Monday, September 24, 2007

CHECKS AND BALANCES (Forged checks and signatures)

by Obiter 07

In this day and age, having your check or checkbooks stolen and then your signature forged by some individual with a golden arm doesn’t seem so far-fetched. It may even happen that the checks you have legitimately issued suddenly have a different payee and bear bigger amounts than the original. What rights to you have in such instances? With your bank balance suddenly depleted by unauthorized check withdrawals, what can you do?

Forged Check

If your signature is forged, the bank has no right to debit your account for the amount specified in the check. A forged check is totally invalid and confers no right against you. The law specifically provides thus:

“Sec. 23. FORGED SIGNATURE, EFFECT OF. — When a signature is forged or made without authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority.” (Section 23 of the Negotiable Instruments Law (NIL))


However, one can be precluded from using forgery as a defense if one has warranted or admitted the genuineness of the signature in question and if one, by his acts, silence or negligence, is estopped (read: impeded) from setting up the defense of forgery. This simply means if by your conduct, which can consist of positive acts or failure to act, you have allowed others to believe the check is valid even if forged, then you cannot excuse yourself by claiming forgery.

And parties to the check subsequent to the forgery can be liable under the same. For example, if you indorse the check, you warrant the genuineness of the signatures on the instrument. So if it turns out to be a forgery, you as an indorser, can be held liable for the check anyway.

If the check amount itself is altered, the check becomes void except against those who assented to the alteration or authorized the alterations -

“Section 124. Alteration of instrument; effect of. – Where a negotiable instrument is materially altered without the assent of all parties liable thereon, it is avoided, except as against a party who has himself made, authorized or assented to the alteration and subsequent indorsers. xxx (NIL)” The bank cannot debit your account except to the extent of the original amount. [Agbayani, citing Chief of Staff vs. PNB NO. 16792-R, May 23, 1960 (CA)]

But the owner of the account has recourse against the drawee bank which must re-credit to his account the amount of the forged check if encashed -

“In cases involving a forged check, the drawer can recover from the drawee bank. No drawee bank has a right to pay a forged check. If it does, it shall have to re-credit the amount of the check to the account of the drawer. The liability chain ends with the drawee bank whose responsibility it is to know the drawer’s signature since the latter is its customer.” [Associated Bank vs. Court of Appeals, GR Nos. 107382 and 107612, January 31, 1996]

The institution of checks was made to facilitate commercial transactions and the purpose of the law is to insure that this does not result in the unauthorized depletion of your bank balances.


Monday, September 17, 2007


By Siesta-friendly

With the economy driving more of our people especially much-needed professionals like engineers, scientists, nurses and doctors to work abroad, with our new “mini-size me” culture[1] caused by our much decreased (and still decreasing) disposable income, with our government practicing its own brand of Ponzi scheme of borrowing from one creditor to pay off another, with negligible budget allocations for social programs (like healthcare and education), it is disturbing and very frustrating that campaigns for renegotiating, suspending or even repudiating some of our debts have not galvanized the masses to demand the immediate reversal of fiscal policies.

It’s not hard to understand – if you are poor why spend most of your income to pay off your debt and leave very little for your family’s food, medicine, education and other daily needs? That is slow suicide. Yet, that is exactly what our government has been doing for years.

What can we do? 1st, we’d do well to recognize the legal concept called “Odious Debt”. It’s a legal basis other countries including even the US and Great Britain have used to repudiate their own foreign debt.[2]

Repudiate Odious Debt

Legally, debt is to be considered odious if the government used the money for personal purposes or to oppress the people. Moreover, in cases where borrowed money was used in ways contrary to the people’s interest, with the knowledge of the creditors, the creditors may be said to have committed a hostile act against the people. Creditors cannot legitimately expect repayment of such debts.”[3]

The common argument against repudiating debt on the basis of it being odious is that such act would make the debtor-country an international outcast and will be avoided by future creditors. Since other countries have in fact repudiated their debt and have been able to avail of more loans, it is obvious that this is an argument concocted by creditors to scare poor debtor-countries from repudiating their debt so they can continue collecting.

The stand-out in the Odious Debt category, even in the international context, is the loan granted to the Marcos government for the creation of the Bataan Nuclear Power Plant which cost us USD155,000 a day (about USD2.3B in total) without a single watt of energy produced - on top of being set near 2 fault lines and a volcano, they were numerous safety risks found - and for a cost that would have purchased at least 3 plants instead of only 1.[4] And that’s just the tip of the iceberg for the Marcos regime and certainly together with the succeeding regimes.

A list of behest loans (i.e., government-guaranteed loans at the behest of cronies or public assumption of private debts) alone (for Ferdie’s friends to Glo’s) will probably take up dozens of pages. IPP contracts and NPC-guaranteed loans will add a few more. White elephants surfacing every few months would make it a perfect catalogue of how to bleed a country dry. And the list naturally goes on with the latest addition being the NBN (nationwide broadband network) deal, whether or not they find the missing contract.

But not only does our government favor the creditors’ stand (over providing for the people’s needs) but the government has, from the time of Marcos, bent over backwards to please our creditors by regularly automatically appropriating funds for debt repayment even before funds have been allocated for government programs.

Repeal the Automatic Appropriations law

Despite widespread poverty, rising unemployment and lack of adequate social programs, during each budget appropriation the government implements Section 31 of P.D. 1177 which states that:

“expenditures for … (b) principal and interest on public debt, (c) national government guarantees of obligations which are drawn upon, are automatically appropriated.”[5]

This means that the poor chooses to set aside funds to pay its debt before providing funds for anything else even if it results in hardly any funds allocated for its daily needs (even food or medicine).

Thus, in the 2007 national budget, the government allotted P7,133 per capita for debt repayment while allotting only P165 per capita for health and P1,827 per capita for education, culture and manpower.[6] With a government that has a propensity to borrow (its borrowings total more than the last 3 regimes combined) than to find ways to stem graft and corruption, scrap its pork barrel and streamline the bureaucracy, the Ponzi scheme continues (inducing Juan de la Cruz to either slowly starve or suffer from lack of healthcare or promptly escape if he can).

The dictator called for automatic appropriations to please his (possibly complicit) creditors. The dictatorship is gone, the housewife, the general and the actor who have succeeded have left office. The economist sitting at the top should know better but remains as insensitive as the rest who preceded her. We should discontinue the dictator’s practice and reverse the policy of pleasing creditors first before caring for the people’s welfare.

Uphold the Constitution

The Constitution lists and limits the authority of government and sets forth the following distinct mandates:

“The State shall pursue an independent foreign policy. In its relations with other states, the paramount consideration shall be national sovereignty, territorial integrity, national interest, and the right to self-determination.[7]

The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all.[8]

The State shall develop a self-reliant and independent national economy …”[9]

Promoting the people’s welfare, providing an environment that protects local industries, stimulates production and creates jobs, and creating policies free from the influence of foreign self-interest are basic strategies for real national development.

There are clear ways to rise from our debtbed, we really can’t afford to ignore them.

[1] Olarte, Avigail and Chua, Yvonne T. “Mini-size Me”. PCIJ I-Report, Issue No. 1 Jan-March 2005., accessed September 11, 2007.

[2] Taken from, accessed September 11, 2007.

[3] Taken from, accessed September 10, 2007.

[4] Cabacungan, Gil C. Jr. “Saga Of Bataan Nuclear Plant Debt Ends Next Year”. Inquirer, November 24, 2006., accessed September 12, 2007.

[5] July 30, 1977.

[6] IBON Media. “Debt Payments At All-Time High: Social Services Spending Still A Casualty Of Govt’s Debt Service”. IBON Media Releases, July 18, 2007., accessed September 11, 2007.

[7] Section 7, ARTICLE II, supra.

[8] Section 9, ibid.

[9] Section 9, ibid.


Monday, September 10, 2007

The Goods, The Bad and The Warranty

byObiter 07

You’ve finally bought your dream car, that longed-for component, that precious cooking range or that pretty bag. But just when you’ve begun breaking in your sweet purchase, suddenly, an unexplainable and sickening sound comes out of the car engine, the disk changer keeps stopping, one burner doesn’t work, or the bag’s strap breaks off. Now, you can’t help getting that sinking feeling that the car is a lemon, or the component, the range or the bag is just plain worthless.

You need not chuck it down to experience. The law does provide some remedies to an aggrieved buyer.

Implied Warranties

In the first instance, a claim may be based on the implied warranty against hidden defects under the New Civil Code:

“ARTICLE 1547. In a contract of sale, unless a contrary intention appears, there is:
(1) xxx,
(2) An implied warranty that the thing shall be from any hidden faults or defects, or any charge or encumbrancenot declared or known to the buyer.


ARTICLE 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold may have , should they render it unfit for the use for which it is intended, or should they diminish its fitness for such use to such an extent that, had the vendee been aware thereof, he would not have acquired it or would have given a lower price for it; but said vendor shall not be answerable for patent defects or those which may be visible, or for those which are not visible if the vendee is an expert who, by reason of his trade or profession, should have known them. (1484a)” (Emphasis supplied)

Remember though, actions for breach of implied warranties under the contract of sale is generally barred after six (6) months from delivery of the thing sold.[1] So if problems manifest themselves after this period, you need to find some other way to get relief.

Express Warranties

If there are express warranties provided, the claim shall be based under Republic Act No. 7344 otherwise known as the Consumer Act of the Philippines. The Consumer Act distinguishes between full and limited warranties thus:

“(c) Designation of warranties. - A written warranty shall clearly and conspicuously designate such warranty as:

(1) “Full warranty” if the written warranty meets the minimum requirements set forth in paragraph (d); or

(2) “Limited warranty” if the written warranty does not meet such minimum requirements.

d) Minimum standards for warranties. - For the warrantor of a consumer product to meet the minimum standards for warranty, he shall:

(1) remedy such consumer product within a reasonable time and without charge in case of a defect, malfunction or failure to conform to such written warranty;

(2) permit the consumer to elect whether to ask for a refund or replacement without charge of such product or part, as the case may be, where after reasonable number of attempts to remedy the defect or malfunction, the product continues to have the defect or to malfunction. The warrantor will not be required to perform the above duties if he can show that the defect, malfunction or failure to conform to a written warranty was caused by damage due to unreasonable use thereof. (Art. 68)”

You have to then examine the express warranties made by the product manufacturer. Note that replacement is called for only after repairs are done and have proven are ineffective.


A breach of express or implied warranties entitles the consumer to the following reliefs under the Consumer Act:

“(f) Breach of warranties. - (1) In case of breach of express warranty, the consumer may elect to have the goods repaired or its purchase price refunded by the warrantor. In case the repair of the product in whole or in part is elected, the warranty work must be made to conform to the express warranty within thirty (30) days by either the warrantor or his representative. The thirty-day period, however, may be extended by conditions which are beyond the control of the warrantor or his representative. In case the refund of the purchase price is elected, the amount directly attributable to the use of the consumer prior to the discovery of the non-conformity shall be deducted.

(2) In case of breach of implied warranty, the consumer may retain in the goods and recover damages, or reject the goods, cancel and contract and recover from the seller so much of the purchase price as has been paid, including damages. (Article 68)”

In brief, for express warranties, one can elect repair or a refund. For implied warranties, one can retain the goods with damages or reject the same and get a refund. A similar relief but with damages, in the case of implied warranties, is provided under the Civil Code.[2]

In case you don’t know yet, these provisions are what protect consumers against any ‘No Return, No Exchange“ policy. Before considering any court case, though, remember that you can always file a complaint with the DTI via online at or their hotline 751-3330.

[1] ARTICLE 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six months, from the delivery of the thing sold. (1490) [R. A. No. 7384]

[2] ARTICLE 1567. supra.


Monday, September 3, 2007

The Writ Stuff (Habeas Corpus, Amparo, and Habeas Data)

By Siesta-friendly

Habeas Corpus

Habeas corpus, Latin for “you have the body”, is the name given to a variety of writs for the purpose of bringing a party before a court or judge. It’s purpose is not to determine the prisoner’s guilt or innocence but whether he is restrained of his liberty by due process[1]

Our present rules of court procedure only provides for the writ of habeas corpus ad subjiciendum (we all know it simply as the writ of habeas corpus) which is the common remedy against an alleged illegal detention. Thus, the writ ordinarily extends only to cases of “illegal confinement or detention by which any person is deprived of his liberty, or by which the rightful custody of any person is withheld from the person entitled thereto”.[2] It is more commonly associated with activists being allegedly picked up by military agents but it can have equal application to, say, a child taken by one spouse without the consent of the other or a spouse being placed in a drug rehab center without the consent of the other (the Mark Jimenez case should come to mind).


At present, there is a proposed amendment to the rules to allow the use of the writ of amparo. It is unclear if the proposed amendments would cover all aspects of the amparo doctrine. It may be better eventually if our laws do so. The doctrine has a broad scope encompassing not just illegal detention nor actual violations, but also the prevention of possible violations, of human rights and other constitutional guarantees. “The “amparo” suit is an original Mexican institution with no exact equivalent in the common law tradition.

The word “amparo” literally means favor, aid, protection, or shelter. Legally the word encompasses elements of several legal actions of the common law tradition: writ of habeas corpus, injunction, error, mandamus, and certiorari.

There are five types of “amparo” suits: 1) “amparo” as a defense of individual rights such as life, liberty, and personal dignity; 2) “amparo” against laws (defending the individual against un-constitutional laws); 3) “amparo” in judicial matters (examine the legality of judicial decisions); 4) administrative “amparo” (providing jurisdiction against administrative enactments affecting the individual); 5) “amparo” in agrarian matters (protecting the communal [property] rights of peasants).”[3]

The amparo procedure for the protection of human rights has 2 parts: The 1st part aims to prevent the consummation of the alleged violation/s of human rights; and so, without yet deciding on the merits of the case, the court suspends the alleged illegal act/s. The 2nd part of the procedure involves proving the facts alleged and determining whether or not they do violate human rights. The acts subject of the amparo suit include all kinds of actions by any authority, even laws or judicial decisions.[4]

Applying the foregoing to the present reality of our country’s record-breaking killings and abductions of activists, labor leaders, journalists, and even priests, the alleged violators will then be promptly investigated and will not be left to merely deny they have custody of the prisoner (and render useless any procedure to produce the prisoner and make them accountable). The court can order an investigation to determine the truth of the facts alleged. This radically changes the present habeas corpus procedure where the alleged violators can simply deny they have custody and that is that, and everybody should look elsewhere.

As it is more likely that the victims of human rights violations are those who cannot afford costly, complex, inaccessible, burdensome and prolonged procedures, the proposed amendments to our rules must avoid the same. To defend against possible dictatorial leanings of leaders, the right to amparo must not be allowed to be suspended under any circumstance. And owing to the repeated allegations against military personnel, civilian courts must be given jurisdiction over them to avoid further loopholes.

Habeas Data

A companion to the habeas corpus and amparo remedies is the writ of “habeas data’ based on a person’s right to information about himself/herself, whether the information is in the possession of the government or a private entity.[5] The right includes the right to modify (even correct) or remove such information due to its sensitive, erroneous, biased, or discriminatory nature.

In recent years, recourse to the action of habeas data has become a fundamental instrument for investigation into human rights violations committed during past military dictatorships in some South American countries. Families of disappeared persons have used habeas data actions to obtain information concerning government conduct, to learn the fate of disappeared persons, and to exact accountability.[6]

In the end, of course, a writ by any other name is only as strong as the powers of enforcement. It is significant to note that the 2 farmers who last month escaped an alleged 18-month illegal and brutal detention by military soldiers went straight to the Supreme Court to seek protection and not to the lower courts, the police, their local government nor even MalacaƱang, and at the same time, refused protection under the Witness Protection Program of the DOJ. This act speaks volumes on their faith in the institutions which, by theory and by law, are supposed to protect them.

[1]“Habeas Corpus”. Black’s Law Dictionary. 5th ed. 1979.
[2] Rule 102, Revised Rules of Court. (July 1, 1997).
[3] Avalos, Francisco A. The Mexican Legal System. 2nd ed. Fred B Rothman & Co., 2000.
[4] Mejorada, Carlos Sanchez. The Writ of Amparo. Mexican Procedure to Protect Human Rights. Annals of the American Academy of Political and Social Science, Vol. 243, Essential Human Rights. Sage Publications, Inc. January, 1946. Pp. 107-111
[5] Declaration of Principles on Freedom of Expression, Basic Documents Pertaining To Human Rights The Inter-American System, OEA/Ser.L/V/I.4 rev. 8 (May 22, 2001)
[6] Report On Terrorism And Human Rights, OEA/Ser.L/V/II.116, Doc. 5 rev. 1 corr. (October 22, 2002).