Atty. Maria Zarah R.

Villanueva – Castro
Compilation of Cases and Doctrines
ENFORCEMENT OF LIABILITY

➢ Wong, an agent of Limtong Press, who had a history of unremitted ➢ Under Section 186 of the Negotiable Instruments Law, "a check
collections, which were duly acknowledged in a confirmation receipt must be presented for payment within a reasonable time after its
he cosigned with his wife for LPI. issue or the drawer will be discharged from liability thereon to the
➢ Wong issued 6 post dated checks which were drawn payable to LPI extent of the loss caused by the delay." By current banking practice,
intended to guarantee the calendar orders of customers who failed to a check becomes stale after more than six (6) months, or 180 days.
WONG v. COURT OF issue post-dated checks. Private respondent herein deposited the checks 157 days after the
APPEALS ➢ Following company policy, LPI refused to accept the checks as date of the check. Hence said checks cannot be considered stale.
G.R. No. 117857; February 2, 2001 guarantees. Parties then agreed to apply the checks to the payment of
Quisumbing, J.:
Wong’s unremitted collections.
➢ Before maturity of the checks, Wong told LPI not to deposit the
checks and promised to replace them within 30 days which he failed
to fulfill.
➢ LPI thus deposited the checks to RCBC and were returned for the
reason “account closed”.
➢ Spouses Gueco obtained a loan from ICB to purchase a car where ➢ Even assuming that presentment is needed, failure to present for
they defaulted in payment. payment within a reasonable time will result to the discharge of the
➢ ICB sought to collect from them and the car was subject to a writ of drawer only to the extent of the loss caused by the delay. Failure to
replevin. Negotiation resulted in the reduction of the outstanding present on time, thus, does not totally wipe out all liability. In fact,
loan. the legal situation amounts to an acknowledgment of liability in the
INTERNATIONAL ➢ Gueco delivered a manager’s check but the car was not released sum stated in the check. In this case, the respondents have not
CORPORATE BANK v. because of his refusal to sign the Joint Motion to Dismiss. alleged, much less shown that they or the bank which issued the
SPOUSES GUECO ➢ ICB filed an action for damages before the MTC which was manager's check has suffered damage or loss caused by the delay or
G.R. No. 141968; February 12, 2001 dismissed. non-presentment. Definitely, the original obligation to pay certainly
Kapunan, J.:
➢ On appeal, RTC held that the signing of the joint motion to dismiss has not been erased.
was not a condition precedent for the effectivity of the compromise ➢ It has been held that, if the check had become stale, it becomes
on the reduction of the loan. CA affirmed in toto. imperative that the circumstances that caused its non-presentment
➢ Spouses Gueco pray the ICB return the car or its value and that ICB be determined. In the case at bar, there is no doubt that the ICB held
should suffer the loss because of its own negligence with the fact that on the check and refused to encash the same because of the
the manager’s check had become stale. controversy surrounding the signing of the joint motion to dismiss.

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 Atty. Maria Zarah R. Villanueva – Castro
Compilation of Cases and Doctrines

➢ Moulic issued 2 post dated checks in the amount of 50,000 each to ➢ Under sec. 114 of the NIL, a notice of dishonor is not required to be
Victoriano as security for pieces of jewelry to be sold on given to the drawer in the following cases: (a) Where the drawer
commission. and the drawee are the same person; (b) When the drawee is a
STATE INVESTMENT ➢ Moulic failed to sell the pieces of jewelry and returned them to fictitious person or a person not having capacity to contract; (c)
HOUSE v. COURT OF Victoriano before the maturity of the checks. When the drawer is the person to whom the instrument is presented
APPEALS ➢ Checks could no longer be retrieved because they have already been for payment: (d) Where the drawer has no right to expect or require
G.R. No. 101163; January 11, 1993 negotiated to SIHI. Before maturity date, Moulic withdrew her funds that the drawee or acceptor will honor the instrument; (e) Where the
Bellosillo, J.:
from the drawee bank. drawer had countermanded payment.
➢ Checks were dishonored for insufficiency of funds upon
presentment. SIHI notified Moulic and requested that they be paid in
cash instead. Moulic avers that no notice was given to her.
➢ RTC dismissed the complaint. CA affirmed the decision.
➢ Arceo obtained a loan from Cenizal to which he issued a post dated ➢ The 90-day period provided in the law is not an element of the
check in favor of Cenizal. offense. Neither does it discharge petitioner from his duty to
➢ Upon maturity of the check, Cenizal did not deposit it because Arceo maintain sufficient funds in the account within a reasonable time
promised that he would replace the check with cash 7 times. from the date indicated in the check. According to current banking
➢ Cenizal thereafter brought the check for encashment but was practice, the reasonable period within which to present a check to
ARCEO, JR. v. PEOPLE dishonored due to insufficient funds. the drawee bank is six months. Thereafter, the check becomes stale
OF THE PHILIPPINES ➢ Arceo was given a letter through counsel of the dishonor giving him and the drawer is discharged from liability thereon to the extent of
G.R. No. 142641; July 17, 2006 3 days from receipt to pay the amount of the check but still failed to the loss caused by the delay.
Corona, J.:
do so.
➢ Arceo was charged before the RTC and was found guilty in violation
of BP22. CA affirmed the decision in toto.
➢ Arceo claims that he should not be held liable for the dishonor of the
check because it was presented beyond the 90 day period and that
notice was not complied with.

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ALLIED BANKING CORP.
v. COURT OF APPEALS
and GG SPORTSWEAR
G.R. No. 125851; July 11, 2006
Quisumbing, J.:
AREZA v. EXPRESS
SAVINGS BANK
G.R. No. 176697; September 10, 2004
Perez, J.:
➢ The check issued by Areza was then dishonored by ESB for the reason
➢ Areza’s demanded that ESB honor their check, but instead of doing so,
Atty. Maria Zarah R. Villanueva – Castro
Compilation of Cases and Doctrines
➢ ABC purchased and export bill in the amount of 02,085 USD from ➢ There are well-defined distinctions between the contract of an
GG Sportswear. The bill, drawn under a LoC, covered a training suit indorser and that of a guarantor/surety of a commercial paper,
that was in transit to West Germany. ABC credit GGS the peso which is what is involved in this case. The contract of indorsement
equivalent of the bill. is primarily that of transfer, while the contract of guaranty is that of
➢ Gidwani and Alcron executed their respective Letters of Guaranty, personal security. The liability of a guarantor/surety is broader than
holding themselves liable on the export bill should it be dishonored that of an indorser. Unless the bill is promptly presented for
or retired by the drawee for any reason. Spouses de Villa and payment at maturity and due notice of dishonor given to the indorser
Gidwani also executed a Continuing Guaranty for the payment of within a reasonable time, he will be discharged from liability
any and all such credit accommodations which ABC may extend to thereon. On the other hand, except where required by the provisions
GGS. of the contract of suretyship, a demand or notice of default is not
➢ When ABC negotiated the bill to CFBL, the issuing bank, payment required to fix the surety's liability.
was refused due to some material discrepancies in the documents
submitted by GGS relative to the LoC.
➢ ABC demanded payment from all the respondents based on their
sureties and letters of guaranty. Respondents refused to pay.
➢ Respondents claim that ABC did not protest upon dishonor and since
there was no protest, all indorsers should be discharged.
➢ Spouses Areza were engaged in the business of buy and sell of brand new ➢ A depositary/collecting bank may resist or defend against a claim
and second hand motor vehicles and maintained two bank deposits with for breach of warranty if the drawer, the payee, or either the drawee
ESB. bank or depositary bank was negligent and such negligence
➢ Mambuhay ordered from the petitioners 1 brand new car and another substantially contributed to the loss from alteration. In the instant
second hand car. He used 9 checks, payable to different payees and drawn
case, no negligence can be attributed to petitioners.
against the Philippine Veterans Bank.
➢ Areza spouses deposited the checks to ESB. ESB then deposited the same
➢ 24 hour clearing rule does apply.
to Equitable PCI. ➢ Items which have been the subject of a material alteration or items
➢ Equitable PCI presented the checks to PVB which honored them. Entire bearing a forged indorsement when such endorsement is necessary
amount of the checks was credited to the Areza’s savings account; for negotiation shall be returned by direct presentation or demand
prompting them to release the 2 cars. to the Presenting bank and not through the regular clearing house
➢ Checks were then returned by the PVAO to PVB on the ground of material facilities within the period prescribed by law for the filing of a legal
alteration. PVB returned the checks to Equitable PCI who then debited the action by the returning bank/branch, institution or entity against the
account of ESB. bank/branch, institution or entity sending the same.
“Deposit Under Hold”
ESB closed their savings account and withdrew the amount equivalent on
the checks.
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