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BARTOLOME PUZON, the instrument is delivered gets the title to the instrument completely and
JR., Respondent. irrevocably.
Delivery in relation to sec 16 - Delivery when effectual, when presumed
Not really quoted in the case: SEC. 16. Every contract on a negotiable
Facts: Bartolome V. Puzon, Jr., was a dealer of beer products of petitioner instrument is incomplete and revocable until delivery of the instrument for
San Miguel Corporation (SMC). Puzon purchased SMC products on credit. To the purpose of giving effect thereto xxxxxxx
ensure payment and as a business practice, SMC required him to issue The evidence of SMC failed to establish that the check was given in
postdated checks equivalent to the value of the products purchased on credit payment of the obligation of Puzon. There was no provisional receipt or
before the same were released to him. Said checks were returned to Puzon official receipt issued for the amount of the check. What was issued was a
when the transactions covered by these checks were paid or settled in full. receipt for the document, a "POSTDATED CHECK SLIP." The petitioner's
demand letter sent to respondent states "As per company policies on
On December 2000, Puzon purchased products on credit and issued two BPI receivables, all issuances are to be covered by post-dated checks. However,
checks. to cover the said transaction. Check Nos. 27904 (for P309,500.00) you have deviated from this policy by forcibly taking away the check you have
and 27903 (forP11,510,827.00) issued to us to cover the December issuance." Notably, the term "payment"
was not used instead the terms "covered" and "cover" were used. The
On January 23, 2001, Puzon, together with his accountant, visited the SMC affidavit of petitioner’s witness further reveals that the term "cover" was not
Sales Office to reconcile his account with SMC. During that visit Puzon meant to be used interchangeably with "payment." In said affidavit paragraph
allegedly requested to see BPI Check No. 17657. However, when he got hold 8 clearly shows that partial payment is expected to be made by the return of
of BPI Check No. 27903 which was attached to a bond paper together with beer empties, and not by the deposit or encashment of the check.
BPI Check No. 17657 he allegedly immediately left the office with his
accountant, bringing the checks with them. When taken in conjunction with the counter-affidavit of Puzon – where he
states that "As the [liquid beer] contents are paid for, SMC return[s] to me the
SMC sent a letter to Puzon demanding the return of the said checks. Puzon corresponding PDCs or request[s] me to replace them with whatever was the
ignored the demand hence SMC filed a complaint against him for theft with the unpaid balance." – it becomes clear that both parties did not intend for the
City Prosecutor’s Office of Parañaque City. check to pay for the beer products. The evidence proves that the check
was accepted, not as payment, but in accordance with the long-standing
Issue: WHETHER OR NOT THE DELIVERY OF THE CHECKS TO SMC policy of SMC to require its dealers to issue postdated checks to cover
VESTED THE LATTER OWNERSHIP OVER THE CHECKS (so as to make its receivables. The check was only meant to cover the transaction and
Puzon liable for theft, an element of which consists the taking of personal in the meantime Puzon was to pay for the transaction by some other
property belonging to another) means other than the check. This being so, title to the check did not
transfer to SMC; it remained with Puzon. The second element of the felony
Held: No, the delivery of the checks did not make SMC the owner thereof. The of theft was therefore not established. Petitioner was not able to show that
check was not given as payment, there being no intent to give effect to the Puzon took a check that belonged to another
instrument,then ownership of the check was not transferred to SMC.
Sec 12 of the Negotiable Instruments Law provides: Sec. 12. Antedated and
postdated – The instrument is not invalid for the reason only that it is antedated
or postdated, provided this is not done for an illegal or fraudulent purpose. The
person to whom an instrument so dated is delivered acquires the title
thereto as of the date of delivery
Facts: (d) That at the time it was negotiated to him, he had no notice of any infirmity
Gregorio C. Roxas, respondent, is a trader. He delivered stocks of in the instrument or defect in the title of person negotiating it.
vegetable oil to spouses Rodrigo and Marissa Cawili. As payment therefor,
spouses Cawili issued a personal check in the amount of P348,805.50. As a general rule, under the above provision, every holder is
However, when respondent tried to encash the check, it was dishonored by presumed prima facie to be a holder in due course. One who claims otherwise
the drawee bank. Spouses Cawili then assured him that they would replace has the onus probandi to prove that one or more of the conditions required to
the bounced check with a cashier’s check from the Bank of the Philippine constitute a holder in due course are lacking. In this case, petitioner contends
Islands (BPI), petitioner. that the element of "value" is not present, therefore, respondent could not be
a holder in due course. Petitioner’s contention lacks merit. Section 25 of the
Respondent and Rodrigo Cawili went to petitioner’s branch at Shaw same law states:
Boulevard, Mandaluyong City where Elma Capistrano, the branch manager,
personally attended to them. Upon Elma’s instructions, Lita Sagun, the bank SEC. 25. Value, what constitutes. – Value is any consideration
teller, prepared BPI Cashier’s Check No. 14428 in the amount of P348,805.50, sufficient to support a simple contract. An antecedent or pre-existing debt
drawn against the account of Marissa Cawili, payable to respondent. Rodrigo constitutes value; and is deemed as such whether the instrument is payable
then handed the check to respondent in the presence of Elma. on demand or at a future time. There is no dispute that respondent received
Rodrigo Cawili’s cashier’s check as payment for the former’s vegetable oil. The
The following day, respondent returned to petitioner’s branch at Shaw fact that it was Rodrigo who purchased the cashier’s check from petitioner will
Boulevard to encash the cashier’s check but it was dishonored. Elma informed not affect respondent’s status as a holder for value since the check was
him that Marissa’s account was closed on that date. Despite respondent’s delivered to him as payment for the vegetable oil he sold to spouses Cawili.
insistence, the bank officers refused to encash the check and tried to retrieve Verily, the Court of Appeals did not err in concluding that respondent is a
it from respondent. He then called his lawyer who advised him to deposit the holder in due course of the cashier’s check.
check in his (respondent’s) account at Citytrust, Ortigas Avenue. However, the
check was dishonored on the ground "Account Closed." 2. Yes.
It bears emphasis that the disputed check is a cashier’s check. The
Respondent filed with the RTC complaint for sum of money against Court held that a cashier’s check is really the bank’s own check and may be
petitioner. The RTC renders judgment ordering BPI to pay Roxas. treated as a promissory note with the bank as the maker. The check becomes
Court of Appeals affirmed the trial court’s judgment. the primary obligation of the bank which issues it and constitutes a written
promise to pay upon demand. The Court took judicial notice of the "well-known
Issue: and accepted practice in the business sector that a cashier’s check is deemed
as cash." This is because the mere issuance of a cashier’s check is considered
1. Whether or not respondent is a holder in due course. acceptance thereof.
2. Whether or not BPI is liable to respondent for the amount of the cashier’s
check. In view of the above pronouncements, petitioner bank became liable
to respondent from the moment it issued the cashier’s check. Having been
Ruling: accepted by respondent, subject to no condition whatsoever, petitioner should
have paid the same upon presentment by the former.
1. Yes.
Section 52 of the Negotiable Instruments Law provides:
SEC. 52. What constitutes a holder in due course. – A holder in due
course is a holder who has taken the instrument under the following conditions:
ISSUE:
Whether the Hipolitos are liable on the promissory note which they executed
in favor of the petitioner.
HELD:
YES, the Hipolitos are liable on the promissory note which they executed
in favor of the petitioner.
With the purchase of the bill, ALLIED credited GGS the peso equivalent Art. 2047. By guaranty a person, called the guarantor, binds himself to the
of the bill amounting to P151,474.52 creditor to fulfill the obligation of the principal debtor in case the latter should
fail to do so.
Nari Gidwani and Alcron International Ltd. (Alcron) executed their If a person binds himself solidarily with the principal debtor, the provisions
respective Letters of Guaranty, holding themselves liable on the export bill of Section 4, Chapter 3, Title I of this Book shall be observed. In such case
if it should be dishonored or retired by the drawee for any reason. the contract is called a suretyship.
spouses Leon and Leticia de Villa and Nari Gidwani also executed a Section 152 of the Negotiable Instruments Law pertaining to indorsers,
Continuing Guaranty/Comprehensive Surety (surety), guaranteeing relied on by respondents, is not pertinent to this case.
payment of any and all such credit accommodations which ALLIED may
extend to GGS There are well-defined distinctions between the contract of an indorser
and that of a guarantor/surety of a commercial paper, which is what is
When ALLIED negotiated the export bill to Chekiang, payment was involved in this case.
refused due to some material discrepancies in the documents submitted
by GGS relative to the exportation covered by the letter of credit. The contract of indorsement is primarily that of transfer, while the contract
of guaranty is that of personal security
ALLIED demanded payment
The liability of a guarantor/surety is broader than that of an indorser.
GGS and Nari Gidwani: signed blank forms of the Letters of Guaranty and
the Surety, and the blanks were only filled up by ALLIED after they had Unless the bill is promptly presented for payment at maturity and due
affixed their signatures. They also added that the documents did not cover notice of dishonor given to the indorser within a reasonable time, he will
the transaction involving the subject export bill. be discharged from liability thereon. On the other hand, except where
required by the provisions of the contract of suretyship, a demand or notice
spouses de Villa: not aware of the existence of the export bill; they signed of default is not required to fix the surety's liability.
blank forms of the surety; and averred that the guaranty was not meant to
secure the export bill Therefore, no protest on the export bill is necessary to charge all the
respondents jointly and severally liable
Alcron: foreign corporation doing business in the Philippines, its branch in
the Philippines is merely a liaison office; neither its liaison office in the having affixed their consenting signatures in several documents executed
Philippines nor its then representative, Hans-Joachim Schloer, had the at different times, it is safe to presume that they had full knowledge of its
authority to issue Letters of Guaranty for and in behalf of local entities and terms and conditions, hence, they are precluded from asserting ignorance
persons of the legal effects of the undertaking they assumed thereunder
Bank of America NT & SA vs. Philippine Racing Club, G.R. No. 150228, filling up the checks and the repetition of the entries was possibly an attempt
July 30, 2009 to rectify the mistake.
Facts:
Indeed, it is highly uncommon for a corporation to make out checks payable to
Plaintiff PRCI is a domestic corporation which maintains a current account with CASH for substantial amounts such as in this case. If each irregular
petitioner Bank of America. Its authorized signatories are the company circumstance in this case were taken singly or isolated, the banks employees
President and Vice-President. By virtue of a travel abroad for these officers, might have been justified in ignoring them. However, the confluence of the
they pre-signed checks to accommodate any expenses that may come up irregularities on the face of the checks and circumstances that depart from the
while they were abroad for a business trip. The said pre-signed checks were usual banking practice of respondent should have put petitioners employees
left for safekeeping by PRCs accounting officer. on guard that the checks were possibly not issued by the respondent in due
course of its business. Petitioners subtle sophistry cannot exculpate it from
On the space where the name of the payee should be indicated (Pay To The behavior that fell extremely short of the highest degree of care and diligence
Order Of) the following 2-line entries were instead typewritten: on the upper required of it as a banking institution.
line was the word CASH while the lower line had the following typewritten
words, viz: ONE HUNDRED TEN THOUSAND PESOS ONLY. Sec. 14. Blanks, when may be filled. Where the instrument is wanting in any
material particular, the person in possession thereof has a prima facie authority
Clearly there was an irregularity with the filling up of the blank checks as to complete it by filling up the blanks therein. And a signature on a blank paper
both showed similar infirmities and irregularities and yet, the petitioner delivered by the person making the signature in order that the paper may be
bank did not try to verify with the corporation and proceeded to encash converted into a negotiable instrument operates as a prima facie authority to
the checks. fill it up as such for any amount. In order, however, that any such instrument
when completed may be enforced against any person who became a party
PRC filed an action for damages against the bank. The lower court awarded thereto prior to its completion, it must be filled up strictly in accordance with
actual and exemplary damages. On appeal, the CA affirmed the lower court’s the authority given and within a reasonable time. But if any such instrument,
decision and held that the bank was negligent. Hence this appeal. Petitioner after completion, is negotiated to a holder in due course, it is valid and effectual
contends that it was merely doing its obligation under the law and contract in for all purposes in his hands, and he may enforce it as if it had been filled up
encashing the checks, since the signatures in the checks are genuine. strictly in accordance with the authority given and within a reasonable time.
Sec. 16, Delivery; when effectual; when presumed. Every contract on a
Issues: negotiable instrument is incomplete and revocable until delivery of the
(1) WON the bank was negligent instrument for the purpose of giving effect thereto. As between immediate
(2) WON Section 14 of the Negotiable Instruments Law must be applied parties, and as regards a remote party other than a holder in due course, the
delivery in order to be effectual, must be made either by or under the authority
Petitioner insists that it merely fulfilled its obligation under law and contract of the party making, drawing, accepting, or indorsing as the case may be; and
when it encashed the aforesaid checks. Invoking Sections 126[7] and 185[8] in such case the delivery may be shown to have been conditional, or for a
of the Negotiable Instruments Law (NIL), petitioner claims that its duty as a special purpose only, and not for the purpose of transferring the property in
drawee bank to a drawer-client maintaining a checking account with it is to pay the instrument. But where the instrument is in the hands of a holder of a due
orders for checks bearing the drawer-clients genuine signatures. Thus, course, a valid delivery thereof by all parties prior to him so as to make them
pursuant to the said obligation, the drawee bank has the duty to determine liable to him is conclusively presumed. And where the instrument is no longer
whether the signatures appearing on the check are the drawer-clients or its in the possession of a party whose signature appears thereon, a valid and
duly authorized signatories. If the signatures are genuine, the bank has the intentional delivery by him is presumed until the contrary is proved.
unavoidable legal and contractual duty to pay. If the signatures are forged and
falsified, the drawee bank has the corollary, but equally unavoidable legal and In defense of its cashier/tellers questionable action, petitioner insists that
contractual, duty not to pay. pursuant to Sections 14 and 16 of the NIL, it could validly presume, upon
Although not in the strict sense material alterations, the misplacement of the presentation of the checks, that the party who filled up the blanks had authority
typewritten entries for the payee and the amount on the same blank and the and that a valid and intentional delivery to the party presenting the checks had
repetition of the amount using a check writer were glaringly obvious taken place. Thus, in petitioners view, the sole blame for this debacle should
irregularities on the face of the check. Clearly, someone made a mistake in
be shifted to respondent for having its signatories pre-sign and deliver the International Corporate Bank, Inc. vs. Court of Appeals and Philippine
subject checks. National Bank
G.R. No. 129910, September 5, 2006
Petitioners contention would have been correct if the subject checks were 501 SCRA 20
correctly and properly filled out by the thief and presented to the bank in good
order. In that instance, there would be nothing to give notice to the bank of any FACTS: The Ministry of Education and Culture issued 15 checks drawn
infirmity in the title of the holder of the checks and it could validly presume that against Philippine National Bank (PNB). Petitioner International Corporate
there was proper delivery to the holder. The bank could not be faulted if it Bank, Inc. (ICB) accepted the checks for deposit on various dates.
encashed the checks under those circumstances. However, the undisputed
facts plainly show that there were circumstances that should have alerted the After 24 hours from submission of the checks to PNB for clearing, ICB paid
bank to the likelihood that the checks were not properly delivered to the person the value of the checks and allowed the withdrawals of the deposits.
who encashed the same. In all, we see no reason to depart from the finding in However, on 14 October 1981, PNB returned all the checks to petitioner
the assailed CA Decision that the subject checks are properly characterized without clearing them because the serial number of the checks were
as incomplete and undelivered instruments thus making Section 15 [20] of the materially altered. Thus, ICB instituted an action for collection of sums of
NIL applicable in this case. money against PNB to recover the value of the checks.
RTC Ruling: ICB is not entitled to recover the value of the checks from PNB
because the ICB failed to inquire on the status of the checks before paying
their value. PNB cannot be faulted for the delay in clearing the checks
considering the ingenuity in which the alterations were effected.
Despite its late filing, the Court of Appeals resolved to admit the motion for
reconsideration “in the interest of substantial justice.” In its 9 August 1994
Amended Decision, the Court of Appeals reversed itself and affirmed the
Decision of the trial court dismissing the complaint. The CA held that its 10
October 1991 Decision failed to appreciate that the rule on the return of
altered checks within 24 hours from the discovery of the alteration had been
duly passed by the Central Bank and accepted by the members of the
banking system. Until the rule is repealed or amended, the rule has to be
applied.
In its 16 July 1997 Resolution, the Court of Appeals denied the Motion for justifiable reason. Additionally, the petition was filed on time both
Reconsideration of ICB for lack of merit so the latter filed the petition before under Rules 45 and 65. Hence, in accordance with the liberal spirit
the Supreme Court under both Rules 45 and 65. which pervades the Rules of Court and in the interest of justice, it
treated the petition as having been filed under Rule 45.
ISSUES:
1. Whether or not the checks were materially altered. NOTES:
2. Whether or not the motion for reconsideration filed by respondent was out Petitioners may not delegate upon the court the task of determining under
of time thus making the 10 October 1991 Decision final and executory. which rule should the petition should fall; A petition cannot be subsumed
3. Whether or not the filing of the petition under both Rules 45 and 65 is simultaneously under Rule 45 and Rule 65 of the Rules of Court, and neither
proper. may petitioners delegate upon the court the task of determining under which
rule the petition should fall– Respondent asserts that the petition should be
RULING: dismissed outright since petitioner availed of a wrong mode of appeal.
Respondent cites Ybañez v. Court of Appeals where the Court ruled that “a
1. An alteration on the serial number of a check is not a material petition cannot be subsumed simultaneously under Rule 45 and Rule 65 of
alteration. The Court held that since there were no material the Rules of Court, and neither may petitioners delegate upon the court the
alterations on the checks, respondent Philippine National Bank is task of determining under which rule the petition should fall.”
liable to petitioner International Corporate Bank, Inc. for the value of
the checks amounting to P1,447,920, with legal interest from 16
March 1982 until full payment.
3. The remedies of appeal and certiorari are mutually exclusive and not
alternative or successive. However, the Court found the petition to be
meritorious so it resolved the issue and set aside technicality for this
METROBANK vs. CABILZO by Cabilzo. In fact, he was wary enough that he filled with asterisks the spaces
G.R. No. 154469 December 6, 2006 between and after the amounts, not only those stated in words, but also those
510 SCRA 259 in numerical figures, in order to prevent any fraudulent insertion, but
unfortunately, the check was still successfully altered, indorsed by the
FACTS: On 12 November 1994, Cabilzo issued a Metrobank Check No. collecting bank, and cleared by the drawee bank, and encashed by the
985988, payable to “CASH” and postdated on 24 November 1994 in the perpetrator of the fraud, to the damage and prejudice of Cabilzo.
amount of One Thousand Pesos (P1, 000.00). The check was drawn against
Cabilzo’s Account with Metrobank Pasong Tamo Branch under Current Metrobank cannot lightly impute that Cabilzo was negligent and is therefore
Account No. 618044873-3 and was paid by Cabilzo to a certain Mr. Marquez, prevented from asserting his rights under the doctrine of equitable estoppel
as his sales commission. Subsequently, the check was presented to when the facts on record are bare of evidence to support such conclusion. The
Westmont Bank for payment. Westmont Bank, in turn, indorsed the check to doctrine of equitable estoppel states that when one of the two innocent
Metrobank for appropriate clearing. After the entries thereon were examined, persons, each guiltless of any intentional or moral wrong, must suffer a loss, it
including the availability of funds and the authenticity of the signature of the must be borne by the one whose erroneous conduct, either by omission or
drawer, Metrobank cleared the check for encashment in accordance with the commission, was the cause of injury. Metrobank’s reliance on this dictum is
Philippine Clearing House Corporation (PCHC) Rules. misplaced. For one, Metrobank’s representation that it is an innocent party is
flimsy and evidently, misleading. At the same time, Metrobank cannot
On 16 November 1994, Cabilzo’s representative was at Metrobank Pasong asseverate that Cabilzo was negligent and this negligence was the proximate
Tamo Branch to make some transaction when he was asked by bank cause of the loss in the absence of even a scintilla proof to buttress such claim.
personnel if Cabilzo had issued a check in the amount of P91, 000.00 to which Negligence is not presumed but must be proven by the one who alleges it,
the former replied in the negative. On the afternoon of the same date, Cabilzo which petitioner failed to.
himself called Metrobank to reiterate that he did not issue a check in the
amount of P91, 000.00 and requested that the questioned check be returned
to him for verification, to which Metrobank complied. Upon receipt of the check,
Cabilzo discovered that Metrobank Check No. 985988 which he issued on 12
November 1994 in the amount of P1, 000.00 was altered to P91, 000.00 and
the date 24 November 1994 was changed to 14 November 1994.Hence,
Cabilzo demanded that Metrobank re-credit the amount of P91, 000.00 to his
account. Metrobank, however, refused reasoning that it has to refer the matter
first to its Legal Division for appropriate action. Repeated verbal demands
followed but Metrobank still failed to re-credit the amount of P91, 000.00 to
Cabilzo’s account
(2) W/N Westmont Bank shall be held liable. have done, as any reasonable prudent man would have done, was to verify
the genuineness of the indorsements thereon. However, defendant
(3) W/N Ong is barred to recover the money from Westmont Bank due to apparently failed to make such a verification or, what is worse did so but,
laches. chose to disregard the obvious dissimilarity of the signatures.The first
omission makes it guilty of gross negligence; the second of bad faith. In
either case, defendant is liable to plaintiff for the proceeds of the checks in
question.
Held:
(3) No. Laches may be defined as the failure or neglect for an unreasonable
(1) Yes. Respondent admitted that he was never in actual or physical
and unexplained length of time, to do that which, by exercising due diligence,
possession of the two checks of the Island Securities nor did he authorize
could or should have been done earlier. It is negligence or omission to assert
Tanlimco or any of the latter’s representative to demand, accept and receive
a right within a reasonable time, warranting a presumption that the party
the same. For this reason, petitioner argues, respondent cannot sue
entitled thereto has either abandoned or declined to assert it.
petitioner because under Section 51 of the Negotiable Instruments Law it is
only when a person becomes a holder of a negotiable instrument can he sue In the case at bar, it cannot be said that respondent sat on his rights. He
in his own name. immediately acted after knowing of the forgery by proceeding to seek help
from the Tanlimco family and later the Central Bank, to remedy the situation
and recover his money from the forger, Paciano Tanlimco. Only after he had
exhausted possibilities of settling the matter amicably with the
family of Tanlimco and through the CB, about five months after the unlawful
transaction took place, did he resort to making the demand upon the
petitioner and eventually before the court for recovery of the money value of
the two checks. These acts cannot be construed as undue delay in or
abandonment of the assertion of his rights.