G.R. No.

93073 December 21, 1992

REPUBLIC PLANTERS BANK, petitioner,
vs.
COURT OF APPEALS and FERMIN CANLAS, respondents.

Under the promissory note (Exhibit "D") defendants Pinch Manufacturing

Corporation (formerly named Worldwide Garment Manufacturing, Inc.),
and Shozo Yamaguchi are ordered to pay jointly and severally, the plaintiff
bank the sum of P367,000.00 with interest of 16% per annum from January
29, 1980 until fully paid
Under the promissory note (Exhibit "F") defendant corporation Pinch
(formerly Worldwide) is ordered to pay the plaintiff bank the sum of
P140,000.00 with interest at 16% per annum from November 27, 1980 until
fully paid.

CAMPOS, JR., J.:

This is an appeal by way of a Petition for Review on Certiorari from the decision * of the Court
of Appeals in CA G.R. CV No. 07302, entitled "Republic Planters Bank.Plaintiff-Appellee vs.
Pinch Manufacturing Corporation, et al., Defendants, and Fermin Canlas, DefendantAppellant", which affirmed the decision ** in Civil Case No. 82-5448 except that it completely
absolved Fermin Canlas from liability under the promissory notes and reduced the award for
damages and attorney's fees. The RTC decision, rendered on June 20, 1985, is quoted
hereunder:
WHEREFORE, premises considered, judgment is hereby rendered in favor
of the plaintiff Republic Planters Bank, ordering defendant Pinch
Manufacturing Corporation (formerly Worldwide Garment Manufacturing,
Inc.) and defendants Shozo Yamaguchi and Fermin Canlas to pay, jointly
and severally, the plaintiff bank the following sums with interest thereon at
16% per annum from the dates indicated, to wit:

Defendant Pinch (formely Worldwide) is hereby ordered to pay the plaintiff

the sum of P231,120.81 with interest at 12% per annum from July 1, 1981,
until fully paid and the sum of P331,870.97 with interest from March 28,
1981, until fully paid.
All the defendants are also ordered to pay, jointly and severally, the plaintiff
the sum of P100,000.00 as and for reasonable attorney's fee and the further
sum equivalent to 3% per annum of the respective principal sums from the
dates above stated as penalty charge until fully paid, plus one percent (1%)
of the principal sums as service charge.
With costs against the defendants.
SO ORDERED. 1

Under the promissory note (Exhibit "A"), the sum of P300,000.00 with
interest from January 29, 1981 until fully paid; under promissory note
(Exhibit "B"), the sum of P40,000.00 with interest from November 27,
1980; under the promissory note (Exhibit "C"), the sum of P166,466.00
which interest from January 29, 1981; under the promissory note (Exhibit
"E"), the sum of P86,130.31 with interest from January 29, 1981; under the
promissory note (Exhibit "G"), the sum of P12,703.70 with interest from
November 27, 1980; under the promissory note (Exhibit "H"), the sum of
P281,875.91 with interest from January 29, 1981; and under the promissory
note (Exhibit "I"), the sum of P200,000.00 with interest from January 29,
1981.

From the above decision only defendant Fermin Canlas appealed to the then Intermediate Court
(now the Court Appeals). His contention was that inasmuch as he signed the promissory notes
in his capacity as officer of the defunct Worldwide Garment Manufacturing, Inc, he should not
be held personally liable for such authorized corporate acts that he performed. It is now the
contention of the petitioner Republic Planters Bank that having unconditionally signed the nine
(9) promissory notes with Shozo Yamaguchi, jointly and severally, defendant Fermin Canlas is
solidarity liable with Shozo Yamaguchi on each of the nine notes.
We find merit in this appeal.

From the records, these facts are established: Defendant Shozo Yamaguchi and private
respondent Fermin Canlas were President/Chief Operating Officer and Treasurer respectively,
of Worldwide Garment Manufacturing, Inc.. By virtue of Board Resolution No.1 dated August
1, 1979, defendant Shozo Yamaguchi and private respondent Fermin Canlas were authorized to
apply for credit facilities with the petitioner Republic Planters Bank in the forms of export
advances and letters of credit/trust receipts accommodations. Petitioner bank issued nine
promissory notes, marked as Exhibits A to I inclusive, each of which were uniformly worded in
the following manner:
___________, after date, for value received, I/we, jointly and severaIly
promise to pay to the ORDER of the REPUBLIC PLANTERS BANK, at
its office in Manila, Philippines, the sum of ___________ PESOS(....)
Philippine Currency...

On February 5, 1982, petitioner bank filed a complaint for the recovery of sums of money
covered among others, by the nine promissory notes with interest thereon, plus attorney's fees
and penalty charges. The complainant was originally brought against Worldwide Garment
Manufacturing, Inc. inter alia, but it was later amended to drop Worldwide Manufacturing, Inc.
as defendant and substitute Pinch Manufacturing Corporation it its place. Defendants Pinch
Manufacturing Corporation and Shozo Yamaguchi did not file an Amended Answer and failed
to appear at the scheduled pre-trial conference despite due notice. Only private respondent
Fermin Canlas filed an Amended Answer wherein he, denied having issued the promissory
notes in question since according to him, he was not an officer of Pinch Manufacturing
Corporation, but instead of Worldwide Garment Manufacturing, Inc., and that when he issued
said promissory notes in behalf of Worldwide Garment Manufacturing, Inc., the same were in
blank, the typewritten entries not appearing therein prior to the time he affixed his signature.

In the mind of this Court, the only issue material to the resolution of this appeal is whether
private respondent Fermin Canlas is solidarily liable with the other defendants, namely Pinch
On the right bottom margin of the promissory notes appeared the signatures of Shozo
Yamaguchi and Fermin Canlas above their printed names with the phrase "and (in) his personal Manufacturing Corporation and Shozo Yamaguchi, on the nine promissory notes.
capacity" typewritten below. At the bottom of the promissory notes appeared: "Please credit
proceeds of this note to:
We hold that private respondent Fermin Canlas is solidarily liable on each of the promissory
notes bearing his signature for the following reasons:
________ Savings Account ______XX Current Account
No. 1372-00257-6
of WORLDWIDE GARMENT MFG. CORP.
These entries were separated from the text of the notes with a bold line which ran horizontally
across the pages.
In the promissory notes marked as Exhibits C, D and F, the name Worldwide Garment
Manufacturing, Inc. was apparently rubber stamped above the signatures of defendant and
private respondent.
On December 20, 1982, Worldwide Garment Manufacturing, Inc. noted to change its corporate
name to Pinch Manufacturing Corporation.

The promissory motes are negotiable instruments and must be governed by the Negotiable
Instruments Law. 2
Under the Negotiable lnstruments Law, persons who write their names on the face of
promissory notes are makers and are liable as such. 3 By signing the notes, the maker promises
to pay to the order of the payee or any holder 4 according to the tenor thereof. 5 Based on the
above provisions of law, there is no denying that private respondent Fermin Canlas is one of the
co-makers of the promissory notes. As such, he cannot escape liability arising therefrom.
Where an instrument containing the words "I promise to pay" is signed by two or more persons,
they are deemed to be jointly and severally liable thereon. 6 An instrument which begins" with
"I" ,We" , or "Either of us" promise to, pay, when signed by two or more persons, makes them
solidarily liable. 7 The fact that the singular pronoun is used indicates that the promise is
individual as to each other; meaning that each of the co-signers is deemed to have made an
independent singular promise to pay the notes in full.

In the case at bar, the solidary liability of private respondent Fermin Canlas is made clearer and
certain, without reason for ambiguity, by the presence of the phrase "joint and several" as
describing the unconditional promise to pay to the order of Republic Planters Bank. A joint and
several note is one in which the makers bind themselves both jointly and individually to the
payee so that all may be sued together for its enforcement, or the creditor may select one or
more as the object of the suit. 8 A joint and several obligation in common law corresponds to a
civil law solidary obligation; that is, one of several debtors bound in such wise that each is
liable for the entire amount, and not merely for his proportionate share. 9 By making a joint and
several promise to pay to the order of Republic Planters Bank, private respondent Fermin
Canlas assumed the solidary liability of a debtor and the payee may choose to enforce the notes
against him alone or jointly with Yamaguchi and Pinch Manufacturing Corporation as solidary
debtors.

As a general rule, officers or directors under the old corporate name bear no personal liability
for acts done or contracts entered into by officers of the corporation, if duly authorized.
Inasmuch as such officers acted in their capacity as agent of the old corporation and the change
of name meant only the continuation of the old juridical entity, the corporation bearing the same
name is still bound by the acts of its agents if authorized by the Board. Under the Negotiable
Instruments Law, the liability of a person signing as an agent is specifically provided for as
follows:
Sec. 20. Liability of a person signing as agent and so forth. Where the
instrument contains or a person adds to his signature words indicating that
he signs for or on behalf of a principal , or in a representative capacity, he is
not liable on the instrument if he was duly authorized; but the mere addition
of words describing him as an agent, or as filling a representative character,
without disclosing his principal, does not exempt him from personal
liability.

As to whether the interpolation of the phrase "and (in) his personal capacity" below the
signatures of the makers in the notes will affect the liability of the makers, We do not find it
necessary to resolve and decide, because it is immaterial and will not affect to the liability of
private respondent Fermin Canlas as a joint and several debtor of the notes. With or without the Where the agent signs his name but nowhere in the instrument has he disclosed the fact that he
presence of said phrase, private respondent Fermin Canlas is primarily liable as a co-maker of
is acting in a representative capacity or the name of the third party for whom he might have
each of the notes and his liability is that of a solidary debtor.
acted as agent, the agent is personally liable to take holder of the instrument and cannot be
permitted to prove that he was merely acting as agent of another and parol or extrinsic evidence
Finally, the respondent Court made a grave error in holding that an amendment in a
is not admissible to avoid the agent's personal liability. 13
corporation's Articles of Incorporation effecting a change of corporate name, in this case from
Worldwide Garment manufacturing Inc to Pinch Manufacturing Corporation extinguished the
On the private respondent's contention that the promissory notes were delivered to him in blank
personality of the original corporation.
for his signature, we rule otherwise. A careful examination of the notes in question shows that
The corporation, upon such change in its name, is in no sense a new corporation, nor the
successor of the original corporation. It is the same corporation with a different name, and its
character is in no respect changed.10
A change in the corporate name does not make a new corporation, and whether effected by
special act or under a general law, has no affect on the identity of the corporation, or on its
property, rights, or liabilities. 11
The corporation continues, as before, responsible in its new name for all debts or other
liabilities which it had previously contracted or incurred. 12

they are the stereotype printed form of promissory notes generally used by commercial banking
institutions to be signed by their clients in obtaining loans. Such printed notes are incomplete
because there are blank spaces to be filled up on material particulars such as payee's name,
amount of the loan, rate of interest, date of issue and the maturity date. The terms and
conditions of the loan are printed on the note for the borrower-debtor 's perusal. An incomplete
instrument which has been delivered to the borrower for his signature is governed by Section 14
of the Negotiable Instruments Law which provides, in so far as relevant to this case, thus:
Sec. 14. Blanks: when may be filled. Where the instrument is wanting in
any material particular, the person in possesion thereof has a prima
facie authority to complete it by filling up the blanks therein. ... In order,
however, that any such instrument when completed may be enforced
against any person who became a party thereto prior to its completion, it

must be filled up strictly in accordance with the authority given and within
a reasonable time...
Proof that the notes were signed in blank was only the self-serving testimony of private
respondent Fermin Canlas, as determined by the trial court, so that the trial court ''doubts the
defendant (Canlas) signed in blank the promissory notes". We chose to believe the bank's
testimony that the notes were filled up before they were given to private respondent Fermin
Canlas and defendant Shozo Yamaguchi for their signatures as joint and several promissors. For
signing the notes above their typewritten names, they bound themselves as unconditional
makers. We take judicial notice of the customary procedure of commercial banks of requiring
their clientele to sign promissory notes prepared by the banks in printed form with blank spaces
already filled up as per agreed terms of the loan, leaving the borrowers-debtors to do nothing
but read the terms and conditions therein printed and to sign as makers or co-makers. When the
notes were given to private respondent Fermin Canlas for his signature, the notes were
complete in the sense that the spaces for the material particular had been filled up by the bank
as per agreement. The notes were not incomplete instruments; neither were they given to private
respondent Fermin Canlas in blank as he claims. Thus, Section 14 of the NegotiabIe
Instruments Law is not applicable.
The ruling in case of Reformina vs. Tomol relied upon by the appellate court in reducing the
interest rate on the promissory notes from 16% to 12% per annum does not squarely apply to
the instant petition. In the abovecited case, the rate of 12% was applied to forebearances of
money, goods or credit and court judgemets thereon, only in the absence of any stipulation
between the parties.
In the case at bar however , it was found by the trial court that the rate of interest is 9% per
annum, which interest rate the plaintiff may at any time without notice, raise within the limits
allowed law. And so, as of February 16, 1984 , the plaintiff had fixed the interest at 16% per
annum.
This Court has held that the rates under the Usury Law, as amended by Presidential Decree No.
116, are applicable only to interests by way of compensation for the use or forebearance of
money. Article 2209 of the Civil Code, on the other hand, governs interests by way of
damages. 15 This fine distinction was not taken into consideration by the appellate court, which
instead made a general statement that the interest rate be at 12% per annum.

Inasmuch as this Court had declared that increases in interest rates are not subject to any ceiling
prescribed by the Usury Law, the appellate court erred in limiting the interest rates at 12% per
annum. Central Bank Circular No. 905, Series of 1982 removed the Usury Law ceiling on
interest rates. 16
In the 1ight of the foregoing analysis and under the plain language of the statute and
jurisprudence on the matter, the decision of the respondent: Court of Appeals absolving private
respondent Fermin Canlas is REVERSED and SET ASIDE. Judgement is hereby rendered
declaring private respondent Fermin Canlas jointly and severally liable on all the nine
promissory notes with the following sums and at 16% interest per annum from the dates
indicated, to wit:
Under the promissory note marked as exhibit A, the sum of P300,000.00 with interest from
January 29, 1981 until fully paid; under promissory note marked as Exhibit B, the sum of
P40,000.00 with interest from November 27, 1980: under the promissory note denominated as
Exhibit C, the amount of P166,466.00 with interest from January 29, 1981; under the
promissory note denominated as Exhibit D, the amount of P367,000.00 with interest from
January 29, 1981 until fully paid; under the promissory note marked as Exhibit E, the amount of
P86,130.31 with interest from January 29, 1981; under the promissory note marked as Exhibit
F, the sum of P140,000.00 with interest from November 27, 1980 until fully paid; under the
promissory note marked as Exhibit G, the amount of P12,703.70 with interest from November
27, 1980; the promissory note marked as Exhibit H, the sum of P281,875.91 with interest from
January 29, 1981; and the promissory note marked as Exhibit I, the sum of P200,000.00 with
interest on January 29, 1981.
The liabilities of defendants Pinch Manufacturing Corporation (formerly Worldwide Garment
Manufacturing, Inc.) and Shozo Yamaguchi, for not having appealed from the decision of the
trial court, shall be adjudged in accordance with the judgment rendered by the Court a quo.
With respect to attorney's fees, and penalty and service charges, the private respondent Fermin
Canlas is hereby held jointly and solidarity liable with defendants for the amounts found, by the
Court a quo. With costs against private respondent.
SO ORDERED.
FACTS:

Yamaguchi and Canlas are officers of the Worldwide Garment

Manufacturing, which later changed its name to Pinch Manufacturing. They were
authorized to apply for credit facilities with the petitioner bank. The two officers signed
the promissory notes issued to secure the payment of the obligations. Later, the
bank instituted an action for collection of money, impleading also the two
officers. The trial court held the two officers personally liable also.

HELD:
Canlass is solidarily liable on each of the promissory notes to which his
signature appears.

The promissory notes in question are negotiable instruments

and thus, governed by the Negotiable Instruments Law.

Under the Negotiable Instruments Law, persons who write their names in the
instrument are makers are liable as such. By signing the note, the maker promises to
pay to the order of the payee or any holder the tenor of the obligation. Based on the
above provisions of the law, there is no denying that Canlass is one of the co-makers of
the promissory note.

G.R. No. 93397 March 3, 1997

TRADERS ROYAL BANK, petitioner,
vs.
COURT OF APPEALS, FILRITERS GUARANTY ASSURANCE CORPORATION and
CENTRAL BANK of the PHILIPPINES, respondents.

TORRES, JR., J.:

Assailed in this Petition for Review on Certiorari is the Decision of the respondent Court of
Appeals dated January 29, 1990, 1 affirming the nullity of the transfer of Central Bank
Certificate of Indebtedness (CBCI) No. D891, 2 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 3 dated February 4, 1981, and a Detached
Assignment 4 dated April 27, 1981.
Docketed as Civil Case No. 83-17966 in the Regional Trial Court of Manila, Branch 32, the
action was originally filed as a Petition for Mandamus 5 under Rule 65 of the Rules of 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 that:
3. On November 27, 1979, 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) and having an aggregate value of PESOS:
THREE MILLION FIVE HUNDRED THOUSAND (P3,500,000.00);
4. The aforesaid Detached Assignment (Annex "A") contains an express
authorization executed by the transferor intended to complete the
assignment through the registration of the transfer in the name of

PhilFinance, which authorization is specifically phrased as follows:

'(Filriters) hereby irrevocably authorized the said issuer (Central Bank) to
transfer the said bond/certificates on the books of its fiscal agent;
5. On February 4, 1981, petitioner entered into a Repurchase Agreement
with PhilFinance . . ., whereby, for and in consideration of the sum of
PESOS: FIVE HUNDRED THOUSAND (P500,000.00), PhilFinance sold,
transferred and delivered to petitioner CBCI 4-year, 8th series, Serial No.
D891 with a face value of P500,000.00 . . ., which CBCI was among those
previously acquired by PhilFinance from Filriters as averred in paragraph 3
of the Petition;
6. Pursuant to the aforesaid Repurchase Agreement (Annex "B"),
Philfinance agreed to repurchase CBCI Serial No. D891 (Annex "C"), at the
stipulated price of PESOS: FIVE HUNDRED NINETEEN THOUSAND
THREE HUNDRED SIXTY-ONE & 11/100 (P519,361.11) on April 27,
1981;
7. PhilFinance failed to repurchase the CBCI on the agreed date of maturity,
April 27, 1981, when the checks it issued in favor of petitioner were
dishonored for insufficient funds;
8. Owing to the default of PhilFinance, it executed a Detached Assignment
in favor of the Petitioner to enable the latter to have its title completed and
registered in the books of the respondent. And by means of said
Detachment, Philfinance transferred and assigned all, its rights and title in
the said CBCI (Annex "C") to petitioner and, furthermore, it did thereby
"irrevocably authorize the said issuer (respondent herein) to transfer the
said bond/certificate on the books of its fiscal agent." . . .
9. Petitioner presented the CBCI (Annex "C"), together with the two (2)
aforementioned Detached Assignments (Annexes "B" and "D"), to the
Securities Servicing Department of the respondent, and requested the latter
to effect the transfer of the CBCI on its books and to issue a new certificate
in the name of petitioner as absolute owner thereof;

10. Respondent failed and refused to register the transfer as requested, and
continues to do so notwithstanding petitioner's valid and just title over the
same and despite repeated demands in writing, the latest of which is hereto
attached as Annex "E" and made an integral part hereof;
11. The express provisions governing the transfer of the CBCI were
substantially complied with the petitioner's request for registration, to wit:
"No transfer thereof shall be valid unless made at said
office (where the Certificate has been registered) by the
registered owner hereof, in person or by his attorney
duly authorized in writing, and similarly noted hereon,
and upon payment of a nominal transfer fee which may
be required, a new Certificate shall be issued to the
transferee of the registered holder thereof."
and, without a doubt, the Detached Assignments presented to respondent
were sufficient authorizations in writing executed by the registered owner,
Filriters, and its transferee, PhilFinance, as required by the above-quoted
provision;
12. Upon such compliance with the aforesaid requirements, the ministerial
duties of registering a transfer of ownership over the CBCI and issuing a
new certificate to the transferee devolves upon the respondent;
Upon these assertions, TRB prayed for the registration by the Central Bank of the subject CBCI
in its name.
On December 4, 1984, the Regional Trial Court the case took cognizance of the defendant
Central Bank of the Philippines' Motion for Admission of Amended Answer with Counter
Claim for Interpleader 6 thereby calling to fore the respondent Filriters Guaranty Assurance
Corporation (Filriters), the registered owner of the subject CBCI as respondent.
For its part, Filriters interjected as Special Defenses the following:
11. Respondent is the registered owner of CBCI No. 891;

12. The CBCI constitutes part of the reserve investment against liabilities
required of respondent as an insurance company under the Insurance Code;
13. Without any consideration or benefit whatsoever to Filriters, in violation
of law and the trust fund doctrine and to the prejudice of policyholders and
to all who have present or future claim against policies issued by Filriters,
Alfredo Banaria, then Senior Vice-President-Treasury of Filriters, without
any board resolution, knowledge or consent of the board of directors of
Filriters, and without any clearance or authorization from the Insurance
Commissioner, executed a detached assignment purportedly assigning
CBCI No. 891 to Philfinance;
xxx xxx xxx
14. Subsequently, Alberto Fabella, Senior Vice-President-Comptroller are Pilar
Jacobe, Vice-President-Treasury of Filriters (both of whom were holding the same
positions in Philfinance), without any consideration or benefit redounding to Filriters
and to the grave prejudice of Filriters, its policy holders and all who have present or
future claims against its policies, executed similar detached assignment forms
transferring the CBCI to plaintiff;
xxx xxx xxx
15. The detached assignment is patently void and inoperative because the assignment
is without the knowledge and consent of directors of Filriters, and not duly authorized
in writing by the Board, as requiring by Article V, Section 3 of CB Circular No. 769;
16. The assignment of the CBCI to Philfinance is a personal act of Alfredo Banaria
and not the corporate act of Filriters and such null and void;
a) The assignment was executed without consideration and for that reason, the
assignment is void from the beginning (Article 1409, Civil Code);
b) The assignment was executed without any knowledge and consent of the board of
directors of Filriters;

c) The CBCI constitutes reserve investment of Filriters against liabilities, which is a

requirement under the Insurance Code for its existence as an insurance company and
the pursuit of its business operations. The assignment of the CBCI is illegal act in the
sense of malum in se or malum prohibitum, for anyone to make, either as corporate or
personal act;
d) The transfer of dimunition of reserve investments of Filriters is expressly
prohibited by law, is immoral and against public policy;
e) The assignment of the CBCI has resulted in the capital impairment and in the
solvency deficiency of Filriters (and has in fact helped in placing Filriters under
conservatorship), an inevitable result known to the officer who executed assignment.
17. Plaintiff had acted in bad faith and with knowledge of the illegality and invalidity
of the assignment.
a) The CBCI No. 891 is not a negotiable instrument and as a certificate of
indebtedness is not payable to bearer but is a registered in the name of Filriters;
b) The provision on transfer of the CBCIs provides that the Central Bank shall
treat the registered owner as the absolute owner and that the value of the registered
certificates shall be payable only to the registered owner; a sufficient notice to
plaintiff that the assignments do not give them the registered owner's right as absolute
owner of the CBCI's;
c) CB Circular 769, Series of 1980 (Rules and Regulations Governing CBCIs)
provides that the registered certificates are payable only to the registered owner
(Article II, Section 1).
18. Plaintiff knew full well that the assignment by Philfinance of CBCI No. 891 by
Filriters is not a regular transaction made in the usual of ordinary course of business;

b) The assignment by Filriters of the CBCI is clearly not a transaction in the usual or
regular course of its business;
c) The CBCI involved substantial amount and its assignment clearly constitutes
disposition of "all or substantially all" of the assets of Filriters, which requires the
affirmative action of the stockholders (Section 40, Corporation [sic] Code. 7
In its Decision 8 dated April 29, 1988, the Regional Trial Court of Manila, Branch XXXIII
found the assignment of CBCI No. D891 in favor of Philfinance, and the subsequent
assignment of the same CBCI by Philfinance in favor of Traders Royal Bank null and void and
of no force and effect. The dispositive portion of the decision reads:
ACCORDINGLY, judgment is hereby rendered in favor of the respondent
Filriters Guaranty Assurance Corporation and against the plaintiff Traders
Royal Bank:
(a) Declaring the assignment of CBCI No. 891 in favor of PhilFinance, and
the subsequent assignment of CBCI by PhilFinance in favor of the plaintiff
Traders Royal Bank as null and void and of no force and effect;
(b) Ordering the respondent Central Bank of the Philippines to disregard the
said assignment and to pay the value of the proceeds of the CBCI No. D891
to the Filriters Guaranty Assurance Corporation;
(c) Ordering the plaintiff Traders Royal Bank to pay respondent Filriters
Guaranty Assurance Corp. The sum of P10,000 as attorney's fees; and
(d) to pay the costs.
SO ORDERED. 9

The petitioner assailed the decision of the trial court in the Court of Appeals 10, but their appeals
a) The CBCI constitutes part of the reserve investments of Filriters against liabilities likewise failed. The findings of the fact of the said court are hereby reproduced:
requires by the Insurance Code and its assignment or transfer is expressly prohibited
by law. There was no attempt to get any clearance or authorization from the Insurance
The records reveal that defendant Filriters is the registered owner of CBCI
Commissioner;
No. D891. Under a deed of assignment dated November 27, 1971, Filriters

transferred CBCI No. D891 to Philippine Underwriters Finance

Corporation (Philfinance). Subsequently, Philfinance transferred CBCI No.
D891, which was still registered in the name of Filriters, to appellant
Traders Royal Bank (TRB). The transfer was made under a repurchase
agreement dated February 4, 1981, granting Philfinance the right to
repurchase the instrument on or before April 27, 1981. When Philfinance
failed to buy back the note on maturity date, it executed a deed of
assignment, dated April 27, 1981, conveying to appellant TRB all its right
and the title to CBCI No. D891.

1980, better known as the "Rules and Regulations Governing Central Bank Certificates of
Indebtedness", which provided that any "assignment of registered certificates shall not be valid
unless made . . . by the registered owner thereof in person or by his representative duly
authorized in writing."

Armed with the deed of assignment, TRB then sought the transfer and
registration of CBCI No. D891 in its name before the Security and
Servicing Department of the Central Bank (CB). Central Bank, however,
refused to effect the transfer and registration in view of an adverse claim
filed by defendant Filriters.

Said the Court:

Left with no other recourse, TRB filed a special civil action

for mandamus against the Central Bank in the Regional Trial Court of
Manila. The suit, however, was subsequently treated by the lower court as a
case of interpleader when CB prayed in its amended answer that Filriters be
impleaded as a respondent and the court adjudge which of them is entitled
to the ownership of CBCI No. D891. Failing to get a favorable judgment.
TRB now comes to this Court on appeal. 11
In the appellate court, petitioner argued that the subject CBCI was a negotiable instrument, and
having acquired the said certificate from Philfinance as a holder in due course, its possession of
the same is thus free fro any defect of title of prior parties and from any defense available to
prior parties among themselves, and it may thus, enforce payment of the instrument for the full
amount thereof against all parties liable thereon. 12
In ignoring said argument, the appellate court that the CBCI is not a negotiable instrument,
since the instrument clearly stated that it was payable to Filriters, the registered owner, whose
name was inscribed thereon, and that the certificate lacked the words of negotiability which
serve as an expression of consent that the instrument may be transferred by negotiation.
Obviously, the assignment of the certificate from Filriters to Philfinance was fictitious, having
made without consideration, and did not conform to Central Bank Circular No. 769, series of

Petitioner's claimed interest has no basis, since it was derived from Philfinance whose interest
was inexistent, having acquired the certificate through simulation. What happened was
Philfinance merely borrowed CBCI No. D891 from Filriters, a sister corporation, to guarantee
its financing operations.

In the case at bar, Alfredo O. Banaria, who signed the deed of assignment
purportedly for and on behalf of Filriters, did not have the necessary written
authorization from the Board of Directors of Filriters to act for the latter.
For lack of such authority, the assignment did not therefore bind Filriters
and violated as the same time Central Bank Circular No. 769 which has the
force and effect of a law, resulting in the nullity of the transfer (People v.
Que Po Lay, 94 Phil. 640; 3M Philippines, Inc. vs. Commissioner of
Internal Revenue, 165 SCRA 778).
In sum, Philfinance acquired no title or rights under CBCI No. D891 which
it could assign or transfer to Traders Royal Bank and which the latter can
register with the Central Bank.
WHEREFORE, the judgment appealed from is AFFIRMED, with costs
against plaintiff-appellant.
SO ORDERED. 13
Petitioner's present position rests solely on the argument that Philfinance owns 90% of Filriters
equity and the two corporations have identical corporate officers, thus demanding the
application of the doctrine or piercing the veil of corporate fiction, as to give validity to the
transfer of the CBCI from registered owner to petitioner TRB. 14 This renders the payment by
TRB to Philfinance of CBCI, as actual payment to Filriters. Thus, there is no merit to the lower

court's ruling that the transfer of the CBCI from Filriters to Philfinance was null and void for
lack of consideration.
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).
The pertinent portions of the subject CBCI read:

The language of negotiability which characterize a negotiable paper as a credit instrument is its
freedom to circulate as a substitute for money. Hence, freedom of negotiability is the touchtone
relating to the protection of holders in due course, and the freedom of negotiability is the
foundation for the protection which the law throws around a holder in due course (11 Am. Jur.
2d, 32). This freedom in negotiability is totally absent in a certificate indebtedness as it merely
to pay a sum of money to a specified person or entity for a period of time.
As held in Caltex (Philippines), Inc. v. Court of Appeals, 16:

xxx xxx xxx

The Central Bank of the Philippines (the Bank) for value received, hereby
promises to pay bearer, of if this Certificate of indebtedness be registered,
to FILRITERS GUARANTY ASSURANCE CORPORATION, the
registered owner hereof, the principal sum of FIVE HUNDRED
THOUSAND PESOS.
xxx xxx xxx
Properly understood, a certificate of indebtedness pertains to certificates for the creation and
maintenance of a permanent improvement revolving fund, is similar to a "bond," (82 Minn.
202). Being equivalent to a bond, it is properly understood as acknowledgment of an obligation
to pay a fixed sum of money. It is usually used for the purpose of long term loans.
The appellate court ruled that the subject CBCI is not a negotiable instrument, stating that:
As worded, the instrument provides a promise "to pay Filriters Guaranty
Assurance Corporation, the registered owner hereof." Very clearly, the
instrument is payable only to Filriters, the registered owner, whose name is
inscribed thereon. It lacks the words of negotiability which should have
served as an expression of consent that the instrument may be transferred
by negotiation. 15
A reading of the subject CBCI indicates that the same is payable to FILRITERS GUARANTY
ASSURANCE CORPORATION, and to no one else, thus, discounting the petitioner's
submission that the same is a negotiable instrument, and that it is a holder in due course of the
certificate.

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. The pertinent question then is, was the transfer
of the CBCI from Filriters to Philfinance and subsequently from Philfinance to TRB, in accord
with existing law, so as to entitle TRB to have the CBCI registered in its name with the Central
Bank?
The following are the appellate court's pronouncements on the matter:
Clearly shown in the record is the fact that Philfinance's title over CBCI No. D891 is
defective since it acquired the instrument from Filriters fictitiously. Although the deed
of assignment stated that the transfer was for "value received", there was really no
consideration involved. What happened was Philfinance merely borrowed CBCI No.
D891 from Filriters, a sister corporation. Thus, for lack of any consideration, the
assignment made is a complete nullity.

What is more, We find that the transfer made by Filriters to Philfinance did not
conform to Central Bank Circular No. 769, series of 1980, otherwise known as the
"Rules and Regulations Governing Central Bank Certificates of Indebtedness", under
which the note was issued. Published in the Official Gazette on November 19, 1980,
Section 3 thereof provides that any assignment of registered certificates shall not be
valid unless made . . . by the registered owner thereof in person or by his
representative duly authorized in writing.
In the case at bar, Alfredo O. Banaria, who signed the deed of assignment purportedly
for and on behalf of Filriters, did not have the necessary written authorization from
the Board of Directors of Filriters to act for the latter. For lack of such authority, the
assignment did not therefore bind Filriters and violated at the same time Central Bank
Circular No. 769 which has the force and effect of a law, resulting in the nullity of the
transfer (People vs. Que Po Lay, 94 Phil. 640; 3M Philippines, Inc. vs. Commissioner
of Internal Revenue, 165 SCRA 778).

We respectfully submit that, considering that the Court of Appeals has held
that the CBCI was merely borrowed by Philfinance from Filriters, a sister
corporation, to guarantee its (Philfinance's) financing operations, if it were
to be consistent therewith, on the issued raised by TRB that there was a
piercing a veil of corporate entity, the Court of Appeals should have ruled
that such veil of corporate entity was, in fact, pierced, and the payment by
TRB to Philfinance should be construed as payment to Filriters. 17
We disagree with Petitioner.
Petitioner cannot put up the excuse of piercing the veil of corporate entity, as this merely an
equitable remedy, and may be awarded only in cases when the corporate fiction is used to
defeat public convenience, justify wrong, protect fraud or defend crime or where a corporation
is a mere alter ego or business conduit of a person. 18

Peiercing the veil of corporate entity requires the court to see through the protective shroud
which exempts its stockholders from liabilities that ordinarily, they could be subject to, or
distinguished one corporation from a seemingly separate one, were it not for the existing
corporate fiction. But to do this, the court must be sure that the corporate fiction was misused,
to such an extent that injustice, fraud, or crime was committed upon another, disregarding, thus,
Petitioner now argues that the transfer of the subject CBCI to TRB must upheld, as the
his, her, or its rights. It is the protection of the interests of innocent third persons dealing with
respondent Filriters and Philfinance, though separate corporate entities on paper, have used their the corporate entity which the law aims to protect by this doctrine.
corporate fiction to defraud TRB into purchasing the subject CBCI, which purchase now is
refused registration by the Central Bank.
The corporate separateness between Filriters and Philfinance remains, despite the petitioners
In sum, Philfinance acquired no title or rights under CBCI No. D891 which it could
assign or transfer to Traders Royal Bank and which the latter can register with the
Central Bank

insistence on the contrary. For one, other than the allegation that Filriters is 90% owned by
Philfinance, and the identity of one shall be maintained as to the other, there is nothing else
which could lead the court under circumstance to disregard their corporate personalities.

Says the petitioner;

Since Philfinance own about 90% of Filriters and the two companies have
the same corporate officers, if the principle of piercing the veil of corporate
entity were to be applied in this case, then TRB's payment to Philfinance for
the CBCI purchased by it could just as well be considered a payment to
Filriters, the registered owner of the CBCI as to bar the latter from
claiming, as it has, that it never received any payment for that CBCI sold
and that said CBCI was sold without its authority.
xxx xxx xxx

Though it is true that when valid reasons exist, the legal fiction that a corporation is an entity
with a juridical personality separate from its stockholders and from other corporations may be
disregarded, 19 in the absence of such grounds, the general rule must upheld. The fact that
Filfinance owns majority shares in Filriters is not by itself a ground to disregard the
independent corporate status of Filriters. In Liddel & Co., Inc. vs. Collector of Internal
Revenue, 20 the mere ownership by a single stockholder or by another corporation of all or
nearly all of the capital stock of a corporation is not of itself a sufficient reason for disregarding
the fiction of separate corporate personalities.

In the case at bar, there is sufficient showing that the petitioner was not defrauded at all when it
acquired the subject certificate of indebtedness from Philfinance.

Sec. 3. Assignment of Registered Certificates. Assignment of registered

certificates shall not be valid unless made at the office where the same have
been issued and registered or at the Securities Servicing Department,
Central Bank of the Philippines, and by the registered owner thereof, in
person or by his representative, duly authorized in writing. For this purpose,
the transferee may be designated as the representative of the registered
owner.

On its face the subject certificates states that it is registered in the name of Filriters. This should
have put the petitioner on notice, and prompted it to inquire from Filriters as to Philfinance's
title over the same or its authority to assign the certificate. As it is, there is no showing to the
effect that petitioner had any dealings whatsoever with Filriters, nor did it make inquiries as to
the ownership of the certificate.

Petitioner, being a commercial bank, cannot feign ignorance of Central Bank Circular 769, and
its requirements. An entity which deals with corporate agents within circumstances showing
The terms of the CBCI No. D891 contain a provision on its TRANSFER. Thus:
that the agents are acting in excess of corporate authority, may not hold the corporation
22
TRANSFER. This Certificate shall pass by delivery unless it is registered in liable. This is only fair, as everyone must, in the exercise of his rights and in the performance
of his duties, act with justice, give everyone his due, and observe honesty and good faith. 23
the owner's name at any office of the Bank or any agency duly authorized
by the Bank, and such registration is noted hereon. After such registration
The transfer made by Filriters to Philfinance did not conform to the said. Central Bank Circular,
no transfer thereof shall be valid unless made at said office (where the
Certificates has been registered) by the registered owner hereof, in person, which for all intents, is considered part of the law. As found by the courts a quo, Alfredo O.
Banaria, who had signed the deed of assignment from Filriters to Philfinance, purportedly for
or by his attorney, duly authorized in writing and similarly noted hereon
and upon payment of a nominal transfer fee which may be required, a new and in favor of Filriters, did not have the necessary written authorization from the Board of
Certificate shall be issued to the transferee of the registered owner thereof. Directors of Filriters to act for the latter. As it is, the sale from Filriters to Philfinance was
fictitious, and therefore void and inexistent, as there was no consideration for the same. This is
The bank or any agency duly authorized by the Bank may deem and treat
fatal to the petitioner's cause, for then, Philfinance had no title over the subject certificate to
the bearer of this Certificate, or if this Certificate is registered as herein
authorized, the person in whose name the same is registered as the absolute convey the Traders Royal Bank. Nemo potest nisi quod de jure potest no man can do
owner of this Certificate, for the purpose of receiving payment hereof, or on anything except what he can do lawfully.
account hereof, and for all other purpose whether or not this Certificate
shall be overdue.
Concededly, the subject CBCI was acquired by Filriters to form part of its legal and capital
reserves, which are required by law 24 to be maintained at a mandated level. This was pointed
out by Elias Garcia, Manager-in-Charge of respondent Filriters, in his testimony given before
This is notice to petitioner to secure from Filriters a written authorization for the transfer or to
the court on May 30, 1986.
require Philfinance to submit such an authorization from Filriters.
Petitioner knew that Philfinance is not registered owner of the CBCI No. D891. The fact that a
non-owner was disposing of the registered CBCI owned by another entity was a good reason
for petitioner to verify of inquire as to the title Philfinance to dispose to the CBCI.

Q Do you know this Central Bank Certificate of Indebtedness, in short, CBCI No.
D891 in the face value of P5000,000.00 subject of this case?
A Yes, sir.

Moreover, CBCI No. D891 is governed by CB Circular No. 769, series of 1990 21, known as the
Rules and Regulations Governing Central Bank Certificates of Indebtedness, Section 3, Article
V of which provides that:

Q Why do you know this?

A Well, this was CBCI of the company sought to be examined by the Insurance
Commission sometime in early 1981 and this CBCI No. 891 was among the CBCI's
that were found to be missing.

entered into a Repurchase agreement, on which petitioner bought the CBCI from
Philfinance. The latter agreed to repurchase the CBCI but failed to do so. When the petitioner
tried to have it registered in its name in the CB, the latter didn't want to recognize the transfer.

Q Let me take you back further before 1981. Did you have the knowledge of this CBCI HELD:
No. 891 before 1981?
A Yes, sir. This CBCI is an investment of Filriters required by the Insurance
Commission as legal reserve of the company.

The CBCI is not a negotiable instrument. The instrument provides for a promise to pay
the registered owner Filriters. Very clearly, the instrument was only payable to Filriters. It
lacked the words of negotiability which should have served as an expression of the
consent that the instrument may be transferred by negotiation.

Q Legal reserve for the purpose of what?

A Well, you see, the Insurance companies are required to put up legal reserves under
Section 213 of the Insurance Code equivalent to 40 percent of the premiums receipt
and further, the Insurance Commission requires this reserve to be invested preferably
in government securities or government binds. This is how this CBCI came to be
purchased by the company.

The language of negotiability which characterize a negotiable paper as a credit

instrument is its freedom to circulate as a substitute for money. Hence, freedom of
negotiability is the touchstone relating to the protection of holders in due course, and the
freedom of negotiability is the foundation for the protection, which the law throws around
a holder in due course. This freedom in negotiability is totally absent in a certificate of
indebtedness as it merely acknowledges to pay a sum of money to a specified person or
entity for a period of time.

It cannot, therefore, be taken out of the said funds, without violating the requirements of the
law. Thus, the anauthorized use or distribution of the same by a corporate officer of Filriters
cannot bind the said corporation, not without the approval of its Board of Directors, and the
maintenance of the required reserve fund.
Consequently, the title of Filriters over the subject certificate of indebtedness must be upheld
over the claimed interest of Traders Royal Bank.

G.R. No. L-35767 June 18, 1976

RAYMUNDO A. CRYSTAL, petitioner,

ACCORDINGLY, the petition is DISMISSED and the decision appealed from dated January
29, 1990 is hereby AFFIRMED.

vs.

SO ORDERED.

COURT OF APPEALS and PELAGIA OCANG, PACITA, TEODULO, FELICISIMO,

PABLO, LYDIA, DIOSCORA and RODRIGO, all surnamed DE GRACIA, respondents.

FACTS:
RESOLUTION
Filriters through a Detached Agreement transferred ownership to Philfinance a Central Bank
Certificate of Indebtedness. It was only through one of its officers by which the CBCI was
conveyed without authorization from the company. Petitioner and Philfinance later

BARREDO, J.:

redemption as null and void because the cheek he used to pay the redemption price had been
dishonored for lack of sufficient funds. In other words both petitioner and Ocang, predicating
their respective claims to rightful possession on the same sale on execution in the same case,
Motion for reconsideration of the decision of this Court in this case promulgated on February
Civil Case No. R-l666, had alternately taken the law in their hands to obtain possession of the
25, 1975 affirming the decision of the Court of Appeals in favor of private respondents which
lands in question in disregard of the toilet for the complete satisfaction of that significant of the
held that petitioner's redemption of the property acquired by said respondents in an execution
court in that case. In the light of these peculiar circumstances, it does appear to be more that
sale pursuant to a final judgment of the trial court in Civil Case No. R-1666, Court of First
since it is the Case in that Civil Case No. R-1666, that rendered the judgment and subsequently
Instance of Cebu, was invalid inasmuch as the check which petitioner had used in paying the
redemption price had been either dishonored or had become state, hence its value was never this ordered the execution from which the redemption was made, it should to the people to settle the
whole controversy among all the interested statistics including even the judgment leftors 'the
upholding in the process the jurisdiction of the trial court to rule on the question of validity of
heirs of Nicolas Rafols themselves, who, according to the records, have claim of that own
the redemption in question notwithstanding that by order of that same court, said matter had
been made the subject of a separate suit, Civil as No. 62-T also of the Court of First Instance of relative to the same redemption, which might just as well be inquired into in said case, rather
than in Case No. 62-T in which they are not parties. Otherwise, stated, in issuing the impugned
Cebu, filed on August 9, 1960.
writ of possession, the court took the bull by the horns, so to speak, thereby overturning its own
In his motion for reconsideration, petitioner insists that it was an act in excess of jurisdiction on previous stand on the matter announced in its orders of March 24 and June 4, 1960
the part of the trial court in R-1666, to issue on May 31, 1971 the writ of possession sought by aforementioned. Consequently, We overrule the argument of jurisdiction or even abuse of
discretion raised by petitioner and reiterate what We have said in regard thereto ni Our decision.
private respondents, thru Pelagia Ocang, in her motion of August 15, 1970, considering that
court had previously pointedly observed in its order of March 24, 1960 that "the question as to
This is not to say that the procedure followed by Ocang and sactioned by the trial court of
whether or not the redemption allegedly made by Mr. Crystal by paying the amount to Mrs.
Pelagia Ocang without using the said P11,200 deposited with the sheriff is legal and effective" resorting to the issuance of a writ of possession is not open to question, since a writ of
possession is not always available in all controversies concerning possession of real estate. But
has to be decided in "another proper case" and, furthermore, in its order of June 4, 1960 in the
We see no need to resolve that point here. More importantly, what impresses Us in the motion
same case, the same court had more definitely ruled that "the question of ownership of Mr.
for reconsideration is the possible injustice that might result from our unqualified reliance in
Raymundo Crystal, the redemptioner, is not a proper matter to be decided in this case but in
another case where the legality or validity of the alleged deed of redemption executed in favor our decision on the finding of the Court of Appeals that the check for P11,200 paid by petitioner
for the redemption in dispute had been dishonored, in the face of the other finding in the same
of Mr. Crystal will be amply raised and threshed out" and, accordingly, in attention to such
decision of the Court of Appeals indicating that instead of having been dishonored, the said
observations and ruling, petitioner did file Civil Case No. 62-T, which is still pending trial.
check had become state, albeit it was being replaced with new ones from time to time. Surely,
While, as already explained in Our decision, such pose of petitioner has its merits, We deem it for a check to the dishonored upon presentment on the one hand, and to be state for not being
presented at all in time, on the other, are incompatible developments that naturally have variant
in advisable to this point to modify Our ruling that there is really no issuance of jurisdiction
legal consequences. Thus, if needed the check in question had been dishonored, then there can
involved here and that it is preferable, under the peculiar circumstances obtaining in this
be no doubt that petitioner's redemption was null and void. On the oher hand, if it had only
particular case, that the root of the controversy between the parties be inquired into and
become stale, then it becomes imperative that the circumstances that caused its non(determined in the incident already taken cognizance of by the trial court in Civil Case No. Rpresentment be determined, for if this was not due to the fault of the petitioner, then it would be
1666 regarding tile light of possession over tile alert in dispute. In this connection, it is to be
noted that even after he had filed Civil Case No. 62-T, in of hat he must have considered as his unfair to deprive him of the rights he had acquired as redemptioner, particularly, the value of the
check has otherwise been received or realized by the party concerned. From the motion for
right a redemption i of the property sold in execution a judgment in Civil Case No. R-1666,
reconsideration and its annexes, We gather that petitioner has ready evidence showing that
petitioner regained possession of the four (4) parcels of land in question without the torture of
when Pelagia Ocang secured the writ of possession in question, she had already been paid the
the court, taking the same from Pelagia Ocang who his taken it from him also extrajudicially
full amount of the check in dispute. What is more, there are a number of circumstances pointed
that she had legally acquired the same precisely in the same execution and that petitioner

out in said motion, apparaently supported by corresponding evidence, tending to show that a
compromise had already been agreed upon by the parties, although not yet approved by the
court, or, at least, that Ocang has made admissions which indicate that the issue regarding the
supposed dishonorign or becomeing state of the repeatedly mentioned check is no longer of any
legal significance and, for that matter, the observations we made in our decision in regard to the
duties of the sheriff in the premises have been rendered academic.

Needless to say, the Supreme Court should not allow any of its decision to become final when it
is properly made to appear in a motion for reconsideration based on relevant facts and
circumstances not previously brought to its attention, although demonstrable from the records,
that even if the technical consideration on which it is based is well taken, substantial jusitce
might be sacrificed, if further proceedings are not ordered to be held to verify undeniable facts
which might have escaped the eyes of the Court of Appeals. In the instant case, We took it as
proven, per statements of fact in the decision of the Court of Appeals, that the check with which
petitioner redeemed the property in dispute had been dishonored. On that premise and seeing
that even if We upheld the technical point of jurisdiction raised by petitioner, the final outcome
of the controversy between the parties would not be different, We proceeded to decide the
merits of the respective substantive claims of the parties. We felt that in view of the findings of
fact of the Court of Appeals, equity demanded that the case be earlier terminated by ignoring
not only whatever flaw ther was in the procedure adopted by the court below but also the
seemingly unusual departure by the Court of Appeals from the orthodox rule requiring courts to
confine its scrutiny in certiorari cases only to the specific point of jurisdiction complained of.

One more point. In our decision, We assumed that the findings of fact of the Court of Appeals
were the result of an exhaustive consideration of evidence presented in due course by the
parties. It turns out now, that inasmuch as the trial court itself had previously ruled that the
validity of the redemption in controversy should be the subject of a separate action and that, in
fact, such separate action had already been filed by petitioner, it was in this other case that
petitioner was present the corresponding evidencence. Hence, whatever evidence was before
the trial court in Case No. R-1666 when it issued the subject writ of possession could not have
been complete, much less incontrovertible.

With these substantial consideration in view, We find no just alternative than to reconsider Our
decision in so far as the matter of validity or invalidity of petitioner's redemption is concerned.
It being shown that the pivotal finding of the Court of Appeals regarding the check in question
might actually be belied in a more appropriate proceeding, the foundation of Our own decision
has been shaken. Indeed, We are now convinced that is but fair and just that the trial court
should be allowed to receive all relevant and competent evidence the parties may wish to
present relative to the issue of whether or not respondent Pelagia Ocang has already received in
one form or another, directly or indirectly, the full amount of P11,200 as redemption price of the
four (4) parcels of land in dispute, as well as to all other facts which might affect the validity of
the redemption here in controversy. Withal, should it be found by the trial court that the
redemption was invalid, because the redemption price has not been fully paid, it should further
determine who made the improvements found on said lands, in order that if it should turn out
that they were introduced by petitioner, possession may not be awarded to respondents unless
said improvements are first properly and fully reimbursed to petitioner. It goes without saying
that the proceedings herein contemplated are to be held in Civil Case No. R-1666.
Correspondingly, Civil Case No. 62-T and the other case reviewing the same should be deemed
Now, however, there is a strong showing in the motion for reconsideration, presmised on no less academic.
than other portions of the very decision of the intermediate court and other apparently credible
WHEREFORE, the decision of this Court of February 25, 1975 is hereby reconsidered and
evidence, that not only was said check not dishonored, although it became stale, but that
modified in line with the foregoing opinion and this case is remanded to the trial court for
repondent Pelagia Ocang had actually been paid already the full value thereof. And in this
further proceedings as therein indicated.
connection, it is notable that in the comment of respondents on petitioner's motion for
reconsideration, there is no clear and categorical denial of these important and decisive facts.

SALVACION F. VDA. DE EDUQUE, ETC., plaintiff-appellee,

vs.
JOSE M. OCAMPO, defendant-appellant.
Alfredo B. Cacnio and Padilla, Carlos and Fernando for appellant.
Jose Feria for appellee.
Delfin L. Gonzalez for plaintiff-intervenor.
MORAN, C.J.:
This is an action to compel acceptance of payment of a mortgage debt.
On February 16, 1935, Dr. Jose Eduque secured two loans from Mariano Ocampo de Leon,
Doa Escolastica de los Reyes and Don Jose M. Ocampo, the first in the amount of P40,000
and the second in the sum of P15,000, both payable within the period of twenty years, with
interest at the rate of 5 per cent per annum. Payment of these two loans was guaranteed by
mortgage on real property. In the mortgage contract it is stipulated that any of the mortgage
creditors may receive payment and execute deeds of cancellation of the mortgage debts.
On December 6, 1943, plaintiff and appellee, as administratrix of the estate of the deceased Dr.
Jose Eduque, tendered payment, by means of cashier's check, of the total amount of the two
loans, P55,000, to defendant-appellant Jose M. Ocampo, one of the creditors, who refused to
accept payment. By reason of such refusal, an action was brought and a cashier's check for the
total amount of P55,000 deposited in court. After trial, judgment was rendered against
defendant compelling him to accept the P55,000 deposited in court, to issue deeds for
cancellation of the mortgage debts, and to pay the expenses of consignation and costs.
Defendant accepted the judgment with respect to the second loan of P15,000 upon the ground
that, according to him, in the deed of mortgage corresponding to that loan it clearly appeared
that the loan was payable "durante el termino de 20 aos," and that the only question remaining
between the parties is the interpretation of the first deed of mortgage regarding the first loan of
P40,000. and he asked the court to order "que de la cantidad de P55,000 consignada en este
Juzgado, se entregue al demandado la suma de P15,000, despues de descontar
proporcionalmente cualesquiera cantidades por deposito y otros conceptos segun los terminos
de la decision promulgada." The order was issued accordingly and the sum of P15,000 out of
the P55,000 deposited in court was delivered to the defendant.

The present appeal concerns the decision of the lower court regarding the first loan of P40,000,
and the principal error assigned by the appellant is that tender of payment by means of a
cashier's check representing Japanese war notes is not valid.
We have already help that Japanese military notes were legal tender during the Japanese
occupation. But appellant argues, further, that the consignation of a cashier's check, which is not
legal tender, is not binding upon him. This question, however, has never been raised in the
lower court. Upon the contrary, defendant accepted impliedly the consignation of the cashier's
check when he himself asked the court that out of the money thus consigned he be paid the
amount of the second loan of P15,000. It is a rule that " a cashier's check may constitute a
sufficient tender where no objection is made on this ground." (62 C. J., p. 670; see also 40
Amer. Jur., p. 764.)
For all the foregoing, judgment is affirmed with cost against appellant.

NEW PACIFIC TIMBER & SUPPLY COMPANY, INC., Petitioner, vs. HON. ALBERTO For failure of the petitioner to comply with his judgment obligation, the respondent Judge, upon
V. SENERIS, RICARDO A. TONG and EX-OFFICIO SHERIFF HAKIM S.
motion of the private respondent, issued an order for the issuance of a writ of execution on
ABDULWAHID,Respondents.
December 21, 1974. Accordingly, writ of execution was issued for the amount of P63,130.00
pursuant to which, the Ex-Officio Sheriff levied upon the following personal properties of the
CONCEPCION JR., J.: petitioner, to wit: chanrobles virtual law library
A petition for certiorari with preliminary injunction to annul and/or modify the order of the
Court of First Instance of Zamboanga City (Branch ii) dated August 28, 1975 denying
petitioner's Ex-Parte Motion for Issuance of Certificate Of Satisfaction Of
Judgment.chanroblesvirtualawlibrary chanrobles virtual law library

(1) Unit American Lathe 24chanrobles virtual law library

(1) Unit American Lathe 18 Cracker Wheeler chanrobles virtual law library

(1) Unit Rockford Shaper 24

Herein petitioner is the defendant in a complaint for collection of a sum of money filed by the
private respondent. 1 On July 19, 1974, a compromise judgment was rendered by the respondent and set the auction sale thereof on January 15, 1975. However, prior to January 15, 1975,
Judge in accordance with an amicable settlement entered into by the parties the terms and
petitioner deposited with the Clerk of Court, Court of First Instance, Zamboanga City, in his
conditions of which, are as follows: chanrobles virtual law library
capacity as Ex-Officio Sheriff of Zamboanga City, the sum of P63,130.00 for the payment of the
judgment obligation, consisting of the following: chanrobles virtual law library
(1) That defendant will pay to the plaintiff the amount of Fifty Four Thousand Five Hundred
Pesos (P54,500.00) at 6% interest per annum to be reckoned from August 25, 1972; chanrobles 1. P50.000.00 in Cashier's Check No. S-314361 dated January 3, 1975 of the Equitable Banking
virtual law library
Corporation; and chanrobles virtual law library
(2) That defendant will pay to the plaintiff the amount of Six Thousand Pesos (P6,000.00) as
attorney's fees for which P5,000.00 had been acknowledged received by the plaintiff under
Consolidated Bank and Trust Corporation Check No. 16-135022 amounting to P5,000.00
leaving a balance of One Thousand Pesos (P1,000.00); chanrobles virtual law library

2. P13,130.00 incash. 3

In a letter dated January 14, 1975, to the Ex-Officio Sheriff, 4 private respondent through
counsel, refused to accept the check as well as the cash deposit. In the 'same letter, private
respondent requested the scheduled auction sale on January 15, 1975 to proceed if the petitioner
(3) That the entire amount of P54,500.00 plus interest, plus the balance of P1,000.00 for
cannot produce the cash. However, the scheduled auction sale at 10:00 a.m. on January 15,
attorney's fees will be paid by defendant to the plaintiff within five months from today, July 19, 1975 was postponed to 3:00 o'clock p.m. of the same day due to further attempts to settle the
1974; and chanrobles virtual law library
case. Again, the scheduled auction sale that afternoon did not push through because of a last
ditch attempt to convince the private respondent to accept the check. The auction sale was then
(4) Failure one the part of the defendant to comply with any of the above-conditions, a writ of
postponed on the following day, January 16, 1975 at 10:00 o'clock a.m. 5 At about 9:15 a.m., on
2
execution may be issued by this Court for the satisfaction of the obligation.
January 16, 1975, a certain Mr. Taedo representing the petitioner appeared in the office of
the Ex-Officio Sheriff and the latter reminded Mr. Taedo that the auction sale would proceed at
10:00 o'clock. At 10:00 a.m., Mr. Taedo and Mr. Librado, both representing the petitioner
requested the Ex-OfficioSheriff to give them fifteen minutes within which to contract their
lawyer which request was granted. After Mr. Taedo and Mr. Librado failed to return, counsel
for private respondent insisted that the sale must proceed and the Ex-Officio Sheriff proceeded

with the auction sale. 6 In the course of the proceedings, Deputy Sheriff Castro sold the levied
properties item by item to the private respondent as the highest bidder in the amount of
P50,000.00. As a result thereof, the Ex-Officio Sheriff declared a deficiency of
P13,130.00. 7Thereafter, on January 16, 1975, the Ex-Officio Sheriff issued a "Sheriff's
Certificate of Sale" in favor of the private respondent, Ricardo Tong, married to Pascuala Tong
for the total amount of P50,000.00 only. 8Subsequently, on January 17, 1975, petitioner filed
an ex-parte motion for issuance of certificate of satisfaction of judgment. This motion was
denied by the respondent Judge in his order dated August 28, 1975. In view thereof, petitioner
now questions said order by way of the present petition alleging in the main that said
respondent Judge capriciously and whimsically abused his discretion in not granting the motion
for issuance of certificate of satisfaction of judgment for the following reasons: (1) that there
was already a full satisfaction of the judgment before the auction sale was conducted with the
deposit made to the Ex-Officio Sheriff in the amount of P63,000.00 consisting of P50,000.00 in
Cashier's Check and P13,130.00 in cash; and (2) that the auction sale was invalid for lack of
proper notice to the petitioner and its counsel when the Ex-Officio Sheriff postponed the sale
from June 15, 1975 to January 16, 1976 contrary to Section 24, Rule 39 of the Rules of Court.
On November 10, 1975, the Court issued a temporary restraining order enjoining the
respondent Ex-Officio Sheriff from delivering the personal properties subject of the petition to
Ricardo A. Tong in view of the issuance of the "Sheriff Certificate of Sale." chanrobles virtual
law library
We find the petition to be impressed with merit.chanroblesvirtualawlibrary chanrobles virtual
law library
The main issue to be resolved in this instance is as to whether or not the private respondent can
validly refuse acceptance of 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 which it deposited with
the Ex-Officio Sheriff before the date of the scheduled auction sale. In upholding private
respondent's claim that he has the right to refuse payment by means of a check, the respondent
Judge cited the following: chanrobles virtual law library
Section 63 of the Central Bank Act: chanrobles virtual law library

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.
Article 1249 of the New Civil Code: chanrobles virtual law library
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.chanroblesvirtualawlibrary chanrobles virtual law library
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.chanroblesvirtualawlibrary chanrobles
virtual law library
In the meantime, the action derived from the original obligation shall be held in abeyance.
Likewise, the respondent Judge sustained the contention of the private respondent that he has
the right to refuse payment of the amount of P13,130.00 in cash because the said amount is less
than the judgment obligation, citing the following Article of the New Civil Code: chanrobles
virtual law library
Art. 1248. Unless there is an express stipulation to that effect, the creditor cannot be compelled
partially to receive the presentations in which the obligation consists. Neither may the debtor be
required to make partial payment.chanroblesvirtualawlibrary chanrobles virtual law library
However, when the debt is in part liquidated and in part unliquidated, the creditor may demand
and the debtor may effect the payment of the former without waiting for the liquidation of the
latter.
It is to be emphasized in this connection that the check deposited by the petitioner in the
amount of P50,000.00 is not an ordinary check but a Cashier's Check of the Equitable Banking
Corporation, a bank of good standing and reputation. As testified to by the Ex-Officio Sheriff
with whom it has been deposited, it is a certified crossed check. 9 It is a well-known and

accepted practice in the business sector that a Cashier's Check is deemed as cash. Moreover,
since the said check had been certified by the drawee bank, by the certification, 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,
with rights and duties of one in such situation. 10 Where a check is certified by the bank on
which it is drawn, the certification is equivalent to acceptance. 11 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, and that they shall be so applied whenever the check is presented for
payment. It is an understanding that the check is good then, and shall continue good, and this
agreement is as binding on the bank as its notes in circulation, a certificate of deposit payable to
the order of the depositor, or any other obligation it can assume. The object of certifying a
check, as regards both parties, is to enable the holder to use it as money." 12 When the holder
procures the check to be certified, "the check operates as an assignment of a part of the funds to
the creditors." 13 Hence, the exception to the rule enunciated under Section 63 of the Central
Bank Act to the effect "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" shall apply in this case. 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. The auction sale, therefore, was uncalled for. Furthermore, it appears
that on January 17, 1975, the Cashier's Check was even withdrawn by the petitioner and
replaced with cash in the corresponding amount of P50,000.00 on January 27, 1975 pursuant to
an agreement entered into by the parties at the instance of the respondent Judge. However, the
private respondent still refused to receive the same. Obviously, the private respondent is more
interested in the levied properties than in the mere satisfaction of the judgment obligation. Thus,
petitioner's motion for the issuance of a certificate of satisfaction of judgment is clearly
meritorious and the respondent Judge gravely abused his discretion in not granting the same
under the circumstances.chanroblesvirtualawlibrary chanrobles virtual law library
In view of the conclusion reached in this instance, We find no more need to discuss the ground
relied in the petition.chanroblesvirtualawlibrary chanrobles virtual law library

(166) has long become final and executory and so, the same is not being questioned herein. The
subject of the petition at bar as having been issued in grave abuse of discretion is the order
dated August 28, 1975 of the respondent Judge which was merely issued in execution of the
said decision. Thus, even granting that appeal is open to the petitioner, the same is not an
adequate and speedy remedy for the respondent Judge had already issued a writ of
execution. 14chanrobles virtual law library
WHEREFORE, in view of all the foregoing, judgment is hereby rendered: chanrobles virtual
law library
1. Declaring as null and void the order of the respondent Judge dated August 28,
1975; chanrobles virtual law library
2. Declaring as null and void the auction sale conducted on January 16, 1975 and the certificate
of sale issued pursuant thereto; chanrobles virtual law library
3. Ordering the private respondent to accept the sum of P63,130.00 under deposit as payment of
the judgment obligation in his favor; chanrobles virtual law library
4. Ordering the respondent Judge and respondent Ex-Officio Sheriff to release the levied
properties to the herein petitioner.chanroblesvirtualawlibrary chanrobles virtual law library
The temporary restraining order issued is hereby made
permanent.chanroblesvirtualawlibrary chanrobles virtual law library
Costs against the private respondent.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED.

FACTS: Petitioner, New Pacific Timber & Supply Co. Inc. was the defendant in a complaint for
collection of money filed by private respondent, Ricardo A. Tong. In this complaint, respondent
Judge rendered a compromise judgment based on the amicable settlement entered by the parties
It is also contended by the private respondent that Appeal and not a special civil action for
wherein petitioner will pay to private respondent P54,500.00 at 6% interest per annum and
certiorari is the proper remedy in this case, and that since the period to appeal from the decision P6,000.00 as attorneys fee of which P5,000.00 has been paid. Upon failure of the petitioner to
of the respondent Judge has already expired, then, the present petition has been filed out of
pay the judgment obligation, a writ of execution worth P63,130.00 was issued levied on the
time. The contention is untenable. The decision of the respondent Judge in Civil Case No. 250 personal properties of the petitioner. Before the date of the auction sale, petitioner deposited

with the Clerk of Court in his capacity as the Ex-Officio Sheriff P50,000.00 in Cashiers Check
of the Equitable Banking Corporation and P13,130.00 in cash for a total of
P63,130.00. Private respondent refused to accept the check and the cash and requested for the
auction sale to proceed. The properties were sold for P50,000.00 to the highest bidder with a
deficiency of P13,130.00. Petitioner subsequently filed an ex-parte motion for issuance of
certificate of satisfaction of judgment which was denied by the respondent Judge. Hence this
present petition, alleging that the respondent Judge capriciously and whimsically abused his
discretion in not granting the requested motion for the reason that the judgment obligation was
fully satisfied before the auction sale with the deposit made by the petitioner to the Ex-Officio
Sheriff. In upholding the refusal of the private respondent
to accept the check, the respondent Judge cited Article 1249 of the New Civil Code which
provides that payments of debts shall be made in the currency which is the legal tender of the
Philippines and Section 63 of the Central Bank Act which provides that checks representing
deposit money do not have legal tender power. In sustaining the contention of the private
respondent to refuse the acceptance of the cash, the respondent Judge cited Article 1248 of the
New Civil Code which provides that creditor cannot be compelled to accept partial payment
unless there is an express stipulation to the contrary.
ISSUE: Can the check be considered a valid payment of the judgment obligation?
RULING: Yes. It is to be emphasized that it is a well-known and accepted practice in the
business sector that a Cashiers Check is deemed cash. Moreover, since the check has been
certified by the drawee bank, this certification implies that the check is sufficiently funded in
the drawee bank and the funds will be applied whenever the check is presented for payment.
The object of certifying a check is to enable the holder to use it as money. When the holder
procures the check to be certified, it operates as an assignment of a part of the funds to the
creditors. Hence, the exception provided in Section 63 of the Central Bank Act which states that
checks which have been cleared and credited to the account of the creditor shall be equivalent
to a delivery to the creditor in cash the amount equal to that which is credited to his account.
The Cashiers Check and the cash are valid payment of the obligation of the petitioner. The
private respondent has no valid reason to refuse the acceptance of the check and cash as full
payment of the obligation

G.R. No. 100290 June 4, 1993

Private respondent, 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 Regional Trial Court
of Pasig, Metro Manila be withdrawn to satisfy the judgment obligation. On 15 January 1991,
NORBERTO TIBAJIA, JR. and CARMEN TIBAJIA, petitioners,
defendant spouses (petitioners) filed a motion to lift the writ of execution on the ground that the
vs.
judgment debt had already been paid. On 29 January 1991, the motion was denied by the trial
THE HONORABLE COURT OF APPEALS and EDEN TAN, respondents.
court 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. A motion for reconsideration was
PADILLA, J.:
denied on 8 February 1991. Thereafter, the spouses Tibajia filed a petition for certiorari,
prohibition and injunction in the Court of Appeals. The appellate court dismissed the petition on
Petitioners, spouses Norberto Tibajia, Jr. and Carmen Tibajia, are before this Court assailing the
24 April 1991 holding that payment by cashier's check is not payment in legal tender as
decision * of respondent appellate court dated 24 April 1991 in CA-G.R. SP No. 24164 denying
required by Republic Act No. 529. The motion for reconsideration was denied on 27 May 1991.
their petition for certiorariprohibition, and injunction which sought to annul the order of Judge
Eutropio Migrio of the Regional Trial Court, Branch 151, Pasig, Metro Manila in Civil Case
In this petition for review, the Tibajia spouses raise the following issues:
No. 54863 entitled "Eden Tan vs. Sps. Norberto and Carmen Tibajia."
Stated briefly, the relevant facts are as follows:

I WHETHER OR NOT THE BPI CASHIER'S CHECK NO. 014021 IN THE

AMOUNT OF P262,750.00 TENDERED BY PETITIONERS FOR PAYMENT OF
THE JUDGMENT DEBT, IS "LEGAL TENDER".

Case No. 54863 was a suit for collection of a sum of money filed by Eden Tan against the
Tibajia spouses. A writ of attachment was issued by the trial court on 17 August 1987 and on 17
II WHETHER OR NOT THE PRIVATE RESPONDENT MAY VALIDLY REFUSE
September 1987, the Deputy Sheriff filed a return stating that a deposit made by the Tibajia
THE TENDER OF PAYMENT PARTLY IN CHECK AND PARTLY IN CASH
spouses in the Regional Trial Court of Kalookan City in the amount of Four Hundred Forty Two
MADE BY PETITIONERS, THRU AURORA VITO AND COUNSEL, FOR THE
Thousand Seven Hundred and Fifty Pesos (P442,750.00) in another case, had been garnished by
SATISFACTION OF THE MONETARY OBLIGATION OF PETITIONERShim. On 10 March 1988, the Regional Trial Court, Branch 151 of Pasig, Metro Manila rendered
SPOUSES. 1
its decision in Civil Case No. 54863 in favor of the plaintiff Eden Tan, ordering the Tibajia
spouses to pay her an amount in excess of Three Hundred Thousand Pesos (P300,000.00). On
The only issue to be resolved in this case is whether or not payment by means of check (even
appeal, the Court of Appeals modified the decision by reducing the award of moral and
by cashier's check) is considered payment in legal tender as required by the Civil Code,
exemplary damages. The decision having become final, Eden Tan filed the corresponding
motion for execution and thereafter, the garnished funds which by then were on deposit with the Republic Act No. 529, and the Central Bank Act.
cashier of the Regional Trial Court of Pasig, Metro Manila, were levied upon.
It is contended by the petitioners that the check, which was a cashier's check of the Bank of the
Philippine Islands, undoubtedly a bank of good standing and reputation, and which was a
On 14 December 1990, the Tibajia spouses delivered to Deputy Sheriff Eduardo Bolima the
crossed check marked "For Payee's Account Only" and payable to private respondent Eden Tan,
total money judgment in the following form:
is considered legal tender, payment with which operates to discharge their monetary
obligation. 2 Petitioners, to support their contention, cite the case of New Pacific Timber and
Cashier's Check P262,750.00
Supply Co., Inc. v. Seeris 3 where this Court held through Mr. Justice Hermogenes Concepcion,
Cash 135,733.70
Jr. that "It is a well-known and accepted practice in the business sector that a cashier's check is

deemed as cash".
Total P398,483.70

The provisions of law applicable to the case at bar are the following:

In the recent cases of Philippine Airlines, Inc. vs. Court of Appeals 4 and Roman Catholic
Bishop of Malolos, Inc. vs. Intermediate Appellate Court, 5 this Court held that

a. 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.;
b. 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.
c. 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.

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 (2) 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.
Petitioners erroneously rely on one of the dissenting opinions in the Philippine Airlines case 6 to
support their cause. The dissenting opinion however does not in any way support the contention
that a check is legal tender but, on the contrary, states that "If the PAL checks in question had
not been encashed by Sheriff Reyes, there would be no payment by PAL and, consequently, no
discharge or satisfaction of its judgment obligation." 7 Moreover, the circumstances in
the Philippine Airlines case are quite different from those in the case at bar for in that case the
checks issued by the judgment debtor were made payable to the sheriff, Emilio Z. Reyes, who
encashed the checks but failed to deliver the proceeds of said encashment to the judgment
creditor.
In the more recent case of Fortunado vs. Court of Appeals, 8 this Court stressed that, "We are
not, by this decision, sanctioning the use of a check for the payment of obligations over the
objection of the creditor."
WHEREFORE, the petition is DENIED. The appealed decision is hereby AFFIRMED, with
costs against the petitioners.
SO ORDERED.
FACTS Tibajia spouses delivered to Sheriff the total money judgment in cashiers check and
cash.Private respondent, 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 Regional Trial
Court of Pasig, Metro Manila be withdrawn to satisfy the judgment obligation. Tibajias filed a
motion to lift the writ of execution on the ground that the judgment debt had already been paid.
The motion was denied.

ISSUE Whether or not payment by means of cashiers check is considered payment in legal
tender.
RULING NO. A check, whether a managers 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. A check is not legal tender and that a creditor may validly
refuse payment by check, whether it be a managers, cashiers or personal check. The Supreme
Court stressed that, We are not, by this decision, sanctioning the use of a check for the
payment of obligations over the objection of the creditor.