BASED ON AGBAYANIS BOOK AND ATTY. MERCADOS LECTURES
Page 95 of 190
BY: MA. ANGELA LEONOR C. AGUINALDO ATENEO LAW 2D BATCH 2010
HELD: The warranties for which Alviar and Gonzales are liable as general indorsers in favor of subsequent indorsers extend only to the state of the instrument at the time of their indorsements, specifically that the instrument is genuine and in all respects what it purports to be; that they have good title thereto; that all prior parties had capacity to contract; and that the instrument, at the time of their endorsements, is valid and subsisting. This however cannot be used by someone which introduced the defect in the instrument, such as the bank in this case, which qualifiedly indorsed the same, to hold prior parties liable on the instrument because it results to an absurd situation whereby a subsequent party may render an instrument useless and inutile and let innocent parties bear the loss while he himself gets away scot-free. It cannot be overstressed that had it not been for the qualified indorsement of Gomez, there would have been no reason for the dishonor of the check.
Sec. 67. Liability of indorser where paper negotiable by delivery. Where a person places his indorsement on an instrument negotiable by delivery, he incurs all the liability of an indorser.
CASE DIGESTS: SECTION 67
130 JAI ALAI V. BPI 66 SCRA 29
FACTS: Checks were deposited by petitioner in its current account with the bank. These checks were from a certain Ramirez, a consistent better in its games, who was a sales agent from Inter-Island Gas. Inter-Island later found out that of the forgeries committed in the checks and thus, it informed all the parties concerned. Upon the demands on the bank as the collecting bank, it debited the account of petitioner. Thereafter, petitioner tried to issue a check for payment of shares of stock but such was dishonored for insufficient funds. It filed a complaint against the bank.
HELD: Considering that the petitioner indorsed the said checks when it deposited them with the respondent, the petitioner as an indorser guaranteed the genuineness of all prior indorsements thereon. The respondent which relied upon the petitioners warranty should not be held liable for the resulting loss.
Furthermore, the provision in the deposit slip on the right of reservation by the bank applies only when there is actual receipt of current funds or solvent credits. But as earlier on indicated, the transfer on account of the checks were ineffectual because it was made under the mistaken and valid assumption that the indorsements of the payee thereon were genuine.
Sec. 68. Order in which indorsers are liable. - As respect one another, indorsers are liable prima facie in the order in which they indorse; but evidence is admissible to show that, as between or among themselves, they have agreed otherwise. Joint payees or joint indorsees who indorse are deemed to indorse jointly and severally.
APPLICATION OF SECTION Applies only with respect to an indorser as against another but not as against a holder in due course Every indorser is liable to all indorsers subsequent to him but not those prior to him whom he in turn makes liable
JOINT AND SEVERAL LIABILITY OF JOINT PAYEES Joint payees or joint indorsees are deemed to indorse solidarily
EFFECT OF LACK OF NOTICE OF DISHONOR, ETC. One of the joint indorsers cannot escape liability because proper notice of dishonor wasnt given to his joint indorser
Sec. 69. Liability of an agent or broker. - Where a broker or other agent negotiates an instrument without indorsement, he incurs all the liabilities prescribed by Section Sixty-five of this Act, unless he discloses the name of his principal and the fact that he is acting only as agent.
APPLICATION OF SECTION 69 Instruments payable to bearer To escape personal liability as a party negotiating by delivery, the agent must disclose his principal and state that he is acting only as an agent
VI. PRESENTATION FOR PAYMENT
Sec. 70. Effect of want of demand on principal debtor. - Presentment for payment is not necessary in order to charge the person primarily liable on the instrument; but if the instrument is, by its terms, payable at a special place, and he is able and willing