NIL CASE DIGEST

TRADERS ROYAL BANK VS CA and FILRITERS GUARANTY ASSURANCE

CORP (GR 93397)
FACTS:
Private respondent as registered owner, sold, transferred, assigned and delivered(USED A
DOCUMENT CALLED DETACH ASSIGNMENT) unto PHILFINANCE all its rights
and title to Central Bank Certificates of Indebtedness (CBCI) of P500k and having an
aggregate value of P3.5M. The petitioner entered into a Repurchase Agreement with
PhilFinance . . ., whereby, for and in consideration of the sum 500k, PhilFinance sold,
transferred and delivered to petitioner the CBCI from filriters. After, PHILFINANCE
agreed to repurchase CBCI , at the stipulated price of P519,361.11 on April 27, 1981.
PHILFINANCE failed to repurchase on the agreed date of maturity. Owing to the default
of PhilFinance, it executed a Detached Assignment in favor of the Petitioner to enable the
latter to have its title completed and registered in the books of the respondent. And by
means of said Detachment, Philfinance transferred and assigned all, its rights and title in
the said CBCI (Annex "C") to petitioner and, furthermore, it did thereby "irrevocably
authorize the said issuer (respondent herein) to transfer the said bond/certificate on the
books of its fiscal agent
Petitioner presented the CBCI (Annex "C"), together with the two (2) aforementioned
Detached Assignments (Annexes "B" and "D"), to the Securities Servicing Department of
the respondent.
Respondent failed and refused to register the transfer as requested, and continues to do so
notwithstanding petitioner's valid and just title over the same and despite repeated
demands in writing. The express provisions governing the transfer of the CBCI were
substantially complied with the petitioner's request for registration, to wit:
"No transfer thereof shall be valid unless made at said office (where the Certificate has
been registered) by the registered owner hereof, in person or by his attorney duly
authorized in writing, and similarly noted hereon, and upon payment of a nominal
transfer fee which may be required, a new Certificate shall be issued to the transferee of
the registered holder thereof."
and, without a doubt, the Detached Assignments presented to respondent were sufficient
authorizations in writing executed by the registered owner, Filriters, and its transferee,
PhilFinance, as required by the above-quoted provision
Upon these assertions, TRB prayed for the registration by the Central Bank of the subject
CBCI in its name.
The court ruled in favor of respondent. CA Affirmed.

ISSUE:
WON THE CBCI IS A NEGOTIABLE INSTRUMENT
HELD:
The appellate court ruled that the subject CBCI is not a negotiable instrument,
stating that:
As worded, the instrument provides a promise "to pay Filriters Guaranty Assurance
Corporation, the registered owner hereof." Very clearly, the instrument is payable
only to Filriters, the registered owner, whose name is inscribed thereon. It lacks the
words of negotiability which should have served as an expression of consent that the
instrument may be transferred by negotiation. 15
A reading of the subject CBCI indicates that the same is payable to FILRITERS
GUARANTY ASSURANCE CORPORATION, and to no one else, thus, discounting the
petitioner's submission that the same is a negotiable instrument, and that it is a holder in
due course of the certificate.
The language of negotiability which characterize a negotiable paper as a credit instrument
is its freedom to circulate as a substitute for money. Hence, freedom of negotiability is the
touchtone relating to the protection of holders in due course, and the freedom of
negotiability is the foundation for the protection which the law throws around a holder in
due course (11 Am. Jur. 2d, 32). This freedom in negotiability is totally absent in a
certificate indebtedness as it merely to pay a sum of money to a specified person or entity
for a period of time.
As held in Caltex (Philippines), Inc. v. Court of Appeals, 16:
The accepted rule is that the negotiability or non-negotiability of an instrument is
determined from the writing, that is, from the face of the instrument itself. In the
construction of a bill or note, the intention of the parties is to control, if it can be legally
ascertained. While the writing may be read in the light of surrounding circumstance in
order to more perfectly understand the intent and meaning of the parties, yet as they have
constituted the writing to be the only outward and visible expression of their meaning, no
other words are to be added to it or substituted in its stead. The duty of the court in such
case is to ascertain, not what the parties may have secretly intended as
contradistinguished from what their words express, but what is the meaning of the words
they have used. What the parties meant must be determined by what they said.
Thus, the transfer of the instrument from Philfinance to TRB was merely an assignment,
and is not governed by the negotiable instruments law.

NEW PACIFIC TIMBER VS JUDGE SENERIS, TONG ( G.R. No. L-41764)

FACTS:
Petitioner, New Pacific Timber & Supply Co. Inc. was the defendant in a complaint
for collection of money filed by private respondent, Ricardo A. Tong. In this
complaint, respondent Judge rendered a compromise judgment based on the amicable
settlement entered by the parties wherein petitioner will pay to private respondent
P54,500.00 at 6% interest per annum and P6,000.00 as attorneys fee of which P5,000.00
has been paid.
Upon failure of the petitioner to pay the judgment obligation, a writ of execution
worth P63,130.00 was issued levied on the personal properties of the petitioner.
(Before) the date of the auction sale, petitioner deposited with the Clerk of Court in his
capacity as the Ex-Officio Sheriff P50,000.00 in Cashiers Check of the Equitable
Banking Corporation and P13,130.00 in cash for a total of P63,130.00.
Private respondent refused to accept the check and the cash and requested for the
auction sale to proceed. The properties were sold for P50,000.00 to the highest bidder
with a deficiency of P13,130.00.
Petitioner subsequently filed an ex-parte motion for issuance of certificate of
satisfaction of judgment which was denied by the respondent Judge. Hence this
present petition, alleging that the respondent Judge capriciously and whimsically abused
his discretion in not granting the requested motion for the reason that the judgment
obligation was fully satisfied before the auction sale with the deposit made by the
petitioner to the Ex-Officio Sheriff. In upholding the refusal of the private respondent
to accept the check, the respondent Judge cited Article 1249 of the New Civil Code which
provides that payments of debts shall be made in the currency which is the legal tender of
the Philippines and Section 63 of the Central Bank Act which provides that checks
representing deposit money do not have legal tender power. In sustaining the contention
of the private respondent to refuse the acceptance of the cash, the respondent Judge cited
Article 1248 of the New Civil Code which provides that creditor cannot be compelled to
accept partial payment unless there is an express stipulation to the contrary.
ISSUE:
whether or not the private respondent can validly refuse acceptance of the payment of the
judgment obligation made by the petitioner consisting of P50,000.00 in Cashier's Check
and P13,130.00 in cash which it deposited with the Ex-Officio Sheriff before the date of
the scheduled auction sale.
HELD:
It is to be emphasized in this connection that the check deposited by the petitioner in
the amount of P50,000.00 is not an ordinary check but a Cashier's Check of the

Equitable Banking Corporation, a bank of good standing and reputation.

As testified to by the Ex-Officio Sheriff with whom it has been deposited, it is a certified
crossed check. 9
It is a well-known and accepted practice in the business sector that a Cashier's
Check is deemed as cash.
Moreover, since the said check had been certified by the drawee bank, by the
certification, the funds represented by the check are transferred from the credit of
the maker to that of the payee or holder, and for all intents and purposes, the latter
becomes the depositor of the drawee bank, with rights and duties of one in such
situation. 10
Where a check is certified by the bank on which it is drawn, the certification is
equivalent to acceptance. 11 Said certification "implies that the check is drawn upon
sufficient funds in the hands of the drawee, that they have been set apart for its
satisfaction, and that they shall be so applied whenever the check is presented for
payment. It is an understanding that the check is good then, and shall continue
good, and this agreement is as binding on the bank as its notes in circulation, a
certificate of deposit payable to the order of the depositor, or any other obligation it
can assume.
The object of certifying a check, as regards both parties, is to enable the holder to
use it as money." 12 When the holder procures the check to be certified, "the check
operates as an assignment of a part of the funds to the creditors." 13 Hence, the
exception to the rule enunciated under Section 63 of the Central Bank Act to the
effect "that a check which has been cleared and credited to the account of the
creditor shall be equivalent to a delivery to the creditor in cash in an amount equal
to the amount credited to his account" shall apply in this case. Considering that the
whole amount deposited by the petitioner consisting of Cashier's Check of
P50,000.00 and P13,130.00 in cash covers the judgment obligation of P63,000.00 as
mentioned in the writ of execution, then,
We see no valid reason for the private respondent to have refused acceptance of the
payment of the obligation in his favor. The auction sale, therefore, was uncalled for.
Furthermore, it appears that on January 17, 1975, the Cashier's Check was even
withdrawn by the petitioner and replaced with cash in the corresponding amount of
P50,000.00 on January 27, 1975 pursuant to an agreement entered into by the
parties at the instance of the respondent Judge. However, the private respondent
still refused to receive the same. Obviously, the private respondent is more interested
in the levied properties than in the mere satisfaction of the judgment obligation.
Thus, petitioner's motion for the issuance of a certificate of satisfaction of judgment
is clearly meritorious and the respondent Judge gravely abused his discretion in not
granting the same under the circumstances.

NORBERTO TIBAJIA VS CA AND EDEN TAN ( GR 100290)

FACTS:
a suit for collection of a sum of money was 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 in the Regional Trial Court of Kalookan City
in the amount of (P442,750.00) in another case, had been garnished by him.
The RTC rendered its decision in favor of the plaintiff Eden Tan, ordering the Tibajia
spouses to pay her an amount in excess of Three Hundred Thousand Pesos (P300,000.00).
On appeal, the Court of Appeals modified the decision by reducing the award of moral
and exemplary damages. The decision having become final, Eden Tan filed the
corresponding motion for execution and thereafter, the garnished funds which by
then were on deposit with the cashier of the Regional Trial Court of Pasig, Metro
Manila, were levied upon.
On 14 December 1990, the Tibajia spouses delivered to Deputy Sheriff Eduardo Bolima
the total money judgment in the following form:
Cashier's CheckP262,750.00
Cash
135,733.70

Total P398,483.70
Private respondent, Eden Tan, refused to accept the payment made by the Tibajia
spouses and instead insisted that the garnished funds deposited with the cashier of
the Regional Trial Court of Pasig, Metro Manila be withdrawn to satisfy the
judgment obligation. On 15 January 1991, defendant spouses (petitioners) filed a
motion to lift the writ of execution on the ground that the judgment debt had
already been paid.
On 29 January 1991, the 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. A motion for reconsideration was
denied on 8 February 1991. Thereafter, the spouses Tibajia filed a petition for
certiorari, prohibition and injunction in the Court of Appeals. The appellate court
dismissed the petition on 24 April 1991 holding that payment by cashier's check is
not payment in legal tender as required by Republic Act No. 529. The motion for
reconsideration was denied on 27 May 1991.
ISSUE:
whether or not payment by means of check (even by cashier's check) is considered
payment in legal tender as required by the Civil Code, Republic Act No. 529, and the
Central Bank Act.

HELD:
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.
The ruling in these two (2) cases merely applies the statutory provisions which lay down
the rule that a check is not legal tender and that a creditor may validly refuse payment by
check, whether it be a manager's, cashier's or personal check.
Petitioners erroneously rely on one of the dissenting opinions in the Philippine Airlines
case 6 to support their cause. The dissenting opinion however does not in any way
support the contention that a check is legal tender but, on the contrary, states that "If the
PAL checks in question had not been encashed by Sheriff Reyes, there would be no
payment by PAL and, consequently, no discharge or satisfaction of its judgment
obligation." 7 Moreover, the circumstances in the Philippine Airlines case are quite
different from those in the case at bar for in that case the checks issued by the judgment
debtor were made payable to the sheriff, Emilio Z. Reyes, who encashed the checks but
failed to deliver the proceeds of said encashment to the judgment creditor.
In the more recent case of Fortunado vs. Court of Appeals, 8 this Court stressed that, "We
are not, by this decision, sanctioning the use of a check for the payment of obligations
over the objection of the creditor."
WHEREFORE, the petition is DENIED. The appealed decision is hereby AFFIRMED,
with costs against the petitioners.
SALVACION EDUQUE VS OCAMPO
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, Doa 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
years, with interest at the rate of 5 per cent 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 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 deposited in court. After
trial, judgment was rendered against defendant compelling him to accept the P55,000
deposited in court, to issue deeds for 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 aos," 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 out of the P55,000 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 help that Japanese military notes were legal tender during the Japanese
occupation. But appellant argues, further, that the consignation of 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. 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. Jur., p. 764.)
For all the foregoing, judgment is affirmed with cost against appellant.
SESBRENO VS CA
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.

HELD:
We consider Delta's arguments seriatim.
Firstly, it is important to bear in mind that the negotiation of a negotiable instrument
must be distinguished from the assignment or transfer of an instrument whether
that be negotiable or non-negotiable. Only an instrument qualifying as a negotiable
instrument under the relevant statute may be negotiated either by indorsement
thereof coupled with delivery, or by delivery alone where the negotiable instrument
is in bearer form. A negotiable instrument may, however, instead of being
negotiated, also be assigned or transferred.
The legal consequences of negotiation as distinguished from assignment of a
negotiable instrument are, of course, different. A non-negotiable instrument may,
obviously, not be negotiated; but it may be assigned or transferred, absent an
express prohibition against assignment or transfer written in the face of the
instrument:
The words "not negotiable," stamped on the face of the bill of lading, did not
destroy its assignability, but the sole effect was to exempt the bill from the statutory
provisions relative thereto, and a bill, though not negotiable, may be transferred by
assignment; the assignee taking subject to the equities between the original parties.
12 (Emphasis added)
DMC PN No. 2731, 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, in whole or in part, that Note.
We also find nothing in his "Letter of Agreement" which can be reasonably construed as
a prohibition upon Philfinance assigning or transferring all or part of DMC PN No. 2731,
before the maturity thereof. It is scarcely necessary to add that, even had this "Letter of
Agreement" set forth an explicit prohibition of transfer upon Philfinance, such a
prohibition cannot be invoked against an assignee or transferee of the Note who parted

with valuable consideration in good faith and without notice of such prohibition. It is not
disputed that petitioner was such an assignee or transferee. Our conclusion on this point is
reinforced by the fact that what Philfinance and Delta were doing by their exchange of
their promissory notes was this: Delta invested, by making a money market placement
with Philfinance, approximately P4,600,000.00 on 10 April 1980; but promptly, on the
same day, borrowed back the bulk of that placement, i.e., P4,000,000.00, by issuing its
two (2) promissory notes: DMC PN No. 2730 and DMC PN No. 2731, both also dated 10
April 1980. Thus, Philfinance was left with not P4,600,000.00 but only P600,000.00 in
cash and the two (2) Delta promissory notes.
Apropos Delta's complaint that the partial assignment by Philfinance of DMC PN No.
2731 had been effected without the consent of Delta, we note that such consent was not
necessary for the validity and enforceability of the assignment in favor of petitioner. 14
Delta's argument that Philfinance's sale or assignment of part of its rights to DMC PN No.
2731 constituted conventional subrogation, which required its (Delta's) consent, is quite
mistaken. Conventional subrogation, which in the first place is never lightly inferred, 15
must be clearly established by the unequivocal terms of the substituting obligation or by
the evident incompatibility of the new and old obligations on every point. 16 Nothing of
the sort is present in the instant case.
PH EDUC VS SORIANO
FACTS:
On April 18, 1958 Enrique Montinola sought to purchase from the Manila Post Office ten
(10) money orders of P200.00 each payable to E.P. Montinola withaddress at Lucena,
Quezon. Montinola offered to pay for them with a private checks were not generally
accepted in payment of money orders, the teller advised him to see the Chief of the
Money Order Division, but instead of doing so, Montinola managed to leave building
with his own check and the ten(10) money orders without the knowledge of the teller.
On the same date, April 18, 1958, upon discovery of the disappearance of the unpaid
money orders, an urgent message was sent to all postmasters, and the following day
notice was likewise served upon all banks, instructing them not to pay anyone of the
money orders aforesaid if presented for payment. The Bank of America received a copy
of said notice three days later.
On April 23, 1958 one of the above-mentioned money orders numbered 124688 was
received by appellant as part of its sales receipts. The following day it deposited the same
with the Bank of America, and one day thereafter the latter cleared it with the Bureau of
Posts and received from the latter its face value of P200.00.
On September 27, 1961, appellee Mauricio A. Soriano, Chief of the Money Order
Division of the Manila Post Office, acting for and in behalf of his co-appellee, Postmaster
Enrico Palomar, notified the Bank of America that money order No. 124688 attached to
his letter had been found to have been irregularly issued and that, in view thereof, the

amount it represented had been deducted from the bank's clearing account. For its part, on
August 2 of the same year, the Bank of America debited appellant's account with the
same amount and gave it advice thereof by means of a debit memo.
On October 12, 1961 appellant requested the Postmaster General to reconsider the action
taken by his office deducting the sum of P200.00 from the clearing account of the Bank
of America, but his request was denied. So was appellant's subsequent request that the
matter be referred to the Secretary of Justice for advice. Thereafter, appellant elevated the
matter to the Secretary of Public Works and Communications, but the latter sustained the
actions taken by the postal officers.
ISSUE:
WON that the postal money order in question is a negotiable instrument
HELD:
It is not disputed that our postal statutes were patterned after statutes in force in the
United States. For this reason, ours are generally construed in accordance with the
construction given in the United States to their own postal statutes, in the absence of any
special reason justifying a departure from this policy or practice. The weight of authority
in the United States is that postal money orders are not negotiable instruments (Bolognesi
vs. U.S. 189 Fed. 395; U.S. vs. Stock Drawers National Bank, 30 Fed. 912), the reason
behind this rule being that, in establishing and operating a postal money order system, the
government is not engaging in commercial transactions but merely exercises a
governmental power for the public benefit.
It is to be noted in this connection that some of the restrictions imposed upon money
orders by postal laws and regulations are inconsistent with the character of negotiable
instruments. For instance, such laws and regulations usually provide for not more than
one endorsement; payment of money orders may be withheld under a variety of
circumstances (49 C.J. 1153).
Of particular application to the postal money order in question are the conditions laid
down in the letter of the Director of Posts of October 26, 1948 (Exhibit 3) to the Bank of
America for the redemption of postal money orders received by it from its depositors.
Among others, the condition is imposed that "in cases of adverse claim, the money order
or money orders involved will be returned to you (the bank) and the, corresponding
amount will have to be refunded to the Postmaster, Manila, who reserves the right to
deduct the value thereof from any amount due you if such step is deemed necessary." The
conditions thus imposed in order to enable the bank to continue enjoying the facilities
theretofore enjoyed by its depositors, were accepted by the Bank of America. The latter is
therefore bound by them. That it is so is clearly referred from the fact that, upon receiving
advice that the amount represented by the money order in question had been deducted
from its clearing account with the Manila Post Office, it did not file any protest against
such action.

Moreover, not being a party to the understanding existing between the postal officers, on
the one hand, and the Bank of America, on the other, appellant has no right to assail the
terms and conditions thereof on the ground that the letter setting forth the terms and
conditions aforesaid is void because it was not issued by a Department Head in
accordance with Sec. 79 (B) of the Revised Administrative Code. In reality, however, said
legal provision does not apply to the letter in question because it does not provide for a
department regulation but merely sets down certain conditions upon the privilege granted
to the Bank of Amrica to accept and pay postal money orders presented for payment at
the Manila Post Office. Such being the case, it is clear that the Director of Posts had
ample authority to issue it pursuant to Sec. 1190 of the Revised Administrative Code.
In view of the foregoing, We do not find it necessary to resolve the issues raised in the
third and fourth assignments of error.
WHEREFORE, the appealed decision being in accordance with law, the same is hereby
affirmed with costs.