Topic: Forms and Interpretation of Negotiable Instrument [Sec. 17 (g) NIL].

BALDOMERO INCIONG, JR., petitioner,

vs.
COURT OF APPEALS and PHILIPPINE BANK OF COMMUNICATIONS, respondents.
G.R. No. 96405 June 26, 1996

FACTS:

Petitioner (Inciong) in this case was one of the signatories who was induced to sign a
promissory note together with two (2) others namely; Rene C. Naybe and Gregorio D.
Pantanosas on February 3, 1983. The note was executed for private respondent bank
(PBC) in favor of a loan worth P50,000.00 obtained by Naybe. The promissory note was
due on May 5, 1983.

On its due date, the obligation was not performed. PBC demanded for the face value
of the note, but never get a positive response from the obligors. Thus, on January 24, 1986
private respondent filed a complaint for collection against the three obligors.

The complaint was initially dismissed, but subsequently reinstituted. The lower court issued
summonses against the obligors, but only the petitioner was impleaded in the case since
Naybe was out of the country, and Pantanosas was excluded for some other reason.

Petitioner alleged the he affixed his signature in the note but in one copy, he indicated
that he bound himself only for the amount of P5,000.00. Thus, it was by trickery, fraud and
misrepresentation that he was made liable for the amount of P50,000.00.

The RTC ruled against the petitioner because the former’s signature clearly appeared in
the note. The CA affirmed the decision of the lower court.

ISSUE:

Whether or not the petitioner, by signing the note as co-maker could make him solely
liable on its face value in favor of the creditor?

RULING:

YES. The petitioner could be solely liable to it.

A solidary or joint and several obligation is one in which each debtor is liable for the entire
obligation, and each creditor is entitled to demand the whole obligation.

There is a solidary liability only when the obligation expressly so states, when the law so
provides or when the nature of the obligation so requires.

Because the promissory note involved in this case expressly states that the three
signatories therein are jointly and severally liable, any one, some or all of them may be
proceeded against for the entire obligation. 20 The choice is left to the solidary creditor
to determine against whom he will enforce collection.
Topic: Forms and Interpretation of Negotiable Instrument -- Forgery (Sec. 23, NIL).

BANCO DE ORO SAVINGS AND MORTGAGE BANK, petitioner,

vs.
EQUITABLE BANKING CORPORATION, PHILIPPINE CLEARING HOUSE
CORPORATION, AND REGIONAL TRIAL COURT OF QUEZON CITY, BRANCH XCII
(92), respondents.
G.R. No. 74917 January 20, 1988

FACTS:

Petitioner through its Visa Card Department, drew checks payable to certain member
establishments of Visa Card. Subsequently, the checks were deposited to the private
respondent (Equitable). The checks were sent to PCHC for clearing and was thereafter
cleared. Accordingly, petitioner paid the Checks; its clearing account was debited for
the value of the Checks and Equitable’s clearing account was credited for the same
amount.

Afterwards, petitioner discovered that endorsements appearing at the back of the

Checks were forged. Petitioner then demanded reimbursement from Equitable, but the
latter refused to do so. The PCHC through its arbiter conducted arbitration; and it ruled
in favor of Equitable.

This prompted petitioner to file a complaint against Equitable and PCHC. The RTC held
in favor of the Equitable and PCHC. Thus, petition for review on certiorari was raised to
the Supreme Court.

ISSUE:

Whether or not the petitioner shall bear the loss or liability in the forged endorsements of
checks?

RULING:

YES. The petitioner shall bear the loss or liability on the said checks.

A commercial bank cannot escape the liability of an endorser of a check and which
may turn out to be a forged endorsement.

The Court has succinctly emphasized that the 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.

In another case, the Court held that if the drawee-bank discovers that the signature of
the payee was forged after it has paid the amount of the check to the holder thereof, it
can recover the amount paid from the collecting bank.
Topic: Negotiation
Note: (Consideration - Sec. 29 and Liabilities of Parties Sec. 66 may apply)

ANG TIONG, plaintiff-appellee,

vs.
LORENZO TING, doing business under the name and style of PRUNES PRESERVED
MFG., and FELIPE ANG, defendants.
FELIPE ANG, defendant-appellant.
G.R. No. L-26767 February 22, 1968

FACTS:

Defendant Lorenzo Ting issued check payable to "cash or bearer", with Felipe Ang's
signature (indorsement in blank) at the back thereof. The instrument was received by
the plaintiff Ang Tiong who thereafter presented it to the drawee bank for payment. The
bank dishonored it.
The plaintiff then made written demands on both Lorenzo Ting and Felipe Ang that they
make good the amount represented by the check. These demands went unheeded;
so he filed at the MTC for collection plus damages. The MTC ruled in favor of the plaintiff.

Only Felipe Ang appealed to CFI which rendered judgment still in favor of the
plaintiff. Felipe Ang then elevated the case to the Court of Appeals, which referred it to
the Supreme Court because the issues raised are purely of law.

The appellant imputes to the court a quo an error: that it adjudged him a general
indorser under the Negotiable Instruments Law.

ISSUE:

Whether or not Felipe Ang be treated as general endorser when he made a “blank
indorsement” of the check issued, and be held liable when dishonored?

RULING:

YES. Ang is a general indorser, and he is liable for the check.

The Supreme Court affirmed the judgement a quo in toto, that Ang is a general indorser
and be held liable for the dishonored check.

Furthermore, the Court ruled that even on the assumption that the appellant is a mere
accommodation party, as he professes to be, he is nevertheless, by the clear mandate
of section 29 of the Negotiable Instruments Law, yet "liable on the instrument to a holder
for value, notwithstanding that such holder at the time of taking the instrument knew him
to be only an accommodation party."

To paraphrase, the accommodation party is liable to a holder for value as if the contract
was not for accommodation. It is not a valid defense that the accommodation party
did not receive any valuable consideration when he executed the instrument. Nor is it
correct to say that the holder for value is not a holder in due course merely because at
the time he acquired the instrument, he knew that the indorser was only an
accommodation party.
Topic: Checks

SPOUSES GEORGE MORAN and LIBRADA P. MORAN, petitioners,

vs.
THE HON. COURT OF APPEALS and CITYTRUST BANKING
CORPORATION, respondents.
G.R. No. 105836 March 7, 1994

FACTS:

Petitioners spouses are the owners of a gasoline station. They regularly purchased bulk
fuel and other related products from Petrophil Corporation.

Petitioners maintained three joint accounts, and two savings accounts, in the private
respondent, Citytrust Banking Corporation (CBC). As a special privilege to the petitioners,
whom the CBC considered as valued clients, it allowed them to maintain a zero
balance in their current account. The parties had an agreement of automatic transfer
of fund from the petitioners savings account to their current account when the latter is
insufficient, such arrangement was called a pre-authorized transfer (PAT) agreement.

Petitioners, through Librada Moran, issued two checks payable to Petrophil. The checks
issued to Petrol were dishonored due to an operational error made by the CBC’s
personnel. Thereby, transactions between the petitioners and Petrophil have been
canceled.

The petitioners filed a complaint in the RTC against the CBC for damages; likewise, CBC
filed a counterclaim for damages. The RTC dismissed both, and it was affirmed by the
CA.

ISSUE:

Whether or not the CBC is liable for damages due to its negligence that resulted for the
checks to be dishonored?

RULING:

NO. The CBC is not liable.

Petitioner had no reason to complain, for they alone were at fault. A drawer must
remember his responsibilities every time he issues a check. He must personally keep track
of his available balance in the bank and not rely on the bank to notify him of the
necessity to fund certain check she previously issued.

The actions taken by the bank after the incident clearly show that there was neither
malice nor bad faith, but rather a clear intent to mollify an obviously agitated client.

The fact that there is a fiduciary relationship between a bank and its depositors, as well
as the extent of diligence expected of it in handling the accounts entrusted to its
care, the bank may not be held responsible for such damages in the absence of fraud,
bad faith, malice, or wanton attitude