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September 21, 2016

Gonzalez vs. RCBC

  • Gonzales was an employee of Rizal Commercial Banking Corporation (or RCBC) as New Accounts Clerk in the Retail Banking Department at its Head Office.
  • A foreign check of $7,500 was drawn by Dr. Don Zapanta of Ade Medical Group (Western Avenue, Los Angeles, California) against the drawee bank Wilshire Center Bank, N.A., (Los Angeles, California, U.S.A.) and payable to Gonzales’ mother, defendant Eva Alviar.
  • Alviar then endorsed this check.  
  • Since RCBC gives special accommodations to its employees to receive the check’s value without awaiting the clearing period, Gonzales presented the foreign check to Olivia Gomez, the RCBC’s Head of Retail Banking.  
  • After examining this, Gomez requested Gonzales to endorse it which she did.  
  • Gomez then acquiesced to the early encashment of the check and signed the check but indicated thereon her authority of “up to P17,500.00 only.
  • Afterwards, Olivia Gomez directed Gonzales to present the check to RCBC employee Carlos Ramos and procure his signature.  
  • After inspecting the check, Carlos Ramos also signed it with an “ok” annotation.  
  • After getting the said signatures Gonzales presented the check to Rolando Zornosa, Supervisor of the Remittance section of the Foreign Department of the RCBC Head Office, who after scrutinizing the entries and signatures therein authorized its encashment.  
  • Gonzales then received its peso equivalent of P155,270.85.
  • RCBC then tried to collect the amount of the check with the drawee bank by the latter through its correspondent bank, the First Interstate Bank of California, on two occasions dishonored the check because of “END. IRREG” or irregular indorsement.  
  • Insisting, RCBC again sent the check to the drawee bank, but this time the check was returned due to “account closed”.  
  • Unable to collect, RCBC demanded from Gonzales the payment of the peso equivalent of the check that she received.  
  • Gonzales settled the matter by agreeing that payment be made thru salary deduction.  This temporary arrangement for salary deductions was communicated by Gonzales to RCBC through a letter.
  • Alviar did not pay the obligation. Thereafter, Gonzales resigned from RCBC. What had been deducted from her salary was only P12,822.20 covering ten months.
  • A complaint for sum of money was filed by RCBC against Alviar and spouses Gonzales.
  • The RTC held Alviar (as principal debtor) and Theresa Gonzales (as guarantor) liable.
  • CA affirmed RTC ruling.

Issue: WON the prior indorsers Alviar and Gonzales is liable. NO


A subsequent party which caused the defect in the instrument cannot have any recourse against any of the prior endorsers in good faith.  Eva Alviar’s and the petitioner’s  liability to subsequent holders of the foreign check is governed by Section 66 of NIL
Under Section 66, the warranties for which Alviar and Gonzales are liable as general endorsers in favor of subsequent endorsers extend only to the state of the instrument at the time of their endorsements, specifically, that the instrument is genuine and in all respects what it purports to be; that they have good title thereto; that all prior parties had capacity to contract; and that the instrument, at the time of their endorsements, is valid and subsisting.  

This provision, however, cannot be used by the party which introduced a defect on the instrument, such as respondent RCBC in this case, which qualifiedly endorsed the same, to hold prior endorsers liable on the instrument because it results in the absurd situation whereby a subsequent party may render an instrument useless and inutile and let innocent parties bear the loss while he himself gets away scot-free.  It cannot be over-stressed that had it not been for the qualified endorsement (“up to P17,500.00 only”) of Olivia Gomez, who is the employee of RCBC, there would have been no reason for the dishonor of the check, and full payment by drawee bank therefor would have taken place as a matter of course.

One who invokes Section 66 must come to court with clean hands
Section 66 of the Negotiable Instruments Law which further states that the general endorser additionally engages that, on due presentment, the instrument shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent endorser who may be compelled to pay it, must be read in the light of the rule in equity requiring that those who come to court should come with clean hands.  The holder or subsequent endorser who tries to claim under the instrument which had been dishonored for “irregular endorsement” must not be the irregular endorser himself who gave cause for the dishonor. Otherwise, a clear injustice results when any subsequent party to the instrument may simply make the instrument defective and later claim from prior endorsers who have no knowledge or participation in causing or introducing said defect to the instrument, which thereby caused its dishonor.

RCBC should bear the loss
RCBC, which caused the dishonor of the check upon presentment to the drawee bank, through the qualified endorsement of its employee, Olivia Gomez, cannot hold prior endorsers, Alviar and Gonzales in this case, liable on the instrument.

The Court must order the return of the salary deductions to Gonzalez, with legal interest of 12% per annum, notwithstanding the her apparent acquiescence to such an arrangement
It must be noted that Gonzales is not any ordinary client or depositor with whom RCBC had this isolated transaction.  She was a rank-and-file employee of RCBC, being a new accounts clerk thereat.  It is easy to understand how a vulnerable Gonzales, who is financially dependent upon RCBC, would rather bite the bullet, so to speak, and expectedly opt for salary deduction rather than lose her job and her entire salary altogether.  In this sense, we cannot take petitioner’s apparent acquiescence to the salary deduction as being an entirely free and voluntary act on her part.  

Additionally, under the obtaining facts and circumstances surrounding the present complaint for collection of sum of money by RCBC against its employee, which may be deemed tantamount to harassment, and the fact that RCBC itself was the one, acting through its employee, Olivia Gomez, which gave reason for the dishonor of the dollar-check in question, RCBC may likewise be held liable for moral and exemplary damages and attorney’s fees by way of damages, in the amount of P20,000.00 for each.

  • G.R. No. 156294 
  • November 29, 2006
  • MELVA THERESA ALVIAR GONZALES,   Petitioner,                          - versus -  RIZAL COMMERCIAL BANKING CORPORATION,                                           Respondent.


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