Banco Atlantico v

8/3/2019 Banco Atlantico v

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Banco Atlantico v. Auditor General

Facts

Philippine Embassy issued checks to Virginia Boncan and Azucena Pace drawn from PNB Ney York (PNBNY). Virginia

altered the amount of the check and presented them to BANCO ATLANTICO requesting that the checks be not presented

to PNBNY for payment until later date. BANCO ATLANTICO paid the full amount to Virginia without clearing with the

drawee bank. PNB found out the alteration Phil. Emb. and sent a notice of stop payment to PNBNY. BANCO ATLANTICO

presented the checks for payment to PNBNY, pursuant to the request of Phil. Emb. NOBNY dishonored the checks.

BANCO ATLANTICO filed a money claim contending that he has the right to recover the face value of the check being a

Holder in due course (HIDC) under Section 61 of the NIL.

Issue:

Whether or not BANCO ATLANTICO has the right to recover the amount of the check under section 61 of the NIL?

Ruling:

Section 61 of the NIL which provides for the liability of the drawer can only be availed of by a HOLDER IN DUE COURSE

(HIDC)

Section 52 of the NIL provides that:

A holder in due course is a holder who has taken the instrument under the following conditions:

A. That it is complete and regular on its faceB. That he became the holder before it became overdue, and without notice that it has previously been

dishonored.

C. That he took it in good faith and for valueD. That at the time it was negotiated to him, he had no notice of infirmity in the instrument or defect in the title of

the person negotiating it.

All these conditions must concur before a holder be considered a HIDC.

When Virginia deposited the check in her account with BANCO ATLANTICO, she requested in writing that the checks be

not presented for collection to PNBNY until later date, BANCO ATLATICO should have been put on guard that there was

something wrong with the checks. BANCO ATLANTICO obviously had knowledge of the infirmity or defect of the check

thus failing to comply with Subsection D of Section 52 of the NIL.

Therefore, BANCO ATLANTICO beaing not a HIDC as contemplated by Section 52 of the NIL is not entitled to recover the

value of the check from the Phil. Embassy.


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VICENTE DE OCAMPO V. ANITA GATCHALIAN

Facts

Manuel Gonzales offered to sell a car allegedly in behalf of DE OCAMPO CLINIC for P600 to Anita Gatchalian. He then

required Gatchalian to prepare a check payable to show as evidence of her intention to buy the said car only fo

safekeeping and will be returned to her when the car and its certificate of registration will be brought by Gonzales.

Gatchalian drawn a crossed check amounting to P600 payable to VICENTE DE OCAMPO and issued it to Gonzales.

Gonzales delivered the checks to De Ocampo but not as proof of intent to buy but for payment of the hospital fees of his

wife amounting to P441.75. De Ocampo accepted the check and delivered to Gonzales the sum of P158.25 as balance

for the amount of the check. Upon failure of Gonzales to return with the car and the check, Gatchalian stopped the

payment of the check. The check was subsequently dishonored when De Ocampo presented it for payment. De Ocampo

filed an Estafa case against Manuel Gonzales and Gatchalian with the CFI of Manila. CFI of Manila decided in favor of De

Ocampo ordering Gathcalian to pay the former the sum of P600.

Gatchalian appealed conteding that De Ocampo is not a holder in due course because he acquired the check with notice

of defect in the title of Gonzales.

ISSUE

Whether or not De Ocampo is a HIDC therefor may recover the amount of the check from Gatchalian.

RULING




dishonored.C. That he took it in good faith and for valueD. That at the time it was negotiated to him, he had no notice of infirmity in the instrument or defect in the title of


In the case given: The check is not the personal check of Gonzales. Gatchalian is not in any manner obligated to De

Campo Clinic. The amount of the check is in excess of the amount due and the check is a crossed check.

All these circumstances should have put De Ocampo to inquire as to the tittle of Gonzales over the said check. It is not

necessary that De Ocampo knew the exact fraud practiced by Gonzales. It is sufficient to show that He has notice of the

defect of Gonzaless Title over the instrument. De Ocampo has not acquired the check in good faith under the conditions

stipulated in Section 52 of the NIL. Therefore he is not deemed a HIDC and not entitled to recover the amount of the

check from Gatchalian.

.


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HI-CEMENT v. INSULAR BANK OF AMERICA

FACTS

Spouses Tan were the controlling stockholder of ET Henry & Co (ETHENRY). a company engaged in the distribution of

Bunker fuels. One of the customers of ET HENRY is HI-CEMENT CORPORATION (HI-CEMENT). In consideration of the

Bunker fuels acquired by HI-CEMENT from ETHENRY, HI-CEMENT issues crossed postdated checks bearing the restrictionPAYEES ACCOUNT ONLY payable to ETHENRY.

INSULAR BANK OF AMERICA (INSULAR) re- discounted the checks and as a result ETHENRY was able to cash the

postdated checks issued by HI-CEMENT with pre deducted interest.

When INSULAR presented the checks for payment, it was dishonored due to insufficiency of fund.

INSULAR filed a complaint for collection of sum of money.

HI-CEMENT in their defense contends that ISULAR should not have accepted the checks for re-discounting because aside

from the fact that it is a crossed check and bears the restriction PAYEES Account only it was only the treasurer who

signed by the check, hence lacks the signature of the GENERAL MANAGER.

ISSUE:

WON INSULAR BANK is a HIDC therefore can recover the face value of the check from HI-CEMENT.

RULING




dishonored.



INSULAR is aware that the checks were crossed and bore restrictions that were for deposit to payees account only. They

also has knowledge that the check only bore one signature. As a banking institution INSULAR is impressed with public

interest, thus, it was not expected to be careless and negligent specially where it dealt with crossed checks.

Crossing of checks should have put the holder on inquiry and upon himthe duty to ascertain the endorsers title to the

check, failing to in this respect; INSULAR is therefore guilty of negligence amounting to legal absence of good faith,

hence failing to comply with the Subsections C and D of Section 52 of NIL.

Therefore INSULAR is not a HIDC as contemplated by section 52 of the NIL.


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Chan Wan v. Tan Kim

Facts

Tan Kim drawn 2 crossed checks for deposit to China Bank account of White House shoe supply bearing on its face the

word NON-NEGOTIABLE from Equitable Bank and issued to a person named Pinong and Muy in consideration of some

shoes Pinong promise to make for Tan Kim.

Pinong deposited the check to CHINA BANK but was returned due to insufficiency of funds, stamped in the back of the

check the words Account Closed.

The check somehow reached the hands of Chan Wan and presented it for payment to Equitable Bank but was also later

returned due to insufficiency of fund.

Chan Wan file a complaint for collection of sum of money against Tan Kim.

Issue:

WON Chan Wan is a HIDC hence can recover the value of the check from Tan Kim.

Ruling

The checks were crossed and has words written on its face NON-NEGOTIABLE the checks has been crossed specifically

for CHINA BANK and should have been presented for payment by CHINA BANK not by CHAN WAN, because there was no

proper presentment, the liability did not attached to the drawer.

Further Chan Wan acquired the checks after it was dishonored and returned by CHINA BANK with stamp on its back the

words Account Closed




dishonored.



Since CHAN WAN has knowledge that the check had been previously dishonored before he acquired them, he failed tocomply with Subsection B of the above mentioned provision, therefore he is not deemed a HIDC as contemplated by NIL


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ROBERT DINO V. MARIA LUISA JUDAL-LOOT

FACTS

VIVENCIA CONSING executed a Deed of Absolute Sale and Deed of mortgage covering some parcels of land situated in

Lapu-lapu city in favor of ROBERT DINO in return DINO drawn 3 crossed checks from Metro Bank and issued them to

CONSING. When DINO found out that the subject land covered by the Deed of sale and Deed of Mortgage weregovernment properties, he advised Metro Bank to stop payment. Only the payment for 1 check was ordered stopped

the other two were already cashed by the payees. The said check was negotiated by Fe Lobitana to Maria Judal-Loot and

was later discounted by the latter, before accepting the check Loot inquired with the drawee bank whether the check

was funded and the Bank answered in the affirmative.

When Judal-Loot presented the checks for deposit with the drawee bank, the latter dishonored the same for the reason

Stopped Payment

Loot filed a colletion suit with the Mandaue RTC against DINO and Lobitana.

ISSUE

WON Judal-Loot is a HIDC of the check which entitled her to recover the value of the said check




dishonored.



In the case at bar, the subject instrument is a crossed check. A crossed check warns the holder that ithas been issued for

a definite purpose so that the holder must inquire if he has received the check pursuant to the purpose.

Judal-Loot failed to inquire or ascertain Tobitanas title over the instrument; the verification of funding does not amount

to determination of title. Judal-Loot is guilty of negligence amounting to absence of good faith hence he is not a HIDC as

defined by Section 52 of the NIL


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CELY YANG v. CA

Facts

CELY YANG and PREM CHANDIRAMANI entered into an agreement whereby Yang would issue PCIB managers check in

the amount of 4.2M in exchange for 2 managers check amounting to 2.087M each payable to FERNANDO DAVID on the

condition that the difference of 26K would be their profit and be divided equally between them.

YANG drawn 2 crossed managers checks from EQUITABLE BANK and FAR EASTERN BANK and gave the checks to AlbertLiong who instructed his messenger DANILO RANIGO to meet and turn over the checks to CHANDIRAMANI whom in

return would deliver to RANIGO the PCIB checks of FERNANDO DAVID.

CHANDIRAMANI was able to get the checks without delivering the exchange consideration of PCIB managers check.

CHANDIRMANI delivered the check to FERNANDO DAVID but before accepting the same FERNANDO inquire with the

china bank as to the genuiness of the checks, the bank answered in the affirmative, in return FERNANDO gave

CHANDIRAMANI US 360,000.

YANG requested to stop the payment of the 2 managers check

YANG contend that the subject check being a crossed checks, FERANDO is not a HIDC because he failed to inquire from

CHANDIRAMANI about how he acquire the possession of said cheks, therefore he is aware of any defect or infirmity of

the title of CHANDIRAMANI at the time of their negotiation.

FERNANDO contend that he verified the genuiness of the check and had no notice of any defect or infirmity that would

have aroused his suspicion. The instrument is complete and regular on its face.

Issue

WON the CA erred in holding that FERNANDO DAVID is a HIDC entitling him to recover the value of the EQUITABLE

CHECK and FAR EASTERN check from CELY YANG.

RULING

Every holder is pessumed to be an HIDC, however this presumption arises only in favor of person who is a holder as

defined by Section 191 of the NIL meaning the payee or indorsee of a bill or note who is in the possession of the

instrument therof. It is undisputed that Ferando is the payee of the subject checks therefore the presumption applies in

his favor. The vital issue is wether Fernando took the instrument in the condition stated in Section 52 of the NIL.

In the case at bar David is not privy to the transaction of Yang and CHANDIRAMANI, FERNANDO even took step in

ascertaining the Genuiness of the instrument, and only accepted the same after he was assured that there was nothing

wrong with the said checks which at the time Fernando is not aware of the Stop payment order.

With regards to the contention of Yang that the subject checks were crossed and Fernando should have ascertain the

Title of CHARINDAMAMI over the said checks pursuant to the decision of the court in the case of De Ocampo v

Gatchalian.

In the case a bar the crossed check was delivered and deposited by David the payee of the said checks, therefore the

purpose behind the crossing of the checks was satisfied by the payee.

Fernando took the checks in good faith thus complying with the provision of Section 52 of the NIL.


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Documents

Banco Atlantico v