2.3 Metrobank Vs Junnel's Marketing

6/24/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 867

G.R. No. 235511. June 20, 2018.*

METROPOLITAN BANK AND TRUST COMPANY,
petitioner, vs. JUNNEL’S MARKETING CORPORATION,
PURIFICACION DELIZO, and BANK OF COMMERCE,
respondents.

G.R. No. 235565. June 20, 2018.*

BANK OF COMMERCE, petitioner, vs. JUNNEL’S MARKETING
CORPORATION, PURIFICACION DELIZO, and
METROPOLITAN BANK AND TRUST COMPANY, respondents.
Mercantile Law; Negotiable Instruments Law; Checks; The instant

case involves the unauthorized payment of valid checks, i.e., the
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* THIRD DIVISION.

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612 SUPREME COURT REPORTS ANNOTATED

Metropolitan Bank and Trust Company vs. Junnel’s Marketing
Corporation
payment of checks to persons other than the payee named therein or his
order. The subject checks herein are considered valid because they are
complete and bear genuine signatures.—The instant case involves the
unauthorized payment of valid checks, i.e., the payment of checks to persons
other than the payee named therein or his order. The subject checks herein
are considered valid because they are complete and bear genuine signatures.
Bank of America is the leading jurisprudence that illustrates the respective
liabilities of a collecting bank and a drawee bank in cases of unauthorized
payment of valid checks. Notably, the facts of Bank of America are parallel
to the facts of the present case. Both Bank of America and the present case
central.com.ph/sfsreader/session/00000172e1ef7c1ba674ae3c003600fb002c009e/t/?o=False 1/29
involved crossed checks payable to the order of a specified payee that

were deposited in a collecting bank under an account not belonging to
the payee or his indorsee but which, upon presentment, were subsequently
honored by the drawee bank.
Same; Same; Same; Bank of America held that, in cases involving the
unauthorized payment of valid checks, the drawee bank becomes liable to
the drawer for the amount of the checks but the drawee bank, in turn, can
seek reimbursement from the collecting bank.—Bank of America held that,
in cases involving the unauthorized payment of valid checks, the drawee
bank becomes liable to the drawer for the amount of the checks but the
drawee bank, in turn, can seek reimbursement from the collecting
bank. The rationale of this rule on sequence of recovery lies in the very
basis and nature of the liability of a drawee bank and a collecting bank in
said cases. As the recent case of BDO Unibank v. Lao explains: The liability
of the drawee bank is based on its contract with the drawer and its duty to
charge to the latter’s accounts only those payables authorized by him. A
drawee bank is under strict liability to pay the check only to the payee or to
the payee’s order. When the drawee bank pays a person other than the payee
named in the check, it does not comply with the terms of the check and
violates its duty to charge the drawer’s account only for properly payable
items. On the other hand, the liability of the collecting bank is anchored on
its guarantees as the last endorser of the check. Under Section 66 of the
Negotiable Instruments Law, an endorser warrants “that the instrument is
genuine and in all respects what it purports to be; that he has good title to it;
that all prior parties had capacity to contract; and that the instrument is at

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the time of his endorsement valid and subsisting.” It has been

repeatedly held that in check transactions, the collecting bank 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. If any of
the warranties made by the collecting bank turns out to be false, then the
drawee bank may recover from it up to the amount of the check.
Same; Same; Same; When a drawee bank pays a person other than the
payee named on the check, it essentially commits a breach of its obligation
and renders the payment it made unauthorized.—A drawee bank is
contractually obligated to follow the explicit instructions of its drawer-
clients when paying checks issued by them. The drawer’s instructions —

including the designation of the payee or to whom the check should be paid
— are reflected on the face and by the terms thereof. When a drawee bank
pays a person other than the payee named on the check, it essentially
commits a breach of its obligation and renders the payment it made
unauthorized. In such cases and under normal circumstances, the drawee
bank may be held liable to the drawer for the amount charged against the
latter’s account.
Same; Same; Same; Once an unauthorized payment on a check has
been made, the resulting liability of the drawee bank to the drawer for such
payment attaches even if the former had acted merely upon the guarantees
of a collecting bank.—The liability of the drawee bank to the drawer in
cases of unauthorized payment of checks has been regarded in jurisprudence
to be strict by nature. This means that once an unauthorized payment on a
check has been made, the resulting liability of the drawee bank to the
drawer for such payment attaches even if the former had acted merely upon
the guarantees of a collecting bank. Indeed, it is only when the unauthorized
payment of a check had been caused or was attended by the fault or
negligence of the drawer himself can the drawee bank be excused, whether
wholly or partially, from being held liable to the drawer for the said
payment.

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Same; Same; Same; Indorser; Collecting Bank; Words and Phrases; A

collecting or presenting bank — i.e., the bank that receives a check for
deposit and that presents the same to the drawee bank for payment — is an
indorser of such check. When a collecting bank presents a check to the
drawee bank for payment, the former thereby assumes the same warranties
assumed by an indorser of a negotiable instrument pursuant to Section 66 of
the Negotiable Instruments Law.—A collecting or presenting bank — i.e.,
the bank that receives a check for deposit and that presents the same to the
drawee bank for payment — is an indorser of such check. When a collecting
bank presents a check to the drawee bank for payment, the former thereby
assumes the same warranties assumed by an indorser of a negotiable
instrument pursuant to Section 66 of the Negotiable Instruments Law. These
warranties are: (1) that the instrument is genuine and in all respects what it
purports to be; (2) that the indorser has good title to it; (3) that all prior
parties had capacity to contract; and (4) that the instrument is, at the time of
the indorsement, valid and subsisting. If any of the foregoing warranties
turns out to be false, a collecting bank becomes liable to the drawee bank for
payments made under such false warranty. Here, it is clear that Bankcom
had assumed the warranties of an indorser when it forwarded the subject
checks to PCHC for presentment to Metrobank. By such presentment,
Bankcom effectively guaranteed to Metrobank that the subject checks had
been deposited with it to an account that has good title to the same. This
guaranty, however, is a complete falsity because the subject checks were, in
truth, deposited to an account that neither belongs to the payees of the
subject checks nor to their indorsees. Hence, as the subject checks were paid
under Bankcom’s false guaranty, the latter — as collecting bank — stands
liable to return the value of such checks to Metrobank.
Same; Same; Same; Same; Jurisprudence has it that a collecting
bank’s mere act of presenting a check for payment to the drawee bank is
itself an assertion, on the part of the former, that it had done its duty to
ascertain the validity of prior indorsements.—Jurisprudence has it that a
collecting bank’s mere act of presenting a check for payment to the drawee
bank is itself an assertion, on the part of the former, that it had done its duty
to ascertain the validity of prior indorsements. Hence, in Banco De Oro v.
Equitable Banking Corporation, 157 SCRA 188 (1998), we stated: Apropos
the matter of for-

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gery in endorsements, this Court has presently succinctly emphasized

that 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. This is laid
down in the case of PNB v. National City Bank. x x x More than such
pronouncement, however, Section 17 of the PCHC Rules and Regulations
expressly provides that checks “cleared through the PCHC” that do not bear
the mentioned guarantees shall nonetheless “be deemed guaranteed by the
[collecting bank] as to all prior endorsements and/or lack of endorsement”
such that “no drawee bank shall return any [check] received by it through
clearing by reason only of the absence or lack of such guarantee. . . as long
as there is evidence appearing on the [check] itself that the same had been
deposited with the [collecting bank] x x x.”
Same; Same; Same; Reimbursement; The sequence of recovery in cases
of unauthorized payment of checks, however, does not ordinarily stop with
the collecting bank. In the event that it is made to reimburse the drawee
bank, the collecting bank can seek similar reimbursement from the very
persons who caused the checks to be deposited and received the
unauthorized payments.—The sequence of recovery in cases of
unauthorized payment of checks, however, does not ordinarily stop with the
collecting bank. In the event that it is made to reimburse the drawee bank,
the collecting bank can seek similar reimbursement from the very persons
who caused the checks to be deposited and received the unauthorized
payments. Such persons are the ones ultimately liable for the unauthorized
payments and their liability rests on their absolute lack of valid title to the
checks that they were able to encash. Verily, Bankcom ought to have a right
of recourse against the persons that caused the anomalous deposit of the
subject checks and received payments therefor. Unfortunately — as none of
such persons were impleaded in the case before us — no pronouncement as
to this matter can be made in favor of Bankcom.
PETITIONS for review on certiorari of the decision and resolution

of the Court of Appeals.

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The facts are stated in the opinion of the Court.

Subido, Pagente, Certeza, Mendoza & Binay for Metrobank.
Rodrigo, Berenguer & Guno for Bank of Commerce.
Suzette A. Ner for respondent Junnel’s Marketing Corp.

VELASCO, JR., J.:

At bench are two appeals1 assailing the Decision2 dated 22
March 2017 and Resolution3 dated 19 October 2017 of the Court of
Appeals (CA) in C.A.-G.R. CV No. 102462. The first appeal was
filed by the Metropolitan Bank and Trust Company (Metrobank),
while the second by the Bank of Commerce (Bankcom).
The facts are as follows:
Respondent Junnel’s Marketing Corporation (JMC) is a domestic
corporation engaged in the business of selling wines and liquors. It
has a current account with Metrobank4 from which it draws checks
to pay its different suppliers. Among JMC’s suppliers are Jardine
Wines and Spirits (Jardine) and Premiere Wines (Premiere).
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1 Both appeals are made via a Petition for Review on Certiorari under Rule 45 of
the Rules of Court.
2 Rollo (G.R. No. 235565), pp. 39-52. The decision was penned by Associate
Justice Ramon M. Bato, Jr. for the Eleventh Division of the Court of Appeals, with
Associate Justices Manuel M. Barrios and Renato C. Francisco, concurring.
3 Id., at pp. 54-55. The resolution was penned by Associate Justice Ramon M.
Bato, Jr. for the Former Eleventh Division of the Court of Appeals, with Associate
Justices Manuel M. Barrios and Renato C. Francisco, concurring.
4 Specifically, Metrobank F.B. Harrison branch.

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In 2000, during an audit of its financial records,5 JMC discovered

an anomaly involving eleven (11) checks (subject checks) it had
issued to the orders of Jardine and Premiere on various dates
between October 1998 to May 1999. As it was, the subject checks
had already been charged against JMC’s current account but were,
for some reason, not covered by any official receipt from Jardine or
Premiere. The subject checks, which are all crossed checks and
amounting to P1,481,292.00 in total, are as follows:

Checks Payable to the Order of Jardine:

1. Check No. 3010048953 – issued on 11 October 1998 in the
amount of P181,440.00.
2. Check No. 3010048955 – issued on 24 October 1998 in the
3. Check No. 3010069098 – issued on 18 May 1999 in the
7. Check No. 3010048954 – issued on 29 December 1998 in the
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5 The idea of an audit was conceived by JMC after it received communication

from Jardine requesting for the settlement of an invoice that — per JMC’s records —
was supposedly covered by a check it (JMC) already issued (See Rollo [G.R. No.
235565], p. 40).

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Checks Payable to the Order of Premiere:

3. Check No. 3010049410 – issued on 18 April 1999 in the
4. Check No. 3010049150 – issued on 27 November 1998 in the

Examination of the dorsal portion of the subject checks revealed
that all had been deposited with Bankcom, Dau branch, under
Account No. 0015-32987-7.6 Upon inquiring with Jardine and
Premiere, however, JMC was able to confirm that neither of the said
suppliers owns Bankcom Account No. 0015-32987-7.
Meanwhile, on 30 April 2000, respondent Purificacion Delizo
(Delizo), a former accountant of JMC, executed a handwritten
letter7 addressed to one Nelvia Yusi, President of JMC. In the said
letter, Delizo confessed that, during her time as an accountant for
JMC, she stole several company checks drawn against JMC’s
current account. She professed that the said checks were never given
to the named payees but were forwarded by her to one Lita Bituin
(Bituin). Delizo further admitted that she, Bituin and an unknown
bank manager colluded to cause the deposit and encashing of the
stolen checks and shared in the proceeds thereof.
JMC surmised that the subject checks are among the checks purportedly
stolen by Delizo.
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6 As revealed in the dorsal portion of the checks.

7 Rollo (G.R. No. 235565), p. 61.

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On 28 January 2002, JMC filed before the Regional Trial Court

(RTC) of Pasay City a complaint for sum of money8 against Delizo,
Bankcom and Metrobank. The complaint was raffled to Branch 115
and was docketed as Civil Case No. 02-0193.
In its complaint, JMC alleged that the wrongful conversion of the
subject checks was caused by a combination of the “tortious and felonious”
scheme of Delizo and the “negligent and unlawful acts” of Bankcom and
Metrobank, to wit:9

1. Delizo, by her own admission, stole the company checks of
JMC. Among these checks, as confirmed by JMC’s audit, are
the subject checks.
2. After stealing the subject checks, Delizo and her accomplices,
Bituin and an unknown bank manager, caused the subject
checks to be deposited in Bankcom, Dau branch, under
Account No. 0015-32987-7. Bankcom, on the other hand,
negligently accepted the subject checks for deposit under the
said account despite the fact that they are crossed checks
payable to the orders of Jardine and Premiere and neither of
them owns the concerned account.
3. Thereafter, Bankcom presented the subject checks for payment
to Metrobank which, also in negligence, decided to honor the
said checks even though Bankcom Account No. 0015-32987-7
belongs to neither Jardine nor Premiere.

On the basis of the foregoing averments, JMC prayed that Delizo,
Bankcom and Metrobank be held solidarily liable in its favor for the
amount of the subject checks.
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8 Id., at pp. 56-60.

9 Id.

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Delizo, Bankcom and Metrobank filed their individual answers

denying liability.10 Incorporated in Metrobank’s answer, moreover,
is a cross-claim against Bankcom and Delizo wherein Metrobank
asks for the right to be reimbursed in the event it is ordered liable in
favor of JMC.11
On 28 May 2013, the RTC rendered a decision12 holding both
Bankcom and Metrobank liable to JMC — on a 2/3 to 1/3 ratio,
respectively — for the amount of subject checks plus interest as well
as attorney’s fees, but absolving Delizo from any liability.13 The trial
court, in the same decision, also dismissed Metrobank’s cross-claim
against Bankcom. The dispositive portion of the decision reads:14
WHEREFORE, judgment is rendered against defendants [Bankcom]

and [Metrobank] for the total value of the 11 checks. [Bankcom] and
Metrobank are adjudged solidarily liable to pay [JMC] at the ratios of
2/3 and 1/3, respectively:
1. The actual loss of P1,481,292 including 6% legal interest from
the filing of the complaint;
2. Plus 12% interest on the principal of P1,481,292 including 6%
interest on the principal, from the date this Decision becomes final
and executory;
3. The attorney’s fees of 15% of the total of number one and two
above;
4. Costs against [Bankcom] and Metrobank.
Metrobank’s cross-claim against [Bankcom] is DISMISSED, both
being negligent.
SO ORDERED.
_______________
10 Rollo (G.R. No. 235511), pp. 84-100.

11 Id., at pp. 93-94.
12 Rollo (G.R. No. 235565), pp. 220-234.
13 Id.
14 Id., at pp. 233-234.

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The RTC’s decision was hinged on the following findings:15

1. The subject checks were complete and not forged. They were,
however, stolen by unknown malefactors and were wrongfully
encashed due to the negligence of Bankcom and Metrobank.
2. Delizo’s complicity in the acquisition and negotiation of the
subject checks was not proven. No direct evidence linking
Delizo to the deeds was presented. Moreover, Delizo’s
supposed handwritten confession must be discredited for
being made under duress, intimidation and threat. It was
established during trial that Delizo was only forced by Yusi to
confess about the missing checks and to execute the
handwritten confession. Hence, Delizo must be absolved from
any liability.
3. The involvement of Bankcom and Metrobank on the wrongful
encashment of the subject checks, however, were clearly
established:
a. Bankcom accepted the subject checks for deposit under
Account No. 0015-32987-7, endorsed them and sent
them for clearance with the Philippine Clearing House
Corporation (PCHC). Bankcom did all these despite the
fact that the subject checks were all crossed checks and
that Account No. 0015-32987-7 neither belongs to
Jardine nor Premiere — the payees named in the subject
checks. In this regard, Bankcom was clearly negligent.
b. Metrobank, on the other hand, is also negligent for its
failure to scrutinize the subject checks before clearing
and honoring them. Had Metrobank done so, it would
have noticed that Bankcom’s ID band
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15 Id., at pp. 220-234.

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stamped at the back of the subject checks did not contain any
initials and are, therefore, defective. In this regard, Metrobank
was remiss in its duty to ensure that the subject checks are
paid only to the named payees.

In view of the comparative negligence of Bankcom and

Metrobank, they should be held liable to JMC, on a 2/3 to 1/3
ratio, respectively, for the amount of subject checks plus
interest.

Bankcom and Metrobank filed their respective appeals with the
CA.
On 22 March 2017, the CA rendered its decision16 affirming,
albeit with modification, the decision of the RTC. The disposition of
the decision reads:17

WHEREFORE, the Decision dated 28 May 2013 of the [RTC] in

Civil Case No. 02-0193 is AFFIRMED with MODIFICATION in
that: (a) the award of attorney’s fees is DELETED; and (b)
[Bankcom] and [Metrobank] are ordered to pay interest at the rate of
12% per annum on the principal of P1,481,292 including 6% interest
on the principal, from the date of the Decision (28 May 2013) until
June 2013 and 6% per annum from 1 July 2013 until full satisfaction.
The Decision is affirmed in all other respects.

SO ORDERED.

The CA agreed with the RTC that Bankcom and Metrobank
should be held liable to JMC, on a 2/3 to 1/3 ratio, respectively, for
the amount of subject checks. The appellate court, however, differed
with the trial court with respect to the
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16 Id., at pp. 39-52.

17 Id., at p. 52.

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basis of Metrobank’s liability. According to the CA, Metrobank’s negligence

consisted, not in its inability to notice that Bankcom’s ID band does not
contain any initials, but in its failure to ascertain that only four (4) out of the
11 subject checks were stamped by Bankcom with the express guarantees
“ALL PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENT
GUARANTEED” and “NONNEGOTIABLE” as required by Section 17 of

the PCHC Rules and Regulations.18
The CA also sustained the ruling of the RTC anent the absolution
of Delizo and the dismissal of Metrobank’s cross-claim.
Finally, the CA modified the rate of interest due on the amount of
the subject checks that was fixed by the RTC and also deleted the
RTC’s award of attorney’s fees in favor of JMC.19
Bankcom and Metrobank filed their motions for reconsideration,
but the CA remained steadfast. Hence the present consolidated
appeals.
Both Metrobank and Bankcom pray for absolution but they differ
in the arguments they raise in support of their prayer:20
1. Metrobank posits that it should be absolved because it had
exercised absolute diligence in verifying the genuineness of
the subject checks. Metrobank argues that the RTC erred in
holding it negligent on its failure to ascertain that only four (4)
out of the 11 subject checks were stamped with Bankcom’s
express guarantees. Metrobank claims that while Section 17 of
the PCHC Rules and Regulations does require all checks
cleared through the PCHC to contain the collecting
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18 Id., at pp. 39-52.

19 Id.
20 See Rollo (G.R. No. 235511), pp. 10-30; Rollo (G.R. No. 235565), pp. 10-31.

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bank’s express guarantees, the same provision precludes it, as

a drawee bank, to return any checks presented to it for
payment just because the same does not contain such express
guarantees “for as long as there is evidence appearing on the
cheque itself that the same had been deposited with the
[collecting] [b]ank, e.g., PCHC machine sprayed tracer/ID
band.” In this regard, Metrobank points out that all the subject
checks had been stamped in their dorsal portion with PCHC’s
tracer ID for Bankcom.
Metrobank submits that, under the circumstances, it should be
Bankcom — as the last indorser of the subject checks — that
should bear the loss and be held solely liable to JMC.
2. Bankcom, on the other hand, argues that it should be absolved

because it was never a party to the wrongful encashment of
the subject checks. It claims that Account No. 0015-32987-7
does not exist in its system and, therefore, denies that the
subject checks were ever deposited with it.
Bankcom proffers the view that it is JMC that should bear the
loss of the subject checks. Bankcom argues that it was JMC’s
faulty accounting procedures which led to the subject checks
being stolen and misappropriated.

Our Ruling

The consolidated appeals must be denied as neither Metrobank
nor Bankcom are entitled to absolution.
Be that as it may, there is a need to modify the decision of the CA
and the RTC with respect to the manner by which Metrobank and
Bankcom are held liable under the circumstances. Instead of holding
both Metrobank and Bankcom liable to JMC in accordance with a
fixed ratio, we find that

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the two banks should have been ordered sequentially liable for the
entire amount of the subject checks pursuant to the seminal case of
Bank of America v. Associated Citizens Bank.21
Accordingly, we rule: (1) Metrobank liable to return to JMC the
entire amount of the subject checks plus interest and (2) Bankcom
liable to reimburse Metrobank the same amount plus interest.

The Rule on Sequence
of Recovery in Cases of
Unauthorized Payment
of Checks; The Case of
Bank of America

The instant case involves the unauthorized payment of valid
checks, i.e., the payment of checks to persons other than the payee
named therein or his order. The subject checks herein are considered
valid because they are complete and bear genuine signatures.
Bank of America is the leading jurisprudence that illustrates the
respective liabilities of a collecting bank and a drawee bank in cases
of unauthorized payment of valid checks. Notably, the facts of Bank
of America are parallel to the facts of the present case. Both Bank of

America and the present case involved crossed checks payable to
the order of a specified payee that were deposited in a collecting
bank under an account not belonging to the payee or his
indorsee but which, upon presentment, were subsequently honored
by the drawee bank, thus:
1. Bank of America involved four (4) crossed checks drawn
against the Bank of America (the drawee bank) and made
payable to the order of a Miller Offset
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21 G.R. Nos. 141001 & 141018, May 21, 2009, 588 SCRA 51.

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Press, Inc. (the designated payee). These checks were then

deposited to the Associated Citizens Bank (the collecting bank) under
a joint bank account of one Ching Uy Seng and a certain Uy Chung
Guan Seng (an account that does not belong to the payee or its
indorsee). The checks were then presented to the Bank of America,
which honored it, resulting to loss on the part of BA Finance
Corporation (the drawer.)
2. The instant case involves eleven (11) crossed checks that were
drawn against Metrobank (the drawee bank) and made
payable to the orders of Jardine and Premiere (the designated
payees). These checks were deposited with Bankcom (the
collecting bank) under Account No. 0015-32987-7 (an
account that does not belong to either payee or their
indorsees). The checks were then presented to Metrobank,
which honored it, resulting to loss on the part of JMC (the
drawer.)

Bank of America held that, in cases involving the unauthorized
payment of valid checks, the drawee bank becomes liable to the
drawer for the amount of the checks but the drawee bank, in
turn, can seek reimbursement from the collecting bank. The
rationale of this rule on sequence of recovery lies in the very basis
and nature of the liability of a drawee bank and a collecting bank in
said cases. As the recent case of BDO Unibank, Inc. v. Lao22
explains:
The liability of the drawee bank is based on its contract with the
drawer and its duty to charge to the latter’s accounts only those
payables authorized by him. A drawee bank is under strict liability to
pay the check only to the payee or to the payee’s order. When the
drawee bank pays a person other than the payee named in the check,
_______________
22 G.R. No. 227005, June 19, 2017, 827 SCRA 481.

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it does not comply with the terms of the check and violates its duty to
charge the drawer’s account only for properly payable items.
On the other hand, the liability of the collecting bank is anchored on
its guarantees as the last endorser of the check. Under Section 66 of
the Negotiable Instruments Law, an endorser warrants “that the
instrument is genuine and in all respects what it purports to be; that
he has good title to it; that all prior parties had capacity to contract;
and that the instrument is at the time of his endorsement valid and
subsisting.”
It has been repeatedly held that in check transactions, the collecting
bank 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. If any of the warranties made by
the collecting bank turns out to be false, then the drawee bank may
recover from it up to the amount of the check. (Citations omitted)

This rule should have been applied to the case at bench.

Metrobank is Liable
to JMC

Metrobank, as drawee bank, is liable to return to JMC the amount
of the subject checks.
A drawee bank is contractually obligated to follow the explicit
instructions of its drawer-clients when paying checks issued by
them.23 The drawer’s instructions — including the designation of the
payee or to whom the check should be paid
_______________
23 Bank of America, NT & SA v. Associated Citizens Bank, supra note 21.

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— are reflected on the face and by the terms thereof.24 When a

drawee bank pays a person other than the payee named on the check,
it essentially commits a breach of its obligation and renders the
payment it made unauthorized.25 In such cases and under normal
circumstances, the drawee bank may be held liable to the drawer for
the amount charged against the latter’s account.26
The liability of the drawee bank to the drawer in cases of
unauthorized payment of checks has been regarded in jurisprudence
to be strict by nature.27 This means that once an unauthorized
payment on a check has been made, the resulting liability of the
drawee bank to the drawer for such payment attaches even if the
former had acted merely upon the guarantees of a collecting
bank.28 Indeed, it is only when the unauthorized payment of a check
had been caused or was attended by the fault or negligence of the
drawer himself can the drawee bank be excused, whether wholly or
partially, from being held liable to the drawer for the said payment.29
In the present case, it is apparent that Metrobank had breached
JMC’s instructions when it paid the value of the subject checks to
Bankcom for the benefit of a certain Account No. 0015-32987-7.
The payment to Account No. 0015-32987-7 was unauthorized as it
was established that the said account does not belong to Jardine or
Premiere, the payees of the subject checks, or to their indorsees. In
addition, causal or
_______________
24 Id.
25 Id.
26 Id.
27 See Bank of America, NT & SA v. Associated Citizens Bank, id.; and
Associated Bank v. Court of Appeals, G.R. Nos. 107382 and 107612, January 31,
1996, 252 SCRA 620.
28 See Bank of America, NT & SA v. Associated Citizens Bank, id.
29 See Gempesaw v. Court of Appeals, G.R. No. 92244, February 9, 1993, 218
SCRA 682; and Bank of America NT & SA v. Philippine Racing Club, G.R. No.
150228, July 30, 2009, 594 SCRA 301.

629
VOL. 867, JUNE 20, 2018 629

Corporation
concurring negligence on the part of JMC had not been proven.

Under such circumstances, Metrobank is clearly liable to return to
JMC the amount of the subject checks.
Metrobank’s insistence that it should be absolved for it merely
complied with Section 17 of the PCHC Rules and Regulations and
thereby only relied upon the concomitant guarantees of Bankcom
when it paid the subject checks, cannot stand insofar as JMC is
concerned. In Bank of America, we rejected a similar argument
interposed by a drawee bank (Bank of America) precisely on the
ground of the latter’s strict liability to its drawer (BA-Finance),
viz.:30
Bank of America denies liability for paying the amount of the four
checks issued by BA-Finance to Miller, alleging that it (Bank of
America) relied on the stamps made by Associated Bank stating
that all prior endorsement and/or lack of endorsement
guaranteed, through which Associated Bank assumed the liability
of a general endorser under Section 66 of the Negotiable Instruments
Law. Moreover, Bank of America contends that the proximate
cause of BA-Finances injury, if any, is the gross negligence of
Associated Bank which allowed Ching Uy Seng (Robert Ching) to
deposit the four checks issued to Miller in the personal joint bank
account of Ching Uy Seng and Uy Chung Guan Seng.
We are not convinced.
The bank on which a check is drawn, known as the drawee bank,
is under strict liability, based on the contract between the bank
and its customer (drawer), to pay the check only to the payee or
the payee’s order. x x x.
x x x x
_______________
30 Bank of America, NT & SA v. Associated Citizens Bank, supra note 21.

630


Corporation
In this case, the four checks were drawn by BA-Finance and made
payable to the Order of Miller Offset Press, Inc. The checks were
also crossed and issued For Payee’s Account Only. Clearly, the
drawer intended the check for deposit only by Miller Offset Press,
Inc. in the latter’s bank account. Thus, when a person other than
Miller, i.e., Ching Uy Seng, a.k.a. Robert Ching, presented and
deposited the checks in his own personal account (Ching Uy
Sengs joint account with Uy Chung Guan Seng), and the drawee
bank, Bank of America, paid the value of the checks and charged
BA-Finances account therefor, the drawee Bank of America is
deemed to have violated the instructions of the drawer, and
therefore, is liable for the amount charged to the drawer’s
account. (Citations omitted. Emphasis supplied)

Accordingly, we find Metrobank liable to return to JMC the
amount of the subject checks.

Bankcom is Liable
to Metrobank

While Metrobank’s reliance upon the guarantees of Bankcom
does not excuse it from being liable to JMC, such reliance does
enable Metrobank to seek reimbursement from Bankcom — the
collecting bank.
A collecting or presenting bank — i.e., the bank that receives a
check for deposit and that presents the same to the drawee bank for
payment — is an indorser of such check.31 When a collecting bank
presents a check to the drawee bank for payment, the former thereby
assumes the same warranties assumed by an indorser of a negotiable
instrument pursuant to Section 66 of the Negotiable Instruments
Law. These warranties are: (1) that the instrument is genuine and in
all
_______________
31 Associated Bank v. Court of Appeals, supra note 27.

631
VOL. 867, JUNE 20, 2018 631

Corporation
respects what it purports to be; (2) that the indorser has good title to
it; (3) that all prior parties had capacity to contract; and (4) that the
instrument is, at the time of the indorsement, valid and
subsisting.32 If any of the foregoing warranties turns out to be false,
a collecting bank becomes liable to the drawee bank for payments
made under such false warranty.
Here, it is clear that Bankcom had assumed the warranties of an indorser
when it forwarded the subject checks to PCHC for presentment to
Metrobank. By such presentment, Bankcom effectively guaranteed to
Metrobank that the subject checks had been deposited with it to an account
that has good title to the same. This guaranty, however, is a complete falsity
because the subject checks were, in truth, deposited to an account that
neither belongs to the payees of the subject checks nor to their indorsees.
Hence, as the subject checks were paid under Bankcom’s false guaranty, the
latter — as collecting bank — stands liable to return the value of such
checks to Metrobank.
Bankcom’s assertion that it should be absolved as the subject
checks were allegedly never deposited with it must fail. Such
allegation is readily disproved by the fact that the subject checks all
contained, at their dorsal side, a stamp bearing Bankcom’s tracer/ID
band.33 Under the PCHC Rules and Regulations, the stamped
tracer/ID band of Bankcom signifies that the checks had been
deposited with it and that Bankcom indorsed the said checks and
sent them to PCHC.34 As observed by the RTC:35
Record shows that the pieces of evidence presented by [JMC],

particularly the 11 subject checks were endorsed and were allowed to
be encashed by [Bankcom], as indi-
_______________
32 Section 66 of the NEGOTIABLE INSTRUMENTS LAW.

33 Rollo (G.R. No. 235565), p. 230.
34 See Section 17 of PCHC Rules and Regulations.
35 Rollo (G.R. No. 235565), p. 230.

632

Corporation
cated in the dorsal portion of the checks where [PCHC] machine’s

tracer, or the ID band of [Bankcom] was stamped. And this stamped
tracer ID band of [Bankcom] signifies that [Bankcom] certified that
the checks were deposited to [Bankcom] and [Bankcom] endorsed
these checks and sent them to PCHC.

Neither do we find the liability of Bankcom to be affected by the
fact that only four (4) out of the eleven (11) subject checks were
actually stamped with the guarantees “ALL PRIOR
ENDORSEMENTS AND/OR LACK OF ENDORSEMENT
GUARANTEED” and “NONNEGOTIABLE” as required under
Section 17 of the PCHC Rules and Regulations. The stamping of
such guarantees is not necessary to fix the liability of Bankcom as an
indorser for all the subject checks.
To begin with, jurisprudence has it that a collecting bank’s mere
act of presenting a check for payment to the drawee bank is itself an
assertion, on the part of the former, that it had done its duty to
ascertain the validity of prior indorsements. Hence, in Banco de Oro
v. Equitable Banking Corporation,36 we stated:
Apropos the matter of forgery in endorsements, this Court has

presently succinctly emphasized that 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. This is laid down
in the case of PNB v. National City Bank. (Citations omitted.
Emphasis supplied)
More than such pronouncement, however, Section 17 of the

PCHC Rules and Regulations expressly provides that checks
_______________
36 No. L-74917, January 20, 1998, 157 SCRA 188.

633
VOL. 867, JUNE 20, 2018 633

Corporation
“cleared through the PCHC” that do not bear the mentioned

guarantees shall nonetheless “be deemed guaranteed by the
[collecting bank] as to all prior endorsements and/or lack of

endorsement” such that “no drawee bank shall return any [check]
received by it through clearing by reason only of the absence or lack
of such guarantee. . . as long as there is evidence appearing on the
[check] itself that the same had been deposited with the [collecting
bank] x x x.” The full provision reads:

Sec. 17. Bank Guarantee.—All checks cleared through the PCHC

shall bear the guarantee affixed thereto by the Presenting
Bank/Branch which shall read as follows:

Cleared thru the Philippine Clearing House Corporation all prior
endorsements and/or lack of endorsement guaranteed NAME OF
BANK/BRANCH BRSTN (Date of Clearing).

Checks to which said guarantee has not been affixed shall,
nevertheless, be deemed guaranteed by the Presenting Bank as to
all prior endorsement and/or lack of endorsement.

No drawee bank shall return any cheque received by it through
clearing by reason only of the absence or lack of such guarantee
stamped at the back of said cheque, for as long as there is
evidence appearing on the cheque itself that the same had been
deposited wit “tracer/ID band.” (Emphasis supplied)

In the present case, all the subject checks have been transmitted
by Bankcom to the PCHC for clearing and presentment to
Metrobank. As earlier adverted to, all of the said checks also bear
the PCHC machine sprayed tracer/ID band of Bankcom. Such
circumstances, pursuant to prevailing banking practices as laid out
under the PCHC Rules and Regulations, are enough to fix the
liability of Bankcom as an indorser of the subject

634

Corporation
checks even sans the stamp “ALL PRIOR ENDORSEMENTS

AND/OR LACK OF ENDORSEMENT GUARANTEED” and
“NONNEGOTIABLE.” As the stamping of such guarantees are not
required before the warranties of an indorser could attach against
Bankcom, we find the latter liable to reimburse Metrobank the value

of all the subject checks.

Recourse of Bankcom

The sequence of recovery in cases of unauthorized payment of
checks, however, does not ordinarily stop with the collecting bank.
In the event that it is made to reimburse the drawee bank, the
collecting bank can seek similar reimbursement from the very
persons who caused the checks to be deposited and received the
unauthorized payments.37 Such persons are the ones ultimately liable
for the unauthorized payments and their liability rests on their
absolute lack of valid title to the checks that they were able to
encash.
Verily, Bankcom ought to have a right of recourse against the
persons that caused the anomalous deposit of the subject checks and
received payments therefor. Unfortunately — as none of such
persons were impleaded in the case before us — no pronouncement
as to this matter can be made in favor of Bankcom.
At this juncture, we express our concurrence to the absolution of
Delizo. The RTC and the CA were uniform in their finding that the
participation of Delizo — as the supposed thief of the subject checks
— had not been established in this case. We reviewed the evidence
on hand and saw no cogent reason to deviate from this factual
finding.
_______________
37 See Bank of America, NT & SA v. Associated Citizens Bank, supra note 21.

635
VOL. 867, JUNE 20, 2018 635

Corporation
Doctrine of Comparative
Negligence Does Not Ap-
ply to the Instant Case

Instead of applying the rule on the sequence of recovery to the
case at bench, the RTC and the CA held both Metrobank and
Bankcom liable to JMC in accordance with a fixed ratio. In so doing,
the RTC and the CA seemingly relied on the doctrine of comparative
negligence38 as applied in the cases of Bank of the Philippine Islands
39
v. Court of Appeals and Allied Banking Corporation v. Lim Sio
Wan.40 In both cases, the Court held the drawee bank and collecting
bank liable for the wrongful encashment of checks under a 60% and
40% ratio.
It must be emphasized, however, that the factual contexts of Bank
of the Philippine Islands and Allied Banking Corporation are starkly
different from the instant case:
1. Bank of the Philippine Islands involved two (2) cashier’s
checks issued by the Bank of the Philippine Islands (BPI) in
favor of a certain Eligia Fernando (Eligia). The checks are
supposed to represent the proceeds of a pre-terminated money
market placement of Eligia with BPI. BPI issued the checks
upon the mere phone request of a person who introduced
herself as Eligia. The checks were subsequently de-
_______________
38 The doctrine of comparative negligence is a legal principle that limits the

extent of reparation that may be recovered by a person who is guilty of contributory
negligence. Under this doctrine, a person who is guilty of contributory negligence,
though allowed to seek recourse against the principal tortfeasor, must nonetheless
bear a portion of the losses proportionate to the amount of his negligence. The
application of this doctrine is sanctioned in our jurisdiction by the second sentence of
Article 2179 of the Civil Code.
39 G.R. No. 102383, November 26, 1992, 216 SCRA 51.
40 G.R. No. 133179, March 27, 2008, 549 SCRA 504.

636

Corporation
posited with the China Banking Corporation (CBC) under an account

that was opened by a person who identified herself as Eligia. This
person thereafter encashed the checks.
It was later established, however, that Eligia never requested
the pre-termination of her money market placement nor
opened an account with the CBC. It was an impostor who did
so.
2. Allied Banking Corporation, on the other hand, involved a
manager’s check issued by the Allied Banking Corporation
(ABC) in favor of a certain Lim Sio Wan (Lim). The check is
supposed to represent the proceeds of a pre-terminated money
market placement of Lim with ABC. ABC issued the checks
upon the mere phone request of a person who introduced

herself as Lim. The checks, now bearing an indorsement of
Lim, were then deposited with the Metrobank under the
account of a certain Filipinas Cement Corporation. The checks
were eventually encashed.
It was later established, however, that Lim never requested the
pre-termination of his money market placement and that his
indorsement in the check was forged.

A glaring peculiarity in the cases of Bank of the Philippine
Islands and Allied Banking Corporation is that the drawee bank —
which is essentially also the drawer in the scenario — is not only
guilty of wrongfully paying a check but also of negligence in
issuing such check. Indeed, this is the very reason why the drawee
bank in the two cases were adjudged co-liable with the collecting
bank under a fixed ratio and the former was not allowed to claim
reimbursement from the latter.41 The drawee bank cannot claim that
its participa-
_______________
41 Id.

637
VOL. 867, JUNE 20, 2018 637

Corporation
tion in the wrongful payment of a check was merely limited to its reliance
on the guarantees of the collecting bank. In other words, the drawee bank
was held liable in its own right because it was the one that negligently
issued the checks in the first place.
That, however, is clearly not the situation in the case at bench.
Here, no negligence similar to that committed by the drawee banks
in Bank of the Philippine Islands and Allied Banking Corporation —
whether in type or in magnitude — can be attributed to Metrobank.
Metrobank, though guilty of the unauthorized check payments, only
acted upon the guarantees deemed made by Bankcom under
prevailing banking practices. While Metrobank’s reliance upon the
guarantees of Bankcom did not excuse it from being answerable to
JMC, such reliance does enable Metrobank to seek reimbursement
from Bankcom on the ground of the breach in the latter’s warranties
as a collecting bank. Under such circumstances, we cannot deny
Metrobank’s right to seek reimbursement from Bankcom.
Hence, given the differences in the factual milieu between this

case on one hand and the cases of Bank of the Philippine Islands and
Allied Banking Corporation on the other, we find that the doctrine of
comparative negligence cannot be applied so as to apportion the
respective liabilities of Metrobank and Bankcom. The liabilities of
Metrobank and Bankcom, as already discussed in length, must be
governed by the rule on sequential recovery pursuant to Bank of
America.

Interests

As a final matter, we also saw it fit to impose legal interest upon
the respective principal liabilities of Metrobank and Bankcom.

638

Corporation
In Nacar v. Gallery Frames,42 we laid out the following

guidelines for the imposition and computation of legal interests:

To recapitulate and for future guidance, the guidelines laid
down in the case of Eastern Shipping Lines are accordingly
modified to embody BSP MB Circular No. 799, as follows:
I. When an obligation, regardless of its source, i.e., law,
contracts, quasi-contracts, delicts or quasi-delicts is breached,
the contravener can be held liable for damages. The provisions
under Title XVIII on “Damages” of the Civil Code govern in
determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the
concept of actual and compensatory damages, the rate of
interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in
the payment of a sum of money, i.e., a loan or
forbearance of money, the interest due should be
that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be
6% per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or

forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum.
No interest, however, shall be adjudged on unliquidated
claims or damages, except
_______________
42 G.R. No. 189871, August 13, 2013, 703 SCRA 439.

639
VOL. 867, JUNE 20, 2018 639

Corporation
when or until the demand can be established with reasonable

certainty. Accordingly, where the demand is established
with reasonable certainty, the interest shall begin to run
from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code), but when such
certainty cannot be so reasonably established at the time the
demand is made, the interest shall begin to run only from the
date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been
reasonably ascertained). The actual base for the computation
of legal interest shall, in any case, be on the amount finally
adjudged.
3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal
interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 6% per annum from
such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a
forbearance of credit.

And, in addition to the above, judgments that have become
final and executory prior to July 1, 2013, shall not be
disturbed and shall continue to be implemented applying the
rate of interest fixed therein. (Citations omitted. Emphasis
supplied)

Applying the foregoing guidelines to the case at bench, we fix the
legal interests due against Metrobank and Bankcom thusly:

1. The liability of Metrobank to JMC consists in returning the
amount it charged against JMC’s current account. Current
accounts, like all bank deposits, are considered under the law
as loans.43 Normally, current accounts are interest-bearing by
express con-
_______________
43 Article 1980 of the CIVIL CODE OF THE PHILIPPINES.

640

Corporation
tract. However, the actual interest rate, if any, for the current
account opened by JMC with Metrobank was not given in
evidence.44
Under these circumstances, we find it proper to subject
Metrobank’s principal liability to JMC to a legal interest of
6% per annum from 28 January 2002 until full
satisfaction.45 The date 28 January 2002 is the date when JMC
filed its complaint with the RTC.
2. The liability of Bankcom to Metrobank, on the other hand, consists in
returning the amount it was paid by
_______________
44 Confronted with a similar scenario, the case of Associated Bank v. Court of

Appeals, G.R. Nos. 107382 and 107612 ruled that the drawee bank should just be
subjected to a 6% legal interest. The pertinent portion of the ruling reads:
The trial court made PNB and Associated Bank liable with legal interest
from March 20, 1981, the date of extrajudicial demand made by the Province
of Tarlac on PNB. The payments to be made in this case stem from the
deposits of the Province of Tarlac in its current account with the PNB. Bank
deposits are considered under the law as loans. Central Bank Circular No. 416
prescribes a twelve percent (12%) interest per annum for loans, forebearance
of money, goods or credits in the absence of express stipulation. Normally,
current accounts are likewise interest-bearing, by express contract, thus
excluding them from the coverage of CB Circular No. 416. In this case,
however, the actual interest rate, if any, for the current account opened
by the Province of Tarlac with PNB was not given in evidence. Hence, the
Court deems it wise to affirm the trial court’s use of the legal interest
rate, or six percent (6%) per annum. The interest rate shall be computed
from the date of default, or the date of judicial or extrajudicial demand.
(Emphasis supplied)
45 See Associated Bank v. Court of Appeals, supra note 27.

641
VOL. 867, JUNE 20, 2018 641

Corporation
Metrobank. This stems from a breach by Bankcom of its

warranties as a collecting bank.
Accordingly, we find it proper to subject Bankcom’s principal
liability to Metrobank to a legal interest of 6% per annum
from 5 March 2003 until full satisfaction.46 The date 5 March
2003 is the date when Metrobank filed its answer with cross-
claim against Bankcom.

WHEREFORE, the consolidated appeals are DENIED. The
Decision dated 22 March 2017 and Resolution dated 19 October
2017 of the Court of Appeals (CA) in C.A.-G.R. CV No. 102462 are
herein MODIFIED with respect to the individual liabilities of the
Metropolitan Bank and Trust Company and the Bank of Commerce,
as follows:
1. The Metropolitan Bank and Trust Company is adjudged liable
to pay respondent Junnel’s Marketing Corporation the
following:
a. The principal amount of P1,481,292.00, and
b. Interest on the said principal at the rate of
6% per annum from 28 January 2002 until full
satisfaction.
2. The Bank of Commerce is adjudged liable to pay the
Metropolitan Bank and Trust Company the following:
a. The principal amount of P1,481,292.00, and
b. Interest on the said principal at the rate of
6% per annum from 5 March 2003 until full
satisfaction.
Other findings and pronouncements of the Court of Appeals in its
Decision dated 22 March 2017 and Resolution dated 19 October
2017 in C.A.-G.R. CV No. 102462 that are not contrary to this
Decision are AFFIRMED.
_______________
46 Id.

642

Corporation
Costs against the Metropolitan Bank and Trust Company and the
Bank of Commerce.
SO ORDERED.
Leonen, Martires and Gesmundo, JJ., concur.

Bersamin, J., On Leave.
Petitions denied, judgment and resolution modified.
Notes.—The liability of the collecting bank is anchored on its

guarantees as the last endorser of the check. Under Section 66 of the
Negotiable Instruments Law, an endorser war-rants “that the
instrument is genuine and in all respects what it purports to be; that
he has good title to it; that all prior parties had capacity to contract;
and that the instrument is at the time of his endorsement valid and
subsisting.” (BDO Unibank, Inc. vs. Lao, 827 SCRA 481 [2017])
A check therefore is subject to prescription of actions upon a
written contract. (Evangelista vs. Screenex, Inc., 845 SCRA 131
[2017])

——o0o——
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6/24/2020 SUPREME COURT REPORTS ANNOTATED VOLUME 867

G.R. No. 235511. June 20, 2018.*

Mercantile Law; Negotiable Instruments Law; Checks; The instant

612 SUPREME COURT REPORTS ANNOTATED

involved crossed checks payable to the order of a speciﬁed payee that

VOL. 867, JUNE 20, 2018 613

the time of his endorsement valid and subsisting.” It has been

clients when paying checks issued by them. The drawer’s instructions —

614 SUPREME COURT REPORTS ANNOTATED

Same; Same; Same; Indorser; Collecting Bank; Words and Phrases; A

VOL. 867, JUNE 20, 2018 615

gery in endorsements, this Court has presently succinctly emphasized

PETITIONS for review on certiorari of the decision and resolution

616 SUPREME COURT REPORTS ANNOTATED

The facts are stated in the opinion of the Court.

VOL. 867, JUNE 20, 2018 617

In 2000, during an audit of its ﬁnancial records,5 JMC discovered

5 The idea of an audit was conceived by JMC after it received communication

618 SUPREME COURT REPORTS ANNOTATED

Checks Payable to the Order of Premiere:

6 As revealed in the dorsal portion of the checks.

VOL. 867, JUNE 20, 2018 619

On 28 January 2002, JMC ﬁled before the Regional Trial Court

8 Id., at pp. 56-60.

620 SUPREME COURT REPORTS ANNOTATED

Metropolitan Bank and Trust Company vs. Junnel’s Marketing

Delizo, Bankcom and Metrobank ﬁled their individual answers

WHEREFORE, judgment is rendered against defendants [Bankcom]

10 Rollo (G.R. No. 235511), pp. 84-100.

VOL. 867, JUNE 20, 2018 621

The RTC’s decision was hinged on the following ﬁndings:15

15 Id., at pp. 220-234.

622 SUPREME COURT REPORTS ANNOTATED

In view of the comparative negligence of Bankcom and

WHEREFORE, the Decision dated 28 May 2013 of the [RTC] in

16 Id., at pp. 39-52.

VOL. 867, JUNE 20, 2018 623

basis of Metrobank’s liability. According to the CA, Metrobank’s negligence

GUARANTEED” and “NONNEGOTIABLE” as required by Section 17 of

18 Id., at pp. 39-52.

624 SUPREME COURT REPORTS ANNOTATED

bank’s express guarantees, the same provision precludes it, as

2. Bankcom, on the other hand, argues that it should be absolved

VOL. 867, JUNE 20, 2018 625

of America are parallel to the facts of the present case. Both Bank of

626 SUPREME COURT REPORTS ANNOTATED

Press, Inc. (the designated payee). These checks were then

22 G.R. No. 227005, June 19, 2017, 827 SCRA 481.

VOL. 867, JUNE 20, 2018 627

23 Bank of America, NT & SA v. Associated Citizens Bank, supra note 21.

628 SUPREME COURT REPORTS ANNOTATED

— are reﬂected on the face and by the terms thereof.24 When a

VOL. 867, JUNE 20, 2018 629

concurring negligence on the part of JMC had not been proven.

30 Bank of America, NT & SA v. Associated Citizens Bank, supra note 21.

630 SUPREME COURT REPORTS ANNOTATED

Metropolitan Bank and Trust Company vs. Junnel’s Marketing

31 Associated Bank v. Court of Appeals, supra note 27.

VOL. 867, JUNE 20, 2018 631