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JIMENEZ v. BUCOY 103 PHIL 40 FACTS: In the proceedings in the intestate of Luther Young and Pacita Young who died in 1954 and 1952, respectively, Pacifica Jimenez presented for payment 4 promissory notes signed by Pacita for different amounts totalling P21,000. Acknowledging receipt by Pacita during the Japanese occupation, in the currency then prevailing, the Administrator manifested willingness to pay provided adjustment of the sums be made in line with the Ballantyne schedule. The claimant objected to the adjustment insisting on full payment in accordance with the notes. The Administrator also raised the the defense that the notes contained no express promise to pay a specified amount.The court held that the notes should be paid in the currency prevailing after the war, and thus entitling Jimemez to recover P21,000 plus P2,000 as attorneys fees. Hence, the appeal. ISSUES: (1) Whether the amounts should be paid, peso for peso; or whether a reduction should be made in accordance with the Ballantyne schedule. (2) Whether the note contains a promise to pay. HELD: (1) If the loan was expressly agreed to be payable only after the war, or after liberation, or became payable after those dates, no reduction could be effected, and peso-for-peso payment shall be ordered in Philippine currency. The Ballantyne Conversion Table does not apply where the monetary obligation, under the contract, was not payable during the Japanese occupation. Herein, the debtor undertook to pay six months after the war, peso for peso payment is indicated. (2) Yes. To constitute a good promissory note, no precise words of contract are necessary, provided they amount, in legal effect, to a promise to pay. In other words, if over and above the mere acknowledgment of the debt there may be collected from the words used a promise to pay it; the instrument may be regarded as a promissory note. Wherefore, in view of the foregoing considerations, the appealed decision is affirmed, except as to the attorney's fees which are hereby disapproved. So ordered. METROPOLITAN BANK V. CA 194 SCRA 169 FACTS: Eduardo Gomez opened an account with Golden Savings bank and deposited 38 treasury warrants. All these warrants were indorsed by Gloria Castillo as Cashier of Golden Savings and deposited to its Savings Account in the Metrobank branch in Calapan, Mindoro. They were then sent for clearing by the branch office to the principal office of Metrobank, which forwarded them to the Bureau of Treasury for special clearing. On persistent inquiries on whether the warrants have been cleared, the branch manager allowed withdrawal of the warrants, only to find out later on that the treasury warrants have been dishonoured. Metrobank demanded the refund by Golden Savings of 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. The trial court rendered a decision in favour of the defendant. The CA affirmed. Hence, this petition. ISSUE: Whether the treasury warrants are negotiable instruments, therefore making Golden Savings Bank liable. HELD: The treasury warrants were not negotiable instrume nts. Clearly, it is indicated that it was non-negotiable and of equal significance is the indication that they are payable from a particular fund, Fund 501. This indication as the source of payment to be made on the treasury warrant makes the promise to pay conditional and the warrants themselves non-negotiable. Metrobank then cannot contend that by indorsing the warrants in general, GS assumed that they were genuine and in all respects what they purport it to be, in accordance to Section 66 of the NIL. The simple reason is that the law isnt applicable to the non-negotiable treasury warrants. The indorsement was made for the purpose of merely depositing them with Metrobank for clearing. It was in fact Metrobank which stamped on the back of the warrants: All prior indorsements and/or lack of endorsements guaranteed PHILIPPINE EDUCATION INC v. SORIANO 39 SCRA 587 FACTS: Enrique Montinola sought to purchase from the Manila Post Office 10 money orders (P200 each), offering to pay for them with a private check. Montinola was able to leave the building with his check and the 10 money orders without the knowledge of the teller. Upon discovery, message was sent to all postmasters and banks involving the unpaid money orders. One of the money orders was received by the Philippine Education Co. as part of its sales receipt. It was deposited by the company with the Bank of America, which cleared it with the Bureau of Post. The Postmaster, through the Chief of the Money Order Division of the Manila Post Office informed the bank of the irregular issuance of the money order. The bank debited the account of the company. The company moved for reconsideration. ISSUE: Whether instruments. HELD: Philippine postal statutes are patterned from those of the United States, and the weight of authority in said country is that Postal money orders are not negotiable instruments inasmuch as the establishment of a postal money order is an exercise of governmental power for the publics benefit. Furthermore, some of the restrictions imposed upon money order by postal laws and regulations are inconsistent with the character of negotiable instruments. For instance, postal money orders may be withheld under a variety of circumstances, and which are restricted to not more than one indorsement. EQUITABLE BANKING V. IAC 161 SCRA 518 postal money orders are negotiable

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FACTS: Nell Company issued a check to help Casals and Casville Enterprises obtain a letter of credit from Equitable Banking in connection with equipment, a garrett skidder, which Casals and Casville were buying from Nell. Nell indicated the payee as follows EQUITABLE BANKING CORPORATION A/C CASVILLE ENTERPRISES INC. Casals deposited the check with the bank and the bank teller accepted the same and in accordance with customary bank practice, stamped in the check the words non-negotiable. The amount was withdrawn after the deposit. This prompted Nell to file a case against the bank, Casals and Casville. While the instant case was being tried, Casals and Casville assigned the garrett skidder to plaintiff which credited in favor of defendants the amount of P450,000, as partial satisfaction of its claim against them. HELD: Equitable is not liable to Nell. Nell should bear the loss as it was through its own acts, which put it into the power of Casals and Casville Enterprises to perpetuate the fraud against it. The check wasnt initially non-negotiable. Neither was it cross-checked. The rubber-stamping transversally on the face of the check was only made the bank teller in accordance with customary bank practice, and not by Nell as the drawer of the check, and simply meant that thereafter the same check could no longer be negotiated. The payee was not indicated with reasonable certainty in contravention of Section 8. As worded, it could be accepted as deposit to the account of the party named therein after the symbols of A/C, or payable to the bank as trustee, or as an agent, for Casville with the latter being the ultimate beneficiary. CALTEX v. CA 212 SCRA 489 FACTS: On various dates, Security Bank and Trust Co. (SEBTC), through its Sucat branch, issued 280 certificates of time deposit (CTD) in favor of one Angel dela Cruz who deposited with the bank the aggregate amount of P1.12 million. Anger de la Cruz delivered the CTDs to Caltex in connection with his purchase of fuel products from the latter. Subsequently, dela Cruz informed the bank that he lost all the CTDs, and thus executed an affidavit of loss to facilitate the issuance of the replacement CTDs. De la Cruz was able to obtain a loan of P875,000 from the bank, and in turn, he executed a notarized Deed of Assignment of Time Deposit in favor of the bank. Thereafter, Caltex presented for verification the CTDs (which were declared lost by de la Cruz) with the bank. Caltex formally informed the bank of its possession of the CTDs and its decision to preterminate the same. The bank rejected Caltex claim and demand, after Caltex failed to furnish copy of the requested documents evidencing the guarantee agreement, etc. In 1983, de la Cruz loan matured and the bank set-off and applied the time deposits as payment for the loan. Caltex filed the complaint, but it was dismissed. (1) Whether the Certificates of Time Deposit (CTDs) are negotiable instruments. (2) Whether the CTDs negotiation require delivery only. HELD: (1) The CTDs in question meet the requirements of the law for negotiability. Contrary to the lower courts findings, the CTDs are negotiable instruments (Section 1). Negotiability or non-negotiability of an instrument is determined from the writing, i.e. from the face of the instrument itself. The documents provided that the amounts deposited shall be repayable to the depositor. The amounts are to be repayable to the bearer of the documents, i.e. whosoever may be the bearer at the time of presentment. (2) Although the CTDs are bearer instruments, a valid negotiation thereof for the true purpose and agreement between it (Caltex) and de la Cruz requires both delivery and indorsement; as the CTDs were delivered to it as security for dela Cruz purchases of its fuel products, and not for payment. Herein, there was no negotiation in the sense of a transfer of title, or legal title, to the CTDs in which situation mere delivery of the bearer CTDs would have sufficed. The delivery thereof as security for the fuel purchases at most constitutes 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 since the terms thereof and the subsequent disposition of such security, in the event of non-payment of the principal obligation, must be contractually provided for. MUELLER & MARTIN v. LIBERTY INSURANCE 219 SW 465 FACTS: The corporation Mueller & Martin was defrauded by George L. Martin, one of its authorized signatories. Martin drew seven checks payable to the German Savings Fund Company Building Association (GSFCBA) amounting to $2,972.50 against the account of the corporation without authority from the latter. Martin was also an officer of the GSFCBA but did not have signing authority. At the back of the checks, Martin placed the rubber stamp of the GSFCBA and signed his own name as endorsement. He then successfully drew the funds from Liberty Insurance Bank for his own personal profit. When the corporation filed an action against the bank to recover the amount of the checks, the claim was denied. ISSUE: Whether the Bank is liable even if there was a fictitious payee. HELD: The US Supreme Court held in Mueller that when the person making the check so payable did not intend for the specified payee to have any part in the transactions, the payee is considered as a fictitious payee. The check is then considered as a bearer instrument to be validly negotiated by mere delivery. Thus, the US Supreme Court held that Liberty Insurance Bank, as drawee, was authorized to make payment to the bearer of the check, regardless of whether prior indorsements were genuine or not. AMERICAN SASH v COMMERCE TRUST 56 SW 2D 1034 FACTS: The plaintiff-appellant sues the defendant-respondent trust company for $2226.30, the amount of fifty certain payroll checks, which it is alleged the defendant wrongfully charged to the plaintiff's deposit account during the three months' period between September 15 and December 15,

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1922, the indorsements of the payees' names having been forged on the backs of said checks, and the defendant trust company having paid the amounts thereof to persons not entitled thereto. The defendant's answer was a general denial coupled with a plea of the affirmative defense that at the end of each of said three months it had returned to plaintiff all cancelled checks paid during the month together with a statement of the account showing all debits and credits, on which was printed a notice or stipulation that if no errors were reported in ten days the account would be considered correct. The answer avers this constituted an account stated; that the plaintiff negligently failed to discover and report the forged indorsements or that the checks "were in any manner incorrectly charged against the plaintiff's account," within said ten days; and further failed to report said forged indorsements within a reasonable time, as a result of which the defendant trust company was deprived of an opportunity to protect itself against loss. ISSUE: entitled to them by reason of a padded payroll made by the payroll clerk, and knew that one person named as payee in a check was not entitled to the money, his negligence in failing to note the name of such payee was not a defense, where he signed payroll checks by the hundred relying on the payroll information presented to him by the payroll clerk. ANG TEK LIAN V. CA 87 PHIL 383 FACTS: Knowing he had insufficient funds, Ang Tek Lian issued a check for P4000, payable to cash. This was given to Lee Hua Hong in exchange for cash. Upon presentment of the check, it was dishonoured for having insufficient funds. It is argued that the check, being payable to cash, wasnt indorsed by the defendant, and thus, isnt guilty of the crime charged. ISSUE: Whether the bank is negligent when it failed to ascertain the identity of the holder of the check. HELD: A check drawn to the order of cash is payable to bearer, and the bank may pay it to the person presenting it for payment without the drawers indorsement. Of course, if the bank is not sure of the bearers identity or financial solvency, it has the right to demand for identification and/or assurance against possible complicationsfor instance, forgery of the drawers signature, loss of the check by the rightful owner, raising the amount payable, etc. The bank therefore, requires for its protection that the indorsement of the draweror some other persons known to itbe obtained. A check payable to bearer is authority for payment to the holder. Where a check is in the ordinary form and is payable to bearer so that no indorsement is required, a bank to which it is presented for payment need not have the holder identified, and is not negligent in failing to do so. CHING v. NICDAO 522 SCRA 310 FACTS: Petitioner Ching averred that the checks were issued to him by respondent Nicdao as security for the loans that she obtained from him. They agreed that respondent Nicdao would leave the checks undated and that she would pay the loans within one year. However, when petitioner Ching went to see her after the lapse of one year to ask for payment, respondent Nicdao allegedly said that she had no cash. Petitioner Ching claimed that he went back to respondent Nicdao several times more but every time, she would tell him that she had no money. The checks were dishonored by the bank for being "DAIF." Shortly thereafter, petitioner Ching, together with Emma Nuguid, wrote a demand letter to respondent Nicdao which, however, went unheeded. Accordingly, they separately filed the criminal complaints for violation of BP 22 against the latter. The MCTC held that there was indeed a violation of BP 22. The MCTC further ruled that there was no evidence to show that petitioner Ching was not a holder in due course as to cause it (the MCTC) to believe that the said check was not issued to him. Respondent Nicdaos admission of indebtedness was sufficient to prove that there was

1)

Whether the bank is liable for the fraudulent payroll checks with fictitious payees 2) Whether the negligence of the depositor is a valid defense. HELD: 1) The word "person" used in Section 2638, Revised Statutes 1929, means the maker of the paper; the depositor not being bound by the guilty knowledge of its payroll clerk, who caused the checks to be made out to persons not entitled to the money, the intent of the payroll clerk did not make such checks payable to bearer. Where a payroll clerk had no authority to execute checks but fraudulently induced his principal to issue checks to persons not entitled to them, the maker was not bound by the guilty knowledge of the agent; the padding of the payroll by the agent was not the proximate cause of cashing of the checks. Where checks were executed to persons not entitled to them through fraudulent payroll list made out by the depositor's payroll clerk, the fact that such clerk delivered the checks payable to employees does not constitute a part of the making of such checks, where the payroll clerk had no authority to utter the checks nor discretion as to whom they should be delivered. 2) Where the authorized officer of a corporation draws a check in ignorance of the fact that the payee is fictitious or nonexistent, and the check is put in circulation by an employee acting outside the scope of his authority, the statute, Section 2639, Revised Statutes 1929, relating to checks payable to bearer does not apply because the corporation would be without actual or constructive knowledge of the fictitious status of the payee. Where a bank rendered monthly statements to its depositors with the cancelled checks which had printed thereon a request that the depositor "examine this statement" and report any error, in an action by the depositor for a balance due which the bank had paid out on forged endorsements, negligence of the depositor in failing to detect the forgery was an affirmative defense which the facts in the record show was not supported by the evidence. The fact that the secretary and treasurer of the depositor who signed checks, payable to persons not

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consideration for the issuance of the checks. RTC affirmed. Nicdao filed an appeal to the Court of Appeals. CA reversed the decision and acquitted accused upon finding that the checks were incomplete and undelivered. Ching is now appealing the civil aspect of the case to the Supreme Court. ISSUE: Whether Nicdao is liable civilly, the checks being incomplete and undelivered. HELD: The P20,000,000.00 check was a stolen check which was never issued nor delivered by respondent Nicdao to petitioner Ching. As such, according to the CA, petitioner Ching "did not acquire any right or interest over Check No. 002524 and cannot assert any cause of action founded on said check,"41 and that respondent Nicdao "has no obligation to make good the stolen check and cannot, therefore, be held liable for violation of B.P. Blg. 22." With respect to the ten (10) other checks, the CA established that the loans secured by these checks had already been extinguished after full payment had been made by respondent Nicdao. In this connection, the second element for the crime under BP 22, i.e., "that the check is made or drawn and issued to apply on account or for value," is not present. WHEREFORE, premises considered, the Petition is DENIED for lack of merit. SO ORDERED. DBR v. SIMA WEI 219 SCRA 736 FACTS: In consideration for a loan extended by the Development Bank of Rizal (DBR) to Sima Wei, the latter executed and delivered to the former a promissory note, engaging to pay DBR or order the amount of P1,820,000.00 on or before 24 June 1983 with interest at 32% per annum. Sima Wei made partial payments on the note, leaving a balance of P1,032,450.02. On 18 November 1983, Sima Wei issued two crossed checks payable to DBR drawn against China Banking Corporation, bearing respectively the serial numbers 384934, for the amount of P550,000.00 and 384935, for the amount of P500,000.00. The said checks were allegedly issued in full settlement of the drawer's account evidenced by the promissory note. These two checks were not delivered to DBR or to any of its authorized representatives. For reasons not shown, these checks came into the possession of Lee Kian Huat, who deposited the checks without DBR's indorsement (forged or otherwise) to the account of the Asian Industrial Plastic Corporation, at the Balintawak branch, Caloocan City, of the Producers Bank. Cheng Uy, Branch Manager of the Balintawak Branch of Producers Bank, relying on the assurance of Samson Tung, President of Plastic Corporation, that the transaction was legal and regular, instructed the cashier of Producers Bank to accept the checks for deposit and to credit them to the account of said Plastic Corporation, inspite of the fact that the checks were crossed and payable to DBR and bore no indorsement of the latter. On 5 July 1986, DBR filed the complaint for a sum of money against Sima Wei and/or Lee Kian Huat, Mary Cheng Uy, Samson Tung, Asian Industrial Plastic Corporation and the Producers Bank of the Philippines, on two causes of actionL (1) To enforce payment of the balance of P1,032,450.02 on a promissory note executed by Sima Wei on 9 June 1983; and (2) To enforce payment of two checks executed by Sima Wei, payable to ISSUE: Whether DBR, as the intended payee of the instrument, has a cause of action against any or all of the defendants, in the alternative or otherwise. HELD: The normal parties to a check are the drawer, the payee and the drawee bank. Courts have long recognized the business custom of using printed checks where blanks are provided for the date of issuance, the name of the payee, the amount payable and the drawer's signature. All the drawer has to do when he wishes to issue a check is to properly fill up the blanks and sign it. However, the mere fact that he has done these does not give rise to any liability on his part, until and unless the check is delivered to the payee or his representative. A negotiable instrument, of which a check is, is not only a written evidence of a contract right but is also a species of property. Just as a deed to a piece of land must be delivered in order to convey title to the grantee, so must a negotiable instrument be delivered to the payee in order to evidence its existence as a binding contract. Section 16 of the Negotiable Instruments Law, which governs checks, provides in part that "Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto." Thus, the payee of a negotiable instrument acquires no interest with respect thereto until its delivery to him. Delivery of an instrument means transfer of possession, actual or constructive, from one person to another. Without the initial delivery of the instrument from the drawer to the payee, there can be no liability on the instrument. Moreover, such delivery must be intended to give effect to the instrument. Herein, the two (2) China Bank checks, were not delivered to the payee, DBR. Without the delivery of said checks to DBR, the former did not acquire any right or interest therein and cannot therefore assert any cause of action, founded on said checks, whether against the drawer Sima Wei or against the Producers Bank or any of the other respondents. Since DBR never received the checks on which it based its action against said respondents, it never owned them (the checks) nor did it acquire any interest therein. Thus, anything which the respondents may have done with respect to said checks could not have prejudiced DBR. It had no right or interest in the checks which could have been violated by said respondents. DBR has therefore no cause of action against said respondents, in the alternative or otherwise. If at all, it is Sima Wei, the drawer, who would have a cause of action against her co-respondents, if the allegations in the complaint are found to be true. DBR, and drawn against the China Banking Corporation, to pay the balance due on the promissory note. Except for Lee Kian Huat, Sima Wei, et al. filed their separate Motions to Dismiss alleging a common ground that the complaint states no cause of action. The trial court granted the Motions to Dismiss. The Court of Appeals affirmed the decision, to which DBR, represented by its Legal Liquidator, filed the Petition for Review by Certiorari.

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