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Consolidated Plywood Industries, Inc. vs IFC Leasing & Acceptance Corp, 149 SCRA 448 4. GSIS vs CA, 170 SCRA 533 5. Traders Royal Bank vs CA, 269 SCRA 15 6. PNB vs Rodriguez, 566 SCRA 518
Moran vs Court of Appeals, 230 SCRA 799, GR No. 105836, March 7, 1994
Facts: M who regularly purchased bulk fuel from P maintained 3 joint accounts with Citytrust Bank, namely: Current Account No. 1 (CA1), Savings Account No. 1 (SA1), and Savings Account No. 2 (SA2). M had a pre-authorized transfer (PAT) agreement with Citytrust wherein the former have written authority to the latter to automatically transfer funds from their SA1 to their CA1 at any time whenever the funds in their current account were insufficient to meet withdrawals from said current account. On December 12, 1983, M drew a check for P50, 576.00 payable to P. On December 13, 1983, M issued another check in the amount of P56, 090.00 in favor of the same. On December 14, 1983, P deposited the 2 aforementioned check to its account with the PNB. In turn, PNB presented them for clearing and the record shows that on December 14, 1983, the accounts has insufficient funds (CA1 had a zero balance, while SA1 [covered by PAT] had an available balance of P26, 104.30 and SA2 had an available balance of P43, 268.39). Hence the checks were dishonoured. On December 15, 1983 at 10:00 AM, M went to the bank as was his regular practice and deposited in their SA2 the amounts of P10, 874.58 and P6, 754.25, and he deposited likewise in the SA1 the amounts of P5, 900.00, P35, 100.00 and 30.00. The amount of P40,000.00 was then transferred by him from SA2 to their CA1. At the same time, the amount of P66,666.00 was transferred from SA1 to the same current account through PAT agreement. Sometime on December 15 or 16, 1983 M was informed that that P refused to deliver their orders on a credit basis because the two checks they had previously issued were dishonored upon presentment for payment due to “insufficiency of funds.” The non-delivery of orders forced petitioners to stop business operations, allegedly causing them to suffer loss of earnings. On December 16 or 17, 1983, P got the signature of M on an application for a manager‟s check so that the dishonoured checks could be redeemed and presented the checks in payment for the two dishonoured checks. On July 24, 1984, claimed P1,000,000.00 for moral damages. Issue: WON the bank is liable for damages for its refusal to pay a check on account of insufficient funds considering the fact that a deposit may be made later in the day. Held: No, Petitioners had no sufficient funds in their accounts when the bank dishonoured the checks in question. First, a check is a bill of exchange drawn on a bank payable on demand. Thus, a check is a written order addressed to a bank or persons carrying on the business of banking, by a party having money in their hands, requesting them to pay on presentment, to a person named therein or to bearer or order, a named sum of money.
MANILA OIL REFINING 43 PHIL 444 FACTS: Manila Oil has issued a promissory note in favor of National Bank which included a provision on a confession of judgment in case of failure to pay obligation. the deed of sale with chattel mortgage with promissory note was issued. The failure of a bank to pay the check of a merchant or a trader. Manila Oil has failed to pay on demand. it is clear that the available balance on December 14. the banker agrees to pay checks drawn by the depositor provided that said depositor has money in the hands of the bank. To this the defendant objected. Indeed. NATIONAL BANK V. At the same time. the available balance of SA1 which was the subject of the PAT agreement was not enough to cover either of the two checks. Simultaneously. This prompted the bank to file a case in court. By virtue of the contract of deposit between the banker and its depositor. the seller assigned the deed of sale with chattel mortgage and promissory note to respondent. 1983 was used by the bank in determining whether or not there was sufficient cash deposited to fund the two checks. the available balance for SA1 was only P26. two used tractors. he must first show that he had on deposit sufficient funds to meet demand. CONSOLIDATED PLYWOOD V. The used tractors were then delivered but barely 14 days after. Thereafter. where the bank possesses funds of the depositor. 104. when PNB presented the checks for collection.30 while CA1had no available balance. it broke down. Petitioner would delay the payments on the promissory notes until the seller completes its obligation under the warranty. It was only on December 15. On December 14. Conversely.Second. . IFC 149 SCRA 448 FACTS: Petitioner bought from Atlantic Gulf and Pacific Company. Provisions in notes authorizing attorneys to appear and confess judgments against makers should not be recognized in our jurisdiction by implication and should only be considered as valid when given express legislative sanction. notwithstanding the fact that a deposit may be made later in the day. The seller sent mechanics but the tractors were not repaired accordingly as they were no longer serviceable. 1983 at around 10:00 AM that the necessary funds were deposited. the relationship between the bank and the depositor is that of a debtor and creditor. Petitioner was issued a sales invoice for the two used tractors. HELD: Warrants of attorney to confess judgment aren‟t authorized nor contemplated by our law. Thirdly. When M‟s checks were dishonored due to insufficiency of funds. 1983. a bank is not liable for its refusal to pay a check on account of insufficient funds. which unfortunately was too late to prevent the dishonour of the checks. it is bound to honor his checks to the extent of the amount deposits. wherein an attorney associated with them entered his appearance for the defendant. when the deposit is sufficient. through its sister company Industrial Products Marketing. Before a bank depositor may maintain a suit to recover a specific amount form his bank. a collection suit was filed against petitioner for the payment of the promissory note. entitles the drawer to substantial damages without any proof of actual damages. Considering the clearing process adopted.
particularly the payment of the amortizations due. They also executed a 'promissory note". Due to the failure to comply with the terms of the mortgage. the petitioner may raise against the respondents all defenses available to it against the seller. GSIS extrajudicially foreclosed the mortgage and caused the . 38989 of the Register of Deed of Quezon City. This undertaking was not fulfilled.000. 1957. executed a deed of mortgage. dated November 13. Mr. GSIS V. assuming the note is negotiable. co-owned by said mortgagor spouses. together with spouses Mr. Court of Appeals 170 SCRA 533." obligating themselves to assume the said obligation to the GSIS and to secure the release of the mortgage covering that portion of the land belonging to spouses Racho and which was mortgaged to the GSIS. Both sides of the case used the provisions on accommodation parties in the Negotiable Instruments Law. Upon failure of the mortgagors to comply with the conditions of the mortgage. the Lagasca spouses executed an instrument denominated "Assumption of Mortgage. Isabelo R. it follows that the respondent can never be a holder in due course but remains merely an assignee of the note in question. The promissory note in question is not a negotiable instrument. was given as security under the two deeds. 1989 Facts: Private respondents. 1961.00 and P 3. A parcel of land covered by Transfer Certificate of Title No. another deed of mortgage. Racho. The trial court dismissed the action but this was reversed by the appellate court. Government Service Insurance System v. The promissory note and the deeds of mortgage are not negotiable instruments as they lack the fourth requisite which is it must be payable to order or bearer. respectively.HELD: It is patent that the seller is liable for the breach in warranty against the petitioner. the latter‟s rights are based on a negotiable instrument and assuming further that the petitioner‟s defense may not prevail against it. and Mrs. This liability as a general rule extends to the corporation to whom it assigned its rights and interests unless the assignee is a holder in due course of the promissory note in question. They also executed a promissory note.00. in connection with two loans granted by the latter in the sums of P 11. in favor of petitioner GSIS and subsequently. And as such. dated April 14. On July 11. the mortgages were extrajudicially foreclosed. CA 170 SCRA 533 FACTS: Two deeds of mortgages were issued by spouses Racho in favor of GSIS as security for two loans obtained by them. Thus. The promissory note in question lacks the socalled words of negotiability. in which case. February 23. and Mrs Flaviano Lagasca. 1958.500. HELD: Both parties rely on the Negotiable Instruments Law but this is misplaced. The foreclosure was being assailed by the spouses as they alleged that the mortgage contracts were signed not as guarantees or sureties but merely gave their common property for the sole benefit of the other spouses.
otherwise known as the Negotiable Instruments Law. the provisions of Act No. The note is payable to a specified party. 2031 because they are neither payable to order nor to bearer. The factual context of this case is precisely what is contemplated in the last paragraph of Article 2085 of the Civil Code to the effect that third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property. erred in annulling the mortgage insofar as it affected the share of private respondents or in directing reconveyance of their property or the payment of the value. the fact that the loans were solely for the benefit of the Lagasca spouses would not invalidate the mortgage with respect to private respondents' share in the property. the mortgage and the extrajudicial foreclosure proceedings are valid? Held: Both parties relied on the provisions of Section 29 of Act No. The respondent court. 1962. but is held liable on the instrument to a holder for value although the latter knew him to be only an accommodation party. As earlier indicated. the spouses Racho filed a complaint against the spouses Lagasca praying that the extrajudicial foreclosure "made on. as well as the mortgage deeds subject of this case. . the factual findings of respondent court are that private respondents signed the documents "only to give their consent to the mortgage as required by GSIS". 2031. 1968 dismissing the complaint for failure to establish a cause of action. The trial court rendered judgment on February 25. instead. Absent the aforesaid requisite. The promissory note. Contrary to the holding of the respondent court. stating that.mortgaged property to be sold at public auction on December 3. their property and all other documents executed in relation thereto in favor of the Government Service Insurance System" be declared null and void. Issues: Whether the respondent court erred in annulling the mortgage as it affected the share of private respondents in the reconveyance of their property? Whether private respondents benefited from the loan. acceptor of indorser without receiving value therefor. However. with full knowledge that the loans secured were solely for the benefit of the appellant Lagasca spouses who alone applied for the loan. drawer. by the provisions of the Civil Code and special laws on mortgages. with the latter having full knowledge that the loans secured thereby were solely for the benefit of the Lagasca spouses. although formally they are co-mortgagors. which provide that an accommodation party is one who has signed an instrument as maker. governance shall be afforded. 2031 would not apply. the GSIS. These documents do not comply with the fourth requisite to be considered as such under Section 1 of Act No. it cannot be said that private respondents are without liability under the aforesaid mortgage contracts. the GSIS required their consent to the mortgage of the entire parcel of land which was covered with only one certificate of title. said decision was reversed by the respondent Court of Appeals. For more than two years. So long as valid consent was given. is clearly not negotiable instruments.
The transfer of the instrument from Philfinance to TRB was merely an assignment. The language of negotiability which characterize a negotiable paper as a credit instrument is its freedom to circulate as a substitute for money. freedom of negotiability is the touchstone relating to the protection of holders in due course. Very clearly. CA 269 SCRA 15 FACTS: Filriters through a Detached Agreement transferred ownership to Philfinance a Central Bank Certificate of Indebtedness. the assignment made is a complete nullity. which the law throws around a holder in due course. HELD: The CBCI is not a negotiable instrument. Hence. When the petitioner tried to have it registered in its name in the CB. What happened was Philfinance merely borrowed CBCI from Filriters. It was only through one of its officers by which the CBCI was conveyed without authorization from the company. The instrument provides for a promise to pay the registered owner Filriters. the instrument was only payable to Filriters. Petitioner and Philfinance later entered into a Repurchase agreement. This freedom in negotiability is totally absent in a certificate of indebtedness as it merely acknowledges to pay a sum of money to a specified person or entity for a period of time. It lacked the words of negotiability which should have served as an expression of the consent that the instrument may be transferred by negotiation. Although the deed of assignment stated that the transfer was for „value received„. The latter agreed to repurchase the CBCI but failed to do so. and the freedom of negotiability is the foundation for the protection. The pertinent question then is—was the transfer of the CBCI from Filriters to Philfinance and subsequently from Philfinance to TRB. in accord with existing law. Giving more credence to rule that there was no valid transfer or assignment to petitioner. there was really no consideration involved.TRADERS ROYAL BANK V. . for lack of any consideration. the transfer wasn't in conformity with the regulations set by the CB. and is not governed by the negotiable instruments law. on which petitioner bought the CBCI from Philfinance. Furthermore. so as to entitle TRB to have the CBCI registered in its name with the Central Bank? Clearly shown in the record is the fact that Philfinance‟s title over CBCI is defective since it acquired the instrument from Filriters fictitiously. Thus. a sister corporation. the latter didn't want to recognize the transfer.
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