PNB v.

Picornell
46 Phil 716

People v. Maniego
148 SCRA 30

FACTS: - Julia Maniego was an indorser of several checks drawn by

her sister, Milagros Pamintuan, which were dishonored after they
had been exchange with cash belonging to the Government, then in
the official custody of Lt. Rizalino Ubay. Ubay, Pamintuan and
Maniego were indicted for the crime of malversation. Ubay and
Maniego were arraigned, while Pamintuan fled to the United States.

- Ubay was found guilty while Maniego was acquitted. Both,

however, were ordered to pay in solidum the amount of P57,434.50
to the government. Maniego appealed.

ISSUE: Whether Maniego is liable even if she is a mere indorser.

HELD: - Under the law, the holder or last indorsee of a negotiable

instrument has the right to enforce payment of the instrument for the
full amount thereof against all parties liable thereon.

- Among the parties liable thereon is an indorser of the instrument.

Such an indorser who indorses without qualification, inter alia,
engaged that on due presentment, the instrument shall be accepted
or paid, or both, according to its tenor, and that if it be dishonored,
and the necessary proceedings on dishonor be duly taken, he will
pay the amount thereof to the holder, or to any subsequent indorser
who may be compelled to pay it.
- Maniego may also be deemed an accommodation party in the
light of the facts (i.e. without receiving value for the same). As such,
she is liable on the instrument to a holder for value, notwithstanding
such holder at the time of taking the instrument knew her to be only
an accommodation party, although she has the right, after paying the
holder, to obtain reimbursement from the party accommodated.
Ang Tiong v. Lorenzo Ting
22 SCRA 713
- Assuming further that Ang is an accommodation indorser, the fact
that Ang may obtain security from the maker to protect himself
against the danger of insolvency of the latter cannot in any manner
affect his liability to Ang Tiong, as the said remedy is a matter of
concern exclusively between an accommodation indorser and an
accommodated party. The liability of Felipe Ang remains primary and
unconditional.
Banco De Oro v. Equitable Bank
157 SCRA 188

FACTS: - Lorenzo Ting issued a check for P4,000 payable to cash

or bearer. With Felipe Angs signature (indorsement in blank) at the
back thereof, the instrument was received by Ang Tiong who
thereafter presented it to the bank for payment.

- The drawee bank dishonored it. Ang Tiong made written demands
on both Ting and Ang to make good the amount represented by the
check.

- These demands unheeded. Ang Tiong filed suit for collection. The
trial court adjudged for Ang Tiong. Only Ang appealed, maintaining
that he is only an accommodation party.

ISSUE: Whether Felipe Ang is an accommodation party.

HELD: - Felipe Ang is a general indorser (Section 63, Negotiable

Instruments Law), in the absence of any indication by appropriate
words his intention to be bound in some other capacity.

- Even on the assumption that Ang is a mere accommodation party,

he is liable on the instrument to a holder for value notwithstanding
that such holder at the time of taking the instrument knew him to be
only an accommodation party (Section 29, Negotiable Instruments
Law).

Associated Bank v CA
252 SCRA 620
FACTS: - The Province of Tarlac was disbursing funds to
Concepcion Emergency Hospital via checks drawn against its
account with the Philippine National Bank (PNB).
- These checks were drawn payable to the order of Concepcion
Emergency Hospital. Fausto Pangilinan was the cashier of
Concepcion Emergency Hospital in Tarlac until his retirement in
1978. He used to handle checks issued by the provincial government
of Tarlac to the said hospital. However, after his retirement, the
provincial government still delivered checks to him until its discovery
of this irregularity in 1981.
- By forging the signature of the chief payee of the hospital (Dr.
Adena Canlas), Pangilinan was able to deposit 30 checks amounting
to P203k to his account with the Associated Bank.
- When the province of Tarlac discovered this irregularity, it
demanded PNB to reimburse the said amount. PNB in turn
demanded Associated Bank to reimburse said amount. PNB averred
that Associated Bank is liable to reimburse because of its
indorsement borne on the face of the checks:
All prior endorsements guaranteed ASSOCIATED BANK.
ISSUE: What are the liabilities of each party?
HELD: The checks involved in this case are order instruments.
Liability of Associated Bank
Where the instrument is payable to order at the time of the forgery,
such as the checks in this case, the signature of its rightful holder
(here, the payee hospital) is essential to transfer title to the same
instrument. When the holders indorsement is forged, all parties prior
to the forgery may raise the real defense of forgery against all parties
subsequent thereto.
A collecting bank (in this case Associated Bank) where a check is
deposited and which indorses the check upon presentment with the
drawee bank (PNB), is such an indorser. So even if the indorsement
on the check deposited by the bankss client is forged, Associated
Bank is bound by its warranties as an indorser and cannot set up the
defense of forgery as against the PNB.
EXCEPTION: If it can be shown that the drawee bank (PNB)
unreasonably delayed in notifying the collecting bank (Associated
Bank) of the fact of the forgery so much so that the latter can no
longer collect reimbursement from the depositor-forger.
Liability of PNB
The bank on which a check is drawn, known as the drawee bank
(PNB), is under strict liability to pay the check to the order of the
payee (Provincial Government of Tarlac). Payment under a forged
indorsement is not to the drawers order. When the drawee bank
pays a person other than the payee, it does not comply with the
terms of the check and violates its duty to charge its customers (the
drawer) account only for properly payable items. Since the drawee
bank did not pay a holder or other person entitled to receive
payment, it has no right to reimbursement from the drawer. The
general rule then is that the drawee bank may not debit the drawers
account and is not entitled to indemnification from the drawer. The
risk of loss must perforce fall on the drawee bank.
EXCEPTION: If the drawee bank (PNB) can prove a failure by the
customer/drawer (Tarlac Province) to exercise ordinary care that
substantially contributed to the making of the forged signature, the
drawer is precluded from asserting the forgery.
In sum, by reason of Associated Banks indorsement and warranties
of prior indorsements as a party after the forgery, it is liable to refund
the amount to PNB. The Province of Tarlac can ask reimbursement
from PNB because the Province is a party prior to the forgery.
Hence, the instrument is inoperative. HOWEVER, it has been proven
that the Provincial Government of Tarlac has been negligent in
issuing the checks especially when it continued to deliver the checks
to Pangilinan even when he already retired. Due to this contributory
negligence, PNB is only ordered to pay 50% of the amount or half of
P203 K.
BUT THEN AGAIN, since PNB can pass its loss to Associated Bank
(by reason of Associated Banks warranties), PNB can ask the 50%
reimbursement from Associated Bank. Associated Bank can ask
reimbursement from Pangilinan but unfortunately in this case, the
court did not acquire jurisdiction over him.
PCIB v CA
350 SCRA 446
FACTS: - Ford Philippines filed actions to recover from the drawee
bank Citibank and collecting bank PCIB the value of several
checks payable to the Commissioner of Internal Revenue which
were embezzled allegedly by an organized syndicate.
- What prompted this action was the drawing of a check by
Ford, which it deposited to PCIB as payment and was debited
from their Citibank account.
- It later on found out that the payment wasnt received by the
Commissioner. Meanwhile, according to the NBI report, one of the
checks issued by petitioner was withdrawn from PCIB for alleged
mistake in the amount to be paid.
- This was replaced with managers check by PCIB, which were
allegedly stolen by the syndicate and deposited in their own
account.
- The trial court decided in favor of Ford.
ISSUE: Has Ford the right to recover the value of the checks
intended as payment to CIR?
HELD: - The checks were drawn against the drawee bank but the
title of the person negotiating the same was allegedly defective
because the instrument was obtained by fraud and unlawful
means, and the proceeds of the checks were not remitted to the
payee. It was established that instead paying the
Commissioner, the checks were diverted and encashed for the
eventual distribution among members of the syndicate.
- Pursuant to this, it is vital to show that the negotiation is
made by the perpetrator in breach of faith amounting to fraud. The
person negotiating the checks must have gone beyond the authority
given by his principal. If the principal could prove that there was no
negligence in the performance of his duties, he may set up the
personal defense to escape liability and recover from other
parties who, through their own negligence, allowed the commission
of the crime.
- It should be resolved if Ford is guilty of the imputed
contributory negligence that would defeat its claim for
reimbursement, bearing in mind that its employees were among the
members of the syndicate. It appears although the employees of
Ford initiated the transactions attributable to the organized
syndicate, their actions were not the proximate cause of
encashing the checks payable to CIR.
- The degree of Fords negligence couldnt be characterized as
the proximate cause of the injury to parties. The mere fact
that the forgery was committed by a drawer-payors confidential
employee or agent, who by virtue of his position had unusual
facilities for perpetrating the fraud and imposing the forged paper
upon the bank, doesnt entitle the bank to shift the loss to the drawer-
payor, in the absence of some circumstance raising estoppel against
the drawer.

* Note: not only PCIB but also Citibank is responsible for

negligence. Citibank was negligent in the performance of its duties
as a drawee bank. It failed to establish its payments of Fords
checks were made in due course and legally in order.