NEGOTIABLE INSTRUMENTS LAW

OUTLINE OF DECIDED CASES (1996 and up)

Atty. Rene Alexis P. Villarente, MBA
Supervising Attorney
Ateneo Legal Services Office
Introduction
Function and Importance of Negotiable Instruments
A. Substitute for Money but not legal tender

5. Bank of the Philippine Islands vs. Spouses Reynaldo and

Victoria Royeca, G.R. No. 176664, July 21, 2008, Third
Division, J. Nachura

(Ernesto Pacheco [12/2/99] debt of drawer; Benny Go

[10/11/05] debt of drawer; Spouses Antonio [11/22/05] debt of
payee; Chua Gaw [4/16/08] debt of payee)

Issue: Whether the tender of the check constitutes payment?

(Also Article 315 (2) (d) estafa of the RPC, Section 13, 14 and 12
as to undated checks, and stale checks)

6. Eumelia R. Mitra vs. People of the Philippines and

Felicisimo S. Tarcel, G.R. No. 191404, July 5, 2010, Second
Division, J. Mendoza.
Issue: Functions and Importance of Negotiable Instrument.

1. Myron C. Papa, Administrator of the Testate Estate of

Angela M. Butte vs. A.U. Valencia and Co. Inc., Felix
Pearroyo, Sps. Arsenio B. Reyes & Amanda Santos, and
Delfin Jao, G.R. No. 105188, January 23, 1998, First Division,
J. Kapunan

7. Donnina C. Halley vs. Printwell Inc., G.R. No. 157549, May

30, 2011, Third Division, J. Bersamin.

Issue: If the holder intentionally did not encash the check will the
sale be consummated in the light of Article 1249 of the Civil
Code?

(Note instructive as to the principle of the trust fund doctrine in

corporation law. But this topic is outside the scope of the
negotiable instrument law which is the prime subject of this work.
The trust fund doctrine enunciates a xxx rule that the property of
a corporation is a trust fund for the payment of creditors, but such
property can be called a trust fund only by way of analogy or
metaphor. As between the corporation itself and its creditors it is a
simple debtor, and as between its creditors and stockholders its
assets are in equity a fund for the payment of its debts. [42A,
Words and Phrases, Trust Fund Doctrine, p. 445, citing McIver v.
Young Hardware Co., 57 S.E. 169, 171, 144 N.C. 478, 119 Am. St.
Rep. 970; Gallagher v. Asphalt Co. of America, 55 A. 259, 262, 65
N.J. Eq. 258.])

(Also Section 62 and 137 on acceptance and Section 70 on tender

of payment)
2. Cebu International Finance Corporation vs. Court of
Appeals, Vicente Alegre, G.R. No. 123031, October 12, 1999,
Second Division, J. Quisumbing
Issue: What law governs the money market transaction of CIFC
with Alegre: Article 1249 of the Civil Code or Section 137 of the
NIL? Is a check a legal tender? Was Alegre bound by the
compromise agreement of CICF and BPI? When the BPI deducted
the amount of the check from CIFCs current account, did this ipso
facto operate as a discharge or payment of the check?
3. Juan A. Rueda, Jr. vs. Hon. Sandiganbayan and People of
the Philippines, G.R. No. 129064, November 29, 2000, En banc,
J. Pardo
Issue: What does cash mean in a generally accepted auditing
practice? Are NIs cash?
(Note: What if the payee intentionally delays the presentment of
the check for encashment to avoid the effect of payment?, Also
delivery of check for purposes of payment)
4. Pio Barretto Realty Development Corporation vs. Court of
Appeals, Judge Perfecto A.S. Laguio, Jr. and Honor P.
Moslares, G.R. No. 132362, June 28, 2001, Second Division, J.
Bellosillo
Issue: What is the effect of the delivery of the check? Is it not that
payment takes effect only when the check is encashed?
(Also check as proof of payment or proof of indebtedness and
whose rights are transgressed if there is no notice of dishonor)

1. Ernesto T. Pacheco and Virginia O. Pacheco vs. Court of

Appeals, and People of the Philippines, G.R. No. 126670
December 2, 1999, First Division, J. Ynares-Santiago

Issue: Is check money? When does a bill of exchange produce the

fact of payment?

Issue: What are the elements of the felony of estafa under Article
315 (2) (d) of the Revised Penal Code? Can one waive the
negotiable character of the check and treat it simply as proof of an
obligation (evidence of indebtedness)? How material is the fact
that the check was issued undated? What is the effect of a stale
check?
(Note this is instructive as to evidence but this subject is not
covered by NIL. Quotable Quotes: Vice Chancellor Van Flee once
said Evidence to be believed must not only proceed from the
mouth of a credible witness but must be credible in itself such as
the common experience and observation of mankind can approve
as probable under the circumstances. We have no test of the truth
of human testimony, except its conformity to our knowledge,
observation and experience. Whatever is repugnant to these
belongs to the miraculous, and is outside of judicial cognizance.)
2. Benny Go vs. Eliodoro Bacaron, G.R. No. 159048, October
11, 2005, Third Division, J. Panganiban
Issue: Are checks evidence of indebtedness?

B. Medium of commercial transactions

(Also history of Article 315 (2) [d])
1. People of the Philippines vs. Roberto Tongko, G.R. No.
123567 June 5, 1998, Second Division, J. Puno

3. Spouses Antonio and Lolita Tan vs. Carmelito Villapaz, G.R.

No. 160892, November 22, 2005, Third Division, J. CarpioMorales

Issue: What is the history of Article 315 (2) (d) of the Revised
Penal Code? Is a NI a medium of commercial transaction?

Issue: Can a check prove a loan transaction that was required to be

in writing under Article 1358 of the Civil Code (All other contracts
where the amount involved exceeds P500.00 must appear in
writing, even private one)?

C. Medium of credit transaction

(Evidence of indebtedness)

4. Concepcion Chua Gaw vs. Suy Ben Chua and Felisa Chua,
G.R. No. 160855, April 16, 2008, Third Division, J. Nachura

(Note: A check is evidence of indebtedness of either the drawer or

the payee or the holder. The check happens be in the hands of the
person who wants to prove the indebtedness of another. If the
check was used to prove the indebtedness of the drawer, that check
is in the hands of the payee or holder for it was presumably
returned to the payee or holder after it was dishonored by the
drawee bank. If the check was used to prove the indebtedness of
the payee, that check is in the hands of the drawer because when
deposited, the check was honored and so returned to the drawer by
the drawee bank. A promissory note is evidence of indebtedness of
the maker [Section 60]. Can it be an evidence of indebtedness of
the holder or payee[?])

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao University College of Law, Updated October 10, 2012.

Issue: Is the check evidence of indebtedness?

5. Land Bank of the Philippines vs. Monet's Export and
Manufacturing Corp., et al., G.R. No. 184971, April 19, 2010,
Second Division, J. Abad
Issue: Is a promissory note evidence of indebtedness?
6. Emilia Lim vs. Mindanao Wines & Liquor Galleria, as
Single Proprietorship Business Outfit Owned by Evelyn S.
Valdevieso, G.R. No. 175851, July 24, 2012, First Division, J.
Del Castillo

Issue: Can a check the entries of which are in writing prove a loan
transaction? If Emilia was acquitted of violations of BP 22 can she
nevertheless be required to pay the debt she owes?
D. It is specie of property
1. Gemma T. Jacinto vs. People of the Philippines, G.R. No.
162540, July 13, 2009, Third Division, J. Peralta.
Issue: Are checks by itself personal property? May it be subject to
theft even if it bounced?
(Also this is instructive about impossible crime Article 4 [2] of the
Revised Penal Code. But these topics are outside the scope of the
negotiable instrument law which is the prime subject of this.)
2. People of the Philippines vs. Bernard G. Mirto, G.R. No.
193479, October 19, 2011, Third Division, J. Velasco, Jr.
Issue: Are checks by itself personal property? May it be subject to
theft or qualified theft?
3. Anita L. Miranda vs. People of the Philippines, G.R. No.
176298, January 25, 2012, First Division, J. Villarama, Jr.
Issue: Are checks by itself personal property? May it be subject of
qualified theft?

Section 1

Issue: What is a letter of credit? Is it a negotiable instrument? How

about a draft drawn from a letter of credit?

(Also negotiability: characteristic of NI, Section 30 assignment vs

negotiation, negotiability and holder in due course)

(Note instructive as to meaning and import of a letter of credit, but

not strictly covered by NIL)

1. Traders Royal Bank vs. Court of Appeals, Filriters Guaranty

Assurance Corporation and Central Bank of the Philippines,
G.R. No. 93397, March 3, 1997, Second Division, J. Torres Jr.

(Also negotiability)

Issue: Is a CBCI a Negotiable Instrument? What is negotiability

and what is its relation to the right conferred to a holder in due
course? When the CBCI was transferred to Philfinance and TRB,
what was it that transpired, a negotiation or an assignment?
(Also Section 89, 103, 104 on notice of dishonor, NI substitute for
money, negotiability: characteristic of NI)
2. Firestone Tire & Rubber Company of the Philippines vs.
Court of Appeals and Luzon Development Bank, G.R. No.
113236, March 5, 2001, Second Division, J. Quisumbing
Issue: Are special withdrawal slips negotiable? Do the rules
governing the giving of immediate notice of dishonor of NI apply
in this case?

6. People of the Philippines vs. Aloma Reyes and Trichia Mae

Reyes (at large), G.R. No. 154159, March 31,2005, Second
Division, J. Puno
Issue: What is a negotiable order of withdrawal (NOW)? It is a
negotiable instrument? Is negotiability the gravamen of estafa?
7. Noe S. Andaya vs. People of the Philippines, G.R. No.
168486, June 27, 2006, First Division, J. Ynares-Santiago
Issue: Are disbursement
(negotiable instruments)?

vouchers

commercial

documents

8. Leonila Batulanon vs. People of the Philippines, G.R. No.

139857, September 15, 2006, First Division, J. Ynares-Santiago
Issue: Are cash vouchers negotiable instruments?

(Also Sections 184 and 60)

(Also presumption of consideration)

E. Proof of Payment
1. Francisco Taquinod vs. Deputy Sheriff Rolando Tomas,
RTC, Branch 21, Santiago City, A.M. No. P-09-2660,
November 29, 2011, En Banc, Per Curiam.
Issue: Are checks proof of payment and so proof of violation of
Section 2 (e), Canon III of the Code of Conduct?
F. Evidence of Indebtedness

notes

evidence

Issue: Whether or not Roxas should be jointly and severally liable

with Astro for the sum awarded by the RTC. What is a maker and
what is its liability?
(Also Sections 29)

1. Westmont Investment Corporation vs. Amos P. Francia, Jr.,

et. al., G.R. No. 194128, December 7, 2011, Third Division, J.
Mendoza.
Issue: Are promissory
(borrowings)?

3. Astro Electronics Corp. and Peter Roxas vs. Philippine

Export and Foreign Loan Guarantee Corporation, G.R. No.
136729, September 23, 2003, Second Division, J. AustriaMartinez

of

indebtedness

G. Guarantee for the Performance of a Future Obligation

(Also consideration under Section 24)
1. San Miguel Corporation vs. Helen T. Kalalo, G.R. No.
185522, June 13, 2012, Second Division, J. Sereno.
Issue: Can checks be only for payment of a preexisting obligation?
May the checks be likewise issued as a guarantee for the
performance of a future obligation? Is it possible that the
dishonored checks were issued merely to guarantee the
performance of a future obligation?

4. Romeo C. Garcia vs. Dionisio V. Llamas, G.R. No. 154127,

December 8, 2003, First Division, J. Panganiban
Issue: Is the quoted promissory note a negotiable instrument?
Assuming that it is what is the liability of an accommodation
party?
(Note instructive as to the rule on summary judgment vis a vis
judgment on the pleadings as well as the principle of novation as
mode of extinguishment of obligation. But these topics are outside
the scope of the negotiable instrument law which is the prime
subject of this work)
5. Transfield Philippines, Inc. vs. Luzon Hydro Corporation,
Australia and New Zealand Banking Corporation Limited and
Security Bank Corporation, G.R. No. 146717, November 22,
2004, Second Division, J. Tinga

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao University College of Law, Updated October 10, 2012.

9. Pentacapital Investment Corporation vs. Makilito

Mahinay/Pentacapital Investment Corporation vs. Mikilito,
G.R. No. 171736, July 5, 2010, Second Division, J. Nachura
Issue: Give another definition of promissory note other than
Section 1 and 184 of the NIL?
Section 1
(NIL and Tax)
1. Bibiano V. Baas, Jr. vs. Court of Appeals, Aquino T. Larin,
Rodolfo Tuazon and Procopio Talon, G.R. No. 102967,
February 10, 2000, Second Division, J. Quisumbing
Issue: What is re-discounting? What is unusual with the rediscounting in this case? When the promissory note was rediscounted in this manner was it correct to report it as sale on
installment?
(Note instructive as to counter-claim award and attorneys fees
granted to maliciously sued government employees, but not
covered by NIL)
2. BPI Family Bank vs. Court of Appeals, Court of Tax Appeals
and Commissioner of Internal Revenue, G.R. No. 117319, July
19, 2006, Third Division, Resolution

Issue: Are T-Bills and CB-Bills promissory notes or deposit

substitutes such that it is exempt from DST? What is the
difference between deposit substitutes and certificates of
indebtedness? What is the difference between certificate of
indebtedness and promissory notes?
(Also Section 126 and 129 of the NIL, Bill of Exchange,
documentary stamp tax, telegraphic transfer and drafts)
3. Bank of the Philippine Islands vs. Commissioner of Internal
Revenue, G.R. No. 137002, July 27, 2006, First Division, J.
Chico-Nazario
Issue: What does Section 182 of the National Internal Revenue
Code (NIRC) cover? What is the definition of a Bill of Exchange
(B/E)? What is the distinction between a B/E and a letter of credit?
What is a telegraphic transfer? What is the nature of a DST? What
is a draft?

Issue: The question is whether or not the reference to the penalty

charges in the promissory note constitutes substantial compliance
with the disclosure requirement of the Truth in Lending Act?
3. Union Bank of the Philippines vs. Spouses Rodolfo T. Tiu
and Victoria N. Tiu, G.R. Nos. 173090-91, September 7, 2011,
First Division, J. De Castro.
Issue: Is the stipulation that the promissory note is payable in
dollars prohibited? Trace the history of the rule on payment using
foreign denomination from Article 1249 of the Civil Code to
Republic Act No. 8183 of July 5, 1996.
4. Eleanor De Leon Llenado vs. People of the Philippines and
Editha Villaflores, G.R. No. 193279, March 14, 2012, Second
Division, J. Sereno.
Issue: When does the 12% interest rate (should there be no
stipulation) commence to run?

Issue: Can an actual, existing and living payee be considered

fictitious? Who bears the loss in a fictitious payee situation, the
drawee or the drawer? What is the fictitious payee rule? What is
the commercial bad faith exception to the fictitious payee rule?
Section 12
1. San Miguel Corporation vs. Bartolome Puzon, Jr., G.R. No.
167567, September 22, 2010, First Division, J. Del Castillo
Issue: What is the meaning of delivery in relation to Section 16?
When the check was issued only for security and was taken by the
drawer who gave it as security can the drawer be charged of theft?
(Note also instructive as to the elements of theft and defense of
ownership of the property taken, but not covered in the NIL)
Sections 14-15-16

4. Security Bank Corporation vs. Commissioner of Internal

Revenue, G.R. No. 130838, August 22, 2006, Second Division, J.
Garcia

5. Asiatrust Development Bank vs. Carmelo H. Tuble, G.R. No.

183987, July 25, 2012, Second Division, J. Sereno.

1. Federico O. Borromeo, Lourdes O. Borromeo and Federico

O. Borromeo, Inc , vs. Amancio Sun and the Court of Appeals,
G.R. No. 75908, October 22, 1999, Third Division, J. Purisima

Issue: Does the term securities include negotiable promissory

notes?

Issue: What is a dragnet clause? What is a monetary interest?

What is compensatory interest?

Issue: Is document subject in this case executed with similar

effects as Section 14 of the NIL?

5. International Exchange Bank vs. Commissioner of Internal

Revenue, G.R. No. 171266, April 4, 2007, Second Division, J.
Carpio Morales

Section 7

Issue: Are the FSDs subject to DST? Is the negotiability of an

instrument material for the imposition of DST?
Section 2
(Note while usury law has been repealed the Courts will bring
down unconscionable rates)
1. New Sampaguita Builders Construction, Inc. (NSBCI) and
spouses Eduardo R. Dee and Arcelita M. Dee vs. Philippine
National Bank, G.R. No. 148753, July 30, 2004, Third Division,
J. Panganiban

[Also Section 1 and Section 24 on presumption of consideration]

(Q: When instrument is payable on demand when must it be

presented for payment? A: Section 71. Also Section 186 stale
check, managers check (drawer is maker) and Section 193
reasonable time)

2. Quirino Gonzales Logging Concessionaire, Quirino Gonzales

and Eufemia Gonzales vs. Court of Appeals and Republic
Planters Bank, G.R. No. 126568, April 30, 2003, Third
Division, J. Carpio-Morales

1. International Corporate Bank vs. Gueco, G.R. No. 141968,

February 12, 2001, First Division, J. Kapunan

Issue: Did the promissory note comply with Section 1 of the NIL?
What is the presumption of consideration?
What is the
consequence of an instrument issued in blank?

Issue: What is a stale check? What is meant by reasonable time

after issue that a check must be presented for payment? What is the
nature of a managers check?
Section 9
(Bearer Instruments)

3. Sps. Sergio and Milagros Ojeda vs. Andrelina Orbeta, G.R.

No. 142047, July 10, 2006, Third Division, Resolution
Issue: What is the effect of a blank check that was delivered?
(Also checks as evidence of indebtedness)

Issue: Can banks unilaterally increase interest rates? What is the

effect of the repeal of the Usury Law? What is the use of the Truth
in Lending Act? Can attorneys fees mentioned in the PNs
reduced?

(Also crossed check)

1. Teresita L. Vertudes vs. Julie Buenaflor and Bureau of
Immigration, G.R. No. 153166, December 16, 2005, Second
Division, J. Puno

(Note Quotable Quotes: The time is now ripe to give teeth to the
often ignored forty-one-year old Truth in Lending Act and thus
transform it from a snivelling paper tiger to a growling financial
watchdog of hapless borrowers)

Issue: What is the effect of the issuance of bearer checks that were
not crossed? Is this proof that the transaction was not for loan but
the promise for travel documents to Japan?

2. Bank of the Philippines Islands, Inc. vs. Sps. Norman and

Angelina Yu, et al., G.R. No. 184122. January 20, 2010, Second
Division, J. Abad.

2. Philippine National Bank vs. Erlando T. Rodriguez and

Norma Rodriguez, G.R. No. 170325, September 26, 2008, Third
Division, J. Reyes, R.T.

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao University College of Law, Updated October 10, 2012.

4. Samson Ching vs. Clarita Nicdao and Court of Appeals,

G.R. No. 141181, April 27, 2007, Third Division, J. Callejo, Sr.
Issue: What is the effect of Sections 15 and 16 of the NIL? Is the
check here an evidence of indebtedness?
(Note also instructive as to the right of the private complainant to
appeal the civil aspect of the case in cases of acquittal, but not
covered in the NIL)
5. Rafael P. Lunaria vs. People of the Philippines, G.R. No.
160127, November 11, 2008, First Division, CJ. Puno.

Issue: What is the effect of Section 14 of the NIL? What is

presumption of authority to fill the blanks?

Issue: What rule must be followed if there is no ambiguity? How

will the document be interpreted under Section 17 of the NIL when
the NI reads: I/We and signed by two or more persons?

Issue: Give a review of the effects of a forged indorsement? Where

thirty checks bearing forged endorsements are paid, who bears the
loss, the drawer, the drawee bank or the collecting bank?

Sections 19, 20, 44, 69

2. SPS. Francisco S. Antonio and Amor W. Antonio vs. Sps.

Teodorico C. Omnes and Alice Omnes and the Standard
Chartered Bank, G.R. No. 140980, March 1, 2000, Second
Division, Resolution

(Also definition of issue under Section 191)

6. John Dy vs. People of the Philippines and the Honorable
Court of Appeals, G.R. No. 158312, November 14, 2008, Second
Division, Acting CJ. Quisumbing.
Issue: What is issuance of a check under Section 191? What is the
prima facie authority to complete blank material particulars under
Section 14 of the NIL?
(Also material alteration and Article 2179 of the Civil Code)
7. Bank of America NT & SA vs. Philippine Racing Club, G.R.
No. 150228, January 30, 2009, First Division, J. Leonardo-De
Castro.
Issue: What are the effects of Article 14 and 16? What is the
effect of Article 15? What is material alteration? What is meant
by obvious irregularities? What is material alteration?

(Also forgery, on the findings of fact by the trial courts)

1. Adalia Francisco vs. Court of Appeals, Herby Commercial &
Construction Corporation and Jaime C. Ong, G.R. No. 116320,
November 29, 1999, Third Division, J. Gonzaga-Reyes
Issue: What are the effects of the findings of fact of the trial courts
of the existence of forgery? How a NI may be issued through an
agent (Section 20) or indorsed in a representative capacity (Section
44)?
2. Solidbank Corporation vs. Mindanao Ferroalloy
Corporation, spouses Jong-Wong Hong, and Sook-ok Kim
Hong, Teresita Cu and Ricardo P. Guevarra, G.R. No. 153535,
July 28, 2005, Third Division, J. Panganiban
Issue: What is the liability of an agent under Sections 19 and 20 of
the NIL.

(Also managers check)

8. Rizal Commercial Banking Corporation vs. Hi-Tri
Development Corporation and Luz R. Bakunawa, G.R. No.
192413, June 13, 2012, Second Division, J. Sereno.
Issue: When are instruments considered delivered under Section
16?
Sections 17
1. People of the Philippines vs. Martin L. Romero and Ernesto
C. Rodriguez, G.R. No. 112985, April 21, 1999, First Division,
J. Pardo

Sections 22
(Also, Section 52 holder in due course, Section 28 failure or
absence of consideration)
1. Atrium Management Corporation vs. Court of Appeals, E.T.
Henry and Co., Lourdes Victoria M. De Leon, Rafael De Leon,
Jr., and Hi-Cement Corporation, G.R. No. 109491, February
28, 2001, First Division, J. Pardo

Issue: Are the Antonios precluded from recovering from Standard

Chartered Bank due to negligence?
3. Metropolitan Bank & Trust Company vs. Sanvar
Development Corp., G.R. No. 145916, January 29, 2001,
Second Division, Resolution
Issue: Whether or not Sanvars complaint states a cause of action
against Metrobank bank, the collecting bank, as to the two checks?
Who bears the loss in case of a forged indorsement?
(Also Section 51 and 191 on simple holder, desirable short cut,
laches, negligence, liability of collecting bank)
4. Westmont Bank (formerly Associated Banking Corp.) vs.
Eugene Ong, G.R. No. 132560, January 30, 2002, Second
Division, J. Quisumbing
Issue: What is the effect of forgery? What is nature of the liability
of a collecting bank in forgeries of indorsements? Is Ong a holder
under Sections 51 and 191 when he was never in actual or physical
possession of the checks? What is the concept of a desirable short
cut? What is the degree of care required for banks considering
the nature of its business? Why was there negligence here? Was
Ong barred by laches since it took him five (5) months to demand
from Westmont?

1a. Lourdes M. De Leon vs. Court of Appeals, Atrium

Management Corporation, and Hi-Cement Corporation, G.R.
No. 121794, February 28, 2001, First Division, J. Pardo

(Also crossed checks, managers checks, collecting banks liability,

section 63 indorser)

Issue: What is an ultra vires act? In what instances will personal

liability of corporate officers attach? What is a holder in due
course? Is Atrium a holder in due course when it re-discounted the
crossed checks? Are holders not in due course precluded from
recovering on the instrument?

5. Traders Royal Bank vs. Radio Philippines Network, Inc.,

Intercontinental Broadcasting Corporation and Banahaw
Broadcasting Corporation, through
the
Board
of
Administrators, and Security Bank and Trust Company, G.R.
No. 138510, October 10, 2002, Third Division, J. Corona

Sections 23
(Forgery)

Issue: Whether or not TRB should be held solely liable when it

paid the amount of the checks in question to a person other than
the payee indicated on the face of the check, the BIR? What is
effect of Section 23 of the NIL? What is the consequence of a
bank paying a forged check? What is crossed check? Was TRB
negligent? What is a collecting bank? Under the circumstances is
SBTC a collecting bank? Who are deemed indorsers?

Issued: Is Section 17 of the NIL applicable?

(Also liability of indorse Section 63 and 66)
2. Remedios Nota Sapiera vs. Court of Appeals and Ramon
Sua, G.R. No. 128927, September 14, 1999, Second Division, J.
Bellosillo
Issue: In what capacity did Sapiera sign when there is doubt as to
her signature? What is the rule of construction under Section 17?
Who are indorsers under Section 63? What is the liability of an
indorser under Section 66?
3. Spouses Eduardo B. Evangelista and Epifania C. Evangelista
vs. Mercator Finance Corp., Lydia P. Salazar, Lamecs Realty
and Development Corp. and the Register of Deeds of Bulacan,
G.R. No. 148864, August 21, 2003, Third Division, J. Puno

1. Associated Bank vs. Court of Appeals, Province of Tarlac

and Philippine National Bank
G.R. No. 107382, January 31, 1996, Second Division, J.
Romero
1a. Philippine National Bank vs. Court of Appeals, Province of
Tarlac and Associated Bank
G.R. No. 107612, January 31, 1996, Second Division, J.
Romero

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao University College of Law, Updated October 10, 2012.

6. Ramon K. Ilusorio, vs. Court of Appeals and the Manila

Banking Corporation, G.R. No. 139130, November 27, 2002,
Second Division, J. Quisumbing

Issue: What is the effect of the negligence of the drawer on the rule
that when the signature of the drawer is forged (Section 23) the
drawee bears the loss?
7. Michael A. Osmea vs. Citibank, N.A., Associated Bank and
Frank Tan, G.R. No. 141278, March 23, 2004, Second Division,
J. Callejo, Sr.
Issue: Was there negligence on the part of the banks in paying the
amount of the check without the indorsement of Frank Tan? Is the
ruling in the Associated Bank case (1996) on the liability of a
collecting bank applicable in this case?

Issue: Since bank deposits are considered loan can banks

unilaterally freeze an account? What are the liabilities of banks on
forgery? Is there a need for Buenaventura et. al. to ascertain the
right of Franco on the check? What is the nature of a banks
relationship with its depositor?
(Also liabilities of
indorsements, PCHC)

parties,

collecting

banks

clearing

11. Allied Banking Corporation vs. Lim Sio Wan, Metropolitan

Bank and Trust Company, and Producers Bank, G.R. No.
133197, March 27, 2008, Second Division, J. Velasco, Jr.

(Q: What is wholly in operative referred to by the pronoun it

arising out of forgery? Is it the instrument or the signature? A:
Westmont (1/30/02) signature; Ilusorio (11/27/02) check or
instrument; BPI vs Casa (5/28/04) signature. A: It refers to the
signature not the instrument to be wholly inoperative due to
forgery, Associated Bank vs. CA (1/31/96), for if it refers to the
instrument then the exceptions to Section 23 will be of no more use
as the instrument becomes wholly inoperative].

Issue: Give the liabilities of the parties by reason of forgery?

What is the effect of the negligence of Allied and Metrobank? Who
is ultimately liable and under what grounds?

8. Bank of the Philippine Islands vs. Casa Montessori

Internationale, and Leonardo T. Yabut
G.R. No. 149454, May 28, 2004, First Division, J. Panganiban

1. Teresita Villaluz, Chit Ilagan, spouses Ador and Tess

Taberna and Mario Llamas vs. Court of Appeals and spouses
Reynaldo and Zenaida Anzures, G.R. No. 106214, September 5,
1997, Third Division, J. Francisco

8a. Casa Montessori Internationale vs. Bank of the Philippine

Islands, G.R. No. 149507, May 28, 2004, First Division, J.
Panganiban
Issue: What is forgery under Section 23? What are the factual
findings of the sole negligence of BPI? Who bears the loss in case
of forgery of the drawers signature? What is estoppel? Was
CASA estopped in failing to make a report?
9. Samsung Construction Company Philippines, Inc., vs. Far
East Bank and Trust Company and Court of Appeals, G.R. No.
129015, August 13, 2004, Second Division, J. Tinga
Issue: In case of forgery of the signature of the drawer without
negligence on its part who bears the loss? What are the factual
findings as to the negligence of the drawee bank?
(Also bank deposits treated a loan, fiduciary relationship of bank
and its depositor)
10. BPI Family Bank, vs. Edgardo Buenaventura, Myrna
Lizardo and Yolanda Tica, G.R. No. 148196, September 30,
2005, Second Division, J. Austria-Martinez
10a. Edgardo Buenaventura, Myrna Lizardo and Yolanda
Tica, vs. BPI Family Bank, G.R. No. 148259, September 30,
2005, Second Division, J. Austria-Martinez

CONSIDERATION
Sections 24, 25, 28, 191 (value)
(Rule 131 Section 3 (r) and (s) of the Rules of Court)

Issue: What is the presumption of consideration under Section 24?

What is the effect of Villaluz issuance of a check for P2 million?
(Note, there is a twin ejectment case involving, Ilagan, Taberna and
Llamas but not part of NIL)
2. Remigio S. Ong vs. People of the Philippines and Court of
Appeals, G.R. No. 139006, November 27, 2000, First Division,
J. Kapunan
Issue: What is the gravamen of the offense punished by BP 22? Is
it necessary to prove consideration in BP 22?
3. Luis S. Wong vs. Court of Appeals and People of the
Philippines, G.R. No. 117857, February 2, 2001, Second
Division, J. Quisumbing
Issue: What was the consideration for the issuance of the checks?
In BP 22 is there a necessity to determine the reason for the
issuance of the check?

4a. Mico Metals Corporation vs. Court of Appeals and

Philippine Bank of Communications G.R. No. 117914,
February 1, 2002, Second Division, J. De Leon, Jr.
Issue: What is the presumption of consideration under Section 24
and Rule 131 Section 3 of the Rules of Court? What are the
requirements for a negotiable instrument to be a substitute for
money? What are letters of credit? Are letters of credit negotiable
instruments? How about a draft? How are letters of credit
transacted?
5. Felicito G. Sanson, Celedonia Sanson-Saquin, Angeles A.
Montinola, Eduardo A. Montinola, Jr. vs. Court of Appeals and
Melecia T. Sy, as administratrix of the Intestate Estate of the
Late Juan Bon Fing Sy, G.R. No. 127745, April 22, 2003, Third
Division, J. Carpio Morales
Issue: What is the effect of Section 24 of the NIL?
(Note instructive as to dead mans statute but not covered in the
NIL)
(Also Section 52 holder in due course, and gravamen of BP 22)
6. Leodegario Bayani vs. People of the Philippines, G.R. No.
154947, August 11, 2004
Second Division, J. Callejo
Issue: What is the gravamen of BP 22? Was Evangelista
considered a holder in due course? What is the presumption of
consideration (Section 24)? What is the effect of want of
consideration (Section 28)?
7. Vicky C. Ty vs. People of the Philippines, G.R. No. 149275,
September 27, 2004, Second Division, J. Tinga
Issue: What is the basis of the presumption of consideration? Is it
a valid defense that no valuable consideration redowned to the
maker personally?
8. Victor Ongson vs. People of the Philippines, G.R. No.
156169, August 12, 2005, First Division, J. Ynares-Santiago
Issue: What constitutes valuable consideration? What is the
presumption of consideration? What is it that the law punishes in
BP 22?
(Also elements of BP 22)

(Also, Section 1, NI as substitute for money, letters of credit,

drafts)
4. Charles Lee, Chua Siok Uy, Mariano Sio, Alfonso Yap,
Richard Velasco and Alfonso Co vs. Court of Appeals and
Philippine Bank of Communications, G.R. No. 117913,
February 1, 2002, Second Division, J. De Leon, Jr.

9. Leodegario Bayani vs. People of the Philippines, G.R. No.

155619, August 14, 2007, Third Division, J. Austria-Martinez
Issue: What are the elements of BP 22? What is the presumption
of consideration (Section 24)?
What constitutes valuable
consideration?
(Note instructive as to hearsay but not covered by the NIL)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao University College of Law, Updated October 10, 2012.

(Also Section 191 on the meaning of issuance)

10. Isidro Pablito M. Palana vs. People of the Philippines, G.R.
No. 149995, September 28, 2007, Third Division, J. YnaresSantiago

1. Spouses Gil and Noelli Gardose vs. Reynaldo S. Tarroza,

G.R. No. 130570, May 19, 1998, Second Division, J. Puno

Issue: What is the liability of an accommodation party under

Section 29 of the NIL? What is a promissory note? Who proves
payment? Can stipulated interest rates be equitably reduced? What
is the basis of such reduction under the Civil Code?

Issue: What is the presumption of consideration? What is the

meaning of issuance under Section 191 of the NIL?

Issue: What is the relationship of the accommodation party and the

party accommodated? What is the difference between a surety and
guaranty? What is an accommodation party? What is the
immediate right of recourse under Section 151? What is the
liability of the drawer under Section 61?

11. Carmencita G. Cario vs. Merlin de Castro, G.R. No.

176084, April 30, 2008, Third Division, J. Ynares-Santiago

(Note, no mention where the check was drawn and what was the
reason for the dishonor or if it was dishonored in the first place).

Issue: What is an accommodation party? Was Bautista an

accommodation party?

Issue: Was the check issued for consideration?

2. Agro Conglomerates, Inc. and Mario Soriano vs. Court of

Appeals, and Regent Savings and Loan Bank, Inc., G.R. No.
117660, December 18, 2000, Second Division, J. Quisumbing

NEGOTIATION AND INDORSEMENTS

(Note instructive as to authority to prosecute criminal cases but not

covered by the NIL. Quote: Under Section 5, Rule 110 of the
Rules of Court all criminal actions commenced by complaint or
information shall be prosecuted under the direction and control of
the fiscal. The fiscal represents the People of the Philippines in the
prosecution of offenses before the trial courts at the metropolitan
trial courts, municipal trial courts, municipal circuit trial courts
and the regional trial courts. However, when such criminal actions
are brought to the Court of Appeals or (to) this Court (SC), it is the
Solicitor General who must represent the People of the Philippines
not the fiscal.)
12. Siain Enterprises, Inc. vs. Cupertino Realty Corporation
and Edwin R. Catacutan, G.R. No. 170782, June 22, 2009,
Third Division, J. Nachura
Issue: Was there a consideration for the issuance of the promissory
note? What is the presumption of consideration? Is this
presumption provided for in the Rules of Court?
13. Engr. Jose E. Cayanan Vs. North Star International Travel,
Inc., G.R. No. 172954. October 5, 2011, 1st Division, J.
Villarama
Issue: What is the presumption of consideration under Section 24?
Sections 28
(Also Section 29 and 52 of the NIL)
1. Perpetual Savings Bank vs. Dolores Brondial, et.al., G.R. No.
146663, March 14, 2001, First Division, Resolution
Issue: Is PSB a holder in due course? Does the promissory note
have consideration? What is the effect of Section 28 of the NIL?
Is Brondial and accommodation party under Section 29? What is
the role of PSB (the party accommodated) in this transaction?
Sections 29
(Accommodation Party)

7. Claude P. Bautista vs. Auto Plus Traders, Incorporated and

Court of Appeals, G.R. No. 166405, August 18, 2008, Second
Division, J. Quisumbing

Sections 30 (8, 9), 31, 34, 40, 48, 49

Issue: What is an accommodation maker? What is a surety?

(Also crossed check)

3. Majestic Finance & Investment Co., Inc. vs. Amelia L.

Bonifacio, G.R. No. 147920, April 3, 2002, First Division,
Resolution

1. Bank of the Philippine Islands vs. Court of Appeals,

Annabelle A. Salazar and Julio R. Templonuevo, G.R. No.
136202, January 25, 2007, First Division, J. Azcuna

Issue:
What is an accommodation party?
accommodation party here not liable?

Issue: What is the effect of a transfer of an order instrument

without indorsement? What is the effect that the checks were
crossed and the one year period before Templonuevo demanded
reimbursement? Does a collecting bank, over the objections of its
depositor, have the authority to withdraw unilaterally from such
depositors account the amount it had previously paid upon certain
unendorsed order instruments deposited to another account that
was later closed?

Why is the

4. Genevieve Lim vs. Florencio Saban, G.R. No. 163720,

December 16, 2004, Second Division, J. Tinga
Issue: What is an accommodation party? Give the elements for
the existence of an accommodation party? Was Lim an
accommodation party to Ybaez?
(Note instructive as to revocation of brokers agency rights after
the transaction has been consummated, but not covered by NIL)
(Also Section 119 [d] and Section 122 on discharge of NIL)
5. Tomas Ang vs. Associated Bank and Antonio Ang Eng Liong,
G.R. No. 146511, September 5, 2007, First Division, J. Azcuna
Issue: What is an accommodation party under Section 29 of the
NIL? Were the Promissory Notes discharged under Section 119
(d) and 122 of the NIL?
What is the warranty of an
accommodation party? What is the meaning of without receiving
value What about receiving value for lending his name?
(Note instructive as to revocation of brokers agency rights after
the transaction has been consummated, but not covered by NIL)
(Also, Section 184 on promissory notes, Section 119 on payment,
Section 2 and Usury law on reduction of rates)
6. Henry Dela Rama Co vs. Admiral United Savings Bank,
G.R. No. 154740, April 16, 2008, Third Division, J. Nachura

(Q: If a collecting bank is considered a holder for value [BPI vs.

CA, GR 112392, February 29, 2000, an accommodation party is
liable to a collecting bank as it is a holder for value], can a
collecting bank be considered an indorser since usually it
guarantees all prior indorsements or lack of it? (1) Legal
Answer: Up until this case of Metro Bank vs. BA Finance [GR
179952, December 4, 2009] the answer is yes. 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
[Associated Bank vs. CA 252 SCRA 260, January 31, 1996]. (2)
Academic Answer: No a collecting bank is a holder with rights
( 191: payee or indorsee or bearer) and not an indorser with
liabilities ( 63: intent to be bound). A collecting banks practice of
guaranteeing all prior indorsements or lack of it (clearing
indorsement, PCHC rules 17) is different from the warranty of
indorsers ( 65 and 66) although having the same effect. (3)
Suggested Answer. A collecting bank is neither an indorser nor a
holder. A collecting bank is a mere agent of the owner of the item
for purposes of collection (Section 4-205 of the U.S. Uniform
Commercial Code and Far East Bank vs. Gold Palace [GR 168274,
August 20, 2008]).

(Also Sections 61 and 151)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao University College of Law, Updated October 10, 2012.

(Also, warranty of acceptor, common law principle on mistake in

payment of the acceptor, US Uniform Commercial code 3-417 (a)
do not have similar provision in the Philippine jurisdiction, and
restrictive indorsement)
2. Far East Bank & Trust Company vs. Gold Palace Jewellery
Co., as represented by Judy L. Yang, Julie Yang-Go and Kho
Soon Huat, G.R. No. 168274, August 20, 2008, Third Division,
J. Nachura
Issue: What is the nature of a collecting bank? Is the indorsement
of a holder (Gold Palace) to collecting Bank (Far East) in the
nature of a restrictive indorsement? Is this not indorsement under
Section 66?
(Also Section 68 and cross check)
3. Metropolitan Bank and Trust Company (formerly Asian
Bank Corporation) vs. BA Finance Corporation and Malayan
Insurance Co., Inc., G.R. No. 179952, December 4, 2009, First
Division, J. Carpio Morales.
Issue: What is Section 41 of the NIL? What is the effect of
payment based on a forged indorsement? What is the effect of a
collecting bank being the last indorser?
NEGOTIATION AND INDORSEMENTS
Philippine Clearing House Corporation (PCHC)
clearing indorsement
(Also suit of Payees against the drawee bank, but note here the
drawee accepts)
1. Allied Banking Corporation vs. Court of Appeals and Bank
of the Philippine Islands, G.R. No. 123871, August 31, 1998,
First Division, J. Panganiban
Issue: What is the mandatory recourse to the PCHC? What is the
exhaustion of arbitral authority of the PCHC in cases involving
checks cleared under PCHC before recourse to a 3 rd party
complaint?
(Note is Section 13 of PCHC rules not an expansion of RTCs
jurisdiction without approval of Congress since PCHC rules is not
a law?)
RIGHTS OF HOLDERS
Sections 26, 51, 52, 58
(Also crossed check)
1. Cely Yang vs. Court of Appeals, Philippine Commercial
International Bank, Far East Bank & Trust Co., Equitable
Banking Corporation, Prem Chandiramani and Fernando
David

G.R. No. 138074, August 15, 2003, Second Division, J.

Quisumbing
Issue: Is David a holder in due course? Can a payee be considered
a holder in due course? Is David a holder for value? Is David in
good faith when he did not inquire as to reason why the cashiers
check was drawn for him especially that, these were crossed
checks?
(Note: The case was silent as to the result of the suit against
Equitable Bank. The case was likewise silent as to Prem, except
that the RTC said Yang has recourse against Prem: But is it not
that Prem was already a defendant at the RTC? The case is also
silent as to the owner of PCIB FDUC Account No. 4195-01165-2)
(Also Section 24, 28, managers check, certified check [promissory
note], Section 62, liability of acceptor, Section 187 certified check,
degree of care required of banks)
2. Equitable PCI Bank (the Banking Entity into which
Philippine Commercial International Bank was merged) vs.
Rowena Ong, G.R. No. 156207, September 15, 2006, First
Division, J. Chico-Nazario

LIABILITIES OF PARTIES
Sections 61, 62 (189) 64, 65, 66
[Also accommodation party, liability of collecting bank, NI not
legal tender]
1. Bank of the Philippine Islands vs. Court of Appeals and
Benjamin C. Napiza, G.R. No. 112392, February 29, 2000, First
Division, J. Ynares-Santiago
Issue: What is the liability of a general indorser? Is this liability
applicable to Napiza? Is Napiza liable as an accommodation
party? What is the meaning of depositing a check to a collecting
bank?
(Also degree of care of banks, Note: exception to the degree of
diligence required of banks)
2. Gregorio H. Reyes and Consuelo Puyat-Reyes vs. Court of
Appeals, and Far East Bank and Trust Company, G.R. No.
118492, August 15, 2001, Second Division, J. De Leon, Jr.

Issue: Was there unjust enrichment for transfer of the value of the
managers check without consideration? Is Ong privy to the
transaction between Ong and Sarande? What is a holder in due
course and holder for value? What is the presumption of
consideration? What is the effect of want or failure of
consideration? What is the effect of a managers check and
certified check? What is the liability of an acceptor? What is the
degree of care required of banks?

Issue: Is Section 61 (liability of drawer) of the NIL applicable?

What is the degree of care required of banks?

(Note: For academic discussion: Here Ong [the holder-payee] can

immediately sue PCI Davao Branch [the drawee] as a managers
check is considered a promissory note with the bank as maker.
Also the mere issuance of a managers check constitutes an
acceptance of the drawee under Section 62. Either way [maker or
acceptor] the drawee becomes primarily liable)

3. Associated Bank (Now Westmont Bank) vs. Vicente Henry

Tan, G.R. No. 156940, December 14, 2004, First Division, J.
Panganiban

(Also consideration, meaning of value, effect of cashiers check,

issuance of cashiers check considered an acceptance)
3. Bank of the Philippine Islands vs. Gregorio C. Roxas, G.R.
No. 157833, October 15, 2007, First Division, J. SandovalGutierrez
Issue: Is Roxas a holder in due course? What is the presumption
of consideration? What constitutes value?
4. Sps. Pedro and Florencia Violago vs. BA Finance
Corporation and Avelino Violago, G.R. No. 158262, July 21,
2008, Second Division, J. Velasco, Jr.
Issue: Was BA Finance a holder in due course? What is it that
prevails, the NIL on Holder in Due Course or Article 1318 of the
Civil Code on vitiated consent? What is the effect of a holder in
due course?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao University College of Law, Updated October 10, 2012.

(Note the suit was for damages not on the payment of the value of
the demand draft)
(Also nature of banking business, legal tender, negligence, Section
89 notice of dishonor)

Issue: Whether a collecting bank has the right to debit the account
of its client for a check that was dishonored by a drawee? What is
the right of set-off and how should the bank exercise this right?
What is the nature of the obligation of a depository bank? Give the
nature of the banking business? Is a check a legal tender? What is
the relation of payee or holder of a commercial paper and the
collecting bank? Whose negligence was the proximate cause of
the loss? Is there a need for the bank to give notice to Tan? What
is the basis for such notice requirement? What is the applicability
of Sections 66 and 89 of the NIL to this case?
4. Solidbank Corporation vs. Spouses Teodulfo and Carmen
Arrieta, G.R. No. 152720, February 17, 2005, Third Division, J.
Panganiban
Issue: Is the drawee bank who did not accept (dishonor a check)
liable for damages in a suit filed by the drawer?
5. Maria Tuazon, et.al. vs. Heirs of Bartolome Ramos, G.R. No.
156262, July 14, 2005, Third Division, J. Panganiban

Issue: What is the nature of a contract of agency and does it apply

in this case? Is the drawer an indispensable party in a suit
instituted by the holder when checks were dishonored?
6. Sincere Z. Villanueva vs. Marlyn P. Nite, G.R. No. 148211,
July 25, 2006, Second Division, J. Corona

Issue: What are the liabilities of the drawer and drawee of both
has contributory negligence?
NOTICE OF DISHONOR
Sections 89, 114

Issue: If the drawee bank dishonors a check can payee-holder sue

the bank? Is the drawer an indispensable party in a suit initiated by
the payee-holder against a drawee bank?
7. Melva Theresa Alviar Gonzales vs. Rizal Commercial
Banking Corporation, G.R. No. 156294, November 29, 2006,
Second Division, J. Garcia

(Also elements of BP 22, knowledge of sufficiency of funds)

1. Lina Lim Lao vs. Court of Appeals and People of the
Philippines, G.R. No. 119178, June 20, 1997, Third Division, J.
Panganiban

(Note: Must the notice of dishonor be in writing under the NIL?)

5. Alfredo Rigor vs. People of the Philippines, G.R. No. 144887,
November 17, 2004, First Division, J. Azcuna
Issue: Is there presumption of knowledge of insufficiency of
funds when check is presented ninety (90) from its due date? What
is the effect of admission of Rigor? Is the knowledge of the payee
that the funds are insufficient material in BP 22? How is notice of
dishonor made in BP 22?
(Also Section 2 on stipulated interests and Usury Law and Section
24 on presumption of consideration)

Issue: Does a subsequent party which caused the defect in the

instrument have any recourse against prior endorsers in good faith?

Issue: What are the elements of BP 22? What constitutes

knowledge of insufficiency of funds? What is the need for notice
of dishonor? To whom must notice be given?

8. Gemma Ilagan vs. People of the Philippines, G.R. No.

166873, April 27, 2007, Second Division, J. Carpio Morales

(Note while it appears applicable the SC did not rule that this
instrument is incomplete and undelivered, Section 15 of NIL)

8a. Alberto Cordero Sy vs. People of the Philippines, G.R. No.

168069, April 27, 2007, Second Division, J. Carpio Morales

(Also meaning of the term issue)

Issue: Are notice of dishonor required under BP 22, and how is it

made? Are unconscionable interest rates still allowed even when
the Usury Law was already repealed? What is absence of
consideration under Section 24?

2. Betty King vs. People of the Philippines, G.R. No. 131540,

December 2, 1999, Third Division, J. Panganiban

7. Jude Joby Lopez vs. People of the Philippines, G.R. No.

166810, June 26, 2008, First Division, J. Leonardo-De Castro

Issue: What is the meaning of the term issue? What is the reason
of the need for notice of dishonor in BP 22?

Issue: What is the effect of failure to receive notice of dishonor?

What is the effect of Section 114 (d) of the NIL?

(Also Section 186 delay in the presentment of checks, Section 196

on cases not provided for in the Act: Delay in presentment
discharges the drawer, but how about delay in giving notice of
dishonor, difference between rediscounting and loan
accommodation)

(Note instructive as to the elements of ESTAFA under Article 315

2 (d) of the Penal Code but not part of the coverage this
presentation)

8b. Jaime Tan vs. People of the Philippines, G.R. No. 168543,
April 27, 2007, Second Division, J. Carpio Morales
Issue: Is there a necessity of knowledge on the part of indorser
(Tan) that Gemma (drawer) has no sufficient funds? What is deceit
in estafa?
(Note while it is not expressly mentioned this case is instructive on
the necessary proceedings on dishonor be duly taken before
indorse be made liable under Section 66)
9. Equitable PCI Bank vs. Arcelito B. Tan, G.R. No. 165339,
August 23, 2010, Second Division, J. Peralta
Issue: Does the drawee bank that allowed payment of a post dated
check before its due date that caused the dishonor of the drawers
other issued checks liable to the drawer for damages? What is the
meaning of a drawee bank? What is the liability of a drawee bank?
10. Citibank, N.A. vs. Atty. Ernesto S. Dinopol, G.R. No.
188412, November 22, 2010, Second Division, J. Mendoza
Issue: What is the liability of a drawee bank that wrongfully
dishonors a check? What is the diligence required of banks only
Roman pater familias? What is the degree of diligence required of
banks by the General Banking Law of 2000?
(Also accommodation party)
10. Philippine National Bank vs. Spouses Cheah Chee Chong
and Ofelia Camacho Cheah/Spouses Cheah Chee Chong and
Ofelia Camacho Chea vs. Philippine National Bank, G.R. No.
170865/G.R. No. 170892, April 25, 2012, First Division, J. Del
Castillo

3. Great Asian Sales Center Corporation and Tan Chiong Lin

vs. Court of Appeals, and Bancasia Finance and Investment
Corporation, G.R. No. 105774, April 25, 2002, Third Division,
J. Carpio
Issue: What is the nature of a deed of assignment with recourse? In
such case what is the purpose of an indorsement? What is the
effect of absence of notice of dishonor? When notice of dishonor
need not be given (Section 114)? What is the effect of delay in
giving notice of dishonor? What law applies on matters not
covered by the NIL (Section 196)? What does delay in Section
186 of the NIL refer to? What is the difference between
rediscounting and loan accommodation?

6. James Svendsen vs. People of the Philippines, G.R. No.

175381, February 26, 2008, Second Division, J. Carpio Morales

8. Edgardo Medalla vs. Resurreccion D. Laxa, G.R. No.

193362, January 18, 2012, Second Division, J. Reyes.
Issue: What is the gravamen of the offense of B.P. 22?
9. Hector Trenas vs. People of the Philippines, G.R. No. 195002,
January 25, 2012, Second Division, J. Sereno.
Issue: Is dishonor an element of the offense of estafa under Article
315, par. 1 (b) of the RPC?
10. Amada Resterio vs. People of the Philippines, G.R. No.
177438, September 24, 2012, First Division, J. Bersamin.
Issue: How is notice of dishonor made as required in Batas
Pambansa Blg. 22?

(Also payment discharge the instrument)

4. Willy G. Sia vs. People of the Philippines, G.R. No. 149695,
April 28, 2004, Second Division, J. Callejo Sr.
Issue: What is the prima facie presumption of knowledge of
insufficiency of funds? Must the notice of dishonor be in writing?
What is the need that such notice to be in writing? What is the
effect of payment?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao University College of Law, Updated October 10, 2012.

(The notice of dishonor required by Batas Pambamsa Blg. 22 to be

given to the drawer, maker or issuer of a check should be written.
If the service of the written notice of dishonor on the maker,
drawer or issuer of the dishonored check is by registered mail, the
proof of service consists not only in the presentation as evidence of
the registry return receipt but also of the registry receipt together
with the authenticating affidavit of the person mailing the notice of
dishonor. Without the authenticating affidavit, the proof of giving
the notice of dishonor is insufficient unless the mailer personally
testifies in court on the sending by registered mail.)

Issue: What is an alteration under Section 125? What is the

meaning of Section 125 (f)? What is the relation of Section 125 to
Section 1? What is spoliation? Is the change in the serial number
material alteration?

DISCHARGE OF NEGOTIABLE INSTRUMENTS

(Also section 1: is a checks serial number material particular?)

(Also, forgery, proximate cause, liabilities of parties: relationship

between payee and collecting bank, requirement of banking
business on the first to cash the check, negligence of employees,
liability of drawer to drawee, nature of banking business and
functions, comparative negligence)

2. The International Corporate Bank vs. Court of Appeals and

Philippine National Bank, G.R. No. 129910, September 5, 2006,
Third Division, J. Carpio

1. Philippine Commercial International Bank vs. Court of

Appeals, and Ford Philippines, Inc. and Citibank, N.A., G.R.
No. 121413, January 29, 2001, Second Division, J. Quisumbing

Issue: What is material alteration and whether or not the checks

were materially altered?

1a. Ford Philippines Inc. vs. Court of Appeals and Citibank,

N.A. and Philippine Commercial International Bank, G.R. No.
121479, January 29, 2001, Second Division, J. Quisumbing

Section 119
1. Marciano Tan vs. Philippine Commercial International
Bank, G.R. No. 152666, April 23, 2008, Second Division, J.
Carpio Morales.
Issue: What is the element of knowledge of insufficient fund in
BP 22. How does the BP 22 create the presumption of knowledge?
What is the remedy for the person liable to escape liability? Was
payment made when the buses were surrendered? Does payment
obliterate criminal liability?

(Also Section 1 (b), estoppel: negligence, banking: affected by

public interest)
3. Metropolitan Bank and Trust Company vs. Renato D.
Cabilzo, G.R. No. 154469, December 6, 2006, First Division, J.
Chico-Nazario
Issue: What is material alteration? What is the effect of payment
made under a materially altered instrument? What is the doctrine
of equitable estoppel? What is the degree of diligence required of
a bank?

(Also crossed check)

PROTEST
2. Anamer Salazar vs. J.Y. Brothers Marketing Corporation,
G.R. No. 171998, October 20, 2010, Second Division, J. Peralta.
Issue: How are instruments discharged under Section 119 (d) in
relation to Article 1231 (6) of the Civil Code? What are the
elements of novation?
3. Cresencio C. Milla vs. People of the Philippines and Carlos
V. Lopez, G.R. No. 188726, January 25, 2012, Second Division,
J. Sereno.
Issue: Is the obligation novated when the checks used as payment
of an obligation bounced? What are the elements of novation?
(Note instructive as to the elements of ESTAFA under Article 315
2 (d) of the Penal Code but not part of the coverage this
presentation)
MATERIAL ALTERATION
Sections 124 and 125

Sections 152
(Also negotiation and indorsement. Distinction between contract of
an indorser and that of a guarantor/surety of a commercial paper)
1. Allied Banking Corporation vs. Court of Appeals, G.G.
Sportswear Manufacturing Corporation, Nari Gidwani,
Spouses Leticia and Leon de Villa and Alcron International
LTD. G.R. No. 125851, July 11, 2006, Third Division, J.
Quisumbing
Issue: Can respondents, in their capacity as guarantors and surety,
be held jointly and severally liable under the Letters of Guaranty
and Surety, in the absence of protest on the bill in accordance with
Section 152 of the NIL?
(Note Case did not rule delve on the fact that letters of credit is not
a negotiable instrument nor on the negotiability of an export bill)
2. Producers Bank of the Philippines vs. Excelsa Industries,
Inc., G.R. No. 152071, May 8, 2009, Second Division, J. Tinga

1b. Ford Philippines Inc. vs. Citibank, N.A., Philippine

Commercial, International Bank and the Court of Appeals,
G.R. No. 128604, January 29, 2001, Second Division, J.
Quisumbing
Issue: As to G.R. No. 121413 and 121479. What is the
relationship of the payee-holder and collecting bank? What is a
crossed check and the corresponding duty of the collecting bank?
What is the requirement of banking business on the one who first
cashes or negotiates a check? As to G.R. No. 128604. What is the
liability of PCI bank relative to the acts of its employees? Is the
doctrine of contributory negligence applicable? What is the
liability of the drawer to the drawee? What is the nature of the
banking functions? What is comparative negligence? What is the
nature of the banking business?
(Also scope of the term insufficient fund, notice of dishonor)
2. Elvira Yu Oh vs. Court of Appeals and People of the
Philippines, G.R. No. 125297, June 6, 2003, Second Division, J.
Austria Martinez
Issue: What is the scope of the term insufficient fund as ground
for dishonor in BP 22? What is the meaning of check under BP 22
especially so that here the check is not payable on demand as
defined by Article 185? Is the requirement of notice of dishonor in
BP 22 mandatory?
(Also liabilities of parties, suit of payee directly against drawer,
Section 147)
3. Hongkong and Shanghai Banking Corporation Limited vs.
Cecilia Diez Catalan, G.R. No. 159590, October 18, 2004,
Second Division, J. Austria Martinez

(Also Section 125 in relation to Section 1)

1. Philippine National Bank vs. Court of Appeals, Capitol City
Development Bank, Philippine Bank of Communications and
F. Abante Marketing, G.R. No. 107508, April 25, 1996, First
Division, J. Kapunan

Issue: What is the effect of failure to comply with Sections 89 and

152 of the NIL on the liability of respondent when he signed a
separate undertaking and promised to pay on demand the full
amount of the draft?
PROMISSORY NOTES AND CHECKS

3a. HSBC International Trustee Limited vs. Cecilia Diez

Catalan, G.R. No. 159591, October 18, 2004, Second Division,
J. Austria Martinez
3b. HSBC vs. Catalan, G.R. No. 159590, April 25, 2005, Second
Division, Resolution

Sections 184, 185, 186, 189

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao University College of Law, Updated October 10, 2012.

Issue: What is the effect that this suit is under Article 19 of the
Civil Code? What about Sections 189 and 147 of the NIL?
4. Luzon Development Bank vs. Benedicto C. Conquilla,
Cornelia C. Conquilla, Dorotea C. Orcine and Feliciano S.
Conquilla, G.R. No. 163338, September 21, 2005, Third
Division, J. Panganiban
Issue: What is a promissory note? Is the promissory note proof of
identity parties (Columbia and Coquillas)?
(Also, Section 1 effect of check drawn against closed account:
non-negotiable! Section 6 issued undated, stale check)
5. Victoria J. Ilano, etc. vs. Hon. Dolores Espaol, et. al., G.R.
No. 161756, December 16, 2005
Third Division, J. Carpio Morales

Issue: Are the managers checks (MCs) proof of receipt of loan

proceeds? What is the significance of BPIs clearing indorsement?
What is a crossed check? What is the liability of the indorser? Is a
collecting bank an indorser? Are checks legal tender?
(Also section 36 restrictive indorsement)
9. Hi-Cement Corporation vs. Insular Bank of Asia and
America (later Philippine Commercial International Bank and
now, Equitable PCI Bank), G.R. No. 132403, September 28,
2007, First Division, J. Corona
9a. E.T. Henry & Co. and spouses Enrique Tan and Lilia Tan
vs. Insular Bank of Asia and America (later Philippine
Commercial International Bank and now, Equitable PCI
Bank) G.R. No. 132419, September 28, 2007 First Division, J.
Corona

12. Robert Dino vs. Maria Luisa Judal-Loot joined by her

husband Vicente Loot, G.R. No. 170912, April 19, 2010, Second
Division, J. Carpio
Issue: What is the effect of a crossed check? What is a holder in
due course?
(Note unique since the effect of a cross check hits the holder and
not the drawee or collecting bank as in previous cases)
13. Salvador O. Echano vs. Liberty Toledo, G.R. No. 173930,
September 15, 2010, Second Division, J. Abad
Issue: What is the effect of a crossed check? What is a managers
check?
(Also instructive as to the diligence required of banks)

Issue: What is the effect as to the negotiability of the check drawn

against closed account? What will happen to checks that are not
dated? What is a stale check? What is the banking practice on stale
checks?
(Note: Remedy is bill of particulars not dismissal if complaint
lacks particularity. Note: this is not covered by the NIL)
6. Atty. Jose Ricuerdo P. Flores vs. Felix M. Falcotelo, Sheriff
IV, RTC Branch 276, Muntinlupa City, A.M. No. P-05-2038,
January 25, 2006, First Division, J. Austria Martinez
Issue: What are the safeguards provided by NIL that were
violated?

Issue: What are crossed checks and how will these checks affect
holders in due course? Are crossed checks similar to restrictive
indorsements? Are holders (E-PCI) required to ascertain indorsers
title on crossed checks? What is solidary liability and relativity of
contracts (Section 17, Articles 1207 and 1208 of the Civil Code)?

14. Philippine Commercial Bank Vs. Antonio B. Balmaceda

and Rolando N. Ramos, G.R. No. 158143. September 21, 2011
2nd Division, J. Brion.
Issue: What is a crossed check?

(Note instructive as the principle of piercing the veil of corporate

personality but not covered by NIL)
10. Metropolitan Bank and Trust Company vs. Philippine
Bank of Communications, Filipinas Orient Finance
Corporation, Pipe Master Corporation and Tan Juan Lian,
G.R. No. 141408, October 18, 2007, First Division, J. SandovalGutierrez

(Also instructive as to warranty of a maker as to the identity of the

payee)
15. Philippine National Bank Vs. Amelio Tria and Atty.
Reyes/John Doe, G.R. No. 183308, April 25, 2012, Third
Division, J. Velasco Jr.
Issue: What is a managers check?

(Note this is instructive as to the procedure for sheriffs in case

litigants voluntarily pay. There was no mention however as to
what these NIL safeguards are)

10a. Solid Bank Corporation vs. Filipinas Orient Finance

Corporation, Pipe Master Corporation, Tan Juan Lian, and/or
Philippine Bank of Communications, G.R. No. 141429, October
18, 2007, First Division, J. Sandoval-Gutierrez

(Also section 52, 191 and negotiation (section 30) vs assignment)

7. Leticia G. Miranda vs. PDIC, BSP and Prime Savings Bank,
G.R. No. 169334, September 8, 2006, First Division, J. YnaresSantiago

Issue: Whether or not Metrobank and Solidbank liable to Filipinas

Orient for accepting PBCom crossed checks payable to Pipe
Master? What are crossed checks? What are the liabilities of the
collecting bank? What is a clearing indorsement?

(Note this is instructive as to exclusive authority of the Executive

Department through the Department of Justice to file information
in criminal case. Here the SC ordered the filing of an information
stating that the earlier refusal of the DOJ to do so [sustained by the
CA] was grave abuse of discretion. But this discussion is not
covered by NIL)
OTHER RELATED TOPICS

Issue: Do checks operate as an assignment of funds in the hands of

Miranda? Was the claim of Miranda a disputed claim under
Section 30 of RA 7653 and thus under the jurisdiction of the
liquidation court? Are the respondents solidarily liable to Miranda?
(Also PCHC clearing indorsement, liability of indorser, liability of
collecting bank, checks as legal tender)
8. Citibank, N.A. (formerly First National City Bank) and
Investors Finance Corporation, doing business under the
name and style of FNCB Finance vs. Modesta R. Sabeniano,
G.R. No. 156132, October 16, 2006, First Division, J. ChicoNazario

(Also checks payable to cash (bearer instrument) and liability of

drawer)
11. Security Bank and Trust Company vs. Rizal Commercial
Banking Corporation, G.R. No. 170984, January 30, 2009,
Second Division, Acting CJ. Quisumbing

1. Jovencio Lim and Teresita Lim vs. People of the Philippines,

Regional Trial Court of Quezon City, Branch 217, City
Prosecutor of Quezon City, and Wilson Cham, G.R. No.
149276, September 27, 2002, En banc, J. Corona
Issue: Whether or not PD 818 is constitutional?

11a. Rizal Commercial Banking Corporation vs. Security Bank

and Trust Company, G.R. No. 170987, January 30, 2009,
Second Division, Acting CJ. Quisumbing
Issue: What is a managers check? What is the effect of a check
payable to cash? What is the liability of the drawer?

2. Republic of the Philippines, represented by The Anti-Money

Laundering Council (AMLC) vs. Hon. Antonio M. Eugenio,
JR., as presiding judge of RTC, Manila, Branch 34, Pantaleon
Alvarez and Lilia Cheng, G.R. No. 174629, February 14, 2008,
Second Division, J. Tinga

(Also holder in due course)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao University College of Law, Updated October 10, 2012.

10

Issue: Are checks confidential communications (especially in the

light of U.S. vs. Miller, 425 US 435, [1976])? Are bank deposits
covered by the right to privacy? If so, what is the basis of such
privacy in the Philippine setting?
3. Spouses PNP Director Eliseo D. Dela Paz (Ret.) and Maria
Fe C. Dela Paz vs. Senate Committee on Foreign Relations and
the Senate Sergeant-at-arms Jose Balajadia, Jr., G.R. No.
184849, February 13, 2009, En banc, J. Nachura
Issue: Effect of Article 14 (2) of the United Nations Convention
Against Corruption as well as Article 17 (1) and (2) of the United
Nations Convention Against Transnational Organized Crime on
movement of cash and appropriate negotiable instruments?
4. Spouses Simon Yap and Milagros Guevarra vs. First e-Bank
Corporation (previous known as PDCP Development Bank,
Inc.), G.R. No. 169889, September 29, 2009, First Division, J.
Corona
Issue: What is the effect of Circular 57-97 now Rule 111 Section 1
(b) on criminal actions involving violation of BP 22 and its civil
action?
4. Office of the Court Administrator (OCA) vs. Clerk of Court
Hermenegildo I. Marasigan, RTC Kabacan, North Cotabato,
A.M. No. P-05-2082, December 12, 2011, En Banc, Per Curiam.
Issue: What are guidelines on check payments for court fees
provided in OCA Circular No. 88-2007, issued on August 28, 2007
or the Supreme Court adopted guidelines for the payment of fees,
and its modes and effect, thus, amending Section 1, Rule 141 of
the Rules of Court?
5. Magdiwang Realty Corporation, Renato P. Dragon and
Esperanza Tolentino vs. The Manila Banking Corporation,
substituted by First Sovereign Asset Management (SPV-AMC),
Inc., G.R. No. 195592, September 5, 2012, First Division, J.
Reyes.
Issue: Explain the (10)-year prescriptive period to file an action
based on the subject promissory note? What are the circumstances
that interrupt this period in accordance with Article 1155 of the
New Civil Code?
6. Office of the Court Administrator (OCA) vs. Susan R.
Fontanilla, Clerk of Court, Municipal Circuit Trial Court, San
Narciso-Buenavista, San Narciso, Quezon, A.M. No. P-12-3686,
September 18, 2012, En Banc, Per Curiam.
Issue: What is the check payment system? How does it eliminate
the irregularities in the collection of court funds?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao University College of Law, Updated October 10, 2012.

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