MERCARCTEE LAW { i i | 2010 PRE-WEEK NOTES _ ee peo caciscecnnieel mn NEGOTIABLE INSTRUMENTS LAW | ‘Requisites of Negotiability, lay electronic messages be considered as negotiable instruments? Nahe may not The eletronie messages ae not signed bythe jvestor-lents as supposed drawers of abil exchange; they do not contain an unconditional order to pay a sum certain in money asthe payment i supposed to come from A {pec fund or account ofthe investr-lints; and, they are not payable io order or betcerbut to a specifically designated hid party. Thu, the electronic messages are not bills of exchange or nogotable itetruments (Hongkong & Shanghat ‘Banking Corp v. CIR. OR. No. 166018 & 167728, June 4, 2014). : ‘A borrowed P500,000 from B as evidenced by a promissory note. The promissory note contains a promise to Pay in te angount of 500,000 payable to B on August 5, 2020, Aasunaing alleged that they agreed upon that the promissory note should be payable to bearer but.faliod to include it in te promissory note due to mere inadvertence. Is the instrument negotiable? | i No. Negotiabilty ov non-negotability of an instrument Is ‘determined from the wafting, that is, fom the fice of the {natcamentitsell 1a the construction of bill or not, the intention ofthe pastiesis to copra: iit canbe legally ascertained. While the writing may be read in the light of aurzounding circumstances in arder to pte perfectly understand the intent sand meaning ofthe parties, yet as they have constituted the writing to be the only outward and visible expression oftheir ‘meaning, ao other words are tobe added to itor substitoted in its stead. The dity ofthe cout in such case is to asertan, hot what therparties may have seccelly fatended as contradistinguished from what tei words express, but what i the ‘meaning of the words they have used. What ess it be determined by hat they said (Caltex (Philfppines), Ine. v, CA, GR No. 9775, Aust 10,1982). OY NG OPA INSTRUMENTIS “promise to pay A or onder PSGQI as |x Line! not an unconditional promise soon as I have the money. Signed}Zi/) _|'to ps required under Sec. 1(b) of NIL_ *T promis to pay D or order P10 0005 auiie Siaaeesfialletregardesp of the inclusion of the Ileres: arrinterest of 6% per annua (Signe) ees Sohn alsin although its to be pid with ineret % a ! 3 WANILISec. 2) [promise to pay Hor order PIS sisaiegGabfeAn unqualified order or promise to pays, to my purchase of dog to. (Signed) ichyfoupled with the statement of the transaction siaueignied wut Bled instebment (NI, Sec. 3). : “Pao onde FX hs amount oF PROUT) gl ESRI SiGotagG An inerinnt payable aa deel day ater eit lene" ep eg rahe oe ied paid aur dat ot [promis to pay to For order P25,000 toe SHR fnatsunieat, ible. An unqualified order or prove to pay is bbe debited in my account at JK Bank. i “coupled with the| particular account to be debited (Gizned) 0: wit See 3) ! \ “T promise to pay ¥ of order P30000 of | The ‘nstrument™s negotiable, Negotiable character of an instrument sender cleaning serves for 3 days atthe | otherwise negotiable is not affected by «provision which gives the holder ‘option of the holder. (Signed) R® an election to require something to be done in lew of payment of money (Ot, Sec: 5) 1 ‘A negotiable instrument that isnot dated |The instrument is negotiable. Validity and negotiable character of an 2 : instrument are not affected by the fact that it is mt dated (NIL, Se 6 “N maintains a savings account in KBC Bank and discounting arrangement with KEM Savings and Loan Association (KEMSLA), association of KEM employees. The KEMSLA checks issued for these ers were then given to N for sediseounting whenever the association was short of funds. To subvert the poflcy, KEMSLA’s ‘fficers took out losis in the names of unknowing members, without the lnowledge or consont of the liter by forging the indorsement of the named payces in the checks, In return, N igaued his personal checks in the name of the members and delivered the checks to an officer of KEMSLA, ‘The KEMSLA checks were deposited by N to his account. N's checks were deposited directly by KEMSLA to iés sayings account without any indorsement from the named payees. To put astop to this scheme, KBC closed the current account of KEMSLA. KEMSLA checks deposited by N yere returned or dishonored for the reason "Account Closed.” The cofresponding checks of N wore deposited as usual to the KEMSLA savings account. The amouits were duly dite from the secount of N. Ths, because the KEMSLA checks given ag payment wereseturned, N insured © losses’from the rediscounting transactions. a May KDC ban validly ris the dense of ttous payee rule? | B Encption othe Hatitous payee rae? i 018 sin psn cenmazo nan OPERONS |2018 PRE-WEEK NOTES 2.1 fot0 san BeDA ceNTRAUZED GAR OPERATIONS | MERCANTILE LAW a. No, Her the fetitious-payee rulo to be available as a defense, KBC must show that the |makers did not intend for the named payees to be part of the tminenetion invelving the checks. At most the bank's thesis shows that the payee: did not have knowledge of the existence of the checks, This lack of knowledgelon tle part of the payees; however, was not tantamount ta «lack ofiatention on the part of N thatthe payees wolid not receive the checks’ proceeds. Considering that N was transacting with KEMSLA and not the individual plyees, tis uhderstandable that he relied on the information given by the officers of KEMSLA that the payees cr PNB v. Sps. Rodrigues, supra) Ht een ee eel aon tw te Satine pee eA showing of comb tie drawee bat, or any taser ofthe check for that mats, wil work to sti of this defense. The Sreepon will enuse 19 beat the lots Commercial bid ath ie peesent ifthe tpafree of the check sets Gistoneaty and ia pty to ne faudulene scheme (ENB. Spx Regu supe) Defenses | : TRE . nd in.all Fespects what itspurpértsito. be! ater Atertion Antedating / Post Dating T Fornery insertion of Wrong Date $ ‘Duress amounting to Forger Filling up blanks beyond the scope of uthority Defenses and Warranties Breached "REAL DEFENSES. ats gene Pasig. se 97 nag PE RAP RAS ROO Bild COL LANE a OS ‘Want of Delivery of facomplts Instrument Want of Delivery of Complete Instrument gj Stonditional Delivery of Complete Instrument figment ia] Ae i inet inna prey pati ad Capac ly fo Contac Sra EOE Minority =¥i COLLEGE OF LAW f° Insanity a 7 ‘Want of Authoriey ST Aga lira Viees Acts a s eT Wie tine or te ina eaineRE NE =EaEEE| Tegal Tt Prescription Se ipmegarcamaefaor 1 Fraud in Fact Fs fumblanlaibejond reasonable tine we iets) ihn essed S [nietéyln Bakror Fat i 7 Nam ed | X and ¥ are childhood friends and busines as busy playing basketball, he pre-signed several blank checks and entrusted it to ¥ as paymentfor the e¥penses oftheir business. X instructed ¥ to fill up the amounts only when itis with his approval. As Y needed Funds for hospitalization of his wife, ¥ went to Z and borrowed money on the premise that X needs it for the construction of his house, Y used the cheeks given to * ‘im by X.7 acceded to the request. There was no authorization in favor of to enter into contracts in behalf of X. | a. IsZaholder in due course? i b. May'X validly set up the defense of the check was not completely filled out strictly under the authority he has given? i No, he isnot, Under Sec. 52 ofthe NIL, to be holder in due course, the holder must tgok it in good faith and for value. In order to show that the defendant had “lnowledge of euch facts that his actioh in tang the intrdment amounted to bad faith it is not necessary to prove that the defendant lmew the exact fraud that was practiced upon the plaintiff by the defendants asignor, i being sufficient to chow thatthe defendant had notice that there \was something wrong about his ascignor’ requisition of ttl, although he did not have notice ofthe perticalar ‘wrong that was committed. Acquisition in good faith means laking without knowledge or notice of equities of any sort which could beset up against a prior holder of the instrument. It means that he does not have'aty ‘mowledge of fact which would render it dishonest for him to take a negotiable paper. There was 26 special authority to actin behalf ofX and ¥ contracted the oan with Z, Hence, 2's knowledge thatthe X is nota party ‘or privy tothe contract of len, and eorrespondingly had no obligation o lability fo him, renders him dishones, hence in bad faith (Patrimonio v. Guierex, GR. No. 18776, June 4 2014). | “ b. _Yes.X gave ¥ the presigned checks to be used in their business provided that he could only use them upon his approval. His instruction was limited to the use of the checks forthe expenses of their business, and oi the condition that X's prior approval be first secured, Thus, Y exceeded his authority. As 2 is not a holder in due2018 PRE-WEEK HOTES 1 courte, X can validly set up the personal defense chat the blanks were not filed up in aocordance with tne authoriy he gave (Patrimonio v Gute, supra) | : Incomplete and Undel ' | enon wt 7] Nwanted to buy the car of T, seller of used cars: N was able to get his pen and & paper from his drawer and was able to make a promissory note leaving the amount only in blank. As he heard hii favorite show “Probinsyana” Tablet a. Novtvhere an incomplete instrament has nt ben delivered, wil not, feoinpleted and negotiated witout i authority, bee valid contract in the hands of any holder, as againstany personwhose signature was placed thereon i iefove every EM See 15} Te defenses areal defense, which deletes fable gains ny holder, whether i UNfatier in due curse or not (AQUINO, Moves and Cones on Boning Law ang NegtiheIsruments Low (218), ‘ 248). ci | fen Where the innicoment sin the hands of holder in ie conte, vali very Uheret hy al pate prior | Fan a fo make tem fale ohms conclusively presumed (Ms Sa, 16) As to aber in doe cure, cnn | ‘eesbllsed tht there was no delivery. Delivery teconcsiveas tothe hold th de course Ihe ein possession i | i ‘of a complete instrument (AQUINO, Nor Banking Law and Negotiable Instruments Law (2039), 2. 209). , _ SARERDA e : nds GEREN anigana ns pat Company. The sole signatory 4 10 OBZ's account was Q, project mine? Wine yEeuatody of Z, the accountant of OBZ. A certain MP went to the Near West fankcfnd jes Speck in the amount of PSMillion drawn, against the account of QBZ. Convitiged that th ie, he referred the check to PP, a senior i officer, who Was also satisfied toc Company in the premises of the said that it was genuine and the a the check, Q learned of the encas ‘Who should bear the loss? b. May the bane validly rai signature of Q? a. The bank must bear the loss. AY} such signature" i ineffectual or £9. PP aw, junior accountant of OBZ {tp Have the genuineness of the signature. Y ment, PP authorized the encashment of fa hs sigiatare had been forged. nt. paymert is made, the drawee éannot charge vol into the drawer's account. The tradi : he result is that he drewee is ina sypetior postion 9 “the detect a forgery because he has the mak signaluty and is expected to know and compares The rule has 2 and healthy cnatinary efact on bande by eneousaging eure in the comparicon of the signatores aging noes on the nto signature eards they have on file, Moreover, the very opportunity of the diawee to insure and to distribute the half . cost among its customers who use checks makes the drawee an idea! paty to spead the risk to insurance = Gamsung Construction Company Philippines v. FEBTC G.R. No. 129015, August 13, 2004). i, No, The bare fact thatthe forgery was commited by an engloyee of the party whose signature was forged esnnet necessarily imply that such party's negligence was the cause forthe forgery. Employers da not possess the preternatutal gift of cognition as to the evi that may lure within he hearts and minds of their employees for ‘Gamsung Construction Company Philippines v. FEBTC, supra). “ Hea nent ° i eed_ Accommodation Party : sir | 9, C foaned the amount of PaMillion fo A Corporation through its Manager, E. The loon was evideited by sof promissory note issued by F in behalf of A Corporation. As a guaranty or security for the payiment of the note, any Ealeoiseued and delivered to C 4 post-ated personal checks drawn from'E’s own bank account. The check Was cial dishonored fr being drow againet eased seconnt C demanded payment fois A Corporation and Fe a oarty accommodation party? nest, ‘Yes. When Este manager of A Corporation, agreed to accommodate its loan to C by issuing her own post dated checks in payment thereot, she is an accommodation patty (Aglibot v. Santa C.R No. 185985, December 3, 2012) An hiv ‘sccommodation party is one who hes signed the instrument as males, drawer, indorser, without ecciving value therefor the + and for the purpose of lending his namne to'some other persou. Such person is Hable on the instrument to a holder for value, due “notwithstanding such holler, at the ie of the taking ofthe instrument ew him to be only an accomimietion pasty : (Geo29, NII). in lending his name to the accommodated party, the accommodation paty isin effect a qurety fo the late. ‘2018 Sail GEDA CENTRALIZED BAR OPERATIONS | 32018 PRE-WEEK NOTES L 10, um. 2. 13. MERCANTILE LAW He lds is name to enable He ecole pony to blanc ete vise money. He reeves no part of the Contidrtion fo ihe nsec bess ily ote ther pis thereto Besse hq want toate Stes Pilpne Ban of Commer v Arua, GR Nos 1-288607 danuary 3, 81) B went to H to borrow money. H will nt loan money toB if G would not be aeting as an sesommodation party G agreed and executed a promissory note in favor of H to be payable on Noveraber 28,2018, Suppose B was able to asl for an extension for period of payment without the consent of G, may G alsojbe benefited from the extension? ‘Yes. Unlike in a contract of suretychip, the lability ofthe eocommodstion party remains nbt only primary but also unconditional toa holder for value sch that even ifthe accommodated party receives an exfensin of the peiod for payment without the consent ofthe accormedation party, the later Is stil able forthe whole obligation and such Extension does not release him because as faras a holder for value is conceraed, he isa sliday eo-debtor (Aglibotv. Sante, GR. No, 185945, December 5, 2012). Holder In Due Course A issued a negotiable promissory note to B and authorized the latter to fill up the amouint in blankk in the sum ‘of P00. However, B put P5,000 in violation of the instruction. B negotiated the note tolC who had knowledge ‘of thp infirmity. C indorsed the note to D who is an innocent purchaser in good faith and for value, who in turn, indorses said note to E for value, but who has knowledge of the infirmity. Can E enforce the note against ar ‘Yes, can enforce the note against A. Under the Shelter Rule, a holder who derives his ttle through a holder in due course, and who is not himself a party to any fraud or ile the instrument, has all the rights of euch former holder in respect of al partie prior the ater ( aes ta holder in due coufe because when he took att gaint ort hae allthe rights of holder the instrument, hehad lmowledage the bree a ‘roo af tt commited by B la Ayan Et Spt | GY ei or zat acting tetsu (Pas FSnnin 3 Ren gE Baw ye eee Sas oF i | Acct ent, N offered a foreign draft by GHE fethe draftto ABC bank (Collecting Bank). the same. ’s decount with ABC was ‘mformed ABC Bank that the draft was 900,000 to XYZ Banke ABC now wants N purchased jewelries from B for Company in the amount of PIM ‘ale Dane presented the dat Gredited for PiMillin, B gave tl materially altered from P100,000| fo deduct the amount of #900,000. XZ Banke The NU explicitly provies fa x trament, engages that he wil pay according to the tenor of his acceptance, Unnustai iN Gre awe bank cleared and pald the subject foreign draft and forwarded the amount there f ting bs eet then credited to Bie account the payment it :eoeived. Following the plain language ofthe law 1 the sald payment, recognized and complied with its bligation to pay tr accordance with the tenor of Miacceptane. The tenor ofthe acceptance is determined by the tems of the il e i when the drove accept. Siated simply, SZ war lable on St payment of the shecl according to the tenor ofthe check atthe time of payment, which was the raised amount (FEBTE v. Gold Paldce Jewellry Co, OR. No. 168274, August 202008) 1 Indorser ‘As payment of Iis loan to B, A issued a Masagana Banke check payable to B or his order. C, the personal accountant of B, placed his signature at the back of the check to signify that he recorded such payment. The check was then indorsed to D, as B's payment of some purchased materials. When the check was dishonored bby Masagana Bank, demanded payment from C.C refused payment arguing that hedifl not indorse the check. i IC correct? ' 1b. Can C claim that he is only secondarily Hable being an indorser‘and that he mist fist proceed against A? i 2, No,C'sargumentis untenable, See. 63 of NL makes “a person placnghis slgnsture upon an instrument otherwise than as maker, drawer or acceptor” a general indorser “unless he clearly indcstes by appropiate words his intention to be bound in some other capacity” (Tiong v: Ting, GR. No, L-26767, February 22, 1968).C's act of placing. bis signature atthe back ofthe check, makes him liable as a general indoser, and therefore Yableon the check. b, No, D need not proceed agains! the drawer A before he ean sue C, Sec. 66, par2 ofthe NIL states that a general indorser warrants that if the instrument be dishonored and necessary proceedings on dishonor be duly taken, he ‘ill pay the amount thereot to the holder, orto any subsequent indorser who maybe compelled to pay it. Aer tu Instrument Is dshonored by non-payment, Indorsrs Cease ta be mescly secondly lables they beste Principal debtors wise liability becomes identical to that ofthe oxiginal obligor. The holder ofthe negotiable 4 2019 san EEDA centRALZeD OAR OPERATIONS 1uw MERCANTILE U8 2018 Pr- WEEK NOTES the date any. sable athe also a for such antio, sum eige inst nurse, older took older athe HE anld, ‘was rants ding reign cnt it hits othe UNo. ‘onal The ‘ored ct ie 16. W. 18, 1 | instrument need not even proceed against the drawer before suing the c (Tuason v, Heirs of Ramos, GR. ‘No, 156262, July 14, 2005) Liahilities of Drawee Bar Mecting Banks t Dam and Bae received a check from April as payment for motor vehicles, Daih and Bae deposited the check to Glotia Bank. Gloria Bank, in turn, presented the check to the drawee bank, Santa Fe Bank, where the check ‘was honored. As a result, the amount of check was credited by Gloria Banke to the savings account of Damn and Bae. It then turned out the check was materially altered from P4,000.00 to 200,000, What is the liability of | toca Ban ah deponttory/ellesting Dans x Es css? : Sea ue any So bang an flemfor olen except the bankjon which the shed i drum. & Jagostytalcctiag ban where a heck a deponted and which endorses the eel on preentment with the drawee Meee eeeniy ade Sec E6 of the Negatble Insruments Lavan enone warants “tat the Instrent i al ape whet purpors to estat hem good tl ols hat hor ares had expecta contact Oy Ee oer eee gee esarylelecting halon endrser general sur the es beens tes he cyt ascertain the gnsinnes Fe hcg oof presenting the heck or pymep to he deanee an operon at the party maldag the presentment hss done its duty t ascertaln tie genuineness of the endorsements. Ian of the eutpa may th dpontyodecng bak topo fo be ap thed te nes ae may seared fos op the amt ofthese avesa Bers Sings Bok ne, OR No 069, Sptnber 1, 201). Presentment for Payment ‘When is presentment for agceptance m: [eis mandatory inthe following’ a. When payable after sil B.— When expressly so stipulat fe When the bill is drawn pay 133). 8 [Ris excuzed in the following eases: i ewer | ae fx the niaturity ofthe instrument; oF jd busnse of the drawee (NIL, See & When, although presentment féqit to thd drawee bank only on September dishonoring the check? fet ts lesue, and ln determining what is a eof trade or business with respect to sich Baye employed such dligenceas a prudent man ‘exercises in his oum affairs: This is becausPppoellure and WO}EGeKind the use dfa check pointe to ite iminediate use and payable as, a chek payable on del BRIER Walang ovrdie by about two aed = Half (2-1/2) yours was considered a stale check. Failure ofa payee to encash a chelbfor more than ten (10) years undoubtedly resulted in the check becoming stale Thus, even & delay of one (0) week or fa (2) days, under the speci ciraunstances of the sted ase constituted uneazonabe ime as atntter of law (ntermational Corporate Bank Spe Oueco, OR No, 141968, February 12,2001). “reasonable te,’ regard is to be had Instruments, and the facts. of the partiul Material Alteration | 1s an alteration ofthe serial number of a check is a material alteration under the Negotiable Instruments Law? 1No, An alteration is said to bé material if alters the effect ofthe instrument It means an unauthorized change in an instrument that purports to modify in any respect the obligation ofa party ax an unauthorized addition of words or rambers or other change to an incomplete instrument relating to the obligation ofa party. In other words, a tiaterial alteration is one which changes the items which are raquzed tobe stated under Section 1 ofthe Negotisble Instruments Law. The check’s serial number ie not the cole indieation of ite origin. As suecinetly found by the Court of Appeals, the name ofthe government agency which issued the subject check was prominently printed therein. The check’s issuer waa therefore sufficiently identified, rendering the referral tothe serial number redundant and inconsequential (international Corporate Bank v. CA, GR. No, 128910, September 5, 2006). ! ‘What is “No Erasure Rule”? | ‘Under Clearing House Operating Memorandum No, 15-460 (effective January 4, 2016), any check with erasure, alteration, and/or deficiency ~ even if countersigned, except for post-dated checks bearing the required bank stamp, shall no longer bevligible or acceptable for clearing. Fe i} | | i 1 20%8 G4 2eDA ceNTRALIZED GAR OPGRATIONS |SERAN LAW 2019 nac-wenk NOTES in 2 aes 4. 19, C-wanted to buy a parcel of Iand to E who sells a lot near her. B would only sell theliot sf © will pay using Scannger’s cheek. Cwent to Land Dank of the Philippines and opened an account wih deposit as PIOMAIKion T purchased a manager's checle which was valued at PoMillion payable to E. C requested a photocopy of the managers chesk fo provide # with proof that he'had available funds. Z, branch mfnager, agreed and the photocopy wae given to E. Unfortunately, her deal with E did not push through. An employee of the Bank of | see puiltgpine Islands (BED called Land Bank to inform dean that F had deposited the check for payment. Z coatinmte that Land Bank had issued the check to CZ infoeraed C that the checle was paid by DPI. C informed 2 tat ho newer negotiated the check because the deal did mot amatvialio and the ctl: was stil in i poonsion. C sesks scimbursemént from the Land Bank. The Land Bank contended that C is precluded from. Peta che datvase of forgery because of hs Fallre fo motiy the and Bante thatthe dey didnt push through ‘nil in giving a copy of the cheek. Is the contention valid? " No A eeawetor e depositor ofthe bani is precluded frm seserting the forgery ifthe drawee bank can prove his faite te conseise ordinary soe and if this negligence substantially eanlstbuted tothe forgery ox the perpetralion ofthe frand, While the et of giving Ea photocopy ofthe check may have allowed the ltter to create a duplicate, this eannot posibly excuse Land Banl¢'s filo to recognize that the check itself not just the signatures ~ is'x fake instrument. More mportently, Land Bank ltself furnished © the photocopy without objecting to the laters interion of giving i to E. C's fare to inform Land Bank thatthe deal did not push trough does not justify Land Bark’scopfiaaton and clearing of ‘fake check bearing the forged signtures ofits own officers Whither or not the deal pushed thjoogh, the check remained in Kho's possession He was ented to a reasonable expectation thal the bank would not releasé any funds corresponding to the check (Land Bank ofthe Philippines v. Kho, Gx. No 205839, july 7, 2016; Covered Case) 20. SuperSpecal tee Product (SSSP) was wails eustoiner PN was akaippoyee depository bank of Interco anid’p§PN.. Tatercoleued thee checks pa payee only” PN presented each Temanded deposit in his accou steel pipes Intereo replied that ucts, International Copper Export (Interco), ig Coxporation (Equitable or bank) is the ech re0 stesl Pipes ‘uiglie amount of P900,000. As payment, TB rst S ecossed with the notatlon account ud that he had|good title thereto and iis SHG. Wen Sr remind nero ofthe paid EAae payable wo SSSP and drawn against Equitable. IN was able to deposit the checks in his of damages against Equitable alleging ful and llega! conversion ofthe cheecs PM's actions. | ‘own account. Interco subsequently) paid thatit did not receive prompt paymadgt frbm. payable to SSSP, and of Equitable'S9ss ‘a. Should Equitable Bank i BL Indefense, Equitable argu! checks. It cites provisions 1 receive the check, cannot tenable? ms a. Yes. The checks that interco issued the notation "account payee only” This rei ‘nate expectation that the payee alone would receive the ‘proceeds of the checks and that diversciof the eieks would be averted, Tals expectation arises from the ccepted banking practice that crossed cecksrare iaended for deposit inthe named payer's account only and no ‘other. At the very least, the nature of crossed checks should place a bank on notice that it should exercise more caution or expend more than a cursory inquiry, to ascertain Whether the payee onthe check hes authorizgd the Iholder to deposit the same in a different account. Its well to remember that the bonking system has become an indispensable institution in the moder world and plays avitl roe in th economic ie of every civilized society. Equitable didnot observe the requited degree of diligence expected of a banking institution under the existing factual dzeamstances, The fact that «person, other than the named payee ofthe crossed check, was presenting i for deposit should have put the bankcon guard. Itchould have verified ifthe payee authorized the holder to ptesent ‘the same in its behalf, or indorsed it to him (Equitable Banking Corporation v. Special Steel Products, GR. No. 175350, “une 13,2012) | \ b, Equitable's argument is misplaced and beside the point, SSP’s cause of action is net based on the three checks SSSSP does not ask Equitable or BN to daliver to it the’ proceeds ofthe checks asthe rightful payee. SSSP does not ‘ssert aight based on the undelivered checks or for breach of contact. Instead, it asserts a cause of action based fon quasidelict. A quasi-delict is an act or omission, there being fault or negligencd, which causes damage. to ‘another (qultable Banking Corporation x. Special Stel Products, supra. ' On " 21. Wisengaged in selling washing machines, R wanted to buy 10 units of washing macilie valued at P2Milion. R paid W sith ten (0) Philippine Veterans Affairs Office (PVAO) chess payable to different payees and drawn gninst the Dhlippine-Veterans Dank (drawes), each valued at Two Hundred Thousasdd Pesos (2000.00) for seotal of 2 Million Pesos: Express Savings Bank: (he Bank) offered the services of the Bank forthe processing find eventual crediting ofthe said chee to W's docount, The Ban deposited the cece with its Jeposteary fant Equitable PCI Beak, Equitable-PC Bank presented fhe checks tothe drawee which honored the ehetks. 6 | co+e ean BEDA CENTRALIZED GAR OPERATIONS 7 issreo) 15 the nent, count yand apaid table. ahis zing seeks vered not fense salned rethe nthe nano athe isting Sing sesent 175350, recks, snot ige to IERCANTILE LAW i t | i 2, H ‘demanded the retum of money 2018 PRE-WEEK NOTES In July 2000, the subject checks were retumed by PVAO on the ground thit the amount on the face of the heels was altered from original ainotnt of 94,000.00 to ¥200,000.00: Equitable-PCI Bamk debited the deposit Sccount of the Banke in the amount of P2Million. The Dank then withdlew the amount of ¥3,800,000.00 Tepresenting the returned checks from W's savings account. W faulted the dravee bank for not following the 2achowr cleaving period because It was only in August 2000 that Equitable-PCI was notified. Contention of W valid? No Is clear thatthe go-clled "2thouct mle has been snodiied. Inthe case of Hapgong & Shanghai vs. People's Bank reiterated in Metropolitan Bank and Trust Co vs. PNCB, the Supreme Court silly efforeed the 25-hour rule uncer whizh the drawee bank arever loses the right to claim against presenting/cellecting bankif the cheek isnot returned atthe next tlearing day or within 24 houts. Apporently, the corametcel banks fl trict enforoement of the 23-hour rue s roo barsh find therefore made representations and obtained modification ofthe rule, which meulification is now incorporated in the Manual of Regulations. Since the seme commercial donis contolled the Philippine Cleering, House Corporation, Incorporating the amended rue in the PCHC Rules naturally fellowes (Arezav, Express Savings Baik, supra) As the rule row stands, the 24-hour ral ssl in force, thai, any check whlch chould be refused by the draweebancin accordance swith long standing ed cepted banking practices shall be returned through tine PCHCIlocal clearing offic, 28 He case may be, not later than the next regular clesring (24-hour). The modification, however, is that tems hich have been the subject of material alteration or bearing forged endorcemtent may be returned even beyond 24 ous so long thatthe sime is returned within the presriptive period fixe by law. The consensus among lawyer is thatthe prescriptive period is 10 _years because. check or the endorsement thereon isa writen contract. Moreover, the Item need not be returned through the clearing house but by dicet presentation tothe presenting bank. In short the 24-hour clearing raledoes not apply to altered checks (Arezew Express Savings Bank, supra) ' Jand K were co-workers. J, friend of K, appro: if ghe could have her Bank of America checks clear and | tnchashed, However, Kdoesnot have a9 fi ekGgsked iste could have L's chesk amounting to 8500000, J has joint dollasavings 4eaquuticheieehinhgi® with PNB. agreed, In the bank, M, PNB Division Chief, accommodated disctssed wit she protess of Glésring the subject check it Aormally, Pi ee eb indars dem srcahac rata: P ile dar deed ELE se einen at of the subject check had been temporarily credited unt #oF November 6, 1992. On November 16, Hein cldayed, Next day, PNB, after dodueting the ieplyjvithdrawn by L, Philadelphia informed! 1992, M called up J to inform her hist (pformed about the bounead checke PNB! bank charges, credited $299,248.70. ‘2 Should the PNB be liable b. Is} guilty of contributory we a. Yes. PNB cleared the check ates sxmounty of checks without p? isa foreign bank and the emoia in Assotaed Bonk v Ten, whet ‘stgaiised 15-day clearing period. The payment of the {hoe bank especially so where the drawe bank {MEE to aormal or ondary banking practic. Alc fdival ofthe value ofa cheek prior to its clearing, wwe sd that "(before the check s posi, the collecting bank can only‘essame at ts cowm isk xx x that the check would Ke aul out” The delay in the veccipt by PNB of the message notifying it ofthe dishonor of the subjecéieck is Sno moment, because had PNB waited forthe expiration of the clearing period and had never celeazed during that tne the proceeds ofthe check, would have alzeady been duly notified ofits dishonor. Clearly, PNB's discegard of ite preventive! and protective meaguce against the possibility of being victimized by bad checke had brought upon itself the injury of losing a significant amosnt of ‘money (PNB ¥. Sps Cheat, GR No. 170865, April 25, 2012) | , Yes. alld to observe caution in giving her full rat in accommodating a complete stranger snd this led her and her husband t be swindled. Considering that Iwas not personally known o her snd the amount of the foreign check to be encashed was $300,000.00, higher degree of care is expected of J which she, however, failed to ‘ercise under the eizcumstanees, Another cieumstance which should have guided J to be tore eiresmspect in hher dealings was when a bank officer called her upto inform thatthe Bask of America check has alzeady been cleared way ealier than the 15-day clearing petiod. The fact that the eheck was cleared after only eight banking days from the time it was deposited ge contrary to what M tod her that eleeing takes 15 daye should havéalteady ‘put Jn guard. She éhould have fice veriied the regularity of ouch hasty clearance considering that if something goes wrong with the transaction, it ie she and-her hueband who would be pat at sk and not the accommodated Barly. However, J chose to ignore the stme and instead actively parteipated in immediately withéeaiing the Droseede ofthe check (2NB v. Spe. Cheah pra) j 2018 SAN BEDA CENTRALIZED BAR OPERATIONS | 72016 PAg-WEEK NOTES [ : INSURANCE LAW | CONCHETORINSURANCR —_ | i 25, B filed complaint for collection of a sum of money with damages against JK, Insurhnce Company since er vsarchouses were consumed by Fire. However, hay claim was denied hecause JK, claimed that the eanse of the, fixe was arson and not accidental. B then filed an administrative case before the bara ‘Commissioner Claiming that dhe issues left to be sesalved is whether JKE. should be held Unble for/undair claim settlement ‘ratios dve to its unjustified sefusal to settle her claim; and that the lieense of the Insurance company be Rincelled, JKL filed a motion to dismiss on the ground of forum shopping. Rule on the ‘case. ‘i ance ae tue [ai Case) nay proceed alongside the eli ase. Although the pale are the etme, and both Adiccion the sae cet of facts, 0 wll gure doal evidence, but th inte to be resolved the aasetaasofevidene, be procedure to be fellowes, andthe rel tobe adjudged by these vo bodies are diferent. B= aaanaae oeton in Cul Case are predicated on the insurers refusal to pay her fie hisurance Gaim, Thus, B prays in her sae dace Ihe neurers be ordered to pay he fllngured value f the loses. On the ott hand fn the Adm. Case, the See crornot there as unoaaorable delay or denial ofthe claims of petitioner, and fin the aflumative, whether ‘or not that would justify the suspension or revocation of the insurers’ licenses. Moreover, in Civil Case, B tnust establish Sere uaponderance of evidence. In Adm. Case, te degree of proof required of petitioner to establish he claim s ‘Shstantl evidenee In aditon, the procedutetosbe followed by the tial eourt is governed bythe Rules of Court, while {he Insurance Commissioner as its own set of rules and ies not bound by the cigiites of technical rales of procedure ‘These to bodies conduc independont means of ascertaining the ultimate facts of thei respective eazes that wil serve as tn fo clr reapeatve decisions (Malayan Insonnes Godan Emma Concepcion L Lin, GR No. 20727 January 16 2017; Covered Case) , 3 vad ten shan pepe bythe Commoner (NSUTANGE 24, May an insurance policy be idqed i ‘Yes, the poliey may be inelectronicigg the ‘Blectronie Commerce Act’ and CODE, Section 50. i 25, ABC entered into a contract of eine oil, The shipment was insured with py ie etre argo of ol 0X2 paid ABC 7 deanded EEG to pay the amount it paid td yige value of the lost cargo is equivalent to UE hot legally Liable to ABC due tothe latter's Zc, BOUEY that the vessel as seaworthy. Ts EEG's ee : AG eRive operates asa waiver oft ight to enfokes the {tea ofthe med waaty agin ADC wie Popa weer, the eae cas! be vay intepaed en fulomatic admision ofthe vee seurorthineso SY XY2 a8 foreclose recourse against the ERG for any ability under {fs contractual obligation asa commaon cavir “The fact of payment grants XYZ the right which enables it to exereise legal ‘remedies that would otherwise be available to ABC as the owner of the lost cargo against EFG (Delsan Transport Lines, Inc. 42 Cour of Appeals, GR. No, 127897, Nowrnber 15, 2001). } contention correct? No, EFG is not correct. The payment made BSS, “What is barratry in Marine Insurance? ‘eludes “any willl misconduct on the par ofthe master or erew in pursuance of some unlawfil ar fraudulent porpose without the consent ofthe owners, and tothe prejudice of the owner's interest’ It necestarly requires wilful and Jitenona ast ints eamminson. No hones error of judgment or mere negligence, unless erinaly gros, canbe bamary logue n IAC, GB Ne £85955, Noverber 1 1989 aa ifferentiate Hostile Fire and Friendly Fire. Friendly fire is one that burns in a place where it was intended to burn and out to be. Undera fire insurance, the insurer ‘gould nt be be able ifthe damage was tad by fiendly Ge. Hostile frei one that escapes from the place where it {vas intended to burn and dught tobe Tecan also be aie tha stared as friendly Bre but escapes from fo its original place brit becomes too strong 2st hecomes out of contra. In tasee.a8 such, the insurer would beheld lable (DB LEON & DE EON, The Insurance Code of the Palipines (2014). 258). | ‘ERE | 8 | 2018 SAN BEOA CENTRALIZED BAR OPERATIONSi ERCANTRE Lt a 200 PRE WEEK NOTES AA eety, Cumped from tie softop of a 1-stocey building and died. M, tHe son of G claimed the proceeds : Ske policy. 90P2 found out that G rns found tobe clinically insane since Mirch 3, 2017 and contends thet the policy is vold due to concealment. lb X¥2 correct? : Ow Rin the tact of concealment only entitles XYZ to the rescission of the contract (INSURANCE CODE, Sec. 27). Since there td vies no recision, the polly ia Valid end binding X02 ist able because te inser ina ie insurance contraet shell ace whic nennc of rude oly when tis comratted afte he policy ha been fof Fra period of tw 2 yeas For eat aac a ofak Yestatement ones he ply provides shorts paso Provide, bower, thet suicide aha ra ated tthe stat of anny shall be compensable reardlesea the dat of comission (INSURANCE CODE, See. 188) both oo “What is an Endowment Policy? ihe Fa det one were he suc binds imc to pay 2 ined tim to he feared if the ater survive fora Sees Jpusincdpeiodor, the dies within such period to some other person indicated. Under Section 180 ofthe Insurance Code, es! ! srrendovrment contract shal be considered asa life insurance contract for purposes of said code (Lalicanv, Insular Life ane i ‘Assurance Company Lid, GR, No, 183526, August 25, 2009). ue INSURABLE INTEREST wile | 4,_ABCis the maker of KJeans ABC obtained a fire insurance poli from DEF Insurance Corporation with bole ieee ‘debt endorsements, One day, GHI Superstore was gutted by fire and included in the items lost or destroyed em | er toe of clothing matenls soft and ie Dae co thse fled a claim sgainet GUL OFT one ‘loge that they could not beheld liable for lbogsBvent- The RTC dismissed DEP's Complaint since - the sales invoices state that {He-merchagdil * of the yendor until the price is fully paid, tne ABC retained ownership. he delivered goed apd-st bre | a No When hss owen ae ye py Ft ek oo ene yh bye. ae ‘esordingly, GI Corp bears the ep se ant lose complet interest over fhe ae I an ele et eee ese ies : Interest is not determined by coneepla tie (fai fas ystantil economic interest in the property ' incurable terest thirst ih secre poly tobave nthe psc othe i thing insured. Thecefore, an inswrablefce imply property interes, or «an pon, a or pasesion of the sbjet metterhohe eS Dcora benetel Interest e requiste othe por cximence of such an efereace tothe property that ke would be snc TRE lemead i belgpred or ost (Gauans Cagayan ina rence ee Company of Nort America, GR. Na. 263, r pay on a quarterly bass until the énti3E he p fils, B was given a 31 day gracé period to pay ¢ the promiumd subsequent to the frst vaste to pay Grete’ quarter but failed to phy the subsequent teen premiums. His policy lapeed and became $ci@:2ayfltedor reinstatement with an agent of the insurance oa ‘Smpany, Ths gen epnse received ea eraedOrerp to Bed witout the appleation beng me DrovessedV filed a claim for the proceeds. The insurance Company denied the claim since te poliey had Pec ready lapsed and filed to reinstate the same. i ‘ » nny OIE have an existing insurable interest in his own life until the day of bis death? 3. WasE able to reinstate the lapsed inrurance policy on his life befote his death? : 2 Yea: In genera an insurable intrest is that interet which a person is deemed to have fa the subject matted pose inured, where he hase relation or connection with or concer i it, suc tht the person wl derive pecniary, po ‘benefit or advantage tom the prosorvation ofthe subject mater nsseed and wil suffer pecuniary los or damage coal from its destruction, termination, or injury by the happening ofthe event ipsed against, An insuranble interest fives a person the legal right to insure the subject matter ofthe policy of insurance, Setion 10 ofthe Tasurance oe indeed provides that every person hasan insiable interest in his owh ie. i ‘ b. NowThe stiolation in « Ife insurance policy giving the ineured the peiilege to scinatts # upon watten tpoliction does not give the insured absolute right to such ceinstatement by the mere fling of an applicton: “Fac insuer has the nght to deny the reinstatement fie ct steed a tp the inability of the inated endl — the latter doesnot pay all overdue premium and all other indebtedness to the insurer After the death of thd b inured the insurance Company cannot be compelled o entrain an apliaton for reinstatement of the policy because the conditions precedent to senstaement can no longer be deterinined and stisGed (Calica. nsular Life Assurance Company Lt supra). r : 2. ‘A insured his house worth P2,000,000 for P1,500,000 with the policy providing that the loss shall be payable B. The house was mortgaged ta B as security forthe loan of P,000,000, Later, the house was totally destroyed by fire, What I the extent ofthe insurable interét of the mortgagor andthe mortgagee in case they insure the ‘time property? : ; i i 2010 GAN BEOA CENTRALIZED 9A OPERATIONS | 92018 PRE-WEEK NOTES MERCANTILE LAW, | src montgagor of propeity, asthe owner has an insurable interest therein to the extent ofits abe ‘On the other hand, hetorigagee has an insurable terest in the moregnged property tothe extent ofthe debt secur since the property it weied ute as securitythereof The mortgagor and dhe morkgages have each at ineuable interest in the property mie his interest is separate and distinet from the other. Flence, insurance taleen by one it his own’ name only and ae i aC othe bent ofthe te, nace both of them ake ou separ rsuance polis om ae ee sar tiznt open ejeston ta ihre Able ieee (Geganta CA GR Na. 14827 February 6, 1995) DOUBLE INSURANCE, j 38, AC, procured a Marine Policy from CDE Company covering al risks of dict physical lose or damage from say eternal eause, if by land. A Co, then entered into a contract of carriage with F Cé~ where in the tier aay eens to answer for all risks. ¥ Co, signed a Special Risk Insurance Policy with MNO insurance which provides that “the insurance does not coveF any loss or damage to property which atthe ime ofthe happening preach Tous or damage is insured by or would but for the existence of this poliey, be insured by any Fire or ‘Marine poliey or policies” Is there double insurance? Novthere is no dovble insurance. The interest off Co. over the interest of ACo, over the property subject matter of bath retrance conteacts is also different and distinct fcom that of ¥ Co. The policy issued by CDE Compény was in consideration atthe legel and/or equitable interest of A Co. over its own goods. On the other hand, what was issued by MNO Insurance {oF Co. ovas aver the latter's ingurable interest over the safety.of the goods, which may becom the basis of the latter's lability in ease of loss or damage to the property and falls within the contemplation of Section 15 of the Insurance Code (Malayan Insurance Co, In. v. Philippine First Insurance Co, Inc, G.R. No. 188500, July 1, 2012). y o : Beer ie ee [provide that an incre he py R 2? fhe thing insurdd Is exposed tothe peril Tc Sites eee ceeeenpwldandUndnguner Pept noe an nal life policy whenever the grace period Sie 77). i lysgai¢l? a ig yemium thereothasbeen pad. An exception’ ump at the time ofthe loss (Makan! Tuscany 2) 1 : 3, the owner of the motor vehicle, in the ‘on the policy, M Insurance issued 2 the premium however nobody form M ced up the next day. On the day that cle was stolen thus prompting G to file a claim 0 inguraniee contract. Is M Insurance's contention wan be bide paps 25. Willan insurance policy be binding ppt Wa i ota Condominium Corporation vs. Court o 36, -M Insurance ieeued a comprehensi amount of PLS million. To collec Statement of account to G's Company Insurance picked up the check. G-was thé the check was supposed to be pleked up, the ‘with MIngurance, M Insurance claimed tha€there correct? ‘Yee G is not entitled to the insurance proceeds because no insuranc® policy became effective for lack of premium payment. Heweren this role hasan exception. In UCPB General Insirance Co, Tne v. Masagana Telemart, G. No. 137172, Apr 4 2004 the exceptions ae as follows: 1 dane eoe cae of ie oF Industral life poley, wheiever the grace period provision applis, as exprestly povided by Section 7 itself, : he Where the itrer acknowledged inthe policy or contract of inguance itself the reset of premium, evin if premfum hes net been actually paid as expresly provided by Section 78itsel, " Wht pte oe it en pint anton dar pen as er aes the time of loss; ! 4. Where the insurer granted the incureda ered term forthe payment of the premium, and logs occurs before the expiration of the tenn: and i : ‘hore the insurer isin estoppel as when thas consistently granted 60.o-90-dy-crodit.erh for te payment of Jronitins. The ease dia not fallunder any ofthe exceptions (Gatsanov, Development Insurance and Surety Corp, GR No. 19072, February 27,2017: Covered Case) 7 ' [RESCISSION OF INSURANCE CONTRACTS a7. Et, deceased husband of J, was issue a Health Care Agreement for health coverage with ABC Insurance Corp. (ABC), During the perlod of his coverage, BT euffered a heart attack aid wae confined in a hospital. IT tried to Gaim the benefite under the health eare agreement, but ABC denied her claim after it was discovered at the fine of ET's confinement that he wae hypertensive, diabetic and asthmatic, contraty to his answek in the 4 pane sat BDA CENTRALIZED Ba OPERATIONS | 38Eu hand, ery is aperty Iyand Druary from latter sich, ening ire oF Fboth ration ater Code pel ustral ‘ption, sean inthe ued a mM vy that sation Ipril 4, led by, sient sade at vethe rent of Corp. Corp. ied to at the nthe rat MCRCANTLE UN 38. 39. a. i 2018 PRE-WEEK NOTES * application form. Thao, JF pad the hospitalization oxponses. Owe to financhl difficulties, Thad to take ET Peenc When ET felt very woak, JT brought lim back to the hospital werd he died the samme day, Thus, JT. | Jstitated an action for damages before the RTC. Was the denial by ABC|of the claim on the ground of ; concealment proper? Rete unde See 27 of the insurance Code "a concealment eile the iojwed pat reasnd a eontretofineuraee” | eee et pastes ste conmenaent oan aon on ic ena at sus, no excion vas | rade. The cancellation of health care agreements in insurance policies'require the congurrence of the following conditions: + {itor notte of nesta to insured; ZNotiee mast be based onthe occurrence aller elfective te ofthe policy of one * rere of the rounds mentioned, aMust bein writing, male or delveced tothe jasated a the adres shown inthe Poy asthe oun retin pon rien etl of nara ods dupont ure Pee eee a ich clocllation fs based Nowe ofthe abore preconditions vas fled in thi ease (Phlameare Health Sytem Ine» Court of Appel CR. Na 12567, March 18, 2002). ‘What is the Test of Materiality in Concealment/Representation? . ‘The test of materiality is contained in Section 31 of the Insucance Code which provides that Materialy is tobe determined not by.the event, but solely by the probable and reasonable influence of the facts upon the: parly to whom the ‘commiaication is éve, in forming his estimate of the disadvantages of the proposed contract, or in making his inquiries (ela. de Canilang ». Court of Appeals, GR. No. 92892, june 17,1993). ‘Mr. A procured alife insurance contract for himself from, XYZ. Insurance Co. At the time Mr. A applied for the Insurance, he was required to disclose whether he had been subjected to medical tests, to which he answered in the negative, Mr. A died in a plane crash. Mrs. B, the designated beneficiaty, filed a claim with XYZ. but the Inter denad the tame on the ground that j-geyeyg. that to weske ior to Me A's appliaton for {nsurance, he was subjected to several ey #FEliugd at a hospital. Was the denial of the clan by XYZ proper? Se ss Bs Sy E ae : Yes iis wll-setethat the inte eed not dig the gga he ha tale Sos to the Insurer es sullen that bis non dlsloute mised the ap osha ates ape aft popetd surance polo: nan bis nono mie he nd Up UE ata eS Ae dat taernt tone poral and boas ofthe insurance policy. The matters i a hay SeUARE Hegel ge tioher's action on his application, either by appfoving it with the correspond n iuigfrejecting the same, Moreover, a disclosure smayive warranted a medical ea of to teasonbly asses the knee etpting te application SunlfeAssla [eos Ci Ne His Je) May the two-year period in the in Temay be shortened but it cannot be ext beyond the two-year period would defeat the ‘very purpote ofthe incontestebilit clatis [fom rising defenses and deny the claims ofthe Insuged (DE LEON & DB LEON Sr, Te Inupe lige), p. 173) | Cite the instances when the ineontestabili De invoked. ‘The incontestability clause cannot be invoked: ( ‘a, Non-payment of premium; | b. Violation of the conditions of the policy relating to military or naval servicd in thes of war; and ‘e.—Broperty insurance (AQUINO, The Essentials of Insurance Law (2014), p.170) Can an insurer contest the life insurance policy on the ground of misrepresentation or concealment ifthe insured dies within 2 years from the issuance of the insurance contract?’ : First view: No The insurer has two years fom ie ewance to inveatigate and vee whether the policy was obtained by fraud, concealment, or misrepresentation. Upon the death of the insured within the two-year period from the issuance of the policy the insurer loses its right o rescind the policy. Az discussed in Manlla Bankers, the death ofthe insazed within the two-year period wil ender the right ofthe inrer to eccind the palcy nagstory. As such the inéontestablity period -will now set in (Sun Life of Canada (Philippines), Inc. v. Ma. Daisy's Sibya, GR.No. aa June 8, 2016). ‘Second vows Yes. The insurer has two years from the date of issuance of the insurance. cantractor. of ts Ist retistaterent ‘within which to contest the policy, whether or not, the insured sill ives‘within such period. After two years the defenses of concealment or mistepresentation, no matter how patent or well founded, no; longer lie. Congress felt this was a sufficient answer tothe various tacies employed by insurance companies to avoid liability. The petitioners! interpretation ‘would give rise to the incongruous situation where the benefiiarice of an insured who dies right after taking out and paying for Ife insurance policy, would he allowed fo collect on the policy even if the insured fraudulently concealed ‘material facts (Emillo Tan v The Court of Appeals, G.R-no. 48049, June 29, 989). £2016 SAN REDA CENTRALIZED BAR OPERATIONS [14 ,2018 Pre~WIeEK HOTES MERCANTILE LAW Hote: Gutl sie cases uecided by « Supieme Coust Division, ‘Therelore, they do nol overtnin eich ofher. ‘The suggested Deter view isthe fist view, being the latest decision, Ie used Menila Bankers Life Insurance Corporation ws. Cresencia Aban, GR. No, 175566, July 29, 2013, 38 penned by Justice Del Castillo, as basis For the ease. : 43. On July 3, 1995, 4 took out a life insurance policy froma X Insurance Carp, designating B, his niece, as beneficiary. The policy was issued on August 20, 1993, ater the requisite medical exaintnation and payment of the insueance premiunn. A died on April 10, 1956, filed a claim for the insurance provetds on july 9,996. The ‘im ovae dented on April 16,1997. X corp. filed a eivil ease for rescission and/or anmuilment of the policy om the grou that the policy was obtained by fraud, concealment and/or misrepresentatign under the Insurance ‘Code, Should the policy be reseinded? . ' No, Wehould not be sescinded. The insure has two years from the date of issuance ofthe insurdnce contract oof ts last woattatonent within whith to contest the pole. whether or nt, the insaed sil ves within sc period. Aes two Yeas, the defenses of concealment or mistepresentation, no matter how patent or weli founded, no longer le, After the two-yeat peviod lapses, or wien the insured dies within the period, the insucer must make’ good on th policy, even though the policy was obtained by Fraud, concealment, or misrepresentation. The insurance policy was in fofce for a period ofS years, ‘Tmontis, and 24 days. Considering that the insted died aftr the two-year period, X Insurance Corp. therefore, Darved fom provieg that the policy is void ab initio by reason of the insureds fraudulent eoncealment-or misrepresentation or want of insurable interest onthe part of the beneficiary (Mnila Bankers Life Insurance Corporatign vs. Cresencia Aban, OLR ‘No, 175666, July 9, 2013 Det Castifl, J). : (chats SErTEEMENT AND SUBROGATION 44] cand entered into a Contact of Affe tcanspot of the ltter’scobper concentrate. The fargo wos ingured with ABG Inenrance (3 edits destination, te smpas were found foltave been contaminated Yefiled a lap Feld claim om the bass of tho recommendation complaint for damages against% alleg thesunseaworthiness of the vessel of X. On tite other hand, X denies lability argues losi-because ir bought back the copper coneentrates, May ABC collect reifibursemient fr ‘ No, dh insucerindemnifes the insure Bise injury, then there is no obligation on.therpat of th and it tures out that indemnification not Gv, op being able to seek recompense from thelleked virong right tobe indemnified and therefore ggh Insurance Ca. Ine, GR. No 185568, Nowtlibr 2220 See 45, ABC Corp. shipped 60,000 bags of SshCGynidh as insted stevedore JKL Co, unloaded.the bag oiidih ihe the Burean of Customs and delivery GX@e gos condition. XYZ Insurance paid the value’ a _ JKL Co, for damages. JKL Co. contends that: fase “Of action because it failed to present the insurayce policy covering the subject shipment and that tte Subfokation Receipt presented by XYZ was not sufficient to rove that the subject shipment was insured and that respondent was validly subrogated to the rights of the consignee. Is the contention of XVZ Insurance correct? i Nor lis the viw and 0 held thatthe presentation in evidence ofthe marine insurance policy isnot indispensable inthis ‘case before the insurer may recover from the common carrier the insured value of the lost cargo in the exercise of its ‘gubrogatory right. The right of subrogation accrues simply upon payment by the insurance company of the insurance Glaie Since there was no issue regtrding the validity ofthe insurance contzact ot policy, or any provision thereof, XYZ {insurance had no reason to present the insurance contractor poliey as evidence during the trial (Aslan Terminals, ne. vs. Malayan Tnsurance Coy Ine, OR. No 171406, April 4,2011; Del Castillo, J). i of the adjuster of the amouittte-be paid. Begigned ay DR pial ikcrenel of ernsee on i are Slats) tually slferedffom. If there is no loss or jnsured, Should the insurer pay the insured Hf excessive, the ingurer takes the risk of not the supposed sublogor did not passess the ogee (Lada Siping Co Ine Malayan [7inswrance. Upon arrival of the vessel, the dir storage area pending the clearance from + some of the bags were found to be in bad 's, XYZ, as subrogee, fled a complaint against NOTICE AND PROOF OF Loss, 46, May anotice or proof of loss be given orally? Yearin the absence of any stipulation in th policy, noties or proof may be given orally or in waiting. However, i case of lo upon an insurance agatest fe, an insurer is exonerated, f written notice thereof be not given to him by an insured, for some percon entitled tothe benefit of the insurance, without unnecessary delay (INSURANCE CODE, Sc. 90) 47. ‘BC, Ine. (ABC) filed an insurance claim against DEF Insurance Co. (DEF) for the loss of its insured properties, Gueto fire, ABC submitted a Swora Statement of Loss and Formal Claim signed by ABC Manager, and Proof of Loss signed by ABC Accounting Manager and countersighed hy the Adjuster’s representative. The parties later ‘agreed upon the amount of insurance claim, but DEF refused to pay the same. DEF alleged non-compliance of Policy condition No. 13 on the submission of certain documents to prove the loss. Was DEF's denial of the claim ‘correct? z i 421 2018 SaN BEDA CENTRALZED BAR OPERATIONS | |