BASED ON AGBAYANIS BOOK AND ATTY. MERCADOS LECTURES
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BY: MA. ANGELA LEONOR C. AGUINALDO ATENEO LAW 2D BATCH 2010 circulation. When the drawee banks cashes or pays a check, the cycle of negotiation is terminated and it is illogical thereafter to speak of subsequent holders who can invoke the warrant against the drawee.
Further, in determining the relative rights of a drawee who under a mistake of fact, has paid, a holder who has received such payment, upon a check to which the name of the drawer has been forged, it is only fair to consider the question of diligence and negligence of the parties in respect thereto. The responsibility of the drawee who pays a forged check, for the genuineness of the drawers signature is absolute only in favor of one who has not, by his own fault or negligence, contributed to the success of the fraud or to mislead the drawee.
According to the undisputed facts, National City Bank in purchasing the papers in question from unknown persons without making any inquiry as to the identity and authority of said persons negotiating and indorsing them, acted negligently and contributed to the constructive loss of PNB in failing to detect the forgery. Under the circumstances of the case, if the appellee bank is allowed to recover, there will be no change in position as to the injury or prejudice of the appellant.
DRAWER: PANGASINAN PAYEE: IAS!MOTOR SERVICE DRAWEE: PNB COLLECTING BANK: NATIONAL CITY BANK OF NEW YORK
Sec. 63. When a person deemed indorser. - A person placing his signature upon an instrument otherwise than as maker, drawer, or acceptor, is deemed to be indorser unless he clearly indicates by appropriate words his intention to be bound in some other capacity.
WHEN PERSON DEEMED INDORSER In the absence of any indication in what capacity a person whose signature is written on the instrument intends to be bound, he shall be deemed as an indorser
INDICATION TO BE BOUND OTHERWISE THAN INDORSER Will not be deemed as an indorser if he indicates by appropriate words his intention to be bound in some other capacity But anyone who assumes the responsibility of identifying the payee of a check is answerable to the bank cashing the check if the bank pays its amount to such payee so identified
ADMISSIBILITY OF PAROL EVIDENCE The statutory command that the legal effect of a blank instrument cannot be changed by parol proof or by evidence from other source The intent to be bound in some other capacity than as an indorser must be indicated in the indorsement or on the face of the instrument and cannot be shown by parol
CASE DIGESTS: SECTION 63
118 ANG TIONG V. TING 22 SCRA 713
Ting issued a PBCom check payable to cash or bearer. This was indorsed by Ang at the back and it was received by plaintiff. Upon encashment of the check, the same was dishonored. Plaintiff moved that the two make good the value of the check but despite demands, he was unheeded, prompting him to file a complaint. The trial court decided in his favor.
HELD: There is nothing in the check in question indicates that the appellant is not a general indorser.
When a person placing his signature upon an instrument otherwise than a maker, drawer, or acceptor, he is deemed to be a general indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity, which he did not do so.
Even on the assumption that the appellant was an accommodation indorser, as he professes to be, he is nevertheless by the clear mandate of section 29, liable on the instrument to a holder for value, notwithstanding that such holder at the time of taking the instrument knew him to be an accommodation party. And assuming that he was an accommodation party, he may obtain security from the maker to protect himself against the danger of insolvency of the latter but this doesn't affect his liability to the appellee, as the said remedy is a matter of recourse between him and the maker.
119 TUAZON V. HEIRS OF BARTOLOME RAMOS 463 SCRA 408
FACTS: Respondents alleged that on a relevant date, spouses Tuazon purchased from their predecessor-in-interest cavans of rice. That on the total number