BACHRACH vs GOLINGCO (1918) • Such a stipulation is not void as usurious, even when added to a contract for
the payment of the highest rate of interest permissible.
Petition: Petition for Review of the Decision of the CA
Petitioner: E. M. BACHRACH
Respondent: VICENTE GOLINGCO
Ponencia: STREET, J.
DOCTRINE:
• The legality of such a stipulation (attorney’s fees in case of failure to pay
upon maturity), when annexed to a negotiate instrument is expressly
recognized by the Negotiable Instruments Law ((Act No. 2031, sec. 2, par.
E)
• Such a stipulation is not void as usurious, even when added to a contract for
the payment of the highest rate of interest permissible.
• The lawful purpose of such a stipulation is to permit the creditor to receive
the whole amount due him under his contract without the deduction of the
expenses caused by the delinquency of the debtor.
FACTS:
1. From a judgment in favor of the plaintiff for the sum of P8461, as principal,
with interest, and for the further sum of P2,115.25, as a stipulated attorney's
fee, the defendant has appealed.
2. The note represents the purchase price of a truck which the plaintiff sold to
the defendant.
3. The note provides that, in the event it becoming necessary to employ
counsel to enforce its collection, the maker is to pay an additional twenty-
five per cent "as fees for the attorney collecting the same."
4. As security for the payment of said indebtedness, the plaintiff took a chattel
mortgage on the truck; and after the note had matured this chattel mortgage
was foreclosed.
5. At the foreclosure sale the plaintiff himself became the purchaser for the
sum of P539, which amount was credited upon the indebtedness.
ISSUE: W/N the agreement for 25 per cent as an attorney's fee for collection is
valid
RULING + RATIO:
YES, the agreement for 25 per cent as an attorney's fee for collection is valid.
• The legality of such a stipulation, when annexed to a negotiate instrument is
expressly recognized by the Negotiable Instruments Law ((Act No. 2031,
sec. 2, par. E)
o Such a stipulation may be made for the purpose of concealing
usury; but that is a matter of proof to be determined.
• The lawful purpose of such a stipulation is to permit the creditor to receive
the whole amount due him under his contract without the deduction of the
expenses caused by the delinquency of the debtor.
o The court opines that they are authorized to reduce the amount of
the attorney’s fees which will enable the plaintiff to pay a
reasonable compensation to his attorney; and we think that P800 is
sufficient for this purpose.
DISPOSITION: it is ordered that the plaintiff have and recover of the defendant the
sum of
• P8,461, with interest thereon at the rate of 8 per centum per annum, from
the tenth day of July, 1916, until paid, and
• P800 as attorney's fees, and for the statutory costs of both instances,
exclusive of the statutory allowance for attorney's fees
Abubakar vs. The Auditor General
Petitioner: Benjamin Abubakar
Respondent: The Auditor Genereal
Ponencia: Bengzon, J.
FACTS:
1. Auditor General refused to authorize the payment of Treasury warrant for
P1,000 issued in favor of Placido S. Urbanes, but is now in the hands of
petitioner Benjamin Abubakar (petitioner-holder).
2. AG’s reasons:
a. FIRST: The money available for the redemption of treasury
warrants issued is appropriated by RA no. 80 and this warrant does
not come within the purview of said appropriation
b. SECOND: One of the requirements of his office had not been
complied with:
i. That is must be shown that the holders of warrants
covering payment or replenishment of cash advances for
official expenditures received them in payment of definite
govt obligations
3. Petitioner Abubakar argues that he is a holder in good faith and for value of
a negotiable instrument and is entitled to the rights and privileges of a
holder in due course, free from defenses.
ISSUE: W/N the Auditor General erred in refusing to permit payment out of the
particular appropriation in Item F-IV-8 of Republic Act No. 80.
 1) Manila Oil executed and delivered a promissory note to PNB. In it was a
RULING: We think that he did not. promise to pay to PNB or order. It stated moreover, that in case they are unable to
pay when the note becomes due, any lawyer from the Philippines may appear and
1. The warrant was originally made payable to Placido S. Urbanes in his confess judgement for all the costs: principal, interests, attorney’s fees, etc.
capacity as disbursing officer of the Food Administration for "additional 2) And since everyone defaults like those people in property cases, Manila Oil
cash advance for Food Production Campaign in La Union". was unable to pay and Atty. Rector, who was associated with PNB confessed
2. It is thus apparent that this is a treasury warrant issued in favor of a public judgement on behalf of Manila Oil.
officer or employee and held in possession by a private individual 3) Manila Oil protested such confession (even though they said any lawyer of
(petitioner Abubakar). the Philippines can confess judgement).
3. The Auditor General can hardly be blamed for not authorizing its 4) PNB argued that Section 5 of the NI Law expressly states that such
redemption out of an appropriation specifically for "treasury warrants issued provision on confession of judgement does not affect the negotiability of an
... in favor of and held in possession by private individuals." instrument.
4. This warrant was not issued in favor of a private individual. It was
issued in favor of a government employee. ISSUES:
5. The petitioner argues that he is a holder in good faith and for value of a 1. WoN confession of judgement is an allowable provision in a Negotiable
negotiable instrument and is entitled to the rights and privileges of a holder Instrument.
in due course, free from defenses. But this treasury warrant is not within
the scope of the negotiable instruments law. PROVISION:
6. The document bearing on its face the words "payable from the • Subsection (b), Section 5, RA 2031. “The negotiable character of an
appropriation for food administration," instrument otherwise negotiable is not affected by a provision which…
a. is actually an order for payment out of "a particular fund," (b) authorizes confession of judgement if the instrument is not paid at
b. and is not unconditional, maturity.”
c. and does not fulfill one of the essential requirements of a
negotiable instrument. RULING + RATIO:
7. In the United States, government warrants for the payment of money are not 1. No. Such a provision is not allowable in our jurisdiction.
negotiable instruments nor commercial proper 1. Absent any implementing laws, such common law principle may open the
way for fraud, and/or deny a person’s day in court, and/or run counter to the statutory
right to appeal a person’s case.
DISPOSITION: Petition dismissed, with costs
DISPOSITION: Decision is set aside and case is remanded to the lwer court for
Philippine National Bank vs. Manila Oil Refining & By-Products Company,
further proceedings.
Inc. (1922)

Petition: Pure question of law

Petitioner: Philippine National Bank
Respondent: Manila Oil Refining & By-products Co., Inc.
Ponente: Malcolm

DOCTRINE: (Confession of Judgement Provision not allowed) Notwithstanding the

provision on section 5 of RA 2031 or the Negotiable Instruments Law, enumeration
(b), authorizing a confession of judgement, such confessions made automatically
during inability to pay at maturity date of negotiable instruments are not recognized
in this jurisdiction since 1) it is not founded on sound principles of law, 2) it gives
way to fraud and denial of persons of their days in court. That said, absent legislation
giving validity to such, it must be declared void.

FACTS:
 SALAS vs CA (1990)
Petitioner: JUANITA SALAS
Respondent: COURT OF APPEALS and FIRST FINANCE & LEASING
CORPORATION
Ponencia: FERNAN, C.J.
DOCTRINE:
Where a person, posing as the registered owner of land, transferred the land to
another who acquired a TCT which was subsequently declared null and void, on the
ground that the transfer was made by an impostor, the transferee cannot claim
damages against the Assistant Fund.
FACTS:
1) On February 6, 1980, petitioner Juanita Salas bought a motor vehicle from the
Violago Motor Sales Corporation (VMS) for P58,138.20 through a promissory
note. This note was then endorsed to respondent Filinvest Finance & Leasing
Corporation) which financed the purchase.
2) Petitioner defaulted, allegedly due to a discrepancy in the engine and chassis
numbers of the vehicle delivered to her and those indicated in the sales invoice.
RTC case ruled against petitioner, thus the case was elevated to CA. CA ruled
against petitioner again, thus the present SC case.
3) Petitioner contends bad faith against VMS for selling a different car. Said bad
faith supposedly released petitioner from any liability to private respondent who
should instead proceed against VMS. She also contends that it is not necessary
to implead VMS as a party to the case before it can be made to answer for
damages because VMS was earlier sued by her in a pending RTC case for
"breach of contract with damages".
ISSUES:
1. Whether or not the promissory note in question is a negotiable
instrument which will bar completely all the available defenses of the
petitioner against private respondent.
PROVISION:
• Sec. 8. , Negotiable Instruments Law. When payable to order. - The
instrument is payable to order where it is drawn payable to the order of a
specified person or to him or his order. It may be drawn payable to the order
of:
(a) A payee who is not maker, drawer, or drawee; or
(b) The drawer or maker; or
(c) The drawee; or
(d) Two or more payees jointly; or
(e) One or some of several payees; or
(f) The holder of an office for the time being.
Where the instrument is payable to order, the payee must be named or otherwise
indicated therein with reasonable certainty.
RULING + RATIO:
1. YES. The note is without a doubt a promissory note
A. It is in writing and signed by the maker Juanita Salas;
B. It contains an unconditional promise to pay the amount of
P58,138.20;
C. It is payable at a fixed or determinable future time which is
"P1,614.95 monthly for 36 months due and payable on the 21
st day of each month starting March 21, 1980 thru and
inclusive of Feb. 21, 1983;"
D. It is payable to Violago Motor Sales Corporation, or order and
as such,
E. The drawee is named or indicated with certainty
− The note was then indorsed to respondent. Perfectly valid. Respondent is
now a holder in due course
.
− Respondent holds the instrument free from any defect of title of prior
parties, and free from defenses available to prior parties among
themselves, and may enforce payment of the instrument for the full
amount thereof. Petitioner cannot set up against respondent the defense of
nullity of the contract of sale between her and VMS.
− Whatever issue is raised or claim presented against VMS must be
resolved in the "breach of contract" case, and NOT in this one.
DISPOSITION: Petition DENIED.
 CONSOLIDATED PLYWOOD v. IFC LEASING 1987
Petitioner: Consolidated Plywood Industries, et al.
Respondent: IFC Leasing, et. al.
Ponencia: Gutierrez, Jr.
DOCTRINE: When an instrument is payable to order - There are only two ways
to make an instrument payable to order. There must always be a specified person
named. Without the words ‘or order’ or ‘to the order of’, the instrument is payable
only to the person designated therein and therefore, is non-negotiable. Any
subsequent purchaser will not enjoy the advantages of being a holder of a negotiable
instrument, but will merely ‘step into the shoes’ of the person designated in the
instruments and will thus be open to all defenses available against the latter.
FACTS:
1. Petitioner is engaged in the logging business. Some of their activities
include opening of additional roads and other logging operations in Davao
Oriental.
2. For this, it needed two additional units of tractors. Atlantic Gulf, through its
sister company, Industrial Products Marketing, offered to sell to petitioner 2
“used” tractors.
3. After inspection, the sellers assured petitioner that the tractors were fit for
the job and gave a warranty of 90 days. Petitioner then agreed to purchase
the tractors.
4. The deed of sale with chattel mortgage with promissory note was then
executed, and simultaneous with this, Industrial Products assigned its rights
and interest in the chattel mortgage in favor of IFC Leasing./
5. Barely 14 days after, one of the tractors broke down. 9 days after this, the
other also broke down. So Vergara (petitioner) requested for promp
attention under the warranty.
6. Despite mechanics being sent to the jobsite, the units were no longer
serviceable. So Vergara informed the seller that they would delay the
payments as listed in the promissory note until the seller fulfills their
obligation under the warranty.
7. Eventually, respondent IFC Leasing filed a complaint to recover money
from petitioner. The trial court ruled in favor of respondents and asked
petitioners to pay.
8. On appeal, the CA ruled that the promissory note was negotiable and so,
enforceable against the defendants.
9. Hence, this petition.
ISSUES:
WoN the promissory note is a negotiable instrument so as to bar completely all the
available defenses of petitioner against respondents
PROVISION:
Sec. 8. When payable to order. - The instrument is payable to order
where it is drawn payable to the order of a specified person or to him
or his order. It may be drawn payable to the order of:
(a) A payee who is not maker, drawer, or drawee; or
(b) The drawer or maker; or
(c) The drawee; or
(d) Two or more payees jointly; or
(e) One or some of several payees; or
(f) The holder of an office for the time being.
Where the instrument is payable to order, the payee must be named
or otherwise indicated therein with reasonable certainty.
RULING + RATIO:
No.
• The instrument to be considered negotiable must contain the so-called
‘words of negotiablity’ = must be payable to order or bearer. These serve as
an expression of consent that the instrument may be transferred.
• There are only two ways to make an instrument payable to order. There
must always be a specified person named.
• Without the words ‘or order’ or ‘to the order of’, the instrument is payable
only to the person designated therein and therefore, is non-negotiable.
• Any subsequent purchaser will not enjoy the advantages of being a holder
of a negotiable instrument, but will merely ‘step into the shoes’ of the
person designated in the instruments and will thus be open to all defenses
available against the latter.
• It then follows that respondent can never be a holder in due course but is a
mere assignee. Hence, petitioner may raise against respondent all defenses
available to it as against the seller – assignor, Industrial Products Marketing.
 Philippine Education Co. v. Mauricio Soriano (1971)
Petition: Appeal
Petitioner: PHILIPPINE EDUCATION CO., plaintiff-appellant,
Respondent: MAURICIO A. SORIANO, ET AL., defendants-appellees
Ponencia: Dizon
DOCTRINE: Postal money order is not a negotiable instrument, the reason
behind this rule being that, in establishing and operating a postal money order
system, the government is not engaging in commercial transactions but merely
exercises a governmental power for the public benefit.
FACTS:
4) Enrique Montinola sought to purchase from Manila Post Office ten money
orders of 200php each payable to E. P. Montinola.
5) Montinola offered to pay with the money orders with a private check. Private
check were not generally accepted in payment of money orders, the teller
advised him to see the Chief of the Money Order Division, but instead of doing
so, Montinola managed to leave the building with his own check and the 10
money orders without the knowledge of the teller.
6) Upon the disappearance of the unpaid money order, a message was sent to
instruct all banks that it must not pay for the money orders stolen upon
presentment. The Bank of America received a copy of said notice 3 days later.
7) PECO received said money orders as part of its sales receipt and deposited it
with the Bank of America which cleared and released to PECO its face value of
P200.
8) Mauricio Soriano, Chief of the Money Order Division notified the Bank of
America that the money order deposited had been found to have been irregularly
issued and that, the amount it represented had been deducted from the bank’s
clearing account.
9) The Bank of America debited PECO’s account with the same amount and give
notice by means of debit memo.
10) Hence, this petition.
ISSUE:
WoN a postal money order is a negotiable instrument
RULING + RATIO:
2. NO. A postal money order is a negotiable instrument
- It is not disputed that our postal statutes were patterned after statutes in
force in the United States. For this reason, ours are generally construed
in accordance with the construction given in the United States to their
own postal statutes, in the absence of any special reason justifying a
departure from this policy or practice.
- The weight of authority in the United States is that postal money orders
are not negotiable, the reason behind this rule being that, in establishing
and operating a postal money order system, the government is not
engaging in commercial transactions but merely exercises a
governmental power for the public benefit.
DISPOSITION: Petition denied.
- Appealed decision being in accordance with law, the same is hereby
affirmed with costs
Equitable Banking Corp vs IAC (1988)
Petition: Petition to Review on Certiorari
Petitioner: EQUITABLE BANKING CORP
Respondent: IAC and THE EDWARD J. NELL CO
Ponencia: MELENCIO-HERERA, J.
DOCTRINE: (Standard of care required)
When the payee is not indicated with reasonable certainty the (A/C in this case) then
it is in contravention of the NIL.
FACTS:
11) Liberato Casals, representing himself as a majority stockholder, president and
GM of Casville Enterprise, went to Edward J. Nell Company, a dealer of
machineries, equipment and supplies, and purchased 2 garret skiiders.
a) Casville Enterprises, Inc., is a firm engaged in the large scale
production, procurement and processing of logs and lumber products,
which had a plywood plant in Sta. Ana, Metro Manila.
12) Casals informed Apolonio Javier EVP of NELL CO, that his corporation,
Casville Enterprises, Inc., had a credit line with Equitable Banking Corporation.
13) Javier agreed to have the skidders paid by way of a domestic letter of credit
which defendant Casals promised to open in Nell Co’s favor.
a) Casville, through its president, defendant Casals, ordered from plaintiff
two units of garrett skidders Manila P485,000.00/unit P970,000.00 for
2.
14) The terms of the condition were: By irrevocable domestic letter of credit to be
issued in favor of THE EDWARD J. NELL CO. or ORDER payable in thirty six
(36) months and will be opened within ninety (90) days after date of shipment.
At first installment will be due one hundred eighty (180) days after date of
shipment. Interest-14% per annum
15) Casal requested for delivery of one garrett skidder to Cagayan de Oro, with the
information that an irrevocable Domestic Letter of Credit would be opened in
Nell Co’s favor.
16) In compliance Nell Co shipped one of the machinery and paid for the shipping
with the assurance from Casals that he will cover the cost in the letter of credit.
17) Casals after handed Nell Co a posted dated check for 300,000.
a) After Casville informed Nell Co that their application for credit in
Equitable Banking Corp was approved however they would need
300,000 as a collateral and another 100,000PHP to cover the title of the
security.
18) Nell Co agreed to advance 400,000PHP by way of check addressed to Equitable
Bank with a notation : a/c of Casville Enterprises Inc. for Marginal deposit and
payment of balance on Estrada Property to be used as security for trust receipt
for opening L/C of Garrett Skidders in favor of the Edward J. Nell Co."
19) Casville then applied for a letter of credit to Equitable Bank and showed Nell Co
the requirements imposed by the bank.
a) 30% cash margin deposit;
b) Acceptable Real Estate Collateral to secure the Trust Receipts;
c) Chattel Mortgage on the equipment; and Ashville
d) Other terms and conditions that our bank may impose.
20) After Nell Co issued a check for P427,300.00, payable to the "order of
EQUITABLE BANKING CORPORATION A/C CASVILLE ENTERPRISES,
INC." and drawn against the first National City Bank. The check did not
contain the notation found in the previous check but the substance of said
notation was reproduced in a covering letter that went with the check.
21) Nell Co entrusted the delivery of the check and the latter to defendant Casals
because it believed that no one, including defendant Casals, could encash the
same as it was made payable to the defendant bank alone.
22) Casals immediately deposited it with the bank and the bank teller accepted the
same for deposit in Casville's checking account. Casville, acting through Casals,
then withdrew all the amount deposited.
23) Nell Co was informed that no letters of credit were opened by the defendant
bank in its favor and then discovered that Casville had the P427,300.00, without
paying its obligation to the bank.
ISSUES:
1. W/N Equitable Banking Corporation is liable to Edward J. Nell Co. for the
value of the second check issued by NELL which was made payable to the
order of EQUITABLE Ashville BANIUNG CORPORATION A/C OF
CASVILLE ENTERPRISES INC.
PROVISION:
SEC 8 NIL
RULING + RATIO:
3. NO.
- The subject check was equivocal and patently ambiguous. By making
the check read:
o Pay to the EQUITABLE BANKING CORPORATION Order
of A/C OF CASVILLE ENTERPRISES, INC.
o Payee ceased to be indicated with reasonable certainty in
contravention of Section 8 of the Negotiable Instruments
Law.
- It could be accepted as deposit to the account of the party named after
the symbols "A/C," or payable to the Bank as trustee, or as an agent, for
Casville Enterprises, Inc., with the latter being the ultimate beneficiary.
- That ambiguity is to be taken contra proferentem that is, construed
against NELL who caused the ambiguity and could have also avoided it
by the exercise of a little more care.
- Article 1377 of the Civil Code, provides:
o The interpretation of obscure words or stipulations in a
contract shall not favor the party who caused the
obscurity.
- Contrary to the finding of Appellate Court, the subject check was,
initially, not non-negotiable. Neither was it a crossed check.
o The stamp that said Non-negotiable was made by the bank
teller and not by Nell Company.
- It was NELL's own acts, which put it into the power of Casals and
Casville Enterprises to perpetuate the fraud against it and,
consequently, it must bear the loss
DISPOSITION: Petition granted.
Equitable Banking Corporation is absolved from any and all liabilities to the private
respondent, Edward J. Nell Company, and the Amended Complaint against petitioner
bank is hereby ordered dismissed. No costs.
 PNB v. Rodriguez and Rodriguez
Petition: Petition for Review on Certiorari
Petitioner: Philippine National Bank
Respondent: Erlando Rodriguez and Norma Rodriguez
Ponente: Reyes
DOCTRINE:
The rule protects the depositary bank and assigns the loss to the drawer of the check
who was in a better position to prevent the loss in the first place.
FACTS:
1. Spouses Rodriguez were engaged in the informal lending business and had a
discounting arrangement with Philnabank Employees Savings and Loan Association
(PEMSLA), an association of PNB employees.
2. PEMSLA would grant loans to its members and have the spouses Rodriguez
rediscount the postdated checks issued to the members whenever PEMSLA was
short of funds. Spouses Rodriguez did this by replacing such checks with their own
checks issued in the name of the members.
3. PEMSLA had a policy not to approve applications for loans of members with
outstanding debts. PEMSLA officers then devised a scheme by obtaining loans under
fictitious names where the spouses would rediscount such.
4. PNB found out about this scheme and closed the bank account of PEMSLA. This
resulted to the PEMSLA checks in full value being dishonored when the spouses
presented them. On the other hand, PEMSLA was able to have the discounted checks
issued by the spouses without any indorsement from the named payees credited to
its account.
5. Spouses filed a civil complaint against PNB seeking to recover the amount of
P2,345,804.00 that was deposited to the PEMSLA savings account because they
credited the checks even without indorsements.
6. PNB contends that the spouses' had no intention for the named payees to receive
the proceeds of the checks deemed as "fictitious payees" hence it was a check
payable to bearer. The issued checks being payable to order, PNB was not at fault
crediting these checks to the PEMSLA account even without the indorsement of the
named payees.
7. Spouses argued that the checks on their faces were unquestionably payable to
order and that PNB committed a breach of contract when it paid the value of the
checks to PEMSLA without indorsement from the payees. The CA ruled in favor of
the spouses Rodriguez. Hence, this petition.
ISSUES:
Whether the subject checks are payable to order or to bearer, and who bears the loss
PROVISION:
Negotiable Instrument Law: SEC. 30. What constitutes negotiation. – An instrument
is negotiated when it is transferred from one person to another in such manner as to
constitute the transferee the holder thereof. If payable to bearer, it is negotiated by
delivery; if payable to order, it is negotiated by the indorsement of the holder
completed by delivery.
RULING + RATIO:
The checks are payable to order given the inability of PNB to prove that it is a
fictitious-payee check, PNB bears the loss.
• A check payable to a specified payee may nevertheless be considered as a
bearer instrument if it is payable to the order of a fictitious or non-existing
person, and such fact is known to the person making it so payable.
• A review of US jurisprudence yields that an actual, existing, and living
payee may also be “fictitious” if the maker of the check did not intend for
the payee to in fact receive the proceeds of the check.
• In a fictitious-payee situation, the drawee bank is absolved from liability
and the drawer bears the loss. When faced with a check payable to a
fictitious payee, it is treated as a bearer instrument that can be negotiated by
delivery. The underlying theory is that one cannot expect a fictitious payee
to negotiate the check by placing his indorsement thereon. And since the
maker knew this limitation, he must have intended for the instrument to be
negotiated by mere delivery. Thus, in case of controversy, the drawer of the
check will bear the loss. (Exception: A showing of commercial bad faith on
the part of the drawee bank, or any transferee of the check for that matter,
will work to strip it of this defense. The exception will cause it to bear the
loss.)
• In the case herein, the Rodriguez checks are undisputedly payable to
specified payees and are actual, existing, and living persons who are
members of PEMSLA that had rediscounting arrangement with the spouses
Rodriguez. The question here is whether the payees were "fictitious" in a
broader sense, or the checks were not really intended for them.
• PNB failed to show that the makers did not intend for the named payees to
be part of the transaction involving the checks. The bank showing that the
 payees did not have knowledge of these checks does not reveal the intention
of the spouses Rodriguez's intention of the payees to not be the receivers.
• Because of a failure to show that the payees were “fictitious” in its broader
sense, the fictitious-payee rule does not apply. Checks are to be deemed
payable to order where drawee bank bears the loss for their gross
negligence.
DISPOSITION:
The decision in favor of the spouses Rodriguez is AFFIRMED WITH
MODIFICATION, the moral damages are reduced given that PNB's actions were to
stop the actions of its employees.
ANG TEK LIAN vs. COURT OF APPEALS (GR No. L-2516, September 25,
1950)
Petition: Review on Certiorari
Petitioner: Ang Tek Lian
Respondent: The Court of Appeals
Ponencia: Bengzon
Doctrine: (Check drawn payable to the order of “Cash”; Indorsement) – A check
payable to the order of “cash” is a check payable to bearer, and the bank may pay it
to the person presenting it for payment without the drawer’s indorsement.
FACTS
1) On November 16, 1946, petitioner Ang Tek Lian went to the office of his
friend Lee Hua Hong to ask for P4,000.00 in cash because he allegedly could not
withdraw from his bank.
2) In exchange, petitioner would give him his China Banking Corporation
Check in the amount of P4,000.00 payable to the order of “cash”.
3) Relying upon petitioner's assurance that he had sufficient funds in the bank
to meet his obligations, Lee Huang Hong agreed and delivered to him, on the same
date, the sum of P4,000.00 in cash.
4) On November 18, 1946, Lee Huang Hong presented the check to the drawee
bank for payment, but it was dishonored for insufficiency of funds. It was later found
out that the balance of petitioner's deposit on both dates was only P335. Despite
repeated efforts to notify him that the check had been dishonored by the bank,
petitioner could not be located anywhere.
5) He was eventually summoned in the City Fiscal's Office in view of the
complaint for estafa filed against him. Thereafter, petitioner was convicted of estafa
in the Court of First Instance of Manila. The Court of Appeals affirmed the verdict.
6) Petitioner now argues before the Supreme Court that since the check was
made payable to "cash" and was not endorsed by him, he should not be made guilty
of the offense charged.
ISSUE:
Whether or not petitioner was correctly held liable for issuing a bouncing check even
if it does not have his indorsement;
HELD:
Under sec. 9 (d) of the Negotiable Instruments Law, a check drawn payable to the
order of "cash" is a check payable to bearer and the bank may pay it to the person
presenting it for payment without the drawer's indorsement.
A check payable to bearer is authority for payment to the holder. Where a check is in
the ordinary form, and is payable to bearer, so that no indorsement is required, a
bank, to which it is presented for payment, need not have the holder identified and is
not negligent in failing to do so. If the bank has no reasonable cause for suspecting
any irregularity, it will be protected in paying a bearer check no matter what facts
unknown to it may have occurred prior to its presentment.
Besides, the form of the check was totally unconnected with its dishonor. The Court
of Appeals correctly declared that it was returned unsatisfied because the drawer had
insufficient funds and not because the drawer's indorsement was lacking.
Jimenez v Bucoy (1958)
Petition: Petition for Relief
Petitioners: INTESTATE OF LUTHER YOUNG AND PACITA YOUNG, spouses.
PACIFICA JIMENEZ, petitioner-appellee
Respondents: DR. JOSE BUCOY, administrator-appellant
Ponencia: Bengzon
DOCTRINE: No precise words stating an express promise to pay are needed to make
it a good promissory note.
FACTS:
1. Intestate of Luther and Pacita Young, died in 1954 and 1952 respectively.
Pacifica Jimenez presented 4 promissory notes signed by Pacita for different
amounts totaling 21,000.00 pesos.
2. Acknowledging receipt by Pacita during the Japanese occupation in the
currency then prevailing, the administrator manifested WILLINGNESS TO PAY
provided it be adjusted with the Ballantyne schedule.
3. Bucoy also calls attention to the fact that the notes contained no express
promise to pay a specified amount.
4. Jimenez objected to the adjustment insisting on full payment in accordance
with the notes.
5. Judge of the trial court held that notes should be paid in the currency after
the war, entitling plaintiff to recover 21k, and atty. Fees for 2,000. Hence this appeal.

6. The promissory note reads as follows: “Received from Miss Pacifica

Jimenez the total amount of P10,000, ten thousand pesos payable 6 months after the
war, without interest.” The other 3 notes were couched in the same terms, differing
in amounts.

ISSUE:

1. WoN EXPRESS PROMISE to pay is needed to make it a valid negotiable

instrument [MAIN ISSUE]
2. WoN the payment should be adjusted to follow the Ballantyne schedule
3. WoN Buyco should have ordered to pay Atty. Fees. [MINOR ISSUE[

PROVISIONS:
Section 10 of the Negotiable Instruments Law
SEC. 10. The instrument need not follow the language of this Act, but any terms are
sufficient which clearly indicate an intention to conform to the requirements hereof.

RULING + RATIO:

1. NO, an express promise to pay is not needed. Following the controlling

doctrines on the matter, no precise words stating an express promise to pay are
needed to make it a good promissory note. Just that they amount, in legal effect, to a
promise to pay. In other words, if over above the mere acknowledgment of the debt,
it may be understood by the words that there is a promise to pay it, it is enough.

2. NO, it need not be adjusted to the Ballantyne schedule. The Ballantyne

schedule should only apply if the loan could be paid during the Japanese Occupation.
However in this case, it is clear from the promissory note that it said “6 months
AFTER the war” Thus, in this case, no reduction could be effect, a peso-for-peso
payment shall be ordered in Philippine currency.

3. NO, Buyco should not have been ordered to pay Atty. Fees. There are only
2 reasons for one to be ordered to pay Atty. Fees, either the situation of the case falls
under cerain exceptions (like cases about Legal Support), or the defendant acted in
gross and evident bad faith. The court ruled that Buyco did not act in bad faith, but
merely that his attitude was a consequence of his line of defense.

DISPOSITION: Appealed decision is affirmed, except as to the attorney's fees which

are hereby disapproved. So ordered.