Metropolitan Bank & Trust Company vs. Court of Appeals Lozano v Martinez; G.R. No.
Lozano v Martinez; G.R. No. L-63419; 18 Dec 1986; 146 SCRA 323
G.R. No. 88866, February, 18, 1991
Facts: Eduardo Gomez opened an account with Golden Savings and
deposited 38 treasury warrants. All warrants were subsequently indorsed
by Gloria Castillo as Cashier of Golden Savings and deposited to its Savings
account in Metrobank branch in Calapan, Mindoro. They were sent for
clearance. Meanwhile, Gomez is not allowed to withdraw from his account,
later, however, exasperated over Floria repeated inquiries and also as an
accommodation for a valued client Metrobank decided to allow Golden
Savings to withdraw from proceeds of the warrants. In turn, Golden Savings
subsequently allowed Gomez to make withdrawals from his own account.
Metrobank informed Golden Savings that 32 of the warrants had been
dishonored by the Bureau of Treasury and demanded the refund by Golden
Savings of the amount it had previously withdrawn, to make up the deficit in
its account. The demand was rejected. Metrobank then sued Golden
Savings.
Issue:
1. Whether or not Metrobank can demand refund agaist Golden
Savings with regard to the amount withdraws to make up with the deficit as
a result of the dishonored treasury warrants.
2. Whether or not treasury warrants are negotiable instruments
Held: No. Metrobank is negligent in giving Golden Savings the impression
that the treasury warrants had been cleared and that, consequently, it was
safe to allow Gomez to withdraw. Without such assurance, Golden
Savings would not have allowed the withdrawals. Indeed, Golden Savings
might even have incurred liability for its refusal to return the money that all
appearances belonged to the depositor, who could therefore withdraw it
anytime and for any reason he saw fit.
It was, in fact, to secure the clearance of the treasury warrants that Golden
Savings deposited them to its account with Metrobank. Golden Savings
had no clearing facilities of its own. It relied on Metrobank to determine the
validity of the warrants through its own services. The proceeds of the
warrants were withheld from Gomez until Metrobank allowed Golden
Savings itself to withdraw them from its own deposit. Metrobank cannot
contend that by indorsing the warrants in general, Golden Savings
assumed that they were genuine and in all respects what they purport to
be, in accordance with Sec. 66 of NIL. The simple reason that NIL is not
applicable to non negotiable instruments, treasury warrants.
No. The treasury warrants are not negotiable instruments. Clearly stamped
on their face is the word: non negotiable. Moreover, and this is equal
significance, it is indicated that they are payable from a particular fund, to
wit, Fund 501. An instrument to be negotiable instrument must contain an
unconditional promise or orders to pay a sum certain in money. As provided
by Sec 3 of NIL an unqualified order or promise to pay is unconditional
though coupled with: 1st, an indication of a particular fund out of which
reimbursement is to be made or a particular account to be debited with the
amount; or 2nd, a statement of the transaction which give rise to the
instrument. But an order to promise to pay out of particular fund is not
unconditional. The indication of Fund 501 as the source of the payment to
be made on the treasury warrants makes the order or promise to pay not
conditional and the warrants themselves non-negotiable. There should be
no question that the exception on Section 3 of NIL is applicable in the case
at bar.
FACTS: Petitioners were charged with violations of Batas Pambansa Blg.
22. They each filed with the trial courts a motion to quash the information
against them on the ground that the acts charged did not constitute a
crime, the statute being unconstitutional.
ISSUE: Whether or not B.P. 22 is repugnant to the constitutional
protection against imprisonment for debt.
RULING: NO. The gravamen of the offense punished by B.P. 22 is the act
of making and issuing a worthless check or a check that is dishonored
upon its presentation for payment. It is not the non-payment of an
obligation which the law punishes. The law is not intended or designed to
coerce a debtor to pay his debt. The thrust of the law is to prohibit, under
pain of penal sanctions, the making of worthless checks and putting them
in circulation. Because of its deleterious effects on the public interest, the
practice is proscribed by the law. The law punishes the act not as an
offense against property, but an offense against public order.
Petitions are DISMISSED.
CITIBANK vs. SABENIANO
G.R.No. 156132, October 16, 2006
FACTS: Petitioner Citibank is a banking corporation duly authorized under
the laws of the USA to do commercial banking activities n the Philippines.
Sabeniano was a client of both Petitioners Citibank and FNCB Finance.
Respondent filed a complaint against petitioners claiming to have
substantial deposits, the proceeds of which were supposedly deposited
automatically and directly to respondents account with the petitioner
Citibank and that allegedly petitioner refused to despite repeated demands.
Petitioner alleged that respondent obtained several loans from the former
and in default, Citibank exercised its right to set-off respondents
outstanding loans with her deposits and money. RTC declared the act
illegal, null and void and ordered the petitioner to refund the amount plus
interest, ordering Sabeniano, on the other hand to pay Citibank her
indebtedness. CA affirmed the decision entirely in favor of the respondent.
ISSUE: Whether petitioner may exercise its right to set-off respondents
loans with her deposits and money in Citibank-Geneva
RULING: Petition is partly granted with modification.
1. Citibank is ordered to return to respondent the principal amount of
P318,897.34 and P203,150.00 plus 14.5% per annum
2. The remittance of US $149,632.99 from respondents Citibank-Geneva
account is declared illegal, null and void, thus Citibank is ordered to refund
said amount in Philippine currency or its equivalent using exchange rate at
the time of payment.
3. Citibank to pay respondent moral damages of P300,000, exemplary
damages for P250,000, attorneys fees of P200,000.
4. Respondent to pay petitioner the balance of her outstanding loans of
P1,069,847.40 inclusive off interest.
Tibajia v CA; G.R. No. 100290; 04 Jun 1993; 223 SCRA 163
FACTS: Petitioners were ordered by the trial court to pay private
respondent in connection with the civil suit the latter filed against them.
They delivered the total money judgment to the Deputy Sheriff. Private
respondent refused to accept the proffered payment, insisting that she be
paid from petitioners garnished funds deposited with the cashier of the
trial court.
ISSUE: Whether or not payment by means of cashiers check is
considered payment in legal tender.
RULING: NO. A check, whether a managers 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.
PAL, Inc. vs CA, G.R. No. L-49188, January 30, 1990
Facts: Amelia Tan under the name and style of Able Printing Press
commenced or filed a complaint for damages against petitioner Philippine
Airlines with the CFI Manila ruling in her favor. Upon appeal, the Court of
Appeals upheld the decision of the CFIs decision with only minor
modifications as to the damages to be awarded to Amelia Tan. The
corresponding writ of execution was duly referred to Deputy Sheriff Emilio
Z. Reyes for enforcement with checks in the name of Sheriff Reyes. Four
months later, Amelia Tan moved for the issuance of an alias writ of
execution stating that the judgment rendered by the lower court, and
affirmed with modification by the Court of Appeals, remained unsatisfied.
However, the Philippine Airlines answered that it has already satisfied its
obligation, as evidenced by check vouchers signed and received by Sheriff
Reyes. The Court has summoned the sheriff to explain the delay but
apparently he absconded or disappeared.
Issues: Is the payment rendered through a check made by PAL to the
absconding sheriff in his name operate to satisfy the judgment debt?
Who shall bear the loss for the amount encashed check by the absconding
sheriff?
Held: In general, a payment, in order to be effective to discharge an
obligation, must be made to the proper person. Article 1240 of the Civil
Code provides that, payment shall be made to the person in whose favor
the obligation has been constituted, or his successor in interest, or any
person authorized to receive it.
Under ordinary circumstances, payment by the judgment debtor to the
sheriff should be valid payment to extinguish the judgment debt. There are
circumstances, however, which compel a different conclusion such as
when the payment made by the petitioner to the absconding sheriff was
not in cash or legal tender but in checks.
Article 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 delivery of promissory notes payable to order, or bills of exchange or
other mercantile documents shall produce the effect of payment only when
they have been cashed, or when through the fault of the creditor they have
been impaired.
In the meantime, the action derived from the original obligation shall be
held in abeyance.
Consequently, unless authorized to do so by law or by consent of the
obligee a public officer has no authority to accept anything other than
money in payment of an obligation under a judgment being executed.
Strictly speaking, the acceptance by the sheriff of the petitioners checks,
in the case at bar, does not, per se, operate as a discharge of the
judgment debt.
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 managers 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.
Mere delivery of checks does not discharge the obligation under a
judgment. The obligation is not extinguished and remains suspended until
the payment by commercial document is actually realized (Art. 1249, Civil
Code, par. 3).
PAL created a situation which permitted the said Sheriff to personally
encash said checks and misappropriate the proceeds thereof to his
exclusive personal benefit. For the prejudice that resulted, the petitioner
himself must bear the fault. As between two innocent persons, one of
whom must suffer the consequence of a breach of trust, the one who
made it possible by his act of confidence must bear the loss. (Blondeau, et
al. v. Nano, et al., L-41377, July 26, 1935, 61 Phil. 625).
Roman Catholic Bishops of Malolos v IAC; G.R. No. 72110; 16 Nov 1990; 191 SCRA 411
FACTS: Petitioner and private respondent entered into a contract of sale
over a parcel of land to be paid within four (4) years from execution of the
contract. The contract included stipulations 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.
Upon the denial of its requests to pay in three installments when the
period of payment had expired, private respondent proffered a personal
check which petitioner refused to accept.
ISSUE: Whether or not there was a tender of payment.
RULING: NO. 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 managers 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 oblige or
creditor.
PHILIPPINE EDUCATION CO., INC. v. MAURICIO A. SORIANO. G.R.
No. L-22405. June 30, 1971.
FACTS: Enrique Montinola sought to purchase from the Manila Post Office
ten (10) money orders of P200.00. He offered them with private checks that
were not generally accepted in payment of money order. Apparently, he
managed to leave with the money orders. After the discovery of the
disappearance of the unpaid money orders, a message was sent to all
postmasters instructing them not to pay anyone that holds the orders.
The Bank of America, then, received of the money orders from petitioner.
Defendant then notified the bank that the money order has been irregularly
issued that the amount was deducted from petitioner's account. After asking
the Postmaster General to reconsider the deduction, which he denied,
plaintiff filed an action against defendant.
The lower court decided that the notice be revoked that the plaintiff shall be
indemnified.
ISSUE: Whether the money order was negotiable.
RULING: The SC affirmed the lower court's decision. Postal money orders
are not negotiable instruments. The reason behind this rule being that, in
establishing and operating a postal money order system, the government is
not engaging in commercial transactions but merely exercises a
governmental power for the public benefit.
Caltex (Philippines) Inc. vs. CA, GR 97753, 10 August 1992,
negotiability
FACTS: Security Bank and Trust Co. issued 280 certificates of time deposit
(CTD) in favor of one Mr. Angel dela Cruz who deposited with the bank
P1.12 million. Dela Cruz delivered the CTDs to Caltex in connection with
his purchase of fuel products from the latter. Subsequently, dela Cruz
informed the bank that he lost all the CTDs, and thus executed an affidavit
of loss to facilitate the issuance of the replacement CTDs. When Caltex
presented said CTDs for verification with the bank and formally informed the
bank of its decision to preterminate the same, the bank rejected Caltex
claim and demand as Caltex failed to furnish copies of certain requested
documents. In 1983, dela Cruz loan matured and the bank set-off and
applied the time deposits as payment for the loan. Caltex filed a complaint
which was dismissed on the ground that the subject certificates of deposit
are non-negotiable.
ISSUE: Whether the Certificates of Time Deposit (CTDs) are negotiable
instruments.
RULING: The CTDs in question are negotiable instruments as they meet
the requirements of the law for negotiability as provided for in Section 1 of
the Negotiable Instruments Law. The documents provide that the amounts
deposited shall be repayable to the depositor. And according to the
document, the depositor 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. However, petitioner cannot recover on the
CTDs. Although the CTDs are bearer instruments, a valid negotiation
thereof for the true purpose and agreement between it and dela Cruz, as
ultimately ascertained, requires both delivery and indorsement. In this
case, there was no indorsement as the CTDs were delivered not as
payment but only as a security for dela Cruz' fuel purchases.
**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. The CTDs in question are negotiable instruments as they
meet the requirements of the law for negotiability as provided for in Section
1 of the Negotiable Instruments Law. The documents provide that the
amounts deposited shall be repayable to the depositor. And according to
the document, the depositor 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.
Metropolitan Bank & Trust Company vs. Court of Appeals
G.R. No. 88866 February 18, 1991- negotiability
FACTS: Eduardo Gomez opened an account with Golden Savings and
Loan Association and deposited over a period of two months 38 treasury
warrants with a total value of P1,755,228.37. All these warrants were
subsequently indorsed by Gloria Castillo as Cashier of Golden Savings
and deposited to its savings account in the Metrobank branch in Calapan,
Mindoro. They were then sent for clearing by the branch office to the
principal office of Metrobank, which forwarded them to the Bureau of
Treasury for special clearing. Before they were cleared, petitioner decided
to allow Golden Savings to withdraw from the proceeds of the
warrants. Golden Savings in turn subsequently allowed Gomez to make
withdrawals from his own account. Subsequently, Metrobank informed
Golden Savings that 32 of the warrants had been dishonored by the
Bureau of Treasury and demanded the refund by Golden Savings of the
amount it had previously withdrawn, to make up the deficit in its
account. Metrobank contends that by indorsing the warrants in general,
Golden Savings assumed that they were "genuine and in all respects what
they purport to be," in accordance with Section 66 of the Negotiable
Instruments Law.
ISSUE: Whether petitioner can hold Golden Savings liable as an indorser
of the treasury warrants based on the predication that the treasury warrants
involved in this case are negotiable instruments.
RULING: Clearly stamped on the face of the treasury warrants is the word
"non-negotiable." It is also indicated that they are payable from a particular
fund, to wit, Fund 501. The indication of Fund 501 as the source of the
payment to be made on the treasury warrants makes the order or promise
to pay "not unconditional" and the warrants themselves non-
negotiable. Petitioner cannot hold Golden Savings liable as an indorser
under Section 66 of the NIL for the simple reason that this law is not
applicable to the non-negotiable treasury warrants.
Sesbreno v Court of Appeals; G.R. No. 89252; 24 May 1993; 222 SCRA 466
FACTS: Petitioner made a money market placement with the Philippine
Underwriters Finance Corporation (Philfinance) for which he was issued,
among others, a Certificate of Sale of one Delta Motors Corporation
(Delta) promissory note with Philfinace as payee and Delta as maker,
and on the face of the said note was stamped NON-NEGOTIABLE.
Despite repeated demand, petitioner failed to collect his investment and
interest thereon.
ISSUE: Whether or not a non-negotiable is capable of assignment or
transfer.
RULING: YES. A non-negotiable instrument may 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. A promissory
note marked non-negotiable but not at the same time stamped non-
transferrable or non-assignable may be assigned or transferred.
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. These
are supplied by Fojas-Arca. Fojas-Arca purchased on credit with
FirestoneTire & Rubber Company, 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 plaintiffs 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 defendants 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 depositors 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.
Negotiable Instruments Case Digest: Salas V. CA (1990)
G.R. No. 76788 January 22,1990
Lessons Applicable: Introduction to Negotiable Instruments (Negotiable
Instruments Law)
FACTS:
*February 6, 1980: Juanita Salas bought a motor vehicle from the Violago
Motor Sales Corp. (VMS) for P58,138.20 as evidence by a promissory
note
*This note was subsequently endorsed to Filinvest Finance &Leasing
Corp. (FFLC)
*May 21, 1980: Salas defaulted in her installments allegedly due to
discrepancies in the engine and chassis number of the vehicle delivered
and discovery of certificate of reg. and deed of mortgage
*VMS initiated for a sum of money at the RTC
*RTC: favored VMS
*CA: Affirmed

ISSUE: W/N the promissory note is a negotiable which will bar completely
all defenses of Salas against VMS

HELD: YES. Affirmed

Requisites under the law (Sec. 1 of Negotiable Instruments Law)
*it is in writing and signed by the maker (Salas)
*it contains an unconditional promise to pay the amount P58,138.20
*it is payable at a fixed or determinable future time which is P1,614.95
monthly for 36 months due and payable on the 21st day of each month
starting March 21, 1980 thru and inclusive of Feb 21 1983
*It is payable to VMS or order and as such
*drawee is named or indicated with certainty
Filinvest = holder in due course

Ang Tek Lian vs CA

G.R. No. L-2516
September 25, 1950

FACTS: Knowing he had no funds therefor, petitioner Ang Tek Lian drew
a check upon the China Banking Corporation for the sum of P4,000,
payable to the order of cash. He delivered it to Lee Hua Hong in
exchange for money which the latter handed in the act. The next business
day, the check was presented by Lee Hua Hong to the drawee bank for
payment, but it was dishonored for insufficiency of funds, the balance of
the deposit of Ang Tek Lian on both dates being P335 only.

Petitioner was sued for estafa. In his defense, however, he argues that as
the check had been made payable to cash and had not been endorsed
by Ang Tek Lian, the defendant is not guilty of the offense charged.

ISSUE: WON a check payable to cash needs indorsement?

HELD: NO. 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
drawers indorsement. 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.