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    PNB v. Rodriguez Case Digest

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    Kian Fajardo
    This case involved fraudulent checks issued by the Philippine National Bank Employees Savings and Loan Association (PEMSLA) that were rediscounted by respondents Spouses Rodriguez. When the fraudulent scheme was discovered, PNB closed PEMSLA's account. Rodriguez filed a civil complaint against PEMSLA and PNB to recover losses from rediscounting the checks. The court ruled the checks were payable to order, not bearer, making PNB liable. To be considered bearer instruments under Philippine law, the payees must be fictitious and the person making the check payable must know this. However, PNB did not prove the payees were fictitious or show it was not commercially negligent.

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    PNB v. Rodriguez Case Digest

    Uploaded by

    Kian Fajardo
    2K views3 pages
    This case involved fraudulent checks issued by the Philippine National Bank Employees Savings and Loan Association (PEMSLA) that were rediscounted by respondents Spouses Rodriguez. When the fraudulent scheme was discovered, PNB closed PEMSLA's account. Rodriguez filed a civil complaint against PEMSLA and PNB to recover losses from rediscounting the checks. The court ruled the checks were payable to order, not bearer, making PNB liable. To be considered bearer instruments under Philippine law, the payees must be fictitious and the person making the check payable must know this. However, PNB did not prove the payees were fictitious or show it was not commercially negligent.

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    Case Digest

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    This case involved fraudulent checks issued by the Philippine National Bank Employees Savings and Loan Association (PEMSLA) that were rediscounted by respondents Spouses Rodriguez. When the fraudulent scheme was discovered, PNB closed PEMSLA's account. Rodriguez filed a civil complaint against PEMSLA and PNB to recover losses from rediscounting the checks. The court ruled the checks were payable to order, not bearer, making PNB liable. To be considered bearer instruments under Philippine law, the payees must be fictitious and the person making the check payable must know this. However, PNB did not prove the payees were fictitious or show it was not commercially negligent.

    Copyright:

    © All Rights Reserved
    Download as RTF, PDF, TXT or read online from Scribd
    Download as rtf, pdf, or txt
    2K views3 pages

    PNB v. Rodriguez Case Digest

    Uploaded by

    Kian Fajardo
    This case involved fraudulent checks issued by the Philippine National Bank Employees Savings and Loan Association (PEMSLA) that were rediscounted by respondents Spouses Rodriguez. When the fraudulent scheme was discovered, PNB closed PEMSLA's account. Rodriguez filed a civil complaint against PEMSLA and PNB to recover losses from rediscounting the checks. The court ruled the checks were payable to order, not bearer, making PNB liable. To be considered bearer instruments under Philippine law, the payees must be fictitious and the person making the check payable must know this. However, PNB did not prove the payees were fictitious or show it was not commercially negligent.

    Copyright:

    © All Rights Reserved
    Download as RTF, PDF, TXT or read online from Scribd
    Download as rtf, pdf, or txt
    of 3

    Philippine National Bank v.

    Rodriguez
    G.R. No. 170325
    September 26, 2008
    When Instrument is Payable to Bearer
    FACTS: Respondents Spouses Rodriguez maintained
    savings and demand/checking accounts as well as
    demand deposits (Checkings/Current Account) with
    petitioner PNB. They are also engaged in the informal
    lending business of discounting arrangement with
    Philnabank Employees Savings and Loan Association
    (PEMSLA), an association of PNB. PEMSLA regularly
    granted loans to its member and Spouses would
    rediscount the apostate checks issued to members
    whenever the association was short of funds. At the same
    time, the spouses would replace the postdated checks
    with their own checks issued in the same name.
    PEMSLAs policy would not approve applications with
    outstanding debts and in order to subvert this they created
    a scheme to obtain additional loans in the names of
    unknowing members without their knowledge and consent.
    PEMSLA checks were then given to spouses for
    rediscounting and were carried out by forging the
    endorsement of the named payees in the checks.
    Rodriguez checks were deposited directly to PEMSLA

    without any endorsement from the named payees.


    Petitioner found out about the fraudulent acts, and took
    measures by closing the current account of PEMSLA.
    Since PEMSLA checks were dishonored and returned the
    respondents incurred losses from the rediscounting
    transactions. Spouses filed a civil complaint against
    PEMSLA and PNB, the court rendering judgment in favor
    of respondent.
    ISSUE/S: Whether or not the disputed checks were
    payable to bearer and order making petitioner liable if it is
    of the latter and respondent liable is it is the former.
    HELD. The checks were payable to order, making
    petitioner liable for the losses. As a rule, if the payee is
    fictitious or not intended to be the true recipient of the
    proceeds of the check it is considered as a bearer
    instrumentaccording to Sections 8 and 9 of the
    Negotiable Instruments Law. The distinction lies in the
    manner of their negotiation. An order instrument from the
    payee or holder requires endorsement. A bearer
    instrument does not required endorsementnegotiable by
    mere delivery. However, under Section 9 of the same law,
    a checks is payable to a specified payee may nevertheless
    be considered as a bearer instrument if it is payable to the

    order of a fictitious or non-existing person, and such fact is


    known to the person making it so payable. According to
    US jurisprudence, an actual, existing and living payee may
    also be fictitious if the maker of the check did not intend
    for the payee to receive the check. If such a case happens
    then the check is a bearer instrument. In a fictitious-payee
    situation, the drawee bank is absolved from liability and
    the drawer bears the loss. However, if there is showing of
    commercial bad faith on the part of the drawee bank, or
    any transferee of the check for that matter, will work to strip
    it of this defense. PNBs failure to show that the payees
    were fictitious, the fictitious-payee rule does not apply
    making the instrument payable to order. Also, PNB was
    remiss in its duty as the drawee bank since its employees
    were the one who crested the whole fraudulent scheme.

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