G.R. No. L-43191 November 13, 1935
Lessons Applicable: Notice of Dishonor (Negotiable Instrument)
FACTS:
- August 2, 1933: Treasurer of the US for the United States Veterans Bureau issued a Warrant in the amount of $361, payable to the order of Francisco Sabectoria Bacos
- Atty. Paulino Gullas and Pedro Lopez signed as endorsers of this check
- cashed by the Philippine National Bank
- dishonored by Insular Treasurer
- outstanding balance of Attorney Gullas on the books of the bank was P509
- August 20, 1933: Attorney Gullas left his residence for Manila so the notices of dishonor informing him that the amount of $366 was applied to his outstanding balance were not received by him
- August 31, 1933: Upon his return to Cebu, he received the notice of dishonor and paid the balance
- Inconveniences to Atty. Gullas:
- insurance unpaid due to lack of credit
- periodicals in the vicinity gave prominence to the news to the great mortification of Gullas
ISSUE: W/N the bank had the right to automatically credit Gullas account and it was not prejudicial to him
HELD: NO. Pay Gullas nominal damage of P250
- it has been held a long line of authorities that notice of dishonor is in order to charge all indorser and that the right of action against him does not accrue until the notice is given
- GR: a bank has a right of set off of the deposits in its hands for the payment of any indebtedness to it on the part of a depositor
- However this may be, as to an indorser the situation is different, and notice should actually have been given him in order that he might protect his interests.