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Rodriguez and
L-2516 September, 1950 PEMSLA are both clients of Philippine National Bank (PNB) Amelia
Bengzon, J.: Avenue Branch, Cebu City.
87 Phil. 383 – Mercantile Law – Negotiable Instruments Law – Rodriguez filed a civil complaint for the recovery of
Negotiable Instruments in General – Indorsement to “Cash” – PhP2,345,804.00. PNB, on the other hand, answered that the
Bearer Instrument checks, being payable to a “fictitious payee” under NIL, were
considered bearer instruments; thus, they are negotiable by
In 1946, Ang Tek Lian approached Lee Hua and asked him if he mere delivery.
could give him P4,000.00. He said that he meant to withdraw
from the bank but the bank’s already closed. In exchange, he ISSUE(S):
gave Lee Hua a check which is “payable to the order of ‘cash’”. (1) WON the Rodriguez checks were payable to order
The next day, Lee Hua presented the check for payment but it (2) WON spouses Rodriguez should bear the loss
was dishonored due to insufficiency of funds. Lee Hua eventually
sued Ang Tek Lian. In his defense, Ang Tek Lian argued that he RULING:
did not indorse the check to Lee Hua and that when the latter (1) The checks are payable to order.
accepted the check without Ang tek Lian’s indorsement, he had (2) Rodriguez spouses should not bear the loss. It is PNB,
done so fully aware of the risk he was running thereby. the drawee bank, who should bear the loss.
Lastly, PNB was negligent in the selection and supervision of its (a) A payee who is not maker, drawer, or drawee; or
employees. The trustworthiness of bank employees is (b) The drawer or maker; or
indispensable to maintain the stability of the banking industry. (c) The drawee; or
Thus, banks are enjoined to be extra vigilant in the management (d) Two or more payees jointly; or
and supervision of their employees. (e) One or some of several payees; or
(f) The holder of an office for the time being.
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 to the benefit of all laws exempting property, real or
personal, from levy or sale.
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.