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Chan Wan vs. Tan Kim, GR NO.

L-15380, September
30, 1960

Facts: Checks payable to "cash or bearer" and drawn by defendant Tan Kim
(upon the Equitable Banking Corporation, were all presented for payment by
Chan Wan, plaintiff, to the drawee bank, but they were all due to insufficient
funds. Tan Kim declared that the checks had been issued to two persons
named Pinong and Muy for some shoes the former had promised to make
and were intended as mere receipts. the Lower Court declined to order
payment for two principal reasons: (a) plaintiff failed to prove he was a
holder in due course, and (b) the checks being crossed checks should not
have been deposited instead with the bank mentioned in the crossing.

Issue: Whether or not the plaintiff has the right to collect on the said
negotiable instruments.

Held: Yes. The Negotiable Instruments Law does not provide that a
holder who is not a holder in due course, may not in any case, recover on
the instrument. If B purchases an overdue negotiable promissory note
signed by A, he is not a holder in due course; but he may recover from A, if
the latter has no valid excuse for refusing payment. The only disadvantage
of holder who is not a holder in due course is that the negotiable instrument
is subject to defense as if it were non- negotiable.
BPI vs. CA, GR NO. 112392, Feb. 29, 2000

Facts: Benjamin Napiza deposited in Foreign Currency Deposit Unit (FCDU)

Savings account which he maintained in petitioner a Managers Check
payable to "cash" in and duly endorsed by him on its dorsal side. Said check
belonged to Henry Chan, who went to the office of private respondent and
requested him to deposit the check in his dollar account by way of
accommodation and for the purpose of clearing the same. The former
acceded, and agreed to deliver to the latter a signed blank withdrawal slip,
with the understanding that as soon as the check is cleared, both of them
would go to the bank to withdraw the amount of the check upon private
respondents presentation to the bank of his passbook.

Using the said blank withdrawal slip, Ruben Gayon, Jr. was able to withdraw
the amount of $2,541.67 from aforesaid savings account. The withdrawal
slip shows that the amount was payable to Ramon A. de Guzman and Agnes
C. de Guzman and was duly initialed by the branch assistant manager,
Teresita Lindo.

On November 20, 1984, BPI received communication from the Wells Fargo
Bank International of New York that check deposited by Napiza was a
counterfeit check because it was "not of the type or style of checks issued by
Continental Bank International." Mr. Ariel Reyes, manager of BPI, instructed
one of its employees, Benjamin D. Napiza IV, who is Napiza's son, to inform
his father that the check bounced.

Napiza's son told Reyes that the check been assigned "for encashment" to
Ramon A. de Guzman and/or Agnes C. de Guzman after it shall have been
cleared upon instruction of Chan. His father immediately tried to contact
Chan but Chan was out of town. Napiza's son undertook to return the
amount of $2,500.00 to BPI

BPI filed a complaint against Napiza for the return of the aforesaid amount
or the prevailing peso equivalent plus legal interest, attorney's fees, and
litigation and/or costs of suit.

Napiza admitted that he indeed signed a "blank" withdrawal slip with the
understanding that the amount deposited would be withdrawn only after the
check in question has been cleared. However, without his knowledge, it was
withdrawn with one of BPI's employees.

The Lower Court dismissed the complaint. Having admitted that it committed
a "mistake" in not waiting for the clearance of the check before authorizing
the withdrawal of its value or proceeds, BPI should suffer the resultant loss.
The CA affirmed the lower court's decision. Hence, the appeal to the SC.

In the said appeal, BPI claims that Napiza, having affixed his signature at
the dorsal side of the check, should be liable in accordance to Sec. 66 of the
Negotiable Instrument Law.

Issue: Whether or not Napiza may be held liable as indorser or

accommodation party.

Held: No. Private respondent may be held liable as an indorser of the check
or even as an accommodation party. However, to hold private respondent
liable for the amount of the check he deposited by the strict application of
the law and without considering the attending circumstances in the case
would result in an injustice and in the erosion of the public trust in the
banking system.

Propriety of the withdrawal should be gauged by compliance with the rules

thereon that both petitioner bank and its depositors are duty-bound to
observe. Under the rules, to be able to withdraw from the savings account
deposit under the Philippine foreign currency deposit system, two requisites
must be presented to petitioner bank by the person withdrawing an amount:
(a) a duly filled-up withdrawal slip, and (b) the depositors passbook. In the
above-stated case, it is very clear that the said requisites are not complied.

Furthermore, in depositing the check in his name, private respondent did not
become the outright owner of the amount stated therein. Under the rule, by
depositing the check with petitioner, private respondent was merely
designating petitioner 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, petitioner shall credit the amount in private
respondents 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. Again, this is in accordance with ordinary banking practices and with
this Courts pronouncement that "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." The rule finds more meaning in this case where the check
involved is drawn on a foreign bank and therefore collection is more difficult
than when the drawee bank is a local one even though the check in question
is a managers check.
Cayanan vs. North Star International Travel Inc, GR
NO. 172954, October 5, 2011

Facts: Virginia Balagtas, the General Manager of North Star, in

accommodation and upon the instruction of its client, petitioner Cayanan,
sent the amount of US$60,000 to View Sea Ventures Ltd., in Nigeria from
her personal account in Citibank Makati. On March 29, 1994, Virginia again
sent US$40,000 to View Sea Ventures by telegraphic transfer, with
US$15,000 coming from petitioner. Likewise, on various dates, North Star
extended credit to petitioner for the airplane tickets of his clients, with the
total amount of such indebtedness under the credit extensions eventually
reaching P510,035.47.

To cover payment of the foregoing obligations, petitioner issued five checks

to North Star. When presented for payment, the checks in the amount were
dishonored for insufficiency of funds while the other three checks were
dishonored because of a stop payment order from petitioner. North Star,
through its counsel, wrote petitioner, informing him that the checks he
issued had been dishonored. North Star demanded payment, but petitioner
failed to settle his obligations. Hence, North Star instituted a Criminal Case-
violation of Batas Pambansa Blg. 22. The MeTC found petitioner guilty
beyond reasonable doubt. However, upon appeal, the RTC acquitted
petitioner. But, the CA reversed said decision insofar as the civil aspect is
concerned and held petitioner civilly liable for the value of the subject
checks. Hence, the appeal to the SC.

Petitioner argues that the CA erred in holding him civilly liable to North Star
for the value of the checks since North Star did not give any valuable
consideration for the checks. He insists that the US$85,000 sent to View Sea
Ventures was not sent for the account of North Star but for the account of
Virginia as her investment. He points out that said amount was taken from
Virginias personal dollar account in Citibank and not from North Stars
corporate account. On the other hand, Respondent North Star counters that
petitioner is liable for the value of the five subject checks as they were
issued for value.
Issue: 1. Whether or not CA erred in making petitioner civilly liable

2. Whether or not the instrument is for value

Held: Yes. Upon issuance of a 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. Sadly,
however, petitioner 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.

Petitioner claims that North Star did not give any valuable consideration for
the checks since the US$85,000 was taken from the personal dollar account
of Virginia and not the corporate funds of North Star. The subject checks,
bearing petitioners signature, speak for themselves. The fact that petitioner
himself specifically named North Star as the payee of the checks is an
admission of his liability to North Star and not to Virginia Balagtas, who as
manager merely facilitated the transfer of funds. Indeed, it is highly
inconceivable that an experienced businessman like petitioner would issue
various checks in sizeable amounts to a payee if these are without

Having failed to fully settle his obligation under the checks, the appellate
court was correct in holding petitioner liable to pay the value of the five
checks he issued in favor of North Star.

G.R. No. 114427 February 6, 1995


Geagonia is the owner of Norman's Mart. On December 22, 1989, he

obtained from Country Bankers Insurance Corporation (CBIC) a fire
insurance policy for P100,000.00 for the period of December 22, 1989 to
December 22, 1990. It covers his stock-in-trade. The policy contained a

3. The insured shall give notice to the Company of any insurance or

insurances already affected, or which may subsequently be effected,
covering any of the property or properties consisting of stocks in trade,
goods in process and/or inventories only hereby insured, and unless such
notice be given and the particulars of such insurance or insurances be stated
therein or endorsed in this policy pursuant to Section 50 of the Insurance
Code, by or on behalf of the Company before the occurrence of any loss or
damage, all benefits under this policy shall be deemed forfeited, provided
however, that this condition shall not apply when the total insurance or
insurances in force at the time of the loss or damage is not more than

On May 27, 1990, fire broke out at the public market which destroyed
Geagonia’s Stock-in-trade. This prompted him to file a claim with CBIC.
CBIC found out that said stock-in-trade were covered by other fire insurance
policies issued by Philippine First Insurance Co., Inc (PFIC). Thus, CBIC
denied Geagonia’s claim on the ground of violation of condition 3 of the

The PFIC policies had mortgage clause, to wit:

MORTGAGE: Loss, if any shall be payable to Messrs. Cebu Tesing Textiles,

Cebu City as their interest may appear subject to the terms of this policy.
CO-INSURANCE DECLARED: P100,000. — Phils. First CEB/F 24758.

Geagonia alleged that he had no knowledge of the provision in the private

respondent's policy requiring him to inform it of the prior policies; this
requirement was not mentioned to him by the private respondent's agent;
and had it been mentioned, he would not have withheld such information.


Whether or not condition 3 in the fire insurance policy of CBIC was not
violated when Geagonia did not disclose the other fire insurance policies with
PFIC and thus, entitle him to the claim under the policy.


Yes, condition 3 was not violated and thus, Geagonia is entitled to his claim
under the policy.

It is a cardinal rule on insurance that a policy or insurance contract is to be

interpreted liberally in favor of the insured and strictly against the company,
the reason being, undoubtedly, to afford the greatest protection which the
insured was endeavoring to secure when he applied for insurance…

With these principles in mind, we are of the opinion that Condition 3 of the
subject policy is not totally free from ambiguity and must, perforce, be
meticulously analyzed. Such analysis leads us to conclude that (a) the
prohibition applies only to double insurance, and (b) the nullity of the policy
shall only be to the extent exceeding P200,000.00 of the total policies

… A double insurance exists where the same person is insured by several

insurers separately in respect of the same subject and interest… the
insurable interests of a mortgagor and a mortgagee on the mortgaged
property are distinct and separate. Since 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. The non-disclosure then of the
former policies was not fatal to the petitioner's right to recover on the
private respondent's policy.

Furthermore, by stating within Condition 3 itself that such condition shall not
apply if the total insurance in force at the time of loss does not exceed
P200,000.00, the private respondent was amenable to assume a co-insurer's
liability up to a loss not exceeding P200,000.00.

G.R. No. 75605 January 22, 1993



G.R. No. 76399 January 22, 1993


Verendia insured his residential building under a fire insurance policy with
Fidelity and Surety Insurance Company of the Philippines (Fidelity). In order
to support his He also insured the same building with other Insurance

While these insurance policies were in force, the said building was
completely destroyed by fire. Thus, Verendia filed a claim to Fidelity.
However, it was denied on the ground of over-insurance and that he
maliciously represented that the building at the time of the fire was leased
under a contract executed on June 25, 1980 to a certain Roberto Garcia,
when actually it was a Marcelo Garcia who was the lessee. This prompted
him to file a complaint with the trial court. However, it rendered a decision in
favor of Fidelity.

Verendia appealed to the Intermediate Appellate Court which reversed the

trial court decision. It reasoned that there was no misrepresentation and
that Fidelity waived paragraph 3 of the policy when it attempted to settle the
claim of Verendia.


1. Whether or not the fire insurance policy was avoided when Verendia
used a false lease contract to support his claim under Fire Insurance.

2. Whether or not Fidelity waived paragraph 3 of the policy when it

attempted to settle the claim of Verendia.

1. Yes, the fire insurance policy was avoided.

Verendia failed to live by the terms of the policy, specifically Section 13

thereof which is expressed in terms that are clear and unambiguous, that all
benefits under the policy shall be forfeited "If the claim be in any respect
fraudulent, or if any false declaration be made or used in support thereof, or
if any fraudulent means or devises are used by the Insured or anyone acting
in his behalf to obtain any benefit under the policy". Verendia, having
presented a false declaration to support his claim for benefits in the form of
a fraudulent lease contract, he forfeited all benefits therein by virtue of
Section 13 of the policy in the absence of proof that Fidelity waived such
provision (Pacific Banking Corporation vs. Court of Appeals, supra). Worse
yet, by presenting a false lease contract, Verendia, reprehensibly
disregarded the principle that insurance contracts are uberrimaefidae and
demand the most abundant good faith (Velasco vs. Apostol, 173 SCRA 228

2. No, Fidelity did not waived paragraph 3 of the policy when it

attempted to settle the claim of Verendia. While it did attempt to
settle, no settlement was arrived at and enforced.

The Supreme Court said that There is also no reason to conclude that by
submitting the subrogation receipt as evidence in court, Fidelity bound itself
to a "mutual agreement" to settle Verendia's claims in consideration of the
amount of P142,685.77. While the said receipt appears to have been a filled-
up form of Fidelity, no representative of Fidelity had signed it. It is even
incomplete as the blank spaces for a witness and his address are not filled
up. More significantly, the same receipt states that Verendia had received
the aforesaid amount. However, that Verendia had not received the amount
stated therein, is proven by the fact that Verendia himself filed the complaint
for the full amount of P385,000.00 stated in the policy. It might be that
there had been efforts to settle Verendia's claims, but surely, the
subrogation receipt by itself does not prove that a settlement had been
arrived at and enforced. Thus, to interpret Fidelity's presentation of the
subrogation receipt in evidence as indicative of its accession to its "terms" is
not only wanting in rational basis but would be substituting the will of the
Court for that of the parties.

G.R. No. L-25579 March 29, 1972


Juan S. Biagtan (Biagtan) was insured with Insular Life Assurance Company,
Ltd. (Insular) under policy no. 398075 for the sum of P5,000.00 and under
supplementary contract denominated Accidental Death Benefit Clause, for an
additional sum of P5,000.00 if the death of the Insured resulted directly
from bodily injury effected solely through external and violent means
sustained in an accident... and independently of all other causes. The clause,
however,expressly provided that it would not apply where death resulted
from an injury intentionally inflicted by another party.

One day, a band of robbers entered the house of Biagtan. He was stabbed to
death by said robbers. Biagtan’s beneficiaries filed a claim under the policy.
Insular then paid them the amount under the policy, however, it refused to
pay them the additional sum under the Accidental Death Benefit Clause on
the ground that the death resulted from intentionally inflicted injuries.


Whether or not the injuries inflicted by the robbers that cause the death of
the insured is intentional.


Yes, the injuries inflicted were intentional.

Nine wounds were inflicted upon the deceased, all by means of thrusts with
sharp-pointed instruments wielded by the robbers. This is a physical fact as
to which there is no dispute. So is the fact that five of those wounds caused
the death of the insured. Whether the robbers had the intent to kill or
merely to scare the victim or to ward off any defense he might offer, it
cannot be denied that the act itself of inflicting the injuries was intentional.
It should be noted that the exception in the accidental benefit clause invoked
by the appellant does not speak of the purpose — whether homicidal or not
— of a third party in causing the injuries, but only of the fact that such
injuries have been "intentionally" inflicted — this obviously to distinguish
them from injuries which, although received at the hands of a third party,
are purely accidental. x xxBut where a gang of robbers enter a house and
coming face to face with the owner, even if unexpectedly, stab him
repeatedly, it is contrary to all reason and logic to say that his injuries are
not intentionally inflicted, regardless of whether they prove fatal or not. As it
was, in the present case they did prove fatal, and the robbers have been
accused and convicted of the crime of robbery with homicide.

In the case of Hutchcraft'sEx'r v. Travelers' Ins. Co., 87 Ky. 300, 8 S.W.

570, 12 Am. St. Rep. 484, the insured was waylaid and assassinated for the
purpose of robbery. Two (2) defenses were interposed to the action to
recover indemnity, namely: (1) that the insured having been killed by
intentional means, his death was not accidental, and (2) that the proviso in
the policy expressly exempted the insurer from liability in case the insured
died from injuries intentionally inflicted by another person. In rendering
judgment for the insurance company the Court held that while the
assassination of the insured was as to him an unforeseen event and
therefore accidental, "the clause of the proviso that excludes the (insurer's)
liability, in case death or injury is intentionally inflicted by another person,
applies to this case."

G.R. No. 183526 August 25, 2009


Eulogio, husband of Violeta, insured his life with Insular Life Assurance
Company Limited (Insular). Violeta was named beneficiary therein. In the
life insurance policy, it contained a term where an insured failed to pay his
premium, he would be given 31 day grace period to pay. However, if despite
said grace period, the insured still failed to pay the policy would
automatically lapse and become void.

Eulogio failed to pay his premium and remained unpaid even after the grace
period given. Thus, his life insurance policy lapsed and became void. He
applied for the reinstatement of his policy. Under the policy, however, the
insured must pay the premiums that had become due plus interest and file
an application for reinstatement. The filing of the reinstatement and
payment of those premiums and interest does not automatically reinstate
the said policy. Said reinstatement application still needs approval. Pending
its approval, the premiums paid and interest would be treated as a deposit
and the Insular is not bound to any claims.

When Eulogio filed his application for reinstatement, he filed the same and
paid the premium due to Insular’s agent. However, it was denied by reason
that the interest was not paid. Thus, he filed a second application to said
agent paying the premiums due and interest thereon. However on the same
day, he died. The said agent, not knowing of his death, forwarded the
reinstatement application and payment the next day. However, Insular life
learned of the death and thus, denied the application on ground that there’s
nothing to insure since Eulogio is already dead.

Violeta filed a claim under the policy believing that the same was
automatically reinstated by virtue of the application filed and payments
made by her husband prior to his death. Insular denied the same saying that
the insurance policy was not reinstated because the application for
reinstatement still needs approval and pending its approval the Insular is not
bound to its claim. The same could not be approved anymore since Eulogio
is dead.

Whether or not the insurance policy was automatically reinstated by virtue of

the filing of the reinstatement and payments of the premiums due and its


No, the insurance policy was not automatically reinstated.

"The stipulation in a life insurance policy giving the insured the privilege to
reinstate it upon written application does not give the insured absolute right
to such reinstatement by the mere filing of an application. The insurer 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 premium and all
other indebtedness to the insurer. 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." (Emphases ours.)

It does not matter that when he died, Eulogio’s Application for

Reinstatement and deposits for the overdue premiums and interests were
already with Malaluan.

x xx

Malaluan did not have the authority to approve Eulogio’s Application for
Reinstatement. Malaluan still had to turn over to Insular Life Eulogio’s
Application for Reinstatement and accompanying deposits, for processing
and approval by the latter.

The Court agrees with the RTC that the conditions for reinstatement under
the Policy Contract and Application for Reinstatement were written in clear
and simple language, which could not admit of any meaning or interpretation
other than those that they so obviously embody. A construction in favor of
the insured is not called for, as there is no ambiguity in the said provisions in
the first place. The words thereof are clear, unequivocal, and simple enough
so as to preclude any mistake in the appreciation of the same.