Liability of Acceptor

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 Section 62. Liability of acceptor. ? The acceptor by accepting that he

will pay it according to the tenor of his acceptance; and admits? (a) The existence of the drawer,

the genuineness of his signature, and his capacity and authority to draw the instrument; and
? (b) The existence of the payee

3/11/13 and his then capacity to indorse.

Liability of drawee

--BEFORE acceptance
Drawee of a bill is not liable. He is not obligated to the payee or any holder to accept a bill although he maybe held liable to the dawer for breach of contract if he refuses without valid reason to accept the bill.

--AFTER acceptance
Once the drawee accepts, he becomes liable. The acceptor is primarily bound on the instrument. By his acceptance, he engages to pay it according to the terms of his acceptance. His acceptance is a promise to 3/11/13 pay

Liability depends on tenor of acceptance

The nature of acceptance is important to determine the kind of liability . Acceptor engages to pay according to the tenor of his acceptance. Ex. Mr X draws on Bank a bill for P5000.Bank accepts the bill for P2000, it is liable only for P2000 , the tenor of his acceptance, and not P5000 which is the tenor of the bill.

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Effects of acceptance of an altered bill

A bill is altered without authority by the

payee before acceptance, and is subsequently accepted by the acceptor as altered, the acceptor is liable to an innocent holder according to the tenor of his acceptance.

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Warranties of the acceptor

Warrants the existence of the payee and his

capacity to indorse.

He admits the existence of the drawer and

authorithy to draw the bill.

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LIABILITY OF ACCEPTOR

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BANK OF AMERICA NT & SA, vs. PHILIPPINE RACING CLUB

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The two (2) checks had similar entries with similar infirmities and irregularities. On the space where the name of the payee should be indicated (Pay To The Order Of) the following 2-line entries were instead typewritten: on the upper line was the word "CASH" while the lower line had the following typewritten words, viz: "ONE HUNDRED TEN THOUSAND PESOS ONLY ." Despite the highly irregular entries on the face of the checks, defendant-appellant bank, without as much as verifying and/or confirming the legitimacy of the checks considering the substantial amount involved 3/11/13 and the obvious infirmity/defect of the

ISSUE:

Whether or not petitioner is liable for the checks.

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HELD: Both Banks are engaged in business impressed with public interest. They have the duty to treat their clients accounts meticulously and with the highest degree of care considering the fiduciary nature of their relationship. The diligence required of banks therefore is more than that of a good father of a family. In this case extraordinary diligence demands that BA should have ascertained from PRCI the authenticity of the subject checks or the accuracy of the entries 3/11/13 therein. Although not in the strict sense

However, PRCIs officers practice of presigning blank checks is also a seriously negligent behavior and highly risky means of purportedly ensuring efficient operation of its businesses. It should have occurred to them that these checks could fall into wrong hands as they did in this case where the checks were stolen by a clerk from the accounting department. But even if both parties are guilty of negligence, BA still emerge as the foremost party liable in this case because it had the last clear chance to avoid the loss. They could have called up PRCI for verification 3/11/13 and confirmation before honoring the