Case

Philippine Education Co., vs. Mauricio Soriano, et al.,

Caltex Philippines, Inc., vs. Court of Appeals and Security Bank

and Trust Company

Metropolitan Bank vs. Court of Appeals

Sesbreno vs. Court of Appeals

Firestone Tire and Rubber Co., vs. Court of Appeals

Case Doctrine
Postal money orders are not negotiable instruments. In establishing and
operating a postal money order system, the government is not
engaging in commercial transactions but merely exercises a
governmental power for the public benefit.
The negotiability or non-negotiability of an instrument is determined
from the writing, that is, from the face of the instrument itself. The
documents provided that the amounts deposited shall be repayable to
the depositor. The amounts are repayable to the bearer of the
documents.
The indication of Fund 501 as the source of the payment to be made on
the treasury warrants makes the order or promise to pay not
unconditional and the warrants themselves non-negotiable, in
accordance with Section 3 of the Negotiable Instruments Law.
An instrument though marked non-negotiable, may nevertheless be
assigned or transferred, absent an express prohibition against
assignment or transfer written on the face of the instrument. The words
not negotiable stamped on the face of the bill of lading did not destroy
its assignability, but the sole effect was to exempt the bill from the
statutory provisions relative thereto. A bill, though not negotiable, may
be transferred by assignment; the assignee taking subject to the
equities between the original parties.
As the withdrawal slips in question were non-negotiable, the rules
governing the giving of immediate notice of dishonor of negotiable
instruments do not apply. The respondent bank was under no obligation
to give immediate notice that it would not make payment on the subject
withdrawal slips. Citibank should have known that withdrawal slips
were not negotiable instruments. It could not expect these slips to be
treated as checks by other entities. Payment or notice of dishonor from
respondent bank could not be expected immediately, in contrast to the
situation involving checks. Citibank was not bound to accept the

Ang Tek Lian vs. Court of Appeals

Development Bank of Rizal, vs. Sima Wei and/or Lee Kian Huat,
Mary Cheng Uy, Samson Tung, Asian Industrial Plastic
Corporation and Producers Bank of the Philippines

The Philippine Bank of Commerce vs. Jose M. Aruego

Adalia Francisco vs. Court of Appeals, Herby Commercial &

Construction Corporation and Jaime C. Ong

Jai-Alai Corporation of the Philippines vs. Bank of the Philippine

Islands

withdrawal slips as a valid mode of deposit. But having erroneously

accepted them as such, Citibank and petitioner as account-holder
must bear the risks attendant to the acceptance of these instruments.
Under Section 9 (d) of the Negotiable Instruments Law, a check drawn
payable to the order of cash is a check payable to bearer, and the
bank may pay it to the person presenting it for payment without the
drawers indorsement. A check payable to bearer is authority for
payment to holder. Where a check is in the ordinary form, and is
payable to bearer, so that no indorsement is required, a bank, to which
it is presented for payment, need not have the holder identified, and is
not negligent in doing so.
a. The payee of a negotiable instrument acquires no interest with
respect thereto until its delivery to him. Delivery of an instrument
means transfer of possession, actual or constructive, from one
person to another. Without the initial delivery of the instrument
from the drawer to the payee, there can be no liability on the
instrument. Moreover, such delivery must be intended to give
effect to the instrument.
b. The delivery of checks in payment of an obligation does not
constitute payment unless they are cashed or their value is
impaired through the fault of the creditor.
a. A party who signs a bill of exchange as an agent, but failed to
disclose his principal becomes personally liable for the drafts he
accepted.
The Negotiable Instruments Law provides that where any person is
under obligation to indorse in a representative capacity, he may indorse
in such terms as to negative personal liability. An agent, when so
signing should indicate that he is merely signing in behalf of the
principal; otherwise he shall be held personally liable.
a. Where a check is deposited with a collecting bank, the
relationship created is that of agency, not creditor-debtor. Same
rule follows where after drawee-bank paid the collecting bank, it

Metropolitan Waterworks and Sewage System vs. Court of

Appeals

Republic Bank vs. Mauricia T. Ebrada

Banco de Oro Savings and Mortgage Bank vs. Equitable Banking
Corporation

Gempesaw vs. Court of Appeals

was found out that the signature of the payee of the check was
forged by the one who previously encashed them.
b. It is the obligation of the collecting bank to reimburse the
drawee-bank for the value of the checks subsequently found to
contain the forged indorsement of the payee, since the bank with
which the check was deposited has no right to pay the sum
stated therein to the forger, or anyone else upon a forged
signature.
c. A depositor of a check as indorser warrants that it is genuine and
in all respects what it purports to be.
d. One who accepts and encashes a check from an individual
knowing that the payee is a corporation does so out of his own
peril.
a. Where a depositor is using its own personalized checks, its failure
to provide adequate security measures to prevent forgeries of its
checks constitutes gross negligence and bars it from setting up
the defense of forgery.
b. Failure of depositor to make prompt reconciliation of the monthly
bank statements furnished by the bank constitutes negligence for
which the bank cannot be blamed in case depositors checks are
forged.
It is only the negotiation predicated on the forged indorsement that
should be declared inoperative.
a. By stamping its guarantee at the back of the checks, petitioner is
now estopped from claiming that the checks under consideration
are not negotiable instruments. Petitioner can not now deny
liability because it has assumed the liabilities of an indorser by
stamping its guarantees at the back of the checks.
b. The collecting bank or last indorser generally suffers the loss
because it has the duty to ascertain the genuineness of all prior
indorsements.