METROPOLITAN BANK & TRUST COMPANY, Petitioner VS CA Metrobank filed its Petition for Review (Civil Case No.
Civil Case No. 00-595)
,Respondents.
GR No. 166260
FACTS:
Check No. 080126638 dated January 13, 1997, payable to
cash, and drawn against the account of Bienvenido C. Tan
with petitioner Metropolitan Bank & Trust Company
(Metrobank) was deposited with respondent United Overseas
Bank (UOB). Metrobank cleared the check, however, it
informed UOB that it was returning the check on account of
material alteration. The date was changed from January 23,
1997 to January 13, 1997, and the amount was altered
from P1,000.00 to P91,000.00.
UOB refused to accept the return and to reimburse
Metrobank the amount it paid on the check. The latter filed a
Complaint, contending that since UOB failed to exercise due
diligence in determining that the check had been altered, it
should bear the loss. In its Answer with Counterclaim, UOB
interposed the defenses that it exercised due diligence, and
that Metrobank failed to comply with the 24-hour clearing
house rule, and, with gross negligence, cleared the check.
After almost a year, Metrobank moved for the postponement
of the hearings, on the ground that the PNP Crime Laboratory
document examination results were not yet available. In the
scheduled December 10, 1998 hearing, Metrobanks counsel
failed to appear. UOB thus moved for the dismissal of the
case, which the Arbitration Committee granted.
Metrobank filed a Motion for Reconsideration of the
dismissal order, attaching thereto a copy of the Medical
Certificate declaring that its counsel had been afflicted with
influenza and a copy of PNP Crime Laboratory Document
Examination Report No. 102-98 stating that the subject check
had been altered.
UOB opposed the motion and argued that Metrobank was
not serious in prosecuting the case considering the numerous
postponements of hearings made by its counsel. Further, the
examination by the PNP Crime Laboratory of the check had
already been completed on July 6, 1998. The Arbitration
Committee denied Metrobank’s motion. Metrobank filed its
Second Motion for Reconsideration.
The PCHC Board of Directors issued Resolution denying the
second motion for reconsideration. Metrobank again moved
for the reconsideration of this resolution. However, it
received communication from the PCHC Executive Secretary
informing it that the proper remedy was for it to file a notice
of appeal with the PCHC and a petition for review with the
Regional Trial Court (RTC) within a non-extendible period of
fifteen (15) days counted from the receipt of the PCHC board
resolution.
with the RTC but the trial court dismissed the petition. It
ruled that it had no jurisdiction over the petition, the same
having been filed out of time. Metrobank appealed the case
to the CA who affirmed the ruling of the trial court.
Petitioner instituted the instant petition for review
on certiorari before this Court. The petition is denied.
ISSUE:
Whether or not the PCHC Rules can confer jurisdiction on the
RTC to review arbitral awards.
HELD:
No. PCHC Rules cannot confer jurisdiction on the RTC to
review arbitral awards. The petitioner had several judicial
remedies available at its disposal after the Arbitration
Committee denied its Motion for Reconsideration. It may
petition the proper RTC to issue an order vacating the award
on the grounds provided for under Section 24 of the
Arbitration Law. Petitioner likewise has the option to file a
petition for review under Rule 43 of the Rules of Court with
the Court of Appeals on questions of fact, of law, or mixed
questions of fact and law. Lastly, petitioner may file a petition
for certiorari under Rule 65 of the Rules of Court on the
ground that the Arbitrator Committee acted without or in
excess of its jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction. Since this case
involves acts or omissions of a quasi-judicial agency, the
petition should be filed in and cognizable only by the Court of
Appeals.
The trial court, in this case, properly dismissed Civil Case No.
00-595 for lack of jurisdiction, not because the petition had
been filed out of time, but because the court had no
jurisdiction over the subject matter of the petition.
DEVELOPMENT BANK OF RIZAL VS. SIMA WEI, ET AL.
G.R. NO. 85419
FACTS:
Respondent Sima Wei executed and delivered to petitioner
Bank a promissory note engaging to pay the petitioner Bank
or order the amount of P1,820,000.00. Sima Wei
subsequently issued two crossed checks payable to petitioner
Bank drawn against China Banking Corporation in full
settlement of the drawer's account evidenced by the
promissory note. These two checks however were not
delivered to the petitioner-payee or to any of its authorized
representatives but instead came into the possession of
respondent Lee Kian Huat, who deposited the checks without
the petitioner-payee's indorsement to the account of
respondent Plastic Corporation with Producers Bank. Inspite
of the fact that the checks were crossed and payable to
petitioner Bank and bore no indorsement of the latter, the
Branch Manager of Producers Bank authorized the
acceptance of the checks for deposit and credited them to
the account of said Plastic Corporation.

ISSUE:
Whether or not the petitioner Bank has a cause of action
against Sima Wei for the undelivered checks.
HELD:
No. A negotiable instrument must be delivered to the payee
in order to evidence its existence as a binding
contract. Section 16 of the NIL provides that every contract
on a negotiable instrument is incomplete and revocable
until delivery of the instrument for the purpose of giving
effect thereto. Thus, the payee of a negotiable instrument
acquires no interest with respect thereto until its delivery to
him. Without the initial delivery of the instrument from the
drawer to the payee, there can be no liability on the
instrument. Petitioner however has a right of action against
Sima Wei for the balance due on the promissory note.
METROPOLITAN BANK AND TRUST COMPANY (formerly
ASIANBANK CORPORATION) V. BA FINANCE CORPORATION
and MALAYAN INSURANCE CO. INC.
G.R. No. 179952
FACTS:
Lamberto Bitanga (Bitanga) obtained from respondent
BA Finance Corporation (BA Finance) a loan to secure which,
he mortgaged his car to respondent BA Finance. Bitanga thus
had the mortgaged car insured by respondent Malayan
Insurance Co., Inc. (Malayan Insurance). The car was
stolen. On Bitangas claim, Malayan Insurance issued a check
payable to the order of B.A. Finance
Corporation and Lamberto Bitanga for P224,500, drawn
against China Banking Corporation (China Bank). The check
was crossed with the notation For Deposit Payees
Account Only.
Without the indorsement or authority of his co-payee
BA Finance, Bitanga deposited the check to his account with
the Asianbank Corporation (Asianbank), now merged with
petitioner Metropolitan Bank and Trust Company
(Metrobank). Bitanga subsequently withdrew the entire
proceeds of the check.
In the meantime, Bitangas loan became past due, but
despite demands, he failed to settle it. BA Finance thereupon
demanded the payment of the value of the check from
Asianbank but to no avail, prompting it to file a complaint for
sum of money and damages against Asianbank and Bitanga
alleging that, inter alia, it is entitled to the entire proceeds of
the check.
On the issue of whether or not BA Finance has a cause
of action, Metrobank contends that Bitanga is authorized to
indorse the check as the drawer names him as one of the
payees. Moreover, his signature is not a forgery nor has he or
anyone forged the signature of the representative of BA
Finance Corporation. No unauthorized indorsement appears
on the check. Absent the indispensable fact of forgery or
unauthorized indorsement, the payee may not recover from
the collecting bank.
ISSUES:
Whether BA Finance has a cause of action against
Metrobank even if the subject check had not been delivered
to BA Finance by the issuer itself?
Is Metrobank liable to BA Finance for the full value of
the check, under the Negotiable Instruments Law?
HELD:
YES. Section 41 of the Negotiable Instruments
Law provides:
Where an instrument is payable to the order of two
or more payees or indorsees who are not partners, all must
indorse unless the one indorsing has authority to indorse for
the others.
Bitanga alone endorsed the crossed check, and
petitioner allowed the deposit and release of the proceeds
thereof, despite the absence of authority of Bitangas co-
payee BA Finance to endorse it on its behalf. Petitioners
argument that since there was neither forgery, nor
unauthorized indorsement because Bitanga was a co-payee in
the subject check, the dictum in Associated Bank v.
CA does not apply in the present case fails. The payment of
an instrument over a missing indorsement is the equivalent of
payment on a forged indorsement or an unauthorized
indorsement in itself in the case of joint payees.
Accordingly, one who credits the proceeds of a check
to the account of the indorsing payee is liable in conversion
to the non-indorsing payee for the entireamount of the
check.
YES. Section 68 of the Negotiable Instruments
Law instructs that joint payees who indorse are deemed
to indorse jointly and severally. When the maker dishonors
the instrument, the holder thereof can turn to those
secondarily liable the indorser for recovery.
A collecting bank, Asianbank in this case, where a
check is deposited and which indorses the check upon
presentment with the drawee bank, is an indorser. his is
because in indorsing a check to the drawee bank, a collecting
bank stamps the back of the check with the phrase all prior
endorsements and/or lack of endorsement guaranteed and,
for all intents and purposes, treats the check as a negotiable
instrument, hence, assumes the warranty of an indorser.
Petitioner, as the collecting bank or last indorser,
generally suffers the loss because it has the duty to ascertain
the genuineness of all prior indorsements 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 prior indorsements.
 REPUBLIC BANK, PLAINTIFF-APPELLEE,
VS.
MAURICIA T. EBRADA, DEFENDANT-APPELLANT.
G.R. NO. L-40796
FACTS:
Defendant Ebrada, encashed Back Pay Check No. 508060
issued by the Bureau of Treasury dated January 15, 1963 for
P1,246.08 at the main office of the plaintiff Republic
Bank. Plaintiff Bank was later advised by the said bureau that
the alleged indorsement on the reverse side of the aforesaid
check by the payee, "Martin Lorenzo" was a forgery since the
latter had allegedly died as of July 14, 1952. Plaintiff Bank was
then requested by the Bureau of Treasury to refund the
amount of P1,246.08. To recover what it had refunded to the
Bureau of Treasury, plaintiff Bank made verbal and formal
demands upon defendant Ebrada to account for the sum of
P1,246.08, but said defendant refused to do so. So plaintiff
Bank sued defendant Ebrada before the City Court of Manila.
Defendant filed her answer denying the material allegations
of the complaint and alleged that she was a holder in due
course of the check in question, or at the very least, has
acquired her rights from a holder in due course and therefore
entitled to the proceeds thereof. She also alleged that the
plaintiff Bank has no cause of action against her; that it is in
estoppel, or so negligent as not to be entitled to recover
anything from her.
Trial court rendered a decision, ordering the defendant to pay
the plaintiff the amount of ONE THOUSAND TWO FORTY-SIX
08/100 (P1,246.08), with interest at the legal rate from the
filing of the complaint on June 16, 1966, until fully paid, plus
the costs in both instances against Mauricia T. Ebrada.
In her appeal, defendant-appellant presses that the lower
court erred.
From the stipulation of facts it is admitted that defendant-
appellant was the last indorser of the said check. As such
indorser, she was supposed to have warranted that she has
good title to said check; for under Section 65 of the
Negotiable Instruments Law:6
Every person negotiating an instrument by
delivery or by qualified indorsement,
warrants:
(a) That the instrument is genuine and in all
respects what it purports to be.
(b) That she has good title to it.
xxx xxx xxx
and under Section 65 of the same Act:
Every indorser who indorses without
qualification warrants to all subsequent
holders in due course:
(a) The matters and things mentioned in
subdivisions (a), (b), and (c) of the next
preceding sections;
(b) That the instrument is at the time of his
indorsement valid and subsisting.
It turned out, however, that the signature of the original
payee of the check, Martin Lorenzo was a forgery because he
was already dead 7 almost 11 years before the check in
question was issued by the Bureau of Treasury. Under action
23 of the Negotiable Instruments Law (Act 2031):
When a signature is forged or made
without the authority of the person whose
signature it purports to be, it is wholly
inoperative, and no right to retain the
instruments, or to give a discharge thereof
against any party thereto, can be acquired
through or under such signature unless the
party against whom it is sought to enforce
such right is precluded from setting up the
forgery or want of authority.
ISSUES:
1) Whether the bank can recover from Ebrada who
was the last indorser of the check with the forged
indorsement.
2) Whether the existence of one forged signature in
the check will render void all the other negotiations of the
check with respect to the other parties whose signature are
genuine.
HELD:
1) Republic Bank should suffer the loss when it paid
the amount of the check in question to Ebrada but it has the
remedy to recover from the latter the amount it paid to her
because as last indorser of the check, she has warranted that
she has good title to it even if in fact she did not because the
payee of the check was already dead 11 years before the
check was issued.
2) The negotiation of the check in question from
Martin Lorenzo, the original payee whose indorsement was
forged, to the second indorser, should be declared of no
affect, but the negotiation of the aforesaid check from the
second indorser to the third indorser, and from the third
indorser to Ebrada who did not know of the forgery, should
be considered valid and enforceable, barring any claim of
forgery.
**The existence of one forged signature in the check will not
render void all the other negotiations of the check with
respect to the other parties whose signature are genuine. As
last indorser of the check, petitioner warranted that she has
good title to it even if in fact she did not because the payee of
the check was already dead 11 years before the check was
issued.

REPUBLIC PLANTERS BANK V. CA
G.R. NO. 93073
FACTS:
Shozo Yamaguchi (President/Chief Operating Officer) and
Fermin Canlas (Treasurer) by virtue of Board Resolution
of Worldwide Garment Manufacturing, Inc were authorized
to apply for credit facilities with the Republic Planters Bank in
the forms of export advances and letters of credit/trust
receipts accommodations. Nine (9) promissory notes
with Worldwide Garment Manufacturing, Inc. was apparently
rubber stamped above the signatures of Yamaguchi and
Canlas were issued to Republic Planters Bank
February 5, 1982: Republic Planters filed a complaint for the
recovery of sums of money. Shozo Yamaguchi did not file an
Amended Answer and failed to appear at the scheduled pre-
trial conference despite due notice
Fermin Canlas denied having issued the promissory notes as
an officer of Pinch Manufacturing Corporation (Worldwide
Garment Manufacturing, Inc) and when he issued said
promissory notes in behalf of Worldwide Garment
Manufacturing, Inc., it was in blank (typewritten entries not
appearing when he signed)
ISSUE:
Whether or not Fermin Canlas is solidarily liable with the
other defendants, namely Pinch Manufacturing Corporation
and Shozo Yamaguchi on the 9 promissory notes because
they are negotiable and ruled by the Negotiable Instruments
Law
HELD:
CA absolving Fermin Canlas is REVERSED and SET ASIDE.
Judgement is hereby rendered declaring private respondent
Fermin Canlas jointly and severally liable on all 9 promissory
notes with the following sums and at 16% interest per annum
Under the Negotiable lnstruments Law, persons who write
their names on the face of promissory notes are makers and
are liable as such. By signing the notes, the maker promises to
pay to the order of the payee or any holder according to the
tenor thereof. Based on the above provisions of law, there is
no denying that private respondent Fermin Canlas is one of
the co-makers of the promissory notes. As such, he cannot
escape liability arising there from.
Where an instrument containing the words "I promise to pay"
is signed by two or more persons, they are deemed to be
jointly and severally liable thereon. An instrument which
begins" with "I" ,We" , or "Either of us" promise to, pay, when
signed by two or more persons, makes them solidarily
liable. The In the case at bar, the solidary liability of private
respondent Fermin Canlas is made clearer and certain,
without reason for ambiguity, by the presence of the phrase
A joint and several note is one in which the makers bind
themselves both jointly and individually to the payee so that
all may be sued together for its enforcement, or the creditor
may select one or more as the object of the suit. A joint and
several obligation in common law corresponds to a civil law
solidary obligation; that is, one of several debtors bound in
such wise that each is liable for the entire amount, and not
merely for his proportionate share. By making a joint and
several promise to pay to the order of Republic Planters Bank,
private respondent Fermin Canlas assumed the solidary
liability of a debtor and the payee may choose to enforce the
notes against him alone or jointly with Yamaguchi and Pinch
Manufacturing Corporation as solidary debtors.
As to whether the interpolation of the phrase "and (in) his
personal capacity" below the signatures of the makers in the
notes will affect the liability of the makers, We do not find it
necessary to resolve and decide, because it is immaterial and
will not affect to the liability of private respondent Fermin
Canlas as a joint and several debtor of the notes. With or
without the presence of said phrase, private respondent
Fermin Canlas is primarily liable as a co-maker of each of the
notes and his liability is that of a solidary debtor.
Finally, a change of corporate name, in this case from
Worldwide Garment manufacturing Inc to Pinch
Manufacturing Corporation did not extinguish the personality
of the original corporation. A change in the corporate name
does not make a new corporation, and whether effected by
special act or under a general law, has no affect on the
identity of the corporation, or on its property, rights,
or liabilities.
As a general rule, officers or directors under the old corporate
name bear no personal liability for acts done or contracts
entered into by officers of the corporation, if duly authorized.
Under the Negotiable Instruments Law, the liability of a
person signing as an agent is specifically provided for as
follows:
Sec. 20. Liability of a person signing as agent and so
forth. Where the instrument contains or a person adds to
his signature words indicating that he signs for or on
behalf of a principal , or in a representative capacity, he
is not liable on the instrument if he was duly authorized;
but the mere addition of words describing him as an
agent, or as filling a representative character, without
disclosing his principal, does not exempt him from
personal liability.
Where the agent signs his name but nowhere in the
instrument has he disclosed the fact that he is acting in a
representative capacity or the name of the third party for
whom he might have acted as agent, the agent is personally
liable to take holder of the instrument and cannot be
permitted to prove that he was merely acting as agent of
another and parol or extrinsic evidence is not admissible to
avoid the agent's personal liability.
On the private respondent's contention that the promissory
notes were delivered to him in blank for his signature, we rule
otherwise. An incomplete instrument which has been
delivered to the borrower for his signature is governed by
Section 14 of the Negotiable Instruments Law which
provides, in so far as relevant to this case, thus:
Sec. 14. Blanks: when may be filled. — Where the
instrument is wanting in any material particular, the
person in possesion thereof has a prima facie authority
to complete it by filling up the blanks therein. ... In
order, however, that any such instrument when
completed may be enforced against any person who
became a party thereto prior to its completion, it must
be filled up strictly in accordance with the authority
given and within a reasonable time...
HELD:
Petitioner is liable. The Negotiable Instruments Law provides
that where any person is under obligation to indorse in a
representative capacity, he may indorse in such terms as to
negative personal liability. An agent, when so signing, should
indicate that he is merely signing in behalf of the principal
and must disclose the name of his principal; otherwise he
shall be held personally liable. Even assuming that Francisco
was authorized by HCCC to sign Ong's name, still, Francisco
did not indorse the instrument in accordance with law.
Instead of signing Ong's name, Francisco should have signed
her own name and expressly indicated that she was signing as
an agent of HCCC. Thus, the Certification cannot be used by
Francisco to validate her act of forgery.

ADALIA FRANCISCO VS. COURT OF APPEALS, ET AL.

G.R. NO. 116320

FACTS:
Francisco Realty & Development Corporation (AFRDC), of
which petitioner Francisco is the president, entered into a
Land Development and Construction Contract with private
respondent Herby Commercial & Construction Corporation
(HCCC), represented by its President and General Manager
private respondent Ong. Under the contract, HCCC was to be
paid on the basis of the completed houses and developed
lands delivered to and accepted by AFRDC and the GSIS. To
facilitate payment, AFRDC executed a Deed of Assignment in
favor of HCCC to enable the latter to collect payments directly
from the GSIS. Furthermore, the GSIS and AFRDC put up an
Executive Committee Account with the Insular Bank of Asia &
America (IBAA) in the amount of P4,000,000.00 from which
checks would be issued and co-signed by petitioner Francisco
and the GSIS Vice-President Armando Diaz Sometime in 1979,
Ong discovered that Diaz and Francisco, the Vice-President of
GSIS, had executed and signed seven checks of various dates
and amounts payable to HCCC for completed and delivered
work under the contract. Ong, however, claims that these
checks were never delivered to HCCC. It turned out that
Francisco forged the indorsement of Ong on the checks and
indorsed the checks for a second time by signing her name at
the back of the checks, petitioner then deposited said checks
in her savings account. A case was brought by private
respondents against petitioner to recover the value of said
checks. Petitioner however claims that she was authorized to
sign Ong's name on the checks by virtue of the Certification
executed by Ong in her favor giving her the authority to
collect all the receivables of HCCC from the GSIS, including
the questioned checks.

ISSUE:
Whether petitioner cannot be held liable on the questioned
checks by virtue of the Certification executed by Ong giving
her the authority to collect such checks from the GSIS.