Negotiable Instruments Full Cases

8/13/2019 Negotiable Instruments Full Cases

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NEGOTIABLE INSTRUMENTSCASES(SET 1)

1.) G.R. No. 72593 April 30, 19 7CONSOLI!ATE! "L#$OO! IN!USTRIES, INC., %ENR# $EE, &' RO!OL O T. *ERGARA, petitioners,vs.I C LEASING AN! ACCE"TANCE COR"ORATION, respondent

2.) G.R. No. 75502 No+ - r 12, 19 7/ALILI! $OO! IN!USTRIES COR"ORATION, AL RE!O SALONGA &' OA UIN MIGUEL !E ESUS, petitioners,vs.%ONORABLE INTERME!IATE A""ELLATE COURT &' "%ILI""INE BAN/ING COR"ORATION

3.) G.R. No. L 57 5 April 2 , 19 9BENITO S# 4 ONG, petitioner,vs."EO"LE O T%E "%ILI""INES "%ILI""INES &' COURT O A""EALS, respondents.

.) G.R. No. L 91 &' &r4 30, 1990"%ILI""INE AIRLINES, INC.,petitioner,vs.%ON. COURT O A""EALS, %ON. U!GE RICAR!O !. GALANO, Co r6 o ir86 I'86&' o M&'il&, Br&' : ;III, AIME /. !ELROSARIO, ! p 64 S: ri , Co r6 o ir86 I'86&' , M&'il&, &' AMELIA TAN, respondents

5.) G.R. No. 10 555 ! - r 20, 199RAMON TAN,petitioner,vs.T%E %ONORABLE COURT O A""EALS &' RI


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G.R. No. 72593 April 30, 19 7

CONSOLI!ATE! "L#$OO! IN!USTRIES, INC., %ENR# $EE, &' RO!OL O T. *ERGARA, p 6i6io' r8, +8. I C LEASING AN!ACCE"TANCE COR"ORATION, r 8po' '6.

GUTIERREZ, JR., J.:

This is a petition for certiorari under Rule 45 of the Rules of Court hich assails on !uestions of la a decision of the Inter"ediate #ppellate Court in #C$G.R. C% &o. '(')* dated Jul+ -, *(5, as ell as its resolution dated cto/er -, *(5, den+in0 the "otion forreconsideration.

The antecedent facts culled fro" the petition are as follo s:

The petitioner is a corporation en0a0ed in the lo00in0 /usiness. It had for its pro0ra" of lo00in0 activities for the +ear *-( the openin0of additional roads, and si"ultaneous lo00in0 operations alon0 the route of said roads, in its lo00in0 concession area at 1a0an0a,2ana+, and Cara0a, 3avao riental. or this purpose, it needed t o 67 additional units of tractors.

Co0ni8ant of petitioner$corporation9s need and purpose, #tlantic Gulf ;acific Co"pan+ of 2anila, throu0h its sister co"pan+ and"ar33$6 $1 and the other an >33$ '$1.

In order to ascertain the e?tent of or< to hich the tractors ere to /e e?posed, t.s.n., 2a+ 6(, *(), p. 447 and to deter"ine the

capa/ilit+ of the =Used= tractors /ein0 offered, petitioner$corporation re!uested the seller$assi0nor to inspect the @o/ site. #fterconductin0 said inspection, the seller$assi0nor assured petitioner$corporation that the =Used= #llis Cra ler Tractors hich ere /ein0offered ere fit for the @o/, and 0ave the correspondin0 arrant+ of ninet+ *)7 da+s perfor"ance of the "achines and availa/ilit+ ofparts. t.s.n., 2a+ 6(, *(), pp. 5*$''7.

Aith said assurance and arrant+, and rel+in0 on the seller$assi0nor9s sundred Ei0ht+ &ine ;esos - D )) ; ,)*B,-(*.- 7, accrued interest of ne >undred ift+ ne Thousand i?>undred Ei0hteen ;esos ('D )) ; 5 ,' (.('7 as of #u0ust 5, *-*, accruin0 interest thereafter at the rate of t elve 6 7percent per annu", attorne+9s fees of T o >undred ort+ &ine Thousand Ei0ht+ ne ;esos - D )) ;64*,)( .- 7 and costs of suit.

The petitioners filed their a"ended ans er pra+in0 for the dis"issal of the co"plaint and as


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A>ERE RE, @ud0"ent is here/+ rendered:

. orderin0 defendants to pa+ @ointl+ and severall+ in their official and personal capacities the principal su" of &E 2IFFI & &I&ETT>REE T> U #&3 E%E& >U&3RE3 &I&ET EIG>T ;E - D )) ; ,)*B,-*(.- 7 ith accrued interest of &E >U&3RE3I T &E T> U #&3 IH >U&3RE3 EIG>TEE& ;E ('D )) ; 5 ,' (.,('7 as of #u0ust 5, *-* and accruin0 interestthereafter at the rate of 6 per annu"

6. orderin0 defendants to pa+ @ointl+ and severall+ attorne+9s fees e!uivalent to ten percent ) 7 of the principal and to pa+ the costsof the suit.

3efendants9 counterclai" is disallo ed. pp. 45$4', Rollo7

n June (, *( , the trial court issued an order den+in0 the "otion for reconsideration filed /+ the petitioners.

Thus, the petitioners appealed to the Inter"ediate #ppellate Court and assi0ned therein the follo in0 errors:

I

T>#T T>E F AER C URT ERRE3 I& I&3I&G T>#T T>E EFFER #TF#&TIC GUF #&3 ;#CI IC C 2;#& 2#&IF# 3I3& T #;;R %E 3E E&3#&T $#;;EFF#&T CF#I2 A#RR#&T .

II

T>#T T>E F AER C URT ERRE3 I& I&3I&G T>#T ;F#I&TI $ #;;EFFEE I # > F3ER I& 3UE C UR E T>E;R 2I R & TE #&3 UE3 U&3ER #I3 & TE # > F3ER T>ERE I& 3UE C UR E.

n Jul+ -, *(5, the Inter"ediate #ppellate Court issued the challen0ed decision affir"in0 in toto the decision of the trial court. Thepertinent portions of the decision are as follo s:

??? ??? ???

ro" the evidence presented /+ the parties on the issue of arrant+, Ae are of the considered opinion that aside fro" the fact that noprovision of arrant+ appears or is provided in the 3eed of ale of the tractors and even ad"ittin0 that in a contract of sale unless acontrar+ intention appears, there is an i"plied arrant+, the defense of /reach of arrant+, if there is an+, as in this case, does not lie infavor of the appellants and a0ainst the plaintiff$appellee ho is the assi0nee of the pro"issor+ note and a holder of the sa"e in duecourse. Aarrant+ lies in this case onl+ /et een Industrial ;roducts 2aroldin0 that /reach of arrant+ if an+, is not a defense availa/le to appellants either to ithdra fro" the contract andDor de"and aproportionate reduction of the price ith da"a0es in either case #rt. 5'-, &e Civil Code7. Ae no co"e to the issue as to hetherthe plaintiff$appellee is a holder in due course of the pro"issor+ note.

To /e0in ith, it is /e+ond ar0u"ents that the plaintiff$appellee is a financin0 corporation en0a0ed in financin0 and receiva/lediscountin0 e?tendin0 credit facilities to consu"ers and industrial, co""ercial or a0ricultural enterprises /+ discountin0 or factorin0co""ercial papers or accounts receiva/le dul+ authori8ed pursuant to R.#. 5*() other ise


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II

T>E RE ; &3E&T I & T # > F3ER I& 3UE C UR E: #T 1E T, IT I # 2ERE # IG&EE T>E U1JECT ;R 2I R& TE.

III.

I&CE T>E I& T#&T C# E I&% F%E # & &$&EG TI#1FE I& TRU2E&T #&3 T>E TR#& ER RIG>T A# T>R UG> # 2ERE # IG&2E&T, T>E ;ETITI &ER 2# R#I E #G#I& T T>E RE ; &3E&T #FF 3E E& E T>#T #RE #%#IF#1FET IT # #G#I& T T>E EFFER$ # IG& R, I&3U TRI#F ;R 3UCT 2#R ETI&G.

I%.

T>E ;ETITI &ER #RE & T FI#1FE R T>E ;# 2E&T T>E ;R 2I R & TE 1EC#U E:

#7 T>E EFFER$# IG& R I GUIFT 1RE#C> A#RR#&T U&3ER T>E F#A

17 I #T #FF, T>E RE ; &3E&T 2# REC %ER &F R 2 T>E EFFER$# IG& R T>E ;R 2I R & TE.

%.

T>E # IG&2E&T T>E C>#TTEF 2 RTG#GE 1 T>E EFFER$ # IG& R I& #% R T>E RE ; &3E&T 3 E & T

C>#&GE T>E TURE T>E TR#& #CTI & R 2 1EI&G # #FE & I& T#FF2E&T T # ;URE F #&.

%I.

T>E ;R 2I R & TE C#&& T 1E #32ITTE3 R U E3 I& E%I3E&CE I& #& C URT 1EC#U E T>E REKUI ITE3 CU2E&T#R T#2; >#%E & T 1EE& # IHE3 T>ERE & R C#&CEFFE3.

The petitioners pra+ed that @ud0"ent /e rendered settin0 aside the decision dated Jul+ -, *(5, as ell as the resolution datedcto/er -, *(5 and dis"issin0 the co"plaint /ut 0rantin0 petitioners9 counterclai"s /efore the court of ori0in.

n the other hand, the respondent corporation in its co""ent to the petition filed on e/ruar+ 6), *(', contended that the petition asfiled out of ti"e that the pro"issor+ note is a ne0otia/le instru"ent and respondent a holder in due course that respondent is not lia/lefor an+ /reach of arrant+ and finall+, that the pro"issor+ note is ad"issi/le in evidence.

The core issue herein is hether or not the pro"issor+ note in !uestion is a ne0otia/le instru"ent so as to /ar co"pletel+ all theavaila/le defenses of the petitioner a0ainst the respondent$assi0nee.

;reli"inaril+, it "ust /e esta/lished at the outset that e consider the instant petition to have /een filed on ti"e /ecause the petitioners9"otion for reconsideration actuall+ raised ne issues. It cannot, therefore, /e considered pro$ for"al.

The petition is i"pressed ith "erit.

irst, there is no !uestion that the seller$assi0nor /reached its e?press *)$da+ arrant+ /ecause the findin0s of the trial court, adopted/+ the respondent appellate court, that = 4 da+s after deliver+, the first tractor /ro


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It is patent then, that the seller$assi0nor is lia/le for its /reach of arrant+ a0ainst the petitioner. This lia/ilit+ as a 0eneral rule, e?tendsto the corporation to ho" it assi0ned its ri0hts and interests unless the assi0nee is a holder in due course of the pro"issor+ note in!uestion, assu"in0 the note is ne0otia/le, in hich case the latter9s ri0hts are /ased on the ne0otia/le instru"ent and assu"in0 furtherthat the petitioner9s defenses "a+ not prevail a0ainst it.

econdl+, it li


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This /ein0 so, there as no need for the petitioner to i"plied the seller$assi0nor hen it as sued /+ the respondent$assi0nee /ecausethe petitioner9s defenses appl+ to /oth or either of either of the". #ctuall+, the records sho that even the respondent itself ad"itted to/ein0 a "ere assi0nee of the pro"issor+ note in !uestion, to it:

#TT . ;#F#C#:

3id e 0et it ri0ht fro" the counsel that hat is /ein0 assi0ned is the 3eed of ale ith Chattel 2ort0a0e ith the pro"issor+ notehich is as testified to /+ the itness as indorsedM Counsel for ;laintiff noddin0 his head.7 Then e have no further !uestions oncross,

C URT:

ou confir" his "anifestationM ou are noddin0 +our headM 3o +ou confir" thatM

#TT . IF#G#&:

The 3eed of ale cannot /e assi0ned. # deed of sale is a transaction /et een t o persons hat is assi0ned are ri0hts, the ri0hts ofthe "ort0a0ee ere assi0ned to the I C Feasin0 #cceptance Corporation.

C URT:

>e puts it in a si"ple a+ as one$deed of sale and chattel "ort0a0e ere assi0ned . . . +ou ant to "a#T C & TITUTE # > F3ER I& 3UE C UR E. L # holder in due course is a holder ho has ta


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Ae su/scri/e to the vie of Ca"pos and Ca"pos that a financin0 co"pan+ is not a holder in 0ood faith as to the /u+er, to it:

In install"ent sales, the /u+er usuall+ issues a note pa+a/le to the seller to cover the purchase price. 2an+ ti"es, in pursuance of aprevious arran0e"ent ith the seller, a finance co"pan+ pa+s the full price and the note is indorsed to it, su/ro0atin0 it to the ri0ht tocollect the price fro" the /u+er, ith interest. Aith the increasin0 fre!uenc+ of install"ent /u+in0 in this countr+, it is "ost pro/a/le thatthe tendenc+ of the courts in the United tates to protect the /u+er a0ainst the finance co"pan+ ill , the finance co"pan+ ill /esu/@ect to the defense of failure of consideration and cannot recover the purchase price fro" the /u+er. #s a0ainst the ar0u"ent thatsuch a rule ould seriousl+ affect =a certain "ode of transactin0 /usiness adopted throu0hout the tate,= a court in one case stated:

It "a+ /e that our holdin0 here ill re!uire so"e chan0es in /usiness "ethods and ill i"pose a 0reater /urden on the finance

co"panies. Ae thin< the /u+er$2r. 2rs. General ;u/lic$should have so"e protection so"e here alon0 the line. Ae /elieve thefinance co"pan+ is /etter a/le to /ear the ris< of the dealer9s insolvenc+ than the /u+er and in a far /etter position to protect hisinterests a0ainst unscrupulous and insolvent dealers. . . .

If this opinion i"poses 0reat /urdens on finance co"panies it is a potent ar0u"ent in favor of a rule hich in afford pu/lic protectionto the 0eneral /u+in0 pu/lic a0ainst unscrupulous dealers in personal propert+. . . . 2utual inance Co. v. 2artin, 'B o. 6d '4*, 44

#FR 6d N *5BO7 Ca"pos and Ca"pos, &otes and elected Cases on &e0otia/le Instru"ents Fa , Third Edition, p. 6(7.

In the case of Co""ercial Credit Corporation v. ran0e Countr+ 2achine Aor


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pro"issor+ note ;1C &o. 655$-'7 as e?ecuted this ti"e in the a"ount of ;B)),))).)), pa+a/le on or /efore B Januar+ *--. Theset o instru"ents ere e?ecuted to docu"ent or reflect loans secured fro" respondent 1an< and ere si0ned /+ 2essrs. de Jesus andalon0a in the follo in0 "anner:

#. ;ro"issor+ &ote ;1C &o. 6)6$-'$for ;')),))).)):

3ue 3ece"/er 6*, *-' &o. 6)6$-'

or value received, ID e @ointl+ and severall+ pro"ise to pa+ to the ;hilippine 1anREE >U&3RE3 T> U #&3 &F ... pesos ;B)),))).))7, ith interest at the rate ofURTEE& per cent 4 7 per annu", fro" T 3# until paid. In case this note is not paid at "aturit+ the interest rate shall

auto"aticall+ /e increased to PPPPPPP PPPPPP 7 per annu".

??? ??? ???

E?ecuted at 2a


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In a three$pa0e 3ecision dated 6 cto/er *(B, the trial court found petitioner alilid lia/le to respondent 1an< for the o/li0ationscontracted under pro"issor+ notes ;1C &o. 6)6$-' and ;1C &o. 655$-' . the dispositive portion of the decision reads:

A>ERE RE, @ud0"ent is here/+ rendered in favor of plaintiff ;hilippine 1an


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The a00re0ate a"ount of petitioner alilid9s "onetar+ o/li0ations to respondent 1an< is deter"ina/le fro" the co""on stipulationsand conditions contained in pro"issor+ notes ;1C &o. 6)6$-' and ;1C &o. 655$-', under hich petitioner alilid /ound itself to pa+respondent 1anERE RE, the decision of 1ranch 6B of the then Court of irst Instance of Ri8al eventh Judicial 3istrict7 in Civil Case &o. 4 6'(and the decision of the then Inter"ediate #ppellate Court dated ( &ove"/er *(5 are # IR2E3 to the e?tent that the+ refer to theprincipal a"ounts and stipulated interest due under ;ro"issor+ &otes ;1C &o. 6)6$-' and ;1C &o. 655$-' and to attorne+9s feese!uivalent to ten percent ) 7 of the entire a"ount due. This case is RE2#&3E3 to the trial court for deter"ination of hether or notservice char0es and penalt+ char0es in case of late pa+"ent are due fro" petitioner alilid to respondent 1an


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That on or a/out and durin0 the "onth of Januar+ *(' in Caloocan Cit+, 2etro 2anila and ithin the @urisdiction of this >onora/leCourt, the a/ove$ na"ed accused received fro" the ;ana"a a "ill Inc., represented in this case /+ TE ;E&G 2E&, ;1C Chec< &o.6* ' ' dated Januar+ 5, *(' for ;',))).)) hich chec< as su/se!uentl+ encashed /+ said accused for the purpose of and underthe e?press o/li0ation on his part to use the said a"ount in securin0 a 2arine Insurance covera0e for ;B,))),))).)) on a ship"ent oflo0s o ned /+ ;ana"a a "ill, Inc. /ut said accused ith a/use of trust and confidence reposed upon hi" far fro" co"pl+in0 ith hiso/li0ation and ith intent to deceive and defraud said corporation, did then and there illfull+, unla full+ and feloniousl+ receive a2arine Insurance covera0e for onl+ ;l,))),))).)) to cover said ship"ent of lo0s, pa+in0 therefor onl+ the a"ount of ;6,- 6.5) asinsurance pre"iu" ithout the


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3efense itness, ent Cotoco, the Under ritin0 2ana0er of = riental= corro/orated petitioner9s testi"on+ that the ;B2 ;olic+ firstissued /+ = riental= E?hi/it = =7 as cancelled and replaced /+ a ; 2 ;olic+ E?hi/it =B=7. >e e?plained that /efore the ;B2 ;olic+as cancelled, petitioner had surrendered the ori0inal to = riental= that the ori0inal and the replace"ent ;olicies /ear the sa"e serialnu"/er ('D))6 /ecause it is co"pan+ polic+ for the replace"ent ;olic+ to carr+ the sa"e nu"/er as the ori0inal ;olic+ and that heas a are that the irst Inte0rated Insurance Co., Inc., had issued a ;62 ;olic+ for =;ana"a= t.s.n., &ove"/er 6 , *(', pp. -($()7/ecause the latter co"pan+ char0es a lo er pre"iu" rate than = riental= i/id., pp. ()$(67.

Is the accused 0uilt+ of Estafa co""itted throu0h "isappropriation under para0raph l /7, #rticle B65 of the Revised ;enal CodeM aidprovision reads:

#RT. B 5. indlin0 estafa7. #n+ person ho shall defraud another /+ an+ of the "eans "entioned herein$/elo shall /e punished/+:

? ? ? ? ? ? ? ? ?

/7 1+ appropriatin0 or convertin0, to the pre@udice of another, "one+, 0oods, or an+ other personal propert+ received /+ the offender intrust or on co""ission, or for ad"inistration, or under an+ other o/li0ation involvin0 the dut+ to "aave the fore0oin0 ele"ents /een "et in respect of petitioner$accusedM ;etitioner, supported /+ the olicitor General, avers that the+have not /ecause no conversion or "isappropriation has /een co""itted and that there as no de"and for the return of the ;',))).))0iven to petitioner. In other ords, ele"ents 6, B, and 4 of the cri"e are lac


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essential ele"ent of the cri"e of Estafa /+ "isappropriation or conversion. The first ele"ent of the cri"e of Estafa, therefore, issatisfied.

#s to the second ele"ent of ="isappropriation or conversion= of the "one+ or propert+ received, petitioner contends that the sa"e is inattendant /ecause petitioner had, in fact, procured the ;B2 insurance covera0e fro" t o co"panies, spendin0 therefor all of theentrusted a"ount of ;',))).)) for pre"iu"s.

Ae find ourselves in disa0ree"ent.

To =convert= =distraer=7 connotes the act of usin0 or disposin0 of another9s propert+ as if it ere one9s o n. #nd to ="isappropriate==appropiar=7 "eans to o n, to ta


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This is a petition to revie on certiorari the decision of the Court of #ppeals in C#$G.R. &o. )-'*5 entitled =;hilippine #irlines, Inc. v.>on. Jud0e Ricardo 3. Galano, et al.=, dis"issin0 the petition for certiorari a0ainst the order of the Court of irst Instance of 2anilahich issued an alias rit of e?ecution a0ainst the petitioner.

The petition involvin0 the alias rit of e?ecution had its /e0innin0s on &ove"/er (, *'-, hen respondent #"elia Tan, under thena"e and st+le of #/le ;rintin0 ;ress co""enced a co"plaint for da"a0es /efore the Court of irst Instance of 2anila. The case asdoco ever, the order could not /e served upon 3eput+ heriff Re+es ho had a/sconded or disappeared.

n 2arch 6(, *-(, "otion for the issuance of a partial alias rit of e?ecution as filed /+ respondent #"elia Tan.

n #pril *, *-(, respondent #"elia Tan filed a "otion to ithdra =2otion for ;artial #lias Arit of E?ecution= ith u/stitute 2otion

for #lias Arit of E?ecution. n 2a+ , *-(, the respondent Jud0e issued an order hich reads:

#s pra+ed for /+ counsel for the plaintiff, the 2otion to Aithdra 92otion for ;artial #lias Arit of E?ecution ith u/stitute 2otion for #lias Arit of E?ecution is here/+ 0ranted, and the "otion for partial alias rit of e?ecution is considered ithdra n.

Fet an #lias Arit of E?ecution issue a0ainst the defendant for the fall satisfaction of the @ud0"ent rendered. 3eput+ heriff Jai"e . delRosario is here/+ appointed pecial heriff for the enforce"ent thereof. C# Rollo, p. B47

n 2a+ (, *-(, the petitioner received a cop+ of the first alias rit of e?ecution issued on the sa"e da+ directin0 pecial heriffJai"e . del Rosario to lev+ on e?ecution in the su" of ;65,))).)) ith le0al interest thereon fro" Jul+ 6), *'- hen respondent

#"elia Tan "ade an e?tra$@udicial de"and throu0h a letter. Fev+ as also ordered for the further su" of ;5,))).)) a arded asattorne+9s fees.

14


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n 2a+ 6B, *-(, the petitioner filed an ur0ent "otion to !uash the alias rit of e?ecution statin0 that no return of the rit had as +et/een "ade /+ 3eput+ heriff E"ilio Z. Re+es and that the @ud0"ent de/t had alread+ /een full+ satisfied /+ the petitioner asevidenced /+ the cash vouchers si0ned and receipted /+ the server of the rit of e?ecution, 3eput+ heriff E"ilio Z. Re+es.

n 2a+ 6', *-(, the respondent Jai"e . del Rosario served a notice of 0arnish"ent on the depositor+ /an< of petitioner, ar East1an< and Trust Co"pan+, Rosario 1ranch, 1inondo, 2anila, throu0h its "ana0er and 0arnished the petitioner9s deposit in the said/an< in the total a"ount of ;'4,4)(.)) as of 2a+ ', *-(. >ence, this petition for certiorari filed /+ the ;hilippine #irlines, Inc., on the0rounds that:

I

#& #FI# ARIT EHECUTI & C#&& T 1E I UE3 AIT> UT ;RI R RETUR& T>E RIGIF ARIT 1 T>EI2;FE2E&TI&G ICER.

II

;# 2E&T JU3G2E&T T T>E I2;FE2E&TI&G ICER # 3IRECTE3 I& T>E ARIT EHECUTI & C & TITUTE#TI #CTI & JU3G2E&T.

III

I&TERE T I & T ;# #1FE A>E& T>E 3ECI I & I IFE&T # T T>E ;# 2E&T T>ERE .

I%

ECTI & 5, RUFE B*, ;#RTICUF#RF RE ER T FE% ;R ;ERT JU3G2E&T 3E1T R #&3 3I ; #F R #FET>ERE T #TI JU3G2E&T.

Can an alias rit of e?ecution /e issued ithout a prior return of the ori0inal rit /+ the i"ple"entin0 officerM

Ae rule in the affir"ative and e !uote the respondent court9s decision ith approval:

The issuance of the !uestioned alias rit of e?ecution under the circu"stances here o/tainin0 is @ustified /ecause even ith thea/sence of a heriffs return on the ori0inal rit, the unaltera/le fact re"ains that such a return is incapa/le of /ein0 o/tained sic7/ecause the officer ho is to "a


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/efore *'-, ithout need of her 0oin0 to court to enforce her ri0hts. #nd all /ecause ;#F did not issue the chec


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#s a protective "easure, therefore, the courts encoura0e the practice of pa+"ents /+ chee< provided ade!uate controls are institutedto prevent ron0ful pa+"ent and ille0al ithdra al or dis/urse"ent of funds. If particularl+ /i0 a"ounts are involved, escroarran0e"ents ith a /an< and carefull+ supervised /+ the court ould /e the safer procedure. #ctual transfer of funds ta


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inall+, e find no error in the respondent court9s pronounce"ent on the inclusion of interests to /e recovered under the alias rit ofe?ecution. This lo0icall+ follo s fro" our rulin0 that ;#F is lia/le for /oth the lost checERE RE, I& %IEA T>E REG I&G, the petition is here/+ 3I 2I E3. The @ud0"ent of the respondent Court of #ppealsis # IR2E3 and the trial court9s issuance of the alias rit of e?ecution a0ainst the petitioner is upheld ithout pre@udice to an+ actionit should ta


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havin0 /een ="issent= or ="isrouted.= The ne?t da+, 2arch ', RC1C de/ited the a"ount covered /+ the sa"e cashier9s chec< fro"the account of the petitioner. Respondent /an< at this ti"e had not infor"ed the petitioner of its action hich the latter clai"s helearned of onl+ 46 da+s after, specificall+ on 2arch ', hen he received the /ane cited /ein0 Chair"an of ;ala an 1o+ cout Council, 6$ter";resident of the Rotar+ Clu/ of ;uerto ;rincesa, "e"/er of ;ala an Cha"/er of Co""erce and Industr+, "e"/er of the 2onitorin0Tea" of the ;ala an Inte0rated #rea 3evelop"ent ;ro@ect, "e"/er of Fion9s Clu/, ;hilippine Rifle ;istol #ssociation and the aturda+>ealth Clu/ to @ustif+ his clai" for "oral da"a0es.

In its defense, RC1C diso nin0 an+ ne0li0ence, put the /la"e for the ="isroutin0= on the petitioner for usin0 the ron0 chec< depositslip. It insisted that the "isuse of a local chec< deposit slip, instead of a re0ional chec< deposit slip, tri00ered the ="isroutin0= /+ RC1Cof the cashier9s chec< to the Central 1an< and it as petitioner9s ne0li0ent ="isuse= of a local deposit slip hich as the pro?i"atecause of the ="isroutin0,= thus he should /ear the conse!uence. 6

RC1C alle0ed that it co"plied strictl+ ith accepted /an


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or havin0 failed to prove /+ an+ receipt or ritin0 to underpin it, plaintiff9s clai" for actual da"a0e is denied for lac< of "erit.

IT I R3ERE3.

RC1C appealed to the Court of #ppeals contendin0 that the trial court erred in holdin0 RC1C lia/le to petitioner on account of itsalle0ed ne0li0ence and in a ardin0 petitioner "oral and e?e"plar+ da"a0es and attorne+9s fees.

The Court of #ppeals on Januar+ 6, **B rendered a decision 6) ith the follo in0 decretal portion:

A>ERE RE, and upon all the fore0oin0, the decision of the court /elo is RE%ER E3 and this co"plaint is 3I 2I E3 ithoutpronounce"ent as to cost.

The Court of #ppeals9 decision is /ased on the follo in0 findin0s: 6

Ahat appeared to have caused the unfortunate incident as that the plaintiff filled up the ron0 deposit slip hich led to the sendin0 ofthe chec< to the Central 1an< hen the clearin0 should have /een "ade else here.

1ut the clai" of the plaintiff that he as not advised that the Cashier9s chec< as "issent does not see" to /e correct. The evidenceindicated that the defendant /an< thru its personnel had called hi" up thru telephone in the nu"/er &o. ')$45$6B7 hich he 0ave inhis speci"en si0nature card. 1ut it ca"e out, that said telephone nu"/er as no lon0er active or as alread+ deleted fro" the list oftelephone nu"/ers.

There as an instruction on the part of the plaintiff for the /an< to contact his dau0hter, 2rs. Evel+n Tan 1an8on and accordin0 to theplaintiff, she too, as not contacted as per his instruction. The evidence, ho ever, indicated that 2s. Evel+n Tan also could not /econtacted at the nu"/er supposed to pertain to her as appeared in the speci"en si0nature card. In other ords hile there asco"pliance ith the instructions 0iven /+ the plaintiff /ut said instructions ere fault+. The plaintiff as a custo"er of the /an< is undero/li0ation to infor" the defendant of an+ chan0es in the telephone nu"/ers to /e contacted in the event of an+ e?i0enc+.

#ll in all, the facts indicate that the refusal of RC1C to credit the a"ount of ;B),))).)) to the plaintiff9s current account is consistentith the accepted /ane raises the follo in0 errors:

. T>E > & R#1FE C URT #;;E#F C 22ITTE3 GR #&3 2#&I E T ERR R I& C &CFU3I&G T>#T T>E&EGFIGE&CE A# # CRI1#1FE T >EREI& ;ETITI &ER.

6. T>E > & R#1FE C URT #;;E#F GR#%EF #1U E3 IT 3I CRETI & I& I&3I&G T>#T T>E RE ; &3E&T 1#&

>#3 & T 1EE& RE2I I& T>E ;ER R2#&CE IT 1FIG#TI & T >EREI& ;ETITI &ER.

B. T>E > & R#1FE C URT #;;E#F C 22ITTE3 GR #&3 2#&I E T ERR R #&3 GR#%E #1U E 3I CRETI &I& RE%ER I&G T>E #A#R3 2 R#F #&3 EHE2;F#R 3#2#GE T T>E ;ETITI &ER.

4. T>E > & R#1FE C URT #;;E#F C 22ITTE3 GR #&3 2#&I E T ERR R #&3 GR#%E #1U E 3I CRETI &I& & T #A#R3I&G #TT R&E 9 EE T ;ETITI &ER.

In a "ost recent case decided /+ this Court, Cit+ Trust Corporation v. The Inter"ediate #ppellate Court, 66involvin0 da"a0es a0ainstCit+ Trust 1anerrero, is clearl+ ritten on said deposit slip E?h. 17. This is controllin0 indeter"inin0 in hose account the deposit is "ade or should /e posted. This is so /ecause it is not li


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In the case /efore Us, e are not persuaded that defendant /an< as not free fro" /la"e for the fiasco. In the first place, the tellershould not have accepted plaintiff9s deposit ithout correctin0 the account nu"/er on the deposit slip hich, o/viousl+, as erroneous/ecause, as pointed out /+ defendant, it contained onl+ seven -7 di0its instead of ei0ht (7. econd, the co"plete na"e of plaintiffdepositor appears in /old letters on the deposit slip E?h. 17. There could /e no "ista


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#rt. 666). Aillful in@ur+ to propert+ "a+ /e a le0al 0round for a ardin0 "oral da"a0es if the court should find that, under thecircu"stances, such da"a0es are @ustl+ due. The sa"e rule applies to /reaches of contract here the defendant acted fraudulentl+ orin /ad faith.

In the a/sence of "oral da"a0es, RC1C ar0ues, e?e"plar+ da"a0es cannot /e a arded under #rt. 6665 of the sa"e Code hichstates:

E?e"plar+ da"a0es or corrective da"a0es are i"posed, /+ a+ of e?a"ple or correction for the pu/lic 0ood, in addition to the "oral,te"perate, li!uidated or co"pensator+ da"a0es.

Ae hold that petitioner has the ri0ht to recover "oral da"a0es even if the /anERE , e RE%ER E the decision of respondent Court of #ppeals and here/+ order private respondent RC1C, 1inondo

1ranch, to pa+ petitioner the a"ount of one hundred thousand ; )),))).))7 pesos as "oral da"a0es and the su" of fift+ thousand;5),))).))7 pesos as attorne+9s fees, plus costs.

R3ERE3.

;adilla, 3avide, Jr., 1ellosillo and Kuiason, JJ., concur.

G.R. No. 100290 ' , 1993

NORBERTO TIBA IA, R. &' CARMEN TIBA IA, p 6i6io' r8, +8. T%E %ONORABLE COURT O A""EALS &' E!EN TAN,r 8po' '68.

;#3IFF#, J.

;etitioners, spouses &or/erto Ti/a@ia, Jr. and Car"en Ti/a@ia, are /efore this Court assailin0 the decision of respondent appellatecourt dated 64 #pril ** in C#$G.R. ; &o. 64 '4 den+in0 their petition for certiorariprohi/ition, and in@unction hich sou0ht to annulthe order of Jud0e Eutropio 2i0riQo of the Re0ional Trial Court, 1ranch 5 , ;asi0, 2etro 2anila in Civil Case &o. 54('B entitled =EdenTan vs. ps. &or/erto and Car"en Ti/a@ia.=

tated /riefl+, the relevant facts are as follo s:

Case &o. 54('B as a suit for collection of a su" of "one+ filed /+ Eden Tan a0ainst the Ti/a@ia spouses. # rit of attach"ent asissued /+ the trial court on - #u0ust *(- and on - epte"/er *(-, the 3eput+ heriff filed a return statin0 that a deposit "ade /+the Ti/a@ia spouses in the Re0ional Trial Court of aloo


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for e?ecution and thereafter, the 0arnished funds hich /+ then ere on deposit ith the cashier of the Re0ional Trial Court of ;asi0,2etro 2anila, ere levied upon.

n 4 3ece"/er **), the Ti/a@ia spouses delivered to 3eput+ heriff Eduardo 1oli"a the total "one+ @ud0"ent in the follo in0 for":

Cashier9s Chec< ;6'6,-5).))

Cash B5,-BB.-)

LLLL

Total ;B*(,4(B.-)

;rivate respondent, Eden Tan, refused to accept the pa+"ent "ade /+ the Ti/a@ia spouses and instead insisted that the 0arnishedfunds deposited ith the cashier of the Re0ional Trial Court of ;asi0, 2etro 2anila /e ithdra n to satisf+ the @ud0"ent o/li0ation. n5 Januar+ ** , defendant spouses petitioners7 filed a "otion to lift the rit of e?ecution on the 0round that the @ud0"ent de/t hadalread+ /een paid. n 6* Januar+ ** , the "otion as denied /+ the trial court on the 0round that pa+"ent in cashier9s chec< is notpa+"ent in le0al tender and that pa+"ent as "ade /+ a third part+ other than the defendant. # "otion for reconsideration as deniedon ( e/ruar+ ** . Thereafter, the spouses Ti/a@ia filed a petition for certiorari, prohi/ition and in@unction in the Court of #ppeals. Theappellate court dis"issed the petition on 64 #pril ** holdin0 that pa+"ent /+ cashier9s chec< is not pa+"ent in le0al tender asre!uired /+ Repu/lic #ct &o. 56*. The "otion for reconsideration as denied on 6- 2a+ ** .

In this petition for revie , the Ti/a@ia spouses raise the follo in0 issues:

I A>ET>ER R & T T>E 1;I C# >IER9 C>EC & . ) 4)6 I& T>E #2 U&T ;6'6,-5).)) TE&3ERE3 1 ;ETITI &ERR ;# 2E&T T>E JU3G2E&T 3E1T, I =FEG#F TE&3ER=.

II A>ET>ER R & T T>E ;RI%#TE RE ; &3E&T 2# %#FI3F RE U E T>E TE&3ER ;# 2E&T ;#RTF I& C>EC #&3 ;#RTF I& C# > 2#3E 1 ;ETITI &ER , T>RU #UR R# %IT #&3 C U& EF, R T>E #TI #CTI & T>E2 &ET#R 1FIG#TI & ;ETITI &ER $ ; U E .

The onl+ issue to /e resolved in this case is hether or not pa+"ent /+ "eans of chec< even /+ cashier9s chec


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# chec


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all its ri0hts and title to Central 1an< Certificates of Inde/tedness of ;E : I%E >U&3RE3 T> U #&3 ;5)),)))7 and havin0 ana00re0ate value of ;E : T>REE 2IFFI & I%E >U&3RE3 T> U #&3 ;B,5)),))).))7

4. The aforesaid 3etached #ssi0n"ent #nne? =#=7 contains an e?press authori8ation e?ecuted /+ the transferor intended to co"pletethe assi0n"ent throu0h the re0istration of the transfer in the na"e of ;hil inance, hich authori8ation is specificall+ phrased as follo s:9 ilriters7 here/+ irrevoca/l+ authori8ed the said issuer Central 1an U #&3 ;5)),))).))7, ;hil inance sold, transferred and delivered to petitioner C1CI 4$+ear,

(th series, erial &o. 3(* ith a face value of ;5)),))).)) . . ., hich C1CI as a"on0 those previousl+ ac!uired /+ ;hil inancefro" ilriters as averred in para0raph B of the ;etition

'. ;ursuant to the aforesaid Repurchase #0ree"ent #nne? =1=7, ;hilfinance a0reed to repurchase C1CI erial &o. 3(* #nne? =C=7,at the stipulated price of ;E : I%E >U&3RE3 &I&ETEE& T> U #&3 T>REE >U&3RE3 IHT $ &E D )) ;5 *,B' . 7on #pril 6-, *(

-. ;hil inance failed to repurchase the C1CI on the a0reed date of "aturit+, #pril 6-, *( , hen the chec


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5. The detached assi0n"ent is patentl+ void and inoperative /ecause the assi0n"ent is ithout the


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#r"ed ith the deed of assi0n"ent, TR1 then sou0ht the transfer and re0istration of C1CI &o. 3(* in its na"e /efore the ecurit+and ervicin0 3epart"ent of the Central 1an< C17. Central 1an U #&3 ;E .

??? ??? ???

;roperl+ understood, a certificate of inde/tedness pertains to certificates for the creation and "aintenance of a per"anenti"prove"ent revolvin0 fund, is si"ilar to a =/ond,= (6 2inn. 6)67. 1ein0 e!uivalent to a /ond, it is properl+ understood asac


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The lan0ua0e of ne0otia/ilit+ hich characteri8e a ne0otia/le paper as a credit instru"ent is its freedo" to circulate as a su/stitute for"one+. >ence, freedo" of ne0otia/ilit+ is the touchtone relatin0 to the protection of holders in due course, and the freedo" ofne0otia/ilit+ is the foundation for the protection hich the la thro s around a holder in due course #". Jur. 6d, B67. This freedo"in ne0otia/ilit+ is totall+ a/sent in a certificate inde/tedness as it "erel+ to pa+ a su" of "one+ to a specified person or entit+ for aperiod of ti"e.

#s held in Calte? ;hilippines7, Inc. v. Court of #ppeals, ':

The accepted rule is that the ne0otia/ilit+ or non$ne0otia/ilit+ of an instru"ent is deter"ined fro" the ritin0, that is, fro" the face ofthe instru"ent itself. In the construction of a /ill or note, the intention of the parties is to control, if it can /e le0all+ ascertained. Ahile

the ritin0 "a+ /e read in the li0ht of surroundin0 circu"stance in order to "ore perfectl+ understand the intent and "eanin0 of theparties, +et as the+ have constituted the ritin0 to /e the onl+ out ard and visi/le e?pression of their "eanin0, no other ords are to /eadded to it or su/stituted in its stead. The dut+ of the court in such case is to ascertain, not hat the parties "a+ have secretl+ intendedas contradistin0uished fro" hat their ords e?press, /ut hat is the "eanin0 of the ords the+ have used. Ahat the parties "eant"ust /e deter"ined /+ hat the+ said.

Thus, the transfer of the instru"ent fro" ;hilfinance to TR1 as "erel+ an assi0n"ent, and is not 0overned /+ the ne0otia/leinstru"ents la . The pertinent !uestion then is, as the transfer of the C1CI fro" ilriters to ;hilfinance and su/se!uentl+ fro";hilfinance to TR1, in accord ith e?istin0 la , so as to entitle TR1 to have the C1CI re0istered in its na"e ith the Central 1an


29/43

Thou0h it is true that hen valid reasons e?ist, the le0al fiction that a corporation is an entit+ ith a @uridical personalit+ separate fro"its stoc


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It cannot, therefore, /e ta


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n 6' 2arch *( , ;hilfinance delivered to petitioner the 3CR &o. )()5 issued /+ private respondent ;ilipinas 1an< =;ilipinas=7. Itreads as follo s:

;IFI;I 1#&

2aIF. B)-,*BB.BB

U&3ERARITER

I&CE C R;.

Ae further certif+ that these securities "a+ /e inspected /+ +ou or +our dul+ authori8ed representative at an+ ti"e durin0 re0ular/an


32/43

denied an+ lia/ilit+ to petitioner on the pro"issor+ note, and e?plained in turn that it had previousl+ a0reed ith ;hilfinance to offset its32C ;& &o. 6-B alon0 ith 32C ;& &o. 6-B)7 a0ainst ;hilfinance ;& &o. 4B$# issued in favor of 3elta.

In the "eanti"e, ;hilfinance, on ( June *( , as placed under the @oint "ana0e"ent of the ecurities and e?chan0e co""ission= EC=7 and the Central 1an


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irstl+, it is i"portant to /ear in "ind that the ne0otiation of a ne0otia/le instru"ent "ust /e distin0uished fro" theassi0n"ent ortransfer of an instru"ent hether that /e ne0otia/le or non$ne0otia/le. nl+ an instru"ent !ualif+in0 as a ne0otia/le instru"ent underthe relevant statute "a+ /e ne0otiated either /+ indorse"ent thereof coupled ith deliver+, or /+ deliver+ alone here the ne0otia/leinstru"ent is in /earer for". # ne0otia/le instru"ent "a+, ho ever, instead of /ein0 ne0otiated, also /e assi0ned or transferred. Thele0al conse!uences of ne0otiation as distin0uished fro" assi0n"ent of a ne0otia/le instru"ent are, of course, different. # non$ne0otia/le instru"ent "a+, o/viousl+, not /e ne0otiated /ut it "a+ /e assi0ned or transferred, a/sent an e?press prohi/ition a0ainstassi0n"ent or transfer ritten in the face of the instru"ent:

The ords =not ne0otia/le,= sta"ped on the face of the /ill of ladin0, did not destro+ its assi0na/ilit+, /ut the sole effect as to e?e"ptthe /ill fro" the statutor+ provisions relative thereto, and a /ill, thou0h not ne0otia/le, "a+ /e transferred /+ assi0n"ent the assi0nee

ta


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=i"personal "ar


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It /ears so"e e"phasis that petitioner could have notified 3elta of the assi0n"ent or sale as effected on * e/ruar+ *( . >e couldhave notified 3elta as soon as his "one+ "ar


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contravention of its underta


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irst Instance of Kue8on Cit+, - pra+in0 that the e?tra@udicial foreclosure ="ade on, their propert+ and all other docu"ents e?ecuted inrelation thereto in favor of the Govern"ent ervice Insurance +ste"= /e declared null and void. It as further pra+ed that the+ /eallo ed to recover said propert+, andDor the G I /e ordered to pa+ the" the value thereof, andDor the+ /e allo ed to repurchase theland. #dditionall+, the+ aso ever, contrar+ to the holdin0 of the respondent court, it cannot /e said that private respondents are ithout lia/ilit+ under theaforesaid "ort0a0e contracts. The factual conte?t of this case is precisel+ hat is conte"plated in the last para0raph of #rticle 6)(5 ofthe Civil Code to the effect that third persons ho are not parties to the principal o/li0ation "a+ secure the latter /+ pled0in0 or"ort0a0in0 their o n propert+

o lon0 as valid consent as 0iven, the fact that the loans ere solel+ for the /enefit of the Fa0asca spouses ould not invalidate the"ort0a0e ith respect to private respondents9 share in the propert+. In consentin0 thereto, even assu"in0 that private respondents"a+ not /e assu"in0 personal lia/ilit+ for the de/t, their share in the propert+ shall nevertheless secure and respond for theperfor"ance of the principal o/li0ation. The parties to the "ort0a0e could not have intended that the sa"e ould appl+ onl+ to theali!uot portion of the Fa0asca spouses in the propert+, other ise the consent of the private respondents ould not have /een re!uired.

The supposed re!uire"ent of prior de"and on the private respondents ould not /e in point here since the "ort0a0e contracts createdo/li0ations ith specific ter"s for the co"pliance thereof. The facts further sho that the private respondents e?pressl+ /oundthe"selves as solidar+ de/tors in the pro"issor+ note herein/efore !uoted.

37


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Co"in0 no to the e?tra@udicial foreclosure effected /+ G I , Ae cannot a0ree ith the rulin0 of respondent court that lac< of notice tothe private respondents of the e?tra@udicial foreclosure sale i"pairs the validit+ thereof. In1onnevie, et al. vs. Court of appeals, et al., 5the Court ruled that #ct &o. B B5, as a"ended, does not re!uire personal notice on the "ort0a0or, !uotin0 the re!uire"ent on notice insuch cases as follo s:

ection B. &otice shall /e 0iven /+ postin0 notices of sale for not less than t ent+ da+s in at least three pu/lic places of the "unicipalit+here the propert+ is situated, and if such propert+ is orth "ore than four hundred pesos, such notice shall also /e pu/lished once aee< for at least three consecutive eeERE RE, @ud0"ent is here/+ rendered RE%ER I&G the decision of the respondent Court of #ppeals and REI& T#TI&G thedecision of the court a !uo in Civil Case &o. K$*4 ( thereof.

R3ERE3.

2elencio$>errera Chairperson7, ;aras, ;adilla and ar"iento, JJ., concur.

G.R. No. 97753 A @ 86 10, 1992

CALTE; ("%ILI""INES), INC., p 6i6io' r, +8. COURT O A""EALS &' SECURIT# BAN/ AN! TRUST COM"AN#,r 8po' '68.

REG#F#3 , J.:

This petition for revie on certiorari i"pu0ns and see


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5 2ar. (6 -4-*- to *4()) 4 ',)))

5 2ar. (6 (**'5 to (**(' 66 ((,)))

5 2ar. (6 -) 4- to *) 5) 4 ',)))

( 2ar. (6 *))) to *))6) 6) (),)))

* 2ar. (6 *))6B to *))5) 6( 6,)))

* 2ar. (6 (*** to *)))) ) 4),)))

* 2ar. (6 *)65 to *)6-6 66 ((,)))

LLL LLLL

Total 6() ; , 6),)))

SSSSS SSSSSSSS

6. #n0el dela Cru8 delivered the said certificates of ti"e CT3s7 to herein plaintiff in connection ith his purchased of fuel products fro"the latter ri0inal Record, p. 6)(7.

B. o"eti"e in 2arch *(6, #n0el dela Cru8 infor"ed 2r. Ti"oteo Tian0co, the ucat 1ranch 2an0er, that he lost all the certificates ofti"e deposit in dispute. 2r. Tian0co advised said depositor to e?ecute and su/"it a notari8ed #ffidavit of Foss, as re!uired /+defendant /an


40/43

#&3 TRU T C 2;#&

'--( #+ala #ve., 2a


41/43

#tt+. Calida:

! 2r. Aitness, ho is the depositor identified in all of these certificates of ti"e deposit insofar as the /an< is concernedM

itness:

a #n0el dela Cru8 is the depositor. (

??? ??? ???

n this score, the accepted rule is that the ne0otia/ilit+ or non$ne0otia/ilit+ of an instru"ent is deter"ined fro" the ritin0, that is, fro"the face of the instru"ent itself. * In the construction of a /ill or note, the intention of the parties is to control, if it can /e le0all+ascertained. ) Ahile the ritin0 "a+ /e read in the li0ht of surroundin0 circu"stances in order to "ore perfectl+ understand the intentand "eanin0 of the parties, +et as the+ have constituted the ritin0 to /e the onl+ out ard and visi/le e?pression of their "eanin0, noother ords are to /e added to it or su/stituted in its stead. The dut+ of the court in such case is to ascertain, not hat the parties "a+have secretl+ intended as contradistin0uished fro" hat their ords e?press, /ut hat is the "eanin0 of the ords the+ have used.Ahat the parties "eant "ust /e deter"ined /+ hat the+ said.

Contrar+ to hat respondent court held, the CT3s are ne0otia/le instru"ents. The docu"ents provide that the a"ounts deposited shall/e repa+a/le to the depositor. #nd ho, accordin0 to the docu"ent, is the depositorM It is the =/earer.= The docu"ents do not sa+ thatthe depositor is #n0el de la Cru8 and that the a"ounts deposited are repa+a/le specificall+ to hi". Rather, the a"ounts are to /erepa+a/le to the /earer of the docu"ents or, for that "atter, hosoever "a+ /e the /earer at the ti"e of present"ent.

If it as reall+ the intention of respondent /an< to pa+ the a"ount to #n0el de la Cru8 onl+, it could have ith facilit+ so e?pressed thatfact in clear and cate0orical ter"s in the docu"ents, instead of havin0 the ord =1E#RER= sta"ped on the space provided for thena"e of the depositor in each CT3. n the ordin0s of the docu"ents, therefore, the a"ounts deposited are repa+a/le to hoever"a+ /e the /earer thereof. Thus, petitioner9s aforesaid itness "erel+ declared that #n0el de la Cru8 is the depositor =insofar as the/an< is concerned,= /ut o/viousl+ other parties not priv+ to the transaction /et een the" ould not /e in a position to ence, the situation ould re!uire an+ part+ dealin0 ith the CT3s to 0o /ehind theplain i"port of hat is ritten thereon to unravel the a0ree"ent of the parties thereto throu0h facts aliunde. This need for resort toe?trinsic evidence is hat is sou0ht to /e avoided /+ the &e0otia/le Instru"ents Fa and calls for the application of the ele"entar+ rulethat the interpretation of o/scure ords or stipulations in a contract shall not favor the part+ ho caused the o/scurit+. 6

The ne?t !uer+ is hether petitioner can ri0htfull+ recover on the CT3s. This ti"e, the ans er is in the ne0ative. The records reveal that #n0el de la Cru8, ho" petitioner chose not to i"plead in this suit for reasons of its o n, delivered the CT3s a"ountin0 to; , 6),))).)) to petitioner ithout infor"in0 respondent /an< thereof at an+ ti"e. Unfortunatel+ for petitioner, althou0h the CT3s are/earer instru"ents, a valid ne0otiation thereof for the true purpose and a0ree"ent /et een it and 3e la Cru8, as ulti"atel+

ascertained, re!uires /oth deliver+ and indorse"ent. or, althou0h petitioner see


42/43

ho ever, there as no ne0otiation in the sense of a transfer of the le0al title to the CT3s in favor of petitioner in hich situation, foro/vious reasons, "ere deliver+ of the /earer CT3s ould have sufficed. >ere, the deliver+ thereof onl+ as securit+ for the purchases of

#n0el de la Cru8 and e even disre0ard the fact that the a"ount involved as not disclosed7 could at the "ost constitute petitioneronl+ as a holder for value /+ reason of his lien. #ccordin0l+, a ne0otiation for such purpose cannot /e effected /+ "ere deliver+ of theinstru"ent since, necessaril+, the ter"s thereof and the su/se!uent disposition of such securit+, in the event of non$pa+"ent of theprincipal o/li0ation, "ust /e contractuall+ provided for.

The pertinent la on this point is that here the holder has a lien on the instru"ent arisin0 fro" contract, he is dee"ed a holder forvalue to the e?tent of his lien. 6B #s such holder of collateral securit+, he ould /e a pled0ee /ut the re!uire"ents therefor and theeffects thereof, not /ein0 provided for /+ the &e0otia/le Instru"ents Fa , shall /e 0overned /+ the Civil Code provisions on pled0e of

incorporeal ri0hts, 64 hich inceptivel+ provide:

#rt. 6)*5. Incorporeal ri0hts, evidenced /+ ne0otia/le instru"ents, . . . "a+ also /e pled0ed. The instru"ent provin0 the ri0ht pled0edshall /e delivered to the creditor, and if ne0otia/le, "ust /e indorsed.

#rt. 6)*'. # pled0e shall not ta


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pa+a/le to /earer, hich it invo

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