Ang Tiong vs.

Ting
In August 1960, Lorenzo Ting issued a check in the amount of P4,000.00 payable to cash or bearer.
At the back of the check, Felipe Ang affixed his signature. The check later on ended up in the hands
of Ang Tiong. When Tiong presented the check with the bank, it was dishonored. Tiong then sued
Lorenzo and Felipe. Tiong won the collection suit. Felipe appealed on the ground that he should be
allowed to recover from Lorenzo because Felipe is a guarantor and not an indorser. Felipe also
avers, in the alternative, that he is a mere accommodation party and that fact is known by Tiong. As
such, Tiong should make Lorenzo the person directly and primarily liable, not Felipe.

ISSUE: Whether or not Felipes arguments are correct.

HELD: No. The check is a negotiable instrument. What governs the transaction is the Negotiable
Instruments Law (NIL) and not the Civil Code provisions on guaranty. Felipe is not a guarantor.
Under Section 63 of the NIL a person signing in blank a negotiable instrument, such as the check in
this case, is considered as a general indorser. All Felipe did is to affix his signature at the back of the
check such already qualifies as a blank indorsement.
A person placing his signature upon an instrument otherwise than as maker, drawer or acceptor is a
general indorser, unless he clearly indicates plaintiff appropriate words his intention to be bound
in some other capacity, which he did not do. And section 66 ordains that every indorser who
indorses without qualification, warrants to all subsequent holders in due course (a) that the
instrument is genuine and in all respects what it purports to be; (b) that he has a good title to it; (c)
that all prior parties have capacity to contract; and (d) that the instrument is at the time of his
indorsement valid and subsisting. In addition, he engages that on due presentment, it shall be
accepted or paid, or both, as the case may be, and that if it be dishonored, he will pay the amount
thereof to the holder.
Anent Felipes alternative allegation that he is exempt as an accommodation party, the same is not
tenable. Section 29 of the NIL is clear when it states that an accommodation party is liable on the
instrument to a holder for value, notwithstanding that such holder at the time of taking the instrument
knew him to be only an accommodation party.
Further, whether or not Felipe should be allowed to recover from the maker, Lorenzo, does not affect
Tiongs right to recover from any of them (Lorenzo the maker, or Felipe the indorser).

Metrobank vs. CA
Metropolitan Bank & Trust Company vs. Court of Appeals
G.R. No. 88866

February, 18, 1991

Cruz, J.:
Facts:
Eduardo Gomez opened an account with Golden Savings and deposited 38
treasury warrants. All warrants were subsequently indorsed by Gloria Castillo as
Cashier of Golden Savings and deposited to its Savings account in Metrobank
branch in Calapan, Mindoro. They were sent for clearance. Meanwhile, Gomez is not
allowed to withdraw from his account, later, however, exasperated over Floria
repeated inquiries and also as an accommodation for a valued client Metrobank
decided to allow Golden Savings to withdraw from proceeds of the warrants. In turn,
Golden Savings subsequently allowed Gomez to make withdrawals from his own
account. Metrobank informed Golden Savings that 32 of the warrants had been
dishonored by the Bureau of Treasury and demanded the refund by Golden Savings
of the amount it had previously withdrawn, to make up the deficit in its account. The
demand was rejected. Metrobank then sued Golden Savings.

Issue:
1. Whether or not Metrobank can demand refund agaist Golden Savings with regard
to the amount withdraws to make up with the deficit as a result of the dishonored
treasury warrants.
2. Whether or not treasury warrants are negotiable instruments

Held:
No. Metrobank is negligent in giving Golden Savings the impression that the
treasury warrants had been cleared and that, consequently, it was safe to allow

Gomez to withdraw. Without such assurance, Golden Savings would not have
allowed the withdrawals. Indeed, Golden Savings might even have incurred liability
for its refusal to return the money that all appearances belonged to the depositor,
who could therefore withdraw it anytime and for any reason he saw fit.
It was, in fact, to secure the clearance of the treasury warrants that Golden Savings
deposited them to its account with Metrobank. Golden Savings had no clearing
facilities of its own. It relied on Metrobank to determine the validity of the warrants
through its own services. The proceeds of the warrants were withheld from Gomez
until Metrobank allowed Golden Savings itself to withdraw them from its own
deposit.
Metrobank cannot contend that by indorsing the warrants in general, Golden
Savings assumed that they were genuine and in all respects what they purport to
be, in accordance with Sec. 66 of NIL. The simple reason that NIL is not applicable
to non negotiable instruments, treasury warrants.

No. The treasury warrants are not negotiable instruments. Clearly stamped
on their face is the word: non negotiable. Moreover, and this is equal significance,
it is indicated that they are payable from a particular fund, to wit, Fund 501. An
instrument to be negotiable instrument must contain an unconditional promise or
orders to pay a sum certain in money. As provided by Sec 3 of NIL an unqualified
order or promise to pay is unconditional though coupled with: 1st, an indication of a
particular fund out of which reimbursement is to be made or a particular account to
be debited with the amount; or 2nd, a statement of the transaction which give rise
to the instrument. But an order to promise to pay out of particular fund is not
unconditional. 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 conditional and
the warrants themselves non-negotiable. There should be no question that the
exception on Section 3 of NIL is applicable in the case at bar.

Garcia vs. Lacuesta

Antero Mercado left a will dated January 3, 1943. The will appears to have been signed by Atty.
Florentino Javier as he wrote the name of Antero Mercado and his name for the testatior on the will.
HOWEVER, immediately after Antero Mercados will, Mercado himself placed an X mark.
The attestation clause was signed by three instrumental witnesses. Said attestation clause states
that all pages of the will were signed in the presence of the testator and witnesses, and the
witnesses in the presence of the testator and all and each and every one of us witnesses. The
attestation clause however did not indicate that Javier wrote Antero Mercados name.

ISSUE: Whether or not the will is valid.

HELD: No. The attestation clause is fatally defective for failing to state that Antero Mercado caused
Atty. Florentino Javier to write the testators name under his express direction, as required by
Section 618 of the Code of Civil Procedure.
But is there really a need for such to be included in the attestation clause considering that even
though Javier signed for Antero, Antero himself placed his signature by virtue of the X mark, and by
that, Javiers signature is merely a surplusage? That the placing of the X mark is the same as
placing Anteros thumb mark.
No. Its not the same as placing the testators thumb mark. It would have been different had it been
proven that the X mark was Anteros usual signature or was even one of the ways by which he
signs his name. If this were so, failure to state the writing by somebody else would have been
immaterial, since he would be considered to have signed the will himself.

Caltex vs. CA
Negotiable Instruments Law Negotiable Instruments in General 212 SCRA 448 Bearer
Instrument Certificate of Time Deposit
In 1982, Angel de la Cruz obtained certificates of time deposit (CTDs) from Security Bank and Trust
Company for the formers deposit with the said bank amounting to P1,120,000.00. The said CTDs
are couched in the following manner:

This is to Certify that B E A R E R has deposited in this Bank the sum of _______ Pesos, Philippine
Currency, repayable to said depositor _____ days. after date, upon presentation and surrender of
this certificate, with interest at the rate of ___ % per cent per annum.

Angel de la Cruz subsequently delivered the CTDs to Caltex in connection with the purchase of fuel
products from Caltex.
In March 1982, Angel de la Cruz advised Security Bank that he lost the CTDs. He executed an
affidavit of loss and submitted it to the bank. The bank then issued another set of CTDs. In the same
month, Angel de la Cruz acquired a loan of P875,000.00 and he used his time deposits as collateral.
In November 1982, a representative from Caltex went to Security Bank to present the CTDs
(delivered by de la Cruz) for verification. Caltex advised Security Bank that de la Cruz delivered
Caltex the CTDs as security for purchases he made with the latter. Security Bank refused to accept

the CTDs and instead required Caltex to present documents proving the agreement made by de la
Cruz with Caltex. Caltex however failed to produce said documents.
In April 1983, de la Cruz loan with Security bank matured and no payment was made by de la Cruz.
Security Bank eventually set-off the time deposit to pay off the loan.
Caltex sued Security Bank to compel the bank to pay off the CTDs. Security Bank argued that the
CTDs are not negotiable instruments even though the word bearer is written on their face because
the word bearer contained therein refer to depositor and only the depositor can encash the CTDs
and no one else.

ISSUE: Whether or not the certificates of time deposit are negotiable.

HELD: Yes. The CTDs indicate that they are payable to the bearer; that there is an implication that
the depositor is the bearer but as to who the depositor is, no one knows. It does not say on its face
that the depositor is Angel de la Cruz. If it was really the intention of respondent bank to pay the
amount to Angel de la Cruz only, it could have with facility so expressed that fact in clear and
categorical terms in the documents, instead of having the word BEARER stamped on the space
provided for the name of the depositor in each CTD. On the wordings of the documents, therefore,
the amounts deposited are repayable to whoever may be the bearer thereof.
Thus, de la Cruz is the depositor insofar as the bank is concerned, but obviously other parties not
privy to the transaction between them would not be in a position to know that the depositor is not the
bearer stated in the CTDs.
However, Caltex may not encash the CTDs because although the CTDs are bearer instruments, a
valid negotiation thereof for the true purpose and agreement between Caltex and De la Cruz,
requires both delivery and indorsement. As discerned from the testimony of Caltex representative,
the CTDs were delivered to them by de la Cruz merely for guarantee or security and not as payment.

BATAAN CIGAR vs. CA

Facts Bataan Cigar & Cigarette Factory, Inc. engaged one of its suppliers, King Tim PuaGeorge to
deliver 2,000 bales of tobacco leaf starting October 1978. BCCFI, on July13, 1978 issued crossed
checks postdated sometime in March 1979 in the total amount of P820,000.00.Relying on the
supplier's representation that he would complete delivery within three months from December 5,
1978, petitioner agreed to purchase additional 2,500 bales of tobacco leaves, despite the supplier's

failure to deliver in accordance with their earlier agreement. Again petitioner issued postdated
crossed checks in the total amount of P1,100,000.00, payable sometime in September 1979.
George King failed to deliver the bales of tobacco leaf as agreed despite petitioner's demand, BCCFI
issued on March 30, 1979, a stop payment order on all checks payable to George King Efforts of
SIHI to collect from BCCFI failed, the trial court pronounced SIHI as having a valid claim being a
holder in due course. Which was affirmed by the CA

Issue whether or not SIHI, a second indorser, a holder of crossed checks, is a holder indue course,
to be able to collect from the drawer, BCCFI?

Held: No
Ratio
crossing of a check should have the following effects: (a) the check may not been cashed but only
deposited in the bank; (b) the check may be negotiated only once to one who has an account with
a bank; (c) and the act of crossing the check serves as warning to the holder that the check has
been issued for a definite purpose so that he must inquire if he has received the check pursuant to
that purpose, otherwise, he Is not a holder in due course BCCFI's defense in stopping payment is as
good to SIHI as it is to George King. Because, really, the checks were issued with the intention that
George King would supply BCCFI with the bales of tobacco leaf. There being failure of
consideration, SIHI is not a holder in due course.

Associated Bank vs. CA

Merle Reyes is a businesswoman who was issued 6 checks by her customers as payments for her
services. The 6 checks are crossed checks which on their faces are written: Payees account only.
The checks never reached the hands of Reyes. Instead, a certain Rafael Sayson got hold of the
checks and had them deposited, and subsequently encashed, from his deposit account with
Associated Bank.
Reyes demanded refund from Associated Bank as she averred that those checks are crossed
checks and should have only be deposited with Reyes account which is with Prudential Bank.
Associated Bank argued that the checks were indorsed to Sayson by Reyess husband, Eddie
Reyes.
ISSUE: Whether or not Associated Bank should refund the 6 checks.
HELD: Yes. The six checks in the case at bar had been crossed and issued for payees account
only. This could only signify that the drawers (Reyes clients) had intended the same for deposit only
by the person indicated, to wit, Merle Reyes.
The court also elucidated the effects of crossing a check namely:

that the check may not be encashed but only deposited in the bank;
that the check may be negotiated only once to one who has an account
with a bank; and

that the act of crossing the check serves as a warning to the holder that the
check has been issued for a definite purpose so that he must inquire if he has received the check
pursuant to that purpose.

On the other hand, even if indeed Eddie Reyes indorsed the checks, Associated Bank is still liable
because in the first place, the husband is not authorized to make indrosements. And even if the
endorsements were forged, as alleged, Associated Bank would still be liable to Reyes for not
verifying the endorsers authority. There is no substantial difference between an actual forging of a
name to a check as an endorsement by a person not authorized to make the signature and the
affixing of a name to a check as an endorsement by a person not authorized to endorse it.

Republic Bank vs. CA

On January 25, 1966, San Miguel Corporation (SMC) issued a P240.00 check in favor of Roberto
Delgado against SMCs account with the First National City Bank (FNCB). Delgado fraudulently
changed the amount written on the check to P9,240.00. Delgado made a check deposit with
Republic Bank. Republic Bank accepted the check and endorsed it to FNCB by stamping on the
back of the check all prior and/or lack of indorsement guaranteed. The check cleared and FNCB
paid Republic Bank P9,240.00.
On April 19, 1966, SMC notified FNCB that the check involved was forged. FNCB refunded SMC the
amount of the check. On May 19, 1966, FNCB informed Republic bank about the forgery, by then
Delgado withdrew his account from Republic Bank. On August 15, 1966, FNCB demanded Republic
Bank to refund the amount of the check.

ISSUE: Whether or not Republic Bank should refund the amount to FNCB.

HELD: No. The 24-hour clearing house rule embodied in Section 4(c) of Central Bank Circular No. 9,
as amended, applies to this case. This rule mandates banks that after a clearing, all cleared items
must be returned not later than 3:00 PM of the following business day.
It is true that when an endorsement is forged, the collecting bank or last endorser, as a general rule,
bears the loss. But the unqualified endorsement of the collecting bank on the check should be read
together with the 24-hour regulation on clearing house operation. Thus, when the drawee bank
(FNCB) fails to return a forged or altered check to the collecting bank (Republic Bank) within the 24hour clearing period, the collecting bank is absolved from liability.

Evangelista vs. Mercator Finance

Facts: The spouses Evangelista filed a complaint for annulment of titles against the
respondents, claiming to be the registered owners of five (5) parcels of land
contained in the real estate mortgage executed by them and Embassy Farms Inc. in
favor of Mercator Financing Corporation (Mercator). The mortgage was in
consideration of certain loans and credit accommodations amounting to P844,
625.78.
The spouses alleged the following: (1) that they executed the said real estate
mortgage merely as officers of Embassy Farms; (2) that they did not receive the
proceeds of the loan evidenced by the promissory note, as all went to Embassy
Farms; (3) that the real estate mortgage is void due to absence of a principal
obligation on which it rests; (4) that since the real estate mortgage is void, the
foreclosure proceedings, the subsequent sale as well as the issuance of transfer
certificates of title are likewise void. Petitioners further alleged ambiguity in the
wording of the promissory note, which should be resolved against Mercator who
provided the form thereof.
Mercator admitted that petitioners were the owners of the subject parcels of land. It,
however, contended that the spouses executed a Mortgage in favor of Mercator
Finance Corporation for and in consideration of certain loans, and/or other forms of
credit accommodations obtained from the Mortgagee (defendant Mercator Finance
Corporation) amounting to EIGHT HUNDRED FORTY-FOUR THOUSAND SIX HUNDRED
TWENTY-FIVE & 78/100 (P844,625.78) and to secure the payment of the same and
those others that the MORTGAGEE may extend to the MORTGAGOR (plaintiffs) x x
x. It contended that since petitioners and Embassy Farms signed the promissory
note as co-makers (the note being worded as For value received, I/We jointly and
severally promise to pay to the order of Mercator), aside from the Continuing
Suretyship Agreement subsequently executed to guarantee the indebtedness, the
petitioners are jointly and severally liable with Embassy Farms. Due to their failure
to pay the obligation, the foreclosure and subsequent sale of the mortgaged

properties are thus valid. Respondents Salazar and Lamecs asserted that they are
innocent purchasers for value and in good faith.
Issue: May the spouses be held solidarily liable with Embassy Farms?
Held: YES. Courts can interpret a contract only if there is doubt in its letter. But, an
examination of the promissory note shows no such ambiguity. Besides, assuming
arguendo that there is an ambiguity, Section 17 of the Negotiable Instruments Law
states, viz:
SECTION 17. Construction where instrument is ambiguous. Where the language of
the instrument is ambiguous or there are omissions therein, the following rules of
construction apply: (g) Where an instrument containing the word I promise to pay
is signed by two or more persons, they are deemed to be jointly and severally liable
thereon.

Petitioners also insist that the promissory note does not convey their true intent in
executing the document. The defense is unavailing. Even if petitioners intended to
sign the note merely as officers of Embassy Farms, still this does not erase the fact
that they subsequently executed a continuing suretyship agreement. A surety is one
who is solidarily liable with the principal. Petitioners cannot claim that they did not
personally receive any consideration for the contract for well-entrenched is the rule
that the consideration necessary to support a surety obligation need not pass
directly to the surety, a consideration moving to the principal alone being sufficient.
A surety is bound by the same consideration that makes the contract effective
between the principal parties thereto. Having executed the suretyship agreement,
there can be no dispute on the personal liability of petitioners.