negotiable instrument cases by atty. rafal

8/9/2019 Negotiable Instrument Cases by Atty. Rafal

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G.R. No. L-22405 June 30, 1971

PHILIPPINE EDUCATION CO., INC., plaintiff-appellant,vs.AURICIO A. !ORIANO, ET AL., defendant-appellees.

Marcial Esposo for plaintiff-appellant.

Office of the Solicitor General Arturo A. Alafriz, Assistant Solicitor General Antonio G. Ibarra and Attorney ConcepcionTorrios-A!apinan for defendants-appellees.

DI"ON, J.:

An appeal from a decision of the Court of First Instance of Manila dismissing the complaint filed by the Philippine EducationCo., Inc. against Mauricio A. oriano, Enrico Palomar and !afael Contreras.

"n April #$, #%&$ Enri'ue Montinola sought to purchase from the Manila Post "ffice ten (#)* money orders of P+)).)) eachpayable to E.P. Montinola ithaddress at ucena, ue/on. After the postal teller had made out money ordersnumbered#+01$&, #+01$2-#+01%&, Montinola offered to pay for them ith a private chec3s ere not generally accepted in payment ofmoney orders, the teller advised him to see the Chief of the Money "rder 4ivision, but instead of doing so, Montinolamanaged to leave building ith his on chec3 and the ten(#)* money orders ithout the 3noledge of the teller.

"n the same date, April #$, #%&$, upon discovery of the disappearance of the unpaid money orders, an urgent message assent to all postmasters, and the folloing day notice as li3eise served upon all ban3s, instructing them not to pay anyoneof the money orders aforesaid if presented for payment. 5he 6an3 of America received a copy of said notice three days later.

"n April +7, #%&$ one of the above-mentioned money orders numbered #+01$$ as received by appellant as part of its salesreceipts. 5he folloing day it deposited the same ith the 6an3 of America, and one day thereafter the latter cleared it iththe 6ureau of Posts and received from the latter its face value of P+)).)).

"n eptember +2, #%1#, appellee Mauricio A. oriano, Chief of the Money "rder 4ivision of the Manila Post "ffice, acting forand in behalf of his co-appellee, Postmaster Enrico Palomar, notified the 6an3 of America that money order 8o. #+01$$attached to his letter had been found to have been irregularly issued and that, in vie thereof, the amount it represented hadbeen deducted from the ban39s clearing account. For its part, on August + of the same year, the 6an3 of America debitedappellant9s account ith the same amount and gave it advice thereof by means of a debit memo.

"n "ctober #+, #%1# appellant re'uested the Postmaster :eneral to reconsider the action ta3en by his office deducting thesum of P+)).)) from the clearing account of the 6an3 of America, but his re'uest as denied. o as appellant9ssubse'uent re'uest that the matter be referred to the ecretary of ;ustice for advice. 5hereafter, appellant elevated thematter to the ecretary of Public


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5he first, second and fifth assignments of error discussed in appellant9s brief are related to the other and ill therefore bediscussed =ointly. 5hey raise this main issue> that the postal money order in 'uestion is a negotiable instrumentB that itsnature as such is not in anyay affected by the letter dated "ctober +1, #%0$ signed by the 4irector of Posts and addressedto all ban3s ith a clearing account ith the Post "ffice, and that money orders, once issued, create a contractualrelationship of debtor and creditor, respectively, beteen the government, on the one hand, and the remitters payees orendorses, on the other.

It is not disputed that our postal statutes ere patterned after statutes in force in the nited tates. For this reason, ours aregenerally construed in accordance ith the construction given in the nited tates to their on postal statutes, in the

absence of any special reason =ustifying a departure from this policy or practice. 5he eight of authority in the nited tatesis that postal money orders are not negotiable instruments (6olognesi vs. .. #$% Fed. 7%&B .. vs. toc3 4raers8ational 6an3, 7) Fed. %#+*, the reason behind this rule being that, in establishing and operating a postal money ordersystem, the government is not engaging in commercial transactions but merely eDercises a governmental poer for thepublic benefit.

It is to be noted in this connection that some of the restrictions imposed upon money orders by postal las and regulationsare inconsistent ith the character of negotiable instruments. For instance, such las and regulations usually provide for notmore than one endorsementB payment of money orders may be ithheld under a variety of circumstances (0% C.;. ##&7*.

"f particular application to the postal money order in 'uestion are the conditions laid don in the letter of the 4irector ofPosts of "ctober +1, #%0$ (EDhibit 7* to the 6an3 of America for the redemption of postal money orders received by it from itsdepositors. Among others, the condition is imposed that in cases of adverse claim, the money order or money ordersinvolved ill be returned to you (the ban3* and the, corresponding amount ill have to be refunded to the Postmaster, Manila,ho reserves the right to deduct the value thereof from any amount due you if such step is deemed necessary. 5heconditions thus imposed in order to enable the ban3 to continue en=oying the facilities theretofore en=oyed by its depositors,

ere accepted by the 6an3 of America. 5he latter is therefore bound by them. 5hat it is so is clearly referred from the factthat, upon receiving advice that the amount represented by the money order in 'uestion had been deducted from its clearingaccount ith the Manila Post "ffice, it did not file any protest against such action.

Moreover, not being a party to the understanding eDisting beteen the postal officers, on the one hand, and the 6an3 ofAmerica, on the other, appellant has no right to assail the terms and conditions thereof on the ground that the letter settingforth the terms and conditions aforesaid is void because it as not issued by a 4epartment ?ead in accordance ith ec. 2%(6* of the !evised Administrative Code. In reality, hoever, said legal provision does not apply to the letter in 'uestionbecause it does not provide for a department regulation but merely sets don certain conditions upon the privilege granted tothe 6an3 of Amrica to accept and pay postal money orders presented for payment at the Manila Post "ffice. uch being thecase, it is clear that the 4irector of Posts had ample authority to issue it pursuant to ec. ##%) of the !evised AdministrativeCode.

In vie of the foregoing,


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G.R. No. L-491## J$nu$%& 30, 1990

PHILIPPINE AIRLINE!, INC., petitioner,vs.HON. COURT O' APPEAL!, HON. JUDGE RICARDO D. GALANO, Cou%( o) '*%+( In+($ne o) $n*$, %$n/ III,JAIE . DEL RO!ARIO, Deu(& !/e%*)), Cou%( o) '*%+( In+($ne, $n*$, $n AELIA TAN,respondents.

GUTIERRE", JR., J.:

6ehind the simple issue of validity of an alias rit of eDecution in this case is a more fundamental 'uestion. hould the Courtallo a too literal interpretation of the !ules ith an open invitation to 3navery to prevail over a more discerning and =ustapproachG hould e not apply the ancient rule of statutory construction that las are to be interpreted by the spirit hichvivifies and not by the letter hich 3illethG

5his is a petition to revie on certiorari the decision of the Court of Appeals in CA-:.!. 8o. )21%& entitled hilippineAirlines, Inc. (. on. "ud!e #icardo . Galano, et al./,dismissing the petition for certiorari against the order of the Court ofFirst Instance of Manila hich issued an alias rit of eDecution against the petitioner.

5he petition involving the alias rit of eDecution had its beginnings on 8ovember $, #%12, hen respondent Amelia 5an,under the name and style of Able Printing Press commenced a complaint for damages before the Court of First Instance ofManila. 5he case as doc3eted as Civil Case 8o. 2#7)2, entitledA+elia Tan, et al. (. hilippine Airlines, Inc.

After trial, the Court of First Instance of Manila, 6ranch #7, then presided over by the late ;udge ;esus P. Morfe rendered=udgment on ;une +%, #%2+, in favor of private respondent Amelia 5an and against petitioner Philippine Airlines, Inc. (PA* asfollos>


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"n March 7,#%2$, the Court of Appeals denied the issuance of the alias rit for being premature, ordering the eDecutingsheriff Emilio . !eyes to appear ith his return and eDplain the reason for his failure to surrender the amounts paid to him bypetitioner PA. ?oever, the order could not be served upon 4eputy heriff !eyes ho had absconded or disappeared.

"n March +$, #%2$, motion for the issuance of a partial alias rit of eDecution as filed by respondent Amelia 5an.

"n April #%, #%2$, respondent Amelia 5an filed a motion to ithdra Motion for Partial Alias

I

A8 AIA

II

PALME85 "F ;4:ME85 5" 5?E IMPEME85I8: "FFICE! A 4I!EC5E4 I8 5?E

Indeed, technicality cannot be countenanced to defeat the eDecution of a =udgment for eDecution is the fruit and end of the


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suit and is very aptly called the life of the la (Ipe3d=ian Merchandising Co. v. Court of 5aD Appeals, $ C!A &% #%17NBCommissioner of Internal !evenue v. Hisayan Electric Co., #% C!A 1%2, 1%$ #%12N*. A =udgment cannot be renderednugatory by the unreasonable application of a strict rule of procedure. Hested rights ere never intended to rest on there'uirement of a return, the office of hich is merely to inform the court and the parties, of any and all actions ta3en underthe rit of eDecution.


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!A +)),02 Am. t. !ep. 0)+*. Conse'uently, unless authori/ed to do so by la or by consent of the obligee a public officerhas no authority to accept anything other than money in payment of an obligation under a =udgment being eDecuted. trictlyspea3ing, the acceptance by the sheriff of the petitioner9s chec3s, in the case at bar, does not, per se, operate as a dischargeof the =udgment debt.

ince a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, byitself, operate as payment (ee. #$%, Act +)7# on 8egs. Insts.B Art. #+0%, Civil CodeB 6ryan andon Co. v. American 6an3, 2Phil. +&&B 5an unco v. antos, % Phil. 00B +# !.C.. 1), 1#*. A chec3, hether a manager9s chec3 or ordinary chee3, is notlegal tender, and an offer of a chec3 in payment of a debt is not a valid tender of payment and may be refused receipt by the

obligee or creditor. Mere delivery of chec3s does not discharge the obligation under a =udgment. 5he obligation is noteDtinguished and remains suspended until the payment by commercial document is actually reali/ed (Art. #+0%, Civil Code,par. 7*.

If bouncing chec3s had been issued in the name of Amelia 5an and not the heriff9s, there ould have been no payment.After dishonor of the chec3s, Ms. 5an could have run after other properties of PA. 5he theory is that she has received novalue for hat had been aarded her. 6ecause the chec3s ere dran in the name of Emilio . !eyes, neither has shereceived anything. 5he same rule should apply.

It is argued that if PA had paid in cash to heriff !eyes, there ould have been payment in full legal contemplation. 5hereasoning is logical but is it valid and properG ogic has its limits in decision ma3ing.

As beteen to innocent persons, one of hom must suffer the conse'uence of a breach of trust, the oneho made it possible by his act of confidence must bear the loss. (6londeau, et al. v. 8ano, et al., -0#722,;uly +1, #%7&, 1# Phil. 1+&*

?aving failed to employ the proper safeguards to protect itself, the =udgment debtor hose act made possible the loss hadbut itself to blame.

5he attention of this Court has been called to the bad practice of a number of eDecuting officers, of re'uiring chec3s insatisfaction of =udgment debts to be made out in their on names. If a sheriff directs a =udgment debtor to issue the chec3s inthe sheriff9s name, claiming he must get his commission or fees, the debtor must report the sheriff immediately to the courthich ordered the eDecution or to the upreme Court for appropriate disciplinary action. Fees, commissions, and salaries arepaid through regular channels. 5his improper procedure also allos such officers, ho have siDty (1)* days ithin hich toma3e a return, to treat the moneys as their personal finds and to deposit the same in their private accounts to earn siDty (1)*


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days interest, before said finds are turned over to the court or =udgment creditor (ee 6algos v. Helasco, #)$ C!A &+%$#N*. uite as easily, such officers could put up the defense that said chec3s had been issued to them in their private orpersonal capacity.


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!e$%$(e O*n*on+

NARA!A, J., dissenting>

5he eDecution of final =udgments and orders is a function of the sheriff, an officer of the court hose authority is by and largestatutorily determined to meet the particular eDigencies arising from or connected ith the performance of the multifariousduties of the office. It is the ac3noledgment of the many dimensions of this authority, defined by statute and chiselled bypractice, hich compels me to disagree ith the decision reached by the ma=ority.

A consideration of the ide latitude of discretion alloed the sheriff as the officer of the court most directly involved ith theimplementation and eDecution of final =udgments and orders persuades me that PA9s payment to the sheriff of its =udgmentdebt to Amelia 5an, though made by chec3 issued in said officer9s name, lafully satisfied said obligation and foreclosedfurther recourse therefor against PA, notithstanding the sheriffs failure to deliver to 5an the proceeds of the chec3.

It is a matter of history that the =udiciary .. is an inherit or of the Anglo-American tradition. hether it be against property of the=udgment debtor in his hands or in the hands of a third person i e. money =udgment*, or for the sale of property, real orpersonal (i.e. foreclosure of mortgage* or the delivery thereof, etc. (sec. $, !ule 7%*.

nder sec. #& of the same !ule, the sheriff is empoered to levy on so much of the =udgment debtor9s property as may besufficient to enforce the money =udgment and sell these properties at public auction after due notice to satisfy the ad=udgedamount. It is the sheriff ho, after the auction sale, conveys to the purchaser the property thus sold (secs. +&, +1, +2, !ule7%*, and pays the =udgment creditor so much of the proceeds as ill satisfy the =udgment.


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but it goes ithout saying that if the sheriff so desires, he may re'uire payment to be made in laful money. If he accepts thechec3, he places himself in a position here he ould be liable to the =udgment creditor if any damages are suffered by thelatter as a result of the medium in hich payment as made (;avellana v. Mirasol, et al., 0) Phil. 21#*. 5he validity of thepayment made by the =udgment debtor, hoever, is in no ise affected and the latter is discharged from his obligation to the=udgment creditor as of the moment the chec3 issued to the sheriff is encashed and the proceeds are received by Id. office.5he issuance of the chec3 to a person authori/ed to receive it (Art. #+0), Civil CodeB ee. 01 of the Code of Civil ProcedureBEnage v. Hda y ?i=os de Escano, 7$ Phil. 1&2, cited in ;avellana v. Mirasol, 0) Phil. 21#* operates to release the =udgmentdebtor from any further obligations on the =udgment.

5he sheriff is an ad=unct of the courtB a court functionary hose competence involves both discretion and personal liability(concurring opinion of ;. Fernando, citing y Piaoco v. "smena, % Phil. +%%, in 6agatsing v. ?errera, 1& C!A 070*. 6eingan officer of the court and acting ithin the scope of his authori/ed functions, the sheriff s receipt of the chec3s in payment ofthe =udgment eDecution, may be deemed, in legal contemplation, as received by the court itself (ara v. 6ayona, #) May#%&&, 8o. - #)%#%*.

5hat the sheriff functions as a conduit of the court is further underscored by the fact that one of the re'uisites for appointmentto the office is the eDecution of a bond, conditioned (upon* the faithful performance of his (the appointee9s* duties .. for thedelivery or payment to :overnment, or the person entitled thereto, of all properties or sums of money that shall officiallycome into his hands (sec. 77), !evised Administrative Code*.

5here is no 'uestion that the chec3s came into the sheriffs possession in his official capacity. 5he court may re'uire of the=udgment debtor, in complying ith the =udgment, no further burden than his vigilance in ensuring that the person he is payingmoney or delivering property to is a person authori/ed by the court to receive it. 6eyond this, further eDpectations becomeunreasonable. 5o my mind, a proposal that ould ma3e the =udgment debtor un'ualifiedly the insurer of the =udgmentcreditor9s entitlement to the =udgment amount hich is really hat this case is all about begs the 'uestion.

5hat the chec3s ere made out in the sheriffs name (a practice, by the ay, of long and common acceptance* is of littleconse'uence if =uDtaposed ith the eDtent of the authority eDplicitly granted him by la as the officer entrusted ith the poerto eDecute and implement court =udgments. 5he sheriffs re'uirement that the chec3s in payment of the =udgment debt beissued in his name as simply an assertion of that authorityB and PA9s compliance cannot in the premises be faulted merelybecause of the sheriffs subse'uent malfeasance in absconding ith the payment instead of turning it over to the =udgmentcreditor.

If payment had been in cash, no 'uestion about its validity or of the authority and duty of the sheriff to accept it in settlementof PA9s =udgment obligation ould even have arisen. imply because it as made by chec3s issued in the sheriff s namedoes not arrant reaching any different conclusion.

As payment to the court discharges the =udgment debtor from his responsibility on the =udgment, so too must payment to theperson designated by such court and authori/ed to act in its behalf, operate to produce the same effect.

It is unfortunate and deserving of commiseration that Amelia 5an as deprived of hat as ad=udged to her hen the sheriff

misappropriated the payment made to him by PA in dereliction of his sorn duties. 6ut I submit that her remedy lies, nothere and in reviving liability under a =udgment already lafully satisfied, but elsehere.

ACC"!4I8:L, I vote to grant the petition.

Melencio-errera, Gancayco, "., concurs.

'ELICIANO, J., dissenting>

I concur in the able dissenting opinions of 8arvasa and Padilla, ;;. and ould merely ish to add a fe footnotes to theirlucid opinions.

#. 8arvasa, ;. has demonstrated in detail that a sheriff is authorizedby the !ules of Court and our case lato receive either legal tender or chec3s from the =udgment debtor in satisfaction of the =udgment debt. Inaddition, Padilla, ;. has underscored the obli!ationof the sheriff, imposed upon him by the nature of hisoffice and the la, to turn over such legal tender, chec3s and proceeds of eDecution sales to the =udgmentcreditor. 5he failure of a sheriff to effect such turnover and his conversion of the funds (or goods* held byhim to his on uses, do not have the effect of frustrating payment by and conse'uent discharge of the=udgment debtor.

5o hold otherise ould be to thro the ris3 of the sheriff faithfully performing his duty as a public officerupon those members of the general public ho are compelled to deal ith him. It seems to me that a=udgment debtor ho turns over funds or property to the sheriff can not reasonably be made an insurer ofthe honesty and integrity of the sheriff and that the ris3 of the sheriff carrying out his duties honestly andfaithfully is properly lodged in the tate itself 5he sheriff, li3e all other officers of the court, is appointed andpaid and controlled and disciplined by the :overnment, more specifically by this Court. 5he public surelyhas a duty to report possible rongdoing by a sheriff or similar officer to the proper authorities and, ifnecessary, to testify in the appropriate =udicial and administrative disciplinary proceedings. 6ut to ma3e the


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individual members of the general community insurers of the honest performance of duty of a sheriff, orother officer of the court, over hom they have no control, is not only deeply unfair to the former. It is also aconfession of comprehensive failure and comes too close to an abdication of duty on the part of the Courtitself. 5his Court should have no part in that.

+. I also feel compelled to comment on the ma=ority opinion ritten by :utierre/, ;. ith all his customaryand special ay ith ords. My learned and elo'uent brother in the Court apparently accepts theproposition that payment by a =udgment debtor of cash to a sheriff produces the legal effects of payment,the sheriff being authori/ed to accept such payment. 5hus, in page #) of hisponencia, :utierre/, ;. rites>

5he receipt of money due on a =udgment by an officer authori/ed by la to accept it ill satisfy the debt.(Citations omitted*

5he theory is here payment is made to a person authori/ed and recogni/ed by the creditor, the paymentto such a person so authori/ed is deemed payment to the creditor. nder ordinary circumstances, paymentby the =udgment debtor in the case at bar, to the sheriff ould be valid payment to eDtinguish the =udgmentdebt.

hortly thereafter, hoever, :utierre/, ;. bac3s off from the above position and strongly implies thatpayment in cash to the sheriff is sheer imprudence on the part of the =udgment debtor and that therefore,should the sheriff abscond ith the cash, the =udgment debtor has not validly discharged the =udgmentdebt>

It is argued that if PA had paid in cash to heriff !eyes, there ould have been payment in full legalcontemplation. 5he reasoning is logical but is it valid and properG

In the first place, PA did not pay in cash. It paid in chec3s.And second, payment in cash alays carries ith it certain cautions. 8obody hands over big amounts ofcash in a careless and inane manner. Mature thought is given to the possibility of the cash being lost, of thebearer being aylaid or running off ith hat he is carrying for another. Payment in chec3s is preciselyintended to avoid the possibility of the money going to the rong party....

Payment in money or cash to the implementing officer may be deemed absolute payment of the =udgmentdebt but the court has never, in the least bit, suggested that =udgment debtors should settle their obligationsby turning over huge amounts of cash or legal tender to sheriffs and other eDecuting officers. ... (Emphasisin the original* (Ma=ority opinion, pp. #+-#7*

5here is no dispute ith the suggestion apparently made that maDimum safety is secured here the =udgment debtor deliversto the sheriff not cash but a chec&made out, not in the name of the sheriff, but in the ud!+ent creditor8s na+e. 5hefundamental point that must be made, hoever, is that under our la only cash is legal tender and that the sheriff can becompelled to accept only cashand not chec3s, e(en if +ade out to the na+e of the ud!+ent creditor.15he sheriff could

have 'uite lafully re'uired PA to deliver to him only cash, i.e., Philippine currency. If the sheriff had done so, and if PAhad complied ith such a re'uirement, as it ould have had to, one ould have to agree that legal payment must be deemedto have been effected. It re'uires no particularly acute mind to note that a dishonest sheriff could easily convert the moneyand abscond. 5he fact that the sheriff in the instant case re'uired, not cash to be delivered to him, but rather a chec3 madeout in his name, does notchange the legal situation. PA did notthereby become negligentB it did notma3e the loss anymorepossible or probable than if it had instead delivered plain cash to the sheriffs.

It seems to me that the ma=ority opinion9s real premise is the unspo3en one that the =udgment debtor should bear the ris3 ofthe fragility of the sheriff s virtue until the money or property parted ith by the =udgment debtor actually reaches the hands ofthe =udgment creditor. 5his brings me bac3 to my earlier point that ris3 is most appropriately borne not by the =udgmentdebtor, nor indeed by the =udgment creditor, but by the tate itself. 5he Court re'uires all sheriffs to post good and ade'uatefidelity bonds before entering upon the performance of their duties and, presumably, to maintain such bonds in force andeffect throughout their stay in office.25he =udgment creditor, in circumstances li3e those of the instant case, could bealloed to eDecute upon the absconding sheriff s bond.3

I believe the Petition should be granted and I vote accordingly.

PADILLA, J., 4issenting "pinion

From the facts that appear to be undisputed, I reach a conclusion different from that of the ma=ority. heriff Emilio . !eyes,the trial court9s authori/ed sheriff, armed ith a rit of eDecution to enforce a final money =udgment against the petitionerPhilippine Airlines (PA* in favor of private respondent Amelia 5an, proceeded to petitioner PA9s office to implement the rit.

5here is no 'uestion that heriff !eyes, in enforcing the rit of eDecution, as acting ith full authority as an officer of thela and not in his personal capacity. tated differently, PA had every right to assume that, as an officer of the la, heriff!eyes ould perform his duties as en=oined by la. It ould be grossly unfair to no charge PA ith advanced orconstructive notice that Mr. !eyes ould abscond and not deliver to the =udgment creditor the proceeds of the rit of


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eDecution. If a =udgment debtor cannot rely on and trust an officer of the la, as the heriff, hom else can he trustG

Pursued to its logical eDtreme, if PA had delivered to heriff !eyes the amount of the =udgment in CA?, i.e. Philippinecurrency, ith the corresponding receipt signed by heriff !eyes, this ould have been payment by PA in full legalcontemplation, because under Article #+0) of the Civil Code, payment shall be made to the person in hose favor theobligation has been constituted or his successor in interest or any person authorized to recei(e it. And said payment if madeby PA in cash, i.e., Philippine currency, to heriff !eyes ould have satisfied PA9s =udgment obligation, as payment is alegally recogni/ed mode for eDtinguishing one9s obligation. (Article #+7#, Civil Code*.

nder ec. #&, !ule 7%, !ules of Court hich provides that-

ec. #&. EDecution of money =udgments. O 5he officer must enforce an eDecution of a money =udgment bylevying on all the property, real and personal of every name and nature hatsoever, and hich may bedisposed of for value, of the =udgment debtor not eDempt from eDecution, or on a sufficient amount of suchproperty, if there be sufficient, and selling the same, andpayin! to the ud!+ent creditor, or his attorney, so+uch of the proceeds as 9ill satisfy the ud!+ent. ... .(emphasis supplied*

it ould be the duty of heriff !eyes to pay to the =udgment creditor the proceeds of the eDecution i.e., the cash receivedfrom PA (under the above assumption*. 6ut, the duty of the sheriff to pay the cash to the =udgment creditor ould be amatter separate the distinct from the fact that PA ould have satisfied its =udgment obligation to Amelia 5an, the =udgmentcreditor, by delivering the cash amount due under the =udgment to heriff !eyes.

4id the situation change by PA9s delivery of its to (+* chec3s totalling P7),))).)) dran against its ban3 account, payableto heriff !eyes, for account of the =udgment rendered against PAG I do not thin3 so, because hen heriff !eyesencashed the chec3s, the encashment as in fact a payment by PA to Amelia 5an through heriff !eyes, an officer of thela authori/ed to receive payment, and such payment discharged PA9 obligation under the eDecuted =udgment.

If the PA chee3s in 'uestion had not been encashed by heriff !eyes, there ould be no payment by PA and,conse'uently no discharge or satisfaction of its =udgment obligation. 6ut the chec3s had been encashed by heriff !eyesgiving rise to a situation as if PA had paid heriff !eyes in cash, i.e., Philippine currency. 5his, e repeat, is payment, inlegal contemplation, on the part of PA and this payment legally discharged PA from its =udgment obligation to the =udgmentcreditor. 5o be sure, the same encashment by heriff !eyes of PA9s chec3s delivered to him in his official capacity asheriff, imposed an obligation on heriff !eyes to pay and deliver the proceeds of the encashment to Amelia 5an ho isdeemed to have ac'uired a cause of action against heriff !eyes for his failure to deliver to her the proceeds of theencashment. As held>

Payment of a =udgment, to operate as a release or satisfaction, even pro tanto must be made to the plaintiffor to some person authori/ed by him, or by la, to receive it. 5he payment of money to the sheriff havingan eDecution satisfies it, and, if the plaintiff fails to receive it, his only remedy is against the officer(?enderson v. Planters9 and Merchants 6an3, &% " 0%7, #2$ Ala. 0+)*.

Payment of an eDecution satisfies it ithout regard to hether the officer pays it over to the creditor ormisapplies it (70), 77 C.;.. 100, citing Elliot v. ?iggins, $7 8.C. 0&%*. If defendant consents to the heriff smisapplication of the money, hoever, defendant is estopped to claim that the debt is satisfied (70), 77C.;.. 100, citing ?eptinstall v. Medlin $7 8.C. #1*.

5he above rulings find even more cogent application in the case at bar because, as contended by petitioner PA (not deniedby private respondent*, hen heriff !eyes served the rit of eDecution on PA, he (!eyes* as accompanied by privaterespondent9s counsel. Prudence dictated that hen PA delivered to heriff !eyes the to (+* 'uestioned chec3s (payable toheriff !eyes*, private respondent9s counsel should have insisted on their immediate encashment by the heriff ith thedraee ban3 in order to promptly get hold of the amount belonging to his client, the =udgment creditor.

ACC"!4I8:L, I vote to grant the petition and to 'uash the court a 7uo8s alias rit of eDecution.

Melencio-errera, Gancayco, Sar+iento, Cortes, ""., concurs.

!e$%$(e O*n*on+

NARA!A, J., dissenting>

5he eDecution of final =udgments and orders is a function of the sheriff, an officer of the court hose authority is by and largestatutorily determined to meet the particular eDigencies arising from or connected ith the performance of the multifariousduties of the office. It is the ac3noledgment of the many dimensions of this authority, defined by statute and chiselled bypractice, hich compels me to disagree ith the decision reached by the ma=ority.

A consideration of the ide latitude of discretion alloed the sheriff as the officer of the court most directly involved ith theimplementation and eDecution of final =udgments and orders persuades me that PA9s payment to the sheriff of its =udgmentdebt to Amelia 5an, though made by chec3 issued in said officer9s name, lafully satisfied said obligation and foreclosed


12/75

further recourse therefor against PA, notithstanding the sheriffs failure to deliver to 5an the proceeds of the chec3.

It is a matter of history that the =udiciary .. is an inherit or of the Anglo-American tradition. hether it be against property of the=udgment debtor in his hands or in the hands of a third person i e. money =udgment*, or for the sale of property, real orpersonal (i.e. foreclosure of mortgage* or the delivery thereof, etc. (sec. $, !ule 7%*.

nder sec. #& of the same !ule, the sheriff is empoered to levy on so much of the =udgment debtor9s property as may besufficient to enforce the money =udgment and sell these properties at public auction after due notice to satisfy the ad=udgedamount. It is the sheriff ho, after the auction sale, conveys to the purchaser the property thus sold (secs. +&, +1, +2, !ule

7%*, and pays the =udgment creditor so much of the proceeds as ill satisfy the =udgment.


13/75

the =udgment eDecution, may be deemed, in legal contemplation, as received by the court itself (ara v. 6ayona, #) May#%&&, 8o. - #)%#%*.

5hat the sheriff functions as a conduit of the court is further underscored by the fact that one of the re'uisites for appointmentto the office is the eDecution of a bond, conditioned (upon* the faithful performance of his (the appointee9s* duties .. for thedelivery or payment to :overnment, or the person entitled thereto, of all properties or sums of money that shall officiallycome into his hands (sec. 77), !evised Administrative Code*.

5here is no 'uestion that the chec3s came into the sheriffs possession in his official capacity. 5he court may re'uire of the=udgment debtor, in complying ith the =udgment, no further burden than his vigilance in ensuring that the person he is payingmoney or delivering property to is a person authori/ed by the court to receive it. 6eyond this, further eDpectations becomeunreasonable. 5o my mind, a proposal that ould ma3e the =udgment debtor un'ualifiedly the insurer of the =udgmentcreditor9s entitlement to the =udgment amount hich is really hat this case is all about-begs the 'uestion.

5hat the chec3s ere made out in the sheriffs name (a practice, by the ay, of long and common acceptance* is of littleconse'uence if =uDtaposed ith the eDtent of the authority eDplicitly granted him by la as the officer entrusted ith the poerto eDecute and implement court =udgments. 5he sheriffs re'uirement that the chec3s in payment of the =udgment debt beissued in his name as simply an assertion of that authorityB and PA9s compliance cannot in the premises be faulted merelybecause of the sheriffs subse'uent malfeasance in absconding ith the payment instead of turning it over to the =udgmentcreditor.

If payment had been in cash, no 'uestion about its validity or of the authority and duty of the sheriff to accept it in settlementof PA9s =udgment obligation ould even have arisen. imply because it as made by chec3s issued in the sheriff s namedoes not arrant reaching any different conclusion.

As payment to the court discharges the =udgment debtor from his responsibility on the =udgment, so too must payment to theperson designated by such court and authori/ed to act in its behalf, operate to produce the same effect.

It is unfortunate and deserving of commiseration that Amelia 5an as deprived of hat as ad=udged to her hen the sheriffmisappropriated the payment made to him by PA in dereliction of his sorn duties. 6ut I submit that her remedy lies, nothere and in reviving liability under a =udgment already lafully satisfied, but elsehere.

ACC"!4I8:L, I vote to grant the petition.

Melencio-errera, Gancayco, "., concurs.

'ELICIANO, J., dissenting>

I concur in the able dissenting opinions of 8arvasa and Padilla, ;;. and ould merely ish to add a fe footnotes to theirlucid opinions.

#. 8arvasa, ;. has demonstrated in detail that a sheriff is authorizedby the !ules of Court and our case lato receive either legal tender or chec3s from the =udgment debtor in satisfaction of the =udgment debt. Inaddition, Padilla, ;. has underscored the obli!ationof the sheriff, imposed upon him by the nature of hisoffice and the la, to turn over such legal tender, chec3s and proceeds of eDecution sales to the =udgmentcreditor. 5he failure of a sheriff to effect such turnover and his conversion of the funds (or goods* held byhim to his on uses, do not have the effect of frustrating payment by and conse'uent discharge of the=udgment debtor.

5o hold otherise ould be to thro the ris3 of the sheriff faithfully performing his duty as a public officerupon those members of the general public ho are compelled to deal ith him. It seems to me that a=udgment debtor ho turns over funds or property to the sheriff can not reasonably be made an insurer ofthe honesty and integrity of the sheriff and that the ris3 of the sheriff carrying out his duties honestly andfaithfully is properly lodged in the tate itself 5he sheriff, li3e all other officers of the court, is appointed andpaid and controlled and disciplined by the :overnment, more specifically by this Court. 5he public surelyhas a duty to report possible rongdoing by a sheriff or similar officer to the proper authorities and, ifnecessary, to testify in the appropriate =udicial and administrative disciplinary proceedings. 6ut to ma3e theindividual members of the general community insurers of the honest performance of duty of a sheriff, orother officer of the court, over hom they have no control, is not only deeply unfair to the former. It is also aconfession of comprehensive failure and comes too close to an abdication of duty on the part of the Courtitself. 5his Court should have no part in that.

+. I also feel compelled to comment on the ma=ority opinion ritten by :utierre/, ;. ith all his customaryand special ay ith ords. My learned and elo'uent brother in the Court apparently accepts theproposition that payment by a =udgment debtor of cash to a sheriff produces the legal effects of payment,the sheriff being authori/ed to accept such payment. 5hus, in page #) of hisponencia, :utierre/, ;. rites>

5he receipt of money due on a =udgment by an officer authori/ed by la to accept it ill satisfy the debt.(Citations omitted*


14/75

5he theory is here payment is made to a person authori/ed and recogni/ed by the creditor, the paymentto such a person so authori/ed is deemed payment to the creditor. nder ordinary circumstances, paymentby the =udgment debtor in the case at bar, to the sheriff ould be valid payment to eDtinguish the =udgmentdebt.

hortly thereafter, hoever, :utierre/, ;. bac3s off from the above position and strongly implies thatpayment in cash to the sheriff is sheer imprudence on the part of the =udgment debtor and that therefore,should the sheriff abscond ith the cash, the =udgment debtor has not validly discharged the =udgmentdebt>

It is argued that if PA had paid in cash to heriff !eyes, there ould have been payment in full legalcontemplation. 5he reasoning is logical but is it valid and properG

In the first place, PA did not pay in cash. It paid in chec3s.

And second, payment in cash alays carries ith it certain cautions. 8obody hands over big amounts ofcash in a careless and inane manner. Mature thought is given to the possibility of the cash being lost, of thebearer being aylaid or running off ith hat he is carrying for another. Payment in chec3s is preciselyintended to avoid the possibility of the money going to the rong party....

Payment in money or cash to the implementing officer may be deemed absolute payment of the =udgmentdebt but the court has never, in the least bit, suggested that =udgment debtors should settle their obligationsby turning over huge amounts of cash or legal tender to sheriffs and other eDecuting officers. ... (Emphasisin the original* (Ma=ority opinion, pp. #+-#7*

5here is no dispute ith the suggestion apparently made that maDimum safety is secured here the =udgment debtor delivers

to the sheriff not cash but a chec&made out, not in the name of the sheriff, but in the ud!+ent creditor8s na+e. 5hefundamental point that must be made, hoever, is that under our la only cash is legal tender and that the sheriff can becompelled to accept only cashand not chec3s, e(en if +ade out to the na+e of the ud!+ent creditor.15he sheriff couldhave 'uite lafully re'uired PA to deliver to him only cash, i.e., Philippine currency. If the sheriff had done so, and if PAhad complied ith such a re'uirement, as it ould have had to, one ould have to agree that legal payment must be deemedto have been effected. It re'uires no particularly acute mind to note that a dishonest sheriff could easily convert the moneyand abscond. 5he fact that the sheriff in the instant case re'uired, not cash to be delivered to him, but rather a chec3 madeout in his name, does notchange the legal situation. PA did notthereby become negligentB it did notma3e the loss anymorepossible or probable than if it had instead delivered plain cash to the sheriffs.

It seems to me that the ma=ority opinion9s real premise is the unspo3en one that the =udgment debtor should bear the ris3 ofthe fragility of the sheriff s virtue until the money or property parted ith by the =udgment debtor actually reaches the hands ofthe =udgment creditor. 5his brings me bac3 to my earlier point that ris3 is most appropriately borne not by the =udgmentdebtor, nor indeed by the =udgment creditor, but by the tate itself. 5he Court re'uires all sheriffs to post good and ade'uatefidelity bonds before entering upon the performance of their duties and, presumably, to maintain such bonds in force and

effect throughout their stay in office.25he =udgment creditor, in circumstances li3e those of the instant case, could bealloed to eDecute upon the absconding sheriff s bond.3

I believe the Petition should be granted and I vote accordingly.

PADILLA, J., 4issenting "pinion

From the facts that appear to be undisputed, I reach a conclusion different from that of the ma=ority. heriff Emilio . !eyes,the trial court9s authori/ed sheriff, armed ith a rit of eDecution to enforce a final money =udgment against the petitionerPhilippine Airlines (PA* in favor of private respondent Amelia 5an, proceeded to petitioner PA9s office to implement the rit.

5here is no 'uestion that heriff !eyes, in enforcing the rit of eDecution, as acting ith full authority as an officer of thela and not in his personal capacity. tated differently, PA had every right to assume that, as an officer of the la, heriff!eyes ould perform his duties as en=oined by la. It ould be grossly unfair to no charge PA ith advanced orconstructive notice that Mr. !eyes ould abscond and not deliver to the =udgment creditor the proceeds of the rit of

eDecution. If a =udgment debtor cannot rely on and trust an officer of the la, as the heriff, hom else can he trustGPursued to its logical eDtreme, if PA had delivered to heriff !eyes the amount of the =udgment in CA?, i.e. Philippinecurrency, ith the corresponding receipt signed by heriff !eyes, this ould have been payment by PA in full legalcontemplation, because under Article #+0) of the Civil Code, payment shall be made to the person in hose favor theobligation has been constituted or his successor in interest or any person authorized to recei(e it. And said payment if madeby PA in cash, i.e., Philippine currency, to heriff !eyes ould have satisfied PA9s =udgment obligation, as payment is alegally recogni/ed mode for eDtinguishing one9s obligation. (Article #+7#, Civil Code*.

nder ec. #&, !ule 7%, !ules of Court hich provides that-

ec. #&. EDecution of money =udgments.-5he officer must enforce an eDecution of a money =udgment bylevying on all the property, real and personal of every name and nature hatsoever, and hich may be


15/75

disposed of for value, of the =udgment debtor not eDempt from eDecution, or on a sufficient amount of suchproperty, if there be sufficient, and selling the same, andpayin! to the ud!+ent creditor, or his attorney, so+uch of the proceeds as 9ill satisfy the ud!+ent. ... .(emphasis supplied*

it ould be the duty of heriff !eyes to pay to the =udgment creditor the proceeds of the eDecution i.e., the cash receivedfrom PA (under the above assumption*. 6ut, the duty of the sheriff to pay the cash to the =udgment creditor ould be amatter separate the distinct from the fact that PA ould have satisfied its =udgment obligation to Amelia 5an, the =udgmentcreditor, by delivering the cash amount due under the =udgment to heriff !eyes.

4id the situation change by PA9s delivery of its to (+* chec3s totalling P7),))).)) dran against its ban3 account, payableto heriff !eyes, for account of the =udgment rendered against PAG I do not thin3 so, because hen heriff !eyesencashed the chec3s, the encashment as in fact a payment by PA to Amelia 5an through heriff !eyes, an officer of thela authori/ed to receive payment, and such payment discharged PA9 obligation under the eDecuted =udgment.

If the PA chee3s in 'uestion had not been encashed by heriff !eyes, there ould be no payment by PA and,conse'uently no discharge or satisfaction of its =udgment obligation. 6ut the chec3s had been encashed by heriff !eyesgiving rise to a situation as if PA had paid heriff !eyes in cash, i.e., Philippine currency. 5his, e repeat, is payment, inlegal contemplation, on the part of PA and this payment legally discharged PA from its =udgment obligation to the =udgmentcreditor. 5o be sure, the same encashment by heriff !eyes of PA9s chec3s delivered to him in his official capacity asheriff, imposed an obligation on heriff !eyes to pay and deliver the proceeds of the encashment to Amelia 5an ho isdeemed to have ac'uired a cause of action against heriff !eyes for his failure to deliver to her the proceeds of theencashment. As held>

Payment of a =udgment, to operate as a release or satisfaction, even pro tanto must be made to the plaintiffor to some person authori/ed by him, or by la, to receive it. 5he payment of money to the sheriff having

an eDecution satisfies it, and, if the plaintiff fails to receive it, his only remedy is against the officer(?enderson v. Planters9 and Merchants 6an3, &% " 0%7, #2$ Ala. 0+)*.

Payment of an eDecution satisfies it ithout regard to hether the officer pays it over to the creditor ormisapplies it (70), 77 C.;.. 100, citing Elliot v. ?iggins, $7 8.C. 0&%*. If defendant consents to the heriff smisapplication of the money, hoever, defendant is estopped to claim that the debt is satisfied (70), 77C.;.. 100, citing ?eptinstall v. Medlin $7 8.C. #1*.

5he above rulings find even more cogent application in the case at bar because, as contended by petitioner PA (not deniedby private respondent*, hen heriff !eyes served the rit of eDecution on PA, he (!eyes* as accompanied by privaterespondent9s counsel. Prudence dictated that hen PA delivered to heriff !eyes the to (+* 'uestioned chec3s (payable toheriff !eyes*, private respondent9s counsel should have insisted on their immediate encashment by the heriff ith thedraee ban3 in order to promptly get hold of the amount belonging to his client, the =udgment creditor.

ACC"!4I8:L, I vote to grant the petition and to 'uash the court a 7uo8s alias rit of eDecution.

Melencio-errera, Gancayco, Sar+iento, Cortes, ""., concurs.

'oo(no(e+

# Art. #+0%, Civil CodeB e.g., 6elisario v. 8atividad, 1) Phil. #&1 (#%70*B Hillanueva v. antos, 12 Phil 10$(#%7$*.

+ ee e.g., ec. 01, !epublic Act 8o. +%1, as amended by !epublic Act 8o. 0$#0.

7 ee e.g., ec. %, Act 8o. 7&%$.


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G.R. No. ### 'e6%u$%& 1#, 1991

ETROPOLITAN AN TRU!T COPAN8, petitioner,vs.COURT O' APPEAL!, GOLDEN !AING! LOAN A!!OCIATION, INC., LUCIA CA!TILLO, AGNO CA!TILLO $nGLORIA CA!TILLO, respondents.

An!ara, Abello, Concepcion, #e!ala : Cruz for petitioner.

$en!zon, 'arra!a, ;arciso, Cudala, ecson : $en!son for Ma!no and %ucia Castillo.

A!apito S. )aardo and "ai+e M. Cabiles for respondent Golden Sa(in!s : %oan Association, Inc.

CRU", J.:p

5his case, for all its seeming compleDity, turns on a simple 'uestion of negligence. 5he facts, pruned of all non-essentials,are easily told.

5he Metropolitan 6an3 and 5rust Co. is a commercial ban3 ith branches throughout the Philippines and even abroad.:olden avings and oan Association as, at the time these events happened, operating in Calapan, Mindoro, ith the otherprivate respondents as its principal officers.

In ;anuary #%2%, a certain Eduardo :ome/ opened an account ith :olden avings and deposited over a period of tomonths 7$ treasury arrants ith a total value of P#,2&&,++$.72. 5hey ere all dran by the Philippine Fish Mar3etingAuthority and purportedly signed by its :eneral Manager and countersigned by its Auditor. iD of these ere directly payable

to :ome/ hile the others appeared to have been indorsed by their respective payees, folloed by :ome/ as secondindorser. 1

"n various dates beteen ;une +& and ;uly #1, #%2%, all these arrants ere subse'uently indorsed by :loria Castillo asCashier of :olden avings and deposited to its avings Account 8o. +0%$ in the Metroban3 branch in Calapan, Mindoro.5hey ere then sent for clearing by the branch office to the principal office of Metroban3, hich forarded them to the6ureau of 5reasury for special clearing. 2

More than to ee3s after the deposits, :loria Castillo ent to the Calapan branch several times to as3 hether thearrants had been cleared. he as told to ait. Accordingly, :ome/ as meanhile not alloed to ithdra from hisaccount. ater, hoever, eDasperated over :loria9s repeated in'uiries and also as an accommodation for a valued client,the petitioner says it finally decided to allo :olden avings to ithdra from the proceeds of thearrants. 35he first ithdraal as made on ;uly %, #%2%, in the amount of P&)$,))).)), the second on ;uly #7, #%2%, inthe amount of P7#),))).)), and the third on ;uly #1, #%2%, in the amount of P#&),))).)). 5he total ithdraal asP%1$.))).)). 4

In turn, :olden avings subse'uently alloed :ome/ to ma3e ithdraals from his on account, eventually collecting thetotal amount of P#,#12,&)).)) from the proceeds of the apparently cleared arrants. 5he last ithdraal as made on ;uly#1, #%2%.

"n ;uly +#, #%2%, Metroban3 informed :olden avings that 7+ of the arrants had been dishonored by the 6ureau of5reasury on ;uly #%, #%2%, and demanded the refund by :olden avings of the amount it had previously ithdran, to ma3eup the deficit in its account.

5he demand as re=ected. Metroban3 then sued :olden avings in the !egional 5rial Court of Mindoro. 5After trial,=udgment as rendered in favor of :olden avings, hich, hoever, filed a motion for reconsideration even as Metroban3filed its notice of appeal. "n 8ovember 0, #%$1, the loer court modified its decision thus>

ACC"!4I8:L, =udgment is hereby rendered>

#. 4ismissing the complaint ith costs against the plaintiffB

+. 4issolving and lifting the rit of attachment of the properties of defendant :olden avings and oan

Association, Inc. and defendant pouses Magno Castillo and ucia CastilloB7. 4irecting the plaintiff to reverse its action of debiting avings Account 8o. +0%$ of the sum ofP#,2&0,)$%.)) and to reinstate and credit to such account such amount eDisting before the debit as madeincluding the amount of P$#+,)77.72 in favor of defendant :olden avings and oan Association, Inc. andthereafter, to allo defendant :olden avings and oan Association, Inc. to ithdra the amountoutstanding thereon before the debitB

0. "rdering the plaintiff to pay the defendant :olden avings and oan Association, Inc. attorney9s fees andeDpenses of litigation in the amount of P+)),))).)).

&. "rdering the plaintiff to pay the defendant pouses Magno Castillo and ucia Castillo attorney9s fees andeDpenses of litigation in the amount of P#)),))).)).


17/75

" "!4E!E4.

"n appeal to the respondent court, the decision as affirmed, prompting Metroban3 to file this petition for revie on thefolloing grounds>

#. !espondent Court of Appeals erred in disregarding and failing to apply the clear contractual terms andconditions on the deposit slips alloing Metroban3 to charge bac3 any amount erroneously credited.

(a* Metroban39s right to charge bac3 is not limited to instances here the chec3s or treasury arrants areforged or unauthori/ed.

(b* ntil such time as Metroban3 is actually paid, its obligation is that of a mere collecting agent hichcannot be held liable for its failure to collect on the arrants.

+. nder the loer court9s decision, affirmed by respondent Court of Appeals, Metroban3 is made to pay forarrants already dishonored, thereby perpetuating the fraud committed by Eduardo :ome/.

7. !espondent Court of Appeals erred in not finding that as beteen Metroban3 and :olden avings, thelatter should bear the loss.

0. !espondent Court of Appeals erred in holding that the treasury arrants involved in this case are notnegotiable instruments.

5he petition has no merit.

From the above undisputed facts, it ould appear to the Court that Metroban3 as indeed negligent in giving :olden avingsthe impression that the treasury arrants had been cleared and that, conse'uently, it as safe to allo :ome/ to ithdra

the proceeds thereof from his account ith it.

=indly note that in recei(in! ite+s on deposit, the ban& obli!ates itself only as the depositor8s collectin!a!ent, assu+in! no responsibility beyond care in selectin! correspondents, and until such time as actualpayment shall have come into possession of this ban3, the ri!ht is reser(ed to char!e bac& to thedepositor8s account any a+ount pre(iously credited, 9hether or not such ite+ is returned. This also appliesto chec&sdran on local ban3s and ban3ers and their branches as ell as on this ban3, 9hich are unpaiddue toinsufficiency of funds, forgery, unauthori/ed overdraft orany other reason. (Emphasis supplied.*

According to Metroban3, the said conditions clearly sho that it as acting only as a collecting agent for :olden avings andgive it the right to charge bac3 to the depositor9s account any amount previously credited, hether or not such item isreturned. 5his also applies to chec3s . . . hich are unpaid due to insufficiency of funds, forgery, unauthori/ed overdraft ofany other reason. It is claimed that the said conditions are in the nature of contractual stipulations and became binding on


18/75

:olden avings hen :loria Castillo, as its Cashier, signed the deposit slips.

4oubt may be eDpressed about the binding force of the conditions, considering that they have apparently been imposed bythe ban3 unilaterally, ithout the consent of the depositor. Indeed, it could be argued that the depositor, in signing the depositslip, does so only to identify himself and not to agree to the conditions set forth in the given permit at the bac3 of the depositslip.


19/75

ection 7 of the 8egotiable Instruments a is applicable in the case at bar. 5his conclusion conforms to Abuba3ar vs.Auditor :eneral 11here the Court held>

5he petitioner argues that he is a holder in good faith and for value of a negotiable instrument and isentitled to the rights and privileges of a holder in due course, free from defenses. 6ut this treasury arrantis not ithin the scope of the negotiable instrument la. For one thing, the document bearing on its face theords payable from the appropriation for food administration, is actually an "rder for payment out of aparticular fund, and is not unconditional and does not fulfill one of the essential re'uirements of anegotiable instrument (ec. 7 last sentence and section #(b*N of the 8egotiable Instruments a*.

Metroban3 cannot contend that by indorsing the arrants in general, :olden avings assumed that they ere genuine andin all respects hat they purport to be, in accordance ith ection 11 of the 8egotiable Instruments a. 5he simple reasonis that this la is not applicable to the non-negotiable treasury arrants. 5he indorsement as made by :loria Castillo not forthe purpose of guaranteeing the genuineness of the arrants but merely to deposit them ith Metroban3 for clearing. It asin fact Metroban3 that made the guarantee hen it stamped on the bac3 of the arrants> All prior indorsement andor lac3 ofendorsements guaranteed, Metropolitan 6an3 5rust Co., Calapan 6ranch.

5he petitioner lays heavy stress on ;ai Alai Corporation v. 6an3 of the Philippine Islands, 12but e feel this case isinapplicable to the present controversy. 5hat case involved chec3s hereas this case involves treasury arrants. :oldenavings never represented that the arrants ere negotiable but signed them only for the purpose of depositing them forclearance. Also, the fact of forgery as proved in that case but not in the case before us. Finally, the Court found the ;ai AlaiCorporation negligent in accepting the chec3s ithout 'uestion from one Antonio !amire/ notithstanding that the payeeas the Inter-Island :as ervices, Inc. and it did not appear that he as authori/ed to indorse it. 8o similar negligence canbe imputed to :olden avings.


20/75

G.R. No. 97753 Auu+( 10, 1992

CALTE :PHILIPPINE!;, INC., petitioner,vs.COURT O' APPEAL! $n !ECURIT8 AN AND TRU!T COPAN8, respondents.

$ito, %ozada, Orte!a : Castillo for petitioners.

;epo+uceno, ofile6a : Guin!ona for pri(ate.

REGALADO, J.:

5his petition for revie on certiorariimpugns and see3s the reversal of the decision promulgated by respondent court onMarch $, #%%# in CA-:.!. CH 8o. +71#& 1 affirming ith modifications, the earlier decision of the !egional 5rial Court ofManila, 6ranch KII, 2 hich dismissed the complaint filed therein by herein petitioner against respondent ban3.

5he undisputed bac3ground of this case, as found by the court a 7uo and adopted by respondent court, appears of record>

#. "n various dates, defendant, a commercial ban3ing institution, through its ucat 6ranch issued +$)certificates of time deposit (C54s* in favor of one Angel dela Cru/ ho deposited ith herein defendant theaggregate amount of P#,#+),))).)), as follos> (;oint Partial tipulation of Facts and tatement of Issues,"riginal !ecords, p. +)2B 4efendant9s EDhibits # to +$)*B

CT CTatesSerial ;os.?uantityA+ount

++ Feb. $+ %)#)# to %)#+) +) P$),)))+1 Feb. $+ 201)+ to 201%# %) 71),)))+ Mar. $+ 202)# to 2020) 0) #1),)))0 Mar. $+ %)#+2 to %)#01 +) $),)))& Mar. $+ 202%2 to %0$)) 0 #1,)))& Mar. $+ $%%1& to $%%$1 ++ $$,)))& Mar. $+ 2)#02 to %)#&) 0 #1,)))$ Mar. $+ %)))# to %))+) +) $),)))% Mar. $+ %))+7 to %))&) +$ ##+,)))% Mar. $+ $%%%# to %)))) #) 0),)))% Mar. $+ %)+ to %)+2+ ++ $$,)))OOO OOOO5otal +$) P#,#+),)))QQQQQ QQQQQQQQ

+. Angel dela Cru/ delivered the said certificates of time (C54s* to herein plaintiff in connection ith hispurchased of fuel products from the latter ("riginal !ecord, p. +)$*.

7. ometime in March #%$+, Angel dela Cru/ informed Mr. 5imoteo 5iangco, the ucat 6ranch Manger, thathe lost all the certificates of time deposit in dispute. Mr. 5iangco advised said depositor to eDecute andsubmit a notari/ed Affidavit of oss, as re'uired by defendant ban39s procedure, if he desired replacementof said lost C54s (58, February %, #%$2, pp. 0$-&)*.

0. "n March #$, #%$+, Angel dela Cru/ eDecuted and delivered to defendant ban3 the re'uired Affidavit ofoss (4efendant9s EDhibit +$#*. "n the basis of said affidavit of loss, +$) replacement C54s ere issued infavor of said depositor (4efendant9s EDhibits +$+-&1#*.

&. "n March +&, #%$+, Angel dela Cru/ negotiated and obtained a loan from defendant ban3 in the amountof Eight ?undred eventy Five 5housand Pesos (P$2&,))).))*. "n the same date, said depositoreDecuted a notari/ed 4eed of Assignment of 5ime 4eposit (EDhibit &1+* hich stated, among others, thathe (de la Cru/* surrenders to defendant ban3 full control of the indicated time deposits from and after date

of the assignment and further authori/es said ban3 to pre-terminate, set-off and apply the said timedeposits to the payment of hatever amount or amounts may be due on the loan upon its maturity (58,February %, #%$2, pp. 1)-1+*.

1. ometime in 8ovember, #%$+, Mr. Aranas, Credit Manager of plaintiff CalteD (Phils.* Inc., ent to thedefendant ban39s ucat branch and presented for verification the C54s declared lost by Angel dela Cru/alleging that the same ere delivered to herein plaintiff as security for purchases made ith CalteDPhilippines, Inc. by said depositor (58, February %, #%$2, pp. &0-1$*.

2. "n 8ovember +1, #%$+, defendant received a letter (4efendant9s EDhibit &17* from herein plaintiffformally informing it of its possession of the C54s in 'uestion and of its decision to pre-terminate the same.

$. "n 4ecember $, #%$+, plaintiff as re'uested by herein defendant to furnish the former a copy of the


21/75

document evidencing the guarantee agreement ith Mr. Angel dela Cru/ as ell as the details of Mr.Angel dela Cru/ obligation against hich plaintiff proposed to apply the time deposits (4efendant9s EDhibit&10*.

%. 8o copy of the re'uested documents as furnished herein defendant.

#). Accordingly, defendant ban3 re=ected the plaintiff9s demand and claim for payment of the value of theC54s in a letter dated February 2, #%$7 (4efendant9s EDhibit &11*.

##. In April #%$7, the loan of Angel dela Cru/ ith the defendant ban3 matured and fell due and on August

&, #%$7, the latter set-off and applied the time deposits in 'uestion to the payment of the matured loan(58, February %, #%$2, pp. #7)-#7#*.

#+. In vie of the foregoing, plaintiff filed the instant complaint, praying that defendant ban3 be ordered topay it the aggregate value of the certificates of time deposit of P#,#+),))).)) plus accrued interest andcompounded interest therein at #1per annu+, moral and eDemplary damages as ell as attorney9s fees.

After trial, the court a 7uorendered its decision dismissing the instant complaint. 3

"n appeal, as earlier stated, respondent court affirmed the loer court9s dismissal of the complaint, hence this petitionherein petitioner faults respondent court in ruling (#* that the sub=ect certificates of deposit are non-negotiable despite beingclearly negotiable instrumentsB (+* that petitioner did not become a holder in due course of the said certificates of depositBand (7* in disregarding the pertinent provisions of the Code of Commerce relating to lost instruments payable to bearer. 4

5he instant petition is bereft of merit.

A sample teDt of the certif icates of time deposit is reproduced belo to provide a better understanding of the issues involved

in this recourse.

EC!I5L 6A8JA84 5!5 C"MPA8L122$ Ayala Ave., Ma3ati 8o. %)#)#Metro Manila, PhilippinesCA5 "FFICEP 0,))).))CE!5IFICA5E "F 4EP"I5!ate #1

4ate of Maturity FE6. +7, #%$0 FE6 ++, #%$+, #%RRRR

5his is to Certify that 6 E A ! E ! has deposited in this 6an3 the sum of PE"> F"!5?"A84 "8L, EC!I5L 6A8J CA5 "FFICE P0,))) )) C5Pesos,Philippine Currency, repayable to said depositor 27# days. after date, upon presentationand surrender of this certificate, ith interest at the rate of #1 per centper annu+.

(gd. Illegible* (gd. Illegible*

OOOOOOOOOO OOOOOOOOOOO

A5?"!IE4 I:8A5!E 5

!espondent court ruled that the C54s in 'uestion are non-negotiable instruments, nationali/ing as follos>

. . .


22/75

reasonable certainty.

5he C54s in 'uestion undoubtedly meet the re'uirements of the la for negotiability. 5he parties9 bone of contention is ithregard to re'uisite (d* set forth above. It is noted that Mr. 5imoteo P. 5iangco, ecurity 6an39s 6ranch Manager ay bac3 in#%$+, testified in open court that the depositor reffered to in the C54s is no other than Mr. Angel de la Cru/.

DDD DDD DDD

Atty. Calida>

' In other ords Mr.

a Les, your ?onor, and e have the record to sho that Angel dela Cru/ as the oneho cause (sic* the amount.

Atty. Calida>

' And no other person or entity or company, Mr.

a 8one, your ?onor. 7

DDD DDD DDD

Atty. Calida>

' Mr.

a Angel dela Cru/ is the depositor. #

DDD DDD DDD

"n this score, the accepted rule is that the negotiability or non-negotiability of an instrument is determined from the riting,that is, from the face of the instrument itself.9 In the construction of a bill or note, the intention of the parties is to control, if itcan be legally ascertained. 10


23/75

In a letter dated 8ovember +1, #%$+ addressed to respondent ecurity 6an3, ;.. Aranas, ;r., CalteD Credit Manager, rote>. . . 5hese certificates of deposit ere negotiated to us by Mr. Angel dela Cru/ to !uarantee his purchases of fuel products(Emphasis ours.* 13 5his admission is conclusive upon petitioner, its protestations notithstanding. nder the doctrine ofestoppel, an admission or representation is rendered conclusive upon the person ma3ing it, and cannot be denied ordisproved as against the person relying thereon. 14A party may not go bac3 on his on acts and representations to thepre=udice of the other party ho relied upon them. 15 In the la of evidence, henever a party has, by his on declaration,act, or omission, intentionally and deliberately led another to believe a particular thing true, and to act upon such belief, hecannot, in any litigation arising out of such declaration, act, or omission, be permitted to falsify it. 1

If it ere true that the C54s ere delivered as payment and not as security, petitioner9s credit manager could have easilysaid so, instead of using the ords to guarantee in the letter afore'uoted. 6esides, hen respondent ban3, as defendant inthe court belo, moved for a bill of particularity therein 17 praying, among others, that petitioner, as plaintiff, be re'uired toaver ith sufficient definiteness or particularity (a* the due date or dates ofpay+ent of the alleged indebtedness of Angel dela Cru/ to plaintiff and (b* hether or not it issued a receipt shoing that the C54s ere delivered to it by 4e la Cru/aspay+ent of the latter9s alleged indebtedness to it, plaintiff corporation opposed the motion. 1# ?ad it produced the receiptprayed for, it could have proved, if such truly as the fact, that the C54s ere delivered as payment and not as security.?aving opposed the motion, petitioner no labors under the presumption that evidence illfully suppressed ould beadverse if produced. 19

nder the foregoing circumstances, this dis'uisition in Inter!rated #ealty Corporation, et al. (s. hilippine ;ational $an&, etal. 20 is apropos>

. . . Adverting again to the Court9s pronouncements in %opez, supra, e 'uote therefrom>

5he character of the transaction beteen the parties is to be determined by their

intention, regardless of hat language as used or hat the form of the transfer as. If itas intended to secure the payment of money, it must be construed as a pledgeB but ifthere as some other intention, it is not a pledge. ?oever, even though a transfer, ifregarded by itself, appears to have been absolute, its ob=ect and character might still be'ualified and eDplained by contemporaneous riting declaring it to have been a deposit ofthe property as collateral security. It has been said that a transfer of property by thedebtor to a creditor, even if sufficient on its face to ma3e an absolute conveyance, shouldbe treated as a pledge if the debt continues in ineDistence and is not discharged by thetransfer, and that accordingly the use of the terms ordinarily importing conveyance ofabsolute onership ill not be given that effect in such a transaction if they are alsocommonly used in pledges and mortgages and therefore do not un'ualifiedly indicate atransfer of absolute onership, in the absence of clear and unambiguous language orother circumstances eDcluding an intent to pledge.

Petitioner9s insistence that the C54s ere negotiated to it begs the 'uestion. nder the 8egotiable Instruments a, an

instrument is negotiated hen it is transferred from one person to another in such a manner as to constitute the transfereethe holder thereof, 21and a holder may be the payee or indorsee of a bill or note, ho is in possession of it, or the bearerthereof. 22 In the present case, hoever, there as no negotiation in the sense of a transfer of the legal title to the C54s infavor of petitioner in hich situation, for obvious reasons, mere delivery of the bearer C54s ould have sufficed. ?ere, thedelivery thereof only as security for the purchases of Angel de la Cru/ (and e even disregard the fact that the amountinvolved as not disclosed* could at the most constitute petitioner only 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, necessarily, theterms thereof and the subse'uent disposition of such security, in the event of non-payment of the principal obligation, mustbe contractually provided for.

5he pertinent la on this point is that here the holder has a lien on the instrument arising from contract, he is deemed aholder for value to the eDtent of his lien. 23As such holder of collateral security, he ould be a pledgee but the re'uirementstherefor and the effects thereof, not being provided for by the 8egotiable Instruments a, shall be governed by the CivilCode provisions on pledge of incorporeal rights, 24 hich inceptively provide>

Art. +)%&. Incorporeal rights, evidenced by negotiable instruments, . . . may also be pledged. 5he

instrument proving the right pledged shall be delivered to the creditor, and if negotiable, must be indorsed.Art. +)%1. A pledge shall not ta3e effect against third persons if a description of the thing pledged and thedate of the pledge do not appear in a public instrument.

Aside from the fact that the C54s ere only delivered but not indorsed, the factual findings of respondent court 'uoted at thestart of this opinion sho that petitioner failed to produce any document evidencing any contract of pledge or guaranteeagreement beteen it and Angel de la Cru/. 25 Conse'uently, the mere delivery of the C54s did not legally vest in petitionerany right effective against and binding upon respondent ban3. 5he re'uirement under Article +)%1 aforementioned is not amere rule of ad=ective la prescribing the mode hereby proof may be made of the date of a pledge contract, but a rule ofsubstantive la prescribing a condition ithout hich the eDecution of a pledge contract cannot affect third personsadversely. 2


24/75

"n the other hand, the assignment of the C54s made by Angel de la Cru/ in favor of respondent ban3 as embodied in apublic instrument. 27

Art. #1+&. An assignment of credit, right or action shall produce no effect as against third persons, unless itappears in a public instrument, or the instrument is recorded in the !egistry of Property in case theassignment involves real property.

!espondent ban3 duly complied ith this statutory re'uirement. Contrarily, petitioner, hether as purchaser, assignee or lienholder of the C54s, neither proved the amount of its credit or the eDtent of its lien nor the eDecution of any public instrumenthich could affect or bind private respondent. 8ecessarily, therefore, as beteen petitioner and respondent ban3, the latterhas definitely the better right over the C54s in 'uestion.

Finally, petitioner faults respondent court for refusing to delve into the 'uestion of hether or not private respondent observedthe re'uirements of the la in the case of lost negotiable instruments and the issuance of replacement certificates therefor,on the ground that petitioner failed to raised that issue in the loer court. 2#

"n this matter, e uphold respondent court9s finding that the aspect of alleged negligence of private respondent as notincluded in the stipulation of the parties and in the statement of issues submitted by them to the trial court. 29 5he issuesagreed upon by them for resolution in this case are>

#.


25/75

a dispossessed oner or holder of a bearer instrument so that he may obtain a duplicate of the same, and, on the other, anoption in favor of the party liable thereon ho, for some valid ground, may elect to refuse to issue a replacement of theinstrument. ignificantly, none of the provisions cited by petitioner categorically restricts or prohibits the issuance a duplicateor replacement instrument sans compliance ith the procedure outlined therein, and none establishes a mandatoryprecedent re'uirement therefor.


26/75


27/75

assurance against possible complications, O for instance, (a* forgery of draer9s signature, (b* loss of the chec3 by therightful oner, (c* raising of the amount payable, etc. 5he ban3 may therefore re'uire, for its protection, that the indorsementof the draer O or of some other person 3non to it O be obtained. 6ut here the 6an3 is satisfied of the identity and or theeconomic standing of the bearer ho tenders the chec3 for collection, it ill pay the instrument ithout further 'uestionB and itould incur no liability to the draer in thus acting.

A chec3 payable to bearer is authority for payment to holder.


28/75

:.!. 8o. %7)27 4ecember +#, #%%+

REPULIC PLANTER! AN, petitioner,vs.COURT O' APPEAL! $n 'ERIN CANLA!, respondents.

CAPO!, JR., J.:

5his is an appeal by ay of a Petition for !evie on Certiorari from the decision < of the Court of Appeals in CA :.!. CH 8o.)27)+, entitled !epublic Planters 6an3.Plaintiff-Appellee vs. Pinch Manufacturing Corporation, et al., 4efendants, andFermin Canlas, 4efendant-Appellant, hich affirmed the decision


29/75

their printed names ith the phrase and (in* his personal capacity typeritten belo. At the bottom of the promissory notesappeared> Please credit proceeds of this note to>

RRRRRRRR avings Account RRRRRRKK Current Account

8o. #72+-))+&2-1

of


30/75

5he corporation continues, as before, responsible in its ne name for all debts or other liabilities hich it had previouslycontracted or incurred.12

As a general rule, officers or directors under the old corporate name bear no personal liability for acts done or contractsentered into by officers of the corporation, if duly authori/ed. Inasmuch as such officers acted in their capacity as agent of theold corporation and the change of name meant only the continuation of the old =uridical entity, the corporation bearing thesame name is still bound by the acts of its agents if authori/ed by the 6oard. nder the 8egotiable Instruments a, theliability of a person signing as an agent is specifically provided for as follos>

ec. +). %iability of a person si!nin! as a!ent and so forth.


31/75

under promissory note mar3ed as EDhibit 6, the sum of P0),))).)) ith interest from 8ovember +2, #%$)> under thepromissory note denominated as EDhibit C, the amount of P#11,011.)) ith interest from ;anuary +%, #%$#B under thepromissory note denominated as EDhibit 4, the amount of P712,))).)) ith interest from ;anuary +%, #%$# until fully paidBunder the promissory note mar3ed as EDhibit E, the amount of P$1,#7).7# ith interest from ;anuary +%, #%$#B under thepromissory note mar3ed as EDhibit F, the sum of P#0),))).)) ith interest from 8ovember +2, #%$) until fully paidB under thepromissory note mar3ed as EDhibit :, the amount of P#+,2)7.2) ith interest from 8ovember +2, #%$)B the promissory notemar3ed as EDhibit ?, the sum of P+$#,$2&.%# ith interest from ;anuary +%, #%$#B and the promissory note mar3ed asEDhibit I, the sum of P+)),))).)) ith interest on ;anuary +%, #%$#.

5he liabilities of defendants Pinch Manufacturing Corporation (formerly


32/75

:.!. 8o. #0$$10 August +#, +))7

!POU!E! EDUARDO . EANGELI!TA $n EPI'ANIA C. EANGELI!TA, Petitioners,vs.ERCATOR 'INANCE CORP., L8DIA P. !ALA"AR, LAEC=!


33/75

capacity as ell(.* Plaintiffs(,* by affiDing their signatures thereon in a dual capacity have bound themselves as solidarydebtor(s* ith Embassy Farms, Inc. to pay defendant Mercator Finance Corporation the amount of indebtedness. 5hat theprincipal contract of loan is void for lac3 of consideration, in the light of the foregoing is untenable.#7

PetitionersU motion for reconsideration as denied for lac3 of merit.#05hus, petitioners ent up to the Court of Appeals, butagain ere unsuccessful. 5he appellate court held>

5he appellantsU insistence that the loans secured by the mortgage they eDecuted ere not personally theirs but those ofEmbassy Farms, Inc. is clearly self-serving and misplaced. 5he fact that they signed the sub=ect promissory notes in the(ir*personal capacities and as officers of the said debtor corporation is manifest on the very face of the said documents ofindebtedness (pp. ##$, #+$-#7#, "rig. !ec.*. Even assuming arguendo that they did not, the appellants lose sight of the factthat third persons ho are not parties to a loan may secure the latter by pledging or mortgaging their on property ( ustanvs. Court of Appeals,+11 C!A 117, 12&*. D D D. In constituting a mortgage over their on property in order to secure thepurported corporate debt of Embassy Farms, Inc., the appellants undeniably assumed the personality of persons interestedin the fulfillment of the principal obligation ho, to save the sub=ect realities from foreclosure and ith a vie toards beingsubrogated to the rights of the creditor, ere free to discharge the same by payment (Articles #7)+ 7N and #7)7, Civil Codeof the Philippines*.#&(emphases in the original*

5he appellate court also observed that if the appellants really felt aggrieved by the foreclosure of the sub=ect mortgage andthe subse'uent sales of the realties to other parties, hy then did they commence the suit only on August #+, #%%2 (hen thecertificate of sale as issued on ;anuary #+, #%$2, and the certificates of title in the name of Mercator on eptember +2,#%$$*G PetitionersU procrastination for about nine (%* years is difficult to understand. "n so flimsy a ground as lac3 ofconsideration, (*e may even venture to say that the complaint as not orth the time of the courts. #1

A motion for reconsideration by petitioners as li3eise denied for lac3 of merit.#25hus, this petition here they allege that>

5he court a 'uo erred and acted ith grave abuse of discretion amounting to lac3 or eDcess of =urisdiction in affirming in totothe May 0, #%%$ order of the trial court granting respondentUs motion for summary =udgment despite the eDistence of genuineissues as to material facts and its non-entitlement to a =udgment as a matter of la, thereby deciding the case in a ayprobably not in accord ith applicable decisions of this ?onorable Court.#$

e affirm.

ummary =udgment is a procedural techni'ue aimed at eeding out sham claims or defenses at an early stage of thelitigation.#%5he crucial 'uestion in a motion for summary =udgment is hether the issues raised in the pleadings aregenuine or fictitious, as shon by affidavits, depositions or admissions accompanying the motion. A genuine issue means anissue of fact hich calls for the presentation of evidence, as distinguished from an issue hich is fictitious or contrived so asnot to constitute a genuine issue for trial.+)5o forestall summary =udgment, it is essential for the non-moving party toconfirm the eDistence of genuine issues here he has substantial, plausible and fairly arguable defense, i.e., issues of factcalling for the presentation of evidence upon hich a reasonable finding of fact could return a verdict for the non-movingparty. 5he proper in'uiry ould therefore be hether the affirmative defenses offered by petitioners constitute genuine issue

of fact re'uiring a full-blon trial.+#In the case at bar, there are no genuine issues raised by petitioners. Petitioners do not deny that they obtained a loan fromMercator. 5hey merely claim that they got the loan as officers of Embassy Farms ithout intending to personally bindthemselves or their property. ?oever, a simple perusal of the promissory note and the continuing suretyship agreementshos otherise. 5hese documentary evidence prove that petitioners are solidary obligors ith Embassy Farms.

5he promissory note++states>

For value received, I

eptember #1, #%$+ - P#&0,+12.$2

"ctober #1, #%$+ - P#&0,+12.$2

8ovember #1, #%$+ - P#&0,+12.$2

4ecember #1, #%$+ - P#&0,+12.$2

;anuary #1, #%$7 - P#&0,+12.$2

February #1, #%$7 - P#&0,+12.$2

D D D D D D D D D

5he note as signed at the bottom by petitioners Eduardo 6. Evangelista and Epifania C. Evangelista, and Embassy Farms,Inc. ith the signature of Eduardo 6. Evangelista belo it.

5he Continuing uretyship Agreement+7also proves the solidary obligation of petitioners, vi/>
http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt13http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt13http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt14http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt14http://www.lawphil.net/judjuris/juri1997/jan1997/gr_111924_1997.htmlhttp://www.lawphil.net/judjuris/juri1997/jan1997/gr_111924_1997.htmlhttp://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt15http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt16http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt17http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt17http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt17http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt18http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt18http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt19http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt19http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt20http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt21http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt21http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt22http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt23http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt13http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt14http://www.lawphil.net/judjuris/juri1997/jan1997/gr_111924_1997.htmlhttp://www.lawphil.net/judjuris/juri1997/jan1997/gr_111924_1997.htmlhttp://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt15http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt16http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt17http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt18http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt19http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt20http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt21http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt22http://www.lawphil.net/judjuris/juri2003/aug2003/gr_148864_2003.html#fnt23


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(Embassy Farms, Inc.*Principal

(Eduardo 6. Evangelista*urety

(Epifania C. Evangelista*urety

(Mercator Finance Corporation*Creditor

5o> ME!CA5"! FI8A8CE C"P"!A5I"8

(#* For valuable andor other consideration, E4A!4" 6. EHA8:EI5A and EPIFA8IA C.EHA8:EI5A (hereinafter called urety*, =ointly and severally unconditionally guarantees (sic* toME!CA5"! FI8A8CE C"P"!A5I"8 (hereinafter called Creditor*, the full, faithful and promptpayment and discharge of any and all indebtedness of EM6AL FA!M, I8C. (hereinafter calledPrincipal* to the Creditor.

D D D D D D D D D

(7* 5he obligations hereunder are =oint and several and independent of the obligations of the Principal.A separate action or actions may be brought and prosecuted against the urety hether or not theaction is also brought and prosecuted against the Principal and hether or not the Principal be =oinedin any such action or actions.

D D D D D D D D D

5he agreement as signed by petitioners on February #1, #%$+. 5he promissory notes+0subse'uently eDecuted bypetitioners and Embassy Farms, restructuring their loan, li3eise prove that petitioners are solidarily liable ith EmbassyFarms.

Petitioners further allege that there is an ambiguity in the ording of the promissory note and claim that since it as Mercatorho provided the form, then the ambiguity should be resolved against it.

Courts can interpret a contract only if there is doubt in its letter.+&6ut, an eDamination of the promissory note shos no suchambiguity. 6esides, assuming arguendo that there is an ambiguity, ection #2 of the 8egotiable Instruments a states, (iz@

EC5I"8 #2. Construction here instrument is ambiguous. V

D D D D D D D D D

(g*


35/75

:.!. 8o. #1#2&1 4ecember #1, +))&

ICTORIA J. ILANO %e%e+en(e 6& /e% A((o%ne&-*n-)$(, ILO ANTONIO C. ILANO, Petitioners,vs.HON. DOLORE! L. E!PA>OL, *n /e% $$*(& $+ E?eu(*@e Jue, RTC o) Iu+, C$@*(e, %. 90, $n, AELIAALON"O, EDITH CALILAP, DANILO CAACLANG, E!TELA CAACLANG, ALLAN CAACLANG, LENI"A RE8E!,EDBIN RE8E!, JANE ACAREL, CHERR8 CAACLANG, 'LORA CARERA, E!TELITA LEGA!PI, CARENCITAGON"ALE!, NEIA CA!TRO, GLORIA DOINGUE", ANNIL8N C. !AALE $n +e@e%$ JOHN DOE!,!espondents.

4 E C I I " 8

CARPIO ORALE!, J.

5he Court of Appeals having affirmed the dismissal by 6ranch +) of the !egional 5rial Court (!5C* of Cavite at Imus, for lac3of cause of action, Civil Case 8o. +)2%-)), the complaint filed by herein petitioner Hictoria ;. Ilanofor !evocationCancellation of P%o*++o%& No(e+ and 6ills of EDchange :C/e+; ith 4amages and Prayer for PreliminaryIn=unction or 5emporary !estraining "rder (5!"*,#against herein respondents #& named defendants (and several ;ohn4oes*, a recital of the pertinent allegations in the complaint, 'uoted (erbati+ as follos, is in order>

D D D

7. 5hat defendant AMEIA ". A"8", is a trusted employee of petitionerN. he has been ith them for several yearsalready, and through the years, defendant A"8" as able to gain the trust and confidence of petitionerN and her familyB

0. 5hat due to these trust and confidence reposed upon defendant A"8" by petitionerN, there ere occasions hendefendant A"8" as entrusted ith petitionerUsN ME5!"6A8J Chec3 6oo3 containing either signed or unsigned blan3chec3s, especially in those times hen petitionerN left for the nited tates for medical chec3-upB

&. ometime during the second ee3 of 4ecember #%%%, or thereabouts, defendant A"8" by means ofee*( $n $6u+eo) on)*ene +ueee *n %ou%*n P%o*++o%& No(e+ $n +*ne 6$n /e+)%o e(*(*one%F /o $+ (/en%eue%$(*n )%o *ne++B

1. 5hat as stated, aside from the said blan3 chec3s, e)en$n( ALON"O *e*+e +ueee *n *nu*ne(*(*one%F(o +*n (/e P%o*++o%& No(e+ $n(e$(e June #, 1999 in the amount of PE"> "8E MII"8 F"! ?84!E45

8AME AM"85 ME

negotiable instrument cases by atty. rafal

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