negotiable instruments law_digests
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NEGOTIABLE INSTRUMENTS LAW
Section 1
1 Roman Catholic of Malolos v IAC
PETITIONER: Roman Catholic Bishop of Malolos, Inc.RESPONDENTS: IAC and Robes-Francisco Realty and Development, Corporation
FACTS: July 7, 1971: Roman Catholic sold to Robes-Francisco, through its then
president Mr. Carlo F. Robes, for a parcel of land in Bulacano Downpayment: P23,930o Balance: P100,000 plus 12% interest per annum to be paid within 4
years (that is, on or before July 7, 1975)o Non-payment within the period: cancellation, forfeiture of payments,
and reconveyance of the land The new lawyer (Atty. Francisco) of Robes-Francisco wrote a letter to Father
Vasquez to be furnished with a copy of the contract + supporting documents On July 17, 1975: The contract had already expired; new lawyer wrote to
Roman Catholic formally requesting to proceed with payment as follows:o Pay the balance of P100,000 in 3 equal installments of 6 months
eacho First installment + accrued interest of P24,000 will be paid upon
approval of said request Roman Catholic denied the request, but granted a grace period of 5 days
from the receipt of the denial within which to complete the payment of P124,000. Otherwise, the stipulation on cancellation, etc., will be implemented.
Atty. Francisco wrote another letter requesting for an extension of 30 days. Atty. Fernandez, lawyer of petitioner, DENIED the request. Atty. Francisco wrote another letter directly to petitioner for the alleged refusal
to accept the tender of payment made on the last day of the grace period. o Also demanded for the execution of a Deed of Absolute Sale over the
land Atty. Fernandez denied the request; denied the tender of payment; cancelled
the contract and considered all previous payments forfeited and the land ipso jure reconveyed.
TC: Ruled in favor of ROMAN CATHOLICo Declared the contract as cancelledo DP = forfeited
WHY? Questionable pattern of human conduct Inconsistency of testimonials Atty. Francisco did not present the check used as
tender of payment Company had insufficient funds
CA: Reversed the ruling of the trial court; ruled in favor of ROBES-FRANSICO
o Respondent had sufficient available fundso Respondent tendered payment
ISSUES:(1) WON the finding that respondent had sufficient available funds on or
before the grace period for the payment of its obligation proof that it did a tender of payment?
(2) WON it is petitioner’s legal obligation to execute a deed of absolute sale before the respondent has actually paid the complete consideration of the sale?
(3) WON an offer of a check is a valid tender of payment under a contract that stipulates that the consideration of the sale is in Philippine Currency?
HELD/RATIO:(1) NO; a finding that respondent had sufficient available funds on or
before the grace period does not constitute proof of tender of payment
ToP involves a positive and unconditional act by the obligor of offering a legal tender currency as payment to the obligee for the former’s obligation and demanding that the latter accept the same.
ToP cannot be presumed by a mere inference from the surrounding circumstances.
ToP presupposes not only that the obligor is RWA(2) NO; based on the contractual stipulation, the DOAS will only be
executed upon full payment of the consideration Art. 1159 of the Civil Code: principle of obligatory force SC said it should have paid within the grace period and secured
a receipt such that it would have been in a position to demand the execution of the documents.
(3) NO; a certified personal check is not legal tender nor the currency stipulated
Therefore, not a valid ToP Art. 1249 of CC Philippine Airlines v CA: Delivery of a negotiable instrument does
not operate as payment; check is not legal tender, not a valid ToP
Hence, where the tender of payment by the private respondent was not valid for failure to comply with the requisite payment in legal tender or currency stipulated within the grace period and as such, was validly refused receipt by the petitioner, the subsequent consignation did not operate to discharge the former from its obligation to the latter
2 BPI Express Credit Card Corporation v CA
PETITIONER: BPI Express Credit Card CorporationRESPONDENTS: CA and Ricardo J. Marasigan
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FACTS: Atty, Ricardo J. Francisco was a complimentary member of the BECC and
was issued a credit card.o Credit limit: P3,000o In later years, it was increased to P5,000o His membership was always renewedo He often exceeded his credit limit and paid by mode of check, which
BPI tolerated When Marasigan’s outstanding bill ballooned to P8,987.84 was not paid on
time (because he was in Quezon province), his secretary informed him that BPI was demanding immediate payment of P15,000 to secure future bills and threatening to suspend his credit card.
Marasigan issued a postdated Far East Bank check amounting to P15,000 on the condition that BPI would not suspend his credit card
o It was received and remained in custody with employees of BPI BPI, through a letter, informed Marasigan of the temporary suspension of
the privileges of his credit card and the inclusion of his account in the Caution List.
o No showing that Marasigan received such letter December 8, 1989: Marasigan was confident that he had settled his credit
card billo Café Adriatico dishonored Marasigan’s credit card for the amount of
P735.32o The bill was paid for by one of Marasigan’s guests
Marasigan, through a letter, asked BPI for the following:o To present the exact billing due himo To withhold the deposit of the postdated checko To return said check to him
DEMANDS LEFT AND RIGHT BUT TO NO AVAIL
RTC: RULED IN FAVOR OF MARASIGANo Legal basis: Art. 19 of CC (Abuse of Rights Doctrine)
CA: AFFIRMED THE DECISION OF THE RTC
ISSUES:(1) WON Marasigan can recover moral damages arising from the cancellation
of his credit card by BPI?(2) WON BPI had the right to suspend the credit card of Marasigan?(3) WON prior to the suspension of Marasigan’s credit card, the parties
entered into an agreement whereby the card could still be used and would be duly honored by duly accredited establishments?
HELD/RATIO:(1) NO; BPI did not act in bad faith by cancelling the credit card
It was Marasigan’s own negligence (failure to pay the credit card bill on time) which was the proximate cause of his embarrassing and humiliating experience.
(2) YES; based on the terms and conditions of the credit card: Unpaid balance within 30 days: suspended Unpaid balance within 60 days: cancelled Marasigan also admitted that he made no payments on the
periods given Thus, BPI is justified in suspending the credit card
(3) YES; there was an arrangement between the parties; however, Marasigan did not comply with his obligations
Agreement was issuance of a check for immediate payment However, while Marasigan did issue a check for P15,000, it was
postdated Settled is the doctrine that a check is only a substitute for money
and not money, the delivery of such an instrument does not, by itself operate as payment.
o Case at bar: The issuance of the postdated check was not effective payment.
3 Caltex (Philippines), Inc. v CA
PETITIONER: Caltex (Philippines), Inc.RESPONDENTS: CA and Security Bank and Trust Company
FACTS: SECURITY BANK (Sucat Branch) issued 280 certificates of time deposit
(CTDs) amounting to P1.12M in favor of one ANGEL DELA CRUZ, who deposited said sum of money to the bank
Dela Cruz delivered CTDs to CALTEX in connection with his purchase of fuel products from the latter
Dela Cruz informed the manager of the Sucat Branch, TIMOTEO TIANGCO, that he had lost all the CTDs issued to him
o Tiangco advised Dela Cruz to execute an AFFIDAVIT OF LOSS (S.O.P. by the bank)
In compliance with Tiangco’s advice, 280 replacement CTDs were issued to Dela Cruz
Dela Cruz obtained and negotiated a LOAN with Security Bank for P875K On the same day, Dela Cruz executed a DEED OF ASSIGNMENT OF TIME
DEPOSITo He surrendered to the bank full control of TDs
Caltex presented to Security Bank the 280 CTDs from Dela Cruz; informed Security Bank of its decision to pre-terminate the TDs
Dela Cruz defaulted on the loan obligation
TC: DISMISSED THE COMPLAINT OF CALTEX CA: AFFIRMED THE LOWER COURT’S DISMISSAL
ISSUES:(1) WON the subject certificates of deposit are non-negotiable despite being
clearly negotiable instruments?(2) WON Caltex can rightfully recover on the CTDs?
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HELD/RATIO:(1) NO; the CTDs are NEGOTIABLE INSTRUMENTS
Section 1of Negotiable Instruments Law (requisites) CTDs meet the requirements of the law for negotiability
o Depositor = bearer Negotiability or non-negotiability of an instrument is determined
from the writing, that is, from the face of the instrument itself(2) NO;
CTDs are bearer instruments, but a valid negotiation thereof for the true purpose and agreement as ultimately ascertained, requires both delivery and indorsement.
CTD = payment as guarantee to secure purchases CTD = embodied in a public instrument
4 Inciong, Jr. v CA
PETITIONER: Baldomero Inciong Jr.RESPONDENTS: CA and Philippine Bank of Communications
FACTS: INCIONG executed a PROMISSORY NOTE in the amount of P50K to
PHILLIPINE BANK OF COMMUNICATIONSo Signed with 2 others; SOLIDARY OBLIGATION
On due date, the promisors did not pay their obligation. Bank sent telegrams demanding payment. TC: RULED AGAINST INCIONG
o Inconsistent testimony < Evidence of “50,000” on PN CA: AFFIRMED THE RULING OF THE TC
ISSUE: WON a PROMISSORY NOTE is a negotiable instrument?
HELD/RATIO: YES; PROMISSORY NOTES ARE NEGOTIABLE INSTRUMENTS
5 Traders Royal Bank v CA
PETITIONER: Traders Royal BankRESPONDENTS: CA, Filriters Guaranty Assurance Corporation, Central Bank of the Philippines
FACTS: FILRITERS executed a DETACHED ASSIGNMENT assigning all its rights to
the CENTRAL BANK’S CERTIFICATE OF INDEBTEDNESS to PHILFINANCE worth P3.5M
TRADERS entered into a REPURCHASE AGREEMENT with PhilFinanceo PhilFinance sold to Traders one of the CBCIs from Filriters worth
P500K PhilFinance failed to repurchase the CBCIs PhilFinance issued a DETACHED ASSIGNMENT in favor of Traders to enable
it to have the title completedo Expressly authorized issuer to transfer CBCIs
Traders presented it to [respondent], but the latter failed to recognize it RTC: The assignment of CBCI in favor of PhilFinance, and the subsequent
assignment of the same CBCI by PhilFinance in favor of Traders NULL AND VOID
CA: Affirmed the decision of the RTCo CBCI is not a negotiable instrument
Payable only to FILRITERS and to no one else
ISSUE: WON a CENTRAL BANK CERTIFICATE OF INDEBTENDESS is a negotiable instrument?
HELD/RATIO: YES CBCI pertains to certificates for the creation and maintenance of a
permanent improvement revolving fund; it is similar to a “bond”o Acknowledgement of an obligation to pay a fixed sum of money
Case at bar: The transfer of the instrument from PhilFinance to TRB was merely an assignment
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