Professional Documents
Culture Documents
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
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.
1 |C a b u c h a n . N e g o C a s e D i g e s t s
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
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
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.
3 |C a b u c h a n . N e g o C a s e D i g e s t s
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 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,
4 |C a b u c h a n . N e g o C a s e D i g e s t s
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
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
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
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
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
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.
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.
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.
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
7 |C a b u c h a n . N e g o C a s e D i g e s t s
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
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.
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.
HELD
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.
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.
Thus, the drawer also owes no duty of diligence to the collecting bank,
since the law imposes a duty of diligence on the collecting bank to
8 |C a b u c h a n . N e g o C a s e D i g e s t s
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:
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.
9 |C a b u c h a n . N e g o C a s e D i g e s t s
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
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
August 31, 1964: he withdrew the balance of P17,920 and closed his
account with Metro Bank
September 3, 1964: FNCB returned cancelled Check to drawer Joaquin
Cunanan & Company, together with the monthly statement of the
company's account with FNCB.
notified FNCB that the check had been altered
actual amount of P50.00 was raised to P50,000.00
name of the payee, Manila Polo Club, was superimposed the word CASH.
September 10, 1964: FNCB wrote Metro Bank asking for reimbursement
June 29, 1965: FNCB filed for recovery
CA affirmed Trial Court: Metro Bank to reimburse FNCB
ISSUE:
Whether or not Metrobank should reimsburse FNCB for the altered
amount as indorser
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
GR
FACTS:
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
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
12 |C a b u c h a n . N e g o C a s e D i g e s t s
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
Ramon Ilusorio vs CA
GR no. 139130 II FORGERY
FACTS:
13 |C a b u c h a n . N e g o C a s e D i g e s t s
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
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
place, a supposed endorsement appearing on the back of the check was
made for the whole amount of the check. At the time of the transfer of
this check to Montinola, the check was long overdue by about 2-1/2
years.
Montinola instituted an action against the PNB and the Provincial
Treasurer of Misamis Oriental to collect the sum of P100,000, the
amount of the aforesaid check. There now appears on the face of said
check the words in parenthesis "Agent, Phil. National Bank" under
the signature of Laya purportedly showing that Laya issued the check as
agent of the Philippine National Bank.
ISSUE:
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
Whether or not Sadaya can claim against estate of Sevilla as coaccommodation party when Verona as principal debtor is not yet
insolvent
HELD:
NO, CA decision affirmed. The SC held that since Varona received
full value of the promissory note while Sadaya received nothing
therefrom, the former is bound by the obligation to reimburse the latter.
A solidary accommodation maker who made payment has
the right to contribution, from his co-accommodation maker, in the
absence of agreement to the contrary between them, and subject to
conditions imposed by law.
Consequently, according to Art. 2073, the requisites before one
accommodation maker can seek reimbursement from a coaccommodation maker shall not be applicable, unless the payment has
been made in virtue of a judicial demand or unless the principal debtor is
insolvent.
The following are the rules:
(1) A joint and several accommodation maker of a negotiable
promissory note may demand from the principal debtor
reimbursement for the amount that he paid to the payee; and
(2) a joint and several accommodation maker who pays on the
said promissory note may directly demand reimbursement from
his co-accommodation maker without first directing his action
against the principal debtor provided that (a) he made the
payment by virtue of a judicial demand, or (b) a principal debtor is
insolvent.
In this case, Sadaya's payment to BPI "was made voluntarily and
without any judicial demand," and that "there is an absolute absence of
evidence showing that Varona is insolvent". Hence, Sadaya cannot claim
from Sevillas estate.
ErnesitaCrisologo - Jose (petitioner) vs CA and Ricardo Santos, VP for
Salses of Mover Enterprises(respondents)
177 SCRA 594 || Section 29
Ponente: Regalado. J
FACTS:
ISSUE:
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
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
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.
HELD:
findings insofar as the merits of Criminal Case and the liability of the
accused therein are concerned.
Affirmed the CA decision.
Section 29 of the Negotiable Instruments Law which holds an
accommodation party liable on the instrument to a holder for value,
although such holder at the time of taking the instrument knew him to be
only an accommodation party, does not include nor apply to corporations
which are accommodation parties. This is because the issue or
indorsement of negotiable paper by a corporation without consideration
and for the accommodation of another is ultra vires. Hence, one who has
taken the instrument with knowledge of the accommodation nature
thereof cannot recover against a corporation where it is only an
accommodation party. If the form of the instrument, or the nature of the
transaction, is such as to charge the indorsee with knowledge that the
issue or indorsement of the instrument by the corporation is for the
accommodation of another, he cannot recover against the corporation
thereon.
By way of exception, an officer or agent of a corporation shall have
the power to execute or indorse a negotiable paper in the name of the
corporation for the accommodation of a third person only if specifically
authorized to do so. Corollarily, corporate officers, such as the president
and vice-president, have no power to execute for mere accommodation a
negotiable instrument of the corporation for their individual debts or
transactions arising from or in relation to matters in which the
corporation has no legitimate concern. Since such accommodation paper
cannot thus be enforced against the corporation, especially since it is not
involved in any aspect of the corporate business or operations, the
inescapable conclusion in law and in logic is that the signatories thereof
shall be personally liable therefor, as well as the consequences arising
from their acts in connection therewith. The fact that for lack of capacity
the corporation is not bound by an accommodation paper does not
thereby absolve, but should render personally liable, the signatories of
said instrument where the facts show that the accommodation involved
was for their personal account, undertaking or purpose and the creditor
was aware thereof.
Stelco Marketing v. CA
210 SCRA 51 || Accomodation Party
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
16 |C a b u c h a n . N e g o C a s e D i g e s t s
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
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
"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
17 |C a b u c h a n . N e g o C a s e D i g e s t s
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
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
evidence of indebtedness of private respondent. The appellate court
erred in considering only the statements of account in determining
whether private respondent was indebted to petitioner under the checks.
It failed to give due importance to the most telling piece of evidence of
private respondents indebtedness --- the checks. The Court stressed that
a check which is regular on its face is deemed prima facie to have
been issued for a valuable consideration and every person whose
signature appears thereon is deemed to have become a party thereto
for value -- Sec. 24 of NIL. And the mere introduction of the instrument
sued on in evidence prima facie entitles the plaintiff to recovery.
While the Negotiable Instruments Law does refer to accommodation
transactions, no such transaction was here shown.
Sec. 29. Liability of 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.
Having issued or indorsed the check, the accommodating party has
warranted to the holder in due course that he will pay the same according
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
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
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
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
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
wherein cash. The check was Jose Go's property when it was misplaced or
stolen hence he stopped its payment. At the outset, respondent bank knew
it was Jose Go's check and no one else since Go had not paid or indorsed it
to anyone. The bank was therefore liable to nobody on the check but Jose
Go. The bank had no intention to issue it to petitioner but only to buyer
Jose Go. When payment on it was therefore stopped, respondent bank was
not the one who did it but Jose Go, the owner of the check. Respondent
bank could not be drawer and drawee for clearly, Jose Go owns the money
it represents and he is therefore the drawer and the drawee in the same
manner as if he has a current account and he issued a check against it; and
from the moment said cashier's check was lost and or stolen no one
outside of Jose Go can be termed a holder in due course because Jose Go
had not indorsed it in due course. The check in question suffers from the
infirmity of not having been properly negotiated and for value by
respondent Jose Go who as already been said is the real owner of said
instrument.
Liability of the General Indorser
METROPOL v. SAMBOK MOTORS COMPANY
G.R. No. L-39641 | LIABILITY OF THE GENERAL INDORSER
FACTS:
One Dr. Javier Villaruel executed a promissory note in the amount of P15,
939.00 in favor of Ng Sambok Sons Motors Co, LTD. It was agreed that it
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
qualification. A person who indorses without qualification engages that on
due presentment, the note shall be accepted or paid, or both as the case
maybe, and that if it be dishonored, he will pay the amount thereof to the
holder. The words added by Sambok do not limit his liability, but rather
confirm his obligation as general indorser.
Maralit v. Imperial
301 SCRA 605 (1999) || Liability of General Indorser
FACTS:
Petitioner Ester B. Maralit filed three complaints for estafa through
falsification of commercial documents through reckless imprudence
against respondent Jesusa Corazon L. Imperial. Maralit alleged that she
was assistant manager of the Naga City branch of the Philippine National
Bank (PNB); that on May 20, 1992, June 1, 1992, and July 1, 1992
Imperial separately deposited in her savings account at the PNB three
United States treasury warrants and on the same days respectively
withdrew their peso equivalent; and that the treasury warrants were
20 |C a b u c h a n . N e g o C a s e D i g e s t s
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
subsequently returned one after the other by the United States Treasury,
through the Makati branch of the Citibank, on the ground that the
amounts thereof had been altered. Maralit claimed that, as a consequence,
she was held personally liable by the PNB for the total amount
of P320,287.30.
Imperial claimed that she merely helped a relative encash the
treasury warrants; that she deposited the same in her savings account and
then withdrew their peso equivalent with the approval of Maralit; that she
gave the money to her relative; that she did not know that the amounts on
the treasury warrants had been altered nor did she represent to petitioner
that the treasury warrants were genuine; and that upon being informed of
the dishonor of the warrants she immediately contacted her relative and
signed an acknowledgment of debt promising to pay the total amount of
the treasury warrants.
After preliminary investigation, the City Prosecutor of Naga City filed
three informations against Imperial in the Trial Court who acquitted her
from criminal liability but found her civilly liable as indorser of the checks
which is the subject matter of the criminal action. Accordingly, the sheriff
served a notice of garnishment on the PNB. Later, she moved to quash the
writ of execution on the ground that the judgment did not order the
accused to pay a specific amount of money to a particular person as it
merely adjudicated the criminal aspect but not the civil aspect. Imperial
then filed a petition for certiorari and prohibition in the Regional Trial
Court who held that the MTC decision did not really find Imperial civilly
liable because in fact it was Maralit who was found responsible for making
the defraudation possible.
ISSUE:
Yes. The RTC was REVERSED. The decision of the MTC was an
adjudication of both the criminal and civil liability of Imperial inasmuch as
it does not appear that Maralit instituted a separate civil action or
reserved or waived the right to bring such action.
The Court symphatizes with the complainant that there was indeed
damage and loss, but said loss is chargeable to the Imperial who upon her
indorsements warrant that the instrument is genuine in all respect what it
purports to be and that she will pay the amount thereof in case of
dishonor. (Sec. 66 Negotiable Instrument Law)
21 |C a b u c h a n . N e g o C a s e D i g e s t s
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
Mr. Ariel Reyes, manager of BPI, instructed one of its employees, Benjamin
D. Napiza IV, who is Napiza's son, to inform his father that the check
bounced.
Reyes himself sent a telegram to Napiza regarding the dishonor of the
check
Napiza's son told Reyes that:
check been assigned "for encashment" to Ramon A. de Guzman and/or
Agnes C. de Guzman after it shall have been cleared upon instruction of
Chan
his father immediately tried to contact Chan but Chan was out of town
Napiza's son undertook to return the amount of $2,500.00 to BPI
August 12, 1986: BPI filed a complaint against Napiza for the return of
$2,500.00 or the prevailing peso equivalent plus legal interest, attorney's
fees, and litigation and/or costs of suit
Napiza:
admitting that he indeed signed a "blank" withdrawal slip with the
understanding that the amount deposited would be withdrawn only after
the check in question has been cleared.
However, without his knowledge, it was withdrawn through collusion
with one of BPI's employees.
BPI aslo filed a motion for admission of a third party complaint against
Chan. He alleged that "thru strategem and/or manipulation," Chan was
able to withdraw the amount of $2,500.00 even without Napiza's
passbook.
Lower Court dismissed the complaint.
Having admitted that it committed a "mistake" in not waiting for the
clearance of the check before authorizing the withdrawal of its value or
proceeds, BPI should suffer the resultant loss.
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
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.
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
23 |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
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
check representing thereduced amount of P150,000.00. Said check
was given to Mr. Rivera, a representative of the bank However,since
Dr. Gueco refused to sign the joint motion to dismiss, he was made
to execute a statement to the effectthat he was withholding the
payment of the check. Subsequently, in a letter addressed to Ms.
Desi Tomas, vicepresident of the bank, dated 4 September 1995, Dr.
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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Agapay.Albarillo.Ambito.Arevalo.Baguilat.Bunag.Cabrera.Claveria.Escalona.Fernando.Ferrer.Flores.Hernando.Hipolito.Lara.Melgar.Mella.Nasam.Nunez.Retardo.Rodriguez.Soriano.Tamayao.Ubaldo
check is one drawn by the bank's manager upon the bank itself. It is
similar to a cashier's checkboth as to effect and use. A cashier's
check is a check of the bank's cashier on his own or another check.
Ineffect, it is a bill of exchange drawn by the cashier of a bank upon
the bank itself, and accepted in advance bythe act of its issuance. It
is really the bank's own check and may be treated as a promissory
note with the bankas a maker. The check becomes the primary
obligation of the bank which issues it and constitutes its
writtenpromise to pay upon demand. The mere issuance of it is
considered an acceptance thereof. If treated aspromissory note, the
drawer would be the maker and in which case the holder need not
prove presentment forpayment or present the bill to the drawee for
acceptance. Even assuming that presentment is needed, failure
topresent for payment within a reasonable time will result to the
discharge of the drawer only to the extent ofthe loss caused by the
delay. Failure to present on time, thus, does not totally wipe out all
liability. In fact, thelegal situation amounts to an acknowledgment
of liability in the sum stated in the check. In this case, theGueco
spouses have not alleged, much less shown that they or the bank
which issued the manager's check hassuffered damage or loss
caused by the delay or non-presentment. Definitely, the original
obligation to paycertainly has not been erased. It has been held that,
if the check had become stale, it becomes imperative thatthe
circumstances that caused its non-presentment be determined.
Herein, the bank held on the check andrefused to encash the same
because of the controversy surrounding the signing of the joint
motion to dismiss. The Court saw no bad faith or negligence in this
position taken by the Bank.
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.
25 |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
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
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
across its face or across a corner thereof. It may be crossed generally or
specially.
A check is crossed specially when the name of a particular banker or a
company is written between the parallel lines drawn. It is crossed
generally when only the words "and company" are written or nothing is
written at all between the parallel lines. It may be issued so that
presentment can be made only by a bank. Veritably the Negotiable
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
The court held that Citytrust should not be held liable. A check is a bill of
exchange drawn on a bank payable on demand. Thus, a check is a written
order addressed to a bank or persons carrying on the business of banking,
by a party having money in their hands, requesting them to pay on
presentment, to a person named therein or to bearer or order, a named
sum of money. Where the bank possesses funds of a depositor, it is bound
to honor his checks to the extent of the amount of his deposits. The failure
of a bank to pay the check of a merchant or a trader, when the deposit is
sufficient, entitles the drawer to substantial damages without any proof of
actual damages. Conversely, a bank is not liable for its refusal to pay a
check on account of insufficient funds, notwithstanding the fact that a
deposit may be made later in the day. Before a bank depositor may
maintain a suit to recover a specific amount from his bank, he must first
show that he had on deposit sufficient funds to meet his demand.
Petitioner had no reason to complain, for they alone were at fault. A
drawer must remember his responsibilities every time he issues a check.
He must personally keep track of his available balance in the bank and not
rely on the bank to notify him of the necessity to fund certain check she
previously issued. A check, as distinguished from an ordinary bill of
exchange, is supposed to be drawn against a previous deposit of funds for
it is ordinarily intended for immediately payment. Legally, the bank had
all the right to dishonor the checks because there were no sufficient funds
to speak of in the first place. If the demand is by check, a drawer must
have to his credit enough to cover the demand. If his credit with the bank
is less than the amount on the face of the check, the bank may lawfully
refuse payment.
Ramon Tan v. CA & Rizal Commercial Banking
GR No. 108555 (December 20, 1994) || Section 189
FACTS:
Petitioner Ramon Tan had maintained an account with respondent banks
Binondo branch. He secured a Cashiers Check from the Philippine
Commercial Industrial Bank payable to his order. He deposited the check
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
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
29 |C a b u c h a n . N e g o C a s e D i g e s t s