Government Service Insurance System v. CA, G.R. No.

L-40824, [February 23, 1989]

Facts: Private respondents, Mr. and Mrs. Isabelo R. Racho, together with the spouses
Mr. and Mrs. Flaviano Lagasca, executed a deed of mortgage, in favor of petitioner
Government Service Insurance System in connection with two loans granted by the
latter in the sums of P11,500.00 and P3,000.00, respectively. They also executed a
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promissory note which is payable to GSIS.

Lagasca spouses 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. Thus, the mortgage was foreclosed.
Private respondents filed a complaint with CFI QC to declare the foreclosure null and
void. TC dismissing the complaint for failure to establish a cause of action. On appeal,
the CA reversed and held that although formally they are co-mortgagors, they are so
only for accommodation.

Issue: WON the promissory note and mortgage is negotiable instruments.

Held: No. both parties relied on the provisions of Section 29 of Act No. 2031,
otherwise known as the Negotiable Instruments Law, which provide that an
accommodation party is one who has signed an instrument as maker, drawer,
acceptor of indorser without receiving value therefor, but is held liable on the
instrument to a holder for value although the latter knew him to be only an
accommodation party. This approach of both parties appears to be misdirected and
their reliance misplaced. 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.
Federal Express Corp. v. Antonino, G.R. No. 199455, [June 27, 2018])

Facts: Eliza was the owner of Unit 22-A (the Unit) in Allegro Condominium,
located at 62 West 62nd St., New York, United States. Luwalhati and Eliza were in
the Philippines. As the monthly common charges on the Unit had become due, they
decided to send several Citibank checks to Veronica Z. Sison (Sison), who was
based in New York. The package was addressed to Sison who was tasked to deliver
the checks payable to Maxwell-Kates, Inc. and to the New York County Department
of Finance. Sison allegedly did not receive the package, resulting in the non-
payment of Luwalhati and Eliza's obligations and the foreclosure of the Unit.  Sison
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contacted FedEx to inquire about the non-delivery. She was informed that the
package was delivered to her neighbor but there was no signed receipt.
Luwalhati and Eliza, through their counsel, sent a demand letter to FedEx for
payment of damages due to the non-delivery of the package, but FedEx refused to
heed their demand.  Hence, they filed their Complaint  for damages.
RTC ruled for Luwalhati and Eliza found that Luwalhati failed to accurately declare
the contents of the package as "checks." However, it ruled that a check is not legal
tender or a "negotiable instrument equivalent to cash," as prohibited by the Air
Waybill.  On appeal, CA affirmed the ruling of TC.
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Issue: Whether checks with a specified payee are negotiable instruments equivalent to

cash

Held: No. There is no question that checks, whether payable to order or to bearer, so
long as they comply with the requirements under Section 1 of the Negotiable
Instruments Law, are negotiable instruments. |

It is settled in jurisprudence that checks, being only negotiable instruments, are only
substitutes for money and are not legal tender; more so when the check has a named
payee and is not payable to bearer. An order instrument, which has to be endorsed by
the payee before it may be negotiated,  cannot be a negotiable instrument equivalent to
cash. It is worth emphasizing that the instruments given as further examples under the
Air Waybill must be endorsed to be considered equivalent to cash.

The contract between petitioner and respondents is a contract of adhesion; it was

prepared solely by petitioner for respondents to conform to.  Although not
automatically void, any ambiguity in a contract of adhesion is construed strictly
against the party that prepared it.  Accordingly, the prohibition against transporting
money must be restrictively construed against petitioner and liberally for
respondents.  |||
Ubas, Sr. v. Chan, G.R. No. 215910, [February 6, 2017],

Facts: Wilson Chan, "doing business under the name and style of UNIMASTER,"
was indebted to Michael Ubas in the amount of P1,500,000.00, representing the price
of boulders, sand, gravel, and other construction materials allegedly purchased by
respondent from him for the construction of the Macagtas Dam in Northern Samar.
That the said obligation has long become due and demandable and yet, respondent
unjustly refused to pay the same despite repeated demands. He averred that
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respondent had issued three (3) bank checks, payable to "CASH” but when petitioner
presented the subject checks for encashment the same were dishonored due to a stop
payment order. As such, respondent was guilty of fraud in incurring the obligation.

RTC ruled that petitioner had a cause of action against respondent.  On appeal, CA
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dismissed and held that respondent was not the proper party defendant in the case,
considering that the drawer of the subject checks was Unimasters, which, as a
corporate entity, has a separate and distinct personality from respondent.

Issue: WON the CA erred in dismissing the case for lack of COA.

Held: Yes. it has also been long established that where the plaintiff-creditor possesses
and submits in evidence an instrument showing the indebtedness, a presumption that
the credit has not been satisfied arises in [his] favor. Thus, the defendant is, in
appropriate instances, required to overcome the said presumption and present
evidence to prove the fact of payment so that no judgment will be entered against
him.” Section 24. Presumption of Consideration. — Every negotiable instrument is
deemed prima facie to have been issued for a valuable consideration; and every person whose
signature appears thereon to have become a party thereto for value. |||

Besides, Section 16 of the NIL provides that when an instrument is no longer in the

possession of the person who signed it and it is complete in its terms, "a valid and
intentional delivery by him is presumed until the contrary is proved," as in this case.  |||

Respondent was not able to overcome the presumption of consideration under Section
24 of the NIL and establish any of his affirmative defenses. On the other hand, as the
holder of the subject checks which are presumed to have been issued for a valuable
consideration, and having established his privity of contract with respondent,
petitioner has substantiated his cause of action by a preponderance of evidence.   |||

Metropolitan Bank and Trust Co. v. Chiok, G.R. Nos. 172652, 175302 & 175394,
[November 26, 2014]

Facts: Wilfred N. Chiok (Chiok) had been engaged in dollar trading for several years.
He usually buys dollars from Gonzalo B. Nuguid (Nuguid) at the exchange rate
prevailing on the date of the sale. Chiok pays Nuguid either in cash or manager's
check, to be picked up by the latter or deposited in the latter's bank account. Nuguid
delivers the dollars either on the same day or on a later date as may be agreed upon
between them, up to a week later. Chiok and Nuguid had been dealing in this manner
for about six to eight years, with their transactions running into millions of pesos. For
this purpose, Chiok maintained accounts with petitioners Metropolitan Bank and
Trust Company (Metrobank) and Global Business Bank, Inc. (Global Bank), the
latter being then referred to as the Asian Banking Corporation (Asian Bank). Chiok
likewise entered into a Bills Purchase Line Agreement (BPLA) with Asian Bank.
Under the BPLA, checks drawn in favor of, or negotiated to, Chiok may be purchased
by Asian Bank.
Pursuant to the BPLA, Asian Bank "bills purchased" Security Bank & Trust Company
(SBTC) Manager's Check 25.5 M.

Chiok then deposited the three managers checks P26,068,350.00 in Nuguid's account
with Far East Bank & Trust Company (FEBTC), the predecessor-in-interest oBank of
the Philippine Islands (BPI). Nuguid was supposed to deliver US$1,022,288.50,  the
dollar equivalent of the three checks as agreed upon, in the afternoon of the same day.
Nuguid, however, failed to do so, prompting Chiok to request that payment on the
three checks be stopped. Chiok was allegedly advised to secure a court order within
the 24-hour clearing period.

Chiok filed a Complaint for damages with RTC. The RTC held that Nuguid failed to
prove the delivery of dollars to Chiok. The RTC went on to rule that manager's checks
and cashier's checks may be the subject of a Stop Payment Order from the purchaser
on the basis of the payee's contractual breach. On appeal, the Court of Appeals
affirmed, Article 1191 of the Civil Code provides a legal basis of the right of
purchasers of MCs and CCs to make a stop payment order on the ground of the failure
of the payee to perform his obligation to the purchaser.

Issue: Whether or not payment of manager's and cashier's checks are subject to the
condition that the payee thereof should comply with his obligations to the purchaser of
the check.

Held: No. he legal effects of a manager's check and a cashier's check are the same. A
manager's check, like a cashier's check, is an order of the bank to pay, drawn upon
itself, committing in effect its total resources, integrity, and honor behind its issuance.
By its peculiar character and general use in commerce, a manager's check or a
cashier's check is regarded substantially to be as good as the money it represents. |||

While indeed, it cannot be said that manager's and cashier's checks are pre-
cleared, clearing should not be confused with acceptance. Manager's and cashier's
checks are still the subject of clearing to ensure that the same have not been materially
altered or otherwise completely counterfeited. However, manager's and cashier's
checks are pre-accepted by the mere issuance thereof by the bank, which is both its
drawer and drawee. Thus, while manager's and cashier's checks are still subject to
clearing, they cannot be countermanded for being drawn against a closed account, for
being drawn against insufficient funds, or for similar reasons such as a condition not
appearing on the face of the check. Long standing and accepted banking practices do
not countenance the countermanding of manager's and cashier's checks on the basis of
a mere allegation of failure of the payee to comply with its obligations towards the
purchaser. On the contrary, the accepted banking practice is that such checks are as
good as cash.  
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Fortunado v. Court of Appeals, G.R. No. 78556, [April 25, 1991],

Facts: