PECO vs.

Soriano

It is not disputed that the Philippine postal statutes were patterned after similar statutes in force in
United States. The Weight of authority in the United States is that postal money orders are not
negotiable instruments, the reason being that in establishing and operating a postal money order
system, the government is not engaged in commercial transactions but merely exercises a governmental
power for the public benefit. Moreover, some of the restrictions imposed upon money orders by postal
laws and regulations are inconsistent with the character of negotiable instruments. For instance, such
laws and regulations usually provide for not more than one endorsement; payment of money orders
may be withheld under a variety of circumstances.

Caltex (Phils.) Inc. V. CA And Security Bank And Trust

CTDS although the CTDs are bearer instruments, a valid negotiation thereof for the true purpose and
agreement between it and De la Cruz, as ultimately ascertained, requires both delivery and indorsement

Metrobank vs. CA

Metrobank is negligent in giving Golden Savings the impression that the treasury warrants had been
cleared and that, consequently, it was safe to allow Gomez to withdraw. Without such assurance,
Golden Savings would not have allowed the withdrawals. Indeed, Golden Savings might even have
incurred liability for its refusal to return the money that all appearances belonged to the depositor, who
could therefore withdraw it anytime and for any reason he saw fit.

It was, in fact, to secure the clearance of the treasury warrants that Golden Savings deposited them to
its account with Metrobank. Golden Savings had no clearing facilities of its own. It relied on Metrobank
to determine the validity of the warrants through its own services. The proceeds of the warrants were
withheld from Gomez until Metrobank allowed Golden Savings itself to withdraw them from its own
deposit.

Metrobank cannot contend that by indorsing the warrants in general, Golden Savings assumed that they
were genuine and in all respects what they purport to be, in accordance with Sec. 66 of NIL. The simple
reason that NIL is not applicable to non negotiable instruments, treasury warrants

No. The treasury warrants are not negotiable instruments.

Sesbreno vs CA

A non-negotiable instrument may not be negotiated but may be assigned or transferred, absent an
express prohibition against assignment or transfer written on the face of the instrument.

Ang Tek Lian vs. CA

A check drawn payable to the order of cash is a check payable to bearer and the bank may pay it to
the person presenting it for payment without the drawers indorsement. However, if the bank is not
sure of the bearers identity or financial solvency, it has the right to demand identification or assurance
against possible complication. But where the bank is satisfied of the identity or economic standing of the
bearer who tenders the check for collection, it will pay the instrument without further question; and it
would incur no liability to the drawer in thus acting.

Firestone Tire vs. CA

No. Withdrawal slips in question were non negotiable instrument. Hence, the rules governing the giving
immediate notice of dishonor of negotiable instrument do not apply. The essence of negotiability which
characterizes a negotiable paper as a credit instrument lies in its freedom to circulate freely as a
substitute for money. The withdrawal slips in question lacked this character.

Dev't Bank of Rizal vs Sima Wei

The payee of a negotiable instrument acquires no interest with respect thereto until its delivery to him.
Delivery of an instrument means transfer of possession, actual or constructive, from one person to
another. Without the initial delivery of the instrument from the drawer to the payee, there can be no
liability on the instrument. Moreover, such delivery must be intended to give effect to the instrument.

Francisco vs CA

Petitioner is liable. The Negotiable Instruments Law provides that where any person is under obligation
to indorse in a representative capacity, he may indorse in such terms as to negative personal liability.
An agent, when so signing, should indicate that he is merely signing in behalf of the principal and must
disclose the name of his principal; otherwise he shall be held personally liable.

Aruego

Aruego did not disclose in any of the drafts that he accepted that he was signing as representative of the
Philippine Education Foundation Company. For failure to disclose his principal, Aruego is personally
liable for the drafts he accepted, pursuant to Section 20 of the NIL which provides that when a person
adds to his signature words indicating that he signs for or on behalf of a principal or in a representative
capacity, he is not liable on the instrument if he was duly authorized; but the mere addition of words
describing him as an agent or as filing a representative character, without disclosing his principal, does
not exempt him from personal liability.

Jai-Alai Corp vs BPI

The depositor of a check as indorser warrants that it is genuine and in all respects what it purports to
be. Having indorsed the checks to respondent bank, petitioner is deemed to have given the warranty
prescribed in Section 66 of the NIL that every single one of those checks " is genuine and in all respects
what it purports to be
Republic vs Ebrada

The existence of one forged signature in the check will not render void all the other negotiations of the
check with respect to the other parties whose signature are genuine. As last indorser of the check,
petitioner warranted that she has good title to it even if in fact she did not because the payee of the
check was already dead 11 years before the check was issued.

MWSS vs. Court of Appeals

It is basic that whoever alleges forgery must prove such fact. Forgery cannot be presumed, it must be
duly established.

Banco de Oro vs. Equitable Banking Corporation

If the instrument involved is a check, the drawee cannot charge the account of the drawer if the payees
or indorsers signature is forged. The drawee, in turn has the right of recourse against the collecting
bank.

The drawer generally owes no duty of diligence to the collecting bak, the law imposes a duty of diligence
on the collecting bank to scrutinize checks deposited with it for the purpose of determining their
genuineness and regularity. The collecting bank being primarily engaged in banking holds itself out to
the public as the expert and the law holds it to high standard of conduct.

It is the collecting bank that generally suffers the loss with regard to forged indorsements because
it had the duty to ascertain the genuineness of all prior indorsements 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 indorsements.

Gempesaw vs. Court of Appeals

A forged signature is wholly inoperative, no one can gain title to the instrument through such forged
insdorsement. Such indorsement prevents any subsequent partyfrom acquiring any right as against
parties prior to the forgery. Although rights may exist between and among parties subsequent to the
forged instrument, not one of the can acquire rights agasint parties prior to the forgery. Such forged
instrument cuts-off the rights of all subsequent parties as against parties prior to the forgery. However,
the law makes an exception to these rules where party is precluded from setting up forgery as a
defense.
Associated Bank vs. Court of Appeals

When a check is deposited with the collecting bank, it takes a risk on its depositor. It is only logical that
this bank be held accountable for checks deposited by its customers. It is important to mention that
Payee whose signature was forged may directly proceed against the collecting bank. However, the
drawer cannot opt to recover from the collecting bank. There is no privity of contract between the
drawer and the collecting bank.

Metrobank vs. First National City Bank

When the indorsement itself is very clear when it begins with the words For clearance, clearing office
such indorsement must be read together with the 24-hour rule regulation of the House operations of
the Central Bank. Once that 24-hour period is over, the liability on such indorsement has ceased. Failure
of drawee bank to call the attention of collecting bank to the alteration of the check in question until
after the lapse of 24 hours negates whatever right it might have against the collecting bank. Its remedy
lies not against collecting bank but against the party responsible for the changing of the name of the
payee and the amount on the face of the check.

Republic Bank vs. Court of Appeals

The 24-hour clearing house rule is valid rule applicable to commercial banks. As general rule, the
collecting bank or last endorser bears the loss when the indorsement was forged. But the unqualified
endorsement of the collecting bank on the check should be read together with the 24-hour regulation
on the clearing house operation. Thus, when the drawee bank fails to return a forged or altered check to
the collecting bank is absolved from liability. Unless an alteration is attributable to the fault or
negligence of the drawer himself, the remedy of the drawee bank that negligently clears a forged and/or
honor altered check for payment is against the party responsible for the forgery or alteration, otherwise,
it bears the loss.

Philippine Commercial International Bank vs. Court of Appeals

A bank (in this case PCIB) which cashes a check drawn upon another bank (in this case Citibank), without
requiring proof as to the identity of persons presenting it, or making inquiries with regard to them,
cannot hold the proceeds against the drawee when the proceeds of the checks were afterwards
diverted to the hands of a third party.

Ramon Illusorio vs. Court of Appeals

The collecting bank or last endorser generally suffers the loss because it has the duty to ascertain the
genuineness of all prior indorsements 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 indorsements. As between the drawer and the drawee bank, the drawee bank
should bear the loss. The drawee bank shall have recourse against the collecting bank because such
collecting bank guarantees that all prior endorsements are genuine. The collecting bank then can go
against the forger. In cases involving a forged check, where the drawers is forged, drawer can recover
from the drawee bank. No drawee bank has a right to pay a forged check. If it does, it shall have to
recredit the amount of check to the account of the drawer. The liability chain ends with drawee bank
whose responsibility it is to know the drawers signature since the latter is its customer.

Samsung Construction Co. Phils, Inc vs. FEBTC and CA

Under Sec. 62 of NIL, among the warranties to be assumed by the acceptor is it admits the existence of
the drawer, the genuineness of his signature, and his capacity and authority to draw the instrument. It is
incumbent upon the drawee bank to ascertain the genuineness of the signature of its depositor. The
respondent bank in this case did not exercise the degree of diligence required to enable it to detect the
forgery. Aside from the warranties as an indorser, the collecting bank is made liable because it is privy to
the depositor who negotiated the check because it knows him, his address and history for being a client
thereof. Thus, it is in a better position to detect forgery or irregularity in the indorsement aka Doctrine
of Comparative Negligence