negotiable instruments law cases

7/25/2019 negotiable instruments law cases

1/54

FIRST DIVISION

[G.R. No. 148789. January 16, 2003.]

!I F"#I$% S"VINGS "N&, IN'. an( )*D+*$ITO NO*$ "%"ORD", Petitioners, . RO#*O

#"NI&"N, Respondent.

D * ' I S I O N

VIT-G,J.

Petitioners seek a review of the decision of the Court of Appeals in C.A. G.R. SP. No. 48011 which has affired the

!ud"ent of the Re"ional #rial Court$ %ranch &'$ of (loilo Cit)$ disissin" the coplaint of petitioners for andaus

and orderin" the to pa) respondent the su of P*0$000.00 +) wa) of attorne),s fees. cralaw-red

(t would appear that respondent$ +ein" the Cit) #reasurer of (loilo Cit)$ assessed petitioner +ank +usiness taes for

the )ears 1//& and 1//*. n &' anuar) 1//4$ the +ank issued two ana"er,s checks pa)a+le to the Cit) #reasurerof (loilo Cit)$ the first$ 2ana"er,s Check No. 010'4/ for P4'&$&30.'0$ was to cover the +usiness ta for the )ear 1//&$

and the second$ 2ana"er,s Check No. 010'0 in the aount of P48&$/88.4$ was to settle the +usiness ta for the

)ear 1//*. 5ed6elito %a)a+orda$ then ana"er of the +ank,s (loilo %ranch$ instructed an eplo)ee$ 7dund Sa+io$ to

deliver the two ana"er,s checks to the Secretar) to the Cit) 2a)or$ a certain #oto 7spinosa$ who$ in turn$ handed

the over to his secretar)$ eila Salcedo$ for transittal to the Cit) #reasurer. #he value of the checks were eventuall)

credited to the account of the Cit) #reasurer of (loilo Cit). #he checks$ however$ were not applied to satisf) the ta

lia+ilities of petitioner +ut of other tapa)ers.

#he isapplication of the proceeds of the checks cae to the knowled"e of respondent Cit) #reasurer who$ thereupon$

created a coittee to look into the atter. #he investi"ation revealed that it was upon the representation of eilaSalcedo that the ana"er,s checks were used to pa) ta lia+ilities of other tapa)ers and not those of petitioner +ank.

2eanwhile$ the +ank$ throu"h counsel$ ade a deand on respondent to issue official receipts to show that it had

paid its +usiness taes for the )ears 1//& and 1//* covered +) the diverted ana"er,s checks. 9hen he refused to

issue the receipts re:uested$ respondent was sued +) petitioners for andaus and daa"es.

#he Re"ional #rial Court disissed the coplaint for andaus and ruled that petitioners had no clear le"al ri"ht to

deand the issuance of official receipts nor could respondent$ "iven the circustances$ +e copelled to issue another

set of receipts in the nae of the +ank. #he trial court further ordered petitioners to pa) respondent the su of

P*0$000.00 +) wa) of attorne),s fees.

#he Court of Appeals$ on appeal +) petitioners$ sustained the trial court in toto. chanro+1esvirtua11aw1i+rar)

(n their petition for review +efore this Court$ petitioners ur"e a reversal of the decision of the appellate court

contendin" that ;

R 2AN?A2@S N7C7SSAR( (NC@?7S (N?72N(>(CA#(N >R ?A2AG7S AN? (S ASS7SS7? N A

P@%(C >>(C(A,S PR(BA#7 CAPAC(#$ 57NC7$ S@(NG A P@%(C >>(C(A (N 5(S PR(BA#7 CAPAC(# ?7S N# AS A

2A##7R > R(G5# 7N#(#7 5(2 # AN A9AR? > A##RN7,S >77S % 9A > C@N#7RCA(2.


2/54

+= #57 R7C7(P# % #57 C(# #R7AS@R7R,S >>(C7 > (( > #57 >AC7 BA@7 > #57 #9 2ANAG7R,S C57CS

(N#7N?7? >R PA27N# > (#S %@S(N7SS #AD7S >R #57 7AR 1//& AN? 1//* 7N#(#7S (# # #57 (SS@ANC7 >

AN >>(C(A R7C7(P# 7N>RC7A%7 % A 9R(# > 2AN?A2@S.< cralawvirtua1awli+rar)

(n order that a writ of andaus a) aptl) issue$ it is essential that$ on the one hand$ the person petitionin" for it

has a clear le"al ri"ht to the clai that is sou"ht and that$ on the other hand$ the respondent has an iperative dut)

to perfor that which is deanded of hi. 1 2andaus will not issue to enforce a ri"ht$ or to copel copliance with

a dut)$ which is :uestiona+le or over which a su+stantial dou+t eists. #he principal function of the writ of andausis to coand and to epedite$ not to in:uire and to ad!udicateE thus$ it is neither the office nor the ai of the writ to

secure a le"al ri"ht +ut to ipleent that which is alread) esta+lished. @nless the ri"ht to the relief sou"ht is

unclouded$ andaus will not issue. &

#he checks delivered +) petitioner +ank to #oto 7spinosa were ana"er,s checks. A ana"er,s check$ like a cashier,s

check$ is an order of the +ank to pa)$ drawn upon itself$ coittin" in effect its total resources$ inte"rit) and honor

+ehind its issuance. %) its peculiar character and "eneral use in coerce$ a ana"er,s check or a cashier,s check is

re"arded su+stantiall) to +e as "ood as the one) it represents. *

%) allowin" the deliver) of the su+!ect checks to a person who is not directl) char"ed with the collection of its talia+ilities$ the +ank ust +e deeed to have assued the risk of a possi+le isuse thereof even as it appears to have

fallen short of the dili"ence ordinaril) epected of it. #he +ank$ of course$ is not precluded fro pursuin" a ri"ht of

action a"ainst those who could have +een responsi+le for the wron"doin" or who i"ht have +een un!ustl) +enefited

there+).

#he award of attorne),s fees in favor of respondent Cit) #reasurer$ however$ should +e deleted. Such an award$ in the

concept of daa"es under Article &&08 of the Civil Code$ deands factual and le"al !ustifications. 4 9hile the law

allows soe de"ree of discretion on the part of the courts in awardin" attorne),s fees and epenses of liti"ation$ the

use of that !ud"ent$ however$ ust +e done with "reat care approiatin" as closel) as possi+le the instances

eeplified +) the law. Attorne),s fees in the concept of daa"es are not recovera+le a"ainst a part) !ust +ecause of

an unfavora+le !ud"ent. Repeatedl)$ it has +een said that no preiu should +e placed on the ri"ht to liti"ate.

957R7>R7$ the instant petition is partl) "ranted. #he appealed decision is affired save for the award of attorne),s

fees in favor of private respondent which is ordered deleted. No costs. chanro+1esvirtua11aw1i+rar)

S R?7R7?.

?avide$ r.$ C.J.$ naresFSantia"o$ Carpio and A6cuna$JJ.$ concur.


3/54

S*'OND DIVISION

[G.R. No. 977/3. "uu 10, 1992.]

'"$T* !)I$I!!IN*S5, IN'., Petitioner, . 'O-RT OF "!!*"$S an( S*'-RIT% "N& "ND TR-ST

'O#!"N%, Respondents.

o, $oa(a, Ora 'a::o, ;or Petitioners.

Nno, )o;:?a Gunona ;or


4/54

ne"otiated to it +e"s the :uestion. @nder the Ne"otia+le (nstruents aw$ an instruent is ne"otiated when it is

transferred fro one person to another in such a anner as to constitute the transferee the holder thereof$ and a

holder a) +e the pa)ee or indorsee of a +ill or note$ who is in possession of it$ or the +earer thereof$ (n the present

case$ however$ there was no ne"otiation in the sense of a transfer of the le"al title to the C#?s in favor of petitioner in

which situation$ for o+vious reasons$ ere deliver) of the +earer C#?s would have sufficed. 5ere$ the deliver) thereof

onl) as securit) for the purchases of An"el de la Cru6 Hand we even disre"ard the fact that the aount involved was

not disclosed= could at the ost constitute petitioner onl) as a holder for value +) reason of his lien. Accordin"l)$ a

ne"otiation for such purpose cannot +e effected +) ere deliver) of the instruent since$ necessaril)$ the tersthereof and the su+se:uent disposition of such securit)$ in the event of nonFpa)ent of the principal o+li"ation$ ust

+e contractuall) provided for. #he pertinent law on this point is that where the holder has a lien on the instruent

arisin" fro contract$ he is deeed a holder for value to the etent of his lien.

4. (?.E C?7 > C227RC7E R@7S # %7 >97? (N CAS7 > S# (NS#R@27N# PAA%7 # %7AR7RE 27R7

P7R2(SS(B7 AN? N# 2AN?A#R. ; A close scrutin) of the provisions of the Code of Coerce la)in" down the

rules to +e followed in case of lost instruents pa)a+le to +earer$ which it invokes$ will reveal that said provisions$

even assuin" their applica+ilit) to the C#?s in the case at +ar$ are erel) perissive and not andator). #he ver)

first article cited +) petitioner speaks for itself- %SC@R7 9R?S R S#(P@A#(NS (N

CN#RAC#E S5A N# >ABR #57 PAR# 95 CA@S7 #57 %SC@R(#E CAS7 A# %AR. ; (f it was reall) the

intention of respondent +ank to pa) the aount to An"el de la Cru6 onl)$ it could have with facilit) so epressed that

fact in clear and cate"orical ters in the docuents$ instead of havin" the word


5/54

3. (?.E (?.E C5ARAC#7R > #RANSAC#(N ?7#7R2(N7? % (N#7N#(N > #57 PAR#(7S. ; #his dis:uisition in

(nte"rated Realt) Corporation$ 7t. Al. v. Philippine National %ank$ 7t. Al. is apropos- (NCRPR7A R(G5#SE R7@(R727N# >R ASS(GN27N# # #A7 7>>7C# AGA(NS# #5(R?

P7RSNSE %S7RB7? (N CAS7 A# %AR. ; #he assi"nent of the C#?s ade +) An"el de la Cru6 in favor of

respondent +ank was e+odied in a pu+lic instruent. 9ith re"ard to this other ode of transfer$ the Civil Code

specificall) declares-


6/54

pa)ent of the alle"ed inde+tedness of An"el de la Cru6 to plaintiff and H+= whether or not it issued a receipt showin"

that the C#?s were delivered to it +) ?e la Cru6 as pa)ent of the latter,s alle"ed inde+tedness to it$ plaintiff

corporation opposed the otion. 5ad it produced the receipt pra)ed for$ it could have proved$ if such trul) was the

fact$ that the C#?s were delivered as pa)ent and not as securit). 5avin" opposed the otion$ petitioner now la+ors

under the presuption that evidence willfull) suppressed would +e adverse if produced.

1&. (?.E C(B( PRC7?@R7E APP7ASE (SS@7S N# RA(S7? (N #R(A C@R# CANN# %7 RA(S7? >R #57 >(RS#

#(27 N APP7AE CAS7 A# %AR. ; PreFtrial is priaril) intended to ake certain that all issues necessar) to thedisposition of a case are properl) raised. #hus$ to o+viate the eleent of surprise$ parties are epected to disclose at a

preFtrial conference all issues of law and fact which the) intend to raise at the trial$ ecept such as a) involve

privile"ed or ipeachin" atters. #he deterination of issues at a preFtrial conference +ars the consideration of other

:uestions on appeal. #o accept petitioner,s su""estion that respondent +ank,s supposed ne"li"ence a) +e considered

encopassed +) the issues on its ri"ht to preterinate and receive the proceeds of the C#?s would +e tantaount to

sa)in" that petitioner could raise on appeal an) issue. 9e a"ree with private respondent that the +road ultiate issue

of petitioner,s entitleent to the proceeds of the :uestioned certificates can +e preised on a ultitude of other le"al

reasons and causes of action$ of which respondent +ank,s supposed ne"li"ence is onl) one. 5ence$ petitioner,s

su+ission$ if accepted$ would render a preFtrial deliitation of issues a useless eercise.

D * ' I S I O N

R*G"$"DO,J.

#his petition for review on certiorariipu"ns and seeks the reversal of the decision proul"ated +) respondent court

on 2arch 8$ 1//1 in CAFG.R. CB No. &*'1 1 affirin"$ with odifications$ the earlier decision of the Re"ional #rial

Court of 2anila$ %ranch D(($ & which disissed the coplaint filed therein +) herein petitioner a"ainst private

respondent +ank.

#he undisputed +ack"round of this case$ as found +) the court a :uo and adopted +) respondent court$ appears of

record-!"c-chanro+les.co.ph

acts and Stateent of (ssues$ ri"inal Records$ p. &03E

?efendant,s 7hi+its 1 to &80=- chanro+1es virtual 1awli+rar)

C#? C#?

?ates Serial Nos. uantit) Aount

&& >e+. 8& /0101 to /01&0 &0 P80$000

&' >e+. 8& 34'0& to 34'/1 /0 *'0$000

& 2ar. 8& 34301 to 34340 40 1'0$000

4 2ar. 8& /01&3 to /014' &0 80$000


7/54

2ar. 8& 343/3 to /4800 4 1'$000

2ar. 8& 8//' to 8//8' && 88$000

2ar. 8& 30143 to /010 4 1'$000

8 2ar. 8& /0001 to /00&0 &0 80$000

/ 2ar. 8& /00&* to /000 &8 11&$000

/ 2ar. 8& 8///1 to /0000 10 40$000

/ 2ar. 8& /0&1 to /0&3& && 88$000

;; ;;;;;

#otal &80 P1$1&0$000

KKK KKKKKKK

e+ruar) /$ 1/83. pp. 48F0=. cralawnad

ive #housand Pesos HP83$000.00=. n the sae date$ said depositor eecuted a notari6ed ?eed of

Assi"nent of #ie ?eposit H7hi+it '&= which stated$ aon" others$ that he Hdela Cru6= surrenders to defendant

+ank Lfull control of the indicated tie deposits fro and after date of the assi"nent and further authori6es said

+ank to preFterinate$ setFoff and Jappl) the said tie deposits to the pa)ent of whatever aount or aounts a)

+e due, on the loan upon its aturit) H#SN$ >e+ruar) /$ 1/83$ pp. '0F'&=.


8/54

e+ruar) 3$ 1/8* H?efendant,s 7hi+it ''=.

e+ruar) /$

1/83$ pp. 1*0F1*1=.

>(C7 P 4.000.00

C7R#(>(CA#7 > ?7PS(#

Rate 1'M

?ate of 2aturit) >7% &*$ 1/84 >7% && 1/8&$ 1/

#his is to Certif) that %7AR7R has deposited in this %ank the su of P7SS- >@R S7C@R(# %AN #5@SAN? N.

S@CA# >>(C7 P4$000 O 00 C#S Pesos$ Philippine Currenc)$ repa)a+le to said depositor 3*1 da)s after date$ upon


9/54

presentation and surrender of this certificate$ with interest at the rate of 1'M per cent per annu.

HS"d. (lle"i+le HS"d. (lle"i+le=

A@#5R(7? S(GNA#@R7S<

Respondent court ruled that the C#?s in :uestion are nonFne"otia+le instruents$ rationali6in" as follows- !"c-chanro+les.co.ph


10/54


11/54

evidence is what is sou"ht to +e avoided +) the Ne"otia+le (nstruents aw and calls for the application of the

eleentar) rule that the interpretation of o+scure words or stipulations in a contract shall not favor the part) who

caused the o+scurit). 1&

#he net :uer) is whether petitioner can ri"htfull) recover on the C#?s. #his tie$ the answer is in the ne"ative. #he

records reveal that An"el de la Cru6$ who petitioner chose not to iplead in this suit for reasons of its own$

delivered the C#?s aountin" to P1$1&0$000.00 to petitioner without inforin" respondent +ank thereof at an) tie.

@nfortunatel) for petitioner$ althou"h the C#?s are +earer instruents$ a valid ne"otiation thereof for the truepurpose and a"reeent +etween it and ?e la Cru6$ as ultiatel) ascertained$ re:uires +oth deliver) and indorseent.

>or$ althou"h petitioner seeks to deflect this fact$ the C#?s were in realit) delivered to it as a securit) for ?e la Cru6,

purchases of its fuel products. An) dou+t as to whether the C#?s were delivered as pa)ent for the fuel products or

as a securit) has +een dissipated and resolved in favor of the latter +) petitioner,s own authori6ed and responsi+le

representative hiself.cralawnad

(n a letter dated Nove+er &'$ 1/8& addressed to respondent Securit) %ank$ . . Aranas$ r.$ Calte Credit 2ana"er$

wrote-


12/54

indicate a transfer of a+solute ownership$ in the a+sence of clear and una+i"uous lan"ua"e or other circustances

ecludin" an intent to pled"e.,ish

2arketin" Authorit) and purportedl) si"ned +) its General 2ana"er and counterFsi"ned +) its Auditor. Si of these

were directl) pa)a+le to Goe6 while the others appeared to have +een indorsed +) their respective pa)ees$ followed

+) Goe6 as second indorser. 1

n various dates +etween une & and ul) 1'$ 1/3/$ all these warrants were su+se:uentl) indorsed +) Gloria Castilloas Cashier of Golden Savin"s and deposited to its Savin"s Account No. &4/8 in the 2etro+ank +ranch in Calapan$

2indoro. #he) were then sent for clearin" +) the +ranch office to the principal office of 2etro+ank$ which forwarded

the to the %ureau of #reasur) for special clearin". &

2ore than two weeks after the deposits$ Gloria Castillo went to the Calapan +ranch several ties to ask whether the

warrants had +een cleared. She was told to wait. Accordin"l)$ Goe6 was eanwhile not allowed to withdraw fro his

account. ater$ however$


16/54

(nc. and defendant Spouses 2a"no Castillo and ucia CastilloE

*. ?irectin" the plaintiff to reverse its action of de+itin" Savin"s Account No. &4/8 of the su of P1$34$08/.00 and

to reinstate and credit to such account such aount eistin" +efore the de+it was ade includin" the aount of

P81&$0**.*3 in favor of defendant Golden Savin"s and oan Association$ (nc. and thereafter$ to allow defendant

Golden Savin"s and oan Association$ (nc. to withdraw the aount outstandin" thereon +efore the de+itE

4. rderin" the plaintiff to pa) the defendant Golden Savin"s and oan Association$ (nc. attorne),s fees and epensesof liti"ation in the aount of P&00$000.00.

. rderin" the plaintiff to pa) the defendant Spouses 2a"no Castillo and ucia Castillo attorne),s fees and epenses

of liti"ation in the aount of P100$000.00.

S R?7R7?.

n appeal to the respondent court$ ' the decision was affired$ proptin" 2etro+ank to file this petition for review on

the followin" "rounds-chanro+1es virtual 1awli+rar)

1. Respondent Court of Appeals erred in disre"ardin" and failin" to appl) the clear contractual ters and conditions on

the deposit slips allowin" 2etro+ank to char"e +ack an) aount erroneousl) credited.

Ha= 2etro+ank,s ri"ht to char"e +ack is not liited to instances where the checks or treasur) warrants are for"ed or

unauthori6ed.

H+= @ntil such tie as 2etro+ank is actuall) paid$ its o+li"ation is that of a ere collectin" a"ent which cannot +e held

lia+le for its failure to collect on the warrants.

&. @nder the lower court,s decision$ affired +) respondent Court of Appeals$ 2etro+ank is ade to pa) for warrants

alread) dishonored$ there+) perpetuatin" the fraud coitted +) 7duardo Goe6.

*. Respondent Court of Appeals erred in not findin" that as +etween 2etro+ank and Golden Savin"s$ the latter should

+ear the loss.

4. Respondent Court of Appeals erred in holdin" that the treasur) warrants involved in this case are not ne"otia+le

instruents.

#he petition has no erit.

>ro the a+ove undisputed facts$ it would appear to the Court that 2etro+ank was indeed ne"li"ent in "ivin" Golden

Savin"s the ipression that the treasur) warrants had +een cleared and that$ conse:uentl)$ it was safe to allow

Goe6 to withdraw the proceeds thereof fro his account with it. 9ithout such assurance$ Golden Savin"s would not

have allowed the withdrawalsE with such assurance$ there was no reason not to allow the withdrawal. (ndeed$ Golden

Savin"s i"ht even have incurred lia+ilit) for its refusal to return the one) that to all appearances +elon"ed to the

depositor$ who could therefore withdraw it an) tie and for an) reason he saw fit.

(t was$ in fact$ to secure the clearance of the treasur) warrants that Golden Savin"s deposited the to its account

with 2etro+ank. Golden Savin"s had no clearin" facilities of its own. (t relied on 2etro+ank to deterine the validit)

of the warrants throu"h its own services. #he proceeds of the warrants were withheld fro Goe6 until 2etro+ank


17/54

allowed Golden Savin"s itself to withdraw the fro its own deposit. 3 (t was onl) when 2etro+ank "ave the "oF

si"nal that Goe6 was finall) allowed +) Golden Savin"s to withdraw the fro his own account.

#he ar"uent of 2etro+ank that Golden Savin"s should have eercised ore care in checkin" the personal

circustances of Goe6 +efore acceptin" his deposit does not hold water. (t was Goe6 who was entrustin" the

warrants$ not Golden Savin"s that was etendin" hi a loanE and oreover$ the treasur) warrants were su+!ect to

clearin"$ pendin" which the depositor could not withdraw its proceeds. #here was no :uestion of Goe6,s identit) or

of the "enuineness of his si"nature as checked +) Golden Savin"s. (n fact$ the treasur) warrants were dishonoredalle"edl) +ecause of the for"er) of the si"natures of the drawers$ not of Goe6 as pa)ee or indorser. @nder the

circustances$ it is clear that Golden Savin"s acted with due care and dili"ence and cannot +e faulted for the

withdrawals it allowed Goe6 to ake.

%) contrast$ 2etro+ank ehi+ited etraordinar) carelessness. #he aount involved was not triflin" ; ore than one

and a half illion pesos Hand this was 1/3/=. #here was no reason wh) it should not have waited until the treasur)

warrants had +een clearedE it would not have lost a sin"le centavo +) waitin". et$ despite the lack of such clearance

; and notwithstandin" that it had not received a sin"le centavo fro the proceeds of the treasur) warrants$ as it now

repeatedl) stresses ; it allowed Golden Savin"s to withdraw ; not once$ not twice$ +ut thrice ; fro the uncleared

treasur) warrants in the total aount of P/'8$000.00.cralawnad

(ts reasonI (t was


18/54

as a ere a"ent it cannot +e lia+le to the principal. #his is not eactl) true. n the contrar)$ Article 1/0/ of the Civil

Code clearl) provides that ;

Art. 1/0/. ; #he a"ent is responsi+le not onl) for fraud$ +ut also for ne"li"ence$ which shall +e !ud"ed with ore or

less ri"or +) the courts$ accordin" to whether the a"enc) was or was not for a copensation.

#he ne"li"ence of 2etro+ank has +een sufficientl) esta+lished. #o repeat for ephasis$ it was the clearance "iven +) it

that assured Golden Savin"s it was alread) safe to allow Goe6 to withdraw the proceeds of the treasur) warrants hehad deposited. 2etro+ank isled Golden Savin"s. #here a) have +een no epress clearance$ as 2etro+ank insists

Halthou"h this is refuted +) Golden Savin"s= +ut in an) case that clearance could +e iplied fro its allowin" Golden

Savin"s to withdraw fro its account not onl) once or even twice +ut three ties. #he total withdrawal was in ecess

of its ori"inal +alance +efore the treasur) warrants were deposited$ which onl) added to its +elief that the treasur)

warrants had indeed +een cleared.

2etro+ank,s ar"uent that it a) recover the disputed aount if the warrants are not paid for an) reason is not

accepta+le. An) reason does not ean no reason at all. therwise$ there would have +een no need at all for Golden

Savin"s to deposit the treasur) warrants with it for clearance. #here would have +een no need for it to wait until the

warrants had +een cleared +efore pa)in" the proceeds thereof to Goe6. Such a condition$ if interpreted in the wa)the petitioner su""ests$ is not +indin" for +ein" ar+itrar) and unconsciona+le. And it +ecoes ore so in the case at

+ar when it is considered that the supposed dishonor of the warrants was not counicated to Golden Savin"s +efore

it ade its own pa)ent to Goe6. chanro+les.co-cralaw-red

#he +elated notification a""ravated the petitioner,s earlier ne"li"ence in "ivin" epress or at least iplied clearance to

the treasur) warrants and allowin" pa)ents therefro to Golden Savin"s. %ut that is not all. n top of this$ the

supposed reason for the dishonor$ to wit$ the for"er) of the si"natures of the "eneral ana"er and the auditor of the

drawer corporation$ has not +een esta+lished. / #his was the findin" of the lower courts which we see no reason to

distur+. And as we said in 29SS v. Court of Appeals- 10

>or"er) cannot +e presued HSiasat$ 7t. Al. v. (AC$ 7t Al.$ 1*/ SCRA &*8=. (t ust +e esta+lished +) clear$ positive

and convincin" evidence. #his was not done in the present case.

A no less iportant consideration is the circustance that the treasur) warrants in :uestion are not ne"otia+le

instruents. Clearl) staped on their face is the word und 01.

#he followin" sections of the Ne"otia+le (nstruents aw$ especiall) the underscored parts$ are pertinent- chanro+1es virtual 1awli+rar)

S7C#(N 1. ; >or of ne"otia+le instruents. ; An instruent to +e ne"otia+le ust confor to the followin"

re:uireents-chanro+1esvirtual 1awli+rar)

Ha= (t ust +e in writin" and si"ned +) the aker or drawerE

H+= 2ust contain an unconditional proise or order to pa) a su certain in one)E

Hc= 2ust +e pa)a+le on deand$ or at a fied or deterina+le future tieE

Hd= 2ust +e pa)a+le to order or to +earerE and


19/54

He= 9here the instruent is addressed to a drawee$ he ust +e naed or otherwise indicated therein with reasona+le

certaint).

x x x

S7C. *. 9hen proise is unconditional. ; An un:ualified order or proise to pa) is unconditional within the eanin"

of this Act thou"h coupled with ;

Ha= An indication of a particular fund out of which rei+urseent is to +e ade or a particular account to +e de+ited

with the aountE or

H+= A stateent of the transaction which "ives rise to the instruent.

%ut an order or proise to pa) out of a particular fund is not unconditional.

#he indication of >und 01 as the source of the pa)ent to +e ade on the treasur) warrants akes the order or

proise to pa) or one thin"$ the docuent +earin" on its face the words


20/54

withdraw P1$1'3$00.00 +efore Golden Savin"s was notified of the dishonor. #he aount he has withdrawn ust +e

char"ed not to Golden Savin"s +ut to 2etro+ank$ which ust +ear the conse:uences of its own ne"li"ence. %ut the

+alance of P8'$8/.00 should +e de+ited to Golden Savin"s$ as o+viousl) Goe6 can no lon"er +e peritted to

withdraw this aount fro his deposit +ecause of the dishonor of the warrants. Goe6 has in fact disappeared. #o

also credit the +alance to Golden Savin"s would undul) enrich it at the epense of 2etro+ank$ let alone the fact that it

has alread) +een infored of the dishonor of the treasur) warrants.chanro+les lawli+rar) - red

957R7>R7$ the challen"ed decision is A>>(R27?$ with the odification that Para"raph * of the dispositive portion ofthe !ud"ent of the lower court shall +e reworded as follows- chanro+1es virtual 1awli+rar)

*. ?e+itin" Savin"s Account No. &4/8 in the su of P8'$8/.00 onl) and thereafter allowin" defendant Golden

Savin"s O oan Association$ (nc. to withdraw the aount outstandin" thereon$ if an)$ after the de+it.

S R?7R7?.

EN BANC

[G.R. No. L-22405. June 30, 1971.]

PHILIPPINE EDCA!I"N C"., INC., Plaintiff-Appellant, #. $ARICI" A. %"RIAN", E! AL., Defendants-Appellees.

$&'()&* E+o+o, o' Plaintiff-Appellant.

%o*)()o' Gene'&* A'u'o A. A*&')/, A++)+&n %o*)()o' Gene'&* Anon)o G. I&''& &n Ao'ne Con(e()on!o'')o+-A&)n&n o' Defendants-Appellees.

%LLAB%

1. COMMERCIAL LAW; POSTAL LAW; NATURE OF POSTAL MONEY ORDERS. It is not disputed t!t ou" post!#st!tutes $e"e p!tte"ned !%te" si&i#!" st!tutes in %o"'e in te United St!tes. Fo" tis "e!son( ou"s !"e )ene"!##* 'onst"ued in!''o"d!n'e $it te 'onst"u'tion )i+en in te United St!tes to tei" o$n post!# st!tutes( in te !,sen'e o% !n* spe'i!#"e!son -usti%*in) ! dep!"tu"e %"o& tis po#i'* o" p"!'ti'e. Te $ei)t o% !uto"it* in te United St!tes is t!t post!# &one*o"de"s !"e not ne)oti!,#e inst"u&ents /o#o)nesi +. U.S.( 10 Fed. 23; U.S. +. Sto'4 D"!$e"s N!tion!# /!n4( 25 Fed.167( te "e!son ,eind tis "u#e ,ein) t!t( in est!,#isin) !nd ope"!tin) ! post!# &one* o"de" s*ste&( te )o+e"n&ent isnot en)!)in) in 'o&&e"'i!# t"!ns!'tions ,ut &e"e#* e8e"'ises ! )o+e"n&ent!# po$e" %o" te pu,#i' ,ene%it. It is to ,enoted in tis 'onne'tion t!t so&e o% te "est"i'tions i&posed upon &one* o"de"s ,* post!# #!$s !nd "e)u#!tions !"ein'onsistent $it te '!"!'te" o% ne)oti!,#e inst"u&ents. Fo" inst!n'e( su' #!$s !nd "e)u#!tions usu!##* p"o+ide %o" not&o"e t!n one endo"se&ent; p!*&ent o% &one* o"de"s &!* ,e $ite#d unde" ! +!"iet* o% 'i"'u&st!n'es 9 C. :. 11327.

6. ADMINISTRATIE LAW; ID.; A LETTER OF T


21/54

te /!n4 o% A&e"i'!( on te ote"( !ppe##!nt !s no "i)t to !ss!i# te te"&s !nd 'onditions te"eo% on te )"ound t!t te#ette" settin) %o"t te te"&s !nd 'onditions !%o"es!id is +oid ,e'!use it $!s not issued ,* ! Dep!"t&ent


22/54

P#!inti%% !#so p"!*s %o" su' ote" !nd %u"te" "e#ie% !s &!* ,e dee&ed -ust !nd e@uit!,#e.B'"!#!$ +i"tu!1!$ #i,"!"*

On No+e&,e" 1?( 16( !%te" te p!"ties !d su,&itted te stipu#!tion o% %!'ts "ep"odu'ed !t p!)es 16 to 13 o% teRe'o"d on Appe!#( te !,o+en!&ed 'ou"t "ende"ed -ud)&ent !s %o##o$sG-)'G'!n"o,#es.'o&.p

BW


23/54

FIRST DIVISION

[G.R. No. $B18103. Jun 8, 1922. ]

!)I$I!!IN* N"TION"$ "N&, Plaintiff-Appellee, . #"NI$" OI$ R*FINING %B!ROD-'TS

'O#!"N%, IN'., Defendant-Appellant.

"nono Gona: ;orAppellant.

Ro=an J. $a>on ;orAppellee.

)aran C:>E Fr DCE !rn &n>a(E G@@, #>Donou JononE Ju:an

Co:;onE Ro $arn>E Fran> . #aony, an( Jo ". * >ura.

S%$$"-S

1. @?G27N#SE @?G27N#S % CN>7SS(NE R(G(N. ; #he practice of enterin" !ud"ents in de+t on

warrants of attorne) is ancient ori"in.

&. (?.E (?.E C22N A9 PRAC#(C7. ; (n the course of tie a warrant of attorne) to confess !ud"ent

+ecae a failiar coon law securit).

*. (?.E (?.E (N?S. ; At coon law$ there were two kinds of !ud"ents +) confessionE the one a

!ud"ent +) co"novit actione$ and the other +) confession relicta verificatione.

4. (?.E (?.E A?BAN#AG7S. ; ud"ents +) confession as appeared at coon law were considered an

aica+le$ eas)$ and cheap wa) settle and secure de+ts.

. (?.E (?.E ?(SA?BAN#AG7S. ; #he reco"nition of such a for of o+li"ation would +rin" a+out a

coplete reor"ani6ation of coercial custos and practices$ with reference to shortFter o+li"ations.

(nstead of resultin" to the advanta"e of coercial life in the Philippines$ !ud"ent notes i"ht +e the

source of a+use and oppression$ and ake the involuntar) parties thereto.

'. (?.E (?.E BA(?(# >E (N #57 @N(#7? S#A#7S. ; A nu+er of !urisdictions in the @nited States haveaccepted the coon law view of !ud"ent +) confession$ while still other !urisdictions have refused to

sanction the.

3. (?.E (?.E (?.E (?. ; (n the a+sence of statute$ there is a conflict of authorit) as to the validit) of a

warrant of attorne) for the confession of !ud"ent. #he wei"ht of opinion is that unless authori6ed +)

statute$ warrants of attorne) to confess !ud"ent are void$ as a"ainst pu+lic polic).

8. (?.E (?.E (?.E (N #57 P5((PP(N7 (SAN?SE S#A#@#R PRB(S(NS. ; Neither the Code of Civil

Procedure nor an) other reedial statute epressl) or tacitl) reco"ni6es a confession of !ud"ent

coonl) called a !ud"ent note.


24/54

/. (?.E (?.E (?.E (?.E (?.E R(G5# # A ?A (N C@R#. ; #he provisions of the Code of Civil Procedure$ in

relation to constitutional safe"uards relatin" to the ri"ht to take a an,s propert) onl) after a da) in court

and after due process of law$ conteplate that all defendants shall have opportunit) to +e heard.

10. (?.E (?.E (?.E (?.E (?.E C@N#7RCA(2S. ; #he provisions of the Code of Civil Procedure pertainin" to

counterclais ar"ue a"ainst !ud"ent notes$ especiall) as the Code provides that in case the defendant or

his assi"nee oits to set up a counterclai$ he cannot afterwards aintain an action a"ainst the plaintiff

therefor.

11. (?.E (?.E (?.E (?.E (?.E AR#(C7 1&'$ C(B( C?7. ; At least one provision of the su+stantive law$

nael)$ that the validit) and fulfillent of contracts cannot +e left to the will of one of the contractin"

parties HCivil Code$ art. 1&'=$ constitutes another indication of fundaental le"al purpose.

1&. (?.E (?.E (?.E (?.E (?.E N7G#(A%7 (NS#R@27N#S A9 HAC# No. &0*1=$ S7C#(N H+= >

ne"otia+le (nstruent otherwise ne"otia+le is not affected +) a provision which authori6es a confession of

!ud"ent if the instruent +e not paid at aturit)$ cannot +e taken to sanction !ud"ents +) confession.

1*. (?.E (?.E (?.E (?. ; 9arrants of attorne) to confess !ud"ent are void as a"ainst pu+lic polic)$

+ecause the) enlar"e the field for fraud$ +ecause under these instruents the proissor +ar"ains awa)his ri"ht to a da) in court$ and +ecause the effect of the instruent is to strike down the ri"ht of appeal

accorded +) statute.

14. (?.E (?.E (?.E (?. ; 9arrants of attorne) to confess !ud"ent are not authori6ed nor conteplated +)

our law.

1. %(S AN? N#7SE @?G27N# N#7$ BA(?(# >. ; (n the a+sence of epress le"islative sanction$

provisions in notes authori6in" attorne)s to appear and confess !ud"ents a"ainst akers should not +e

reco"ni6ed in this !urisdiction +) iplication.

1'. (?.E (?. ; A provision in a proissor) note where+) in case the sae is not paid at aturit)$ theaker authori6es an) attorne) to appear and confess !ud"ent thereon for the principal aount$ with

interest$ costs$ and attorne),s fees$ and waives all errors$ ri"hts to in:uisition$ and appeal$ and all propert)

eeptions$ is not valid in this !urisdiction.

D * ' I S I O N

#"$'O$#,J.

#he :uestion of first ipression raised in this case concerns the validit) in this !urisdiction of a provision in

a proissor) note where+) in case the sae is not paid at aturit)$ the aker authori6es an) attorne) to

appear and confess !ud"ent thereon for the principal aount$ with interest$ costs$ and attorne),s fees$

and waives all errors$ ri"hts to in:uisition$ and appeal$ and all propert) eeptions.

n 2a) 8$ 1/&0$ the ana"er and the treasurer of the 2anila il Refinin" O %)FProducts Copan)$ (nc$.

eecuted and delivered to the Philippine National %ank$ a written instruent readin" as

follows-!"c-chanro+les.co.ph


25/54


26/54

oits to set up a counterclai$ he cannot afterwards aintain an action a"ainst the plaintiff therefor.

HSecs. /$ /'$ /3.= At least one provision of the su+stantive law$ nael)$ that the validit) and fulfillent

of contracts cannot +e left to the will of one of the contractin" parties HCivil Code$ art. 1&'=$ constitutes

another indication of fundaental le"al purpose.

#he attorne) for the appellee contends that the Ne"otia+le (nstruents aw HAct No. &0*1= epressl)

reco"ni6ed !ud"ent notes$ and that the) are enforci+le under the re"ular procedure. #he Ne"otia+le

(nstruents aw$ in section $ provides that irst National %ank of ansas Cit) for the

aount that i"ht then +e due thereon$ with interest at the rate therein entioned and the costs of suit$

to"ether with an attorne),s fee of 10 per cent and also to waive and release all errors in said proceedin"s

and !ud"ent$ and all proceedin"s$ appeals$ or writs of error thereon. Plaintiff filed a petition in the Circuit

Court to which was attached the a+oveFentioned instruent. An attorne) naed ?enha appearedpursuant to the authorit) "iven +) the note sued on$ entered the appearance of the defendant$ and

consented that !ud"ent +e rendered in favor of the plaintiff as pra)ed in the petition. After the Circuit

Court had entered a !ud"ent$ the defendant$ throu"h counsel$ appeared speciall) and filed a otion to

set it aside. #he Supree Court of 2issouri$ speakin" throu"h 2r. ustice Graves$ in part

said-!"c-chanro+les.co.ph


27/54

x x x


28/54

>ar:uhar Co. iited$ or a"ent$ or an) prothonotar) or attorne) of an) Court of Record to appear for us

and in our nae to confess !ud"ent a"ainst us and in favor of said A. %. >ar:uhar Co.$ iited$ for the

a+ove naed su with costs of suit and release of all errors and without sta) of eecution after the

aturit) of this note.< ,#he Supree Court of 9est Bir"inia$ on consideration of validit) of the !ud"ent

note a+ove descri+ed$ speakin" throu"h 2r. ustice 2iller$ in part said-!"c-chanro+les.co.ph

irst National %ank of as

Cruces v. %aker HQ1/1/$ 180 Pac.$ &/1=. #he Supree Court of New 2eico$ in a per curia decision$ in

part$ said-!"c-chanro+les.co.ph


29/54

(n soe of the states these !ud"ents have +een condened +) statute and of course in that case are

not allowed.


30/54

T)IRD DIVISION

[G.R. No. 76788. January 22, 1990.]

J-"NIT" S"$"S, Petitioner, . )ON. 'O-RT OF "!!*"$S an( FI$INV*ST FIN"N'* $*"SING

'OR!OR"TION, Respondents.

"rno '. V::a:on, Jr. ;or Petitioner.

$a@au, $oyo:a, "nara "o>a ;or Private Respondent.

S%$$"-S

1. C227RC(A A9E N7G#(A%7 (NS#R@27N#E R7@(S(#7SE SA#(S>(7? (N CAS7 A# %AR. ; #he :uestioned

proissor) note shows that it is a ne"otia+le instruent$ havin" coplied with the re:uisites under the law as

follows- Qa it is in writin" and si"ned +) the aker uanita SalasE Q+ it contains an unconditional proise to pa) the

aount of P8$1*8.&0E Qc it is pa)a+le at a fied or deterina+le future tie which is C easin" and Acceptance Corp.$ this Court had the occasion to clearl) distin"uish +etween a

ne"otia+le and a nonFne"otia+le instruent. Aon" others$ the instruent in order to +e considered ne"otia+le ust

contain the soFcalled 5?7R (N ?@7 C@RS7. ; A holder in due course$ havin"

taken the instruent under the followin" conditions- Qa it is coplete and re"ular upon its faceE Q+ it +ecae the

holder thereof +efore it was overdue$ and without notice that it had previousl) +een dishonoredE Qc it took the sae

in "ood faith and for valueE and Qd when it was ne"otiated to >ilinvest$ the latter had no notice of an) infirit) in the

instruent or defect in the title of B2S Corporation.

4. (?.E (?.E R(G5# > A 5?7R (N ?@7 C@RS7E APP(CA%7 (N #57 CAS7 A# %AR. ; Respondent corporation

holds the instruent free fro an) defect of title of prior parties$ and free fro defenses availa+le to prior parties


31/54

aon" theselves$ and a) enforce pa)ent of the instruent for the full aount thereof. #his +ein" so$ petitioner

cannot set up a"ainst respondent the defense of nullit) of the contract of sale +etween her and B2S. 7ven assuin"

for the sake of ar"uent that there is an iota of truth in petitioner,s alle"ation that there was in fact deception ade

upon her in that the vehicle she purchased was different fro that actuall) delivered to her$ this atter cannot +e

passed upon in the case +efore us$ where the B2S was never ipleaded as a part).

D * ' I S I O N

F*RN"N, C.J.

Assailed in this petition for review on certiorariis the decision of the Court of Appeals in C.A.FG.R. CB No. 0033

entitled ilinvest >inance O easin" Corporation v. Salase+ruar) '$ 1/80$ uanita Salas Hhereinafter referred to as petitioner= +ou"ht a otor vehicle

fro the Biola"o 2otor Sales Corporation HB2S for +revit)= for P8$1*8.&0 as evidenced +) a proissor) note. #his

note was su+se:uentl) endorsed to >ilinvest >inance O easin" Corporation Hhereinafter referred to as private

respondent= which financed the purchase.

Petitioner defaulted in her installents +e"innin" 2a) &1$ 1/80 alle"edl) due to a discrepanc) in the en"ine and

chassis nu+ers of the vehicle delivered to her and those indicated in the sales invoice$ certificate of re"istration and

deed of chattel ort"a"e$ which fact she discovered when the vehicle fi"ured in an accident on / 2a) 1/80.

#his failure to pa) propted private respondent to initiate Civil Case No. /1 for a su of one) a"ainst petitioner

+efore the Re"ional #rial Court of San >ernando$ Papan"a.

(n its decision dated Septe+er 10$ 1/8&$ the trial court held$ thus- !"c-chanro+les.co.ph

R7$ and in view of all the fore"oin"$ !ud"ent is here+) rendered orderin" the defendant to pa) the

plaintiff the su of P&8$414.40 with interest thereon at the rate of 14M fro cto+er &$ 1/80 until the said su is

full) paidE and the further aount of P1$000.00 as attorne),s fees.


32/54

cannot su+se:uentl) take a position contradictor) of$ or inconsistent with his pleadin"s HCunanan v. Aparo$ 80 Phil.

&&3=. Adissions ade +) the parties in the pleadin"s$ or in the course of the trial or other proceedin"s$ do not

re:uire proof and cannot +e contradicted unless previousl) shown to have +een ade throu"h palpa+le istake HSec.

&$ Rule 1&/$ Revised Rules of CourtE Sta. Ana v. 2aliwat$ F&*0&*$ Au". *1$ 1/'8$ &4 SCRA 1018=.


33/54

#he pivotal issue in this case is whether the proissor) note in :uestion is a ne"otia+le instruent which will +ar

copletel) all the availa+le defenses of the petitioner a"ainst private Respondent.

Petitioner,s lia+ilit) on the proissor) note$ the due eecution and "enuineness of which she never denied under oath

is$ under the fore"oin" factual ilieu$ as inevita+le as it is clearl) esta+lished.

#he records reveal that involved herein is not a siple case of assi"nent of credit as petitioner would have it appear$where the assi"nee erel) steps into the shoes of$ is open to all defenses availa+le a"ainst and can enforce pa)ent

onl) to the sae etent as$ the assi"norFvendor.

Recentl)$ in the case of Consolidated Pl)wood (ndustries (nc. v. (>C easin" and Acceptance Corp.$ ' this Court had

the occasion to clearl) distin"uish +etween a ne"otia+le and a nonFne"otia+le instruent. chanro+lesvirtualawli+rar) chanro+les.co-chanro+les.co.ph

Aon" others$ the instruent in order to +e considered ne"otia+le ust contain the soFcalled e+. 11$ 1/80

or value received$ (9e !ointl) and severall)$ proise to pa) Biola"o 2otor Sales Corporation or order$ at its office in

San >ernando$ Papan"a$ the su of >(># 7(G5# #5@SAN? N7 5@N?R7? #5(R# 7(G5# O &0100 N

HP8$1*8.&0= Philippine currenc)$ which aount includes interest at 14M per annu +ased on the diinishin"

+alance$ the said principal su$ to +e pa)a+le$ without need of notice or deand$ in installents of the aounts

followin" and at the dates hereinafter set forth$ to wit- P1$'14./ onths for


34/54

1/8 thru and inclusive of $ 1/8 provided that interest at 14M per

annu shall +e added on each unpaid installent fro aturit) hereof until full) paid.

x x x

(NANC7 AN? 7AS(NG CRPRA#(N

e+. &1$ 1/8*E< Qd it is pa)a+le to Biola"o 2otor Sales Corporation$ or order and as such$ Qe the

drawee is naed or indicated with certaint). /

(t was ne"otiated +) indorseent in writin" on the instruent itself pa)a+le to the rder of >ilinvest >inance and

easin" Corporation 10 and it is an indorseent of the entire instruent. 11

@nder the circustances$ there appears to +e no :uestion that >ilinvest is a holder in due course$ havin" taken the

instruent under the followin" conditions- Qa it is coplete and re"ular upon its faceE Q+ it +ecae the holder

thereof +efore it was overdue$ and without notice that it had previousl) +een dishonoredE Qc it took the sae in "ood

faith and for valueE and Qd when it was ne"otiated to >ilinvest$ the latter had no notice of an) infirit) in the

instruent or defect in the title of B2S Corporation. 1&

Accordin"l)$ respondent corporation holds the instruent free fro an) defect of title of prior parties$ and free fro

defenses availa+le to prior parties aon" theselves$ and a) enforce pa)ent of the instruent for the full aount


35/54

thereof. 1* #his +ein" so$ petitioner cannot set up a"ainst respondent the defense of nullit) of the contract of sale

+etween her and B2S. chanro+les.co - virtuallawli+rar)

7ven assuin" for the sake of ar"uent that there is an iota of truth in petitioner,s alle"ation that there was in fact

deception ade upon her in that the vehicle she purchased was different fro that actuall) delivered to her$ this

atter cannot +e passed upon in the case +efore us$ where the B2S was never ipleaded as a part).

9hatever issue is raised or clai presented a"ainst B2S ust +e resolved in the eliciano$ %idin and Cortes$JJ.$ concur.


36/54

*N "N'

[G.R. No. $B2/16. Sor havin" issued a ru++er check$ An" #ek ian was convicted of estafa in the Court of >irst (nstance of 2anila. #he

Court of Appeals affired the verdict.

(t appears that$ knowin" he had no funds therefor$ An" #ek ian drew on Saturda)$ Nove+er 1'$ 1/4'$ the check

7hi+it A upon the China %ankin" Corporation for the su of P4$000$ pa)a+le to the order of


37/54

+ank$ or the funds deposited +) hi in the +ank were not sufficient to cover the aount of the check$ and without

inforin" the pa)ee of such circustancese+ruar) 11$ 1/'* in favor

of .%.. 7nterprises$ (nc. 14 coverin" the purchase of two tractors$ 1 and .%.. 7nterprises drew on >e+ruar) 1*$

1/'* a si"ht draft on said C in the aount of P1$000.00 +ut petitioners have not paid said aount.

n its fifth cause of action$ the %ank alle"ed that it issued C No. '*F0&84? on 2arch 14$ 1/'* in favor of Super

2aster Auto Suppl) HS2AS= coverin" the purchase of


41/54

ownership over the ort"a"ed properties in favor of the %ank. #he) den)$ however$ havin" availed of the credit

accoodations and havin" received the value of the proissor) notes$ as the) do den) havin" ph)sicall) received

the tractors and e:uipent su+!ect of the Cs.chanro+1esvirtua11aw1i+rar)

As affirative defenses$ petitioners assert that the coplaint states no cause of action$ and assuin" that it does$ the

sae isare +arred +) prescription or null and void for want of consideration.

%) rder of 2arch 10$ 1/33$ %ranch *' of the 2anila R#C attached the preferred shares of stocks of the spousesuirino and 7ufeia Gon6ales with the %ank with a total par value of P414$000.00.

>indin" for petitioners$ the trial court rendered its ?ecision of April &&$ 1//& the dispositive portion of which reads- chanro+1es virtual 1awli+ra

957R7>R7$ !ud"ent is rendered as follows- chanro+1es virtual 1awli+rar)

1. All the clais of plaintiff particularl) those descri+ed in the first to the tenth causes of action of its coplaint are

denied for the reasons earlier entioned in the +od) of this decisionE

&. As re"ards the clais of defendants pertainin" to their counterclai H7hi+its


42/54

a+sence of consent since defendants did not "ive their consent to loans alle"edl) procured$ the proceeds of which

were never received +) the alle"ed de+tors$ defendants herein. . . .

Plaintiff did not present evidence to support its tenth cause of action. >or this reason$ it ust conse:uentl) +e denied

for lack of evidence.chanro+1esvirtua11aw1i+rar)

n the atter of Qthe counterclais of defendants$ the) seek the return of the real and personal properties which

the) have "iven in "ood faith to plaintiff. A"ain$ prescription a) appl). #he real properties of defendants ac:uired +)plaintiff were foreclosed in 1/' and conse:uentl)$ defendants had one H1= )ear to redee the propert) or ten H10=

)ears fro issuance of title on the "round that the o+li"ation foreclosed was fictitious.

x x x

n appeal$ &' the Court of Appeals HCA= reversed the decision of the trial court +) ?ecision &3 of une &8$ 1//' which

disposed as follows- &8

957R7>R7$ preises considered$ the appealed decision Hdated April &&$ 1//&= of the Re"ional #rial Court H%ranch

*'= in 2anila in Civil Case No. 8&F4141 is here+) R7B7RS7? ; and let the case +e reanded +ack to the court a :uo

for the deterination of the aountHs= to +e awarded to the Qthe %ankFappellant relative to its clais a"ainst the

appellees.

S R?7R7?.

9ith re"ard to the first to sith causes of action$ the CA upheld the contention of the %ank that the notices of

foreclosure sale were


43/54

1. 957#57R R N# R7SPN?7N# C@R# 7RR7? (N S 5?(NG #5A# R7SPN?7N#FAPP777S HS(C.= R7P@%(C

PAN#7RS %ANQ,S >(RS#$ S7CN?$ #5(R?$ >@R#5$ >(>#5 AN? S(D#5 CA@S7S > AC#(N 5AB7 N# PR7SCR(%7?

CN#RAR # #57 >(N?(NGS > #57 97R C@R#$ R#C %RANC5 *' #5A# #57 SA(? CA@S7S > AC#(N 5AB7

AR7A? PR7SCR(%7?.chanro+1esvirtua11aw1i+rar)

&. 957#57R R N# R7SPN?7N# C@R# 7RR7? (N S 5?(NG #5A# R7SP?N7N#FAPP777S HS(C.= R7P@%(C

PAN#7RS %ANQ,S S7B7N#5$ 7(G5# AN? N(N#5 CA@S7S > AC#(N APP7ARS HS(C.= # %7 (2PR7SS7? 9(#527R(# CN#RAR # #57 >(N?(NGS > #57 97R C@R# R#C %RANC5 *' #5A# #57 SA(? CA@S7S 5AB7 N

BA(? GR@N? # S@S#A(N Q#572 AN? >R AC > 7B(?7NC7.

*. 957#57R R N# R7SPN?7N# C@R# Q7RR7? (N R7B7RS(NG #57 >(N?(NGS > #57 R7G(NA #R(A C@R#

%RANC5 *' > 2AN(A #5A# P7#(#(N7RSFAPP7AN# HS(C.= 2A S77 #57 R7#@RN > #57 R7A AN? P7RSNA

PRP7R#(7S 95(C5 #57 2A 5AB7 G(B7N (N G? >A(#5 AS #57 SA27 (S %ARR7? % PR7SCR(P#(N AN? #5A#

P7#(#(N7RSFAPP7AN# HS(C.= 5A? N7 H1= 7AR # R7?772 #57 PRP7R# R #7N H10= 7ARS >R2 (SS@ANC7

> #57 #(#7 N #57 GR@N? #5A# #57 %(GA#(N >R7CS7? 9AS >(C#(#(@S.

4. 957#57R R N# R7SPN?7N# C@R# 7RR7? (N S 5?(NG #5A# P7(#(N7RSFAPP7AN#S QS(C AR7 N#7N#(#7? # AN A9AR? > A##RN7,S >77S.

#he petition is partl) eritorious.

n the first issue. #he Civil Code provides that an action upon written contract$ an o+li"ation created +) law$ and a

!ud"ent ust +e +rou"ht within ten )ears fro the tie the ri"ht of action accrues. **

#he findin" of the trial court that ore than ten )ears had elapsed since the ri"ht to +rin" an action on the %ank,s first

to sith causes had arisen *4 is not disputed. #he %ank contends$ however$ that


44/54

propert) at pu+lic auction and the outstandin" o+li"ation at the tie of the foreclosure proceedin"s. */ (n the present

case$ the %ank$ as ort"a"ee$ had the ri"ht to clai pa)ent of the deficienc) after it had foreclosed the ort"a"e in

1/'. 40 (n other words$ the prescriptive period started to run a"ainst the %ank in 1/'. As it filed the coplaint onl)

on anuar) &3$ 1/33$ ore than ten )ears had alread) elapsed$ hence$ the action on its first to fifth causes had +)

then prescri+ed. No other conclusion can +e reached even if the suit is considered as one upon a written contract or

upon an o+li"ation to pa) the deficienc) which is created +) law$ 41 the prescriptive period of +oth +ein" also ten

)ears. 4&

As re"ards the proissor) note su+!ect of the sith cause of action$ its period of prescription could not have +een

interrupted +) the notices of foreclosure sale not onl) +ecause$ as earlier discussed$ petitioners, contention that the

notices of foreclosure are tantaount to written etraF!udicial deand cannot +e considered a+sent an) showin" of

the contents thereof$ +ut also +ecause it does not appear fro the records that the said note is covered +) the

ort"a"e contract.

Coin" now to the second issue$ petitioners seek to evade lia+ilit) under the %ank,s seventh to ninth causes of action

+) claiin" that petitioners uirino and 7ufeia Gon6ales si"ned the proissor) notes in +lankE that the) had not

received the value of said notes$ and that the credit line thereon was unnecessar) in view of their one) deposits$

the) citin"


45/54

2ort"a"es=$ as aended. #hou"h the %ank,s action for deficienc) is +arred +) prescription$ nothin" irre"ular attended

the foreclosure proceedin"s to warrant the reconve)ance of the properties covered there+).

As for petitioners, pra)er for oral and eeplar) daa"es$ it not havin" +een raised as issue +efore the courts

+elow$ it can not now +e considered. Neither can the award of attorne),s fees for lack of le"al +asis.

957R7>R7$ the CA ?ecision is here+) A>>(R27? with 2?(>(CA#(N.

Repu+lic %ank,s Coplaint with respect to its first to sith causes of action is here+) ?(S2(SS7?. (ts coplaint with

respect to its seventh to ninth causes of action is R72AN?7? to the court of ori"in$ the 2anila Re"ional #rial Court$

%ranch *'$ for it to deterine the aounts due the %ank thereunder.chanro+1esvirtua11aw1i+rar)

S R?7R7?.

Puno$ Pan"ani+an$ SandovalFGutierre6 and Corona$JJ.$ concur.

Repu,#i' o% te Pi#ippines

%PRE$E C"R!

M!ni#!

SECOND DIISION

G.R. No. 85419 $&'( 9, 1993

DE:EL"P$EN! BAN; "< RI6AL, p#!inti%%petitione"(

+s.

%I$A =EI &n>o' LEE ;IAN HA!, $AR CHENG , %A$%"N !NG, A%IAN IND%!RIAL PLA%!IC

C"RP"RA!I"N &n PR"DCER% BAN; "< !HE PHILIPPINE%, de%end!nts"espondents.

Yngson & Associates for petitioner.

Henry A. Reyes & Associates for Samso Tung & Asian Industrial Plastic Corporation.

Eduardo . Castelo for Sima !ei.

"onsod# Tamargo & Associates for Producers $an%.

Rafael S. Santayana for "ary Ceng 'y.

CA$P"%, JR., J.:

On :u#* ( 10( te De+e#op&ent /!n4 o% Ri!# petitione" /!n4 %o" ,"e+it*7 %i#ed ! 'o&p#!int %o" ! su& o% &one*

!)!inst "espondents Si&! Wei !ndHo" Lee >i!n


46/54

17 To en%o"'e p!*&ent o% te ,!#!n'e o% P1(526(935.56 on ! p"o&isso"* note e8e'uted ,*

"espondent Si&! Wei on :une ( 102; !nd

67 To en%o"'e p!*&ent o% t$o 'e'4s e8e'uted ,* Si&! Wei( p!*!,#e to petitione"( !nd d"!$n

!)!inst te Cin! /!n4in) Co"po"!tion( to p!* te ,!#!n'e due on te p"o&isso"* note.

E8'ept %o" Lee >i!n


47/54

inst"u&ent ,e de#i+e"ed to te p!*ee in o"de" to e+iden'e its e8isten'e !s ! ,indin) 'ont"!'t. Se'tion 1 o% te

Ne)oti!,#e Inst"u&ents L!$( $i' )o+e"ns 'e'4s( p"o+ides in p!"tG

E+e"* 'ont"!'t on ! ne)oti!,#e inst"u&ent is in'o&p#ete !nd "e+o'!,#e unti# de#i+e"* o% te

inst"u&ent %o" te pu"pose o% )i+in) e%%e't te"eto. . . .

Tus( te p!*ee o% ! ne)oti!,#e inst"u&ent !'@ui"es no inte"est $it "espe't te"eto unti# its de#i+e"* to i&.3De#i+e"*

o% !n inst"u&ent &e!ns t"!ns%e" o% possession( !'tu!# o" 'onst"u'ti+e( %"o& one pe"son to !note".4Witout te initi!#

de#i+e"* o% te inst"u&ent %"o& te d"!$e" to te p!*ee( te"e '!n ,e no #i!,i#it* on te inst"u&ent. Mo"eo+e"( su'de#i+e"* &ust ,e intended to )i+e e%%e't to te inst"u&ent.

Te !##e)!tions o% te petitione" in te o"i)in!# 'o&p#!int so$ t!t te t$o 67 Cin! /!n4 'e'4s( nu&,e"ed

20929 !nd 20923( $e"e not de#i+e"ed to te p!*ee( te petitione" e"ein. Witout te de#i+e"* o% s!id 'e'4s to

petitione"p!*ee( te %o"&e" did not !'@ui"e !n* "i)t o" inte"est te"ein !nd '!nnot te"e%o"e !sse"t !n* '!use o%

!'tion(founded on said cec%s( $ete" !)!inst te d"!$e" Si&! Wei o" !)!inst te P"odu'e"s /!n4 o" !n* o% te

ote" "espondents.

In te o"i)in!# 'o&p#!int( petitione" /!n4( !s p#!inti%%( sued "espondent Si&! Wei on te p"o&isso"* note( !nd te

!#te"n!ti+e de%end!nts( in'#udin) Si&! Wei( on te t$o 'e'4s. On !ppe!# %"o& te o"de"s o% dis&iss!# o% te

Re)ion!# T"i!# Cou"t( petitione" /!n4 !##e)ed t!t its '!use o% !'tion $!s not ,!sed on 'o##e'tin) te su& o% &one*e+iden'ed ,* te ne)oti!,#e inst"u&ents st!ted ,ut on (uasi)delict ! '#!i& %o" d!&!)es on te )"ound o%

%"!udu#ent !'ts !nd e+ident ,!d %!it o% te !#te"n!ti+e "espondents. Tis $!s '#e!"#* !n !tte&pt ,* te petitione"

/!n4 to '!n)e not on#* te teo"* o% its '!se ,ut te ,!sis o% is '!use o% !'tion. It is $e##sett#ed t!t ! p!"t*

'!nnot '!n)e is teo"* on !ppe!#( !s tis $ou#d in e%%e't dep"i+e te ote" p!"t* o% is d!* in 'ou"t. 5

Not$itst!ndin) te !,o+e( it does not ne'ess!"i#* %o##o$ t!t te d"!$e" Si&! Wei is %"eed %"o& #i!,i#it* to petitione"

/!n4 unde" te #o!n e+iden'ed ,* te p"o&isso"* note !)"eed to ,* e".


48/54

'ou"t %o" ! t"i!# on te &e"its( 'onsistent $it tis de'ision( in o"de" to dete"&ine $ete" "espondent Si&! Wei is

#i!,#e to te De+e#op&ent /!n4 o% Ri!# %o" !n* !&ount unde" te p"o&isso"* note !##e)ed#* si)ned ,* e".

SO ORDERED.

*ar+asa# C.J.# Padilla# Regalado and *ocon# JJ.# concur.

FIRST DIVISION

[G.R. No. $B2/836B37. January 31, 1981.]

T)* !)I$I!!IN* "N& OF 'O##*R'*, Plaintiff-Appellee , . JOS* #. "R-*GO, Defendant-Appellant.

Su=u:on, Su=u:on an( $@on>o ;or Plaintiff-Appellee .

"ruo, nB#a=ar:, ;or Defendant-Appellant.

S%NO!SIS

Plaintiff +ank instituted an action a"ainst defendant ose 2. Arue"o for recover) of one) it had paid on various

drafts drawn a"ainst it and si"ned +) defendant as follows-


49/54

1. R727?(A A9E @?G27N#S R7(7> #57R7>R2E R7@(S(#7S. ; #o entitle a part) to relief fro !ud"ent taken

a"ainst hi$ throu"h his istake$ inadvertence$ supervise or ecusa+le ne"lect$ he ust show to the court that he

has a eritorious defense. (n other words$ in order to set aside the order of default$ the defendant ust not onl)

show that his failure to answer was due to fraud$ accident$ istake or ecusa+le ne"li"ence +ut also that he has a

eritorious defense.

&. (?.E (?.E (?.E (?.E >A(@R7 # >(7 ANS97R 7DC@SA%7 (N CAS7 A# %AR. ; #he failure of the defendant to file his

answer on the last da) for pleadin" is ecusa+le where the order settin" aside the disissal of the coplaint wasreceived at -00 o,clock in the afternoon of such last da) for pleadin"$ and it was therefore ipossi+le for hi to have

filed his answer on that sae da) +ecause the courts then held office onl) up to -00 o,clock in the afternoonE and

where the defendant iediatel) filed his answer on the followin" da).

*. (?.E (?.E (?.E (?.E CAS7 A# %AR >A(S # S59 27R(#R(@S ?7>7NS7. ; 9here the defense interposed +) the

defendant who has +een declared in default is not eritorious$ his petition for relief fro !ud"ent should +e deniedE

for$ to "rant the defendant,s pra)er will result in a new trial which will serve no purpose and will !ust waste the tie of

the courts as well as the parties +ecause the defense is nil or ineffective.

4. C227RC(A A9E N7G#(A%7 (NS#R@27N#S A9E %(S > 7DC5ANG7E P7RSNS S(GN(NG (NR7PR7S7N#A#(B7 CAPAC(# S5@? ?(SCS7 PR(NC(PA. ; 9here an inspection of the drafts accepted +) the

defendant shows that nowhere has he disclosed that he was si"nin" as a representative of the Philippine 7ducation

>oundation Copan)$ and he erel) si"ned as follows- oundation Copan) of which he is president.

. (?.E (?.E (?.E ACC22?A#(N PAR# ?(>>7R7N#(A#7? >R2 ?RA977ACC7P#RE CAS7 A# %AR. ; An

accoodation part) is one who has si"ned the instruent as aker$ drawer$ acceptor$ indorser$ without receivin"

value thereof and for the purpose of lendin" his nae to soe other person. Such person is lia+le on the instruent

to a holder for value$ notwithstandin" such holder$ at the tie of the takin" of the instruent knew hi to +e onl) an

accoodation part). (n lendin" his nae to the part) accoodated$ the accoodation part) is in effect a suret)

for the latter. 5e lends his nae to ena+le the accoodated part) to o+tain credit or to raise one). 5e receives no

part of the consideration for the instruent +ut assues lia+ilit) to the other parties thereto +ecause he wants to

accoodate another. (n the instant case$ the defendant si"ned as a draweeacceptor. @nder the Ne"otia+le

(nstruents aw$ a drawee is priaril) lia+le. #hus$ if the defendant who is a law)er$ reall) intended to +e secondaril)

lia+le onl)$ he should not have si"ned as an acceptordrawee. (n doin" so$ he +ecae priaril) and personall) lia+le

for the drafts.

'. (?.E (?.E (?.E NA#@R7 > ACC7P#ANC7 N# ?7#7R2(NA#7 AS # 957#57R C227RC(A PAP7R (S %( >

7DC5ANG7 R N#. ; @nder the Ne"otia+le (nstruents aw$ a +ill of echan"e is an unconditional order in writin"

addressed +) one person to another$ si"ned +) the person "ivin" it$ re:uirin" the person to who it is addressed to

part) on deand or at a fied or deterina+le future tie a su certain in one) to order or to +earer. As lon" as a

coercial paper confors with the definition of a +ill of echan"e$ that paper is considered a +ill of echan"e. #he

nature of acceptance is iportant onl) in deterination of whether a coercial paper is a +ill of echan"e or not.

#hus$ in the case at +ar$ defendant,s contentions that the drafts si"ned +) hi were not reall) +ills of echan"e +ut

ere pieces of evidence of inde+tedness +ecause pa)ents were ade +efore acceptance$ is not eritorious.

D * ' I S I O N


50/54

F*RN"ND*+,J.

#he defendant$ ose 2. Arue"o$ appealed to the Court of Appeals fro the order of the Court of >irst (nstance of

2anila$ %ranch D((($ in Civil Case No. 4&0'' den)in" his otion to set aside the order declarin" hi in default$ 1 and

fro the order of said court in the sae case den)in" his otion to set aside the !ud"ent rendered after he was

declared in default. & #hese two appeals of the defendant were docketed as CAFG.R. No. &33*4FR and CAFG.R. No.&3/40FR$ respectivel).

@pon otion of the defendant on ul) &$ 1/'0$ * he was allowed +) the Court of Appeals to file one consolidated

record on appeal of CAFG.R. No. &33*4FR and CAFG.R. No. &3/40FR. 4

(n a resolution proul"ated on 2arch 1$ 1/''$ the Court of Appeals$ >irst ?ivision$ certified the consolidated appeal to

the Supree Court on the "round that onl) :uestions of law are involved.

n ?ece+er 1$ 1//$ the Philippine %ank of Coerce instituted a"ainst ose 2. Arue"o Civil Case No. 4&0'' for

the recover) of the total su of a+out P*$000.00 with dail) interest thereon fro Nove+er 13$ 1// until full) paidand coission e:uivalent to *8M for ever) thirt) H*0= da)s or fraction thereof plus attorne),s fees e:uivalent to

10M of the total aount due and costs. ' #he coplaint filed +) the Philippine %ank of Coerce contains twent)F

two H&&= causes of action referrin" to twent)Ftwo H&&= transactions entered into +) the said %ank and Arue"o on

different dates coverin" the period fro Au"ust &8$ 1/0 to 2arch 14$ 1/1. 3 #he su sou"ht to +e recovered

represents the cost of the printin" of


51/54

n anuar) 1*$ 1/'0$ the plaintiff filed a otion for reconsideration. 1* n 2arch 3$ 1/'0$ actin" upon the otion for

reconsideration filed +) the plaintiff$ the trial court set aside its order disissin" the coplaint and set the case for

hearin" on 2arch 1$ 1/'0 at 8-00 in the ornin". 14 A cop) of the order settin" aside the order of disissal was

received +) the defendant on 2arch 11$ 1/'0 at -00 o,clock in the afternoon accordin" to the affidavit of the deput)

sheriff of 2anila$ 2aerto de la Cru6. n the followin" da)$ 2arch 1&$ 1/'0$ the defendant filed a otion to postpone

the trial of the case on the "round that there havin" +een no answer as )et$ the issues had not )et +een !oined. 1 n

the sae date$ the defendant filed his answer to the coplaint interposin" the followin" defensesE #hat he si"ned the

docuent upon which the plaintiff sues in his capacit) as President of the Philippine 7ducation >oundationE that hislia+ilit) is onl) secondar)E and that he +elieved that he was si"nin" onl) as an accoodation part). 1'

n 2arch 1$ 1/'0$ the plaintiff filed an e parte otion to declare the defendant in default on the "round that the

defendant should have filed his answer on 2arch 11$ 1/'0. 5e contends that +) filin" his answer on 2arch 1&$ 1/'0$

defendant was one da) late. 13 n 2arch 1/$ 1/'0 the trial court declared the defendant in default. 18 #he defendant

learned of the order declarin" hi in default on 2arch &1$ 1/'0. n 2arch &&$ 1/'0 the defendant filed a otion to

set aside the order of default alle"in" that althou"h the order of the court dated 2arch 3$ 1/'0 was received on 2arch

11$ 1/'0 at -00 in the afternoon$ it could not have +een reasona+l) epected of the defendant to file his answer on

the last da) of the re"leentar) period$ 2arch 11$ 1/'0$ within office hours$ especiall) +ecause the order of the court

dated 2arch 3$ 1/'0 was +rou"ht to the attention of counsel onl) in the earl) hours of 2arch 1&$ 1/'0. #he defendantalso alle"ed that he has a "ood and su+stantial defense. Attached to the otion are the affidavits of deput) sheriff

2aerto de la Cru6 that he served the order of the court dated 2arch 3$ 1/'0 on 2arch 11$ 1/'0$ at -00 o,clock in

the afternoon and the affidavit of the defendant Arue"o that he has a "ood and su+stantial defense. 1/ #he trial court

denied the defendant,s otion on 2arch &$ 1/'0. &0 n 2a) '$ 1/'0$ the trial court rendered !ud"ent sentencin"

the defendant to pa) to the plaintiff the su of P*$444.* representin" the total aount of his o+li"ation to the said

plaintiff under the twent)Ftwo H&&= causes of action alle"ed in the coplaint as of Nove+er 1$ 1/3 and the su of

P10$000.00 as attorne),s fees. &1

n 2a) /$ 1/'0 the defendant filed a notice of appeal fro the order dated 2arch &$ 1/'1 den)in" his otion to set

aside the order declarin" hi in default$ an appeal +ond in the aount of P'0.00$ and his record on appeal. #he

plaintiff filed his opposition to the approval of defendant,s record on appeal on 2a) 1*$ 1/'0. #he followin" da)$ 2a)

14$ 1/'0$ the lower court disissed defendant,s appeal fro the order dated 2arch &$ 1/'0 den)in" his otion to

set aside the order of default. && n 2a) 1/$ 1/'0$ the defendant filed a otion for reconsideration of the trial court,s

order disissin" his appeal. &* #he plaintiff$ on 2a) &0$ 1/'0$ opposed the defendant,s otion for reconsideration of

the order disissin" appeal. &4 n 2a) &1$ 1/'0$ the trial court reconsidered its previous order disissin" the appeal

and approved the defendant,s record on appeal. & n 2a) *0$ 1/'0$ the defendant received a cop) of a notice fro

the Clerk of Court dated 2a) &'$ 1/'0$ inforin" the defendant that the record on appeal filed +) the defendant was

forwarded to the Clerk of the Court of Appeals. &'

n une 1$ 1/'0 Arue"o filed a otion to set aside the !ud"ent rendered after he was declared in default reiteratin"

the sae "round previousl) advanced +) hi in his otion for relief fro the order of default. &3 @pon opposition of

the plaintiff filed on une *$ 1/'0$ &8 the trial court denied the defendant,s otion to set aside the !ud"ent +)

default in an order of une 11$ 1/'0. &/ n une &0$ 1/'0$ the defendant filed his notice of appeal fro the order of

the court den)in" his otion to set aside the !ud"ent +) default$ his appeal +ond$ and his record on appeal. #he

defendant,s record on appeal was approved +) the trial court on une &$ 1/'0. *0 #hus$ the defendant had two

appeals with the Court of AppealsE H1= Appeal fro the order of the lower court den)in" his otion to set aside the

order of default docketed as CAFG.R. No. &33*4FRE H&= Appeal fro the order den)in" his otion to set aside the

!ud"ent +) default docketed as CAFG.R. No. &3/40FR.

(n his +rief$ the defendantFappellant assi"ned the followin" errors- chanro+1es virtual 1awli+rar)


52/54

7N?AN# 9AS (N ?7>A@#.

7N?AN# (N ?7>A@# A#5@G5 A# #57

#(27 #57R7 9AS AR7A? N >(7 AN ANS97R % 5(2 9(#5@# >(RS# ?(SPS(NG > SA(? ANS97R (N AN

APPRPR(A#7 AC#(N.

7N?AN#,S P7#(#(N >R R7(7> > R?7R > ?7>A@# AN? >R2

@?G27N# % ?7>A@# AGA(NS# ?7>7N?AN#.< *1

(t has +een held that to entitle a part) to relief fro a !ud"ent taken a"ainst hi throu"h his istake$ inadvertence$

surprise or ecusa+le ne"lect$ he ust show to the court that he has a eritorious defense. *& (n other words$ in

order to set aside the order of default$ the defendant ust not onl) show that his failure to answer was due to fraud$

accident$ istake or ecusa+le ne"li"ence +ut also that he has a eritorious defense.

#he record discloses that Arue"o received a cop) of the coplaint to"ether with the suons on ?ece+er &$ 1/'0E

that on ?ece+er 13$ 1/'0$ the last da) for filin" his answer$ Arue"o filed a otion to disissE that on ?ece+er &&$

1/'0 the lower court disissed the coplaintE that on anuar) &*$ 1/'0$ the plaintiff filed a otion for

reconsideration and on 2arch 3$ 1/'0$ actin" upon the otion for reconsideration$ the trial court issued an order

settin" aside the order of disissalE that a cop) of the order was received +) the defendant on 2arch 11$ 1/'0 at

-00 o,clock in the afternoon as shown in the affidavit of the deput) sheriffE and that on the followin" da)$ 2arch 1&$

1/'0$ the defendant filed his answer to the coplaint. cralawnad

#he failure then of the defendant to file his answer on the last da) for pleadin" is ecusa+le. #he order settin" aside

the disissal of the coplaint was received at -00 o,clock in the afternoon. (t was therefore ipossi+le for hi to

have filed his answer on that sae da) +ecause the courts then held office onl) up to -00 o,clock in the afternoon.

2oreover$ the defendant iediatel) filed his answer on the followin" da).

5owever$ while the defendant successfull) proved that his failure to answer was due to ecusa+le ne"li"ence$ he has

failed to show that he has a eritorious defense.

#he defendant does not have a "ood and su+stantial defense. ?efendant Arue"o,s defenses consist of the followin"- chanro+1esvirtual 1

li+rar)

a= #he defendant si"ned the +ills of echan"e referred to in the plaintiff ,s coplaint in a representative capacit)$ as

the then President of the Philippine 7ducation >oundation Copan)$ pu+lisher of


53/54

o+li"or$ to add to the securit) of said plaintiff +ank. #he reason for this stateent is that unlike real +ills of echan"e$

where pa)ent of the face value is advanced to the drawer onl) upon acceptance of the sae +) the drawee$ in the

case in :uestion$ pa)ent for the supposed +ills of echan"e were ade +efore acceptanceE so that in effect$

althou"h these docuents are la+elled +ills of echan"e$ le"all) the) are not +ills of echan"e +ut ere instruents

evidencin" inde+tedness of the drawee who received the face value thereof$ with the defendant as onl) additional

securit) of the sae. **

#he first defense of the defendant is that he si"ned the supposed +ills of echan"e as an a"ent of the Philippine7ducation >oundation Copan) where he is president. Section &0 of the Ne"otia+le (nstruents aw provides that

R7$ the order appealed fro in Civil Case No. 4&0'' of the Court of >irst (nstance of 2anila den)in" the

petition for relief fro the !ud"ent rendered in said case is here+) affired$ without pronounceent as to costs.


54/54

S R?7R7?.

#eehankee$ 2akasiar$ Guerrero and 2elencioF5errera$JJ.$ concur.

negotiable instruments law cases

Documents

Transcript of negotiable instruments law cases