P a g e | 1

[G.R. No. L-39641. February 28, 1983.]

METROPOL (BACOLOD) FINANCING & INVESTMENT
CORPORATION, plaintiff-appellee, vs. SAMBOK MOTORS
COMPANY and NG SAMBOK SONS MOTORS CO.,
LTD., defendant-appellants.
SYLLABUS
1. MERCANTILE LAW; PROMISSORY NOTE; QUALIFIED
INDORSEMENT; EFFECT THEREOF. A qualified
indorsement constitutes the indorser a mere assignor of the title to
the instrument. It may be made by adding to the indorser's
signature the words "without recourse" or any words of similar
import. Such an indorsement relieves the indorser of the general
obligation to pay if the instrument is dishonored but not of the
liability arising from warranties on the instrument as provided in
Section 65 of the Negotiable Instruments Law. However,
appellant Sambok indorse the note "with recourse'' and even
waived the notice of demand, dishonor, protest and presentment.
2. ID.; ID.; ADDITION OF THE WORDS "WITH RECOURSE"
DO NOT MAKE THE INDORSEMENT QUALIFIED; CASE
AT BAR. Appellant, by indorsing the note "with recourse''
does not make itself a qualified indorser but a general indorser
who is secondarily liable, because by such indorsement, it agreed
that if Dr. Villaruel fails to pay the note, plaintiff-appellee can go
after said appellant. The effect of such indorsement is that the
note was indorsed without qualification. A person who indorses
without qualification engages that on due presentment, the note
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.
Appellant Sambok's intention of indorsing the note without
qualification is made even more apparent by the fact that the
notice of' demand, dishonor, protest and presentment were all
waived. The words added by said appellant do not limit his
liability, but rather confirm his obligations as a general indorser.
3. ID.; ID.; AFTER DISHONORED BY NON-PAYMENT,
PERSON SECONDARILY LIABLE BECOMES THE
PRINCIPAL DEBTOR. The lower court did not err in not
declaring appellant as only secondarily liable because after an
instrument is dishonored by, non-payment. the person secondarily
liable thereon ceases to be such and becomes a principal debtor.
His liability becomes the same as that of the original obligor.
Consequently, the holder need not even proceed against the
maker before suing the indorser.
D E C I S I O N
DE CASTRO, J p:
The former Court of Appeals, by its resolution dated October 16,
1974 certified this case to this Court the issue raised therein being
one purely of law.
On April 15, 1969 Dr. Javier Villaruel executed a promissory
note in favor of Ng Sambok Sons Motors Co., Ltd., in the amount
of P15,939.00 payable in twelve (12) equal monthly installments,
beginning May 18, 1969, with interest at the rate of one percent
per month. It is further provided that in case on non-payment of
any of the installments, the total principal sum then remaining
unpaid shall become due and payable with an additional interest
equal to twenty-five percent of the total amount due. LLphil
On the same date, Sambok Motors Company (hereinafter referred
to as Sambok), a sister company of Ng Sambok Sons Motors Co.,
Ltd., and under the same management as the former, negotiated
and indorsed the note in favor of plaintiff Metropol Financing &
Investment Corporation with the following indorsement:
"Pay to the order of Metropol Bacolod Financing & Investment
Corporation with recourse. Notice of Demand; Dishonor; Protest;
and Presentment are hereby waived.
SAMBOK MOTORS CO. (BACOLOD)
By:
RODOLFO G. NONILLO
Asst. General Manager"
The maker, Dr. Villaruel defaulted in the payment of his
installments when they became due, so on October 30, 1969
plaintiff formally presented the promissory note for payment to
the maker. Dr. Villaruel failed to pay the promissory note as
demanded, hence plaintiff notified Sambok as indorsee of said
note of the fact that the same has been dishonored and demanded
payment.
Sambok failed to pay, so on November 26, 1969 plaintiff filed a
complaint for collection of a sum of money before the Court of
First Instance of Iloilo, Branch I. Sambok did not deny its liability
but contended that it could not be obliged to pay until after its co-
defendant Dr. Villaruel, has been declared insolvent.
During the pendency of the case in the trial court, defendant Dr.
Villaruel died, hence, on October 24, 1972 the lower court, on
motion, dismissed the case against Dr. Villaruel pursuant to
Section 21, Rule 3 of the Rules of Court. 1
On plaintiff's motion for summary judgment, the trial court
rendered its decision dated September 12, 1973, the dispositive
portion of which reads as follows:
"WHEREFORE, judgment is rendered:
"(a) Ordering Sambok Motors Company to pay to the plaintiff the
sum of P15,939.00 plus the legal rate of interest from October 30,
1969;
"(b) Ordering same defendant to pay to plaintiff the sum
equivalent to 25% of P15,939.00 plus interest thereon until fully
paid; and cdrep
"(c) To pay the cost of suit."
Not satisfied with the decision, the present appeal was instituted,
appellant Sambok raising a lone assignment of error as follows:
"The trial court erred in not dismissing the complaint by finding
defendant-appellant Sambok Motors Company as assignor and a
qualified indorsee of the subject promissory note and in not
holding it as only secondarily liable thereof."
Appellant Sambok argues that by adding the words "with
recourse" in the indorsement of the note, it becomes a qualified
indorser; that being a qualified indorser, it does not warrant that if
P a g e | 2

said note is dishonored by the maker on presentment, it will pay
the amount to the holder; that it only warrants the following
pursuant to Section 65 of the Negotiable Instruments Law: (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 had
capacity to contract; (d) that he has no knowledge of any fact
which would impair the validity of the instrument or render it
valueless.
The appeal is without merit.
A qualified indorsement constitutes the indorser a mere assignor
of the title to the instrument. It may be made by adding to the
indorser's signature the words "without recourse" or any words of
similar import. 2 Such an indorsement relieves the indorser of the
general obligation to pay if the instrument is dishonored but not
of the liability arising from warranties on the instrument as
provided in Section 65 of the Negotiable Instruments Law already
mentioned herein. However, appellant Sambok indorsed the note
"with recourse" and even waived the notice of demand, dishonor,
protest and presentment.
"Recourse" means resort to a person who is secondarily liable
after the default of the person who is primarily
liable. 3 Appellant, by indorsing the note "with recourse" does not
make itself a qualified indorser but a general indorser who is
secondarily liable, because by such indorsement, it agreed that if
Dr. Villaruel fails to pay the note, plaintiff-appellee can go after
said appellant. The effect of such indorsement is that the note was
indorsed without qualification. A person who indorses without
qualification engages that on due presentment, the note 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. 4 AppellantSambok's intention of indorsing the note
without qualification is made even more apparent by the fact that
the notice of demand, dishonor, protest and presentment were all
waived. The words added by said appellant do not limit his
liability, but rather confirm his obligation as a general indorser.
Lastly, the lower court did not err in not declaring appellant as
only secondarily liable because after an instrument is dishonored
by non-payment, the person secondarily liable thereon ceases to
be such and becomes a principal debtor. 5 His liability becomes
the same as that of the original obligor. 6 Consequently, the
holder need not even proceed against the maker before suing the
indorser. LLphil
WHEREFORE, the decision of the lower court is hereby
affirmed. No costs.
SO ORDERED.
Makasiar, Concepcion, Jr., Guerrero and Escolin, JJ., concur.
||| (Metropol Financing & Investment Corp. v. Sambok Motors
Co., Ltd., G.R. No. L-39641, February 28, 1983)







[G.R. No. 130756. January 21, 1999.]
ESTER B. MARALIT, petitioner, vs. JESUSA CORAZON
L. IMPERIAL, respondent.
SYNOPSIS
Petitioner Ester B. Maralit filed three complaints for estafa
through falsification of commercial documents through reckless
imprudence against respondent Jesusa Corazon
L.Imperial. Maralit alleged that she was the assistant manager of
the Naga City Branch of the Philippine National Bank (PNB), that
respondent deposited in her savings account at the PNB three
United States Treasury Warrants and withdrew their peso
equivalent, and that the treasury warrants were subsequently
returned one after the other by the United States Treasury on the
ground that the amounts were altered. As a consequence
thereof, Maralit was held personally liable by the PNB for the
amount of the treasury warrants totaling P320,287.30. After trial,
the Municipal Trial Court of Naga City (MTC) rendered
judgment finding no ground to hold the accused criminally liable
for which she was charged, hence, Corazon Imperial is
ACQUITTED of all the charges against her. The accused,
however was held civilly liable as indorser of the checks which
are the subject matter of the criminal action. The decision having
become final and executory, the MTC ordered the enforcement of
the civil liability arising from the criminal action. Respondent
moved to quash the writ of execution issued by the MTC on the
ground that the judgment did not order the accused to pay a
specific amount of money to a particular person as it merely
adjudicated the criminal aspect but not the civil aspect, hence,
there was no judgment which can be the subject of execution. The
motion was denied by the MTC for lack of merit. Respondent
filed a petition for certiorari and prohibition in the Regional Trial
Court of Naga City (RTC), contending that the writ of execution
issued by the MTC was at variance with the judgment in the
criminal cases. The RTC held that the decision of the MTC did
not really find respondent liable for P320,286.46 because in fact it
was petitioner who was found responsible for making the
defraudation possible. Petitioner moved for reconsideration but
was denied. In this petition, petitioner contends that the phrase
"civilly liable" in the judgment part of the MTC's decision also
connotes an order to pay on respondent's part. HCEcaT
The Supreme Court reversed the decision of the Regional Trial
Court of Naga City. The Court ruled that to affirm the RTC's
decision would be to hold that respondent was absolved from
both criminal and civil liability by the MTC. Such reading of the
MTC decision will not, however, bear analysis. For one, the
dispositive portion of the decision of the MTC expressly declares
respondent to be "civilly liable" as indorser of the checks which is
the subject matter of the criminal action. To find therefore that
there is no declaration of civil liability of respondent would be to
disregard the judgment of the MTC. Worse, it would be to amend
a final and executory decision of a court. The ambiguity of the
MTC's decision can easily be clarified by a resort to the text of
the decision or, what is properly called, the opinion part. By
P a g e | 3

doing so, it is clear that it can only be to petitioner that respondent
was made liable as the former was the offended party in the case.
SYLLABUS
REMEDIAL LAW; CRIMINAL PROCEDURE; JUDGMENT;
ANY AMBIGUITY IN A DECISION CAN EASILY BE
CLARIFIED BY A RESORT TO THE TEXT OF THE
DECISION OR, WHAT IS PROPERLY CALLED, THE
OPINION PART. In this case, to affirm the RTC's decision
would be to hold that respondent was absolved from both
criminal and civil liability by the MTC. Such reading of the MTC
decision will not, however, bear analysis. For one, the dispositive
portion of the decision of the MTC expressly declares respondent
to be "civilly liable as indorser of the checks which is [sic] the
subject matter of the criminal action." To find therefore that there
is no declaration of civil liability of respondent would be to
disregard the judgment of the MTC. Worse, it would be to amend
a final and executory decision of a court. It is argued that the
decision of the MTC did not order respondent, as accused in the
case, to pay a specific amount of money to any particular person
such that it could not be an adjudication of respondent's civil
liability. However, the ambiguity can easily be clarified by a
resort to the text of the decision or, what is properly called, the
opinion part. Doing so, it is clear that it can only be to petitioner
that respondent was made liable as the former was the offended
party in the case. As for what amount respondent is liable, it can
only be for the total amount of the treasury warrants subject of the
case, determined according to their peso equivalent, in the
decision of the MTC. For another, that respondent should pay
petitioner the amounts of the altered treasury warrants is the
logical consequence of the MTC's holding that private respondent
is civilly liable for the treasury warrants subject of the case.
D E C I S I O N
MENDOZA, J p:
This is a petition for review on certiorari of the decision, dated
August 26, 1997, and the resolution, dated September 29, 1997,
of the Regional Trial Court of Naga City (Branch 21) in Special
Civil Case No. RTC '97-3744. cdphil
The facts are as follows:
Petitioner Ester B. Maralit filed three complaints for estafa
through falsification of commercial documents through reckless
imprudence against respondent Jesusa Corazon
L.Imperial. 1 Maralit alleged that she was assistant manager of
the Naga City branch of the Philippine National Bank (PNB); that
on May 20, 1992, June 1, 1992, and July 1, 1992
respondent Imperial separately deposited in her savings account
at the PNB three United States treasury warrants bearing USTW
Nos. 2034-91254963, 2034-91180047, and 2034-33330760 and
on the same days withdrew their peso equivalent of P59,216.86,
P130,743.60, and P130,326.00, respectively; and that the treasury
warrants were subsequently returned one after the other by the
United States Treasury, through the Makati branch of the
Citibank, on the ground that the amounts thereof had been
altered. Maralit claimed that, as a consequence, she was held
personally liable by the PNB for the total amount of P320,287.30.
In her counter-affidavit, respondent claimed that she merely
helped a relative, Aida Abengoza, encash the treasury warrants;
that she deposited the treasury warrants in her savings account
and then withdrew their peso equivalent with the approval of
petitioner; that she gave the money to Aida Abengoza; that she
did not know that the amounts on the treasury warrants had been
altered nor did she represent to petitioner that the treasury
warrants were genuine; and that upon being informed of the
dishonor of the warrants she immediately contacted Aida
Abengoza and signed an acknowledgment of debt promising to
pay the total amount of the treasury warrants.
After preliminary investigation, the City Prosecutor of Naga City
filed three informations against respondent in the Municipal Trial
Court of Naga City (Branch 3).
On September 26, 1996, judgment was rendered as follows:
WHEREFORE, in view of the foregoing considerations, the
Court finds no ground to hold the accused criminally liable for
which she is charged, hence Corazon Jesusa L. Imperial is
ACQUITTED of all the charges against her. The accused
however is civilly liable as indorser of the checks which is (sic)
the subject matter of the criminal action. 2
The decision having become final and executory, the MTC, on
November 11, 1996, ordered the enforcement of the civil liability
against the accused arising from the criminal action. 3 The writ of
execution, dated December 9, 1996, directed the sheriff as
follows: 4
NOW, THEREFORE, you are hereby commanded to cause the
execution of the aforesaid judgment in the amount of THREE
HUNDRED TWENTY THOUSAND TWO HUNDRED
EIGHTY SIX & 46/100 (P320,286.46) ONLY, equivalent to the
amount of the 3 three US$ checks amounting to $12,621.13, and
to levy the goods and chattels of the defendant/s, except those
which are exempt from execution and to make the sale thereat in
accordance with the procedure outlined by Rule 39, Revised
Rules of Court and such cases made and provided, together with
all your lawful fees for the services of this writ.
Accordingly, the sheriff served a notice of garnishment on the
PNB.
Respondent at first moved to declare her savings account exempt
from execution on the ground that the same represented her salary
as an employee of the Commission on Audit, which was not even
sufficient for her expenses and that of her family. Later, she
moved to quash the writ of execution on the ground "that the
judgment did not order the accused to pay [a] specific amount of
money to a particular person as it merely adjudicated the criminal
aspect but not the civil aspect hence there was no judgment
rendered which can be the subject of execution."
Both motions of respondent were denied by the MTC for lack of
merit in its order, dated February 24, 1997. 5 Accordingly, an
alias writ of execution was issued.
On April 14, 1997, respondent filed a petition for certiorari and
prohibition in the Regional Trial Court of Naga City, contending
that the writ of execution issued by the MTC was at variance with
the judgment in the criminal cases.
P a g e | 4

The RTC issued a writ of preliminary injunction enjoining
enforcement of the writ of execution issued by the MTC. On
August 26, 1997, it rendered a decision, which, among other
things, made permanent the injunction. The RTC held that the
decision of the MTC did not really find respondent liable for
P320,286.46 because in fact it was petitioner who was found
responsible for making the defraudation possible. prcd
Petitioner moved for reconsideration alleging that respondent
filed her petition for certiorari and prohibition more than three
months after the MTC had ordered execution of its decision on
November 11, 1996. However, her motion was denied on
September 28, 1997. 6 The RTC held that the three-month period
should be counted from April 1, 1997, when the alias writ of
execution was issued, or from April 7, 1997, when the MTC
denied private respondent's motion for reconsideration of the
order denying her motion to quash the writ of execution. The
RTC likewise found the second ground of petitioner's motion for
reconsideration, i.e., that its decision was contrary to law and
jurisprudence, devoid of merit.
Hence, this petition. Petitioner raises the following issues: 7
1. Whether respondent's Petition for Certiorari and Prohibition
under Rule 65 of the Rules of Court was filed out of time;
2. Whether this case warrants the relaxation of the rule that
"Certiorari is not a substitute for a lost or lapsed appeal."
3. Whether or not the MTC committed grave abuse of discretion
amounting to lack or excess of jurisdiction, when it issued the
Order of Execution, Writ of Execution and Alias Writ of
Execution to implement its final and executory civil judgment in
Criminal Cases No. 68697, 68698 and 68699, which reads: ". .
. The accused however is civilly liable as indorser of the checks
subject matter of the criminal action."
4. Whether or not the MTC merely adjudicated the criminal
aspect but not the civil aspect of Criminal Cases 68697, 68698
and 68699.
5. Whether there was substantial variance as between the
dispositive portion of the civil judgment and the writ of execution
issued thereunder.
6. Whether or not a court exercising certiorari jurisdiction has the
authority to modify or alter the final and executory decision of the
lower court even by way of an obiter dictum.
Petitioner contends that the phrase "civilly liable" in the judgment
part of the MTC's decision also connotes an order to pay on
respondent's part.
It may fairly be assumed that the decision of the MTC was an
adjudication of both the criminal and civil liability of respondent
inasmuch as it does not appear that petitioner instituted a separate
civil action or reserved or waived the right to bring such action.
The question is whether the decision of the MTC finds respondent
civilly liable and, in the affirmative, for how much. As already
stated, the RTC held that the MTC did not really find respondent
liable. In reaching that conclusion, the RTC said:
A mere reading of the dispositive portion of the judgment and the
writ of execution will readily show that there is variance between
the two. Whereas, the judgment pronounced [respondent herein]
to be "civilly liable as indorser of the checks which is the subject
matter of the criminal action," the writ of execution commanded
the Sheriff "to cause the execution of the aforesaid judgment in
the amount of THREE HUNDRED TWENTY THOUSAND
TWO HUNDRED EIGHTY SIX & 46/100 (P320,286.46)
ONLY, equivalent to the amount of the 3 three US$ checks
amounting to $12,621.13, . . . ." In the judgment, nothing is
mentioned about the amount for which [respondent herein] is
liable as indorser, but in the writ of execution, the civil liability of
the [respondent herein] has already been fixed at P320,286.46.
The variance, therefor, between the judgment and the writ of
execution is substantial because it consists of the addition of the
amount of the civil liability of the [respondent herein].
xxx xxx xxx
. . . The [MTC's] findings of facts and conclusions of law as
expressed in the body of the decision do not support the
dispositive portion of the judgment that [respondent herein] is
civilly liable. On the contrary a reading of the body of the
judgment in question will show that [respondent] is not civilly
liable. For three (3) times, the Court stated in the body of its
decision that it is [petitioner] Maralit herself who should be
faulted and be held responsible for the payment of the dishonored
US Dollar checks.
Hereunder quoted are portions of the body of the decision in
question showing that [respondent] herein should not be held
civilly liable and that it was [petitioner]Maralit who should be
blamed and be held responsible:
. . . The Court however is quite intrigue[d] on why the accused
was allowed to encash the peso equivalent despite the fact that the
check was deposited for collection and clearing. It is the
established procedure of banks that out of town checks and US
Treasury Warrants should first be cleared before the same is to be
paid. More so if the holder is a second indorser. The private
complainant in this regard explained that [as assistant branch
manager] she has the discretion and that there is no hold order
appearing in the savings account of the accused. She likewise
explained that she trusted the accused whom she knew is working
in the same building and a depositor. In short she took the risk of
approving the withdrawal of the peso equivalent, without the
check being cleared and if the same is dishonored she should be
responsible. (page 5, judgment).
The information accuses the accused for disregarding the banking
laws and procedure of the PNB. This is a generous statement. In
the first place the accused is not an employee of the bank. She has
no control nor supervision over its employees. If there is anyone
who has disregarded banking laws, it is the private complainant
for approving withdrawals before the check were cleared.
Mrs. Maralit is more knowledgeable of the banking procedures of
the bank of which she is the assistant manager. She knows the
risk of approving encashment before clearing. She took the risk
therefore she should be responsible for the outcome of the risk
she has taken. (page 6, Judgment).
The Court is of the opinion that there was negligence on both the
complainant and the accused but greater responsibility should be
borne by the private complainant. The accused could not have
encashed and deposited the checks without her approval. If the
P a g e | 5

complainant was not remiss in her duty in imposing the banking
rules strictly, then these things could not have happened. (page 7,
Judgment). 8
This portion of the decision of the MTC actually refers to
respondent's criminal liability and not her civil liability. More
specifically, the portion in question refers to the allegations in the
three informations that respondent committed falsification of
commercial documents through reckless imprudence by "1)
taking advantage of [her] position as state auditor of the
Commission on Audit assigned at the PNB, Naga Branch, 2)
disregard[ing] existing procedure, banking laws, policies, and
circulars of the PNB, 3) . . . not tak[ing] the necessary precaution
to determine the genuineness of the Treasury Warrants and the
alteration of the amount[s] therein deposited and [in] encash[ing]
the checks, and 4) . . . [her] negligence, carelessness, and
imprudence [which] caused damage and loss to
[petitioner]." 9 Nevertheless, the MTC held that respondent was
civilly liable as the penultimate paragraph of its decision makes
clear:
The Court sympathizes with the complainant that there was
indeed damage and loss, but said loss is chargeable to the accused
who upon her indorsements warrant that the instrument is genuine
in all respect what it purports to be and that she will pay the
amount thereof in case of dishonor. (Sec. 66, Negotiable
Instrument Law)10
Thus, while the MTC found petitioner partly responsible for the
encashment of the altered checks, it found respondent civilly
liable because of her indorsements of the treasury warrants, in
addition to the fact that respondent executed a notarized
acknowledgment of debt promising to pay the total amount of
said warrants. llcd
In this case, to affirm the RTC's decision would be to hold that
respondent was absolved from both criminal and civil liability by
the MTC. Such reading of the MTC decision will not, however,
bear analysis. For one, the dispositive portion of the decision of
the MTC expressly declares respondent to be "civilly liable as
indorser of the checks which is [sic] the subject matter of the
criminal action." To find therefore that there is no declaration of
civil liability of respondent would be to disregard the judgment of
the MTC. Worse, it would be to amend a final and executory
decision of a court.
It is argued that the decision of the MTC did not order
respondent, as accused in the case, to pay a specific amount of
money to any particular person such that it could not be an
adjudication of respondent's civil liability. However, the
ambiguity can easily be clarified by a resort to the text of the
decision or, what is properly called, the opinion part. Doing so, it
is clear that it can only be to petitioner that respondent was made
liable as the former was the offended party in the case. As for
what amount respondent is liable, it can only be for the total
amount of the treasury warrants subject of the case, determined
according to their peso equivalent, in the decision of the MTC.
For another, that respondent should pay petitioner the amounts of
the altered treasury warrants is the logical consequence of the
MTC's holding that private respondent is civilly liable for the
treasury warrants subject of the case. 11
WHEREFORE, the decision of the Regional Trial Court of Naga
City (Branch 21) is REVERSED. cdlex
SO ORDERED.
||| (Maralit v. Imperial, G.R. No. 130756, January 21, 1999)

[G.R. No. 128927. September 14, 1999.]
REMEDIOS NOTA SAPIERA, petitioner, vs. COURT OF
APPEALS and RAMON SUA, respondents.
SYNOPSIS
On several occasions, petitioner Remedios Nota Sapiera, a sari-
sari store owner, purchased from Monrico Mart certain grocery
items and paid for them with checks issued by one Arturo de
Guzman. These checks were signed at the back by petitioner.
When presented for payment the checks were dishonored because
the drawer's account was already closed. Private respondent
Ramon Sua informed Arturo de Guzman and petitioner about the
dishonor but both failed to pay the value of the checks.
Consequently, four charges of estafa were filed against petitioner
with the Regional Trial Court of Dagupan City. After trial, the
court a quo acquitted petitioner of all the charges of estafa but did
not rule on whether she could be held civilly liable for the checks
she indorsed to private respondent. In a petition
for mandamus filed by private respondent, the Court of Appeals
rendered a decision holding petitioner liable for the value of the
checks. SEcAIC
Hence, this petition for review.
The Court ruled that the dismissal of the criminal cases against
petitioner did not erase her civil liability since the dismissal was
due to insufficiency of evidence and not from a declaration from
the court that the fact from which the civil action might arise did
not exist. An accused acquitted of estafa may nevertheless be held
civilly liable where the facts established by the evidence so
warrant. The accused should be adjudged liable for the unpaid
value of the checks signed by her in favor of the complainant.
SYLLABUS
1. REMEDIAL LAW; CRIMINAL PROCEDURE; CIVIL
LIABILITY NOT EXTINGUISHED BY ACQUITTAL OF
ACCUSED. Section 2, par. (b), of Rule 111 of the Rules of
Court, as amended, specifically provides: "Extinction of the penal
action does not carry with it extinction of the civil, unless the
extinction proceeds from a declaration in a final judgment that the
fact from which the civil might arise did not exist. The judgment
of acquittal extinguishes the liability of the accused for damages
only when it includes a declaration that the fact from which the
civil liability might arise did not exist. Thus, the civil liability is
not extinguished by acquittal where: (a) the acquittal is based on
reasonable doubt; (b) where the court expressly declares that the
liability of the accused is not criminal but only civil in nature;
and, (c) where the civil liability is not derived from or based on
the criminal act of which the accused is acquitted. TIcEDC
2. ID.; ID.; ID.; CASE AT BAR. The dismissal of the criminal
cases against petitioner did not erase her civil liability since the
P a g e | 6

dismissal was due to insufficiency of evidence and not from a
declaration from the court that the fact from which the civil action
might arise did not exist. An accused acquitted of estafa may
nevertheless be held civilly liable where the facts established by
the evidence so warrant. The accused should be adjudged liable
for. the unpaid value of the checks signed by her in favor of the
complainant.
3. ID.; ID.; ID.; RATIONALE. The rationale behind the award
of civil indemnity despite a judgment of acquittal when evidence
is sufficient to sustain the award was explained by the Code
Commission in connection with Art. 29 of the Civil Code, to
wit: The old rule that the acquittal of the accused in a criminal
case also releases him from civil liability is one of the most
serious flaws in the Philippine legal system. It has given rise to
numberless instances of miscarriage of justice, where the acquittal
was due to a reasonable doubt in the mind of the court as to the
guilt of the accused. The reasoning followed is that inasmuch as
the civil responsibility is derived from the criminal offense, when
the latter is not proved, civil liability cannot be demanded. This is
one of those cases where confused thinking leads to unfortunate
and deplorable consequences. Such reasoning fails to draw a clear
line of demarcation between criminal liability and civil
responsibility, and to determine the logical result of the
distinction. The two liabilities are separate and distinct from each
other. One affects the social order and the other private rights.
One is for punishment or correction of the offender while the
other is for reparation of damages suffered by the aggrieved party
. . . It is just and proper that for the purposes of imprisonment of
or fine upon the accused, the offense should be proved beyond
reasonable doubt. But for the purpose of indemnifying the
complaining party, why should the offense also be proved beyond
reasonable doubt? Is not the invasion or violation of every private
right to be proved only by preponderance of evidence? Is the right
of the aggrieved person any less private because the wrongful act
is also punishable by the criminal law.
4. MERCANTILE LAW; NEGOTIABLE INSTRUMENTS;
PERSON DEEMED AN INDORSER WHEN SHE SIGNED
BACK OF CHECK WITHOUT INDICATION AS TO HOW
SHE SHOULD BE BOUND THEREBY. It is undisputed that
the four (4) checks issued by de Guzman were signed by
petitioner at the back without any indication as to how she should
be bound thereby and, therefore, she is deemed to be an indorser
thereof. TcSHaD
D E C I S I O N
BELLOSILLO, J p:
REMEDIOS NOTA SAPIERA appeals to us through this petition
for review the Decision of the Court of Appeals 1 which acquitted
her of the crime of estafa but held her liable nonetheless for the
value of the checks she indorsed in favor of private respondent
Ramon Sua. cdrep
On several occasions petitioner Remedios Nota Sapiera, a sari-
sari store owner, purchased from Monrico Mart certain grocery
items, mostly cigarettes, and paid for them with checks issued by
one Arturo de Guzman: (a) PCIB Check No. 157059 dated 26
February 1987 for P140,000.00; (b) PCIB Check No. 157073
dated 26 February 1987 for P28,000.00; (c) PCIB Check No.
157057 dated 27 February 1987 for P42,150.00; and, d)
Metrobank Check No. DAG 045104758 PA dated 2 March
1987 for P125,000.00. These checks were signed at the back by
petitioner. When presented for payment the checks were
dishonored because the drawer's account was already closed.
Private respondent Ramon Sua informed Arturo de Guzman and
petitioner about the dishonor but both failed to pay the value of
the checks. Hence, four (4) charges of estafa were filed against
petitioner with the Regional Trial Court of Dagupan City,
docketed as Crim. Cases Nos. D-8728, D-8729, D-8730 and D-
8731. Arturo de Guzman was charged with two (2) counts of
violation of B.P. Blg. 22, docketed as Crim. Cases Nos. D-8733
and D-8734. These cases against petitioner and de Guzman were
consolidated and tried jointly.
On 27 December 1989 the court a quo 2 acquitted petitioner of all
the charges of estafa but did not rule on whether she could be held
civilly liable for the checks she indorsed to private respondent.
The trial court found Arturo de Guzman guilty of Violation
of B.P. Blg. 22 on two (2) counts and sentenced him to suffer
imprisonment of six (6) months and one (1) day in each of the
cases, and to pay private respondent P167,150.00 as civil
indemnity.
Private respondent filed a notice of appeal with the trial court
with regard to the civil aspect but the court refused to give due
course to the appeal on the ground that the acquittal of petitioner
was absolute. Private respondent then filed a petition
for mandamus with the Court of Appeals, docketed as CA-GR SP
No. 24626, praying that the courta quo be ordered to give due
course to the appeal on the civil aspect of the decision. The Court
of Appeals granted the petition and ruled that private respondent
could appeal with respect to the civil aspect the judgment of
acquittal by the trial court. prcd
On 22 January 1996, the Court of Appeals in CA-GR CV No.
36376 rendered the assailed Decision insofar as it sustained the
appeal of private respondent on the civil aspect and ordering
petitioner to pay private respondent P335,000.00 representing the
aggregate face value of the four (4) checks indorsed by petitioner
plus legal interest from the notice of dishonor.
Petitioner filed a motion for reconsideration of the Decision. On
19 March 1997 the Court of Appeals issued a Resolution noting
the admission of both parties that private respondent had already
collected the amount of P125,000.00 from Arturo de Guzman
with regard to his civil liability in Crim. Cases Nos. 8733 and
8734. The appellate court noted that private respondent was the
same offended party in the criminal cases against petitioner and
against de Guzman. Criminal Cases Nos. 8733 and 8734 against
De Guzman, and Crim. Cases Nos. 8730 and 8729 against
petitioner, involved the same checks, to wit: PCIB Checks Nos.
157057 for P42,150.00 and Metrobank Check No. DAG-
045104758 PA for P125,000.00.
Thus, the Court of Appeals ruled that private respondent could
not recover twice on the same checks. Since he had collected
P125,000.00 as civil indemnity in Crim. Cases Nos. 8733 and
8734, this amount should be deducted from the sum total of the
civil indemnity due him arising from the estafa cases against
petitioner. The appellate court then corrected its previous award,
which was erroneously placed at P335,000.00, to P335,150.00 as
the sum total of the amounts of the four (4) checks involved.
Deducting the amount of P125,000.00 already collected by
P a g e | 7

private respondent, petitioner was adjudged to pay P210,150.00
as civil liability to private respondent. Hence, this petition
alleging that respondent Court of Appeals erred in holding
petitioner civilly liable to private respondent because her acquittal
by the trial court from charges of estafa in Crim. Cases Nos. D-
8728, D-8729, D-8730 and D-8731 was absolute, the trial court
having declared in its decision that the fact from which the civil
liability might have arisen did not exist.
We cannot sustain petitioner. The issue is whether respondent
Court of Appeals committed reversible error in requiring
petitioner to pay civil indemnity to private respondent after the
trial court had acquitted her of the criminal charges. Section 2,
par. (b), of Rule 111 of the Rules of Court, as amended,
specifically provides: "Extinction of the penal action does not
carry with it extinction of the civil, unless the extinction proceeds
from a declaration in a final judgment that the fact from which the
civil might arise did not exist.
The judgment of acquittal extinguishes the liability of the accused
for damages only when it includes a declaration that the fact from
which the civil liability might arise did not exist. Thus, the civil
liability is not extinguished by acquittal where: (a) the acquittal is
based on reasonable doubt; (b) where the court expressly declares
that the liability of the accused is not criminal but only civil in
nature; and, (c) where the civil liability is not derived from or
based on the criminal act of which the accused is
acquitted. 3 Thus, underArt. 29 of the Civil Code
When the accused in a criminal prosecution is acquitted on the
ground that his guilt has not been proved beyond reasonable
doubt, a civil action for damages for the same act or omission
may be instituted. Such action requires only a preponderance of
evidence. Upon motion of the defendant, the court may require
the plaintiff to file a bond to answer for damages in case the
complaint should be found to be malicious. dctai
In a criminal case where the judgment of acquittal is based upon
reasonable doubt, the court shall so declare. In the absence of any
declaration to that effect, it may be inferred from the text of the
decision whether or not acquittal is due to that ground.
An examination of the decision in the criminal cases reveals these
findings of the trial court
Evidence for the prosecution tends to show that on various
occasions, Remedios Nota Sapiera purchased from Monrico Mart
grocery items (mostly cigarettes) which purchases were paid with
checks issued by Arturo de Guzman; that those purchases and
payments with checks were as follows:
(a) Sales Invoice No. 20104 dated February 26, 1987 in the
amount of P28,000.00; that said items purchased were paid with
PCIBank Check No. 157073 dated February 26, 1987;
(b) Sales Invoice No. 20108 dated February 26, 1987 in the
amount of P140,000.00; that said items purchased were paid with
PCIBank No. 157059 dated February 26, 1987;
(c) Sales Invoice No. 20120 dated February 27, 1987 in the
amount of P42,150.00; that said items were paid with PCIBank
Check No. 157057 dated February 27, 1987;
(d) Sales Invoice No. 20148 and 20149 both dated March 2, 1987
in the amount of P120,103.75; said items were paid with
Metrobank Check No. 045104758 dated March 2, 1987 in the
amount of P125,000.00.
That all these checks were deposited with the Consolidated Bank
and Trust Company, Dagupan Branch, for collection from the
drawee bank;
That when presented for payment by the collecting bank to the
drawee bank, said checks were dishonored due to account closed,
as evidenced by check return slips; . . . .
From the evidence, the Court finds that accused Remedios Nota
Sapiera is the owner of a sari-sari store inside the public market;
that she sells can(ned) goods, candies and assorted grocery items;
that she knows accused Arturo De Guzman, a customer since
February 1987; that de Guzman purchases from her grocery items
including cigarettes; that she knows Ramon Sua; that she has
business dealings with him for 5 years; that her purchase orders
were in clean sheets of paper; that she never pays in check; that
Ramon Sua asked her to sign subject checks as identification of
the signature of Arturo de Guzman; that she pays in cash;
sometimes delayed by several days; that she signed the four (4)
checks on the reverse side; that she did not know the subject
invoices; that de Guzman made the purchases and he issued the
checks; that the goods were delivered to de Guzman; that she was
not informed of dishonored checks; and that counsel for Ramon
Sua informed de Guzman and told him to pay . . . . LLjur
In the case of accused Remedios Nota Sapiera, the prosecution
failed to prove conspiracy.
Based on the above findings of the trial court, the exoneration of
petitioner of the charges of estafa was based on the failure of the
prosecution to present sufficient evidence showing conspiracy
between her and the other accused Arturo de Guzman in
defrauding private respondent. However, by her own testimony,
petitioner admitted having signed the four (4) checks in question
on the reverse side. The evidence of the prosecution shows that
petitioner purchased goods from the grocery store of private
respondent as shown by the sales invoices issued by private
respondent; that these purchases were paid with the four (4)
subject checks issued by de Guzman; that petitioner signed the
same checks on the reverse side; and when presented for
payment, the checks were dishonored by the drawee bank due to
the closure of the drawer's account; and, petitioner was informed
of the dishonor.
We affirm the findings of the Court of Appeals that despite the
conflicting versions of the parties, it is undisputed that the four
(4) checks issued by de Guzman were signed by petitioner at the
back without any indication as to how she should be bound
thereby and, therefore, she is deemed to be an indorser thereof.
The Negotiable Instruments Law clearly provides
SECTION 17. Construction where instrument is ambiguous.
Where the language of the instrument is ambiguous, or there are
admissions therein, the following rules of construction apply: . . .
. (f) Where a signature is so placed upon the instrument that it is
not clear in what capacity the person making the same intended to
sign, he is deemed an indorser. . .
P a g e | 8

SECTION 63. When person deemed indorser. A person
placing his signature upon an instrument otherwise than as maker,
drawer or acceptor, is deemed to be an indorser unless he clearly
indicates by appropriate words his intention to be bound in some
other capacity.
SECTION 66. Liability of general indorser. Every indorser
who indorses without qualification, warrants to all subsequent
holders in due course: (a) The matters and things mentioned in
subdivisions (a), (b) and (c) of the next preceding section; and (b)
That the instrument is, at the time of the indorsement, valid and
subsisting;
And, in addition, he engages that, on due presentment, it shall be
accepted or paid or both, as the case may be, according to its
tenor, and that if it be dishonored and the necessary proceedings
on dishonor be duly taken, he will pay the amount thereof to the
holder or to any subsequent indorser who may be compelled to
pay it. cdtai
The dismissal of the criminal cases against petitioner did not
erase her civil liability since the dismissal was due to
insufficiency of evidence and not from a declaration from the
court that the fact from which the civil action might arise did not
exist. 4 An accused acquitted of estafa may nevertheless be held
civilly liable where the facts established by the evidence so
warrant. The accused should be adjudged liable for the unpaid
value of the checks signed by her in favor of the complainant. 5
The rationale behind the award of civil indemnity despite a
judgment of acquittal when evidence is sufficient to sustain the
award was explained by the Code Commission in connection with
Art. 29 of the Civil Code, to wit:
The old rule that the acquittal of the accused in a criminal case
also releases him from civil liability is one of the most serious
flaws in the Philippine legal system. It has given rise to
numberless instances of miscarriage of justice, where the acquittal
was due to a reasonable doubt in the mind of the court as to the
guilt of the accused. The reasoning followed is that inasmuch as
the civil responsibility is derived from the criminal offense, when
the latter is not proved, civil liability cannot be demanded.
This is one of those cases where confused thinking leads to
unfortunate and deplorable consequences. Such reasoning fails to
draw a clear line of demarcation between criminal liability and
civil responsibility, and to determine the logical result of the
distinction. The two liabilities are separate and distinct from each
other. One affects the social order and the other private rights.
One is for punishment or correction of the offender while the
other is for reparation of damages suffered by the aggrieved party
. . . . It is just and proper that for the purposes of imprisonment of
or fine upon the accused, the offense should be proved beyond
reasonable doubt. But for the purpose of indemnifying the
complaining party, why should the offense also be proved beyond
reasonable doubt? Is not the invasion or violation of every private
right to be proved only by preponderance of evidence? Is the right
of the aggrieved person any less private because the wrongful act
is also punishable by the criminal law? 6
Finally, with regard to the computation of the civil liability of
petitioner, the finding of the Court of Appeals that petitioner is
civilly liable for the aggregate value of the unpaid four (4) checks
subject of the criminal cases in the sum of P335,150.00, less the
amount of P125,000.00 already collected by private respondent
pending appeal, resulting in the amount of P210,150.00 still due
private respondent, is a factual matter which is binding and
conclusive upon this Court.
WHEREFORE, the petition is DENIED. The Decision of the
Court of Appeals dated 22 January 1996 as amended by its
Resolution dated 19 March 1997 ordering petitioner Remedios
Nota Sapiera to pay private respondent Ramon Sua the remaining
amount of P210,150.00 as civil liability, is AFFIRMED. Costs
against petitioners.
SO ORDERED. Cdpr
Mendoza, Quisumbing and Buena, JJ., concur.
||| (Sapiera v. Court of Appeals, G.R. No. 128927, September 14,
1999)











[G.R. No. 112392. February 29, 2000.]
BANK OF THE PHILIPPINE ISLANDS, petitioner, vs.
COURT OF APPEALS and BENJAMIN C.
NAPIZA, respondents.
SYNOPSIS
By way of accommodation and only for the purpose of clearing,
Benjamin Napiza (private respondent herein), deposited a check
in the amount of $2,500.00 in his dollar deposit with the
petitioner Bank of the Philippine Islands. This check belongs to
Henry Chan. Napiza delivered to Chan a signed blank withdrawal
slip, with the understanding that as soon as the check is cleared,
both of them would go to the bank to withdraw the amount of the
check upon private respondent's presentation to the bank of his
passbook. However, using the same blank withdrawal slip, a bank
employee was able to withdraw the amount of $2,541.67, which
was made payable to Ramon A. de Guzman and Agnes C. de
Guzman. Later, the bank received a communication that the
deposited check was a counterfeit. The bank informed respondent
Napiza that the check bounced, hence, the latter tried to locate
P a g e | 9

Chan. Since Napiza was unable to locate Chan, the bank
demanded payment from him. Napiza refused to pay on the
ground that the check was deposited for clearing purposes only to
accommodate Chan. As a result, petitioner bank filed a complaint
against private respondent for the return of the amount of
$2,500.00 or the prevailing peso equivalent plus interest,
attorney's fees, and litigation costs. The lower court dismissed the
complaint. The lower court held that having committed a mistake
of not waiting for the clearance of the check before authorizing
the withdrawal of its value, petitioner should suffer the resultant
loss. The Court of Appeals affirmed the lower court's decision
and stressed that the mere deposit of the check did not mean that
it was already the property of the depositor. The check had to be
cleared and its proceeds can only be withdrawn upon presentation
of a passbook in accordance with the bank's rules and regulations.
Hence, this petition. SCaITA
The Supreme Court denied the petition. The Court of Appeals
correctly held that in depositing the check in his name, private
respondent did not become the outright owner of the amount
stated therein. Under petitioner bank's own rule, by depositing the
check, private respondent was merely designating petitioner as
the collecting bank. This is in consonance with the rule that a
negotiable instrument, such as a check, is not a legal tender.
SYLLABUS
1. COMMERCIAL LAW; NEGOTIABLE INSTRUMENTS
LAW; WARRANTIES OF A PERSON NEGOTIATING AN
INSTRUMENT; APPLICATION IN CASE AT BAR. Section
65, on the other hand, provides for the following warranties of a
person negotiating an instrument by delivery or by qualified
indorsement: (a) that the instrument is genuine and in all respects
what it purports to be; (b) that he has a good title to it; and (c) that
all prior parties had capacity to contract. In People vs. Maniego,
this Court described the liabilities of an indorser as follows:
"Appellant's contention that as mere indorser, she may not be
liable on account of the dishonor of the checks indorsed by her, is
likewise untenable. Under the law, the holder or last indorsee of a
negotiable instrument has the right 'to enforce payment of the
instrument for the full amount thereof against all parties liable
thereon.' Among the 'parties liable thereon' is an indorser of the
instrument, i.e., 'a person placing his signature upon an
instrument otherwise than as a maker, drawer or acceptor **
unless he clearly indicated by appropriate words his intention to
be bound in some other capacity.' Such an indorser 'who indorses
without qualification,' inter alia'engages that on due presentment,
** (the instrument) shall be accepted or paid, or both, as the case
may be, according to its tenor, and that if it be dishonored, and
the necessary proceedings on dishonor be duly taken, he will pay
the amount thereof to the holder, or any subsequent indorser who
may be compelled to pay it.' Maniego may also be deemed an
'accommodation party' in the light of the facts, i.e., a person 'who
has signed the instrument as maker, drawer, acceptor, or indorser,
without receiving value therefor, and for the purpose of lending
his name to some other person.' As such, she is under the law
'liable on the instrument to a holder for value, notwithstanding
such holder at the time of taking the instrument knew ** (her) to
be only an accommodation party,' although she has the right, after
paying the holder, to obtain reimbursement from the party
accommodated, 'since the relation between them is in effect that
of principal and surety, the accommodation party being the
surety.'" It is thus clear that ordinarily private respondent may be
held liable as an indorser of the check or even as an
accommodation party. However, to hold private respondent liable
for the amount of the check he deposited by the strict application
of the law and without considering the attending circumstances in
the case would result in an injustice and in the erosion of the
public trust in the banking system. The interest of justice thus
demands looking into the events that led to the encashment of the
check.
2. ID.; ID.; CHECK DEPOSIT; COLLECTING BANK OR
LAST ENDORSER SUFFERS THE LOSS, AS A GENERAL
RULE; RATIONALE; CASE AT BAR. As correctly held by
the Court of Appeals, in depositing the check in his name, private
respondent did not become the outright owner of the amount
stated therein. Under the above rule, by depositing the check with
petitioner, private respondent was, in a way, merely designating
petitioner as the collecting bank. This is in consonance with the
rule that a negotiable instrument, such as a check, whether a
manager's check or ordinary check, is not legal tender. As such,
after receiving the deposit, under its own rules, petitioner shall
credit the amount in private respondent's account or infuse value
thereon only after the drawee bank shall have paid the amount of
the check or the check has been cleared for deposit. Again, this is
in accordance with ordinary banking practices and with this
Court's pronouncement that "the collecting bank or last endorser
generally suffers the loss because it has the duty to ascertain the
genuineness of all prior endorsements considering that the act of
presenting the check for payment to the drawee is an assertion
that the party making the presentment has done its duty to
ascertain the genuineness of the endorsements." The rule finds
more meaning in this case where the check involved is drawn on
a foreign bank and therefore collection is more difficult than
when the drawee bank is a local one even though the check in
question is a manager's check. Said ruling brings to light the fact
that the banking business is affected with public interest. By the
nature of its functions, a bank is under obligation to treat the
accounts of its depositors "with meticulous care, always having in
mind the fiduciary nature of their relationship."
3. CIVIL LAW; QUASI-DELICTS; NEGLIGENCE; DEFINED;
WHEN PRESENT; CASE AT BAR. As such, in dealing with
its depositors, a bank should exercise its functions not only with
the diligence of a good father of a family but it should do so with
the highest degree of care. In the case at bar, petitioner, in
allowing the withdrawal of private respondent's deposit, failed to
exercise the diligence of a good father of a family. In total
disregard of its own rules, petitioner's personnel negligently
handled private respondent's account to petitioner's detriment. As
this Court once said on this matter: "Negligence is the omission to
do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and
reasonable man would do. The seventy-eight (78)-year-old, yet
still relevant, case of Picart vs. Smith, provides the test by which
to determine the existence of negligence in a particular case
which may be stated as follows: Did the defendant in doing the
alleged negligent act use that reasonable care and caution which
an ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence. The law here in
effect adopts the standard supposed to be supplied by the
imaginary conduct of the discreet pater-familias of the Roman
law. The existence of negligence in a given case is not determined
by reference to the personal judgment of the actor in the situation
P a g e | 10

before him. The law considers what would be reckless,
blameworthy, or negligent in the man of ordinary intelligence and
prudence and determines liability by that."
4. ID.; ID.; ID.; PROXIMATE CAUSE, DEFINED; PRESENCE
THEREOF IN CASE AT BAR. While it is true that private
respondent's having signed a blank withdrawal slip set in motion
the events that resulted in the withdrawal and encashment of the
counterfeit check, the negligence of petitioner's personnel was the
proximate cause of the loss that petitioner sustained. Proximate
cause, which is determined by a mixed consideration of logic,
common sense, policy and precedent, is that cause, which, in
natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which the
result would not have occurred." The proximate cause of the
withdrawal and eventual loss of the amount of $2,500.00 on
petitioner's part was its personnel's negligence in allowing such
withdrawal in disregard of its own rules and the clearing
requirement in the banking system. In so doing, petitioner
assumed the risk of incurring a loss on account of a forged or
counterfeit foreign check and hence, it should suffer the resulting
damage.
D E C I S I O N
YNARES-SANTIAGO, J p:
This is a petition for review on certiorari of the Decision 1 of the
Court of Appeals in CA-G.R. CV No. 37392 affirming in toto that
of the Regional Trial Court of Makati, Branch 139, 2 which
dismissed the complaint filed by petitioner Bank of the Philippine
Islands against Benjamin C. Napiza for sum of money.
On September 3, 1987, private respondent deposited in Foreign
Currency Deposit Unit (FCDU) Savings Account No. 028-
187 3 which he maintained in petitioner bank's Buendia Avenue
Extension Branch, Continental Bank Manager's Check No.
00014757 4 dated August 17, 1984, payable to "cash" in the
amount of Two Thousand Five Hundred Dollars ($2,500.00) and
duly endorsed by private respondent on its dorsal side. 5 It
appears that the check belonged to a certain Henry Chan who
went to the office of private respondent and requested him to
deposit the check in his dollar account by way of accommodation
and for the purpose of clearing the same. Private respondent
acceded, and agreed to deliver to Chan a signed blank withdrawal
slip, with the understanding that as soon as the check is cleared,
both of them would go to the bank to withdraw the amount of the
check upon private respondent's presentation to the bank of his
passbook.
Using the blank withdrawal slip given by private respondent to
Chan, on October 23, 1984, one Ruben Gayon, Jr. was able to
withdraw the amount of $2,541.67 from FCDU Savings Account
No. 028-187. Notably, the withdrawal slip shows that the amount
was payable to Ramon A. de Guzman and Agnes C. de Guzman
and was duly initialed by the branch assistant manager, Teresita
Lindo. 6
On November 20, 1984, petitioner received communication from
the Wells Fargo Bank International of New York that the said
check deposited by private respondent was a counterfeit
check 7 because it was "not of the type or style of checks issued
by Continental Bank International." 8 Consequently, Mr. Ariel
Reyes, the manager of petitioner's Buendia Avenue Extension
Branch, instructed one of its employees, Benjamin D. Napiza IV,
who is private respondent's son, to inform his father that the
check bounced. 9Reyes himself sent a telegram to private
respondent regarding the dishonor of the check. In turn, private
respondent's son wrote to Reyes stating that the check had been
assigned "for encashment" to Ramon A. de Guzman and/or Agnes
C. de Guzman after it shall have been cleared upon instruction of
Chan. He also said that upon learning of the dishonor of the
check, his father immediately tried to contact Chan but the latter
was out of town. 10
Private respondent's son undertook to return the amount of
$2,500.00 to petitioner bank. On December 18, 1984, Reyes
reminded private respondent of his son's promise and warned that
should he fail to return that amount within seven (7) days, the
matter would be referred to the bank's lawyers for appropriate
action to protect the bank's interest. 11 This was followed by a
letter of the bank's lawyer dated April 8, 1985 demanding the
return of the $2,500.00. 12
In reply, private respondent wrote petitioner's counsel on April
20, 1985 13 stating that he deposited the check "for clearing
purposes" only to accommodate Chan. He added:
"Further, please take notice that said check was deposited on
September 3, 1984 and withdrawn on October 23, 1984, or a total
period of fifty (50) days had elapsed at the time of withdrawal.
Also, it may not be amiss to mention here that I merely signed an
authority to withdraw said deposit subject to its clearing, the
reason why the transaction is not reflected in the passbook of the
account. Besides, I did not receive its proceeds as may be gleaned
from the withdrawal slip under the captioned signature of
recipient.
"If at all, my obligation on the transaction is moral in nature,
which (sic) I have been and is (sic) still exerting utmost and
maximum efforts to collect from Mr. Henry Chan who is directly
liable under the circumstances.
xxx xxx xxx"
On August 12, 1986, petitioner filed a complaint against private
respondent, praying for the return of the amount of $2,500.00 or
the prevailing peso equivalent plus legal interest from date of
demand to date of full payment, a sum equivalent to 20% of the
total amount due as attorney's fees, and litigation and/or costs of
suit.
Private respondent filed his answer, admitting that he indeed
signed a "blank" withdrawal slip with the understanding that the
amount deposited would be withdrawn only after the check in
question has been cleared. He likewise alleged that he instructed
the party to whom he issued the signed blank withdrawal slip to
return it to him after the bank draft's clearance so that he could
lend that party his passbook for the purpose of withdrawing the
amount of $2,500.00. However, without his knowledge, said party
was able to withdraw the amount of $2,541.67 from his dollar
savings account through collusion with one of petitioner's
employees. Private respondent added that he had "given the
plaintiff fifty-one (51) days with which to clear the bank draft in
question." Petitioner should have disallowed the withdrawal
because his passbook was not presented. He claimed that
P a g e | 11

petitioner had no one to blame except itself "for being grossly
negligent"; in fact, it had allegedly admitted having paid the
amount in the check "by mistake" . . . "if not altogether due to
collusion and/or bad faith on the part of (its) employees."
Charging petitioner with "apparent ignorance of routine bank
procedures," by way of counterclaim, private respondent prayed
for moral damages of P100,000.00, exemplary damages of
P50,000.00 and attorney's fees of 30% of whatever amount that
would be awarded to him plus an honorarium of P500.00 per
appearance in court.
Private respondent also filed a motion for admission of a third
party complaint against Chan. He alleged that "thru statagem
and/or manipulation," Chan was able to withdraw the amount of
$2,500.00 even without private respondent's passbook. Thus,
private respondent prayed that third party defendant Chan be
made to refund to him the amount withdrawn and to pay
attorney's fees of P5,000.00 plus P300.00 honorarium per
appearance.
Petitioner filed a comment on the motion for leave of court to
admit the third party complaint, wherein it asserted that per
paragraph 2 of the Rules and Regulations governing BPI savings
accounts, private respondent alone was liable "for the value of the
credit given on account of the draft or check deposited." It
contended that private respondent was estopped from disclaiming
liability because he himself authorized the withdrawal of the
amount by signing the withdrawal slip. Petitioner prayed for the
denial of the said motion so as not to unduly delay the disposition
of the main case asserting that private respondent's claim could be
ventilated in another case.
Private respondent replied that for the parties to obtain complete
relief and to avoid multiplicity of suits, the motion to admit third
party complaint should be granted. Meanwhile, the trial court
issued orders on August 25, 1987 and October 28, 1987 directing
private respondent to actively participate in locating Chan. After
private respondent failed to comply, the trial court, on May 18,
1988, dismissed the third party complaint without prejudice.
On November 4, 1991, a decision was rendered dismissing the
complaint. The lower court held petitioner could not hold private
respondent liable based on the check's face value alone. To so
hold him liable "would render inutile the requirement of
'clearance' from the drawee bank before the value of a particular
foreign check or draft can be credited to the account of a
depositor making such deposit." The lower court further held that
"it was incumbent upon the petitioner to credit the value of the
check in question to the account of the private respondent only
upon receipt of the notice of final payment and should not have
authorized the withdrawal from the latter's account of the value or
proceeds of the check." Having admitted that it committed a
"mistake" in not waiting for the clearance of the check before
authorizing the withdrawal of its value or proceeds, petitioner
should suffer the resultant loss.
On appeal, the Court of Appeals affirmed the lower court's
decision. The appellate court held that petitioner committed "clear
gross negligence" in allowing Ruben Gayon, Jr. to withdraw the
money without presenting private respondent's passbook and,
before the check was cleared and in crediting the amount
indicated therein in private respondent's account. It stressed that
the mere deposit of a check in private respondent's account did
not mean that the check was already private respondent's
property. The check still had to be cleared and its proceeds can
only be withdrawn upon presentation of a passbook in accordance
with the bank's rules and regulations. Furthermore, petitioner's
contention that private respondent warranted the check's
genuineness by endorsing it is untenable for it would render
useless the clearance requirement. Likewise, the requirement of
presentation of a passbook to ascertain the propriety of the
accounting reflected would be a meaningless exercise. After all,
these requirements are designed to protect the bank from
deception or fraud.
The Court of Appeals cited the case of Roman Catholic Bishop of
Malolos, Inc. v. IAC, 14 where this Court stated that a personal
check is not legal tender or money, and held that the check
deposited in this case must be cleared before its value could be
properly transferred to private respondent's account.
Without filing a motion for the reconsideration of the Court of
Appeal's Decision, petitioner filed this petition for review
on certiorari, raising the following issues:
1. WHETHER OR NOT RESPONDENT NAPIZA IS LIABLE
UNDER HIS WARRANTIES AS A GENERAL INDORSER.
2. WHETHER OR NOT A CONTRACT OF AGENCY WAS
CREATED BETWEEN RESPONDENT NAPIZA AND RUBEN
GAYON.
3. WHETHER OR NOT PETITIONER WAS GROSSLY
NEGLIGENT IN ALLOWING THE WITHDRAWAL.
Petitioner claims that private respondent, having affixed his
signature at the dorsal side of the check, should be liable for the
amount stated therein in accordance with the following provision
of the Negotiable Instruments Law (Act No. 2031):
"SECTION 66. Liability of general indorser. Every indorser
who indorses without qualification, warrants to all subsequent
holders in due course
(a) The matters and things mentioned in subdivisions (a), (b), and
(c) of the next preceding section; and
(b) That the instrument is at the time of his indorsement, valid and
subsisting.
And, in addition, he engages that on due presentment, it shall be
accepted or paid, or both, as the case may be, according to its
tenor, and that if it be dishonored, and the necessary proceedings
on dishonor be duly taken, he will pay the amount thereof to the
holder, or to any subsequent indorser who may be compelled to
pay it."
Section 65, on the other hand, provides for the following
warranties of a person negotiating an instrument by delivery or by
qualified indorsement: (a) that the instrument is genuine and in all
respects what it purports to be; (b) that he has good title to it, and
(c) that all prior parties had capacity to contract. 15 In People v.
Maniego, 16 this Court described the liabilities of an indorser as
follows:
"Appellant's contention that a mere indorser, she may not be
liable on account of the dishonor of the checks indorsed by her, is
P a g e | 12

likewise untenable. Under the law, the holder or last indorsee of a
negotiable instrument has the right 'to enforce payment of the
instrument for the full amount thereof against all parties liable
thereon.' Among the 'parties liable thereon' is an indorser of the
instrument, i.e., 'a person placing his signature upon an
instrument otherwise than as maker, drawer or acceptor ** unless
he clearly indicated by appropriate words his intention to be
bound in some other capacity.' Such an indorser 'who indorses
without qualification,' inter alia 'engages that on due presentment,
** (the instrument) shall be accepted or paid, or both, as the case
may be, according to its tenor, and that if it be dishonored, and
the necessary proceedings on dishonor be duly taken, he will pay
the amount thereof to the holder, or any subsequent indorser who
may be compelled to pay it.' Maniego may also be deemed an
'accommodation party' in the light of the facts, i.e., a person 'who
has signed the instrument as maker, drawer, acceptor, or indorser,
without receiving value therefor, and for the purpose of lending
his name to some other person.' As such, she is under the law
'liable on the instrument to a holder for value, notwithstanding
such holder at the time of taking the instrument knew ** (her) to
be only an accommodation party,' although she has the right, after
paying the holder, to obtain reimbursement from the party
accommodated, 'since the relation between them is in effect that
of principal and surety, the accommodation party being the
surety."
It is thus clear that ordinarily private respondent may be held
liable as an indorser of the check or even as an accommodation
party. 17 However, to hold private respondent liable for the
amount of the check he deposited by the strict application of the
law and without considering the attending circumstances in the
case would result in an injustice and in the erosion of the public
trust in the banking system. The interest of justice thus demands
looking into the events that led to the encashment of the check.
Petitioner asserts that by signing the withdrawal slip, private
respondent "presented the opportunity for the withdrawal of the
amount in question." Petitioner relied "on the genuine signature
on the withdrawal slip, the personality of private respondent's son
and the lapse of more than fifty (50) days from date of deposit of
the Continental Bank draft, without the same being returned
yet." 18 We hold however, that the propriety of the withdrawal
should be gauged by compliance with the rules thereon that both
petitioner bank and its depositors are duty-bound to observe.
In the passbook that petitioner issued to private respondent, the
following rules on withdrawal of deposits appear:
"4. Withdrawals must be made by the depositor personally but in
some exceptional circumstances, the Bank may allow withdrawal
by another upon the depositor's written authority duly
authenticated; and neither a deposit nor a withdrawal will be
permitted except upon the presentation of the depositor's savings
passbook, in which the amount deposited withdrawn shall be
entered only by the Bank.
5. Withdrawals may be made by draft, mail or telegraphic transfer
in currency of the account at the request of the depositor in
writing on the withdrawal slip or by authenticated cable. Such
request must indicate the name of the payee/s, amount and the
place where the funds are to be paid. Any stamp, transmission and
other charges related to such withdrawals shall be for the account
of the depositor and shall be paid by him/her upon demand.
Withdrawals may also be made in the form of travelers checks
and in pesos. Withdrawals in the form of notes/bills are allowed
subject however, to their (availability).
6. Deposits shall not be subject to withdrawal by check, and may
be withdrawn only in the manner above provided, upon
presentation of the depositor's savings passbook and with the
withdrawal form supplied by the Bank at the counter." 19
Under these rules, to be able to withdraw from the savings
account deposit under the Philippine foreign currency deposit
system, two requisites must be presented to petitioner bank by the
person withdrawing an amount: (a) a duly filled-up withdrawal
slip; and (b) the depositor's passbook. Private respondent admits
that he signed a blank withdrawal slip ostensibly in violation of
Rule No. 6 requiring that the request for withdrawal must name
the payee, the amount to be withdrawn and the place where such
withdrawal should be made. That the withdrawal slip was in fact
a blank one with only private respondent's two signatures affixed
on the proper spaces is buttressed by petitioner's allegation in the
instant petition that had private respondent indicated therein the
person authorized to receive the money, then Ruben Gayon, Jr.
could not have withdrawn any amount. Petitioner contends that
"(i)n failing to do so (i.e., naming his authorized agent), he
practically authorized any possessor thereof to write any amount
and to collect the same." 20
Such contention would have been valid if not for the fact that the
withdrawal slip itself indicates a special instruction that the
amount is payable to "Ramon A. de Guzman &/or Agnes C. de
Guzman." Such being the case, petitioner's personnel should have
been duly warned that Gayon, who was also employed in
petitioner's Buendia Ave. Extension branch, 21 was not the
proper payee of the proceeds of the check. Otherwise, either
Ramon or Agnes de Guzman should have issued another authority
to Gayon for such withdrawal. Of course, at the dorsal side of the
withdrawal slip is an "authority to withdraw" naming Gayon the
person who can withdraw the amount indicated in the check.
Private respondent does not deny having signed such authority.
However, considering petitioner's clear admission that the
withdrawal slip was a blank one except for private respondent's
signature, the unavoidable conclusion is that the typewritten name
of "Ruben C. Gayon, Jr." was intercalated and thereafter it was
signed by Gayon or whoever was allowed by petitioner to
withdraw the amount. Under these facts, there could not have
been a principal-agent relationship between private respondent
and Gayon so as to render the former liable for the amount
withdrawn.
Moreover, the withdrawal slip contains a boxed warning that
states: "This receipt must be signed and presented with the
corresponding foreign currency savings passbook by the depositor
in person. For withdrawals thru a representative, depositor should
accomplish the authority at the back." The requirement of
presentation of the passbook when withdrawing an amount cannot
be given mere lip service even though the person making the
withdrawal is authorized by the depositor to do so. This is clear
from Rule No. 6 set out by petitioner so that, for the protection of
the bank's interest and as a reminder to the depositor, the
withdrawal shall be entered in the depositor's passbook. The fact
that private respondent's passbook was not presented during the
withdrawal is evidenced by the entries therein showing that the
last transaction that he made with the bank was on September 3,
P a g e | 13

1984, the date he deposited the controversial check in the amount
of $2,500.00. 22
In allowing the withdrawal, petitioner likewise overlooked
another rule that is printed in the passbook. Thus:
"2. All deposits will be received as current funds and will be
repaid in the same manner; provided, however, that deposits
of drafts, checks, money orders, etc. will be accepted as subject to
collection only and credited to the account only upon receipt of
the notice of final payment. Collection charges by the Bank's
foreign correspondent in effecting such collection shall be for the
account of the depositor. If the account has sufficient balance, the
collection shall be debited by the Bank against the account. If, for
any reason, the proceeds of the deposited checks, drafts, money
orders, etc., cannot be collected or if the Bank is required to
return such proceeds, the provisional entry therefor made by the
Bank in the savings passbook and its records shall be deemed
automatically cancelled regardless of the time that has elapsed,
and whether or not the defective items can be returned to the
depositor; and the Bank is hereby authorized to execute
immediately the necessary corrections, amendments or changes in
its record, as well as on the savings passbook at the first
opportunity to reflect such cancellation." (Emphasis supplied.)
As correctly held by the Court of Appeals, in depositing the check
in his name, private respondent did not become the outright
owner of the amount stated therein. Under the above rule, by
depositing the check with petitioner, private respondent was, in a
way, merely designating petitioner as the collecting bank. This is
in consonance with the rule that a negotiable instrument, such as a
check, whether a manager's check or ordinary check, is not legal
tender. 23 As such, after receiving the deposit, under its own
rules, petitioner shall credit the amount in private respondent's
account or infuse value thereon only after the drawee bank shall
have paid the amount of the check or the check has been cleared
for deposit. Again, this is in accordance with ordinary banking
practices and with this Court's pronouncement that "the collecting
bank or last endorser generally suffers the loss because it has the
duty to ascertain the genuineness of all prior endorsements
considering that the act of presenting the check for payment to the
drawee is an assertion that the party making the presentment has
done its duty to ascertain the genuineness of the
endorsements." 24 The rule finds more meaning in this case
where the check involved is drawn on a foreign bank and
therefore collection is more difficult than when the drawee bank
is a local one even though the check in question is a manager's
check. 25
In Banco Atlantico v. Auditor General, 26 Banco Atlantico, a
commercial bank in Madrid, Spain, paid the amounts represented
in three (3) checks to Virginia Boncan, the finance officer of the
Philippine Embassy in Madrid. The bank did so without
previously clearing the checks with the drawee bank, the
Philippine National Bank in New York, on account of the "special
treatment" that Boncan received from the personnel of Banco
Atlantico's foreign department. The Court held that the
encashment of the checks without prior clearance is "contrary to
normal or ordinary banking practice specially so where the
drawee bank is a foreign bank and the amounts involved were
large." Accordingly, the Court approved the Auditor General's
denial of Banco Atlantico's claim for payment of the value of the
checks that was withdrawn by Boncan.
Said ruling brings to light the fact that the banking business is
affected with public interest. By the nature of its functions, a bank
is under obligation to treat the accounts of its depositors "with
meticulous care, always having in mind the fiduciary nature of
their relationship." 27 As such, in dealing with its depositors a
bank should exercise its functions not only with the diligence of a
good father of a family but it should do so with the highest degree
of care. 28
In the case at bar, petitioner, in allowing the withdrawal of private
respondent's deposit, failed to exercise the diligence of a good
father of a family. In total disregard of its own rules, petitioner's
personnel negligently handled private respondent's account to
petitioner's detriment. As this Court once said on this matter:
"Negligence is the omission to do something which a reasonable
man, guided by those considerations which ordinarily regulate the
conduct of human affairs, would do, or the doing of something
which a prudent and reasonable man would do. The seventy-eight
(78)-year-old, yet still relevant, case of Picart v. Smith, provides
the test by which to determine the existence of negligence in a
particular case which may be stated as follows: Did the defendant
in doing the alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would have used in
the same situation? If not, then he is guilty of negligence. The law
here in effect adopts the standard supposed to be supplied by the
imaginary conduct of the discreet pater-familias of the Roman
law. The existence of negligence in a given case is not determined
by reference to the personal judgment of the actor in the situation
before him. The law considers what would be reckless,
blameworthy, or negligent in the man of ordinary intelligence and
prudence and determines liability by that." 29
Petitioner violated its own rules by allowing the withdrawal of an
amount that is definitely over and above the aggregate amount of
private respondent's dollar deposits that had yet to be cleared. The
bank's ledger on private respondent's account shows that before
he deposited $2,500.00, private respondent had a balance of only
$750.00. 30Upon private respondent's deposit of $2,500.00 on
September 3, 1984, that amount was credited in his ledger as a
deposit resulting in the corresponding total balance of
$3,250.00. 31 On September 10, 1984, the amount of $600.00 and
the additional charges of $10.00 were indicated therein as
withdrawn thereby leaving a balance of $2,640.00. On September
30, 1984, an interest of $11.59 was reflected in the ledger and on
October 23, 1984, the amount of $2,541.67 was entered as
withdrawn with a balance of $109.92. 32 On November 19, 1984
the word "hold" was written beside the balance of
$109.92. 33 That must have been the time when Reyes,
petitioner's branch manager, was informed unofficially of the fact
that the check deposited was a counterfeit, but petitioner's
Buendia Ave. Extension Branch received a copy of the
communication thereon from Wells Fargo Bank International in
New York the following day, November 20, 1984. 34 According
to Reyes, Wells Fargo Bank International handled the clearing of
checks drawn against U.S. banks that were deposited with
petitioner. 35
From these facts on record, it is at once apparent that petitioner's
personnel allowed the withdrawal of an amount bigger than the
original deposit of $750.00 and the value of the check deposited
in the amount of $2,500.00 although they had not yet received
notice from the clearing bank in the United States on whether or
P a g e | 14

not the check was funded. Reyes' contention that after the lapse of
the 35-day period the amount of a deposited check could be
withdrawn even in the absence of a clearance thereon, otherwise
it could take a long time before a depositor could make a
withdrawal, 36 is untenable. Said practice amounts to a disregard
of the clearance requirement of the banking system.
While it is true that private respondent's having signed a blank
withdrawal slip set in motion the events that resulted in the
withdrawal and encashment of the counterfeit check, the
negligence of petitioner's personnel was the proximate cause of
the loss that petitioner sustained. Proximate cause, which is
determined by a mixed consideration of logic, common sense,
policy and precedent, is "that cause, which, in natural and
continuous sequence, unbroken by any efficient intervening cause
produces the injury, and without which the result would not have
occurred." 37 The proximate cause of the withdrawal and
eventual loss of the amount of $2,500.00 on petitioner's part was
its personnel's negligence in allowing such withdrawal in
disregard of its own rules and the clearing requirement in the
banking system. In so doing, petitioner assumed the risk of
incurring a loss on account of a forged or counterfeit foreign
check and hence, it should suffer the resulting damage.
WHEREFORE, the petition for review on certiorari is DENIED.
The Decision of the Court of Appeals in CA-G.R. CV No. 37392
is AFFIRMED.
SO ORDERED.
||| (BPI v. Court of Appeals, G.R. No. 112392, February 29, 2000)