Digests: Negotiable Instruments Law

Digests
Negotiable Instruments Law

Michael Vernon Guerrero Mendiola 2004 Shared under Creative Commons ttribution! NonCommercial!Share li"e #$0 %hili&&ines license$
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buba"ar vs$ uditor General* G' L!+40,* #+ -ul. +/40 1$$$$$$$$$ + ng (iong vs$ (ing* G' L!22323* 22 4ebruar. +/20 1$$$$$$$$$ + rrieta vs$ National 'ice 5 Corn Cor&oration 6N 'IC7* G' L!+,24,* #+ -anuar. +/24 1$$$$$$$$$ + ssociated 8an" vs$ C * G' 0/002* 3 Ma. +//2 1$$$$$$$$$ 2 ssociated 8an" vs$ C * G' +03#02* #+ -anuar. +//2 1$$$$$$$$$ 2 8ataan Cigar and Cigarette 4actor. vs$ C * G' /#040* # March +//4 1$$$$$$$$$ # Calte9 6%hili&&ines7 Inc$ vs$ C * G' /33,#* +0 ugust +//2 1$$$$$$$$$ # Caram 'esources vs$ Contreras* M M(-00#004/* 22 :ctober +//4 1$$$$$$$$$ 4 Cit. (rust 8an"ing vs$ C * G' /2,/+* #0 &ril +//+ 1$$$$$$$$$ , Clar" vs$ Sellner* G' +2433* 22 November +/2+ 1$$$$$$$$$ , Co vs$ %N8* G' L!,+323* 2/ -une +/02 1$$$$$$$$$ 2 Cru; vs$ C * G' +003#0* +3 -une +//4 1$$$$$$$$$ 2 Cr.stal vs$ C * G' L!#,323* +0 -une +/32 1$$$$$$$$$ 2 Dela Victoria vs$ 8urgos* G' ++++/0* 23 -une +//, 1$$$$$$$$$3 4irestone (ire and 'ubber vs$ Ines Chaves 5 Co$* G' L!+3+02* +/ :ctober +/22 1$$$$$$$$$ 3 Gem&esaw vs$ C * G' /2244* / 4ebruar. +//# 1$$$$$$$$$ 0 <ong"ong 5 Shanghai 8an" vs$ %eo&le=s 8an" and (rust* G' L!20222* #0 Se&tember +/30 1$$$$$$$$$ 0 Ibasco vs$ C * G' ++3400* , Se&tember +//2 1$$$$$$$$$ / -imene; vs$ 8uco.* G' L!+022+* 20 4ebruar. +/,0 1$$$$$$$$$ / >alalo vs$ Lu;* G' L!23302* #+ -ul. +/30 1$$$$$$$$$ +0 Lao vs$ C * G' ++/+30* 20 -une +//3 1$$$$$$$$$ +0 La;aro vs$ C * G' +0,42+* ++ November +//# 1$$$$$$$$$ ++ Lim vs$ C * G' +030/0* +/ December +//, 1$$$$$$$$$ ++ Lim vs$ %eo&le* G' +#00#0* +0 Se&tember 2000 1$$$$$$$$$ +2 Lim vs$ 'odrigo* G' 32/34* +0 November +/00 1$$$$$$$$$ +2 Llamado vs$ C * G' //0#2* 22 March +//3 1$$$$$$$$$ +# Lo;ano vs$ Martine;* G' L!2#4+/* +0 December +/02 1$$$$$$$$$ +# Magno vs$ C * G' /2+#2* 22 -une +//2 1$$$$$$$$$ +4 Manila Lighter (rans&ortation vs$ C * G' L!,0#3#* +, 4ebruar. +//0 1$$$$$$$$$ +4 Moran vs$ C * G' +0,0#2* 3 March +//4 1$$$$$$$$$ +, M?SS vs$ C * G' L!22/4#* +4 -ul. +/02 1$$$$$$$$$ +, Navarro vs$ C * G' ++2#0/* + ugust +//4 1$$$$$$$$$ +2 %eo&le vs$ Gros&e* G' L!340,#!,4* 20 -anuar. +/00 1$$$$$$$$$ +2 %eo&le vs$ Maniego* G' L!#0/+0* 23 4ebruar. +/03 1$$$$$$$$$ +3 %eo&le vs$ 'e.es* G' +0++23!#+* +0 November +//# 1$$$$$$$$$ +3 %eo&le vs$ (uanda* C ##20* #0 -anuar. +//0 1$$$$$$$$$ +0 %hili&&ine 8an" o) Commerce vs$ ruego* G' L!2,0#2!#3* #+ -anuar. +/0+ 1$$$$$$$$$ +0 %hili&&ine Commercial Industrial 8an" vs$ C * G' +2+4+#* 2/ -anuar. 200+ 1$$$$$$$$$ +/ %hili&&ine @ducation Co$ vs$ Soriano* G' L!2240,* #0 -une +/3+ 1$$$$$$$$$ 20 %ineda vs$ dela 'ama* G' L!#+0#+* 20 &ril +/0# 1$$$$$$$$$ 20 %N8 vs$ C * G' L!2200+* 2/ :ctober +/20 1$$$$$$$$$ 2+ %N8 vs$ National Cit. 8an"* G' 4#,/2* #+ :ctober +/#2 1$$$$$$$$$ 2+ %N8 vs$ Auim&o* G' L!,#+/4* +4 March +/00 1$$$$$$$$$ 22 %once vs$ C * G' L!4/444* #+ Ma. +/3/ 1$$$$$$$$$ 2# %rudencio vs$ C * G' L!#4,#/* +4 -ul. +/02 1$$$$$$$$$ 2# Aue vs$ %eo&le* G' 3,2+3!+0* 2+ Se&tember +/03 1$$$$$$$$$ 24 'e&ublic 8an" vs$ C * G' 4232,* 22 &ril +//+ 1$$$$$$$$$ 24 'e&ublic 8an" vs$ @brada* G' L!403/2* #+ -ul. +/3,1$$$$$$$$$ 2, 'e&ublic %lanters 8an" vs$ C * G' /#03#* 2+ December +//2 1$$$$$$$$$ 2, San Carlos Milling vs$ 8%I* G' #3423* ++ December +/## 1$$$$$$$$$ 22
Sesbreno vs$ C * G' 0/2,2* 24 Ma. +//# 1$$$$$$$$$ 22 State Investment <ouse vs$ C * G' +0++2#* ++ -anuar. +//# 1$$$$$$$$$ 23 State Investment <ouse vs$ I C* G' 32324* +# -ul. +/0/ 1$$$$$$$$$ 20 Stelco Mar"eting vs$ C * G' /2+20* +3 -une +//2 1$$$$$$$$$ 20 (an vs$ C * G' +00,,,* 20 December +//4 1$$$$$$$$$ 2/ (ibaBia vs$ C * G' +002/0* 4 -une +//# 1$$$$$$$$$ 2/ (ravel :n vs$ C * G' ,2+2/* 22 -une +//2 1$$$$$$$$$ #0 C. vs$ C * G' ++/000* 20 -une +//3 1$$$$$$$$$ #0 Vaca vs$ C * G' 4#,/2* #+ :ctober +/#2 1$$$$$$$$$ #0 Vda$ de @duDue vs$ :cam&o* G' L!222* 22 &ril +/,0 1$$$$$$$$$ #+
This collection contains sixty (60) cases summarized in this format by Michael Vernon M. Guerrero (as a sophomore law student) durin the !econd !emester" school year #00$%#00& in the 'e otiable (nstruments )aw class under *tty. Minda Gapuz at the *rellano +ni,ersity !chool of )aw (*+!)). -ompiled as ./0" 1uly #022. 3erne Guerrero entered *+!) in 1une #00# and e,entually raduated from *+!) in #006. 4e passed the .hilippine bar examinations immediately after (*pril #005).
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Digests (Berne Guerrero)
[1] Abubakar vs. Auditor General GR L-140 ! "1 #ul$ 1%4& 'irst Division! Beng(on (#) 'a)ts* Treasury Warrant A-2867376 was issued in favor of Placide S. Urbanes on ! "ece#ber $% for P &!!!& but is now in t'e 'ands of (en)a#in Abuba*ar. T'e Auditor refused to aut'ori+e t'e ,ay#ent of t'e treasury warrant. Abuba*ar contends 'e is a 'older in -ood fait' and for value and t'us& entitled to t'e ri-'ts and ,rivile-es of a 'older in due course. +ssue* W'et'er Abuba*ar is a 'older in due course. ,eld* A treasury warrant is not a ne-otiable instru#ent. it bein- an order for ,ay#ent out of a /,articular fund0& and is not unconditional and does not fulfill one of t'e essential re1uire#ents of a ne-otiable instru#ent. T'erefore& a 'older of a treasury warrant cannot ar-ue t'at 'e is a 'older in -ood fait' and for value of a ne-otiable instru#ent and t'us entitled to t'e ri-'ts and ,rivile-es of a 'older in due course& free fro# defenses. [-] Ang .iong vs. .ing GR L--/0/0! -- 'ebruar$ 1%/& 1n Ban)! 2astro (#) 'a)ts* 2oren+o Tin- issued a c'ec* for P%&!!! ,ayable to /cas' or bearer.0 Wit' 3eli,e An-4s si-nature 5indorse#ent in blan*6 at t'e bac* t'ereof& t'e instru#ent was received by An- Tion- w'o t'ereafter ,resented it to t'e ban* for ,ay#ent. T'e drawee ban* dis'onored it. An- Tion- #ade written de#ands on bot' Tin- and An- to #a*e -ood t'e a#ount re,resented by t'e c'ec*. T'ese de#ands un'eeded. An- Tionfiled suit for collection. T'e trial court ad)ud-ed for An- Tion-. 7nly An- a,,ealed& #aintainin- t'at 'e is only an acco##odation ,arty. +ssue* W'et'er 3eli,e An- is an acco##odation ,arty. ,eld* 3eli,e An- is a -eneral indorser 5Section 63& 8e-otiable 9nstru#ents 2aw6& in t'e absence of any indication by a,,ro,riate words 'is intention to be bound in so#e ot'er ca,acity. :ven on t'e assu#,tion t'at An- is a #ere acco##odation ,arty& 'e is liable on t'e instru#ent to a 'older for value notwit'standin- t'at suc' 'older at t'e ti#e of ta*in- t'e instru#ent *new 'i# to be only an acco##odation ,arty 5Section 2$& 8e-otiable 9nstru#ents 2aw6. Assu#in- furt'er t'at An- is an acco##odation indorser& t'e fact t'at An#ay obtain security fro# t'e #a*er to ,rotect 'i#self a-ainst t'e dan-er of insolvency of t'e latter cannot in any #anner affect 'is liability to An- Tion-& as t'e said re#edy is a #atter of concern e;clusively between an acco##odation indorser and an acco##odated ,arty. T'e liability of 3eli,e An- re#ains ,ri#ary and unconditional. ["] Arrieta vs. 3ational Ri)e 4 2orn 2or5oration (3AR+2) GR L-1 /4 ! "1 #anuar$ 1%/4 1n Ban)! Regala (#) 'a)ts* 7n $ <ay $=2& Pa+ and >italiado Arrieta ,artici,ated in t'e ,ublic biddin- called by 8A?9@ for t'e
3egotiable +nstru6ents La7! -004 ( 1 )
su,,ly of 2!&!!! #etric tons of (ur#ese rice. Ad 'er bid of A2!3 ,er #etric ton was t'e lowest& s'e was awarded t'e contract for t'e sa#e. As a result of t'e delay in t'e o,enin- of t'e letter of credit by 8A?9@& t'e allocation of Arrieta4s su,,lier in ?an-oon was cancelled and t'e =B de,osit a#ountin- to an e1uivalent of P2!!&!!! was forfeited. Arrieta endeavored but failed to restore t'e cancelled (ur#ese rice allocation& and t'us offered T'ailand rice instead. Suc' offer was re)ected by 8A?9@. Subse1uently& Arrieta sent a letter to 8A?9@& de#andin- co#,ensation for t'e da#a-es caused 'er in t'e su# of USA286&!!! re,resentinunreali+ed ,rofit. T'e de#and 'avin- been re)ected& s'e instituted t'e case. +ssue* W'et'er t'e rate of e;c'an-e to be a,,lied in t'e conversion is t'at ,revailin- at t'e ti#e of breac'& or at t'e ti#e t'e obli-ation was incurred& or on t'e ,ro#ul-ation of t'e decision. ,eld* As ,ronounced in :astboard 8avi-ation vs. 9s#ael& if t'ere is any a-ree#ent to ,ay an obli-ation in t'e currency ot'er t'an P'ili,,ine le-al tender& t'e sa#e is null and void as contrary to ,ublic ,olicy 5?A =2$6& and t'e #ost t'at could be de#anded is to ,ay said obli-ation in P'ili,,ine currency to be #easured in t'e ,revailin- rate of e;c'an-e at t'e ti#e t'e obli-ation was incurred. Cerein& t'e rate of e;c'an-e to be a,,lied is t'at of Duly $=2& w'en t'e contract was e;ecuted. [4] Asso)iated Bank vs. 2A GR &%&0-! 0 8a$ 1%%'irst Division! 2ru( (#) 'a)ts* <elissa4s ?TW4s custo#ers issued cross c'ec*s ,ayable to <elissa4s ?TW& w'ic' its ,ro,rietor <erle ?eyes did not receive. 9t was learned t'at t'e c'ec*s 'ad been de,osited wit' t'e Associated (an* by one ?afael Sayson. Sayson was not aut'ori+ed by ?eyes to de,osit and encas' said c'ec*s. ?eyes filed an action for t'e recovery of t'e total value of t'e c'ec*s ,lus da#a-es. +ssue* W'et'er t'e ban* was ne-li-ent for t'e loss. ,eld* @rossin- a c'ec* #eans t'at t'e drawee ban* s'ould not encas' t'e c'ec* but #erely acce,t it for de,osit& t'at t'e c'ec* #ay be ne-otiated only once by one w'o 'as an account in a ban*& and t'at t'e c'ec* serves as warnin- t'at it was issued for a definite ,ur,ose so t'at 'e #ust in1uire if 'e 'as received t'e c'ec* ,ursuant to t'at ,ur,ose. T'e effect& t'us& relate to t'e #ode of its ,resent#ent for ,ay#ent& in accordance wit' Section 72 of t'e 8e-otiable 9nstru#ents 2aw. T'e ban* ,aid t'e c'ec*s notwit'standin- t'at title 'ad not ,assed to t'e indorser& as t'e c'ec*s 'ad been crossed and issued /for ,ayee4s account only.0 9t does did so in its own ,eril and beca#e liable to t'e ,ayee for t'e value of t'e c'ec*s. T'e failure of t'e ban* to #a*e an in1uiry as to Sayson4s aut'ority was a breac' of its duty. T'e ban* is ne-li-ent and is t'us liable to ?eyes. [ ] Asso)iated Bank vs. 2A GR 100"&-! "1 #anuar$ 1%%/ 9e)ond Division! Ro6ero (#) 'a)ts* T'e Province of Tarlac #aintains a current account wit' t'e P'ili,,ine 8ational (an* 5P8( Tarlac (ranc'6 w'ere t'e ,rovincial funds are de,osited. Portions of t'e funds were allocated to t'e @once,cion :#er-ency Cos,ital. @'ec*s were issued to it and were received by t'e 'os,ital4s ad#inistrative officer and cas'ier 53austo Pan-ilinan6. Pan-ilinan& t'rou-' t'e 'el, of Associated (an* but after for-in- t'e si-nature of t'e 'os,ital4s c'ief 5Adena @anlas6& was able to de,osit t'e c'ec*s in 'is ,ersonal account. All t'e c'ec*s bore t'e sta#, /All ,rior endorse#ent -uaranteed Associated (an*.0 T'rou-' ,ost-audit& t'e ,rovince
3egotiable +nstru6ents La7! -004 ( - )
discovered t'at t'e 'os,ital did not receive several allotted c'ec*s& and sou-'t t'e restoration of t'e debited a#ounts fro# P8(. 9n turn& P8( de#anded rei#burse#ent fro# Associated (an*. (ot' ban*s resisted ,ay#ent. Cence& t'e ,resent action. +ssue* W'o s'all bear t'e loss resultin- fro# t'e for-ed c'ec*s. ,eld* P8( is not ne-li-ent as it is not re1uired to return t'e c'ec* to t'e collectin- ban* wit'in 2% 'ours as t'e ban*s involved are covered by @entral (an* @ircular =8! and not t'e rules of t'e P'ili,,ine @learinCouse. Associated (an*& and not P8(& is t'e one duty-bound to warrant t'e instru#ent as -enuine& valid and subsistin- at t'e ti#e of indorse#ent ,ursuant to Section 66 of t'e 8e-otiable 9nstru#ents 2aw. T'e sta#, -uaranteein- ,rior indorse#ent is not an e#,ty rubric. t'e collectin- ban* is 'eld accountable for c'ec*s de,osited by its custo#ers. Cowever& due to t'e fact t'at t'e Province of Tarlac is e1ually ne-li-ent in ,er#ittin- Pan-ilinan to collect t'e c'ec*s w'en 'e was no lon-er connected wit' t'e 'os,ital& it s'ares t'e burden of loss fro# t'e c'ec*s bearin- a for-ed indorse#ent. T'erefore& t'e Province can only recover =!B of t'e a#ount fro# t'e drawee ban* 5P8(6& and t'e collectin- ban* 5Associated (an*6 is liable to P8( for =!B of t'e sa#e a#ount. [/] Bataan 2igar and 2igarette 'a)tor$ vs. 2A GR %"04&! " 8ar): 1%%4 9e)ond Division! 3o)on (#) 'a)ts* (ataan @i-ar and @i-arette 3actory 9nc. 5(@@396 en-a-ed one of its su,,liers& Ei# Ti# Pua Feor-e 5Feor-e Ein-6& to deliver bales of tobacco leaf. 9n consideration t'ereof& (@@39 issued ,ostdated cross c'ec*s to Ein-. Ein- sold t'e c'ec*s& at a discount& to t'e State 9nvest#ent Couse 9nc. 5S9C96. As Ein- failed to deliver t'e bales of tobacco leaf des,ite de#and& (@@39 issued sto, ,ay#ent orders on t'e c'ec*s. :fforts by S9C9 to collect fro# (@@39 failed. S9C9 filed suit. +ssue* W'et'er S9C9 can recover t'e value of t'e c'ec*s& ,re#ised on t'e issue w'et'er S9C9 is a 'older in due course. ,eld* T'e facts of t'e case are on all fours to t'e case of S9C9 vs. 9nter#ediate A,,ellate @ourt. T'e crossinof t'e c'ec*s s'ould ,ut t'e 'older on in1uiry and u,on 'i# devolves t'e duty to ascertain t'e indorser4s title to t'e c'ec* or t'e nature of 'is ,ossession. 3ailin- in t'is res,ect& t'e 'older is declared -uilty of -ross ne-li-ence a#ountin- to le-al absence of -ood fait'& contrary to Section =2 5c6 of t'e 8e-otiable 9nstru#ents 2aw& and as suc' t'e consensus of aut'ority is to t'e effect t'at t'e 'older of t'e c'ec* is not a 'older in due course. (@@39 cannot be obli-ed to ,ay t'e c'ec*s as t'ere is a failure of consideration 5Ein- bein- unable to su,,ly t'e bales of tobacco leaf& for w'ic' t'e c'ec*s were intended for6. Still& S9C9 -- a 'older not in due course -- can collect fro# t'e i##ediate indorser& Feor-e Ein-. Suc' is t'e disadvanta-e of a 'older not in due course& i.e. t'e instru#ent is sub)ect to defenses as if it were non-ne-otiable. [0] 2alte; (<:ili55ines) +n). vs. 2A GR %00 "! 10 August 1%%9e)ond Division! Regalado (#) 'a)ts* 7n various dates& Security (an* and Trust @o. 5S:(T@6& t'rou-' its Sucat branc'& issued 28! certificates of ti#e de,osit 5@T"6 in favor of one An-el dela @ru+ w'o de,osited wit' t'e ban* t'e a--re-ate a#ount of P . 2 #illion. An-er de la @ru+ delivered t'e @T"s to @alte; in connection wit' 'is ,urc'ase of
3egotiable +nstru6ents La7! -004 ( " )
fuel ,roducts fro# t'e latter. Subse1uently& dela @ru+ infor#ed t'e ban* t'at 'e lost all t'e @T"s& and t'us e;ecuted an affidavit of loss to facilitate t'e issuance of t'e re,lace#ent @T"s. "e la @ru+ was able to obtain a loan of P87=&!!! fro# t'e ban*& and in turn& 'e e;ecuted a notari+ed "eed of Assi-n#ent of Ti#e "e,osit in favor of t'e ban*. T'ereafter& @alte; ,resented for verification t'e @T"s 5w'ic' were declared lost by de la @ru+6 wit' t'e ban*. @alte; for#ally infor#ed t'e ban* of its ,ossession of t'e @T"s and its decision to ,reter#inate t'e sa#e. T'e ban* re)ected @alte;4 clai# and de#and& after @alte; failed to furnis' co,y of t'e re1uested docu#ents evidencin- t'e -uarantee a-ree#ent& etc. 9n $83& de la @ru+4 loan #atured and t'e ban* set-off and a,,lied t'e ti#e de,osits as ,ay#ent for t'e loan. @alte; filed t'e co#,laint& but w'ic' was dis#issed. +ssue [1]* W'et'er t'e @ertificates of Ti#e "e,osit 5@T"s6 are ne-otiable instru#ents. ,eld [1]* T'e @T"s in 1uestion #eet t'e re1uire#ents of t'e law for ne-otiability. @ontrary to t'e lower court4s findin-s& t'e @T"s are ne-otiable instru#ents 5Section 6. 8e-otiability or non-ne-otiability of an instru#ent is deter#ined fro# t'e writin-& i.e. fro# t'e face of t'e instru#ent itself. T'e docu#ents ,rovided t'at t'e a#ounts de,osited s'all be re,ayable to t'e de,ositor. T'e a#ounts are to be re,ayable to t'e bearer of t'e docu#ents& i.e. w'osoever #ay be t'e bearer at t'e ti#e of ,resent#ent. +ssue [-]* W'et'er t'e @T"s4 ne-otiation re1uire delivery only. ,eld [-]* Alt'ou-' t'e @T"s are bearer instru#ents& a valid ne-otiation t'ereof for t'e true ,ur,ose and a-ree#ent between it 5@alte;6 and de la @ru+ re1uires bot' delivery and indorse#ent. as t'e @T"s were delivered to it as security for dela @ru+4 ,urc'ases of its fuel ,roducts& and not for ,ay#ent. Cerein& t'ere was no ne-otiation in t'e sense of a transfer of title& or le-al title& to t'e @T"s in w'ic' situation #ere delivery of t'e bearer @T"s would 'ave sufficed. T'e delivery t'ereof as security for t'e fuel ,urc'ases at #ost constitutes @alte; as a 'older for value by reason of 'is lien. Accordin-ly& a ne-otiation for suc' ,ur,ose cannot be effected by #ere delivery of t'e instru#ent since t'e ter#s t'ereof and t'e subse1uent dis,osition of suc' security& in t'e event of non-,ay#ent of t'e ,rinci,al obli-ation& #ust be contractually ,rovided for. [&] 2ara6 Resour)es vs. 2ontreras A8 8.#0&"0&4%! -/ =)tober 1%%4 'irst Division! Davide #r. (#) 'a)ts* Teresita "i+on obtained a loan fro# @ara# ?esources ,ayable in install#ents. S'e issued a ,ro#issory note and ,ostdated (P9 c'ec*s& four of w'ic' were dis'onored w'en ,resented to t'e ban* as t'e account a-ainst w'ic' t'ey were drawn 'ad been closed. @ara# c'ar-ed "i+on for violation of (P22& but w'ere Dud-e @ontreras ac1uitted "i+on on t'e -round of reasonable doubt. Subse1uently& @ara# c'ar-ed Dud-e <a;i#o @ontreras wit' -ross i-norance of t'e law and -ross #isconduct co##itted in "i+on4s cri#inal case. +ssue* W'et'er #alice is an essential ele#ent in (P 22. ,eld* 9n t'e % cri#inal cases before Dud-e @ontreras& "i+on as accused ad#itted t'at a loan was -ranted to 'er and in connection t'erewit' s'e e;ecuted a ,ro#issory note w'erein s'e bound 'erself to ,ay t'e loan in 2 install#ents. S'e issued t'e ,ostdated c'ec*s to cover t'e install#ents as t'ey fall due. T'e c'ec*s were drawn a-ainst 'er (P9 current account& w'ic' s'e closed in t'e sa#e #ont's s'e obtained t'e loan& so t'at w'en t'e c'ec*s were ,resented for ,ay#ent t'ey were dis'onored. <alice and intent in issuin- a wort'less c'ec* are i##aterial. T'e offense is co##itted by t'e very fact of its ,erfor#ance& i.e. t'e #ere act of issuina wort'less c'ec*. T'e offense is #alu# ,ro'ibitu#. An act #ay not be considered by society as in'erently
wron-& 'ence& not #alu# in se& but because of t'e 'ar# t'at it inflicts on t'e co##unity& it can be outlawed and cri#inally ,unis'ed as #alu# ,ro'ibitu#& ,ursuant to t'e State4s e;ercise of ,olice ,ower. [%] 2it$ .rust Banking vs. 2A GR %- %1! "0 A5ril 1%%1 .:ird Division! Gutierre( #r. (#) 'a)ts* Willia# Sa#ara ,urc'ased fro# @itytrust (an* "raft 2368 for USA %!&!!! t'e ,ayee bein- T'ai 9nternational Airways and t'e corres,ondin- drawee ban* in t'e United States is <arine <idland. Sa#ara e;ecuted a sto,-,ay#ent order of t'e ban* draft instructin- @itytrust to infor# <arine <idland about t'e order t'rou-' tele;. <arine <idland noted t'e order& and t'us @itytrust credited Sa#ara4s account. Seven #ont's later& @itytrust re-debited Sa#ara4s account u,on discovery t'at <arine <idland 'ad already debited @itytrust4s account. +ssue* W'o s'all be liable for t'e a#ount. ,eld* @itytrust and <arine <idland were not in ,rivity wit' eac' ot'er in a transaction involvin- ,ay#ent t'rou-' a ban* draft. A ban* draft is a bill of e;c'an-e drawn by a ban* u,on its corres,ondent ban* issued at t'e solicitation of a stran-er w'o ,urc'ases and ,ays t'erefor. 9t is an order for ,ay#ent of #oney. @itytrust was t'e drawer of t'e draft t'rou-' w'ic' it ordered <arine <idland& t'e drawee ban*& to ,ay T'ai Airways. T'e drawee ban* actin- as ,ayor ban* is solely liable for acts not done in accordance wit' t'e instructions of t'e drawer ban* or t'e ,urc'aser of t'e draft. T'e drawee ban* 'as t'e burden of ,roof t'at it did not so violate. <eanw'ile& t'e drawer& if sued by t'e ,urc'aser of t'e draft& is liable for t'e act of debitin- t'e custo#er4s account des,ite an instruction to sto, ,ay#ent. T'e drawer 'as t'e duty to ,rove t'at 'e co#,lied wit' t'e order to infor# t'e drawee. [10] 2lark vs. 9ellner GR 1/400! -- 3ove6ber 1%-1 'irst Division! Ro6ualde( (#) 'a)ts* Feor-e Sellner& wit' WC @lar*e and Do'n <ave& si-ned a note in favor of ?8 @lar* dated Duly $ % in <anila for t'e a#ount of P 2&!!!. T'e note #atured& but its a#ount was not ,aid. Action was filed in court. Sellner4s counsel alle-e t'at Sellner did not receive anyt'in- of value for t'e transaction& t'at t'e instru#net was not ,resented to sellner for ,ay#ent& and t'at Sellner& bein- an acco##odation ,arty is not liable unless t'e note is ne-otiated& w'ic' was alle-edly not done. +ssue* W'et'er Sellner is an acco##odation ,arty liable for t'e note. ,eld* Sellner& as one of t'e si-ners of t'e note& is one of t'e )oint and several debtors on t'e note& and as suc' 'e is liable under Section 6! of t'e 8e-otiable 9nstru#ents 2awG Sellner lent 'is na#e& not to t'e creditor& but to t'ose w'o si-ned wit' 'i# ,lacin- 'i#self wit' res,ect to t'e creditor in t'e sa#e ,osition and wit' t'e sa#e liability as t'e said si-ners. and t'us is a )oint surety rat'er t'an an acco##odation ,arty. As to t'e ,resent#ent for ,ay#ent& suc' action is not necessary in order to c'ar-e t'e ,erson ,ri#arily liable& as is Sellner 5Section 7!& 8e-otiable 9nstru#ents 2aw6. [11]
3egotiable +nstru6ents La7! -004 (
2o vs. <3B GR L- 10/0! -% #une 1%&9e)ond Division! Barredo (#) 'a)ts* Standard Parts <anufacturin- @or,oration #ort-a-ed ,ro,erties to P8(. W'en Standard failed to ,ay its obli-ation 5P%&2$6&8!3&=6 secured by said ,ro,erties6& P8( e;tra-)udicially foreclosed t'e #ort-a-es. Standard& #eanw'ile& transferred its ri-'ts in t'e #ort-a-es to @itadel 9nsurance and Surety @o.& w'ic' wrote P8( its interest to redee# t'e <a*ati ,ro,erty 5one of t'e ,ro,erty #ort-a-ed6 for P &62 &$7!. P8( re)ected t'e offer. @itadel filed suit a-ainst P8(& w'ere t'e co#,laint was acco#,anied by an ?@(@ #ana-er4s c'ec* and w'ic' was de,osited under a savin-s ban* account wit' ?@(@ by order of t'e trial court. +ssue* W'et'er t'ere was a valid and effective tender of ,ay#ent. ,eld* T'e une1uivocal tender of rede#,tion was #ade& t'rou-' a #ana-er4s c'ec* of ?@(@ 5a well-*nown& bi- and re,utable ban*in- institution6 for t'e a#ount it believed it s'ould ,ay as rede#,tion ,rice. P8( re)ected it on t'e sole and only -round t'at it considered t'e a#ount insufficient. ?ede#,tion was #ade on ti#e& i.e. year fro# t'e date a,,earin- as t'e date of t'e re-istration of t'e certificate of sale. Tender by #ana-er4s c'ec* was not inefficacious as t'e @ourt 'as already sanctioned rede#,tion by c'ec* 5See Davellana vs. <irasol6. [1-] 2ru( vs. 2A GR 10&0"&! 10 #une 1%%4 'irst Division! >a5unan (#) 'a)ts* Andrea <ayor is en-a-ed in t'e business of -rantin- interest-bearin- loans and in rediscountinc'ec*s. ?oberto @ru+& on t'e ot'er 'and& is en-a-ed in sellin- ready to wear clot'es at t'e Pasay @o##ercial @enter. @ru+ fre1uently borrows #oney fro# <ayor. 9n $8$& @ru+ borrowed P 76&!!! fro# #ayor& w'ic' <ayor delivered. 9n turn& @ru+ issued a Pre#iere (an* c'ec* for t'e sa#e a#ount. W'en t'e c'ec* #atured& <ayor ,resented it to t'e ban* but was dis'onored and #ar*ed /account closed.0 W'en notified of t'e dis'onor& @ru+ ,ro#ised to ,ay in cas'. 8o ,ay#ent was #ade& and t'us t'e cri#inal action for violation of (P 22 was instituted. +ssue* W'et'er @ru+ is liable for violatin- (P 22& even u,on t'e clai# t'at t'e c'ec* was issued to serve a #ere evidence of indebtedness& and not for circulation or ne-otiation. ,eld* A c'ec* issued as an evidence of debt& t'ou-' not intended to be ,resented for ,ay#ent 'as t'e sa#e effect of an ordinary c'ec*& 'ence& it falls wit'in t'e a#bit of (P 22. W'en a c'ec* is ,resented for ,ay#ent& t'e drawee ban* will -enerally acce,t t'e sa#e re-ardless of w'et'er it was issued in ,ay#ent of an obli-ation or #erely to -uarantee t'e said obli-ation. W'at t'e law ,unis'es is t'e issuance of a bouncinc'ec*& not t'e ,ur,ose for w'ic' it was issued nor t'e ter# and conditions relatin- to its issuance. T'e #ere act of issuin- a wort'less c'ec* is #alu# ,ro'ibitu#. [1"] 2r$stal vs. 2A GR L-" 0/0! 1& #une 1%0/ Resolution o? t:e 9e)ond Division! Barredo (#) 'a)ts* T'e Su,re#e @ourt& in its decision of 2= 3ebruary $7=& affir#ed t'e decision of t'e @ourt of A,,eals&
3egotiable +nstru6ents La7! -004 ( / )
'oldin- t'at ?ay#undo @rystal4s rede#,tion of t'e ,ro,erty ac1uired by Pela-ia 7can-& Pacita& Teodulo& 3elicisi#o& Pablo& 2ydia& "ioscoro and ?odri-o& all surna#ed de Farcia& was invalid as t'e c'ec* w'ic' @rystal used in ,ayin- t'e rede#,tion ,rice 'as been eit'er dis'onored or 'ad beco#e stale 5:r-o& t'e value of t'e c'ec* was never reali+ed6. @rystal filed a #otion for reconsideration. +ssue* W'et'er t'e conflictin- circu#stances of t'e c'ec* bein- dis'onored and beco#in- stale affect t'e validity of t'e rede#,tion sale. ,eld* 3or a c'ec* to be dis'onored u,on ,resent#ent and to be stale for not bein- ,resented at all in ti#e are inco#,atible develo,#ents t'at 'ave variant le-al conse1uences. 9f indeed t'e 1uestioned c'ec* was dis'onored& t'e rede#,tion was null and void. 9f it 'ad only beco#e state& it beco#es i#,erative t'at t'e circu#stances t'at caused its non-,resent#ent be deter#ined& for if it was not due to t'e fault of t'e drawer& it would be unfair to de,rive 'i# of t'e ri-'ts 'e 'ad ac1uired as rede#,tioner. Cerein& it a,,ears t'at t'ere is a stron- s'owin- t'at t'e c'ec* was not dis'onored& alt'ou-' it beca#e stale& and t'at Pela-ia 7can- 'ad actually been ,aid t'e full value t'ereof. T'e Su,re#e @ourt& t'us& reconsidered its decision and re#anded t'e case to t'e trial court for furt'er ,roceedin-s. [14] Dela @i)toria vs. Burgos GR 1111%0! -0 #une 1%% 'irst Division! Bellosillo (#) 'a)ts* ?aul Sesbreno filed a co#,laint for da#a-es a-ainst Assistant @ity 3iscal (ienvenido <abanto before t'e ?T@ of @ebu @ity. After trial& )ud-#ent was rendered orderin- <abanto to ,ay Sesbreno P &!!!. T'e decision 'avin- beco#e final and e;ecutory& t'e trial court ordered its e;ecution u,on Sesbreno4s #otion. T'e writ of e;ecution was issued des,ite <abanto4s ob)ection. A notice of -arnis'#ent was served u,on 2oreto de la >ictoria as @ity 3iscal of <andaue @ity w'ere <abanto was t'en detailed. "e la >ictoria #oved to 1uas' t'e notice of -arnis'#ent clai#in- t'at 'e was not in ,ossession of any #oney& funds& etc. belon-in- to <abanto until delivered to 'i#& and as suc' are still ,ublic funds w'ic' could not be sub)ect of -arnis'#ent.. +ssue* W'et'er t'e c'ec*s sub)ect of -arnis'#ent belon- to <abanto or w'et'er t'ey still belon- to t'e -overn#ent. ,eld* Under Section 6 of t'e 8e-otiable 9nstru#ents 2aw& every contract on a ne-otiable instru#ent is inco#,lete and revocable until delivery of t'e instru#ent for t'e ,ur,ose of -ivin- effect t'ereto. As ordinarily understood& delivery #eans t'e transfer of t'e ,ossession of t'e instru#ent by t'e #a*er or drawer wit' t'e intent to transfer title to t'e ,ayee and reco-ni+e 'i# as t'e 'older t'ereof. Cerein& t'e salary c'ec* of a -overn#ent officer or e#,loyee does not belon- to 'i# before it is ,'ysically delivered to 'i#. 9nas#uc' as said c'ec*s 'ad not yet been delivered to <abanto& t'ey did not belon- to 'i# and still 'ad t'e c'aracter of ,ublic funds. As a necessary conse1uence of bein- ,ublic fund& t'e c'ec*s #ay not be -arnis'ed to satisfy t'e )ud-#ent. [1 ] 'irestone .ire and Rubber vs. +nes 2:aves 4 2o. GR L-1010/! 1% =)tober 1%// 1n Ban)! Regala (#) 'a)ts* T'e c'ec* was intended as ,art of t'e ,ay#ent of 9nes @'aves4 debt. W'en ,resented to t'e Security (an* and Trust @o. by 3irestone& t'e c'ec* was returned for insufficiency of funds. "es,ite re,eated
de#ands& 9nes @'aves failed to settle its account. 'ence& t'e suit. +ssue* W'et'er -ood fait' is re1uired in t'e issuance of a c'ec*. ,eld* :veryone #ust in t'e ,erfor#ance of 'is duties& observe 'onesty and -ood fait'. W'ere a ,erson issues a ,ostdated c'ec* wit'out funds to cover it and infor#s t'e ,ayee of t'is fact& 'e cannot be 'eld -uilty of estafa because t'ere is no deceit. Cerein& t'ere is not'inin t'e record to s'ow t'at 3irestone *new t'at t'ere were no funds w'en it acce,ted t'e c'ec*& #uc' less t'at 3irestone a-reed to ta*e t'e c'ec* wit' *nowled-e of t'e lac* of funds. As 9nes @'ave+ is -uilty of fraud 5bad fait'6 in t'e ,erfor#ance of its obli-ation& it is liable for da#a-es. 9ts conduct wantin- in -ood fait'& t'e award of attorney4s fees was warranted. [1/] Ge65esa7 vs. 2A GR %--44! % 'ebruar$ 1%%" 9e)ond Division! 2a65os #r. (#) 'a)ts* 8atividad Fe#,esaw issued c'ec*s& ,re,ared by 'er boo**ee,er& a total of 82 c'ec*s in favor of several su,,lies. <ost of t'e c'ec*s for a#ounts in e;cess of actual obli-ations as s'own in t'eir corres,ondin- invoices. 9t was only after t'e la,se of #ore t'an 2 years did s'e discovered t'e fraudulent #ani,ulations of 'er boo**ee,er. 9t was also learned t'at t'e indorse#ents of t'e ,ayee were for-ed& and t'e c'ec*s were brou-'t to t'e c'ief accountant of P'ili,,ine (an* of @o##erce 5t'e "rawee (an*& (uendia (ranc'6 w'o de,osited t'e# in t'e accounts of Alfredo ?o#ero and (enito 2a#. Fe#,esaw #ade de#and u,on t'e ban* to credit t'e a#ount c'ar-ed due t'e c'ec*s. T'e ban* refused. Cence& t'e ,resent action. +ssue* W'o s'all bear t'e loss resultin- fro# t'e for-ed indorse#ents. ,eld* As a rule& a drawee ban* w'o 'as ,aid a c'ec* on w'ic' an indorse#ent 'as been for-ed cannot c'ar-e t'e drawer4s account for t'e a#ount of said c'ec*. An e;ce,tion to t'e rule is w'ere t'e drawer is -uilty of suc' ne-li-ence w'ic' causes t'e ban* to 'onor suc' c'ec*s. Fe#,esaw did not e;ercise ,rudence in ta*inste,s t'at a careful and ,rudent business#an would ta*e in circu#stances to discover discre,ancies in 'er account. Cer ne-li-ence was t'e ,ro;i#ate cause of 'er loss& and under Section 23 of t'e 8e-otiable 9nstru#ents 2aw& is ,recluded fro# usin- for-ery as a defense. 7n t'e ot'er 'and& t'e ban*in- rule banninacce,tance of c'ec*s for de,osit or cas' ,ay#ent wit' #ore t'an one indorse#ent unless cleared by so#e ban* officials does not invalidate t'e instru#ent. neit'er does it invalidate t'e ne-otiation or transfer of said c'ec*s. T'e only *ind of indorse#ent w'ic' sto,s t'e furt'er ne-otiation of an instru#ent is a restrictive indorse#ent w'ic' ,ro'ibits t'e furt'er ne-otiation t'ereof& ,ursuant to Section 36 of t'e 8e-otiable 9nstru#ents 2aw. 9n li-'t of any case not ,rovided for in t'e Act t'at is to be -overned by t'e ,rovisions of e;istin- le-islation& ,ursuant to Section $6 of t'e 8e-otiable 9nstru#ents 2aw& t'e ban* #ay be 'eld liable for da#a-es in accordance wit' Article 7! of t'e @ivil @ode. T'e drawee ban*& in its failure to discover t'e fraud co##itted by its e#,loyee and in contravention ban*in- rules in allowin- a c'ief accountant to de,osit t'e c'ec*s bearin- second indorse#ents& was ad)ud-ed liable to s'are t'e loss wit' Fe#,esaw on a =!H=! ratio. [10] ,ongkong 4 9:ang:ai Bank vs. <eo5leAs Bank and .rust GR L--&--/! "0 9e5te6ber 1%00 'irst Division! 'ernando (#) 'a)ts* T'e P'ili,,ine 2on- "istance Tele,'one @o#,any 5P2"T6 drew a c'ec* on t'e Con-*on- I
3egotiable +nstru6ents La7! -004 ( & )
S'an-'ai (an*in- @or,oration 5CS(@6 in t'e latter4s favor for P %&6!8.!=& and sent it t'rou-' #ail. T'e c'ec* fell into t'e 'ands of 3lorentino @'an-co& w'o was able to erase t'e na#e of t'e ,ayee and substituted 'is own& and de,osited t'e altered c'ec* in 'is current account wit' t'e Peo,le4s (an* and Trust @o. 5P(T@6. T'e c'ec* was cleared by CS(@& and P(T@ credited @'an-co t'e a#ount. T'e alteration was *nown w'en t'e cancelled c'ec* was returned to P2"T. CS(@ re1uested P(T@ to refund t'e a#ount& but t'e latter refused. +ssue* W'et'er CS(@ can clai# rei#burse#ent fro# P(T@. ,eld* A ,erson w'o ,resents fro ,ay#ent c'ec*s -uarantees t'e -enuineness of t'e c'ec*& and t'e drawee ban* need to concern itself wit' not'in- but t'e -enuineness of t'e si-nature& and t'e state of t'e account wit' it of t'e drawee. 9f at all& w'atever re#edy& w'atever re#edy CS(@ 'as would lie not a-ainst P(T@ but as a-ainst t'e ,arty res,onsible for c'an-in- t'e na#e of t'e ,ayee 5i.e. @'an-co6. 9ts failure to call t'e attention of P(T@ as to suc' alteration until after t'e la,se of 27 days would& in t'e li-'t of @entral (an* @ircular $ 52%-'our clearin- 'ouse rule6& ne-ate w'atever ri-'t it #i-'t 'ave 'ad a-ainst P(T@. [1&] +bas)o vs. 2A GR 1104&&! 9e5te6ber 1%%/ .:ird Division! Davide #r. (#) 'a)ts* T'e 9basco s,ouses re1uested credit acco##odation fro t'e su,,ly of in-redients in t'e #anufacture of ani#al feeds fro# t'e Trivinio s,ouses. 9basco issued 3 c'ec*s for 3 deliveries of dara*. T'e c'ec*s bounced and t'e 9basco s,ouses were notified of t'e dis'onor. 9basco instead offered a ,ro,erty in "aet. T'e ,ro,erty& bein- across t'e sea& t'e Trivinio s,ouses did not ins,ect t'e ,ro,erty. 3or t'e failure of t'e 9basco s,ouses to settle t'eir account& t'e Trivinio s,ouses filed cri#inal cases a-ainst t'e for#er for violation of (P22. +ssue* W'et'er t'e c'ec*s were for acco##odation or -uarantee to ac1uire t'e benefits of t'e inter,retation of <inistry @ircular % of t'e "e,art#ent of Dustice in relation to (P 22. ,eld* <inistry @ircular %& issued "ece#ber $8 by t'e "e,art#ent of Dustice& ,rovides t'at w'ere a c'ec* is issued as ,art of an arran-e#ent to -uarantee or secure t'e ,ay#ent of t'e obli-ation& ,re-e;istin- or not& t'e drawer is not cri#inally liable for eit'er estafa or violation of (P 22. 9ncidents 'owever indicate t'at t'e c'ec*s were issued as ,ay#ent and for value& and not for acco##odation 5i.e. ,ertainin- to an arran-e#ent #ade a favor to anot'er& not u,on a consideration received6. as t'e c'ec*s failed to bear any state#ent /for acco##odation0 and /for -uarantee0 to s'ow 9basco4s intent. 5 9t #ust be noted& 'owever& t'at (P22 does not distin-uis' and a,,lies even in cases w'ere dis'onored c'ec*s were issued as a -uarantee or for de,osit only. T'e erroneous inter,retation of <inistry @ircular % was rectified by t'e re,ealin- <inistry @ircular 2& issued on 8 Au-ust $8%6. [1%] #i6ene( vs. Bu)o$ GR L-10--1! -& 'ebruar$ 1% & 1n Ban)! Beng(on (#) 'a)ts* 9n t'e ,roceedin-s in t'e intestate of 2ut'er Joun- and Pacita Joun- w'o died in $=% and $=2& res,ectively& Pacifica Di#ene+ ,resented for ,ay#ent % ,ro#issory notes si-ned by Pacita for different a#ounts totallin- P2 &!!!. Ac*nowled-in- recei,t by Pacita durin- t'e Da,anese occu,ation& in t'e currency
3egotiable +nstru6ents La7! -004 ( % )
t'en ,revailin-& t'e Ad#inistrator #anifested willin-ness to ,ay ,rovided ad)ust#ent of t'e su#s be #ade in line wit' t'e (allantyne sc'edule. T'e clai#ant ob)ected to t'e ad)ust#ent insistin- on full ,ay#ent in accordance wit' t'e notes. T'e court 'eld t'at t'e notes s'ould be ,aid in t'e currency ,revailin- after t'e war& and t'us entitlin- Di#e#e+ to recover P2 &!!! ,lus P2&!!! as attorney4s fees. Cence& t'e a,,eal. +ssue* W'et'er t'e a#ounts s'ould be ,aid& ,eso for ,eso. or w'et'er a reduction s'ould be #ade in accordance wit' t'e (allantyne sc'edule. ,eld* 9f t'e loan was e;,ressly a-reed to be ,ayable only after t'e war& or after liberation& or beca#e ,ayable after t'ose dates& no reduction could be effected& and ,eso-for-,eso ,ay#ent s'all be ordered in P'ili,,ine currency. T'e (allantyne @onversion Table does not a,,ly w'ere t'e #onetary obli-ation& under t'e contract& was not ,ayable durin- t'e Da,anese occu,ation. Cerein& t'e debtor undertoo* to ,ay /si; #ont's after t'e war&0 ,eso for ,eso ,ay#ent is indicated. [-0] >alalo vs. Lu( GR L--00&-! "1 #ul$ 1%00 1n Ban)! Baldivar (#) 'a)ts* 7n 7 8ove#ber $=$& 7ctavio Ealalo entered into an a-ree#ent wit' Alfredo 2u+ w'ere 'e was to render en-ineerin- desi-n services for a fee. 7n "ece#ber $6 & Ealalo sent 2u+ a state#ent of account w'ere t'e balance due for services rendered was P=$&=!=. 7n 8 <ay $62& 2u+ sent Ealalo a resu#e of fees due to t'e latter& and a c'ec* for P !&86 .!8. Ealalo refused to acce,t t'e c'ec* as full ,ay#ent of t'e balance of t'e fees due 'i#. 7n ! Au-ust $62& Ealalo filed a co#,laint containin- % causes of action& i.e. A28&!!! 5re,resentin- 2!B of t'e a#ount ,aid to 2u+ in t'e 9nternational ?esearc' 9nstitute ,ro)ect6 and t'e balance of P3!&88 .2= as fees. P 7&!!!! as conse1uential and #oral da#a-es. P==&!!! as #oral da#a-es& attorney4s fees and liti-ation e;,enses. and P2=&!!! as actual da#a-es& attorney4s fees and liti-ation e;,enses6. T'e trial court ruled in favor of Ealalo. 2u+ filed an a,,eal directly wit' t'e Su,re#e @ourt raisin- only 1uestions of law. +ssue* W'et'er t'e rate of e;c'an-e of dollar to ,eso are t'ose at t'e ti#e of t'e ,ay#ent of t'e )ud-#ent or at t'e ti#e w'en t'e researc' institute ,ro)ect beca#e due and de#andable. ,eld* 2u+4 obli-ation to ,ay Ealalo t'e su# of USA28&!!! accrued on 2= Au-ust $6 & or after t'e enact#ent of ?A =2$ 5 6 Dune $=!6. T'us& t'e ,rovision of t'e statute w'ic' re1uires ,ay#ent at t'e ,revailin- rate of e;c'an-e w'en t'e obli-ation was incurred cannot be a,,lied. ?A =2$ does not ,rovide for t'e rate of e;c'an-e for t'e ,ay#ent of obli-ation incurred after t'e enact#ent of t'e Act& and t'us t'e rate of e;c'an-e s'ould be t'at ,revailin- at t'e ti#e of ,ay#ent. T'e view finds su,,ort in t'e rulin- of t'e @ourt in :n-el vs. >elasco I @o. T'e trial court did not err in 'oldin- t'e rate of e;c'an-e is t'at at t'e ti#e of ,ay#ent. [-1] Lao vs. 2A GR 11%10&! -0 #une 1%%0 .:ird Division! <anganiban (#) 'a)ts* 2i# 2i# 2ao was a )unior officer of Pre#ier 9nvest#ent Couse in its (inondo branc'. S'e was aut'ori+ed to si-n c'ec*s for and in be'alf of t'e cor,oration. 9n t'e course of business& s'e #et 3r. Arteli)o Pali)o& ,rovincial treasurer of t'e Society of t'e "ivine Word. 3r. Pali)o was aut'ori+ed to invest donations of t'e society and 'ad been investin- t'e society4s #oney wit' Pre#iere. 3r. Pali)o was issued c'ec*s in
,ay#ent of interest for t'e society4s invest#ents. T'e c'ec*s were dis'onored for /insufficiency of funds.0 3r. Pali)o was only able to ac1uire P=&!!! for 'is efforts in de#andin- t'e ,ay#ent of t'e c'ec*s. Pre#iere& subse1uently& was ,laced under receivers'i,. 3r. Pali)o filed a suit a-ainst 2i# 2ao and 'is co-si-natory& Teodulo As,rec& 'ead of o,erations for violation of (P 22. +ssue* W'et'er an e#,loyee w'o& as ,art of 'er re-ular duties& si-ns blan* cor,orate c'ec*& be 'eld for violation of (P22. ,eld* T'e c'ec*s co-si-ned by 2i# 2ao were si-ned in advance and in blan*& delivered to t'e 'ead of o,erations& w'o subse1uently filled in t'e na#e of 'e ,ayee& t'e a#ounts and corres,ondin- dates of #aturity. t'is ,rocedure followed in *ee,in- wit' 'er duties as a )unior officer. T'ou-' (P 22 ,rovides t'e ,resu#,tion t'at a drawer is *nowled-eable of t'e fact of insufficiency of funds& suc' ,resu#,tion #ay be debun*ed by contrary evidence. Cerein& 2i# 2ao does not 'ave t'e ,ower& duty or res,onsibility to #onitor and assess t'e balances a-ainst t'e issuance& nor to #a*e sure t'at t'e c'ec*s were funded. Suc' res,onsibility devolved u,on t'e cor,oration4s Treasury "e,art#ent in @ubao& Kue+on @ity. 3urt'er#ore& no notice of dis'onor was actually sent or received by 2i# 2ao to su,,ort t'e ,ri#a facie evidence of *nowled-e of insufficient funds. S'e was t'us ac1uitted. [--] La(aro vs. 2A GR 10 4/1! 11 3ove6ber 1%%" 9e)ond Division! <adilla (#) 'a)ts* <arlyn 2a+aro received fro# ?udy @'ua t'e a#ount of P$!&!!! as advanced ,ay#ent for deliveries of su-ar& etc. 2a+aro was only able to deliver ,artial delivery. To refund t'e undelivered -oods& s'e issued a c'ec* for P72&!!!. W'en de,osited& t'e c'ec* was dis'onored and sta#,ed /account closed.0 To #a*e u, for t'e dis'onor& 2a+aro indorsed a c'ec* issued by one 2olita Soriano& ,ayable to /@as'.0 9t was li*ewise dis'onored and #ar*ed /account closed.0 @'ua sent a de#and letter as*infor t'e ,ay#ent of t'e a#ount covered by t'e first c'ec* wit'in days fro# recei,t of letter. 3or failure of t'e accused to ,ay t'e a#ount& @'ua filed cases for estafa and violation of (P 22. +ssue* W'et'er da#a-e or ,re)udice is an ele#ent of (P 22 violation. ,eld* T'e clear intention of t'e fra#ers of (P 22 is to #a*e t'e #ere act of issuin- a c'ec* t'at is wort'less #alu# ,ro'ibitu#. T'e law does not re1uire t'at t'ere be da#a-e or ,re)udice to t'e individual co#,lainant by reason of t'e issuance of t'e c'ec*. T'e fine ,rovided for in (P 22 was intended as an additional ,enalty for t'e act of issuin- a wort'less c'ec*. (P 22 ,rovides t'at a fine of not less t'an but not #ore t'an double t'e a#ount of t'e dis'onored c'ec* #ay be i#,osed by t'e court. [-"] Li6 vs. 2A GR 100&%&! 1% De)e6ber 1%% 'irst Division! Bellosillo (#) 'a)ts* S,ouses <anuel and ?osita 2i# are t'e ,resident and treasurer& res,ectively& of ?9F9 (uilt 9ndustries 9nc. ?9F9 'ad been transactin- business wit' 2inton @o##ercial @o#,any for years& t'e latter su,,lyin- t'e for#er wit' steel ,lates& steel bars& flat bars and ,urlin stic*s w'ic' t'e co#,any uses in t'e fabrication& installation and buildin- of steel structures. T'e 2i#s ordered steel ,lates fro# 2inton @o##ercial& deliverin- c'ec*s to t'e latter4s collector as ,ay#ent. T'e c'ec*s were dis'onored for /insufficiency of
funds0 wit' t'e additional notation /,ay#ent sto,,ed0 5T'e 2i#s clai#ed t'at t'e su,,lies delivered by 2inton @o##ercial were not in accordance wit' t'e s,ecifications of ,urc'ase orders6. "es,ite de#ands& t'e 2i#s refused to #a*e -ood t'e c'ec*s or to ,ay value of t'e deliveries. +ssue* W'et'er t'e recei,t of t'e c'ec*s by t'e collector of 2inton is t'e issuance and delivery to t'e ,ayee wit'in t'e conte#,lation of t'e law 5as ,relude to )urisdiction issue6. ,eld* /9ssue0 #eans t'e first delivery of t'e instru#ent co#,lete in for# to a ,erson w'o ta*es it as a 'older. /Colder/ refers to t'e ,ayee or indorsee of a note or w'o is in ,ossession of it or t'e bearer t'ereof. T'e issuance as well as t'e delivery of t'e c'ec* #ust be to a ,erson w'o ta*es it as a 'older. "elivery of t'e c'ec*s si-nifies transfer of ,ossession 5actual or constructive6 fro# one ,erson to anot'er wit' intent to transfer title t'ereto. t'e delivery bein- t'e final act essential to its consu##ation as an obli-ation. T'e collector was not t'e ,erson w'o could ta*e t'e c'ec*s as a 'older. 8eit'er could t'e collector be dee#ed an a-ent of 2inton @o##ercial wit' res,ect to t'e c'ec*s because 'e was a #ere e#,loyee. [-4] Li6 vs. <eo5le GR 1"00"&! 1& 9e5te6ber -000 1n Ban)! <ardo (#) 'a)ts* ?osa 2i# bou-'t various *inds of )ewelry wort' P3!!&!!! fro# t'e store of <aria Antonia Se-uan& by issuin- a c'ec* ,ayable to /cas'0 drawn a-ainst <etro(an*. T'e ne;t day& 2i# a-ain ,urc'ased )ewelry valued at P2% &668 by issuin- anot'er c'ec* ,ayable to cas' li*ewise drawn a-ainst <etro(an*. Se-uan de,osited t'e c'ec*s wit' 'er ban*. T'e c'ec*s were returned wit' a notice of dis'onor as 2i#4s accounts in said ban* were already closed. U,on de#and& 2i# ,ro#ised to ,ay Se-uan t'e a#ounts of t'e two dis'onored c'ec*s. S'e never did. ?osa 2i# was c'ar-e for two counts of violation of (P 22& w'ere s'e was found -uilty& and sentenced to year i#,rison#ent wit' fine 5P2!!&!!!6. +ssue* W'et'er 2i# 'as *nowled-e of t'e insufficiency of funds w'en issuin- t'e c'ec*s. ,eld* T'e ele#ents of (P22 are 5 6 t'e #a*in-& drawin- and issuance of any c'ec* to a,,ly for account or for value& 526 t'e *nowled-e of t'e #a*er& drawer or issuer t'at at t'e ti#e of issue 'e does not 'ave sufficient funds in or credit wit' t'e drawee ban* for t'e ,ay#ent of suc' c'ec* in full u,on its ,resent#ent& and 536 t'e subse1uent dis'onor of t'e c'ec* by t'e drawee ban* for insufficiency of funds or credit or dis'onor for t'e sa#e reason 'ad not t'e drawer& wit'out any valid cause& ordered t'e ban* to sto, ,ay#ent. 2i# never denied issuin- t'e c'ec*. Section 2 of (P 22 creates a ,resu#,tion )uris tantu# t'at t'e second ele#ent ,ri#a facie e;ists w'en t'e first and t'ird ele#ents are ,resent. 9f not rebutted& it suffices to sustain a conviction. 9t #ust be noted t'at si#ilar to t'e >aca case& t'e @ourt deleted t'e ,rison sentences i#,osed u,on 2i#& 'oldin- t'at t'e two fines i#,osed for eac' of t'e violation 5P2!!&!!! eac' 6 are a,,ro,riate and sufficient. Subsidiary i#,rison#ent not e;ceedin- 6 #ont's is ,rovided in case of insolvency or non-,ay#ent of t'e fines as decreed. [- ] Li6 vs. Rodrigo GR 0/%04! 1& 3ove6ber 1%&& .:ird Division! 'ernan (#) 'a)ts* Eo Cu issued = ,ost dated c'ec*s a#ountin- to P2!!&!!! alle-edly in ,ay#ent of a certain obli-ation
3egotiable +nstru6ents La7! -004 ( 1- )
to (enito 2i#. Said c'ec*s were 'anded to 2i#4s brot'er& >icente& at Eo Cu4s office in 8ueva Street& <anila for delivery to (enito 2i# in (a-uio @ity. W'en ,resented at 2i#4s de,ository ban* in (a-uio @ity& t'e c'ec*s were dis'onored for 'avin- been drawn a-ainst a closed account. 2i# filed a suit a-ainst Eo Cu for violation of (P 22 in (a-uio @ity. +ssue* W'et'er t'e delivery of t'e c'ec*s to (enito 2i#4s brot'er is t'e delivery conte#,lated by law 5,relude to )uridictional issue6 ,eld* T'e venue of t'e offense lies at t'e ,lace w'ere t'e c'ec* was e;ecuted and delivered to t'e ,ayee and t'at t'e ,lace w'ere a c'ec* was written& si-ned or dated does not fi; t'e ,lace w'ere it was e;ecuted& as w'at is of decisive i#,ortance is t'e delivery t'ereof w'ic' is t'e final act essential to its consu##ation as an obli-ation. T'e /delivery0 conte#,lated by law /#ust be to a ,erson w'o ta*es t'e c'ec* as a 'older&0 i.e. /t'e ,ayee or indorsee of a bill or note& w'o is in ,ossession of it& or t'e bearer t'ereof.0 >icente 2i#& (enito4s brot'er& cannot be said to 'ave ta*en t'e c'ec*s in t'e conce,t of a 'older for 'e is neit'er t'e ,ayee or indorsee t'ereof. 8eit'er could 'e be dee#ed to be (enito4s a-ent wit' res,ect t'ereto& for 'e was ,ur,osely sent to Eo Cu to -et certain stoc* certificates and not t'e c'ec*s in 1uestion 5T'is is si#ilar to t'e Peo,le vs. Jabut case6. [-/] Lla6ado vs. 2A GR %%0"-! -/ 8ar): 1%%0 9e)ond Division! .orres #r. (#) 'a)ts* ?icardo 2la#ado and Dacinto Pascual were Treasurer and President of Pan Asia 3inance @or,oration. 2eon Faw delivered P 8!&!!! to 2la#ado wit' assurance t'at t'e a#ount would be re,aid on % 8ove#ber $83 wit' 2B interest and a s'are of t'e ,rofits of t'e cor,oration. 7n said date& Faw de,osited t'e c'ec* but it was dis'onored. 9nfor#in- 2la#ado of t'e dis'onor& 2la#ado offered in writin- to ,ay Faw a ,ortion of t'e a#ount e1uivalent to !B t'ereof on % or = 8ove#ber and t'e balance rolled over for a ,eriod of $! days. 2la#ado failed to do so. Faw filed a co#,laint a-ainst 2la#ado and Pascual for violation of (P 22. Pascual re#ains at lar-e. 2la#ado contends 'e si-ned t'e c'ec* in blan*. +ssue* W'et'er 2la#ado is ,ersonally liable for t'e bounced c'ec*. ,eld* 2la#ado4s clai# t'at 'e si-ned t'e c'ec* in blan* is 'ardly a defense. (y si-nin- t'e c'ec*& 'e #ade 'i#self ,rone to bein- c'ar-ed wit' violation of (P 22. 9t beca#e incu#bent u,on 'i# to ,rove 'is defenses. As treasurer of t'e cor,oration w'o si-ned t'e c'ec* in 'is ca,acity as cor,orate officer& lac* of involve#ent in t'e ne-otiation for t'e transaction is not a defense. 2la#ado is ,ersonally liable even if t'e c'ec* was in t'e na#e of t'e cor,oration. T'ird ,ara-ra,' of Section & (P 22& states t'at /w'ere t'e c'ec* is drawn by a cor,oration& co#,any or entity& t'e ,erson5s6 w'o actually si-ned t'e c'ec* in be'alf of suc' drawer s'all be liable under t'is Act.0 9t #ust be noted t'at t'e c'ec* was issued for a valuable consideration 5P 8!&!!!6. Cad t'e #oney been intended to be returned w'en t'e invest#ent was successful& t'e c'ec* need not be issued. A recei,t and t'eir written a-ree#ent would 'ave sufficed. [-0] Lo(ano vs. 8artine( GR L-/"41%! 1& De)e6ber 1%&/ 1n Ban)! Ca5 (#)
3egotiable +nstru6ents La7! -004 ( 1" )
'a)ts* 2o+ano vs. <artine+ 5F? 2-63% $6& 2obaton vs. @ru+ 5F? 2-6683$-%26& "atuin vs. Pano 5F? 7 6=%6& >iola-o vs. Pano 5F? 7%=2%-2=6& Abad vs. Feroc'i 5F? 7= 22-%$6& A-uili+ vs. Presidin- Dud-e of (ranc' =% 5F? 7=8 2- 36& Co)as vs. Penaranda 5F? 7=76=-676 and Peo,le vs. 8itafan 5F? 7=78$6 are cases involvin- ,rosecution of offenses under (P 22 w'ic' were consolidated 'erein as t'e ,arties 5defendants6 t'ereto 1uestion t'e constitutionality of t'e statute& (P 22. +ssue* W'et'er (P 22 is constitutional. ,eld* T'e lan-ua-e of (P22 is broad enou-' to cover all *inds of c'ec*s& w'et'er ,resent dated or ,ost dated& w'et'er issued in ,ay#ent of ,re-e;istin- obli-ations or -iven in #utual or si#ultaneous e;c'an-e for so#et'in- of value. (P 22 is ai#ed to ,ut a sto, or to curb t'e ,ractice of issuin- wort'less c'ec*s& w'ic' is ,roscribed by t'e State because of t'e in)ury it causes to ,ublic interests. T'e -rava#en of t'e offense ,unis'ed by (P 22 is t'e act of #a*in- or issuin- a wort'less c'ec* or a c'ec* w'ic' is dis'onored u,on its ,resentation for ,ay#ent. it is not t'e non-,ay#ent of an obli-ation w'ic' t'e law ,unis'es. T'e law ,ublis'es t'e act not as an offense a-ainst ,ro,erty but an offense a-ainst ,ublic order. T'e enact#ent of (P 22 is a valid e;ercise of ,olice ,ower and is not re,u-nant to t'e constitutional in'ibition a-ainst i#,rison#ent for debt. T'e statute is not unconstitutional. [-&] 8agno vs. 2A GR %/1"-! -/ #une 1%%9e)ond Division! <aras (#) 'a)ts* 7riel <a-no lac*ed funds to ,urc'ase necessary e1ui,#ent to #a*e 'is car re,air s'o, business o,erational. Ce a,,roac'ed @ora+on Ten-& w'o in turn referred 2S 3inance and <ana-e#ent @or,oration& w'o could acco##odate 'i# and ,rovide 'i# credit facilities. 2S 3inance re1uired a warranty de,osit 53!B of t'e total value of t'e ,ieces of e1ui,#ent to be ,urc'ased6& w'ic' Ten- advanced& un*nown to <a-no. W'en t'e e1ui,#ent were delivered to <a-no& 'e issued a ,ostdated c'ec* to 2S 3inance& w'ic' delivered it to Ten-. W'en t'e c'ec* #atured& <a-no re1uested t'at t'e c'ec* not to be de,osited as 'e no lon-er ban*s wit' Pacific (an*. To re,lace t'e c'ec*& <a-no issued 6 ,ostdated c'ec*s& 2 of w'ic' were de,osited and cleared& t'e ot'er % were 'eld #o#entarily by Ten-& on t'e re1uest of <a-no for t'ey are not covered wit' sufficient funds. As <a-no cannot ,ay t'e #ont'ly rentals fro t'e e1ui,#ent& t'e sa#e were ,ulled out. 7nly t'en did <a-no learned t'at Ten- was t'e one w'o advanced t'e de,osit. <a-no ,ro#ised to ,ay 'er but ,ay#ent never ca#e. W'en t'e c'ec*s were de,osited& t'ey were dis'onored. <a-no was found -uilty of violation of (P22 w'en t'e cases were ad)udicated. +ssue* W'et'er t'ere was a violation of (P 22. ,eld* T'e cru; of t'e #atter rest u,on t'e reason for t'e drawin- of t'e ,ostdated c'ec*s by <a-no& i.e. w'et'er t'ey were drawn or issued /to a,,ly on account or for value&0 as re1uired under Section of (P 22. W'en viewed a-ainst t'e definitions of /warranty0 and /de,osit&0 for w'ic' t'e ,ostdated c'ec*s were issued or drawn& t'e alle-ed cri#e could not 'ave been co##itted by <a-no. 3urt'er#ore& t'e ele#ent of /*nowinat t'e ti#e of issue t'at 'e does not 'ave sufficient funds in or credit wit' t'e drawee ban*....H0 is inversely a,,lied in t'e case. 3ro# t'e be-innin-& <a-no never 'id t'e fact t'at 'e 'ad no funds. <a-no& t'us& was ac1uitted of t'e cri#e c'ar-ed. [-%] 8anila Lig:ter .rans5ortation vs. 2A
GR L- 0"0"! 1 'ebruar$ 1%%0 'irst Division! Grino-ADuino (#) 'a)ts* %$ c'ec*s were issued by <anila 2i-'ter Trans,ortation4s custo#ers in ,ay#ent of bro*era-e G li-'tera-e services and were all delivered to its collector& Au-usto Pere+. U,on for-ed indorse#ents of t'e co#,any4s Feneral <ana-er& 2uis Fas*ell& t'e c'ec*s found t'eir way to t'e accounts of t'ird ,ersons and were later wit'drawn. A co#,laint to recover t'e value of t'e c'ec*s were filed a-ainst @'ina (an*. (an* denied liability. +ssue* W'et'er t'e ban* is ne-li-ent as to bear t'e loss resultin- fro# t'e c'ec*s wit' for-ed indorse#ents. ,eld* Since <anila 2i-'ter Trans,ortation was not a client of t'e ban*& t'e latter 'ad no way of ascertainint'e aut'enticity of its indorse#ents on t'e c'ec*s w'ic' were de,osited in t'e accounts of t'ird ,ersons 5Eo 2it and @ao Pe*6 in said ban*. T'e ban* was not ne-li-ent because& in accordance wit' ban*in- ,ractice& it caused t'e c'ec*s to ,ass t'rou-' t'e clearin- 'ouse before it allowed t'eir ,roceeds to be wit'drawn by t'e de,ositors. ["0] 8oran vs. 2A GR 10 &"/! 0 8ar): 1%%4 9e)ond Division! Regalado (#) 'a)ts* Feor-e and 2ibrada <oran #aintained 3 )oint accounts wit' @ityTrust (an*in- @or,oration. T'e <orans issued c'ec*s in favor of Petro,'il @or,oration& w'ic' were dis'onored for insufficiency of funds. <oran de,osited t'e a#ount t'at would cover t'e c'ec*s t'e day after t'e c'ec*4s clearin-. Petro,'il did not deliver t'e <orans4 fuel orders for t'eir Wac*-Wac* Petron Fasoline station& ,ro#,tin- t'e latter to te#,orarily sto, business o,erations. T'e <orans sued t'e ban* for da#a-es. +ssue* W'et'er a ban* is liable for its refusal to ,ay a c'ec* on account of insufficient funds& notwit'standint'e fact t'e fact t'at a de,osit was #ade later in t'e day. ,eld* A c'ec* is a bill of e;c'an-e drawn on a ban* ,ayable on de#and. W'ere t'e ban* ,ossesses funds of a de,ositor& it is bound to 'onor 'is c'ec*s to t'e e;tent of t'e a#ount of t'e de,osits. 3ailure to do so& w'en de,osit is sufficient& entitles t'e drawer to substantial da#a-es wit'out ,roof of actual da#a-es. Cerein& 'owever& t'e balance of t'e account #aintained in t'e ban* was not enou-' to cover eit'er of t'e two c'ec*s w'en t'ey were dis'onored. A c'ec*& as distin-uis'ed fro# an ordinary bill of e;c'an-e& is su,,osed to be drawn a-ainst a ,revious de,osit of funds. As suc'& a drawer #ust re#e#ber 'is res,onsibilities every ti#e 'e issues a c'ec*. Ce #ust ,ersonally *ee, trac* of 'is available balance in t'e ban* and not rely on t'e ban* to notify 'i# of t'e necessity to fund t'e c'ec*s 'e ,reviously issued. A ban* is under no obli-ation to #a*e ,art ,ay#ent on a c'ec*& u, to only t'e a#ount of t'e drawer4s funds& w'ere t'e c'ec* is drawn for an a#ount lar-er t'an w'at t'e drawer 'as on de,osit. A c'ec* is intended not only to transfer a ri-'t to t'e a#ount na#ed in it& but to serve t'e furt'er ,ur,ose of affordin- evidence for t'e ban* of t'e ,ay#ent of suc' a#ount w'en t'e c'ec* is ta*en u,. @learly& a ban* is not liable for its refusal to ,ay a c'ec* on account of insufficient funds& notwit'standin- t'e fact t'at a de,osit #ay be #ade later in t'e day. (efore a ban* de,ositor #ay #aintain a suit to recover a s,ecific a#ount fro# 'is ban*& 'e #ust first s'ow t'at 'e 'ad on de,osit sufficient funds to #eet 'is de#and. ["1] 8E99 vs. 2A
GR L-/-%4"! 14 #ul$ 1%&/ 9e)ond Division! Gutierre( #r. (#) 'a)ts* (y s,ecial arran-e#ent wit' P8(& <WSS used ,ersonali+ed c'ec*s in drawin- fro# its account. T'e c'ec*s were ,rinted by its ,rinter& 3. <esina :nter,rises. 23 c'ec*s were ,aid and cleared by P8(& and debited a-ainst <WSS4 account fro# <arc' to <ay $6$. T'e c'ec*s were de,osited by ,ayees ?aul "i+on& Arturo Sison& and Antonio <endo+a in t'eir account wit' P@9(an*. Said ,ersons were later found to be fictitious. <WSS re1uested P8( to restore t'e a#ount debited due to t'e 23 c'ec*s& alle-edly for-ed& to its account. T'e ban* refused. Cence& t'e ,resent action. +ssue* W'o s'all bear t'e loss resultin- fro# t'e alle-ed for-ed c'ec*s. ,eld* T'ere was no e;,ress and cate-orical findin- t'at t'e 23 c'ec*s were for-ed or si-ned by ,ersons ot'er t'an t'e aut'ori+ed <WSS si-natories. 3or-ery is not ,resu#ed but s'ould be establis'ed by clear& ,ositive and convincin- evidence. <WSS is barred fro# settin- u, defense of for-ery under Section 23 of t'e 8e-otiable 9nstru#ents 2aw as <WSS co##itted -ross ne-li-ence in t'e ,rintin- of its ,ersonali+ed c'ec*s& failed to reconcile its ban* state#ents wit' its own records& and failed to ,rovide a,,ro,riate security #easures over its own record. P8(& t'e drawee ban*& 'ad ta*en necessary #easures in t'e detection of for-ed c'ec*s and t'e ,revention of t'eir fraudulent encas'#ent t'rou-' constant re#inders to all its current account boo**ee,ers infor#in- t'e# of t'e activities of for-ery syndicates. <WSS4 -ross ne-li-ence was t'e ,ro;i#ate cause of t'e loss 5P3 #illion6& and s'ould bear t'e loss. ["-] 3avarro vs. 2A GR 11-"&%! 1 August 1%%4 'irst Division! 2ru( (#) 'a)ts* <ercedes ". 8avarro was convicted of violatin- (atas Pa#bansa (ilan- 22 5(P 226 in t'e ?e-ional Trial @ourt of Pan-asinan. S'e failed to file 'er brief on a,,eal. S'e clai#ed to 'ave #ade ,ay#ent to t'e ori-inal co#,lainant4s saleslady w'en s'e filed a #otion for new trial on t'e -round of /newly discovered evidence.0 Suc' #otion was denied. +ssue* W'et'er 8avarro is indeed -uilty of violatin- t'e bouncin- c'ec* law. ,eld* Pay#ent of t'e value of t'e c'ec* eit'er by t'e drawer or by t'e drawee ban* wit'in = ban*in- days fro# notice of dis'onor -iven to t'e drawer is a co#,lete defense. T'e ,ri#a facie ,resu#,tion t'at t'e drawer 'ad *nowled-e of t'e insufficiency of funds or credit at t'e ti#e of t'e issuance and on its ,resented for ,ay#ent would be rebutted by suc' ,ay#ent. T'is defense lies re-ardless of t'e stren-t' of t'e evidence offered by t'e ,rosecution to ,rove t'e ele#ents of t'e offense 5i.e. violation of (P 226. Cerein& 8avarro failed to overco#e t'e ,resu#,tion by substantiatin- 'er alle-ation of ,ay#ent. T'ere is no ,roof t'at t'e ,ay#ent& if it was really #ade at all& was done wit'in = days fro# t'e notice of dis'onor. [""] <eo5le vs. Gros5e GR L-040 "- 4! -0 #anuar$ 1%&& 9e)ond Division! 8elen)io-,errera (#) 'a)ts* <anuel Parulan issued a c'ec* to t'e San <i-uel @or,oration& w'ic' was received by t'e latter4s finance officer in Fui-uinto& (ulacan& and w'ic' was forwarded and de,osited in S<@4s (P9 account in San
3egotiable +nstru6ents La7! -004 ( 1/ )
3ernando& Pa#,an-a. Anot'er c'ec* was issued by Parulan as direct ,ay#ent for t'e s,ot sale of beer& w'ic' was si#ilarly received& forwarded and de,osited as above. (ot' were dis'onored for /insufficiency of funds.0 Parulan was c'ar-ed wit' violation of (atas Pa#bansa (ilan- 22 and for estafa under Article 3 =& ,ara-ra,' 2 5d6 of t'e ?evised Penal @ode. Tried )ointly& t'e court dis#issed t'e cases for lac* of )urisdiction. +ssue* W'et'er t'e c'ec*s were issued in (ulacan or Pa#,an-a. ,eld* W'ile t'e sub)ect c'ec* was issued in (ulacan& it was not co#,letely drawn t'ereat& but in San 3ernando& Pa#,an-a& w'ere it was uttered and delivered. T'e ,lace w'ere t'e bills were written& si-ned or dated does not fi; or deter#ine t'e ,lace w'ere t'ey were e;ecuted. W'at is of decisive i#,ortance is t'e delivery t'ereof& as it is t'e final act essential to its consu##ation as an obli-ation. T'e issuance and t'e delivery of t'e c'ec* #ust be to a ,erson w'o ta*es it as a 'older& i.e. t'e ,ayee or indorsee of a bill or note& w'o is in ,ossession of it or t'e bearer t'ereof. (ot' estafa by ,ostdatin- or issuin- a bad c'ec* a transitory or continuin- offense. T'us& as )urisdiction or venue is deter#ined by t'e alle-ations in t'e infor#ation& i.e. San 3ernando& Pa#,an-a& t'e venue was ,ro,erly laid. @ase is re#anded to t'e trial court for ,ro,er dis,osition. ["4] <eo5le vs. 8aniego GR L-"0%10! -0 'ebruar$ 1%&0 'irst Division! 3arvasa (#) 'a)ts* Dulia <anie-o was an indorser of several c'ec*s drawn by 'er sister& <ila-ros Pa#intuan& w'ic' were dis'onored after t'ey 'ad been e;c'an-e wit' cas' belon-in- to t'e Fovern#ent& t'en in t'e official custody of 2t. ?i+alino Ubay. Ubay& Pa#intuan and <anie-o were indicted for t'e cri#e of #alversation. Ubay and <anie-o were arrai-ned& w'ile Pa#intuan fled to t'e United States. Ubay was found -uilty w'ile <anie-o was ac1uitted. (ot'& 'owever& were ordered to ,ay in solidu# t'e a#ount of P=7&%3%.=! to t'e -overn#ent. <anie-o a,,ealed. +ssue* W'et'er <anie-o is liable even if s'e is a #ere indorser. ,eld* Under t'e law& t'e 'older or last indorsee of a ne-otiable instru#ent 'as t'e ri-'t to enforce ,ay#ent of t'e instru#ent for t'e full a#ount t'ereof a-ainst all ,arties liable t'ereon. A#on- t'e ,arties liable t'ereon is an indorser of t'e instru#ent. Suc' an indorser w'o indorses wit'out 1ualification& inter alia& en-a-ed t'at on due ,resent#ent& t'e instru#ent s'all be acce,ted or ,aid& or bot'& accordin- to its tenor& and t'at if it be dis'onored& and t'e necessary ,roceedin-s on dis'onor be duly ta*en& 'e will ,ay t'e a#ount t'ereof to t'e 'older& or to any subse1uent indorser w'o #ay be co#,elled to ,ay it. <anie-o #ay also be dee#ed an /acco##odation ,arty0 in t'e li-'t of t'e facts 5i.e. wit'out receivin- value for t'e sa#e6. As suc'& s'e is liable on t'e instru#ent to a 'older for value& notwit'standin- suc' 'older at t'e ti#e of ta*in- t'e instru#ent *new 'er to be only an acco##odation ,arty& alt'ou-' s'e 'as t'e ri-'t& after ,ayin- t'e 'older& to obtain rei#burse#ent fro# t'e ,arty acco##odated. [" ] <eo5le vs. Re$es GR 1011-0-"1! 1& 3ove6ber 1%%" 'irst Division! 2ru( (#) 'a)ts* 2orie Farcia delivered rice to @resencia ?eyes& as acco##odation to 'er friend <anny @abrera w'o 'ad no #ore stoc* to sell. ?eyes issued 6 c'ec*s for 6 orders delivered in different dates. 7nly 3 of t'e 6 c'ec*s were #ade -ood& t'e ot'er 3 were returned by t'e ban* due to /insufficient funds.0 Farcia notified
?eyes of t'e dis'onor and t'e latter ,ro#ised to ,ay 'er t'eir total value. "es,ite de#ands& ?eyes failed to #a*e -ood t'e c'ec*s or re,lace t'e# wit' cas'. 3 cri#inal cases for violation of (P 22 and 2 cri#inal cases for estafa were filed a-ainst ?eyes. +ssue* W'et'er a sin-le act of issuin- a c'ec* #ay entail cri#inal liability of bot' violation of (P 22 and Article 3 = of t'e ?evised Penal @ode 5:stafa6. ,eld* A sin-le cri#inal act #ay -ive rise to a #ulti,licity of offenses and w'ere t'ere is a variance or differences between t'e ele#ents of an offense in one law and anot'er law. T'e -rava#en of t'e offense ,unis'ed by (P 22 is t'e act of #a*in- and issuin- a wort'less c'ec* or a c'ec* t'at is dis'onored u,on its ,resent#ent for ,ay#ent. and act dee#ed ,ernicious and ini#ical to ,ublic welfare. (P 22 a,,lies even w'ere t'e dis'onored c'ec*s were issued #erely in t'e for# of a de,osit or a -uaranty and not as actual ,ay#ent& as t'e law does not #a*e any distinction. 7n t'e ot'er 'and& t'e c'ec*s were not ,ay#ent for a ,ree;istin- obli-ation nut as consideration for eac' s'i,#ent of rice. T'e c'ec*s were issued as an induce#ent for t'e surrender by t'e ,arty deceived of 'er ,ro,erty. ?eyes #ade -ood 3 of t'e c'ec*s& -ivin- assurance to Farcia t'at t'e re#ainin- c'ec*s were fully funded. Cer failure to #a*e -ood t'e c'ec*s raised t'e ,ri#a facie inference of deceit. ["/] <eo5le vs. .uanda A2 ""/0! "0 #anuar$ 1%%0 Resolution 1n Ban)! <er 2uria6 'a)ts* 9n $83& Atty. 3e Tuanda received fro# one Cer#inia A. <ar1ue+ several ,ieces of )ewelry wit' a total value of P36&!!! for sale on co##ission bases. 9n $8%& instead of returnin- t'e unsold ,ieces of )ewelry wort' P26&2=!& s'e issued 3 c'ec*s. T'ese c'ec*s were dis'onored by t'e drawee ban*& Traders ?oyal (an*& for insufficiency of funds. 8otwit'standin- recei,t of t'e notice of dis'onor& Tuanda #ade no effort to settle 'er obli-ation. @ri#inal cases were filed& w'erein s'e was ac1uitted of estafa but was found -uilty of violation of (P 22. T'e a,,ellate court affir#ed t'e decision of t'e trial court and i#,osed furt'er sus,ension a-ainst Tuanda in t'e ,ractice of law& on t'e -round t'at t'e offense involves #oral tur,itude. +ssue* W'et'er violation of (P 22 involves #oral tur,itude to allow t'e sus,ension of a #e#ber of t'e bar fro# t'e ,ractice of law. ,eld* @onviction of a cri#e involvin- #oral tur,itude relates to and affects t'e -ood #oral c'aracter of a ,erson convicted of suc' offense. Cerein& (P 22 violation is a serious cri#inal offense w'ic' deleteriously affects ,ublic interest and ,ublic order. T'e effects of t'e issuance of a wort'less c'ec* transcends t'e ,rivate interest of ,arties directly involved in t'e transaction and touc'es t'e interest of t'e co##unity at lar-e. Puttin- valueless co##ercial ,a,ers in circulation& #ulti,lied a t'ousand fold& can very well ,ollute t'e c'annels of trade and co##erce& in)ure t'e ban*in- syste# and eventually 'urt t'e welfare of society and t'e ,ublic interest. T'e @ourt affir#ed t'e sus,ension of Tuanda fro# t'e ,ractice of law. ["0] <:ili55ine Bank o? 2o66er)e vs. Aruego GR L-- &"/-"0! "1 #anuar$ 1%&1 'irst Division! 'ernande( (#) 'a)ts* Dose Arue-o ,ublis'es a ,eriodical called /World @urrent :vents.0 To facilitate ,ay#ent of t'e ,rintin-& Arue-o obtained a credit acco##odation fro# t'e P'ili,,ine (an* of @o##erce. 3or every ,rintin3egotiable +nstru6ents La7! -004 ( 1& )
of t'e ,eriodical& t'e ,rinter 5:ncal Press and P'oto-:n-ravin-6 collected t'e cost of ,rintin- by drawin- a draft a-ainst t'e ban*& said draft bein- sent later to Arue-o for acce,tance. As an added security for t'e ,ay#ent of t'e a#ounts advanced to t'e ,rinter& t'e ban* also re1uired Arue-o to e;ecute a trust recei,t in favor of t'e ban* w'erein Arue-o undertoo* to 'old in trust for t'e ban* t'e ,eriodicals and to sell t'e sa#e wit' t'e ,ro#ise to turn over to t'e ban* t'e ,roceeds of t'e sale to answer for t'e ,ay#ent of all obli-ations arisin- fro# t'e draft. T'e ban* instituted an action a-ainst Arue-o to recover t'e cost of ,rintin- of t'e latter4s ,eriodical for t'e ,eriod of 28 Au-ust $=! to % <arc' $= . +ssue [1]* W'et'er t'e drafts were bills of e;c'an-e or #ere ,ieces of evidence of indebtedness. ,eld [1]* Under t'e 8e-otiable 9nstru#ents 2aw& a bill of e;c'an-e is an unconditional order in writinaddressed by one ,erson to anot'er& si-ned by t'e ,erson -ivin- it& re1uirin- t'e ,erson to w'o# it is addressed to ,ay on de#and or at a fi;ed or deter#inable future ti#e a su# certain in #oney to order or to bearer. As lon- as a co##ercial ,a,er confor#s wit' t'e definition of a bill of e;c'an-e& t'at ,a,er is considered a bill of e;c'an-e. T'e nature of acce,tance is i#,ortant only in t'e deter#ination of t'e *ind of liabilities of t'e ,arties involved& but not in t'e deter#ination of w'et'er a co##ercial ,a,er is a bill of e;c'an-e or not. +ssue [-]* W'et'er Arue-o is an a-ent of P'ili,,ine :ducation 3oundation @o#,any w'en 'e si-ned t'e su,,osed bills of e;c'an-e. ,eld [-]* 8ow'ere in t'e drafts acce,ted by Arue-o t'at 'e disclosed t'at 'e was si-nin- as re,resentative of t'e P'ili,,ine :ducation 3oundation @o#,any. 3or failure to disclose 'is ,rinci,al& Arue-o is ,ersonally liable for t'e drafts 'e acce,ted& ,ursuant to Section 2! of t'e 8e-otiable 9nstru#ents 2aw. +ssue ["]* W'et'er Arue-o is ,ri#arily liable. ,eld ["]* An acco##odation ,arty is one w'o 'as si-ned t'e instru#ent as #a*er& drawer& acce,tor& indorser& wit'out receivin- value t'erefor and for t'e ,ur,ose of lendin- 'is na#e to so#e ot'er ,erson. Cerein& Arue-o si-ned as a drawee G acce,tor. Under t'e 8e-otiable 9nstru#ents 2aw& a drawee is ,ri#arily liable. 9f Arue-o intended to be secondarily liable only& 'e s'ould not 'ave si-ned as an acce,tor G drawee. 9n doin- so& 'e beca#e ,ri#arily and ,ersonally liable for t'e drafts. ["&] <:ili55ine 2o66er)ial +ndustrial Bank vs. 2A GR 1-141"! -% #anuar$ -001 9e)ond Division! Fuisu6bing (#) 'a)ts* 3ord issued @itiban* c'ec*s in favor of t'e @o##issioner of 9nternal ?evenue as ,ay#ents of its ta;es& t'rou-' t'e de,ository ban* 9nsular (an* of Asia and A#erica 5later P@9(an*6. Proceeds of t'e c'ec*s were never received by t'e @o##issioner& but were encas'ed and diverted to t'e accounts of #e#bers of a syndicate& to w'ic' 3ord4s Feneral 2ed-er Accountant Fodofredo ?ivera belon-s. U,on de#and of t'e @o##issioner anew& 3ord was forced to #a*e second ,ay#ent of its ta;es. T'us& 3ord instituted actions to recover t'e a#ounts fro# t'e collectin- 5de,ository6 and drawee ban*s. +ssue* W'et'er 3ord 'as t'e ri-'t to recover fro# t'e collectin- ban* 5P@9 (an*6 andGor t'e drawee ban* 5@itiban*6 t'e value of t'e c'ec*s. ,eld* T'e #ere fact t'at for-ery was co##itted by a drawer-,ayor4s confidential e#,loyee or a-ent& w'o by virtue of 'is ,osition 'ad unusual facilities to ,er,etrate t'e fraud and i#,osin- t'e for-ed ,a,er u,on t'e
3egotiable +nstru6ents La7! -004 ( 1% )
ban*& does not entitle t'e ban* to s'ift t'e loss to t'e drawer-,ayor& in t'e absence of so#e circu#stance raisin- esto,,el a-ainst t'e drawer. T'e rule a,,lies to c'ec*s fraudulently ne-otiated or diverted by t'e confidential e#,loyees w'o 'old t'e# in t'eir ,ossession. 9n F?s 2 % 3 and 2 %7$& P@9(an* failed to verify t'e aut'ority of <r. ?ivera to ne-otiate t'e c'ec*s. 3urt'er#ore& P@9(an*4s clearin- sta#, w'ic' -uarantees ,rior or lac* of indorse#ents render P@9(an* liable as it allowed @itiban* wit'out any ot'er o,tion but to ,ay t'e c'ec*s. P@9(an*& bein- a de,ository G collectin- ban* of t'e (9?& 'ad t'e res,onsibility to #a*e sure t'at t'e crossed c'ec*s were de,osited in /Payee4s account only0 as found in t'e instru#ent. 9n F? 286!%& on t'e ot'er 'and& t'e switc'in- o,eration involvin- t'e c'ec*s& w'ile in transit for clearin-& were t'e clandestine or 'idden actuations ,erfor#ed by t'e #e#bers of t'e syndicate in t'eir own ,ersonal& covert and ,rivate ca,acity. wit'out t'e *nowled-e nor official or conscious ,artici,ation of P@9(an* in t'e ,rocess of e#be++le#ent. @entral (an* @ircular =8! 5 $776& 'owever& ,rovide d t'at any t'eft affectin- ite#s in transit for clearin- are for t'e account of t'e sendin- ban* 5'erein P@9(an*6. Still& @itiban* was li*ewise ne-li-ent in t'e ,erfor#ance of its duties as it failed to establis' its ,ay#ent of 3ord4s c'ec*s were #ade in due course and le-ally in order. T'e fact t'at drawee ban* did not discover t'e irre-ularity seasonably constitutes ne-li-ence in carryin- out t'e ban*4s duty to its de,ositors. ["%] <:ili55ine 1du)ation 2o. vs. 9oriano GR L---40 ! "0 #une 1%01 1n Ban)! Di(on (#) 'a)ts* :nri1ue <ontinola sou-'t to ,urc'ase fro# t'e <anila Post 7ffice ! #oney orders 5P2!! eac'6& offerin- to ,ay for t'e# wit' a ,rivate c'ec*. <ontinola was able to leave t'e buildin- wit' 'is c'ec* and t'e ! #oney orders wit'out t'e *nowled-e of t'e teller. U,on discovery& #essa-e was sent to all ,ost#asters and ban*s involvin- t'e un,aid #oney orders. 7ne of t'e #oney orders was received by t'e P'ili,,ine :ducation @o. as ,art of its sales recei,t. 9t was de,osited by t'e co#,any wit' t'e (an* of A#erica& w'ic' cleared it wit' t'e (ureau of Post. T'e Post#aster& t'rou-' t'e @'ief of t'e <oney 7rder "ivision of t'e <anila Post 7ffice infor#ed t'e ban* of t'e irre-ular issuance of t'e #oney order. T'e ban* debited t'e account of t'e co#,any. T'e co#,any #oved for reconsideration. +ssue* W'et'er ,ostal #oney orders are ne-otiable instru#ents. ,eld* P'ili,,ine ,ostal statutes are ,atterned fro# t'ose of t'e United States& and t'e wei-'t of aut'ority in said country is t'at Postal #oney orders are not ne-otiable instru#ents inas#uc' as t'e establis'#ent of a ,ostal #oney order is an e;ercise of -overn#ental ,ower for t'e ,ublic4s benefit. 3urt'er#ore& so#e of t'e restrictions i#,osed u,on #oney order by ,ostal laws and re-ulations are inconsistent wit' t'e c'aracter of ne-otiable instru#ents. 3or instance& ,ostal #oney orders #ay be wit''eld under a variety of circu#stances& and w'ic' are restricted to not #ore t'an one indorse#ent. [40] <ineda vs. dela Ra6a GR L-"1&"1! -& A5ril 1%&" 'irst Division! Gutierre( (#) 'a)ts* Dose >. dela ?a#a is a lawyer w'ose services were retained by Desus Pineda for t'e ,ur,ose of #a*inre,resentations wit' t'e c'air#an and -eneral #ana-er of t'e 8ational ?ice and @orn Ad#inistration to sto,
3egotiable +nstru6ents La7! -004 ( -0 )
and delay t'e institution of cri#inal c'ar-es a-ainst Pineda w'o alle-edly #isa,,ro,riated &!!! cavans of ,alay de,osited at 'is rice#ill in @once,cion& Tarlac. Subse1uently& "ela ?a#a filed suit to collect a P$&3!! loan& evidenced by t'e #atured ,ro#issory note& and P=&!!! as attorney4s fees. T'e @ourt of 3irst 9nstance ruled in favor of Pineda& w'ic' was reversed by t'e @ourt of A,,eals. +ssue* W'et'er t'e ,ro#issory note is void for lac* of consideration. ,eld* T'e ,resu#,tion t'at a ne-otiable instru#ent is issued for a valuable consideration 5Section 2%& 8e-otiable 9nstru#ents 2aw6 is only ,ri#a facie. 9t can be rebutted by ,roof to t'e contrary. T'e ter# of t'e note sustains t'e version of Pineda t'at 'e si-ned t'e ,ro#issory note because 'e believed dela ?a#a4s story t'at t'ese a#ounts 'ad already been advanced by dela ?a#a and -iven as -ifts for 8A?9@ officials. T'e ,ro#issory note was t'us e;ecuted for an ille-al consideration. and t'us is void li*e any ot'er contract as ,er Article %!$ of t'e @ivil @ode. T'e consideration for t'e ,ro#issory note -- to influence ,ublic officers in t'e ,erfor#ance of t'eir duties -- is contrary to law and ,ublic ,olicy. T'e ,ro#issory note is void ab initio and no cause of action for t'e collection cases can arise fro# it. [41] <3B vs. 2A GR L--/001! -% =)tober 1%/& 1n Ban)! 2on)e5)ion (#) 'a)ts* 7ne Au-usto 2i# de,osited in 'is current account wit' P@9 (an* 5Padre 3aura (ranc'6 a FS9S c'ec* drawn a-ainst P8(. T'e si-natures of t'e Feneral <ana-er and Auditor of FS9S were for-ed. P@9(an* sta#,ed at t'e bac* of t'e c'ec* /All ,rior indorse#ents or lac* of indorse#ents -uaranteed& P@9 (an*.0 P@9(an* sent t'e c'ec* to P8( t'rou-' t'e @entral (an*. P8( did not return t'e c'ec* to P@9(an*. and t'us P@9(an* credited 2i#4s account. As FS9S 'as infor#ed P8( t'at t'e c'ec* was lost two #ont's before said transaction& its account was recredited by P8( u,on its de#and 5due to t'e for-ed c'ec*6. P8( re1uested for refund wit' P@9 (an*. T'e latter refused. +ssue* W'o s'all bear t'e loss resultin- fro# t'e for-ed c'ec*. ,eld* T'e collectin- ban* is not liable as t'e for-ery e;istin- are t'ose of t'e drawers4 and not of t'e indorsers4. T'e indorse#ent of t'e inter#ediate ban* does not -uarantee t'e si-nature of t'e drawer. P8(4s failure to return t'e c'ec* to t'e collectin- ban* i#,lied t'at t'e c'ec* was -ood. 9n fact& P8( even 'onored t'e c'ec* even if FS9S 'as re,orted two #ont's earlier t'at t'e c'ec* was stolen and t'e ban* t'us s'ould sto, ,ay#ent. P8(4s ne-li-ence was t'e #ain and ,ro;i#ate cause for t'e corres,ondin- loss. P8( t'us s'ould bear suc' loss. U,on ,ay#ent by P8(& as drawee& t'e c'ec* ceased to be a ne-otiable instru#ent& and beca#e a #ere vouc'er or ,roof of ,ay#ent. [4-] <3B vs. 3ational 2it$ Bank GR 4" %/! "1 =)tober 1%"/ 1n Ban)! Re)to (#) 'a)ts* An un*nown ,erson or ,ersons ne-otiated wit' <otor Service @o. c'ec*s ,ur,ortedly issued by t'e Pan-asinan Trans,ortation @o. by D2 Elar& <ana-er and Treasurer& a-ainst P8( and in favor of 9nternational Auto ?e,air S'o, for P %%.=! and P2 =.7=. Said c'ec*s were indorsed by said un*nown ,ersons in t'e #anner indicated at t'e bac* t'ereof. T'e c'ec*s were indorsed fro de,osit at t'e 8ational @ity (an* of 8ew Jor* 58@(8J6 and <otor Service @o. was credited wit' t'e a#ounts t'ereof. Said c'ec*s were cleared at
t'e clearin- 'ouse and P8( credited 8@(8J for t'e a#ounts t'ereof& believin- t'at t'e si-natures of t'e drawer are -enuine& etc. P8( found t'at t'e si-nature were for-ed w'en so infor#ed by t'e Pan-asinan Trans,ortation @o. 9t de#anded rei#burse#ent fro# 8@(8J and <otor Service @o. (ot' refused. Pan-asinan Trans,ortation ob)ected to its deduction of its de,osit. +ssue [1]* W'et'er t'e ,ay#ent of t'e c'ec*s #ade by t'e drawee ban* constitutes an acce,tance. ,eld [1]* A c'ec* is a bill of e;c'an-e ,ayable on de#and and only t'e rules -overnin- bills of e;c'an-e ,ayable on de#and are a,,licable to it 5Section 8=6. T'e fact t'at acce,tance is a ste, unnecessary insofar as bills of e;c'an-e ,ayable on de#and are concerned& it follows t'at t'e ,rovisions relative to /acce,tance0 are wit'out a,,lication to c'ec*s. T'ere is not'inin law& 'owever& a-ainst t'e ,resentation of c'ec*s for acce,tance before t'ey are ,aid. @ertification is e1uivalent to acce,tance 5Section 876. W'en certified& t'e drawer will ,erfor# 'is ,ro#ise by any ot'er #eans t'an t'e ,ay#ent of #oney 5Section 326. W'en certified& t'e drawer and all indorsers are disc'ar-ed fro# liability t'ereon 5Section 886& and t'en t'e c'ec* o,erates as an assi-n#ent of a ,art of t'e funds to t'e credit of t'e drawer wit' t'e ban* 5Section 8$6. Acce,tance 'as a tec'nical #eanin- in t'e 8e-otiable 9nstru#ents 2aw. Wit' few e;ce,tions& /,ay#ent0 neit'er includes or i#,lies /,ay#ent.0 Pay#ent of t'e c'ec*& cas'in- it on ,resent#ent is not acce,tance. +ssue [-]* W'et'er t'e drawee ban* is liable for t'e a#ount in a for-ed c'ec* for its failure to detect t'e for-ery. ,eld [-]* 9n deter#inin- t'e relative ri-'ts of a drawee w'o& under a #ista*e of fact& 'as ,aid& and a 'older w'o 'as received suc' ,ay#ent& u,on a c'ec* to w'ic' t'e na#e of t'e drawer is for-ed& it is only fair to consider t'e 1uestion of dili-ence or ne-li-ence contributed to t'e success of t'e fraud or to #islead t'e drawee. To entitle t'e 'older of a for-ed c'ec* to retain t'e #oney obtained t'ereon& t'ere #ust be a s'owint'at t'e duty to ascertain t'e -enuineness of t'e si-nature rested entirely u,on t'e drawee& and t'at t'e constructive ne-li-ence of suc' drawee in failin- to detect t'e for-ery was not affected by any disre-ard of duty on t'e ,art of t'e 'older& or by failure of any ,recaution w'ic'& fro# 'is i#,lied assertion in ,resentint'e c'ec* as a sufficient vouc'er& t'e drawee 'ad t'e ri-'t to believe 'e 'ad ta*en. Under t'e circu#stance of t'e case& if t'e P8( is allowed to recover& t'ere will be no c'an-e of ,osition as to t'e in)ury or ,re)udice of t'e <otor Service @o. [4"] <3B vs. Fui65o GR L- "1%4! 14 8ar): 1%&& 'irst Division! Gan)a$)o (#) 'a)ts* 3rancisco Fo+on was a de,ositor of t'e P'ili,,ine 8ational (an* 5P8( @aloocan @ity branc'6. :rnesto Santos& Fo+on4s friend& too* a c'ec* fro# t'e latter4s c'ec*boo* w'ic' was left in t'e car& filled it u, for t'e a#ount of P=&!!!& for-ed Fo+on4s si-nature& and encas'ed it. Fo+on learned about t'e transaction u,on recei,t of t'e ban*4s state#ent of account& and re1uested t'e ban* to recredit t'e a#ount to 'is account. T'e ban* refused. Cence& t'e ,resent action. +ssue* W'o s'all bear t'e loss resultin- fro# t'e for-ed c'ec*. ,eld* T'e ,ri#e duty of a ban* is to ascertain t'e -enuineness of t'e si-nature of t'e drawer or t'e de,ositor on t'e c'ec* bein- encas'ed. 9t is e;,ected to use reasonable business ,rudence in acce,tin- and cas'in- a c'ec* bein- encas'ed or ,resented to it. Pay#ent in ne-lect of duty ,laces u,on 'i# t'e result of suc' ne-li-ence. Still& Fo+on4s act in leavin- 'is c'ec*boo* in t'e car& w'ere 'is trusted friend re#ained in& cannot be considered ne-li-ence sufficient to e;cuse t'e ban* fro# its own ne-li-ence. T'e ban* bears t'e loss.
3egotiable +nstru6ents La7! -004 ( -- )
[44] <on)e vs. 2A GR L-4%444! "1 8a$ 1%0% 'irst Division! 8elen)io-,errera (#) 'a)ts* 7n 3 Dune $6$& Desus Afable& to-et'er wit' 3eli+a <endo+a and <a. Aurora "ino e;ecuted a ,ro#issory note in favor of 8elia Ponce in t'e su# of P8 %&868.%2 ,ayable wit'out interest on or before 3 Duly $6$& sub)ect to an interest of 2B ,er annu# if not ,aid at #aturity& and an additional su# e1uivalent to !B of total a#ount due as attorney4s fees in case it is necessary to brin- suit& and t'e e;ecution of a first #ort-a-e on t'eir ,ro,erties or t'e @ar#en Planas <e#orial 9nc. in t'e event of failure to ,ay t'e indebtedness in accordance wit' t'e ter#s. U,on failure of t'e debtors to ,ay& a co#,laint was filed a-ainst t'e# for t'e recovery of t'e ,rinci,al su#& ,lus interest and da#a-es. T'e trial court rendered )ud-#ent in favor of Ponce. T'e @ourt of A,,eals affir#ed t'e decision of t'e trial court. 7n t'e second #otion for reconsideration& 'owever& t'e a,,ellate court reversed t'e )ud-#ent and o,ined t'at t'e intent of t'e ,arties was t'at t'e note was ,ayable in US dollars w'ic' is ille-al& wit' neit'er ,arty entitled to recover under t'e /in ,ari delicto0 rule. +ssue* W'et'er an a-ree#ent to ,ay in dollars defeat a creditor4s clai# for ,ay#ent. ,eld* 9f t'ere is an a-ree#ent to ,ay an obli-ation in a currency ot'er t'an P'ili,,ine le-al tender& t'e sa#e is ille-al G null and void as contrary to ,ublic ,olicy& ,ursuant to ?A =2$& and t'e #ost t'at can be de#anded is to ,ay t'e said obli-ation in P'ili,,ine currency. 9t cannot defeat a creditor4s clai# for ,ay#ent& for suc' will allow a ,erson to enric' 'i#self ine1uitably at anot'er4s e;,ense. W'at ?A =2$ ,ro'ibits is t'e ,ay#ent of an obli-ation in dollars. A creditor cannot obli-e t'e debtor to ,ay in dollars& even if t'e loan was -iven in said currency. 9n suc' case& t'e inde#nity is e;,ressed in P'ili,,ine currency on t'e basis of t'e current rate of e;c'an-e at t'e ti#e of ,ay#ent. [4 ] <ruden)io vs. 2A GR L-"4 "%! 14 #ul$ 1%&/ 9e)ond Division! Gutierre( #r. (#) 'a)ts* :ulalio and :lisa Prudencio are t'e re-istered owners of a ,arcel of land located in Sa#,aloc& <anila. T'e ,ro,erty was #ort-a-ed to P8( to -uarantee a loan of P &!!! e;tended to one "o#in-o Prudencio. So#eti#e in $==& @once,cion I Ta#ayo @onstruction @o.& t'rou-' Dose Toribio 5Prudencio4s relative6& ,ersuaded t'e Prudencios to #ort-a-e t'eir ,ro,erty to secure t'e loan of P !&!!! w'ic' t'e co#,any was ne-otiatin- wit' t'e P8(. T'e Prudencios si-ned t'e /A#end#ent of ?eal :state <ort-a-e.0 T'e ,ro#issory note coverin- t'e P !&!!! loan was si-ned by Toribio. T'e Prudencios also si-ned t'e ,ortion of t'e note indicatin- t'at t'ey are re1uestin- t'e P8( to issue t'e c'ec* coverin- t'e loan to t'e @o#,any. Dose Toribio e;ecuted t'e /"eed of Assi-n#ent0 assi-nin- all ,ay#ents #ade by t'e (ureau to t'e co#,any on account of t'e Puerto Princesa buildin- ,ro)ect in favor of P8(. T'e (ureau& 'owever& conditioned t'at t'e ,ay#ent s'ould be for labor and #aterials. T'e Prudencios wrote P8( t'at since P8( aut'ori+ed ,ay#ents to t'e @o#,any w'ere t'ere were c'an-es in t'e conditions of t'e contract wit'out t'eir *nowled-e& t'ey see* to cancel t'e #ort-a-e contract. 3ailin- to cancel t'e #ort-a-e& t'ey filed suit to cancel t'e sa#e. +ssue* W'et'er t'e Prudencios were solidary co-debtors or sureties as a result of bein- acco##odation #a*ers.
3egotiable +nstru6ents La7! -004 ( -" )
,eld* 9n lendin- 'is na#e to t'e acco##odated ,arty& t'e acco##odation ,arty is in effect a surety. Cowever& unli*e in a contract of suretys'i,& t'e liability of t'e acco##odation ,arty re#ains not only ,ri#ary but also unconditional to a 'older for value suc' t'at even if t'e acco##odated ,arty receives an e;tension of t'e ,eriod of ,ay#ent wit'out t'e consent of t'e acco##odation ,arty& t'e latter is still liable for t'e w'ole obli-ation and suc' e;tension does not release 'i# because as far as t'e 'older for value is concerned& 'e is a solidary co-debtor. @onse1uently& t'e Prudencios cannot clai# to 'ave been released fro# t'eir obli-ation si#,ly because t'e ti#e of ,ay#ent of suc' obli-ation was te#,orarily deferred by P8( wit'out t'eir *nowled-e and consent. To be freed of obli-ation& it is t'us necessary to deter#ine if P8(& t'e ,ayee of t'e ,ro#issory note& is a 'older in due course. Cerein& P8( was an i##ediate ,arty or in ,rivy to t'e note& besides t'at it dealt directly wit' t'e Prudencios *nowin- fully well t'at t'ey are acco##odation #a*ers. T'e -eneral rule t'at a ,ayee #ay be considered a 'older in due course does not a,,ly to P8(. [4/] Fue vs. <eo5le GR 0 -10-1&! -1 9e5te6ber 1%&0 Resolution o? t:e 9e)ond Division! <aras (#) 'a)ts* T'e ?e-ional Trial @ourt convicted >ictor Kue of t'e cri#e of violation of (P 22. Said )ud-#ent was affir#ed by t'e @ourt of A,,eals and t'e Su,re#e @ourt. 9n its #otion for consideration& Kue alle-ed t'at t'e ?T@ Kue+on @ity does not 'ave )urisdiction as t'e ele#ent of t'e ,lace of t'e issuance of t'e c'ec* was absent. +ssue [1]* W'et'er t'e ,lace of issuance or t'e ,lace or t'e ,lace of de,osit deter#ines )urisdiction G venue of (P 22 cases. ,eld [1]* T'e findin-s of t'e trial court reveal t'at t'e c'ec*s were issued in Kue+on @ity 5as ad#itted by Kue 'i#self in 'is answer6. 9t is of no #o#ent w'et'er t'e c'ec*s were de,osited by t'e co#,lainant in a ban* outside of Kue+on @ity. T'e deter#inative factor is t'e ,lace of issuance. +ssue [-]* W'et'er (P 22 a,,lies to dis'onored c'ec*s issued as -uarantee. ,eld [-]* (P 22 a,,lies even in cases w'ere dis'onored c'ec*s are issued #erely in t'e for# of a de,osit or -uarantee. T'e enact#ent does not #a*e any distinction as to w'et'er t'e c'ec*s wit'in its conte#,lation are issued in ,ay#ent of an obli-ation or #erely to -uarantee t'e said obli-ation. T'e 'istory of t'e enact#ent evinces t'e definite le-islative intent to #a*e t'e ,ro'ibition all-e#bracin- wit'out #a*in- any e;ce,tion fro# t'e o,eration t'ereof in favor of a -uarantee. [40] Re5ubli) Bank vs. 2A GR 4-0- ! -- A5ril 1%%1 'irst Division! Grino ADuino (#) 'a)ts* San <i-uel @or,oration issued a dividend c'ec* for P2%! in favor of D. ?oberto "el-ado& a stoc*'older. "el-ado altered t'e a#ount of t'e c'ec* to P$&2%!. T'e c'ec* was indorsed and de,osited by "el-ado wit' ?e,ublic (an*. ?e,ublic (an* endorsed t'e c'ec* to 3irst 8ational @ity (an* 538@(6& t'e drawee ban*& by sta#,in- on t'e bac* of t'e c'ec* /all ,rior and G or lac* of indorse#ents -uaranteed. ?elyin- on t'e endorse#ent& 38@( ,aid t'e a#ount to ?e,ublic (an*. 2ater on& San <i-uel infor#ed 38@( of t'e #aterial alteration of t'e a#ount. 38@( recredited t'e a#ount to San <i-uel4s account& and de#anded refund fro# ?e,ublic (an*. ?e,ublic (an* refused. Cence& t'e ,resent action.
+ssue* W'o s'all bear t'e loss resultin- fro# t'e altered c'ec*. ,eld* W'en an indorse#ent is for-ed& t'e collectin- ban* or last indorser& as a -eneral rule& bears t'e loss. (ut t'e un1ualified indorse#ent of t'e collectin- ban* on t'e c'ec* s'ould be read to-et'er wit' t'e 2%-'our re-ulation on clearin- 'ouse o,eration. T'us& w'en t'e drawee ban* fails to return a for-ed or altered c'ec* to t'e collectin- ban* wit'in t'e 2%-'our clearin- ,eriod 5as ,rovided by Section %c of @entral (an* @ircular $& as a#ended6& t'e collectin- ban* is absolved fro# liability. T'e drawee ban*& 38@(& s'ould bear t'e loss for t'e ,ay#ent of t'e altered c'ec* for its failure to detect and warn ?e,ublic (an* of t'e fraudulent c'aracter of t'e c'ec* wit'in t'e 2%-'our clearin- 'ouse rule. [4&] Re5ubli) Bank vs. 1brada GR L-400%/! "1 #ul$ 1%0 'irst Division! 8artin (#) 'a)ts* <auricia :brada encas'ed a bac* ,ay c'ec* for P 2%6.!8 at ?e,ublic (an* 5:scolta (ranc'6. T'e (ureau of Treasury& w'ic' issued t'e c'ec* advised t'e ban* t'at t'e alle-ed indorse#ent of t'e c'ec* by one /<artin 2oren+o0 was a for-ery as t'e latter 'as been dead since % Duly $=2. and re1uested t'at it be refunded 'e su# deducted fro# its account. T'e ban* refunded t'e a#ount to t'e (ureau and de#anded u,on :brada t'e su# in 1uestion& w'o refused. Cence& t'e ,resent action. +ssue* W'et'er t'e ban* can recover fro# t'e last indorser. ,eld* Accordin- to Section 23 of t'e 8e-otiable 9nstru#ents 2aw& w'ere t'e si-nature on a ne-otiable instru#ent is for-ed& t'e ne-otiation of t'e c'ec* is wit'out force or effect. Cowever& followin- t'e rulin- in (ea# vs. 3arrel 5US case6& w'ere a c'ec* 'as several indorse#ents on it& only t'e ne-otiation based on t'e for-ed or unaut'ori+ed si-nature w'ic' is ino,erative. T'e last indorser& :brada& was duty-bound to ascertain w'et'er t'e c'ec* was -enuine before ,resentin- it to t'e ban* for ,ay#ent. Cer failure to do so #a*es 'er liable for t'e loss and t'e (an* #ay recover fro# 'er t'e #oney s'e received for t'e c'ec*. Cad s'e ,erfor#ed 'er duty& t'e for-ery would 'ave been detected and fraud defeated. :ven if s'e turned over t'e a#ount to "o#in-ue+ i##ediately after receivin- t'e cas' ,roceeds of t'e c'ec*& s'e is liable as an acco##odation ,arty under Section 2$ of t'e 8e-otiable 9nstru#ents 2aw. [4%] Re5ubli) <lanters Bank vs. 2A GR %"00"! -1 De)e6ber 1%%9e)ond Division! 2a65os #r. (#) 'a)ts* ?e,ublic Planters (an* issued $ ,ro#issory notes si-ned by S'o+o Ja#a-uc'i 5President6 and 3er#in @anlas 5Treasurer6 of Worldwide Far#ent <anufacturin- 9nc. Ja#a-uc'i and @anlas were aut'ori+ed by t'e cor,oration to a,,ly for credit facilities wit' t'e ban* in for# of e;,ort advances and letters of credit or trust recei,ts acco##odations. T'ree years after& t'e ban* filed an action to recover t'e su#s of #oney covered by t'e ,ro#issory notes. Worldwide Far#ent <anufacturin- c'an-ed its na#e to Pinc' <anufacturin- @or,. @anlas alle-ed 'e was not liable ,ersonally for t'e cor,orate acts t'at 'e ,erfor#ed& and t'at t'e notes were still blan* w'en 'e si-ned t'e#. +ssue* W'et'er t'e cor,orate treasurer is liable for t'e a#ounts in t'e ,ro#issory notes.
3egotiable +nstru6ents La7! -004 ( - )
,eld* @anlas is a co-#a*er of t'e ,ro#issory notes& under t'e law& and cannot esca,e liability arisint'erefro#. 9nas#uc' as t'e instru#ent contained t'e words /9 ,ro#ise to ,ay0 and is si-ned by two or #ore ,ersons& said ,ersons are dee#ed to be )ointly and severally liable t'ereon. As t'e ,ro#issory notes are stereoty,e ones issued by t'e ban* in ,rinted for# wit' blan* s,aces filled u, as ,er a-reed ter#s of t'e loan& followin- custo#ary ,rocedures& leavin- t'e debtors to do not'in- but read t'e ter#s and conditions t'erein and to si-n as #a*ers or co-#a*ers. Section % of t'e 8e-otiable 9nstru#ents 2aw& t'erefore& does not a,,ly. @anlas is solidarily liable wit' t'e cor,oration for t'e a#ount of t'e $ ,ro#issory notes. [ 0] 9an 2arlos 8illing vs. B<+ GR "04/0! 11 De)e6ber 1%"" 9e)ond Division! ,ull (#) 'a)ts* Dose,' Wilson& t'e ,rinci,al e#,loyee of San @arlos <illin- @o. 2td. in t'e <anila 7ffice& cons,ired wit' one Alfredo "olores& a #essen-er-cler* in t'e sa#e office& in sendin- a cable-ra# in code to t'e co#,any in Conolulu re1uestin- a tele-ra,'ic transfer of A !!&!!! to @'ina (an* of <anila. U,on recei,t of t'e #oney& @'ina (an* sent an e;c'an-e contract to San @arlos <illin- offerin- t'e su# of P2! &!!!& w'ic' was t'en t'e current rate of e;c'an-e. 7n t'is contract was for-ed t'e na#e of 8ewland (aldwin. A #ana-er4s c'ec* on @'ina (an* ,ayable to San @arlos <illin- or order was recei,t for by "olores. T'e c'ec* was de,osited wit' (P9 indorsed by a s,urious si-nature of (aldwin. After clearin-& (P9 received a letter& ,ur,ortedly si-ned by (aldwin& directin- t'e s'i,#ent and delivery of P2! &!!!. "olores witnessed t'e ,ac*in- of t'e #oney and returned wit' t'e c'ec* for P2! &!!! ,ur,ortedly si-ned by (aldwin. "olores turned t'e #oney over to Wilson and received as 'is s'are P !&!!!. W'en t'e cri#e was discovered& (P9 refused to credit San @arlos <illin-4s account wit' t'e a#ount wit'drawn by t'e for-ed c'ec*s. +ssue* W'o s'all be liable for t'e value of t'e for-ed c'ec*. ,eld* A ban* t'at cas'es a c'ec* #ust *now to w'o# it ,ays. 9t is an ele#entary ,rinci,le bot' in ban*inand of t'e 8e-otiable 9nstru#ents 2aw t'at a ban* is bound to *now t'e si-natures of its custo#ers. and if it ,ays a for-ed c'ec*& it #ust be considered as #a*in- t'e ,ay#ent out of its own funds& and cannot ordinarily c'ar-e t'e a#ount so ,aid to t'e account of t'e de,ositor w'ose na#e was for-ed. As t'e ,ro;i#ate cause of loss was due to t'e ne-li-ence of (P9 in 'onorin- and cas'in- t'e for-ed c'ec*s& it is liable for t'e a#ount of P2! &!!! wit' le-al interest t'ereon fro# 23 "ece#ber $28& until ,ay#ent. [ 1] 9esbreno vs. 2A GR &%- -! -4 8a$ 1%%" .:ird Division! 'eli)iano (#) 'a)ts* 7n $ 3ebruary $8 & ?aul Sesbreno #ade a #oney #ar*et ,lace#ent in t'e a#ount of P3!!&!!! wit' t'e P'ili,,ine Underwriters 3inance @or,oration 5P'il3inance6& wit' a ter# of 32 days. P'il3inance issued to Sesbreno t'e @ertificate of @onfir#ation of Sale of a "elta <otor @or,oration Pro#issory 8ote 5273 6& t'e @ertificate of Securities "elivery ?ecei,t indicatin- t'e sale of t'e note wit' notation t'at said security was in t'e custody of Pili,inas (an*& and ,ostdated c'ec*s drawn a-ainst t'e 9nsular (an* of Asia and A#erica for P3!%&=33.33 ,ayable on 3 <arc' $8 . T'e c'ec*s were dis'onored for 'avin- been drawn a-ainst insufficient funds. Pili,inas (an* never released t'e note& nor any instru#ent related t'ereto& to Sesbreno. but Sesbreno learned t'at t'e security was issued ! A,ril $8!& #aturin- on 6 A,ril $8 & 'as a face value of P2&3!!&833.33 wit' P'il3inance as ,ayee and "elta <otors as #a*er. and was sta#,ed /non-ne-otiable0 on its face. As Sesbreno was unable to collect 'is invest#ent and interest t'ereon& 'e filed an action for da#a-es
3egotiable +nstru6ents La7! -004 ( -/ )
a-ainst "elta <otors and Pili,inas (an*. +ssue* W'et'er non-ne-otiability of a ,ro#issory note ,revents its assi-n#ent. ,eld* 7nly an instru#ent 1ualifyin- as a ne-otiable instru#ent under t'e relevant statute #ay be ne-otiated eit'er by indorse#ent t'ereof cou,led wit' delivery& or by delivery alone if it is in bearer for#. A ne-otiable instru#ent& instead of bein- ne-otiated& #ay also be assi-ned or transferred. T'e le-al conse1uences of ne-otiation and assi-n#ent of t'e instru#ent are different. A ne-otiable instru#ent #ay not be ne-otiated but #ay be assi-ned or transferred& absent an e;,ress ,ro'ibition a-ainst assi-n#ent or transfer written in t'e face of t'e instru#ent. 'erein& t'ere was no ,ro'ibition sti,ulated. [ -] 9tate +nvest6ent ,ouse vs. 2A GR 1011/"! 11 #anuar$ 1%%" 'irst Division! Bellosillo (#) 'a)ts* 8ora (. <oulic issued to @ora+on >ictoriano c'ec*s& as security for ,ieces of )ewelry sold on co##ission. >ictoriano ne-otiated t'e c'ec*s to t'e State 9nvest#ent Couse 9nc. 5S9C96. <oulic failed to sell t'e ,ieces of )ewelry& so 'e returned t'e# to t'e ,ayee before t'e #aturity of t'e c'ec*s. T'e c'ec*s& 'owever& could not be retrieved as t'ey 'ad already been ne-otiated. (efore t'e c'ec*4s #aturity dates& <oulic wit'drew 'er funds fro# t'e drawee ban*. U,on ,resent#ent of t'e c'ec*s for ,ay#ent& t'ey were dis'onored for insufficiency of funds. S9C9 sued to recover t'e value of t'e c'ec*s. +ssue* W'et'er t'e ,ersonal defense of failure or absence of consideration is available& or conversely& w'et'er S9C9 is a 'older in due course. ,eld* 7n t'eir faces& t'e ,ost-dated c'ec*s were co#,lete and re-ular. S9C9 bou-'t t'e c'ec*s fro# t'e ,ayee 5>ictoriano6 before t'eir due dates. S9C9 too* t'e c'ec*s in -ood fait' and for value& albeit at a discounted ,rice. and S9C9 was never infor#ed not #ade aware t'at t'e c'ec*s were #erely issued to ,ayee as security and not for value. @o#,lyin- wit' t'e re1uisites of Section =2 of t'e 8e-otiable 9nstru#ents 2aw& S9C9 is a 'older in due course. As suc'& it 'olds t'e instru#ents free fro# any defect of title of ,rior ,arties& and fro# defenses available to ,rior ,arties a#on- t'e#selves. S9C9 #ay enforce full ,ay#ent of t'e c'ec*s. T'e defense of failure or absence of consideration is not available as S9C9 was not ,rivy to t'e ,ur,ose for w'ic' t'e c'ec*s were issued. T'at t'e ,ost-dated c'ec*s were #erely issued as security is not a -round for t'e disc'ar-e of t'e instru#ent as a-ainst a 'older in due course. 9t is not one of t'e -rounds outlined in Section $ of t'e 8e-otiable 9nstru#ent 2aw& for t'e instru#ent to be disc'ar-ed. 9t #ust be noted t'at t'e drawin- and ne-otiation of a c'ec* 'ave certain effects aside fro# t'e transfer of title or t'e incurrin- of liability in re-ard to t'e instru#ent by t'e transferor. T'e 'older w'o ta*es t'e ne-otiated ,a,er #a*es a contract wit' t'e ,arties on t'e face of t'e instru#ent. T'ere is an i#,lied re,resentation t'at funds or credit are available for t'e ,ay#ent of t'e instru#ent in t'e ban* u,on w'ic' it is drawn. @onse1uently& t'e wit'drawal of t'e #oney fro# t'e drawee ban* to avoid liability on t'e c'ec*s cannot ,re)udice t'e ri-'ts of 'olders in due course. T'e drawer& <oulic& is liable to t'e 'older in due course& S9C9. [ "]
9tate +nvest6ent ,ouse vs. +A2 GR 0-0/4! 1" #ul$ 1%&% .:ird Division! 'ernan (#) 'a)ts* 8ew Si*atuna Wood 9ndustries 9nc. 58SW96 re1uested for a loan fro# Carris @'ua& w'o issued 3 crossed c'ec*s. Subse1uently& 8SW9 entered in an a-ree#ent wit' t'e State 9nvest#ent Couse 9nc. 5S9C96& under a deed of sale& w'ere t'e for#er assi-ned and discounted ,ostdated c'ec*s includin- t'e 3 issued by @'ua. W'en t'e 3 c'ec*s were alle-edly de,osited by S9C9& t'e c'ec*s were dis'onored by reason of /insufficient funds&0 /sto, ,ay#ent0 and /account closed.0 S9C9 #ade de#ands u,on @'ua to #a*e -ood said c'ec*s& @'ua failed to do so. +ssue* W'et'er S9C9 is a 'older in due course so as to recover t'e a#ounts in t'e c'ec*s fro# @'ua& t'e drawer. ,eld* T'e 8e-otiable 9nstru#ents 2aw does not #ention /crossed c'ec*s0 but t'e @ourt 'as reco-ni+ed t'e ,ractice t'at crossin- t'e c'ec* 5by two ,arallel lines in t'e u,,er left ,ortion of t'e c'ec*6 #eans t'at t'e c'ec* #ay only be de,osited in t'e ban* and t'at t'e c'ec* #ay be ne-otiated only once 5to one w'o 'as an account wit' a ban*6. T'e act of crossin- a c'ec* serves as a warnin- to t'e 'older t'at t'e c'ec* 'as been issued for a definite ,ur,ose so t'at 'e #ust in1uire if 'e 'as received t'e c'ec* ,ursuant to t'at ,ur,ose& ot'erwise 'e is not a 'older in due course. Cerein& S9C9 rediscounted t'e c'ec* *nowin- t'at it was a crossed c'ec*. Cis failure to in1uire fro# t'e 'older 58SW96 t'e ,ur,ose for w'ic' t'e c'ec*s were crossed ,revents 'i# fro# bein- considered in -ood fait'& and t'us& as a 'older in due course. S9C9& t'erefor is sub)ect to ,ersonal defenses& suc' as t'e lac* of consideration between t'e 8SW9 and @'ua& i.e. resultin- fro# t'e nonconsu##ation of t'e loan. [ 4] 9tel)o 8arketing vs. 2A GR %/1/0! 10 #une 1%%9e)ond Division! 3arvasa (#) 'a)ts* Stelco <ar*etin- @or,oration sold steel bars and F9 wires to ?J2 @onstruction 9nc. wort' P 26&8=$.6 . ?J2 -ave Stelco4s /sister cor,oration&0 Ar#stron- 9ndustries& a <etro(an* c'ec* fro# Steelweld @or,oration 5T'e c'ec* was issued a,,arently by Steelweld4s President Peter ?afael 2i#son to ?o#eo 2i#& President of ?J2 and 2i#son4 friend& by way of acco##odation& as a -uaranty and not in ,ay#ent of an obli-ation6. W'en Ar#stron- de,osited t'e c'ec* at its ban*& it was dis'onored because it was drawn a-ainst insufficient funds. W'en so de,osited& t'e c'ec* bore 2 indorse#ents& i.e. ?J2 and Ar#stron-. A cri#inal case was instituted a-ainst 2i#son& etc. for violation of (P 22& Subse1uently& Stelco filed a civil case a-ainst ?J2 and Steelweld to recover t'e value of t'e steel ,roducts. +ssue* W'et'er Stelco was a 'older in due course of t'e c'ec* issued by Steelweld. ,eld* T'e records do not s'ow any intervention or ,artici,ation by Stelco in any #anner or for# w'atsoever in t'e transaction involvin- t'e c'ec*& or any co##unication of any sort between Steelweld and Stelco& or between eit'er of t'e# and Ar#stron- 9ndustries& at any ti#e before t'e dis'onor of t'e c'ec*. T'e record does s'ow t'at after t'e c'ec* was de,osited and dis'onored& Stelco ca#e into ,ossession of it in so#e way. Stelco cannot t'us be dee#ed a 'older of t'e c'ec* for value as it does not #eet two essential re1uisites ,rescribed by t'e statute& i.e. t'at it did not beco#e /t'e 'older of it before it was overdue& and wit'out notice t'at it 'ad been ,reviously dis'onored&0 and t'at it did not ta*e t'e c'ec* /in -ood fait' and for value.0 [ ]
3egotiable +nstru6ents La7! -004 ( -& )
.an vs. 2A GR 10& ! -0 De)e6ber 1%%4 'irst Division! >a5unan (#) 'a)ts* ?a#on Tan& a business#an fro# Puerto Princesa& secured a @as'ier4s @'ec* fro# P'ili,,ine @o##ercial 9ndustrial (an* 5P@9(an*6 to P3!&!!! ,ayable to 'is order to avoid carryin- cas' w'ile enroute to <anila. Ce de,osited t'e c'ec* in 'is account in ?i+al @o##ercial (an*in- @or,oration 5?@(@6 in its (inondo (ranc'. ?@(@ sent t'e c'ec* for clearin- to t'e @entral (an* w'ic' was returned for 'avin- been /#issent0 or /#isrouted.0 ?@(@ debited Tan4s account wit'out infor#in- 'i#. ?elyin- on co##on *nowled-e t'at a cas'ier4s c'ec* was as -ood as cas'& and a #ont' after de,ositin- t'e c'ec*& 'e issued two ,ersonal c'ec*s in t'e na#e of Fo 2a* and <S "evelo,#ent Tradin- @or,oration. (ot' c'ec*s bounced due to /insufficiency of funds.0 Tan filed a suit for da#a-es a-ainst ?@(@. +ssue* W'et'er a cas'ier4s c'ec* is as -ood as cas'& so as to 'ave funded t'e two c'ec*s subse1uently drawn. ,eld* An ordinary c'ec* is not a #ere underta*in- to ,ay an a#ount of #oney. T'ere is an ele#ent of certainty or assurance t'at it will be ,aid u,on ,resentation. t'at is w'y it is ,erceived as a convenient substitute for currency in co##ercial and financial transactions. Cerein& w'at is involved is #ore t'an an ordinary c'ec*& but a cas'ier4s c'ec*. A cas'ier4s c'ec* is a ,ri#ary obli-ation of t'e issuin- ban* and acce,ted in advance by its #ere issuance. (y its very nature& a cas'ier4s c'ec* is a ban*4s order to ,ay w'at is drawn u,on itself& co##ittin- in effect its total resources& inte-rity and 'onor beyond t'e c'ec*. Cerein& P@9( by issuin- t'e c'ec* created an unconditional credit in favor any collectin- ban*. ?eliance on t'e lay#an4s ,erce,tion t'at a cas'ier4s c'ec* is as -ood as cas' is not entirely #is,laced& as it is rooted in ,ractice& tradition and ,rinci,le. [ /] .ibaGia vs. 2A GR 100-%0! 4 #une 1%%" 9e)ond Division! <adilla (#) 'a)ts* A suit for collection of su# of #oney was ruled in favor of :den Tan and a-ainst t'e s,ouses 8orberto Dr. and @ar#en Tiba)ia. After t'e decision was #ade final& Tan filed a #otion for e;ecution and levied u,on t'e -arnis'ed funds w'ic' were de,osited by t'e s,ouses wit' t'e cas'ier of t'e ?e-ional Trial @ourt of Pasi-. T'e s,ouses& 'owever& delivered to t'e de,uty s'eriff t'e total #oney )ud-#ent in t'e for# of @as'ier4s @'ec* 5P262&7=!6 and @as' 5P 3=&733.7!6. Tan refused t'e ,ay#ent and insisted u,on t'e -arnis'ed funds to satisfy t'e )ud-#ent obli-ation. T'e s,ouses filed a #otion to lift t'e writ of e;ecution on t'e -round t'at t'e )ud-#ent debt 'ad already been ,aid. T'e #otion was denied. +ssue* W'et'er t'e s,ouses 'ave satisfied t'e )ud-#ent obli-ation after t'e delivery of t'e cas'ier4s c'ec* and cas' to t'e de,uty s'eriff. ,eld* A c'ec*& w'et'er a #ana-er4s c'ec* or ordinary c'ec*& is not le-al tender& and an offer of a c'ec* in ,ay#ent of a debt is not a valid tender of ,ay#ent and #ay be refused recei,t by t'e obli-ee or creditor 5P'ili,,ine Airlines vs. @ourt of A,,eals. ?o#an @at'olic (is'o, of <alolos vs. 9nter#ediate A,,ellate @ourt6. T'e court is not& by decision& sanctionin- t'e use of a c'ec* for t'e ,ay#ent of obli-ations over t'e ob)ection of t'e creditor 53ortunado vs. @ourt of A,,eals6. [ 0]
3egotiable +nstru6ents La7! -004 ( -% )
.ravel =n vs. 2A GR /1/%! -/ #une 1%%.:ird Division! 'eli)iano (#) 'a)ts* Travel-7n 9nc. is a travel a-ency sellin- airline tic*ets on co##ission basis for and in be'alf of different airline co#,anies. Arturo S. <iranda 'ad a revolvin- credit line wit' Travel-7n. Ce ,rocured tic*ets on be'alf of airline ,assen-ers and derived co##issions t'erefro#. <iranda a,,arently owed Travel-7n t'e a#ount of P278&2! .=7 5t'e value of airline tic*ets sold to t'e for#er6& to w'ic' <iranda ,aid various a#ounts in cas' and in *ind. Ce t'ereafter issued 6 ,ost-dated c'ec*s a#ountin- to P =&!!! w'ic' were all dis'onored by t'e drawee ban*. Travel-7n filed suit to recover t'e value of t'e c'ec*s. <iranda countered t'at 'e instead over,aid 'is obli-ations& and t'at 'e #erely issued t'e c'ec*s for ,ur,oses of acco##odation as 'e alle-edly 'ad in t'e ,ast accorded Travel-7n. +ssue* W'et'er <iranda is indebted to Travel-7n& or w'et'er 'e is an acco##odation ,arty. ,eld* A c'ec* w'ic' is re-ular on its face is dee#ed ,ri#a facie to 'ave been issued for a valuable consideration and every ,erson w'ose si-nature a,,ears t'ereon is dee#ed to 'ave beco#e a ,arty t'ereto for value. T'us& t'e #ere introduction of t'e instru#ent sued on& in evidence ,ri#a facie& entitles t'e ,laintiff to recovery. Suc' ,resu#,tion subsists unless ot'erwise contradicted by ot'er co#,etent evidence. T'e c'ec*s& bein- ,resented for ,ay#ent& were t'us intended for encas'#ent. T'ere is not'inin t'e c'ec*s 5nor in ot'er docu#ents6 t'at stated ot'erwise. Travel-7n was a ,ayee& not an acco##odated ,arty for t'e c'ec*s& as it reali+ed no value on t'e c'ec*s w'ic' bounced. Travel-7n& t'us& is entitled to t'e benefit of t'e ,resu#,tion t'at it is a 'older in due course. [ &] H$ vs. 2A GR 11%000! -& #une 1%%0 'irst Division! Bellosillo (#) 'a)ts* ?osa Uy and @onsolacion 2eon-& w'o are friends& for#ed a ,artners'i,. wit' @onsolacion contributin- additional ca,ital for t'e e;,ansion of ?osa4s lu#ber business. T'e friends'i, between t'e two soured w'en t'e ,artners'i, docu#ents were never ,rocessed. @onsolacion as*ed for t'e return of 'er invest#ents. ?osa issued c'ec* w'ic' were dis'onored for insufficiency of funds. Uy was c'ar-ed for estafa and violation of (P 22. +ssue* W'et'er *nowled-e of insufficiency of funds is transitory or si#ultaneous wit' t'e issuance of t'e instru#ent. ,eld* :ven if it is true t'at (P 22 is a transitory or continuin- offense and as suc' a ,erson indicted wit' a transitory offense #ay be validly tried in any )urisdiction w'ere t'e offense was in ,art co##itted& *nowled-e by t'e #a*er or drawer of t'e fact t'at 'e 'as no sufficient funds to cover t'e c'ec* or of 'avinsufficient funds is si#ultaneous to t'e issuance of t'e instru#ent. 8one of t'e essential in-redients of (P 22 was co##itted in t'e @ity of <anila. i.e. @onsolacion was a resident of <a*ati w'ile Uy was a resident of @aloocan @ity. t'e ,lace of business of t'e alle-ed ,artners'i, is in <alabon. t'e drawee ban* was located in <alabon. and t'e c'ec*s were all de,osited for collection in <a*ati. [ %] @a)a vs. 2A GR 4" %/! "1 =)tober 1%"/
3egotiable +nstru6ents La7! -004 ( "0 )
1n Ban)! Re)to (#) 'a)ts* :duardo >aca is t'e ,resident and owner of :rvine 9nternational w'ile 3ernando 8ieto& >aca4s son-inlaw& is t'e fir#4s ,urc'asin- #ana-er. T'ey issued a c'ec* for P !&!!! to t'e Feneral A-ency for ?econnaissance& "etection and Security 5FA?"S6 and drawn a-ainst @'ina (an*. W'en de,osited wit' P@9(an*& t'e c'ec* was dis'onored for insufficiency of funds. FA?"S sent a de#and letter but t'e drawers failed to ,ay wit'in t'e ti#e -iven 57 days fro# notice6. A few days later& 'owever& >aca issued a c'ec* to FA?"S for P $&866. 6& drawn a-ainst Associated (an*& re,lacin- t'e dis'onored c'ec*. FA?"S did not return t'e dis'onored c'ec*. 2ater on& FA?"S Actin- 7,erations <ana-er filed a cri#inal suit a-ainst >aca and 8ieto for violation of (P 22. T'e trial court sentenced eac' to year i#,rison#ent and to ,ay a fine of P !&!!! and costs. +ssue [1]* W'et'er t'e drawers 'ad *nowled-e of insufficient funds in issuin- t'e c'ec*. ,eld [1]* Section 2 of (P 22 ,rovides a ,resu#,tion of *nowled-e of insufficiency of funds if t'e drawer fails to #aintain sufficient funds wit'in $! days after t'e date of t'e c'ec*& or to #a*e arran-e#ent for ,ay#ent in full by t'e drawee of suc' c'ec* wit'in = days after receivin- notice t'at suc' c'ec* 'as not been ,aid by t'e drawee. Cerein& t'e second c'ec* su,,osedly re,lacin- t'e dis'onored c'ec* is actually t'e ,ay#ent of two se,arate bills& and was issued = days after notice. Suc' /re,lace#ent0 cannot ne-ate t'e ,resu#,tion t'at t'e drawers *new of t'e insufficiency of funds. +ssue [-]* W'et'er t'e absence of da#a-es incurred by t'e ,ayee absolves t'e drawers fro# liability. ,eld [-]* T'e clai# -- t'at t'e case was si#,ly a result of a #isunderstandin- between FA?"S and t'e drawers and t'at t'e security a-ency did not suffer any da#a-e fro# t'e dis'onor of t'e c'ec* -- is fli#sy. :ven if t'e ,ayee suffered no da#a-e as a result of t'e issuance of t'e bouncin- c'ec*& t'e da#a-e to t'e inte-rity of t'e ban*in- syste# cannot be denied. "a#a-e to t'e ,ayee is not an ele#ent of t'e cri#e ,unis'ed in (P 22. 8oteH 9n t'is case& t'e @ourt reco-ni+ed t'e contribution of 3ili,ino entre,reneurs to t'e national econo#y. and t'at to serve t'e ends of cri#inal )ustice& instead of t'e year i#,rison#ent& a fine of double t'e a#ount of t'e c'ec* involved was i#,osed as ,enalty. T'is was #ade to redee# valuable 'u#an #aterial and ,revent unnecessary de,rivation of ,ersonal liberty and econo#ic usefulness wit' due re-ard to t'e ,rotection of t'e social order. [/0] @da. de 1duDue vs. =)a65o GR L----! -/ A5ril 1% 0 9e)ond Division! 8oran (2#) 'a)ts* 7n 6 3ebruary $3=& "r. Dose :du1ue secured two loans fro# <ariano 7ca#,o de 2eon& "ona :scolastica delos ?eyes and "on Dose <. 7ca#,o& wit' a#ount s of P%!&!!! and P =&!!!& bot' ,ayable wit'in 2! years wit' interest of =B ,er annu#. Pay#ent of t'e loans was -uaranteed by #ort-a-e on real ,ro,erty. 7n 6 "ece#ber $%3& Salvacion 3. >da de :du1ue& as ad#inistratri; of t'e estate of "r. Dose :du1ue& tendered ,ay#ent by #eans of a cas'ier4s c'ec* re,resentin- Da,anese War notes to Dose <. 7ca#,o& w'o refused ,ay#ent. (y reason of suc' refusal& an action was brou-'t and t'e cas'ier4s c'ec* was de,osited in court. After trial& )ud-#ent was rendered a-ainst 7ca#,o co#,ellin- 'i# to acce,t t'e a#ount& to ,ay t'e e;,enses of consi-nation& etc. 7ca#,o acce,ted t'e )ud-#ent as to t'e second loan but a,,ealed as to t'e first loan.
3egotiable +nstru6ents La7! -004 ( "1 )
+ssue* W'et'er t'ere is a tender of ,ay#ent by #eans of a cas'ier4s c'ec* re,resentin- war notes. ,eld* Da,anese #ilitary notes were le-al tender durin- t'e Da,anese occu,ation. and 7ca#,o i#,liedly acce,ted t'e consi-nation of t'e cas'ier4s c'ec* w'en 'e as*ed t'e court t'at 'e be ,aid t'e a#ount of t'e second loan 5P =&!!!6. 9t is a rule t'at a cas'ier4s c'ec* #ay constitute a sufficient tender w'ere no ob)ection is #ade on t'is -round.
3egotiable +nstru6ents La7! -004 ( "- )

Digests: Negotiable Instruments Law

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