Facts: Some time in 1993, six business leaders, explored the possibility of investing in the new NAIA airport terminal, so they formed Asians Emerging Dragon Corp. They submitted proposals to the government for the development of NAIA Intl. Passenger Terminal III (NAIA IPT III). The NEDA approved the NAIA IPT III project. Bidders were invited, and among the proposal Peoples Air Cargo (Paircargo) was chosen. AEDC protested alleging that preference was given to Paircargo, but still the project was awarded to Pair cargo. Because of that, it incorporated into, Phil. Intl. Airport Terminals Co. (PIATCO). The DOTC and PIATCO entered into a concession agreement in 1997 to franchise and operate the said terminal for 21years. In Nov. 1998 it was amended in the matters of pertaining to the definition of the obligations given to the concessionaire, development of facilities and proceeds, fees and charges, and the termination of contract. Since MIAA is charged with the maintenance and operations of NAIA terminals I and II, it has a contract with several service providers. The workers filed the petition for prohibition claiming that they would lose their job, and the service providers joined them, filed a motion for intervention. Likewise several employees of the MIAA filed a petition assailing the legality of arrangements. A group of congressmen filed similar petitions. Pres. Arroyo declared in her speech that she will not honor PIATCO contracts which the Exec. Branch's legal office concluded null and void.

Issue: Whether or Not the 1997 concession agreement is void, together with its amendments for being contrary to the constitution.

Held: The 1997 concession agreement is void for being contrary to public policy. The amendments have the effect of changing it into and entirely different agreement from the contract bidded upon. The amendments present new terms and conditions which provide financial benefit to PIATCO which may have the altered the technical and financial parameters of other bidders had they know that such terms were available. The 1997 concession agreement, the amendments and supplements thereto are set aside for being null and void.

The petitioners have local standi. They are prejudiced by the concession agreement as their livelihood is to be taken away from them.

A civil case was filed by Ricardo Hermoso against Damaso Perez for the latter’s failure to pay a debt of P17k. Hermoso won and a writ of execution was issued in his favor. The sheriff was to conduct a public sale of a property owned by Damaso worth P300k. This was opposed by Damaso as he claimed the amount of said property was more than the amount of the debt. Judge Lantin, issuing judge, found merit on this hence he amended his earlier decision and so he issued a second writ this time directing the sheriff to conduct  a public sale on Damaso’s 210 shares of stock approximately worth P17k.Subsequently, Damaso and his wife filed five more petitions for injunction trying to enjoin the public sale. The case eventually reached the Supreme Court where the SC ruled that the petition of the Perez spouses are without merit; that their numerous petitions for injunction are contemplated for delay. In said decision, the Supreme Court ordered petitioners to pay the cost of the suit but said cost should be paid by their counsels. The counsels now appeal said decision by the Supreme Court as they claimed that such decision reflected adversely against their professionalism; that “If there was delay, it was because petitioners’ counsel happened to be more assertive . . . a quality of the lawyers (which) is not to be condemned.”ISSUE: Whether or not the counsels for the Spouses Perez are excused.HELD:  No. A counsel’s assertiveness in espousing with candor and honesty his client’s cause must be encouraged and is to be commended; what is not tolerated  is a lawyer’s insistence despite the patent futility of his client’s position, as in the case at bar. It is the duty of a counsel to advise his client, ordinarily a layman to the intricacies and vagaries of the law, on the merit or lack of merit of his case. If he finds that his client’s cause is defenseless, then it is his bounden duty to advise the latter to acquiesce and submit, rather than traverse the incontrovertible. A lawyer must resist the whims and caprices of his client, and temper his client’s propensity to litigate. A lawyer’s oath to uphold the cause of justice is superior to his duty to his client; its primacy is indisputable.

4. BANOGON V ZERNA

As officers of the court, lawyers have a responsibility to assist in the proper administration of justice. They do not discharge this duty by filing pointless petitions that only add to the workload of the judiciary, especially this Court, which is burdened enough as it is. A judicious study of the facts and the law should advise them when a case, such as this, should not be permitted to be filed to merely clutter the already congested judicial dockets. They do not advance the cause of law or their clients by commencing litigations that for sheer lack of merit do not deserve the attention of the courts. Facts:It’s unbelievable. The original decision in this case was rendered by the cadastral court way back on February 9, 1926, sixty one years ago. A motion to amend that decision was filed on March 6, 1957, thirty one years later. This was followed by an amended petition for review of the judgment on March 18, 1957, and an opposition thereto on March 26, 1957. On October 11, 1971, or after fourteen years, a motion to dismiss the petition was filed. The petition was dismissed on December 8, 1971, and the motion for reconsideration was denied on February 14, 1972. The petitioners then came to us on certiorari to question the orders of the respondent judge.The petitioners contend that the said judgment had not yet become final and executory because the land in dispute had not yet been registered in favor of the private respondents. The said judgment would become so only after one year from the issuance of the decree of registration. If anyone was guilty of laches, it was the private respondents who had failed to enforce the judgment by having the land registered in their the pursuant thereto. 

For their part, the private respondents argue that the decision of February 9, 1926, became final and executory after 30 days, same not having been appealed by the petitioners during that period. They slept on their rights for thirty one years before it occurred to them to question the judgment of the cadastral court. In fact, their alleged predecessor-in-interest, Filomeno Banogon, lived for nineteen more years after the 1926 decision and did not see fit to challenge it until his death in 1945. The herein petitioners themselves waited another twelve years, or until 195 7, to file their petition for review. Issue: W/N the petition should be grantedHeld: No.  A reading (of the petitioner’s defense, Rivera v. Moran) will show that it is against their contentions and that under this doctrine they should not have delayed in asserting their claim of fraud. Their delay was not only for thirty one days but for thirty one years. Laches bars their petition now. Their position is clearly contrary to law and logic and to even ordinary common sense.Litigation must end and terminate sometime and somewhere, and it is assent essential to an effective and efficient administration of justice that, once a judgment has become final, the winning party be not, through a mere subterfuge, deprived of the fruits of the verdict. Courts must therefore guard against any scheme calculated to bring about that result. Constituted as they are to put an end to controversies, courts should frown upon any attempt to prolong them.Regarding the argument that the private respondents took fourteen years to move for the dismissal of the petition for review, it suffices to point out that an opposition thereto had been made as early as March 26, 1957, or nine days after the filing of the petition. Moreover, it was for the petitioners to move for the hearing of the petition instead of waiting for the private respondents to ask for its dismissal. After all, they were the parties asking for relief, and it was the private respondents who were in possession of the land in dispute.As officers of the court, lawyers have a responsibility to assist in the proper administration of justice. They do not discharge this duty by filing pointless petitions that only add to the workload of the judiciary, especially this Court, which is burdened enough as it is. A judicious study of the facts and the law should advise them when a case, such as this, should not be permitted to be filed to merely clutter the already congested judicial dockets. They do not advance the cause of law or their clients by commencing litigations that for sheer lack of merit do not deserve the attention of the courts. Petition dismissed, with costs against the petitioners.

5. ACTS: Augusto Salas, Jr. was the registered owner of a vast tract of land in Lipa City, Batangas. He entered into an Owner-Contractor Agreement with Respondent Laperal Realty Corporation to render and provide complete (horizontal) construction services on his land. Said agreement contains an arbitration clause, to wit:“ARTICLE VI.  ARBITRATION.All cases of dispute between CONTRACTOR and OWNER’S representative shall be referred to the committee represented by:1. One representative of the OWNER;2. One representative of the CONTRACTOR;3. One representative acceptable to both OWNER and CONTRACTOR.”Salas, Jr. then executed a Special Power of Attorney in favor of Respondent Laperal Realty to exercise general control, supervision and management of the sale of his land, for cash or on installment basis. By virtue thereof, Respondent Laperal Realty subdivided said land and sold portions thereof to Respondents Rockway Real Estate Corporation and South Ridge Village, Inc. in 1990; to Respondent spouses Abrajano and Lava and Oscar Dacillo in 1991; and to Respondents Eduardo Vacuna, Florante de la Cruz and Jesus Vicente Capalan in 1996 (Respondent Lot Buyers hereinafter).Back in 1989, Salas, Jr. left his home in the morning for a business trip to Nueva Ecija.  He, however, never returned on that unfaithful morning. Seven years later or in 1996, his wife, Teresita Diaz-Salas filed with the RTC of Makati City a verified Petition for the Declaration of Presumptive Death, which Petition was granted.In 1998, Petitioners, as heirs of Salas, Jr. filed in the RTC of Lipa City a  Complaint for Declaration of Nullity of Sale, Reconveyance, Cancellation of Contract, Accounting and Damages against Respondents.Respondent Laperal Realty filed a Motion to Dismiss on the ground that Petitioners failed to submit their grievance to arbitration as required under Article VI of the Owner-Contractor Agreement. Respondent spouses Abrajano and Lava and Respondent Dacillo filed a Joint Answer with Counterclaim and Crossclaim praying for dismissal of Petitioners’ Complaint for the same reason.The RTC then issued the herein assailed Order dismissing Petitioners’ Complaint for non-compliance with the foregoing arbitration clause.Hence the present Petition for Review on Certiorari under Rule 45.

 ISSUE: Whether or not the arbitration clause under Article VI of the Owner-Contractor Agreement is binding upon the Respondent Lot Buyers?

 ARGUMENTS:Petitioners argue that (1) their causes of action did not emanate from the Owner-Contractor Agreement, (2) that their causes of action for cancellation of contract and accounting are covered by the exception under the Arbitration Law, and (3) that failure to arbitrate is not a ground for dismissal.Petitioners claim that they suffered lesion of more than one-fourth (1/4) of the value of Salas, Jr.’s land when Respondent Laperal Realty subdivided it and sold portions thereof to Respondent Lot Buyers.   Thus, they instituted action against both Respondent Laperal Realty and Respondent Lot Buyers for rescission of the sale transactions and reconveyance to them of the subdivided lots.   They argue that rescission, being their cause of action, falls under the exception clause in Sec. 2 ofRepublic Act No. 876 which provides that “such submission [to] or contract [of arbitration] shall be valid, enforceable and irrevocable, save upon such grounds as exist at law for the revocation of any contract”.

RULING:NO. Respondent Lot Buyers are neither parties to the Agreement nor the latter’s assigns or heirs.  Consequently, the right to arbitrate as provided in Article VI of the Agreement was never vested in Respondent Lot Buyers.

Respondent Laperal Realty, on the other hand, as a contracting party to the Agreement, has the right to compel Petitioners to first arbitrate before seeking judicial relief.  However, to split the proceedings into arbitration for Respondent Laperal Realty and trial for the Respondent Lot Buyers, or to hold trial in abeyance pending arbitration between Petitioners and Respondent Laperal Realty, would in effect result in multiplicity of suits, duplicitous procedure and unnecessary delay.  On the other hand, it would be in the interest of justice if the trial court hears the complaint against all herein Respondents and adjudicates Petitioners’ rights as against theirs in a single and complete proceeding.Petition is GRANTED. The assailed Order of RTC of Lipa City is NULLIFIED and SET ASIDE.

RATIO DECIDENDI:In a catena of cases inspired by Justice Malcolm’s provocative dissent in Vega v. San Carlos Milling Co. [1924], the SC has recognized arbitration agreements as valid, binding, enforceable and not contrary to public policy so much so that when there obtains a written provision for arbitration which is not complied with, the trial court should suspend the proceedings and order the parties to proceed to arbitration in accordance with the terms of their agreement. Arbitration is the “wave of the future” in dispute resolution. To brush aside a contractual agreement calling for arbitration in case of disagreement between parties would be a step backward.A submission to arbitration is a contract. As such, the Agreement, containing the stipulation on arbitration, binds the parties thereto, as well as their assigns and heirs. But only they.   Petitioners, as heirs of Salas, Jr., and Respondent Laperal Realty are certainly bound by the Agreement.  If Respondent Laperal Realty, had assigned its rights under the Agreement to a third party, making the former, the assignor, and the latter, the assignee, such assignee would also be bound by the arbitration provision since assignment involves such transfer of rights as to vest in the assignee the power to enforce them to the same extent as the assignor could have enforced them against the debtor or, in this case, against the heirs of the original party to the Agreement.  However, Respondent Lot Buyers are NOT assignees of the rights of Respondent Laperal Realty under the Agreement to develop Salas, Jr.’s land and sell the same.   They are, rather, buyers of the land that Respondent Laperal Realty was given the authority to develop and sell under the Agreement.  As such, they are NOT “assigns” contemplated in Art. 1311 of the New Civil Code which provides that “contracts take effect only between the parties, their assigns and heirs”.In the same vein, Petitioners’ contention that rescission, being their cause of action, falls under the exception clause in Sec. 2 of Republic Act No. 876 is without merit.  For while rescission, as a general rule, is an arbitrable issue, they impleaded in the suit for rescission the Respondent Lot Buyers who are neither parties to the Agreement nor the latter’s assigns or heirs.  Consequently, the right to arbitrate as provided in Article VI of the Agreement was never vested in Respondent Lot Buyers.

11. NATIONAL IRRIGATION ADMINISTRATION VS. CA- EASEMENT AND JUST COMPENSATIONWhen a land, originally public land is awarded to a provate individual, a legal easement may be constituted and thus no just compensation is required. It would be otherwise if the land were originally private property, in which case, just compensation must be paid for the taking of a part thereof for public use as an easement of a right of way.

FACTS: A free patent over three (3) hectares of land, situated in the province of Cagayan was issued in the name of Vicente Manglapus, and registered under OCT No. P-24814. The land was granted subject to the following proviso expressly stated in the title:

"... it shall not be subject to any encumbrance whatsoever in favor of any corporation, association or partnership except with the consent of the grantee and the approval of the Secretary of Agriculture and Natural Resources and solely for educational, religious or charitable purposes or for a right of way; and subject finally to all conditions and public easements and servitudes recognized and prescribed by law especially those mentioned in sections 109, 110, 111, 112, 113 and 114 of Commonwealth Act No. 141 as amended..."

Subsequently, respondent Manglapus acquired the lot from Vicente Manglapus by absolute sale.Sometime in 1982, NIA was to construct canals in Amulung, Cagayan and Alcala, Cagayan. NIA then entered a portion of Manglapus' land and made diggings and fillings thereon. Manglapus filed a complaint for damages against NIA.

ISSUE: Whether or not the NIA should pay Manglapus just compensation for the taking of a portion of his property for use as easement of a right of way.

RULING: No.The transfer certificate of title contains such a reservation. It states that title to the land shall be:". . . subject to the provisions of said Land Registration Act and the Public Land Act, as well as those of Mining Laws, if the land is mineral, and subject, further to such conditions contained in the original title as may be subsisting."

Under the Original Certificate of Title, there was a reservation and condition that the land is subject to "to all conditions and public easements and servitudes recognized and prescribed by law especially those mentioned in Sections 109, 110, 111, 112, 113 and 114, Commonwealth Act No. 141, as amended." This reservation, unlike the other provisos imposed on the grant, was not limited by any time period and thus is a subsisting condition.

Section 112, Commonwealth Act No. 141, provides that lands granted by patent,"shall further be subject to a right of way sot exceeding twenty meters in width for public highways, railroads,irrigation ditches, aqueducts, telegraphs and telephone lines, and similar works..."

We note that the canal NIA constructed was only eleven (11) meters in width. This is well within the limit provided by law. Manglapus has therefore no cause to complain.

Article 619 of the Civil Code provides that, "Easements are established either by law or by the will of the owners. The former are called legal and the latter voluntary easements." In the present case, we find and declare that a legal easement of a right-of-way exists in favor of the government.

The land was originally public land, and awarded to respondent Manglapus by free patent. The ruling would be otherwise if the land were originally private property, in which case, just compensation must be paid for the taking of a part thereof for public use as an easement of a right of way.

19. G.R. No. 137174 July 10, 2000REPUBLIC OF THE PHILIPPINES, Represented by the POLLUTION ADJUDICATIONBOARD (DENR) vs. MARCOPPER MINING CORPORATIONFACTS:Respondent MMC was issued a temporary permit to operate a tailings sea disposal system. In the meantime, the National Pollution Control Commission (NPCC) was abolished by EO No. 192d a t e d   J u n e   1 0 ,   1 9 8 7 ,   a n d   i t s p o w e r s   a n d   f u n c t i o n s   w e r e   i n t e g r a t e d   i n t o   t h e E n v i r o n m e n t a l Management Bureau and into the Pollution Adjudication Board (PAB).On April 11, 1988, the DENR Secretary, in his capacity as Chairman of the PAB, issued an Order directing MMC to "cease and desist from discharging mine tailings into Calancan Bay."This was appealed by the MMC with the Office of the President (OP).In line with the directive from the OP, the Calancan Bay Rehabilitation Project (CBRP) was created, and MMC remitted the amount of P30,000.00 a day, starting from May 13, 1988 to the Ecology Trust Fund (ETF) thereof. However, on June 30, 1991, MMC stopped discharging its tailings in the Bay, hence, it likewise ceased from making further deposits to the ETF.The PAB sought for the enforcement of the order issued by the OP, however, the CA acted on Marcopper’s petition and ordered the PAB to refrain and desist from enforcing aforesaid Order. Hence, the instant petition.ISSUE:The Court of Appeals erred in ruling that Republic Act No. 7942 repealed the provisions of Republic Act No. 3931, as amended by Presidential Decree No. 984, with respect to the power and function of petitioner Pollution Adjudication  Board to issue, renew or deny permits for the discharge of the mine tailings.HELD:The SC held that the CA erred in ruling that the PAB had no authority to issue the Order from T h e r u l i n g o f t h e C o u r t o f A p p e a l s t h a t t h e P A B h a s b e e n d i v e s t e d o f a u t h o r i t y t o a c t o n  pollution related  matters  in  mining  operations  is  anchored  on  the provisions of RA 7942(Philippine Mining Act of 1995).  However, Section 19 of EO 192 vested the PAB with the specific power to adjudicate pollution cases in general. Sec. 2, par. (a) of PD 984 defines the

10. (questions of fact are NOT APPEALEABLE - already final and executory)F: Hi-Precision entered a construction contract with Steel Builders where Steel Builders would complete a P21M construction project until Oct8, 1990. However, the project's completion date was moved to Nov1990.-Come Nov 1990, the construction was only almost 76% complete. Each party attributed delay to the other. Hi-Precision undertook the project and completed it February 1991.-Steel builders filed a REQUEST FOR ARBITRATION w/ CIAC-Steel builders filed a COMPLAINT FOR COLLECTION OF unpaid progress buildings-ANSWER: claimed actual and liquidated damages-CIAC: Hi-Precision ordered to pay Steel Builders-MRs filed by both parties. Net amount awarded reducedON AWARD: based on mutual default (though they could not point out which of the two was the first infractor)-High Precision now goes to SC for review of the CIAC Arbitrator's award, claiming that there were errors of law and that if they do raise errors of facts, these should still be considered, there being GAD on the part of the CIACH: For Lim Kim1. Should have impleaded the arbitrators of the CIAC, not CIAC, as the award sought ot be reviewed is that of the arbitrators and not of CIAC2. The matters raised by High Precision are really matters of fact which are not subject to review of the courts under Section 19 of eO 1008Precision is asking this Court to pass upon claims which are either clearly and directly factual innature or require previous determination of factual issues. This upon the one hand. Upon the other hand, the Court considers that petitioner Hi-Precision has failed to show any serious errors of law amounting to grave abuse of discretion resulting in lack of jurisdiction on the part of the Arbitral Tribunal, in either the methods employed or the results reached by the Arbitral Tribunal, in disposing of the detailed claims of the respective parties.

16. Banco de Oro Savings and Mortgage Bank v. Equitable Banking Corp. [G.R. No. 74917. January 20, 1988]

FACTSEquitable Bank drew six crossed manager’s check payable to certain member establishments of Visa Card. Subsequently, the checks were deposited with Banco De Oro (BDO) to the credit of its depositor. Following normal procedures and after stamping at the back of the checks the usual endorsements,BDOsent the checks for clearing through the Philippine Clearing House Corporation (PCHC). Accordingly, Equitable Banking paid the checks; its clearing account was debited for the value of the checks and BDO’s clearing account was credited for the same amount. Thereafter, Equitable Banking discovered that the endorsements appearing at the back of the checks and purporting to be that of the payees were forged and/or unauthorized or otherwise belong to persons other than the payees.Equitable Banking presented the checks directly to BDO for the purpose of claiming reimbursement from the latter. However, BDO refused to accept such direct presentation and to reimburse Equitable Banking for the value of the checks.ISSUES(a) Whether or not BDO is estopped from claiming that checks under consideration are non-negotiable instruments.(b) Whether or not BDO can escape liability by reasons of forgery.(c) Whether or not only negotiable checks are within the jurisdiction of PCHC. RULING(a) YES. BDO having stamped its guarantee of “all prior endorsements and/or lack of endorsements” is now estopped from claiming that the checks under consideration are not negotiable instruments. The checks were accepted for deposit by the petitioner stamping thereon its guarantee, in order that it can clear the said checks with the respondent bank. By such deliberate and positive attitude of the petitioner it has for all legal intents and purposes treated the said cheeks as negotiable instruments and accordingly assumed the warranty of the endorser when it stamped its guarantee of prior endorsements at the back of the checks. It led the said respondent to believe that it was acting as endorser of the checks and on the strength of this guarantee said respondent cleared the checks in question and credited the account of the petitioner. Petitioner is now barred from taking an opposite posture by claiming that the disputed checks are not negotiable instrument.(b) NO. A commercial bank cannot escape the liability of an endorser of a check and which may turn out to be a forged endorsement. Whenever any bank treats the signature at the back of the checks as endorsements and thus logically guarantees the same as such there can be no doubt said bank has considered the checks asnegotiable.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.(c)  NO. PCHC’s jurisdiction is not limited to negotiable checks only. The term check as used in the said Articles of Incorporation of PCHC can only connote checks in general use in commercial and business activities. Thus, no distinction. Ubi lex non distinguit, nec nos distinguere debemus. Checks are used between banks and bankers and their customers, and are designed to facilitate banking operations. It is of the essence to be payable on demand, because the contract between the banker and the customer is that the money is needed on demand.

17. The Province of Tarlac was disbursing funds to Concepcion Emergency Hospital via checks drawn against its account with the Philippine National Bank (PNB). These checks were drawn payable to the order of Concepcion Emergency Hospital. Fausto Pangilinan was the cashier of Concepcion Emergency Hospital in Tarlac until his retirement in 1978. He used to handle checks issued by the provincial government of Tarlac to the said hospital. However, after his retirement, the provincial government still delivered checks to him until its discovery of this irregularity in 1981. By forging the signature of the chief payee of the hospital (Dr. Adena Canlas), Pangilinan was able to deposit 30 checks amounting to P203k to his account with the Associated Bank.When the province of Tarlac discovered this irregularity, it demanded PNB to reimburse the said amount. PNB in turn demanded Associated Bank to reimburse said amount. PNB averred that Associated Bank is liable to reimburse because of its indorsement borne on the face of the checks:

“All prior endorsements guaranteed ASSOCIATED BANK.”ISSUE: What are the liabilities of each party?HELD: The checks involved in this case are order instruments.Liability of Associated BankWhere 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 holder’s indorsement is forged, all parties prior to the forgery may raise the real defense of forgery against all parties subsequent thereto.A collecting bank (in this case Associated Bank) where a check is deposited and which indorses the check upon presentment with the drawee bank (PNB), is such an indorser. So even if the indorsement on the check deposited by the banks’s client is forged, Associated Bank is bound by its warranties as an indorser and cannot set up the defense of forgery as against the PNB.EXCEPTION: If it can be shown that the drawee bank (PNB) unreasonably delayed in notifying the collecting bank (Associated Bank) of the fact of the forgery so much so that the latter can no longer collect reimbursement from the depositor-forger.Liability of PNBThe bank on which a check is drawn, known as the drawee bank (PNB), is under strict liability to pay the check to the order of the payee (Provincial Government of Tarlac). Payment under a forged indorsement is not to the drawer’s order. When the drawee bank pays a person other than the payee, it does not comply with the terms of the check and violates its duty to charge its customer’s (the drawer) account only for properly payable items. Since the drawee bank did not pay a holder or other person entitled to receive payment, it has no right to reimbursement from the drawer. The general rule then is that the drawee bank may not debit the drawer’s account and is not entitled to indemnification from the drawer. The risk of loss must perforce fall on the drawee bank.EXCEPTION: If the drawee bank (PNB) can prove a failure by the customer/drawer (Tarlac Province) to exercise ordinary care that substantially contributed to the making of the forged signature, the drawer is precluded from asserting the forgery.In sum, by reason of Associated Bank’s indorsement and warranties of prior indorsements as a party after the forgery, it is liable to refund the amount to PNB. The Province of Tarlac can ask reimbursement from PNB because the Province is a party prior to the forgery. Hence, the instrument is inoperative. HOWEVER, it has been proven that the Provincial Government of Tarlac has been negligent in issuing the checks especially when it continued to deliver the checks to Pangilinan even when he already retired. Due to this contributory negligence, PNB is only ordered to pay 50% of the amount or half of P203 K.BUT THEN AGAIN, since PNB can pass its loss to Associated Bank (by reason of Associated Bank’s warranties), PNB can ask the 50% reimbursement from Associated Bank. Associated Bank can ask reimbursement from Pangilinan but unfortunately in this case, the court did not acquire jurisdiction over him.

15. FACTS:  January 6, 1981: Allied Bank (Allied) purchased Export Bill of $20,085 from G.G. Sportswear Mfg.

Corporation (GGS) The bill, drawn under a letter of credit covered Men's Valvoline Training Suit that was in transit to

West Germany  The export bill was issued by Chekiang First Bank Ltd., Hongkong.  With the purchase of the bill, ALLIED credited GGS the peso equivalent of the bill amounting

to P151,474.52  Nari Gidwani and Alcron International Ltd. (Alcron) executed their respective Letters of Guaranty,

holding themselves liable on the export bill if it should be dishonored or retired by the drawee for any reason.

spouses Leon and Leticia de Villa and Nari Gidwani also executed a Continuing Guaranty/Comprehensive Surety (surety), guaranteeing payment of any and all such creditaccommodations which ALLIED may extend to GGS

When ALLIED negotiated the export bill to Chekiang, payment was refused due to some material discrepancies in the documents submitted by GGS relative to the exportation covered by the letter of credit. 

ALLIED demanded payment GGS and Nari Gidwani: signed blank forms of the Letters of Guaranty and the Surety, andthe

blanks were only filled up by ALLIED after they had affixed their signatures. They also added that the documents did not cover the transaction involving the subject export bill.

spouses de Villa: not aware of the existence of the export bill; they signed blank forms of the surety; and averred that the guaranty was not meant to secure the export bill

Alcron: foreign corporation doing business in the Philippines, its branch in the Philippines is merely a liaison office; neither its liaison office in the Philippines nor its then representative, Hans-Joachim Schloer, had the authority to issue Letters of Guaranty for and in behalf of local entities and persons

RTC: in favor of Allied CA: modified holding GGS liable to reimburse Allied, but it exonerated the guarantors from their

liabilities under the Letters of Guaranty

ISSUE: W/N Gidwani, Alcron and Spouses Villa can be held jointly and severally liable becuase of their capacity as guarantors and surety in the absence of protest on the bill in accordance with Section 152 of the Negotiable Instruments Law?

HELD: YES. CA modified. Nari Gidwani, and Spouses Leon and Leticia de Villa are jointly and severally liable together with G.G. Sportswear

Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the principal debtor in case the latter should fail to do so. If a person binds himself solidarily with the principal debtor, the provisions of Section 4, Chapter 3,

Title I of this Book shall be observed. In such case the contract is called a suretyship. Section 152 of the Negotiable Instruments Law pertaining to indorsers, relied on by respondents, is

not pertinent to this case.  There are well-defined distinctions between the contract of an indorser and that of a guarantor/surety

of a commercial paper, which is what is involved in this case.  The contract of indorsement is primarily that of transfer, while the contract of guaranty is that of

personal security The liability of a guarantor/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 time, he will be discharged from liability thereon. On the other hand, except where required by the provisions of the contract of suretyship, a demand or notice of default is not required to fix the surety's liability.

Therefore, no protest on the export bill is necessary to charge all the respondents jointly and severally liable 

having affixed their consenting signatures in several documents executed at different times, it is safe to presume that they had full knowledge of its terms and conditions, hence, they are precluded from asserting ignorance of the legal effects of the undertaking they assumed thereunder

22. Sun Insurance Office, Ltd. v. CA and Emilio Tan G.R. No. 89741 March 13, 1991FACTS: Emilio Tan took from Sun Insurance Office a P300,000.00 property insurance policy to cover his interest in the electrical supply store of his brother. Four days after the issuance of the policy, the building was burned including the insured store. On August 20, 1983, Tan f i l e d   h i s c l a i m   f o r f i r e   l o s s   w i t h   S u n I n s u r a n c e   O f f i c e ,   b u t   o n   F e b r u a r y   2 9 , 1 9 8 4 , S u n Insurance Office wrote Tan denying the latter’s claim. On April 3, 1984, Tan wrote Sun Insurance Office, seeking reconsideration of the denial of his claim. Sun Insurance Office answered the letter, advising Tan’s counsel that the Insurer’s denial of Tan’s claim remained unchanged.ISSUES: ( 1 ) W O N t h e   f i l i n g   o f   a   m o t i o n   f o r   r e c o n s i d e r a t i o n i n t e r r u p t s t h e   1 2   m o n t h s prescriptive period to contest the denial of the insurance claim; and(2)WON the rejection of  the claim shall be deemed final only of  it contains words to the effect that the denial is final;HELD: (1) No. In this case, Condition 27 of the Insurance Policy of the parties reads: 27.  Action or suit clause- I f a c l a i m b e m a d e a n d r e j e c t e d a n d a n action or suit be not commenced either in the Insurance Commission orin any court of competent jurisdiction within twelve (12) months from receipt of notice of such rejection, or in case of arbitration taking place as provided herein, within twelve (12) months after due notice of the award made by the arbitrator or arbitrators or umpire, then the claim shall for all purposes be deemed to have been abandoned and shall not thereafter be recoverable hereunder. As the terms are very clear and free from any doubt or ambiguity whatsoever, it must be taken and understood in its plain, ordinary and popular sense. Tan, in his letter addressed to Sun Insurance Office dated April 3, 1984, admitted that h e   r e c e i v e d   a   c o p y   o f   t h e l e t t e r   o f   r e j e c t i o n   o n   A p r i l   2 ,   1 9 8 4 .   T h u s ,   t h e   1 2 - m o n t h prescriptive period started to run from the said date of April 2, 1984, for such is the plain meaning and intention of Section 27 of the insurance policy. The condition contained in an insurance policy that claims must be presented within one year after rejection is not merely a procedural requirement but an important matter essential to a prompt settlement of claims against insurance companies as it demands that insurance suits be brought by the insured while the evidence as to the origin and cause of destruction have not yet disappeared. It is apparent that Section 27 of the insurance policy was stipulated pursuant toSection 63 of the Insurance Code, which states that: S e c .   6 3 .   A   c o n d i t i o n ,   s t i p u l a t i o n   o r   a g r e e m e n t   i n   a n y   p o l i c y   o f  insurance, limiting the time for commencing an action there under to a Period of less than one year from the time when the cause of action accrues, is void. It also begs to ask, when does the cause of action accrue? The insured’s cause of  a c t i o n   o r   h i s r i g h t   t o f i l e   a   c l a i m   e i t h e r i n   t h e I n s u r a n c e   C o m m i s s i o n   o r   i n a   c o u r t o f   competent jurisdiction commences from the time of the denial of his claim by the Insurer, either expressly or impliedly.  But the  rejection  referred to should be construed as the rejection in the first instance (i.e. at the first occasion or for the first time), not rejection c o n v e y e d i n a r e s o l u t i o n o f a p e t i t i o n f o r r e c o n s i d e r a t i o n . T h u s , t o a l l o w t h e f i l i n g o f a motion for reconsideration to  suspend the running of the prescriptive period of twelvemonths, a whole new body of rules on the matter should be promulgated so as to avoid any conflict that may be brought by it, such as: a.whether the mere filing of a plea for reconsideration of a denial is sufficient or must it be supported by arguments/affidavits/material evidence; b.how many petitions for reconsideration should be permitted?(2) No. The Eagle Star case cited by Tan to defend his theory that the rejection of the claim shall be deemed final only of it contains words to the effect that the denial is final is i n a p p l i c a b l e   i n   t h e i n s t a n t   c a s e .   F i n a l   r e j e c t i o n   o r   d e n i a l   c a n n o t b e   t a k e n   t o   m e a n   t h e rejection of a petition for reconsideration. The Insurance policy in theEagle Star case provides that the insured should file his claim, first, with the carrier and then with the insurer. The final rejection being referred to in said case is the rejection by the insurance company.