NEGOTIABLE INSTRUMENTS NOTES

BASED ON AGBAYANIS BOOK AND ATTY. MERCADOS LECTURES

Page 180 of 190


BY: MA. ANGELA LEONOR C. AGUINALDO
ATENEO LAW 2D BATCH 2010
FACTS:
Petitioner redeemed property, which has been sold upon execution, with a
check issued to the buyer Ocang. The CA found that the check for P11200
paid by petitioner for the redemption in dispute has been dishonored, in
the face of the other findings in the same decision of the CA indicating that
instead of having been dishonored, the said check had only become stale,
albeit it being replaced with new ones from time to time.

HELD:
Surely, for a check to be dishonored upon presentment, on the one hand,
and to be stale for not being presented at all in time, are incompatible
developments that naturally have variantly legal consequences. Thus, if
indeed the check in question had been dishonored, then there can be no
doubt that the petitioners redemption was null and void. On the other
hand, if it had only become stale, then it becomes imperative that the
circumstances that caused its non-presentment be determined, for if this
wasnt due to the fault of petitioner, then it would be unfair to deprive him
of the rights he acquired as redemptioner, particularly, if after all, the
value of the check has otherwise been received or realized by the party
concerned.

The case was remanded to the trial court to receive all relevant and
competent evidence to the issue of whether or not Ocang has received in
one form or another, the full amount as redemption price of the four
parcels of land in dispute as well as to the other facts.

It was found out that Ocang, when he applied for a writ of possession,
there was payment of redemption price by Crystal. Thus, there was a
proper redemption.

180 MONTINOLA V. PNB
88 SCRA 178

FACTS:
Ramos, as a disbursing officer of an army division of the USAFE, made cash
advancements w/ the Provincial Treasurer of Lanao. In exchange, the
Provl Treasurer of Lanao gave him a P500,000 check. Thereafter, Ramos
presented the check to Laya for encashment. Laya in his capacity as
Provincial Treasurer of Misamis Oriental as drawer, issued a check to
Ramos in the sum of P100000, on the Philippines National Bank as drawee;
the P400000 value of the check was paid in military notes.

Ramos was unable to encash the said check for he was captured by the
Japanese. But after his release, he sold P30000 of the check to Montinola
for P90000 Japanese Military notes, of which only P45000 was paid by the
latter. The writing made by Ramos at the back of the check was to the
effect that he was assigning only P30000 of the value of the document with
an instruction to the bank to pay P30000 to Montinola and to deposit the
balance to Ramos's credit. This writing was, however, mysteriously
obliterated and in its place, a supposed indorsement appearing on the back
of the check was made for the whole amount of the check. At the time of
the transfer of this check to Montinola, the check was long overdue by
about 2-1/2 years.

Montinola instituted an action against the PNB and the Provincial Treasurer
of Misamis Oriental to collect the sum of P100,000, the amount of the
aforesaid check. There now appears on the face of said check the words in
parenthesis "Agent, Phil. National Bank" under the signature of Laya
purportedly showing that Laya issued the check as agent of the Philippine
National Bank.

HELD:
Montinola could not be considered as a holder in due course. Why? For
one to be a holder in due course, one should take the instrument before it
has become overdue. Remember that in this case, Montinola took the
check which has long become overdue. He cannot even be in the slightest
be considered as a holder because the NIL defines a holder as being the
payee or the indorsee of the negotiable instrument. In this case, he wasn't
the payee nor was he the indorsee of the check in issue.

181 PACHECO V. CA
319 SCRA 595

FACTS:
Due to dire financial needs of petitioner spouses who were engaged in the
construction business, they secured loans from Vicencio. At every loan
secured, the lender compelled the spouses to issue an undated check
despite the admission of spouses that their bank account has insufficient
funds or as on a later date, already closed. Lender assured them that the
issuance of the check was only evidence of indebtedness, that it would not
be presented to the bank, and it would be for formalities only. On the date
wherein there was an unpaid balance to the loans secured by the spouses,
the lender had them place a date on two of the later checks issued.
Surprised later on, the spouses were charged with estafa as the checks
were presented for encashment and was dishonored.

HELD: