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66.03_Gullas v PNB

66.03_Gullas v PNB

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Published by Elaine Atienza

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Published by: Elaine Atienza on Nov 29, 2012
Copyright:Attribution Non-commercial


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G.R. No. L-43191 November 13, 1935PAULINO GULLAS,
defendant-appellant. The Treasurer of the United States issued a Warrant payable to the order of Francisco Bacos. Atty. Paulino Gullas and Pedro Lopez signed as endorsers of thischeck. It was cashed by PNB, but was dishonored by the Insular Treasurer.At that time, the outstanding balance of Atty. Gullas on the books of the bank wasP509. Against this balance he had issued certain checks which could not be paidwhen the money was sequestered by the bank. The bank, upon learning of the dishonor of the treasury warrant, sent notices bymail to Atty. Gullas, but these could not be delivered to him at that time because hewas in Manila.In the bank's letter addressed to Gullas and Lopez, they were informed that the US Treasury warrant has been returned due to the stop payment order by the Insular Treasurer. They were also informed that PNB applied the outstanding balances of Atty. Gullas in his current account for the payment of the foregoing check.Because of what PNB did (it applied Gullas’s deposit to pay for the unpaid check),the checks issued by Atty. Gullas including one for his insurance were not paidbecause of the lack of funds. Certain publications also published articles regardingthe matter, to the prejudice of Atty. Gullas.
W/N PNB had the right to apply Gullas’s deposit for the payment of theindorsed check
 The NIL establishes the liability of a general indorser and giving theprocedure for a notice of dishonor. The general indorser of negotiable instrumentengages that if he be dishonored and the, necessary proceedings of dishonor beduly taken, he will pay the amount thereof to the holder. (Negotiable InstrumentsLaw, sec. 66.)
Notice of dishonor is in order to charge all indorser and that the right of action against him does not accrue until the notice is given.
Prior to the mailing of notice of dishonor, and without waiting for any action byGullas, the bank made use of the money standing in his account to make good forthe treasury warrant. At this point, Gullas was merely an indorser and had issued ingood faith.Atty. Gullas should be awarded nominal damages because of the premature actionof the bank against which Atty. Gullas had no means of protection.

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