Philippine
Education Co. vs. Soriano
The
Weight of authority in the United States is that postal money orders are not
negotiable instruments, the reason being that in establishing and operating a postal
money order system, the government is not engaged in commercial transactions
but merely exercises a governmental power for the public benefit. Moreover,
some of the restrictions imposed upon money orders by postal laws and
regulations are inconsistent with the character of negotiable instruments. For
instance, such laws and regulations usually provide for not more than one
endorsement; payment of money orders may be withheld under a variety of
circumstances.
Caltex
Phil. vs. Court of Appeals
A
negotiable instrument that is payable to bearer may be negotiated by mere
delivery. No further act other than delivery is necessary in order to negotiate
the instrument and to make the transferee a holder.
Metrobank
vs. Court of Appeals
An
instrument to be negotiable instrument must contain an unconditional promise or
orders to pay a sum certain in money. As provided by Sec 3 of NIL an
unqualified order or promise to pay is unconditional though coupled with: 1st,
an indication of a particular fund out of which reimbursement is to be made or
a particular account to be debited with the amount; or 2nd, a
statement of the transaction which give rise to the instrument. But an order to
promise to pay out of particular fund is not unconditional.
Sesbreno
vs. Court of Appeals
Only
an instrument qualifying as a negotiable instrument under the relevant statute
may be negotiated either by indorsement thereof coupled with delivery, or by
delivery alone if it is in bearer form. A negotiable instrument, instead of
being negotiated, may also be assigned or transferred. The legal consequences
of negotiation and assignment of the instrument are different. A negotiable
instrument may not be negotiated but may be assigned or transferred, absent an
express prohibition against assignment or transfer written in the face of the
instrument.
Firestone
Tire & rubber Co. vs. Court of Appeals
Withdrawal
slips are non negotiable instruments. The essence of negotiability which
characterizes a negotiable paper as a credit instrument lies in its freedom to
circulate freely as a substitute for money. The withdrawal slips lacked this
character.
Ang
Tek Lian vs. Court of Appeals
A
check drawn payable to the order of “cash” is a check payable to bearer and the
bank may pay it to the person presenting it for payment without the drawer’s
indorsement. However, if the bank is not sure of the bearer’s identity or
financial solvency, it has the right to demand identification or assurance
against possible complication. But where the bank is satisfied of the identity
or economic standing of the bearer who tenders the check for collection, it
will pay the instrument without further question; and it would incur no
liability to the drawer in thus acting.
Development
Bank of the Phils. vs. Sima Wei
The
payee of a negotiable instrument acquires no interest with respect thereto
until its delivery to him. Delivery of an instrument means transfer of
possession, actual or constructive, from one person to another. Without the
initial delivery of the instrument from the drawer to the payee, there can be
no liability on the instrument. Moreover, such delivery must be intended to
give effect to the instrument.
Philippine
Bank of Commerce vs. Aruego
There
is a difference between a qualified indorser and a person negotiating by mere
delivery. While a qualified indorser warrants to all subsequent holders, the
warranties of the person negotiating by mere delivery extends only in favor of
his immediate transferee.
Francisco
vs. Court of Appeals
The negotiable
Instruments Law provides that when a person is under
obligation to indorse in a representative capacity, he may indorse in such
terms as to negative personal liability. An agent, when so signing,
should indicate that he is merely signing as an agent in behalf of the
principal and must disclose the name
of his principal. Otherwise, he will
be held liable personally
Jail-Alai
vs. Bank of the Philippine Islands
Holders
of checks may obtain payment from the drawee bank by presenting it for payment
directly with the bank or by depositing it in his account in another bank known
as the collecting bank or depositary bank. When the holder deposits his check
with the collecting bank, the nature of the relationship created at that stage
is one of agency, that is the bank is to collect from the drawee of the check
the corresponding proceeds.
Republic
Bank vs. Ebreda
Where
the signature on a negotiable instrument is forged, the negotiation of the
check is without force or effect. However, where a check has several
indorsersment on it, it is only the negotiation based on the forged or
unauthorized signature is inoperative. It will not render void all the other
negotiations of the check with respect to other parties whose signatures are
genuine.
MWSS
vs. Court of Appeals
It
is basic that whoever alleges forgery must prove such fact. Forgery cannot be
presumed, it must be duly established.
Banco
de Oro vs. Equitable Banking Corporation
If
the instrument involved is a check, the drawee cannot charge the account of the
drawer if the payee’s or indorser’s signature is forged. The drawee, in turn
has the right of recourse against the collecting bank.
The
drawer generally owes no duty of diligence to the collecting bak, the law
imposes a duty of diligence on the collecting bank to scrutinize checks
deposited with it for the purpose of determining their genuineness and
regularity. The collecting bank being primarily engaged in banking holds itself
out to the public as the expert and the law holds it to high standard of
conduct.
It
is the collecting bank that generally
suffers the loss with regard to forged indorsements because
it had the duty to ascertain the
genuineness of all prior indorsements considering that the
act of presenting the check for payment to the drawee is an assertion that the
party making the presentment has done its duty to ascertain the genuineness of
the indorsements.
Gempesaw
vs. Court of Appeals
A
forged signature is wholly inoperative, no one can gain title to the instrument
through such forged insdorsement. Such indorsement prevents any subsequent
partyfrom acquiring any right as against parties prior to the forgery. Although
rights may exist between and among parties subsequent to the forged instrument,
not one of the can acquire rights agasint parties prior to the forgery. Such
forged instrument cuts-off the rights of all subsequent parties as against
parties prior to the forgery. However, the law makes an exception to these
rules where party is precluded from setting up forgery as a defense.
Associated
Bank vs. Court of Appeals
When
a check is deposited with the collecting bank, it takes a risk on its
depositor. It is only logical that this bank be held accountable for checks
deposited by its customers. It is important to mention that Payee whose
signature was forged may directly proceed against the collecting bank. However,
the drawer cannot opt to recover from the collecting bank. There is no privity
of contract between the drawer and the collecting bank.
Metrobank
vs. First National City Bank
When
the indorsement itself is very clear when it begins with the words “For
clearance, clearing office” such indorsement must be read together with the
24-hour rule regulation of the House operations of the Central Bank. Once that
24-hour period is over, the liability on such indorsement has ceased. Failure
of drawee bank to call the attention of collecting bank to the alteration of
the check in question until after the lapse of 24 hours negates whatever right
it might have against the collecting bank. Its remedy lies not against
collecting bank but against the party responsible for the changing of the name
of the payee and the amount on the face of the check.
Republic
Bank vs. Court of Appeals
The
24-hour clearing house rule is valid rule applicable to commercial banks. As
general rule, the collecting bank or last endorser bears the loss when the
indorsement was forged. But the unqualified endorsement of the collecting bank
on the check should be read together with the 24-hour regulation on the
clearing house operation. Thus, when the drawee bank fails to return a forged
or altered check to the collecting bank is absolved from liability. Unless an
alteration is attributable to the fault or negligence of the drawer himself,
the remedy of the drawee bank that negligently clears a forged and/or honor
altered check for payment is against the party responsible for the forgery or
alteration, otherwise, it bears the loss.
Philippine
Commercial International Bank vs. Court of Appeals
A
bank (in this case PCIB) which cashes a check drawn upon another bank (in this
case Citibank), without requiring proof as to the identity of persons
presenting it, or making inquiries with regard to them, cannot hold the
proceeds against the drawee when the proceeds of the checks were afterwards
diverted to the hands of a third party.
Ramon
Illusorio vs. Court of Appeals
The
collecting bank or last endorser generally suffers the loss because it has the
duty to ascertain the genuineness of all prior indorsements considering that
the act of presenting the check for payment to the drawee is an assertion that
the party making the presentment has done its duty to ascertain the genuineness
of the indorsements. As between the drawer and the drawee bank, the drawee bank
should bear the loss. The drawee bank shall have recourse against the
collecting bank because such collecting bank guarantees that all prior endorsements
are genuine. The collecting bank then can go against the forger. In cases
involving a forged check, where the drawer’s is forged, drawer can recover from
the drawee bank. No drawee bank has a right to pay a forged check. If it does,
it shall have to recredit the amount of check to the account of the drawer. The
liability chain ends with drawee bank whose responsibility it is to know the
drawer’s signature since the latter is its customer.
Samsung
Construction Co. Phils, Inc vs. FEBTC and CA
Under
Sec. 62 of NIL, among the warranties to be assumed by the acceptor is it admits
the existence of the drawer, the genuineness of his signature, and his capacity
and authority to draw the instrument. It is incumbent upon the drawee bank to
ascertain the genuineness of the signature of its depositor. The respondent
bank in this case did not exercise the degree of diligence required to enable
it to detect the forgery. Aside from the warranties as an indorser, the
collecting bank is made liable because it is privy to the depositor who
negotiated the check because it knows him, his address and history for being a
client thereof. Thus, it is in a better position to detect forgery or
irregularity in the indorsement aka “Doctrine of Comparative Negligence”
Philippine
National Bank vs. Court of Appeals
An
alteration is said to be material if it alters the effect of the instrument. It
means an unauthorized change in an instrument that purports to modify in any
respect the obligation of a party or an unauthorized addition of words or
numbers or other change to an incomplete instrument relating to the obligation
of a party. In other words, material alteration is one which changes the items
which is required to be stated under Sec 1 of NIL.
Sadaya
vs. Sevilla
On
principle, a solidary accommodation maker—who
made payment—has the right to contribution, from his co-accomodation
maker, in the absence of agreement to the contrary between them, subject to
conditions imposed by law. This right
springs from an implied promise to
share equally the burdens thay may ensue
from their having consented to stamp their
signatures on the promissory note.
Crisologo-Jose
vs. Court of Appeals
The
provision of NIL which holds an accommodation party liable on the instrument to
holder for value, although such holder at the time of taking the instrument
knew him to be only an accommodation party, does not include nor apply to
corporations which are accommodation parties. This is because the issue or
indorsement of negotiable paper by a corporation without consideration and for
accommodation of another is ultra vires. Hence, one who has taken the
instrument with knowledge of the accommodation nature thereof cannot recover
against a corporation where it is only a accommodation party.
Stelco
Marketing vs. Court of Appeals
A
person cannot be holder of the check for value if it does not meet the
essential requisites prescribed by the law. He must become the holder of it
before it was overdue, and without notice that it had previously dishonored,”
and he took the check in good faith and for value before he can be considered
as a holder of the check for value.
Travel-On
BPI vs. Court of Appeals
Check
which is regular on its face is deemed prima facie to have been issued for a
valuable consideration and every person whose signature appears thereon is
deemed to have become a party thereto for value. Further the rule is quite
settled that a negotiable instrument is presumed to have been given or indorsed
for a sufficient consideration unless otherwise contradicted and overcome by
another evidence.
In the accommodation transactions
recognized by the NIL, an accommodating party lends his credit to the
accommodated party, by issuing or indorsing a check which is held by the payee
or indorsee as a holder in due course, who gave full value which the
accommodated party must repay the accommodating party, unless of course the
accommodating party intended to make a donation to the accommodated party. But
the accommodating party is bound on the check to the holder in due course who
is necessarily a third party and is not the accommodated party. Having issued
or indorsed the check, the accommodating party has warranted to the holder in
due course that he will pay the same according to its tenor.
De
Ocampo vs. Gatchalian
Good
faith on the part of the holder is presumed, such presumption is destroyed if
the payee or indorsee acquired possession of the instrument under circumstances
that should have put it to inquiry as to the title of the holder who negotiated
the instrument. The burden is now on the part of the holder to show that
notwithstanding the suspicious circumstances, it acquired in the actual good
faith.
Mesina
vs. IAC
The
holder of a cashier’s check who is not
a holder in due course cannot enforce
payment against the issuing bank which
dishonors the same. If a payee of a cashier’s check obtained it
from the issuing bank by fraud, or if there is
some other reason why the payee is not
entitled to collect the check, the bank
would of course have the right to
refuse payment of the check when presented by payee.
Metropol
vs. Sambok
A
qualified indorserment constitutes the indorser a mere assignor of the title to
the instrument. It may be made by adding to the indorser’s signature the words
“without recourse” or any words of similar import. Such indorsement relieves
the indorser of the general obligation to pay if the instrument is dishonored
but not of the liability arising from warranties on the instrument as provided by section 65 of NIL.
Recourse
means resort to a person who is secondarily liable after the default of the
person who is primarily liable. A person who indorses without qualification
engages that on due presentment, the note shall be accepted or paid, or both as
the case maybe, and that if it be dishonored, he will pay the amount thereof to
the holder.
Sepiera
vs. Court of Appeals
Every indorser who indorses without
qualification, warrants to all subsequent holders in due course that, on due
presentment, it shall be accepted or paid or both, according to its tenor, and
that if it be dishonored and the necessary proceedings on dishonor be duly
taken, he will pay the amount thereof to the holder or to any subsequent
indorser who may be compelled to pay it.
Prudencial
Bank vs. IAC
Acceptance
is presumed to be unqualified or absolute. If the drawee intends toqualify his
acceptance, he must do so distinctly and unmistakably or else the acceptance
will be taken as absolute.
Wong
vs. Court of Appeals
A check must be presented
for payment within a reasonable time after its issue or the drawer will be
discharged from liability thereon to the extent of the loss caused by the
delay. By current banking practice, a check becomes stale after more than six
(6) months, or 180 days.
The
International Corporate Bank vs. Francis S. Gueco and Ma. Luz E Gueco
A
stale check is one which has not been presented for payment within a reasonable
time after its issue. It is valueless and, therefore, should not be paid. Under
the negotiable instruments law, an instrument not payable on demand must be
presented for payment on the day it falls due. When the instrument is payable
on demand, presentment must be made within a reasonable time after its issue.
In the case of a bill of exchange, presentment is sufficient if made within a
reasonable time after the last negotiation thereof. A check must be presented
for payment within a reasonable time after its issue, and in determining what
is a "reasonable time," regard is to be had to the nature of the
instrument, the usage of trade or business with respect to such instruments,
and the facts of the particular case. The test is whether the payee employed
suchdiligence as a prudent man exercises in his own affairs. This is because
the nature and theory behind the useof a check points to its immediate use and
payability.
State
Investment House Inc. vs. CA
The
withdrawal of the money from the drawee bank to avoid liability on the checks
cannot prejudice the rights of holders in due course. For the reason that the
holder who takes the negotiated paper makes a contract with the parties on the
face of the instrument; there is an implied representation that funds or credit
are available for the payment of the instrument in the bank upon which it is
withdrawn.
Bataan
Cigar and Cigarette Factory, Inc. vs. CA
In
order to preserve the credit worthiness of checks, jurisprudence has pronounced
that crossing a check should have the following effects: (1) check may not be
encashed but only deposited in the bank; (2) the check may be negotiated only
once, to one who has an account with a bank; (3) and the act of crossing the
check serves as a warning to the holder that the check has been issued for a
definite purpose so that he must inquire if he has received the check pursuant
to that purpose, otherwise he is not a holder in due course.
Citytrust
banking Corp., vs. Intermediate Appellate Court
Even
there was error on the account number the controlling in determining in whose
account the deposit is name of the account owner. This is so because it is not
likely to commit an error in one’s name than merely relying on numbers which
are difficult to remember. Numbers are for the convenience of the bank but was
never intended to disregard the real name of its depositors. The bank is
engaged in business impressed with public trust, and it is its duty to protect
in return its clients and depositors who transact business with it.
Tan
vs. Court of Appeals
A
cashier’s check is a primary obligation of the issuing bank and accepted in
advance by its mere issuance, and by its peculiar character and general use in
the commercial world is regarded substantially to be as good as the money which
it represents.
Papa
vs. A.U. Valencia
After
more than 10 years from the payment in part by cash and in part by check, the
presumption is that the check had been encashed. Failure of the payee to encash
a check for more than 10 years undoubtedly resulted in the impairment of the
check through his unreasonable and unexplained delay.
Bank
of the Philippine Islands vs. Court of Appeals
Every
negotiable instrument is deemed prima facie to have been issued for a valuable
consideration; every person whose signature appears thereon to have become a
party thereto for value. Therefore, it is up to the party who alleges that
there was absence of consideration to prove such fact.
The
presumption will operate only if there was negotiation. Consideration is not
presumed if there was transfer without indorsement.
