9/24/2015

NegotiableInstrumentsLawCrossedChecks|PhilippineMercantileLawReview

PhilippineMercantileLawReview
Notes,CasesandDoctrinesinMercantileLaw

NegotiableInstrumentsLawCrossedChecks
Whataretheeffectsofcrossingacheck?
Itmeansthatitcouldonlybedepositedandcouldnotbeconvertedintocash.Thus,the
effectofcrossingacheckrelatestothemodeofpayment,meaningthatthedrawerhadintended
thecheckfordepositonlybytherightfulperson,i.e.,thepayeenamedtherein.(BankofAmerica,
NT&SA,vs.AssociatedCitizensBank,G.R.No.141001,141018,May21,2009,[Carpio,J.])

InBataanCigarv.CourtofAppeals,theSupremeCourtenumeratedtheeffectsofcrossinga
checkasfollows:

a.)Thecheckmaynotbeencashedbutonlydepositedinthebank;
b.)Thecheckmaybenegotiatedonlyoncetoonewhohasanaccountwithabank;and
c.)Theactofcrossingthecheckservesasawarningtotheholderthatthecheckhasbeen
issuedforadefinitepurposesothathemustinquireifhehasreceivedthecheckpursuanttothat
purpose;otherwise,heisnotaholderinduecourse.

Theeffectthereforeofcrossingacheckrelatestothemodeofitspresentmentforpayment.
Under Section 72 of the Negotiable Instruments Law, presentment for payment to be sufficient
mustbemade(a)bytheholder,orbysomepersonauthorizedtoreceivepaymentonhisbehalf
Astowhotheholderorauthorizedpersonwilldependontheinstructionsstatedonthefaceof
the check. (State Investment House vs. Intermediate Appellate Court, G.R. No. 72764, July 13, 1989,
[Fernan,C.J:])

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Theactofcrossingacheckservesasawarningtotheholderthatthecheckhasbeenissued

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NegotiableInstrumentsLawCrossedChecks|PhilippineMercantileLawReview

Theactofcrossingacheckservesasawarningtotheholderthatthecheckhasbeenissued
foradefinitepurposesothattheholderthereofmustinquireifhehasreceivedthecheckpursuant
tothatpurpose;otherwise,heisnotaholderinduecourse.(Dinovs.Loot,G.R.No.170912,April
19,2010,[Carpio,J.])

Dutyofthecollectingbankwhendealingwithcrossedchecks
InPhilippineCommercialInternationalBankvs.CourtofAppealsandFordPhils.,Inc.,[1]itwas
held that: the crossing of the check with the phrase Payees Account Only, is a warning that
thechecksshouldbedepositedonlyintheaccountoftheCIR.Thus,itisthedutyofthecollecting
bankPCIBanktoascertainthatthecheckbedepositedinpayeesaccountonly.Therefore,itisthe
collecting bank (PCIBank) which is bound to scrutinize the check and to know its depositors
beforeitcouldmaketheclearingindorsementallpriorindorsementsand/orlackofindorsement
guaranteed.

InBancodeOroandMortgageBankvs.EquitableBankingCorporation,[2]weruled:

Anentpetitionersliabilityonsaidinstruments,thiscourtisinfullaccordwiththerulingofthe
PCHCsBoardofDirectorsthat:

Inpresentingthechecksforclearingandforpayment,thedefendantmadeanexpressguarantee
on the validity of all prior endorsements. Thus, stamped at the back of the checks are the
defendants clear warranty: ALL PRIOR ENDORSEMENTS AND/OR LACK OF
ENDORSEMENTSGUARANTEED.Withoutsuchwarranty,plaintiffwouldnothavepaidonthe
checks.

No amount of legal jargon can reverse the clear meaning of defendants warranty. As the
warrantyhasproventobefalseandinaccurate,thedefendantisliableforanydamagearisingout
ofthefalsityofitsrepresentation.[3]

Whatmaybethewaysofcrossingacheck?
Thecrossingmaybespecialwhereinbetweenthetwoparallellinesiswrittenthename
ofabankorbusinessinstitution,inwhichcasethedraweeshouldpayonlywiththeintervention
ofthatbankorcompany.

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NegotiableInstrumentsLawCrossedChecks|PhilippineMercantileLawReview

Itmayalsobegeneralwhereinbetweentwoparalleldiagonallinesarewrittenthewords
andCo.ornoneatall,inwhichcasethedraweeshouldnotencashthesamebutmerelyaccept
the same for deposit. (Bank of America, NT & SA, vs. Associated Citizens Bank, G.R. No. 141001,
141018,May21,2009,[Carpio,J.])

[1]G.R.Nos.121413,121479,128604,January29,2011
[2]157SCRA188(1988)
[3]Id.at194
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