Tibajia Jr. v. Court of Appeals [G.R. No. 100290. June 4, 1993]
FACTS
Tibajia spouses delivered to Sheriff the total money judgment in cashier’s check
and cash.Private respondent, Eden Tan, refused to accept the payment made by
the Tibajia spouses and instead insisted that the garnished funds deposited with
the cashier of the Regional Trial Court of Pasig, Metro Manila be withdrawn to
satisfy the judgment obligation. Tibajias filed a motion to lift the writ of execution
on the ground that the judgment debt had already been paid. The motion was
denied.
ISSUE
Whether or not payment by means of cashier’s check is considered payment in
legal tender.
RULING
NO. A check, whether a manager’s check or ordinary check, is not legal tender,
and an offer of a check in payment of a debt is not a valid tender of payment and
may be refused receipt by the obligee or creditor. A check is not legal tender and
that a creditor may validly refuse payment by check, whether it be a manager’s,
cashier’s or personal check. The Supreme Court stressed that, “We are not, by
this decision, sanctioning the use of a check for the payment of obligations over
the objection of the creditor.”
Philippine Airlines v. Court of Appeals [G.R. No. L-49188. January
30, 1990]
FACTS
Amelia Tan was found to have been wronged by Philippine Air Lines (PAL). She
filed her complaint in 1967. After ten (10) years of protracted litigation in the
Court of First Instance and the Court of Appeals, Ms. Tan won her case. Almost
twenty-two (22) years later, Ms. Tan has not seen a centavo of what the courts
have solemnly declared as rightfully hers. Through absolutely no fault of her
own, Ms. Tan has been deprived of what, technically, she should have been paid
from the start, before 1967, without need of her going to court to enforce her
rights. And all because PAL did not issue the checks intended for her, in her
name. Petitioner PAL filed a petition for review on certiorari the decision of Court
of Appeals dismissing the petition for certiorari against the order of the Court of
First Instance (CFI) which issued an alias writ of execution against them.
Petitioner alleged that the payment in check had already been effected to the
absconding sheriff, satisfying the judgment.
ISSUE
Whether or not payment by check to the sheriff extinguished the judgment debt.
RULING
NO. The payment made by the petitioner to the absconding sheriff was not in
cash or legal tender but in checks. The checks were not payable to Amelia Tan
or Able Printing Press but to the absconding sheriff.In the absence of an
agreement, either express or implied, payment means the discharge of a debt or
obligation in money and unless the parties so agree, a debtor has no rights,
except at his own peril, to substitute something in lieu of cash as medium of
payment of his debt. Strictly speaking, the acceptance by the sheriff of the
petitioner’s checks, in the case at bar, does not, per se, operate as a discharge of
the judgment debt. The check as a negotiable instrument is only a substitute for
money and not money, the delivery of such an instrument does not, by itself,
operate as payment. A check, whether a manager’s check or ordinary cheek, is
not legal tender, and an offer of a check in payment of a debt is not a valid tender
of payment and may be refused receipt by the obligee or creditor. Mere delivery
of checks does not discharge the obligation under a judgment. The obligation is
not extinguished and remains suspended until the payment by commercial
document is actually realized (Art. 1249, Civil Code, par. 3).
Caltex Inc. v. Court of Appeals [G.R. No. 97753. August 10, 1992]
FACTS
On various dates, Security Bank and Trust Company (SBTC), through its Sucat Branch issued
280 certificates of time deposit (CTD) in favor of one Angel dela Cruz who later lost them.
Date of Maturity FEB. 23, 1984 FEB 22, 1982, 19____
This is to Certify that B E A R E R has deposited in this Bank the sum
of PESOS: FOUR THOUSAND ONLY, SECURITY BANK SUCAT OFFICE
P4,000& 00 CTS Pesos, Philippine Currency, repayable to said
depositor 731 days. after date, upon presentation and surrender of this
certificate, with interest at the rate of 16% per cent per annum.
(Sgd. Illegible)
Caltex (Phils.) Inc. went to the SBTC Sucat branch and presented for verification
the CTDs declared lost by Angel dela Cruz alleging that the same were delivered
to herein plaintiff “as security for purchases made with Caltex Philippines, Inc.”
by said depositor. SBTC rejected Caltex’s demand and claim. Caltex sued SBTC
but case was dismissed rationalizing that CTD’s are non-negotiable instruments.
ISSUE
Whether or not Certificate of Time Deposit (CTD) is a negotiable instrument.
RULING
YES. The CTDs in question undoubtedly meet the requirements of the law for
negotiability under Section 1 of the Negotiable Instruments Law. The accepted
rule is that the negotiability or non-negotiability of an instrument is determined
from the writing, that is, from the face of the instrument itself. In the
construction of a bill or note, the intention of the parties is to control, if it can
be legally ascertained. Here, if it was really the intention of respondent bank to
pay the amount to Angel de la Cruz only, it could have with facility so expressed
that fact in clear and categorical terms in the documents, instead of having the
word “BEARER” stamped on the space provided for the name of the depositor in
each CTD.
While the writing may be read in the light of surrounding circumstances in order
to more perfectly understand the intent and meaning of the parties, yet as they
have constituted the writing to be the only outward and visible expression of
their meaning, no other words are to be added to it or substituted in its stead.
Metropolitan Bank and Trust Co. v. Court of Appeals [G.R. No. 88866.
February 18, 1991]
FACTS
Various treasury warrants drawn by the Philippine Fish Marketing Authority
were subsequently indorsed by Golden Savings. Petitioner allowed Golden
Savings to withdraw thrice from uncleared treasury warrants as the former was
exasperated over persistent inquiries of the latter after one week. Warrants were
later dishonored by the Bureau of Treasury.
ISSUE
(a) Whether or not treasury warrants are negotiable instruments.
(b) Whether or not petitioner’s negligence would bar them for recovery.
RULING
(a) NO. The indication of fund as the source of the payment to be made on the
treasury warrants makes the order or promise to pay “not unconditional” and
the warrants themselves non-negotiable. Metrobank cannot contend that by
indorsing the warrants in general, Golden Savings assumed that they were
“genuine and in all respects what they purport to be,” in accordance with Section
66 of the Negotiable Instruments Law. The simple reason is that this law is not
applicable to the non-negotiable treasury warrants.
(b) YES. Metrobank was indeed negligent in giving Golden Savings the
impression that the treasury warrants had been cleared and that, consequently,
it was safe to allow Gomez to withdraw the proceeds thereof from his account
with it. Without such assurance, Golden Savings would not have allowed the
withdrawals; with such assurance, there was no reason not to allow the
withdrawal. However, withdrawals released after the notice of the dishonor may
be debited as it will result to unjust enrichment.
Ang Tek Lian v. Court of Appeals [G.R. No. L-2516. September 25, 1950]
FACTS
Petitioner drew a check payable to the order of “cash” knowing that he had no
funds. He delivered it in exchange of money. Petitioner was found guilty of estafa,
but petitioner argued that the check had not been indorsed by him, hence, he
should not be held guilty thereof.
ISSUE
Whether or not indorsement is necessary to negotiate a check payable to the
order of “cash”.
RULING
NO. Indorsement is no longer necessary. Under the Negotiable Instruments Law
(Sec. 9 [d]), a check drawn payable to the order of “cash” is a check payable to
bearer, and the bank may pay it to the person presenting it for payment without
the drawer’s indorsement. Being a bearer instrument, negotiation may be done
by mere delivery of the instrument.
PHILIPPINE NATIONAL BANK (PNB) vs. RODRIGUEZ G.R. No. 170325
September 26, 2008
FACTS:
Respondents-Spouses Rodriguez maintained savings and demand/checking
accounts with petitioner.
In line with their informal lending business, they had a discounting arrangement
with PEMSLA, an association of PNB employees, which regularly granted loans
to its members. Spouses Rodriguez would rediscount the postdated checks
issued to members whenever the association was short of funds, and would
replace the postdated checks with their own checks issued in the name of the
members.
PNB later on found out that some PEMSLA officers took out loans in the names
of other members, without their knowledge or consent by forging the
indorsement of the named payees in the checks.
PNB then closed the current account of PEMSLA. The checks deposited to
PEMSLA however, were debited from the Rodriguez account. Thus, spouses
Rodriguez incurred losses.
The spouses Rodriguez filed a civil complaint for damages against PEMSLA and
PNB. They sought to recover the value of their checks that were deposited to the
PEMSLA savings account amounting to P2,345,804.00. The spouses contended
that PNB paid the wrong payees, hence, it should bear the loss.
The RTC rendered judgment in favor of spouses Rodriguez, and ruled that PNB
is liable to return the value of the checks.
On appeal, the CA affirmed the RTC Decicion..
ISSUE:
Whether the subject checks are payable to order or to bearer and who bears the
loss.
RULING:
A check is “a bill of exchange drawn on a bank payable on demand.” It is either
an order or a bearer instrument.
As a rule, when the payee is fictitious or not intended to be the true recipient of
the proceeds, the check is considered as a bearer instrument.
Under Section 30 of the NIL, an order instrument requires an indorsement from
the payee or holder before it may be validly negotiated. A bearer instrument, on
the other hand, does not require an indorsement to be validly negotiated. It is
negotiable by mere delivery.
Under Section 9(c) of the NIL, a check payable to a specified payee may
nevertheless be considered as a bearer instrument if it is payable to the order of
a fictitious or non-existing person, and such fact is known to the person making
it so payable. Thus, checks issued to “Prinsipe Abante” or “Si Malakas at si
Maganda,” who are well-known characters in Philippine mythology, are bearer
instruments because the named payees are fictitious and non-existent.
For the fictitious-payee rule to be available as a defense, PNB must show that
the makers did not intend for the named payees to be part of the transaction
involving the checks. At most, the bank’s thesis shows that the payees did not
have knowledge of the existence of the checks. This lack of knowledge on the
part of the payees, however, was not tantamount to a lack of intention on the
part of respondents-spouses that the payees would not receive the checks’
proceeds. Considering that respondents-spouses were transacting with PEMSLA
and not the individual payees, it is understandable that they relied on the
information given by the officers of PEMSLA that the payees would be receiving
the checks.
Verily, the subject checks are presumed order instruments. This is because, as
found by both lower courts, PNB failed to present sufficient evidence to defeat
the claim of respondents that the named payees were the intended recipients of
the checks’ proceeds. The bank failed to satisfy a requisite condition of a
fictitious-payee situation – that the maker of the check intended for the payee to
have no interest in the transaction.
Because of a failure to show that the payees were “fictitious” in its broader sense,
the fictitious-payee rule does not apply. Thus, the checks are to be deemed
payable to order. Consequently, the drawee bank bears the loss.
PNB vs. Manila Oil Refining and By Products Company
G.R. No. L-18103, June 8, 1922
FACTS:
The manager and the treasurer of the defendant executed and delivered to the
complainant Philippine National Bank a written instrument with a judgment
note on demand, PNB brought an action and filed a motion confessing
judgment.
ISSUE:
Whether or not a judgment note or a provision in a promissory note whereby in
case the same is not paid at maturity, the maker authorizes any attorney to
and confess judgment thereon for the principal amount with interest, costs and
attorney’s fees, and waives all errors, rights to inquisition, and appeal, and all
property exemptions. Will it affect the negotiable character of the instrument?
RULING:
No, a judgment note will not affect the negotiable character of the instrument.
However, judgment note is not valid and effective. Warrants of attorney to
confess judgment are void as against public policy because they enlarge the
field for fraud, under these instruments the promissor bargains away his right
a day in court, and the effect of instrument is to strike down the right of appeal
accorded by statute.
REPUBLIC PLANTERS BANK v. CA, GR No. 93073, 1992-12-21
Facts:
This is an appeal by way of a Petition for Review on Certiorari from the decision*
of the Court of Appeals in CA G.R. CV No. 07302, entitled "Republic Planters
Bank, Plaintiff-Appellee vs. Pinch Manufacturing Corporation... which affirmed
the decision** in Civil Case No. 82-5448 except that it completely absolved
Fermin Canlas from liability under the promissory notes... and reduced the
award for damages and attorney's fees.
From the above decision only defendant Fermin Canlas appealed to the then
Intermediate Appellate Court
His contention was that inasmuch as he signed the promissory notes in his
capacity as officer of the defunct Worldwide Garment Manufacturing,... Inc., he
should not be held personally liable for such authorized corporate acts that he
performed.
It is now the contention of the petitioner Republic Planters Bank that having
unconditionally signed the nine (9) promissory notes with Shozo Yamaguchi,
jointly and severally,... defendant Fermin Canlas is solidarily liable with Shozo
Yamaguchi on each of the nine notes.
Defendant
Yamaguchi and private respondent Fermin Canlas were President/Chief
Operating Officer and Treasurer respectively, of Worldwide Garment
Manufacturing, Inc.
defendant Shozo Yamaguchi and private respondent Fermin Canlas were
authorized to apply for credit facilities with the petitioner Republic Planters Bank
in the forms of export advances and letters of credit/trust receipts
accommodations.
Petitioner bank issued nine promissory... notes
In the promissory notes... the name Worldwide Garment Manufacturing, Inc. was
apparently rubber stamped above the signatures of defendant and private
respondent.
Worldwide Garment Manufacturing, Inc. voted to change its corporate name to
Pinch Manufacturing Corporation.
petitioner bank filed a complaint for the recovery of sums of money covered
among others, by the nine promissory notes with interest thereon, plus
attorney's fees and penalty charges.
Only private respondent Fermin Canlas filed an Amended Answer wherein he
denied having issued the promissory notes in question since according to him,
he was... not an officer of Pinch Manufacturing Corporation, but instead of
Worldwide Garment Manufacturing, Inc., and that when he issued said
promissory notes in behalf of Worldwide Garment Manufacturing, Inc., the same
were in blank, the typewritten entries not appearing... therein prior to the time
he affixed his signature.
Issues:
whether private respondent Fermin Canlas is solidarily liable with the other
defendants, namely Pinch Manufacturing Corporation and Shozo Yamaguchi, on
the nine promissory notes.
Ruling:
We find merit in this appeal.
We hold that private respondent Fermin Canlas is solidarily liable on each of the
promissory notes bearing his signature... t
The promissory notes are negotiable instruments and must be governed by the
Negotiable Instruments Law
Under the Negotiable Instruments Law, persons who write their names on the
face of promissory notes are makers and are liable as such.
By signing the notes, the maker promises to pay to the order of the payee or
any... holder[4] according to the tenor thereof.[5] Based on the above provisions
of law, there is no denying that private respondent Fermin Canlas is one of the
co-makers of the promissory... notes. As such, he cannot escape liability arising
therefrom.
Where an instrument containing the words "I promise to pay" is signed by two
or more persons, they are deemed to be jointly and severally liable thereon.
The fact that the singular pronoun is used indicates that the promise is
individual as to each other; meaning that each of the co-signers is... deemed to
have made an independent singular promise to pay the notes in full.
In the case at bar, the solidary liability of private respondent Fermin Canlas is
made clearer and certain, without reason for ambiguity, by the presence of the
phrase "joint and several" as describing the unconditional promise to pay to the
order of Republic Planters Bank.
By making a joint and several promise to pay to the order of Republic Planters
Bank, private respondent Fermin Canlas assumed the solidary liability of a
debtor and the payee may choose to enforce the notes against him alone or jointly
with Yamaguchi... and Pinch Manufacturing Corporation as solidary debtors.
As to whether the interpolation of the phrase "and (in) his personal capacity"
below the signatures of the makers in the notes will affect the liability of the
makers... it is immaterial and... will not affect the liability of private respondent
Fermin Canlas as a joint and several debtor of the notes.
the respondent Court made a grave error in holding that an amendment in a
corporation's Articles of Incorporation effecting a change of corporate name, in
this case from Worldwide Garment Manufacturing, Inc. to Pinch Manufacturing
Corporation, extinguished the... personality of the original corporation.
A change in the corporate name does not make a new corporation, and whether
effected by special act or under a general law, has no effect on the identity of the
corporation, or on its property, rights, or liabilities
Under the Negotiable Instruments Law, the liability of a person signing as an...
agent is specifically provided for as follows:
Sec. 20. Liability of a person signing as agent and so forth. Where the instrument
contains or a person adds to his signature words indicating that he signs for or
on behalf of a principal, or in a representative capacity, he is not liable on the
instrument if... he was duly authorized; but the mere addition of words
describing him as an agent, or as filling a representative character, without
disclosing his principal, does not exempt him from personal liability.
Where the agent signs his name but nowhere in the instrument has he disclosed
the fact that he is acting in a representative capacity or the name of the third
party for whom he might have acted as agent, the agent is personally liable to
the holder of the instrument and... cannot be permitted to prove that he was
merely acting as agent of another and parol or extrinsic evidence is not
admissible to avoid the agent's personal liability.
On the private respondent's contention that the promissory notes were delivered
to him in blank for his signature, we rule otherwise.
Such printed notes are incomplete because there are blank spaces to be filled up
on material particulars
An incomplete instrument which has been delivered to the borrower for his
signature is governed by Section 14 of the Negotiable Instruments Law which
provides, in so far as... relevant to this case, thus:
Sec. 14. Blanks; when may be filled. -- Where the instrument is wanting in any
material particular, the person in possession thereof has a prima facie authority
to complete it by filling up the blanks therein. x x x x In order, however, that any
such... instrument when completed may be enforced against any person who
became a party thereto prior to its completion, it must be filled up strictly in
accordance with the authority given and within a reasonable time. x x x x.
We chose to believe the... bank's testimony that the notes were filled up before
they were given to private respondent Fermin Canlas and defendant Shozo
Yamaguchi for their signatures as joint and several promissors. For signing the
notes above their typewritten names, they bound themselves as... unconditional
makers.
When the notes were given to private respondent Fermin Canlas for his
signature, the notes were complete in the sense that the spaces for the material
particular... had been filled up by the bank as per agreement.
the private respondent Fermin Canlas is hereby held jointly and solidarily liable
with defendants for the amounts found by the Court a quo.
SPS. EDUARDO B. EVANGELISTA AND EPIFANIA C. EVANGELISTA v.
MERCATOR FINANCE CORP., GR No. 148864, 2003-08-21
Facts:
Petitioners, Spouses Evangelista... filed a complaint[1] for annulment of titles
against respondents, Mercator Finance Corporation... and the Register of Deeds
of Bulacan
Petitioners claimed being the registered owners of... five (5) parcels of land[2]
contained in the Real Estate Mortgage[3] executed by them and Embassy Farms,
Inc.
They alleged that they executed the Real Estate Mortgage in favor of Mercator
Financing Corporation
("Mercator") only as officers of Embassy Farms.
They did not receive the proceeds of the loan evidenced by a promissory note, as
all of it went to Embassy Farms. Thus, they contended that the mortgage was
without any consideration as to them since they did not personally obtain... any
loan or credit accommodations.
Mercator... contended that... plaintiffs executed a Mortgage in favor of defendant
Mercator Finance Corporation `for and in consideration of certain loans, and/or
other forms... of credit accommodations obtained from the Mortgagee (defendant
Mercator Finance Corporation)... and to secure the payment of the same and
those others that the
MORTGAGEE may extend to the MORTGAGOR (plaintiffs)... then petitioners are
jointly and severally liable with Embassy Farms. Due to their failure to pay the
obligation, the... foreclosure and subsequent sale of the mortgaged properties
are valid.
Respondents Salazar and Lamecs asserted that they are innocent purchasers for
value and in good faith,... The RTC granted the motion for summary judgment
and dismissed the complaint.
It held:... hat the liability of the signatories thereto are solidary in view of the
phrase "jointly and severally."... petitioners went up to the Court of Appeals, but
again were unsuccessful. The appellate court held:
The appellants' insistence that the loans secured by the mortgage they executed
were not personally theirs but those of Embassy Farms, Inc. is clearly selfserving and misplaced.
The fact that they signed the subject promissory notes in the(ir) personal
capacities... and as officers of the said debtor corporation is manifest on the very
face of the said documents of indebtedness
Issues:
Whether or not the Real Estate Mortgage executed by the plaintiffs in favor of
defendant Mercator Finance Corp. is null and void
Whether or not the extra-judicial foreclosure proceedings undertaken on subject
parcels of land to satisfy the indebtedness of Embassy Farms, Inc. is (sic) null
and void;
Whether or not the sale made by defendant Mercator Finance Corp. in favor of
Lydia Salazar and that executed by the latter in favor of defendant Lamecs Realty
and Development Corp. are null and void;
Ruling:
we affirm.
Petitioners do not deny that they obtained a loan from Mercator. They merely
claim that they got the loan as officers of Embassy Farms without intending to
personally bind themselves or their property.
However, a simple perusal of the promissory note and the continuing suretyship
agreement shows otherwise. These documentary evidence prove that petitioners
are solidary obligors with Embassy Farms.
The promissory note[22] states:
For value received, I/We jointly and severally promise to pay to the order of
MERCATOR FINANCE CORPORATION
The note was signed at the bottom by petitioners Eduardo B. Evangelista and
Epifania C. Evangelista, and Embassy Farms, Inc. with the signature of Eduardo
B. Evangelista below it.
The Continuing Suretyship Agreement[23] also proves the solidary obligation of
petitioners
Courts can interpret a contract only if there is doubt in its letter.[25] But, an
examination of the promissory note shows no such ambiguity.
Besides, assuming arguendo that there is an ambiguity, Section 17 of the
Negotiable Instruments Law states,... viz:
SECTION 17. Construction where instrument is ambiguous. - Where the
language of the instrument is ambiguous or there are omissions therein, the
following rules of construction apply:
(g) Where an instrument containing the word "I promise to pay" is signed by two
or more persons, they are deemed to be jointly and severally liable thereon.
Even if petitioners intended to sign the note merely as officers of Embassy Farms,
still this does not erase the fact that they subsequently... executed a continuing
suretyship agreement. A surety is one who is solidarily liable with the principal.
Having executed the suretyship agreement, there can be no dispute on the
personal liability of petitioners.
Lastly, the parol evidence rule does not apply in this case.
where the parties admitted the existence of the loans and the mortgage deeds
and the fact of default on the due... repayments but raised the contention that
they were misled by respondent bank to believe that the loans were long-term
accommodations, then the parties could not be allowed to introduce evidence of
conditions allegedly agreed upon by them other than those stipulated in the
loan... documents because when they reduced their agreement in writing, it is
presumed that they have made the writing the only repository and memorial of
truth, and whatever is not found in the writing must be understood to have been
waived and abandoned.
IN VIEW WHEREOF, the petition is dismissed.