People of The Phils. v. Gilbert Reyes Wagas, G.R. No. 157943, September 4, 2013

People of the Phils. v. Gilbert Reyes Wagas, G.R. No.
157943, September 4, 2013
Facts: Gilbert Wagas ordered from Alberto Ligaray 200 bags of rice over the telephone. As
payment, Wagas issued a check in favor of Ligaray. When the check was deposited it was
dishonored due to insufficiency of funds. Ligaray notified Wagas and demanded payment from the
latter but Wagas refused and failed to pay the amount, Ligaray filed a complaint for estafa before the
RTC. RTC convicted Wagas of estafa because the RTC believed that the prosecution had proved
that it was Wagas who issued the dishonored check, despite the fact that Ligaray had never met
Wagas in person. Hence, this direct appeal.
Issue: Whether or not Wagas is guilty beyond reasonable doubt
Held: No. The Supreme Court acquitted Wagas. The check delivered to Ligaray was made
payable to cash. Under the Negotiable Instruments Law, this type of check was payable to the bearer
and could be negotiated by mere delivery without the need of an indorsement. This rendered it highly
probable that Wagas had issued the check not to Ligaray, but to somebody else like Cañada, his
brother-in-law, who then negotiated it to Ligaray.1wphi1 Relevantly, Ligaray confirmed that he did not
himself see or meet Wagas at the time of the transaction and thereafter, and expressly stated that the
person who signed for and received the stocks of rice was Cañada.
It bears stressing that the accused, to be guilty of estafa as charged, must have used the check in
order to defraud the complainant. What the law punishes is the fraud or deceit, not the mere issuance
of the worthless check. Wagas could not be held guilty of estafa simply because he had issued the
check used to defraud Ligaray. The proof of guilt must still clearly show that it had been Wagas as the
drawer who had defrauded Ligaray by means of the check.
Philippines National Bank vs. Erlando T. Rodriguez, et al. G.R. No. 170325,
September 26, 2008
MARCH 16, 2014 LEAVE A COMMENT
A bank that regularly processes checks that are neither payable to the customer nor duly indorsed by the payee
is apparently grossly negligent in its operations. This Court has recognized the unique public interest possessed
by the banking industry and the need for the people to have full trust and confidence in their banks. For this
reason, banks are minded to treat their customer’s accounts with utmost care, confidence, and honesty. In a
checking transaction, the drawee bank has the duty to verify the genuineness of the signature of the drawer and
to pay the check strictly in accordance with the drawer’s instructions, i.e., to the named payee in the check.
Facts: Spouses Rodriguez maintained a savings and demand/checking accounts with petitioners Philippines
National Bank (PNB). They were engaged in the informal lending business and had a discounting arrangement
with the Philnabank Employees Savings and Loan Association (PEMSLA), an association of PNB employees,
which likewise maintained current and savings accounts with petitioner bank. PEMSLA regularly granted loans
to its members. Spouses Rodriguez would rediscount the postdated checks issued to members whenever the
association was short of funds. As was customary, the spouses would replace the postdated checks with their
own checks issued in the name of the members.
It was PEMSLA’s policy not to approve applications for loans of members with outstanding debts. To subvert
this policy, some PEMSLA officers devised a scheme to obtain additional loans despite their outstanding loan
accounts. They took out loans in the names of unknowing members, without the knowledge or consent of the
latter. The PEMSLA checks issued for these loans were then given to the spouses for rediscounting. The
officers carried this out by forging the indorsement of the named payees in the checks. In return, the spouses
issued their personal checks (Rodriguez checks) in the name of the members and delivered the checks to an
officer of PEMSLA. The PEMSLA checks, on the other hand, were deposited by the spouses to their account.
Meanwhile, the Rodriguez checks were deposited directly by PEMSLA to its savings account without any
indorsement from the named payees. This usual irregular procedure is made possible through the facilitation of
Edmundo Palermo, Jr., treasurer of PEMSLA and bank teller in the PNB Branch.
The spouses issued 69 checks, in the total amount of P2,345,804.00, payable to 47 members of PEMSLA. After
finding out such fraudulent act, PNB closed the current account of PEMSLA. As a result, the PEMSLA checks
deposited by the spouses were returned or dishonored for the reason “Account Closed.” The corresponding
Rodriguez checks, however, were deposited as usual to the PEMSLA savings account. The amounts were duly
debited from the Rodriguez account. Thus, because the PEMSLA checks given as payment were returned,
spouses Rodriguez incurred losses from the rediscounting transactions. Spouses Rodriguez sued PEMSLA and
PNB. They contended that because PNB credited the checks to the PEMSLA account even without
indorsements, PNB violated its contractual obligation to them as depositors. PNB paid the wrong payees, hence,
it should bear the loss. Trial court ruled in favor of spouses and ordered PNB to pay. CA affirmed the decision.
Hence this petition
Issue: Whether or not PNB can be made liable to pay the amount of checks which were deposited to the
PEMSLA savings account.
Held: A bank that regularly processes checks that are neither payable to the customer nor duly indorsed by the
payee is apparently grossly negligent in its operations. This Court has recognized the unique public interest
possessed by the banking industry and the need for the people to have full trust and confidence in their banks.
For this reason, banks are minded to treat their customer’s accounts with utmost care, confidence, and honesty.
In a checking transaction, the drawee bank has the duty to verify the genuineness of the signature of the drawer
and to pay the check strictly in accordance with the drawer’s instructions, i.e., to the named payee in the check.
It should charge to the drawer’s accounts only the payables authorized by the latter. Otherwise, the drawee will
be violating the instructions of the drawer and it shall be liable for the amount charged to the drawer’s account.
Rodriguez checks are payable to order since the bank failed to prove that the named payees therein are
fictitious. Hence, the fictitious-payee rule which will make the instrument payable to bearer does not apply.
PNB accepted the 69 checks for deposit to the PEMSLA account even without any indorsement from the named
payees. It bears stressing that order instruments can only be negotiated with a valid indorsement.
HILIPPINE NATIONAL BANK, plaintiff-appellee, vs.MANILA OIL REFINING & BY-

PRODUCTS COMPANY, INC., defendant-appellant.
FACTS: Manila Oil Refining & By-Products Company, Inc., executed and delivered to the Philippine National
Bank, a written instrument promising to pay to the order of the latter P61,000.00 and stipulating that in case the
note be not paid at maturity, it authorizes any attorney in the Philippine Islands to appear in its name and
confess judgment for the above sum with interest, cost of suit and attorney's fees of ten (10) per cent for
collection, a release of all errors and waiver of all rights to inquisition and appeal, and tothe benefit of all laws
exempting property, real or personal, from levy or sale. The Manila Oil Refining and By-Products Company,
Inc. failed to pay. The Philippine National Bank brought action. An attorney associated with the Philippine
National Bank entered his appearance in representation of Manila Oil Refining & By-Products Company, Inc,
and filed a motion confessing judgment. ISSUE:Is the provision in a promissory note which authorizes any
attorney to appear and confess judgment thereon in case the same be not paid at maturity valid. HELD:Warrants
of attorney to confess judgment are not authorized nor contemplated by our law. The provisions in notes
authorizing attorneys to appear and confess judgments against makers should not be recognized in this
jurisdiction by implication and should only be considered as valid when given express legislative sanction.Such
warrants of attorney are void as against public policy. They enlarge the field for fraud, the promissor bargains
away his right to a day in court, and it strikes down the right of appeal accorded by statute. It might be the
source of abuse and oppression, andmake the courts involuntary parties thereto

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People of the Phils. v. Gilbert Reyes Wagas, G.R. No.

157943, September 4, 2013

Issue: Whether or not Wagas is guilty beyond reasonable doubt

HILIPPINE NATIONAL BANK, plaintiff-appellee, vs.MANILA OIL REFINING & BY-

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