Professional Documents
Culture Documents
Week 1 Digest
Week 1 Digest
CA
G.R. No. 101163, January 11, 1993
FACTS: Private respondent Nora Moulic issued to Corazon Victoriano , as security for
pieces of jewelry to be sold on commission, two postdated checks in the amount of fifty
thousand each. Thereafter, Victoriano negotiated the checks to State Investment
House, Inc. When Moulic failed to sell the jewelry, she returned it to Victoriano before
the maturity of the checks. However, the checks cannot be retrieved as they have been
negotiated. Before the maturity date Moulic withdrew her funds from the bank
contesting that she incurred no obligation on the checks because the jewelry was
never sold and the checks were negotiated without her knowledge and consent. Upon
presentment for payment, the checks were dishonored for insufficiency of funds.
ISSUES:
1. Whether or not State Investment House Inc. was a holder of the check in due course
2. Whether or not Moulic can set up against the petitioner the defense that there was
failure or absence of consideration
HELD:
Section 52 of the NIL provides what constitutes a holder in due course. The evidence
shows that:
a. on the faces of the postdated checks were complete and regular;
b. that State Investment House Inc. bought the checks from the payee Victoriano
before the due dates;
c. that it was taken in good faith and for value; and
d. there was no knowledge with regard that the checks were issued as security
and not for value.
2. No, Moulic can only invoke this defense against the petitioner if it was a privy to the
purpose for which they were issued and therefore is not a holder in due course.
Section 119 of NIL provides how an instrument can be discharged. Moulic can only
invoke paragraphs c and d as possible grounds for the discharge of the instruments.
Since Moulic failed to get back the possession of the checks as provided by paragraph
c, intentional cancellation of instrument is impossible. As provided by paragraph d,
the acts which will discharge a simple contract of payment of money will discharge the
instrument. Correlating Article 1231 of the Civil Code which enumerates the modes of
extinguishing obligation, none of those modes outlined therein is applicable in the
instant case. Thus, Moulic may not unilaterally discharge herself from her liability by
mere expediency of withdrawing her funds from the drawee bank. She is thus liable as
she has no legal basis to excuse herself from liability on her check to a holder in due
course. Moreover, the fact that the petitioner failed to give notice of dishonor is of no
moment. The need for such notice is not absolute; there are exceptions provided by
Sec 114 of NIL.
PURPOSE:
In addition, the Negotiable Instruments Law was enacted for the purpose of
facilitating, not hindering or hampering transactions in commercial paper.
Thus, the said statute should not be tampered with haphazardly or lightly. Nor
should it be brushed aside in order to meet the necessities in a single case.
Garcia v. Llamas
G.R. No. 154127
Garcia averred that he assumed no liability under the promissory note because
he signed it merely as an accommodation party for de Jesus. He added that the
loan had been paid by de Jesus through the issuance of a check. Llamas, on
the other hand, answered that the loan remained unpaid for the reason that
the check issued by de Jesus bounced.
RULING: No. By its terms, the note was made payable to a specific person rather
than to bearer or to order— a requisite for negotiability under Act 2031, the Negotiable
Instruments Law (NIL). Hence, petitioner cannot avail himself of the NIL's provisions
on the liabilities and defenses of an accommodation party. Besides, a non-negotiable
note is merely a simple contract in writing and is evidence of such intangible rights as
may have been created by the assent of the parties. The promissory note is thus
covered by the general provisions of the Civil Code, not by the NIL.
Even granting arguendo that the NIL was applicable, still, petitioner would be liable for
the promissory note. Under Article 29 of Act 2031, an accommodation party is liable
for the instrument to a holder for value even if, at the time of its taking, the latter
knew the former to be only an accommodation party.
Travel On v. CA
G.R. No. L-56169, June 26, 1992
FACTS: Petitioner Travel-On Inc. is a travel agency from which Arturo Miranda
procured tickets on behalf of airline passengers and derived commissions therefrom.
Miranda was sued by petitioner to collect on the six postdated checks he issued which
were all dishonored by the drawee banks. Miranda, however, claimed that he had
already fully paid and even overpaid his obligations and that refunds were in fact due
to him. He argued that he had issued the postdated checks not for the purpose of
encashment to pay his indebtedness but for purposes of accommodation, as he had in
the past accorded similar favors to petitioner. Petitioner however urges that the
postdated checks are per se evidence of liability on the part of private respondent and
further argues that even assuming that the checks were for accommodation, private
respondent is still liable thereunder considering that petitioner is a holder for value.
ISSUE:
1. WON Private respondent be held liable on the 6 postdated checks he issued
2. WON the check were issued for accommodation
HELD:
1. Yes. The Court held that the checks are the all-important evidence of petitioner's
case; that these checks clearly established private respondent's indebtedness to
petitioner; that these checks were intended for encashment.
It is important to stress that a 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. Thus,
the mere introduction of the instrument sued on in evidence prima facie entitles the
plaintiff to recovery. 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 other competent evidence.
FACTS: The Republic of the Philippines filed a complaint for escheat of certain
unclaimed bank deposits balances under the provisions of Act No. 3936 against
several banks, among them the First National City Bank of New York. It is alleged that
pursuant to Section 2 of said Act defendant banks forwarded to the Treasurer of the
Philippines a statement under oath of their respective managing officials of all the
credits and deposits held by them in favor of persons known to be dead or who have
not made further deposits or withdrawals during the period of 10 years or more.
Wherefore, it is prayed that said credits and deposits be escheated to the Republic of
the Philippines by ordering defendant banks to deposit them to its credit with the
Treasurer of the Philippines.
After hearing the court a quo rendered judgment holding that cashier's or manager's
checks and demand drafts as those which defendant wants excluded from the
complaint come within the purview of Act No. 3936, but not the telegraphic transfer
payment orders which are of different category. Consequently, the complaint was
dismissed with regard to the latter. But, after a motion to reconsider was filed by
defendant, the court a quo changed its view and held that even said demand drafts do
not come within the purview of said Act and so amended its decision accordingly.
Plaintiff has appealed.
ISSUE: Whether the demand drafts and telegraphic orders come within the meaning of
the term "credits" or "deposits" employed in the law.
FACTS: Gueco spouses obtained a loan from ICB (now Union Bank) to purchase a car.
In consideration thereof, the debtors executed Promissory Notes which were payable in
monthly installments, and a chattel mortgage was made over the car. However, the
spouses defaulted in payment of their obligations and despite the lowering of the
amount to be paid (from 180k down to 150k), they still failed to pay. Thereafter, they
tendered a manager’s check in favor of the bank. Nonetheless, the car was still
detained because the spouses refused to sign the joint motion to dismiss. The bank
averred that the joint motion to dismiss is part of standard office procedure to
preclude the filing of other claims. Because of this, the spouses filed an action for
damages against the bank. And by the time the case was instituted, the check had
become stale in the hands of the bank.
ISSUE: WON failure to present payment within a reasonable time absolved respondent
from his liability
HELD: NO. Failure to present for payment within a reasonable time will result to the
discharge of the drawer only to the extent of the loss caused by the delay. Failure to
present on time, thus, does not totally wipe out all liability.
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 such diligence as a
prudent man exercises in his own affairs. This is because the nature and theory
behind the use of a check points to its immediate use and payability.
It has been held that, if the check had become stale, it becomes imperative that the
circumstances that caused its non-presentment be determined. In the case at bar,
there is no doubt that the petitioner bank held on the check and refused to encash the
same because of the controversy surrounding the signing of the joint motion to
dismiss.
PNB v. TRIA
G.R. NO. 193250
DOCTRINE: The check in question was a manager’s check. A manager’s check is one
drawn by a bank’s manager. Tria in this case, upon the bank itself. We have held that
it stands on the same footing as a certified check,which is deemed to have been
accepted by the bank that certified it, as it is an order of the bank to pay, drawn upon
itself, committing in effect its total resources, integrity and honor behind its issuance.
By its peculiar character and general use in commerce, a manager’s check is regarded
substantially to be as good as the money it represents.
FACTS:
Respondent Amelio Tria (Tria) is a former branch manager of Philippine National
Bank’s(PNB) Metropolitan Waterworks and Sewerage System (MWSS) branch. MWSS
opened an account in PNB-MWSS. On April 22, 2004 PNB-MWSS received a letter
from MWSS instructing the former to issue a manager’s check in the amount of P5,
200, 000.00 in favor of a certain Atty. Rodrigo Reyes.The employees of PNB, after
authentication and verification approved the request for the issuance of the manager’s
check. On April 26, 2004, Tria accompanied Atty. Reyes to PNB Quezon City branch
since PNB-MWSS had insufficient funds to pay the amount. He told the employee of
PNB QC that Atty. Reyes is their valued client. On February 2, 2005, Zaida Pulida
(Pulida), a MWSS employee handling the subject bank account inquired to PNB about
the P5, 200, 000.00 debited to the account. Pulida notified PNB that MWSS did not
apply for the issuance of the said manager’s check. Furthermore, upon verification
with the Integrated Bar of the Philippines, it was confirmed that there was no Rodrigo
Reyes included in its roster. PNB conducted its own investigation and held Tria liable
for qualified theft. Tria denied the allegation and contended other bank employees
should be liable for the loss.
ISSUE: WON Tria, the bank manager, is liable for the crime charge for approving the
manager’s check
RULING: Yes. The check in question was a manager's check. A manager's check is
one drawn by a bank's manager,Tria in this case, upon the bank itself. We have
held that it stands on the same footing as a certified check, which is deemed to have
been accepted by the bank that certified it, as it is an order of the bank to pay, drawn
upon itself, committing in effect its total resources, integrity and honor behind its
issuance. xxx Indeed, as the bank's own check, a manager's check becomes the
primary obligation of the bank and is accepted in advance by the act of its
issuance
As branch manager, Tria signs manager's checks. He serves as the last safeguard
against any pretense resorted to for an illicit claim over the bank's money . The
acts of the other bank officials in the MWSS branch in processing the manager's
checks pass through the supervision and approval of Tria. Thus, the processing and
approval of the check are the responsibility of Tria.
RCBC V. HI-TRI
G.R. No. 192413. June 13, 2012
RCBC contends that the Bakunawas were not the owners of the unclaimed balances
and were thus not entitled to notice from the RTC Clerk of Court. It hinges its claim on
the theory that the funds represented by the Manager's Check were deemed
transferred to the credit of the payee or holder upon its issuance.
Hi-Tri and Bakunawa, on the other hand, contend that they have a legal interest in
the fund allocated for the payment of the Manager's Check, their ownership of the
funds was evidenced by their continued custody of the Manager's Check. (Note the
funds were part of the compromise agreement between Hi-Tri and Rosmil in a special
civil case, hence, the Manager’s check is still in the custody of Bakunawa)
ISSUE: WON the issuance of manager’s check automatically passes the funds to the
account of the payee
HELD: No. the mere issuance of a manager's check does not ipso facto work as an
automatic transfer of funds to the account of the payee. In case the procurer of the
manager's or cashier's check retains custody of the instrument, does not tender it to
the intended payee, or fails to make an effective delivery, the check remains
undelivered.
Since there was no delivery, presentment of the check to the bank for payment did not
occur. An order to debit the account of respondents was never made. In fact, petitioner
confirms that the Manager's Check was never negotiated or presented for
payment to its Ermita Branch, and that the allocated fund is still held by the
bank. As a result, the assigned fund is deemed to remain part of the account of Hi-
Tri, which procured the Manager's Check. The doctrine that the deposit represented
by a manager's check automatically passes to the payee is inapplicable, because the
instrument — although accepted in advance — remains undelivered. Hence,
respondents should have been informed that the deposit had been left inactive
for more than 10 years, and that it may be subjected to escheat proceedings if
left unclaimed.
BELOW is part of the discussion in Chavez’s book
DOCTRINE: When a signature is forged or made without the authority of the person
whose signature it purports to be, it is wholly inoperative, and no right to retain the
instrument, or to give a discharge therefor, or to enforce payment thereof against any
party thereto, can be acquired through or under such signature." Consequently, if a
bank pays a forged check, it must be considered as paying out of its funds and cannot
charge the amount so paid to the account of the depositor.
FACTS: Private respondents were all assessed for tax by the BIR. To pay the
assessed taxes, they bought manager’s checks from the petitioner Traders Royal Bank.
However, None of these checks were paid to the BIR. They were found to have
been deposited in the account of a third person in Security Bank. As the taxes
remained unpaid, the BIR issued a levy, distraint and garnishment against the
respondents. An action was filed wherein it was decided that respondents
should be reimbursed for the amounts of the checks by petitioner bank and the latter
in turn, must be reimbursed by Security Bank. In the appellate court, it was held
that Traders Bank should be the only bank liable.
ISSUE: WON Traders Bank should solely bare the loss for its negligence
RULING: YES. Petitioner ought to have known that, where a check is drawn payable to
the order of one person and is presented for payment by another and purports upon
its face to have been duly indorsed by the payee of the check, it is the primary duty of
petitioner to know that the check was duly indorsed by the original payee and, where
it pays the amount of the check to a third person who has forged the signature of the
payee, the loss falls upon petitioner who cashed the check. Its only remedy is against
the person to whom it paid the money.
FACTS: Petitioner Tan maintained a current account with the RCBC. He secured a
cashier’s check from Philippine Commercial Industrial Bank (PCIB) payable to his
order and deposited the same in his RCBC account. However, RCBC erroneously sent
the check for clearing to the Central Bank which was returned for having missent or
misrouted. The, RCBC debited the account of Tan by the same amount of the check.
Tan, by having knowledge that a cashier’s check was good as cash, issued two
personal checks, both was dishonored for insufficiency of funds. Tan filed a complaint
for damages. RCBC disowning any negligence, put the blame for the “misrouting” on
the petitioner for using the wrong check deposit slip.
ISSUE: WON the RCBC had been remiss in the performance of its duty and obligation
to its client
RULING: Yes. The respondent bank cannot exculpate itself from liability by claiming
that its depositor "impliedly instructed" the bank to clear his check with the Central
Bank by filling a local check deposit slip. Such posture is disingenuous, to say the
least. First, why would RCBC follow a patently erroneous act born of ignorance or
inattention or both. Second, bank transactions pass through a succession of bank
personnel whose duty is to check and countercheck transactions for possible
errors. In the instant case, the teller should not have accepted the local deposit slip
with the cashier's check that on its face was clearly a regional check without calling
the depositor's attention to the mistake at the very moment this was presented to her.
Neither should everyone else down the line who processed the same check for clearing
have allowed the check to be sent to Central Bank. Depositors do not pretend to be
past master of banking technicalities, much more of clearing procedures. As soon as
their deposits are accepted by the bank teller, they wholly repose trust in the bank
personnel's mastery of banking, their and the bank's sworn profession of diligence and
meticulousness in giving irreproachable service.
The bank is engaged in business impressed with public interests, and it is its
duty to protect in return its many clients and depositors who transact business
with it. It should not be a matter of the bank alone receiving deposits, lending out
money and collecting interests. It is also its obligation to see to it that all funds
invested with it are properly accounted for and duly posted in its ledgers.
ASSOCIATED BANK V. CA
G.R. No. 89802. May 7, 1992
FACTS: Private Respondent Reyes is engaged in business. When she went to her
clients to collect for their unpaid accounts, her clients informed her that they issued
crossed checks payable to her business. The said checks were deposited with
Petitioner Associated Bank and paid to Sayson, who is not authorized by Reyes to
deposit and encash the said checks. Reyes sued Associated Bank for recovery and
damages.
ISSUE: WON Associated bank is negligent in its duty to Reyes as its client
RULING: The bank was negligent when they permitted the encashment of the checks
by Sayson. When the Bank paid the checks so endorsed notwithstanding that title had
not passed to the endorser, it did so at its peril and became liable to the payee for the
value of the checks. This liability attached whether or not the Bank was aware of the
unauthorized endorsement.
The Bank does not deny collecting the money on the endorsement. It was its
responsibility to inquire as to the authority of Rafael Sayson to deposit crossed checks
payable to Melissa's RTW upon a prior endorsement by Eddie Reyes. The failure of the
Bank to make this inquiry was a breach of duty that made it liable to the private
respondent for the amount of the checks.
They also argue that it was Eddie Reyes, the private respondent's own husband, who
endorsed the checks. Assuming that Eddie Reyes did endorse the crossed checks, we
hold that the Bank would still be liable to the private respondent because he was not
authorized to make the endorsements
LEE V. RODIL
G.R. No. 80544. July 5, 1989
FACTS: Petitioner Lee was charged with estafa for being an entrustee in a trust receipt
agreement who disposes of the goods covered by it but fails to deliver the proceeds of
the sale to the bank.
Lee alleges that the violation of a trust receipt agreement does not constitute estafa
notwithstanding an express provision in the "Trust Receipts Law" (P.D. 115)
characterizing such violation as estafa.
For Recit purposes - Not included in the case: as defined in the book
Trust receipts is considered as a security transaction intended to aid in financing
importers and retail dealers who do not have sufficient funds or resources to finance
the importation or purchase of merchandise, and who may not be able to acquire
credit except thru utilization, as collateral, of the merchandise imported or purchased.
FACTS: Respondent Cheng was the treasurer and director of Makati Sports. Some
time, Hodreal expressed his interest to buy a share of Makati Sport, but no action has
been taken on the part of the latter. Mcfoods expressed interest in buying a share of
Makati Sport for P1,800,000.00. The Deed of Absolute Sale was executed and a stock
certificate No, A 2243 was issued to Mcfoods. The following days, Mcfood offer to resell
the share to Makati Sport. It appears that while the sale between Makati Sports and
Mcfood was still under negotiations, there were negotiations between Hodreal and
Mcfood for the sale of Makati Sport.
An investigation was conducted, and the committee held that there is prima facie
evidence to show that defendant Cheng profited from the transaction because of her
knowledge. Makati Sports sought damages against the respondents. Both the RTC and
CA dismissed the case.