PHILIPPINE EDUCATION CO., INC. v. MAURICIO A. SORIANO. G.R. No. L-22405. The SC affirmed the lower court's decision.

9;s decision. Postal money orders are not negotiable

June 30, 1971. 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.
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.
TIBAJIA VS CA
FACTS:
A suit for collection of a sum of money filed by Eden Tan against petitioners, Tibajia
spouses. A writ of attachment was issued, and the Deputy Sheriff filed a return
stating that a deposit made by the Tibajia spouses in the RTC of Kalookan City in
the amount of P442,750.00 in another case, had been garnished by him.

A decision was rendered in favor of the plaintiff, ordering the Tibajia spouses to
pay her an amount in excess of P300,000.00.
ISSUE: Whether the money order was negotiable.
Eden Tan thereafter filed the corresponding motion for execution and the
garnished funds were levied upon.
RULING:
Eden Tan, refused to accept the payment made by the Tibajia spouses and instead
insisted that the garnished funds deposited with the cashier of the RTC Pasig be
withdrawn to satisfy the judgment obligation.
Petitioners filed a motion to lift the writ of execution on the ground that the
judgment debt had already been paid.
The motion was denied on the ground that payment in cashier’s check is not
payment in legal tender and that payment was made by a third party other than
the defendant.
The appellate court dismissed the petition of the spouses, holding that payment by
cashier’s check is not payment in legal tender as required by Republic Act No. 529.
ISSUE:
Whether or not a CASHIER’S CHECK is considered payment “LEGAL TENDER”.
RULING:
The provisions of law applicable to the case at bar are the following:chanrobles
virtual law library
Article 1249 of the Civil Code which provides:
Art. 1249. 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.;
Section 1 of Republic Act No. 529, as amended, which provides:
Sec. 1. Every provision contained in, or made with respect to, any obligation which
purports to give the obligee the right to require payment in gold or in any
particular kind of coin or currency other than Philippine currency or in an amount
of money of the Philippines measured thereby, shall be as it is hereby declared
against public policy null and void, and of no effect, and no such provision shall be
contained in, or made with respect to, any obligation thereafter incurred. Every
obligation heretofore and hereafter incurred, whether or not any such provision as
to payment is contained therein or made with respect thereto, shall be discharged
upon payment in any coin or currency which at the time of payment is legal tender
for public and private debts.
Section 63 of Republic Act No. 265, as amended (Central Bank Act) which provides:
Sec. 63. Legal character – Checks representing deposit money do not have legal
tender power and their acceptance in the payment of debts, both public and
private, is at the option of the creditor: Provided, however, that a check which has
been cleared and credited to the account of the creditor shall be equivalent to a
delivery to the creditor of cash in an amount equal to the amount credited to his
account.
From the aforequoted provisions of law, it is clear that this petition must fail.
In two recent cases 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 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.
Philippine Airlines v. Court of Appeals [G.R. No. L-49188. January 30, 1990]
FACTS:
Amelia Tan was found to have been wronged by Philippine Air Lines (PAL). She filed
her complaint in 1967. After ten (10) years of protracted litigation in the Court of
First Instance and the Court of Appeals, Ms. Tan won her case. Almost twenty-two
(22) years later, Ms. Tan has not seen a centavo of what the courts have solemnly
declared as rightfully hers. Through absolutely no fault of her own, Ms. Tan has
been deprived of what, technically, she should have been paid from the
start, before 1967, without need of her going to court to enforce her rights. And all
because PAL did not issue the checks intended for her, in her name. Petitioner PAL
filed a petition for review on certiorari the decision of Court of Appeals dismissing
the petition for certiorari against the order of the Court of First Instance (CFI)
which issued an alias writ of execution against them. Petitioner alleged that the
payment in check had already been effected to the absconding sheriff, satisfying
the judgment.
ISSUE:
Whether or not payment by check to the sheriff extinguished the judgment debt.
RULING:
NO. The payment made by the petitioner to the absconding sheriff was not in
cash or legal tender but in checks. The checks were not payable to Amelia Tan or
Able Printing Press but to the absconding sheriff.In the absence of an agreement,
either express or implied, payment means the discharge of a debt or obligation in
money and unless the parties so agree, a debtor has no rights, except at his own
peril, to substitute something in lieu of cash as medium of payment of his debt.
Strictly speaking, the acceptance by the sheriff of the petitioner’s checks, in the
case at bar, does not, per se, operate as a discharge of the judgment debt. The
check as 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 manager’s check or ordinary cheek, 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).
Hong Kong and Shanghai Banking Corporation Limited-Philippine Branches vs.
Commissioner of Internal Revenue 724 SCRA 499 2014
Facts:
Hong Kong and Shanghai Banking Corporation (HSBC) performs custodial services
on behalf of its investor-clients, corporate and individual, resident or nonresident
of the Philippines, with respect to their passive investments in the Philippines,
particularly investments in shares of stocks in domestic corporations. It serves as
the collection/payment agent with respect to dividends and other income derived
from its investor-clients’ passive investments. HSBC’s investor-clients maintain
Philippine peso and/or foreign currency accounts. Those accounts are managed
by HSBC through instructions given through electronic messages. In purchasing
shares of stock and other investment in securities, the investor-clients would send
electronic messages from abroad instructing HSBC to debit their local or foreign
currency accounts and to pay the purchase price therefor upon receipt of the
securities.
Issue: Whether or not the instructions sent through electronic messages by the
client-investors to Hong Kong and Shanghai Banking Corporation are considered as
bills of exchange
V. Ruling of the Supreme Court:
Section 1 of the Negotiable Instruments Law provides: “Sec. 1. Form of negotiable
instruments.—An instrument to be negotiable must conform to the following
requirements:
a) It must be in writing and signed by the maker or drawer; b) Must contain an
unconditional promise or order to pay a sum certain in money; c) Must be payable
on demand, or at a fixed or determinable future time; d) Must be payable to order
or to bearer; and e) Where the instrument is addressed to a drawee, he must be
named or otherwise indicated therein with reasonable certainty.” A bill of
exchange is an unconditional order in writing addressed by one person to another,
signed by the person giving it, requiring the person to whom it is addressed to pay
on demand or at a fixed or determinable future time a sum certain in money to
order or to bearer. A bill of exchange is one of two general forms of negotiable
instruments under the Negotiable Instruments Law.
Once the drawee accepts, he becomes an acceptor. As acceptor, he engages to pay
the bill of exchange according to the tenor of his acceptance. Acceptance is made
upon presentment of the bill of exchange, or within 24 hours after such
presentment. Presentment for acceptance is the production or exhibition of the
bill of exchange to the drawee for the purpose of obtaining his acceptance.
Presentment for acceptance is necessary only in the instances where the law
requires it. In the instances where presentment for acceptance is not necessary,
the holder of the bill of exchange can proceed directly to presentment for payment.
Presentment for payment is the presentation of the instrument to the person
primarily liable for the purpose of demanding and obtaining payment thereof. Thus,
whether it be presentment for acceptance or presentment for payment, the
negotiable instrument has to be produced and shown to the drawee for
acceptance or to the acceptor for payment.
B. Application The electronic messages are not signed by the investor-clients, as
supposed drawers of a bill of exchange; they do not contain an unconditional order
to pay a sum certain in money as the payment is supposed to come from a specific
fund or account of the investor-clients; and, they are not payable to order or
bearer but to a specifically designated third party. Thus, the electronic messages
are not bills of exchange. The electronic messages received by HSBC from its
investor-clients abroad instructing the former to debit the latter’s local and foreign
currency accounts and to pay the purchase price of shares of stock or investment
in securities do not properly qualify as either presentment for acceptance or
presentment for payment. Therefore, instructions sent through electronic
messages by the client-investors to HSBC are not considered as bills of exchange
and are also not negotiable instruments.
DONNINA C. HALLEY, petitioner, vs. PRINTWELL, INC.
FACTS:
The petitioner was an incorporator and original director of Business Media
Philippines, Inc. (BMPI), which, at its incorporation on November 12, 1987, 3 had
an authorized capital stock of P3,000,000.00 divided into 300,000 shares each with
a par value of P10.00, of which 75,000 were initially subscribed. Printwell engaged
in commercial and industrial printing. BMPI commissioned Printwell for the
printing of the magazine Philippines, Inc. (together with wrappers and subscription
cards) that BMPI published and sold. For that purpose, Printwell extended 30-day
credit accommodations to BMPI.
In the period from October 11, 1988 until July 12, 1989, BMPI placed with Printwell
several orders on credit, evidenced by invoices and delivery receipts totaling
P316,342.76. Considering that BMPI paid only P25,000.00, Printwell sued BMPI on
January 26, 1990 for the collection of the unpaid balance of P291,342.76 in the RTC.
4 On February 8, 1990, Printwell amended the complaint in order to implead as
defendants all the original stockholders and incorporators to recover on their
unpaid subscriptions, The defendants averred that they all had paid their
subscriptions in full.
In addition, the stockholders submitted other documents in evidence, namely: (a)
an audit report(b) BMPI balance sheet 8 and income statement 9 as of December
31, 1988; (c) BMPI income tax return for the year 1988 (stamped "received" by the
BIR); 10 (d) journal vouchers; 11 (e) cash deposit slips; 12 and (f) Bank of the
Philippine Islands (BPI) savings account passbook in the name of BMPI.
Is there a valid payment?
PAYMENT(CHECK)- The petitioner's OR No. 227, presented to prove the payment
of the balance of her subscription, indicated that her supposed payment had been
made by means of a check. Thus, to discharge the burden to prove payment of her
subscription, she had to adduce evidence satisfactorily proving that her payment
by check was regarded as payment under the law. A check is not money and only
substitutes for money, the delivery of a check does not operate as payment and
does not discharge the obligation under a judgment. The delivery of a bill of
exchange only produces the fact of payment when the bill has been encashed.
“A check is not legal tender and, therefore, cannot constitute a valid tender of
payment. 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.“
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. To establish their defense, the
respondents therefore had to present proof, not only that they delivered the
checks to the petitioner, but also that the checks were encashed. Ostensibly,
therefore, the petitioner's mere submission of the receipt issued in exchange of
the check did not satisfactorily establish her allegation of full payment of her
subscription. Indeed, she could not even inform the trial court about the identity
of her drawee bank, and about whether the check was cleared and its amount paid
to BMPI. In fact, she did not present the check itself.