Case Title Facts
1) Aglibot vs. Santia Herein private respondent Engr. Ingersol L. Santia
GR No 185945 loaned the amount of ₱2,500,000.00 to Pacific
Dec 5, 2012 Lending & Capital Corporation (PLCC), through its
Manager, petitioner Fideliza J. Aglibot. The loan
was evidenced by a Promissory Note issued by
Aglibot in behalf of PLCC, payable in one year
subject to interest at 24% per annum.
Allegedly as a guaranty or security for the
payment of the note, Aglibot also issued and
delivered to Santia 11 post-dated personal checks
drawn from her own demand account (maintained
at Metrobank, Camiling Branch). Aglibot is a major
stockholder of PLCC.
Upon presentment of the aforesaid checks for
payment, they were dishonored by the bank for
having been drawn against insufficient funds or
closed account. Santia thus demanded payment
from PLCC and Aglibot of the face value of the
checks, but neither of them heeded his demand.
Consequently, 11 Informations for violation of B.P.
22 were filed against Aglibot before the MTCC,
Dagupan City.
Aglibot admitted that she did obtain a loan from
Santia, but claimed that she did so in behalf of
PLCC. Aglipot also alleged that she did not receive
any notice of dishonor of the checks. Thus, she
could not be held criminally liable under B.P. 22.
MTCC acquitted Aglibot of all the counts of her
criminal liability. However, she was ordered to pay
the private complainant the sum of ₱3,000,000.00
representing the total face value of the eleven
checks plus interest of 12% per annum as well as
Issue/s Ruling
1) Is Aglipot a mere 1) No. The petition is bereft of merit.
guarantor of the said
debt of PLCC, which Aglibot cannot invoke the benefit of
means that she excussion (that creditor must proceed against
cannot be made a principal debtor before proceeding against a
liable for the debt subsidiary debtor).
without first
exhausting all means The Court rejected Aglibot’s claim that she
to collect the debt was as a mere guarantor of the indebtedness
from the principal of PLCC to Santia, for want of proof.
debtor (PLCC)?
The law (Civil Code) provides that a guaranty
2) Is Aglipot rather an is not presumed, but must be express, and
accommodation cannot extend to more than what is stipulated
party? therein. This is the obvious rationale why a
contract of guarantee is unenforceable unless
made in writing or evidenced by some writing.
2) Yes.
NIL:
Sec. 29. Liability of an accommodation party.
— An accommodation party is one who has
signed the instrument as maker, drawer,
acceptor, or indorser, without receiving value
therefor, and for the purpose of lending his
name to some other person. Such a person is
liable on the instrument to a holder for value
notwithstanding such holder at the time of
taking the instrument knew him to be only an
accommodation party.
The mere fact, then, that Aglibot issued her
own checks to Santia made her personally
liable to the latter on her checks without the
need for Santia to first go after PLCC for the
 the cost of suit.
RTC further absolved Aglibot of any civil liability
towards Santia on the ground of failure to fulfill, a
condition precedent of exhausting all means to
collect from the principal debtor. The CA,
however, reversed the RTC’s dismissal of the civil
aspect of the case, ordering Aglipot to personally
pay Satia ₱3,000,000.00 with interest at 12% per
annum.
2) Areza vs. Express Petitioners Cesar V. Areza and LolitaB. Areza
Savings Bank maintained two bank deposits with respondent
GR No 176697 Express Savings Bank’s Biñan branch. They were
Sept 10, 2014 engaged in the business of "buy and sell" of brand
new and second-hand motor vehicles. Gerry
Mambuay bought from the petitioners a second-
hand Mitsubishi Pajero and a brand-new Honda
CRV and paid the petitioners with (9) Philippine
Veterans Affairs Office checks payable to different
payees and drawn against the Philippine Veterans
Bank (drawee), each valued at two hundred
thousand pesos for a total of one million eight
hundred thousand pesos. About this occasion,
petitioners claimed that Michael Potenciano
(Potenciano), the branch manager of respondent
Express Savings Bank (the Bank) was present
during the transaction and immediately offered the
services of the Bank for the processing and
eventual crediting of the said checks to petitioners’
account.
On 3 May 2000, petitioners deposited the said
payment of its loan. It would have been
otherwise had it been shown that Aglibot was
a mere guarantor, except that since checks
were issued ostensibly in payment for the
loan, the provisions of the Negotiable
Instruments Law must take primacy in
application.
The relation between an accommodation
party and the party accommodated is, in
effect, one of principal and surety — the
accommodation party being the surety. It is a
settled rule that a surety is bound equally and
absolutely with the principal and is deemed an
original promisor and debtor from the
beginning. The liability is immediate and
direct.
Whether or not the No, the respondents does not have the right to
respondents "had the debit the amount to the account of the
right to debit the amount petitioners. Section 124 of the Negotiable
of ₱1,800,000.00 from Instruments Law which states that a material
the petitioners’ alteration avoids an instrument except as
accounts" against an assenting party and subsequent
indorsers, but a holder in due course may
enforce payment according to its original
tenor.If the drawee did not pay according to the
original tenor of the instrument, as directed by
the drawer, then it has no right to claim
reimbursement from the drawer, much less, the
right to deduct the erroneous payment it made
from the drawer’s account which it was
expected to treat with utmost fidelity.The
drawee, however, still has recourse to recover
its loss. It may pass the liability back to the
collecting bank which is what the drawee bank
exactly did in this case. It debited the account
of Equitable-PCI Bank for the altered amount of
the checks.
The Bank and Equitable-PCI Bank are both
 checks in their savings account with the Bank. The
Bank, inturn, deposited the checks with its
depositary bank, Equitable-PCI Bank, in
Biñan,Laguna. Equitable-PCI Bank presented the
checks to the drawee, the Philippine Veterans
Bank, which honored the checks.
Sometime in July 2000, the subject checks were
returned by PVAO to the drawee on the ground that
the amount on the face of the checks was altered
from the original amount of ₱4,000.00 to
₱200,000.00. The drawee returned the checks to
Equitable-PCI Bank by way of Special Clearing
Receipts. In August 2000, the Bank was informed
by Equitable-PCI Bank that the drawee dishonored
the checks on the ground of material alterations.
Equitable-PCI Bank initially filed a protest with the
Philippine Clearing House. In February 2001, the
latter ruled in favor of the drawee Philippine
Veterans Bank. Equitable-PCI Bank, in turn,
debited the deposit account of the Bank in the
amount of ₱1,800,000.00.
The Bank closed the Special Savings Account of
the petitioners with a balance of ₱1,179,659.69 and
transferred said amount to their savings account.
The Bank then withdrew the amount of
₱1,800,000.00representing the returned checks
from petitioners’ savings account.
3) BPI vs. CA In 1987, Napiza deposited in his maintained Foreign
GR No 112392 Currency Deposit Unit (FCDU) Savings Account in BPI
Feb 29, 2000 a Continental Bank Manager's Check payable to
"cash" in the amount of Two Thousand Five Hundred
Dollars ($2,500.00) and duly endorsed by private
respondent on its dorsal side. It appears that the
check belonged to a certain Henry Chan who went to
the office of private respondent and requested him
to deposit the check in his dollar account by way of
accommodation and for the purpose of clearing the
same. Private respondent acceded, and agreed to
depositary and collecting banks. It has been
repeatedly held that in check transactions, the
depositary/collecting bank or last endorser
generally suffers the loss because it has the
duty to ascertain the genuineness of all prior
endorsements 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 endorsements.If any of the
warranties made by the depositary/collecting
bank turns out to be false, then the drawee
bank may recover from it up to the amount of
the check.
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 a high standard of conduct.
As collecting banks, the Bank and Equitable-
PCI Bank are both liable for the amount of the
materially altered checks. Since Equitable-PCI
Bank is not a party to this case and the Bank
allowed its account with Equitable PCI Bank to
be debited, it has the option to seek recourse
against the latter in another forum.
WHETHER OR NOT Ordinarily, private respondent may be held liable
RESPONDENT NAPIZA IS as an indorser of the check or even as an
LIABLE UNDER HIS accommodation party under Sections 65 and 66
WARRANTIES AS A of the Negotiable Instruments Law for as an
GENERAL INDORSER AND indorser he warrants (a) that the instrument is
WHETHER PETITIONER genuine and in all respects what it purports to
WAS GROSSLY be; (b) that he has a good title to it, and (c) that
NEGLIGENT IN ALLOWING all prior parties had capacity to contract.
THE WITHDRAWAL. However, to hold private respondent liable for
the amount of the check he deposited by the
strict application of the law and without
deliver to Chan a signed blank withdrawal slip, with
the understanding that as soon as the check is
cleared, both of them would go to the bank to
withdraw the amount of the check upon private
respondent's presentation to the bank of his
passbook.
However, on October 23, 198, the blank withdrawal
slip given by private respondent to Chan slipped to
the hands of one Ruben Gayon, Jr. who was able to
withdraw the amount of $2,541.67 to his FCDU
Savings Account even if the check was not yet
cleared.
On November 20, 1984, petitioner was informed by
Wells Fargo Bank International of New York that the
said check deposited by private respondent was a
counterfeit check because it was "not of the type or
style of checks issued by Continental Bank
International." Consequently, Mr. Ariel Reyes, the
manager of petitioner bank, instructed one of its
employees, Benjamin D. Napiza IV, who is private
respondent's son, to inform his father that the check
bounced.
Eventually, petitioner filed a complaint against
private respondent, praying for the return of the
amount of $2,500.00 plus interest.
Private respondent admitted that he indeed signed a
"blank" withdrawal slip with the understanding that
the amount deposited would be withdrawn only after
the check in question has been cleared.
Petitioner claims that private respondent, having
affixed his signature at the dorsal side of the check,
should be liable for the amount stated therein in
accordance with Sec. 66 of the Negotiable
Instruments Law (Act No. 2031):
On November 4, 1991, the lower court held that
petitioner could not hold private respondent liable
based on the check's face value alone. Having
admitted that it committed a "mistake" in not waiting
for the clearance of the check before authorizing the
considering the attending circumstances in the
case would result in an injustice and in the
erosion of the public trust in the banking system.
In the passbook that petitioner issued to private
respondent it includes several rules on
withdrawal of deposits. Under these rules, to be
able to withdraw from the savings account
deposit under the Philippine foreign currency
deposit system, two requisites must be
presented to petitioner bank by the person
withdrawing an amount: (a) a duly filled-up
withdrawal slip, and (b) the depositor's passbook.
This was not followed or done in this case. Gayon
was able to withdraw without the depositor’s
passbook.
Thus, petitioner, in allowing the withdrawal of
private respondent's deposit, failed to exercise
the diligence of a good father of a family. In total
disregard of its own rules, petitioner's personnel
negligently handled private respondent's account
to petitioner's detriment.
Moreover, Petitioner violated its own rules by
allowing the withdrawal of an amount that is
definitely over and above the aggregate amount
of private respondent's dollar deposits that had
yet to be cleared.
Therefore, petitioner as the collecting bank or
last endorser suffers the loss because it has the
duty to ascertain the genuineness of all prior
endorsements 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 endorsements
 withdrawal of its value or proceeds, petitioner should
suffer the resultant loss.
On appeal, the Court of Appeals affirmed the lower
court's decision. Without filing a motion for the
reconsideration, petitioner filed this petition for
review on certiorari
4) Equitable Banking Augusto L. Pardo (Pardo) is SSPI’s President and
Corp vs. Special Steel majority stockholder. International Copra Export
Products Corporation (Interco) is its regular customer. Jose
GR No 175350 Isidoro Uy, alias Jolly Uy (Uy), is an Interco employee,
June 13, 2012 in charge of the purchasing department, and the son-
in-law of its majority stockholder. Petitioner
Equitable Banking Corporation (Equitable or bank) is
a private domestic corporation engaged in banking
and is the depository bank of Interco and of Uy.
In 1991, SSPI sold welding electrodes to Interco, as
evidenced by the following sales invoices: Sales
Invoice No. 65042 dated February 14, 1991 for P
325,976.34 Sales Invoice No. 65842 dated April 11,
1991 for P 345,412.80 Sales Invoice No. 65843 dated
April 11, 1991 for P 313,845.84. The due dates for
these invoices were March 16, 1991 (for the first
sales invoice) and May 11, 1991 (for the others). The
invoices provided that Interco would pay interest at
the rate of 36% per annum in case of delay.
In payment for the above welding electrodes, Interco
issued three checks payable to the order of SSPI. Each
check was crossed with the notation “account payee
only” and was drawn against Equitable. The records
do not identify the signatory for these three checks,
or explain how Uy, Interco’s purchasing officer, came
into possession of these checks. The records only
disclose that Uy presented each crossed check to
Equitable on the day of its issuance and claimed that
he had good title thereto and demanded the deposit
of the checks in his personal accounts in Equitable.
Whether or not the No. The checks that Interco issued in favor of SSPI
payment made by were all crossed, made payable to SSPI’s order,
Equitable is proper. and contained the notation “account payee
only.” This creates a reasonable expectation that
the payee alone would receive the proceeds of
the checks and that diversion of the checks
would be averted. This expectation arises from
the accepted banking practice that crossed
checks are intended for deposit in the named
payee’s account only and no other. At the very
least, the nature of crossed checks should place a
bank on notice that it should exercise more
caution or expend more than a cursory inquiry, to
ascertain whether the payee on the check has
authorized the holder to deposit the same in a
different account. It is well to remember that
“[t]he banking system has become an
indispensable institution in the modern world
and plays a vital role in the economic life of every
civilized society. Whether as mere passive
entities for the safe-keeping and saving of money
or as active instruments of business and
commerce, banks have attained an [sic]
ubiquitous presence among the people, who
have come to regard them with respect and even
gratitude and, above all, trust and confidence. In
this connection, it is important that banks should
guard against injury attributable to negligence or
bad faith on its part. As repeatedly emphasized,
since the banking business is impressed with
public interest, the trust and confidence of the
public in it is of paramount importance.

5) Metropolitan Bank On July 5, 1995, respondent Wilfred N. Chiok (Chiok)
& Trust Co vs. Chiok bought US$1,022,288.50 dollars from Gonzalo B.
GR No 172652 Nuguid (Nuguid) where Chiok deposited the three
Nov 26, 2014 manager’s checks (Asian Bank MC Nos. 025935 and
025939, and Metrobank CC No. 003380), with an
aggregate value of ₱26,068,350.00 in Nuguid’s
account with petitioner Bank of the Philippine Islands
(BPI). Nuguid, however, failed to deliver the dollar
equivalent of the three checks as agreed upon,
prompting Chiok to request that payment on the
three checks be stopped. On the following day, July 6,
1995, Chiok filed a Complaint for damages with
application for ex parte restraining order and/or
preliminary injunction with the Regional Trial Court
(RTC) of Quezon City against the spouses Gonzalo
Consequently, the highest degree of diligence is
expected, and high standards of integrity and
performance are required of it.”
Equitable did not observe the required degree of
diligence expected of a banking institution under
the existing factual circumstances.
Equitable’s pretension that there is nothing
under the circumstances that rendered Uy’s title
to the checks questionable is outrageous. These
are crossed checks, whose manner of discharge,
in banking practice, is restrictive and specific.
Uy’s name does not appear anywhere on the
crossed checks. Equitable, not knowing the
named payee on the check, had no way of
verifying for itself the alleged genuineness of the
indorsement to Uy. The checks bear nothing on
their face that supports the belief that the
drawer gave the checks to Uy. Uy’s relationship
to Interco’s majority stockholder will not justify
disregarding what is clearly ordered on the
checks.
Whether or not payment No. A manager’s check, like a cashier’s check, is
of manager’s and an order of the bank to pay, drawn upon itself,
cashier’s checks are committing in effect its total resources, integrity,
subject to the condition and honor behind its issuance. By its peculiar
that the payee thereof character and general use in commerce, a
should comply with his manager’s check or a cashier’s check is regarded
obligations to the substantially to be as good as the money it
purchaser of the checks. represents. While manager’s and cashier’s checks
are still subject to clearing, they cannot be
countermanded for being drawn against a closed
account, for being drawn against insufficient
funds, or for similar reasons such as a condition
not appearing on the face of the check. Long
standing and accepted banking practices do not
countenance the countermanding of manager’s
 and Marinella Nuguid, and the depositary banks,
Asian Bank and Metrobank. On July 25, 1995, the RTC
issued an Order directing the issuance of a writ of
preliminary prohibitory injunction. When checks
were presented for payment, Asian Bank refused to
honor MC Nos. 025935 and 025939 in deference to
the TRO.
RTC: Held that Nuguid failed to prove the delivery of
dollars to Chiok. According to the RTC, Nuguid’s claim
that Chiok was still liable for seven dishonored China
Banking Corporation (CBC) checks with a total worth
of ₱72,984,020.00 is highly doubtful since such claim
was not presented as a counterclaim in the case.
Furthermore, the court ruled that the certification of
CBC stating the reasons for the stop payment order
"are indicative of Chiok’s non-liability to Nuguid." The
RTC further noted that there was a criminal case filed
by Chiok against Nuguid on March 29, 1996 for estafa
and other deceit on account of Nuguid’s alleged
failure to return the originals of the seven CBC
checks. The RTC went on to rule that manager’s
checks and cashier’s checks may be the subject of a
Stop Payment Order from the purchaser on the basis
of the payee’s contractual breach.
CA: By depositing the subject checks to the account
of Nuguid, Chiok had already performed his
obligation under the contract, and the subsequent
failure of Nuguid to comply with what was incumbent
upon him gave rise to an action for rescission
pursuant to Article 1191 of the Civil Code.
6) Patrimonio vs. The petitioner Alvin Patrimonio(then a decorated
Gutierrez professional basketball player) and the respondent
GR No 187769 Napoleon Gutierrez (a well-known sports columnist)
June 4, 2014 entered into a business venture under the name of
Slam Dunk Corporation (Slam Dunk), a production
outfit that produced mini-concerts and shows related
and cashier’s checks on the basis of a mere
allegation of failure of the payee to comply with
its obligations towards the purchaser.
Therefore, when Nuguid failed to deliver the
agreed amount to Chiok, the latter had a cause of
action against Nuguid to ask for the rescission of
their contract; but, Chiok did not have a cause of
action against Metrobank and Global Bank that
would allow him to rescind the contracts of sale
of the manager’s or cashier’s checks, which
would have resulted in the crediting of the
amounts thereof back to his accounts.
Reciprocal obligations are those which arise from
the same cause, and in which each party is a
debtor and creditor of the other, such that the
obligation of one is dependent upon the
obligation of the other. They are to be performed
simultaneously such that the performance of one
is conditioned upon the simultaneous fulfillment
of the other. Otherwise stated, the right of
rescission under Article 1191 of the civil code can
only be exercised in accordance with the
principle of relativity of contracts under Article
1311 of the same code
1) Whether or not 1) No. Section 14 of the NIL provides for when
Gutierrez had validly blanks may be filled. This provision applies to an
filled-up the instrument. incomplete but delivered instrument. Under this
rule, if the maker or drawer delivers a pre-signed
2) Whether or not blank paper to another person for the purpose of
to basketball.
In the course of their business, the petitioner pre-
signed several checks to answer for the expenses of
Slam Dunk. Although signed, these checks had no
payee’s name, date or amount. The blank checks
were entrusted to Gutierrez with the specific
instruction not to fill them out without previous
notification to and approval by the petitioner.
Petitioner said the arrangement was made so that he
could verify the validity of the payment and make the
proper arrangements to fund the account.
Without the petitioner’s knowledge and consent,
Gutierrez went to Marasigan to secure a loan in the
amount of P200,000.00 on the excuse that the
petitioner needed the money for the construction of
his house. In addition to the payment of the principal,
Gutierrez assured Marasigan that he would be paid
an interest of 5% per month.
Marasigan acceded to Gutierrez’ request and gave
him ₱200,000.00 sometime in February 1994.
Gutierrez simultaneously delivered to Marasigan one
of the blank checks the petitioner pre-signed with
Pilipinas Bank, Greenhills Branch, with the blank
portions filled out with the words "Cash" "Two
Hundred Thousand Pesos Only", and the amount of
"₱200,000.00". The upper right portion of the check
corresponding to the date was also filled out with the
words "May 23, 1994" but the petitioner contended
that the same was not written by Gutierrez.
Marasigan deposited the check but it was dishonored
for the reason “ACCOUNT CLOSED.” It was later
revealed that petitioner’s account with the bank had
been closed.
Marasigan also sought recovery from Gutierrez, to no
avail. He thereafter sent several demand letters to
the petitioner asking for the payment of P200,000.00,
but his demands likewise went unheeded.
Marasigan is a holder in converting it into a negotiable instrument, that
due course thus may hold person is deemed to have prima facie authority
Patrimonio liable. to fill it up. It merely requires that the instrument
be in the possession of a person other than the
drawer or maker and from such possession,
together with the fact that the instrument is
wanting in a material particular, the law
presumes agency to fill up the blanks.
In order however that one who is not a holder in
due course can enforce the instrument against a
party prior to the instrument’s completion, two
requisites must exist: (1) that the blank must be
filled strictly in accordance with the authority
given; and (2) it must be filled up within a
reasonable time. If it was proven that the
instrument had not been filled up strictly in
accordance with the authority given and within a
reasonable time, the maker can set this up as a
personal defense and avoid liability. The subject
check was not completely filled out strictly under
the authority he has given.
2) No. Sec. 52 of the NIL— 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;
(b) That he became the holder of it before it was
overdue, and without notice that it had been
previously dishonored, if such was the fact;
(c) That he took it in good faith and for value;
(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.
 Consequently, he filed a criminal case for violation of
B.P. 22 against the petitioner.
RTC ruled in favor of Marasigan. It found that the
petitioner, in issuing the pre-signed blank checks, had
the intention of issuing a negotiable instrument,
albeit with specific instructions to Gutierrez not to
negotiate or issue the check without his approval.
RTC declared Marasigan as a holder in due course
and accordingly dismissed the petitioner’s complaint
for declaration of nullity of the loan. It ordered the
petitioner to pay Marasigan the face value of the
check with a right to claim reimbursement from
Gutierrez.
CA affirmed the RTC ruling.
7) People vs. Wagas Wagas was charged with Estafa for allegedly issuing a Whether or not
GR No 157943 BPI check worth P200,000.00 as payment for 200 Prosecution established
Sept 4, 2013 bags of rice ordered from Alberto Ligaray. The check beyond reasonable doubt
Acquisition in good faith means taking without
knowledge or notice of equities of any sort which
could be set up against a prior holder of the
instrument. It means that he does not have any
knowledge of fact which would render it
dishonest for him to take a negotiable paper. The
absence of the defense, when the instrument
was taken, is the essential element of good faith.
In order to show that the defendant had
“knowledge of such facts that his action in taking
the instrument amounted to bad faith,” it is not
necessary to prove that the defendant knew the
exact fraud that was practiced upon the plaintiff
by the defendant’s assignor, it being sufficient to
show that the defendant had notice that there
was something wrong about his assignor’s
acquisition of title, although he did not have
notice of the particular wrong that was
committed. In the present case, Marasigan’s
knowledge that the petitioner is not a party or a
privy to the contract of loan, and correspondingly
had no obligation or liability to him, renders him
dishonest, hence, in bad faith.
Considering that Marasigan is not a holder in due
course, the petitioner can validly set up the
personal defense that the blanks were not filled
up in accordance with the authority he gave.
Consequently, Marasigan has no right to enforce
payment against the petitioner and the latter
cannot be obliged to pay the face value of the
check.
No. SC acquitted Wagas but ordered him to pay
Ligaray P200,000.00 as actual damages,plus 6%
interest per annum.
was dishonored for being “drawn against insufficient
fund” and inspite notice and several demands,
accused Wagas failed to make good the said check or
replace the same with cash.
During cross-examination, Ligaray admitted that he
did not personally meet Wagas because they only
transacted through telephone and that he released
the 200 bags of rice directly to Robert Cañada, the
brother-in-law of Wagas, who signed the delivery
receipt upon receiving the rice.
In his defense, Wagas admitted having issued the
said check to Cañada and not to Ligaray. He also
denied having any telephone conversation or
dealings with Liganay.
A letter, signed by Wagas, admitting his liability, was
presented by the Prosecution. Wagas admitted the
letter, but insisted that it was Cañada who transacted
with LIgaray, and that he had signed the letter only
because his sister and her husband (Cañada) had
begged him to assume the responsibility.
RTC DECISION: RTC convicted Wagas of Estafa.
Wagas appealed directly to SC by notice of appeal.
the existence of all the The essential elements of the crime charged are:
elements of the crime of (a) a check is postdated or issued in payment of
estafa as charged, as well an obligation contracted at the time the check is
as the identity of the issued; (b) lack or insufficiency of funds to cover
perpetrator of the crime. the check; and (c) damage to the payee thereof.
It is the criminal fraud or deceit in the issuance of
a check that is punishable, not the non-payment
of a debt. Prima facie evidence of deceit exists by
law upon proof that the drawer of the check
failed to deposit the amount necessary to cover
his check within three days from receipt of the
notice of dishonor.
In every criminal prosecution, however, the
identity of the offender, like the crime itself,
must be established by proof beyond reasonable
doubt. In that regard, the Prosecution did not
establish beyond reasonable doubt that it was
Wagas who had defrauded Ligaray by issuing the
check.
Firstly, Ligaray expressly admitted that he did not
personally meet the person with whom he was
transacting over the telephone.
Secondly, the check delivered to Ligaray was
made payable to cash. Under the Negotiable
Instruments Law, this type of check was payable
to the bearer and could be negotiated by mere
delivery without the need of an indorsement.
This rendered it highly probable that Wagas had
issued the check not to Ligaray, but to somebody
else like Cañada, his brother-in-law, who then
negotiated it to Ligaray.
Wagas could not be held guilty of estafa simply
because he had issued the check used to defraud
Ligaray. The proof of guilt must still clearly show
that it had been Wagas as the drawer who had
defrauded Ligaray by means of the check.
Thirdly, Ligaray admitted that it was Cañada who
received the rice from him and who delivered the

8) PHILIPPINE PCIB filed an action for recovery of sum of
COMMERCIAL money with damages before the RTC against
INTERNATIONAL Antonio Balmaceda, the Branch Manager of their Sta.
BANK vs. ANTONIO Cruz, Manila Branch. Allegedly, Balmaceda took
B. BALMACEDA and advantage of his position as Branch Manager to
ROLANDO N. RAMOS fraudulently obtain and encash 31 Manager’s
G.R. No. 158143. checks amounting to a total of P10,782,150. Said
September 21, 2011. complaint was later on amended where certain
Rolando Ramos was impleaded as one of the
recipients of a portion of the proceeds from
Balmaceda’s alleged fraud. Checks encashed were
increased to 34 and their total amount to
P11,937,150. RTC granted the motion but Balmaceda
did not file an answer.
In his defense, accordingly, Ramos is a reputable
businessman engaged in buy and sell of fighting cock.
Balmaceda was one of his clients. He admitted he
sold fighting cock to the latter and received payment
in return but without knowledge of the source of
Balmaceda’s money. RTC ruled in favor of PCIB
ordering Ramos to pay the misappropriated amount
and its legal interest, plus moral damages.
Upon appeal filed by Ramos before the CA, PCIB’s
negligence was raised as an issue. It could have been
Whether Ramos, who
received a portion of the
money that Balmaceda
took from PCIB, should
also be held liable for the
return of this money to
the Bank.
check to him.
Finally, Ligaray’s declaration that it was Wagas
who had transacted with him over the telephone
was not reliable because he did not explain how
he determined that the person with whom he
had the telephone conversation was really Wagas
whom he had not yet met or known before then.
Nevertheless, an accused, though acquitted of
estafa, may still be held civilly liable where the
preponderance of the established facts so
warrants. Wagas as the admitted drawer of the
check was legally liable to pay the amount of it to
Ligaray, a holder in due course.
No, Ramos was not liable.
PCIB itself is at fault as employer. An indicator of
PCIB’s negligence is the fact that it allowed
Balmaceda to encash the Manager’s checks that
were plainly crossed checks. A crossed check is
one where two parallel lines are drawn across its
face or across its corner. Based on jurisprudence,
the crossing of a check has the following effects:
(a) the check may not be encashed but only
deposited in the bank; (b) the check may be
negotiated only once—to the one who has an
account with the bank; and (c) the act of crossing
the check serves as a warning to the holder that
the check has been issued for a definite purpose
and he must inquire if he received the check
pursuant to this purpose; otherwise, he is not a
holder in due course. In other words, the crossing
of a check is a warning that the check should be
deposited only in the account of the payee.
When a check is crossed, it is the duty of the
collecting bank to ascertain that the check is only
deposited to the payee’s account. In complete
disregard of this duty, PCIB’s systems allowed
Balmaceda to encash 26 Manager’s checks which
 impossible for Balmacelda to perpetrate his were all crossed checks, or checks payable to the
fraudulent act if not for the following circumstances: “payee’s account only.”
1. Taking advantage of his position as Branch
Manager of the bank The General Banking Law of 2000 requires of
2. Acting in said capacity, by instructing the bank staff banks the highest standards of integrity and
to prepare the application form for the purchase of performance. The banking business is impressed
Manager’s checks passable to several persons with public interest. Of paramount importance is
3. Forging of the signature of the client’s authorized the trust and confidence of the public in general
representative on their forms and sign the forms as in the banking industry. Consequently, the
PCIB’s approving officer diligence required of banks is more than that of a
4. Having an authorized office of PCIB to issue the Roman pater familias or a good father of a family.
Manager’s Check. The highest degree of diligence is expected.
CA found no sufficient evidence existed to prove
that Ramos colluded with Balmaceda in the
latter’s fraudulent manipulations. The mere fact that
Balmaceda made Ramos the payee in some of the
Manager’s checks does not suffice to prove that
Ramos was complicit in Balmaceda’s fraudulent
scheme. CA observed that other persons were also
named as payees in the checks that Balmaceda
acquired and encashed, and PCIB only chose to go
after Ramos.
Appeal was granted in CA and PCIB was ordered to
pay Ramos Moral and Exemplary Damages including
Attorney’s fees. Hence this petition.

9) PNB vs. FF Cruz & In its complaint, it is alleged that [respondent F.F. Whether the Court of PNB is guilty of negligence.
Co Cruz & Co., Inc.] (hereinafter FFCCI) opened
GR No 17325 savings/current or so-called combo account No.
Sept 26, 2008
0219-830-146 and dollar savings account No. 0219-
0502-458-6 with [petitioner Philippine National Bank]
(hereinafter PNB) at its Timog Avenue Branch. Its
President Felipe Cruz (or Felipe) and Secretary-
Treasurer Angelita A. Cruz (or Angelita) were the
named signatories for the said accounts.
The said signatories on separate but coeval dates left
Appeals seriously erred
when it found PNB guilty Preliminarily, in G.R. No. 173278, we resolved
of negligence? with finality that FFCCI is guilty of contributory
negligence, thus, making it partly liable for the
loss (i.e., as to 40%thereof) arising from the
unauthorized withdrawal of P13,210,500.31 from
its combo account. The case before us is, thus,
limited to PNB’s alleged negligence in the subject
transactions which the appellate court found to
be the proximate cause of the loss, thus, making
for and returned from the Unites States of America,
Felipe on March 18, 1995 until June 10, 1995 while
Angelita followed him on March 29, 1995 and
returned ahead on May 9, 1995.
While they were thus out of the country, applications
for cashier's and manager's [checks] bearing Felipe's
[signature] were presented to and both approved by
the PNB. The first was on March 27, 1995 for
P9,950,000.00 payable to a certain Gene B. Sangalang
and the other one was on April 24, 1995 for
P3,260,500.31 payable to one Paul Bautista. The
amounts of these checks were then debited by the
PNB against the combo account of [FFCCI].
When Angelita returned to the country, she had
occasion to examine the PNB statements of account
of [FFCCI] for the months of February to August 1995
and she noticed the deductions of P9,950,000.00 and
P3,260,500.31. Claiming that these were
unauthorized and fraudulently made, [FFCCI]
requested PNB to credit back and restore to its
account the value of the checks. PNB refused, and
thus constrained [FFCCI] filed the instant suit for
damages against the PNB and its own accountant
Aurea Caparas (or Caparas).
In its traverse, PNB averred lack of cause of action. It
alleged that it exercised due diligence in handling the
account of [FFCCI]. The applications for manager's
check have passed through the standard bank
procedures and it was only after finding no infirmity
that these were given due course. In fact, it was no
less than Caparas, the accountant of [FFCCI], who
it liable for the greater part of the loss (i.e., as to
60% thereof) pursuant to our rulings in Philippine
Bank of Commerce v. Court of Appeals14 and The
Consolidated Bank & Trust Corporation v. Court of
Appeals.
PNB contends that it was not negligent in
verifying the genuineness of the signatures
appearing on the subject applications for
manager’s check. It claims that it followed the
standard operating procedure in the verification
process and that four bank officers examined the
signatures and found the same to be similar with
those found in the signature cards of FFCCI’s
authorized signatories on file with the bank. PNB
raises factual issues which are generally not
proper for review under a Rule 45 petition. While
there are exceptions to this rule, we find none
applicable to the present case. As correctly found
by the appellate court, PNB failed to make the
proper verification because the applications for
the manager’s check do not bear the signature of
the bank verifier. PNB concedes the absence of
the subject signature but argues that the same
was the result of inadvertence. It posits that the
testimonies of Geronimo Gallego (Gallego), then
the branch manager of PNB Timog Branch, and
Stella San Diego (San Diego), then branch cashier,
suffice to establish that the signature verification
process was duly followed. We are not
persuaded.
First, oral testimony is not as reliable as
confirmed the regularity of the transaction. The delay
of [FFCCI] in picking up and going over the bank
statements was the proximate cause of its self-
proclaimed injury. Had [FFCCI] been conscientious in
this regard, the alleged chicanery would have been
detected early on and Caparas effectively prevented
from absconding with its millions. It prayed for the
dismissal of the complaint.
Regional Trial Court's Ruling
The trial court ruled that F.F. Cruz and Company, Inc.
( FFCCI) was guilty of negligence in clothing Aurea
Caparas (Caparas) with authority to make decisions
on and dispositions of its account which paved the
way for the fraudulent transactions perpetrated by
Caparas; that, in practice, FFCCI waived the two-
signature requirement in transactions involving the
subject combo account so much so that Philippine
National Bank (PNB) could not be faulted for
honoring the applications for manager's check even if
only the signature of Felipe Cruz appeared thereon;
and that FFCCI was negligent in not immediately
informing PNB of the fraud.
On the other hand, the trial court found that PNB
was, likewise, negligent in not calling or personally
verifying from the authorized signatories the
legitimacy of the subject withdrawals considering
that they were in huge amounts. For this reason, PNB
had the last clear chance to prevent the unauthorized
debits from FFCCI's combo account. Thus, PNB
should bear the whole loss -
documentary evidence
Second, PNB’s own witness, San Diego, testified
that in the verification process, the principal duty
to determine the genuineness of the signature
devolved upon the account analyst. However,
PNB did not present the account analyst to
explain his or her failure to sign the box for
signature and balance verification of the subject
applications for manager’s check, thus, casting
doubt as to whether he or she did indeed verify
the signatures thereon.
Third, we cannot fault the appellate court for not
giving weight to the testimonies of Gallego and
San Diego considering that the latter are
naturally interested in exculpating themselves
from any liability arising from the failure to
detect the forgeries in the subject transactions
Fourth, Gallego admitted that PNB’s employees
received training on detecting forgeries from the
National Bureau of Investigation. However,
Emmanuel Guzman, then NBI senior document
examiner, testified, as an expert witness, that the
forged signatures in the subject applications for
manager’s check contained noticeable and
significant differences from the genuine
signatures of FFCCI’s authorized signatories and
that the forgeries should have been detected or
observed by a trained signature verifier of any
bank.
 [PNB] to pay plaintiff [FFCCI] P13,210,500.31
representing the amounts debited against plaintiff's
account, with interest at the legal rate computed
from the filing of the complaint plus costs of suit.
Court of Appeal's Ruling
the CA rendered the assailed Decision affirming with
modification the Decision of the trial court, viz:
The appealed Decision is AFFIRMED with the
MODIFICATION that [PNB] shall pay [FFCCI] only 60%
of the actual damages awarded by the trial court
while the remaining 40% shall be borne by [FFCCI].
Given the foregoing, we find no reversible error
in the findings of the appellate court that PNB
was negligent in the handling of FFCCI’s combo
account, specifically, with respect to PNB’s failure
to detect the forgeries in the subject applica-
tions for manager’s check which could have
prevented the
loss. As we have often ruled, the banking
business is impressed with public trust.21 A
higher degree of diligence is imposed on banks
relative to the handling of their affairs than that
of an ordinary business enterprise.22 Thus, the
degree of responsibility, care and trustworthiness
expected
of their officials and employees is far greater
than those of ordinary officers and employees in
other enterprises.
In the case at bar, PNB failed to meet the high
standard of diligence required by the
circumstances to prevent the fraud. In Philippine
Bank of Commerce v. Court of Appeals24 and The
Consolidated Bank & Trust Corporation v. Court of
Appeals,25 where the bank’s negligence is the
proximate cause of the loss and the depositor is
guilty of contributory negligence, we allocated
the damages between
the bank and the depositor on a 60-40 ratio. We
apply the same ruling in this case considering
that, as shown above, PNB’s negligence is the
proximate cause of the loss while the issue as to
FFCCI’s contributory negligence has been settled
with finality in G.R. No. 173278. Thus, the
appellate court properly adjudged PNB to bear

10) PNB vs. Rodriguez Spouses Erlando and Norma Rodriguez, herein 1) Whether or not the
GR No 170325 respondents had a discounting arrangement with the instrument is a bearer
Sept 26, 2008 Philnabank Employees Savings and Loan Association instrument.
(PEMSLA), an association of PNB employees and a
client of PNB Amelia Avenue Branch. Spouses
Rodriguez would rediscount the postdated checks
issued to members whenever the association was
short of funds. As was customary, the spouses would
replace the postdated checks with their own checks
issued in the name of the members. Some PEMSLA
officers devised a scheme to obtain additional loans
despite their outstanding loan accounts, a bar from
obtaining a new loan. They took out loans in the
names of unknowing members, without the
knowledge or consent of the latter. The PEMSLA
checks issued for these loans were then given to the
spouses fo rediscounting. The officers carried this out
by forging the indorsement of the named payees in
the checks. In return, the spouses issued their
personal checks (Rodriguez checks) in the name of
the members and delivered the checks to an o cer of
PEMSLA. The PEMSLA checks, on the other hand,
were deposited by the spouses to their account.
From November 1998 to February 1999, the spouses
issued sixty nine (69) checks, in the total amount of
P2,345,804.00. These were payable to forty seven
(47) individual payees who were all members of
PEMSLA. Later on, PNB, herein petitioner, eventually
found out about these fraudulent acts. To put a stop
to his scheme, PNB closed the current account of
PEMSLA. As a result, the PEMSLA checks deposited by
the spouses were returned or dishonored for the
reason "Account Closed". The corresponding
Rodriguez checks, however, were deposited as usual 2)Whether or not PNB
to the PEMSLA savings account. The amounts were should be held liable
duly debited from the Rodriguez account. Thus, for the amounts of the
the greater part of the loss consistent with these
rulings.
No. A negotiable instrument is payable to bearer
when it is expressly stated and payable to the
person named therein or the bearer. It is also a
bearer instrument when it is payable to the order
of a fictitious or non-existing person provided
that such fact is known to the person making it so
payable; when the name of the payee does not
purport to be the name of any person; or where
the only or last indorsement is an indorsement in
blank. A bearer instrument does not require an
indorsement to be validly negotiated. It is
negotiable by mere delivery. On the other hand,
an order instrument is drawn payable to the
order of a specifed person or to him or his order.
It may be drawn payable to the order of a payee
who is not maker, drawer, or drawee; drawer or
maker; drawee; two or more payees jointly; one
or some of several payees holder of an office for
the time being. The case at bar showed that the
instrument is an order instrument because PNB
failed to present sufficient evidence to defeat the
claim of respondents-spouses that the named
payees were the intended recipients of the
checks' proceeds. The bank failed to satisfy a
requisite condition of a fictitious-payee situation
— that the maker of the check intended for the
payee to have no interest in the transaction. Such
failureto to show that the payees were
"fictitious" in its broader sense made the
fictitious-payee rule inapplicable. Thus, the
checks are to be deemed payable to order.
Yes. A bank that has been remiss in its duty must
suffer the consequences of its negligence. Being
issued to named payees, PNB was duty-bound by
 because the PEMSLA checks given as payment were checks. law and by banking rules and procedure to
returned, spouses Rodriguez incurred losses from the require that the checks be properly indorsed
rediscounting transactions. Thus, made them file a before accepting them for deposit and payment.
petition before the RTC. RTC ruled in favor of the PNB should be held liable for the amounts of the
defendant Spouses and asked the petitioner to return checks.
the value of the checks. PNB appealed before the CA.
CA initially set aside the RTC’s disposition. The CA
concluded that the checks were obviously meant by
the spouses to be really paid to PEMSLA. They added
that the payees in the checks were "fictitious payees"
because they were not the intended payees at all
making the checks bearer instruments. The
respondents moved for a reconsideration. CA
reversed itself through an Amended Decision stating
that the checks were payable to order. The petitioner
failed to present sufficient proof to defeat the claim
of the respondents that they really intended the
checks to be received by the specified payees. Thus,
the petitioner is liable for the value of the checks
which it paid to PEMSLA without indorsements from
the named payees. The award for damages was
deemed appropriate in view of the failure of the
petitioner to treat the respondent’s account with the
highest degree of care considering their relationship
is fiduciary in nature. Case was raised to SC under
Rule 45 of the Rules of Court.

11) Pua vs. Sps Tiong The controversy arose from a Complaint for a Sum of
GR No 198660 Money filed by petitioner Pua against respondent-
Oct 23, 2013 spouses Benito Lo Bun Tiong Benito) and Caroline
Siok Ching Teng Caroline). During trial, petitioner Pua
clarified that the PhP 8,500,000 check was given by
respondents to pay the loans they obtained from her
under a compounded interest agreement on various
dates in 1988. In all, respondents issued 17 checks for
a total amount of PhP 1,975,000. These checks were
dishonored upon presentment to the drawee bank.
As a result of the dishonor, petitioner demanded
Whether or not the YES as per Sec 24 of the NIL: Presumption of
issuance of the check by consideration. – Every negotiable instrument is
the petitioner was issued deemed prima facie to have been issued for a
for a valuable valuable consideration; and every person whose
consideration and signature appears thereon to have become a
sufficient proof to party for value.
establish indebtedness?
In Pacheco v. Court of Appeals, this Court has
expressly recognized that a check "constitutes an
evidence of indebtedness" and is a veritable
"proof of an obligation." Hence, it can be used "in
lieu of and for the same purpose as a promissory
payment. Respondents, however, pleaded for more
time because of their financial difficulties. Petitioner
Pua obliged and simply reminded the respondents of
their indebtedness from time to time. Sometime in
September 1996, when their financial situation
turned better, respondents called and asked
petitioner Pua for the computation of their loan
obligations. Hence, petitioner handed them a
computation dated which showed that, at the agreed
2% compounded interest rate per month, the
amount of the loan payable to petitioner rose to PhP
13,218,544.20. On receiving the computation, the
respondents asked petitioner to reduce their
indebtedness to PhP 8,500,000.13 Wanting to get
paid the soonest possible time, petitioner Pua agreed
to the lowered amount.
Respondents then delivered to petitioner Asiatrust
Check bearing the reduced amount of PhP 8,500,000.
In turn, respondents demanded the return of the
previously dishonored checks. Petitioner, however,
refused to return the bad checks and advised
respondents that she will do so only after the
encashment.
Like the 17 checks, however, it was also dishonored
when it was presented by petitioner to the drawee
bank. Hence, as claimed by petitioner, she decided to
file a complaint to collect the money owed her by
respondents.
For the defense, both respondents Caroline and
Benito testified along with Rosa Dela Cruz Tuazon
(Tuazon), who was the OIC-Manager of Asiatrust-
Binondo Branch in 1997. Respondents categorically
denied obtaining a loan from petitioner. Respondent
Caroline, in particular, narrated that, in August 1995,
she and petitioner’s sister, Lilian, forged a
partnership that operated a mahjong business.
note. In the case of Lozano v. Martinez, We
pointed out that a check functions more than a
promissory note since it not only contains an
undertaking to pay an amount of money but is an
"order addressed to a bank and partakes of a
representation that the drawer has funds on
deposit against which the check is drawn,
sufficient to ensure payment upon its
presentation to the bank." This Court reiterated
this rule in the relatively recent Lim v. Mindanao
Wines and Liquour Galleria stating that "a check,
the entries of which are in writing, could prove a
loan transaction." This very same principle
underpins Section 24 of the Negotiable
Instruments Law (NIL):
Section 24. Presumption of consideration. – Every
negotiable instrument is deemed prima facie to
have been issued for a valuable consideration;
and every person whose signature appears
thereon to have become a party for value.
Consequently, the 17 original checks, completed
and delivered to petitioner, are sufficient by
themselves to prove the existence of the loan
obligation of the respondents to petitioner. Note
that respondent Caroline had not denied the
genuineness of these checks. Instead,
respondents argue that they were given to
various other persons and petitioner had simply
collected all these 17 checks from them in order
to damage respondents’ reputation. This account
is not only incredible; it runs counter to human
experience, as enshrined in Sec. 16 of the NIL
which provides that when an instrument is no
longer in the possession of the person who
signed it and it is complete in its terms "a valid
and intentional delivery by him is presumed until
the contrary is proved."
 In March 1996, however, respondent Caroline and
Lilian had a serious disagreement that resulted in the
dissolution of their partnership and the cessation of
their business. In the haste of the dissolution and as a
result of their bitter separation, respondent Caroline
alleged that she forgot about the five (5) pre-signed
checks she left with Lilian.
After trial, the RTC issued its Decision dated January
31, 2006 in favor of petitioner. In holding thus, the
RTC stated that the possession by petitioner of the
checks signed by Caroline, under the Negotiable
Instruments Law, raises the presumption that they
were issued and delivered for a valuable
consideration. On the other hand, the court a quo
discounted the testimony for the defense completely
denying respondents’ loan obligation to Pua.
12) RCBC Savings In April 2002, Noel M. Odrada (Odrada) sold a
Bank vs. Odrada second-hand Mitsubishi Montero (Montero) to
GR No 219037 Teodoro L. Lim (Lim) for P1,510,000. Of the total
Oct 19, 2016 consideration, P610,000 was initially paid by Lim and
the balance of P900,000 was paid in manager’s
checks issued by RCBC dated April 12, 2002.
After the issuance of the manager's checks and their
turnover to Odrada but prior to the checks'
presentation, Lim notified Odrada in a letter dated
April 15, 2002 that there were issues regarding the
roadworthiness of the Montero, stating hidden
defects. A meeting was requested with regard to the
matter. However, Odrada did not go to the slated
meeting and instead deposited the manager's checks
with International Exchange Bank (Ibank) on April 16,
The appellate court’s justification in giving credit
to respondents’ contention that the respondents
had delivered the 17 checks to persons other
than petitioner lies on the supposed failure of
petitioner "to establish for whose accounts [the
checks] were deposited and subsequently
dishonored." This is clearly contrary to the
evidence on record. It seems that the appellate
court overlooked the original copies of the bank
return slips offered by petitioner in evidence.
These return slips show that the 1988 checks
issued by respondent Caroline were dishonored
by the drawee banks because they were "drawn
against insufficient funds." Further, a close
scrutiny of these return slips will reveal that the
checks were deposited either in petitioner’s
account or in the account of her brother, Ricardo
Yulo—a fact she had previously testified to
explaining that petitioner indorsed some checks
to her brother to pay for a part of the capital she
used in her financing business.
Whether or not the Yes. The drawee bank may refuse to pay the
drawee bank of a manager's check by interposing a personal
manager's check has the defense of the purchaser.
option of refusing
payment by interposing a As a general rule, the drawee bank is not liable
personal defense of the until it accepts. Prior to a bill's acceptance, no
purchaser of the contractual relation exists between the holder
manager's check and the drawee. Acceptance, therefore, creates a
privity of contract between the holder and the
drawee that when the latter accepts, becomes
primarily liable. Once he accepts, the he admits
the: (a) existence of the drawer; (b) genuineness
of the drawer's signature; (c) capacity and
authority of the drawer to draw the instrument;
and (d) existence of the payee and his then
capacity to endorse.
2002 and redeposited the same on April 19, 2002 but
the checks were dishonored both times apparently
upon Lim's instruction to RCBC. Consequently,
Odrada filed a collection suit against Lim and RCBC.
In his Answer, Lim alleged that the cancellation of the
manager’s checks was at his instance, upon
discovery of the misrepresentations by Odrada about
the Montero's roadworthiness. Lim claimed that the
cancellation was not done ex parte but through a
letter dated April 15, 2002. He further alleged that
the letter was delivered to Odrada prior to the
presentation of the manager's checks to RCBC. On
the other hand, RCBC contended that the checks
were dishonored because Lim had cancelled the
loan. RCBC claimed that the cancellation of the check
was prior to the presentation of the manager's
checks.
The RTC ruled in favor of Odrada, stating that the
defective condition of the Montero was not a
supervening event that would justify the dishonor of
the manager's checks. A manager's check is
equivalent to cash and is really the bank's own check.
It may be treated as a promissory note with the bank
as maker. Hence, the check becomes the primary
obligation of the bank which issued it and constitutes
a written promise to pay on demand. Being the party
primarily liable, RCBC is liable to Odrada for the value
of the manager's checks.
On appeal, the CA affirmed the RTC’s decision,
holding that when RCBC issued the check, it admitted
the existence of the payee and his then capacity to
endorse, and undertook that on due presentment the
checks which were negotiable instruments would be
accepted or paid, or both according to its tenor. The
the effective delivery of the checks to Odrada made
RCBC liable for the checks. Odrada was a holder in
The CA gravely erred when it considered Odrada
as a holder in due course. Section 52 of the NIL
defines a holder in due course as one who has
taken the instrument under the following
conditions:
(a) That it is complete and regular upon its face;
(b) That he became the holder of it before it was
overdue, and without notice that it has been
previously dishonored, if such was the fact;
(c) That he took it in good faith and for value;
(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.
Odrada, instead of addressing the issue,
attempted to deposit the checks a day after Lim
had informed him that there was a serious
problem with the Montero. His actions do not
amount to good faith. Moreover, when Odrada
redeposited the checks, he was already formally
notified by RCBC the previous day of the
cancellation of Lim's auto loan transaction. RCBC
may refuse payment by interposing a personal
defense of Lim - that the title of Odrada had
become defective when there arose a partial
failure or lack of consideration.
Section 58 of the NIL provides: "In the hands of
any holder other than a holder in due course, a
negotiable instrument is subject to the same
defenses as if it were non-negotiable, x x x."
Since Odrada was not a holder in due course, the
instrument becomes subject to personal
defenses. Hence, RCBC may legally act on a
countermand by Lim, the purchaser of the
manager's checks.
 due course; the defense of want of consideration is
not available against him.
13) Samsung Plaintiff Samsung (based in Binan, Laguna)
Construction vs. Far maintained a current account with defendant FEBTC
East Bank & Trust at the latter’s Bel-Air, Makati Branch. The sole
Company signature of plaintiff account was Jong Kyu Lee
GR No 129015 (Jong), its project manager, while the checks
Aug 13, 2004 remained in the custody of the company’s
accountant, kyu yong lee (Kyu).
On March 19, 1992, a certain Roberto Gonzaga
presented for payment FEBTC check no. 432100 to
the bank’s branch in BelAir Makati. The check,
payable to cash and drawn against Samsung
Construction’s current account, was in the amount of
P999,500.00. The bank teller first checked the
balance of Samsung’s account. After ascertaining
there were enough funds to cover the check, she
compared the signature appearing on the check with
the specimen signature of Jong as contained in the
specimen signature card with the bank. After
comparing the two signatures, the teller was satisfied
as to the authenticity of the signature appearing on
the check. She then asked Gonzaga to submit proof
of his identity which Gonzaga presented 3
identification cards.at the same time, the teller
forwarded the check to the branch Senior Assistant
Cashier, as it was a bank policy that 2 bank branch
officers approve checks exceeding 100,000 pesos, for
payment or encashment. The senior assistant
likewise counterchecked the signature on the check
as against that on the signature card, concluding that
the check was indeed signed by Jong. The senior
assistant (velez) then forwarded the check and
signature to another bank for approval. However this
time, it was noticed that the assistant accountant
(Sempio) of Samsung Construction was also in the
bank. The assistant accountant was well-known to
Syfu and other bank officers. Syfu showed the check
W/N the CA had seriously
misapprehended the
facts when it overturned
the RTC’s findings of
forgery and that it erred
in finding that it had been
negligent in safekeeping
the check, and applying
the equity principle
enunciated in PNB v.
National City Bank of New
York.
We reverse the CA. The general rule forged
signature is wholly inoperative and payment
made through or under such signature is
ineffectual or does not discharge the instrument.
If payment is made, the drawee cannot charge it
to the drawer’s account. The traditional
justification for the result is that the drawee is in
a superior position to detect a forgery because
he has the maker’s signature and is expected to
know and compare it. The rule has a healthy
cautionary effect on banks by encouraging care in
the comparison of the signatures against those
on the signature cards they have on file.
Moreover, the very opportunity of the drawee to
insure and to distribute the cost among its
customers who use checks makes the drawee an
ideal party to spread the risk to insurance.
Under Section 23 of the Negotiable Instruments
Law, forgery is a real or absolute defense by the
party whose signature was indeed forged. On the
premise that Jong’s signature was indeed forged,
FEBTC is liable for the loss since it authorized the
discharge of the forged check. Such liability
attaches even if the bank exerts due diligence
and care in preventing such faulty discharge.
Forgeries often deceive the eye of the most
cautions experts; and when a bank has been so
deceived, it is a harsh rule which compels it to
suffer although no one has suffered by its being
deceived. The forgery may be so near like the
genuine as to defy detection by the depositor
himself, and yet the bank is liable to the
depositor if it pays the check.
Thus, the first matter of inquiry is into whether
the check was indeed forged. A document
formally presented is presumed to be genuine
to Sempio who vouched for the genuineness of
Jong’s signature. Satisfied with the genuineness of
the signature of Jong, Syfu authorized the bank’s
encashment of the check to Gonzaga.
The following day, Kyu (samsung’s accountant)
examined the balance of the bank account and
discovered the amount encashed. Aware that he had
not prepared such check for Jong’s signature, Kyu
perused the checkbook and found that the last blank
check was missing. Jong learned of the encashment
of the check, and realized that his signature had been
forged. A criminal case for qualified theft was filed
against Sempio before the Laguna Court. Samsung
demanded the respondents credit to it the amount of
P999,500.00 with interest. FEBTC said that it was still
conducting an investigation on the matter.
Unsatisfied, Samsung filed a complaint for violation
of section 23 of the Negotiable Instruments Law, and
prayed for the payment of the amount debited as a
result of the questioned check plus interest and atty’s
fees
RTC: chose to believe the findings of the NBI expert
(Samsung Corp referred the check for investigation to
the NBI). This court held that Jong’s signature on the
check was forged.
FEBTC appealed to CA
CA: held the contradictory findings of the NBI and
PNP created doubt as to whether there was forgery.
Invoked the ruling in PNB vs. National City Bank of
New York that, “if a loss, which must be borne by one
or 2 innocent persons, can be traced to the neglect or
fault of either, such loss would be borne by the
negligent party, even if innocent of intentional
fraud.”
until it is proved to be fraudulent. In a forgery
trial, this presumption must be overcome but this
can only be done by convincing testimony and
effective illustrations. The bare fact that forgery
was committed by an employee of the party
whose signature was forged cannot necessarily
imply that such party’s negligence was the cause
for the forgery.
Still, even if the bank performed with utmost
diligence, the drawer whose signature was forged
may still recover from the bank as long as he/she
is not precluded from setting up the defense of
forgery. 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. A bank is liable irrespective of its good
faith, in paying a forged check.
The presumption remains that every person
takes ordinary care of his concerns, and that the
ordinary course of business has been followed;
Negligence is not presumed but must be proven
by him who alleges it.