Philippine Education Co. vs.

Soriano GR L-22405, 30 June 1971 En Banc, Dizon (J) Facts: Enrique Montinola sought to purchase from the Manila Post Office 10 money orders (P200 each), offering to pay for them with a private check. Montinola was able to leave the building with his check and the 10 money orders without the knowledge of the teller. Upon discovery, message was sent to all postmasters and banks involving the unpaid money orders. One of the money orders was received by the Philippine Education Co. as part of its sales receipt. It was deposited by the company with the Bank of America, which cleared it with the Bureau of Post. The Postmaster, through the Chief of the Money Order Division of the Manila Post Office informed the bank of the irregular issuance of the money order. The bank debited the account of the company. The company moved for reconsideration. Issue: Whether postal money orders are negotiable instruments. Held: Philippine postal statutes are patterned from those of the United States, and the weight of authority in said country is that Postal money orders are not negotiable instruments inasmuch as the establishment of a postal money order is an exercise of governmental power for the publics benefit. Furthermore, some of the restrictions imposed upon money order by postal laws and regulations are inconsistent with the character of negotiable instruments. For instance, postal money orders may be withheld under a variety of circumstances, and which are restricted to not more than one indorsement.

Caltex (Philippines) Inc. vs. CA GR 97753, 10 August 1992 Second Division, Regalado (J) Facts: On various dates, Security Bank and Trust Co. (SEBTC), through its Sucat branch, issued 280 certificates of time deposit (CTD) in favor of one Angel dela Cruz who deposited with the bank the aggregate amount of P1.12 million. Anger de la Cruz delivered the CTDs to Caltex in connection with his purchase of fuel products from the latter. Subsequently, dela Cruz informed the bank that he lost all the CTDs, and thus executed an affidavit of loss to facilitate the issuance of the replacement CTDs. De la Cruz was able to obtain a loan of P875,000 from the bank, and in turn, he executed a notarized Deed of Assignment of Time Deposit in favor of the bank. Thereafter, Caltex presented for verification the CTDs (which were declared lost by de la Cruz) with the bank. Caltex formally informed the bank of its possession of the CTDs and its decision to preterminate the same. The bank rejected Caltex claim and demand, after Caltex failed to furnish copy of the requested documents evidencing the guarantee agreement, etc. In 1983, de la Cruz loan matured and the bank set-off and applied the time deposits as payment for the loan. Caltex filed the complaint, but which was dismissed. Issue [1]: Whether the Certificates of Time Deposit (CTDs) are negotiable instruments. Held [1]: The CTDs in question meet the requirements of the law for negotiability. Contrary to the lower courts findings, the CTDs are negotiable instruments (Section 1). Negotiability or nonnegotiability of an instrument is determined from the writing, i.e. from the face of the instrument itself. The documents provided that the amounts deposited shall be repayable to the depositor. The amounts are to be repayable to the bearer of the documents, i.e. whosoever may be the bearer at the time of presentment. Issue [2]: Whether the CTDs negotiation require delivery only.

Held [2]: Although the CTDs are bearer instruments, a valid negotiation thereof for the true purpose and agreement between it (Caltex) and de la Cruz requires both delivery and indorsement; as the CTDs were delivered to it as security for dela Cruz purchases of its fuel products, and not for payment. Herein, there was no negotiation in the sense of a transfer of title, or legal title, to the CTDs in which situation mere delivery of the bearer CTDs would have sufficed. The delivery thereof as security for the fuel purchases at most constitutes Caltex as a holder for value by reason of his lien. Accordingly, a negotiation for such purpose cannot be effected by mere delivery of the instrument since the terms thereof and the subsequent disposition of such security, in the event of non-payment of the principal obligation, must be contractually provided for. METROPOLITAN BANK & trust co. vs. CA G.R. No. 88866 February 18, 1991 Lessons Applicable: Forgery (Negotiable Instruments Law) FACTS: January 1979: Eduardo Gomez opened an account 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 account 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 account. - 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 vs. CA GR 89252, 24 May 1993 Third Division, Feliciano Facts: On 9 February 1981, Raul Sesbreno made a money market placement in the amount of P300,000 with the Philippine Underwriters Finance Corporation (PhilFinance), with a term of 32 days. PhilFinance issued to Sesbreno the Certificate of Confirmation of Sale of a Delta Motor Corporation Promissory Note (2731), the Certificate of Securities Delivery Receipt indicating the sale of the note with notation that said security was in the custody of Pilipinas Bank, and postdated checks drawn against the Insular Bank of Asia and America for P304,533.33 payable on 13 March 1981. The checks were dishonored for having been drawn against insufficient funds. Pilipinas Bank never released the note, nor any instrument related thereto, to Sesbreno; but Sesbreno learned that the security was issued 10 April 1980, maturing on 6 April 1981, has a face value of P2,300,833.33 with PhilFinance as payee and Delta Motors as maker; and was stamped non-negotiable on its face. As Sesbreno was unable to collect his investment and interest thereon, he filed an action for damages against Delta Motors and Pilipinas Bank. Issue: Whether non-negotiability of a promissory note prevents its assignment. Held: Only an instrument qualifying as a negotiable instrument under the relevant statute may be negotiated either by indorsement thereof coupled with delivery, or by delivery alone if it is in bearer form. A negotiable instrument, instead of being negotiated, may also be assigned or transferred. The legal consequences of negotiation and assignment of the instrument are different. A negotiable instrument may not be negotiated but may be assigned or transferred, absent an express prohibition against assignment or transfer written in the face of the instrument. herein, there was no prohibition stipulated.

FIRESTONE CASE!

Ang Tek Lian vs CA Ang Tek Lian vs. Court of Appeals G.R. No. L-2516 September 25, 1950 --payable to bearer FACTS: Petitioner drew a check payable to "cash"knowing that he had no funds in his account. He delivered said check to Hong for which the latter handed him money. When the check was presented for payment it was dishonored for insufficiency of funds. An information for the crime of estafa was filed against Ang Tek Lian. Petitioner however argues that he is not guilty of the offense charged because he did not endorse the check which was made payable to "cash". ISSUE: Whether a check payable to "cash" requires an indorsement by the drawer for it to be encashed. RULING: No. Under Section 9(d) of the 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.