Documente Academic
Documente Profesional
Documente Cultură
I. LETTERS OF CREDIT
Feati Bank & Trust Company vs. Court of Appeals, 196 SCRA 576 (1991)
MWSS vs. Hon. Daway, 432 SCRA 559 (2004)
Reliance Commodities, Inc. vs. Daewoo Industrial Co., Ltd., 228 SCRA 545
(1993)
Bank of the Philippine Islands vs. De Reny Fabric Industries, Inc., 35 SCRA 253
(1970)
Insular Bank of Asia & America vs. Intermediate Appellate Court, 167 SCRA 450
(1988)
Bank of America vs Court of Appeals 228 SCRA 357
Transfield Philippines, Inc. vs. Luzon Hydro Corp. 443 SCRA 307 (2004)
Philippine Virginia Tobacco Administration vs. De Los Angeles, 164 SCRA 543
(1988)
Feati Bank & Trust Company vs. Court of Appeals, 196 SCRA 576 (1991)
i. Applicant
ii. Issuing Bank
iii. Beneficiary
Reliance Commodities, Inc. vs. Daewoo Industrial Co., Ltd., 228 SCRA 545 (1993)
Prudential Bank & Trust Company vs. IAC, 216 SCRA 257 (1992)
Rodzssen Supply Company, Inc. vs. Far East Bank and Trust Company, 357
SCRA 618 (2001)
Abad vs. Court of Appeals, 181 SCRA 191 (1990); Consolidated Bank & Trust
Corporation vs. Court of Appeals, 356 SCRA 671 (2001)
a. Doctrine of Independence
Philippine National Bank vs. San Miguel Corporation, G.R. No. 186063, January
15, 2014
Insular Bank of Asia & America vs. Intermediate Appellate Court, 167 SCRA 450
(1988)
Vintola vs. Insular Bank of Asia and America, 150 SCRA 140 (1987)
Rosario Textile Mills Corp. vs. Home Bankers Savings and Trust Company, 462
SCRA 88 (2005)
c. The loan should be granted to finance acquisition of the goods under trust
receipt. If loan is granted when entrustee already has ownership of the goods,
transaction only a simple loan
Land Bank of the Philippines vs. Perez, G.R. No. 166884, June 13,
2012;
Hur Tin Yang vs. People of the Philippines, G.R. No. 195117, August
14, 2013
e. No trust receipt, notwithstanding the label, if goods offered as security for a loan
accommodation are goods sold to the debtor
Sps. Dela Cruz vs. Dela Cruz, GR No. 158649, February 18, 2013
f. Failure of the entrustee to remit sale proceeds or return the goods in case of
non-sale constitutes criminal liability
g. Crime against public order
Compensation shall not be proper when one of the debts consists in civil liability
arising from a penal offense; moreover, any compromise relating to the civil liability
does not automatically extinguish the criminal liability of the accused. The mere failure
of the entrustee to deliver the proceeds of the sale or the goods if not sold, constitutes a
criminal offense that causes prejudice not only to another, but more to the public
interest. Metropolitan Bank & Trust Company vs. Tonda, 338 SCRA 254 (2000)
Prudential Bank vs. National Labor Relations Commission, 251 SCRA 412 (1995)
Ng vs People, ibid.
Land Bank vs Court of Appeals, ibid.
Hur Ting Yang vs People, ibid.
iii. Non-delivery of the goods
iv. Novation
Rosario Textile Mills Corp. vs. Home Bankers Savings and Trust Company, ibid.
b. Directors and officers of the corporation not civilly liable unless they assume
personal liability
9. Remedies Available
South City Homes, Inc. vs. BA Finance Corporation, 371 SCRA 603 (2001)
Landl & Company vs. Metropolitan Bank, 435 SCRA 639 (2004)
1. Requisites of Negotiability
The Bank where postal money orders were deposited may debit the account of the
depositor corresponding to the amount of postal money orders deposited and
subsequently withdrawn from the depositors account when it turns out that such
instruments had been stolen by another but ended up being received by the depositor as
part of its sales receipts. Postal money orders are not negotiable instruments, the reason
being that in establishing and operating a postal money order system, the government is
not engaged in commercial transactions but merely exercises a governmental power for
the public benefit. Moreover, some of the restrictions imposed upon money orders by
postal laws and regulations are inconsistent with the character of negotiable
instruments. For instance, such laws and regulations usually provide for not more than
one endorsement and payment may be withheld under a variety of circumstances. Not
being negotiable instruments, the restriction which the Director of Posts imposed that in
cases of adverse claims on the money orders, the corresponding amount will have to be
refunded to the Post Master is valid against the bank in which the warrants were
deposited. Philippine Education Co., Inc.,vs. Soriano, 39 SCRA 587 (1971)
Thus, when the defendant obtained a credit accommodation from a bank to facilitate the
payment of printing costs and the cost of printing is collected by drawing a draft against
the bank but which draft is later on sent to the defendant for acceptance, the signature
of the defendant on the draft, without any additional words, is tantamount to
acceptance. Defendants argument that the drafts signed by him were not really bills of
exchange but mere pieces of evidence of indebtedness because payments had been
made by the bank before the defendants acceptance is erroneous. A commercial paper
which conforms with the definition of a bill exchange is a bill of exchange. The nature
of the acceptance is important only in the determination of liability of the parties but
not to determine whether a commercial paper is a bill of exchange or not. Philippine
Bank of Commerce vs. Aruego, 102 SCRA 530 (1981)
Without the words or order or "to the order of," the instrument is payable only to the
person designated therein and is therefore non-negotiable. Any subsequent purchaser
thereof will not enjoy the advantages of being a holder of a negotiable instrument, but
will merely "step into the shoes" of the person designated in the instrument and will
thus be open to all defenses available against the latter. Juanita Salas vs. Hon. Court
of Appeals and First Finance & Leasing Corporation, G.R. No. 76788, January 22,
1990
Treasury warrants which are stamped on their face non-negotiable and/or are payable
from a particular fund, to wit, Fund 501, are non-negotiable. The indication of Fund
501 as the source of payment to be made on the treasury warrant makes the order or
promise under the NIL do not apply. Not being negotiable instruments, then the
warranties of a general endorser could not be enforced against the person who
deposited the warrants with the collecting bank when such depositor did not have any
knowledge that the warrants had been issued without government authority.
Metropolitan Bank & Trust Company vs. Court of Appeals, Golden Savings &
Loan Association, Inc. Lucia Castillo, Magno Castillo and Gloria Castillo, G.R.
No. 88866 February 18, 1991
When the documents provide that the amounts deposited shall be repayable to the
depositor, such instrument is negotiable because it is payable to the "bearer." The
documents do not say that the depositor is Angel de la Cruz and that the amounts
deposited are repayable specifically to him, but the amounts are to be repayable to the
bearer of the documents or, for that matter, whosoever may be the bearer at the time of
presentment. Caltex (Philippines), Inc. vs. Court of Appeals and Security Bank and
Trust Company, G.R. No. 97753, August 10, 1992
Under the fictitious payee rule, a check made expressly payable to a non-fictitious and
existing person is not necessarily an order instrument if the payee is not the intended
recipient of the proceeds of the check. There is, however, a commercial bad faith
exception to this rule which provides that a showing of commercial bad faith on the part
of the drawee bank, or any transferee of the check for that matter, will work to strip it
of this defense. Philippine National Bank vs. Erlando T. Rodriguez and Norma
Rodriguez, G.R. No. 170325, September 26, 2008
Under the Negotiable Instruments Law, a check made payable to cash is payable to the
bearer and could be negotiated by mere delivery without the need of an indorsement.
However, the drawer of the post-dated check cannot be liable for estafa to the person
who did not acquire the instrument directly from drawer but through negotiation of
another by mere delivery. This is because the drawer did not use the check to defraud
the holder/private complainant. People of the Philippines vs. Gilbert Reyes Wagas,
G.R. No. 157943, September 4, 2013
The electronic messages are not signed by the investor-clients as supposed drawers of a
bill of exchange; they do not contain an unconditional order to pay a sum certain in
money as the payment is supposed to come from a specific fund or account of the
investor-clients; and, they are not payable to order or bearer but to a specifically
designated third party. Thus, the electronic messages are not bills of exchange. As there
was no bill of exchange or order for the payment drawn abroad and made payable here in
the Philippines, there could have been no acceptance or payment that will trigger the
imposition of the DST under Section 181 of the Tax Code. The Hongkong And
Shanghai Banking Corporation Limited-Philippine Branches vs. Commissioner Of
Internal Revenue G.R. Nos. 166018 & 167728, June 04, 2014
Postal money orders are not negotiable instruments, the reason being that in
establishing and operating a postal money order system, the government is not engaged
in the commercial transactions but merely exercises a governmental power for the
public benefit. Some of the restrictions imposed upon money orders by postal laws and
regulations are inconsistent with the character of negotiable instruments. For instance,
such laws and regulations usually provide for not more than one endorsement; payment
of money orders may be withheld under a variety of circumstances. Philippine
Education Co., Inc., vs. Mauricio A. Soriano, et al., G.R. No. L-22405, June 30,
1971
Withdrawal slips are non-negotiable instruments. Hence, the rules governing the giving
of immediate notice of dishonor of negotiable instruments do not apply in this case. The
essence of negotiability which characterizes a negotiable paper as a credit instrument
lies in its freedom to circulate freely as a substitute for money. The withdrawal slips in
question lacked this character. In a case where a client maintained a special savings
account with his drawee bank, was allowed to withdraw funds there from through the
medium of special withdrawal slips and used the withdrawal slips in payment of certain
purchases, as if they were checks, and the creditor deposited these withdrawal slips to
its bank which in turn would send them for collection to the drawee bank, the fact that
other withdrawal slips were honored and paid by the drawee bank was no license for
the collecting bank to presume that subsequent withdrawal slips would be honored and
paid immediately. And the drawee bank was under no obligation to give immediate
notice that it would make payment on the subject withdrawal slips. Firestone Tire &
Rubber Company of the Philippines vs. Court of Appeals and Luzon Development
Bank, G.R. No. 113236, March 5, 2001
A check is a bill of exchange drawn on a bank payable on demand which may either
be an order or a bearer instrument. Under Section 9(c) of the NIL, a check payable to a
specified payee may nevertheless be considered as a bearer instrument if it is payable to
the order of a fictitious or non-existing person like checks issued to Prinsipe Abante
or Si Malakas at si Maganda, who are well-known characters in Philippine
mythology. Philippine National Bank vs. Erlando T. Rodriguez and Norma
Rodriguez, G.R. No. 170325, September 26, 2008
The payee of a negotiable instrument acquires no interest with respect thereto until its
delivery to him. Thus, if a debtor, who drew two checks in payment of his obligation, never
delivered the checks to his creditor and a third party was able to collect the proceeds
thereof by forging the endorsement of the creditor as payee, the payee/creditor has no cause
of action against anyone on the basis of the checks. Since the checks were never delivered,
then the obligation of the drawer to the creditor subsists. Development Bank of Rizal vs.
Sim Wei, 219 SCRA 736 (1993)
The 17 original checks, completed and delivered to petitioner, are sufficient by themselves
to prove the existence of the loan obligation of the respondents to petitioner. Sec. 16 of the
NIL provides that when an instrument is no longer in the possession of the person who
signed it and it is complete in its terms "a valid and intentional delivery by him is presumed
until the contrary is proved. Ting Ting Pua vs. Spouses Benito Lo Bun Tiong and
Caroline Siok Ching Teng, G.R. No. 198660, October 23, 2013
1. Insertion of Date
Both courts below relied so much on the fact that Mrs. Vicencios husband is a former
Judge who knows the law. He should have known, then, that he need not even ask the
petitioners to place a date on the check, because as holder of the check, he could have
inserted the date pursuant to Section 13 of the Negotiable Instruments Law
(NIL). Moreover, as stated in Section 14 thereof, complainant, as the person in
possession of the check, has prima facie authority to complete it by filling up the
blanks therein. Besides, pursuant to Section 12 of the same law, a negotiable
instrument is not rendered invalid by reason only that it is antedated or postdated.
Pacheco vs. Court of Appeals, G.R. No. 126670, December 2, 1999
2. Completion of Blanks
In any case, it is no defense that the promissory notes were signed in blank as Section
14 of the Negotiable Instruments Law concedes the prima facie authority of the person
in possession of negotiable instruments to fill in the blanks. Quirino Gonzales
Logging Concessionaire, Quirino Gonzales and Eufemia Gonzales vs. the Court of
Appeals (CA) and Republic Planters Bank, G. R. No. 126568, April 30, 2003
Where the checks issued in payment of the salary of an assistant city fiscal have not
been delivered to him, they cannot be garnished because the funds do not belong to him
and still have the character of public funds. Until its physical delivery, the check does
not belong to the government employee consistent with Section 16 of the NIL that
every contract on a negotiable instrument is incomplete until its delivery for the
purpose of giving effect to it. Thus, the City Fiscal, on whom the notice of garnishment
meant for his Assistant City Fiscals was served, could not be held liable for contempt
for non-delivery of the salary of the Assistant Fiscal to the judgment creditor. Loreto
D. de la Victoria, as City Fiscal of Mandaue City and in his personal capacity as
garnishee vs. Hon. Jose P. Burgos, Presiding Judge, RTC, Br. XVII, Cebu City,
and Raul H. Sesbreo, G.R. No. 111190, June 27, 1995
If the post-dated check was given to the payee in payment of an obligation, the purpose
of giving effect to the instrument is evident, thus title or ownership the check was
transferred to the payee. However, if the PDC was not given as payment, then there was
no intent to give effect to the instrument and ownership was not transferred. The
evidence proves that the check was accepted, not as payment, but in accordance with
the policy of the payee to cover the transaction (purchase of beer products) and in the
meantime the drawer was to pay for the transaction by some other means other than the
check. This being so, title to the check did not transfer to the payee; it remained with
the drawer. The second element of the felony of theft was therefore not
established. Hence, there is no probable cause for theft. San Miguel Corporation vs.
Puzon, Jr. G.R. No. 167567, September 22, 2010
The fact that a person, other than the named payee of the crossed check, was presenting
it for deposit should have put the bank on guard. It should have verified if the payee
authorized the holder to present the same in its behalf or indorsed it to him. The banks
reliance on the holders assurance that he had good title to the three checks constitutes
gross negligence even though the holder was related to the majority stockholder of the
payee. While the check was not delivered to the payee, the suit may still prosper
because the payee did not assert a right based on the undelivered check but on quasi-
delict. Equitable Banking Corporation vs. Special Steel Products, June 13, 2012
C. Signature
1. Signing in Trade Name
One who signs an instrument in a trade or assumed name will be liable on the said
instrument to the same extent as if he had signed in his own name.
2. Signature of Agent
Under Section 20 of the Negotiable Instruments Law, where the instrument contains or
a person adds to his signature words indicating that he signs for or on behalf of a
principal or in a representative capacity, he is not liable on the instrument if he was
duly authorized; but the mere addition of words describing him as an agent or as filing
a representative character, without disclosing his principal, does not exempt him from
personal liability. In the instant case, an inspection of the drafts accepted by the
defendant shows that nowhere has he disclosed that he was signing as a representative
of the Philippine Education Foundation Company and such failure to disclose his
principal makes him personally liable for the drafts he accepted. The Philippine Bank
of Commerce vs. Jose M. Aruego, G.R. Nos. L-25836-37, January 31, 1981
4. Forgery
A drawee bank which paid a check on which the signature of the drawer had been
forged cannot recover the payment from the collecting bank, because payment implies
acceptance and admission of the genuineness of the signature of the drawer. The
question of whether or not the endorsements have been falsified is immaterial to the
liability of the drawee for as against the drawee, the endorsement of the collecting bank
does not guarantee the signature of the drawer, since the forgery of the endorsement
was not the cause of the loss. And even assuming that the collecting bank had been
guilty of negligence in not discovering that the checks was forged, the drawee bank had
been guilty of greater negligence when it had a previous and formal notice from the
drawer that the check had been lost. Philippine National Bank vs. Court of Appeals,
25 SCRA 693 (1968)
Pursuant to its duty to ascertain the genuineness of the signature of the drawer or
depositor on the check being encashed, a bank is expected to use reasonable business
prudence in accepting and cashing a check presented to it. When a check was stolen by
a classmate and friend of the drawer who thereafter forged the latters signature, the
drawee bank should return the amount debited from the account of the drawer, because
the drawee was guilty of negligence in paying the check despite the forged signature,
and the drawer, under the circumstance, could not be considered negligent. Philippine
National Bank vs. Quimpo, 158 SCRA 582 (1988)
Where the checks were deposited to a bank account despite the forgery of the
endorsement of the payee and the collecting bank allowed withdrawals after the checks
had been cleared, the collecting bank is not liable on the forged check where the payee
is not its depositor and where the payee was guilty of negligence by allowing a
condition in which its employees could appropriate the checks and falsify the
endorsement. The collecting bank could not be guilty of negligence because it had no
way of ascertaining the authenticity of the endorsements in the checks and because it
caused the checks to pass through the clearing house before allowing withdrawal of the
proceeds thereof. Manila Lighter Transportation, Inc., vs. Court of Appeals, 182
SCRA 251 (1990)
When the drawee bank fails to return a forged or altered check to the collecting bank
within the 24-hour clearing period, the collecting bank is absolved from liability. It is
true that when an endorsement is forged, the collecting bank or last endorser, as a
general rule, bears the loss. But the unqualified endorsement of the collecting bank on
the checks should be read with the 24 hour regulation on clearing house operation.
Republic Bank vs. Court of Appeals, 196 SCRA 100 (1991)
When a bank accepted a crossed check payable to a person other than the depositor and
stamped thereon its guarantee all prior endorsement and/or lack of endorsements
guaranteed, the bank had for all legal intents and purposes treated the said check as a
negotiable instrument and, accordingly assumed the warranty of an endorser. Thus,
when a crossed check payable to a person other than the depositor who was not
authorized by the payee to endorse it was paid notwithstanding that the title had not
passed to the endorser, the bank did so at its peril and became liable to the payee for the
value of the check. Out of convenience, the payee may disregard the circuitous route in
determining the chain of liability and proceed directly against the collecting bank.
Associated Bank vs. Court of Appeals, 208 SCRA 465 (1992)
Generally, a forged signature is wholly inoperative and payment made through or under
such signature is ineffective or does not discharge the instrument, except when the
party relying on the forgery is precluded from setting up the forgery or want of
authority. Where over a period of two years a depositor signed checks prepared by her
book keeper without ascertaining the correctness of their amounts, did not examine and
reconcile the bank statements and cancelled checks, failed to set-up an accounting
procedures to monitor check issuance and discovered later on that the signatures of the
payees were forgeries, and the drawee, on the other hand , violated its internal policies
against acceptance of second endorsed checks, the loss occasioned or caused by such
negligence should be divided equally between the depositor and the drawee bank.
Gempesaw vs. Court of Appeals, 218 SCRA 682 (1993)
While a drawee bank which paid several checks payable to order with forged
endorsements can recover the payment from the collecting bank because the forged
endorsement is inoperative, the drawer must share one-half of the loss when it
substantially contributed to the loss by continuing to release the check to the forger
although the drawer knew that he was no longer under the employ of the payee. The
drawee bank is also liable because it is under strict obligation to pay the check to the
order of the payee. If the drawee did not pay the holder or other person entitled to
receive payment, in effect it violated the instruction of the drawee. However, the latter
can recover from the collecting bank because in case of forgery of the payees
endorsement, the latter incurs liability because of its breach of warranty as an endorser.
Associated Bank vs. Court of Appeals, 252 SCRA 620 (1996)
A drawer who discovered the loss his checkbook and did not notify the bank of the loss
should bear the loss caused by the subsequent payment of the checks in which the
signature of the drawer had been forged. Security Bank and Trust Corporation vs.
Triump Lumber and Construction Corporation, 301 SCRA 537 (1999)
The drawer, which issued crossed checks to the Commissioner of Internal Revenue
(CIR) in payment for its taxes but which payment was not received by the CIR because
the checks were switched with worthless checks en route to clearing and, as a
consequence, had to pay the CIR anew, could recover the amount deducted from its
account from the drawee for the loss because it failed to ensure that the amount of the
checks is paid only to the designated payee while the collecting bank should share one-
half of the loss because its branch manager conspired in the fraud. Philippine
Commercial International Bank vs. Court of Appeals, 350 SCRA 446 (2001)
Since what is at issue is whether the depositor issued the questioned checks, the
essential comparison should be between the signatures appearing on the checks and the
specimen signature appearing on the depositors card. Such is the normal process
followed in verifying signatures for purpose of bank withdrawals. Considering that the
depositors card was not presented in evidence, resort may thus be made to other
documents as would bear his authentic signature. The record is replete with documents
such as residence certificate, passport, and application forms for the current account.
However, there is no significant disparity between the signatures on the checks and
those on the abovesaid documents. Forgery, as any other mechanism of fraud, must be
proven clearly and convincingly, and the burden of proof lies on the party alleging
forgery. Chiang Yia Min vs. CA, 355 SCRA 608 (2001)
The drawer is precluded from setting up the forgery due to his own negligence when he
accorded his secretary unusual degree of trust and unrestricted access to his credit card,
passbooks, check books, bank statement including custody and possession of cancelled
checks and reconciliation of accounts, when the drawer had introduced his secretary to
the bank for purposes of reconciliation of his account, the said secretary became a
familiar figure in the bank and whenever the bank verifiers call the office of the drawer,
it is the same secretary who answers and confirms the checks. Its verifiers first verified
the drawers signatures thereon as against his specimen signature cards, and when in
doubt, the verifier went further, such as by referring to a more experienced verifier for
further verification. In some instances, the verifier made a confirmation by calling the
depositor by phone. It is only after taking such precautionary measures that the subject
checks were given to the teller for payment. Of course it is possible that the verifiers
might have made a mistake in failing to detect the forgery, if indeed there was.
However, a mistake is not negligence if it was an honest mistake. Ilusorio vs. Court of
Appeals, 393 SCRA 89 (2002)
As a general rule, a bank or corporation who has obtained possession of a check upon
an unauthorized or forged indorsement of the payees signature and who collects the
amount of the check from the drawee, is liable for the proceeds thereof to the payee or
other owner, notwithstanding that the amount has been paid to the person from whom
the check was obtained. The theory of the rule is that the possession of the check on the
forged or unauthorized indorsement is wrongful and when the money had been
collected on the check, the proceeds are held for the rightful owners who may recover
them. The payee ought to be allowed to recover directly from the collecting bank,
regardless of whether the check was delivered to the payee or not. Westmont Bank
(formerly Associated Banking Corp.) vs. Eugene Ong, G.R. No. 132560, January
30, 2002
It is a rule that when a signature is forged or made without the authority of the person
whose signature it purports to be, the check is wholly inoperative and no right to retain
the instrument, or to give a discharge therefor, or to enforce payment thereof against
any party, can be acquired through or under such signature. However, the rule does
provide for an exception, namely: "unless the party against whom it is sought to enforce
such right is precluded from setting up the forgery or want of authority." In the instant
case, it is the exception that applies as the petitioner is precluded from setting up the
forgery, assuming there is forgery, due to his own negligence in entrusting to his
secretary his credit cards and checkbook including the verification of his statements of
account. Ramon K. Ilusorio vs. Hon. Court of Appeals, G.R. No. 139130,
November 27, 2002
Even if the bank performed with utmost diligence, the drawer whose signature was
forged may still recover from the bank as long as he or she is not precluded from setting
up the defense of forgery. After all, Section 23 of the Negotiable Instruments Law
plainly states that no right to enforce the payment of a check can arise out of a forged
signature. Since the drawer is not precluded by negligence from setting up the forgery,
the general rule should apply. Samsung Construction Company Philippines, Inc., vs.
Far East Bank and Trust Company and Court Of Appeals, G.R. No. 129015,
August 13, 2004
As between a bank and its depositor, where the banks negligence is the proximate
cause of the loss and the depositor is guilty of contributory negligence, the greater
proportion of the loss shall be borne by the bank. The bank was negligent because it did
not properly verify the genuineness of the signatures in the applications for managers
checks while the depositor was negligent because it clothed its accountant/bookkeeper
with apparent authority to transact business with the Bank and it did not examine its
monthly statement of account and report the discrepancy to the Bank. The court
allocated the damages between the bank and the depositor on a 60-40 ratio. Philippine
National Bank vs. FF Cruz and Company, G.R. No. 173259, July 25, 2011
While its manager forged the signature of the authorized signatories of clients in the
application for managers checks and forged the signatures of the payees thereof, the
drawee bank also failed to exercise the highest degree of diligence required of banks in
the case at bar. It allowed its manager to encash the Managers checks that were plainly
crossed checks. A crossed check is one where two parallel lines are drawn across its
face or across its corner. Based on jurisprudence, the crossing of a check has the
following effects: (a) the check may not be encashed but only deposited in the bank; (b)
the check may be negotiated only once to the one who has an account with the bank;
and (c) the act of crossing the check serves as a warning to the holder that the check has
been issued for a definite purpose and he must inquire if he received the check pursuant
to this purpose; otherwise, he is not a holder in due course. In other words, the crossing
of a check is a warning that the check should be deposited only in the account of the
payee. When a check is crossed, it is the duty of the collecting bank to ascertain that the
check is only deposited to the payees account. Philippine Commercial International
Bank vs. Balmaceda, G.R. No. 158143, September 21, 2011
D. Consideration
A check which is regular on its face is deemed prima facie to have been issued for a
valuable consideration and every person whose signature appears thereon is deemed to
have become a party thereto for value. Thus, the mere introduction of the instrument sued
on in evidence prima facie entitles the plaintiff to recovery. Further, the rule is quite settled
that a negotiable instrument is presumed to have been given or indorsed for a sufficient
consideration unless otherwise contradicted and overcome by other competent evidence.
Travel-On, Inc. vs. Court of Appeals and Arturo S. Miranda, G.R. No. L-56169, June
26, 1992
Letters of credit and trust receipts are not negotiable instruments, but drafts issued in
connection with letters of credit are negotiable instruments. While the presumption found
under the Negotiable Instruments Law may not necessarily be applicable to trust receipts
and letters of credit, the presumption that the drafts drawn in connection with the letters of
credit have sufficient consideration applies. Charles Lee, Chua Siok Suy, Mariano Sio,
Alfonso Yap, Richard Velasco and Alfonso Co vs. Court of Appeals and Philippine
Bank of Communications, G.R. No. 117913, February 1, 2002
When promissory notes appear to be negotiable as they meet the requirements of Section 1
of the Negotiable Instruments Law, they are prima facie deemed to have been issued for
consideration unless sufficient evidence was adduced to show otherwise. Quirino
Gonzales Logging Concessionaire, Quirino Gonzales and Eufemia Gonzales vs. the
Court of Appeals (CA) and Republic Planters Bank, G. R. No. 126568, April 30, 2003
E. Accommodation Party
Section 29 of the Negotiable Instruments Law by clear mandate makes the accomodation
party "liable on the instrument to a holder for value, notwithstanding that such holder at the
time of taking the instrument knew him to be only an accommodation party." It is not a
valid defense that the accommodation party did not receive any valuable consideration
when he executed the instrument. It is not correct to say that the holder for value is not a
holder in due course merely because at the time he acquired the instrument, he knew that
the indorser was only an accommodation party. Ang Tiong vs. Lorenzo Ting, doing
business under the name & style of Prunes Preserves MFG., & Felipe Ang, G.R. No.
L-26767, February 22, 1968
When the checks are dishonored for lack of funds, the party who indorsed those checks as
accommodation endorser is liable for the payment of the checks. People vs. Maniego, 148
SCRA 30 (1987)
Where a corporate officer issued a check in behalf of the corporation to accommodate his
client who needed the check in consideration for a certain transaction and the check was
dishonored for lack of funds, the payee cannot hold the corporation liable. The rule that an
accommodation party is liable on the instrument to a holder for value does not apply to
corporations which are accommodation parties. This is because the issue or endorsement of
negotiable paper by a corporation without consideration and for the accommodation of
another is ultra vires. Hence, one who has taken the instrument with knowledge of the
accommodation nature thereof cannot recover against a corporation where it is only an
accommodation party. Since such accommodation paper cannot be enforced against the
corporation especially since it is not involved in any aspect of the corporate business or
operations, the corporate officers who executed the instruments should be held personally
liable. Crisologo Jose vs. Court of Appeals, 177 SCRA 594 (1989)
When a promissory note which is payable to GSIS is not payable to bearer or order, such
instrument is non-negotiable. As such, third party mortgagor who mortgaged his property
to secure the obligation of another is not liable as an accommodation party but liable under
Article 2085 of the Civil Code to the effect that third persons who are not parties to the
principal obligation may secure the latter by pledging or mortgaging their own property.
GSIS vs. Court of Appeals, G.R. No. L-40824, February 23, 1989
A party who signed a promissory note as accommodation maker in favor of the payees,
who then indorsed it to a financing company, is liable to the financing company and cannot
raise the defense that he did not receive any value thereof, but he is entitled to
reimbursement from the party accommodated. The relationship of an accommodation party
and the party accommodated is in effect one of principal and surety, such that after making
payment, an accommodation party has the right to claim reimbursement from the party
accommodated. Caneda vs. Court of Appeals, 181 SCRA 762 (1990)
When a married couple signed a promissory note in favor of a bank to enable the sister of
the husband to obtain a loan, they are considered as accommodation parties who are liable
for the payment of said loan. Town Saving and Loan Bank, Inc., vs. Court of Appeals,
223 SCRA 459 (1993)
A person who signed a promissory note as a co-maker for the purpose of lending his name
to his co-maker but without receiving value on the note is an accommodation party. An
accommodation party who lends his name to enable the accommodated party to obtain
credit or raise money is liable on the instrument to a holder for value even if he receives no
part of the consideration. He assumes the obligation to the other party and binds himself to
pay the note on its due date. By signing the note, Co thus became liable for the debt even if
he had no direct personal interest in the obligation or did not receive any benefit therefrom.
Henry dela Rama vs. Admiral United Savings Bank, 551 SCRA 472 (2008)
While a maker who signed a promissory note for the benefit of his co-maker (who received
the loan proceeds) is considered an accommodation party, he is, nevertheless, entitled to a
written notice on the default and the outstanding obligation of the party accommodated.
There being no such written notice, the Bank is grossly negligent in terminating the credit
line of the accommodation party for the unpaid interest dues from the loans of the party
accommodated and in dishonoring a check drawn against such credit line. Gonzales vs.
Phillippine Commercial and International Bank, GR No. 180257, February 23, 2011
F. Negotiation
If an assigned promissory note had already been extinguished because its maker is
similarly indebted to the assignor, then the defense of set-off or legal compensation
could also be invoked against the assignee of the note. The debtors consent is not
needed to effectuate assignment of credit and negotiation. Sesbreno vs. Court of
Appeals, 222 SCRA 466 (1993)
2. Modes of Negotiation
Where a check is made payable to the order of cash the word cash does not purport
to be the name of any person, and hence the instrument is payable to bearer. The
drawee bank need not obtain any indorsement of the check, but may pay it to the person
presenting it without any indorsement. Ang Tek Lian vs. the Court of Appeals, G.R.
No. L-2516, September 25, 1950
An indorsement is restrictive which either: (1) Prohibits the further negotiation of the
instrument; or (2) Constitutes the indorsee the agent of the indorser; or (3) Vests the
title in the indorsee in trust for or to the use of some other persons. A restrictive
indorsement confers upon the indorsee the right: (a) to receive payment of the
instrument; (b) to bring any action thereon that the indorser could bring; (c) to
transfer his rights as such indorsee, where the form of the indorsement authorizes him
to do so. But all subsequent indorsees acquire only the title of the first indorsee under
the restrictive indorsement.
A qualified indorsement constitutes the indorser a mere assignor of the title to the
instrument. It may be made by adding to the indorser's signature the words "without
recourse" or any words of similar import. Such an indorsement does not impair the
negotiable character of the instrument. Where an indorsement is conditional, the party
required to pay the instrument may disregard the condition and make payment to the
indorsee or his transferee whether the condition has been fulfilled or not. But any
person to whom an instrument so indorsed is negotiated will hold the same, or the
proceeds thereof, subject to the rights of the person indorsing conditionally.
Where the payee acquired the check under circumstances that should have put it to
inquiry as to the title of the holder who negotiated the check to him, the payee has the
duty to present evidence that he acquired the check in good faith. As the holder's title
was defective or suspicious, it cannot be stated that the payee acquired the check
without knowledge of said defect in holder's title, and for this reason the presumption
that it is a holder in due course or that it acquired the instrument in good faith does not
exist. Vicente R. De Ocampo & Co. vs. Anita Gatchalian, et al., G.R. No. L-15126,
November 30, 1961
A holder in due course holds the instrument free from any defect of title of prior
parties, and free from defenses available to prior parties among themselves, and may
enforce payment of the instrument for the full amount thereof. This being so, petitioner
cannot set up against respondent the defense of nullity of the contract of sale between
her and VMS. Juanita Salas vs. Hon. Court of Appeals and First Finance &
Leasing Corporation, G.R. No. 76788, January 22, 1990
A drawer who issued two negotiable checks as security for pieces of jewelry to be sold
by the drawer on commission basis is liable to an endorsee to whom the payee
negotiated the checks even if the drawer returned the pieces of jewelry to the payee,
resulting in failure of consideration. Since the checks are negotiable instruments, the
holder thereof is presumed to be a holder in due course. As holder in due course, he
holds the instrument free from any defect of title of prior parties and from defenses
available to prior parties among themselves. Thus, the drawer of the check may not
invoke the defense of lack of consideration. The withdrawal of the money from the
drawee bank to avoid liability on the checks can not prejudice the rights of the holder
in due course. State Investment House, Inc. vs. Court of Appeals, 217 SCRA 32
(1993)
It is then settled that crossing of checks should put the holder on inquiry and upon him
devolves the duty to ascertain the indorsers title to the check or the nature of his
possession. Failing in this respect, the holder is declared guilty of gross negligence
amounting to legal absence of good faith, contrary to Sec. 52 (c) of the Negotiable
Instruments Law, and as such the consensus of authority is to the effect that the holder
of the check is not a holder in due course. Bataan Cigar and Cigarette Factory,
Inc.,vs. the Court of Appeals and State Investment House, Inc., G.R. No. 93048,
March 3, 1994
Where cashiers checks were issued merely as financial assistance to the payee with
instruction that the checks were strictly endorsed for payees account only and not to
be further negotiated, the party in whose favor the checks were negotiated could not
qualify as a holder in due course. However, it does not follow as a legal proposition
that simply because the holder was not a holder in due course for having taken the
checks with notice that the same were for deposit only to the account of another that it
was altogether precluded from recovering on the instrument. The Negotiable
Instruments Law does not provide that a holder not in due course cannot recover on
the instrument. The disadvantage of the holder in not being a holder in due course is
that the instrument is subject to defense as if it were non-negotiable. One such defense
is absence or failure of consideration (the defense raised by the drawer since the
checks had no consideration and was issued merely as a form of financial assistance to
the payee). Atrium Management Corporation vs. Court of Appeals, et al., G.R.
No. 109491, February 28, 2001
The weight of authority sustains the view that a payee may be a holder in due course.
Hence, the presumption that he is a prima facie holder in due course applies in his
favor. However, said presumption may be rebutted and vital to the resolution of this
issue is the concurrence of all the requisites provided for in Section 52 of the
Negotiable Instruments Law. Cely Yang vs. Hon. Court of Appeals, Philippine
Commercial International Bank, Far East Bank & Trust Co., Equitable Banking
Corporation, Prem Chandiramani and Fernando David, G.R. No. 138074, August
15, 2003
In order however that one who is not a holder in due course can enforce the instrument
against a party prior to the instruments completion, two requisites must exist: (1) that
the blank must be filled strictly in accordance with the authority given; and (2) it must
be filled up within a reasonable time. If it was proven that the instrument had not been
filled up strictly in accordance with the authority given and within a reasonable time,
the maker can set this up as a personal defense and avoid liability. However, if the
holder is a holder in due course, there is a conclusive presumption that authority to fill
it up had been given and that the same was not in excess of authority.
Yet, it does not follow that simply because he is not a holder in due course, he is
already totally barred from recovery. The NIL does not provide that a holder who is
not a holder in due course may not in any case recover on the instrument. The only
disadvantage of a holder who is not in due course is that the negotiable instrument is
subject to defenses as if it were non-negotiable. Among such defenses is the filling up
blank not within the authority.
While under the law, the one in possession had a prima facie authority to complete
the check, such prima facie authority does not extend to its use (i.e., subsequent
transfer or negotiation) once the check is completed. In other words, only the authority
to complete the check is presumed. Further, the law used the term "prima facie" to
underscore the fact that the authority which the law accords to a holder is a
presumption juris tantum only; hence, subject to contrary proof. Thus, evidence that
there was no authority or that the authority granted has been exceeded may be
presented by the maker in order to avoid liability under the instrument.
In the present case, no evidence is on record that the one to whom the check was
delivered ever secured prior approval from the petitioner to fill up the blank or to use
the check. In his testimony, petitioner asserted that he never authorized nor approved
the filling up of the blank checks. Alvin Patrimonio vs. Napoleon Gutierrez III G.R.
No. 187769, June 04, 2014
Where the instrument is payable to order at the time of the forgery, such as the checks
in this case, the signature of its rightful holder (here, the payee hospital) is essential to
transfer title to the same instrument. When the holders indorsement is forged, all
parties prior to the forgery may raise the real defense of forgery against all parties
subsequent thereto. Associated Bank vs. Court of Appeals, G.R. No. 107382,
January 31, 1996
By admitting it committed an error, clearing the check of Sarande and issuing in favor
of Ong not just any check but a managers check for that matter, PCI Banks liability
is fixed. Under the circumstances, we find that summary judgment was proper and a
hearing would serve no purpose. That summary judgment is appropriate was
incisively expounded by the trial court when it made the following observation: xxx It
may be true that plaintiffs PCIB Check No. 073661 for P132,000.00 which was paid
to her by Warliza Sarande was actually not funded but since plaintiff became a holder
in due course, defendant-bank cannot interpose a defense of want or lack of
consideration because that defense is equitable or personal and cannot prosper against
a holder in due course pursuant to Section 28 of the Negotiable Instruments
Law. Therefore, when the aforementioned check was endorsed and presented by the
plaintiff and certified to and accepted by defendant-bank in the purchase of PCIB
Managers Check No. 1983 in the amount of P132,000.00, there was a valid
consideration. Equitable PCI Bank vs. Ong, G.R. No. 156207, September 15, 2006
The evidence on record shows that Evangelista rediscounted the check and
gave P55,000.00 to Rubia after the latter endorsed the same. As such, Evangelista is a
holder of the check in due course. Under Section 28 of the Negotiable Instruments
Law (NIL), absence or failure of consideration is a matter of defense only as against
any person not a holder in due course. Bayani vs. People of the Philippines, G.R.
No. 154947, August 11, 2004
H. Liabilities of Parties
1. Maker
Under the Negotiable Instruments Law, persons who write their names on the face of
promissory notes are makers and liable as such. Republic Planters Bank vs. Court of
Appeals, 216 SCRA 730 (1992)
2. Drawer
The drawer of the checks should pay their value to the bank who paid for them, in case
said checks were lost and thus were not debited by the drawee bank against the
drawers current account consistent with the doctrine of preventive unjust enrichment.
Philippine National Bank vs. Court of Appeals, 112 SCRA 553 (1982)
In the case of DAUD, the depositor has, on its face, sufficient funds in his account,
although it is not available yet at the time the check was drawn, whereas in DAIF, the
depositor lacks sufficient funds in his account to pay the check. Moreover, DAUD does
not expose the drawer to possible prosecution for estafa and violation of BP 22, while
DAIF subjects the depositor to liability for such offenses. Bank of the Philippine
Islands vs. Reynald R. Suarez, G.R. No. 167750, March 15, 2010
3. Acceptor
Lapse of three months after collecting bank obtained proceeds of the checks that were
forged is not material where collecting bank acted promptly upon being informed of
forgery. Moreover, the depositor of a check as endorser warrants that it is genuine and
in all respects what it purports to be. Thus, when the checks deposited had forged
endorsements and the collecting bank, as a consequence of such forgery, was made to
pay the drawee bank, the collecting bank can debit the account of the depositor for his
breach of warranty. Jai-Alai Corporation Philippines vs. BPI, 66 SCRA 29 (1975)
To simplify proceedings, the payee of the illegally encashed checks should be allowed
to recover directly from the bank responsible for such encashment regardless of
whether or not the checks were actually delivered to the payee. Associated Bank and
Conrado Cruz, vs. Hon. Court of Appeals, and Merle V. Reyes, doing business
under the name and style "Melissas RTW", G.R. No. 89802, May 7, 1992
As a general rule, a bank or corporation who has obtained possession of a check upon
an unauthorized or forged indorsement of the payees signature and who collects the
amount of the check from the drawee, is liable for the proceeds thereof to the payee or
other owner, notwithstanding that the amount has been paid to the person from whom
the check was obtained. The theory of the rule is that the possession of the check on the
forged or unauthorized indorsement is wrongful and when the money had been
collected on the check, the proceeds are held for the rightful owners who may recover
them. The payee ought to be allowed to recover directly from the collecting bank,
regardless of whether the check was delivered to the payee or not. Westmont Bank
(formerly Associated Banking Corp.) vs. Eugene Ong, G.R. No. 132560, January
30, 2002
Where a check is drawn payable to the order of one person (BIR) but is presented for
payment by another and purports upon its face to have been duly indorsed by the payee
of the check, it is the primary duty of the bank to know that the check was duly
indorsed by the original payee and, where it pays the amount of the check to a third
person who has forged the signature of the payee, the loss falls on such bank who
cashed the checks. Also, since one of the checks was crossed, the drawee bank was
duty-bound to ascertain the indorsers title to the check or the nature of his possession.
By encashing in favor of unknown persons checks which were on their face payable to
the BIR, a government agency which can only act through its agents, the bank did so at
its own peril and must suffer the consequences of the unauthorized or wrongful
endorsement. While it is true that a colleting bank which indorses a check bearing a
forged indorsement and presents it to the drawee bank guarantees all prior indorsement,
including the forged indorsement itself and ultimately should be liable therefore, the
drawee bank cannot benefit from this rule if there is no proof that the checks were ever
presented to and accepted by the bank impleaded in the case. Traders Royal Bank vs.
Radio Philippines Network, 390 SCRA 608 (2002)
If a bank pays a forged check, it must be considered as paying out of its funds and
cannot charge the amount so paid to the account of the depositor. A bank is liable,
irrespective of its good faith, in paying a forged check. Samsung Construction
Company Philippines, Inc. vs. Far East Bank and Trust Company and Court Of
Appeals, G.R. No. 129015, August 13, 2004
It is undisputed that the subject check was adequately funded, but that the drawee-bank
wrongfully dishonored it. The fact that another check the drawer had issued was
previously dishonored does not necessarily imply that the dishonor of a succeeding
check can no longer cause moral injury and personal hurt for which the aggrieved party
may claim moral damages. Such prior occurrence does not prove that drawer does not
have a good reputation that can be besmirched. Solidbank Corp. vs. Arrieta, 451
SCRA 711 (2005)
When the drawee bank pays a person other than the payee named on the check despite
the latters lack of endorsement, it does not comply with the terms of the check and
violates its duty to charge the drawers account only for properly payable items and
shall be liable for the amount charged to the drawer. However, the drawee bank may
recover from the collecting bank. A collecting bank where a check is deposited, and
which endorses the check upon presentment with the drawee bank, is an endorser.
Under Section 66 of the Negotiable Instruments Law, an endorser warrants "that the
instrument is genuine and in all respects what it purports to be; that he has good title to
it; that all prior parties had capacity to contract; and that the instrument is at the time of
his endorsement valid and subsisting." In check transactions, the collecting bank or last
endorser generally suffers the loss because it has the duty to ascertain the genuineness
of all prior endorsements considering that the act of presenting the check for payment
to the drawee is an assertion that the party making the presentment has done its duty to
ascertain the genuineness of the endorsements. When the collecting bank stamped the
back of the check with the phrase all prior and/or lack of endorsements guaranteed,
that bank had for all intents and purposes treated the check as a negotiable instrument
and accordingly assumed the warranty of an endorser. The collecting bank, on the other
hand, can obtain reimbursement from the person who deposited the check and received
the proceeds thereof, in line with the principle that no one should unjustly enrich
himself at the expense of another. Bank of America, NT and SA vs. Associated
Citizens bank 588 SCRA 51 (2009). Please see also PNB vs. Rodriguez 566 SCRA
513 (2008), supra.
4. Indorser
The general indorser of a check engages that if it be dishonored and the necessary
proceeding for dishonor duly be taken, he will pay the amount thereof to the holder.
However, a notice of dishonor is necessary in order to change an endorser and the right
of action against him does not accrue until the notice is given. Gullas vs. PNB, 62
PHIL 519
Section 63 of the Negotiable Instruments Law makes "a person placing his signature
upon an instrument otherwise than as maker, drawer or acceptor" a general indorser
"unless he clearly indicates by appropriate words his intention to be bound in some
other capacity." Ang Tiong vs. Lorenzo Ting, doing business under the name &
style of Prunes Preserves MFG., & Felipe Ang, G.R. No. L-26767, February 22,
1968
Where a person paid for certain merchandise with checks issued by the drawer and such
person signed at the back of the checks without any indication as to how she should be
bound thereby, she is deemed to be an endorser thereof and as such, is liable to pay the
instruments to the payee if the checks were dishonored for lack of funds. Sapiera vs.
Court of Appeals, 314 SCRA 370 (1999)
The Negotiable Instruments Law provides that where any person is under obligation to
indorse in a representative capacity, he may indorse in such terms as to negative
personal liability. Thus, a party who forged the signature of the president of a
corporation on a check payable to the corporation cannot raise the defense when she
was sued by the corporation that she was authorized to sign the name of the
corporation, since she did not sign her own name and failed to indicate that she was
signing as agent of the corporation. Francisco vs. Court of Appeals, 319 SCRA 354
(1999)
Where the beneficiary of the letter of credit negotiated the draft payable to its order in
favor of a bank which required the execution by certain corporate officers of the
beneficiary of a surety agreement in favor of the negotiating bank, the dishonor of the
draft makes the surety liable despite the lack of notice of dishonor or protest to the
surety. The liability of a guarantor or surety is broader than that of an indorser. Unless
the bill is promptly presented for payment at maturity and due notice of dishonor given
to the indorser within a reasonable period, he will be discharged from liability thereon.
On the other hand, except where required by the provisions of the contract of
suretyship, demand or notice of default is not required to fix the suretys liability.
Allied Banking Corporation vs. Court of Appeals 494 SCRA 467 (2006)
A bank which paid the monetary value of a foreign check as a special accommodation
to its employee on the basis of the latters endorsement, as well as that of her mother
who is the payee thereof, is considered an irregular indorser if one of its officers who
approved the bills purchase indicated at the back of the check up to a certain amount
only. Where the drawee bank refused to honor the check because of the irregular
endorsement, the collecting bank cannot pass the liability to its employee and her
mother despite their endorsement. A subsequent party which caused the defect in the
instrument cannot have any recourse against any of the prior endorsers in good faith.
Section 66 of the Negotiable Instruments Law which states that the general indorser
additionally engages that, on due presentment, the instrument shall be accepted or paid,
or both, as the case may be, according to its tenor, and that if it be dishonored and the
necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the
holder, or to any subsequent endorser who may be compelled to pay it, must be read in
the light of the rule in equity requiring that those who come to court should come with
clean hands. The holder or subsequent indorser who tries to claim under the instrument
which had been dishonored for irregular indorsement must not be the irregular
indorser himself who gave cause for the dishonor. Otherwise, a clear injustice results
when any subsequent party to the instrument may simply make the instrument defective
and later claim from prior indorsers who have no knowledge or participation in causing
or introducing said defect to the instrument, which thereby caused its dishonor.
Gonzales vs. Rizal Commercial Banking Corporation, 508 SCRA 459 (2006)
The collecting bank which accepted a post-dated check for deposit and sent it for
clearing and the drawee bank which cleared and honored the check are both liable to
the drawer for the entire face value of the check. Allied Banking Corporation vs.
Bank of the Philippine Islands, GR. 188363, February 27, 2013
5. Warranties
The subject checks were accepted for deposit by the Bank for the account of Sayson
although they were crossed checks and the payee was not Sayson but Melissas RTW.
The Bank stamped thereon its guarantee that "all prior endorsements and/or lack of
endorsements (were) guaranteed." By such deliberate and positive act, the Bank had
for all legal intents and purposes treated the said checks as negotiable instruments
and, accordingly, assumed the warranty of the endorser. Associated Bank and
Conrado Cruz, vs. Hon. Court of Appeals, and Merle V. Reyes, doing business
under the name and style "Melissas RTW", G.R. No. 89802, May 7, 1992
The effects of crossing a check relate to the mode of its presentment for payment. Under
Section 72 of the Negotiable Instruments Law, presentment for payment must be made by
the holder or by some person authorized to receive payment on his behalf, who the holder
or authorized person depends on the face of the check. Associated Bank and Conrado
Cruz, vs. Hon. Court of Appeals, and Merle V. Reyes, doing business under the name
and style "Melissas RTW, G.R. No. 89802, May 7, 1992
A bank which pays a certificate of deposit payable to bearer without requiring the surrender
of the certificate of deposit remains liable to the holder. Far East Bank vs. Querimit, 373
SCRA 665 (2002)
Presentment for acceptance is not required for sight drafts. Presentment for acceptance
is required if the draft is payable after sight or in any other case, when presentment for
acceptance is necessary to fix the maturity of the instrument or when the bill expressly
so stipulates or when the bill is drawn payable elsewhere than at the residence or place
of business of the drawee. Prudential Bank vs. Court of Appeals, 216 SCRA 257
(1992)
Under the Negotiable Instruments Law, an instrument not payable on demand must be
presented for payment on the day it falls due. When the instrument is payable on
demand, presentment must be made within a reasonable time after its issue. In the case
of a bill of exchange, presentment is sufficient if made within a reasonable time after
the last negotiation thereof. International Corporate Bank vs. Gueco, 351 SCRA 516
(2001)
While delivery of a check produces the effect of payment only when it is encashed, the
rule is otherwise if the debtor was prejudiced by the creditors unreasonable delay in
presentment. Acceptance of a check implies an undertaking of due diligence in
presenting it for payment. If no such presentment was made, the drawer cannot be held
liable irrespective of loss or injury sustained by the payee. Payment will be deemed
effected and the obligation for which the check was given as conditional payment will
be discharged. Thus, when a party issued a check in payment of the purchase price of a
property pursuant to a compromise agreement duly approved by the court, the owner
and another person who are parties to the compromise agreement could not disregard
and set aside the sale three years after the compromise agreement. The fact that the
check tendered in payment of the property was never encashed could not be invoked
against the payor. Pio Barretto Realty Development Corporation vs. Court of
Appeals, 360 SCRA 127 (2001)
2. Parties to Whom Presentment for Payment Should Be Made
The effects of crossing a check relate to the mode of its presentment for payment.
Under Section 72 of the Negotiable Instruments Law, presentment for payment to be
sufficient must be made by the holder or by some person authorized to receive payment
on his behalf. Who the holder or authorized person is depends on the face of the check.
Associated Bank vs. Court of Appeals, 208 SCRA 465 (1992)
J. Notice of Dishonor
For a check to be dishonored upon presentation, on the one hand, and to be stale for not
being presented at all in time on the other hand, are incompatible developments that
naturally have variant legal consequences. Crytal vs. Court of Appeals, 71 SCRA 443
(1976)
Where a check issued by a depositor was dishonored for being drawn against an
uncollected deposit because the bank failed to send for clearing the check deposit to fund
that check, even though the check was deposited before the cutoff clearing time, the bank is
liable for damages. BPI vs. IAC, 219 SCRA 644 (1993)
A bank which dishonored checks issued by a depositor for insufficiency of funds cannot be
held liable for damages even if the depositor had sufficient funds in her savings accounts to
cover the checks drawn against the current account maintained with the same bank where
there was no evidence that the depositor had an arrangement with bank for the automatic
transfer of funds. Alunan vs. Traders Royal Bank, 230 SCRA 225 (1994)
A bank which dishonored a check issued by a depositor because at the time the checks
were processed for clearing the depositor had no sufficient funds in the account after the
processing of the checks is not liable for damages. A check, as distinguished from an
ordinary bill of exchange, is supposed to be drawn against a previous deposit of funds for it
is ordinarily intended for immediate payment. The depositor must personally keep track of
his available balance in the bank and not rely on the bank to notify him of the necessity to
fund certain checks he previously issued. A bank is under no obligation to make part
payment on a check, up to the amount of the drawers funds. Moran vs. Court of
Appeals, 230 SCRA 799 (1994)
Where two checks issued by a depositor were dishonored for lack of funds because he
erroneously filled up a deposit slip for local checks for a regional check he previously
deposited and, as result, the drawee bank erroneously presented the check for clearing at
the Central Bank and the regional check was dishonored, the drawee bank is guilty of
negligence and liable for damages to the depositor. A bank cannot exculpate itself from
liability for the consequence of the use of wrong deposit slip resulting in the misrouting of
a regional check to the Central Bank. The teller should not have accepted the local deposit
slip with the cashiers check that on its face was clearly a regional check without calling
the depositors attention for the mistake at the very moment it was presented to her. The
bank is not expected to be infallible, but it must bear the blame for not discovering the
mistake of its teller despite the established procedure requiring the papers and bank books
to pass through a battery of bank personnel whose duty it is to check and countercheck
them for possible errors. Tan vs. Court of Appeals, 239 SCRA 311 (1994)
The term "notice of dishonor" denotes that a check has been presented for payment and was
subsequently dishonored by the drawee bank. This means that the check must necessarily
be due and demandable because only a check that has become due can be presented for
payment and subsequently be dishonored. A postdated check cannot be dishonored if
presented for payment before its due date. Jaime Dico vs. Hon. Court of Appeals and
People of the Philippines, G.R. NO. 141669, February 28, 2005
1. Parties to Be Notified
Notice of dishonor to the corporation, which has a personality distinct and separate
from the officer of the corporation, does not constitute notice to the latter. The absence
of notice of dishonor necessarily deprives an accused an opportunity to preclude a
criminal prosecution. Lao vs. Court of Appeals, G.R. No. 119178, June 20, 1997
If the drawer or maker is an officer of a corporation, the notice of dishonor to the said
corporation is not notice to the employee or officer who drew or issued the check for
and in its behalf. Ofelia Marigomen vs. People of the Philippines, G.R. No. 153451,
May 26, 2005
Under the Negotiable Instruments Law, notice of dishonor is not required if the drawer
has no right to expect or require the bank to honor the check, or if the drawer has
countermanded payment. In the instant case, all the checks were dishonored for any of
the following reasons: "account closed", "account under garnishment", insufficiency of
funds", or "payment stopped." In the first three instances, the drawers had no right to
expect or require the bank to honor the checks, and in the last instance, the drawers had
countermanded payment. Great Asian Sales Center Corporation and Tan Chong
Lin vs. the Court of Appeals and Bancasia Finance and Investment Corporation,
G.R. No. 105774, April 25, 2002
When what was stamped on the check was Payment Stopped Funded and DAUD
which means drawn against uncollected deposits, the check was not issued without
sufficient funds and was not dishonored due to insufficiency of funds. Even with
uncollected deposits, the bank may honor the check at its discretion in favor of favored
clients, in which case there would be no violation of B. P. 22. Eliza T. Tan vs. People
of the Philippines, G.R. No. 141466, January 19, 2001
3. Effect of Notice
In the case of DAUD, the depositor has, on its face, sufficient funds in his account,
although it is not available yet at the time the check was drawn, whereas in DAIF, the
depositor lacks sufficient funds in his account to pay the check. Moreover, DAUD does
not expose the drawer to possible prosecution for estafa and violation of BP 22, while
DAIF subjects the depositor to liability for such offenses. Bank of the Philippine
Islands vs. Reynald R. Suarez, G.R. No. 167750, March 15, 2010
The failure of the prosecution to prove the existence and receipt by petitioner of the
requisite written notice of dishonor and that he was given at least five banking days
within which to settle his account constitutes sufficient ground for his acquittal in a
case for violation of BP 22. James Svendsen vs. People of the Philippines, G.R. NO.
175381, February 26, 2008
4. Form of Notice
A notice of dishonor received by the maker or drawer of the check is thus indispensable
before a conviction for violation of BP 22 can ensue. The notice of dishonor may be
sent by the offended party or the drawee bank, and it must be in writing. A mere oral
notice to pay a dishonored check will not suffice. The lack of a written notice is fatal
for the prosecution. Jaime Dico vs. Hon. Court of Appeals and People of the
Philippines, G.R. NO. 141669, February 28, 2005
Notice of dishonor is not required if the drawer has no right to expect or require the
bank to honor the check or if the drawer has countermanded payment. In the instant
case, all the checks were dishonored for any of the following reasons: account closed,
account under garnishment, insufficiency of funds, or payment stopped. In the
first three instances, the drawer had no right to except or require the bank to honor the
checks and in the last instance, the drawer had countermanded payment. Great Asian
Sales Corporation vs. Court of Appeals, 381 SCRA 557 (2002)
The holder of two checks which were dishonored because the drawer withdrew her
funds from the bank can hold the drawer liable even if no notice of dishonor was given
to the drawer, since the drawer had no right to expect that the drawee bank would honor
the checks. State Investment House, Inc. vs. Court of Appeals, 217 SCRA 32 (1993)
Mere delivery of a check does not discharge the obligation. The obligation is not
extinguished and remains suspended until the payment by commercial document is
actually realized. Thus, although the value of a check was deducted from the funds of
the drawer but the funds were never delivered to the payee because the drawee bank set
off the amount against the losses it incurred from the forgery of the drawers check, the
drawers obligation to the payee remains unpaid. Cebu International Finance
Corporation vs. Court of Appeals, 316 SCRA 488 (1999)
While Section 119 of the Negotiable Instruments Law in relation to Article 1231 of the
Civil Code provides that one of the modes of discharging a negotiable instrument is by
any other act which will discharge a simple contract for the payment of money, such as
novation, the acceptance by the holder of another check which replaced the dishonored
bank check did not result to novation. There are only two ways which indicate the
presence of novation and thereby produce the effect of extinguishing an obligation by
another which substitutes the same. First, novation must be explicitly stated and
declared in unequivocal terms as novation is never presumed. Secondly, the old and the
new obligations must be incompatible on every point. In the instant case, there was no
express agreement that the holders acceptance of the replacement check will discharge
the drawer and endorser from liability. Neither is there incompatibility because both
checks were given precisely to terminate a single obligation arising from the same
transaction. Anamer Salazar vs. JY Brothers Marketing Corporation, GR no.
171998, October 20, 2010
L. Material Alteration
1. Concept
The serial number is not an essential requisite for negotiability under Section 1 of the
Negotiable Instruments Law and an alteration of which is not material. The alteration of
the serial number does not change the relations between the parties. Philippine
National Bank vs. Court of Appeals, Capitol City Development Bank, Philippine
Bank of Communications, and F. Abante Marketing, G.R. No. 107508, April 25,
1996
Alterations of the serial numbers do not constitute material alterations on the checks.
Since there were no material alterations on the checks, respondent as drawee bank has
no right to dishonor them and return them to petitioner, the collecting bank. The
International Corporate Bank, Inc., vs. Court of Appeals and Philippine National
Bank, G.R. No. 129910, September 5, 2006
Payment made under materially altered instrument is not payment done in accordance
with the instruction of the drawer. When the drawee bank pays a materially altered
check, it violates the terms of the check, as well as its duty to charge its client's account
only for bona fide disbursements he had made. Since the drawee bank, in the instant
case, did not pay according to the original tenor of the instrument, as directed by the
drawer, then it has no right to claim reimbursement from the drawer, much less, the
right to deduct the erroneous payment it made from the drawer's account which it was
expected to treat with utmost fidelity. Metropolitan Bank and Trust Company vs.
Renato D. Cabilzo, G.R. No. 154469, December 6, 2006
Payment made under a materially altered instrument is not payment done in accordance
with the instructions of the drawer. Where the drawee bank pays a materially altered
check, (as when the amount was increased from P 1,000 to P 91,000), it violates the
terms of the check., as well as its duty to charge its clients account only for bona fide
disbursements he had made. Since the drawee bank did not pay according to the tenor
of the instrument, then it has no right to claim reimbursement from the drawer much
less the right to deduct the erroneous payment it made from the drawers account. The
drawee bank can not rely on the endorsement of the collecting bank to negate liability.
The corollary liability of such indorsement, if any, is separate and independent from the
liability of the drawee bank to the drawer. Such reliance is also offensive to the dictum
that being impressed with public interest, banks should exercise the highest degree of
diligence and should therefore lightly rely on the judgment of other banks on occasions
where its clients money were involved. Metropolitan Bank and Trust Company vs.
Cabilzo 510 SCRA 259 (2006)
When the drawee bank pays a materially altered check, it violates the terms of the
check, as well as its duty to charge its clients account only for bona fide disbursements
he had made. If the drawee did not pay according to the original tenor of the
instrument, as directed by the drawer, then it has no right to claim reimbursement from
the drawer, much less, the right to deduct the erroneous payment it made from the
drawers account which it was expected to treat with utmost fidelity. The drawee,
however, still has recourse to recover its loss. The collecting banks are ultimately liable
for the amount of the materially altered check. It cannot further pass the liability back
to Cesar and Lolita absent any showing in the negligence on the part of Cesar and
Lolita which substantially contributed to the loss from alteration. Cesar V. Areza and
Lolita B. Areza vs. Express Savings Bank, Inc., and Michael Potenciano, G.R. No.
176697, September 10, 2014
M. Acceptance
1. Definition
The acceptance of a bill is the signification by the drawee of his assent to the order of
the drawer. Prudential Bank, v. Intermediate Appellate Court, Philippine Rayon
Mills Inc.,and Anacleto R. Chi, G.R. No. 74886, December 8, 1992
Indeed, "acceptance" and "payment" are, within the purview of the law, essentially
different things, for the former is "a promise to perform an act," whereas the latter is the
"actual performance" thereof. In the words of the Law, "the acceptance of a bill is the
signification by the drawee of his assent to the order of the drawer," which, in the case
of checks, is the payment, on demand, of a given sum of money. Philippine National
Bank vs. the Court of Appeals and Philippine Commercial and Industrial Bank,
G.R. No. L-26001, October 29, 1968
While indeed, it cannot be said that managers and cashiers checks are pre-cleared,
clearing should not be confused with acceptance. Managers and cashiers checks are still
the subject of clearing to ensure that the same have not been materially altered or
otherwise completely counterfeited. However, managers and cashiers checks are pre-
accepted by the mere issuance thereof by the bank, which is both its drawer and drawee.
Thus, while managers and cashiers checks are still subject to clearing, they cannot be
countermanded for being drawn against a closed account, for being drawn against
insufficient funds, or for similar reasons such as a condition not appearing on the face of
the check. Long standing and accepted banking practices do not countenance the
countermanding of managers and cashiers checks on the basis of a mere allegation of
failure of the payee to comply with its obligations towards the purchaser. On the contrary,
the accepted banking practice is that such checks are as good as cash. Metropolitan
Bank and Trust Company vs. Wilfred N. Chiok G.R. No. 172652 November 26, 2014
2. Manner
When a check had been certified by the drawee bank, such certification is equivalent
to acceptance because it enables the holder to use it as money. Also, where a holder
procures a check to be certified, the check operates as an assignment of a part of the
funds to the creditor. New Pacific Timber vs. Seneris, 101 SCRA 686, 1980)
Acceptance may be done in writing by the drawee in the bill itself, or in a separate
instrument. Prudential Bank vs. Intermediate Appellate Court, Philippine Rayon
Mills Inc. and Anacleto R. Chi, G.R. No. 74886, December 8, 1992
1. Time/Place/Manner of Presentment
While it is true that the delivery of a check produces the effect of payment only when it
is encashed, pursuant to Art. 1249 of the Civil Code, the rule is otherwise if the debtor
is prejudiced by the creditors unreasonable delay in presentment. After more than ten
(10) years from the payment in part by cash and in part by check, the presumption is
that the check had been encashed, and the failure to encash for more than ten (10) years
undoubtedly resulted in the impairment of the check through unreasonable and
unexplained delay on the part of the payee. Myron C. Papa vs. A.U. Valencia & Co.,
Inc., et al. G.R. No. 105188. January 23, 1998
O. Promissory Notes
Where an instrument containing the words I promise to pay is signed by two or more
persons, they are deemed to be jointly and severally liable thereon. Under Section 17
(g) of the Negotiable Instrument Law and Art. 1216 of the Civil Code, where the
promissory note was executed jointly and severally by two or more persons, the payee
of the promissory note had the right to hold any one or any two of the signers of the
promissory note responsible for the payment of the amount of the note. Philippine
National Bank vs. Concepcion Mining Company, Inc., et al., G.R. No. L-16968.
July 31, 1962.
The buyer of a car shall be liable to pay the unpaid balance on the promissory note and
not just the installments due and payable before the said automobile was carnapped.
Being the principal contract, the promissory note is unaffected by whatever befalls the
subject matter of the accessory contract. Perla Compania De Seguros, Inc.,vs. the
Court of Appeals, Herminio Lim And Evelyn Lim, G.R. No. 96452, May 7, 1992
When a promissory note expresses "no time for payment," it is deemed "payable on
demand. Jose L. Ponce de leon vs. Rehabilitation Finance Corporation, G.R. No.
L-24571, December 18, 1970
The drawer of a check who had a balance of P1,144,760.00 in his account could not be
convicted of estafa because of the dishonor of his check for lack of funds where the
check indicated the amount of P1,000,200.00 in words and the amount of
P1,200,000.00 in figure, since under Section 17 of the Negotiable Instruments Law, in
case of ambiguity between the sum denoted in words and in figures, the amount in
words should prevail. However, this rule of interpretation could not be favorable to the
accused who engaged in ponzi scheme and represented to an investor that an
investment of 150,000 would become P 1,200,000 in 21 days. People of the
Philippines vs. Martin L. Romero and Ernesto C. Rodriguez, G.R. No. 112985,
April 21, 1999
An instrument which begins with I, We, or Either of us promise to pay, when signed by
two or more persons, makes them solidarily liable. Also, the phrase joint and several
binds the makers jointly and individually to the payee so that all may be sued together
for its enforcement, or the creditor may select one or more as the object of the suit.
Astro Electronics Corp. and Peter Roxas vs. Philippine Export and Foreign Loan
Guarantee Corporation, G.R. No. 136729, September 23, 2003
P. Checks
1. Definition
Settled is the doctrine that a check is only a substitute for money and not money; hence,
the delivery of such an instrument does not, by itself, operate as payment. This is
especially true in case of post-dated check. Thus, the issuance of a post-dated check
was not an effective payment. It did not comply with the cardholders obligation to pay
his past due credit card charges. Consequently, the card company was justified in
suspending his credit card. BPI Card Corporation vs. Court of Appeals, 296 SCRA
260 (1998)
2. Kinds
Under accepted banking practice, crossing a check is done by writing two parallel lines
diagonally on the left top portion of the checks. The crossing is special where the name
of a bank or a business institution is written between the two parallel lines, which
means that the drawee should pay only with the intervention of that company. The
crossing is general where the words written between the two parallel lines are "and Co."
or "for payees account only," which means that the drawee bank should not encash the
check but merely accept it for deposit. Associated Bank and Conrado Cruz, vs. Hon.
Court of Appeals, and Merle V. Reyes, doing business under the name and style
"Melissas RTW", G.R. No. 89802, May 7, 1992
The effects of crossing a check are: (1) that the check may not be encashed but only
deposited in the bank; (2) that the check may be negotiated only once to one who
has an account with a bank; and (3) that the act of crossing the check serves as a
warning to the holder that the check has been issued for a definite purpose so that he
must inquire if he has received the check pursuant to that purpose. State Investment
House vs. IAC, 175 SCRA 310 (1989)
A memorandum check is an evidence of debt against the drawer and although may not
be intended to be presented, has the same effect as an ordinary check and if passed on
to a third person, will be valid in his hands like any other check. People vs. Nitafan,
G.R. No. 75954, October 22, 1992
A cashiers check is a primary obligation of the issuing bank and accepted in advance
by its mere issuance. By its very nature, a cashiers check is the banks order to pay
drawn upon itself, committing in effect its total resources, integrity and honor behind
the check. A cashiers check by its peculiar character and general use in the commercial
world is regarded substantially to be as good as the money which it represents. Tan vs.
Court of Appeals, G.R. No. 108555, December 20, 1994
While its manager forged the signature of the authorized signatories of clients in the
application for managers checks and forged the signatures of the payees thereof, the
drawee bank also failed to exercise the highest degree of diligence required of banks in
the case at bar. It allowed its manager to encash the Managers checks that were plainly
crossed checks. A crossed check is one where two parallel lines are drawn across its
face or across its corner. Based on jurisprudence, the crossing of a check has the
following effects: (a) the check may not be encashed but only deposited in the bank; (b)
the check may be negotiated only once to the one who has an account with the bank;
and (c) the act of crossing the check serves as a warning to the holder that the check has
been issued for a definite purpose and he must inquire if he received the check pursuant
to this purpose; otherwise, he is not a holder in due course. In other words, the crossing
of a check is a warning that the check should be deposited only in the account of the
payee. When a check is crossed, it is the duty of the collecting bank to ascertain that the
check is only deposited to the payees account. Philippine Commercial International
Bank vs. Balmaceda, G.R. No. 158143, September 21, 2011
A judgment creditor cannot validly refuse acceptance of the payment of the judgment
obligation tendered in the form of a cashiers check. A cashiers check issued by a bank
of good standing is deemed as cash. New Pacific Timber vs. Seneris, G.R. No. 41764,
December 19, 1980
The obligation of the judgment debtor subsists when the check issued by a judgment
debtor was made payable to the sheriff who encashed the same but failed to deliver its
proceeds to the judgment creditor. This is because a check does not produce the effect
of payment until encashed. Philippine Airlines vs. Court of Appeals, G.R. No. 49188,
January 30, 1990
Tendering a check on the last day of the grace period to pay the purchase price is not
valid and a seller has a right to cancel the contract. A check, be it a managers check or
ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a
valid tender of payment and may be refused by the creditor. Bishop of Malolos vs.
Intermediate Appellate Court, G.R. No. 72110, November 16, 1990
A check may be used for the exercise of the right of redemption, the same being a right
and not an obligation. Fortunado vs. Court of Appeals, 196 SCRA 26 (1991)
The judgment creditor may validly refuse the tender of payment partly in check and
partly in cash. A cashiers check tendered by the judgment debtor to satisfy the
judgment debt is not a legal tender. Tibajia, Jr. vs. Court of Appeals, G.R. No.
100290, June 4, 1993
A check does not constitute legal tender, but once the creditor accepted a fully funded
check to settle an obligation, he is estopped from later on denouncing the efficacy of
such tender of payment. By accepting the tendered check and converting it into money,
the creditor is presumed to have accepted it as payment and to hold otherwise would be
inequitable and unfair to the obligor. Far East Bank & Trust Company vs. Diaz
Realty, Inc., G.R. No. 138588, August 23, 2001
A stale check is one which has not been presented for payment within a reasonable time
after its issue. It is valueless and, therefore, should not be paid. International
Corporate Bank vs. Sps. Francis S. Gueco and Ma. Luz E. Gueco, G.R. No.
141968, February 12, 2001
Where a managers check made payable to cash and appearing regular on its face,
was presented to another bank that immediately honors it no fault may be attributed to
such bank in relying upon the integrity of the check, even if payment thereon was later
ordered stopped by the drawer-bank because the one who encashed the check was
actually not the intended payee. In other words, as between the bank that honored the
managers check and the drawer-bank, it is the latter that should bear the loss. Security
Bank and Trust Company vs. Rizal Commercial Banking Corporation, G.R. No.
170984, January 30, 2009
Clearing should not be confused with acceptance. Managers and cashiers checks are
still the subject of clearing to ensure that the same have not been materially altered or
otherwise completely counterfeited. However, managers and cashiers checks are pre-
accepted by the mere issuance thereof by the bank, which is both its drawer and
drawee. Thus, while managers and cashiers checks are still subject to clearing, they
cannot be countermanded for being drawn against a closed account, for being drawn
against insufficient funds, or for similar reasons such as a condition not appearing on
the face of the check. Long standing and accepted banking practices do not
countenance the countermanding of managers and cashiers checks on the basis of a
mere allegation of failure of the payee to comply with its obligations towards the
purchaser. On the contrary, the accepted banking practice is that such checks are as
good as cash. However, in view of the peculiar circumstances of the case at bench, We
are constrained to set aside the foregoing concepts and principles in favor of the
exercise of the right to rescind a contract upon the failure of consideration thereof.
Metropolitan Bank and Trust Company vs. Wilfred N. Chiok, G.R. No. 172652,
G.R. No. 175302, G.R. No. 175394, November 26, 2014
a. Time
A check must be presented for payment within a reasonable time after its issue, and
in determining what is a reasonable time, regard is to be had to the nature of the
instrument, the usage of trade or business with respect to such instruments and the
facts of the particular case. The test is whether the payee employed such diligence
as a prudent man exercise in his own affairs. This is because the nature and theory
behind the use of a check points to its immediate use and payability. International
Corporate Bank vs. Sps. Francis S. Gueco and Ma. Luz E. Gueco, G.R. No.
141968, February 12, 2001
b. Effect of Delay
Failure to present for payment within a reasonable time will result to the discharge
of the drawer only to the extent of the loss caused by the delay. Failure to present
on time, thus, does not totally wipe out all liability. In fact, the legal situation
amounts to an acknowledgment of liability in the sum stated in the check. In this
case, the debtors have not alleged, much less shown that they or the bank which
issued the managers check has suffered damage or loss caused by the delay or non-
presentment. Definitely, the original obligation to pay certainly has not been erased.
International Corporate Bank vs. Sps. Francis S. Gueco and Ma. Luz E.
Gueco, G.R. No. 141968, February 12, 2001
Q. Miscellaneous Topics
1. Negotiable instrument as mode of payment
A judgment creditor cannot validly refuse acceptance of the payment of the judgment
obligation consisting of a cashiers check. This is because a cashiers check issued by a
bank of good standing is deemed as cash. Moreover, since the said check had been
certified by the drawee bank, such certification is equivalent to acceptance. The object
of certifying a check, as regards both parties, is to enable the holder to use it as money.
Where the holder procures the check to be certified, the check operates as an
assignment of a part of the funds to the creditor. New Pacific Timber vs. Seneris, 101
SCRA 686 (1980) (See however, Tibajia, Jr, vs. Court of appeals, infra)
Where the check issued by a judgment debtor was made payable to the sheriff who
encashed the same but failed to deliver the proceeds thereof to the judgment creditor,
the obligation of the judgment debtor subsists. This is because a check does not produce
the effect of payment until encashed. Philippine Airlines vs. Court of Appeals, 181
SCRA 557 (1990)
Since a negotiable instrument is only a substitute for money, the delivery of such
instrument does not, by itself, operate as payment. A check whether a managers check
or ordinary check, is not legal tender, and an offer of a check in payment of a debt is
not a valid tender of payment and may be refused by the creditor. Thus, the tender of a
check by the buyer on the last day of the grace period to pay the purchase price was not
valid for failure to comply with the requisite payment in legal tender or currency
stipulated. Consequently, the seller is within its right to cancel the contract. Roman
Catholic Bishop of Malolos vs. Intermediate Appelate Court, 191 SCRA 411 (1990)
A check may be used for the exercise of the right of redemption, the same being a
right and not an obligation. Fortunado vs. Court of Appeals, 196 SCRA 26 (1991)
A cashiers check tendered by the judgment debtor to satisfy the judgment debt is not a
legal tender and as such the judgment creditor may validly refuse the tender of payment
partly in check and partly in cash. Tibajia, jr. vs. Court of Appeals, 223 SCRA 163
(1993)
A cashiers check is a primary obligation of the issuing bank and accepted in advance
by its mere issuance. By its very nature, a cashiers check is the banks order to pay
drawn upon itself, committing in effect its total resources, integrity and honor behind
the check. A cashiers check by its peculiar character and general use in the commercial
world is regarded substantially to be as good as the money which it represents. When
the payee of a cashiers check deposited the same with another bank, the issuing bank
created an unconditional credit in favor of the collecting bank. Thus, the payee is
entitled to damages when he issued a check which was dishonored because the
cashiers check he deposited was not credited to his account. The fact that the payee
erroneously accomplished the deposit slip resulting in the misrouting of the check is not
a valid defense. Tan vs. Court of Appeals, 239 SCRA 310 (1994)
Where the seller to whom a check was issued as payment for a parcel of land did not
encash the check after more than ten years from issuance, the payment should be
deemed effected, because the check was impaired through the fault of the payee.
Consequently, the seller may be compelled to deliver to the buyer the title on the
property. Papa vs. A.U Valencia & Co., Inc. vs. 284 SCRA 643 (1998)
Settled is the doctrine that a check is only a substitute for money and not money; hence,
the delivery of such an instrument does not, by itself, operate as payment. This is
specially true in case of post-dated check. Thus, the issuance of a post-dated check was
not an effective payment. It did not comply with the cardholders obligation to pay his
past due credit card charges. Consequently, the card company was justified in
suspending his credit card. BPI Express Card Corporation vs. Court of Appeals, 296
SCRA 260 (1998)
Mere delivery of a check does not discharge the obligation. The obligation is not
extinguished and remains suspended until the payment by commercial document is
actually realized. Thus, although the value of a check was deducted from the funds of
the drawer but the funds were never delivered to the payee because the drawee bank set
off the amount against the losses it incurred from the forgery of the drawers check, the
drawers obligation to the payee remains unpaid. Cebu International Finance
Corporation vs. Court of Appeals, 316 SCRA 488 (1999)
In depositing the check in his name, the depositor did not become the outright owner of
the amount stated therein. By depositing the check with the bank, the depositor was, in
a way, merely designating the bank as the collecting bank. This is in consonance with
the rule that a negotiable instrument, such as a check, whether a managers check or
ordinary check, is not legal tender. As such, after receiving the deposit, under its own
rules, the bank shall credit the amount to the depositors account or infuse value thereon
only after the drawee bank shall have paid the amount of the check or the check has
been cleared for deposit. The depositors contention that after the lapse of the 35-day
period the amount of a deposited check could be withdrawn even in the absence of a
clearance thereon, otherwise it could take a long time before a depositor could make a
withdrawal is untenable. Said practice amounts to a disregard of the clearance
requirement of the banking system. Bank of the Philippine Islands vs. Court of
Appeals, 326 SCRA 641 (2000)
A stale check is one which has not been presented for payment within a reasonable time
after its issue. It is valueless and, therefore, should not be paid. Under the Negotiable
Instruments Law, an instrument not payable on demand must be presented for payment
on the day it falls due. When the instrument is payable on demand, presentment must be
made within a reasonable time after its issue. In the case of a bill of exchange,
presentment is sufficient if made within a reasonable time after the last negotiation
thereof.
A check must be presented for payment within a reasonable time after its issue, and in
determining what is a reasonable time, regard is to be had to the nature of the
instrument, the usage of trade or business with respect to such instruments and the
facts of the particular case. The test is whether the payee employed such diligence as a
prudent man exercise in his own affairs. This is because the nature and theory behind
the use of a check points to its immediate use and payability. In a case, a check payable
on demand which was long overdue by about two and a half years was considered a
stale check. Also, failure of a payee to encash a check for more than 10 years
undoubtedly resulted in the check becoming stale.
In the case at bar, however, the check involved is not an ordinary bill of exchange but a
managers check. A managers check is one drawn by the banks manager upon the
bank itself. It is similar to a cashiers check both as to effect and use. A cashiers check
is a check of the banks cashier on his own or another check. In effect, it is a bill of
exchange drawn by a cashier of a bank upon the bank itself, and accepted in advance by
the act of its issuance. It is really the banks own check and may be treated as a
promissory note with the bank as a maker. The check becomes the primary obligation
of the bank which issues it and constitutes its written promise to pay upon demand.
The mere issuance of it is considered as acceptance thereof. If treated as promissory
note, the drawer would be the maker and in which case the holder need not prove
presentment for payment or present the bill to the drawee for acceptance.
In a case where the Bank and the defendant entered into a compromise agreement to
settle the unpaid obligation of the defendant and that pursuant thereto, the defendant
delivered a managers check but which the Bank held because of the refusal of the
defendant to execute a joint motion to dismiss, the fact that the managers check had
become stale did not extinguish the obligation of the defendant. Even assuming that
presentment is needed, failure to present for payment within a reasonable time will
result to the discharge of the drawer only to the extent of the loss caused by the delay.
Failure to present on time, thus, does not totally wipe out all liability. In fact, the legal
situation amounts to an acknowledgement of liability in the sum stated in the check. In
this case, the debtors have not alleged, much less shown that they or the bank which
issued the managers check has suffered damage or loss caused by the delay or non
presentment. Definitely, the original obligation to pay certainly has not been erased.
International Corporate Bank vs. Gueco, 351 SCRA 516 (2001)
A check does not constitute legal tender, and that a creditor may validly refuse to
accept it if tendered as payment. In other words, the creditor has the option and the
discretion of refusing or accepting it. However, once the creditor accepted a fully
funded check after the debtors manifestation that it had been given to settle an
obligation, he is estopped from later on denouncing the efficacy of such tender of
payment. By accepting the tendered check and converting it into money, the creditor is
presumed to have accepted it as payment. To hold otherwise would be inequitable and
unfair to the obligor. xxx That the debtor subsequently withdrew the money from the
creditor (bank) is of no moment, because such withdrawal will not affect the efficacy
or the legal ramifications of the tender of payment duly made. There being a valid
tender of payment, the accrual of interest based on the stipulated rate should stop on the
date of the tender. Far East Bank & Trust Company vs. Diaz Realty, Inc., 363
SCRA 596 (2001)
In general, a managers check is not legal tender. The creditor has the option of refusing
or accepting it. However, payment in check by the debtor may be acceptable as valid, if
no prompt objection to said payment is made. Consequently, the debtors tender of
payment in the form of managers check is valid. Thus, where the seller of real property
tendered the return of the reservation fee in the form of managers check because the
sale agreement was not fully consummated owing to the failure of the buyer to pay the
balance of the purchase price within the stipulated period, the tender of the managers
check was considered a valid tender of payment. When the buyer refused to accept the
check, the consignation of the check with the court was sufficient to satisfy the
obligation. Pabugais vs. Sahijiwani, 423 SCRA 596 (2004)
A managers check stands on the same footing as a certified check under the Negotiable
Instruments Law, and as such, is deemed accepted in advance by drawer-bank through
the mere act of its issuance.
Thus, where a managers check, made payable to cash and appearing regular on its
face, was presented to another bank that immediately honors itno fault may be
attributed to such bank in relying upon the integrity of the check, even if payment
thereon was later ordered stopped by the drawer-bank because the one who encashed
the check was actually not the intended payee. In other words, as between the bank that
honored the managers check and the drawer-bank, it is the latter that should bear the
loss. Security Bank and Trust Company vs. Rizal Commercial Banking
Corporation 577 SCRA 407 (2009)
To hold a person liable under B.P. Blg. 22, it is not enough to establish that a check
issued was subsequently dishonored. It must be shown further that the person who
issued the check knew at the time of issue that he does not have sufficient funds in or
credit with the drawee bank for the payment of such check in full upon its
presentment. Because this element involves a state of mind, Section 2 of BP Blg. 22
creates a prima facie presumption that the issuer knew of the insufficiency of funds. It
must be shown that he or she received a notice of dishonor and, within five banking
days thereafter, failed to satisfy the amount of the check or make arrangement for its
payment. If such notice of non-payment by the drawee bank is not sent to the maker or
drawer of the bum check, or if there is no proof as to when such notice was received by
the drawer, then the presumption of prima facie evidence as provided in Section 2 of
BP 22 cannot arise, since there would simply be no way of reckoning the crucial 5-day
period. Danao vs. Court of Appeals, 358 SCRA 450 (2001)
The ninety (90) day period from due date within which the check must be presented for
payment is not among the elements of the offense under BP 22. Section 2 of BP 22 is
clear that a dishonored check presented within the ninety (90) day period creates a
prima facie presumption of knowledge of insufficiency of funds, which is an essential
element of the offense. Since knowledge involves a state of mind difficult to establish,
the statute itself creates a prima facie presumption of the existence of this element from
the fact of drawing, issuing or making a check, the payment of which was subsequently
refused for insufficiency of funds. The term prima facie evidence denotes evidence
which, if unexplained or uncontradicted, is sufficient to sustain the proposition it
supports or to establish the facts, or to counterbalance the presumption of innocence to
warrant a conviction.
An indorser who passes a bad check may be held liable under BP 22, even though the
presumption of knowledge does not apply to him, if there is evidence that at the time of
indorsement, he was aware of the insufficiency of funds. The presumption in Section 2
was intended to facilitate proof of knowledge and not to foreclose admissibility of other
evidence that may also prove such knowledge. Thus, the only consequence of the
failure to present the check for payment within 90 days from the dated stated is that
there arises no prima facie presumption of knowledge of insufficiency of funds. But the
prosecution may still prove such knowledge through other evidence. Bautista vs.
Court of Appeals, 360 SCRA 618 (2001)
The law has made the mere act of issuing bum check a malum prohibitum, an act
proscribed by the legislature for being deemed pernicious and inimical to public
welfare. The gravamen of the offense under this law is the act of issuing a worthless
check or a check that is dishonored upon its presentment for payment. Thus, even if
there had been payment, through compensation or offset or some other means, there
could still be prosecution for violation of BP 22. Tan vs. Mendez, Jr., 383 SCRA 202
(2002)
A check issued as an evidence of debt though not intended for encashment, has the
same effect like any other check and is within the contemplation of BP 22. The law
does not appear to concern itself with what might actually be envisioned by the parties,
its primordial intention being to instead ensure the stability and commercial value of
checks as being virtual substitutes for currency. It is not required much less
indispensable, for the prosecution to present the drawee banks representative as a
witness to testify on the dishonor of the checks because of insufficiency of funds. The
prosecution may present, as it did in this case, only complainant as a witness to prove
all the elements of the offense charged. Recuerdo vs. People of the Philippines, 395
SCRA 638 (2003)
The language of BP Blg. 22 is broad enough to cover all kinds of checks, whether
present dated or postdated, or whether issued in payment of pre-existing obligations or
given in mutual or simultaneous exchange for something of value. The claim that BP
Blg. 22 does not include postdated check and cases of closed accounts has no leg to
stand on. The term closed account is within the meaning of the phrase does not have
sufficient funds in or credit with the drawee bank. For liability to attach under BP 22,
prosecution must establish that checks were issued, the same were subsequently
dishonored and that the issuer at the time of the checks issuance had knowledge that he
did not have enough funds or credit in the bank upon presentment thereof. The
presumption that the issuer had knowledge of the insufficiency of funds is brought into
existence only after it is proved that the issuer had received a notice of dishonor and
that within five days from receipt thereof, he failed to pay the amount of the check or to
make arrangement for its payment. Failure of the prosecution to prove that the accused
received the requisite notice of dishonor is a clear ground of acquittal. Yu Oh vs.
Court of Appeals, 403 SCRA 300 (2003)
3. Clearing Rules
Under its rules and regulations, PCHC has jurisdiction over a case even if the checks
subject of litigation are admittedly non-negotiable. However, where a bank stamped its
guarantee on the back of checks and subsequently presented them for clearing, it is
estopped from raising the defense of non-negotiability, because it assumed the
liabilities of an endorser. Banco de Oro vs. Equitable Banking Corp, 157 SCRA 188
(1988)
A third party complaint of one bank against another involving check cleared through
the Philippine Clearing House Corporation (PCHC) is unavailing, unless the third-party
claimant has first exhausted the arbitral authority of the PCHC Arbitration Committee
and obtained a decision from said body adverse to its claim. Allied Banking
Corporation vs. Court of Appeals, 321 SCRA 563 (1999)
A party aggrieved by an arbitral award of the PCHC may choose among any of the
following remedies: a.) filing a petition to vacate arbitral award in the Regional Trial
Court, pursuant to the Arbitration Law, b.) filing a petition for review in the Court
Appeals, under Rule 43 of the Rules of Court, and c) filing a petition for certiorari
under Rule 65 before the Court of Appeals, in case the arbitral award is impressed with
grave abuse of discretion. The filing of a petition for review with the RTC, albeit
provided by the PCHC Rules on Arbitration, is not the appropriate remedy. Since the
Rules of Procedure for Arbitration of the Philippine Clearing House Corporation
(PCHC) only came about as a result of a mere agreement between and among member
banks of the PCHCsuch rules cannot validly confer jurisdiction on the Regional Trial
Courts to review arbitral awards of the former. It is a well settled principle that
jurisdiction over the subject matter can only be conferred by law, and can never be
determined by consent or acquiescence of the parties Metropolitan Bank & Trust
Company vs. Court of Appeals, 579 SCRA (2009)
A. Concept of Insurance
In insurance law, the indemnity agreement and the pledge agreement are two different
securities. An action instituted, therefore, against the guarantors does not release or
extinguish the lien of an insurer against the shares of stock pledged in its favor. Gidwani
vs. Domestic Insurance Company of the Philippines, 122 SCRA 732 (1983)
One test in order to determine whether one is engaged in insurance business is whether the
assumption of risk and indemnification of loss (which are elements of an insurance
business) are the principal object and purpose of the organization or whether they are
merely incidental to its business. If these are the principal objectives, the business is that of
insurance. But if they are merely incidental and service is the principal purpose, then the
business is not insurance. In this case, Health Maintenance Organizations (HMOs) are not
insurance business. Philippine Health Care Providers, Inc. vs. Commissioner of
Internal Revenue, G.R. No. 167330, September 18, 2009
The contract of insurance is one of perfect good faith (uferrimal fidei) not for the insured
alone, but equally so for the insurer; in fact, it is mere so for the latter, since its dominant
bargaining position carries with it stricter responsibility. Qua Chee Gan v. Law Union, 98
Phil 85, 1955
Being a contract of adhesion, terms of a policy are to be construed strictly against the party
which prepared the contract - the insurer. By reason of exclusive control of insurance
contract, ambiguity must be strictly interpreted against the insurer and liberally in favor of
the insured, especially to avoid forfeiture. Philamcare Health System vs. Court of
Appeals, 379 SCRA 356 (2002)
Contracts of insurance, like other contracts, are to be construed according to the sense and
meaning of the terms which the parties themselves have used. If such terms are clear and
unambiguous, they must be taken and understood in their plain, ordinary and popular sense.
Accordingly, in interpreting the exclusions in an insurance contract, the terms used
specifying the excluded classes therein are to be given their meaning as understood in
common speech. A contract of insurance is a contract of adhesion. So, when the terms of
the insurance contract contain limitations on liability, courts should construe them in such a
way as to preclude the insurer from non-compliance with his obligation. Alpha Insurance
and Surety Co. vs. Castor, GR No. 198174, September 2, 2013
Under Sec. 2(a) of the Insurance Code, an insurance contract is an agreement whereby one
undertakes for a consideration to indemnify another against loss, damage or liability arising
from an unknown or contingent event, and with the following elements: 1.) Insured has an
insurable interest; 2.) Insured is subject to a risk of loss by the happening of the designated
peril; 3.) Insurer assumes risk; 4.) 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 5.) In
consideration of the insurers promise, the insured pays a premium. Philamcare Health
System vs. Court of Appeals, 379 SCRA 432 (1997)
For purposes of determining the liability of a health care provider to its members, a health
care agreement is 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. Limitations as to liability must be
distinctly specified and clearly reflected in the extent of coverage which the company
voluntary assume, otherwise, any ambiguity arising therein shall be construed in favor of
the member. Being a contract of adhesion, the terms of an insurance contract are to be
construed strictly against the party which prepared the contract - the insurer. This is
equally applicable to Health Care Agreements. The phraseology used in medical or
hospital service contracts, such as standard charges must be liberally construed in favor
of the subscriber, and if doubtful or reasonably susceptible of two interpretations the
construction conferring coverage is to be adopted, and exclusionary clauses of doubtful
import should be strictly construed against the provider. Thus, if the member, while on
vacation, underwent a procedure in the USA, the standard charges referred to in the
contract should mean standard charges in USA and not the cost had the procedure been
conducted in the Philippines. Fortune Medicare Inc. vs. Amorin, G.R. No. 195872,
March 12, 2014
A guarantee bond loses its force upon termination of the certificate to transact insurance
business of the issuing surety company although it does not have the effect of annulling
such bond. But considering that the bondsmens authority to continue doing business has
been suspended, it becomes doubtful whether the winning party can still recover on said
bonds. Santiago Syjuco, Inc. vs. Tecson, 116 SCRA 685 (1982)
Contracts of insurance are construed liberally in favor of the insured and strictly against the
insurer. National Power Corporation vs. Court of Appeals, 145 SCRA 533 (1986)
Insurers promise of rebate to the insured which is prohibited by law may not be enforced
by the courts. Section 361 of PD 612 prohibits insurance companies from giving or paying
to the insured any form of commission or rebate of premium. Lumibao vs. Intermediate
Appellate Court, 189 SCRA 469 (1990)
The only persons entitled to claim the insurance proceeds are either the insured, if still
alive; or the beneficiary, if the insured is already deceased, upon the maturation of the
policy. The exception to this rule is a situation where the insurance contract was intended
to benefit third persons who are not parties to the same in the form of favorable stipulations
or indemnity. In such a case, third parties may directly sue and claim from the insurer.
Because no legal proscription exists in naming as beneficiaries the children of illicit
relationships by the insured, the shares of Eva in the insurance proceeds, whether forfeited
by the court in view of the prohibition on donations under Article 739 of the Civil Code or
by the insurers themselves for reasons based on the insurance contracts, must be awarded to
the said illegitimate children, the designated beneficiaries, to the exclusion of heirs. Heirs
Of Loreto c. Maramag vs. Eva Verna De Guzman Maramag, et al., G.R. No. 181132,
June 5, 2009
D. Classes
1. Marine
The evidence shows that the loss of the cargo was due to the perils of the ship; that the
sinking of the barge was due to improper loading of the logs on one side so that the
barge was tilting on one side and for that it did not navigate on even keel; that it was no
longer seaworthy that was why it developed leak. A loss which, in the ordinary course
of events, results from the natural and inevitable action of the sea, from the ordinary
wear and tear of the ship, or from the negligent failure of the ship's owner to provide
the vessel with proper equipment to convey the cargo under ordinary conditions, is not
a peril of the sea but such a loss is rather due to what has been aptly called the 'peril of
the ship.' The insurer undertakes to insure against perils of the sea and similar perils,
not against perils of the ship. Isabela Roque, doing business under the name and
style of Isabela Roque Timber Enterprises, et al., vs. The Intermediate Appellate
Court, et al., G.R. No. L-66935, November 11, 1985
The rusting of steel pipes in the course of a voyage is a peril of the sea in view of the
toll on the cargo of wind, water, and salt conditions. Cathay Insurance Co., vs. The
Court of Appeals, et al., G.R. No. L-76145, June 30, 1987
A marine insurance policy providing that the insurance was to be against all risks
must be construed as creating a special insurance and extending to other risks than are
usually contemplated, and covers all losses except such as arising from the fraud of the
insured. The burden of the insured, therefore, is to prove merely that the goods he
transported have been lost, destroyed or deteriorated and thereafter, the burden is
shifted to the insurer to prove that the loss was due to excepted perils. In the present
case, there being no showing that the loss was caused by any of the excepted perils, the
insurer is liable under the policy. Filipino Merchants Insurance Co., Inc., vs. Court
Of Appeals, et al., G.R. No. 85141, November 28, 1989
An all risks provision of a marine policy creates a special type of insurance which
extends coverage to risks not usually contemplated and avoids putting upon the insured
the burden of establishing that the loss was due to peril falling within the policys
coverage. The insurer can avoid coverage upon demonstrating that a specific provision
expressly excludes the loss from coverage but in this case, the damage caused to the
cargo has not been attributed to any of the exceptions provided for nor is there any
pretension to this effect. Choa Tiek Seng, doing business under the name and style
of Sengs Commercial Enterprises vs. The Court of Appeals, et al., G.R. No. 84507,
March 15, 1990
Fire may not be considered a natural disaster or calamity since it almost always arises
from some act of man or by human means. It cannot be an act of God unless caused by
lightning or a natural disaster or casualty not attributable to human agency. In the case
at bar, it is not disputed that a small flame was detected on the acetylene cylinder and
that by reason thereof, the same exploded despite efforts to extinguish the fire. Verily,
the cause of the fire was the fault or negligence of ESLI. Philippine Home Assurance
Corporation vs. Court of Appeals, G.R. No. 106999, June 20, 1996
In every marine insurance policy the vessel impliedly warrants to the assurer that the
vessel is seaworthy and such warranty is as much a term of the contract as if expressly
written on the face of the policy. Hence, it becomes the obligation of the cargo owner to
look for a reliable common carrier which keeps its vessels in seaworthy condition. In
policies where the law will generally imply a warranty of seaworthiness, such warranty
can only be executed by writing the terms in the policy in the clearest language. The
result of the admission of seaworthiness by the assurer may mean one or two things: (a)
that the warranty of the seaworthiness is to be taken as fulfilled; or (b) that the risk of
unseaworthiness is assumed by the insurance company. Philippine American General
Insurance Co., Inc. vs. Court of Appeals, 273 SCRA 262 (1997)
An all risks insurance policy covers all kinds of loss other than those due to
willful and fraudulent act of the insured. Filipino Merchants Co.Inc vs. Court of
Appeals, 179 SCRA 638 (1989); Mayer Steel Pipe Corporation vs. Court of
Appeals, 274 SCRA 42 (1997)
2. Fire
As defined by Section 60 of the Insurance Code, an open policy is one in which the
value of the thing insured is not agreed upon but is left to be ascertained in case of loss.
This means that the actual loss, as determined, will represent the total indemnity due
the insured from the insurer except only that the total indemnity shall not exceed the
face value of the policy. Where the actual loss in an open policy has been ascertained,
the factual determination should be respected in the absence of proof that it was arrived
at arbitrarily. Development Insurance Corporation vs. Intermediate Appellate
Court, et al., G.R. No. L-71360, July 16, 1986
3. Casualty
It should be noted that the insurance policy entered into by the parties is a theft or
robbery insurance policy which is a form of casualty insurance. Except with respect to
compulsory motor vehicle liability insurance, the Insurance Code contains no other
provisions applicable to casualty insurance or to robbery insurance in particular. These
contracts are, therefore, governed by the general provisions applicable to all types of
insurance. Outside of these, the rights and obligations of the parties must be determined
by the terms of their contract, taking into consideration its purpose and always in
accordance with the general principles of insurance law. Fortune Insurance and
Surety Co., Inc. vs. Court of Appeals and Producers Bank of the Philippines, G.R.
No. 115278, May 23, 1995
It has been aptly observed that in burglary, robbery, and theft insurance, the opportunity
to defraud the insurerthe moral hazardis so great that insurers have found it
necessary to fill up their policies with countless restrictions, many designed to reduce
this hazard. Seldom does the insurer assume the risk of all losses due to the hazards
insured against. Persons frequently excluded under such provisions are those in the
insureds service and employment. The purpose of the exception is to guard against
liability should the theft be committed by one having unrestricted access to the
property. Fortune Insurance and Surety Co., Inc. vs. Court of Appeals and
Producers Bank of the Philippines, G.R. No. 115278, May 23, 1995
4. Suretyship
A surety contract is merely a collateral one, its basis is the principal contract or
undertaking which it secures. Necessarily, the stipulations in such principal agreement
must at least be communicated or made known to the surety. First Lepanto-Taisho
Insurance Corporation vs. Chevron Philippines, Inc., G.R. No. 177839, January
18, 2012
The surety bond must be read in its entirety and together with the contract between
NPC and the contractors. The provisions must be construed together to arrive at their
true meaning. Certain stipulations cannot be segregated and then made to control. In the
case at bar, it cannot be denied that the breach of contract in this case, that is, the
abandonment of the unfinished work of the transmission line of the NPC by the
contractor FEEI was within the effective date of the contract and the surety bond. Such
abandonment gave rise to the continuing liability of the bond as provided for in the
contract which is deemed incorporated in the surety bond executed for its completion.
National Power Corporation vs. Court of Appeals, et al., G.R. No. L-43706,
November 14, 1986
Under Section 176 of the Insurance Code, as amended, the liability of a surety in a
surety bond is joint and several with the principal obligor. Finman's bond was posted by
Pan Pacific in compliance with the requirements of Article 31 of the Labor Code in
order to guarantee compliance with prescribed recruitment procedures, rules and
regulations, and terms and conditions of employment as appropriate. While Finman has
refrained from attaching a copy of the bond it had issued to its Petition for Certiorari,
there can be no question that the conditions of the surety bond include the POEA Rules
and Regulation. It is settled doctrine that the conditions of a bond specified and
required in the provisions of the statute or regulation providing for the submission of
the bond, are incorporated or built into all bonds tendered under that statute or
regulation, even though not there set out in printer's ink. Finman General Assurance
Corporation vs. William Inocencio, et al., G.R. No. 90273-75, November 15, 1989
Section 177 of the Insurance Code states that the surety is entitled to payment of the
premium as soon as the contract of suretyship or bond is perfected and delivered to the
obligor. No contract of suretyship or bonding shall be valid and binding unless and until
the premium therefor has been paid, except where the obligee has accepted the bond, in
which case the bond becomes valid and enforceable irrespective of whether or not the
premium has been paid by the obligor to the surety. A continuing bond, as in this case
where there is no fixed expiration date, may be cancelled only by the obligee, which is
the NFA, by the Insurance Commissioner, and by the court. By law and by the specific
contract involved in this case, the effectivity of the bond required for the obtention of a
license to engage in the business of receiving rice for storage is determined not alone by
the payment of premiums but principally by the Administrator of the NFA. Country
Bankers Insurance Corporation vs. Antonio Lagman, G.R. No. 165487, July 13,
2011
The extent of the suretys liability is determined by the language of the suretyship
contract or bond itself. It can not be extended by implications beyond the terms of the
contract. Having accepted the bond, the creditor is bound by the recital in the surety
bond that the terms and conditions of its distributorship contract be reduced in writing
or at the very least communicated in writing to the surety. Such non-compliance by the
creditor impacts not on the validity or legality of the surety contract but on the
creditors right to demand performance. First Lepanto-Taisho Insurance
Corporation vs. Chevron Philippines, GR No. 177839, January 18, 2012
5. Life
Where a GSIS member failed to state his beneficiary or beneficiaries in his application
for membership, the proceeds of the retirement benefits shall accrue to his estate and
will be distributed among his legal heirs in accordance with the law on intestate
succession. Re: Claims for Benefits of the Heirs of the Late Mario vs. Chanliongco,
Adm. Matter No. I90-RET., October 18, 1977
A life insurance policy is no different from a civil donation insofar as the beneficiary is
concerned for both are founded upon the same consideration: liberality. A beneficiary is
like a donee, because from the premiums of the policy which the insured pays, out of
liberality, the beneficiary will receive the proceeds or profits of said insurance. As a
consequence, the proscription in Article 739 of the New Civil Code should equally
operate in life insurance contracts. The conviction for adultery or concubinage is not
necessary before the disabilities mentioned in Article 739 may effectuate. It would be
sufficient if evidence preponderates upon the guilt of the consort for the offense
indicated. The Insular Life Assurance Company, Ltd., vs. Carponia T. Ebrado and
Pascuala Vda. De Ebrado, G.R. No. l-44059, October 28, 1977
Where an agreement is made between the applicant and the agent, no liability shall
attach until the principal approves the risk and a receipt is given by the agent. The
acceptance is merely conditional, and is subordinated to the act of the company in
approving or rejecting the application. Thus, in life insurance, a binding slip or
binding receipt does not insure by itself. The binding deposit receipt in question is
merely an acknowledgment, on behalf of the company, that the latters branch office
had receive 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 Pacific Life disapproved the insurance application of respondent, the
binding deposit receipt in question had never become in force at any time. Great
Pacific Life Assurance Company vs. Court of Appeals, 89 SCRA 543 (1979)
The so-called incontestability clause preclude the insurer from raising the defenses of
false representation or concealment of material facts insofar as health and previous
diseases are concerned if the insurance has been in force at least two (2) years during
the insureds lifetime. Tan vs. Court of Appeals, 174 SCRA 403 (1989)
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. 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. Sun
Insurance Office, Ltd. vs. Court of Appeals, G.R. No. 92383, July 17, 1992
The legitimate heirs of the insured who were not designated as beneficiaries in the life
insurance policies are considered third parties to the insurance contracts and, thus are
not entitled to the proceeds thereof. The insurance companies have no legal obligation
to turn over the insurance proceeds to them. The revocation of the common law spouse
of the insured as a beneficiary in one policy and her disqualification as such in another
are of no moment considering that the designation of the illegitimate children as
beneficiaries in the Insurance Policies remains valid. Because no legal proscription
exists in naming as beneficiaries children of illicit relationships by the insured, the
shares of the common-law spouse in the insurance proceeds, whether forfeited by the
Court in view of the prohibition on donation under Article 739 of the Civil Code or by
the insurers themselves for reasons based on the insurance contracts, must be awarded
to the said illegitimate children, the designated beneficiaries, to the exclusion of the
legitimate heirs. It is only in cases where the insured has not designated any
beneficiary, or when the designated beneficiary is disqualified by law to receive the
proceeds, that the insurance policy proceeds shall redound to the benefit of the estate of
the insured. Heirs of Loreto C. Maramag vs. Maramag, GR No. 181132, June 5,
2009
The main purpose of the authorized driver clause is that a person other than the
insured owner, who drives the car on the insureds order, such as his regular driver, or
with his permission, such as a friend or member of the family or the employees of a car
service or repair shop must be duly licensed drivers and have no disqualification to
drive a motor vehicle. The mere happenstance that the employee(s) of the shop owner
diverts the use of the car to his own illicit or unauthorized purpose in violation of the
trust reposed in the shop by the insured car owner does not mean that the authorized
driver clause has been violated such as to bar recovery, provided that such employee is
duly qualified to drive under a valid drivers license. It is the theft clause, not the
authorized driver clause that applies. Jewel Villacorta vs. The Insurance
Commission, et al., G.R. No. 54171, October 28, 1980
Under the authorized driver clause, an authorized driver must not only be permitted
to drive by the insured but it is also essential that he is permitted under the law and
regulations to drive the motor vehicle and is not disqualified from so doing under any
enactment or regulation. At the time of the accident, Stokes had been in the Philippines
for more than 90 days and under the law, he could not drive a motor vehicle without a
Philippine drivers license. He was therefore not an authorized driver under the terms
of the insurance policy in question, and MALAYAN was right in denying the claim of
the insured. James Stokes, as Attorney-in-Fact of Daniel Stephen Adolfson vs.
Malayan Insurance Co., Inc., G.R. No. L-34768, February 24, 1984
Where the drivers temporary operators permit had expired, and the insurance policy
states that a driver with an expired Traffic Violation Receipt or expired Temporary
Operators permit is not considered an authorized driver within the meaning of the
policy, the expiration of the same bars recovery under the policy. In liability insurance,
the parties are bound by the terms of the policy and the right of insured to recover is
governed thereby. Agapito Gutierrez vs. Capital Insurance & Surety Co., Inc., G.R.
No. L-26827, June 29, 1984
The requirement under the authorized driver clause that the driver be permitted in
accordance with the licensing or other laws or regulations to drive the Motor Vehicle
and is not disqualified from driving such motor vehicle by order of a Court of Law or
by reason of any enactment or regulation in that behalf, applies only when the driver
is driving on the insureds order or with his permission. It does not apply when the
person driving is the insured himself. Andrew Palermo vs. Pyramid Insurance Co.,
Inc., G.R. No. L-36480, May 31, 1988
From a reading Section 378, the following rules on claims under the no fault
indemnity provision, where proof of fault or negligence is not necessary for payment
of any claim for death or injury to a passenger or a third party, are established: 1.) A
claim may be made against one motor vehicle only. 2.) If the victim is an occupant of a
vehicle, the claim shall lie against the insurer of the vehicle in which he is riding,
mounting or dismounting from. 3.) In any other case (i.e. if the victim is not an
occupant of a vehicle), the claim shall lie against the insurer of the directly offending
vehicle. 4.) In all cases, the right of the party paying the claim to recover against the
owner of the vehicle responsible for the accident shall be maintained. Perla Compania
De Seguros, Inc. vs. Hon. Constante A. Ancheta, Presiding Judge of the Court of
First Instance of Camarines Norte, Branch III, et al., G.R. No. L-49699, August 8,
1988
Own damage coverage under a vehicle insurance policy simply meant that the insurer
had assumed to reimburse the costs for repairing the damage to the insured vehicle, as
opposed to damage to third party vehicle/property. The phrase own damage does not
mean damage to the insured car caused by the assured itself, instead of third parties.
Pan Malayan Insurance Corporation vs. Court of Appeals, 184 SCRA 54 (1990)
Insurers liability under Third Party Liability coverage accrues immediately upon
occurrence of injury or event upon which the liability depends and does not depend on
the recovery of judgment by the injured party against the insured. Therefore, insurer
can be sued and held directly liable by the injured party to the extent of the coverage
Vda. De Maglana vs. Hon. Cosolacion, 212 SCRA 268, 1992)
In a case arising from a vehicular collision where the driver, the registered owners, the
beneficial owners, and the insurer were sued, a compromise agreement entered into
between the plaintiff and the insurer resulting in the dismissal of the case as against the
insurer did not redound to the benefit of the other defendants. Imson vs. Court of
Appeals, 239 SCRA 58 (1994)
Aside from compulsory motor vehicle liability insurance, the Insurance Code contains
no other provisions applicable to casualty insurance or to robbery insurance in
particular. In burglary, robbery and theft insurance, the opportunity to defraud the
insurer is so great that the insurers have found it necessary to fill up their policies with
countless restrictions. Fortune Insurance and Surety Co., Inc. vs. Court of Appeals,
244 SCRA 308 (1995)
The liability of the insured carrier or vehicle owner is based on tort, in accordance with
the provisions of the Civil Code; while that of the insurer arises from contract,
particularly, the insurance policy. The third-party liability of the insurer is only up to
the extent of the insurance policy and that required by law; and it cannot be held
solidarily liable for anything beyond that amount. The Heirs of George Y. Poe vs.
Malayan Insurance Company, Inc., G.R. No. 156302, April 7, 2009 14, 1996
E. Insurable Interest
1. In Life/Health
Every person has an insurable interest in the life and health of: 1.) Himself, or his
spouse and of his children; 2.) Any person: (a) on whom he depends wholly or in part
for education or support, or in whom he has a pecuniary interest; (b) under legal
obligation to him for the payment of money, respecting property or service, of which
death or illness might delay or prevent the performance; and (c) upon whom whose life
any estate or interest vested in him depends. Philamcare Health System vs. Court of
Appeals, 379 SCRA 356 (2002)
The existence of an insurance interest gives a person the legal right to insure the subject
matter of the policy of insurance. Section 19 of the Insurance Code states that an
interest in the life or health of a person insured must exist when the insurance takes
effect, but need not exist thereafter or when the loss occurs. Lalican vs. Insular Life
Assurance Company Ltd, 597 SCRA 159 (2009)
An employer corporation has an insurable interest on its manager where the death of
the manager will be detrimental to the corporations operations. El Oriente Fabrica de
Tabacos vs. Posada, 56 Phil 147 (1931)
2. In Property
Claim of insurance company that insurance of building does not cover the elevator is
incorrect. An open policy is one in which the value of the thing insured is not agreed
upon but is left to be ascertained in case of loss. This means that the actual loss, as
determined, will represent the total indemnity due the insurer except only that the total
indemnity shall not exceed the face value of the policy. Development Insurance
Corporation vs. Intermediate Appellate Court, 143 SCRA 62 (1986)
A non-life insurance policy such as the fire insurance policy taken by spouses Cha 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.
The basis of such requirement of insurable interest in property insured is based on
sound public policy: to prevent a person from taking out an insurance policy on
property upon which he has no insurable interest and collecting the proceeds of said
policy in case of loss of the property. In such a case, the contract of insurance is a mere
wager which is void under Section 25 of the Insurance Code. Spouses Nilo Cha and
Stella Uy Cha vs. Court of Appeals, G.R. No. 124520, August 18, 1997
With the transfer of the location of the subject properties, without notice and without
the insurers consent, after the renewal of the policy, the insured clearly committed
concealment, misrepresentation and a breach of a material warranty. Section 26 of the
Insurance Code provides that a neglect to communicate that which a party knows and
ought to communicate, is called a concealment.
Under Section 27 of the Insurance Code, a concealment entitles the injured party to
rescind a contract of insurance. Moreover, under Section 168 of the Insurance Code,
the insurer is entitled to rescind the insurance contract in case of an alteration in the use
or condition of the thing insured. Section 168 of the Insurance Code provides, as
follows: An alteration in the use or condition of a thing insured from that to which it is
limited by the policy made without the consent of the insurer, by means within the
control of the insured, and increasing the risks, entitles an insurer to rescind a contract
of fire insurance. Malayan Insurance Company vs. PAP Co. Philippine Branch),
G.R. No. 2007784, August 07, 2013.
A double insurance exists where the same person is insured by several insurers
separately in respect of the same subject and interest. Since, the insurable interests of a
mortgagor and a mortgagee on the mortgaged property are distinct and separate, the
two policies of the PFIC do not cover the same interest as that covered by the policy of
the private respondent, no double insurance exists. Armando Geagonia vs. Court of
Appeals, et al., G.R. No. 114427, February 6, 1995
By the express provision of Section 93 of the Insurance Code, double insurance exists
where the same person is insured by several insurers separately in respect to the same
subject and interest. The requisites in order for double insurance to arise are as follows:
1.) The person insured is the same; 2.) Two or more insurers insuring separately; 3.)
There is identity of subject matter; 4.) There is identity of interest insured; and 5.)
There is identity of the risk or peril insured against. In the present case, even though the
two insurance policies were issued over the same goods and cover the same risk, there
arises no double insurance since they were issued to two different persons/entities
having distinct insurable interests. Necessarily, over insurance by double insurance
cannot likewise exist. Malayan Insurance Co., Inc., vs. Philippine First Insurance
Co., Inc.,and Reputable Forwarder Services, Inc., G.R. No. 184300, July 11, 2012
Where a mortgagor pays insurance premium under group insurance policy (Mortgage
Redemption Insurance), making loss payable to mortgagee, the insurance is on
mortgagors interest, and mortgagor continues to be a party to the contract. In this type
of policy insurance, mortgagee is simply an appointee of the insurance fund, such loss-
payable clause does not make mortgagee a party to the contract Great Pacific Life vs.
Court of Appeals, 316 SCRA 677 (1999)
It needs not much emphasis to say that an application form does not prove that
insurance was secured. Anybody can get an application form for insurance, fill it up at
home before filing it with the insurance company. In fact, the very first sentence of the
form states that it merely forms the basis of a contract between you and NZILife.
There was no contract yet. Furthermore, there is no proof that the insurance company
approved the proposal, no proof that any premium payments were made, and no proof
from the record of exhibits as to the date it was accomplished. It appearing that no
insurance was issued to Lam Po Chun with accused-appellant as the beneficiary, the
motive capitalized upon by the trial court vanishes. People of the Philippines vs. Yip
Wai Ming, G.R. No. 120959, November 14, 1996
Where the provisions in the binding deposit receipt shows that it is intended to be
merely a provisional or temporary insurance contract and the same 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, the acceptance thereof is merely conditional and
is subordinated to the act of the company in approving or rejecting the application.
Since Pacific Life disapproved the insurance application, the binding deposit receipt in
question never become in force at anytime since in life insurance, a "binding slip" or
"binding receipt" does not insure by itself. Great Pacific Life Assurance Company
vs. Honorable Court of Appeals, G.R. No. L-31845, April 30, 1979
For a valid cancellation of the policy, the following requisites must concur: 1) There
must be prior notice of cancellation to the insured; 2) The notice must be based on the
occurrence, after the effective date of the policy, of one or more of the grounds
mentioned; 3) The notice must be (a) in writing, (b) mailed, or delivered to the named
insured, (c) at the address shown in the policy; 4) It must state (a) which of the grounds
mentioned in Section 64 is relied upon and (b) that upon written request of the insured,
the insurer will furnish the facts on which the cancellation is based. MICO claims it
cancelled the policy in question for non-payment of premium. However, there is no
proof that the notice, assuming it complied with the other requisites, was actually
mailed to and received by Pinca. Malayan Insurance Co., Inc. vs. Gregoria Cruz
Arnaldo, in her capacity as the Insurance Commissioner, et al., G.R. No. L-67835,
October 12, 1987
2. Premium Payment
By accepting the promise of Plastic Era to pay the insurance premium within thirty (30)
days from the effective date of policy, Capital Insurance has implicitly agreed to
modify the tenor of the insurance policy and in effect, waived the provision therein that
it would only pay for the loss or damage in case the same occurs after the payment of
the premium. Considering that the insurance policy is silent as to the mode of payment,
Capital Insurance is deemed to have accepted the promissory note in payment of the
premium. This rendered the policy immediately operative on the date it was delivered.
By accepting its promise to pay, Capital Insurance had in effect extended credit to
Plastic Era. Therefore, Capital Insurance did not have the right to cancel the policy for
nonpayment of the premium except by putting Plastic Era in default and giving it
personal notice to that effect. Capital Insurance & Surety Co., Inc. vs. Plastic Era
Co., Inc., et al., G.R. No. L-22375, July 18, 1975
It is explicit in the policy that PSIC's agreement to indemnify Woodwork for loss by
fire only arises "after payment of premium. Compliance by the insured with the terms
of the contract is a condition precedent to the right of recovery. Since the premium had
not been paid, the policy must be deemed to have lapsed. The non-payment of
premiums does not merely suspend but put an end to an insurance contract, since the
time of the payment is peculiarly of the essence of the contract. Philippine Phoenix
Surety & Insurance Company vs. Woodwork, Inc., G.R. No. L-25317, August 6,
1979
The non-payment of premium on the cover note is no cause for Pacific to lose what is
due it as if there had been payment of premium, for non-payment by it was not
chargeable against its fault. Had all the logs been lost during the loading operations, but
after the issuance of the cover note, liability on the note would have already arisen even
before payment of premium. This is how the cover note as a "binder" should legally
operate otherwise, it would serve no practical purpose in the realm of commerce, and is
supported by the doctrine that where a policy is delivered without requiring payment of
the premium, the presumption is that a credit was intended and policy is valid. Pacific
Timber Export Corporation vs. Court of Appeals, et al., G.R. No. L-38613,
February 25, 1982
It is obvious from both the Insurance Act and the stipulation of the parties that time is
of the essence in respect of the payment of the insurance premium so that if it is not
paid the contract does not take effect unless there is still another stipulation to the
contrary. In the instant case, Arce was given a grace period to pay the premium but the
period having expired with no payment made, he cannot insist that Capital is
nonetheless obligated to him. Pedro Arce vs. Capital Insurance & Surety Co., Inc.,
G.R. No. L-28501, September 30, 1982
A surety bond to guarantee payment of taxes automatically loses force and effect upon
approval of the insureds application for tax exemption. Suretyship cannot exist without
a valid obligation. The insurance company incurred no risk from the time the insureds
tax exemption application was approved. Consequently, any purported renewal of the
policy was void because the cause or object of said renewal did not exist at the time of
the purported transaction. The insured therefore had no obligation to pay the premium
for such purported renewals. Plaridel Surety & Insurance Company vs. Artex
Development Company, Inc., 120 SCRA 827 (1983)
Under Section 77 of the Insurance Code, the remedy for the non-payment of premiums
is to put an end to and render the insurance policy not binding. The non-payment of
premium does not merely suspend but puts an end to an insurance contract since the
time of the payment is peculiarly the essence of the contract. Unless premium is paid,
an insurance contract does not take effect. Since admittedly the premiums have not
been paid, the policies issued have lapsed. The insurance coverage did not go into
effect or did not continue and the obligation of Philamgen as insurer ceased. Arturo
Valenzuela, et al. vs. Court Of Appeals, et al., G.R. No. 83122, October 19, 1990
Section 177 of the Insurance Code states that the surety is entitled to payment of the
premium as soon as the contract of suretyship or bond is perfected and delivered to the
obligor. No contract of suretyship or bonding shall be valid and binding unless and until
the premium therefor has been paid, except where the obligee has accepted the bond, in
which case the bond becomes valid and enforceable irrespective of whether or not the
premium has been paid by the obligor to the surety. Philippine Pryce Assurance
Corporation vs. Court Of Appeals, et al., G.R. No. 107062, February 21, 1994
Section 77 of the Insurance Code of 1978 provides that an insurer is entitled to payment
of the premium as soon as the thing insured is exposed to the peril insured against. The
first exception is provided by Section 77 itself, and that is, in case of a life or industrial
life policy whenever the grace period provision applies. The second is that covered by
Section 78 of the Insurance Code, which provides that any acknowledgment in a policy
or contract of insurance of the receipt of premium is conclusive evidence of its
payment, so far as to make the policy binding, notwithstanding any stipulation therein
that it shall not be binding until premium is actually paid. A third exception was laid
down in Makati Tuscany Condominium Corporation vs. Court of Appeals, wherein the
Court ruled that Section 77 may not apply if the parties have agreed to the payment in
installments of the premium and partial payment has been made at the time of loss.
Tuscany has also provided a fourth exception, namely, that the insurer may grant credit
extension for the payment of the premium. This simply means that if the insurer has
granted the insured a credit term for the payment of the premium and loss occurs before
the expiration of the term, recovery on the policy should be allowed even though the
premium is paid after the loss but within the credit term. Moreover, as a fifth exception,
estoppel bars it from taking refuge under said Section, since Masagana relied in good
faith on such practice. UCPB General Insurance Co. Inc., vs. Masagana Telemart,
Inc., G.R. No. 137172, April 4, 2001
FEBTC is estopped from claiming that the insurance premium has been unpaid. FEBTC
induced Maxilite and Marques to believe that the insurance premium has in fact been
debited from Maxilites account. However, FEBTC failed to do so. FEBTCs conduct
clearly constitutes gross negligence in handling Maxilites and Marques accounts. As a
consequence, FEBTC must be held liable for damages pursuant to Article 2176 of the
Civil Code. Jose Marques and Maxilite Technologies, Inc. vs. Far East Bank And
Trust Company, et al., G.R. No. 171379, January 10, 2011
In life insurance, even though insured may have obtained an endowment policy,
payment of premiums is not a debt or obligation, but an exercise of a right on the part
of the insured. If insured wants to keep policy alive, he may pay premium. But the
insurer may not compel him to pay the premium if insured desires to let the policy
lapse. Constantino vs. Asia Life, 87 Phil 248, (1950)
The age of the insured was not concealed to the insurance company for her application
for insurance coverage which was on a printed form furnished by Manila Bankers and
which contained very few items of information clearly indicated her age at the time of
filing, the same to be almost 65 years of age. Despite such information which could
hardly be overlooked in the application form, Manila Bankers received her payment of
premium and issued the corresponding certificate of insurance without question. As
there was sufficient time (45 days) for the Manila Bankers to process the application
and issue notice that the applicant was over 60 years of age and thereby cancel the
policy on that ground if it was minded to do so, Manila Bankers failure to act, is
therefore either attributable to its willingness to waive such disqualification; or, through
the negligence or to the incompetence of its employees for which it has only itself to
blame. Regina Edillon vs. Manila Bankers Life Insurance, et al., G.R. No. L-34200,
September 30, 1982
The stipulation in a life insurance policy giving the insured the privilege to reinstate it
upon written application within three years from the date it lapses and upon evidence of
insurability satisfactory to the insurance company and the payment of all overdue
premiums and any other indebtedness to the company, does not give the insured
absolute right to such reinstatement by the mere filing of an application therefor. The
company has the right to deny the reinstatement if it is not satisfied as to the
insurability of the insured and if the latter does not pay all overdue premiums and all
other indebtedness to the company. After the death of the insured the insurance
company cannot be compelled to entertain an application for reinstatement of the policy
because the conditions precedent to reinstatement can no longer be determined and
satisfied. James McGuire vs. The Manufacturers Life Insurance Co., G.R. No. L-
3581, September 21, 1950
Where a life insurance policy lapsed, and as compliance with the conditions for
reinstatement of the policy, the insured paid only part of the overdue premium, the
failure to pay the balance of the overdue premium prevented the reinstatement said
policy and thereafter the recovery therefrom. Andres vs. Crown Life Ins. Co., G.R.
No. L-10875, January 28, 1958
4. Refund of Premiums
Great Pacific should have informed Cortez of the deadline for paying the first premium
before or at least upon delivery of the policy to him, so he could have complied with
what was needful and would not have been misled into believing that his life and his
family were protected by the policy, when actually they were not. And, if the premium
paid by Cortez was unacceptable for being late, it was the company's duty to return it.
By accepting his premiums without giving him the corresponding protection, Great
Pacific acted in bad faith and since his policy was in fact inoperative or ineffectual from
the beginning, the company was never at risk, hence, it is not entitled to keep the
premium. Great Pacific Life Insurance Corporation vs. Court of Appeals, et al.,
G.R. No. L-57308, April 23, 1990
1. Concealment
Where the applicant, in apparent bad faith, withheld the fact material to the risk to be
assumed by the insurance company, the latter is entitled to rescind the contract of
insurance. The contract of insurance is one of perfect good faith, not for the insured
alone but equally so for the insurer. Where there is concealment or a neglect to
communicate that which a party knows and ought to communicate, whether intentional
or unintentional, rescission is available as a remedy to the insurer. Great Pacific Life
Assurance Company vs. Honorable Court of Appeals, G.R. No. L-31845, April 30,
1979
Concealment exists where the assured had knowledge of a fact material to the risk, and
honesty, good faith, and fair dealing requires that he should communicate it to the
assurer, but he designedly and intentionally withholds the same. In the absence of
evidence that the insured had sufficient medical knowledge as to enable him to
distinguish between "peptic ulcer" and "a tumor", his statement that said tumor was
"associated with ulcer of the stomach, " should be construed as an expression made in
good faith of his belief as to the nature of his ailment and operation. Ng Gan Zee vs.
Asian Crusader Life Assurance Corporation, G.R. No. L-30685, May 30, 1983
Where the insured is specifically required to disclose to the insurer any other insurance
and its particulars which he may have effected on the same subject matter, the
knowledge of such insurance by the insurer's agents, even assuming the acquisition
thereof by the former, is not the "notice" that would estop the insurers from denying the
claim. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith. New Life Enterprises and Julian
Sy vs. Court of Appeals, et al., G.R. No. 94071, March 31, 1992
Where the insured is specifically required to disclose to the insurer matters relating to
his health, the insured's failure to disclose the fact that he was hospitalized for two
weeks prior to filing his application for insurance, raises grave doubts about his bona
fides. Materiality is to be determined not by the event, but solely by the probable and
reasonable influence of the facts upon the party to whom communication is due, in
forming his estimate of the disadvantages of the proposed contract or in making his
inquiries. Sunlife Assurance Company of Canada vs. Court of Appeals, et al., G.R.
No. 105135, June 22, 1995
One who solicits insurance is an underwriter and not an agent of the insurance
company. If insurer appoints a general agent, then such agent can bind the company by
virtue of the written appointment. On the other hand, an underwriter who fills up a
policy with false answers and later insured signs the policy, the false answers become
the insureds own answer because he signed the policy. Soliman vs. U.S. Life, 104
Philippine 1046, (1958)
2. Misrepresentation/Omissions
When the insured signed the pension plan application, he adopted as his own the
written representations and declarations embodied in it. It is clear from these
representations that he concealed his chronic heart ailment and diabetes. He cannot sign
the application and disown the responsibility for having it filled up. Thus, the insurance
company had every right to act on the faith of that certification. Ma. Lourdes S.
Florendo vs. Philam Plans, Inc., et al., G.R. No. 186983, February 22, 2012
By virtue of the incontestability clause, the insurer has two years from the date of
issuance of the insurance contract or of its last reinstatement within which to contest the
policy, whether or not, the insured still lives within such period. After two years, the
defenses of concealment or misrepresentation, no matter how patent or well founded,
no longer lie. Considering that the insured died before the two-year period had lapsed,
Phil-Am Insurance is not, therefore, barred from proving that the policy is void ab initio
by reason of the insureds fraudulent concealment or misrepresentation. Emilio Tan vs.
Court of Appeals, G.R. No. 48049, June 29, 1989
The "Incontestability Clause" under Section 48 of the Insurance Code provides that an
insurer is given two years from the effectivity of a life insurance contract and while
the insured is alive to discover or prove that the policy is void ab initio or is
rescindible by reason of the fraudulent concealment or misrepresentation of the insured
or his agent. After the two-year period lapses, or when the insured dies within the
period, the insurer must make good on the policy, even though the policy was obtained
by fraud, concealment, or misrepresentation. Manila Bankers Life Insurance
Corporation vs. Cresencia P. Aban, G.R. No. 175666, July 29, 2013
The 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 insured died on the 11th month
following the issuance of his plan, the incontestability period has not yet set in.
Consequently, the insurer was not barred from questioning the beneficiarys entitlement
to the benefits of the pension plan. Florendo vs. Philam Plans, GR. No 186983,
February 22, 2012
3. Breach of Warranties
The insurance company is barred by waiver (or rather estoppel) to claim violation of
the so-called fire hydrants warranty, for the reason that knowing fully all that the
number of hydrants demanded therein never existed from the very beginning, the
insurance company nevertheless issued the policies in question subject to such
warranty, and received the corresponding premiums. It would be perilously close to
conniving at fraud upon the insured to allow insurance company to claim now as void
ab initio the policies that it had issued to the plaintiff without warning of their fatal
defect, of which it was informed, and after it had misled the defendant into believing
that the policies were effective. Qua Chee Gan vs. Law Union, 98 Phil 85 (1955)
An alteration in the use or condition of a thing insured from that to which it is limited
by the policy made without the consent of the insurer, by means within the control of
the insured, and increasing the risks, entitles an insurer to rescind a contract of fire
insurance. Malayan Insurance Company, Inc. vs. Pap Co., Ltd., G.R. No. 200784,
August 7, 2013
Where the insurance policy clearly and categorically placed PCSI's liability for all damages
arising out of death or bodily injury sustained by one person as a result of any one accident
at P12,000.00 and under the law prevailing, P.D. 612, the minimum liability is P12,000 per
passenger, the stipulation regarding PCSIs liability under the insurance contract not being
less than P12,000.00, and therefore not contrary to law, morals, good customs, public order
or public policy, must be upheld as effective, valid and binding as between the parties.
Perla Compania De Seguros, Inc. vs. Court of Appeals, G.R. No. 78860, May 28, 1990
The right of subrogation accrues simply upon payment by the insurance company of the
insurance claim. When it is not disputed that the insurance company indeed paid, then there
is valid subrogation in its favor. Malayan Insurance Co vs. Alberto, GR No. 194320,
February 1, 2012
Plaintiff's verified claim totalled P31,860.85, of which, in accordance with the terms of
the policy, three-fourths was asked, or P23,895.64. Dependant's inventory of the goods
found after the fire came to P13,113. The difference between plaintiff's claim and
defendant's estimate of the loss, which was confirmed in the trial court, was
P18,747.85. In connection with these figures plaintiff suggests too low a valuation by
the representatives of the defendant. Computed at plaintiff's valuation, the goods
inventoried by the defendant's committee would amount to P19,346.30. There would,
however, still remain a considerable void between the two amounts, of P12,514.55. In
this case, the difference under one hypothesis is about 50 per cent, and under another
hypothesis, about 25 per cent. Still that constitutes a serious discrepancy between the
true value of the property and that sworn to in the proofs of loss, and is an outstanding
fact to be considered as bearing upon the presence of fraud. It is more than an honest
misstatement, more than inadvertence or mistake, more than a mere error in opinion,
more than a slight exaggeration, and in connection with all the surrounding
circumstances, discloses a material overvaluation made intentionally and willfully. The
insured cannot therefore recover. Tan It v. Sun Insurance, 51 Philippine 212 (1927)
A perusal of the records shows that Usiphil Incorporated, after the occurrence of the
fire, immediately notified Finman Gen. Assurance thereof. Thereafter, Usiphil
Incorporated submitted the following documents: (1) Sworn Statement of Loss and
Formal Claim and; (2) Proof of Loss. The submission of these documents, constitutes
substantial compliance. Indeed, as regards the submission of documents to prove loss,
substantial, not strict as urged by Finman Gen. Assurance, compliance with the
requirements will always be deemed sufficient. Finman Gen. Assurance vs. Court of
Appeals, 361 SCRA 214 (2001)
The Insurance Code provides that a policy may declare that a violation of specified
provisions thereof shall avoid it. Thus, in fire insurance policies, which contain
provisions such as Condition No. 15 of the insurance policy, a fraudulent discrepancy
between the actual loss and that claimed in the proof of loss voids the insurance policy.
Mere filing of such a claim will exonerate the insurer. United Merchants Corporation
vs. Country Bankers Insurance Corporation, G.R. No. 198588, July 11, 2012
2. Guidelines on Claims Settlement
a. Prescription of Action
There is absolutely nothing in the law which mandates that the two periods
prescribed in Section 384 of the Insurance Codethat is, the six-month period for
filing the notice of claim and the one-year period for bringing an action or suit must
always concur. On the contrary, it is very clear that the one-year period is only
required in proper cases. The one-year period should instead be counted from the
date of rejection by the insurer as this is the time when the cause of action accrues.
Since in the case at hand, there has yet been no accrual of cause of action,
prescription has not yet set in. This is because, before such final rejection, there was
no real necessity for bringing suit. Summit Guaranty and Insurance Company,
Inc. vs. Hon. Jose C. De Guzman, in his capacity as Presiding Judge of Branch
III, CFI of Tarlac, et al., G.R. No. L-50997, June 30, 1987
In case the claim was denied by the insurer but the insured filed a petition for
reconsideration, the prescriptive period should be counted from the date the claim
was denied at the first instance by the insurance company and not from the denial of
the reconsideration. Sun Life Office, Ltd. vs. Court of Appeals, G.R. No. 89741,
March 13, 1991
Where the delay in bringing the suit against the insurance company was not caused
by the insured or its subrogee but by the insurance company itself, it is unfair to
penalize the insured or its subrogee by dismissing its action against the insurance
company on the ground of prescription. To prevent the insurance company from
evading its responsibility to the insured through this clever scheme, and to protect
the insuring public against similar acts by other insurance companies, the one-year
period under Section 384 should be counted not from the date of the accident but
from the date of the rejection of the claim by the insurer. It is only from the
rejection of the claim by the insurer that the insureds cause of action accrued since
a cause of action does not accrue until the party obligated refuse, expressly or
impliedly, to comply with its duty. Country Bankers Insurance Corp., vs. The
Travellers Insurance and Surety Corp., et al., G.R. No. 82509, August 16, 1989
The prescriptive period for the insureds action for indemnity should be reckoned
from the "final rejection" of the claim. "Final rejection" simply means denial by the
insurer of the claims of the insured and not the rejection or denial by the insurer of
the insureds motion or request for reconsideration. A perusal of the letter dated
April 26, 1990 shows that the GSIS denied Hollero Constructions indemnity
claims. The same conclusion obtains for the letter dated June 21, 1990 denying
Hollero Constructions indemnity claim. Holler's causes of action for indemnity
respectively accrued from its receipt of the letters dated April 26, 1990 and June 21,
1990, or the date the GSIS rejected its claims in the first instance. Consequently,
given that it allowed more than twelve (12) months to lapse before filing the
necessary complaint before the RTC on September 27, 1991, its causes of action
had already prescribed. H.H. Hollero Construction Inc. vs. Government Service
Insurance System and Pool of Machinery Insurers, G.R. No. 152334,
September 24, 2014
b. Subrogation
As the insurer, Fireman's Fund is entitled to go after the person or entity that
violated its contractual commitment to answer for the loss insured against. Upon
payment of the loss, the insurer is entitled to be subrogated pro tanto to any right of
action which the insured may have against the third person whose negligence or
wrongful act caused the loss. When the insurance company pays for the loss, such
payment operates as an equitable assignment to the insurer of the property and all
remedies which the insured may have for the recovery thereof. Firemans Fund
Insurance Copany vs. Jamila & Company, Inc., G.R. No. L-27427, April 7,
1976
St. Paul, as insurer, after paying the claim of the insured for damages under the
insurance, is subrogated merely to the rights of the assured. As subrogee, it can
recover only the amount that is recoverable by the latter. Since the right of the
assured, in case of loss or damage to the goods, is limited or restricted by the
provisions in the bill of lading, a suit by the insurer as subrogee necessarily is
subject to like limitations and restrictions. St. Paul Fire & Marine Insurance Co.
vs. Macondray & Co., Inc., et al., G.R. No. L-27796, March 25, 1976
The proximate cause of the sinking of the vessel was her condition of
unseaworthiness arising from her having been top-heavy when she departed from
the Port of Zamboanga. Since the vessel was unseaworthy with reference to the
cargo, there was therefore a breach of warranty of seaworthiness that rendered the
assured not entitled to the payment of its claim under the policy. Hence, when
PhilAmGen paid the claim of the bottling firm there was in effect a voluntary
payment and no right of subrogation accrued in its favor. In other words, when
PhilAmGen paid, it did so at its own risk. The Philippine American General
Insurance Company, Inc. vs. Court of Appeals, et al., G.R. No. 116940, June
11, 1999
The insurer, upon happening of the risk "insured" against and after payment to the
insured, is subrogated to the rights and cause of action of the latter. As such, the
insurer has the right to seek reimbursement for all the expenses paid. However, in a
contract of carriage involving the shipment of knock-down auto parts of Nissan
motor vehicles which were allegedly lost and destroyed, the insurer was not
properly subrogated because of the non-presentation of any marine insurance
policy. The submission of a marine risk note instead of the insurance policy doesn't
satisfy the requirement for subrogation. The marine risk note is not an insurance
policy. It is only an acknowledgment or declaration of the insurer confirming the
specific shipment covered by its marine open policy, the evaluation of the cargo and
the chargeable premium. Eastern Shipping Lines, Inc. vs. Prudential Guarantee
and Assurance, Inc., G.R. No. 174116, September 11, 2009
The payment by the insurer to the assured operates as an equitable assignment of all
remedies the assured may have against the third party who caused the damage.
Subrogation is not dependent upon, nor does it grow out of, any privity of contract
or upon written assignment of claim. It accrues simply upon payment of the
insurance claim by the insurer. Aboitiz Shipping Corporation v. Insurance
Company Of North America, G.R. No. 168402, August 6, 2008; Malayan
Insurance Co., Inc., vs. Rodelio Alberto, et al., G.R. No. 194320, February 1,
2012
I. Miscellaneous Topics
1. Liability of Insurer
Delay of insured in reporting the loss must be objected to promptly by insurer. Sending
of insurance adjuster to assess the loss amounts to waiver of delay in giving notice of
loss. Pacific Timer Export Corporation vs. Court of Appeals, 112 SCRA 199
(1982)
When a surety bond is executed, it does not guarantee that the plaintiffs cause of action
is meritorious, and that it will be responsible for all the costs that may be adjudicated
against its principal incase the action fails. The extent of the suretys liabilities is
determined by the clause of the contract of suretyship. Increase of suretys liability
beyond the maximum of the bond by making it liable to pay interest is justified only if
the surety failed to pay its obligation on demand. Zenith Insurance Corporation vs.
Court of Appeals, 119 SCRA 485 (1982)
Adjusters report should have been given equal weight and evidence having been
offered by the insurance company itself, which constitutes an admission of its liability
up to the amount recommended. Adjusters report is in the nature of an admission
against the interest. Noda vs. Cruz-Arnaldo, 151 SCRA 227 (1987)
While it is true that where the insurance contract provides for indemnity against the
liability to third persons, such third persons can directly sue the insurer, however, the
direct liability does not mean 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 contracts;
that of the insured is based on tort. Where insurance policy insures directly against
liability, the insurers liability accrues immediately upon the occurrence of the injury or
event upon which the liability depends, and does not depend upon the recovery of
judgment by the injured party against the insured. Vda, De Maglana vs.Consolacion,
212 SCRA 268 (1992)
The insured or the heirs of a deceased victim of a vehicular accident may sue directly
the insurer of the vehicle for indemnity, but the insurers liability is only up to the
extent of the insurance policy and those required by law. GSIS vs. CA, 308 SCRA 559
(1999)
An insurer in an indemnity contract for third party liability is directly liable to the
injured party up to the extent specified in the agreement but it cannot be held solidarily
liable beyond that amount. Tiu vs. Arriesgado, 437 SCRA 426 (2004)
2. Insurance Agent
An insurance company has two classes of agents who sell its insurance polices. They
are: (1) salaried employees who keep definite hours and work under the control and
supervision of the company; and (2) registered representatives who work on
commission basis. Great Pacific Life Assurance Corporation vs. Judico, 180 SCRA
445 (1989)
The Insurance Code may govern the licensing requirements and other particular duties
of insurance agents but it does not bar the application of the Labor code with regard to
labor standards and labor relations. Great Pacific Life Assurance Corporation vs.
National Labor Relations Commission, 187 SCRA 694 (1990)
In group insurance policies, the employer is the agent of the insurer. Pineda vs. Court
of Appeals, 226 SCRA 754 (1993)
Where the contract of agency entered into is not included within the meaning of an
insurance business, Section 2 of the Insurance Code cannot be invoked. Quasi-judicial
power of the Insurance Commissioner does not cover the relationship affecting the
insurance company and its agent but is limited to adjudicating claims and complaints
filed by the insured against the Insurance company. There are two classes of agents
who sell insurance policies, to wit: (1) salaried employees who keep definite hours and
work under the control and supervision of the company; (2) registered representative,
who works on commission basis. Salaried employees are governed by their Contract of
Employment and the Labor Code while registered representatives are governed by the
Contract of Agency and the Civil Code provision on Agency. Philippine American
Life Insurance Company vs. Ansaldo, 234 SCRA 509 (1994)
A settling agent acting within the scope of its authority cannot be held personally liable
and /or solidarily liable for the obligations of the disclosed principal. A resident agent,
as a representative of the foreign insurance company, is tasked only to receive legal
processes on behalf of its principal and not to answer personally for any insurance
claims. Smith, Bell & Co., Inc. vs. Court of Appeals, 267 SCRA 530 (1997)
3. Reinsurance
The general rule in the law of reinsurance is that the reinsurer is entitled to avail itself
of every defense which the re-insured might urge in an action by the person originally
insured. The rights of the insurer can be fully protected in a separate action against him
by the reinsured. The clause in the reinsurance contract that the reinsurer is obliged to
pay as may be paid thereon (referring to the original policies), does not automatically
make the reinsurer liable to pay the reinsured once the latter pays the original insured.
This clause does not preclude the reinsurer from insisting upon proper proof that a loss
strictly within the terms of the original policy has taken place. Gibson vs. Revilla, 92
SCRA 219 (1979)
A reinsurance company is not doing business in a certain state merely because the
property or lives which are insured by the original insurer company are located in that
State. Avon Insurance PLC vs. Court of Appeals, 278 SCRA 312 (1997)
Life and non-life insurance policies are subject to documentary stamp taxes by their
mere issuance, and the fact that the policies have not become effective for non-payment
of the corresponding premiums cannot affect the insurance companys liability for
payment of documentary stamp taxes. Philippine Home Assurance Corp. vs. Court
of Appeals, 301 SCRA 443 (1999)
The payment of documentary stamp taxes is done at the time the act is done or
transaction had and the tax base for the computation of documentary stamp taxes on life
insurance policies under Sec. 183 of the Insurance Code is the amount fixed in the
policy, unless the interest of the person insured is susceptible of exact pecuniary
measurement. The amount fixed in the policy is the figure written on its face and
whatever increases will take effect in the future by reason of any automatic increase
clause embodied in the policy without the need of another contract. The amount
insured by the policy at the time of its issuance necessarily includes the additional sum
covered by the automatic increase clause because it is already determinate at the time
the transaction is entered into and forms part of the policy. Commissioner of Internal
Revenue vs. Lincoln Philippine Life Insurance Co., Inc., 379 SCRA 423 (2002)
V. Transportation Laws
Pedro De Guzman vs. Court of Appeals, G. R. No. L-47822, December 22, 1988
b.The common carrier need not be the owner ( of the vessel ) used to consummate contract
of carriage
Cebu Salvage Corporation vs. Philippine Home Assurance Corporation, G.R. No. 150403,
January 25, 2007
First Philippine Industrial Corporation vs. Court of Appeals, G.R. No. 125948,
December 29, 1989
b.customs broker
A.F. Sanchez Brokerage Inc. vs. Court of Appeals, G.R. No. 147079, December 21,
2004
Unsworth Transport International (Phils.) vs. Court of Appeals, G.R. No. 166250,
July 26, 2010
Spouses Perena vs. Spouses Nicolas, GR No. 157917, August 29, 2012
Philippine American General Insurance Company vs. PKS Shipping Company, G.R.
No. 149038, April 9, 2003
Heirs of Amparo de los Santos vs. Court of Appeals, 186 SCRA 649 (1990)
American Home Assurance Company vs. The Court of Appeals, G.R. No. 94149,
May 5, 1992
Philippines Airlines, Inc. vs. Court of Appeals, 226 SCRA 423 (1993)
Vector Shipping Corp. and Francisco Soriano vs. Adelfo B. Macasa 559 SCRA 97
(2008)
R Transport Corporation vs. Pante, G.R. No. 162104, September 15, 2009
Nedlloyd Lijnen B.V. Rotterdam and the East Asiatic Co., LTD. vs. Glow Laks
Enterprises, LTD., G.R. No. 156330, November 19, 2014
Eastern Shipping Lines, Inc. vs. BPI/MS Insurance Corporation and Mitsui
Insurance Co., Ltd., G.R. No. 182864, January 12, 2015
Ma. Luisa Benedicto vs. Hon. Intermediate Appellate Court, G.R. No. 70876, July
19, 1990
Cogeo Cubao Operators and Drivers Association vs. Court of Appeals, 207 SCRA
243 (1992)
Spouses Cesar & Suthira Zalamea vs. Court of Appeals, G.R. No. 104235
November 18, 1993
Philippine Airlines, Inc. vs. Court of Appeals, G.R. No. 119641, May 17, 1996
Philippine Airlines, Inc. vs. Court of Appeals, G.R. No. 120262, July 17, 1997
Philippine General Insurance, Co. Inc. vs. Court of Appeals, 273 SCRA 262 (1997)
Carlos Singson vs. Court of Appeals, G.R. No. 119995, November 18, 1997)
Loadstar Shipping Co., Inc. vs. Court of Appeals, G.R. No. 131621, September 28,
1999
Equitable Leasing Corporation vs. Lucita Suyom et al., G.R. No. 143360,
September 5, 2002
Light Rail Transit Authority & Rodolfo Roman vs. Marjorie Natividad, G.R. No.
145804, February 6, 2003
Singapore Airlines Limited vs. Fernandez, G.R. No. 142305, December 10, 2003
Cathay Pacific Airways, Ltd., vs. Spouses Daniel Vazquez And Maria Luisa
Madrigal Vazquez, G.R. No. 150843, March 14, 2003
William Tiu, doing business under the name and style of D Rough Riders
vs. Pedro A. Arriesgado, G.R. No. 138060, September 1, 2004
Philippine Airlines Inc. vs. Court of Appeals, G.R. No. 123238, September 22, 2008
The Heirs of the late Ruben Reinoso, Sr. vs. Court of Appeals, GR No. 116121,
July 18, 2011
Heirs of Jose Marcial Ochoa vs. G&S Transport Corporation, G.R. No. 170071,
March 9, 2011 as affirmed in the July 16, 2012 decision
Loadstar Shipping Company, Inc., and Loadstar International Shipping Co., Inc.
vs. Malayan Insurance Co., Inc., G.R. No. 185565, November 26, 2014
1. Exempting Causes
Mauro Ganzon vs. Court of Appeals, G.R. No. L-48757, May 30, 1988
Virgines Calvo doing business under the name and style Transorient
Container Terminal Services, Inc. vs. UCPB General Insurance Co., Inc., G.R.
No. 148496, March 19, 2002
Loadstar Shipping Co., Inc., vs. Court of Appeals, G.R. No. 131621, September
28, 1999
Smith Bell Dodwell Shipping Agency Corporation vs. Catalino Borja, G.R. No.
143008, June 10, 2002
b. Absence of Delay
Aniceto Saludo, Jr. vs. Hon. Court of Appeals, G.R. No. 95536, March 23, 1992
Philippine Air Lines vs. Florante Miano, G.R. No. 106664, March 8, 1995
2. Contributory Negligence
3. Duration of Liability
Mauro Ganzon vs. Court of Appeals, G.R. No. L-48757, May 30, 1988
Lu Do & Lu YM Corporation vs. I.V. Binamira, G.R. No. L-9840, April 22,
1957
Westwind Shipping Corporation vs. UCPB General Insurance Co., G.R. No.
200289, November 25, 2013
a. Void Stipulations
Sweet Lines, Inc. vs. Hon. Bernardo Teves, Presiding Judge, CFI of Misamis
Oriental, Branch VII, G.R. No. L-37750, May 19, 1978
St. Paul Fire & Marine Insurance Co. vs. Macondray & Co, Inc., et al., G.R. No. L-
27796, March 25, 1976
Eastern and Australian Steamship Co., Ltd. vs. Great American Insurance Co., G.R.
No. L-37604 October 23, 1981
a. Checked-In Baggage
C. Safety of Passengers
Victory Liner, Inc. vs. Rosalito Gammad, G.R. No. 159636, November 25, 2004
Philippine National Railways vs. The Honorable Court of Appeals, G.R. No. L-55347,
October 4, 1985
Clemente Brias vs. The People of the Philippines, G.R. No. L-30309, November 25, 1983
1. Duration of Liability
Dangwa Transportation Co., Inc. vs. Court of Appeals, G.R. No. 95582,
October 7, 1991
b. Arrival at Destination
La Mallorca vs. Honorable Court of Appeals, G.R. No. L-20761, July 27, 1966
Aboitiz Shipping Corporation vs. Hon. Court of Appeals, Eleventh Division, G.R.
No. 884458, November 6, 1989
a. Employees
Antonia Maranan vs. Pascual Perez, et al, G.R. No. L-22272, June 26, 1967
Leopoldo Poblete vs. Donato Fabros, G.R. No. L-29803, September 14, 1979
Sabena Belgian World Airlines vs. Honorable Court of Appeals G.R. No. 82068.
March 31, 1989
Jose Pilapil vs. Hon. Court of Appeals, G.R. No. 52159, December 22, 1989
3. Exempting causes
a. Force majeure
Alberta Yobido vs. Court of Appeals, G.R. No. 113003, October 17, 1997
Fortune Express, Inc., vs. Court of Appeals, G.R. No. 119756, March 18, 1999
Philippine Airlines, Inc. vs. Hon. Court of Appeals, G.R. No. 54470, May 8, 1990
Pan American World Airways, Inc. vs. Intermediate Appellate Court, G.R. No. 68988,
June 21, 1990
China Airlines Limited vs. Court of Appeals, 211 SCRA 897 (1992)
Sulpicio Lines, Inc., vs. The Honorable Court of Appeals, G.R. No. 113578, July 14,
1995
Collin A. Morris vs. Court of Appeals, G.R. No. 127957, February 21, 2001
Smith Bell Dodwell Shipping Agency Corp. vs. Borja, 383 SCRA 341 (2002)
Victory Liner, Inc. vs. Rosalito Gammad, G.R. No. 159636, November 25, 2004
D. Bill of Lading
D.1 Definition
Unsworth Transport International Phils., Inc. vs. Court of Appeals, G.R. No. 166250,
July 26, 2010
d.2 Three-Fold Character
Keng Hua Paper Products Co., Inc. vs. Court of Appeals, 286 SCRA 257 (1998)
Lorenzo Shipping Corp. vs. Chubb and Sons, Inc., G.R. No. 147724, June 8, 2004
d.3 parties
Everett Steamship Corporation vs. Court of Appeals, 297 SCRA 496 (1998)
Magellan Manufacturing Marketing Corporation vs. Court of Appeals, G.R. No. 95529,
August 22, 1991
Provident Insurance Corp. vs. Court of Appeals, G.R. No. 118030, January 15, 2004
2. Delivery of Goods
a. Period of Delivery
a. Notice requirement
Philippine American General Insurance Co., Inc. and Tagum Plastics, Inc. vs. Sweet
Lines, Inc., G.R. No. 87434 August 5, 1992
Lorenzo Shipping Corp. vs. Chubb and Sons, Inc., G.R. No. 147724, June 8, 2004
Aboitiz Shipping Corporation vs. Insurance Company of North America, G.R. No.
168402, August 6, 2008
Ucpb General Insurance Co., Inc., vs. Aboitiz Shipping Corporation, et. al., G.R. No.
168433, February 10, 2009
c. Period to file Actions
Loadstar Shipping Co., Inc. vs. Court of Appeals, 315 SCRA 339 (1999)
Federal Express Corporation vs. American Home Assurance Company, G.R. No.
150094, August 18, 2004
E. Maritime Commerce
1. Charter Parties
Lintonjua Shipping Company, Inc. vs. National Seamen Board, 176 SCRA 189
(1989)
National Food Authority vs. Court of Appeals, G.R. No. 96453, August 4, 1999
Caltex Philippines, Inc. vs. Sulpicio Lines, Inc., et. al., G.R. No. 131166, September
30, 1999
a. Bareboat/Demise Charter
Shipping Company, Inc., vs. National Seamen Board, 176 SCRA 189 (1989)
b. Time Charter
Oceaneering Contractrors (Phils), Inc. vs. Nestor Barreto, doing business as NNB
Lighterage , G.R. No. 184215, February 9, 2011
c. Voyage/Trip Charter
Cebu Salvage Corporation vs. Philippine Home Assurance Corporation, G.R. No.
150403, January 25, 2007
Chua Yek Hong vs. Intermediate Appellate Court, G.R. No. 74811, September 30, 1988
Macondray & Co., Inc. vs. Provident Insurance Corp., 445 SCRA 644 (2004)
Centennial Transmarine, Inc. et al. vs. Ruben G. Dela Cruz, 563 SCRA 210 (2008)
Chua Yek Hong vs. Intermediate Appellate Court, G.R. No. 74811, September 30, 1988
Chua Yek Hong vs. Intermediate Appellate Court, G.R. No. 74811, September 30,
1988
Philippine American General Insurance Co. vs. Court of Appeals, 273 SCRA 262
(1997)
Dela Torre vs. Court of Appeals, G.R. No. 160088, July 13, 2011
R.V. Marvan Freight, Inc. vs. Court of Appeals, 424 SCRA 596 (2004)
a. Collisions
Far Eastern Shipping Company vs. Court of Appeals, G.R. No. 130068, October 1,
1998
a. Application
National Development Company vs. Court of Appeals, G.R. No. L-49469, August
19, 1988
Sea-Land Service, Inc. vs. Intermediate Appellate Court, G.R. No. 75118, August
31, 1987
Philippine First Insurance Co. Inc. vs. Wallem Phils. Shipping, Inc., G.R. No.
165647, March 26, 2009
Insurance Company of North America vs. Asian Terminals, Inc., G.R. No. 180784,
February 15, 2012
Mitsui O.S.K. Lines Ltd. vs. Court of Appeals, G.R. No. 119571, March 11, 1998
Belgian Overseas Chartering and Shipping N.V. vs. Philippine First Insurance Co.,
Inc., G.R. No. 143133, June 5, 2002
Asian Terminals Inc. vs. Philam Insurance Co. G.R. No. 181262 , July 24, 2013
Union Carbide Philippines, Inc. vs. Manila Railroad Co., G.R. No. L-27798, June
15, 1977
Dole Philippines, Inc. vs. Maritime Company of the Philippines, G.R. No. L-61352,
February 27, 1987
Loadstar Shipping Co., Inc. vs. Court of Appeals, G.R. No. 131621 September 28,
1999
Mayer Steel Pipe Corporation vs. Court of Appeals, G.R. No. 124050 June 19,
1997
Mitsui O.S.K. Lines Ltd., represented by Magsaysay Agencies, Inc. vs. Court of
Appeals, G.R. No. 119571, March 11, 1998
d. Limitation of Liability
Eastern Shipping Lines, Inc. vs. Intermediate Appellate Court, G.R. No. L-69044,
May 29, 1987
Belgian Overseas Chartering and Shipping N.V. vs. Philippine First Insurance Co.,
Inc., G.R. No. 143133, June 5, 2002
Philam Insurance Company vs. Heung Ah Shipping Corporation and Wallem
Shipping Inc., G.R. No. 1877l and G.R. No. 187812, July 23, 2014
F. Air Transportation
British Airways vs. Court of Appeals, G.R. No. 121824, January 29, 1998
Collin A. Morris vs. Court of Appeals, G.R. No. 127957, February 21, 2001
Sarreal, Sr. vs. Japan Airlines Co. Ltd., 207 SCRA 359 (1992)
Pan American World Airways, Inc. vs. Intermediate Appellate Court, G.R. No.
68988, June 21, 1990
1. Applicability
Philippine Airlines Inc. vs. Hon. Adriano Savillo, et. al., G.R. No. 149547, July
4, 2008
2.Non-applicability
KLM Royal Dutch Airlines vs. Court of Appeals, 65 SCRA 237 (1975)
Alitalia vs. Intermediate Appellate Court, G.R. No. 71929, December 4, 1990
3. Limitation of Liability
4. Jurisdictional rules
Lhuillier vs. British Airways, G.R. No. 171092, March 15, 2010
a. Liability to Passengers
Lufthansa German Airlines vs. Court of Appeals, G.R. No. 83612, November 24,
1994
Philippine Airlines Inc. vs. Court of Appeals, G.R. No. 119706, March 14, 1996
3. Willful Misconduct
Sabena World Airlines vs. Court of Appeals, G.R. No. 104685, March 14, 1996
G. Miscellaneous Topics
1. Motor Vehicles
PCI Leasing & Finance Inc. vs. UCPB General Insurance Co. Inc., 557 SCRA 141
(2008)
Mercado AG. Cadiente vs. Bithuel Macas 571 SCRA 105 (2008)
Mariano C. Mendoza and Elvira Lim vs. Spouses Leonora J. Gomez and Gabriel V.
Gomez, G.R. No. 160110, June 18, 2014
2. Arrastre Services
International Container Terminal Services, Inc. vs. Prudential Guarantee & Assurance
Co., Inc., 320 SCRA 244 (1999)
Westwind Shipping Corporation vs. UCPB General Insurance Co., G.R. No.
200289, November 25, 2013
3. Public Utilities
Kilusang Mayo Uno Labor Center vs. Garcia, Jr., 239 SCRA 386 (1994)
Philippine Airlines, Inc., vs. Civil Aeronautics Board, 270 SCRA 538 (1997)
A. Corporation
1. Definition
Benny Hung vs. BPI Finance Corporation, G.R. No. 182398, July 20, 2010
Rebecca Boyer-Roxas and Guillermo Roxas vs. Hon. Court of Appeals and Heirs
of Eugenia V. Roxas, Inc., G.R. No. 100866, July 14, 1992
Ryuichi Yamamoto vs. Nishino Leather Industries, Inc. and Ikuo Nishino, G.R.
No. 150283, April 16, 2008
International Express Travel & Tours vs. Court of Appeals, 373 SCRA 474 (2002)
B. Classes of Corporations
Pioneer Surety & Insurance Corporation vs. Court of Appeal, 175 SCRA 668
(1989)
Reynaldo M. Lozano vs. Hon. Eliezer R. De los Santos, Presiding Judge, RTC, Br.
58, Angeles City; and Antonio Anda, G.R. No. 125221, June 19, 1997
Lim Tong Lim vs. Philippine Fishing Gear Industries, Inc., G.R. No. 136448,
November 3, 1999
International Express Travel & Tour Services, Inc. vs. Hon. Court of Appeals,
G.R. No. 119002, October 19, 2000
People of the Philippines vs. Engr. Carlos Garcia, G.R. No. 117010, April 18, 1997
- De facto corporation
Sawadyaan vs. Court of Appeals, G.R. No. 141735, June 8, 2005
i. Chartered GOCC
ii. Non-Chartered GOCC
Boy Scouts of the Philippines vs. Commission on Audit, G.R. No. 177131, June 7,
2011
Liban vs. Gordon, GR No. 175352, January 10, 2011
Funa vs. Manila Economic and Cultural Office, GR. No. 193462, February 4, 2014
C. Nationality of Corporations
2. Control Test
Marissa R. Unchuan vs. Antonio J.P. Lozada, Anita Lozada and the Register of
Deeds of Cebu City, G.R. No. 172671, April 16, 2009
Wilson P. Gamboa vs. Finance Secretary Margarito B. Teves, et al., G.R. No.
176579, June 28, 2011
Heirs of Wilson P. Gamboa vs. Finance Secretary Margarito B. Teves, et al., G.R.
No. 176579, October 9, 2012
3. Grandfather Rule
Ricardo S. Silverio, Jr., Esses Development Corporation, and Tri-Star Farms, Inc.
vs. Filipino Business Consultants, Inc., G.R. No. 143312, August 12, 2005)
Jardine Davis, Inc. vs. JRB Realty, Inc., 463 SCRA 555 (2005)
China Banking Corporation vs. Dyne-Sem Electronics Corporation 494 SCRA 493
(2006)
Spouses Ramon Nisce vs. Equitable PCI Bank 516 SCRA 231 (2007)
Pasricha vs. Don Luis Dison Realty, Inc., 548 SCRA 273 (2008)
Ryuichi Yamamoto vs. Nishino Leather Industries, Inc. and Ikuo Nishino 551
SCRA 447 (2008)
Virgilio S. Delima vs. Susan Mercaida Gois 554 SCRA 731 (2008)
Philippine National Bank vs. Merelo B. Aznar, G.R. No. 171805, May 30, 2011
Stronghold Insurance Company, Inc. vs. Tomas Cuenca, et. al., G.R. No. 173297,
March 6, 2013
Abbot Laboratories vs. Alacaraz, G.R. No. 192571, July 23, 2013
Nuccio Saverios vs. Puyat, G.R. No. 186433, November 27, 2013
Girly G. Ico vs. Systems Technology Institute Inc, et al., G.R. 185100, July 9, 2014
Palm Avenue Holding Co., Inc and Palm Avenue Realty and Development
Corporation vs. Sandiganbayan, G.R. No. 173082, August 6, 2014
Olongapo City vs Subic Water and Sewerage Company, GR No. 171626, August 6,
2014
Gerardo Lanuza Jr. and Antonio O. Olbes vs. BF Corporation, et al., G.R. No.
17438, October 1, 2014
FVR Skills and Services Exponents, Inc., et al. vs. Jovert Seva et al., G.R. No.
200857, October 22, 2014
Philippine National Bank vs. Court of Appeals, et al., G.R. No. L-27155, May
18, 1978
Naguiat vs. National Labor Relations Commission G.R. No. 116123, March
13, 1997
Singian, Jr. vs. Sandiganbayan G.R. Nos. 160577-94, December 16, 2005
The Executive Secretary, et al. vs. Court of Appeals, et al., G.R. No. 131719,
May 25, 2004
Edward C. Ong vs. the Court of Appeals and the People of the Philippines,
G.R. No. 119858, April 29, 2003
Alfredo Ching vs. the Secretary of Justice, et al., G. R. No. 164317, February 6,
2006
Herman C. Crystal, et al. vs. Bank of the Philippine Islands, G.R. No. 172428,
November 28, 2008
2. Doctrine of Piercing the Corporate Veil
Should the court first acquire jurisdiction over the corporation whose corporate veil it
intends to pierce ?
Kukan International Corporation vs. Hon. Judge Amor Reyes, G.R. No. 182729,
September 29, 2010
Gold Line Tours vs. Heirs of Maria Concepcion Lacsa, GR No. 159108, June 18,
2012
Pacific Rehouse Corporation vs. Court of Appeals, G.R. No. 199687, March 24,
2014
Livesey vs. Binswanger Philippines, G.R. No. 177493, March 19, 2014
Prince Transport, Inc. vs. Garcia, G.R. No. 167291, January 12, 2011
Villa Rey Transit, Inc. vs. FerrerG.R. No. L-23893, October 29, 1968
Times Transportation Company, Inc. vs. Santos Sotelo, et al., G.R. No. 163786,
February 16, 2005
Pamplona Plantation Company, Inc. vs. Tinghil, 450 SCRA 421 (2005)
GCC vs. Alsons Development and Investment Corporation 513 SCRA 225
(2007)
Sps. Pedro and Florencia Violago vs. BA Finance Corporation and Avelino
Violago, 559 SCRA 69 (2008)
Claude P. Bautista vs. Auto Plus Traders Inc., 561 SCRA 223 (2008)
Siain Enterprises, Inc., vs. Cupertino Realty Corporation, Inc.,et. al. 590
SCRA 435 (2009)
Arco Pulp and Paper Co., Inc., and Candida Santos vs. Dan T. Lim, doing
business under the name and style of Quality Papers & Plastics Products
Enterprises, G.R. No. 206806, June 25, 2014
Heirs of Fe Tan Uy, represented by her heir, Mauling Uy Lim vs. International
Exchange Bank, G.R. No. 166282 & 83, February 13, 2013
Mariano A. Albert vs. University Publishing Co., Inc., G.R. No. L-19118, January 30,
1965
Islamic Directorate of the Philippines vs. Court of Appeals, 272 SCRA 454 (1997)
International Express Travel & Tour Services, Inc. vs. Court of Appeals G.R. No.
119002, October 19, 2000, ibid
1. Promoter
Nautica Canning Corporation, et al. vs. Roberto C. Yumul, G.R. No. 164588,
October 19, 2005
Republic Planters Bank vs. Court of Appeals, G.R. No. 93073, December 21, 1992
P.C. Javier & Sons, Inc., et al. vs.Paic Savings & Mortgage Bank, Inc., et al., G.R.
No. 129552, June 29, 2005
Zuellig Freight and Cargo Systems vs. National Labor Relations Commission, et
al., G.R. No. 157900, July 22, 2013
4. Corporate Term
Philippine National Bank vs. Court of First Instance of Rizal, Pasig, et al., G.R.
No. 63201, May 27, 1992
Wilson P. Gamboa vs. Finance Secretary Margarito B. Teves, et al., G.R. No.
176579, June 28, 2011
Heirs of Wilson P. Gamboa vs. Finance Secretary Margarito B. Teves, et al., G.R.
No. 176579, October 9, 2012
6. Articles of Incorporation
b. Contents
Clavecillia Radio System vs. Hon. Agustin Antillon, G.R. No. L-22238,
February 18, 1967
Hyatt Elevators and Escalators Corporation vs. Goldstar Elevators Phils. Inc.,
G.R. No. 161026, October 24, 2005
c. Amendment
8. Adoption of By-Laws
John Gokongwei, Jr. vs. Securities and Exchange Commission, et al., G.R. No.
L-45911, April 11, 1979
Citibank, N.A. vs. Hon. Segundino G. Chua, et al., G.R. No. 102300, March 17,
1993
Forest Hills Golf and Country Club Inc. vs. Gardpro Inc., G.R. No. 164686,
October 22, 2014
Loyola Grand Villas Homeowners (South) Association, Inc. vs. Hon. Court of
Appeals, G.R. No. 117188, August 7, 1997
Grace Christian High School vs. Court Of Appeals, G.R. No. 108905, October
23, 1997
c. Binding Effects
China Banking Corporation vs. Court of Appeals, and Valley Golf and
Country Club, Inc., G.R. No. 117604, March 26, 1997
PMI Colleges vs. the National Labor Relations Commission and Alejandro
Galvan, G.R. No. 121466, August 15, 1997
d. Amendment or Revision
Cebu Country Club, Inc., et al. vs. Ricardo F. Elizagaque, G.R. No. 160273,
January 18, 2008
F. Corporate Powers
National Power Corporation vs. Honorable Abraham P. Vera G.R. No. 83558,
February 27, 1989
Aurbach vs. Sanitary Wares Manufacturing Corporation, 180 SCRA 130 (1989)
Lopez Realty, Inc., and Asuncion Lopez Gonzales vs. FlorentinaFontecha, et al.,
and the National Labor Relations Commission, G.R. No. 76801, August 11, 1995
Pilipinas Loan Company, Inc.,vs. Hon. Securites and Exchange Commission and
Filipinas Pawnshop, Inc., G.R. No. 104720, April 4, 2001
Ligaya Esguerra, et al. vs. Holcim Philippines, Inc., G.R. No. 182571, September 2,
2013
Mid Pasig Land and Development Corporation vs. Tablante, G.R. No. 162924,
February 4, 2010; PNCC Skyway Traffic Management and Security Division
Workers Organization vs. PNCC Skyway Corporation, GR No. 171231, February
17, 2010
Spouses Afulugencia vs. Metropolitan Bank and Trust Co. G.R. No. 185145,
February 05, 2014
Philippine National Bank vs. the Court of First Instance of Rizal, Pasig, et al.,
G.R. No. 63201, May 27, 1992
Datu Tagoranao Benito vs. Securities & Exchange Commission, 123 SCRA 722
(1983)
Central Textile Mills, Inc. vs. National Wages and Productivity Commission, et
al., G.R. No. 104102, August 7, 1996
Heirs of Antonio Pael vs. Court of Appeals, G.R. No. 133547, February 10,
2000
Madrigal & Company, Inc. vs. Hon. Ronaldo B. Zamora, et al., G.R. No. L-
48237, June 30, 1987
Republic Planters Bank vs. Hon. Enrique A. Agana, Sr., G.R. No. 51765,
March 3, 1997
Republic of the Philippines vs. Acoje Mining Company, Inc., G.R. No. L-
18062, February 28, 1963
i.ii Ultra vires acts of the board and officers
Visayan vs. National Labor Relations Commission, 196 SCRA 410
(1991)
Yao Ka Sin Trading vs. Court of Appeals, 209 SCRA 763 (1992)
Metropolitan Bank & Trust Co. vs. Quilts & All, Inc., 222 SCRA 480
(1993);
Maria Clara Pirovana, et al. vs. the De La Rama Steamship Co., G.R. No.
L-5377, December 29, 1954
Republic of the Philippines vs. Acoje Mining Company, Inc., G.R. No. L-
18062, February 28, 1963
3. How Exercised
a. By the Shareholders
Citibank, N.A. vs. Chua, G.R. No. 102300, March 17, 1993
Lopez Realty, Inc., vs. Florentina Fontecha, G.R. No. 76801 August 11, 1995
Premium Marble Resources, Inc. vs. Court of Appeals, G.R. No. 96551,
November 4, 1996
Tam Wing Tak vs. Hon. Ramon P. Makasiar, G.R. No. 122452, January 29,
2001
A.F realty & Development, Inc. vs. Dieselman Freight services Company, 373
SCRA 385 (2002)
c. By the Officers
The Board of Liquidators vs. Heirs of Maximo M. Kalaw G.R. No. L-18805,
August 14, 1967
Rural Bank Of Milaor (Camarines Sur) vs. Francisca Ocfemia, G.R. No.
137686, February 8, 2000
Westmont Bank vs. Inland Construction and Development Corp., G.R. No.
123650, March 23, 2009
Associated Bank vs. Spouses Rafael and Monaliza Pronstroller, G.R. No.
148444, July 14, 2008
Banate vs. Philippine Countryside Rural Bank (Liloan, Cebu), Inc., G.R. No.
163825, July 13, 2010
Megan Sugar Corporation vs. RTC of Ilo-ilo Br. 68, G.R. no. 170352, June 1,
2011
Ong, et al. vs. Tiu, et al., G.R. No. 144476 & G.R. No. 144629, April 8, 2003
Ryuichi Yamamoto vs. Nishino Leather Industries, Inc. and Ikuo Nishino, G.R.
No. 150283, April 16, 2008
Sales vs. Securities and Exchange Commission, 169 SCRA 109 (1989)
Matling Industrial and Commercial Corporation, et al. vs. Ricardo R. Coros, G.R.
No. 157802, October 13, 2010
4. Elections
Paul Lee Tan vs. Paul Sycip and Merritto Lim, G.R. No. 153468, August 17,
2006
b. Quorum
Lanuza vs. Court of Appeals, G.R. No. 131394, March 28, 2005
5. Removal
6. Filling of Vacancies
Valle Verde Country Club, Inc., et al. vs. Victor Africa, G.R. No. 151969,
September 4, 2009
7. Compensation
Western Institute of Technology, Inc., et al. vs. Ricardo T. Salas, et al., G.R. No.
113032, August 21, 1997
Benguet Electric Cooperative, Inc. vs. National Relations Commission, 209 SCRA
55 (1992)
Cebu Country Club Inc., et al. vs. Elizagaque 542 SCRA 65 (2008)
Heirs of Fe Tan Uy, represented by her heir, Mauling Uy Lim vs. International
Exchange Bank, G.R. No. 166282 & 83, February 13, 2013
Antonio C. Carag vs. National Labor Relations Commission, et al., G.R. No.
147590, April 2, 2007
United Coconut Planters Bank vs. Planters Products, Inc., Janet Layson and
Gregory Grey, G.R. No. 179015, June 13, 2012
Mercy Vda. de Roxas vs. Our Lady's Foundation, Inc., G.R. No. 182378, March 6,
2013
Rolando DS. Torres vs. Rural Bank of San Juan, Inc.,et al., G.R. No. 184520,
March 13, 2013
Polymer Rubber Corporation vs. Ang, G.R. No. 185160, July 24, 2013
Edward C. Ong vs. the Court of Appeals and the People of the Philippines, G.R.
No. 119858, April 29, 2003
Alfredo Ching vs. the Secretary of Justice, et al., G. R. No. 164317, February 6,
2006
10. Contracts
Filipinas Port Services Inc. vs. Go, G.R. No. 161886, March 16, 2007
12. Meetings
People of the Philippines vs. Hermenegildo Dumlao, G.R. No. 168918, March 2,
2009
a. Quorum
Rosita Pea vs. the Court of Appeals, G.R. No. 91478, February 7, 1991
H. Stockholders and Members
2. Participation in Management
a. Proxy
Government Service Insurance System vs. the Hon. Court of Appeals, G.R. No.
183905, April 16, 2009
b. Voting Trust
3. Proprietary Rights
a. Right of Appraisal
Turner vs. Lorenzo Shipping Corporation, G.R. No. 157479, November 24,
2010
b. Right to Inspect
John Gokongwei, Jr. vs. Securities and Exchange Commission, et al., G.R. No.
L-45911, April 11, 1979
Aderito Z. Yujuico and Bonifacio C. Sumbilla vs. Cezar T. Quiambao and Eric
C. Pilapil, G.R. No. 180416, June 02, 2014
c. Pre-Emptive Right
Majority of Stockholders of Ruby Industrial Corporation vs. Lim, GR No.
165887, June 6, 2011
d. Right to Vote
e. Right to Dividends
Nielson & Company, Inc., vs. Lepanto Consolidated Mining Company, G.R.
No. L-21601, December 17, 1966
Nora A. Bitong vs. Court of Appeals, et al., G.R. No. 123553, July 13, 1998)
J.G. Summit Holdings, Inc.,vs. Court of Appeals, et al. G.R. No. 124293,
January 31, 2005
4. Remedial Rights
a. Individual Suit
b. Representative Suit
c. Derivative Suit
Gilda C. Lim, vs. Patricia Lim-Yu, G.R. No. 138343, February 19, 2001
Virginia O. Gochan, et al. vs. Richard G. Young, et al., G.R. No. 131889,
March 12, 2001
Oscar C. Reyes vs. Hon. Regional Trial Court of Makati, , G.R. No. 165744,
August 11, 2008
Legaspi Towers 300, Inc. vs. Muer, G.R. No. 170783, June 18, 2012
Ang, for and in behalf of Sunrise Marketing (Bacolod), Inc. vs. Spouses Ang,
G.R. No. 201675, June 19, 2013
Nestor Ching and Andrew Wellington vs. Subic Bay Golf and Country Club
Inc., et al., G.R. No. 174353, September 10, 2014
5. Obligation of a Stockholder
Edward A. Keller & Co., Ltd. vs. COB Group Marketing, Inc., 141 SCRA 86
(1986)
I. Capital Structure
1. Subscription Agreements
Ong Yong, et al. vs. David S. Tiu, et al., G.R. No. 144476 & G.R. No. 144629, April
8, 2003
2. Shares of Stock
a. Nature of Stock
Philippine National Bank vs. Bitulok Sawmill, Inc., 23 SCRA 1366 (1968)
Embassy Farms, Inc. vs. Court of Appeals, 188 SCRA 492 (1990)
Tan vs. Securities and Exchange Commission, 206 SCRA 740 (1992)
Rural Bank of Salinas, Inc. vs. Court of Appeals, 210 SCRA 510 (1992)
China Banking Corporation vs. Court of Appeals, 270 SCRA 503 (1997)
Rural Bank of Lipa City, Inc. vs. Court of Appeals, 366 SCRA 188 (2001). See
also Batangas Laguna Tayabas Bus Company, Inc., et al., vs. Benjamin
Bitanga, et al., 362 SCRA 635 (2001)
Republic of the Philippines vs. Sandiganbayan and Victor Africa, 402 SCRA
84 (2003)
Trans Middle East (Phils.) vs. Sandiganbayan. 490 SCRA 455 (2006)
Pacific Basin Securities vs. Oriental Petroleum 531 SCRA 667 (2007)
Valley Golf and Country Club, Inc., vs. Vda. De Caram 585 SCRA 218 (2009)
Calatagan Golf Club, Inc. vs. Clemente, Jr. 585 SCRA 300 (2009)
Joselito Musni Puno vs. Puno Enterprises, Inc., represented by Jesusa Puno,
G.R. No. 177066, September 11, 2009
Trans Middle East (Phils.) vs. Sandiganbayan, G.R. No. 172556, June 9, 2006
Valley Golf and Country Club, Inc. vs. Vda. De Caram, 585 SCRA 218 (2009)
Africa vs. Hon. Sandiganbayan, G.R. Nos. 172222/G.R. No. 174493/ G.R. No.
184636, November 11, 2013
b. Subscription Agreements
Philippine National Bank vs. Bitulok Sawmill, Inc., et al., G.R. Nos. L-24177-
85, June 29, 1968
Republic Planters Bank vs. Hon. Enrique A. Agana, Sr., as Presiding Judge,
Court of First Instance of Rizal, Branch XXVIII, Pasay City, Robes-Francisco
Realty & Development Corporation and Adalia F. Robes, G.R. No. 51765,
March 3, 1997
b. Notice Requirement
i. Effect of Delinquency
Calatagan Golf Club, Inc. vs. Sixto Clemente, Jr., G.R. No. 165443, April
16, 2009
Apocada vs. National Labor Relations Commission, 172 SCRA 442 (1989)
4. Certificate of Stock
Alfonso S. Tan vs. Securities and Exchange Commission, G.R. No. 95696
March 3, 1992
Nora A. Bitongvs. Court of Appeals, et al., G.R. No. 123553, July 13, 1998
b. Negotiability
Rural Bank of Salinas, Inc. vs. Securities and Exchange Commission, et al.,
G.R. No. 96674, June 26, 1992
China Banking Corporation vs. Court of Appeals, and Valley Golf and
Country Club, Inc., G.R. No. 117604, March 26, 1997
The Rural Bank of Lipa City, Inc., et al. vs. Honorable Court of Appeals, G.R.
No. 124535, September 28, 2001
Vicente C. Ponce vs. Alsons Cement Corporation, and Francisco M. Giron, Jr.,
G.R. No. 139802, December 10, 2002
Fil-Estate Golf and Development vs. Vertex Sales and Trading Inc., G.R. No.
202079, June 10, 2013
Forest Hills Golf & Country Club vs. Vertex Sales and Trading Inc.G.R. No.
202205, March 6, 2013
c. Issuance
i. Full Payment
Irineo S. Baltazar vs. Lingayen Gulf Electric Power, Co., Inc., G.R. No. L-
16236, June 30, 1965
Jesus V. Lanuza, et al. vs. Court of Appeals, et al., G.R. No. 131394, March 28,
2005
Manuel A. Torres, Jr., (Deceased), et al. vs. Court of Appeals, et al., G.R. No.
120138, September 5, 1997
Chung Ka Bio vs. Intermediate Appellate Court, 163 SCRA 534 (1988)
Aguirre vs. FQB +7, Inc., G.R. No. 170770, January 9 2013
Alabang Development Corporation vs. Alabang Hills Village Association and Rafael
Tinio, G.R. No. 187456, June 02, 2014
1. Modes of Dissolution
a. Voluntary
b. Involuntary
Philippine National Bank vs. Court of First Instance of Rizal, Pasig, et al.,
G.R. No. 63201, May 27, 1992
ii. Failure to Organize and Commence Business Within 2 Years from
Incorporation
If a corporation does not formally organize and commence the transaction of its
business or the construction of its works within two (2) years from the date of its
incorporation, its corporate powers cease and the corporation shall be deemed
dissolved.
2. Methods of Liquidation
Carlos Gelano and Guillermina Mendoza De Gelano vs. the Honorable Court
of Appeals and Insular Sawmill, Inc., G.R. No. L-39050 February 24, 1981
Rene Knecht and Knecht, Inc. vs. United Cigarette Corp., represented by
Encarnacion Gonzales Wong, and Eduardo Bolima, Sheriff, Regional Trial
Court, Branch 151, Pasig City, G.R. No. 139370, July 4, 2002
Alemar's Sibal & Sons, Inc. vs. Honorable Jesus M. Elbinias, in his capacity as
the Presiding Judge of Regional Trial Court, National Capital Region, Branch
CXLI (141), Makati, and G.A. Yupangco& Co., Inc., G.R. No. 75414 June 4,
1990
Victor Yam &Yek Sun Lent, doing business under the name and style of
Philippine Printing Works vs. the Court of Appeals and Manphil Investment
Corporation, G.R. No. 104726, February 11, 1999
Clemente vs. Court of Appeals, 242 SCRA 717 (1995) . See also Reburiano vs.
Court of Appeals, 301 SCRA 342 (1999)
Vigilla vs. Philippine College of Criminology, GR No. 200094, June 10, 2013
K. Other Corporations
1. Close Corporations
Manuel R. Dulay Enterprises, Inc. vs. Court of Appeals, 225 SCRA 678 (1993)
San Juan Structural and Steel Fabricators, Inc. vs. Court of Appeals, Motorich
Sales Corporation, Nenita Lee Gruenberg, ACL Development Corp. and JNM
Realty and Development Corp., G.R. No. 129459, September 29, 1998
Sergio F. Naguiat, doing business under the name and style Sergio F.
NaguiatEnt., Inc., & Clark Field Taxi, Inc.,vs. National Labor Relations
Commission (Third Division), National Organization Of Workingmen and its
members, Leonardo T. Galang, et al., G.R. No. 116123, March 13, 1997
e. Pre-Emptive Right
2. Non-Stock Corporations
a. Treatment of Profits
Rev. Luis Ao-as, et al. vs. Hon. Court of Appeals, G.R. No. 128464, June 20,
2006
3. Foreign Corporations
i. Consent
Eriks PTE. Ltd. vs. Court of Appeals, G.R. No. 118843, February 6, 1997
Merrill Lynch Futures, Inc. vs. Court of Appeals, 211 SCRA 824 (1992)
Philip Morris, Inc. vs. Court of Appeals, 224 SCRA 576 (1993)
George Grotjahn GBBH & Co. vs. Isnani, 235 SCRA 216 (1994)
Litton Mill, Inc. vs. Court of Appeals, 256 SCRA 696 (1996)
Columbia Pictures, Inc. vs. Court of Appeals, 261 SCRA 144 (1996)
Eriks Pte., Ltd. vs. Court of Appeals, 267 SCRA 567 (1997)
Avon Insurance PLC vs. Court of Appeals, 278 SCRA 312 (1997)
It does not follow that the insurer, as subrogee, has also no capacity to sue in
this jurisdiction simply because the insured party (which is a foreign
corporation) has no legal capacity to sue in the Philippines. The rights inherited
by the insurer pertain only to the payment it made to the insured and which
amount it now seeks to recover from the shipping company which caused the
loss sustained by the insured. Capacity to sue is a right personal to its holder. It
is conferred by law and not by the parties. The insurer has satisfactorily proven
its capacity to sue, after having shown that it is not doing business in the
Philippines, but is suing only under an isolated transaction, i.e under the one
marine insurance policy issued in favor of the consignee/insured.
Lorenzo Shipping Corp. vs. Chubb and Sons, 431 SCRA 266 (2004)
Expertravel & Tours, Inc. vs. CA, 459 SCRA 147 (2005)
B. Van Zuiden Bros Ltd. vs. GTVL Manufacturing Industries, 523 SCRA
233 (2007)
Aboitiz Shipping Corp. vs. Insurance Co. of North America, 561 SCRA 262
(2008)
Cargill, Inc., vs. Intra Strata Assurance Corporation, G.R. No. 168266,
March 15, 2010
Hutchison Ports Philippines Limited vs. Subic Bay Metropolitan Authority,
International Container Terminal Services Inc., Royal Port Services, Inc.,
and the Executive Secretary, G.R. No. 131367, August 31, 2000
The Home Insurance Company vs. Eastern Shipping Lines, G.R. No. L-
34382 July 20, 1983
Steelcase, Inc. vs. Design International Selections, Inc., G.R. No. 171995,
April 18, 2012
Steelcase, Inc. vs. Design International Selections, Inc., G.R. No. 171995, April
18, 2012
Antam Consolidated, Inc. vs. Court of Appeals, 143 SCRA 534 (1986)
c. Personality to Sue
Converse Rubber Corporation vs. Universal Rubber Products Inc., 147 SCRA
154 (1987)
Top-Weld Manufacturing, Inc. vs. Eced, S.A., 138 SCRA 118. See also
Granger Associates vs. Microwave Systems, Inc., 189 SCRA 631 (1990)
Global Business Holdings, Inc., vs. Surecomp Software, B.V., G.R. No. 173463,
October 13, 2010
Steelcase, Inc., vs. Design International Selections, Inc., G.R. No. 171995, April
18, 2012
Edward J. Nell Company vs. Pacific Farms, Inc., 15 SCRA 415 (1965)
Associated Bank vs. Court of Appeals and Lorenzo Sarmiento, Jr., G.R. No.
123793, June 29, 1998
SME Bank Inc. vs. Gaspar, G.R. No. 186641, October 8, 2013
Bank of Commerce vs. Radio Philippines Network Inc., et al., G.R. No. 195615,
April 21, 2014
John F. McLeod vs. National Labor Relations Commission (First Division), et al.,
G.R. No. 146667, January 23, 2007
3. Effectivity
Mindanao Savings and Loan Association, Inc., represented by its Liquidator, the
Philippine Deposit Insurance Corporation vs. Edward Willkom; Gilda Go;
Remedios Uy; Malayo Bantuas, in his capacity as the Deputy Sheriff of Regional
Trial Court, Branch 3, Iligan City; and the Register of Deeds of Cagayan de Oro
City, G.R. No. 178618, October 11, 2010
4. Effects
Associated Bank vs. Court of Appeals and Lorenzo Sarmiento, Jr., G.R. No.
123793, June 29, 1998
Spouses Ramon Nisce vs. Equitable PCI Bank 516 SCRA 231 (2007)
Bank of Philippine Islands vs. Lee, G.R. No. 190144, August 1, 2012
M. Miscellaneous Topics
1. Corporate Officers
Board of Liquidators vs. Kalaw, 20 SCRA 987 (1967)
AC Ransom Labor Union vs. NLRC 142 SCRA 269 (1986); Villanueva vs. Adre
172 SCRA 876 (1989).
Prime White Cement Corporation vs. Intermediate Appellate Court, 220 SCRA
103 (1993)
New Durawood Company Inc. vs. Court of Appeals, 253 SCRA 740 (1996)
Tabang vs. National Labor Relations Commission, 266 SCRA 462 (1997)
Naguiat vs. National Labor Relations Commission, 269 SCRA 564 (1997)
Reahs Corporation vs. National Labor Relations Commission, 271 SCRA 247
(1997)
San Juan Structure and Steel Fabricators, Inc. vs. Court of Appeals, 296 SCRA
631 (1998)
Peoples Aircagro and Warehousing Company, Inc. vs. Court of Appeals, 297
SCRA 170 (1998)
Restaurante Las Conchas vs. Llego, 314 SCRA 24 (1999) (Please see, however,
decisions to the contrary in Carag vs. NLRC and Macleod vs. NLRC, infra)
Consolidated Food Corporation vs. National Labor Relations, 315 SCRA 129
(1999)
Rural Bank of Milaor (Camarines Sur) vs. Ocfemia, 325 SCRA 99 (2000); Soler
vs. Court of Appeals, 358 SCRA 57 (2001)
Security Bank and Trust Co. vs. Cuenca, 341 SCRA 781 (2000)
Safic Alcan & Cie vs. Imperial Vegetable Co., Inc., 355 SCRA 559 (2001)
Nakpil vs. Intercontinental Broadcasting Corporation, 379 SCRA 653 (2002)
Great Asian Sales Center Corporation vs. Court of Appeals, 381 SCRA 557 (2002)
DBP vs. Sps. Francisco and Leticia Ong, 460 SCRA 170 (2005)
The property of a corporation may not be sold without express authority from the board
of directors. Physical acts, like the offering of the properties of the corporation for sale,
or the acceptance of a counter-offer of prospective buyers of such properties and the
execution of the deed of sale covering such property, can be performed by the
corporation only by officers or agents duly authorized for the purpose by corporate by-
laws or by specific acts of the board of directors. Absent such valid
delegation/authorization, the rule is that the declarations of an individual director
relating to the affairs of the corporation, but not in the course of or connected with, the
performance of authorized duties of such director, are not binding on the corporation.
Corporate officers in the context of PD 902-A are those officers of a corporation who
are given that character either by the Corporation Code or by the corporations by-laws.
Under Section 25 of the Corporation Code, the corporate officers are the president,
secretary, treasurer and such other officers as may be provided for in the by-laws.
The burden of proof is on the party who makes the allegation that the person whose
removal was the subject of the controversy was a corporate officer whose position was
provided in the by-laws. Where the petitioner merely alleged that respondent was a
corporate officer but failed to prove that its by-laws provided for the office of vice
president for nationwide expansion, then the petitioner failed to satisfy the burden of
proof that was required of it. Thus, its claim that respondent was a corporate officer
whose removal was cognizable by the SEC under PD 902-A (now by the RTC) and not
by the NLRC under the Labor Code cannotbe sanctioned.
An office is created by the charter of the corporation and the officer is elected by the
directors or stockholders. On the other hand, an employee occupies no office and
generally is employed not by the action of the directors or stockholders but by the
managing officer of the corporation who also determines the compensation to be paid to
such employee.
Easycall Communications Phils. Inc. vs. Edward King 478 SCRA 102 (2005)
People of the Philippines vs. Hermenegildo Dumlao and Emilio Lao, 580 SCRA
409 (2009)
James U. Gosiaco vs. Leticia Ching and Edwin Casta 585 SCRA 471 (2009)
Digital Microwave Corp. vs. Court of Appeals, 328 SCRA 289 (2000)
Philippine Rabbit Bus Lines, Inc., vs. Aladdin Transit Corp. 494 SCRA 358 (2006)
Maranaw Hotels & Resort Corporation vs. Court of Appeals 576 SCRA 463 (2009)
4. Teleconferencing
5. Condominium Corporation
6. Interest in Investment
The President of PDIC as Liquidator of Pacific Banking Corporation vs. Reyes 460
SCRA 473 (2005)
Nestle Philippines, Inc. vs. Court of Appeals, 203 SCRA 504) (Under the Rules and
Regulations Implementing the SRC, however, notice of confirmation of exemption
and payment of the fee in case of exempt sale transactions are sufficient)
Betty Gabionza and Isabelita Tan vs. Court of Appeals, G.R. No. 161057, September
12, 2008
Power Homes Unlimited Corporation vs. SEC 546 SCRA 567 (2008)
Timeshare Realty vs. Cesar Lao, G.R. No. 158941, February 11, 2008
Securities and Exchange Commission vs. Prosperity.Com, Inc., G.R. No. 164197,
January 25, 2012
Securities and Exchange Commission vs. Oudine Santos, G.R. No. 195542, March 19,
2014
1. Exempt Securities
Union Bank of the Philippines vs. Securities and Exchange Commission, G.R. No.
138949, June 6, 2001
2. Exempt Transactions
Nestle Philippines, Inc.,vs. Court of Appeals, G.R. No. 86738, November 13, 1991
Onapal Philippines Commodities, Inc. vs. Court of Appeals, G.R. No. 90707,
February 1, 1993
1. Insider Trading
Securities and Exchange Commission vs. Interport Resources Corporation, et. al.,
G.R. No. 135808, October 6, 2008
D. Protection of Investors
Cemco Holdings, Inc. vs. National Life Insurance Company of the Philippines,
G.R. No. 171815, August 7, 2007
GSIS vs. Court of Appeals, G.R. No. 183905, April 16, 2009
Securities and Exchange Commission vs. Court of Appeals et al., G.R. No. 187702,
October 22, 2014
3. Disclosure Rule
Securities and Exchange Commission vs. Interport Resources Corporation, et. al.,
G.R. No. 135808, October 6, 2008
Securities and Exchange Commission vs. Interport Resources Corporation, et. al.,
G.R. No. 135808, October 6, 2008
E. Civil Liability
Citibank N.A. vs. Tanco-Gabaldon, et al. G.R. No. 198444, September 4, 2013
Jose U. Pua vs. Citibank, N. A. G.R. No. 180064, September 16, 2013
Primamanila Plans Inc., herein represented by Eduardo S. Madrid vs. Securities and
Exchange Commission, G.R. No. 193791, August 6, 2014
Cosmos Bottling Corporation vs. Commission En Banc of the SEC and Justine
Callangan in her capacity as Director of Corporate Finance Department of the SEC,
G.R. No. 199028, November 12, 2014
H. Miscellaneous Topics
1. Intra-corporate disputes
Unlad Resources Devt., Corp., et al. vs. Renato P. Dragon, 560 SCRA 63 (2008)
Garcia vs. Eastern Telecommunications Philippines, Inc 585 SCRA 450 (2009)
3. Regulatory Jurisdiction
Securities and Exchange Commission vs. Court of Appeals, 246 SCRA 738
(1995)
Philippine Stock Exchange vs. Securities & Exchange Commission, 281 SCRA
232 (1997)
Philippine National Construction Corporation vs. Pabion, 320 SCRA 188 (1999)
Pilipinas Loan Company, Inc. vs. Securities and Exchange Commission, 356
SCRA 193 (2001)
Eustacio Atwel, et al. vs. Conception Progressive Association, Inc., 551 SCRA
272 (2008)
Baviera vs. Standard Chartered Bank, et al. 515 SCRA 170 (2007)
Cemco Holdings vs. National Life Insurance Company, 529 SCRA 355 (2007)
Provident International Resources Corp., et al. vs. Joaquin T. Venus, et al. 554
SCRA 540 (2008)
4. Corporate Rehabilitation
Tysons Super Concrete, Inc. vs. Court of Appeals 461 SCRA 69 (2005)
Spouses Sobrejuanite vs. ASB Development Corporation 471 SCRA 763 (2005)
Sy Chim vs. Sy Siy Ho & Sons, Inc., 480 SCRA 465 (2006)
Danilo G. Punongbayan vs. Perfecto G. Punongbayan, Jr. 491 SCRA 581 (2006)
New Frontier Sugar Corporation vs. RTC of Ilo-ilo and Equitable PCI Bank, 513
SCRA 601 (2007)
Union Bank of the Philippine vs. ASB Devt. Corp., 560 SCRA 578 (2008)
China Banking Corporation vs. ASB Holdings, Inc., 575 SCRA 247 (2008)
Garcia vs. Philippine Airlines. G.R. No. 164856 576 SCRA 479 (2009)
Malayan Insurance Company, Inc. vs. Victorias Milling Company, Inc. 586 SCRA
45 (2009)
Puerto Azul Land Inc. vs. Pacific Wide Realty Development Corporation, G.R.
No. 184000, September 17, 2014
Robinsons Bank Corporation vs. Hon. Samuel H. Gaerlan, G.R. No. 195289,
September 24, 2014
BPI Family Sacings Bank Inc., vs. St. Michael Medical Center, Inc., G.R. No.
205469, March 25, 2015
Romeo Busuego vs. Court of Appeals, G.R. No. 95326, March 11, 1999
Ana Maria Koruga vs. Teodoro Arcenas, Jr., G.R. No. 168332/ G.R. No. 169053,
June 19, 2009
Ana Maria Koruga vs. Teodoro Arcenas, Jr., G.R. No. 168332/G.R. No. 169053,
June 19, 2009
BSP Monetary Board vs. Hon. Antonio-Valenzuela, G.R. No. 184778, October 2,
2009
a. Conservatorship
Central Bank of the Philippines vs. Court of Appeals, G.R. No. L-45710 October
3, 1985
Central Bank of the Philippines vs. Court of Appeals, G.R. No. 88353, May 8,
1992
First Philippine International Bank vs. Court of Appeals, G.R. No. 115849,
January 24, 1996
b. Closure
Emerito Ramos vs. Central Bank of the Philippines, G.R. No. L-29352, October
4, 1971
Central Bank vs. Court of Appeals, G.R. No. L-50031-32, July 27, 1981
Central Bank of the Philippines vs. Court of Appeals, 139 SCRA 46 (1985)
Overseas Bank of Manila vs. Court of Appeals, G.R. No. L-45866, April 19, 1989
Banco Filipino Savings and Mortgage Bank vs. Central Bank, G.R. No. 70054,
December 11, 1991
Central Bank of the Philippines vs. Court of Appeals, 208 SCRA 652 (1992)
Rural Bank of San Miguel vs. Monetary Board, G.R. No. 150886, February 16,
2007
BSP Monetary Board vs. Hon. Antonio-Valenzuela, G.R. No. 184778, October 2,
2009
c. Receivership
Central Bank of the Philippines vs. Court of Appeals, G.R. No. L-45710, October
3, 1985
Spouses Romeo Lipana and Milagros Lipana vs. Development Bank of Rizal,
G.R. No. 73884, September 24, 1987
Abacus Real Estate Development Center, Inc.,vs. Manila Banking Corp., G.R.
No. 162270, April 06, 2005
Alfeo D. Vivas, vs. Monetary Board and PDIC, G.R. No. 191424, August 7, 2013
d. Liquidation
Apollo M. Salud vs. Central Bank of the Philippines, G.R. No. L-17620, August
19, 1986
Banco Filipino Savings and Mortgage Bank vs. Central Bank, G.R. No. 70054,
December 11, 1991
Jerry Ong vs. Court of Appeals, G.R. No. 112830, February 1, 1996
Domingo Manalo vs. Court of Appeals, G.R. No. 141297, October 8, 2001
Rural Bank of Sta. Catalina vs. Land Bank of the Philippines, G.R. No. 148019,
July 26, 2004
Leticia G. Miranda vs. Philippine Deposit Insurance Corporation, G.R. No.
169334, September 8, 2006
1. Purpose
BSB Group, Inc. vs. Sally Go, G.R. No. 168644, February 16, 2010
2. Prohibited Acts
Philippine Commercial International Bank vs. Court of Appeals, 255 SCRA 299
(1996)
Union Bank of the Philippines vs. Court of Appeals, G.R. No. 134699, December
23, 1999
3. Deposits Covered
Intengan vs. Court of Appeals, G.R. No. 128996, February 15, 2002
4. Exceptions
PNB vs. Gancayco, 15 SCRA 91 (1965); Banco Filipino Saving and Mortgage
Bank vs. Purisima, 161 SCRA 576 (1988)
Mellon Bank, N.A. vs. Magsino, G.R. No. 71479, October 18, 1990
PCIB vs. Court of Appeals, G.R. No. 84526, January 28, 1991
Marquez vs. Desierto, G.R. No. 135882, June 27, 2001; Office of the
Ombudsman vs. Ibay, G. R. No. 137538, September 3, 2001
China Bank Corporation vs. Court of Appeals 511 SCRA 110 (2006)
BSB Group, Inc.,vs. Sally Go, G.R. No. 168644, February 16, 2010
Dona Adela Export International Inc., vs. Trade and Investment Development
Corporation and the Bank of the Philippine Islands, G.R. No. 201931, February
11, 2015
PCIB vs. Court of Appeals, G.R. No. 84526, January 28, 1991
Salvacion vs. Central Bank of the Philippines, G.R. No. 94723, August 21, 1997
Teodoro Baas vs. Asia Pacific Finance Corporation, G.R. No. 128703, October
18, 2000
First Planters Pawnshop, Inc.,vs. Commissioner of Internal Revenue, G.R. No. 174134,
July 30, 2008
a. Corporate Powers
Simex International (Manila) Inc. vs. Court of Appeals, 183 SCRA 360 (1990)
Luzan Sia vs. Court of Appeals, G.R. No. 102970, May 13, 1993
Gregorio Reyes vs. Court of Appeals, G.R. No. 118492, August 15, 2001
Consolidated Bank and Trust Corporation vs. Court of Appeals, G.R. No.
138569, September 11, 2003
Citibank, N.A. vs. Spouses Luis & Carmelita Cabamongan, G.R. No. 146918,
May 2, 2006
Philippine Savings Bank vs. Chowking Food Corporation, G.R. No. 177526, July
4, 2008
Philippine National Bank vs. Erlando T. Rodriguez, et. al., G.R. No. 170325,
September 26, 2008
Central Bank of the Philippines vs. Citytrust Banking Corporation, G.R. No.
141835, February 4, 2009
Central Bank of the Philippines vs. Citytrust Banking Corporation, 578 SCRA
27 (2009)
Bank of America, NT and SA vs. Associated Citizens Bank, G.R. No. 141018,
May 21, 2009
Equitable PCI Bank vs. Arcelito B. Tan, G.R. No. 165339, August 23, 2010
Comsavings Bank vs. Spouses Danilo and Estrella Capistrano, G.R. No. 170942,
August 28, 2013
Land Bank of the Philippines vs. Emmanuel Oate, G.R. No. 192371, January
15, 2014
6. Stipulation on Interests
Fidelity Savings and Mortgage Bank vs. Hon. Pedro Cenzon, G.R. No. L-46208,
April 5, 1990
Ileana Macalinao vs. Bank of the Philippine Islands, G.R. No. 175490,
September 17, 2009
Heirs of Estelita Burgos-Lipat namely: Alan B. Lipat and Alfredo B. Lipat, Jr.
vs. Heirs of Eugenio D. Trinidad namely: Asuncion R. Trinidad, et. al., G.R. No.
185644, March 2, 2010
Asia Trust Development Bank vs. Carmelo H. Tuble, G.R. No. 183987, July 25,
2012
Advocates for Truth in Lending vs. BSP, G.R. No. 192986, January 15, 2013
The total amount of loans, credit accommodations and guarantees that may be
extended by a bank to any person, partnership, association, corporation or other entity
shall at no time exceed twenty five percent (25%) of the net worth of such bank. The
basis for determining compliance with the single borrowers limit (SBL) is the total
credit commitment of the bank to or on behalf of the borrower.
Hilario P. Soriano vs. People of the Philippines, et. al., G.R. No. 162336,
February 1, 2010
Republic of the Philippines vs. Sandiganbayan, et. al., G.R. No. 166859/G.R. No.
169203/G.R. No. 180702, April 12, 2011
D. Miscellaneous Topics
Philippine Deposit Insurance Corporation vs. Court of Appeals, 283 SCRA 462.
1998
2. Truth in Lending
Consolidated Bank and Trust Company vs. Court of Appeals, 246 SCRA 193
(1995)
Section 1 of R.A. No. 3765 provides that prior to the consummation of a loan
transaction, the bank, as creditor, is obliged to furnish a client with a clear statement,
in writing, setting forth, to the extent applicable and in accordance with the rules and
regulations prescribed by the Monetary Board of the Central Bank of the Philippines,
the following information:
Development Bank of the Philippines vs. Arcilla Jr., 462 SCRA 599 (2005)
Spouses Eduardo and Lydia Silos vs. Philippine National Bank, G.R. No. 181945,
July 2, 2014
IX. Intellectual Property Code
Pearl & Dean (Philippines), Inc. vs. Shoemart, Inc., G.R. No. 148222, August 15,
2003
B. Patents
1. Patentable Inventions
Jessie Ching vs. William Salinas, et. al., G.R. No. 161295, June 29, 2005
2. Ownership of a Patent
a. Right to a Patent
Pearl & Dean (Philippines), Inc. vs. Shoemart, Inc., G.R. No. 148222, ibid
Domiciano Aguas vs. Conrado De Leon, G.R. No. L-32160, January 30, 1982
Precision Systems, Inc.,vs. Court of Appeals, G.R. No. 118708, February 2, 1998
Smith Kline Beckman Corporation vs. Court of Appeals, G.R. No. 126627,
August 14, 2003
Philippine Pharmawealth, Inc.,vs. Pfizer, Inc., G.R. No. 167715, November 17,
2010
4. Patent Infringement
i. Literal Infringement
Pascual Godines vs. Court of Appeals, G.R. No. 97343, September 13, 1993
ii. Doctrine of Equivalents
Rosario Maguan vs. Court of Appeals, G.R. L-45101, November 28, 1986
5. Licensing
C. Trademarks
Pribhdas J. Mirpuri vs. Court of Appeals, G.R. No. 114508, November 19, 1999
Elidad C. Kho, doing business under the name and style of KEC Cosmetics
Laboratory vs. Court of Appeals, et. al., G.R. No. 115758, March 19, 2002
E.Y. Industrial Sales vs. Shien Dar Electricity and Machinery Co. , G.R. No.
184850, 20 October 2010
Superior Commercial Enterprises, Inc. vs. Kunnan Enterprises Ltd. and Sports
Concept & Distributor, Inc., G.R. No. 169974, April 20, 2010
Taiwan Kolin Corporation, LTD. vs. Kolin Electronics Co., Inc.,G.R. No.
209843, March 25, 2015
2. Non-Registrable Marks
Lyceum of the Philippines vs. Court of Appeals, 219 SCRA 610 (1993)
a. Dominancy Test
Amigo Manufacturing, Inc. vs. Cluett Peabody Co., Inc., G.R. No. 139300,
March 14, 2001
Societe Des Produits Nestle, S.A. vs. Court of Appeals and CFC Corporation,
G.R. No. 112012, April 4, 2001
McDonalds Corporation vs. L.C. Big Mak Burger, Inc., G.R. No. 143993,
August 18, 2004
Prosource International, Inc. vs. Horphag Research Management SA, G.R. No.
180073, November 25, 2009
Berris Agricultural Co., Inc. vs. Norvy Abyadang, G.R. No. 183404, October 13,
2010
Dermaline, Inc. vs. Myra Phamaceuticals, Inc., G.R. No. 190065, August 1, 2010
Soceite Des Produits Nestle, S.A. vs. Dy, Jr., G.R. No. 172276, August 8, 2010
Sketchers USA vs. Inter Pacific Industrial Trading Corporation, GR No. 164321,
March 28, 2011
b. Holistic Test
Fruit of the Loom, Inc. vs. Court of Appeals, G.R. No. L-32747, November 29,
1984
Philip Morris, Inc. vs. Fortune Tobacco Corporation, G.R. No. 158589, June 27,
2006
Victorio Diaz vs. People of the Philippines, G.R. No. 180677, February 18, 2013
Hickok Manufacturing, Co., Inc. vs. Court of Appeals, G.R. No. L-44707, August
31, 1982
Faberge, Inc. vs. Intermediate Appellate Court, G.R. No. 71189, November 4,
1992
Canon Kabushiki Kaisha vs. Court of Appeals, G.R. No. 120900, July 20, 2004
Mighty Corporation and La Campana Fabrica De Tabaco, Inc. vs. E. & J. Gallo
Winery and the Andresons Group, Inc., G.R. No. 154342, July 14, 2004
5. Well-Known Marks
Mighty Corporation and La Campana Fabrica De Tabaco, Inc. vs. E. & J. Gallo
Winery and the Andresons Group, Inc., G.R. No. 154342, July 14, 2004
Sehwani, Inc. vs. In-N-Out Burger, Inc., G.R. No. 171053, October 15, 2007
Berris Agricultural Co., Inc. vs. Norvy Abyadang, G.R. No. 183404, ibid
Conrad and Company, Inc. vs. Court of Appeals, 246 SCRA 691 (1995)
Shangri-la International Hotel Management Ltd., et al. vs. Court of Appeals, 359
SCRA 273 (2001)
Melbarose R. Sasot and Allandale R. Sasot vs. People of the Philippines, G.R.
No. 143193, June 29, 2005
Levi Strauss & Co., Levi Strauss (Phils.) Inc. vs. Clinton Apparelle, Inc., G.R.
No. 138900, September 20, 2005
Tanduay Distillers, Inc.,vs. Ginebra San Miguel, Inc., G.R. No. 164324, August
14, 2009
a. Trademark Infringement
Asia Brewery, Inc., vs. Court of Appeals and San Miguel Corporation, G.R. No.
103543, July 5, 1993
Pearl & Dean (Philippines) Inc. vs. Shoemart, Inc., G.R. No. 148222, ibid
William C. Yao, Sr., et. al. vs. People of the Philippines, G.R No. 168306, June
19, 2007
Ong vs. People of the Philippines, G.R. No. 169440, November 23, 2011
Republic Gas Corporation (REGASCO), et. al. vs. Petron Corporation, et. al.,
G.R. No. 194062, June 17, 2013
Century Chinese Medicine Co., et. al. vs. People of the Philippines, G.R. No.
188526, November 11, 2013
8. Unfair Competition
Asia Brewery, Inc. vs. Court of Appeals and San Miguel Corporation, G.R. No.
103543, ibid
McDonalds Corporation vs. L.C. Big Mak Burger, Inc., G.R. No. 143993, ibid
Sony Computer Entertainment, Inc. vs. Supergreen, Inc., 518 SCRA 750 (2007)
Coca-Cola Bottlers Philippines, Inc.,(CCBPI), Naga Plant vs. Quintin Gomez, et,
al., G.R. No. 154491, November 14, 2008
Republic Gas Corporation (REGASCO), et. al. vs. Petron Corporation, et. al.,
G.R. No. 194062, ibid
Roberto Co vs. Keng Huan Jerry Yeung and Emma Yeung, G.R. No. 212705,
September 10, 2014
9. Trade Names or Business Names
Converse Rubber Corporation vs. Universal Rubber Products, Inc., G.R. No. L-
27906, January 8, 1987
Coffee Partners vs. San Francisco Coffee and Roastery, Inc., G.R. No. 169504,
March 3, 2010
Ecole De Cuisine Manille (Cordon Bleu of the Philippines), Inc. vs. Renaus
Cointreau & Cie and Le Cordon Bleu Intl, B.V., G.R. No. 185830, June 5, 2013
D. Copyrights
2. Copyrightable Works
3. Non-Copyrightable Works
Francisco Joaquin, Jr. vs. Franklin Drilon, et. al., G.R. No. 108946, January 28,
1999
Pearl & Dean (Philippine), Inc. vs. Shoemart, Inc., G.R. No. 148222, ibid
Columbia Pictures, Inc. vs. Court of Appeals, 261 SCRA 144 (1996)
5. Limitations on Copyright
PMSI cannot be said to be infringing upon the exclusive broadcasting rights of ABS-
CBN under the IP Code for PMSI does not perform the functions of a broadcasting
organization, thus, it cannot be said that it is engaged in rebroadcasting Channels 2
and 23. PMSI is not the origin nor does it claim to be the origin of the programs
broadcasted by the ABS-CBN; the former did not make and transmit on its own but
merely carried the existing signals of the latter and when PMSIs subscribers view
ABS-CBNs programs in Channels 2 and 23, they know that the origin thereof was
the latter. Ibid
GMA Network Inc., vs. Central CATV Inc., G.R. No. 176694, July 18, 2014
a. Copyright Infringement
Filipino Society of Composers, Authors and Publishers, Inc. vs. Benjamin Tan,
G.R. No. L-36402, March 16, 1987
Columbia Pictures, Inc., et. al. vs. Court of Appeals, G.R. No. 110318, August 28,
1996
Pacita Habana, et. al. vs. Felicidad Robles and Goodwill Trading Co., Inc., G.R.
No. 131522, July 19, 1999
NBI-Microsoft Corporation vs. Judy Hwang, et. al., G.R. No. 147043, June 21,
2005
X. Special Laws
Republic of the Philippines vs. Glasgow Credit and Collection Services, Inc.,
G.R. No. 170281, January 18, 2008
Republic of the Philippines vs. Hon. Antonio Eugenio, G.R. No. 174629,
February 14, 2008
Republic of the Philippines vs. Cabrini Green & Ross, Inc., G.R. No. 154522,
May 5, 2006
Ret. Lt. Gen. Jacinto Ligot, et. al. vs. Republic of the Philippines, G.R. No.
176944, March 6, 2013
1. Definition of Terms
a. Doing Business in the Philippines
Alfred Hahn vs. Court of Appeals, G.R. No. 113074, January 22, 1997
Eriks Pte. Ltd. vs. Court of Appeals, G.R. No. 118843, February 6, 1997
Steelcase, Inc. vs. Design International Selections, Inc., G.R. No. 171995, April
18, 2012
Heirs of Wilson Gamboa vs. Finance Secretary Margarito Teves, G.R. No.
176579, October 9, 2012
Philippine National Bank vs. Noahs Ark Sugar Refinery, 226 SCRA 36 (1993)
Philippine National Bank vs. Se. Jr., 256 SCRA 380 (1996)
Philippine Naitonal Bank vs. Sayo, Jr., 292 SCRA 202 (1998)