LAW 2:

LAW ON NEGOTIABLE
INSTRUMENTS
MWF 7:00-8:00 p.m

Submitted by:
Abellare, Elarabel Q.
Amaba, Kris Dianne O.
Senerpida, Tesha B.

Submitted to:
Atty. Vir Celito Raymundo
LAW 2 Professor
 INSIGHTS

The Philippine Star updated news last August 2, 2017 pertaining to

Metrobank which sues top executive and two others for fraud. As we were
reading the headline, we knew for the fact that fraud is a wrongful and
criminal deception intended to gain money or financial benefits and therefore
illegal and immoral. The said article stated that Metropolitan Bank & Trust
Co. (Metrobank) has filed criminal case against a ranking official and two
other individuals after the bank fell victim to internal fraud involving Php900
million. Even though Metrobank is the second largest bank in the Philippines,
Php900 million is still a huge amount. It affects not just the financial
resources of the bank but also its reputation. They hold and live to their motto
“You’re in good hands” where in fact, its people inside the organization itself
perpetrated robbery.

Ma. Victoria Lopez, the Metrobank’s corporate service management

division head and account service manager, used her position in the bank in
conspiracy with the other respondents, Hubert Co and Sue Sai, made it
appear that one of the bank’s larger clients issued a promissory note in the
amount of Php900 million, resulting in the crediting of the amount to the
client’s savings account. Crediting the amount to the client’s savings account
means the bank’s liability to the client increases. The said article also added
that Lopez made it appear that the client subsequently requested the
issuance of several cashier’s checks to be debited from the client’s account.
They disbursed loans into fictitious accounts created in the name of a
Universal Robina Corp., a large and legitimate client of the bank. The funds
in the fake accounts, were then convey off electronically to other accounts in
other financial institutions and into the pockets of the suspects. The bank
also stated Sai’s name was written at the back of the cashier’s checks in the
indorsement portion.

It was stated that the client issued a promissory note amounting to

Php900 million. The word “Issue” here, according to the Negotiable
Instruments Law or Act No. 2031, Section 191, pertains to the first delivery
of the instrument, complete in form, to a person who takes it as a holder. The
Act No. 2031, Section 184 clearly defines promissory note. A negotiable
promissory note within the meaning of this Act is an unconditional promise
in writing made by one person to another, signed by the maker, engaging to
pay on demand, or at a fixed or determinable future time, a sum certain in
money to order or to bearer. Where a note is drawn to the maker’s own order,
it is not complete until indorsed to him. In the above article, the issuer or the
maker is the Universal Robina Corp. which is the client while the payee here
is the Metrobank. Universal Robina Corp. issued a promissory note to
Metrobank amounting to Php900 million which immediately had been
credited in the client’s savings account. It is also stated that the client
subsequently requested the issuance of several cashier’s checks to be
debited from the client’s account. Section 185 of Act No. 2031 clearly defines
check. A check is a bill of exchange drawn on a bank payable on demand.
Except as herein otherwise provided, the provisions of this Act applicable to
a bill of exchange payable on demand apply to a check. Cashier’s check is
a special type of check where it is drawn by the cashier of a bank upon the
bank itself, payable on demand to a payee. The funds therefore in the fake
accounts were immediately transferred which resulted to fraud.

The article also stated that Sai’s name, one of the respondents in the
act of fraud) was written at the back of the cashier’s checks in the
indorsement portion. Section 191 in Act No. 2031 define Indorsement as an
indorsement completed by delivery. Since Sue Sai’s name was written at the
back of the cashier’s check, he was also involved in the fraudulent act of
transferring the funds to him.