NIL SET 2 1) PNB V.

QUIMPO 158 SCRA 582 FACTS: While Gozon was in the bank with Santos left in the car, the latter stole a check and forged the signat re of the for!er" #e was able to encash the check" #e was later a$$rehended b% the $olice a thorities and he ad!itted to stealing the check" &he co rt decided in fa'or of Gozon" &he bank now $osed the iss e on whether Gozon(s act of lea'ing his checkbook in the car the $ro)i!ate ca se of the loss" HELD: Where the $ri'ate res$ondent(s check was re!o'ed and stolen witho t his knowledge and consent, he cannot be considered negligent in this case" Liabilities of Parties Forgery Liability of the Drawee Bank FACTS* +n , ne 1-./, 0rancisco Gozon ++ went to the 1hili$$ine 2ational 3ank 4Caloocan Cit%) acco!$anied b% his friend 5rnesto Santos" Gozon left Santos in his car and while Gozon was at the bank, Santos took a check fro! Gozon(s checkbook" Santos forged Gozon(s signat re and filled o t the check with the a!o nt of 15,666"66" Santos was able to encash the check that da% with 123" Gozon learned of this when his state!ent arri'ed" Santos e'ent all% ad!itted to forging Gozon(s signat re" Gozon then de!anded the 123 to ref nd hi! the a!o nt" 123 ref sed" , dge 7 i!$o r led in fa'or of Gozon" ISSUE: Whether or not 123 is liable" HELD: 8es" A bank is bo nd to know the signat res of its c sto!ers9 and if it $a%s a forged check, it ! st be considered as !aking the $a%!ent o t of its own f nds, and cannot ordinaril% change the a!o nt so $aid to the acco nt of the de$ositor whose na!e was forged" 123 failed to !eet its obligation to know the signat re of its corres$ondent 4Gozon)" 0 rther, it was fo nd b% the co rt that there are glaring differences between Gozon(s a thentic s$eci!en signat res and that of the forged check" 2) PNB V. NATIONAL CITY BANK OF NY :/ 1#+; .11 FACTS: <nknown $ersons negotiated with =otor Ser'ices Co!$an% checks, which were $art of the sti$ lation in $a%!ent of a to!obile tires $ rchased fro! the latter(s store" +t $ r$orted to ha'e been iss ed b% 1angasinan &rans$ortation Co!$an%" &he said checks were indorsed at the back b% said nknown $ersons, the =otor co!$an% belie'ing at that ti!e that the signat res contained therein were gen ine" &he checks were later de$osited with the co!$an%(s acco nt in 2ational Cit% 3ank of 28" &he said checks were conse> entl% cleared and 123 credited 2ational Cit% 3ank with the a!o nts" &hereafter, 123 disco'ered that the signat res were forged and it de!anded the rei!b rse!ent of the a!o nts for which it credited the other bank" HELD: A check is a bill of e)change $a%able on de!and and onl% the r les go'erning bills of e)changes $a%able on de!and are a$$licable to it" in 'iew of the fact that acce$tance is a ste$ necessar% insofar as negotiable instr !ents are concerned, it follows that the $ro'isions relati'e to acce$tance are witho t a$$lication to checks" Acce$tance i!$lies s bse> ent negotiation of the instr !ent, which is not tr e in the case of checks beca se fro! the !o!ent it is $aid, it is withdrawn fro! circ lation" When the drawee banks

cashes or $a%s a check, the c%cle of negotiation is ter!inated and it is illogical thereafter to s$eak of s bse> ent holders who can in'oke the warrant against the drawee" 0 rther, in deter!ining the relati'e rights of a drawee who nder a !istake of fact, has $aid, a holder who has recei'ed s ch $a%!ent, $on a check to which the na!e of the drawer has been forged, it is onl% fair to consider the > estion of diligence and negligence of the $arties in res$ect thereto" &he res$onsibilit% of the drawee who $a%s a forged check, for the gen ineness of the drawer(s signat re is absol te onl% in fa'or of one who has not, b% his own fa lt or negligence, contrib ted to the s ccess of the fra d or to !islead the drawee" According to the ndis$ ted facts, 2ational Cit% 3ank in $ rchasing the $a$ers in > estion fro! nknown $ersons witho t !aking an% in> ir% as to the identit% and a thorit% of said $ersons negotiating and indorsing the!, acted negligentl% and contrib ted to the constr cti'e loss of 123 in failing to detect the forger%" <nder the circ !stances of the case, if the a$$ellee bank is allowed to reco'er, there will be no change in $osition as to the in? r% or $re? dice of the a$$ellant" /) PCIB V. CA /56 SCRA @@: FACTS: 0ord 1hili$$ines filed actions to reco'er fro! the drawee bank Citibank and collecting bank 1C+3 the 'al e of se'eral checks $a%able to the Co!!issioner of +nternal Re'en e which were e!bezzled allegedl% b% an organized s%ndicate" What $ro!$ted this action was the drawing of a check b% 0ord, which it de$osited to 1C+3 as $a%!ent and was debited fro! their Citibank acco nt" +t later on fo nd o t that the $a%!ent wasn(t recei'ed b% the Co!!issioner" =eanwhile, according to the 23+ re$ort, one of the checks iss ed b% $etitioner was withdrawn fro! 1C+3 for alleged !istake in the a!o nt to be $aid" &his was re$laced with !anager(s check b% 1C+3, which were allegedl% stolen b% the s%ndicate and de$osited in their own acco nt" &he trial co rt decided in fa'or of 0ord" ISSUE: #as 0ord the right to reco'er the 'al e of the checks intended as $a%!ent to C+RA HELD: &he checks were drawn against the drawee bank b t the title of the $erson negotiating the sa!e was allegedl% defecti'e beca se the instr !ent was obtained b% fra d and nlawf l !eans, and the $roceeds of the checks were not re!itted to the $a%ee" +t was established that instead $a%ing the Co!!issioner, the checks were di'erted and encashed for the e'ent al distrib tion a!ong !e!bers of the s%ndicate" 1 rs ant to this, it is 'ital to show that the negotiation is !ade b% the $er$etrator in breach of faith a!o nting to fra d" &he $erson negotiating the checks ! st ha'e gone be%ond the a thorit% gi'en b% his $rinci$al" +f the $rinci$al co ld $ro'e that there was no negligence in the $erfor!ance of his d ties, he !a% set $ the $ersonal defense to esca$e liabilit% and reco'er fro! other $arties who, thro gh their own negligence, allowed the co!!ission of the cri!e" +t sho ld be resol'ed if 0ord is g ilt% of the i!$ ted contrib tor% negligence that wo ld defeat its clai! for rei!b rse!ent, bearing in !ind that its e!$lo%ees were a!ong the !e!bers of the s%ndicate" +t a$$ears altho gh the e!$lo%ees of 0ord initiated the transactions attrib table to the organized s%ndicate, their actions were not the $ro)i!ate ca se of encashing the checks $a%able to C+R" &he degree of 0ord(s negligence co ldn(t be characterized as the $ro)i!ate ca se of the in? r% to $arties" &he !ere fact that the forger% was co!!itted b% a drawerB$a%or(s confidential e!$lo%ee or agent, who b% 'irt e of his $osition had n s al facilities for $er$etrating the fra d and i!$osing the forged $a$er $on the bank, doesn(t entitle the bank to shift the loss to the drawerB$a%or, in the absence of so!e circ !stance raising esto$$el against the drawer" 2ote* not onl% 1C+3 b t also Citibank is res$onsible for negligence" Citibank was negligent in the $erfor!ance of its d ties as a drawee bank" +t failed to establish its $a%!ents of 0ord(s checks were !ade in d e co rse and legall% in order" @) BPI V. CASA MONTESORRI INTERNATIONALE

@/6 SCRA 2:1 FACTS: CASA has a c rrent acco nt with 31+" +t was disco'ered that for a !aterial $eriod of ti!e, se'eral checks were encashed b% a certain Sonn% Santos, who e'ent all% was known to be a fictitio s na!e sed b% the e)ternal a ditor of CASA" &he e)ternal a ditor ad!itted forging the signat re of CASA(s $resident to be able to encash the checks" &he trial co rt held the bank liable b t this was !odified" &he !odified decision a$$ortioned the loss between 31+ and CASA" HELD: A forged signat re is a real and absol te defense, and a $erson whose signat re a$$ears on a negotiable instr !ent is forged is dee!ed to ne'er ha'e beco!e a $art% thereto and to ha'e ne'er consented to the contract that allegedl% ga'e rise to it" &he co nterfeiting of an% writing, consisting in the signing of another(s na!e with intent to defra d, is forger%" 0irst, there was reall% a finding of forger%" &he forger ad!itted e'en in his affida'it of his forger%" Second, there was a finding b% the $olice laborator% that indeed the signat res were forged" 0 rther!ore, the negligence is attrib table to 31+ alone" +ts negligence consisted in the o!ission of the degree of diligence re> ired of a bank" C;oss borne b% $ro)i!ate ca se of negligence 5) BANCO DE ORO SAVING V. EQUITABLE 15. SCRA 188 FACTS: 3DE drew checks $a%able to !e!ber establish!ents" S bse> entl%, the checks were de$osited in &rencio(s acco nt with 5> itable" &he checks were sent for clearing and was thereafter cleared" Afterwards, 3DE disco'ered that the indorse!ents in the back of the checks were forged" +t then de!anded that 5> itable credit its acco nt b t the latter ref sed to do so" &his $ro!$ted 3DE to file a co!$laint against 5> itable and 1C#C" &he trial co rt and R&C held in fa'or of the 5> itable and 1C#C" HELD: 0irst, 1C#C has ? risdiction o'er the case in > estion" &he articles of incor$oration of 1##C e)tended its o$eration to clearing checks and other clearing ite!s" 2o do bt transactions on nonBnegotiable checks are within the a!bit of its ? risdiction" 0 rther, the $artici$ation of the two banks in the clearing o$erations is s b!ission to the ? risdiction of the 1C#C" 1etitioner is likewise esto$$ed fro! raising the nonBnegotiabilit% of the checks in iss e" +t sta!$ed its g arantee at the back of the checks and s bse> entl% $resented it for clearing and it was in the basis of these endorse!ents b% the $etitioner that the $roceeds were credited in its clearing acco nt" &he $etitioner cannot now den% its liabilit% as it ass !ed the liabilit% of an indorser b% sta!$ing its g arantee at the back of the checks" 0 rther!ore, the bank cannot esca$e liabilit% of an indorser of a check and which !a% t rn o t to be a forged indorse!ent" Whene'er a bank treats the signat re at the back of the checks as indorse!ents and th s logicall% g arantees the sa!e as s ch there can be no do bt that said bank had considered the checks as negotiable" A long line of cases also held that in the !atter of forger% in endorse!ents, it is the collecting bank that generall% s ffers the loss beca se it had the d t%h to ascertain the gen ineness of all $rior indorse!ents considering that the act of $resenting the check for $a%!ent to the drawee is an assertion that the $art% !aking the $resent!ent has done its d t% to ascertain the gen ineness of the indorse!ents" :) BPI V. CA 21: SCRA 51

FACTS: So!eone who identified herself to be 0ernando called $ 31+, re> esting for the $reBter!ination of her !one% !arket $lace!ent with the bank" &he $erson who took the call didnFt bother to 'erif% with 0ernando(s office if whether or not she reall% intended to $reter!inate her !one% !arket $lace!ent" +nstead, he relied on the 'erification stated b% the caller" #e $roceeded with the $rocessing of the ter!ination" &hereafter, the caller ga'e deli'er% instr ctions that instead of deli'ering the checks to her office, it wo ld be $icked $ b% her niece and it indeed ha$$en as s ch" +t was fo nd o t later on that the $erson i!$ersonated 0ernando and her alleged niece in getting the checks" &he dis$atcher also didnFt bother to get the $ro!issor% note e'incing the $lace!ent when he ga'e the checks to the i!$ersonated niece" &his was aggra'ated b% the fact that this i!$ersonator o$ened an acco nt with the bank and de$osited the s b?ect checks" +t then withdrew the a!o nts" &he da% of the !at rit% of the !one% !arket $lace!ent ha$$ened and the real 0ernando s rfaced herself" She denied $reter!inating the !one% !arket $lace!ents and tho gh she was the $a%ee of the checks in iss e, she didnFt recei'e an% of its $roceeds" &his $ro!$ted the bank to s rrender to C3C the checks and asking for rei!b rse!ent on alleged forger% of $a%ee(s indorse!ents" HELD: &he general r le shall a$$l% in this case" Since the $a%ee(s indorse!ent has been forged, the instr !ent is wholl% ino$erati'e" #owe'er, nderl%ing circ !stances of the case show that the general r le on forger% isn(t a$$licable" &he iss e as to who between the $arties sho ld bear the loss in the $a%!ent of the forged checks necessitates the deter!ination of the rights and liabilities of the $arties in'ol'ed in the contro'ers% in relation to the forged checks" &he acts of the e!$lo%ees of 31+ were tainted with !ore negligence if not cri!inal than the acts of C3C" 0irst, the act of disclosing infor!ation abo t the !one% !arket $lace!ent o'er the $hone is a 'iolation of the General 3anking ;aw" Second, there was fail re on the bank(s $art to e'en co!$are the signat res d ring the ter!ination of the $lace!ent, o$ening of a new acco nt with the s$eci!en signat re in file of 0ernando" And third, there was fail re to ask the s rrender of the $ro!issor% note e'idencing the $lace!ent" &he acts of 31+ e!$lo%ees was the $ro)i!ate ca se to the loss" 2e'ertheless, the negligence of the e!$lo%ees of C3C sho ld be taken also into consideration" &he% closed their e%es to the s s$icio s large a!o nt withdrawals !ade o'er the co nter as well as the o$ening of the acco nt" .) REPUBLIC V. EBRADA :5 SCRA :86 FACTS: 5brada encashed a G3ack 1a% CheckH iss ed b% the 3 rea of &reas r% at the Re$ blic 3ank in 5scolta =anila" &he 3 rea of &reas r% ad'ised the Re$ blic 3ank that the instr !ent was forged" +t infor!ed the bank that the original $a%ee of the check died 11 %ears before the check was iss ed" &herefore, there was a forger% of his signat re" &his is the se> ence* =artin ;orenzo &he deceased $erson, original G$a%eeH, where the forger% ha$$ened Ra!on ;orenzo Delia Do!ing ez =a ricia 5brada DefendantBa$$elant 5brada ref ses to ret rn the $roceeds of the check clai!ing that she alread% ga'e it to Delia Do!ing ez" She also clai!s that she is a #DC 4holder in d e co rse) and that the bank is alread% esto$$ed" #5;D*

5brada sho ld ret rn the $roceeds of the check to Re$ blic 3ank" As an indorser of the check, she was s $$osed to ha'e warranted that she has good title to said check" See Section :5" Section 2/* When the signat re is forged or !ade witho t the a thorit% of the $erson whose signat re it $ r$orts to be, it is wholl% ino$erati'e, and no right to retain the instr !ents, or to gi'e a discharge thereof against an% $art% thereto, can be ac> ired thro gh or nder s ch signat re nless the $art% against who! it is so ght to enforce s ch right is 1R5C;<D5D fro! setting $ the forger% or want of a thorit%" +t is onl% the negotiation based on the forged or na thorized signat re which is ino$erati'e" &herefore* =artin ;orenzo Signat re ino$erati'e Ra!on ;orenzo &o Do!ing ez* o$erati'e Delia Do!ing ez &o 5brada* o$erati'e =a ricia 5brada Drawee bank can collect fro! the one who encashed the check" +f 5brada $erfor!ed the d t% of ascertaining the gen iness of the check, in all $robabilit%, the forger% wo ld ha'e been detected and the fra d defeated" 8) ASSOCIATED BANK V. CA 252 SCRA :26 FACTS: &he $ro'ince of &arlac !aintains an acco nt with 123B&arlac" 1art of its f nds is a$$ro$riated for the benefit of Conce$cion 5!ergenc% #os$ital" D ring a $ostBa dit done b% the $ro'ince, it was fo nd o t that /6 of its checks weren(t recei'ed b% the hos$ital" <$on f rther in'estigation, it was fo nd o t that the checks were encashed b% 1angilinan who was a for!er cashier and ad!inistrati'e officer of the hos$ital thro gh forged indorse!ents" &his $ro!$ted the $ro'incial treas rer to ask for rei!b rse!ent fro! 123 and thereafter, 123 fro! Associated 3ank" As the two banks didnFt want to rei!b rse, an action was filed against the!" HELD: &here is a distinction on forged indorse!ents with regard bearer instr !ents and instr !ents $a%able to order" With instr !ents $a%able to bearer, the signat re of the $a%ee or holder is nnecessar% to $ass title to the instr !ent" #ence, when the indorse!ent is a forger%, onl% the $erson whose signat re is forged can raise the defense of forger% against holder in d e co rse" +n instr !ents $a%able to order, the signat re of the rightf l holder is essential to transfer title to the sa!e instr !ent" When the holder(s signat re is forged, all $arties $rior to the forger% !a% raise the real defense of forger% against all $arties s bse> ent thereto" +n connection to this, an indorser warrants that the instr !ent is gen ine" A collecting bank is s ch an indorser" So e'en if the indorse!ent is forged, the collecting bank is bo nd b% his warranties as an indorser and cannot set $ the defense of forger% as against the drawee bank" 0 rther!ore, in cases in'ol'ing checks with forged indorse!ents, s ch as the case at bar, the chain of liabilit% doesnFt end with the drawee bank" &he drawee bank !a% not debit the acco nt of the drawer b t !a% generall% $ass liabilit% back thro gh the collection chain to the $art% who took fro! the forger and of co rse, the forger hi!self, if a'ailable" +n other words, the drawee bank can seek rei!b rse!ent or a ret rn of the a!o nt it $aid fro! the collecting bank or $erson" &he collecting bank generall% s ffers the loss beca se it has te d t% to ascertain the gen ineness of all $rior endorse!ents considering that the act of $resenting the check for $a%!ent to the drawee is an assertion that the $art% !aking the $resent!ent has done its d t% to ascertain the gen ineness of the indorse!ents" With regard the iss e of dela%, a dela% in infor!ing the bank of the forger%, which de$ri'es it of the o$$ort nit% to go after the forger, signifies negligence on the $art of the drawee bank and will $recl de it fro! clai!ing rei!b rse!ent" +n this case, 123 wasnFt g ilt% of an% negligent dela%" +ts dela% hasnFt

$re? diced Associated 3ank in an% wa% beca se e'en if there wasnFt dela%, the fact that there was nothing left of the acco nt of 1angilinan, there co ldnFt be an%!ore rei!b rse!ent" -) TRADERS ROYAL BANK V. RPN /-6 SCRA :68 FACTS: R12, +3C and 33C were all assessed for ta) b% the 3+R" &o $a% the assessed ta)es, the% bo ght !anager(s checks fro! $etitioner bank" 2one of these checks were $aid to the 3+R" &he% were fo nd to ha'e been de$osited in the acco nt of a third $erson in Sec rit% 3ank" As the ta)es re!ained n$aid, the 3+R iss ed a le'%, distraint and garnish!ent against the three networks" An action was filed wherein it was decided that the networks sho ld be rei!b rsed for the a!o nts of the checks b% $etitioner bank and the latter in t rn, ! st be rei!b rsed b% Sec rit% 3ank" +n the a$$ellate co rt, it was held that &raders 3ank sho ld be the onl% bank liable" HELD: 1etitioner o ght to ha'e known that where a check is drawn $a%able to the order of one $erson and is $resented for $a%!ent b% another and $ r$orts $on its face to ha'e been d l% indorsed b% the $a%ee of the check, it is the $ri!ar% d t% of the $etitioner to know that the check was d l% indorsed b% the original $a%ee, and it $a%s the a!o nt of the check to the third $erson, who has forged the signat re of the $a%ee, the loss falls $on the $etitioner who cashed the check" +ts onl% re!ed% is against the $erson to who! it $aid the !one%" +t sho ld be f rther noted that one of the checks was a crossed check" &he crossing of the check sho ld ha'e $ t $etitioner on g ard9 it was d t%Bbo nd to ascertain the indorser(s title to the check or the nat re of his $ossession" 16) HSBC V. PEOPLES BANK /5 SCRA 1@6 FACTS: 1eo$le(s 3ank is so ght to be liable for the a!o nt in'ol'ed in checks s b?ect of this case" &his arose fro! the following facts* 1;D& drew a check on #S3C with the latter being the $a%ee" &he check landed in the hands of a third $erson who s ccessf ll% s bstit ted his na!e as $a%ee and de$osited the check with the 1eo$le(s 3ank" <$on knowledge of this, rei!b rse!ent was being so ght fro! the 1eo$le(s 3ank and it ref sed to do so" &his $ro!$ted to an action against it" HELD: &he entire case of #S3C relied on the indorse!ent that has been heretofore co$iedIna!el%, a g arantee of all $rior indorse!ents !ade b% 1eo$le(s 3ank and since s ch an indorse!ent carries with it a conco!itant g arantee of gen ineness, the 1eo$le(s 3ank is liable to #S3C for alteration of the na!e of the $a%ee" En the other hand, the 1eo$le(s 3ank relied on the 2@Bho r reg lation of the Central 3ank that re> ired after a clearing, that all cleared ite!s ! st be ret rned not later than 2@ ho rs" +t sho ld be noted that the checks were ret rned b% #S3C 2. da%s later" Dis!issal of its co!$laint was therefore called for" 11) BANCO ATLANTICO V. AUDITOR GENERAL 81 SCRA //5 FACTS: 3oncan was the 0inance Efficer of the 1hili$$ine 5!bass% in =adrid who on !an% occasions negotiated with 3anco Atlantico checks, allegedl% endorsed to her b% the e!bass%" En these occasions, the bank allowed the $a%!ent of the checks, notwithstanding the fact that the drawee bank has not %et cleared the checks for collection" &his was $re!ised on the finding that 3oncan had s$ecial relations with the e!$lo%ees of the bank" And that $on $resent!ent to the drawee bank, the checks were dishonored d e to nonBacce$tance allegedl% on the gro nd that the drawer has ordered the sto$$age of $a%!ent" &his $ro!$ted 3anco

Atlantico to collect fro! the 1hili$$ine 5!bass% for the f nds released to 3oncan b t the latter ref sed" &his e'ent all% led to filing of !one% clai! of the bank with the A ditor General" HELD: En whether or not 3anco Atlantico was a holder in d e co rse, it is not" 0ollowing the decision of the A ditor General in den%ing the clai! of the bank, the checks were de!and notes" +t sho ld ha'e been $ t on g ard when 3oncan negotiated the checks with the! and s bse> entl% de$osited the sa!e to her acco nt" 5'en tho gh it were de!and notes, she instr cted the bank that the sa!e be not $resented for collection till a later date" &he fact that the a!o nt was > ite big and it was the $a%ee herself who !ade the re> est that the sa!e be not $resented for collection ntil a fi)ed date in the f t re was $roof of a glaring infir!it% or defect in the instr !ent" +t lo dl% $roclai!s G&ake !e at %o r own risk"H +t was ob'io s b% then that the bank had knowledge of the infir!it% or defect of the checks" 0 rther!ore, what it did when it allowed $a%!ent before clearing is be%ond the nor!al and ordinar% banking $ractice es$eciall% when the bank in'ol'ed is a foreign bank and the a!o nts in'ol'ed were large" 3oncan wasnFt e'en a client of the bank b t was so!eone who had s$ecial relations with its officers" +n 'iew of the foregoing, the e!bass% as the drawer of the / checks in > estion cannot be held liable" +t is a$$arent that the said / checks were 4fra d lentl% altered) b% 3oncan as to their acco nts and therefore wholl% ino$erati'e 4note* sho ld be Ga'oidedH)" 12) THE INTERNATIONAL CORPORATE BANK, INC. v. COURT OF APPEALS an 2A&+E2A; 3A2J 561 SCRA 26 1/) METROBANK V. CABLI!O 516 SCRA 25FACTS: Cablizo !aintained an acco nt with $etitioner" +t drew a check $a%able to cash $a%able to a certain =ar> ez, for the latter(s sales co!!ission" &he check was s bse> entl% de$osited in West!ont bank and the latter s b!itted it with =etrobank for clearing" &he check was cleared" &hereafter, the bank(s re$resentati'e asked Cablizo if he iss ed a check for 1-1,666" &he answer was in the negati'e" &his $ro!$ted Cablizo to call =etrobank and ask for the recrediting of 1-6,666 b t $etitioner failed to recredit the a!o nt $ro!$ting Cablizo to file an action against it" HELD: An alteration is said to be !aterial if it alters the effect of the instr !ent" +t !eans an na thorized change in the instr !ent that $ r$orts to !odif% in an% res$ect the obligation of a $art% or an na thorized addition of words or n !bers or other change to an inco!$lete instr !ent relating to the obligation of the $art%" +n other words, a !aterial alteration is one which changes the ite!s which are re> ired to be stated nder Section 1 of the 2+;" &he check in iss e was !ateriall% altered when its a!o nt was increased fro! 11666 to 1-1666" Cablizo was not the one who a thorized or !ade s ch increase" &here is no showing that he was negligent in e)ercising what was d e in a $r dent !an which co ld ha'e otherwise $re'ented the loss" Cablizo was ne'er re!iss in the $re$aration and iss ance of the check" &he doctrine of e> itable esto$$el is ina$$licable against Cablizo" &his doctrine states that when one of the two innocent $erson, each g iltiness of an intentional or !oral wrong, ! st s ffer a loss, it ! st be borne b% the one whose erroneo s cond ct, either b% o!ission or co!!ission, was the ca se of the in? r%" 2egligence is ne'er $res !ed" =etrobank was act all% the one re!iss in its d ties" &he CA took into consideration that the alterations were act all% 'isible in the e%e and %et the bank allowed so!eone not ac> ainted with the e)a!ination of checks to do the sa!e" 0 rther!ore, it cannot rel% on the indorse!ent of West!ont 3ank of the check" +t sho ld ha'e e)ercised !etic lo s care in handling the affairs of its clients es$eciall% if the client(s !one% is in'ol'ed" PHILIPPINE

1@) PNB V. MA!A AND MECENAS @8 1#+; 26. FACTS: =aza and =acenas e)ec ted a total of fi'e $ro!issor% notes" &hese were not $aid at !at rit%" And to reco'er the a!o nts stated on the face of the $ro!issor% notes, 123 initiated an action against the two" &he s$ecial defense $osed b% the two is that the $ro!issor% notes were deli'ered to the! in blank b% a certain 5ncha s and were !ade to sign the notes so that the latter co ld sec re a loan fro! the bank" &he% also alleged that the% ne'er negotiated the notes with the bank nor ha'e the% recei'ed an% 'al e thereof" &he% also $ra%ed that 5ncha s be i!$leaded in the co!$laint b t s ch was denied" &he trial co rt then held in fa'or of the bank" HELD: &he defendants attested to the gen ineness of the instr !ents s ed on" 2either did the% $oint o t an% !istake in regard to the a!o nt and interest that the lower co rt sentenced the! to $a%" Gi'en s ch, the defendants are liable" &he% a$$ear as the !akers of the $ro!issor% notes and as s ch, the% ! st kee$ their engage!ent and $a% as $ro!ised" And ass !ing that the% are acco!!odation $arties, the defendants ha'ing signed the instr !ents witho t recei'ing 'al e thereof, for the $ r$ose of lending their na!es to so!e other $erson, are still liable for the $ro!issor% notes" &he law now is s ch that an acco!!odation $art% cannot clai! no benefit as s ch, b t he is liable according to the face of his ndertaking, the sa!e as he hi!self financiall% interest in the transaction" +t is also no defense to sa% that the% didnFt recei'e the 'al e of the notes" &o fasten liabilit% howe'er to an acco!!odation !aker, it is not necessar% that an% consideration sho ld !o'e to hi!" &he acco!!odation which s $$orts the $ro!ise of the acco!!odation !aker is that $arted with b% the $erson taking the note and recei'ed b% the $erson acco!!odated" 15) STELCO MARKETING V. CA 216 SCRA 51 FACTS: 1etitioner was engaged in the distrib tion and sale of str ct ral steel bars" R8; bo ght on se'eral occasion large > antities of steel bars b t the sa!e were ne'er $aid for des$ite se'eral de!ands b% $etitioner" En a rele'ant date, R8; ga'e to Ar!strong +nd stries a check in $a%!ent of its obligations" &he check was drawn b% Steelweld Cor$orationIallegedl% the owner of R8; $ers aded the $resident of Steelweld to acco!!odate the for!er in its obligation" &he check, when de$osited was thereafter dishonored d e to ins fficient f nds" A case ens ed for 'iolations of 3122 b t the case was dis!issed as the check was held to be for acco!!odation $ r$oses onl%" &hereafter a co!$laint was filed b% $etitioner against R8; and Steelweld for the reco'er% of s ! of !one% in $a%!ent of the steel bars ordered" R8; was nowhere to be fo nd that is wh% the $roceedings co!!enced as against Steelweld onl%" &he trial co rt decided in fa'or of $etitioner b t this was re'ersed b% the CA" HELD: 1etitioner contends that the ac> ittal of ;i! and &ianson didnFt o$erate to release Steelweld fro! its liabilit% as an acco!!odation $art%" 2oteworth% is that neither said $rono nce!ent nor an% other $art of the ? dg!ent of ac> ittal declared it liable to $etitioner" &o be s re, as regards an acco!!odation $art%, the condition of lack of notice of an% infir!it% or defect in title of the $ersons negotiating it is of no a$$lication since the law $reser'es the right of reco rse of a holder for 'al e against an acco!!odation $art% notwithstanding knowledge that at the ti!e of taking the instr !ent, knew hi! onl% as an acco!!odation $art%" 0 rther, there is no e'idence to show that $etitioner $ossessed the check before the instr !ent(s $resent!ent and dishonor" +n what trans$ired d ring the transactions in'ol'ing the check, e'idence and facts show that there was an% $artici$ation or inter'ention on the $art of $etitioner" What the record shows is that

onl% after the check was de$osited and dishonored, $etitioner ca!e into $ossession of it in so!e wa% and was able to gi'e it in e'idence at the trial of the ci'il case it has instit ted against the drawers of the check" 1:) AGRO CONGLOMERATES V. SORIANO /@8 SCRA @56 FACTS: 1etitioner sold to Wonderland 0ood +nd stries two $arcels of land" &he% sti$ lated nder a =e!orand ! of Agree!ent that the ter!s of $a%!ent wo ld be 11,666,666 in cash, 12,666,666 in shares of stock, and the balance wo ld be $a%able in !onthl% install!ents" &hereafter, an addend ! was e)ec ted between the!, > alif%ing the cash $a%!ent" +nstead of cash $a%!ent, the 'endee a thorized the 'endor to obtain a loan fro! the financier on which the 'endee bo nd itself to $a% for" &his loan was to co'er for the $a%!ent of 11,666,666" &his addend ! was not notarized" 1etitioner Soriano signed as !aker the $ro!issor% notes $a%able to the bank" #owe'er, the $etitioners failed to $a% the obligations as the% were d e" D ring that ti!e, the bank was in financial distress and this $ro!$ted it to endorse the $ro!issor% notes for collection" &he bank ga'e a!$le ti!e to $etitioners then to satisf% their obligations" &he trial co rt held in fa'or of the bank" +t didnFt find !erit to the contention that Wonderland was the one to be held liable for the $ro!issor% notes" HELD: 0irst, there was no contract of sale that !aterialized" &he original agree!ent was that Wonderland wo ld $a% cash and $etitioner wo ld deli'er $ossession of the far!lands" 3 t this was changed thro gh an addend !, that $etitioner wo ld instead sec re a loan and the settle!ent of the sa!e wo ld be sho ldered b% Wonderland" 1etitioners beca!e liable as acco!!odation $arties" &he% ha'e the right after $a%ing the instr !ent to seek rei!b rse!ent fro! the $art% acco!!odated, since the relation between the! has in effect beca!e one of $rinci$al and s ret%" 0 rther!ore, as it t rned o t, the contract of s ret% between Woodland and $etitioner was e)ting ished b% the rescission of the contract of sale of the far!land" With the rescission, there was conf sion in the $ersons of the $rinci$al debtor and s ret%" &he addend ! thereon likewise lost its efficac%" 1.) BPI V. COURT OF APPEALS GR 1/:262 FACTS: &e!$lon e'o de!anded $a%!ent fro! $etitioner of a s ! of !one% re$resenting the aggregate 'al e of three checks which were allegedl% $a%able to hi! b t which were de$osited with the $etitioner to Salazar(s acco nt, witho t his knowledge and corres$onding endorse!ent" 0inding !erit in the de!ands of &e!$lon e'o, the bank then froze the acco nt of the engineering fir! as the acco nt of Salazar was alread% closed or had ins fficient f nds" 0ail re of an% settle!ent between &e!$lon e'o and Salazar, this $ro!$ted the bank to debit the acco nt of Salazar and gi'e back the !one% to &e!$lon e'o thro gh cashier(s check" &he acco nt of Salazar was also debited for whate'er charges inc rred for the iss ance of the cashier(s check" &he trial co rt held in fa'or of Salazar" ISSUE: Does a collecting bank, o'er the ob?ections of its de$ositor, ha'e the a thorit% to withdraw nilaterall% fro! s ch de$ositor(s acco nt the a!o nt it had $re'io sl% $aid $on certain nendorsed order instr !ents de$osited b% the de$ositor to another acco nt that she later closedA HELD: +n the $resent case, the records do not s $$ort the finding !ade b% the CA and the trial co rt that a $rior arrange!ent e)isted between Salazar and &e!$lon e'o regarding the transfer of ownershi$ of the checks" &his fact

is cr cial as Salazar(s entitle!ent to the 'al e of the instr !ents is based on the ass !$tion that she is a transferee within the conte!$lation of Section @- of the 2egotiable +nstr !ents ;aw" &ransferees in this sit ation do not en?o% the $res !$tion of ownershi$ in fa'or of holders since the% are neither $a%ees nor indorsees of s ch instr !ents" &he weight of a thorit% is that the !ere $ossession of a negotiable instr !ent does not in itself concl si'el% establish either the right of the $ossessor to recei'e $a%!ent, or of the right of one who has !ade $a%!ent to be discharged fro! liabilit%" &h s, so!ething !ore than !ere $ossession b% $ersons who are not $a%ees or indorsers of the instr !ent is necessar% to a thorize $a%!ent to the! in the absence of an% other facts fro! which the a thorit% to recei'e $a%!ent !a% be inferred" 5'en if the dela% in the de!and for rei!b rse!ent is taken in con? nction with Salazar(s $ossession of the checks, it cannot be said that the $res !$tion of ownershi$ in &e!$lon e'o(s fa'or as the designated $a%ee therein was s fficientl% o'erco!e" &his is consistent with the $rinci$le that if instr !ents $a%able to na!ed $a%ees or to their order ha'e not been indorsed in blank, onl% s ch $a%ees or their indorsees can be holders and entitled to recei'e $a%!ent in their own right" &he $res !$tion that a negotiable instr !ent was gi'en for a s fficient consideration will not in re to the benefit of Salazar beca se the ter! Ggi'enH does not $ertain !erel% to a transfer of $h%sical $ossession of the instr !ent" &he $hrase Ggi'en or indorsedH in the conte)t of a negotiable instr !ent refers to the !anner in which s ch instr !ent !a% be negotiated" +t is an e)ce$tion to the general r le for a $a%ee of an order instr !ent to transfer the instr !ent witho t indorse!ent" 1recisel% beca se the sit ation is abnor!al, it is b t fair to the !aker and to $rior holders to re> ire $ossessors to $ro'e witho t the aid of an initial $res !$tion in their fa'or, that the% ca!e into $ossession b% 'irt e of a legiti!ate transaction with the last holder" Salazar failed to discharge this b rden, and the ret rn of the check $roceeds to &e!$lon e'o was therefore warranted nder the circ !stances des$ite the fact that &e!$lon e'o !a% not ha'e clearl% de!onstrated that he ne'er a thorized Salazar to de$osit the checks or to encash the sa!e" 2oteworth% also is the fact that $etitioner sta!$ed on the back of the checks the words* KAll $rior endorse!ents andLor lack of endorse!ents g aranteed,K thereb% !aking the ass rance that it had ascertained the gen ineness of all $rior endorse!ents" #a'ing ass !ed the liabilit% of a general indorser, $etitioner(s liabilit% to the designated $a%ee cannot be denied" Conse> entl%, $etitioner, as the collecting bank, had the right to debit Salazar(s acco nt for the 'al e of the checks it $re'io sl% credited in her fa'or" #owe'er, the iss e of whether it acted ? dicio sl% is an entirel% different !atter" As b sinesses affected with $ blic interest, and beca se of the nat re of their f nctions, banks are nder obligation to treat the acco nts of their de$ositors with !etic lo s care, alwa%s ha'ing in !ind the fid ciar% nat re of their relationshi$" +n this regard, $etitioner was clearl% re!iss in its d t% to $ri'ate res$ondent Salazar as its de$ositor" &o begin with, the irreg larit% a$$eared $lainl% on the face of the checks" Des$ite the ob'io s lack of indorse!ent thereon, $etitioner $er!itted the encash!ent of these checks three ti!es on three se$arate occasions" &his negates $etitioner(s clai! that it !erel% !ade a !istake in crediting the 'al e of the checks to Salazar(s acco nt and instead bolsters the concl sion of the CA that $etitioner recognized Salazar(s clai! of ownershi$ of checks and acted deliberatel% in $a%ing the sa!e, contrar% to ordinar% banking $olic% and $ractice" +t ! st be e!$hasized that the law i!$oses a d t% of diligence on the collecting bank to scr tinize checks de$osited with it, for the $ r$ose of deter!ining their gen ineness and reg larit%" &he collecting bank, being $ri!aril% engaged in banking, holds itself o t to the $ blic as the e)$ert on this field, and the law th s holds it to a high standard of cond ct" &he taking and collection of a check witho t the $ro$er indorse!ent a!o nt to a con'ersion of the check b% the bank" =ore i!$ortantl%, howe'er, solel% $on the $ro!$ting of &e!$lon e'o, and with f ll knowledge of the brewing dis$ te between Salazar and &e!$lon e'o, $etitioner debited the acco nt held in the na!e of the sole $ro$rietorshi$ of Salazar witho t e'en ser'ing d e notice $on her" &his ran contrar% to $etitioner(s ass rances to $ri'ate res$ondent Salazar that the acco nt wo ld re!ain nto ched, $ending the resol tion of the contro'ers% between her and &e!$lon e'o" 0or the abo'e reasons, the Co rt finds no reason to dist rb the award of da!ages granted b% the CA against $etitioner" &his whole incident wo ld ha'e been a'oided had $etitioner adhered to the standard of diligence e)$ected of one engaged in the banking b siness" A de$ositor has the right to reco'er reasonable !oral da!ages e'en if the bank(s negligence !a% not ha'e been attended

with !alice and bad faith, if the for!er s ffered !ental ang ish, serio s an)iet%, e!barrass!ent and h !iliation 18) PEOPLE V. MANIEGO 1@8 SCRA /6