NEGOTIABLE INSTRUMENTS LAW

OUTLINE OF DECIDED CASES (1996 and up)

Atty. Rene Alexis P. Villarente, MBA

Supervising Attorney
Ateneo Legal Services Office

Introduction
Function and Importance of Negotiable Instruments

A. Substitute for Money but not legal tender

1. Myron C. Papa, Administrator of the Testate Estate of Angela M. Butte vs. A.U. Valencia
and Co. Inc., Felix Peñarroyo, Sps. Arsenio B. Reyes & Amanda Santos, and Delfin Jao, G.R.
No. 105188, January 23, 1998, First Division, J. Kapunan

Issue: If the holder intentionally did not encash the check will the sale be consummated in the
light of Article 1249 of the Civil Code?

(Also Section 62 and 137 on acceptance and Section 70 on tender of payment)

2. Cebu International Finance Corporation vs. Court of Appeals, Vicente Alegre, G.R. No.
123031, October 12, 1999, Second Division, J. Quisumbing

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 1
University College of Law, Updated October 10, 2012.
Issue: What law governs the money market transaction of CIFC with Alegre: Article 1249 of the
Civil Code or Section 137 of the NIL? Is a check a legal tender? Was Alegre bound by the
compromise agreement of CICF and BPI? When the BPI deducted the amount of the check from
CIFC’s current account, did this ipso facto operate as a discharge or payment of the check?

3. Juan A. Rueda, Jr. vs. Hon. Sandiganbayan and People of the Philippines, G.R. No. 129064,
November 29, 2000, En banc, J. Pardo

Issue: What does “cash” mean in a generally accepted auditing practice? Are NIs cash?

(Note: What if the payee intentionally delays the presentment of the check for encashment to avoid the
effect of payment?, Also delivery of check for purposes of payment)

4. Pio Barretto Realty Development Corporation vs. Court of Appeals, Judge Perfecto A.S.
Laguio, Jr. and Honor P. Moslares, G.R. No. 132362, June 28, 2001, Second Division, J.
Bellosillo

Issue: What is the effect of the delivery of the check? Is it not that payment takes effect only
when the check is encashed?

(Also check as proof of payment or proof of indebtedness and whose rights are transgressed if there is no
notice of dishonor)

5. Bank of the Philippine Islands vs. Spouses Reynaldo and Victoria Royeca, G.R. No.
176664, July 21, 2008, Third Division, J. Nachura

Issue: Whether the tender of the check constitutes payment?

6. Eumelia R. Mitra vs. People of the Philippines and Felicisimo S. Tarcel, G.R. No. 191404,
July 5, 2010, Second Division, J. Mendoza.

Issue: Functions and Importance of Negotiable Instrument.

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 2
University College of Law, Updated October 10, 2012.
7. Donnina C. Halley vs. Printwell Inc., G.R. No. 157549, May 30, 2011, Third Division, J.
Bersamin.

Issue: Is check money? When does a bill of exchange produce the fact of payment?

(Note instructive as to the principle of the “trust fund doctrine” in corporation law. But this topic is outside the scope
of the negotiable instrument law which is the prime subject of this work. The trust fund doctrine enunciates a – xxx
rule that the property of a corporation is a trust fund for the payment of creditors, but such property can be called a
trust fund ‘only by way of analogy or metaphor.’ As between the corporation itself and its creditors it is a simple
debtor, and as between its creditors and stockholders its assets are in equity a fund for the payment of its debts. [42A,
Words and Phrases, Trust Fund Doctrine, p. 445, citing McIver v. Young Hardware Co., 57 S.E. 169, 171, 144 N.C. 478,
119 Am. St. Rep. 970; Gallagher v. Asphalt Co. of America, 55 A. 259, 262, 65 N.J. Eq. 258.])

B. Medium of commercial transactions

(Also history of Article 315 (2) [d])

1. People of the Philippines vs. Roberto Tongko, G.R. No. 123567 June 5, 1998, Second
Division, J. Puno

Issue: What is the history of Article 315 (2) (d) of the Revised Penal Code? Is a NI a medium of
commercial transaction?

C. Medium of credit transaction

(Evidence of indebtedness)

(Note: A check is evidence of indebtedness of either the drawer or the payee or the holder. The check happens be in
the hands of the person who wants to prove the indebtedness of another. If the check was used to prove the
indebtedness of the drawer, that check is in the hands of the payee or holder for it was presumably returned to the
payee or holder after it was dishonored by the drawee bank. If the check was used to prove the indebtedness of the
payee, that check is in the hands of the drawer because when deposited, the check was honored and so returned to
the drawer by the drawee bank. A promissory note is evidence of indebtedness of the maker [Section 60]. Can it be
an evidence of indebtedness of the holder or payee[?])

(Ernesto Pacheco [12/2/99] – debt of drawer; Benny Go [10/11/05] – debt of drawer; Spouses Antonio [11/22/05] –
debt of payee; Chua Gaw [4/16/08] – debt of payee)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 3
University College of Law, Updated October 10, 2012.
(Also Article 315 (2) (d) estafa of the RPC, Section 13, 14 and 12 as to undated checks, and stale checks)

1. Ernesto T. Pacheco and Virginia O. Pacheco vs. Court of Appeals, and People of the
Philippines, G.R. No. 126670 December 2, 1999, First Division, J. Ynares-Santiago

Issue: What are the elements of the felony of estafa under Article 315 (2) (d) of the Revised Penal
Code? Can one waive the negotiable character of the check and treat it simply as proof of an
obligation (evidence of indebtedness)? How material is the fact that the check was issued
undated? What is the effect of a stale check?

(Note this is instructive as to “evidence” but this subject is not covered by NIL. Quotable Quotes: Vice Chancellor
Van Flee once said “Evidence to be believed must not only proceed from the mouth of a credible witness but must be
credible in itself – such as the common experience and observation of mankind can approve as probable under the
circumstances. We have no test of the truth of human testimony, except its conformity to our knowledge, observation
and experience. Whatever is repugnant to these belongs to the miraculous, and is outside of judicial cognizance”.)

2. Benny Go vs. Eliodoro Bacaron, G.R. No. 159048, October 11, 2005, Third Division, J.
Panganiban

Issue: Are checks evidence of indebtedness?

3. Spouses Antonio and Lolita Tan vs. Carmelito Villapaz, G.R. No. 160892, November 22,
2005, Third Division, J. Carpio-Morales

Issue: Can a check prove a loan transaction that was required to be in writing under Article 1358
of the Civil Code (All other contracts where the amount involved exceeds P500.00 must appear
in writing, even private one)?

4. Concepcion Chua Gaw vs. Suy Ben Chua and Felisa Chua, G.R. No. 160855, April 16, 2008,
Third Division, J. Nachura

Issue: Is the check evidence of indebtedness?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 4
University College of Law, Updated October 10, 2012.
5. Land Bank of the Philippines vs. Monet's Export and Manufacturing Corp., et al., G.R. No.
184971, April 19, 2010, Second Division, J. Abad

Issue: Is a promissory note evidence of indebtedness?

6. Emilia Lim vs. Mindanao Wines & Liquor Galleria, as Single Proprietorship Business
Outfit Owned by Evelyn S. Valdevieso, G.R. No. 175851, July 24, 2012, First Division, J. Del
Castillo

Issue: Can a check the entries of which are in writing prove a loan transaction? If Emilia was
acquitted of violations of BP 22 can she nevertheless be required to pay the debt she owes?

D. It is specie of property

1. Gemma T. Jacinto vs. People of the Philippines, G.R. No. 162540, July 13, 2009, Third
Division, J. Peralta.

Issue: Are checks by itself personal property? May it be subject to theft even if it bounced?

(Also this is instructive about impossible crime Article 4 [2] of the Revised Penal Code. But these topics
are outside the scope of the negotiable instrument law which is the prime subject of this.)

2. People of the Philippines vs. Bernard G. Mirto, G.R. No. 193479, October 19, 2011, Third
Division, J. Velasco, Jr.

Issue: Are checks by itself personal property? May it be subject to theft or qualified theft?

3. Anita L. Miranda vs. People of the Philippines, G.R. No. 176298, January 25, 2012, First
Division, J. Villarama, Jr.

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 5
University College of Law, Updated October 10, 2012.
Issue: Are checks by itself personal property? May it be subject of qualified theft?

E. Proof of Payment

1. Francisco Taquinod vs. Deputy Sheriff Rolando Tomas, RTC, Branch 21, Santiago City,
A.M. No. P-09-2660, November 29, 2011, En Banc, Per Curiam.

Issue: Are checks proof of payment and so proof of violation of Section 2 (e), Canon III of the
Code of Conduct?

F. Evidence of Indebtedness

1. Westmont Investment Corporation vs. Amos P. Francia, Jr., et. al., G.R. No. 194128,
December 7, 2011, Third Division, J. Mendoza.

Issue: Are promissory notes evidence of indebtedness (borrowings)?

G. Guarantee for the Performance of a Future Obligation

(Also consideration under Section 24)

1. San Miguel Corporation vs. Helen T. Kalalo, G.R. No. 185522, June 13, 2012, Second
Division, J. Sereno.

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 6
University College of Law, Updated October 10, 2012.
Issue: Can checks be only for payment of a preexisting obligation? May the checks be likewise
issued as a guarantee for the performance of a future obligation? Is it possible that the
dishonored checks were issued merely to guarantee the performance of a future obligation?

Section 1

(Also negotiability: characteristic of NI, Section 30 assignment vs negotiation, negotiability and holder in
due course)

1. Traders Royal Bank vs. Court of Appeals, Filriters Guaranty Assurance Corporation and
Central Bank of the Philippines, G.R. No. 93397, March 3, 1997, Second Division, J. Torres Jr.

Issue: Is a CBCI a Negotiable Instrument? What is negotiability and what is its relation to the
right conferred to a holder in due course? When the CBCI was transferred to Philfinance and
TRB, what was it that transpired, a negotiation or an assignment?

(Also Section 89, 103, 104 on notice of dishonor, NI substitute for money, negotiability: characteristic of
NI)

2. Firestone Tire & Rubber Company of the Philippines vs. Court of Appeals and Luzon
Development Bank, G.R. No. 113236, March 5, 2001, Second Division, J. Quisumbing

Issue: Are special withdrawal slips negotiable? Do the rules governing the giving of immediate
notice of dishonor of NI apply in this case?

(Also Sections 184 and 60)

3. Astro Electronics Corp. and Peter Roxas vs. Philippine Export and Foreign Loan Guarantee
Corporation, G.R. No. 136729, September 23, 2003, Second Division, J. Austria-Martinez

Issue: Whether or not Roxas should be jointly and severally liable with Astro for the sum
awarded by the RTC. What is a maker and what is its liability?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 7
University College of Law, Updated October 10, 2012.
(Also Sections 29)

4. Romeo C. Garcia vs. Dionisio V. Llamas, G.R. No. 154127, December 8, 2003, First Division,
J. Panganiban

Issue: Is the quoted promissory note a negotiable instrument? Assuming that it is what is the
liability of an accommodation party?

(Note instructive as to the rule on “summary judgment” vis a vis “judgment on the pleadings” as well as the
principle of novation as mode of extinguishment of obligation. But these topics are outside the scope of the
negotiable instrument law which is the prime subject of this work)

5. Transfield Philippines, Inc. vs. Luzon Hydro Corporation, Australia and New Zealand
Banking Corporation Limited and Security Bank Corporation, G.R. No. 146717, November 22,
2004, Second Division, J. Tinga

Issue: What is a letter of credit? Is it a negotiable instrument? How about a draft drawn from a
letter of credit?

(Note instructive as to meaning and import of a letter of credit, but not strictly covered by NIL)

(Also negotiability)

6. People of the Philippines vs. Aloma Reyes and Trichia Mae Reyes (at large), G.R. No.
154159, March 31,2005, Second Division, J. Puno

Issue: What is a negotiable order of withdrawal (NOW)? It is a negotiable instrument? Is

negotiability the gravamen of estafa?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 8
University College of Law, Updated October 10, 2012.
7. Noe S. Andaya vs. People of the Philippines, G.R. No. 168486, June 27, 2006, First Division,
J. Ynares-Santiago

Issue: Are disbursement vouchers commercial documents (negotiable instruments)?

8. Leonila Batulanon vs. People of the Philippines, G.R. No. 139857, September 15, 2006, First
Division, J. Ynares-Santiago

Issue: Are cash vouchers negotiable instruments?

(Also presumption of consideration)

9. Pentacapital Investment Corporation vs. Makilito Mahinay/Pentacapital Investment

Corporation vs. Mikilito, G.R. No. 171736, July 5, 2010, Second Division, J. Nachura

Issue: Give another definition of promissory note other than Section 1 and 184 of the NIL?

Section 1
(NIL and Tax)

1. Bibiano V. Bañas, Jr. vs. Court of Appeals, Aquino T. Larin, Rodolfo Tuazon and Procopio
Talon, G.R. No. 102967, February 10, 2000, Second Division, J. Quisumbing

Issue: What is re-discounting? What is unusual with the re-discounting in this case? When the
promissory note was re-discounted in this manner was it correct to report it as sale on
installment?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 9
University College of Law, Updated October 10, 2012.
(Note instructive as to counter-claim award and attorney’s fees granted to maliciously sued government employees,
but not covered by NIL)

2. BPI Family Bank vs. Court of Appeals, Court of Tax Appeals and Commissioner of
Internal Revenue, G.R. No. 117319, July 19, 2006, Third Division, Resolution

Issue: Are T-Bills and CB-Bills promissory notes or deposit substitutes such that it is exempt
from DST? What is the difference between deposit substitutes and certificates of indebtedness?
What is the difference between certificate of indebtedness and promissory notes?

(Also Section 126 and 129 of the NIL, Bill of Exchange, documentary stamp tax, telegraphic transfer and
drafts)

3. Bank of the Philippine Islands vs. Commissioner of Internal Revenue, G.R. No. 137002,
July 27, 2006, First Division, J. Chico-Nazario

Issue: What does Section 182 of the National Internal Revenue Code (NIRC) cover? What is the
definition of a Bill of Exchange (B/E)? What is the distinction between a B/E and a letter of
credit? What is a telegraphic transfer? What is the nature of a DST? What is a draft?

4. Security Bank Corporation vs. Commissioner of Internal Revenue, G.R. No. 130838, August
22, 2006, Second Division, J. Garcia

Issue: Does the term securities include negotiable promissory notes?

5. International Exchange Bank vs. Commissioner of Internal Revenue, G.R. No. 171266,
April 4, 2007, Second Division, J. Carpio Morales

Issue: Are the FSDs subject to DST? Is the negotiability of an instrument material for the
imposition of DST?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 10
University College of Law, Updated October 10, 2012.
 Section 2

(Note while usury law has been repealed the Courts will bring down unconscionable rates)

1. New Sampaguita Builders Construction, Inc. (NSBCI) and spouses Eduardo R. Dee and
Arcelita M. Dee vs. Philippine National Bank, G.R. No. 148753, July 30, 2004, Third Division,
J. Panganiban

Issue: Can banks unilaterally increase interest rates? What is the effect of the repeal of the
Usury Law? What is the use of the Truth in Lending Act? Can attorney’s fees mentioned in the
PN’s reduced?

(Note Quotable Quotes: The time is now ripe to give teeth to the often ignored forty-one-year old “Truth in Lending
Act” and thus transform it from a snivelling paper tiger to a growling financial watchdog of hapless borrowers)

2. Bank of the Philippines Islands, Inc. vs. Sps. Norman and Angelina Yu, et al., G.R. No.
184122. January 20, 2010, Second Division, J. Abad.

Issue: The question is whether or not the reference to the penalty charges in the promissory note
constitutes substantial compliance with the disclosure requirement of the Truth in Lending Act?

3. Union Bank of the Philippines vs. Spouses Rodolfo T. Tiu and Victoria N. Tiu, G.R. Nos.
173090-91, September 7, 2011, First Division, J. De Castro.

Issue: Is the stipulation that the promissory note is payable in dollars prohibited? Trace the
history of the rule on payment using foreign denomination from Article 1249 of the Civil Code
to Republic Act No. 8183 of July 5, 1996.

4. Eleanor De Leon Llenado vs. People of the Philippines and Editha Villaflores, G.R. No.
193279, March 14, 2012, Second Division, J. Sereno.

Issue: When does the 12% interest rate (should there be no stipulation) commence to run?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 11
University College of Law, Updated October 10, 2012.
5. Asiatrust Development Bank vs. Carmelo H. Tuble, G.R. No. 183987, July 25, 2012, Second
Division, J. Sereno.

Issue: What is a “dragnet clause”? What is a monetary interest? What is compensatory interest?

Section 7

(Q: When instrument is payable on demand when must it be presented for payment? A: Section 71.
Also Section 186 stale check, manager’s check (drawer is maker) and Section 193 “reasonable time”)

1. International Corporate Bank vs. Gueco, G.R. No. 141968, February 12, 2001, First Division,
J. Kapunan

Issue: What is a stale check? What is meant by reasonable time after issue that a check must be
presented for payment? What is the nature of a manager’s check?

Section 9
(Bearer Instruments)

(Also crossed check)

1. Teresita L. Vertudes vs. Julie Buenaflor and Bureau of Immigration, G.R. No. 153166,
December 16, 2005, Second Division, J. Puno

Issue: What is the effect of the issuance of bearer checks that were not crossed? Is this proof that
the transaction was not for loan but the promise for travel documents to Japan?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 12
University College of Law, Updated October 10, 2012.
2. Philippine National Bank vs. Erlando T. Rodriguez and Norma Rodriguez, G.R. No.
170325, September 26, 2008, Third Division, J. Reyes, R.T.

Issue: Can an actual, existing and living payee be considered fictitious? Who bears the loss in a
fictitious payee situation, the drawee or the drawer? What is the fictitious payee rule? What is
the commercial bad faith exception to the fictitious payee rule?

Section 12

1. San Miguel Corporation vs. Bartolome Puzon, Jr., G.R. No. 167567, September 22, 2010,
First Division, J. Del Castillo

Issue: What is the meaning of delivery in relation to Section 16? When the check was issued
only for security and was taken by the drawer who gave it as security can the drawer be
charged of theft?

(Note also instructive as to the elements of theft and defense of ownership of the property taken, but not covered in
the NIL)

Sections 14-15-16

1. Federico O. Borromeo, Lourdes O. Borromeo and Federico O. Borromeo, Inc , vs. Amancio
Sun and the Court of Appeals, G.R. No. 75908, October 22, 1999, Third Division, J. Purisima

Issue: Is document subject in this case executed with similar effects as Section 14 of the NIL?

[Also Section 1 and Section 24 on presumption of consideration]

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 13
University College of Law, Updated October 10, 2012.
2. Quirino Gonzales Logging Concessionaire, Quirino Gonzales and Eufemia Gonzales vs.
Court of Appeals and Republic Planters Bank, G.R. No. 126568, April 30, 2003, Third
Division, J. Carpio-Morales

Issue: Did the promissory note comply with Section 1 of the NIL? What is the presumption of
consideration? What is the consequence of an instrument issued in blank?

3. Sps. Sergio and Milagros Ojeda vs. Andrelina Orbeta, G.R. No. 142047, July 10, 2006, Third
Division, Resolution

Issue: What is the effect of a blank check that was delivered?

(Also checks as evidence of indebtedness)

4. Samson Ching vs. Clarita Nicdao and Court of Appeals, G.R. No. 141181, April 27, 2007,
Third Division, J. Callejo, Sr.

Issue: What is the effect of Sections 15 and 16 of the NIL? Is the check here an evidence of
indebtedness?

(Note also instructive as to the right of the private complainant to appeal the civil aspect of the case in cases of
acquittal, but not covered in the NIL)

5. Rafael P. Lunaria vs. People of the Philippines, G.R. No. 160127, November 11, 2008, First
Division, CJ. Puno.

Issue: What is the effect of Section 14 of the NIL? What is presumption of authority to fill the
blanks?

(Also definition of “issue” under Section 191)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 14
University College of Law, Updated October 10, 2012.
6. John Dy vs. People of the Philippines and the Honorable Court of Appeals, G.R. No.
158312, November 14, 2008, Second Division, Acting CJ. Quisumbing.

Issue: What is issuance of a check under Section 191? What is the prima facie authority to
complete blank material particulars under Section 14 of the NIL?

(Also material alteration and Article 2179 of the Civil Code)

7. Bank of America NT & SA vs. Philippine Racing Club, G.R. No. 150228, January 30, 2009,
First Division, J. Leonardo-De Castro.

Issue: What are the effects of Article 14 and 16? What is the effect of Article 15? What is
material alteration? What is meant by obvious irregularities? What is material alteration?

(Also manager’s check)

8. Rizal Commercial Banking Corporation vs. Hi-Tri Development Corporation and Luz R.
Bakunawa, G.R. No. 192413, June 13, 2012, Second Division, J. Sereno.

Issue: When are instruments considered delivered under Section 16?

Sections 17

1. People of the Philippines vs. Martin L. Romero and Ernesto C. Rodriguez, G.R. No. 112985,
April 21, 1999, First Division, J. Pardo

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 15
University College of Law, Updated October 10, 2012.
Issued: Is Section 17 of the NIL applicable?

(Also liability of indorse Section 63 and 66)

2. Remedios Nota Sapiera vs. Court of Appeals and Ramon Sua, G.R. No. 128927, September
14, 1999, Second Division, J. Bellosillo

Issue: In what capacity did Sapiera sign when there is doubt as to her signature? What is the
rule of construction under Section 17? Who are indorsers under Section 63? What is the liability
of an indorser under Section 66?

3. Spouses Eduardo B. Evangelista and Epifania C. Evangelista vs. Mercator Finance Corp.,
Lydia P. Salazar, Lamecs Realty and Development Corp. and the Register of Deeds of
Bulacan, G.R. No. 148864, August 21, 2003, Third Division, J. Puno

Issue: What rule must be followed if there is no ambiguity? How will the document be
interpreted under Section 17 of the NIL when the NI reads: “I/We” and signed by two or more
persons?

Sections 19, 20, 44, 69

(Also forgery, on the findings of fact by the trial courts)

1. Adalia Francisco vs. Court of Appeals, Herby Commercial & Construction Corporation and
Jaime C. Ong, G.R. No. 116320, November 29, 1999, Third Division, J. Gonzaga-Reyes

Issue: What are the effects of the findings of fact of the trial courts of the existence of forgery?
How a NI may be issued through an agent (Section 20) or indorsed in a representative capacity
(Section 44)?

2. Solidbank Corporation vs. Mindanao Ferroalloy Corporation, spouses Jong-Wong Hong,

and Sook-ok Kim Hong, Teresita Cu and Ricardo P. Guevarra, G.R. No. 153535, July 28, 2005,
Third Division, J. Panganiban

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 16
University College of Law, Updated October 10, 2012.
Issue: What is the liability of an agent under Sections 19 and 20 of the NIL.

Sections 22

(Also, Section 52 holder in due course, Section 28 failure or absence of consideration)

1. Atrium Management Corporation vs. Court of Appeals, E.T. Henry and Co., Lourdes
Victoria M. De Leon, Rafael De Leon, Jr., and Hi-Cement Corporation, G.R. No. 109491,
February 28, 2001, First Division, J. Pardo

1a. Lourdes M. De Leon vs. Court of Appeals, Atrium Management Corporation, and Hi-
Cement Corporation, G.R. No. 121794, February 28, 2001, First Division, J. Pardo

Issue: What is an ultra vires act? In what instances will personal liability of corporate officers
attach? What is a holder in due course? Is Atrium a holder in due course when it re-discounted
the crossed checks? Are holders not in due course precluded from recovering on the
instrument?

Sections 23
(Forgery)

1. Associated Bank vs. Court of Appeals, Province of Tarlac and Philippine National Bank
G.R. No. 107382, January 31, 1996, Second Division, J. Romero

1a. Philippine National Bank vs. Court of Appeals, Province of Tarlac and Associated Bank
G.R. No. 107612, January 31, 1996, Second Division, J. Romero

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 17
University College of Law, Updated October 10, 2012.
Issue: Give a review of the effects of a forged indorsement? Where thirty checks bearing forged
endorsements are paid, who bears the loss, the drawer, the drawee bank or the collecting bank?

2. SPS. Francisco S. Antonio and Amor W. Antonio vs. Sps. Teodorico C. Omnes and Alice
Omnes and the Standard Chartered Bank, G.R. No. 140980, March 1, 2000, Second Division,
Resolution

Issue: Are the Antonio’s precluded from recovering from Standard Chartered Bank due to
negligence?

3. Metropolitan Bank & Trust Company vs. Sanvar Development Corp., G.R. No. 145916,
January 29, 2001, Second Division, Resolution

Issue: Whether or not Sanvar’s complaint states a cause of action against Metrobank bank, the
collecting bank, as to the two checks? Who bears the loss in case of a forged indorsement?

(Also Section 51 and 191 on simple holder, desirable short cut, laches, negligence, liability of collecting
bank)

4. Westmont Bank (formerly Associated Banking Corp.) vs. Eugene Ong, G.R. No. 132560,
January 30, 2002, Second Division, J. Quisumbing

Issue: What is the effect of forgery? What is nature of the liability of a collecting bank in
forgeries of indorsements? Is Ong a holder under Sections 51 and 191 when he was never in
actual or physical possession of the checks? What is the concept of a “desirable short cut”?
What is the degree of care required for banks considering the nature of its business? Why was
there negligence here? Was Ong barred by laches since it took him five (5) months to demand
from Westmont?

(Also crossed checks, managers checks, collecting bank’s liability, section 63 indorser)

5. Traders Royal Bank vs. Radio Philippines Network, Inc., Intercontinental Broadcasting
Corporation and Banahaw Broadcasting Corporation, through the Board of Administrators,
and Security Bank and Trust Company, G.R. No. 138510, October 10, 2002, Third Division, J.
Corona

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 18
University College of Law, Updated October 10, 2012.
Issue: Whether or not TRB should be held solely liable when it paid the amount of the checks in
question to a person other than the payee indicated on the face of the check, the BIR? What is
effect of Section 23 of the NIL? What is the consequence of a bank paying a forged check? What
is crossed check? Was TRB negligent? What is a collecting bank? Under the circumstances is
SBTC a collecting bank? Who are deemed indorsers?

6. Ramon K. Ilusorio, vs. Court of Appeals and the Manila Banking Corporation, G.R. No.
139130, November 27, 2002, Second Division, J. Quisumbing

Issue: What is the effect of the negligence of the drawer on the rule that when the signature of
the drawer is forged (Section 23) the drawee bears the loss?

7. Michael A. Osmeña vs. Citibank, N.A., Associated Bank and Frank Tan, G.R. No. 141278,
March 23, 2004, Second Division, J. Callejo, Sr.

Issue: Was there negligence on the part of the banks in paying the amount of the check without
the indorsement of Frank Tan? Is the ruling in the Associated Bank case (1996) on the liability
of a collecting bank applicable in this case?

(Q: What is “wholly in operative” referred to by the pronoun “it” arising out of forgery? Is “it” the
instrument or the signature? A: Westmont (1/30/02) – signature; Ilusorio (11/27/02) – check or
instrument; BPI vs Casa (5/28/04) – signature. A: “It” refers to the signature not the instrument to be
wholly inoperative due to forgery, Associated Bank vs. CA (1/31/96), for if “it” refers to the instrument
then the exceptions to Section 23 will be of no more use as the instrument becomes wholly inoperative].

8. Bank of the Philippine Islands vs. Casa Montessori Internationale, and Leonardo T. Yabut
G.R. No. 149454, May 28, 2004, First Division, J. Panganiban

8a. Casa Montessori Internationale vs. Bank of the Philippine Islands, G.R. No. 149507, May
28, 2004, First Division, J. Panganiban

Issue: What is forgery under Section 23? What are the factual findings of the sole negligence of
BPI? Who bears the loss in case of forgery of the drawer’s signature? What is estoppel? Was
CASA estopped in failing to make a report?

9. Samsung Construction Company Philippines, Inc., vs. Far East Bank and Trust Company
and Court of Appeals, G.R. No. 129015, August 13, 2004, Second Division, J. Tinga

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 19
University College of Law, Updated October 10, 2012.
Issue: In case of forgery of the signature of the drawer without negligence on its part who bears
the loss? What are the factual findings as to the negligence of the drawee bank?

(Also bank deposits treated a loan, fiduciary relationship of bank and its depositor)

10. BPI Family Bank, vs. Edgardo Buenaventura, Myrna Lizardo and Yolanda Tica, G.R. No.
148196, September 30, 2005, Second Division, J. Austria-Martinez

10a. Edgardo Buenaventura, Myrna Lizardo and Yolanda Tica, vs. BPI Family Bank, G.R. No.
148259, September 30, 2005, Second Division, J. Austria-Martinez

Issue: Since bank deposits are considered loan can banks unilaterally freeze an account? What
are the liabilities of banks on forgery? Is there a need for Buenaventura et. al. to ascertain the
right of Franco on the check? What is the nature of a bank’s relationship with its depositor?

(Also liabilities of parties, collecting bank’s clearing indorsements, PCHC)

11. Allied Banking Corporation vs. Lim Sio Wan, Metropolitan Bank and Trust Company,
and Producers Bank, G.R. No. 133197, March 27, 2008, Second Division, J. Velasco, Jr.

Issue: Give the liabilities of the parties by reason of forgery? What is the effect of the
negligence of Allied and Metrobank? Who is ultimately liable and under what grounds?

CONSIDERATION

Sections 24, 25, 28, 191 (value)

(Rule 131 Section 3 (r) and (s) of the Rules of Court)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 20
University College of Law, Updated October 10, 2012.
1. Teresita Villaluz, Chit Ilagan, spouses Ador and Tess Taberna and Mario Llamas vs. Court
of Appeals and spouses Reynaldo and Zenaida Anzures, G.R. No. 106214, September 5, 1997,
Third Division, J. Francisco

Issue: What is the presumption of consideration under Section 24? What is the effect of
Villaluz’ issuance of a check for P2 million?

(Note, there is a twin ejectment case involving, Ilagan, Taberna and Llamas but not part of NIL)

2. Remigio S. Ong vs. People of the Philippines and Court of Appeals, G.R. No. 139006,
November 27, 2000, First Division, J. Kapunan

Issue: What is the gravamen of the offense punished by BP 22? Is it necessary to prove
consideration in BP 22?

3. Luis S. Wong vs. Court of Appeals and People of the Philippines, G.R. No. 117857,
February 2, 2001, Second Division, J. Quisumbing

Issue: What was the consideration for the issuance of the checks? In BP 22 is there a necessity to
determine the reason for the issuance of the check?

(Also, Section 1, NI as substitute for money, letters of credit, drafts)

4. Charles Lee, Chua Siok Uy, Mariano Sio, Alfonso Yap, Richard Velasco and Alfonso Co vs.
Court of Appeals and Philippine Bank of Communications, G.R. No. 117913, February 1,
2002, Second Division, J. De Leon, Jr.

4a. Mico Metals Corporation vs. Court of Appeals and Philippine Bank of Communications
G.R. No. 117914, February 1, 2002, Second Division, J. De Leon, Jr.

Issue: What is the presumption of consideration under Section 24 and Rule 131 Section 3 of the
Rules of Court? What are the requirements for a negotiable instrument to be a substitute for
money? What are letters of credit? Are letters of credit negotiable instruments? How about a
draft? How are letters of credit transacted?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 21
University College of Law, Updated October 10, 2012.
5. Felicito G. Sanson, Celedonia Sanson-Saquin, Angeles A. Montinola, Eduardo A.
Montinola, Jr. vs. Court of Appeals and Melecia T. Sy, as administratrix of the Intestate
Estate of the Late Juan Bon Fing Sy, G.R. No. 127745, April 22, 2003, Third Division, J. Carpio
Morales

Issue: What is the effect of Section 24 of the NIL?

(Note instructive as to “dead man’s statute” but not covered in the NIL)

(Also Section 52 holder in due course, and gravamen of BP 22)

6. Leodegario Bayani vs. People of the Philippines, G.R. No. 154947, August 11, 2004
Second Division, J. Callejo

Issue: What is the gravamen of BP 22? Was Evangelista considered a holder in due course?
What is the presumption of consideration (Section 24)? What is the effect of want of
consideration (Section 28)?

7. Vicky C. Ty vs. People of the Philippines, G.R. No. 149275, September 27, 2004, Second
Division, J. Tinga

Issue: What is the basis of the presumption of consideration? Is it a valid defense that no
valuable consideration redowned to the maker personally?

8. Victor Ongson vs. People of the Philippines, G.R. No. 156169, August 12, 2005, First
Division, J. Ynares-Santiago

Issue: What constitutes valuable consideration? What is the presumption of consideration?

What is it that the law punishes in BP 22?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 22
University College of Law, Updated October 10, 2012.
(Also elements of BP 22)

9. Leodegario Bayani vs. People of the Philippines, G.R. No. 155619, August 14, 2007, Third
Division, J. Austria-Martinez

Issue: What are the elements of BP 22? What is the presumption of consideration (Section 24)?
What constitutes valuable consideration?

(Note instructive as to hearsay but not covered by the NIL)

(Also Section 191 on the meaning of issuance)

10. Isidro Pablito M. Palana vs. People of the Philippines, G.R. No. 149995, September 28,
2007, Third Division, J. Ynares-Santiago

Issue: What is the presumption of consideration? What is the meaning of issuance under Section
191 of the NIL?

11. Carmencita G. Cariño vs. Merlin de Castro, G.R. No. 176084, April 30, 2008, Third
Division, J. Ynares-Santiago

Issue: Was the check issued for consideration?

(Note instructive as to authority to prosecute criminal cases but not covered by the NIL. Quote: “Under Section 5,
Rule 110 of the Rules of Court all criminal actions commenced by complaint or information shall be prosecuted under
the direction and control of the fiscal. The fiscal represents the People of the Philippines in the prosecution of
offenses before the trial courts at the metropolitan trial courts, municipal trial courts, municipal circuit trial courts
and the regional trial courts. However, when such criminal actions are brought to the Court of Appeals or (to) this
Court (SC), it is the Solicitor General who must represent the People of the Philippines not the fiscal.”)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 23
University College of Law, Updated October 10, 2012.
12. Siain Enterprises, Inc. vs. Cupertino Realty Corporation and Edwin R. Catacutan, G.R.
No. 170782, June 22, 2009, Third Division, J. Nachura

Issue: Was there a consideration for the issuance of the promissory note? What is the
presumption of consideration? Is this presumption provided for in the Rules of Court?

13. Engr. Jose E. Cayanan Vs. North Star International Travel, Inc., G.R. No. 172954. October
5, 2011, 1st Division, J. Villarama

Issue: What is the presumption of consideration under Section 24?

Sections 28

(Also Section 29 and 52 of the NIL)

1. Perpetual Savings Bank vs. Dolores Brondial, et.al., G.R. No. 146663, March 14, 2001, First
Division, Resolution

Issue: Is PSB a holder in due course? Does the promissory note have consideration? What is the
effect of Section 28 of the NIL? Is Brondial and accommodation party under Section 29? What
is the role of PSB (the party accommodated) in this transaction?

Sections 29
(Accommodation Party)

(Also Sections 61 and 151)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 24
University College of Law, Updated October 10, 2012.
1. Spouses Gil and Noelli Gardose vs. Reynaldo S. Tarroza, G.R. No. 130570, May 19, 1998,
Second Division, J. Puno

Issue: What is the relationship of the accommodation party and the party accommodated?
What is the difference between a surety and guaranty? What is an accommodation party?
What is the immediate right of recourse under Section 151? What is the liability of the drawer
under Section 61?

(Note, no mention where the check was drawn and what was the reason for the dishonor or if it was dishonored in
the first place).

2. Agro Conglomerates, Inc. and Mario Soriano vs. Court of Appeals, and Regent Savings and
Loan Bank, Inc., G.R. No. 117660, December 18, 2000, Second Division, J. Quisumbing

Issue: What is an accommodation maker? What is a surety?

3. Majestic Finance & Investment Co., Inc. vs. Amelia L. Bonifacio, G.R. No. 147920, April 3,
2002, First Division, Resolution

Issue: What is an accommodation party? Why is the accommodation party here not liable?

4. Genevieve Lim vs. Florencio Saban, G.R. No. 163720, December 16, 2004, Second Division,
J. Tinga

Issue: What is an accommodation party? Give the elements for the existence of an
accommodation party? Was Lim an accommodation party to Ybañez?

(Note instructive as to revocation of broker’s agency rights after the transaction has been consummated, but not
covered by NIL)

(Also Section 119 [d] and Section 122 on discharge of NIL)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 25
University College of Law, Updated October 10, 2012.
5. Tomas Ang vs. Associated Bank and Antonio Ang Eng Liong, G.R. No. 146511, September
5, 2007, First Division, J. Azcuna

Issue: What is an accommodation party under Section 29 of the NIL? Were the Promissory
Notes discharged under Section 119 (d) and 122 of the NIL? What is the warranty of an
accommodation party? What is the meaning of “without receiving value” What about
“receiving value” for lending his name?

(Note instructive as to revocation of broker’s agency rights after the transaction has been consummated, but not
covered by NIL)

(Also, Section 184 on promissory notes, Section 119 on payment, Section 2 and Usury law on reduction of
rates)

6. Henry Dela Rama Co vs. Admiral United Savings Bank, G.R. No. 154740, April 16, 2008,
Third Division, J. Nachura

Issue: What is the liability of an accommodation party under Section 29 of the NIL? What is a
promissory note? Who proves payment? Can stipulated interest rates be equitably reduced?
What is the basis of such reduction under the Civil Code?

7. Claude P. Bautista vs. Auto Plus Traders, Incorporated and Court of Appeals, G.R. No.
166405, August 18, 2008, Second Division, J. Quisumbing

Issue: What is an accommodation party? Was Bautista an accommodation party?

NEGOTIATION AND INDORSEMENTS

Sections 30 (8, 9), 31, 34, 40, 48, 49

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 26
University College of Law, Updated October 10, 2012.
(Also crossed check)

1. Bank of the Philippine Islands vs. Court of Appeals, Annabelle A. Salazar and Julio R.
Templonuevo, G.R. No. 136202, January 25, 2007, First Division, J. Azcuna

Issue: What is the effect of a transfer of an order instrument without indorsement? What is the
effect that the checks were crossed and the one year period before Templonuevo demanded
reimbursement? Does a collecting bank, over the objections of its depositor, have the authority
to withdraw unilaterally from such depositor’s account the amount it had previously paid upon
certain unendorsed order instruments deposited to another account that was later closed?

(Q: If a collecting bank is considered a holder for value [BPI vs. CA, GR 112392, February 29, 2000, an
accommodation party is liable to a collecting bank as it is a holder for value], can a collecting bank be
considered an indorser since usually it “guarantees all prior indorsements or lack of it”? (1) Legal
Answer: Up until this case of Metro Bank vs. BA Finance [GR 179952, December 4, 2009] the answer is
yes. “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” [Associated Bank vs. CA 252 SCRA 260, January 31, 1996]”. (2)
Academic Answer: No a collecting bank is a holder with rights (§ 191: payee or indorsee or bearer) and
not an indorser with liabilities (§ 63: intent to be bound). A collecting bank’s practice of guaranteeing all
prior indorsements or lack of it (clearing indorsement, PCHC rules §17) is different from the warranty of
indorsers (§ 65 and 66) although having the same effect. (3) Suggested Answer. A collecting bank is
neither an indorser nor a holder. A collecting bank is a mere agent of the owner of the item for purposes
of collection (Section 4-205 of the U.S. Uniform Commercial Code and Far East Bank vs. Gold Palace [GR
168274, August 20, 2008]).

(Also, warranty of acceptor, common law principle on mistake in payment of the acceptor, US Uniform
Commercial code 3-417 (a) do not have similar provision in the Philippine jurisdiction, and restrictive
indorsement)

2. Far East Bank & Trust Company vs. Gold Palace Jewellery Co., as represented by Judy L.
Yang, Julie Yang-Go and Kho Soon Huat, G.R. No. 168274, August 20, 2008, Third Division, J.
Nachura

Issue: What is the nature of a collecting bank? Is the indorsement of a holder (Gold Palace) to
collecting Bank (Far East) in the nature of a restrictive indorsement? Is this not indorsement
under Section 66?

(Also Section 68 and cross check)

3. Metropolitan Bank and Trust Company (formerly Asian Bank Corporation) vs. BA Finance
Corporation and Malayan Insurance Co., Inc., G.R. No. 179952, December 4, 2009, First
Division, J. Carpio Morales.

Issue: What is Section 41 of the NIL? What is the effect of payment based on a forged
indorsement? What is the effect of a collecting bank being the last indorser?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 27
University College of Law, Updated October 10, 2012.
 NEGOTIATION AND INDORSEMENTS

Philippine Clearing House Corporation (PCHC)

“clearing indorsement”

(Also suit of Payees against the drawee bank, but note here the drawee accepts)

1. Allied Banking Corporation vs. Court of Appeals and Bank of the Philippine Islands, G.R.
No. 123871, August 31, 1998, First Division, J. Panganiban

Issue: What is the mandatory recourse to the PCHC? What is the exhaustion of arbitral
authority of the PCHC in cases involving checks cleared under PCHC before recourse to a 3 rd
party complaint?

(Note is Section 13 of PCHC rules not an expansion of RTC’s jurisdiction without approval of Congress since PCHC
rules is not a law?)

RIGHTS OF HOLDERS

Sections 26, 51, 52, 58

(Also crossed check)

1. Cely Yang vs. Court of Appeals, Philippine Commercial International Bank, Far East Bank
& Trust Co., Equitable Banking Corporation, Prem Chandiramani and Fernando David
G.R. No. 138074, August 15, 2003, Second Division, J. Quisumbing

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 28
University College of Law, Updated October 10, 2012.
Issue: Is David a holder in due course? Can a payee be considered a holder in due course? Is
David a holder for value? Is David in good faith when he did not inquire as to reason why the
cashier’s check was drawn for him especially that, these were crossed checks?

(Note: The case was silent as to the result of the suit against Equitable Bank. The case was likewise silent as to Prem,
except that the RTC said Yang has recourse against Prem: But is it not that Prem was already a defendant at the
RTC? The case is also silent as to the owner of PCIB FDUC Account No. 4195-01165-2)

(Also Section 24, 28, manager’s check, certified check [promissory note], Section 62, liability of acceptor,
Section 187 certified check, degree of care required of banks)

2. Equitable PCI Bank (the Banking Entity into which Philippine Commercial International
Bank was merged) vs. Rowena Ong, G.R. No. 156207, September 15, 2006, First Division, J.
Chico-Nazario

Issue: Was there unjust enrichment for transfer of the value of the manager’s check without
consideration? Is Ong privy to the transaction between Ong and Sarande? What is a holder in
due course and holder for value? What is the presumption of consideration? What is the effect
of want or failure of consideration? What is the effect of a manager’s check and certified check?
What is the liability of an acceptor? What is the degree of care required of banks?

(Note: For academic discussion: Here Ong [the holder-payee] can immediately sue PCI Davao Branch [the drawee] as
a manager’s check is considered a promissory note with the bank as maker. Also the mere issuance of a manager’s
check constitutes an acceptance of the drawee under Section 62. Either way [maker or acceptor] the drawee becomes
primarily liable)

(Also consideration, meaning of value, effect of cashier’s check, issuance of cashier’s check considered an
acceptance)

3. Bank of the Philippine Islands vs. Gregorio C. Roxas, G.R. No. 157833, October 15, 2007,
First Division, J. Sandoval-Gutierrez

Issue: Is Roxas a holder in due course? What is the presumption of consideration? What
constitutes value?

4. Sps. Pedro and Florencia Violago vs. BA Finance Corporation and Avelino Violago, G.R.
No. 158262, July 21, 2008, Second Division, J. Velasco, Jr.

Issue: Was BA Finance a holder in due course? What is it that prevails, the NIL on Holder in
Due Course or Article 1318 of the Civil Code on vitiated consent? What is the effect of a holder
in due course?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 29
University College of Law, Updated October 10, 2012.
 LIABILITIES OF PARTIES

Sections 61, 62 (189) 64, 65, 66

[Also accommodation party, liability of collecting bank, NI not legal tender]

1. Bank of the Philippine Islands vs. Court of Appeals and Benjamin C. Napiza, G.R. No.
112392, February 29, 2000, First Division, J. Ynares-Santiago

Issue: What is the liability of a general indorser? Is this liability applicable to Napiza? Is
Napiza liable as an accommodation party? What is the meaning of depositing a check to a
collecting bank?

(Also degree of care of banks, Note: exception to the degree of diligence required of banks)

2. Gregorio H. Reyes and Consuelo Puyat-Reyes vs. Court of Appeals, and Far East Bank and
Trust Company, G.R. No. 118492, August 15, 2001, Second Division, J. De Leon, Jr.

Issue: Is Section 61 (liability of drawer) of the NIL applicable? What is the degree of care
required of banks?

(Note the suit was for damages not on the payment of the value of the demand draft)

(Also nature of banking business, legal tender, negligence, Section 89 notice of dishonor)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 30
University College of Law, Updated October 10, 2012.
3. Associated Bank (Now Westmont Bank) vs. Vicente Henry Tan, G.R. No. 156940,
December 14, 2004, First Division, J. Panganiban

Issue: Whether a collecting bank has the right to debit the account of its client for a check that
was dishonored by a drawee? What is the right of set-off and how should the bank exercise this
right? What is the nature of the obligation of a depository bank? Give the nature of the banking
business? Is a check a legal tender? What is the relation of payee or holder of a commercial
paper and the collecting bank? Whose negligence was the proximate cause of the loss? Is there
a need for the bank to give notice to Tan? What is the basis for such notice requirement? What
is the applicability of Sections 66 and 89 of the NIL to this case?

4. Solidbank Corporation vs. Spouses Teodulfo and Carmen Arrieta, G.R. No. 152720,
February 17, 2005, Third Division, J. Panganiban

Issue: Is the drawee bank who did not accept (dishonor a check) liable for damages in a suit
filed by the drawer?

5. Maria Tuazon, et.al. vs. Heirs of Bartolome Ramos, G.R. No. 156262, July 14, 2005, Third
Division, J. Panganiban

Issue: What is the nature of a contract of agency and does it apply in this case? Is the drawer an
indispensable party in a suit instituted by the holder when checks were dishonored?

6. Sincere Z. Villanueva vs. Marlyn P. Nite, G.R. No. 148211, July 25, 2006, Second Division, J.
Corona

Issue: If the drawee bank dishonors a check can payee-holder sue the bank? Is the drawer an
indispensable party in a suit initiated by the payee-holder against a drawee bank?

7. Melva Theresa Alviar Gonzales vs. Rizal Commercial Banking Corporation, G.R. No.
156294, November 29, 2006, Second Division, J. Garcia

Issue: Does a subsequent party which caused the defect in the instrument have any recourse
against prior endorsers in good faith?

8. Gemma Ilagan vs. People of the Philippines, G.R. No. 166873, April 27, 2007, Second
Division, J. Carpio Morales

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 31
University College of Law, Updated October 10, 2012.
8a. Alberto Cordero Sy vs. People of the Philippines, G.R. No. 168069, April 27, 2007, Second
Division, J. Carpio Morales

8b. Jaime Tan vs. People of the Philippines, G.R. No. 168543, April 27, 2007, Second Division,
J. Carpio Morales

Issue: Is there a necessity of knowledge on the part of indorser (Tan) that Gemma (drawer) has
no sufficient funds? What is deceit in estafa?

(Note while it is not expressly mentioned this case is instructive on the “necessary proceedings on dishonor be duly
taken” before indorse be made liable under Section 66)

9. Equitable PCI Bank vs. Arcelito B. Tan, G.R. No. 165339, August 23, 2010, Second Division,
J. Peralta

Issue: Does the drawee bank that allowed payment of a post dated check before its due date
that caused the dishonor of the drawer’s other issued checks liable to the drawer for damages?
What is the meaning of a drawee bank? What is the liability of a drawee bank?

10. Citibank, N.A. vs. Atty. Ernesto S. Dinopol, G.R. No. 188412, November 22, 2010, Second
Division, J. Mendoza

Issue: What is the liability of a drawee bank that wrongfully dishonors a check? What is the
diligence required of banks only Roman pater familias? What is the degree of diligence required
of banks by the General Banking Law of 2000?

(Also accommodation party)

10. Philippine National Bank vs. Spouses Cheah Chee Chong and Ofelia Camacho
Cheah/Spouses Cheah Chee Chong and Ofelia Camacho Chea vs. Philippine National Bank,
G.R. No. 170865/G.R. No. 170892, April 25, 2012, First Division, J. Del Castillo

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 32
University College of Law, Updated October 10, 2012.
Issue: What are the liabilities of the drawer and drawee of both has contributory negligence?

NOTICE OF DISHONOR

Sections 89, 114

(Also elements of BP 22, knowledge of sufficiency of funds)

1. Lina Lim Lao vs. Court of Appeals and People of the Philippines, G.R. No. 119178, June 20,
1997, Third Division, J. Panganiban

Issue: What are the elements of BP 22? What constitutes knowledge of insufficiency of funds?
What is the need for notice of dishonor? To whom must notice be given?

(Note while it appears applicable the SC did not rule that this instrument is incomplete and undelivered, Section 15
of NIL)

(Also meaning of the term “issue”)

2. Betty King vs. People of the Philippines, G.R. No. 131540, December 2, 1999, Third
Division, J. Panganiban

Issue: What is the meaning of the term “issue”? What is the reason of the need for notice of
dishonor in BP 22?

(Also Section 186 delay in the presentment of checks, Section 196 on cases not provided for in the Act:
Delay in presentment discharges the drawer, but how about delay in giving notice of dishonor, difference
between rediscounting and loan accommodation)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 33
University College of Law, Updated October 10, 2012.
3. Great Asian Sales Center Corporation and Tan Chiong Lin vs. Court of Appeals, and
Bancasia Finance and Investment Corporation, G.R. No. 105774, April 25, 2002, Third
Division, J. Carpio

Issue: What is the nature of a deed of assignment with recourse? In such case what is the
purpose of an indorsement? What is the effect of absence of notice of dishonor? When notice of
dishonor need not be given (Section 114)? What is the effect of delay in giving notice of
dishonor? What law applies on matters not covered by the NIL (Section 196)? What does delay
in Section 186 of the NIL refer to? What is the difference between rediscounting and loan
accommodation?

(Also payment discharge the instrument)

4. Willy G. Sia vs. People of the Philippines, G.R. No. 149695, April 28, 2004, Second
Division, J. Callejo Sr.

Issue: What is the prima facie presumption of “knowledge” of insufficiency of funds? Must the
notice of dishonor be in writing? What is the need that such notice to be in writing? What is the
effect of payment?

(Note: Must the notice of dishonor be in writing under the NIL?)

5. Alfredo Rigor vs. People of the Philippines, G.R. No. 144887, November 17, 2004, First
Division, J. Azcuna

Issue: Is there presumption of “knowledge” of insufficiency of funds when check is presented

ninety (90) from its due date? What is the effect of admission of Rigor? Is the knowledge of the
payee that the funds are insufficient material in BP 22? How is notice of dishonor made in BP
22?

(Also Section 2 on stipulated interests and Usury Law and Section 24 on presumption of consideration)

6. James Svendsen vs. People of the Philippines, G.R. No. 175381, February 26, 2008, Second
Division, J. Carpio Morales

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 34
University College of Law, Updated October 10, 2012.
Issue: Are notice of dishonor required under BP 22, and how is it made? Are unconscionable
interest rates still allowed even when the Usury Law was already repealed? What is absence of
consideration under Section 24?

7. Jude Joby Lopez vs. People of the Philippines, G.R. No. 166810, June 26, 2008, First
Division, J. Leonardo-De Castro

Issue: What is the effect of failure to receive notice of dishonor? What is the effect of Section 114
(d) of the NIL?

(Note instructive as to the elements of ESTAFA under Article 315 2 (d) of the Penal Code but not part of the coverage
this presentation)

8. Edgardo Medalla vs. Resurreccion D. Laxa, G.R. No. 193362, January 18, 2012, Second
Division, J. Reyes.

Issue: What is the gravamen of the offense of B.P. 22?

9. Hector Trenas vs. People of the Philippines, G.R. No. 195002, January 25, 2012, Second
Division, J. Sereno.

Issue: Is dishonor an element of the offense of estafa under Article 315, par. 1 (b) of the RPC?

10. Amada Resterio vs. People of the Philippines, G.R. No. 177438, September 24, 2012, First
Division, J. Bersamin.

Issue: How is notice of dishonor made as required in Batas Pambansa Blg. 22?

(The notice of dishonor required by Batas Pambamsa Blg. 22 to be given to the drawer, maker or issuer of a check
should be written. If the service of the written notice of dishonor on the maker, drawer or issuer of the dishonored
check is by registered mail, the proof of service consists not only in the presentation as evidence of the registry return
receipt but also of the registry receipt together with the authenticating affidavit of the person mailing the notice of
dishonor. Without the authenticating affidavit, the proof of giving the notice of dishonor is insufficient unless the
mailer personally testifies in court on the sending by registered mail.)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 35
University College of Law, Updated October 10, 2012.
 DISCHARGE OF NEGOTIABLE INSTRUMENTS

Section 119

1. Marciano Tan vs. Philippine Commercial International Bank, G.R. No. 152666, April 23,
2008, Second Division, J. Carpio Morales.

Issue: What is the element of “knowledge of insufficient fund” in BP 22. How does the BP 22
create the presumption of knowledge? What is the remedy for the person liable to escape
liability? Was payment made when the buses were surrendered? Does payment obliterate
criminal liability?

(Also crossed check)

2. Anamer Salazar vs. J.Y. Brothers Marketing Corporation, G.R. No. 171998, October 20, 2010,
Second Division, J. Peralta.

Issue: How are instruments discharged under Section 119 (d) in relation to Article 1231 (6) of
the Civil Code? What are the elements of novation?

3. Cresencio C. Milla vs. People of the Philippines and Carlos V. Lopez, G.R. No. 188726,
January 25, 2012, Second Division, J. Sereno.

Issue: Is the obligation novated when the checks used as payment of an obligation bounced?
What are the elements of novation?

(Note instructive as to the elements of ESTAFA under Article 315 2 (d) of the Penal Code but not part of the coverage
this presentation)

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 36
University College of Law, Updated October 10, 2012.
 MATERIAL ALTERATION

Sections 124 and 125

(Also Section 125 in relation to Section 1)

1. Philippine National Bank vs. Court of Appeals, Capitol City Development Bank,
Philippine Bank of Communications and F. Abante Marketing, G.R. No. 107508, April 25,
1996, First Division, J. Kapunan

Issue: What is an alteration under Section 125? What is the meaning of Section 125 (f)? What is
the relation of Section 125 to Section 1? What is spoliation? Is the change in the serial number
material alteration?

(Also section 1: is a check’s serial number material particular?)

2. The International Corporate Bank vs. Court of Appeals and Philippine National Bank,
G.R. No. 129910, September 5, 2006, Third Division, J. Carpio

Issue: What is material alteration and whether or not the checks were materially altered?

(Also Section 1 (b), estoppel: negligence, banking: affected by public interest)

3. Metropolitan Bank and Trust Company vs. Renato D. Cabilzo, G.R. No. 154469, December
6, 2006, First Division, J. Chico-Nazario

Issue: What is material alteration? What is the effect of payment made under a materially
altered instrument? What is the doctrine of equitable estoppel? What is the degree of diligence
required of a bank?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 37
University College of Law, Updated October 10, 2012.
 PROTEST

Sections 152

(Also negotiation and indorsement. Distinction between contract of an indorser and that of a
guarantor/surety of a commercial paper)

1. Allied Banking Corporation vs. Court of Appeals, G.G. Sportswear Manufacturing

Corporation, Nari Gidwani, Spouses Leticia and Leon de Villa and Alcron International
LTD. G.R. No. 125851, July 11, 2006, Third Division, J. Quisumbing

Issue: Can respondents, in their capacity as guarantors and surety, be held jointly and severally
liable under the Letters of Guaranty and Surety, in the absence of protest on the bill in
accordance with Section 152 of the NIL?

(Note Case did not rule delve on the fact that letters of credit is not a negotiable instrument nor on the negotiability of
an export bill)

2. Producers Bank of the Philippines vs. Excelsa Industries, Inc., G.R. No. 152071, May 8,
2009, Second Division, J. Tinga

Issue: What is the effect of failure to comply with Sections 89 and 152 of the NIL on the liability
of respondent when he signed a separate undertaking and promised to pay on demand the full
amount of the draft?

PROMISSORY NOTES AND CHECKS

Sections 184, 185, 186, 189

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 38
University College of Law, Updated October 10, 2012.
(Also, forgery, proximate cause, liabilities of parties: relationship between payee and collecting bank,
requirement of banking business on the first to cash the check, negligence of employees, liability of
drawer to drawee, nature of banking business and functions, comparative negligence)

1. Philippine Commercial International Bank vs. Court of Appeals, and Ford Philippines, Inc.
and Citibank, N.A., G.R. No. 121413, January 29, 2001, Second Division, J. Quisumbing

1a. Ford Philippines Inc. vs. Court of Appeals and Citibank, N.A. and Philippine Commercial
International Bank, G.R. No. 121479, January 29, 2001, Second Division, J. Quisumbing

1b. Ford Philippines Inc. vs. Citibank, N.A., Philippine Commercial, International Bank and
the Court of Appeals, G.R. No. 128604, January 29, 2001, Second Division, J. Quisumbing

Issue: As to G.R. No. 121413 and 121479. What is the relationship of the payee-holder and
collecting bank? What is a crossed check and the corresponding duty of the collecting bank?
What is the requirement of banking business on the one who first cashes or negotiates a check?
As to G.R. No. 128604. What is the liability of PCI bank relative to the acts of its employees? Is
the doctrine of contributory negligence applicable? What is the liability of the drawer to the
drawee? What is the nature of the banking functions? What is comparative negligence? What
is the nature of the banking business?

(Also scope of the term insufficient fund, notice of dishonor)

2. Elvira Yu Oh vs. Court of Appeals and People of the Philippines, G.R. No. 125297, June 6,
2003, Second Division, J. Austria Martinez

Issue: What is the scope of the term “insufficient fund” as ground for dishonor in BP 22? What
is the meaning of check under BP 22 especially so that here the check is not payable on demand
as defined by Article 185? Is the requirement of notice of dishonor in BP 22 mandatory?

(Also liabilities of parties, suit of payee directly against drawer, Section 147)

3. Hongkong and Shanghai Banking Corporation Limited vs. Cecilia Diez Catalan, G.R. No.
159590, October 18, 2004, Second Division, J. Austria Martinez

3a. HSBC International Trustee Limited vs. Cecilia Diez Catalan, G.R. No. 159591, October
18, 2004, Second Division, J. Austria Martinez

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 39
University College of Law, Updated October 10, 2012.
3b. HSBC vs. Catalan, G.R. No. 159590, April 25, 2005, Second Division, Resolution

Issue: What is the effect that this suit is under Article 19 of the Civil Code? What about
Sections 189 and 147 of the NIL?

4. Luzon Development Bank vs. Benedicto C. Conquilla, Cornelia C. Conquilla, Dorotea C.

Orcine and Feliciano S. Conquilla, G.R. No. 163338, September 21, 2005, Third Division, J.
Panganiban

Issue: What is a promissory note? Is the promissory note proof of identity parties (Columbia
and Coquillas)?

(Also, Section 1 effect of check drawn against closed account: non-negotiable! Section 6 issued undated,
stale check)

5. Victoria J. Ilano, etc. vs. Hon. Dolores Español, et. al., G.R. No. 161756, December 16, 2005
Third Division, J. Carpio Morales

Issue: What is the effect as to the negotiability of the check drawn against closed account? What
will happen to checks that are not dated? What is a stale check? What is the banking practice on
stale checks?

(Note: Remedy is bill of particulars not dismissal if complaint lacks particularity. Note: this is not covered by the NIL)

6. Atty. Jose Ricuerdo P. Flores vs. Felix M. Falcotelo, Sheriff IV, RTC Branch 276,
Muntinlupa City, A.M. No. P-05-2038, January 25, 2006, First Division, J. Austria Martinez

Issue: What are the safeguards provided by NIL that were violated?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 40
University College of Law, Updated October 10, 2012.
(Note this is instructive as to the procedure for sheriffs in case litigants voluntarily pay. There was no mention
however as to what these NIL safeguards are)

(Also section 52, 191 and negotiation (section 30) vs assignment)

7. Leticia G. Miranda vs. PDIC, BSP and Prime Savings Bank, G.R. No. 169334, September 8,
2006, First Division, J. Ynares-Santiago

Issue: Do checks operate as an assignment of funds in the hands of Miranda? Was the claim of
Miranda a disputed claim under Section 30 of RA 7653 and thus under the jurisdiction of the
liquidation court? Are the respondents solidarily liable to Miranda?

(Also PCHC clearing indorsement, liability of indorser, liability of collecting bank, checks as legal tender)

8. Citibank, N.A. (formerly First National City Bank) and Investors’ Finance Corporation,
doing business under the name and style of FNCB Finance vs. Modesta R. Sabeniano, G.R.
No. 156132, October 16, 2006, First Division, J. Chico-Nazario

Issue: Are the managers checks (MCs) proof of receipt of loan proceeds? What is the
significance of BPI’s clearing indorsement? What is a crossed check? What is the liability of the
indorser? Is a collecting bank an indorser? Are checks legal tender?

(Also section 36 restrictive indorsement)

9. Hi-Cement Corporation vs. Insular Bank of Asia and America (later Philippine
Commercial International Bank and now, Equitable PCI Bank), G.R. No. 132403, September
28, 2007, First Division, J. Corona

9a. E.T. Henry & Co. and spouses Enrique Tan and Lilia Tan vs. Insular Bank of Asia and
America (later Philippine Commercial International Bank and now, Equitable PCI Bank)
G.R. No. 132419, September 28, 2007 First Division, J. Corona

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 41
University College of Law, Updated October 10, 2012.
Issue: What are crossed checks and how will these checks affect holders in due course? Are
crossed checks similar to restrictive indorsements? Are holders (E-PCI) required to ascertain
indorser’s title on crossed checks? What is solidary liability and relativity of contracts (Section
17, Articles 1207 and 1208 of the Civil Code)?

(Note instructive as the principle of piercing the veil of corporate personality but not covered by NIL)

10. Metropolitan Bank and Trust Company vs. Philippine Bank of Communications,
Filipinas Orient Finance Corporation, Pipe Master Corporation and Tan Juan Lian, G.R. No.
141408, October 18, 2007, First Division, J. Sandoval-Gutierrez

10a. Solid Bank Corporation vs. Filipinas Orient Finance Corporation, Pipe Master
Corporation, Tan Juan Lian, and/or Philippine Bank of Communications, G.R. No. 141429,
October 18, 2007, First Division, J. Sandoval-Gutierrez

Issue: Whether or not Metrobank and Solidbank liable to Filipinas Orient for accepting PBCom
crossed checks payable to Pipe Master? What are crossed checks? What are the liabilities of the
collecting bank? What is a “clearing indorsement”?

(Also checks payable to ‘cash’ (bearer instrument) and liability of drawer)

11. Security Bank and Trust Company vs. Rizal Commercial Banking Corporation, G.R. No.
170984, January 30, 2009, Second Division, Acting CJ. Quisumbing

11a. Rizal Commercial Banking Corporation vs. Security Bank and Trust Company, G.R. No.
170987, January 30, 2009, Second Division, Acting CJ. Quisumbing

Issue: What is a manager’s check? What is the effect of a check payable to cash? What is the
liability of the drawer?

(Also holder in due course)

12. Robert Dino vs. Maria Luisa Judal-Loot joined by her husband Vicente Loot, G.R. No.
170912, April 19, 2010, Second Division, J. Carpio

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 42
University College of Law, Updated October 10, 2012.
Issue: What is the effect of a crossed check? What is a holder in due course?

(Note unique since the effect of a cross check ‘hits’ the holder and not the drawee or collecting bank as in previous
cases)

13. Salvador O. Echano vs. Liberty Toledo, G.R. No. 173930, September 15, 2010, Second
Division, J. Abad

Issue: What is the effect of a crossed check? What is a manager’s check?

(Also instructive as to the diligence required of banks)

14. Philippine Commercial Bank Vs. Antonio B. Balmaceda and Rolando N. Ramos, G.R. No.
158143. September 21, 2011 2nd Division, J. Brion.

Issue: What is a crossed check?

(Also instructive as to warranty of a maker as to the identity of the payee)

15. Philippine National Bank Vs. Amelio Tria and Atty. Reyes/John Doe, G.R. No. 183308,
April 25, 2012, Third Division, J. Velasco Jr.

Issue: What is a manager’s check?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 43
University College of Law, Updated October 10, 2012.
(Note this is instructive as to exclusive authority of the Executive Department through the Department of Justice to
file information in criminal case. Here the SC ordered the filing of an information stating that the earlier refusal of
the DOJ to do so [sustained by the CA] was grave abuse of discretion. But this discussion is not covered by NIL)

OTHER RELATED TOPICS

1. Jovencio Lim and Teresita Lim vs. People of the Philippines, Regional Trial Court of
Quezon City, Branch 217, City Prosecutor of Quezon City, and Wilson Cham, G.R. No.
149276, September 27, 2002, En banc, J. Corona

Issue: Whether or not PD 818 is constitutional?

2. Republic of the Philippines, represented by The Anti-Money Laundering Council (AMLC)

vs. Hon. Antonio M. Eugenio, JR., as presiding judge of RTC, Manila, Branch 34, Pantaleon
Alvarez and Lilia Cheng, G.R. No. 174629, February 14, 2008, Second Division, J. Tinga

Issue: Are checks confidential communications (especially in the light of U.S. vs. Miller, 425 US
435, [1976])? Are bank deposits covered by the right to privacy? If so, what is the basis of such
privacy in the Philippine setting?

3. Spouses PNP Director Eliseo D. Dela Paz (Ret.) and Maria Fe C. Dela Paz vs. Senate
Committee on Foreign Relations and the Senate Sergeant-at-arms Jose Balajadia, Jr., G.R. No.
184849, February 13, 2009, En banc, J. Nachura

Issue: Effect of Article 14 (2) of the United Nations Convention Against Corruption as well as
Article 17 (1) and (2) of the United Nations Convention Against Transnational Organized Crime
on “movement of cash and appropriate negotiable instruments”?

4. Spouses Simon Yap and Milagros Guevarra vs. First e-Bank Corporation (previous known
as PDCP Development Bank, Inc.), G.R. No. 169889, September 29, 2009, First Division, J.
Corona

Issue: What is the effect of Circular 57-97 now Rule 111 Section 1 (b) on criminal actions
involving violation of BP 22 and its civil action?

4. Office of the Court Administrator (OCA) vs. Clerk of Court Hermenegildo I. Marasigan,
RTC Kabacan, North Cotabato, A.M. No. P-05-2082, December 12, 2011, En Banc, Per Curiam.

Issue: What are guidelines on check payments for court fees provided in OCA Circular No. 88-
2007, issued on August 28, 2007 or the Supreme Court adopted guidelines for the payment of
fees, and its modes and effect, thus, amending Section 1, Rule 141 of the Rules of Court?

5. Magdiwang Realty Corporation, Renato P. Dragon and Esperanza Tolentino vs. The
Manila Banking Corporation, substituted by First Sovereign Asset Management (SPV-AMC),
Inc., G.R. No. 195592, September 5, 2012, First Division, J. Reyes.

Issue: Explain the (10)-year prescriptive period to file an action based on the subject promissory
note? What are the circumstances that interrupt this period in accordance with Article 1155 of
the New Civil Code?

6. Office of the Court Administrator (OCA) vs. Susan R. Fontanilla, Clerk of Court,
Municipal Circuit Trial Court, San Narciso-Buenavista, San Narciso, Quezon, A.M. No. P-12-
3686, September 18, 2012, En Banc, Per Curiam.

Issue: What is the check payment system? How does it eliminate the irregularities in the
collection of court funds?

Outline of NIL Decided Cases 1996 and up, Atty. Rene Alexis P. Villarente, MBA, Ateneo de Davao 44
University College of Law, Updated October 10, 2012.