PRELIMINARY CONSIDERA CONSIDER ATIONS Philippine Education Co. Inc. vs. Soriano !R L"##$%&' (% )une *+,*En Banc, Dizon (J): 8 concur, 2 took no part Facts: On 18 April 1958 Enriqu !ontinola sou"#t to purc#as $ro% t# !anila &ost O'c 1 %on or*rs o$ &2+ ac# paal to E+ &+ !ontinola -it# a**rss at .ucna, /uzon+ A$tr t# postal tllr #a* %a* out %on or*rs nu%r* 12085, 1208312095, !ontinola o4r* to pa $or t#% -it# a priat c#ck+As priat c#cks -r not "nrall accpt* in pa%nt o$ %on or*rs, t# tllr a*is* #i% to s t# 6#i$ o$ t# !on Or*r Diision, ut insta* o$ *oin" so, !ontinola %ana"* to la t# uil*in" -it# #is o-n c#ck an* t# 1 %on or*rs -it#out t# kno-l*" o$ t# tllr+ tllr+ On t# sa% *at, 18 April 1958, upon *iscor o$ t# *isapparanc o$ t# unpai* %on or*rs, an ur"nt %ssa" -as snt to all post%astrs, an* t# $ollo-in" *a notic -as lik-is sr* upon all anks+ instructin" t#% not to pa anon o$ t# %on or*rs a$orsai* i$ prsnt* $or pa%nt+ 7# Blank o$ A%rica rci* a cop o$ sai* notic *as latr+ On 2 April 1958 on o$ t# ao %ntion* %on or*rs nu%r* 12088 -as rci* rci* &#ilippin E*ucation 6o+ as part o$ its sals rcipts+ 7# $ollo-in" *a it *posit* t# sa% -it# t# Bank o$ A%rica, an* on *a t#ra$tr t# lattr clar* it -it# t# Burau o$ &osts an* rci* $ro% t# lattr its $ac alu o$ &2++ On 2 pt%r 191,
!auricio A+ oriano, 6#i$ o$ t# !on Or*r Diision o$ t# !anila &ost O'c, actin" $or an* in #al$ o$ &ost3%astr Enrico &alo%ar, noti* t# Bank o$ A%rica t#at %on or*r 12088 attac#* to #is lttr #a* n $oun* to #a n irr"ularl issu* an* t#at, in i- t#ro$, t# a%ount it rprsnt* #a* n **uct* $ro% t# ank;s clarin" account+ For its part, on Au"ust 2 o$ t# sa% ar, t# Bank o$ A%rica *it* &#ilippin E*ucation 6o+;s account -it# t# sa% a%ount an* "a it a*ic t#ro$ %ans o$ a *it %%o+ On 12 Octor 191 &#ilippin E*ucation 6o+ rqust* t# &ost%astr <nral to rconsi*r t# action takn #is o'c **uctin" t# su% o$ &2+ $ro% t# clarin" account o$ t# Bank o$ A%rica, ut #is rqust -as *ni*+ o -as &#ilippin E*ucation 6o+;s susqunt rqust t#at t# %attr r$rr* r$rr* to t# crtar o$ ustic $or a*ic+ 7#ra$tr, &#ilippin E*ucation 6o+ lat* t# %attr to t# crtar o$ &ulic =orks an* 6o%%unications, ut t# lattr sustain* t# actions takn t# postal o'crs+ >n connction -it# t# nts st $ort# ao, !ontinola -as c#ar"* -it# t#$t in t# 6ourt o$ First >nstanc o$ !anila (6ri%inal 6as 08) ut a$tr trial # -as acquitt* on t# "roun* o$ rasonal *out+ On 8 Januar 192 &#ilippin E*ucation 6o+ l* an action a"ainst oriano, t al+ in t# !unicipal 6ourt o$ !anila+ On 1 ?o%r 192, a$tr t# partis #a* su%itt* t# stipulation o$ $acts, t# %unicipal court rn*r* rn*r* @u*"%nt, or*rin" oriano, t
al+ to countr%an* t# notic "in to t# Bank o$ A%rica on 2 pt%r 191, **uctin" $ro% sai* Bank;s clarin" account t# su% o$ &2+ rprsntin" t# a%ount o$ postal %on or*r 12088, or in t# altrnati, to in*%ni$ &#ilippin E*ucation 6o+ in t# sai* su% o$ &2+ -it# intrst t#ron t#ron at t# rat o$ 8312 pr annu% $ro% 2 pt%r 191 until $ull pai*C -it#out an pronounc%nt as to costs an* attorn;s $s+ 7# cas -as appal* to t# 6ourt o$ First >nstanc o$ !anila -#r, a$tr t# partis #a* rsu%itt* t# sa% stipulation o$ $acts, t# appal* *cision *is%issin" t# co%plaints -it# costs, -as rn*r*+ &#ilippin E*ucation 6o+ appal*+ >ssu: =#t#r t# postal %on or*r is a n"otial instru%nt+ l*: &#ilippin postal statuts statuts -r -r pattrn* a$tr si%ilar statuts in $orc in t# nit* tats+ For t#is rason, &#ilippin postal statuts ar "nrall constru* in accor*anc -it# t# construction "in in t# nit* tats to t#ir o-n postal statuts, in t# asnc o$ an spcial rason @usti$in" a *partur $ro% t#is polic or practic+ 7# -i"#t o$ aut#orit in t# nit* nit* tatus is t#at postal %on or*rs ar not n"otial instru%nts, t# rason #in* t#is rul in" t#at, in stalis#in" an* opratin" a postal %on or*r sst%, t# "orn%nt is not n"a"in" in co%%rcial transactions ut %rl Grciss a "orn%ntal po-r $or t# pulic nt+ o% o$ t#
rstrictions i%pos* upon %on or*rs postal la-s an* r"ulations ar inconsistnt -it# t# c#aractr o$ n"otial nstru%nts+ For instanc, suc# la-s an* r"ulations usuall proi* $or not %or t#an on n*ors%ntC pa%nt o$ %on or*rs %a -it##l* un*r a arit o$ circu%stancs Tia/ia vs. Court o0 Appeals !R *%%#+%' $ )une *++(con* Diision, &a*illa (J): concur Facts: 6as 508 -as a suit $or collction o$ a su% o$ %on l* E*n 7an a"ainst t# 7ia@ia spouss (?orrto Jr+ Jr+ an* 6ar%n)+ A -rit o$ attac#%nt -as issu* t# trial court on 1 Au"ust 198 an* on 1 pt%r 198, t# Dput #ri4 l* a rturn statin" t#at a *posit %a* t# 7ia@ia spouss in t# H"ional 7rial 6ourt (H76) o$ Ialookan 6it in t# a%ount o$ &002,5+ &002,5+ in anot#r cas, #a* n "arnis#* #i%+ On 1 !arc# 1988, t# H76, Branc# 151 o$ &asi", !tro !anila rn*r* its *cision in 6iil 6as 508 in $aor o$ E*n 7an, or*rin" t# 7ia@ia spouss to pa #r an a%ount in Gcss Gcss o$ &,++ &,++ On appal, t# 6ourt o$ Appals %o*i* t# *cision r*ucin" t# a-ar* o$ %oral an* G%plar *a%a"s+ 7# *cision #ain" co% nal, E*n 7an l* t# corrspon*in" %otion $or Gcution an* t#ra$tr, t#ra$tr, t# "arnis#* $un*s -#ic# t#n -r on *posit -it# t# cas#ir o$ t# H76 o$ &asi", !tro !anila, -r li* upon+ On 10 Dc%r 199, t# 7ia@ia spouss *lir* *lir* to Dput #ri4 E*uar*o Boli%a t# total %on
al+ to countr%an* t# notic "in to t# Bank o$ A%rica on 2 pt%r 191, **uctin" $ro% sai* Bank;s clarin" account t# su% o$ &2+ rprsntin" t# a%ount o$ postal %on or*r 12088, or in t# altrnati, to in*%ni$ &#ilippin E*ucation 6o+ in t# sai* su% o$ &2+ -it# intrst t#ron t#ron at t# rat o$ 8312 pr annu% $ro% 2 pt%r 191 until $ull pai*C -it#out an pronounc%nt as to costs an* attorn;s $s+ 7# cas -as appal* to t# 6ourt o$ First >nstanc o$ !anila -#r, a$tr t# partis #a* rsu%itt* t# sa% stipulation o$ $acts, t# appal* *cision *is%issin" t# co%plaints -it# costs, -as rn*r*+ &#ilippin E*ucation 6o+ appal*+ >ssu: =#t#r t# postal %on or*r is a n"otial instru%nt+ l*: &#ilippin postal statuts statuts -r -r pattrn* a$tr si%ilar statuts in $orc in t# nit* tats+ For t#is rason, &#ilippin postal statuts ar "nrall constru* in accor*anc -it# t# construction "in in t# nit* tats to t#ir o-n postal statuts, in t# asnc o$ an spcial rason @usti$in" a *partur $ro% t#is polic or practic+ 7# -i"#t o$ aut#orit in t# nit* nit* tatus is t#at postal %on or*rs ar not n"otial instru%nts, t# rason #in* t#is rul in" t#at, in stalis#in" an* opratin" a postal %on or*r sst%, t# "orn%nt is not n"a"in" in co%%rcial transactions ut %rl Grciss a "orn%ntal po-r $or t# pulic nt+ o% o$ t#
rstrictions i%pos* upon %on or*rs postal la-s an* r"ulations ar inconsistnt -it# t# c#aractr o$ n"otial nstru%nts+ For instanc, suc# la-s an* r"ulations usuall proi* $or not %or t#an on n*ors%ntC pa%nt o$ %on or*rs %a -it##l* un*r a arit o$ circu%stancs Tia/ia vs. Court o0 Appeals !R *%%#+%' $ )une *++(con* Diision, &a*illa (J): concur Facts: 6as 508 -as a suit $or collction o$ a su% o$ %on l* E*n 7an a"ainst t# 7ia@ia spouss (?orrto Jr+ Jr+ an* 6ar%n)+ A -rit o$ attac#%nt -as issu* t# trial court on 1 Au"ust 198 an* on 1 pt%r 198, t# Dput #ri4 l* a rturn statin" t#at a *posit %a* t# 7ia@ia spouss in t# H"ional 7rial 6ourt (H76) o$ Ialookan 6it in t# a%ount o$ &002,5+ &002,5+ in anot#r cas, #a* n "arnis#* #i%+ On 1 !arc# 1988, t# H76, Branc# 151 o$ &asi", !tro !anila rn*r* its *cision in 6iil 6as 508 in $aor o$ E*n 7an, or*rin" t# 7ia@ia spouss to pa #r an a%ount in Gcss Gcss o$ &,++ &,++ On appal, t# 6ourt o$ Appals %o*i* t# *cision r*ucin" t# a-ar* o$ %oral an* G%plar *a%a"s+ 7# *cision #ain" co% nal, E*n 7an l* t# corrspon*in" %otion $or Gcution an* t#ra$tr, t#ra$tr, t# "arnis#* $un*s -#ic# t#n -r on *posit -it# t# cas#ir o$ t# H76 o$ &asi", !tro !anila, -r li* upon+ On 10 Dc%r 199, t# 7ia@ia spouss *lir* *lir* to Dput #ri4 E*uar*o Boli%a t# total %on
@u*"%nt in t# $ollo-in" $or%: (1) (1) 6as#ir;s 6#ck -ort# &22,5+, an* 6as# in t# a%ount a %ount o$ &15,+ (7otallin" &98,08+)+ E*n 7an, r$us* to accpt t# pa%nt %a* t# 7ia@ia spouss an* insta* insist* insist* t#at t# "arnis#* $un*s *posit* -it# t# cas#ir o$ t# H76 o$ &asi", !tro !anila -it#*ra-n to satis$ t# @u*"%nt oli"ation+ On 15 Januar 1991, t# spouss l* a %otion to li$t t# -rit o$ Gcution Gcution on t# "roun* t#at t# @u*"%nt *t #a* alra* n n pai*+ On 29 Januar 1991, t# %otion -as *ni* t# trial court on t# "roun* t#at pa%nt in cas#ir;s c#ck is not pa%nt in l"al tn*r an* t#at pa%nt -as %a* a t#ir* part ot#r t#an t# *$n*ant+ A %otion $or rconsi*ration -as *ni* on 8 Fruar 1991+ 7#ra$tr, t# spouss 7ia@ia l* a ptition $or crtiorari, pro#iition an* in@unction in t# 6ourt o$ Appals+ 7# appllat court *is%iss* t# ptition on 20 April 1991 #ol*in" t#at pa%nt cas#ir;s c#ck is not pa%nt in l"al tn*r as rquir* Hpulic Act 529+ 7# %otion $or rconsi*ration -as *ni* on 2 !a 1991+ 7# spouss l* t# ptition $or ri-+ >ssu: =#t#r pa%nt %ans o$ c#ck (n cas#ir;s c#ck) is consi*r* pa%nt in l"al tn*r as rquir* t# 6iil 6o*, Hpulic Act 529, an* t# 6ntral Bank Act+ l*: Articl 1209 o$ t# 6iil 6o* -#ic# proi*s t#at 7# pa%nt o$ *ts in %on s#all %a* in t# currnc
stipulat*, an* i$ it is not possil to *lir suc# currnc, t#n in t# currnc -#ic# is l"al tn*r in t# &#ilippins+ 7# *lir o$ pro%issor nots paal to or*r, or ills o$ Gc#an" Gc#an" or ot#r %rcantil *ocu%nts s#all pro*uc t# 4ct o$ pa%nt onl -#n t# #a n cas#*, or -#n t#rou"# t# $ault o$ t# cr*itor t# #a n i%pair*+ >n t# %anti%, t# action *ri* $ro% t# ori"inal oli"ation s#all #l* in aanc+ ction 1 o$ Hpulic Hpulic Act 529, as a%n**, on t# ot#r #an*, proi*s t#at Er proision contain* in, or %a* -it# rspct to, an oli"ation -#ic# purports to "i t# oli" t# ri"#t to rquir pa%nt in "ol* or in an particular kin* o$ coin or currnc ot#r t#an &#ilippin currnc or in an a%ount o$ %on o$ t# &#ilippins %asur* t#r, s#all as it is #r *clar* a"ainst pulic polic, null an* oi*, an* o$ no 4ct, an* no suc# proision s#all contain* in, or %a* -it# rspct to, an oli"ation t#ra$tr t#ra$tr incurr*+ Er oli"ation #rto$or an* #ra$tr incurr*, -#t#r or not an suc# proision as to pa%nt is contain* t#rin or %a* -it# rspct t#rto, s#all *isc#ar"* upon pa%nt in an coin or currnc -#ic# at t# ti% o$ pa%nt is l"al tn*r $or pulic an* priat *ts+ Also, ction o$ Hpulic Act 25, a%n** (6ntral Bank Act) -#ic# proi*s t#at 6#cks rprsntin" rprsntin" *posit %on *o not #a l"al tn*r po-r an* t#ir accptanc in t# pa%nt o$ *ts, ot# pulic an* priat, is at t# option o$ t# cr*itor:
&roi**, #o-r, t#at a c#ck -#ic# #as n clar* an* cr*it* to t# account o$ t# cr*itor s#all quialnt to a *lir to t# cr*itor o$ cas# in an a%ount qual to t# a%ount cr*it* to #is account+ Furt#r, in t# rcnt cass o$ &#ilippin Airlins, >nc+ s+ 6ourt o$ Appals (
nc+ s+ >ntr%*iat Appllat 6ourt (n t# %or rcnt cas o$ Fortuna*o s+ 6ourt o$ Appals (
Philippine Airlines vs. Court o0 Appeals !R $+*11' (% )anuar2 *++%En Banc,
Facts:
On 8 ?o%r 19, A%lia 7an, un*r t# na% an* stl o$ Al &rintin" &rss co%%nc* a co%plaint $or *a%a"s $or t# 6ourt o$ First >nstanc (6F>) o$ !anila (6iil 6as 1)+ A$tr trial, t# 6F> o$ !anila, Branc# 1, t#n prsi** or t# lat Ju*" Jsus &+ !or$ rn*r* @u*"%nt on 29 Jun 192, in $aor o$ 7an, or*rin" &#ilippin Airlins, >nc+ (&A.) to pa 7an t# a%ount o$ &5,+ as actual *a%a"s, -it# l"al intrst t#ron $ro% 7an;s Gtra3@u*icial *%an* %a* t# lttr o$ 2 Jul 19C &18,2+, rprsntin" t# unraliz* prot o$ 1 inclu** in t# contract pric o$ &2,+ plus l"al intrst t#ron $ro% 2 Jul 19C &2,+ as an* $or %oral *a%a"s, -it# l"al intrst t#ron $ro% 2 Jul 19C &5,+ *a%a"s as an* $or attorn;s $C -it# costs a"ainst &A.+ On 28 Jul 192, &A. l* its appal -it# t# 6ourt o$ Appals (6A3;s *cision, or*rin" &A. to pa t# su% o$ &25,+ as *a%a"s an* &5,+ as attorn;s $+ ?otic o$ @u*"%nt -as snt t# 6ourt o$ Appals to t# trial court an* on *ats susqunt t#rto, a %otion $or rconsi*ration -as l* 7an, *ul oppos* &A.+ On 2 !a 19, t# 6ourt o$ Appals rn*r* its rsolution *nin" 7an;s %otion $or rconsi*ration $or lack o$ %rit+ ?o $urt#r appal #ain" n takn t# partis, t# @u*"%nt ca% nal an* Gcutor an* on 1 !a 19, @u*"%nt -as corrspon*in"l ntr* in t# cas+
7# cas -as r%an** to t# trial court $or Gcution an* on 2 pt%r 19, 7an l* a %otion prain" $or t# issuanc o$ a -rit o$ Gcution o$ t# @u*"%nt rn*r* t# 6ourt o$ Appals+ On 11 Octor 19, t# trial court, prsi** or Ju*" Hicar*o D+ nstanc o$ !anila $or n$orc%nt+ 0 %ont#s latr, on 11 Fruar 198, 7an %o* $or t# issuanc o$ an alias -rit o$ Gcution statin" t#at t# @u*"%nt rn*r* t# lo-r court, an* a'r%* -it# %o*ication t# 6ourt o$ Appals, r%ain* unsatis*+ On 1 !arc# 198, &A. l* an opposition to t# %otion $or t# issuanc o$ an alias -rit o$ Gcution statin" t#at it #a* alra* $ull pai* its oli"ation to 7an t#rou"# t# *put s#ri4 o$ t# court, Hs, as i*nc* cas# ouc#rs proprl si"n* an* rcipt* sai* E%ilio + Hs+ On !arc# 198, t# 6ourt o$ Appals *ni* t# issuanc o$ t# alias -rit $or in" pr%atur, or*rin" t# Gcutin" s#ri4 Hs to appar -it# #is rturn an* Gplain t# rason $or #is $ailur to surrn*r t# a%ounts pai* to #i% &A.+ o-r, t# or*r coul* not sr* upon Dput #ri4 Hs -#o #a* ascon** or *isappar*+ On 28 !arc# 198, %otion $or t# issuanc o$ a partial alias -rit o$ Gcution -as l* 7an+ On 19 April 198, 7an l* a %otion to -it#*ra- !otion $or &artial Alias =rit o$ EGcution -it# ustitut !otion $or
Alias =rit o$ EGcution+ On 1 !a 198, t# Ju*" issu* an or*r "rantin" t# %otion, an* issuin" t# alias -rit o$ Gcution+ On 18 !a 198, &A. rci* a cop o$ t# rst alias -rit o$ Gcution issu* on t# sa% *a *irctin" pcial #ri4 Jai% I+ *l Hosario to l on Gcution in t# su% o$ &25,+ -it# l"al intrst t#ron $ro% 2 Jul 19 -#n 7an %a* an Gtra@u*icial *%an* t#rou"# a lttr+ . -as also or*r* $or t# $urt#r su% o$ &5,+ a-ar** as attorn;s $s+ On 2 !a 198, &A. l* an ur"nt %otion to quas# t# alias -rit o$ Gcution statin" t#at no rturn o$ t# -rit #a* as t n %a* Dput #ri4 Hs an* t#at t# @u*"%nt *t #a* alra* n $ull satis* &A. as i*nc* t# cas# ouc#rs si"n* an* rcipt* t# srr o$ t# -rit o$ Gcution, Dput #ri4 Hs+ On 2 !a 198, pcial #ri4 *l Hosario sr* a notic o$ "arnis#%nt on t# *positor ank o$ &A., Far East Bank an* 7rust 6o%pan, Hosario Branc#, Binon*o, !anila, t#rou"# its %ana"r an* "arnis#* &A.;s *posit in t# sai* ank in t# total a%ount o$ &0,08+ as o$ 1 !a 198+ &A. l* t# ptition $or crtiorari+ >ssu: =#t#r t# pa%nt %a* to t# ascon*in" s#ri4 c#ck in #is na% oprat to satis$ t# @u*"%nt *t+
l*:
n*r t# initial @u*"%nt, A%lia 7an -as $oun* to #a n -ron"* &A.+ # l* #r co%plaint in 19+ A$tr 1 ars o$ protract* liti"ation in t# 6ourt o$ First >nstanc an* t# 6ourt o$ Appals, !s+ 7an -on #r cas+ Al%ost 22 ars latr, !s+ 7an #as not sn a cntao o$ -#at t# courts #a sol%nl *clar* as ri"#t$ull #rs+ 7#rou"# asolutl no $ault o$ #r o-n, !s+ 7an #as n *pri* o$ -#at, tc#nicall, s# s#oul* #a n pai* $ro% t# start, $or 19, -it#out n* o$ #r "oin" to court to n$orc #r ri"#ts+ An* all caus &A. *i* not issu t# c#cks intn** $or #r, in #r na%+ n*r t# pculiar circu%stancs o$ t# cas, t# pa%nt to t# ascon*in" s#ri4 c#ck in #is na% *i* not oprat as a satis$action o$ t# @u*"%nt *t+ >n "nral, a pa%nt, in or*r to 4cti to *isc#ar" an oli"ation, %ust %a* to t# propr prson+ Articl 120 o$ t# 6iil 6o* proi*s t#at &a%nt s#all %a* to t# prson in -#os $aor t# oli"ation #as n constitut*, or #is succssor in intrst, or an prson aut#oriz* to rci it+ Furt#r, Articl 1209 o$ t# 6iil 6o* proi*s t#at 7# pa%nt o$ *ts in %on s#all %a* in t# currnc stipulat*, an* i$ it is not possil to *lir suc# currnc, t#n in t# currnc -#ic# is l"al tn*r in t# &#ilippins+ 7# *lir o$ pro%issor nots paal to or*r, or ills o$ Gc#an" or ot#r %rcantil *ocu%nts s#all pro*uc t# 4ct o$ pa%nt onl -#n t# #a n cas#*, or -#n t#rou"# t# $ault o$ t# cr*itor t# #a n i%pair*+ >n t# %anti%, t# action *ri* $ro% t# ori"inal oli"ation s#all
#l* in aanc+ >n t# asnc o$ an a"r%nt, it#r Gprss or i%pli*, pa%nt %ans t# *isc#ar" o$ a *t or oli"ation in %on an* unlss t# partis so a"r, a *tor #as no ri"#ts, Gcpt at #is o-n pril, to sustitut so%t#in" in liu o$ cas# as %*iu% o$ pa%nt o$ #is *t+ 6onsquntl, unlss aut#oriz* to *o so la- or consnt o$ t# oli", a pulic o'cr #as no aut#orit to accpt ant#in" ot#r t#an %on in pa%nt o$ an oli"ation un*r a @u*"%nt in" Gcut*+trictl spakin", t# accptanc t# s#ri4 o$ &A.;s c#cks *os not, pr s, oprat as a *isc#ar" o$ t# @u*"%nt *t+ inc a n"otial instru%nt is onl a sustitut $or %on an* not %on, t# *lir o$ suc# an instru%nt *os not, itsl$, oprat as pa%nt+ A c#ck, -#t#r a %ana"r;s c#ck or or*inar c#ck, is not l"al tn*r, an* an o4r o$ a c#ck in pa%nt o$ a *t is not a ali* tn*r o$ pa%nt an* %a r$us* rcipt t# oli" or cr*itor+ !r *lir o$ c#cks *os not *isc#ar" t# oli"ation un*r a @u*"%nt+ 7# oli"ation is not Gtin"uis#* an* r%ains suspn** until t# pa%nt co%%rcial *ocu%nt is actuall raliz*
II. 3ORM AND INTERPRETATION O3 NE!OTIA4LE INSTR5MENTS Metropolitan 4an6 7 Trust Co8pan2 vs. Court o0 Appeals !R 11199' *1 3eruar2 *++*First Diision, 6ruz (J): 0 concur
Facts: 7# !tropolitan Bank an* 7rust 6o+ (!troBank) is a co%%rcial ank -it# ranc#s t#rou"#out t# &#ilippins an* n aroa*+ n Januar 199, a crtain E*uar*o
*posits, n turn,
-it# costs a"ainst !troankC issolin" an* li$tin" t# -rit o$ attac#%nt o$ t# proprtis o$ ssu: =#t#r t# trasur -arrants in qustion ar n"otial instru%nts+ l*: 6larl sta%p* on t# trasur -arrants; $ac is t# -or* non3n"otial+ !oror, an* t#is is o$ qual si"nicanc, it is in*icat* t#at t# ar paal $ro% a particular $un*, to -it, Fun* 51+ ction 1 o$ t# ?"otial >nstru%nts .a-, proi*s t#at An instru%nt to n"otial %ust con$or% to t# $ollo-in" rquir%nts: (a) >t %ust in -ritin" an* si"n* t#
%akr or *ra-rC () !ust contain an uncon*itional pro%is or or*r to pa a su% crtain in %onC (c) !ust paal on *%an*, or at a G* or *tr%inal $utur ti%C (*) !ust paal to or*r or to arrC an* () =#r t# instru%nt is a**rss* to a *ra-, # %ust na%* or ot#r-is in*icat* t#rin -it# rasonal crtaint+ ction (=#n pro%is is uncon*itional) t#ro$ proi*s t#at An unquali* or*r or pro%is to pa is uncon*itional -it#in t# %anin" o$ t#is Act t#ou"# coupl* -it# K (a) An in*ication o$ a particular $un* out o$ -#ic# ri%urs%nt is to %a* or a particular account to *it* -it# t# a%ountC or () A stat%nt o$ t# transaction -#ic# "is ris to t# instru%nt+ But an or*r or pro%is to pa out o$ a particular $un* is not uncon*itional+ 7# in*ication o$ Fun* 51 as t# sourc o$ t# pa%nt to %a* on t# trasur -arrants %aks t# or*r or pro%is to pa not uncon*itional an* t# -arrants t#%sls non3n"otial+ 7#r s#oul* no qustion t#at t# Gcption on ction o$ t# ?"otial >nstru%nts .a- is applical in t# prsnt cas+ !troank cannot contn* t#at in*orsin" t# -arrants in "nral, nstru%nts .a-+ 7# si%pl rason is t#at t#is la- is not applical to t# non3n"otial trasur -arrants+ 7# in*ors%nt -as %a*
"uarantin" t# "nuinnss o$ t# -arrants ut %rl to *posit t#% -it# !troank $or clarin"+ >t -as in $act !troank t#at %a* t# "uarant -#n it sta%p* on t# ack o$ t# -arrants: All prior in*ors%nt an*or lack o$ n*ors%nts "uarant*, !tropolitan Bank L 7rust 6o+, 6alapan Branc#+
Calte: ;Philippines< Inc. vs. CA n 198, * la 6ruzM loan %atur* an* t# ank st3o4 an* appli* t# ti% *posits as pa%nt $or t# loan+ 6altG l* t# co%plaint, ut -#ic# -as *is%iss*+
>ssu N1:=#t#r t# 6rticats o$ 7i% Dposit (67Ds) ar n"otial instru%nts+
l* N1:7# 67Ds in qustion %t t# rquir%nts o$ t# la- $or n"otiailit+ 6ontrar to t# lo-r courtMs n*in"s, t# 67Ds ar n"otial instru%nts (ction 1)+ ?"otiailit or non3n"otiailit o$ an instru%nt is *tr%in* $ro% t# -ritin", i++ $ro% t# $ac o$ t# instru%nt itsl$+ 7# *ocu%nts proi** t#at t# a%ounts *posit* s#all rpaal to t# *positor+ 7# a%ounts ar to rpaal to t# arr o$ t# *ocu%nts, i++ -#osor %a t# arr at t# ti% o$ prsnt%nt+ >ssu N2:=#t#r t# 67DsM n"otiation rquir *lir onl+ l* N2:Alt#ou"# t# 67Ds ar arr instru%nts, a ali* n"otiation t#ro$ $or t# tru purpos an* a"r%nt t-n it (6altG) an* * la 6ruz rquirs ot# *lir an* in*ors%ntC as t# 67Ds -r *lir* to it as scurit $or *la 6ruzM purc#ass o$ its $ul pro*ucts, an* not $or pa%nt+ rin, t#r -as no n"otiation in t# sns o$ a trans$r o$ titl, or l"al titl, to t# 67Ds in -#ic# situation %r *lir o$ t# arr 67Ds -oul* #a su'c*+ 7# *lir t#ro$ as scurit $or t# $ul purc#ass at %ost constituts 6altG as a #ol*r $or alu rason o$ #is lin+ Accor*in"l, a n"otiation $or suc# purpos cannot 4ct* %r *lir o$ t# instru%nt sinc t# tr%s t#ro$ an* t# susqunt *isposition o$ suc# scurit, in t# nt o$ non3pa%nt o$
t# principal oli"ation, %ust contractuall proi** $or+ An= Te6 Lian vs. Court o0 Appeals !R L"#&*9' #& Septe8er *+&%En Banc, Bn"zon (J): concur
Facts: Ino-in" # #a* no $un*s t#r$or, An" 7k .ian *r- on atur*a, 1 ?o%r 190, a c#ck upon t# 6#ina Bankin" 6orporation $or t# su% o$ &0,, paal to t# or*r o$ cas#+ *lir* it to . ua on" in Gc#an" $or %on -#ic# t# lattr #an** in t# act+ On 18 ?o%r 190, t# nGt usinss *a, t# c#ck -as prsnt* . ua on" to t# *ra- ank $or pa%nt, ut it -as *is#onor* $or insu'cinc o$ $un*s, t# alanc o$ t# *posit o$ An" 7k .ian on ot# *ats in" &5 onl+ An" 7k .ian -as c#ar"* an* -as conict* o$ sta$a in t# 6ourt o$ First >nstanc o$ !anila+ 7# 6ourt o$ Appals a'r%* t# r*ict+ >ssu: =#t#r in*ors%nt is ncssar $or t# prsntation o$ a arr instru%nt $or pa%nt+ l*:n*r ction 9(*) o$ t# ?"otial >nstru%nts .a-, a c#ck *ra-n paal to t# or*r o$ cas# is a c#ck paal to arr, an* t# ank %a pa it to t# prson prsntin" it $or pa%nt -it#out t# *ra-r;s in*ors%nt+ A c#ck paal to t# or*r o$ cas# is a arr instru%nt+ =#r a c#ck is %a* paal to t# or*r o$ Pcas#,Q t# -or* Pcas# P*os not purport to t# na% o$ an prson, an* #nc t# instru%nt
is paal to arr+ 7# *ra- ank n* not otain an in*ors%nt o$ t# c#ck, ut %a pa it to t# prson prsntin" it -it#out an in*ors%nt+ O$ cours, i$ t# ank is not sur o$ t# arr;s i*ntit or nancial solnc, it #as t# ri"#t to *%an* i*ntication an*or assuranc a"ainst possil co%plications, K $or instanc, (a) $or"r o$ *ra-r;s si"natur, () loss o$ t# c#ck t# ri"#t$ul o-nr, (c) raisin" o$ t# a%ount paal, tc+ 7# ank %a t#r$or rquir, $or its protction, t#at t# in*ors%nt o$ t# *ra-r K or o$ so% ot#r prson kno-n to it K otain*+ But -#r t# Bank is satis* o$ t# i*ntit an*or t# cono%ic stan*in" o$ t# arr -#o tn*rs t# c#ck $or collction, it -ill pa t# instru%nt -it#out $urt#r qustionC an* it -oul* incur no liailit to t# *ra-r in t#us actin"+ A c#ck paal to arr is aut#orit $or pa%nt to t# #ol*r+ =#r a c#ck is in t# or*inar $or%, an* is paal to arr, so t#at no in*ors%nt is rquir*, a ank, to -#ic# it is prsnt* $or pa%nt, n* not #a t# #ol*r i*nti*, an* is not n"li"nt in $ailin" to *o so+ 6onsquntl, a *ra- ank to -#ic# a arr c#ck is prsnt* $or pa%nt n* not ncssaril #a t# #ol*r i*nti* an* or*inaril %a not c#ar"* -it# n"li"nc in $ailin" to *o so+ >$ t# ank #as no rasonal caus $or suspctin" an irr"ularit, it -ill protct* in pain" a arr c#ck, Pno %attr -#at $acts unkno-n to it %a #a
occurr* prior to t# prsnt%nt+Q Alt#ou"# a ank is ntitl* to pa t# a%ount o$ a arr c#ck -it#out $urt#r inquir, it is ntirl rasonal $or t# ank to insist t#at t# #ol*r "i satis$actor proo$ o$ #is i*ntit+ rin an-a, it is si"nicant, an* conclusi, t#at t# $or% o$ t# c#ck -as totall unconnct* -it# its *is#onor+ >t -as rturn* unsatis* caus t# *ra-r #a* insu'cint $un*s K not caus t# *ra-r;s in*ors%nt -as lackin"+
PN4 vs. RODRI!5E> !.R. No. *,%(#& 3ACTS? pouss Erlan*o an* ?or%a Ho*ri"uz -r clints o$ &#ilippin ?ational Bank (&?B) in 6u 6it+ 7# %aintain* sain"s an* *%an*c#ckin" accounts+ 7# spouss -r n"a"* in t# in$or%al ln*in" usinss+ t# #a* a *iscountin" arran"%nt -it# t# &#ilnaank E%plos ain"s an* .oan Association (&E!.A), an association o$ &?B %plos+ &E!.A -as lik-is a clint o$ &?B A%lia Anu Branc#+ 7# association %aintain* currnt an* sain"s accounts -it# ptitionr ank+ &E!.A r"ularl "rant* loans to its %%rs+ pouss Ho*ri"uz -oul* r*iscount t# post*at* c#cks issu* to %%rs -#nr t# association -as s#ort o$ $un*s+ As -as custo%ar, t# spouss -oul* rplac t# post*at* c#cks -it# t#ir o-n c#cks issu* in t# na% o$ t# %%rs+ >t -as &E!.AMs polic not to appro applications $or loans o$ %%rs -it# outstan*in" *ts+ 7o surt t#is polic, so% &E!.A o'crs *is* a sc#% to otain a**itional loans *spit t#ir outstan*in" loan accounts+ 7# took out loans in t# na%s o$ unkno-in" %%rs, -it#out t# kno-l*" or consnt o$ t# lattr+ 7# &E!.A c#cks issu* $or t#s loans -r t#n "in to t# spouss $or r*iscountin"+ 7# o'crs carri* t#is out $or"in" t# in*ors%nt o$ t# na%* pas in t# c#cks+ >n rturn,
t# spouss issu* t#ir prsonal c#cks (Ho*ri"uz c#cks) in t# na% o$ t# %%rs an* *lir* t# c#cks to an o'cr o$ &E!.A+ 7# &E!.A c#cks, on t# ot#r #an*, -r *posit* t# spouss to t#ir account+ !an-#il, t# Ho*ri"uz c#cks -r *posit* *irctl &E!.A to its sain"s account -it#out an in*ors%nt $ro% t# na%* pas+ 7#is -as an irr"ular proc*ur %a* possil t#rou"# t# $acilitation o$ E*%un*o &alr%o, Jr+, trasurr o$ &E!.A an* ank tllr in t# &?B Branc#+ t# spouss issu* siGt nin (9) c#cks, in t# total a%ount o$ &2,05,80++ 7#s -r paal to $ort sn (0) in*ii*ual pas -#o -r all %%rs o$ &E!.A+&?B ntuall $oun* out aout t#s $rau*ulnt acts+ 7o put a stop to t#is sc#%, &?B clos* t# currnt account o$ &E!.A+ As a rsult, t# &E!.A c#cks *posit* t# spouss -r rturn* or *is#onor* $or t# rason PAccount 6los*+Q 7# corrspon*in" Ho*ri"uz c#cks, #o-r, -r *posit* as usual to t# &E!.A sain"s account+ 7# a%ounts -r *ul *it* $ro% t# Ho*ri"uz account+ 7#us, caus t# &E!.A c#cks "in as pa%nt -r rturn*, spouss Ho*ri"uz incurr* losss $ro% t# r*iscountin" transactions+ Issue 7# issus %a co%prss* to -#t#r t# su@ct c#cks ar paal to or*r or to arr an* -#o ars t# lossR
@eld As a rul, -#n t# pa is ctitious or not intn** to t# tru rcipint o$ t# proc*s, t# c#ck is consi*r* as a arr instru%nt+ A c#ck is Pa ill o$ Gc#an" *ra-n on a ank paal on *%an*+Q >t is it#r an or*r or a arr instru%nt+ ctions 8 an* 9 o$ t# ?>. stats:
E6+ 8+ =#n paal to or*r+ S 7# instru%nt is paal to or*r -#r it is *ra-n paal to t# or*r o$ a spci* prson or to #i% or #is or*r+ >t %a *ra-n paal to t# or*r o$ S (a) A pa -#o is not %akr, *ra-r, or *ra-C or () 7# *ra-r or %akrC or (c) 7# *ra-C or (*) 7-o or %or pas @ointlC or () On or so% o$ sral pasC or ($) 7# #ol*r o$ an o'c $or t# ti% in"+ =#r t# instru%nt is paal to or*r, t# pa %ust na%* or ot#r-is in*icat* t#rin -it# rasonal crtaint+ E6+ 9+ =#n paal to arr+ S 7# instru%nt is paal to arr S (a) =#n it is Gprss* to so paalC or () =#n it is paal to a prson na%* t#rin or arrC or (c) =#n it is paal to t# or*r o$ a ctitious or non3Gistin" prson, an* suc# $act is kno-n to t# prson %akin" it so
paalC or (*) =#n t# na% o$ t# pa *os not purport to t# na% o$ an prsonC or () =#r t# onl or last in*ors%nt is an in*ors%nt in lank+ o-r, t#r is a co%%rcial a* $ait# Gcption to t# ctitious3pa rul+ A s#o-in" o$ co%%rcial a* $ait# on t# part o$ t# *ra- ank, or an trans$r o$ t# c#ck $or t#at %attr, -ill -ork to strip it o$ t#is *$ns+ 7# Gcption -ill caus it to ar t# loss+ 6o%%rcial a* $ait# is prsnt i$ t# trans$r o$ t# c#ck acts *is#onstl, an* is a part to t# $rau*ulnt sc#%+>n t# instant cas, t# Ho*ri"uz c#cks -r paal to spci* pas+ >t is unr$ut* t#at t# 9 c#cks -r paal to spcic prsons+ .ik-is, it is uncontrort* t#at t# pas -r actual, Gistin", an* liin" prsons -#o -r %%rs o$ &E!.A t#at #a* a r*iscountin" arran"%nt -it# spouss Ho*ri"uz+ For t# ctitious3pa rul to aailal as a *$ns, &?B %ust s#ot#at t# %akrs *i* not intn* $or t# na%* pas to part o$ t# transaction inolin" t# c#cks+ At %ost, t# ankMs t#sis s#o-s t#at t# pas *i* not #a kno-l*" o$ t# Gistnc o$ t# c#cks+ 7#is lack o$ kno-l*" on t# part o$ t# pas, #o-r, -as not tanta%ount to a lack o$ intntion on t# part o$ spouss t#at t# pas -oul* not rci t# c#cksM proc*s+ 6onsi*rin" t#at spouss -r transactin" -it# &E!.A an* not t# in*ii*ual pas, it is un*rstan*al t#at t# rli* on t#
in$or%ation "in t# o'crs o$ &E!.A t#at t# pas -oul* rciin" t# c#cks+ Tril, t# su@ct c#cks ar prsu%* or*r instru%nts caus &?B $ail* to prsnt su'cint i*nc to *$at t# clai% o$ t# spouss t#at t# na%* pas -r t# intn** rcipints o$ t# c#cksM proc*s+ 7# ank $ail* to satis$ a rquisit con*ition o$ a ctitious3 pa situation S t#at t# %akr o$ t# c#ck intn** $or t# pa to #a no intrst in t# transaction+ Bcaus o$ a $ailur to s#o- t#at t# pas -r PctitiousQ in its roa*r sns, t# ctitious3pa rul *os not appl+ 7#us, t# c#cks ar to *%* paal to or*r+ 6onsquntl, t# *ra- ank ars t# loss+ &lus, it *os not *isput t# $act t#at its tllr or tllrs accpt* t# 9 c#cks $or *posit to t# &E!.A account n -it#out an in*ors%nt $ro% t# na%* pas+ >t ars strssin" t#at or*r instru%nts can onl n"otiat* -it# a ali* in*ors%nt+ 7#is 6ourt #as rco"niz* t# uniqu pulic intrst possss* t# ankin" in*ustr an* t# n* $or t# popl to #a $ull trust an* con*nc in t#ir anks+ For t#is rason, anks ar %in** to trat t#ir custo%rMs accounts -it# ut%ost car, con*nc, an* #onst+ >n a c#ckin" transaction, t# *ra- ank #as t# *ut to ri$ t# "nuinnss o$ t# si"natur o$ t# *ra-r an* to pa t# c#ck strictl in accor*anc -it# t# *ra-rMs instructions, i++, to t# na%* pa in t# c#ck+ >t s#oul* c#ar" to
t# *ra-rMs accounts onl t# paals aut#oriz* t# lattr+ Ot#r-is, t# *ra- -ill iolatin" t# instructions o$ t# *ra-r an* it s#all lial $or t# a%ount c#ar"* to t# *ra-rMs account+ >n t# cas at ar, spouss -r t# ankMs *positors+ 7# c#cks -r *ra-n a"ainst spoussM accounts+ &?B, as t# *ra- ank, #a* t# rsponsiilit to ascrtain t# r"ularit o$ t# in*ors%nts, an* t# "nuinnss o$ t# si"naturs on t# c#cks $or accptin" t#% $or *posit+ .astl, &?B -as oli"at* to pa t# c#cks in strict accor*anc -it# t# instructions o$ t# *ra-rs+ &titionr %isral $ail* to *isc#ar" t#is ur*n+ !oror, &?B -as n"li"nt in t# slction an* suprision o$ its %plos+ 7# trust-ort#inss o$ ank %plos is in*ispnsal to %aintain t# stailit o$ t# ankin" in*ustr+ 7#us, anks ar n@oin* to Gtra i"ilant in t# %ana"%nt an* suprision o$ t#ir %plos+ Banks #an*l *ail transactions inolin" %illions o$ psos+ B t# r natur o$ t#ir -ork t# *"r o$ rsponsiilit, car an* trust-ort#inss Gpct* o$ t#ir %plos an* o'cials is $ar "ratr t#an t#os o$ or*inar clrks an* %plos+ For oious rasons, t# anks ar Gpct* to Grcis t# #i"#st *"r o$ *ili"nc in t# slction an* suprision o$ t#ir %plos &?BMs tllrs an* o'crs, in iolation o$ ankin" ruls o$ proc*ur, pr%itt* t# inali* *posits o$ c#cks to t# &E!.A
account+ >n**, -#n it is t# "ross n"li"nc o$ t# ank %plos t#at caus* t# loss, t# ank s#oul* #l* lial+ A ank t#at #as n r%iss in its *ut %ust su4r t# consquncs o$ its n"li"nc+ Bin" issu* to na%* pas, &?B -as *ut3oun* la- an* ankin" ruls an* proc*ur to rquir t#at t# c#cks proprl in*ors* $or accptin" t#% $or *posit an* pa%nt+ >n n, PN4 should e held liale 0or the a8ounts o0 the chec6s. Philippine National 4an6 vs. Manila Oil Renin= 7 42"Products Co8pan2' Inc. !R L"*1*%(' 1 )une *+##First Diision, !alcol% (J): concur
Facts: On 8 !a 192, t# %ana"r an* t# trasurr o$ t# !anila Oil Hnin" L B3 &ro*ucts 6o%pan, >nc,+ Gcut* an* *lir* to t# &#ilippin ?ational Bank (&?B), a -rittn instru%nt ra*in" as $ollo-s: HE?E=A.+ &1,+ !A?>.A, &+>+, !a 8, 192+ On *%an* a$tr *at - pro%is to pa to t# or*r o$ t# &#ilippin ?ational Bank siGt3on t#ousan* onl psos at &#ilippin ?ational Bank, !anila, &+>+ =it#out *$alcation, alu rci*C an* *o #r aut#oriz an attorn in t# &#ilippin >slan*s, in cas t#is not not pai* at %aturit, to appar in % na% an* con$ss @u*"%nt $or t# ao su% -it# intrst, cost o$ suit an* attorn;s $s o$ tn (1) pr cnt $or collction, a rlas o$ all rrors an* -air o$ all ri"#ts to inquisition an* appal, an* to
t# nt o$ all la-s G%ptin" proprt, ral or prsonal, $ro% l or sal+ Talu rci*+ ?o+ KK Du KK !A?>.A O>. HEF>?>?< L BU3&HOD67 6O+, >?6+, ("*+) T>6E?7E O7E.O, !ana"r+ !A?>.A O>. HEF>?>?< L BU3 &HOD67 6O+, >?6+, ("*+) HAFAE. .O&E+ 7rasurr+ 7# !anila Oil Hnin" L B3&ro*ucts 6o%pan, >nc+ $ail* to pa t# pro%issor not on *%an*+ &?B rou"#t action in t# 6ourt o$ First >nstanc o$ !anila, to rcor &1,, t# a%ount o$ t# not, to"t#r -it# intrst an* costs+ !r+ Elias ?+ Hcto, an attorn associat* -it# &?B, ntr* #is apparanc in rprsntation o$ !anila Oil, an* l* a %otion con$ssin" @u*"%nt+ !anila Oil, #o-r, in a s-orn *claration, o@ct* stron"l to t# unsolicit* rprsntation o$ attorn Hcto+ .atr, attorn Antonio n t# upr% 6ourt, t# qustion o$ rst i%prssion rais* in t# cas concrns t# ali*it in t#is @uris*iction o$ a proision in a pro%issor not -#r
in cas t# sa% is not pai* at %aturit, t# %akr aut#orizs an attorn to appar an* con$ss @u*"%nt t#ron $or t# principal a%ount, -it# intrst, costs, an* attorn;s $s, an* -ais all rrors, ri"#ts to inquisition, an* appal, an* all proprt G%ptions+ >ssu N1: =#t#r t# ?"otial >nstru%nts .a- (Act ?o+ 21) Gprssl rco"niz* @u*"%nt nots, n$orcil un*r t# r"ular proc*ur+ l* N1: 7# ?"otial >nstru%nts .a-, in sction 5, proi*s t#at 7# n"otial c#aractr o$ an instru%nt ot#r-is n"otial is not a4ct* a proision -#ic# () Aut#orizs con$ssion o$ @u*"%nt i$ t# instru%nt not pai* at %aturitC ut t#is proision o$ la- cannot takn to sanction @u*"%nts con$ssion, caus it is a portion o$ a uni$or% la-#ic# %rl proi*s t#at, in @uris*ictions -#r @u*"%nts nots ar rco"niz*, suc# clauss s#all not a4ct t# n"otial c#aractr o$ t# instru%nt+ !oror, t# sa% sction o$ t# ?"otial >nstru%nts .aconclu*s -it# t#s -or*s: But not#in" in t#is sction s#all ali*at an proision or stipulation ot#r-is ill"al+ >ssu N2:=#t#r proisions in nots aut#orizin" attorns to appar an* con$ss @u*"%nts a"ainst %akrs s#oul* not rco"niz* in &#ilippin @uris*iction i%plication+ l* N2: Ju*"%nts con$ssion as appar* at co%%on la- -r
consi*r* an a%ical, as, an* c#ap -a to sttl an* scur *ts+ 7# ar quick r%* sr to sa t# court;s ti%+ 7i% also sa ti% an* %on o$ t# liti"ants an* t# "orn%nt t# Gpnss t#at a lon" liti"ation ntails+ >n on sns, instru%nts o$ t#is c#aractr %a consi*r* as spcial a"r%nts, -it# po-r to ntr up @u*"%nts on t#%, in*in" t# partis to t# rsult as t# t#%sls i-* it+ On t# ot#r #an*, ar *isa*anta"s to t# co%%rcial -orl* -#ic# out-i"# t# consi*rations @ust %ntion*+ uc# -arrants o$ attorn ar oi* as a"ainst pulic polic, caus t# nlar" t# l* $or $rau*, caus un*r t#s instru%nts t# pro%issor ar"ains a-a #is ri"#t to a *a in court, an* caus t# 4ct o$ t# instru%nt is to strik *o-n t# ri"#t o$ appal accor** statut+ 7# rco"nition o$ suc# $or% o$ oli"ation -oul* rin" aout a co%plt ror"anization o$ co%%rcial custo%s an* practics, -it# r$rnc to s#ort3 tr% oli"ations+ >t can ra*il sn t#at @u*"%nt nots, insta* o$ rsultin" to t# a*anta" o$ co%%rcial li$ t# &#ilippins %i"#t t# sourc o$ aus an* opprssion, an* %ak t# courts inoluntar partis t#rto+ >$ t# ank #as a %ritorious cas, t# @u*"%nt is ulti%atl crtain in t# courts+ 7# 6ourt is o$ t# opinion t#us t#at -arrants o$ attorn to con$ss @u*"%nt ar not aut#oriz* nor cont%plat* &#ilippin la-C an* t#at proisions in nots aut#orizin" attorns to appar an* con$ss @u*"%nts a"ainst %akrs s#oul* not rco"niz* in t#is @uris*iction
i%plication an* s#oul* onl consi*r* as ali* -#n "in Gprss l"islati sanction+
Repulic Planters 4an6 vs. Court o0 Appeals !R +(%,(' #* Dece8er *++#con* Diision, 6a%pos Jr+ (J): 0 concur
Facts: #ozo Ua%a"uc#i an* Fr%in 6anlas -r &rsi*nt6#i$ Opratin" O'cr an* 7rasurr rspctil, o$ =orl*-i* nc++ B irtu o$ Boar* Hsolution 1 *at* 1 Au"ust 199, #ozo Ua%a"uc#i an* Fr%in 6anlas -r aut#oriz* to appl $or cr*it $acilitis -it# t# ptitionr Hpulic &lantrs Bank (H&B) in t# $or%s o$ Gport a*ancs an* lttrs o$ cr*ittrust rcipts acco%%o*ations+ Hpulic &lantrs Bank issu* nin pro%issor nots, ac# o$ -#ic# -r uni$or%l -or** in t# $ollo-in" %annr: XXXXXXXXXXX, a$tr *at, $or alu rci*, >-, @ointl an* sra>l pro%is to pa to t# OHDEH o$ t# HE&B.>6 &.A?7EH BA?I, at its o'c in !anila, &#ilippins, t# su% o$ XXXXXXXXXXX &EO(++++) &#ilippin 6urrnc+++ On t# ri"#t otto% %ar"in o$ t# pro%issor nots appar* t# si"naturs o$ #ozo Ua%a"uc#i an* Fr%in 6anlas ao t#ir print* na%s -it# t# p#ras an* (in) #is prsonal capacit tp-rittn lo-+ At t# otto% o$ t#
pro%issor nots appar*: &las cr*it proc*s o$ t#is not to: XXXXXXXX ain"s Account XXXXXXYY 6urrnt, Account ?o+ 123253, an* o$ =OH.D=>DE n t#r pro%issor nots, t# na% =orl*-i* nc+ -as apparntl rur sta%p* ao t# si"naturs o$ Ua%a"uc#i an* 6anlas On 2 Dc%r 1982, =orl*-i* nc+ (=) not* to c#an" its corporat na% to &inc# !anu$acturin" 6orporation (&!6)+ On 5 Fruar 1982, H&B l* a co%plaint $or t# rcor o$ su%s o$ %on cor* a%on" ot#rs, t# nin pro%issor nots -it# intrst t#ron, plus attorn;s $s an* pnalt c#ar"s+ 7# co%plainant -as ori"inall rou"#t a"ainst = intr alia, ut it -as latr a%n** to *rop = as *$n*ant an* sustitut &!6 it its plac+ &!6 an* #ozo Ua%a"uc#i *i* not l an A%n** Ans-r an* $ail* to appar at t# sc#*ul* pr3trial con$rnc *spit *u notic+ Onl 6anlas l* an A%n** Ans-r -#rin #, *ni* #ain" issu* t# pro%issor nots in qustion sinc accor*in" to #i%, # -as not an o'cr o$ &!6, ut insta* o$ =, an* t#at -#n # issu* sai* pro%issor nots in #al$ o$ =, t# sa% -r in lank, t# tp-rittn ntris not apparin" t#rin prior to t# ti% # a'G* #is si"natur+ On 2 Jun 1985, 7# H"ional 7rial 6ourt rn*r* a
*cision in $aor o$ H&B, or*rin" &!6 ($or%rl =),Ua%a"uc#i an* 6anlas to pa, @ointl an* srall, H&B t# $ollo-in" su%s -it# intrst t#ron at 1 pr annu% un*r pro%issor nots, t# su% o$ &,+ -it# intrst $ro% 29 Januar 1981 until $ull pai*C &0,+ -it# intrst $ro% 2 ?o%r 198C &1,0+ -#ic# intrst $ro% 29 Januar 1981C &8,1+1 -it# intrst $ro% 29 Januar 1981C &12,+ -it# intrst $ro% 2 ?o%r 198C &281,85+91 -it# intrst $ro% 29 Januar 1981C an* &2,+ -it# intrst $ro% 29 Januar 1981+ &!6 an* Ua%a"uc#i -r also or*r* to pa @ointl an* srall, H&B t# su% o$ &,+ -it# intrst o$ 1 pr annu% $ro% 29 Januar 198 un*r anot#r pro%issor not+ &!6 -as or*r* to pa &HB t# su% o$ &10,+ -it# intrst at 1 pr annu% $ro% 2 ?o%r 198 until $ull pai*, un*r anot#r pro%issor notC to pa t# su% o$ &21,12+81 -it# intrst at 12 pr annu% $ro% 1 Jul 1981, until $ull pai* an* t# su% o$ &1,8+9 -it# intrst $ro% 28 !arc# 1981, until $ull pai*+ 7# court also or*r* &!6, Ua%a"uc#i, an* 6anlas to pa, @ointl an* srall, H&B t# su% o$ &1,+ as an* $or rasonal attorn;s $ an* t# $urt#r su% quialnt to pr annu% o$ t# rspcti principal su%s $ro% t# *ats ao stat* as pnalt c#ar" until $ull pai*, plus 1 o$ t# principal su%s as sric c#ar"C -it# costs a"ainst &!6, t al+ Fro% t# ao *cision onl 6anlas appal* to t# t#n >ntr%*iat 6ourt (no- t# 6ourt
Appals)+ is contntion -as t#at inas%uc# as # si"n* t# pro%issor nots in #is capacit as o'cr o$ t# *$unct =, # s#oul* not #l* prsonall lial $or suc# aut#oriz* corporat acts t#at # pr$or%*+ 7# appllat court a'r%* t# *cision o$ trial court Gcpt t#at it co%pltl asol* 6anlas $ro% liailit un*r t# pro%issor nots an* r*uc* t# a-ar* $or *a%a"s an* attorn;s $s+ H&B appal* a -a o$ a ptition $or rion crtiorari+ >t is t# contntion o$ H&B t#at #ain" uncon*itionall si"n* t# 9 pro%issor nots -it# Ua%a"uc#i, @ointl an* srall, 6anlas is soli*arit lial -it# Ua%a"uc#i on ac# o$ t# nin nots+ >ssu N1: =#t#r Fr%in 6anlas is soli*aril lial on ac# o$ t# pro%issor nots arin" #is si"natur+ l* N1: Fr%in 6anlas is soli*aril lial on ac# o$ t# pro%issor nots arin" #is si"natur+ 7# pro%issor %ots ar n"otial instru%nts an* %ust "orn* t# ?"otial >nstru%nts .a-+ n*r t# ?"otial lnstru%nts .a-, prsons -#o -rit t#ir na%s on t# $ac o$ pro%issor nots ar %akrs an* ar lial as suc#+ B si"nin" t# nots, t# %akr pro%iss to pa to t# or*r o$ t# pa or an #ol*r accor*in" to t# tnor t#ro$+ Bas* on t# ao proisions o$ la-, t#r is no *nin" t#at 6anlas is on o$ t# co3 %akrs o$ t# pro%issor nots+ As suc#, # cannot scap liailit arisin" t#r$ro%+ =#r an instru%nt containin" t# -or*s > pro%is to pa is
si"n* t-o or %or prsons, t# ar *%* to @ointl an* srall lial t#ron+ An instru%nt -#ic# "ins -it# > ,= , or Eit#r o$ us pro%is to, pa, -#n si"n* t-o or %or prsons, %aks t#% soli*aril lial+ 7# $act t#at t# sin"ular pronoun is us* in*icats t#at t# pro%is is in*ii*ual as to ac# ot#rC %anin" t#at ac# o$ t# co3si"nrs is *%* to #a %a* an in*pn*nt sin"ular pro%is to pa t# nots in $ull+ rin, t# soli*ar liailit o$ 6anlas is %a* clarr an* crtain, -it#out rason $or a%i"uit, t# prsnc o$ t# p#ras @oint an* sral as *scriin" t# uncon*itional pro%is to pa to t# or*r o$ H&B+ A @oint an* sral not is on in -#ic# t# %akrs in* t#%sls ot# @ointl an* in*ii*uall to t# pa so t#at all %a su* to"t#r $or its n$orc%nt, or t# cr*itor %a slct on or %or as t# o@ct o$ t# suit+ A @oint an* sral oli"ation in co%%on la- corrspon*s to a ciil la- soli*ar oli"ationC t#at is, on o$ sral *tors oun* in suc# -is t#at ac# is lial $or t# ntir a%ount, an* not %rl $or #is proportionat s#ar+ B %akin" a @oint an* sral pro%is to pa to t# or*r o$ H&B, 6anlas assu%* t# soli*ar liailit o$ a *tor an* t# pa %a c#oos to n$orc t# nots a"ainst #i% alon or @ointl -it# Ua%a"uc#i an* &!6 as soli*ar *tors+ As to -#t#r t# intrpolation o$ t# p#ras an* (in) #is prsonal capacit lo- t# si"naturs o$ t# %akrs in t# nots -ill a4ct t# liailit o$ t# %akrs, it is i%%atrial an* -ill not a4ct to t# liailit o$ 6anlas
as a @oint an* sral *tor o$ t# nots+ =it# or -it#out t# prsnc o$ sai* p#ras, 6anlas is pri%aril lial as a co3 %akr o$ ac# o$ t# nots an* #is liailit is t#at o$ a soli*ar *tor+ >ssu N2:=#t#r 6anlas can aoi* liailit on t# pro%issor nots clai%in" to a %r a"nt o$ t# corporation+ l* N2: As a "nral rul, o'crs or *irctors un*r t# ol* corporat na% ar no prsonal liailit $or acts *on or contracts ntr* into o'crs o$ t# corporation, i$ *ul aut#oriz*+ >nas%uc# as suc# o'crs act* in t#ir capacit as a"nt o$ t# ol* corporation an* t# c#an" o$ na% %ant onl t# continuation o$ t# ol* @uri*ical ntit, t# corporation arin" t# sa% na% is still oun* t# acts o$ its a"nts i$ aut#oriz* t# Boar*+ n*r t# ?"otial >nstru%nts .a-, t# liailit o$ a prson si"nin" as an a"nt is spcicall proi** $or in ction 2 t#ro$, -#ic# proi*s t#at .iailit o$ a prson si"nin" as a"nt an* so $ort#+ =#r t# instru%nt contains or a prson a**s to #is si"natur -or*s in*icatin" t#at # si"ns $or or on #al$ o$ a principal , or in a rprsntati capacit, # is not lial on t# instru%nt i$ # -as *ul aut#oriz*C ut t# %r a**ition o$ -or*s *scriin" #i% as an a"nt, or as llin" a rprsntati c#aractr, -it#out *isclosin" #is principal, *os not G%pt #i% $ro% prsonal liailit+ =#r t# a"nt si"ns #is na% ut no-#r in t# instru%nt #as # *isclos* t# $act t#at
# is actin" in a rprsntati capacit or t# na% o$ t# t#ir* part $or -#o% # %i"#t #a act* as a"nt, t# a"nt is prsonall lial to tak #ol*r o$ t# instru%nt an* cannot pr%itt* to pro t#at # -as %rl actin" as a"nt o$ anot#r an* parol or Gtrinsic i*nc is not a*%issil to aoi* t# a"nt;s prsonal liailit+ >ssu N: =#t#r t# pro%issor nots -r *lir* to 6anlas in lank $or #is si"natur, or -r inco%plt instru%nts, to allo- t# application o$ ction 10 o$ t# ?"otial >nstru%nts .a-+ l* N: A car$ul Ga%ination o$ t# nots in qustion s#o-s t#at t# ar t# strotp print* $or% o$ pro%issor nots "nrall us* co%%rcial ankin" institutions to si"n* t#ir clints in otainin" loans+ uc# print* nots ar inco%plt caus t#r ar lank spacs to ll* up on %atrial particulars suc# as pa;s na%, a%ount o$ t# loan, rat o$ intrst, *at o$ issu an* t# %aturit *at+ 7# tr%s an* con*itions o$ t# loan ar print* on t# not $or t# orro-r3*tor;s prusal+ An inco%plt instru%nt -#ic# #as n *lir* to t# orro-r $or #is si"natur is "orn* ction 10 o$ t# ?"otial >nstru%nts .a-+ &roo$ t#at t# nots -r si"n* in lank -as onl t# sl$3srin" tsti%on o$ 6anlas+ 7# 6ourt c#os to li t# ank;s tsti%on t#at t# nots -r ll* up $or t# -r "in to 6anlas an* Ua%a"uc#i $or t#ir si"naturs as @oint
an* sral pro%issors+ For si"nin" t# nots ao t#ir tp-rittn na%s, t# oun* t#%sls as uncon*itional %akrs+ 7# court took @u*icial notic o$ t# custo%ar proc*ur o$ co%%rcial anks o$ rquirin" t#ir clintl to si"n pro%issor nots prpar* t# anks in print* $or% -it# lank spacs alra* ll* up as pr a"r* tr%s o$ t# loan, lain" t# orro-rs3*tors to *o not#in" ut ra* t# tr%s an* con*itions t#rin print* an* to si"n as %akrs or co3%akrs+ =#n t# nots -r "in to 6anlas $or #is si"natur, t# nots -r co%plt in t# sns t#at t# spacs $or t# %atrial particular #a* n ll* up t# ank as pr a"r%nt+ 7# nots -r not inco%plt instru%ntsC nit#r -r t# "in to 6anlas in lank as # clai%s+ 7#us, ction 10 o$ t# ?"otia> >nstru%nts .a- is not applical
Evan=elista vs. Mercator 3inance Corp. !R *$119$' #* Au=ust #%%( 7#ir* Diision, &uno (J): 2 concur, 2 on o'cial la
Facts: pouss E*uar*o B+ Ean"lista an* Epi$ania 6+ Ean"lista l* a co%plaint $or annul%nt o$ titls a"ainst !rcator Financ 6orp+ .*ia &+ alazar, .a%cs Halt an* Dlop%nt 6orporation, an* t# H"istr o$ D*s o$ Bulacan+ 7# spouss Ean"lista clai%* in" t# r"istr* o-nrs o$ 5 parcls o$ lan* contain* in t# Hal Estat !ort"a"
Gcut* t#% an* E%ass Far%s, >nc+ 7# all"* t#at t# Gcut* t# Hal Estat !ort"a" in $aor o$ !rcator onl as o'crs o$ E%ass Far%s+ 7# *i* not rci t# proc*s o$ t# loan i*nc* a pro%issor not, as all o$ it -nt to E%ass Far%s+ 7#us, t# contn** t#at t# %ort"a" -as -it#out an consi*ration as to t#% sinc t# *i* not prsonall otain an loan or cr*it acco%%o*ations+ 7#r in" no principal oli"ation on -#ic# t# %ort"a" rsts, t# ral stat %ort"a" is oi*+ =it# t# oi* %ort"a", t# assail* t# ali*it o$ t# $orclosur proc*in"s con*uct* !rcator, t# sal to it as t# #i"#st i**r in t# pulic auction, t# issuanc o$ t# trans$r crticats o$ titl to it, t# susqunt sal o$ t# sa% parcls o$ lan* to .*ia &+ alazar, an* t# trans$r o$ t# titls to #r na%, an* lastl, t# sal an* trans$r o$ t# proprtis to rspon*nt .a%cs Halt L Dlop%nt 6orporation+ !rcator a*%itt* t#at t# spouss Ean"lista -r t# o-nrs o$ t# su@ct parcls o$ lan*+ >t, #o-r, contn** t#at on 1 Fruar 1982, t# spouss Gcut* a !ort"a" in $aor o$ !rcator $or an* in consi*ration o$ crtain loans, an*or ot#r $or%s o$ cr*it acco%%o*ations otain* $ro% t# !ort"a" (!rcator) a%ountin" to &800,25+8 an* to scur t# pa%nt o$ t# sa% an* t#os ot#rs t#at t# !ort"a" %a Gtn* to t# %ort"a"or+ >t contn** t#at sinc t# spouss an* E%ass Far%s si"n* t# pro%issor not as co3%akrs, asi* $ro% t# 6ontinuin" urts#ip
A"r%nt susquntl Gcut* to "uarant t# in*t*nss o$ E%ass Far%s, an* t# succ*in" ro%issor notsN8 rstructurin" t# loan, t#n t# spouss ar @ointl an* srall lial -it# E%ass Far%s+ Du t#ir $ailur to pa t# oli"ation, t# $orclosur an* susqunt sal o$ t# %ort"a"* proprtis ar ali*+ alazar an* .a%cs assrt* t#at t# ar innocnt purc#asrs $or alu an* in "oo* $ait#, rlin" on t# ali*it o$ t# titl o$ !rcator+ .a%cs a*%itt* t# prior o-nrs#ip o$ t# spouss o$ t# su@ct parcls o$ lan*, ut all"* t#at t# ar t# prsnt r"istr* o-nr+ alazar an* .a%cs lik-is assail* t# lon" silnc an* inaction t# spouss as it -as onl a$tr a laps o$ al%ost 1 ars $ro% t# $orclosur o$ t# proprt an* t# susqunt sals t#at t# %a* t#ir clai%+ 7#us, alazar an* .a%cs arr* t#at ptitionrs ar in stoppl an* "uilt o$ lac#s+ A$tr pr3trial, !rcator %o* $or su%%ar @u*"%nt on t# "roun* t#at Gcpt as to t# a%ount o$ *a%a"s, t#r is no $actual issu to liti"at*+ !rcator ar"u* t#at ptitionrs #a* a*%itt* in t#ir pr3trial ri$ t# Gistnc o$ t# pro%issor not, t# continuin" surts#ip a"r%nt an* t# susqunt pro%issor nots rstructurin" t# loan, #nc, t#r is no "nuin issu r"ar*in" t#ir liailit+ 7# %ort"a", $orclosur proc*in"s an* t# susqunt sals ar ali* an* t# co%plaint %ust *is%iss*+ 7# spouss oppos* t# %otion $or su%%ar @u*"%nt clai%in" t#at caus t#ir prsonal liailit to !rcator is at issu,
t#r is a n* $or a $ull3lo-n trial+ 7# H76 "rant* t# %otion $or su%%ar @u*"%nt an* *is%iss* t# co%plaint+ 7# spoussM %otion $or rconsi*ration -as *ni* $or lack o$ %rit+ 7#us, t# spouss -nt up to t# 6ourt o$ Appals, ut a"ain -r unsuccss$ul+ A %otion $or consi*ration t# spouss -as lik-is *ni* $or lack o$ %rit+ 7# spouss l* t# &tition $or Hi- on 6rtiorari+ 7# spouss all", intr alia, t#at t#r is an a%i"uit in t# -or*in" o$ t# pro%issor not an* clai% t#at sinc it -as !rcator -#o proi** t# $or%, t#n t# a%i"uit s#oul* rsol* a"ainst it+ >ssu: =#t#r t# spouss ar soli*aril lial -it# E%ass Far%s, in li"#t o$ t# pro%issor not si"n* t#%+ l*: 7# pro%issor not an* t# 6ontinuin" urts#ip A"r%nt pro t#at t# spouss ar soli*ar oli"ors -it# E%ass Far%s+ 7# pro%issor nots susquntl Gcut* t# spouss an* E%ass Far%s, rstructurin" t#ir loan, lik-is pro t#at t# spouss ar soli*aril lial -it# E%ass Far%s+ 7# spouss all" t#at t#r is an a%i"uit in t# -or*in" o$ t# pro%issor not an* clai% t#at sinc it -as !rcator -#o proi** t# $or%, t#n t# a%i"uit s#oul* rsol* a"ainst it+ 6ourts can intrprt a contract onl i$ t#r is *out in its lttr+ But, an Ga%ination o$ t# pro%issor not s#o-s no suc# a%i"uit+ Bsi*s, assu%in" ar"un*o t#at t#r is an a%i"uit, ction 1 o$ t# ?"otial
>nstru%nts .a- stats t#at =#r t# lan"ua" o$ t# instru%nt is a%i"uous or t#r ar o%issions t#rin, t# $ollo-in" ruls o$ construction appl: (") =#r an instru%nt containin" t# -or* ;> pro%is to pa; is si"n* t-o or %or prsons, t# ar *%* to @ointl an* srall lial t#ron+ Furt#r, n i$ t# spouss intn** to si"n t# not %rl as o'crs o$ E%ass Far%s, still t#is *os not ras t# $act t#at t# susquntl Gcut* a continuin" surts#ip a"r%nt+ A surt is on -#o is soli*aril lial -it# t# principal+ 7# spouss cannot clai% t#at t# *i* not prsonall rci an consi*ration $or t# contract $or -ll3 ntrnc#* is t# rul t#at t# consi*ration ncssar to support a surt oli"ation n* not pass *irctl to t# surt, a consi*ration %oin" to t# principal alon in" su'cint+ A surt is oun* t# sa% consi*ration t#at %aks t# contract 4cti t-n t# principal partis t#rto+ ain" Gcut* t# surts#ip a"r%nt, t#r can no *isput on t# prsonal liailit o$ t# spouss+
Ilano vs @on. Espanol
FA67: D$n*ant A!E.>A O+ A.O?O, is a trust* %plo o$ Nptitionr+ # #as n -it# t#% $or sral ars alra*, an* t#rou"# t# ars, *$n*ant A.O?O -as al to "ain t# trust an* con*nc o$ Nptitionr an* #r $a%ilC
7#at *u to t#s trust an* con*nc rpos* upon *$n*ant A.O?O Nptitionr, t#r -r occasions -#n *$n*ant A.O?O -as ntrust* -it# NptitionrMs !E7HOBA?I 6#ck Book containin" it#r si"n* or unsi"n* lank c#cks, spciall in t#os ti%s -#n Nptitionr l$t $or t# nit* tats $or %*ical c#ck3upC D$n*ant Alonzo -as al to succ* in in*ucin" t# ptitionr to si"n &? t#rou"# $rau* an* *citC *$n*ant A.O?O in collusion -it# #r co3*$n*ants, E7E.A 6A!A6.A?<, A..A? 6A!A6.A?< an* E7E.>7A .E lik-is Bas ale to induce plainti to si=n several undated lan6 chec6s' a%on" -#ic# ar: 7# na%* *$n*ants3#rin rspon*nts l* t#ir rspcti Ans-rs inokin", a%on" ot#r "roun*s $or *is%issal, lack o$ caus o$ action, $or -#il t# c#cks su@ct o$ t# co%plaint #a* n issu* on account an* $or alu, so% #a* n *is#onor* *u to PA66O?7 6.OEDCQ an* t# all"ations in t# co%plaint ar ar an* "nral+ 7# trial court *is%iss* ptitionrMs co%plaint $or $ailur Pto all" t# ulti%at $actsQ3ass o$ ptitionrs clai% t#at #r ri"#t -as iolat* an* t#at s# su4r* *a%a"s t#r+ 7# 6ourt o$ Appals a'r%* t# trial courtMs *cision an* #l* t#at t# l%nts o$ a caus o$ action ar asnt in t# cas an* ptitionr *i* not *n t# "nuinnss or aut#nticit o$ #r si"natur on t#
su@ct pro%issor nots an* t# all"*l si"n* lank >E: >n issu t#n is -#t#r ptitionrMs co%plaint $ail* to stat a caus o$ action+ E.D: As rZct* in t# ao3quot* all"ations in ptitionrMs co%plaint, ptitionr is skin" t-in rli$s, on $or rocationcancllation o$ pro%issor nots an* c#cks, an* t# ot#r $or *a%a"s+ =#il so% o$ t# all"ations %a lack particulars, an* ar in t# $or% o$ conclusions o$ la-, t# l%nts o$ a caus o$ action ar prsnt+ For n i$ so% ar not stat* -it# particularit, ptitionr all"* 1) #r l"al ri"#t not to oun* t# instru%nts -#ic# -r r$t o$ consi*ration an* to -#ic# #r consnt -as itiat*C 2) t# corrlati oli"ation on t# part o$ t# *$n*ants3 rspon*nts to rspct sai* ri"#tC an* ) t# act o$ t# *$n*ants3rspon*nts in procurin" #r si"natur on t# instru%nts t#rou"# P*cit,Q Paus o$ con*ncQ P%ac#ination,Q P$rau*,Q P$alsication,Q P$or"r,Q P*$rau*ation,Q an* Pa* $ait#,Q an* P-it# %alic, %alolnc an* sls# intnt+Q =#r t# all"ations o$ a co%plaint ar a"u, in*nit, or in t# $or% o$ conclusions, its *is%issal is not propr $or t# *$n*ant %a ask $or %or particulars+
=it# rspct to ao3sai* 6#ck ?o+ 808, #o-r, -#ic# -as *ra-n a"ainst anot#r account o$ ptitionr, alit t# *at o$ issu ars onl t# ar [ 1999, its ali*it an* n"otial c#aractr at t# ti% t# co%plaint -as l* on !arc# 28, 2 -as not a4ct*+ For ction o$ t# ?"otial >nstru%nts .a- proi*s: ction + O%issionC salC particular %on+ S The validit2 and ne=otiale character o0 an instru8ent are not aected 2 the 0act that ;a< It is not dated C or () Dos not spci$ t# alu "in, or t#at an alu #a* n "in t#r$orC or (c) Dos not spci$ t# plac -#r it is *ra-n or t# plac -#r it is paalC or (*) Bars a salC or () Dsi"nats a particular kin* o$ currnt %on in -#ic# pa%nt is to %a*+
o-r, n i$ t# #ol*r o$ 6#ck ?o+ 808 -oul* #a ll* up t# %ont# an* *a o$ issu t#ron to PDc%rQ an* P1,Q rspctil, it -oul* #a, as it *i*, co% stal siG () %ont#s or 18 *as t#ra$tr, $ollo-in" currnt ankin" practic+ >t is, #o-r, -it# rspct to t# qustion* pro%issor nots t#at t# prsnt ptition assu%s %rit+ For, ptitionrMs all"ations in t# co%plaint rlati t#rto, n i$ lackin" particularit, *os not as priorl stat* call $or t# *is%issal o$ t# co%plaint+ III.NE!OTIATION
Sesreno vs. Court o0 Appeals !R 1+#&#' #$ Ma2 *++( 7#ir* Diision, Fliciano (J): 0 concur
Facts: On 9 Fruar 1981, Haul sr\o %a* a %on %arkt plac%nt in t# a%ount o$ &,+ -it# t# &#ilippin n*r-ritrs Financ 6orporation (&#ilnanc), 6u Branc#C t# plac%nt, -it# a tr% o$ 2 *as, -oul* %atur on 1 !arc# 1981+ &#ilnanc, also on 9 Fruar 1981, issu* t# $ollo-in" *ocu%nts to srno: (a) t# 6rticat o$ 6onr%ation o$ al, -it#out rcours, 209 o$ 1 Dlta !otors 6orporation &ro%issor ?ot (D!6 &?) 21 $or a tr% o$ 2 *as at 1+ pr annu%C () t# 6rticat o$ curitis Dlir Hcipt 158 in*icatin" t# sal o$ D!6 &? 21 to srno, -it# t# notation t#at t# sai* scurit -as in custo*ians#ip o$ &ilipinas Bank, as pr Dno%inat* 6usto*ian Hcipt (D6H) 185 *at* 9 Fruar 1981C an* (c) post3*at* c#cks paal on 1 !arc# 1981 (i++, t# %aturit *at o$ srno;s inst%nt), -it# srno as pa, &#ilnanc as *ra-r, an* >nsular Bank o$ Asia an* A%rica as *ra-, in t# total a%ount o$ &0,5++ On 1 !arc# 1981, srno sou"#t to ncas# t# post3*at* c#cks issu* #ilnanc+ o-r, t# c#cks -r *is#onor* $or #ain" n *ra-n a"ainst insu'cint $un*s+ On 2 !arc# 1981, &#ilnanc *lir* to srno t# D6H 185 issu* &ilipinas Bank (&ilipinas)+ On 2 April 1981, srno
approac#* !s+ Elizat# * Tilla o$ &,9++ Dlta, #o-r, *ni* an &ilipinas, !akati Branc#, an* #an** to liailit to srno on t# pro%issor #r a *%an* lttr in$or%in" t# ank not, an* Gplain* in turn t#at it #a* t#at #is plac%nt -it# &#ilnanc in t# priousl a"r* -it# &#ilnanc to a%ount rZct* in t# D6H 185 #a* o4st its D!6 &? 21 (alon" -it# D!6 r%ain* unpai* an* outstan*in", an* &? 2) a"ainst &#ilnanc &? 103A t#at # in 4ct -as askin" $or t# issu* in $aor o$ Dlta+ >n t# %anti%, p#sical *lir o$ t# un*rlin" &#ilnanc, on 18 Jun 1981, -as plac* pro%issor not+ srno t#n un*r t# @oint %ana"%nt o$ t# Ga%in* t# ori"inal o$ t# D!6 &? curitis an* EGc#an" 6o%%ission 21 an* $oun*: t#at t# scurit #a* (E6) an* t# 6ntral Bank+ &ilipinas n issu* on 1 April 198C t#at it *lir* to t# E6 D!6 &? 21, -#ic# -oul* %atur on April 1981C t#at it #a* to *at apparntl r%ains in t# custo* a $ac alu o$ &2,,8+, -it# o$ t# E6+ As srno #a* $ail* to &#ilnanc as pa an* Dlta !otors collct #is inst%nt an* intrst 6orporation (Dlta) as %akrC an* t#at t#ron, # l* on 28 pt%r 1982 on $ac o$ t# pro%issor not -as an action $or *a%a"s -it# t# H"ional sta%p* ?O?3?EAB.E+ &ilipinas 7rial 6ourt (H76) o$ 6u 6it, Branc# 21, *i* not *lir t# ?ot, nor an a"ainst Dlta an* &ilipinas+ 7# trial crticat o$ participation in rspct court, in a *cision *at* 5 Au"ust 198, t#ro$, to srno+ srno latr *is%iss* t# co%plaint an* %a* si%ilar *%an* lttrs, *at* Jul countrclai%s $or lack o$ %rit an* $or 1981 an* Au"ust 1981, a"ain askin" lack o$ caus o$ action, -it# costs a"ainst &ilipinas $or p#sical *lir o$ t# srno+ srno appal* to t# ori"inal o$ D!6 &? 21+ &ilipinas 6ourt o$ Appals (6A n a all"*l r$rr* all o$ srno;s Dcision *at* 21 !arc# 1989, t# 6ourt *%an* lttrs to &#ilnanc $or -rittn o$ Appals *ni* t# appal+ srno instructions, as #a* n suppos*l %o* $or rconsi*ration o$ t# ao a"r* upon in a curitis Dcision, -it#out succss+ srno l* 6usto*ians#ip A"r%nt t-n t# &tition $or Hi- on 6rtiorari+ &ilipinas an* &#ilnanc+ &#ilnanc nr *i* proi* t# appropriat >ssu: instructionsC &ilipinas nr rlas* D!6 =#t#r t# %arkin" Pnon3n"otialQ in &? 21, nor an ot#r instru%nt in D!6 &? 21 pro#iit* &#ilnanc $ro% rspct t#ro$, to ptitionr+ srno assi"nin" or also %a* a -rittn *%an* on 10 Jul trans$rrin" t# sa% to srno+ 1981 upon Dlta $or t# partial satis$action o$ D!6 &? 21, Gplainin" l*: t#at &#ilnanc, as pa t#ro$, #a* 7# n"otiation o$ a n"otial assi"n* to #i% sai* ?ot to t# Gtnt o$ instru%nt %ust *istin"uis#* $ro%
t# assi"n%nt or trans$r o$ an instru%nt -#t#r t#at n"otial or non3n"otial+ Onl an instru%nt quali$in" as a n"otial instru%nt un*r t# rlant statut %a n"otiat* it#r in*ors%nt t#ro$ coupl* -it# *lir, or *lir alon -#r t# n"otial instru%nt is in arr $or%+ A n"otial instru%nt %a, #o-r, insta* o$ in" n"otiat*, also assi"n* or trans$rr*+ 7# l"al consquncs o$ n"otiation as *istin"uis#* $ro% assi"n%nt o$ a n"otial instru%nt ar, o$ cours, *i4rnt+ A non3n"otial instru%nt %a, oiousl, not n"otiat*C ut it %a assi"n* or trans$rr*, asnt an Gprss pro#iition a"ainst assi"n%nt or trans$r -rittn in t# $ac o$ t# instru%nt: 7# -or*s ;not n"otial, sta%p* on t# $ac o$ t# ill o$ la*in", *i* not *stro its assi"nailit, ut t# sol 4ct -as to G%pt t# ill $ro% t# statutor proisions rlati t#rto, an* a ill, t#ou"# not n"otial, %a trans$rr* assi"n%ntC t# assi"n takin" su@ct to t# quitis t-n t# ori"inal partis+ rin, D!6 &? ?o+ 21, -#il %ark* non3n"otial, -as not at t# sa% ti% sta%p* non3 trans$rral or non3assi"nal+ >t contain* no stipulation -#ic# pro#iit* &#ilnanc $ro% assi"nin" or trans$rrin", in -#ol or in part, t#at ?ot+ Furt#r, t#r is not#in" in t# lttr o$ a"r%nt *at* 1 April 198 t-n Dlta an* &#ilnanc -#ic# can rasonal constru* as a pro#iition upon &#ilnanc assi"nin" or trans$rrin"
all or part o$ D!6 &? 21, $or t# %aturit t#ro$+ >t is scarcl ncssar to a** t#at, n #a* t#is .ttr o$ A"r%nt st $ort# an Gplicit pro#iition o$ trans$r upon &#ilnanc, suc# a pro#iition cannot inok* a"ainst an assi"n or trans$r o$ t# ?ot -#o part* -it# alual consi*ration in "oo* $ait# an* -it#out notic o$ suc# pro#iition+ >t is not *isput* t#at srno -as suc# an assi"n or trans$r N7# issu -#t#r Dlta is lial $or t# alu o$ t# pro%issor to srno -as rsol* t#rou"# Articls 129 an* 1 o$ t# ?- 6iil 6o* as to co%pnsation, an* Articl 1285 o$ t# sa% as to t# assi"n%nt o$ cr*itor;s ri"#ts+ 7# 6ourt #l* t#at sinc srno $ail* to noti$ Dlta o$ t# assi"n%nt o$ t# cr*itor;s (&#ilnanc) ri"#ts at an ti% $or t# %aturit *at o$ D!6 &? 21, an* caus t# rcor* is ar o$ an in*ication t#at &#ilnanc #a* itsl$ noti* Dlta o$ t# assi"n%nt to srno, t# 6ourt -as co%pll* to up#ol* t# *$ns o$ co%pnsation rais* Dlta+ 7# 6ourt, #o-r, #l* t#at &#ilnanc r%ain* lial to srno un*r t# tr%s o$ t# assi"n%nt %a* &#ilnanc to srno+ As to t# issu o$ &ilipinasM liailit to srno, on t# ot#r #an*, t# 6ourt #l* t#at &ilipinas %ust rspon* to srno $or *a%a"s sustain* #i% arisin" out o$ its rac# o$ *ut+ B $ailin" to *lir t# ?ot to srno as *positor3nciar o$ t# t#in" *posit* 33 -#n &ilipinas purport* to
rquir an* a-ait t# instructions o$ &#ilnanc, in oious contrantion o$ its un*rtakin" un*r t# D6H to 4ct p#sical *lir o$ t# ?ot upon rcipt o$ -rittn instructions $ro% sr\o 33 &ilipinas 4ctil an* unla-$ull *pri* srno o$ t# ?ot *posit* -it# it+ S 6iil .a- >> issus, !T<+ Consolidated Pl2Bood Industries Inc. vs. I3C Leasin= and Acceptance Corp. !R ,#&+(' (%April *+1,con* Diision,
Facts: 6onsoli*at* &l-oo* >n*ustris >nc+ (6&>>) is a corporation n"a"* in t# lo""in" usinss+ >t #a* $or its pro"ra% o$ lo""in" actiitis $or t# ar 198 t# opnin" o$ a**itional roa*s, an* si%ultanous lo""in" oprations alon" t# rout o$ sai* roa*s, in its lo""in" concssion ara at Ba"an"a, !ana, an* 6ara"a, Daao Orintal+ For t#is purpos, it n** 2 a**itional units o$ tractors+ 6o"nizant o$ 6&>>;s n* an* purpos, Atlantic n*ustrial &ro*ucts !arktin" (>&!), a corporation *alin" in tractors an* ot#r #a quip%nt usinss, o4r* to sll to 6&>> 2 s* Allis 6ra-lr 7ractors, 1 an D3213B an* t# ot#r an D313B+ D313B+ >n or*r to ascrtain t# Gtnt o$ -ork to -#ic# t# tractors -r to Gpos*, an* to *tr%in t# capailit o$ t# s* tractors in" o4r*, 6&>> rqust* t# sllr3assi"nor to inspct t# @osit+ A$tr con*uctin" sai*
inspction, >&! assur* 6&>> t#at t# s* Allis 6ra-lr 7ractors -#ic# -r in" o4r* -r t $or t# @o, an* "a t# corrspon*in" -arrant o$ 9 *as pr$or%anc o$ t# %ac#ins an* aailailit o$ parts+ =it# sai* assuranc an* -arrant, an* rlin" on t# >&!;s skill an* @u*"%nt, 6&>> t#rou"# nr = an* Ho*ol$o 7+ Tr"ara, prsi*nt an* ic3prsi*nt, rspctil, a"r* to purc#as on install%nt sai* 2 units o$ s* Allis 6ra-lr 7ractors+ >t also pai* t# *o-n pa%nt o$ &21,++ &21,++ On 5 April 198, >&! issu* t# sals inoic $or t# 2 units o$ tractors+ At t# sa% ti%, t# ** o$ sa sal l -it# c#attl %ort"a" -it# pro%issor not -as Gcut*+ Gcut*+ i%ultanousl -it# t# Gcution Gcution o$ t# ** o$ sal -it# c#attl %ort"a" -it# pro%issor not, >&!, %ans o$ a ** o$ assi"n%nt, assi"n* its ri"#ts an* intrst in t# c#attl %ort"a" in $aor o$ >F6 .asin" an* Accptanc 6orporation+ >%%*iatl t#ra$tr, t#ra$tr, >&! *lir* sai* 2 units o$ s* tractors to 6&>>;s @osit an* as a"r*, >&! station* its o-n %c#anics to supris t# oprations o$ t# %ac#ins+ Barl 10 *as #a* laps* a$tr t#ir *lir -#n on o$ t# tractors rok *o-n an* a$tr anot#r 9 *as, t# ot#r tractor lik-is rok *o-n+ On 25 April 198, Tr"ara $or%all a*is* >&! o$ t# $act t#at t# tractors rok *o-n an* rqust* $or >&!;s usual pro%pt attntion un*r t# -arrant+ >n rspons to t# $or%al a*ic Tr"ara, >&! snt to t# @osit its %c#anics to con*uct t# ncssar rpairs, ut t# tractors *i* not co% out to -#at t#
s#oul* a$tr t# rpairs -r court rn*r* @u*"%nt, or*rin" 6&>>, un*rtakn caus t# units -r no t al+ to pa @ointl an* srall in t#ir lon"r srical+ Bcaus o$ t# o'cial an* prsonal capacitis t# rakin" *o-n o$ t# tractors, t# roa* principal su% o$ &1,9,98+1 &1,9,98+1 -it# uil*in" an* si%ultanous lo""in" accru* intrst o$ &151,18+8 as o$ 15 oprations o$ 6&>> -r *la* an* Au"ust 199 an* accruin" intrst Tr"ara a*is* >&! t#at t# pa%nts pa %nts o$ t#ra$tr t#ra$tr at t# rat o$ 12 pr annu%C t# install%nts as list* in t# an* attorn;s $s quialnt to 1 o$ pro%issor not -oul* lik-is lik-is t# principal an* to pa t# costs o$ t# *la* until >&! co%pltl $ullls its suit+ On 8 Jun 1981, t# trial court oli"ation oli"a tion un*r its -arrant+ -arrant+ inc t# issu* an or*r *nin" t# %otion $or tractors -r no lon"r srical, on rconsi*ration l* 6&>>, t al+ 6&>>, t April 199, = ask* >&! to pull out t# al+appal* to t# >ntr%*iat Appllat units an* #a t#% rcon*ition*, an* 6ourt+ On 1 Jul 1985, t# >ntr%*iat t#ra$tr to o4r t#% $or sal+ 7# Appllat 6ourt issu* t# *cision proc*s -r to "in to >F6 .asin" a'r%in" in toto t# *cision o$ t# trial an* t# Gcss, i$ an, to *ii** court+ 6&>> t al+;s %otion $or t-n >&! an* 6&>> -#ic# o4r* to rconsi*ration -as *ni* t# ar 12 o$ t# rcon*itionin" cost+ ?o >ntr%*iat Appllat 6ourt in its rspons to t#is lttr -as rci* rsolution *at* 1 Octor 1985, a cop 6&>> an* *spit sral $ollo-3up calls, o$ -#ic# -as rci* 6&>>, t al+ on 21 >&! *i* not#in" -it# r"ar* to t# Octor 1985+ 6&>>, t al+ l* t# ptition rqust, until t# co%plaint in t# cas $or crtiorari un*r rul ru l 05 o$ t# Huls o$ -as l* >F6 .asin" a"ainst 6&>>, 6ourt+ =, an* Tr"ara+ 7# co%plaint -as l* >F6 .asin" a"ainst 6&>>, t al+ $or >ssu: t# rcor o$ t# principal su% o$ =#t#r t# pro%issor not in qustion &1,9,89+1, &1,9,89+1, accru* intrst o$ is a n"otial instru%nt+ &151,18+8 &151,18+8 as o$ 15 Au"ust 199, accruin" intrst t#r a$tr at t# rat o$ l*: 12 pr annu%, attorn;s $s o$ 7# prtinnt portion o$ t# not proi*s proi*s &209,81+1 &209,81+1 an* costs o$ suit+ 6&>>, t al+ t#at FOH TA.E HE6E>TED, >- @ointl l* t#ir a%n** ans-r prain" $or an* srall pro%is to pa to t# t# *is%issal o$ t# co%plaint an* askin" >?D7H>A. &HOD67 !AHIE7>?<, t# t# trial court to or*r >F6 lasin" to pa su% o$ O?E !>..>O? ?>?E7U 7HEE t#% *a%a"s in an a%ount at t# soun* 7OA?D ETE? ?DHED E><7U *iscrtion o$ t# court, &2,+ as an* ?>?E &EO L 11 onl $or attorn;s $s, an* &5,+ $or (&1,9,89+1), (&1,9,89+1), &#ilippin 6urrnc, 6urrnc, t# Gpnss o$ liti"ation, a%on" ot#rs+ >n a sai* principal su%, to paal in 20 *cision *at* 2 April 1981, t# trial %ont#l install%nts startin" Jul 15,
198 an* r 15t# o$ t# %ont# t#ra$tr until $ull pai*+ 6onsi*rin" t#at para"rap# (*), ction 1 o$ t# ?"otial >nstru%nts .a- rquirs t#at a pro%issor not %ust paal to or*r or arr, it cannot *ni* t#at t# pro%issor not in qustion is not a n"otial instru%nt+ 7# instru%nt in or*r to consi*r* n"otial %ust contain t# so call* -or*s o$ n"otiailit K i++, %ust paal to or*r or arr+ 7#s -or*s sr as an Gprssion o$ consnt t#at t# instru%nt %a trans$rr*+ 7#is consnt is in*ispnsal sinc a %akr assu%s "ratr risk un*r a n"otial instru%nt t#an un*r a non3n"otial on+ =it#out t# -or*s or or*r or to t# or*r o$, t# instru%nt is paal onl to t# prson *si"nat* t#rin an* is t#r$or non3n"otial+ An susqunt purc#asr t#ro$ -ill not n@o t# a*anta"s o$ in" a #ol*r o$ a n"otial instru%nt, ut -ill %rl stp into t# s#os o$ t# prson *si"nat* in t# instru%nt an* -ill t#us opn to all *$nss aailal a"ainst t# lattr+ lattr+ 7#r$or, consi*rin" t#at t# su@ct pro%issor not is not a n"otial instru%nt, it $ollo-s t#at >F6 .asin" can nr a #ol*r in *u cours ut r%ains a %r assi"n o$ t# not in qustion+ 7#us, 6&>> %a rais a"ainst >F6 .asin" all *$nss aailal to it as a"ainst >&!+ 7#is in" so, t#r -as no n* $or 6&>> to i%pla* >&! -#n it -as su* >F6 .asin" caus 6&>>;s *$nss appl to ot# or it#r o$ t#%+
Dela ictoria vs@on. 4ur=os 3acts? Haul + srno l* a co%plaint $or *a%a"s a"ainst Assistant 6it Fiscal Fiscal Binni*o ?+ !aanto, Jr+, Jr+, t al+ $or t# H"ional 7rial 6ourt o$ 6u 6it+ A$tr trial Ju*"%nt -as rn*r* or*rin" !aanto, t al+ to pa &11,+ to srno+ 7# *cision #ain" co% nal an* Gcutor, on %otion o$ t# lattr, t# trial court or*r* its Gcution+ Gcution+ 7#is or*r -as qustion* !aanto, t al+ $or t# 6ourt o$ Appals+ o-r, on 15 Januar 1992 a -rit o$ Gcution -as issu*+ On 0 Fruar 1992 a notic o$ "arnis#%nt -as sr* on .orto D+ * la Tictoria as 6it Fiscal o$ !an*au 6it -#r !aanto, Jr+, Jr+, -as t#n *tail*+ 7# ?otic *irct* D la Tictoria not to *isurs, trans$r, rlas or con to an ot#r prson Gcpt to t# *put s#ri4 concrn* t# salar c#cks, %onis, or cas# *u or lon"in" to !aanto, Jr+, un*r pnalt o$ la-+ On 1 !arc# 1992 srno l* a %otion $or t# trial court $or Ga%ination o$ t# "arnis#s+ On 25 !a 1992 t# ptition pn*in" $or t# 6ourt o$ Appals -as *is%iss*+ 7#us t# trial court, n*in" no %or l"al ostacl to act on t# %otion $or Ga%ination o$ t# "arnis#s, *irct* D la Tictoria on 0 ?o%r 1992 to su%it #is rport s#o-in" t# a%ount o$ t# "arnis#* salaris o$ !aanto, Jr+, -it#in 15 *as $ro% rcipt takin" into consi*ration t# proisions o$ c+ 12, pars+ ($) an* (i), Hul 9 o$ t# Huls o$ 6ourt+ On 20
?o%r 1992 srno l* a %otion to rquir D la Tictoria to Gplain -# # s#oul* not cit* in cont%pt o$ court $or $ailin" to co%pl -it# t# or*r o$ 0 ?o%r 1992+ On t# ot#r #an*, on 19 Januar 199 D la Tictoria %o* to quas# t# notic o$ "arnis#%nt clai%in" t#at # -as not in possssion o$ an %on, $un*s, cr*it, proprt or ant#in" o$ alu lon"in" to !aanto, Jr+, until *lir* to #i%+ $urt#r clai%* t#at, as suc#, t# -r still pulic $un*s -#ic# coul* not su@ct to "arnis#%nt+ On 9 !arc# 199 t# trial court *ni* ot# %otions an* or*r* D la Tictoria to i%%*iatl co%pl -it# its or*r o$ 0 ?o%r 1992+ >t opin* t#at t# c#cks o$ !aanto, Jr+, #a* alra* n rlas* t#rou"# D la Tictoria t# Dpart%nt o$ Justic *ul si"n* t# o'cr concrn*C t#at upon sric o$ t# -rit o$ "arnis#%nt, D la Tictoria as custo*ian o$ t# c#cks -as un*r oli"ation to #ol* t#% $or t# @u*"%nt cr*itorC t#at D la Tictoria ca% a irtual part to, or a $orc* intrnor in, t# cas an* t# trial court #r acquir* @uris*iction to in* #i% to its or*rs an* procsss -it# a i- to t# co%plt satis$action o$ t# @u*"%ntC an* t#at a**itionall t#r -as no su'cint rason $or D la Tictoria to #ol* t# c#cks caus t# -r no lon"r "orn%nt $un*s an* prsu%al *lir* to t# pa, con$or%al -it# t# last sntnc o$ ction 1 o$ t# ?"otial >nstru%nts .a-+ =it# r"ar* to t# cont%pt c#ar", t# trial court -as not %orall coninc* o$ D la Tictoria;s "uilt+ On 2 April 199 t#
%otion $or rconsi*ration -as *ni*+ D la Tictoria l* t# ptition+ Issue? =#t#r a c#ck still in t# #an*s o$ t# %akr or its *ul aut#oriz* rprsntati is o-n* t# pa $or p#sical *lir to t# lattr+ @eld? nstru%nts .a-, r contract on a n"otial instru%nt is inco%plt an* rocal until *lir o$ t# instru%nt $or t# purpos o$ "iin" 4ct t#rto+ As or*inaril un*rstoo*, *lir %ans t# trans$r o$ t# possssion o$ t# instru%nt t# %akr or t# *ra-r -it# intnt to trans$r titl to t# pa an* rco"niz #i% as t# #ol*r t#ro$+ >nas%uc# as sai* c#cks #a* not t n *lir* to !aanto, Jr+, t# *i* not lon" to #i% an* still #a* t# c#aractr o$ pulic $un*s+ As #l* in 7iro + ontanosas, t# salar c#ck o$ a "orn%nt o'cr or %plo suc# a s a tac#r *os not lon" to #i% $or it is p#sicall *lir* to #i%+ ntil t#at ti% t# c#ck lon"s to t# "orn%nt+ Accor*in"l, $or t#r is actual
*lir o$ t# c#ck, t# pa #as no po-r or itC # cannot assi"n it -it#out t# consnt o$ t#
D4P vs Si8a Fei 3acts? >n consi*ration $or a loan Gtn** t# Dlop%nt Bank o$ Hizal (DBH) to i%a =i, t# lattr Gcut* an* *lir* to t# $or%r a pro%issor not, n"a"in" to pa DBH or or*r t# a%ount o$ &1,82,+ on or $or 20 Jun 198 -it# intrst at 2 pr annu%+ i%a =i %a* partial pa%nts on t# not, lain" a alanc o$ &1,2,05+2+ On 18 ?o%r 198, i%a =i issu* t-o cross* c#cks paal to DBH *ra-n a"ainst 6#ina Bankin" 6orporation, arin" rspctil t# srial nu%rs 8090, $or t# a%ount o$ &55,+ an* 8095, $or t# a%ount o$ &5,++ 7# sai*
c#cks -r all"*l issu* in $ull sttl%nt o$ t# *ra-r;s account i*nc* t# pro%issor not+ 7#s t-o c#cks -r not *lir* to DBH or to an o$ its aut#oriz* rprsntatis+ For rasons not s#o-n, t#s c#cks ca% into t# possssion o$ . Iian uat, -#o *posit* t# c#cks -it#out DBH;s in*ors%nt ($or"* or ot#r-is) to t# account o$ t# Asian >n*ustrial &lastic 6orporation, at t# Balinta-ak ranc#, 6aloocan 6it, o$ t# &ro*ucrs Bank+ 6#n" , Branc# !ana"r o$ t# Balinta-ak Branc# o$ &ro*ucrs Bank, rlin" on t# assuranc o$ a%son 7un", &rsi*nt o$ &lastic 6orporation, t#at t# transaction -as l"al an* r"ular, instruct* t# cas#ir o$ &ro*ucrs Bank to accpt t# c#cks $or *posit an* to cr*it t#% to t# account o$ sai* &lastic 6orporation, inspit o$ t# $act t#at t# c#cks -r cross* an* paal to DBH an* or no in*ors%nt o$ t# lattr+ On 5 Jul 198, DBH l* t# co%plaint $or a su% o$ %on a"ainst i%a =i an*or . Iian uat, !ar 6#n" , a%son 7un", Asian >n*ustrial &lastic 6orporation an* t# &ro*ucrs Bank o$ t# &#ilippins, on t-o causs o$ action. (1) 7o n$orc pa%nt o$ t# alanc o$ &1,2,05+2 on a pro%issor not Gcut* i%a =i on 9 Jun 198C an* (2) 7o n$orc pa%nt o$ t-o c#cks Gcut* i%a =i, paal to DBH, an* *ra-n a"ainst t# 6#ina Bankin" 6orporation, to pa t# alanc *u on t# pro%issor not+ EGcpt $or . Iian uat, i%a =i, t al+ l* t#ir sparat !otions to Dis%iss all"in" a co%%on "roun* t#at t# co%plaint stats no
caus o$ action+ 7# trial court "rant* t# !otions to Dis%iss+ 7# 6ourt o$ Appals a'r%* t# *cision, to -#ic# DBH, rprsnt* its ."al .iqui*ator, l* t# &tition $or Hi- 6rtiorari+ Issue? =#t#r DBH, as t# intn** pa o$ t# instru%nt, #as a caus o$ action a"ainst an or all o$ t# *$n*ants, in t# altrnati or ot#r-is+ @eld? 7# nor%al partis to a c#ck ar t# *ra-r, t# pa an* t# *ra- ank+ 6ourts #a lon" rco"niz* t# usinss custo% o$ usin" print* c#cks -#r lanks ar proi** $or t# *at o$ issuanc, t# na% o$ t# pa, t# a%ount paal an* t# *ra-r;s si"natur+ All t# *ra-r #as to *o -#n # -is#s to issu a c#ck is to proprl ll up t# lanks an* si"n it+ o-r, t# %r $act t#at # #as *on t#s *os not "i ris to an liailit on #is part, until an* unlss t# c#ck is *lir* to t# pa or #is rprsntati+ A n"otial instru%nt, o$ -#ic# a c#ck is, is not onl a -rittn i*nc o$ a contract ri"#t ut is also a spcis o$ proprt+ Just as a ** to a pic o$ lan* %ust *lir* in or*r to con titl to t# "rant, so %ust a n"otial instru%nt *lir* to t# pa in or*r to i*nc its Gistnc as a in*in" contract+ ction 1 o$ t# ?"otial >nstru%nts .a-, -#ic# "orns c#cks, proi*s in part t#at Er contract on a n"otial instru%nt is inco%plt an* rocal
until *lir o$ t# instru%nt $or t# purpos o$ "iin" 4ct t#rto+ 7#us, t# pa o$ a n"otial instru%nt acquirs no intrst -it# rspct t#rto until its *lir to #i%+ Dlir o$ an instru%nt %ans trans$r o$ possssion, actual or constructi, $ro% on prson to anot#r+ =it#out t# initial *lir o$ t# instru%nt $ro% t# *ra-r to t# pa, t#r can no liailit on t# instru%nt+ !oror, suc# *lir %ust intn** to "i 4ct to t# instru%nt+ rin, t# t-o (2) 6#ina Bank c#cks, nu%r* 8090 an* 8095, -r not *lir* to t# pa, DBH+ =it#out t# *lir o$ sai* c#cks to DBH, t# $or%r *i* not acquir an ri"#t or intrst t#rin an* cannot t#r$or assrt an caus o$ action, $oun** on sai* c#cks, -#t#r a"ainst t# *ra-r i%a =i or a"ainst t# &ro*ucrs Bank or an o$ t# ot#r rspon*nts+ inc DBH nr rci* t# c#cks on -#ic# it as* its action a"ainst sai* rspon*nts, it nr o-n* t#% (t# c#cks) nor *i* it acquir an intrst t#rin+ 7#us, ant#in" -#ic# t# rspon*nts %a #a *on -it# rspct to sai* c#cks coul* not #a pr@u*ic* DBH+ >t #a* no ri"#t or intrst in t# c#cks -#ic# coul* #a n iolat* sai* rspon*nts+ DBH #as t#r$or no caus o$ action a"ainst sai* rspon*nts, in t# altrnati or ot#r-is+ >$ at all, it is i%a =i, t# *ra-r, -#o -oul* #a a caus o$ action a"ainst #r co3 rspon*nts, i$ t# all"ations in t# co%plaint ar $oun* to tru+ Metropol 4acolod vs Sa8o6 Motors
3acts? On 15 April 199 Dr+ Jair Tillarul Gcut* a pro%issor not in $aor o$ ?" a%ok ons !otors 6o+, .t*+, in t# a%ount o$ &15,99+ paal in 12 qual %ont#l install%nts, "innin" 18 !a 199, -it# intrst at t# rat o$ 1 pr %ont#+ >t is $urt#r proi** t#at in cas on non3pa%nt o$ an o$ t# install%nts, t# total principal su% t#n r%ainin" unpai* s#all co% *u an* paal -it# an a**itional intrst qual to 25 o$ t# total a%ount *u+ On t# sa% *at, a%ok !otors 6o%pan, a sistr co%pan o$ ?" a%ok ons !otors 6o+, .t*+, an* un*r t# sa% %ana"%nt as t# $or%r, n"otiat* an* in*ors* t# not in $aor o$ !tropol Financin" L >nst%nt 6orporation -it# t# $ollo-in" in*ors%nt: &a to t# or*r o$ !tropol Bacolo* Financin" L >nst%nt 6orporation -it# rcours+ ?otic o$ D%an*C Dis#onorC &rotstC an* &rsnt%nt ar #r -ai*+ A!BOI !O7OH 6O+ (BA6O.OD) B: HODO.FO <+ ?O?>..O, Asst+ <nral !ana"r+ 7# %akr, Dr+ Tillarul *$ault* in t# pa%nt o$ #is install%nts -#n t# ca% *u, so on Octor 199, !tropol $or%all prsnt* t# pro%issor not $or pa%nt to t# %akr+ Dr+ Tillarul $ail* to pa t# pro%issor not as *%an**, #nc !tropol noti* a%ok as in*ors o$ sai* not o$ t# $act t#at t# sa% #as n *is#onor* an* *%an** pa%nt+ a%ok $ail* to pa, so on 2 ?o%r 199 !tropol l* a
co%plaint $or collction o$ a su% o$ %on $or t# 6ourt o$ First >nstanc o$ >loilo, Branc# >+ a%ok *i* not *n its liailit ut contn** t#at it coul* not oli"* to pa until a$tr its co3 *$n*ant Dr+ Tillarul, #as n *clar* insolnt+ Durin" t# pn*nc o$ t# cas in t# trial court, Dr+ Tillarul *i*, #nc, on 20 Octor 192 t# lo-r court, on %otion, *is%iss* t# cas a"ainst Dr+ Tillarul pursuant to ction 21, Hul o$ t# Huls o$ 6ourt+ On !tropol;s %otion $or su%%ar @u*"%nt, t# trial court rn*r* its *cision *at* 12 pt%r 19, or*rin" a%ok to pa to !tropol t# su% o$ &15,99+ plus t# l"al rat o$ intrst $ro% Octor 199C t# su% quialnt to 25 o$ &15,99+ plus intrst t#ron until $ull pai*C an* to pa t# cost o$ suit+ ?ot satis* -it# t# *cision, a%oc appal*+ a%ok ar"u t#at a**in" t# -or*s -it# rcours in t# in*ors%nt o$ t# not, it co%s a quali* in*orsrC t#at in" a quali* in*orsr, it *os not -arrant t#at i$ sai* not is *is#onor* t# %akr on prsnt%nt, it -ill pa t# a%ount to t# #ol*rC t#at it onl -arrants t# $ollo-in" pursuant to ction 5 o$ t# ?"otial >nstru%nts .a-: (a) t#at t# instru%nt is "nuin an* in all rspcts -#at it purports to C () t#at # #as a "oo* titl to itC (c) t#at all prior partis #a* capacit to contractC (*) t#at # #as no kno-l*" o$ an $act -#ic# -oul* i%pair t# ali*it o$ t# instru%nt or rn*r it alulss+ Issue?
=#t#r a%ok is a quali* in*orsr o$ t# su@ct pro%issor not+ @eld? A quali* in*ors%nt constituts t# in*orsr a %r assi"nor o$ t# titl to t# instru%nt+ >t %a %a* a**in" to t# in*orsr;s si"natur t# -or*s -it#out rcours or an -or*s o$ si%ilar i%port+ uc# an in*ors%nt rlis t# in*orsr o$ t# "nral oli"ation to pa i$ t# instru%nt is *is#onor* ut not o$ t# liailit arisin" $ro% -arrantis on t# instru%nt as proi** in ction 5 o$ t# ?"otial >nstru%nts .a-+ o-r, a%ok in*ors* t# not -it# rcours an* n -ai* t# notic o$ *%an*, *is#onor, protst an* prsnt%nt+ Hcours %ans rsort to a prson -#o is scon*aril lial a$tr t# *$ault o$ t# prson -#o is pri%aril lial+ a%ok, in*orsin" t# not -it# rcours *os not %ak itsl$ a quali* in*orsr ut a "nral in*orsr -#o is scon*aril lial, caus suc# in*ors%nt, it a"r* t#at i$ Dr+ Tillarul $ails to pa t# not, !tropol can "o a$tr a%ok+ 7# 4ct o$ suc# in*ors%nt is t#at t# not -as in*ors* -it#out qualication+ A prson -#o in*orss -it#out qualication n"a"s t#at on *u prsnt%nt, t# not s#all accpt* or pai*, or ot# as t# cas %a , an* t#at i$ it *is#onor*, # -ill pa t# a%ount t#ro$ to t# #ol*r+ a%ok;s intntion o$ in*orsin" t# not -it#out qualication is %a* n %or apparnt t# $act t#at t# notic o$ *%an*, *is#onor,
protst an* prsnt%nt -r all -ai*+ 7# -or*s a*** a%ok *o not li%it #is liailit, ut rat#r conr% #is oli"ation as a "nral in*orsr+ Furt#r, a$tr an instru%nt is *is#onor* non3 pa%nt, t# prson scon*aril lial t#ron cass to suc# an* co%s a principal *tor+ is liailit co%s t# sa% as t#at o$ t# ori"inal oli"or+ 6onsquntl, t# #ol*r n* not n proc* a"ainst t# %akr $or suin" t# in*orsr+ !e8pesaB vs. Court o0 Appeals !R +##$$. + 3eruar2 *++(con* Diision, 6a%pos Jr+ (J): 0 concur 3acts? ?atii*a* O+ <%psa- o-ns an* oprats $our "rocr stors locat* at Hizal Anu EGtnsion an* at con* Anu, ot# in 6aloocan 6it+ A%on" t#s "rocris ar D+<+ #oppr;s !art an* D+<+ =#ol al !art+ <%psa%aintains a c#ckin" account nu%r* 13831 -it# t# 6aloocan 6it Branc# o$ &B6o%+ 7o $acilitat pa%nt o$ *ts to #r supplirs, <%psa- *ra-s c#cks a"ainst #r c#ckin" account -it# &B6o% as *ra-+ r custo%ar practic o$ issuin" c#cks in pa%nt o$ #r supplirs -as as $ollo-s: 7# c#cks -r prpar* an* ll* up as to all %atrial particulars #r trust* ookkpr, Alicia
-#ic# in*icat t# corrct oli"ations *u an* paal to #r supplirs+ <%psasi"n* ac# an* r c#ck -it#out ot#rin" to ri$ t# accurac o$ t# c#cks a"ainst t# corrspon*in" inoics caus s# rpos* $ull an* i%plicit trust an* con*nc on #r ookkpr+ 7# issuanc an* *lir o$ t# c#cks to t# pas na%* t#rin -r l$t to t# ookkpr+ <%psaa*%itt* t#at s# *i* not %ak an rication as to -#t#r t# c#cks -r actuall *lir* to t#ir rspcti pas+ Alt#ou"# &B6o% noti* #r o$ all c#cks prsnt* to an* pai* t# ank, <%psa- *i* not ri$ t# corrctnss o$ t# rturn* c#cks, %uc# lss c#ck i$ t# pas actuall rci* t# c#cks in pa%nt $or t# supplis s# rci*+ >n t# cours o$ #r usinss oprations corin" a prio* o$ 2 ars, <%psa- issu*, $ollo-in" #r usual practic, a total o$ 82 c#cks in $aor o$ sral supplirs+ 7#s c#cks -r all prsnt* t# in*orss as #ol*rs t#ro$ to, an* #onor* &B6o%+ &B6o% corrspon*in"l *it* t# a%ounts t#ro$ a"ainst <%psa-;s c#ckin" account nu%r* 3831+ !ost o$ t# c#cks -r $or a%ounts in Gcss o$ #r actual oli"ations to t# arious pas as s#o-n in t#ir corrspon*in" inoics+ &racticall, all t# c#cks issu* an* #onor* &B6o% -r cross* c#cks+ Asi* $ro% t# *ail notic "in to <%psa- &B6o%, t# lattr also $urnis#* #r -it# a %ont#l stat%nt o$ #r ank transactions, attac#in" t#rto all t# cancll* c#cks s# #a* issu* an* -#ic# -r *it*
a"ainst #r currnt account+ >t -as onl a$tr t# laps o$ %or t#an 2 ars t#at <%psa- $oun* out aout t# $rau*ulnt %anipulations o$ #r ookkpr+ All t# 82 c#cks -it# $or"* si"naturs o$ t# pas -r rou"#t to Ernst .+ Boon, 6#i$ Accountant o$ &B6o% at t# Bun*ia ranc#, -#o, -it#out aut#orit t#r$or, accpt* t#% all $or *posit at t# Bun*ia ranc# to t# cr*it an*or in t# accounts o$ Al$r*o U+ Ho%ro an* Bnito .a%+ Ernst .+ Boon -as a r clos $rin* o$ Al$r*o U+ Ho%ro+ out o$ t# 82 c#cks -r *posit* in ain"s Account 80035 o$ Al$r*o U+ Ho%ro at &B6o%;s Bun*ia ranc#, an* 0 c#cks in #is ain"s Account 238139 at its On"pin ranc#+ 7# rst o$ t# c#cks -r *posit* in Account 0030, un*r t# na% o$ Bnito .a% at t# Elcano ranc# o$ t# rspon*nt *ra- Bank+ Aout o$ t# pas -#os na%s -r spcicall -rittn on t# c#cks *i* not rci nor n s t# su@ct c#cks an* t#at t# in*ors%nts apparin" at t# ack o$ t# c#cks -r not t#irs+ 7# ta% o$ au*itors $ro% t# %ain o'c o$ &B6o% -#ic# con*uct* prio*ical inspction o$ t# ranc#s; oprations $ail* to *iscor, c#ck or stop t# unaut#oriz* acts o$ Ernst .+ Boon+ All t# *posit slips o$ t# 82 c#cks in qustion -r initial* an*or appro* $or *posit Ernst .+ Boon, contrar to t# ruls o$ &B6o%, -#r onl a Branc# !ana"r, an* no ot#r o'cial o$ &B6o%, %a accpt a scon* in*ors%nt on a c#ck $or *posit+ 7# Branc# !ana"rs o$ t# On"pin an* Elcano
ranc#s accpt* t# *posits %a* in t# Bun*ia ranc# an* cr*it* t# accounts o$ Al$r*o U+ Ho%ro an* Bnito .a% in t#ir rspcti ranc#s+ On ?o%r 1980, <%psa- %a* a -rittn *%an* on &B6o% to cr*it #r account -it# t# %on alu o$ t# 82 c#cks totallin" &1,28,+89 $or #ain" n -ron"$ull c#ar"* a"ainst #r account+ &B6o% r$us* to "rant <%psa-;s *%an*+ On 2 Januar 1985, <%psa- l* a 6o%plaint a"ainst t# &#ilippin Bank o$ 6o%%unications (&B6o%) $or rcor o$ t# %on alu o$ 82 c#cks c#ar"* a"ainst <%psa-;s account -it# &B6o% on t# "roun* t#at t# pas; in*ors%nts -r $or"ris+ 7# H"ional 7rial 6ourt, Branc# 6YYT>>> o$ 6aloocan 6it, -#ic# tri* t# cas, rn*r* a *cision on 1 ?o%r 198 *is%issin" t# co%plaint as -ll as &B6o%;s countrclai%+ On appal, t# 6ourt o$ Appals in a *cision rn*r* on 22 Fruar 199, a'r%* t# *cision o$ t# H76 on t-o "roun*s, na%l (1) t#at <%psa-;s "ross n"li"nc in issuin" t# c#cks -as t# proGi%at caus o$ t# loss an* (2) assu%in" t#at t# ank -as also n"li"nt, t# loss %ust nrt#lss orn t# part -#os n"li"nc -as t# proGi%at caus o$ t# loss+ On 5 !arc# 199, <%psa- l* t# ptition $or ri- un*r Hul 05 o$ t# Huls o$ 6ourt+ >ssu N1: =#t#r t# *ra-rMs account %a c#ar"* $or c#cks -#r t# in*ors%nts -r $or"*+
l* N1: As a %attr o$ practical si"nicanc, prol%s arisin" $ro% $or"* in*ors%nts o$ c#cks %a "nrall rokn into t-o tps o$ cass: (1) -#r $or"r -as acco%plis#* a prson not associat* -it# t# *ra-r K $or Ga%pl a %ail rorC an* (2) -#r t# in*ors%nt -as $or"* an a"nt o$ t# *ra-r+ 7#is *i4rnc in situations -oul* *tr%in t# 4ct o$ t# *ra-r;s n"li"nc -it# rspct to $or"* in*ors%nts+ =#il t#r is no *ut rstin" on t# *positor to look $or $or"* in*ors%nts on #is cancll* c#cks in contrast to a *ut i%pos* upon #i% to look $or $or"ris o$ #is o-n na%, a *positor is un*r a *ut to st up an accountin" sst% an* a usinss proc*ur as ar rasonal calculat* to prnt or rn*r *i'cult t# $or"r o$ in*ors%nts, particularl t# *positor;s o-n %plos+ An* i$ t# *ra-r (*positor) larns t#at a c#ck *ra-n #i% #as n pai* un*r a $or"* in*ors%nt, t# *ra-r is un*r *ut pro%ptl to rport suc# $act to t# *ra- ank+ For #is n"li"nc or $ailur it#r to *iscor or to rport pro%ptl t# $act o$ suc# $or"r to t# *ra-, t# *ra-r loss #is ri"#t a"ainst t# *ra- -#o #as *it* #is account un*r t# $or"* in*ors%nt+ As a rul, a *ra- ank -#o #as pai* a c#ck on -#ic# an in*ors%nt #as n $or"* cannot c#ar" t# *ra-r;s account $or t# a%ount o$ sai* c#ck+ An Gcption to t#is rul is -#r t# *ra-r is "uilt o$ suc# n"li"nc -#ic# causs t# ank to #onor suc# a c#ck or c#cks+ >$ a
c#ck is stoln $ro% t# pa, it is quit oious t#at t# *ra-r cannot possil *iscor t# $or"* in*ors%nt %r Ga%ination o$ #is cancll* c#ck+ 7#is accounts $or t# rul t#at alt#ou"# a *positor o-s a *ut to #is *ra- ank to Ga%in #is cancll* c#cks $or $or"r o$ #is o-n si"natur, # #as no si%ilar *ut as to $or"* in*ors%nts+ A *i4rnt situation ariss -#r t# in*ors%nt -as $or"* an %plo or a"nt o$ t# *ra-r, or *on -it# t# acti participation o$ t# lattr+ !ost o$ t# cass inolin" $or"r an a"nt or %plo *al -it# t# pa;s in*ors%nt+ 7# *ra-r an* t# pa o$tnti%s #a usinss rlations o$ lon" stan*in"+ 7# continu* occurrnc o$ usinss transactions o$ t# sa% natur proi*s t# opportunit $or t# a"nt%plo to co%%it t# $rau* a$tr #ain" *lop* $a%iliarit -it# t# si"naturs o$ t# partis+ o-r, soonr or latr, so% lak -ill s#o- on t# *ra-r;s ooks+ >t -ill t#n @ust a qustion o$ ti% until t# $rau* is *iscor*+ 7#is is spciall tru -#n t# a"nt prptrats a sris o$ $or"ris as #rin+ 7# n"li"nc o$ a *positor -#ic# -ill prnt rcor o$ an unaut#oriz* pa%nt is as* on $ailur o$ t# *positor to act as a pru*nt usinss%an -oul* un*r t# circu%stancs+ rin,<%psa- rli* i%plicitl upon t# #onst an* loalt o$ #r ookkpr, an* *i* not n ri$ t# accurac o$ t# a%ounts o$ t# c#cks s# si"n* a"ainst t# inoics attac#* t#rto+ Alt#ou"# s# r"ularl rci* #r ank stat%nts, s#
apparntl *i* not car$ull Ga%in t# sa% nor t# c#ck stus an* t# rturn* c#cks, an* *i* not co%par t#% -it# t# sals inoics+ Ot#r-is, s# coul* #a asil *iscor* t# *iscrpancis t-n t# c#cks an* t# *ocu%nts srin" as ass $or t# c#cks+ =it# suc# *iscor, t# susqunt $or"ris -oul* not #a n acco%plis#*+ >t -as not until 2 ars a$tr t# ookkpr co%%nc* #r $rau*ulnt sc#% t#at <%psa*iscor* t#at 82 c#cks -r -ron"$ull c#ar"* to #r account, at -#ic# ti% s# noti* &B6o%+ <%psa-;s $ailur to %ak suc# a*quat inquir constitut* n"li"nc -#ic# rsult* in t# ank;s #onorin" o$ t# susqunt c#cks -it# $or"* in*ors%nts+ <%psa-;s n"li"nc -as t# proGi%at caus o$ #r loss+ An* sinc it -as #r n"li"nc -#ic# caus* &B6o% to #onor t# $or"* c#cks or prnt* it $ro% rcorin" t# a%ount it #a* alra* pai* on t# c#cks, <%psa- cannot no- co%plain s#oul* t# ank r$us to rcr*it #r account -it# t# a%ount o$ suc# c#cks+ n*r ction 2 o$ t# ?>., s# is noprclu** $ro% usin" t# $or"r to prnt t# ank;s *itin" o$ #r account+ >ssu N2:=#t#r ankin" ruls pro#iitin" t# *ra- ank $ro% #ain" c#cks -it# %or t#an on in*ors%nt inali*at t# n"otiation or trans$r o$ t# sai* c#ck+
l* N2: 7# ankin" rul annin" accptanc o$ c#cks $or *posit or cas# pa%nt -it# %or t#an on in*ors%nt unlss clar* so% ank o'cials *os not inali*at t# instru%ntC nit#r *os it inali*at t# n"otiation or trans$r o$ t# sai* c#ck+ >n 4ct, t#is rul *stros t# n"otiailit o$ illsc#cks li%itin" t#ir n"otiation in*ors%nt o$ onl t# pa+ n*r t# ?"otial >nstru%nts .a-, t# onl kin* o$ in*ors%nt -#ic# stops t# $urt#r n"otiation o$ an instru%nt is a rstricti in*ors%nt -#ic# pro#iits t# $urt#r n"otiation t#ro$+ >n t#is kin* o$ rstricti in*ors%nt, t# pro#iition to trans$r or n"otiat %ust -rittn in Gprss -or*s at t# ack o$ t# instru%nt, so t#at an susqunt part %a $or-arn* t#at it cass to n"otial+ o-r, t# rstricti in*ors acquirs t# ri"#t to rci pa%nt an* rin" an action t#ron as an in*orsr, ut # can no lon"r trans$r #is ri"#ts as suc# in*ors -#r t# $or% o$ t# in*ors%nt *os not aut#oriz #i% to *o so+ Alt#ou"# t# #ol*r o$ a c#ck cannot co%pl a *ra- ank to #onor it caus t#r is no priit t-n t#%, as $ar as t# *ra-r3*positor is concrn*, suc# ank %a not l"all r$us to #onor a n"otial ill o$ Gc#an" or a c#ck *ra-n a"ainst it -it# %or t#an on in*ors%nt i$ t#r is not#in" irr"ular -it# t# ill or c#ck an* t# *ra-r #as su'cint $un*s+ 7# *ra- cannot co%pll* to accpt or pa t# c#ck t# *ra-r or an #ol*r caus as a
*ra-, # incurs no liailit on t# c#ck unlss # accpts it+ But t# *ra- -ill %ak itsl$ lial to a suit $or *a%a"s at t# instanc o$ t# *ra-r $or -ron"$ul *is#onor o$ t# ill or c#ck I. @OLDERS De Oca8po vs !atchalian 3acts? On or aout 8 pt%r 195, in t# nin", Anita 6+
o$
!anila, a co%plaint $or sta$a a"ainst nstanc o$ !anila, t#rou"# on+ 6onra*o !+ Tasquz, prsi*in", sntnc*
Issue *-? =#t#r D Oca%po is a #ol*r in *u cours+ @eld *-? ?O+ ction 52, ?"otial >nstru%nts .a-, *ns #ol*r in *u cours as A #ol*r in *u cours is a #ol*r -#o #as takn t# instru%nt un*r t# $ollo-in" con*itions: (a) 7#at it is co%plt an* r"ular upon its $acC () 7#at # ca% t# #ol*r o$ it $or it -as or*u, an* -it#out notic t#at it #a* n priousl *is#onor*, i$ suc# -as t# $actC (c) 7#at # took it in "oo* $ait# an* $or aluC (*) 7#at at t# ti% it -as n"otiat* to #i% # #a* no notic o$ an inr%it in t# instru%nt or *$ct in t# titl o$ t# prson n"otiatin" it+ Alt#ou"# D Oca%po -as not a-ar o$ t# circu%stancs un*r
-#ic# t# c#ck -as *lir* to t -as pa;s *ut to ascrtain $ro% t# #ol*r
# #a* t# c#ck in #is possssion an* -# # -as usin" it $or t# pa%nt o$ #is o-n prsonal account K3 s#o- t#at #ol*r;s titl -as *$cti or suspicious, to sa t# last+ As #ol*r;s titl -as *$cti or suspicious, it cannot stat* t#at t# pa acquir* t# c#ck -it#out kno-l*" o$ sai* *$ct in #ol*r;s titl, an* $or t#is rason t# prsu%ption t#at it is a #ol*r in *u cours or t#at it acquir* t# instru%nt in "oo* $ait# *os not Gist+ An* #ain" prsnt* no i*nc t#at it acquir* t# c#ck in "oo* $ait#, it (pa) cannot consi*r* as a #ol*r in *u cours+ >n ot#r -or*s, un*r t# circu%stancs o$ t# cas, insta* o$ t# prsu%ption t#at pa -as a #ol*r in "oo* $ait#, t# $act is t#at it acquir* possssion o$ t# instru%nt un*r circu%stancs t#at s#oul* #a put it to inquir as to t# titl o$ t# #ol*r -#o n"otiat* t# c#ck to it+ 7# ur*n -as, t#r$or, plac* upon it to s#o- t#at not-it#stan*in" t# suspicious circu%stancs, it acquir* t# c#ck in actual "oo* $ait#
Yan= vs CA
Facts: Dc%r 22, 198: 6l Uan" an* &r% 6#an*ira%ani ntr* into an a"r%nt -#r Uan" -as to "i 2 &2+8! &6>B %ana"rs c#ck in t# a%ount o$ &0+2 %illion ot# paal to t# or*r o$ Frnan*o Dai*+ Uan" an* 6#an*ira%ani a"r* t#at t# *i4rnc o$ &2I in t# Gc#an" -oul* t#ir prot to *ii** quall t-n
t#%+ Uan" an* 6#an*ira%ani also $urt#r a"r* t#at t# Uan" -oul* scur $ro% FEB76 a *ollar *ra$t in t# a%ount o$ ]2I, paal to &6>B F6D Account ?o+ 0195311532, -#ic# 6#an*ira%ani -oul* Gc#an" $or anot#r *ollar *ra$t in t# sa% a%ount to issu* an" n" Bank .t*+ o$ on" Ion"+ Dc%r 22, 198, Uan" procur* t# 4: a) Equital 6as#irs 6#ck ?o+ 66& 103 90 in t# su% o$ &2,8,+, *at* Dc%r 22, 198, paal to t# or*r o$ Frnan*o Dai*C ) FEB76 6as#irs 6#ck ?o+ 288, in t# a%ount o$ &2,8,+, *at* Dc%r 22, 198, lik-is paal to t# or*r o$ Frnan*o Dai*C an* c) FEB76 Dollar Dra$t ?o+ 01, *ra-n on 6#%ical Bank, ?- Uork, in t# a%ount o$ ]2,+, *at* Dc%r 22, 198, paal to &6>B F6D Account ?o+ 0195311532+ Dc%r 22, 198 1 p+%+: Uan" "a t# cas#irs c#cks an* *ollar *ra$ts to #r usinss associat, Alrt .ion", to *lir* to 6#an*ira%ani .ion"s %ssn"r, Danilo Hani"o Hani"o -as to %t 6#an*ira%ani at 2 p+%+ at &#ilippin 7rust Bank, Aala Anu, !akati -#r # -oul* turn or Uan"s cas#irs c#cks an* *ollar *ra$t to 6#an*ira%ani -#o, in turn, -oul* *lir to Hani"o a &6>B %ana"rs c#ck in t# su% o$ &0+2 %illion an* a an" n" Bank *ollar *ra$t $or ]2I in Gc#an" ut 6#an*ira%ani *i* not appar Dc%r 22, 198 0 p+%+: Hani"o rport* t# all"* loss o$ t# c#cks an* t# *ollar *ra$t to .ion"+ .ion", in
turn, in$or%* Uan", an* t# loss -as t#n rport* to t# polic+ 6#an*ira%ani -as al to "t #ol* o$ t# instru%nts 6#an*ira%ani *lir* t# 2 cas#irs c#cks to Frnan*o Dai* at 6#ina Bankin" 6orporation ranc# in an Frnan*o 6it, &a%pan"a >n Gc#an", # "ot ]I $ro% Dai*, -#ic# # *posit* in t# sain"s account o$ #is -i$, &us#paC an* #is %ot#r, Hani Hnan*as, -#o #l* F6D Account ?o+ 120 -it# t# nit* 6oconut &lantrs Bank ranc# in B F6D Account ?o+ 01953 11532 on t# sa% *at+ Uan" rqust* FEB76 an* Equital to stop pa%nt on t# instru%nts s# li* to lost Bot# anks co%pli* -it# #r rqustUan" l* a"ainst Dai* an* 6#an*ira%ani6A a'r%s H76: in $aor o$ Dai* Issue? =#t#r Dai* -as a #ol*r in *u cours+ @eld? Er #ol*r o$ a n"otial instru%nt is *%* pri%a $aci a #ol*r in *u cours+ o-r, t#is prsu%ption ariss onl in $aor o$ a prson -#o is a #ol*r as *n* in ction 191 o$ t# ?"otial >nstru%nts .a-, %anin" a pa or in*ors o$ a ill or not, -#o is in possssion o$ it, or t# arr t#ro$+ rin, it is not *isput* t#at Dai* -as t# pa o$ t# c#cks in
qustion+ 7# -i"#t o$ aut#orit sustains t# i- t#at a pa %a a #ol*r in *u cours+ nc, t# prsu%ption t#at # is a pri%a $aci #ol*r in *u cours applis in #is $aor+ o-r, sai* prsu%ption %a rutt*+ nc, -#at is ital to t# rsolution o$ t#is issu is -#t#r Dai* took possssion o$ t# c#cks un*r t# con*itions proi** $or in ction 52 o$ t# ?"otial >nstru%nts .a-+ All t# rquisits proi** $or in ction 52 %ust concur in Dai*;s cas, ot#r-is # cannot *%* a #ol*r in *u cours+ Uan";s c#alln" to Dai*;s status as a #ol*r in *u cours #in"s on t-o ar"u%nts: (1) t# lack o$ proo$ to s#o- t#at Dai* tn*r* an alual consi*ration $or t# *isput* c#cksC an* (2) Dai*;s $ailur to inquir $ro% 6#an*ira%ani as to #o- t# lattr acquir* possssion o$ t# c#cks, t#us rsultin" in Dai*;s intntional i"noranc tanta%ount to a* $ait#+ >n su%, Uan" posits t#at t# last t-o rquisits o$ ction 52 ar %issin", t#r prntin" Dai* $ro% in" consi*r* a #ol*r in *u cours+ n$ortunatl $or Uan", #r ar"u%nts on t#is scor ar lss t#an %ritorious an* $ar $ro% prsuasi
Mesina vs IAC FA67: Jos
con$rnc -it# on AlGan*r .i%+ l$t t# c#ck in #is *sk an* upon #is rturn, .i% an* t# c#ck -r "on+ =#n
itsl$+&titionr$ail* to sustantiat t#at # -as a #ol*r in *u cours+ pon qustionin", # a*%itt* t#at # "ot t# c#ck $ro% .i% -#o stol t# c#ck+ r$us* to *isclos #o- an* -# it #as pass* to #i%+ >t si%pl %ans t#at # #as notic o$ t# *$ct o$ #is titl or t# c#ck $ro% t# start+ 7# #ol*r o$ a cas#irMs c#ck -#o is not a #ol*r in *u cours cannot n$orc pa%nt a"ainst t# issuin" ank -#ic# *is#onors t# sa%+ >$ a pa o$ a cas#irMs c#ck otain* it $ro% t# issuin" ank $rau*, or i$ t#r is so% ot#r rason -# t# pa is not ntitl* to collct t# c#ck, t# ank -oul* o$ cours #a t# ri"#t to r$us pa%nt o$ t# c#ck -#n prsnt* pa, sinc t# ank -as a-ar o$ t# $acts surroun*in" t# loss o$ t# c#ck in qustion.
. LIA4ILITY O3 PARTIES ASTRO ELECTRONICS CORP. v. P@ILIPPINE EGPORT AND 3OREI!N LOAN !5ARANTEE CORPORATION 011 6HA 02C A7H>A3!AH7>?EC pt+ 2, 2 ^lora^ 3ACTS 3Astro -as "rant* sral loans t# &#ilippin 7rust 6o%pan a%ountin" to &,,+ -it# intrst an* scur* t#r pro%issor nots+ 3>n ac# pro%issor nots, ptitionr HoGas si"n* t-ic, as &rsi*nt o$ Astro an* in #is prsonal capacit+ HoGas also si"n* a 6ontinuin" urt s#ip A"r%nt in $aor o$ &#iltrust Bank, as &rsi*nt o$ Astro an* as surt+ 3&#il"uarant, -it# t# consnt o$ Astro, "uarant* in $aor o$ &#iltrust t# pa%nt o$ o$ AstroMs loan, su@ct to t# con*ition t#at upon pa%nt &#il"uanrant o$ sai* a%ount, it s#all proportionall suro"at* to t# ri"#ts o$ &#iltrust a"ainst Astro+ 3As a rsult o$ AstroMs $ailur to pa its loan oli"ations, *spit *%an*s, &#il"uarant pai* o$ t# "uarant* loan to &#iltrust+ usquntl, &#il"uarant l* a"ainst Astro an* HoGas a co%plaint $or su% o$ %on -it# t# H76 o$ !akati+ 3>n #is Ans-r, HoGas *isclai%s an liailit on t# instru%nts, all"in" t#at # %rl si"n* t# sa% in lank an* t# p#rass Pin #is prsonal capacitQ an* Pin #is o'cial capacitQ -r $rau*ulntl insrt* -it#out #is kno-l*"+
37# H76 rn*r* its *cision in $aor o$ &#il"uarant osrin" t#at i$ HoGas rall intn** to si"n t# instru%nts %rl in #is capacit as &rsi*nt o$ Astro, t#n # s#oul* #a si"n* onl onc in t# pro%issor not+ 36A a'r%* t# H76 *cision a"rin" -it# t# trial court t#at HoGas $ail* to Gplain satis$actoril -# # #a* to si"n t-ic in t# contract an* t#r$or t# prsu%ption t#at priat transactions #a n $air an* r"ular %ust sustain*+ ISS5E =O? HoGas s#oul* @ointl an* srall lial (soli*ar) -it# Astro $or t# su% a-ar** t# H76+
@ELD YES. AstroMs loan -it# &#iltrust Bank is scur* t#r pro%issor nots+ 7#s pro%issor nots ar ali* an* in*in" a"ainst Astro an* HoGas+ As it appars on t# nots, HoGas si"n* t-ic: rst, as prsi*nt o$ Astro an* scon*, in #is prsonal capacit+ >n si"nin" #is na% asi* $ro% in" t# &rsi*nt o$ Asro, HoGas ca% a co3 %akr o$ t# pro%issor nots an* cannot scap an liailit arisin" $ro% it+ 3n*r t# Negotiable Instruments Law, prsons -#o -rit t#ir na%s on t# $ac o$ pro%issor nots ar %akrs, pro%isin" t#at t# -ill pa to t# or*r o$ t# pa or an #ol*r accor*in" to its tnor+ 7#us, n -it#out t# p#ras Pprsonal capacit,Q HoGas -ill still
pri%aril lial as a @oint an* sral *tor un*r t# nots consi*rin" t#at #is intntion to lial as suc# is %ani$st* t# $act t#at # a'G* #is si"natur on ac# o$ t# pro%issor nots t-ic -#ic# ncssaril -oul* i%pl t#at # is un*rtakin" t# oli"ation in t-o *i4rnt capacitis, o'cial an* prsonal+ 3nnotic* ot# t# trial court an* t# 6ourt o$ Appals, a closr Ga%ination o$ t# si"naturs a'G* HoGas on t# pro%issor nots, ra*il rals t#at portions o$ #is si"naturs cor* portions o$ t# tp-rittn -or*s Pprsonal capacitQ in*icatin" -it# crtaint t#at t# tp-rittn -or*s -r alra* Gistin" at t# ti% HoGas a'G* #is si"naturs t#us *%olis#in" #is clai% t#at t# tp-rittn -or*s -r @ust insrt* a$tr # si"n* t# pro%issor nots+ >$ -#at # clai%s is tru, t#n portions o$ t# tp-rittn -or*s -oul* #a cor* portions o$ #is si"naturs, an* not ic rsa+ 3As to t# t#ir* pro%issor not, t# cop su%itt* is not clar so t#at t#is 6ourt coul* not *iscrn t# sa% osrations on t# nots+ 3 7# pro%issor nots uni$or%l proi*: PFOH TA.E HE6E>TED, >= @ointl, srall an* soli*aril, pro%is to pa to &>.7H7 BA?I or or*r+++Q 3An instru%nt -#ic# "ins -it# P>Q, P=Q, or PEit#r o$ usQ pro%is to pa, -#n si"n* t-o or %or prsons, %aks t#% soli*aril lial+ Also, t# p#ras P@oint an* sralQ in*s t# %akrs @ointl an* in*ii*uall to t# pa so t#at all %a su* to"t#r
$or its n$orc%nt, or t# cr*itor %a slct on or %or as t# o@ct o$ t# suit+ ain" si"n* un*r suc# tr%s, HoGas assu%* t# soli*ar liailit o$ a *tor an* &#iltrust Bank %a c#oos to n$orc t# nots a"ainst #i% alon or @ointl -it# Astro+ HoGasM clai% t#at t# p#rass Pin #is prsonal capacitQ an* Pin #is o'cial capacitQ -r insrt* on t# nots -it#out #is kno-l*" -as corrctl *isr"ar** t# H76 an* t# 6ourt o$ Appals+ >t is not *isput* t#at HoGas *os not *n t#at # si"n* t# nots t-ic+ HoGas $ail* to pro t# trut# o$ suc# all"ations+ Bar all"ations, -#n unsustantiat* i*nc, *ocu%ntar or ot#r-is, ar not quialnt to proo$ un*r our Huls o$ 6ourt+ 3HoGas is a usinss%an -#o is prsu%* to tak or*inar car o$ #is concrns+ 6larl, # kn- t# natur o$ t# transactions an* *ocu%nts inol* as # not onl Gcut* t#s nots on t-o *i4rnt *ats ut # also Gcut*, an* a"ain, si"n* t-ic, a Pcontinuin" urt s#ip A"r%ntQ notariz* on Jul 1, 1981, -#rin # "uarant*, @ointl an* srall -it# Astro t# rpa%nt o$ &,,+ *u to &#iltrust+ uc# continuin" surts#ip a"r%nt n r3 n$orc* #is soli*ar liailit &#iltrust caus as a surt, # oun* #i%sl$ @ointl an* srall -it# AstroMs oli"ation+ 3&#il"uarant #as all t# ri"#t to proc* a"ainst ptitionr, it is suro"at* to t# ri"#ts o$ &#iltrust to
*%an* $or an* collct pa%nt $ro% ot# HoGas an* Astro sinc it alra* pai* t# alu o$ o$ t# loan oli"ation+ 3Subrogation is t# trans$r o$ all t# ri"#ts o$ t# cr*itor to a t#ir* prson, -#o sustituts #i% in all #is ri"#ts+ >t %a it#r l"al or conntional+ ."al suro"ation is t#at -#ic# taks plac -it#out a"r%nt ut opration o$ la- caus o$ crtain acts+ >nstancs o$ l"al suro"ation ar t#os proi** in Articl 12 o$ t# 6iil 6o*+ 6onntional suro"ation, on t# ot#r #an*, is t#at -#ic# taks plac a"r%nt o$ t# partis+ 3HoGasM acquiscnc is not ncssar $or suro"ation to tak plac caus t# instant cas is on o$ t# l"al suro"ation t#at occurs opration o$ la-, an* -it#out n* o$ t# *torMs kno-l*"+ Furt#r, &#il"uarant, as "uarantor, ca% t# trans$r o$ all t# ri"#ts o$ &#iltrust as a"ainst HoGas an* Astro caus t# P"uarantor -#o pas is suro"at* irtu t#ro$ to all t# ri"#ts -#ic# t# cr*itor #a* a"ainst t# *tor+Q Disposition Dcision o$ t# 6ourt o$ Appals AFF>H!ED in toto+
!ARCIA LLAMAS 01 6HA 292 C &an"anianC Dc%r 8, 2 ^@onas^ 3ACTS 3A co%plaint $or su% o$ %on an* *a%a"s -as l* in t# H76 #rin rspon*nt Dionisio .la%as a"ainst #rin &titionr Ho%o
an* E*uar*o * Jsus, all"in" (1) t#at ptitionr an* * Jsus orro-* &0k $ro% rspon*nt L Gcut* a pro%issor not -#rin t# oun* t#%sls @ointl an* srallC an* (2) t#at t# loan #as lon" n or*u an*, *spit rpat* *%an*s, ptitionr an* * Jsus #a $ail* an* r$us* to pa it+ AnnG* to t# co%plaint -r t# pro%issor not an* a *%an* lttr rspon*nt a**rss* to ptitionr an* * Jsus+ 3 &titionr
an* $or &titionr
ISS5E =O? t# not -as n"otial @ELD ?O+ &titionr ars t#at as a %r acco%%o*ation part, # -as rlas* as oli"or -#n rspon*nt a"r* to Gtn* t# tr% o$ t# oli"ation+ 7#is rasonin" is %isplac*, caus t# not #rin is not a n"otial instru%nt+ 7# not ra*s: PROMISSORY NOTE P400,000.00 RECEIE! "ROM #TTY. !IONISIO . LL#M#S, t$e sum o% "O&R '&N!RE! T'O&S#N! PESOS, P$ili((ine Curren)* (a*able on or be%ore +anuar* -, // at No. 44 120 St. 1amias, 3ueon Cit*, wit$ interest at t$e rate o% 56 (er mont$ or %ra)tion t$ereo%. It is un7erstoo7 t$at our liabilit* un7er t$is loan is 8ointl* an7 se9erall* :si);. Don at /uzon 6it, !tro !anila t#is 2r* *a o$ Dc%r, 199+ 3B its tr%s, t# not -as %a* paal to a spcic prson rat#r t#an to arr or to or*r 3 a rquisit $or n"otiailit un*r Act 21, t# ?"otial >nstru%nts .a- (?>.)+ &titionr cannot aail #i%sl$ o$ t# ?>.;s proisions on t# liailitis an* *$nss o$ an acco%%o*ation part+ A non3n"otial not is %rl a si%pl contract in -ritin" an* is i*nc o$ suc# intan"il ri"#ts as %a #a n crat* t# assnt o$ t# partis+ 7# pro%issor not is t#us cor* t# "nral proisions o$ t# 6iil 6o*, not t# ?>.+ En "rantin" t#at t# ?>. -as applical,
ptitionr -oul* lial $or t# pro%issor not+ n*r Art+ 29 o$ Act 21, an acco%%o*ation part is lial $or t# instru%nt to a #ol*r $or alu n i$ t# lattr kn- t# $or%r to onl an acco%%o*ation part+ 7# rlation t-n an acco%%o*ation part an* t# part acco%%o*at* is, in 4ct, on o$ principal an* surt+ >t is a sttl* rul t#at a surt is oun* quall an* asolutl -it# t# principal an* is *%* an ori"inal pro%isor an* *tor $ro% t# "innin"+ 37# liailit is i%%*iat an* *irct+ Disposition &tition *ni*+ Assail* *cision a'r%*+
Crisolo=o")ose vs. CA 3acts? >n 198, Hicar*o + antos, Jr+ -as t# ic3prsi*nt o$ !or Entrpriss, >nc+ in3c#ar" o$ %arktin" an* salsC an* t# prsi*nt o$ t# sai* corporation -as Att+ Oscar + Bnars+ On April 198, Att+ Bnars, in acco%%o*ation o$ #is clints, t# spouss Jai% an* 6larita On", issu* 6#ck 955 *ra-n a"ainst 7ra*rs Hoal Bank, *at* 10 Jun 198, in t# a%ount o$ &05,+ paal to Ernstina 6risolo"o3Jos+ inc t# c#ck -as un*r t# account o$ !or Entrpriss, >nc+, t# sa% -as to si"n* its prsi*nt, Att+ Oscar + Bnars, an* t# trasurr o$ t# sai* corporation+ o-r, sinc at t#at ti%, t# trasurr o$ !or Entrpriss -as not aailal, Att+ Bnars prail* upon antos to si"n t# a$orsai* c#ck as an altrnat si"nator+ antos *i* si"n t# c#ck+ 7# c#ck -as issu* to 6risolo"o3Jos in consi*ration o$ t# -air or quitclai% 6risolo"o3Jos or a crtain proprt -#ic# t# nsuranc st% (<>) a"r* to sll to t# clints o$ Att+ Bnars, t# spouss On", -it# t# un*rstan*in" t#at upon approal t# <> o$ t# co%pro%is a"r%nt -it# t# spouss On", t# c#ck -ill ncas#* accor*in"l+ o-r, sinc t# co%pro%is a"r%nt -as not appro* -it#in t# Gpct* prio* o$ ti%, t# a$orsai* c#ck $or &05,+ -as rplac* Att+ Bnars -it# anot#r 7ra*rs Hoal Bank c#ck arin" 9299 *at* 1 Au"ust 198, in t#
sa% a%ount o$ &05,+, also paal to 6risolo"o3Jos+ 7#is rplac%nt c#ck -as also si"n* Att+ Bnars an* antos =#n 6risolo"o3Jos *posit* t#is rplac%nt c#ck -it# #r account at Fa%il ain"s Bank, !aon Branc#, it -as *is#onor* $or insu'cinc o$ $un*s+ A susqunt r*positin" o$ t# sai* c#ck -as lik-is *is#onor* t# ank $or t# sa% rason+ nc, 6risolo"o3Jos t#rou"# counsl -as constrain* to l a cri%inal co%plaint $or iolation o$ Batas &a%ansa 22 (B&22) -it# t# /uzon 6it Fiscal;s O'c a"ainst Att+ Bnars an* antos 7# insti"atin" Assistant 6it Fiscal, Al$onso .la%as, accor*in"l l* an a%n** in$or%ation -it# t# court c#ar"in" ot# Bnars an* antos $or iolation o$ B& 22 (6ri%inal 6as /3108) o$ t#n 6ourt o$ First >nstanc o$ Hizal, /uzon 6it+ !an-#il, *urin" t# prli%inar insti"ation o$ t# cri%inal c#ar" a"ainst Bnars an* antos, $or Assistant 6it Fiscal .la%as, antos tn*r* cas#ir;s c#ck 66 1152 $or &05,+ *at* 1 April 1981 to 6risolo"o3Jos, t# co%plainant in t#at cri%inal cas+ 6risolo"o3Jos r$us* to rci t# cas#ir;s c#ck in pa%nt o$ t# *is#onor* c#ck in t# a%ount o$ &05,++ nc, antos ncas#* t# a$orsai* cas#ir;s c#ck an* susquntl *posit* sai* a%ount o$ &05,+ -it# t# 6lrk o$ 6ourt on 10 Au"ust 1981+ >nci*ntall, t# cas#ir;s c#ck a*rt* to ao -as purc#as* Att+ Bnars an* "in to antos to appli* in pa%nt o$ t# *is#onor*
c#ck+ A$tr trial, t# court a quo, #ol*in" t#at it -as not prsua** to li t#at consi"nation r$rr* to in Articl 125 o$ t# 6iil 6o* is applical to t#is cas, rn*r* @u*"%nt *is%issin" antos; co%plaint $or consi"nation an* 6risolo"o3 Jos;s countrclai%+ On appal an* on 8 pt%r 198, t# appllat court rrs* an* st asi* sai* @u*"%nt o$ *is%issal an* ri* t# co%plaint $or consi"nation, *irctin" t# trial court to "i *u cours t#rto+ 6risolo"o3Jos l* t# ptition+ Issue *-? =#t#r antos, as an acco%%o*ation part, is lial t#ron un*r t# ?"otial >nstru%nts .a-+
*i* not rci an alual consi*ration -#n # Gcut* t# instru%nt+ Fro% t# stan*point o$ contract la-, # *i4rs $ro% t# or*inar concpt o$ a *tor t#rin in t# sns t#at # #as not rci* an alual consi*ration $or t# instru%nt # si"ns+ ?rt#lss, # is lial to a #ol*r $or alu as i$ t# contract -as not $or acco%%o*ation, in -#atr capacit suc# acco%%o*ation part si"n* t# instru%nt, -#t#r pri%aril or scon*aril+ 7#us, it #as n #l* t#at in ln*in" #is na% to t# acco%%o*at* part, t# acco%%o*ation part is in 4ct a surt $or t# lattr+ Sada2a vs. Sevilla' *+ SCRA +#$
@eld *-? ction 29 (.iailit o$ acco%%o*ation part) o$ t# ?"otial >nstru%nts .a- proi*s t#at An acco%%o*ation part is on -#o #as si"n* t# instru%nt as %akr, *ra-r, accptor, or in*orsr, -it#out rciin" alu t#r$or, an* $or t# purpos o$ ln*in" #is na% to so% ot#r prson+ uc# a prson is lial on t# instru%nt to a #ol*r $or alu, not-it#stan*in" suc# #ol*r, at t# ti% o$ takin" t# instru%nt, kn- #i% to onl an acco%%o*ation part+ 6onsquntl, to consi*r* an acco%%o*ation part, a prson %ust (1) a part to t# instru%nt, si"nin" as %akr, *ra-r, accptor, or in*orsr, (2) not rci alu t#r$or, an* () si"n $or t# purpos o$ ln*in" #is na% $or t# cr*it o$ so% ot#r prson+ Bas* on t# $or"oin" rquisits, it is not a ali* *$ns t#at t# acco%%o*ation part
3ACTS? a*aa, illa an* Tarona si"n* soli*aril a pro%issor not in $aor o$ t# ank+ Tarona -as t# onl on -#o rci* t# proc*s o$ t# not+ a*aa an* illa ot# si"n* as co3 %akrs to acco%%o*at Tarona+ 7#ra$tr, t# ank collct* $ro% a*aa+ Tarona $ail* to ri%urs+
6onsquntl, illa *i* an* intstat stat proc*in"s -r stalis#*+ a*aa l* a cr*itorMs clai% on #is stat $or t# pa%nt # %a* on t# not+ 7# a*%inistrator rsist* t# clai% on t# "roun* t#at illa *i*n;t rci an proc*s o$ t# loan+ 7# trial court a*%itt* t# clai% o$ a*aa t#ou"# tis -as rrs* t# 6A+
E.D: a*aa coul* #a sou"#t ri%urs%nt $ro% Tarona, -#ic# is ri"#t an* @ust as t# lattr -as t# onl on -#o rci* alu $or t# not Gcut*+ 7#r is an i%pli* contract o$ in*%nit t-n a*aa an* Tarona upon t# $or%rMs pa%nt o$ t# oli"ation to t# ank+ url nou"#, t# oli"ations o$ Tarona an* illa to a*aa cannot @oint an* sral+ For in**, #a* pa%nt n %a* Tarona, Tarona coul*n;t #a* rason to sk ri%urs%nt $ro% it#r a*aa or illa+ A$tr all, t# proc*s o$ t# loan -nt to Tarona alon+ On principl, a soli*ar acco%%o*ation %akrK-#o %a* pa%ntK#as t# ri"#t to contriution, $ro% #is co3acco%o*ation %akr, in t# asnc o$ a"r%nt to t# contrar t-n t#%, su@ct to con*itions i%pos* la-+ 7#is ri"#t sprin"s $ro% an i%pli* pro%is to s#ar quall t#ur*ns t# %a nsu $ro% t#ir #ain" consnt* to sta%p t#ir si"naturs on t# pro%issor not+ 7# $ollo-in" ar t# ruls: 1+ A @oint an* sral acco%%o*ation %akr o$ a ?"otial pro%issor not %a *%an* $ro% t# &rincipal *tor ri%urs%nt $or t# a%ount t#at # pai* to t# pa
2+ A @oint an* sral acco%%o*ation %akr -#o pas on t# sai* pro%issor not %a *irctl *%an* ri%urs%nt $ro% #is co3acco%%o*ation %akr -it#out rst *irctin" #is action a"ainst t# principal *tor proi** t#at a+ %a* t# pa%nt irtu o$ a @u*icial *%an* + A principal *tor is insolnt+ >t -as nr s#o-n t#at t#r -as a @u*icial *%an* on a*aa to pa t# oli"ation an* also, it -as nr pron t#at Tarona -as insolnt+ 7#us, a*aa cannot proc* a"ainst illa $or ri%urs%nt+
TRAEL ON . CA #*% SCRA (&* FA67: &titionr -as a tral a"nc inol* in tickt sals on a co%%ission asis $or an* on #al$ o$ *i4rnt airlin co%panis+ !iran*a #as a rolin" cr*it lin -it# t# co%pan+ procur* tickts on #al$ o$ ot#rs an* *ri* co%%issions $ro% it+ &titionr l* a collction suit a"ainst !iran*a $or t# unpai* a%ount o$ siG c#cks+ &titionr all"* t#at !iran*a procur* tickts $ro% t#% -#ic# # pai* -it# cas# an* c#cks ut t# c#cks -r *is#onor* upon prsnt%nt to
t# ank+ 7#is -as in" r$ut* !iran*a sain" t#at # actuall pai* $or #is oli"ations, n in t# Gcss+ ar"u* t#at t# c#cks -r $or acco%%o*ation purposs onl+ 7# co%pan n** to s#o- to its Boar* o$ Dirctors t#at its accounts rcial -as in "oo* stan*in"+ 7# H76 an* 6A #l* !iran*a not to lial+ E.D: Hlianc t# lo-r an* appllat court on t# co%panMs nancial stat%nts -r -ron", to s i$ !iran*a -as lial or not+ 7#is nancial stat%nts -r actuall not up*at* to s#o- t#at t#r -as in*t*nss on t# part o$ !iran*a+ 7# st i*nc t#at t# courts s#oul* #a look* at -r t# c#cks itsl$+ 7#r is a pri%a $aci prsu%ption t#at a c#ck -as issu* $or alual consi*ration an* t# proision puts t# ur*n upon t# *ra-r to *ispro t#is prsu%ption+ !iran*a -as unal to rli #i%sl$ o$ t#is ur*n+ Onl clar an* conincin" i*nc an* not %r sl$3srin" i*nc o$ *ra-r can rut t#is prsu%ption+ 7# co%pan -as ntitl* to t# nt con$rr* t# statutor proision+ !iran*a $ail* to s#o- t#at t# c#cks -rnMt issu* $or an alual consi*ration+ 7# c#cks -r clar statin" t#at t# co%pan -as t# pa an* not a %r acco%%o*at* part+ An* also, notic -as "in to t# $act t#at t# c#cks -r issu* a$tr a -rittn *%an* t# co%pan r"ar*in" !iran*aMs unpai* liailitis
A!RO CON!LOMERATES' INC. vs. CA and RE!ENT SAIN!S and LOAN 4ANH' INC. 3ACTS A"ro 6on"lo%rats >nc+ (Tn*or) sol* 2 parcls o$ $ar%lan*s to =on*rlan* Foo* >n*ustris (n*), -#rin t# Gcut* a !%oran*u% o$ A"r%nt (!OA) -#r t# n* -oul* pa &5 ! as $ollo-s: &1! cas#, &2! in s#ars o$ stock o$ Tn* 6orporation an* &2! in install%nts _ 18 intrst pr annu%+ A$tr-#ic#, t# n*or, -n* an* rspon*nt Bank Gcut* an A**n*u% to t# prious !OA+ 7# narran"%nt proi* t#at t# &1! cas# pa%nt an* prpai* intrst o$ &1+! (18 o$ &2!) -oul* incurr* as *t $ro% t# BA?I t# Tn*or as aut#oriz* t# Tn*+ &roi** #o-r, t#at sai* loan s#all %a* $or an* in t# na% o$ t# TE?DOH+ 7# TE?DEE t#r a"rs to pa t# $ull a%ount o$ &1+! *irctl to t# TE?DOH+ >t is un*rstoo* t#at -#il t# loan -ill scur* $ro% an* in t# na% o$ t# TE?DOH, t# TE?DEE -ill t# on lial to pa t# ntir proc*s t#ro$ inclu*in" intrst an* ot#r c#ar"s+ &titionr3n*or issu* &? paal to t# Bank, ut t# $or%r $ail* to pa suc# oli"ation so t# Bank l* cass o$ collction+ 7#us t# Bank n*ors* t# &? $or collction+ ISS5E
1+ =? &titionr3n*ors is soli*aril lial -it# =on*rlan* (n*) to pa t# ank (cr*itor)+ 2+ =? t# A**n*u% si"n* t# Bank, t# Tn*or an* Tn* constituts a noation o$ t# contract sustitution o$ *tor, -#ic# G%pts ptitionrs3 n*or $ro% an liailit to pa t# &? t# issu* to t# Bank+ @ELD. 1+ ?O+ A susi*iar contract o$ surts#ip #a* takn 4ct sinc ptitionr3n*ors si"n* t# &? as %akr an* acco%%o*ation part $or t# nt o$ =on*rlan* (n*)+ &titionrs ca% lial as acco%%o*ation part+ An acco%%o*ation part is a prson -#o #as si"n* t# instru%nt as %akr, accptor, or in*orsr, -it#out rciin" alu t#r$or, an* $or t# purpos o$ ln*in" #is na% to so% ot#r prson an* is lial on t# instru%nt to a #ol*r $or alu, not-it#stan*in" suc# #ol*r at t# ti% o$ takin" t# instru%nt kn(t# si"nator) to an acco%%o*ation part+ #as t# ri"#t, a$tr pain" t# #ol*r, to otain ri%urs%nt $ro% t# part acco%%o*at*, sinc t# rlation t-n t#% #as in 4ct co% on o$ principal an* surt, t# acco%%o*ation part in" t# surt+ urts#ip is *n* as t# rlation -#ic# Gists -#r on prson #as un*rtakn an oli"ation an* anot#r prson is also un*r t# oli"ation or ot#r *ut to t# oli", -#o is ntitl* to ut on pr$or%anc, an* as t-n
t# t-o -#o ar oun*, on rat#r t#an t# ot#r s#oul* pr$or%+ 7# surtMs liailit to t# cr*itor or pro%is o$ t# principal is sai* to *irct, pri%ar an* asolutC in ot#r -or*s, # is *irctl an* quall oun* -it# t# principal+ An* t# cr*itor %a proc* a"ainst an on o$ t# soli*ar *tors+i 2+ ?O+ 7# a**n*u% *i* not 4ct to a noation o$ t# oli"ation o$ ptitionr3 n*or to pa t# &? PsustitutionQ o$ a n- *tor, =on*rlan* (n*)+ ?oation is t# Gtin"uis#%nt o$ an oli"ation t# sustitution or c#an" o$ t# oli"ation a susqunt on -#ic# Gtin"uis#s or %o*is t# rst, it#r c#an"in" t# o@ct or principal con*itions, or b* substituting anot$er in (la)e o% t$e 7ebtor, or suro"atin" a t#ir* prson in t# ri"#ts o$ t# cr*itor+ >n or*r t#at a noation can tak plac, t# concurrnc o$ t# $ollo-in" rquisits ar in*ispnsal: 1) 7#r %ust a prious ali* oli"ationC 2) 7#r %ust an a"r%nt o$ t# partis concrn* to a n- contractC ) 7#r %ust t# Gtin"uis#%nt o$ t# ol* contractC an* 0) 7#r %ust t# ali*it o$ t# ncontract+
!ON>ALES S RC4C <+H+ ?o+ 15290 ?o%r 29, 2 .ssons Applical: Hi"#t o$ t# #ol*r (?"otial >nstru%nts .a-)
ntrstat Bank o$ 6ali$ornia ut it -as *is#onor* t# c#ck caus: E?D+ >HHE< or irr"ular in*ors%n account clos* nal to collct, H6B6 *%an** $ro% E: =? Ea Aliar an* !la 7#rsa Alia3
FA67:
E.D: ?O+ 6A HETEHED+ H6B6 ri%urs
2+ 7#at t# instru%nt is, at t# ti% o$ #is in*ors%nt, ali* an* susistin" >n a**ition, # n"a"s t#at, on *u prsnt%nt, it s#all accpt* or pai*, or ot#, as t# cas %a , accor*in" to its tnor, an* t#at i$ it *is#onor* an* t# ncssar proc*in"s on *is#onor *ul takn, # -ill pa t# a%ount t#ro$ to t# #ol*r, or to an susqunt in*orsr -#o %a co%pll* to pa it
n*r ction , t# -arrantis $or -#ic# Aliar an*
a* it not n $or t# quali* n*ors%nt up to &1,5+ onl o$ Oliia
TOMAS AN!' petitioner' vs. ASSOCIATED 4ANH AND ANTONIO AN! EN! LION!' respondents.
FA67: On Au"ust 28, 199, rspon*nt Associat* Bank ($or%rl Associat* Bankin" 6orporation an* no- kno-n as nit* Orsas Bank &#ilippins) l* a collction suit a"ainst Antonio An" En" .ion" an* ptitionr 7o%as An" $or t# t-o (2) pro%issor nots t#at t# Gcut* as principal *tor an* co3 %akr, rspctil+ Dspit rpat*
*%an*s $or pa%nt, t# latst o$ -#ic# -r on pt%r 1, 1988 an* pt%r 9, 198, on Antonio An" En" .ion" an* 7o%as An", rspctil, rspon*nt Bank clai%* t#at t# *$n*ants $ail* an* r$us* to sttl t#ir oli"ation, rsultin" in a total in*t*nss o$ &59,8+9 as o$ Jul 1, 199 &titionr 7o%as An" l* an Ans-r -it# 6ountrclai% an* 6ross3clai%+8 intrpos* t# a'r%ati *$nss t#at: t# ank is not t# ral part in intrst as it is not t# #ol*r o$ t# pro%issor nots, %uc# lss a #ol*r $or alu or a #ol*r in *u coursC t# ank kn- t#at # *i* not rci an alual consi*ration $or a'Gin" #is si"naturs on t# nots ut %rl lnt #is na% as an acco%%o*ation partC # accpt* t# pro%issor nots in lank, -it# onl t# print* proisions an* t# si"natur o$ Antonio An" En" .ion" apparin" t#rinC it -as t# ank -#ic# co%plt* t# nots upon t# or*rs, instructions, or rprsntations o$ #is co3*$n*antC >n its Hpl, 9 rspon*nt Bank countr* t#at it is t# ral part in intrst an* is t# #ol*r o$ t# nots sinc t# Associat* Bankin" 6orporation an* Associat* 6itizns Bank ar its pr*cssors3in3intrst+ 7# $act t#at 7o%as An" nr rci* an %ons in consi*ration o$ t# t-o (2) loans an* t#at suc# -as kno-n to t# ank ar i%%atrial caus, as an acco%%o*ation %akr, # is consi*r* as a soli*ar *tor -#o is pri%aril lial $or t# pa%nt o$ t# pro%issor
nots+ 6itin" ction 29 o$ t# ?"otial >nstru%nts .a- (?>.), t# ank posit* t#at asnc or $ailur o$ consi*ration is not a %attr o$ *$nsC nit#r is t# $act t#at t# #ol*r kn- #i% to onl an acco%%o*ation part+ 7# trial court rn*r* a"ainst *$n*ant Antonio An" En" .ion" an* in $aor o$ plainti4, or*rin" t# $or%r to pa t# lattr: 7# *cision ca% nal an* Gcutor as no appal -as takn t#r$ro%+ pon t# ank;s e<2(arte %otion, t# court accor*in"l issu* a -rit o$ Gcution on April 5, 1991+ 1 7#ra$tr, on Jun , 1991, t# court st t# pr3trial con$rnc t-n t# ank an* 7o%as An",18 -#o, in turn, l* a !otion to Dis%iss19 on t# "roun* o$ lack o$ @uris*iction or t# cas in io$ t# all"* nalit o$ t# Fruar 21, 1991 Dcision+ contn** t#at c+ 0, Hul 18 o$ t# ol* Huls sanctions onl on @u*"%nt in cas o$ sral *$n*ants, on o$ -#o% is *clar* in *$ault+ !oror, in #is uppl%ntal !otion to Dis%iss,2 7o%as An" %aintain* t#at # is rlas* $ro% #is oli"ation as a soli*ar "uarantor an* acco%%o*ation part caus, t# ank;s actions, # is no- prclu** $ro% assrtin" #is cross3clai% a"ainst Antonio An" En" .ion", upon -#o% a nal an* Gcutor @u*"%nt #a* alra* n issu*+ 7rial t#n nsu* t-n t# ank an* 7o%as An"+ pon t# lattr;s %otion *urin" t# pr3trial con$rnc, Antonio
An" En" .ion" -as a"ain *clar* in *$ault $or #is $ailur to ans-r t# cross3 clai% -it#in t# r"l%ntar prio*+20 A$tr t# trial, 7o%as An" o4r* in i*nc sral *ocu%nts, -#ic# inclu** a cop o$ t# 7rust A"r%nt t-n t# Hpulic o$ t# &#ilippins an* t# Asst &riatization 7rust, as crti* t# notar pulic, an* n-s clippin"s $ro% t# !anila Bulltin *at* !a 18, 1990 an* !a , 1990+ 1 All t# *ocu%ntar G#iits -r a*%itt* $or $ailur o$ t# ank to su%it its co%%nt to t# $or%al o4r+2 7#ra$tr, 7o%as An" lct* to -it#*ra- #is ptition in 6A <+H+ & ?o+ 080 $or t# 6ourt o$ Appals, -#ic# -as t#n "rant*+ On Januar 5, 199, t# trial court rn*r* @u*"%nt a"ainst t# ank, *is%issin" t# co%plaint $or lack o$ caus o$ action+ 7# appllat court *isr"ar** t# ank;s rst assi"n* rror $or in" irrlant in t# nal *tr%ination o$ t# cas an* $oun* its scon* assi"n* rror as not %ritorious+ >nsta*, it pos* $or rsolution t# issu o$ -#t#r t# trial court rr* in *is%issin" t# co%plaint $or collction o$ su% o$ %on $or lack o$ caus o$ action as t# ank -as sai* to not t# #ol*r o$ t# nots at t# ti% t# collction cas -as l*+ >n ans-rin" t# lon issu, t# 6ourt o$ Appals #l* t#at t# ank is a #ol*r un*r c+ 191 o$ t# ?>.+ >t conclu** t#at *spit t# Gcution o$ t# D*s o$ 7rans$r an* 7rust A"r%nt, t# Asst &riatization 7rust cannot
*clar* as t# #ol*r o$ t# su@ct pro%issor nots $or t# rason t#at it is nit#r t# pa or in*ors o$ t# nots in possssion t#ro$ nor is it t# arr o$ sai* nots+ 7# 6ourt o$ Appals osr* t#at t# ank, as t# pa, *i* not in*ors t# nots to t# Asst &riatization 7rust *spit t# Gcution o$ t# D*s o$ 7rans$r an* 7rust A"r%nt an* t#at t# nots continu* to r%ain -it# t# ank until t# institution o$ t# collction suit+ =it# t# ank as t# #ol*r o$ t# pro%issor nots, t# 6ourt o$ Appals #l* t#at 7o%as An" is accountal t#r$or in #is capacit as an acco%%o*ation part+ 6itin" c+ 29 o$ t# ?>., # is lial to t# ank in spit o$ t# lattr;s kno-l*", at t# ti% o$ takin" t# nots, t#at # is onl an acco%%o*ation part+ !oror, as a co3%akr -#o a"r* to @ointl an* srall lial on t# pro%issor nots, 7o%as An" cannot ali*l st up t# *$ns t#at # *i* not rci an consi*ration t#r$or as t# $act t#at t# loan -as "rant* to t# principal *tor alra* constituts a su'cint consi*ration+ Furt#r, t# 6ourt o$ Appals a"r* -it# t# ank t#at t# Gprinc o$ 7o%as An" in usinss rn*r* it i%plausil t#at # -oul* @ust si"n t# pro%issor nots as a co3%akr -it#out n c#ckin" t# ral a%ount o$ t# *t to incurr*, or t#at # %rl act* on t# li$ t#at t# rst loan application -as cancll*+ Accor*in" to t# appllat court, it is apparnt t#at # -as n"li"nt in $allin" $or t# alii o$ Antonio An" En" .ion" an* suc# $act -oul* not sr to Gonrat
#i% $ro% #is rsponsiilit un*r t# nots+ ?ont#lss, t# 6ourt o$ Appals *ni* t# clai%s o$ t# ank $or sric, pnalt an* or*u c#ar"s as -ll as attorn;s $s on t# "roun* t#at t# pro%issor nots %a* no %ntion o$ suc# c#ar"s$s+ >E: -#o is t# ral part in intrst at t# ti% o$ t# institution o$ t# co%plaint, is it t# ank or t# Asst &riatization 7rustR Bas* on t# ao ack*rop, rspon*nt Bank *os not appar to t# ral part in intrst -#n it institut* t# collction suit on Au"ust 28, 199 a"ainst Antonio An" En" .ion" an* ptitionr 7o%as An"+ At t# ti% t# co%plaint -as l* in t# trial court, it -as t# Asst &riatization 7rust -#ic# #a* t# aut#orit to n$orc its clai%s a"ainst ot# *tors+ >n $act, *urin" t# pr3trial con$rnc, Att+ Ho*rick Orallo, counsl $or t# ank, opnl a*%itt* t#at it -as un*r t# trusts#ip o$ t# Asst &riatization 7rust+5 7# Asst &riatization 7rust, -#ic# s#oul* #a n rprsnt* t# O'c o$ t#
t# trial an* up to t# ti% t#is cas rac#* t# 6ourt, t#at t# issu #a* n rn*r* %oot -it# t# occurrnc o$ a suprnin" nt S t# u3ack o$ t# ank its $or%r o-nr, .onar*o 7, so%ti% in Octor 199+ B suc# r3acquisition $ro% t# Asst &riatization 7rust -#n t# cas -as still pn*in" in t# lo-r court, t# ank rclai%* its ral an* actual intrst or t# unpai* pro%issor notsC #nc, it coul* ri"#t$ull quali$ as a #ol*r 58 t#ro$ un*r t# ?>.+ ?otal, ction 29 o$ t# ?>. *ns an acco%%o*ation part as a prson -#o #as si"n* t# instru%nt as %akr, *ra-r, accptor, or in*orsr, -it#out rciin" alu t#r$or, an* $or t# purpos o$ ln*in" #is na% to so% ot#r prson+ As "lan* $ro% t# tGt, an acco%%o*ation part is on -#o %ts all t# t#r rquisits, iz: (1) # %ust a part to t# instru%nt, si"nin" as %akr, *ra-r, accptor, or in*orsrC (2) # %ust not rci alu t#r$orC an* () # %ust si"n $or t# purpos o$ ln*in" #is na% or cr*it to so% ot#r prson+59 An acco%%o*ation part ln*s #is na% to nal t# acco%%o*at* part to otain cr*it or to rais %onC # rcis no part o$ t# consi*ration $or t# instru%nt ut assu%s liailit to t# ot#r partis t#rto+ 7# acco%%o*ation part is lial on t# instru%nt to a #ol*r $or alu n t#ou"# t# #ol*r, at t# ti% o$ takin" t# instru%nt, kn- #i% or #r to %rl an acco%%o*ation part, as
i$ t# contract -as not $or acco%%o*ation+1 As ptitionr ackno-l*"* it to , t# rlation t-n an acco%%o*ation part an* t# acco%%o*at* part is on o$ principal an* surt S t# acco%%o*ation part in" t# surt+2 As suc#, # is *%* an ori"inal pro%isor an* *tor $ro% t# "innin"C # is consi*r* in la- as t# sa% part as t# *tor in rlation to -#atr is a*@u*"* touc#in" t# oli"ation o$ t# lattr sinc t#ir liailitis ar intr-on as to insparal+0 Alt#ou"# a contract o$ surts#ip is in ssnc accssor or collatral to a ali* principal oli"ation, t# surt;s liailit to t# cr*itor is imme7iate, (rimar* an* absoluteC # is 7ire)tl* an* e=uall* oun* -it# t# principal+5 As an quialnt o$ a r"ular part to t# un*rtakin", a surt co%s lial to t# *t an* *ut o$ t# principal oli"or n -it#out possssin" a *irct or prsonal intrst in t# oli"ations nor *os # rci an nt t#r$ro%+ 6onsquntl, in issuin" t# t-o pro%issor nots, ptitionr as acco%%o*atin" part -arrant* to t# #ol*r in *u cours t#at # -oul* pa t# sa% accor*in" to its tnor+8 >t is no *$ns to stat on #is part t#at # *i* not rci an alu t#r$or 81 caus t# p#ras >wit$out re)ei9ing 9alue t$ere%or> us* in c+ 29 o$ t# ?>. %ans -it#out rciin" alu irtu o$ t# instru%nt an* not as it is
apparntl suppos* to %an, -it#out rciin" pa%nt $or ln*in" #is na%+82 tat* *i4rntl, -#n a t#ir* prson a*ancs t# $ac alu o$ t# not to t# acco%%o*at* part at t# ti% o$ its cration, t# consi*ration $or t# not as r"ar*s its %akr is t# %on a*anc* to t# acco%%o*at* part+ >t is nou"# t#at alu -as "in $or t# not at t# ti% o$ its cration+8 As in t# instant cas, a su% o$ %on -as rci* irtu o$ t# nots, #nc, it is i%%atrial so $ar as t# ank is concrn* -#t#r on o$ t# si"nrs, particularl ptitionr, #as or #as not rci* ant#in" in pa%nt o$ t# us o$ #is na%+80 n*r t# la-, upon t# %aturit o$ t# not, a surt %a pa t# *t, *%an* t# collatral scurit, i$ t#r an, an* *ispos o$ it to #is nt, or, i$ applical, suro"at #i%sl$ in t# plac o$ t# cr*itor -it# t# ri"#t to n$orc t# "uarant a"ainst t# ot#r si"nrs o$ t# not $or t# ri%urs%nt o$ -#at # is ntitl* to rcor $ro% t#%+ 85 H"rttal, non o$ t#s -r pru*ntl *on ptitionr+ =#n # -as rst noti* t# ank so%ti% in 1982 r"ar*in" #is accountailitis un*r t# pro%issor nots, # lacka*aisicall rli* on Antonio An" En" .ion", -#o rprsnt* t#at # -oul* tak car o$ t# %attr, insta* o$ *irctl co%%unicatin" -it# t# ank $or its sttl%nt+8 7#us, ptitionr cannot noclai% t#at # -as pr@u*ic* t# suppos* Gtnsion o$ ti% "in t# ank to #is co3*tor+
Furt#r%or, sinc t# liailit o$ an acco%%o*ation part r%ains not onl (rimar* ut also un)on7itional to a #ol*r $or alu, n i$ t# acco%%o*at* part rcis an Gtnsion o$ t# prio* $or pa%nt -it#out t# consnt o$ t# acco%%o*ation part, t# lattr is still lial $or t# -#ol oli"ation an* suc# Gtnsion *os not rlas #i% caus as $ar as a #ol*r $or alu is concrn*, # is a soli*ar co3*tor+8 >n Clar? 9. Sellner ,88 t#is 6ourt #l*: G G G 7# %r *la o$ t# cr*itor in n$orcin" t# "uarant #as not an %ans i%pair* #is action a"ainst t# *$n*ant+ >t s#oul* not lost si"#t o$ t#at t# *$n*ant;s si"natur on t# not is an assuranc to t# cr*itor t#at t# collatral "uarant -ill r%ain "oo*, an* t#at ot#r-is, #, t# *$n*ant, -ill prsonall rsponsil $or t# pa%nt+ 7ru, t#at i$ t# cr*itor #a* *on an act -#r t# "uarant -as i%pair* in its alu, or *isc#ar"*, suc# an act -oul* #a -#oll or partiall rlas* t# surtC ut it %ust orn in %in* t#at it is a rco"niz* *octrin in t# %attr o$ surts#ip t#at -it# rspct to t# surt, t# cr*itor is un*r no oli"ation to *ispla an *ili"nc in t# n$orc%nt o$ #is ri"#ts as a cr*itor+ is %r inaction in*ul"nc, passinss, or *la in proc*in" a"ainst t# principal *tor, or t# $act t#at # *i* not n$orc t# "uarant or appl on t# pa%nt o$ suc# $un*s as -r aailal, constitut no *$ns at all $or t# surt, unlss t# contract Gprssl rquirs *ili"nc
an* pro%ptnss on t# part o$ t# cr*itor, -#ic# is not t# cas in t# prsnt action+ 7#r is in so% *cisions a tn*nc to-ar* #ol*in" t#at t# cr*itor;s lac#s %a *isc#ar" t# surt, %anin" lac#s a n"li"nt $oraranc+ 7#is t#or, #o-r, is not "nrall accpt* an* t# courts al%ost unirsall consi*r it ssntiall inconsistnt -it# t# rlation o$ t# partis to t# not+ (21 H+6+.+, 123 10)89 ?it#r can ptitionr nt $ro% t# all"* insolnc o$ Antonio An" En" .ion" $or -ant o$ clar an* conincin" i*nc proin" t# sa%+ Assu%in" it to tru, # also *i* not Grcis *ili"nc in *%an*in" scurit to protct #i%sl$ $ro% t# *an"r t#ro$ in t# nt t#at # (ptitionr) -oul* ntuall su* t# ank+ Furt#r, -#t#r ptitionr %a or %a not otain scurit $ro% Antonio An" En" .ion" cannot in an %annr a4ct #is liailit to t# ankC t# sai* r%* is a %attr o$ concrn Gclusil t-n t#%sls as acco%%o*ation part an* acco%%o*at* part+ 7# $act t#at ptitionr stan*s onl as a surt in rlation to Antonio An" En" .ion" is i%%atrial to t# clai% o$ t# ank an* *os not a -#it *i%inis# nor *$at t# ri"#ts o$ t# lattr as a #ol*r $or alu+ 7o sanction #is t#or is to "i un-arrant* l"al rco"nition to t# patnt asur*it o$ a situation -#r a co3%akr, -#n su* on an instru%nt a #ol*r in *u cours an* $or alu, can scap liailit t# connint
Gp*int o$ intrposin" t# *$ns t#at # is a %rl an acco%%o*ation part+9 >n su%, as r"ar*s t# ot#r issus an* rrors all"* in t#is ptition, t# 6ourt nots t#at t#s -r t# r sa% qustions o$ $act rais* on appal $or t# 6ourt o$ Appals, alt#ou"# at ti%s couc#* in *i4rnt tr%s an* Gplain* %or ln"t#il in t# ptition+ u'c it to sa t#at t# sa%, in" $actual, #a n satis$actoril pass* upon an* consi*r* ot# t# trial an* appllat courts+ >t is *octrinal t#at onl rrors o$ la- an* not o$ $act ar ri-al t#is 6ourt in ptitions $or ri- on )ertiorari un*r Hul 05 o$ t# Huls o$ 6ourt+ a $or t# %ost co"nt an* co%pllin" rason, it is not our $unction un*r t# rul to Ga%in, aluat or -i"# t# proati alu o$ t# i*nc prsnt* t# partis all or a"ain+91 F@ERE3ORE , t# Octor 9, 2 Dcision an* Dc%r 2, 2 Hsolution o$ t# 6ourt o$ Appals in 6A3 <+H+ 6T ?o+ 501 ar A33IRMED + 7# ptition is DENIED $or lack o$ %rit+ 3AR EAST 4ANH 7 TR5ST COMPANY' &titionr, 3 rsus 3 !OLD PALACE )EFELLERY CO.' as represented 2 )ud2 L. Yan=' )ulie Yan="!o and Hho Soon @uat' Hspon*nt
FA67: a%ul 7a"o, a $ori"nr, purc#as* $ro%
a**rss* to .an* Bank, an* paal to ssu* a cas# inoic to 7a"o L tol* #i% t#at t# @-lris -oul* rlas* -#n t# *ra$t #a* n clar*+ Juli Uan"3t -as ncas#* 7a"o+ -ks a$tr, .B& in$or%* Far East t#at t# a%ount in t# $ori"n *ra$t #a* n %atriall3altr* $ro% && + to && 8,+ an* t#at t# -ill rturnin" it+ Far East t#us r$un** t# a%ount pai* .B&+ 7#us, Far East #a* to sk ri%urs%nt $ro%
lattr *i* not rspon* $aoral, Far East institut* a ciil cas $or su% o$ %on an* *a%a"s+ t $urt#r sai* t#at t# *ra- ank #a* clar* t# c#ck an* its r%* s#oul* a"ainst t# part rsponsil $or t# altration+ ISS5E? F@ET@ER OR NOT 3AR EAST 4ANH CO5LD PROCEED A!AINST !OLD PALACE. @ELD? No. RATIO? 7# accptor, accptin" t# instru%nt, n"a"s t#at # -ill pa it a))or7ing to t$e tenor o% $is a))e(tan)e+ 7#is proision applis -it# qual $orc in cas t# *ra- pas a ill -it#out #ain" priousl accpt* it+ is actual pa%nt o$ t# a%ount in t# c#ck i%plis not onl #is assnt to t# or*r o$ t# *ra-r an* a rco"nition o$ #is corrspon*in" oli"ation to pa t# a$or%ntion* su%, ut also, #is clar co%plianc -it# t#at oli"ation+ Actual pa28ent 2 the draBee is =reater than his acceptance, -#ic# is %rl a pro%is in -ritin" to pa+ 7# pa%nt o$ a c#ck inclu*s its accptanc+
n%istakal #rin is t# $act t#at t# *ra- ank clar* an* pai* t# su@ct $ori"n *ra$t an* $or-ar** t# a%ount t#ro$ to t# collctin" ank+ .B& -as lial on its pa%nt o$ t# c#ck accor*in" to t# tnor o$ t# c#ck at t# ti% o$ pa%nt, -#ic# -as t# rais* a%ount+ 7#us, .B& coul* no lon"r rpu*iat t# pa%nt it rronousl %a* to a *u cours #ol*r+ t $urt#r rassrts t# us$ulnss, stailit an* currnc o$ n"otial papr -it#out sriousl n*an"rin" accpt* ankin" practics+ Bankin" institutions can ra*il protct t#%sls a"ainst liailit on altr* instru%nts it#r quali$in" t#ir accptanc or crtication, or rlin" on $or"r insuranc an* spcial papr -#ic# -ill %ak altrations oious+ 7# *ra- ank, in %ost cass, is in a ttr position, co%par* to t# #ol*r, to ri$ -it# t# *ra-r t# %attrs stat* in t# instru%nt+
7#us, consi*rin" t#at, in t#is cas, ., its collctin" a"nt, Far East, s#oul* not #a *it* t# %on pai* t# *ra- ank $ro% rspon*nt co%panMs account+ =#n ., ca% an a"nt o$ t# $or%r $or t# collction o$ t# a%ount in t# *ra$t+ 7# susqunt pa%nt t# *ra- ank an* t# collction o$ t# a%ount t# collctin" ank clos* t# transaction inso$ar as t# *ra- an* t# #ol*r o$ t# c#ck or #is a"nt ar concrn*, conrt* t# c#ck into a %r ouc#r, an*, as alra* *iscuss*, $orclos* t# rcor t# *ra- o$ t# a%ount pai*+ 7#is closur o$ t# transaction is a %attr o$ cours+ As t# transaction in t#is cas #a* n clos* an* t# principal3a"nt rlations#ip t-n t# pa an* t# collctin" ank #a* alra* cas*, t# lattr in rturnin" t# a%ount to t# *ra- ank -as alra* actin" on its o-n an* s#oul* no- rsponsil $or its o-n actions+ ?it#r can ptitionr consi*r* to #a act* as t# rprsntati o$ t# *ra- ank -#n it *it* rspon*ntMs account, caus, as alra* Gplain*, t# *ra- ank #a* no ri"#t to rcor -#at it pai*+ .ik-is, Far East cannot inok t# -arrant o$ t# pa*positor -#o in*ors* t# instru%nt $or collction to s#i$t t# ur*n it rou"#t upon itsl$+ 7#is is prcisl caus t# sai* in*ors%nt is onl $or purposs o$
collction -#ic#, un*r ction o$ t# ?>., is a rstricti in*ors%nt+ >t *i* not in an -a trans$r t# titl o$ t# instru%nt to t# collctin" ank+ 6A rulin" is a'r%* to t# Gtnt t#at Far East coul* not *it ts r%* is not a"ainst ALES vs. PCI4 !.R. No. *1%#&,3eruar2 #(' #%** 3ACTS?
Eusio B to -#ic# it "rant* a cr*it lin to B+
&6>B all"*l call* t# attntion o$ n t# %anti%, B *u to t# tr%ination &6>B o$ t# cr*it lin $or t# unpai* prio*ic intrst *us $ro% t# loans o$ B lik-is $roz t# F6D account o$ B $roz, B r%in*in" t#at it kn- -ll t#at t# actual orro-rs -r t# spouss &anlilio an* # nr nt* $ro% t# proc*s o$ t# loans, -#ic# -r sric* t# &6>B account o$ t# spouss &anlilio+ 7# H76 $oun*
6larl, B *i* not *isput+ >n #is tsti%on,
VI. DEFENSES PN4 . CA" Material Alteration #&9 SCRA $+* 3ACTS? DE6 issu* a c#ck in $aor o$ Aant !arktin" containin" a spcic srial nu%r, *ra-n a"ainst &?B+ 7# c#ck -as *posit* Aant inits account -it# 6apitol an* t# .attr
consquntl *posit* t# sa%-it# its account -it# &B6O! -#ic# latr *posit* it -it# ptitionr $or clarin"+ 7# c#ck -as t#ra$tr clar*+ o-r, on a rlant *at,ptitionr &?B rturn* t# c#ck on account t#at t#r #a* n a %atrial altration on it+ usqunt *its -r %a* ut 6apitol cannot *it t# account o$ Aant an lon"r $or t# lattr #a* -it#*ra-n all t# %on alra* $ro% t# account+ 7#is pro%pt* 6apitol to sk rclarication $ro% &B6O! an* *%an** t# rcr*itin" o$ its account+ &B6O! $ollo-* suit *oin" t# sa% a"ainst &?B+ D%an*s un#**, it l* an action a"ainst &B6O! an* t# lattr l* a t#ir*3part co%plaint a"ainst ptitionr+ @ELD? An altration is sai* to %atrial i$ it altrs t# 4ct o$ t# instru%nt+ >t %ans an unaut#oriz* c#an" in t# instru%nt t#at purports to %o*i$ in an rspct t# oli"ation o$ a part or an unaut#oriz* a**ition o$ -or*s or nu%rs or ot#r c#an" to an inco%plt instru%nt rlatin" to# oli"ation o$ t# part+ >n ot#r -or*s, a %atrial altration is on -#ic# c#an"s t# it%s -#ic# ar rquir* to stat* un*r ction 1 o$ t# ?>.+
>n t#is cas, t# all"* %atrial altration -as t# altration o$ t# srial nu%r o$ t# c#ck in issuK-#ic# is not an ssntial l%nt o$ a
n"otial instru%nt un*r ction 1+ &?B all"s t#at t# altration -as %atrial sinc it is an accpt* concpt t#at a 76AA c#ck its r natur is t# %*iu% o$ Gc#an" o$ "orn%nts, instru%ntalitis an* a"ncis+ As a sa$t %asur, r "orn%nt o'c or a"nc is assi"n* c#cks arin" *i4rnt srial nu%rs+ But t#is contntion #as to $ail+ 7# c#ckMs srial nu%r is not t# sol in*icia o$ its ori"in+ 7# na% o$ t# "orn%nt a"nc issuin" t# c#ck is clarl stat* t#rin+ 7#us, t# c#ckMs *ra-r is su'cintl i*nti*, rn*rin" r*un*ant t# r$rral to its srial nu%r+ 7#r$or, t#r in" no %atrial altration in t# c#ck co%%itt*, &?B coul* not rturn t# c#ck to &B6O!+ >t s#oul* pa t# sa%+ Associated an6 vs CA 3acts? Faustino &an"ilinan, cas#ir o$ t# 6oncpcion E%r"nc ospital, $or"* t# si"natur o$ Dr+ A*na 6anlas -#o -as t# 6#i$ o$ t# sai* #ospital an* n*ors* c#cks a%ountin" to &2, to #i%sl$+ 7# %on -as *ra-n $ro% t# account o$ t# &roinc o$ 7arlac -it# &?B+ &an"ilinan *posit* t# c#cks to #isprsonal sain"s account -it# Associat* Bank -#ic# -as clar* an* pai* $or &?B+ 7# c#cks #a a sta%p o$ Associat* Bank -#ic# ra*s
PAll prior n*ors%nts "uarant* Associat* BankQ+ 7# &roinc o$ 7arlac, t#rou"# t# &roincial 7rasurr, -rot &?B to rstor t# arious a%ounts *it* $ro% t# currnt account o$ t# &roinc+ &?B on its part *%an** ri%urs%nt $ro% Associat* Bank+ Bot# anks rsist* pa%nt -#ic# l* to t# &roinc o$ 7arlac suin" &?B+ &?B in turn i%pla** Associat* Bank in t# suit as a t#ir*3part *$n*ant -#il Associat* Bank i%pla** 6anlas an* &an"ilinan as $ourt#3part *$n*ants+ 7# trial court rul* t#at 1) &?B s#oul* pa t# &roinc o$ 7arlac t# &2, -it# l"al intrsts, 2) Associat* Bank s#oul* pa t# sa% a%ount to &?B an* ) *is%iss* t# co%plaints a"ainst 6anlas an* &an"ilinan+ On appal, t# 6A a'r%* t# rulin" o$ t#trial court Issue? =#o s#oul* ar t# loss arisin" $ro% t# $or"r, t# &roinc o$ 7arlac, &?B, Associat* Bank or &an"ilinanR @eld? 7# 6 #l* t#at t# &roinc an* Associat* Bank s#oul* ar losss in t# proportion o$ 535+
7# &roinc can onl rcor 5 o$ t# &2, $ro% &?B caus o$ t# n"li"nc t# G#iit* in rlasin" t#
c#cks to t# t#n alra* rtir* &an"ilinan -#o is an unaut#oriz* prson to #an*l t# sai* c#cks+ On t# ot#r #an*, Associat* Bank is lial to &?B onl to 5 o$ t# sa% a%ount caus o$ its liailit as in*orsr o$ t# c#cks t#at -r *posit* &an"ilinan, an* "uarant* t# "nuinnss o$ t# sai* c#cks+ 7# $ail* to Grcis *u *ili"nc in c#ckin" t# racit o$ in*ors%nts+ )ai a Lai vs 4PI
FA67: Fro% April 2, 1959 to !a 18, 1959, Jai S Alai 6orporation o$ t# &#ilippins *posit* 1 c#cks in its currnt account -it# t# Bank o$ t# &#ilippin >slan*s (B&>)+ 7# c#cks -#ic# -r acquir* Antonio J+ Ha%irz, a sals a"nt o$ t# >ntr3>slan* ntr3 >slan*+ A$tr t# c#cks #a* n su%itt* to intr3ank clarin", >ntr3 >slan* *iscor* t#at all t# n*ors%nts %a* on t# c#cks purport*l its cas#irs (antia"o A%plao an* Ticnta !ucor) -r $or"ris+ 7#us, it in$or%* all t# partis concrn*+ pon t# *%an*s on B&> as t# collctin" ank, B&> *it* t# alu o$ t# c#cks a"ainst ptitionrMs currnt account an* $or-ar** to t# lattr t# c#cks containin" $or"* n*ors%nts -#ic# t# ptitionr r$us* to accpt+ 7#ra$tr, ptitionr tri* to issu a c#ck $or pa%nt o$ s#ars o$ stocks ut suc# -as *is#onor* $or insu'cinc
o$ $un*s+ >t l* a co%plaint a"ainst t# ank+ >E: =#t#r or not t# B&> #a* t# ri"#t to *it $ro% ptitionrMs currnt account t# alu o$ t# c#cks -it# t# $or"* n*ors%ntsR E.D: UE+ B&> act* -it#in l"al oun*s -#n it *it* t# ptitionrMs account+ =#n t# ptitionr *posit* t# c#cks to its account, t# rlations#ip crat* -as on o$ a"nc an* not o$ cr*itor3*tor o$ B&> -as to collct $ro% t# *ra- S ank o$ t# c#cks -it# t# corrspon*in" proc*s+ B&> %a #a t# proc*s alra* -#n it *it* t# account o$ ptitionr+ ?ont#lss, t#rMs still no cr*itor S *tor rlations#ip+ 7# pa%nts %a* t# *ra- Sank to rspon*nt -r in4cti+ nc, t# cr*itor S *tor rlations#ip #a* not n ali*l stalis#*+
Repulic 4an6 vs. Erada !R L"$%,+9' (* )ul2 *+,& 3ACTS? !auricia Era*a ncas#* a ack pa c#ck $or &120+8 at Hpulic Bank (Escolta Branc#)+ 7# Burau o$ 7rasur, -#ic# issu* t# c#ck a*is* t# ank t#at t# all"* in*ors%nt o$ t# c#ck on P!artin .ornzoQ -as a $or"r as t# lattr #as n *a* sinc 10 Jul 1952C an* rqust* t#at it r$un** # su% **uct* $ro% its account+ 7#
ank r$un** t# a%ount to t# Burau an* *%an** upon Era*a t# su% in qustion, -#o r$us*+ nc, t# prsnt action+ ISS5E? =#t#r t# ank can rcor $ro% t# last in*orsr+ @ELD? Accor*in" to ction 2 o$ t# ?"otial >nstru%nts .a-, -#r t# si"natur on a n"otial instru%nt is $or"*, t# n"otiation o$ t# c#ck is -it#out $orc or 4ct+ o-r, $ollo-in" t# rulin" in Ba% s+ Farrl ( cas), -#r a c#ck #as sral in*ors%nts on it, onl t# n"otiation as* on t# $or"* or unaut#oriz* si"natur -#ic# is inoprati+ 7# last in*orsr, Era*a, -as *ut3oun* to ascrtain -#t#r t# c#ck -as "nuin $or prsntin" it to t# ank $or pa%nt+ r $ailur to *o so %aks #r lial $or t# loss an* t# Bank %a rcor $ro% #r t# %on s# rci* $or t# c#ck+ a* s# pr$or%* #r *ut, t# $or"r -oul* #a n *tct* an* $rau* *$at*+ En i$ s# turn* or t# a%ount to Do%in"uz i%%*iatl a$tr rciin" t# cas# proc*s o$ t# c#ck, s# is lial as an acco%%o*ation part un*r ction 29 o$ t# ?"otial >nstru%nts .a-+ !e8pesaB vs. CA
?atii*a* <%psa- issu* c#cks, prpar* #r ookkpr, a total o$ 82 c#cks in $aor o$ sral supplis+ !ost o$ t# c#cks $or a%ounts in Gcss o$ actual oli"ations as s#o-n in t#ir corrspon*in" inoics+ >t -as onl a$tr t# laps o$ %or t#an 2 ars *i* s# *iscor* t# $rau*ulnt %anipulations o$ #r ookkpr+ >t -as also larn* t#at t# in*ors%nts o$ t# pa -r $or"*, an* t# c#cks -r rou"#t to t# c#i$ accountant o$ &#ilippin Bank o$ 6o%%rc (t# Dra- Bank, Bun*ia Branc#) -#o *posit* t#% in t# accounts o$ Al$r*o Ho%ro an* Bnito .a%+ <%psa- %a* *%an* upon t# ank to cr*it t# a%ount c#ar"* *u t# c#cks+ 7# ank r$us*+ nc, t# prsnt action+ >ssu: =#o s#all ar t# loss rsultin" $ro% t# $or"* in*ors%nts+ l*: As a rul, a *ra- ank -#o #as pai* a c#ck on -#ic# an in*ors%nt #as n $or"* cannot c#ar" t# *ra-rMs account $or t# a%ount o$ sai* c#ck+ An Gcption to t# rul is -#r t# *ra-r is "uilt o$ suc# n"li"nc -#ic# causs t# ank to #onor suc# c#cks+ <%psa- *i* not Grcis pru*nc in takin" stps t#at a car$ul an* pru*nt usinss%an -oul* tak in circu%stancs to *iscor *iscrpancis in #r account+ r n"li"nc -as t# proGi%at caus o$ #r loss, an* un*r ction 2 o$ t# ?"otial >nstru%nts .a-, is prclu**
$ro% usin" $or"r as a *$ns+ On t# ot#r #an*, t# ankin" rul annin" accptanc o$ c#cks $or *posit or cas# pa%nt -it# %or t#an on in*ors%nt unlss clar* so% ank o'cials *os not inali*at t# instru%ntC nit#r *os it inali*at t# n"otiation or trans$r o$ sai* c#cks+ 7# onl kin* o$ in*ors%nt -#ic# stops t# $urt#r n"otiation o$ an instru%nt is a rstricti in*ors%nt -#ic# pro#iits t# $urt#r n"otiation t#ro$, pursuant to ction o$ t# ?"otial >nstru%nts .a-+ >n li"#t o$ an cas not proi** $or in t# Act t#at is to "orn* t# proisions o$ Gistin" l"islation, pursuant to ction 19 o$ t# ?"otial >nstru%nts .a-, t# ank %a #l* lial $or *a%a"s in accor*anc -it# Articl 11 o$ t# 6iil 6o*+ 7# *ra- ank, in its $ailur to *iscor t# $rau* co%%itt* its %plo an* in contrantion ankin" ruls in allo-in" a c#i$ accountant to *posit t# c#cks arin" scon* in*ors%nts, -as a*@u*"* lial to s#ar t# loss -it# <%psa- on a 5:5ratio+
Philippine Co88ercial Industrial 4an6 vs. CA !R *#*$*(' #+ )anuar2 #%%* con* Diision, /uisu%in" (J)
Facts: For* issu* 6itiank c#cks in $aor o$ t# 6o%%issionr o$ >ntrnal Hnu as pa%nts o$ its taGs, t#rou"# t# *positor ank >nsular Bank o$ Asia an* A%rica (latr &6>Bank)+ &roc*s o$ t# c#cks -r nr rci* t# 6o%%issionr, ut -r ncas#* an* *irt* to t# accounts o$ %%rs o$ a sn*icat, to -#ic# For*Ms <nral .*"r Accountant ssu: =#t#r For* #as t# ri"#t to rcor $ro% t# collctin" ank (&6> Bank) an*or t# *ra- ank (6itiank) t# alu o$ t# c#cks+
l*: 7# %r $act t#at $or"r -as co%%itt* a *ra-r3paorMs con*ntial %plo or a"nt, -#o irtu o$ #is position #a* unusual $acilitis to prptrat t# $rau* an* i%posin" t# $or"* papr upon t# ank, *os not ntitl t# ank to s#i$t t# loss to t# *ra-r3paor, in t# asnc o$ so% circu%stanc raisin" stoppl a"ainst t# *ra-r+ 7# rul applis to c#cks
$rau*ulntl n"otiat* or *irt* t# con*ntial %plos -#o #ol* t#% in t#ir possssion+ >n Bank $ail* to ri$ t# aut#orit o$ !r+ Hira to n"otiat t# c#cks+ Furt#r%or, &6>BankMs clarin" sta%p -#ic# "uarants prior or lack o$ in*ors%nts rn*r &6>Bank lial as it allo-* 6itiank -it#out an ot#r option ut to pa t# c#cks+ &6>Bank, in" a *positor collctin" ank o$ t# B>H, #a* t# rsponsiilit to %ak sur t#at t# cross* c#cks -r *posit* in P&aMs account onlQ as $oun* in t# instru%nt+ >n Bank in t# procss o$ %zzl%nt+ 6ntral Bank 6ircular 58 (19), #o-r, proi* * t#at an t#$t a4ctin" it%s in transit $or clarin" ar $or t# account o$ t# sn*in" ank (#rin &6>Bank)+ till, 6itiank -as lik-is n"li"nt in t# pr$or%anc o$ its *utis as it $ail* to stalis# its pa%nt o$ For*Ms c#cks -r %a* in *u cours an* l"all in or*r+ 7# $act t#at *ra- ank *i* not *iscor t# irr"ularit sasonal constituts n"li"nc in
carrin" out t# ankMs *ut to its *positors+ MFSS vs. CA
Facts: B spcial arran"%nt -it# &?B, != us* prsonaliz* c#cks in *ra-in" $ro% its account+ 7# c#cks -r print* its printr, F+ !sina Entrpriss+ 2 c#cks -r pai* an* clar* &?B, an* *it* a"ainst !=M account $ro% !arc# to !a 199+ 7# c#cks -r *posit* pas Haul Dizon , Arturo ison, an* Antonio !n*oza in t#ir account -it# &6>Bank+ ai* prsons -r latr $oun* to ctitious+ != rqust* &?B to rstor t# a%ount *it* *u to t# 2 c#cks, all"*l $or"*, to its account+ 7# ank r$us*+ nc, t# prsnt action+ >ssu:=#o s#all ar t# loss rsultin" $ro% t# all"* $or"* c#cks+ l*: 7#r -as no Gprss an* cat"orical n*in" t#at t# 2 c#cks -r $or"* or si"n* prsons ot#r t#an t# aut#oriz* != si"natoris+ For"r is not prsu%* ut s#oul* stalis#* clar, positi an* conincin" i*nc+ != is arr* $ro% sttin" up *$ns o$ $or"r un*r ction 2 o$ t# ?"otial >nstru%nts .a- as != co%%itt* "ross n"li"nc in t# printin" o$ its prsonaliz* c#cks, $ail* to rconcil its ank stat%nts -it# its o-n rcor*s, an $ail* to proi*
appropriat scurit %asurs or its o-n rcor*+ &?B, t# *ra- ank, #a* takn ncssar %asurs in t# *tction o$ $or"* c#cks an* t# prntion o$ t#ir $rau*ulnt ncas#%nt t#rou"# constant r%in*rs to all its currnt account ookkprs in$or%in" t#% o$ t# actiitis o$ $or"r sn*icats+ !=M "ross n"li"nc -as t# proGi%at caus o$ t# loss (& %illion), an* s#oul* ar t# loss+
Illusorio vs CA FA67: >lusorio -as a usinss%an -#o -as in c#ar" o$ 2 or so corporations+ -as a *positor in "oo* stan*in" o$ !anila Bankin" 6orporation+ As # -as in c#ar" o$ a i" nu%r o$ corporations, # -as usuall out o$ t# countr $or usinss+ t#n ntrust* #is cr*it car*s, c#ckook, lank c#cks, passooks, tc to #is scrtar, Iat#rin Eu"nio+ Eu"nio -as also in c#ar" o$ ri$in" an* rconcilin" t# stat%nts o$ >lusorioMs c#ckin" account+
Eu"nio -as al to ncas# an* *posit to #r prsonal account c#cks *ra-n a"ainst >lusorioMs account -it# an a""r"at a%ount o$ 119I+ >lusorio *i*nMt ot#r to c#ck #is stat%nt o$ account until a usinss partnr in$or%* #i% t#at # sa- Eu"nio usin" #is cr*it car*s+ >lusorio t#n r* #r an* institut* cri%inal cas o$ Esta$a t#ru $alsication a"ainst Eu"nio+ !anila Bankin" 6orp+ also institut* a co%plaint
o$ sta$a a"ainst Eu"nio as* on t# a'*ait o$ Dant Hazon, an %plo+ Hazon stat* t#at # prsonall Ga%in* an* scrutiniz* t# ncas#* c#cks in accor*anc -it# t#ir rication proc*urs+ !anila Bank sou"#t t# Gprtis o$ ?B> in *tr%inin" t# "nuinnss o$ t# c#cks ut >lusorio $ail* to su%it spci%n si"naturs an* t#us, ?B> coul* not con*uct t# Ga%ination+ >ssu: =? !anila Bank is lial $or *a%a"s $or $ailin" to *tct a $or"* c#ck l*: ?o+ 7o ntitl* to *a%a"s, >lusorio #as t# ur*n o$ poin" t#at t# ank -as n"li"nt in $ailin" to *tct t# *iscrpanc in t# si"naturs on t# c#cks+ >lusorio #a* to stalis# t# $act o$ $or"r -#ic# # $ail* to *o $ailin" to su%it #is spci%n si"naturs $or ?B> to conclusil stalis# $or"r+ Furt#r%or, t# Bank -as not n"li"nt in ri$in" t# c#cks as t# ri* t# *ra-rMs si"naturs a"ainst t#ir spci%n si"naturs an* in *out, r$rr* to %or Gprinc* rir $or $urt#r rication+ On t# contrar, it -as >lusorio -#o -as $oun* to n"li"nt+ accor** #is scrtar -it# an unusual *"r o$ trust an* unrstrict* accss to #is nancs+ Furt#r%or, *spit t# $act t#at t# ank -as r"ularl sn*in" stat%nts o$
account, # $ail* to c#ck t#% until # $oun* out t#at #is scrtar -as usin" #is cr*it car*s+ c+ 2 o$ t# ?"otial >nstru%nts laproi*s t#at a $or"* c#ck is inoprati, %anin" t#r -as no ri"#t to n$orc pa%nt a"ainst an part+ But it also proi*s an Gcption: Punlss t# part a"ainst -#o% it is sou"#t n$orc suc# ri"#t is prclu** $ro% sttin" up t# $or"r or -ant o$ aut#oritQ+ 7#is cas $alls un*r t# Gcption sinc >lusorio is prclu** $ro% sttin" up $or"r *u to #is o-n n"li"nc consi*rin" t#at # allo-* #is scrtar accss to #is cr*it car*s, c#ckook, an* allo-* #is scrtar to ri$ #is stat%nts o$ account+
Sa8sun= Construction v. 3ar East 4an6 ;Au=ust *&' #%%$< 3acts: a%sun" 6onstruction #l* an account -it# Far East Bank+ On *a a c#ck -ort# 9,, paal to cas#, -as prsnt* on Horto
Issue: =#t#r or not Far East Bank is lial to ri%urs a%sun"$or cas#in" out t# $or"* c#ck, -#ic# -as *ra-n $ro% t# account o$ a%sun" @eld: Far East Bank is lial $or ri%urs%nt+ c+ 2 o$ t# ?"otial >nstru%nt .astats t#at a $or"* si"natur %aks t# instru%nt P-#oll inopratiQ+ >$ pa%nt is %a* t# *ra- (Far East) cannot c#ar" it to t# *ra-rMs account (a%sun")+ 7# $act t#at t# $or"r is clr is i%%atrial+ 7# $or"* si"natur %a soclosl rs%l t# "nuin as to *$ *tction t# *positor #i%sl$+ An* t, i$ t# ank pas t# c#ck, it is pain" out -it# its o-n %on an* not o$ t# *positorMs+ 7#is rul o$ liailit can stat* riZ in t#s -or*s: PA ank is oun* to kno- its *positorMs si"natur+Q 7# accusation o$ n"li"nc on t# part o$a%sun" -as not clarl pron+ Asnc o$ proo$ to t# contrar, t# prsu%ption is t#at t# or*inar cours o$ usinss -as $ollo-*+
!ETROPOLITAN 4ANH AND TR5ST CO. v CA4IL>O 51 6HA 259 3ACTS? Hnato 6ailzo -as on o$ !troankMs clints -#o %aintain*a currnt account -it# t# an kMs&ason" 7a%o Branc#+On?o+ 12, 1990, # issu* a c#
ck paal to cas# an*post*at* on ?o+ 20, 1990 $or t# a%ount o$ &1,+ 7#c# ck -as prsnt* to =st%ont Bank $or pa%nt an*t#lattr in*ors* it to !troank+ !troank clar* t# c#ckan* *it* 6ailzoMs account+ >t -as $oun* outlatr 6ailzot#at t# c#ckMs a%ount -as altr* to &91, an* t# *at c#an"* to ?o+ 10+ 6ailzo *%an** t#at !troank r3cr*it t# 9, to #is account+ !troank r$us*+6ailzol* a ciil action $or *a%a"s a"ainst !troank+ >n its*$ns, !troanksai* t#at it Grcis* *u *ili"nc inGa%inin" t# "nuinnss o$ t# si"natur an* t#tc#nicalntris inclu*in" t# a%ount in "urs an* in -or*s to s i$ t#r -r altrations an* $oun* t#at t#r-as non+ >t $urt#rstat* t#at 6ailzo -as partl rsponsil $or lain" spacson t# c#ck -#ic# %a* t#$rau*ulnt insrtion possil+ 7#H76 an* t# 6ourt o$ Appals rul* in $aor o$ 6ailzo sain"t#at !troank -aslial ISS5E? =? !troank s#oul* #l* lial $or *a%a"s $or itsn"li"nc @ELD? UE+ 7# *"r o$ *ili"nc rquir* o$ a rasonal %an in t#Grcis o$ #is tasks an* t#pr$or%an c o$ #is *utis #asn $ait#$ull co%pli* -it# 6ailzo+ >n $act, # -as -ar nou"# t#at # ll* -it# astrisks t# spac t-n an*a$tr t# a%ounts, not onl t#os stat* in-or*s ut alsot#os in nu%rical "urs in or*r to
prnt an $rau*ulnt insrtion+ !troank cannot rl on t# *octrin o$ quital stoppl -#ic# stats t#at P-#n on o$ t# t-o innocnt prsons, ac# "uilt lss o$ an intntional or %oral -ron", %ust su4r a loss, it %ust orn t# on -#os rronous con*uct, it#r o%ission or co%%ission, -as t# caus o$ in@ur+Q!troank *i* not prot#at 6ailzo -as n"li"nt or t#at t#is n"li"nc -as t# proGi%at caus o$ t# loss+ ?"li"nc is not prsu%* ut it %ust pron t# on -#o all"s it+ Bankin" is a usinss a4ct* -it# pulic intrst an* caus o$ t# natur o$ its $unctions, t# ank is un*r oli"ation to trat t# accounts o$ its *positors -it# %ticulous car, al-as #ain" in %in* t# *uciar natur o$ t#ir rlations#ip+ 7# appropriat *"r o$ *ili"nc rquir* o$ a ank %ust a a #i"# *"r o$ *ili"nc, i$ not t# ut%ost *ili"nc+ r, t# altrations on t# c#ck ar isil to t# nak* ut !troank $ail* to *tct t# altrations -#ic# coul* not scap t# attntion o$ n an or*inar prson+ 7#is n"li"nc is $urt#r Gacrat* t# $act t#at it -as t# cas# custo*ian -#o Ga%in* t# c#ck -#n #is $unctions *o not inol t# Ga%inin" o$ c#cks+ Oiousl, t# custo*ian -as not rs* an* co%ptnt in #an*lin" suc# *ut+ Banks ar Gpct* to Grcis t# #i"#st *"r o$ *ili"nc in t# slction an* suprision o$ %plos
4an6 o0 A8erica vs. Philippine Racin= Clu <+H+ 15228 Jul , 29 Ponente@ Leonar7o2!e Castro, +@
Facts: 1+ &lainti4 &H6> is a *o%stic corporation -#ic# %aintains a currnt account -it# ptitionr Bank o$ A%rica+ >ts aut#oriz* si"natoris ar t# co%pan &rsi*nt an* Tic3&rsi*nt+ B irtu o$ a tral aroa* $or t#s o'crs, t# pr3si"n* c#cks to acco%%o*at an Gpnss t#at %a co% up -#il t# -r aroa* $or a usinss trip+ 7# sai* pr3 si"n* c#cks -r l$t $or sa$kpin" &H6s accountin" o'cr+ n$ortunatl, t# t-o (2) o$ sai* c#cks ca% into t# #an*s o$ on o$ its %plos -#o %ana"* to ncas# it -it# ptitionr ank+ 7# sai* c#ck -as ll* in -it# t# us o$ a c#ck3-ritr, -#rin in t# lank $or t# ;&a;, t# a%ount in -or*s -as -rittn, -it# t# -or* ;6as#; -rittn ao it+ 2+ 6larl t#r -as an irr"ularit -it# t# llin" up o$ t# lank c#cks as ot# s#o-* si%ilar inr%itis an* irr"ularitis an* t, t# ptitionr ank *i* not tr to ri$ -it# t# corporation an* proc** to ncas# t# c#cks+ + &H6 l* an action $or *a%a"s a"ainst t# ank+ 7# lo-r court a-ar** actual an* G%plar *a%a"s+ On appal, t# 6A a'r%* t# lo-r court;s *cision an* #l* t#at t# ank -as n"li"nt+ nc t#is appal+
&titionr contn*s t#at it -as %rl *oin" its oli"ation un*r t# la- an* contract in ncas#in" t# c#cks, sinc t# si"naturs in t# c#cks ar "nuin+
o$ t# plainti4, a clck in its accountin" *part%nt at t#at+ As t# %plor, &H6 suppos*l s#oul* #a control an* suprision or its o-n %plos+
Issue? Fhether or not the petitioner can e held liale 0or ne=li=ence and thus should pa2 da8a=es to PRC
+ 7# court #l* t#at t# ptitionr is lial $or o$ t# total a%ount o$ *a%a"s -#il &H6 s#oul* s#oul*r 0 o$ t# sai* a%ount+ FESTMONT 4ANH' 0or8erl2 ASSOCIATED 4ANH noB 5NITED OERSEAS 4ANH P@ILIPPINES s+ MYRNA DELA ROSA"RAMOS' DOMIN!O TAN and FILLIAM CO3ACTS? Hspon*nt !rna Dla Hosa3Ha%os %aintain* a c#ckin"currnt account -it# t# nit* Orsas Bank &#ilippins (Bank) at t# lattrMs to+ 6risto Branc#, Binon*o, !anila+ >n #r sral transactions -it# t# Bank, Dla Hosa3Ha%os "ot acquaint* -it# its i"naturTrir, rspon*nt Do%in"o 7an (7an)+ 7an o4r* Dla Hosa3 Ha%os a spcial arran"%ntQ -#rin # -oul* nanc or plac su'cint $un*s in #r c#ckin"currnt account -#nrt#r -oul* an or*ra$t or -#n t# a%ount o$ sai* c#cks -oul* Gc* t# alanc o$#r currnt account+ 7#is nancir3*tor rlations#ip start* in 198 an* last* until1998+Dla Hosa3 Ha%os issu* post*at* c#cks corin" t# principal a%ount plus intrst asco%put* 7an on spci* *at+ 7#r -r also ti%s -#n s# @ust pai* in cas#+ Hlatito t#ir sai* a"r%nt, Dla Hosa3Ha%os issu* an* *lir* to 7an $our Associat* Bankc#cks *ra-n
l* Bot# partis ar #l* to at $ault ut t# ank #as t# last clar c#anc to prnt t# $rau*ulnt ncas#%nt #nc it is t# on $or%ost lial + 1+ 7#r -as no *isput t#at t# si"naturs in t# c#cks ar "nuin ut t# prsnc o$ irr"ularitis on t# $ac o$ t# c#ck s#oul* #a alrt* t# ank to Grcis caution $or ncas#in" t#%+ >t is -ll3sttl* t#at anks ar in t# usinss i%prss* -it# pulic intrst t#at t# ar *ut oun* to protct t#ir clints an* t#ir *posits at all ti%s+ 7# %ust trat t# accounts o$ t#s clints -it# %ticulousnss an* a #i"#st *"r o$ car consi*rin" t# *uciar natur o$ t#ir rlations#ip+ 7# *ili"nc rquir* o$ anks ar %or t#an t#at o$ a "oo* $at#r o$ a $a%il+ 2+ 7# &H6 o'crs; practic o$ pr3 si"nin" c#cks is a sriousl n"li"nt an* #i"#l risk #aior -#ic# %aks t#% also contriutor to t# loss+ >t;s o-n n"li"nc %ust t#r$or %iti"at t# ptitionr;s liailit+ !oror, t# prson -#o stol t# c#cks is also an %plo
a"ainst #r currnt account an* paal to cas#+Accor*in" to Dla Hosa3Ha%os, on o$ t# c#cks a%ountin" &2,+ -as a stal"uarant c#ck+ 7# c#ck -as ori"inall *at* Au"ust 28, 198 ut -as altr* to %ak itappar t#at it -as *at* !a 8, 1988+ 7an t#n *posit* t# c#ck in t# account o$ t# ot#rrspon*nt, =illia% 6o (6o), *spit t# oious supri%pos* *at+ As a rsult, t# a%ount o$&2,+ or t# alu in*icat* in t# c#ck -as ntuall c#ar"* a"ainst #r c#ckin"account+Anot#r c#ck $or &22,5+, *at* Jun 1, 1988, -as issu* in pa%nt o$ci"artts t#at Dla Hosa3Ha%os ou"#t $ro% 6o+ 7#is c#ck all"*l ounc* so s# rplac* it -it# #r "oo* custo%rMs c#ck an* cas# an* "a it to 7an+ 7# lattr, #o-r,*i* not rturn t# ounc* c#ck to #r+ >nsta*, # r*posit* it in 6oMs account+ # issu* anot#r c#ck $or &2,+, -#ic# -as anot#r "uarant c#ck t#at -as alsoun*at*+ Dla Hosa3Ha%os clai%* t#at it -as 7an -#o plac* t# *at Jun 10, 1988+ Fort#is c#ck, an or*r to stop pa%nt -as issu* caus o$ insu'cint $un*s+ inc t# t-oc#cks -#r *is#onor* $or insu'cint $un*s, s# con$ront* 6o r"ar*in" t# *posits o$ t#t-o c#cks, t# lattr *isclos* t#at #r t-o c#cks -r *posit* in #is account to cor $or#is &02,5+ cas# -#ic# -as takn 7an+ 7#n, -it# a t#rat to Gpos #r rlations#ip-it# a %arri* %an, 7an an* 6o -r al to corc #r to rplac t# t-o ao3
%ntion*c#cks -it# anot#r in t# a%ount o$ &02,5+ -#ic# -as quialnt to t# total a%ounto$ t# t-o *is#onor* c#cks+6lai%in" t#at t# $our c#cks %ntion* -r *posit* 7an -it#out #r consnt,Dla Hosa3Ha%os institut* a co%plaint a"ainst 7an an* t# Bank $or t# H76 skin", a%on" ot#r t#in"s, to rcor $ro% t# Bank t# su% o$ ₱50,89+ rprsntin" t# total a%ount c#ar"* or -it#*ra-n $ro% #r currnt account+ Dla Hosa3Ha%os susquntla%n** #r co%plaint to inclu* 6o+7# H76 sntnc* =st%ont Bank an* *$n*ants S 7an an* 6o lial @ointl an* srall t# su% o$ &50,89+, rprsntin" plainti4Ms lost *posit+ 7# 6A a'r%* an* %o*i* t# *cision statin" t#at t# liailit o$ t# ank an**$n*ant cors onl t# t#r c#cks+ ISS5E? =#t#r or not t# Bank is lial to t# lost *posits t#rou"# t# n"li"nc or $rau* its o'cr+ R5LIN!? Us+ 6onsi*rin" t#at anks can onl act t#rou"# t#ir o'crs an* %plos, t#*uciar oli"ation lai* *o-n $or t#s institutions ncssaril Gtn*s to t#ir %plos+ >t #as n rpat*l #l* t#at a ankMs liailit as an oli"or is not %rl icarious, ut pri%ar sinc t# ar Gpct* to osr an quall #i"# *"r o$ *ili"nc, not onl in t# slction, ut also in t# suprision o$ its
%plos+ 7#us, n i$ it is t#ir %plos -#o ar n"li"nt, t# ankMs rsponsiilit to its clint r%ains para%ount %akin" its liailit to t#sa% to a *irct on+ n**, it -as t# %plos -#o *irctl *alt -it# Dla Hosa3Ha%os, ut t# Bank cannot *istanc itsl$ $ro% t#%+ 7#at t#-r t# ons -#o "ain* at t# Gpns o$ Dla Hosa3Ha%os -ill not Gcus it o$ its$un*a%ntal rsponsiilit to #r+nc, t#is 6ourt is o$ t# opinion t#at t# appllant ank s#oul* #l* lial $or t#*a%a"s su4r* t# plainti43appll in t# cas at nc#+o-r, it -as Dla Hosa3 Ha%os -#o Gpos* #rsl$ to risk -#n s# ntr* into t#atspcial arran"%nt -it# 7an+ =#il t# Bank rn"* on its rsponsiilit to Dla Hosa3 Ha%os, s# is nrt#lss quall "uilt o$ contriutor n"li"nc+ >t #as n #l* t#at-#r t# ank an* a *positor ar quall n"li"nt, t# s#oul* quall su4r t# loss+ 7#t-o %ust ot# ar t# consquncs o$ t#ir %istaks+ METROPOLITAN 4ANH AND TR5ST COMPANY s+
4A 3INANCE CORPORATION and MALAYAN INS5RANCE CO.' INC. <+H+ ?o+ 19952+ Dc%r 0, 29+ 3ACTS? .a%rto Bitan"a otain* $ro% rspon*nt BA Financ 6orporation a loan, to scur -#ic#, #%ort"a"* #is car to rspon*nt BA Financ+ Bitan"a #a* t# %ort"a"* car insur* rspon*nt!alaan >nsuranc+ 7# car -as stoln+ On Bitan"aMs clai%, !alaan >nsuranc issu* a c#ck paal to t# or*r o$ B+A+ Financ 6orporation an* .a%rto Bitan"a, *ra-n a"ainst 6#ina+ 7# c#ck -as cross* -it# t# notation For Dposit &asM Account Onl+ =it#out t# in*ors%nt or aut#orit o$ #is co3pa BA Financ, Bitan"a *posit* t# c#ck to #is account -it# t# Asianank, no%r"*-it# #rin ptitionr !troank+ Bitan"a susquntl -it#*r- t# ntir proc*s o$ t# c#ck+ >n t# %anti%, Bitan"aMs loan ca% past *u, ut *spit *%an*s, # $ail* to sttl it+ BA Financ ntuall larn* o$ t# loss o$ t# car an* o$ !alaan >nsuran cMs issuanc o$ a cross* c#ck paalto it an* Bitan"a, an* o$ Bitan"aMs *positin" it in #is account at Asianank an* -it#*ra-in" t# ntir proc*s t#ro$+ BA Financ t#rupon *%an** t# pa%nt o$ t# alu o$ t# c#ck $ro%Asianank ut to no aail, pro%ptin" it to l a co%plaint $or t# H76 $or su% o$ %on an**a%a"s a"ainst Asianank an* Bitan"a, all"in" t#at, intr alia, it is ntitl* to t# ntir
proc*s o$ t# c#ck+ 7# trial court, #ol*in" t#at Asianank -as n"li"nt in allo-in" Bitan"a to *posit t# c#ckto #is account an* to -it#*ra- t# proc*s t#ro$, -it#out #is co3pa BA Financ #ain" it#rin*ors* it or aut#oriz* #i% to in*ors it in its #al$, $oun* Asianank an* Bitan"a @ointl an*srall lial to BA Financ $ollo-in" ction 01 o$ t# ?"otial >nstru%nts .a- + 7# appllat court, a'r%in" t# trial courtMs *cision, #l* t#at BA Financ #as a caus o$ action a"ainst Nit n i$ t# su@ct c#ck #a* not n *lir* to BA Financ t# issur itsl$+ nc, t# prsnt &tition$or Hi- on 6rtiorari l* !troank to -#ic# Asianank -as, as arlir stat*, %r"*, $aultin"t# appllat court+
ISS5E =O? t# ptitionr is lial $or t# $ull alu o$ t# c#ckR @ELD? Us+ A'r%in" t# *cision o$ t# 6A, t# 6 #l* t#at ction 01 o$ t# ?"otial >nstru%nts.a- proi*s: =#r an instru%nt is paal to t# or*r o$ t-o or %or pas or in*orss -#o arnot partnrs, all %ust in*ors unlss t# on in*orsin" #as aut#orit to in*ors $or t# ot#rs+ Bitan"aalon n*ors* t# cross* c#ck, an* ptitionr allo-* t# *posit an* rlas o$ t# proc*s t#ro$, *spit t# asnc o$ aut#orit o$ Bitan"aMs co3pa BA Financ to n*ors it on its #al$+7# pa%nt o$
an instru%nt or a %issin" in*ors%nt is t# quialnt o$ pa%nt on a $or"*in*ors%nt or an unaut#oriz* in*ors%nt in itsl$ in t# cas o$ @oint pas+ 6larl, ptitionr,t#rou"# its %plo, -as n"li"nt -#n it allo-* t# *posit o$ t# cross* c#ck, *spit t# lonn*ors%nt o$ Bitan"a, ostnsil i"norin" t# $act t#at t# c#ck *i* not, it ars rpatin", carr t# in*ors%nt o$ BA Financ
II. EN3ORCEMENT O3 LIA4ILITY 3ar East Realt2 Invest8ent Inc. vs. Court o0 Appeals !R L"(9&$+' & Octoer *+11con* Diision, &aras (J): 0 concur
Facts: >n its co%plaint *at* !a 9, 198, l* -it# t# 6it 6ourt o$ !anila, (6iil 6as 1859) a"ainst D ian 7at, i 6# an* nst%nt >nc+ (FEH>>) all"*, a%on" ot#rs, t#at on 1 pt%r 19, D t al+ approac#* FEH>> at its o'c in !anila an* ask* t# lattr to Gtn* to t#% an acco%%o*ation loan in t# su% o$ &0,5+, -#ic# t# n** in t#ir usinss, an* -#ic# t# pro%is* to pa, @ointl an* srall, in on %ont# ti%C t#at t# propos* to pa FEH>> intrst t#ron at t# rat o$ 10 pr annu%, as in $act t# *lir* to FEH>>
t# 6#ina Bankin" 6orporation (6#inaBank) 6#ck T?391550, *at* 1 pt%r 19, $or &0,5+, ra-n D, an* si"n* t#% at t# ack o$ sai* c#ck, -it# t# assuranc t#at a$tr on %ont# $ro% 1 pt%r 19, t# sai* c#ck -oul* r*%* t#% pain" cas# in t# su% o$ &0,5+, or t# sai* c#ck can prsnt* $or pa%nt on or i%%*iatl a$tr on %ont# an* sai* ank -oul* #onor t# sa%C t#at, in or*r to acco%%o*at D t al+, FEH>> a"r* an* actuall Gtn** to D t al+ an acco%%o*ation loan in t# su% o$ &0,5+ un*r t# a$orsai* con*itions propos* D t al+, -#ic# a%ount -as *lir* to t# latrC t#at on 5 !arc# 190, t# a$orsai* c#ck -as prsnt* $or pa%nt to t# 6#inaBank, ut sai* c#ck ounc* an* -as not cas#* sai* ank, $or t# rason t#at t# currnt account o$ t# *ra-r t#ro$ #a* alra* n clos*C an* t#at susquntl, FEH>> *%an** $ro% D t al+ t# pa%nt o$ t#ir a$orsai* loan oli"ation, ut t# lattr $ail* an* r$us* to pa not-it#stan*in" rpat* *%an*s t#r$or+ >, or*rin" D t al+ to pa FEH>>, @ointl an* srall, t# su% o$ &0,5+ -it# intrst t#ron at t# l"al rat $ro% 1 pt%r 19 until t# sai* a%ount is $ull pai*C plus t# su% o$ &5+ -a o$ attorn;s $s, plus t# costs o$ suit+ 7# *cision o$ t#
cit court -as appal* D t al+ to t# 6ourt o$ First >nstanc o$ !anila, -#r t# cas -as #ar* * noo $or lack o$ transcript o$ stno"rap#ic nots takn in t# cit court+ A$tr trial, t# 6ourt o$ First >nstanc o$ !anila, Branc# >Y, rn*r* a *cision in 6iil 6as 858, *at* 15 Octor 191, a'r%in" t# *cision o$ t# cit court, or*rin" D t al+ to pa, @ointl an* srall, FEH>> t# su% o$ &0,5+, plus intrst at t# rat o$ 10 pr annu%, $ro% 1 pt%r 19, until $ull pai*, plus t# su% o$ &1,+ in t# concpt o$ attorn;s $sC an* costs o$ suit+ D t al+ l* a ptition $or ri- -it# t# 6ourt o$ Appals+ On 12 Fruar 19, t# appllat court, n*in" t#at t# qustion* c#ck -as not "in as collatral to "uarant a loan scur* D t al+ -#o all"*l ca% as a "roup to FEH>> on 1 pt%r 19, ut pass* t#rou"# ot#r #an*s $or rac#in" FEH>> an* t# sai* c#ck -as not prsnt* -it#in a rasonal ti% an* a$tr its issuanc, rrs* t# *cision o$ t# 6ourt o$ First >nstanc+ >ts %otion $or rconsi*ration #ain" n *ni*, FEH>> l* t# ptition $or ri-+
>ssu: =#t#r prsnt%nt $or pa%nt an* notic o$ *is#onor o$ t# qustion* c#ck -r %a* -it#in rasonal ti%+ l*:
?O+ =#r t# instru%nt is not paal on *%an*, prsnt%nt %ust %a* on t# *a it $alls *u+ =#r it is paal on *%an*, prsnt%nt %ust %a* -it#in a rasonal ti% a$tr issu, Gcpt t#at in t# cas o$ a ill o$ Gc#an", prsnt%nt $or pa%nt -ill su'cint i$ %a* -it#in a rasonal ti% a$tr t# last n"otiation t#ro$+ ?otic %a "in as soon as t# is *is#onor*C an* unlss *la is Gcus* %ust "in -it#in t# ti% G* t# la-+ ?o #ar* an* $ast *%arcation lin can *ra-n t-n -#at %a consi*r* as a rasonal or an unrasonal ti%, caus rasonal ti% *pn*s upon t# pculiar $acts an* circu%stancs in ac# cas+ Hasonal ti% #as n *n* as so %uc# ti% as is ncssar un*r t# circu%stancs $or a rasonal pru*nt an* *ili"nt %an to *o, connintl, -#at t# contract or *ut rquirs s#oul* *o n, #ain" a r"ar* $or t# ri"#ts an* possiilit o$ loss, i$ an, to t# ot#r part rin, it is oious t#at prsnt%nt an* notic o$ *is#onor -r not %a* -it#in a rasonal ti%+ 7# c#ck in qustion -as issu* on 1 pt%r 19, ut -as prsnt* to t# *ra- ank onl on 5 !arc# 190, an* *is#onor* on t# sa% *at+ A$tr *is#onor t# *ra- ank, a $or%al notic o$ *is#onor -as %a* FEH>> t#rou"# a lttr *at* 2 April 198+ n*r t#s circu%stancs, FEH>> un*out*l $ail* to Grcis pru*nc an* *ili"nc on -#at # ou"#t to *o as rquir* la-+
FEH>> lik-is $ail* to s#o- an @ustication $or t# unrasonal *la+
L5IS S. FON!' petitioner, vs. CO5RT O3 APPEALS and PEOPLE O3 T@E P@ILIPPINES' respondents.
FA67: &titionr =on" -as an a"nt o$ .i%ton" &rss >nc+ (.&>), a %anu$acturr o$ caln*ars+ .&> -oul* print sa%pl caln*ars, t#n "i t#% to a"nts to prsnt to custo%rs+ 7# a"nts -oul* "t t# purc#as or*rs o$ custo%rs an* $or-ar* t#% to .&>+ A$tr printin" t# caln*ars, .&> -oul* s#ip t# caln*ars *irctl to t# custo%rs+ 7#ra$tr, t# a"nts -oul* co% aroun* to collct t# pa%nts+ &titionr, #o-r, #a* a #istor o$ unr%itt* collctions, -#ic# # *ul ackno-l*"* in a conr%ation rcipt # co3si"n* -it# #is -i$+ nc, ptitionrMs custo%rs -r rquir* to issu post*at* c#cks $or .&> -oul* accpt t#ir purc#as or*rs+ >n arl Dc%r 1985, =on" issu* siG () post*at* c#cks totalin" &18,25+, all *at* Dc%r , 1985 an* *ra-n paal to t# or*r o$ .&>+7#s c#cks -r initiall intn** to "uarant t# caln*ar or*rs o$ custo%rs -#o $ail* to issu post3*at* c#cks+ o-r, $ollo-in" co%pan polic, .&> r$us* to accpt t# c#cks as "uarants+ >nsta*, t# partis a"r* to appl t# c#cks to t# pa%nt o$ ptitionrMs unr%itt* collctions $or 1980 a%ountin" to &18,++ .&> -ai* t#
&52+ *i4rnc+ B$or t# %aturit o$ t# c#cks, ptitionr prail* upon .&> not to *posit t# c#cks an* pro%is* to rplac t#% -it#in *as+ o-r, ptitionr rn"* on #is pro%is+ nc, on Jun 5, 198, .&> *posit* t# c#cks -it# Hizal 6o%%rcial Bankin" 6orporation (H6B6)+ 7# c#cks -r rturn* $or t# rason Paccount clos*+Q 7# *is#onor o$ t# c#cks -as i*nc* t# H6B6 rturn slip+ On Jun 2, 198, co%plainant t#rou"# counsl noti* t# ptitionr o$ t# *is#onor+ &titionr $ail* to %ak arran"%nts $or pa%nt -it#in (5) ankin" *as+ On ?o%r , 198, ptitionr -as c#ar"* -it# t#r () counts o$ iolation o$ B+&+ Bl"+ 22 un*r t#r sparat >n$or%ations $or t# t#r c#cks a%ountin" to &5,5+, &,5+, an* &,01++ pon arrai"n%nt, =on" pla** not "uilt+ 7rial nsu*+ On Au"ust , 199, t# trial court n*s t# accus* .uis + =on" <>.7U on* rasonal *out o$ t# o4ns o$ Tiolations o$ ction 1 o$ Batas &a%ansa Bilan" 22+ 7# appllat court a'r%* t# t# trial courtMs *cision in toto+ >E: -#t#r or not t# proscution -as al to stalis# on* rasonal *out all t# l%nts o$ t# o4ns pnaliz* un*r B+&+ Bl"+ 22+ E.D 7#r ar t-o (2) -as o$ iolatin" B+&+ Bl"+ 22: (1) %akin" or *ra-in" an*
issuin" a c#ck to appl on account or $or alu kno-in" at t# ti% o$ issu t#at t# c#ck is not su'cintl $un**C an* (2) #ain" su'cint $un*s in or cr*it -it# t# *ra- ank at t# ti% o$ issu ut $ailin" to kp su'cint $un*s t#rin or cr*it -it# sai* ank to cor t# $ull a%ount o$ t# c#ck -#n prsnt* to t# *ra- ank -it#in a prio* o$ nint (9) *as+ $or t# sa% rason #a* not t# *ra-r, -it#out an ali* caus, or*r* t# ank to stop pa%nt+Q &titionr contn*s t#at t# rst l%nt *os not Gist caus t# c#cks -r not issu* to appl $or account or $or alu+ att%pts to *istin"uis# #is situation $ro% t# usual Pcut3an*3*ri*Q B+&+ 22 cas clai%in" t#at t# c#cks -r issu* as "uarant an* t# oli"ations t# -r suppos* to "uarant -r alra* pai*+ 7#is Za-* ar"u%nt #as no $actual asis, t# H76 an* 6A #ain" ot# rul* t#at t# c#cks -r in pa%nt $or unr%itt* collctions, an* not as "uarant+ .ik-is, t# ar"u%nt #as no l"al asis, $or -#at B+&+ Bl"+ 22 punis#s is t# issuanc o$ a ouncin" c#ck an* not t# purpos $or -#ic# it -as issu* nor t# tr%s an* con*itions rlatin" to its issuanc+ As to t# scon* l%nt, B+&+ Bl"+ 22 crats a prsu%ption 8uris tantum t#at t# scon* l%nt (rima %a)ie Gists -#n t# rst an* t#ir* l%nts o$ t# o4ns ar prsnt+ 7#us, t# %akrMs kno-l*" is prsu%* $ro% t# *is#onor o$ t# c#ck $or insu'cinc o$ $un*s+
&titionr ars t#at sinc t# co%plainant *posit* t# c#cks on Jun 5, 198, or 15 *as a$tr t# Dc%r , 1985 %aturit *at, t# prsu%ption o$ kno-l*" o$ lack o$ $un*s un*r ction 2 o$ B+&+ Bl"+ 22 s#oul* not appl to #i%+ $urt#r clai%s t#at # s#oul* not Gpct* to kp #is ank account acti an* $un** on* t# nint3*a prio*+ ction 2 o$ B+&+ Bl"+ 22 proi*s: E9i7en)e o% ?nowle7ge o% insuA)ient %un7s. 22 7# %akin", *ra-in" an* issuanc o$ a c#ck pa%nt o$ -#ic# is r$us* t# *ra- caus o$ insu'cint $un*s in or cr*it -it# suc# ank, -#n prsnt* -it#in nint (9) *as $ro% t# *at o$ t# c#ck, s#all (rima %a)ie i*nc o$ kno-l*" o$ suc# insu'cinc o$ $un*s or cr*it unlss suc# %akr or *ra-r pas t# #ol*r t#ro$ t# a%ount *u t#ron, or %aks arran"%nts $or pa%nt in $ull t# *ra- o$ suc# c#ck -it#in (5) ankin" *as a$tr rciin" notic t#at suc# c#ck #as not n pai* t# *ra-+ An ssntial l%nt o$ t# o4ns is Pkno-l*"Q on t# part o$ t# %akr or *ra-r o$ t# c#ck o$ t# insu'cinc o$ #is $un*s in or cr*it -it# t# ank to cor t# c#ck upon its prsnt%nt+ inc t#is inols a stat o$ %in* *i'cult to stalis#, t# statut itsl$ crats a (rima %a)ie prsu%ption o$ suc# kno-l*" -#r pa%nt o$ t# c#ck Pis r$us* t# *ra- caus o$ insu'cint $un*s in or cr*it -it# suc# ank -#n prsnt* -it#in nint (9)
*as $ro% t# *at o$ t# c#ck+Q 7o %iti"at t# #ars#nss o$ t# la- in its application, t# statut proi*s t#at suc# prsu%ption s#all not aris i$ -it#in (5) ankin" *as $ro% rcipt o$ t# notic o$ *is#onor, t# %akr or *ra-r %aks arran"%nts $or pa%nt o$ t# c#ck t# ank or pas t# #ol*r t# a%ount o$ t# c#ck+ 6ontrar to ptitionrMs assrtions, no-#r in sai* proision *os t# larquir a %akr to %aintain $un*s in #is ank account $or onl 9 *as+ Hat#r, t# clar i%port o$ t# la- is to stalis# a (rima %a)ie prsu%ption o$ kno-l*" o$ suc# insu'cinc o$ $un*s un*r t# $ollo-in" con*itions (1) prsnt%nt -it#in 9 *as $ro% *at o$ t# c#ck, an* (2) t# *is#onor o$ t# c#ck an* $ailur o$ t# %akr to %ak arran"%nts $or pa%nt in $ull -it#in 5 ankin" *as a$tr notic t#ro$+ 7#at t# c#ck %ust *posit* -it#in nint (9) *as is si%pl on o$ t# con*itions $or t# (rima %a)ie prsu%ption o$ kno-l*" o$ lack o$ $un*s to aris+ >t is not an l%nt o$ t# o4ns+ ?it#r *os it *isc#ar" ptitionr $ro% #is *ut to %aintain su'cint $un*s in t# account -it#in a rasonal ti% t#ro$+ n*r ction 18 o$ t# ?"otial >nstru%nts .a-, Pa c#ck %ust prsnt* $or pa%nt -it#in a rasonal ti% a$tr its issu or t# *ra-r -ill *isc#ar"* $ro% liailit t#ron to t# Gtnt o$ t# loss caus* t# *la+Q B currnt ankin" practic, a c#ck co%s stal a$tr %or t#an siG () %ont#s, or 18 *as+
&riat rspon*nt #rin *posit* t# c#cks 15 *as a$tr t# *at o$ t# c#ck+ nc sai* c#cks cannot consi*r* stal+ Onl t# prsu%ption o$ kno-l*" o$ insu'cinc o$ $un*s -as lost, ut suc# kno-l*" coul* still pron *irct or circu%stantial i*nc+ As $oun* t# trial court, priat rspon*nt *i* not *posit t# c#cks caus o$ t# rassuranc o$ ptitionr t#at # -oul* issu nc#cks+ pon #is $ailur to *o so, .&> -as constrain* to *posit t# sai* c#cks+ A$tr t# c#cks -r *is#onor*, ptitionr -as *ul noti* o$ suc# $act ut $ail* to %ak arran"%nts $or $ull pa%nt -it#in (5) ankin" *as t#ro$+ 7#r is, on rcor*, su'cint i*nc t#at ptitionr #a* kno-l*" o$ t# insu'cinc o$ #is $un*s in or cr*it -it# t# *ra- ank at t# ti% o$ issuanc o$ t# c#cks+ An* *spit ptitionrMs insistnt pla o$ innocnc, - n* no rror in t# rspon*nt courtMs a'r%anc o$ #is coniction t# trial court $or iolations o$ t# Bouncin" 6#cks .a-+ o-r, pursuant to t# polic "ui*lins in #7ministrati9e Cir)ular No. 2000 , -#ic# took 4ct on ?o%r 21, 2, t# pnalt i%pos* on ptitionr s#oul* no- %o*i* to a n o$ not lss t#an ut not %or t#an *oul t# a%ount o$ t# c#cks t#at -r *is#onor*+ The International Corporate 4an6 ;noB 5nion 4na6 o0 the Philippines< vs. Spouses !ueco
!R *$*+91' *# 3eruar2 #%%* 3acts? pouss Francis + ntrnational 6orporat Bank (no- nion Bank o$ t# &#ilippins) to purc#as a car K a ?issan ntra 1 0DH, 1989 !o*l+ >n consi*ration t#ro$, t# pouss Gcut* pro%issor nots -#ic# -r paal in %ont#l install%nts an* c#attl %ort"a" or t# car to sr as scurit $or t# nots+ 7# pouss *$ault* in pa%nt o$ install%nts+ 6onsquntl, t# Bank l* on Au"ust 1995 a ciil action (6iil 6as 58395) $or u% o$ !on -it# &rar $or a =rit o$ Hplin $or t# !tropolitan 7rial 6ourt o$ &asa 6it, Branc# 05+ On 25 Au"ust 1995, Dr+ Francis
t is t# issu* t# *cision, *nin" t# ptition contntion o$ t# n t# %tin" o$ 29 prclu* $utur lin" o$ clai%s, Au"ust 1995, Dr+ n prsi*nt o$ t# ank, *at* 0 pt%r its *cision, t# H76 #l* t#at t#r -as a 1995, Dr+ n ot#r rspct, t# court a'r%* t# *cision o$ Issue?
=#t#r t# ank -as n"li"nt in optin" not to *posit or us t# %ana"rMs c#ck+ @eld? ?O+ A stal c#ck is on -#ic# #as not n prsnt* $or pa%nt -it#in a rasonal ti% a$tr its issu+ >t is alulss an*, t#r$or, s#oul* not pai*+ n*r t# n"otial instru%nts la-, an instru%nt not paal on *%an* %ust prsnt* $or pa%nt on t# *a it $alls *u+ =#n t# instru%nt is paal on *%an*, prsnt%nt %ust %a* -it#in a rasonal ti% a$tr its issu+ >n t# cas o$ a ill o$ Gc#an", prsnt%nt is su'cint i$ %a* -it#in a rasonal ti% a$tr t# last n"otiation t#ro$+ A c#ck %ust prsnt* $or pa%nt -it#in a rasonal ti% a$tr its issu, an* in *tr%inin" -#at is a rasonal ti%, r"ar* is to #a* to t# natur o$ t# instru%nt, t# usa" o$ tra* or usinss -it# rspct to suc# instru%nts, an* t# $acts o$ t# particular cas+ 7# tst is -#t#r t# pa %plo* suc# *ili"nc as a pru*nt %an Grciss in #is o-n a4airs+ 7#is is caus t# natur an* t#or #in* t# us o$ a c#ck points to its i%%*iat us an* paailit+ >n a cas, a c#ck paal on *%an* -#ic# -as lon" or*u aout t-o an* a #al$ (23 12) ars -as consi*r* a stal c#ck+ Failur o$ a pa to ncas# a c#ck $or %or t#an 1 ars un*out*l rsult* in t# c#ck co%in" stal+ 7#us, n a *la o$ 1 -k or t-o (2) *as, un*r t# spcic circu%stancs o$ t# crtain
cass constitut* unrasonal ti% as a %attr o$ la-+ rin, t# c#ck inol* is not an or*inar ill o$ Gc#an" ut a %ana"r;s c#ck+ A %ana"r;s c#ck is on *ra-n t# ank;s %ana"r upon t# ank itsl$+ >t is si%ilar to a cas#ir;s c#ck ot# as to 4ct an* us+ A cas#ir;s c#ck is a c#ck o$ t# ank;s cas#ir on #is o-n or anot#r c#ck+ >n 4ct, it is a ill o$ Gc#an" *ra-n t# cas#ir o$ a ank upon t# ank itsl$, an* accpt* in a*anc t# act o$ its issuanc+ >t is rall t# ank;s o-n c#ck an* %a trat* as a pro%issor not -it# t# ank as a %akr+ 7# c#ck co%s t# pri%ar oli"ation o$ t# ank -#ic# issus it an* constituts its -rittn pro%is to pa upon *%an*+ 7# %r issuanc o$ it is consi*r* an accptanc t#ro$+ >$ trat* as pro%issor not, t# *ra-r -oul* t# %akr an* in -#ic# cas t# #ol*r n* not pro prsnt%nt $or pa%nt or prsnt t# ill to t# *ra- $or accptanc+ En assu%in" t#at prsnt%nt is n**, $ailur to prsnt $or pa%nt -it#in a rasonal ti% -ill rsult to t# *isc#ar" o$ t# *ra-r onl to t# Gtnt o$ t# loss caus* t# *la+ Failur to prsnt on ti%, t#us, *os not totall -ip out all liailit+ >n $act, t# l"al situation a%ounts to an ackno-l*"%nt o$ liailit in t# su% stat* in t# c#ck+ >n t#is cas, t#
#as not n ras*+ >t #as n #l* t#at, i$ t# c#ck #a* co% stal, it co%s i%prati t#at t# circu%stancs t#at caus* its non3 prsnt%nt *tr%in*+ rin, t# ank #l* on t# c#ck an* r$us* to ncas# t# sa% caus o$ t# contrors surroun*in" t# si"nin" o$ t# @oint %otion to *is%iss+ 7# 6ourt sano a* $ait# or n"li"nc in t#is position takn t# Bank+
3ar East Realt2 Invest8ent vs CA !.R. No. L"(9&$+ 4ACH!RO5ND? Septe8er *(' *+9% the privaterespondents approached the petitioner at its oce in Manila and as6ed the latter to e:tend to the8 an acco88odation loan in the su8 o0 P$'&%%.%%'Bhich the2 pro8ised to pa2' /ointl2 and severall2' in one 8onth ti8e Bith an interest thereon at the rate o0 *$J per annu8. Respondents =ave a China 4an6in= Corporation Chec6 No. N" +*&&9$ 0or P$'&%%.%%' draBn 2 D2 @ian Tat' and si=ned 2 the8at the ac6 o0 said chec6. A ssured t hat a0ter one 8onth 0ro8 Septe8er *(' the said chec6 Bould e redee8ed 2 the82 pa2in= cash in the su8 o0 P$'&%%.%%' or the said chec6 can e presented 0or
pa28ent on or i88ediatel2 a0ter one 8onth and said an6 Bould honor the sa8e March &' *+9$ the a0oresaid chec6 Bas presented 0or pa28ent to China 4an6in= Corporation' ut said chec6 ounced and Bas not cashed 2 said an6' 0or the reason that the current account o0 the draBer thereo0 had alread2 een closed. Ma2 +' *+91 Petitioner led a case a=ainst the private respondents 0or the collection and pa28ent o0 P$'&%%.%% Representin= the 0ace value o0 an unpaid and dishonored chec6 Respondents Ar=u8ents !aB Su2 An clai8s that petitioner has no cause o0 action ecause the endorse8ent on the ac6 o0 the chec6 shoBs that he si=ned said endorse8ent 0or his principal' the ictor2 @ardBare and not 0or his oBn individual account' hence' could not e 8ade personall2 liale there0or. EEN =rantin= that he acted in his oBn capacit2 as the endorser' he has een Bholl2 dischar=ed 2 dela2 in present8ent o0 thechec6 0or pa28ent. D2 @ian Tat denied havin= an2 ne=otiation Bith petitioner and clai8s that as 0ar as he could
re8e8er' said chec6 Bas delivered 2 hi8 to Sin Chin )uat !rocer2 and not to the petitioner. In addition' accordin= to the i88ediateendorser' !aB Su2 An' Bho endorsed the chec6 0or his principal'ictor2 @ardBare'this chec6 Bas delivered to the Asian Suret2 7Insurance Co.' Inc.' to e applied to the indetedness o0 the ictor2 @ardBare Bith said Insurance Co8pan2. Considerin= that this chec6 in Kuestion Bas dated Septe8er *('*+9% ut deposited 0or pa28ent March &' *+9$'this unreasonale dela2 in present8ent Bholl2 Dischar=ed not onl2 the endorser ut also the draBer. Respondents Main Ar=u8ent? In order to char=e the persons Secondaril2 liale' such as draBer and endorsers' the instru8ent 8ust e presented 0or pa28ent on the date and Period therein 8entioned in the instru8ent'i0 it is pa2ale ona :ed date' or Bithin a reasonale ti8e a0ter issue' otherBise the draBer and endorsers are dischar=ed 0ro8 liailit2. The Kuestioned chec6 Bas dated Septe8er *(' *+9%. !rantin= that it Bas a=reed that it Bill onl2 e deposited a0ter one 8onth 0ro8 its date' it should have een deposited 0or pa28ent a0ter one 8onth and not
onl2 on March &' *+9$. This dela2 in the present8ent 0or pa28ent o0 the chec6 cannot e construed as a reasonale ti8e. Petitioners Ar=u8ents Present8ent 0or pa28ent and notice o0 dishonor are not necessar2 as Bhen 0unds are insucient to 8eeta chec6' the DraBer is liale Bhether such present8ent and notice e totall2 o8itted or 8erel2 dela2ed. @oBever' in a situation Bhere the present8ent andor notice is reKuired to e 8ade Bithout unreasonale dela2' the draBer is dischar=ed pro tanto or onl2 up to the de=ree o0 the loss suered' 2 reason o0 dela2. Since dischar=e is the e:ception to the =eneral rule' the loss 8ust e proven 2 the draBer. The draBer in the instant case has not presented in evidence an2 loss Bhich he 8a2 have suered 2 reason o0 the dela2. Rulin= Trial Court in 0avor o0 petitioner CA reversed and decided in 0avor o0 respondent. o 3indin= that the Kuestioned chec6 Bas not =iven as collateral to =uarantee a loan secured 2 the three private respondents Bho alle=edl2 ca8eas a =roup to the 3ar
East Realt2 Invest8ent' Inc.' on Septe8er *(' *+9%' ut passed throu=h other hands e0ore reachin= the petitioner and the said chec6 Bas not presented Bithin a reasonale ti8e and a0ter its issuance' reversed the decision o0 the Court o0 3irst Instance. ISS5ES *. Fhether or not present8ent 0or pa28ent and notice o0 dishonor o0 the Kuestioned chec6 Bere 8ade Bithin reasonale ti8e. RESOL5TIONS AND AR!5MENTS ISS5E * Fhether or not present8ent 0or pa28ent and notice o0 dishonor o0 the Kuestioned chec6 Bere 8ade Bithin reasonale ti8e." NO. PERTINENT PROISION O3 LAF? Fhere the instru8ent is not pa2ale on de8and' present8ent Must e 8ade on the da2 it0alls due.Fhere it is pa2ale on de8and'present8ent 8ust e 8ade Bithin a reasonale ti8e a0ter issue' e:cept that in the case o0 a ill o0 e:chan=e' present8ent 0or pa28ent Bill e sucient i0 8ade Bithin a reasonale ti8e a0ter the last ne=otiation thereo0. ;Section ,*' Ne=otiale Instru8ents LaB<.
MA)OR POINT *? No hard and 0ast de8arcation line can e draBn etBeen Bhat 8a2 e considered as reasonale or an unreasonale ti8e'ecause reasonale ti8e depends upon the peculiar 0acts and circu8stances in each case It is ovious in this case that present8ent and notice o0 dishonor Bere not 8ade Bithin a reasonale ti8e. Reasonale ti8ehas een dened as so 8uch ti8e as is necessar2 under the circu8stances 0or a reasonale prudent and dili=ent 8an to do' convenientl2' Bhat the contract or dut2 reKuires should e done' havin= a re=ard 0or the ri=hts' and possiilit2 o0 loss' i0 an2' to theother part2 In the instant case' the chec6 in Kuestion Bas issued on Septe8er *(' *+9%' ut Bas presented to the draBee an6 onl2 on March &' *+9$' and dishonored on the sa8edate. A0ter dishonor 2 the draBee an6' a 0or8al notice o0dishonor Bas 8ade 2 the petitioner throu=h a letter dated April #,' *+91. 5nder these circu8stances' the petitioner undoutedl2 0ailed to
E:ercise prudence and dili=ence on Bhat he ou=ht to do as reKuired 2 laB. The petitioner li6eBise 0ailed to shoB an2 /ustication 0or the unreasonale dela2. 3INAL ERDICT? CA upheld.
decision
State Invest8ent @ouse vs. CA' #*, SCRA (# 3acts? ?ora B+ !oulic issu* to 6orazon Tictoriano, as scurit $or pics o$ @-lr to sol* on co%%ission, 2 post3 *at* Equital Bankin" 6orporation c#cks in t# a%ount o$ &5, ac#, on *at* Au"ust 199 an* t# ot#r, pt%r 199+ 7#ra$tr, t# pa n"otiat* t# c#cks to t# tat >nst%nt ous >nc+ (>>)+ !oulic $ail* to sll t# pics o$ @-lr, so s# rturn* t#% to t# pa $or %aturit o$ t# c#cks+ 7# c#cks, #o-r, coul* no lon"r rtri* as t# #a* alra* n n"otiat*+ 6onsquntl, $or t#ir %aturit *ats, !oulic -it#*r- #r $un*s $ro% t# *ra- ank+pon prsnt%nt $or pa%nt, t# c#cks -r *is#onor* $or insu'cinc o$ $un*s+ On 2 Dc%r 199, >> all"*l noti* !oulic o$ t# *is#onor o$ t# c#cks an* rqust* t#at it pai* in cas# insta*, alt#ou"# !oulic ars t#at no suc# notic -as "in #r+ On Octor 198, >> su* to rcor t# alu o$ t# c#cks plus attorn;s $s an* Gpnss o$ liti"ation+
>n #r Ans-r, !oulic contn*s t#at s# incurr* no oli"ation on t# c#cks caus t# @-lr -as nr sol* an* t# c#cks -r n"otiat* -it#out #r kno-l*" an* consnt+ # also institut* a 7#ir*3&art 6o%plaint a"ainst 6orazon Tictoriano, -#o latr assu%* $ull rsponsiilit $or t# c#cks+ On 2 !a 1988, t# trial court *is%iss* t# 6o%plaint as -ll as t# 7#ir*3&art 6o%plaint, an* or*r* >> to pa !oulic &,+ $or attorn;s $s+ >> lat* t# or*r o$ *is%issal to t# 6ourt o$ Appals, ut t# appllat court a'r%* t# trial court on t# "roun* t#at t# ?otic o$ Dis#onor to !oulic -as %a* on* t# prio* prscri* t# ?"otial >nstru%nts .a- an* t#at n i$ >> *i* sr suc# notic on !oulic -it#in t# r"l%ntar prio* it -oul* o$ no consqunc as t# c#cks s#oul* nr #a n prsnt* $or pa%nt+ >> l* t# ptition $or ri-+ Issue *-? =#t#r t# all"* issuanc o$ t# post3*at* c#cks as scurit is a "roun* $or t# *isc#ar" o$ t# instru%nt as a"ainst a #ol*r in *u cours+ @eld *-? ction 119 o$ t# ?"otial >nstru%nt .a- outlin* t# "roun*s in -#ic# an instru%nt is *isc#ar"*+ 7# proision stats t#at A n"otial instru%nt is *isc#ar"*: (a) B pa%nt in *u cours or on #al$ o$ t# princi=#t#r t# post3*at* c#cks, issu* as scurit, is a "roun* $or t# *isc#ar" o$ t# instru%nt as a"ainst a
#ol*r in *u cours+ pal *torC () B pa%nt in *u cours t# part acco%%o*at*, -#r t# instru%nt is %a* or accpt* $or #is acco%%o*ationC (c) B t# intntional cancllation t#ro$ t# #ol*rC (*) B an ot#r act -#ic# -ill *isc#ar" a si%pl contract $or t# pa%nt o$ %onC () =#n t# principal *tor co%s t# #ol*r o$ t# instru%nt at or a$tr %aturit in #is o-n ri"#t+ Oiousl, !O.>6 %a onl inok para"rap#s (c) an* (*) as possil "roun*s $or t# *isc#ar" o$ t# instru%nt+ But, t# intntional cancllation cont%plat* un*r para"rap# (c) is t#at cancllation 4ct* *stroin" t# instru%nt it#r tarin" it up, urnin" it, or -ritin" t# -or* cancll* on t# instru%nt+ 7# act o$ *stroin" t# instru%nt %ust also %a* t# #ol*r o$ t# instru%nt intntionall+ inc !O.>6 $ail* to "t ack possssion o$ t# post3 *at* c#cks, t# intntional cancllation o$ t# sai* c#cks is alto"t#r i%possil+ On t# ot#r #an*, t# acts -#ic# -ill *isc#ar" a si%pl contract $or t# pa%nt o$ %on un*r para"rap# (*) ar *tr%in* ot#r Gistin" l"islations sinc ction 119 *os not spci$ -#at t#s acts ar, +"+, Art+ 121 o$ t# 6iil 6o* -#ic# nu%rats t# %o*s o$ Gtin"uis#in" oli"ations+ A"ain, non o$ t# %o*s outlin* t#rin is applical in t# instant cas as ction 119 cont%plats o$ a situation -#r t# #ol*r o$ t# instru%nt is t# cr*itor -#il its *ra-r is t# *tor+ rin, t# pa, 6orazon Tictoriano,
-as no lon"r !O.>6;s cr*itor at t# ti% t# @-lr -as rturn*+ 6orrspon*in"l, !O.>6 %a not unilatrall *isc#ar" #rsl$ $ro% #r liailit t# %r Gp*inc o$ -it#*ra-in" #r $un*s $ro% t# *ra- ank+ # is t#us lial as s# #as no l"al asis to Gcus #rsl$ $ro% liailit on #r c#cks to a #ol*r in *u cours+ Issue #-? =#t#r t# rquir%nt t#at >> s#oul* "i ?otic o$ Dis#onor to !O.>6 is in*ispnsal+ @eld #-? 7# n* $or notic is not asolutC t#r ar Gcptions un*r ction 110 o$ t# ?"otial >nstru%nts .a-+ ction 110 (=#n notic n* not "in to *ra-r) proi*s t#at ?otic o$ *is#onor is not rquir* to "in to t# *ra-r in t# $ollo-in" cass: (a) =#r t# *ra-r an* t# *ra- ar t# sa% prsonC () =#n t# *ra- is a ctitious prson or a prson not #ain" capacit to contractC (c) =#n t# *ra-r is t# prson to -#o% t# instru%nt is prsnt* $or pa%ntC (*) =#r t# *ra-r #as no ri"#t to Gpct or rquir t#at t# *ra- or accptor -ill #onor t# instru%ntC () =#r t# *ra-r #a* countr%an** pa%nt+ >n**, !O.>6; actuations la %uc# to *sir*+ # *i* not rtri t# c#cks -#n s# rturn* t# @-lr+ # si%pl -it#*r- #r $un*s $ro% #r *ra- ank an* trans$rr* t#% to anot#r to protct #rsl$+ A$tr -it#*ra-in" #r $un*s, s# coul* not #a Gpct* #r c#cks to #onor*+ >n ot#r -or*s, s# -as
rsponsil $or t# *is#onor o$ #r c#cks, #nc, t#r -as no n* to sr #r ?otic o$ Dis#onor, -#ic# is si%pl rin"in" to t# kno-l*" o$ t# *ra-r or in*orsr o$ t# instru%nt, it#r rall or -ritin", t# $act t#at a spci* instru%nt, upon propr proc*in"s takn, #as not n accpt* or #as not n pai*, an* t#at t# part noti* is Gpct* to pa it+ >n a**ition, t# ?"otial >nstru%nts .a-as nact* $or t# purpos o$ $acilitatin", not #in*rin" or #a%prin" transactions in co%%rcial papr+ 7#us, t# sai* statut s#oul* not ta%pr* -it# #ap#azar*l or li"#tl+ ?or s#oul* it rus#* asi* in or*r to %t t# ncssitis in a sin"l cas+ 7# #ol*r -#o taks t# n"otiat* papr %aks a contract -it# t# partis on t# $ac o$ t# instru%nt+ 7#r is an i%pli* rprsntation t#at $un*s or cr*it ar aailal $or t# pa%nt o$ t# instru%nt in t# ank upon -#ic# it is *ra-n+ 6onsquntl, t# -it#*ra-al o$ t# %on $ro% t# *ra- ank to aoi* liailit on t# c#cks cannot pr@u*ic t# ri"#ts o$ #ol*rs in *u cours+ rin, suc# -it#*ra-al rn*rs t# *ra-r, !oulic, lial to >>, a #ol*r in *u cours o$ t# c#cks+ >> coul* not Gpct pa%nt as !O.>6 l$t no $un*s -it# t# *ra- ank to %t #r oli"ation on t# c#cks, so t#at ?otic o$ Dis#onor -oul* $util+ Asia 4an6in= Corporation vs. )avier !R *+%&*' $ April *+#(First Diision, Aancna (J): 0 concur, 1 ot* $or rrsal, 1 took no part
Facts: On 1 !a 192, ala*or B+ 6#as *r- a c#ck on t# &#ilippin ?ational Bank (&?B) $or &11, in $aor o$ .a >nsular, a concrn *oin" usinss in t#is cit+ 7#is c#ck -as n*ors* t# li%it* partnrs o$ .a >nsular, an* t#n *posit* ala*or B+ 6#as in #is currnt account -it# Asia Bankin" 6orporation+ 7# *posit -as %a* on 10 Jul 192+ On 25 Jun 192, ala*or B+ 6#as *r- anot#r c#ck $or &18,85+ on &?B, in $aor o$ .a >nsular+ 7#is c#ck -as also n*ors* t# li%it* partnrs o$ .a >nsular, an* -as lik-is *posit* 6#as in #is currnt account -it# Asia Bankin", on Jul 192+ 7# a%ount rprsnt* ot# c#cks -as us* 6#as a$tr t# -r *posit* in Asia Bankin", *ra-in" c#cks on t# lattr+ usquntl t#s c#cks -r prsnt* Asia Bankin" to &?B $or pa%nt, ut t# lattr r$us* to pa on t# "roun* t#at t# *ra-r, 6#as, #a* no $un*s t#rin+ Asia Bankin" rou"#t t# action a"ainst Juan Jair, as n*orsr, $or t# pa%nt o$ t# alu o$ ot# c#cks+ 7# lo-r court sntnc* Jair to pa Asia Bankin" &11,, upon t# c#ck o$ 1 !a 192, -it# intrst t#ron at 9 pr annu% $ro% 1 Jul 192, an* &18,8+0 on t# c#ck o$ 25 Jun 192, -it# intrst t#ron at 9 pr annu% $ro% 5 Au"ust 192+ Fro% t#is @u*"%nt t# *$n*ant appal*+ >ssu:
=#t#r JairMs liailit as n*ors* o$ t# c#cks in qustion -as Gtin"uis#*+ l*: ction 89 o$ t# ?"otial >nstru%nts .a- (Act ?o+ 21) proi*s t#at, -#n a n"otial instru%nt is *is#onor* $or non3accptanc or non3pa%nt, notic t#ro$ %ust "in to t# *ra-r an* o$ ac# o$ t# n*orsrs, an* t#os -#o ar not noti* t#at t# *ocu%nt -as *is#onor*+ 7#n, un*r t# "nral principl o$ t# la- o$ proc*ur, it -ill incu%nt upon Asia Bankin", -#o sks to n$orc Jai-;s liailit upon t#s c#cks as n*orsr, to stalis# sai* liailit proin" t#at notic -as "in to Jair -it#in t# ti%, an* in t# %annr, rquir* t# lat#at t# c#cks in qustion #a* n *is#onor*+ >$ t#s $acts ar not pron, Asia Bankin" #as not su'cintl stalis#* Jair;s liailit+ 7#r is no proo$ in t# rcor* tn*in" to s#o- t#at plainti4 "a an notic -#atsor to t# *$n*ant t#at t# c#cks in qustion #a* n *is#onor*, an* t#r$or it #as not stalis#* its caus o$ action+ 7# upr% 6ourt rrs* t# @u*"%nt appal* $ro% an* asol* Jair $ro% t# co%plaint -it#out spcial pronounc%nt as to costs+ N2co Sales Corporation vs. 4A 3inance Corp. !R ,*9+$' *9 Au=ust *++*con* Diision, &aras (J): 0 concur
Facts:
?co als 6orporation -#os prsi*nt an* "nral %ana"r is Huno Uao, is n"a"* in t# usinss o$ sllin" construction %atrials -it# principal o'c in Daao 6it+ o%ti% in 198, t# rot#rs antia"o an* Hnato Frnan*z, ot# actin" in #al$ o$ ans#ll 6orporation, approac#* Huno Uao $or cr*it acco%%o*ation+ 7# rqust* ?co, t#ru Uao, to "rant ans#ll *iscountin" priil"s -#ic# ?co #a* -it# BA Financ 6orporation+ Uao apparntl acquisc*, #nc on or aout 15 ?o%r 198, t# Frnan*zs -nt to Uao $or t# purpos o$ *iscountin" ans#ll;s post3*at* c#ck -#ic# -as a B&>3Daao Branc# 6#ck 09908 *at* 1 Fruar 199 $or t# a%ount o$ &,++ 7# sai* c#ck -as paal to ?co+ Follo-in" t# *iscountin" procss a"r* upon, ?co, t#ru Uao, n*ors* t# c#ck in $aor o$ BA Financ+ 7#ra$tr, BA Financ issu* a c#ck paal to ?co -#ic# n*ors* it in $aor o$ ans#ll+ ans#ll t#n %a* us o$ an*or n"otiat* t# c#ck+ acco%panin" t# Gc#an" o$ c#cks -as a D* o$ Assi"n%nt Gcut* ?co in $aor o$ BA Financ -it# t# con$or%it o$ ans#ll+ ?co -as rprsnt* Huno Uao, -#il ans#ll -as rprsnt* t# Frnan*z rot#rs+ n*r t# sai* D*, t# su@ct o$ t# *iscountin" -as t# a$orcit* c#ck+ At t# ack t#ro$ an* o$ r ** o$ assi"n%nt -as t# 6ontinuin" urts#ip A"r%nt -#r t# Frnan*zs uncon*itionall "uarant* to BA Financ t# $ull, $ait#$ul an* pro%pt pa%nt an* *isc#ar" o$
an an* all in*t*nss o$ ?co+ 7# B&> c#ck, #o-r, -as *is#onor* t# *ra- ank upon prsnt%nt $or pa%nt+ BA Financ i%%*iatl rport* t# %attr to t# Frnan*zs -#o t#rupon issu* a sustitut c#ck *at* 19 Fruar 199 $or t# sa% a%ount in $aor o$ BA Financ+ >t -as a curit Bank an* 7rust 6o%pan c#ck arin" t# nu%r 1815, -#ic# -as a"ain *is#onor* -#n it -as prsnt* $or pa%nt+ Dspit rpat* *%an*s, ?co an* t# Frnan*zs $ail* to sttl t# oli"ation -it# BA Financ, t#us pro%ptin" t# lattr to institut an action in court+ ?co an* t# Frnan*zs, *spit #ain" n sr* -it# su%%ons an* copis o$ t# co%plaint, $ail* to l t#ir ans-r an* -r consquntl *clar* in *$ault+ On 1 !a 198, t# lo-r court rul* in $aor o$ BA Financ or*rin" t#% to pa t# $or%r @ointl an* srall, t# su% o$ &5,5+ plus 10 intrst pr annu% $ro% 1 Jul 199 an* attorn;s $s in t# a%ount o$ &,+ as -ll as t# costs o$ suit+ ?co, #o-r, %o* to st asi* t# or*r o$ *$ault, to #a its ans-r a*%itt* an* to al to i%pla* ans#ll+ 7# prar -as "rant* t#rou"# an or*r *at* 2 Jun 198, -#rin t# *cision o$ t# court -as st asi* onl as r"ar*s ?co+ 7rial nsu* onc %or until t# court rac#* a scon* *cision, or*rin" ?co to pa BA Financ &,+ as principal oli"ation, plus intrst t#ron at t# rat o$ 10 pr annu% $ro% 1 Fruar 199 until $ull
pai*C t# a%ount o$ 1,+ as an* $or attorn;s $sC an* on3t#ir* (1) o$ t# costs o$ t# suit+ =it# rspct to t# Frnan*zs, t# *cision o$ 1 !a 198 stoo*+ On appal, t# appllat court also up#l* BA Financ ut %o*i* t# lo-r court;s *cision or*rin" t#at t# intrst s#oul* run $ro% 19 Fruar 199 until pai* an* not $ro% 1 Fruar 199+ ?co;s susqunt %otion $or rconsi*ration -as *ni*+ ?co l* t# ptition $or ri- on crtiorari+ >ssu: =#t#r ?co -as actuall *isc#ar"* o$ its liailit or t# B76 c#ck -#n BA Financ $ail* to "i it a notic o$ *is#onor+ l*: ?O+ ?co;s prtnsion t#at it #a* not n noti* o$ t# $act o$ *is#onor is li* not onl t# $or%al *%an* lttr ut also t# n*in"s o$ t# trial court t#at Huno Uao o$ ?co an* t# Frnan*z Brot#rs o$ ans#ll #a* $rqunt contacts $or, *urin" an* a$tr t# *is#onor+ !or i%portantl, it $ails to raliz t#at $or as lon" as t# cr*it r%ains outstan*in", it s#all continu to lial to BA Financ as its assi"nor+ 7# *is#onor o$ an assi"n* c#ck si%pl strsss its liailit an* t# $ailur to "i a notic o$ *is#onor -ill not *isc#ar" it $ro% suc# liailit+ 7#is is caus t# caus o$ action st%s $ro% t# rac# o$ t# -arrantis %o*i* in t# D* o$ Assi"n%nt, an* not $ro% t# *is#onorin" o$ t# c#ck alon
PACI3ICO 4. ARCEO' )R' )r. vs. People o0 the Philippines' !.R. No. *$#9$*' *, )ul2 #%%9
FA67: On !arc# 10, 1991, Nptitionr, otain* a loan $ro% priat co%plainant Josno 6nizal in t# a%ount o$ &1,++ ral -ks t#ra$tr, Nptitionr otain* an a**itional loan o$ &5,+ $ro% N6nizal+ N&titionr t#n issu* in $aor o$ 6nizal, Bank o$ t# &#ilippin >slan*s N(B&>) 6#ck ?o+ 1255, post*at* Au"ust 0, 1991, $or &15,+, at 6nizalMs #ous locat* at &ana Anu, /uzon 6it+ =#n Au"ust 0, 1991 ca%, N6nizal *i* not *posit t# c#ck i%%*iatl caus Nptitionr pro%is* N t#at # -oul* rplac t# c#ck -it# cas#+ uc# pro%is -as %a* rall sn () ti%s+ =#n #is patinc ran out, N6nizal rou"#t t# c#ck to t# ank $or ncas#%nt+ 7# #a* o'c o$ t# Bank o$ t# &#ilippin >slan*s t#rou"# a lttr *at* Dc%r 5, 1991, in$or%* N6nizal t#at t# c#ck ounc* caus o$ insu'cint $un*s+ 7#ra$tr, N6nizal -nt to t# #ous o$ Nptitionr to in$or% #i% o$ t# *is#onor o$ t# c#ck ut N6nizal $oun* out t#at Nptitionr #a* l$t t# plac+ o, N6nizal r$rr* t# %attr to a la-r -#o -rot a lttr "iin" Nptitionr t#r *as $ro% rcipt t#ro$ to pa t# a%ount o$ t# c#ck+ N&titionr still $ail* to %ak "oo* t# a%ount o$ t# c#ck+ As a consqunc,
N6nizal Gcut* on Januar 2, 1992 $or t# o'c o$ t# 6it &roscutor o$ /uzon 6it #is a'*ait an* su%itt* *ocu%nts in support o$ #is co%plaint $or Nsta$a an* Niolation o$ NB& 22 a"ainst Nptitionr+ A$tr *u insti"ation, t#is cas $or Niolation o$ NB& 22 -as l* a"ainst Nptitionr on !arc# 2, 1992+ 7# c#ck in qustion an* t# rturn slip -r #o-r lost N6nizal as a rsult o$ a r t#at occurr* nar #is rsi*nc on pt%r 1, 1992+ N6nizal Gcut* an A'*ait o$ .oss r"ar*in" t# loss o$ t# c#ck in qustion an* t# rturn slip+ 7# trial, ptitionr -as $oun* "uilt as c#ar"*, t# appllat court a'r%* t# trial courtMs *cision in toto >E: =O? ptitionr is #l* lial $or t# *is#onor o$ t# c#ck caus it -as prsnt* on* t# 93*a prio* proi** un*r t# la-+ E.D: 7# 6ourt rul* t#at t# 93*a prio* proi** in t# la- is not an l%nt o$ t# o4ns+ ?it#r *os it *isc#ar" ptitionr $ro% #is *ut to %aintain su'cint $un*s in t# account -it#in a rasonal ti% $ro% t# *at in*icat* in t# c#ck+ Accor*in" to currnt ankin" practic, t# rasonal prio* -it#in -#ic# to prsnt a c#ck to t# *ra- ank is siG %ont#s+ 7#ra$tr, t# c#ck co%s stal an* t# *ra-r is *isc#ar"* $ro% liailit t#ron to t# Gtnt o$ t# loss caus* t# *la+ 7#us, 6nizalMs prsnt%nt o$ t# c#ck to t# *ra- ank 12 *as ($our
%ont#s) a$tr its issu -as still -it#in t# allo-al prio*+ &titionr -as $r* nit#r $ro% t# oli"ation to kp su'cint $un*s in #is account nor $ro% liailit rsultin" $ro% t# *is#onor o$ t# c#ck+ 7# "raa%n o$ t# o4ns is t# act o$ *ra-in" an* issuin" a -ort#lss c#ck+ nc, t# su@ct o$ t# inquir is t# $act o$ issuanc or Gcution o$ t# c#ck, not its contnt+ r, t# *u Gcution an* Gistnc o$ t# c#ck -r su'cintl stalis#*+ 6nizal tsti* t#at # prsnt* t# ori"inals o$ t# c#ck, t# rturn slip an* ot#r prtinnt *ocu%nts $or t# O'c o$ t# 6it &roscutor o$ /uzon 6it -#n # Gcut* #is co%plaint3 a'*ait *urin" t# prli%inar insti"ation+ 7# 6it &roscutor $oun* a (rima %a)ie cas a"ainst ptitionr $or iolation o$ B& 22 an* l* t# corrspon*in" in$or%ation as* on t# *ocu%nts+ Alt#ou"# t# c#ck an* t# rturn slip -r a%on" t# *ocu%nts lost 6nizal in a r t#at occurr* nar #is rsi*nc on pt%r 1, 1992, # -as nrt#lss al to a*quatl stalis# t# *u Gcution, Gistnc an* loss o$ t# c#ck an* t# rturn slip in an a'*ait o$ loss as -ll as in #is tsti%on *urin" t# trial o$ t# cas+ !oror, ptitionr #i%sl$ a*%itt* t#at # issu* t# c#ck+ nr *ni* t#at t# c#ck -as prsnt* $or pa%nt to t# *ra-
ank an* -as *is#onor* $or #ain" n *ra-n a"ainst insu'cint $un*s+
Allied 4an6in= vs. CA' !! SportsBear' ** )ul2 #%%9
FA67: On Januar , 1981, ptitionr Alli* Bank, !anila (A..>ED) purc#as* EGport Bill ?o+ BDO38132 in t# a%ount o$ ]2,85+ $ro% rspon*nt <+<+ ports-ar !$"+ 6orporation (<<)+ 7# ill, *ra-n un*r a lttr o$ cr*it ?o+ BB0509 cor* !nMs Talolin 7rainin" uit t#at -as in transit to =st <r%an (ni"r ia Hottr*a%) un*r 6ont+ `299+ 7# Gport ill -as issu* 6#kian" First Bank .t*+, on"kon"+ =it# t# purc#as o$ t# ill, A..>ED cr*it* << t# pso quialnt o$ t# a$or%ntion* ill a%ountin" to &151,00+52 an* t# rcipt o$ -#ic# -as ackno-l*"* t# lattr in its lttr *at* Jun 22, 1981+ On t# sa% *at, rspon*nts ?ari ntrnational .t*+ (Alcron) Gcut* t#ir rspcti .ttrs o$ ED %a Gtn* to <<+ =#n
A..>ED n"otiat* t# Gport ill to 6#kian", pa%nt -as r$us* *u to so% %atrial *iscrpancis in t# *ocu%nts su%itt* << rlati to t# Gportation cor* t# lttr o$ cr*it+ 6onsquntl, A..>ED *%an** pa%nt $ro% all t# rspon*nts as* on t# .ttrs o$ ED+ o-r, rspon*nts r$us* to pa, pro%ptin" A..>ED to l an action $or a su% o$ %on+ Hspon*nt <<, as t# nciar o$ t# Gport ill, insta* o$ "oin" to 6#kian" First Bank .t*+ (issuin" ank), -nt to ptitionr A..>ED, to #a t# Gport ill purc#as* or *iscount*+ B$or A..>ED a"r* to purc#as t# su@ct Gport ill, it rquir* rspon*nts ?ari ED to rspon*nt <<+N9 7# surt also contain* a claus -#r sai* surtis -ai protst an* notic o$ *is#onor o$ an an* all suc# instru%nts, loans, a*ancs, cr*its an*or oli"ations+N1
7#s lttrs o$ "uarant an* surt ar no- t# asis o$ t# ptitionrMs action+ >E: =#t#r or not rspon*nts ?ari, D Tilla an* Alcron ar lial un*r t# .ttrs o$ nstru%nts .a- prtainin" to in*orsrs, rli* on rspon*nts, is not prtinnt to t#is cas+ 7#r ar -ll3*n* *istinctions t-n t# contract o$ an in*orsr an* t#at o$ a "uarantorsurt o$ a co%%rcial papr, -#ic# is -#at is inol* in t#is cas+ 7# contract o$ in*ors%nt is pri%aril t#at o$ trans$r, -#il t# contract o$ "uarant is t#at o$ prsonal scurit+N10 7# liailit o$ a "uarantorsurt is roa*r t#an t#at o$ an in*orsr+ nlss t# ill is pro%ptl prsnt* $or pa%nt at %aturit an* *u notic o$ *is#onor "in to t# in*orsr -it#in a rasonal ti%, # -ill *isc#ar"* $ro% liailit t#ron+N15 On t# ot#r #an*, Gcpt -#r rquir* t# proisions o$ t# contract o$ surts#ip, a *%an* or notic o$ *$ault is not rquir* to G t# surtMs liailit+ N1 cannot co%plain t#at t# cr*itor #as not noti* #i% in t# asnc o$ a spcial a"r%nt to t#at 4ct in t# contract o$ surts#ip+N1 7#r$or, no protst on t# Gport ill is ncssar to c#ar" all t# rspon*nts @ointl an* srall lial -it# <+<+
ports-ar sinc t# rspon*nts #l* t#%sls lial upon *%an* in cas t# instru%nt -as *is#onor* an* on t# surt, t# n -ai* notic o$ *is#onor as stipulat* in t#ir .ttrs o$
IG. C@ECHS 4ataan Ci=ar vs. CA' #(% SCRA 9$1
Facts: Bataan 6i"ar L 6i"artt Factor, >nc+ (B66F>), a corporation inol* in t# %anu$acturin" o$ ci"artts, n"a"* on o$ its supplirs, Iin" 7i% &ua <or" (<or" Iin"), to *lir 2, als o$ toacco la$ startin" Octor 198+ >n consi*ration t#ro$, B66F>, on 1 Jul 198 issu* cross* c#cks post *at* so%ti% in !arc# 199 in t# total a%ount o$ &82,++ Hlin" on t# supplir;s rprsntation t#at # -oul* co%plt *lir -it#in t#r %ont#s $ro% 5 Dc%r 198, B66F> a"r* to purc#as a**itional 2,5 als o$ toacco las, *spit t# supplir;s $ailur to *lir in accor*anc -it# t#ir arlir a"r%nt+ A"ain B66F> issu* post*at* cross* c#cks in t# total a%ount o$ &1,1,+, paal so%ti% in pt%r 199+ Durin" t#s ti%s, <or" Iin" -as
si%ultanousl *alin" -it# tat >nst%nt ous, >nc+ (>>) On 19 Jul 198, # sol* at a *iscount c#ck 76B7 55182 arin" an a%ount o$ &10,+, post *at* 1 !arc# 199, *ra-n B66F>, na%in" <or" Iin" as pa to >>+ On Dc%r 19 an* 2, 198, # a"ain sol* to >> c#cks 76B7 89 L 898, ot# in t# a%ount o$ &1,+, post *at* pt%r 15 L , 199 rspctil, *ra-n B66F> in $aor o$ <or" Iin"+ >n as %uc# as <or" Iin" $ail* to *lir t# als o$ toacco la$ as a"r* *spit B66F>;s *%an*, B66F> issu* on !arc# 199, a stop pa%nt or*r on all c#cks paal to <or" Iin", inclu*in" c#ck 76B7 55182+ usquntl, stop pa%nt -as also or*r* on c#cks 76B7s 89 L 898 on pt%r 10 L 28, 199, rspctil, *u to <or" Iin";s $ailur to *lir t# toacco las+ E4orts o$ >> to collct $ro% B66F> #ain" $ail*, it institut* t# cas $or collction on t#r unpai* c#cks, na%in" onl B66F> as part *$n*ant+ 7# trial court pronounc* >> as #ain" a ali* clai% in" a #ol*r in *u cours+ >t $urt#r sai* t#at t# non3inclusion o$ Iin" 7i% &ua <or" as part *$n*ant is i%%atrial in t# cas, sinc #, as pa, is not an in*ispnsal part+ 7# 6ourt o$ Appals a'r%* t# *cision o$ t# trial court+ B66F> l* t# ptition $or ri-+
>ssu:
=#t#r >>, a scon* in*orsr, a #ol*r o$ cross* c#cks, is a #ol*r in *u cours, to al to collct $ro% t# *ra-r, B66F>+ l*: 7# ?"otial >nstru%nts .a- stats -#at constituts a #ol*r in *u cours, i++ A #ol*r in *u cours is a #ol*r -#o #as takn t# instru%nt un*r t# $ollo-in" con*itions: (a) 7#at it is co%plt an* r"ular upon its $acC () 7#at # ca% t# #ol*r o$ it $or it -as or*u, an* -it#out notic t#at it #a* n priousl *is#onor*, i$ suc# -as t# $actC (c) 7#at # took it in "oo* $ait# an* $or aluC (*) 7#at at t# ti% it -as n"otiat* to #i% # #a* no notic o$ an inr%it in t# instru%nt or *$ct in t# titl o$ t# prson n"otiatin" it+ ction 59 o$ t# ?>. $urt#r stats t#at r #ol*r is *%* pri%a $aci a #ol*r in *u cours+ o-r, -#n it is s#o-n t#at t# titl o$ an prson -#o #as n"otiat* t# instru%nt -as *$cti, t# ur*n is on t# #ol*r to pro t#at # or so% prson un*r -#o% # clai%s, acquir* t# titl as #ol*r in *u cours+ 6rossin" o$ c#cks s#oul* put t# #ol*r on inquir an* upon #i% *ols t# *ut to ascrtain t# in*orsr;s titl to t# c#ck or t# natur o$ #is possssion+ Failin" in t#is rspct, t# #ol*r is *clar* "uilt o$ "ross n"li"nc a%ountin" to l"al asnc o$ "oo* $ait#, contrar to c+ 52(c) o$ t# ?"otial >nstru%nts .a-, an* as suc# t# consnsus o$ aut#orit is to t# 4ct t#at t# #ol*r o$ t# c#ck is not a
#ol*r in *u cours+ rin, B66F>;s *$ns in stoppin" pa%nt is as "oo* to >> as it is to <or" Iin"+ Bcaus, rall, t# c#cks -r issu* -it# t# intntion t#at <or" Iin" -oul* suppl B66F> -it# t# als o$ toacco la$+ 7#r in" $ailur o$ consi*ration, >> is not a #ol*r in *u cours+ 6onsquntl, B66F> cannot oli"* to pa t# c#cks+ (?ot: >t *os not %an, #o-r, t#at >> coul* not rcor $ro% t# c#cks+ 7# onl *isa*anta" o$ a #ol*r -#o is not a #ol*r in *u cours is t#at t# instru%nt is su@ct to *$nss as i$ it -r non3n"otial+ nc, >> can collct $ro% t# i%%*iat in*orsr, <or" Iin"+) Stelco Mar6etin= vs. CA !R +9*9%' *, )une *++# con* Diision, ?arasa (J)
Facts: tlco !arktin" 6orporation sol* stl ars an* <> -irs to HU. 6onstruction >nc+ -ort# &12,859+1+ HU. "a tlcoMs Psistr corporation,Q Ar%stron" >n*ustris, a !troBank c#ck $ro% tl-l* 6orporation (7# c#ck -as issu* apparntl tl-l*Ms &rsi*nt &tr Ha$al .i%son to Ho%o .i%, &rsi*nt o$ HU. an* .i%sonM $rin*, -a o$ acco%%o*ation, as a "uarant an* not in pa%nt o$ an oli"ation)+ =#n Ar%stron" *posit* t# c#ck at its ank, it -as *is#onor* caus it -as *ra-n a"ainst insu'cint $un*s+ =#n so *posit*, t# c#ck or 2
in*ors%nts, i++ HU. an* Ar%stron"+ A cri%inal cas -as institut* a"ainst .i%son, tc+ $or iolation o$ B& 22, usquntl, tlco l* a ciil cas a"ainst HU. an* tl-l* to rcor t# alu o$ t# stl pro*ucts+ >ssu: =#t#r tlco -as a #ol*r in *u cours o$ t# c#ck issu* tl-l*+ l*: 7# rcor*s *o not s#o- an intrntion or participation tlco in an %annr or $or% -#atsor in t# transaction inolin" t# c#ck, or an co%%unication o$ an sort t-n tl-l* an* tlco, or t-n it#r o$ t#% an* Ar%stron" >n*ustris, at an ti% $or t# *is#onor o$ t# c#ck+ 7# rcor* *os s#o- t#at a$tr t# c#ck -as *posit* an* *is#onor*, tlco ca% into possssion o$ it in so% -a+ tlco cannot t#us *%* a #ol*r o$ t# c#ck $or alu as it *os not %t t-o ssntial rquisits prscri* t# statut, i++ t#at it *i* not co% Pt# #ol*r o$ it $or it -as or*u, an* -it#out notic t#at it #a* n priousl *is#onor*,Q an* t#at it *i* not tak t# c#ck Pin "oo* $ait# an* $or alu+Q State Invest8ent @ouse vs. CA' *,& SCRA (** 3acts? S#ortl $or 5 pt%r 198, ?ikatuna =oo* >n*ustris, >nc+ (?=>>)
rqust* $or a loan $ro% arris 6#ua+ 7# lattr a"r* to "rant t# sa% su@ct to t# con*ition t#at t# $or%r s#oul* -ait until Dc%r 198 -#n # -oul* #a t# %on+ >n i- o$ t#is a"r%nt, Anita &na 6#ua (arris 6#ua;s -i$) issu* cross* c#cks paal to ?=>> all post*at* 22 Dc%r 198+ 7# total alu o$ t# post*at* c#cks a%ount* to & 299,05++ usquntl, ?=>> ntr* into an a"r%nt -it# tat >nst%nt ous, >nc+ (>>) -#r $or an* in consi*ration o$ t# su% o$ &l,0,02+91 un*r a ** o$ sal, t# $or%r assi"n* an* *iscount* -it# >> 11 post*at* c#cks inclu*in" t# post*at* c#cks issu* &\a 6#ua to ?=>>+ =#n t# t#r c#cks issu* &na 6#ua -r all"*l *posit* >>, t#s c#cks -r *is#onor* rason o$ insu'cint $un*s, stop pa%nt an* account clos*, rspctil+ >> clai%* t#at *spit *%an*s on &\a 6#ua to %ak "oo* sai* c#cks, t# lattr $ail* to pa t# sa% ncssitatin" t# $or%r to l an action $or collction a"ainst t# lattr an* #r #usan* $or t# H"ional 7rial 6ourt o$ !anila, Branc# YYYT>> (6iil 6as 823150)+ 7# spouss 6#ua l* a t#ir* part co%plaint a"ainst ?=>> $or ri%urs%nt an* in*%nication in t# nt t#at t# #l* lial to >>+ For $ailur o$ ?=>> to ans-r t# t#ir* part co%plaint *spit *u sric o$ su%%ons, t# lattr -as *clar* in *$ault+ On April 1980, t# lo-r court rn*r* @u*"%nt a"ainst t# spouss, or*rin" t#% to pa @ointl an* srall to >> & 229,05+ -it#
intrst at t# rat o$ 12 pr annu% $ro% 20 Fruar 1981 until $ull pai*C & 29,905+ as an* $or attorn;s $sC an* t# costs o$ suit+ On t# t#ir* part co%plaint, ?=>> -as or*r* to pa t# spouss all a%ounts sai* spouss %a pa to >> on account o$ t# cas+ On appal l* t# spouss (A63ntr%*iat Appllat 6ourt (no- 6ourt o$ Appals) rrs* t# lo-r court;s @u*"%nt in its *cision, *is%issin" t# co%plaint, -it# costs a"ainst >>+ >> l* t# ptition $or ri-+ Issue *-? =#t#r >> is a #ol*r in *u cours as to ntitl it to proc* a"ainst t# spouss 6#ua $or t# a%ount stat* in t# *is#onor* cross c#cks+ @eld *-? ?O+ ction 52(c) o$ t# ?"otial >nstru%nts .a- *ns a #ol*r in *u cours as on -#o taks t# instru%nt in "oo* $ait# an* $or alu+ On t# ot#r #an*, ction 52(*) proi*s t#at in or*r t#at on %a a #ol*r in *u cours, it is ncssar t#at at t# ti% t# instru%nt -as n"otiat* to #i% # #a* no notic o$ an *$ct in t# titl o$ t# prson n"otiatin" it+ o-r, un*r ction 59 r #ol*r is *%* pri%a $aci to a #ol*r in *u cours+ A*%itt*l, t# ?"otial >nstru%nts .ar"ulatin" t# issuanc o$ n"otial c#cks as -ll as t# li"#ts an* liailitis arisin" t#r$ro%, *os not %ntion cross* c#cks+ But t# 6ourt #as takn co"nizanc o$ t# practic t#at a c#ck -it# t-o paralll lins in t# uppr l$t
#an* cornr %ans t#at it coul* onl *posit* an* %a not conrt* into cas#+ 6onsquntl, suc# circu%stanc s#oul* put t# pa on inquir an* upon #i% *ols t# *ut to ascrtain t# #ol*r;s titl to t# c#ck or t# natur o$ #is possssion+ Failin" in t#is rspct, t# pa is *clar* "uilt o$ "ross n"li"nc a%ountin" to l"al asnc o$ "oo* $ait# an* as suc# t# consnsus o$ aut#orit is to t# 4ct t#at t# #ol*r o$ t# c#ck is not a #ol*r in "oo* $ait#+ Hlin" on t# rulin" in Oca%po + ntr%*iat Appllat 6ourt (no- 6ourt o$ Appals), corrctl luci*at* t#at t# 4cts o$ crossin" a c#ck ar: t# c#ck %a not ncas#* ut onl *posit* in t# ankC t# c#ck %a n"otiat* onl onc to on -#o #as an account -it# a ankC an* t# act o$ crossin" t# c#ck srs as a -arnin" to t# #ol*r t#at t# c#ck #as n issu* $or a *nit purpos so t#at # %ust inquir i$ # #as rci* t# c#ck pursuant to t#at purpos, ot#r-is # is not a #ol*r in *u cours+ Furt#r, t# appllat court sai* t#at -#n >> r*iscount* t# c#ck kno-in" t#at it -as a cross* c#ck # -as kno-in"l iolatin" t# ao-* intntion o$ crossin" t# c#ckC t#at #is $ailur to inquir $ro% t# #ol*r, ?=>>, t# purpos $or -#ic# t# t#r c#cks -r cross *spit t# -arnin" o$ t# crossin", prnts #i% $ro% in" consi*r* in "oo* $ait# an* t#us # is not a #ol*r in *u coursC t#at in" not a #ol*r in *u cours, >> -as su@ct to prsonal *$nss, suc# as lack o$
consi*ration t-n t# spouss an* ?=>> (no *posits -r %a*, #nc no loan -as %a*, #nc t# t#r c#cks ar -it#out consi*ration as pr ction 28, ?>.)C t#at ?=>> n"otiat* t# t#r c#cks in rac# o$ $ait# in iolation o$ ction 55, ?"otial >nstru%nts .a-, -#ic# is a prsonal *$ns aailal to t# *ra-r o$ t# c#ckC t#at suc# instru%nts ar %ntion* in ction 501 o$ t# 6o* o$ 6o%%rcC an* t#at t7# pa%nt %a* to a prson ot#r t#an t# ankr or institution s#all not G%pt t# prson on -#o% it is *ra-n, i$ t# pa%nt -as not corrctl %a*+ 7# upr% 6ourt a"r* -it# t# appllat court+
Papa vs. alencia !R *%&*11' #( )anuar2 *++1First Diision, Iapunan (J): concur
Facts: o%ti% in Jun 1982, A++ Talncia an* 6o+, >nc+ an* FliG &\arroo, l* -it# t# H"ional 7rial 6ourt o$ &asi", Branc# 151, a co%plaint $or spcic pr$or%anc a"ainst !ron 6+ &apa, in #is capacit as a*%inistrator o$ t# 7stat Estat o$ on An"la !+ Butt+ 7# co%plaint all"* t#at on 15 Jun 19, !ron 6+ &apa, actin" as attorn3in3$act o$ An"la !+ Butt, sol* to &\arroo, t#rou"# Talncia, a parcl o$ lan*, consistin" o$ 28+ squar %trs, locat* at cornr Htiro an* 6a*iz trts, .a .o%a, /uzon 6it, an* cor* 7rans$r 6rticat o$ 7itl 2899 o$ t# H"istr o$ D*s o$ /uzon
6itC t#at prior to t# all"* sal, t# sai* proprt, to"t#r -it# sral ot#r parcls o$ lan* lik-is o-n* Butt, #a* n %ort"a"* #r to t# Associat* Bankin" 6orporation (noAssociat* 6itizns Bank)C t#at a$tr t# all"* sal, ut $or t# titl to t# su@ct proprt #a* n rlas*, Butt pass* a-aC t#at *spit rprsntations %a* Talncia to t# ank to rlas t# titl to t# proprt sol* to &\arroo, t# ank r$us* to rlas it unlss an* until all t# %ort"a"* proprtis o$ t# lat Butt -r also r*%*C t#at in or*r to protct #is ri"#ts an* intrsts or t# proprt, &\arroo caus* t# annotation on t# titl o$ an a*rs clai% as i*nc* Entr ?o+ &E+ K 118732899, inscri* on 18 Januar 19+ 7# co%plaint $urt#r all"* t#at it -as onl upon t# rlas o$ t# titl to t# proprt, so%ti% in April 19, t#at Talncia an* &\arroo *iscor* t#at t# %ort"a" ri"#ts o$ t# ank #a* n assi"n* to on 7o%as .+ &arpana (no- *cas*), as spcial a*%inistrator o$ t# Estat o$ Ha%on &apa+ Jr+, on 12 April 19C t#at sinc t#n, &apa #a* n collctin" %ont#l rntals in t# a%ount o$ &8+ $ro% t# tnants o$ t# proprt, kno-in" t#at sai* proprt #a* alra* n sol* to Talncia an* &\arroo on 15 Jun 19C t#at *spit rpat* *%an*s $ro% sai* rspon*nts, &apa r$us* an* $ail* to *lir t# titl to t# proprt+ Talncia an* &\arroo pra* t#at &apa or*r* to *lir to &\arroo t# titl to t# su@ct proprt (767 2899)C to turn
or to t# lattr t# su% o$ &2,+ as accru* rntals as o$ April 1982, an* t# %ont#l rntal o$ &8+ until t# proprt is *lir* to &\arrooC to pa Talncia an* &\arroo t# su% o$ &2,+ as attorn;s $sC an* to pa t# costs o$ t# suit+ pon #is %otion, Dln Jao -as allo-* to intrn in t# cas+ !akin" co%%on caus -it# Talncia an* &\arroo, Jao all"* t#at t# su@ct lot -#ic# #a* n sol* to &\arroo t#rou"# Talncia -as in turn sol* to #i% on 2 Au"ust 19 $or t# su% o$ &1,5+, upon #is pain" arnst %on in t# a%ount o$ &5,++ For #is part, &apa, as a*%inistrator o$ t# 7stat Estat o$ Butt, l* a t#ir*3part co%plaint a"ainst spouss Arsnio B+ Hs an* A%an*a antos, t# -innin" i**rs in pulic auction sal #l* t# 6it 7rasurr o$ /uzon 6it -#n t# stat o$ Butt -as not al to pa t# ral stat taG o$ sai* proprt+ On 29 Jun 198, t# trial court rn*r* a *cision, allo-in" &apa to r*% $ro% t# Hs spouss an* or*rin" t# spouss to allo- t# $or%r to r*% t# proprt in qustion, pain" t# su% o$ 10,+ plus l"al intrst o$ 12 t#ron $ro% 2 Januar 198C or*rin" &apa to Gcut a D* o$ Asolut al in $aor o$ &\arroo corin" t# proprt in qustion an* to *lir pac$ul possssion an* n@o%nt o$ t# sai* proprt to &\arroo, $r $ro% an lins an* ncu%rancs, an* t#at s#oul* t#at
i%possil, $or an rason not attriutal to &apa, sai* &apa -as or*r* to pa to &\arroo t# su% o$ &05,+ plus l"al intrst o$ 12 $ro% 15 Jun 19C or*rin" &\arroo to Gcut an* *lir to intrnor a ** o$ asolut sal or t# sa% proprt, upon t# lattr;s pa%nt to t# $or%r o$ t# alanc o$ t# purc#as pric o$ &1,5+, an* t#at s#oul* t#at i%possil, &\arroo -as or*r* to pa Jao t# su% o$ &5,+ plus l"al intrst o$ 12 $ro% 2 Au"ust 19C an* or*rin" &apa to pa Talncia an* &\arroo t# a%ount o$ &5,+ $or an* as attorn;s $s an* liti"ation Gpnss+ &apa appal* t# a$orsai* *cision o$ t# trial court to t# 6ourt o$ Appals, all"in" a%on" ot#rs t#at t# sal -as nr consu%%at* as # *i* not ncas# t# c#ck (in t# a%ount o$ &0,+) "in Talncia an* &\arroo in pa%nt o$ t# $ull purc#as pric o$ t# su@ct lot+ %aintain* t#at -#at Talncia an* &\arroo #a* actuall pai* -as onl t# a%ount o$ &5,+ (in cas#) as arnst %on+ 7# Hs spouss, lik-is, appal* t# ao *cision+ o-r, t#ir appal -as *is%iss* caus o$ $ailur to l t#ir appllants; ri$+ On 2 Januar 1992, t# 6ourt o$ Appals rn*r* a *cision, a'r%in" -it# %o*ication t# trial court;s *cision, or*rin" &apa to *lir to Talncia an* &\arroo t# o-nr;s *uplicat o$ 767 2899 o$ An"la !+ Butt an* t# pac$ul possssion an* n@o%nt o$ t# lot in qustion or, i$ t# o-nr;s *uplicat crticat cannot
pro*uc*, to aut#oriz t# H"istr o$ D*s to cancl it an* issu a crticat o$ titl in t# na% o$ &\arrooC -it## costs a"ainst &apa+ &apa l* t# ptition $or ri- on crtiorari+ >ssu: =#t#r t# all"* sal o$ t# su@ct proprt #a* n consu%%at*, on t# prsu%ption t#at t# c#ck in t# a%ount o$ &0, -as ncas#*+ l*: Talncia an* &\arroo #a* "in &apa t# a%ounts o$ &5,+ in cas# on 20 !a 19, an* &0,+ in c#ck on 15 Jun 19, in pa%nt o$ t# purc#as pric o$ t# su@ct lot+ &apa #i%sl$ a*%its #ain" rci* sai* a%ounts, an* #ain" issu* rcipts t#r$or+ &apa;s assrtion t#at # nr ncas#* t# a$orsai* c#ck is not sustantiat* an* is at o**s -it# #is stat%nt in #is ans-r t#at # can no lon"r rcall t# transaction -#ic# is suppos* to #a #appn* 1 ars a"o+ A$tr %or t#an 1 ars $ro% t# pa%nt in part cas# an* in part c#ck, t# prsu%ption is t#at t# c#ck #a* n ncas#*+ n -ai* t# prsntation o$ oral i*nc+
pursuant to Articl 1209 o$ t# 6iil 6o*, t# rul is ot#r-is i$ t# *tor is pr@u*ic* t# cr*itor;s unrasonal *la in prsnt%nt+ 7# accptanc o$ a c#ck i%plis an un*rtakin" o$ *u *ili"nc in prsntin" it $or pa%nt, an* i$ # $ro% -#o% it is rci* sustains loss -ant o$ suc# *ili"nc, it -ill #l* to oprat as actual pa%nt o$ t# *t or oli"ation $or -#ic# it -as "in+ >t #as, lik-is, n #l* t#at i$ no prsnt%nt is %a* at all, t# *ra-r cannot #l* lial irrspcti o$ loss or in@ur unlss prsnt%nt is ot#r-is Gcus*+7#is is in #ar%on -it# Articl 1209 o$ t# 6iil 6o* un*r -#ic# pa%nt -a o$ c#ck or ot#r n"otial instru%nt is con*ition* on its in" cas#*, Gcpt -#n t#rou"# t# $ault o$ t# cr*itor, t# instru%nt is i%pair*+ 7# pa o$ a c#ck -oul* a cr*itor un*r t#is proision an* i$ its non3pa%nt is caus* #is n"li"nc, pa%nt -ill *%* 4ct* an* t# oli"ation $or -#ic# t# c#ck -as "in as con*itional pa%nt -ill *isc#ar"*+ 6onsi*rin" t#at Talncia an* &\arroo #a* $ulll* t#ir part o$ t# contract o$ sal *lirin" t# pa%nt o$ t# purc#as pric, t#, t#r$or, #a* t# ri"#t to co%pl &apa to *lir to t#% t# o-nr;s *uplicat o$ 767 2899 o$ An"la !+ Butt an* t# pac$ul possssion an* n@o%nt o$ t# lot in qustion
SINCERE >. ILLAN5EA' ptitionr, s+ MARLYN P. NITE' rspon*nt+
!.R. No. *$1#** )ul2 #&' #%%9 3ACTS? !ariln ?it, t# rspon*nt, otain* a loan $ro% ptitionr Tillanua an* as a scurit $or t# loan, s# issu* an AB6 c#ck (Asian ank 6orporation) t#rto+ t#rto+ 7# *at #o-r -as latr on c#an" ut -it# consnt o$ Tillanua+ pon prsnt%nt o$ c#ck ptitionr, it -as *is#onor* *u to %atrial altration, so rspon*nt ?it -#o alra* l$t t# countr, t#ru #r rprsntati, rprsntati, t#n insta* partiall sttl #r loan -it# t# a"r%nt t#at t# alanc -oul* paal on a latr *at+
o-r, onl siG () *as t#ra$tr, Tillanua institut* institut* an action $or su% o$ %on a"ainst AB6 ank $or t# $ull a%ount o$ *is#onor* c#ck -#r H76 rul* in #is $aor an* or*r* t# ank to pa Tillanua+ Onl t#n rspon*nt ?it $oun* out t#at #r account lack* suc# a%ount+ # -nt to 6A skin" to annul H76 or*r an* *cision, -#o rul* no- on #r $aor n*in" $rau* an* a* $ait# attn*ant on part o$ Tillanua+ nc t#is ptition+ ISS5E? =#t#r or not Ju*"%nt pro%ul"at* H76 -#ic# -as alra* satis* %a annull* an* st asi*R
@ELD?
upr% 6ourt n* $or $ or Hspon*nt !ariln ?it+ 1 Hspon* spon*nt nt ?it ?it %a %a aail aail o$ t# t# r%* o$ annul%nt o$ @u*"%nt un*r Hul 0 a Annu Annul% l%n ntt o$ o$ @u*" @u*"% %nt nt is a r%* in la- in*pn*nt o$ t# cas -#r t# @u*"%nt sou"#t to annull* is pro%ul"at*+ It )an be Ble7 b* one w$o was not a (art* to t$e )ase in w$i)$ t$e assaile7 8u7gment was ren7ere7. >$ t# t# or* or*in inar ar r% r%* *i is s o$ n- trial, appal, ptition $or rli$ or ot#r appropriat r%*is ar no lon"r aailal t#rou"# no $ault o$ t# ptitionr, annul%nt o$ or*rs an* *cision o$ H76 6ourt o$ appals is propr c >n t# t# cas cas at at ar ar,, s$e was not ma7e a (art* to t$e suit against #C. T$us, s$e was neit$er able to (arti)i(ate in t$e original (ro)ee7ings nor resort to t$e ot$er reme7ies be)ause t$e )ase was Ble7 w$en s$e was abroa7 * Annu Annul% l%n ntt o$ o$ @u*" @u*"% %nt nt %a %a as* onl on lack o$ @uris*iction an* Gtrinsic $rau* -#ic# prnts t# a""ri* part $ro% #ain" a trial or prsntin" #is cas to t# court, or is us* to procur t# @u*"%nt -it#out $air su%ission o$ t# contrors+ 7#is r$rs to
acts intn** to kp t# a As s# s# is is a par part t in int intr rst st unsuccss$ul part a-a $ro% -it#out -#o% no nal t# courts as -#n t#r is a *tr%ination can #a* o$ $als pro%is o$ co%pro%is an action+ or -#n on is kpt in 7# 7# a asnc snc o$ an i"noranc o$ t# suit+ in*ispnsal part rn*rs An* An* 6 6 up# up#ol ol* * 6AM 6AMs s n*i n*in" n" o$ all susqunt actions o$ t# Gtrinsinc $rau*+ 1st, court null an* oi* $or -ant o$ institutin" an action arl aut#orit to act, not onl as *as a$tr a co%pro%is #as to t# asnt partis ut n sttl* $or t# alanc n as to t#os prsnt+ o$ t# loan, clai%in" $or t# $ull an* -#ol a%ount o$ t# =#r$or, &tition Dni*+ loan t# $act t#at it -as E5ITA4LE"PCI4 v ON! alra* partiall pai*, o$ -#ic# Tillanua *i* not *n FA67: rciin", an* not i%pla*in" 7# cas ori"inat* -#n a crtain rspon*nt !ariln to a =arliza aran*, rlin" on t# ankMs part to t# cas kno-in" s# assuranc t#at #r *posits -r @ust l$t $or aroa*, to prnt prnt cr*it*, issu* t-o c#cks to rspon*nt #r $ro% opposin" t# clai%+ Ho-na On" *ra-n a"ainst t# $or%rMs 7#s ar i*nt i*nt o$ a* $ait# account -it# &6> Bank+ On t# sa% *a, an* $rau*ulnt intntion rspon*nt prsnt* t# sa% c#cks to &6> Bank $or conrsion into %ana"rMs 2 Also, Also, qual quall l i%port i%portant ant,, H7 H76 *cision %a annull* $or lack o$ c#cks, -#ic# t# ank oli"* to *o+ 7# nGt *a, On" *posit* t# c#cks in @uris*iction or t# prson o$ #r account -it# Equital Bank, rspon*nt ?it pursuant to #o-r s# latr rci* a c#ck prtinnt proision o$ ?"otial rturn3slip in$or%in" #r t#at &6> #a* instru%nts la- -#ic# sustantiall stopp* pa%nt o$ t# sai* c#cks in #ol*s t#at no priit o$ contract t# "roun* o$ Pirr"ular issuancQ+ t-n AB6 an* ptitionr Hspon*nt susquntl l* a Tillanua as t# contract o$ loan co%plaint $or su% o$ %on, *a%a"s, -as t-n Tillanua an* ?it+ an* attornMs $s a$tr $ailur &6> 7#us, ?o collction suit coul* Bank to #onor t# c#cks *spit prospr -it#out rspon*nt ?it *%an*s+&6> Bank arr* t#at t# -#o -as an in7is(ensable (art* account t# c#ck -as *ra-n a"ainst -as un*r Hul , c+ o$ t# Huls o$ alra* clos*, t#r$or t# asnc 6ourt+
o$ consi*ration+ 7# $urt#r clai% t#at t# in$or%* aran* an* On" aout t# situation an* rqust* t#at t# rturn t# c#cks+ pon $ailin" to appar at t# #arin", t# trial court *clar* &6> Bank in *$ault an* rul* in $aour o$ rspon*nt, a-ar*in" #r -it# *a%a"s, tc+7# H76 *ni* &6> Banks !+H+ an* t# 6A *ni* its appal+
is an or*r o$ t# ank to pa, *ra-n upon itsl$, co%%ittin" in 4ct its total rsourcs, rsourcs, int"rit, an* #onor #in* its issuanc+ Us, Us, not onl -as On" a #ol*r in *u cours ut %ost spciall a #ol*r $or alu+ 7# cas at ar $alls squarl -it# t# *nition o$ a #ol*rin *u cours, as *n* in sction 52 o$ t# ?>.
>E: =? t# H76 an* 6A -as corrct in #ol*in" t#at t#r -as consi*ration, t#r$or rspon*nt -as a #ol*r $or alu an* in *u cours+
SEC5RITY 4ANH S RC4C FA67: Januar 9, 1981: curit curit Bank an* 7rust 7rust 6o%pan (B76) issu* a %ana"rMs c#ck $or & 8!, paal to 6A, as proc*s o$ t# loan "rant* to
E.D: H"ar*in" H"ar*in" t# issu on consi*ration, t# court stat* t#at a %ana"rMs c#ck is on *ra-n t# ankMs %an"r upon t# ank itsl$+ 7# c#ck co%s t# pri%ar oli"ation o$ t# ank -#ic# issus it an* constituts it -rittn pro%is to pa upon *%an*+ !r issuanc o$ it is consi*r* accptanc t#ro$+ t#ro$+ uc# accptanc i%plis t#at t# c#ck is is *ra-n upon su'cint $un*s in t# #an*s o$ t# *ra- GGG, t# c#ck "oo*, s#all continu "oo*, an* in*in" on t# ank+Furt#r, &6> BankMs issuanc o$ t# %ana"rMs c#cks to On" c%nts t# lattrMs position as a #ol*r $or alu+ 7# court ritrat* t#at caus caus o$ t#ir pculiar c#aractr an* "nral us in co%%rc, %ana"rMs c#cks ar r"ar** sustantiall to as "oo* as t# %on it rprsnts (in ot#r -or*s it #as n "in alu)+ Furt#r, a %ana"rMs c#ck
*posit* 6ontinntal !anu$acturin" 6orporation (6!6) in its 6urrnt Account -it# Hizal 6o%%rcial Bankin" 6orporation 6orpora tion (H6B6)
>%%*iatl, H6B6 #onor* t# &8! c#ck an* allo-* 6!6 to -it#*ra-
Januar 12, 1981: <6D6 issu* a top &a%nt Or*r to B76 clai%in" t#at t# & 8! c#ck -as rlas* to a r* part %istak % istak
B76 B76 *is#onor* an* rturn* t# %ana"rMs c#ck to H6B6
Fruar 1, 1981: H6B6 l* a co%plaint $or *a%a"s a"ainst B76 -it# 6F> t#n trans$rr* to H76
*%* to #a n accpt* t# ank t#at crti* it
Follo-in" t# ruls o$ t# &#ilippin 6larin" ous, H6B6 an* B76 stopp* rturnin" t# c#cks to ac# ot#r+
B -a o$ a t%porar arran"%nt pn*in" rsolution o$ t# cas, t# & 8 ! c#ck -as quall *ii** t-n H6B6 an* B76
!a 9, 2: H76 in $aor o$ H6B6 6A: a'r%* -it# %o*ication H76 *cision a**in" intrst
>E: =? B76 s#oul* #l* lial $or its %ana"r;s c#ck
E.D: UE+ 6A a'r%*+ At t# outst, it %ust not* t#at t# qustion* c#ck issu* B76 is not @ust an or*inar c#ck ut a %ana"rMs c#ck+
As t# ankMs o-n c#ck, a %ana"rMs c#ck co%s t# pri%ar oli"ation o$ t# ank an* is accpt* in a*anc t# act o$ its issuanc
H6B6, in i%%*iatl cr*itin" t# a%ount o$ &8 %illion to 6!6Ms account, rli* on t# int"rit an* #onor o$ t# c#ck as it is r"ar** in co%%rcial transactions Jul 9, 198 !%oran*u%: anks -r "in t# *iscrtion to alloi%%*iat *ra-in"s on uncollct* *posits o$ %ana"rMs c#cks, a%on" ot#rs
%ana"rMs c#ck
i%portant t#at anks s#oul* "uar* a"ainst in@ur attriutal to n"li"nc or a* $ait# on its part
on *ra-n a ankMs %ana"r upon t# ank itsl$ sa% $ootin" as a crti* c#ck -#ic# is
ankin" usinss is i%prss* -it# pulic intrst, t# trust an* con*nc o$ t# pulic in it is o$ para%ount i%portanc #i"#st *"r o$ *ili"nc is Gpct*, an* #i"# stan*ar*s
o$ int"rit an* pr$or%anc ar rquir* o$ it
