Development Bank of Rizal v. Sima Wei Lim v.

CA (251 SCRA 408)

(219 SCRA 736)
FACTS: Manuel and Rosita Lim, spouses, and
FACTS: Respondent Sima Wei executed and
president and treasurer respectively of Rigi
delivered to petitioner Bank a promissory
Bilt Industries, Inc., allegedly issued 7
note engaging to pay the petitioner Bank or
Solidbank checks as payment for goods
order the amount of P1,820,000.00. Sima Wei
purchased from and delivered by Linton
subsequently issued two crossed checks
Commercial Company, Inc. When deposited
payable to petitioner Bank drawn against
with Rizal Commercial Banking Corporation,
China Banking Corporation in full settlement
said checks were dishonored for
of the drawer's account evidenced by the
“insufficiency of funds” with the additional
promissory note. These two checks however
notation “payment stopped” stamped
were not delivered to the petitioner-payee or
thereon. Despite demand, spouses Lim
to any of its authorized representatives but
refused to make good the checks or pay the
instead came into the possession of
value of the deliveries. The RTC held spouses
respondent Lee Kian Huat, who deposited the
Lim guilty of estafa and violation of BP22. On
checks without the petitioner-payee's
appeal, the CA acquitted accused-appellants
indorsement to the account of respondent
of estafa on the ground that the checks were
Plastic Corporation with Producers
not made in payment of an obligation
Bank. Inspite of the fact that the checks were
contracted at the time of their issuance but
crossed and payable to petitioner Bank and
affirmed the finding that they were guilty of
bore no indorsement of the latter, the Branch
having violated B.P. Blg. 22. In the present
Manager of Producers Bank authorized the
case, petitioners maintain that the
acceptance of the checks for deposit and
prosecution failed to prove that any of the
credited them to the account of said Plastic
essential elements of the crime punishable
Corporation.
under B.P. Blg. 22 was committed within the
jurisdiction of RTC-Malabon claiming that
ISSUE: Whether petitioner Bank has a cause of
what was proved was that all the elements of
action against Sima Wei for the undelivered
the offense were committed in Kalookan City.
checks.

RULING: No. A negotiable instrument must be

RULING: It is settled that venue in criminal
delivered to the payee in order to evidence its
cases is a vital ingredient of
existence as a binding contract. Section 16 of
jurisdiction. It shall be where the crime or
the NIL provides that every contract on a
offense was committed or any one of the
negotiable instrument is incomplete and
essential ingredients thereof took place. In
revocable until delivery of the instrument for
determining the proper venue for these cases,
the purpose of giving effect thereto. Thus, the
the following are material facts—the checks
payee of a negotiable instrument acquires no
were issued at the place of business of Linton;
interest with respect thereto until its delivery
they were delivered to Linton at the same
to him. Without the initial delivery of the
place; they were dishonored in Kalookan City;
instrument from the drawer to the payee,
petitioners had knowledge of the
there can be no liability on the
insufficiency of funds in their account.
instrument. Petitioner however has a right of
action against Sima Wei for the balance due on
Under Section 191 of the Negotiable
the promissory note.
Instruments
Law, issue means the first delivery of the
instrument complete in its form to a
person who takes it as holder. The term
holder on the other hand refers to the payee
or indorsee of a bill or note who is in
possession of it or the bearer thereof. The
important place to consider in the
consummation of a negotiable instrument is
the place of delivery. Delivery is the
final act essential to its consummation as an
obligation.
Republic Planters Bank v. CA (216 SCRA
738)
FACTS: In 1979, World Garment
Manufacturing, through its board authorized
Shozo Yamaguchi (president) and Fermin
Canlas (treasurer) to obtain credit facilities
from Republic Planters Bank (RPB). For this, 9
promissory notes were executed. Each
promissory note was uniformly written in the
following manner:
___________, after date, for value received, I/we,
jointly and severally promise to pay to the
ORDER of the REPUBLIC PLANTERS BANK, at
its office in Manila, Philippines, the sum of
___________ PESOS(….) Philippine Currency…
Please credit proceeds of this note to:
________ Savings Account ______XX Current
Account
No. 1372-00257-6 of WORLDWIDE GARMENT
MFG. CORP.
Sgd. Shozo Yamaguchi
Sgd. Fermin Canlas
The note became due and no payment was
made. RPB eventually sued Yamaguchi and
Canlas. Canlas, in his defense, averred that he
should not be held personally liable for such
authorized corporate acts that he performed
inasmuch as he signed the promissory notes in
his capacity as officer of the defunct
Worldwide Garment Manufacturing.
ISSUE: Whether or not Canlas should be held
liable for the promissory notes.
HELD: Yes. The solidary liability of private
respondent Fermin Canlas is made clearer and
certain, without reason for ambiguity, by the
presence of the phrase “joint and several” as
describing the unconditional promise to pay to
the order of Republic Planters Bank. Where an
instrument containing the words “I promise to
pay” is signed by two or more persons, they
are deemed to be jointly and severally liable
thereon.
Canlas is solidarily liable on each of the
promissory notes bearing his signature for the
following reasons:
The promissory notes are negotiable
instruments and must be governed by the
Negotiable Instruments Law.
Under the Negotiable lnstruments Law,
persons who write their names on the face of
promissory notes are makers and are liable as
such. By signing the notes, the maker
promises to pay to the order of the payee or
any holder according to the tenor thereof.
Astro Electronics v. Phil. Export and
Foreign Loans (411 SCRA 462)
FACTS: Astro Electronic Corp. (Astro) was
granted several loans by Phil. Trust Co. (Phil
Trust) amounting to Php 3,000.00 with
interest and secured by three promissory
notes. In each note, it appears that Roxas
signed twice as president of Astro and in his
personal capacity. Thereafter, Philippine
Export & Foreign Guarantee Corp. (Phil
Guarantee), with the consent of Astro,
guaranteed in favor of Phil Trust the payment
of 70% of Astro’s loan. Upon the latter’s failure
to pay its loan obligation, despite demands,
Phil Guarantee paid 70% of the guaranteed
loan. The Phil Trust and Phil Guarantee
subsequently filed against astro and Roxas a
complaint for sum of money. The Regional
Trial Court rendered its decision ordering
Astro & Roxas to pay jointly and severally Phil
Guarantee the sum of Php 3, 621, 187.52 with
interest and cost.

ISSUE: Whether or not Roxas should be jointly
and severally liable with Astro for the sum
awarded by the RTC.
HELD: By signing twice, as president of Astro
and in his personal capacity, Roxas became a
co-maker of the notes and cannot escape any
liability arising from it. Under the NIL, persons
who write their names on the face of the note
as makers, promising that they will pay to the
order of the payee or any holder according to
its tenor will be liable as such. Roxas is
primarily liable as a joint and several debtor
considering that his intention to be liable is
manifested by the fact that he affixed his
signature twice in each of the three
promissory notes which necessarily would
imply that he is undertaking the obligation in
two different capacities, official and personal.
San Carlos Mining v. BPI (59 Phil 59)
FACTS:
Wilson, a principal employee of petitioner, to
gether with Wilson, a messenger-clerk,
conspired to withdraw cash from the
petitioner’s account through forgery of a
check, in the name of the agent authorized to
sign the check.
While the authorized agent of petitioner w
as on vacation, Wilson and
Dolores sent a cablegram to China Banking
for the transfer of $100,000. On the contr
act, the name of Baldwin was forged and i
t was indicated therein that a certified check
be issued. Thereafter, this was received and
deposited with the BPI. Upon deposit, an
indorsement in the name of Baldwin was
placed. The bank account was credited. Later,
a letter was
sent to the bank, purporting to be signed
by Baldwin asking that it be
withdrawn. This was done in supervision of
Dolores. Dolores and Wilson then was able to
get the money. This eventually came to the
knowledge of plaintiff who filed an action
against China Banking and BPI. The trial court
dismissed the case.
HELD: A bank is bound to know the
signatures of its customers and if it pays a
forged check, it must be considered as making
the payment out of its own funds, and cannot
ordinarily charge the amount so paid to the
account of the depositor whose name was
forged.
There is no act of the plaintiff that led the bank
astray. If it was in fact lulled into the false
sense of security, it was by the effrontery of
Dolores, the messenger to whom it entrusted
this large sum of money.
The proximate cause of the loss must therefore
be due to the negligence of the bank in
honoring and cashing the two forged checks.
Great Eastern Life v. HSBC (43 Phil 678)
The plaintiff is an insurance corporation, and
the defendants are banking corporations, and
each is duly licensed to do its respective
business in the Philippines Islands.
May 3, 1920, the plaintiff drew its check for
P2,000 on the Hongkong and Shanghai
Banking Corporation with whom it had an
account, payable to the order of Lazaro
Melicor. E. M. Maasim fraudulently obtained
possession of the check, forged Melicor's
signature, as an endorser, and then
personally endorsed and presented it to the
Philippine National Bank where the amount
of the check was placed to his credit. After
having paid the check, and on the next day,
the Philippine national Bank endorsed the
check to the Hongkong and Shanghai Banking
Corporation which paid it and charged the
amount of the check to the account of the
plaintiff. In the ordinary course of business,
the Hongkong Shanghai Banking Corporation
rendered a bank statement to the plaintiff
showing that the amount of the check was
charged to its account, and no objection was
then made to the statement. About four
months after the check was charged to the
account of the plaintiff, it developed that
Lazaro Melicor, to whom the check was made
payable, had never received it, and that his
signature, as an endorser, was forged by
Maasim, who presented and deposited it to
his private account in the Philippine National
Bank. With this knowledge , the plaintiff
promptly made a demand upon the Hongkong
and Shanghai Banking Corporation that it
should be given credit for the amount of the
forged check, which the bank refused to do,
and the plaintiff commenced this action to
recover the P2,000 which was paid on the
forged check. On the petition of the Shanghai
Bank, the Philippine National Bank was made
defendant. The Shanghai Bank denies any
liability, but prays that, if a judgment should
be rendered against it, in turn, it should have
like judgment against the Philippine National
Bank which denies all liability to either party.
Upon the issues being joined, a trial was had
and judgment was rendered against the
plaintiff and in favor of the defendants, from
which the plaintiff appeals, claiming that the
court erred in dismissing the case,
notwithstanding its finding of fact, and in not
rendering a judgment in its favor, as prayed
for in its complaint.
JOHNS, J.:
There is no dispute about any of the findings
of fact made by the trial court, and the
plaintiff relies upon them for a reversal.
Among other things, the trial court says:
Who is responsible for the refund to
the drawer of the amount of the check
drawn and payable to order, when its
value was collected by a third person
by means of forgery of the signature
of the payee? Is it the drawee or the
last indorser, who ignored the forgery
at the time of making the payment, or
the forger?
To lower court found that Melicor's name was
forged to the check. "So that the person to
whose order the check was issued did not
receive the money, which was collected by E.
M. Maasim," and then says:
Now then, the National Bank should
not be held responsible for the
payment of made to Maasim in good
faith of the amount of the check,
because the indorsement of Maasim is
unquestionable and his signature
perfectly genuine, and the bank was
not obliged to identify the signature of
the former indorser. Neither could the
Hongkong and Shanghai Banking
Corporation be held responsible in
making payment in good faith to the
National Bank, because the latter is a
holder in due course of the check in
question. In other words, the two
defendant banks can not be held
civilly responsible for the
consequences of the falsification or
forgery of the signature of Lazaro
Melicor, the National Bank having had
no notice of said forgery in making
payment to Maasim, nor the
Hongkong bank in making payment to
National Bank. Neither bank incurred
in any responsibility arising from that
crime, nor was either of the said
banks by subsequent acts, guilty of
negligence or fault.
This was fundamental error.
Plaintiff's check was drawn on Shanghai Bank
payable to the order of Melicor. In other
words, the plaintiff authorized and directed
the Shanghai Bank to pay Melicor, or his
order, P2,000. It did not authorize or direct
the bank to pay the check to any other person
than Melicor, or his order, and the testimony
is undisputed that Melicor never did part
with his title or endorse the check, and never
received any of its proceeds. Neither is the
plaintiff estopped or bound by the banks
statement, which was made to it by the
Shanghai Bank. This is not a case where the
plaintiff's own signature was forged to one of
it checks. In such a case, the plaintiff would
have known of the forgery, and it would have
been its duty to have promptly notified the
bank of any forged signature, and any failure
on its part would have released bank from
any liability. That is not this case. Here, the
forgery was that of Melicor, who was the
payee of the check, and the legal presumption
is that the bank would not honor the check
without the genuine endorsement of Melicor.
In other words, when the plaintiff received it
banks statement, it had a right to assume that
Melicor had personally endorsed the check,
and that, otherwise, the bank would not have
paid it.
Section 23 of Act No. 2031, known as the
Negotiable Instruments Law, says:
When a signature is forged or made
without the authority of the person
whose signature it purports to be, it is
wholly inoperative, and no right to
retain the instrument, or to give a
discharge therefor, or to enforce
payment thereof against any party
thereto, can be acquired through or
under such signature, unless the party
against whom it is sought to enforce
such right is precluded from setting
up the forgery or want of authority.
That section is square in point.
The money was on deposit in the Shanghai
Bank, and it had no legal right to pay it out to
anyone except the plaintiff or its order. Here,
the plaintiff ordered the Shanghai Bank to pay
the P2,000 to Melicor, and the money was
actually paid to Maasim and was never paid
to Melicor, and he never paid to Melicor, and
he never personally endorsed the check, or
authorized any one to endorse it for him, and
the alleged endorsement was a forgery.
Hence, upon the undisputed facts, it must
follow that the Shanghai Bank has no defense
to this action.
It is admitted that the Philippine National
Bank cashed the check upon a forged
signature, and placed the money to the credit
of Maasim, who was a forger. That the
Philippine National Bank then endorsed the
check and forwarded it to the Shanghai Bank
by whom it was paid. The Philippine National
Bank had no license or authority to pay the
money to Maasim or anyone else upon a forge
signature. It was its legal duty to know that
Melicor's endorsment was genuine before
cashing the check. Its remedy is against
Maasim to whom it paid the money.
The judgment of the lower court is reversed,
and one will be entered here in favor of the
plaintiff and against the Hongkong and
Shanghai Banking Corporation for the P2,000,
with interest thereon from November 8, 1920
at the rate of 6 per cent per annum, and the
costs of this action, and a corresponding
judgment will be entered in favor of the
Hongkong Shanghai Banking Corporation
against the Philippine National Bank for the
same amount, together with the amount of its
costs in this action. So ordered.
Republic Bank v. Ebrada (65 SCRA 680)
On January 15, 1963, the Bureau of Treasury
issued a back pay check to Martin Lorenzo in
the amount of P1,246.08. The drawee named
therein was Republic Bank. The check was
subsequently indorsed to Ramon Lorenzo,
then to Delia Dominguez and then to Mauricia
Ebrada. Ebrada encashed the check with the
Republic Bank. Republic Bank paid the amount
of the check to Ebrada. Ebrada, upon receiving
the cash, gave it to Dominguez; Dominguez in
turn gave the cash to Ramon Lorenzo.
Later, the Bureau of Treasury notified that the
check was a forgery because the payee named
therein (Martin Lorenzo) was actually dead 11
years ago before the check was issued.
Republic Bank refunded the amount to the
Bureau of Treasury. The bank then demanded
Ebrada to refund them.
ISSUE: Whether or not Republic Bank may
recover from Ebrada.
HELD: Yes. Ebrada, being the last indorser,
warranted the genuineness of the signatures
of the payee and the previous indorsers. The
drawee bank is not duty bound to ascertain
whether or not the signatures of the payee and
the indorsers are genuine. One who purchases
a check or draft is bound to satisfy himself that
the paper is genuine and that by indorsing it or
presenting it for payment or putting it into
circulation before presentation he impliedly
asserts that he has performed his duty and the
drawee (in this case Republic Bank) who has
paid the forged check, without actual
negligence on his part, may recover the money
paid from such negligent purchasers.
But Ebrada did not profit from this because she,
upon receiving the encashment, gave the same
to Dominguez?
She is still liable because she is considered as
an accommodation party – pursuant to Section
29 of the Negotiable Instruments Law. An
accommodation party is one 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. Such a person is liable on
the instrument to a holder for value,
notwithstanding such holder at the time of
taking the instrument knew him to be only an
accommodation party.
Gempesaw v. CA (218 SCRA 682)
Natividad Gempesaw is a businesswoman who
entrusted to her bookkeeper, Alicia Galang,
the preparation of checks about to be issued in
the course of her business transactions. From
1984 to 1986, 82 checks amounting to
P1,208,606.89, were prepared and were
supposed to be delivered to Gempesaw’s
clients as payees named thereon. However,
through Galang, these checks were never
delivered to the supposed payees. Instead, the
checks were fraudulently indorsed to Alfredo
Romero and Benito Lam.
ISSUE: Whether or not the bank should refund
the money lost by reason of the forged
indorsements.
HELD: No. Gempesaw cannot set up the
defense of forgery by reason of her negligence.
As a rule, a drawee bank (in this case the
Philippine Bank of Communications) who has
paid a check on which an indorsement has
been forged cannot charge the drawer’s
(Gempesaw’s) account for the amount of said
check. An exception to this rule is where the
drawer is guilty of such negligence which
causes the bank to honor such a check or
checks. If a check is stolen from the payee, it is
quite obvious that the drawer cannot possibly
discover the forged indorsement by mere
examination of his cancelled check. A different
situation arises where the indorsement was
forged by an employee or agent of the drawer,
or done with the active participation of the
latter.
The negligence of a depositor which will
prevent recovery of an unauthorized payment
is based on failure of the depositor to act as a
prudent businessman would under the
circumstances. In the case at bar, Gempesaw
relied implicitly upon the honesty and loyalty
of Galang, and did not even verify the accuracy
of amounts of the checks she signed against
the invoices attached thereto. Furthermore,
although she regularly received her bank
statements, she apparently did not carefully
examine the same nor the check stubs and the
returned checks, and did not compare them
with the same invoices. Otherwise, she could
have easily discovered the discrepancies
between the checks and the documents
serving as bases for the checks. With such
discovery, the subsequent forgeries would not
have been accomplished. It was not until two
years after Galang commenced her fraudulent
scheme that Gempesaw discovered that
eighty-two (82) checks were wrongfully
charged to her account, at which she notified
the Philippine Bank of Communications.
MWSS v. CA (143 SCRA 20)
Metropolitan Waterworks and Sewerage
System (MWSS) had an account with PNB.
When it was still called NAWASA, MWSS made
a special arrangement with PNB so that it may
have personalized checks to be printed by
Mesina Enterprises. These personalized
checks were the ones being used by MWSS in
its business transactions.
From March to May 1969, MWSS issued 23
checks to various payees in the aggregate
amount of P320,636.26. During the same
months, another set of 23 checks containing
the same check numbers earlier issued were
forged. The aggregate amount of the forged
checks amounted to P3,457,903.00. This
amount was distributed to the bank accounts
of three persons: Arturo Sison, Antonio
Mendoza, and Raul Dizon.
MWSS then demanded PNB to restore the
amount of P3,457,903.00. PNB refused. The
trial court ruled in favor of MWSS but the
Court of Appeals reversed the trial court’s
decision.
ISSUE: Whether or not PNB should restore the
said amount.
HELD: No. MWSS is precluded from setting up
the defense of forgery. It has been proven that
MWSS has been negligent in supervising the
printing of its personalized checks. It failed to
provide security measures and coordinate the
same with PNB. Further, the signatures in the
forged checks appear to be genuine as
reported by the National Bureau of
Investigation so much so that the MWSS itself
cannot tell the difference between the forged
signature and the genuine one. The records
likewise show that MWSS failed to provide
appropriate security measures over its own
records thereby laying confidential records
open to unauthorized persons. Even if the
twenty-three (23) checks in question are
considered forgeries, considering the MWSS’s
gross negligence, it is barred from setting up
the defense of forgery under Section 23 of the
Negotiable Instruments Law.
The Supreme Court further emphasized that
forgery cannot be presumed. It must be
established by clear, positive, and convincing
evidence. This was not done in the present
case.
Ilusorio v. CA (393 SCRA 89)
FACTS: Ilusorio was a businessman who was
in charge of 20 or so corporations. He was a
depositor in good standing of Manila Banking
Corporation. As he was in charge of a big
number of corporations, he was usually out of
the country for business. He then entrusted
his credit cards, checkbook, blank checks,
passbooks, etc to his secretary, Katherine
Eugenio. Eugenio was also in charge of
verifying and reconciling the statements of
Ilusorio’s checking account.
Eugenio was able to encash and deposit to
her personal account checks drawn against
Ilusorio’s account with an aggregate amount
of 119K. Ilusorio didn’t bother to check his
statement of account until a business partner
informed him that he saw Eugenio using his
credit cards. Ilusorio then fired her and
instituted criminal case of Estafa thru
falsification against Eugenio. Manila Banking
Corp. also instituted a complaint of estafa
against Eugenio based on the affidavit of
Dante Razon, an employee. Razon stated that
he personally examined and scrutinized the
encashed checks in accordance with their
verification procedures.
Manila Bank sought the expertise of NBI in
determining the genuineness of the checks
but Ilusorio failed to submit specimen
signatures and thus, NBI could not conduct
the examination.
ISSUE: W/N Manila Bank is liable for
damages for failing to detect a forged check
HELD: No. To be entitled to damages,
Ilusorio has the burden of poving that the
bank was negligent in failing to detect the
discrepancy in the signatures on the checks.
Ilusorio had to establish the fact of forgery
which he failed to do by failing to submit his
specimen signatures for NBI to conclusively
establish forgery.
Furthermore, the Bank was not negligent in
verifying the checks as they verified the
drawer’s signatures against their specimen
signatures and in doubt, referred to more
experienced verifier for further verification.
On the contrary, it was Ilusorio who was
found to be negligent. He accorded his
secretary with an unusual degree of trust and
unrestricted access to his finances.
Furthermore, despite the fact that the bank
was regularly sending statements of account,
he failed to check them until he found out that
his secretary was using his credit cards.
Sec. 23 of the Negotiable Instruments law
provides that a forged check is inoperative,
meaning there was no right to enforce
payment against any party. But it also
provides an exception: “unless the party
against whom it is sought enforce such right
is precluded from setting up the forgery or
want of authority”. This case falls under the
exception since Ilusorio is precluded from
setting up forgery due to his own negligence
considering that he allowed his secretary
access to his credit cards, checkbook, and
allowed his secretary to verify his statements
of account.