Liability of Parties informing the bank in writing that it be not presented for collection until a later date,

G.R. No. L-33549 – Banco Atletico v. Auditor General Banco Atlantico through its agent teller or cashier should have been put on guard that
Fernandez, J.
Virginia Boncan, a Finance Officer with the Philippine Embassy in Madrid, negotiated by
endorsement three embassy checks in the amounts of US$10,109.10, US$35,000.75, and
US$90,000.00, with petitioner, a commercial bank doing business in Madrid. The first two
checks were fraudulently altered by Boncan, by increasing the amounts for which the
checks were issued. The third check was a demand note payable to Boncan. When she
deposited it in her account, she asked petitioner not to present the check for collection
until a later date. Contrary to normal banking practice, petitioner cashed the three checks
without first clearing the same with the drawee bank, the Philippine National Bank, New
York Branch. Upon presentment for acceptance and payment of said checks by petitioner,
the drawee bank dishonored the checks by non-acceptance on the ground that the drawer
ordered payments to be stopped. The Philippine Embassy refused to pay the petitioner.
Petitioner then filed the corresponding claim with the Auditor General, but the latter denied
the same.
The Supreme Court affirmed the decision of the auditor General Denying the claim of
petitioner.
DOCTRINE
Where a bank to which a check was negotiated encashes the same without first clearing it
with the drawee bank, contrary to normal banking practice, and the check is dishonored by
the drawee bank on the ground that the drawer had ordered payment to be stopped
because the check was fraudulently altered, the encashing bank assumes the risk and no
right of payment could be acquired by the latter against any party thereto.
there was something wrong with the check.
4. The fact that the amount involved was quite big and it was the payee herself who
made the request that the same not be presented for collection until a fixed date in the
future was proof of a glaring infirmity or defect in the instrument.
5. It loudly proclaims, "Take me at your risk."
6. The interest of the payee was the immediate payment of the check of which she was
the beneficiary and not the deferment of the presentment for collection of the same to
the drawee bank.
7. This being the case, Banco Atlantico was not a holder in due course as defined by
Section 52 of the N.I.L., because it was obvious that it had knowledge of the infirmity
or defect of the check.
8. The fact that the check was honored by claimant bank was proof not only of their
gross negligence but a further manifestation of the special treatment they were
according Miss Boncan.
9. In view of the foregoing, the embassy as the drawer of the 3 checks in question
cannot be held liable. It is apparent that the said 3 checks were (fraudulently altered)
by Boncan as to their accounts and therefore wholly inoperative.
DISPOSITIVE PORTION
WHEREFORE, the decision of the Auditor General denying the claim of the petitioner for
payment of the three (3) checksof the petition, is hereby affirmed, without pronouncement
as to costs.

FACTS
1. Boncan was the Finance Officer of the Philippine Embassy in Madrid who on many
occasions negotiated with Banco Atlantico checks, allegedly endorsed to her by the
embassy.
2. On these occasions, the bank made the payment of the checks, notwithstanding the
fact that the drawee bank has not yet cleared the checks for collection.
3. This was premised on the finding that Boncan had special relations with the
employees of the bank. And that upon presentment to the drawee bank, the checks
were dishonored due to non-acceptance allegedly on the ground that the drawer has
ordered the stoppage of payment.
4. This prompted Banco Atlantico to collect from the Philippine Embassy for the funds
released to Boncan but the latter refused. This eventually led to filing of money claim
of the bank with the Auditor General

ISSUE with HOLDING

1. WON Banco Atlantico was a holder in due course? NO.:
2. All four conditions enumerated under Sec. 52, NIL must concur before a holder can
be considered as a holder in due course. The absence or failure to comply with any of
the conditions set forth under this section will make one's title to the instrument
defective.

3. The check for US$90,000.00 was a demand note. When Miss Boncan the payee of
this check, negotiated the same by depositing it in her account, at the same time
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