Professional Documents
Culture Documents
The CTDs in question are negotiable instruments as The Spouses Chua alleged that they have repeatedly
they meet the requirements of the law for negotiability as demanded payment from Rivera to no avail. Because of
provided for in Section 1 of the Negotiable Instruments Rivera’s unjustified refusal to pay, the Spouses Chua
Law. The documents provide that the amounts were constrained to file a suit before the MeTC.
deposited shall be repayable to the depositor. And
Rivera, in his Answer, countered that he never executed
according to the document, the depositor is the "bearer." the subject Promissory Note.
The documents do not say that the depositor is Angel de
la Cruz and that the amounts deposited are repayable After trial, the MeTC ruled in favor of the Spouses Chua.
specifically to him. Rather, the amounts are to be The decision was affirmed by both the RTC and the CA.
repayable to the bearer of the documents or, for that
ISSUE:
matter, whosoever may be the bearer at the time of
presentment. However, petitioner cannot recover on the WON Negotiable Instruments Law is applicable in the
CTDs. Although the CTDs are bearer instruments, a present case.
valid negotiation thereof for the true purpose and
agreement between it and dela Cruz, as ultimately HELD:
ascertained, requires both delivery and indorsement. In No. The subject promissory note is not a negotiable
this case, there was no indorsement as the CTDs were instrument and the provisions of the NIL do not apply to
delivered not as payment but only as a security for dela this case. Section 1 of the NIL requires the concurrence
Cruz' fuel purchases. of the following elements to be a negotiable instrument:
120,000.00
The trial court favored the petitioners, but the CA
FOR VALUE RECEIVED, I, RODRIGO RIVERA
reversed the decision.
promise to pay spouses SALVADOR C. CHUA and
VIOLETA SY CHUA, the sum of One Hundred Twenty
Thousand Philippine Currency (P120,000.00) on Issue:
December 31, 1995.
W/N the promissory notes were valid
It is agreed and understood that failure on my part to pay
the amount of (P120,000.00) One Hundred Twenty Held:
Thousand Pesos on December 31, 1995. (sic) I agree to
pay the sum equivalent to FIVE PERCENT (5%) interest Yes, the promissory notes were valid. The
monthly from the date of default until the entire obligation petitioners claim that they signed the notes in blank but
is fully paid for. did not receive the value of the notes. They also admit
the genuineness and due execution of the notes. The
Should this note be referred to a lawyer for collection, I promissory notes were negotiable as they met the
agree to pay the further sum equivalent to twenty requirements of Section 1 of the Negotiable Instruments
percent (20%) of the total amount due and payable as
and for attorney’s fees which in no case shall be less Law. The notes are prima facie deemed to have been
than P5,000.00 and to pay in addition the cost of suit issued for consideration.
and other incidental litigation expense.
Thus, no bill of exchange was made on the part The named defendants-herein respondents filed their
of HSBC and therefore, the covered transactions should respective Answers invoking, among other grounds for
not be subject to DST. Wherefore, erroneous payment of dismissal, lack of cause of action, for while the checks
taxes for the abovementioned transactions entitles subject of the complaint had been issued on account
HSBC to a tax refund. and for value, some had been dishonored due to
“ACCOUNT CLOSED;” and the allegations in the
But an order to promise to pay out of particular fund is
complaint are bare and general.
not unconditional. The indication of Fund 501 as the
source of the payment to be made on the treasury
The trial court dismissed petitioner‟s complaint for failure
warrants makes the order or promise to pay “not
conditional” and the warrants themselves non- “to allege the ultimate facts”
negotiable. There should be no question that the
exception on Section 3 of NIL is applicable in the case at -bases of petitioners claim that her right was violated
bar. and that she suffered damages thereby. The Court of
Appeals affirmed the trial court‟s decision and held that
the elements of a cause of action are absent in the case
and petitioner did not deny the genuineness or
authenticity of her signature on the subject promissory
8. ILANO VS HON. DOLORES L. ESPAÑOL
notes and the allegedly signed blank
FACTS: Amelia Alonzo is a trusted employee of Victoria
ISSUE: In issue then is whether petitioner‟s complaint
Ilano. During those times that Ilano is in the Unied States
failed to state a cause of action.
for medical check-up, Alonzo was entrusted with Ilano„s
Metrobank Check Book which contains both signed and RULING: As reflected in the above-quoted allegations in
unsigned blank checks. A Complaint for petitioner‟s complaint, petitioner is seeking twin reliefs,
Revocation/Cancellation of Promissory Notes and Bills one for revocation/cancellation of promissory notes and
of Exchange (Checks) with Damages and Prayer for checks, and the other for damages. While some of the
Preliminary Injunction or Temporary Restraining Order allegations may lack particulars, and are in the form of
(TRO) against Alonzo et al. before the Regional Trial conclusions of law, the elements of a cause of action are
Court of Cavite. Ilano contends that Alonzo, by means of present. For even if some are not stated with
deceit and abuse of confidence succeeded in procuring particularity, petitioner alleged
Promissory Notes and signed blank checks. Alonzo
likewise succeeded in inducing Ilano to sign antedated 1) her legal right not to be bound by the instruments
Promissory Notes. which were bereft of consideration and to which her
consent was vitiated;
The RTC rendered a decision dismissing the complaint
for lack of cause of action and failure to allege the 2) the correlative obligation on the part of the
ultimate facts of the case. On appeal, the Court of defendants-respondents to respect said right; and 3) the
Appeals affirmed the dismissal of the complaint. Hence, act of the defendants-respondents in procuring her
this petition. **Defendant AMELIA O. ALONZO is a signature on the instruments through “deceit,”“abuse of
confidence” “machination,” “fraud,” “falsification,”
“forgery,” “defraudation,” and “bad faith,” and “with
malice, malevolence and selfish intent.” 9. G.R. No. 170325 September 26, 2008
PHILIPPINE NATIONAL BANK, Petitioner,
Where the allegations of a complaint are vague, vs.
ERLANDO T. RODRIGUEZ and NORMA RODRIGUEZ,
indefinite, or in the form of conclusions, its dismissal is
Respondents.
not proper for the defendant may ask for more
particulars. With respect to above-said Check No. WHEN the payee of the check is not intended to be the
0084078, however, which was drawn against another true recipient of its proceeds, is it payable to order or
account of petitioner, albeit the date of issue bears only bearer? What is the fictitious-payee rule and who is
the year − 1999, its validity and negotiable character at liable under it? Is there any exception?
the time the complaint was filed on March 28, 2000 was
FACTS:
not affected. For Section 6 of the Negotiable Instruments
Law provides:
The spouses were engaged in the informal lending
business. In line with their business, they had a
Section 6. Omission; seal; particular money.
discounting arrangement with the Philnabank Employees
Savings and Loan Association (PEMSLA), an
–
association of PNB employees. Naturally, PEMSLA was
likewise a client of PNB Amelia Avenue Branch. The
The validity and negotiable character of an instrument
association maintained current and savings accounts
are not affected by the fact that with petitioner bank.
–
PEMSLA regularly granted loans to its members.
Spouses Rodriguez would rediscount the postdated
(a) It is not dated; or
checks issued to members whenever the association
was short of funds. As was customary, the spouses
(b) Does not specify the value given, or that any value
would replace the postdated checks with their own
had been given therefor; or (c) Does not specify the checks issued in the name of the members.
place where it is drawn or the place where it is payable;
or (d) Bears a seal; or (e) Designates a particular kind of It was PEMSLA’s policy not to approve applications for
current money in which payment is to be made. loans of members with outstanding debts. To subvert
However, even if the holder of Check No. 0084078 this policy, some PEMSLA officers devised a scheme to
would have filled up the month and day of issue thereon obtain additional loans despite their outstanding loan
to be “December” and “31,”respectively, it would have, accounts. They took out loans in the names of
unknowing members, without the knowledge or consent
as it did, become stale six (6) months or 180 days
of the latter. The PEMSLA checks issued for these loans
thereafter, following current banking practice. It is, were then given to the spouses for rediscounting. The
however, with respect to the questioned promissory officers carried this out by forging the indorsement of the
notes that the present petition assumes merit. named payees in the checks.
For, petitioner‟s allegations in the complaint relative In return, the spouses issued their personal checks
thereto, even if lacking particularity, does not as priorly (Rodriguez checks) in the name of the members and
stated call for the dismissal of the complaint. **While delivered the checks to an officer of PEMSLA. The
some of the allegations may lack particulars, and are in PEMSLA checks, on the other hand, were deposited by
the form of conclusions of law, the elements of a cause the spouses to their account.
of action are present. For even if some are not stated
with particularity, Ilano alleged 1) her legal right not to be Meanwhile, the Rodriguez checks were deposited
directly by PEMSLA to its savings account without any
bound by the instruments which were bereft of
indorsement from the named payees. This was an
consideration and to which her consent was vitiated; 2) irregular procedure made possible through the
the correlative obligation on the part of the defendants- facilitation of Edmundo Palermo, Jr., treasurer of
respondents to respect said right; and 3) the act of the PEMSLA and bank teller in the PNB Branch. It appears
defendants-respondents in procuring her signature on that this became the usual practice for the parties.
the instruments through “deceit,” “abuse of confidence”
“machination,” “fraud,” “falsification,” “forgery,” For the period November 1998 to February 1999, the
“defraudation,” and “bad faith,” and “with malice, spouses issued sixty nine (69) checks, in the total
amount of P2,345,804.00. These were payable to forty
malevolence and selfish intent.
seven (47) individual payees who were all members of
4
PEMSLA.
Petitioner PNB eventually found out about these intention on the part of respondents-spouses that the
fraudulent acts. To put a stop to this scheme, PNB payees would not receive the checks’ proceeds.
closed the current account of PEMSLA. As a result, the Considering that respondents-spouses were transacting
PEMSLA checks deposited by the spouses were with PEMSLA and not the individual payees, it is
returned or dishonored for the reason "Account Closed." understandable that they relied on the information given
The corresponding Rodriguez checks, however, were by the officers of PEMSLA that the payees would be
deposited as usual to the PEMSLA savings account. The receiving the checks.
amounts were duly debited from the Rodriguez account.
Thus, because the PEMSLA checks given as payment Verily, the subject checks are presumed order
were returned, spouses Rodriguez incurred losses from instruments. This is because, as found by both lower
the rediscounting transactions. courts, PNB failed to present sufficient evidence to
defeat the claim of respondents that the named payees
The spouses Rodriguez filed a civil complaint for were the intended recipients of the checks’ proceeds.
damages against PEMSLA and PNB. They sought to The bank failed to satisfy a requisite condition of a
recover the value of their checks that were deposited to fictitious-payee situation – that the maker of the check
the PEMSLA savings account amounting to intended for the payee to have no interest in the
P2,345,804.00. The spouses contended that PNB paid transaction.
the wrong payees, hence, it should bear the loss.
Because of a failure to show that the payees were
The RTC rendered judgment in favor of spouses “fictitious” in its broader sense, the fictitious-payee rule
Rodriguez, and ruled that PNB is liable to return the does not apply. Thus, the checks are to be deemed
value of the checks. payable to order. Consequently, the drawee bank bears
the loss.
On appeal, the CA affirmed the RTC Decicion..
ISSUE:
RULING: