Philippine Education Co.

vs Soriano (GR L-22405, 30 June 1971)

 
Philippine Education Co. vs Soriano
(GR L-22405, 30 June 1971)

Facts:
Enrique Montinola sought to purchase from the Manila Post Office 10 money
orders (P200 each), offering to pay for them with a private check. Montinola was
able to leave the building with his check and the 10 money orders without the
knowledge of the teller. Upon discovery, message was sent to all postmasters
and banks involving the unpaid money orders. One of the money orders was
received by the Philippine Education Co. as part of its sales receipt. It was
deposited by the company with the Bank of America, which cleared it with the
Bureau of Post. The Postmaster, through the Chief of the Money Order Division
of the Manila Post Office informed the bank of the irregular issuance of the
money order. The bank debited the account of the company. The company
moved for reconsideration.

Issue:
Whether or not  postal money orders are negotiable instruments.

Held:
No. Philippine postal statutes are patterned from those of the United States, and
the weight of authority in said country is that Postal money orders are not
negotiable instruments inasmuch as the establishment of a postal money order is
an exercise of governmental power for the public’s benefit. Furthermore, some of
the restrictions imposed upon money order by postal laws and regulations are
inconsistent with the character of negotiable instruments. For instance, postal
money orders may be withheld under a variety of circumstances, and which are
restricted to not more than one indorsement
CALTEX VS CA

Caltex claims that the Certificate of Time Deposits (CTD’s) are non-negotiable
since it lacks the requirement of payable to order or to bearer under Section 1
of the Negotiable Instruments Law. The Court of Appeals declared the CTD's as
non-negotiable, however, the Supreme Court ruled in the contrary, stating that it
correctly followed the requisites under Section 1 of the Negotiable Instruments
Law with its 4th requisite “An Instrument must be payable to order or to bearer”
being in question in the case at bar.

Doctrine:
Interpretation of obscure words or stipulations in a contract shall not favor the
party who caused the obscurity. 

Facts:
On various dates, Security Bank issued certificates of time deposit (CTDs) In
favor of one Angel dela Cruz who deposited with the said bank the aggregate
amount of 1,120,000php. The delivery of these CTD’s was in connection with
his purchase of fuel products from Caltex Inc. 

Sometime in March 1982, dela Cruz informed the branch manager of Security
Bank, Timoteo Tianco that he lost all the CTD’s. In their reply, Tiangco advised
dela Cruz to execute and subit a notarized affidavit of loss as required by the
bank’s procedure if he desired the replacement of the lost CTD’s.

Dela Cruz was able to execute and deliver to Security Bank the required
affidavit of loss and on the basis of the affidavit, the bank issued to dela Cruz
280 replacement CTD’s

On March 25, 1982, dela Cruz negotiated and obtained a loan from Security
Bank. On the same date, dela Cruz executed a notarized Deed of Assignment
of Time Deposit which stated, he surrenders to Security Bank "full control of the
indicated time deposits from and after date" of the assignment and further
authorizes 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.

Issues Ratio:
Whether or not Certificate of Time Deposits are Non-Negotiable and whether it
was payable to order or to bearer.

Dispositive:
No. The CTD's are negotiable instruments.
The documents provide that the amounts deposited shall be repayable to the
depositor. And who, according to the document, is the depositor? It is the
"bearer." The documents do not say that the depositor is Angel de la Cruz and
that the amounts deposited are repayable specifically to him. Rather, the
amounts are to be repayable to the bearer of the documents or, for that matter,
whosoever may be the bearer at the time of presentment.

If it was really the intention of Security Bank to pay the amount to dela Cruz
only, it could have with facility so expressed that fact in clear and categorical
terms in the documents, instead of having the word "BEARER" stamped on the
space provided for the name of the depositor in each CTD. On the wordings of
the documents, therefore, the amounts deposited are repayable to whoever
may be the bearer thereof. 

Caltex’s witness merely declared that Angel de la Cruz is the depositor "insofar
as the bank is concerned," but obviously other parties not privy to the
transaction between them would not be in a position to know that the depositor
is not the bearer stated in the CTDs. Hence, the situation would require any
party dealing with the CTDs to go behind the plain import of what is written
thereon to unravel the agreement of the parties thereto through facts aliunde.
This need for resort to extrinsic evidence is what is sought to be avoided by the
Negotiable Instruments Law and calls for the application of the elementary rule
that the interpretation of obscure words or stipulations in a contract shall not
favor the party who caused the obscurity. 
METROBANK VS CA

FACTS:
Gomez  opened  an  account  with  Golden  Savings  bank  and  deposited  38
treasury  warrants.    All  these  warrants  were  indorsed  by  the  cashier  of
Golden  Savings,  and  deposited  it  to  the  savings  account  in  a  Metrobank
branch.    They  were  sent  later  on  for  clearing  by  the  branch  office  to  the
principal  office  of  Metrobank,  which  forwarded  them  to  the  Bureau  of
Treasury  for  special  clearing.    On  persistent  inquiries  on  whether  the
warrants have been cleared, the branch manager allowed withdrawal of the
warrants,  only  to  find  out  later  on  that  the  treasury  warrants  have  been
dishonored.  
 

HELD:
The  treasury  warrants  were  not  negotiable  instruments.    Clearly,  it  is
indicated  that  it  was  non-negotiable  and  of  equal  significance  is  the
indication  that  they  are  payable  from  a  particular  fund,  Fund  501.    This
indication  as  the  source  of  payment  to  be  made  on  the  treasury  warrant
makes  the  promise  to  pay  conditional  and  the  warrants  themselves  non-
negotiable.
 
Metrobank then cannot contend that by indorsing the warrants in general, GS
assumed that they were genuine and in all respects what they purport it to be, in
accordance to Section 66 of the NIL.  The simple reason is that the  law  isn’t 
applicable  to  the  non-negotiable  treasury  warrants.    The
indorsement  was  made  for  the  purpose  of  merely  depositing  them  with
Metrobank  for  clearing.    It  was  in  fact  Metrobank  which  stamped  on  the
back of the warrants: “All prior indorsements and/or lack of endorsements
guaranteed…”
 Sesbreño vs. Court of Appeals [G.R. No. 89252. May 24, 1993]
5/31/2021
0 COMMENTS
 

Sesbreño v. Court of Appeals [G.R. No. 89252. May 24, 1993]

Facts:
Petitioner Raul Sesbreño made a money market placement in the amount of
P300,000.00 with the Philippine Underwriters Finance Corporation
(“Philfinance”). The latter issued a Certificate of Confirmation of Sale “without
recourse” from Delta Motors Corporation Promissory Note, a Certificate of
securities indicating the sale to petitioner, with the notation that the said security
was in custodianship of Pilipinas Bank, andpost-dated checks payable with
petitioner as payee, Philfinance as drawer. Petitioner approached private
respondent Pilipinas Bank and handed her a demand letter informing the bank
that his placement with Philfinance had remained unpaid and outstanding, and
that he in effect was asking for the physical delivery of the underlying promissory
note. Pilipinas did not deliver the Note, nor any certificate of participation in
respect thereof, to petitioner.

Issue:
 Whether or not non-negotiable instruments are transferrable.

Held:
 YES. 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. 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.
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. These are supplied by
Fojas-Arca. Fojas-Arca purchased on creditwith FirestoneTire & Rubber
Company, in payment Fojas-Arca delivered a 6 special withdrawalslips. 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 oncredit of its products but several withdrawal slips were dishonored
and not paid. As aconsequence, Citibank debited the plaintiff’s account
representing the aggregate amount of thetwo dishonored special withdrawal
slips. Fojas-Arca averred that the pecuniary losses it sufferedare a caused by
and directly attributes to defendant’s gross negligence as a result Fojas-Arcafiled
a complaint

.Issue:Whether or not the acceptance and payment of the special withdrawal

slips without thepresentation of the depositor’s passbook thereby giving the
impression that it is a negotiableinstrument like a check.

Held:No. Withdrawal slips in question were non negotiable instrument. Hence,

the rulesgoverning the giving immediate notice of dishonor of negotiable
instrument do not apply. Theessence of negotiability which characterizes a
negotiable paper as a credit instrument lies in itsfreedom to circulate freely as a
substitute for money. The withdrawal slips in question lacked thischaracter
 SALAS V. CA

181 SCRA 296

 
FACTS:

Petitioner  bought  a  car  from  Viologo  Motor  Sales  Company,  which  was
secured  by  a  promissory  note,  which  was  later  on  indorsed  to  Filinvest
Finance,  which  financed  the  transaction.    Petitioner  later  on  defaulted  in
her  installment  payments,  allegedly  due  to  the  fraud  imputed  by  VMS  in
selling her a different vehicle from what was agreed upon.  This default in
payment  prompted  Filinvest  Finance  to  initiate  a  case  against  petitioner. 
The  trial  court  decided  in  favor  of  Filinvest,  to  which  the  appellate  court
upheld by increasing the amount to be paid.
It is the contention of petitioner that since the agreement between her and the 
motor  company  was  inexistent,  none  had  been  assigned  in  favor  of private
respondent.  
 
HELD:
Petitioner’s  liability  on  the  promissory  note,  the  due  execution  and
genuineness of which she never denied under oath, is under the foregoing
factual milieu, as inevitable as it is clearly established.  
 
The records reveal that involved herein is not a simple case of assignment of 
credit  as  petitioner  would  have  it  appear,  where  the  assignee  merely steps 
into  the  shoes  of,  is  open  to  all  defenses  available  against  and  can
enforce payment only to the same extent as, the assignor-vendor.
 
The  instrument  to  be  negotiable  must  contain  the  so-called  words  of
negotiability.    There  are  only  2  ways  for  an  instrument  to  be  payable  to
order.  There must always be a specified person named in the instrument and the
bill or note is to be paid to the person designated in the instrument or  to  any 
person  to  whom  he  has  indorsed  and  delivered  the  same.  Without the
words “or order” or “to the order of”, the instrument is payable only  to  the 
person  designated  therein  and  is  thus  non-negotiable.    Any subsequent 
purchaser  thereof  will  not  enjoy  the  advantages  of  being  a
holder  in  due  course  but  will  merely  step  into  the  shoes  of  the  person
designated  in  the  instrument  and  will  thus  be  open  to  the  defenses
available against the latter.  
 
In  the  case  at  bar,  the  promissory  notes  is  earmarked  with  negotiability
and Filinvest is a holder in due course.   
Ang Tek Lian v. Court of Appeals
[G.R. No. L-2516. September 25, 1950]
 
Facts:
Petitioner drew a check payable to the order of “cash” knowing that he had no
funds. He delivered it in exchange of money. Petitioner was found guilty of
estafa, but petitioner argued that the check had not been indorsed by him, hence,
he should not be held guilty thereof.

Issue:
Whether or not indorsement is necessary to negotiate a check payable to the
order of “cash”.

Held:
NO. Indorsement is no longer necessary. Under the Negotiable Instruments Law
(Sec. 9 [d]), a check drawn payable to the order of “cash” is a check payable to
bearer, and the bank may pay it to the person presenting it for payment without
the drawer’s indorsement. Being a bearer instrument, negotiation may be done
by mere delivery of the instrument.

Where a check is made payable to the order of "cash", the word cash "does not
purport to be the name of any person", and hence the instrument is payable to
bearer. The drawee bank need not obtain any indorsement of the check, but may
pay it to the person presenting it without any indorsement. .