nil set 1 final

8/12/2019 Nil Set 1 Final

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#1 CEBU INTERNATIONAL V. CA

316 SCRA 488

FACTS:

Petitioner is a quasi-banking institution involved in money market transactions Alegre invested

!it" #etitioner P$%%&%%% Petitioner issued t"en a #romissory note& !"ic" !ould mature a##ro'imately a(ter a

mont" )"e note covered (or Alegre*s #lacement #lus interest +n t"e maturity o( t"e note& #etitioner issued a

c"eck #ayable to Alegre& covering t"e !"ole amount due ,t !as dra!n (rom #etitioner*s current account in P,

."en t"e !i(e o( Alegre tried to de#osit t"e c"eck& t"e bank dis"onored t"e c"eck Petitioner !as

noti(ied o( t"is matter and Alegre demanded t"e immediate #ayment in cas" ,n turn& #etitioner #romised to

re#lace t"e c"eck on t"e im#ossible #remise t"at t"e (irst issued be returned to t"em )"is #rom#ted Alegre to (ile a

com#laint against #etitioner and #etitioner in turn& (iled a case against P, (or allegedly unla!(ully deducting

(rom its account counter(eit c"ecks )"e trial court decided in (avor o( Alegre

ISSUE:

."et"er or not t"e /egotiable ,nstruments 0a! is a##licable to t"e money market transaction "eld

bet!een #etitioner and Alegre

HELD:

Considering t"e nature o( t"e money market transaction& Article 124 o( t"e CC is t"e a##licable

#rovision s"ould be a##lied A money market "as been de(ined to be a market dealing in standardied s"ort-

term credit instruments !"ere lenders and borro!ers don*t deal directly !it" eac" ot"er but t"roug" a

middleman or dealer in t"e o#en market ,n a money market transaction& t"e investor is t"e lender !"o loans

"is money to a borro!er t"roug" a middleman or dealer

,n t"e case at bar& t"e transaction is in t"e nature o( a loan Petitioner acce#ted t"e c"eck but !"en

"e tried to encas" it& it !as dis"onored )"e "older "as an immediate recourse against t"e dra!er& and consequently

could immediately (ile an action (or t"e recovery o( t"e value o( t"e c"eck

5urt"er& in a loan transaction& t"e obligation to #ay a sum certain in money may be #aid in money& !"ic" is

t"e legal tender or& by t"e use o( a c"eck A c"eck is not legal tender& and t"ere(ore cannot constitute valid tender

o( #ayment

#2 ROMAN CATHOLIC OF MALOLOS V. IAC

11 SCRA 411

FACTS:

Petitioner !as t"e o!ner o( a #arcel o( land ,t t"en entered into a contract o( lease agreement !it" Robes-

5ransisco Realty (or t"e #arcel o( land )"e agreement !as t"at t"ere !ould be do!n #ayment #lus installments

!it" interest Robes-5ransisco !as t"en in de(ault no!ing t"at it !as in its #ayment o( t"e installments& it

requested (or t"e restructuring o( t"e installment #ayments but !as denied ,t t"en asked (or grace #eriod to

#ay t"e same and tendered a c"eck t"erea(ter Suc" !as re(used and t"e contract !as cancelled

HELD:

A c"eck !"et"er a manager*s c"eck or ordinary c"eck is not legal tender and an o((er o( a c"eck in

#ayment o( a debt is not valid tender o( #ayment and may be re(used recei#t by t"e obligee or creditor As t"is is

t"e case& t"e subsequent consignation o( t"e c"eck didn7t o#erate to disc"arge Robes-5ransisco (rom itsobligation to #etitioner

#3 BPI EXPRESS CARD CORPORATION V.CA

22 SCRA 26%

FACTS:

arasigan !as t"e "older o( a P, credit card 9ue to "is delinquency in #ayment& immediate demand !as

given by P, to #ay account arasigan issued a #ostdated c"eck )"e c"eck !as t"erea(ter ke#t in custiody


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by P, and card !as tem#orarily sus#ended And on a relevant date& arasigan a(ter eating in Ca(: Adriatico

tried to use "is card to #ay but it !as dis"onored

HELD:

)"e issuance o( t"e #ostdated c"eck !as not e((ective #ayment on t"e #art o( arasigan and t"us& t"e bank

!as ;usti(ied in sus#ending tem#orarily "is use o( t"e credit card A c"eck is only a substitute (or money and

not money& and t"e delivery o( suc" instrument doesn7t itsel( o#erate as #ayment

#4 CF SHARP & CO., INC. V. NORTHWEST AIRLINES, INC.

381 SCRA 314

FACTS:

Petitioner !as aut"oried to sell tickets o( /ort"!est Airlines-C)9@ in (avor o( one Angel dela Cru !"o de#osited !it" t"e bank t"e aggregate amount o( P112

million Anger de la Cru delivered t"e C)9s to Calte' in connection !it" "is #urc"ase o( (uel #roducts (rom t"e

latter Subsequently& dela Cru in(ormed t"e bank t"at "e lost all t"e C)9s& and t"us e'ecuted an a((idavit o( loss to

(acilitate t"e issuance o( t"e re#lacement C)9s 9e la Cru !as able to obtain a loan o( P8$&%%% (rom t"e bank&

and in turn& "e e'ecuted a notaried 9eed o( Assignment o( )ime 9e#osit in (avor o( t"e bank

)"erea(ter& Calte' #resented (or veri(ication t"e C)9s >!"ic" !ere declared lost by de la Cru@ !it" t"e

bank Calte' (ormally in(ormed t"e bank o( its #ossession o( t"e C)9s and its decision to #reterminate t"e same

)"e bank re;ected Calte'* claim and demand& a(ter Calte' (ailed to (urnis" co#y o( t"e requested documents

evidencing t"e guarantee agreement& etc ,n 183& de la Cru* loan matured and t"e bank set-o(( and a##lied t"e

time de#osits as #ayment (or t"e loan Calte' (iled t"e com#laint& but !"ic" !as dismissed

I** 718: ."et"er t"e Certi(icates o( )ime 9e#osit >C)9s@ are negotiable instruments

H! 718:

)"e C)9s in question meet t"e requirements o( t"e la! (or negotiability Contrary to t"e lo!er court*s

(indings& t"e C)9s are negotiable instruments >Section 1@ /egotiability or non-negotiability o( an instrument is

determined (rom t"e !riting& ie (rom t"e (ace o( t"e instrument itsel( )"e documents #rovided t"at t"e amounts

de#osited s"all be re#ayable to t"e de#ositor )"e amounts are to be re#ayable to t"e bearero( t"e documents& ie!"osoever may be t"e bearer at t"e time o( #resentment

I** 728: ."et"er t"e C)9s* negotiation require delivery only


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H! 728:

Alt"oug" t"e C)9s are bearer instruments& a valid negotiation t"ereo( (or t"e true #ur#ose and agreement

bet!een it >Calte'@ and de la Cru requires bot" delivery and indorsementB as t"e C)9s !ere delivered to it as

security (or dela Cru* #urc"ases o( its (uel #roducts& and not (or #ayment erein& t"ere !as no negotiation in t"e

sense o( a trans(er o( title& or legal title& to t"e C)9s in !"ic" situation mere delivery o( t"e bearer C)9s !ould

"ave su((iced )"e delivery t"ereo( as security (or t"e (uel #urc"ases at mostconstitutes Calte' as a "older (or value

by reason o( "is lien Accordingly& a negotiation (or suc" #ur#ose cannot be e((ected by mere delivery o( t"e

instrument since t"e terms t"ereo( and t"e subsequent dis#osition o( suc" security& in t"e event o( non-#ayment o(

t"e #rinci#al obligation& must be contractually #rovided (or

CALTEX V. CA 212 SCRA 448 Bearer Instrument Certificate of Time Deposit

,n 182& Angel de la Cru obtained certi(icates o( time de#osit >C)9s@ (rom Security ank and )rust Com#any (or

t"e (ormer*s de#osit !it" t"e said bank amounting to P1&12%&%%%%% )"e said C)9s are couc"ed in t"e (ollo!ing

mannerDThis is to Certify that B E A R E R has deposited in this Ban the sum of !!!!!!! "esos# "hi$ippine Currency#

repaya%$e to said depositor !!!!! days& after date# upon presentation and surrender of this certificate# 'ith interest

at the rate of !!! ( per cent per annum&

Angel de la Cru subsequently delivered t"e C)9s to Calte' in connection !it" t"e #urc"ase o( (uel #roducts (rom

Calte'

,n arc" 182& Angel de la Cru advised Security ank t"at "e lost t"e C)9s e e'ecuted an a((idavit o(

loss and submitted it to t"e bank )"e bank t"en issued anot"er set o( C)9s ,n t"e same mont"& Angel de la Cru

acquired a loan o( P8$&%%%%% and "e used "is time de#osits as collateral

,n /ovember 182& a re#resentative (rom Calte' !ent to Security ank to #resent t"e C)9s >delivered by

de la Cru@ (or veri(ication Calte' advised Security ank t"at de la Cru delivered Calte' t"e C)9s as security (or

#urc"ases "e made !it" t"e latter Security ank re(used to acce#t t"e C)9s and instead required Calte' to #resent

documents #roving t"e agreement made by de la Cru !it" Calte' Calte' "o!ever (ailed to #roduce said

documents

,n A#ril 183& de la Cru* loan !it" Security bank matured and no #ayment !as made by de la Cru Security ank

eventually set-o(( t"e time de#osit to #ay o(( t"e loan

Calte' sued Security ank to com#el t"e bank to #ay o(( t"e C)9s Security ank argued t"at t"e C)9s

are not negotiable instruments even t"oug" t"e !ord EbearerF is !ritten on t"eir (ace because t"e !ord EbearerF

contained t"erein re(er to de#ositor and only t"e de#ositor can encas" t"e C)9s and no one else

ISSUE: ."et"er or not t"e certi(icates o( time de#osit are negotiable

HELD:

Ges )"e C)9s indicate t"at t"ey are #ayable to t"e bearerB t"at t"ere is an im#lication t"at t"e de#ositor is

t"e bearer but as to !"o t"e de#ositor is& no one kno!s ,t does not say on its (ace t"at t"e de#ositor is Angel de la

Cru ,( it !as really t"e intention o( res#ondent bank to #ay t"e amount to Angel de la Cru only& it could "ave

!it" (acility so e'#ressed t"at (act in clear and categorical terms in t"e documents& instead o( "aving t"e !ord

E?AR?RF stam#ed on t"e s#ace #rovided (or t"e name o( t"e de#ositor in eac" C)9 +n t"e !ordings o( t"e

documents& t"ere(ore& t"e amounts de#osited are re#ayable to !"oever may be t"e bearer t"ereo(

)"us& de la Cru is t"e de#ositor Einso(ar as t"e bank is concerned&F but obviously ot"er #arties not #rivy to t"e

transaction bet!een t"em !ould not be in a #osition to kno! t"at t"e de#ositor is not t"e bearer stated in t"e C)9s

o!ever& Calte' may not encas" t"e C)9s because alt"oug" t"e C)9s are bearer instruments& a valid

negotiation t"ereo( (or t"e true #ur#ose and agreement bet!een Calte' and 9e la Cru& requires bot" delivery andindorsement As discerned (rom t"e testimony o( Calte'* re#resentative& t"e C)9s !ere delivered to t"em by de la

Cru merely (or guarantee or security and not as #ayment

#9 T* R;! B)< V. CA>1@HR /o 33 arc" 3& 1

0essons A##licableD Requisites o( negotiability to antedated and #ostdated instruments >/egotiable ,nstrument

0a!@


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In another case# the Supreme Court e)p$ained that on$y the dra'ee may %e he$d $ia%$e if it 'as not esta%$ished thatthe checs containin* for*ed indorsements passed throu*h the a$$e*ed co$$ectin* %an& The dra'ee in this case

encashed checs +one of 'hich is crossed, presented %y unno'n persons a$thou*h said checs 'ere paya%$e to

BIR& -ence# the dra'ee 'as c$ear$y ne*$i*ent in encashin* the checs&

FACTS:

5ilriters >assigned@ I P"il(inance >still under t"e name o( 5ilriters assigned@ I )raders Royal ank J

>valid or not@

/ovember 2& 1D 5ilriters Huaranty Assurance Cor#oration >5ilriters@ e'ecuted a K9etac"ed Assignment

!"ereby 5ilriters& as registered o!ner& sold& trans(erred& assigned and delivered unto P"ili##ine =nder!riters

5inance Cor#oration >P"il(inance@ all its rig"ts and title to Central ank Certi(icates o( ,ndebtedness >CC,@ o(

P$%%k and "aving an aggregate value o( P3$

)"e 9etac"ed Assignment contains an e'#ress aut"oriation e'ecuted by t"e trans(eror intended to

com#lete t"e assignment t"roug" t"e registration o( t"e trans(er in t"e name o( P"il5inance

5ebruary 4& 181D )raders Royal ank >)raders@ entered into a Re#urc"ase Agreement !L P"il5inance!"ereby in consideration o( t"e sum o( P$%%&%%%%%& P"il5inance sold& trans(erred and delivered a CC, !L a (ace

value o( P$%% !"ic" CC, !as among t"ose #reviously acquired by P"il5inance (rom 5ilriters

P"il5inance (ailed to re#urc"ase on t"e agreed date o( maturity& A#ril 2& 181& !"en t"e c"ecks it issued

in (avor o( #etitioner !ere dis"onored (or insu((icient (unds

P"il(inance trans(erred and assigned all& its rig"ts and title in t"e CC, to )raders

Res#ondent (ailed and re(used to register t"e trans(er as requested& and continues to do so not!it"standing

#etitioner7s valid and ;ust title over t"e same and des#ite re#eated demands in !riting

)raders #rayed (or t"e registration by t"e Central ank o( t"e sub;ect CC, in its name

CA a((irmed R)CD subsequent assignment in (avor o( )raders Royal ank null and void and o( no (orce

and e((ect

P"il(inance acquired no title or rig"ts under CC, !"ic" it could assign or trans(er to )raders and !"ic" it

can register !it" t"e Central ank

instrument is #ayable only to 5ilriters& t"e registered o!ner

ISSUE:.L/ t"e CC, is a negotiable instrument

HELD: /+ Petition is dismissed CA a((irmed

F"*:

5ilriters registered o!ner o( CC, 5ilriters trans(erred it to P"il(inance by one o( its o((icers !it"out

aut"oriation (rom t"e com#any Subsequently P"il(inance trans(erred same CC, to )R under a re#urc"ase

agreement ."en P"il(inance (ailed to do so)"e )R tried to register in its name in t"e C )"e latter didn*t !ant

to recognie t"e trans(er

I**:

."et"er t"e CC, is negotiable instrument or not

."et"er t"e Assignment o( registered certi(icate is valid or null and void

R!'):

=nder section 1 o( Act no 2%31 an instrument to be negotiable must con(orm to t"e (ollo!ingrequirementsD

>a@ ,t must be in !riting and signed by t"e maker or dra!erB

>b@ ust contain an unconditional #romise or order to #ay a sum certain in moneyB

>c@ ust be #ayable on demand& or at a (i'ed or determinable (uture timeB

>d@ ust be #ayable to order or to bearerB and

>e@ ."ere t"e instrument is addressed to a dra!ee& "e must be named or ot"er!ise indicated t"erein !it" reasonablecertainty

=nder section 3& Article M o( Rules and Regulations Hoverning Central ank Certi(icates o( ,ndebtedness

states t"at t"e assignment o( registered certi(icates s"all not be valid unless made at t"e o((ice !"ere t"e same "ave


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been issued and registered or at t"e Securities Servicing 9e#artment& Central ank o( t"e P"ili##ines& and by t"e

registered o!ner t"ereo(& in #erson or by "is re#resentative& duly aut"oried in !riting 5or t"is #ur#ose& t"e

trans(eree may be designated as t"e re#resentative o( t"e registered o!ner

A##licationLAnalysisD

)"e CC, is not a negotiable instrument& since t"e instrument clearly stated t"at it !as #ayable to 5ilriters&

and t"e certi(icate lacked t"e !ords o( negotiability !"ic" serve as an e'#ression o( consent t"at t"e instrument

may be trans(erred by negotiation

+bviously t"e Assignment o( certi(icate (rom 5ilriters to P"il(inance !as null and void +ne o( o((icers

!"o signed t"e deed o( assignment in be"al( o( 5ilriters did not "ave t"e necessary !ritten aut"oriation (rom t"e

oard o( 9irectors o( 5ilriters 5or lack o( suc" aut"ority t"e assignment is considered null and void

ConclusionLoldingsD

e(ore t"e instruments become negotiable instruments& t"e instrument must con(orm to t"e requirements

under t"e /egotiable ,nstrument 0a! +t"er!ise instrument s"all not bind t"e #arties

Clearly s"o!n in t"e record is t"e (act t"at P"il(inance*s title over CC, is de(ective since itacquired t"e instrument (rom 5ilriters (ictitiously =nder 14% o( t"e Civil Code t"ose contracts !"ic" are

absolutely simulated or (ictitious are considered void and ine'istent (rom t"e beginning

#0 INCION V. CA

2$ SCRA $8

FACTS:

A #romissory note !as issued by #etitioner toget"er !it" 2 ot"ers ;ointly and severally& to make t"em

liable to PC )"erea(ter !as a de(ault on t"e #ayment o( t"e note PC #roceeded against ,nciong and in t"e

action (iled by t"e bank& t"e court decided in its (avor

HELD:

."ere t"e #romissory note e'#ressly states t"at t"e t"ree signatures t"erein are ;ointly and severally

liable& any one or some or all o( t"em may be #roceeded against (or t"e entire obligationNt"e c"oice is le(t to

t"e solidary creditor to determine against !"om "e !ill en(orce collection

Si*nature of .aers /uaranty

FACTS:,n 5ebruary 183& Rene /aybe took out a loan (rom P"ili##ine ank o( Communications >PC@ in t"e

amount o( P$%k 5or t"at "e e'ecuted a #romissory note in t"e same amount /aybe !as able to convince

aldomero ,nciong and Hregorio Pantanosas to co-sign !it" "im as co-makers )"e #romissory note !ent due and

it !as le(t un#aid PC demanded #ayment (rom t"e t"ree but still no #ayment !as made PC t"en sue t"e t"ree

but PC later released Pantanosas (rom its obligations /aybe le(t (or Saudi Arabia "ence can*t be issued summons

and t"e com#laint against "im !as subsequently dro##ed ,nciong !as le(t to (ace t"e suit e argued t"at t"at since

t"e com#laint against /aybe !as dro##ed& and t"at Pantanosas !as released (rom "is obligations& "e too s"ould

"ave been released

ISSUE:."et"er or not ,nciong s"ould be "eld liable

HELD:Ges ,nciong is considering "imsel( as a guarantor in t"e #romissory note And "e !as basing "is argument

based on Article 2%8% o( t"e Civil Code !"ic" #rovides t"at guarantors are released (rom t"eir obligations i( t"e

creditors s"all release t"eir debtors ,t is to be noted "o!ever t"at ,nciong did not sign t"e #romissory note as a

guarantor e signed it as a solidary co-maker

A guarantor !"o binds "imsel( in solidum !it" t"e #rinci#al debtor does not become a solidary co-debtor

to all intents and #ur#oses )"ere is a di((erence bet!een a solidary co-debtor and a (iador in solidum >surety@ )"elatter& outside o( t"e liability "e assumes to #ay t"e debt be(ore t"e #ro#erty o( t"e #rinci#al debtor "as been

e'"austed& retains all t"e ot"er rig"ts& actions and bene(its !"ic" #ertain to "im by reason o( t"e (iansaB !"ile a

solidary co-debtor "as no ot"er rig"ts t"an t"ose besto!ed u#on "im


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ecause t"e #romissory note involved in t"is case e'#ressly states t"at t"e t"ree signatories t"erein are

;ointly and severally liable& any one& some or all o( t"em may be #roceeded against (or t"e entire obligation )"e

c"oice is le(t to t"e solidary creditor >PC@ to determine against !"om "e !ill en(orce collection Consequently&

t"e dismissal o( t"e case against Pontanosas may not be deemed as "aving disc"arged ,nciong (rom liability as !ell

As regards /aybe& su((ice it to say t"at t"e court never acquired ;urisdiction over "im ,nciong& t"ere(ore& may only

"ave recourse against "is co-makers& as #rovided by la!

#= SERRANO V. CA

16 SCRA 1%

FACTS:

Serrano boug"t some ;e!elry (rom Ribaya 9ue to need o( (inances& s"e decided to "ave t"e ;e!elry

#a!ned S"e instructed "er secretary to do so (or "er& !"ic" t"e secretary did but absconded a(ter receiving

t"e #roceeds ,t is to be noted t"at t"e #a!ns"o# ticket indicated t"at t"e ;e!elry !as redeemable Eby

#resentation by t"e bearerF A(ter!ards& t"ere !as a lead on !"ere t"e ;e!elry !as #a!ned An investigation!as done to veri(y t"e sus#icion )"e ;e!elry !as to be sold in a #ublic auction t"en )"e #etitioner and #olice

aut"orities in(ormed t"e #a!ns"o# o!ner not to sell t"e ;e!elry as s"e !as t"e rig"t(ul o!ner t"ereo(

9es#ite o( t"is "o!ever& t"e ;e!elry !as redeemed by a )omasa de 0eon !"o #resented t"e #a!ns"o#

ticket

HELD:

aving been in(ormed by t"e #etitioner and t"e #olice t"at ;e!elry #a!ned to it !as eit"er stolen or

involved in an embelement o( t"e #roceeds o( t"e #ledge& #a!nbroker became duty bound to "old t"e t"ings

#ledged and to give notice to t"e #etitioner and aut"orities o( any e((ort to redeem t"em Suc" a duty !as

im#osed by Article 21 o( t"e CC )"e circumstance t"at t"e #a!n ticket stated t"at t"e #a!n !as redeemable by

t"e bearer& didn*t dissolve t"is duty )"e #a!n ticket !asn*t a negotiable instrument under t"e /,0& nor !as it a

negotiable document o( title under Article 1$%o( t"e CC

#/ M! -. C" > A((!*

2 SCRA 481B HR /o 131622& /ovember 2& 18

F"*:

9e(endants obtained a loan (rom Plainti(( in t"e amount P$%& %%%%%& #ayable in 2 mont"s and e'ecuted a#romissory note Plainti(( gave only t"e amount o( P4& %%%%% to t"e borro!ers and retained P3& %%%%% as advance

interest (or 1 mont" at 6O #er mont"

9e(endants obtained anot"er loan (rom 9e(endant in t"e amount o( P%& %%%%%& #ayable in 2 mont"s& at

6O interest #er mont" )"ey e'ecuted a #romissory note to evidence t"e loan and received only P84& %%%%% out o(

t"e #roceeds o( t"e loan

5or t"e t"ird time& 9e(endants secured (rom Plainti(( anot"er loan in t"e amount o( P3%%& %%%%%& maturing

in 1 mont"& and secured by a real estate mortgage )"ey e'ecuted a #romissory note in (avor o( t"e Plainti((

o!ever& only t"e sum o( P2$& %%%%%& !as given to t"em out o( t"e #roceeds o( t"e loan

=#on maturity o( t"e t"ree #romissory notes& 9e(endants (ailed to #ay t"e indebtedness

9e(endants consolidated all t"eir #revious un#aid loans totalling P44%& %%%%%& and soug"t (rom Plainti((

anot"er loan in t"e amount o( P6%& %%%%%& bringing t"eir indebtedness to a total o( P$%&%%%%% )"ey e'ecuted

anot"er #romissory note in (avor o( Plainti(( to #ay t"e sum o( P$%%& %%%%% !it" a $$O interest #er mont" #lus2O service c"arge #er annum& !it" an additional amount o( 1O #er mont" as #enalty c"arges

+n maturity o( t"e loan& t"e 9e(endants (ailed to #ay t"e indebtedness !"ic" #rom#t t"e Plainti((s to (ile

!it" t"e R)C a com#laint (or collection o( t"e (ull amount o( t"e loan including interests and ot"er c"arges

9eclaring t"at t"e due e'ecution and genuineness o( t"e (our #romissory notes "as been duly #roved& t"e

R)C ruled t"at alt"oug" t"e =sury 0a! "ad been re#ealed& t"e interest c"arged on t"e loans !as unconscionable

and Erevolting to t"e conscienceF and ordered t"e #ayment o( t"e amount o( t"e (irst 3 loans !it" a 12O interest #erannum and 1O #er mont" as #enalty

+n a##eal& Plainti((-a##ellants argued t"at t"e #romissory note& !"ic" consolidated all t"e un#aid loans o(

t"e de(endants& is t"e la! t"at governs t"e #arties


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)"e Court o( A##eals ruled in (avor o( t"e Plainti((-a##ellants on t"e ground t"at t"e =sury 0a! "as

become legally ine'istent !it" t"e #romulgation by t"e Central ank in 182 o( Circular /o %$& t"e lender and

t"e borro!er could agree on any interest t"at may be c"arged on t"e loan& and ordered t"e 9e(endants to #ay t"e

Plainti((s t"e sum o( P$%%&%%%& #lus $$O #er mont" interest and 2 service c"arge #er annum & and 1O #er mont"

as #enalty c"arges

9e(endants (iled t"e #resent case via #etition (or revie! on certiorari

I**:.+/ t"e sti#ulated $$O interest rate #er mont" on t"e loan in t"e sum o( P$%%& %%%%% is usurious

H!:

/o A sti#ulated rate o( interest at $$O #er mont" on t"e P$%%& %%%%% loan is e'cessive& iniquitous&

unconscionable and e'orbitant& but it cannot be considered EusuriousF because Central ank Circular /o %$ "as

e'#ressly removed t"e interest ceilings #rescribed by t"e =sury 0a! and t"at t"e =sury 0a! is no! Elegally

ine'istentF

9octrineD A C Circular cannot re#eal a la! +nly a la! can re#eal anot"er la!


8/12

etrobank t"en cannot contend t"at by indorsing t"e !arrants in general& HS assumed t"at t"ey !ere

genuine and in all res#ects !"at t"ey #ur#ort it to be& in accordance to Section 66 o( t"e /,0 )"e sim#le reason is

t"at t"e la! isn*t a##licable to t"e non-negotiable treasury !arrants )"e indorsement !as made (or t"e

#ur#ose o( merely de#ositing t"em !it" etrobank (or clearing ,t !as in (act etrobank !"ic" stam#ed

on t"e back o( t"e !arrantsD EAll #rior indorsements andLor lack o( endorsements guaranteedF

)"e courts "ave t"e #o!er to limit t"e amount recoverable under a s#ecial #rovision in a #romissory note&

!"ereby t"e debtor obligates "imsel( to #ay a s#eci(ied amount& or a certain #er centum o( t"e #rinci#al debt&

in satis(action o( attorney*s (ees (or !"ic" t"e creditor !ould become liable in suing u#on t"e note

/ormally& i( t"ere is absence o( any agreement as to attorney*s (ees& t"en t"e court !ould only grant

nominal amounts

#12 SALAS V. CA

181 SCRA 26

Transfer and Negotiation0 If the instrument is mere$y assi*ned# the transferee does not %ecome a ho$der and he

mere$y steps into the shoes of the transferor&Any defense aai$a%$e a*ainst the transferor is aai$a%$e a*ainst thetransferee&

FACTS:

Petitioner boug"t a car (rom Miologo otor Sales Com#any& !"ic" !as secured by a #romissory

note& !"ic" !as later on indorsed to 5ilinvest 5inance& !"ic" (inanced t"e transaction Petitioner later on

de(aulted in "er installment #ayments& allegedly due to t"e (raud im#uted by MS in selling "er a di((erent

ve"icle (rom !"at !as agreed u#on )"is de(ault in #ayment #rom#ted 5ilinvest 5inance to initiate a case

against #etitioner )"e trial court decided in (avor o( 5ilinvest& to !"ic" t"e a##ellate court u#"eld by

increasing t"e amount to be #aid

,t is t"e contention o( #etitioner t"at since t"e agreement bet!een "er and t"e motor com#any !as

ine'istent& none "ad been assigned in (avor o( #rivate res#ondent

HELD:

Petitioner*s liability on t"e #romissory note& t"e due e'ecution and genuineness o( !"ic" s"e never

denied under oat"& is under t"e (oregoing (actual milieu& as inevitable as it is clearly establis"ed

)"e records reveal t"at involved "erein is not a sim#le case o( assignment o( credit as #etitioner !ould

"ave it a##ear& !"ere t"e assignee merely ste#s into t"e s"oes o(& is o#en to all de(enses available against

and can en(orce #ayment only to t"e same e'tent as& t"e assignor-vendor)"e instrument to be negotiable must contain t"e so-called !ords o( negotiability )"ere are only

2 !ays (or an instrument to be #ayable to order )"ere must al!ays be a s#eci(ied #erson named in t"e

instrument and t"e bill or note is to be #aid to t"e #erson designated in t"e instrument or to any #erson to !"om

"e "as indorsed and delivered t"e same .it"out t"e !ords Eor orderF or Eto t"e order o(F& t"e instrument is

#ayable only to t"e #erson designated t"erein and is t"us non-negotiable Any subsequent #urc"aser

t"ereo( !ill not en;oy t"e advantages o( being a "older in due course but !ill merely ste# into t"e s"oes

o( t"e #erson designated in t"e instrument and !ill t"us be o#en to t"e de(enses available against t"e latter

,n t"e case at bar& t"e #romissory notes is earmarked !it" negotiability and 5ilinvest is a "older in

due course

Q13 CONSOLIDATED PL@WOOD V. IFC

14 SCRA 448

FACTS:

Petitioner boug"t (rom Atlantic Hul( and Paci(ic Com#any& t"roug" its sister com#any ,ndustrial Products

arketing& t!o used tractors Petitioner !as issued a sales invoice (or t"e t!o used tractors At t"e same

time& t"e deed o( sale !it" c"attel mortgage !it" #romissory note !as issued

Simultaneously& t"e seller assigned t"e deed o( sale !it" c"attel mortgage and #romissory note tores#ondent )"e used tractors !ere t"en delivered but barely 14 days a(ter& t"e tractors broke do!n )"e

seller sent mec"anics but t"e tractors !ere not re#aired accordingly as t"ey !ere no longer serviceable Petitioner

!ould delay t"e #ayments on t"e #romissory notes until t"e seller com#letes its obligation under t"e !arranty


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)"erea(ter& a collection suit !as (iled against #etitioner (or t"e #ayment o( t"e #romissory note

HELD:

,t is #atent t"at t"e seller is liable (or t"e breac" in !arranty against t"e #etitioner )"is liability as a

general rule e'tends to t"e cor#oration to !"om it assigned its rig"ts and interests unless t"e assignee is a

"older in due course o( t"e #romissory note in question& assuming t"e note is negotiable& in !"ic" case&

t"e latter*s rig"ts are based on a negotiable instrument and assuming (urt"er t"at t"e #etitioner*s de(ense

may not #revail against it

)"e #romissory note in question is not a negotiable instrument )"e #romissory note in question

lacks t"e so-called !ords o( negotiability And as suc"& it (ollo!s t"at t"e res#ondent can never be a "older in due

course but remains merely an assignee o( t"e note in question )"us& t"e #etitioner may raise against t"e

res#ondents all de(enses available to it against t"e seller

#14 EUITABLE BAN?IN V. IAC

161 SCRA $18

FACTS:

/ell Com#any issued a c"eck to "el# Casals and Casville ?nter#rises obtain a letter o( credit (rom

?quitable anking in connection !it" equi#ment& a garrett skidder& !"ic" Casals and Casville !ere buying

(rom /ell /ell indicated t"e #ayee as (ollo!s E?T=,)A0? A/,/H C+RP+RA),+/ ALC

CASM,00? ?/)?RPR,S?S ,/CF

Casals de#osited t"e c"eck !it" t"e bank and t"e bank teller acce#ted t"e same and in accordance !it"

customary bank #ractice& stam#ed in t"e c"eck t"e !ords Enon-negotiableF )"e amount !as !it"dra!n

a(ter t"e de#osit

)"is #rom#ted /ell to (ile a case against t"e bank& Casals and Casville ."ile t"e instant case

!as being tried& Casals and Casville assigned t"e garrett skidder to #lainti(( !"ic" credited in (avor o(

de(endants t"e amount o( P4$%&%%%& as #artial satis(action o( its claim against t"em

HELD:

?quitable is not liable to /ell /ell s"ould bear t"e loss as it !as t"roug" its o!n acts& !"ic" #ut it into t"e

#o!er o( Casals and Casville ?nter#rises to #er#etuate t"e (raud against it

)"e c"eck !asn*t initially non-negotiable /eit"er !as it cross-c"ecked )"e rubber-stam#ing

transversally on t"e (ace o( t"e c"eck !as only made t"e bank teller in accordance !it" customary bank #ractice&and not by /ell as t"e dra!er o( t"e c"eck& and sim#ly meant t"at t"erea(ter t"e same c"eck could no longer

be negotiated

)"e #ayee !as not indicated !it" reasonable certainty in contravention o( Section 8 As !orded& it could

be acce#ted as de#osit to t"e account o( t"e #arty named t"erein a(ter t"e symbols o( ALC& or #ayable to t"e bank as

trustee& or as an agent& (or Casville !it" t"e latter being t"e ultimate bene(iciary

#15 PACHECO V. CA

31 SCRA $$

FACTS:

9ue to dire (inancial needs o( #etitioner s#ouses !"o !ere engaged in t"e construction business& t"ey

secured loans (rom Micencio At every loan secured& t"e lender com#elled t"e s#ouses to issue anundated c"eck des#ite t"e admission o( s#ouses t"at t"eir bank account "as insu((icient (unds or as on a later

date& already closed 0ender assured t"em t"at t"e issuance o( t"e c"eck !as only evidence o( indebtedness& t"at it

!ould not be #resented to t"e bank& and it !ould be (or (ormalities only +n t"e date !"erein t"ere !as an un#aid

balance to t"e loans secured by t"e s#ouses& t"e lender "ad t"em #lace a date on t!o o( t"e later c"ecks

issued Sur#rised later on& t"e s#ouses !ere c"arged !it" esta(a as t"e c"ecks !ere #resented (or

encas"ment and !as dis"onored

HELD:


10/12

G =)=A0 AHR???/) +5 )? PAR),?S& )? /?H+),A0? CARAC)?R +5 A C?C

AG ? .A,M?9 A/9 )? ,/S)R=?/) ? S,P0G )R?A)?9 AS PR++5 +5 A/ +0,HA),+/

)"ere cannot be deceit on t"e #art o( t"e s#ouses because t"ey agreed !it" t"e lender at t"e time o( t"e issuance

and #ostdating o( t"e c"ecks t"at t"e same s"all not be encas"ed or #resented to t"e bank As #er

assurance o( t"e lender& t"e c"ecks are not"ing but evidence o( t"e loan or security t"ereo( in lieu o( and (or t"e

same #ur#ose as a #romissory note

Q16 REPUBLIC PLANTERS BAN? V. CA

21 SCRA 36

FACTS:

Gamaguc"i and Canlas are o((icers o( t"e .orld!ide Harment anu(acturing& !"ic" later

c"anged its name to Pinc" anu(acturing )"ey !ere aut"oried to a##ly (or credit (acilities !it" t"e #etitioner

bank )"e t!o o((icers signed t"e #romissory notes issued to secure t"e #ayment o( t"e obligations 0ater& t"e

bank instituted an action (or collection o( money& im#leading also t"e t!o o((icers )"e trial court "eldt"e t!o o((icers #ersonally liable also

HELD:

Canlass is solidarily liable on eac" o( t"e #romissory notes to !"ic" "is signature a##ears )"e

#romissory notes in question are negotiable instruments and t"us& governed by t"e /egotiable ,nstruments 0a!

=nder t"e /egotiable ,nstruments 0a!& #ersons !"o !rite t"eir names in t"e instrument are makers

are liable as suc" y signing t"e note& t"e maker #romises to #ay to t"e order o( t"e #ayee or any "older t"e tenor

o( t"e obligation ased on t"e above #rovisions o( t"e la!& t"ere is no denying t"at Canlass is one o( t"e co-

makers o( t"e #romissory note

#10 MANUEL LIM V. COURT OF APPEALS

2$1 SCRA 4%8

FACTS:

S#ouses 0im !ere c"arged !it" esta(a and violations o( P22 (or allegedly #urc"asing goods (rom 0inton

Commercial Cor#oration and issuing c"ecks as #ayment t"ereo( )"e c"ecks !"en #resented to t"e bank

!ere dis"onored (or insu((iciency o( (unds or t"e #ayment (or t"e c"ecks "as been sto##ed

HELD:

,t is settled t"at venue in criminal cases is a vital ingredient o( ;urisdiction ,t s"all be !"ere t"e crime

or o((ense !as committed or any one o( t"e essential ingredients t"ereo( took #lace ,n determining t"e #ro#er

venue (or t"ese cases& t"e (ollo!ing are material (actsNt"e c"ecks !ere issued at t"e #lace o( business o( 0intonB

t"ey !ere delivered to 0inton at t"e same #laceB t"ey !ere dis"onored in alookan CityB #etitioners "ad kno!ledge

o( t"e insu((iciency o( (unds in t"eir account

=nder Section 11 o( t"e /egotiable ,nstruments 0a!& issue means t"e (irst delivery o( t"e

instrument com#lete in its (orm to a #erson !"o takes it as "older )"e term "older on t"e ot"er "and re(ers to

t"e #ayee or indorsee o( a bill or note !"o is in #ossession o( it or t"e bearer t"ereo( )"e im#ortant #lace to

consider in t"e consummation o( a negotiable instrument is t"e #lace o( delivery 9elivery is t"e (inal act

essential to its consummation as an obligation

Q18 REPUBLIC PLANTERS BAN? V. COURT OF APPEALS

216 SCRA 38

FACTS:

Gamaguc"i and Canlas are o((icers o( t"e .orld!ide Harment anu(acturing& !"ic" later

c"anged its name to Pinc" anu(acturing )"ey !ere aut"oried to a##ly (or credit (acilities !it" t"e #etitionerbank )"e t!o o((icers signed t"e #romissory notes issued to secure t"e #ayment o( t"e obligations 0ater& t"e

bank instituted an action (or collection o( money& im#leading also t"e t!o o((icers )"e trial court "eld

t"e t!o o((icers #ersonally liable also


11/12

HELD:

Canlass is solidarily liable on eac" o( t"e #romissory notes to !"ic" "is signature a##ears )"e

#romissory notes in question are negotiable instruments and t"us& governed by t"e /egotiable ,nstruments 0a!

=nder t"e /egotiable ,nstruments 0a!& #ersons !"o !rite t"eir names in t"e instrument are makers

are liable as suc" y signing t"e note& t"e maker #romises to #ay to t"e order o( t"e #ayee or any "older t"e tenor

o( t"e obligation ased on t"e above #rovisions o( t"e la!& t"ere is no denying t"at Canlass is one o( t"e co-

makers o( t"e #romissory note

Si*nature of .aers

F"*:

,n 1& .orld Harment anu(acturing& t"roug" its board aut"oried S"oo Gamaguc"i >#resident@ and

5ermin Canlas >treasurer@ to obtain credit (acilities (rom Re#ublic Planters ank >RP@ 5or t"is& #romissory

notes !ere e'ecuted ?ac" #romissory note !as uni(ormly !ritten in t"e (ollo!ing mannerD

!!!!!!!!!!!# after date# for a$ue receied# I'e# 3oint$y and seera$$y promise to pay to the RDER of the

RE"5B6IC "6A7TERS BA7# at its office in .ani$a# "hi$ippines# the sum of !!!!!!!!!!! "ESS+9&,

"hi$ippine Currency9

"$ease credit proceeds of this note to:!!!!!!!! Sain*s Account !!!!!!;; Current Account

7o& 1>2?=0@ of R6DIDE /AR.E7T ./& CR"&

S*d& Shoo ama*uchi

S*d& ermin Can$as

)"e note became due and no #ayment !as made RP eventually sued Gamaguc"i and Canlas Canlas& in

"is de(ense& averred t"at "e s"ould not be "eld #ersonally liable (or suc" aut"oried cor#orate acts t"at "e

#er(ormed inasmuc" as "e signed t"e #romissory notes in "is ca#acity as o((icer o( t"e de(unct .orld!ide Harment

anu(acturing

ISSUE: ."et"er or not Canlas s"ould be "eld liable (or t"e #romissory notes

HELD:

Ges )"e solidary liability o( #rivate res#ondent 5ermin Canlas is made clearer and certain& !it"out reason

(or ambiguity& by t"e #resence o( t"e #"rase E;oint and severalF as describing t"e unconditional #romise to #ay tot"e order o( Re#ublic Planters ank ."ere an instrument containing t"e !ords E, #romise to #ayF is signed by t!o

or more #ersons& t"ey are deemed to be ;ointly and severally liable t"ereon

Canlas is solidarily liable on eac" o( t"e #romissory notes bearing "is signature (or t"e (ollo!ing reasonsD

The promissory notes are ne*otia%$e instruments and must %e *oerned %y the 7e*otia%$e Instruments 6a'&=nder t"e /egotiable lnstruments 0a!& #ersons !"o !rite t"eir names on t"e (ace o( #romissory notes are

makers and are liable as suc" y signing t"e notes& t"e maker #romises to #ay to t"e order o( t"e #ayee or any

"older according to t"e tenor t"ereo(

Q1 FRANSISCO V. COURT OF APPEALS

31 SCRA 3$4

FACTS:A 5ransisco Realty and 9evelo#ment and erby Commercial and Construction Cor#oration

entered into a 0and 9evelo#ment and Construction Contract 5ransisco !as t"e #resident o( A5R9C

!"ile +ng !as t"e #resident o( CCC ,t !as agreed u#on t"at CCC !ould undertake t"e construction o(

"ousing units and t"e develo#ment o( a large #arcel o( land )"e #ayment !ould be on a turnkey basis )o

(acilitate t"e #ayment& A59RC e'ecuted a 9eed o( Assignment to enable t"e CCC to collect #ayments

(rom t"e HS,S 5urt"er& t"ey o#ened an account !it" a bank (rom !"ic" c"ecks !ould be issued by 5ransiscoand t"e HS,S #resident

CCC later on (iled a com#laint (or t"e un#aid balance in #ursuance to its agreement !it" A5R9C

o!ever& an amicable settlement ensued& !"ic" !as embodied in a emorandum o( Agreement ,t !as embodied


12/12

in said agreement t"at HS,S recognies its indebtedness to CCC and t"at CCC !ould also #ay its obligations to

A5R9C

A year later& it !as (ound out t"at 9ia and 5ransisco "ad dra!n c"ecks #ayable to +ng +ng

denied acce#ting said c"ecks and it !as (urt"er (ound out t"at 9ia entrusted t"e c"ecks to 5ransisco !"o

later (orged t"e signature o( +ng& s"o!ing t"at "e indorsed t"e c"ecks to "er and t"en s"e de#osited t"e c"ecks

to "er #ersonal savings account )"is incident #rom#ted +ng to (ile a com#laint against 5ransisco

HELD:

+ng*s signature !as (ound to be (orged by 5ransisco

5ransisco*s contention t"at "e !as aut"oried to sign +ng*s name in "er (avor giving "er aut"ority to

collect all t"e receivables o( CCC (rom HS,S )"is contention is bere(t o( any merit )"e /egotiable

,nstruments 0a! #rovides t"at !"en a #erson is under obligation to indorse in a re#resentative ca#acity& "e may

indorse in suc" terms as to negative #ersonal liability An agent& !"en so signing& s"ould indicate t"at "e is merely

signing as an agent in be"al( o( t"e #rinci#al and must disclose t"e name o( "is #rinci#al +t"er!ise& "e !ill

be "eld liable #ersonally And assuming s"e !as indeed aut"oried& s"e didn7t com#ly !it" t"erequirements o( t"e la! ,nstead o( signing +ng*s name& s"e s"ould "ave signed in "er o!n name as agent o(

CCC )"us& "er contentions cannot su##ort or validate "er acts o( (orgery

Q2% ILLUSORIO V. CA33 SCRA 8

Forgery, Sec. 23

In one case# the dra'er 'as not a$$o'ed to recoer a$thou*h his si*nature 'as a$$e*ed$y for*ed %ecause it 'as

esta%$ished that the person 'ho encashed the checs 'as his trusted secretary& The dra'ers ne*$i*ence 'as

considered the pro)imate cause of his $oss %ecause he entrusted his %$an checs and credit cards to his secretary&

-e a$so entrusted to his secretary the erification and reconci$iation of his accounts& -e did not persona$$y chec

his statement of accounts and cance$$ed or used checs as the same 'ere a$so entrusted to his secretary&

FACTS:

Petitioner !as a #rominent businessman !"o& because o( di((erent business commitments& entrusted to

"is t"en secretary t"e "andling o( "is credit cards and c"eckbooks 5or a material #eriod o( time& t"e

secretary !as able to encas" and de#osit in "er #ersonal account money (rom t"e account o( #etitioner

=#on kno!ledge o( "er acts& s"e !as (ired immediately and criminal actions !ere (iled against "er

)"erea(ter& #etitioner requested t"e bank to restore its money but t"e bank re(used to do so

HELD:

)"e #etitioner doesn*t "ave a course o( action against t"e bank )o be entitled to damages&

#etitioner "as t"e burden o( #roving negligence on t"e #art o( t"e bank (or (ailure to detect t"e discre#ancy in t"e

signatures on t"e c"ecks ,t is incumbent u#on #etitioner to establis" t"e (act o( (orgery Curiously t"oug"&

#etitioner (ailed to su##ly additional signature s#ecimens as requested by t"e /, )"e bank !as not also remiss in

#er(ormance o( its duties& it #ractices due diligence in encas"ing c"ecks )"e bank didn*t "ave any "int o( t"e

modus o#erandi o( ?ugenio as s"e !as a regular customer& designated by t"e #etitioner "imsel( to transact on

"is be"al(

,t !as #etitioner !"o !as negligent in t"is case e (ailed to e'amine "is bank statements and t"is !as

t"e #ro'imate cause o( "is o!n damage ecause o( t"is negligence& "e is #recluded (rom setting u# t"e de(ense

o( (orgery !it" regard t"e c"ecks

nil set 1 final

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