Patrimonio vs. Gutierrez

Patrimonio vs. Gutierrez

(G.R. No. 187769, June 4, 2014)

Doctrines: In order however that one who is not a holder in due course can enforce the instrument against a party prior to the instrument’s completion, two requisites must exist: (1) that the blank must be filled strictly in accordance with the authority given; and (2) it must be filled up within a reasonable time. If it was proven that the instrument had not been filled up strictly in accordance with the authority given and within a reasonable time, the maker can set this up as a personal defense and avoid liability. However, if the holder is a holder in due course, there is a conclusive presumption that authority to fill it up had been given and that the same was not in excess of authority.

Facts: The petitioner and the respondent Napoleon Gutierrez (Gutierrez) entered into a business venture under the name of Slam Dunk Corporation (Slum Dunk), a production outfit that produced mini-concerts and shows related to basketball. In the course of their business, the petitioner pre-signed several checks to answer for the expenses of Slam Dunk; however, these checks had no payee’s name, date or amount. The blank checks were entrusted to Gutierrez with the specific instruction not to fill them out without previous notification to and approval by the petitioner. Without the petitioner’s knowledge and consent, Gutierrez went to Marasigan to secure a loan in the amount of ₱200,000.00 and  Gutierrez simultaneously delivered to Marasigan one of the blank checks the petitioner pre-signed with Pilipinas Bank in the amount of "₱200,000.00. When Marasigan deposited the check, it was dishonored for the reason "ACCOUNT CLOSED" and so Marasigan sought recovery from Gutierrez and petitioner asking for the payment of ₱200,000.00.

Issue: Whether or not Marasigan is a holder in due course thus may hold petitioner liable.

Held: No, Marasigan is not a holder in due course. Section 52(c) & (d) of the NIL states that a holder in due course is one who takes the instrument “in good faith and for value" and that it is necessary that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it. In the present case, Gutierrez was only authorized to use the check for business expenses; thus, he exceeded the authority when he used the check to pay the loan he supposedly contracted for the construction of petitioner's house. Marasigan’s knowledge that the petitioner is not a party or a privy to the contract of loan, and correspondingly had no obligation or liability to him, renders him dishonest, hence, in bad faith. Considering that Marasigan is not a holder in due course, the petitioner can validly set up the personal defense that the blanks were not filled up in accordance with the authority he gave; hence, Marasigan has no right to enforce payment against the petitioner and the latter cannot be obliged to pay the face value of the check.

Metropolitan Bank and Trust Company vs. Wilfred N. Chiok

Metropolitan Bank and Trust Company vs. Wilfred N. Chiok

(G.R. No. 172652; November 26, 2014)

Doctrine: While manager’s and cashier’s checks are still subject to clearing, they cannot be countermanded for being drawn against a closed account, for being drawn against insufficient funds, or for similar reasons such as a condition not appearing on the face of the check.

Facts: On July 5, 1995, respondent Wilfred N. Chiok (Chiok) bought US$1,022,288.50 dollars from Gonzalo B. Nuguid (Nuguid) where Chiok deposited the three manager’s checks (Asian Bank MC Nos. 025935 and 025939, and Metrobank CC No. 003380), with an aggregate value of ₱26,068,350.00 in Nuguid’s account with petitioner Bank of the Philippine Islands (BPI). Nuguid, however, failed to deliver the dollar equivalent of the three checks as agreed upon, prompting Chiok to request that payment on the three checks be stopped. On the following day, July 6, 1995, Chiok filed a Complaint for damages with application for ex parte restraining order and/or preliminary injunction with the Regional Trial Court (RTC) of Quezon City against the spouses Gonzalo and Marinella Nuguid, and the depositary banks, Asian Bank and Metrobank. On July 25, 1995, the RTC issued an Order directing the issuance of a writ of preliminary prohibitory injunction. When checks were presented for payment, Asian Bank refused to honor MC Nos. 025935 and 025939 in deference to the TRO.

Issue: Whether or not payment of manager’s and cashier’s checks are subject to the condition that the payee thereof should comply with his obligations to the purchaser of the checks.

Held: No. A manager’s check, like a cashier’s check, is an order of the bank to pay, drawn upon itself, committing in effect its total resources, integrity, and honor behind its issuance. By its peculiar character and general use in commerce, a manager’s check or a cashier’s check is regarded substantially to be as good as the money it represents. While manager’s and cashier’s checks are still subject to clearing, they cannot be countermanded for being drawn against a closed account, for being drawn against insufficient funds, or for similar reasons such as a condition not appearing on the face of the check. Long standing and accepted banking practices do not countenance the countermanding of manager’s and cashier’s checks on the basis of a mere allegation of failure of the payee to comply with its obligations towards the purchaser. Therefore, when Nuguid failed to deliver the agreed amount to Chiok, the latter had a cause of action against Nuguid to ask for the rescission of their contract; but, Chiok did not have a cause of action against Metrobank and Global Bank that would allow him to rescind the contracts of sale of the manager’s or cashier’s checks, which would have resulted in the crediting of the amounts thereof back to his accounts.

Areza vs. Express Savings Bank

Areza vs. Express Savings Bank

(G.R. No. 176697, September 10, 2014)

Doctrines: A depositary/collecting bank where a check is deposited, and which endorses the check upon presentment with the drawee bank, is an endorser. Under Section 66 of the Negotiable Instruments Law, an endorser warrants “that the instrument is genuine and in all respects what it purports to be; that he has good title to it; that all prior parties had capacity to contract; and that the instrument is at the time of his endorsement valid and subsisting.”

It is well-settled that the relationship of the depositors and the Bank or similar institution is that of creditor-debtor. Article 1980 of the New Civil Code provides that fixed, savings and current deposits of money in banks and similar institutions shall be governed by the provisions concerning simple loans. The bank is the debtor and the depositor is the creditor. The depositor lends the bank money and the bank agrees to pay the depositor on demand. The savings deposit agreement between the bank and the depositor is the contract that determines the rights and obligations of the parties.

Facts: Petitioners received an order for the purchase of a motor vehicle from Gerry Mambuay where the latter paid petitioners with nine (9) Philippine Veterans Affairs Office (PVAO) checks payable to different payees and drawn against the Philippine Veterans Bank (drawee), each valued at Two Hundred Thousand Pesos (₱200,000.00). Petitioners deposited the said checks in their savings account with the Express Savings Bank which, in turn, deposited the checks with its depositary bank, Equitable-PCI Bank and the latter presented the checks to the drawee, the Philippine Veterans Bank, which honored the checks. However, the subject checks were returned by PVAO to the drawee on the ground that the amount on the face of the checks was altered from the original amount of ₱4,000.00 to ₱200,000.00. After informing Express Savings Bank that the drawee dishonored the checks, Equitable-PCI Bank debited the deposit account of ESB in the amount of P1.8M. Express Savings Bank then withdrew the amount of P1.8M representing the returned checks from petitioners saving account.

Issue: Whether or not Express Savings Bank had the right to debit ₱1,800,000.00 from petitioners’ accounts.

Held: No, Express Savings Bank cannot debit the savings account of petitioners. A depositary/collecting bank where a check is deposited, and which endorses the check upon presentment with the drawee bank, is an endorser. Under Section 66 of the Negotiable Instruments Law, an endorser warrants “that the instrument is genuine and in all respects what it purports to be; that he has good title to it; that all prior parties had capacity to contract; and that the instrument is at the time of his endorsement valid and subsisting.” As collecting bank, Express Savings Bank is liable for the amount of the materially altered checks. It cannot further pass the liability back to the petitioners absent any showing in the negligence on the part of the petitioners which substantially contributed to the loss from alteration.