digest_nego_feb052012.doc

8/14/2019 digest_nego_feb052012.doc

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G.R. No. 89252May 24, 1993

Raul Sesbreo,Petitioner, vs. CA, Delta MotorsCorporation and Pilipinas Bank,Respondents.

DOCTRINE: The rights of an assignee are not any greaterthan the rights of the assignor, since the assignee is ere!ys"#stit"ted in the $!ace of the assignor and that the assigneeac%"ires his rights s"#&ect to the e%"ities ' i.e., the defenses' (hich the de#tor co"!d have set "$ against the origina!assignor #efore notice of the assignent (as given to thede#tor.

The i$ersona! character of the oney ar)et deviceover!oo)s the individ"a!s or entities concerned. The issuer ofa commercial paper in the money market necessarily knows in

advance that it would be expenditiously transacted andtransferred to any investor/lender without need of notice to

said issuer. In practice, no notification is i!en to t"eborro#er or issuer of co$$ercial paper of t"e sale or

transfer to t"e in!estor.

%ACTS :FEL!"#$% &.:

*etitioner +es#reo ade a oney ar)et $!aceent (ith

*hi!finance for *3--.

*hi!finance iss"ed $ost/dated chec)s,petitioner as payee

$aya#!e on the at"rity of the oney ar)et $!aceentand so!d a *roissory Note iss"ed #y 'elta (otors to*hi!finance (hich (as ar)ed non)ne*otiable to$etitioner.

0hen the $ost/dated chec) (as dishonored, $etitioner

ade a deand on e!ta for the satisfaction of the$roissory note.

e!ta denied any !ia#i!ity to $etitioner on the $roissory

note, as the said note (as not intended to #e negotiated orother(ise transferred #y *hi!finance as anifested #y the(ord non)ne*otiable sta$ across the face of the Note.

e!ta a!so arg"ed that ass"ing that the $artia!

assignent in favor of $etitioner (as va!id, $etitionertoo) the Note s"#&ect to the defenses avai!a#!e to e!ta//the co$ensation of the o#!igation of *hi!finance (ith thes"#&ect note.

ISS&E: 0as there a va!id assignent that (o"!d ena#!e$etitioner to co!!ect on e!ta 'ES(NO)

*E+D: There (as a va!id assignent. The *N, (hi!e ar)ednon)ne*otiable was not at the same time stamped +non)transferrable+ or +non)assi*nable.+t contained no sti$"!ation(hich $rohi#ited *hi!finance fro assigning or transferring, in(ho!e or in $art, that Note. Neither is the consent of e!tanecessary for the va!idity and enforcea#i!ity of the assignentin favor of $etitioner.

*o#e!er, petitioner still cannot collect on t"e saipro$issor- note.

*etitioner notified e!ta of his rights as assignee on!y afterco$ensation had ta)en $!ace #y o$eration of !a( #eca"se theoffsetting instr"ents the obli*ation of Philfinance and thaof 'elta under the promissory note had #oth reachedat"rity. 6t the tie that e!ta (as first $"t to notice of theassignent in $etitioner7s favor the note had a!ready #eendischarged #y co$ensation.

+ince the assignor *hi!finance co"!d not have then co$e!!ed$ayent ane( #y e!ta of the $roissory note, $etitioner, asassignee of *hi!finance, is sii!ar!y disa#!ed fro co!!ectingfro e!ta the $ortion of the Note assigned to hi. Thedefense of co$ensation raised #y $rivate res$ondent e!tasho"!d #e "$he!d. Philfinance remains liable to petitionerunder the terms of the assi*nment made by Philfinance to

petitioner.

GNTMN:

This refers to o"r o"tstanding $!aceent of *4,-1,.; as evidenced#y yo"r *roissory Note No. 143/6, dated 6$ri! 1-, 198-, to at"reon 6$ri! , 1981.

6s agreed "$on, (e enc!ose o"r non/negotia#!e *roissory Note No2;3- and 2;31 for *2,---,---.-- each, dated 6$ri! 1-, 198-, to #eoffsetted


2/15

G.R. No. 132-2 : Can"ary 25, 2--;

Bank of t"e P"ilippine Islans,Petitioner, v. CA, AnnabelleA) Sala.ar, and /ulio R) Te$plonue!o,Respondents

DOCTRINE: The ere $ossession of a negotia#!e instr"entdoes not in itse!f conc!"sive!y esta#!ish either the right of the$ossessor to receive $ayent, or of the right of one (ho hasade $ayent to #e discharged fro !ia#i!ity. Th"s,soething ore than ere $ossession #y $ersons (ho are not$ayees or indorsers of the instr"ent is necessary to a"thoriDe$ayent to the in the a#sence of any other facts fro (hichthe a"thority to receive $ayent ay #e inferred.

Negotia#!e instr"ents are negotiated #y Etransfer to one$erson or another in s"ch a anner as to constit"te thetransferee the ho!der thereof.

%ACTS:",!-#"% &.:RT>+a!aDar>66ffired+>45:

".". alaar !onstruction and En*ineerin* ervicesfi!ed

an action for a s" of oney (ith daages against$etitioner (ith RT>/*asig >ity. The co$!aint (as !ateraended #y s"#stit"ting the nae of 6nna#e!!e 6.+a!aDar as the rea! $arty in interest.

*rivate res$ondent +a!aDar had in her $ossession 3 chec)s

$aya#!e to the order of co/$rivate res$ondentTe$!on"evo.

es$ite the !ac) of indorseent of the designated $ayee

"$on s"ch chec)s, +a!aDar (as a#!e to de$osit the chec)sin her $ersona! savings acco"nt (ith $etitioner B* andencash the sae.

Te$!on"evo $rotested the $"r$orted!y "na"thoriDed

encashent of the chec)s after the !a$se of one year frothe date of the !ast chec). B* froDe 6.6. +a!aDar and>onstr"ctionFs acco"nt.

*etitioner B* decided to de#it the ao"nt of the chec)

fro +a!aDarFs acco"nt and the sae (as $aid toTe$!on"evo #y eans of a cashier7s chec).

+a!aDar fi!ed an action for a s" of oney for *28

(ith daages against $etitioner B*.

n the ans(er to the third/$arty co$!aint, $rivate

res$ondent Te$!on"evo aditted the $ayent to hi of*28 and arg"ed that said $ayent (as to correct thea!icio"s de$osit ade #y $rivate res$ondent +a!aDar toher $rivate acco"nt, and that $etitioner #an)7s neg!igenceand to!erance regarding the atter (as vio!ative of the$riary and ordinary r"!es of #an)ing. The debitin* fromanother account of private respondent alaar%

considerin* that her other account was effectively closed%

was not his concern.

ISS&E: 0ere the ded"ctions ade #y $etitioner fro $rivateres$ondent +a!aDar7s acco"nt $ro$er 'ES)

*E+D: The records do not s"$$ort the finding ade #y the>6 and the tria! co"rt that a $rior arrangeent eisted#et(een +a!aDar and Te$!on"evo regarding the transfer ofo(nershi$ of the chec)s. This fact is crucial as alaar0sentitlement to the value of the instruments is based on the

assumption that she is a transferee within the contemplation

ofSection 49of the #L.

Section 01 conte$!ates a sit"ation (here#y the $ayee orindorsee de!ivers a negotia#!e instr"ent for va!"e (itho"tindorsing it. B"t for the $"r$ose of determinin* whether thetransferee is a holder in due course, the negotiation ta)eseffect as of the tie (hen the indorseent is act"a!!y adeThis is an e2uitable assin$entand the transferee ac1uiresthe instrument sub2ect to defenses and e1uities available

amon* prior parties. Th"s, if the transferor had !ega! tit!e, thetransferee ac%"ires s"ch tit!e and, in addition, the right to havethe indorseent of the transferor and a!so the right, as ho!derof the !ega! tit!e, to aintain !ega! action against the a)er oracce$tor or other $arty !ia#!e to the transferor. The "nder!ying

$reise of this $rovision, ho(ever, is that a !ali transfer oo(nershi$ of the negotia#!e instr"ent in %"estion has ta)en$!ace.

*etitioner, as the co!!ecting #an), had the right to de#i+a!aDar7s acco"nt for the va!"e of the chec)s it $revio"s!ycredited in her favor.

The $resent case invo!ves chec)spayable to order. Not #einga $ayee or indorsee of the chec)s, $rivate res$ondent +a!aDarco"!d not #e a ho!der thereof. t is an exception to the generar"!e for a $ayee of an order instr"ent to transfer theinstr"ent (itho"t indorseent. *recise!y #eca"se the

sit"ation is a#nora!, it is #"t fair to the a)er and to $riorho!ders to re%"ire $ossessors to $rove (itho"t the aid of aninitia! $res"$tion in their favor, that they cae into$ossession #y virt"e of a !egitiate transaction (ith the !astho!der. alaar failed to dischar*e this burden% and the returnof the check proceeds to Templonuevo was therefore

warranted under the circumstances despite the fact thatTemplonuevo may not have clearly demonstrated that he

never authoried alaar to deposit the checks or to encash

the same.

*o#e!er, $etitioner #an) sho"!d #e he!d !ia#!e for daages to+a!aDar. The act of the #an) in freeDing and !ater de#iting the

acco"nt of +a!aDar ca"sed her great daage and $re&"dice$artic"!ar!y (hen she had a!ready iss"ed chec)s dra(n againstthe said acco"nt and (ere s"#se%"ent!y dishonored. Thi(ho!e incident (o"!d have #een avoided had $etitioneadhered to the standard of di!igence e$ected of one engagedin the #an)ing #"siness.

0HRAIR, the $etition is $artia!!y GR6NT. Theassai!ed ecision and Reso!"tion #y the >6 are MIAinsofar as it ordered $etitioner B* to ret"rn the ao"nt of*2;,;-;.;- to res$ondent 6.6. +a!aDar, (hich $ortion isR?R+ and +T 6+. n a!! other res$ects, the saeare 6AARM.


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4/15

G.R. No. 9;;536"g"st 1-, 1992

Calte3,Petitioner, vs. CAand Securit- Bank an TrustCo$pan-,Respondents.

DOCTRINE: 6n instr"ent is negotiated (hen it istransferred fro one $erson to another in s"ch a anner as toconstit"te the transferee the ho!der thereof, and a ho!der ay#e the $ayee or indorsee of a #i!! or note, (ho is in $ossessionof it, or the #earer thereof.

%ACTS:RE3"L"'$% &.:

*rivate res$ondent iss"ed 28- certificates of time

deposit >Ts in favor of 6nge! de!a >r"D (hode$osited (ith $rivate res$ondent the aggregateao"nt of *1.12-M.

6 sa$!e of tet of the >Ts is as fo!!o(s:

JThis is to >ertify that B6RR has de$osited in this Ban) thes" of *+I+: AIKR +>KRT@ B6N THIK+6N IN@.+K>6T IAA> *4,--- L -- >T+ *esos, *hi!i$$ine >"rrency,

re$aya#!e to said de$ositor ;31 days after date, "$on $resentationand s"rrender of this certificate, (ith interest at the rate of 1 $ercent $er ann".

e!a >r"D de!ivered the said >Ts to $etitioner in

connection (ith his $"rchase of f"e! $rod"cts.

Thereafter e!a >r"D infored the Branch Manager

of $rivate res$ondent that he !ost a!! the certificates oftie de$osit in dis$"teO on the #asis of an affidavit of!oss, 28- re$!aceent >Ts (ere iss"ed in favor ofsaid de$ositor.

e!a >r"D then o#tained a !oan fro res$ondent #an)

in the ao"nt of *8;5 and he eec"ted a notariDed

'eed of "ssi*nment of Time 'eposit (hich statedthat he s"rrenders to $rivate res$ondent the f"!!contro! of the tie de$osits and f"rther a"thoriDessaid #an) to $re/terinate, set/off and a$$!y the saidtie de$osits to the $ayent of (hatever ao"nt orao"nts ay #e d"e on the !oan "$on its at"rity.

*rivate res$ondent then received a !etter fro

$etitioner fora!!y inforing it of its decision to $re/terinate the >Ts in its $ossession a!!eging thatthey (ere de!ivered #y e!a >r"D as sec"rity for$"rchases ade (ith *etitioner.

*rivate res$ondent re&ected the $etitioners deand

and c!ai for $ayent of the va!"e of the >Ts.

The !oan at"red and fe!! d"e, the $rivate res$ondent

set/off and a$$!ied the tie de$osits in %"estion tothe $ayent of the at"red !oan.Petitioner filed theinstant complaint.

RT> disissed the co$!aint.

>6 affired the !o(er co"rt7s disissa! of the

co$!aint stating that the >Ts are $aya#!e, not to(hoever $"r$orts to #e the bearer #"t on!y to thes$ecified $erson indicated therein, the de$ositor. neffect, the a$$e!!ee #an) ac)no(!edges its de$osito6nge! de!a >r"D as the $erson (ho ade the de$osiand f"rther engages itse!f to $ay said de$ositor theao"nt indicated thereon at the sti$"!ated date.

Hence this $etition.

ISS&E: 0hether the >Ts in %"estion are negotia#!einstr"ents. 'ES.

*E+D: The >Ts in %"estion "ndo"#ted!y eet there%"ireents of the !a( for negotia#i!ity inc!"ding +ection1d of the N. The acce$ted r"!e is that the negotia#i!ity ornon/negotia#i!ity of an instr"ent is deterined fro the(riting, that is, fro the face of the instr"ent itse!f. >ontraryto (hat res$ondent co"rt he!d, t"e CTDs are neotiableinstru$ents. The doc"ents $rovide that the ao"ntsde$osited sha!! #e re$aya#!e to the de$ositor.

6ccording to the doc"ent the de$ositor is the #earer. Thedoc"ents do not say that the de$ositor is 6nge! de !a >r"Dand that the ao"nts de$osited are re$aya#!e s$ecifica!!y tohi. Rather, the ao"nts are to #e re$aya#!e to the #earer ofthe doc"ents or, for that atter, (hosoever ay #e the#earer at the tie of $resentent.

The inter$retation of o#sc"re (ords or sti$"!ations in acontract sha!! not favor the $arty (ho ca"sed the o#sc"rity.

*o#e!er, petitioner cannot ri"tfull- reco!er on t"e CTDfor lack of neotiation as t"e CTDs #ere in realit-

eli!ere to it as a securit-for e !a >r"D7 $"rchases of itsf"e! $rod"cts.

n the $resent case, t"ere #as no neotiation in t"e sense oa transfer of t"e leal title to t"e CTDs in fa!or o

petitioner in #"ic" situation, for ob!ious reasons, $ere

eli!er- of t"e bearer CTDs #oul "a!e suffice. Here, thede!ivery thereof on!y as sec"rity for the $"rchases of 6nge! de!a >r"D co"!d at the ost constit"te $etitioner on!y as a ho!derfor va!"e #y reason of his !ien. 6ccording!y, a negotiation fors"ch $"r$ose cannot #e effected #y ere de!ivery of theinstr"ent since, necessari!y, the ters thereof and thes"#se%"ent dis$osition of s"ch sec"rity, in the event of non/$ayent of the $rinci$a! o#!igation, "st #e contract"a!!y$rovided for.

6side fro the fact that the >Ts (ere on!y de!ivered #"t notindorsed, petitioner failed to produce any documenevidencin* any contract of pled*e or *uarantee a*reement

between it and "n*el de la !ru. >onse%"ent!y, t"e $ereeli!er- of t"e CTDs i not leall- !est in petitioner an-

ri"t effecti!e aainst an binin upon responent bank

On t"e ot"er "an, t"e assin$ent of t"e CTDs $ae b-

Anel e la Cru. in fa!or of responent bank #as

e$boie in a public instru$ent. Therefore, as #et(een$etitioner and res$ondent #an), the !atter has definite!y the#etter right over the >Ts in %"estion.


5/15

0HRAIR, the $etition is N and the a$$ea!eddecision is here#y 6AARM.


6/15

G.R. No. ;2593 6$ri! 3-, 198;

Consoliate Pl-#oo Inustries, Inc), *enr- 4ee, andRoolfo T) 5erara,Petitioners, vs. I%C +easin an

Acceptance Corporation,Respondent.

DOCTRINE: ee E!. 45.c.6 E!.45.d6 E!. 47.

6 financing co$any is not a ho!der in good faith as to the#"yer. n insta!!ent sa!es, the #"yer "s"a!!y iss"es a note$aya#!e to the se!!er to cover the $"rchase $rice. Many ties,in $"rs"ance of a $revio"s arrangeent (ith the se!!er, afinance co$any $ays the f"!! $rice and the note is indorsed toit, s"#rogating it to the right to co!!ect the $rice fro the#"yer, (ith interest.

%ACTS: 3-TERRE,% &R.% &.:

nd"stria! *rod"cts Mar)eting se!!er/assignor offered to

se!! to *etitioner 2 E-sedE "llis !rawler Tractors, theforer ass"ring the !atter that tractors (hich (ere #eingoffered (ere fit for the &o#, and gave the corres$onding(arranty of 9- days $erforance of the achines and

avai!a#i!ity of $arts.

0ith said ass"rance and (arranty, and re!ying on the

se!!er/assignor7s s)i!! and &"dgent, $etitioner agreed to$"rchase on insta!!ent said Tractors.

The se!!er/assignor iss"ed the sa!es invoice for the 2

"nits of a deed of sa!e (ith chatte! ortgage (ith$roissory note (as eec"ted (hich reads:

EAIR ?6K R>?, P(e &oint!y and severa!!y $roise to $ayto the NK+TR6 *RIK>T+ M6RTNG, the s" of INMIN NNT@ THR THIK+6N +?N HKNR

GHT@ NN *+I+ L ;1P1-- on!y *1,-93,;89.;1, *hi!i$$ine>"rrency, the said $rinci$a! s", to #e $aya#!e in 24 onth!yinsta!!ents starting C"!y 15, 19;8 and every 15th of the onththereafter "nti! f"!!y $aid. . . . .E

Thereafter the se!!er/assignor, #y eans of a deed of

assignent assigned its rights and interest in the chatte!ortgage in favor of the res$ondent.

Bare!y 14 days had e!a$sed after their de!ivery (hen one

of the tractors #ro)e do(n and after another 9 days, theother tractor !i)e(ise #ro)e do(n.

6tte$ts to re$air the tractors fai!ed and it (as fo"nd o"t

that the "nits (ere no !onger servicea#!e.

*etitioner advised the se!!er/assignor that the $ayents

of the insta!!ents as !isted in the $roissory note (o"!d!i)e(ise #e de!ayed "nti! the se!!er/assignor co$!ete!yf"!fi!!s its o#!igation "nder its (arranty.

*etitioner as)ed the se!!er/assignor to $"!! o"t the "nits

and have the reconditioned, and thereafter to offerthe for sa!e.

The $roceeds (ere to #e given to the res$ondent and the

ecess, if any, to #e divided #et(een the se!!er/assignorand $etitioner/cor$oration (hich offered to #ear 1P2 ofthe reconditioning cost.

No res$onse (as ade #y se!!er/assignor and $etitioner

instead !earned that res$ondent fi!ed a co$!aint againsthe $etitioners for the recovery of the s" in the$roissory note.

The tria! co"rt rendered &"dgent against the $etitioner

and denied the MR fi!ed #y the $etitioner.

IAC affired the decision of the !o(er co"rt ho!ding

that the (arranty contended #y $etitioner !ies on!y#et(een se!!er/assignor and the $etitioner and noagainst the $rivate res$ondent (ho is the assignee of the$roissory note and a ho!der of the sae in d"e co"rse.

ISS&E: 0as the $roissory note a negotia#!e instr"ent soas to #ar co$!ete!y a!! the avai!a#!e defenses of the $etitioneragainst the res$ondent/assignee. NO)

*E+D: >onsidering that $aragra$h d, +ection 1 of the Nre%"ires that a pro$issor- note 6$ust be pa-able to oreror bearer,6 it cannot #e denied that the $roissory note in%"estion is not a negotia#!e instr"ent.

0itho"t the (ords 0or order0 or 0to the order of,7 theinstr"ent is $aya#!e on!y to the $erson designated thereinand is therefore non/negotia#!e. 6ny s"#se%"ent $"rchaserthereof (i!! not en&oy the advantages of #eing a ho!der of anegotia#!e instr"ent, #"t (i!! ere!y 7ste$ into the shoes7 ofthe $erson designated in the instr"ent and (i!! th"s #e o$ento a!! defenses avai!a#!e against the !atter.E

Therefore, considering that the s"#&ect $roissory note is noa ne*otiable instrument, it fo!!o(s that t"e responent canne!er be a "oler in ue course but re$ains a $ere

assinee of t"e note in 2uestion. Th"s, the $etitioner ayraise against the res$ondent a!! defenses avai!a#!e to it asagainst the se!!er/assignor, nd"stria! *rod"cts Mar)eting.

ven conceding for $"r$oses of disc"ssion that the $roissorynote in %"estion is a negotia#!e instr"ent, the res$ondencannot #e a ho!der in d"e co"rse #eca"se the responent "aactual kno#lee of t"e fact t"at t"e seller7assinor8s ri"

to collect t"e purc"ase price #as not unconitional, andthat it (as s"#&ect to the condition that the tractors so!d (erenot defective. The res$ondent )ne( that (hen the tractors

t"rned o"t to #e defective, it (o"!d #e s"#&ect to the defense offai!"re of consideration and cannot recover the $"rchase $ricefro the $etitioners. The res$ondent too) the $roissory note(ith act"a! )no(!edge of the foregoing facts so that its actionin ta)ing the instr"ent ao"nted to #ad faith, and therefore itis not a ho!der in d"e co"rse as $rovided "nder Sections 9:an 9; of the N . 6s s"ch, the res$ondent is s"#&ect to a!defenses (hich the $etitioners ay raise against the se!!er/assignor.

0HRAIR, in vie( of the foregoing, the decision of theres$ondent a$$e!!ate co"rt as (e!! as its reso!"tion are here#y


7/15

6NNK and +T 6+. The co$!aint against the$etitioner #efore the tria! co"rt is +M++.


8/15

G.R. No. /1538- +e$te#er 3-, 19-

C"an 4an,plaintiff)appellant, vs. Tan or$oration $aya#!e to Jcash or bearer.

These chec)s (ere $resented for $ayent #y >han 0an

#"t there (ere a!! dishonored and ret"rned to hi "n$aidd"e to ins"fficient f"nds andPor ca"ses attri#"ta#!e to thedra(er.

Aro the #ac) of the chec)s it (o"!d see to sho( that

they (ere $revio"s!y de$osited (ith >hina Ban)ing>or$oration #"t as dra(ee had no f"nds, they (ere

"n$aid and ret"rned, soe of the sta$ed EaccountcloseE.

Tan i a!!eges that the chec)s had #een iss"ed to t(o

$ersons naed *inong and M"y for soe shoes theyhave $roised to a)e.

The !o(er co"rt dec!ined to order $ayent for the reason

that >han 0an fai!ed to $rove he (as a ho!der in d"eco"rse.

ISS&E: Has >han 0an, not bein* a holder in due course, hadthe right to co!!ect on the 11 s"#&ect chec)s 'ES)

*E+D: t does not fo!!o( as a !ega! $ro$osition, that si$!y#eca"se >han 0an (as not a ho!der in d"e co"rse, >han 0anco"!d not recover on the chec)s. The N does not $rovidethat a ho!der (ho is not a ho!der in d"e co"rse, ay not in anycase, recover on the instr"ent.

Ho(ever, if it (ere tr"e that the chec)s had #een iss"ed in$ayent for shoes that (ere never ade and de!ivered, Tani (o"!d have a good defense as against a ho!der (ho is nota ho!der in d"e co"rse.

>ase (as reanded for f"rther $roceedings.

QQ +ide Note: The N reg"!ating the iss"ance of negotia#!echec)s, the rights and the !ia#i!ities arising therefro, does notention Ecrossed chec)sE."rt. 49:of the >ode of >oercerefers to s"ch instr"ents. The #i!!s of Exchan*e "ct of

En*land of :;;5% contains several provisions about them,soe of (hich are %"oted in the argin. nP#8vs. ,ulueta,+> a$$!ied soe $rovisions of said Bi!!s of change 6ct#eca"se the N, originating fro ng!and and codified in theKnited +tates, $erits resort thereto in atters not covered #yit and !oca! !egis!ation.

G.R. No. /1512 Nove#er 3-, 191

5icente R. De Oca$po = Co.,Plaintiff)"ppellee, vs. Anita

>atc"alian, Et Al.,'efendants)"ppellants.

DOCTRINE: +ince Eho!derE, as defined in sec. 191, inc!"des

a $ayee (ho is in $ossession the (ord ho!der in the first c!a"se

of sec. 52 and in the second s"#section ay #e re$!aced #y the

definition in sec. 191 so as to read Ea "oler in ue course i

a pa-ee or inorsee #"o is in possession,E etc. 8rannan0s

on #e*otiable nstruments Law, th ed., $. 543.

n order to sho( that the defendant had E)no(!edge of s"ch

facts that his action in ta)ing the instr"ent ao"nted to #ad

faith,E it is not necessary to $rove that the defendant )ne( the

eact fra"d that (as $racticed "$on the $!aintiff #y the

defendant7s assignor, it #eing s"fficient to sho( that the

defendant had notice that there (as soething (rong a#o"t

his assignor7s ac%"isition of tit!e, a!tho"gh he did not have

notice of the $artic"!ar (rong that (as coitted Paika vPerry. t is s"fficient that the #"yer of a note had notice or

)no(!edge that the note (as in soe (ay tainted (ith fra"d. t

is not necessary that he sho"!d )no( the $artic"!ars or even

the nat"re of the fra"d, since a!! that is re%"ired is )no(!edge

of s"ch facts that his action in ta)ing the note ao"nted #ad

faith. $ark (otor !o. v.


9/15

"e to the sto$ order $ayent, the $!aintiff (as not a#!e

to encash the chec) and th"s fi!ed an action for recovery

on the chec) dra(n #y defendant.

efendants/a$$e!!ants contend that the chec) is not a

negotia#!e instr"ent, and that plaintiff is not a "oler

in ue course. That defendant Gatcha!ian had no

intention to transfer her $ro$erty in the instr"ent as it

(as for safe)ee$ing ere!y and, therefore, there (as node!ivery re%"ired #y !a(.

ISS&E? +ho"!d the $!aintiff #e considered a ho!der in d"e

co"rse and th"s co"!d co!!ect on the said chec) NO)

*E+D: Section 9:c $rovides that a ho!der in d"e co"rse is

one (ho ta)es the instr"ent Ein good faith and for va!"eOE

Section 91, Ethat every ho!der is deeed $ria facie to #e a

ho!der in d"e co"rseOE and Section 9: @, that in order that

one ay #e a ho!der in d"e co"rse it is necessary that Eat the

tie the instr"ent (as negotiated to hi Ehe had no notice of

any . . . defect in the tit!e of the $erson negotiating it.E

t is tr"e that $!aintiff (as not a(are of the circ"stances

"nder (hich the chec) (as de!ivered to GonDa!es. However,

the fact that a$$e!!ants had no o#!igation or !ia#i!ity to the

Ica$o >!inicO that the ao"nt of the chec) did not

corres$ond eact!y (ith the o#!igation of GonDa!es to e

Ica$oO and that the chec) had t(o $ara!!e! !ines in the "$$er

!eft hand corner, (hich $ractice eans that the check could

only be deposited but may not be converted into cash '

sho"!d have $"t the $!aintiff to in%"iry as to the (hy the

$ossession of the chec) #y Man"e! GonDa!es, and (hy he "sedit to $ay his (ife7s acco"nt.

Having fai!ed to ascertain the nat"re of the tit!e of GonDa!es to

the chec), plaintiff #as not in oo fait", and it ay not #e

considered as a ho!der of the chec) in good faith. The r"!e that

a $ossessor of the instr"ent is $ria facie a ho!der in d"e

co"rse does not a$$!y #eca"se there (as a defect in the tit!e of

the ho!der GonDa!es, #eca"se the instr"ent is not $aya#!e to

hi or to #earer. The #"rden (as, therefore, $!aced "$on it to

sho( that not(ithstanding the s"s$icio"s circ"stances, it

ac%"ired the chec) in act"a! good faith.

*!aintiff has not $roved that it ac%"ired the chec) in good faith

and ay not #e deeed a ho!der in d"e co"rse thereof.

Therefore $!aintiff co"!d not co!!ect on the chec) as it s"#&ect

to the efenseof lack of delivery as the checks delivery was

for safekeepin*ere!y and, therefore, there (as no eli!er-

re2uire b- la#.

Aor the foregoing considerations, the decision a$$ea!ed fro

sho"!d #e R?R+, and the defendants are a#so!ved fro

the co$!aint.

G.R. No. /1152 Can"ary 2, 191;

B) A) >reen, et al.% plaintiffs)appellees, vs. M. o$eD, et al.%

'efendants)"ppellants.

DOCTRINE: The #"rden of $roof (as anifest!y "$on the

a)er of the note to esta#!ish the fact of )no(!edge of the

e%"ita#!e defenses #efore they co"!d #e $eritted to re!y "$on

s"ch defenses as against the $"rchasers.

%ACTS: !"R$#% &.:

6 negotia#!e note (as iss"ed #y defendant to a $ayee

(hich the !atter indorsed to $!aintiffs, the $resent ho!ders

the.

The defendant ref"sed to $ay the note a!!eging tha

$!aintiffs (ere not #ona fide ho!ders of the note #y

indorseent, #eca"se they had )no(!edge of the

eistence of certain e%"ita#!e defenses (hich the a)ers

(ere entit!ed to set "$ as against the $ayee of the note

#efore they ac%"ired it #y indorseent fro the $ayee.

The $!aintiff on the other hand c!ais that he sent an

e$!oyee to ca!! "$on the a)ers of the note to in%"ire

(hether it (as a good note (hich (o"!d #e $aid at

at"rity, and that "$on his ret"rn this e$!oyee stated

that he had #een infored #y the a)ers of the note that i

(as a good note d"!y eec"ted #y the and that it (o"!d

#e $aid (hen d"e.

ISS&E: >o"!d the defendant ref"se $ayent on the note NO)

*E+D: The co"rt r"!ed that the a!!egations of the defendan

(ere either (ho!!y fa!se or he fai!ed to a)e hise!f

"nderstood res"!ting to the fact that no )no(!edge of the

eistence of e%"ita#!e defenses (as ade )no(n to the

$!aintiff, the $"rchaser of the note.

There (as nothing on the face of the note to $"t the $"rchasers

on notice of the eistence of s"ch e%"ita#!e defenses. t (as

entire!y reg"!ar in for and cae into their $ossession in the

"s"a! co"rse of #"siness.

%"ita#!e defenses of this nat"re cannot defeat the right of the

ho!ders of a negotia#!e note #y indorseent and for va!"a#!e

consideration, "nti! and "n!ess )no(!edge of the eistence of

s"ch e%"ita#!e defenses is #ro"ght hoe to the, or "nti! it

a$$ears that the ho!ders had s"ch )no(!edge of the eistence

of defects in the instr"ent as to charge the (ith #ad faith in

ac%"iring it "nder a!! the attendant circ"stances.

The &"dgent sho"!d #e 6AARM.


10/15

G.R. No. /1941 March 28, 1923

C"arles A) %ossu$,Plaintiff)"ppellant, vs. %ernane.*er$anos, a*eneral partnership, and Cose A. AernandeD @

>astro et al% 'efendants)"ppellees.

DOCTRINE: The $res"$tion to the effect that every ho!deris deeed $ria facie to #e a ho!der in d"e co"rse e$ressedin +ection 59 of the N arises on!y in favor of a $erson (hois a ho!der in the sae defined in section 191 of the sae !a(,that is, a $ayee or indorse is in $ossession of the draft, or the#earer thereof. Knder this definition, in order to #e a ho!der,one "st #e in $ossession of the note or the #earer thereof.

A"rther, t is a (e!!/)no(n r"!e of !a( that if the origina!$ayee of a note "nenforcea#!e for !ac) of considerationre$"rchases the instr"ent after transferring it to a ho!der ind"e co"rse, the $a$er again #ecoes s"#&ect in the $ayee7shands to the sae defenses to (hich it (o"!d have #eens"#&ect if the $a$er had never $assed thro"gh the hands of aho!der in d"e co"rse.

%ACTS: TREET% &.:

>har!es 6. Aoss", (as the resident agent in Mani!a of

the "merican ron Products !ompany% nc., #ased inNe( @or) >ity.

Heranos $!aced an order for a tai! shaft of a vesse! (ith

Aoss"Fs >o$any, $roviding the !atter of thes$ecifications and the $"r$ose for its "se. *!aintiff dra(na tie draft S225- "$on defendant $aya#!e to *NB.

+aid draft (as $resented to Heranos and (as acce$ted.

0hen the shaft arrived, the sae (as fo"nd not to #e in

confority (ith the s$ecifications and th"s Heranosref"sed to $ay the draft.

Having #een dishonored, *NB indorsed the draft in

#!an), (itho"t consideration, and de!ivered it to Aoss".

Aoss" instit"ted the $resent action for the recovery of

the ao"nt in the draft.

The tria! co"rt a#so!ved the defendants fro the

co$!aint. Th"s, $!aintiff a$$ea!ed.

Aoss" arg"es that he ay sti!! recover against the$erson $riari!y !ia#!e (here it a$$ears that he deriveshis tit!e thro"gh a ho!der in d"e co"rse.

ISS&E?0hether Aoss" has indeed derived his tit!ed thro"gha ho!der in d"e co"rse and th"s he co"!d co!!ect on the draft.NO)

*E+D: *!aintiff is far fro #eing a ho!der of this draft in d"eco"rse. Airst, he (as hise!f a $arty to the contract (hichs"$$!ied the consideration for the draft, a!#eit "e acte in arepresentati!e capacit-. +econd, he $roc"red the instr"entto #e indorsed #y the #an) and de!ivered to hise!f (itho"t

the $ayent of va!"e, after it (as overd"e, and (ith f"!! noticethat, as #et(een the origina! $arties, the consideration hadco$!ete!y fai!ed.

Knder these circ"stances, recovery on this draft #y the$!aintiff #y virt"e of any erit in his o(n $osition is o"t of the%"estion. considers the sit"ation to #e the sae in $ractica! effect asif the action had #een #ro"ght in the nae of the 6ericanron *rod"cts >o$any, nc., itse!fO and the "se of the nae ofAoss" stri)es "s as a ere atte$t at an evasion of the r"!eof !a( that (o"!d have #een fata! to the s"ccess of an actioninstit"ted #y that co$any.

The &"dgent a$$ea!ed fro "st #e 6AARM.

MA+CO+M, /., dissentin*?

Section 9of the N $rovides: E. . . " holder who derives histitle throu*h a holder in due course% and who is not himself a

party to any fraud or ille*ality affectin* the instrument% has

all the ri*hts of such former holder in respect of all parties

prior to the latter.E

Knder the $rovisions of this section, Aoss" is in eact!y thesae sit"ation as the *NB (o"!d #e. Aoss" is entit!ed to a!!the rights that $ertain to the *NB as ho!der in d"e co"rse. +"chis the !a(.

The absence or failure of consieration is not a defenseagainst a ho!der in d"e co"rse, a!tho"gh it is a defense agains

a ho!der not in d"e co"rse, as c!ear!y a$$ears fro the NN, +ecs. 28, 51, 52, 5;, 58, 59.

The $!ain $rovisions of the N sho"!d not #e ignored andthey sho"!d #e constr"ed and a$$!ied in accordance (ith the!ang"age of the 6ct and in accordance (ith $recedentsconstr"ing and a$$!ying the Knifor Negotia#!e nstr"enta(.


11/15

G.R. No. ;2;4C"!y 13, 1989

State In!est$ent *ouse,Petitioner, vs. 6>, Anita Pea

C"ua and *arris C"ua,Respondents.

DOCTRINE? the Negotia#!e nstr"ents a( reg"!ating the

iss"ance of negotia#!e chec)s as (e!! as the !ights and

!ia#i!ities arising therefro, does not ention Ecrossed

chec)sE. The act of crossing a chec) serves as a (arning to theho!der that the chec) has #een iss"ed for a definite $"r$ose so

that he "st in%"ire if he has received the chec) $"rs"ant to

that $"r$ose, other(ise he is not a ho!der in d"e co"rse.

%ACTS:FER#"#% !.&.?

Ne( +i)at"na 0ood nd"stries nc. N+0 re%"ested for

a !oan fro Harris >h"a, (ho iss"ed 3 crossed chec)s.

+"#se%"ent!y, N+0 entered in an agreeent (ith the

+tate nvestent Ho"se nc. +H, "nder a

deed of sa!e, (here the forer assigned and disco"nted

11 $ostdated chec)s inc!"ding the 3 iss"ed #y >h"a.

0hen the 3 chec)s (ere a!!eged!y de$osited #y +H, the

chec)s (ere dishonored #y reason of Jins"fficient f"nds,

Jsto$ $ayent and Jacco"nt c!osed. +H ade

deands "$on >h"a to a)e good said chec)s, >h"a

fai!ed to do so.

The !o(er co"rt r"!ed against the $rivate res$ondents.

6> reversed, finding the a$$ea! eritotrio"s.

ISS&E: s +H a ho!der in d"e co"rse so as to recover the

ao"nts in the chec)s fro >h"a, the dra(er

*E+D: The Negotia#!e nstr"ents a( does not ention

Jcrossed chec)s #"t the >o"rt has recogniDed the $ractice

that crossing the chec) #y t(o $ara!!e! !ines in the "$$er !eft

$ortion of the chec) eans that the chec) ay on!y #e

de$osited in the #an) and that the chec) ay #e negotiated

on!y once to one (ho has an acco"nt (ith a #an). Herein,

+H redisco"nted the chec) )no(ing that it (as a crossedchec).

Aai!ing in this res$ect, the $ayee is dec!ared g"i!ty of gross

neg!igence ao"nting to !ega! a#sence of good faith and as

s"ch the consens"s of a"thority is to the effect that the ho!der

of the chec) is not a ho!der in good faith. +H, therefor is

s"#&ect to $ersona! defenses, s"ch as the lack of consideration

between the #@ and !hua, i.e. res"!ting fro the non/

cons"ation of the !oan. 4*ERE%ORE, t"e ecision

appeale fro$ is "ereb- A%%IRMED)

G.R. No. 182;4 : 6"g"st 2-, 2--8

%ar East Bank L Trust Co$pan-,Petitioner, v. >ol

Palace /e#eller- Co., as represented by/u- +) 'an, et al,

Respondent.

DOCTRINE: +ec 2. If N $rovides that the acce$tor, #y

acce$ting the instr"ent, engages that he (i!! $ay it according

to the tenor of his acce$tance. This $rovision a$$!ies (ith

e%"a! force in case the dra(ee $ays a #i!! (itho"t having

$revio"s!y acce$ted it. His act"a! $ayent of the ao"nt in

the chec) i$!ies not on!y his assent to the order of the dra(er

and a recognition of his corres$onding o#!igation to $ay the

aforeentioned s", #"t a!so, his c!ear co$!iance (ith tha

o#!igation."ctual payment by the drawee is *reater than his

acceptance% which is merely a promise in writin* to pay. The

payment of a check includes its acceptance.

Knder the !a(, the dra(ee, #y the said $ayent, recogniDed

and co$!ied (ith its o#!igation to $ay in accordance (ith thetenor of his acce$tance. The tenor of the acce$tance is

deterined #y the ters of the #i!! as it is (hen the dra(ee

acce$ts.

%ACTS:#"!


12/15

Aai!"re to heed deand, Aar ast instit"ted the $resent

action for recovery of s" of oney (ith daages.

ISS&E: 0hether Aar ast co"!d de#it Go!d *a!aceFs acco"nt

for the ao"nt ref"nded to B*. NO)

*E+D: The dra(ee #an) B* c!eared and $aid the s"#&ect

foreign draft and for(arded the ao"nt to the co!!ecting #an)

Aar ast. The !atter then credited to Go!d *a!ace7s acco"nt the$ayent it received. +tated si$!y, B* (as !ia#!e on its

$ayent of the chec) according to the tenor of the chec) at the

tie of $ayent, (hich (as the raised ao"nt.

Beca"se of that engageent, +BP coul no loner repuiate

t"e pa-$ent it erroneousl- $ae to a ue course "oler.

Go!d *a!ace (as not a $artici$ant in the a!teration of the draft,

(as not neg!igent, and (as a ho!der in d"e co"rse.

Having re!ied on the dra(ee #an)7s c!earance and $ayent of

the draft and not #eing neg!igent, responent is a$pl-

protecte b- Section ;: of t"e NI+. Go!d *a!ace, had no

faci!ity to ascertain (ith the dra(er, KIB Ma!aysia, the tr"e

ao"nt in the draft. t (as !eft (ith no o$tion #"t to re!y on

the re$resentations of B* that the draft (as good.

Aar ast cannot invo)e the (arranty of the $ayeePde$ositor

(ho indorsed the instr"ent for co!!ection to shift the #"rden

it #ro"ght "$on itse!f. This is $recise!y #eca"se the said

indorseent is on!y for $"r$oses of co!!ection (hich, "nder

+ection 3 of the N, is a restrictive indorseent. 0itho"t

any !ega! right to do so, the co!!ecting #an), therefore, co"!d

not de#it res$ondent7s acco"nt for the ao"nt it ref"nded tothe dra(ee #an).

Aar ast7s reedy "nder the !a( is not against Go!d *a!ace #"t

against the dra(ee/#an) or the $erson res$onsi#!e for the

a!teration.

0HRAIR, $reises considered, the ecision and theReso!"tion of the >6 are 6AARM 0TH THMIA>6TIN that the a(ard of ee$!ary daages andattorney7s fees is T.

G.R. No. 1-;382. Can"ary 31, 199

Associate Bank,Petitioner, vs. CA, Pro!ince of Tarlacand

*NB,Respondent.

G.R. No. 1-;12. Can"ary 31, 199

PNB,Petitioner, vs. >6, Pro!ince of Tarlac, and Associate

Bank,Respondent.

DOCTRINE: *ayent "nder a forged indorseent is not to

the dra(ers order. 0hen the dra(ee #an) $ays a $erson other

than the $ayee, it does not co$!y (ith the ters of the chec)

and vio!ates its d"ty to charge its c"stoers the dra(er

acco"nt on!y for $ro$er!y $aya#!e ites. +ince the dra(ee

#an) did not $ay a ho!der or other $erson entit!ed to receive

$ayent, it has no right to rei#"rseent fro the dra(er

The GNR6 RK then is that the drawee bank may no

debit the drawers account and is not entitled toindemnification from the drawer. T"e risk of loss $us

perforce fall on t"e ra#ee bank)

Ho(ever, if the dra(ee #an) can $rove a fai!"re #y the

c"stoerPdra(er to eercise ordinary care that s"#stantia!!y

contri#"ted to the a)ing of the forged signat"re, the dra(er

is $rec!"ded fro asserting the forgery.

f at the sae tie the dra(ee #an) (as a!so neg!igent to the

$oint of s"#stantia!!y contri#"ting to the !oss, then s"ch !oss

fro the forgery can #e a$$ortioned #et(een the neg!igen

dra(er and the neg!igent #an).

n cases invo!ving a forged chec), (here the dra(ers signat"re

is forged, the dra(er can recover fro the dra(ee #an). No

dra(ee #an) has a right to $ay a forged chec). f it does, i

sha!! have to recredit the ao"nt of the chec) to the acco"nt of

the dra(er. The !ia#i!ity chain ends (ith the dra(ee #an)

(hose res$onsi#i!ity it is to )no( the dra(ers signat"re since

the !atter is its c"stoer.

n cases invo!ving chec)s (ith forged indorseents, s"ch as

the $resent $etition, the chain of !ia#i!ity does not end (ith thedra(ee #an). The dra(ee #an) ay not de#it the acco"nt of

the dra(er #"t ay genera!!y $ass !ia#i!ity #ac) thro"gh the

co!!ection chain to the $arty (ho too) fro the forger and, of

co"rse, to the forger hise!f, if avai!a#!e.28 n other (ords

the dra(ee #an) can see) rei#"rseent or a ret"rn of the

ao"nt it $aid fro the $resentor #an) or $erson.29

Theoretica!!y, the !atter can deand rei#"rseent fro the

$erson (ho indorsed the chec) to it and so on. The !oss fa!!s

on the $arty (ho too) the chec) fro the forger, or on the

forger hise!f.


13/15

+ince a forged indorseent is ino$erative, the co!!ecting #an)

had no right to #e $aid #y the dra(ee #an). The forer "st

necessari!y ret"rn the oney $aid #y the !atter #eca"se it (as

$aid (rongf"!!y.

%ACTS:R$(ER$% &.:

The *rovince of Tar!ac aintains a c"rrent acco"nt (ith*NB/Tar!ac (here the $rovincia! f"nds are de$osited.

*ortions of the f"nds (ere a!!ocated to the >once$cion

ergency Hos$ita!. >hec)s (ere iss"ed to it and (ere

received #y the hos$ita!Fs administrative officer and

cashier Fausto Pan*ilinan 3- chec)s, *2-3.

*angi!inan, thro"gh the he!$ of 6ssociated Ban) butafter

forging the signat"re of the hos$ita!Fs chief 6dena

>an!as, (as a#!e to de$osit the chec)s in his $ersona!

acco"nt. 6!! the chec)s #ore the sta$ J"ll prior

endorsement *uaranteed "ssociated 8ank.

Thro"gh $ost/a"dit, the $rovince discovered that the

hos$ita! did not receive severa! a!!otted chec)s, and

so"ght the restoration of the de#ited ao"nts fro *NB.

n t"rn, *NB deanded rei#"rseent fro 6ssociated

Ban). Both #an)s are innocent of the forgery, and #oth

resisted $ayent. Hence, the $resent action.

ISS&E: 0ho sha!! #ear the !oss res"!ting fro the forged

chec)s. ASSOCIATED BAN!earing Ho"se. 6ssociated Ban), and not

*NB, is the one d"ty/#o"nd to (arrant the instr"ent as

gen"ine, va!id and s"#sisting at the tie of indorseent

$"rs"ant to Section ;;of the N.

The sta$ g"aranteeing $rior indorseent is not an e$ty

r"#ricO the co!!ecting #an) is he!d acco"nta#!e for chec)s

de$osited #y its c"stoers. Ho(ever, d"e to the fact that the

*rovince of Tar!ac is e%"a!!y neg!igent in $eritting

*angi!inan to co!!ect the chec)s (hen he (as no !onger

connected (ith the hos$ita!, it s"ares t"e buren of lossfro

the chec)s #earing a forged indorseent. Therefore, the

Pro!ince can onl- reco!er 9 of the ao"nt fro the

dra(ee #an) *NB, and the co!!ecting #an) 6ssociated

Ban) is !ia#!e to *NB for 5- of the sae ao"nt.

>hec)s having forged indorseents sho"!d #e differentiated

fro forged chec)s or chec)s #earing the forged signat"re of

the dra(er.

6 forged signat"re, (hether it #e that of the dra(er or the

$ayee, is #"oll- inoperati!e an no one can ain title to t"e

instru$ent t"rou" it. 6 $erson (hose signat"re to an

instr"ent (as forged (as never a $arty and never consented

to the contract (hich a!!eged!y gave rise to s"ch instr"ent

Section :F oes not a!oi t"e instru$ent but onl- t"

fore sinature) Th"s, a forged indorseent does no

o$erate as the $ayees indorseent.

The >*TIN to the *eneral rule in ection 5Ais (here

Ea $arty against (ho it is so"ght to enforce a right is

$rec!"ded fro setting "$ the forgery or (ant of a"thority

E*arties (ho (arrant or adit the gen"ineness of the signat"re

in %"estion and those (ho, #y their acts, si!ence or neg!igence

are esto$$ed fro setting "$ the defense of forgery, are

$rec!"ded fro "sing this defense. ndorsers, $ersons

negotiating #y de!ivery and acce$tors are (arrantors of the

gen"ineness of the signat"res on the instr"ent.

n bearer instruments% the si*nature of the payee or holder is

unnecessary to pass title to the instrument.


14/15

n this case, the chec)s (ere indorsed #y the co!!ecting #an)

6ssociated Ban) to the dra(ee #an) *NB. The forer (i!!

necessari!y #e !ia#!e to the !atter for the chec)s #earing forged

indorseents. f the forgery is that of the $ayees or ho!ders

indorseent, the co!!ecting #an) is he!d !ia#!e, (itho"t

$re&"dice to the !atter $roceeding against the forger.

More i$ortant!y, #y reason of the statutor- #arrant- of a

eneral inorserin +ection of the N, a co!!ecting #an)(hich indorses a chec) #earing a forged indorseent and

$resents it to the dra(ee #an) g"arantees a!! $rior

indorseents, inc!"ding the forged indorseent. t (arrants

that the instr"ent is gen"ine, and that it is va!id and

s"#sisting at the tie of his indorseent. 8ecause the

indorsement is a for*ery% the collectin* bank commits a

breach of this warranty and will be accountable to the drawee

bank. This liability scheme operates without re*ard to fault on

the part of the collectin*/presentin* bank. Even if the latter

bank was not ne*li*ent% it would still be liable to the drawee

bank because of its indorsement.

The >o"rt has consistent!y r"!ed that Ethe co!!ecting #an) or

!ast endorser genera!!y s"ffers the !oss #eca"se it has the d"ty

to ascertain the gen"ineness of a!! $rior endorseents

considering that the act of $resenting the chec) for $ayent to

the dra(ee is an assertion that the $arty a)ing the

$resentent has done its d"ty to ascertain the gen"ineness of

the endorseents.E

N ?0 IA TH AIRGING, the $etition for revie( fi!ed

#y the *NB is here#y *6RT6@ GR6NT. The $etition

for revie( fi!ed #y the 6ssociated Ban) is here#y N.

The decision of the tria! co"rt is MIA.

G.R. No. ;491; Can"ary 2-, 1988

Banco De Oro Sa!ins An Mortae Bank,Petitioner, vs.

E2uitable Bankin Corporation, *hi!i$$ine >!earing Ho"se

>or$oration,Respondents.

%ACTS: 3"#!"B!$% &.:

Banco e Iro dre( si crossed Manager7s chec) $aya#!eto certain e#er esta#!ishents of ?isa >ard.

The >hec)s (ere de$osited (ith %"ita#!e Ban) to the

credit of its de$ositor, a certain 6ida Trencio.

6fter sta$ing at the #ac) of the >hec)s the "s"a

endorseents: 76!! $rior andPor !ac) of endorseen

g"aranteed7 the defendant sent the chec)s for c!earing

thro"gh the *hi!i$$ine >!earing Ho"se >or$oration

*>H>.

Banco e Iro $aid the >hec)s and its c!earing acco"nt

(as de#ited for the va!"e of the >hec)s and %"ita#!e

Ban) s c!earing acco"nt (as credited for the sae

ao"nt.

Thereafter, Banco e Iro discovered that the

endorseents a$$earing at the #ac) of the >hec)s and

$"r$orting to #e that of the $ayees (ere forged andPor

"na"thoriDed or other(ise #e!ong to $ersons other than

the $ayees.

Banco e Iro $resented the >hec)s direct!y to %"ita#!e

Ban) for the $"r$ose of c!aiing rei#"rseent fro the

!atter.

Ho(ever, defendant ref"sed to acce$t s"ch direc

$resentation and to rei#"rse Banco e Iro for the va!"e

of the >hec)s. *ence, t"is case)

ISS&E? >o"!d Banco e Iro co!!ect rei#"rseent fro

%"ita#!e Ban)'ES)

*E+D: The $etitioner having sta$ed its g"arantee of Ea!$rior endorseents andPor !ac) of endorseentsE is no(

esto$$ed fro c!aiing that the chec)s "nder consideration

are not negotia#!e instr"ents. t !ed the said res$ondent to

#e!ieve that it (as acting as endorser of the chec)s and on the

strength of this g"arantee said res$ondent c!eared the chec)s

in %"estion and credited the acco"nt of the $etitioner

*etitioner is no( #arred fro ta)ing an o$$osite $ost"re #y

c!aiing that the dis$"ted chec)s are not negotia#!e

instr"ent.


15/15

6 coercia! #an) cannot esca$e the !ia#i!ity of an endorser

of a chec) and (hich ay t"rn o"t to #e a forged

endorseent. 0henever any #an) treats the signat"re at the

#ac) of the chec)s as endorseents and th"s !ogica!!y

g"arantees the sae as s"ch there can #e no do"#t said #an)

has considered the chec)s as negotia#!e.

The co!!ecting #an) or !ast endorser genera!!y s"ffers the !oss

#eca"se it has the d"ty to ascertain the gen"ineness of a!! $riorendorseents considering that the act of $resenting the chec)

for $ayent to the dra(ee is an assertion that the $arty a)ing

the $resentent has done its d"ty to ascertain the gen"ineness

of the endorseents.

0hi!e the dra(er genera!!y o(es no d"ty of di!igence to the

co!!ecting #an), the !a( i$oses a d"ty of di!igence on the

co!!ecting #an) to scr"tiniDe chec)s de$osited (ith it for the

$"r$ose of deterining their gen"ineness and reg"!arity. The

co!!ecting #an) #eing $riari!y engaged in #an)ing ho!ds

itse!f o"t to the $"#!ic as the e$ert and the !a( ho!ds it to a

high standard of cond"ct.

digest_nego_feb052012.doc

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