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1st case digest: Name: Zainali Joy D.

Aragon Subject: NEGOTIABLE INSTRUMENTS LAW Topic: Incidents of Stages in the Life of a Negotiable Instrument: Issuance, First Delivery of the Instrument to the Payee Loreto D. De La Victoria, as City Fiscal of Mandaue City and his personal capacity as garnishee vs. Hon. Jose P. Burgos, Presiding Judge, RTC, Br. XVII, Cebu City, and Raul H. Sesbreno, G.R. No. 111190, June 27, 1995 FACTS: Assistant City Fiscal Bienvenido N. Mabanto was ordered to pay herein private respondent Raul Sesbreño P11,000.00 as damages. A notice of garnishment was served on herein petitioner Loreto D. de la Victoria as City Fiscal of Mandaue City where Mabanto was detailed. The notice directed the petitioner not to disburse, transfer, release or convey to any other person except to the deputy sheriff concerned the salary checks or other checks, monies, or cash due or belonging to Mabanto, Jr., under penalty of law. The trial court, finding no more legal obstacle to act on the motion for the examination of the garnishees, directed petitioner to submit his report showing the amount of the garnished salaries. Petitioner moved to quash the notice of garnishment claiming that he was not in possession of any money, funds, credit, property or anything of value belonging to Mabanto, Jr., except his salary and RATA checks, but that said checks were not yet properties of Mabanto, Jr., until delivered to him. He further claimed that, as such, they were still public funds which could not be subject to garnishment. ISSUE:

Whether a check still in the hands of the maker or its duly authorized representative is owned by the payee before physical delivery to the latter
RULING: No, the payee does not own the check until delivered to him. Garnishment is considered as a species of attachment for reaching credits belonging to the judgment debtor owing to him from a stranger to the litigation. 6 Emphasis is laid on the phrase "belonging to the judgment debtor" since it is the focal point in resolving the issues raised. As Assistant City Fiscal, the source of the salary of Mabanto, Jr., is public funds. He receives his compensation in the form of checks from the Department of Justice through petitioner as City Fiscal of Mandaue City and head of office. Under Sec. 16 of the Negotiable Instruments Law, every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto. As ordinarily understood, delivery means the transfer of the possession of the instrument by the maker or drawer with intent to transfer title to the payee and recognize him as the holder thereof. Inasmuch as said checks had not yet been delivered to Mabanto, Jr., they did not belong to him and still had the character of public funds. As held in Tiro v. Hontanosas, "the salary check of a government officer or employee such a s a teacher does not belong to him before it is physically delivered to him. Until that time the check belongs to the government. Accordingly, before there is actual delivery of the check, the payee has no power over it; he cannot assign it without the consent of the Government." As a necessary consequence of being public fund, the checks may not be garnished to satisfy the judgment. The rationale behind this doctrine is obvious consideration of public policy. The Court succinctly stated in Commissioner of Public

and the loss was then reported to the police. PCIB and EBC. to be delivered to Chandiramani by Liong's messenger. attorney's fees in the amount of P100. without delivering the exchange consideration consisting of the PCIB manager's check and the Hang Seng Bank dollar draft. Chandiramani got US$360.00 from David. FEBTC subsequently lifted the stop payment order on FEBTC Dollar Draft 4771. On 28 December 1987. as appropriated by law. that the checks and the dollar draft were not lost. each in the amount of P2.00. in the possession of De la Victoria. for Chandiramani was able to get hold of said instruments. 2 hours after Chandiramani and Ranigo were to meet in Makati City. but these motions were denied. Yang and Chandiramani agreed that the difference of P26. On 4 July 1995. payable to PCIB. The trial court dismissed the complaint against FEBTC. however. Liong.000. San Diego that "the functions and public services rendered by the State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific objects. Chandiramani did not appear at the rendezvous and Ranigo allegedly lost the two cashier's checks and the dollar draft bought by Yang. Danilo Ranigo.000.000. but upon the representation of PCIB.00 in the exchange would be their profit to be divided equally between them. David then elevated the matter to the Court of Appeals. Jr. Yang gave the aforementioned cashier's checks and dollar drafts to her business associate. which Chandiramani deposited in the savings account of his wife. ordering Yang to pay David moral damages in the amount of P100.087 million. without prejudice to whatever action Yang will file against Chandiramani for reimbursement of the amounts received by him from David." The trial court exceeded its jurisdiction in issuing the notice of garnishment concerning the salary checks of Mabanto. Meanwhile. Aragon Subject: NEGOTIABLE INSTRUMENTS LAW Topic: Holders in Due Course Yang vs.00. Both banks complied with her request. Yang requested FEBTC and ECB to stop payment on the instruments she believed to be lost. in turn.Highways v. The Complaint was subsequently amended to include a prayer for Equitable to return to Yang the amount of P2. Yang seasonably filed an appeal with the Court of Appeals but the appellate court affirmed the decision of the . and David. of Hong Kong. with prayer for a temporary restraining order. together with the earnings derived therefrom pendente lite. It transpired. which was dismissed by the appellate court. informed Yang. thus enabling the holder of PCIB FCDU Account 4195-01165-2 to receive the amount of US$200. Albert Liong. 2nd Case digest: Name: Zainali Joy D. with interest thereon until fully paid. David moved for dismissal of the cases against him and for reconsideration of the Orders granting the writ of preliminary injunction..00. which Chandiramani would exchange for another dollar draft in the same amount to be issued by Hang Seng Bank Ltd.000.2 million in exchange for 2 of Yang's manager's checks. Court of Appeals. Meanwhile. but the trial court denied her motion. and the (b) Equitable Cashier's Check CCPS 14-009467. In exchange. and his mother. both payable to the order of Fernando David.087 million. Chandiramani delivered to David the (a) FEBTC Cashier's Check 287078. Chandiramani. the trial court handed down its decision in favor of David declaring him entitled to the proceeds of the 2 cashier's checks. 409 SCRA 159 FACTS: Cely Yang and Prem Chandiramani entered into an agreement whereby the latter was to give Yang a Philippine Commercial International Bank (PCIB) manager's check in the amount of P4.000. Yang lodged a Complaint for injunction and damages against ECB. Yang and Chandiramani also further agreed that the former would secure from Far East Bank & Trust Company (FEBTC) a dollar draft in the amount of US$200.000. Yang then moved for reconsideration of the RTC judgment.00 and to pay the costs.

Under these circumstances. in his capacity as Judge of RTC – Manila (Branch VIII). the presumption that he is a prima facie holder in due course applies in his favor. 3rd Case digest: Name: Zainali Joy D. IAC. 000. Uy had to answer a phone call after which he proceeded to the men's room. The bank manager entrusted the check for safekeeping to a bank official who had a visitor in the person of Alexander Lim. Unfortunately.000. Furthermore. All the requisites provided for in Section 52 must concur in David's case. David is a holder in Due Course. 1986 FACTS: Jose Go purchased from Associate Bank a Cashier’s Check for P800. thereby preventing David from being considered a holder in due course. Aragon Subject: NEGOTIABLE INSTRUMENTS LAW Topic: Holders in Due Course Marcelino A. her arguments on this score are less than meritorious and far from persuasive. Hon. and Albert Uy. thus resulting in David's intentional ignorance tantamount to bad faith. this presumption arises only in favor of a person who is a holder as defined in Section 191 of the Negotiable Instruments Law. Yang posits that the last two requisites of Section 52 are missing. Unfortunately for Yang. When he returned to his desk. Instead. if any. Every holder of a negotiable instrument is deemed prima facie a holder in due course. his visitor Lim was already gone. In sum.trial court with modification and ordered Yang to pay PCIB the amount of P25. he left it on top of the manager’s desk when left the bank. or the bearer thereof. the check was not in his folder and nowhere to be found. Hence. what is vital to the resolution of this issue is whether David took possession of the checks under the conditions provided for in Section 52 of the Negotiable Instruments Law. petitioner wasn't able to show any circumstance which should have placed David in inquiry as to why and wherefore of the possession of the checks by Chandimari. Chandimari and David had the agreement between themselves of the delivery of the checks. it is not disputed that David was the payee of the checks in question.00. 70145. David had no obligation to ascertain from Chandimari what the nature of the latter’s title to the checks was. David even inquired with the banks on the genuineness of the checks in issue. However. David wasn't a privy to the transactions between Yang and Chandimari. Arsenio M. However." Herein. who is in possession of it. and (2) David's failure to inquire from Chandiramani as to how the latter acquired possession of the checks. meaning a "payee or indorsee of a bill or note. ISSUE: Is David a holder in Due Course? RULING: Yes. The latter advised Jose Go . The weight of authority sustains the view that a payee may be a holder in due course. said presumption may be rebutted. he wasn't aware of any request for the stoppage of payment. At that time. No. Gonong. otherwise he cannot be deemed a holder in due course. November 13. G. as attorney's fees. Hence. Jose Go. Mesina vs. Yang filed the petition for review on certiorari.R. Yang's challenge to David's status as a holder in due course hinges on two arguments: (1) the lack of proof to show that David tendered any valuable consideration for the disputed checks. or the nature of his possession. When Jose Go inquired for his cashier's check from Albert Uy.

Petitioner failed to substantiate that he was a holder in due course. The instant petition is merely dilatory. since the bank was aware of the facts surrounding the loss of the check in question. the owner of the check. He refused to disclose how and why it has passed to him. from a certain Atty. Several days later. respondent bank was not the one who did it but Jose Go. If a payee of a cashier’s check obtained it from the issuing bank by fraud. ISSUE: IAC erred in ruling that a cashier's check can be countermanded even in the hands of a holder in due course RULING: The assailed orders of the respondent court are AFFIRMED. in its letter. with the words "Payment Stopped" stamped on it. He also executed an affidavit of loss. However. Respondent bank could not be drawer and drawee for clearly. the bank would of course have the right to refuse payment of the check when presented by payee. Respondent bank. The check was immediately dishonored by Associated Bank by sending it back to Prudential Bank. A case of interpleader was filed by the bank and Go moved to participate as intervenor in the complaint for damages. Upon questioning. Petitioner cannot raise as arguments that a cashier’s check cannot be countermanded from the hands of a holder in due course and that a cashier’s check is a check drawn by the bank against itself. he admitted that he got the check from Lim who stole the check. Mesina moved for the dismissal of the case but was denied. and from the moment said cashier's check was lost and/or stolen no one outside of Jose Go can be termed a holder in due course because Jose Go had not indorsed it in due course. which was being held by his client. It simply means that he has notice of the defect of his title over the check from the start. . Jose Go owns the money it represents and he is therefore the drawer and the drawee in the same manner as if he has a current account and he issued a check against it. or if there is some other reason why the payee is not entitled to collect the check. The trial court ruled in the interpleader case ordering the bank to replace the cashier’s check in favor of Go. replied saying the check belonged to Jose Go who lost it in the bank and is laying claim to it. The holder of a cashier’s check who is not a holder in due course cannot enforce payment against the issuing bank which dishonors the same. the same was again returned to Associated Bank and for the second time it was dishonored.to go to the bank to accomplish a "STOP PAYMENT" order. The check in question suffers from the infirmity of not having been properly negotiated and for value by respondent Jose Go who was already been said is the real owner of said instrument. Lorenzo Navarro demanding payment on the cashier's check in question. respondent Associated Bank received a letter. The records of the police show that Associated Bank received the lost check for clearing coming from Prudential Bank. When payment on it was therefore stopped.

Aragon Subject: NEGOTIABLE INSTRUMENTS LAW Topic: Interpretation of Instruments Equitable Banking vs. Casals informed him that his corporation. or as an agent. Nell indicated the payee as follows “EQUITABLE BANKING CORPORATION A/C CASVILLE ENTERPRISES INC. he was referred for negotiation in connection with the manner of payment. Nell Co. RULING: Equitable is not liable to Nell. Nell Company and told its senior sales engineer. for the value of the second check issued by NELL.” Casals deposited the check with the bank and the bank teller accepted the same and in accordance with customary bank practice. As worded. When defendant was asked for cash payment for the skidders.00 to stand as collateral or marginal deposit in favor of Equitable Banking Corporation and an additional amount of P100. However. Casals handed to plaintiff a check in the amount of P300. covering the above-mentioned equipment. Exhibit "E-l. and which the Bank teller credited to the account of Casville. While the instant case was being tried. ISSUES: Whether or not petitioner Equitable Banking Corporation is liable to private respondent Edward J.00 postdated August 4.4th Case digest: Name: Zainali Joy D.00. Casville informed the plaintiff that their application for a letter of credit for the payment of the Garrett skidders had been approved by the Equitable Banking Corporation. 161 SCRA 518 FACTS: Defendant Liberato Casals went to plaintiff Edward J. IAC. had a credit line with Equitable Banking Corporation.000. Although the words "A/C OF CASVILLE ENTERPRISES INC. 1976. as partial satisfaction of its claim against them. The Court finds that the check in question was payable only to the defendant bank and to no one else. the payee was still the latter. stamped in the check the words “non-negotiable”. or payable to the bank as trustee. also in favor of Equitable Banking Corporation. Casville Enterprises. for Casville with the latter being the ultimate beneficiary.. Nell should bear the loss as it was through its own acts. which put it into the power of Casals and Casville Enterprises to perpetuate the fraud against it. "appear on the face of the check after or under the name of defendant bank. This prompted Nell to file a case against the bank.000. it could be accepted as deposit to the account of the party named therein after the symbols of A/C. to clear the title of the Estrada property belonging to Casals which had been approved as security for the trust receipts to be issued by the bank. Plaintiff considered these checks either as partial payment for the skidder that was already delivered to Cagayan de Oro or as reimbursement for the marginal deposit that plaintiff was supposed to pay. Inc. Casals and Casville. which was followed by another check of same date. The amount was withdrawn after the deposit. Amado Claustro that he was interested in buying one of the plaintiff's garrett skidders." which was made payable to the order of EQUITABLE Ashville BANIUNG CORPORATION A/C OF CASVILLE ENTERPRISES INC.000. The addition .000. The payee was not indicated with reasonable certainty in contravention of Section 8. Casals and Casville assigned the garrett skidder to plaintiff which credited in favor of defendants the amount of P450. After Casals talked with plaintiff's sales engineer. the defendants said that they would need the sum of P300.

and "Non-negotiable. 1976. Article 1377 of the Civil Code. with the latter being the ultimate beneficiary. In the last analysis. As worded. or as an agent. provides: Art. 1377. the Payee of the instrument for the words merely indicated for whose account or in connection with what account the check was issued by the plaintiff. it was NELL's own acts. consequently. The payee ceased to be indicated with reasonable certainty in contravention of Section 8 of the Negotiable Instruments Law. and its implicit trust in Casals. issuance and delivery of the check. it could be accepted as deposit to the account of the party named after the symbols "A/C. not nonnegotiable. for Casville Enterprises. Neither was it a crossed check. initially. The subject check was equivocal and patently ambiguous. construed against NELL who caused the ambiguity and could have also avoided it by the exercise of a little more care. Contrary to the finding of respondent Appellate Court. which put it into the power of Casals and Casville Enterprises to perpetuate the fraud against it and. By making the check read: Pay to the EQUITABLE BANKING CORPORATION Order of A/C OF CASVILLE ENTERPRISES. INC. Inc. That ambiguity is to be taken contra proferentem that is." separately boxed. the subject check was. . were the proximate cause of its own defraudation. August 17. it must bear the loss. Thus..of said words did not in any way make Casville Enterprises. and not by NELL as the drawer of the check. Inc.No. The rubber-stamping transversall on the face of the subject check of the words "Non-negotiable for Payee's Account Only" between two (2) parallel lines. NELL's own acts and omissions in connection with the drawing. The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity. 4. was made only by the Bank teller in accordance with customary bank practice. Teller." or payable to the Bank as trustee. and simply meant that thereafter the same check could no longer be negotiated.