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KHO
Unfortunately, the deal with Red Orange did not push through. Sometimes
later, BPI called Land Bank to inform them that Red Orange had deposited a
Land Bank manager’s check. A faxed copy of the deposited check was then
sent to the clearing office and upon examination, they thought the details
matched the check purchased by Kho, Land Bank confirmed the check.
Land Bank informed Kho by phone that his check was cleared and paid
the BPI. Shocked, Kho informed Land Bank that never negotiated the check
because the deal did not materialize and the actual check was still in his
possession. They discovered that what was deposited and encashed with BPI was
a spurious manager’s check.
ISSUES:
RULINGS:
1) YES, a purchaser of a manager’s check can assert forgery when the
proximate cause of the loss is the negligence of the bank.
Kho’s failure to inform Land Bank that the deal did not push through
does not justify Land Bank’s confirmation and clearing of a fake check bearing
the forged signatures of its own officers. Whether or not the deal pushed
through, the check remained in Kho’s possession. He was entitled to a
reasonable expectation that the bank would not release any funds corresponding
to the check.
2) YES, Land Bank breached its duty of diligence and assumed the risk
of incurring a loss on account of a forged or counterfeit check.
Consequently, banks are expected to exact the highest degree of, if not
the utmost, diligence. They are obligated to treat their depositors’ accounts with
meticulous care, always keeping in mind the fiduciary nature of their
relationship.
FACTS:
ISSUE: Who shall bear the loss resulting from the forged indorsements.
RULING:
FACTS:
ISSUE: WON the bank should bear the loss of forged indorsement.
RULING:
It was held that the Province of Tarlac was grossly negligent, to the
point of substantially contributing to its loss. Nevertheless, the High Court
apportioned the loss evenly between the Province of Tarlac and the drawee
bank because of the bank’s failure to pay according to the terms of the
check. It violated its duty to charge the customer’s account only for properly
payable items.
4. SAMSUNG CONSTRUCTION CO. vs. FAR EAST BANK & TRUST CO.
FACTS: Plaintiff maintained a current account with respondent FEBTC. The sole
signatory to plaintiff’s account was Jong, its Project Manager, while the
checks remained in the custody of the company’s accountant, Kyu. A
certain Roberto Gonzaga presented for payment FEBTC check payable to cash
and drawn against the Samsung’s current account, in the amount of
P999,500.00 had been encashed upon submission of proof of identity and
three (3) identification cards. The following day, Kyu, examined the balance of
the bank account and discovered that a check in the amount of P999,500.00
had been encashed. As the last blank check was missing, Jong learned that
his signature was forged.
HELD: YES. The general rule is to the effect that a forged signature is
“wholly inoperative” and payment made “through or under such signature” is
ineffectual or does not discharge the instrument. If payment is made, the
drawee cannot charge it to the drawer’s account. The traditional justification
for the result is that the drawee is in a superior position to detect a
forgery because he has the maker’s signature and is expected to know
and compare it. The rule has a healthy cautionary effect on banks by
encouraging care in the comparison of the signatures against those on the
signature cards they have on file. Moreover, the very opportunity of the
drawee to insure and to distribute the cost among its customers who use
checks makes the drawee an ideal party to spread the risk to
insurance.
- - - The general rule remains that the drawee who has paid upon the forged
signature bears the loss. The exception to this rule arises only when
negligence can be traced on the part of the drawer whose signature
was forged, and the need arises to weigh the comparative negligence
between the drawer and drawee to determine who should bear the
burden of loss. The Court finds no basis to conclude that Samsung was
negligent in the safekeeping of its checks. For one, the settled rule
is that the mere fact that the depositor leaves his check book lying
around does not constitute such negligence as will free the bank from
liability to him, where a clerk of the depositor or other persons
taking advantage of the opportunity, abstract some of the check blanks, forges
the depositor’s signature and collect on the checks from the bank. And
for another, in point of fact Samsung was not negligent at all since
it reported the forgery almost immediately upon discovery.
With respect to Check No. 0084078, however, which was drawn against
another account of Llano, albeit the date of issue bears only the
year – 1999, its validity and negotiable character at the time the
complaint was filed was not affected. Section 6 of the Negotiable
Instrument Law provides that “the liability and negotiable character of an
instrument are not affected by the fact that -- (a) it is not dated; or
(b) Does not specify the value given, or that any value had been
given therefore, or (c) Does not specify the place where it is drawn
or the place where it is payable; or (d) Bears a seal; or (e)
Designate a particular kind of current money in which payment is to be
made (Victoria J. Ilano vs. Hon. Dolores Español, G.R. No. 161758, December 16, 2005,
478 SCRA 365)
5. ALVIN PATRIMONIO vs. NAPOLEON GUTIERREZ & MARASIGAN
FACTS: Alvin and Napoleon entered into a business venture under the
name “Slam Dunk Corporation.”
When Marasigan deposited the check, it was dishonored for the reason
“ACCOUNT CLOSED.”
Marasigan sought recovery from Napoleon and Alvin sending several demand
letters for the payment of the loan but to no avail prompting Marasigan
to file a criminal case for violation of B.P. 22 against Alvin.
(1) Whether Alvin is liable for the dishonor of the check he pre-signed.
HELD: (1) NO. Alvin is not liable. Under Section 14 of the Negotiable
Instrument Law, if the maker or drawer delivers a pre-signed blank paper
to another person for the purpose of converting it into a negotiable
instrument, that person is deemed to have prima facie authority to fill it
up.
While Napoleon had a prima facie authority to complete the check, such
prima facie authority does not extend to its use, i.e., subsequent transfer
or negotiation, once the check is complete. There is no evidence that
Napoleon ever secured prior approval from Alvin to fill up the blank o r to
use the check.
(2) NO. Marasigan is not a holder in due course. Under Section 52
(c) of the NIL, states that a holder in due course is one who takes
the instrument “in good faith and for value.”
FACTS: In April 2002, respondent Odrada sold a second hand Mitsubishi Montero
to Lim for P1,510,000. Lim initially paid P510,000 and the balance was to be
paid by RCBC thru a car loan.
Before the checks were presented to the bank, Lim notified Odrada that
there was an issue regarding the roadworthiness and hidden defects of the
Montero. Lim further instructed Odrada not to encash the manager’s checks until
his complaints are clarified and satisfied.
Without addressing Lim’s concern, Odrada deposited the manager’s checks with
IBank and redeposited them. However, the checks were dishonored both times
apparently upon Lim’s instruction to RCBC. Odrada was also notified by RCBC
the previous day of the cancellation of Lim’s auto loan.
ISSUES
RULINGS
Good faith means that the person taking the instrument has acted with
due honesty with regard to the rights of the parties liable on the
instrument and that at the time he took the instrument, the holder has no
knowledge of any defect or infirmity of the instrument. To constitute notice of
an infirmity in the instrument or defect in the title of the person negotiating
the same, the person to whom it is negotiated must have had actual
knowledge of such facts that his action in taking the instrument would
amount to bad faith.
After the bank official answered the telephone and returned from the
men’s room, the manager’s check no longer be found.
A third party named Marcelo Mesina deposited the manager’s check with
Prudential Bank but the drawee bank sent back the manager’s check to the
collecting bank with the words “payment stopped.”
When asked how Mesina got hold of the check, he merely stated that
Alexander Lim, who’s already at large, paid the check to him for “a certain
transaction.”
ISSUE
RULING
Therefore, the issuing bank could validly refuse payment because Mesina is
not a holder in due course.
FACTS: Altura Investors, Inc. purchased a manager’s check from UCPB, which then
issued a manager’s check in the amount of P494,000 to Makati Bel-Air
Developers, Inc. The manager’s check represented the payment of Altura for a
condominium unit it purchased from Makati Bel-Air Developers.
ISSUE
Whether UCPB can validly refuse to pay the value of the manager’s
check.
RULING
YES. UCPB can validly refuse to pay the value of the manager’s check
since Makati Bel-Air Developers’ title to the instrument became defective when
there arose a partial failure of consideration.
MATERIAL ALTERATION
FACTS: On the second week of December 1988, the President and Vice
President of PRCI were scheduled to go out of the country in connection
with the corporation’s business. They pre-signed several checks to insure
continuity of PRCI’s operation to settle obligations that might become due.
These checks were entrusted to the accountant with instructions to make
use of the same as the need arises.
HELD: YES. Although not in the strict sense “material alterations,” the
misplacement of typewritten entries for the payee and the amount on the
same blank and the repetition of the amount using a check writer
were glaringly obvious irregularities on the face of the check. Clearly,
someone made a mistake in filling up the check and the repetition of
the entries was possibly an attempt to rectify the
mistake. All these circumstances should have alerted the bank to the
possibility that the holder or the person who is attempting to encash
the check did not have proper title to the checks or did not have
authority to fill up and encash the same.
G.R. Nos. 175652, 175302 & 175394, November 28, 2014, 742 SCRA 835
FACTS: Chiok had been engaged in dollar trading for several years. He usually
buys dollars from Nuguid at the exchange rate prevailing on the date of
the sale.
Chiok pays Nuguid either in cash or manager’s check, to be picked up
by the latter or deposited in the latter’s bank account. Nuguid delivers the
dollars either on the same day or on a later date as may be agreed
upon between them, up to a week later.
Chiok and Nuguid had been dealing in this manner for about six to
eight years, with their transactions running into millions of pesos.
For this purpose, Chiok maintained accounts with Metrobank and Global
Bank and entered into a Bills Purchase Line Agreement (BPLA).
On July 5, 1995, Chiok deposited the three (3) manager’s checks from
Metrobank & Global Bank with an aggregate value of P26,068,035 in Nuguid’s
account with BPI. Nuguid was supposed to deliver US$1,022,288.50 as agreed
upon.
Chiok was allegedly advised to secure a court order within the 24-hour
clearing period, so he filed a complaint with an application for ex parte
restraining order or TRO with the RTC against Metrobank and Global Bank.
(2) Can the court deviate from the general principles that manager’s
checks are considered as substantially as good as the money they represent
in the case?
HELD: (1) NO. Under Art. 1191 of the Civil Code, the right to rescind
obligation is implied in reciprocal ones in case one of the obligors should
not comply with what is incumbent upon him.
The cause of action, however, is predicated upon the reciprocity of the
obligations of the injured party and the guilty party. Thus, the right of
rescission can be exercised in accordance with the principle of relativity of
contracts under Art. 1131 of the Civil Code.
In this case, when Nuguid failed to deliver the agreed amount to Chiok,
the latter had a cause of action against Metrobank and Global Bank that
would allow him to rescind the contract of sale of the manager’s checks,
which would have resulted in the crediting of the amounts thereof back to
Chiok’s checks. However, Metrobank and Global Bank are not parties to the
contract.
Facts:
Lao entered into a transaction with Everlink, through its authorized representative Wu, under
which, Everlink would supply him with "HCG sanitary wares"; and that for the down payment, he issued
two (2) Equitable crossed checks payable to Everlink: Check No. 0127-2422494 and Check No. 0127-
242250,5 in the amounts of P273,300.00 and P336,500.00, respectively.
Lao further averred that when the checks were encashed, he contacted Everlink for the
immediate delivery of the sanitary wares, but the latter failed to perform its obligation. Later, Lao
learned that the checks were deposited in two different bank accounts at respondent International
Exchange Bank, now respondent Union Bank of the Philippines (Union Bank). He was later informed that
the two bank accounts belonged to Wu and a company named New Wave Plastic (New Wave),
represented by a certain Willy Antiporda (Antiporda). Consequently, Lao was prompted to file a
complaint against Everlink and Wu for their failure to comply with their obligation and against BDO for
allowing the encashment of the two (2) checks. He later withdrew his complaint against Everlink as the
corporation had ceased existing.
Lao filed an Amended Complaint, wherein he impleaded Union Bank as additional defendant for
allowing the deposit of the crossed checks in two bank accounts other than the payee's, in violation of
its obligation to deposit the same only to the payee's account.
BDO averred that Union Bank, as the collecting bank and last endorser, must suffer the loss because it
had the duty to ascertain the genuineness of all prior endorsement. It asserted that as the drawee bank,
it could not be held liable because it merely relied on Union Bank's express guarantee.
Issue: WON A COLLECTING BANK ASSUMES RESPONSIBILITY FOR A CROSSED CHECK AS A GENERAL
ENDORSER IN ACCORDANCE WITH SECTION 66 OF THE NEGOTIABLE INSTRUMENTS LAW.
Held:
Yes. The liability of the collecting bank is anchored on its guarantees as the last endorser of the
check. Under Section 66 of the Negotiable Instruments Law, an endorser warrants "that the instrument
is genuine and in all respects what it purports to be; that he has good title to it; that all prior parties had
capacity to contract; and that the instrument is at the time of his endorsement valid and subsisting."
Union Bank was clearly negligent when it allowed the check to be presented by, and deposited
in the account of New Wave, despite knowledge that it was not the payee named therein. Further, it
could not have escaped its attention that the subject checks were crossed checks.
FACTS: Evangelista obtained a loan from Screenex which issued 2 checks to the former. There were also
vouchers of Screenex that were signed by the accused evidencing that he received the 2 checks in
acceptance of the loan granted to him. As security for the payment, Evangelista gave 2 open-dated
checks, both pay to order of Screenex. From the time it was issued, they were held in safekeeping
together with the other documents and papers of the company by Philip Gotuaco, Sr., father-in-law of
respondent Alexander Yu, until the former’s death. Before the checks were deposited, there was a
personal demand from the family for Evangelista to settle the loan and a demand letter was sent by the
family lawyer.
Evangelista was charged with violation of BP 22 in a criminal case filed with the MeTC of Makati. The
MeTC found that the prosecution had indeed proved the first 2 elements of cases involving BP 22 but
failed to prove the 3rd element. Also, there was failure on the part of Yu to prove that the demand letter
had actually been received by the addressee and there was no way to determine when the 5-day period
should start to toll, there was failure to establish prima facie evidence of knowledge of insufficiency of
funds, hence, the court acquitted Evangelista of the criminal charges. Ruling on the civil aspect, the
court held that while Evangelista admitted to having issued and delivered the checks to Gotuaco and
having fully paid the amount, no evidence of payment was presented. In the end, Evangelista was
declared liable for the civil obligation.
Timely appeal was made to the RTC raising two errors of the MeTC, to wit: 1) Lower court erred in not
appreciating the fact that the prosecution failed to prove the civil liability and 2) any civil liability
attributable to Evangelista had been extinguished by prescription. RTC held that the checks should be
taken as evidence of Evangelista’s indebtedness to prove that the obligation subsisted. Also, the alleged
payment of by Evangelista was an affirmative defense that he had the burden of proving but that he
failed to discharge.
CA, upon petition for review, denied the same. It held that the reckoning time for the prescriptive period
began when the instrument was issued and the corresponding check returned by the bank to its
depositor; that the issue of prescription was raised for the first time on appeal; and that the loan
obligation was never denied by Evangelista, who claimed it was already settled, but failed to show any
proof of payment.
ISSUE: Whether or not the CA committed a reversible error in holding that Evangelista is still liable for
the total amount indicated in the 2 checks considering that he was already acquitted in the criminal
charged for violation of BP 22.
HELD: In BP 22 cases, the action for the corresponding civil obligation is deemed instituted with the
criminal action. The criminal action for violation of BP 22 necessarily includes the corresponding civil
action and no reservation to file such civil action separately shall be allowed or recognized. This
notwithstanding, the civil action deemed instituted with the criminal action is treated as an independent
civil liability based on contract.
By definition, a check is a bill of exchange drawn on a bank payable on demand. It is an undertaking that
the drawer will pay the amount indicated thereon. Sec 119 of the NIL, however, states that a negotiable
instrument like a check may be discharged by any other act which will discharge a simple contract for
the payment of money. A check is therefore subject to a 10-year prescription of actions upon a written
contract. If the check is undated as in the present case, the cause of action is reckoned from the
issuance of the check. Assuming that Yu had authority to insert the dates in the checks, the fact that he
did so after the lapse of more than 10 years cannot qualify as changes made within a reasonable period.
The cause of action on the checks has become stale, hence time-barred. Prescription has indeed set in.
We therefore have no other recourse but to grant the petition on the ground of prescription. Even if the
defense was belatedly raised before the RTC for the first time on appeal from the ruling of MeTC, we
nonetheless dismiss the complaint, seeking to enforce civil liability of Evangelista based on the undated
checks. Holding Evanglista liable for the 2 checks has already prescribed.
Facts:
Issue:
Ruling: