1. PNB v.

Picornell
Facts: Picornell bought bales of tobacco from PNB for an
amount of 39K and issued a bill payable 30 days after sight. The
tobacco was shipped and consigned. The bill was delivered with
the condition that the tobacco should not be delivered to HTV
except upon payment. The consigner of the tobacco delivered
directly to HTV without the knowledge of PNB which retained
the bill of lading of the tobacco. HTV communicated to Picornell
of the receipt of the tobacco that it is of no use and damaged.
Picornell replied and also communicated with PNB that the
payment of the bill be extended for another 30 days because of
the predicament, and the bank granted and HTV reaccepted the
terms of the payment herein. Two days after maturity, the
drawee, HTV, absolutely refused to pay the amount in the bill
for noncompliance of the contract by the drawer.
Issue: (1) Whether Picornell should pay alleging that he is an
agent of HTV YES (2) Whether the defense of want/partial
consideration is a proper defense to PNB NO
(1) The fact that Picornell was a commission agent of Hyndman,
Tavera & Ventura, in the purchase of the tobacco, does not
necessarily make him an agent of the company in its obligations
arising from the drawing of the bill by him. His acts in
negotiating the bill constitute a different contract from that
made by his having purchased the tobacco on behalf of
Hyndman, Tavera & Ventura. Furthermore, he cannot exempt
himself from responsibility by the fact of his having been a mere
agent of this company, because nothing to this effect was
indicated or added to his signature on signing the bill.
(2) Partial want of consideration, if it was, does not exist with
respect to the bank which paid to Picornell the full value of said
bill of exchange. The bank was a holder in due course, and was
such for value full and complete. The Hyndman, Tavera &
Ventura company cannot escape liability in view of section 28 of
the Negotiable Instruments Law. The drawee by acceptance
becomes liable to the payee or his indorsee, and also to the
drawer himself. But the drawer and acceptor are the immediate
parties to the consideration, and if the acceptance be without
consideration, the drawer cannot recover of the acceptor. The
payee holds a different relation; he is a stranger to the
transaction between the drawer and the acceptor, and is,
therefore, in a legal sense a remote party. In a suit by him
against the acceptor, the question as to the consideration
between the drawer and the acceptor cannot be inquired into.
The payee or holder gives value to the drawer, and if he is
ignorant of the equities between the drawer and the acceptor,
he is in the position on a bona fide indorsee. Hence, it is no
defense to a suit against the acceptor of a draft which has been
discounted, and upon which money has been advance by the
plaintiff, that the draft was accepted or the accommodation of
the drawer. Picornell, he warranted, as drawer of the bill, that it
would be accepted upon proper presentment and paid in due
course, and as it was not paid, he became liable to the payment
of its value to the holder PNB. Therefore, being secondarily
liable to HTV, Picornell should pay the bank.




2. People v. Maniego
Facts: CFI indicted Rizalino Ubay, Milagros Pamintuan, and Julia
Maniego. Rizalino Ubay is a disbursing officer of AFP, who has
the custody and control of public funds. He conspired with
Milagros Pamintuan and Julia Maniego. Pamintuan drawn a
check where Maniego was the indorser, encashed the check
with Ubay, they all fully know that said checks are worthless and
are not covered by funds in the aforementioned banks, for
which reason the same were dishonored and rejected by the
said banks when presented for encashment. Because of failure
to prove beyond reasonable doubt their crime of malversation,
they were just held civilly liable for the checks issued, which
herine appealed by Maniego.
Issue: Whether Maniego should be held civilly liable, after being
acquitted, and being merely an indorser of the check. YES, civilly
liable
Held: Appellant's contention that as mere indorser, she may not
be made liable on account of the dishonor of the checks
indorsed by her, is likewise untenable. Under the law, the
holder or last indorsee of a negotiable instrument has the right
to "enforce payment of the instrument for the full amount
thereof against all parties liable thereon." Among the "parties
liable thereon" is an indorser of the instrument i.e., "a person
placing his signature upon an instrument otherwise than as
maker, drawer, or acceptor ** unless he clearly indicates by
appropriate words his intention to be bound in some other
capacity. " Such an indorser "who indorses without
qualification," inter alia "engages that on due presentment, **
(the instrument) shall be accepted or paid, or both, as the case
may be, 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." Maniego may also be
deemed an "accommodation party" in the light of the facts, i.e.,
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."
3. Ang Tiong v. Lorenzo Ting
Facts: Lorenzo Ting issued a PBCom check amounting to P4K,
payable to cash or bearer, with Felipe Angs signature
(indorsement in blank) at the back. It was received later on by
Ang Tiong, who presented it to the bank which was
subsequently dishonored. Ang Tiong made a written demand
with Felipe Ang and Ang Tiong to make good on the check, MTC
adjuged, and only Felipe Ang appealed.
Issue: Whether Felipe is liable being a general indorser and
guarantor should first go to the person primarily liable. Yes
Held: Art 2071 of the new Civil Code where "The guarantor,
even before been paid, may proceed against the principal
debtor; (1) when he is sued for the payment; . . . the action of
the guarantor is to obtain release from the guaranty, to demand
a security that shall protect him from any proceedings by the
creditor . . .," is here completely irrelevant and can have no
application. Nothing in the check in question indicates that the
appellant is not a general indorser within the purview of section
63 of the Negotiable Instruments Law which makes "a person
placing his signature upon an instrument otherwise than as
maker, drawer or acceptor" a general indorser, "unless he
clearly indicates plaintiff appropriate words his intention to be
bound in some other capacity," which he did not do. And
section 66 ordains that "every indorser who indorses without
qualification, warrants to all subsequent holders in due course"
(a) that the instrument is genuine and in all respects what it
purports to be; (b) that he has a good title to it; (c) that all prior
parties have capacity to contract; and (d) that the instrument is
at the time of his indorsement valid and subsisting. In addition,
"he engages that on due presentment, it shall be accepted or
paid, or both, as the case may be, and that if it be dishonored,
he will pay the amount thereof to the holder." Even on the
assumption that the appellant is a mere accommodation party,
as he professes to be, he is nevertheless, by the clear mandate
of section 29 of the Negotiable Instruments Law, yet "liable on
the instrument to a holder for value, notwithstanding that such
holder at the time of taking the instrument knew him to be only
an accommodation party."
That the appellant, again assuming him to be an
accommodation indorser, may obtain security from the maker
to protect himself against the danger of insolvency of the latter,
cannot in any manner affect his liability to the appellee, as the
said remedy is a matter of concern exclusively between
accommodation indorser and accommodated party. So that the
fact that the appellant stands only as a surety in relation to the
maker, granting this to be true for the sake of argument, is
immaterial to the claim of the appellee, and does not a whit
diminish nor defeat the rights of the latter who is a holder for
value. The liability of the appellant remains primary and
unconditional. To sanction the appellant's theory is to give
unwarranted legal recognition to the patent absurdity of a
situation where an indorser, when sued on an instrument by a
holder in due course and for value, can escape liability on his
indorsement by the convenient expedient of interposing the
defense that he is a mere accomodation indorser.
4. BDO v. Equitable Banking Corporation
Doctrine: Where the drawee having endorsed and of having
stamped its guarantee of "all prior endorsements and/or lack of
endorsements" is not estopped by virtue of warranty on the
said non-payment of the checks. Apropos the matter of forgery
in endorsements, this Court has succinctly emphasized 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.
Facts: Plaintiff (BDO) drew 6 crossed Managers check totaling
an amount of 45K payable to certain member establishments of
Visa Card. The checks were subsequently deposited with
defendant (Equitable) to credit its certain depositor, a certain
Aida Trencio. All prior and/or lack of endorsement guaranteed
the defendant sent the checks for clearing through the
Philippine Clearing House Corporation (PCHC). Accordingly,
plaintiff paid the Checks; its clearing account was debited for
the value of the Checks and defendant's clearing account was
credited for the same amount. Following normal procedures,
and after stamping at the back of the Checks the usual
endorsements. All prior and/or lack of endorsement guaranteed
the defendant sent the checks for clearing through the PCHC.
Accordingly, plaintiff paid the Checks; its clearing account was
debited for the value of the Checks and defendant's clearing
account was credited for the same amount.
Thereafter, plaintiff discovered that the endorsements
appearing at the back of the Checks and purporting to be that of
the payees were forged and/or unauthorized or otherwise
belong to persons other than the payees.
BDO presented the Checks directly to the defendant for the
purpose of claiming reimbursement from the latter. However,
defendant refused to accept such direct presentation and to
reimburse the plaintiff for the value of the Checks; hence, this
case. It was first put into arbitration, which sided with BDO.
Issue/Held:
1. Whether the crossed manager check is a non-negotiable
instrument (yes non-negotiable siya) and such should not be
under the jurisdiction of PCHC Arbitration law does not
qualify therefore courts should not qualify
Four kinds of checks in this jurisdiction; the regular check; the
cashier's check; the traveller's check; and the crossed check.
The Court, further elucidated, that while the Negotiable
Instruments Law does not contain any provision on crossed
checks, it is coon practice in commercial and banking operations
to issue checks of this character, obviously in accordance with
Article 541 of the Code of Commerce.
Sec. 185. Check defined. A check is a bill of exchange drawn
on a bank payable on demand. Except as herein otherwise
provided, the provisions of this act applicable to a bill of
exchange payable on demand apply to a check
Also under Arbitration Law, Sec. 21 says, Items which have been
the subject of material alteration or items bearing forged
endorsement when such endorsement is necessary for
negotiation shall be returned by direct presentation or demand
to the Presenting Bank and not through the regular clearing
house facilities within the period prescribed by law for the filing
of a legal action by the returning bank/branch, institution or
entity sending the same.
Viewing these provisions the conclusion is clear that the PCHC
Rules and Regulations should not be interpreted to be
applicable only to checks which are negotiable instruments but
also to non-negotiable instruments and that the PCHC has
jurisdiction over this case even as the checks subject of this
litigation are admittedly non-negotiable.
Moreover, petitioner is estopped from raising the defense of
non-negotiability of the checks in question. It stamped its
guarantee on the back of the checks and subsequently
presented these checks for clearing and it was on the basis of
these endorsements by the petitioner that the proceeds were
credited in its clearing account.
The petitioner by its own acts and representation can not now
deny liability because it assumed the liabilities of an endorser by
stamping its guarantee at the back of the checks.
2. Whether Equitable should be liable for being an endorser
and drawer of the check YES
In presenting the Checks for clearing and for payment, the
defendant made an express guarantee on the validity of "all
prior endorsements." Thus, stamped at the back of the checks
are the defendant's clear warranty; ALL PRIOR ENDORSEMENTS
AND/OR LACK OF ENDORSEMENTS GUARANTEED. Without such
warranty, plaintiff would not have paid on the checks.
No amount of legal jargon can reverse the clear meaning of
defendant's warranty. As the warranty has proven to be false
and inaccurate, the defendant is liable for any damage arising
out of the falsity of its representation.
The principle of estoppel, effectively prevents the defendant
from denying liability for any damage sustained by the plaintiff
which, relying upon an action or declaration of the defendant,
paid on the Checks. The same principle of estoppel effectively
prevents the defendant from denying the existence of the
Checks.
Where a check is accepted or certified by the bank on which it is
drawn, the bank is estopped to deny the genuineness of the
drawers signature and his capacity to issue the instrument.
If a drawee bank pays a forged check which was previously
accepted or certified by the said bank, it can not recover from a
holder who did not participate in the forgery and did not have
actual notice thereof.
The payment of a check does not include or imply its
acceptance in the sense that this word is used in Section 62 of
the Negotiable Instruments Act.
3. Whether Drawer (Trenecio) owes duty to BDO (collecting
bank) NONE
The real and underlying reasons why negligence of the drawer
constitutes no defense to the collecting bank are that there is
no privity between the drawer and the collecting bank and the
drawer owe to that bank no duty of vigilance and no act of the
collecting bank is induced by any act or representation or
admission of the drawer. And it follows that negligence on the
part of the drawer cannot create any liability from it to the
collecting bank, and the drawer thus is neither a necessary nor a
proper party to an action by the drawee bank against such bank.
It is quite true that depositors in banks are under the obligation
of examining their passbooks and returned vouchers as a
protection against the payment by the depository bank against
forged checks, and negligence in the performance of that
obligation may relieve that bank of liability for the repayment of
amounts paid out on forged checks, which but for such
negligence it would be bound to repay.
Thus Court holds that while the drawer generally owes no duty
of diligence to the collecting bank, the law imposes a duty of
diligence on the collecting bank to scrutinize checks deposited
with it for the purpose of determining their genuineness and
regularity. The collecting bank being primarily engaged in
banking holds itself out to the public as the expert and the law
holds it to a high standard of conduct.
And although the subject checks are non-negotiable the
responsibility of petitioner as indorser thereof remains.
5. Associated Bank v. CA
Provincial Funds / duty of collecting bank / retired cashier The
Province of Tarlac maintained an account w/ PNB. It issued checks
in favor of Concepcion Emergency Hospital, or the Chief thereof.
Tarlac released the checks to Pangilinan, its retired cashier.
Pangilinan forged the indorsement of the hospital chief, deposited
the checks to his personal account w/ Associated Bank, w/c
guaranteed all prior endorsements. PNB cleared the checks; thus
Pangilinan was able to withdraw the amounts. Tarlac now seeks to
recover both from PNB, w/c then seeks to recover from Associated
Bank.
Tarlac must bear half the losses because it acted negligently in
allowing Pangilinan, a retired cashier for 3 years, to handle the
checks. The PNB must be held liable for breaching its obligation
to Tarlac to pay only the latters intended payees however, it may
recover from Associated Bank. The collecting bank, as last endorser,
generally suffers the loss because it is its duty to ascertain and
guarantee the genuineness of all prior indorsements. PNB is duty
bound only to ascertain the signature of its depositor, but it may
rely upon the guarantee of Associated Bank w/ regard to the
genuineness of the indorsements. The other half of the liability thus
devolves upon Associated Bank. PNB is also not guilty of
unreasonable delay. Even though it was unable to return the checks
w/in 24 hours as per CB Circular 580, it promptly informed
Associated Bank w/c was not prejudiced in going after Pangilinan.