BASED ON AGBAYANIS BOOK AND ATTY. MERCADOS LECTURES
Page 188 of 190
BY: MA. ANGELA LEONOR C. AGUINALDO ATENEO LAW 2D BATCH 2010 ! As stated, Under banking laws and practices, by the certification, the funds represented by the check were transferred from the credit of the maker to that of the payee or holder, and for all intents and purposes, the latter became the depositor of the bank, with rights and duties of one in such relation. But the transfer of the corresponding funds from the credit of the depositor to that of the payee had to be co-extensive with the life of the checks, which in this case was 90 days. If the checks were not presented for payment within that period they became invalid and the funds were automatically restored to the credit of the drawer though not as a current deposit but as special deposit.
UNCERTIFIED CHECK IS NOT AN ASSIGNMENT OF FUNDS ! A check of itself is not an assignment of the funds of the drawer in the bank ! A general deposit in the bank is so much money to the depositors credit. It is a debt to him by the bank, payable on demand to his order, not property capable of identification and specific appropriation. A check drawn upon the bank in usual form, not accepted or certified by its cashier to be good, doesnt constitute transfer of any money to the credit of the holder. It is simply an order which may be countermanded and payment forbidden by the drawer at any time before it is actually cashed. It creates no lien on the money which the holder can enforce against the bank. It doesnt of itself operate as an equitable assignment.
DRAWEE BANK NOT LIABLE TO HOLDER ON CHECK UNLESS ACCEPTED OR CERTIFIED ! Before acceptance or certification, the bank isnt liable and the holder has no right to sue the drawee bank on the check ! On this question, we conclude that the general rule is that an action cannot be maintained by the payee of the check against the bank on which it is drawn, unless the check has been certified or accepted by the bank in compliance with the statute, even though at the time the check is that an action cannot be maintained by the payee of the drawer of the check out of which the check is legally payable; and that the payment of the check by the bank on which it is drawn, even though paid on the unauthorized indorsement of the name of the holder; doesnt constitute as certification thereof, neither is it an acceptance thereof; and without acceptance or certification, as provided by statute, there is no privity of contract between the drawee bank and the payee, or the holder of the check. Neither is there assignment of the funds where the check isnt drawn on a particular fund, or doesnt show on its face that it is an assignment of a particular fund.
SUMMARY OF RIGHTS AND LIABILITIES OF PARTIES 1. The holder has no action against it as a check is not in itself an assignment of funds of the drawer in the hands of the drawee bank, and the drawee bank isnt liable on the check until it has accepted or certified it 2. Neither has the holder a right of action against the drawer where the drawee bank refuses to accept or certify the check but he has a right of action against the drawer where the drawee bank refuses to pay 3. And while the holder has no right of action against the drawee bank which refuses to pay, accept or certify the check, the drawer has a right of action against the drawee bank so refusing. Such right of action, however, isnt based on the check drawn but on the original contract of deposit between them
DUTY OF DEPOSITOR TO BANK ! Where a drawer of a check has prepared his check so negligentlythat it can be altered easily without giving the instrument a suspicious appearance and alterations are afterwards made, he cannot blame anyone but himself and in such case, he cannot hold the bank liable for the consequences of his own negligence in the respect ! But negligence of depositor in drawing a check will not excuse the paying bank unless it is misled by such negligent act, and if the drawer of a check is first in fault and if his negligence contributes directly to its wrongful and fraudulent appropriation, he isnt entitled to recover
DUTY OF DEPOSITOR WHERE PASSBOOK RETURNED TO HIM ! It is his duty to examine such checks within a reasonable time and if they disclose forgeries or alterations, to report them to the bank, dispute the correctness of payments thereafter made by it on similar checks. ! This rule assumes that the bank itself hasnt been guilty of negligence in making the payment for when, by the exercise of proper case, it could have discovered the alteration of forgery, it must bear the loss notwithstanding that the depositor failed in his duty to examine the accounts
STOPPING PAYMENT ! As a check is itself doesnt operate as an assignment of funds to the credit of the drawer, the latter may countermand payment before its acceptance or certification. ! The order to stop payment must be communicated to the bank before the check to which it refers has been paid; and in the absence of this