#1 CEBU INTERNATIONAL V.

CA 316 SCRA 488 FACTS: Petitioner is a quasi-banking institution involved in money market transactions Alegre invested !it" #etitioner P$%%&%%% Petitioner issued t"en a #romissory note& !"ic" !ould mature a##ro'imately a(ter a mont" )"e note covered (or Alegre*s #lacement #lus interest +n t"e maturity o( t"e note& #etitioner issued a c"eck #ayable to Alegre& covering t"e !"ole amount due ,t !as dra!n (rom #etitioner*s current account in -P, ."en t"e !i(e o( Alegre tried to de#osit t"e c"eck& t"e bank dis"onored t"e c"eck Petitioner !as noti(ied o( t"is matter and Alegre demanded t"e immediate #ayment in cas" ,n turn& #etitioner #romised to re#lace t"e c"eck on t"e im#ossible #remise t"at t"e (irst issued be returned to t"em )"is #rom#ted Alegre to (ile a com#laint against #etitioner and #etitioner in turn& (iled a case against -P, (or allegedly unla!(ully deducting (rom its account counter(eit c"ecks )"e trial court decided in (avor o( Alegre ISSUE: ."et"er or not t"e /egotiable ,nstruments 0a! is a##licable to t"e money market transaction "eld bet!een #etitioner and Alegre1 HELD: Considering t"e nature o( t"e money market transaction& Article 1243 o( t"e CC is t"e a##licable #rovision s"ould be a##lied A money market "as been de(ined to be a market dealing in standardi4ed s"ortterm credit instruments !"ere lenders and borro!ers don*t deal directly !it" eac" ot"er but t"roug" a middleman or dealer in t"e o#en market ,n a money market transaction& t"e investor is t"e lender !"o loans "is money to a borro!er t"roug" a middleman or dealer ,n t"e case at bar& t"e transaction is in t"e nature o( a loan Petitioner acce#ted t"e c"eck but !"en "e tried to encas" it& it !as dis"onored )"e "older "as an immediate recourse against t"e dra!er& and consequently could immediately (ile an action (or t"e recovery o( t"e value o( t"e c"eck 5urt"er& in a loan transaction& t"e obligation to #ay a sum certain in money may be #aid in money& !"ic" is t"e legal tender or& by t"e use o( a c"eck A c"eck is not legal tender& and t"ere(ore cannot constitute valid tender o( #ayment #2 ROMAN CATHOLIC OF MALOLOS V. IAC 131 SCRA 411 FACTS: Petitioner !as t"e o!ner o( a #arcel o( land ,t t"en entered into a contract o( lease agreement !it" Robes5ransisco Realty (or t"e #arcel o( land )"e agreement !as t"at t"ere !ould be do!n #ayment #lus installments !it" interest Robes-5ransisco !as t"en in de(ault 6no!ing t"at it !as in its #ayment o( t"e installments& it requested (or t"e restructuring o( t"e installment #ayments but !as denied ,t t"en asked (or grace #eriod to #ay t"e same and tendered a c"eck t"erea(ter Suc" !as re(used and t"e contract !as cancelled HELD: A c"eck !"et"er a manager*s c"eck or ordinary c"eck is not legal tender and an o((er o( a c"eck in #ayment o( a debt is not valid tender o( #ayment and may be re(used recei#t by t"e obligee or creditor As t"is is t"e case& t"e subsequent consignation o( t"e c"eck didn7t o#erate to disc"arge Robes-5ransisco (rom its obligation to #etitioner #3 BPI EXPRESS CARD CORPORATION V. CA 232 SCRA 26% FACTS: 8arasigan !as t"e "older o( a -P, credit card 9ue to "is delinquency in #ayment& immediate demand !as given by -P, to #ay account 8arasigan issued a #ostdated c"eck )"e c"eck !as t"erea(ter ke#t in custiody

by -P, and card !as tem#orarily sus#ended tried to use "is card to #ay but it !as dis"onored HELD:

And on a relevant date& 8arasigan a(ter eating in Ca(: Adriatico

)"e issuance o( t"e #ostdated c"eck !as not e((ective #ayment on t"e #art o( 8arasigan and t"us& t"e bank !as ;usti(ied in sus#ending tem#orarily "is use o( t"e credit card A c"eck is only a substitute (or money and not money& and t"e delivery o( suc" instrument doesn7t itsel( o#erate as #ayment #4 CF SHARP & CO., INC. V. NORTHWEST AIRLINES, INC. 381 SCRA 314 FACTS: Petitioner !as aut"ori4ed to sell tickets o( /ort"!est Airlines-<a#an& but (ailed to remit t"e #roceeds )"is #rom#ted /.A to (ile suit against #etitioner in )okyo and ;udgment !as rendered in its (avor )"erea(ter& t"e R)C issued a !rit o( e'ecution (or (oreign court*s decision )"e #etitioner (iled (or certiorari& asserting it "as already made #artial #ayments )"e CA lo!ered t"e amount to be #aid and included in its decision t"at t"e amount may be #aid in local currency at rate #revailing at time o( #ayment HELD: =nder RA $23& sti#ulations on t"e satis(action o( obligations in (oreign currency are void Payments o( monetary obligations& sub;ect to certain e'ce#tions& s"all be disc"arged in t"e currency !"ic" is t"e legal tender o( t"e P"ili##ines -ut since t"e la! doesn7t #rovide (or t"e rate o( e'c"ange (or t"e #ayment o( (oreign currency obligations incurred a(ter its enactment& ;uris#rudence "eld t"at t"e e'c"ange rate s"ould be t"e #revailing rate at time o( #ayment )"is la! "as been amended& allo!ing #ayments (or obligations to be made in currency ot"er t"an P"ili##ine currency but t"en again& it (ailed to state !"at t"e e'c"ange rate t"at s"ould be used )"is being t"e case t"e ;uris#rudence regarding t"e use o( t"e e'c"ange rate at time o( #ayment s"all be used #5 C !"#$ %P&'!'((')#*+ I),. -*. CA .R /0053, 11 A232*" 1//2, S#,4)5 D'-'*'4), R#3 ! 54 %6+ F ,"*: +n various dates& Security -ank and )rust Co >S?-)C@& t"roug" its Sucat branc"& issued 28% certi(icates o( time de#osit >C)9@ in (avor o( one Angel dela Cru4 !"o de#osited !it" t"e bank t"e aggregate amount o( P1 12 million Anger de la Cru4 delivered t"e C)9s to Calte' in connection !it" "is #urc"ase o( (uel #roducts (rom t"e latter Subsequently& dela Cru4 in(ormed t"e bank t"at "e lost all t"e C)9s& and t"us e'ecuted an a((idavit o( loss to (acilitate t"e issuance o( t"e re#lacement C)9s 9e la Cru4 !as able to obtain a loan o( P8A$&%%% (rom t"e bank& and in turn& "e e'ecuted a notari4ed 9eed o( Assignment o( )ime 9e#osit in (avor o( t"e bank )"erea(ter& Calte' #resented (or veri(ication t"e C)9s >!"ic" !ere declared lost by de la Cru4@ !it" t"e bank Calte' (ormally in(ormed t"e bank o( its #ossession o( t"e C)9s and its decision to #reterminate t"e same )"e bank re;ected Calte'* claim and demand& a(ter Calte' (ailed to (urnis" co#y o( t"e requested documents evidencing t"e guarantee agreement& etc ,n 1383& de la Cru4* loan matured and t"e bank set-o(( and a##lied t"e time de#osits as #ayment (or t"e loan Calte' (iled t"e com#laint& but !"ic" !as dismissed I**2# 718: ."et"er t"e Certi(icates o( )ime 9e#osit >C)9s@ are negotiable instruments H#!5 718: )"e C)9s in question meet t"e requirements o( t"e la! (or negotiability Contrary to t"e lo!er court*s (indings& t"e C)9s are negotiable instruments >Section 1@ /egotiability or non-negotiability o( an instrument is determined (rom t"e !riting& i e (rom t"e (ace o( t"e instrument itsel( )"e documents #rovided t"at t"e amounts de#osited s"all be re#ayable to t"e de#ositor )"e amounts are to be re#ayable to t"e bearer o( t"e documents& i e !"osoever may be t"e bearer at t"e time o( #resentment I**2# 728: ."et"er t"e C)9s* negotiation require delivery only

H#!5 728: Alt"oug" t"e C)9s are bearer instruments& a valid negotiation t"ereo( (or t"e true #ur#ose and agreement bet!een it >Calte'@ and de la Cru4 requires bot" delivery and indorsementB as t"e C)9s !ere delivered to it as security (or dela Cru4* #urc"ases o( its (uel #roducts& and not (or #ayment Cerein& t"ere !as no negotiation in t"e sense o( a trans(er o( title& or legal title& to t"e C)9s in !"ic" situation mere delivery o( t"e bearer C)9s !ould "ave su((iced )"e delivery t"ereo( as security (or t"e (uel #urc"ases at most constitutes Calte' as a "older (or value by reason o( "is lien Accordingly& a negotiation (or suc" #ur#ose cannot be e((ected by mere delivery o( t"e instrument since t"e terms t"ereo( and t"e subsequent dis#osition o( suc" security& in t"e event o( non-#ayment o( t"e #rinci#al obligation& must be contractually #rovided (or CALTEX V. CA 212 SCRA 448 Bearer Instrument Certificate of Time Deposit ,n 1382& Angel de la Cru4 obtained certi(icates o( time de#osit >C)9s@ (rom Security -ank and )rust Com#any (or t"e (ormer*s de#osit !it" t"e said bank amounting to P1&12%&%%% %% )"e said C)9s are couc"ed in t"e (ollo!ing mannerD This is to Certify that B E A R E R has deposited in this Ban the sum of !!!!!!! "esos# "hi$ippine Currency# repaya%$e to said depositor !!!!! days& after date# upon presentation and surrender of this certificate# 'ith interest at the rate of !!! ( per cent per annum& Angel de la Cru4 subsequently delivered t"e C)9s to Calte' in connection !it" t"e #urc"ase o( (uel #roducts (rom Calte' ,n 8arc" 1382& Angel de la Cru4 advised Security -ank t"at "e lost t"e C)9s Ce e'ecuted an a((idavit o( loss and submitted it to t"e bank )"e bank t"en issued anot"er set o( C)9s ,n t"e same mont"& Angel de la Cru4 acquired a loan o( P8A$&%%% %% and "e used "is time de#osits as collateral ,n /ovember 1382& a re#resentative (rom Calte' !ent to Security -ank to #resent t"e C)9s >delivered by de la Cru4@ (or veri(ication Calte' advised Security -ank t"at de la Cru4 delivered Calte' t"e C)9s as security (or #urc"ases "e made !it" t"e latter Security -ank re(used to acce#t t"e C)9s and instead required Calte' to #resent documents #roving t"e agreement made by de la Cru4 !it" Calte' Calte' "o!ever (ailed to #roduce said documents ,n A#ril 1383& de la Cru4* loan !it" Security bank matured and no #ayment !as made by de la Cru4 Security -ank eventually set-o(( t"e time de#osit to #ay o(( t"e loan Calte' sued Security -ank to com#el t"e bank to #ay o(( t"e C)9s Security -ank argued t"at t"e C)9s are not negotiable instruments even t"oug" t"e !ord EbearerF is !ritten on t"eir (ace because t"e !ord EbearerF contained t"erein re(er to de#ositor and only t"e de#ositor can encas" t"e C)9s and no one else ISSUE: ."et"er or not t"e certi(icates o( time de#osit are negotiable HELD: Ges )"e C)9s indicate t"at t"ey are #ayable to t"e bearerB t"at t"ere is an im#lication t"at t"e de#ositor is t"e bearer but as to !"o t"e de#ositor is& no one kno!s ,t does not say on its (ace t"at t"e de#ositor is Angel de la Cru4 ,( it !as really t"e intention o( res#ondent bank to #ay t"e amount to Angel de la Cru4 only& it could "ave !it" (acility so e'#ressed t"at (act in clear and categorical terms in t"e documents& instead o( "aving t"e !ord E-?AR?RF stam#ed on t"e s#ace #rovided (or t"e name o( t"e de#ositor in eac" C)9 +n t"e !ordings o( t"e documents& t"ere(ore& t"e amounts de#osited are re#ayable to !"oever may be t"e bearer t"ereo( )"us& de la Cru4 is t"e de#ositor Einso(ar as t"e bank is concerned&F but obviously ot"er #arties not #rivy to t"e transaction bet!een t"em !ould not be in a #osition to kno! t"at t"e de#ositor is not t"e bearer stated in t"e C)9s Co!ever& Calte' may not encas" t"e C)9s because alt"oug" t"e C)9s are bearer instruments& a valid negotiation t"ereo( (or t"e true #ur#ose and agreement bet!een Calte' and 9e la Cru4& requires bot" delivery and indorsement As discerned (rom t"e testimony o( Calte'* re#resentative& t"e C)9s !ere delivered to t"em by de la Cru4 merely (or guarantee or security and not as #ayment #9 T: 5#:* R4; ! B )< V. CA >133A@ H R /o 3333A 8arc" 3& 133A 0essons A##licableD Requisites o( negotiability to antedated and #ostdated instruments >/egotiable ,nstrument 0a!@

In another case# the Supreme Court e)p$ained that on$y the dra'ee may %e he$d $ia%$e if it 'as not esta%$ished that the chec s containin* for*ed indorsements passed throu*h the a$$e*ed co$$ectin* %an & The dra'ee in this case encashed chec s +one of 'hich is crossed, presented %y un no'n persons a$thou*h said chec s 'ere paya%$e to BIR& -ence# the dra'ee 'as c$ear$y ne*$i*ent in encashin* the chec s& FACTS: 5ilriters >assigned@ I P"il(inance >still under t"e name o( 5ilriters assigned@ I )raders Royal -ank J 1 >valid or not@ /ovember 2A& 13A3D 5ilriters Huaranty Assurance Cor#oration >5ilriters@ e'ecuted a K9etac"ed Assignment !"ereby 5ilriters& as registered o!ner& sold& trans(erred& assigned and delivered unto P"ili##ine =nder!riters 5inance Cor#oration >P"il(inance@ all its rig"ts and title to Central -ank Certi(icates o( ,ndebtedness >C-C,@ o( P$%%k and "aving an aggregate value o( P3 $8 )"e 9etac"ed Assignment contains an e'#ress aut"ori4ation e'ecuted by t"e trans(eror intended to com#lete t"e assignment t"roug" t"e registration o( t"e trans(er in t"e name o( P"il5inance 5ebruary 4& 1381D )raders Royal -ank >)raders@ entered into a Re#urc"ase Agreement !L P"il5inance !"ereby in consideration o( t"e sum o( P$%%&%%% %%& P"il5inance sold& trans(erred and delivered a C-C, !L a (ace value o( P$%%6 !"ic" C-C, !as among t"ose #reviously acquired by P"il5inance (rom 5ilriters P"il5inance (ailed to re#urc"ase on t"e agreed date o( maturity& A#ril 2A& 1381& !"en t"e c"ecks it issued in (avor o( #etitioner !ere dis"onored (or insu((icient (unds P"il(inance trans(erred and assigned all& its rig"ts and title in t"e C-C, to )raders Res#ondent (ailed and re(used to register t"e trans(er as requested& and continues to do so not!it"standing #etitioner7s valid and ;ust title over t"e same and des#ite re#eated demands in !riting )raders #rayed (or t"e registration by t"e Central -ank o( t"e sub;ect C-C, in its name CA a((irmed R)CD subsequent assignment in (avor o( )raders Royal -ank null and void and o( no (orce and e((ect P"il(inance acquired no title or rig"ts under C-C, !"ic" it could assign or trans(er to )raders and !"ic" it can register !it" t"e Central -ank instrument is #ayable only to 5ilriters& t"e registered o!ner ISSUE: .L/ t"e C-C, is a negotiable instrument HELD: /+ Petition is dismissed CA a((irmed F ,"*: 5ilriters registered o!ner o( C-C, 5ilriters trans(erred it to P"il(inance by one o( its o((icers !it"out aut"ori4ation (rom t"e com#any Subsequently P"il(inance trans(erred same C-C, to )R- under a re#urc"ase agreement ."en P"il(inance (ailed to do so )"e )R- tried to register in its name in t"e C- )"e latter didn*t !ant to recogni4e t"e trans(er I**2#: ."et"er t"e C-C, is negotiable instrument or not ."et"er t"e Assignment o( registered certi(icate is valid or null and void R2!')3: =nder section 1 o( Act no 2%31 an instrument to be negotiable must con(orm to t"e (ollo!ing requirementsD >a@ ,t must be in !riting and signed by t"e maker or dra!erB >b@ 8ust contain an unconditional #romise or order to #ay a sum certain in moneyB >c@ 8ust be #ayable on demand& or at a (i'ed or determinable (uture timeB >d@ 8ust be #ayable to order or to bearerB and >e@ ."ere t"e instrument is addressed to a dra!ee& "e must be named or ot"er!ise indicated t"erein !it" reasonable certainty =nder section 3& Article M o( Rules and Regulations Hoverning Central -ank Certi(icates o( ,ndebtedness states t"at t"e assignment o( registered certi(icates s"all not be valid unless made at t"e o((ice !"ere t"e same "ave

been issued and registered or at t"e Securities Servicing 9e#artment& Central -ank o( t"e P"ili##ines& and by t"e registered o!ner t"ereo(& in #erson or by "is re#resentative& duly aut"ori4ed in !riting 5or t"is #ur#ose& t"e trans(eree may be designated as t"e re#resentative o( t"e registered o!ner A##licationLAnalysisD )"e C-C, is not a negotiable instrument& since t"e instrument clearly stated t"at it !as #ayable to 5ilriters& and t"e certi(icate lacked t"e !ords o( negotiability !"ic" serve as an e'#ression o( consent t"at t"e instrument may be trans(erred by negotiation +bviously t"e Assignment o( certi(icate (rom 5ilriters to P"il(inance !as null and void +ne o( o((icers !"o signed t"e deed o( assignment in be"al( o( 5ilriters did not "ave t"e necessary !ritten aut"ori4ation (rom t"e -oard o( 9irectors o( 5ilriters 5or lack o( suc" aut"ority t"e assignment is considered null and void ConclusionLColdingsD -e(ore t"e instruments become negotiable instruments& t"e instrument must con(orm to t"e requirements under t"e /egotiable ,nstrument 0a! +t"er!ise instrument s"all not bind t"e #arties Clearly s"o!n in t"e record is t"e (act t"at P"il(inance*s title over C-C, is de(ective since it acquired t"e instrument (rom 5ilriters (ictitiously =nder 14%3 o( t"e Civil Code t"ose contracts !"ic" are absolutely simulated or (ictitious are considered void and ine'istent (rom t"e beginning #0 INCION. V. CA 2$A SCRA $A8 FACTS: A #romissory note !as issued by #etitioner toget"er !it" 2 ot"ers ;ointly and severally& to make t"em liable to P-C )"erea(ter !as a de(ault on t"e #ayment o( t"e note P-C #roceeded against ,nciong and in t"e action (iled by t"e bank& t"e court decided in its (avor HELD: ."ere t"e #romissory note e'#ressly states t"at t"e t"ree signatures t"erein are ;ointly and severally liable& any one or some or all o( t"em may be #roceeded against (or t"e entire obligationNt"e c"oice is le(t to t"e solidary creditor to determine against !"om "e !ill en(orce collection Si*nature of .a ers /uaranty FACTS: ,n 5ebruary 1383& Rene /aybe took out a loan (rom P"ili##ine -ank o( Communications >P-C@ in t"e amount o( P$%k 5or t"at "e e'ecuted a #romissory note in t"e same amount /aybe !as able to convince -aldomero ,nciong and Hregorio Pantanosas to co-sign !it" "im as co-makers )"e #romissory note !ent due and it !as le(t un#aid P-C demanded #ayment (rom t"e t"ree but still no #ayment !as made P-C t"en sue t"e t"ree but P-C later released Pantanosas (rom its obligations /aybe le(t (or Saudi Arabia "ence can*t be issued summons and t"e com#laint against "im !as subsequently dro##ed ,nciong !as le(t to (ace t"e suit Ce argued t"at t"at since t"e com#laint against /aybe !as dro##ed& and t"at Pantanosas !as released (rom "is obligations& "e too s"ould "ave been released ISSUE: ."et"er or not ,nciong s"ould be "eld liable HELD: Ges ,nciong is considering "imsel( as a guarantor in t"e #romissory note And "e !as basing "is argument based on Article 2%8% o( t"e Civil Code !"ic" #rovides t"at guarantors are released (rom t"eir obligations i( t"e creditors s"all release t"eir debtors ,t is to be noted "o!ever t"at ,nciong did not sign t"e #romissory note as a guarantor Ce signed it as a solidary co-maker A guarantor !"o binds "imsel( in solidum !it" t"e #rinci#al debtor does not become a solidary co-debtor to all intents and #ur#oses )"ere is a di((erence bet!een a solidary co-debtor and a (iador in solidum >surety@ )"e latter& outside o( t"e liability "e assumes to #ay t"e debt be(ore t"e #ro#erty o( t"e #rinci#al debtor "as been e'"austed& retains all t"e ot"er rig"ts& actions and bene(its !"ic" #ertain to "im by reason o( t"e (iansaB !"ile a solidary co-debtor "as no ot"er rig"ts t"an t"ose besto!ed u#on "im

-ecause t"e #romissory note involved in t"is case e'#ressly states t"at t"e t"ree signatories t"erein are ;ointly and severally liable& any one& some or all o( t"em may be #roceeded against (or t"e entire obligation )"e c"oice is le(t to t"e solidary creditor >P-C@ to determine against !"om "e !ill en(orce collection Consequently& t"e dismissal o( t"e case against Pontanosas may not be deemed as "aving disc"arged ,nciong (rom liability as !ell As regards /aybe& su((ice it to say t"at t"e court never acquired ;urisdiction over "im ,nciong& t"ere(ore& may only "ave recourse against "is co-makers& as #rovided by la! #= SERRANO V. CA 136 SCRA 1%A FACTS: Serrano boug"t some ;e!elry (rom Ribaya 9ue to need o( (inances& s"e decided to "ave t"e ;e!elry #a!ned S"e instructed "er secretary to do so (or "er& !"ic" t"e secretary did but absconded a(ter receiving t"e #roceeds ,t is to be noted t"at t"e #a!ns"o# ticket indicated t"at t"e ;e!elry !as redeemable Eby #resentation by t"e bearer F A(ter!ards& t"ere !as a lead on !"ere t"e ;e!elry !as #a!ned An investigation !as done to veri(y t"e sus#icion )"e ;e!elry !as to be sold in a #ublic auction t"en )"e #etitioner and #olice aut"orities in(ormed t"e #a!ns"o# o!ner not to sell t"e ;e!elry as s"e !as t"e rig"t(ul o!ner t"ereo( 9es#ite o( t"is "o!ever& t"e ;e!elry !as redeemed by a )omasa de 0eon !"o #resented t"e #a!ns"o# ticket HELD: Caving been in(ormed by t"e #etitioner and t"e #olice t"at ;e!elry #a!ned to it !as eit"er stolen or involved in an embe44lement o( t"e #roceeds o( t"e #ledge& #a!nbroker became duty bound to "old t"e t"ings #ledged and to give notice to t"e #etitioner and aut"orities o( any e((ort to redeem t"em Suc" a duty !as im#osed by Article 21 o( t"e CC )"e circumstance t"at t"e #a!n ticket stated t"at t"e #a!n !as redeemable by t"e bearer& didn*t dissolve t"is duty )"e #a!n ticket !asn*t a negotiable instrument under t"e /,0& nor !as it a negotiable document o( title under Article 1$%Ao( t"e CC #/ M#5#! -. C42:" 4> A((# !* 233 SCRA 481B HR /o 131622& /ovember 2A& 1338 F ,"*: 9e(endants obtained a loan (rom Plainti(( in t"e amount P$%& %%% %%& #ayable in 2 mont"s and e'ecuted a #romissory note Plainti(( gave only t"e amount o( P4A& %%% %% to t"e borro!ers and retained P3& %%% %% as advance interest (or 1 mont" at 6O #er mont" 9e(endants obtained anot"er loan (rom 9e(endant in t"e amount o( P3%& %%% %%& #ayable in 2 mont"s& at 6O interest #er mont" )"ey e'ecuted a #romissory note to evidence t"e loan and received only P84& %%% %% out o( t"e #roceeds o( t"e loan 5or t"e t"ird time& 9e(endants secured (rom Plainti(( anot"er loan in t"e amount o( P3%%& %%% %%& maturing in 1 mont"& and secured by a real estate mortgage )"ey e'ecuted a #romissory note in (avor o( t"e Plainti(( Co!ever& only t"e sum o( P2A$& %%% %%& !as given to t"em out o( t"e #roceeds o( t"e loan =#on maturity o( t"e t"ree #romissory notes& 9e(endants (ailed to #ay t"e indebtedness 9e(endants consolidated all t"eir #revious un#aid loans totalling P44%& %%% %%& and soug"t (rom Plainti(( anot"er loan in t"e amount o( P6%& %%% %%& bringing t"eir indebtedness to a total o( P$%&%%% %% )"ey e'ecuted anot"er #romissory note in (avor o( Plainti(( to #ay t"e sum o( P$%%& %%% %% !it" a $ $O interest #er mont" #lus 2O service c"arge #er annum& !it" an additional amount o( 1O #er mont" as #enalty c"arges +n maturity o( t"e loan& t"e 9e(endants (ailed to #ay t"e indebtedness !"ic" #rom#t t"e Plainti((s to (ile !it" t"e R)C a com#laint (or collection o( t"e (ull amount o( t"e loan including interests and ot"er c"arges 9eclaring t"at t"e due e'ecution and genuineness o( t"e (our #romissory notes "as been duly #roved& t"e R)C ruled t"at alt"oug" t"e =sury 0a! "ad been re#ealed& t"e interest c"arged on t"e loans !as unconscionable and Erevolting to t"e conscienceF and ordered t"e #ayment o( t"e amount o( t"e (irst 3 loans !it" a 12O interest #er annum and 1O #er mont" as #enalty +n a##eal& Plainti((-a##ellants argued t"at t"e #romissory note& !"ic" consolidated all t"e un#aid loans o( t"e de(endants& is t"e la! t"at governs t"e #arties

)"e Court o( A##eals ruled in (avor o( t"e Plainti((-a##ellants on t"e ground t"at t"e =sury 0a! "as become legally ine'istent !it" t"e #romulgation by t"e Central -ank in 1382 o( Circular /o 3%$& t"e lender and t"e borro!er could agree on any interest t"at may be c"arged on t"e loan& and ordered t"e 9e(endants to #ay t"e Plainti((s t"e sum o( P$%%&%%%& #lus $ $O #er mont" interest and 2P service c"arge #er annum & and 1O #er mont" as #enalty c"arges 9e(endants (iled t"e #resent case via #etition (or revie! on certiorari I**2#: .+/ t"e sti#ulated $ $O interest rate #er mont" on t"e loan in t"e sum o( P$%%& %%% %% is usurious H#!5: /o A sti#ulated rate o( interest at $ $O #er mont" on t"e P$%%& %%% %% loan is e'cessive& iniquitous& unconscionable and e'orbitant& but it cannot be considered EusuriousF because Central -ank Circular /o 3%$ "as e'#ressly removed t"e interest ceilings #rescribed by t"e =sury 0a! and t"at t"e =sury 0a! is no! Elegally ine'istent F 9octrineD A C- Circular cannot re#eal a la! +nly a la! can re#eal anot"er la! <uris#rudence #rovides t"at C- Circular did not re#eal nor in a !ay amend t"e =sury 0a! but sim#ly sus#ended t"e latter*s e((ectivity >Security -ank and )rust Co vs R)C@ =sury "as been legally non-e'istent in our ;urisdiction ,nterest can no! be c"arged as lender and borro!er may agree u#on 0a!D Article 222A& Civil Code )"e courts s"all reduce equitably liquidated damages& !"et"er intended as an indemnity or a #enalty i( t"ey are iniquitous or unconscionable #11 BACHRACH V. .OLIN.CO 33 PC,0 133 FACTS: -ac"rac" sold a truck to Holingco& !"ic" !as secured by a #romissory note and a c"attel mortgage on t"e truck )"e #romissory note #rovided t"at t"ere !ould be #ayment o( 2$O attorney*s (ees HELD: ,t may la!(ully be sti#ulated in (avor o( t"e creditor t"at in t"e event t"at it becomes necessary& by reason o( t"e delinquency o( t"e debtor& to em#loy counsel to en(orce #ayment o( t"e obligation& a reasonable attorney*s (ee s"all be #aid by t"e debtor& in addition to amount due o( #rinci#al and interest )"e legality o( t"is sti#ulation& !"en anne'ed to t"e negotiable instrument& is recogni4ed by t"e /,0 Q11 METROPOLITAN BAN? V. CA 134 SCRA 163 FACTS: Home4 o#ened an account !it" Holden Savings bank and de#osited 38 treasury !arrants All t"ese !arrants !ere indorsed by t"e cas"ier o( Holden Savings& and de#osited it to t"e savings account in a 8etrobank branc" )"ey !ere sent later on (or clearing by t"e branc" o((ice to t"e #rinci#al o((ice o( 8etrobank& !"ic" (or!arded t"em to t"e -ureau o( )reasury (or s#ecial clearing +n #ersistent inquiries on !"et"er t"e !arrants "ave been cleared& t"e branc" manager allo!ed !it"dra!al o( t"e !arrants& only to (ind out later on t"at t"e treasury !arrants "ave been dis"onored ISSUE: ."et"er t"e treasury !arrants are negotiable instruments& t"ere(ore making Holden Savings -ank liable HELD: )"e treasury !arrants !ere not negotiable instruments Clearly& it is indicated t"at it !as nonnegotiable and o( equal signi(icance is t"e indication t"at t"ey are #ayable (rom a #articular (und& 5und $%1 )"is indication as t"e source o( #ayment to be made on t"e treasury !arrant makes t"e #romise to #ay conditional and t"e !arrants t"emselves non-negotiable

8etrobank t"en cannot contend t"at by indorsing t"e !arrants in general& HS assumed t"at t"ey !ere genuine and in all res#ects !"at t"ey #ur#ort it to be& in accordance to Section 66 o( t"e /,0 )"e sim#le reason is t"at t"e la! isn*t a##licable to t"e non-negotiable treasury !arrants )"e indorsement !as made (or t"e #ur#ose o( merely de#ositing t"em !it" 8etrobank (or clearing ,t !as in (act 8etrobank !"ic" stam#ed on t"e back o( t"e !arrantsD EAll #rior indorsements andLor lack o( endorsements guaranteedRF )"e courts "ave t"e #o!er to limit t"e amount recoverable under a s#ecial #rovision in a #romissory note& !"ereby t"e debtor obligates "imsel( to #ay a s#eci(ied amount& or a certain #er centum o( t"e #rinci#al debt& in satis(action o( attorney*s (ees (or !"ic" t"e creditor !ould become liable in suing u#on t"e note S/ormally& i( t"ere is absence o( any agreement as to attorney*s (ees& t"en t"e court !ould only grant nominal amounts #12 SALAS V. CA 181 SCRA 236 Transfer and Negotiation 0 If the instrument is mere$y assi*ned# the transferee does not %ecome a ho$der and he mere$y steps into the shoes of the transferor&Any defense a1ai$a%$e a*ainst the transferor is a1ai$a%$e a*ainst the transferee& FACTS: Petitioner boug"t a car (rom Miologo 8otor Sales Com#any& !"ic" !as secured by a #romissory note& !"ic" !as later on indorsed to 5ilinvest 5inance& !"ic" (inanced t"e transaction Petitioner later on de(aulted in "er installment #ayments& allegedly due to t"e (raud im#uted by M8S in selling "er a di((erent ve"icle (rom !"at !as agreed u#on )"is de(ault in #ayment #rom#ted 5ilinvest 5inance to initiate a case against #etitioner )"e trial court decided in (avor o( 5ilinvest& to !"ic" t"e a##ellate court u#"eld by increasing t"e amount to be #aid ,t is t"e contention o( #etitioner t"at since t"e agreement bet!een "er and t"e motor com#any !as ine'istent& none "ad been assigned in (avor o( #rivate res#ondent HELD: Petitioner*s liability on t"e #romissory note& t"e due e'ecution and genuineness o( !"ic" s"e never denied under oat"& is under t"e (oregoing (actual milieu& as inevitable as it is clearly establis"ed )"e records reveal t"at involved "erein is not a sim#le case o( assignment o( credit as #etitioner !ould "ave it a##ear& !"ere t"e assignee merely ste#s into t"e s"oes o(& is o#en to all de(enses available against and can en(orce #ayment only to t"e same e'tent as& t"e assignor-vendor )"e instrument to be negotiable must contain t"e so-called !ords o( negotiability )"ere are only 2 !ays (or an instrument to be #ayable to order )"ere must al!ays be a s#eci(ied #erson named in t"e instrument and t"e bill or note is to be #aid to t"e #erson designated in t"e instrument or to any #erson to !"om "e "as indorsed and delivered t"e same .it"out t"e !ords Eor orderF or Eto t"e order o(F& t"e instrument is #ayable only to t"e #erson designated t"erein and is t"us non-negotiable Any subsequent #urc"aser t"ereo( !ill not en;oy t"e advantages o( being a "older in due course but !ill merely ste# into t"e s"oes o( t"e #erson designated in t"e instrument and !ill t"us be o#en to t"e de(enses available against t"e latter ,n t"e case at bar& t"e #romissory notes is earmarked !it" negotiability and 5ilinvest is a "older in due course Q13 CONSOLIDATED PL@WOOD V. IFC 143 SCRA 448 FACTS: Petitioner boug"t (rom Atlantic Hul( and Paci(ic Com#any& t"roug" its sister com#any ,ndustrial Products 8arketing& t!o used tractors Petitioner !as issued a sales invoice (or t"e t!o used tractors At t"e same time& t"e deed o( sale !it" c"attel mortgage !it" #romissory note !as issued Simultaneously& t"e seller assigned t"e deed o( sale !it" c"attel mortgage and #romissory note to res#ondent )"e used tractors !ere t"en delivered but barely 14 days a(ter& t"e tractors broke do!n )"e seller sent mec"anics but t"e tractors !ere not re#aired accordingly as t"ey !ere no longer serviceable Petitioner !ould delay t"e #ayments on t"e #romissory notes until t"e seller com#letes its obligation under t"e !arranty

)"erea(ter& a collection suit !as (iled against #etitioner (or t"e #ayment o( t"e #romissory note HELD: ,t is #atent t"at t"e seller is liable (or t"e breac" in !arranty against t"e #etitioner )"is liability as a general rule e'tends to t"e cor#oration to !"om it assigned its rig"ts and interests unless t"e assignee is a "older in due course o( t"e #romissory note in question& assuming t"e note is negotiable& in !"ic" case& t"e latter*s rig"ts are based on a negotiable instrument and assuming (urt"er t"at t"e #etitioner*s de(ense may not #revail against it )"e #romissory note in question is not a negotiable instrument )"e #romissory note in question lacks t"e so-called !ords o( negotiability And as suc"& it (ollo!s t"at t"e res#ondent can never be a "older in due course but remains merely an assignee o( t"e note in question )"us& t"e #etitioner may raise against t"e res#ondents all de(enses available to it against t"e seller #14 EAUITABLE BAN?IN. V. IAC 161 SCRA $18 FACTS: /ell Com#any issued a c"eck to "el# Casals and Casville ?nter#rises obtain a letter o( credit (rom ?quitable -anking in connection !it" equi#ment& a garrett skidder& !"ic" Casals and Casville !ere buying (rom /ell /ell indicated t"e #ayee as (ollo!s E?T=,)A-0? -A/6,/H C+RP+RA),+/ ALC CASM,00? ?/)?RPR,S?S ,/C F Casals de#osited t"e c"eck !it" t"e bank and t"e bank teller acce#ted t"e same and in accordance !it" customary bank #ractice& stam#ed in t"e c"eck t"e !ords Enon-negotiableF )"e amount !as !it"dra!n a(ter t"e de#osit )"is #rom#ted /ell to (ile a case against t"e bank& Casals and Casville ."ile t"e instant case !as being tried& Casals and Casville assigned t"e garrett skidder to #lainti(( !"ic" credited in (avor o( de(endants t"e amount o( P4$%&%%%& as #artial satis(action o( its claim against t"em HELD: ?quitable is not liable to /ell /ell s"ould bear t"e loss as it !as t"roug" its o!n acts& !"ic" #ut it into t"e #o!er o( Casals and Casville ?nter#rises to #er#etuate t"e (raud against it )"e c"eck !asn*t initially non-negotiable /eit"er !as it cross-c"ecked )"e rubber-stam#ing transversally on t"e (ace o( t"e c"eck !as only made t"e bank teller in accordance !it" customary bank #ractice& and not by /ell as t"e dra!er o( t"e c"eck& and sim#ly meant t"at t"erea(ter t"e same c"eck could no longer be negotiated )"e #ayee !as not indicated !it" reasonable certainty in contravention o( Section 8 As !orded& it could be acce#ted as de#osit to t"e account o( t"e #arty named t"erein a(ter t"e symbols o( ALC& or #ayable to t"e bank as trustee& or as an agent& (or Casville !it" t"e latter being t"e ultimate bene(iciary #15 PACHECO V. CA 313 SCRA $3$ FACTS: 9ue to dire (inancial needs o( #etitioner s#ouses !"o !ere engaged in t"e construction business& t"ey secured loans (rom Micencio At every loan secured& t"e lender com#elled t"e s#ouses to issue an undated c"eck des#ite t"e admission o( s#ouses t"at t"eir bank account "as insu((icient (unds or as on a later date& already closed 0ender assured t"em t"at t"e issuance o( t"e c"eck !as only evidence o( indebtedness& t"at it !ould not be #resented to t"e bank& and it !ould be (or (ormalities only +n t"e date !"erein t"ere !as an un#aid balance to t"e loans secured by t"e s#ouses& t"e lender "ad t"em #lace a date on t!o o( t"e later c"ecks issued Sur#rised later on& t"e s#ouses !ere c"arged !it" esta(a as t"e c"ecks !ere #resented (or encas"ment and !as dis"onored HELD:

-G 8=)=A0 AHR??8?/) +5 )C? PAR),?S& )C? /?H+),A-0? CCARAC)?R +5 A CC?C6 8AG -? .A,M?9 A/9 )C? ,/S)R=8?/) -? S,8P0G )R?A)?9 AS PR++5 +5 A/ +-0,HA),+/ )"ere cannot be deceit on t"e #art o( t"e s#ouses because t"ey agreed !it" t"e lender at t"e time o( t"e issuance and #ostdating o( t"e c"ecks t"at t"e same s"all not be encas"ed or #resented to t"e bank As #er assurance o( t"e lender& t"e c"ecks are not"ing but evidence o( t"e loan or security t"ereo( in lieu o( and (or t"e same #ur#ose as a #romissory note Q16 REPUBLIC PLANTERS BAN? V. CA 213 SCRA A36 FACTS: Gamaguc"i and Canlas are o((icers o( t"e .orld!ide Harment 8anu(acturing& !"ic" later c"anged its name to Pinc" 8anu(acturing )"ey !ere aut"ori4ed to a##ly (or credit (acilities !it" t"e #etitioner bank )"e t!o o((icers signed t"e #romissory notes issued to secure t"e #ayment o( t"e obligations 0ater& t"e bank instituted an action (or collection o( money& im#leading also t"e t!o o((icers )"e trial court "eld t"e t!o o((icers #ersonally liable also HELD: Canlass is solidarily liable on eac" o( t"e #romissory notes to !"ic" "is signature a##ears )"e #romissory notes in question are negotiable instruments and t"us& governed by t"e /egotiable ,nstruments 0a! =nder t"e /egotiable ,nstruments 0a!& #ersons !"o !rite t"eir names in t"e instrument are makers are liable as suc" -y signing t"e note& t"e maker #romises to #ay to t"e order o( t"e #ayee or any "older t"e tenor o( t"e obligation -ased on t"e above #rovisions o( t"e la!& t"ere is no denying t"at Canlass is one o( t"e comakers o( t"e #romissory note #10 MANUEL LIM V. COURT OF APPEALS 2$1 SCRA 4%8 FACTS: S#ouses 0im !ere c"arged !it" esta(a and violations o( -P22 (or allegedly #urc"asing goods (rom 0inton Commercial Cor#oration and issuing c"ecks as #ayment t"ereo( )"e c"ecks !"en #resented to t"e bank !ere dis"onored (or insu((iciency o( (unds or t"e #ayment (or t"e c"ecks "as been sto##ed HELD: ,t is settled t"at venue in criminal cases is a vital ingredient o( ;urisdiction ,t s"all be !"ere t"e crime or o((ense !as committed or any one o( t"e essential ingredients t"ereo( took #lace ,n determining t"e #ro#er venue (or t"ese cases& t"e (ollo!ing are material (actsNt"e c"ecks !ere issued at t"e #lace o( business o( 0intonB t"ey !ere delivered to 0inton at t"e same #laceB t"ey !ere dis"onored in 6alookan CityB #etitioners "ad kno!ledge o( t"e insu((iciency o( (unds in t"eir account =nder Section 131 o( t"e /egotiable ,nstruments 0a!& issue means t"e (irst delivery o( t"e instrument com#lete in its (orm to a #erson !"o takes it as "older )"e term "older on t"e ot"er "and re(ers to t"e #ayee or indorsee o( a bill or note !"o is in #ossession o( it or t"e bearer t"ereo( )"e im#ortant #lace to consider in t"e consummation o( a negotiable instrument is t"e #lace o( delivery 9elivery is t"e (inal act essential to its consummation as an obligation Q18 REPUBLIC PLANTERS BAN? V. COURT OF APPEALS 216 SCRA A38 FACTS: Gamaguc"i and Canlas are o((icers o( t"e .orld!ide Harment 8anu(acturing& !"ic" later c"anged its name to Pinc" 8anu(acturing )"ey !ere aut"ori4ed to a##ly (or credit (acilities !it" t"e #etitioner bank )"e t!o o((icers signed t"e #romissory notes issued to secure t"e #ayment o( t"e obligations 0ater& t"e bank instituted an action (or collection o( money& im#leading also t"e t!o o((icers )"e trial court "eld t"e t!o o((icers #ersonally liable also

HELD: Canlass is solidarily liable on eac" o( t"e #romissory notes to !"ic" "is signature a##ears )"e #romissory notes in question are negotiable instruments and t"us& governed by t"e /egotiable ,nstruments 0a! =nder t"e /egotiable ,nstruments 0a!& #ersons !"o !rite t"eir names in t"e instrument are makers are liable as suc" -y signing t"e note& t"e maker #romises to #ay to t"e order o( t"e #ayee or any "older t"e tenor o( t"e obligation -ased on t"e above #rovisions o( t"e la!& t"ere is no denying t"at Canlass is one o( t"e comakers o( t"e #romissory note Si*nature of .a ers F ,"*: ,n 13A3& .orld Harment 8anu(acturing& t"roug" its board aut"ori4ed S"o4o Gamaguc"i >#resident@ and 5ermin Canlas >treasurer@ to obtain credit (acilities (rom Re#ublic Planters -ank >RP-@ 5or t"is& 3 #romissory notes !ere e'ecuted ?ac" #romissory note !as uni(ormly !ritten in t"e (ollo!ing mannerD !!!!!!!!!!!# after date# for 1a$ue recei1ed# I2'e# 3oint$y and se1era$$y promise to pay to the 4RDER of the RE"5B6IC "6A7TERS BA78# at its office in .ani$a# "hi$ippines# the sum of !!!!!!!!!!! "ES4S+9&, "hi$ippine Currency9 "$ease credit proceeds of this note to: !!!!!!!! Sa1in*s Account !!!!!!;; Current Account 7o& 1<=20>>2?=0@ of A4R6DAIDE /AR.E7T .B/& C4R"& S*d& ShoCo Dama*uchi S*d& Bermin Can$as )"e note became due and no #ayment !as made RP- eventually sued Gamaguc"i and Canlas Canlas& in "is de(ense& averred t"at "e s"ould not be "eld #ersonally liable (or suc" aut"ori4ed cor#orate acts t"at "e #er(ormed inasmuc" as "e signed t"e #romissory notes in "is ca#acity as o((icer o( t"e de(unct .orld!ide Harment 8anu(acturing ISSUE: ."et"er or not Canlas s"ould be "eld liable (or t"e #romissory notes HELD: Ges )"e solidary liability o( #rivate res#ondent 5ermin Canlas is made clearer and certain& !it"out reason (or ambiguity& by t"e #resence o( t"e #"rase E;oint and severalF as describing t"e unconditional #romise to #ay to t"e order o( Re#ublic Planters -ank ."ere an instrument containing t"e !ords E, #romise to #ayF is signed by t!o or more #ersons& t"ey are deemed to be ;ointly and severally liable t"ereon Canlas is solidarily liable on eac" o( t"e #romissory notes bearing "is signature (or t"e (ollo!ing reasonsD The promissory notes are ne*otia%$e instruments and must %e *o1erned %y the 7e*otia%$e Instruments 6a'& =nder t"e /egotiable lnstruments 0a!& #ersons !"o !rite t"eir names on t"e (ace o( #romissory notes are makers and are liable as suc" -y signing t"e notes& t"e maker #romises to #ay to t"e order o( t"e #ayee or any "older according to t"e tenor t"ereo( Q13 FRANSISCO V. COURT OF APPEALS 313 SCRA 3$4 FACTS: A 5ransisco Realty and 9evelo#ment and Cerby Commercial and Construction Cor#oration entered into a 0and 9evelo#ment and Construction Contract 5ransisco !as t"e #resident o( A5R9C !"ile +ng !as t"e #resident o( CCCC ,t !as agreed u#on t"at CCCC !ould undertake t"e construction o( "ousing units and t"e develo#ment o( a large #arcel o( land )"e #ayment !ould be on a turnkey basis )o (acilitate t"e #ayment& A59RC e'ecuted a 9eed o( Assignment to enable t"e CCCC to collect #ayments (rom t"e HS,S 5urt"er& t"ey o#ened an account !it" a bank (rom !"ic" c"ecks !ould be issued by 5ransisco and t"e HS,S #resident CCCC later on (iled a com#laint (or t"e un#aid balance in #ursuance to its agreement !it" A5R9C Co!ever& an amicable settlement ensued& !"ic" !as embodied in a 8emorandum o( Agreement ,t !as embodied

in said agreement t"at HS,S recogni4es its indebtedness to CCCC and t"at CCCC !ould also #ay its obligations to A5R9C A year later& it !as (ound out t"at 9ia4 and 5ransisco "ad dra!n c"ecks #ayable to +ng +ng denied acce#ting said c"ecks and it !as (urt"er (ound out t"at 9ia4 entrusted t"e c"ecks to 5ransisco !"o later (orged t"e signature o( +ng& s"o!ing t"at "e indorsed t"e c"ecks to "er and t"en s"e de#osited t"e c"ecks to "er #ersonal savings account )"is incident #rom#ted +ng to (ile a com#laint against 5ransisco HELD: +ng*s signature !as (ound to be (orged by 5ransisco 5ransisco*s contention t"at "e !as aut"ori4ed to sign +ng*s name in "er (avor giving "er aut"ority to collect all t"e receivables o( CCCC (rom HS,S )"is contention is bere(t o( any merit )"e /egotiable ,nstruments 0a! #rovides t"at !"en a #erson is under obligation to indorse in a re#resentative ca#acity& "e may indorse in suc" terms as to negative #ersonal liability An agent& !"en so signing& s"ould indicate t"at "e is merely signing as an agent in be"al( o( t"e #rinci#al and must disclose t"e name o( "is #rinci#al +t"er!ise& "e !ill be "eld liable #ersonally And assuming s"e !as indeed aut"ori4ed& s"e didn7t com#ly !it" t"e requirements o( t"e la! ,nstead o( signing +ng*s name& s"e s"ould "ave signed in "er o!n name as agent o( CCCC )"us& "er contentions cannot su##ort or validate "er acts o( (orgery Q2% ILLUSORIO V. CA 333 SCRA 83 Forgery, Sec. 23 In one case# the dra'er 'as not a$$o'ed to reco1er a$thou*h his si*nature 'as a$$e*ed$y for*ed %ecause it 'as esta%$ished that the person 'ho encashed the chec s 'as his trusted secretary& The dra'erEs ne*$i*ence 'as considered the pro)imate cause of his $oss %ecause he entrusted his %$an chec s and credit cards to his secretary& -e a$so entrusted to his secretary the 1erification and reconci$iation of his accounts& -e did not persona$$y chec his statement of accounts and cance$$ed or used chec s as the same 'ere a$so entrusted to his secretary& FACTS: Petitioner !as a #rominent businessman !"o& because o( di((erent business commitments& entrusted to "is t"en secretary t"e "andling o( "is credit cards and c"eckbooks 5or a material #eriod o( time& t"e secretary !as able to encas" and de#osit in "er #ersonal account money (rom t"e account o( #etitioner =#on kno!ledge o( "er acts& s"e !as (ired immediately and criminal actions !ere (iled against "er )"erea(ter& #etitioner requested t"e bank to restore its money but t"e bank re(used to do so HELD: )"e #etitioner doesn*t "ave a course o( action against t"e bank )o be entitled to damages& #etitioner "as t"e burden o( #roving negligence on t"e #art o( t"e bank (or (ailure to detect t"e discre#ancy in t"e signatures on t"e c"ecks ,t is incumbent u#on #etitioner to establis" t"e (act o( (orgery Curiously t"oug"& #etitioner (ailed to su##ly additional signature s#ecimens as requested by t"e /-, )"e bank !as not also remiss in #er(ormance o( its duties& it #ractices due diligence in encas"ing c"ecks )"e bank didn*t "ave any "int o( t"e modus o#erandi o( ?ugenio as s"e !as a regular customer& designated by t"e #etitioner "imsel( to transact on "is be"al( ,t !as #etitioner !"o !as negligent in t"is case Ce (ailed to e'amine "is bank statements and t"is !as t"e #ro'imate cause o( "is o!n damage -ecause o( t"is negligence& "e is #recluded (rom setting u# t"e de(ense o( (orgery !it" regard t"e c"ecks