Nego Chapter V Notes

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties A.
LIABILITIES OF PRIMARY PARTIES

KINDS OF PARTIES ACCORDING TO LIABILITY 1) Primary party Unconditionally liable; the primary party is bound to pay the holder at the date of maturity, whether or not the holder demands payment him (Sec 192 NIL) o He is not relieve from liability even if NI should become overdue due to holders failure to make a demand a. Maker b. Acceptor of Bill 2) Secondary party Conditionally liable; the secondary party is not bound to pay unless the following conditions have been fulfilled: (a) due presentment or demand to the primary party for payment or acceptance; (b) its dishonor by the party; and (c) taking of proceedings required by law after dishonor, i.e. notice of dishonor and in case of foreign Bills of Exchange, protest of the bill (Sec 70 NIL) a. Indorsers b. Drawer FACTS: Utterback issued a promissory note payable to Davis Coal Co. Payee failed to comply with Sec 199b and 571, Kentucky Statute, prior to the execution of the note, which is a requisite for conducting business in Kentucky. ISSUE: WON payees failure to comply with the Kentucky provisions render the PN uncollectible in the hands of HDC HELD: No. Under the NIL, the defendant (maker) cannot deny either the existence of the original payee or its capacity to indorse, as against HDC. The NIL does not say that the maker admits the payees capacity to make the contract for which the PN was executed. BUT again, the act DOES take from the maker the right to deny the capacity of the payee to indorse and negotiate the note free from defenses available against the payee, even though, as between the original parties, the note was void and unenforceable for any reason. It has been held in both Colorado and North Dakota that a note to a foreign corporation that he has not complied with the local law, without which it would not do business in the state, is valid against the maker in the hands of a holder in due course. a.
PARTIES PRIMARILY LIABLE

1. LIABILITY OF MAKER Under Sec 60, the maker is primarily liable since he engages to pay the note according to its tenor, subject to no condition whatsoever By executing a PN, the maker warrants that the payee named in the NI is existing; therefore, he cannot question the corporate existence of the payee Maker also represents to the world that the payee has the capacity to indorse at the time of the making of PN and thus represents that the payee can transfer a good and valid title to the PN by indorsement o Maker cannot raise the defense of minority; insanity of payee or ultra-vires act of corporation
STATUS OF DRAWEE PRIOR TO ACCEPTANCE OR PAYMENT The drawee is not liable on the bill of exchange
or check until he accepts it. Even HDC cannot sue drawer prior to his acceptance o REASON: Mere issuance of the bill does not render the drawee liable because it does not operate as an assignment of the funds in the hands of the drawee o When the bill is accepted, the acceptor becomes primarily liable under Sec 62 o Bank is not liable until it accepts or certifies the check. Prior to certification, the drawer may issue a stop payment order
FIRST NATL BANK OF CENTRAL CITY V. UTTERBACK 177 Ky. 76, S.W. 534, L.R.A. 1918B, 838 (1917)
Subject: Negotiable Promissory note Maker: Utterback Payee: Davis Coal Co
NOTE: If the drawee bank refuses to accept the bill without justifiable reason/s, the drawee may be liable to the drawer for breach of contract or damages based on tort.
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NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

ARANETA V. BANK OF AMERICA 40 SCRA 144 (1971)
Drawer: Leopoldo Araneta Drawee: Bank of America Subject: Checks of various amounts FACTS: Araneta issued a check for $500 drawn against Bank of America. At the time he had a credit of $523.81 in his account. However the check was dishonored and stamped account closed. Upon inquiry, Bank of America acknowledged the error and sent letter of apology to the payee. However, similar incidents happened later. Subsequently, Araneta drew 2 checks for $500 and $150, both payable to cash and drawn against the same bank. The check for $500 was indorsed to Rufina Saldana who deposited it in her account with First National City Bank of New York which cleared through the Federal Reserve Bank. It was actually paid by BA but it later claimed that it paid by mistake and requested the amount to be re-credited. FNCB informed Saldana but before her reply was received, BA recalled the check from FNCB and honored it. Due to the foregoing incidents, Araneta filed an action for damages (actual, moral, temperate and exemplary) against Bank of America. The trial court awarded all the items prayed for by the petitioner. On appeal, CA eliminated the award of compensatory and temperate damages and reduced the award of moral damages ISSUE: WON Bank of America is liable for temperate and moral damages HELD: Yes. The financial credit of a businessman is a prized and valuable asset, it being a significant part of his business. Any adverse reflection thereon constitutes some material loss to him. Injury to ones commercial credit or to the good will of the business firm is often hard to show with certainty in terms of money. Temperate damages are awarded where definite proof of pecuniary loss cannot be offered but the court is convinced that there has been a loss. While it is true that under Art 2217 NCC, besmirched reputation is a ground upon which moral damages may be claimed, CA has already taken this element into consideration when it granted the award of moral damages.
WOODY V. NATIONAL BANK OF ROCKY MOUNT 194 N.C. 549, 140 S.E. 150 (1927)
Subject: Check for $6 Drawer: Woody Drawee: Bank of Rocky Mount Payee: E.L. Hollingworth Indorsee: Kingston Garage Depositing Bank: Kingston Bank FACTS: Woody issued a check for $6 payable to the order of Hollingworth. The check was indorsed to Kingston Garage, who in turn deposited it with Kingston Bank. At the time deposit, Woody had in his account with drawee bank $50. However, the check was dishonored and marked no account. Woody was arrested and charged for having issued a worthless check. He was later acquitted. As such, Woody filed an action for damages against Bank of Rocky Mount, alleging that the drawee banks act was willful, negligent, wanton and malicious. ISSUE: WON Woody may recover compensatory and punitive damages from drawee bank HELD: Yes. Upon the refusal or failure of the bank to pay the check of its depositor, the bank is liable for a breach of its contract. The depositor may recover of the bank the amount of his check, with interest and cost; the action being on contract, the recovery is limited to the amount of the check, with interest from date of demand and refusal, and, by virtue of the statute, the costs of the action. Notwithstanding that the relation of the bank to its depositor is that of debtor and creditor, a bank may be held liable in tort to its depositor whose check it has wrongfully refused or failed to pay.
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A depositor, whose check has been wrongfully dishonored by the refusal or failure of the bank on which it was drawn to pay the same, may maintain an action against the bank, not only in contract but also in tort, to recover the damages which he has sustained, and that the jury may, when the plaintiff is a merchant or trader, assess not only nominal but also substantial damages; when the plaintiff is not a merchant or trader, he may recover such sum as special damages as the jury shall find, upon the facts, will compensate him for the injury resulting from the wrong done him by the defendant. Even if such actual loss or injury is not shown, yet more than nominal damages may be given. It can hardly be possible that a customers check can be wrongfully refused payment without some impeachment of his credit, which must in fact be an actual injury, though he cannot from the nature of the case furnish independent, distinct proof thereon. the order and the consequent recovery of damages therefore. Indeed, this view has been, in effect, reiterated in a comparatively recent case. Thus, in Air France vs. Carrascoso, involving an airplane passenger who, despite his first-class ticket, had been illegally ousted from his first-class accommodation and compelled to take a seat in the tourist compartment, was held entitled to recover damages from the air-carrier, upon the ground of tort on the latters part, for, although the relation between a passenger and a carrier is contractual both in origin and nature the act that breaks the contract may also be a tort. In view, however, of the facts obtaining in the case at bar, and considering, particularly, the circumstance, that the wrong done to the plaintiff was remedied as soon as the President of the bank realized the mistake he and his subordinate employee had committed, the Court finds that an award of nominal damagesthe amount of which need not be provenin the sum of P1,000, in addition to attorneys fees in the sum of P500, would suffice to vindicate plaintiffs rights.
SINGSON V. BPI 23 SCRA 1117 (1968)

FACTS: Singson was one of defendants in civil case where judgment was
rendered against him and co-defendants Lobregat and Villa-Abrille, to pay. Singson and Lobregat appealed, but not Villla-Abrille. Writ of garnishment was served upon BPI in which Singson had account, insofar as VillaAbrilles credit against the bank were concerned. The clerk of the BPI, upon reading name of plaintiff and without informing himself that garnishment was merely for deposits of Villa-Abrillle and Bona, prepared letter for Bank Presidents signature, informing Singson of the garnishment of his deposits. 2 checks issued by Singson in favor of Lega Corp, drawn against said bank, were deposited by drawee. Believing that Singson had no more control over his deposits, bank dishonored the checks. Singson filed an action for damages against bank and its president for damages because of illegal freezing of account. ISSUE: WON the existence of a contract between the parties bars a plaintiffs claim for damages based on tort HELD: No. The existence of a contract between the parties
SPEROFF V. FIRST-CENTRAL TRUST CO 149 Ohio St. 415, 79 N.E. 2d 119 (1948)
FACTS: Vassil Speroff had drawn a check on First-Central Trust Co.
(FCTC). He eventually notified FCTC that said check be not paid (stop order). Speroff sued FCTC to recover the amount of said check. FCTC admitted to the drawing of the check and to having received the notice not to pay. However, it interposed the defense that Speroff signed a document stating that Speroff agreed to indemnify FCTC against any loss resulting from the nonpayment of said check and that it is expressly understood that it will not be held responsible if it paid the check through inadvertency or oversight. The trial court rendered a judgment for FCTC. CA reversed saying that said statement of release was void as it was contrary to public policy and void for want of consideration. Hence, this appeal.
does not bar the commission of a tort by the one against
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ISSUE: WON the statement constitutes a valid defense of release signed by Speroff Drawee: Chase Natl Bank of City of New York Payee: Caracanda Bros & Co. Ltd. FACTS: Arbeedee and Caracanda entered into an agreement for the purchase of sugar which provided that Arbeedee and should deliver a check for $25,000 to Caracanda to bind the transaction and that an amount would be returned upon receipt by Caracanda of a letter of credit to obtained by Arbeedee. Arbeedee drew such a check on its account in the plaintiff bank and delivered it to Caracanda. Thereafter Arbeedee requested Chase National Bank to stop payment on the check. Caracanda presented the check for certification and it was certified by drawee bank by mistake. The following day, Caracanda presented it for payment and drawee bank paid it. When advised of the payment of the check Arbeedee insisted that plaintiff make no debit against it account asserting that Caracanda has no legal right to the money. Plaintiff thereupon demanded payment of the $25,000 from Caracanda but Carancanda refused. The complaint alleges due demand upon both defendants and nonpayment and prays for judgment in the sum of $25,000 against Arbeedee and/or Caracanda. ISSUE: WON drawee bank may recover HELD: No. A defendant may not be held liable unless facts are alleged which constitute a cause of action. The complaint failed to allege ratification by Arbeedee after learning of the payment by plaintiff to Caracanda and there are no alternative allegations of fact upon which to rest such a cause of action. Our courts have never permitted a bank in a commercial transaction to such as this, after breaching its depositor's instructions to involve him against his will in litigation with a third party in order that the bank may recoup a potential loss resulting from its own error. The doctrine of subrogation or equitable assignment is not properly applicable under such circumstances. A bank may protect itself by contract with its depositor so as to limit liability on a stop payment order. When that has not been done, the common law liability is absolute in the absence of ratification. 2. LIABILITY OF ACCEPTOR A drawee has no liability on the bill unless and until he accepts the same. Once he accepts, he becomes primarily liable on the instrument because he
HELD: No. The Court upheld the CAs two grounds for avoiding the statement of release. ON WANT OF CONSIDERATION Under the reciprocal rights and obligations inherent in the relationship existing between a bank and its depositors, it was the duty of FCTC NOT to pay after it had received the stop payment order of Speroff. Hence, when Speroff was asked to sign a statement or release to the effect that the bank would not be held responsible if it would pay the check, this was a new element in the relationship. What consideration or benefit was received by Speroff as promisor and what detriment was suffered by FCTC as promise as a result of this statement? NONE so clearly there was no compliance with either of the fundamental requirements as to consideration. ON CONTRARY TO PUBLIC POLICY It is elementary that a bank is required by law to act in good faith and exercise reasonable care in its relationship with its depositors. In this case, the obtaining from Speroff of a purported release from liability for inadvertency or oversight as a condition of the order to stop payment of the check was contrary to public policy and did not relieve FCTC from its duty to act in good faith and exercise reasonable care. The Court distinguished that FCTCs defense of purported release was a void and invalid defense. However, the FCTCs defense of exercising good faith and reasonable care (which it interposed in its amended answer) is a valid defense so the Court remanded the case back to the Court of Common Pleas for trial on that issue.
CHASE NATL BANK OF CITY OF NEW YORK V. BATTAT Court of Appeals of New York 1948 297 N.Y. 185, 78 N.E. 2d, 465
Subject: Check for $25,000 as payment for the purchase of sugar Drawer: Arbeedee
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accepts to pay it according to the tenor of his acceptance, subject to no condition whatsoever Acceptance applies only to bills of exchange Object: to bind the drawee and to make him an actual and bound party to the instrument Requisites for valid acceptance (Sec 132) a. It must be in writing b. It must be signed by the drawee c. It must not change the implied promise of the acceptor to pay only in money NOTE: There can be no valid oral or implied acceptance except under Sec 137 (constructive acceptance) o Acceptance is made by writing the word accepted or by the drawees signature alone
A drawee may be charged as acceptor although he writes merely his name upon the bill and that anyone taking the bill has the right to fill up a blank acceptance on the same principle that a holder may fill up a blank indorsement.
KILGORE NATL BANK V. MOORE BROS LUMBER CO 102 S.W. 2d 200 (1937)
Subject 2 checks Drawer: Waddell Drawee: Kilgore National Bank Payee: Moore Bros Lumber Co Collecting Bank: Grand Saline Bank FACTS: Waddell transacted with Moore Brothers, a firm engaged in the
lumber business. As payment for the lumber he purchased, Waddell drew 2 checks for $350 drawn against Kilgore National Bank. The 2 checks were deposited by Moore Brothers in Grand Saline Bank for collection. A few days later, Grand Saline notified G.J. Moore that the checks had been returned by Kilgore Bank unpaid. Because of this, G.J. Moore brought Waddell to Kilgore Bank where Waddell, Moore and the cashier of Kilgore Bank had an ORAL agreement. Waddell instructed Kilgore bank to pay Moore. The cashier promised Moore the payment of said checks once presented again. On the ledger of the bank in connection with Waddell's account, the cashier made the unsigned notation: "Hold for Moore Brothers $350.00" G.J. Moore ordered Grand Saline to forward the checks to Kilgore again. One of the checks was paid. The other, however, was not. This prompted Moore to file suit against Kilgore Bank to recover amount of the last mentioned unpaid check. ISSUE: WON Kilgore is liable for the other check HELD: No. Section 132 governs. To be a valid acceptance, the following requisites must be present: 1) It must be in writing 2) It must be signed by the drawee, and 3) It must not change the implied promise of acceptor to pay only in money. Acceptance is usually made by writing "accepted" and signing immediately below. However, the drawee's signature alone is NOT sufficient. The plain purpose of 132 is to prevent any liability to the holder of a check from arising from the bare oral promise of the drawee bank to pay the check.
LAWLESS V. TEMPLE 254 Mass. 395, 150 N.E. 176 (1926)

Subject: Bill Drawer: Norris Temple Drawee: Maurice Temple Payee: Hazel Lawless FACTS: Drawer issued a bill for $150.50 drawn against drawee Temple, in favor of Lawless. On the face of the instrument, the drawee signed his name. Drawee contends that the mere signature of the name of the drawee on the bill cannot fulfill the requirements that the signification of the assent of the drawee must be in writing and signed
ISSUE: WON the signature of the drawee is sufficient acceptance HELD: Yes. Acceptance must be in writing because sound policy requires that some substantial and tangible evidence of the contract is more reliable in nature than the statement or recollection of witnesses. The common practice before the NIL was to write the word "accepted" + the signature on the face of the bill. But based on case law, the signature is both writing and signing. The name alone is constantly holden to satisfy the requirement.
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CAB: The liability of Kilgore Bank to Moore Brothers depends entirely on the BARE ORAL PROMISE of the drawee bank to pay. As we have said, this should have been in writing (and of course, complying as well with the other two requisites). The notation in the bank's ledger "Hold for Moore Brother, $350.00" adds no force to said promise. This statement (as opposed to the oral promise to pay) does NOT EVEN make any contract, oral or written, to pay. It gave its oral promise to pay the checks, but this standing alone, is insufficient under the statutes to charge the bank with liability. FACTS: Subject checks were deposited in various banks and then, forwarded by said banks to drawee bank for payment. 5 of the checks were not returned by the drawee bank to the forwarding banks for more than 2 days. Holder of the checks sued the drawee bank for payment on the theory that its failure to return the checks within 24 hrs after receipt thereof constituted acceptance. The trial court ruled in favor of drawee bank, saying that mere retention of the checks unaccompanied by its refusal to return them, was not acceptance ISSUE: WON failure to return the checks to the holder or the collecting bank within 24 hrs amounts to acceptance HELD: Yes. The drawee to whom a bill is delivered for acceptance is deemed to have accepted it under Section 137 where: 1. he destroys it; 2. where he refuses within 24 hrs after delivery to return the bill accepted or non-accepted to the holder; and 3. where he refuses within such other period as the holder may allow to return the bill accepted or non-accepted to the holder. Whether a demand from the holder for the return of the bill, and a refusal on the part of the drawee, are conditions precedent to an acceptance No prior demand from holder is required because to require so is not to the convenience or interest of the holder. The manifest purpose in requiring prompt return of the bill is in the interest of and for the protection of the holder If this section had in view the protection of the holder, then it was evidently the intention of the legislature that the non-return of the bill within the specified time, regardless of the cause, will make the drawee an acceptor CAB: The drawee bank, having failed to return the 5 checks to the collecting bank within 24 hrs after delivery, is deemed to have accepted the checks, and is therefore, liable for their amount.
a.
CONSTRUCTIVE ACCEPTANCE The drawee has 24 hrs

after presentment to determine whether to accept the bill or not. o 24 hr-period is counted from time of delivery If check is returned unaccepted within 24 hrs = not dishonored since drawee still has the remainder of the period to accept or dishonor If check is returned and fails to accept within the remainder of the 24 hrs = dishonored If check is returned with statement of refusal = dishonored If drawee destroys the check instead of returning or accepting = deemed accepted (Sec 137) unless the destruction is accidental If the bill is delivered to the drawee who destroys the same If the drawee does not return the bill, accepted or non-accepted within 24 hrs (24-hr rule) or such time allowed by holder o Sec 137 NIL uses the word refuses which clearly implies a demand for the return of the bill. o Mere failure to return on time is not acceptance; Sec 150 provides if no acceptance is given within the prescribed time, the bill is deemed dishonored
URWILLER V. PLATTE VALLEY STATE BANK 164 Neb. 630, 83 N.W. 2d 88 (1957)
Subject: Check Drawer: Ira McCord Drawee: Platte Valley State Bank Payee: Norton Urwiller
WEISNER V. FIRST NATL BANK OF GALLITZIN 220 Pa. 21, 68 Atl. 955 (1908)
Subject: 6 Checks Drawer: Samuel Bullock
Drawee: First National Bank of Gallitzin Payee: Charles Gallaer or order Holder: Wisner
FACTS: As payment for his purchase of hogs, McCord issued to Urwiller a check for P2,491.11. The next day, Urwillers wife
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deposited the check to Ravenna Bank. The bank then forward it for collection in the usual course of business through regular channels, The check was received in a cash letter during business hours on Saturday, Dec 12, 1953. The check was proofed on the day it was received and posted for action on the following business day, which was Monday. On Monday it was decided not to pay the check, but mark it for 'return,' because the drawer thereof did not have sufficient funds on deposit in his account with PVSB. Actual return was not made to the Federal Reserve Bank until Wednesday. This delay was caused by the fact that bank examiners came and assumed control of all the records of the bank, including cash items, on Mon morning. Urwiller was advised by the Ravenna bank late Thurs afternoon, of the fact that payment of the check had been refused although the check was not actually returned to him until Saturday. The check has never been paid. ISSUE: WON retention of a check by a drawee bank for more than 24 hours after it is presented to it for payment constitutes an acceptance of the instrument so that the drawee bank is bound to pay it HELD: No. A drawee is allowed 24 hrs after presentment in which to decide whether or not he will accept the bill. Where a drawee to whom a bill is delivered for acceptance destroys the same or refuses within 24 hrs after such delivery or within such other period as the holder may allow, to return the bill accepted or nonaccepted to the holder, the drawee will be deemed to have accepted the same (Sec 137). It will be noted that this Section applies when a bill is delivered for acceptancenot payment. Presentment for payment and presentment for acceptance are two different acts well known to the law of negotiable instruments. The difference between the object and effect of presentation for these respective purposes is very marked. Payment extinguishes the debt and puts an end to the paper evidencing the same, while acceptance has the very opposite effect. It creates a new liability upon the part of the acceptor, and gives new life to the instrument. In absence of statutory right, holder would be left to his common law rights, for either breach of contract or for tortious breach of duty, by drawee bank which had refused payment on grounds of insufficiency of funds in drawer's account.
SUMCAD V. PROVINCE OF SAMAR 52 O.G. 18, 7582 (1956)

Subject: Check for P25,000 Drawer: Province of Samar Drawee: PNB Payee: Paulino Santos Subsequent Indorsements: Santos indorsed the check to James McGuire then transferred to Sumcad FACTS: McGuire presented the check to municipal treasurer of Borongan for payment, the latter did not pay or did not choose to pay. McGuire wrote letters to the Bureau of Posts seeking payment for check. Director of the Bureau of Posts referred to PNB. (Note: McGuire did not present check directly to PNB.) PNB requested photostatic copies of the check which were received by bank. At this time, Province of Samar still had P84,287.47. McGuire requested the Bureau of Post to expedite compliance with the requirements of PNB so he can encash the check. Before the check could be certified, Province of Samar already withdrew from their PNB account P83,504.07 leaving only P743.43. Sumcad (MGuires assignee) et al were not able to encash check so they sued Province of Samar and PNB. PNB was held solidarily liable with Province of Samar. ISSUES: 1. WON PNB constructively accepted to assume the obligation 2. WON PNB is solidarily liable HELD: FIRST ISSUE: Yes. When PNB requested photostatic copies of the check from the Bureau of Posts and McGuire to present check to provincial treasurer and provincial auditor for certification, it voluntarily assumed the obligation of holding so much of the deposit of the province of Samar as would be sufficient to cover the amount of the check, or
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before allowing the withdrawal that exhausted said deposit, of making the necessary inquiry on the matter. It would be an empty gesture if the appellant did not mean to assume the obligation of paying the check and holding sufficient deposit of the drawer for the purpose. SECOND ISSUE: PNBs liability is only subsidiary to that of the Province of Samar which is primarily liable thereon. J. PADILLA, DISSENTING: PNB should not be liable at all. When it requested the Bureau of Posts to furnish it with photostatic copies of the check, it only means that the original check was not presented to it for payment! The act of requesting did not create an obligation on the part of PNB. b. Randall, and endorsed by him to Payson. Coolidge wrote to Corthwaite stating that, since there is no seal to any of the signatures, it is necessary to ascertain the legality of the scrolls. Coolidge wrote to its friend, William, who was to determine whether the draft was to be honored. William replied, approving the bond. Cornthwaithe called on Williams to inquire whether he had satisfied Coolidge respecting the bond. Williams stated the substance of the letter he had written, and read to him a part of it. Payson also called on him to make the same inquiry, to whom he gave the same information and also read the letter he had written. 2 days later, a bill was drawn by Cornthwaite and paid to Payson in part of the protested bill of $2,700.it was presented to Coolidge, who refused to accept it. ISSUE: WON Coolidge is deemed to have accepted the bill, hence liable to Payson HELD: Yes. A promise to accept a bill amounts to an acceptance to a person who has taken it on the credit of that promise, although the promise was made before the existence of the bill, and although it is drawn in favor of a person who takes it for a preexisting debt Upon a review of several cases, the court holds that a letter written within a reasonable time before or after the bill of exchange, describing it in terms not to be mistaken, and promising to accept it, is if shown to the person who afterwards takes the bill on the credit of the letter, a virtual acceptance binding the person who makes the promise. c.
ACCEPTANCE ON A SEPARATE INSTRUMENT An

acceptance is valid even if it is not written on the same instrument, e.g. letter or telegram. o Acceptance may be on an existing bill or a future bill: (1) Extrinsic acceptance acceptance on an existing bill; acceptance may be conditional (2) Virtual acceptance acceptance on an future bill; acceptance must be unconditional o To be valid, such acceptance must identify the bill to which the acceptance and must be clear and unequivocal o Sec 134 requires that the acceptance be shown and purchaser take the take the bill for value on the faith of such acceptance Effect: Subsequent holders acquire the rights of the relying party from whom they take the NI, applying Sec 58 and 49 NIL
COOLIDGE V. PAYSON 2 Wheat. 66, 4 L. Ed. 185 (1817)

Drawer: Cornthwaite & Cary Drawee: Coolidge & Co Payee: John Randall Indorsee: Payson & Co FACTS: Coolidge held proceeds of the cargo of the Hiram, claimed by Cornthwaite. Corthwaite executed bonds of indemnity with scrolls instead of seals, and drew on them for $2,700, payable to
KINDS OF ACCEPTANCE
(1) General acceptance Sec 140 provides that an acceptance to pay at a particular place is a general acceptance UNLESS it expressly states that the bill is to be paid there only and not elsewhere (2) Conditional acceptance If any of the following are present: (a) Conditional i.e., which makes payment by the acceptor dependent on the fulfillment of a condition (b) Partial i.e., acceptance only to the part of the anount
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(c) Local i.e., acceptance to pay ONLY at a particular place (d) Qualified as to time (e) Acceptance of some one or more of the drawees but not all d. (4) Travelers check NI upon which holders signature must appear twice on the instrument: first when issued and again, when cashed
TRADE ACCEPTANCE Draft or bill of exchange with a

definite maturity, drawn by seller or buyer for the purchase of goods, bearing across its face the acceptance of the buyer o Generally limited to domestic transactions
REPUBLIC V. PNB 3 SCRA 851 (1961)

FACTS: Republic filed a complaint for escheat of certain unclaimed bank deposit balances against several banks under Act. 3936 which provides that unclaimed balances (which includes credits or deposits of money, bullion, security and other evidence of indebtedness of any kind + interest) in favor of persons not heard from for 10 years or more, with the increase and proceeds thereof, shall be deposited with the Insular Treasurer to the credit of the Phil. Government. Among these banks was the First National City Bank of New York who argued that some of its credits did not fall within the purview of the Act. The court held that cashiers checks and demand drafts fall under the Act but upon MFR changed its view and excluded drafts, hence this appeal. ISSUE: WON demand drafts create a creditor-debtor relationship between drawee and payee, thus falling within the meaning of credits in Act. 3969 HELD: No. A demand draft is not of the same category as a cashiers check which should fall under the Act. In banking terminology, the term bank draft is used interchangeably with a bill of exchange. A bill of exchange under the NIL (Sec 127) does not operate as an assignment of funds in the hands of the drawee who is not liable on the instrument until he accepts. In fact, the law requires presentment within a reasonable time or else the drawer is discharged from liability. Since it is admitted in this case that the drafts in question were never presented either for acceptance or payment, appellee bank never became a debtor of the payees, hence the drafts never became credits under the Act. Drafts must however be distinguished from cashiers checks, which is simply a bill of exchange drawn by the bank on itself; it is equivalent to a certified check and its
e.
BANKERS ACCEPTANCE Negotiable time draft or bill of

exchange drawn on and accepted by a commercial bank o Generally used for international trade e.g., financial, import-export transactions o Used when buyer and seller are not known to each other; acceptance substitutes the banks credit for the unknown firm o Effect: Accepting bank is unconditionally and irrevocably liable to pay holder at maturity. Drawer and indorsers are subsidiarily liable
f.
CHECKS An instrument which is in the form of a bill of exchange but is always payable on demand and always drawn on a bank Elements: (1) Contain an unconditional order (2) For payment of money (3) Amount of which is definite and certain (4) May be transferred by indorsement or by delivery depending if payable to bearer or to order Kinds of checks: (1) Personal checks most common form (2) Managers (cashiers) check drawn by a bank itself and has the effect of acceptance. It is more like a promissory note; as such bank is primarily liable (3) Memorandum check check where the word memorandum or memo is written across its face meaning that the drawer will pay the holder absolutely, without need of presentment
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deposit passes to the credit of the holder who then becomes a depositor of that amount. on the requirement of a return, the office of which is merely to inform the court and the parties, of any and all actions taken under the writ of execution. Where such information can be established in some other manner, the absence of an executing officer's return will not preclude a judgment from being treated as discharged or being executed through an alias writ of execution as the case may be. SECOND ISSUE: Yes. GENERAL RULE: Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive it (Art 1240) EXCEPTION (under peculiar circumstances like in this case): NO a. Unless authorized to do so by law or by consent of the obligee, a public officer has no authority to accept anything other than money in payment of an obligation under a judgment being executed. Strictly speaking, the acceptance by the sheriff of the petitioner's checks, in the case at bar, does not, per se, operate as a discharge of the judgment debt. Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment (Sec 189, Act 2031 on NI; Art. 1249 NCC) A check, whether a manager's check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor. Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended until the payment by commercial document is actually realized (Art 1249 par 3). b. It is argued that if PAL had paid in cash to Sheriff Reyes, there would have been payment in full legal contemplation. The reasoning is logical but is it valid and proper? Logic has its limits in decision making. We should not follow rulings to their logical extremes if in doing so we arrive at unjust or absurd results. c. PAL was negligent. Making the checks payable to the judgment creditor would have prevented the encashment or
PAL V. COURT OF APPEALS G.R. NO 49188 (1990)

FACTS: CFI of Manila rendered judgment in favor of Tan and against PAL. PAL appealed and the amount of damages was lowered to a total of P30, 000.00. The judgment became final and executory there being no further appeal taken. Tan filed a motion for the issuance of a writ of execution of the judgment. Judge Galano issued its order of execution and it was duly referred to Deputy Sheriff Emilio Z. Reyes. Four months later, Tan moved for the issuance of an alias writ of execution stating that the judgment remained unsatisfied. PAL filed an opposition stating that it had already fully paid its obligation to Tan through the deputy sheriff Reyes as evidenced by cash vouchers properly signed and receipted by Sheriff Reyes (PAL issued a check amounting to P30,000.00 in the name of Sherriff Reyes and not in the name of Tan). However, Sherriff Reyes encashed the check but failed to surrender the amount to Tan. He, instead, absconded. Judge Galano granted Tans Motion for Alias Writ of Execution and directed Special Sheriff del Rosario to levy on execution. Consequently, Del Rosario served a notice of garnishment on the depository bank of PAL. ISSUES: 1. WON an alias writ of execution be issued without a prior return of the original writ by the implementing officer 2. WON payment of judgment to the implementing officer as directed in the writ of execution constitutes satisfaction of judgment HELD: FIRST ISSUE: Yes. Technicality cannot be countenanced to defeat the execution of a judgment for execution is the fruit and end of the suit and is very aptly called the life of the law. A judgment cannot be rendered nugatory by the unreasonable application of a strict rule of procedure. Vested rights were never intended to rest
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the taking of undue advantage by the sheriff, or any person into whose hands the checks may have fallen, whether wrongfully or in behalf of the creditor. The issuance of the checks in the name of the sheriff clearly made possible the misappropriation of the funds that were withdrawn. Bautista, in an Urgent Motion, prayed that the sum covered by the PNB check be delivered to and kept by the clerk of court until such time as all incidents relative to the validity of the auction sale were finally resolved. Sheriff notified the petitioners' counsel of the deposit of the PN check. Counsel told the check that he was rejecting the check as it was not legal tender. Respondent court held that NSC's redemption was absolute and unconditional in view of its refusal to join Bautista in contesting the validity of the sale. However, the validity of the redemption was dependent on the validity of the certificate of sale, which still has to be resolved by the trial court ISSUE: WON the payment by check of draft is sufficient to compel redemption HELD: Yes. In the US, it has been held and recognized that a payment by check or draft or bank bill or currency which is not legal tender is effective if the officer accepts such payment. If in good faith, the redemptioner pays, and the officer receives before the expiration of the time of redemption, an ordinary banker's check, the payment is regarded as sufficient. The Court does not, by this decision, sanction the use of check for the payment of obligations over the objection of the creditor. It is just that a check may be used for the exercise of the right of redemption, the same being a right and not an obligation. The tender of a check is sufficient to compel redemption but it is not in itself a payment that relieves redemptioner from his liability to pay the redemption price. While the private respondents have properly exercised their right of redemption, they remain liable for the payment of the redemption price.
FORTUNADO V. COURT OF APPEALS 196 SCRA 269

FACTS: In a civil case, the RTC rendered judgment ordering Angel Bautista to pay damages to Alfero Fortunado. Pursuant to said judgment, the Sheriff levied upon 2 parcels of land registered in the name of Bautista, but 1 of the said parcels of land was already sold to the National Steel Corporation (NSC). The properties were sold to the petitioner as the only bidder in a public auction. NSC then gave notice to the sheriff of its intention to redeem the property it owned. The sheriff suggested as the 2 lots were sold together that both of them should be redeemed. NSC filed with the trial court an urgent motion to redeem, which was opposed by the petitioners on the ground that the movant did not have the personality to intervene. As the motion remained unresolved, the NSC issued to the sheriff a PNB check for the properties. Bautista sent the sheriff a letter bearing NSC's conformity in which he availed himself of SC's check to redeem the properties. His letter contained the ff reservation: This redemption is made solely for the purpose of effecting the execution and delivery to me of the necessary certificate of redemption and the same shall not be taken to mean my acknowledgment of the validity of the said writ of execution and sale, both of which I shall continue to contest, nor shall this be taken to mean as a waiver on my part of the legal rights and remedies available to me under the circumstances. Sheriff issued the certificate of redemption in favor of NSC and Bautista. Bautista later on wrote to the sheriff that he would no longer effect the redemption because there was nothing to redeem, the auction sale being null and void.
MESINA V. INTERMEDIATE APPELLATE COURT 145 SCRA 499 (1986)

FACTS: Jose Go purchased from Associated Bank a cashiers check worth P800,000. Accidentally, he left the check on top of the desk of the bank manager when he left the bank. The bank manager
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entrusted the check for safekeeping to bank official, Albert Uy, who then had a visitor, Alexander Lim. Uy had to answer a telephone call, then he went t the mens room. When he returned to the desk, his visitor Lim was already gone and so was the check. When Jose Go returned to the bank, the check was nowhere to be found. Uy advised Go to accomplish a stop payment order. Go also executed an affidavit of loss. Uy also went to the police station to report the loss, pointing to Alexander Lim as the one who could shed light on it. Associated Bank received the lost check 2 days after for clearing, coming from Prudential bank. The check was immediately dishonored by Associated Bank and returned to Prudential with the words, Stop Payment. The check was again returned to Associated Bank and for the 2nd time, it was dishonored. Several days later, Associated Bank received a letter from Atty. Lorenzo Navarro demanding payment for the check and threatened to sue. He refuses to reveal who his client is. Unsure with what to do with the matter, Associated Bank filed for an Interpleader. The client turned out to be one named Mesina. He said the check was paid to him by Alexander Lim in a certain transaction but refused to elucidate further. Mesina filed a complaint for damages. The rendered a decision on the interpleader ordering Associated Bank to replace Jose Gos check or pay its cash equivalent. Mesinas complaint on the other hand was dismissed. The issue in that case is who between Mesina and Go are entitled for the payment of the check. Since this issue had been resolved in the other case, it has become moot and academic ISSUE: WON the lower courts ruling in the interpleader case should be set aside. HELD: No. Mesina invokes theories on causes and effects ofa cashiers checks such as 1) it cannot be countermanded in the hands of a holder in due course and 2) a cashiers check is a bill of exchange drawn by the bank against itself. But these are general principles which cannot be aptly applied to the case at bar without considering other things. Mesina failed to substantiate that he is a holder in due course. He refused to say how and why the check was passed to him. He therefore had notice of the defect of his title over the check from the start. Next, the check was bought by Jose Go from the bank for purposes of transferring his bank from Associated Bank to a nearby bank, thinking that carrying a check would be safer than carrying cash; it was not issued in payment of an obligation. The check was Jose Gos property when it was misplaced or stolen. Bank was therefore liable to no one else but Jose Go. When the payment was stopped, it was not the bank who did it but Jose Go. The bank could not be the drawer and drawee for clearly, Jose Go owns the money it represents and he is therefore the drawer and drawee in the same manner as if he has a current account and he issued a check against it. No one outside Jose Go can be termed a holder in due course because Go had not indorsed it in due course. NOTE: Clear implication from the case is that if Mesina had been a holder in due course, the court would have granted recovery. (a) Certification and its effects Under Sec 187, certification of a check by a bank is equivalent to acceptance. Certification is an agreement by which the bank promises to pay the check at any time it is presented for payment Prior to certification = bank is not liable to holder (no privity) Certification must be in writing; may be made on the check or on another instrument Refusal to certify is NOT equivalent to dishonor Effects: Certification at the request of holder = bank is solidary debtor and drawer and indorsers are discharged. Stop order by drawer is void Certification at the request of the drawer = secondary parties are not released from liability. Stop order from drawer prevents payment
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Sec 188 applies only to indorsers at the time of certification and cannot be deemed to operate as a release of subsequent indorser Effect: A bank who certified a check makes the same warranties as an acceptor under Sec 62 been set apart for its satisfaction, and that they shall be so applied whenever the check is presented for payment. The object of certifying a check as to both parties is to enable the holder to use it as money. CAB: The present case is an except to Sec 63 Central Bank Act
NEW PACIFIC TIMBER & SUPPLY CO V. SENERIS 101 SCRA 686 (1980)
Subject: Equitable Banks cashiers check for P50,000 dated January 3, 1975 Drawer: New Pacific Timber FACTS: New Pacific failed to comply with his judgment obligation. Judge issued writ of execution for P63,130 to which the Sheriff levied upon personal properties and set the auction sale on January 15. Prior to the scheduled sale, New Timber deposited with the Clerk of Court the P50,000 check and P13,130 in cash. Seneris refused to accept check and cash. Sheriff proceeded with the auction sale. ISSUE: WON Seneris can validly refuse acceptance of the payment of the judgment obligation made by New Timber, consisting of the Cashiers check and cash. HELD: Yes. Sec 63 of Central Bank act provides that checks representing money are not considered legal tender and acceptance is at the option of the creditor. However, a check that has been cleared and credited to the account of the creditor is equivalent to delivery of cash. What was issued is a cashiers check from a bank of good standing and reputation. It is a well-known and accepted practice in business that a cashiers check is deemed as cash. Moreover, since the check had been certified by the drawee bank, by the certification, the funds represented by the checks are transferred from the credit of the maker to that of the payee or holder, and for all intents and purposes, the latter becomes the depositor of the drawee bank, with rights and duties of one in such situation. The certification is equivalent to acceptance. Said certification implies that the check is drawn upon sufficient funds the hands of the drawee, that they have
WACHTEL V. ROSEN 249 N.Y. 386, 164 N.E. 326 (1928)

FACTS: Plaintiff received from Arthur Wachtel a check drawn on National Park Bank which plaintiff presented to said bank for certification. The bank refused to certify the check. ISSUE: WON the refusal of the drawee bank to certify the check is equivalent to a dishonor of the check such that holder may sue the drawer as if the check was presented for payment and payment had been refused HELD: No. The general rule is that a check is of right presentable only for payment, and that the bank is under no obligation to certify, although it may do so. When a bank certifies a check at the request of the holder, a new obligation is created. Under Sec 324 324, the drawer and all the endorsers are discharged from liability if the check is accepted or certified. The acceptance of a bill of exchange, on the other hand, does not discharge the liability. The certification differs in effect from mere acceptance of bills other than checks, in that it is not an added obligation but a substitute obligation. Certification of the check by the bank is equivalent to payment. The bank in this case may not be prepared to substitute itself with the drawer.
ROMAN CATHOLIC BISHOP OF MALOLOS V. IAC G.R. NO 7211 (1990)

FACTS: Plaintiff sold a parcel of land to Robes-Francisco Realty and Devt Corp for P123,930. The contract stipulated a down payment of P23,930 and the balance shall be paid per annum within 4 years plus interest. The contract likewise provides for cancellation, forfeiture of previous payments, and reconveyance of
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the land in question in case Robes-Francisco Realty and Development would fail to complete payment within the said period. After the expiration of the stipulated period for payment, RobesFrancisco wrote Roman Catholic a formal request that her company be allowed to pay the principal amount of P100,000.00 in 3 equal installments of 6 months each with the first installment and the accrued interest of P24,000.00 to be paid immediately upon approval of the said request. Roman Catholic denied the said request of Robes-Francisco, but granted the latter a grace period of 5 days from the receipt of the denial to pay the total balance of P124,000.00, otherwise, the provisions of the contract regarding cancellation, forfeiture, and reconveyance would be implemented. Robes-Francisco protested alleged refusal of the latter to accept tender of payment purportedly made by the former on August 5, 1975, the last day of the grace period and demanded the execution of a deed of absolute sale over the land in question and after which it would pay its account in full, otherwise, judicial action would be resorted to. Roman Catholic refused to execute the deed of absolute sale due to its failure to pay its full obligation. Moreover, Roman Catholic denied that Robes-Francisco had made any tender of payment whatsoever within the grace period. In view of this alleged breach of contract, Roman Catholic cancelled the contract and considered all previous payments forfeited and the land as ipso facto reconveyed. The trial court held in favor of plaintiff. Failure of RobesFrancisco to present in court the certified personal check allegedly tendered as payment or, at least, its Xerox copy, or even bank records thereof is fatal. And Robes-Francisco was found to have insufficient funds to fulfill the entire obligation considering that its president, Atty. Francisco, only had a savings account deposit of P64,840.00, and although the latter had a money-market placement of P300,000.00, the same was to mature only after the expiration of the 5-day grace period. The trial court declared the subject contract cancelled and Robes-Franciscos down payment of P23,930.00 forfeited in favor of Roman Catholic, and dismissed the complaint On appeal, IAC reversed the trial court decision as Robes-Francisco has a total available sum of P364,840 and their disposal on or before August 4, 1975 to answer for the obligation of the Roman Catholic. It was not correct for the trial court to conclude that Robes-Francisco had only about P64,840 in savings deposit on or before August 5, 1975, a sum not enough to pay the outstanding account of P124,000. ISSUES: 1. WON finding that Robes-Francisco had sufficient available funds on or before the grace period for the payment of its obligation is proof that it did tender of payment for its said obligation within said period 2. WON there is legal obligation on the part of Roman Catholic to execute a deed of absolute sale in favor of the Robes-Francisco before the latter has actually paid the complete consideration of the sale where the contract between and executed by the parties stipulates 3. WON an offer of a check is a valid tender of payment of an obligation under a contract which stipulates that the consideration of the sale is in Philippine Currency HELD: FIRST ISSUE: No. A finding that Robes-Francisco had sufficient available funds on or before the grace period for the payment of its obligation does not constitute proof of tender of payment by the latter for its obligation within the said period. Tender of payment involves a positive and unconditional act by the obligor of offering legal tender currency as payment to the obligee for the former's obligation and demanding that the latter accept the same. Thus, tender of payment cannot be presumed by a mere inference from surrounding circumstances. At most, sufficiency of available funds is only affirmative of the capacity or ability of the obligor to fulfill his part of the bargain. But whether or not the obligor avails himself of such funds to settle his outstanding account remains to be proven by independent and credible evidence. Tender of payment presupposes not only that the obligor is able, ready, and willing, but more so, in the act of performing his obligation.
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SECOND ISSUE: No. Although admittedly the documents for the deed of absolute sale had not been prepared, the subject contract clearly provides that the full payment by the private respondent is an a priori condition for the execution of the said documents by Roman Catholic. What Robes-Francisco should have done if it was indeed desirous of complying with its obligations would have been to pay Roman Catholic within the grace period and obtain a receipt of such payment duly issued by the latter. Thereafter, or, allowing a reasonable time, Robes-Francisco could have demanded from Roman Catholic the execution of the necessary documents. In case Roman Catholic refused, Robes-Francisco could have had always resorted to judicial action for the legit enforcement of its right. THIRD ISSUE: No. A certified personal check is not legal tender nor the currency stipulated, and therefore, cannot constitute valid tender of payment as provided under Art 1249 NCC. The first paragraph of Art 1249 provides that "the payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such currency, then in the currency which is legal tender in the Philippines. In PAL v. CA, the SC held that since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment. A check, whether a manager's check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor. CAB: Hence, the tender of payment by Robes-Francisco was not valid for failure to comply with the requisite payment in legal tender or currency stipulated within the grace period and as such, was validly refused receipt by Roman Catholic, the subsequent consignation did not operate to discharge the former from its obligation to the latter. Drawer: Mitchell, as buyer of an oil property Drawee: Allegheny Trust Co Payee: Bulliet, as seller of the the oil property FACTS: Mitchell and Bulliet executed a memorandum of agreement (MOA) over the sale of oil property. The MOA provided that the $5,000 would be given in escrow in evidence of good faith that Mitchell would pay the remainder of the purchase price. In the event of Mitchells failure to pay, the $5.000 would be forfeited in favor of Buillet. Mitchell made sure with Allegheny that it had enough funds. Buillet then sent a telegram to Allegheny inquiring whether it would honor Mitchells check, and the bank replied through wire that it would. Mitchell did not pay the purchase price. Buillet then claimed from Allegheny, but the latter refused to pay because Mitchell had given a stop payment order. Allegheny also insisted that, putting itself in the position of Mitchell, there was no transfer of title as to the property being conveyed as there was failure of consideration, thus it should not be liable to pay since Mitchell itself would not be liable to pay. (In effect, Allegheny invoked the defense available to Mitchell) ISSUE: WON Allegheny is liable for the amount under the circumstances HELD: Yes. The reply of Allegheny that it would honor the check amounted to certification of the bank, thus making it liable. Sec 189 NIL provides that a check does not operate as an assignment of funds unless the drawee bank certifies it. And the bank is not liable to the holder unless and until he accepts or certifies the check. The effect of the banks certifying a check at the request of the holder is to create a new obligation on the part of the bank to that holder, the amount of the check passes to the credit of the holder, who is thereafter a depositor to that amount. The obligation of the acceptor is to pay the instrument according to the tenor of his acceptance. It has been said that an acceptor admits everything essential to the validity of the bill, and on this
BULLIET V. ALLEGHENY TRUST CO 284 Pa. 561, 131 Atl. 471 (1925)
Subject: Check for $5000
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ground he cannot even set up the defense of want of consideration between the parties. obligation under the facts was likewise to make the payment to the indorsee holder Mr. Mack. A check may be certified by the bank at the request of the payee or the holder, when the check is certified at the request of the drawer or maker before it reaches the hands f the payee therein named. When such a certification is made and there is delivery to the payee, under the circumstances and conditions making him a bona fide holder for value, without notice of defects therein then the instrument is beyond recall by the maker as against the payee. He may only do so (recall) if the payee is not a bona fide holder for value but has obtained the check by fraud perpetrated by him upon the maker. CAB: Since Mr. Mack is not a holder in due course, it is necessary to inquire whether the bank by reason of its certification would have been justified in making payment to Mrs. Sutter the payee upon proper presentation of the check by her notwithstanding the service of notice to stop payment by her husband the maker and the disclosure by him to the bank of the conditions upon which the check was obtained by Mrs. Sutters. There is nothing in the case that indicate that Mrs Sutter procured the check by any fraud perpetrated by her to her husband. (b) Distinction between surrender of check upon payment and negotiation The delivery of check by holder to drawee bank upon its payment is not negotiation. Reason: Holder is not transferring title to bank but is merely demanding that the bank discharge its contractual obligation to the holder Signature of drawee bank on such is acknowledgment of receipt of payment of the same Effect: NI is extinguished and becomes a mere voucher If check is deposited by holder to a bank other than drawee bank = indorsement Effect: holder is negotiating check to depositary bank who will collect from the drawee bank through the clearing house
SUTTER V. SECURITY TRUST CO 96 N.J. Eq. 644, 126 a. 435, 35 A.L.R. 938 (1924)
Subject: Checks Drawer: Sutter Drawee: Security Trust Co Payee: Mrs. Sutter Indorser Mack FACTS: Mr. Sutter drew a check in favor of his wife on March 25 1922 in the amount of $1000 for which he procured the certification of drawee Security Trust Co. The check was delivered to his wife in consideration of a certain agreement between them concerning their separation. The wife violated said agreement after the delivery of the check to her. On March 27, 1922 Mr. Sutter requested that payment be stopped upon the check because of Mrs. Sutters violation of their agreement. Mrs. Sutter on the same day went to her brother Mr. Mack and indorsed the check to him and he deposited it in his bank in Philadelphia. On March 30, through the Federal Reserve Bank of Philadelphia, the check was presented to Security Trust Co for payment which was refused on ground of payment stopped. Respondent told Mr. Sutter that the check was in the hands of an innocent third person for value and that unless he indemnified respondent the check would be paid. He refused to indemnify respondent, thus respondent paid the check upon subsequent presentment. Mr. Sutter demanded the payment to him of his alleged balance of $1034.41 which includes the $1000 drawn which was refused except as to balance of $34. ISSUE: WON Security Trust Co was justified in paying the indorsee Mr. Mack the $1000 value of the check HELD: Yes. The Bank was justified and legally called upon to make payment to Mrs. Sutter upon presentation and demand, as against the notice of the maker of the check to stop payment, its
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(c) Clearing of checks Central Bank has a clearing house where representatives of different banks meet every afternoon of every business day o Checks are given to the reps of respective drawee banks where they are examined and cleared o If check as sufficient funds and is not defective = cleared o If defective check or no funds = returned to collective bank the next day lading of the tobacco, were to be delivered to Hyndman upon payment of the bill. The central office of PNB in Manila received the bill and the documents attached and presented the bill to Hyndman, who accepted it. Upon examination of the tobacco, Hyndman notified Picornell that a portion of the tobacco was damaged. Thereafter, Hyndman informed PNB that it refused to pay the bill of exchange because of the noncompliance of the drawer Picornell. ISSUES 1. WON the bank is subject to the defense of partial want of consideration. 2. WON Picornell is not liable on the instrument on the theory that he is merely a commissioned agent. HELD FIRST ISSUE: No. The question whether or not the tobacco was worth the value of the bill, does not concern the plaintiff bank. Such partial want of consideration, if it was, does not exist with respect to the bank which paid to Picornell the full value of said bill of exchange. The bank was a holder in due course, and was such for value full and complete. The Hyndman, Tavera & Ventura company 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 be without consideration, the drawer cannot recover of 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 of a bona fide indorsee. 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 for the accommodation of the drawer.
B. LIABILITY OF SECONDARY PARTIES The parties

secondarily liable are the drawer and indorser. They cannot be liable unless the check was presented and subsequently dishonored. 1.
LIABILITY OF DRAWER The liability of drawer is

conditional; he is liable only if the following conditions are present: a) Presentment b) Dishonor of NI; and c) Taking of the necessary proceedings for dishonor 1) Protest for foreign bills 2) Notice of dishonor o Drawer WARRANTS: 1) Existence of payee 2) Payees capacity to indorse the NI at the time of its issuance
PNB V. PICORNELL 46 PHIL 716 (1922)

Subject: Bill of Exchange Drawer: Picornell Drawee: Firm of Hyndman, Tavera & Ventura Payee: PNB FACTS: A bill of exchange was drawn by Picornell in favor of PNB against the firm of Hyndman, Tavera & Ventura, succeeded by J. Pardo de Tavera. Said bill of exchange was for the amount obtained by Picornell for the purchase of some bales of tobacco in Cebu on the instructions of his principal, Hyndman, Tavera & Ventura. This instrument, together with the invoice and bill of
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SECOND ISSUE: No. As to 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. (Sec. 61, Negotiable Instruments Law.) The fact that Picornell was a commission agent of Hyndman, Tavera & Ventura, 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 Hyndman, Tavera & Ventura. 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 (Sec 20 NIL). Concerning the notice to Picornell of the dishonor of the bill, it appears from Exhibit C, which is the protest for the non-payment thereof, that a copy of such protest was sent by mail in good season addressed to Picornell, the presumption, now conclusive, that the latter received it (Ses. 105-106, NIL), not having been rebutted, or at least, contradicted. Upon the non-payment of the bill by the drawee-acceptor, the bank had the right of recourse, which it exercised, against the drawer (Sec 84). CAB: The drawee, the Hyndman, Tavera & Ventura, or its successors, J. Pardo de Tavera, accepted the bill and is primarily liable for the value of the negotiable instrument, while the drawer, Picornell, is secondarily liable. Embassy check signed by Luis M. Gonzales, its ambassador and by said Virginia Boncan as Finance Officer, dated October 31, 1968 in the sum of US$10,109.10 payable to Azucena Pace and drawn against the PNB branch in New York, U.S.A. The check was endorsed by Azucena Pace and Virginia Bonca. The petitioner, without clearing the check with the drawn bank in New York, U.S.A., paid the full amount of US$10,109.10 to Virginia Boncan; that on November 2, 1968, Virginia Boncan in the sum of US$35,000.75 dated November 2, 1968 payable to Virginia Boncan and drawn against the PNB New York.; that the petitioner paid the full amount of the check to Virginia Boncan without clearing said check with the drawee bank. Upon presentment for acceptance and payment of the aforementioned checks by Banco Atlantico through its collecting bank in New York, U.S.A. to the drawn bank, the Philippine National Bank branch in U.S.A., said drawee bank dishonored the checks by non-acceptance allegedly on the ground that the drawer had ordered payments to be stopped; that upon receipt of the notice of the dishonor, the collecting bank (PNB New York) sent individual notices of protest with respect to the checks in question to the Philippine Embassy in Madrid, Spain and to Virginia Boncan as endorser payee that Virginia Boncan and the Philippine Embassy in Madrid, Spain refused to pay the petitioner the amounts of the aforementioned checks. ISSUE: WON the Philippine Embassy in Madrid is liable, as drawer of the 3 checks in question HELD: No. It is apparent that the said 3 checks were fraudulently altered by Virginia Boncan as to their amounts and, therefore, wholly inoperative. No right of payment thereof against any party thereto could have been acquired by the petitioner. The petitioner paid the amounts of the 3 checks in question to Boncan without previously clearing the said checks with the drawee bank, PNB. This is contrary to normal or ordinary banking practice specially so where the drawee bank is a foreign bank and the amounts involved were large. The drawer of the aforementioned checks was not even a client of the petitioner. There is a showing that Virginia
BANCO ATLANTICO V. AUDITOR GENERAL 81 SCRA 335 (1978)

Subject: Phil Embassy check for US$10,109.10 Drawer: Gonzales (Ambassador) and Boncan (Finance Officer) Drawee: PNB New York branch Payee: Azuecena Pace Indorsee: Banco Atlantico Madrid FACTS: Boncan, then the Finance Officer of the Philippine Embassy in Madrid, negotiated with Banco Atlantico a Philippine
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Boncan enjoyed special treatment from the employees and chiefs of the petitioner's foreign department. It was probably because of this special relationship that the petitioner cashed the 3 checks in question without prior clearances from the drawee bank. SEC. 52. What constitutes a holder in due course A holder in due course is a holder who has taken the instrument under the following conditions: a. That it is complete and regular on its face; b. That he became the holder of it before it was overdue, and without notice that it has been previously dishonored, if such was the fact; c. That he took it in good faith and for value; d. That at the time it was negotiated to him he had no notice of infirmity in the instrument or defect in the title of the person negotiating it. All four conditions enumerated under this section must concur before a holder can be considered as a holder in due course. The absence or failure to comply with any of the conditions set forth under this section will make one's title to the instrument defective. CAB: The check for US$90,000.00 was a demand note. When Miss Boncan the payee of this check, negotiated the same by depositing it in her account, at the same time informing the bank in writing (copy of her letter is enclosed for ease of reference) that it be not presented for collection until a later date, Banco Atlantico through its agent teller or cashier should have been put on guard that there was something wrong with the check. The fact that the amount involved was quite big and it was the payee herself who made the request that the same not be presented for collection until a fixed date in the future was proof of a glaring infirmity or defect in the instrument. It loudly proclaims, "Take me at your risk." The interest of the payee was the immediate encashment of the check of which she was the beneficiary and not the deferment of the presentment for collection of the same to the drawee bank. This being the case, Banco Atlantico was not a holder in due course as defined by Sec. 52 of NIL, because it was obvious that it had knowledge of the infirmity or defect of the check. The fact that the check was honored by claimant bank was proof not only of their gross negligence but a further manifestation of the special treatment they were according Miss Boncan.
McCORNACK V. CENTRAL STATE BANK 211 N.W. 542, 53 A.L.R. 1297

Drawer: McCornack Drawee: Central State Bank Payee: C.R. Kutsman (fictitious person) FACTS: Halverson gained the confidence of McCornack and represented to him that he had a client who wished to borrow money to be secured by mortgage on land, and so McCornack consented to make the loan. Halverson delivered to McCornack a note purporting to be signed by CR Kutsman and secured by a mortgage. McCornack signed a check for $1,005.50 which he gave to Halverson. Halverson indorsed the name Kutsman and his own name on the check and deposited it in his account. The check was paid on presentation to Central State Bank and the amount charged to the account of McCornack. Later it was discovered that the note and the mortgage were forged instruments and no Kutsman in fact existed. Halverson, by like fraudulent means, obtained other checks from McCornack. McCornack sued to recover, as for a conversion, the amount paid by the bank and charged against its (McCornack) account. Court decided in favor of McCornack. Defenses of drawee bank: 1. Check paid to person to whom McCornack intended payment to be made 2. The bank was not guilty of negligence 3. McCornack was negligent in making the check in that he failed to ascertain that the payee was a fictitious person 4. By accepting without objection the statement of their bank account with the check in question cancelled and charged against it, there was account stated, and the plaintiffs were thereby estopped to claim that the check was improperly paid 5. By failing to notify the bank within 6 months after receiving such statement of the alleged irregularity in the payment of the check, the claim was barred by the statute of limitations 6. McCornacks were guilty of negligence in not sooner notifying the bank of the alleged error in the payment of the check, for the reason that they knew, or should have known, that Halverson was receiving the proceeds of checks turned over to him under similar circumstances, and so received the
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proceeds of the check in question, thereby causing loss to the bank. ISSUE: WON Central State Bank (drawee) is liable HELD: Yes. A check payable to the order of a fictitious person with the knowledge of the drawer is payable to bearer. But where the fact that it is payable to a fictitious person is unknown to the drawer, that bank upon which it is drawn, or paying it, is in no different position than where it pays a check payable to a real party upon a forged instrument. McCornack did not know that the payee was fictitious; the check was not, therefore, payable to bearer, and the bank cannot escape liability on that ground. Where an impostor represents himself to be another, whether the person whom he so impersonates be a real or fictitious person, and procures a check payable to the order of such person, the bank is protected in paying the check to the impostor, because it made payment to the person to whom the drawer intended it should be made, no matter what name he assumed. But where one represents himself to be the agent of a fictitious person and fraudulently procures the delivery to himself of a check payable to the order of such fictitious person as payee, and secures the payment of the check to himself by indorsing the name of the fictitious payee upon it, in the absence of estoppel or negligence on the part of the drawer, the loss must be borne by the drawee and not by the drawer. The bank in paying the check was bound to know at its own risk that the indorsements by which the holder of the check claimed title were genuine. Its liability for payment not in accordance with the direction of the drawer did not depend upon negligence, but upon a violation of its implied contract with its depositor. The question WON the bank was negligent is immaterial upon the naked and primary question of its liability for having paid a check upon a forged indorsement. Here, the check was paid by the bank without inquiry as to the indorsement of Kutsman. McCornack was not negligent. There is no showing that anything had come to his knowledge respecting Halverson to put him upon inquiry as to his honesty. Moreover, McCornacks failure to ascertain that the payee of his check was a fictitious person did not induce or contribute to the payment of the check by the bank. The drawer of the check, who, through failure to discover the fraud that is being practiced upon him, makes a check payable to the order of a fictitious payee in ignorance of that fact, stands in the same position with reference to the bank upon which it is drawn as where his check is payable to the order of a real person. His negligence in so drawing the check is immaterial unless directly and proximately affects the conduct of the bank in paying the check. On Sec 9521 of Code 1924 (Sec 61 NIL): This provision would seem to be, not for the benefit of the drawee, nor designed to relieve the drawee of the duty to pay out the drawers money in accordance with his order, but for the protection of holders of the paper in case the drawee refuses to pay. It provides, not only that the drawer admits the existence of the payee and his capacity to indorse, but that he engages that upon dishonor and the necessary proceedings thereon he will pay the amount to the holder or any subsequent indorser who may be compelled to pay it. There is here no engagement to pay the amount to a drawee who has honored the check. When the payee is a fictitious person and this is unknown to the drawer the statute does not have the effect to bind the drawer by an indorsement of the name of the payee by one to whom he did not intend payment to be made. If the drawee demanded a genuine indorsement, as it was its duty to do before honoring the check, since there could be no such thing in the case of a fictitious payee, the check would not have been honored. In such case, an innocent holder, upon taking proper steps, would have been protected by Sec 9521. The purpose of that section was to protect the innocent holder of dishonored paper-not the drawee who paid it in violation of duty. a.
CRIMINAL LIABILITY FOR BOUNCING CHECKS (BP 22)

If check is dishonored of insufficient funds, the drawer may be held civilly liable (under NIL) and criminally liable under BP 22. o Purpose: To prevent increase in the number of worthless checks issued by unscrupulous persons
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causing prejudice to the banking system and to the flow of business and trade Acts punishable: 1) Making, drawing or issuing a check knowing at the time of issue that the drawer has no sufficient funds/credit with the drawee bank knowledge of insufficient funds is essential 2) Failure to keep sufficient funds to cover the check for 90 days from date of check drawing and issuance of said check is prima facie evidence of drawers knowledge of insufficient funds EXCEPT if Drawer pays holder the amount of the check within 5 banking days after notice of dishonor or makes arrangement for payment in full by the drawee (same period) Payment within 5 banking days does not remove criminal liability To dishonor check = write reason for dishonor in the check and in the notice of dishonor (prima facie evidence of issuance, due presentment and dishonor of check) If check is presented after 90 days and dishonored = no criminal liability Check is presented on account or for value o o If the check was issued in payment of pre-existing debt, there is NO estafa Offender must be able to obtain something from the offended party by means of the check he issues and delivers (for value or consideration) If postdating a check issued as mere guarantee/promissory note, there is NO estafa
LOZANO V. MARTINEZ 146 SCRA 323 (1986)

FACTS: Petitions arose from cases prosecuted under BP 22 or the Bouncing Checks Law. Defendants in these cases moved to quash the informations filed against them on ground that BP 22 is unconstitutional. Arguments against the constitutionality of BP 22: 1. It offends the constitutional provision on non-imprisonment for debt 2. It impairs freedom of contract 3. It contravenes the equal protection clause 4. It is an undue delegation of legislative and executive powers 5. During its passage, the interim Batasan violated the constitutional provision prohibiting amendments to a bill on 3rd reading BACKGROUND ON BP 22: Acts punishable 1. Anyone who makes/draws & issues any check on account or for value, knowing at the time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of said check, in full, upon presentment, which check is subsequently dishonored by the drawee bank for insufficiency of funds/credit or would have been dishonored for the same reason had not the drawer, w/o any valid reason, ordered the bank to stop payment. 2. Anyone who has sufficient funds in or credit with bank when he makes/draws & issues a check but fails to keep sufficient funds or maintain a credit to cover full amount if presented w/in 90 days from date appearing on check resulting to the bank dishonoring the check.
o o b.
ESTAFA UNDER RPC By express provision of BP22,

prosecution of said law is without prejudice to any liability under RPC, particularly Art 315(d) Deceit is necessary Elements 1) Offender issued a postdated check or issued a check in payment of an obligation 2) Such postdating or issuing a check was done when offender had no funds in the bank or his funds deposited therein were not sufficient to cover the amount of the check NOTE: o Good faith is a defense in a charge of estafa by postdating or issuing a check o the drawers failure to cover the issued check within 3 days from notice of dishonor is prima facie evidence of deceit
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Penalty: imprisonment of not less than 30 days nor more than 1 yr or a fine of not less than the amt of the check nor more than double said amount, but it should not exceed P200k or both fine & imprisonment at courts discretion. Essential element: knowledge of the insufficiency of funds. Prima facie presumption of knowledge: when check is refused by bank due to insufficient funds/credit when presented within 90 days from date of the check. Presumption will not arise if within 5 days from receipt of notice of dishonor, the maker/drawer makes arrangements for payment of check by bank/pays the holder the amount of the check. Prima facie proof of dishonor: introduction as evidence of unpaid and dishonored check with drawee banks refusal to pay stamped/written thereon or attached thereto, giving the reason thereof. Purpose of the statute: stop/curb practice of issuing worthless checks due to the injury it causes to the public interests. History of provisions covering bouncing checks: a. Penal Code of Spain Art. 335 penalized act of defrauding another by falsely pretending to possess any power, influence, qualification, property, credit, agency or business or by means of similar deceit. b. 1926, Phil Legislature amended PC Art. 335 penalizing anyone who: 1) issues a check in payment of a debt or for other valuable consideration knowing at the time of its issuance that he does not have sufficient funds in the bank to cover its amount; 2) maliciously signs check differently from his authentic signature as registered at the bank in order that the latter would dishonor it; 3) issues a postdated check & at the date set for its payment doesnt have sufficient deposit to cover the same. c. RPC Art. 315, Par. 2(d) punishes anyone who postdates a check or issues a check in payment of an obligation knowing that at the time he had no/insufficient funds in the bank without informing the payee of such circumstances. However, this provision did not cover checks issued to pay pre-existing obligations since the deceit that causes the defrauding must be prior to d. or simultaneous with the commission of the fraud. In this case, payee already parted with his money/property before the check was issued thus hes not defrauded by means of a prior or simultaneous deceit. Drawer on the other hand did not derive any material benefit in return for checks issuance. Aiming to cover checks issued to pay pre-existing obligations, RA 4885 amended Art. 315 2(d) by removing the requirement of drawers knowledge of insufficiency of funds and by giving the drawer 3 days from receipt of notice of dishonor to deposit the amount necessary to cover the check. Failure to do so would be a prima facie evidence of deceit. But SC ruled in People vs. Sabio that the amended provision still did not cover pre-existing obligations. BP 22 was enacted to cover checks issued to pay preexisting debts, which statistically constituted the greater bulk of dishonored checks.
e.
ISSUE: WON BP 22 is constitutional HELD: Yes. BP 22 is clear and broad enough to cover all kinds of checks whether present or postdated, or whether issued in payment of a pre-existing obligation or given in mutual or simultaneous exchange for something of value. WON it violates the constitutional prohibition on non-imprisonment for debt No. Those who assail the statute claim that the felony is consummated only upon the dishonor/non-payment of check. That it is really a bad debt law rather than a bad check law. It punishes the non-payment of the check & not the act of issuing it. It is a veiled device to coerce payment of a debt under the threat of penal sanction. BP 22 punishes making & issuing a worthless check and not the non-payment of an obligation. It does not intend to coerce a debtor to pay his debt. It is punished because of its deleterious effects on the public interest. It punishes the act not as an offense against property, but an offense against public order. Although the legislature cannot penalize a person for non-payment of a debt ex-contractu, it can proscribe certain acts deemed
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pernicious & inimical to public welfare. It is within the police power of the state (making & issuing of worthless checks is a public nuisance to be abated by the imposition of penal sanctions). Court cannot question its wisdom. Its sufficient that there be a reasonable nexus between the means & end. A check is a convenient substitute for currency in commercial & financial transactions due to the assurance that it will be paid upon presentation. Central Bank reports show that 1/3 of the entire money supply of the country consists of peso demand deposits (funds against which commercial papers like checks are drawn). Considering these facts and that there are approximately 50-80 million pesos worth of bouncing checks per day, we can see that the State has a legitimate purpose in protecting checks. Any practice tending to destroy the confidence in checks should be deterred since it would injure trade & commerce, banking system, the nations economy & eventually the welfare of the society & the public interest. It would be mistaken charity of judgment to place this felony alongside a felony committed by an honest man unable to pay his debts. WON BP 22 impairs freedom of contract. No. The Constitution only protects the freedom to enter into LAWFUL contracts & not those which contravene public policy. Besides, a check is not a contract. Its a commercial instrument used as a substitute for money forming part of the banking system & thus not entirely free from states regulatory power. WON BP 22 denies equal protection of the laws or is discriminatory since it penalizes the drawer of the check but not the payee. No. It would be absurd to punish the person swindled. No sense in talking about swindleds indispensable participation in the commission of the crime. Classification per se is valid as long as it is not unreasonable or arbitrary. WON BP 22 constitutes undue/improper delegation of legislative/executive powers since completion of act is dependent on the will of the payee. No. What cannot be delegated is the power to legislate, or the power to make laws, which means, as applied to the present case, the power to define the offense sought to be punished and to prescribe the penalty. The power to define the crime and prescribe the penalty therefore has not been in any manner delegated to the payee. Nor is the power to enforce the statute delegated to the offended party. WON BP 22 violates Art. VII Sec. 9(2) of the 1973 Consti which prohibits the introduction of the amendments to a bill during the 3rd reading. No. Although there was confusion among Batasan Members regarding this matter, a Special Committee investigated the matter & found that there were actually no amendments introduced during the 3rd reading. Amendment in question was made during the 2nd reading.
PEOPLE V. NITAFAN 215 SCRA 79 (1992)

Subject: Memorandum check dated February 9, 1985 Drawer: KT Lim alias Mariano Lim Drawee: Phil Trust Co Payee: Fatima Cortez Sasaki FACTS: K.T. Lim was charged with violation of BP 22 for the check he issued to Sasaki for P143,000 which was dishonored by drawee for insufficiency of funds. Despite notice of dishonor, Lim did not pay within 5 days. Failing in his argument that BP 22 is unconstitutional, Lim now argues that the memorandum check he issued is in the nature of a PN, hence, outside the purview of the statute. ISSUE: WON a memorandum check is within the coverage of BP 22 HELD: Yes. A memorandum check is in the form of an ordinary check, with the word "memorandum", "memo" or "mem" written across its face, signifying that the maker or drawer engages to pay the bona fide holder absolutely, without any condition concerning its presentment. Such a check is an evidence of debt against the drawer, and although may not be intended to be presented, has the same effect as an ordinary check, and if passed to the third person, will be valid in his hands like any other check. It is still drawn on a bank and should be distinguished from PN. In the business community a PN has less impact and persuadability than a check.
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A memorandum check comes within Sec 185 NIL which defines a check as "a bill of exchange drawn on a bank payable on demand." It must therefore fall within the ambit of BP 22 which does not distinguish but merely provides that "[a]ny person who makes or draws and issues any check A memorandum check, upon presentment, is generally accepted by the bank. It does not matter for whatever purpose it was issued, for the mere act of issuing a worthless check is malum prohibitum. A memorandum check may carry with it the understanding that it is not to be presented at the bank but will be redeemed by the maker when the loan falls due. However, with BP 22, this may no longer prevail to exempt it from penal sanction imposed by the law. To require that the agreement surrounding the issuance of check be first looked into and thereafter exempt such issuance from the punitive provision of BP 22 on the basis of such agreement or understanding would frustrate the very purpose for which the law was enacted --to stem the proliferation of unfunded checks 2. Non-delivery of incomplete NI = not a defense under Sec 65(b) If qualified indorser has knowledge of insolvency of prior parties = liable under Sec 65(d) because he knows the NI is valueless o Lack of consideration of NI = same effect
3.
LIABILITY OF GENERAL INDORSER unqualified

indorser Gen indorser makes 2 contracts: contract of sale of NI and special contract of indorsement Liable as assignor of credit AND also on his indorsement Under Sec 66 warranties of Gen indorser run to all subsequent HDCs = indorse should not have knowledge of breach of warranty at the time of indorsement If NI payable to bearer is specially indorsed = indorser becomes liable under Sec 66 o EXCEPT if holder chooses to strike out the indorsement as not necessary to title When maker issues PN payable to his own order, it is not complete until he indorses it = not the same as indorsement to make him liable under Sec 66 o Such indorsement is merely a step in the issuance of NI so that 1st transferee may become a holder (effect 1st transferee becomes payee) o Liability of maker is still as MAKER When banks require holders of a check to sign at the back = not same as indorsement but mere acknowledgment of receipt of cash paid by drawee bank Bank stamps all prior and/or lack of indorsement guaranteed liable against forgery not because of Sec 66 but because fo express warranty
LIABILITY OF QUALIFIED INDORSER A qualified

indorsement is made by adding the words without recourse or similar words to the indorsers signature. Effect: Indorser becomes a mere assignor of the title to NI Negotiation by delivery presupposes no indorsement because NI is payable to bearer; he passes it in the same condition he received it Qualified indorser WARRANTS (Sec 65): a) NI is genuine and in all respects what it purports to be b) He has good title to it c) All prior parties had capacity to contract d) He has no knowledge of any fact which would impair the validity of the NI or render it valueless Qualified indorser does not undertake to pay NI in case of its dishonor. Like an assignor, he gives no assurance that the prior parties primarily liable can or will pay NI (His liability is like that of a seller) Forgery and material alteration = not a defense under Sec 65(a)
ADOLLPH RAMISH V. WOODRUFF 2 Cal (2d) 190, 28 P. 360 (1934)

Subject: Promissory note Maker: Woodruff Payee: Craig Indorsee: Adolph Ramish FACTS: Adolph Ramish held the promissory note of Craig for $13,000. Said note matured on Feb 1932. Craig and Woodruff
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exchanged their own negotiable notes (each for $10,000) dated February 19 and due in 90 days. Craig indorsed the note from Woodruff but it was uncertain as to whether or not it was for collateral security for Craigs indebtedness to Adolph Ramish and was thus treated as an issue in the case. Adolph Ramish sued Woodruff. Woodruff admitted the notes execution but denied title of Adolph Ramish, saying that the note was delivered for inspection and investigation only. He also alleged that note served as collateral security for the $6,820 balance of the note and that Adolph Ramish was not a holder in due course because it did not take the note by negotiation under proper indorsement and thus was subject to the available defenses. According to Woodruff, the indorsement by Craig did not amount to a commercial indorsement but was merely a guaranty which does not operate as a transfer cutting off the defenses of the maker. ISSUE: WON the note had been indorsed in accordance with the law (as an ordinary commercial endorsement) HELD: Yes. There are two views with regard to this matter: Minority view: A guaranty placed on a bill or note does not constitute a commercial negotiation. The guaranty is considered a separate contract. Majority view: These are the better reasoned arguments and are in accordance with the policy of free circulation of commercial paper as a substitute for money. Sec 63 NIL provides: A person placing his signature in the instrument, otherwise than a maker, drawer or acceptor is deemed to be an indorser unless there is a clear indication through the words of being bound in another capacity. When a person signs his name upon the back of the NI is under consideration, the tendency is to resolve all doubtful cases towards holding the same to be a commercial indorsement in due course. Commercial instruments take the place of money and requiring every assignee to inquire into circumstances bearing upon the original execution, along with taking cognizance of all the equities between the original parties, would destroy their commercial value. CAB: The evidence is conflicting with regard to Woodruffs argument that the note was delivered for inspection and investigation purposes, along with an allegation that there was no meeting of the minds and that there was no authorization to deliver the note as collateral security.
WACHOVIA BANK & TRUST CO V. CRAFTON 181 N.C. 404, 107 S.E. 316 (1921)
Subject: Promissory Note Maker: Carver Payee/Indorser: Crafton Indorsee/HDC: Wachovia Bank FACTS: Carver issued a promissory note in favor of Crafton. Crafton in turn, indorsed the note to Wachovia Bank. Wachovia Bank, as HDC, sued Crafton on the note. Crafton, as indorser, denied liability, alleging that the PN was for an amount won in a gambling transaction hence, void. Lower court ruled in favor of defendant. Plaintiff appealed. ISSUE: WON the indorsee, a HDC can recover from a PN which was for an amount won in a gambling transaction HELD: Yes. Statutes applicable render this and all notes and contracts in like cases void and no action thereon can be sustained. The principle however, is allowed to prevail only where the action is on the note to enforce its obligations, and does not affect or extend to suits by an innocent indorsee for value and HDC against the indorser on his contract of indorsement. The contract of indorsement is a substantive contract, separable and independent of the instrument on which it appears, and where it has been made without ratification, and for value, it guarantees to a HDC, among other things that the instrument, at the time of the indorsement, is a valid and subsisting obligation.
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The law which renders these contracts void was enacted for the suppression of gambling but it would tend rather to encourage the vice if a successful gambler could procure the value of such a note on his indorsement. It is an established rule that the obligation of an indorser is a new and independent contract, separate and distinct from that evidenced by the note. 4.
HOROWITZ V WOLLOWITZ 59 Misc. 520, 110 NY Supp. 972 (1908)

FACTS: A promissory note prepared by Barnet Cohen on 18 Dec 1906 is worded as follows: Six months and five days date I promise to pay the order of myself $500 at 16-1/2 Carmine St. Value received. Said note was delivered to Jacob Jormack. At the time of making said note, and prior to its delivery to Horowitz, Louis Wollowitz indorsed it with intent to charge himself as first indorser. Thereafter and before maturity, Jormack indorsed the note to Horowitz for value. Horowitz presented the note for payment. Unpaid, he filed suit in court. Defendants (Cohen, Jormack and Wollowitz) set up the defense that the note was tainted with usury in its inception, and was therefore null and void. ISSUE: WON an indorser may raise the defense that note is void for usury HELD: No. It is not necessary to pass upon the question of the availability to the maker of the defense of usury as against HIDCs, because defendants herein were sued in their capacity, not as makers, but as indorsers of the note in question. Sec116, US law (Sec 66, NIL): Every indorser who indorses without qualification warrants to all subsequent holders in due course: xxx (b) that the instrument is, at the time of his indorsement, valid and subsisting. Under the language of the statute, as applied by the decisions in Packard v. Windholz and Lennon v. Grauer, it must be held that in indorsing the note the defendant warranted its validity, and he cannot be heard now to assert that it is void for usury, any more than for forgery or any other cause.
LIABILITY
OF RESTRICTIVE INDORSER Liability of restrictive indorser depends on the kind of restrictive indorsement is made If indorsement prohibits further negotiation = NI ceases to be negotiable but restrictive indorser is liable to his immediate indorsee as Gen indorser unless otherwise indicated If by restrictive indorsement, indorsee is made an agent of indorser = any subsequent indorsee who acquires title from agent acquires only such title Restrictive indorsement for the benefit of 3rd party = liable as Gen indorser unless otherwise indicated
ORDER OF LIABILITY AMONG INDORSERS Under Sec
68, among themselves, indorsers are liable prima facie in the order they indorse o Sec 68 does not bind the holder and he may sue any of the indorsers regardless of the order of their indorsement
a.
5.
LIABILITY OF ACCOMODATION PARTY An

accommodation party is one who has signed the NI as maker, drawer, acceptor or indorser, without receiving value therefor, for the purpose of lending his name to some other person. Such person is liable on the NI to the holder for value, despite the latters knowledge of him as an accommodation party (Sec 29) An accommodation party in lending his name to the accommodated party, is in effect a surety for the latter Since the relationship between the accommodated and accommodation party is one of principal and surety, should the accommodation party pay to the holder, he has a right to claim from the accommodated party LIABILITY: The accommodation partys liability is primary or secondary depending on whether he signed as maker, drawer, acceptor or indorser o If accommodation party signed as maker = primarily liable
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Effect: There is absence of consideration and holder cannot recover from accommodation party If accommodation party signed as co-maker = there is consideration although accommodation party received no part of it but holder can recover from him o If accommodation party signed as drawer = secondarily liable o If accommodation party signed as acceptor = primarily liable o If accommodation signed as indorser = secondarily liable An accommodation party, whether irregular or otherwise, is liable as general indorser under Sec 66 unless he indicates otherwise The liability of an accommodation party under Sec 29 is limited only to HDC because in the hands of a non-HDC, a NI is subject to the same defenses as if it were nonnegotiable Even if the holder knows the party to be an accommodation party, it does not prevent him from becoming HDC and recovering from accommodation party A corporation, unless expressly authorized by its charter, has no authority to sign as accommodation party and cannot be liable to holder for value Plaintiffs Claim: All four were original promissors, and therefore liable. Defendants Comment: Smith and Foss were merely indorsers, and therefore free from liability because of want of demand and notice. ISSUE: WON Smith and Foss became original promissors when they signed the instrument on its back. HELD: No. Nature of liability must be expressly stated in instances where the instrument was signed other than on its face. Before the enactment of the NIL, the law was firmly settled in states by judicial decisions, that one who signed his name on the back of a note at its inception was a joint or joint and several makers with who signed on the face, so far as necessity for demand and notice of non-payment was concerned. The passage of the NIL abrogated this rule of commercial law. Sec 63 NIL: A person placing his signature upon an instrument otherwise than as maker, drawer, or acceptor, is deemed to be an indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity. CAB: Smith and Foss placed their signatures, not on the face (as makers), but on the backmeaning other than makersand they did not indicate by any words, appropriate or otherwise, any intention to be bound in some other capacity. However Ingalls seeks to differentiate between regular and irregular indorsers. According to him, regular endorsers are entitled to have demand made to the maker first, with due notice of dishonor given to him (indorser). Such right is not available to irregular indorsers. This interpretation however would revert the law back to the time before the NIL was enacted. Sec 64 NIL: Where a person not otherwise a party to an instrument, place thereon his signature in blank before delivery he is liable as an indorser, in accordance with the following rules: (1) If the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent parties.
INGALLS V. MARSTON 121 Me. 182, 116 Atl. 216 (1922)

Promissors: Herbert Marston, Almeda Marston Indorsers: Howard Smith and Walter Foss, but they signed at the notes inception Payee: Ingalls FACTS: Herbert L. and Almeda E. Marston issued a promissory note and signed the note on its face. Howard W. Smith and Walter H. Foss placed their signatures on the back of the note at its inception, and before the delivery to the payee, Ingalls. The first installment was not demanded of the makers, Herbert and Almeda (at maturity), and notice of dishonor was not given o Smith and Foss.
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CAB: The note was made payable to the order of a third person, and therefore this section applies, and these irregular indorsers were made liable to the payee Ingalls and to all other subsequent parties. But their liability is that of indorsers as the section unequivocally provides. These necessarily imply the inherent elements of demand and notice of dishonor. 1. WON defendants are bound on the note 2. WON the liability of the defendants is primary & absolute HELD FIRST ISSUE: Yes. If the note was given to plaintiff bank merely as a semblance of collateral security, the result was to effect a scheme to deceive the bank examiner. If so, it was an illegal transaction, and it is against public policy to permit defendants to rely upon it as a defense. In such circumstances, the defendants are bound as the face of the note discloses. Transactions with banks are affected with an unusual public interest. It is of public importance that all dealings with banks be conducted with integrity & honesty. SECOND ISSUE: Yes. Under the Uniform Act, one who takes a negotiable note as collateral to secure a pre-existing debt takes for value, even though no independent consideration is given. An accommodation party cannot claim the benefit of being treated as a surety as against a holder for value, but is liable as if he were financially interested in the transaction. It follows that the liability of the defendants on the note is primary & absolute and that there was no error in the direction of a verdict against them. Under the Negotiable Instruments Act, the previous rule to the effect that, if a holder for value knew a party had signed for accommodation only he must be treated as a surety, has been abolished. An accommodation party is now primarily & absolutely liable on the instrument to a holder for value. Sec 25 provides that xxx an antecedent or pre-existing debt constitutes value xxx Sec 27 provides that xxx where the holder has a lien on the instrument, xxx he is deemed a holder for value to the extent of his lien xxx.
WEST RUSTLAND & TRUST CO V. HOUSTON 104 Vt. 104, 158 Atl. 69, 80 A.L.R. 664 (1932)
FACTS: The note in suit is a promissory note, signed by defendant Buck, an employee of the Buck Lumber Company, as MAKER then INDORSED by defendant Houston. This note is a renewal of another note, also signed by Buck as maker & indorsed by Houston, which was delivered to plaintiff bank as collateral security for the indebtedness of the Buck Lumber Company to it. Buck testified that before the note was signed, he had a talk with F.L. Jones, treasurer of the plaintiff bank. Jones told him that the bank examiner was expected to visit the bank very soon, & that he wanted a new note, to be held by the bank as collateral, as he thought that the indebtedness of the Buck Lumber Company to the bank was larger than the bank examiner would like. Jones explained that he was afraid not to have some extra collateral to show the examiner, & that the note would be held only until the examiner had examined the books & then returned to either of the defendants. Houston testified that he spoke with Buck about signing the note in suit, & he was told the purpose of the note, after which he signed it. NOTE: The bank examiner is sent by the commissioner of banking & insurance to oversee & inspect banks in order to protect the public interest. The receiver of the plaintiff bank (it appears the bank was subsequently placed in receivership) brought an action to recover from the defendants, as makers. The trial was by jury, and at the close of the evidence, a verdict was directed for plaintiff. The defendants excepted to the direction of the verdict and to the judgment thereon. ISSUES:
GOODMAN V. GAUL 244 Mass. 528, 138 N.E. 910 (1923)

Subject: Promissory note for $265 Maker: Bennie Bean Payee: Goodman
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Indorser: Goodman, Gaul (Internal Revenue Stamp) FACTS: Bean signed the note and handed it to Goodman. The latter then saw Gaull at his place of business and asked him if he will indorse a note for Bennie Bean. Gaul agreed and signed the note. Goodman instituted the action to recover from Gaul as indorser the amount in the promissory note. ISSUE: WON Gaull is liable HELD: No. An accommodation party is liable to all subsequent parties except to the party whom he accommodated. The circumstances will show if Gaul was indeed an accommodation party. It appears Bean did not ask for the defendants indorsement, or authorized the plaintiff to obtain it, or that defendants signature was agreed upon to be affixed for the instrument to become complete. It is clear from the record that defendant signed in accommodation of the plaintiff. The party for whose accommodation a not is given cannot enforce it against the accommodator. It is a mere gratuity. The plaintiff asks to be allowed to amend and to proceed on the indorsement as a written guaranty. But the contract itself fails to show any contract of guaranty. His signature being on the note, he is presumed to be a indorser, unless by some words he indicates his intention to be bound by another capacity. Such is lacking in the case. ISSUES: 1. WON he is liable. 2. WON presentment is necessary. 3. WON he is merely an accommodation party. HELD FIRST ISSUE: Yes. It is not dependent on whether or not he has received any or part of his debt. So long as he is one of the joint and several debtors which he is, makes him liable. SECOND ISSUE: No. There is no requirement for presentment. THIRD ISSUE: No By putting his signature to the note, he lent his name not to the creditor, but to those who signed with him placing himself with respect to the creditor in the same position and with the same liability as the said signers. It should be noted that the phrase without receiving value therefor, as used in Sec. 29 of the aforesaid Act, means without receiving payment for lending out his name. If, as in the case, a sum of money was received by virtue of the note, it is immaterial, so far as the creditor is concerned, whether one of the signers has, or has not, received anything for the use of his name. In reality the legal situation of the defendant in this case may properly be regarded as that of a joint surety, rather than that of an accommodation party. The defendant as a joint surety, may, upon the maturity of the note, pay the debt, demand the collateral security and dispose of it to his benefit; but there is no proof whatsoever that this was done. As to the plaintiff, he is the holder for value under the phrase of said Sec. 29 for he had paid the money to the signers at the time the note was executed and delivered to him. Who is the holder is defined in section 191 of the said law thus: By W.H. Clarke, his attorney. Geo C. Sellner.
The note matured but was not paid. Defendant argued that he did not receive or the whole of the amount of the debt; also, that the instrument was not presented to him for payment; finally that he is an accommodation party thus failure to negotiate means lack of liability.
CLARK V. SELLNER 42 PHIL 384 (1921)

Subject: Promissory note Maker: Sellner and two others Payee: Clark FACTS: Sellner and two others signed a note in favor of Clark. The note reads: Php.12,000 Manila, July 1, 1914 Six months after date, for value received.xxx (Sgd.) W.H. Clarke, John Maye.
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Holder means the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof. And as such holder, he has the right to demand payment of the debt from the signer of the note, even though he knows that sai signer is merely an accommodation party (Sec. 29 above cited), assuming the subject to be such, which as has been stated, is not the case. this particular case, Serrano obtained compensation for his services of the borrower, the lender paying nothing. Sometimes this was a certain % of the sum loaned; at other times it was a part of the interest which the borrower was to pay, the latter paying 1% per month for use of the money, the lender taking 1% and the broker 1/2%. According to the method usually followed in these transactions, and the procedure in this particular case, the broker Serrano delivered the money personally to the borrower, took the note in his own name and immediately transferred it by indorsement to the lender. In this case, this was done at the special request of the indorsee Maulini and simply as a favor to him, Maulini stating to Serrano that he did not wish his name to appear on the books of the borrowing company as a lender of money and that he desired that the broker take the note in his own name, immediately transferring to him title thereto by indorsement. This was done, the note being at once transferred to the lender. There never was a moment when Serrano was the real owner of the note. It was always the note of the indorsee Maulini, he having furnished the money which was the consideration for the note directly to the maker and being the only person who had the slightest interest therein, Serrano, the broker, acting solely as an agent, a vehicle by which the naked title to the note passed from the borrower to the lender. The only payment that the broker received was for his services in negotiating the loan. He was paid absolutely nothing for becoming responsible as an indorser on the paper, nor did the indorsee lose, pay or forego anything, or alter his position thereby. SECOND ISSUE: Yes. accommodation indorser. Defendant Serrano was not an
MAULINI V. SERRANO 28 PHIL 640 (1914)

FACTS: The action was brought by plaintiff Maulini upon the contract of indorsement alleged to have been made in his favor by defendant Serrano upon a PN. A PN was issued by Padern, Moreno and Gimenez in favor of Serrano for P3K due on September 5, 1912. The note was indorsed on the back as follows: "Pay to the order of Don Fernando Maulini, value received. Manila, June 5, 1912. (Sgd.) A. G. Serrano." CFI: (1) By verbal agreement between the indorser Serrano and the indorsee Maulini, the indorser, in making the indorsement, was acting as agent for the indorsee, as a mere vehicle for the transference of naked title, and that his indorsement was wholly without consideration. (2) It was immaterial whether there was a consideration for the transfer or not, as the indorser, under the evidence offered, was an accommodation indorser. So Maulini appealed. ISSUES: 1 WON CFI erred in ruling that the indorsement was without consideration, 2 WON CFI erred in holding that Serrano was an accommodation indorser. HELD: FIRST ISSUE: Yes. It seems that Serrano was a broker doing business in Manila and that part of his business consisted in looking up and ascertaining persons who had money to loan as well as those who desired to borrow money and, acting as a mediary, negotiate a loan between the two. According to his custom in transactions of this kind, and the arrangement made in
Where an indorsement is made as a favor to the indorsee, who requests it, not to secure payment, but to relieve himself from a distasteful situation, and where the only consideration for such indorsement passes from the indorser to the indorsee, the situation does not present one creating an accommodation indorsement, nor one where there is a consideration sufficient to sustain an action on the indorsement.
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Sec 29 NIL defines an accommodation party as "one who has signed the instrument as maker, drawer, acceptor, or indorser, w/o receiving value, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew the same to be only an accommodation party." CFI misunderstood this definition. The accommodation to which reference is made in Sec 29 is not one to the person who takes the note i.e., the payee or indorsee, but one to the maker or indorser of the note. It is true that in this case it was an accommodation to the plaintiff, in a popular sense, to have the defendant indorse the note; but it was not the accommodation described in the law, but, rather, a mere favor to him and one which in no way bound Serrano. In cases of accommodation indorsement, the indorser makes the indorsement for the accommodation of the maker. Such an indorsement is generally for the purpose of better securing the payment of the note i.e., he lends his name to the maker, not to the holder. In other words: An accommodation note is one to which the accommodation party has put his name, without consideration, for the purpose of accommodating some other party who is to use it and is expected to pay it. The credit given to the accommodation party is sufficient consideration to bind the accommodation maker. b.) defendants have not negotiated the notes with the bank, nor have they received the value thereof, or delivered them to the bank in payment of any pre-existing debt c.) it was Echaus who negotiated the notes with the bank and who is accordingly the real party in interest and the party liable for the payment of the notes. Trial judge rendered judgment in favor of plaintiff and against defendants jointly and severally ISSUE: WON The defendants are liable to pay the amount on the promissory note (considering that they are accommodation parties) HELD: Yes. Their liability on the instruments is primary and unconditional. Echaus is merely secondarily liable. The most plausible and reasonable stand for the defendants is that they are accommodation parties. But as accommodation parties, the defendants having signed the instruments without receiving value therefore 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. Even if defendants never received the value of the notes, even assuming that it is fundamental that an instrument given without consideration does not create any obligation 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. When accommodation parties make payment to the holder of the notes, they have a right to sue the accommodated party for reimbursement, since the relation between them in effect is that principal and sureties, the accommodation parties being the sureties.
PNB V. MAZA 48 PHIL 207 (1925)

Subject: 5 Promissory notes for P10,000 each Maker: Ramon Maza and Francisco Mecenas Payee: PNB FACTS: The notes were not taken up by Maza and Mecenas at maturity. To recover the amounts on the face of the notes with interest, action was begun by PNB against Maza and Mecenas in CFI Iloilo. Defendants defense: a.) the notes were went in blank to them by Enrique Echaus with the request that they sign them so that he, Echaus might negotiate them with PNB in case of need;
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ACUNA V. VELOSO 50 PHIL 241 (1927)
FACTS: Xavier is an agent working in Manila of Veloso. Veloso has certain properties in Manila but is based in Cebu. Xavier on his own, is in the practice of trading real estate as far as his credit allowed. Xavier wanted to purchase a property in Legarda for which he lacked P25000 for partial purchase. He asked assistance from Veloso. They approached Gonzalez and Gonzalez agreed to lend the money on two conditions: 1)Xavier and Veloso execute a joint and several note in the amount lent by Gonzalez; 2) that Xavier (only) purchases interest which Gonzalez had in a mortgage credit on a property in Pangasinan. Acuna sued Veloso and Xavier for the amount in the note and interests. TC gave judgment jointly and severally against the defendants. TC having found that Veloso was a mere accommodation maker as regards Xavier, gave judgment over in favor of Veloso against Xavier for whatever the former should pay upon the judgment, and lastly ordered that Veloso be subrogated to the rights of the plaintiff Acuna in a mortgage given by Xavier to secure the debt. After execution of note, it was found that the Legarda property was already encumbered with a mortgage to another bank. Thus to secure himself further, Gonzalez asked Xavier to execute a second mortgage to him upon the Legarda property. The encumbrance on the Legarda property was now 25000 plus 22,070 (1/2 interest in the Pangasinan property) NOTE: Acuna is a transferee of the note executed by Xavier and Veloso. But he is said to be a holder only and not a holder in due course for although he purchased the note for value, he purchased the note 2 years after it fell due. (the court discussed the case by putting Gonzalez in the shoes of Acuna. ISSUE: WON Veloso is jointly and severable liable with Xavier HELD: Yes. In this case the accommodating party and the accommodated party unite in making a joint and several note to a person who advances the face value of the note to one of its makers at the very time of its creation. The consideration for the note, as regards both makers, was the money which the payee advanced to Xavier; and it cannot be said that the note was lacking in consideration as to Veloso because he himself received none of this money. Value was given for the note, and this was enough. In equity as between Veloso and Xavier, the former is entitled to all the rights of surety, and Xavier is the real debtor; but as to the creditor, both Veloso and Xavier are mere joint and several makers. However the Court noted that the second mortgage was already under foreclosure. Thus it held that if the amount received for the foreclosure of such property is enough to cover the indebtedness of Xavier and Veloso, Gonzales would thus be fully paid and that would end the matter. *Issue of Velosos subrogation (Veloso on appeal raised the issue of his right to be subrogated to the rights of Gonzalez in case amount after foreclosure of Legarda property was not enough) Veloso's right of subrogation in case enough is not realized to pay off the whole, must be understood to extend to such proportion of the proceeds of the contemplated foreclosure sale of the mortgaged property on Legarda Street as the amount of the note, and interest, bears to the entire secured indebtedness.
ANG TIONG V. TING 22 SCRA 713 (1968)

Subject: PBCOM check for P4,000 payable to cash or bearer Drawer: Lorenzo Ting Drawee: PBCOM Indorser: Felipe Ang (indorsement in blank) Bearer: Ang Tiong FACTS: Ang Tiong presented check to drawee bank. When the check was dishonored, he made written demands to Lorenzo and Felipe. Unheeded, he filed collection suit in Manila MTC. MTC ruled in his favor. CFI affirmed. Case was elevated to CA, but the latter certified the same to SC since it involves pure questions of law. ISSUE: WON Felipe is liable
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HELD: Yes. A check is a negotiable instrument governed by NIL (Secs. 1 and 185). A person placing his signature upon an instrument otherwise than as a maker, drawer or acceptor is a general indorser unless he clearly indicates by appropriate words his intention to be bound in some other capacity (Sec. 63, NIL) Even assuming that appellant is just an accommodation party, he is still liable to HDC even if the latter, at the time of taking the instrument, knew him to be only an accommodation party (Sec. 29) Again assuming that Art 2071 NCC applies (being an accommodation indorser, he may obtain security from the maker to protect himself against the danger of insolvency of the latter,) said remedy is between accommodation indorser and accommodated party only and cannot diminish nor defeat the rights of a holder for value. HELD: No. The court goes to the Civil Code for this case, because nothing extant in the Negotiable Instruments Law defines the right of one accommodation maker to seek reimbursement from another. Sevilla and Sadaya are, in themselves, co-guarantors of Varona, so their case is covered by Art. 2073: When there are two or more guarantors of the same debt, the one among them who has paid may demand of each of the others the share which is proportionally owing from him. If any of the guarantors should be insolvent, the share shall be borne by the others, including the payer, in the same proportion. The provisions of this article shall not be applicable unless the payment has been made in virtue of a judicial demand or unless the principal debtor is insolvent. Based on that provision, a joint and several accommodation maker who pays on a promissory note may directly demand reimbursement from his co-accommodation maker without first directing his action against the principal debtor provided that (a) he made the payment by virtue of a judicial demand or (b) the principal debtor is insolvent. CAB: Sadayas payment to the bank was made voluntarily and without any judicial demand, and there is no evidence showing Varona is insolvent.
SADAYA V. SEVILLA 19 SCRA 924 (1967)

Subject: Promissory note for P15,000 payable on demand Makers: Sevilla, Varona and Sadaya, jointly and severally Payee: BPI Indorsee: CIT Corp, holder for value and in due course FACTS: Sevilla and Sadaya signed as co-makers as a favor to Varona. The proceeds of the note, P15k, was received by Varona alone. As of June 15, 1950, the outstanding balance was at P4,850. No payment was made after that date. The bank collected the balance plus interest from Sadaya. Varona did not reimburse him. Sevilla died. Sadaya filed a creditors claim against his estate for the sum Sadaya paid on the note. The administrator resisted the claim saying that the deceased Sevilla did not receive any amount as consideration for the promissory note, and that he signed it only as surety for Varona. ISSUE: WON Sadaya can demand reimbursement for the amount he paid on the note from his co-accomodation maker, Sevilla
PRUDENCIO V. COURT OF APPEALS 143 SCRA 7 (1986)

Subject: Promissory note P10,000 Maker: Jose Toribio as attorney in fact of CTCC Payee: PNB Accommodation party: Prudencio
FACTS: Promissory note (PN) for P10,000 payable to PNB secured
by a real estate mortgage on the property of the Prudencios. Concepcion & Tamayo Construction Company (CTCC) had a pending contract with the Bureau of Public Works for the construction of the municipal building of Puerto Princesa, Palawan. As CTCC needed funds for the construction, Toribio, a relative of
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the Prudencios and the attorney-in-fact of the CTCC, prevailed upon the Prudencios to mortgage their property to secure the loan of P10,000 being negotiated with PNB. They were finally persuaded as Toribio also signed on the day of the signing of the PN a Deed of Assignment (DA) assigning all payments from the Bureau to the Company in favor of PNB. Unknown to the Prudencios and contrary to the DA, the Bureau, with the approval of PNB, made 3 payments totaling P11,234.40 directly to the Company for labor and materials. Another payment for P5,000 was, however, denied by PNB as the loan was already overdue. The Company abandoned the work and subsequently, its life as a partnership expired. The Bureau rescinded the contract and assumed the work. The Prudencios wrote PNB requesting the cancellation of the mortgage since the conditions of the contract were changed without their knowledge when PNB allowed payment to the Company instead of on account of the loan. PNB refused. The trial court ruled for PNB and ordered the Prudencios to pay jointly and severally with the owners of the Company, Concepcion and Tamayo. ISSUES: 1. WON the CA erred in holding the Prudencios as solidary codebtors instead of sureties. 2. WON the CA erred in not holding that the Prudencios were released from their obligation when PNB, without their knowledge and consent, changed the tenor and condition of the assignment of payments made by the principal debtor and released to such principal debtor payments from the Bureau which were more than enough to wipe out the indebtedness to the PNB. HELD FIRST ISSUE: No. In lending his name to the accommodated party, the accommodation party is in effect a surety. However, unlike a contract of suretyship, the liability of the accommodation party remains not only primary but also unconditional to a holder for value such that even if the accommodated party receives an extension of the period for payment without the consent of the accommodation party, the latter is still liable for the whole obligation and such extension does not release him because as far as a holder for value is concerned, he is a solidary co-debtor. SECOND ISSUE: Yes. Between the immediate parties to a negotiable instrument the parties between whom there is privity the consideration may be inquired into; and as to them the only superiority of a bill or note over other unsealed evidence of debt is that it prima facie imports a consideration. Although as a general rule, a payee may be considered a holder in due course, in this case, such a rule cannot apply to PNB. Not only was PNB an immediate party or in privy to the PN, that is, it had dealt directly with the Prudencios knowing fully well that the latter only signed as accommodation makers but more important, it was the DA executed by the Company in favor of PNB which principally moved the Prudencios to sign the PN also in favor of PNB. Under the terms of the DA, it is clear that there are no further conditions which could possibly alter the agreement without the consent of the Prudencios. Yet, PNB approved the Bureaus release of 3 payments directly to the Company in violation of the DA and without notice to the Prudencios who stood to lose their property once the PN falls due without it having been paid because PNB, in effect, waived payment of the first three releases. PNB cannot be regarded as having acted in good faith which is also one of the requisites of a holder in due course. Thus, the Prudencios can validly set up their personal defense of release from the real estate mortgage against PNB. 6. LIABILITY OF AN AGENT When a broker or agent negotiates an instrument without indorsement, he incurs all liabilities under Sec 65 (general indorser) unless he discloses the name of his principal and the fact that he is acting only as agent (Sec 69) The principal whose name is undisclosed on the NI cannot be liable because no person is liable on an instrument unless his signature appears thereon (Sec 18 NIL). o Where the agent signs his name but does not disclose the name of the principal or that he is acting only as an agent = no action against the principal and the agent is personally liable to the holder o Agent signed his name band indicated he is acting in a representative capacity but did not disclose principals
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name = parol evidence cannot be used to evade agents personal liability o Agent signed his name without indicating that he acted as agent but disclosed the name of principal = agent is presumptively liable but parol evidence is admissible to show that he is an agent of a third person o Where agent disclosed on the NI that he is acting in a representative capacity and the name of his principal = parol evidence is admissible to exonerate the agent from personal liability Where the agent discloses the name of the principal and expressly indicates that an agency exists between them = principal is bound and agent is not personally liable UNLESS he had not authority from the principal If agent signs by procuration, it serves as a notice that the agents authority is limited o If agent in signing by procuration exceeded his authority = principal is not liable even to HDC ISSUE: WON parol evidence is admissible to prove that the signature M. Gross was not an individual signature but was the signature of State Street Grocery Co. Inc HELD: Yes. The decision must be based upon the terms of Sec 20 NIL. This section covers at least five classes of cases. The instant case falls under the fifth class: Where the negotiable instrument contains words indicating that one has signed for or on behalf of a principal, or in a representative capacity, he is not liable if he was duly authorized. Whether defendant Gross was authorized to sign or not, and whether the check contains words indicating that he signed for and in behalf of a principal or in a representative capacity, might be proved by evidence outside the check for the purpose of carrying out the intention of the parties and establishing just what the contract was, not to vary it, but to ascertain it. We do not understand how the fact of authorization could be proved in any case where it was not established by the instrument except by extraneous evidence. The body of the check does not contain any reference to the State Street Grocery as the drawer of the check. But this section of the statute does not say that the words indicating the relation in which Gross signed the check must appear in the body of the check. If words appear on any part of the check indicating that Gross signed in behalf of the State Street Grocery, that will be sufficient, whether the words appear at the head of the check or on its margin. All that is necessary between the original parties is that these words should be such as to reasonably apprise or put on notice the payee that it was or might be the check of the company, and not of Gross. By such proof the true contract is revealed, and the intention of the parties effected.
AUSTIN, NICHOLS & CO V. GROSS 98 Conn. 782, 120 Atl. 596 (1923)
Subject: Check in payment for goods by State Street Grocery Drawee: Palloti, Andretta & Co Bankers Payee: Austin, Nichols & Co FACTS: In payment for the goods by State Street Grocery from Austin, Nichols & Co, a check was delivered to the payee. The check had the following tenor: Pay to the order of Austin, Nichols & Co., Inc., $334 86/100, three hundred thirty-four 86/100 dollars. M. Gross. State Street Grocery Co. Inc. The check was duly presented for payment and has not been paid. At this time, plaintiff had no account with Gross personally. Plaintiff sued Gross, not State Street Grocery. Parol evidence, offered by Gross for the purpose of showing that the check sued on was the check of the State Street Grocery Co., was excluded. The trial court ruled in favor of plaintiff.
NEW GEORGIA NATL BANK OF ALBANY V. LIPPMAN 249 N.Y. 307, 164 N.E. 108, 80 A.L.R. 1344 (1928)
J&G
FACTS: Plaintiff is the owner thru indorsement of promissory note
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signed, J&G Lippmann, LJ Lippmann, Pres. It asks for judgment in the alternative against corporation (maker of note) or against the president personally if he acted WITHOUT authority. ISSUE: WON the president should be personally liable HELD: Yes. The proviso that the agent or representative shall not be liable on the instrument if he was duly authorized to sign, carries with it a fair implication that he shall be so liable if not authorized. HELD IN A CASE: A note bearing name of corporatin in margin, signed by the president and treasurer in own names with addition of official titles, and thereafter discounted by a bank without notice dehors the instrument, was in law the individual promise. The statute does not distinguish between cases where he has indicated his intention unmistakably and where he has done so more obscurely. Liability is imposed upon agent, not in the aid of his intention, for the hypothesis intention to the contrary has been adequately revealed. Liability exists as a duty imposed by law. If agent signing without authority is not liable, there might be a failure of justice when note wrongfully issued was in the hands of later holders. No doubt a remedy in tort is available to such holder if agent had misrepresented his authority as to be guilty of fraud. In proportion as the agent was relieved of liability if he acted with authority, there was need to charge him with liability if authority was lacking. the payment of a note representing a portion of the purchase price. Said note was signed by Mayer in his individual capacity and not designating himself as an agent. Neither did he disclose in the note the names of any of the other interested parties in the transaction. Pratt sued Mayer, Hopper, Payne and Trimble to recover a deficiency on the note. ISSUE: WON Mayer is liable on the instrument as agent HELD: No. All the exhibits show that Mayer signed in his individual capacity and not as agent for other defendants. The exhibits do not show either that a trade-name was used or that the parties thereto were partners. An undisclosed principal has been held liable except in cases of negotiable instruments and specialties, but the law seems well settled that in the case of negotiable instruments an undisclosed principal could not be charged at any time. In the case of negotiable instruments, this restriction arises, not by reason of the status of the parties, but by reason of the character of the instrument. When a negotiable instrument is executed by an agent without sufficiently indicating on its face who the principal is, parol evidence cannot be introduced to charge the principal, although the agent executed the instrument as an agent. This exception to the rule is based upon the reason that each party who takes a negotiable instrument makes his contract with the parties who appear on its face to be bound for its payment; and in suits upon negotiable instruments no evidence to charge any principal thereto unless his name in some way is disclosed on the instrument itself. The instrument in question here was a negotiable instrument (even if it was secured by a deed of trust as it is negotiable in form). To go beyond the face of the instrument is to nullify Sec 3099 of the US CC.
PRATT V. HOPPER 12 Cal App. (2d) 291, 55 P. 2d 517 (1936)

FACTS: Mabel Pratt conveyed a tract of land to Mitchell Mayer. Mayer then executed a deed of trust to the California Trust Co (CTC) as trustee and Pratt as beneficiary therein. Mayer also executed a deed of the property to Hopper and Payne. Trimble carried on the negotiations for the purchase of the property for the parties. The trust from Mayer to the CTC secured
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INSULAR DRUG CO INC V. PNB 58 PHIL 684 (1933)
FACTS: The Insular Drug Co Inc is a Philippine corporation with offices in the City of Manila. U.E. Foerster was formerly a salesman of drug company for the Islands of Panay and Negros. Foerster also acted as a collector for the company. He was instructed to take the checks which came to his hands for the drug company to the Iloilo branch of the Chartered Bank of India, Australia and China and deposit the amounts to the credit of the drug company. Instead, Foerster deposited checks, including those of Juan Llorente, Dolores Salcedo, Estanislao Salcedo, and a fourth party, with the Iloilo branch of the Philippine National Bank. The checks were in that bank placed in the personal account of Foerster. Some of the checks were drawn against the Bank of Philippine National Bank. After the indorsement on the checks was written "Received payment prior indorsement guaranteed by Philippine National bank, Iloilo Branch, Angel Padilla, Manager." The indorsement on the checks took various forms. In this connection it should be explained that Carmen E. de Foerster was his stenographer. As a consequence of the indorsements on checks the amounts therein stated were subsequently withdrawn by U. E., Foerster and Carmen E. de Foerster. Eventually the Manila office of the drug company investigated the transactions of Foerster. Upon the discovery of anomalies, Foerster committed suicide. But there is no evidence showing that the bank knew that Foerster was misappropriating the funds of his principal. The Insular Drug Company claims that it never received the face value of 132 checks here in the question covering a total of P18,285.92. ISSUE: WON the bank is responsible to the drug company for the amounts represented by the checks HELD: Yes. The bank could tell by the checks themselves that the money belonged to the Insular Drug Co., Inc., and not to Foerster or his wife or his clerk. When the bank credited those checks to the personal account of Foerster and permitted Foerster and his wife to make withdrawals without there being made authority from the drug company to do so, the bank made itself responsible to the drug company for the amounts represented by the checks. The bank could relieve itself from responsibility by pleading and proving that after the money was withdrawn from the bank it passed to the drug company which thus suffered no loss, but the bank has not done so. The bank will have to stand the loss occasioned by the negligence of its agents.
PHIL BANK OF COMMERCE V. ARUEGO 102 SCRA 530 (1981)

FACTS: This case involves 22 transactions between Bank and Aruego for the printing of defendant's periodical. Defendant had a credit accommodation with Bank. The printers would collect the cost of printing from Bank. The total amount demanded was P35k. The instruments were signed: "Jose Aruego (Acceptor) (Sgd.) Jose Aruego" Aruego's defenses: 1. He signed in his capacity as President of Philippine Education Foundation (PEFC), publisher of the periodical 2. He's not a principal obligor, but only an accommodation party 3. The documents are not legally bills of exchange but only instruments evidencing indebtedness because payments were made before acceptance ISSUES: 1. WON Aruego is a mere representative 2. WON Aruego is a primarily liable 3. WON the documents are bills of exchange HELD FIRST ISSUE: No. Sec 20 of NIL says that an agent who does not disclose his principal is not exempt from liability. Aruego did not disclose that he was signing as a representative of PEFC. For failure to disclose his principal, Aruego is personally liable. SECOND ISSUE: Yes. Accomodation party = one who signs instrument as maker, drawer, indorser, without receiving value for the purpose of lending his name = surety; therefore, primarily liable.
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The defendant who is a lawyer should not have signed as an acceptor/drawee. In doing so, he became primarily and personally liable for the drafts. THIRD ISSUE: Yes. As long as a commercial paper conforms with the definition of a bill of exchange, that paper is considered a bill of exchange. The nature of acceptance is important only in the determination of the kind of liabilities of the parties involved, but not in the determination of whether a commercial paper is a bill of exchange or not. 7. it should be negotiated within a reasonable time, otherwise the drawers and indorsers will be discharged for they have an interest in having the bills accepted immediately in order to shorten the time of payment and thus put a limit to the period of their liability (Sec 144) Checks are not mean to be presented for acceptance or certification and if so presented and certification refused, they will to be deemed dishonored. o Same rule applies to bills payable on demand
SIGNATURE BY TRADE NAME Under Sec 18 NIL, a

person whose signature does not appear on the instrument is not liable thereon unless expressly provided. But a person who signs in a trade or assumed name will be liable as if he signed his own name This is not an exception to the rule which forbids action on a NI against one whose name does not appear thereon but it is an instance in which the defendants business name serves the same purpose that would be served by the use of his given name
a.
HOW AND WHEN MADE Presentment for acceptance

may be made to the proper party at the time and in the manner provided under Sec 145, otherwise it would be irregular and ineffective and the drawees refusal will not be a dishonor of the bill o Place where presentment for acceptance should be made is not important as long as it is made to the proper person o If drawee is dead, presentment for acceptance may be made to the drawees personal representative. This is permissive since Sec 148(a) excuses presentment when the drawee is insolvent
C. PRESENTMENT AND DISHONOR

1.
b.
WHEN EXCUSED Sec 147 NIL excuses delay in making

presentment and Sec 148 excuses non-presentment for acceptance. When Excused: o If drawee is dead, or has absconded or is a fictitious person or incapacitated o Where after exercise of reasonable diligence, presentment cannot be made o Where although presentment has been irregular, acceptance has been refused on some other ground
PRESENTMENT FOR ACCEPTANCE Presentment

for acceptance refers to bills of exchange only. When presentment of acceptance is necessary (Sec 143) Where the bill is payable after sight, or in any other case where presentment for acceptance is necessary in order to fix the maturity of NI Where the bill expressly stipulates that it shall be presented for acceptance; or Where the bill is drawn payable elsewhere than at the residence or place of business of drawee NOTE: This list is exclusive. o Bills duly presented for acceptance under Sec 143 and not accepted will be deemed as bills dishonored by nonacceptance o Sec 144 provides that such presentment must be made or
2.
DISHONOR A bill is dishonored if an acceptance as

prescribed by NIL is refused or cannot be obtained. Acceptance on a separate instrument makes the acceptor liable only to one who takes the bill for value on the faith of such acceptance (Sec 134) Acceptance should be given within 24 hrs from presentment otherwise, it shall be treated as dishonored and notice of dishonor shall be sent to secondary parties
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When a bill is dishonored by non-acceptance, there is no need to present the instrument again for payment, and the holder acquires an immediate right of recourse against the persons secondarily liable, provided the latter are given a notice of dishonor under Sec 89 or accepted for his accommodation and he has no reason to expect that it will be paid In this situation, the principal debtor is the indorser and thus has no right to demand payment from the accommodation maker or acceptor To excuse presentment (requisites): NI was made or accepted for indorsers accommodation AND he has no reason to expect its payment Sec 80 refers only to an indorser for whose accommodation an NI is made or accepted and not to an indorser from whom the bill is drawn. (3) As to all secondary parties Under Sec 82, presentment for payment is dispensed with when: (a) After exercise of reasonable diligence presentment cannot be made (b) Drawee is a fictitious person (c) Waiver of presentment, express or implied Effect: the holder may treat the NI as a bill or note and hold the drawer liable as maker who is a primary party not entitled to presentment Waiver of notice does not mean waiver of presentment To bind indorser or drawer, his waiver must be with knowledge of the facts which release him, so if he pays not knowing there was no demand and no notice, he can recover b.
3.
PRESENTMENT FOR PAYMENT Presentment for

payment is the presentation of the instrument, whether note or bill, to the person primarily liable for the purpose of demanding and obtaining payment thereof Presentment for payment need not be made to charge the primary party If NI is payable at a special place, the ability and willingness of the primary party to pay at such special place on the date of maturity constitutes a tender of payment. Effect: primary party is relieved from payment of cost in case of suit. Tender of payment may result in the discharge of secondary parties
a.
WHEN PRESENTMENT NOT NECESSARY

(1) As to drawer Sec 79 provides an instance where the drawer will not be discharged despite of lack of presentment to primary party Absence of right in the drawer to require and of a right to expect the drawee or acceptor too pay = not the same (Sec 73) Right to require payment there is a preexisting contract between drawer and drawee so it is the duty of the drawee/acceptor to pay Right to expect payment although there is no contractual duty owed by drawee to pay, there is reasonable expectation that the drawee will pay If drawee and drawer are the same = no need for presentment (Sec 130 NIL) If drawee is insolvent at the time check is issued and drawer knows of it = presentment and notice are not required because he would not have the right to expect payment (2) As to indorser Sec 80 provides that presentment is not required to charge an indorser if the NI was made
DATE AND TIME OF PRESENTMENT OF NI WITH FIXED MATURITY If an instrument has a fixed date of maturity,
presentment must be made on the day the instrument falls due o If made before maturity = not effective o If made after maturity = too late unless delay is excusable; effect: secondary parties will be discharged o No presentment on Sunday or holiday = NI will have to be presented on the next business day (Sec 194) o In determining the proper date for presentment, the date from which the time is to run is excluded and the date of payment included
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c.
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Nego Chapter V Notes

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NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties A.

LIABILITIES OF PRIMARY PARTIES

PARTIES PRIMARILY LIABLE

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

SINGSON V. BPI 23 SCRA 1117 (1968)

does not bar the commission of a tort by the one against

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

LAWLESS V. TEMPLE 254 Mass. 395, 150 N.E. 176 (1926)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

CONSTRUCTIVE ACCEPTANCE The drawee has 24 hrs

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

SUMCAD V. PROVINCE OF SAMAR 52 O.G. 18, 7582 (1956)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

ACCEPTANCE ON A SEPARATE INSTRUMENT An

COOLIDGE V. PAYSON 2 Wheat. 66, 4 L. Ed. 185 (1817)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

TRADE ACCEPTANCE Draft or bill of exchange with a

REPUBLIC V. PNB 3 SCRA 851 (1961)

BANKERS ACCEPTANCE Negotiable time draft or bill of

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

PAL V. COURT OF APPEALS G.R. NO 49188 (1990)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

FORTUNADO V. COURT OF APPEALS 196 SCRA 269

MESINA V. INTERMEDIATE APPELLATE COURT 145 SCRA 499 (1986)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

WACHTEL V. ROSEN 249 N.Y. 386, 164 N.E. 326 (1928)

ROMAN CATHOLIC BISHOP OF MALOLOS V. IAC G.R. NO 7211 (1990)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

B. LIABILITY OF SECONDARY PARTIES The parties

LIABILITY OF DRAWER The liability of drawer is

PNB V. PICORNELL 46 PHIL 716 (1922)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

BANCO ATLANTICO V. AUDITOR GENERAL 81 SCRA 335 (1978)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

McCORNACK V. CENTRAL STATE BANK 211 N.W. 542, 53 A.L.R. 1297

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

CRIMINAL LIABILITY FOR BOUNCING CHECKS (BP 22)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

LOZANO V. MARTINEZ 146 SCRA 323 (1986)

ESTAFA UNDER RPC By express provision of BP22,

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

PEOPLE V. NITAFAN 215 SCRA 79 (1992)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

LIABILITY OF GENERAL INDORSER unqualified

LIABILITY OF QUALIFIED INDORSER A qualified

ADOLLPH RAMISH V. WOODRUFF 2 Cal (2d) 190, 28 P. 360 (1934)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

HOROWITZ V WOLLOWITZ 59 Misc. 520, 110 NY Supp. 972 (1908)

LIABILITY OF ACCOMODATION PARTY An

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

INGALLS V. MARSTON 121 Me. 182, 116 Atl. 216 (1922)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

GOODMAN V. GAUL 244 Mass. 528, 138 N.E. 910 (1923)

NEGOTIABLE INSTRUMENTS LAW Chapter 5: Liabilities of Parties

CLARK V. SELLNER 42 PHIL 384 (1921)