Sadaya vs.

Sevilla
On principle, a solidary accommodation maker—who made payment—has 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.

Crisologo-Jose vs. Court of Appeals

The provision of NIL which holds an accommodation party liable on the instrument to holder for value,
although such holder at the time of taking the instrument knew him to be only an accommodation party,
does not include nor apply to corporations which are accommodation parties. This is because the issue or
indorsement of negotiable paper by a corporation without consideration and for accommodation of another
is ultra vires. Hence, one who has taken the instrument with knowledge of the accommodation nature
thereof cannot recover against a corporation where it is only a accommodation party.

Stelco Marketing vs. Court of Appeals

A person cannot be holder of the check for value if it does not meet the essential requisites prescribed by
the law. He must become the holder of it before it was overdue, and without notice that it had previously
dishonored,” and he took the check in good faith and for value before he can be considered as a holder of
the check for value.

Travel-On BPI vs. Court of Appeals

Check which is regular on its face is deemed prima facie to have been issued for a valuable consideration
and every person whose signature appears thereon is deemed to have become a party thereto for value.
Further the rule is quite settled that a negotiable instrument is presumed to have been given or indorsed
for a sufficient consideration unless otherwise contradicted and overcome by another evidence.

In the accommodation transactions recognized by the NIL, an accommodating party lends his credit
to the accommodated party, by issuing or indorsing a check which is held by the payee or indorsee as a
holder in due course, who gave full value which the accommodated party must repay the accommodating
party, unless of course the accommodating party intended to make a donation to the accommodated party.
But the accommodating party is bound on the check to the holder in due course who is necessarily a third
party and is not the accommodated party. Having issued or indorsed the check, the accommodating party
has warranted to the holder in due course that he will pay the same according to its tenor.

Agro Conglomerate Inc. vs CA

An accommodation party is a person who has signed the instrument as maker, acceptor,
or indorser,without receiving value therefor, and for the purpose of lending his name to some other
person and isliable on the instrument to a holder for value, notwithstanding such holder at the time of
taking theinstrument knew (the signatory) to be an accommodation party.

By this time, we note a subsidiary contract of suretyship had taken effect since petitioners signed the
promissory notes as maker and accommodation party for the benefit of Wonderland. Petitioners became
liable as accommodation party. He has the right, after paying the holder, to obtain reimbursement from
the party accommodated, since the relation between them has in effect become one of principal and surety, the
accommodation party being the surety. The surety’s liability to the creditor or promisee of the principal is said to be
direct, primary and absolute; in other words, he is directly and equally bound with the principal. And the
creditor may proceed against any one of the solidary debtors.

De Ocampo vs. Gatchalian

Good faith on the part of the holder is presumed, such presumption is destroyed if the payee or indorsee
acquired possession of the instrument under circumstances that should have put it to inquiry as to the title
of the holder who negotiated the instrument. The burden is now on the part of the holder to show that
notwithstanding the suspicious circumstances, it acquired in the actual good faith.

Mesina vs. IAC

The holder of a cashier’s check who is not a holder in due course
cannot enforce payment against the issuing bank which dishonors the same. If a payee of a cashier’s
check obtained it from the issuing bank by
fraud, or if there is some other reason why the payee is not entitled to
collect the check, the bank would of course have the right to refuse payment of the check when
presented by payee.

Metropol vs. Sambok

A qualified indorserment constitutes the indorser a mere assignor of the title to the instrument. It may be
made by adding to the indorser’s signature the words “without recourse” or any words of similar import.
Such indorsement relieves the indorser of the general obligation to pay if the instrument is dishonored but
not of the liability arising from warranties on the instrument as provided by section 65 of NIL.

Recourse means resort to a person who is secondarily liable after the default of the person who is primarily
liable. A person who indorses without qualification engages that on due presentment, the note shall be
accepted or paid, or both as the case maybe, and that if it be dishonored, he will pay the amount thereof to
the holder.

Sapiera vs. Court of Appeals

Every indorser who indorses without qualification, warrants to all subsequent holders in due course that,
on due presentment, it shall be accepted or paid or both, according to its tenor, and that if it be dishonored
and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder or
to any subsequent indorser who may be compelled to pay it.

[BPI v. CA and Napiza] A negotiable instrument, such as a check, whether a manager’s check or ordinary
check, is not legal tender. As such, after receiving the deposit, under its own rules, petitioner shall credit
the amount in private respondent’s account or infuse value thereon only after the drawee bank shall have
paid the amount of the check or the check has been cleared for deposit. Again, this is in accordance with
ordinary banking practices and with this Court’s pronouncement that “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. The rule
finds more meaning in this case where the check involved is drawn on a foreign bank and therefore
collection is more difficult than when the drawee bank is a local one even though the check in question is a
manager’s check.

Prudencial Bank vs. IAC

Acceptance is presumed to be unqualified or absolute. If the drawee intends to qualify his acceptance, he
must do so distinctly and unmistakably or else the acceptance will be taken as absolute.

Wong vs. Court of Appeals

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, or 180 days.

The International Corporate Bank vs. Francis S. Gueco and Ma. Luz E Gueco
A stale check is one which has not been presented for payment within a reasonable time after its issue. It
is valueless and, therefore, should not be paid. Under the negotiable instruments law, an instrument not
payable on demand must be presented for payment on the day it falls due. When the instrument is payable
on demand, presentment must be made within a reasonable time after its issue. In the case of a bill of
exchange, presentment is sufficient if made within a reasonable time after the last negotiation thereof. A
check must be presented for payment within a reasonable time after its issue, and in determining what is a
"reasonable time," regard is to be had to the nature of the instrument, the usage of trade or business with
respect to such instruments, and the facts of the particular case. The test is whether the payee employed
suchdiligence as a prudent man exercises in his own affairs. This is because the nature and theory behind
the useof a check points to its immediate use and payability.
Nyco Sales Corporation vs BA Finance Corporation
Yes. The relationship between Nyco Sales and BA Finance is one of assignor-assignee. The assignor-
vendor warrants both the credit itself (its existence and legality) and the person of the debtor (his
solvency), if so stipulated, as in the case at bar. Consequently, if there be any breach of the above
warranties, the assignor-vendor should be held answerable therefor. There is no question then that the
assignor-vendor is indeed liable for the invalidity of whatever he assigned to the assignee-vendee.
Considering now the facts of the case at bar, it is beyond dispute that Nyco executed a deed of
assignment in favor of BA Finance with Sanshell Corporation as the debtor-obligor. BA Finance is actually
enforcing said deed and the check covered thereby is merely an incidental or collateral matter. This
particular check merely evidenced the credit which was actually assigned to BA Finance. Thus, the
designation is immaterial as it could be any other check. It is only what is represented by the said checks
that Nyco is being asked to pay.

State Investment House Inc. vs. CA

The withdrawal of the money from the drawee bank to avoid liability on the checks cannot prejudice the
rights of holders in due course. For the reason that the holder who takes the negotiated paper makes a
contract with the parties on the face of the instrument; there is an implied representation that funds or credit
are available for the payment of the instrument in the bank upon which it is withdrawn.

MATERIAL ALTERATION
[PNB v. CA] An alteration is said to be material if it alters the effect of the instrument. It means an
unauthorized change in an 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 a 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.
The case at bench is unique in the sense that what was altered is the serial number of the check in question,
an item which, it can readily be observed, is not an essential requisite for negotiability under Section 1 of
the NIL. The aforementioned alteration did not change the relations between the parties. The name of the
drawer and the drawee were not altered. The intended payee was the same. The sum of money due to the
payee remained the same. The check’s serial number is not the sole indication of its origin. As succinctly
found by the Court of Appeals, the name of the government agency which issued the subject check was
prominently printed therein. The check’s issuer was therefore sufficiently identified, rendering the referral
to the serial number redundant and inconsequential. Petitioner, thus cannot refuse to accept the check in
question on the ground that the serial number was altered, the same being an immaterial or innocent one.
[Montinola v. PNB] The insertion of the words "Agent, Phil. National Bank" which converts the bank from
a mere drawee to a 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. (Section 124
of the Negotiable Instruments Law). The check was not legally negotiated within the meaning of the
Negotiable Instruments Law. Section 32 of the same law provides that "the indorsement must be an
indorsement of the entire instrument. An indorsement which purports to transfer to the indorsee a part only
of the amount payable, . . . (as in this case) does not operate as a negotiation of the instrument." Montinola
may therefore not be regarded as an indorsee. At most he may be regarded as a mere assignee of the
P30,000 sold to him by Ramos, in which case, as such assignee, he is subject to all defenses available to
the drawer Provincial Treasurer of Misamis Oriental and against Ramos. Neither can Montinola be
considered as a holder in due course because section 52 of said law defines a holder in due course as a
holder who has taken the instrument under certain conditions, one of which is that he became the holder
before it was overdue. When Montinola received the check, it was long overdue. And, Montinola is not even
a holder because section 191 of the same law defines holder as the payee or indorsee of a bill or note and
Montinola is not a payee. Neither is he an indorsee for as already stated, at most he can be considered
only as assignee. Neither could it be said that he took it in good faith. As already stated, he has not paid
the full amount of P90,000 for which Ramos sold him P30,000 of the value of the check. In the second
place, as was stated by the trial court in its decision, Montinola speculated on the check and took a chance
on its being paid after the war. Montinola must have known that at the time the check was issued in May,
1942, the money circulating in Mindanao and the Visayas was only the emergency notes and that the check
was intended to be payable in that currency. Also, he should have known that a check for such a large
amount of P100,000 could not have been issued to Ramos in his private capacity but rather in his capacity
as disbursing officer of the USAFFE, and that at the time that Ramos sold a part of the check to him, Ramos
was no longer connected with the USAFFE but already a civilian who needed the money only for himself
and his family.
As already stated, as a mere assignee Montinola is subject to all the defenses available against assignor
Ramos. And, Ramos had he retained the check may not now collect its value because it had been issued
to him as disbursing officer. As observed by the trial court, the check was issued to M. V. Ramos not as a
person but M. V. Ramos as the disbursing officer of the USAFFE. Therefore, he had no right to indorse it
personally to plaintiff. It was negotiated in breach of trust, hence he transferred nothing to the plaintiff.
Bataan Cigar and Cigarette Factory, Inc. vs. CA
In order to preserve the credit worthiness of checks, jurisprudence has pronounced that crossing a check
should have the following effects: (1) check may not be encashed but only deposited in the bank; (2) the
check may be negotiated only once, to one who has an account with a bank; (3) and the act of crossing the
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.

Citytrust banking Corp., vs. Intermediate Appellate Court

Even there was error on the account number the controlling in determining in whose account the deposit is
name of the account owner. This is so because it is not likely to commit an error in one’s name than merely
relying on numbers which are difficult to remember. Numbers are for the convenience of the bank but was
never intended to disregard the real name of its depositors. The bank is engaged in business impressed
with public trust, and it is its duty to protect in return its clients and depositors who transact business with
it.

Tan vs. Court of Appeals

A cashier’s check is a primary obligation of the issuing bank and accepted in advance by its mere issuance,
and by its peculiar character and general use in the commercial world is regarded substantially to be as
good as the money which it represents.

Papa vs. A.U. Valencia

After more than 10 years from the payment in part by cash and in part by check, the presumption is that
the check had been encashed. Failure of the payee to encash a check for more than 10 years undoubtedly
resulted in the impairment of the check through his unreasonable and unexplained delay.

Bank of the Philippine Islands vs. Court of Appeals

Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration; every
person whose signature appears thereon to have become a party thereto for value. Therefore, it is up to
the party who alleges that there was absence of consideration to prove such fact.
The presumption will operate only if there was negotiation. Consideration is not presumed if there was
transfer without indorsement.