Digested cases for NIL

In Unity there is Strength

1.FLORENTINA A. LOZANO, petitioner, vs. THE HONORABLE ANTONIO

M. MARTINEZ, in his capacity as Presiding Judge, Regional Trial

Court, National Capital Judicial Region, Branch XX, Manila, and the
HONORABLE JOSE B. FLAMINIANO, in his capacity as City Fiscal of
Manila, respondents
G.R. No. L-63419 December 18, 1986
Facts:
These are consolidated issues which have been presented for decision that raised
the constitutionality of Batas Pambansa Bilang 22 otherwise known as the Bouncing
Check Law.
Issue:
WON a bill of exchange in the form of check as a medium of payment is
unconstitutional.
Held:
By definition, a check is a bill of exchange drawn on a bank and payable on
demand. It is a written order on a bank, purporting to be drawn against a deposit of
funds for the payment of all events, of a sum of money to a certain person therein
named or to his order or to cash and payable on demand. Unlike a promissory note,
a check is not a mere undertaking to pay an amount of money. It is an order
addressed to a bank and partakes of a representation that the drawer has funds on
deposit against which the check is drawn, sufficient to ensure payment upon its
presentation to the bank. There is therefore an element of certainty or assurance
that the instrument wig be paid upon presentation. For this reason, checks have
become widely accepted as a medium of payment in trade and commerce. Although
not legal tender, checks have come to be perceived as convenient substitutes for
currency in commercial and financial transactions.

2. BANK OF THE PHILIPPINE ISLANDS, Petitioner, vs. SPOUSES REYNALDO AND

VICTORIA ROYECA, Respondents.
G.R. No. 176664 July 21, 2008

Facts:
Respondents, spouses Royeca executed and delivered to Toyota Shaw, Inc. a
Promissory Note which is payable in equal monthly installments with notice of
its maturity date, it also provides for a penalty for every month that an
installment remains unpaid.
Toyota, with notice to respondents, executed a Deed of Assignment 5 transferring
all its rights, title, and interest in the Chattel Mortgage to Far East Bank and
Trust Company (FEBTC), where the latter (FEBTC) sent a formal demand to
respondents, asking for the payment thereof, plus penalty, claiming that the
respondents failed to pay four (4) monthly amortizations. The complaint was
later amended to substitute BPI as plaintiff when it merged with and absorbed
FEBTC.
The respondents refused to pay on the ground that they had already paid their
obligation to FEBTC, alleged that they already delivered to the Auto Financing
Department of FEBTC eight (8) postdated checks in different amounts as
manifested in the Acknowledgment Receipt that petitioner bank received the
said checks which is attached to their answer.
Issue:
WON the Acknowledgment Receipt was sufficient proof of payment.
Held:
The Acknowledgement Receipt is only a proof that respondents delivered eight
checks in payment of the amount due. Apparently, this will not suffice to
establish actual payment. Settled is the rule that payment must be made in
legal tender. 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.

3. Traders Royal Bank vs CA et. Al

G.R. No. 93397

Facts:
This is a Petition for Review on Certiorari assailing the Decision of the respondent
Court of Appeals, affirming the nullity of the transfer of Central Bank Certificate of
Indebtedness (CBCI) No. D891, with a face value of P500, 000.00, from the
Philippine Underwriters Finance Corporation (Philfinance) to the petitioner Trader's
Royal Bank (TRB), under a Repurchase Agreement, and a Detached Assignment.
The action was originally filed as a Petition for Mandamus in the Regional Trial Court,
to compel the Central Bank of the Philippines to register the transfer of the subject
CBCI to petitioner Traders Royal Bank (TRB). In the said petition, TRB stated partially
that:
Filriters Guaranty Assurance Corporation (Filriters) executed a "Detached
Assignment" . . ., whereby Filriters, as registered owner, sold, transferred, assigned
and delivered unto Philippine Underwriters Finance Corporation (Philfinance) all its
rights and title to Central Bank Certificates of Indebtedness of PESOS: FIVE
HUNDRED THOUSAND (P500,000.00).
Issue:
WON the subject CBCI D891 is a negotiable instrument
Held:
Admittedly, the subject CBCI is not a negotiable instrument in the absence of words
of negotiability within the meaning of the negotiable instruments law (Act 2031). As
held in Caltex (Philippines), Inc. v. Court of Appeals:
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. In the
construction of a bill or note, the intention of the parties is to control, if it can be
legally ascertained. While the writing may be read in the light of surrounding
circumstance in order to more perfectly understand the intent and meaning of the
parties, yet as they have constituted the writing to be the only outward and visible

expression of their meaning, no other words are to be added to it or substituted in

its stead. The duty of the court in such case is to ascertain, not what the parties
may have secretly intended as contradistinguished from what their words express,
but what is the meaning of the words they have used. What the parties meant must
be determined by what they said. Thus, the transfer of the instrument from
Philfinance to TRB was merely an assignment, and is not governed by the
negotiable instruments law.

4. CALTEX (PHILIPPINES), INC., petitioner, vs. COURT OF APPEALS and

SECURITY BANK AND TRUST COMPANY, respondents.
G.R. No. 97753 August 10, 1992
Facts:
Respondent bank through its Branch issued certificates of time deposit (CTDs) in
favor of one Angel dela Cruz who is a depositor in the same bank, where the latter
delivered the said certificates of time deposits (CTDs) to petitioner (Caltex) in
connection with his purchased of fuel products from the petitioners company.
Subsequently, Angel dela Cruz (depositor) negotiated and obtained a loan from
respondent bank and executed a notarized Deed of Assignment of Time Deposit
which stated, among others, that he (de la Cruz) surrenders to said bank "full
control of the indicated time deposits from and after date" of the assignment
and further authorizes said bank to pre-terminate, set-off and "apply the said
time deposits to the payment of whatever amount or amounts may be due" on
the loan upon its maturity. Sometime in November 1982, the Credit Manager of
petitioner Caltex (Phils.) Inc., went to the respondent bank's branch and
presented for verification the CTDs declared lost by Angel dela Cruz alleging
that the same were delivered to herein petitioner "as security for purchases
made with Caltex Philippines, Inc." by said depositor. Then, on November 26,
1982, respondent received a letter from herein petitioner formally informing it of
its possession of the CTDs in question and of its decision to pre-terminate the
same.
Accordingly, respondent bank rejected the petitioner's demand and claim for
payment of the value of the CTDs in a letter dated February 7, 1983. In April
1983, the loan of Angel dela Cruz with the defendant bank matured and fell due
and on August 5, 1983, the latter set-off and applied the time deposits in
question to the payment of the matured loan.
Issue:
WON the CTDs (Certificates of time deposits) is a negotiable instrument and
repayable not only to the depositor as bearer

Held:
Contrary to the respondent court, the CTDs are negotiable instruments. The
documents provide that the amounts deposited shall be repayable to the depositor.
And who, according to the document, is the depositor? It 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. If it was really the intention of respondent bank
to pay the amount to Angel de la Cruz only, it could have with facility so expressed
that fact in clear and categorical terms in the documents, instead of having the
word "BEARER" stamped on the space provided for the name of the depositor in
each CTD.

5.

BENJAMIN ABUBAKAR, petitioner, vs. THE AUDITOR GENERAL, respondent.

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

Facts:
The respondent, Auditor General refused to authorize the payment of Treasury
warrant which was originally issued in favor of Placido S. Urbanes, a government
employee, in his capacity as disbursing officer of the Food Administration for
"additional cash advance for Food Production Campaign but is now in the hands of
herein petitioner Benjamin Abubakar, who argues that he is a holder in good faith
and for value of a negotiable instrument and is entitled to the rights and
privileges of a holder in due course, free from defenses.
Issue:
WON a Treasury warrant originally issued to a government employee is a negotiable
instrument
Held:
Such being the case, the Auditor General can hardly be blamed for not authorizing
its redemption out of an appropriation specifically for "treasury warrants issued ... in
favor of and held in possession by private individuals." (Republic Act No. 80, Item FIV-8.) This warrant was not issued in favor of a private individual. It was issued in
favor of a government employee. Also, this treasury warrant is not within the
scope of the negotiable instruments law. For one thing, the document bearing on
its face the words "payable from the appropriation for food administration," is
actually 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. (Section 3 last sentenced and section 1[b] of the

Negotiable Instruments Law.)

6. CLAUDE P. BAUTISTA, petitioner, vs. AUTO PLUS TRADERS, INCORPORATED

and COURT OF APPEALS, respondents.
G.R. No. 166405 August 6, 2008
Facts:
Petitioner raised the sole issue of whether as an officer of the corporation, he is
personally and civilly liable to the private respondent for the value of the two
checks and asserts that BP Blg. 22 merely pertains to the criminal liability of the
accused and that the corporation, which has a separate personality from its officers,
is solely liable for the value of the two checks.
Private respondent counters that petitioner should be held personally liable for both
checks, alleged that the latter issued two postdated checks: a personal check in his
name and a corporation check under the account of Cruiser Bus Lines and Transport
Corporation. According to private respondent, petitioner, by issuing his check to
cover the obligation of the corporation, became an accommodation party. Under
Section 29 of the Negotiable Instruments Law, an accommodation party is liable on
the instrument to a holder for value.
Issue:
WON the petitioner can be considered as an accommodation party for the signed
Check, as defined in the Negotiable Instrument Law
Held:

Petitioner cannot be considered liable as an accommodation party for the signed

Check. Section 29 of the Negotiable Instruments Law defines an accommodation
party is one who meets all these three requisites, viz: (1) he must be a party to the
instrument, signing as maker, drawer, acceptor, or indorser; (2) he must not receive
value therefor; and (3) he must sign for the purpose of lending his name or credit to
some other person. The first two elements are present, however there is insufficient
evidence presented in the instant case to show the presence of the third requisite.
All that the evidence shows is that petitioner signed Check, which is drawn against
his personal account. The said check corresponds to the value of 24 sets of tires
received by Cruiser Bus Lines and Transport Corporation. There is no showing of
when petitioner issued the check and in what capacity. In the absence of concrete
evidence it cannot just be assumed that petitioner intended to lend his name to the
corporation. Hence, petitioner cannot be considered as an accommodation party.
Cruiser Bus Lines and Transport Corporation, however, remains liable for the checks
especially since there is no evidence that the debts covered by the subject checks
have been paid.

7. ERNESTINA CRISOLOGO-JOSE, petitioner, vs. COURT OF APPEALS and

RICARDO S. SANTOS, JR. in his own behalf and as Vice-President for Sales
of Mover Enterprises, Inc., respondents.
G.R. No. 80599 September 15, 1989
Facts:
Petitioner avers that the accommodation party in this case is Mover Enterprises, Inc.
and not private respondent who merely signed the check in question in a
representative capacity, that is, as vice-president of said corporation, hence he is
not liable thereon under the Negotiable Instruments Law.
Issue:
WON the private respondent, one of the signatories of the check issued under the
account of Mover Enterprises, Inc., is an accommodation party under the Negotiable
Instruments Law
Held:
Respondent Santos is an accommodation party and is, therefore, liable for the value
of the check. The fact that he was only a co-signatory does not detract from his
personal liability. A co-maker or co-drawer under the circumstances in this case is as
much an accommodation party as the other co-signatory or, for that matter, as a
lone signatory in an accommodation instrument. Under the doctrine in Philippine

Bank of Commerce vs. Aruego, supra, he is in effect a co-surety for the

accommodated party with whom he and his co-signatory, as the other co-surety,
assume solidary liability ex lege for the debt involved. With the dishonor of the
check, there was created a debtor-creditor relationship, as between Atty. Benares
and respondent Santos, on the one hand, and petitioner, on the other.

8. JUANITA SALAS, petitioner, vs. HON. COURT OF APPEALS and FIRST

FINANCE & LEASING CORPORATION, respondents.
G.R. No. 76788 January 22, 1990
Facts:

This is petition before the SC where the petitioner assigns twelve (12) errors
which focus on the alleged fraud, bad faith and misrepresentation of Violago
Motor Sales Corporation in the conduct of its business and which fraud, bad
faith and misrepresentation supposedly released petitioner from any liability to
private respondent who should instead proceed against VMS.
Records disclose that, Juanita Salas (hereinafter referred to as petitioner) bought a
motor vehicle from the Violago Motor Sales Corporation (VMS for brevity) as
evidenced by a promissory note. This note was subsequently endorsed to Filinvest
Finance & Leasing Corporation (hereinafter referred to as private respondent) which
financed the purchase.

Petitioner argues that in the light of the provision of the law on sales by
description which she alleges is applicable here, no contract ever existed
between her and VMS and therefore none had been assigned in favor of private
respondent.

Issue:

WON the promissory note in question is a negotiable instrument which will bar
completely all the available defenses of the petitioner against private
respondent.
Held:
A careful study of the questioned promissory note shows that it is a negotiable
instrument, having complied with the requisites under the law. It was negotiated by
indorsement in writing on the instrument itself payable to the Order of Filinvest
Finance and Leasing Corporation and it is an indorsement of the entire instrument.
Under the circumstances, there appears to be no question that Filinvest is a holder
in due course, having taken the instrument under the required conditions.
Accordingly, Respondent Corporation holds the instrument free from any defect of
title of prior parties, and free from defenses available to prior parties among
themselves, and may enforce payment of the instrument for the full amount
thereof. This being so, petitioner cannot set up against respondent the defense of
nullity of the contract of sale between her and VMS (Violago Motor Sales)
Corporation.

9. VICENTE R. DE OCAMPO & CO., plaintiff-appellee, vs. ANITA GATCHALIAN,

ET AL., defendants-appellants.
G.R. No. L-15126 November 30, 1961
Facts:

Defendants-appellants contend that the check is not a negotiable instrument,

under the facts and circumstances stated in the stipulation of facts, and that
plaintiff is not a holder in due course. In support of the first contention, it is
argued that defendant had no intention to transfer her property in the
instrument as it was for safekeeping merely and, therefore, there was no
delivery required by law (Section 16, Negotiable Instruments Law); that
assuming for the sake of argument that delivery was not for safekeeping merely,
delivery was conditional and the condition was not fulfilled. It is also claimed
that the plaintiff-appellee is not a holder in due course because it acquired the
check with notice of defect in the title of the holder, and because under the
circumstances stated in the stipulation of facts there were circumstances that
brought suspicion about holders possession and negotiation, which
circumstances should have placed the plaintiff-appellee under the duty, to
inquire into the title of the holder.

Answering the first contention of appellant, counsel for plaintiff-appellee argues that
in accordance with the best authority on the Negotiable Instruments Law, plaintiffappellee may be considered as a holder in due course, citing Brannan's Negotiable
Instruments Law, holds that a payee may be a holder in due course and says that to
this effect is the greater weight of authority.
Issue:
1. WON the plaintiff-appellee may be considered as a holder in due course.
Held:

Section 52, NIL, defines holder in due course, thus: A holder in due course is a
holder who has taken the instrument under the following conditions: (a) That it
is complete and regular upon its face; (b) That he became the holder of it before
it was overdue, and without notice that it had been previously dishonored, if
such was the fact; (c) That he took it in good faith and for value; (d) That at the
time it was negotiated to him he had no notice of any infirmity in the instrument
or defect in the title of the person negotiating it.
1.The stipulation of facts contains no statement of such good faith, hence we are
forced to the conclusion that plaintiff payee has not proved that it acquired the
check in good faith and may not be deemed a holder in due course thereof. As
holder's title was defective or suspicious, it cannot be stated that the payee
acquired the check without knowledge of said defect in holder's title, and for this
reason the presumption that it is a holder in due course or that it acquired the
instrument in good faith does not exist. And having presented no evidence that
it acquired the check in good faith, it (payee) cannot be considered as a holder
in due course.

10.CHARLES A. FOSSUM, plaintiff-appellant, vs. FERNANDEZ HERMANOS, a

general partnership, and JOSE F. FERNANDEZ Y CASTRO and RAMON
FERNANDEZ Y CASTRO, members of the said partnership of FERNANDEZ
HERMANOS, defendants-appellees.
G.R. No. L-19461 March 28, 1923
Facts:
The plaintiff, an agent of the American Iron Products Company, Inc, procured an
order from the defendant, to deliver a tail shaft, to be installed on the ship Romulus.
It was stipulated that said tail shaft would be in accordance with the specifications
contained in a blueprint. Meanwhile, the American Iron Products Company, Inc. had
drawn a time draft, at sixty days, upon the defendants, for the purchase price of the
shaft, and payable to the Philippine National Bank. In due course the draft was
presented to the defendant for acceptance, and was accepted according to its tenor.
Upon inspection, the shaft was found not to be in conformity with the specifications,
consequently, the defendant refused to pay the draft, and it remained for a time

dishonored in the hands of the Philippine National Bank. Later the bank indorsed the
draft in blank, without consideration, and delivered it to the plaintiff, who thereupon
instituted the present action on the instrument against the acceptor, defendant, and
the two individuals named in the complaint, in the character of members of said
partnership.
Issue:
WON the plaintiff Fossum is a holder of the questioned draft in due course
Held:
The plaintiff Fossum is far from being a holder of the draft in due course. He was
himself a party to the contract which supplied the consideration for the draft, albeit
he there acted in a representative capacity. In the second place, he procured the
instrument to be indorsed by the bank and delivered to himself without the
payment of value, after it was overdue, and with full notice that, as between the
original parties, the consideration had completely failed. Under these circumstances
recovery on this draft by the plaintiff by virtue of any merit in his own position is out
of the question.