Trader’s royal v.

CA

Central Bank Certificates of Indebtedness

proof that FGAC has the required reserve investment with the
Central Bank to operate as an insurer and to protect third persons
from whatever liabilities FGAC may incur.

Assigned to PUFC then the latter sold it to traders with right of

repurchase. Latter failed to repurchase. Trader’s sought to compel
BSP to register CBCIs to under their name.

HELD:
CBCIs are not negotiable. Payee inscribed therein is specific and
the central bank is obliged to pay the named payee only and no one
else.

Metrobank v. CA
HELD:
The treasury warrants were not negotiable instruments. Clearly, it is
indicated that it was non-negotiable and of equal significance is the
indication that they are payable from a particular fund, Fund 501. This
indication as the source of payment to be made on the treasury warrant
makes the promise to pay conditional and the warrants themselves non-
negotiable.

Metrobank then cannot contend that by indorsing the warrants in general, GS

assumed that they were genuine and in all respects what they purport it to be,
in accordance to Section 66 of the NIL. The simple reason is that
the law isn’t applicable to the non-negotiable treasury warrants. The
indorsement was made for the purpose of merely depositing them with
Metrobank for clearing. It was in fact Metrobank which stamped on the
back of the warrants: “All prior indorsements and/or lack of endorsements
guaranteed…”

Ang Tek Lian v. CA

HELD: No. Under the Negotiable Instruments Law (sec. 9 [d]), a check
drawn payable to the order of “cash” is a check payable to bearer
hence a bearer instrument, and the bank may pay it to the person
presenting it for payment without the drawer’s indorsement. Where a
check is made payable to the order of ‘cash’, the word “cash” does not
purport to be the name of any person, and hence the instrument is
payable to bearer. The drawee bank need not obtain any indorsement
of the check, but may pay it to the person presenting it without any
indorsement.

NATIONAL BANK V. MANILA OIL REFINING

43 PHIL 444

FACTS:
Manila Oil has issued a promissory note in favor of Nationa
l Bank which included a provision on a confession of judgment
in case of failure to pay obligation. Indeed, Manila Oil has failed
to pay on demand. This prompted the bank to file a case in
court, wherein an attorney associated with them entered his
appearance for the defendant. To this the defendant objected.

HELD:
Warrants of attorney to confess judgment aren’t author
ized nor
contemplated by our law. Provisions in notes authorizing a
ttorneys to appear and confess judgments against makers
should not be recognized in our jurisdiction by implication and
should only be considered as valid when given express legislative
sanction.

Republic Planters v. CA
Held: Canlas is a co-maker of the promissory notes, under the
law, and cannot escape liability arising therefrom. Inasmuch as
the instrument contained the words “I promise to pay” and is
signed by two or more persons, said persons are deemed to be
jointly and severally liable thereon. As the promissory notes are
stereotype ones issued by the bank in printed form with blank
spaces filled up as per agreed terms of the loan, following
customary procedures, leaving the debtors to do nothing but
read the terms and conditions therein and to sign as makers or
co-makers. Section 14 of the Negotiable Instruments Law,
therefore, does not apply. Canlas is solidarily liable with the
corporation for the amount of the 9 promissory notes.

Spouses Eduardo and Epifania Evangelista vs

Mercator Financing Co.(GR No 148864, Aug 21, 2003,
Puno)

The promissory not in question is worded as follows:

“For value received, I/we jointly and severally promise to

pay to the order of Mercator Financing Company ……..”

Are the spouses jointly and severally liable?

The SC held that under Section 17 (g) of the NIL and

Article 1216 of the Civil Code, where the promissory note
was executed jointly and severally by two or more
persons, the payee of the promissory note had the right to
hold any one of the two (2) signers of the promissory note
responsible for the payment of the whole amount of the
note.

HELD: YES but only for the 2nd check.

estafa under Article 315, paragraph 2(d) of the

Revised Penal Code, as amended by Republic Act No.
4885 elements

postdating or issuance of a check in payment of

 an obligation contracted at the time the check was
issued

insufficiency of funds to cover the check -

including the uncollected deposit he had more than
enough funds to cover the first check

damage to the payee

Section 191 of the Negotiable Instruments Law

"issue" - first delivery of an instrument,

complete in form, to a person who takes it as a
holder

Significantly, delivery is the final act essential

to the negotiability of an instrument. Delivery
denotes physical transfer of the instrument by the
maker or drawer coupled with an intention to
convey title to the payee and recognize him as a
holder. It means more than handing over to
another; it imports such transfer of the instrument
to another as to enable the latter to hold it for
himself

Even if the checks were given to W.L. Foods in

blank, this alone did not make its issuance invalid.

When the checks were delivered to Lim,

through his employee, he became a holder
with prima facie authority to fill the blanks

SEC. 14. Blanks; when may be filled.-Where the instrument

is wanting in any material particular,the person in
possession thereof has a prima facie authority to
complete it by filling up the blanks therein. And a
signature on a blank paper delivered by the person making
the signature in order that the paper may be converted into
a negotiable instrument operates as aprima facie authority
to fill it up as such for any amount.

law merely requires that the instrument be in the

possession of a person other than the drawer or maker

From such possession, together with the fact that

the instrument is wanting in a material particular, the
law presumes agency to fill up the blanks

burden of proving want of authority or that

the authority granted was exceeded, is placed on
the person questioning such authority - Dy didn't
fulfill this

estafa punished under Article 315, paragraph 2(d)

of the Revised Penal Code is committed when a check
is dishonored for being drawn against insufficient funds
or closed account, and not against uncollected
deposit. Corollarily, the issuer of the check is not liable
for estafa if the remaining balance and the uncollected
deposit, which was duly collected, could satisfy the
amount of the check when presented for payment.

B.P. Blg. 22 elements = malum prohibitum

the making, drawing and issuance of any

check to apply to account or for value

the knowledge of the maker, drawer or issuer

that at the time of issue he does not have
sufficient funds in or credit with the drawee bank
for the payment of such check in full upon its
presentment
 subsequent dishonor of the check by the
drawee bank for insufficiency of funds or credit or
dishonor for the same reason had not the drawer,
without any valid cause, ordered the bank to stop
payment - considered by the bank to retroactively
have had P160,659.39 in his account on July 22,
1992 which was more than enough to cover the
first check

Dy admitted that he issued the checks, and that

the signatures appearing on them were his

Section 2 of B.P. Blg. 22, petitioner was prima

facie presumed to know of the inadequacy of his funds with
the bank when he did not pay the value of the goods or
make arrangements for their payment in full within 5
banking days upon notice

Sesbreno V. CA
HELD: YES. 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 where the
negotiable instrument is in bearer form. A negotiable instrument may,
however, instead of being negotiated, also be assigned or
transferred. The legal consequences of negotiation as distinguished
from assignment of a negotiable instrument are, of course, different.
A non-negotiable instrument may, obviously, not be negotiated; but it
may be assigned or transferred, absent an express prohibition
against assignment or transfer written in the face of the instrument:
The words “not negotiable,” stamped on the face of the bill of lading,
did not destroy its assignability, but the sole effect was to exempt the
bill from the statutory provisions relative thereto, and a bill, though not
negotiable, may be transferred by assignment; the assignee taking
subject to the equities between the original parties. 12 (Emphasis
added)
DMC PN No. 2731, while marked “non-negotiable,” was not at the
same time stamped “non-transferable” or “non-assignable.” It
contained no stipulation which prohibited Philfinance from assigning
or transferring, in whole or in part, that Note.
Consolidated Plywood V. IFC
HELD:
It is patent that the seller is liable for the breach in warranty
against the
petitioner. This liability as a general rule extends to the c
orporation to whom it assigned its rights and interests unless
the assignee is a holder in
due course of the promissory note in question, assuming t
he note is
negotiable, in which case, the latter’s rights are based on a
negotiable
instrument and assuming further that the petitioner’s defe
nse may not prevail against it.

The promissory note in question is not a negotiable instru

ment. The promissory note in question lacks the so-called
words of negotiability. And as such, it follows that the
respondent can never be a holder in due course
but remains merely an assignee of the note in question. T
hus, the
petitioner may raise against the respondents all defenses a
vailable to it against the seller.