TIBAJIA vs.
CA and EDEN TAN therein or made with respect thereto, shall be discharged upon payment in any coin
G.R. No. 100290 June 4, 1993
FACTS
 A suit for collection of a sum of money filed by Eden Tan against the Tibajia
spouses
 A writ of attachment was issued by the trial court
 The Deputy Sheriff filed a return stating that a deposit made by the Tibajia spouses
had been garnished by him.
 Tibajia spouses delivered to Deputy Sheriff Eduardo Bolima the total money
judgment in check
 Private respondent refused to accept the payment made by the Tibajia spouses and
instead insisted that the garnished funds deposited be withdrawn to satisfy the
judgment obligation.
 Petitioners filed a motion to lift the writ of execution on the ground that the judgment
debt had already been paid
 Motion was denied by the trial court on the ground that payment in cashier's check is
not payment in legal tender and that payment was made by a third party other than
the defendant
ISSUE
 WHETHER OR NOT THE BPI CASHIER'S CHECK TENDERED BY PETITIONERS
FOR PAYMENT OF THE JUDGMENT DEBT, IS "LEGAL TENDER"
RULING
 The provisions of law applicable to the case at bar are the following:
a. Article 1249 of the Civil Code which provides:
Art. 1249. The payment of debts in money shall be made in the currency stipulated,
and if it is not possible to deliver such currency, then in the currency which is legal
tender in the Philippines.
The delivery of promissory notes payable to order, or bills of exchange or other
mercantile documents shall produce the effect of payment only when they have been
cashed, or when through the fault of the creditor they have been impaired.
In the meantime, the action derived from the original obligation shall be held in
abeyance.;
b. Section 1 of Republic Act No. 529, as amended, which provides:
Sec. 1. Every provision contained in, or made with respect to, any obligation which
purports to give the obligee the right to require payment in gold or in any particular
kind of coin or currency other than Philippine currency or in an amount of money of
the Philippines measured thereby, shall be as it is hereby declared against public
policy null and void, and of no effect, and no such provision shall be contained in, or
made with respect to, any obligation thereafter incurred. Every obligation heretofore
and hereafter incurred, whether or not any such provision as to payment is contained
or currency which at the time of payment is legal tender for public and private debts
Section 63 of Republic Act No. 265, as amended (Central Bank Act) which provides:
Sec. 63. Legal character — Checks representing deposit money do not have legal
tender power and their acceptance in the payment of debts, both public and private,
is at the option of the creditor: Provided, however, that a check which has been
cleared and credited to the account of the creditor shall be equivalent to a delivery to
the creditor of cash in an amount equal to the amount credited to his account.
In the recent cases of Philippine Airlines, Inc. vs. Court of Appeals 4 and Roman
Catholic Bishop of Malolos, Inc. vs. Intermediate Appellate Court, 5 this Court held
that —
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.
Pio Barretto Realty Development Corporation vs Court of Appeals
360 SCRA 127
Honor Moslares and Pio Barretto Realty Development Corporation are disputing
over the estate of Nicolai Drepin, represented by Atty. Tomas Trinidad. To settle the
dispute, and while the case was in court, they entered into a Compromise Agreement
by which they agreed to have the estate in dispute be sold; that in case Moslares was
able to buy the property first, he should pay P3,000,000.00 to Barretto Realty
(representing the amount of investments by Barretto Realty in the estate); that should
Barretto Realty buy the property first, it should pay P1,000,000.00 to Moslares
(representing interest). The compromise agreement was approved by the judge
(Judge Perfecto Laguio).
Barretto Realty was able to buy the property first hence it delivered a manager’s
check worth P1,000,000.00 to Moslares but the latter refused to accept the same.
Barretto Realty filed a petition before the trial court to direct Moslares to comply
with the Compromise Agreement. Barretto Realty also consigned the check payment
with the court. The judge issued a writ of execution against Moslares and the sheriff
also delivered the check to Moslares which the latter accepted. However, three years
later, Moslares filed a motion for reconsideration alleging that the check payment did
not amount to legal tender and that he never even encashed the check. The judge
agreed with Moslares.
ISSUE: Whether or not the judge was correct.
HELD: No. There was already a final and executory order issued by the same judge
three years prior. The same may no longer be amended regardless of any claim or
error or incorrectness (save for clerical errors only). It is true that a check is not a
legal tender and while delivery of a check produces the effect of payment only when
it is encashed, the rule is otherwise if the debtor (Barretto Realty) was prejudiced by
the creditor’s (Moslares’) unreasonable delay in presentment. Acceptance of a check
implies an undertaking of due diligence in presenting it for payment. If no such
presentment was made, the drawer cannot be held liable irrespective of loss or injury
sustained by the payee. Payment will be deemed effected and the obligation for
which the check was given as conditional payment will be discharged.
SALVACION F. VDA. DE EDUQUE, ETC. PLAINTIFF AND APPELLEE,
VS. JOSE M. OCAMPO, DEFENDANT AND APPELLANT. 86 Phil. 216
DECISION
MORAN, C.J.:
This is an action to compel acceptance of payment of a mortgage debt.
On February 16, 1935, Dr. Jose Eduque secured two loans from Mariano Ocampo de
Leon, Doña Escolastica de los Reyes and Don Jose M. Ocampo, the first in the
amount of P40,000, and the second in the sum of P15,000, both payable within the
period of twenty (20) years, with interest at -the rate of 5 per annum. Payment of
these two loans was ¦guaranteed by mortgage on real property. In the mortgage
contract it is. stipulated that any of the mortgage creditors may receive payment and
execute deeds of cancellation of the mortgage debts.
On December 6, 1943, plaintiff and appellee, as administratrix of the estate of the
deceased Dr. Jose Eduque, tendered payment, by means of a cashier's check, of the
total amount of the two loans, P55,000, to defendant-appellant Jose M. Ocampo, one
of the creditors, who refused to accept payment. By reason of such refusal, an action
was brought and a cashier's check for the total amount of P55,000 was deposited in
court. After trial, judgment was rendered against defendant compelling him to accept
the P55,000 deposited in court, to issue deeds of cancellation of the mortgage debts,
and to pay the expenses of consignation and costs.
Defendant accepted the judgment with respect to the second loan of P15,000 upon
the ground that, according to him, in the deed of mortgage corresponding to that loan
it clearly appeared that the loan was payable "durante el termino de 20 años", and
that the only question remaining between the parties is the interpretation of the first
deed of mortgage regarding the first loan of P40,000. And he asked the court to order
"que de la cantidad de P55,000 consignada en este Juzgado, se entregue al
demandado la suma de P15,000, despues de descontar proporcionalmente
cualesquiera cantidades por deposito y otros conceptos segun los terminos de la
decision promulgada." The order was issued accordingly and the sum of P15,000.00
out of the P55,000.00 deposited in court was delivered to the defendant.
The present appeal concerns the decision of the lower court regarding the first loan
of P40,000, and the principal error assigned by the appellant is that tender of
payment by means of a cashier's check representing Japanese war notes is not valid.
We have already held that Japanese military notes were legal tender during the
Japanese occupation. But appellant argues, further, that the consignation oS a
cashier's check, which is not legal tender, is not binding upon him. This question,
however, has never been raised in the lower court. Upon the contrary, defendant
accepted impliedly the consignation of the cashier's check when he himself asked the
court that out of the money thus consigned he be paid the amount of the second loan
of P15,000.00. It is a rule that "a cashier's check may constitute a sufficient tender
where no objection is made on this ground." (62 C.J., p. 670; see also 40 Amer. Jut.,
p. 764.)
For all foregoing, judgment is affirmed with costs against appellant.Ozaeta, Pablo,
Bengzon, Montemayor, and Reyes, JJ., concur.
TUASON, J., dissenting:
I am constrained to dissent from the majority decision on the ground on which I
rested my dissent in various cases involving the validity of payments in Japanese
military notes.
I maintain that Japanese war notes were not legal tneder and could not be made so by
military orders. Accordingly, payment in that currency of pre-war obligation over the
protest of the creditor did not operate to discharge the debt except to the extent he
was or could have been benefited by the payment.
DIVISION
[ GR No. L-35767, Jun 18, 1976 ]
RAYMUNDO A. CRYSTAL v. DE GRACIA
RESOLUTION
163 Phil. 465
BARREDO, J.:
Motion for reconsideration of the decision of this Court in this case promulgated on
February 25, 1975 affirming the decision of the Court of Appeals in favor of private
respondents which held that petitioner's redemption of the property acquired by said
respondents in an execution sale pursuant to a final judgment of the trial court in
Civil Case No. R-1666, Court of First Instance of Cebu, was invalid inasmuch as the
check which petitioner had used in paying the redemption price had been either
dishonored or had become stale, hence its value was never realized, thus upholding
in the process the jurisdiction of the trial court to rule on the question of validity of
the redemption in question notwithstanding that by order of that same court, said
matter had been made the subject of a separate suit, Civil Case No. 62-T also of the
Court of First Instance of Cebu, filed on August 9, 1960.
In his motion for reconsideration, petitioner insists that it was an act in excess of
jurisdiction on the part of the trial court in R-1666, to issue on May 31, 1971 the writ
of possession sought by private respondents, thru Pelagia Ocang, in her motion of
August 15, 1970, considering that the court had previously pointedly observed in its
order of March 24, 1960 that "the question as to whether or not the redemption
allegedly made by Mr. Crystal by paying the amount to Mrs. Pelagia Ocang without
using the said P11,200 deposited with the sheriff is legal and effective" has to be
decided in "another proper case" and, furthermore, in its order of June 4, 1960 in the
same case, the same court had more definitely ruled that "the question of ownership
of Mr. Raymundo Crystal, the redemptioner, is not a proper matter to be decided in
this case but in another case where the legality or validity of the alleged deed of
redemption executed in favor of Mr. Crystal will be amply raised and threshed out"
and, accordingly, in attention to such observations and ruling, petitioner did file Civil
Case No. 62-T, which is still pending trial.
While, as already explained in Our decision, such pose of petitioner has its merits,
We deem it inadvisable at this point to modify Our ruling that there is really no issue
of jurisdiction involved here and that it is preferable, under the peculiar
circumstances obtaining in this particular case, that the root of the controversy
between the parties be inquired into and determined in the incident already taken
cognizance of by the trial court in Civil Case No. R-1666 regarding the right of
possession over the property in dispute. In this connection, it is to be noted that even
after he had filed Civil Case No. 62-T, evidently in reliance of what he must have
considered as his right as redemptioner of the property sold in execution under a
judgment in Civil Case No. R-1666, petitioner regained possession of the four (4)
parcels of land in question without the aid of the court, taking the same from Pelagia
Ocang who had previously taken it away from him also extrajudicially, claiming that
she had legally acquired the same precisely in that same execution and that
petitioner's redemption, was null and void because the check he used to pay the
redemption price had been dishonored for lack of sufficient funds. In other words,
both petitioner and Ocang, predicating their respective claims to rightful possession
on the same sale on execution in the same case, Civil Case No. R-1666, had
alternately taken the law in their hands to obtain possession of the lands in question
in disregard of the proper procedure for the complete satisfaction of the judgment of
the court in that case. In the light of these peculiar circumstances, it does appear to
be more appropriate that, since it was the court in that Civil Case No. R-1666 that
rendered the judgment and subsequently ordered the execution sale from which the
disputed redemption was made, it should be the one to settle the whole controversy
among all the interested parties, including even the judgment debtors, the heirs of
Nicolas Rafols themselves, who, according to the records, have claims of their own
relative to the same redemption, which might just as well be inquired into in said
case, rather than in Case No. 62-T in which they are not parties. Otherwise stated, in
issuing the impugned writ of possession, the court took the bull by the horns, so to
speak, thereby overturning its own previous stand on the matter announced in its
orders of March 24 and June 4, 1960 aforementioned. Consequently, We overrule
the argument of jurisdiction or even abuse of discretion raised by petitioner and
reiterate what We have said in regard thereto in Our decision.
This is not to say that the procedure followed by Ocang and sanctioned by the trial
court of resorting to the issuance of a writ of possession is not open to question, since
a writ of possession is not always available in all controversies concerning
possession of real estate. But We see no need to resolve that point here. More
importantly, what impresses Us in the motion for reconsideration is the possible
injustice that might result from Our unqualified reliance in Our decision on the
finding of the Court of Appeals that the check for P11,200 paid by petitioner for the
redemption in dispute had been dishonored, in the face of the other finding in the
same decision of the Court of Appeals indicating that instead of having been
dishonored, the said check had only become stale, albeit it was being replaced with
new ones from time to time. Surely, for a check to be dishonored upon presentment,
on the one hand, and to be stale for not being presented at all in time, on the other,
are incompatible developments that naturally have variant legal consequences. Thus,
if indeed the check in question had been dishonored, then there can be no doubt that
petitioner's redemption was null and void. On the other hand, if it had only become
stale, then it becomes imperative that the circumstances that caused its non-
presentment be determined, for if this was not due to the fault of the petitioner, then
it would be unfair to deprive him of the rights he had acquired as redemptioner,
particularly, if, after all, the value of the check has otherwise been received or
realized by the party concerned. From the motion for reconsideration and its
annexes, We gather that petitioner has ready evidence showing that when Pelagia
Ocang secured the writ of possession in question, she had already been paid the full
amount of the check in dispute. What is more, there are a number of circumstances
pointed out in said motion, apparently supported by corresponding evidence, tending
to show that a compromise had already been agreed upon by the parties, although not
yet approved by the court, or, at least, that Ocang has made admissions which
indicate that the issue regarding the supposed dishonoring or becoming stale of the
repeatedly mentioned check is no longer of any legal significance and, for that
matter, the observations We made in Our decision in regard to the duties of the
sheriff in the premises have been rendered academic.
Needless to say, the Supreme Court should not allow any of its decisions to become
final when it is properly made to appear in a motion for reconsideration based on
relevant facts and circumstances not previously brought to its attention, although
demonstrable from the records, that even if the technical consideration on which it is
based is well taken, substantial justice might be sacrificed, if further proceedings are
not ordered to be held to verify undeniable facts which might have escaped the eyes
of the Court of Appeals. In the instant case, We took it as proven, per statements of
fact in the decision of the Court of Appeals, that the check with which petitioner
redeemed the property in dispute had been dishonored. On that premise and seeing
that even if We upheld the technical point of jurisdiction raised by petitioner, the
final outcome of the controversy between the parties would not be different, We
opted to put aside the procedural aspect of the dispute, and proceeded to decide the
merits of the respective substantive claims of the parties. We felt that in view of the
findings of fact of the Court of Appeals, equity demanded that the case be earlier
terminated by ignoring not only whatever flaw there was in the procedure adopted by
the court below but also the seemingly unusual departure by the Court of Appeals
from the orthodox rule requiring courts to confine its scrutiny in certiorari cases only
to the specific point of jurisdiction complained of.
Now, however, there is a strong showing in the motion for reconsideration, premised
on no less than other portions of the very decision of the intermediate court and other
apparently credible evidence, that not only was said check not dishonored, although
it became stale, but that respondent Pelagia Ocang had actually been paid already the
full value thereof. And in this connection, it is notable that in the comment of
respondents on petitioner's motion for reconsideration, there is no clear and
categorical denial of these important and decisive facts.
One more point. In Our decision, We assumed that the findings of fact of the Court
of Appeals were the result of an exhaustive consideration of evidence presented in
due course by the parties. It turns out now, that inasmuch as the trial court itself had
previously ruled that the validity of the redemption in controversy should be the
subject of a separate action and that, in fact, such separate action had already been
filed by petitioner, it was in this other case that petitioner was to present the
corresponding evidence. Hence, whatever evidence was before the trial court in
Case No. R-1666 when it issued the subject writ of possession could not have been
complete, much less incontrovertible.
With these substantial considerations in view, We find no just alternative than to
reconsider Our decision in so far as the matter of validity or invalidity of petitioner's
redemption is concerned. It being shown that the pivotal finding of the Court of
Appeals regarding the check in question might actually be belied in a more
appropriate proceeding, the foundation of Our own decision has been
shaken. Indeed, We are now convinced that it is but fair and just that the trial court
should be allowed to receive all relevant and competent evidence the parties may
wish to present relative to the issue of whether or not respondent Pelagia Ocang has
already received in one form or another, directly or indirectly, the full amount of
P11,200 as redemption price of the four (4) parcels of land in dispute, as well as to
all other facts which might affect the validity of the redemption here in
controversy. Withal, should it be found by the trial court that the redemption was
invalid because the redemption price has not been fully paid, it should further
determine who made the improvements found on said lands, in order that if it should
turn out that they were introduced by petitioner, possession may not be awarded to
respondents unless said improvements are first properly and fully reimbursed to
petitioner. It goes without saying that the proceedings herein contemplated are to be
held in Civil Case No. R-1666. Correspondingly, Civil Case No. 62-T and the other
case reviewing the same should be deemed academic.
WHEREFORE , the decision of this Court of February 25, 1975 is hereby
reconsidered and modified in line with the foregoing opinion and this case is
remanded to the trial court for further proceedings as therein indicated.
Antonio, Esguerra, Aquino, and Martin, JJ., concur.
Fernando, J., did not take part.
Concepcion, Jr., J., is on leave.
Esguerra and Martin, JJ., were designated to sit in the Second Division.
CHARLESS LEE , ET AL VS COURT OF APPEALS and PHILIPPINE
BANK OF COMMUNICATIONSGR NO. 117913 & 117914, February 1,
2002375 SRA 579
FACTS:
MICO Metals Corporation, through its President, Chares Lee requested from
Philippine Bank of Communication a discounting loan/credit line in the amount of
P3,000,000.000 for the purpose of carrying out MICO’s line of business as well as to
maintain its volume of business, and another discounting loan/credit line for the
purpose of opening letters of credit and trust receipts.Both requests were supported
by a resolution that the President, Charles Lee, and the VicePresident and General
Manager, Mr. Mariano Sio, are authorized and empowered to apply for,negotiate and
secure the approval of commercial loans x x x x x but not limited to discount
loans,letters of credit, trust receipts, lines for marginal deposits on foreign and
domestic letters of credit x x x x for a total amount of not to exceed
P10,000,000.00.The request was approved by the Bank PBCom, and first availment
in the amount of P1,000,000.00 was made on March 26, 1979. Total availment has
reached P3,000,000.00, whichupon maturity, were rolled-over or renewed.
As security to the loan, a Real Estate Mortgage over MICO’s properties was
executed by its VPMariano Sio. Further, Charles Lee, Chua Siok Suy, Mariano Sio,
Alfonso Yap and RichardVelasco, executed in their personal capacity a Surety
Agreement in favor of PBCom in theamount of P3,000,000.00.Another
P4,0000,000.00 was requested by the President Charles Lee from PBCom for
thepurpose of expansion and modernization of the companies machineries. The
request wasconsequently approved and availed in full. Another surety agreement was
executed by the sameset of officers-persons in favor of PBCom and their liability
shall not at any one time exceed thesum of P7,500,000.00/ Later, MICO furnished
PBCom a copy of its notarized certification issued by its corporatesecretary
stating therein that Chio Siok Suy was the duly authorized person,
unanimouslyapproved by the Board of Directors, to negotiate with PBCom on behalf
of MICO for loans andother credit availments.
After the receipt of this secretary’s certificate, foreign letters of credits, domestic
letter of credits and loans were further requested, approved and availed. Upon
maturity of all the creditavailments, PBCom demanded for payment but MICO failed
to settle despite repeated demands,reason for the Bank to foreclose extrajudicially
the properties, and later sold them in public auction. The price however,
was not sufficient to fully pay the total outstanding. PBComdemanded from the
petitioners-sureties the deficiency, which the latter refused to acknowledge.Thus, the
filing with the court of the complaint and for attachment on the properties of
thepetitioners-sureties contending that MICO is no longer in operation and it has no
other propertiesto settle for the deficiency. The trial court denied the complaint
for failure on the part of theBank to prove that the proceeds of the loans were ever
delivered to MICO, which the Court of Appeals reversed, hence this petition.
ISSUES:
1)Whether or not the proceeds of the loans and letters of credit transactions were
everdelivered to MICO; and
2)Whether or not the individual petitioners, as sureties, may be held liable under the
2 SuretyAgreements executed.
RULING:
The SC
AFFIRMED
in toto the decision of the Court Appeals.In civil cases, the party having the burden
of proof must establish his case by preponderance of evidence, which can be
established by the operation of presumption or by the probative value,which the law
attaches to a specific state of facts, thereby creating a prima facie case. If there isno
proof to the contrary, the prima facie case or evidence will prevail.The Negotiable
Instruments Law clearly provides that every negotiable instrument is deemedprima
facie to have been issued for valuable consideration and every person whose
signatureappears thereon are also presumed to have become a party for
value. Negotiable instrumentsinclude promissory notes, bills of exchange and
checks. Letters of credit and trust receipts arehowever, not negotiable instruments,
but drafts issued in connection with letters of credit are negotiable instruments.All
documents presented by PBCom have not merely created a prima facie case but have
actuallyproved the solidary obligation of MICO and the petitioners-sureties. While
the presumptionfound under the Negotiable Instruments Law may not necessarily be
applicable to trust receiptsand letters of credit, the presumption that the drafts drawn
in connection with the letters of credithave sufficient consideration. The fact that
the letters of credit show that the pertinentmaterials/merchandise have been received
by MICO and with drafts signed by thebeneficiary/suppliers proved that there was a
consideration for value.Therefore, the contention of the petitioner that the contracts
on loans and letters of credits werenot binding on the premise that there were no
consideration for value and if there was, the Bank failed to present evidence as to the
crediting of the proceeds to its account is untenable. It wasthe petitioner who has
been preventing the Bank in presenting the evidence. But from the fact itself that
MICO has requested for an additional loan of P4M, impliedly, is a prima facie
casewhich showed that the proceeds of the earlier loans were delivered
to MICO. The court also found no merits on the latter’s contention that the contracts
were executed fraudulently by theunauthorized person Chua Siok Suy. The fact that
it was MICO which furnished PBCom the Secretary’s Certificate, notarized by its
own corporate secretary suffices for the PBCom tobelieve that it was valid and
binding, hence the granting of the request for further availments.Anent petitioners-
sureties contention that they obtained no consideration whatsoever on thesurety
agreements, the Court pointed out that the consideration for the surety is the very
consideration for the principal obligor, MICO, in the contracts of loan. In the case
of WillexPlastic Industries Corporation vs. CA, it ruled that the consideration
necessary to support a surety obligation need not pass directly to the surety, a
consideration moving to the principal alonebeing sufficient. For a guarantor or
surety is bound by the same consideration that makes thecontract effective
between the parties thereto. It is not necessary that a guarantor or suretyshould
receive any part or benefit, if such there be, accruing to his principal
PHILIPPINE BANK OF COMMERCE vs. ARUEGO
Facts:
Jose Aruego obtained a credit accommodation from the Philippine Bank of
Commerce to facilitate the payment of printing of “World Current Events”, the
periodical he is publishing. Thus, for every printing of the periodical, the printer,
Encal Press and Photo Engraving, collected the cost of printing by drawing a draft
against the plaintiff, said draft being sent later to the defendant for acceptance. As an
added security for the payment of the amounts advanced to Encal Press and Photo-
Engraving, the plaintiff bank also required defendant Aruego to execute a trust
receipt in favor of said bank wherein said defendant undertook to hold in trust for
plaintiff the periodicals and to sell the same with the promise to turn over to the
plaintiff the proceeds of the sale of said publication to answer for the payment of all
obligations arising from the draft. The Philippine Bank of Commerce instituted an
action against Aruego to recover the cost of printing of the latter’s
periodical. Aruego however argues that he signed the supposed bills of exchange
only as an agent of the Philippine Education Foundation Company where he is
president.
Issue:
Whether Aruego can be held liable by the petitioner although he signed the supposed
bills of exchange only as an agent of Philippine Education Foundation Company.
Held:
Yes. Aruego did not disclose in any of the drafts that he accepted that he was signing
as representative of the Philippine Education Foundation Company. Aruego contends
that he signed the supposed bills of exchange as an agent of the Philippine Education
Foundation Company where he is president. Section 20 of the Negotiable
Instruments Law provides that "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 filing a
representative character, without disclosing his principal, does not exempt him from
personal liability." An inspection of the drafts accepted by the defendant shows that
nowhere has he disclosed that he was signing as a representative of the Philippine
Education Foundation Company. He merely signed as follows: "JOSE ARUEGO
(Acceptor) (SGD) JOSE ARGUEGO For failure to disclose his principal, Aruego is
personally liable for the drafts he accepted.
PBCom vs Aruego
Philippine Bank of Commerce vs. Aruego
GR L-25836-37, 31 January 1981, 102 scra 530
--agents
FACTS:
To facilitate payment of the printing of a periodical called “World Current Events.”,
Aruego, its publisher, obtained a credit accommodation from the Philippine Bank of
Commerce. For every printing of the periodical, the printer collected the cost of
printing by drawing a draft against the bank, said draft being sent later to Aruego for
acceptance. As an added security for the payment of the amounts advanced to the
printer, the bank also required Aruego to execute a trust receipt in favor of the bank
wherein Aruego undertook to hold in trust for the bank the periodicals and to sell the
same with the promise to turn over to the bank the proceeds of the sale to answer for
the payment of all obligations arising from the draft. The bank instituted an action
against Aruego to recover the cost of printing of the latter’s periodical. Aruego
however argues that he signed the supposed bills of exchange only as an agent of the
Philippine Education Foundation Company where he is president.
ISSUES:
Whether Aruego can be held liable by the petitioner although he signed the supposed
bills of exchange only as an agent of Philippine Education Foundation Company.
RULING:
Aruego did not disclose in any of the drafts that he accepted that he was signing as
representative of the Philippine Education Foundation Company. For failure to
disclose his principal, Aruego is personally liable for the drafts he accepted, pursuant
to Section 20 of the NIL which provides that when 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 filing a representative character,
without disclosing his principal, does not exempt him from personal liability.
Sesbreno vs CA
Sesbreno vs. Court of Appeals
GR 89252, 24 May 1993
FACTS:
Petitioner Sesbreno made a money market placement in the amount of P300,000 with
the Philippine Underwriters Finance Corporation (PhilFinance), with a term of 32
days. PhilFinance issued to Sesbreno the Certificate of Confirmation of Sale of a
Delta Motor Corporation Promissory Note, the Certificate of Securities Delivery
Receipt indicating the sale of the note with notation that said security was in the
custody of Pilipinas Bank, and postdated checks drawn against the Insular Bank of
Asia and America for P304,533.33 payable on March 13, 1981. The checks were
dishonored for having been drawn against insufficient funds. Pilipinas Bank never
released the note, nor any instrument related thereto, to Sesbreno; but Sesbreno
learned that the security which was issued on April 10, 1980, maturing on 6 April
1981, has a face value of P2,300,833.33 with PhilFinance as payee and Delta
Motors as maker; and was stamped “non-negotiable” on its face. As Sesbreno was
unable to collect his investment and interest thereon, he filed an action for damages
against Delta Motors and Pilipinas Bank. Delta Motors contents that said promissory
note was not intended to be negotiated or otherwise transferred by Philfinance as
manifested by the word "non-negotiable" stamped across the face of the Note.
ISSUE: Whether the non-negotiability of a promissory note prevents its assignment.
RULING: A negotiable instrument, instead of being negotiated, may also be
assigned or transferred. The legal consequences of negotiation and assignment of the
instrument are different. A non-negotiable instrument may not be negotiated but may
be assigned or transferred, absent an express prohibition against assignment or
transfer written in the face of the instrument. The subject promissory note, while
marked "non-negotiable," was not at the same time stamped "non-transferable" or
"non-assignable." It contained no stipulation which prohibited Philfinance from
assigning or transferring such note, in whole or in part.
**A non-negotiable instrument may not be negotiated but may be assigned or
transferred, absent an express prohibition against assignment or transfer written on
the face of the instrument.
Caltex vs CA
Caltex (Philippines) Inc. vs. CA
GR 97753, 10 August 1992
-negotiability
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.
103 Phil. 40 – Mercantile Law – Negotiable Instruments Law – Negotiable
Instruments in General – Unconditional Promise To Pay
During the Japanese occupation, Pacita Young issued three promissory notes to
Pacifica Jimenez. The total sum of the notes was P21k. All three promissory notes
were couched in this manner:
Received from Miss Pacifica Jimenez the total amount of ___________ payable six
months after the war, without interest.
When the promissory notes became due, Jimenez presented the notes for payment.
Pacita and her husband died and so the notes were presented to the administrator of
the estate of the spouses (Dr. Jose Bucoy). Bucoy manifested his willingness to pay
but he said that since the loan was contracted during the Japanee occupation the
amount should be deducted and the Ballantyne Schedule should be used, that is peso-
for-yen (which would lower the amount due from P21k). Bucoy also pointed out that
nowhere in the not can be seen an express “promise” to pay because of the absence
of the words “I promise to pay…”
ISSUE: Whether or not Bucoy is correct.
HELD: No. The Ballantyne schedule may not be used here because the debt is not
payable during the Japanese occupation. It is expressly stated in the notes that the
amounts stated therein are payable “six months after the war”. Therefore, no
reduction could be effected, and peso-for-peso payment shall be ordered in
Philippine currency.
The notes also amounted in effect to a promise to pay the amounts indicated therein.
An acknowledgment may become a promise by the addition of words by which a
promise of payment is naturally implied, such as, “payable,” “payable” on a given
day, “payable on demand,” “paid . . . when called for,” . . . To constitute a good
promissory note, no precise words of contract are necessary, provided they amount,
in legal effect, to a promise to pay. In other words, if over and above the mere
acknowledgment of the debt there may be collected from the words used a promise
to pay it, the instrument may be regarded as a promissory note.
Sec. 10. Terms, when sufficient. - The instrument need not follow the language
of this Act, but any terms are sufficient which clearly indicate an intention to
conform to the requirements hereof.
Illustrative case:
JIMENEZ V. BUCOY
103 PHIL 40
FACTS:
In the intestate of the estate of spouses Young, Jimenez presents a
promissory note signed by Pacita Young for different amounts totaling
P21,000. The administrator is willing to pay the promissory note on the
premise that the amount be adjusted. Claimant assails the adjustment and
hence, she instituted a case for collection of sum of money.
*Note: “6 months after the war”
HELD: The administrator calls attention to the fact that the notes contained no
express promise to pay for a certain amount. This is without merit. An
acknowledge may become a promise to pay by the addition of words by
which a promise of payment is naturally implied, such as “payable”,
“payable” on a given date, “payable on demand”, “paid…when called for”.
To constitute a good promissory note, no precise words of contract are
necessary, provided they amount, in legal effect, a promise to pay.
 90 SCRA 533 – – Mercantile Law – Negotiable Instruments Law – Negotiable
Instruments in General – Sum Certain in Money – RA 529
In 1969, Jesusa Afable and two others procured a loan from Nelia Ponce in the
amount of $194,016.29. In June 1969, Afable and her co-debtors executed a
promissory note in favor of Ponce in the peso equivalent of the loan amount which
was P814,868.42. The promissory note went due and was left unpaid despite
demands from Ponce. This prompted Ponce to sue Afable et al. The trial court ruled
in favor of Ponce. The Court of Appeals initially affirmed the trial court but it later
reversed its decisions as it ruled that the promissory note under consideration was
payable in US dollars, and, therefore pursuant to Republic Act 529, the transaction
was illegal with neither party entitled to recover under the in pari delicto rule.
ISSUE: Whether or not Ponce may recover.
HELD: Yes. RA 529 provides that an agreement to pay in dollars is null and void
and of no effect however what the law specifically prohibits is payment in currency
other than legal tender. It does not defeat a creditor’s claim for payment, as it
specifically provides that “every other domestic obligation … whether or not any
such provision as to payment is contained therein or made with respect thereto, shall
be discharged upon payment in any coin or currency which at the time of payment is
legal tender for public and private debts.” A contrary rule would allow a person to
profit or enrich himself inequitably at another’s expense.
On the face of the promissory note, it says that it is payable in Philippine currency –
the equivalent of the dollar amount loaned to Afable et al. It may likewise be pointed
out that the Promissory Note contains no provision “giving the obligee the right to
require payment in a particular kind of currency other than Philippine currency, ”
which is what is specifically prohibited by RA No. 529. If there is any agreement to
pay an obligation in a currency other than Philippine legal tender, the same is null
and void as contrary to public policy, pursuant to Republic Act No. 529, and the
most that could be demanded is to pay said obligation in Philippine currency.
NOTE: RA 529 has already been repealed by Republic Act 8183 which provides
that every monetary obligation must be paid in Philippine currency which is legal
tender in the Philippines. However, the parties may agree that the obligation or
transaction shall be settled in any other currency at the time of payment. (The
Philippine Negotiable Instruments Law, De Leon and De Leon Jr., p. 29)
34 SCRA 337 – Mercantile Law – Negotiable Instruments Law – Negotiable
Instruments in General – Sum Certain in Money – Currency To Be Used
Octavio Kalalo is an engineer whose services were contracted by Alfredo Luz, an
architect in 1961. Luz contracted Kalalo to work on ten projects across the country,
one of which was an in the International Rice Research Institute (IRRI) Research
Center in Los Baños, Laguna. Luz was to be paid $140,000.00 for the entire project.
For Kalalo’s work, Luz agreed to pay him 20% of what IRRI is going to pay or
equivalent to $28,000.00.
ISSUE: Whether or not Kalalo should be paid in US currency.
HELD: No. The agreement was forged in 1961, years before the passage of
Republic Act 529 in 1950. The said law requires that payment in a particular kind of
coin or currency other than the Philippine currency shall be discharged in Philippine
currency measured at the prevailing rate of exchange at the time the obligation was
incurred. Nothing in the law however provides which rate of exchange shall be used
hence it is but logical to use the rate of exchange at the time of payment.
NOTE: RA 529 has already been repealed by Republic Act 8183 which provides
that every monetary obligation must be paid in Philippine currency which is legal
tender in the Philippines. However, the parties may agree that the obligation or
transaction shall be settled in any other currency at the time of payment. (The
Philippine Negotiable Instruments Law, De Leon and De Leon Jr., p. 29)
5 SCRA 745 – Mercantile Law – Negotiable Instruments Law – Negotiable
Instruments in General – Rules of Construction
A promissory note dated march 12, 1954 was executed by Vicente Legarda,
president of Concepcion Mining Company, and Jose Sarte. On the face of the
promissory note partially reads:
NINETY DAYS after date, for value received, I promise to pay to the order of the
Philippine National Bank . . . .
The promissory note matured and without payment from the makers. PNB sued
Concepcion Mining and Sarte.
ISSUE: Whether or not the estate of Legarda should be included in the suit.
HELD: No. There is no need for pursuant to Section 17 (g) of the Negotiable
Instruments Law:
SEC. 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:
xxx xxx xxx
(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.
 PHILIPPINE NATIONAL BANK, plaintiff-appellee,
vs.
CONCEPCION MINING COMPANY, INC., ET AL., defendants-appellants.
Ramon B. de los Reyes for plaintiff-appellee.
Demetrio Miraflor for defendants-appellants.
DECISION
LABRADOR, J.:
Appeal from a judgment or decision of the Court of First Instance of Manila, Hon.
Gustavo Victoriano, presiding, sentencing defendants Concepcion Mining Company
and Jose Sarte to pay jointly and severally to the plaintiff the amount of P7,197.26
with interest up to September 29, 1959, plus a daily interest of P1.3698 thereafter up
to the time the amount is fully paid, plus 10% of the amount as attorney’s fees, and
costs of this suit.
The present action was instituted by the plaintiff to recover from the defendants the
face of a promissory note the pertinent part of which reads as follows:
Manila, March 12, 1954
NINETY DAYS after date, for value received, I promise to pay to the order of the
Philippine National Bank . . . .
In case it is necessary to collect this note by or through an attorney-at-law, the
makers and indorsers shall pay ten percent (10%) of the amount due on the note as
attorney’s fees, which in no case shall be less than P100.00 exclusive of all costs and
fees allowed by law as stipulated in the contract of real estate mortgage. Demand and
Dishonor Waived. Holder may accept partial payment reserving his right of recourse
again each and all indorsers.
(Purpose — mining industry)
CONCEPCION MINING COMPANY, INC.,
By:
(Sgd.) VICENTE LEGARDA
President
(Sgd.) VICENTE LEGARDA
(Sgd.) JOSE S SARTE
“Please issue check to —
Mr. Jose S. Sarte”
Upon the filing of the complaint the defendants presented their answer in
which they allege that the co-maker the promissory note Don Vicente L. Legarda
died on February 24, 1946 and his estate is in the process of judicial determination in
Special Proceedings No. 29060 of the Court of First Instance of Manila. On the basis
of this allegation it is prayed, as a special defense, that the estate of said deceased
Vicente L. Legarda be included as party-defendant. The court in its decision ruled
that the inclusion of said defendant is unnecessary and immaterial, in accordance
with the provisions of Article 1216 of the Deny Civil Code and section 17 (g) of the
Negotiable Instruments Law.
A motion to reconsider this decision was denied and thereupon defendants presented
a petition for relief, asking that the effects of the judgment be suspended for the
reason that the deceased Vicente L. Legarda should have been included as a party-
defendant and his liability should be determined in pursuance of the provisions of the
promissory note. This motion for relief was also denied, hence defendant appealed to
this Court.
Section 17 (g) of the Negotiable Instruments Law provides as follows:
SEC. 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:
xxx xxx xxx
(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.
And Article 1216 of the Civil Code of the Philippines also provides as follows:
ART. 1216. The creditor may proceed against any one of the solidary debtors or
some of them simultaneously. The demand made against one of them shall not be an
obstacle to those which may subsequently be directed against the others so long as
the debt has not been fully collected.
In view of the above quoted provisions, and as the promissory note was executed
jointly and severally by the same parties, namely, Concepcion Mining Company, Inc.
and Vicente L. Legarda and Jose S. Sarte, the payee of the promissory note had the
right to hold any one or any two of the signers of the promissory note responsible for
the payment of the amount of the note. This judgment of the lower court should be
affirmed.
Our attention has been attracted to the discrepancies in the printed record on appeal.
We note, first, that the names of the defendants, who are evidently the Concepcion
Mining Co., Inc. and Jose S. Sarte, do not appear in the printed record on appeal. The
title of the complaint set forth in the record on appeal does not contain the name of
Jose Sarte, when it should, as two defendants are named in the complaint and the
only defense of the defendants is the non-inclusion of the deceased Vicente L.
Legarda as a defendant in the action. We also note that the copy of the promissory
note which is set forth in the record on appeal does not contain the name of the third
maker Jose S. Sarte. Fortunately, the brief of appellee on page 4 sets forth said name
of Jose S. Sarte as one of the co-maker of the promissory note. Evidently, there is an
attempt to mislead the court into believing that Jose S. Sarte is no one of the co-
makers. The attorney for the defendants Atty. Jose S. Sarte himself and he should be
held primarily responsible for the correctness of the record on
appeal. WE, THEREFORE, order the said Atty. Jose S. Sarte to explain why in his
record on appeal his own name as one of the defendants does not appear and neither
does his name appear as one of the co-signers of the promissory note in question. SO
ORDERED
 INCIONG V. CA
257 SCRA 578
FACTS: A promissory note was issued by petitioner together with 2 others jointly
and severally, to make them liable to PBC. Thereafter was a default on the payment
of the note. PBC proceeded against Inciong and in the action filed by the bank, the
court decided in its favor.
HELD: Where the promissory note expressly states that the three signatures
therein are jointly and severally liable, any one or some or all of them may
be proceeded against for the entire obligation—the choice is left to the
solidary creditor to determine against whom he will enforce collection.
SESBRENO V. CA
222 SCRA 466
FACTS: Petitioner made a placement with Philfinance. The latter delivered to him
documents, some of which was a promissory note from Delta Motors and a post-
dated check. The post-dated checks were dishonored. This prompted petitioner to
ask for the promissory note from DMC and it was discovered that the note issued by
DMC was marked as non-negotiable. As Sesbreno failed to recover his money, he
filed case against DMC and Philfinance.
HELD:The nonnegotiability of the instrument doesn’t mean that it is non-
assignable or transferable. It may still be assigned or transferred in whole or in part,
even without the consent of the promissory note, since consent is not necessary for
the validity of the assignment.
In assignment, the assignee is merely placed in the position of the
assignors and acquires the instrument subject to all the defenses that
might have been set up against the original payee.
TIBAJIA V. CA
223 SCRA 163
FACTS:Tan filed a suit against spouses Tibaija. Decision was rendered in
her favor. She then filed a motion of execution for the amount deposited and
the cashier of RTC was garnished for the amount deposited therein by the
spouses. This prompted the spouses to deliver cash and check but Tan
refused to accept.
HELD:
A check is not valid legal tender and the creditor may validly refuse payment
by check.
ROMAN CATHOLIC OF MALOLOS V. IAC
191 SCRA 411
FACTS:
Petitioner was the owner of a parcel of land. It then entered into a contract
of lease agreement with Robes-Fransisco Realty for the parcel of
land. The agreement was that there would be downpayment plus installments
with interest. Robes-Fransisco was then in default. Knowing
that it was in its payment of the installments, it requested for the
restructuring of the installment payments but was denied. It then asked for
grace period to pay the same and tendered a check thereafter. Such was refused and
the contract was cancelled.
HELD:
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 valid tender of payment and may be
refused receipt by the obligee or creditor. As this is the case,
the subsequent consignation of the check didn't operate to discharge Robes-
Fransisco from its obligation to petitioner.
ABUBAKAR V. AUDITOR GENERAL
81 PHIL. 359
FACTS:
The auditor general refuses to authorize the payment of the treasury
warrant issued in the name of Placido Urbanes, now in the hands of
Benjamin Abubakar. The auditor general refuses to do so because, first, the
money available for redemption of treasury warrants was appropriated by law and
the subject warrant doesn’t fall within the purview of the law; second, one of the
requirements was not complied with, which is it must be sworn that the holders of
the warrant covering payment or replenishment
of cash advances for official expenditures received them in payment of definite
government obligations.

HELD:
Petitioner holds that he is a holder in good faith and for value of a
negotiable instrument and is entitled to the rights and privileges of a holder in due
course, free from defenses. But this treasury warrant is within the
scope of the Negotiable
Instruments Law. For one thing, the document bearing on its face the words
“payable from the appropriation for food administration”, is actually an order for
payment out of a particular fund, and is not unconditional, and doesn’t fulfill one of
the essential requirements of a negotiable instrument.
PHILIPPINE BANK OF COMMERCE V. ARUEGO
102 SCRA 530
FACTS:
Aruego, on behalf of World Current Events, entered into a Credit
Agreement with PBCom, for the publication of the company’s periodicals. At
every printing endeavor by the printing press, a bill of exchange is drawn
against PBCom. The instruments are signed by Aruego, without any indication that
he is an agent of World Current Events. When he was being held liable by PBCom,
he averred that he only signed the instrument in the capacity of agent of the
company.
HELD:
An inspection of the drafts accepted by the defendant would show nowhere that he
has disclosed that he was signing in representation of the Philippine Education
Foundation Company. He merely signed his name. For failure to
disclose his principal, Aruego was personally liable for the drafts he accepted.
Eduque vs. Ocampo
86 Phil. 216
Facts:
On 16 February 1935, Dr. Jose Eduque secured two loans from Mariano Ocampo de
Leon, DonaEscolastica delos Reyes and Don Jose M. Ocampo, with amount s of
P40,000 and P15,000, both payablewithin 20 years with interest of 5% per annum.
Payment of the loans was guaranteed by mortgage on realproperty. On 6 December
1943, Salvacion F. Vda de Eduque, as administratrix of the estate of Dr. JoseEduque,
tendered payment by means of a cashier’s check representing Japanese War notes to
Jose M.Ocampo, who refused payment. By reason of such refusal, an action
was brought and the cashier’s check wasdeposited in court. After trial, judgment was
rendered against Ocampo compelling him to accept the amount,to pay the expenses
of consignation, etc. Ocampo accepted the judgment as to the second loan but
appealed asto the first loan.
Issue:
Whether there is a tender of payment by means of a cashier’s check representing war
notes.
Held:
Japanese military notes were legal tender during the Japanese occupation;
and Ocampo impliedlyaccepted the consignation of the cashier’s check when he
asked the court that he be paid the amount of thesecond loan (P15,000). It is a rule
that a cashier’s check may constitute a sufficient tender where no objectionis made
on this ground.