Professional Documents
Culture Documents
Table of Contents
BPI v Roxas............................................................................................... 1
Nota Sapiera v CA....................................................................................1
Metrobank v PBCOM................................................................................2
BPI v CA.................................................................................................... 3
Coolidge V Payson...................................................................................5
Republic V PNB........................................................................................6
PAL V CA................................................................................................... 6
Fortunado V CA........................................................................................ 7
Mesina V IAC............................................................................................. 7
New Pacific Timber V Seneris.................................................................8
Wachtel V Rosen......................................................................................8
Roman Catholic Archbishop of Malolos Inc V IAC................................8
Bulliet V Allegheny Trust Co....................................................................8
Sutter V Security Trust Co.......................................................................8
PNB V Picornell......................................................................................10
Banco Atlantico V Auditor General.......................................................10
McCornack V Central State Bank..........................................................12
Adolph Ramish , Inc V Woodruff...........................................................13
Wachovia Bank V Crafton......................................................................14
Horowitz V Wollowitz.............................................................................14
BPI v Roxas
LIABILITY OF PARTIES>5. Checks
BPI v Roxas
SANDOVAL-GUTIERREZ, J. October 15, 2007
FACTS:
Respondent Roxas sold vegetable oil to Spouses Cawili. As
payment, spouses Cawili issued a personal check (in the amount of
P348,805.50).
Respondent tried to encash the check but it was dishonored by the
drawee bank. Spouses assured Roxas that they would replace the
bounced check with a cashiers check from petitioner BPI.
Roxas and Rodrigo Cawili went to BPI where the branch manager
personally attended to them. A cashiers check was drawn against
the account of Marissa Cawili, payable to Roxas and was handed to
the latter.
The dismissal of the criminal cases against petitioner did not erase her
civil liability since the dismissal was due to insufficiency of evidence and
not from a declaration from the court that the fact from which the civil
action might arise did not exist. An accused acquitted of estafa may
nevertheless be held civilly liable where the facts established by the
evidence so warrant. The accused should be adjudged liable for the
unpaid value of the checks signed by her in favor of the complainant.
Metrobank v PBCOM
Metrobank v PBCOM
Facts:
Pipe Master Corp. entered into a check discounting agreement with
Filipinas Orient
Pipe Master issued a Board Resolution authorizing Yu Kio in his
capacity as President and/or Tan Juan Lim in his capacity as VicePresident to execute, indorse make, sign, deliver or negotiate
instruments, documents, and such other papers necessary in
connection with any transaction coursed through Filipinas Orient for
and in behalf of the corporation.
Under the check discounting agreement between Pipe Master and
Filipinas Orient, Yu Kio sold to Filipinas Orient 4 Metro Bank checks
amounting to P1M. In exchange, Filipinas Orient (drawer) issued to
Issue: W/N Metro Bank and Solid Bank are liable to Filipinas Orient for
accepting the PBCom crossed checks payable to Pipe Master. YES
Ratio:
It is the collecting bank which is bound to scrutinize the check and to know its
depositors before it can make the clearing indorsement, all prior
indorsements and/or lack of indorsement guaranteed. The law imposes on
the collecting bank the duty to diligently scrutinize the checks deposited with
it for the purpose of determining their genuineness and regularity.
The Court previously held that the collecting bank or last indorser generally
suffers the loss because it had the duty to ascertain the genuineness of all
prior indorsements and is privy to the depositor who negotiates the check. In
Jai-alai Corp. of the Philippines v. BPI, the Court ruled that one who accepts
and encashes a check from an individual knowing that the payee is a
corporation does so at his own peril.
In this case, Metro Bank and Solid Bank are liable to Filipinas Orient for their
negligence in accepting the checks and allowing the transaction to push
through and disregarding established banking rules and procedures. They
accommodated Yu Kio being a valued client. They stamped at the back of
the checks their clearing indorsements. In doing so, they became general
signed blank withdrawal slip to return it to him after the bank drafts
clearance so that he could lend that party his passbook for the purpose
of withdrawing the amount. However, without his knowledge, said party
was able to withdraw the amount through collusion with one of petitioners
employees. Private respondent added that he had "given the Plaintiff fifty
one (51) days with which to clear the bank draft in question." Petitioner
should have disallowed the withdrawal because his passbook was not
presented. He claimed that petitioner had no one to blame except itself
"for being grossly negligent;" in fact, it had allegedly admitted having paid
the amount in the check "by mistake" x x x "if not altogether due to
collusion and/or bad faith on the part of (its) employees."
Lower court: dismissed the complaint. It held that petitioner could not
hold private respondent liable based on the checks face value alone. To
so hold him liable "would render inutile the requirement of clearance from
the drawee bank before the value of a particular foreign check or draft
can be credited to the account of a depositor making such deposit." It
was incumbent upon the petitioner to credit the value of the check in
question to the account of the private respondent only upon receipt of the
notice of final payment and should not have authorized the withdrawal
from the latters account of the value or proceeds of the check." Having
admitted that it committed a "mistake" in not waiting for the clearance of
the check before authorizing the withdrawal of its value or proceeds,
petitioner should suffer the resultant loss.
CA: affirmed lower court. It held that petitioner committed "clear gross
negligence" in allowing Gayon Jr. to withdraw the money without
presenting private respondents passbook and, before the check was
cleared and in crediting the amount indicated therein in private
respondents account.
Issue/Held:
1.......WHETHER OR NOT RESPONDENT NAPIZA IS LIABLE UNDER HIS
WARRANTIES AS A GENERAL INDORSER. (NO)
Petitioner claims that private respondent, having affixed his signature at the
dorsal side of the check, should be liable for the amount stated therein in
accordance with Sec. 66. of the NIL.
Section 65, on the other hand, provides for the following warranties of a
person negotiating an instrument by delivery or by qualified indorsement: (a)
that the instrument is genuine and in all respects what it purports to be; (b)
that he has a good title to it, and (c) that all prior parties had capacity to
contract.
Ordinarily private respondent may be held liable as an indorser of the check
or even as an accommodation party. However, to hold private respondent
liable for the amount of the check he deposited by the strict application of the
law would result in an injustice. 'The interest of justice thus demands looking
into the events that led to the encashment of the check.
The propriety of the withdrawal should be gauged by compliance with the
rules thereon that both petitioner bank and its depositors are duty-bound to
observe.
2.......WHETHER OR NOT A CONTRACT OF AGENCY WAS CREATED
BETWEEN RESPONDENT NAPIZA AND RUBEN GAYON. (NO)
Petitioner alleged that had private respondent indicated therein the person
authorized to receive the money, then Ruben Gayon, Jr. could not have
withdrawn any amount. Petitioner contends that "(i)n failing to do so (i.e.,
naming his authorized agent), he practically authorized any possessor
thereof to write any amount and to collect the same..
Such contention would have been valid if not for the fact that the withdrawal
slip itself indicates a special instruction that the amount is payable to "Ramon
A. de Guzman &/or Agnes C. de Guzman." Such being the case, petitioners
personnel should have been duly warned that Gayon, who was also
employed in petitioners Buendia branch, was not the proper payee of the
proceeds of the check. Otherwise, either Ramon or Agnes de Guzman
should have issued another authority to Gayon for such withdrawal. Of
course, at the dorsal side of the withdrawal slip is an "authority to withdraw"
naming Gayon the person who can withdraw the amount indicated in the
check. Private respondent does not deny having signed such authority.
However, considering petitioners clear admission that the withdrawal slip was
a blank one except for private respondents signature, the unavoidable
conclusion is that the typewritten name of "Ruben C. Gayon, Jr." was
intercalated and thereafter it was signed by Gayon or whoever was allowed
by petitioner to withdraw the amount. Under these facts, there could not have
been a principal-agent relationship between private respondent and Gayon
so as to render the former liable for the amount withdrawn.
3.......WHETHER OR NOT PETITIONER WAS GROSSLY NEGLIGENT IN
ALLOWING THE WITHDRAWAL. (YES)
Affirmed.
Coolidge V Payson
COOLIDGE v. PAYSON
FACTS
DRAWER: Cornhwaite & Cary
DRAWEE: Collidge & Co. (defendant)
PAYEE: John Randall
INDORSEE: Payson & Co. (plaintiff)
Upon a review of several cases, the court holds that a letter written
within a reasonable time before or after the bill of exchange, describing it in
terms not to be mistaken, and promising to accept it, is if shown to the person
who afterwards takes the bill on the credit of the letter, a virtual acceptance
binding the person who makes the promise.
Republic V PNB
Republic of the Philippines v. PNB (1961)
Facts:
The Republic filed a complaint for escheat of certain unclaimed bank
deposit balances against several banks.
o Under Act 3936, unclaimed balances include credits,
deposits of money, bullion, security and other evidence of
indebtedness of any kind of persons not heard from for 10
years or more.
PNB wanted to exclude from the escheat proceedings cashiers or
managers checks, demand drafts and telegraphic transfer payment
orders.
Lower court ruled cashiers check or managers checks and demand
drafts cannot be excluded, only the telegraphic transfer payment
orders.
o Upon an MR, demand drafts may be excluded, not subject to
escheat
Issue: WoN demand drafts (NO) and telegraphic orders (YES) come within
the purview of credits, hence may be subject to escheat
Held: PNB is liable for the cashiers checks and managers checks but is not
liable for the demand draft.
Demand drafts are bills of exchange payable on demand.
o A bill of exchange in NIL does not constitute an assignment
of funds and the drawee is not liable on it unless he accepts
it.
PAL V CA
PAL vs CA
Facts:
- Respondent Tan filed a complaint for damages against petitioner PAL
where PAL was ordered by the CFI to pay Tan a sum of money. This
was affirmed by the CA. The decision has become final and
executory. The records were remanded to the CFI for execution of
judgment.
- The order and writ of execution were subsequently issued. The writ
was referred to one Deputy Sheriff Emilio Reyes.
- Four months after, Tan moved for the issuance of an alias writ of
execution stating that the judgment remained unsatisfied. PAL
opposed this motion stating that it had already fully paid its obligation
through Reyes.
- The CA denied the motion for being premature and ordered Reyes to
appear with his return and explain his failure to surrender the
Fortunado V CA
Mesina V IAC
Mesina vs. IAC
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 a bank official, a certain Albert Uy. While Uy went to the
men's room, the check was stolen by his visitor in the person of Alexander
Lim. Upon discovering that the check was lost, Jose Go accomplished a
"STOP PAYMENT" order. Two days later, Associated Bank received the lost
check for clearing from Prudential Bank. After dishonoring the same check
twice, Associated Bank received summons and copy of a complaint for
damages of Marcelo Mesina who was in possession of the lost check and is
demanding payment. Petitioner claims that a cashier's check cannot be
countermanded in the hands of a holder in due course.
ISSUE:
Whether or not petitioner can collect on the stolen check on the ground that
he is a holder in due course.
RULING:
No. Petitioner failed to substantiate his claim that he is a holder in due
course and for consideration or value as shown by the established facts of
the case. Admittedly, petitioner became the holder of the cashier's check as
endorsed by Alexander Lim who stole the check. He refused to say how and
why it was passed to him. 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.
**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.
Issue/Holding/Ratio
WON the real defense that plaintiff had no record title to the oil
property (want of consideration) was valid? NO.
o An acceptor admits everything essential to the validity of
the bill, and on this ground he cannot, for example, even
set up the defense of want of consideration between
drawer and payee.
o The reply of Allegheny that it would honor the check
amounted to certification of the bank, thus making it
liable.
o Such certification at the request of the holder created a
new obligation on the part of the bank to that holder. It
passed the amount of the check to the credit of the
holder, who is thereafter a depositor to that amount.
Issue: Whether the the bank, by reason of its certification, would have been
justified in making payment to Mrs. Sutter, the payee, upon proper
presentation of the check by her, notwithstanding the service of the notice to
stop payment by her husband, the maker, and a disclosure by him to the
officers of the bank of the condition upon which the check was obtained by
Mrs. Sutter. (YES)
Held:
A drawer of a check, which has been certified at his request before
delivery, may recall the same and require the certifying bank to refuse
payment to the payee named therein if such payee is not a bona fide
holder, for value, but has obtained the check by fraud perpetrated by him
upon the maker. And further, that upon suit by the payee named in the
check against the certifying bank, upon its refusal to pay, after notice
from the drawer to stop payment, for reasons showing the payee not to
be a bona fide holder thereof, for value, the bank can urge and have the
benefit of any defense that the drawer could have against such payee,
establishing that such payee obtained the instrument, or any signature
thereto, by fraud, duress or force and fear, or other unlawful means, or
for an illegal consideration; and also that the right of the maker of a
check, certified at his request before delivery, is the same against an
endorsee holder, who is not a holder, in due course, as is his right to stop
payment against the payee who is not a bona fide holder, for value. Such
rule, however, has no application to a certified check held by a payee
who is a bona fide holder, for value, nor to a holder in due course,
although certified at the request of the drawer before delivery, nor where
the check, after delivery, is certified at the request of the payee or holder.
There is nothing to justify a holding that Mrs. Sutter, the payee, procured
the check by any fraud perpetrated by her upon her husband. For this
reason we conclude that the bank would have been justified in making
payment of the check to Mrs. Sutter, upon presentation thereof by her. If
the bank was not justified in making payment to Mrs. Sutter, the payee
named in the check, then it was not justified in making payment to Mr.
Mack (brother), the endorsee, who, we have found, under the facts here
presented, was not a holder in due course, and the stop-payment notice
of the maker, under such conditions, would operate in favor of the maker
against him as such holder, and would place the bank in a position where
it was not justified in making payment to such an endorsee holder.
As the bank was, under the facts presented, justified and legally called
upon to make payment to Mrs. Sutter, upon presentation and demand, as
against the notice of the maker of the check to stop payment, its
obligation, under the facts, was likewise to make payment to the
endorsee holder, Mr. Mack.
Affirmed.
PNB V Picornell
PNB V. PICORNELL, 1922
Facts:
A bill of exchange was drawn by Picornell in favor of PNB, plaintiff,
against the firm of Hyndman, Tavera & Ventura, now dissolved, its
only successor being the defendant Joaquin Pardo de Tavera.
Said BOE was for the amount obtained by Picornell for the purchase
of bales of tobacco in Cebu by the instructions of his principal,
Hyndman, Tavera & Ventura.
This instrument, together with the invoice and bill of lading of the
tobacco, were delivered to the National Bank with the understanding
that the bank should not deliver them to Hyndman, Tavera & Ventura
except upon payment of the bill.
The central office of PNB in Manila received the bill and the aforesaid
documents annexed thereto; and presented the bill to Hyndman,
Tavera & Ventura, who accepted it.
Upon inspection by Hyndman, Tavera & Ventura of the tobacco, it
wrote to Picornell, notifying him that of the tobacco received, there
was a certain portion which was of no use and was damaged.
Thereafter, Hyndman, Tavera & Ventura informed the plaintiff that it
refused to pay the BOE because of the noncompliance of the drawer
Picornell.
Hence the bank brought this instant action.
Issue: Whether bank could recover on the drawee Hyndman, Tavera &
Ventura under the subject BOE. YES
HELD:
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.
As to 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.
The fact that the tobacco was or was not of inferior quality does not
affect the responsibility of Picornell, because while it may have an
effect upon the contract between him and the firm of Hyndman,
Tavera, Ventura, yet it cannot have upon the responsibility of both to
the bank, upon the bill drawn and accepted as above stated.
The drawee, the Hyndman, Tavera & Ventura company, or its
successors, J. Pardo de Tavera, accepted the bill and is primarily
liable for the value of the negotiable instrument, while the drawer
Picornell, is secondarily liable. However, no question has been raised
about this aspect of the responsibility of the defendants. The
appellants are liable to PNB for the value of the bill of exchange.
Banco Atlantico V Auditor General
Banco Atlantico v. Auditor General (Fernandez, 1978)
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The basis of this argument is the nature of the indorsement made by Craig to
Ramish-- whether or not it was meant for collateral security or for transfer of
title.
4. Trial court of California ruled in favor of Woodruff (there was valid transfer
of title-- there was valid indorsement from Craig to Ramish). Hence this
petition.
ISSUE: Whether or not Woodruff is liable as a general indorser in spite of the
'guaranty'. (YES)
HELD: Reversed.
- In this kind of scenario, the 'indorsement' may be considered either a
guaranty or indorsement depending on two factors: (1) w/n there is a
passage of title, and (2) the nature of the liability incurred by the transferor
who has made the 'guaranty'/'indorsement'. In this case, the only issue is (1)
as the only defense invoked was offset against the original payee (Craig).
- Crucial here is the statement that purports to be either a guaranty or an
indorsement. There are two views on how this may operate:
a. The minority rule is that a guaranty placed on a bill/note does not constitue
a commercial negotiation thereof, and that the guaranty is a separate
contract. (based on the theory that a blank indorsemen admits of the
implications of its terms only becase of the fact that it is in blank; where there
are express terms, there can be no implied terms)
b. The majority rule, applied by the Court due to their being in accordance
with the policy of free circulation of commercial papers as money substitutes
and given NIL 63 (one is deemed an indorser unless he clearly indicates by
appropriate words his intent to be bound in some other capacity), is that if
one shows intent to be treated as guarantor/indorser, he shall be treated as
one. For example, a word of guaranty enlarges one's liability-- here, one
does not merely assume the burdens of indorsement, but also assumes the
unconditional liability of a guarantor (in contrast, an indorser is conditionally
liable; presentment, dishonor, and proceedings for dishonor/protest are
required).
An example of what was considered a guaranty stated: "I hereby sell, set
over and assign the note... and hereby GUARANTEE that this is a good,
valid and subsisting promissoryu note."
- There appears to be conflict among the evidence present (the indorsement
itself, the argument that there was no delivery of the note other than for
purposes of inspection and investigation; there were even points on lack of
meeting of minds and authority of agent). However, in case of doubt, the
tendency of the law is to resolve doubtful cases on negotiable instruments in
favor of due course holding. Given the indorsement and these
circumstances, it appears that there was at the very least an indorsement
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FACTS:
This is a promissory note for a gambling debt. Maker is J.M.
Carver, payee J.W. Crafton. Crafton indorsed the note to
Wachovia and now denies liability on the note because the
law provides all notes and contracts for gambling debts are
void. Wachovia is a holder in due course.
ISSUE / HELD
W/N Wachovia can collect. YES
RATIO:
The law that makes this note void does not extend to suits by
an innocent indorsee for value and holder in due course
against an indorser for his contract of indorsement. The
contract of indorsement is separable and independent of the
instrument. It guarantees that the instrument is a valid and
subsisting obligation. Thus the recovery should be sustained.
Horowitz V Wollowitz
Horowitz v. Wollowitz, Cohen, Jormack, et al. (1908)
(1) Maker (Cohen) created promissory note pay to order of himself for
$500. Delivered to 1st indorser (Wollowitz ) who indorsed it to last
indorser (Jormack) and finally sold for value and indorsed to plaintiff
holder (Horowitz).
(2) Upon presentment, Cohen refused to honor his obligation on the
grounds that Jormack was paid a usurious rate on the note by Cohen
which rendered the PN void ab initio. (defense of illegality used by
the maker against the holder).
(3) Case was filed against all indorsers and the maker. BUT the
subject of the appeal was the liability of the last indorser
(Jormack).
NOT AN ISSUE: The court did not pass on the question of WON a maker
can use the defense of illegality against a holder in due course since,
ISSUE: What was the liability of the last indorser (Jormack)?
HELD: Jormack is liable to Horowitz because:
(1) Section 116 of the NIL states that every indorser who indorses
without qualification warrants to all subsequent holders in due
course, inter alia, that the instrument is at the time of his indorsement
valid and subsisting.
(2) Furthermore, apart from NIL 116, it is an established rule that the
obligation of an indorser is a new and independent contract, separate
and distinct from the contract evidenced in the note.
DISPOSITIVE: Remand for further trial.
Other examples cited in the case:
(1) Packard v. Windholz Maker was Truman. Truman forged first
indorsement of Eaton to Windholz. Windholz made real indorsement
to Packard. Windholz was found liable to Packard even if he did not,
in good faith, know about the first forged indorsement beause he
guaranteed the genuineness of all prior indorsements.
(2) Lennon v. Grauer even if makers signature was forged, it is not a
defense that can be used by the indorser since he guaranteed all
prior signatures.
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