COURSE/CASE SYLLABUS IN COMMERCIAL LAW

Dean Nilo T. Divina

I. LETTERS OF CREDIT

1. Definition and Nature of Letter of Credit

- A Financial devise to facilitate commercial transaction

Bank of America vs. Court of Appeals, 228 SCRA 357 (1993)

Prudential Bank and Trust Company vs. IAC, 216 SCRA 257 (1992)

- Security arrangements but not accessory contracts

Feati Bank & Trust Company vs. Court of Appeals, 196 SCRA 576 (1991)
MWSS vs. Hon. Daway, 432 SCRA 559 (2004)

- A composite of at least three distinct but intertwined relationships, each

relationship being concretized in a contract:

Reliance Commodities, Inc. vs. Daewoo Industrial Co., Ltd., 228 SCRA 545
(1993)

- Not a negotiable instrument

Lee vs. Court of Appeals, 375 SCRA 579 (2002)

- Different from trust receipt

Bank of Commerce vs. Serrano, 451 SCRA 484 (2005)

2. Laws governing letter of credit

- Applicability of usage and customs apply in commercial transactions in the

absence of any particular provision in the Code of Commerce

Bank of the Philippine Islands vs. De Reny Fabric Industries, Inc., 35 SCRA 253
(1970)

3. Kinds of letter of credit

a. Commercial and stand by letter of credit

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)

b. Irrevocable and revocable letter of credit

Philippine Virginia Tobacco Administration vs. De Los Angeles, 164 SCRA 543
(1988)

c. Confirmed and unconfirmed letter of credit

Feati Bank & Trust Company vs. Court of Appeals, 196 SCRA 576 (1991)

4. Parties to a Letter of Credit

a. Rights and Obligations of Parties

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)

iv. Advising/Notifying Bank

v. Paying Bank
vi. Confirming Bank

Bank of America vs. Court of Appeals, ibid.

Feati Bank and Trust Company vs. Court of Appeals, ibid.

5. Basic Principles of Letter of Credit

a. Doctrine of Independence

i. In commercial letter of credit

BPI vs. De reny Fabrics, ibid..

 Land Bank of the Philippines vs. Monets Export and Manufacturing Corp., 453
SCRA 173 (2005)

Philippine National Bank vs. San Miguel Corporation, G.R. No. 186063, January
15, 2014

ii. In Standby letter of credit

Insular Bank of Asia & America vs. Intermediate Appellate Court, 167 SCRA 450
(1988)

b. Fraud Exception Principle

Transfield Philippines, Inc. vs. Luzon Hydro Corp. Ibid.

c. Doctrine of Strict Compliance

Feati Bank & Trust Company vs. Court of Appeals, ibid.

II. Trust Receipts Law

1. Definition/Concept of a Trust Receipt Transaction

a. A security transaction intended to aid in financing importers and retail

dealers who do not have sufficient funds or resources to finance the
importation or purchase of merchandise, and who may not be able to
acquire credit except through utilization, as collateral of the merchandise
imported or purchased.

Lee vs. Court of Appeals, 375 SCRA 579 (2002)

b. The loan and security features of a trust receipt

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

Colinares vs. Court of Appeals, 339 SCRA 609 (2000)

 Consolidated Bank & Trust Corp. vs. Court of Appeals, 356 SCRA
671 (2001)

d. The goods must be intended for sale or resale, otherwise, it is a simple

loan

Anthony L. Ng vs. People of the Philippines, G.R. No. 173905, April

23, 2010;

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

People vs. Hon. Nitafan 207 SCRA 726 (1992)

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)

2. Ownership of the Goods, Documents and Instruments under a Trust Receipt

a. Entrustee is the owner of the goods

Vintola vs IBAA, ibid

Rosario Textile Mills vs Home Bankers Trust, ibid.
 b. Entrustee can not mortgage the goods under trust receipt

DBP vs. Prudential Bank, 475 SCRA 623 (2005)

3. Rights of the Entruster

a. Validity of the Security Interest as Against the Creditors of the

Entrustee/Innocent Purchaser for Value

Prudential Bank vs. National Labor Relations Commission, 251 SCRA 412 (1995)

4. Obligation and Liability of the Entrustee

a. No criminal liability in the following cases

i. entrustee already owns the goods when loan under TR granted

Colinares vs Court of Appeals, ibid.

Consolidated vs Court of Appeals, ibid.
ii. goods not intended for sale or resale

Ng vs People, ibid.
Land Bank vs Court of Appeals, ibid.
Hur Ting Yang vs People, ibid.
iii. Non-delivery of the goods

Ramos vs. Court of Appeals, 153 SCRA 276 (1987)

iv. Novation

Ong vs. Court of Appeals, 124 SCRA 578 (1983)

Pilipinas Bank vs. Ong, 387 SCRA 37 (2002)

5. Payment/Delivery of Proceeds of Sale or Disposition of Goods, Documents or

Instrume

6. Return of Goods, Documents or Instruments in Case of Non-Sale

Vintola vs. Insular Bank of Asia and America, ibid

7. Liability for Loss of Goods, Documents or Instruments

Rosario Textile Mills Corp. vs. Home Bankers Savings and Trust Company, ibid.

8. Penal Sanctions if Offender is a Corporation

 a. Criminal Liability of directors, officers and agents

Ong vs. Court of Appeals, 401 SCRA 649 (2003)

Ching vs Secretary of Justice

b. Directors and officers of the corporation not civilly liable unless they assume
personal liability

Tupaz IV vs. Court of Appeals, 475 SCRA 398 (2005)

9. Remedies Available

a. Criminal and civil actions

Vintola vs. Insular Bank of Asia and America, ibid

Sarmiento vs. Court of Appeals, 394 SCRA 315 (2002)

b. Entrusters repossession of the goods under trust receipt not a bar to

foreclosure of mortgage of other collateral

Philippine National Bank vs. Pineda, 197 SCRA 1 (1991)

c. cancellation of trust and repossession of goods

South City Homes, Inc. vs. BA Finance Corporation, 371 SCRA 603 (2001)

d. entrustee liable for deficiency

Landl & Company vs. Metropolitan Bank, 435 SCRA 639 (2004)

III. Negotiable Instruments Law

A. Forms and Interpretation

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)

A check which reads Pay to the EQUITABLE BANKING CORPORATION Order of

A/C OF CASVILLE ENTERPRISES, INC. is not negotiable because the payee ceased
to be indicated with reasonable certainty in contravention of Section 8 of the Negotiable
Instruments Law. As worded, it could be accepted as deposit to the account of the party
named after the symbols "A/C," or payable to the Bank as trustee, or as an agent, for
Casville Enterprises, Inc., with the latter being the ultimate beneficiary. Equitable
Banking Corporation vs. Intermediate Appellate Court and Edward J. Nell Co.,
G.R. No. 74451, May 25, 1988

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

The language of negotiability which characterizes a negotiable paper as a credit

instrument is its freedom to circulate as a substitute for money. The freedom of
negotiability is the touchstone relating to the protection of holders in due course and is
the foundation for the protection which the law thrown around a holder in due course.
This freedom in negotiability is totally absent in a certificate of indebtedness which
merely acknowledges to pay a sum of money to a specified persons or entity. Since a
certificate of indebtedness which is not payable to order or bearer but is payable to a
specific person is not negotiable, the assignee takes it subject to the defect in the title of
the assignor. Thus, when the person who signed the deed of assignment was not
authorized by the board of directors, the assignor had no title to convey to the assignee.
Traders Royal Bank vs. Court of Appeals, Filriters Guaranty Assurance
Corporation and Central Bank of the Philippines, G.R. No. 93397, March 3, 1997

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

2. Kinds of Negotiable Instruments

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

A certificate of deposit is defined as a written acknowledgement by a bank of the

receipt of a sum of money on deposit which the bank promise to pay to the depositor or
the order of the depositor or to some other person or his order whereby the relation of
 debtor and creditor between the bank and the depositor is created. A document to be
considered a certificate of deposit need not be in a specific form. Thus, a passbook of
an interest-earning deposit account issued by a bank is a certificate of deposit drawing
interest because it is considered a written acknowledgment by a bank that it has
accepted a deposit of a sum of money from a depositor. Thus, it is subject to
documentary stamp tax. Prudential Bank vs. Commissioner of Internal Revenue
(CIR) G.R. No. 180390, July 27, 2011

B. Completion and Delivery

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

3. Incomplete and Undelivered Instruments

 The CA emphasized that the P20,000,000.00 check was never delivered by respondent
Nicdao to petitioner Ching. As such, the said check without the details as to the date,
amount and payee, was an incomplete and undelivered instrument when it was stolen and
ended up in petitioner Chings hands. On this point, the CA applied Sections 15 and 16 of
the Negotiable Instruments Law. Its finding relative to the P20,000,000.00 check that it
was a stolen check necessarily absolved respondent Nicdao of any civil liability thereon
as well. Ching vs. Nicdao, G.R. No. 141181, April 27, 2007

4. Complete but Undelivered Instruments

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

3. Indorsement by Minor or Corporation

The indorsement or assignment of the instrument by a corporation or by a minor passes

the property therein, notwithstanding that from want of capacity, the corporation or minor
may incur no liability thereon.

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)

A bank which allowed the pre-termination of a money market placement without

making verification with the client and comparing the signature in the letter pre-
terminating the money market placement with the specimen signature of the client on
file and without requiring the surrender of the promissory note evidencing the money
market placement is considered negligent, more so in this case, where the instruction
was made by a swindler who impersonated the client with a money market placement
in a bank. The bank to whom the swindler deposited the cashiers check representing
the proceeds of the money market placement was also negligent when it approved the
opening of the account with only a tax account number as means of identification. The
drawee bank, however, whose negligence is greater and the proximate cause of the loss
should bear sixty per cent of the loss while the collecting bank should bear forty per
cent thereof. Bank of the Philippine Island vs. Court of Appeals, 216 SCRA 51
(1992)

The possession of a check on a forged or unauthorized indorsement is wrongful, and

when the money is collected on the check, the bank can be held for moneys had and
received. The proceeds are held for the rightful owner of the payment and may be
recovered by him. The position of the bank taking the check on the forged or
unauthorized indorsement is the same as if it had taken the check and collected without
indorsement at all. The act of the bank amounts to conversion 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

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

A forged signature is a real or absolute defense, and a person whose signature on a

negotiable instrument is forged is deemed to have never become a party thereto and to
have never consented to the contract that allegedly gave rise to it. The counterfeiting of
any writing, consisting in the signing of anothers name with intent to defraud, is
forgery. Bank of the Philippine Islands vs. Casa Montessori Internationale and
Leonardo T. Yabut, G.R. No. 149454, May 28, 2004

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

In actions based upon a negotiable instrument, it is unnecessary to aver or prove

consideration, for consideration is imported and presumed from the fact that it is a
negotiable instrument. The presumption exists whether the words "value received" appear
on the instrument or not. Remigio S. Ong vs. People of the Philippines and Court of
Appeals, G.R. No. 139006, November 27, 2000

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

Upon issuance of a negotiable check, in the absence of evidence to the contrary, it is

presumed that the same was issued for valuable consideration which may consist either in
some right, interest, profit or benefit accruing to the party who makes the contract, or some
forbearance, detriment, loss or some responsibility, to act, or labor, or service given,
suffered or undertaken by the other side. Under the Negotiable Instruments Law, it is
presumed that every party to an instrument acquires the same for a consideration or for
value. As petitioner alleged that there was no consideration for the issuance of the subject
checks, it devolved upon him to present convincing evidence to overthrow the presumption
and prove that the checks were in fact issued without valuable consideration. Petitioner,
however, has not presented any credible evidence to rebut the presumption, as well as
North Stars assertion, that the checks were issued as payment for the US$85,000 petitioner
 owed to the corporation and not to the manager who facilitate the fund transfer. Cayanan
vs. North Star International Travel Inc. G.R. No. 172954, October 5, 2011

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

To be entitled to recover from an accommodation party, the holder of a negotiable

instrument must be a holder in due course except for the notice of want of consideration. If
he does not quality as a holder in due course then he holds the instrument subject to the
defenses as if it were non-negotiable. A bank cannot be considered a holder in due course
when it dealt with an accommodation party knowing fully well that the latter signed the
promissory note and deed of assignment only because the said deed contains a provision
that the principal debtor would assign and convey to the bank all payments to be received
from the person who would pay the project to be undertaken by the principal debtor as
public works contractor. The approval by the bank of the direct release of payments by the
Bureau of Public Works to the project contractor which the bank should have retained and
applied to the contractors loan constitutes a waiver of said payments for which it cannot
charge the accommodation party which had no knowledge of nor approved such procedure.
Thus, an accommodation party can set up the defense of release from liability. The bank, in
effect, extended the term of payment of the note without the consent of the accommodation
makers who stand as sureties to the accommodated party and to all other parties who are
not holders in due course or who do not derive their right from the same. Prudencio vs.
Court of Appeals, 143 SCRA 7 (1986)

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)

An accommodation party who acted as a co-maker of a promissory note issued in favor of a

bank cannot validly set up the defense that he did not receive any consideration therefor as
the fact that the loan was granted to the principal debtor already constitutes sufficient
consideration. The accommodation party is one who meets all the three requisites: 1) he
must be a party to the instrument, signing as maker, drawer, acceptor or indorser; 2) he
must not receive any value therefor; and 3) he must sign for the purpose of lending his
name or credit to some other person. The accommodation party is liable on the instrument
to a holder for value even though the holder, at the time of taking the instrument, knew him
or her to be merely an accommodation party, as if the contract was not for accommodation.
The relation between an accommodation party and the accommodated party is one of
principal and surety - the accommodation party being the surety. As an equivalent of a
regular party to the undertaking, a surety becomes liable to the debt and duty of the
principal obligor even without possessing a direct or personal interest in the obligation not
does he receive any benefit therefrom. xxx It is completely immaterial if the payee of the
promissory note would opt to proceed only against the accommodation party or the
accommodated party. xxx Further, since the liability of an accommodation party remains
not only primary but also unconditional to a holder for value, even if the accommodated
party receives an extension of the period for payment without the consent of the
accommodation party, the latter is still liable for the whole obligation and such extension
does not release him because as far as a holder for value is concerned, he is a solidary
debtor. xxx The insolvency of the accommodated party will not relieve the accommodation
party from his obligation to the payee of the note. He may obtain a security from the party
 accommodated to protect himself from the danger of insolvency in the event that he is
eventually sued by the payee. But whether or not he obtains security can not affect his
liability to the payee as the said remedy is a matter of concern exclusively between him and
the accommodated party. Ang vs. Associated Bank, 532 SCRA 244 (2007)

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

1. Distinguished from Assignment

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

Under the Negotiable Instruments Law, an instrument is negotiated when it is

transferred from one person to another in such a manner as to constitute the transferee
the holder thereof, and a holder may be the payee or indorsee of a bill or note, who is in
possession of it, or the bearer thereof. In case of a bearer instrument, mere delivery
would suffice. Caltex (Philippines), Inc. vs. Court of Appeals and Security Bank
and Trust Company, G.R. No. 97753, August 10, 1992
 3. Kinds of Indorsements
An indorsement may be either special or in blank; and it may also be either restrictive
or qualified or conditional. A special indorsement specifies the person to whom, or to
whose order, the instrument is to be payable, and the indorsement of such indorsee is
necessary to the further negotiation of the instrument. An indorsement in blank
specifies no indorsee, and an instrument so indorsed is payable to bearer, and may be
negotiated by delivery. The holder may convert a blank indorsement into a special
indorsement by writing over the signature of the indorser in blank any contract
consistent with the character of the indorsement.

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.

G. Rights of the Holder

1. Holder in Due Course

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

Possession of a negotiable instrument after presentment and dishonor, or payment, is

utterly inconsequential; it does not make the possessor a holder for value within the
meaning of the law. It gives rise to no liability on the part of the maker or drawer and
indorsers. Stelco Marketing Corporation vs. Hon. Court of Appeals and Steelweld
Corporation of the Philippines, Inc., G.R. No. 96160, June 17, 1992

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

2. Defenses Against the Holder

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)

The acceptance of a check implies an undertaking of due diligence in presenting it for

payment, and if he from whom it is received sustains loss by want of such diligence, it
will be held to operate as actual payment of the debt or obligation for which it was
given. If no presentment is made at all, the drawer cannot be held liable irrespective of
loss or injury unless presentment is otherwise excused. Myron C. Papa vs. A.U.
Valencia & Co., Inc., et al. G.R. No. 105188, January 23, 1998
 When a foreign bill is dishonored by non-acceptance or non-payment, protest is
necessary to hold the drawer and endorsers liable. Failure to protest the non-acceptance
of the sight draft results in the discharge the instrument. However, liability may subsist
under a separate letter of undertaking. Liability under the letter of undertaking is direct
and primary. It is independent from the liability under the sight draft. There is no need
to prove that the provisions of the letter of credit were violated in order to be held liable
under the letter of undertaking. Velasquez vs. Solidbank Corporation, 550 SCRA
119 (2008)

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)

Payment of checks by a foreign bank to a collecting bank without previously clearing

said checks with the drawee bank is contrary to normal or ordinary banking practice,
more so if the collecting bank had been told by the depositor not to present the check
for payment until a later date although the check was already due. Thus, the collecting
bank cannot recover from the drawer in case the check is dishonored. Banco Atlantico
vs. Auditor General, 81 SCRA 335 (1978)

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)

If a bank refuses to pay a check (notwithstanding sufficiency of funds), the payee

holder cannot sue the drawee bank - the payee should instead sue the drawer who might
in turn sue the drawee bank. Under Section 189 of the Negotiable Instruments law, a
check by itself does not operate as an assignment of any part of the funds to the credit
of the drawer with the bank, and the bank is not liable to the holder, unless and until it
accepts or certifies the check. Section 189 is sound law based on logic and established
legal principles: no privity of contract exists between the drawee bank and the payee.
Villanueva vs. Nite 496 SCRA 459 (2006)
 If instruments payable to named payees or to their order have not been indorsed in
blank, only such payees or their indorsees can be holders and entitled to receive
payment in their own right. The presumption that a negotiable instrument was given for
a sufficient consideration will not inure to the benefit of someone who is merely the
transferee of the physical possession of the instrument. Thus, the collecting bank has
the right to deduct from such transferees account the amount it had previously paid
upon certain unendorsed order instruments deposited by the latter to his account after
the bank has discovered the erroneous payment to such transferee. BPI vs. Court of
Appeals 512 SCRA 620 (2007)

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)

A corporation, which endorsed checks on a with recourse basis to secure a loan

obtained from a financing company, is liable in case the checks are dishonored despite
the absence of notice of dishonor to the endorser. The with recourse stipulation
enlarges the liability of the endorser beyond that of a mere endorser under the
Negotiable Instruments Law. The holder has the option to enforce it, under the
Negotiable Instruments law or for breach of contract under the Civil Code of the
Philippines. Great Asian Sales Corporation vs. Court of Appeals, 381 SCRA 557
(2002)

After an instrument is dishonored by non-payment, indorsers cease to be merely

secondarily liable; they become principal debtors whose liability becomes identical to
that of the original obligor.The holder of the negotiable instrument need not even
proceed against the drawer before suing the indorser. Maria Tuazon vs. Heirs of
Bartolome Ramos, 463 SCRA 408 (2005)

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

I. Presentment for Payment

Where instrument is payable on demand, presentment must be made within a reasonable

time after issue. Reasonable time depends upon the peculiar facts and circumstance of each
case. Where a check is presented for payment three and a half years after the date of its
maturity, the presentment is considered beyond a reasonable time and the indorser should
be deemed discharged. Far East Realty Investment, Inc. vs. Court of Appeals, 166
SCRA 256 (1988)
The promissor cannot question the failure of the payee to exhibit to him the promissory
note when he has made an express waiver of demand, presentment, protest and notice of
non-payment of the note. Ansaldo vs. Court of Appeals, 177 SCRA 594 (1989)

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)

1. Necessity of Presentment for Payment

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)

A bank which erroneously dishonored for insufficiency of funds checks drawn by a

depositor is liable for damages to the depositor. Metrobank vs. Court of Appeals, 237
SCRA 76 (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

2. Parties Who May Give Notice and Dishonor

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

5. Dispensation with Notice

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)

6. Effect of Failure to Give Notice

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)

The absence of a notice of dishonor necessarily deprives an accused an opportunity to

preclude a criminal prosecution. Lao vs. Court of Appeals, 274 SCRA 572 (1997)

K. Discharge of Negotiable Instrument

 In depositing the check in his name, the depositor did not become the out-right 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)

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

An alteration is said to be material if it alters the effect of the instrument. It means an

unauthorized change in an instrument that purports to modify in any respect the
obligation of a party or an unauthorized addition of words or numbers or other change
to an incomplete instrument relating to the obligation of a party. In other words, a
material alteration is one which changes the items which are required to be stated under
 Section 1 of the Negotiable Instruments Law. 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

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

2. Effect of Material Alteration

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

N. Presentment for Acceptance

1. Time/Place/Manner of Presentment

Presentment for acceptance is defined as the production of a bill of exchange to a

drawee for acceptance. Presentment for acceptance is necessary only where the bill is
payable after sight or in any other case, where presentment for acceptance is necessary
in order to fix the maturity of the instrument, or where the bill expressly stipulates that
it shall be presented for acceptance, or where the bill is drawn payable elsewhere than
at the residence or place of business of the drawee. Prudential Bank vs. Intermediate
Appellate Court, Philippine Rayon Mills Inc.,and Anacleto R. Chi, G.R. No.
74886, December 8, 1992

2. Effect of Failure to Make 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

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. Teddy G. Pabugais
vs. Dave Sahijiwani, G.R. No. 156846, February 23, 2004

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

3. Presentment for Payment

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)

2. Liabilities of Parties under B.P. 22

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.

The presumption in section 2 is not a conclusive presumption that forecloses or

precludes the presentation of evidence to the contrary. Neither does the term prima
facie evidence precludes the presentation of other evidence that may sufficiently prove
the existence or knowledge of insufficiency of funds or lack of credit.

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)

Participants in the regional clearing operations of the Philippine Clearing House

Corporation (PCHC) cannot bypass the arbitration process laid out by the body and
seek relief directly from the courts. Home Bankers Savings and Trust Company vs.
Court of Appeals, 318 SCRA 558 (1999)

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)

IV. Insurance Code

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)

The cardinal principle in Insurance Law is that a policy or contract of insurance is to be

construed liberally in favor of the insured and strictly as against the insurance company,
yet, 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. Lalican vs. Insular
Life Assurance Company, Ltd. 597 SCRA 159 (2009)

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

B. Elements of an Insurance Contract

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

C. Characteristics/Nature of Insurance Contracts

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)

Ambiguity in words of insurance contract shall be interpreted in favor of its beneficiary.

Serrano vs. Court of Appeals, 130 SCRA 327 (1984)

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 insurance contract is primarily a risk-distributing device, a mechanism by which all

members of a group exposed to a particular risk contribute premiums to an insurer. From
these contributory funds are paid whatever losses occur due to exposure to the peril insured
against. Each party therefore takes a risk: the insurer being compelled upon the happening
of the contingency to pay the entire sum agreed upon; and the insured of a parting with the
amount required as premium, without receiving anything therefore in case the contingency
does not happen. Tibay vs. Court of Appeals, 257 SCRA 126 (1996)

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

6. Compulsory Motor Vehicle Liability Insurance

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.

3. Double Insurance and Over Insurance

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

4. Multiple or Several Interests on Same Property

 As to a mortgaged property, the mortgagor and the mortgagee have each an
independent insurable interest therein and both interests may be covered by one policy,
or each may take out a separate policy covering his interest, either at the same or at
separate times. The mortgagor's insurable interest covers the full value of the
mortgaged property, even though the mortgage debt is equivalent to the full value of the
property. The mortgagee's insurable interest is to the extent of the debt, since the
property is relied upon as security thereof, and in insuring he is not insuring the
property but his interest or lien thereon. Armando Geagonia vs. Court of Appeals, et
al., G.R. No. 114427, February 6, 1995

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)

F. Perfection of the Contract of Insurance

1. Offer and Acceptance/Consensual

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 78 of the Insurance Code explicitly provides that an 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 the premium is actually paid. This Section establishes a
legal fiction of payment and should be interpreted as an exception to Section 77.
American Homes Assurance vs. Antonio Chua, G.R. 130421, June 28, 1999

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

3. Reinstatement of a Lapsed Policy of Life Insurance

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

G. Rescission of Insurance Contracts

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

In group insurance, there is no medical examination required. But if in group insurance

an application form requires an answer to previous sickness, and that is falsely denied,
then there is concealment. Saturnino vs. Phil-Am Life, 7 SCRA 316, (1963)

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

H. Claims Settlement and Subrogation

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

1. Notice and Proof of Loss

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

When Manila Mahogany executed a release claim discharging San Miguel

Corporation from all actions, claims, demands and rights of action arising out of or
as a consequence of the accident after the insurer had paid the proceeds of the
policy, the insurer is entitled to recover from the insured the amount of insurance
money paid. Since the insurer can be subrogated to only such rights as the insured
may have, should the insured, after receiving payment from the insurer, release the
wrongdoer who caused the loss, the insurer loses his rights against the wrongdoer.
But in such a case, the insurer will be entitled to recover from the insured whatever
it has paid to the latter, unless the release was made with the consent of the insurer.
Manila Mahogany Manufacturing Corporation vs. Court of Appeals, G.R. No.
L-52756, October 12, 1987

Payment by the insurer to the assured operates as an equitable assignment to the

former of all remedies which the latter may have against the third party whose
negligence or wrongful act caused the loss. There are a few recognized exceptions
to this rule. For instance, if the assured by his own act releases the wrongdoer or
third party liable for the loss or damage, from liability, the insurers right of
subrogation is defeated. Similarly, where the insurer pays the assured the value of
the lost goods without notifying the carrier who has in good faith settled the
assureds claim for loss, the settlement is binding on both the assured and the
insurer, and the latter cannot bring an action against the carrier on his right of
subrogation . And where the insurer pays the assured for a loss which is not a risk
covered by the policy, thereby effecting voluntary payment, the former has no
right of subrogation against the third party liable for the loss. Pan Malayan
Insurance Corporation vs. Court of Appeals, et al., G.R. No. 81026, April 3,
1990

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 presentation in evidence of the marine insurance policy is not indispensable

before the insurer may recover from the common carrier the insured value of the
lost cargo in the exercise of its subrogatory right. The subrogation receipt, by itself,
is sufficient to establish not only the relationship of American Home as insurer and
Caltex, as the assured shipper of the lost cargo of industrial fuel oil, but also the
amount paid to settle the insurance claim. The right of subrogation accrues simply
upon payment by the insurance company of the insurance claim. Delsan Transport
Lines, Inc. vs. Court of Appeals, et al., G.R. No. 127897, November 15, 2001

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

Receipt of compensation is essential for a person to be considered an insurance agent.

The criminal information charging a person of insurance solicitation must state is was
 for compensation, otherwise no conviction is warranted. Aisporna vs. Court of
Appeals, 113 SCRA 459 (1982)

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)

An insurer which delivers to an insurance agent or insurance broker an insurance policy

shall be deemed to have authorized such agent to receive on its behalf payment of any
premium which is due on such policy. South Sea Surety and Insurance Co., Inc. vs.
Court of Appeals, 244 SCRA 744 (1995)

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)

4. Documentary Stamp Tax on Insurance Policy

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

1. Definition of common carrier

a. Carrying of persons or goods or both may be the principal

or ancillary activity

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

2.Examples of common carrier

 a. Pipeline operator

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

Loadmasters Customs Services, Inc. vs. Glodel Brokerage Corporation, GR No.

179446, January 10, 2011

c. Freight forwarder that contracts delivery of the goods

Unsworth Transport International (Phils.) vs. Court of Appeals, G.R. No. 166250,
July 26, 2010

d. school bus operator despite limited clientele

Spouses Perena vs. Spouses Nicolas, GR No. 157917, August 29, 2012

2.Distinctions between common carrier and private carrier

Philippine American General Insurance Company vs. PKS Shipping Company, G.R.
No. 149038, April 9, 2003

3. Diligence Required of Common Carriers

a. Extra-ordinary diligence required/ Presumption of fault in case of loss or

damage to goods or death or injury to passengers

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)

Macam vs. Court of Appeals, 313 SCRA 77 (1999)

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

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

3. Liabilities of Common Carriers

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

B. Vigilance over Goods

1. Exempting Causes

Mauro Ganzon vs. Court of Appeals, G.R. No. L-48757, May 30, 1988

Central Shipping Company, Inc. vs. Insurance Company of North America,

G.R. No. 150751, September 20, 2004

Western Shipping Agency, Inc., vs. National Labor Relations Commission,

253 SCRA 405 (1996)

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

a. Requirement of Absence of Negligence

Bachelor Express, Incorporated vs. The Honorable Court of Appeals (Sixth

Division), G.R. No. 85691, July 31, 1990

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

c. Due Diligence to Prevent or Lessen the Los

Central Shipping Company, Inc. vs. Insurance Company of North America,

G.R. No. 150751, September 20, 2004

2. Contributory Negligence

3. Duration of Liability

a. Delivery of Goods to Common Carrier

Mauro Ganzon vs. Court of Appeals, G.R. No. L-48757, May 30, 1988

b. Actual or Constructive Delivery

Lu Do & Lu YM Corporation vs. I.V. Binamira, G.R. No. L-9840, April 22,
1957

Compaia Maritima vs. Insurance Company of North America, G.R. No. L-

18965, October 30, 1964

Westwind Shipping Corporation vs. UCPB General Insurance Co., G.R. No.
200289, November 25, 2013

4. Stipulation for Limitation of Liability

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

b. Limitation of Liability to Fixed Amount

c. Limitation of Liability in Absence of Declaration of Greater Value

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

5. Liability for Baggage of Passengers

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

a. Waiting for Carrier or Boarding of Carrier

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

2. Liability for Acts of Others

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

b. Other Passengers and Strangers

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

b. when force majeure does not apply

Fortune Express, Inc., vs. Court of Appeals, G.R. No. 119756, March 18, 1999

4. Extent of Liability for Damages

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)

d.4 kinds of bill of lading

Magellan Manufacturing Marketing Corporation vs. Court of Appeals, G.R. No. 95529,
August 22, 1991

d.5 stipulations in a bill of lading

Provident Insurance Corp. vs. Court of Appeals, G.R. No. 118030, January 15, 2004

2. Delivery of Goods

a. Period of Delivery

Maersk Line vs. Court of Appeals, 222 SCRA 108 (1993)

b. Delivery Without Surrender of Bill of Lading

National Trucking and Forwarding Corporation vs. Lorenzo Shipping Corporation,

G.R. No. 153563, February 07, 2005.

3.Requirements/Conditions precedent for Filing Claims ( Coastwise or inter-

island commerce )

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

2. Liability of Ship Owners and Shipping Agents

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)

3.Limited liability rule/hyphotecary nature of maritime law

 Aboitiz Shipping Corporation vs. General Accident Fire and Life Assurance
Corporation Ltd., 217 SCRA 359 (1993)

Chua Yek Hong vs. Intermediate Appellate Court, G.R. No. 74811, September 30, 1988

a. Exceptions to Limited Liability

Luzon Stevedoring Corporation vs. Court of Appeals, G.R. No. L-58897,

December 3, 1987

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

3. Accidents and Damages in Maritime Commerce

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

4. Carriage of Goods by Sea Act

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

b.Concept of loss or damage

 Domingo Ang vs. American Steamship Agencies, Inc., G.R. No. L-22491, January
27, 1967

Mitsui O.S.K. Lines Ltd. vs. Court of Appeals, G.R. No. 119571, March 11, 1998

d. Conditions for filing of claim in case of loss or damage

c.1 Notice of Loss or Damage

Belgian Overseas Chartering and Shipping N.V. vs. Philippine First Insurance Co.,
Inc., G.R. No. 143133, June 5, 2002

Wallem Philippines Shipping vs. SR Farms, GR No. 161849, July 9, 2010

Asian Terminals Inc. vs. Philam Insurance Co. G.R. No. 181262 , July 24, 2013

c.2 Period of Prescription

Union Carbide Philippines, Inc. vs. Manila Railroad Co., G.R. No. L-27798, June
15, 1977

Ang vs. Compaia Maritima, 133 SCRA 600 (1984)

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

New World International Development Corporation vs. NYK-FilJapan Shipping

Corporation, GR No. 171468, August 24, 2011

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

f.1 The nature of an airlines contract of carriage

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

f.2 cases of liability of air carrier

Philippine Airlines, Inc. vs. Ramos, 207 SCRA 461 (1992)

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

British Airways vs. Court of Appeals, 258 SCRA 450 (1996)

G.The Warsaw Convention

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

b. Liability for Checked Baggage

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

Tiu vs. Arriesgado, 437 SCRA 426 (2004)

Villanueva vs. Domingo, 438 SCRA 485 (2004)

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

Asian Terminals Inc. vs. First Lepanto-Taisho Insurance Corporation, G.R.

No. 185964, June 16, 2014

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)

VI. The Corporation Code

A. Corporation

1. Definition

1.a Distinguished from other forms of business organizations

Benny Hung vs. BPI Finance Corporation, G.R. No. 182398, July 20, 2010

2. Attributes of the Corporation

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

1. Stock and non-stock

2. De jure, de facto, corporation by estoppel, corporation by prescription

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

Macasaet vs. Francisco, G.R. No. 156759, June 5, 2013

- De facto corporation
 Sawadyaan vs. Court of Appeals, G.R. No. 141735, June 8, 2005

3. Domestic and foreign

4. Open and close
5. Parent and subsidiary
6. Corporation sole and corporation aggregate
7. Public and private
8. Government owned and controlled corporation

i. Chartered GOCC
ii. Non-Chartered GOCC

Baluyot vs. Holganza, 325 SCRA 248 (2000)

Feliciano vs. Commission on Audit, 464 Philippine 439 (2004)

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

Carandang vs. Desierto, G.R. No. 148076, January 12, 2011

Funa vs. Manila Economic and Cultural Office, GR. No. 193462, February 4, 2014

C. Nationality of Corporations

1. Place of Incorporation Test

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

Narra Nickel Mining and Development Corporation, et al., vs. Redmont

Consolidated Mines Corporation, G.R. No. 199580, April 21, 2014
 Narra Nickel Mining and Development Corporation, et al. vs. Redmont
Consolidated Mines Corporation, G.R. No. 199580, January 28, 2015

D. Corporate Juridical Personality

1. Doctrine of Separate Juridical Personality

Saw vs. Court of Appeals, 195 SCRA 797 (1991)

Lim vs. CA, 323 SCRA 102 (2000)

PNB vs. Ritratto Group, Inc., 362 SCRA 216 (2001)

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)

PEA-PTGWO vs. NLRC 581 SCRA 598 (2009)

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

Development Bank of the Philippines vs. Hydro Resources Contractors

Corporation, GR. No. 167603, March 13, 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

a. Liability for Torts and Crimes

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

b. Recovery of Moral Damages

Filipinas Broadcasting Network, Inc.,vs. AGO Medical And Educational Center-

Bicol Christian College of Medicine, (AMEC-BCCM) and Angelita F. Ago, G.R.
No. 141994, January 17, 2005

Manila Electric Company vs. T.E.A.M. Electronics Corporation, Technology

Electronics Assembly and Management Pacific Corporation; and Ultra
Electronics Instruments, Inc., G.R. No. 131723, December 13, 2007

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

- Applicable to corporation and single proprietorship

Prince Transport, Inc. vs. Garcia, G.R. No. 167291, January 12, 2011

a. Grounds for Application of Doctrine

Villa Rey Transit, Inc. vs. FerrerG.R. No. L-23893, October 29, 1968

A.C. Ransom Labor Union-CCLU vs. National Labor Relations Commission,

et al., G.R. No. L-69494, May 29, 1987

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

WPM International Trading Inc., and Warlito Manlapaz vs. Fe Corazon

Labayen, G.R. No. 182770, September 17, 2014

Hacienda Cataywa/Manuel Villanueva vs. Rosario Lorenzo, G.R. No. 179640,

March 18, 2015

b. Test in Determining Applicability

Indophil Textile Mill Workers Union-PTGWO vs. Voluntary Arbitrator

Teodorico P. Calica and Indophil Textile Mills, Inc., G.R. No. 96490, February
3, 1992

Development Bank of the Philippines vs. Hydro Resources Contractors

Corporation, GR. No. 167603, March 13, 2013

c.Effects of piercing the corporate veil

Park Hotel vs Soriano, GR No. 171118, September 10, 2012

Heirs of Fe Tan Uy, represented by her heir, Mauling Uy Lim vs. International
Exchange Bank, G.R. No. 166282 & 83, February 13, 2013

E. Incorporation and Organization

Mariano A. Albert vs. University Publishing Co., Inc., G.R. No. L-19118, January 30,
1965

MISCI-NACUSIP Local Chapter vs. National Wages and Productivity Commission,

269 SCRA 173 (1997)

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

Samahanng Optometrists sa Pilipinas. vs. Acebedo International Corporation G.R.

No. 117097, March 21, 1997

1. Promoter

a. Liability of Corporation for Promoters Contracts

 Rizal Light & Ice Co., Inc. vs. the Municipality of Morong, Rizal, G.R. No. L-
20993, September 28, 1968

2. Number and Qualifications of Incorporators

Nautica Canning Corporation, et al. vs. Roberto C. Yumul, G.R. No. 164588,
October 19, 2005

3. Corporate Name Limitations on Use of Corporate Name

Republic Planters Bank vs. Court of Appeals, G.R. No. 93073, December 21, 1992

Industrial Refractories Corporation of the Philippines vs. Court of Appeals,

Securities and Exchange Commission and Refractories Corporation of the
Philippines, G.R. No. 122174, October 3, 2002

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

Chu Ka Bio vs Intemediate Appelate Court

5. Minimum Capital Stock and Subscription Requirements

MSCI-NACUSIP Local Chapter vs. National Wages and Productivity Commission

and Monomer Sugar Central, Inc., G.R. No. 125198, March 3, 1997

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

a. Nature and Function of Articles

 Alicia E. Gala, et al. vs. Ellice Agro-Industrial Corporation, et al., G.R. No.
156819, December 11, 2003

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

7. Registration and Issuance of Certificate of Incorporation

8. Adoption of By-Laws

a. Nature and Functions 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

- Effect of non-submission of by-laws

Loyola Grand Villas Homeowners (South) Association, Inc. vs. Hon. Court of
Appeals, G.R. No. 117188, August 7, 1997

b. Requisites of Valid By-Laws

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

1. General Powers, Theory of General Capacity

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

Esguerra vs. Holcim Philippines G.R. No. 182571, September 2, 2013

Spouses Afulugencia vs. Metropolitan Bank and Trust Co. G.R. No. 185145,
February 05, 2014

2. Specific Powers, Theory of Specific Capacity

a. Power to Extend or Shorten Corporate Term

Philippine National Bank vs. the Court of First Instance of Rizal, Pasig, et al.,
G.R. No. 63201, May 27, 1992

b. Power to Increase or Decrease Capital Stock or Incur, Create, Increase Bonded

Indebtedness

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

Majority of Stockholders of Ruby Industrial Corporation vs. Lim, GR No.

165887, June 6, 2011

c. Power to Deny Pre-Emptive Rights

d. Power to Sell or Dispose of Corporate Assets

Pea vs. Court of AppealsG.R. No. 91478, February 7, 1991

Islamic Directorate of the Philippines vs. Court of Appeals And Iglesia Ni

Cristo, G.R. No. 117897, May 14, 1997

e. Power to Acquire Own Shares

Boman Environmental Development Corporation vs. Hon. Court of Appeals,

G.R. No. 77860, November 22, 1988

f. Power to Invest Corporate Funds in another Corporation or Business

Heirs of Antonio Pael vs. Court of Appeals, G.R. No. 133547, February 10,
2000

g. Power to Declare Dividends

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

h. Power to Enter Into Management Contract

i. Ultra Vires Acts

i.i-on the part of the corporation

Atrium Management Corporation vs. Court of Appeals, et al., G.R.

No. 109491, February 28, 2001

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);

i. Consequences of Ultra Vires Acts

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

b. By the Board of Directors

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

c.i doctrine of apparent authority

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

Advance Paper Corporation vs. Arma Traders Corporation, G.R. No 176897,

December 11, 2013.

4. Trust Fund Doctrine

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

Halley vs Printwell, Inc. GR No. 157549, May 30, 2011

G. Board of Directors and Trustees

1. Doctrine of Centralized Management

Bitong vs. Court of Appeals, 292 SCRA 503 (1998)

Citibank, N.A. vs. Chua, ibid

2. Business Judgment Rule

Sales vs. Securities and Exchange Commission, 169 SCRA 109 (1989)

Filipinas Port Services, Inc., represented by stockholders, Eliodoro C. Cruz and

Mindanao Terminal and Brokerage Services, Inc. vs. Victoriano S. Go, et al., G.R.
No. 161886, March 16, 2007

Matling Industrial and Commercial Corporation, et al. vs. Ricardo R. Coros, G.R.
No. 157802, October 13, 2010

3. Tenure, Qualifications and Disqualifications of Directors or Trustees

 Grace Christian High School vs. Court of Appeals, G.R. No. 108905, October 23,
1997

Lee vs. Court of Appeals, G.R. No. 93695, February 4, 1992

4. Elections

Paul Lee Tan vs. Paul Sycip and Merritto Lim, G.R. No. 153468, August 17,
2006

a. Cumulative Voting/Straight Voting

b. Quorum

Lanuza vs. Court of Appeals, G.R. No. 131394, March 28, 2005

5. Removal

Raniel vs. Jochico, G.R. No. 153413, March 1, 2007

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

8. Fiduciary Duties and Liability Rules

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

9. Responsibility for Crimes and Damages

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

a. Between Corporations with Interlocking Directors

Development Bank of the Philippines vs. Honorable Court of Appeals and

Remington Industrial Sales Corporation , G.R. No. 126200, August 16, 2001

12. Executive Committee

Filipinas Port Services Inc. vs. Go, G.R. No. 161886, March 16, 2007

12. Meetings

Esguerra vs. Court of Appeals, 267 SCRA 380 (1997)

People of the Philippines vs. Hermenegildo Dumlao, G.R. No. 168918, March 2,
2009

Lopez Realty Inc,m and Asuncion Lopez-Gonzales vs. Spouses Reynaldo

Tanjangco and Maria Luisa Arguelles-Tanjangco, G.R. No. 154291, November 12,
2014

a. Quorum

Rosita Pea vs. the Court of Appeals, G.R. No. 91478, February 7, 1991
H. Stockholders and Members

1. Rights of a Stockholder and Members

a. Doctrine of Equality of Shares

Commissioner of Internal Revenue vs. Court of Appeals, G.R. No. 108576,

January 20, 1999.

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

Lee vs. Court of Appeals, G.R. No. 93695, February 4, 1992

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

Gonzales vs. Philippine National Bank, 122 SCRA 489 (1983)

Republic vs. Sandiganbayan, 199 SCRA 39 (1991)

Victor Africa vs. Presidential Commission on Good Government, et al., G.R.

No. 83831, January 9, 1992

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

Castillo vs. Balinghasay, G.R. No. 150976, October 18, 2004.

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)

f. Right of First Refusal

Republic vs. Sandiganbayan, 346 SCRA 760 (2000)

J.G. Summit Holdings, Inc.,vs. Court of Appeals, et al. G.R. No. 124293,
January 31, 2005

4. Remedial Rights

a. Individual Suit

Cua Jr. vs. Tan, G.R. No. 181455-56, December 4, 2009

b. Representative Suit

c. Derivative Suit

San Miguel Corporation vs. Kahn, 176 SCRA 448 (1989)

Bitong vs. Court of Appeals, 292 SCRA 503 (1998)

Lim vs. Lim-Yu, 352 SCRA 216 (2001)

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

Yu vs. Yukayguan, 588 SCRA 589 (2009)

 Hi- Yield, Inc. vs. Court of Appeals, 590 SCRA 548 (2009)

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

Alfredo Villamor Jr. vs. John S. Umale in Substitution of Hernando Balmores,

G.R. No. 172843, September 24, 2014,

5. Obligation of a Stockholder

Edward A. Keller & Co., Ltd. vs. COB Group Marketing, Inc., 141 SCRA 86
(1986)

Neugene Marketing, Inc.,vs. Court of Appeals, 303 SCRA 295 (1999)

Halley vs Printwell, GR No. 157549, May 30, 2011

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

Stockholders of F. Guanson vs. Register of Deeds of Manila, 6 SCRA 373

(1962)

Philippine National Bank vs. Bitulok Sawmill, Inc., 23 SCRA 1366 (1968)

Rivera vs. Florendo, 144 SCRA 643 (1986)

De Erguiga vs. Court of Appeals, 178 SCRA 1 (1989)

Embassy Farms, Inc. vs. Court of Appeals, 188 SCRA 492 (1990)
Tan vs. Securities and Exchange Commission, 206 SCRA 740 (1992)

Razon vs. Intermediate Appellate Court, 207 SCRA 234 (1992)

Rural Bank of Salinas, Inc. vs. Court of Appeals, 210 SCRA 510 (1992)

Torres vs. Court of Appeals, 270 SCRA 493 (1997)

China Banking Corporation vs. Court of Appeals, 270 SCRA 503 (1997)

Bitong vs. Court of Appeals, 292 SCRA 503 (1998)

Thomson vs. Court of Appeals, 298 SCRA 280 (1998)

Garcia vs. Jomouad, 323 SCRA 424 (2000)

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)

Ponce vs. Alsons Cement Corporation, 393 SCRA 602 (2002)

Republic of the Philippines vs. Sandiganbayan and Victor Africa, 402 SCRA
84 (2003)

Republic of the Phils. vs. Sandiganbayan, Ibid.

Republic vs. Estate of Hans Menzi, 476 SCRA (2005)

Nautica Canning Corporation vs. Yumul 473 SCRA 415 (2005)

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

Marsh Thomson vs. Court of Appeals and the American Champer of

Commerce of the Philippines, Inc., G.R. No. 116631, October 28, 1998

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)

Majority of Stockholders of Ruby Industrial Corporation vs. Lim, G.R. No.

165887, June 6, 2011

Africa vs. Hon. Sandiganbayan, G.R. Nos. 172222/G.R. No. 174493/ G.R. No.
184636, November 11, 2013

Africa vs. Hon. Sandiganbayan, Ibid.

b. Subscription Agreements

Philippine National Bank vs. Bitulok Sawmill, Inc., et al., G.R. Nos. L-24177-
85, June 29, 1968

c. Classes of Shares of Stock

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

3. Payment of Balance of Subscription

a. Call by Board of Directors

b. Notice Requirement

c. Sale of Delinquent Shares

i. Effect of Delinquency

Calatagan Golf Club, Inc. vs. Sixto Clemente, Jr., G.R. No. 165443, April
16, 2009

ii. Call by Resolution of the Board of Directors

Apocada vs. National Labor Relations Commission, 172 SCRA 442 (1989)

4. Certificate of Stock

a. Nature of the Certificate

 Stockholders of F. Guanzon and Sons, Inc. vs. Register of Deeds of Manila,
G.R. No. L-18216, October 30, 1962

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

i. Requirements for Valid Transfer of Stocks

Enrique Razon vs. Intermediate Appellate Court and Vicente B. Chuidian, in

his capacity as Administrator of the Estate of the Deceased Juan T. Chuidian,
G.R. No. 74306, March 16, 1992

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

Nemesio Garcia vs. Nicolas Jomouad, Ex-Officio Provincial Sheriff of Cebu,

and Spouses Jose Atinon& Sally Atinon, G.R. No. 133969, January 26, 2000

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

5. Stock and Transfer Book

 a. Contents

Jesus V. Lanuza, et al. vs. Court of Appeals, et al., G.R. No. 131394, March 28,
2005

b. Who May Make Valid Entries

Manuel A. Torres, Jr., (Deceased), et al. vs. Court of Appeals, et al., G.R. No.
120138, September 5, 1997

J. Dissolution and Liquidation

Chase vs. Buencamino, 136 SCRA 365 (1985)

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

i. Where No Creditors Are Affected

Teodoro B. Vesagas and Wilfred D. Asis vs. the Honorable Court of

Appeals and DelfinoRaniel and HelendaRaniel, G.R. No. 142924, December
5, 2001

ii. Where Creditors Are Affected

iii. By Shortening of Corporate Term

A voluntary dissolution may be effected by amending the articles of incorporation

to shorten the corporate term.

b. Involuntary

i. By Expiration of Corporate Term

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.

iii. Legislative Dissolution

A corporation created by special law can be dissolved by an enactment of special

law or expiration of its charter.

iv. Dissolution by the SEC on Grounds under Existing Laws

PDIC vs. BIR, G.R. No. 158261, December 18, 2006

2. Methods of Liquidation

a. By the Corporation Itself

Yu vs. Yukayguan, G.R. No. 177549, June 18, 2009

b. Conveyance to a Trustee within a Three-Year Period

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

c. By Management Committee or Rehabilitation Receiver

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

Alfredo Villamor Jr. vs. John S. Umale in Substitution of Hernando Balmores,

G.R. No. 172843, September 24, 2014
 d. Liquidation after Three Years

Mambulao Lumber Company vs. Philippine National Bank, 22 SCRA 359

(1968); National Abaca & Other Fibers Corporation vs. Pore, 2 SCRA 989
(1961). See, however, Gelano and Reburiano cases, infra

Clemente vs. Court of Appeals, 242 SCRA 717 (1995) . See also Reburiano vs.
Court of Appeals, 301 SCRA 342 (1999)

Philippine National Bank vs. Bitulok Sawmill Inc., SCRA 269.

Paramount Insurance Corp. vs. A.C. Ordoez Corporation and Franklin

Suspine, G.R. No. 175109, August 6, 2008

Lucia Barramedavda. de Ballesteros vs. Rural Bank of Canaman,

Inc., represented by its liquidator, the Philippine Deposit Insurance
Corporation, G.R. No. 176260, November 24, 2010

Vigilla vs. Philippine College of Criminology, GR No. 200094, June 10, 2013

K. Other Corporations

1. Close Corporations

a. Characteristics of a Close Corporation

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

b. When Board Meeting is Unnecessary or Improperly Held

Manuel R.Dulay Enterprises, Inc., VirgilioE. Dulay and Nepomuceno Redovan

vs. the Honorable Court of Appeals, G.R. No. 91889 August 27, 1993

e. Pre-Emptive Right

f. Amendment of Articles of Incorporation

 g. Deadlocks

2. Non-Stock Corporations

a. Treatment of Profits

b. Distribution of Assets upon Dissolution

Litonjua vs. Court of Appeals, 286 SCRA 136 (1998)

Long vs. Basa, 366 SCRA 113 (2001)

Ao-As vs. CA 491 SCRA 339 (2006)

Petronilo J. Barayuga vs. Adventist University of the Philippines, through its

Board of Trustees, represented by its Chairman, Nestor D. Dayson, G.R. No.
168008, August 17, 2011

Rev. Luis Ao-as, et al. vs. Hon. Court of Appeals, G.R. No. 128464, June 20,
2006

3. Foreign Corporations

a. Bases of Authority over Foreign Corporations

i. Consent

Eriks PTE. Ltd. vs. Court of Appeals, G.R. No. 118843, February 6, 1997

ii. Doctrine of Doing Business (related to definition under the Foreign

Investments Act, R.A. No. 7042)

Wang Laboratories, Inc., vs. Mendoza, 156 SCRA 44 (1987)

Marubeni Nederland B.V. vs. Tensuan, 190 SCRA 105 (1990)

Merrill Lynch Futures, Inc. vs. Court of Appeals, 211 SCRA 824 (1992)

Philip Morris, Inc. vs. Court of Appeals, 224 SCRA 576 (1993)

Signetics Corporation vs. Court of Appeals, 225 SCRA 737 (1993)

George Grotjahn GBBH & Co. vs. Isnani, 235 SCRA 216 (1994)
Litton Mill, Inc. vs. Court of Appeals, 256 SCRA 696 (1996)

Communication Materials and Design, Inc. vs. Court of Appeals, 260

SCRA 673 (1996)

Columbia Pictures, Inc. vs. Court of Appeals, 261 SCRA 144 (1996)

Hahn vs. Court of Appeals, 266 SCRA 537 (1997)

Eriks Pte., Ltd. vs. Court of Appeals, 267 SCRA 567 (1997)

Avon Insurance PLC vs. Court of Appeals, 278 SCRA 312 (1997)

Hutchison Ports Philippines Limited vs. Subic Bay Metropolitan Authority,

339 SCRA 34 (2000)

MR Holdings, Ltd. vs. Bajar, 380 SCRA 617 (2002)

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)

Rimbunan Hijau Group of Companies vs. Oriental Wood Processing

Corporation, 470 SCRA 650 (2005)

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

b. Necessity of a License to Do Business

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

Bulakhidas vs. Navarro, 142 SCRA 1 (1986)

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)

MR Holdings, Ltd. vs. Sheriff Carlos P. Bajar, Sheriff Ferdinand M. Jandusay,

Solidbank Corporation, and Marcopper Mining Corporation, G.R. No.
138104, April 11, 2002

Global Business Holdings, Inc., vs. Surecomp Software, B.V., G.R. No. 173463,
October 13, 2010

d. Instances When Unlicensed Foreign Corporations May Be Allowed to Sue Isolated

Transactions

Steelcase, Inc., vs. Design International Selections, Inc., G.R. No. 171995, April
18, 2012

L. Mergers and Consolidations

1. Definition and Concept

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

Commission of Internal Revenue vs. Bank of Commerce, G.R. No. 180529,

November 25, 2013

Bank of Commerce vs. Radio Philippines Network Inc., et al., G.R. No. 195615,
April 21, 2014

2. Constituent vs. Consolidated Corporation

John F. McLeod vs. National Labor Relations Commission (First Division), et al.,
G.R. No. 146667, January 23, 2007

3. Effectivity

Philippine National Bank & National Sugar Development Corporation vs.

Andrada Electric & Engineering Company, G.R. No. 142936, April 17, 2002

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

Babst vs. Court of Appeals, 350 SCRA 341 (2001)

Omictin vs. Court of Appeals 512 SCRA 70 (2007)

Spouses Ramon Nisce vs. Equitable PCI Bank 516 SCRA 231 (2007)

Bank of the Philippine Islands vs. BPI Employees Union-Davao Chapter-

Federation of Unions In Bpi Unibank, G.R. No. 164301, October 19, 2011

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)

Llamado vs. Court of Appeals, 270 SCRA 423 (1997)

Reahs Corporation vs. National Labor Relations Commission, 271 SCRA 247
(1997)

Uichico vs. National Labor Relations Commission, 273 SCRA 35 (1997)

Torres, Jr. vs. Court of Appeals, 278 SCRA 793 (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)

Atrium Management Corp. vs. Court of Appeals, 353 SCRA 23 (2001)

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.

Litonjua, Jr. vs. Eternity Corporation 490 SCRA 204 (2006)

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)

Elcee Farms, Inc. vs. NLRC 512 SCRA 602 (2007)

Aratea vs. Suico, 518 SCRA 501 (2007)

Carag vs. NLRC 520 SCRA 28 (2007)

 Pamplona Plantation Company vs. Ramon Acosta et al., 510 SCRA 249 (2006)

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)

2. Doctrine of Corporate Negligence

Professional Services, Inc. vs. CA 544 SCRA 170 (2008)

3. Authority to sign certification against forum shopping

Digital Microwave Corp. vs. Court of Appeals, 328 SCRA 289 (2000)

BA Savings Bank vs. Court of Appeals, 336 SCRA 484 (2000)

Shipside Incorporation vs. Court of Appeals, 352 SCRA 334 (2001)

San Pablo Manufacturing Corporation vs. Commissioner of Internal Revenue 492

SCRA 192 (2006)

Philippine Rabbit Bus Lines, Inc., vs. Aladdin Transit Corp. 494 SCRA 358 (2006)

Cagayan Valley Drug Corporation vs. CIR 545 SCRA 10 (2008)

Maranaw Hotels & Resort Corporation vs. Court of Appeals 576 SCRA 463 (2009)

4. Teleconferencing

Expertravel & Tours, Inc. vs. CA 459 SCRA 147 (2005)

5. Condominium Corporation

Yamane vs. BA Lepanto Condominium Corporation 474 SCRA 258 (2005)

6. Interest in Investment

The President of PDIC as Liquidator of Pacific Banking Corporation vs. Reyes 460
SCRA 473 (2005)

VII. Securities Regulation Code (R.A. No. 8799)

A. State Policy, Purpose

 Abacus Securities Corporation vs. Ruben Ampil, G.R. No. 160016, February 27, 2006

B. Securities Required to be Registered

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

C. Prohibitions of Fraud, Manipulation and Insider Trading

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

Philippine Veterans Bank v. Callangan, in her capacity Director of the Corporation

Finance Department of the Securities and Exchange Commission and/or the
Securities and Ex-change Commission, G.R. No. 191995, August 3, 2011
 1. Tender Offer Rule

Cemco Holdings, Inc. vs. National Life Insurance Company of the Philippines,
G.R. No. 171815, August 7, 2007

2. Rules on Proxy Solicitation

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

Fabia vs. Court of Appeals, 388 SCRA 574 (2002)

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

F. Securities and Exchange Commission

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

Calleja vs. Panday 483 SCRA 680 (2006)

 Orendain vs. BF Homes, Inc., 506 SCRA 348 (2006)

ujuico vs. Quiambao 513 SCRA 243 (2007)

Reyes vs. RTC of Makati, 561 SCRA 593 (2008)

Unlad Resources Devt., Corp., et al. vs. Renato P. Dragon, 560 SCRA 63 (2008)

Garcia vs. Eastern Telecommunications Philippines, Inc 585 SCRA 450 (2009)

Roberto L. Abad, et al vs. Philippine Communications Satellite Corporation, G.R.

No. 200620, March 18, 2015

3. Regulatory Jurisdiction

Peneyra vs. Intermediate Appellate Court, 181 SCRA 244 (1990)

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)

TCL Sales Corporation vs. Court of Appeals, 349 SCRA 35 (2001)

Pilipinas Loan Company, Inc. vs. Securities and Exchange Commission, 356
SCRA 193 (2001)

Mobilia Products, Inc., vs. Umezawa 452 SCRA736 (2005)

Abacus Securities vs. Ampil 483 SCRA 315 (2006)

Securities and Exchange Commission vs. Performance Foreign Exchange

Corporation 495 SCRA 579 (2006)

Philippine Association of Stock Transfer and Registry Agencies, Inc.,v. CA et al.

539 SCRA 61 (2007)

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)

Securities and Exchange Commission vs. Interport Resources Corporation 567

SCRA 354 (2008)

GSIS vs. Court of Appeals 585 SCRA 679 (2009)

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)

Ao-As vs. CA 491 SCRA 339 (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)

Philippine Airlines vs. Zamora 514 SCRA 584 (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

Philippine Bank of Communications vs. Basic Polyprinters and Packaging

Corporation, G.R. No. 187581, October 20, 2014
 Marilyn Victorio-Aquino vs. Pacific Plans Inc., and Mamareto A. Marcelo Jr.,
G.R. No. 193108, December 10, 2014

BPI Family Sacings Bank Inc., vs. St. Michael Medical Center, Inc., G.R. No.
205469, March 25, 2015

VIII. Banking Laws

A. The New Central Bank Act (R.A. No. 7653)

1. Responsibility and Primary Objective

Perez vs. Monetary Board, 20 SCRA 592 (1967)

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

2. Monetary Board - Powers and Functions

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

3. How the BSP handles Banks in Distress

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)

Lipana vs. Development Bank of Rizal, 154 SCRA 257 (1987)

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

In Re : Petition for Assistance in the Liquidation in the Rural Bank of Bokod

(Benguet), PDIC vs. Bureau of Internal Revenue, 511 SCRA 123 (2006)

B. Law on Secrecy of Bank Deposits (R.A. No. 1405, as amended)

1. Purpose

BSB Group, Inc. vs. Sally Go, G.R. No. 168644, February 16, 2010

2. Prohibited Acts

Oate vs. Abrogar, G.R. No. 107303, February 23, 1995

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

Ejercito vs. Sandiganbayan, G.R. Nos. 157294-95, November 30, 2006

4. Exceptions

PNB vs. Gancayco, 15 SCRA 91 (1965); Banco Filipino Saving and Mortgage
Bank vs. Purisima, 161 SCRA 576 (1988)

RCBC vs. De Castro, G.R. No. L-34548, November 29, 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

Van Twest vs. Court of Appeals, 230 SCRA 42 (1994)

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

Rizal Commercial Banking Corporation vs. Hi-Tri Development Corporation,

672 SCRA 514 (2012)

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

5. Garnishment of Deposits, Including Foreign Deposits

De la Rama vs. Villarosa, 8 SCRA 413 (1963)

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

C. General Banking Law of 2000 (R.A. No. 8791)

1. Definition and Classification of Banks

Republic of the Philippines vs. Security Credit and Acceptance Corporation,

G.R. No. L-20583, January 23, 1967

2. Distinction of Banks from Quasi-Banks and Trust Entities

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

3. Bank Powers and Liabilities

a. Corporate Powers

Register of Deeds of Manila vs. China Banking Corporation, 4 SCRA 1145

(1962)

Banco de Oro-EPCI, Inc. vs. JAPRL Development Corporation, G.R. No.

179901, April 14, 2008

b. Banking and Incidental Powers

 Spouses Raul and Amalia Panlilio vs. Citibank, N.A., G.R. No. 156335,
November 28, 2007

4. Diligence Required of BanksRelevant Jurisprudence

Pacific Bank vs. Hart, 173 SCRA 102 (1989)

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

Development Bank of the Philippines vs. Guaria Agricultural and Realty

Development Corporation, G.R. No. 160758, January 15, 2014

5. Nature of Bank Funds and Bank Deposits

 Consolidated Bank and Trust Corporation vs. Court of Appeals, G.R. No.
138569, September 11, 2003

Suan vs. Gonzales, 518 SCRA 82 (2007)

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

7. Grant of Loans and Security Requirements

a. Single Borrowers Limit

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.

b. Restrictions on Bank Exposure to DOSRI (Directors, Officers, Stockholders and

their Related Interests

Banco de Oro vs. Bayuga, 93 SCRA 443 (1979)

People vs. Jalandoni, 122 SCRA 588 (1983)

Jose C. Go vs. BSP, G.R. No. 178429, October 23, 2009

Jose C. Go vs. BSP, G.R. No. 178429, October 23, 2009

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

Philippine Amanah Bank (Now Al-Amanah Islamic Investment Bank of the

Philippines, also known as Islamic Bank) vs. Evangelista Contreras, G.R. No.
173168, September 29, 2014

D. Miscellaneous Topics

1. Philippine Deposit Insurance Corporation

Philippine Deposit Insurance Corporation vs. Court of Appeals, 283 SCRA 462.
1998

PDIC vs. Court of Appeals, 402 SCRA 194 (2003)

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:

1. The cash price or delivered price of the property or service to be acquired;

2. The amounts, if any, to be credited as down payment and/or trade-in;
3. The difference between the amounts set forth under clauses 1 and 2;
4. The charges, individually itemized which are paid or to be paid by such person in
connection with the transaction but which are not incident to the extension of
credit;
5. The total amount to be financed;
6. The finance charges expressed in terms of pesos and centavos;
7. The percentage that the finance charge bears to the total amount to be financed
expressed as a simple annual rate on the outstanding unpaid balance of the obligation.

Development Bank of the Philippines vs. Arcilla Jr., 462 SCRA 599 (2005)

UCPB vs. Spouses Beluso, 530 SCRA 567 (2007)

Spouses Eduardo and Lydia Silos vs. Philippine National Bank, G.R. No. 181945,
July 2, 2014
IX. Intellectual Property Code

A. Intellectual Property Rights in General

1. Differences between Copyrights, Trademarks and Patent

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

3. Rights Conferred by a Patent

Domiciano Aguas vs. Conrado De Leon, G.R. No. L-32160, January 30, 1982

Manzano vs. Court of Appeals, G.R. No. 113388, September 5, 1997

Precision Systems, Inc.,vs. Court of Appeals, G.R. No. 118708, February 2, 1998

Del Rosario vs. Court of Appeals, 255 SCRA 152 (1996)

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

a. Tests in Patent Infringement

i. Literal Infringement

Pascual Godines vs. Court of Appeals, G.R. No. 97343, September 13, 1993
 ii. Doctrine of Equivalents

Pascual Godines vs. Court of Appeals, G.R. No. 97343, ibid

Smith Kline Beckman Corporation vs. Court of Appeals, G.R. No.

126627, ibid

b. Defenses in Action for Infringement

Rosario Maguan vs. Court of Appeals, G.R. L-45101, November 28, 1986

5. Licensing

Prince vs. United Laboratories, Inc.,166 SCRA 133 (1988)

C. Trademarks

Pribhdas J. Mirpuri vs. Court of Appeals, G.R. No. 114508, November 19, 1999

1. Acquisition of Ownership of Mark

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

Air Philippines Corporation v. Pennswell, Inc., 540 SCRA 215 (2007).

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

Birkenstock Orthopaedie Gmbh and Co. Kg vs. Philippine Shoe Expo

Marketing Corporation, G.R. No. 194307, November 20, 2013

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)

3. Prior Use of Mark as a Requirement

 Mattel, Inc. vs. Emma Francisco, et al., 560 SCRA 504 (2008)

4. Tests to Determine Confusing Similarity between Marks

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

McDonalds Corporation vs. Macjoy Fastfood Corporation, G.R. No. 166115,

February 2, 2007

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

Emerald Garment Manufacturing Corporation vs. Court of Appeals, G.R. No.

100098, December 29, 1995

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

c. Doctrine of unrelated goods

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

Pribhdas J. Mirpuri vs. Court of Appeals, G.R. No. 114508, ibid

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

Fredco Manufacturing Corporation vs. President and Fellows of Harvard

College, GR No. 185917, June 1, 2011

6. Rights Conferred by Registration

Berris Agricultural Co., Inc. vs. Norvy Abyadang, G.R. No. 183404, ibid

7. Infringement and Remedies

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

Del Monte Corporation and Philippine Packing Corporation vs. Court of

Appeals, G.R. No. L-78325, January 25, 1990

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

Shang Properties Realty Corporation (formerly the Shang Grand Tower

Corporation) and Shang Properties Inc., (formerly EDSA Properties Holdings,
Inc.) vs. St Francis Development Corporation, G.R. No. 190706, July 21, 2014

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

Fredco Manufacturing Corporation vs. President and Fellows of Harvard

College, GR No. 185917, ibid

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

Manly Sportwear Manufacturing, Inc. vs. Dadodette Enterprises and/or Hermes

Sports Center, G.R. No. 165306, September 20, 2005

1. Basic Principles, Sections 172.2, 175 and 181

2. Copyrightable Works

United Features vs. Munsingwear Creation, 179 SCRA 260 (1989)

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

4. Rights of Copyright Owner

Columbia Pictures, Inc. vs. Court of Appeals, 261 SCRA 144 (1996)

5. Limitations on Copyright

ABS-CBN Broadcasting Corporation vs. Philippine Multi-Media System, Inc.,

G.R. Nos. 175769-70, January 19, 2009

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

A. Anti-Money Laundering Act (R.A. No. 9160, as amended)

1. Unlawful Activities or Predicate Crimes

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

2. Freezing of Monetary Instrument or Property

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

B. Foreign Investments Act (R.A. No. 7042)

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

Agilent Technologies Singapore (Pte.) Ltd. vs. Integrated Silicon Technology

Philippines Corporation, G.R. No. 154618, April 14, 2004

Steelcase, Inc. vs. Design International Selections, Inc., G.R. No. 171995, April
18, 2012

2. Foreign Investment Negative List

Heirs of Wilson Gamboa vs. Finance Secretary Margarito Teves, G.R. No.
176579, October 9, 2012

C. Warehouse Receipts Law

Estrada vs. Court of Agrarian Relations, 2 SCRA 986 (1961)

Consolidated Terminals vs. Artex Development Co., 63 SCRA 46 (1975)

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)