BPI vs ROYECA (GR No.

176664)

FACTS:
Spouses Royeca executed and delivered a promissory note to Toyota Shaw
and to secure the payment of this promissory note, they executed a Chattel
mortgage over a motor vehicle. However, Toyota transferred the title and rights
of this vehicle to Far East Bank and Trust Company (FEBTC). FEBTC filed a Complaint
for Replevin and Damages against the Royecas for refusing to pay the monthly
amortizations.

ISSUES:
1. WON Royecas were able to prove full payment of their obligation.
2. WON tender of checks constitutes payment.

HELD:
1. NO. As a general rule, one who pleads payment has the burden of proving it.
The debtor (Royecas) has the burden of showing with legal certainty that the
obligation has been discharged by payment. Acknowledgment Receipt was the
only proof that Royecas delivered the checks for payment. It was not a
sufficient proof of payment. Moreover, Royecas had to present proof, not only
that they delivered the checks to the petitioner, but also that the checks were
encashed. They failed to do so. Had the checks been actually encashed, they could
have easily produced the cancelled checks as evidence to prove the same. A
promissory note in the hands of the creditor is a proof of indebtedness rather than
proof of payment.
2. NO. A check is not legal tender and, therefore, cannot constitute a valid tender
of payment. Since 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. The obligation is not extinguished and remains suspended until the
payment by commercial document is actually realized.
Preponderance of evidence: evidence which is more convincing to the court as
worthy of belief than that which is offered in opposition thereto. REPLEVIN: an
action to recover personal property said or claimed to be unlawfully taken.

TRADERS ROYAL BANK V. CA

269 SCRA 15
FACTS:
Filriters through a Detached Agreement transferred ownership to Philfinance a
Central Bank Certificate of Indebtedness. It was only through one of its officers by
which the CBCI was conveyed without authorization from the company. Petitioner
and Philfinance later entered into a Repurchase
agreement,
on
which
petitioner bought the CBCI from Philfinance. The latter agreed to repurchase
the CBCI but failed to do so. When the petitioner tried to have it registered in its
name in the CB, the latter didn't want to recognize the transfer.
ISSUE:
Whether or not the CBCI is negotiable or not?
HELD:
The CBCI is not a negotiable instrument. The instrument provides for a
promise to pay the registered owner Filriters. Very clearly, the instrument was only
payable to Filriters. It lacked the words of negotiability which should have
served as an expression of the consent that the instrument may be
transferred by negotiation.
The language of negotiability which characterize a negotiable paper as a
credit instrument is its freedom to circulate as a substitute for money. Hence,
freedom of negotiability is the touchstone relating to the protection of holders in
due course, and the freedom of negotiability is the foundation for the protection,
which the law throws around a holder in due course. This freedom in
negotiability is totally absent in a certificate of indebtedness as it merely
acknowledges to pay a sum of money to a specified person or entity for a
period of time.
The transfer of the instrument from Philfinance to TRB was merely an
assignment, and is not governed by the negotiable instruments law. The pertinent
question then iswas the transfer of the CBCI from Filriters to Philfinance
and subsequently from Philfinance to TRB, in accord with existing law, so as to
entitle TRB to have the CBCI registered in its name with the Central Bank? Clearly
shown in the record is the fact that Philfinances title over CBCI is defective
since it acquired the instrument from Filriters fictitiously. Although the deed of
assignment stated that the transfer was for value received, there was really

no consideration involved. What happened was Philfinance merely borrowed

CBCI from Filriters, a sister corporation. Thus, for lack of any consideration,
the assignment made is a complete nullity. Furthermore, the transfer wasn't in
conformity with the regulations set by the CB. Giving more credence to rule
that there was no valid transfer or assignment to petitioner.

Caltex (Philippines) Inc. vs. CA

GR 97753, 10 August 1992
FACTS:
Security Bank and Trust Co. issued 280 certificates of time deposit (CTD) in favor of
one Mr. Angel dela Cruz who deposited with the bank P1.12 million. Dela Cruz
delivered the CTDs to Caltex in connection with his purchase of fuel products from
the latter. Subsequently, dela Cruz informed the bank that he lost all the CTDs, and
thus executed an affidavit of loss to facilitate the issuance of the replacement CTDs.
When Caltex presented said CTDs for verification with the bank and formally
informed the bank of its decision to preterminate the same, the bank rejected
Caltex claim and demand as Caltex failed to furnish copies of certain requested
documents. In 1983, dela Cruz loan matured and the bank set-off and applied the
time deposits as payment for the loan. Caltex filed a complaint which was dismissed
on the ground that the subject certificates of deposit are non-negotiable.
ISSUE:
Whether the Certificates of Time Deposit (CTDs) are negotiable instruments.
RULING:
The CTDs in question are negotiable instruments as they meet the requirements of
the law for negotiability as provided for in Section 1 of the Negotiable Instruments
Law. The documents provide that the amounts deposited shall be repayable to the
depositor. And according to the document, the depositor is the "bearer." The
documents do not say that the depositor is Angel de la Cruz and that the amounts
deposited are repayable specifically to him. Rather, the amounts are to be
repayable to the bearer of the documents or, for that matter, whosoever may be the
bearer at the time of presentment. However, petitioner cannot recover on the
CTDs. Although the CTDs are bearer instruments, a valid negotiation thereof for
the true purpose and agreement between it and dela Cruz, as ultimately
ascertained, requires both delivery and indorsement. In this case, there was no
indorsement as the CTDs were delivered not as payment but only as a security for
dela Cruz' fuel purchases.

**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. The
CTDs in question are negotiable instruments as they meet the requirements of the
law for negotiability as provided for in Section 1 of the Negotiable Instruments Law.
The documents provide that the amounts deposited shall be repayable to the
depositor. And according to the document, the depositor is the "bearer." The
documents do not say that the depositor is Angel de la Cruz and that the amounts
deposited are repayable specifically to him. Rather, the amounts are to be
repayable to the bearer of the documents or, for that matter, whosoever may be the
bearer at the time of presentment.