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the Bank of the Philippine Islands (BPI). In 1987, Napiza was approached by Henry Chan and the latter gave him a $2,500 Continental Bank Manager’s check. Chan asked if Napiza can deposit the check to his (Napiza’s BPI account) by way of accommodation and for the purpose of clearing the said check. Napiza agreed and so he deposited the check on September 3, 1987. Napiza then delivered a signed blank withdrawal slip to Chan with the condition that the $2,500.00 may only be withdrawn if the check cleared. For some reason, the withdrawal slip ended up in the hands of one Ruben Gayon who went to BPI and successfully withdrew the $2,500.00. At the time of the withdrawal, the check was not yet cleared. Then days later, BPI was notified by the drawee bank named in the check that the check is actually a counterfeit. ISSUE: Whether or not Napiza may be held liable to refund the amount of the check. HELD: No. The Supreme Court ruled that ordinarily, Napiza would have been liable because he is an accommodation indorser. But due to the attendant circumstances, Napiza is discharged from liability. The withdrawal slip indicates as well as the rules promulgated by BPI that withdrawal from the bank should be accompanied by the presentment of the account holder’s (Napiza’s) savings bankbook. This was not done so in the case at bar because Gayon was able to withdraw without it. Further, BPI allowed the withdrawal even before the check cleared. BPI already credited the $2,500.00 to Napiza’s account even without the drawee bank clearing the check. This is contrary to common banking practices and because of such negligence and lack of diligence, BPI, as the collecting bank, shall suffer the loss.
Jimenez vs Bucoy Negotiable Instruments Law – Negotiable Instruments in General – 103 Phil 40 – Unconditional Promise To Pay During the Japanese occupation, Pacita Young issued three promissory notes to Pacifica Jimenez. The total sum of the notes was P21k. All three promissory notes were couched in this manner: Received from Miss Pacifica Jimenez the total amount of ___________ payable six months after the war, without interest. When the promissory notes became due, Jimenez presented the notes for payment. Pacita and her husband died and so the notes were presented to the administrator of the estate of the spouses (Dr. Jose Bucoy). Bucoy manifested his willingness to pay but he said that since the loan was contracted during the Japanee occupation the amount should be deducted and the Ballantyne Schedule should be used, that is peso-for-yen (which would lower the amount due from P21k). Bucoy also pointed out that nowhere in the not can be seen an express “promise” to pay because of the absence of the words “I promise to pay…” ISSUE: Whether or not Bucoy is correct. HELD: No. The Ballantyne schedule may not be used here because the debt is not payable during the Japanese occupation. It is expressly stated in the notes that the amounts stated therein are payable “six months after the war”. Therefore, no reduction could be effected, and peso-for-peso payment shall be ordered in Philippine currency. The notes also amounted in effect to a promise to pay the amounts indicated therein. An acknowledgment may become a promise by the addition of words by which a promise of payment is naturally implied, such as, “payable,” “payable” on a given day, “payable on demand,” “paid . . . when called for,” . . . To constitute a good promissory note, no precise words of contract are necessary, provided they amount, in legal effect, to a promise to pay. In other words, if over and above the mere acknowledgment of the debt there may be collected from the words used a promise to pay it, the instrument may be regarded as a promissory note. cHAN WAN V. TAN KIM 109 PHIL 706
after its demand for payment of the value of the checks was denied. This prompted Chan Wan to institute an action against Tam Kim. as payee. de Leon and the late Antonio de las Alas constituted ultra vires acts. not as payment of the balance of the P30 million pesos cost of hydro oil delivered by E. and the liability didn't attach to the drawer. Henry. Henry and Co. maintains that the checks were not issued for consideration and that Lourdes and E. The trial court dismissed the complaint as Chan Wan failed to show that she was a holder in due course. her husband Rafael de Leon. E. Henry. Atrium Management Corporation filed with the Regional Trial Court. the amount of P2 million corresponding to the value of the four checks. Henry and Co. de Leon. there was no proper presentment.T. de Leon and Antonio de las Alas were personally liable for the checks issued as corporate officers and authorized signatories of the check. He can still collect against Tan Kim if the latter has no valid excuse for refusing payment. Chan Wan is then not a holder in due course.T. Court of Appeals [GR 109491. de Leon was not authorized to issue the subject checks in favor of E. 28 February 2001] Facts: Hi-Cement Corporation through its corporate signatories. plus interest and attorney's fees. Atrium filed the petition. the drawee bank dishonored all four checks for the common reason "payment stopped". On 3 January 1983. Inc. and the late Antonio de las Alas. Manila an action for collection of the proceeds of four postdated checks in the total amount of P2 million. some of them stamped “account closed”. Henry if the checks were in payment for hydro oil delivered by E. E.. Atrium Management Corporation vs.T. Henry. it doesn't mean that she couldn't collect on the checks.T. on 17 March 1993. Inc. absolving Hi-Cement Corporation from liability and dismissing the complaint as against it. who admittedly was in need of financial assistance. Chan Wan presented these for payment but were dishonored for insufficiency of funds. Upon presentment for payment.T. de Leon. they were unpaid and returned. as the trial court surmised.. After due proceedings. The facts show that the checks were indeed deposited with Chinabank and were by the latter presented for collection to the drawee bank.. and Hi-Cement Corporation to pay Atrium jointly and severally. There was no sufficient evidence to show that such is the case. Inc. (2) The issuance of the subject checks by Lourdes M. however.. On appeal to the Court of Appeals. Lourdes M. the trial court rendered a decision ordering Lourdes M. Henry and Co.T.T. issued checks in favor of E. She didn't take the witness stand and merely presented the checks for payment. Why else would petitioner de Leon ask for counterpart checks from E. How it reached the hands of Chan Wan. Chairman. Whether Lourdes M. endorsed the four checks to Atrium Management Corporation for valuable consideration. Lourdes M. Issue: Whether the issuance of the checks was an ultra vires act.T. Held: 1. Tan Kim on the other hand alleged that the checks were for mere receipts only. Inc. the Court of Appeals promulgated its decision modifying the decision of the trial court. Nonetheless. The record reveals that Hi-Cement Corporation issued the four (4) checks to extend financial assistance to E. The only disadvantage for Chan Kim is that she is susceptible to defenses of Tan Kim but what are the defenses of latter? This has to be further deliberated by the trial court.T. HELD: Eight of the checks were crossed checks specially to Chinabank and should have been presented for payment by Chinabank and not by Chan Wan. Hence. Henry to Hi-Cement. Henry engaged in a "kiting operation" to raise funds for E.. Most probably. Inasmuch as Chan Wan didn't present them for payment himself. she acquired them after they have been dishonored. treasurer. The appellate court ruled that: (1) Lourdes M. de Leon . and (3) The subject checks were not issued for valuable consideration. on 20 July 1989.FACTS: Tam Kim issued 11 checks payable to cash or bearer. in turn. But as the account had no sufficient funds. she didn't indicate. Henry to Hi-Cement? HiCement.T.
T.T. Thus. Henry. the act of issuing the checks was well within the ambit of a valid corporate act. An ultra vires act is one committed outside the object for which a corporation is created as defined by the law of its organization and therefore beyond the power conferred upon it by law" The term "ultra vires" is "distinguished from an illegal act for the former is merely voidable which may be enforced by performance. E. having knowledge thereof.T.” (re-discounting arrangement) Through this.T. So were the checks of Riverside and Kanebo. trustee or officer along (although not necessarily) with the corporation may so validly attach.T. as a rule. Her negligence resulted in damage to the corporation. Riverside Mills Corporation (Riverside) and Kanebo Cosmetics Philippines. Yap of Atrium and Mr. ratification. the confirmation letter contained a clause that was not true. to personally answer for his corporate action. not an ultra vires act. Henry". Henry a credit facility known as “Purchase of Short Term Receivables. Bank filed a complaint for sum of money in CFI against E. Henry for the rediscounting of the crossed checks issued in favor of E. the spouses Tan. Inc. or (4) He is made. or estoppel. Hence. only when: (1) He assents (a) to a patently unlawful act of the corporation. (3) He agrees to hold himself personally and solidarily liable with the corporation. E.is the treasurer of the corporation and is authorized to sign checks for the corporation. Insular Bank Lessons Applicable: Rights of Holder against general indorser (Negotiable Instrument Law) FACTS: Enrique Tan and Lilia Tan (spouses Tan) were the controlling stockholders of E. What is more. For every transaction.T. while the latter is void and cannot be validated. Henry).T. there were sufficient funds in the bank to cover payment of the amount of P2 million pesos. Ms.T. Riverside and Kanebo . Hi-Cement Corp. that is.T. 2. a company engaged in the business of processing and distributing bunker fuel.T. resulting in damages to the corporation. "that the checks issued to E. Henry were in payment of Hydro oil bought by Hi-Cement from E. Henry of E. (Kanebo) who issued postdated checks for their purchases Sometime in 1979: Insular Bank of Asia and America (turned PCIB then Equitable PCI-Bank) granted E. v. with pre-deducted interest. Personal liability of a corporate director. E. de Leon and Antonio de las Alas as treasurer and Chairman of HiCement were authorized to issue the checks. Inc. or (c) for conflict of interest. hence. Ms. Henry. (E. Lourdes M. (2) He consents to the issuance of watered down stocks or who. by a specific provision of law." Herein. for it was for securing a loan to finance the activities of the corporation. de Leon may be held personally liable therefor. its stockholders or other persons. Henry & Co. Henry had to execute a promissory note and a deed of assignment 1979-1981: E. She was aware that the checks were strictly endorsed for deposit only to the payee's account and not to be further negotiated. Hi-Cement (including its general manager and its treasurer as signatories of the postdated crossed checks). At the time of the issuance of the checks. Henry's customers were Hi-Cement Corporation (Hi-Cement). the postdated checks of its clients. or (b) for bad faith or gross negligence in directing its affairs. However. de Leon was negligent when she signed the confirmation letter requested by Mr. Henry was able to encash.T.T. does not forthwith file with the corporate secretary his written objection thereto. Henry was able to re-discount its clients' checks February 1981: 20 checks of Hi-Cement (which were crossed and which bore the restriction “deposit to payee’s account only”) were dishonored..
which reads that: On September 8 1953. .W/N bank was a holder in due course .NO HELD: CA AFFIRMED with MODIFICATION remanded to RTC for recomputation 1. and that plaintiff was guilty of grossn egligence in not taking steps to protect itself. charges and penalties until fully paid G. thus. jointly and severally. The complaint sets forth the check and alleges that plaintiff received it in payment of the indebtedness of one Matilde Gonzales (wife). was shown and offered a car by Gonzales who . the difference between the face value of the check and Gonzales' indebtedness. NO.25. Henry.failure: guilty of gross negligence amounting to legal absence of good faith 2. to pay bank damages represented by the face value of the postdated checks plus interests. 132403: RTC & CA Hi-Cement authorized its general manager and treasurer to issue the subject postdated crossed checks Hi-Cement was already estopped from denying such authority since it never objected to the signatories' issuance of all previous checks to E. hence. which was not fulfilled. spouses Tan. plaintiff gave Manuel Gonzales (Gonzales) P158. During trial. specially so where the checks it dealt with were crossed. they could not be further negotiated to it ◾irregularity . it should pay DE OCAMPO VS GATCHALIAN FACTS: The action is for the recovery of the value of a check for P600 payable to the plaintiff and drawnby defendant Anita Gatchalian (Gatchalian). it was not expected to be careless and negligent.only the treasurer's signature appeared on the deed of assignment ◾As a banking institution. defendant Gatchalian who was then interested in looking for a car for the use of her husband and the family.T. Riverside and Kanebo. that upon receipt of said check.T. Hi-Cement.CA Affirmed RTC: Ordering E. ◾the drawer of the postdated crossed checks was not liable to the holder who was deemed not a holder in due course ◾may recover from the party who indorsed/encashed the checks “if the latter has no valid excuse for refusing payment .R.T. it behooved respondent to act with extraordinary diligence in every transaction ◾Its business is impressed with public interest.W/N Hi-Cement can still be made liable for the checks .NO 2.E. ◾Section 191 ◾Section 52 ◾Bank was all too aware that subject checks were crossed and bore restrictions that they were for deposit to payee's account only. Henry had no justification to refuse payment.NO. The defendants admit the execution of the check but they allege that it was issued subject to a condition. ◾It is then settled that crossing of checks should put the holder on inquiry and upon him devolves the duty to ascertain the indorser’s title to the check or the nature of his possession. Henry ISSUE: 1. services. the parties submitted a stipulation of facts.
finding the price of the car to her satisfaction.for and in consideration of the fees and expenses of hospitalization and the release of Gonzale’swife. a complaint for estafa against Gonzales based on and arising from the acts latter in paying his obligations with plaintiff and receiving the cash balance of the check but that said complaint was subsequently dropped. (b) That he became the holder of it before it was overdue.Gonzales failed to appear the following day and failed to bring the car and its certificate of registration and to return the check as previously agreed upon. defines holder in due course. Gonzales advised her that the owner of the car will not be willing to give the certificate of registration unless there is a showing that the party interested in the purchase of said car is ready and willing to make such purchase and that for this purpose Gonzales requested Gatchalian to give him (Gonzales) a check which will be shown to the owner as evidence of buyer's good faith in the intention to purchase the said car. R. but which facts were not known to plaintiff. HELD: When the agent of drawer (Gatchalian) negotiated the check with the intention of getting its value from plaintiff-appellee. Ocampo Clinic. However.Gonzales having received the check from Gatchalian. negotiation took place through no fault of the plaintiff-appellee.expressly or impliedly. that on this request of Gatchalian. to look for a buyer of said car and to negotiate for and accomplish said sale. the obligation of Gonzales or his wife for thehospitalization of the latter and that defendants had no obligation or liability. Gatchalian. in which Plaintiff. defendant Gatchalianissued a "Stop Payment Order" on the check with the drawee bank.Relying on these representations of Gonzales and with his assurance that said check will be only for safekeeping and which will be returned to said defendant the following day when the car andits certificate of registration will be brought by Gonzales to defendants. the said check to be FOR safekeeping only of Gonzales and to be returned TO Gatchalian the following day when Gonzales brings the car and the certificate of registration . with the Ocampo Clinic. thus: A holder in due course is a holder who has taken the instrument under the following conditions: (a) That it is complete and regular upon its face. Negotiable Instruments Law. plaintiff filed or caused to be filed with the Office of the City Fiscal of Manila. and without notice that it had beenpreviously dishonored. Gatchalian drew andissued a check. . but that defendant HipolitoGatchalian is personally acquainted with V. Said "Stop Payment Order"was issued without previous notice on plaintiff who was not being know personally to defendants.or any member of his family at any time prior to September 1953.25 as balance on the amount of the said check. so that her husband would be able to see same. (d) That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it. delivered the same to the Ocampo Clinic inpayment of the fees and expenses arising from the hospitalization of his wife. Defendants appealed from the decision and contended that the check is not a negotiable instrument and plaintiff is not a holder in due course. Hence. directly or indirectlywith the Ocampo Clinic. applying P441.75 hereof to payment of said fees and expenses anddelivering to Gonzales the amount of P158.That Defendants had no arrangements or agreement with the Ocampo Clinic at any time prior tothe hospitalization of the wife of Gonzales and neither or both of said defendants had assumed. accepted check. if such was the fact (c) That he took it in good faith and for value. in which Gonzales executed and issued a receipt for said check. de Ocampo. Section 52. requested Gonzales to bring the car the day following together with the certificate of registration of the car. No other evidences were submitted and upon this stipulation the trial court rendered judgement sentencing defendants to pay the amount of the check (P600) with legal interest. ISSUE: Whether or not plaintiff-appellee is a holder in due course.represented to Gatchalian that he was duly authorized by the owner of the car. Theacts of acceptance of the check and application of its proceeds in the manner specified abovewere made without previous inquiry by plaintiff from defendants. As a result. unless it can be shown that the plaintiff-appellee should be considered as having notice of the defect in the possession of the holder Gonzales.
Having failed in this respect. HELD: No. although he did not havenotice of the particular wrong that was committed. Concepcion and Tamayo Construction Enterprise had a contract with the Bureau of Public Works. and it may not be considered as a holder of the check in good faith. Prudencio. which practice means that the check could only be deposited but may not be converted intocash — all these circumstances should have put the plaintiffappellee to inquiry as to the why andwherefore of the possession of the check by Manuel Gonzales. the Court of Appeals affirmed the trial court. without consideration. it being sufficient to show that the defendant hadnotice that there was something wrong about his assignor's acquisition of title. To such effect is the consensus of authority. and that the check had two parallel lines in the upper lefthand corner. the firm executed a Deed of Assignment in favor of PNB which provides that any payment from the Bureau of Public Works in consideration of work done (by the firm) so far shall be paid directly to PNB – this will also ensure that the loan gets to be paid off before maturity. ISSUE: Whether or not Prudencio should pay the promissory note to PNB. and why he used it to pay Matilde'saccount. de Ocampo. . petitioned to have the mortgage canceled (to save his property from foreclosure). PNB agreed.Judgement of trial court reversed Prudencio vs Court of Appeals Negotiable Instruments Law – Consideration – 143 SCRA 7 – Liability of Accommodation Party – Holder in Course In 1955." it is not necessary to prove that the defendant knew the exact fraud that waspracticed upon the plaintiff by the defendant's assignor. agreed and so he mortgaged the land and executed a promissory note for P10k in favor of PNB. the duty devolvedupon it. why the holder had the check and used it to pay his own personal account. The trial court ruled against Prudencio. that the amount of the check did not correspond exactly with the obligationof Matilde Gonzales to Dr.The stipulation of facts expressly states that plaintiff-appellee was not aware of the circumstances under which the check was delivered to Manuel Gonzales. The firm needed fund to push through with the contract so it convinced spouses Eulalio and Elisa Prudencio to mortgage their parcel of land with the Philippine National Bank for P10. amounting to legal absence of good faith. And so the loan matured without PNB actually receiving any payment from the Bureau of Public Works.00. Prudencio also authorized PNB to issue the P10k check to the construction firm. upon learning that no payment was made on the loan. Notwithstanding the provision in the Deed of Assignment. hence we are forced to the conclusion that plaintiff payee hasnot proved that it acquired the check in good faith and may not be deemed a holder in due course thereof. Prudencio. PNB is not a holder in due course. but we agree with the defendants-appellants that thecircumstances indicated by them in their briefs. The stipulation of factscontains no statement of such good faith. to prove that it actually acquired said check in good faith. Notwithstanding the provision of the Deed of Assignment. In order to show that the defendant had "knowledge of such facts that his action in taking the instrumentamounted to bad faith. In December 1955.000. It was payee's duty to ascertain from the holder Manuel Gonzales what the nature of the latter'stitle to the check was or the nature of his possession. V. plaintiff-appellee. R. such as the fact that appellants had no obligation or liability to the Ocampo Clinic. the Bureau of Public Works asked PNB if it can make the payments instead to the firm because the firm needs the money to buy construction materials to complete the project. In the case at bar as the payee acquired the check under circumstances which should have put it toinquiry. we must declare thatplaintiff-appellee was guilty of gross neglect in not finding out the nature of the title and possession of Manuel Gonzales.
61 to RYL Construction. to the amount of its obligations to the latter. the RTC did not specify to whom it was liable. However. Only after said checks were dishonoured were they acquired by STELCO. is not a holder in due course. The check however was a company check of another corporation Steelweld Corporation of the Philippines (Steelweld) signed by its President and Vice President. One year later. such possession does not give a presumption that the holder is one for value. that it was the injured party. RYL never paid upon delivery of the materials and despite insistent demands. However.I sheets with an aggregate amount of P126. STELCO never became a holder for value since nowhere in the check was STELCO identified as payee. (RYL). It sold on 7 occasions quantities of steel bars and rolls of G. It bore the endorsements of RYL and Armstrong. indorsed to STELCO in any manner or form of payment.” Armstrong subsequently deposited the check but was dishonoured because it was DAIF*. Inc. The court finds that PNB is not a holder in due course because it has not acted in good faith (pursuant to Section 52 of the Negotiable Instruments Law) when it waived the supposed payments from the Bureau of Public Works contrary to the Deed of Assignment. it being merely for accommodation purposes. notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party. RYL issued a check drawn against Metrobank to Armstrong Industries. The exception is that if the holder. STELCO MARKETING CORP VS CA Facts: Petitioner Stelco Marketing Corp (Stelco) is engaged in the distribution and sale to the public of structural steel bars. Issue: Whether or not STELCO was a holder in due course Held: STELCO’s reliance on the RTC’s decision in the previous criminal case is misplaced. or depositor. The trial court acquitted the defendants noting that the checks were not issued to apply on account for value. in this case PNB. Steelweld appealed to the CA which reversed the decision of the RTC declaring that STELCO was not a holder in due course and Steelweld was a stranger to the contract between STELCO and RYL.Prudencio is an accommodation party for he signed the promissory note as maker but he did not receive value or consideration therefor. Although the RTC maintained that Steelweld was liable for issuing a check for accommodation. FERNANDEZ 44 PHIL 675 FACTS: . the court did not release Steelweld from its liabilities. and the proper party to bring the action. Had the Deed been followed. There was no evidence that STELCO had possession before the checks were presented and dishonoured nor evidence that the checks were given to STELCO. As a general rule. Relying on the previous decision and averring that it was a holder in due course. FOSSUM V. an accommodation party is liable on the instrument to a holder for value/in due course. The latter filed a complaint against the pres and vp of Steelweld for violation of BP22. Despite the parties’ agreement that payment would be on COD basis. Stelco subsequently filed a complaint for recovery of the value of the materials from RYL and Steelweld. indorsee. Despite the records showing that STELCO was in possession of the check. relying on Sec 29 of the NIL for issuing a check for accommodation. Evidence shows that Armstrong was the intended payee. the loan would have been paid off at maturity. He expected the firm (accommodated party) to pay the loan – this obligation was shifted to the Bureau of Public Works by way of the Deed of Assignment).859. the sister company and manufacturing arm of Stelco. RYL had already been dissolved leading the trial court to rule against Steelweld and hold them liable. Said check was issued by the president of Steelweld at the request of the president of RYL as an accommodation and “only as guaranty but not to pay for anything.
BCCFI issued on March 30. After Moulic withdrew her funds. Again petitioner issuedpost dated crossed checks in the total amount of P1. despite the supplier's failure to deliver in accordance with their earlier agreement. a stop payment order on all checks payable to George King efforts of SIHI to collect from BCCFI having failed.100. As security for the jewelries. there is no need to issue a notice of dishonor to Moulic.000. In consideration thereof.Fernandez Hermanos placed an order with the products company for the manufacturing of a chain given a set of specifications. BCCFI. before their due dates.00. Moulic issued to Victoriano two post dated checks in the aggregate amount of P100. ISSUE: Whether or not State Investment House is entitled to be paid. it instituted the present case. she could not have expected her checks to be honored. the checks were negotiated by Victoriano to State Investment House. (BCCFI). on July 13. But as the trial court found out. Moulic refused to pay because she said the checks were merely used as security for the jewelry.During these times. The trial court pronounced SIHI as having a valid claim being a holder in due course Issue: Whether or not SIHI.000bales of tobacco leaf starting October 1978. It would only be futile for State Investment to be sending her notices of dishonor for the two checks. State Investment is a holder in due course as it met all the requirements to be one pursuant to Section 52 of the Negotiable Instruments Law. George King sold at a discount the checks drawn by petitioner to private respondent SIHI.00.1979. HELD: It devolved around Fernandez Hermanos to allege and prove its claim that which was delivered and received didn't comply with the specifications and didn't answer the purposes for which it was intended. A draft was drawn by the company and was accepted by Fernandez Hermanos. Moulic further averred that she received no notice of dishonor. It was uponFernandez Hermanos to show that indeed the chain was defective. there was a failure of proof. naming only BCCFI as party defendant. there was failure to identify the so-called defects of the chain. Inc. King Tim Pua George (herein after referred to as George King). In particular. So when the checks were dishonored. to deliver 2. to be able to collect from the drawer. it is clearly shown that: (a) on their faces the post-dated checks were complete and regular: (b) State Investment bought these checks from Victoriano. State Investment demanded Moulic to pay. 1978 issued crossed checks post dated sometime in March 1979 in the total amount of P820. State Investment House vs Court of Appeals and Moulic Negotiable Instruments Law – 217 SCRA 32 – Holder in Due Course – Notice of Dishonor Corazon Victoriano provided pieces of jewelry to Nora Moulic so that the latter may sell the same. It alleged that the chain didn't meet the specifications given by the contract. Further. BATAAN CIGAR v. is a holder in due course. Apparently. .500 bales of tobacco leaves. In as much as George King failed to deliver the bales of tobacco leaf as agreed despite petitioner's demand. the draft was negotiated with Fossum who demanded payment on the instrument but was refused by Fernandez on alleged failure of the chain delivered to satisfy the specifications given.000. payable sometime in September 1979. Petitioner agreed to purchase additional 2. Thereafter. Nonetheless. engaged one of its suppliers. (d) State Investment was never informed nor made aware that these checks were merely issued to Victoriano as security and not for value. CA Bataan Cigar & Cigarette Factory.000. a second indorser . Victoriano was however unable to return the checks hence Moulic withdrew all her funds from the bank. HELD: Yes.00. (c) State Investment took these checks in good faith and for value. BCCFI.a holder of crossed checks. a corporation involved in the manufacturing of cigarettes. Moulic was not able to sell the jewelries so she returned the same to Victoriano. The chain was duly prepared and delivered.
The decision of the Regional Trial Court as affirmed by the Court of Appeals is hereby REVERSEd MESINA V. a lawyer contacted it demanding payment. a check is defined by law as a bill of exchange drawn on a bank payable on demand. The bank then received the check twice for clearing. the more popular of which are the memorandum check. (c) and the act of crossing the check serves as 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. BCCFI cannot be obliged to pay the checks. Upon questioning. HELD: Petitioner cannot raise as arguments that a cashier’s check cannot be countermanded from the hands of a holder in due course and that a cashier’s check is a check drawn by the bank against itself. There being failure of consideration. the name of Mesina was revealed. he is not a holder in due course. If a payee of a . finding that the court a quo erred in the application of law. A case of interpleader was filed by the bank and Go moved to participate as intervenor in the complaint for damages. Petitioner failed to substantiate that he was a holder in due course. the negotiability of a check is not affected by its being crossed. otherwise. whether specially or generally. He left the check in his desk and upon his return. the instant petition is hereby GRANTED. It may be crossed generally or specially. After the second time. the same couldn't be found and Go was advised to request for the stoppage of payment which he did. In order to preserve the credit worthiness of checks. WHEREFORE . There are a variety of checks. The trial court ruled in the interpleader case ordering the bank to replace the cashier’s check in favor of Go. He refused to disclose how and why it has passed to him. which he left on top of the manager’s desk when left the bank. It may legally be negotiated from one person to another as long as the one who encashes the check with the drawee bank is another bank. He refused to disclose the name of his client and threatened to sue. jurisprudence has pronounced that crossing of a check should havethe following effects: (a) the check may not be encashed but only deposited in the bank.Held: YES. An information for theft was then filed against Lim. According to commentators. by the bank mentioned between the parallel lines. As preliminary. The employee was then in conference with one Alexander Lim. He executed also an affidavit of loss as well as reported it to the police. It is then settled that crossing of checks should put the holder on inquiry and upon him devolves the duty to ascertain the indorser's title to the check or the nature of his possession. Later. Mesina moved for the dismissal of the case but was denied. cashier's check. IAC 145 SCRA 497 FACTS: Jose Go purchased from Associate Bank a Cashier’s Check. or if it is specially crossed. Lim and the check were gone. The bank manager then had it kept for safekeeping by one of its employees. traveler's check and crossed check. (b) the check may be negotiated only once to one who has an account with a bank. It simply means that he has notice of the defect of his title over the check from the start. When Go inquired about his check. he said it was paid to him Lim. When asked by the police on how he possessed the check. they dishonored the payment by saying that payment has been stopped. SIHI is not a holder in due course. Consequently. For these two times. Crossed check is one where two parallel lines are drawn across its face or across a corner thereof. 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. he admitted that he got the check from Lim who stole the check.
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. since the bank was aware of the facts surrounding the loss of the check in question. . the bank would of course have the right to refuse payment of the check when presented by payee.
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