Nego Case Doctrines

Case Philippine Education Co., vs. Mauricio Soriano, et al.,

Caltex Philippines, Inc., vs. Court of Appeals and Security Bank and Trust Company

Metropolitan Bank vs. Court of Appeals

Sesbreno vs. Court of Appeals

Firestone Tire and Rubber Co., vs. Court of Appeals

Case Doctrine Postal money orders are not negotiable instruments. In establishing and operating a postal money order system, the government is not engaging in commercial transactions but merely exercises a governmental power for the public benefit. The negotiability or non-negotiability of an instrument is determined from the writing, that is, from the face of the instrument itself. The documents provided that the amounts deposited shall be repayable to the depositor. The amounts are repayable to the bearer of the documents. The indication of Fund 501 as the source of the payment to be made on the treasury warrants makes the order or promise to pay ‘not unconditional’ and the warrants themselves non-negotiable, in accordance with Section 3 of the Negotiable Instruments Law. An instrument though marked non-negotiable, may nevertheless be assigned or transferred, absent an express prohibition against assignment or transfer written on the face of the instrument. The words ‘not negotiable’ stamped on the face of the bill of lading did not destroy its assignability, but the sole effect was to exempt the bill from the statutory provisions relative thereto. A bill, though not negotiable, may be transferred by assignment; the assignee taking subject to the equities between the original parties. As the withdrawal slips in question were non-negotiable, the rules governing the giving of immediate notice of dishonor of negotiable instruments do not apply. The respondent bank was under no obligation to give immediate notice that it would not make payment on the subject withdrawal slips. Citibank should have known that withdrawal slips were not negotiable instruments. It could not expect these slips to be treated as checks by other entities. Payment or notice of dishonor from respondent bank could not be expected immediately, in contrast to the situation involving checks. Citibank was not bound to accept the

Ang Tek Lian vs. Court of Appeals

Development Bank of Rizal, vs. Sima Wei and/or Lee Kian Huat, Mary Cheng Uy, Samson Tung, Asian Industrial Plastic Corporation and Producers Bank of the Philippines

The Philippine Bank of Commerce vs. Jose M. Aruego

Adalia Francisco vs. Court of Appeals, Herby Commercial & Construction Corporation and Jaime C. Ong

Jai-Alai Corporation of the Philippines vs. Bank of the Philippine Islands

withdrawal slips as a valid mode of deposit. But having erroneously accepted them as such, Citibank – and petitioner as account-holder – must bear the risks attendant to the acceptance of these instruments. Under Section 9 (d) of the Negotiable Instruments Law, a check drawn payable to the order of ‘cash’ is a check payable to bearer, and the bank may pay it to the person presenting it for payment without the drawer’s indorsement. A check payable to bearer is authority for payment to holder. Where a check is in the ordinary form, and is payable to bearer, so that no indorsement is required, a bank, to which it is presented for payment, need not have the holder identified, and is not negligent in doing so. a. The payee of a negotiable instrument acquires no interest with respect thereto until its delivery to him. Delivery of an instrument means transfer of possession, actual or constructive, from one person to another. Without the initial delivery of the instrument from the drawer to the payee, there can be no liability on the instrument. Moreover, such delivery must be intended to give effect to the instrument. b. The delivery of checks in payment of an obligation does not constitute payment unless they are cashed or their value is impaired through the fault of the creditor. a. A party who signs a bill of exchange as an agent, but failed to disclose his principal becomes personally liable for the drafts he accepted. The Negotiable Instruments Law provides that where any person is under obligation to indorse in a representative capacity, he may indorse in such terms as to negative personal liability. An agent, when so signing should indicate that he is merely signing in behalf of the principal; otherwise he shall be held personally liable. a. Where a check is deposited with a collecting bank, the relationship created is that of agency, not creditor-debtor. Same rule follows where after drawee-bank paid the collecting bank, it

Metropolitan Waterworks and Sewage System vs. Court of Appeals

Republic Bank vs. Mauricia T. Ebrada Banco de Oro Savings and Mortgage Bank vs. Equitable Banking Corporation

Gempesaw vs. Court of Appeals

was found out that the signature of the payee of the check was forged by the one who previously encashed them. b. It is the obligation of the collecting bank to reimburse the drawee-bank for the value of the checks subsequently found to contain the forged indorsement of the payee, since the bank with which the check was deposited has no right to pay the sum stated therein to the forger, or anyone else upon a forged signature. c. A depositor of a check as indorser warrants that it is genuine and in all respects what it purports to be. d. One who accepts and encashes a check from an individual knowing that the payee is a corporation does so out of his own peril. a. Where a depositor is using its own personalized checks, its failure to provide adequate security measures to prevent forgeries of its checks constitutes gross negligence and bars it from setting up the defense of forgery. b. Failure of depositor to make prompt reconciliation of the monthly bank statements furnished by the bank constitutes negligence for which the bank cannot be blamed in case depositor’s checks are forged. It is only the negotiation predicated on the forged indorsement that should be declared inoperative. a. By stamping its guarantee at the back of the checks, petitioner is now estopped from claiming that the checks under consideration are not negotiable instruments. Petitioner can not now deny liability because it has assumed the liabilities of an indorser by stamping its guarantees at the back of the checks. b. The collecting bank or last indorser generally suffers the loss because it has the duty to ascertain the genuineness of all prior indorsements.