Escolar Documentos
Profissional Documentos
Cultura Documentos
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Negotiability
Philippine Education v. Soriano
GR L-22405, 30 June 1971 || Negotiability
FACTS:
Enrique Montinola sought to purchase from the Manila Post Office 10
money orders (P200 each), offering to pay for them with a private check.
Montinola was able to leave the building with his check and the 10 money
orders without the knowledge of the teller. Upon discovery, message was
sent to all postmasters and banks involving the unpaid money orders. One
of the money orders was received by the Philippine Education Co. as part
of its sales receipt. It was deposited by the company with the Bank of
America, which cleared it with the Bureau of Post. The Postmaster,
through the Chief of the Money Order Division of the Manila Post Office
informed the bank of the irregular issuance of the money order. The bank
debited the account of the company. The company moved for
reconsideration.
ISSUE:
Whether postal money orders are negotiable instruments
HELD:
Philippine postal statutes are patterned from those of the United States,
and the weight of authority in said country is that Postal money orders are
not negotiable instruments inasmuch as the establishment of a postal
money order is an exercise of governmental power for the publics benefit.
Furthermore, some of the restrictions imposed upon money order by
postal laws and regulations are inconsistent with the character of
negotiable instruments. For instance, postal money orders may be
withheld under a variety of circumstances, and which are restricted to not
more than one indorsement.
Caltex Philippines vs. Court of Appeals
212 SCRA 448 G.R. No. 97753 || Negotiability
FACTS:
280 Certificates of Time Deposit (CTDs) were issued by the
Security Bank and Trust Company in favor of Angel Dela Cruz, who
deposited a collective amount of Php 1,120,000. Such CTDs were
then delivered by Dela Cruz to Caltex Phils. for the purchase of fuel
products.
Dela Cruz lost all the CTDs in March 1982 and informed the
manager of Security Bank. The manager arranged for the
replacement of the lost CTDs upon compliance of Dela Cruz to
their bank procedure which entails execution of a notarized
Affidavit of Loss.
Upon replacement of the allegedly lost CTDs, Dela Cruz obtained a
loan of P875,000 from same bank. He then executed a notarized
Deed of Assignment of Time Deposit, surrendering to the bank full
control of the time deposit account, allowing the latter to apply the
said time deposits to the payment of whatever amounts may be
due on the loan upon maturity.
On the other hand, in November 1982, Mr. Aranas, the credit
manager of Caltex, presented to Security Bank for verification the
CTDs declared lost by Dela Cruz. Aranas claimed that the same
were delivered to Caltex as security for purchases made.
Accordingly, Security Bank rejected Caltexs demand for the
payment of the value of the CTDs.
In April 1983, the loan of Dela Cruz with the Security Bank
matured and the latter applied the time deposits in question as
payment of the matured loan.
Caltex then filed a complaint demanding payment of the value of
the CTDs plus accrued interest and compounded interest.
The Regional Trial Court dismissed the case. The Court of Appeals
also dismissed the case.
ISSUE(S):
1. Whether or not the subject Certificates of Time Deposit are
negotiable instruments
2. Whether or not Caltex can recover the value of the CTDs
HELD:
1. YES. A sample text of the CTD states: This is to Certify that B E A
R E R has deposited in this Bank the sum of PESOS: FOUR
THOUSAND ONLY, SECURITY BANK SUCAT OFFICE P4,000 & 00
CTS Pesos, Philippine Currency, repayable to said depositor 731
days. After date, upon presentation and surrender of this
certificate, with interest at the rate of 16% per cent per annum.
Section 1 of the NIL requires among others, that for an instrument
to be negotiable, it must be payable to the order or to bearer (par.
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Sesbreno vs. CA
GR 89252, 24 May 1993
FACTS:
On 9 February 1981, Raul Sesbreno made a money market
placement in the amount of P300,000 with the Philippine Underwriters
Finance Corporation (PhilFinance), with a term of 32 days. PhilFinance
issued to Sesbreno the Certificate of Confirmation of Sale of a Delta Motor
Corporation Promissory Note (2731), the Certificate of Securities Delivery
Receipt indicating the sale of the note with notation that said security was
in the custody of Pilipinas Bank, and postdated checks drawn against the
Insular Bank of Asia and America for P304,533.33 payable on 13 March
1981. The checks were dishonored for having been drawn against
insufficient funds.
Pilipinas Bank never released the note, nor any instrument related
thereto, to Sesbreno; but Sesbreno learned that the security was issued 10
April 1980, maturing on 6 April 1981, has a face value of P2,300,833.33
with PhilFinance as payee and Delta Motors as maker; and was stamped
non-negotiable on its face. As Sesbreno was unable to collect his
investment and interest thereon, he filed an action for damages against
Delta Motors and Pilipinas Bank.
ISSUE:
Whether non-negotiability of a promissory note prevents its assignment.
HELD:
Only an instrument qualifying as a negotiable instrument under
the relevant statute may be negotiated either by indorsement thereof
coupled with delivery, or by delivery alone if it is in bearer form. A
negotiable instrument, instead of being negotiated, may also be assigned
or transferred. The legal consequences of negotiation and assignment of
the instrument are different. A negotiable instrument may not be
negotiated but may be assigned or transferred, absent an express
prohibition against assignment or transfer written in the face of the
instrument. herein, there was no prohibition stipulated.
FIRESTONE TIRE VS CA
GR No. 113236 || Negotiability
FACTS:
Fojas-Arca purchased tires from petitioner with special withdrawal slips
drawn upon Fojas-Arca's special savings account with respondent bank.
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Payable to Bearer
FACTS:
For having issued a rubber check, AngTekLian was convicted of estafa in
the Court of First Instance of Manila. The Court of Appeals affirmed the
verdict.
Knowing he had no funds therefor, AngTekLian drew the check upon the
China Banking Corporation for the sum of P4,000, payable to the order of
"cash". He delivered it to Lee Hua Hong in exchange for money which the
latter handed in act. On November 18, 1946, the next business day, the
check was presented by Lee Hua Hong to the drawee bank for payment,
but it was dishonored for insufficiency of funds, the balance of the deposit
of AngTekLian on both dates being P335 only.
ISSUE:
WoN the check in question need endorsement considering that it is made
payable to the order of cash
HELD:
It depends upon the circumstances of each transaction.Under the
Negotiable Instruments Law (sec. 9 [d], a check drawn payable to the
order of "cash" is a check payable to bearer, and the bank may pay it to the
person presenting it for payment without the drawer's indorsement.
A check payable to the order of cash is a bearer instrument. Where a check
is made payable to the order of "cash", the word cash "does not purport to
be the name of any person", and hence the instrument is payable to
bearer. The drawee bank need not obtain any indorsement of the check,
but may pay it to the person presenting it without any indorsement.
Of course, if the bank is not sure of the bearer's identity or financial
solvency, it has the right to demand identification and /or assurance
against possible complications, for instance, (a) forgery of drawer's
signature, (b) loss of the check by the rightful owner, (c) raising of the
amount payable, etc. The bank may therefore require, for its protection,
that the indorsement of the drawer or of some other person known to
it be obtained. But where the Bank is satisfied of the identity and /or
the economic standing of the bearer who tenders the check for collection,
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it will pay the instrument without further question; and it would incur no
liability to the drawer in thus acting.
Petition dismissed. CAs decision affirmed.
Complete but Undelivered
Development Bank of Rizal vs. Sima Wei
GR 85419 || Complete but undelivered. (Section 16 of Negotiable
Instruments Law)
Facts:
Sima We executed and delivered to the Development Bank of Rizal(DBR) a
promissory note, engaging to pay DBR or order the amount of
P1,820,000.00 with interest at 32% per annum. Sima Wei made partial
payments on the note, leaving a balance of P1,032,450.02. Sima Wei
issued two crossed checks payable to DBR drawn against China Banking
Corporation, bearing respectively the serial numbers 384934, for the
amount of P550,000.00 and 384935, for the amount of P500,000.00. The
said checks were allegedly issued in full settlement of the drawer's
account evidenced by the promissory note. These two checks were not
delivered to DBR or to any of its authorized representatives. For reasons
not shown, these checks came into the possession of Lee Kian Huat, who
deposited the checks without DBR's indorsement (forged or otherwise) to
the account of the Asian Industrial Plastic Corporation, at the Balintawak
branch, Caloocan City, of the Producers Bank. Cheng Uy, Branch Manager
of the Balintawak Branch of Producers Bank, relying on the assurance of
Samson Tung, President of Plastic Corporation, that the transaction was
legal and regular, instructed the cashier of Producers Bank to accept the
checks for deposit and to credit them to the account of said Plastic
Corporation, inspite of the fact that the checks were crossed and payable
to DBR and bore no indorsement of the latter.
Issue:
Whether DBR, as the intended payee of the instrument, has a cause of
action against any or all of the defendants, in the alternative or otherwise
Held:
No. A negotiable instrument, of which a check is, is not only a written
evidence of a contract right but is also a species of property. Just as a deed
to a piece of land must be delivered in order to convey title to the grantee,
so must a negotiable instrument be delivered to the payee in order to
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two (22) transactions entered into by the said Bank and Aruego on
different dates covering the period from August 28, 1950 to March 14,
1951. The sum sought to be recovered represents the cost of the printing
of "World Current Events," a periodical published by the defendant. To
facilitate the payment of the printing the defendant obtained a credit
accommodation from the plaintiff. Thus, for every printing of the "World
Current Events," the printer, Encal Press and Photo Engraving, collected
the cost of printing by drawing a draft against the plaintiff, said draft being
sent later to the defendant for acceptance. As an added security for the
payment of the amounts advanced to Encal Press and Photo-Engraving,
the plaintiff bank also required defendant Aruego to execute a trust
receipt in favor of said bank wherein said defendant undertook to hold in
trust for plaintiff the periodicals and to sell the same with the promise to
turn over to the plaintiff the proceeds of the sale of said publication to
answer for the payment of all obligations arising from the draft.
Defendant filed an answer interposing for his defense that he signed the
drafts in a representative capacity, that he signed only as accommodation
party and that the drafts signed by him were not really bills of exchange
but mere pieces of evidence of indebtedness because payments were
made before acceptance.
ISSUE:
1. WHether the drafts Aruego signed were bills of exchange?
2. Whether Aruego can be held liable by the petitioner although he signed
the supposed bills of exchange only as an agent of Philippine Education
Foundation Company.
RULING:
1. YES. Under the Negotiable Instruments Law, a bill of exchange is an
unconditional order in writting addressed by one person to another,
signed by the person giving it, requiring the person to whom it is
addressed to pay on demand or at a fixed or determinable future time a
sum certain in money to order or to bearer. As long as a commercial paper
conforms with the definition of a bill of exchange, that paper is considered
a bill of exchange. The nature of acceptance is important only in the
determination of the kind of liabilities of the parties involved, but not in
the determination of whether a commercial paper is a bill of exchange or
not.
2. Yes. Section 20 of the Negotiable Instruments Law provides that "Where
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giving her authority to collect all the receivables of HCCC from GSIS. This
contention is bereft of any merit. The Negotiable Instruments Law
provides that when a person is under obligation to indorse in a
representative capacity, he may indorse in such terms as to negative
personal liability. An agent, when so signing, should indicate that he is
merely signing as an agent in behalf of the principal and must disclose
the name of his principal.
Otherwise, he will be held liable
personally. And assuming she was indeed authorized, she didn't
comply with the requirements of the law. Instead of signing Ongs
name, she should have signed in her own name as agent of HCCC. Thus,
her contentions cannot support or validate her acts of forgery.
Forgery
FACTS:
Petitioner deposited 10 checks in its current account with BPI. The checks
which were acquired by petitioner from Ramirez, a sales agent of the
Inter-Island Gas were all payable to Inter-Island Gas Service, Inc. or
order. After the checks had been submitted to Inter-bank clearing, InterIsland Gas discovered that all the indorsements made on the checks
purportedly by its cashiers were forgeries. BPI thus debited the value of
the checks against petitioner's current account and forwarded to the latter
the checks containing the forged indorsements which petitioner refused
to accept.
ISSUE:
Whether BPI had the right to debit from petitioner's current account the
value of the checks with the forged indorsements
RULING:
BPI acted within legal bounds when it debited the petitioner's
account. Having indorsed the checks to respondent bank, petitioner is
deemed to have given the warranty prescribed in Section 66 of the NIL
that every single one of those checks "is genuine and in all respects what it
purports to be." Respondent which relied upon the petitioner's warranty
should not be held liable for the resulting loss.
FACTS:
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FACTS:
Metropolitan Waterworks and Sewerage System (hereinafter referred to
as MWSS) is a government owned and controlled corporation created
under Republic Act No. 6234 as the successor-in- interest of the defunct
NWSA. The Philippine National Bank (PNB for short), on the other hand, is
the depository bank of MWSS and its predecessor-in-interest NWSA.
When it was still called NAWASA, MWSS made a special arrangement with
PNB so that it may have personalized checks to be printed Mesina
Enterprises. These personalized checks are the ones being used by MWSS
in its business transactions.
From March to May 1969, MWSS issued 23 checks to various payees in the
aggregate amount of P320,636.26. During the same months, another set of
23 checks containing the same check numbers earlier issued were forged.
The aggregate amount of the forged checks amounted to P3,457,903.00.
This amount was distributed to the bank accounts of three persons:
Arturo Sison, Antonio Mendoza, and Raul Dizon.
MWSS then demanded PNB to restore the amount of P3,457,903.00. PNB
refused. The trial court ruled in favor of MWSS but the Court of Appeals
reversed the trial courts decision.
ISSUE:
Whether or not PNB should restore the said amount
HELD:
No. MWSS is precluded from setting up the defense of forgery. It has been
proven that MWSS has been negligent in supervising the printing of its
personalized checks. It failed to provide security measures and coordinate
the same with PNB. Further, the signatures in the forged checks appear to
be genuine as reported by the National Bureau of Investigation so much so
that the MWSS itself cannot tell the difference between the forged
signature and the genuine one. The records likewise show that MWSS
failed to provide appropriate security measures over its own records
thereby laying confidential records open to unauthorized persons. Even if
the twenty-three (23) checks in question are considered forgeries,
considering the MWSSs gross negligence, it is barred from setting up the
defense of forgery under Section 23 of the Negotiable Instruments Law.
We cannot fault the respondent drawee Bank for not having detected the
fraudulent encashment of the checks because the printing of the
petitioners personalized checks was not done under the supervision and
control of the Bank. There is no evidence on record indicating that
because of this private printing the petitioner furnished the respondent
Bank with samples of checks, pens, and inks or took other precautionary
measures with the PNB to safeguard its interests.
Under the circumstances, therefore, the petitioner was in a better position
to detect and prevent the fraudulent encashment of its checks.
The Supreme Court further emphasized that forgery cannot be presumed.
It must be established by clear, positive, and convincing evidence. This
was not done in the present case.
Banco De Oro vs Equitable Banking Corporation
157 SCRA 189 || Forgery
FACTS:
Banco de Oro (BDO), through its Visa Card Department, drew six
crossed Managers check with the total amount of P45,982.23 payable to
certain member establishments of Visa Card. The checks were deposited
with Equitable Bank to the credit of its depositor, Aida Trencio.
After stamping at the back of the checks the usual endorsements,
All prior and/or lack of endorsement guarantee, the defendant sent the
checks for clearing to Philippine Clearing House Corporation (PCHC).
BDO paid the checks and its clearing account was debited for the
value of the checks and Equitable Banks clearing account was debited for
the same amount.
Thereafter, BDO discovered that the endorsements at the back of
the checks and purporting to be that of the payees were forged and/or
unauthorized or otherwise, belonging to persons other than the payees.
BDO then presented the checks directly to Equitable Bank for the
purpose of claiming reimbursement from the latter. However, Equitable
Bank refused to accept such direct presentation and to reimburse BDO for
the value of the checks.
In accordance with the rules of the Clearing House, the dispute
was presented for Arbitration. The Arbiter rendered decision in favor of
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Gempesaw vs CA
GR. 92244 || Forgery
FACTS:
NatividadGempesaw owns and operates four grocery stores in Caloocan
City. She maintains a checking account with respondent drawee Phil. Bank
of Communications to issue checks to her suppliers. Alicia Galang, her
bookkeeper, makes the checks and petitioner signs them, without
verifying the accuracy of each, since she trusted Galang. Petitioner never
bothered to verify the correctness of the returned checks. In 2 years, a
total of 82 checks were issued, most of them in excess of her actual
obligations to the various payees, all crossed checks with forged
indorsement signatures. Petitioner completed the checks by signing them
as drawer and thereafter authorized her employee Alicia Galang to deliver
the eighty-two (82) checks to their respective payees. Instead of issuing
the checks to the payees as named in the checks, Alicia Galang delivered
them to the Ernest Boon, Chief Accountant of PBCOM Buendia branch.
Signatures of the first payees as first indorsers were forged. The checks
were then indorsed a 2nd time with the names of Alfredo Romero and
Benito Lam and donated to their respective accounts. It was only after 2
years that petitioner found out about the fraudulent transactions.
Petitioner then demanded respondent drawee Bank to credit her account
with the money value of the 82 checks for having been wrongfully charged
against her account. Respondent drawee Bank refused to grant
petitioner's demand.
ISSUE:
WON Petitioner can claim the value of the 82 checks debited against her
account since there was forgery
HELD:
No. While forgery is a real or absolute defense by the party whose
signature is forged, it is not applicable to the case at bar. A party whose
signature to an instrument was forged was never a party and never gave
his consent to the contract which gave rise to the instrument. In the case
at bar, petitioner admitted that the checks were filled up and completed
by her trusted employee, Alicia Galang, and were given to her for her
signature. Her signing the checks made the negotiable instrument
complete. Prior to signing the checks, there was no valid contract yet. As a
rule, a drawee bank who has paid a check on which an indorsement has
been forged cannot charge the drawer's account for the amount of said
check. An exception to this rule is where the drawer is guilty of such
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negligence which causes the bank to honor such a check or checks. In the
case at bar, the petitioner relied implicitly upon the honesty and loyalty of
her bookkeeper, and did not even verify the accuracy of amounts of the
checks she signed against the invoices attached thereto. Furthermore,
although she regularly received her bank statements, she apparently did
not carefully examine the same nor the check stubs and the returned
checks, and did not compare them with the same invoices. Petitioners
negligence was the proximate cause of her loss. And since it was her
negligence which caused the respondent drawee Bank to honor the forged
checks or prevented it from recovering the amount it had already paid on
the checks, petitioner cannot now complain should the bank refuse to
recredit her account with the amount of such checks. Under Section 23 of
the NIL, she is now precluded from using the forgery to prevent the bank's
debiting of her account. But petitioner can claim for damages under
Article 1170 of NCC since the respondent drawee Bank did not discover
the irregularity with respect to the acceptance of checks with second
indorsement for deposit even without the approval of the branch manager
despite periodic inspection conducted by a team of auditors from the main
office constitutes negligence on the part of the bank in carrying out its
obligations to its depositors.
Associated Bank v. Court of Appeals
252 SCRA 620 || Forgery
FACTS:
The Province of Tarlac was disbursing funds to Concepcion Emergency
Hospital through 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 P203,000.00 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.
ISSUE:
What are the liabilities of each party?
HELD:
The checks involved in this case are order instruments. Liability of
Associated Bank. Where 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, the payee hospital, is essential to transfer title to the same
instrument. When the holders indorsement is forged, all parties prior to
the forgery may raise the real defense of forgery against all parties
subsequent thereto.
A collecting bank, 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
bankss 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 which is the 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 PNB. The 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 drawers 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 customers, 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 drawers 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 Banks 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
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FACTS:
August 25, 1964: Check dated July 8, 1964 for P50,000.00, payable to
CASH, drawn by Joaquin Cunanan & Company on First National City Bank
(FNCB) was deposited with Metropolitan Bank and Trust Company (Metro
Bank) by Salvador Sales.
Earlier that day, Sales had opened a current account with Metro Bank
depositing P500.00 in cash
HELD:
NO. FNCB liable. Under the procedure prescribed, the drawee bank
receiving the check for clearing from the Central Bank Clearing House
must return the check to the collecting bank within the 24-hour period if
the check is defective for any reason. - FNCB failed to do so
indorsement must be read together with the 24-hour regulation on
clearing House Operations of the Central Bank
Metro Bank immediately sent the cash check to the Clearing House of the
Central Bank with the following words stamped at the back of the check:
Metropolitan Bank and Trust Company Cleared (illegible) office All prior
endorsements and/or Lack of endorsements Guaranteed.
The check was cleared the same day. Private respondent paid petitioner
through clearing the amount of P50,000.00, and Sales was credited with
the said amount in his deposit with Metro Bank.
August 26, 1964: Sales made his 1st withdrawal of P480.00 from his
current account
ISSUE:
Whether or not Metrobank should reimsburse FNCB for the altered
amount as indorser
Metro Bank can not be held liable for the payment of the altered check.
Moreover, FNCB did not deny the allegation of Metro Bank that before it
allowed the withdrawal of the balance of P17,920.00 by Salvador Sales,
Metro Bank withheld payment and first verified, through its Assistant
Cashier Federico Uy, the regularity and genuineness of the check deposit
from Marcelo Mirasol, Department Officer of FNCB, because its (Metro
Bank) attention was called by the fast movement of the account.
SBCA-SOL 14-15
Agapay.Albarillo.Ambito.Arevalo.Baguilat.Bunag.Cabrera.Claveria.Escalona.Fernando.Ferrer.Flores.Hernando.Hipolito.Lara.Melgar .Mella.Nasam.Nunez.Retardo.Rodriguez.Soriano.Tamayao.Ubaldo
FACTS:
GR
check to the collecting bank within the 24-hour clearing period, the
collecting bank is absolved from liability.
Every bank that issues checks for the use of its customers should
know whether or not the drawers signature thereon is genuine, whether
there are sufficient funds in the drawers account to cover checks issued,
and it should be able to detect alterations, erasures, superimpositions or
intercalations thereon, for these instruments are prepared, printed and
issued by itself, it has control of the drawers account, and it is supposed
to be familiar with the drawers signature. Unless an alteration is
attributable to the fault or negligence of the drawer himself, such as when
he leaves spaces on the check which would allow the fraudulent insertion
of additional numerals in the amount appearing thereon, the remedy of
the drawee bank that negligently clears a forged and/or altered check for
payment is against the party responsible for the forgery or alteration,
otherwise, it bears the loss.
Philippine Commercial International Bank v. CA
G.R. No. 121413 || FORGERY
FACTS:
These consolidated petitions involve several fraudulently negotiated
checks
In October 1977, Ford Philippines drew a Citibank check in the amount of
P4,746,114.41 in favor of the Commissioner of the Internal Revenue (CIR).
The check represents Fords tax payment for the third quarter of 1977. On
the face of the check was written Payees account only which means that
the check cannot be encashed and can only be deposited with the CIR's
savings account with Metrobank. The said check was however presented
to PCIB and PCIB accepted the same. PCIB then indorsed the check for
clearing to Citibank. Citibank cleared the check and paid PCIB
P4,746,114.41.CIR later informed Ford that it never received the tax
payment. It was later discovered that Fords accountant Godofredo Rivera,
when the check was deposited with PCIB, recalled the check since there
was allegedly an error in the computation of the tax to be paid. PCIB, as
instructed by Rivera, replaced the check with two of its managers checks.
It was further discovered that Rivera was actually a member of a
syndicate and the managers checks were subsequently deposited with the
Pacific Banking Corporation by other members of the syndicate.
Thereafter, Rivera and the other members became fugitives of justice.
In July 1978 and in April 1979, Ford drew two checks in the amounts of
P5,851,706.37 and P6,311,591.73 respectively. Both checks are again for
tax payments. Both checks are for Payees account only or for the CIRs
12 |C a b u c h a n . N e g o C a s e D i g e s t s
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Agapay.Albarillo.Ambito.Arevalo.Baguilat.Bunag.Cabrera.Claveria.Escalona.Fernando.Ferrer.Flores.Hernando.Hipolito.Lara.Melgar .Mella.Nasam.Nunez.Retardo.Rodriguez.Soriano.Tamayao.Ubaldo
bank savings account only with Metrobank. Again, these checks never
reached the CIR. In an investigation, it was found that these checks were
embezzled by the same syndicate to which Rivera was a member.
ISSUE:
Whether Ford has the right to recover from the collecting bank (PCI Bank)
and/or the drawee bank (Citibank) the value of the checks
HELD:
Yes, both are liable for the loss of the proceeds of said checks issued by
Ford in favor of the CIR. The mere fact that forgery was committed by a
drawer-payors confidential employee or agent, who by virtue of his
position had unusual facilities to perpetrate the fraud and imposing the
forged paper upon the bank, does not entitle the bank to shift the loss to
the drawer-payor, in the absence of some circumstance raising estoppel
against the drawer. The rule applies to checks fraudulently negotiated or
diverted by the confidential employees who hold them in their possession.
In GRs 121413 and 121479, PCIBank failed to verify the authority of Mr.
Rivera to negotiate the checks. Furthermore, PCIBanks clearing stamp
which guarantees prior or lack of indorsements render PCIB liable as it
allowed Citibank without any other option but to pay the checks. PCIB,
being a depository / collecting bank of the BIR, had the responsibility to
make sure that the crossed checks were deposited in Payees account
only as found in the instrument.
In GR 128604, on the other hand, the switching operation involving the
checks, while in transit for clearing, were the clandestine or hidden
actuations performed by the members of the syndicate in their own
personal, covert and private capacity; without the knowledge nor official
or conscious participation of PCIB in the process of embezzlement. Central
Bank Circular 580 (1977), however, provides that any theft affecting items
in transit for clearing are for the account of the sending bank (herein
PCIBank). Still, Citibank was likewise negligent in the performance of its
duties as it failed to establish its payment of Fords checks were made in
due course and legally in order. The fact that drawee bank did not
discover the irregularity seasonably constitutes negligence in carrying out
the banks duty to its depositors.
Ramon Ilusorio vs CA
GR no. 139130 II FORGERY
FACTS:
SBCA-SOL 14-15
Agapay.Albarillo.Ambito.Arevalo.Baguilat.Bunag.Cabrera.Claveria.Escalona.Fernando.Ferrer.Flores.Hernando.Hipolito.Lara.Melgar .Mella.Nasam.Nunez.Retardo.Rodriguez.Soriano.Tamayao.Ubaldo
FACTS:
Samsung Construction held an account with Far East Bank. One day a
check worth (P999,500.00), payable to cash, was presented by
one Roberto Gonzaga in the Makati Branch of Far East Bank. The
check was certified to be true by Jose Sempio III, the assistant
accountant of Samsung, who was also present during the time the
check was cashed. Later however it was discovered that no such check
was ever approved by the Samsungs head accountant, the president of the
company also never signed any such check.
ISSUE:
Whether or not Far East Bank is liable to reimburse Samsung for cashing
out the forged check, which was drawn from the account of Samsung
HELD:
Far East Bank is liable for reimbursement. Sec. 23 of the Negotiable
Instrument Law states that a forged signature makes the instrument
wholly inoperative. If payment is made the drawee (Far East) cannot
charge it to the drawers account (Samsung). The fact that the forgery is
clever is immaterial. The forged signature may so closely resemble the
genuine as to defy detection by the depositor himself. And yet, if the bank
pays the check, it is paying out with its own money and not of the
depositors. This rule of liability can be stated briefly in these words: A
bank is bound to know its depositors signature. The accusation of
negligence on the part of Samsung was not clearly proven. Absence of
proof to the contrary, the presumption is that the ordinary course of
business was followed.
Material Alteration
Philippine National Bank v. CA
256 SCRA 491 || Sections 124 &125
FACTS:
A check with a specific serial number (7-3666-223-3)was issued
Department of Education Culture and Sports (DECS) in the amount of
P97,650.00 payable to F. Abante Marketing. This check was drawn against
petitioner PNB.
F. AbanteMarketing, deposited the questioned check in its savings account
with Capitol City Development Bank (Capitol). In turn, Capitol deposited
14 |C a b u c h a n . N e g o C a s e D i g e s t s
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The case at bench is unique in the sense that what was altered is the serial
number of the check in question, it can is not an essential requisite for
negotiability under Section 1 of the Negotiable Instrument Law. The
aforementioned alteration did not change the relations between the
parties. The name of the drawer and the drawee were not altered. The
intended payee was the same. The sum of money due to the payee
remained the same. The checks serial number is not the sole indication of
its origin. As succinctly found by the Court of Appeals, the name of the
government agency which issued the subject check was prominently
printed therein. The checks issuer was therefore sufficiently identified,
rendering the referral to the serial number redundant and
inconsequential. Petitioner, thus cannot refuse to accept the check in
question on the ground that the serial number was altered, the same being
an immaterial or innocent one.
ENRIQUE P MONTINOLA VS THE PHILIPPINE NATIONAL BANK
G.R. NO L-2861 || SECTION 124 & 125
FACTS:
On April 30, 1942, M. V.Ramos, as a disbursing officer of an army
division of the USAFE, went to the neighboring Province Lanao to procure
a cash advance in the amount of P800,000 for the use of the USAFFE in
Cagayan de Misamis. Pedro Encarnacion, Provincial Treasurer of Lanao
did not have that amount in cash. So, he gave Ramos P300,000 in
emergency notes and a check for P500,000. On May 2, 1942 Ramos went
to the office of Provincial Treasurer Laya at Misamis Oriental to encash
the check for P500,000 which he had received from the Provincial
Treasurer of Lanao. Laya did not have enough cash to cover the check so
he gave Ramos P400,000.00 in emergency notes and a check No. 1382 for
P100,000.00 drawn on the Philippine National Bank. According to Laya he
had previously deposited P500,000.00 emergency notes in the Philippine
National Bank branch in Cebu and he expected to have the check issued by
him
cashed
in
Cebu
against
said
deposit.
Ramos was unable to encash the said check for he was captured by
the Japanese. But after his release, he sold P30,000.00 of the check to
Enrique P. Montinola for P850,000.00 Japanese Military notes, of which
only P45000 was paid by the latter. The writing made by Ramos at the
back of the check was to the effect that he was assigning only
P30,000.00 of the value of the document with an instruction to the bank to
pay P30,000.00 to Montinola and to deposit the balance to Ramos's
credit. This writing was, however, mysteriously obliterated and in its
15 |C a b u c h a n . N e g o C a s e D i g e s t s
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HELD:
No. It was not negotiated according to the Negotiable Instruments
Law (NIL) hence it is not a negotiable instrument. There was only a partial
indorsement and not a negotiation contemplated under the NIL. Only
P30k of the P100k amount of the check was indorsed. This merely
makeMontinola a mere assignee and this is the clear intent of Ramos.
Ramos was merely assigning P30k to Montinola. Montinola may therefore
not be regarded as an indorsee and PNB has all the right to dishonor the
check. As mere assignee, he is subject to all defenses available to the
drawer Provincial Treasurer of Misamis Oriental and against Ramos.
Anent the issue of alteration, the apparent purpose of which is to make the
drawee (PNB) the drawer against which Montinola can recover from
directly. Such material alteration which was done by Montinola without
the consent of the parties liable thereon discharges the instrument,
pursuant to Sec. 124 of the NIL.
Montinola cannot be said to be a holder. He is an assignee. And even if he
is a holder, he is not in good faith because he did not pay the full amount
of the consideration for which the P30k was issued to him he only paid
45k Japanese notes out of the 90k Japanese notes consideration.
At any rate, even assuming that there is proper negotiation, Montinola can
no longer encash said check because when he sought to have it encashed
in January 1945, it is already stale there being two and half years pass
since its time of issuance.
Accomodation Party
Intestate Estate of Victor Sevilla v. Francisco Sevilla
G.R. No. L-17845 April 27, 1967 || Accommodation Party
FACTS:
Sevilla, Varona and Sadaya executed, jointly and severally, in favor
of the Bank of the Philippine Islands (BPI), or its order, a promissory note
for P15,000 with interest at 8% per annum, payable on demand. Varona
was the only one who received the proceeds of the note. Sevilla and
Sadaya signed the note as co-makers to accommodate Varona. Payments
were made on account but with an outstanding balance of P4,850.
BPI then collected from Sadaya the balance with interest.
However, Varona failed to reimburse Sadaya despite repeated demands.
Sevilla died which led to naming Francisco Sevilla (Administrator)
as administrator. Sadaya then filed a creditor's claim on his estate for the
payment made on the note. Administrator resisted the claim on the
ground that the deceased Sevilla "did not receive any amount as
consideration for the promissory note," but signed it only "as surety for
Varona".
RTC ruled in favour of Sadaya and directed Administrator to pay
the same from the estate of the deceased Sevilla. CA reversed the decision
and disallowed Sadayas claim against the intestate estate.
ISSUE:
Whether or not Sadaya can claim against estate of Sevilla as coaccommodation party when Verona as principal debtor is not yet
insolvent
HELD:
SBCA-SOL 14-15
Agapay.Albarillo.Ambito.Arevalo.Baguilat.Bunag.Cabrera.Claveria.Escalona.Fernando.Ferrer.Flores.Hernando.Hipolito.Lara.Melgar .Mella.Nasam.Nunez.Retardo.Rodriguez.Soriano.Tamayao.Ubaldo
payable to the defendant Jose. This replacement check was also signed by
Atty. Oscar Z. Benares and by the plaintiff Ricardo S. Santos, Jr. When
defendant deposited this replacement check with her account at Family
Savings Bank, Mayon Branch, it was dishonored for insufficiency of funds.
This prompted the petitioner to file a case against Atty. Bernares and
Santos for violation of BP22. Meanwhile, during the preliminary
investigation, Santos tried to tender a cashiers check for the value of
the dishonored check but petitioner refused to accept such. This was
consigned by Santos with the clerk of court and he instituted charges
against petitioner.
RTC Ruling:The Trial Court held that the consignation was not applicable
in the case at bar.
CA Ruling:Reversed and set aside the RTC's judgment of dismissal
ISSUE:
Whether or not Mover Enterprises may be held liable on the
accommodation instrument, that is, the check issued in favor of herein
petitioner.
FACTS:
Ricardo S. Santos, Jr. was the vice-president of Mover Enterprises,
Inc. in-charge of marketing and sales; and the president of the said
corporation was Atty. Oscar Z. Benares. Atty. Benares issued Check No.
093553 drawn against Traders Royal Bank, dated June 14, 1980, in the
amount of P45,000.00 (Exh. '1') payable to defendant Ernestina CrisologoJose. Since the check was under the account of Mover Enterprises, Inc., the
same was to be signed by its president, Atty. Oscar Z. Benares, and the
treasurer of the said corporation. However, since at that time, the
treasurer of Mover Enterprises was not available, Atty. Benares prevailed
upon the plaintiff, Ricardo S. Santos, Jr., to sign the aforesaid check as an
alternate signatory. Plaintiff Ricardo S. Santos, Jr. did sign the check.
The check was issued to defendant Ernestina Crisologo-Jose in
consideration of the waiver or quitclaim by said defendant over a certain
property which the Government Service Insurance System (GSIS) agreed
to sell to the clients(Ong Spouses) of Atty. Oscar Benares, with the
understanding that upon approval by the GSIS of the compromise
agreement with the spouses Ong, the check will be encashed accordingly.
However, since the compromise agreement was not approved within the
expected period of time, the aforesaid check for P45,000.00 was replaced
by Atty. Benares with another Traders Royal Bank check bearing No.
379299 dated August 10, 1980, in the same amount of P45,000.00 , also
HELD:
17 |C a b u c h a n . N e g o C a s e D i g e s t s
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Agapay.Albarillo.Ambito.Arevalo.Baguilat.Bunag.Cabrera.Claveria.Escalona.Fernando.Ferrer.Flores.Hernando.Hipolito.Lara.Melgar .Mella.Nasam.Nunez.Retardo.Rodriguez.Soriano.Tamayao.Ubaldo
FACTS:
Stelco Marketing Corporation is engaged in the distribution and sale to the
public of structural steel bars. On seven (7) different occasions it sold to
RYL Construction, Inc. quantities of steel bars of various sizes and rolls of
G.I. wire. These bars and wire were delivered at different places at the
indication of RYL Construction, Inc. The aggregate price for the purchases
was P126,859.61. Although the corresponding invoices issued by STELCO
stipulated that RYL would pay "COD" (cash on delivery), the latter made
no payments for the construction materials thus ordered and delivered
despite insistent demands for payment by the former.
On April 4, 1981, RYL gave to Armstrong Industries described by
STELCO as its "sister corporation" and "manufacturing arm" a check
drawn against Metrobank in the amount of P126,129.86, numbered
765380 and dated April 4, 1981. That check was a company check of
another corporation, Steelweld Corporation of the Philippines, signed by
its President, Peter Rafael Limson, and its Vice-President, Artemio Torres.
The check was issued by Limson at the behest of his friend, Romeo Y. Lim,
President of RYL. Romeo Lim had asked Limson for financial assistance,
and the latter had agreed to give Lim a check only by way of
accommodation, "only as guaranty but not to pay for anything." Why the
check was made out in the amount of P126,129.86 is not explained.
Anyway, the check was actually issued in said amount of P126,129.86, and
as already stated, was given by R.Y. Lim to Armstrong, Industries, in
payment of an obligation. When the latter deposited the check at its bank,
it was dishonored because "drawn against insufficient funds." When so
deposited, the check bore two (2) indorsements, that of "RYL
Construction," followed by that of "Armstrong Industries." On account of
the dishonor of Metrobank Check No. 765380, and on complaint of
Armstrong Industries (through a Mr. Young), Rafael Limson and Artemio
Torres were charged in the Regional Trial Court of Manila with a violation
of Batas Pambansa Bilang 22. They were acquitted in a decision "on the
ground that the check in question was not issued by the drawer 'to apply
on account for value,' it being merely for accommodation
purposes."|Thereafter a complaint was filed by petitioner against RYL and
Steelweld for the recovery of sum of money in payment of the steel bars
ordered. RYL was nowhere to be found that is why the proceedings
commenced as against Steelweld only. The trial court decided in favor of
petitioner but this was reversed by the CA.
ISSUE:
Whether Steelweld as an accommodating party can be held liable by
Stelco for the dishonored check
RULING:
Under the Negotiable Instruments Law an accommodation party is liable.
'SEC. 29.Liability of an accommodation party. An accommodation party
is one who has signed the instrument as maker, drawer, acceptor, or
indorser, without receiving value therefor, and for the purpose of lending
his name to some other person. Such a person is liable on the instrument
to a holder for value notwithstanding such holder at the time of taking the
instrument knew him to be only an accommodation party.' " It is
noteworthy that the Trial Court's pronouncement containing reference to
said Section 29 did not specify to whom STEELWELD, as accommodation
party, is supposed to be liable; and certain it is that neither said
pronouncement nor any other part of the judgment of acquittal declared it
liable to STELCO. To be sure, as regards an accommodation party (such as
STEELWELD), lack of notice of any infirmity in the instrument or defect in
title of the persons negotiating it, has no application. This is because
Section 29 of the law above quoted preserves the right of recourse of a
"holder for value" against the accommodation party notwithstanding that
18 |C a b u c h a n . N e g o C a s e D i g e s t s
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"such holder, at the time of taking the instrument, knew him to be only an
accommodation party. As far as Steelweld is concerned, there was no
commercial transaction between said appellant and appellee. Moreover,
there is no evidence that appellee Stelco Marketing became a holder for
value. Nowhere in the check itself does the name of Stelco Marketing
appear as payee, indorsee or depositor thereof. Finally, appellee's
complaint is for the collection of the unpaid accounts for delivery of steel
bars and construction materials. It having been established that appellee
had no commercial transaction with appellant Stelco, appellee had no
cause of action against said appellant.
Travel-On v. CA
210 SCRA 352 || Accomodation Party
FACTS:
Travel-On (petitioner) is an agency selling airline tickets on commission
basis and Arturo S. Miranda (respondent) procures tickets from Travel-on
on behalf of airline passengers also for a commission.
On June 1972, Travel-on files a suit against Miranda to collect for 6 checks
issued by the latter with a total face amount of P115,000. The said checks
were presented by Travel-on and all dishonoured by the drawee bank.
Miranda claimed that he had already paid all his dues to Travel-on and
that the checks were issued just to accommodate the manager of Travelon to show its Board of Directors that Travel-ons accounts receivables
were somehow still good. The manager denied this explanation of
Miranda.
Both the trial and appellate courts had rejected the checks as evidence of
indebtedness on the ground that the various statements of account
prepared by petitioner did not show that Private respondent had an
outstanding balance of P115,000.00 which is the total amount of the
checks he issued.
ISSUE:
WON the respondent is liable for the 6 checks he issued because there is
no accommodation transaction
HELD:
The Supreme Court held that the private respondent must be held liable
on the six checks he issued, as those checks in themselves constituted
FACTS:
SBCA-SOL 14-15
Agapay.Albarillo.Ambito.Arevalo.Baguilat.Bunag.Cabrera.Claveria.Escalona.Fernando.Ferrer.Flores.Hernando.Hipolito.Lara.Melgar .Mella.Nasam.Nunez.Retardo.Rodriguez.Soriano.Tamayao.Ubaldo
one Ruben Gayon, Jr. was able to withdraw the amount of $2,541.67 from
Napiza's FCDU account. It turned out that said check deposited by private
respondent was a counterfeit check. When petitioner BPI demanded the
return of $2,500.00, private respondent claimed that he deposited the
check "for clearing purposes" only to accommodate Chan. Petitioner
claims that private respondent, having affixed his signature at the dorsal
side of the check, should be liable for the amount stated therein in
accordance with the provision of the Negotiable Instruments Law on the
liability of a general indorser (Sec. 66).
ISSUE:
Whether private respondent is obliged to return the money paid
out by BPI on a counterfeit check even if he deposited the check "for
clearing purposes" only to accommodate Chan
HELD:
No. The Supreme Court ruled that ordinarily, Napiza would have
been liable because he is an accommodation indorser. But due to the
attendant circumstances, Napiza is discharged from liability.
The withdrawal slip indicates as well as the rules promulgated by BPI that
withdrawal from the bank should be accompanied by the presentment of
the account holders (Napizas) savings bankbook. This was not done so in
the case at bar because Gayon was able to withdraw without it. Further,
BPI allowed the withdrawal even before the check cleared. BPI already
credited the $2,500.00 to Napizas account even without the drawee bank
clearing the check. This is contrary to common banking practices and
because of such negligence and lack of diligence, BPI, as the collecting
bank, shall suffer the loss.
Agro Conglomerates Inc. v. CA
GR No. 117660 || Accommodation Party
Holders in Due Course
De Ocampo v. Gatchalian
3 SCRA 596 || Holders in due course
FACTS:
Manuel Gonzales represented himself to Anita Gatchalian as the agent of
the owner of the car, De Ocampo Clinic. Upon finding the price of the car
quoted by Manuel Gonzales, Anita Gatchalian requested that the car be
brought the following day together with the certificate of registration.
However, Gonzales advised that the owner of the car will not be willing to
HELD:
No. The Supreme Court stated that the rule that a possessor of the
instrument is a prima facie holder in due course does not apply because
there was a defect in the title of Manuel Gonzales (holder), because the
instrument is not payable to him or to bearer. As holders title was
defective of suspicious, it cannot be stated that De Ocampo (payee)
acquired the check without knowledge of the defect of the holders title,
and for this reason the presumption that it is a holder in due course or
that it acquired the instrument in good faith does not exist. The Supreme
Court further stated that De Ocampo was not in good faith, and that he
should have inquired as to the legal title of the check. The fact that there
was no obligation between Gatchalian and De Ocampo yet the latter was
still named the payee should have been sufficient cause to inquire as to
the title of the check.
Mesina v. Intermediate Appellate Court
G.R. No. 70145 (1986) || Holder in Due Course
FACTS
Respondent Jose Go, on December 29, 1983, purchased from Associated
Bank Cashier's Check No. 011302 for P800,000.00. Unfortunately, Jose Go
left said check on the top of the desk of the bank manager when he left the
bank. The bank manager entrusted the check for safekeeping to a bank
official, a certain Albert Uy, who had then a visitor in the person of
Alexander Lim, Uy had to answer a phone call on a nearby telephone after
20 |C a b u c h a n . N e g o C a s e D i g e s t s
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which he proceeded to the men's room. When he returned to his desk, his
visitor Lim was already gone. When Jose Go inquired for his cashier's
check from Albert Uy, the check was not in his folder and nowhere to be
found. The latter advised Jose Go to go to the bank to accomplish a "STOP
PAYMENT" order, which suggestion Jose Go immediately followed. He also
executed an affidavit of loss. Albert Uy went to the police to report the loss
of the check, pointing to the person of Alexander Lim as the one who could
shed light on it.
The records of the police show that Associated Bank received the lost
check for clearing on December 31, 1983, coming from Prudential Bank,
Escolta Branch. The check was immediately dishonored by Associated
Bank by sending it back to Prudential Bank, with the words "Payment
Stopped" stamped on it. However, the same was again returned to
Associated Bank on January 4, 1984 and for the second time it was
dishonored. Several days later, respondent Associated Bank received a
letter, dated January 9, 1984, from a certain Atty. Lorenzo Navarro
demanding payment on the cashier's check in question, which was being
held by his client. He however refused to reveal the name of his client and
threatened to sue, if payment is not made. Respondent bank, in its letter,
dated January 20, 1984, replied saying the check belonged to Jose Go who
lost it in the bank and is laying claim to it.
Respondent Associated Bank on February 2, 1984 filed an action for
Interpleader naming as respondent, Jose Go and one John Doe, Atty.
Navarro's then unnamed client. On even date, respondent bank received
summons and copy of the complaint for damages of a certain Marcelo A.
Mesina. Simultaneously, respondent bank, thru representative Albert Uy,
informed Cpl. Gimao of the Western Police District that the lost check of
Jose Go is in the possession of Marcelo Mesina, herein petitioner. When
Cpl. Gimao went to Marcelo Mesina to ask how he came to possess the
check, he said it was paid to him by Alexander Lim in a "certain
transaction" but refused to elucidate further.
ISSUE
Whether Mesina is a holder in due course
HELD
Petitioner's allegations hold no water. Theories and examples advanced
by petitioner on causes and effects of a cashier's check such as 1) it cannot
be countermanded in the hands of a holder in due course and 2) a
cashier's check is a bill of exchange drawn by the bank against itself are
general principles which cannot be aptly applied to the case at bar,
SBCA-SOL 14-15
Agapay.Albarillo.Ambito.Arevalo.Baguilat.Bunag.Cabrera.Claveria.Escalona.Fernando.Ferrer.Flores.Hernando.Hipolito.Lara.Melgar .Mella.Nasam.Nunez.Retardo.Rodriguez.Soriano.Tamayao.Ubaldo
was payable in twelve (12) equal monthly installments with interest rate
at one percent per month. And in case on non-payment of any of the
installments, the total principal sum then remaining unpaid shall become
due and payable with an additional interest of 25 percent of the total
amount due. A sister of Ng Sambok Sons Motors Co., LTD., Sambok Motors
Company, negotiated and indorsed the promissory note in favor of
Metropol Financing & Investment Corporation. Dr. Villaruel defaulted in
the payment of the installements and thus, the promissory note was
presented to him. He failed to pay the promissory note as demanded, thus,
Ng Sambok Sons Motors Co., Ltd. notified Sambok as an indorsee that the
promissory note has been dishonored and demanded payment. Ng
Sambok Sons filed a complaint for the collection of sum of money due to
the failure of Sambok to pay. During the pendency of the case Villaruel
died and the lower court dismissed the case against said defendant
Villaruel. ApellantSambok dissatisfied with the decision, appealed and
contested that by adding the words with recourse in the indorsement, it
becomes a qualified indorser. Therefore, it does not warrant that in case
that the maker defaulted to pay upon presentment it will pay the amount
to the holder.
ISSUE:
Whether or not respondent Sambok Motors Company is a qualified
indorser and thus, is not liable upon the failure of payment of the maker
HELD:
The court held that respondent Sambok Motors Company is not a qualified
indorser. A qualified indorserment constitutes the indorser a mere
assignor of the title to the instrument. It may be made by adding to the
indorsers signature the words without recourse or any words of similar
import. Such indorsement relieves the indorser of the general obligation
to pay if the instrument is dishonored but not of the liability arising from
warranties on the instrument as provided by section 65 of NIL. However,
Sambok indorsed the note with recourse and even waived the notice of
demand, dishonor, protest and presentment.
Recourse means resort to a person who is secondarily liable after the
default of the person who is primarily liable. Sambok by indorsing the
note with recourse does not make itself a qualified indorser but a
general indorser who is secondarily liable, because by such indorsement,
it agreed that if Villaruel fails to pay the not the holder can go after it. The
effect of such indorsement is that the note was indorsed witout
SBCA-SOL 14-15
Agapay.Albarillo.Ambito.Arevalo.Baguilat.Bunag.Cabrera.Claveria.Escalona.Fernando.Ferrer.Flores.Hernando.Hipolito.Lara.Melgar .Mella.Nasam.Nunez.Retardo.Rodriguez.Soriano.Tamayao.Ubaldo
liable because in fact it was Maralit who was found responsible for making
the defraudation possible.
aspect of Sapieras case. The Court of Appeals held Sapiera liable for the
civil aspect and was ordered to pay Sua.
ISSUE:
ISSUE:
Whether or not Sapiera is civilly liable although there was an acquittal on
the criminal aspect of the charges against her
HELD:
Petitioner is liable for the value of the checks. Under the Negotiable
Instruments law, Sapiera is considered to be am indorser of check, and
under Section 66, she would be held liable to pay the holder who may be
compelled to pay the instrument. As provided for by law, every indorser
who indorses without qualification, engages that on due presentment, it
shall be accepted of paid or both, as the case may be, and that if it be
dishonored and the necessary proceedings on dishonor be duly taken, he
will pay the amount thereof to the holder or to any subsequent indorser
who may be compelled to pay it.
BPI v. CA and Napiza
GR No. 11239 || Liability of General Indorser
FACTS:
September 3, 1987: Bejanmin Napiza deposited in Foreign Currency
Deposit Unit (FCDU) Savings Account which he maintained in BPI a
Continental Bank Manager's Check dated August 17, 1984, payable to
"cash" $2,500.00
check belonged to Henry who went to the office of Napiza and requested
him to deposit the check in his dollar account by way of accommodation
and for the purpose of clearing the same.
Napiza acceded, and agreed to deliver to Chan a signed blank withdrawal
slip, with the understanding that as soon as the check is cleared, both of
them would go to the bank to withdraw
October 23, 1984: Using the blank withdrawal slip given by Napiza to
Chan, Ruben Gayon, Jr. was able to withdraw
the withdrawal slip shows that the amount was payable to Ramon A. de
Guzman and Agnes C. de Guzman and was duly initialed by the branch
assistant manager, Teresita Lindo
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24 |C a b u c h a n . N e g o C a s e D i g e s t s
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BUT withdrawal slip itself indicates a special instruction that the amount
is payable to "Ramon A. de Guzman &/or Agnes C. de Guzman."
(b) the depositor's passbook
In depositing the check in his name, Napiza did not become the outright
owner of the amount stated therein. By depositing the check with BPI, he
was, in a way, merely designating BPI as the collecting bank.
This is in consonance with the rule that a negotiable instrument, such as a
check, whether a manager's check or ordinary check, is not legal tender
Negligence is the omission to do something which a reasonable man,
guided by those considerations which ordinarily regulate the conduct of
human affairs, would do, or the doing of something which a prudent and
reasonable man would do
While it is true that Napiza's having signed a blank withdrawal slip set in
motion the events that resulted in the withdrawal and encashment of the
counterfeit check, the negligence of BPI's personnel was the proximate
cause of the loss that petitioner sustained.
Proximate cause, which is determined by a mixed consideration of logic,
common sense, policy and precedent, is "that cause, which, in natural and
continuous sequence, unbroken by any efficient intervening cause,
produces the injury, and without which the result would not have
occurred."
The proximate cause = disregard of its own rules and the clearing
requirement in the banking system
Presentment for Payment/Acceptance
PRUDENTIAL BANK vs. INTERMEDIATE APPELLATE COURT,
PHILIPPINE RAYON MILLS, INC. and ANACLETO R. CHI
G.R. No. 74886 December 8, 1992 || (Presentment for acceptance)
FACTS:
Philippine Rayon Mills, Inc. entered into a contract with Nissho Co.,
Ltd. of Japan for the importation of textile machineries under a five-year
deferred payment plan. To effect payment for said machineries, Philippine
Rayon Mills opened a commercial letter of credit with the Prudential Bank
and Trust Company in favor of Nissho. Against this letter of credit, drafts
were drawn and issued by Nissho, which were all paid by the Prudential
Bank through its correspondent in Japan. Two of these drafts were
accepted by Philippine Rayon Mills while the others were not. Petitioner
instituted an action for the recovery of the sum of money it paid to Nissho
as Philippine Rayon Mills was not able to pay its obligations arising from
the letter of credit. The lower court ordered PRMI to pay for the 2 drafts
which were accepted the 10 were not yet accepted and for Chi it was
dismissed. The Respondent court ruled that with regard to the ten drafts
which were not presented and accepted, no valid demand for payment can
be made. Petitioner however claims that the drafts were sight drafts which
did not require presentment for acceptance to Philippine Rayon.
ISSUE:
Whether presentment for acceptance of the drafts was indispensable to
make Philippine Rayon liable thereon
RULING:
NO. Petition GRANTED. Philippine Rayon Mills, Inc. liable on the
12 drafts. Anacleto R. Chi (as guarantor) secondarily liable on the trust
receipt. In the case at bar, the drawee was necessarily the herein
petitioner. It was to the latter that the drafts were presented for
payment. There was in fact no need for acceptance as the issued drafts
are sight drafts. Presentment for acceptance is necessary only in the
cases expressly provided for in Section 143 of the Negotiable Instruments
Law (NIL). The said section provides that presentment for acceptance
must be made:
(a) Where the bill is payable after sight, or in any other case, where
presentment for acceptance is necessary in order to fix the maturity of the
instrument; or
(b) Where the bill expressly stipulates that it shall be presented for
acceptance; or
(c) Where the bill is drawn payable elsewhere than at the residence
or place of business of the drawee.
In no other case is presentment for acceptance necessary in order
to render any party to the bill liable. Obviously then, sight drafts do not
require presentment for acceptance.
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Wong vs. CA
G.R. No. 117857 February 2, 2001 || PRESENTMENT FOR
PAYMENT/ACCEPTANCE
FACTS:
Petitioner Wong was an agent of Limtong Press. Inc. (LPI), a manufacturer
of calendars. LPI would print sample calendars, then give them to agents
to present to customers. The agents would get the purchase orders of
customers and forward them to LPI. After printing the calendars, LPI
would ship the calendars directly to the customers. Thereafter, the agents
would come around to collect the payments. Petitioner, however, had a
history of unremitted collections, which he duly acknowledged in a
confirmation receipt he co-signed with his wife. Hence, petitioners
customers were required to issue postdated checks before LPI would
accept their purchase orders. In early December 1985, Wong issued six
(6) postdated checks totaling P18,025.00, all dated December 30, 1985
and drawn payable to the order of LPI. These checks were initially
intended to guarantee the calendar orders of customers who failed to
issue post-dated checks. However, following company policy, LPI refused
to accept the checks as guarantees. Instead, the parties agreed to apply the
checks to the payment of petitioners unremitted collections for 1984
amounting to P18,077.07. LPI waived the P52.07 difference. Before the
maturity of the checks, petitioner prevailed upon LPI not to deposit the
checks and promised to replace them within 30 days. However, petitioner
reneged on his promise. Hence, on June 5, 1986, LPI deposited the checks
with Rizal Commercial Banking Corporation (RCBC). The checks were
returned for the reason account closed. On June 20, 1986, complainant
through counsel notified the petitioner of the dishonor. Petitioner failed to
make arrangements for payment within five (5) banking days. On
November 6, 1987, petitioner was charged with three (3) counts of
violation of B.P. Blg. 224. The trial court found him guilty and the Court of
Appeals affirmed the decision. Hence, the present petition.
ISSUE:
Whether or not LPI deposited the checks within reasonable time.
HELD:
Yes. Petitioner avers that since the complainant deposited the checks on
June 5, 1986, or 157 days after the December 30, 1985 maturity date, the
presumption of knowledge of lack of funds under Section 2 of B.P. Blg. 22
should not apply to him. Under Section 186 of the Negotiable Instruments
Law, a check must be presented for payment within a reasonable time
after its issue or the drawer will be discharged from liability thereon to
the extent of the loss caused by the delay. By current banking practice, a
check becomes stale after more than six (6) months, or 180 days. Private
respondent herein deposited the checks 157 days after the date of the
check. Hence said checks cannot be considered stale. As found by the trial
court, private respondent did not deposit the checks because of the
reassurance of petitioner that he would issue new checks. Upon his failure
to do so, LPI was constrained to deposit the said checks. After the checks
were dishonored, petitioner was duly notified of such fact but failed to
make arrangements for full payment within five (5) banking days thereof.
There is, on record, sufficient evidence that petitioner had knowledge of
the insufficiency of his funds in or credit with the drawee bank at the time
of issuance of the checks.
The International Corporate Bank v. Sps. Gueco
GR No. 141968 || Presentment for Payment
Facts:
Spouses Francis S. Gueco and Ma. Luz E. Gueco obtained a loan from
petitioner InternationalCorporate Bank (now Union Bank of the
Philippines) to purchase a car a Nissan Sentra 1600 4DR,
1989Model. In consideration thereof, the Spouses executed
promissory notes which were payable in monthlyinstallments and
chattel mortgage over the car to serve as security for the notes. The
Spouses defaulted inpayment of installments.Consequently, the
Bank filed on 7 August 1995 a civil action (Civil Case 658-95)for
"Sum of Money with Prayer for a Writ of Replevin" before the
Metropolitan Trial Court of Pasay City. Desi Tomas, the Bank's
Assistant VicePresident demanded payment of the amount of
P184,000.00 which represents the unpaid balance for the carloan.
After some negotiations and computation, the amount was lowered
to P154,000.00, However, as a resultof the non-payment of the
reduced amount on that date, the car was detained inside the bank's
compound.
In the meeting of 29 August 1995, Dr. Gueco delivered a manager's
26 |C a b u c h a n . N e g o C a s e D i g e s t s
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Checks
State Investment House Inc., v. Court of Appeals
GR No. 101163 || Checks
FACTS:
Private respondent, Nora B. Moulic issued to Corazon Victoriano,
as security for pieces of jewelry to be sold on commission, two (2) postdated Equitable Banking Corporation checks in the amount P50,000.00
each, one dated 30 August 1979 and the other, 30 September 1979.
Thereafter, the payee negotiated the checks to petitioner State Investment
House. Inc.
Moulic failed to sell the pieces of jewelry so she returned them to
the payee before the maturity dates of the checks. However, the checks
could no longer be retrieved as they had already been negotiated.
Consequently, Moulic withdrew her funds from the drawee bank.
Upon presentment for payment, the checks were dishonored for
insufficiency of funds so State Investment notified Moulic of the dishonour
of the checks, which Moulic denied receiving notice thereof. State
Investment then sued to recover the value of the checks. However, Moulic
contends that she incurred no obligation on the checks because the
jewelry was never sold and the checks were negotiated without her
knowledge and consent.
ISSUE:
Whether or not petitioner is a holder in due course therefore
making Moulic liable for the value of the checks she issued.
HELD:
Sec. 52 of the Negotiable Instruments Law states: A holder in due
course is a holder who has taken the instrument under the following
conditions: (a) That it is complete and regular upon its face; (b) That he
became the holder of it before it was overdue, and without notice that it
was previously dishonored, if such was the fact; (c) That he took it in good
faith and for value; (d) That at the time it was negotiated to him he had no
notice of any infirmity in the instrument or defect in the title of the person
negotiating it.
With that, evidence clearly shows that: (a) on their faces the postdated checks were complete and regular: (b) petitioner bought these
checks from the payee, Corazon Victoriano, before their due dates;(c)
petitioner took these checks in good faith and for value, albeit at a
discounted price; and, (d) petitioner was never informed nor made aware
that these checks were merely issued to payee as security and not for
value.
Consequently, petitioner is indeed a holder in due course. As such,
it holds the instruments free from any defect of title of prior parties, and
from defenses available to prior parties among themselves; it may,
therefore, enforce full payment of the checks.
Since she was responsible for the dishonor of her checks, there was no
need to serve her Notice of Dishonor, which is simply bringing to the
knowledge of the drawer or indorser of the instrument, either verbally or
by writing, the fact that a specified instrument, upon proper proceedings
taken, has not been accepted or has not been paid, and that the party
notified is expected to pay it.
Moulic, as drawer, is liable for the value of the checks she issued to
the holder in due course, State Investment, without prejudice to any
action for recompense she may pursue against Victoriano as Third-Party
Defendants who had already been declared as in default.
BATAAN CIGAR AND CIGARETTE FACTORY, INC. vs. THE COURT OF
APPEALS and STATE INVESTMENT HOUSE, INC.
G.R. No. 93048. March 3, 1994 || Section 185
NOCON, J p:
FACTS:
Petitioner, Bataan Cigar & Cigarette Factory, Inc. (BCCFI), a corporation
involved in the manufacturing of cigarettes, engaged one of its suppliers,
King Tim Pua George (herein after referred to as George King), to deliver
2,000 bales of tobacco leaf starting October 1978. In consideration
thereof, BCCFI, on July 13, 1978 issued crossed checks post dated
sometime in March 1979 in the total amount of P820,000.00. Relying on
the supplier's representation that he would complete delivery within
three months from December 5, 1978, petitioner agreed to purchase
additional 2,500 bales of tobacco leaves, despite the supplier's failure to
deliver in accordance with their earlier agreement. Again petitioner issued
postdated crossed checks in the total amount of P1,100,000.00, payable
sometime in September 1979.
During these times, George King was simultaneously dealing with private
respondent State Investment House, Inc (SIHI). On July 19, 1978, he sold
at a discount check TCBT 551826 5 bearing an amount of P164,000.00,
post dated March 31, 1979, drawn by petitioner, naming George King as
payee to SIHI. On December 19 and 26, 1978, he again sold to respondent
28 |C a b u c h a n . N e g o C a s e D i g e s t s
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checks TCBT Nos. 608967 & 608968, 6 both in the amount of P100,000.00,
post dated September 15 & 30, 1979 respectively, drawn by petitioner in
favor of George King. In as much as George King failed to deliver the bales
of tobacco leaf as agreed despite petitioner's demand, BCCFI issued on
March 30, 1979, a stop payment order on all checks payable to George
King, including check TCBT 551826. Subsequently, stop payment was also
ordered on checks TCBT Nos. 608967 & 608968 on September 14 & 28,
1979, respectively, due to George King's failure to deliver the tobacco
leaves. Efforts of SIHI to collect from BCCFI having failed, it instituted the
present case, naming only BCCFI as party defendant. The trial court
pronounced SIHI as having a valid claim being a holder in due course. It
further said that the non-inclusion of King Tim Pua George as party
defendant is immaterial in this case, since he, as payee, is not an
indispensable party.
RTC ruling: Ruled in favor of SIHI
CA Ruling: affirmed RTC Ruling.
ISSUE:
whether or not SIHI, a second indorser, a holder of crossed checks, is a
holder in due course, to be able to collect from the drawer, BCCFI
HELD:
No. The Supreme Court reversed the decision of Court of Appeals. SIHI
cannot collect from BCCFI, because SIHI cannot be considered as a holder
in due course. BCCFI's defense in stopping payment is as good to SIHI as it
is to George King. Because, really, the checks were issued with the
intention that George King would supply BCCFI with the bales of tobacco
leaf. There being failure of consideration, SIHI is not a holder in due
course.
Consequently, BCCFI cannot be obliged to pay the checks. The foregoing
does not mean, however, that respondent could not recover from the
checks. The only disadvantage of a holder who is not a holder in due
course is that the instrument is subject to defenses as if it were nonnegotiable. 14 Hence, respondent can collect from the immediate indorser,
in this case, George King.
(Section 185) A check is defined by law as a bill of exchange drawn on a
bank payable on demand. There are a variety of checks, the more popular
of which are the memorandum check, cashier's check, traveler's check and
crossed check. Crossed check is one where two parallel lines are drawn
29 |C a b u c h a n . N e g o C a s e D i g e s t s
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in his account with RCBC. On the same day, RCBC erroneously sent the
same cashiers check for clearing to the Central Bank which was returned
for having been misspent or misrouted. The next day, RCBC debited the
amount covered by the same cashiers check from the account of the
petitioner. Respondent bank did not inform the petitioner of its action to
which he only learned of the claims 42 days after. Relying on common
knowledge that a cashiers check was as good as cash, petitioner issued
two personal checks in the name of Go Lac, without awaiting any
notification if it was cleared, which was returned twice for insufficiency of
funds. Tan filed a complaint against RCBC for damages. Tan contends that
there was negligence on the part of RCBC, therefore they should be held
liable. RCBC contended that it was merely acting as petitioners collecting
agent and it assumed no responsibility beyond care in selecting
correspondents under the theory that where a check is deposited with a
collecting bank the relationship created is that of agency and not creditordebtor, thus it cannot be held liable.
Trial Court Ruling: Ruled against RCBC and made them liable for moral
damages and exemplary damages but not for actual damages because Tan
failed to prove by any receipt or writing to underpin it.
Court of Appeals: Reversed the decision of the Trial court in that it was
the fault of Tan which led to his loss. First, it was the Tan who filled up the
wrong deposit slip which led to the sending of the check to the Central
Bank when the clearing should have been made elsewhere. Second, the
bank actually tried to advise Tan that the check was misspent, but the
telephone number was no longer active. It was Tan who was under
obligation to inform RCBC of any changes in the telephone numbers to be
contacted. Third, the refusal of RCBC to credit the amount of P30,000.00 is
consistent with the accepted banking practice. It is clear that immediate
payment without awaiting clearance of a cashiers check is
discretionary with the bank to whom the check is presented and
such being the case, the refusal to allow it as in this case is not to be
equated with negligence in the basic perception that discretion is not
demandable as a right.
ISSUE:
Whether or not RCBC should bear the loss
HELD:
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The court held that RCBC should bear the loss. RCBC insists that
immediate payment without awaiting clearance of a cashier's check is
discretionary with the bank to whom the check is presented and such
being the case, its refusal to immediately pay the cashier's check in this
case is not to be equated with negligence on its part. We find this
disturbing and unfortunate.
An ordinary check is not a mere undertaking to pay an amount of money.
There is an element of certainty or assurance that it will be paid upon
presentation that is why it is perceived as a convenient substitute for
currency in commercial and financial transactions. The basis of the
perception being confidence. Any practice that destroys that confidence
will impair the usefulness of the check as a currency substitute and create
havoc in trade circles and the banking community.
Now, what was presented for deposit in the instant cases was not just an
ordinary check but a cashier's check payable to the account of the
depositor himself. A cashier's check is a primary obligation of the issuing
bank and accepted in advance by its mere issuance. By its very nature, a
cashier's check is the bank's order to pay drawn upon itself, committing in
effect its total resources, integrity and honor behind the check. A cashier's
check by its peculiar character and general use in the commercial world is
regarded substantially to be as good as the money which it represents. In
this case, therefore, PCIB by issuing the check created an unconditional
credit in favor of any collecting bank.
All these considered, petitioner's reliance on the layman's perception that
a cashier's check is as good as cash is not entirely misplaced, as it is rooted
in practice, tradition, and principle. We see no reason thus why this socalled discretion was not exercised in favor of petitioner, specially since
PCIB and RCBC are members of the same clearing house group relying on
each other's solvency. RCBC could surely rely on the solvency of PCIB
when the latter issued its cashier's check.
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Whether or not there was valid payment even though Papa failed to
encash the check
HELD:
The Court ruled that there was valid payment. After more than 10
years from the payment in part by cash and in part by check, the
presumption is that the check had been encashed.
Granting that the petitioner had never encashed the check, his
failure to do so for more that 10 years undoubtedly resulted in the
impairment of the check through his unreasonable and unexplained
delay.
While it is true that the delivery of a check produces the effect of payment
only when it is encashed, pursuant to Art. 1249 NCC, the rule is otherwise
if the debtor is prejudiced by the creditors unreasonable delay in
presentment. THe acceptance of a check implies an undertaking of due
diligence in presenting it for payment, and if he from whom it is received
sustains loss by want of such diligence, it will be held to operate as actual
payment of the debt or obligation for which it was given.
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