Está en la página 1de 8

check is not legal tender, and therefore cannot constitute valid tender of

Section 61 payment.
Case 33
Cebu International Finance Corporation v CA
316 SCRA 488

FACTS:
Petitioner is a quasi-banking institution involved in money market
transactions. Alegre invested with petitioner P500,000. Petitioner issued
then a promissory note, which would mature approximately after a
month. The note covered for Alegre’s placement plus interest. On the
maturity of the note, petitioner issued a check payable to Alegre, covering the
whole amount due. It was drawn from petitioner’s current account in
BPI. When
the wife of Alegre tried to deposit the check, the bank dishonored the
check. Petitioner was notified of this matter and Alegre demanded the
immediate payment in cash. In turn, petitioner promised to replace the
check on the impossible premise that the first issued be returned to them. This
prompted Alegre to file a complaint against petitioner and petitioner in
turn, filed a case against BPI for allegedly unlawfully deducting from its
account counterfeit checks. The trial court decided in favor of Alegre.

ISSUE:
Whether or not the Negotiable Instruments
Law is applicable to the money market transaction held between
petitioner and Alegre?

HELD:
Considering the nature of the money market transaction, Article 1249 of
the CC is the applicable provision should be applied. A money market has
been defined to be a market dealing in standardized short-term credit
instruments where lenders and borrowers don’t deal directly with each
other but through a middleman or dealer in the open market. In a money
market transaction, the investor is the lender who loans his money to a
borrower through a middleman or dealer.

In the case at bar, the transaction is in the nature of a loan. Petitioner


accepted the check but when he tried to encash it, it was dishonored. The
holder has an immediate recourse against the drawer, and consequently
could immediately file an action for the recovery of the value of the check.
Further, in a loan transaction, the obligation to pay a sum certain in money
may be paid in money, which is the legal tender or, by the use of a check. A
Section 61  BPI shall debit of P514,390.94 from the current account of CFIC payable
Case 33 to Alegre
CEBU INTERNATIONAL V. CA  In case BPI shall be adjudge liable to Alegre, he cannot go after BPI
316 SCRA 488  July 27, 1993: BPI filed a separate collection suit against Alegre
G.R. No. 123031; October 12, 1999  alleged that Alegre connived w/ Lina A. Pena and Lita A. Anda and forged
Lessons Applicable: Introduction to Negotiable Instruments (Negotiable several checks of CIFC totalling to P1,724,364.58 deducting P514,390.94
Instruments Law) = P914,198.57 + P20,000 cost of suit
 September 27, 1993: RTC favored Alegre
 CIFC appealed but CA Affirmed
FACTS:
 April 25, 1991: Vicente Alegre (Alegre), invested with Cebu International ISSUE: W/N a check is of legal tender thereby extinguishing the obligation of
Finance Corporation (CIFC),a quasi-banking institution, P500,000.00 CIFC to pay Alegre
 CIFC issued a promissory note to mature on May 27, 1991. The note for
P516,238.67 covered private respondent's placement plus 20.5% interest
for 32 days. HELD: NO. CA Affirmed.
 May 27, 1991: CIFC issued BPI Check No. 513397 for P514,390.94 in favor  Section 137 of the Negotiable Instruments Law
of Alegre as proceeds of his matured investment plus interest. The CHECK  BPI primarily liable for accepting the checks
was drawn from CIFC's current account in the Bank of the Philippine  Art. 1249 of the New Civil Code
Islands (BPI)  The payment of debts in money shall be made in the currency stipulated,
 June 17, 1991: Alegre's wife deposited the check with Rizal Commercial and if it is not possible to deliver such currency, then in the currency,
Banking Corp. (RCBC) in Puerto Princesa, Palawan. which is legal tender in the Philippines.
 BPI dishonored the CHECK with the annotation, that the "Check (is) The delivery of promissory notes payable to order, or bills of exchange or
Subject of an Investigation other mercantile documents shall produce the effect of payment only
 BPI took custody of the CHECK pending an investigation of several when they have been cashed, or when through the fault of the creditor they
counterfeit checks drawn against CIFC's aforestated checking account. have been impaired.
 BPI used the check to trace the perpetrators of the forgery.  money market - a market dealing in standardized short-term
 Immediately, Alegre notified CIFC of the dishonored CHECK and credit instruments (involving large amounts) where lenders and
demanded, on several occasions, that he be paid in cash. borrowers do not deal directly with each other but through a middle man
 CIFC refused the request, and instead instructed him to wait for its or dealer in open market. In a money market transaction, the investor is a
ongoing bank reconciliation with BPI. lender who loans his money to a borrower through a middleman or dealer.
 Alegre, through counsel, made a formal demand for the payment of his  In the case at bar, the money market transaction between the CIFC and
money market placement the Alegre is in the nature of a loan.
 CIFC promised to replace the CHECK but required an impossible  Alegre accepted the CHECK, instead of requiring payment in money.
condition that the original must first be surrendered.  Yet, when he presented it to RCBC for encashment, as early as June 17,
 February 25, 1992: Alegre filed a complaint for recovery of a sum of money 1991, the same was dishonored by non-acceptance, with BPI's annotation:
w/ the RTC against CIFC "Check (is) subject of an investigation."
 CIFC filed a motion for leave of court to file a third-party complaint against  Under these circumstances, and after the notice of dishonor, the holder
BPI - dismissed bec. of the other case has an immediate right of recourse against the drawer, and consequently
 CIFC asserted that the CHECK it issued in favor of Alegre was genuine, could immediately file an action for the recovery of the value of the check.
valid and sufficiently funded.  In a loan transaction, the obligation to pay a sum certain in money may be
 July 13, 1992: CIFC sought to recover its lost funds and formally filed paid in money, which is the legal tender or, by the use of a check.
against BPI  A check is not a legal tender, and therefore cannot constitute valid tender
 alleged that BPI unlawfully deducted from CIFC's checking account, of payment.
counterfeit checks amounting to P1,724,364.58  Although the value of the CHECK was deducted from the funds of CIFC, it
 compromise agreement, which was submitted for the approval of the court was not delivered to Alegre - did not not ipso facto operate as a discharge
 BPI pay CFIC P1,724,364.58 + P20,000 litigation expenses or payment
 A compromise is a contract whereby the parties, by making reciprocal
concessions, avoid a litigation or put an end to one already commenced
 unenforceable against Alegre who is not a party
 BPI's confiscation of Alegre's money constitutes garnishment without the
parties going through a valid proceeding in court.
 In effect, CIFC has not yet tendered a valid payment of its obligation to
theAlegre
 GR compromise has upon the parties the effect and authority of res
judicata, with respect to the matter definitely stated therein
 holds true even if the agreement has not been judicially approved
 CIFC cannot go against BPI
Section 62  August 12, 1998: Far East demanded from Gold Palace the payment of
Case 34 balance and upon refusal filed in the RTC
Far East Bank & Trust Co. V. Gold Palace Jewelry Co. (2008)
562 SCRA 604  RTC: in favor of Far East on the basis that Gold Palace was liable under
G.R. No. 168274 August 20, 2008 the liabilities of a general indorser
Lessons Applicable: Liabilities of the Parties (Negotiable Instruments Law)
 CA: reversed since Far East failed to undergo the proceedings on the
protest of the foreign draft or to notify Gold Palace of the draft's dishonor;
thus, Far East could not charge Gold Palace on its secondary liability as an
FACTS: indorser
 June 1998: Samuel Tagoe, a foreigner, purchased from Gold Palace
Jewellery Co.'s (Gold Palace's) store at SM-North EDSA several pieces of ISSUE: W/N Gold Palace should be liable for the altered Foreign Draft
jewelry valued at P258,000

 paid w/ Foreign Draft issued by the United Overseas Bank (Malaysia) to HELD: NO. AFFIRMED WITH THE MODIFICATION that the award of
Land Bank of the Philippines, Manila (LBP) for P380,000 exemplary damages and attorney's fees is DELETED

 Teller of Far East Bank, next door tenant, informed Julie Yang-Go
(manager of Gold Palace) that a foreign draft has similar nature to Act No. 2031, or the Negotiable Instruments Law (NIL), explicitly provides
a manager's check, but advised her not to release the pieces of jewelry until that the acceptor, by accepting the instrument, engages that he will pay
the draft had been cleared it according to the tenor of his acceptance.
 This provision applies with equal force in case the drawee pays a bill
 Yang issued Cash Invoice so the jewelries can be released without having previously accepted it.

 Yang deposited the draft in the company's account with the Far East on  Actual payment by the drawee is greater than his acceptance, which is
June 2, 1998 merely a promise in writing to pay

 When Far East, the collecting bank, presented the draft for clearing to  The payment of a check includes its acceptance
LBP, the drawee bank, cleared the it and Gold Palace's account with Far
East was credited  The tenor of the acceptance is determined by the terms of the bill as it is
when the drawee accepts.
 June 6, 1998: The foreigner eventually returned to claim the purchased
goods.  LBP was liable on its payment of the check according to the tenor of the
check at the time of payment, which was the raised amount.
 After ascertaining that the draft had been cleared, Yang released the pieces
of jewelry and his change, Far East Check of P122,000 paid by the bank  Gold Palace was not a participant in the alteration of the draft, was not
negligent, and was a holder in due course
 June 26, 1998: LBP informed Far East that the Foreign Draft had been
materially altered from P300 to P300,000and that it was returning the  LBP, having the most convenient means to correspond with UOB, did not
same first verify the amount of the draft before it cleared and paid the same

 Far East refunded the amount to LBP and debit only P168,053.36 of the  Gold Palace had no facility to ascertain with the drawer, UOB Malaysia,
amount left in Gold Palace' account without a prior written notice to the the true amount in the draft. It was left with no option but to rely on the
account holder representations of LBP that the draft was good

 Far East only notified by phone the representatives of the Gold Palace  Principle that the drawee bank, having paid to an innocent holder the
amount of an uncertified, altered check in good faith and without
negligence which contributed to the loss, could recover from the person not debit respondent's account for the amount it refunded to the drawee
to whom payment was made as for money paid by mistake - NOT bank.
applicable

 The Court is also aware that under the Uniform Commercial Code in the
United States of America, if an unaccepted draft is presented to a drawee
for payment or acceptance and the drawee pays or accepts the draft, the
person obtaining payment or acceptance, at the time of presentment, and
a previous transferor of the draft, at the time of transfer, warrant to the
drawee making payment or accepting the draft in good faith that the
draft has not been altered - absent any similar provision in our law,
cannot extend the same preferential treatment to the paying bank

 Gold Palace is protected by Section 62 of the NIL, its collecting agent, Far
East, should not have debited the money paid by the drawee bank from
respondent company's account. When Gold Palace deposited the check
with Far East, it, under the terms of the deposit and the provisions of the
NIL, became an agent of the Gold Palace for the collection of the amount
in the draft

 The subsequent payment by the drawee bank and the collection of the
amount by the collecting bank closed the transaction insofar as the drawee
and the holder of the check or his agent are concerned, converted the check
into a mere voucher, and, as already discussed, foreclosed the recovery by
the drawee of the amount paid. This closure of the transaction is a matter
of course; otherwise, uncertainty in commercial transactions, delay and
annoyance will arise if a bank at some future time will call on the payee for
the return of the money paid to him on the check

 As the transaction in this case had been closed and the principal-agent
relationship between the payee and the collecting bank had already
ceased, the latter in returning the amount to the drawee bank was already
acting on its own and should now be responsible for its own actions.
Neither can petitioner be considered to have acted as the representative of
the drawee bank when it debited respondent's account, because, as already
explained, the drawee bank had no right to recover what it paid. Likewise,
Far East cannot invoke the warranty of the payee/depositor who indorsed
the instrument for collection to shift the burden it brought upon itself.
This is precisely because the said indorsement is only for purposes of
collection which, under Section 36 of the NIL, is a restrictive
indorsement. It did not in any way transfer the title of the instrument to
the collecting bank. Far East did not own the draft, it merely presented it
for payment. Considering that the warranties of a general indorser as
provided in Section 66 of the NIL are based upon a transfer of title and are
available only to holders in due course, these warranties did not attach to
the indorsement for deposit and collection made by Gold Palace to Far
East. Without any legal right to do so, the collecting bank, therefore, could
Section 62 according to the tenor of his acceptance. This provision applies with equal
Case 34 force in case the drawee pays a bill without having previously accepted it. His
Far East Bank & Trust Co. V. Gold Palace Jewelry Co. (2008) actual payment of the amount in the check implies not only his assent to the
562 SCRA 604 order of the drawer and a recognition of
G.R. No. 168274;August 20, 2008 his correspondingo b l i g a t i o n t o p a y t h e a f o r e m e n t i o n e d s u m , b
Lessons Applicable: Liabilities of the Parties (Negotiable Instruments Law) u t a l s o , h i s c l e a r c o m p l i a n c e w i t h t h a t obligation.
Actual payment by the drawee is greater than his
acceptance, which is merely a promise in writing to pay. The payment of a check
FACTS: Samuel Tagoe, a foreigner, purchased from Gold Palace (SM North) includes its acceptance. Unmistakable herein is the fact that the drawee bank
jewelries worth PHP 258,000.00. As payment, he offered a foreign draft cleared and paid the subject foreign d r a f t a n d f o r w a r d e d t h e a m o u n t
issued by the United Overseas Bank of Malaysia addressed to Land Bank, and t h e r e o f t o t h e c o l l e c t i n g b a n k . L B P w a s l i a b l e o n i t s payment
payable to Gold Palace for PHP 380,000.00. Judy Yang, the assistant GM of of the check according to the tenor of the check at the time of payment, which
Gold Palace inquired from Far East Bank (SM North) regarding the draft’s was the raised amount. Thus, LBP could no longer repudiate the payment it
nature. The teller told her that it was similar to a manager’s check but advised erroneously made to a due course holder. Gold Palace was not a participant in
her to not release the jewelry until the draft has been cleared. Following the the alteration of the draft, was not negligent, and was a holder in due course—
advice, Yang Issued a cash invoice to Tagoe & told him that the jewelries would it received the draft complete and regular on its face, before it became
be released when the draft had b e e n c l e a r e d . J u l i e Y a n g - G o , overdue and without notice of any dishonor, in good faith and for
the manager of Gold Palace, deposited the draft in the value, and absent any knowledge of any infirmity in the instrument or defect
company’s account with Far East Bank SM North. The latter presented it for in the title of the person negotiating it.
clearing to LBP, the drawee bank, who cleared the same. United
Overseas account with LBP was debited and Gold Palace’s account with
Far East was credited with the amount stated in the draft. The pieces of jewelry
were then released to Tagoe and because the amount in the draft was m o r e
than the value of the goods, a check for PHP 122,000 was
i s s u e d t o h i m . I t w a s encashed by Tagoe.3 w e e k s a f t e r , L B P
informed Far East that the amount in the foreign draft had
b e e n materially-altered from PHP 300.00 to PHP 380,000.00 and that they
will be returning it. Far East thus refunded the amount paid by LBP. Thus, Far
East had to seek reimbursement from Gold Palace but they were only
able to debit PHP 168,053.37, which was done without a p r i o r
written notice to Gold Palace as they only informed them
b y p h o n e . T h e y t h u s demanded the difference of PHP 211,946.64 from
Gold Palace. As the latter did not respond favorably, Far East instituted
a civil case for sum of money and damages. Gold Palace denies the
allegations in the complaint and claims as their defense that the subject foreign
draft has been cleared and it was not they who caused the alteration. The RTC ruled in favor
of Far East but this was reversed by the CA as Far East failed to undergo
the proceedings on the protest and thus, Far East could not charge Gold Palace
on its secondary liability as an indorser. It further said that the drawee bank
had cleared the check and its remedy should be against the part responsible
for the alteration.

ISSUE: WHETHER OR NOT FAR EAST BANK COULD


P R O C E E D A G A I N S T G O L D PALACE.

HELD: No.RATIO:
The acceptor, by accepting the instrument, engages that he will pay it
Section 62
Case 35
Philippine National Bank v. Picornell
G.R. No. L-18751. September 26, 1922]

FACTS
Picornell delivered a bill of exchange to Philippine National Bank (PNB) which
was later presented to and accepted by Hyndman Tavera Y Ventura. The
drawee-acceptor refused to pay PNB.

ISSUE
Whether or not a drawee is liable to the payee upon acceptance.

RULING

YES. The drawee, by acceptance, becomes liable to the payee or his indorsee
and also to the drawer himself. Here, the drawee accepted the bill and is
primarily liable for the value of the negotiable instrument, while the drawer,
Picornell, is secondarily liable. Upon the non-payment of the bill by the
drawee-acceptor, the bank had the right of recourse, which it exercised, against
the drawer. (Sec. 84, Negotiable Instruments Law)
Section 62 Held: The bank on which a check is drawn, known as the drawee bank, is
Case 36 under strict liability, based on the contract between the bank and its customer
Bank of America, NT and SA vs. Associated Citizens Bank (drawer), to pay the check only to the payee or the payee’s order. The drawer’s
583 SCRA 51 instructions are reflected on the face and by the terms of the check. When the
G.R. No. 141001, May 21, 2009 drawee bank pays a person other than the payee named on the check, it does
not comply with the terms of the check and violates its duty to charge the
drawer’s account only for properly payable items. On the part of Associated
The Bank is under strict liability, based on the contract between Bank, the law imposes a duty of diligence on the collecting bank to scrutinize
the bank and its customer (drawer), to pay the check only to the checks deposited with it for the purpose of determining their genuineness and
payee or the payee’s order. The drawer’s instructions are reflected regularity. The collecting bank being primarily engaged in banking holds itself
on the face and by the terms of the check. When the drawee bank out to the public as the expert and the law holds it to a high standard of
pays a person other than the payee named on the check, it does not conduct. In presenting the checks for clearing and for payment, the defendant
comply with the terms of the check and violates its duty to charge [collecting bank] made an express guarantee on the validity of “all prior
the drawer’s account only for properly payable items. endorsements.” Thus, stamped at the back of the checks are the defendant’s
clear warranty. As the warranty has proven to be false and inaccurate,
Facts: BA-Finance Corporation (BA Finance) and Miller Offset Press, Inc. Associated Bank is liable for any damage arising out of the falsity of its
(Miller) entered into a credit line facility agreement whereby Miller can representation.
discount and assign its trade receivables with the BA Finance. At the same
time, Uy Kiat Chung, Ching Uy Seng, and Uy Chung Guan Seng, acting for Held: A bank that regularly processes checks that are neither payable to the
Miller, executed a Continuing Suretyship Agreement with BA-Finance. Under customer nor duly indorsed by the payee is apparently grossly negligent in its
the agreement, they jointly and severally guaranteed the full and prompt operations. This Court has recognized the unique public interest possessed by
payment of any and all indebtedness which Miller may incur with BA-Finance. the banking industry and the need for the people to have full trust and
confidence in their banks. For this reason, banks are minded to treat their
Miller discounted and assigned several trade receivables to BA-Finance by customer’s accounts with utmost care, confidence, and honesty. In a checking
executing Deeds of Assignment in favor of the latter. In consideration thereof, transaction, the drawee bank has the duty to verify the genuineness of the
BA-Finance issued four checks payable to the order of Miller with the notation signature of the drawer and to pay the check strictly in accordance with the
“For Payee’s Account Only.” These checks were drawn against Bank of drawer’s instructions, i.e., to the named payee in the check. It should charge to
America. The four checks were deposited by Ching Uy Seng in Associated the drawer’s accounts only the payables authorized by the latter. Otherwise,
Citizens Bank with his joint account with Uy Chung Seng. Associated Bank the drawee will be violating the instructions of the drawer and it shall be liable
stamped the checks and guaranteed all prior endorsements and/or lack of for the amount charged to the drawer’s account. Rodriguez checks are payable
endorsements and sent them through clearing. Later, Bank of America as to order since the bank failed to prove that the named payees therein are
drawee bank honored the checks and paid the proceeds to Associated Bank as fictitious.
the collecting bank. When Miller failed to deliver to BA-Finance the proceeds
of the assigned trade receivables, BA-Finance filed a collection suit against Hence, the fictitious-payee rule which will make the instrument payable to
Miller and impleaded the three representative of the latter. bearer does not apply. PNB accepted the 69 checks for deposit to the PEMSLA
account even without any indorsement from the named payees. It bears
Bank of America filed a third party complaint against Associated Bank. In its stressing that order instruments can only be negotiated with a valid
answer to the third party complaint, Associated Bank admitted having received indorsement.
the four checks for deposit in the joint account of Ching Uy Seng and Uy Chung
Guan Seng, but alleged that Ching Uy Seng, being one of the corporate officers
of Miller, was duly authorized to act for and on behalf of Miller.

Issues: Whether or not Bank of America is liable to pay BA-Finance and


whether or not Associated Bank should reimburse Bank of America the
amount of the four checks.