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    PNB V Sps. Rodriguez

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    Gieldan Bulalacao
    This case involves fraudulent checks issued by PEMSLA to its members that were then rediscounted by Spouses Rodriguez in exchange for their personal checks. PEMSLA deposited the Rodriguez checks into its account at PNB without the required endorsements. PNB closed PEMSLA's account but honored the Rodriguez checks. The court ruled the checks were presumed to be order instruments as PNB did not prove Spouses Rodriguez intended for the payees to have no interest. As such, PNB was negligent in depositing the checks without proper endorsement and liable for reimbursing the amount charged to the Rodriguez account.

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    PNB V Sps. Rodriguez

    Uploaded by

    Gieldan Bulalacao
    34 views2 pages
    This case involves fraudulent checks issued by PEMSLA to its members that were then rediscounted by Spouses Rodriguez in exchange for their personal checks. PEMSLA deposited the Rodriguez checks into its account at PNB without the required endorsements. PNB closed PEMSLA's account but honored the Rodriguez checks. The court ruled the checks were presumed to be order instruments as PNB did not prove Spouses Rodriguez intended for the payees to have no interest. As such, PNB was negligent in depositing the checks without proper endorsement and liable for reimbursing the amount charged to the Rodriguez account.

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    PNB v Sps. Rodriguez

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    This case involves fraudulent checks issued by PEMSLA to its members that were then rediscounted by Spouses Rodriguez in exchange for their personal checks. PEMSLA deposited the Rodriguez checks into its account at PNB without the required endorsements. PNB closed PEMSLA's account but honored the Rodriguez checks. The court ruled the checks were presumed to be order instruments as PNB did not prove Spouses Rodriguez intended for the payees to have no interest. As such, PNB was negligent in depositing the checks without proper endorsement and liable for reimbursing the amount charged to the Rodriguez account.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    34 views2 pages

    PNB V Sps. Rodriguez

    Uploaded by

    Gieldan Bulalacao
    This case involves fraudulent checks issued by PEMSLA to its members that were then rediscounted by Spouses Rodriguez in exchange for their personal checks. PEMSLA deposited the Rodriguez checks into its account at PNB without the required endorsements. PNB closed PEMSLA's account but honored the Rodriguez checks. The court ruled the checks were presumed to be order instruments as PNB did not prove Spouses Rodriguez intended for the payees to have no interest. As such, PNB was negligent in depositing the checks without proper endorsement and liable for reimbursing the amount charged to the Rodriguez account.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    PNB v. Sps.

    Rodriguez
    Facts:
    Spouses Rodriguez were clients of PNB, maintaining savings and checking accounts on
    the said bank. They were engaged in the informal lending business, having a discounting
    arrangement with the PEMSLA. PEMSLA regularly granted loans to its members. Sps.
    Rodriguez would rediscount the postdated checks issued to members whenever the association
    was short of funds, and in turn, they 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. But some PEMSLA officers took out loans in the
    names of unknowing members without the knowledge or consent of the latter by forging the
    indorsement of the named payees in the checks. PEMSLA checks issued for these loans were
    then given to Sps. Rodriguez for rediscounting. In return, Sps. Rodriguez issued to PEMSLA
    their personal checks as rediscounted checks.
    The rediscounted checks from Sps. Rodriguez were deposited by PEMSLA to its
    savings account without any indorsement from the named payees by an irregular procedure
    made by the treasurer of PEMSLA and a bank teller in PNB. PNB eventually found out about
    these fraudulent acts. They closed the current account of PEMSLA. As a result, the PEMSLA
    deposited by Sps. Rodriguez were dishonored. The Rodriguez checks, however, were
    deposited to the PEMSLA savings account.
    Sps. Rodriguez filed a civil complaint against PEMSLA, MCP and PNB. RTC rendered
    judgement in favor of Sps. Rodriguez, holding that PNB is liable to return the value of the
    checks. CA reversed RTC’s decision and later reversed its own decision, holding that PNB is
    liable to the value of the checks.
    Issue:
    Whether the subject checks are payable to order or to bearer and who bears the loss.
    Ruling:
    The subject checks are presumed order instruments.
    As a rule, when the payee is fictitious or not intended to be the true recipient of the
    proceeds, the check is considered as a bearer instrument.
    For the fictitious-payee rule to be available as a defense, PNB must show that the
    makers did not intend for the named payees to be part of the transaction involving the checks.
    PNB only shows that the payees did not have knowledge of the existence of the checks.
    However, the lack of knowledge on the part of the payees was not tantamount to a lack of
    intention on the part of Sps. Rodriguez that the payees would not receive the check’s
    proceeds. Considering that Sps. Rodriguez were transacting with PEMSLA and not the
    individual payees, it is understandable that they relied on the information given by the PEMSLA
    that the payees would receive the checks.
    The subject checks are presumed order instruments because PNB failed to satisfy
    a requisite condition of a fictitious-payee situation – that the maker of the check intended
    for the payee to have no interest in the transaction.
    PNB shall be liable for the amount charged to the drawer’s account as they were
    negligent when the checks were presented to them for deposit by PEMSLA without any
    type of indorsement. PNB did not pay the checks in strict accordance with the
    instructions of Sps. Rodriguez. 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. It should be charge to the drawer’s accounts only the payables
    authorized by the latter. Otherwise, the drawee bank will be violating the instructions of the
    drawer and it shall be liable for the amount charged to the drawer’s account.

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