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Facts: RULING:
Ang Tek Lian knowing that he had no funds No. A negotiable instrument must be delivered to the
therefor, drew a check upon China Banking Corporation payee in order to evidence its existence as a binding
payable to the order of cash. He delivered it toLee Hua contract. Section 16 of the NIL provides that every
Hong in exchange for money. The check was presented by contract on a negotiable instrument is incomplete and
Lee Hua hong to the drawee bank for payment, but it w3as revocable until delivery of the instrument for the purpose
dishonored for insufficiency of funds. With this, Ang Tek of giving effect thereto. Thus, the payee of a negotiable
Lian was convicted of estafa. instrument acquires no interest with respect thereto until
its delivery to him. Without the initial delivery of the
Issue: instrument from the drawer to the payee, there can be no
Whether or not the check issued by Ang Tek Lian liability on the instrument. Petitioner however has a right
that is payable to the order to cash and not have been of action against Sima Wei for the balance due on the
indorsed by Ang Tek Lian, making him not guilty for the promissory note.
crime of estafa.
Held:
No.Under Sec. 9 of NIL a check drawn payable to Philippine Bank of Commerce vs. Aruego
the order of cash is a check payable to bearer and the GR L-25836-37, 31 January 1981, 102 scra 530
bank may pay it to the person presenting it for payment --agents
without the drawers indorsement. However, if the bank is
not sure of the bearers identity or financial solvency, it FACTS:
has the right to demand identification or assurance against To facilitate payment of the printing of a periodical called
possible complication, such as forgery of drawers World Current Events., Aruego, its publisher, obtained a
signature, loss of the check by the rightful owner, raising credit accommodation from the Philippine Bank of
of the amount payable, etc. But where the bank is satisfied Commerce. For every printing of the periodical, the printer
of the identity or economic standing of the bearer who collected the cost of printing by drawing a draft against
tenders the check for collection, it will pay the instrument the bank, said draft being sent later to Aruego for
without further question; and it would incur no liability to acceptance. As an added security for the payment of the
the drawer in thus acting. amounts advanced to the printer, the bank also required
Aruego to execute a trust receipt in favor of the bank
DEVELOPMENT BANK OF RIZAL vs. SIMA WEI, ET AL. wherein Aruego undertook to hold in trust for the bank
the periodicals and to sell the same with the promise to receivables of HCCC from the GSIS, including the
turn over to the bank the proceeds of the sale to answer questioned checks.
for the payment of all obligations arising from the draft.
The bank instituted an action against Aruego to recover ISSUE:
the cost of printing of the latters periodical. Aruego Whether petitioner cannot be held liable on the
however argues that he signed the supposed bills of questioned checks by virtue of the Certification executed
exchange only as an agent of the Philippine Education by Ong giving her the authority to collect such checks from
Foundation Company where he is president. the GSIS.
ISSUES: RULING:
Whether Aruego can be held liable by the petitioner Petitioner is liable. The Negotiable Instruments Law
although he signed the supposed bills of exchange only as provides that where any person is under obligation to
an agent of Philippine Education Foundation Company. indorse in a representative capacity, he may indorse in
such terms as to negative personal liability. An agent,
RULING: when so signing, should indicate that he is merely signing
Aruego did not disclose in any of the drafts that he in behalf of the principal and must disclose the name of his
accepted that he was signing as representative of the principal; otherwise he shall be held personally
Philippine Education Foundation Company. For failure to liable. Even assuming that Francisco was authorized by
disclose his principal, Aruego is personally liable for the HCCC to sign Ong's name, still, Francisco did not indorse
drafts he accepted, pursuant to Section 20 of the NIL the instrument in accordance with law. Instead of signing
which provides that when a person adds to his signature Ong's name, Francisco should have signed her own name
words indicating that he signs for or on behalf of a and expressly indicated that she was signing as an agent of
principal or in a representative capacity, he is not liable on HCCC. Thus, the Certification cannot be used by Francisco
the instrument if he was duly authorized; but the mere to validate her act of forgery
addition of words describing him as an agent or as filing a
representative character, without disclosing his principal,
Jai-Alai Corp. of the Phil. vs. Bank of the Phil. Islands
does not exempt him from personal liability.
G.R. No. L-29432 August 6, 1975 66 SCRA 29
-forgery
thus logically guarantees the same as such there can be no All prior endorsements guaranteed ASSOCIATED BANK.
doubt said bank has considered the checks as negotiable. ISSUE: What are the liabilities of each party?
HELD: The checks involved in this case are order
instruments.
GEMPESAW V CA
Liability of Associated Bank
Natividad Gempesaw is a businesswoman who entrusted
to her bookkeeper, Alicia Galang, the preparation of Where the instrument is payable to order at the time of
checks about to be issued in the course of her business the forgery, such as the checks in this case, the signature
transactions. From 1984 to 1986, 82 checks amounting to of its rightful holder (here, the payee hospital) is essential
P1,208,606.89, were prepared and were supposed to be to transfer title to the same instrument. When the holders
delivered to Gempesaws clients as payees named indorsement is forged, all parties prior to the forgery may
raise the real defense of forgery against all parties
subsequent thereto.
A collecting bank (in this case Associated Bank) where a
check is deposited and which indorses the check upon
presentment with the drawee bank (PNB), is such an
indorser. So even if the indorsement on the check
deposited by the bankss client is forged, Associated Bank
is bound by its warranties as an indorser and cannot set up
the defense of forgery as against the PNB.
EXCEPTION: If it can be shown that the drawee bank (PNB)
unreasonably delayed in notifying the collecting bank
(Associated Bank) of the fact of the forgery so much so
that the latter can no longer collect reimbursement from
the depositor-forger.