Traders Royal Bank v CA (DIGEST)

Traders Royal Bank v CA (Negotiable Instruments Law)  TRADERS  TRA DERS ROY ROYAL BANK V CA G.R. G.R. No. 93397 March 3, 1997 FACTS: Firi!"r# r"$i#!"r"% o&'"r o( C"'!ra Ba') C"r!i*ca!" o( +'%"!"%'"## -CBC+. Firi!"r# !ra'#("rr"% i! !o /hi*'a'c" 0 o'" o( i!# oc"r# &i!ho2! a2!horia!io' (ro4 !h" co45a'0. S2#"62"'!0, /hi*'a'c" !ra'#("rr"% #a4" CBC+ !o Tra%"r# Ro0a Ba') -TRB 2'%"r a r"52rcha#" a$r""4"'!. h"' /hi*'a'c" (ai"% !o %o #o, Th" TRB !ri"% !o r"$i#!"r i' i!# 'a4" i' !h" CBC+. Th" C"'!ra Ba') %i% 'o! &a'! !o r"co$'i" !h" !ra'#("r. Doc)"!"% a# Ci8i Ca#" No. 3179;; 3179;; i'  i' !h" R"$io'a Tria Co2r! o( Ma'ia, Bra'ch 3<, !h" ac!io' &a# ori$i'a0 *"% a# a /"!i!io' (or Ma'%a42# = 2'%"r R2" R2" ;= o( !h" R2"# o( Co2r!, !o co45" !h" C"'!ra Ba') o( !h" /hii55i'"# !o r"$i#!"r !h" !ra'#("r o( !h" #2>"c! CBC+ !o 5"!i!io'"r Tra%"r# Ro0a Ba') -TRB. DEC+S+ON OF LOER CO?RTS: @ RTC: !ra'#("r i# '2 a'% 8oi%. @ CA: Th" a55"a!" co2r! r2"% !ha! !h" #2>"c! CBC+ i# 'o! a '"$o!ia" i'#!r24"'!. i'#!r24"'!. /hi*'a'c" ac62ir"% 'o !i!" or ri$h!# 2'%"r CBC+ No. D91 &hich i! co2% a##i$' or !ra'#("r !o  Tra%"r#  T ra%"r# Ro0a Ro0a Ba') a'% &hich &hich !h" a!!"r ca' r"$i#!"r r"$i#!"r &i!h !h" C"'!ra Ba'). Th2#, Th2#, !h" !ra'#("r o( !h" i'#!r24"'! (ro4 /hi*'a'c" !o TRB &a# 4"r"0 a' a##i$'4"'!, a'% i# 'o! $o8"r'"% 0 !h" '"$o!ia" i'#!r24"'!# a&. A//L+CABLE LAS: ?'%"r #"c!io' 1 o( Ac! 'o. <31 a' i'#!r24"'! !o " '"$o!ia" 42#! co'(or4 !o !h" (oo&i'$ r"62ir"4"'!#: -a +! 42#! " i' &ri!i'$ a'% #i$'"% 0 !h" 4a)"r or %ra&"r - M2#! co'!ai' a' 2'co'%i!io'a 5ro4i#" or or%"r !o 5a0 a #24 c"r!ai' i' 4o'"0 -c M2#! " 5a0a" o' %"4a'%, or a! a *"% * "% or %"!"r4i'a" %"!"r4i'a" (2!2r" !i4" -% M2#! " 5a0a" !o or%"r or !o "ar"r a'% -" h"r" !h" i'#!r24"'! i# a%%r"##"% !o a %ra&"", h" 42#! " 'a4"% or o!h"r&i#" i'%ica!"% !h"r"i' &i!h r"a#o'a" c"r!ai'!0.

?'%"r #"c!io' 3, Ar!ic" V o( R2"# a'% R"$2a!io'# Go8"r'i'$ C"'!ra Ba') C"r!i*ca!"# o( +'%"!"%'"## #!a!"# !ha! !h" a##i$'4"'! o( r"$i#!"r"% r"$i#!"r"% c"r!i*ca!"# #ha 'o! " 8ai% 2'"## 4a%" a! !h" oc" &h"r" !h" #a4" ha8" ""' i##2"% a'% r"$i#!"r"% r"$i#!"r "% or a! !h" S"c2ri!i"# S"r8ici'$ D"5ar!4"'!, C"'!ra Ba') o( !h" /hii55i'"#, a'% 0 !h" r"$i#!"r"% o&'"r !h"r"o(, i' 5"r#o' or 0 hi# r"5r"#"'!a!i8", %20 a2!hori"% i' &ri!i'$. For !hi# 52r5o#", !h" !ra'#("r"" 4a0 " %"#i$'a!"% a# !h" r"5r"#"'!a!i8" o( !h" r"$i#!"r"% r"$i#!"r"% o&'"r. +SS?ES  R?L+NG: 1. h"!h"r !h" CBC+ i# '"$o!ia" i'#!r24"'! or 'o!.  Th" 5"r!i'"'! 5or!io'# o( !h" #2>"c! CBC+ CBC+ r"a%:   

 Th" C"'!ra Ba') o( !h" /hii55i'"# -!h" Ba') (or 8a2" r"c"i8"%, h"r"0 5ro4i#"# !o 5a0 "ar"r, o( i( !hi# C"r!i*ca!" o( i'%"!"%'"## " r"$i#!"r"%, !o F+LR+TERS G?ARANTY ASS?RANCE COR/ORAT+ON, !h" r"$i#!"r"% o&'"r h"r"o(, !h" 5ri'ci5a #24 o( F+VE ?NDRED TO?SAND /ESOS. NO. Th" CBC+ i# 'o! a '"$o!ia" i'#!r24"'!, #i'c" !h" i'#!r24"'! c"ar0 #!a!"% !ha! i! &a# 5a0a" !o Firi!"r#, a'% !h" c"r!i*ca!" ac)"% !h" &or%# o( '"$o!iaii!0 &hich #"r8" a# a' "5r"##io' o( co'#"'! !ha! !h" i'#!r24"'! 4a0 " !ra'#("rr"% 0 '"$o!ia!io'. B"(or" !h" i'#!r24"'!# "co4" '"$o!ia" i'#!r24"'!#, !h" i'#!r24"'! 42#! co'(or4 !o !h" r"62ir"4"'!# 2'%"r !h" N"$o!ia" +'#!r24"'! La&. O!h"r&i#" i'#!r24"'! #ha 'o! i'% !h" 5ar!i"#. <. h"!h"r !h" A##i$'4"'! o( r"$i#!"r"% c"r!i*ca!" i# 8ai% or '2 a'% 8oi%. +TS N?LL AND VO+D. O8io2#0 !h" A##i$'4"'! o( c"r!i*ca!" (ro4 Firi!"r# !o /hi*'a'c" &a# '2 a'% 8oi%. O'" o( oc"r# &ho #i$'"% !h" %""% o( a##i$'4"'! i' "ha( o( Firi!"r# %i% 'o! ha8" !h" '"c"##ar0 &ri!!"' a2!horia!io' (ro4 !h" Boar% o(  Dir"c!or# o( Firi!"r#. For ac) o( #2ch a2!hori!0 !h" a##i$'4"'! i# co'#i%"r"% '2 a'% 8oi%. C"ar0 #ho&' i' !h" r"cor% i# !h" (ac! !ha! /hi*'a'c"# !i!" o8"r CBC+ i# %"("c!i8" #i'c" i! ac62ir"% !h" i'#!r24"'! (ro4 Firi!"r# *c!i!io2#0. ?'%"r 19 o( !h" Ci8i Co%" !ho#" co'!rac!# &hich ar" a#o2!"0 #i42a!"% or *c!i!io2# ar" co'#i%"r"% 8oi% a'% i'"i#!"'! (ro4 !h" "$i''i'$. /"!i!io'"r )'"& !ha! /hi*'a'c" i# 'o! r"$i#!"r"% o&'"r o( !h" CBC+ No. D91. Th" (ac! !ha! a 'o'o&'"r &a# %i#5o#i'$ o( !h" r"$i#!"r"% CBC+ o&'"% 0 a'o!h"r "'!i!0 &a# a $oo% r"a#o' (or 5"!i!io'"r !o 8"ri(0 o( i'62ir" a# !o !h" !i!" /hi*'a'c" !o %i#5o#" !o !h" CBC+. OTER NOTES: 1. !h" 4"r" o&'"r#hi5 0 a #i'$" #!oc)ho%"r or 0 a'o!h"r cor5ora!io' o( a or '"ar0 a o( !h" ca5i!a #!oc) o( a cor5ora!io' i# 'o! o( i!#"( a #2ci"'! r"a#o' (or %i#r"$ar%i'$ !h" *c!io' o( #"5ara!" cor5ora!" 5"r#o'ai!i"#.