CHAPTER 7 PRESENTMENT OF PAYMENT

WESTMONT BANK V. ONG

373 SCRA 212

FACTS:
Ong was supposed to be the payee of the checks issued by Island Securities. Ong has a
current account with petitioner bank. He opted to sell his shares of stock through Island
Securities. The company in turn issued checks in favor of Ong but unfortunately, the latter
wasn't able to receive any. His signatures were forged by Tamlinco and the checks were deposited
in his own account with petitioner. Ong then sought to collect the money from the family of
Tamlinco first before filing a complaint with the Central Bank. As his efforts were futile to recover
his money, he filed an action against the petitioner. The trial and appellate court decided
in favor of Ong.
HELD:
Since the signature of the payee was forged, such signature should be deemed inoperative
and ineffectual. Petitioner, as the collecting bank, grossly erred in making payment by virtue of
said forged signature. The payee, herein respondent, should therefore be allowed to collect
from the collecting bank.
It should be liable for the loss because it is its legal duty to ascertain that the payees
endorsement was genuine before cashing the check. As a general rule, a bank or
corporation who has obtained possession of a check with an unauthorized or forged indorsement
of the payees signature and who collects the amount of the check other from the drawee, is liable
for the proceeds thereof to the payee or the other owner, notwithstanding that the amount has
been paid to the person from whom the check was obtained.
DOCTRINE OF DESIRABLE SHORT CUTplaintiff uses one action to reach, by desirable short
cut, the person who ought to be ultimately liable as among the innocent persons involved in
the transaction. In other words, the payee ought to be allowed to recover directly from the
collecting bank, regardless of whether the check was delivered to the payee or not.
On the issue of laches, Ong didn't sit on his rights. He immediately sought the intervention of
Tamlincos family to collect the sum of money, and later the Central Bank. Only after
exhausting all the measures to settle the issue amicably did he file the action.

TUAZON V. HEIRS OF BARTOLOME RAMOS

463 SCRA 408

FACTS:
Respondents alleged that on a relevant date, spouses Tuazon purchased from their
predecessor-in-interest cavans of rice. That on the total number of cavans, only a certain portion
has been paid for. In payment thereof, checks have been issued but on presentment, the checks
were dishonored. Respondents alleged that since spouses anticipated the forthcoming suit
against them, they made fictitious sales over their properties. As defense, the spouses averred
that it was the wife of Bartolome who effected the sale and that Maria was merely her agent in
selling the rice. The true buyer of the cavans was Santos. The spouses further averred that when
Ramos got the check from Santos, she took it in good faith and didn't knew that the same were
unfunded.
HELD:
First, there is no contract of agency.
If it was truly the intention of the parties to have a contract of agency, then when the
spouses sued Santos on a separate civil action, they should have instituted the same on behalf
and for the respondents. They didn't do so. The filing in their own names negate their claim that
they acted as
mere agents in selling the rice.
Second, the spouses are liable on the check.
As indorser, Tuazon warranted that upon due presentment, according to their tenor, and
that in case they were dishonored, she would pay the corresponding amount. After the
instrument is dishonored by non-payment, indorsers cease to be merely secondarily liable.
They became
principal debtors whose liability becomes identical to that of the original obligor. The
holder of a negotiable instrument need not even proceed against the maker before suing
the indorser.
Santos is not an indispensable party to the suit against the spouses.

ALLIED BANKING CORPORATION vs. BANK OF THE PHILIPPINE ISLANDS G.R. No.
188363, February 27, 2013
FACTS:
On October 10, 2002, a check in the amount of P1,000,000.00 payable to "Mateo Mgt. Group
International" (MMGI) was presented for deposit and accepted at petitioner's (Allied Bank) Kawit
Branch. The check, post-dated
"Oct. 9, 2003",
was drawn against the account of Marciano Silva, Jr. (Silva) with respondent BPI Bel-Air Branch.
Upon receipt, petitioner sent the check for clearing to respondent through the Philippine Clearing

House Corporation (PCHC). The check was cleared by respondent and petitioner credited the
account of MMGI with P1,000,000.00. On Oc
tober 22, 2002, MMGIs account was closed and all the funds
therein were withdrawn. A month later, Silva discovered the debit of P1,000,000.00
from his account. In response to Silvas complaint, respondent credited his account with
the aforesaid sum. Petitioner filed a complaint before the Arbitration Committee, asserting that
respondent should solely bear the entire face value of the check due to its negligence in failing to
return the check to petitioner within the 24-hour reglementary period as provided in Section 20.1of
the Clearing House Rules and Regulations (CHRR) 2000. In its Answer with Counterclaims,
respondent charged petitioner with gross negligence for accepting the postdated check in the first place. It contended that petitioners admitted
negligence was the sole and proximate cause of the loss.
ISSUE
: What does the Doctrine of Last Clear Chance enunciate?
RULING
: The doctrine of last clear chance, stated broadly, is that the negligence of the plaintiff does not
preclude a recovery for the negligence of the defendant where it appears that the defendant, by
exercising reasonable care and prudence, might have
avoided injurious consequences to the plaintiff notwithstanding the plaintiffs
negligence. The doctrine necessarily assumes negligence on the part of the defendant and
contributory negligence on the part of the plaintiff, and does not apply except upon that
assumption. Stated differently, the antecedent negligence of the plaintiff does not preclude him
from recovering damages caused by the supervening negligence of the defendant, who had the
last fair chance to prevent the impending harm by the exercise of due diligence. Moreover, in
situations where the doctrine has been applied, it was
defendants failure to exercise such ordinary care, havi
ng the last clear chance to avoid loss or injury, which was the proximate cause of the occurrence of
such loss or injury.
ISSUE
: Does the Doctrine of Last Clear Chance apply in this case?
RULING
: YES. In this case, the evidence clearly shows that the proximate cause of the unwarranted
encashment of the subject check was the negligence of respondent who cleared a post-dated
check sent to it thru the PCHC clearing facility without observing its
own verification procedure. As correctly found by the PCHC and upheld by the RTC, if only
respondent exercised ordinary care in the clearing process, it could have easily noticed the glaring
defect upon seeing the date written on the face of the check "Oct. 9, 2003". Respondent could
have then promptly returned the check and with the check
thus dishonored, petitioner would have not credited the amount thereof to the payees
account. Thus, notwithstanding the antecedent negligence of the petitioner in accepting the postdated check for deposit, it can seek reimbursement from respondent the

amount credited to the payees account covering the check.

International Corporate Bank vs. Gueco (351 SCRA 516)

10 Dec
FACTS:
The respondents obtained a loan from the petitioner to purchase a motor vehicle (car). The
respondents defaulted in payment of installments. A civil case was filed by the petitioner which
resulted later into negotiations in lowering the remaining unpaid balance from P184,000.00 to
P150,000.00, detaining the car until payment thereof. Respondent delivered a managers check
but petitioner insisted on the signing of Joint Motion to Dismiss, still holding the motor vehicle.
Respondent initiated civil action for damages before MTC but the case was dismissed for lack of
merit. On appeal to RTC, the decision of MTC was reversed ordering herein petitioners to
indemnify the respondents. The Court of Appeals likewise affirmed the decision of the RTC.
ISSUE:
Whether or not the respondents are entitled of indemnification for damages.
RULING:
NO. Petitioners act of requiring respondents to sign the Joint Motion to Dismiss can not be said to
be a deliberate attempt on the part of petitioner to renege on the compromise agreement of the
parties. The law presumes good faith. In fact, the act of petitioner bank in lowering the debt of
respondent from P184,000.00 to P150,000.00 is indicative of its good faith and sincere desire to
settle the case.
The decision of the Court of Appeals affirming the decision of the RTC was set aside.
Respondents were ordered to pay the original obligation amounting to P150,000.00 to the
petitioner upon surrender or cancellation of the managers check in the latters possession,
afterwhich, petitioner is to return the subject motor vehicle in good working condition.