1. CHAN WAN vs.

TAN KIM and CHEN SO

G.R. No. L-15380 September 30, 1960
Facts:          Eleven checks payable to “cash or bearer” and drawn by defendant Tan upon the Equitable
Banking Corporation, were all presented for payment by Chan Wan to the drawee bank, but they “were all
dishonored and returned to him unpaid due to insufficient funds and/or causes attributable to the drawer.”
The drawer in drawing the check engaged that “on due presentment, the check would be paid, and that if it be
dishonored . . . he will pay the amount thereof to the holder”.

On the backs of the checks, endorsements which apparently show they had been deposited with the China
Banking Corporation and were, by the latter, presented to the drawee bank for collection.

The court declined to order payment for two principal reasons: (a) plaintiff failed to prove he was a holder in
due course, and (b) the checks being crossed checks should not have been deposited instead with the bank
mentioned in the crossing.

Issue: WON a holder who is not a holder in due course may recover on the checks?
Held: YES. The Negotiable Instruments Law does not provide that a holder who is not a holder in due course,
may not in any case, recover on the instrument. If B purchases an overdue negotiable promissory note signed
by A, he is not a holder in due course; but he may recover from A, if the latter has no valid excuse for
refusing payment. The only disadvantage of holder who is not a holder in due course is that the negotiable
instrument is subject to defense as if it were non- negotiable.

2. Metropolitan Bank and Trust Co. v. Court of Appeals [G.R. No. 88866. February 18, 1991]

24MAR
FACTS
Various treasury warrants drawn by the Philippine Fish Marketing Authority were subsequently indorsed by Golden
Savings. Petitioner allowed Golden Savings to withdraw thrice from uncleared treasury warrants as the former was
exasperated over persistent inquiries of the latter after one week. Warrants were later dishonored by the Bureau
of Treasury.

ISSUE
(a) Whether or not treasury warrants are negotiable instruments.

(b) Whether or not petitioner’s negligence would bar them for recovery.

RULING
(a) NO. The indication of fund 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. 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 Section 66 of the Negotiable Instruments Law. The simple reason is that this
law is not applicable to the non-negotiable treasury warrants.

(b) YES. Metrobank was indeed 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 the proceeds thereof from his
account with it. Without such assurance, Golden Savings would not have allowed the withdrawals; with such
assurance, there was no reason not to allow the withdrawal. However, withdrawals released after the notice of the
dishonor may be debited as it will result to unjust enrichment.

Page 1 of 7
3. GOVERNMENT SERVICE INSURANCE SYSTEM vs. COURT OF APPEALS G.R. No. L-40824, February
23, 1989

Fact:
Private respondents, together with the spouses Lagasca, executed a deed of mortgage, in favor of petitioner GSIS
of deed of mortgage. A parcel of land co-owned by said mortgagor spouses Lagasca and Private respondents was
given as security under the aforesaid deed. Lagasca executed an instrument denominated “Assumption of
Mortgage” under which they obligated themselves to assume the aforesaid obligation to the GSIS and to secure
the release of the mortgage covering that portion of the land belonging to herein private respondents and which
was mortgaged to the GSIS. This undertaking was not fulfilled, GSIS extrajudicially foreclosed the mortgage and
caused the mortgaged property to be sold at public auction. Private respondents filed a complaint against the
petitioner and the Lagasca spouses in the CFI praying to declared the extrajudicially foreclosed of GSIS of their
property is null and void. The trial court dismissed the complaint for failure to establish a cause of action. Said
decision was reversed by the respondent Court of Appeals, Hence this case.

Issue:
Whether the transaction of the parties was covered by the Negotiable Instruments Law?

Held:
No, the promissory note hereinbefore quoted, as well as the mortgage deeds subject of this case, are clearly not
negotiable instruments. These documents do not comply with the fourth requisite to be considered as such under
Section 1 of Act No. 2031 because they are neither payable to order nor to bearer. The note is payable to a
specified party, the GSIS. Absent the aforesaid requisite, the provisions of Act No. 2031 would not apply;
governance shall be afforded, instead, by the provisions of the Civil Code and special laws on mortgages.

23, 1989] →

4. Kauffman v. PNB [G.R. No. 16454. September 29, 1921]

FACTS
Wicks, the treasurer of the Philippine Fiber and Produce Company (PFPC), presented himself in the exchange
department of the Philippine National Bank in Manila and requested that a telegraphic transfer of $45,000 should
be made to Kauffman in New York City, upon account of the PFPC.

Pay George A. Kauffman, New York, account Philippine Fiber Produce Co., $45,000. (Sgd.) PHILIPPINE
NATIONAL BANK, Manila.
PNB’s representative in New York withheld the money from Kauffman, in view of his reluctance to accept certain
bills of the PFPC. Kauffman demanded the money but was refused to be paid.

ISSUE
Whether or not Kauffman has a right of action based on Negotiable Instruments Law.

RULING
NO. Kauffman has no right of action based on Negotiable Instrument’s Law on the ground that it can only come into
operation if there is a document in existence of the character described in Section 1 of the said Law, and rights
properly speaking arise in respect to said instrument until it is delivered. In this case, there was an order
transmitted by PNB to its New York branch, for the payment of a specified sum of money to Kauffman. But this
order was not made payable “to order” or “to bearer,” as required in subsection (d) of that Act; and inasmuch as it
never left the possession of the bank, or its representative in New York City, there was no delivery in the sense
intended in Section 16 of the same Law. In this connection it is unnecessary to point out that the official receipt
delivered by the bank to the purchaser of the telegraphic order, and already set out above, cannot itself be viewed
in the light of a negotiable instrument, although it affords complete proof of the obligation actually assumed by
the bank. Kauffman, however, has remedy based on the Civil Code, particularly on stipulations pour atrui.

Page 2 of 7
Borromeo vs Sun
G.R. No. 75908. October 22, 1999
PURISIMA, J

At bar is a Petition for review onCertiorari under Rule 45 of the Revised Rules of Court seeking to set
aside the Resolution of the then Intermediate Appellate Court, which reversed its earlier Decision
setting aside the Decision of the former Court of the First Instance of Rizal.

Facts: 

Amancio Sun brought before the then Court of the First Instance of Rizal an action against Lourdes O.
Borromeo (in her capacity as corporate secretary), Federico O. Borromeo and Federico O. Borromeo
(F.O.B.), Inc., to compel the transfer to his name in the books of F.O.B., Inc., shares of stock registered
in the name of Federico O. Borromeo, as evidenced by a Deed of Assignment. Private respondent averred
that all the shares of stock of F.O.B. Inc. registered in the name of Federico O. Borromeo belong to him,
as the said shares were placed in the name of Federico O. Borromeo 'only to give the latter personality
and importance in the business world.' On the other hand, petitioner Federico O. Borromeo disclaimed
any participation in the execution of the Deed of Assignment, theorizing that his supposed signature
thereon was forged. LL

The lower court of origin came out with a decision declaring the questioned signature on subject Deed of
Assignment as the genuine signature of Federico O. Borromeo. After considering the testimonies of the
two expert witnesses for the parties and after a careful and judicious study and analysis of the
questioned signature as compared to the standard signatures. On appeal by petitioners, the Court of
Appeals adjudged as forgery the controverted signature of Federico O. Borromeo. Amancio Sun
interposed a motion for reconsideration of the said decision, contending that Segundo Tabayoyong,
petitioners' expert witness, is not a credible witness. Acting on the aforesaid motion for
reconsideration, the Court of Appeals reconsidered its decision.

Issue: WON the signature of Frederico O. Borromeo in the Deed of Assignments is a genuine signature.

Held:

Pertinent records reveal that the subject Deed of Assignment is embodied in blank form for the
assignment of shares with authority to transfer such shares in the books of the corporation. It was
clearly intended to be signed in blank to facilitate the assignment of shares from one person to another
at any future time. This is similar to Section 14 of the Negotiable Instruments Law where the blanks
may be filled up by the holder, the signing in blank being with the assumed authority to do so. Indeed, as
the shares were registered in the name of Federico O. Borromeo just to give him personality and
standing in the business community, private respondent had to have a counter evidence of ownership of
the shares involved. Thus, the execution of the deed of assignment in blank, to be filled up whenever
needed. The same explains the discrepancy between the date of the deed of assignment and the date
when the signature was affixed thereto.

While it is true that the 1974 standard signature of Federico O. Borromeo is to the naked eye dissimilar
to his questioned signature circa 1954-1957, which could have been caused by sheer lapse of time, Col.
Jose Fernandez, respondent's expert witness, found the said signatures similar to each other after
subjecting the same to stereomicroscopic examination and analysis because the intrinsic and natural
characteristic of Federico O. Borromeo's handwriting were present in all the exemplar signatures used
by both Segundo Tabayoyong and Col. Jose Fernandez.

Page 3 of 7
 6. RAUL SESBREÑO vs. CA,
DELTA MOTORS CORPORATION AND PILIPINAS BANK
G.R. No. 89252            May 24, 1993

On 9 February 1981, Raul Sesbreno made a money market placement in the amount of P300,000 with the
Philippine Underwriters Finance Corporation (PhilFinance), with a term of 32 days. PhilFinance issued to
Sesbreno the Certificate of Confirmation of Sale of a Delta Motor Corporation Promissory Note (2731), the
Certificate of Securities Delivery Receipt indicating the sale of the note with notation that said security was
in the custody of Pilipinas Bank, and postdated checks drawn against the Insular Bank of Asia and America for
P304,533.33 payable on 13 March 1981. The checks were dishonored for having been drawn against
insufficient funds. Pilipinas Bank never released the note, nor any instrument related thereto, to Sesbreno.
Sesbreno learned that the security was issued 10 April 1980, maturing on 6 April 1981, has a face value of
P2,300,833.33 with PhilFinance as payee and Delta Motors as maker, and was stamped “non-negotiable” on its
face. As Sesbreno was unable to collect his investment and interest thereon, he filed an action for
damages against Delta Motors and Pilipinas Bank.

Issue: Whether or not non-negotiability of a promissory note prevents its assignment.

Held: Only an instrument qualifying as a negotiable instrument under the relevant statute may be negotiated
either by indorsement thereof coupled with delivery, or by delivery alone if it is in bearer form. A negotiable
instrument, instead of being negotiated, may also be assigned or transferred. The legal consequences of
negotiation and assignment of the instrument are different. A negotiable instrument may not be negotiated
but may be assigned or transferred, absent an express prohibition against assignment or transfer written in
the face of the instrument. Herein, there was no prohibition stipulated.

7. BENJAMIN ABUBAKAR vs. THE AUDITOR GENERAL

G.R. No. L-1405             July 31, 1948

Treasury Warrant A-2867376 was issued in favor of Placide S. Urbanes on 10 December 1941 for P1,000, but
is now in the hands of Benjamin Abubakar. The Auditor refused to authorize the payment of the treasury
warrant. Abubakar contends that he is a holder in good faith and for value and thus, entitled to the rights
and privileges of a holder in due course.

Issue: Whether or not Abubakar is a holder in due course.

Held: A treasury warrant is not a negotiable instrument; it being an order for payment out of a “particular
fund”, and is not unconditional and does not fulfill one of the essential requirements of a negotiable
instrument. Therefore, a holder of a treasury warrant cannot argue that he is a holder in good faith and for
value of a negotiable instrument and thus entitled to the rights and privileges of a holder in due course, free
from defenses.
8. Intestate of Luther Young and Pacita Young, spouses. PACIFICA JIMENEZ vs.
DR. JOSE BUCOY
G.R. No. L-10221             February 28, 1958

In the proceedings in the intestate of Luther Young and Pacita Young who died in 1954 and 1952,
respectively, Pacifica Jimenez presented for payment 4 promissory notes signed by Pacita for different
amounts totalling P21,000. Acknowledging receipt by Pacita during the Japanese occupation, in the currency
then prevailing, the Administrator manifested willingness to pay provided adjustment of the sums be made in
line with the Ballantyne schedule. The claimant objected to the adjustment insisting on full payment in
accordance with the notes. The court held that the notes should be paid in the currency prevailing after the
war, and thus entitling Jimemez to recover P21,000 plus P2,000 as attorney’s fees. Hence, the appeal.

Issue: Whether or not the amounts should be paid, peso for peso; or whether a reduction should be made in
accordance with the Ballantyne schedule.

Held: If the loan was expressly agreed to be payable only after the war, or after liberation, or became
payable after those dates, no reduction could be effected, and peso-for-peso payment shall be ordered in
Philippine currency. The Ballantyne Conversion Table does not apply where the monetary obligation, under the
contract, was not payable during the Japanese occupation. Herein, the debtor undertook to pay “six months
after the war,” peso for peso payment is indicated.

Page 4 of 7
 9. Philippine Education Co. Inc. v. Soriano [G.R. No. L-22405. June 30, 1971]

24MAR

FACTS
Enrique Montinola sought to purchase from the Manila Post Office ten (10) money orders each payable to
E.P. Montinola. After the postal teller had made out money orders, Montinola offered to pay for them
with a private checks were not generally accepted in payment of money orders, the teller advised him to
see the Chief of the Money Order Division, but instead of doing so, Montinola managed to leave building
with his own check and the ten(10) money orders without the knowledge of the teller. Upon discovery of
the disappearance of the unpaid money orders, an urgent message was sent to all postmasters, and the
following day notice was likewise served upon all banks, instructing them not to pay anyone of the money
orders aforesaid if presented for payment. The Bank of America received a copy of said notice three
days later. It debited appellant’s account with the same amount and gave it advice thereof by means of a
debit memo.

ISSUE
Whether or not postal money orders are negotiable instruments.

RULING
NO. Postal money orders are not negotiable instruments. Our postal statutes were patterned after
statutes in force in the United States. For this reason, ours are generally construed in accordance with
the construction given in the United States to their own postal statutes, in the absence of any special
reason justifying a departure from this policy or practice. The weight of authority in the United States
is that 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.It is to be noted in this
connection that some of the restrictions imposed upon money orders by postal laws and regulations are
inconsistent with the character of negotiable instruments. For instance, such laws and regulations usually
provide for not more than one endorsement; payment of money orders may be withheld under a variety
of circumstances.

10. CALTEX (PHILIPPINES), INC., petitioner, 

vs.
COURT OF APPEALS and SECURITY BANK AND TRUST COMPANY, respondents.

Page 5 of 7
11. G.R. No. L-39815             April 28, 1934
EULALIO BELISARIO, plaintiff-appellant,
vs.
PAZ NATIVIDAD VIUDA DE ZULUETA, defendant-appellee.
Jose V. Claravall for appellant.
Jose C. Zulueta for appellee.
BUTTE, J.:
FACTS
It appears from Exhibit A that the plaintiff sold the lands (Nos. 3357 and 3358) to the
defendant fo  P37,000, which was duly paid, and the agreement on the part of the grantee to
assume an indebtedness secured by a lien for 4, 500, which was likewise duly paid. The deed
bears the date of April 29, 1927.
On the same date the defendant executed and delivered in favor of the plaintiff an option to
repurchase the lands on or before the end of May, 1931, for the sum of P37,000.
On the 28th of May, 1931, the plaintiff tendered to the defendant a check in the sum of
P37,000, drawn by Rosendo Santiago against his account in the Peoples Bank and Trust Company.
ISSUE
Whether or not the checks made would produce the effect of payment.
HELD
At the time said check was tendered to the defendant the drawer thereof had on deposit in
the said bank subject to check the sum of P5.85. Even if the check had been good, the
defendant was not legally bound to accept it because such a check does not satisfy the
requirements of a legal tender.
Finding no merit in this appeal, the judgment of the court below is affirmed with costs against
the appellant.

12.

Page 6 of 7
13. Gutierrez vs carpio no result

14. new pacific timber

Facts: In a complaint for a collection of sum of money, petitioner failed to comply with his judgment
obligation in an amicable settlement with the respondent. Hence, a writ of execution was issued for the
amount of P63, 140.00 pursuant to which, petitioner’s properties were levied and was set for an auction
sale. Prior to the set date for the auction sale, petitioner deposited with the Clerk of Court, CFI, in his
capacity as Ex-Officio Sheriff, the sum of P63, 130.00 for payment of the judgment obligation,
consisting of P50, 000.00 Cashier’s Check and P13,130.00 in cash.
Private respondent refused to accept the check as well as the cash deposit and requested the scheduled
auction sale. Respondent judge uphold private respondent’s claim that he has the right to refuse payment
by means of a check and cited Section 63 of the Central Bank Act:

“Sec 63. Legal Character – Checks representing deposit money do not have legal tender power and their
acceptance in 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 in cash in an amount equal to the amount credited to his account.”

And Article 1249 of the New Civil Code which provides for payment of debts in money shall be made in
the currency stipulated or the currency that is legal tender in the Philippines.

Likewise, respondent judge sustained the contention of the private respondent that he has a right to
refuse payment of the amount of P13, 130 in cash because the said amount is less than the judgment
obligation, which is a partial payment as provided in Article 1248 of the New Civil Code.

Petitioner filed an ex-parte motion for issuance of certificate of satisfaction of judgment after his
levied properties were all sold during the auction sale. Petitioner question the order of the judge for
denial of the said motion alleging that said judge capriciously and whimsically abused his discretion on
the ground that there was already a full satisfaction of the judgment before the auction sale was
conducted.

Issue: WON there was a valid refusal to accept the payment of the judgment obligation made by the
petitioner consisting of P50, 000.00 in Cashier’s Check and P13, 130.00 in cash.
Held: No. A cashier’s check of the Equitable Bank Corporation is not an ordinary check. It is a well-known
and accepted practice in the business sector that a Cashier’s Check is deemed as cash.
Where a check is certified by the bank on which it is drawn, the certification is equivalent to
acceptance. By the certification of drawee bank, the funds represented by the check are transferred
from the credit of the maker to that of the payee or holder, and for all intents and purposes, the latter
becomes the depositor of the drawee bank. Said certification implies that the check is drawn upon
sufficient funds in the hands of the drawee that they have been set apart for its satisfaction, that they
shall be so applied whenever the check is presented for payment. The object of certifying a check, as
regards to both parties, is to enable the holder to use it as money. When the holder procures the check
to be certified, the check operates as an assignment of a part of the funds to the creditors.
Certification of a check is an exception to the rule enunciated under Sec 63 of the CB Act.

Considering that the whole amount deposited by the petitioner consisting of Cashier’s Check of P50,
000.00 and P13, 130.00 in cash covers the judgment obligation of P63,000.00 as mentioned in the writ of
execution, then, we see no valid reason for the private respondent to have refused acceptance of the
payment of the obligation in his favor.

Page 7 of 7