Anda di halaman 1dari 12

Banco Atlantico vs.

Auditor General Instruments: Checks (demand notes) Drawer: Philippine Embassy Drawee: PNB Payees: Boncan and Pace Collecting bank: Banco Atlantico (Spain) Boncan was the Finance Officer of the Philippine Embassy in Madrid who on many occasions negotiated with Banco Atlanticochecks, allegedly endorsed to her by the embassy.On these occasions, the bank allowed the payment of the checks, notwithstanding the fact that the drawee bank has not yet cleared the checks for collection. This was premised on the finding that Boncan had special relations with the employees of the bank. And that upon presentment to the drawee bank, the checks were dishonored from non-acceptance allegedly on the ground that the drawer was ordered to stop payment. This prompted Banco Atlantico to collect from the Philippine Embassy for the funds released to Boncan which the latter refused. Banco Atlantico filed a money claim with the Auditor General. Auditor General:Banco Atlantico cannot recover from PNB. Banco Atlanticoappeal. SC: Auditor General affirmed. IS BANCO ATLANTICO AHOLDER IN DUE COURSE: Following the decision of the Aud. Gen. in denying the claim of the bank, the checks were demand notes. It should have been put on guard when Boncan negotiated the checks with them and subsequently deposited thesametoheraccount.Eventhoughitweredemandnotes,she instructed the bank that the same be not presented for collection till a later date. o The fact that the amount was quite big and it was the payee herself who made the request that the same be not presented for collection until a fixed date in the future was proof of a glaring infirmity or defect in the instrument. It loudly proclaimsTakemeatyourown risk. It was obvious by then that the bank had knowledge of the infirmity or defect of the checks. Furthermore, what it did when it allowed payment before clearing is beyond the normal and ordinary banking practice especially when the bank involved is a foreign bank and the amounts involved were large. Boncan wasn't even a client of the bank but was someone who had special relations with its officers.

LIABILITY OF DRAWER: The Embassy as the drawer of the 3 checks cannot be held liable. It is apparent that the said 3 checks were (fraudulently altered) by Boncan as to their accounts and therefore wholly inoperative (note: should be avoided).

MBTC v. Cabilzo Instrument: Postdated Metrobank check payable to CASH P1,000 Drawer:Cabilzo Drawee: Metrobank Holder: Marquez (paid as sales commission) Collecting Bank: Westmont Bank Cabilzos representative was at Metrobank Pasong Tamo Branch to make some transaction when he was asked by a bank personnel if Cabilzo had issued a check in the amount of P91,000.00 to which the former replied in the negative. On the afternoon of the same date, Cabilzo himself called Metrobank to reiterate that he did not issue a check in the amount of P91,000.00 and requested that the questioned check be returned to him for verification, to which Metrobank complied. He saw that the check (described above) was altered as to its amount and date. Cabilzo demanded that Metrobank credit his account which Metrobank did not heed. Cabilzo filed a suit for damages. Metrobank argued that Westmont Bank should bear the loss since it was the last indorser who guaranteed the genuineness of the instrument. It also claimed that it exercised extraordinary diligence and that the alterations were not discernible by close inspection. It also said that it was Cabilzos fault for leaving spaces that allowed the alteration to be committed. RTC:Metrobank to pay Cabilzo P90k, 20k AF and 50k ExempD. Metrobank filed a TPC against Westmont Bank which was dismissed on the ground of litispendentia (pending claim of Metrobank angainst Westmont before the PCHC). CA:RTC affirmed, AF+ED deleted. Metrobank filed MR. CA (on MR): MR denied. Metrobank filed cert. SC: CA affirmed, 50K ED. WHEN IS AN ALTERATION MATERIAL: An alteration is said to be material if it changes the effect of the instrument. It means that an unauthorized change in an instrument that purports to modify in any respect the obligation of a party or an unauthorized addition of words or numbers or other change to an incomplete instrument

relating to the obligation of a party. In other words, a material alteration is one which changes the items which are required to be stated under Section 1 of the Negotiable Instruments Law.

EFFECT OF MATERIAL ALTERATION: S124 Where a negotiable instrument is materially altered without the

assent of all parties liable thereon, it is avoided, except as against a party who has himselfmade,authorized, and assented to the alteration and subsequent indorsers. DILIGENCE OF DRAWER: There is no showing that he failed to exercise such reasonable degree of diligence required of a prudent man which could have otherwise prevented the loss. In fact, he was wary enough that he filled with asterisks the spaces between and after the amounts, not only those stated in words, but also those in numerical figures, in order to prevent any fraudulent insertion.

W/N EQUITABLE ESTOPPEL APPLIES: The doctrine of equitable estoppel states that when one of the two
innocent persons, each guiltless of any intentional or moral wrong, must suffer a loss, it must be borne by the one whose erroneous conduct, either by omission or commission, was the cause of injury. Metrobanks reliance on this dictum, is misplaced. For one, Metrobanks representation that it is an innocent party is flimsy and evidently, misleading. At the same time, Metrobank cannot asseverate that Cabilzo was negligent and this negligence was the proximate cause22 of the loss in the absence of even a scintilla proof to buttress such claim. DILIGENCE REQUIRED OF DRAWEE: Metrobank was remiss in that duty and violated that relationship. As observed by the Court of Appeals, there are material alterations on the check that are visible to the naked eye. o o The number "1" in the date is clearly imposed on a white figure in the shape of the number "2". At the end of the amount after the word "ONLY", there are 4 asterisks, while at the beginning of the line or before said phrase, there is none, even as 4 asterisks have been placed before and after the word "CASH" in the space for payee. 4 asterisks before the words "ONE THOUSAND PESOS ONLY" have noticeably been erased with typing correction paper, leaving white marks, over which the word "NINETY" was superimposed. "9" in the amount "91,000", which is superimposed over a whitish mark, obviously an erasure, in lieu of the asterisk which was deleted to insert the said figure. check in question was examined by the cash custodian whose functions do not include the examinations of checks indorsed for payment against drawers accounts.

o o o

LIABILITY OF DRAWEE: the drawee bank, is under strict liability to pay to the order of the payee in accordance with the drawers instructions as reflected on the face and by the terms of the check. Payment made under materially altered instrument is not payment done in accordance with the instruction of the drawer. o Since the drawee bank did not pay according to the original tenor of the instrument, as directed by the drawer, then it has no right to claim reimbursement from the drawer, much less, the right to deduct the erroneous payment it made from the drawers account.

RECOURSE OF DRAWEE: Metrobank is not left with no recourse for it can still run after the one who made the alteration or with the collecting bank, which it had already done.

Marine National Bank v National City Bank On December 1, 1869, Lunt Brothers gave to a stranger, in exchange for $25, a check for that amount drawn upon Marine National Bank, payable to the order of Henry Smith. The next day, a PERSON (not identified in the case) went to Derippe & Co., gold brokers in New York, inquiring for the price of $3,334 gold in currency and stating that he wished to buy some for the Lunt Brothers. Derippe & Co. delivered to the PERSON a memorandum giving the amount as $4,079.96. The PERSON returned with the check issued by the Lunt Brothers which had been altered by erasing the date, payee and amount, and inserting date December 2, 1869, payee Derippe & Co., amount $4,079.96. Derippe & Co. sent the check to Marine National Bank for certification. Marine National Bank upon presentation duly certified the check. Derippe & Co. without notice and being ignorant of the alteration and relying upon the certification, gave to the PERSON the sum of $3,334 American gold, receiving in payment the certified check. Derippe & Co. indorsed the check and deposited it in their account with National City Bank. Marine National Bank paid the check to National City Bank. Immediately after discovering the alterations, Marine National Bank requested repayment of the amount from National City Bank.

National City Bank refused to repay. Both Marine National Bank and National City Bank, when they certified and paid the check and received the check on deposit and received payment respectively, believed it to be a genuine check. Referee: Marine National Bank did not guarantee the genuineness of the filling up of the check by certifying, and so was not estopped from showing the alteration, and was entitled to judgment for the amount paid. General Term: Granted a new trial.

Issue: WON Marine National Bank is estopped from showing the alterations because it certified the check. Held: Referee affirmed. An acceptor of a bill of exchange by acceptance only admits the genuineness of the signature of the drawer, and does not admit the genuineness of the indorsements, whether the drawee of the same bill, or of any other person whose name appears upon it, or any other part of the bill. When the bill is presented for acceptance the acceptor looks to the handwriting of the drawer with which he is presumed to be acquainted, and he affirms its genuineness by giving credit to the bill, by his acceptance in favor of the legal holder thereof. The acceptor cannot be presumed to have any such knowledge of the other facts upon which the rights of the holder may depend. The certificate only holds the bank for the truth of the facts presumed to be within its own knowledge, viz, the genuineness of the signature of the drawer and the state of his account. Doctrine: Moneys paid upon checks and drafts which have been forgeries, either in the body of the instrument or in the indorsements, or in any respect, except the name of the drawer, is recoverable as for money paid by mistake, and upon the ground that payment as an admission of the genuineness of the instrument , was the same as an acceptance, and only operated as an admission of the signature of the drawer. The doctrine is applied to cases of bills altered in the body, by the raising of the amount for which they were drawn, and also to those in which the name of the payee has been feloniously changed. Judge Ruggles: There is no ground for presuming the body of the bill to be in the drawers handwriting, or in any handwriting known to the acceptor. To require the drawee to know the handwriting of the residue of the bill is unreasonable. It would, in most cases, be requiring an impossibility. Such a rule would be not only arbitrary and rigorous, but unjust.

COHN v CITY OF TAUNTON Action was brought by innocent purchasers for value without notice to recover the face amount of overdue coupons on certain bonds of the City of Taunton payable to bearer which have been stolen from the vault of the city treasurer. Impt fact: After these bearer bonds had been delivered to the City Treasurer as agent in order to have them registered, he had completed the issue of fully registered bonds of like amount, but had not destroyed or cancelled the bearer bonds nor placed any notation upon them and had kept them in his vault. Held: Bonds were negotiable instruments and that holders in due course had the rights confirmed to such holders by the negotiable instruments law. An instrument negotiable in form and signed by the maker may be enforced by a holder in due course, in spite of the fact that there has been no proper delivery by the maker or that instrument has been stolen from him. A valid delivery is conclusively presumed in favor of the holder in due course. This rule is applicable against municipal corporations. It would be unfortunate if bonds of municipalities passing by delivery in the market should be treated differently in this regard from the negotiable paper of other corporations and individuals. Statutes strictly regulating the incurring of liability by municipalities could never affect the position of an innocent holder. An instrument that has once been issued, returned, discharged, and then stolen would seem to stand no differently in the hands of a holder in due course than an instrument that has been prepared, signed and stolen before being issued.




PARTIES: FACTS: Hart secured the signatures of the spouses Panac by false representations by making them believe that they were signing a contract to repair dwelling houses but in truth were promissory notes (2 PNs were signed together with other documents on the house repair contract). The spouses, who were illiterate, at first refused. They wished to see an attorney before sigining because they could not read the instrument; however they eventually agreed to sign the instruments, relying on the assurance of Hart. The 2 PNs were indorsed to CLT Corp who now claims the value from the spouses. The trial court found: that plaintiff is a holder in due course that spouses were not negligent in signing the notes hence they are not liable Spouses Panac maker Home Improvement Company payee Hart agent of payee CLT Corporation holder/indorsee

ISSUES/RATIO WON the defense of Spouses (fraud) was real, hence good against plaintiff as a holder in due course. YES There is a manifest distinction between fraud in the execution--in the fact of whether or not an instrument has been executed at all, and fraud in the inducement, that is, where because of the fraudulent representation of the payee, the maker knowingly and voluntarily executes the note, but it is voidable because of the fraud inducing him to execute it. In the former there is no contract whatever. In the latter there is a contract which is voidable for fraud. By the overwhelming weight of authority a negotiable instrument which is void under the foregoing circumstances, where there is in fact no contract or there is fraud in the execution, is not enforceable by a holder in due course in the absence of negligence on the part of the maker; that is, the maker has a real defense to an action thereon. Despite the provision that:"A holder in due course holds the instrument free from any defect of title (similar to sec 23 of NIL), it was not intended by the enactment of the negotiable instruments law that the whole law of contracts was to be abrogated unless clearly indicated. The defense under consideration goes to the existence of any contract. If there is no contract there is no negotiable instrument, which is a simple contract. Authorities in Negotiable Instrument (Williston, Daniel, Britton, et al) are of the view thatwhere the instrument was originally void and there are either no circumstances justifying an estoppel or, though there are, the policy of the law forbids enforcement of the instrument even by a holder in due course. The great weight of authority must be adopted for there to have uniformity in the Negotiable instruments law. WON the evidence is not sufficient to support findings of fraud. YES Evidence is clear that Hart read the contract for the repair to defendants but not the documents containing the six instruments including the notes. Defendants did not know they were signing promissory notes or certificates that the work had been completed when it had not even been commenced. that they did not know they were signing a negotiable instrument with results which follow from its negotiation. They would not have signed it if they had known they were signing notes and certificates of completion is a reasonable inference from the foregoing. Hart knew of the illiteracy of defendants. He was using "high pressure" selling methods upon persons who would appear to be easy victims. The whole tenor of the transactions shows fraud upon his part. WON Spouses were negligent in signing the instruments. NO The court considered the ff: illiteracy of defendants,

the high pressure methods pursued by Hart, the reading of only the contract for repairs and not the notes, the insistence by Hart of an immediate execution, and Hart's brushing aside Mrs. Panac's suggestion that advice and particularly legal advice be first obtained. The other persons who were present when the spouses signed the instrument were friends of Hart a person who cannot read is not always negligent in not calling on a third person to read the instrument to him, the question as to his negligence generally being one for the jury,

People v Yabut FACTS The Spouses Yabut were separately charged with the crime of Estafa by means of false pretenses in CFI Bulacan. Involved in these cases were checks issued (on separate occasions) by the spouses drawn against the Merchants Banking Corporation and Manufacturers Bank and Trust Company and payable to the Free Tires Supply and Free Caltex Station, owned and operated by Alicia P. Andan, in payment articles and merchandise sold to the Spouses The spouses filed a motion to quash contending that 1) the facts recited do not constitute an offense because the checks were issued in payment of a pre-existing obligation; and (2) the venue was improperly laid in Malolos Bulacan, considering that the postdated checks were issued and delivered to and received by the complainant (through one Yambao) in Caloocan, where accused Yabut holds office.chanroblesvirtualawlibrary chanrobles virtual law library The Judge quashed the informations because "(t)he elements of the crime (issuance of the rubber check, attempted encashment, and refusal to honor) alleged in the Information all took place within the territorial jurisdiction, not of Bulacan, but of Caloocan City."y ISSUE: WON CFI Malolos Bulacan has jurisdiction. YES RULING Estafa is a transitory or continuing in nature. Deceit has taken place in Malolos, Bulacan, while the damage in Caloocan City, where the checks were dishonored by the drawee banks there. Jurisdiction can, therefore, be entertained by either the Malolos court or the Caloocan court. While the subject checks were written, signed, or dated in Caloocan City, they were not completely made or drawn there, but in Malolos, Bulacan, where they were uttered and delivered. An undelivered bill or note is inoperative. Until delivery, the contract is revocable. 5 And the issuance as well as the delivery of the check must be to a person who takes it as a holder, which means "(t)he payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof." Delivery of the check signifies transfer of possession, whether actual or constructive, from one person to another with intent to transfer title thereto. Yambao not an agent hence no delivery. Yambao's receipt of the bad checks from the accused in Caloocan City cannot be taken as delivery of the checks to the complainant Andan at Caloocan City to fix the venue there. He did not take delivery of the checks as holder, i.e., as "payee" or "indorse". Yambo is a mere "messenger" or "part-time employee" and not an agent of complaint Alicia P. Andan. The receipt by the spouses Yabut at Caloocan City of the tires and gas supplies from Malolos, Bulacan, signifies but the consummation of the contract between the parties. It was the result of an obligation previously contracted at Malolos, Bulacan. A prosecution for issuing a worthless check with intent to defraud is in the county where the check was uttered and delivered.

PEOPLE V. GROSPE FACTS: Parolan was an authorized wholesale dealer of SMC. He was charged with violations of BP22 and estafa for allegedly issuing checks in favor of SMC but when the check was presented, it was dishonored for having insufficiency funds. This is even more aggravated by the allegation that Paralan failed to make good the check to the prejudice of SMC. The checks in this case were issued by Grospe in favor of SMC, which was received also by the SMC Supervisor at Guiguinto, Bulacan, as direct payment for the spot sale of beer. That check was similarly forwarded by the SMC Supervisor to the SMC Regional Office in San Fernando, Pampanga, where it was delivered to the Finance Officer who in turn deposited the check with the SMC depository bank in San Fernando, Pampanga. SMC received a notice of dishonor for "insufficiency of funds" from the drawee bank, the PDB, in Santa Maria, Bulacan Judge in dismissed the criminal cases on the ground that deceit and damage, the two essential elements that make up the offenses involving dishonored checks, did not occur within the territorial jurisdiction of his Court in Pampanga, but rather in Bulacan where false assurances were given by Respondent-accused and where the checks he had issued were dishonored

ISSUE: WON RTC Pampanga has jurisdiction. YES HELD: Estafa by postdating or issuing a bad check may be a transitory or continuing offense. Its basic elements of deceit and damage may arise independently in separate places. In this case, it did and jurisdiction may be conferred in any of the two places wherein the two elements arose. For while the subject check was issued in Bulacan, it wasn't completely drawn thereat, but in Pampanga. What is of decisive importance is the delivery thereof. The delivery of the instrument is the final act essential to its consummation as an obligation. For although the check was received by the SMC Supervisor in Bulacan, that was not delivery in the contemplation of law. The rule is that the issuance as well as the delivery of the check must be to a person who takes it as a holder, which means the payee or indorser of a bill or note, who is in possession of it, or the bearer thereof. The said representative had to forward the check to the SMC regional office, who thereafter forwarded it to the Finance Officer and later on to the depository bank.

SPS. LIM vs. CA and PEOPLE FACTS: Spouses Manuel and Rosita Lim are the president and treasurer, respectively, of Rigi Bilt Industries, Inc. (RIGI). RIGI had been transacting business with Linton Commercial Company, Inc. (LINTON) for years, the latter supplying the former with steel plates, steel bars, flat bars and purlin sticks which it uses in the fabrication, installation and building of steel structures. As officers of RIGI the Lim spouses were allowed 30, 60 and sometimes even to 90 days credit.

The Lims made several orders for the purchase of mild steel plates from LINTON which was delivered to RIGI's place of business in Caloocan. As payment for the purchases, they issued seven (7) postdated checks. However, they were dishonored for "insufficiency of funds" with the additional notation "payment stopped" stamped thereon. Despite demand Manuel and Rosita refused to make good the checks or pay the value of the deliveries. Hence, they were charged before the Malabon RTC with estafa on three (3) counts under Art. 315, par. 2 (d), of the RPC and with seven (7) counts of violation of B.P. Blg. 22. The trial court held them guilty on guilty of estafa and violating B.P. 22 On appeal to the CA, they claim that: (a) the Malabon RTC had no jurisdiction over the cases because the offenses charged were committed outside its territory; (b) they could not be held liable for estafa because the seven (7) checks were issued by them several weeks after the deliveries of the goods; and, (c) neither could they be held liable for violating B.P. Blg. 22 as they ordered payment of the checks to be stopped because the goods delivered were not those specified by them, besides they had sufficient funds to pay the checks. The CA acquitted them of estafa but affirmed their conviction of violating B.P. 22. On appeal to the SC, the spouses claim that, considering that the checks were all issued, delivered, and dishonored in Kalookan City, the trial court of Malabon exceeded its jurisdiction when it tried the case and rendered judgment thereon.

ISSUE: WON the Malabon RTC had jurisdiction over the cases because the offenses charged were committed outside its territory. HELD / RATIO: Yes. The gravamen of the offense under B.P. 22 is knowingly issuing a worthless check. The elements of the offense are: 1) knowledge on the part of the drawer of the insufficiency of his funds in or credit with the drawee bank for the payment of such check in full upon presentment; and 2) subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment. Violations of B.P. Blg. 22 are categorized as transitory or continuing crimes. That is, crimes in which some acts material and essential to the crimes and requisite to their consummation occur in one municipality or territory and some in another, in which event, the court of either has jurisdiction to try the cases, it being understood that the first court taking cognizance of the case excludes the other. In determining proper venue in these cases, the following acts material and essential to each crime and requisite to its consummation must be considered: (a) the seven (7) checks were issued to LINTON at its place of business in Balut, Navotas; (b) they were delivered to LINTON at the same place; (c) they were dishonored in Kalookan City; and, (d) petitioners had knowledge of the insufficiency of their funds in SOLIDBANK at the time the checks were issued. Under Sec. 191 of the Negotiable Instruments Law the term "issue" means the first delivery of the instrument complete in form to a person who takes it as a holder. On the other hand, the term "holder" refers to the payee or indorsee of a bill or note who is in possession of it or the bearer thereof. Although LINTON sent a collector who received the checks from petitioners at their place of business in Kalookan City, they were actually issued and delivered to LINTON at its place of business in Balut, Navotas. The receipt of the checks by the collector of LINTON is not the issuance and delivery to the payee in contemplation of law. The collector was not the person who could take the checks as a holder, i.e., as a payee or indorsee thereof, with the intent to transfer title thereto.

Neither could the collector be deemed an agent of LINTON with respect to the checks because he was a mere employee.

To support its conclusion, the Court cited the case of People vs. Yabut. To wit: "Alicia P. Andan declared in that sworn testimony before the investigating fiscal that Yambao is but her 'messenger' or 'part-time employee.' There was no special fiduciary relationship that permeated their dealings. For a contract of agency to exist, the consent of both parties is essential. The principal consents that the other party, the agent, shall act on his behalf, and the agent consents so as to act. It must exist as a fact. The law makes no presumption thereof. The person alleging it has the burden of proof to show, not only the fact of its existence, but also its nature and extent . . ." Consequently, venue or jurisdiction lies either in the Regional Trial Court of Kalookan City or Malabon. (The Malabon RTC has jurisdiction to take cognizance of criminal offenses committed in Navotas.) PAVILIS v FARMERS UNION

FACTS: The office manager of defendant was tasked to sign a block of checks to be used during the business hours for the day. The book keepers were, on the other hand, in charge of completing these instruments, filling in the blanks, and delivering these during business hours. The instruments were completed and filled up in accordance with the scale tickets. Checks which were not delivered during the day are kept by the office manager in a safe in the defendants office. On February 24, 1939, C. Hoard, one of the book keepers, who had a key opening the gate across the counter between the defendants office and the hall, opened it and climbed over the counter into the defendants office. He then took instruments which were blank, containing only the signature of the office manager. He filled in the date, amount and payee (himself) of the instrument, and later indorsed it to the plaintiff for $102.85.

Plaintiffs argument: Defendant was negligent and is estopped from not enforcing the contract. The case of Philipps v AW Joy is applicable in the case. In that case the check book which had blank checks which had been signed was left in the office in such a way that it would be easy for anybody to come and abstract one of the checks. In that case the defendant was held to be negligent in leaving the checks behind being prone to theft. Thus the one who occasioned the loss must suffer it. In the present case it was the defendant Farmer Union. RULINGS Lower Court: For Pavilis, granted recovery upon the instrument SC: REVERSED, Farmers Union absolved. ISSUE: WON the instrument is an incomplete instrument and if it is WON, it can be enforced HELD RATIO: It is an incomplete instrument.

As provided by SDC 46.0120 Where an incomplete instrument has not been delivered, it would not, if completed and negotiated, without authority, be a valid contract in the hands of any holder, as against any person whose signature was placed thereon before delivery. Such an instrument cannot be enforced unless a conduct of the part of drawer estops him from not enforcing it.

There was no negligence on defendants part and thus he is not estopped from recovering from the instrument

The Philipps v AW Joy cases facts differ from the present case. In that case the checks were left unguarded with strangers having easy access to the office. The loss in this case did not result from the completion and negotiation of the check by one entrusted with its possession. In this case, it did not appear that the bank had any reason to mistrust its employee and anticipate the wrongful taking by him of the check signed in blank, the subsequent completion and negotiation. The drawer owes the duty to use care in the execution of checks, but it does not follow as a legal conclusion that signers of checks in blanks assumed the risk of all liability in all cases where such instruments are wrongfully taken, completed and negotiated. To hold a person negligent for having in possession a check signed in blank would require something more than the exercise of ordinary care. LINICK V. AJ NUTTING AND CO. (1910; Burr)

FACTS: 1. Linick signed his name on a blank check. 2. Rycoff and Silberman stole the check, wrote FA Mann as payee, and the sum of $147.87. They presented it to the State Bank (where Linick has an account,) to be certified. They indorsed the check with the name of FA Mann and passed it to Nutting for value. 3. Nutting collected the amount from the State Bank. ISSUE: Did Nutting obtain any title to the check? HELD: 1. In case of commercial papers, when by voluntary act a party instructs another with such paper with a blank thereon designed to be filled up with a stipulated amount, such party is liable to a bona fide holder of the instrument, although the amount inserted was larger than that agreed upon. Basis for liability: a. Implied authority conferred by the maker The rule applies where the maker has by his own act or the act of another, authorized, confided in, or invested with apparent authority by him, put the instrument in circulation as negotiable paper No principal-agent relationship between a thief and his victim b. Estoppel by reason of negligence Actionable negligence involves: 1. Existence of a duty 2. Omission to exercise ordinary and reasonable care 3. Injury resulting in consequence thereof It has been held that where the maker of a completed negotiable instrument has parted with its possession but it is in such form that it is possible to make an alteration to it, he is not guilty of negligence in thus delivering it, for the same reason that he is not bound to assume that the person to whom he delivers it will be likely to commit a crime because it is apparently easy to do so. The drawer of a check is not bound so to prepare it that nobody else can successfully tamper with it. 2. The delivery of a promissory note by the maker is necessary to a valid inception of the contract. The possession of such a note by the payee or indorsee is prima facie evidence of delivery; but if it appears that the note has never been actually delivered, and that without any confidence, or negligence, or fault of the maker, but by force of fraud, it was put in circulation, there can be no recovery upon it, even when in the hands of an innocent holder.

Borromeo vs. Sun NIL S14 (where the blanks may be filled up by the holder, the signing in blank being with the assumed authority to do so) is also applicable to shares of stock. In the 1950s, 23k shares of stock of the FOB, Inc. was registered in the name of Borromeo although these belong to Sun. In consideration for the said accommodation, Borromeo executed Deed of Assignment of the said shares in favor of Sun. Sun filed this action in 1974 to compel the transfer to his name of the 23k shares of stock of Federico Borromeo based on the Deed of Assignment dated 1974. Borromeo disclaimed participation in the assignment, claiming that his signature was forged and questioning the discrepancy between the date of assignment and execution.

RTC: Undated Deed of Assignment executed in 54-57, Borromeos signature not a forgery. Sun entitled to shares. Borromeo appealed. CA: Reversed and set aside; signature forgery. Sun filed MR, attacking the credibility of the Borromeos handwriting expert, TabayoyongHe did not have a degree in criminology, never passed a board exam, and was a mere NBI trainee. His civil service eligibility was general clerical. He authored a pamphlet plagiarizing sources. CA (MR): RTC affirmed in toto. Borromeo filed cert. SC: CA Resolution affirmed. FORGERY: CA giving credence to PC Crime Lab report that the signatures are similar and made by the same person is an exercise of discretion binding on SC. o Tabayoyong limited his comparison to 1974 signature specimens, the Court took it to mean that comparison if made with 1950-57 specimens would show that the signature in the Deed of Assignment is genuine.

BLANK SPACES/DISCREPANCY IN DATE: The Deed of Assignment is embodied in blank form for the assignment of shares with authority to transfer such shares in the books of the corporation, analogous to NIL S14 where the blanks may be filled up by the holder, the signing in blank being with the assumed authority to do so. The discrepancy in date is explained by the fact the Deed of Assignment was a counter evidence of ownership of the stocks, to be filled up whenever needed. PONCE DE LEON v REHABILITATION FINANCE In 1945, Jose Ponce De Leon along with several others obtained a loan from PNB for P10K, with Sorianos parcel of land as security. The loan was subsequently increased to P17,500. In 1951, De Leon filed another loan application with Rehabilitation Finance, mortgaging the same land of the Sorianos, along with other properties as security. A P495,000 loan was granted to them and De Leon, his wife, and Soriano signed a promissory note. None of the amortizations and interests were paid to RFC. RFC filed for extra-judicial foreclosure of the properties. Before the expiration of the period to redeem the foreclosed properties, Soriano offered to redeem it, but RFC rejected the offer. Action was brought by Ponce De Leon. He argued that there was a delay in the release of the loans and that the typhoons destroyed some of the machineries in the mortgage and thus his obligations are extinguished. RTC ruled in favor of RFC and dismissed De Leons complaint. As regards the 3rd party complaint of Sorianos, they held that of the mortgage is null and void since the said property was conjugal and the wifes consent was not obtained. Appeal to the SC was made by all parties. Issue: WON the promissory note was not yet due considering that it did not contain any fixed or determined dates of payment Held/ Ratio: PN is due. The promissory note stated that it shall be paid in quarterly installments. Though, the date of maturity was left blank, the promissory note states that the date of maturity was to be fixed as of the date of last release. Though, De Leon argues that there was no complete release of the loan, such is belied by the facts of record which stated that a portion was paid to De Leons creditors and the balance was all paid to him. Moreover, he impliedly admitted that October 1952 was the due date of the first installment when he did not question the accuracy of such when it was presented to him. Moreover by demanding a suspension of payment due to the typhoons is in part admission that the full amount of the loan was released 3 months before and that the first installment was due on that month of October 1952. People v Pacheco FACTS Spouses Pacheco who were engaged in construction buseiness obtained a loan of P10,000.00 from Mrs. Vicencio, a pawnshop owner. Instead of merely requiring a note of indebtedness, however, Mr. Vicencio required Pachecos to issue an undated check as evidence of the loan which allegedly will not be presented to the bank. Subsequent loans were later obtained with the Vicencios still asking for the issuance of checks as evidence of indebtedness.

All the checks were undated at the time Pachecos handed them to Mrs. Vicencio. The six checks represent a total obligation of P85,000.00. When the remaining balance on the loans became due and demandable, Pachecos were not able to pay despite demands to do so. Mrs. Vicencio together with her husband and their daughter Lucille, went to Pachecos residence to persuade Virginia to place the date August 15, 1992 on 2 checks. although said checks were respectively given undated to Mrs. Vicencio on May 17, 1989 and July 21, 1989. Despite being informed by petitioner Virginia that their account with RCBC had been closed, Mrs. Vicencio and her daughter insisted that she place a date on the checks allegedly so that it will become evidence of their indebtedness. The former reluctantly wrote the date on the checks for fear that she might not be able to obtain future loans from Mrs. Vicencio. Pachecos were surprised to receive a demand letter from Mrs. Vicencios spouse informing them that the checks when presented for payment were dishonored due to Account Closed. two informations for estafa(through fraud and false pretenses) were filed against them.

ISSUE: WON the spouses Pacheco are guilty of estafa. NO RATIO: The element of deceit necessary for conviction under Art 315 par 2(d) RPC on Estafa is no present. because of the agreement at the time of the issuance and postdating of the checks that the same shall not be encashed or presented to the banks. As per assurance of the lender, the checks are nothing but evidence of the loan or security thereof in lieu of and for the same purpose as a promissory note. By their own covenant, therefore, the checks became mere evidence of indebtedness. It has been ruled that a drawer who issues a check as security or evidence of investment is not liable for estafa. Mrs. Vicencio could not have been deceived nor defrauded by Pachecos in order to obtain the loans because she was informed that they no longer have funds in their RCBC accounts. In 1992, when the Vicencio family asked Virginia to place a date on the check, the latter again informed Mrs. Vicencio that their account with RCBC was already closed as early as August 1989. With the assurance, however, that the check will only stand as a firm evidence of indebtedness, Virginia placed a date on the check. Under these circumstances, Mrs. Vicencio cannot claim that she was deceived or defrauded by Pachecos in obtaining the loan. In the absence of the essential element of deceit, no estafa was committed by Pachecos. Mr.Vicencio, who was a judge, should have known, then, that he need not even ask the Pachecos to place a date on the check, because as holder of the check, he could have inserted the date pursuant to Section 13 of the Negotiable Instruments Law (NIL). Moreover, as stated in Section 14 thereof, complainant, as the person in possession of the check, has prima facie authority to complete it by filling up the blanks therein. Besides, pursuant to Section 12 of the same law, a negotiable instrument is not rendered invalid by reason only that it is antedated or postdated. Thus, the allegation of Mrs. Vicencio that the date to be placed by Virginia was necessary so as to make the check evidence of indebtedness is nothing but a ploy. Pachecos openly disclosed and never hid the fact that they no longer have funds in the bank as their bank account was already closed. Knowledge by the complainant that the drawer does not have sufficient funds in the bank at the time it was issued to him does not give rise to a case for estafa through bouncing checks.

CHARLES N. DOUGHERTY, an Infant, by SUSAN M. TEVES, His Guardian ad Litem vs. EMMA L. SALT, as Executrix of HELENA M. DOUGHERTY FACTS: Helena visited her nephew Charles, a boy of eight years. During said visit, Helena grew fond of the boy and said that she wanted to take care of him. Hence, a blank note was then produced, filled out, and signed. The note contained the words value received. Then, the aunt handed the note to her nephew with these words, You have always done for me, and I have signed this note for you. Now, do not lose it. Some day it will be valuable. After the death of Helena, Susan Teves, on behalf of his ward Charles, sued on the promissory note in the amount of $3,000 against the estate of the Helena.

Initially, the trial court ruled in favor of the plaintiff. However, it later set aside its previous decision and dismissed the complaint for want of consideration for the promised payment. The Appellate Division, by a divided court, reversed the judgment of dismissal, and reinstated the verdict on the ground that the note was sufficient evidence of consideration.

ISSUE: WON the note was given with consideration, therefore, an action will lie to enforce it. HELD / RATIO: No. The note was given without consideration except that of love and affection, thus, no action will lie to enforce it. As admitted by plaintiff's own witness, the note was the voluntary and unenforceable promise of an executory gift. This child of eight was not a creditor, nor dealt with as one. The aunt was not paying a debt. She was conferring a bounty. A note so given is not made for value received, however its maker may have labeled it.