MAKER PAYEE HOLDERA

DRAWER PAYEE HOLDERA

DRAWEE

B

B

Section 60

Section 61

Section 62

Acceptor

Not liable

Solid Bank vs. Arieta GR. No. 152720 Feb. 17, 2005; A (drawee) bank’s gross negligence in dishonoring a well-funded check, aggravated by its unreasonable delay in repairing the error, calls for an award of moral and exemplary damages. The resulting injury to the check writer’s reputation and peace of mind needs to be recognized and compensated.

“Order” Sec. 1 (b) Villanueva vs. Nite GR. No. 148211 July 25, 2006; If a (drawee)

bank refuses to pay a check (with sufficient funds), the payee-holder should instead sue the drawer who might in turn sue the bank. Section 189 is sound law based on logic and established legal principles: no privity of contract exists between the drawee-bank and the payee. The Drawer is an indispensable party when drawee is sued by the payee.

Metro Bank vs. Cabilzo GR. No. 154469 December 6, 2006; Drawee who paid under a materially altered instrument, such payment is not payment done in accordance with the drawer’s instruction.

Sec 64 Irreg. Sec 65 Del/ Quali Sec 66 General Sec 67 bearer

Sec 69 (20,21,44) Agent

Tuazon vs. Heirs of Ramos GR. No. 156262 July 14, 2005; After an instrument is dishonored by non payment, indorsers ceases to be merely secondarily liable; they become principal debtors whose liability becomes identical to that of the original obligor. The holder of a negotiable instrument need not even proceed against the maker before suing the indorser. Drawer is not indispensable party in an action against the indorser of checks.

IV. RIGHTS AND LIABILITIES OF PARTIES

INDORSERS

BPI vs. Roxas GR. No. 157833 October 15, 2007; Under Section 52, as a general rule, every holder is presumed prima facie to be a holder in due course. One who claims otherwise has the onus probandi to prove that one or more of the conditions are lacking.

Section 51 Simple Holder

Section 26 Holders for Value

Sec. 52/58 Holders in due course

To sue, be paid and to negotiate

Atty. Rene Alexis P. VillarenteAteneo de Davao University College of Law

A drawee who did not accept is not liable and may not be sued (Villanueva vs. Nite, id.) exception:

1. In a suit initiated by the drawer (Solid Bank vs. Arieta, G.R. No. 152720, February 17, 2005)

2. In a suit by the payee or holder based on Article 19 of the Civil Code (HSBC vs. Catalan, G.R. 159590, Oct. 18, 2004)

3. Where the instrument involved is a manager’s or certified check (E-PCI vs. Ong, G.R. 156207, September 15, 2004)

BPI vs. CA and Napiza GR. No. 112392 February 29, 2000; An accommodation party is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party.

Section 191 Definition of Terms: Holder means the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof.

Q: Is a collecting bank a holder for value with rights or a last indorser with liability (PCHC rule § 17)?

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