NEGOTIABLE INSTRUMENTS NOTES

BASED ON AGBAYANIS BOOK AND ATTY. MERCADOS LECTURES

Page 91 of 190


BY: MA. ANGELA LEONOR C. AGUINALDO
ATENEO LAW 2D BATCH 2010
CASE DIGESTS: SECTION 66

121 PEOPLE V. MANIEGO
148 SCRA 30

FACTS:
The accused were charged and later on found guilty of committing
malversation. Ubay was the disbursing officer in the Office of the Chief of
Finance in a military camp and together with his co-accused, were able to
take personal checks drawn against the PNB and BPI, of which Pamintuan
was the drawer and Maniego was the indorser. The checks were encashed
and used, to the prejudice of the government.

Maniego averred that the trial court erred in adjudging her as liable as an
indorser to the government.

HELD:
The contention of Maniego that as a mere indorser, she may not be liable
on account of the dishonor of the checks indorsed by her is untenable. The
holder or last indorsee of a negotiable instrument has the right to enforce
payment of the instrument for the full amount thereof and against all
parties liable thereon. Among the parties liable thereon is the indorser
unless he clearly indicates that his intention to be bound in some other
capacity. Maniego may also be considered as an accommodation party and
as such, is liable to a holder for value notwithstanding if the holder knew
that she was only an accommodation party.

122 METROPOLITAN BANK V. CA
194 SCRA 169

FACTS:
Gomez opened an account with Golden Savings bank and deposited 38
treasury warrants. All these warrants were indorsed by the cashier of
Golden Savings, and deposited it to the savings account in a Metrobank
branch. They were sent later on for clearing by the branch office to the
principal office of Metrobank, which forwarded them to the Bureau of
Treasury for special clearing. On persistent inquiries on whether the
warrants have been cleared, the branch manager allowed withdrawal of the
warrants, only to find out later on that the treasury warrants have been
dishonored.

HELD:
The treasury warrants were not negotiable instruments. Clearly, it is
indicated that it was non-negotiable and of equal significance is the
indication that they are payable from a particular fund, Fund 501. This
indication as the source of payment to be made on the treasury warrant
makes the promise to pay conditional and the warrants themselves non-
negotiable.

Metrobank then cannot contend that by indorsing the warrants in general,
GS assumed that they were genuine and in all respects what they purport
it to be, in accordance to Section 66 of the NIL. The simple reason is that
the law isnt applicable to the non-negotiable treasury warrants. The
indorsement was made for the purpose of merely depositing them with
Metrobank for clearing. It was in fact Metrobank which stamped on the
back of the warrants: All prior indorsements and/or lack of endorsements
guaranteed

123 PRUDENCIO V. CA
143 SCRA 7

FACTS:
Appellants are the owners of a property, which they mortgaged to help
secure a loan of a certain Domingo Prudencio. On a later date, they were
approached by their relative who was the attorney-in-fact of a construction
company, which was in dire need of funds for the completion of a municipal
building. After some persuasion, the appellants amended the mortgage
wherein the terms and conditions of the original mortgage was made an
integral part of the new mortgage. The promissory note covering the
second loan was signed by their relative. It was also signed by them,
indicating the request that the check be released by the bank.

After the amendment of the mortgage was executed, a deed of assignment
was made by Toribio, assigning all the payments to the Bureau to the
construction company. This notwithstanding, the Bureau with approval of
the bank, conditioned however that they should be for labor and materials,
made three payments to the company. The last request was denied by the
bank, averring that the account was long overdue, the remaining balance
of the contract price should be applied to the loan.

The company abandoned the work and as consequence, the Bureau
rescinded the contract and assumed the work. Later on, the appellants
wrote to the PNB that since the latter has authorized payments to the
company instead of on account of the loan guaranteed by the mortgage,
there was a change in the conditions of the contract without the knowledge
of appellants, which entitled the latter to cancel the mortgage contract.