Philippine

Education Co. Vs. Soriano

FACTS: Enrique Montinola sought to purchase from the Manila Post Held: The Certificate of Time Deposit is a negotiable instrument. The
Office 10 money orders (P200 each), offering to pay for them with a negotiability or non-negotiability of an instrument is determined from
private check. Montinola was able to leave the building with his check the writing, that is, from the face of the instrument itself. The duty of
and the 10 money orders without the knowledge of the teller. Upon the court in such case is to ascertain, not what the parties may have
discovery that it was stolen, message was sent to all postmasters and secretly intended as contra distinguished from what their words
banks involving the unpaid money orders. One of the money orders express, but what is the meaning of the words they have used. What
was received by the Philippine Education Co. as part of its sales receipt. the parties meant must be determined by what they said.
It was deposited by the company with the Bank of America, which However, Petitioner's insistence that the CTDs were negotiated to it
cleared it with the Bureau of Post. The Postmaster, through the Chief begs the question. Under the Negotiable Instruments Law, an
of the Money Order Division of the Manila Post Office informed the instrument is negotiated when it is transferred from one person to
bank of the irregular issuance of the money order. The bank debited another in such a manner as to constitute the transferee the holder
the account of the company. The company moved for reconsideration. thereof, and a holder may be the payee or indorsee of a bill or note,
who is in possession of it, or the bearer thereof. In the present case,
ISSUE: Whether postal money orders are negotiable instruments and however, there was no negotiation in the sense of a transfer of the
the petitioner as a holder in due course can demand payment. legal title to the CTDs in favor of petitioner in which situation, for
obvious reasons, mere delivery of the bearer CTDs would have
HELD: Philippine postal statutes are patterned from those of the sufficed. Here, the delivery thereof only as security for the purchases
United States, and the weight of authority in said country is that Postal of Angel de la Cruz could at the most constitute petitioner only as a
money orders are not negotiable instruments inasmuch as the holder for value by reason of his lien.
establishment of a postal money order is an exercise of governmental
power for the publics benefit. Furthermore, some of the restrictions Metrobank vs. Court of Appeals
imposed upon money order by postal laws and regulations are Facts: Gomez opened an account with Golden Savings and deposited
inconsistent with the character of negotiable instruments. For 38 treasury warrants. All these warrants were subsequently indorsed
instance, postal money orders may be withheld under a variety of by Castillo, cashier of Golden Savings and deposited to its Savings
circumstances, and which are restricted to not more than one Account in Metrobank. Gloria Castillo went several times to Metrobank
indorsement. Hence, petitioner cannot demand payment and recover for the cleared warrants. Exasperated over Glorias repeated inquiries
the amount debited. and also as an accommodation for a valued client, she was allowed to
withdraw from the proceeds of the warrants. In turn, Golden Savings
Caltex Philippines, Inc. v. Court of Appeals subsequently allowed Gomez to make withdrawals. After the
Facts: Defendant bank issued 280 certificates of time deposit (CTD) in withdrawal of Gomez, Metrobank informed Golden Savings that the
favor of Angela Dela Cruz upon deposit in the amount of P1,120,000. A warrants were dishonoured by the Bureau of Treasury for forgery of
sample text of the CTD is as follows: signatures and demanded the refund of the amount contending that
This is to certify that BEARER has deposited in this Bank the sum of by indorsing the warrants in general, Golden Savings assumed the
Four Thousand Only... warranty of a general indorser under Section 66.
Dela Cruz deliver the CTD to petition for the purchase of fuel products.
Thereafter, he informed the branch manager that the CTD was lost Issue: Whether or not Golden Savings should be liable as a general
based on her affidavit, which the branch manager accepted and issued indorser under Section 66.
a replacement. Thereafter, Dela Cruz negotiated and obtained a loan
from the bank in the amount of P875,00 and executed a notarized Held: No, Section 66 is not applicable to the warrants because the
Deed of Assignment of time deposit. same is non-negotiable. The indication of Fund 501 as the source of
In 1982, Credit Manager of Caltex went to the defendant bank's and the payment to be made on the treasury warrants makes the order not
presented for verification the CTDs declared lost by Angel Dela Cruz unconditional and the warrants themselves non-negotiable.
alleging that the same were delivered to herein plaintiff "as security for
purchases made with Caltex Philippines, Inc." by said depositor. Sesbreno vs. Court of Appeals
However, this was rejected by the defendant. When the loan of Dela Facts: Petitioner made a placement with Philfinance. The latter
Cruz fell due, the latter set-off and applied the time deposits in delivered to him documents, some of which was a promissory note
question to the payment of the matured loan. However, the plaintiff from Delta Motors and a post-dated check. The post-dated checks
filed the instant complaint, praying that defendant bank be ordered to were dishonored. This prompted petitioner to ask for the promissory
pay it the aggregate value of the certificates of time deposit of note from DMC and it was discovered that the note issued by DMC was
P1,120,000.00 plus accrued interest and damages as well as attorney's marked as non-negotiable. As Sesbreno failed to recover his money,
fees. On appeal, the CA held in favor of defendant bank on the basis he filed case against DMC and Philfinance.
that CTD was not a negotiable instrument, hence, Caltex cannot be a
holder in due course. Issue: Whether or not a nonnegotiable instrument cannot be
transferred .
Issue: Whether or not the Certificate of Time Deposit (CTD) is a
negotiable instrument and Caltex was a holder in due course?
 HELD: The non-negotiability of the instrument doesnt mean that Facts: In consideration for a loan extended by petitioner Bank to
it is non-assignable or transferable. It may still be assigned or respondent Sima Wei, the latter executed and delivered to the former
transferred in whole or in part, even without the consent of the a promissory note. However, two checks were not delivered to the
promissory note, since consent is not necessary for the validity of the petitioner or to any of its authorized representatives. Instead for these
assignment. In assignment, the assignee is merely placed in the checks came into the possession of respondent Lee Kian Huat, who
position of the assignors and acquires the instrument subject to deposited the checks without the petitioners indorsement to the
all the defenses that might have been set up against the original account of respondent Plastic Corporation in Producers Bank which
payee. was afterwards credited to Plastic Corporations account.

Firestone Tire & Rubber Co. vs. Court of Appeals Issue: Whether petitioner Bank can hold petitioner liable for the
FACTS: Fojas Arca and Firestone Tire entered into a franchising undelivered check.
agreement wherein the former purchase on credit the latters
products. The former could pay through special withdrawal slips which Held: A negotiable instrument must be delivered to the payee in order
were deposited and accepted by Citibank. Firestone believed in the to evidence its existence as a binding contract. Delivery of an
sufficient funding of the slips until Citibank informed the former instrument means transfer of possession, actual or constructive, from
that one of the slips was dishonored. It wrote then a demand one person to another. Without the initial delivery of the instrument
letter to Fojas Arca for the payment and damages but the latter from the drawer to the payee, there can be no liability on the
refused to pay, prompting Firestone to file an action against it. instrument. Moreover, such delivery must be intended to give effect to
the instrument. Without the delivery of said checks to petitioner-
Issue: Whether or not the bank is liable for the alleged belated delay in payee, the former did not acquire any right or interest therein and
notifying the dishonor of the negotiable instrument. cannot therefore assert any cause of action, founded on said checks,
whether against the drawer Sima Wei or against the Producers Bank or
HELD: The withdrawal slips are non-negotiable. The essence of any of the other respondents.
negotiability which characterizes a negotiable paper as a credit
instrument lies in its freedom to circulate freely as a substitute for Philippine Bank of Commerce vs. Aruego
money. The withdrawal slips in question lacked this character. Hence, Facts: Plaintiff instituted an action against defendant Aruego for
the rule on immediate notice of dishonor is non-applicable to the case recovery of money signed by the defendant. The latter interposes that
at hand. Thus, the bank was under no obligation to give immediate he signed the drafts in a representative capacity, that he signed only as
notice that it wouldn't make payment on the subject withdrawal slips. an accommodation party and that he is not liable. The court denied the
Nonetheless, Citibank erroneously accepted the same as such and motion and rendered judgement against the defendant. Hence this
thus, must bear the risks attendant to the acceptance of the petition.
instruments.
Issue: Whether or not defendant is liable by accepting the instrument?
Ang Tek Lian vs. Court of Appeals
Facts: In 1946, Ang Tek Lian approached Lee Hua and asked him if he Held: Yes, an inspection of the drafts accepted by the defendant shows
could give him P4,000.00. He said that he meant to withdraw from the that nowhere has he disclosed that he was signing as representative of
bank but the banks already closed. In exchange, he gave Lee Hua a the Philippine Education Foundation Company. For failure to disclose
check which is payable to the order of cash. The next day, Lee Hua his principal as required under Section 20 of the NIL, he is personally
presented the check for payment but it was dishonored due to liable for the drafts he accepted.
insufficiency of funds. Lee Hua eventually sued Ang Tek Lian. In his
defense, Ang Tek Lian argued that he did not indorse the check to Lee Fransisco vs. Court of Appeals
Hua and that when the latter accepted the check without Ang tek FACTS: Sometime in 1979, Ong discovered that Diaz and Francisco had
Lians indorsement, he had done so fully aware of the risk he was executed and signed seven checks drawn against the Insular Bank of
running thereby. Asia & America (IBAA) and payable to Herby Commercial &
Construction Corporation (HCC) for completed and delivered work
ISSUE: Whether or not the indorsement of Ang Tek Lian is essential in a under the contract. Ong, however, claims that these checks were never
bearer instrument. delivered to HCCC. Upon inquiry with Diaz, Ong learned that the GSIS
gave Francisco custody of the checks since she promised that she
HELD: No. Under the Negotiable Instruments Law, a check drawn would deliver the same to HCCC. Instead, Francisco forged the
payable to the order of cash is a check payable to bearer hence a signature of Ong, without his knowledge or consent, at the dorsal
bearer instrument, and the bank may pay it to the person presenting it portion of the said checks to make it appear that HCCC had indorsed
for payment without the drawers indorsement. The drawee bank need the checks; Francisco then indorsed the checks for a second time by
not obtain any indorsement of the check, but may pay it to the person signing her name at the back of the checks and deposited the checks in
presenting it without any indorsement. her IBAA savings account. IBAA credited Franciscos account with the
amount of the checks and the latter withdrew the amount so credited.
Development Bank of the Phils vs. Sima Wei Petitioner claims that she was, in any event, authorized to sign Ongs
name on the checks by virtue of the Certification executed by Ong in
her favor giving her the authority to collect all the receivables of HCCC drawee that the signatures of the payee and previous indorser are
from the GSIS, including the questioned checks. genuine.

ISSUE: Whether or not petitioner singing in a representative capacity is MWSS vs. CA
liable to the questioned checks. Facts: MWSS issued 23 personalized checks against its account with
PNB. During the same month, a second batch of 23 checks bearing the
Held: The Negotiable Instruments Law provides that when a person is same numbers were issued. Both were paid and cleared by PNB and
under obligation to indorse in a representative capacity, he may debited against the account of MWSS. Investigation was conducted by
nd
indorse in such terms as to negative personal liability. An agent, when NBI showed that all the payees for the 2 batch were all fictitious
so signing, should indicate that he is merely signing as an agent in persons. Thereafter, MWSS demanded from PNB to restore the
nd
behalf of the principal and must disclose the name of his principal. amount of the 2 batch payments which were claimed as forged.
Otherwise, he will be held liable personally. If fransisco was
indeed authorized, she didn't comply with the requirements of the Issue: Whether or not the drawee bank PNB is liable.
law. Instead of signing Ongs name, she should have signed in her
own name as agent of HCCC. Hence, she is liable. Held: No. Forgery cannot be presumed. It must be established by clear,
positive and convincing evidence which is lacking in the case at bar.
Jai-Alai Coporation vs. BPI Further, petitioner was using its own personalized checks, instead of
Facts: Petitioner deposited in its current account with respondent bank the official PNB Commercial blank checks. The Drawee bank PNB
several checks acquired from Antonio J. Ramirez, a regular bettor. The cannot be faulted for not having detected the fraudulent encashment
deposits were temporarily credited to petitioners account. However, of the checks because the printin was not done under the supervision
after the checks had been submitted to interbank clearing, it was and control of the Bank. The petitioner was in a better position to
discovered that all indorsements made were forged. Hence, detect and prevent the fraudulent encashment of its checks.
respondent Bank debited the petitioners current account and
forwarded to the latter the checks containing the forged indorsement, Banco de Oro vs. Equitable Banking Corporation
which petitioner refused to accept. Thereafter, petitioner drew against Facts: Banco De Oro drew six crossed managers check payable to
its current account a check which were latter dishonoured due to certain member establishments of Visa Card. The checks were
insufficiency of funds. deposited with Equitable Bank. After stamping at the bank the usual
endorsements, the checks were sent for clearing through the PCHC.
Issue: Whether or not the respondent bank had the right to debit the Banco De Oro paid the checks. Thereafter, Banco De Oro discovered
petitioners current account. that the endorsements appearing at the back of the Checks were
forged and/or unauthorized, hence he claimed reimbursement from
Held: Yes, under Section 23 of the NIL, a forged signature is wholly Equitable bank.
inoperative and no right to discharge it or enforce its payment can be
acquired through or under the forged signature except against a party Issue: Whether or not Banco de Oro could collect reimbursement from
who cannot invoke the forgery. As a collecting bank which indorsed the Equitable Bank.
checks should be liable to the drawee-bank for reimbursement
because the checks had been forged prior to their delivery to the Held: Yes. The petitioner having stamped its guarantee and indorsed is
petitioner. The petitioner must in turn shoulder the loss of the estopped from claiming that the checks under consideration are not
amounts which the respondent, as its collecting agent, had to negotiable instruments. The collecting bank or last endorser generally
reimburse to the drawee-banks. suffers the loss because it has the duty to ascertain the genuineness of
all prior indorsements.
Republic Bank vs. Ebrada
Facts: A check was issued to Lorenzo who turned out to be dead for 11 Gempesaw vs. Court of Appeals
years. The check was indorsed to Lorenzo to Dominguez and to Ebrada. FACTS: In the signing of the checks prepared by Galang, Gempensaw
It was encashed by Ebrada at the Republic Banks main office. didn't bother herself in verifying to whom the checks were being
Informing the bank that the indorsement of Lorenzo was forged, the paid and if the issuances were necessary. She didn't verify the
Bureau of Treasury requested the Bank to refund the amount. returned checks of the bank when the latter notifies her of the same.
Thereafter, the Bank sued Ebrada to return the money. During her two years in business, there were incidents shown that
the amounts paid for were in excess of what should have been paid.
Issue: Whether or not Ebrada is liable to return the value of the check It was also shown that even if the checks were crossed, the intended
bearing a forged signature. payees didn't receive the amount of the checks. This prompted
Gempesaw to demand the bank to credit her account for the
Held: Yes, as last indorser, Ebrada was supposed to have warranted amount of the forged checks. The bank refused to do so and this
that she has good title to said check. The drawee of a check can prompted her to file the case against the bank.
recover from the holder the money paid to him on a forged
instrument. This is because the indorser is supposed to warrant to the Issue: Whether or not the bank Gempesaw has the right to demand
the credit of the amount forged.
 Republic Bank vs. Court of Appeals
HELD: Forgery is a real defense by the party whose signature was FACTS: San Miguel Corporation (SMC) drew a check amounting to
forged. As a rule, a drawee bank who has paid a check on which an P240.00 on its account in First National City Bank (FNCB) in favor of
indorsement has been forged cannot debit the account of a Delgado, a stockholder. Delgado fraudulently altered the amount of
drawer for the amount of said check. An exception to this rule is the check to P9,240 after which he endorsed and deposited it with
when the drawer is guilty of negligence which causes the bank to Republic Bank. Republic Bank endorsed the check to First National City
honor such checks. Petitioner in this case has relied solely on the Bank (FNCB), the drawee bank, by stamping on the back of the check
honesty and loyalty of her bookkeeper and never bothered to all prior and / or lack of indorsement guaranteed". Based on such
verify the accuracy of the amounts of the checks she signed the endorsement, FNCB paid the amount to Republic Bank. Later on, San
invoices attached thereto. And though she received her bank Miguel informed FNCB of the material alteration of the amount. FNCB
statements, she didn't carefully examine the same to double- recredited the amount to San Miguels account, and demanded refund
check her payments. Petitioner didn't exercise reasonable diligence from Republic Bank. Republic Bank refused, claiming there was delay
which eventually led to the fruition of her bookkeepers fraudulent in giving it notice of the alteration.
schemes.
ISSUE: Whether petitioner Republic Bank as the collecting bank should
Associated Bank v. Court of Appeals bear the loss resulting from the altered check.
Facts: The Province of Tarlac maintains a current account with PNB.
Checks were issued and received by the hospitals administrative RULING: When an indorsement is forged, the collecting bank or last
officer and cashier, Pangilinan. Panilinan, through the help of indorser, as a general rule, bears the loss. But the unqualified
Associated Bank but after forging the signature of the hospitals chief indorsement of the collecting bank on the check should be read
was able to deposit the checks in his personal account. The province together with the 24-hour regulation on clearing house operation.
discovered that the hospital did not receive several allotted checks, Hence, when a drawee bank fails to return a forged or altered check to
and sought the restoration of the debited amounts from PNB. In turn, the collecting bank within the 24-hour clearing period, the collecting
PNB demanded reimbursement from Associated Bank. Both banks bank is absolved from liability.
resisted payment. Hence, this present action.
Philippine Commercial International Bank vs. Court of Appeals
Issue: Whether or not Associated Bank should bear the loss. FACTS: Ford Philippines filed actions to recover from the drawee bank
Citibank and collecting bank PCIB the value of several checks
Held: Associated Bank, and not PNB, is the one duty-bound to warrant payable to the Commissioner of Internal Revenue which were
the instrument as genuine, valid and subsisting at the time of embezzled allegedly by an organized syndicate. What prompted
indorsement pursuant to Section 66 of the NIL. The stamp this action was the drawing of a check by Ford, which it
guaranteeing prior indorsement is not an empty rubric; the collecting deposited to PCIB as payment and was debited from their Citibank
bank is held accountable for checks deposited by its customers. account. It later on found out that the payment wasnt received by
the Commissioner. Meanwhile, according to the NBI report, one
Metrobank vs. First National City Bank of the checks issued by petitioner was withdrawn from PCIB for alleged
Facts: A check was drawn by Joaquin Cunanan & Company on First mistake in the amount to be paid. This was replaced with managers
National City Bank (FNCB) which was deposited in Metrobank by check by PCIB, which were allegedly stolen by the syndicate and
Salvador Sales. The check was cleared the same day and the latter deposited in their own account. The trial court decided in favor of
withdrew it and closed his account. Thereafter, upon return of the Ford.
cancelled check, Joaquin Cunanan & Company notified the bank that
the check was altered from actual amount of P50 raised to P50,000 ISSUE: Has Ford the right to recover the value of the checks intended
and over the name superimpose the word Cash. FNCB notified and as payment to CIR?
reiterated the request to Metrobank for the reimbursement but the
latter was adamant in its refusal, hence, this action. HELD: The checks were drawn against the drawee bank but the title of
the person negotiating the same was allegedly defective because the
Issue: Wether or not Metrobank should bear the loss from a materially instrument was obtained by fraud and unlawful means, and the
altered check? proceeds of the checks were not remitted to the payee. The mere
fact that the forgery was committed by a drawer-payors
Held: In this case, the check was not returned to Metro Bank in confidential employee or agent, who by virtue of his position had
accordance with the 24-hour clearing house period, but was cleared by unusual facilities for perpetrating the fraud and imposing the forged
FNCB. Failure of FNCB, therefore, to call the attention of Metro Bank to paper upon the bank, doesnt entitle the bank to shift the loss to the
the alteration of the check in question until after the lapse of nine drawer-payor, in the absence of some circumstance raising estoppel
days, negates whatever right it might have had against Metro Bank in against the drawer.
the light of the said Central Bank Circular. Its remedy lies not against
Metro Bank, but against the party responsible for the changing the Ramon Ilusorio vs. Court of Appeals
name of the payee and the amount on the face of the check. FACTS: Petitioner was a prominent businessman who, because of
different business commitments, entrusted to his then secretary
the handling of his credit cards and checkbooks. For a material Issue: Whether or not PBCOM should bear the loss for the check
period of time, the secretary was able to encash and deposit in materially altered.
her personal account money from the account of petitioner.
Upon knowledge of her acts, she was fired immediately and HELD: An alteration is said to be material if it alters the effect of the
criminal actions were filed against her. Thereafter, petitioner instrument. It means an unauthorized change in the instrument that
requested the bank to restore its money but the bank refused to do so. purports to modify in any respect the obligation of a party or an
unauthorized addition of words or numbers or other change to an
Issue: Whether or not the bank is liable for the forged checks. incomplete instrument relating to the obligation of the party. In
other words, a material alteration is one which changes the items
HELD: The petitioner doesnt have a course of action against the which are required to be stated under Section 1 of the NIL.
bank. To be entitled to damages, petitioner has the burden of proving In this case, the alleged material alteration was the alteration of the
negligence on the part of the bank for failure to detect the discrepancy serial number of the check in issuewhich is not an essential
in the signatures on the checks. It is incumbent upon petitioner to element of a negotiable instrument under Section 1. Therefore, there
establish the fact of forgery. It was petitioner who was negligent in being no material alteration in the check committed, PNB could not
this case. He failed to examine his bank statements and this was the return the check to PBCOM. It should pay the same.
proximate cause of his own damage. Because of this negligence, he
is precluded from setting up the defense of forgery with regard the Montinola vs. Philippine National Bank
checks. Facts: Ramos, a disbursing officer of USAFE made cash advancements
with the provincial Treasurer of Lanao. The latter gave him a P500,000
Samsung Construction Company Phils., Inc vs FEBTC check. Thereafter, Ramos presented the check to laya for encashment.
Facts: Petitioner maintains a current account with the respondent Laya in his capacity as Provincial Treasurer issued a check to Ramos in
bank and authorized Jong to sign checks in behalf of the company. The the sum of P100,000. Ramos was assigned only P30000 of the value of
checks are in the custody of an accountant Kyu. On one occasion, a the document to Montinola and to deposit the balance to Ramoss
certain Gonzaga presented a check to FEBTC purportedly drawn by the credit. This writing however, mysteriously obliterated and in its place,
Company in the amount of P999,500. The check was payable to cash a supposed indorsement appearing on the back of the check was made
and appeared to be signed by Jong. FEBTC upon ascertaining that there for the whole amount of the check Agent, Phil. National Bank under
are sufficient fund to cover the check and finding the signature of Jong the signature of Laya purportedly showing that Laya issued the check
appears to be genuine paid Gonzaga. Later, the forgery was as agent of the PNB.
discovered. Samsung demanded that the amount paid to Gonzaga be
credited back to its account because they have not authorized the Issue: Whether the words, Agent, Phil. National Bank were added
encashment of the check. On the other hand, the respondent bank after Laya had issued the check and thus constitutes a material
claimed negligence on the part of the petitioner in protecting its check. alteration which discharges the instrument.

Issue: Whether or not FEBTC should bear the loss. Held: The insertion of the words Agent, Phil. National Bank, which
converts the bank from a mere drawer and therefore changes its
Held: The SC held that the FEBTC should bear the loss. Under Sec. 62 of liability, constitutes a material alteration of the instrument without the
NIL, among the warranties to be assumed by the acceptor is it admits consent of the parties liable thereon, and so discharges the
the existence of the drawer, the genuineness of his signature, and his instrument.
capacity and authority to draw the instrument. It is incumbent upon
the drawee bank to ascertain the genuineness of the signature of its Sadaya vs. Sevilla
depositor. The respondent bank in this case did not exercise the FACTS: Sadaya, Sevilla and Varona signed solidarily a promissory note
degree of diligence required to enable it to detect the forgery. in favor of the bank. Varona was the only one who received the
proceeds of the note. Sadaya and Sevilla both signed as co-makers
Philippine National Bank vs. Court of Appeals to accommodate Varona. Thereafter, the bank collected from
FACTS: DECS issued a check in favor of Abante Marketing Sadaya. Varona failed to reimburse.
containing a specific serial number, drawn against PNB. The check Consequently, Sevilla died and intestate estate proceedings
was deposited by Abante in its account with Capitol and the latter were established. Sadaya filed a creditors claim on his estate for the
consequently deposited the same with its account with PBCOM payment he made on the note. The administrator resisted the claim
which later deposited it with petitioner for clearing. The check was on the ground that Sevilla didn't receive any proceeds of the loan.
thereafter cleared. However, on a relevant date, petitioner PNB
returned the check on account that there had been a material Issue: Whether or not Sadaya had the right to demand payment.
alteration on it. Subsequent debits were made but Capitol cannot
debit the account of Abante any longer for the latter had withdrawn all HELD: A solidary accommodation makerwho made paymenthas
the money already from the account. This prompted Capitol to the right to contribution, from his co-accomodation maker, in the
seek reclarification from PBCOM and demanded the recrediting of absence of agreement to the contrary between them, subject to
its account. conditions imposed by law. This right springs from an implied

promise to share equally the burdens thay may ensue from their issued postdated checks for purposes of accommodation, as he had in
having consented to stamp their signatures on the promissory note. past accorded similar favors to petitioner.

Crisologo-Jose v. CA Issue: Whether or not said checks were for accommodation and that
Facts: The VP of Mover Enterprises, Inc. issued a check drawn against private respondent is still liable considering that petitioner is a holder
Traders Royal Bank, payable to petitioner Ernestina Crisologo-Jose, for for value.
the accommodation of his client. Petitioner payee was charged with
the knowledge that the check was issued for the personal account of Held: Travel-on is not an accommodated party; it realize no value on
teh President who merely prevailed upon the VP to act as co-signatory the checks bounced. It presented these checks for payment at the
in accordance with the arrangement of the corporation with its drawee bank but the checks bounced. Thus private responded must be
depository bank. held liable on the six checks here involved. Those checks in themselves
constituted evidence of indebtedness of private respondent.
Issue: Whether or not private respondent, is an accommodation party
under NIL and is liable for the amount of said check. BPI vs. Court of Appeals
Facts: Private respondent Benjamin Napiza deposited in his foreign
Held: Yes. To be considered an accommodation party, a person must current deposit with BPI a dollar check owned by Henry Chan in which
(1) be a party to the instrument, (2) not receive value therefor, (3) sign he affixed his signature at the dorsal side thereof. For this purpose,
for the purpose of lending his name for the credit of some other Napiza gave Chan a signed blank withdrawal slip. However, Gayon Jr.
person. It is not a valid defense that the accommodation party did not got hold of the withdrawal slip and used it to withdraw the proceeds of
receive any valuable consideration when he executed the instrument. the dollar check, even before the check was cleared and without the
He is liable to a holder for value as if the contract was not for presentation of the bank passbook.
accommodation, in whatever capacity such accommodation party
signed the instrument, whether primarily or secondarily. Issues: Whether or not petitioner can hold private respondent liable
for the proceeds of the check for having affixed his signature at the
Stelco Marketing vs. Court of Appeals dorsal side as indorser.
FACTS: Petitioner was engaged in the distribution and sale of structural
steel bars. RYL bought on several occasion large quantities of steel Held: A person who has signed the instrument as maker, drawer,
bars but the same were never paid for despite several demands by acceptor, or indorser, without receiving value therefor, and for the
petitioner. On a relevant date, RYL gave to Armstrong Industries a purpose of lending his name to some other person. As such, she is
check in payment of its obligations. That check was a company check under the law liable on the instrument to a holder for value,
of another corporation, Steelweld Corporation of the Philippines, notwithstanding such holder at the time of taking the instrument knew
signed by its President, Peter Rafael Limson, and VP. The check was * * (her) to be only an accommodation party, although she has the
issued by Limson at the behest of his friend, Romeo Y. Lim, President right, after paying the holder, to obtain reimbursement from the party
of RYL. Romeo Lim had asked Limson, for financial assistance, and the accommodated, since the relation between them is in effect that of
latter had agreed to give Lim a check only by way of accommodation, principal and surety, the accommodation party being the surety."
"only as guaranty but not to pay for anything. Stelco filed a complaint It is thus clear that ordinarily private respondent may be held liable as
against RYL and Steelweld for the recovery of sum of money in an indorser of the check or even as an accommodation party.
payment of the steel bars ordered on the ground that the said check However, to hold private respondent liable for the amount of the
has been given for payment of steel bars. check he deposited by the strict application of the law and without
considering the attending circumstances in the case would result in an
Issue: Whether or not petitioner as a holder for value may recover injustice and in the erosion of the public trust in the banking system.
from the accommodation party. The interest of justice thus demands looking into the events that led to
the encashment of the check.
HELD: No. An accommodation party is liable to a holder for value.
However, Stelco cannot be considered as a holder for value for there is Agro Conglomerates, Inc. vs. Court of Appeals
no evidence whatsoever that the check was ever given to it, or FACTS: Petitioner sold to Wonderland Food Industries two parcels
indorsed to it in any manner or form in payment of an obligation or as of land. They stipulated under a Memorandum of Agreement that
security for an obligation, or for any other purpose before it was the terms of payment would be P1,000,000 in cash, P2,000,000 in
presented for payment. STELCO never became a holder for value and shares of stock, and the balance would be payable in monthly
that nowhere in the check itself does the name of Stelco Marketing installments. Petitioner Soriano signed as maker the promissory
appear as payee, indorsee or depositor thereof. notes payable to the bank. However, the petitioners failed to pay the
obligations as they were due. During that time, the bank was in
Travel-On vs. Court of Appeals financial distress and this prompted it to endorse the promissory
Facts: Travel-On filed suit to collect on 6 checks issued by private notes for collection. The bank gave ample time to petitioners then to
respondent with a total face amount of P115 ,000 as payment of satisfy their obligations.
various airline tickets sold to respondent. Private respondent claimed
that he had already fully paid the obligations. He argued that he had
Issue: Whether or not Agro Conglomerates is liable as accommodation over the check from the start. The holder of a cashier's check who is
parties. not a holder in due course cannot enforce such check against the
issuing bank which dishonors the same.
HELD: Petitioners became liable as accommodation parties. They have
the right after paying the instrument to seek reimbursement from Metropol vs. Sambok
the party accommodated, since the relation between them has in Facts: Dr. Javier executed a promissory note in favor of Ng Sambok
effect became one of principal and surety. Sons Motors Co., Ltd. On the same date, Sambok Motors, a sister
Furthermore, as it turned out, the contract of surety between company negotiated and indorsed the note in favour of Metropol
Woodland and petitioner was extinguished by the rescission of the Financing & Investment Corporation adding the word with recourse.
contract of sale of the farmland. With the rescission, there was When Dr. Villaruel failed to pay the promissory note after the demand
confusion in the persons of the principal debtor and surety. of Metropol, the latter notified Sambok of the dishonor and demand
payment. Sambok contended that it could not be obliged to pay until
De Ocampo vs. Gatchalian after its co-defendant Dr. Villaruel has been declared insolvent.
Facts: Anita Gatchalian was interested in buying a car when she was
offered by Manuel Gonzales to a car owned by the Ocampo Clinic. Issue: Whether or not Sambok Motors Company, by adding the words
Anita accepted the offer but Gonzales advised that the owners would with recourse becomes a qualified indorser and therefor does not
only comply only upon showing of interest on the part of the buyer. warrant that if said not is dishonored, it will pay the amount to the
Relying on the latters representation, Anita issued a check. holder.
The next day, Gonzales never appeared. The failure of Gonzales to
appeal resulted in Gatchalian to issue a STOP PAYMENT ORDER on the Held: Recourse means resort to a person who is secondarily liable after
check. It was later found out that Gonzales used the check as payment the default of the person who is primarily liable. Appellant, by
to the Vicente de Ocampo for the hospitalization fees of his wife. De indorsing the note with recourse does not make itself a qualified
Ocampo now demands payment for the check, which Gatchalian indorser but a general indorser who is secondarily liable, because by
refused, arguing that de Ocampo is not a holder in due course and that such indorsement, it agreed that if Dr. Villaruel fails to pay the note,
there is no negotiation of the check. plaintiff-appellee can go after said appellant. The effect of such
indorsement is that the note was indorsed without qualification.
Issue: Whether or not De Ocampo is a holder in due course.
Maralit vs. Imperial
Held: No. De Ocampo is not a holder in due course. Under the Facts: Petitioner Maralit claimed that, as a consequence of the
circumstances of the case, instead of the presumption that payee was materially altered treasury warrant encashed by respondent imperial,
a holder in good faith, the fact is that it acquired possession of the she was held personally liable by the PNB for the total amount of
instrument under circumstances that should have put it to inquiry as to P320,287.30. However, respondent claimed that she merely helped a
the title of the holder who negotiated the check to it. The holder did relative, Aida Abengoza, to encash the treasury warrant and that she
not show or tell the payee why he had the check in his possession and did not know the amounts were altered nor did she represent to
why he was using it for the payment of his own personal account petitioner that the treasury warrants are genuine and that upon being
which shows that holder's title was defective or suspicious. informed of dishonor, she immediately contacted her relative and
signed an acknowledgement to pay the total amount of the treasury
Mesina vs. IAC warrant.
FACTS: Jose Go purchased from Associate Bank a Cashiers Check,
which he left on top of the managers desk when left the bank. Issue: Whether or not respondent should be held liable as a general
The bank manager then had it kept for safekeeping by one of its indorse.
employees. The employee was then in conference with one Alexander
Lim. He left the check in his desk and upon his return, Lim and the Held: The Court symphatizes with the petitioner that there was indeed
check were gone. When Go inquired about his check, the same damage and loss, but said loss is chargeable to the respondent who
couldn't be found and Go was advised to request for the stoppage of upon her indorsements warrant that the instrument is genuine in all
payment which he did. He executed also an affidavit of loss as well as respect what it purports to be and that she will pay the amount
reported it to the police. Thereafter, petitioner demanded payment on thereof in case of dishonor. Thus, while the MTC found petitioner
the said check which she acquired as payment from Alexander Lim in partly responsible for the encashment of the altered checks, it found
certain transaction. respondent civilly liable because of her indorsements of the treasury
warrants, in addition to the fact that respondent executed a notarized
Issue: Whether or not petitioner is a holder in due course and can acknowledgment of debt promising to pay the total amount of said
demand payment. warrants.

HELD: No, petitioner is not a holder in due course. Admittedly, Sapiera vs. Court of Appeals
petitioner became the holder of the cashier's check as endorsed by Facts: On several occasions, petitioner Sapiera, a sari-sari store owner,
Alexander Lim who stole the check. He refused to say how and why it purchased from Monnico Mart certain grocery items, mostly
was passed to him. He had therefore notice of the defect of his title cigarettes, and paid for them with checks issued by one Arturo de
Guzman. These checks were signed at the back by the petitioner. ISSUE: Whether presentment for acceptance of the drafts was
When presented for payment, the checks were dishonored because indispensable to make Philippine Rayon liable thereon.
the drawers account was already closed. Private respondent Roman
Sua informed De Guzman and petitioner about the dishonor but both HELD: In the case at bar, the drawee was necessarily the herein
failed to pay the value of the checks. petitioner. It was to the latter that the drafts were presented for
payment. There was in fact no need for acceptance as the issued
Issue: Whether or not petitioner be required to pay civil indemnity to drafts are sight drafts. Presentment for acceptance is necessary only
private respondent. in the cases expressly provided for in Section 143 of the Negotiable
Instruments Law (NIL). In no other case is presentment for acceptance
Held: Yes. It is undisputed that the four (4) checks issued by De necessary in order to render any party to the bill liable. Obviously
Guzman were signed by petitioner at the back without any indication then, sight drafts do not require presentment for acceptance.
as to how she should be bound thereby and, therefore, she is deemed
to be an indorser thereof. The NIL clearly provides Sec. 17. Wong vs. Court of Appeals
Construction where instrument is ambiguous. --- Where the language Facts: Petitioner Wong was an agent of Limtong Press, Inc. (LPI), a
of the instrument is ambiguous, or there are admissions therein, the manufacturer of calendars. After printing the calendars, LPI would ship
following rules of construction apply: x x x (f) Where a signature is so the calendars directly to the customers. Thereafter, the agents would
placed upon the instrument that it is not clear in what capacity the come around to collect the payments. Petitioner, however, had a
person making the same intended to sign, he is deemed an indorser. x history of unremitted collections, which he duly acknowledged in a
x x confirmation receipt he co-signed with his wife.
Petitioner issued several checks in December 1985, initially to
BPI vs. Court of Appeals and Napiza guarantee the payment of unremitted collections, however, upon
Facts: Private respondent Benjamin Napiza deposited in his foreign agreement between the parties, the checks will be applied to
current deposit with BPI a dollar check owned by Henry Chan in which unremitted collections. Before maturity, petitioner advised not to
he affixed his signature at the dorsal side thereof. For this purpose, deposit the said checks, but after failing to replace them, respondent
Napiza gave Chan a signed blank withdrawal slip. However, Gayon Jr. presented the check on June 1986 which was later on dishonoured by
got hold of the withdrawal slip and used it to withdraw the proceeds of reason of account closed. Having failed to pay, a case of violation of
the dollar check, even before the check was cleared and without the BP 22 was filed against petitioner. Petitioner contends that he is not
presentation of the bank passbook. liable by reason of the delay in presenting the checks.

Issues: Whether or not petitioner can hold private respondent liable Issue: Wether or not the petitioner is discharged from the liability on
for the proceeds of the check for having affixed his signature at the the said checks due to delay in presentment.
dorsal side as indorser.
Held: Under Section 186 of the Negotiable Instruments Law, a check
Held: No. It is thus clear that ordinarily private respondent may be held must be presented for payment within a reasonable time after its issue
liable as an indorser of the check or even as an accommodation or the drawer will be discharged from liability thereon to the extent of
party.[17] However, to hold private respondent liable for the amount the loss caused by the delay. By current banking practice, a check
23
of the check he deposited by the strict application of the law and becomes stale after more than six (6) months, or 180 days. Private
without considering the attending circumstances in the case would respondent herein deposited the checks 157 days after the date of the
result in an injustice and in the erosion of the public trust in the check. Hence, said checks cannot be considered stale.
banking system. The interest of justice thus demands looking into the
events that led to the encashment of the check. The International Corporate Bank vs. Sps. Francis S. Gueco and Ma.
Luz E. Gueco
Prudential Bank vs. IAC FACTS: Gueco spouses obtained a loan from ICB to purchase a car. In
FACTS: To effect payment for machineries purchased by Philippine consideration thereof, the debtors executed PNs, and a chattel
Rayon Mills with Nissho Co., Ltd, the former opened a commercial mortgage was made over the car. The spouses defaulted in
letter of credit with the Prudential Bank and Trust Company in favor of payment of their obligations whereupon they entered into a
Nissho. Drafts were drawn and issued by Nissho, which were all paid by compromise agreement with the bank. After some negotiation and
the Prudential Bank through its correspondent in Japan. Two of these computation, they tendered a managers check in favor of the bank
drafts were accepted by Philippine Rayon Mills while the others were based on the reduced amount. Nonetheless, the car was still detained
not. Petitioner instituted an action for the recovery of the sum of for the spouses refused to sign the joint motion to dismiss. Because of
money it paid to Nissho as Philippine Rayon Mills was not able to pay this, the spouses filed an action for recovery of the car and damages
its obligations arising from the letter of credit. Respondent court ruled against the bank. As the result of the proceeding, the managers check
that with regard to the ten drafts which were not presented and tendered to the bank had become stale in the hands of the bank.
accepted, no valid demand for payment can be made. Petitioner
however claims that the drafts were sight drafts which did not require Issue: Whether or not the bank should bear the loss on the stale
presentment for acceptance to Philippine Rayon. managers check as a result of the proceedings.

HELD: Failure to present for payment within a reasonable time will CItytrust Banking Corporation vs. Court of Appeals
result to the discharge of the drawer only to the extent of the loss Facts: The case emanated from a complaint filed by respondent Emme
caused by the delay. It does not totally wipe out all liability. In fact, the for damages against petitioner. Respondent deposited with petitioner
legal situation amounts to an acknowledgment of liability in the sum several cash in order to amply cover the post dated checks she issued.
stated in the check. In this case, the Gueco spouses have not alleged, When presented for encahsement upon maturity, all checks were
much less shown that they or the bank which issued the managers dishonoured due to insufficiency of funds. Petitioner in its answer
check has suffered damage or loss caused by the delay or non- averred that it was respondents fault that her checks were
presentment. Definitely, the original obligation to pay certainly has not dishonoured because the account no. Reflected in the deposit slip
been erased. which is 2900823 was not her correct no. Which is 29000823.

State Investment House vs. Court of Appeals Issue: Whether of not petitioner is liable for damages on the
Facts: New Sikatuna Wood Industries Inc. (NSWI) requested for a loan dishonoured checks.
from Harris Chua, who issued 3 crossed checks. Subsequently, NSWI
entered in an agreement with State Investment House Inc. (SIHI) Held: The depositor expects the bank to treat his account with utmost
where the former discounted several checks including the crossed fidelity, whether such account consists only of a few hundred pesos or
checks. When the crossed checks were deposited by SIHI, the checks of millions. The bank is engaged in business impressed with public
were dishonoured by reason of insufficient funds and account closed. interest and it is its duty to protect in return its many clients and
SIHI made demands upon Chua to make good said checks by Chua depositors who transact business with it. It is under obligation to treat
failed. the accounts of its depositors with meticulous care having in mind the
fiduciary nature of their relationship. Hence, nominal damages may be
Issue: Whether SIHI is a holder in due course so as to recover the awarded in order that a right of the plaintiff, which have been violated
amounts in the checks from Chua. or invaded by the defendant, may be vindicated or recognized, and not
for the purpose of indemnifying the plaintiff for any loss suffered by
Held: No, the act of crossing a check serves as a warning to the holder him.
that the check has been issued for a definite purpose so that he must
inquire if he has received the check pursuant to that purpose, Ramon Tan vs. Court of Appeals
otherwise he is not a holder in due course. His failure to inquire from Facts: Ramon tan secured a cashiers from Philippine Commercial
the holder the purpose prevents him from being considered in good Industrial Bank (PCIB) payable to his order. He deposited his check in
faith. SIHI, is subject to personal defences for such as the lack of his account with Rizal Commercial Banking Corporation (RCBC)
consideration between the NSWI and Chua. Binondo. On the same day, RCBC erroneously sent the same cashiers
check for clearing to the Central Bank which was returned for having
Bataan Cigar and Cigarette Factory, Inc. vs. Court of Appeals been missent or misrouted. The next day, RCBC debited the
Facts: Petitioner engaged one of its suppliers King Tim Pua George to amount covered by the same cashiers check from the account of the
deliver bales of tobacco leaf. In consideration thereof, petitioner petitioner. Respondent bank at this time had not informed the
issued a crossed check. Relying on the supplier's representation, petitioner of its action.
petitioner agreed to purchase additional bales of tobacco leaves, Relying that said checks were honoured, petitioner issued two
despite the supplier's failure to deliver in accordance with their earlier personal check which was dishonoured due to insufficiency of funds.
agreement upon which he issued post dated crossed checks. However, Petitioner alleging to have suffered humiliation and loss of face in the
the supplier sold the said check at a discount to private respondent business sector due to the bounced check filed a complaint against
State Investment House Inc.(SIHI). Upon failure to deliver said bales of RCBC.
tobacco leaf, petitioner issued a stop order payment on all checks. SIHI
then instituted this action, upon dishonour of the check, on the ground Issue: Whether or not RCBC may be held liable for damages upon
that the same is a holder in due course and would be able to collect erroneous debit covered by the cashiers check.
from petitioner.
Held: A bank cannot exculpate itself from liability for the consequences
Issue: Whether or not SIHI, a holder of a crossed check, is a holder in of the use of wrong deposit slip resulting in the misrouting of a
due course and would be able to collect from petitioner. regional check to the Central Bank for clearing. The bank is not
expected to be infallible but it must bear the blame for not discovering
Held: It is a settled ruled that crossing of checks should put the holder the mistake of its teller despite the established procedure requiring the
on inquiry and upon him devolves the duty to ascertain the indorsers papers and bank books to pass through a battery of bank personnel
title to the check or the nature of his possession. Failing in this respect, whose duty it is to check and countercheck them for possible errors. As
the holder is declared guilty of gross negligence amounting to legal the result of the negligence of the bank, the depositor has the right to
absence of good faith and is to the effect that the holder of the check recover moral damages even if the banks negligence may not have
is not a holder in due course. There being failure of consideration been attended with malice and bad faith if the former suffered mental
which is a personal defense, cannot be obliged to pay the checks to anguish, serious anxiety, embarrassment and humiliation.
SIHI who is not a holder in due course.

Papa vs. A.U. Valencia and Co. Inc. Held: No, Section 152 of the Negotiable Instruments Law pertaining to
Facts: On 1992, a complaint was against Petitioner Myron C. Papa as indorsers, relied on by respondents, is not pertinent to this case. There
attornery-in-fact of Angela M. Butte sold to respondent Penaroyo are well-defined distinctions between the contract of an indorser and
through respondent Valencia a parcel of land on 1973. Petitioner that of a guarantor/surety of a commercial paper, which is what is
appealed decision, alleging among others that the sale was never involved in this case. The contract of indorsement is primarily that of
consummated as he did not encash the check given by respondents transfer, while the contract of guaranty is that of personal security. The
Valencia and Pearroyo in payment of the full purchase price of the liability of a guarantor/surety is broader than that of an indorser.
subject lot. He maintained that what said respondents had actually Unless the bill is promptly presented for payment at maturity and due
paid was only the amount of P5,000.00 (in cash) as earnest money. notice of dishonor given to the indorser within a reasonable time, he
will be discharged from liability thereon. On the other hand, except
Issue: Whether or not the check did not amount to payment. where required by the provisions of the contract of suretyship, a
demand or notice of default is not required to fix the suretys liability.
Held: While it is true that the delivery of a check produces the effect Hence, respondents are liable and protest upon dishonor is not
of payment only when it is cashed, pursuant to Art. 1249 of the Civil necessary,.
Code, the rule is otherwise if the debtor is prejudiced by the creditors
unreasonable delay in presentment. The acceptance of a check implies Sincere Villanueva vs. Marlyn Nite
an undertaking of due diligence in presenting it for payment, and if he Facts: Respondent took a loan from petitioner. To secure the loan,
from whom it is received sustains loss by want of such diligence, it will respondent issued petitioner an Asian Bank Corporation check. The
be held to operate as actual payment of the debt or obligation for check was, however, dishonored due to a material alteration when
which it was given. petitioner deposited the check on due date. Petitioner, however, filed
It has, likewise, been held that if no presentment is made at all, the an action for a sum of money against ABC which was awarded by the
drawer cannot be held liable irrespective of loss or injury unless court. When respondent went to withdraw from her account on ABC,
presentment is otherwise excused. This is in harmony with Article 1249 she was unable to do so because the trial court had ordered ABC to
of the Civil Code under which payment by way of check or other pay petitioner the value of respondents ABC check. Respondent then
negotiable instrument is conditioned on its being cashed, except when filed a petition to annul and set aside the trial courts decision ordering
through the fault of the creditor, the instrument is impaired. The payee ABC to pay petitioner the value of the ABC check.
of a check would be a creditor under this provision and if its non-
payment is caused by his negligence, payment will be deemed effected Issue: Whether or not ABC may be held liable to petitioner for the
and the obligation for which the check was given as conditional dishonour of the check.
payment will be discharged. Failure of a payee to encash a check for
more than ten (10) years undoubtedly resulted in the impairment of the Held: If a bank refuses to pay a check notwithstanding the sufficiency
check through his unreasonable and unexplained delay of funds, the payee-holder cannot sue the bank because there is no
privity of contract exists between the drawee-bank and the payee.
Allied Banking Corporation vs. Court of Appeals Contracts take effect only between the parties, their assigns and heirs.
Facts: Petitioner purchased a letter of credit from respondent G.G. In this case, the contract of loan was between petitioner and
Sportswear Mfg. Corporation. The export bill was issued by Chekiang respondent. No collection suit could prosper without respondent who
First Bank Ltd., Hongkong. With the purchase of the bill, ALLIED was an indispensable party
credited GGS the peso equivalent of the aforementioned bill. On the
same date, respondents executed their respective Letters of Guaranty, Bank of the Philippine Island vs. Commissioner of Internal Revenue
holding themselves liable on the export bill if it should be dishonored Facts: Petitioner Bank of the Philippine Islands (BPI) sold to the Central
or retired by the drawee for any reason. Bank of the Philippines U.S. dollars. BPI instructed, by cable, its
When ALLIED negotiated the export bill to Chekiang, payment was correspondent bank in New York to transfer U.S. dollars deposited in
refused due to some material discrepancies in the documents BPIs account therein to the Federal Reserve Bank in New York for
submitted by GGS relative to the exportation covered by the letter of credit to the Central Banks account therein. Thereafter, the funds had
credit. Consequently, ALLIED demanded payment from all the been credited to its account and the Central Bank promptly transferred
respondents based on the Letters of Guaranty and Surety executed in to the petitioners account in the Philippines the corresponding
favor of ALLIED. However, respondents refused to pay, prompting amount in Philippine pesos.
ALLIED to file an action for a sum of money. Under the NIRC Section 195, it imposes a documentary stamp tax on

Respondents claim that the petitioner did not protest upon dishonor of (1) foreign bills of exchange, (2) letters of credit, and (3) orders, by
the export bill by Chekiang First Bank, Ltd. According to respondents, telegraph or otherwise, for the payment of money issued by express or
since there was no protest made upon dishonor of the export bill, all of steamship companies or by any person or persons.
them, as indorsers were discharged under Section 152 of the
Negotiable Instruments Law. Issue: Whether or not the instruction by cable is a bill of exchange
included in the activities where documentary stamp tax is imposed.
Issue: Whether or not protest upon dishonor is necessary on a
guarantor of a commercial paper. Held: From this enumeration, two common elements need to be
present: (1) drawing the instrument or ordering a drawee, within the
Philippines; and (2) ordering that drawee to pay another person a Held:The claim is without basis. Easily discernible is that what Ong
specified amount of money outside the Philippines. What is being obtained from PCI Bank was not just any ordinary check but a
taxed is the facility that allows a party to draw the draft or make the managers check. A managers check is an order of the bank to pay,
order to pay within the Philippines and have the payment made in drawn upon itself, committing in effect its total resources, integrity
another country. and honor behind its issuance. By accepting PCI Bank Check issued by
The fact that the funds belong to BPI and were not advanced by the Sarande to Ong and issuing in turn a managers check in exchange
correspondent bank will not remove the transaction from the coverage thereof, PCI Bank assumed the liabilities of an acceptor under Section
of Section 195 of the NIRC. A bill of exchange, when drawn in the 62 of the Negotiable Instruments Law. Hence, Petitioner is liable to pay
Philippines but payable in another country, would surely be covered by the value of the check with damages.
this section. And in the case of a bill of exchange, the funds may belong
to the drawer and need not be advanced by the drawee, as in the case International Corporate Bank vs. Court of Appeals and PNB
5
of a check or a draft. In the description of a draft provided hereunder, Facts: The Ministry of Education and Culture issued 15 checks drawn
the drawee is in possession of funds belonging to the drawer of the against respondent which petitioner accepted for deposit on various
bill. dates. After 24 hours from submission of the checks to respondent for
clearing, petitioner paid the value of the checks and allowed the
Citibank NA vs. Sabeniano withdrawals of the deposits. However, on 14 October 1981,
Facts: Respondent Modesta R. Sabeniano was a client of both respondent returned all the checks to petitioner without clearing them
petitioners Citibank and FNCB Finance. Respondent filed a complaint to on the ground that they were materially altered. Thus, petitioner
recover substantial deposits and money market placements with instituted an action for collection of sums of money against
petitioner. Petitioners admitted them however when respondent failed respondent to recover the value of the checks.
to pay her loans with FNCB Finance despite repeated demands by
petitioner Citibank, the latter exercised its right to off-set. In support of Issue: Whether or not respondent should be held liable for the
respondents assertion that she had already paid whatever loans she materially altered checks.
may have had with petitioner Citibank, she presented as evidence
provisional receipts for the acceptance of the checks. Held: The alterations in the checks were made on their serial numbers.
Alteration on serial numbers are not within the purview of material
Issue: Whether or not petitioner the provisional receipts upon alteration as provided under Section 125 of NIL for the name of the
acceptance of checks evidenced the payment. government agency which issued the check was prominently printed.
Since there were no material alterations on the checks, respondent as
Held: Since a negotiable instrument is only a substitute for money and drawee bank has no right to dishonor them and return them to
not money, the delivery of such an instrument does not, by itself, petitioner, the collecting bank. Thus, respondent is liable to petitioner
operate as payment. A check, whether a managers check or ordinary for the value of the checks, with legal interest from the time of filing.
check, is not legal tender, and an offer of a check in payment of a debt
is not a valid tender of payment and may be refused receipt by the Melva Theresa Gonzales vs. Rizal Commercial Banking Corporation
obligee or creditor. Mere delivery of checks does not discharge the Facts: Gonzales was an employee of Rizal Commercial Banking
obligation under a judgment. The obligation is not extinguished and Corporation (RCBC). A foreign check in the amount of $7,500 was
remains suspended until the payment by commercial document is drawn by Dr. Don Zapanta and payable to Gonzales mother,
actually realized. Since the provisional receipt was issued for the the defendant Eva Alviar. Alviar then endorsed this check. Gonzales
receipt of the check, the same cannot be considered as evidence of presented the foreign check to Olivia Gomez. After examining this,
payment hence the loan still subsist. Olivia Gomez acquiesced to the early encashment of the check and
signed the check but indicated thereon her authority of up to
Equitable PCI Bank vs. Rowena Ong P17,500.00 only.
Facts: Sarande deposited in her account with Philippine Commercial RCBC then tried to collect the check with the drawee bank but was
International (PCI) Bank a check in amount of P225,000 which was dishonored because of irregular indorsement. Insisting, RCBC again
cleared. Thereafter, Sarande issued a check amounting to P132,000 sent the check to the drawee bank, but this time the check was
owing to a business consideration. On the same day, Ong presented returned due to account closed. Unable to collect, RCBC demanded
the check to PCI Bank but instead of depositing it, she requested that from Gonzales the payment of the peso equivalent of the check that
proceeds thereof converted into a mangers check whereupon a she received.
managers check was issued. Thereafter, he deposited said check to
Equitable Banking Corporation but was later on dishonored because Issue: Whether or not Gonzales is liable to the subsequent indorser
PCI Bank issued a stop payment owing to Sarandes account being despite of the defect introduced by the latter which rendered the
closed. instrument dishonored.

Issue: Whether or not Ong is a holder in due course in the absence of Held: The foreign drawee bank, Wilshire Center Bank N.A., refused to
consideration in the issuance of the managers check. pay the bearer of this dollar-check drawn by Don Zapanta because of
the defect introduced by RCBC, through its employee, Olivia Gomez.
There is no doubt in the mind of the Court that a subsequent party
which caused the defect in the instrument cannot have any recourse certainly serve the same purpose. When Estrella presented the checks
against any of the prior endorsers in good faith. for payment, the same were dishonored on the ground that they were
drawn against a closed account. Despite notice of dishonor, petitioner
The holder or subsequent endorser who tries to claim under the Macalalag failed to pay the full face value of the second check issued.
instrument which had been dishonored for irregular endorsement Only a full payment of the face value of the second check at the time of
15
must not be the irregular endorser himself who gave cause for the its presentment or during the five-day grace period could have
dishonor. RCBC, which caused the dishonor of the check upon exonerated her from criminal liability.
presentment to the drawee bank, through the qualified
endorsementof its employee, Olivia Gomez, cannot hold prior BPI vs. Court of Appeals G.R. 136202
endorsers, Alviar and Gonzales in this case, liable on the instrument. FACTS: Templonuevo demanded payment from petitioner of a sum
of money representing the aggregate value of three checks which
Metropolitan Bank and Trust Co. vs. Renato Cabilzo were erroneously deposited with the petitioner to A.A. Salazar
FACTS: Cabilzo issued a postdated Metrobank Check payable to Construction and Engineering Services account. Finding merit in the
CASH. The check was presented to Westmont Bank for payment by demands, the bank then froze the account of the engineering firm as
Mr. Marquez. Metrobank cleared the check for encashment. the account of Salazar was already closed or had insufficient funds.
Thereafter, it was discovered that Metrobank Check which he issued in Failure of any settlement between Templonuevo and Salazar, this
the amount of P1, 000.00 was altered to P91,000.00. Cabilzo prompted the bank to debit the account of Salazar and give back the
demanded that Metrobank re-credit the amount of P91,000.00 to his money to Templonuevo through cashiers check. The account of
account. Salazar was also debited for whatever charges incurred for the
issuance of the cashiers check. Hence, respondent Salazar filed this
Issue: Whether or not petitioner is liable for the amount of the action for the recovery of the money.
materially altered check.
ISSUE: Whether or not the collecting bank have the authority to
Held: The bank on which the check is drawn is under strict liability to withdraw unilaterally from such depositors account the amount it
pay to the order of the payee in accordance with the drawers had previously paid upon certain unendorsed order instruments
instructions. Payment made under materially altered instrument is not deposited by the depositor to another account that she later closed?
payment done in accordance with the instruction of the drawer. When
the drawee bank pays a materially altered check, it violates the terms HELD: Consequently, petitioner, as the collecting bank, had the right
of the check, as well as its duty to charge its clients account only to debit Salazars account for the value of the checks it previously
for bona fide disbursements he had made. Since the drawee bank, in credited in her favor. It is of no moment that the account debited by
the instant case, did not pay according to the original tenor of the petitioner was different from the original account to which the
instrument, as directed by the drawer, then it has no right to claim proceeds of the check were credited because both admittedly
reimbursement from the drawer, much less, the right to deduct the belonged to Salazar, the former being the account of the sole
erroneous payment it made from the drawers account which it was proprietorship which had no separate and distinct personality from
expected to treat with utmost fidelity. Hence, petitioner is liable to her, and the latter being her personal account. Howver, the bank is
reimburse the drawer for the amount paid. liable for damages caused to Salazar as a result of the erroneous debit
by reason of its failure to perform its obligation to treat their
Theresa Macalalag vs. People of the Philippines depositors with meticulous care, having in mind the fiduciary nature of
Facts: Petitioner obtained loans from Grace Estrella. Failure to pay the their relationship.
interest and the loan, she executed two acknowledgement/affirmation
receipts and as security for payment of the aforesaid loans issued two
PNB checks in favor of Estrella. However, when Estrella presented said
checks for payment with the drawee bank, the same were dishonored
for the reason that the account against which the same was drawn was
already closed. Estrella sent a notice of dishonor and demand to make
good the said checks to Macalalag, but the latter failed to do so.
Hence, Estrella filed two criminal complaints for Violation of Batas
Pambansa Blg. 22.

Issue: Whether or not petitioner is violated BP 22 upon issuance of the
check as security.

Held: We have repeatedly held that there is no violation of Batas
Pambansa Blg. 22 if the complainant was actually told by the drawer
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that he has no sufficient funds in a bank. Where, as in the case at bar,
the checks were issued as security for a loan, payment by the accused
of the amount of the check prior to its presentation for payment would