PBCom vs Aruego

Philippine Bank of Commerce vs. Aruego

GR L-25836-37, 31 January 1981,  102 scra 530

--agents

FACTS:

To facilitate payment of the printing of a periodical called “World Current Events.”, Aruego, its publisher, obtained a credit accommodation from the Philippine Bank of Commerce. For every printing of the periodical, the printer collected the cost of printing by drawing a draft against the bank, said draft being sent later to Aruego for acceptance. As an added security for the payment of the amounts advanced to the printer, the bank also required Aruego to execute a trust receipt in favor of the bank wherein Aruego undertook to hold in trust for the bank the periodicals and to sell the same with the promise to turn over to the bank the proceeds of the sale to answer for the payment of all obligations arising from the draft. The bank instituted an action against Aruego to recover the cost of printing of the latter’s periodical.  Aruego however argues that he signed the supposed bills of exchange only as an agent of the Philippine Education Foundation Company where he is president.

ISSUES:

Whether Aruego can be held liable by the petitioner although he signed the supposed bills of exchange only as an agent of Philippine Education Foundation Company.

RULING:

Aruego did not disclose in any of the drafts that he accepted that he was signing as representative of the Philippine Education Foundation Company. For failure to disclose his principal, Aruego is personally liable for the drafts he accepted, pursuant to Section 20 of the NIL which provides that when a person adds to his signature words indicating that he signs for or on behalf of a principal or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere addition of words describing him as an agent or as filing a representative character, without disclosing his principal, does not exempt him from personal liability.

Dev't Bank of Rizal vs Sima Wei

DEVELOPMENT BANK OF RIZAL vs. SIMA WEI, ET AL.

G.R. No. 85419 March 9, 1993

--complete undelivered

FACTS:

Respondent Sima Wei executed and delivered to petitioner Bank a promissory note engaging to pay the petitioner Bank or order the amount of P1,820,000.00.  Sima Wei subsequently issued two crossed checks payable to petitioner Bank drawn against China Banking Corporation in full settlement of the drawer's account evidenced by the promissory note.  These two checks however were not delivered to the petitioner-payee or to any of its authorized representatives but instead came into the possession of respondent Lee Kian Huat, who deposited the checks without the petitioner-payee's indorsement to the account of respondent Plastic Corporation with Producers Bank.  Inspite of the fact that the checks were crossed and payable to petitioner Bank and bore no indorsement of the latter, the Branch Manager of Producers Bank authorized the acceptance of the checks for deposit and credited them to the account of said Plastic Corporation.

ISSUE:

Whether petitioner Bank has a cause of action against Sima Wei for the undelivered checks.

RULING:

No.  A negotiable instrument must be delivered to the payee in order to evidence its existence as a binding contract.  Section 16 of the NIL provides that every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto.  Thus, the payee of a negotiable instrument acquires no interest with respect thereto until its delivery to him.  Without the initial delivery of the instrument from the drawer to the payee, there can be no liability on the instrument.  Petitioner however has a right of action against Sima Wei for the balance due on the promissory note.

Ang Tek Lian vs CA

Ang Tek Lian vs. Court of Appeals

G.R. No. L-2516 September 25, 1950

--payable to bearer

FACTS:

Petitioner drew a check payable to "cash"knowing that he had no funds in his account.  He delivered said check to Hong for which the latter handed him money.  When the check was presented for payment it was dishonored for insufficiency of funds.  An information for the crime of estafa was filed against Ang Tek Lian.  Petitioner however argues that he is not guilty of the offense charged because he did not endorse the check which was made payable to "cash".

ISSUE:

Whether a check payable to "cash" requires an indorsement by the drawer for it to be encashed.

RULING:

No.  Under Section 9(d) of the NIL, 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.

BPI vs CA

BPI vs. Court of Appeals and Napiza

G.R. No. 112392. February 29, 2000, 326 scra 641

*accommodation party

**liability of general indorser

FACTS:

A certain Henry Chan owned a Continental Bank Manager’s Check payable to "cash" in the amount of Two Thousand Five Hundred Dollars ($2,500.00).  Chan went to the office of Benjamin Napiza and requested him to deposit the check in his dollar account by way of accommodation and for the purpose of clearing the same. Private respondent acceded, and agreed to deliver to Chan a signed blank withdrawal slip, with the understanding that as soon as the check is cleared, both of them would go to the bank to withdraw the amount of the check upon private respondent’s presentation to the bank of his passbook.  Napiza thus endorsed the check and deposited it in a Foreign Currency Deposit Unit (FCDU) Savings Account he maintained with BPI.  Using the blank withdrawal slip given by private respondent to Chan, one Ruben Gayon, Jr. was able to withdraw the amount of $2,541.67 from Napiza's FCDU account.  It turned out that said check deposited by private respondent was a counterfeit check. 

*When BPI demanded the return of $2,500.00, private respondent claimed that he deposited the check "for clearing purposes" only to accommodate Chan.

**Petitioner claims that private respondent, having affixed his signature at the dorsal side of the check, should be liable for the amount stated therein in accordance with the provision of the Negotiable Instruments Law on the liability of a general indorser (Sec. 66).

ISSUE:*

Whether private respondent is obliged to return the money paid out by BPI on a counterfeit check even if he deposited the check "for clearing purposes" only to accommodate Chan.

ISSUE:**

Whether or not respondent Napiza is liable under his warranties as a general indorser.

 

RULING:

Ordinarily private respondent may be held liable as an indorser of the check or even as an accommodation party.  However, petitioner BPI, in allowing the withdrawal of private respondent’s deposit, failed to exercise the diligence of a good father of a family.  BPI violated its own rules by allowing the withdrawal of an amount that is definitely over and above the aggregate amount of private respondent’s dollar deposits that had yet to be cleared.  The proximate cause of the eventual loss of the amount of $2,500.00 on BPI's part was its personnel’s negligence in allowing such withdrawal in disregard of its own rules and the clearing requirement in the banking system. In so doing, BPI assumed the risk of incurring a loss on account of a forged or counterfeit foreign check and hence, it should suffer the resulting damage.