Commercial Law digest

Negotiable instrument

TRADERS ROYAL BANK Vs CA

Defendant Filriters is the registered owner of CBCI No. NO.

D891. Under a deed of assignment dated
November 27, 1971, Filriters transferred CBCI FREEDOM OF NEGOTIABILITY; NOT PRESENT IN
No. D891 to Philippine Underwriters Finance CERTIFICATE OF INDEBTEDNESS. — The
Corporation (Philfinance). Subsequently, language of negotiability which characterize a
Philfinance transferred CBCI No. D891, which negotiable paper as a credit instrument is its
was still registered in the name of Filriters, to freedom to circulate as a substitute for money.
appellant Traders Royal Bank (TRB). The transfer Hence, freedom of negotiability is the touchstone
was made under a repurchase agreement dated relating to the protection of holders in due
February 4, 1981, granting Philfinance the right to course, and the freedom of negotiability is the
repurchase the instrument on or before April 27, foundation for the protection which the law
1981. When Philfinance failed to buy back the throws around a holder in due course (11 Am.
note on maturity date, it executed a deed of Jur. 2d, 32). This freedom in negotiability is
assignment, dated April 27, 1981, conveying to totally absent in a certificate of indebtedness as
appellant TRB all its rights and title to CBCI No. it merely acknowledges to pay a sum of money
D891. to a specified person or entity for a period of
time.
Armed with the deed of assignment, TRB then sought
the transfer and registration of CBCI No. D891 in
its name before the Security and Servicing
Department of the Central Bank (CB). Central
Bank, however, refused to effect the transfer and
registration in view of an adverse claim filed by
defendant Filriters. Petitioner argued that the
subject CBCI was a negotiable instrument, and
having acquired the said certificate from
Philfinance as a holder in due course, its
possession of the same is thus free from any
defect of title of prior parties and from any
defense available to prior parties among
themselves, and it may thus, enforce payment of NO. the presumption under the Rules of court
the instrument for the full amount thereof against that a NI was given for a sufficient
all parties liable thereon. consideration, thus a HOLDER in due course will
not apply to Salazar. The term given is not
CB Certificate of Bank indebtedness a negotiable merely a transfer of physical possession of the
instrument? instrument. The phrase GIVEN or ENDORSED in
the contest of a negotiable instrument refers to
the manner in wc such instrument maybe
negotiated . NI are negotiated by one person to
2. BPI vs CA SALAZAR, TEMPLONUEVAO
another in such a manner as to constitute the
On the claim of Templonuevo that 3 checks
transferee the HOLDER thereof. If payable to
payable to him were deposited with BPI to
bearer, by delivery, if payable to ORDER by
Salazar’s account without his knowledge and
INDORSEMENT completed by The present case
endorsement. BPI debited salazars bank account
involves checks payable to order. Not being a
and paid Templonuevo with managers check.
payee or indorsee of the checks, private
respondent Salazar could not be a holder
does a collecting bank, over the objections of its
thereof delivery.
depositor, have the authority to withdraw
The weight of authority is that the mere
unilaterally from such depositor's account the
possession of a negotiable instrument does not
amount it had previously paid upon certain
in itself conclusively establish either the right of

unendorsed order instruments deposited by the
depositor to another account that she later
closed?
Is Salazar a holder in due course?
3. NORBERTO TIBAJIA, JR. ET AL, VS CA et al
Execution of judgment against Tibajia couple,
instead of satisfying the judgment debt from the
amount garnished and deposited with the clerk
of court, the couple paid cash and cashier’s
check.
Is a check legal tender?
4, ROMAN CATHOLIC BISHOP OF MALOLOS, INC.,
petitioner, vs. INTERMEDIATE APPELLATE COURT,
and ROBES-FRANCISCO REALTY AND
DEVELOPMENT CORPORATION,1990
5. NEW PACIFIC TIMBER & SUPPLY COMPANY,
INC., petitioner, vs. HON. ALBERTO V. SENERIS,
RICARDO A. TONG and EX-OFFICIO SHERIFF
HAKIM S. ABDULWAHID, 1980
Before the auction sale set by the Clerk of Court as Ex-
Officio sheriff, pursuant to a writ of execution
issued by respondent Judge at the instance of
private respondent, upon failure of petitioner to
pay the judgment obligation in the amount of
P63,130.00, the latter deposited with the Clerk of
Court the amount of P50,000.00 in cashier's
the possessor to receive payment, or of the
right of one who has made payment to be
discharged from liability. Thus, something more
than mere possession by persons who are not
payees or indorsers of the instrument is
necessary to authorize payment to them in the
absence of any other facts from which the
authority to receive payment may be inferred.
(In State Investment House v. IAC, 20 the Court
enumerated the effects of crossing a check,
thus: (1) that the check may not be encashed
but only deposited in the bank; (2) that the
check may be negotiated only once — to one
who has an account with a bank; and (3) that
the act of crossing the check serves as a
warning to the holder that the check has been
issued for a definite purpose so that such holder
must inquire if the check has been received
pursuant to that purpose. )
CIVIL LAW; EXTINGUISHMENT OF OBLIGATIONS;
PAYMENT OR PERFORMANCE; LEGAL TENDER;
CASHIER'S CHECK IS NOT LEGAL TENDER. — In
the recent cases of Philippine Airlines, Inc. vs.
Court of Appeals and Roman Catholic Bishop of
Malolos, Inc. vs. Intermediate Appellate Court,
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.
2. ID.; ID.; ID.; NOT VALIDLY CONSTITUTED BY
PAYMENT OF A CERTIFIED PERSONAL
CHECK. — With regard to the third issue,
granting arguendo that we would rule
affirmatively on the two preceding issues, the
case of the private respondent still can not
succeed in view of the fact that the latter used a
certified personal check which is not legal tender
nor the currency stipulated, and therefore, can
not constitute valid tender of payment. The first
paragraph of Art. 1249 of the Civil Code provides
that "the payment of debts in money shall be
made in the currency stipulated, and if it is not
possible to deliver such currency, then in the
currency which is legal tender in the Philippines.
The Court en banc in the recent case of
Philippine Airlines v. Court of Appeals,