PROBLEM:

TETISA
9
ant 10
1.0
Does the payee or holder of a check have a cause of action against
the drawee bank, if the latter dishonors the check?
A: No. The payee has no cause of action against the bank. The bank
is not liable to the holder unless and until it accepts or certifies the
check. The remedy of the holder is against the drawer, provided,
notice of dishonor is given to him on the basis of the transaction
that gave rise to the issuance of the check. Once the bank certifies
the check, the bank becomes liable thereon because certification is
equivalent to acceptance and if procured by the holder, the drawer
and all indorsers are discharged from liability (Secs. 188 and 189,
NIL).
SuI
Note: However, exceptionally, a payee may sue the
drawee based on Article 19 of the Civil Code if there was
dishonor despite the instruction of the drawer to pay (HSBC 0.
Catalan, 440 SCRA 498 [2004]).
1201
14.02. Warranties of: (a) qualified endorser (Sec. 65), (b)
general endorser (Sec. 66)
a)
Qualified Indorser and Persons negotiating by
delivery (Sec. 65)
Every person negotiating
an instrument by delivery or by a qualified
endorsement warrants:
1)
that the instrument is genuine and in all
respects what it purports to be;
2)
that he has a good title to it;
3)
4)
that all prior parties had capacity to contract;
that he has no knowledge of any fact which
would impair the validity of the instrument
or render it valueless.
Notes: (1) The warranty of persons negotiating
by mere delivery extends to the immediate
transferee only;
(2) a person negotiating by
mere delivery and a qualified indorser are not
secondarily liable (1986, 1988, and 2011 Bar): (3)
A qualified indorser is liable if there was forgery
of the maker's signature because the qualified
indorser warrants that the instrument is genuine
(2011 Bar).