Negotiable Instruments s19h

PECO vs. Soriano

Philippine Education Co. vs. Soriano L-22405 Dizon, J.:

June 30, 1971

Facts: Enrique Montinola sought to purchase from Manila Post Office ten money orders of 200php each payable to E. P. Montinola. Montinola offered to pay with the money orders with a private check. Private check were not generally accepted in payment of money orders, the teller advised him to see the Chief of the Money Order Division, but instead of doing so, Montinola managed to leave the building without the knowledge of the teller. Upon the disappearance of the unpaid money order, a message was sent to instruct all banks that it must not pay for the money order stolen upon presentment. The Bank of America received a copy of said notice. However, The Bank of America received the money order and deposited it to the appellant’s upon clearance. Mauricio Soriano, Chief of the Money Order Division notified the Bank of America that the money order deposited had been found to have been irregularly issued and that, the amount it represented had been deducted from the bank’s clearing . The Bank of America debited appellant’s with the same and give notice by mean of debit memo. Issue: Whether or not the postal money order in question is a negotiable instrument Held: No. It is not disputed that the Philippine postal statutes were patterned after similar statutes in force in United States. The Weight of authority in the United States is that postal money orders are not negotiable instruments, the reason being that in establishing and operating a postal money order system, the government is not engaged in commercial transactions but merely exercises a governmental power for the public benefit. Moreover, some of the restrictions imposed upon money orders by postal laws and regulations are inconsistent with the character of negotiable instruments. For instance, such laws and regulations usually provide for not more than one endorsement; payment of money orders may be withheld under a variety of circumstances.

Negotiable Instruments Case Digest: Caltex (Phils.) Inc. v. CA and Security Bank and Trust Co. (1992) G.R. No. 97753 August 10, 1992 Lessons Applicable: Requisites of negotiability to antedated and postdated instruments (Negotiable Instrument Law)

FACTS: Security Bank and Trust Company (Security Bank), a commercial banking institution, through its Sucat Branch issued 280 certificates of time deposit (CTDs) in favor of Angel dela Cruz who deposited with Security Bank the total amount of P1,120,000 Angel delivered the CTDs to Caltex for his purchase of fuel products March 18, 1982: Angel informed Mr. Tiangco, the Sucat Branch Manager that he lost all CTDs, submitted the required Affidavit of Loss and received the replacement March 25, 1982: Angel dela Cruz negotiated and obtained a loan from Security Bank in the amount of P875,000 and executed a notarized Deed of Assignment of Time Deposit November, 1982: Mr. Aranas, Credit Manager of Caltex went to the Sucat branch to the CTDs declared lost by Angel November 26, 1982: Security Bank received a letter from Caltex formally informing it of its possession of the CTDs in question and of its decision to pre-terminate the same. December 8, 1982: Caltex was requested by Security Bank to furnish: a copy of the document evidencing the guarantee agreement with Mr. Angel dela Cruz the details of Mr. Angel's obligation against which Caltex proposed to apply the time deposits Security Bank rejected Caltex demand for payment bec. it failed to furnish a copy of its agreement w/ Angel April 1983, the loan of Angel dela Cruz with Security Bank matured August 5, 1983: CTD were set-off w/ the matured loan Caltex filed a complaint praying the bank to pay 1,120,000 plus 16% interest CA affirmed RTC to dismiss complaint

ISSUE: W/N the CTDs are negotiable …..W/N Caltex as holder in due course can rightfully recover on the CTDs HELD: Petition is Denied and appealed decision is affirmed. 1. YES. Section 1 Act No. 2031, otherwise known as the Negotiable Instruments Law, enumerates the requisites for an instrument to become negotiable, viz: (a) It must be in writing and signed by the maker or drawer; (b) Must contain an unconditional promise or order to pay a sum certain in money; (c) Must be payable on demand, or at a fixed or determinable future time; (d) Must be payable to order or to bearer; and -check (e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty. The documents provide that the amounts deposited shall be repayable to the depositor depositor = bearer If it was really the intention of respondent bank to pay the amount to Angel de la Cruz only, it could have with facility so expressed that fact in clear and categorical in the documents, instead of having the word "BEARER" stamped on the space provided for the name of the depositor in each CTD negotiability or non-negotiability of an instrument is determined from the writing, that is, from the face of the instrument itself

2. NO. although the CTDs are bearer instruments, a valid negotiation thereof for the true purpose and agreement between it and De la Cruz, as ultimately ascertained, requires both delivery and indorsement CTDs were in reality delivered to it as a security for De la Cruz' purchases of its fuel products

There was no negotiation in the sense of a transfer of the legal title to the CTDs in favor of petitioner in which situation, for obvious reasons, mere delivery of the bearer CTDs would have sufficed. Where the holder has a lien on the instrument arising from contract, he is deemed a holder for value to the extent of his lien. As such holder of collateral security, he would be a pledgee but the requirements therefor and the effects thereof, not being provided for by the Negotiable Instruments Law, shall be governed by the Civil Code provisions on pledge of incorporeal rights: Art. 2095. Incorporeal rights, evidenced by negotiable instruments, . . . may also be pledged. The instrument proving the right pledged shall be delivered to the creditor, and if negotiable, must be indorsed. Art. 2096. A pledge shall not take effect against third persons if a description of the thing pledged and the date of the pledge do not appear in a public instrument. Art. 1625. An assignment of credit, right or action shall produce no effect as against third persons, unless it appears in a public instrument, or the instrument is recorded in the Registry of Property in case the assignment involves real property.

Negotiable Instruments Case Digest: Metrobank v. CA and Golden Savings & Loan Assoc. Inc (1991) G.R. No. 88866 February 18, 1991 Lessons Applicable: Forgery (Negotiable Instruments Law)

FACTS: January 1979: Eduardo Gomez opened an with Golden Savings and deposited over a period of 2 months 38 treasury warrants totalling P1,755,228.37. all drawn by the Philippine Fish Marketing Authority and purportedly signed by its General Manager and countersigned by its Auditor: 6 - directly payable to Gomez 32 - indorsed by their respective payees, followed by Gomez as second indorser

June 25 - July 16, 1979: all warrants were subsequently indorsed by Gloria Castillo as Cashier of Golden Savings and deposited to its Savings in the Metrobank branch They were then sent for clearing by the branch office to the principal office of Metrobank, which forwarded them to the Bureau of Treasury for special clearing More than 2 weeks after the deposits, Castillo asked if the warrants were cleared. She was told to wait. Gomez was also not allowed to withdraw from his exasperated over Gloria's repeated inquiries and also as an accommodation for a "valued client," Metrobank allowed Golden Savings to make the following withdrawals: July 9, 1979 - P508,000.00 July 13, 1979 - P310,000.00 July 16, 1979 - P150,000.00 Gomez was also allowed to withdraw a total amount of P1,167,500 (latest on July 16, 1979) July 21, 1979: Metrobank informed Golden Savings that 32 of the warrants had been dishonored by the Bureau of Treasury on July 19, 1979, and demanded the refund by Golden Savings of the amount it had previously withdrawn, to make up the deficit in its . - refused CA affirmed RTC: favored Golden Savings

ISSUE: W/N Metrobank can claim a refund from Golden Savings

HELD: NO. Affirmed. withdrawn must be charged not to Golden Savings but to Metrobank, which must bear the consequences of its own negligence. But the balance of P586,589.00 should be debited to Golden Savings, as obviously Gomez can no longer be permitted to withdraw this amount from his deposit because of the dishonor of the warrants Metrobank was negligent in giving Golden Savings the impression that the treasury warrants had been cleared and that, consequently, it was safe to allow Gomez to withdraw

It "presumed" that the warrants had been cleared simply because of "the lapse of one week." There was no reason why it should not have waited until the treasury warrants had been cleared

SESBRENO V. CA 222 SCRA 466 FACTS: Petitioner made a placement with Philfinance. The latter delivered to him documents, some of which was a promissory note from Delta Motors and a postdated check. The post-dated checks were dishonored. This prompted petitioner to ask for the promissory note from DMC and it was discovered that the note issued by DMC was marked as non-negotiable. As Sesbreno failed to recover his money, he filed case against DMC and Philfinance. ISSUE: Whether the non negotiability of a promissory note prevents its assignment HELD: The non-negotiability of the instrument doesn’t mean that it is non-assignable or transferable. It may still be assigned or transferred in whole or in part, even without the consent of the promissory note, since consent is not necessary for the validity of the assignment. In assignment, the assignee is merely placed in the position of the assignors and acquires the instrument subject to all the defenses that might have been set up against the original payee.

Ang Tek Lian vs. CA

Ang Tek Lian vs. Court of Appeals L-2516 September, 1950 Bengzon, J.: Facts: Ang Tek Lian knowing that he had no funds therefor, drew a check upon China Banking Corporation payable to the order of “cash”. He delivered it toLee Hua Hong in exchange for money. The check was presented by Lee Hua hong to the drawee bank for payment, but it w3as dishonored for insufficiency of funds. With this, Ang Tek Lian was convicted of estafa. Issue: Whether or not the check issued by Ang Tek Lian that is payable to the order to “cash” and not have been indorsed by Ang Tek Lian, making him not guilty for the crime of estafa. Held: No.Under Sec. 9 of NIL a check drawn payable to the order of “cash” is a check payable to bearer and the bank may pay it to the person presenting it for payment without the drawer’s indorsement. However, if the bank is not sure of the bearer’s identity or financial solvency, it has the right to demand identification or assurance against possible complication, such as forgery of drawer’s signature, loss of the check by the rightful owner, raising of the amount payable, etc. But where the bank is satisfied of the identity or economic standing of the bearer who tenders the check for collection, it will pay the instrument without further question; and it would incur no liability to the drawer in thus acting.