Republic vs. Sema Wei 1. DBP extended a loan to Sema Wei 2.

Sema Wei, in return, executed and delivered a promissory note engaging to pay DBP or Order in the amount of 1,820,000 on or before June 24, 1983 with interest at 32% per annum. 3. Partial payments were made by Sema Wei, but a balance of 1,032, 450.02 remained, for which he issued 2 crossed checks payable to DBP drawn against China Banking Corp for the amount of 500,000 4. said 2 checks were allegedly NOT delivered to DBP or any of its authorized representatives 5. For reasons not know, checks suddenly ended up in the possession of one Lee Kian Huat who deposited the checks without DBPs indorsement (forged or otherwise) to the account of Plastic Corporation at Producers Bank in Balintawak 6. Branch Manager Cheng Uy then instructed cashier of Producers Bank to accept the checks for deposit and credit them to the account of Plastic Corp upon assurance that said transaction was legal and regular by Samsung Tung, President of Plastic- even if checks were crossed and no indorsement was found therein 7. Hence DBP filed a complaint to enforce payment of the promissory note and the 2 checks executed by Sema Wei to pay the balance due on the promissory note 8. RTC: dismissed for lack of cause of action 9. DBP: cause of action not based on collecting a sum of money as evidenced on the negotiable instrument, but based on a QUASI-DELICT- for damages based on fraudulent acts and bad faith of alternative respondents Issue: WON DBP has a cause of action against any or all of the defendants Held: 1. Section 16 of the NIL says that: Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto. Xxx 2. thus the payee of a negotiable instrument acquires no interest until it is delivered TO him 3. Requisites for a valid delivery: a. transfer of possession, actual or constructive from one person to another b. must have the intention to give effect to the instrument 4. otherwise, there can be no liability on the instrument

5. That the 2 checks were NOT delivered to the DBP- the payee- means that DBP has no cause of action against drawer Sima Wei or against any other respondent 6. attempt to base cause of action on quasi-delict: this cant happen on appeal 7. Nevertheless, Sima Wei is not yet discharged from his obligation to DBPissuance of the 2 checks not valid as payment because they were never delivered to DBP 8. and even if delivered, they produce no effect till encashed or their value is impaired through the fault of the creditor: none of these were alleged by Sema Wei and no evidence were presented to prove that she has been discharged from the obligation and DBP has a right to collect the balance 9. as to the other respondents, DBP has no cause of action against them: NO PRIVITY 10. since DBP never received the checks, DBP never owned them nor did it acquire interest therein, therefore DBP could not have been prejudiced: no rights violated since no rights vested in the first place 11. at most, it is Sema Wei that has cause of action against other respondents

Lim vs CA 1. Manuel and Rosita Lim, president and treasurer of Rigi Bilt Industries, involved in the business of fabrication and installation of building structures, were charged with 3 counts of estafa and 7 counts of BP 22 violations for allegedly issuing 7 Consolidated Bank and Trust Company DAIF checks for payment of several orders from Linton Commercial Company, their long time supplier, of mild steel plates, steel bars, Z purlins 2. William Yu Bin, VP and Sales Manager of Linton, testified that when the 7 checks were deposited with RCBC, said checks were dishonoured for insufficiency of funds with the additional notation payment stopped thereon 3. Despite receipt of notices of dishonour, repeated demands to pay remain unheeded 4. Salvador Alfonso, signature verifier of Solidbank, where the Lim Spouses maintained an account also testified as to the various reasons for the checks dishonour: PS, DAIF 5. Manuel Lim admitted having issued the checks but denied that the company had insufficient funds, presenting the bank ledger showing the accounts balance, and that some of the payments were stopped because the supplies delivered by Linton were not in accordance with specifications in the purchase order 6. RTC: both guilty of estafa and violation of BP 22, and that they are to indemnify Linton 7. CA: acquitted of estafa-checks were not made in payment of an obligation contracted at the time of their issuance, BP 22 violation affirmed

Republic Planters Bank vs CA 1. Shozo Yamaguchi and Fermin Canlas, President/COO and Treasurer of the Worldide Garment Manufacturing, were granted by a BOD Resolution to apply for credit facilities with RPB in the forms of export advances and letters of credit, trust receipts accommodations 2. RPB issued 9 promisory notes, uniformly worded 3. right bottom margin: signatures of both Yamaguchi and Canlas and above their printed names and an (in) his personal capacity typewritten below. At the bottom, it also said: please credit proceeds of this note to: Savings account of WWG 4. RPB filed complaint to collect sums of money covered by the 9 promissory notes with interests and penalty charges 5. information brought against WWG, but due to change of name: Pinch Manufacturing Corp, the charge was amended 5. Canlas filed an amended answer denying having issued the promissory notes because he wasnt an officer of PMC, only of WWG ; and that when he signed the promissory notes in behalf of WWG, they were in blank and the typewritten entries were not there yet when he signed Issue: 1. WON Canlas is solidarily liable with PMC and Yamaguchi Held: Yes. He is solidarily liable because: 1. NIL: persons who write their names on the face of promissory notes are makers and are liable as such a. where an instrument containing the words I promise to pay is signed by 2 or more persons, they are joint and severally liable b. the fact that a singular pronoun is used indicates that each of the co-signers is deemed to have made an independent singular promise to pay the note in full c. joint and several were used to describe the unconditional promise to pay to the order of RPB: all or even just one may be sued for enforcement d. as to the phrase: and (in) his personal capacity below the sgnatures- immaterial and will not affect the liability of Canlas e. that name changed from WWG to PMC does not extinguish the personality of the original corporation: not new corp, not successor, but same corp with diff name. no effect on identity of corp, its properties or liabilities.

f.

Astro 1. Astro was granted several loans by Philtrust amounting to 3,000,000 with interest, secured by 3 promissory notes 2. in each of the promissory notes, petitioner Roxas signed twice, as President of Astro and in his personal capacity 3. roxas also signed a Continuing Suretyship Agreement in favour of Philtrust bank, as President of Astro and as surety 4. Philguarantee, with the consent of Astro, then guaranteed in favour of Philtrust the payment of 70% of Astros loan, subject to the condition that upon payment by Philguarantee of said amount, it shall be subrogate Philtrust against Astro 5. Astro failed to pay, Philguarantee paid, and latter filed complaint to collect with Makati RTC 6. Roxas claims that he merely signed the same in blank and the phrases in his personal capacity and in his official capacity were fraudulently inserted without his knowledge 7. RTC ruled in favour of Philguarantee, ordering Roxas and Astro to pay the obligation jointly and severally. That if Roxas really intended to sign the instruments merely in his capacity as President of Astro, he should have signed only ONCE in the promissory note 8. CA affirmed the RTC decision. Roxas failed to explain why he signed 2x Issue: WON Roxas should be jointly and severally liable with Astro Held: Yes. 1. Roxas signed twice: first as president of Astro and second, in his personal capacity- he became co-maker of the promissory note and cannot escape liability arising from it 2. under NIL: persons who write their names on the face of promissory notes are makers, promising that they will pay to the order of the payee or any holder according to its tenor 3. even if personal capacity not there, he still signed the notes 2x 4. also, portions of his signatures covered portions of type-written words 5. roxas did not offer any explanation as to why he signed 2x, thus he failed to overcome the presumptions that private transactions are presumed to be fair and regular and that a person takes ordinary care of his concerns 6. hes a businessman who is presumed to take ordinary care of his concerns- he cannot be said to sign a document without first informing himself of its contents and consequences

7. not only did he execute notes on two different dates but he also signed twice a continuing suretyship agreement: this only re-enforced his solidary liability

San Carlos Milling 1. Baldwin, substitute of Cooper, revoked the power of Wilson relative to the dealings with the BPI, one of the banks where SCM maintains a deposit 2. Wilson conspired with one Alfredo Dolores, a messenger clerk, sent a cablegram in code to the company in Honolulu requesting a telegraphic transfer the China Banking Corp of Manila 100$ 3. Money was transferred and a note was forged with Baldwins name on it, requesting that the bank send a check in favour of the company when transfer is received 4. a managers check amounting to 201,000 Php (current exchange rate) payable to SMC or order was receipted by Dolores 5. on the same day, said check was deposited with the BPI with an indorsement saying that the check is for deposit to the credit account of SMC, signed by SMC, for agent 6. indorsemen to which the name of Baldwin was affixed was spurious 7. BPI then credited the current account of SMC, passed through clearing house where it was paid by China Banking Corporation 8. BPI Cashier received a letter, again w/ the spurious signature of Baldwin, directing the withdrawal and packing of P 200,000.00 cash. Dolores witnessed the counting and packing of the cash, and then withdrew the same. It must be noted that San Carlos never withdrew such large amounts from the BPI, and never under the sole supervision of Dolores. 9. Dolores was able to obtain the money, bring it to SMCs office, and turned it over to Wilson who got his share right then and there 10. Then the fraud was discovered and San Carlos sought to recover from both China Bank and BPI. 11. At the trial, China bank contended that: as the prior endorsement had in law been guaranteed by the BPI, they are absolved even if the endorsement of Newland Baldwin on the check was a forgery 12. BPI contended that: they were not negligent, that they had dealt with the accredited representatives of the company in the due course of business, and that the loss was due to dishonesty of plaintiffs employees and the negligence of the plaintiffs general agent 13. RTC: BPI in GF and San Carlos could not recover ISSUE: W/N BPI was bound to inspect the checks and shall therefore be liable in case of forgery HELD: YES. judgment absolving the Bank of the Philippine Islands must therefore be reversed

duty was upon the BPI, and the China Banking Corporation was not bound to inspect and verify all endorsements of the check, even if some of them were also those of depositors in that bank A bank is bound to know the signatures of its customers; and if it pays a forged check, it must be considered as making the payment out of its own funds, and cannot ordinarily charge the amount so paid to the account of the depositor whose name was forged. under section 23 of the Negotiable Instruments Law they are not a charge against San Carlos nor are the checks of any value to the BPI. proximate cause of loss was due to the negligence of the Bank of the Philippine Islands in honoring and cashing the two forged checks

Great Eastern 1. great eastern (insurance corp) drew a check for 2,000 on the HSBC (bank) payable to the order of Lazaro Melicor 2. E.M. Maasim fraudulently obtained possession of the check, forged Melicors signature to make it appear that the check was indorsed to him 3. check was presented to PNB where the amount of the check was placed to his credit 4. the following day, PNB indorsed the check to HSBC, which it paid and charged the amount to the account of Great Eastern 5. HSBC rendered a bank statement to Great Eastern showing that the amount of the check was charged to its account 6. no objection was made until 4 months after, when Lazaro Melicor stated that he never received the check 7. HSBC refused to give credit back to Great Easter for the 2k check and thus Great Eastern sought to recover 8. trial court ruled: a. PNB not liable because of good faith and because the indorsement of Maasim is unquestionable and his signature is perfectly genuine, and the bank was not obiged to identify the signature of Melicor b. HSBC also not liable, making the payment in good faith to PNB because PNB is a holder in due course of the check c. both not liable and not guilty of negligence or fault Issue: WON HSBC is liable Who is responsible for the refund to the drawer of the amount of the check drawn and payable to order, then its value was collected by a third person by means of forgery of the signature of the payee? Is it the drawee or the last indorser, who ignored the forgery at the time of making the payment, or the forger? Held: 1. Great Eastern authorized and directed HSBC to pay Melicor or his order, 2,000 2. it did not authorize the bank to pay the check to any other person than Melicor or his order and the testimony is undisputed that Melicor never indorsed the check and never got the proceeds 3. neither is Great Eastern estopped because of the bank statement which great eastern only objected to 4 months after: this is not a case where plaintiffs own signature was forged to one of the checks: in such a case, plaintiff would have known of the forgery, and it would have been its duty

to have promptly notified the bank thereof, therefore releasing the bank from any liability 4. the legal presumption was that since Melicor was the payee, the bank would not honor the check without a genuine indorsement of Melicor: so when bank statement arrived, it had a right to assume that Melicor had personally endorsed the check, otherwise the bank would not have paid it 5. Section 23 of the NIL covers this: Since the signature in the instrument is forged, then it was wholly inoperative and the same cannot be enforced against any party thereto being Great Eastern or Melicor. 6. HSBC has no defense to this action. 7. PNB had no license or authority to pay the money to Maasim or anyone else upon a forged signature. It was its legal duty to know that Melicors indorsement was genuine before cashing the check- its remedy is against Maasim to whom it had paid the money 8. judgment of the lower court is reversed, ruled in favour of Great Eastern and against HSBC for 2,000 with 6% interest 9. corresponding judgment entered in favour of HSBC against PNB

Republic Bank vs Ebrada 1 Ebrada cashed a check issued by the Treasury w/ the Republic Bank for some P 1,200.00. The indorsement on the back of the check by the payee Martin Lorenzo was found out to be a forgery since Lorenzo has been dead for some 11 years already. Thus, the Treasury required Republic Bank to reimburse the amounts paid. Republic then goes after Ebrada. 2. Ebrada goes after Dominguez and Dominguez goes after Tinio in a third and fourth party complaint- facts show that Martin Lorenzo indorsed the check to Ramon Lorenzo, then to Delia Dominguez, then to petitioner. That when petitioner encashed the check, she immediately handed the proceeds over to Dominguez, then Dominguez handed it to Tinio 3. Trial court ruled: Ebrada to pay Republic bank, but Ebrada can file complaint against Dominguez and Dominguez against Tinio ETC is