Nego Conso Digests

G.R. No.
16454/ 42 Phil 182

September 29, 1921
FACTS:
Plaintiff- appellee George A. Kauffman, was the president of
Philippine Fiber and Produce Company. He was entitled to the sum of
P98,000 out of the dividend of P100,000 from the companys surplus
earnings for the year 1917.
On October 9, 1918, George B. Wicks, treasurer of said company,

requested from PNB-Manila that a telegraphic transfer of $45,000.00 be
made to Kauffman in New York City, upon the account of the Philippine Fiber
and Produce Company. Wicks then drew and delivered a check for the
amount of P90,355.50 on PNB-Manila which was accepted by the officer
selling the exchange in payment of the transfer in question.
However, the payment to Kauffman was withheld by the PNBManila upon the suggestion of PNB-New York, in view of his reluctance to
accept certain bills of the Philippine Fiber and Produce Company. Hence,
when Kauffman went to PNB-New York City to get the money, payment to
him was refused.
Moreover, at the time of the transaction above-mentioned, the
Philippines Fiber and Produce Company did not have on deposit in the
Philippine National Bank money adequate to pay the check for P90,355.50
even though the company have credit to that extent and the check in
question was charged as an overdraft against the Philippine Fiber and
Produce Company and has remained on the books of the bank as an
interest-bearing item in the account of said company.
ISSUE:
WON Negotiable Instruments Law is applicable in the case.
RULING:
Page
GEORGE A. KAUFFMAN, plaintiff-appellee,

vs.
THE PHILIPPINE NATIONAL BANK, defendant-appellant.
NEGO CONSOLIDATED DIGESTED CASES

Atty Reyes
For the Negotiable Instruments Law can come into operation, there
must be a document in existence of the character described in section 1 of
said Law and no rights arise in respect to said instrument until it is delivered.
In this case, there was an order transmitted by the defendant bank
to its New York branch, for the payment of a specified sum of money to
plaintiff Kauffman. But this order was not made payable "to order or "to
bearer," as required in subsection (d), Sec. 1 of the Negotiable Instruments
Law; and inasmuch as it never left the possession of the bank, or its
representative in New York City, there was no delivery in the sense intended
in section 16 of the same Law. With this, the official receipt delivered by the
bank to the purchaser of the telegraphic order cannot itself be viewed in the
light of a negotiable instrument, although it affords complete proof of the
obligation actually assumed by the bank.
GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,

vs.
COURT OF APPEALS and MR. & MRS. ISABELO R.
RACHO, respondents.
G.R. No. L-40824/ 170 SCRA 533
February 23, 1989
FACTS:
Private respondents, Mr. and Mrs. Racho, with the spouses Mr. and
Mrs Flaviano Lagasca, executed 2 deed of mortgage on a parcel of land in
Quezon City co-owned by said mortgagor spouses in favor of petitioner
GSIS to secure 2 loans granted by the latter. They also executed a
promissory note which states in part:
... for value received, we the undersigned ... JOINTLY, SEVERALLY
and SOLIDARILY, promise to pay the GOVERNMENT SERVICE
INSURANCE SYSTEM the sum of . . . (P 11,500.00) Philippine Currency,
with interest at the rate of six (6%) per centum compounded monthly
payable in . . . (120)equal monthly installments of . . . (P 127.65) each.
Upon failure of the mortgagors to comply with the conditions of the

mortgage on the payment of the amortizations due, GSIS extrajudicially
foreclosed the mortgage and caused the mortgaged property to be sold at
public auction. On August 23, 1965, private respondents filed a complaint
against the petitioner and the Lagasca spouses in the former Court of First
Instance of Quezon City, praying for the declaration of the extrajudicial
foreclosure made on their property be declared null and void arguing that
they did not benefited the loans from the GSIS.
ISSUE:
WON Negotiable Instruments Law is applicable.
RULING:
No. The promissory note as well as the mortgage deeds subject of
this case are clearly not negotiable instruments. These documents do not
comply with the fourth requisite to be considered as such under Section 1 of
Act No. 2031 because they are neither payable to order nor to bearer. The
note is payable to a specified party, the GSIS. Absent the aforesaid requisite,
the provisions of Act No. 2031 would not apply; governance shall be
afforded, instead, by the provisions of the Civil Code and special laws on
mortgages.
NORBERTO TIBAJIA, JR. and CARMEN TIBAJIA, petitioners,

vs.
THE HONORABLE COURT OF APPEALS and EDEN TAN, respondents.
Page
On July 11, 1961, the Lagasca spouses executed an instrument

"Assumption of Mortgage" under which they obligated themselves to assume
the aforesaid obligation to the GSIS and to secure the release of the
mortgage covering that portion of the land belonging to herein private
respondents. This undertaking was not fulfilled.

Atty Reyes
G.R. No. 100290/ 223 SCRA 163
June 4, 1993
FACTS:
Private respondent Tan filed a suit for collection of a sum of money
against petitioners, spouses Tibajia. The RTC of Pasig, Metro Manila favored
Tan. When the decision became final, Eden Tan filed a motion for execution
and thereafter, the garnished funds which by then were on deposit with the
cashier of the RTC of Pasig, Metro Manila, were levied upon.
On 14 December 1990, the Tibajia spouses delivered to Deputy
Sheriff the total money judgment in BPI Cashier's Check with the amount of
P262,750.00 and a cash of 135,733.70. However, private respondent, Eden
Tan, refused to accept the payment made by the Tibajia spouses and
insisted that the garnished funds deposited with the cashier of the RTC of
Pasig be withdrawn to satisfy the judgment obligation. Thereafter, petitioners
filed a motion to lift the writ of execution on the ground that the judgment
debt had already been paid. The motion was denied by the trial court and
was dismissed by the appellate court holding that payment by cashier's
check is not payment in legal tender as required by Republic Act No. 529.
ISSUE:
WON the payment by cashier's check is payment in legal tender.
RULING:
No. In the cases of Philippine Airlines, Inc. vs. Court of Appeals 4
and Roman Catholic Bishop of Malolos, Inc. vs. Intermediate Appellate
Court, the Supreme Court ruled that a check, whether a manager's check or
ordinary check, is not legal tender, and an offer of a check in payment of a
debt is not a valid tender of payment and may be refused receipt by the
obligee or creditor.
Moreover, Article 1249 of the Civil Code provides that the payment
of debts in money shall be made in the currency stipulated, and if it is not
possible to deliver such currency, then in the currency which is legal tender
Also, Section 1 of Republic Act No. 529, as amended, provides

that, every provision contained in, or made with respect to, any obligation
which purports to give the obligee the right to require payment in gold or in
any particular kind of coin or currency other than Philippine currency or in an
amount of money of the Philippines measured thereby, shall be as it is
hereby declared against public policy null and void, and of no effect, and no
such provision shall be contained in, or made with respect to, any obligation
thereafter incurred. Every obligation heretofore and hereafter incurred,
whether or not any such provision as to payment is contained therein or
made with respect thereto, shall be discharged upon payment in any coin or
currency which at the time of payment is legal tender for public and private
debts.
Likewise, Section 63 of Republic Act No. 265, as amended (Central
Bank Act) provides that, checks representing deposit money do not have
legal tender power and their acceptance in the payment of debts, both public
and private, is at the option of the creditor: Provided, however, that a check
which has been cleared and credited to the account of the creditor shall be
equivalent to a delivery to the creditor of cash in an amount equal to the
amount credited to his account.
Page
in the Philippines. The delivery of promissory notes payable to order, or bills

of exchange or other mercantile documents shall produce the effect of
payment only when they have been cashed, or when through the fault of the
creditor they have been impaired. In the meantime, the action derived from
the original obligation shall be held in abeyance.

Atty Reyes
January 30, 1990
FACTS:
Private respondent Amelia Tan, under the name and style of Able
Printing Press commenced a complaint for damages before the Court of
First Instance of Manila against PAL. The trial court favoured private
respondent Tan. When the judgment became final, the trial court issued an
order of execution, upon motion by private respondent. Four months later,
private respondent Tan moved for the issuance of an alias writ of execution
stating that the judgment rendered by the trial court remained unsatisfied.
On March 1, 1978, the petitioner filed an opposition to the motion
for the issuance of an alias writ of execution stating that it had already fully
paid its obligation to plaintiff as evidenced by cash vouchers properly signed
and receipted by the deputy sheriff Emilio Z. Reyes. However, said Deputy
Sheriff Reyes had absconded or disappeared.
On April 19, 1978, private respondent Tan filed another motion for
Alias Writ of Execution which was granted by the trial court of Manila.
Subsequently, petitioner filed an urgent motion to quash the alias writ of
execution stating that no return of the writ had as yet been made by Deputy
Sheriff Reyes and that the judgment debt had already been fully satisfied by
the petitioner.
ISSUE:
WON the checks issued to the absconding sheriff is deemed as payment as
to extinguish the judgment debt.
PHILIPPINE AIRLINES, INC., petitioner,
vs.
HON. COURT OF APPEALS, HON. JUDGE RICARDO D. GALANO, Court
of First Instance of Manila, Branch XIII, JAIME K. DEL ROSARIO,
Deputy Sheriff, Court of First Instance, Manila, and AMELIA TAN,
respondents.
G.R. No. L-49188
RULING:
No. The checks issued by petitioner to the absconding sheriff did
not extinguish the judgment debt because they are neither cash nor a legal
tender. In the absence of an agreement, either express or implied, payment
means the discharge of a debt or obligation in money and unless the parties
so agree, a debtor has no rights, except at his own peril, to substitute
something in lieu of cash as medium of payment of his debt. Consequently,
unless authorized to do so by law or by consent of the obligee a public
Since a negotiable instrument is only a substitute for money and

not money, the delivery of such an instrument does not, by itself, operate as
a discharge of the judgment debt. A check, whether a manager's check or
ordinary check, is not legal tender, and an offer of a check in payment of a
debt is not a valid tender of payment and may be refused receipt by the
obligee or creditor. Mere delivery of checks does not discharge the obligation
under a judgment. The obligation is not extinguished and remains
suspended until the payment by commercial document is actually realized.
Page
officer has no authority to accept anything other than money in payment of

an obligation under a judgment being executed. The acceptance by the
sheriff of the petitioner's checks, in the case at bar, does not, per se, operate
as a discharge of the judgment debt.

Atty Reyes
Petitioner then issued a demand letter to private respondent
Pilipinas Bank, but the note was never released nor any instrument related
thereto. Petitioner also made a written demand upon private respondent
Delta as maker for the partial satisfaction of DMC PN No. 2731, explaining
that Philfinance, as payee thereof, had assigned to him said Note. Delta,
however, denied any liability to petitioner on the promissory note.
As petitioner had failed to collect his investment and interest
thereon, he filed an action for damages with the RTC against private
respondents Delta and Pilipinas. The complaint was dismissed and was
affirmed by the CA on appeal.
ISSUE:
WON a non-negotiable promissory note be assigned.
RAUL SESBREO, petitioner,
vs.
HON. COURT OF APPEALS, DELTA MOTORS CORPORATION AND
PILIPINAS BANK, respondents.
G.R. No. 89252/ 222 SCRA 466
May 24, 1993
FACTS:
Petitioner Raul Sesbreo made a money market placement in the
amount of P300,000.00 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. Upon its maturity, petitioner sought to encash the postdated checks
but they were dishonored for having insufficient funds.
RULING:
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 where the negotiable instrument is in
bearer form. A negotiable instrument may, however, instead of being
negotiated, also be assigned or transferred. The legal consequences of
negotiation as distinguished from assignment of a negotiable instrument are,
of course, different. A non-negotiable instrument may, obviously, not be
negotiated; but it may be assigned or transferred, absent an express
prohibition against assignment or transfer written in the face of the
instrument.
In this case, while the promissory note was marked "nonnegotiable," it was not at the same time stamped "non-transferable" or "nonassignable." Hence, there is no stipulation which prohibited the promissory
notes assigning or transferring, in whole or in part.
METROPOLITAN BANK & TRUST COMPANY, petitioner,
vs.
COURT OF APPEALS, GOLDEN SAVINGS & LOAN ASSOCIATION, INC.,
LUCIA CASTILLO, MAGNO CASTILLO and GLORIA
CASTILLO, respondents.
Page
G.R. No. 88866/ 194 SCRA 169

February 18, 1991

Atty Reyes
of the warrants but merely to deposit them with Metrobank for clearing. It
was in fact Metrobank that made the guarantee when it stamped on the back
of the warrants: "All prior indorsement and/or lack of endorsements
guaranteed, Metropolitan Bank & Trust Co., Calapan Branch."
FACTS:
Eduardo Gomez opened an account with Golden Savings and
deposited 38 treasury warrants with a total value of P1, 755,228.37. All
these warrants were indorsed by the cashier of Golden Savings, and
deposited it to its savings account in Metrobank branch in Calapan,
Mindoro. They were then sent for clearing by the branch office to the
principal office of Metrobank, which forwarded them to the Bureau of
Treasury for special clearing.
"Exasperated" over Gloria Castillos repeated inquiries on whether
the warrants have been cleared and also as an accommodation for a
"valued client, the branch manager allowed the withdrawal of the warrants,
only to find out later on that the treasury warrants have been
dishonoured by the Bureau of Treasury. Metrobank demanded the refund by
Golden Savings of the amount it had previously withdrawn. The demand was
rejected.
CALTEX (PHILIPPINES), INC., petitioner,

vs.
COURT OF APPEALS and SECURITY BANK AND TRUST
COMPANY, respondents.
G.R. No. 97753/ 212 SCRA 448
August 10, 1992
FACTS:
Private respondent, a commercial banking institution issued 280
certificates of time deposit (CTDs) in favor of Angel dela Cruz who deposited
an aggregate amount of P1,120,000.00. Angel dela Cruz delivered the said
CTDs to petitioner, Caltex, in connection with his purchased of fuel products.
ISSUE:
WON the treasury warrants are negotiable instruments.
HELD:
The treasury warrants were not negotiable instruments. Clearly
stamped on their face is the word "non-negotiable and this is of equal
significance, it is indicated that they are payable from a particular fund, to
wit, Fund 501. This indication as the source of the payment to be made on
the treasury warrants makes the order or promise to pay "not unconditional"
and the warrants themselves non-negotiable.
Metrobank cannot contend that by indorsing the warrants in
general, Golden Savings assumed that they were "genuine and in all
respects what they purport to be," in accordance with Section 66 of the
Negotiable Instruments Law. The simple reason is that this law is not
applicable to the non-negotiable treasury warrants. The indorsement was
made by Gloria Castillo not for the purpose of guaranteeing the genuineness
On March 1982, Angel dela Cruz informed the Sucat Branch

Manger of private respondent that he lost all the certificates of time deposit.
Subsequently, Angel dela Cruz executed and delivered to private respondent
the required Affidavit of Loss for the replacement of the 280 CTDs.
On November 1982, the Credit Manager of petitioner went to
petitioner's Sucat branch and presented the CTDs declared lost by Angel
dela Cruz alleging that the same were delivered to petitioner as security for
purchases made to it. However, private respondent bank rejected the
petitioner's demand and claim for payment of the value of the CTDs. In view
of the foregoing, petitioner filed a complaint against private respondent bank.
The trial court and the CA dismissed the case.
ISSUE:
WON the certificates of time deposit (CTDs) are negotiable.

Atty Reyes
The CTDs in question are negotiable instruments. Section 1 Act No.

2031, otherwise known as the Negotiable Instruments Law, enumerates the
requisites for an instrument to become negotiable, viz:
Page
RULING:
BANCO DE ORO SAVINGS AND MORTGAGE BANK, petitioner,

vs.
EQUITABLE BANKING CORPORATION, PHILIPPINE CLEARING HOUSE
CORPORATION, AND REGIONAL TRIAL COURT OF QUEZON CITY,
BRANCH XCII (92), respondents.
(a) It must be in writing and signed by the maker or

drawer;
G.R. No. 74917/ 157 SCRA 188

January 20, 1988
(b) Must contain an unconditional promise or order to pay

a sum certain in money;
FACTS:
(c) Must be payable on demand, or at a fixed or

determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he
must be named or otherwise indicated therein with
reasonable certainty.
The CTDs in question undoubtedly meet the requirements of the
law for negotiability. The documents provide that the amounts deposited
shall be repayable to the depositor. And according to the document, it is the
bearer who is the depositor. The documents do not say that the depositor
is Angel de la Cruz and that the amounts deposited are repayable
specifically to him. Rather, the amounts are to be repayable to the bearer of
the documents or, for that matter, whosoever may be the bearer at the time
of presentment.
If it was really the intention of respondent bank to pay the amount
to Angel de la Cruz only, it could have with facility so expressed that fact in
clear and categorical terms in the documents, instead of having the word
"BEARER" stamped on the space provided for the name of the depositor in
each CTD. On the wordings of the documents, therefore, the amounts
deposited are repayable to whoever may be the bearer thereof.
On 1983, private respondent bank through its Visa Card

Department, drew six crossed Manager's check having an aggregate
amount of P45, 982.23 payable to certain member establishments of Visa
Card. The Checks were deposited with the petitioner. Following normal
procedures, and after stamping at the back of the Checks the usual
endorsements. All prior and/or lack of endorsement guaranteed the
petitioner sent the checks for clearing through the Philippine Clearing House
Corporation (PCHC).
Thereafter, private respondent bank discovered that the
endorsements appearing at the back of the Checks and purporting to be that
of the payees were forged or otherwise belong to persons other than the
payees. Pursuant to the PCHC Clearing Rules and Regulations, private
respondent bank presented the Checks directly to the petitioner for the
purpose of claiming reimbursement from the latter. However, petitioner
refused to accept such direct presentation and to reimburse private
respondent for the value of the Checks.
The dispute was presented for Arbitration. The Arbitrator and the
Board of Directors of the PCHC favored the plaintiff. A petition for review
was filed with the Regional Trial Court but to no avail. Petitioner now assails
the negotiability of the said checks and PCHCs jurisdiction to hear cases
with regard to non-negotiable checks.
ISSUE:
WON the disputed checks are negotiable.
The disputed checks are considered as negotiable. Petitioner is

estopped from raising the defence of non-negotiability of the checks in
question. It stamped its guarantee on the back of the checks and
subsequently presented these checks for clearing and it was on the basis of
these endorsements by the petitioner that the proceeds were credited in its
clearing account.
Page
RULING:

Atty Reyes
THE PHILIPPINE BANK OF COMMERCE, plaintiff-appellee,
vs.
JOSE M. ARUEGO, defendant-appellant.
G.R. Nos. L-25836-37/ 102 SCRA 530
January 31, 1981
FACTS:
The petitioner by its own acts and representation cannot now deny
liability because it assumed the liabilities of an endorser by stamping its
guarantee at the back of the checks.
The petitioner having stamped its guarantee of "all prior
endorsements and/or lack of endorsements" is now estopped from claiming
that the checks under consideration are not negotiable instruments. The
checks were accepted for deposit by the petitioner stamping thereon its
guarantee, in order that it can clear the said checks with the respondent
bank. By such deliberate and positive attitude of the petitioner it has for all
legal intents and purposes treated the said cheeks as negotiable instruments
and accordingly assumed the warranty of the endorser when it stamped its
guarantee of prior endorsements at the back of the checks. It led the said
respondent to believe that it was acting as endorser of the checks and on
the strength of this guarantee said respondent cleared the checks in
question and credited the account of the petitioner. Petitioner is now barred
from taking an opposite posture by claiming that the disputed checks are not
negotiable instrument.
Although the subject checks are non-negotiable the responsibility of
petitioner as indorser thereof remains. To countenance a repudiation by the
petitioner of its obligation would be contrary to equity and would deal a
negative blow to the whole banking system of this country.
Plaintiff instituted an action against defendant for the recovery of

the total sum of money plus interests and attorneys fees. The complaint filed
by the Philippine Bank of Commerce contains twenty-two (22) causes of
action referring to twenty-two (22) transactions entered into by the said Bank
and Aruego on different dates. 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 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 printer, 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.
ISSUES:
WON the drafts Aruego signed were bills of exchange.
RULING:
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
Moreover, Section 20 of the Negotiable Instruments Law provides

that Where the instrument contains or a person adds to his signature words
indicating that he signs for or on behalf of a principal or in a representative
capacity, he is not liable on the instrument if he was duly authorized; but the
mere addition of words describing him as an agent or as filing a
representative character, without disclosing his principal, does not exempt
him from personal liability.
An inspection of the drafts accepted by the defendant shows that

nowhere has he disclosed that he was signing as a representative of the
Philippine Education Foundation Company. He merely signed as follows:
JOSE ARUEGO (Acceptor) (SGD) JOSE ARGUEGO For failure to disclose
his principal, Aruego is personally liable for the drafts he accepted.
Secondly, an accommodation party is one who has signed the
instrument as maker, drawer, indorser, without receiving value therefor and
for the purpose of lending his name to some other person. Such person is
liable on the instrument to a holder for value, notwithstanding such holder, at
the time of the taking of the instrument knew him to be only an
accommodation party. In lending his name to the accommodated party, the
accommodation party is in effect a surety for the latter. He lends his name to
enable the accommodated party to obtain credit or to raise money. He
receives no part of the consideration for the instrument but assumes liability
to the other parties thereto because he wants to accommodate another. In
the instant case, the defendant signed as a drawee/acceptor. Under the
Negotiable Instrument Law, a drawee is primarily liable. Thus, if the
defendant who is a lawyer, he should not have signed as an
acceptor/drawee. In doing so, he became primarily and personally liable for
the drafts.
(METROPOLITAN CASE AGAIN)
Page
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.

Atty Reyes
IN THE MATTER OF THE INTESTATE ESTATE OF JUSTO PALANCA,
Deceased, GEORGE PAY, petitioner-appellant,
vs.
SEGUNDINA CHUA VDA. DE PALANCA, oppositor-appellee.
G.R. No. L-29900/ 57 SCRA 618
June 28, 1974
FACTS:
On January 30, 1952, the late Justo Palanca and Rosa Gonzales
Vda. de Carlos Palanca executed a promissory note to pay George Pay the
amount of P26,900.00, with interest upon receipt by either of the
undersigned of cash payment from the Estate of the late Don Carlos
Palanca or upon demand. August 26, 1967, petitioner George Pay prayed
for relief in court on his right under the promissory note.
ISSUE:
WON a creditor is barred by prescription to collect on a promissory note
executed more than fifteen years.
RULING:
Yes. The ten-year period of limitation of actions did apply, the note
being immediately due and demandable, the creditor admitting expressly
that he was relying on the wording "upon demand." Article 1179 of the Civil
Code provides: "Every obligation whose performance does not depend upon
a future or uncertain event, or upon a past event unknown to the parties, is
demandable at once."
ANG TEK LIAN, petitioner,

vs.
THE COURT OF APPEALS, respondent.
FACTS:
Knowing he had no funds therefor, Ang Tek Lian drew a check upon
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. 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. For
having issued a rubber check, Ang Tek Lian was convicted of estafa.
ISSUE:
WON an instrument payable to the order of cash is a bearer instrument.
RULING:
Yes. Under the Negotiable Instruments Law, 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 bearer is authority for payment to holder. Where
a check is in the ordinary form, and is payable to bearer, so that no
indorsement is required, a bank, to which it is presented for payment, need
not have the holder identified, and is not negligent in falling to do so. If the
bank has no reasonable cause for suspecting any irregularity, it will be
protected in paying a bearer check, "no matter what facts unknown to it may
have occurred prior to the presentment."
Page
G.R. No. L-2516/ 87 Phil 383

September 25, 1950

Atty Reyes
G.R. No. 111190/ 245 SCRA 374
June 27, 1995
FACTS:
Private respondent Raul H. Sesbreo obtained a favorable
judgement before the RTC of Cebu wherein the court ordered Assistant City
Fiscals Bienvenido N. Mabanto, Jr., and Dario D. Rama, Jr. to pay P11,
000.00. The judgment being final, the court ordered its execution.
On February 4, 1992, a notice of garnishment was served on
petitioner Loreto D. de la Victoria as City Fiscal of Mandaue City where
Mabanto, Jr., was then detailed. On January 19, 1993 petitioner moved to
quash the notice of garnishment claiming that he was not in possession of
any money, funds, credit, property or anything of value belonging to
Mabanto, Jr., except his salary and RATA checks, but said checks were not
yet properties of Mabanto, Jr., until delivered to him. He further claimed that,
as such, they were still public funds which could not be subject to
garnishment.
The trial court denied the motion and ordered petitioner to
immediately comply with its February 4, 1992 order. It opined that the
checks of Mabanto, Jr., had already been released through petitioner by the
Department of Justice duly signed by the officer concerned. Upon service of
the writ of garnishment, petitioner as custodian of the checks was under
obligation to hold them for the judgment creditor. The motion for
reconsideration was denied.
ISSUE:
LORETO D. DE LA VICTORIA, as City Fiscal of Mandaue City and in his
personal capacity as garnishee, petitioner,
vs.
HON. JOSE P. BURGOS, Presiding Judge, RTC, Br. XVII, Cebu City, and
RAUL H. SESBREO, respondents.
WON the salary checks not delivered to Mabanto, Jr., still formed part of
public funds and beyond the reach of garnishment proceedings.
RULING:
Yes. Under Sec. 16 of the Negotiable Instruments Law, every
contract on a negotiable instrument is incomplete and revocable until
delivery of the instrument for the purpose of giving effect thereto. As
As Assistant City Fiscal, the source of the salary of Mabanto, Jr., is

public funds. He receives his compensation in the form of checks from the
Department of Justice through petitioner as City Fiscal of Mandaue City and
head of office. Inasmuch as said checks had not yet been delivered to
Mabanto, Jr., they did not belong to him and still had the character of public
funds. Being public fund, the checks may not be garnished to satisfy the
judgment. The rationale behind this doctrine is obvious consideration of
public policy.
JUAN CASABUENA, petitioner,
vs.
HON. COURT OF APPEALS and SPOUSES CIRIACO URDANETA AND
OFELIA IPIL URDANETA, respondents.
G.R. No. 115410/ 286 SCRA 594
February 27, 1998
FACTS:
Private respondent Ciriaco Urdaneta is one of the grantees of a parcel

of land by the City of Manila through its land reform program. Being in debt
to Arsenia Benin, he ceded his rights over the land through a deed of
assignment to secure the debt.
The parties verbally agreed that Urdaneta could redeem the property
upon payment of the loan within three (3) years from the date of assignment
and that failure to pay would transfer physical possession of the lot to Benin
for a period of 15 years, without actual transfer of title and ownership
thereto.
The administration of the property was further assigned to Candido and
Juan Casabuena, to whom Benin had transferred her right, title and interest.
From 1973 to 1976, Juan Casabuena was Benins rental collector. However,
Page
ordinarily understood, delivery means the transfer of the possession of the

instrument by the maker or drawer with intent to transfer title to the payee
and recognize him as the holder thereof.
10

Atty Reyes
their relationship soured which compelled the latter to name as administrator
Angel Tanjuakio, who filed a complaint for ejectment against petitioner.
Finding that the receipts issued by Tanjuakio were insufficient to
prove his ownership over the property, the complaint was dismissed.
Upon learning of the litigation between petitioner and Benin, Urdaneta
asked them to vacate the property and surrender to him possession thereof.
The Urdaneta spouses and Benin then entered into an agreement whereby
the latter would surrender the property with the duplex constructed
thereon. On November 3, 1987, they filed a complaint for recovery of
possession of the property with damages against petitioner and Thelma
Casabuena, representing the heirs of Candido Casabuena. Urdaneta
spouses was declared by the court as its true and lawful owners with the
deed of assignment to Benin merely serving as evidence of Ciriacos
indebtedness to her in view of the prohibition against the sale of the land
imposed by the City government.
Petitioner now assails that the assignment by Benin was made in her
capacity as creditor of the spouses, thus allowing her to transfer ownership
of the property to her assignees.
ISSUE:
WON a deed of assignment transfer ownership of the property to the
assignee.
RULING:
No. An assignment of credit is an agreement by virtue of which the
owner of a credit, known as the assignor, by a legal cause, transfers his
credit and its accessory rights to another, known as the assignee, who
acquires the power to enforce it to the same extent as the assignor could
have enforced it against the debtor. Stated simply, it is the process of
transferring the right of the assignor to the assignee, who would then be
allowed to proceed against the debtor. The assignment involves no transfer
of ownership but merely affects the transfer of rights which the assignor has
at the time, to the assignee.
(SESBRENO CASE AGAIN)
CONSOLIDATED PLYWOOD INDUSTRIES, INC., HENRY WEE, and

RODOLFO T. VERGARA, petitioners,
vs.
IFC LEASING AND ACCEPTANCE CORPORATION, respondent.
Page
The act of assignment could not have operated to efface liens or

restrictions burdening the right assigned, because an assignee cannot
acquire a greater right than that pertaining to the assignor. At most, an
assignee can only acquire rights duplicating those which his assignor is
entitled by law to exercise. In the case at bar, the Casabuenas merely
stepped into Benins shoes, who was not so much an owner as a mere
assignee of the rights of her debtors. Not having acquired any right over the
land in question, it follows that Benin conveyed nothing to defendants with
respect to the property.
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Atty Reyes
means of a deed of assignment, assigned its rights and interest in the chattel
mortgage in favor of the respondent.
Barely 14 days had elapsed after their delivery when one of the
tractors broke down and after another 9 days, the other tractor likewise
broke down. Because of the breaking down of the tractors, the road building
and simultaneous logging operations of petitioner-corporation were delayed.
Since the tractors were no longer serviceable, petitioner Wee asked the
seller-assignor to pull out the units and have them reconditioned, and
thereafter to offer them for sale. Petitioner-corporation also advised the
seller-assignor that the payments of the installments as listed in the
promissory note would be delayed until the seller-assignor completely fulfills
its obligation under its warranty. However, the seller-assignor did nothing
with regard to the request, until a complaint was filed by the respondent
against the petitioners for the recovery of the principal sum of P1,
093,789.71 with interest, attorney's fees and costs of suit. It argued that the
defense of petitioners of breach of warranty does not lie in favor of the
Corporation and against IFC Leasing who is the assignee of the promissory
note and a holder of the same in due course.
ISSUE:
G.R. No. 72593/ 149 SCRA 448
WON the promissory note in question is a negotiable instrument.

RULING:
April 30, 1987

FACTS:
Petitioner is a corporation engaged in the logging business in
Davao Oriental. It contracted with Industrial Products Marketing (the "sellerassignor"), a corporation dealing in tractors and other heavy equipment
business and agreed to purchase on instalment 2 units of "Used" Allis
Crawler Tractors with warranty of 90 days performance of the machines and
availability of parts.
On April 5, 1978, simultaneously with the execution of the deed of
sale with chattel mortgage with promissory note, the seller-assignor, by
The promissory note in question is not a negotiable instrument. The

pertinent portion of the note issued by the Corporation is as follows:
FOR VALUE RECEIVED, I/we jointly and severally promise to pay
to the INDUSTRIAL PRODUCTS MARKETING, the sum of (P1,093,789.71),
Philippine Currency, the said principal sum, to be payable in 24 monthly
installments. . .
Considering that paragraph (d), Section 1 of the Negotiable
Instruments Law requires that a promissory note must be payable to order
or bearer, it cannot be denied that the promissory note in question is not a
negotiable instrument.
There are the only two ways by which an instrument may be made
payable to order. There must always be a specified person named in the
instrument. It means that the bill or note is to be paid to the person
designated in the instrument or to any person to whom he has indorsed and
delivered the same. Without the words or order or to the order of, the
instrument is payable only to the person designated therein and is therefore
non-negotiable. Any subsequent purchaser thereof will not enjoy the
advantages of being a holder of a negotiable instrument, but will merely step
into the shoes of the person designated in the instrument and will thus be
open to all defenses available against the latter.
Therefore, considering that the subject promissory note is not a
negotiable instrument, it follows that the respondent can never be a holder in
due course but remains a mere assignee of the note in question. Thus, the
petitioner may raise against the respondent all defenses available to it as
against the seller-assignor, Industrial Products Marketing.
Page
The instrument in order to be considered negotiable must contain

the so called words of negotiability - i.e., must be payable to order or
bearer. These words serve as an expression of consent that the instrument
may be transferred. This consent is indispensable since a maker assumes
greater risk under a negotiable instrument than under a non-negotiable one.
12

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FACTS:
Private respondent Filriters is the registered owner of Central Bank
Certificate of Indebtedness (CBCI) No. D891 with a face value of
P500,000.00. Under a deed of assignment, Filriters transferred CBCI No.
D891 to Philippine Underwriters Finance Corporation (Philfinance).
Subsequently, Philfinance transferred CBCI No. D891, which was still
registered in the name of Filriters, to herein petitioner Traders Royal Bank
(TRB). The transfer was made under a repurchase agreement, granting
Philfinance the right to repurchase the instrument on or before April 27,
1981. When Philfinance failed to buy back the note on maturity date, it
executed a deed of assignment, conveying to petitioner all its right and the
title to CBCI No. D891.
Armed with the deed of assignment, petitioner then sought the
transfer and registration of CBCI No. D891 in its name before the Security
and Servicing Department of the Central Bank (CB). Central Bank, however,
refused to effect the transfer and registration in view of an adverse claim
filed by private respondent Filriters. Having no other recourse, petitioner filed
a special civil action for mandamus against the Central Bank in the Regional
Trial Court of Manila. The suit, however, failed to get a favourable judgment.
ISSUE:
WON CBCI No. D891 was not a negotiable instrument which would have
served as an expression of consent that the instrument may be transferred
by negotiation.
RULING:
TRADERS ROYAL BANK, petitioner,

vs.
COURT OF APPEALS, FILRITERS GUARANTY ASSURANCE
CORPORATION and CENTRAL BANK of the PHILIPPINES, respondents.
G.R. No. 93397/ 269 SCRA 16
March 3, 1997
The CBCI is not a negotiable instrument. The instrument

provides for a promise to pay the registered owner Filriters. Very clearly, the
instrument was only payable to Filriters. It lacked the words of
negotiability which should have served as an expression of the consent
that the instrument may be transferred by negotiation.
The language of negotiability which characterize a negotiable
paper as a credit instrument is its freedom to circulate as a substitute
for money. Hence, freedom of negotiability is the touchstone relating to the
protection of holders in due course, and the freedom of negotiability is the
foundation for the protection, which the law throws around a holder in
due course. This freedom in
negotiability is
totally
absent in a
Thus, the transfer of the instrument from Philfinance to TRB was

merely an assignment, and is not governed by the negotiable instruments
law.
Page
certificate of indebtedness as it merely acknowledges to pay a sum of

money to a specified person or entity for a period of time.
13

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The trial court held both accused guilty of estafa and violation of
B.P. Blg. 22. On appeal, the Court of Appeals acquitted accused-appellants
of estafa on the ground that indeed the checks were not made in payment of
an obligation contracted at the time of their issuance. However it affirmed the
finding of the trial court that they were guilty of having violated B.P. Blg. 22.
ISSUE:
Moreover, the transfer of the CBCI from Filriters to Philfinance and
subsequently from Philfinance to TRB, did not conform to Sec. 3, Art. V of
Central Bank Circular No. 769, otherwise known as the "Rules and
Regulations Governing Central Bank Certificates of Indebtedness" which
provides that any assignment of registered certificates shall not be valid
unless made . . . by the registered owner thereof in person or by his
representative duly authorized in writing.
MANUEL LIM and ROSITA LIM, petitioners,

vs.
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.
G.R. No. 107898/ 251 SCRA 409
December 19, 1995
FACTS:
Petitioner spouses Manuel and Rosita Lim are the president and
treasurer, respectively, of Rigi Bilt Industries, Inc. (RIGI). The Lims ordered
several pieces of mild steel plates and "Z" purlins from LINTON and said
materials were delivered at their place of business in Kalookan City. The
Lims issued 7 postdated SOLIDBANK Checks as payment which were
received by the collector of LINTON.
However, when those 7 checks were deposited with the Rizal
Commercial Banking Corporation they were dishonored for "insufficiency of
funds" with the additional notation "payment stopped" stamped thereon.
Despite demand petitioners refused to make good the checks or pay the
value of the deliveries. Hence, they were charged before the Regional Trial
Court of Malabon with 3 counts of estafa and 7 counts of violation of B.P. 22.
WON the negotiation takes place in Kalookan City and not in Malabon to
support petitioners claim that the trial court of Malabon exceeded its
jurisdiction in trying and deciding the case.
RULING:
The negotiation takes place in Malabon. Under Sec. 191 of the
Negotiable Instruments Law the term "issue" means the first delivery of the
instrument complete in form to a person who takes it as a holder. The term
"holder" refers to the payee or indorsee of a bill or note who is in possession
of it or the bearer thereof. The SC cited People v. Yabut in explaining that
the place where the bills were written, signed, or dated does not necessarily
fix or determine the place where they were executed. What is of decisive
importance is the delivery thereof. The delivery of the instrument is the final
act essential to its consummation as an obligation. An undelivered bill or
note is inoperative. Until delivery, the contract is revocable. And the issuance
as well as the delivery of the check must be to a person who takes it as
a holder, which means "the payee or indorsee of a bill or note, who is in
possession of it, or the bearer thereof." Delivery of the check signifies
transfer of possession, whether actual or constructive, from one person to
another with intent to transfer title thereto.
Although LINTON sent a collector who received the checks from
petitioners at their place of business in Kalookan City, they were actually
issued and delivered to LINTON at its place of business in Balut, Navotas.
The receipt of the checks by the collector of LINTON is not the issuance and
delivery to the payee in contemplation of law. The collector was not the
person who could take the checks as a holder, i.e., as a payee or indorsee
thereof, with the intent to transfer title thereto. Neither could the collector be
deemed an agent of LINTON with respect to the checks because he was a
mere employee. There was no special fiduciary relationship that permeated
their dealings. For a contract of agency to exist, the consent of both parties
is essential. The principal consents that the other party, the agent, shall act
Page
on his behalf, and the agent consents so as to act. It must exist as a fact.
The law makes no presumption thereof. The person alleging it has the
burden of proof to show, not only the fact of its existence, but also its nature
and extent.
14

Atty Reyes
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 petitioner Bank and bore no indorsement of the
latter.
ISSUE:
(DELA VICTORIA CASE AGAIN)
WON DBP has a cause of action against any or all of the defendants, in the
alternative or otherwise.
DEVELOPMENT BANK OF RIZAL, plaintiff-petitioner,
vs.
SIMA WEI and/or LEE KIAN HUAT, MARY CHENG UY, SAMSON TUNG,
ASIAN INDUSTRIAL PLASTIC CORPORATION and PRODUCERS BANK
OF THE PHILIPPINES, defendants-respondents.
G.R. No. 85419/ 217 SCRA 743

March 9, 1993
FACTS:
For a loan extended by petitioner Bank to respondent Sima Wei
executed and delivered to the former a promissory note in the amount of P1,
820,000.00. Sima Wei made partial payments on the note and subsequently
issued 2 crossed checks payable to petitioner Bank drawn against China
Banking Corporation for the balance.
However, said checks were not delivered to the petitioner-payee or
to any of its authorized representatives. For reasons not shown, these
checks came into the possession of respondent Lee Kian Huat, who
deposited the checks without the petitioner-payee's indorsement to the
account of respondent Plastic Corporation at Producers Bank. Cheng Uy,
Branch Manager of the Balintawak branch of Producers Bank, relying on the
assurance of respondent Samson Tung, President of Plastic Corporation,
that the transaction was legal and regular, instructed the cashier of
RULING:
The normal parties to a check are the drawer, the payee and the
drawee bank. Section 16 of the Negotiable Instruments Law, which governs
checks, provides in part: every contract on a negotiable instrument is
incomplete and revocable until delivery of the instrument for the purpose of
giving effect thereto.
Thus, the payee of a negotiable instrument acquires no interest
with respect thereto until its delivery to him. Delivery of an instrument means
transfer of possession, actual or constructive, from one person to
another. Without the initial delivery of the instrument from the drawer to the
payee, there can be no liability on the instrument. Moreover, such delivery
must be intended to give effect to the instrument.
The allegations of the petitioner show that the two (2) China Bank
checks were not delivered to the payee, the petitioner herein. Without the
delivery of said checks to petitioner-payee, the former did not acquire any
right or interest therein and cannot therefore assert any cause of
action, founded on said checks, whether against the drawer Sima Wei or
against the Producers Bank or any of the other respondents. However, the
drawer Sima Wei is not freed from liability to petitioner Bank under the loan
evidenced by the promissory note agreed to by her. Her allegation that she
has paid the balance of her loan with the two checks payable to petitioner
Bank has no merit because these checks were never delivered to petitioner
Bank.
G.R. No. L-2861/ 68 Phil 178

February 26, 1951
FACTS:
Check No. 1382 with an amount of P100, 000 was issued by
Ubaldo D. Laya in his capacity as Provincial Treasurer of Misamis Oriental
as drawer on Philippine National Bank as drawee. Said check was
countersigned by the provincial auditor.
Laya delivered P400, 000 in emergency notes and said check to
Mariano V. Ramos as disbursing officer of the United States Armed Forces in
the Far East (USAFFE). Ramos, in his personal capacity, then sold P30,000
of the check to Enrique P. Montinola for P90,000 Japanese military notes, of
which only P45,000 was paid by Montinola. The writing made by Ramos at
the back of the check was an instruction to the bank to pay P30, 000 to
Montinola and to deposit the balance to his (Ramos) credit. This writing,
however, was obliterated and in its place made Laya in issuing the check as
acting in his capacity as "Agent, Phil. National Bank and hence making the
drawee, the drawer.
Page
ENRIQUE P. MONTINOLA, plaintiff-appellant,

vs.
THE PHILIPPINE NATIONAL BANK, ET AL., defendants-appellees.
15

Atty Reyes
holder who has taken the instrument under certain conditions, one of which
is that he became the holder before it was overdue. When Montinola
received the check, it was long overdue. Also, Montinola is not even a holder
because a holder is the payee or indorsee of a bill or note and Montinola is
not a payee.
As a mere assignee Montinola is subject to all the defenses
available against assignor Ramos. However, Ramos had he retained the
check may not collect its value because it had been issued to him as
disbursing officer of the USAFFE. Therefore, he had no right to indorse it
personally to plaintiff. It was negotiated in breach of trust, hence he
transferred nothing to the plaintiff.
(ANG TEK LIAN CASE AGAIN)
METROPOL (BACOLOD) FINANCING & INVESTMENT

CORPORATION, plaintiff-appellee,
vs.
SAMBOK MOTORS COMPANY and NG SAMBOK SONS MOTORS CO.,
LTD., defendants-appellants.
ISSUE:
WON the instrument was legally negotiated.
RULING:
The check was not legally negotiated. Section 32 of the NIL
provides that "the indorsement must be an indorsement of the entire
instrument. An indorsement which purports to transfer to the indorsee a part
only of the amount payable, does not operate as a negotiation of the
instrument."
Montinola may not be regarded as an indorsee. At most he may be
regarded as a mere assignee of the P30,000 sold to him by Ramos, in which
case, he is subject to all defenses available to the drawer Provincial
Treasurer of Misamis Oriental and against Ramos. Neither can Montinola be
considered as a holder in due course because a holder in due course is a
G.R. No. L-39641/ 120 SCRA 864

February 28, 1983
FACTS:
On April 15, 1969 Dr. Javier Villaruel executed a promissory note in
favor of Ng Sambok Sons Motors Co., Ltd., in the amount of P15, 939.00
payable in 12 equal monthly installments, beginning May 18, 1969, with
interest of 1% per month. It is further provided that in case on non-payment
of any of the installments, the remaining unpaid balance shall become due
and payable with an additional interest equal to 25% of the total amount due.
Dr. Villaruel defaulted in the payment of his installments when they

became due. He also failed to pay as demanded, hence plaintiff Metropol
notified Sambok as indorsee of said note of the fact that the same has been
dishonored and demanded payment. Sambok also failed to pay which led
plaintiff to file a complaint for collection of a sum of money. During the
pendency of the case in the trial court, defendant Dr. Villaruel died. Thus, the
tiral court ordered Sambok Motors Company to pay the plaintiff.
Page
On the same date, Sambok Motors Company, sister company of Ng Sambok

Sons Motors Co., Ltd., negotiated and indorsed the note in favor of plaintiff
Metropol Financing & Investment Corporation.
16

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the holder. Appellant Sambok's intention of indorsing the note without
qualification is made even more apparent by the fact that the notice of
demand, dishonor, protest and presentment were all waived. The words
added by said appellant do not limit his liability, but rather confirm his
obligation as a general indorser.
Lastly, after an instrument is dishonored by non-payment, the
person secondarily liable thereon ceases to be such and becomes a
principal debtor. His liabiliy becomes the same as that of the original
obligor. Consequently, the holder need not even proceed against the maker
before suing the indorser.
ISSUE:
WON Sambok Motors Company is a qualified indorser of the subject
promissory.
RULING:
No. A qualified indorsement constitutes the indorser a mere
assignor of the title to the instrument. It may be made by adding to the
indorser's signature the words "without recourse" or any words of similar
import. Such an 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 in Section 65 of the Negotiable
Instruments Law. However, appellant 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. Appellant, 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 Dr. Villaruel fails to pay the note, plaintiff-appellee can go after said
appellant. The effect of such indorsement is that the note was indorsed
without qualification. A person who indorses without qualification engages
that on due presentment, the note shall be accepted or paid, or both as the
case may be, and that if it be dishonored, he will pay the amount thereof to
NATIVIDAD GEMPESAW, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and PHILIPPINE BANK OF
COMMUNICATIONS, respondents.
G.R. No. 92244/ 218 SCRA 628
February 9, 1993
FACTS:
Petitioner Natividad O. Gempesaw owns and operates four grocery
stores in Caloocan City. To facilitate payment of debts to her suppliers,
petitioner draws checks against her checking account with the respondent
Philippine Bank of Communications as drawee. As a customary practice, the
checks were prepared and filled up by her trusted bookkeeper, Alicia
Galang, and submitted to the petitioner for her signature, with the
corresponding invoice receipts which indicate the correct obligations due
and payable to her suppliers. Petitioner signed each and every check
without verifying the accuracy of the checks against the corresponding
invoices.
For a period of two years, petitioner issued 82 checks in favor of
several suppliers. These checks were all presented by the indorsees to
respondent drawee Bank which debited the amounts thereof against
On November 7, 1984, petitioner made a written demand on

respondent drawee Bank to credit her account with the money value of the
82 checks totalling P1,208.606.89 for having been wrongfully charged
against her account. Respondent drawee Bank refused to grant petitioner's
demand.
ISSUES:
1
2
WON drawee bank can charge the drawer's account for the amount
of said checks.
WON the banking rules which prohibit the drawee bank from having
checks with more than one indorsement invalidates the instrument.
RULING:
Yes. 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 negligence which causes the bank to honor such a check or checks.
The negligence of a depositor which will prevent recovery of an unauthorized
payment is based on failure of the depositor to act as a prudent
businessman would under the circumstances. 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. Thus, petitioner's 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.
No. The banking rule banning acceptance of checks for deposit or cash
payment with more than one indorsement unless cleared by some bank
officials does not invalidate the instrument; neither does it invalidate the
Page
petitioner's checking account. Most of the checks were for amounts in

excess of her actual obligations to the various payees.
17

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negotiation or transfer of the said check. In effect, this rule destroys the
negotiability of bills/checks by limiting their negotiation by indorsement of
only the payee. Under the NIL, the only kind of indorsement which stops the
further negotiation of an instrument is a restrictive indorsement which
prohibits the further negotiation thereof.
In this kind of restrictive indorsement, the prohibition to transfer or

negotiate must be written in express words at the back of the instrument, so
that any subsequent party may be forewarned that ceases to be negotiable.
However, the restrictive indorsee acquires the right to receive payment and
bring any action thereon as any indorser, but he can no longer transfer his
rights as such indorsee where the form of the indorsement does not
authorize him to do so.
Although the holder of a check cannot compel a drawee bank to honor it
because there is no privity between them, as far as the drawer-depositor is
concerned, such bank may not legally refuse to honor a negotiable bill of
exchange or a check drawn against it with more than one indorsement if
there is nothing irregular with the bill or check and the drawer has sufficient
funds. The drawee cannot be compelled to accept or pay the check by the
drawer or any holder because as a drawee, he incurs no liability on the
check unless he accepts it. But the drawee will make itself liable to a suit for
damages at the instance of the drawer for wrongful dishonor of the bill or
check.
BIBIANO V. BAAS, JR., petitioner,

vs.
COURT OF APPEALS, AQUILINO T. LARIN, RODOLFO TUAZON AND
PROCOPIO TALON, respondents.
G.R. No. 102967/325 SCRA 259
February 10, 2000
FACTS:
In his 1976 Income Tax Return, petitioner reported the P461, 754
initial payment as income from disposition of capital asset. In the succeeding
years, until 1979, petitioner reported a uniform income of P230,877.00 as
gain from sale of capital asset. After an examination by the tax examiners,
Rodolfo Tuazon and Procopio Talon, on April 11, 1978, they recommended a
deficiency of tax assessment for P2,473,673.00.
On June 27, 1980, respondent Larin sent a letter to petitioner
informing of the income tax deficiency that must be settled but petitioner
insisted that the sale of his land to AYALA was on installment. This led Larin
to file a criminal complaint for tax evasion against the petitioner.
ISSUE:
WON the proceeds of the discounted note should have been reported
as taxable income during 1976 and not deferred on instalments.
HELD:
Yes. As a general rule, the whole profit accruing from a sale
of property is taxable as income in the year the sale is made. But, if not all of
the sale price is received during such year, and a statute provides
that income shall be taxable in the year in which it is received, the profit from
an installment sale is to be apportioned between or among the years in
which the installments are paid and received. However, the proceeds from
the disposition or discounting of receivable, though not considered in
computing for initial payments under Sec. 43 and Sec. 175 of the Tax
Code, it is still taxable in the year it was converted to cash. Non-dealer
sales of property may be reported as income under the installment
method provided that the obligation is still outstanding at the close of the
year. Where an installment obligation is discounted at a bank or finance
company, a taxable disposition results. Clearly, the indebtedness of the
buyer is discharged, while the seller acquires money for the settlement of his
receivables. Logically then, the income should be reported at the time of the
actual gain.
Page
On February 20, 1976, petitioner Bibiano V. Baas Jr. sold to Ayala

Investment Corporation 128,265 square meters of land in Muntinlupa for
P2,308,770.00. AYALA issued one promissory note covering four equal
annual installments. On the same day, petitioner discounted the promissory
note with AYALA. AYALA then issued 9 checks to petitioner, all dated
February 20, 1976 with uniform amount of P205, 224.00.
18

Atty Reyes
CHAN WAN, plaintiff-appellant,

vs.
TAN KIM and CHEN SO, defendants-appellees.
G.R. No. L-15380

September 30, 1960
FACTS:
Eleven checks totalling P4,290.00 payable to "cash or bearer" drawn
by defendant Tan Kim upon the Equitable Banking Corporation, were all
presented for payment by Chan Wan to the drawee bank, but were all
dishonored due to insufficiency of funds.
Tan Kim declared without contradiction that the checks had been
issued to Pinong and Muy for some shoes the former had promised to make
and were intended as mere receipts. In view of such circumstance, the court
declined to order payment for reasons that: (a) plaintiff failed to prove that he
was a holder in due course, and (b) the checks being crossed checks should
not have been deposited with the bank mentioned in the crossing.
ISSUE:
WON Chan Wan, a mere holder, may recover on the check.
RULING:
Yes. The Negotiable Instruments Law does not provide that a
holder who is not a holder in due course, may not in any case, recover on
the instrument. If B purchases an overdue negotiable promissory note
signed by A, he is not a holder in due course; but he may recover from A, if
the latter has no valid excuse for refusing payment. The only disadvantage
Atrium Management Corporation, petitioner, vs.

Court of Appeals, e.t. Henry and Co., Lourdes Victoria M. de Leon,
Rafael de Leon, Jr., and Hi-Cement Corporation, respondents.
Page
of holder who is not a holder in due course is that the negotiable instrument
is subject to defense as if it were non- negotiable.
19

Atty Reyes
G.R. No. 109491.

February 28, 2001
LOURDES M. DE LEON, petitioner, vs.
COURT OF APPEALS, ATRIUM MANAGEMENT CORPORATION, AND HICEMENT CORPORATION,respondents.
G.R. No. 121794.
February 28, 2001
The trial court ordered Lourdes M. de Leon, her husband Rafael de

Leon, E.T. Henry and Co., Inc. and Hi-Cement Corporation to pay petitioner
Atrium, jointly and severally. However, the CA absolved Hi-Cement
Corporation from liability and dismissed the complaint as against it. It ruled
that: (1) Lourdes M. de Leon was not authorized to issue the subject checks
in favor of E.T. Henry, Inc. and such issuance constituted ultra vires acts;
and (2) The subject checks were not issued for valuable consideration.
WON Atrium Management Corporation is a holder in due course.
RULING:
1. No. An ultra vires act is one committed outside the object for which a
corporation is created as defined by the law of its organization and therefore
beyond the power conferred upon it by law. The term ultra viresis
distinguished from an illegal act for the former is merely voidable which may
be enforced by performance, ratification, or estoppel, while the latter is void
and cannot be validated.
Lourdes M. de Leon is the treasurer of the corporation and is
authorized to sign checks for the corporation. At the time of the issuance of
the checks, there were sufficient funds in the bank to cover payment of the
amount of P2 million pesos. With this in consideration, the act of issuing the
checks was well within the ambit of a valid corporate act, for it was for
securing a loan to finance the activities of the corporation, hence, not an
ultra vires act.
FACTS:
Hi-Cement Corporation through its corporate signatories, Lourdes M.
de Leon, treasurer, and the late Antonio de las Alas, Chairman issued
checks, to extend financial assistance, in favor of E.T. Henry and Co. Inc., as
payee. E.T. Henry and Co., Inc., in turn, endorsed the four checks to
petitioner Atrium Management Corporation for valuable consideration. Upon
presentment for payment, the drawee bank dishonored all four checks for
reason payment stopped. Atrium, thus, instituted an action for collection of
the proceeds of four post-dated checks with a total amount of P2 million.
No. Atrium was not a holder in due course. Atrium has taken the checks with
notice that they were crossed checks and specifically indorsed for deposit to
payees account only, E.T. Henry. Clearly, then, Atrium could not be
considered a holder in due course.
Considering that Atrium was not a holder in due course for having taken
the instruments in question with notice that the same was for deposit only to
the account of E.T. Henry, it was not altogether precluded from recovering
on the instrument. The Negotiable Instruments Law does not provide that a
holder not in due course can not recover on the instrument.
The disadvantage of Atrium in not being a holder in due course is that
the negotiable instrument is subject to defenses as if it were non-negotiable.
One such defense is absence or failure of consideration.
ISSUE:
1
WON Lourdes M. de Leons issuance constitutes an ultra vires act.
MARCELO A. MESINA, petitioner,

vs.
G.R. No. 70145

November 13, 1986
FACTS:
Jose Go purchased from Associated Bank a Cashier's Check for
P800,000.00. Unfortunately, he 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 Albert Uy, a bank official. Uy proceeded to the
men's room and when he returned to his desk, his visitor Alexander Lim was
already gone. The cashier's check was also nowhere to be found.
Albert Uy advised Jose Go to accomplish a "stop payment" order.
Associated Bank then received the lost check for clearing from Prudential
Bank, Escolta Branch. The check had been dishonored twice by sending it
back to Prudential Bank, with the words "Payment Stopped" stamped on it.
Several days later, Associated Bank received a letter, from Atty. Lorenzo
Navarro demanding payment on the cashier's check in question, which was
being held by his client Marcelo A. Mesina.
Page
THE HONORABLE INTERMEDIATE APPELLATE COURT, HON.

ARSENIO M. GONONG, in his capacity as Judge of Regional Trial Court
Manila (Branch VIII), JOSE GO, and ALBERT UY, respondents.
20

Atty Reyes
had no intention to issue it to Mesina 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.
(kulang ng EQUITABLE BANKING V SPECIAL STEEL GR 175350 June

13 2012)
VICENTE R. DE OCAMPO & CO., plaintiff-appellee,

vs.
ANITA GATCHALIAN, ET AL., defendants-appellants.
G.R. No. L-15126
November 30, 1961
FACTS:
ISSUE:
WON petitioner can collect on the stolen check on the ground that he is a
holder in due course.
RULING:
No. A person who became the holder of a cashier's check as
endorsed by the person who stole it and who refused to say how and why it
was passed to him is not a holder in due course. He had therefore notice of
the defect of his title over the check from the start.
The holder of a cashier's check who is not a holder in due course
cannot enforce such check against the issuing bank which dishonors the
same. The bank was liable to nobody on the check but Jose Go. The bank
Manuel Gonzales represented himself as an authorized agent of

Ocampo Clinic to sell a car. Anita Gatchalian, who is interested in buying it,
issued a crossed check amounting to P600 as evidence of her good faith
in the intention to purchase said car. Without knowledge of the above
transaction, Vicente de Ocampo received from Gonzales the subject
check for the payment of the hospitalization of his wife.
For failure of Gonzales to appear on the agreed day to bring the car
and its certificate of registration as well as the return of the check,
Gatchalian issued a "Stop Payment Order" on the check, with the drawee
bank.
ISSUE:
RULING:
No. The Negotiable Instruments Law provides that every holder is
deemed prima facie to be a holder in due course. Said law further provides
that a holder in due course is one who takes the instrument in good faith and
for value and that in order that one may be a holder in due course it is
necessary that at the time the instrument was negotiated to him he had no
notice of any defect in the title of the person negotiating it.
In the case at bar the rule that a possessor of the instrument
is prima facie a holder in due course does not apply because there was a
defect in the title of the holder, Manuel Gonzales, because the instrument is
not payable to him or to bearer. The check had two parallel lines in the upper
left hand corner, which practice means that the check could only be
deposited but may not be converted into cash. As holder's title was defective
or suspicious, it cannot be stated that the payee acquired the check without
knowledge of said defect in holder's 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. And having presented no evidence that it acquired the check
in good faith, it (payee) cannot be considered as a holder in due course.
Page
WON Vicente de Ocampo is a holder in due course.
21

Atty Reyes
respondent Fernando David and dollar drafts. The difference of P26,000.00
in the exchange would be their profit to be divided equally between them.
However, Chandiramani did not appear at the rendezvous and the
messenger of Albert Liong, yangs business associate, lost the two cashiers
checks and the dollar draft bought by Yang. It transpired, however, that the
checks and the dollar draft were not lost, for Chandiramani was able to get
hold of said instruments, without delivering the exchange consideration
consisting of the PCIB managers check and the dollar draft.
Yang then requested FEBTC and Equitable to stop payment on the
instruments she believed to be lost. Both banks complied with her request,
but upon the representation of PCIB, FEBTC subsequently lifted the stop
payment order on FEBTC Dollar Draft enabling the holder of PCIB FCDU
Account to receive the amount of US$200,000.00. Thus, Yang lodged a
Complaint for injunction and damages against Equitable, Chandiramani, and
David.
ISSUE:
WON Fernando David is a holder in due course?
CELY YANG, petitioner, vs.
HON.
COURT
OF
APPEALS,
PHILIPPINE
COMMERCIAL
INTERNATIONAL BANK, FAR EAST BANK & TRUST CO.,EQUITABLE
BANKING CORPORATION, PREM CHANDIRAMANI and FERNANDO
DAVID, respondents.
G.R. No. 138074

August 15, 2003
FACTS:
Cely Yang and private respondent Prem Chandiramani entered into an
agreement to exchange checks both payable to the order of private
RULING:
Yes. Yang fails to point any circumstance which should have put
David on inquiry as to the why and wherefore of the possession of
the checks by Chandiramani. David was not privy to the transaction
between petitioner and Chandiramani. Instead, Chandiramani and David had
a separate dealing in which it was precisely Chandiramanis duty to deliver
the checks to David as payee. The evidence shows that Chandiramani
performed said task to the latter. David took the step of asking the
manager of his bank to verify from FEBTC and Equitable as to the
genuineness of the checks and only accepted the same after being
assured that there was nothing wrong with said checks. At that time,
David was not aware of any "stop payment" order. Under these
circumstances, David thus had no obligation to ascertain from
Chandiramani what the nature of the latters title to the checks was, if
any, or the nature of his possession. Thus, he cannot be said to be guilty of
gross neglect amounting to legal absence of good faith, absent any
showing that there was something amiss about Chandiramanis acquisition
or possession of the checks.
BATAAN CIGAR AND CIGARETTE FACTORY, INC., petitioner,

vs.
THE COURT OF APPEALS and STATE INVESTMENT HOUSE,
INC., respondents.
G.R. No. 93048
March 3, 1994
Page
Moreover, the factual circumstances in De Ocampo and in Bataan

Cigar are not present in this case. For here, there is no dispute that
the crossed checks were delivered and duly deposited by David, the
payee named therein, in his bank account. In other words, the purpose
behind the crossing of the checks was satisfied by the payee.
22

Atty Reyes
the bank; (b) the check may be negotiated only once to one who has an
account with a bank; (c) and the act of crossing the check serves
as warning to the holder that the check has been issued for a definite
purpose so that he must inquire if he has received the check pursuant to that
purpose, otherwise, he is not a holder in due course. It is settled that
crossing of checks should put the holder on inquiry and upon him devolves
the duty to ascertain the indorser's title to the check or the nature of his
possession. Failing in this respect, the holder is declared guilty of gross
negligence amounting to legal absence of good faith, contrary to Sec. 52(c)
of the Negotiable Instruments Law.
In the present case, BCCFI's defense in stopping payment is as
good to SIHI as it is to George King since 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.
FACTS:
Petitioner Bataan Cigar & Cigarette Factory, Inc. (BCCFI) engaged
King Tim Pua George to deliver bales of tobacco leaf. It issued in
consideration thereof post dated crossed checks. However, George King
sold at a discount several of said checks , drawn by petitioner, naming
George King as payee to SIHI. Due to George Kings failure to deliver the
bales of tobacco leaf as agreed despite petitioner's demand, BCCFI issued a
stop payment order on all checks payable to George King. Efforts of SIHI to
collect from BCCFI having failed, it instituted a case naming only BCCFI as
party defendant.
ISSUE:
WON SIHI is a holder in due course.
RULING:
No. In order to preserve the credit worthiness of checks,
jurisprudence has pronounced that crossing of a check should have the
following effects: (a) the check may not be encashed but only deposited in
STELCO MARKETING CORPORATION, petitioner,

vs.
HON. COURT OF APPEALS and STEELWELD CORPORATION OF THE
PHILIPPINES, INC., respondent.
G.R. No. 96160
June 17, 1992
FACTS:
Stelco Marketing Corporation sold and delivered to RYL
Construction, Inc. quantities of steels bars of various sizes and rolls of G.I.
wire. Although the corresponding invoices issued by STELCO stipulated that
RYL 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.
ISSUE:
WON STELCO ever became a holder in due course.
RULING:
No. There is no evidence whatsoever that the check was ever given
to it, or indorsed to it in any manner or form in payment of an obligation or as
security for an obligation, or for any other purpose before it was presented
for payment.
STELCO cannot even be deemed a holder of the check for value. It
does not meet two of the essential requisites prescribed by the statute. It did
not become "the holder of it before it was overdue, and without notice that it
had been previously dishonored," and it did not take the check "in good faith
and for value." Neither is there any evidence whatever that Armstrong
Industries, to whom R.Y. Lim negotiated the check, accepted the instrument
and attempted to encash it in behalf, and as agent of STELCO. On the
contrary, the indications are that Armstrong was really the intended payee of
the check and was the party actually injured by its dishonour.
(kulang ng GO v METROPOLITAN BANK GR 168842 Aug 11 2010)
JUANITA SALAS, petitioner,

vs.
HON. COURT OF APPEALS and FIRST FINANCE & LEASING
CORPORATION, respondents.
G.R. No. 76788
Page
Steelweld Corporation of the Philippines issued a company check

in favour of RYL for accommodation. RYL subsequently gave to Armstrong,
Industries described by STELCO as its "sister corporation" and
"manufacturing arm" a check drawn against Metrobank. When the latter
deposited the check at its bank, it was dishonored because "drawn against
insufficient funds." When so deposited, the check bore two endorsements,
that of "RYL Construction followed by that of "Armstrong Industries."
23

Atty Reyes
January 22, 1990
FACTS:
Juanita Salas bought a motor vehicle from the Violago Motor Sales
Corporation for P58, 138.20 as evidenced by a promissory note. This note
was subsequently endorsed to Filinvest Finance & Leasing Corporation
which financed the purchase. However, Salas defaulted in her installments
due to a discrepancy in the engine and chassis numbers of the vehicle
delivered to her and those indicated in the sales invoice, certificate of
registration and deed of chattel mortgage, which fact she discovered when
the vehicle figured in an accident. This failure to pay prompted Finance &
Leasing Corporation to initiate a civil case for collection of sum of money
against Salas.
ISSUE:
WON Filinvest Finance & Leasing Corporation is a holder in due course.
RULING:
Filinvest is a holder in due course, having taken the instrument
under the following conditions: [a] it is complete and regular upon its face; [b]
it became the holder thereof before it was overdue, and without notice that it
had previously been dishonored; [c] it took the same in good faith and for
value; and [d] when it was negotiated to Filinvest, the latter had no notice of
any infirmity in the instrument or defect in the title of VMS Corporation.
Accordingly, respondent Corporation holds the instrument free from
any defect of title of prior parties, and free from defenses available to prior
parties among themselves, and may enforce payment of the instrument for
the full amount thereof. This being so, petitioner cannot set up against
respondent the defense of nullity of the contract of sale between her and
VMS.
STATE INVESTMENT HOUSE, petitioner,

vs.
G.R. No. 72764

July 13, 1989
FACTS:
Private respondent Harris Chua granted a loan to New Sikatuna
Wood Industries, Inc. wherein private respondents wife, Anita Pena Chua,
issued three crossed checks payable to New Sikatuna Wood Industries, Inc.
all postdated December 22, 1980. Subsequently, New Sikatuna Wood
Industries, Inc. entered into an agreement with petitioner State Investment
House, Inc. where under a deed of sale, the former assigned and discounted
with petitioner eleven postdated checks including the aforementioned three
postdated checks issued by private respondents wife Anita Pea Chua to
New Sikatuna Wood Industries, Inc.
However, when the three checks issued by private respondent

Anita Pena Chua were deposited by petitioner, these checks were all
dishonored. Petitioner claims that despite demands on private respondent
Anita Pea to make good said checks, the latter failed to pay the same
necessitating the former to file an action for collection against the latter and
her husband Harris Chua.
Page
INTERMEDIATE APPELLATE COURT, ANITA PEA CHUA and HARRIS

CHUA, respondents.
24

Atty Reyes
When appellee rediscounted the check knowing that it was a
crossed check he was knowingly violating the avowed intention of crossing
the check. Furthermore, his failure to inquire from the holder, New Sikatuna
Wood Industries, Inc., the purpose for which the three checks were cross
despite the warning of the crossing, prevents him from being considered in
good faith and thus he is not a holder in due course. Being not a holder in
due course, plaintiff is subject to personal defenses, such as lack of
consideration between appellants and New Sikatuna Wood Industries. Note
that under the facts the checks were postdated and issued only as a loan to
New Sikatuna Wood Industries, Inc. if and when deposits were made to back
up the checks. Such deposits were not made, hence no loan was made,
hence the three checks are without consideration.
EULALIO PRUDENCIO and ELISA T. PRUDENCIO, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, THE PHILIPPINE NATIONAL
BANK, RAMON C. CONCEPCION and MANUEL M. TAMAYO, partners of
the defunct partnership Concepcion & Tamayo Construction Company,
JOSE TORIBIO, Atty-in-Fact of Concepcion & Tamayo Construction
Company, and THE DISTRICT ENGINEER, Puerto Princesa,
Palawan, respondents.
ISSUE:
G.R. No. L-34539
WON petitioner is a holder in due course as to entitle it to proceed

against private respondents Chua for the amount stated in the dishonored
checks.
July 14, 1986
RULING:
No. The Negotiable Instruments Law regulating the issuance of
negotiable checks as well as the rights and liabilities arising therefrom, does
not mention "crossed checks". However, jurisprudence dictates the practice
that a check with two parallel lines in the upper left hand corner means that it
could only be deposited and may not be converted into cash. Consequently,
such circumstance should put the payee on inquiry and upon him devolves
the duty to ascertain the holder's title to the check or the nature of his
possession. Failing in this respect, the payee is declared guilty of gross
negligence amounting to legal absence of good faith and hence not a holder
in due course.
FACTS:
The Concepcion & Tamayo Construction Company (Company) had
a contract with the Bureau of Public Works (Bureau) for the construction of
the municipal building in Palawan. As said Company needed funds for said
construction, the Company approached appellants Eulalio and Elisa
Prudencio to mortgage their property to guaranty a P 10, 000.00 loan which
the PNB extended to the Company. Thus, a promissory note covering the
loan was signed by Jose Toribio, as attorney-in-fact of the Company, and by
the appellants. Further, Jose Toribio, executed a Deed of Assignment
assigning in favor of the PNB all payments to be made by the Bureau to the
Company for the construction of the Puerto Princesa building.
ISSUE:
WON PNB is a holder in due course.
RULING:
No. Although as a general rule, a payee may be considered a
holder in due course but such a rule cannot apply with respect to the
respondent PNB because it has not acted in good faith when it waived the
supposed payments from the Bureau of Public Works contrary to the Deed
of Assignment. The PNB knew that the promissory note which it took from
the accommodation makers was signed by the latter because of full reliance
on the Deed of Assignment, which, PNB had no intention to comply with
strictly. Worse, the third payment to the Company was approved by PNB
although the promissory note was almost a month overdue, an act which is
clearly detrimental to the petitioners. PNB being not a holder in due course,
petitioners can validly set up their personal defence of release from the real
estate mortgage against PNB.
Page
However, notwithstanding the assignment of credit the PNB

approved the Bureau's release of three payments directly to the Company
instead of paying the same to the Bank. Subsequently, the Company
abandoned the work and the Bureau rescinded the construction contract.
Thus, appellants requested the PNB to cancel their mortgage contract since
there was a change in the conditions of the contract without their knowledge.
25

Atty Reyes
FACTS:
Fernandez and Hermanos, as managers of La Compaa Martima,

ordered a tail shaft to Charles A. Fossum, as the resident agent of American
Iron Products Company, Inc. Said tail shaft is to be installed on the
ship Romulus. Thus, it was agreed that it would be in accordance with the
specifications contained in a blueprint and the shaft should be shipped from
New York. Meanwhile, the American Iron Products Company, Inc., had
drawn a time draft upon Fernandez Hermanos for the purchase price of the
shaft and payable to the PNB. In due course the draft was presented to
Fernandez Hermanos for acceptance, and was accepted by said firm
according to its tenor.
However, upon inspection of the shaft, it was found not to be in
conformity with the specifications and was incapable of use for the purpose
for which it had been intended. For this reason, Fernandez Hermanos
refused to pay the draft, and it remained for a time dishonored in the hands
of the PNB. Later the bank indorsed the draft in blank, without consideration,
and delivered it to Charles A. Fossum, who thereupon instituted an action on
the instrument against the acceptor Fernandez Hermanos, among others.
ISSUE:
WON Fossum is a holder in due course.
RULING:
(STELCO MARKETING AGAIN)
CHARLES A. FOSSUM, plaintiff-appellant,

vs.
FERNANDEZ HERMANOS, a general partnership, and JOSE F.
FERNANDEZ Y CASTRO and RAMON FERNANDEZ Y CASTRO,
members of the said partnership of FERNANDEZ
HERMANOS, defendants-appellees.
G.R. No. L-19461
March 28, 1923
No. Fossum himself is far from being a holder of this draft in due
course. He was himself a party to the contract which supplied the
consideration for the draft, albeit he there acted in a representative capacity.
Moreover, he procured the instrument to be indorsed by the bank and
delivered to him without the payment of value, after it was overdue, and with
full notice that, as between the original parties, the consideration had
completely failed. Under these circumstances recovery on this draft by
Fossum by virtue of any merit in his own position is out of the question.
It is a well-known rule of law that if the original payee of a note
unenforceable for lack of consideration repurchase the instrument after
transferring it to a holder in due course, the paper again becomes subject in
the payee's hands to the same defences to which it would have been subject
if the paper had never passed through the hands of a holder in due course.
JAI-ALAI CORPORATION OF THE PHILIPPINES, Petitioner, v.

BANK OF THE PHILIPPINE ISLAND, Respondent.
G.R. No. L-29432
August 6, 1975
FACTS:
Jai- Alai deposited several checks with BPI, all acquired from
Antonio J. Ramirez, a regular bettor at the jai-alai games and a sales agent
of the Inter-Island Gas Service, Inc., the payee of the checks. Subsequently,
Ramirez resigned and after the checks had been submitted to inter-bank
clearing, the Inter-Island Gas discovered that all the indorsement made on
the cheeks as well as the rubber stamp impression thereon reading "InterIsland Gas Service, Inc.", were forgeries. The drawers of the checks
demanded reimbursement from the drawee-banks, who in turn demanded
from BPI. 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:
Page
The same is true where the instrument is retransferred to an agent of the

payee.
26

Atty Reyes
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."
Moreover, Jai-Alai was grossly recreant in accepting the checks
in question from Ramirez. It could not have escaped the attention of the
petitioner that the payee of all the checks was a corporation the InterIsland Gas Service, Inc. Yet, jai-Alai cashed these checks to a mere
individual who was admittedly a habitue at its jai-alai games without
making any inquiry as to his authority to exchange checks belonging
to the payee-corporation. The right of an agent to indorse commercial paper
is a very responsible power and will not be lightly inferred. A
salesman with authority to collect money belonging to his principal does not
have the implied authority to indorse checks received in payment. Any
person taking checks made payable to a corporation, which can act only by
agents, does so at his peril, and must abide by the consequences if the
agent who indorses the same is without authority."
THE PHILIPPINE NATIONAL BANK, plaintiff-appellee,

vs.
BARTOLOME PICORNELL, ET AL., defendants.
BARTOLOME PICORNELL, appellant.
WON BPI had the right to debit from jai- Alais current account the value of
the checks with forged indorsements.
RULING:
Yes. BPI acted within legal bounds when it debited the Jai- Alais
account. When Jai- Alai deposited the checks with BPI, the nature of the
relationship created at that stage was one of agency, that is, the bank was to
collect from the drawees of the checks the corresponding proceeds. While it
may be argued that when BPI already collected the proceeds of the checks
when it debited the Jai- Alais account, the relationship between the parties
had become that of creditor and debtor as to preclude the bank from using
the Jai-Alais funds to make payments not authorized by the latter. In this
case, however, no creditor-debtor relationship was created between the
parties because the indorsements were forgeries. Being forgeries, they are
inoperative and the payment made by the drawee banks are inoperative
and therefore the relationship of a creditor and debtor was not created.
BPI which relied upon Jai-Alai's warranty should not be held
liable for the resulting loss. Having indorsed the checks to BPI, Jai-Alai
G.R. No. L-18751

September 26, 1922

vs.
BARTOLOME PICORNELL, ET AL., defendants.
JOAQUIN PARDO DE TAVERA, appellant.
September 26, 1922

FACTS:
Bartolome Picornell executed a bill of exchange ordering
Hyndman, Tavera & Ventura to pay PNB for the amount used to purchase
bales of tobacco and Picornells commission. The Hyndman, Tavera &
Ventura Company accepted it unconditionally, but did not pay it at its
maturity arguing that the quality of the bales of tobacco fell short of what was
expected.
ISSUE:
Page
G.R. No. L-18915
27

Atty Reyes
been advance by the plaintiff, that the draft was accepted or the
accommodation of the drawer.
As to Bartolome Picornell, he warranted, as drawer of the bill, that it
would be accepted upon proper presentment and paid in due course, and as
it was not paid, he became liable to the payment of its value to the holder
thereof, which is the plaintiff bank.
PHILIPPINE NATIONAL BANK, petitioner,

vs.
THE COURT OF APPEALS and PHILIPPINE COMMERCIAL AND
INDUSTRIAL BANK, respondents.
WON HTV is liable on the instrument despite the fact that the
quality of the bales of tobacco fell short of what was expected.
RULING:
G.R. No. L-26001
Yes. The question whether or not the tobacco was worth the value
of the bill, does not concern the PNB. Such partial want of consideration, if it
was, does not exist with respect to the bank which paid to Picornell the full
value of said bill of exchange. The bank was a holder in due course, and
was such for value full and complete. The Hyndman, Tavera & Ventura
company cannot escape liability in view of Section 28 of the Negotiable
Instruments Law which provides that, the drawee by acceptance becomes
liable to the payee or his indorsee, and also to the drawer himself. But the
drawer and acceptor are the immediate parties to the consideration, and if
the acceptance be without consideration, the drawer cannot recover of the
acceptor. The payee holds a different relation; he is a stranger to the
transaction between the drawer and the acceptor, and is, therefore, in a legal
sense a remote party. In a suit by him against the acceptor, the question as
to the consideration between the drawer and the acceptor cannot be
inquired into. The payee or holder gives value to the drawer, and if he is
ignorant of the equities between the drawer and the acceptor, he is in the
position on a bona fide indorsee. Hence, it is no defense to a suit against the
acceptor of a draft which has been discounted, and upon which money has
October 29, 1968

FACTS:
Augusto Lim deposited a check in his current account with the
PCIB branch, drawn against the PNB. Said check was forwarded, for
clearing, through the Central Bank, to the PNB, which retained said check
and paid its amount to the PCIB debiting it against the account of the GSIS
in the PNB. Subsequently, upon demand from the GSIS, the amount of the
check was re-credited to the latter's account, for the reason that the
signatures of its officers on the check were forged. Thus, the PNB
demanded from the PCIB the refund of said sum, which the PCIB refused to
do.
ISSUE:
WON prior acceptance before payment is required in the case of checks.
RULING:
ANG TIONG, plaintiff-appellee,

vs.
LORENZO TING, doing business under the name and style of PRUNES
PRESERVED MFG., and FELIPE ANG, defendants.
FELIPE ANG, defendant-appellant.
G.R. No. L-26767

February 22, 1968
FACTS:
Lorenzo Ting issued a Philippine Bank of Communications check

payable to "cash or bearer". With Felipe Ang's signature (indorsement in
blank) at the back thereof, the instrument was received by Ang Tiong who
thereafter presented it to the drawee bank for payment. The bank
dishonored it. Tiong then made written demands on both Lorenzo Ting and
Page
No. In general, "acceptance", as used in the Negotiable

Instruments Law is not required for checks, for the same are payable on
demand. Though "acceptance" and "payment" are, within the purview of said
Law, they are essentially different things for the former is "a promise to
perform an act," whereas the latter is the "actual performance"
thereof. Hence, the acceptance of a bill is the signification by the drawee of
his assent to the order of the drawer, which, in the case of checks, is the
payment, on demand, of a given sum of money. Upon the other hand, actual
payment of the amount of a check implies not only an assent to said order of
the drawer and a recognition of the drawer's obligation to pay the
aforementioned sum, but, also, a compliance with such obligation. Moreover,
Section 62 of Act No. 2031 applies in the case of a drawee who pays a bill
without having previously accepted it.
28

Atty Reyes
Felipe Ang but went unheeded. On appeal, Felipe Ang argues that he is only
an accommodation party.
ISSUE:
WON Felipe Ang is an accommodation indorser.
RULING:
No. Felipe Ang is a general indorser within the purview of Section

63 of the Negotiable Instruments Law which makes "a person placing his
signature upon an instrument otherwise than as maker, drawer or acceptor"
a general indorser, "unless he clearly indicates plaintiff appropriate words
his intention to be bound in some other capacity," which he did not do.
Moreover, Section 66 ordains that "every indorser who indorses without
qualification, warrants to all subsequent holders in due course" (a) that the
instrument is genuine and in all respects what it purports to be; (b) that he
has a good title to it; (c) that all prior parties have capacity to contract; and
(d) that the instrument is at the time of his indorsement valid and subsisting.
In addition, "he engages that on due presentment, it shall be accepted or
paid, or both, as the case may be, and that if it be dishonored, he will pay
the amount thereof to the holder."
Even on the assumption that Felipe Ang is a mere accommodation
party, as he professes to be, he is nevertheless, by the clear mandate of
section 29 of the Negotiable Instruments Law, "liable on the instrument to a
holder for value, notwithstanding that such holder at the time of taking the
instrument knew him to be only an accommodation party." This is to arrest
patent absurdity of a situation where an indorser, when sued on an
instrument by a holder in due course and for value, can escape liability on
his indorsement by the convenient expedient of interposing the defence that
he is a mere accomodation indorser.
G.R. No. L-30910

February 27, 1987
Page
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
JULIA MANIEGO, accused-appellant.
29

Atty Reyes
he clearly indicates by appropriate words his intention to be bound in some
other capacity." Such an indorser "who indorses without qualification," inter
alia "engages that on due presentment, ** (the instrument) shall be accepted
or paid, or both, as the case may be, according to its tenor, 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."
R. N. CLARK, plaintiff-appellant,
vs.
GEORGE C. SELLNER, defendant-appellee.
FACTS:
Julia Maniego, together with Milagros Pamintuan and said Lt.
Rizalino Ubay was accused of malversation by drawing worthless checks
which have no funds. Maniego was acquitted in the absence of evidence
against her but ordered to pay jointly and severally with co-accused to
the government. Maniego sought reconsideration of the judgment, praying
that she be absolved from civil liability her being a mere indorser.
G.R. No. L-16477

November 22, 1921
FACTS:
ISSUE:
WON Maniego could be absolved from civil liability.
RULING:
No. Any person criminally liable for felony is also civilly liable. But a
person's acquittal of a crime on the ground that his guilt has not been proven
beyond reasonable doubt does not bar a civil action for damages founded on
the same acts involved in the offense. Extinction of the penal action does not
carry with it extinction of the civil unless such extinction proceeds from a
declaration in a final judgment that the fact from which the civil might arise
did not exist.
Moreover, Maniego's contention that as mere indorser, she may not
be made liable on account of the dishonor of the checks indorsed by her, is
likewise untenable. Under the law, the holder or last indorsee of a negotiable
instrument has the right to "enforce payment of the instrument for the full
amount thereof against all parties liable thereon." Among the "parties liable
thereon" is an indorser of the instrument i.e., "a person placing his signature
upon an instrument otherwise than as maker, drawer, or acceptor ** unless
George Sellner, in conjunction with two other persons, signed a

note in favor of R.N. Clark saying that six months after date they jointly and
severally promise to pay to the order of R. N. Clark with interest of 10% per
annum, payable quarterly. The note matured, but its amount was not paid.
Sellner argues that he, being an accommodation party, is not liable unless
the note is negotiated, which was not done, as shown by the evidence.
ISSUE:
WON Sellner is liable.
RULING:
Yes. By putting his signature to the note, he lent his name, not to
the creditor, but to those who signed with him placing himself with respect to
the creditor in the same position and with the same liability as the said
signers. It should be noted that the phrase "without receiving value therefor,"
as used in Section 29 of the Negotiable Instruments Law, means "without
receiving value by virtue of the instrument" and not, as it apparently is
supposed to mean, "without receiving payment for lending his name."
ERNESTINA CRISOLOGO-JOSE, petitioner,

vs.
COURT OF APPEALS and RICARDO S. SANTOS, JR. in his own behalf
and as Vice-President for Sales of Mover Enterprises, Inc., respondents.
G.R. No. 80599
September 15, 1989
(UNDER ACCOMMODATION PARTY CASE)
FACTS:
Oscar Z. Benares, as president of Mover Enterprises, Inc, issued a
check drawn against Traders Royal Bank in accommodation of his clients,
the spouses Jaime and Clarita Ong. Said check was issued to Ernestina
Crisologo-Jose in consideration of the waiver or quitclaim over a certain
property which the GSIS agreed to sell to the clients of Atty. Oscar Benares,
the spouses Jaime and Clarita Ong, 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, Benares
replaced the check with another Traders Royal Bank check, in the same
amount, also payable to the defendant Jose. This replacement check was
also signed by Benares and by Santos, Jr. However, when said replacement
check was deposited, it was dishonored for insufficiency of funds.
ISSUE:
WON Ricardo S. Santos, as a co-signor, is deemed to be an accommodation
party.
RULING:
Page
Moreover, Sellner's position being a joint surety, he may, at any

time after the maturity of the note, make payment, thus subrogating himself
in the place of the creditor with the right to enforce the guaranty against the
other signers of the note for the reimbursement of what he is entitled to
recover from them.
30

Atty Reyes
Yes. To be considered an accommodation party, a person must (1)
be a party to the instrument, signing as maker, drawer, acceptor, or indorser,
(2) not receive value therefor, and (3) sign for the purpose of lending his
name for the credit of some other person. It is not a valid defense that the
accommodation party did not receive any valuable consideration when he
executed the instrument because in lending his name to the accommodated
party, the accommodation party is in effect a surety for the latter.
Moreover, an accommodation party is 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. This rule 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.
vs.
RAMON MAZA and FRANCISCO MECENAS, defendants-appellants.
November 3, 1925
FACTS:
Ramon Maza and Francisco Mecenas executed five promissory
notes on the PNB. Said notes, however, were not taken up at maturity. To
recover the amounts stated on the face of the notes with back interest, the
PNB filed a case against Maza and Mecenas. The latter interposed a
defence that the promissory notes were sent in blank to them by Enrique
Echaus with the request that they sign them and that it was Echaus who
negotiated the notes with the bank, thus the real party in interest and the
party liable for the payment of the notes.
ISSUE:
WON Maza and Mecenas are liable thereon.
RULING:
Yes. Maza and Mecenas having signed the instruments without
receiving value therefor and for the purpose of lending their names to some
other person are liable on the instruments as accommodation parties. It is
fundamental that an instrument given without consideration does not create
any obligation at law or in equity in favor of the payee. However, to fasten
liability upon an accommodation maker, it is not necessary that any
consideration should move to him. The consideration which supports the
promise of the accommodation maker is that parted with by the person
taking the note and received by the person accommodated.
Nonetheless, Maza and Mecenas is not left without recourse. When
the accommodation parties make payment to the holder of the notes, they
have the right to sue the accommodated party for reimbursement, since the
relation between them is in effect that of principal and sureties, the
accommodation parties being the sureties.
Page
G.R. No. L-24224
31

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FERNANDO MAULINI, ET AL., plaintiffs-appellees,
vs.
ANTONIO G. SERRANO, defendant-appellant.
G.R. No. L-8844
December 16, 1914
FACTS:
Antonio Serrano was a broker and that part of his business
consisted in looking up and ascertaining persons who had money to loan as
well as those who desired to borrow money and, acting as a mediary,
negotiate a loan between the two. According to his custom in transactions,
the broker obtained compensation for his services of the borrower, the
lender paying nothing therefor. The broker delivered the money personally to
the borrower, took note in his own name and immediately transferred it by
indorsement to the lender. In this case, it was done at the special request of
the indorsee and simply as a favor to him, the latter stating to the broker that
he did not wish his name to appear on the books of the borrowing company
as a lender of money and that he desired that the broker take the note in his
own name, immediately transferring to him title thereto by indorsement. This
was done, the note being at once transferred to the lender.
ISSUE:
WON Serrano is an accommodation indorser.
RULING:
No. There never was a moment when Serrano was the real owner
of the note. It was always the note of the indorsee, Maulini, he having
furnished the money which was the consideration for the note directly to the
maker and being the only person who had the slightest interest therein,
Serrano, the broker, acting solely as an agent, a vehicle by which the naked
title to the note passed fro the borrower to the lender. The only payment that
the broker received was for his services in negotiating the loan. He was paid
absolutely nothing for becoming responsible as an indorser on the paper, nor
did the indorsee lose, pay or forego anything, or alter his position thereby.
An accommodation note is one to which the accommodation party
has put his name, without consideration, for the purpose of accommodating
some other party who is to use it and is expected to pay it. The credit given
to the accommodation party is sufficient consideration to bind the
accommodation maker. However, where an indorsement is made as a favor
(PEOPLE V MANIEGO AGAIN)

THE PHILIPPINE BANK OF COMMERCE, plaintiff-appellee,
vs.
JOSE M. ARUEGO, defendant-appellant.
Page
to the indorsee, who requests it, not the better to secure payment, but to
relieve himself from a distasteful situation, and where the only consideration
for such indorsement passes from the indorser to the indorsee, the situation
does not present one creating an accommodation indorsement, nor one
where there is a consideration sufficient to sustain an action on the
indorsement.
32

Atty Reyes
RULING:
Yes. Section 20 of the Negotiable Instruments Law provides that
where the instrument contains or a person adds to his signature words
indicating that he signs for or on behalf of a principal or in a representative
capacity, he is not liable on the instrument if he was duly authorized; but the
mere addition of words describing him as an agent or as filing a
representative character, without disclosing his principal, does not exempt
him from personal liability. An inspection of the drafts accepted by the
defendant shows that nowhere has he disclosed that he was signing as
representative of the Philippine Education Foundation Company. Hence,
for failure to disclose his principal, Aruego is personally liable for the drafts
he accepted.
ATRIUM MANAGEMENT CORPORATION, petitioner, vs.
G.R. Nos. L-25836-37
January 31, 1981
COURT OF APPEALS, E.T. HENRY AND CO., LOURDES VICTORIA M.

DE
LEON,
RAFAEL
DE
LEON,
JR.,
AND
HI-CEMENT
FACTS:
To facilitate the payment of the printing, Jose Aruego obtained a

credit accommodation from the PBCom. Thus, for every printing of the
World Current Events, the printer collected the cost of printing by drawing a
draft against the plaintiff, said draft being sent later to the Aruego for
acceptance. As an added security for the payment of the amounts advanced
to printer, the PBCom also required Aruego to execute a trust receipt in favor
of said bank wherein Aruego undertook to hold in trust for PBCom the
periodicals and to sell the same with the promise to turn over to the latter the
proceeds of the sale of said publication to answer for the payment of all
obligations arising from the draft.
For failure to pay the obligations from the draft, PBCom instituted
an action against Aruego. Aruego argued that he signed the drafts in a
representative capacity that he signed only as accommodation party.
ISSUE:
WON Aruego is liable.
G.R. No. 109491

February 28, 2001
LOURDES M. DE LEON, petitioner, vs. COURT OF APPEALS, ATRIUM

MANAGEMENT
CORPORATION,
AND
HI-CEMENT
CORPORATION,respondents.
G.R. No. 121794
February 28, 2001
FACTS:
The trial court ordered Lourdes M. de Leon, her husband Rafael de

Leon, E.T. Henry and Co., Inc. and Hi-Cement Corporation to pay petitioner
Atrium, jointly and severally. However, the CA absolved Hi-Cement
Corporation from liability and dismissed the complaint as against it. It ruled
that: (1) Lourdes M. de Leon was not authorized to issue the subject checks
in favor of E.T. Henry, Inc. and such issuance constituted ultra vires acts;
and (2) The subject checks were not issued for valuable consideration.
ISSUE:
WON Lourdes M. de Leons issuance constitutes an ultra vires act.

RULING:
No. An ultra vires act is one committed outside the object for which a
corporation is created as defined by the law of its organization and therefore
beyond the power conferred upon it by law. The term ultra viresis
distinguished from an illegal act for the former is merely voidable which may
be enforced by performance, ratification, or estoppel, while the latter is void
and cannot be validated.
Page
Hi-Cement Corporation through its corporate signatories, Lourdes M.

de Leon, treasurer, and the late Antonio de las Alas, Chairman issued
checks, to extend financial assistance, in favor of E.T. Henry and Co. Inc., as
payee. E.T. Henry and Co., Inc., in turn, endorsed the four checks to
petitioner Atrium Management Corporation for valuable consideration. Upon
presentment for payment, the drawee bank dishonored all four checks for
reason payment stopped. Atrium, thus, instituted an action for collection of
the proceeds of four post-dated checks with a total amount of P2 million.
33

Atty Reyes
ERNESTINA CRISOLOGO-JOSE, petitioner,

vs.
COURT OF APPEALS and RICARDO S. SANTOS, JR. in his own behalf
and as Vice-President for Sales of Mover Enterprises, Inc., respondents.
G.R. No. 80599
September 15, 1989
(UNDER ULTRA VIRES)

FACTS:
Oscar Z. Benares, as president of Mover Enterprises, Inc, issued a
check drawn against Traders Royal Bank in accommodation of his clients,
the spouses Jaime and Clarita Ong. Said check was issued to Ernestina
Crisologo-Jose in consideration of the waiver or quitclaim over a certain
property which the GSIS agreed to sell to the clients of Atty. Oscar Benares,
the spouses Jaime and Clarita Ong, 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, Benares
replaced the check with another Traders Royal Bank check, in the same
amount, also payable to the defendant Jose. This replacement check was
also signed by Benares and by Santos, Jr. However, when said replacement
check was deposited, it was dishonored for insufficiency of funds.
ISSUE:
WON a corporation can be held liable as an accommodation party.
RULING:
Lourdes M. de Leon is the treasurer of the corporation and is

authorized to sign checks for the corporation. At the time of the issuance of
the checks, there were sufficient funds in the bank to cover payment of the
amount of P2 million pesos. With this in consideration, the act of issuing the
checks was well within the ambit of a valid corporate act, for it was for
securing a loan to finance the activities of the corporation, hence, not an
ultra vires act.
No. An accommodation party is 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. This rule 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
JUANITA SALAS, petitioner,

vs.
HON. COURT OF APPEALS and FIRST FINANCE & LEASING
Page
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. However, 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.
34

Atty Reyes
it became the holder thereof before it was overdue, and without notice that it
had previously been dishonored; [c] it took the same in good faith and for
value; and [d] when it was negotiated to Filinvest, the latter had no notice of
any infirmity in the instrument or defect in the title of VMS Corporation. Being
a holder in due course, it holds the instrument free from any defect of title of
prior parties, and free from defenses available to prior parties among
themselves, and may enforce payment of the instrument for the full amount
thereof. This being so, Salas cannot set up against Filinvest the defense of
nullity of the contract of sale between her and VMS.
(PRUDENCIO V CA AGAIN)
G.R. No. 76788
January 22, 1990
FACTS:
Juanita Salas bought a motor vehicle from the Violago Motor Sales
Corporation for P58, 138.20 as evidenced by a promissory note. This note
was subsequently endorsed to Filinvest Finance & Leasing Corporation
which financed the purchase. However, Salas defaulted in her installments
due to a discrepancy in the engine and chassis numbers of the vehicle
delivered to her and those indicated in the sales invoice, certificate of
registration and deed of chattel mortgage, which fact she discovered when
the vehicle figured in an accident. This failure to pay prompted Finance &
Leasing Corporation to initiate a civil case for collection of sum of money
against Salas.
ISSUE:
ASSOCIATED BANK, petitioner,

vs.
HON. COURT OF APPEALS, PROVINCE OF TARLAC and PHILIPPINE
NATIONAL BANK, respondents.
G.R. No. 107382/G.R. No. 107612

January 31, 1996
xxxxxxxxxxxxxxxxxxxxx
WON VMS fraud in the conduct of its business release Salas from
paying Filinvest the amount stated in the note.
RULING:
No. Filinvest is a holder in due course, having taken the instrument
under the following conditions: [a] it is complete and regular upon its face; [b]
PHILIPPINE NATIONAL BANK, petitioner,

vs.
HONORABLE COURT OF APPEALS, PROVINCE OF TARLAC, and
ASSOCIATED BANK, respondents.
January 31, 1996

FACTS:
The Province of Tarlac has a current account with the PNB where
the provincial funds are deposited. A portion of the funds of the province is
allocated to the Concepcion Emergency Hospital. The allotment checks for
said government hospital are drawn to the order of "Concepcion Emergency
Hospital, Concepcion, Tarlac" or "The Chief, Concepcion Emergency
Hospital, Concepcion, Tarlac." However, the hospital did not receive several
allotment checks drawn by the Province. After the checks were examined, it
was discovered that 30 checks were encashed by Fausto Pangilinan, with
the Associated Bank acting as collecting bank.
It turned out that Pangilinan collected the questioned checks from
the office of the Provincial Treasurer claiming to be assisting or helping the
hospital follow up the release of the checks. To encash the checks, he
forged the signature of Dr. Adena Canlas who was chief of the payee
hospital. All the checks bore the stamp of Associated Bank which reads "All
prior endorsements guaranteed ASSOCIATED BANK."
Thereafter, the Provincial Treasurer sought the restoration of the
various amounts debited by PNB from the current account of the
Province. In turn, the PNB demanded reimbursement from the Associated
Bank. As both banks resisted payment, the Province of Tarlac sued PNB
which, in turn, impleaded Associated Bank as third-party defendant.
Page
G.R. No. 107612
35

Atty Reyes
indorsement is forged, all parties prior to the forgery may raise the real
defense of forgery against all parties subsequent thereto. An indorser of an
order instrument warrants "that the instrument is genuine and in all respects
what it purports to be; that he has a good title to it; that all prior parties had
capacity to contract; and that the instrument is at the time of his indorsement
valid and subsisting." Hence, he cannot interpose the defense that
signatures prior to him are forged.
A collecting bank where a check is deposited and which indorses
the check upon presentment with the drawee bank is such an indorser. So
even if the indorsement on the check deposited by the banks's client is
forged, the collecting bank is bound by his warranties as an indorser and
cannot set up the defense of forgery as against the drawee bank.
The loss incurred by drawee bank-PNB can be passed on to the
collecting bank-Associated Bank which presented and indorsed the checks
to it. Associated Bank can, in turn, hold the forger, Fausto Pangilinan, liable.
However, the Province of Tarlac failed to exercise due care when it permitted
Fausto Pangilinan to collect the checks when the latter, having already
retired from government service, was no longer connected with the hospital.
This failure to exercise due care contributed to a significant degree to the
loss tantamount to negligence. Hence, the Province of Tarlac should be
liable for part of the total amount paid on the questioned checks.
NATIVIDAD GEMPESAW, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and PHILIPPINE BANK OF
COMMUNICATIONS, respondents.
G.R. No. 92244/ 218 SCRA 628
February 9, 1993
ISSUE:
WON Associated Bank (collecting bank) may interpose the real defense
of forgery against PNB (drawee bank) as to bar recovery by the latter.
RULING:
No. Where the instrument is payable to order at the time of the
forgery, the signature of its rightful holder (here, the payee hospital) is
essential to transfer title to the same instrument. When the holder's
FACTS:
Petitioner Natividad O. Gempesaw owns and operates four grocery
stores in Caloocan City. To facilitate payment of debts to her suppliers,
petitioner draws checks against her checking account with the respondent
Philippine Bank of Communications as drawee. As a customary practice, the
checks were prepared and filled up by her trusted bookkeeper, Alicia
Galang, and submitted to the petitioner for her signature, with the
For a period of two years, petitioner issued 82 checks in favor of

several suppliers. These checks were all presented by the indorsees to
respondent drawee Bank which debited the amounts thereof against
petitioner's checking account. Most of the checks were for amounts in
excess of her actual obligations to the various payees.
On November 7, 1984, petitioner made a written demand on
respondent drawee Bank to credit her account with the money value of the
82 checks totalling P1,208.606.89 for having been wrongfully charged
against her account. Respondent drawee Bank refused to grant petitioner's
demand.
ISSUES:
3
4
WON drawee bank can charge the drawer's account for the amount
of said checks.
WON the banking rules which prohibit the drawee bank from having
checks with more than one indorsement invalidates the instrument.
RULING:
Yes. 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 negligence which causes the bank to honor such a check or checks.
The negligence of a depositor which will prevent recovery of an unauthorized
payment is based on failure of the depositor to act as a prudent
businessman would under the circumstances. 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. Thus, petitioner's negligence was the
proximate cause of her loss. And since it was her negligence which caused
Page
corresponding invoice receipts which indicate the correct obligations due

and payable to her suppliers. Petitioner signed each and every check
without verifying the accuracy of the checks against the corresponding
invoices.
36

Atty Reyes
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.
No. The banking rule banning acceptance of checks for deposit or cash
payment with more than one indorsement unless cleared by some bank
officials does not invalidate the instrument; neither does it invalidate the
negotiation or transfer of the said check. In effect, this rule destroys the
negotiability of bills/checks by limiting their negotiation by indorsement of
only the payee. Under the NIL, the only kind of indorsement which stops the
further negotiation of an instrument is a restrictive indorsement which
prohibits the further negotiation thereof.
In this kind of restrictive indorsement, the prohibition to transfer or

negotiate must be written in express words at the back of the instrument, so
that any subsequent party may be forewarned that ceases to be negotiable.
However, the restrictive indorsee acquires the right to receive payment and
bring any action thereon as any indorser, but he can no longer transfer his
rights as such indorsee where the form of the indorsement does not
authorize him to do so.
Although the holder of a check cannot compel a drawee bank to honor it
because there is no privity between them, as far as the drawer-depositor is
concerned, such bank may not legally refuse to honor a negotiable bill of
exchange or a check drawn against it with more than one indorsement if
there is nothing irregular with the bill or check and the drawer has sufficient
funds. The drawee cannot be compelled to accept or pay the check by the
drawer or any holder because as a drawee, he incurs no liability on the
check unless he accepts it. But the drawee will make itself liable to a suit for
damages at the instance of the drawer for wrongful dishonor of the bill or
check.
Page
REPUBLIC BANK, plaintiff-appellee,

vs.
MAURICIA T. EBRADA, defendant-appellant.
37

Atty Reyes
genuine before presenting it to plaintiff Bank for payment. Her failure to do
so makes her liable for the loss and the drawee Bank may recover from her
the money she received for the check. Had she performed the duty of
ascertaining the genuineness of the check, in all probability the forgery
would have been detected and the fraud defeated.
G.R. No. L-40796

July 31, 1975
FACTS:
Mauricia T. Ebrada encashed a Back Pay Check, issued by the
Bureau of Treasury, at the Republic Bank. Republic Bank subsequently
learned that the indorsement on said check by the payee, "Martin Lorenzo"
was a forgery since the latter is already dead. Republic Bank refunded the
Bureau as requested by the latter. To recover what it had refunded, it made
demands upon defendant Ebrada to account the sum of said check but was
refused.
ISSUE:
WON Ebrada is liable to return the money paid to him by Republic Bank
subject of a forged check.
RULING:
Yes. The drawee of a check can recover from the holder the money
paid to him on a forged instrument. It is not supposed to be its duty to
ascertain whether the signatures of the payee or indorsers are genuine or
not. This is because the indorser is supposed to warrant to the drawee that
the signatures of the payee and previous indorsers are genuine, warranty
not extending only to holders in due course. One who purchases a check or
draft is bound to satisfy himself that the paper is genuine and that by
indorsing it or presenting it for payment or putting it into circulation before
presentation he impliedly asserts that he has performed his duty and the
drawee who has paid the forged check, without actual negligence on his
part, may recover the money paid from such negligent purchasers.
Ebrada, upon receiving the check in question from Adelaida
Dominguez, was duty-bound to ascertain whether the check in question was
METROPOLITAN WATERWORKS AND SEWERAGE SYSTEM, petitioner,

vs.
COURT OF APPEALS (Now INTERMEDIATE APPELLATE COURT) and
THE PHILIPPINE NATIONAL BANK,respondents.
G.R. No. L-62943
July 14, 1986
FACTS:
Twenty-three (23) checks were issued by NWSA all of which were
paid and cleared by PNB and debited by PNB against NWSA Account No. 6.
Said checks were deposited by the payees Raul Dizon, Arturo Sison and
Antonio Mendoza in their respective current accounts with the Philippine
Commercial and Industrial Bank (PCIB) and Philippine Bank of Commerce
(PBC). Thru the Central Bank Clearing, these checks were presented for
payment by PBC and PCIB to the defendant PNB, and paid. At the time of
their presentation to PNB these checks bear the standard indorsement
which reads 'all prior indorsement and/or lack of endorsement guaranteed.'
However, subsequent investigation by the NBI showed that Raul Dizon,
Arturo Sison and Antonio Mendoza were all fictitious persons. Thus,
requested PNB to restore in its Account the total sum of the 23 checks
claimed by NWSA to be forged and/or spurious checks. PNB refused.
ISSUE:
WON PNB is liable to NWSA to restore the amounts of the alleged forged
checks.
RULING:
No. The NBI Reports relied upon by the petitioner are inadequate to
sustain its allegations of forgery. These reports did not touch on the inherent
qualities of the signatures which are indispensable in the determination of
the existence of forgery. There must be conclusive findings that there is a
Moreover, even if the 23 checks in question are considered

forgeries, considering the petitioner's gross negligence, it is barred from
setting up the defense of forgery under Section 23 of the Negotiable
Instruments Law because it was guilty of negligence for failure to reconcile
the bank statements with its own records and failure to provide appropriate
security measures over its own records thereby laying confidential records
open to unauthorized persons. Hence, PNB cannot be faulted for not having
detected the fraudulent encashment of the checks because the printing of
the petitioner's personalized checks was not done under the supervision and
control of the Bank. Under the circumstances, the petitioner was in a better
position to detect and prevent the fraudulent encashment of its checks.
(MWSS AGAIN)
METROPOLITAN BANK & TRUST COMPANY, petitioner,
vs.
COURT OF APPEALS, GOLDEN SAVINGS & LOAN ASSOCIATION, INC.,
LUCIA CASTILLO, MAGNO CASTILLO and GLORIA
CASTILLO, respondents.
G.R. No. 88866

February 18, 1991
FACTS:
Eduardo Gomez opened an account with Golden Savings and
deposited 38 treasury warrants with a total value of P1, 755,228.37. All
these warrants were indorsed by the cashier of Golden Savings, and
deposited it to its savings account in Metrobank. They were then sent
for clearing to the principal office of Metrobank, which forwarded them to the
Bureau of Treasury for special clearing.
Page
variance in the inherent characteristics of the signatures and that they were
written by two or more different persons. Forgery cannot be presumed. It
must be established by clear, positive, and convincing evidence.
38

Atty Reyes
"Exasperated" over Gloria Castillos repeated inquiries on whether
the warrants have been cleared and also as an accommodation for a
"valued client, the branch manager allowed the withdrawal of the warrants,
only to find out later on that the treasury warrants have been
dishonoured by the Bureau of Treasury. Metrobank demanded the refund by
Golden Savings of the amount it had previously withdrawn. The demand was
rejected.
ISSUE:
WON Metropolitan Bank can use forgery of the warrants as defense to free
itself from liability.
RULING:
No. Metrobank exhibited extraordinary carelessness. The amount
involved was not trifling more than one and a half million pesos (and this
was 1979). There was no reason why it should not have waited until the
treasury warrants had been cleared; it would not have lost a single centavo
by waiting. Yet, despite the lack of such clearance and notwithstanding that it
had not received a single centavo from the proceeds of the treasury
warrants, it allowed Golden Savings to withdraw not once, not twice, but
thrice from the uncleared treasury warrants.
Metrobank was indeed negligent in giving Golden Savings the
impression that the treasury warrants had been cleared and that,
consequently, it was safe to allow Gomez to withdraw the proceeds thereof
from his account with it. Without such assurance, Golden Savings would not
have allowed the withdrawals; with such assurance, there was no reason not
to allow the withdrawal. Indeed, Golden Savings might even have incurred
liability for its refusal to return the money that to all appearances belonged to
the depositor, who could therefore withdraw it any time and for any reason
he saw fit.
SAMSUNG CONSTRUCTION COMPANY PHILIPPINES, INC., petitioner,

vs. FAR EAST BANK AND TRUST COMPANY AND COURT OF
APPEALS,respondents.
G.R. No. 129015
August 13, 2004
Samsung Construction Company Philippines, Inc. maintained a current

account with Far East Bank and Trust Company (EBTC). The sole signatory
to Samsung Constructions account was Jong Kyu while the checks
remained in the custody of the companys accountant, Kyu Yong Lee.
Page
FACTS:
39

Atty Reyes
case. Since the bare fact that the forgery was committed by an employee of
the party whose signature was forged cannot necessarily imply that such
partys negligence was the cause for the forgery. Employers do not possess
the preternatural gift of cognition as to the evil that may lurk within the hearts
and minds of their employees.
Roberto Gonzaga presented for payment FEBTC Check to Far East

Bank. Since Jose Sempio III, the assistant accountant of Samsung
Construction, was also in the bank, the bank officers showed the check to
the former, who vouched for the genuineness of Jongs signature. Satisfied
with the genuineness of the signature of Jong, the bank encashed the check
to Gonzaga.
PHILIPPINE NATIONAL BANK petitioner,

vs.
HON. ROMULO S. QUIMPO, Presiding Judge, Court of First Instance of
Rizal, Branch XIV, and FRANCISCO S. GOZON II, respondents.
The following day, Kyu, discovered that a check had been encashed
and that the last blank check was missing. He reported the matter to Jong,
who then proceeded to the bank. Jong learned of the encashment of the
check, and realized that his signature had been forged.
G.R. No. L-53194

March 14, 1988
ISSUE:
WON Samsung Construction was precluded from setting up the defense of
forgery.
FACTS:
RULING:
No. Under Section 23 of the Negotiable Instruments Law, forgery is
a real or absolute defense by the party whose signature is forged. On the
premise that Jongs signature was indeed forged, FEBTC is liable for the
loss since it authorized the discharge of the forged check. Such liability
attaches even if the bank exerts due diligence and care in preventing such
faulty discharge. Forgeries often deceive the eye of the most cautious
experts; and when a bank has been so deceived, it is a harsh rule which
compels it to suffer although no one has suffered by its being deceived. The
forgery may be so near like the genuine as to defy detection by the depositor
himself, and yet the bank is liable to the depositor if it pays the check.
The Court recognizes that Section 23 of the Negotiable Instruments
Law bars a party from setting up the defense of forgery if it is guilty of
negligence. Yet, Samsung Construction was not guilty of negligence in this
Francisco S. Gozon II went to PNB with his friend Ernesto Santos

whom he left in the car while he transacted business in the bank. While in
the car, Santos saw Gozons check book and took a check therefrom, filled it
up for the amount of P5,000.00, forged the signature of Gozon, and
thereafter encashed the check. The account of Gozon was debited the said
amount. Upon receipt of the statement of account from the bank, Gozon
asked that the said amount should be returned to his account as his
signature on the check was forged but the bank refused.
ISSUE:
RULING:
No. A bank is bound to know the signatures of its customers; and if

it pays a forged check, it must be considered as making the payment out of
its own funds, and cannot ordinarily change the amount so paid to the
account of the depositor whose name was forged. This rule is absolutely
necessary to the circulation of drafts and checks, and is based upon the
presumed negligence of the drawee in failing to meet its obligation to know
the signature of its correspondent. ... There is nothing inequitable in such a
rule. If the paper comes to the drawee in the regular course of business, and
he, having the opportunity ascertaining its character, pronounces it to be
valid and pays it, it is not only a question of payment under mistake, but
payment in neglect of duty which the commercial law places upon him, and
the result of his negligence must rest upon him. PNB was negligent in
encashing said forged check without carefully examining the signature which
shows marked variation from the genuine signature of Gozon.
Page
WON Gozon who left his checkbook into hands of Santos was indeed the
proximate cause of the loss and thus precluded from setting up the defense
of forgery.
40

Atty Reyes
G.R. No. 74917
January 20, 1988
FACTS:
Equitable Banking Corporation through its Visa Card Department,
drew six crossed Manager's checks payable to certain member
establishments of Visa Card. The Checks were deposited with petitioner
Banco de Oro. Following normal procedures, and after stamping at the back
of the Checks the usual endorsements. All prior and/or lack of endorsement
guaranteed the petitioner sent the checks for clearing through the Philippine
Clearing House Corporation (PCHC).
Thereafter, private respondent bank discovered that the
endorsements appearing at the back of the Checks and purporting to be that
of the payees were forged or otherwise belong to persons other than the
payees. Pursuant to the PCHC Clearing Rules and Regulations, private
respondent bank presented the Checks directly to the petitioner for the
purpose of claiming reimbursement from the latter. However, petitioner
refused to accept such direct presentation and to reimburse private
respondent for the value of the Checks.
ISSUE:
WON Banco de Oro should reimburse Equitable Banking Corporation.
RULING:
BANCO DE ORO SAVINGS AND MORTGAGE BANK, petitioner,

vs.
EQUITABLE BANKING CORPORATION, PHILIPPINE CLEARING HOUSE
CORPORATION, AND REGIONAL TRIAL COURT OF QUEZON CITY,
BRANCH XCII (92), respondents.
Yes. A commercial bank cannot escape the liability of an endorser

of a check and which may turn out to be a forged endorsement. Whenever
any bank treats the signature at the back of the checks as endorsements
and thus logically guarantees the same as such there can be no doubt said
bank has considered the checks as negotiable. With regard to forged
indorsements, the collecting bank or last endorser generally suffers the loss
because it has the duty to ascertain the genuineness of all prior
endorsements considering that the act of presenting the check for payment
to the drawee is an assertion that the party making the presentment has
done its duty to ascertain the genuineness of the endorsements. Also, if the
WESTMONT BANK (formerly ASSOCIATED BANKING CORP.),

petitioner, vs.
EUGENE ONG, respondent.
G.R. No. 132560
January 30, 2002
FACTS:
Eugene Ong maintained a current account with Westmont Bank,
formerly the Associated Banking Corporation. Ong sold certain shares of
stocks through Island Securities Corporation. To pay Ong, Island Securities
purchased two (2) Pacific Banking Corporation managers checks, issued in
the name of Eugene Ong as payee. However, before Ong could get hold of
the checks, his friend Paciano Tanlimco got hold of them, forged Ongs
signature and deposited these with Westmont Bank, where Tanlimco was
also a depositor. Even though Ongs specimen signature was on file,
Westmont accepted and credited both checks to the account of
Tanlimco, without verifying the signature indorsements appearing at the
back thereof. After the money was withdrawn, Tanlimco absconded.
Page
drawee-bank discovers that the signature of the payee was forged after it
has paid the amount of the check to the holder thereof, it can recover the
amount paid from the collecting bank.
41

Atty Reyes
The collecting bank is liable to the payee and must bear the loss
because it is its legal duty to ascertain that the payees endorsement was
genuine before cashing the check. As a general rule, a bank or corporation
who has obtained possession of a check upon an unauthorized or forged
indorsement of the payees signature and who collects the amount of the
check from the drawee, is liable for the proceeds thereof to the payee or
other owner, notwithstanding that the amount has been paid to the person
from whom the check was obtained.
RAMON K. ILUSORIO, petitioner, vs.

HON. COURT OF APPEALS, and THE MANILA BANKING
G.R. No. 139130
November 27, 2002
FACTS:
Ramon Ilusurio entrusted to his secretary, Katherine Eugenio, his credit

cards and his checkbook with blank checks. However, Eugenio encashed
and deposited to her personal account seventeen (17) checks drawn against
the account of the Ilusurio at the respondent bank, Manila Banking
Corporation. Ilusurio did not bother to check his statement of account until a
business partner apprised him that he saw Eugenio use his credit cards.
ISSUE:
WON Westmont Bank should suffer the loss and be made liable Ong.
RULING:
Ilusurio then requested the respondent bank to credit back and restore
to its account the value of the checks which were wrongfully encashed but
respondent bank refused.
ISSUE:
Yes. The collecting bank or last endorser generally suffers the loss
because it has the duty to ascertain the genuineness of all prior
endorsements. The collecting bank is also made liable because it is privy to
the depositor who negotiated the check. The bank knows him, his address
and history because he is a client. Hence, it is in a better position to detect
forgery, fraud or irregularity in the indorsement. In the case at bar, Westmont
is grossly negligent in performing its duties.
WON petitioner may put up the defense of forgery against respondent bank.
RULING:
No. While it is true that when a signature is forged or made without
the authority of the person whose signature it purports to be, the check is
wholly inoperative. No right to retain the instrument, or to give a discharge
therefor, or to enforce payment thereof against any party, can be acquired
TRADERS ROYAL BANK, petitioner, vs.

RADIO PHILIPPINES NETWORK, INC., INTERCONTINENTAL
BROADCASTING CORPORATION and BANAHAW BROADCASTING
CORPORATION, through the BOARD OF ADMINISTRATORS, and
SECURITY BANK AND TRUST COMPANY, respondents.
Page
through or under such signature. However, the rule does provide for an
exception, namely: unless the party against whom it is sought to enforce
such right is precluded from setting up the forgery or want of authority. In
this case, Ilusurio was negligent by according his secretary unusual degree
of trust and unrestricted access to his credit cards, passbooks, check books,
bank statements, including custody and possession of cancelled checks and
reconciliation of accounts. Hence, he is precluded from setting up the
forgery, assuming there is forgery, due to his own negligence.
42

Atty Reyes
person who has forged the signature of the payee, the loss falls upon him
who cashed the check. Its only remedy is against the person to whom it
paid the money.
A collecting bank which indorses a check bearing a forged
indorsement and presents it to the drawee bank guarantees all prior
indorsements, including the forged indorsement itself, and ultimately should
be held liable therefor. Since TRB did not pay the rightful holder or other
person or entity entitled to receive payment, it has no right to
reimbursement. Petitioner TRB was remiss in its duty and obligation, and
must therefore suffer the consequences of its own negligence and disregard
of established banking rules and procedures.
G.R. No. 138510

October 10, 2002
FACTS:
BANK OF THE PHILIPPINE ISLANDS, petitioner, vs.

COURT OF APPEALS and BENJAMIN C. NAPIZA, respondents.
Plaintiffs Radio Philippines Network (RPN), Intercontinental

Broadcasting Corporation (IBC), and Banahaw Broadcasting Corporation
(BBC) purchased from defendant Traders Royal Bank (TRB) three (3)
managers checks to be used as payment for their tax liabilities to the BIR.
G.R. No. 112392

February 29, 2000
Defendant TRB turned over the checks to Mrs. Vera who was
supposed to deliver the same to the BIR in payment of plaintiffs taxes.
However, said checks were never been delivered. Instead, the checks were
presented for payment by unknown persons to defendant Security Bank and
Trust Company (SBTC). Thereafter, plaintiffs sent letters to both defendants,
demanding that the amounts covered by the checks be reimbursed or
credited to their account. The defendants refused.
Henry Chan went to Benjamin Napiza and requested to deposit a

managers check in the latters 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. Using the blank withdrawal slip given
to Chan, Ruben Gayon, Jr. was able to withdraw the amount. Notably, the
withdrawal slip shows that the amount was payable to Ramon A. de Guzman
and Agnes C. de Guzman and was duly initialled by the BPI branch assistant
manager, Teresita Lindo.
ISSUE:
WON Traders Royal Bank should solely bare the loss for its negligence.
RULING:
Yes. Petitioner TRB ought to have known that, where a check is
drawn payable to the order of one person and is presented for payment by
another and purports upon its face to have been duly indorsed by the payee
of the check, it is its primary duty to know that the check was duly indorsed
by the original payee and, where it pays the amount of the check to a third
FACTS:
Meanwhile, BPI received communication from the Wells Fargo

Bank International of New York that the said check deposited by Napiza was
a counterfeit check. Consequently, it informed Napiza that the check
bounced and demanded the return of the amount thus withdrew.
ISSUE:
RULING:
No. By depositing the check with BPI, Napiza 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 managers check
or ordinary check, is not legal tender. As such, after receiving the deposit,
under its own rules, BPI shall credit the amount in Napizas account or infuse
value thereon only after the drawee bank shall have paid the amount of the
check or the check has been cleared for deposit.
Moreover, by the nature of its functions, a bank is under obligation
to treat the accounts of its depositors "with meticulous care, always having in
mind the fiduciary nature of their relationship." As such, in dealing with its
depositors, a bank should exercise its functions not only with the diligence of
a good father of a family but it should do so with the highest degree of care.
In the case at bar, BPI, in allowing the withdrawal of Napizas deposit, failed
to exercise the diligence of a good father of a family, in total disregard of its
own rules and to the detriment of Napiza. Thus, while it is true that Napizas
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
BPIs personnel was the proximate cause of the loss that petitioner
sustained.
(WALANG BANK OF AMERICA v ASSOC CITIZENS BANK MAY 21,

2009)
(PNB V CA AGAIN)
ENRIQUE P. MONTINOLA, plaintiff-appellant,

vs.
THE PHILIPPINE NATIONAL BANK, ET AL., defendants-appellees.
Page
WON Napiza is liable to return the amount that was withdrew.
43

Atty Reyes
G.R. No. L-2861/ 68 Phil 178
February 26, 1951
FACTS:
Ubaldo D. Laya, in his capacity as Provincial Treasurer of Misamis
Oriental as drawer, issued a check, drawn against PNB. Said check was
countersigned by the provincial auditor. Laya delivered P400, 000 in
emergency notes and said check to Mariano V. Ramos as disbursing officer
of the USAFFE. Ramos, in his personal capacity, then sold P30,000 of the
check to Enrique P. Montinola for P90,000 Japanese military notes. The
writing made by Ramos at the back of the check was an instruction to the
bank to pay P30, 000 to Montinola and to deposit the balance to his (Ramos)
credit. This writing, however, was obliterated and in its place made Laya in
issuing the check as acting in his capacity as "Agent, Phil. National Bank
and hence making the drawee, the drawer.
ISSUE:
WON there is a material alteration.
RULING:
Yes. The insertion of the words "Agent, Phil. National Bank" which
converts the bank from a mere drawee to a drawer and therefore changes its
liability, constitutes a material alteration of the instrument without the consent
of the parties liable thereon, and so discharges the instrument.
G.R. No. 121413

January 29, 2001
PHILIPPINE COMMERCIAL INTERNATIONAL BANK (formerly INSULAR
BANK OF ASIA AND AMERICA),petitioner,
vs.
COURT OF APPEALS and FORD PHILIPPINES, INC. and CITIBANK,
N.A., respondents.
G.R. No. 121479
January 29, 2001
FORD PHILIPPINES, INC., petitioner-plaintiff,
vs.
G.R. No. 128604

January 29, 2001
FORD PHILIPPINES, INC., petitioner,
vs.
CITIBANK, N.A., PHILIPPINE COMMERCIAL INTERNATIONAL BANK
and COURT OF APPEALS, respondents.
FACTS:
Ford drew and issued a check in favor of the Commissioner of

Internal Revenue as payment of its percentage or manufacturer's sales
taxes. Said check was deposited with PCIBank and was subsequently
cleared at the Central Bank. Upon presentment with the Citibank, the
proceeds of the check were paid to PCIB as collecting or depository bank.
However, the proceeds were never received by the payee, the
Commissioner of Internal Revenue. Hence, Ford seeks reimbursement of
the face value of the check to PCIB and CitiBank. Both denied liability and
refused to pay. PCIBank claimed that the action of Ford had prescribed
because of its inability to seek judicial relief seasonably, considering that the
alleged negligent act took place prior to December 19, 1977 but the relief
was sought only in 1983, or seven years thereafter.
ISSUE:
WON Fords cause of action against PCIB has prescribed to bar it from
recovery.
RULING:
Page
COURT OF APPEALS and CITIBANK, N.A. and PHILIPPINE

COMMERCIAL INTERNATIONAL BANK,respondents.
44

Atty Reyes
would normally be a month after December 19, 1977, when Citibank paid the
face value of the check. Since the original complaint for the cause of action
was filed on January 20, 1984, barely six years had lapsed, Ford's cause of
action to recover the amount of said check was seasonably filed within the
period provided by law.
MYRON C. PAPA, Administrator of the Testate Estate of Angela M.

Butte, petitioner, vs. A. U. VALENCIA and CO. INC., FELIX
PEARROYO, SPS. ARSENIO B. REYES & AMANDA SANTOS, and
DELFIN JAO, respondents.
G.R. No. 105188
January 23, 1998
FACTS:
Myron C. Papa, acting as attorney-in-fact of Angela M. Butte, sold to

Felix Pearroyo, through A. U. Valencia and Co, a parcel of land in La Loma,
Quezon City. Prior to the sale, said property, had been mortgaged to the
Associated Banking Corporation. However, upon the release of the title to
the property, Valencia and Pearroyo discovered that the mortgage rights
of the bank had been assigned to Tomas L. Parpana, as special
administrator of the Estate of Ramon Papa, Jr. Despite repeated demands,
the latter refused and failed to deliver the title to the property.
ISSUE:
WON alleged sale of the subject property had been consummated.
No. The statute of limitations begins to run when the bank gives the
depositor notice of the payment, which is ordinarily when the check is
returned to the alleged drawer as a voucher with a statement of his
account, and an action upon a check is ordinarily governed by the statutory
period applicable to instruments in writing. Our laws on the matter provide
that the action upon a written contract must be brought within ten years from
the time the right of action accrues. Hence, the reckoning time for the
prescriptive period begins when the instrument was issued and the
corresponding check was returned by the bank to its depositor. Applying the
same rule, the cause of action for the recovery of the proceeds of check
RULING:
Yes. Valencia and Pearroyo paid Myron C. Papa in cash and in
check for the subject lot. Papas assertion that he never encashed the
aforesaid check is not substantiated and is at odds with his statement
that he can no longer recall the transaction which is supposed to have
happened 10 years ago. After more than ten (10) years from the payment
in part by cash and in part by check, the presumption is that the check had
been encashed.
Page
Granting that Papa had never encashed the check, his failure to do so
for more than ten (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
cashed, pursuant to Art. 1249 of the Civil Code, 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. It has, likewise,
been held that if no presentment is made at all, the drawer cannot be held
liable irrespective of loss or injury unless presentment is otherwise
excused. This is in harmony with Article 1249 of the Civil Code under which
payment by way of check or other negotiable instrument is conditioned on its
being cashed, except when through the fault of the creditor, the instrument is
impaired. The payee of a check would be a creditor under this provision and
if its non-payment is caused by his negligence, payment will be deemed
effected and the obligation for which the check was given as conditional
payment will be discharged.
45

Atty Reyes
Anita Pea to make good said checks, the latter failed to pay the same
necessitating the former to file an action for collection against the latter and
her husband Harris Chua.
ISSUE:
WON State Investment can set up personal defence.
RULING:
Yes. Being not a holder in due course, State Investment is subject
to personal defences, such as lack of consideration between Chua spouses
and New Sikatuna Wood Industries. Note that under the facts the checks
were postdated and issued only as a loan to New Sikatuna Wood Industries,
Inc. if and when deposits were made to back up the checks. Such deposits
were not made, hence no loan was made, hence the three checks are
without consideration.
STATE INVESTMENT HOUSE, petitioner,

vs.
INTERMEDIATE APPELLATE COURT, ANITA PEA CHUA and HARRIS
CHUA, respondents.
THE GREAT EASTERN LIFE INSURANCE CO., plaintiff-appellant,

vs.
HONGKONG & SHANGHAI BANKING CORPORATION and PHILIPPINE
NATIONAL BANK, defendants-appellees.
G.R. No. 72764

July 13, 1989
G.R. No. L-18657

August 23, 1922
FACTS:
FACTS:
Anita Pena Chua issued three post crossed checks payable to New
Sikatuna Wood Industries, Inc. as a loan. Subsequently, New Sikatuna
Wood Industries, Inc. entered into an agreement with petitioner State
Investment House, Inc. where under a deed of sale, the former assigned and
discounted with petitioner eleven postdated checks including the
aforementioned three crossed checks issued by Chua. However, when said
three checks were deposited by petitioner, these checks were all
dishonored. Petitioner claims that despite demands on private respondent
ISSUE:
WON plaintiff can recover.
RULING:
Yes. The plaintiff authorized and directed the Shanghai Bank to pay
Melicor, or his order, P2,000. It did not authorize or direct the bank to pay the
check to any other person than Melicor, or his order. The money, being
deposited in the Shanghai Bank, it had no legal right to pay it out to anyone
except the plaintiff or its order. However, the money was actually paid to
Maasim and was never paid to Melicor, who never personally endorsed the
check, or authorized any one to endorse it for him, and the alleged
endorsement was a forgery. Further, it is admitted that the PNB cashed the
check upon a forged signature, and then endorsed the check and forwarded
it to the Shanghai Bank by whom it was paid. The PNB had no license or
authority to pay the money to Maasim or anyone else upon a forge
signature. It was its legal duty to know that Melicor's endorsment was
genuine before cashing the check. Its remedy is against Maasim to whom it
paid the money.
QUIRINO GONZALES LOGGING CONCESSIONAIRE, QUIRINO

GONZALES and EUFEMIA GONZALES, petitioners, vs. THE COURT OF
APPEALS (CA) and REPUBLIC PLANTERS BANK, respondents.
G. R. No. 126568
April 30, 2003
FACTS:
Page
Plaintiff Great Eastern Life Insurance Co. drew its check on the
Hongkong and Shanghai Banking Corporation, payable to the order of
Lazaro Melicor. However, E. M. Maasim fraudulently obtained possession of
the check, forged Melicor's signature, as an endorser, and presented it to the
PNB. After paying the check, the PNB endorsed the check to the Hongkong
and Shanghai Banking Corporation which paid it and charged the amount of
the check to plaintiffs account. The forgery was discovered four months after
the amount has been charged to plaintiffs account.
46

Atty Reyes
Petitioner Quirino Gonzales Logging Concessionaire (QGLC), through
its proprietor, applied for credit accommodations with Republic Bank, later
known as Republic Planters Bank. The Bank approved QGLCs application
and granted it a credit. Petitioners obligations under the credit line were
secured by a real estate mortgage on four parcels of land.
In separate transactions, petitioners, to secure certain advances from
the Bank in connection with QGLCs exportation of logs, executed a
promissory note in 1964 in favor of the Bank. They were to execute three
more promissory notes in 1967. In 1965, petitioners having long defaulted in
the payment of their obligations under the credit line, the Bank foreclosed
the mortgage. Thus, the Bank to collect the balance of QGLCs obligation
after the proceeds of the foreclosure sale were applied thereto, and nonpayment of the promissory notes despite repeated demands, filed a
complaint for sum of money.
ISSUE:
WON petitioners may interpose the defence of lack of consideration and that
the promissory Notes were signed in blank against the bank.
RULING:
No. The genuineness and due execution of the notes had been
deemed admitted by petitioners, they having failed to deny the same under
oath. Their claim that they signed the notes in blank does not thus lie.
Petitioners admission of the genuineness and due execution of the
promissory notes notwithstanding, they raise want of consideration thereof.
The promissory notes appear to be negotiable as they meet the
requirements of Section 1 of the Negotiable Instruments Law. Such being
the case, the notes are prima facie deemed to have been issued for
consideration. It bears noting that no sufficient evidence was adduced by
petitioners to show otherwise. In any case, it is no defence that the
promissory notes were signed in blank as Section 14 of the Negotiable
Instruments Law concedes the prima facie authority of the person in
possession of negotiable instruments, such as the notes herein, to fill in the
blanks.
(SALAS v CA)
(PNB) v CA)
(ASSOC BANK v CA)
(GREAT EASTERN v HONGKONG SHANGHAI BANK)
Page
(CRISOLOGO v CA AGAIN)
47

Atty Reyes
The province of Samar issued a check to Paulino M. Santos, drawn
against the PNB. The payee negotiated the check with James McGuire
whom presented the check to the municipal treasurer of Borongan for
payment, but the latter was not able to pay the same. McGuire wrote letters
to the Bureau of Posts seeking payment of the check, which were in turn
referred to the PNB. Before the check could be certified by the authorities
concerned as being in order and entitled to priority of payment, the province
of Samar, withdraw the amount of P83,504.07, leaving a balance of only
P743.43 which is insufficient to cover the amount of the check.
ISSUE: WON PNB be held primarily liable to pay the check.
(REP v EBRADA)
HELD:
(PNB v QUIMPO)
(GEMPESAW v CA)
(PCIB v CA)
(PAPA v AU Valencia)
(walang FAR EAST REALTY v CAM 166 scra 256 (1988)
No. The province of Samar is primarily liable to pay the check. The
obligation of PNB is merely subsidiary. An implied acceptance of the check
by the PNB was thereby created. The request by the PNB from the Bureau
of Posts for photostatic copies of the check and the subsequent requirement
by it for its presentation by James McGuire to the provincial treasurer and
the provincial auditor for certification, would be an empty gesture if it did not
thereby mean to assume the obligation of paying the check and holding
sufficient deposit of the drawer for the purpose.
VIOLET MCGUIRE SUMACAD, ET AL. vs.

THE PROVINCE OF SAMAR, THE PHILIPPINE NATIONAL BANK
G.R. No. L-8155
October 23, 1956
FACTS:
G.R. No. L-19051
April 4, 1923
ASIAN BANKING CORPORATION, plaintiff-appellee,

vs.
JUAN JAVIER, limited copartnership, defendant-appellant.
FACTS:
ISSUE:
WON the liability of La Insular as indorser of the checks was extinguished.
RULING:
Yes. The Negotiable Instruments Law provides that, when a
negotiable instrument is dishonored for non-acceptance or non-payment,
notice thereof must be given to the drawer and each of the indorsers, and
those who are not notified shall be discharged from liability, except where
this act provides otherwise. In this case, Asian Banking Corporation failed to
show that it gave any notice whatsoever to La Insular that the checks in
question had been dishonoured. Hence, it has not sufficiently established
the defendant's liability.
notice of dishonor is in order to charge all indorser and that the right of
action against him does not accrue until the notice is given
G.R. No. L-43191
November 13, 1935
PAULINO GULLAS, plaintiff-appellant,

vs.
THE PHILIPPINE NATIONAL BANK, defendant-appellant.
FACTS:
The Treasurer of the United States for the United States Veterans
Bureau issued a Warrant, payable to the order of Francisco Sabectoria
Bacos. Paulino Gullas and Pedro Lopez signed as endorsers of this check.
Thereupon it was cashed by the PNB. Subsequently the treasury warrant
was dishonored by the Insular Treasurer. Prior to the mailing of notice of
dishonor, and without waiting for any action by Gullas, the bank made use of
the money standing in his account to make good for the treasury warrant.
ISSSUE:
Page
Salvador B. Chaves drew two checks on the PNB in favor of La Insular.

These checks were both indorsed by the limited partners of La Insular, and
were both deposited by Chaves in his current account with Asia Banking
Corporation. Subsequently these checks were presented by the Asian
Banking to the PNB for payment, but the latter refused to pay on the ground
that the drawer, Chaves, had no funds therein.
48

Atty Reyes
WON PNB can apply a deposit to the debt of depositor to the bank.
RULING:
No. Under the NIL, Paulino Gullas, as a general indorser of
negotiable instrument engages that if it be dishonored and the necessary
proceedings of dishonor be duly taken, he will pay the amount thereof to the
holder. Said Law further provides that a notice of dishonoris necessary in
order to charge all indorser and that the right of action against him does not
accrue until the notice is given. In this case, the act of the bank in making
use of the money standing in Gullas account to make good for the treasury
warrant prior to the mailing of notice of dishonor is prejudicial to the rights of
Gulla. As an indorser, notice should actually have been given him first in
order that he might protect his interests.
G.R. No. 71694 August 16, 1991

NYCO SALES CORPORATION, petitioner,
vs.
BA FINANCE CORPORATION, JUDGE ROSALIO A. DE LEON
REGIONAL TRIAL COURT, BR. II, INTERMEDIATE APPELLATE COURT,
FIRST CIVIL CASES DIVISION, respondents.
FACTS:
Renato Fernandez and Santiago Renato (officers of Sanshell Corporation)
approached Nyco Sales Corporation for a credit accommodation. Nyco
Sales agreed and, Sanshell issued a post-dated check to Nyco Sales.
Thereafter, Nyco Sales, thru its president Rufino Yao, indorsed the check in
favor of BA Finance. BA Finance issued a check payable to Nyco Sales
which endorsed it in favor of Sanshell. Sanshell then made use of and/or
negotiated the check. Accompanying the exchange of checks was a Deed of
Assignment executed by Nyco Sales (assignor) in favor of BA Finance
(assignee) with the conformity of Sanshell. Under the said Deed, the subject
of the discounting was the check. However, the check bounced. Another
check was issued but it also bounced. Hence, BA Finance sued Nyco Sales.
Nyco Sales averred that it received no notice of dishonor when the second
check was dishonored.
WON Nyco Sales is liable to pay BA Finance.

HELD:
Yes. The relationship between Nyco Sales and BA Finance is one of
assignor-assignee. The assignor-vendor warrants both the credit itself (its
existence and legality) and the person of the debtor (his solvency), if so
stipulated, as in the case at bar. Consequently, if there be any breach of the
above warranties, the assignor-vendor should be held answerable therefor.
Nyco Sales pretension that it had not been notified of the fact of dishonor is
belied by the fact that Nyco Sales and Sanshell had frequent contacts
before, during and after the dishonor. More importantly, as long as the credit
remains outstanding, Nyco Sales shall continue to be liable to BA Finance as
its assignor. The dishonor of an assigned check simply stresses its liability
and the failure to give a notice of dishonor will not discharge it from such
liability. This is because the cause of action stems from the breach of the
warranties embodied in the Deed of Assignment, and not from the
dishonoring of the check alone.
Page
ISSUE:
49

Atty Reyes
prevailed upon LPI not to deposit the checks and promised to replace them
within 30 days. However, Wong reneged on his promise.
ISSUE:
WON the checks are considered stale.
RULING:
No. 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. LPI deposited the checks 157 days after
the date of the check. Hence said checks cannot be considered stale.
(STATE INVESTMENT v IAC again)

(Banco de Oro Savings v Equitable Banking Corp Again)
(WALANG GREAT ASIAN SALES v CA GR 105774 APR 25 2002)

LUIS S. WONG, petitioner, vs.
(walang RP v PNB GR L 16106 Dec 30 1961)

(walang New Pacific Timber v Hon Seneris Dec 19 1980)
(walang PNB v Natl City Bank of New York 63 Phil 711)
COURT OF APPEALS and PEOPLE OF THE PHILIPPINES, respondents.

(ASSOC BANK v CA again)
[G.R. No. 117857. February 2, 2001]
FACTS:
Luis Wong was an agent of Limtong Press Inc. (LPI), a manufacturer of
calendars. Wong issued six (6) postdated checks 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 Wongs
unremitted collections for 1984. Before the maturity of the checks, Wong
(Bataan Cigar v CA again)

(GEMPESAW v CA again)
(State INVESTMENT v IAC again)
(walang People v NITAFAN GR no 75954 Oct 22 1992)
(walang Spouses Moran v CA GR no 105836 Mar 7 1994)
(Gempesaw v CA again)
(walang MESINA v IAC)

(walang DOMAGSANG v CA 347 scra 75 (2000) )
Page
(walang HONGKONG and SHANGHAI v CATALAN)
50

Atty Reyes
(walang Ramos v CA 203 SCRA 657)

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G.R. No.

16454/ 42 Phil 182

On October 9, 1918, George B. Wicks, treasurer of said company,

GEORGE A. KAUFFMAN, plaintiff-appellee,

NEGO CONSOLIDATED DIGESTED CASES

GOVERNMENT SERVICE INSURANCE SYSTEM, petitioner,

Upon failure of the mortgagors to comply with the conditions of the

NORBERTO TIBAJIA, JR. and CARMEN TIBAJIA, petitioners,

On July 11, 1961, the Lagasca spouses executed an instrument

NEGO CONSOLIDATED DIGESTED CASES

Also, Section 1 of Republic Act No. 529, as amended, provides

in the Philippines. The delivery of promissory notes payable to order, or bills

NEGO CONSOLIDATED DIGESTED CASES

Since a negotiable instrument is only a substitute for money and

officer has no authority to accept anything other than money in payment of

NEGO CONSOLIDATED DIGESTED CASES

G.R. No. 88866/ 194 SCRA 169

NEGO CONSOLIDATED DIGESTED CASES

CALTEX (PHILIPPINES), INC., petitioner,

On March 1982, Angel dela Cruz informed the Sucat Branch

NEGO CONSOLIDATED DIGESTED CASES

The CTDs in question are negotiable instruments. Section 1 Act No.

BANCO DE ORO SAVINGS AND MORTGAGE BANK, petitioner,

(a) It must be in writing and signed by the maker or

G.R. No. 74917/ 157 SCRA 188

(b) Must contain an unconditional promise or order to pay

(c) Must be payable on demand, or at a fixed or

On 1983, private respondent bank through its Visa Card

The disputed checks are considered as negotiable. Petitioner is

NEGO CONSOLIDATED DIGESTED CASES

Plaintiff instituted an action against defendant for the recovery of

Moreover, Section 20 of the Negotiable Instruments Law provides

An inspection of the drafts accepted by the defendant shows that

to pay on demand or at a fixed or determinable future time a sum certain in

NEGO CONSOLIDATED DIGESTED CASES

ANG TEK LIAN, petitioner,

G.R. No. L-2516/ 87 Phil 383

NEGO CONSOLIDATED DIGESTED CASES

As Assistant City Fiscal, the source of the salary of Mabanto, Jr., is

Private respondent Ciriaco Urdaneta is one of the grantees of a parcel

ordinarily understood, delivery means the transfer of the possession of the

NEGO CONSOLIDATED DIGESTED CASES

(SESBRENO CASE AGAIN)

CONSOLIDATED PLYWOOD INDUSTRIES, INC., HENRY WEE, and

The act of assignment could not have operated to efface liens or

NEGO CONSOLIDATED DIGESTED CASES

WON the promissory note in question is a negotiable instrument.

April 30, 1987

The promissory note in question is not a negotiable instrument. The

The instrument in order to be considered negotiable must contain

NEGO CONSOLIDATED DIGESTED CASES

TRADERS ROYAL BANK, petitioner,

The CBCI is not a negotiable instrument. The instrument

Thus, the transfer of the instrument from Philfinance to TRB was

certificate of indebtedness as it merely acknowledges to pay a sum of

NEGO CONSOLIDATED DIGESTED CASES

MANUEL LIM and ROSITA LIM, petitioners,

NEGO CONSOLIDATED DIGESTED CASES

G.R. No. 85419/ 217 SCRA 743

G.R. No. L-2861/ 68 Phil 178

ENRIQUE P. MONTINOLA, plaintiff-appellant,

NEGO CONSOLIDATED DIGESTED CASES

(ANG TEK LIAN CASE AGAIN)

METROPOL (BACOLOD) FINANCING & INVESTMENT