Summary: Moran vs.
Court of Appeals (GR 105836, 7 March 1994) had previously issued were dishonored upon presentment for payment. Apparently,
Moran vs. CA
[GR 105836, 7 March 1994]
Second Division, Regalado (J): 4 concur
Facts: George and Librada Moran are the owners of the Wack-Wack Petron gasoline
station located at Shaw Boulevard, corner Old Wack-Wack Road, Mandaluyong,
Metro Manila. They regularly purchased bulk fuel and other related products from
Petrophil Corporation on cash on delivery (COD) basis. Orders for bulk fuel and
other related products were made by telephone and payments were effected by
personal checks upon delivery. The Morans maintained 3 joint accounts, namely 1
current account (37-00066-7) and 2 savings accounts, (1037002387 and
1037001372) with the Shaw Boulevard branch of Citytrust Banking Corporation. As
a special privilege to the Morans, whom it considered as valued clients, the bank
allowed them to maintain a zero balance in their current account. Transfers from
Savings Account 1037002387 to their current account could be made only with their
prior authorization, but they gave written authority to Citytrust to automatically
transfer funds from their Savings Account 1037001372 to their Current Account 37-
00066-7 at any time whenever the funds in their current account were insufficient to
meet withdrawals from said current account. Such arrangement for automatic
transfer of funds was called a pre-authorized transfer (PAT) agreement. On 12
December 1983, the Morans, through Librada, drew a check (Citytrust 041960) for
P50,576.00 payable to Petrophil Corporation. The next day, 13 December 1983, the
Morans, again through Librada, issued another check (Citytrust 041962) in the
amount of P56,090.00 in favor of the same corporation. The total sum of the two
checks was P106,666.00. On 14 December 1983, Petrophil deposited the two
aforementioned checks to its account with the Pandacan branch of the Philippine
National Bank (PNB), the collecting bank. In turn, PNB Pandacan branch presented
them for clearing with the Philippine Clearing House Corporation in the afternoon of
the same day. The records show that on 14 December 1983, Current Account 37-
00066-7 had a zero balance, while Savings Account 1037001372 (covered by the
PAT) had an available balance of P26,104.30 and Savings Account 1037002387 had
an available balance of P43,268.39. At about 10 a.m. of the following day, 15
December 1983, George Moran went to the bank, as was his regular practice, to
personally oversee their daily transactions with the bank. He deposited in their
Savings Account 1037002387 the amounts of P10,874.58 and P6,754.25, 8 and he
likewise deposited in their Savings Account 1037001372 the amounts of P5,900.00,
P35,100.00 and 30.00. The amount of P40,000.00 was then transferred by him from
Saving Account 1037002387 to their current account by means of a pro forma
withdrawal form (a debit memorandum), which was provided by the bank,
authorizing the latter to make the necessary transfer. At the same time, the amount of
P66,666.00 was transferred from Savings Account 1037001372 to the same current
account through the pre-authorized transfer (PAT) agreement. Sometime on
December 15 or 16, 1983 George Moran was informed by his wife Librada, that
Petrophil refused to deliver their orders on a credit basis because the two checks they
the bank dishonored the checks due to "insufficiency of funds." The non-delivery of
gasoline forced the Morans to temporarily stop business operations, allegedly
causing them to suffer loss of earnings. In addition, Petrophil cancelled their credit
accommodation, forcing them to pay for their purchases in cash. George Moran,
furious and upset, demanded an explanation from Raul Diaz, the branch manager.
Failing to get a sufficient explanation, he talked to a certain Villareal, a bank officer,
who allegedly told him that Amy Belen Ragodo, the customer service officer, had
committed a "grave error". On December 16 or 17, 1983, Diaz went to the Moran
residence to get the signatures of the petitioners on an application for a manager's
check so that the dishonored checks could be redeemed. Diaz then went to Petrophil
to personally present the checks in payment for the two dishonored checks. In a
chance meeting around May or June, 1984, George Moran learned from one
Constancio Magno, credit manager of Petrophil, that the latter received from
Citytrust, through Diaz, a letter dated 16 December 1983, notifying them that the two
checks were "inadvertently dishonored . . . due to operational error." Said letter was
received by Petrophil on 4 January 1984. On 24 July 1984, or a little over six months
after the incident, petitioners, through counsel, wrote Citytrust claiming that the
bank's dishonor of the checks caused them besmirched business and personal
reputation, shame and anxiety, hence they were contemplating the filing of the
necessary legal actions unless the bank issued a certification clearing their name and
paid them P1,000,000.00 as moral damages. The bank did not act favorably on their
demands, hence the Morans filed a complaint for damages on 8 September 1984,
with the RTC Pasig (Branch 159, Civil Case 51549). In turn, Citytrust filed a
counterclaim for damages, alleging that the case filed against it was unfounded and
unjust. After trial, a decision dated 9 October 1989 was rendered by the trial court
dismissing both the complaint and the counterclaim. On appeal, the Court of Appeals
rendered judgment in CA-GR CV 25009 on 9 October 1989 affirming the decision of
the trial court.
Issue [1]: Whether a bank is not liable for its refusal to pay a check on account of
insufficient funds, but wherein a deposit may be made later in the day.
Held [1]: Fixed savings and current deposits of money in banks and similar
institutions shall be governed by the provisions concerning simple loan. In other
words, the relationship between the bank and the depositor is that of a debtor and
creditor. By virtue of the contract of deposit between the banker and its depositor,
the banker agrees to pay checks drawn by the depositor provided that said depositor
has money in the hands of the bank. Hence, where the bank possesses funds of a
depositor, it is bound to honor his checks to the extent of the amount of his deposits.
The failure of a bank to pay the check of a merchant or a trader, when the deposit is
sufficient, entitles the drawer to substantial damages without any proof of actual
damages. Conversely, a bank is not liable for its refusal to pay a check on account of
insufficient funds, notwithstanding the fact that a deposit may be made later in the
day. Before a bank depositor may maintain a suit to recover a specific amount from
his bank, he must first show that he had on deposit sufficient funds to meet his
demand.
Issue [2]: Whether the Spouses Moran had sufficient funds in their accounts when
the bank dishonored the checks in question.
Held [2]: The available balance on 14 December 1983 was used by the bank in
determining whether or not there was sufficient cash deposited to fund the two
checks, although what was stamped on the dorsal side of the two checks in question
was "DAIF/12-15-83," since 15 December 1983 was the actual date when the checks
were processed. When the Morans' checks were dishonored due to insufficiency of
funds, the available balance of Savings Account 1037001372, which was the subject
of the PAT agreement, was not enough to cover either of the two checks. On 14
December 1983, when PNB, Pandacan branch presented the checks for collection,
the available balance for Savings Account 1037001372 was only P26,104.30 while
Current Account 37-0006-7 had no available balance. It was only on 15 December
1983 at around 10:00 a.m. that the necessary funds were deposited, which
unfortunately was too late to prevent the dishonor of the checks.
Issue [3]: Whether the bank is required to give notice before dishonoring checks
drawn upon insufficient funds.
Held [3]: If ever the spouses Moran on previous occasions were given notices every
time a check was presented for clearing and payment and there were no adequate
funds in their accounts, these were, at most, mere accommodations on the part of
CityTrust. It was not a requirement or a general banking practice, hence non-
compliance therewith could not lay the bank open to blame or rebuke. Legally, the
bank had all the right to dishonor the checks because there were no sufficient funds
to speak of in the first place. If the demand is by check, a drawer must have to his
credit enough to cover the demand. If his credit with the bank is less than the amount
on the face of the check, the bank may lawfully refuse payment.
Case Digest - Civil Law
Law on Succession
AZNAR vs GARCIA
GRN L. 16749 January 31, 1963
FACTS:
On September 14, 1949 Judge Cusi approved the final accounts of the executor
directing the executor to reimburse Maria Lucy Christensen the amount of 3,600 paid
by her to Helen Christensen Garcia as her legacy and declared Maria Lucy
Christensen entitled to the residue of the property to be enjoyed during her lifetime,
and in case of death, issue one half of said residue to Mrs. Carrie Louise C. Borton,
in accordance with the provisions of the will of the testator Edward E. Christensen.
The will was executed in Manila on March 5, 1951 by Edward Christensen, a citizen
of California USA.
ISSUE:
The nationality which testamentary law should govern, CA or Phils under code art
16.
Held:
The SC held for the child who was given P3,000 only. It was said that while ART 16
of the Civil Code states that the intrinsic validity of testamentary provisions shall be
governed by the decedent’s national law, nevertheless, the Civil Code of CA declares
that the decedent’s domiciliary law shall govern. Hence, the question shall be
referred to the decedent’s domicile.
Aznar vs. Garcia 7
s 95
Facts:
                Edward S. Christensen, though born in New York, migrated to California
where he resided and consequently was considered a California Citizen for a period
of nine years to 1913. He came to the Philippines where he became a domiciliary
until the time of his death. However, during the entire period of his residence in this
country, he had always considered himself as a citizen of California.
                In his will, executed on March 5, 1951, he instituted an acknowledged
natural daughter, Maria Lucy Christensen as his only heir but left a legacy of some
money in favor of Helen Christensen Garcia who, in a decision rendered by the
Supreme Court had been declared as an acknowledged natural daughter of his.
Counsel of Helen claims that under Art. 16 (2) of the civil code, California law
should be applied, the matter is returned back to the law of domicile, that Philippine
law is ultimately applicable, that the share of Helen must be increased in view of
successional rights of illegitimate children under Philippine laws. On the other hand,
counsel for daughter Maria , in as much that it is clear under Art, 16 (2) of the  Mew
Civil Code, the national of the deceased must apply, our courts must apply internal
law of California on the matter. Under California law, there are no compulsory heirs
and consequently a testator should dispose any property possessed by him in absolute
dominion.
Issue:
                Whether Philippine Law or California Law should apply.

 
Held:
                The Supreme Court deciding to grant more successional rights to Helen
Christensen Garcia said in effect that there be two rules in California on the matter.
1.       The conflict rule which should apply to Californian’s outside the
California, and
2.       The internal Law which should apply to California domiciles in
califronia.
The California conflict rule, found on Art. 946 of the California Civil code
States that “if there is no law to the contrary in the place where personal property is
situated, it is deemed to follow the decree of its owner and is governed by the law of
the domicile.”
Christensen being domiciled outside california, the law of his domicile, the
Philippines is ought to be followed.
Wherefore, the decision appealed is reversed and case is remanded to the
lower court with instructions that partition be made as that of the Philippine
law provides.
 
John Fortis vs. Gutierrez Hermanos
G.R. No. L-2484 April 11, 1906
Doctrine:
1.General rule: receipt by a person of share of profits of
business is prima facie evidence that he is a partner;
Exception: profit was for payment as wages of employee.
2.Articles of partnership prevail as to the division of profits
among partners.
3.It is the net profit, after all expenses (including salary of
employee) have been deducted that is shared between
partners.
Facts:
Fortis (plaintiff), an employee of Gutierrez and Hermanos (defendants)
from 1900-1902, brought this action to recover a balance due him as
salary for the year 1902. He alleged that he was entitled, as salary, to 5%
of the net profits of the business of defendants for said year. The
complaint also contained a cause of action for the sum of 600 pesos,
money expended by him for the defendants during the year 1903.
The court ruled in favour of Fortis and found that the 5% net profits for
1902 amounted to 26,378.68 Mexican Pesos (MP), but plaintiff had
received on account of such salary only MP 12,811.75. Thus it ordered the
defendants to pay Fortis the reduced sum of MP 13,025.40.
Issue/s:
Whether defendants were correct to argue that Fortis is a co-partner
Held:
No. The judgment of the court below was affirmed. Case was remanded to
the lower court for execution.
Ratio:
First, it was a mere contract of employment. The plaintiff had neither
voice nor vote in the management of the affairs of the company.
Second, the articles of partnership between the defendants provided that
the profits should be divided among the partners named in a certain
proportion, and the contract made between the plaintiff and the then
manager of the defendant partnership did not in any way vary or modify
this provision of the articles of partnership.
The profits of the business could not be determined until all of the
expenses had been paid. A part of the expenses to be paid for the year
1902 was the salary of the plaintiff. That salary had to be deducted before
the net profits of the business, which were to be divided among the
partners, could be ascertained. It was necessary to determine what the
profits of the business were after paying all of the expenses except his, in
order to determine what the salary of the plaintiff was. But such
determination does not arrive at the net profits of the business yet. It was
only made for the purpose of fixing the basis upon which his
compensation should be determined