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Philippine Education Co. Vs.

Soriano

FACTS: Enrique Montinola sought to purchase from the Manila Post Office 10 money
orders (P200 each), offering to pay for them with a private check. Montinola was
able to leave the building with his check and the 10 money orders without the
knowledge of the teller. Upon discovery that it was stolen, message was sent to all
postmasters and banks involving the unpaid money orders. One of the money
orders was received by the Philippine Education Co. as part of its sales receipt. It
was deposited by the company with the Bank of America, which cleared it with the
Bureau of Post. The Postmaster, through the Chief of the Money Order Division of
the Manila Post Office informed the bank of the irregular issuance of the money
order. The bank debited the account of the company. The company moved for
reconsideration. ISSUE: Whether postal money orders are negotiable instruments
and the petitioner as a holder in due course can demand payment.

Caltex Philippines, Inc. v. Court of Appeals

Facts: Defendant bank issued 280 certificates of time deposit (CTD) in favor of
Angela Dela Cruz upon deposit in the amount of P1,120,000. A sample text of the
CTD is as follows:

This is to certify that BEARER has deposited in this Bank the sum of Four Thousand
Only...

Dela Cruz deliver the CTD to petition for the purchase of fuel products. Thereafter,
he informed the branch manager that the CTD was lost based on her affidavit,
which the branch manager accepted and issued a replacement. Thereafter, Dela
Cruz negotiated and obtained a loan from the bank in the amount of P875,00 and
executed a notarized Deed of Assignment of time deposit.

In 1982, Credit Manager of Caltex went to the defendant bank's and presented for
verification the CTDs declared lost by Angel Dela Cruz alleging that the same were
delivered to herein plaintiff "as security for purchases made with Caltex Philippines,
Inc." by said depositor. However, this was rejected by the defendant. When the loan
of Dela Cruz fell due, the latter set-off and applied the time deposits in question to
the payment of the matured loan. However, the plaintiff filed the instant complaint,
praying that defendant bank be ordered to pay it the aggregate value of the
certificates of time deposit of P1,120,000.00 plus accrued interest and damages as
well as attorney's fees. On appeal, the CA held in favor of defendant bank on the
basis that CTD was not a negotiable instrument, hence, Caltex cannot be a holder in
due course.

Issue: Whether or not the Certificate of Time Deposit (CTD) is a negotiable


instrument and Caltex was a holder in due course?

Metrobank vs. Court of Appeals

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Facts: Gomez opened an account with Golden Savings and deposited 38 treasury
warrants. All these warrants were subsequently indorsed by Castillo, cashier of
Golden Savings and deposited to its Savings Account in Metrobank. Gloria Castillo
went several times to Metrobank for the cleared warrants. Exasperated over Glorias
repeated inquiries and also as an accommodation for a valued client, she was
allowed to withdraw from the proceeds of the warrants. In turn, Golden Savings
subsequently allowed Gomez to make withdrawals. After the withdrawal of Gomez,
Metrobank informed Golden Savings that the warrants were dishonoured by the
Bureau of Treasury for forgery of signatures and demanded the refund of the
amount contending that by indorsing the warrants in general, Golden Savings
assumed the warranty of a general indorser under Section 66.

Issue: Whether or not Golden Savings should be liable as a general indorser under
Section 66.

Sesbreno vs. Court of Appeals

Facts: Petitioner made a placement with Philfinance. The latter delivered to him
documents, some of which was a promissory note from Delta Motors and a post-
dated check. The post-dated checks were dishonored. This prompted petitioner to
ask for the promissory note from DMC and it was discovered that the note issued by
DMC was marked as non-negotiable. As Sesbreno failed to recover his money, he
filed case against DMC and Philfinance.

Issue: Whether or not a nonnegotiable instrument cannot be transferred .

Firestone Tire & Rubber Co. vs. Court of Appeals

FACTS: Fojas Arca and Firestone Tire entered into a franchising agreement wherein
the former purchase on credit the latters products. The former could pay through
special withdrawal slips which were deposited and accepted by Citibank. Firestone
believed in the sufficient funding of the slips until Citibank informed the
former that one of the slips was dishonored. It wrote then a demand letter to
Fojas Arca for the payment and damages but the latter refused to pay,
prompting Firestone to file an action against it.

Issue: Whether or not the bank is liable for the alleged belated delay in notifying the
dishonor of the negotiable instrument.

Ang Tek Lian vs. Court of Appeals

Facts: In 1946, Ang Tek Lian approached Lee Hua and asked him if he could give him
P4,000.00. He said that he meant to withdraw from the bank but the banks already
closed. In exchange, he gave Lee Hua a check which is payable to the order of
cash. The next day, Lee Hua presented the check for payment but it was
dishonored due to insufficiency of funds. Lee Hua eventually sued Ang Tek Lian. In
his defense, Ang Tek Lian argued that he did not indorse the check to Lee Hua and

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that when the latter accepted the check without Ang tek Lians indorsement, he had
done so fully aware of the risk he was running thereby.

ISSUE: Whether or not the indorsement of Ang Tek Lian is essential in a bearer
instrument.

Development Bank of the Phils vs. Sima Wei

Facts: In consideration for a loan extended by petitioner Bank to respondent Sima


Wei, the latter executed and delivered to the former a promissory note. However,
two checks were not delivered to the petitioner or to any of its authorized
representatives. Instead for these checks came into the possession of respondent
Lee Kian Huat, who deposited the checks without the petitioners indorsement to
the account of respondent Plastic Corporation in Producers Bank which was
afterwards credited to Plastic Corporations account.

Issue: Whether petitioner Bank can hold petitioner liable for the undelivered check.

Philippine Bank of Commerce vs. Aruego

Facts: Plaintiff instituted an action against defendant Aruego for recovery of money
signed by the defendent. The latter interposes that he signed the drafts in a
representative capacity, that he signed only as an accommodation party and that
he is not liable. The court denied the motion and rendered judgement against the
defendant. Hence this petition.

Issue: Whether or not defendant is liable by accepting the instrument?

Fransisco vs. Court of Appeals

FACTS: Sometime in 1979, Ong discovered that Diaz and Francisco had executed
and signed seven checks drawn against the Insular Bank of Asia & America (IBAA)
and payable to Herby Commercial & Construction Corporation (HCC) for completed
and delivered work under the contract. Ong, however, claims that these checks
were never delivered to HCCC. Upon inquiry with Diaz, Ong learned that the GSIS
gave Francisco custody of the checks since she promised that she would deliver the
same to HCCC. Instead, Francisco forged the signature of Ong, without his
knowledge or consent, at the dorsal portion of the said checks to make it appear
that HCCC had indorsed the checks; Francisco then indorsed the checks for a
second time by signing her name at the back of the checks and deposited the
checks in her IBAA savings account. IBAA credited Franciscos account with the
amount of the checks and the latter withdrew the amount so credited.

Petitioner claims that she was, in any event, authorized to sign Ongs name on the
checks by virtue of the Certification executed by Ong in her favor giving her the
authority to collect all the receivables of HCCC from the GSIS, including the
questioned checks.

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ISSUE: Whether or not petitioner singing in a representative capacity is liable to the
questioned checks.

Jai-Alai Coporation vs. BPI

Facts: Petitioner deposited in its current account with respondent bank several
checks acquired from Antonio J. Ramirez, a regular bettor. The deposits were
temporarily credited to petitioners account. However, after the checks had been
submitted to interbank clearing, it was discovered that all indorsements made were
forged. Hence, respondent Bank debited the petitioners current account and
forwarded to the latter the checks containing the forged indorsement, which
petitioner refused to accept. Thereafter, petitioner drew against its current account
a check which were latter dishonoured due to insufficiency of funds.

Issue: Whether or not the respondent bank had the right to debit the petitioners
current account.

Republic Bank vs. Ebrada

Facts: A check was issued to Lorenzo who turned out to be dead for 11 years. The
check was indorsed to Lorenzo to Dominguez and to Ebrada. It was encashed by
Ebrada at the Republic Banks main office. Informing the bank that the indorsement
of Lorenzo was forged, the Bureau of Treasury requested the Bank to refund the
amount. Thereafter, the Bank sued Ebrada to return the money.

Issue: Whether or not Ebrada is liable to return the value of the check bearing a
forged signature.

MWSS vs. CA

Facts: MWSS issued 23 personalized checks against its account with PNB. During the
same month, a second batch of 23 checks bearing the same numbers were issued.
Both were paid and cleared by PNB and debited against the account of MWSS.
Investigation was conducted by NBI showed that all the payees for the 2 nd batch
were all fictitious persons. Thereafter, MWSS demanded from PNB to restore the
amount of the 2nd batch payments which were claimed as forged.

Issue: Whether or not the drawee bank PNB is liable.

Banco de Oro vs. Equitable Banking Corporation

Facts: Banco De Oro drew six crossed managers check payable to certain member
establishments of Visa Card. The checks were deposited with Equitable Bank. After
stamping at the bank the usual endorsements, the checks were sent for clearing
through the PCHC. Banco De Oro paid the checks. Thereafter, Banco De Oro
discovered that the endorsements appearing at the back of the Checks were forged
and/or unauthorized, hence he claimed reimbursement from Equitable bank.

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Issue: Whether or not Banco de Oro could collect reimbursement from Equitable
Bank.

Gempesaw vs. Court of Appeals

FACTS: In the signing of the checks prepared by Galang, Gempensaw didn't bother
herself in verifying to whom the checks were being paid and if the issuances
were necessary. She didn't verify the returned checks of the bank when the
latter notifies her of the same. During her two years in business, there were
incidents shown that the amounts paid for were in excess of what should have
been paid. It was also shown that even if the checks were crossed, the intended
payees didn't receive the amount of the checks. This prompted Gempesaw to
demand the bank to credit her account for the amount of the forged checks. The
bank refused to do so and this prompted her to file the case against the bank.

Issue: Whether or not the bank Gempesaw has the right to demand the credit of the
amount forged.

Associated Bank v. Court of Appeals

Facts: The Province of Tarlac maintains a current account with PNB. Checks were
issued and received by the hospitals administrative officer and cashier, Pangilinan.
Panilinan, through the help of Associated Bank but after forging the signature of the
hospitals chief was able to deposit the checks in his personal account. The province
discovered that the hospital did not receive several allotted checks, and sought the
restoration of the debited amounts from PNB. In turn, PNB demanded
reimbursement from Associated Bank. Both banks resisted payment. Hence, this
present action.

Issue: Whether or not Associated Bank should bear the loss.

Metrobank vs. First National City Bank

Facts: A check was drawn by Joaquin Cunanan & Company on First National City
Bank (FNCB) which was deposited in Metrobank by Salvador Sales. The check was
cleared the same day and the latter withdrew it and closed his account. Thereafter,
upon return of the cancelled check, Joaquin Cunanan & Company notified the bank
that the check was altered from actual amount of P50 raised to P50,000 and over
the name superimpose the word Cash. FNCB notified and reiterated the request to
Metrobank for the reimbursement but the latter was adamant in its refusal, hence,
this action.

Issue: Wether or not Metrobank should bear the loss from a materially altered
check?

Republic Bank vs. Court of Appeals

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FACTS: San Miguel Corporation (SMC) drew a check amounting to P240.00 on its
account in First National City Bank (FNCB) in favor of Delgado, a stockholder.
Delgado fraudulently altered the amount of the check to P9,240 after which he
endorsed and deposited it with Republic Bank. Republic Bank endorsed the check
to First National City Bank (FNCB), the drawee bank, by stamping on the back of the
check all prior and / or lack of indorsement guaranteed". Based on such
endorsement, FNCB paid the amount to Republic Bank. Later on, San Miguel
informed FNCB of the material alteration of the amount. FNCB recredited the
amount to San Miguels account, and demanded refund from Republic Bank.
Republic Bank refused, claiming there was delay in giving it notice of the alteration.

ISSUE: Whether petitioner Republic Bank as the collecting bank should bear the loss
resulting from the altered check.

Philippine Commercial International Bank vs. Court of Appeals

FACTS: Ford Philippines filed actions to recover from the drawee bank Citibank and
collecting bank PCIB the value of several checks payable to the
Commissioner of Internal Revenue which were embezzled allegedly by an organized
syndicate. What prompted this action was the drawing of a check by Ford,
which it deposited to PCIB as payment and was debited from their Citibank
account. It later on found out that the payment wasnt received by the
Commissioner. Meanwhile, according to the NBI report, one of the checks
issued by petitioner was withdrawn from PCIB for alleged mistake in the amount to
be paid. This was replaced with managers check by PCIB, which were allegedly
stolen by the syndicate and deposited in their own account. The trial court
decided in favor of Ford.

ISSUE: Has Ford the right to recover the value of the checks intended as payment
to CIR?

Ramon Ilusorio vs. Court of Appeals

FACTS: Petitioner was a prominent businessman who, because of different business


commitments, entrusted to his then secretary the handling of his credit cards
and checkbooks. For a material period of time, the secretary was able to
encash and deposit in her personal account money from the account of
petitioner. Upon knowledge of her acts, she was fired immediately and
criminal actions were filed against her. Thereafter, petitioner requested the
bank to restore its money but the bank refused to do so.

Issue: Whether or not the bank is liable for the forged checks.

Samsung Construction Company Phils., Inc vs FEBTC

Facts: Petitioner maintains a current account with the respondent bank and
authorized Jong to sign checks in behalf of the company. The checks are in the

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custody of an accountant Kyu. On one occasion, a certain Gonzaga presented a
check to FEBTC purportedly drawn by the Company in the amount of P999,500. The
check was payable to cash and appeared to be signed by Jong. FEBTC upon
ascertaining that there are sufficient fund to cover the check and finding the
signature of Jong appears to be genuine paid Gonzaga. Later, the forgery was
discovered. Samsung demanded that the amount paid to Gonzaga be credited back
to its account because they have not authorized the encashment of the check. On
the other hand, the respondent bank claimed negligence on the part of the
petitioner in protecting its check.

Issue: Whether or not FEBTC should bear the loss.

Philippine National Bank vs. Court of Appeals

FACTS: DECS issued a check in favor of Abante Marketing containing a


specific serial number, drawn against PNB. The check was deposited by Abante in
its account with Capitol and the latter consequently deposited the same with
its account with PBCOM which later deposited it with petitioner for clearing.
The check was thereafter cleared. However, on a relevant date, petitioner PNB
returned the check on account that there had been a material alteration on it.
Subsequent debits were made but Capitol cannot debit the account of Abante any
longer for the latter had withdrawn all the money already from the account.
This prompted Capitol to seek reclarification from PBCOM and demanded the
recrediting of its account.

Issue: Whether or not PBCOM should bear the loss for the check materially altered.

Montinola vs. Philippine National Bank

Facts: Ramos, a disbursing officer of USAFE made cash advancements with the
provincial Treasurer of Lanao. The latter gave him a P500,000 check. Thereafter,
Ramos presented the check to laya for encashment. Laya in his capacity as
Provincial Treasurer issued a check to Ramos in the sum of P100,000. Ramos was
assigned only P30000 of the value of the document to Montinola and to deposit the
balance to Ramoss credit. This writing however, mysteriously obliterated and in its
place, a supposed indorsement appearing on the back of the check was made for
the whole amount of the check Agent, Phil. National Bank under the signature of
Laya purportedly showing that Laya issued the check as agent of the PNB.

Issue: Whether the words, Agent, Phil. National Bank were added after Laya had
issued the check and thus constitutes a material alteration which discharges the
instrument.

Sadaya vs. Sevilla

FACTS: Sadaya, Sevilla and Varona signed solidarily a promissory note in favor of
the bank. Varona was the only one who received the proceeds of the note. Sadaya

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and Sevilla both signed as co-makers to accommodate Varona. Thereafter, the
bank collected from Sadaya. Varona failed to reimburse.

Consequently, Sevilla died and intestate estate proceedings were


established. Sadaya filed a creditors claim on his estate for the payment he made
on the note. The administrator resisted the claim on the ground that Sevilla didn't
receive any proceeds of the loan.

Issue: Whether or not Sadaya had the right to demand payment.

Crisologo-Jose v. CA

Facts: The VP of Mover Enterprises, Inc. issued a check drawn against Traders Royal
Bank, payable to petitioner Ernestina Crisologo-Jose, for the accommodation of his
client. Petitioner payee was charged with the knowledge that the check was issued
for the personal account of teh President who merely prevailed upon the VP to act
as co-signatory in accordance with the arrangement of the corporation with its
depository bank.

Issue: Whether or not private respondent, is an accommodation party under NIL and
is liable for the amount of said check.

Stelco Marketing vs. Court of Appeals

FACTS: Petitioner was engaged in the distribution and sale of structural steel bars.
RYL bought on several occasion large quantities of steel bars but the same were
never paid for despite several demands by petitioner. On a relevant date, RYL gave
to Armstrong Industries a check in payment of its obligations. That check was a
company check of another corporation, Steelweld Corporation of the Philippines,
signed by its President, Peter Rafael Limson, and VP. The check was issued by
Limson at the behest of his friend, Romeo Y. Lim, President of RYL. Romeo Lim had
asked Limson, for financial assistance, and the latter had agreed to give Lim a check
only by way of accommodation, "only as guaranty but not to pay for anything.
Stelco filed a complaint against RYL and Steelweld for the recovery of sum of
money in payment of the steel bars ordered on the ground that the said check
has been given for payment of steel bars.

Issue: Whether or not petitioner as a holder for value may recover from the
accommodation party.

Travel-On vs. Court of Appeals

Facts: Travel-On filed suit to collect on 6 checks issued by private respondent with a
total face amount of P115 ,000 as payment of various airline tickets sold to
respondent. Private respondent claimed that he had already fully paid the
obligations. He argued that he had issued postdated checks for purposes of
accommodation, as he had in past accorded similar favors to petitioner.

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Issue: Whether or not said checks were for accommodation and that private
respondent is still liable considering that petitioner is a holder for value.

BPI vs. Court of Appeals

Facts: Private respondent Benjamin Napiza deposited in his foreign current deposit
with BPI a dollar check owned by Henry Chan in which he affixed his signature at
the dorsal side thereof. For this purpose, Napiza gave Chan a signed blank
withdrawal slip. However, Gayon Jr. got hold of the withdrawal slip and used it to
withdraw the proceeds of the dollar check, even before the check was cleared and
without the presentation of the bank passbook.

Issues: Whether or not petitioner can hold private respondent liable for the proceeds
of the check for having affixed his signature at the dorsal side as indorser.

Agro Conglomerates, Inc. vs. Court of Appeals

FACTS: Petitioner sold to Wonderland Food Industries two parcels of land.


They stipulated under a Memorandum of Agreement that the terms of payment
would be P1,000,000 in cash, P2,000,000 in shares of stock, and the balance
would be payable in monthly installments. Petitioner Soriano signed as maker
the promissory notes payable to the bank. However, the petitioners failed to pay
the obligations as they were due. During that time, the bank was in financial
distress and this prompted it to endorse the promissory notes for collection. The
bank gave ample time to petitioners then to satisfy their obligations.

Issue: Whether or not Agro Conglomerates is liable as accommodation parties.

De Ocampo vs. Gatchalian

Facts: Anita Gatchalian was interested in buying a car when she was offered by
Manuel Gonzales to a car owned by the Ocampo Clinic. Anita accepted the offer but
Gonzales advised that the owners would only comply only upon showing of interest
on the part of the buyer. Relying on the latters representation, Anita issued a
check.

The next day, Gonzales never appeared. The failure of Gonzales to appeal resulted
in Gatchalian to issue a STOP PAYMENT ORDER on the check. It was later found out
that Gonzales used the check as payment to the Vicente de Ocampo for the
hospitalization fees of his wife. De Ocampo now demands payment for the check,
which Gatchalian refused, arguing that de Ocampo is not a holder in due course and
that there is no negotiation of the check.

Issue: Whether or not De Ocampo is a holder in due course.

Mesina vs. IAC

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FACTS: Jose Go purchased from Associate Bank a Cashiers Check, which he left on
top of the managers desk when left the bank. The bank manager then had
it kept for safekeeping by one of its employees. The employee was then in
conference with one Alexander Lim. He left the check in his desk and upon his
return, Lim and the check were gone. When Go inquired about his check, the
same couldn't be found and Go was advised to request for the stoppage of payment
which he did. He executed also an affidavit of loss as well as reported it to the
police. Thereafter, petitioner demanded payment on the said check which she
acquired as payment from Alexander Lim in certain transaction.

Issue: Whether or not petitioner is a holder in due course and can demand payment.

Metropol vs. Sambok

Facts: Dr. Javier executed a promissory note in favor of Ng Sambok Sons Motors Co.,
Ltd. On the same date, Sambok Motors, a sister company negotiated and indorsed
the note in favour of Metropol Financing & Investment Corporation adding the word
with recourse. When Dr. Villaruel failed to pay the promissory note after the
demand of Metropol, the latter notified Sambok of the dishonor and demand
payment. Sambok contended that it could not be obliged to pay until after its co-
defendant Dr. Villaruel has been declared insolvent.

Issue: Whether or not Sambok Motors Company, by adding the words with
recourse becomes a qualified indorser and therefor does not warrant that if said
not is dishonored, it will pay the amount to the holder.

Maralit vs. Imperial

Facts: Petitioner Maralit claimed that, as a consequence of the materially altered


treasury warrant encashed by respondent imperial, she was held personally liable
by the PNB for the total amount of P320,287.30. However, respondent claimed that
she merely helped a relative, Aida Abengoza, to encash the treasury warrant and
that she did not know the amounts were altered nor did she represent to petitioner
that the treasury warrants are genuine and that upon being informed of dishonor,
she immediately contacted her relative and signed an acknowledgement to pay the
total amount of the treasury warrant.

Issue: Whether or not respondent should be held liable as a general indorse.

Sapiera vs. Court of Appeals

Facts: On several occasions, petitioner Sapiera, a sari-sari store owner, purchased


from Monnico Mart certain grocery items, mostly cigarettes, and paid for them with
checks issued by one Arturo de Guzman. These checks were signed at the back by
the petitioner. When presented for payment, the checks were dishonored because
the drawers account was already closed. Private respondent Roman Sua informed

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De Guzman and petitioner about the dishonor but both failed to pay the value of the
checks.

Issue: Whether or not petitioner be required to pay civil indemnity to private


respondent.

BPI vs. Court of Appeals and Napiza

Facts: Private respondent Benjamin Napiza deposited in his foreign current deposit
with BPI a dollar check owned by Henry Chan in which he affixed his signature at
the dorsal side thereof. For this purpose, Napiza gave Chan a signed blank
withdrawal slip. However, Gayon Jr. got hold of the withdrawal slip and used it to
withdraw the proceeds of the dollar check, even before the check was cleared and
without the presentation of the bank passbook.

Issues: Whether or not petitioner can hold private respondent liable for the proceeds
of the check for having affixed his signature at the dorsal side as indorser.

Prudential Bank vs. IAC

FACTS: To effect payment for machineries purchased by Philippine Rayon Mills with
Nissho Co., Ltd, the former opened a commercial letter of credit with the Prudential
Bank and Trust Company in favor of Nissho. Drafts were drawn and issued by
Nissho, which were all paid by the Prudential Bank through its correspondent in
Japan. Two of these drafts were accepted by Philippine Rayon Mills while the others
were not. Petitioner instituted an action for the recovery of the sum of money it
paid to Nissho as Philippine Rayon Mills was not able to pay its obligations arising
from the letter of credit. Respondent court ruled that with regard to the ten drafts
which were not presented and accepted, no valid demand for payment can be
made. Petitioner however claims that the drafts were sight drafts which did not
require presentment for acceptance to Philippine Rayon.

ISSUE: Whether presentment for acceptance of the drafts was indispensable to


make Philippine Rayon liable thereon.

Wong vs. Court of Appeals

Facts: Petitioner Wong was an agent of Limtong Press, Inc. (LPI), a manufacturer of
calendars. After printing the calendars, LPI would ship the calendars directly to the
customers. Thereafter, the agents would come around to collect the payments.
Petitioner, however, had a history of unremitted collections, which he duly
acknowledged in a confirmation receipt he co-signed with his wife.

Petitioner issued several checks in December 1985, initially to guarantee the


payment of unremitted collections, however, upon agreement between the parties,
the checks will be applied to unremitted collections. Before maturity, petitioner
advised not to deposit the said checks, but after failing to replace them, respondent

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presented the check on June 1986 which was later on dishonoured by reason of
account closed. Having failed to pay, a case of violation of BP 22 was filed against
petitioner. Petitioner contends that he is not liable by reason of the delay in
presenting the checks.

Issue: Wether or not the petitioner is discharged from the liability on the said
checks due to delay in presentment.

The International Corporate Bank vs. Sps. Francis S. Gueco and Ma. Luz E.
Gueco

FACTS: Gueco spouses obtained a loan from ICB to purchase a car. In consideration
thereof, the debtors executed PNs, and a chattel mortgage was made over
the car. The spouses defaulted in payment of their obligations whereupon
they entered into a compromise agreement with the bank. After some negotiation
and computation, they tendered a managers check in favor of the bank based
on the reduced amount. Nonetheless, the car was still detained for the spouses
refused to sign the joint motion to dismiss. Because of this, the spouses filed an
action for recovery of the car and damages against the bank. As the result of the
proceeding, the managers check tendered to the bank had become stale in the
hands of the bank.

Issue: Whether or not the bank should bear the loss on the stale managers check
as a result of the proceedings.

State Investment House vs. Court of Appeals

Facts: New Sikatuna Wood Industries Inc. (NSWI) requested for a loan from Harris
Chua, who issued 3 crossed checks. Subsequently, NSWI entered in an agreement
with State Investment House Inc. (SIHI) where the former discounted several checks
including the crossed checks. When the crossed checks were deposited by SIHI, the
checks were dishonoured by reason of insufficient funds and account closed. SIHI
made demands upon Chua to make good said checks by Chua failed.

Issue: Whether SIHI is a holder in due course so as to recover the amounts in the
checks from Chua.

Bataan Cigar and Cigarette Factory, Inc. vs. Court of Appeals

Facts: Petitioner engaged one of its suppliers King Tim Pua George to deliver bales
of tobacco leaf. In consideration thereof, petitioner issued a crossed check. Relying
on the supplier's representation, petitioner agreed to purchase additional bales of
tobacco leaves, despite the supplier's failure to deliver in accordance with their
earlier agreement upon which he issued post dated crossed checks. However, the
supplier sold the said check at a discount to private respondent State Investment
House Inc.(SIHI). Upon failure to deliver said bales of tobacco leaf, petitioner issued
a stop order payment on all checks. SIHI then instituted this action, upon dishonour

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of the check, on the ground that the same is a holder in due course and would be
able to collect from petitioner.

Issue: Whether or not SIHI, a holder of a crossed check, is a holder in due course
and would be able to collect from petitioner.

CItytrust Banking Corporation vs. Court of Appeals

Facts: The case emanated from a complaint filed by respondent Emme for damages
against petitioner. Respondent deposited with petitioner several cash in order to
amply cover the post dated checks she issued. When presented for encahsement
upon maturity, all checks were dishonoured due to insufficiency of funds. Petitioner
in its answer averred that it was respondents fault that her checks were
dishonoured because the account no. Reflected in the deposit slip which is 2900823
was not her correct no. Which is 29000823.

Issue: Whether of not petitioner is liable for damages on the dishonoured checks.

Ramon Tan vs. Court of Appeals

Facts: Ramon tan secured a cashiers from Philippine Commercial Industrial Bank
(PCIB) payable to his order. He deposited his check in his account with Rizal
Commercial Banking Corporation (RCBC) Binondo. On the same day, RCBC
erroneously sent the same cashiers check for clearing to the Central Bank which
was returned for having been missent or misrouted. The next day, RCBC debited
the amount covered by the same cashiers check from the account of the petitioner.
Respondent bank at this time had not informed the petitioner of its action.

Relying that said checks were honoured, petitioner issued two personal check which
was dishonoured due to insufficiency of funds. Petitioner alleging to have suffered
humiliation and loss of face in the business sector due to the bounced check filed a
complaint against RCBC.

Issue: Whether or not RCBC may be held liable for damages upon erroneous debit
covered by the cashiers check.

Papa vs. A.U. Valencia and Co. Inc.

Facts: On 1992, a complaint was against Petitioner Myron C. Papa as attornery-in-


fact of Angela M. Butte sold to respondent Penaroyo through respondent Valencia a
parcel of land on 1973. Petitioner appealed decision, alleging among others that the
sale was never consummated as he did not encash the check given by
respondents Valencia and Pearroyo in payment of the full purchase price of the
subject lot. He maintained that what said respondents had actually paid was only
the amount of P5,000.00 (in cash) as earnest money.

Issue: Whether or not the check did not amount to payment.

NEGOTIABLE INSTRUMENTS LAW 13


Allied Banking Corporation vs. Court of Appeals

Facts: Petitioner purchased a letter of credit from respondent G.G. Sportswear Mfg.
Corporation. The export bill was issued by Chekiang First Bank Ltd., Hongkong. With
the purchase of the bill, ALLIED credited GGS the peso equivalent of the
aforementioned bill. On the same date, respondents executed their respective
Letters of Guaranty, holding themselves liable on the export bill if it should be
dishonored or retired by the drawee for any reason.

When ALLIED negotiated the export bill to Chekiang, payment was refused due to
some material discrepancies in the documents submitted by GGS relative to the
exportation covered by the letter of credit. Consequently, ALLIED demanded
payment from all the respondents based on the Letters of Guaranty and Surety
executed in favor of ALLIED. However, respondents refused to pay, prompting
ALLIED to file an action for a sum of money.

Respondents claim that the petitioner did not protest upon dishonor of the export
bill by Chekiang First Bank, Ltd. According to respondents, since there was no
protest made upon dishonor of the export bill, all of them, as indorsers were
discharged under Section 152 of the Negotiable Instruments Law.

Issue: Whether or not protest upon dishonor is necessary on a guarantor of a


commercial paper.

Sincere Villanueva vs. Marlyn Nite

Facts: Respondent took a loan from petitioner. To secure the loan, respondent issued
petitioner an Asian Bank Corporation check. The check was, however, dishonored due to
a material alteration when petitioner deposited the check on due date. Petitioner, however, filed
an action for a sum of money against ABC which was awarded by the court. When respondent
went to withdraw from her account on ABC, she was unable to do so because the trial court had
ordered ABC to pay petitioner the value of respondents ABC check. Respondent then filed a
petition to annul and set aside the trial courts decision ordering ABC to pay petitioner the value
of the ABC check.

Issue: Whether or not ABC may be held liable to petitioner for the dishonour of the
check.

Bank of the Philippine Island vs. Commissioner of Internal Revenue

Facts: Petitioner Bank of the Philippine Islands (BPI) sold to the Central Bank of the
Philippines U.S. dollars. BPI instructed, by cable, its correspondent bank in New York
to transfer U.S. dollars deposited in BPIs account therein to the Federal Reserve
Bank in New York for credit to the Central Banks account therein. Thereafter, the
funds had been credited to its account and the Central Bank promptly transferred to

NEGOTIABLE INSTRUMENTS LAW 14


the petitioners account in the Philippines the corresponding amount in Philippine
pesos.

Under the NIRC Section 195, it imposes a documentary stamp tax on (1) foreign bills
of exchange, (2) letters of credit, and (3) orders, by telegraph or otherwise, for the
payment of money issued by express or steamship companies or by any person or
persons.

Issue: Whether or not the instruction by cable is a bill of exchange


included in the activities where documentary stamp tax is imposed.

Citibank NA vs. Sabeniano

Facts: Respondent Modesta R. Sabeniano was a client of both petitioners Citibank


and FNCB Finance. Respondent filed a complaint to recover substantial deposits and
money market placements with petitioner. Petitioners admitted them however when
respondent failed to pay her loans with FNCB Finance despite repeated demands by
petitioner Citibank, the latter exercised its right to off-set. In support of respondents
assertion that she had already paid whatever loans she may have had with
petitioner Citibank, she presented as evidence provisional receipts for the
acceptance of the checks.

Issue: Whether or not petitioner the provisional receipts upon acceptance of checks
evidenced the payment.

Equitable PCI Bank vs. Rowena Ong

Facts: Sarande deposited in her account with Philippine Commercial International


(PCI) Bank a check in amount of P225,000 which was cleared. Thereafter, Sarande
issued a check amounting to P132,000 owing to a business consideration. On the
same day, Ong presented the check to PCI Bank but instead of depositing it, she
requested that proceeds thereof converted into a mangers check whereupon a
managers check was issued. Thereafter, he deposited said check to Equitable
Banking Corporation but was later on dishonored because PCI Bank issued a stop
payment owing to Sarandes account being closed.

Issue: Whether or not Ong is a holder in due course in the absence of consideration
in the issuance of the managers check.

International Corporate Bank vs. Court of Appeals and PNB

Facts: The Ministry of Education and Culture issued 15 checks 5drawn against
respondent which petitioner accepted for deposit on various dates. After 24 hours
from submission of the checks to respondent for clearing, petitioner paid the value
of the checks and allowed the withdrawals of the deposits. However, on 14 October

NEGOTIABLE INSTRUMENTS LAW 15


1981, respondent returned all the checks to petitioner without clearing them on the
ground that they were materially altered. Thus, petitioner instituted an action for
collection of sums of money against respondent to recover the value of the checks.

Issue: Whether or not respondent should be held liable for the materially altered
checks.

Melva Theresa Gonzales vs. Rizal Commercial Banking Corporation

Facts: Gonzales was an employee of Rizal Commercial Banking Corporation (RCBC).


A foreign check in the amount of $7,500 was drawn by Dr. Don Zapanta and payable
to Gonzales mother, defendant Eva Alviar. Alviar then endorsed this check.
Gonzales presented the foreign check to Olivia Gomez. After examining this, Olivia
Gomez acquiesced to the early encashment of the check and signed the check but
indicated thereon her authority of up to P17,500.00 only.

RCBC then tried to collect the check with the drawee bank but was dishonored
because of irregular indorsement. Insisting, RCBC again sent the check to the
drawee bank, but this time the check was returned due to account closed. Unable
to collect, RCBC demanded from Gonzales the payment of the peso equivalent of
the check that she received.

Issue: Whether or not Gonzales is liable to the subsequent indorser despite of the
defect introduced by the latter which rendered the instrument dishonored.

Metropolitan Bank and Trust Co. vs. Renato Cabilzo

FACTS: Cabilzo issued a postdated Metrobank Check payable to CASH. The check
was presented to Westmont Bank for payment by Mr. Marquez. Metrobank cleared
the check for encashment. Thereafter, it was discovered that Metrobank Check
which he issued in the amount of P1, 000.00 was altered to P91,000.00. Cabilzo
demanded that Metrobank re-credit the amount of P91,000.00 to his account.

Issue: Whether or not petitioner is liable for the amount of the materially altered
check.

Theresa MAcalalag vs. People of the Philippines

Facts: Petitioner obtained loans from Grace Estrella. Failure to pay the interest and
the loan, she executed two acknowledgement/affirmation receipts and as security
for payment of the aforesaid loans issued two PNB checks in favor of Estrella.
However, when Estrella presented said checks for payment with the drawee bank,
the same were dishonored for the reason that the account against which the same
was drawn was already closed. Estrella sent a notice of dishonor and demand to
make good the said checks to Macalalag, but the latter failed to do so. Hence,
Estrella filed two criminal complaints for Violation of Batas Pambansa Blg. 22.

NEGOTIABLE INSTRUMENTS LAW 16


Issue: Whether or not petitioner is violated BP 22 upon issuance of the check as
security.

BPI vs. Court of Appeals G.R. 136202

FACTS: Templonuevo demanded payment from petitioner of a sum of money


representing the aggregate value of three checks which were erroneously
deposited with the petitioner to A.A. Salazar Construction and Engineering
Services account. Finding merit in the demands, the bank then froze the account of
the engineering firm as the account of Salazar was already closed or had insufficient
funds. Failure of any settlement between Templonuevo and Salazar, this prompted
the bank to debit the account of Salazar and give back the money to Templonuevo
through cashiers check. The account of Salazar was also debited for whatever
charges incurred for the issuance of the cashiers check. Hence, respondent Salazar
filed this action for the recovery of the money.

ISSUE: Whether or not the collecting bank have the authority to withdraw
unilaterally from such depositors account the amount it had previously paid
upon certain unendorsed order instruments deposited by the depositor to another
account that she later closed?

NEGOTIABLE INSTRUMENTS LAW 17


1.

HELD: Philippine postal statutes are patterned from those of the United
States, and the weight of authority in said country is that Postal money
orders are not negotiable instruments inasmuch as the establishment of a
postal money order is an exercise of governmental power for the publics
benefit. Furthermore, some of the restrictions imposed upon money order
by postal laws and regulations are inconsistent with the character of
negotiable instruments. For instance, postal money orders may be
withheld under a variety of circumstances, and which are restricted to not
more than one indorsement. Hence, petitioner cannot demand payment
and recover the amount debited.

2. Held: The Certificate of Time Deposit is a negotiable instrument. The


negotiability or non-negotiability of an instrument is determined from the
writing, that is, from the face of the instrument itself. The duty of the court
in such case is to ascertain, not what the parties may have secretly
intended as contra distinguished from what their words express, but what
is the meaning of the words they have used. What the parties meant must
be determined by what they said.

However, Petitioner's insistence that the CTDs were negotiated to it begs


the question. Under the Negotiable Instruments Law, an instrument is
negotiated when it is transferred from one person to another in such a
manner as to constitute the transferee the holder thereof, and a holder
may be the payee or indorsee of a bill or note, who is in possession of it,
or the bearer thereof. In the present case, however, there was no
negotiation in the sense of a transfer of the legal title to the CTDs in favor
of petitioner in which situation, for obvious reasons, mere delivery of the
bearer CTDs would have sufficed. Here, the delivery thereof only as
security for the purchases of Angel de la Cruz could at the most constitute
petitioner only as a holder for value by reason of his lien.

3. Held: No, Section 66 is not applicable to the warrants because the same
is non-negotiable. The indication of Fund 501 as the source of the payment
to be made on the treasury warrants makes the order not unconditional
and the warrants themselves non-negotiable.

4. HELD: The non-negotiability of the instrument doesnt mean that it


is non-assignable or transferable. It may still be assigned or transferred
in whole or in part, even without the consent of the promissory note, since
consent is not necessary for the validity of the assignment. In
assignment, the assignee is merely placed in the position of the
assignors and acquires the instrument subject to all the defenses
that might have been set up against the original payee.

5. HELD: The withdrawal slips are non-negotiable. The essence of


negotiability which characterizes a negotiable paper as a credit instrument
lies in its freedom to circulate freely as a substitute for money. The

NEGOTIABLE INSTRUMENTS LAW 18


withdrawal slips in question lacked this character. Hence, the rule on
immediate notice of dishonor is non-applicable to the case at hand. Thus,
the bank was under no obligation to give immediate notice that it wouldn't
make payment on the subject withdrawal slips. Nonetheless, Citibank
erroneously accepted the same as such and thus, must bear the risks
attendant to the acceptance of the instruments.

6. HELD: No. Under the Negotiable Instruments Law, a check drawn


payable to the order of cash is a check payable to bearer hence a bearer
instrument, and the bank may pay it to the person presenting it for
payment without the drawers indorsement. The drawee bank need not
obtain any indorsement of the check, but may pay it to the person
presenting it without any indorsement.

7.

Held: A negotiable instrument must be delivered to the payee in order to


evidence its existence as a binding contract. Delivery of an instrument
means transfer of possession, actual or constructive, from one person to
another. Without the initial delivery of the instrument from the drawer to
the payee, there can be no liability on the instrument. Moreover, such
delivery must be intended to give effect to the instrument. Without the
delivery of said checks to petitioner-payee, the former did not acquire any
right or interest therein and cannot therefore assert any cause of action,
founded on said checks, whether against the drawer Sima Wei or against
the Producers Bank or any of the other respondents.

8. Held: Yes, an inspection of the drafts accepted by the defendant shows


that nowhere has he disclosed that he was signing as representative of the
Philippine Education Foundation Company. For failure to disclose his
principal as required under Section 20 of the NIL, he is personally liable for
the drafts he accepted.

9. Held: The Negotiable Instruments Law provides that when a person is


under obligation to indorse in a representative capacity, he may indorse in
such terms as to negative personal liability. An agent, when so signing,
should indicate that he is merely signing as an agent in behalf of the
principal and must disclose the name of his principal. Otherwise,
he will be held liable personally. If fransisco was indeed authorized,
she didn't comply with the requirements of the law. Instead of
signing Ongs name, she should have signed in her own name as agent of
HCCC. Hence, she is liable.

10. Held: Yes, under Section 23 of the NIL, a forged signature is wholly
inoperative and no right to discharge it or enforce its payment can be
acquired through or under the forged signature except against a party who
cannot invoke the forgery. As a collecting bank which indorsed the checks
should be liable to the drawee-bank for reimbursement because the
checks had been forged prior to their delivery to the petitioner. The

NEGOTIABLE INSTRUMENTS LAW 19


petitioner must in turn shoulder the loss of the amounts which the
respondent, as its collecting agent, had to reimburse to the drawee-banks.

11. Held: Yes, as last indorser, Ebrada was supposed to have warranted
that she has good title to said check. The drawee of a check can recover
from the holder the money paid to him on a forged instrument. This is
because the indorser is supposed to warrant to the drawee that the
signatures of the payee and previous indorser are genuine.

12. Held: No. Forgery cannot be presumed. It must be established by clear,


positive and convincing evidence which is lacking in the case at bar.
Further, petitioner was using its own personalized checks, instead of the
official PNB Commercial blank checks. The Drawee bank PNB cannot be
faulted for not having detected the fraudulent encashment of the checks
because the printin was not done under the supervision and control of the
Bank. The petitioner was in a better position to detect and prevent the
fraudulent encashment of its checks.

13.

Held: Yes. The petitioner having stamped its guarantee and indorsed is
estopped from claiming that the checks under consideration are not
negotiable instruments. The collecting bank or last endorser generally
suffers the loss because it has the duty to ascertain the genuineness of all
prior indorsements.

14. HELD: Forgery is a real defense by the party whose signature was
forged. As a rule, a drawee bank who has paid a check on which an
indorsement has been forged cannot debit the account of a drawer
for the amount of said check. An exception to this rule is when
the drawer is guilty of negligence which causes the bank to honor such
checks. Petitioner in this case has relied solely on the honesty and
loyalty of her bookkeeper and never bothered to verify the accuracy
of the amounts of the checks she signed the invoices attached
thereto. And though she received her bank statements, she didn't
carefully examine the same to double-check her payments. Petitioner
didn't exercise reasonable diligence which eventually led to the fruition of
her bookkeepers fraudulent schemes.

15. Held: Associated Bank, and not PNB, is the one duty-bound to warrant
the instrument as genuine, valid and subsisting at the time of indorsement
pursuant to Section 66 of the NIL. The stamp guaranteeing prior
indorsement is not an empty rubric; the collecting bank is held
accountable for checks deposited by its customers.

16. Held: In this case, the check was not returned to Metro Bank in
accordance with the 24-hour clearing house period, but was cleared by
FNCB. Failure of FNCB, therefore, to call the attention of Metro Bank to the
alteration of the check in question until after the lapse of nine days,

NEGOTIABLE INSTRUMENTS LAW 20


negates whatever right it might have had against Metro Bank in the light
of the said Central Bank Circular. Its remedy lies not against Metro Bank,
but against the party responsible for the changing the name of the payee
and the amount on the face of the check.

17. RULING: When an indorsement is forged, the collecting bank or last


indorser, as a general rule, bears the loss. But the unqualified indorsement
of the collecting bank on the check should be read together with the 24-
hour regulation on clearing house operation. Hence, when a drawee bank
fails to return a forged or altered check to the collecting bank within the
24-hour clearing period, the collecting bank is absolved from liability.

18. HELD: The checks were drawn against the drawee bank but the title of
the person negotiating the same was allegedly defective because the
instrument was obtained by fraud and unlawful means, and the
proceeds of the checks were not remitted to the payee. The mere fact
that the forgery was committed by a drawer-payors confidential
employee or agent, who by virtue of his position had unusual facilities for
perpetrating the fraud and imposing the forged paper upon the bank,
doesnt entitle the bank to shift the loss to the drawer-payor, in the
absence of some circumstance raising estoppel against the drawer.

19. HELD: The petitioner doesnt have a course of action against the
bank. To be entitled to damages, petitioner has the burden of proving
negligence on the part of the bank for failure to detect the discrepancy in
the signatures on the checks. It is incumbent upon petitioner to establish
the fact of forgery. It was petitioner who was negligent in this case. He
failed to examine his bank statements and this was the proximate
cause of his own damage. Because of this negligence, he is precluded
from setting up the defense of forgery with regard the checks.

20. Held: The SC held that the FEBTC should bear the loss. Under Sec. 62
of NIL, among the warranties to be assumed by the acceptor is it admits
the existence of the drawer, the genuineness of his signature, and his
capacity and authority to draw the instrument. It is incumbent upon the
drawee bank to ascertain the genuineness of the signature of its depositor.
The respondent bank in this case did not exercise the degree of diligence
required to enable it to detect the forgery.

21. HELD: An alteration is said to be material if it alters the effect of the


instrument. It means an unauthorized change in the instrument that
purports to modify in any respect the obligation of a party or an
unauthorized addition of words or numbers or other change to an
incomplete instrument relating to the obligation of the party. In other
words, a material alteration is one which changes the items which are
required to be stated under Section 1 of the NIL.

In this case, the alleged material alteration was the alteration of the serial
number of the check in issuewhich is not an essential element of

NEGOTIABLE INSTRUMENTS LAW 21


a negotiable instrument under Section 1. Therefore, there being no
material alteration in the check committed, PNB could not return the check
to PBCOM. It should pay the same.

22. Held: The insertion of the words Agent, Phil. National Bank, which
converts the bank from a mere drawer and therefore changes its liability,
constitutes a material alteration of the instrument without the consent of
the parties liable thereon, and so discharges the instrument.

23. HELD: A solidary accommodation makerwho made paymenthas


the right to contribution, from his co-accomodation maker, in the absence
of agreement to the contrary between them, subject to conditions
imposed by law. This right springs from an implied promise to
share equally the burdens thay may ensue from their having
consented to stamp their signatures on the promissory note.

24. Held: Yes. To be considered an accommodation party, a person must


(1) be a party to the instrument, (2) not receive value therefor, (3) sign for
the purpose of lending his name for the credit of some other person. It is
not a valid defense that the accommodation party did not receive any
valuable consideration when he executed the instrument. He is liable to a
holder for value as if the contract was not for accommodation, in whatever
capacity such accommodation party signed the instrument, whether
primarily or secondarily.

25. HELD: No. An accommodation party is liable to a holder for value.


However, Stelco cannot be considered as a holder for value for there is no
evidence whatsoever that the check was ever given to it, or indorsed to it
in any manner or form in payment of an obligation or as security for an
obligation, or for any other purpose before it was presented for payment.
STELCO never became a holder for value and that nowhere in the check
itself does the name of Stelco Marketing appear as payee, indorsee or
depositor thereof.

26. Held: Travel-on is not an accommodated party; it realize no value on


the checks bounced. It presented these checks for payment at the drawee
bank but the checks bounced. Thus private responded must be held liable
on the six checks here involved. Those checks in themselves constituted
evidence of indebtedness of private respondent.

27. Held: A person who has signed the instrument as maker, drawer,
acceptor, or indorser, without receiving value therefor, and for the purpose
of lending his name to some other person. As such, she is under the law
liable on the instrument to a holder for value, notwithstanding such holder
at the time of taking the instrument knew * * (her) to be only an
accommodation party, although she has the right, after paying the holder,
to obtain reimbursement from the party accommodated, since the
relation between them is in effect that of principal and surety, the
accommodation party being the surety."

NEGOTIABLE INSTRUMENTS LAW 22


It is thus clear that 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 and without considering the attending
circumstances in the case would result in an injustice and in the erosion of
the public trust in the banking system. The interest of justice thus
demands looking into the events that led to the encashment of the check.

28. HELD: Petitioners became liable as accommodation parties. They have


the right after paying the instrument to seek reimbursement from the
party accommodated, since the relation between them has in effect
became one of principal and surety.

Furthermore, as it turned out, the contract of surety between


Woodland and petitioner was extinguished by the rescission of the
contract of sale of the farmland. With the rescission, there was confusion
in the persons of the principal debtor and surety.

29. Held: No. De Ocampo is not a holder in due course. Under the
circumstances of the case, instead of the presumption that payee was a
holder in good faith, the fact is that it acquired possession of the
instrument under circumstances that should have put it to inquiry as to
the title of the holder who negotiated the check to it. The holder did not
show or tell the payee why he had the check in his possession and why he
was using it for the payment of his own personal account which shows that
holder's title was defective or suspicious.

30. HELD: No, petitioner is not a holder in due course. 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.

31. Held: Recourse means resort to a person who is secondarily liable after
the default of the person who is primarily liable. Appellant, by indorsing
the note with recourse does not make itself a qualified indorser but a
general indorser who is secondarily liable, because by such indorsement,
it agreed that if Dr. Villaruel fails to pay the note, plaintiff-appellee can go
after said appellant. The effect of such indorsement is that the note was
indorsed without qualification.

32. Held: The Court symphatizes with the petitioner that there was indeed
damage and loss, but said loss is chargeable to the respondent who upon
her indorsements warrant that the instrument is genuine in all respect
what it purports to be and that she will pay the amount thereof in case of
dishonor. Thus, while the MTC found petitioner partly responsible for the
encashment of the altered checks, it found respondent civilly liable

NEGOTIABLE INSTRUMENTS LAW 23


because of her indorsements of the treasury warrants, in addition to the
fact that respondent executed a notarized acknowledgment of debt
promising to pay the total amount of said warrants.

33. Held: Yes. It is undisputed that the four (4) checks issued by De
Guzman were signed by petitioner at the back without any indication as to
how she should be bound thereby and, therefore, she is deemed to be an
indorser thereof. The NIL clearly provides Sec. 17. Construction where
instrument is ambiguous. --- Where the language of the instrument is
ambiguous, or there are admissions therein, the following rules of
construction apply: x x x (f) Where a signature is so placed upon the
instrument that it is not clear in what capacity the person making the
same intended to sign, he is deemed an indorser. x x x

34. Held: No. It is thus clear that ordinarily private respondent may be held
liable as an indorser of the check or even as an accommodation party.[17]
However, to hold private respondent liable for the amount of the check he
deposited by the strict application of the law and without considering the
attending circumstances in the case would result in an injustice and in the
erosion of the public trust in the banking system. The interest of justice
thus demands looking into the events that led to the encashment of the
check.

35. HELD: In the case at bar, the drawee was necessarily the herein
petitioner. It was to the latter that the drafts were presented for payment.
There was in fact no need for acceptance as the issued drafts are sight
drafts. Presentment for acceptance is necessary only in the cases
expressly provided for in Section 143 of the Negotiable Instruments Law
(NIL). In no other case is presentment for acceptance necessary in order
to render any party to the bill liable. Obviously then, sight drafts do not
require presentment for acceptance.

36. Held: Under Section 186 of the Negotiable Instruments Law, a check
must be presented for payment within a reasonable time after its issue or
the drawer will be discharged from liability thereon to the extent of the
loss caused by the delay. By current banking practice, a check becomes
stale after more than six (6) months, 23 or 180 days. Private respondent
herein deposited the checks 157 days after the date of the check. Hence,
said checks cannot be considered stale.

37. HELD: Failure to present for payment within a reasonable time will
result to the discharge of the drawer only to the extent of the loss caused
by the delay. It does not totally wipe out all liability. In fact, the legal
situation amounts to an acknowledgment of liability in the sum stated in
the check. In this case, the Gueco spouses have not alleged, much less
shown that they or the bank which issued the managers check has
suffered damage or loss caused by the delay or non-presentment.
Definitely, the original obligation to pay certainly has not been erased.

NEGOTIABLE INSTRUMENTS LAW 24


38. Held: No, the act of crossing a check serves as a warning to the holder
that the check has been issued for a definite purpose so that he must
inquire if he has received the check pursuant to that purpose, otherwise
he is not a holder in due course. His failure to inquire from the holder the
purpose prevents him from being considered in good faith. SIHI, is subject
to personal defences for such as the lack of consideration between the
NSWI and Chua.

39. Held: It is a settled ruled that crossing of checks should put the holder
on inquiry and upon him devolves the duty to ascertain the indorsers title
to the check or the nature of his possession. Failing in this respect, the
holder is declared guilty of gross negligence amounting to legal absence of
good faith and is to the effect that the holder of the check is not a holder
in due course. There being failure of consideration which is a personal
defense, cannot be obliged to pay the checks to SIHI who is not a holder in
due course.

40. Held: The depositor expects the bank to treat his account with utmost
fidelity, whether such account consists only of a few hundred pesos or of
millions. The bank is engaged in business impressed with public interest
and it is its duty to protect in return its many clients and depositors who
transact business with it. It is under obligation to treat the accounts of its
depositors with meticulous care having in mind the fiduciary nature of
their relationship. Hence, nominal damages may be awarded in order that
a right of the plaintiff, which have been violated or invaded by the
defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.

41. Held: A bank cannot exculpate itself from liability for the consequences
of the use of wrong deposit slip resulting in the misrouting of a regional
check to the Central Bank for clearing. The bank is not expected to be
infallible but it must bear the blame for not discovering the mistake of its
teller despite the established procedure requiring the papers and bank
books to pass through a battery of bank personnel whose duty it is to
check and countercheck them for possible errors. As the result of the
negligence of the bank, the depositor has the right to recover moral
damages even if the banks negligence may not have been attended with
malice and bad faith if the former suffered mental anguish, serious
anxiety, embarrassment and humiliation.

42. Held: While it is true that the delivery of a check produces the effect
of payment only when it is cashed, pursuant to Art. 1249 of the Civil Code,
the rule is otherwise if the debtor is prejudiced by the creditors
unreasonable delay in presentment. The acceptance of a check implies an
undertaking of due diligence in presenting it for payment, and if he from
whom it is received sustains loss by want of such diligence, it will be held
to operate as actual payment of the debt or obligation for which it was
given.

NEGOTIABLE INSTRUMENTS LAW 25


It has, likewise, been held that if no presentment is made at all, the drawer
cannot be held liable irrespective of loss or injury unless presentment is
otherwise excused. This is in harmony with Article 1249 of the Civil Code
under which payment by way of check or other negotiable instrument is
conditioned on its being cashed, except when through the fault of the
creditor, the instrument is impaired. The payee of a check would be a
creditor under this provision and if its non-payment is caused by his
negligence, payment will be deemed effected and the obligation for which
the check was given as conditional payment will be discharged. Failure of
a payee to encash a check for more than ten (10) years undoubtedly
resulted in the impairment of the check through his unreasonable and
unexplained delay

43. Held: No, Section 152 of the Negotiable Instruments Law pertaining to
indorsers, relied on by respondents, is not pertinent to this case. There are
well-defined distinctions between the contract of an indorser and that of a
guarantor/surety of a commercial paper, which is what is involved in this
case. The contract of indorsement is primarily that of transfer, while the
contract of guaranty is that of personal security. The liability of a
guarantor/surety is broader than that of an indorser. Unless the bill is
promptly presented for payment at maturity and due notice of dishonor
given to the indorser within a reasonable time, he will be discharged from
liability thereon. On the other hand, except where required by the
provisions of the contract of suretyship, a demand or notice of default is
not required to fix the suretys liability. Hence, respondents are liable and
protest upon dishonor is not necessary,.

44. Held: If a bank refuses to pay a check notwithstanding the sufficiency


of funds, the payee-holder cannot sue the bank because there is no privity
of contract exists between the drawee-bank and the payee. Contracts take
effect only between the parties, their assigns and heirs. In this case, the
contract of loan was between petitioner and respondent. No collection suit
could prosper without respondent who was an indispensable party

45. Held: From this enumeration, two common elements need to be


present: (1) drawing the instrument or ordering a drawee, within the
Philippines; and (2) ordering that drawee to pay another person a
specified amount of money outside the Philippines. What is being taxed is
the facility that allows a party to draw the draft or make the order to pay
within the Philippines and have the payment made in another country.

The fact that the funds belong to BPI and were not advanced by the
correspondent bank will not remove the transaction from the coverage of
Section 195 of the NIRC. A bill of exchange, when drawn in the Philippines
but payable in another country, would surely be covered by this section.
And in the case of a bill of exchange, the funds may belong to the drawer
and need not be advanced by the drawee, as in the case of a check or a

NEGOTIABLE INSTRUMENTS LAW 26


draft. In the description of a draft provided hereunder, the drawee is in
possession of funds belonging to the drawer of the bill.

46. Held: Since a negotiable instrument is only a substitute for money


and not money, the delivery of such an instrument does not, by itself,
operate as payment. A check, whether a managers check or ordinary
check, is not legal tender, and an offer of a check in payment of a debt is
not a valid tender of payment and may be refused receipt by the obligee
or creditor. Mere delivery of checks does not discharge the obligation
under a judgment. The obligation is not extinguished and remains
suspended until the payment by commercial document is actually
realized. Since the provisional receipt was issued for the the receipt of
the check, the same cannot be considered as evidence of payment hence
the loan still subsist.

47. Held:The claim is without basis. Easily discernible is that what Ong
obtained from PCI Bank was not just any ordinary check but a managers
check. A managers check is an order of the bank to pay, drawn upon
itself, committing in effect its total resources, integrity and honor behind
its issuance. By accepting PCI Bank Check issued by Sarande to Ong and
issuing in turn a managers check in exchange thereof, PCI Bank assumed
the liabilities of an acceptor under Section 62 of the Negotiable
Instruments Law. Hence, Petitioner is liable to pay the value of the check
with damages.

48. Held: The alterations in the checks were made on their serial numbers.
Alteration on serial numbers are not within the purview of material
alteration as provided under Section 125 of NIL for the name of the
government agency which issued the check was prominently printed.
Since there were no material alterations on the checks, respondent as
drawee bank has no right to dishonor them and return them to petitioner,
the collecting bank. Thus, respondent is liable to petitioner for the value of
the checks, with legal interest from the time of filing.

49. Held: The foreign drawee bank, Wilshire Center Bank N.A., refused to pay the
bearer of this dollar-check drawn by Don Zapanta because of the defect introduced by
RCBC, through its employee, Olivia Gomez. There is no doubt in the mind of the
Court that a subsequent party which caused the defect in the instrument cannot have
any recourse against any of the prior endorsers in good faith.

The holder or subsequent endorser who tries to claim under the


instrument which had been dishonored for irregular endorsement must
not be the irregular endorser himself who gave cause for the dishonor.
RCBC, which caused the dishonor of the check upon presentment to the

NEGOTIABLE INSTRUMENTS LAW 27


drawee bank, through the qualified endorsementof its employee, Olivia
Gomez, cannot hold prior endorsers, Alviar and Gonzales in this case,
liable on the instrument.

50. Held: The bank on which the check is drawn is under strict liability to
pay to the order of the payee in accordance with the drawers instructions.
Payment made under materially altered instrument is not payment done in
accordance with the instruction of the drawer. When the drawee bank pays
a materially altered check, it violates the terms of the check, as well as its
duty to charge its clients account only for bona fide disbursements he had
made. Since the drawee bank, in the instant case, did not pay according to
the original tenor of the instrument, as directed by the drawer, then it has
no right to claim reimbursement from the drawer, much less, the right to
deduct the erroneous payment it made from the drawers account which it
was expected to treat with utmost fidelity. Hence, petitioner is liable to
reimburse the drawer for the amount paid.

51. Held: We have repeatedly held that there is no violation of Batas Pambansa Blg.
22 if the complainant was actually told by the drawer that he has no sufficient funds in
a bank.10Where, as in the case at bar, the checks were issued as security for a loan,
payment by the accused of the amount of the check prior to its presentation for
payment would certainly serve the same purpose. When Estrella presented the checks
for payment, the same were dishonored on the ground that they were drawn against a
closed account. Despite notice of dishonor, petitioner Macalalag failed to pay the full
face value of the second check issued. Only a full payment of the face value of the
second check at the time of its presentment or during the five-day grace period15 could
have exonerated her from criminal liability.

52. HELD: Consequently, petitioner, as the collecting bank, had the right
to debit Salazars account for the value of the checks it previously credited
in her favor. It is of no moment that the account debited by petitioner was
different from the original account to which the proceeds of the check
were credited because both admittedly belonged to Salazar, the former
being the account of the sole proprietorship which had no separate and
distinct personality from her, and the latter being her personal account.
Howver, the bank is liable for damages caused to Salazar as a result of the
erroneous debit by reason of its failure to perform its obligation to treat
their depositors with meticulous care, having in mind the fiduciary nature
of their relationship.

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