PNB vs Maza GR No.

24224, 3 Nov 1925

Fact: Maza and Macenas executed a total of five promissory notes. These were not
paid at maturity. And to recover the amounts stated on the face of the promissory
notes, PNB initiated an action against the two. The special defense posed by the two is
that the promissory notes were delivered to them in blank by a certain Enchaus and
were made to sign the notes so that the latter could secure a loan from the bank. They
also alleged that they never negotiated the notes with the bank nor have they received
any value thereof. They also prayed that Enchaus be impleaded in the complaint but
such was denied. The trial court then held in favor of the bank.

Issue:
Whether the defendant who did not receive the value of the note they signed was still
liable on the instrument.

Held:
Yes, the defendant was still liable, as accommodation parties, the defendants having
signed the instruments without receiving value therefor and for the purpose of lending
their names to some other person, are still liable on the instruments. The law now is that
the accommodation party can claim no benefit as such, but he is liable according to the
face of his undertaking, the same as if he were himself financially interested in the
transaction. The defense is made to the action that the defendants never received the
value of the promissory notes. it is, of course, fundamental that an instrument given
without consideration does not create any obligation at law or in equity in favor of the
payee. However, to fasten liability upon an accommodation maker, it is not necessary
that any consideration should move to him. The consideration which supports the
promise of the accommodation maker is that parted with by the person taking the note
and received by the person accommodated.
Araneta v. Perez

FACTS: Antonio M. Perez executed a promissory note wherein he agreed to pay

J. Antonio Araneta, or order, the sum of P3, 700.00 after 119 days from the date of
issuance, and if it is not paid on the date of maturity, to pay interest at 9% per
annum on the amount of the loan. The note having become due and Perez having
failed to pay despite demand, Araneta filed a complaint in the Municipal Court of
Manila for collection. Perez admitted the execution of the promissory note as well
as his failure to pay but he averred that the proceeds were used as payment for
the medical treatment of his minor daughter, who is the beneficiary of the trust
administered by Araneta as trustee, and that the trust estate is bound to pay the
expenses because they were for the benefit of said minor. The court ordered
Perez to pay the amounts and dismissed his counterclaim. Perez appealed to the
court a quo. At the same time, Perez filed a complaint in the Municipal Court of
Manila against Araneta in his capacity as trustee of the minor child Angela Perez
Tuason repeating the same allegations contained in his previous complaint. The
court dismissed the latter's complaint. Perez appealed to the court a quo. The
court a quo issued a joint order, affirming the judgment of the municipal court,
and affirming the dismissal issued by the same court. Perez interposed the
present joint appeal.

ISSUE: WON Perez is indebted to Araneta and that the true debtor was the trust
estate of the children of Angela Tuason.

RULING: Yes, Perez is indebted to Araneta, and he is the true debtor, not the trust
estate of the children of Angela Tuason. Section 60 of the Negotiable Instrument
Law provides that "the maker of a negotiable instrument by making it engages
that he will pay it according to its tenor and admits the existence of the payee and
his then capacity to indorse so that appellant cannot now escape liability as a
maker by alleging that he spent the money for the medical treatment of his
daughter since it is not the payee's concern to know how said proceeds should
be spent. That is the sole concern of the maker. Payee's interest is merely to see
that the note is paid according to its terms. Under the terms of the promissory
note, the appellant bound himself to pay personally the said note, which he
cannot shift to another without the consent of the payee. But even assuming that
the appellant’s claim as to how he spent the proceeds of the notes is true, that
will not exempt him from his liability but would merely give him some basis to
claim for recoupment. Moreover, the trust herein created merely provides for
delivery to the beneficiaries of the share that may correspond to them in the net
income of the trust fund but does not impose upon the trustee the duty to pay
any obligation or expenses that may be needed by said beneficiaries. The
Appellant's claim is not justified considering that the appellee was forced to file
the present suit in view of the appellant's refusal to honor the note under
consideration. The request for dismissal has no legal basis.
Jai-Alai vs BPI 66 SCRA 29, 6 Aug 1975, G.R. No. L-29432

Facts: Petitioner acquired 10 checks from a certain Antonio Ramirez. The said checks
were deposited by the petitioner to the respondent bank. The Respondent bank
temporarily credited the said checks to the account of the petitioner. After 3 months, the
checks were found to be forged. The respondent bank debited the account of the
petitioner. The petitioner filed a collection of sums of money against the respondent.
The CFI and the CA dismissed the said complaint, hence this case.

Issue: Whether the respondent is liable to return the amount debited from the account of
the Petitioner.

Held: No, the respondent acted within legal bounds when it debited the petitioner’s
account. When the petitioner deposited the checks with the respondent, the nature of
the relationship created at that stage was one of agency, that is, the bank was to collect
from the drawees of the checks the corresponding proceeds. It is true that the
respondent had already collected the proceeds of the checks when it debited the
petitioner’s account. Section 23 of the Negotiable Instruments Law states that “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 instrument, or to give a
discharge, therefore, or to enforce payment 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.”
PNB v. Rodriguez, G.R. No. 170325, September 26, 2008

FACTS: Respondents-Spouses Erlando and Norma Rodriguez were clients of petitioner

Philippine National Bank (PNB). They maintained savings and demand/checking
accounts. The spouses were engaged in the informal lending business. In line with their
business, they had a discounting [a financing scheme where a postdated check is
exchanged for a current check with a discounted face value] arrangement with the
Philnabank Employees Savings and Loan Association (PEMSLA), an association of
PNB employees.

As was customary, the spouses would replace the postdated checks with their own
checks issued in the name of the members. To subvert this policy, some PEMSLA
officers devised a scheme to obtain additional loans despite their outstanding loan
accounts. They took out loans in the names of unknowing members, without the
knowledge or consent of the latter.

Petitioner PNB eventually found out about these fraudulent acts. To put a stop to this
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".
Thus, because the PEMSLA checks given as payment were returned, spouses
Rodriguez incurred losses from the rediscounting transactions.

ISSUE: Whether or not PNB can be made liable to pay the number of checks which
were deposited to the PEMSLA savings account.

Held: A bank that regularly processes checks that are neither payable to the customer
nor duly indorsed by the payee is apparently grossly negligent in its operations. This
Court has recognized the unique public interest possessed by the banking industry and
the need for the people to have full trust and confidence in their banks. For this reason,
banks are minded to treat their customer’s accounts with utmost care, confidence, and
honesty. In a checking transaction, the drawee bank has the duty to verify the
genuineness of the signature of the drawer and to pay the check strictly in accordance
with the drawer’s instructions, i.e., to the named payee in the check. It should charge to
the drawer’s accounts only the payables authorized by the latter. Otherwise, the drawee
will be violating the instructions of the drawer and it shall be liable for the amount
charged to the drawer’s account. Rodriguez checks are payable to order since the bank
failed to prove that the named payees therein are fictitious. Hence, the fictitious-payee
rule which will make the instrument payable to the bearer does not apply. PNB accepted
the 69 checks for deposit to the PEMSLA account even without any endorsement from
the named payees. It bears stressing that order instruments can only be negotiated with
a valid indorsement.
WESTMINSTER BANK V TORRES

Facts: Petitioner Westminster Bank filed an action in the Court of First Instance of
Manila against the respondent K. Nassoor, Inc., upon five bills of exchange, each of
which was drawn by N. Jureidini, Ltd., of Manchester, England, against K. Nassoor,
Inc., of Manila, payable at a certain number of days after sight to the petitioner or order.
Each of said bills of exchange was accepted unconditionally by the respondent, K.
Nassoor, Inc. Each of these bills of exchange covered a shipment of goods from
Manchester, England, to Manila, and the documents covering the goods were turned
over by petitioner's agent in Manila upon the acceptance by respondent K. Nassoor,
Inc., who, thereupon received the goods covered by the invoices and bills of exchange.
Upon presentation of the bills of exchange at maturity, payment was refused, and after
the due protest, the suit was instituted. The respondent submitted a motion claiming that
the defendant had a valid set-off and counterclaim for damages against N. Jureidini,
Ltd. and that the plaintiff above is not the owner of the drafts sued on, but is merely a
holder of said drafts for collection.

ISSUE: Whether or not respondent K. Nassoor is obligated to pay the petitioner.

RULING: Yes. Sec. 62 of the NIL states that the acceptor, by accepting the instrument,
engages that he will pay it according to the tenor of his acceptance and admits:
(a) The existence of the drawer, the genuineness of his signature, and his capacity
and authority to draw the instrument; and (b) The existence of the payee and his
then capacity to indorse.

It is clear under the stated provision that respondent K. Nassoor, Inc., by its
unconditional acceptance of said instruments and by receiving the merchandise
covered by said instruments, became obligated to the petitioner.
RCBC SAVINGS BANK, PETITIONER, VS. NOEL M. ODRADA,

Facts: Respondent Noel M. Odrada sold a second¬hand Mitsubishi Montero to Teodoro

L. Lim for One Million Five Hundred Ten Thousand Pesos. Of the total consideration,
Six Hundred Ten Thousand Pesos was initially paid by Lim and the balance of Nine
Hundred Thousand Pesos was financed by petitioner RCBC Savings Bank through a
car loan obtained by Lim. After the issuance of the manager's checks and their turnover
to Odrada but prior to the checks' presentation, Lim notified Odrada that there was an
issue regarding the roadworthiness of the Montero. 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 and redeposited
them on 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 loan was at his instance,
upon discovery of the misrepresentations by Odrada about the Montero's
roadworthiness. On the other hand, RCBC contended that the manager's checks were
dishonored because Lim had canceled the loan. Moreover, RCBC alleged that despite
notice of the defective condition of the Montero, which constituted a failure of
consideration, Odrada still proceeded with presenting the manager's checks.

RTC ruled in favor of Odrada which was subsequently affirmed by CA. RCBC and Lim
filed a motion for reconsideration but the Court of Appeals denied the same. RCBC
alone filed this petition before the Court. Thus, the decision of the Court of Appeals
became final and executory as to Lim.

Issue: Whether or not Lim can validly countermand the manager's checks in the hands
of a holder who does not hold the same in due course.

Ruling: Yes, RCBC may refuse to pay the manager’s check. As a general rule, the
drawee bank is not liable until it accepts. Prior to a bill's acceptance, no contractual
relationship exists between the holder and the drawee. Acceptance, therefore, creates
privity of contract between the holder and the drawee so much so that the latter, once it
accepts, becomes the party primarily liable on the instrument. Accordingly, acceptance
is the act that triggers the operation of the liabilities of the drawee (acceptor) under
Section 62 of the Negotiable Instruments Law. Thus, once he accepts, the drawee
admits the following: (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.
PNB vs Picornell 46 Phil 716, 26 Sept 1922, G.R. No. L-18751

Facts: Picornell, following the instruction of Hyndman, Tavera & Ventura (HTV), bought
in bales of tobacco; that Picornell obtained from the branch of the National Bank in
Cebu a sum of money to the value of the tobacco, together with his commission, drawn
the following bill of exchange. The invoice and bill of lading were delivered to the
National Bank with the understanding that the bank should not deliver them to HTV
except upon payment of the bill; The invoice and bill of lading were delivered and
accepted by HTV who proceeded to the examination of the tobacco. HTV wrote and
cable to Picornell, notifying him that of the tobacco received, there was a certain portion
which was no use and was damaged. After a number of communications between
Picornell and HTV, HTV refuses to pay the bill and instruct the bank to dispose of and
sell the tobacco. The Bank sold the tobacco for the amount less of the bill it advanced.
The bank demanded payment for the said balance which Picornell and HTV refused to
pay, hence this case.

Issue:
Whether Picornell and HTV are liable to reimburse the bank on the bill it advanced to
pay for the Tobacco.

Held:
Yes, HTV cannot escape liability in view of section 28 of the Negotiable Instruments
Law. The drawee by acceptance becomes liable to the payee or his indorsee, and also
to the drawer himself. But the drawer and acceptor are the immediate parties to the
consideration, and if the acceptance is without consideration, the drawer cannot recover
the acceptor. The payee holds a different relation; he is a stranger to the transaction
between the drawer and the acceptor, and is, therefore, in a legal sense a remote party.
In a suit by him against the acceptor, the question as to the consideration between the
drawer and the acceptor cannot be inquired into. The payee or holder gives value to the
drawer, and if he is ignorant of the equities between the drawer and the acceptor, he is
in the position on a bona fide indorse. Hence, it is no defense to a suit against the
acceptor of a draft which has been discounted, and upon which money has been
advanced by the plaintiff, that the draft was accepted or the accommodation of the
drawer.

As to Bartolome Picornell, he warranted, as drawer of the bill, that it would be accepted

upon proper presentment and paid in due course, and as it was not paid, he became
liable to the payment of its value to the holder thereof, which is the plaintiff bank. The
fact that Picornell was a commission agent of HTV, in the purchase of the tobacco, does
not necessarily make him an agent of the company in its obligations arising from the
drawing of the bill by him. His acts in negotiating the bill constitute a different contract
from that made by his having purchased the tobacco on behalf of HTV. Furthermore, he
cannot exempt himself from responsibility by the fact of his having been a mere agent of
this company, because nothing to this effect was indicated or added to his signature on
signing the bill.
PRUDENTIAL BANK VS CA

Facts: Private respondent Leticia Valenzula deposited in her savings account Check
No. 666B the amount of P35,271.60, drawn against the Philippine Commercial
International Bank (PCIB). As of June 21, 1988, she had a balance of P35,993.48 in her
savings account and P776.93 in her current account, or total deposits of P36,770.41,
with the petitioner. Thereafter, she issued Prudential Bank Check No. 983395 in the
amount of P11,500.00 post-dated June 20, 1988, in favor of one Belen Legaspi as
payment for jewelry that she had purchased. Legaspi, who was in the jewelry trade,
endorsed the check to one Philip Lhuillier, a businessman also in the jewelry business.
When Lhuillier deposited the check in his account with the PCIB, Pasay Branch, it was
dishonored for being drawn against insufficient funds. Upon her return from the
province, the private respondent was surprised to learn of the dishonor of the check.
She went to the Valenzuela Branch of Prudential Bank to inquire why her check was
dishonored. She approached one Albert Angeles Reyes, the officer in charge of the
current account, and requested him for the ledger of her current account. Private
respondent discovered a debit of P300.00 penalty for the dishonor of her Prudential
Check No. 983395. She asked why her check was dishonored when there were
sufficient funds in her account as reflected in her passbook. Reyes told her that there
was no need to review the passbook because the bank ledger was the best proof that
she did not have sufficient funds. Then, he abruptly faced his typewriter and started
typing. Later, it was found out that the check in the amount of P35,271.60 deposited by
private respondent on June 1, 1988, was credited in her savings account only on June
24, 1988, or after a period of 23 days. Thus the P11,500.00 check was redeposited by
Lhuillier on June 24, 1988, and properly cleared on June 27, 1988.

Because of this incident, the bank tried to mollify private respondent by explaining to
Legaspi and Lhuillier that the bank was at fault. Since this was not the first incident
private respondent had experienced with the bank, private respondent was unmoved by
the bank's apologies and she commenced the present suit for damages before the RTC
of Valenzuela.

Issue: Whether or not the respondent court erred and gravely abused its discretion in
awarding moral and exemplary damages and attorney's fees to be paid by petitioner to
private respondent.

Ruling: No. The Court had occasion to stress the fiduciary nature of the relationship
between a bank and its depositors and the extent of diligence expected of the former in
handling the accounts entrusted to its care, thus: In every case, the depositor expects
the bank to treat his account with the utmost fidelity, whether such account consists only
of a few hundred pesos or of millions. The bank must record every single transaction
accurately, down to the last centavo, and as promptly as possible. This has to be done if
the account is to reflect at any given time the amount of money the depositor can
dispose of as he sees fit, confident that the bank will deliver it as and to whomever he
directs. A blunder on the part of the bank, such as the dishonor of a check without good
reason, can cause the depositor, not a little embarrassment if not also financial loss and
perhaps even civil and criminal litigation. The paint is that as a business affected with
the public interest and because of the nature of its functions, the bank is under
obligation to treat the accounts of its depositors with meticulous care, always having in
mind the fiduciary nature of their relationship. The law allows the grant of exemplary
damages by way of example for the public good. 10 The public relies on the banks'
sworn profession of diligence and meticulousness in giving irreproachable service. The
level of meticulousness must be maintained at all times by the banking sector. Hence,
the Court of Appeals did not err in awarding exemplary damages.

Equitable PCI Bank v. Ong

Facts: Warliza Sarande deposited in her account at Philippine Commercial

International Bank a check in the amount of P225,000.00. Sarande was then informed
that said check has been cleared. Relying on such assurance, she issued two (2)
checks where one was issued to respondent Rowena Ong Owing to a business
transaction. The latter then requested PCI Bank to convert the proceeds thereof into a
manager's check, which the PCI Bank obliged. When Ong deposited the manager's
check in her account with Equitable Banking Corporation, she received a check return-
slip informing her that PCI Bank had stopped the payment of the said check on the
ground of irregular issuance. Ong then filed a complaint for sum of money against
herein petitioner. Petitioner countered that the check was returned as the account
against which it was drawn was already closed.

Issue: Whether or not petitioner Bank is liable to pay the questioned check?

Held: Yes. The certifying bank has all the liabilities under Sec. 62 of the Negotiable
Instruments Law which refers to the liability of the acceptor. It may be true that said
check was actually not funded but since the plaintiff became a holder in due course, the
defendant-bank cannot interpose a defense of want or lack of consideration because
that defense is equitable or personal and cannot prosper against a holder in due course
pursuant to Section 28 of the Negotiable Instruments Law. Therefore, when the
aforementioned check was endorsed and presented by the plaintiff and certified to and
accepted by the defendant-bank in the purchase of PCIB Manager's Check in the
amount of P132,000.00, there was a valid consideration. Moreover, what Ong obtained
from PCI Bank was not just any ordinary check but a manager's check. A manager's
check is an order of the bank to pay, drawn upon itself, committing in effect its total
resources, integrity and honor behind its issuance. By its peculiar character and general
use in commerce, a manager's check is regarded substantially to be as good as the
money it represents.

PNB V. NATIONAL CITY BANK OF NY

63 PHIL 711

FACTS:
Unknown persons negotiated with Motor Services Company checks, which were part of
the stipulation in payment of automobile tires purchased from the latter’s store. It
purported to have been issued by Pangasinan Transportation Company. The
said checks were indorsed at the back by said unknown persons, the Motor
company believing at that time that the signatures contained therein were genuine.
The checks were later deposited with the company’s account in National City
Bank of NY. The said checks were consequently cleared and PNB credited National
City Bank with the amounts. Thereafter, PNB discovered that the signatures
were forged and it demanded the reimbursement of the amounts for which it
credited the other bank.

HELD:
A check is a bill of exchange payable on demand and only the rules governing
bills of exchanges payable on demand are applicable to it. in view of the fact that
acceptance is a step necessary insofar as negotiable instruments are concerned, it
follows that the provisions relative to acceptance are without application to
checks. Acceptance implies subsequent negotiation of the instrument, which is not
true in the case of checks because from the moment it is paid, it is withdrawn
from circulation. When the drawee banks cashes or pays a check, the cycle of
negotiation is terminated and it is illogical thereafter to speak of subsequent
holders who can invoke the warrant against the drawee.

Further, in determining the relative rights of a drawee who under a mistake of fact, has
paid, a holder who has received such payment, upon a check to which the name of the
drawer has been forged, it is only fair to consider the question of diligence and
negligence of the parties in respect thereto. The responsibility of the drawee who
pays a forged check, for the genuineness of the drawer’s signature is absolute only
in favor of one who has not, by his own fault or negligence, contributed to the success
of the
fraud or to mislead the drawee.

According to the undisputed facts, National City Bank in purchasing the papers in
question from unknown persons without making any inquiry as to the identity and
authority of said persons negotiating and indorsing them, acted negligently and
contributed to the constructive loss of PNB in failing to detect the forgery. Under the
circumstances of the case, if the appellee bank is allowed to recover, there will be
no change in position as to the injury or prejudice of the appellant.

PNB V. CA (1968)
FACTS: On January 15, 1962, Augusto Lim deposited in his account with PCIB a
GSIS Check in the sum of P57,415, drawn against the PNB. The check as practiced
was forwarded for clearing through the Central Bank to PNB, which did not return the
said check and paid the amount to PCIB. This payment made was debited against the
account of GSIS in PNB. Later on, it was found that the amount was re-credited from
PNB for the reason of the forged signatures of the officers. Then PNB demanded from
PCIB the refund of the amount.
 The demand for PNB was dismissed by the CFI and CA. Allegedly, Mariano
Pulido forged the signatures of the General Manager and Auditor of GSIS; and later on,
indorsed it to Manuel Go; Go indorsed it to Augusto Lim, who in turn deposited it to
PCIB. Prior to this incident, GSIS has notified PNB that the check had been lost, and
requested that its payment be stopped.
ISSUE: W/N PNB is entitled to reimbursement despite the non-acceptance of the
checks.
HELD: Yes. Lastly, Section 62 of Act No. 2031 provides: The acceptor by
accepting the instrument engages that he will pay it according to the tenor of his
acceptance; and admits: (a) The existence of the drawer, the genuineness of his
signature, and his capacity and authority to draw the instrument; and (b) The existence
of the payee and his then capacity to indorse’s compliance with the obligation.
Acceptance is not required for checks, for the same are payable on demand. Actual
payment of the amount of the check implies not only an assent to the order but also
compliance with such obligation.

Far East Bank & Trust vs Gold Palace Jewellery Co

Facts: A foreigner identified as Samuel Tagoe purchased from the respondent
Gold Palace Jewellery Co. several pieces of jewelry valued at P258,000.00. In payment
of the same, he offered Foreign Draft issued by the United Overseas Bank (Malaysia)
addressed to the Land Bank of the Philippines, Manila (LBP), and payable to the
respondent company for P380,000.00.
 Yang issued Cash Invoice, to the foreigner, informing him that the pieces of
jewelry would be released when the draft had already been cleared. Respondent Julie
Yang-Go, the manager of Gold Palace deposited the draft in the company’s Far East
account. LBP cleared the draft, and Gold Palace’s account with the Far East was
credited. The foreigner was then able to get the goods, and because the amount in the
draft was more than the value of the goods purchased, she issued, as his change, Far
East Check No. 173088 for P122,000.00. This check was later presented for
encashment and was, in fact, paid by the said bank.
In June 1998, or after around three weeks, LBP informed Far East that the
amount in said Foreign Draft had been materially altered from P300.00 to P380,000.00
and that it was returning the same. Intending to debit the amount from the respondent’s
account, Far East subsequently refunded the P380,000.00 earlier paid by LBP.
Meanwhile, Far East was able to debit only P168,053.36 from the Gold Palace’s
account as the respondent has already utilized their funds. This was debited without
their permission. The bank informed the Gold Palace later thru a phone call.
In August 1998, the petitioner demanded from respondents the payment of
P211,946. Because Gold Palace did not heed the demand, Far East consequently
instituted a civil case for a sum of money and damages before the RTC in Makati.
Issue: Whether or not Gold Palace can be held liable.
Ruling: No. The Negotiable Instruments Law (NIL), explicitly provides that the acceptor,
by accepting the instrument, engages that he will pay it according to the tenor of his
acceptance. His actual payment of the amount in the check implies not only his assent
to the order of the drawer and a recognition of his corresponding obligation to pay the
aforementioned sum but also, his clear compliance with that obligation. In this case, the
drawee bank cleared and paid the subject foreign draft and forwarded the amount
thereof to the collecting bank. The latter, Far East, then credited to Gold Palace’s
account the payment it received. Following the plain language of the law, the drawee,
by the said payment, recognized and complied with its obligation to pay in accordance
with the tenor of his acceptance. Stated simply, LBP was liable for its payment of the
check according to the tenor of the check at the time of payment, which was the raised
amount.

Sapiera VS Court of Appeals

Facts: On several occasions, petitioner Remedios Nota Sapiera, a sari-sari store
owner, purchased from Monrico Mart certain grocery items, mostly cigarettes, and paid
for them with checks issued by one Arturo de Guzman
 These checks were signed at the back by the petitioner. When presented for
payment the checks were dishonored because the drawer’s account was already
closed.
Private respondent Ramon Sua informed Arturo de Guzman and the petitioner
about the dishonor but both failed to pay the value of the checks. Hence, four (4)
charges of estafa were filed against the petitioner with the Regional Trial Court of
Dagupan City.
These cases against petitioner and de Guzman were consolidated and tried
jointly.
On 27 December 1989, the court acquitted the petitioner of all the charges of
estafa but did not rule on whether she could be held civilly liable for the checks she
indorsed to private respondents.
Issue: WON the petitioner is liable
Held: Yes. by her own testimony, the petitioner admitted having signed the four
(4) checks in question on the reverse side. The evidence of the prosecution shows that
petitioner purchased goods from the grocery store of the private respondent as shown
by the sales invoices issued by the private respondent; that these purchases were paid
with the four (4) subject checks issued by de Guzman; that petitioner signed the same
checks on the reverse side; and when presented for payment, the checks were
dishonored by the drawee bank due to the closure of the drawer’s account; and,
petitioner was informed of the dishonor.
We affirm the findings of the Court of Appeals that despite the conflicting
versions of the parties, it is undisputed that the four (4) checks issued by de Guzman
were signed by petitioner at the back without any indication as to how she should be
bound thereby and, therefore, she is deemed to be an indorser thereof. The Negotiable
Instruments Law clearly provides -
Sec. 66. Liability of general indorser. - 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 section; and (b)
That the instrument is, at the time of the indorsement, valid and subsisting;
And, in addition, he engages that, on due presentment, it shall be accepted or
paid or both, as the case may be, according to its tenor, and that if it be dishonored and
the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to
the holder or to any subsequent indorser who may be compelled to pay it.