PNB vs. NATIONAL CITY BANK OF NEW YORK and MOTOR SERVICE COMPANY INC.

FACTS: PNB is a banking corporation made by virtue special act of Philippine Legislature while the National Bank of New Your is banking corporation authorized and licensed to carry and engage in banking business in the Philippines and the Motor Service ompany !nc"# is a corporation organized by corporation law of Philippines engaged in the purchase and sale of automobile spare parts and accessories" $hen an unknown person or persons negotiated with defendant Motor Service ompany# !nc"# the checks which are made parts of the stipulation# in payment for automobile tires purchased from said defendant%s stores# purporting to have been issued by the &Pangasinan $ransportation o"# !nc" by '" L" (lar# Manager and $reasurer&# against the Philippine National Bank and in favor of the !nternational )uto *epair Shop# for P+,,"-. and P/+-"0-1 and said checks were indorsed by said unknown persons in the manner indicated at the back thereof# the Motor Service o"# !nc"# believing at the time that the signature of '" L" (lar# Manager and $reasurer of the Pangasinan $ransportation o"# !nc"# on both checks were genuine" $he said checks were cleared at the clearing house and the Philippine National Bank credited the National ity Bank of New York" The Philippine National Bank then found out that the purported signatures of '" L" (lar# as Manager and $reasurer of the Pangasinan $ransportation ompany# !nc"# were forged when so informed by the said ompany# and it accordingly demanded from the defendants the reimbursement of the amounts for which it credited the National ity Bank of New York at the clearing house and for which the latter credited the Motor Service o"# but the defendants refused# and continue to refuse# to make such reimbursements" ISSUE: 23N the check is accepted or certified by the petitioner" RULING: N3" !t is contended# first of all# that the payment of the checks in 4uestion made by the drawee bank constitutes an &acceptance&# and# conse4uently# the case should be governed by the provisions of section 5/ of the Negotiable !nstruments Law# which says6 S7 " 5/" Liability of acceptor" 8$he acceptor by accepting the instrument engages that he will pay it according to the tenor of his acceptance1 and admits6 9a: $he e;istence of the drawer# the genuineness of his signature# and his capacity and authority to draw the instrument1 and 9b: $he e;istence of the payee and his then capacity to indorse" $his contention is without merit" ) check is a bill of e;change payable on demand and only the rules governing bills of e;change payable on demand are applicable to it# according to section +<- of the Negotiable !nstruments Law" !n view of the fact that acceptance is a step unnecessary# in so far as bills of e;change payable on demand are concerned 9sec" +,=:# it follows that the provisions relative to &acceptance& are without application to checks" )cceptance implies# in effect# subse4uent negotiation of the instrument# which is not true in case of the payment of a check because from the moment a check is paid it is withdrawn from circulation" $he warranty established by section 5/# is in favor of holders of the instrument after its acceptance" 2hen the drawee bank cashes or pays a check# the cycle of negotiation is terminated# and it is illogical thereafter to speak of subse4uent holders who can invoke the warranty provided in section 5/ against the drawee" Moreover# according to section +>+# &acceptance& means &an acceptance completed by delivery or notification& and this concept is entirely incompatible with payment# because when payment is made the check is retained by the bank# and there is no such thing as delivery or notification to the party receiving the payment" hecks are not to be accepted# but presented at once for payment" 9+ Bouvier%s Law ?ictionary# ,05": $here can be no such thing as &acceptance& in the ordinary sense of the term" ) check being payable immediately and on demand# the bank can fulfill its duty to the depositor only by paying the amount demanded" $he holder has no right to demand from the bank anything but payment of the check# and the bank has no right# as against the drawer# to do anything but pay it" 9- *" " L"# p" -+5# par" =<": ) check is not an instrument which in the ordinary course of business calls for acceptance" $he holder can never claim acceptance as his legal right" @e can present for payment# and only for payment"

2here a check is accepted or certified by the bank on which it is drawn# the bank is estopped to deny the genuineness of the drawer%s signature and his capacity to issue the instrument" !f a drawee bank pays a forged check which was previously accepted or certified by the said bank it cannot recover from a holder who did not participate in the forgery and did not have actual notice thereof" $o entitle the holder of a forged check to retain the money obtained thereon# there must be a showing that the duty to ascertain the genuineness of the signature rested entirely upon the drawee# and that the constructive negligence of such drawee in failing to detect the forgery was not affected by any disregard of duty on the part of the holder# or by failure of any precaution which# from his implied assertion in presenting the check as a sufficient voucher# the drawee had the right to believe he had taken"

ABUBAKAR vs. AUDITOR GENERAL FACTS: $he )uditor Aeneral refuse to authorized the payment of $resury warrant for P+#... which was issued in favor of Placido S" Brbanes but is now in the hands of herein petitioner BenCamin )bubakar"Dor his refusal the respondent give two 9/: reasons6 first# because the money available for the redemption of treasury warrants issued# is appropriated by *epublic )ct No" <. and this warrant does not come within the purview of said appropriation1 and second# because on of the re4uirements of his office had not been complied with# namely# that it must be shown that the holders of warrants covering payment or replenishment of cash advances for official e;penditures 9as this warrant is: received them in payment of definite government obligations" $he petitioner argues that he is a holder in good faith and for value of a negotiable instrument an dis entitled to the rights and privileges of a holder in due course# free from defenses" ISSUE: 23N the $reasury warrant is a negotiable instrument" RULING: N3" ) treasury warrant Epayable from the appropriation for food administration#F is actually an order for payment out of Ea particular fund#F and is not unconditional# and does not fulfill one of the essential re4uirements of a negotiable instrument" !n the Bnited States# government warrants for the payment of money are not negotiable instruments nor commercial paper"

PHILIPPINE EDUCATIONAL VS. SORIANO FACTS: 7nri4ue Montinola sought to purchase from Manila Post 3ffice ten money orders of /..php each payable to 7" P" Montinola" Montinola offered to pay with the money orders with a private check" Private check were not generally accepted in payment of money orders# the teller advised him to see the hief of the Money 3rder ?ivision# but instead of doing so# Montinola managed to leave the building without the knowledge of the teller" Bpon the disappearance of the unpaid money order# a message was sent to instruct all banks that it must not pay for the money order stolen upon presentment" $he Bank of )merica received a copy of said notice" @owever# $he Bank of )merica received the money order and deposited it to the appellantGs account upon clearance" Mauricio Soriano# hief of the Money 3rder ?ivision notified the Bank of )merica that the money order deposited had been found to have been irregularly issued and that# the amount it represented had been deducted from the bankGs clearing account" $he Bank of )merica debited appellantGs account with the same account and give notice by mean of debit memo" ISSUE: 23N the postal money order in 4uestion is a negotiable instrument" RULING: !t is not disputed that our postal statutes were patterned after statutes in force in the Bnited States" Dor this reason# ours are generally construed in accordance with the construction given in the Bnited States to their own postal statutes# in the absence of any special reason Custifying a departure from this policy or practice" he weight of authority in the Bnited States is that postal money orders are not negotiable instruments 9Bolognesi vs" B"S" +<> Ded" =>-1 B"S" vs" Stock ?rawers National Bank# =. Ded" >+/:# the reason behind this rule being that# in establishing and operating a postal money order system# the government is not engaging in commercial transactions but merely e;ercises a governmental power for the public benefit" !t is to be noted in this connection that some of the restrictions imposed upon money orders by postal laws and regulations are inconsistent with the character of negotiable instruments" Dor instance# such laws and regulations usually provide for not more than one endorsement1 payment of money orders may be withheld under a variety of circumstances 9,> "'" ++-=:"

SESBRENO VS. COURT OF APPEALS FACTS: 3n > Debruary +><+# *aul Sesbreno made a money market placement in the amount of P=..#... with the Philippine Bnderwriters Dinance orporation 9PhilDinance:# with a term of =/ days" PhilDinance issued to Sesbreno the ertificate of onfirmation of Sale of a ?elta Motor orporation Promissory Note 9/0=+:# the ertificate of Securities ?elivery *eceipt indicating the sale of the note with notation that said security was in the custody of Pilipinas Bank# and postdated checks drawn against the !nsular Bank of )sia and )merica for P=.,#-=="== payable on += March +><+" $he checks were dishonored for having been drawn against insufficient funds" Pilipinas Bank never released the note# nor any instrument related thereto# to Sesbreno1 but Sesbreno learned that the security was issued +. )pril +><.# maturing on 5 )pril +><+# has a face value of P/#=..#<=="== with PhilDinance as payee and ?elta Motors as maker1 and was stamped EnonHnegotiableF on its face" )s Sesbreno was unable to collect his investment and interest thereon# he filed an action for damages against ?elta Motors and Pilipinas Bank" !SSB76 23N nonHnegotiability of a promissory note prevents its assignment" *BL!NA6 ) negotiable instrument may# however# instead of being negotiated# also be assigned or transferred" $he legal conse4uences of negotiation as distinguished from assignment of a negotiable instrument are# of course# different" ) nonHnegotiable instrument may# obviously# not be negotiated1 but it may be assigned or transferred# absent an e;press prohibition against assignment or transfer written in the face of the instrument6 $he words &not negotiable#& stamped on the face of the bill of lading# did not destroy its assignability# but the sole effect was to e;empt the bill from the statutory provisions relative thereto# and a bill# though not negotiable# may be transferred by assignment1 the assignee taking subCect to the e4uities between the original parties" +/ 97mphasis added: ?M PN No" /0=+# while marked &nonHnegotiable#& was not at the same time stamped &nonHtransferable& or &nonHassignable"& !t contained no stipulation which prohibited Philfinance from assigning or transferring# in whole or in part# that Note" )propos ?elta%s complaint that the partial assignment by Philfinance of ?M PN No" /0=+ had been effected without the consent of ?elta# we note that such consent was not necessary for the validity and enforceability of the assignment in favor of petitioner" +, ?elta%s argument that Philfinance%s sale or assignment of part of its rights to ?M PN No" /0=+ constituted conventional subrogation# which re4uired its 9?elta%s: consent# is 4uite mistaken"