BATAAN CIGAR AND CIGARETTE FACTORY, INC., vs. Court of Appeals [G.R. No. 9304 , 3 !

ar"# $994% Principle: Rights of a holder (Negotiable Instruments Law) Fa"ts& Bataan igar and igarette !actor" Inc. (B !I) engaged one of its suppliers# $im %im Pua &eorge (&eorge $ing)# to deliver bales of tobacco leaf. In consideration thereof# B !I issued postdated cross chec's in the total amount of P()*$ to $ing. $ing sold ) chec's both in the amount of P+**$# post dated ,eptember +- . /*# +010 respectivel"# drawn b" B !I w2 &eorge as pa"ee# at a discount# to the ,tate Investment 3ouse Inc. (,I3I). 4s $ing failed to deliver the bales of tobacco leaf despite demand# B !I issued stop pa"ment orders on the chec's. 5fforts b" ,I3I to collect from B !I failed. ,I3I filed suit. Issue& 6hether ,I3I can recover the value of the chec's# premised on the issue whether ,I3I is a holder in due course. 'el(& %he Negotiable Instruments Law states what constitutes a holder in due course# thus: ,ec. -) 7 4 holder in due course is a holder who has ta'en the instrument under the following conditions: (a) %hat it is complete and regular upon its face8 (b) %hat he became the holder of it before it was overdue# and without notice that it had been previousl" dishonored# if such was the fact8 (c) %hat he too' it in good faith and for value8 (d) %hat at the time it was negotiated to him he had no notice of an" infirmit" in the instrument or defect in the title of the person negotiating it. ,ection -0 of the NIL further states that ever" holder is deemed prima facie a holder in due course. 3owever# when it is shown that the title of an" person who has negotiated the instrument was defective# the burden is on the holder to prove that he or some person under whom he claims# ac9uired the title as holder in due course. %he facts of the case are on all fours to the case of ,I3I vs. Intermediate 4ppellate ourt. %he crossing of the chec's should put the holder on in9uir" and upon him devolves the dut" to ascertain the indorser:s title to the chec' or the nature of his possession. !ailing in this respect# the holder is declared guilt" of gross negligence amounting to legal absence of good faith# contrar" to ,ection -) (c) of the Negotiable Instruments Law# and as such the consensus of authorit" is to the effect that the holder of the chec' is not a holder in due course. B !I cannot be obliged to pa" the chec's as there is a failure of consideration ($ing being unable to suppl" the bales of tobacco leaf# for which the chec's were intended for). ,till# ,I3I ;; a holder not in due course ;; can collect from the immediate indorser# &eorge $ing. ,uch is the disadvantage of a holder not in due course# i.e. the instrument is sub<ect to defenses as if it were non;negotiable. 5ffect of crossing of a chec': +. chec' ma" not be encashed but onl" deposited in the ban'

). chec' ma" be negotiated onl" once 7 to one who has an account with a ban' /. act of crossing the chec' serves as warning to the holder that the chec' has been issued for a definite purpose ; he must in9uire if he has received the chec' pursuant to that purpose# otherwise# he is not a holder in due course ENGR. )O*E E. CAYANAN +s. NORT' *TAR INTERNATIONA, TRA-E,, INC., [G.R. No. $./904% =R465R: 5ngr. a"anan P4>55: North ,tar International %ravel Inc. !acts: North ,tar International %ravel Incorporated (North ,tar) is a corporation engaged in the travel agenc" business while petitioner is the owner2general manager of ?54 International @anagement and ontractor ,ervices# a recruitment agenc". Airginia Balagtas# the &eneral @anager of North ,tar# in accommodation and upon the instruction of its client# petitioner herein# sent the amount of B,CD*#*** to Aiew ,ea Aentures Ltd.# in Nigeria from her personal account in itiban' @a'ati. En @arch )0# +00F# Airginia again sent B,CF*#*** to Aiew ,ea Aentures b" telegraphic transfer# with B,C+-#*** coming from petitioner. Li'ewise# on various dates# North ,tar eGtended credit to petitioner for the airplane tic'ets of his clients# with the total amount of such indebtedness under the credit eGtensions eventuall" reaching P-+*#*/-.F1. %o cover pa"ment of the foregoing obligations# petitioner issued five chec's to North ,tar 6hen presented for pa"ment# the chec's were dishonored for insufficienc" of funds while the other three chec's were dishonored because of a stop pa"ment order from petitioner. North ,tar# through its counsel# wrote petitioner informing him that the chec's he issued had been dishonored. North ,tar demanded pa"ment# but petitioner failed to settle his obligations. 3ence# North ,tar instituted riminal ase charging petitioner with violation BP ))# before the @% . @% found 5N&R. 4>4N4N &BIL%> be"ond reasonable doubt of Aiolation of BP)). R% ac9uitted petitioner of the criminal charges. %he R% also held that there is no basis for the imposition of the civil liabilit" on petitioner because the chec's issued b" the accused were presented be"ond the period of NIN5%> (0*) =4>, and therefore# there is no violation of the provision of Batas Pambansa Blg. )) and the accused is not considered to have committed the offense. %here being no offense committed# accused is not criminall" liable and there would be no basis for the imposition of the civil liabilit" arising from the offense. 4 reversed the decision of the R% insofar as the civil aspect is concerned and held petitioner civill" liable for the value of the sub<ect chec's. %he 4 ruled that although a"anan was ac9uitted of the criminal charges# he ma" still be held civill" liable for the

chec's he issued since he never denied having issued the five postdated chec's which were dishonored. Petitioner argues that the 4 erred in holding him civill" liable to North ,tar for the value of the chec's since North ,tar did not give an" valuable consideration for the chec's. 3e insists that the B,C(-#*** sent to Aiew ,ea Aentures was not sent for the account of North ,tar but for the account of Airginia as her investment. 3e points out that said amount was ta'en from Airginia:s personal dollar account in itiban' and not from North ,tar:s corporate account. Issue: 6hat is the presumption of consideration under ,ection )FH 3eld: 6e have held that upon issuance of a chec'# in the absence of evidence to the contrar"# it is presumed that the same was issued for valuable consideration which ma" consist either in some right# interest# profit or benefit accruing to the part" who ma'es the contract# or some forbearance# detriment# loss or some responsibilit"# to act# or labor# or service given# suffered or underta'en b" the other side. Bnder the Negotiable Instruments Law# it is presumed that ever" part" to an instrument ac9uires the same for a consideration or for value. 4s petitioner alleged that there was no consideration for the issuance of the sub<ect chec's# it devolved upon him to present convincing evidence to overthrow the presumption and prove that the chec's were in fact issued without valuable consideration.I+DJ ,adl"# however# petitioner has not presented an" credible evidence to rebut the presumption# as well as North ,tar:s assertion# that the chec's were issued as pa"ment for the B,C(-#*** petitioner owed. Notabl"# petitioner anchors his defense of lac' of consideration on the fact that he did not personall" receive the B,C(-#*** from Airginia. 3owever# we note that in his pleadings# he never denied having instructed Airginia to remit the B,C(-#*** to Aiew ,ea Aentures. 5videntl"# Airginia sent the mone" upon the agreement that petitioner will give to North ,tar the peso e9uivalent of the amount remitted plus interest. *tate I1+est2e1t 'ouse +s. IAC [G.R. No. ./.34, $3 )ul4 $9 9% !acts: New ,i'atuna 6ood Industries Inc. (N,6I) re9uested for a loan from 3arris hua# who issued / crossed chec's. ,ubse9uentl"# N,6I entered in an agreement with the ,tate Investment 3ouse Inc. (,I3I)# under a deed of sale# where the former assigned and discounted ++ postdated chec's including the / issued b" hua. 6hen the / chec's were allegedl" deposited b" ,I3I# the chec's were dishonored b" reason of Kinsufficient funds#L Kstop pa"mentL and Kaccount closed.L ,I3I made demands upon hua to ma'e good said chec's# hua failed to do so. Issue: 6hether or not ,I3I is a holder in due course so as to recover the amounts in the chec's from hua# the drawer.

3eld: %he Negotiable Instruments Law does not mention Kcrossed chec'sL but the ourt has recogniMed the practice that crossing the chec' (b" two parallel lines in the upper left portion of the chec') means that the chec' ma" onl" be deposited in the ban' and that the chec' ma" be negotiated onl" once (to one who has an account with a ban'). %he act of crossing a chec' serves as a warning to the holder that the chec' has been issued for a definite purpose so that he must in9uire if he has received the chec' pursuant to that purpose# otherwise he is not a holder in due course. 3erein# ,I3I rediscounted the chec' 'nowing that it was a crossed chec'. 3is failure to in9uire from the holder (N,6I) the purpose for which the chec's were crossed prevents him from being considered in good faith# and thus# as a holder in due course. ,I3I# therefor is sub<ect to personal defenses# such as the lac' of consideration between the N,6I and hua# i.e. resulting from the non;consummation of the loan. 561e(a +s. (ela Ra2a [GR ,73$ 3$, / Apr6l $9 3% F6rst D6+6s6o1, Gut6erre8 9): !acts: ?ose A. dela Rama is a law"er whose services were retained b" ?esus Pineda for the purpose of ma'ing representations with the chairman and general manager of the National Rice and orn 4dministration to stop and dela" the institution of criminal charges against Pineda who allegedl" misappropriated ++#*** cavans of pala" deposited at his ricemill in oncepcion# %arlac. ,ubse9uentl"# =ela Rama filed suit to collect a P0#/** loan# evidenced b" the matured promissor" note# and P-#*** as attorne":s fees. %he ourt of !irst Instance ruled in favor of Pineda# which was reversed b" the ourt of 4ppeals. Issue: 6hether the promissor" note is void for lac' of consideration. 3eld: %he presumption that a negotiable instrument is issued for a valuable consideration (,ection )F# Negotiable Instruments Law) is onl" prima facie. It can be rebutted b" proof to the contrar". %he term of the note sustains the version of Pineda that he signed the promissor" note because he believed dela Rama:s stor" that these amounts had alread" been advanced b" dela Rama and given as gifts for N4RI officials. %he promissor" note was thus eGecuted for an illegal consideration8 and thus is void li'e an" other contract as per 4rticle +F*0 of the ivil ode. %he consideration for the promissor" note ;; to influence public officers in the performance of their duties ;; is contrar" to law and public polic". %he promissor" note is void ab initio and no cause of action for the collection cases can arise from it. Cr6solo;o7)ose +s. Court of Appeals [GR 0099, $0 *epte2<er $9 9% !acts: In +0(*# Ricardo ,. ,antos# ?r. was the vice;president of @over 5nterprises# Inc. in;charge of mar'eting and sales8 and the president of the said corporation was 4tt".

Escar N. Benares. En /* 4pril +0(*# 4tt". Benares# in accommodation of his clients# the spouses ?aime and larita Eng# issued hec' *0/--/ drawn against %raders Ro"al Ban'# dated +F ?une +0(*# in the amount of PF-#***.** pa"able to 5rnestina risologo;?ose. ,ince the chec' was under the account of @over 5nterprises# Inc.# the same was to be signed b" its president# 4tt". Escar N. Benares# and the treasurer of the said corporation. 3owever# since at that time# the treasurer of @over 5nterprises was not available# 4tt". Benares prevailed upon ,antos to sign the aforesaid chec' as an alternate signator". ,antos did sign the chec'. %he chec' was issued to risologo;?ose in consideration of the waiver or 9uitclaim b" risologo;?ose over a certain propert" which the &overnment ,ervice Insurance ,"stem (&,I,) agreed to sell to the clients of 4tt". Benares# the spouses Eng# with the understanding that upon approval b" the &,I, of the compromise agreement with the spouses Eng# the chec' will be encashed accordingl". 3owever# since the compromise agreement was not approved within the eGpected period of time# the aforesaid chec' for PF-#***.** was replaced b" 4tt". Benares with another %raders Ro"al Ban' chec' bearing /10)00 dated +* 4ugust +0(*# in the same amount of PF-#***.**# also pa"able to risologo;?ose. %his replacement chec' was also signed b" 4tt". Benares and b" ,antos 6hen risologo;?ose deposited this replacement chec' with her account at !amil" ,avings Ban'# @a"on Branch# it was dishonored for insufficienc" of funds. 4 subse9uent redepositing of the said chec' was li'ewise dishonored b" the ban' for the same reason. 3ence# risologo;?ose through counsel was constrained to file a criminal complaint for violation of Batas Pambansa )) (BP))) with the OueMon it" !iscalPs Effice against 4tt". Benares and ,antos %he investigating 4ssistant it" !iscal# 4lfonso Llamas# accordingl" filed an amended information with the court charging both Benares and ,antos for violation of BP )) ( riminal ase O;+F(D1) of then ourt of !irst Instance of RiMal# OueMon it". @eanwhile# during the preliminar" investigation of the criminal charge against Benares and ,antos# before 4ssistant it" !iscal Llamas# ,antos tendered cashierPs chec' +D*+-) for PF-#***.** dated +* 4pril +0(+ to risologo;?ose# the complainant in that criminal case. risologo;?ose refused to receive the cashierPs chec' in pa"ment of the dishonored chec' in the amount of PF-#***.**. 3ence# ,antos encashed the aforesaid cashierPs chec' and subse9uentl" deposited said amount of PF-#***.** with the ler' of ourt on +F 4ugust +0(+. Incidentall"# the cashierPs chec' adverted to above was purchased b" 4tt". Benares and given to ,antos to be applied in pa"ment of the dishonored chec'. 4fter trial# the court a 9uo# holding that it was Qnot persuaded to believe that consignation referred to in 4rticle +)-D of the ivil ode is applicable to this case#Q rendered <udgment dismissing ,antosP complaint for consignation and risologo; ?osePs counterclaim. En appeal and on ( ,eptember +0(1# the appellate court reversed and set aside said <udgment of dismissal and revived the complaint for consignation# directing the trial court to give due course thereto. risologo;?ose filed the petition. Issue I+J: 6hether ,antos# as an accommodation part"# is liable thereon under the Negotiable Instruments Law. 3eld I+J: ,ection )0 (Liabilit" of accommodation part") of the Negotiable Instruments Law provides that Q4n accommodation part" is one who has signed the instrument as ma'er# drawer# acceptor# or indorser# without receiving value therefor# and for the

purpose of lending his name to some other person. ,uch a person is liable on the instrument to a holder for value# notwithstanding such holder# at the time of ta'ing the instrument# 'new him to be onl" an accommodation part".Q onse9uentl"# to be considered an accommodation part"# a person must (+) be a part" to the instrument# signing as ma'er# drawer# acceptor# or indorser# ()) not receive value therefor# and (/) sign for the purpose of lending his name for the credit of some other person. Based on the foregoing re9uisites# it is not a valid defense that the accommodation part" did not receive an" valuable consideration when he eGecuted the instrument. !rom the standpoint of contract law# he differs from the ordinar" concept of a debtor therein in the sense that he has not received an" valuable consideration for the instrument he signs. Nevertheless# he is liable to a holder for value as if the contract was not for accommodation# in whatever capacit" such accommodation part" signed the instrument# whether primaril" or secondaril". %hus# it has been held that in lending his name to the accommodated part"# the accommodation part" is in effect a suret" for the latter. Atr6u2 !a1a;e2e1t Corporat6o1 +s. Court of Appeals [G.R. No. $0949$, / Fe<ruar4 /00$% !acts: 3i; ement orporation through its corporate signatories# Lourdes @. de Leon# treasurer# and the late 4ntonio de las 4las# hairman# issued chec's in favor of 5.%. 3enr" and o. Inc.# as pa"ee. 5.%. 3enr" and o.# Inc.# in turn# endorsed the four chec's to 4trium @anagement orporation for valuable consideration. Bpon presentment for pa"ment# the drawee ban' dishonored all four chec's for the common reason Qpa"ment stoppedQ. En / ?anuar" +0(/# 4trium @anagement orporation filed with the Regional %rial ourt# @anila an action for collection of the proceeds of four postdated chec's in the total amount of P) million# after its demand for pa"ment of the value of the chec's was denied. 4fter due proceedings# on )* ?ul" +0(0# the trial court rendered a decision ordering Lourdes @. de Leon# her husband Rafael de Leon# 5.%. 3enr" and o.# Inc. and 3i; ement orporation to pa" 4trium <ointl" and severall"# the amount of P) million corresponding to the value of the four chec's# plus interest and attorne"Ps fees. En appeal to the ourt of 4ppeals# on +1 @arch +00/# the ourt of 4ppeals promulgated its decision modif"ing the decision of the trial court# absolving 3i; ement orporation from liabilit" and dismissing the complaint as against it. %he appellate court ruled that: (+) Lourdes @. de Leon was not authoriMed to issue the sub<ect chec's in favor of 5.%. 3enr"# Inc.8 ()) %he issuance of the sub<ect chec's b" Lourdes @. de Leon and the late 4ntonio de las 4las constituted ultra vires acts8 and (/) %he sub<ect chec's were not issued for valuable consideration. 3ence# 4trium filed the petition. Issue: 6hether the issuance of the chec's was an ultra vires act. 6hether Lourdes @. de Leon and 4ntonio de las 4las were personall" liable for the chec's issued as corporate officers and authoriMed signatories of the chec'. 3eld: +. %he record reveals that 3i; ement orporation issued the four (F) chec's to eGtend financial assistance to 5.%. 3enr"# not as pa"ment of the balance of the P/* million pesos cost of h"dro oil delivered b" 5.%. 3enr" to 3i; ement. 6h" else would petitioner de

Leon as' for counterpart chec's from 5.%. 3enr" if the chec's were in pa"ment for h"dro oil delivered b" 5.%. 3enr" to 3i; ementH 3i; ement# however# maintains that the chec's were not issued for consideration and that Lourdes and 5.%. 3enr" engaged in a Q'iting operationQ to raise funds for 5.%. 3enr"# who admittedl" was in need of financial assistance. %here was no sufficient evidence to show that such is the case. Lourdes @. de Leon is the treasurer of the corporation and is authoriMed to sign chec's for the corporation. 4t the time of the issuance of the chec's# there were sufficient funds in the ban' to cover pa"ment of the amount of P) million pesos. %hus# the act of issuing the chec's was well within the ambit of a valid corporate act# for it was for securing a loan to finance the activities of the corporation# hence# not an ultra vires act. 4n ultra vires act is one committed outside the ob<ect for which a corporation is created as defined b" the law of its organiMation and therefore be"ond the power conferred upon it b" lawQ %he term Qultra viresQ is Qdistinguished from an illegal act for the former is merel" voidable which ma" be enforced b" performance# ratification# or estoppel# while the latter is void and cannot be validated. ). Personal liabilit" of a corporate director# trustee or officer along (although not necessaril") with the corporation ma" so validl" attach# as a rule# onl" when: (+) 3e assents (a) to a patentl" unlawful act of the corporation# or (b) for bad faith or gross negligence in directing its affairs# or (c) for conflict of interest# resulting in damages to the corporation# its stoc'holders or other persons8 ()) 3e consents to the issuance of watered down stoc's or who# having 'nowledge thereof# does not forthwith file with the corporate secretar" his written ob<ection thereto8 (/) 3e agrees to hold himself personall" and solidaril" liable with the corporation8 or (F) 3e is made# b" a specific provision of law# to personall" answer for his corporate action.Q 3erein# Lourdes @. de Leon and 4ntonio de las 4las as treasurer and hairman of 3i; ement were authoriMed to issue the chec's. 3owever# @s. de Leon was negligent when she signed the confirmation letter re9uested b" @r. >ap of 4trium and @r. 3enr" of 5.%. 3enr" for the rediscounting of the crossed chec's issued in favor of 5.%. 3enr". ,he was aware that the chec's were strictl" endorsed for deposit onl" to the pa"eePs account and not to be further negotiated. 6hat is more# the confirmation letter contained a clause that was not true# that is# Qthat the chec's issued to 5.%. 3enr" were in pa"ment of 3"dro oil bought b" 3i; ement from 5.%. 3enr"Q. 3er negligence resulted in damage to the corporation. 3ence# @s. de Leon ma" be held personall" liable therefor. 5'I,I55INE NATIONA, BAN= -*. CO>RT OF A55EA,* !acts: @inistr" of 5ducation ulture issued a chec' pa"able to 4bante @ar'eting and drawn against Philippine National Ban' (PNB). 4bante @ar'eting# deposited the 9uestioned chec' in its savings account with apitol it" =evelopment Ban' ( 4PI%EL). In turn# apitol deposited the same in its account with the Philippine Ban' of ommunications (PB om) which# in turn# sent the chec' to PNB for clearing. PNB cleared the chec' as good and thereafter# PB om credited apitolPs account for the amount stated in the chec'. 3owever# PNB returned the chec' to PB om and debited PB omPs account for the amount covered b" the chec'# the reason being that there was a Qmaterial alterationQ of the chec' number. PB om# as collecting agent of apitol# then proceeded to debit the latterPs account for the same amount# and subse9uentl"# sent the

chec' bac' to petitioner. PNB# however# returned the chec' to PB om. En the other hand# apitol could not in turn# debit 4bante @ar'etingPs account since the latter had alread" withdrawn the amount of the chec'. apitol sought clarification from PB om and demanded the re;crediting of the amount. PB om followed suit b" re9uesting an eGplanation and re;crediting from PNB. ,ince the demands of apitol were not heeded# it filed a civil suit against PB om which in turn# filed a third;part" complaint against PNB for reimbursement2indemnit" with respect to the claims of apitol. PNB# on its part# filed a fourth;part" complaint against 4bante @ar'eting. %he %rial ourt rendered its decision# ordering PB om to re;credit or reimburse8 PNB to reimburse and indemnif" PB om for whatever amount PB om pa"s to apitol8 4bante @ar'eting to reimburse and indemnif" PNB for whatever amount PNB pa"s to PB om. %he court dismissed the counterclaims of PB om and PNB. %he appellate court modified the appealed <udgment b" ordering PNB to honor the chec'. 4fter the chec' shall have been honored b" PNB# the court ordered PB om to re;credit apitolPs account with it the amount. PNB filed the petition for review on certiorari averring that under ,ection +)- of the NIL# an" change that alters the effect of the instrument is a material alteration. Issue: 6EN an alteration of the serial number of a chec' is a material alteration under the NIL. 3eld: NE# alteration of a serial number of a chec' is not a material alteration contemplated under ,ec. +)- of the NIL. 4n alteration is said to be material if it alters the effect of the instrument. It means an unauthoriMed change in an instrument that purports to modif" in an" respect the obligation of a part" or an unauthoriMed addition of words or numbers or other change to an incomplete instrument relating to the obligation of a part". In other words# a material alteration is one which changes the items which are re9uired to be stated under ,ection + of the Negotiable Instruments Law. In the present case what was altered is the serial number of the chec' in 9uestion# an item which is not an essential re9uisite for negotiabilit" under ,ection + of the Negotiable Instruments Law. %he aforementioned alteration did not change the relations between the parties. %he name of the drawer and the drawee were not altered. %he intended pa"ee was the same. %he sum of mone" due to the pa"ee remained the same. %he chec'Ps serial number is not the sole indication of its origin. %he name of the government agenc" which issued the sub<ect chec' was prominentl" printed therein. %he chec'Ps issuer was therefore insufficientl" identified# rendering the referral to the serial number redundant and inconse9uential. FERNANDO !A>,INI, ET A,., plaintiffs;appellees# vs. ANTONIO G. *ERRANO, defendant;appellant. [G.R. No. ,7 44 De"e2<er $3, $9$4% !4 %,: %he action was brought b" !ernando @aulini# plaintiff# upon the contract of indorsement alleged to have been made in his favor b" 4ntonio ,errano# defendant# upon the following promissor" note:

/#***. =ue -th of ,eptember# +0+). 6e <ointl" and severall" agree to pa" to the order of =on 4ntonio &. ,errano on or before the -th da" of ,eptember# +0+)# the sum of three thousand pesos (P/#***) for value received for commercial operations. Notice and protest renounced. If the sum herein mentioned is not completel" paid on the -th da" of ,eptember# +0+)# this instrument will draw interest at the rate of ++R) per cent per month from the date when due until the date of its complete pa"ment. %he ma'ers hereof agree to pa" the additional sum of P-** as attorne"Ps fees in case of failure to pa" the note. @anila# ?une -# +0+). (,gd.) !or Padern# @oreno . o.# b" !. @oreno# member of the firm. !or ?ose Padern# b" !. @oreno. 4ngel &imineM. %he note was indorsed on the bac' as follows: Pa" note to the order of =on !ernando @aulini# value received. @anila# ?une -# +0+). (,gd.) 4.&. ,errano. I,,B5: 6hether or not 4.&. ,errano# the defendant# was an accommodation part" as described in the Negotiable Instruments Law. 35L=: %he ourt held that the accommodation to which reference is made in ,ection )0 is not one to the person who ta'es the note but one to the ma'er or indorser of the note. It is true# that in the case at bar# it was an accommodation to the plaintiff# in the popular sense# to have the defendant indorse the note8 but it wasnPt the accommodation described in the law but rather a mere favor to him and one which in no wa" bound ,errano. In cases of accommodation indorsement# the indorser ma'es the indorsement for the accommodation of the ma'er. ,uch an indorsement is generall" for the purpose of better securing the pa"ment of the note7that is# he lends his name to the ma'er and not the holder. %hus# an accommodation note is one to which the accommodation part" has put his name# without consideration# for the purpose of accommodating some other part" who is to use it and is eGpected to pa" it. %he credit given to the accommodation part" is sufficient consideration to bind the accommodation ma'er. 6here an indorsement is made as a favor to the indorsee# who re9uests it# not the better to secure pa"ment# but to relieve himself from a distasteful situation# and where the onl" consideration for such indorsement passes from the indorser to the indorsee# the situation does not present one creating an accommodation indorsement# nor one where there is a consideration sufficient to sustain an action on the indorsement. E?u6ta<le Ba1@61; Corp +s. *pe"6al *teel 5ro(u"ts, I1". [G.R. No. $.0300, $3 )u1e /0$/%

Fa"ts: ,,PI sold welding electrodes to Interco# as evidenced b" sales invoices. It is due on @arch +D +00+ (for the first sales invoiceS and @a" ++ +00+ (for others). It also provided that Interco would pa" interest at the rate of /DT per annum in case of dela". In pa"ment of for the products# Interco issued / chec's pa"able to the order of ,,PI. 5ach chec' was crossed with the notation Kaccount pa"ee onl"L and was drawn against 59uitable. %he records do not identif" the signator" for the chec's# or eGplain how B" came in possession of these chec's. 3e claimed that he had good title thereto. 3e demanded the deposits in his personal accounts in 59uitable. %he ban' did so rel"ing on B":s status as a valued client and as son;in;law of Interco:s ma<orit" stoc'holder. ,,PI reminded Interco of the unpaid welding electrodes# eGplaining that its immediate need for pa"ment as it was eGperiencing some financial crisis of its own. It replied that it has alread" issued / chec's pa"able to ,,PI and drawn against 59uitable# which was denied b" ,,PI. Later on it was discovered that it was B"# not ,,PI# who received the proceeds of / chec's. Interco finall" paid the value of / chec's to ,,PI plus portion of accrued interests. Interco refused to pa" entire accrued interest on the ground that it was not responsible for the dela". 3ence# Pardo filed a complaint for damages against B" and 59uitable Ban': alleging that the / crossed chec's# all pa"able to order of ,,PI could be deposited and encashed b" ,,PI onl". %rial ourt rendered decision in favor of Pardo which was affirmed b" 4. IssueAs: +. 6hat is the nature of crossed chec'H ). 6hether or not ,,PI has a cause of action against 59uitable for 9uasi;delict# whereb" it can recover actual damages from 59uitableH 'el(: ,,PI:s cause of action based on 9uasi;delist. ,,PI does not as' 59uitable or B" to deliever to it the proceeds of the chec's as the rightful pa"ee. %he courts below correctl" ruled that ,,PI has a cause of action for 9uasi;delict. %he chec's that Interco issued in favor of ,,PI were all crossed# made pa"able to ,,PI:s order and contained the notation Kaccount pa"ee onl".L %his creates a reasonable eGpectation that the pa"ee alone would receive the proceeds of the chec's and that diversion of the chec's would be averted. %his eGpectation arises from the accepted ban'ing practice that crossed chec's are intended for deposit in the named pa"ee:s account onl" and no other. 4t the ver" least# crossed chec's should place a ban' on notice that it should eGercise more caution or eGpend more than a cursor" in9uir"# to ascertain whether the pa"ee on the chec' has authoriMed the holder to deposit the same in different account. A "rosse( "#e"@ B6t# t#e 1otat6o1 Ca""ou1t pa4ee o1l4D "a1 o1l4 <e (epos6te( 61 t#e 1a2e( pa4eeEs a""ou1t. It 6s ;ross 1e;l6;e1"e for a <a1@ to 6;1ore t#6s rule solel4 o1 t#e <as6s of a t#6r( part4Es oral represe1tat6o1s of #a+61; a ;oo( t6tle t#ere to.

RIFA, CO!!ERCIA, BAN=ING COR5ORATION, pet6t6o1er +s. 'I7TRI DE-E,O5!ENT COR5ORATION a1( ,>F R. BA=>NAGA, Respo1(e1ts. [G.R. No. $9/4$3% !acts: LuM Ba'unawa and her husband @anuel (K,pouses Ba'unawaL) are owners of siG (D) parcels of land . %hese lots were se9uestered b" the Presidential ommission on &ood &overnment I(P &&)J. ,ometime in +00*# %eresita @illan (K@illanL)# through her representative# ?err" @ontema"or# offered to bu" said lots for K D#1)F#*(-.1+L# with the promise that she will ta'e care of clearing whatever preliminar" obstacles there ma" be to effect a completion of the sale. %he ,pouses Ba'unawa gave to @illan the Ewner:s opies of said % %s and in turn# @illan made a downpa"ment of K +#*+0#-+F.)0L for the intended purchase. 3owever# @illan was not able to clear said obstacles. 4s a result# the ,pouses Ba'unawa rescinded the sale and offered to return to @illan her downpa"ment. 3owever# @illan refused to accept bac' the downpa"ment. %he ,pouses Ba'unawa# through their compan"# the 3i;%ri =evelopment orporation (K3i;%riL) too' out on Ectober )(# +00+# a @anager:s hec' from R B ;5rmita in the amount of +#*+0#-+F.)0# pa"able to @illan:s compan" Rosmil Realt" and =evelopment orporation (KRosmilL) c2o %eresita @illan. %heir pra"er included that @illan be ordered to receive the said amount but upon advice of their counsel# retained custod" of R B @anager:s hec' No. 5R */FFD0 and refrained from canceling or negotiating it. =uring the pendenc" of the case and without the 'nowledge of 3i;%ri and ,pouses Ba'unawa# R B reported the K+#*+0#-+F.)0;credit eGisting in favor of RosmilL to the Bureau of %reasur" as among its Kunclaimed balancesL as of ?anuar" /+# )**/. En =ecember +F# )**D# Republic# through the Effice of the ,olicitor &eneral (E,&)# filed with the R% the action for 5scheat. En 4pril )**(# the spouses settled amicabl" their dispute with Rosmil and @illan. Instead of onl" the amount of K+#*+0#-+F.)0L# ,pouses Ba'unawa agreed to pa" Rosmil and @illan the amount of K/#***#***.**L# which is inclusive of the amount of +#*+0#-+F.)0. But during negotiations and evidentl" prior to said settlement# @anuel Ba'unawa# through 3i;%ri in9uired from R B ;5rmita the availabilit" of the +#*+0#-+F.)0 under R B @anager:s hec' No. 5R */FFD0. Bnfortunatel"# the" were informed that the amount was alread" sub<ect of the escheat proceedings before the R% . In its letter to R B # the spouses ac'nowledged that the deposit was indeed to be ta'en from 3i;%ri:s R B ban' account once an order to debit is issued upon the pa"ee:s presentation of the @anager:s hec' but the" also contend that since the pa"ee re<ected the negotiated @anager:s hec'# presentation of the @anager:s hec' was never made. %he trial court declared the amounts# sub<ect of the special proceedings# escheated to the Republic and ordered them deposited with the %reasurer of the Philippines (%reasurer) and credited in favor of the Republic. 4 reversed and set aside the decision of the trial court on the ground that the ban' failed to notif" respondents and deprived them of an opportunit" to intervene in the escheat proceedings and to present evidence to substantiate their claim# in violation of their right to due process8 hence# this petition.

Issue: 6EN the issuance of a manager:s chec' wor's as an automatic transfer of funds to the account of the pa"ee. 3eld:NE. @anagerPs or cashierPs chec's are bills of eGchange drawn b" the ban':s manager or cashier# in the name of the ban'# against the ban' itself. %"picall"# a manager:s or a cashier:s chec' is procured from the ban' b" allocating a particular amount of funds to be debited from the depositor:s account or b" directl" pa"ing or depositing to the ban' the value of the chec' to be drawn. ,ince the ban' issues the chec' in its name# with itself as the drawee# the chec' is deemed accepted in advance. Nevertheless# the mere issuance of a manager:s chec' does not ipso facto wor' as an automatic transfer of funds to the account of the pa"ee. In case the procurer of the manager:s or cashier:s chec' retains custod" of the instrument# does not tender it to the intended pa"ee# or fails to ma'e an effective deliver"# we find the following provision on undelivered instruments under the Negotiable Instruments Law applicable: ,ec. +D. =eliver"8 when effectual8 when presumed.75ver" contract on a negotiable instrument is incomplete and revocable until deliver" of the instrument for the purposes of giving effect thereto. 4s between immediate parties and as regards a remote part" other than a holder in due course# the deliver"# in order to be effectual# must be made either b" or under the authorit" of the part" ma'ing# drawing# accepting# or indorsing# as the case ma" be8 G G G ,ince there was no deliver"# presentment of the chec' for pa"ment did no occur. 4n order to debit the account was never made. 4s a result# the assigned fund is deemed to remain part of the account of the one which procured the @anager:s hec'. %he doctrine that the deposit represented b" a manager:s chec' automaticall" passes to the pa"ee is inapplicable# because the instrument7although accepted in advance7remains undelivered. Go18ales +. 5CIB G.R. No. $ 0/0., /3 Fe<ruar4 /0$$ !acts: &onMales was a client of P IB. 3e was granted a credit line b" the ban' through a redit;En;3and;Loan 4greement ( E3L4). 3e drew from the credit line through a chec' and said credit line was secured b" collateral in the form of his accounts with P IB which was a foreign currenc" deposit worth B,= (1+-. 3e obtained below loans from P IB: +. Ebtained with his wife U P-**$ ). Ebtained with spouses Panlilio U P+@# P/**$ %he above loans (total: +.(@) were covered b" / promissor" notes and were secured b" a real estate mortgage on a land co owned b" &onMales and spouses Panlilio. %he promissor" notes state the solidar" liabilit" of &onMales and spouses Panlilio. 3owever# it was the spouses Panlilio who received the proceeds of +.(@. %he monthl" interest dues

were paid b" the spouses Panlilio through auto debit from their P IB account. 3owever# the" defaulted in the pa"ment because their P IB account had insufficient deposits. &onMales issued a chec' to Rene Bnson worth )-*$ drawn against his credit line but said chec' was subse9uentl" dishonored due to termination of &onMales: credit line because of the unpaid period interest dues from the loans. P IB also froMe the foreign currenc" deposit account of &onMales. Issue: 6hether or not &onMales is liable for the three promissor" notes covering P3P+.(@ loan he made with spouses Panlilio. 3eld: >es. 4 close perusal of the records shows that the courts a 9uo correctl" found &onMales solidaril" liable with the spouses Panlilio for the three promissor" notes. %he solidar" liabilit" of &onMales is clearl" stipulated in the promissor" notes which uniforml" begin# K!or value received# the undersigned (the KBERRE65RL)<ointl" and severall" promise to pa" G G G.L 4n accommodation part" is one who meets all the three re9uisites according to ,ec )0 of NIL: +. 3e must be a part" to the instrument# signing as a ma'er# drawer# acceptor# or indorser ). 3e must not receive value therefor /. 3e must sign for the purpose of lending his name or credit to some other person. 4n accommodation part" lends his name to enable the accommodated part" to obtain credit or raise mone". 3e receives no part but assumed liabilit". %he relation between an accommodation part" is one of principal and suret"# the 4P being the suret". 4s such# he is deemed an original promisor and debtor from the beginning. he is considered in law as the same part" as the debtor in relation to whatever is ad<udged touching the obligation of the latter since their liabilities are interwoven. Ro<ert D61o +. !ar6a ,u6sa ,oot [G.R. No. $.09$/, $9 Apr6l /0$0% !acts: Petitioner was induced to lend a s"ndicate P/#***#***.** to be secured b" a real estate mortgage on several parcels of land situated in an<ulao# Lapu;lapu it". Bpon scrutiniMing the documents involving the properties# petitioner discovered that the documents covered rights over government properties. RealiMing he had been deceived# petitioner advised @etroban' to stop pa"ment of his chec's. 3owever# onl" the pa"ment of hec' No. ;@4; +F)++0F*D; 4 was ordered stopped. %he other two chec's were alread" encashed b" the pa"ees. @eanwhile# hec' No. ;@4; +F)++0F*D; 4 (a cross;chec') was negotiated and indorsed to respondents b" petitioner in eGchange for cash in the sum of P0F(#***.**# which respondents borrowed from @etroban' and charged against their credit line. =rawee ban'# @etroban'# ebu;@abolo Branch# which is also their depositar" ban'# answered that the chec's were suffiientl" funded. 3owever# the same was dishonored b" the drawee ban' when the" tried to deposit it for reason KP4>@5N% ,%EPP5=.L

Respondents filed a collection suit against petitioner and Lobitana before the trial court. %he trial court ruled in favor of respondents and declared them due course holders of the sub<ect chec'# since there was no privit" between respondents and defendants. 4 affirmed but modified the trial court:s decision b" deleting the award of interest# moral damages# attorne":s fees and litigation eGpenses. %he ourt of 4ppeals opined that petitioner Kwas onl" eGercising (although incorrectl")# what he perceived to be his right to stop the pa"ment of the chec' which he rediscounted.L %he ourt of 4ppeals ruled that petitioner acted in good faith in ordering the stoppage of pa"ment of the sub<ect chec' and thus# he must not be made liable for those amounts. Issue: 6EN the respondents were holders in due course. 3eld: P5%I%IEN &R4N%5=. ,ection -) of the Negotiable Instruments Law defines a holder in due course# thus: 4 holder in due course is a holder who has ta'en the instrument under the following conditions: (a) %hat it is complete and regular upon its face8 (b) %hat he became the holder of it before it was overdue# and without notice that it has been previousl" dishonored# if such was the fact8 (c) %hat he too' it in good faith and for value8 (d) %hat at the time it was negotiated to him# he had no notice of an" infirmit" in the instrument or defect in the title of the person negotiating it. In the case of a crossed chec'# as in this case# the following principles must additionall" be considered: 4 crossed chec' (a) ma" not be encashed but onl" deposited in the ban'8 (b) ma" be negotiated onl" once 7 to one who has an account with a ban'8 and (c) warns the holder that it has been issued for a definite purpose so that the holder thereof must in9uire if he has received the chec' pursuant to that purpose8 otherwise# he is not a holder in due course. Based on the foregoing# respondents had the dut" to ascertain the indorser:s# in this case Lobitana:s# title to the chec' or the nature of her possession. %his respondents failed to do. Respondents: verification from @etroban' on the funding of the chec' does not amount to determination of Lobitana:s title to the chec'. !ailing in this respect# respondents are guilt" of gross negligence amounting to legal absence of good faith#I+-J contrar" to ,ection -)(c) of the Negotiable Instruments Law. 3ence# respondents are not deemed holders in due course of the sub<ect chec'. 3owever# the fact that respondents are not holders in due course does not automaticall" mean that the" cannot recover on the chec'. %he Negotiable Instruments Law does not provide that a holder who is not a holder in due course ma" not in an" case recover on the instrument. %he onl" disadvantage of a holder who is not in due course is that the negotiable instrument is sub<ect to defenses as if it were non;negotiable. 4mong such defenses is the absence or failure of consideration#I which petitioner sufficientl"

established in this case. Petitioner issued the sub<ect chec' supposedl" for a loan in favor of onsing:s group# who turned out to be a s"ndicate defrauding gullible individuals. ,ince there is in fact no valid loan to spea' of# there is no consideration for the issuance of the chec'. onse9uentl"# petitioner cannot be obliged to pa" the face value of the chec'. !etropol6ta1 Ba1@ a1( Trust Co2pa14 9for2erl4 As6a1<a1@ Corporat6o1: +s. BA F61a1"e Corporat6o1 a1( !ala4a1 I1sura1"e Co., I1". GR. No. $.990/, 4 De"e2<er /009 F6rst D6+6s6o1 9C.). 5u1o, )ust6"es Carp6o7!orales, ,eo1ar(o7De Castro, Bersa261 a1( -6llara2a, )r.: Instrument: hec' =rawer: @ala"an Insurance =rawee: hina Ban' ollecting Ban': @etroban' formerl" 4sianban' Pa"ee: B4 !inance 2 Lamberto Bitanga !acts: Lamberto Bitanga (Bitanga) obtained from B4 !inance orporation (B4 !inance) a P/)0#)(* loan. %o secure the loan he mortgaged his car to B4 !inance. B4 !inance on its part re9uired Bitanga to insure the car against loss or damage b" accident# fire# and theft for a period of one "ear in an amount not less than the outstanding balance of mortgage obligations and that all loss# if an"# under such polic" or policies# will be pa"able to B4 !inance as the mortgagee# its assigns as its interest ma" appear. Bitanga thus had the mortgaged car insured b" @ala"an Insurance o.# Inc. (@ala"an Insurance). %he car was stolen. En Bitanga:s claim# @ala"an Insurance issued a chec' pa"able to the order of KB.4. !inance orporation and Lamberto BitangaL for P))F#-**# drawn against hina Ban'ing orporation ( hina Ban'). %he chec' was crossed with the notation K!or =eposit Pa"ees: 4ccount Enl".L 6ithout the indorsement or authorit" of his co;pa"ee B4 !inance# Bitanga deposited the chec' to his account with the 4sianban' orporation (4sianban')# now merged with @etropolitan Ban' and %rust ompan" (@etroban'). Bitanga subse9uentl" withdrew the entire proceeds of the chec'. In the meantime# Bitanga:s loan became past due# but despite demands# he failed to settle it. B4 !inance eventuall" learned of the loss of the car and of @ala"an Insurance:s issuance of a crossed chec' pa"able to it and Bitanga# and of Bitanga:s depositing it in his account at 4sianban' and withdrawing the entire proceeds thereof. B4 !inance thereupon demanded the pa"ment of the value of the chec' from 4sianban' I1J but to no avail# prompting it to file a complaint before the Regional %rial ourt (R% ) of @a'ati for sum of mone" and damages against 4sianban' and Bitanga# alleging that# inter alia# it is entitled to the entire proceeds of the chec'. It also filed a third part" complaint against @ala"an Insurance.

%he R% ruled in favor of B4 !inance and held 4sianban' and Bitanga solidaril" liable for the full amount of the chec'. 4 favorable ruling was also rendered on @ala"an Insurance holding that @ala"an was not priv" to the contract between B4 !inance and Bitanga and noting that it is the polic" of @ala"an to issue chec's to both the insured and the financing compan". %he 4 affirmed the trial court:s decision. 3ence the appeal to the , where 4sianban' now @etroban' argues that it is onl" liable to B4 !inance for onl" one half of the amount covered b" the chec'. Issue: +. 6hat is ,ection F+ of the NILH ). 6hat is the effect of pa"ment based on a forged indorsementH /. 6hat is the effect of a collecting ban' being the last indorserH 3eld: +. ,ection F+ of the Negotiable Instruments Law provides: 6here an instrument is pa"able to the order of two or more pa"ees or indorsees who are not partners# all must indorse unless the one indorsing has authorit" to indorse for the others. Bitanga alone endorsed the crossed chec'# and 4sianban' allowed the deposit and release of the proceeds thereof# despite the absence of authorit" of Bitanga:s co;pa"ee B4 !inance to endorse it on its behalf. I)-J ). %he pa"ment of an instrument over a missing indorsement is the e9uivalent of pa"ment on a forged indorsement or an unauthoriMed indorsement in itself in the case of <oint pa"ees. learl"# 4sianban'# through its emplo"ee# was negligent when it allowed the deposit of the crossed chec'# despite the lone endorsement of Bitanga# ostensibl" ignoring the fact that the chec' did not# it bears repeating# carr" the indorsement of B4 !inance. 4s has been repeatedl" emphasiMed# the ban'ing business is imbued with public interest such that the highest degree of diligence and highest standards of integrit" and performance are eGpected of ban's in order to maintain the trust and confidence of the public in general in the ban'ing sector. Bndoubtedl"# B4 !inance has a cause of action against 4sianban'. %he provisions of the Negotiable Instruments Law and underl"ing <urisprudential teachings on the blac';letter law provide definitive <ustification for 4sianban':s full liabilit" on the value of the chec'. /.%o be sure# a collecting ban'# 4sianban' in this case# where a chec' is deposited and which indorses the chec' upon presentment with the drawee ban'# is an indorser. %his is because in indorsing a chec' to the drawee ban'# a collecting ban' stamps the bac' of the chec' with the phrase Kall prior endorsements and2or lac' of endorsement guaranteedL and# for all intents and purposes# treats the chec' as a negotiable instrument# hence# assumes the warrant" of an indorser. 6ithout 4sianban':s warrant"# the drawee ban' ( hina Ban' in this case) would not have paid the value of the sub<ect chec'.

4sianban'# as the collecting ban' or last indorser# generall" suffers the loss because it has the dut" to ascertain the genuineness of all prior indorsements considering that the act of presenting the chec' for pa"ment to the drawee is an assertion that the part" ma'ing the presentment has done its dut" to ascertain the genuineness of prior indorsements. 4ccordingl"# one who credits the proceeds of a chec' to the account of the indorsing pa"ee is liable in conversion to the non;indorsing pa"ee for the entire amount of the chec'.

Ba1@ of A2er6"a +. Asso"6ate( C6t68e1Es Ba1@ G.R. No. $4$00$

RAFAE, 5. ,>NARIA +s. 5EO5,E OF T'E 5'I,I55INE* [G.R. No. $30$/., $$ No+e2<er /00 % !acts: Petitioner entered into a partnership agreement with private complainant Nemesio 4rtaiM# in the conduct of a mone";lending business# with the former as industrial partner and the latter the financer. Petitioner# who was then a cashier of !ar 5ast Ban' and %rust ompan" in @e"caua"an# Bulacan# would offer loans to prospective borrowers which his branch was unable to accommodate. 4t the start of the business# petitioner would first inform 4rtaiM of the amount of the proposed loan# then the latter would issue a chec' charged against his account in the ban' (proceeds of which will go to a borrower)# while petitioner would in turn issue a chec' to 4rtaiM corresponding to the amount lent plus the agreed share of interest. %he lending business progressed satisfactoril" between the parties and sufficient trust was established between the parties that the" both agreed to issue pre;signed chec's to each other# for their mutual convenience. %he chec's were signed but had no pa"eePs name# date or amount# and each was given the authorit" to fill these blan's based on each otherPs advice. %he arrangement ended on November +0(0. 4n accounting was paid and it was found that petitioner owed 4rtaiM P(FF#***.** . %wo chec's were issued b" petitioner to 4rtaiM during separate occasions but were subse9uentl" dishonored for insufficient funds. 4pparentl"# petitioner was implicated in a murder case which prevented him to raise the mone" to fund the chec's. %he R% found petitioner guilt" as charged and sentenced him to suffer the penalt" of imprisonment of one (+) "ear# and to pa" 4rtaiM the amount of P(FF#***.**# and the cost of suit. 4mong the contentions# petitioner ma'es much of the argument that the chec' was not QmadeQ or QdrawnQ within the contemplation of the law# nor was it for a consideration. iting the Negotiable Instruments Law# he said the he could not have QdrawnQ and QissuedQ the sub<ect chec' because Qit was not complete in form at the time it was given to 4rtaiM.

Issue: 6EN the chec' was made and drawn b" the petitioner despite the incompleteness in form. 3eld: >5,. 4t the outset# it should be borne in mind that the eGchange of the pre;signed chec's without date and amount between the parties had been their practice for almost a "ear b" virtue of their mone";lending business. %he" had authorit" to fill up blan's upon information that a chec' can then be issued. %hus# under the Negotiable Instruments Law# ,ection +F of which reads: QBlan's# when ma" be filled. ; 6here the instrument is wanting in an" material particular# the person in possession thereof has prima facie authorit" to complete it b" filling up the blan's therein. GGGQ %his practice is allowed. Because of the presumption of authorit"# the burden of proof that there was no authorit" or that authorit" granted was eGceeded is carried b" the person who 9uestions such authorit". Records show that IpetitionerJhad not proven lac' of authorit" on the part of 4rtaiM to fill up such blan's. 3aving failed to prove lac' of authorit"# it can be presumed that 4rtaiM was within his rights to fill up blan's on the chec'. A**OCIATED BAN= a1( CONRADO CR>F +s. 'ON. CO>RT OF A55EA,*, a1( !ER,E -. REYE*, (o61; <us61ess u1(er t#e 1a2e a1( st4le H!el6ssaIs RTG,H [G.R. No. 9 0/, !a4 ., $99/% !acts: @elissa:s R%6:s customers issued cross chec's pa"able to @elissa:s R%6# which its proprietor @erle Re"es did not receive. It was learned that the chec's had been deposited with the 4ssociated Ban' b" one Rafael ,a"son. ,a"son was not authoriMed b" Re"es to deposit and encash said chec's. Re"es filed an action for the recover" of the total value of the chec's plus damages. Issue: 6hether the ban' was negligent for the loss. 3eld: rossing a chec' means that the drawee ban' should not encash the chec' but merel" accept it for deposit# that the chec' ma" be negotiated onl" once b" one who has an account in a ban'# and that the chec' serves as warning that it was issued for a definite purpose so that he must in9uire if he has received the chec' pursuant to that purpose. %he effect# thus# relate to the mode of its presentment for pa"ment# in accordance with ,ection 1) of the Negotiable Instruments Law. %he ban' paid the chec's notwithstanding that title had not passed to the indorser# as the chec's had been crossed and issued Kfor pa"ee:s account onl".L It does did so in its own peril and became liable to the pa"ee for the value of the chec's. %he failure of the ban' to ma'e an in9uir" as to ,a"son:s authorit" was a breach of its dut". %he ban' is negligent and is thus liable to Re"es.

G.R. No. ,733049 O"to<er 0, $9 FAR EA*T REA,TY IN-E*T!ENT INC., petitioner;appellant# vs. T'E 'ONORAB,E CO>RT OF A55EA,*, DY 'IAN TAT, *IY C'EE a1( GAG *>Y AN, respondents;appellees. =octrine: V 6here the instrument is not pa"able on demand# presentment must be made on the da" it falls due. 6here it is pa"able on demand# presentment must be made within a reasonable time after issue# eGcept that in the case of a bill of eGchange# presentment for pa"ment will be sufficient if made within a reasonable time after the last negotiation thereof. V Reasonable %ime has been defined as so much time as is necessar" under the circumstances for a reasonable prudent and diligent man to do# convenientl"# what the contract or dut" re9uires should be done# having a regard for the rights# and possibilit" of loss# if an"# to the other part". V No hard and fast demarcation line can be drawn between what ma" be considered as a reasonable or an unreasonable time# because Kreasonable timeL depends upon the peculiar facts and circumstances in each case. !acts: Private respondents as'ed the petitioner to eGtend an accommodation loan in the sum of PF#-**.**. Respondents delivered to the petitioner a chec' for PF#-**.**# drawn b" =" 3ian %at# and signed b" them at the bac' of said chec'# with the assurance that after one month from ,eptember +/# +0D*# the said chec' would be redeemed b" them b" pa"ing cash in the sum of PF#-**.**# or the said chec' can be presented for pa"ment on or immediatel" after one month. Petitioner agreed and eGtended an accommodation loan %he aforesaid chec' was presented for pa"ment to the hina Ban'ing orporation# but said chec' bounced and was not cashed b" said ban'# for the reason that the current account of the drawer thereof had alread" been closed. Petitioner demanded pa"ment from the private but the latter failed and refused to pa" notwithstanding repeated demands. Both private respondents raised the defense that both have been wholl" discharged b" dela" in presentment of the chec' for pa"ment. %he Lower ourt ruled in favor of the petitioner. 3owever# this was reversed b" the 4 upon appeal b" the respondents# ruling that the chec' was not given as collateral to guarantee a loan secured since the chec' passed through other hands before reaching the petitioner and the said chec' was not presented within a reasonable time. 3ence this petition. Petitioner argues that presentment for pa"ment and notice of dishonor are not necessar" as when funds are insufficient to meet a chec'# thus the drawer is liable# whether such presentment and notice be totall" omitted or merel" dela"ed.

Issues: +. 6hether or not presentment for pa"ment can be dispensed with ). 6hether or not presentment for pa"ment and notice of dishonor of the 9uestioned chec' were made within reasonable time 3eld: +. No. 6here the instrument is not pa"able on demand# presentment must be made on the da" it falls due. 6here it is pa"able on demand# presentment must be made within a reasonable time after issue# eGcept that in the case of a bill of eGchange# presentment for pa"ment will be sufficient if made within a reasonable time after the last negotiation thereof (,ection 1+# Negotiable Instruments Law). ). No. It is obvious in this case that presentment and notice of dishonor were not made within a reasonable time. KReasonable timeL has been defined as so much time as is necessar" under the circumstances for a reasonable prudent and diligent man to do# convenientl"# what the contract or dut" re9uires should be done# having a regard for the rights# and possibilit" of loss# if an"# to the other part" ( itiMens: Ban' Bldg. v. L . 5. 6ertheirmer +(0 ,.6. /D+# /D)# +)D 4r'# /(# 4nn. as. +0+1 5# -)*). Notice ma" be given as soon as the instrument is dishonored8 and unless dela" is eGcused must be given within the time fiGed b" the law (,ection +*)# Negotiable Instruments Law). In the instant case# the chec' in 9uestion was issued on ,eptember +/# +0D*# but was presented to the drawee ban' onl" on @arch -# +0DF# and dishonored on the same date. 4fter dishonor b" the drawee ban'# a formal notice of dishonor was made b" the petitioner through a letter dated 4pril )1# +0D(. Bnder these circumstances# the petitioner undoubtedl" failed to eGercise prudence and diligence on what he ought to do al. re9uired b" law. %he petitioner li'ewise failed to show an" <ustification for the unreasonable dela". No hard and fast demarcation line can be drawn between what ma" be considered as a reasonable or an unreasonable time# because Kreasonable timeL depends upon the peculiar facts and circumstances in each case (%olentino# ommentaries and ?urisprudence on ommercial Laws of the Philippines# Aol. I# 5ighth 5dition# p. /)1). NATI-IDAD GE!5E*AG vs. T'E 'ONORAB,E CO>RT OF A55EA,* a1( 5'I,I55INE BAN= OF CO!!>NICATION* [G.R. No. 9//44 Fe<ruar4 9, $993% !4 %,: &empensaw was the owner of man" grocer" stores. ,he paid her suppliers through the issuance of chec's drawn against her chec'ing account with respondent ban'. %he chec's were prepared b" her boo''eeper &alang. In the signing of the chec's prepared b" &alang# &empensaw didnPt bother herself in verif"ing

to whom the chec's were being paid and if the issuances were necessar". ,he didnPt even verif" the returned chec's of the ban' when the latter notifies her of the same. =uring her two "ears in business# there were incidents shown that the amounts paid for were in eGcess of what should have been paid. It was also shown that even if the chec's were crossed# the intended pa"ees didnPt receive the amount of the chec's. %his prompted &empensaw to demand the ban' to credit her account for the amount of the forged chec's. %he ban' refused to do so and this prompted her to file the case against the ban'. 35L=: !orger" is a real defense b" the part" whose signature was forged. 4 part" whose signature was forged was never a part" and never gave his consent to the instrument. ,ince his signature doesn:t appear in the instrument# the same cannot be enforced against him even b" a holder in due course. %he drawee ban' cannot charge the account of the drawer whose signature was forged because he never gave the ban' the order to pa". In the case at bar the chec's were filled up b" petitioner:s emplo"ee &alang and were later given to her for signature. 3er signing the chec's made the negotiable instruments complete. Prior to signing of the chec's# there was no valid contract "et. Petitioner completed the chec's b" signing them and thereafter authoriMed &alang to deliver the same to their respective pa"ees. %he chec's were then indorsed# forged indorsements thereon. 4s a rule# a drawee ban' who has paid a chec' on which an indorsement has been forged cannot debit the account of a drawer for the amount of said chec'. 4n eGception to this rule is when the drawer is guilt" of negligence which causes the ban' to honor such chec's. Petitioner in this case has relied solel" on the honest" and lo"alt" of her boo''eeper and never bothered to verif" the accurac" of the amounts of the chec's she signed the invoices attached thereto. 4nd though she received her ban' statements# she didnPt carefull" eGamine the same to double; chec' her pa"ments. Petitioner didnPt eGercise reasonable diligence which eventuall" led to the fruition of her boo''eeper:s fraudulent schemes. *A!*ON C'ING vs. C,ARITA NICDAO a1( 'ON. CO>RT OF A55EA,* [G.R. No. $4$$ $, /. Apr6l /00.% !acts: Nicdao was charged eleven (++) counts of violation of Batas Pambansa Bilang (BP) )). @% found her of guilt" of said offenses. R% affirmed. Nicdao filed an appeal to the accused. ourt of 4ppeals. 4 reversed the decision and ac9uitted

hing is now appealing the civil aspect of the case to the ,upreme ourt.

hing vigorousl" argues that notwithstanding respondent Nicdao:s ac9uittal b" the 4# the ,upreme ourt has the <urisdiction and authorit" to resolve and rule on her civil liabilit". 3e anchors his contention on Rule +++# ,ec +B: %he criminal action for violation of Batas Pambansa Blg. )) shall be deemed to necessaril" include the corresponding civil action# and no reservation to file such civil action separatel" shall be allowed or recogniMed. @oreover# under the above;9uoted provision# the criminal action for violation of BP )) necessaril" includes the corresponding civil action# which is the recover" of the amount of the dishonored chec' representing the civil obligation of the drawer to the pa"ee. Nicdao:s defense: ,ec ) of Rule +++ 7 5Gcept in the cases provided for in ,ection / hereof# after the criminal action has been commenced# the civil action which has been reserved cannot be instituted until final <udgment in the criminal action. 4ccdg to her# 4:s decision is e9uivalent to a finding that the facts upon which her civil liabilit" ma" arise do not eGist. %he instant petition# which see's to enforce her civil liabilit" based on the eleven (++) chec's# is thus allegedl" alread" barred b" the final and eGecutor" decision ac9uitting her. Issue: +. 6EN hing ma" appeal the civil aspect of the case within the reglementar" periodH >5, ). 6EN Nicdao civill" liableH NE. 3eld: +. hing is entitled to appeal the civil aspect of the case within the reglementar" period. K5ver" person criminall" liable for a felon" is also civill" liable. 5Gtinction of the penal action does not carr" with it eGtinction of the civil# unless the eGtinction proceeds from a declaration in a final <udgment that the fact from which the civil might arise did not eGist. Petitioner hing correctl" argued that he# as the offended part"# ma" appeal the civil aspect of the case notwithstanding respondent Nicdao:s ac9uittal b" the 4. %he civil action was impliedl" instituted with the criminal action since he did not reserve his right to institute it separatel" nor did he institute the civil action prior to the criminal action. If the accused is ac9uitted on reasonable doubt but the court renders <udgment on the civil aspect of the criminal case# the prosecution cannot appeal from the <udgment of ac9uittal as it would place the accused in double <eopard". 3owever# the aggrieved part"# the offended part" or the accused or both ma" appeal from the <udgment on the civil aspect of the case within the period therefor. &5N5R4L RBL5: ivil liabilit" is not eGtinguished b" ac9uittal: +. where the ac9uittal is based on reasonable doubt8 ). where the court eGpressl" declares that the liabilit" of the accused is not criminal but onl" civil in nature8 and

/. where the civil liabilit" is not derived from or based on the criminal act of which the accused is ac9uitted. ). 4 painsta'ing review of the case leads to the conclusion that respondent Nicdao:s ac9uittal li'ewise carried with it the eGtinction of the action to enforce her civil liabilit". %here is simpl" no basis to hold respondent Nicdao civill" liable to petitioner hing. 4:s ac9uittal of respondent Nicdao is not merel" based on reasonable doubt. Rather# it is based on the finding that she did not commit the act penaliMed under BP )). In particular# the 4 found that the P)*#***#***.** chec' was a stolen chec' which was never issued nor delivered b" respondent Nicdao to petitioner hing. 4 did not ad<udge her to be civill" liable to petitioner hing. In fact# the 4 eGplicitl" stated that she had alread" full" paid her obligations. %he finding relative to the P)*#***#***.** chec' that it was a stolen chec' necessaril" absolved respondent Nicdao of an" civil liabilit" thereon as well.

F6resto1e T6re a1( Ru<<er +s. I1es C#a+es J Co. [GR ,7$.$03, $9 O"to<er $933% E1 Ba1", Re;ala 9): Fa"ts& %he chec' was intended as part of the pa"ment of Ines haves: debt. 6hen presented to the ,ecurit" Ban' and %rust o. b" !irestone# the chec' was returned for insufficienc" of funds. =espite repeated demands# Ines haves failed to settle its account8 hence# the suit. Issue& 6hether good faith is re9uired in the issuance of a chec'. 'el(& 5ver"one must in the performance of his duties# observe honest" and good faith. 6here a person issues a postdated chec' without funds to cover it and informs the pa"ee of this fact# he cannot be held guilt" of estafa because there is no deceit. 3erein# there is nothing in the record to show that !irestone 'new that there were no funds when it accepted the chec'# much less that !irestone agreed to ta'e the chec' with 'nowledge of the lac' of funds. 4s Ines haveM is guilt" of fraud (bad faith) in the performance of its obligation# it is liable for damages. Its conduct wanting in good faith# the award of attorne":s fees was warranted.