METROPOLITAN BANK & TRUST COMPANY VS.

COURT OF
APPEALS, G.R. NO. 88866, FEBRUARY 18, 1991

FACTS:
In January 1979, upon opening an account with Golden Savings, 38 treasury
warrants amounting to P 1,755,228.37 were deposited by a certain Eduardo Gomez
for over a period of two months. As Cashier of Golden Savings, Gloria Castillo
indorsed all the warrants and deposited it to its savings account in Metrobank
branch. Subsequently, they were sent to its Metrobanks main office for clearance
and forwarded to the Bureau of Treasury for special clearing. Before they were
cleared, due to being exasperated over Glorias repeated inquiries, the petitioner
finally decided to allow Golden Savings to withdraw from the proceeds of the
warrants. In turn, Golden Savings then allowed Gomez to make withdrawals from his
account. On July 21, 1979, Metrobank informed Golden Savings about the
dishonoring of 32 warrants by the BTr and demanded the Golden Savings to refund
the amount it had previously withdrawn, to make up the deficit in its account. The
demand was rejected. Metrobank then sued Golden Savings in the Regional Trial
Court of Mindoro.
ISSUE:
Can the petitioner hold Golden Savings liable as an indorser of the treasury
warrants based on the predication that the treasury warrants involved in this case
are negotiable instruments.
HELD:
It would appear to the Court that Metrobank was indeed negligent in giving Golden
Savings the impression that the treasury warrants had been cleared and that,
consequently, it was safe to allow Gomez to withdraw from his account. It is also
indicated that they are payable from a particular fund, to wit, Fund 501. But an
order to pay or promise to pay out of a particular fund is not unconditional therefore
making it non-negotiable. Thus, Golden Savings cannot be held liable as an indorser
because this law is not applicable to the non-negotiable treasury warrants.

CALTEX PHILIPPINES VS. COURT OF APPEALS, G.R. NO. 97753,

AUGUST 10, 1992

FACTS:
On various dates, Angel dela Cruz obtained 280 certificates of time deposit (CTD)
from Security Bank and Trust Co. (SeBTC) by depositing to the bank the aggregate
amount of P1,120,000. Angel de la Cruz subsequently delivered the CTDs to Caltex
in connection with the purchase of fuel products from Caltex. Sometime in March
1982, dela Cruz informed the bank that he lost all the CTDs and was advised to
execute and submit a notarized Affidavit of Loss to the bank. Angel de la Cruz
negotiated and acquired a loan of P875,000 and he used his time deposits as
collateral by executing a notarized Deed of Assignment of Time Deposit. Thereafter,
Caltex presented for verification the lost CTDs with the bank. Caltex advised
Security Bank of its possession of the CTDs but the bank refused to accept the claim
and instead required Caltex to present documents proving the agreement made by
de la Cruz with Caltex. Caltex however failed to furnish said documents. In April
1983, the loan of Angel dela Cruz matured and Security Bank set-off and applied the
CTDs as payment for the load. Caltex filed the complaint but was dismissed.
ISSUE:
1. Whether or not the certificates of time deposit are negotiable.
2. Whether the CTDs negotiation require delivery only.
HELD:
The CTDs in question are negotiable instruments because they meet the
requirements of the law for negotiability. Negotiability or non-negotiability of an
instrument is determined from the face of the instrument itself. The CTDs indicate
that they are payable to the bearer, that is, the amounts deposited are repayable to
whoever may be the bearer thereof at the time of presentment.
However, Caltex may not encash the CTDs because although the CTDs are bearer
instruments, a valid negotiation thereof for the true purpose and agreement
between Caltex and De la Cruz, requires both delivery and indorsement. The CTDs
were also delivered to them merely for guarantee or security and not as payment,

thus, making Caltex as a holder for value by reason of his lien. Accordingly, a
negotiation for such purpose cannot be effected by mere delivery of the instrument.

ANG TEK LIAN VS. CA, G.R. NO. L-2516, SEPTEMBER 25, 1950
FACTS:
On November 16, 1946, Saturday, Ang Tek Lian drew a check amounting to P4,000,
payable to the order of cash upon the China Banking Corporation with him being
aware of having insufficient funds. Lee Hua Hong then handed the money to Ang
Tek Lian upon delivering the check to him. On November 18, 1946, Lee Hua Hong
presented the check for payment, the check was dishonored because of
insufficiency of funds, in which the balance of the deposit is only P335.
Petitioner was sued for estafa. In his defense, Ang Tek Lian argued that the check
had not been indorsed by him.
ISSUE:
Whether indorsement is necessary for the presentation of a bearer instrument for
payment.
HELD:
No. Under the Negotiable Instruments Law (sec. 9 [d]), a check drawn payable to
the order of cash is a bearer instrument, and the person presenting it for
payment can be paid without the need of the drawers indorsement. Where a check
is made payable to the order of cash, the word cash does not purport to be the
name of any person, thus, the instrument is payable to bearer.

PNB VS. RODRIQGUEZ, G.R. NO. 170325, SEPTEMBER 26, 2008

FACTS:
The Spouses Erlando and Norma Rodriguez were engaged in the business of
informal lending and had a discounting arrangement with the Philnabank Employees
Savings and Loan Association (PEMSLA), an association of PNB employees and
maintains current and savings account with Philippine National Bank (PNB). PEMSLA
regularly granted loans to its members where the Rodriguezs would rediscount the
postdated checks issued to members. PEMSLAs policy is to not approve
applications for loans of members with outstanding debts. However, to obtain
additional loans, some PEMSLA officers who have outstanding debts, took out loans
in the names of unknowing members, without the knowledge or consent of the
latter. The officers carried this out by forging the indorsement of the named payees
in the checks.
Rodriguez checks were deposited directly by PEMSLA to its savings account without
any indorsement from the named payees. For the period November 1998-February
1999, spouses issued 69 checks totaling to P2,345,804. These were payable to 47
individual payees who were all members of PEMSLA. The PEMSLA checks deposited
by the spouses were then returned or dishonored after PNB closed the current
account of PEMSLA when the former found out about these fraudulent acts.
Accordingly, the amounts were debited from the Rodriguez account. Subsequently,
the spouses filed a civil complaint for damages
ISSUE:
Whether the subject checks are payable to order or to bearer and who bears the
loss?
HELD:
When the payee is fictitious or not intended to be the true recipient of the proceeds,
the check is considered as a bearer instrument. However, a showing of commercial
bad faith on the part of the drawee bank, or any transferee of the check for that
matter, will work to strip it of this defense. The exception will cause it to bear the
loss.
In this case, PNB, as the drawee bank, had the responsibility to ascertain the
regularity of the indorsements, and the genuineness of the signatures on the checks
before accepting them for deposit. Lastly, PNB was obligated to pay the checks in
strict accordance with the instructions of the drawers. Petitioner miserably failed to
discharge this burden. It paid the values of the checks not to the named payees or
their order, but to PEMSLA, a third party to the transaction between the drawers and

the payees. Moreover, PNB was negligent in the selection and supervision of its
employees.

PNB VS. MANILA OIL REFINING AND BY-PRODUCTS CO., G.R. NO.
L-18103, JUNE 8, 1922
FACTS:
On May 8, 1920, the manager and the treasurer of the Manila Oil Refining & ByProducts Company,
Inc. executed and delivered to the Philippine National Bank (PNB), a written
instrument promising to pay to the order of PNB P61,000 and stipulating that it
authorizes any attorney in the Philippine Islands to appear in its name and confess
judgment for the above sum with interest, cost of suit and attorneys fees of ten
(10) per cent for collection, a release of all errors and waiver of all rights to
inquisition and appeal, and to the benefit if all laws exempting property, real or
personal, from levy or sale. The Manila Oil Refining & By-Products Company, Inc.
failed to pay the promissory note on demand. PNB brought action in the Court of
First Instance of Manila, to recover P61,000, the amount of the note, together with
interest and costs. Mr. Elias N. Recto, an attorney associated with PNB, entered his
appearance in representation of Manila Oil, and filed a motion confessing judgment.