1.

Roman Catholic of Malolos v IAC

Material Facts:

The property subject matter of the contract consists of a parcel of land in the Province of Bulacan, issued
and registered in the name of the petitioner which it sold to the private respondent.

On July 7, 1971, the subject contract over the land in question was executed between the petitioner as
vendor and the private respondent through its then president, Mr. Carlos F. Robes, as vendee,
stipulating for a downpayment of P23,930.00 and the balance of P100,000.00 plus 12% interest per
annum to be paid within four (4) years from execution of the contract. The contract likewise provides for
cancellation, forfeiture of previous payments, and reconveyance of the land in question in case the
private respondent would fail to complete payment within the said period.

After the expiration of the stipulated period for payment, Atty. Adalia Francisco (president of the
company who bought land) wrote the petitioner a formal request that her company be allowed to pay
the principal amount of P100,000.00 in three (3) equal installments of six (6) months each with the first
installment and the accrued interest of P24,000.00 to be paid immediately upon approval of the said
request.

The petitioner formally denied the said request of the private respondent, but granted the latter a grace
period of five (5) days from the receipt of the denial to pay the total balance of P124,000.00. The private
respondent wrote the petitioner requesting an extension of 30 days from said date to fully settle its
account but this was still denied.

Consequently, Atty. Francisco wrote a letter directly addressed to the petitioner, protesting the alleged
refusal of the latter to accept tender of payment made by the former on the last day of the grace period.
But the private respondent demanded the execution of a deed of absolute sale over the land in question

Atty. Fernandez, wrote a reply to the private respondent stating the refusal of his client to execute the
deed of absolute sale so the petitioner cancelled the contract and considered all previous payments
forfeited and the land as ipso facto reconveyed.

From a perusal of the foregoing facts, we find that both the contending parties have conflicting versions
on the main question of tender of payment.

According to the trial court:

. . . What made Atty. Francisco suddenly decide to pay plaintiff’s obligation on tender her payment,
when her request to extend the grace period has not yet been acted upon? Atty. Francisco’s claim that
she made a tender of payment is not worthy of credence.

The trial court considered as fatal the failure of Atty. Francisco to present in court the certified personal
check allegedly tendered as payment or, at least, its xerox copy, or even bank records thereof.
Not satisfied with the said decision, the private respondent appealed to the IAC. The IAC reversed the
decision of the trial court. The IAC, in finding that the private respondent had sufficient available funds,
ipso facto concluded that the latter had tendered payment.

ISSUE:

Whether or not the finding of the IAC that Atty. Francisco had sufficient available funds did tender
payment for the said obligation.

Whether or not an offer of a check is a valid tender of payment of an obligation under a contract which
stipulates that the consideration of the sale is in Philippine Currency.

HELD:

1. No. Tender of payment involves a positive and unconditional act by the obligor of offering legal tender
currency as payment to the obligee for the former’s obligation and demanding that the latter accept the
same. Thus, tender of payment cannot be presumed by a mere inference from surrounding
circumstances. At most, sufficiency of available funds is only affirmative of the capacity or ability of the
obligor to fulfill his part of the bargain. The respondent court was therefore in error.

2. No. In the case of Philippine Airlines v. Court of Appeals:

Since a negotiable instrument is only a substitute for money and not money, the delivery of such an
instrument does not, by itself, operate as payment. 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 tender of payment by the private respondent
was not valid for failure to comply with the requisite payment in legal tender or currency stipulated
within the grace period

the DECISION of the IAC is hereby SET ASIDE and ANNULLED and the DECISION of the trial court is
REINSTATED.
 2. Caltex Philippines, Inc. vs. Court of Appeals
G.R. No. 97753, August 10, 1992

MATERIAL FACTS:

Defendant bank, Security Bank and Trust Company (SBTC) issued 280 certificates of time deposit (CTDs)
in favour of Angel dela Cruz who then used the CTDs to guarantee his purchases of fuel products and
delivered them to plaintiff Caltex. Sometime in March 1982, Angel dela Cruz informed the bank that he
lost all the CTDs and he was advised to submit a notarized affidavit of loss. Upon receipt of the said
affidavit, issued 280 replacement CTDs which he assigned and transferred to defendant bank in
consideration of the loan that was granted to him. Angel dela Cruz executed a notarized Deed of
Assignment of Time Deposit which stated that he surrendered to defendant bank full control of the CTDs
from and after the date of assignment and authorized said bank to pre-terminate, set-off and apply the
said time deposits to the payment of whatever amount or amounts may be due on the loan upon its
maturity.

On the CTDs issued the word ‘bearer’ appears boldly and after the word BEARER stamped on the space
provided supposedly for the name of the depositor, the words ‘has deposited’ a certain amount follows.
The document further provides that the amount deposited shall be ‘repayable to said the depositor’ on
the period indicated

ISSUES:

(1). Whether or not the subject CTDs are negotiable instruments.

(2) Whether or not the CTDs were negotiated to petitioner Caltex.

RULING:

(1) Yes, the CTDs are negotiable instruments. 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 meet the requirements of the law for negotiability in accordance with Section 1 of
the Negotiable Instruments Law which enumerates the requisites for an instrument to be negotiable:

(a) It must be in writing and signed by the maker or drawer;

(b) Must contain an unconditional promise or order to pay a sum certain in money;
(c) Must be payable on demand, or at a fixed or determinable future time;

(d) Must be payable to order or to bearer; and

(e) Where the instrrument is addressed to a drawer, he must be named or otherwise indicated therein
with reasonable certainty.

On this score, 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.

(2) Under the Negotiable Instruments Law, an instrument is negotiated when it is transferred from one
person to another in such a manner as to constitute the transferee the holder thereof, and the holder
may be the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof. In these
case, there was no negotiation in the sense of a transfer of the legal title to the CTDs in favor of Caltex.
Here, the delivery thereof was only a security for the purchases of Angel dela Cruz which could at the
most constitute petitioner only as a holder for value by reason of his lien.
 Firestone Tire & rubber Co. vs. Court of Appeals
GR No. 113236          March 5, 2001

Facts:
            Forjas-Arca Enterprise Company is maintaining a special savings account
with Luzon Development Bank, the latter authorized and allowed withdrawals of
funds though the medium of special withdrawal slips. Fojas-Arca purchased on
credit products from Firestone with a total amount of P4,896,000.00 in payment
Fojas-Arca delivered a 6 special withdrawal slips. In turn, these were deposited by
the Firsestone to its bank account in Citibank. With this, relying on such
confidence and belief Firestone extended to Fojas-Arca other purchase on credit of
its products but several withdrawal slips were dishonored and not paid. As a
consequence, Citibank debited the plaintiff’s account representing the aggregate
amount of the two dishonored special withdrawal slips. Fojas-Arca averred that the
pecuniary losses it suffered are a caused by and directly attributes to defendant’s
gross negligence as a result Fojas-Arca filed a complaint.

Issue:
            Whether or not the acceptance and payment of the special withdrawal slips
without the presentation of the depositor’s passbook thereby giving the impression
that it is a negotiable instrument like a check.

Held:
            No. Withdrawal slips in question were non negotiable instrument. Hence,
the rules governing the giving immediate notice of dishonor of negotiable
instrument do not apply. The essence of negotiability which characterizes a
negotiable paper as a credit instrument lies in its freedom to circulate freely as a
substitute for money. The withdrawal slips in question lacked this character.

A bank is under obligation to treat the accounts of its depositors with

meticulous care, whether such account consists only of a few hundred pesos or of
millions of pesos. The fact that the other withdrawal slips were honored and paid
by respondent bank was no license for Citibank to presume that subsequent slips
would be honored and paid immediately. By doing so, it failed in its fiduciary duty
to treat the accounts of its clients with the highest degree of care.
 E. M. BACHRACH, plaintiff and appellee, vs. VICENTE GOLINGCO, defendant and
appellant

G.R. No. 13660. November 13, 1918.

MATERIAL FACTS:

This is a suit for the recovery of a sum of money claimed as a balance due to the plaintiff on a promissory
note.

The note in question represents the purchase price of an automobile truck which the plaintiff sold to the
defendant at the time the note was executed. As security for the payment of said indebtedness, the
plaintiff took a chattel mortgage on the truck; and after the note had matured this chattel mortgage was
foreclosed. At the foreclosure sale the plaintiff himself became the purchaser for the sum of P539, which
amount was credited upon the indebtedness.

It is provided in the note given by the defendant for the purchase price of the truck that, in the event of it
becoming necessary to employ counsel to enforce its collection, the maker is to pay an additional twenty-
five per cent "as fees for the attorney collecting the same." The trial court gave judgment for the full
amount due on the note and for an additional sum of P2,115.25, for attorney's fees. The appellant assigns
this as error and argues that the agreement to pay an attorney's fee, in addition to the principal and
stipulated interest, is void as usurious and as being grossly excessive.

ISSUE:

Whether or not the 25 percent stipulation on attorney’s fee for collection valid

RULING:

It may lawfully be stipulated in favor of the creditor, whether the obligation be evidenced by promissory
note or otherwise, that in the event that it becomes necessary, by reason of the delinquency of the debtor,
to employ counsel to enforce payment of the obligation, a reasonable attorney's fee shall be paid by the
debtor, in addition to the amount due for principal and interest. The legality of such a stipulation, when
annexed to a negotiable instrument is expressly recognized by the Negotiable Instruments Law.

Inasmuch as the statutory allowance for attorney's fees, as costs, is notoriously less than the amount
which attorneys are entitled to receive from their clients, unless such a stipulation is made and enforced, it
follows that a creditor may be compelled to pay, out of the money due him, a considerable sum as the
necessary cost of enforcing payment by the delinquent debtor.

Such a stipulation is not void as usurious, even when added to a contract for the payment of the highest
rate of interest permissible. The purpose of such a stipulation is not to increase in any respect the benefits
ultimately to accrue to the creditor. It is true that such a stipulation may be made for the purpose of
concealing usury; but that is a matter of proof to be determined in each case upon the evidence.