G.R. No. L-2516 – 87 Phil. 383 – Mercantile Law – Negotiable Instruments Law – Negotiable Instruments in General – Indorsement to “Cash” – Bearer Instrument
In 1946, Ang Tek Lian approached Lee Hua and asked him if he 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 gave Lee Hua a check which is “payable to the order of cash“. The next day, Lee Hua presented the check for payment but it was dishonored due to insufficiency of funds. Lee Hua eventually sued Ang Tek Lian. In his defense, Ang Tek Lian argued that he did not indorse the check to Lee Hua and that when the latter accepted the check without Ang Tek Lian’s indorsement, he had done so fully aware of the risk he was running thereby.
ISSUE: Whether or not Ang Tek Lian is correct.
HELD: No. Under the Negotiable Instruments Law (sec. 9 [d]), a check drawn payable to the order of “cash” is a check payable to bearer hence a bearer instrument, and the bank may pay it to the person presenting it for payment without the drawer’s indorsement. Where a check is made payable to the order of ‘cash’, the word “cash” does not purport to be the name of any person, and hence the instrument is payable to bearer. The drawee bank need not obtain any indorsement of the check, but may pay it to the person presenting it without any indorsement.