Romeo C. Garcia vs. Dionisio V. Llamas, G.R. No. 154127.
December 8, 2003 In March 1982, Angel de la Cruz advised Security Bank that he lost the CTDs.
Facts: A complaint for sum of money was filed by respondent Dionisio Llamas
against Petitioner Romeo Garcia and Eduardo de Jesus alleging that the two
borrowed Php 400, 000 from him. They bound themselves jointly and severally
to pay the loan on or before January 23, 1997 with a 15% interest per month.
The loan remained unpaid despite repeated demands by respondent.
Petitioner resisted the complaint alleging that he signed the promissory
note merely as an accommodation party for de Jesus and the latter had
already paid the loan by means of a check and that the issuance of the check
and acceptance thereof novated or superseded the note.
The trial court rendered a judgment on the pleadings in favor of the
respondent and directed petitioner to pay jointly and severally respondent the
amounts of Php 400, 000 representing the principal amount plus interest at
15% per month from January 23, 1997 until the same shall have been fully
paid, less the amount of Php 120,000 representing interests already paid.
The Court of Appeals ruled that no novation, express or implied, had taken
place when respondent accepted the check from de Jesus. According to the
CA, the check was issued precisely to pay for the loan that was covered by the
promissory note jointly and severally undertaken by petitioner and de Jesus.
Respondent’s acceptance of the check did not serve to make de Jesus the sole
debtor because first, the obligation incurred by him and petitioner was joint
and several; and second, the check which had been intended to extinguish the
obligation bounced upon its presentment.
Issues: (1) Whether or not there was novation of the obligation(2) Whether or
not the defense that petitioner was only an accommodation party had any
basis.
Held: For novation to take place, the following requisites must concur: (1)
There must be a previous valid obligation; (2) the parties concerned must agree
to a new contract; (3) the old contract must be extinguished; and (4) there must
be a valid new contract.
The parties did not unequivocally declare that the old obligation had been
extinguished by the issuance and the acceptance of the check or that the check
would take the place of the note.
(2) By its terms, the note was made payable to a specific person rather than
bearer to or order—a requisite for negotiability. Hence, petitioner cannot avail
himself of the NIL’s provisions on the liabilities and defenses of an
accommodation party. Besides, a non-negotiable note is merely a simple
contract in writing and evidence of such intangible rights as may have been
created by the assent of the parties. The promissory note is thus covered by the
general provisions of the Civil Code, not by the NIL.
Even granting that the NIL was applicable, still petitioner would be liable for
the note. An accommodation party is liable for the instrument to a holder for
value even if, at the time of its taking, the latter knew the former to be only an
accommodation party. The relation between an accommodation party and the
party accommodated is, in effect, one of principal and surety. It is a settled rule
that a surety is bound equally and absolutely with the principal and is deemed
an original promissory debtor from the beginning. The liability is immediate
and direct.
Caltex Phils vs CA
In 1982, Angel de la Cruz obtained certificates of time deposit (CTDs) from
Security Bank and Trust Company for the former’s deposit with the said bank
amounting to P1,120,000.00. The said CTDs are couched in the following
manner:
This is to Certify that B E A R E R has deposited in this Bank the sum
of _______ Pesos, Philippine Currency, repayable to said
depositor _____days. after date, upon presentation and surrender of this
certificate, with interest at the rate of ___ % per cent per annum.
Angel de la Cruz subsequently delivered the CTDs to Caltex in connection with
the purchase of fuel products from Caltex.
He executed an affidavit of loss and submitted it to the bank. The bank then
issued another set of CTDs. In the same month, Angel de la Cruz acquired a loan
of P875,000.00 and he used his time deposits as collateral.
In November 1982, a representative from Caltex went to Security Bank to
present the CTDs (delivered by de la Cruz) for verification. Caltex advised
Security Bank that de la Cruz delivered Caltex the CTDs as security for
purchases he made with the latter. Security Bank refused to accept the CTDs
and instead required Caltex to present documents proving the agreement made
by de la Cruz with Caltex. Caltex however failed to produce said documents.
In April 1983, de la Cruz’ loan with Security bank matured and no payment was
made by de la Cruz. Security Bank eventually set-off the time deposit to pay off
the loan.
Caltex sued Security Bank to compel the bank to pay off the CTDs. Security Bank
argued that the CTDs are not negotiable instruments even though the word
“bearer” is written on their face because the word “bearer” contained therein
refer to depositor and only the depositor can encash the CTDs and no one else.
ISSUE: Whether or not the certificates of time deposit are negotiable.
HELD: Yes. The CTDs indicate that they are payable to the bearer; that there is
an implication that the depositor is the bearer but as to who the depositor is, no
one knows. It does not say on its face that the depositor is Angel de la Cruz. If it
was really the intention of respondent bank to pay the amount to Angel de la
Cruz only, it could have with facility so expressed that fact in clear and
categorical terms in the documents, instead of having the word “BEARER”
stamped on the space provided for the name of the depositor in each CTD. On
the wordings of the documents, therefore, the amounts deposited are repayable
to whoever may be the bearer thereof.
Thus, de la Cruz is the depositor “insofar as the bank is concerned,” but
obviously other parties not privy to the transaction between them would not be
in a position to know that the depositor is not the bearer stated in the CTDs.
However, Caltex may not encash the CTDs because although the CTDs are
bearer instruments, a valid negotiation thereof for the true purpose and
agreement between Caltex and De la Cruz, requires both delivery and
indorsement. As discerned from the testimony of Caltex’ representative, the
CTDs were delivered to them by de la Cruz merely for guarantee or security
and not as payment.
G.R. No. 76788 January 22, 1990JUANITA SALAS, vs. HON. COURT OF
APPEALS and FIRST FINANCE & LEASING CORPORATION
Facts: Juanita Salas (Petitioner) bought a motor vehicle from the Violago Motor
Sales Corporation (VMS) for as evidenced by a promissory note. This note was
subsequently endorsed to Filinvest Finance & Leasing Corporation (private
respondent) which financed the purchase.
Petitioner defaulted in her installments allegedly due to a discrepancy in the
engine and chassis numbers of the vehicle delivered to her and those indicated
in the sales invoice, certificate of registration and deed of chattel mortgage,
which fact she discovered when the vehicle figured in an accident.This failure
to pay prompted private respondent to initiate an action for a sum of money
against petitioner before the Regional Trial Court.
Issue: WON private respondent is a holder in due course?
Held: YES. The PN was negotiated by indorsement in writing on the instrument
itself payable to the Order of Filinvest Finance and Leasing Corporation and it
is an indorsement of the entire instrument.Under the circumstances, there
appears to be no question that Filinvest is a holder in due course, having taken
the instrument under the following conditions: [a] it is complete and regular
upon its face; [b] it became the holder thereof before it was overdue, and without
notice that it had previously been dishonored; [c] it took the same in good faith
and for value; and [d] when it was negotiated to Filinvest, the latter had no
notice of any infirmity in the instrument or defect in the title of VMS
Corporation.Accordingly, respondent corporation 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. This being so, petitioner cannot set up against respondent
the defense of nullity of the contract of sale between her and VMS.