Section 1

1. PHILIPPINE EDUCATION CO., INC., vs Soriano, 39 SCRA 587

Philippine Education Co. Inc. v. Soriano [G.R. No.

L-22405. June 30, 1971]
24MAR
FACTS
Enrique Montinola sought to purchase from the Manila Post Office ten (10) money orders each payable to
E.P. Montinola. After the postal teller had made out money orders, Montinola offered to pay for them with
a private checks were not generally accepted in payment of money orders, the teller advised him to see
the Chief of the Money Order Division, but instead of doing so, Montinola managed to leave building with
his own check and the ten(10) money orders without the knowledge of the teller. Upon discovery of the
disappearance of the unpaid money orders, an urgent message was sent to all postmasters, and the
following day notice was likewise served upon all banks, instructing them not to pay anyone of the money
orders aforesaid if presented for payment. The Bank of America received a copy of said notice three days
later. It debited appellant’s account with the same amount and gave it advice thereof by means of a debit
memo.

ISSUE
Whether or not postal money orders are negotiable instruments.

RULING
NO. Postal money orders are not negotiable instruments. Our postal statutes were patterned after
statutes in force in the United States. For this reason, ours are generally construed in accordance with the
construction given in the United States to their own postal statutes, in the absence of any special reason
justifying a departure from this policy or practice. The weight of authority in the United States is that postal
money orders are not negotiable instruments, the reason behind this rule being that, in establishing and
operating a postal money order system, the government is not engaging in commercial transactions but
merely exercises a governmental power for the public benefit.It is to be noted in this connection that some
of the restrictions imposed upon money orders by postal laws and regulations are inconsistent with the
character of negotiable instruments. For instance, such laws and regulations usually provide for not more
than one endorsement; payment of money orders may be withheld under a variety of circumstances.

2. Caltex vs CA, 212 SCRA 448

 CALTEX V. CA- Negotiable Instruments
12 SCRA 448
FACTS:

Security bank issued Certificates of Time Deposits to Angel dela Cruz.  The same were
given by Dela Cruz to petitioner in connection to his purchase of fuel products of the
latter.  On a later date, Dela Cruz approached the bank manager,  communicated  the 
loss  of  the  certificates  and  requested  for  a reissuance.    Upon  compliance  with 
some  formal  requirements,  he  was issued replacements.  Thereafter, he secured a
loan from the bank where he  assigned  the  certificates  as  security.    Here  comes 
the  petitioner, averred  that  the  certificates  were  not  actually  lost  but  were  given 
as security for payment for fuel purchases.  The bank demanded some proof of  the 
agreement  but  the  petitioner  failed  to  comply.    The  loan  matured and the time
deposits were terminated and then applied to the payment of the  loan.    Petitioner 
demands  the  payment  of  the  certificates  but  to  no avail.  
 
SECURITY BANK
AND TRUST COMPANY
6778 Ayala Ave., Makati No. 90101
Metro Manila, Philippines
SUCAT OFFICEP 4,000.00
CERTIFICATE OF DEPOSIT
Rate 16%
 
Date of Maturity FEB. 23, 1984 FEB 22, 1982, 19____
 
This is to Certify that B E A R E R has deposited in this Bank the sum of
PESOS: FOUR THOUSAND ONLY, SECURITY BANK SUCAT OFFICE P4,000 &
00 CTS Pesos, Philippine Currency, repayable to said depositor 731 days.
after date, upon presentation and surrender of this certificate, with interest
at the rate of 16% per cent per annum.
 
(Sgd. Illegible) (Sgd. Illegible)
 
—————————— ———————————
 
AUTHORIZED SIGNATURES
HELD:

CTDs are negotiable instruments. The documents provide that the amounts deposited 
shall  be  repayable  to  the  depositor.  And  who,  according  to  the document, is the
depositor? It is the "bearer." The documents do not say that the depositor is Angel de la
Cruz and that the amounts deposited are
repayable specifically to him. Rather, the amounts are to  be repayable to the  bearer 
of  the  documents  or,  for  that  matter,  whosoever  may  be  the bearer at the time of
presentment.
 
If  it  was  really  the  intention  of  respondent  bank  to  pay  the  amount  to Angel de la
Cruz only, it could have with facility so expressed that fact in clear and categorical terms
in the documents, instead of having the word "BEARER" stamped on the space
provided for the name of the depositor in each  CTD.  On  the  wordings  of  the 
documents,  therefore,  the  amounts deposited  are  repayable  to  whoever  may  be 
the  bearer  thereof.  Thus, petitioner's aforesaid witness merely declared that Angel de
la Cruz is the
depositor  "insofar  as  the  bank  is  concerned,"  but  obviously  other  parties not 
privy  to  the  transaction  between  them  would  not  be  in  a  position  to know that the
depositor is not the bearer stated in the  CTDs. Hence, the situation  would require any
party dealing with the CTDs to go behind the
plain  import  of  what  is  written  thereon  to  unravel  the  agreement  of  the parties 
thereto  through  facts  aliunde.  This  need  for  resort  to  extrinsic evidence  is  what 
is  sought  to  be  avoided  by  the  Negotiable  Instruments Law  and  calls  for  the 
application  of  the  elementary  rule  that  the
interpretation of obscure words or stipulations in a contract shall not favor the party who
caused the obscurity.
 
The  next  query  is  whether  petitioner  can  rightfully  recover  on  the  CTDs. This
time, the answer is in the negative. The records reveal that Angel de la Cruz, whom
petitioner chose not to implead in this suit for reasons of its own, delivered the CTDs
amounting to P1,120,000.00 to petitioner without informing   respondent   bank  
thereof   at   any   time.   Unfortunately   for petitioner,  although  the  CTDs  are  bearer 
instruments,  a  valid  negotiation thereof for the true purpose and agreement between it
and De la Cruz, as ultimately  ascertained,  requires  both  delivery  and  indorsement. 
For, although  petitioner  seeks  to  deflect  this  fact,  the  CTDs  were  in  reality
delivered to it as a security for De la Cruz' purchases of its fuel products. Any doubt as
to whether the CTDs were delivered as payment for the fuel products or as a security
has been dissipated and resolved in favor of the latter  by  petitioner's   own  authorized 
and  responsible  representative himself.
 
In  a  letter  dated  November  26,  1982  addressed  to  respondent  Security Bank, 
J.Q.  Aranas,  Jr.,  Caltex  Credit  Manager,  wrote:  ".  .  .  These certificates  of 
deposit  were  negotiated  to  us  by  Mr.  Angel  dela  Cruz  to guarantee  his 
purchases  of  fuel  products."  This  admission  is  conclusive
upon  petitioner,  its  protestations  notwithstanding.  Under  the  doctrine  of estoppel, 
an  admission  or  representation  is  rendered  conclusive  upon  the person making it,
and cannot be denied or disproved as against the person relying thereon

Negotiable Instruments Case Digest: Caltex

(Phils.) Inc. V. CA And Security Bank And
Trust Co. (1992)
G.R. No. 97753 August 10, 1992

Lessons Applicable: Requisites of negotiability to antedated and postdated instruments

(Negotiable Instrument Law)

FACTS:

 Security Bank and Trust Company (Security Bank), a commercial banking

institution, through its Sucat Branch issued 280 certificates of time deposit (CTDs)
in favor of Angel dela Cruz who deposited with Security Bank the total amount of
P1,120,000

 Angel delivered the CTDs to Caltex for his purchase of fuel products 
 March 18, 1982: Angel informed Mr. Tiangco, the Sucat Branch Manager that he
lost all CTDs, submitted the required Affidavit of Loss and received the replacement

 March 25, 1982: Angel dela Cruz negotiated and obtained a loan from Security
Bank in the amount of P875,000 and executed a notarized Deed of Assignment of
Time Deposit

 November, 1982: Mr. Aranas, Credit Manager of Caltex went to the Sucat branch
to verify the CTDs declared lost by Angel 

 November 26, 1982: Security Bank received a letter from Caltex formally
informing it of its possession of the CTDs in question and of its decision to pre-
terminate the same.

 December 8, 1982: Caltex was requested by Security Bank to furnish:

 a copy of the document evidencing the guarantee agreement with Mr.

Angel dela Cruz

 the details of Mr. Angel's obligation against which Caltex proposed to

apply the time deposits 

 Security Bank rejected Caltex demand for payment bec. it failed to furnish a
copy of its agreement w/ Angel

 April 1983, the loan of Angel dela Cruz with Security Bank matured 

 August 5, 1983: CTD were set-off w/ the matured loan

 Caltex filed a complaint praying the bank to pay 1,120,000 plus 16% interest

 CA affirmed RTC to dismiss complaint

ISSUE: 

1. W/N the CTDs are negotiable 

2. W/N Caltex as holder in due course can rightfully recover on the CTDs

HELD: Petition is Denied and appealed decision is affirmed. 

1. YES.  

Section 1 Act No. 2031, otherwise known as the Negotiable Instruments Law,
enumerates the requisites for an instrument to become negotiable, viz:

(a) It must be in writing and signed by the maker or drawer;

(b) Must contain an unconditional promise or order to pay a sum certain in money;

(c) Must be payable on demand, or at a fixed or determinable future time;

(d) Must be payable to order or to bearer; and  -check

(e) Where the instrument is addressed to a drawee, he must be named or otherwise

indicated therein with reasonable certainty.

 The documents provide that the amounts deposited shall be repayable to the
depositor

 depositor = bearer
 If it was really the intention of respondent bank to pay the amount
to Angel de la Cruz only, it could have with facility so expressed that fact in clear
and categorical terms in the documents, instead of having the word "BEARER"
stamped on the space provided for the name of the depositor in each CTD

 negotiability or non-negotiability of an instrument is determined from the

writing, that is, from the face of the instrument itself

2. NO. 

 although the CTDs are bearer instruments, a valid negotiation thereof for the
true purpose and agreement between it and De la Cruz, as ultimately ascertained,
requires both delivery and indorsement

 CTDs were in reality delivered to it as a security for De la Cruz' purchases

of its fuel products

 There was no negotiation in the sense of a transfer of the legal title to the
CTDs in favor of petitioner in which situation, for obvious reasons, mere delivery of
the bearer CTDs would have sufficed. 

 Where the holder has a lien on the instrument arising from contract, he is
deemed a holder for value to the extent of his lien. 

 As such holder of collateral security, he would be a pledgee but the

requirements therefor and the effects thereof, not being provided for by the
Negotiable Instruments Law, shall be governed by the Civil Code provisions on
pledge of incorporeal rights:

Art. 2095. Incorporeal rights, evidenced by negotiable instruments, . . . may also be

pledged. The instrument proving the right pledged shall be delivered to the creditor,
and if negotiable, must be indorsed.
Art. 2096. A pledge shall not take effect against third persons if a description of the
thing pledged and the date of the pledge do not appear in a public instrument.

Art. 1625. An assignment of credit, right or action shall produce no effect as against
third persons, unless it appears in a public instrument, or the instrument is recorded in
the Registry of Property in case the assignment involves real property.

3. Metro bank vs CA, 194 scra 169

METROPOLITAN BANK V. CA  
194 SCRA 169
 

FACTS:
Gomez  opened  an  account  with  Golden  Savings  bank  and  deposited  38 treasury 
warrants.    All  these  warrants  were  indorsed  by  the  cashier  of Golden  Savings, 
and  deposited  it  to  the  savings  account  in  a  Metrobank branch.    They  were 
sent  later  on  for  clearing  by  the  branch  office  to  the principal  office  of 
Metrobank,  which  forwarded  them  to  the  Bureau  of Treasury  for  special 
clearing.    On  persistent  inquiries  on  whether  the warrants have been cleared, the
branch manager allowed withdrawal of the warrants,  only  to  find  out  later  on  that 
the  treasury  warrants  have  been
dishonored.   
 

HELD:
The  treasury  warrants  were  not  negotiable  instruments.    Clearly,  it  is indicated 
that  it  was  non-negotiable  and  of  equal  significance  is  the indication  that  they 
are  payable  from  a  particular  fund,  Fund  501.    This indication  as  the  source  of 
payment  to  be  made  on  the  treasury  warrant
makes  the  promise  to  pay  conditional  and  the  warrants  themselves  non-
negotiable.
 
Metrobank then cannot contend that by indorsing the warrants in general, GS assumed
that they were genuine and in all respects what they purport it to be, in accordance to
Section 66 of the NIL.  The simple reason is that the  law  isn’t  applicable  to  the  non-
negotiable  treasury  warrants.    The indorsement  was  made  for  the  purpose  of 
merely  depositing  them  with Metrobank  for  clearing.    It  was  in  fact  Metrobank 
which  stamped  on  the back of the warrants: “All prior indorsements and/or lack of
endorsements guaranteed…”

4. BPI FAMILY SAVINGS BANK, INC. AND HEDZELITO NOEL BAYABORDA, petitioners, vs. ROMEO
MANIKAN, GR No. 1498789

FIRST DIVISION

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

BPI FAMILY SAVINGS BANK, INC. and HEDZELITO NOEL

BAYABORDA, Petitioners, v. ROMEO MANIKAN, Respondent.

DECISION

VITUG, J.:

Petitioners seek a review of the decision of the Court of Appeals in C.A. G.R. SP. No.
48011 which has affirmed the judgment of the Regional Trial Court, Branch 26, of Iloilo
City, dismissing the complaint of petitioners for mandamus and ordering them to pay
respondent the sum of P30,000.00 by way of attorney’s fees. cralaw : red

It would appear that respondent, being the City Treasurer of Iloilo City, assessed
petitioner bank business taxes for the years 1992 and 1993. On 26 January 1994, the
bank issued two manager’s checks payable to the City Treasurer of Iloilo City, the first,
Manager’s Check No. 010649 for P462,270.60, was to cover the business tax for the
year 1992, and the second, Manager’s Check No. 010650 in the amount of
P482,988.45, was to settle the business tax for the year 1993. Hedzelito Bayaborda,
then manager of the bank’s Iloilo Branch, instructed an employee, Edmund Sabio, to
deliver the two manager’s checks to the Secretary to the City Mayor, a certain Toto
Espinosa, who, in turn, handed them over to his secretary, Leila Salcedo, for transmittal
to the City Treasurer. The value of the checks were eventually credited to the account
of the City Treasurer of Iloilo City. The checks, however, were not applied to satisfy the
tax liabilities of petitioner but of other taxpayers.

The misapplication of the proceeds of the checks came to the knowledge of respondent
City Treasurer who, thereupon, created a committee to look into the matter. The
investigation revealed that it was upon the representation of Leila Salcedo that the
manager’s checks were used to pay tax liabilities of other taxpayers and not those of
petitioner bank. Meanwhile, the bank, through counsel, made a demand on respondent
to issue official receipts to show that it had paid its business taxes for the years 1992
and 1993 covered by the diverted manager’s checks. When he refused to issue the
receipts requested, respondent was sued by petitioners for mandamus and damages.

The Regional Trial Court dismissed the complaint for mandamus and ruled that
petitioners had no clear legal right to demand the issuance of official receipts nor could
respondent, given the circumstances, be compelled to issue another set of receipts in
the name of the bank. The trial court further ordered petitioners to pay respondent the
sum of P30,000.00 by way of attorney’s fees.

The Court of Appeals, on appeal by petitioners, sustained the trial court in toto. chanrob1es virtua1 1aw 1ibrary

In their petition for review before this Court, petitioners urge a reversal of the decision
of the appellate court contending that —

"a) AN ACTION FOR MANDAMUS NECESSARILY INCLUDES INDEMNIFICATION FOR

DAMAGES AND IS ASSESSED ON A PUBLIC OFFICIAL’S PRIVATE CAPACITY, HENCE,
SUING A PUBLIC OFFICIAL IN HIS PRIVATE CAPACITY DOES NOT AS A MATTER OF
RIGHT ENTITLE HIM TO AN AWARD OF ATTORNEY’S FEES BY WAY OF COUNTERCLAIM.

b) THE RECEIPT BY THE CITY TREASURER’S OFFICE OF ILOILO OF THE FACE VALUE OF
THE TWO MANAGER’S CHECKS INTENDED FOR PAYMENT OF ITS BUSINESS TAXES FOR
THE YEAR 1992 AND 1993 ENTITLES IT TO THE ISSUANCE OF AN OFFICIAL RECEIPT
ENFORCEABLE BY A WRIT OF MANDAMUS." cralaw virtua1aw library

In order that a writ of mandamus may aptly issue, it is essential that, on the one hand,
the person petitioning for it has a clear legal right to the claim that is sought and that,
on the other hand, the respondent has an imperative duty to perform that which is
demanded of him. 1 Mandamus will not issue to enforce a right, or to compel
compliance with a duty, which is questionable or over which a substantial doubt exists.
The principal function of the writ of mandamus is to command and to expedite, not to
inquire and to adjudicate; thus, it is neither the office nor the aim of the writ to secure
a legal right but to implement that which is already established. Unless the right to the
relief sought is unclouded, mandamus will not issue. 2

The checks delivered by petitioner bank to Toto Espinosa were manager’s checks. A
manager’s check, like a cashier’s check, is an order of the bank to pay, drawn upon
itself, committing in effect its total resources, integrity and honor behind its issuance.
By its peculiar character and general use in commerce, a manager’s check or a
cashier’s check is regarded substantially to be as good as the money it represents. 3
By allowing the delivery of the subject checks to a person who is not directly charged
with the collection of its tax liabilities, the bank must be deemed to have assumed the
risk of a possible misuse thereof even as it appears to have fallen short of the diligence
ordinarily expected of it. The bank, of course, is not precluded from pursuing a right of
action against those who could have been responsible for the wrongdoing or who might
have been unjustly benefited thereby.

The award of attorney’s fees in favor of respondent City Treasurer, however, should be
deleted. Such an award, in the concept of damages under Article 2208 of the Civil
Code, demands factual and legal justifications. 4 While the law allows some degree of
discretion on the part of the courts in awarding attorney’s fees and expenses of
litigation, the use of that judgment, however, must be done with great care
approximating as closely as possible the instances exemplified by the law. Attorney’s
fees in the concept of damages are not recoverable against a party just because of an
unfavorable judgment. Repeatedly, it has been said that no premium should be placed
on the right to litigate. 5

WHEREFORE, the instant petition is partly granted. The appealed decision is affirmed
save for the award of attorney’s fees in favor of private respondent which is ordered
deleted. No costs. chanrob1es virtua1 1aw 1ibrary

SO ORDERED.

5. Borromeo vs Sun, 317 scra 176 (1999)

Borromeo vs. Sun

Borromeo vs Sun
G.R. No. 75908. October 22, 1999
PURISIMA, J

At bar is a Petition for review on Certiorari under Rule 45

of the Revised Rules of Court seeking to set aside the
Resolution of the then Intermediate Appellate Court,
which reversed its earlier Decision setting aside the
Decision of the former Court of the First Instance of
Rizal.
Facts: 

Amancio Sun brought before the then Court of the First

Instance of Rizal an action against Lourdes O. Borromeo
(in her capacity as corporate secretary), Federico O.
Borromeo and Federico O. Borromeo (F.O.B.), Inc., to
compel the transfer to his name in the books of F.O.B.,
Inc., shares of stock registered in the name of Federico
O. Borromeo, as evidenced by a Deed of Assignment.
Private respondent averred that all the shares of stock of
F.O.B. Inc. registered in the name of Federico O.
Borromeo belong to him, as the said shares were placed
in the name of Federico O. Borromeo 'only to give the
latter personality and importance in the business world.'
On the other hand, petitioner Federico O. Borromeo
disclaimed any participation in the execution of the Deed
of Assignment, theorizing that his supposed signature
thereon was forged. LL

The lower court of origin came out with a decision

declaring the questioned signature on subject Deed of
Assignment as the genuine signature of Federico O.
Borromeo. After considering the testimonies of the two
expert witnesses for the parties and after a careful and
judicious study and analysis of the questioned signature
as compared to the standard signatures. On appeal by
petitioners, the Court of Appeals adjudged as forgery the
controverted signature of Federico O. Borromeo.
Amancio Sun interposed a motion for reconsideration of
the said decision, contending that Segundo Tabayoyong,
petitioners' expert witness, is not a credible witness.
Acting on the aforesaid motion for reconsideration, the
Court of Appeals reconsidered its decision.

Issue: WON the signature of Frederico O. Borromeo in the

Deed of Assignments is a genuine signature.

Held:

Pertinent records reveal that the subject Deed of

Assignment is embodied in blank form for the assignment
of shares with authority to transfer such shares in the
books of the corporation. It was clearly intended to be
signed in blank to facilitate the assignment of shares
from one person to another at any future time. This is
similar to Section 14 of the Negotiable Instruments Law
where the blanks may be filled up by the holder, the
signing in blank being with the assumed authority to do
so. Indeed, as the shares were registered in the name of
Federico O. Borromeo just to give him personality and
standing in the business community, private respondent
had to have a counter evidence of ownership of the
shares involved. Thus, the execution of the deed of
assignment in blank, to be filled up whenever needed.
The same explains the discrepancy between the date of
the deed of assignment and the date when the signature
was affixed thereto.

While it is true that the 1974 standard signature of

Federico O. Borromeo is to the naked eye dissimilar to
his questioned signature circa 1954-1957, which could
have been caused by sheer lapse of time, Col. Jose
Fernandez, respondent's expert witness, found the said
signatures similar to each other after subjecting the
same to stereomicroscopic examination and analysis
because the intrinsic and natural characteristic of
Federico O. Borromeo's handwriting were present in all
the exemplar signatures used by both Segundo
Tabayoyong and Col. Jose Fernandez.
6. HSBC vs CIR, GR No. 166018

HSBC vs. CIR, G.R. No. 166018, June 04, 2014

 

Full text 

Facts: HSBC performs custodial services on behalf of its investor-clients with respect to

their passive investments in the Philippines, particularly investments in shares of stocks
in domestic corporations. As a custodian bank, HSBC serves as the collection/payment
agent.

HSBC’s investor-clients maintain Philippine peso and/or foreign currency accounts,

which are managed by HSBC through instructions given through electronic messages.
The said instructions are standard forms known in the banking industry as SWIFT, or
“Society for Worldwide Interbank Financial Telecommunication.”

Pursuant to the electronic messages of its investor-clients, HSBC purchased and paid
Documentary Stamp Tax (DST) from September to December 1997 and also from
January to December 1998 amounting to P19,572,992.10 and P32,904,437.30,
respectively.

BIR, thru its then Commissioner, issued BIR Ruling to the effect that instructions or
advises from abroad on the management of funds located in the Philippines which do
not involve transfer of funds from abroad are not subject to DST. A documentary stamp
tax shall be imposed on any bill of exchange or order for payment purporting to be
drawn in a foreign country but payable in the Philippines.

a. While the payor is residing outside the Philippines, he maintains a local and foreign
currency account in the Philippines from where he will draw the money intended to pay
a named recipient. The instruction or order to pay shall be made through an electronic
message.

Consequently, there is no negotiable instrument to be made, signed or issued by the

payee.

b. Such electronic instructions by the non-resident payor cannot be considered as a

transaction per se considering that the same do not involve any transfer of funds from
abroad or from the place where the instruction originates.

Under the Documentary Stamp Tax Law, the mere withdrawal of money from a bank
deposit, local or foreign currency account, is not subject to DST, unless the account so
maintained is a current or checking account, in which case, the issuance of the check or
bank drafts is subject to the documentary stamp tax.
c. Likewise, the receipt of funds from another bank in the Philippines for deposit to the
payee’s account and thereafter upon instruction of the non-resident depositor-payor,
through an electronic message, the depository bank to debit his account and pay a
named recipient shall not be subject to documentary stamp tax.

With the above BIR Ruling as its basis, HSBC filed on an administrative claim for the
refund of allegedly representing erroneously paid DST to the BIR

As its claims for refund were not acted upon by the BIR, HSBC subsequently brought
the matter to the CTA, which favored HSBC and ordered payment of refund or issuance
of tax credit.

However, the CA reversed decisions of the CTA and ruled that the electronic messages
of HSBC’s investor-clients are subject to DST.

a. DST is levied on the exercise by persons of certain privileges conferred by law for the
creation, revision, or termination of specific legal relationships through the execution of
specific instruments, independently of the legal status of the transactions giving rise
thereto.

ISSUE: Whether or not the electronic messages are considered transactions  pertaining

to negotiable instruments that warrant the payment of DST.

HELD:  NO.

The Court agrees with the CTA that the DST under Section 181 of the Tax Code is
levied on the acceptance or payment of “a bill of exchange purporting to be drawn in a
foreign country but payable in the Philippines” and that “a bill of exchange is an
unconditional order in writing addressed by one person to another, signed by the person
giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or
determinable future time a sum certain in money to order or to bearer.”

The Court further agrees with the CTA that the electronic messages of HSBC’s investor-
clients containing instructions to debit their respective local or foreign currency accounts
in the Philippines and pay a certain named recipient also residing in the Philippines is
not the transaction contemplated under Section 181 of the Tax Code as such
instructions are “parallel to an automatic bank transfer of local funds from a savings
account to a checking account maintained by a depositor in one bank.” The Court
favorably adopts the finding of the CTA that the electronic messages “cannot be
considered negotiable instruments as they lack the feature of negotiability,
which, is the ability to be transferred” and that the said electronic messages are
“mere memoranda” of the transaction consisting of the “actual debiting of the
[investor-client-payor’s] local or foreign currency account in the Philippines” and
“entered as such in the books of account of the local bank,” HSBC.
The instructions given through electronic messages that are subjected to DST in these
cases are not negotiable instruments as they do not comply with the requisites of
negotiability under Section 1 of the Negotiable Instruments Law.

The electronic messages are not signed by the investor-clients as supposed drawers of
a bill of exchange; they do not contain an unconditional order to pay a sum certain in
money as the payment is supposed to come from a specific fund or account of the
investor-clients; and, they are not payable to order or bearer but to a specifically
designated third party. Thus, the electronic messages are not bills of exchange. As
there was no bill of exchange or order for the payment drawn abroad and made payable
here in the Philippines, there could have been no acceptance or payment that will
trigger the imposition of the DST under Section 181 of the Tax Code.

7. National Bank vs Manila Oil Refining, 43 PHIL 444 When payable to bearer

NEGOTIABLE INSTRUMENTS LAW

PNB VS. MANILA OIL REFINING 43 PHIL 444FACTS:
Manila Oil has issued a promissory note in favor of National Bank
whichi n c l u d e d   a   p r o v i s i o n   o n   a   c o n f e s s i o n
o f   j u d g m e n t   i n   c a s e   o f   f a i l u r e   t o   p a y obligation. Indeed, Manila Oil has failed to
pay on demand. his prompted thebank to file a case in court, wherein an attorney associated
with them entered hisappearance for the defendant. o this, !NB objected.
Written Instrument as follows:
"On demand after date we promise to pay to the order of the Philippine National Bank
sixty-onethousand only pesos at Philippine National Bank, Manila, P. I."Without
defalation, !alue reei!ed and do here#y authori$e any attorney in the
PhilippineIslands, in ase this note #e not paid at maturity, to appear in my name and
onfess %ud&ment for the a#o!e sum with interest, ost of suit and attorney's fees of
ten ()*+ per ent for olletion, arelease of all errors and wai!er of all ri&hts to
inuisition and appeal, and to the #enefit of all lawsexemptin& property, real or
personal, from le!y or sale. alue reei!ed. No. ue "M/NI0/ OI0123ININ4 5 B6-
P1O789: 8o., IN8.,(:&d.+ "l82N92 :O920O,"Mana&er."M/NI0/ OI0 123ININ4 5 B6-
P1O789: 8o., IN8.,(:&d.+ "1/3/20 0OP2;,"9reasurer."
ISSUE:
"hether or not, in the absence of e#press legislative sanction, such warrants of attorney
are valid.
RULING:
he judgment appealed from is set aside, and the case is remanded to the lower court for further
proceedings in accordance with this decision.he contract, in so far as it goes beyond the usual
provisions of a note, is void asagainst the public policy of the state, as such public policy is
found e#pressed inour laws and decisions. $uch agreements are ini%uitous to
the uttermost ands h o u l d
b e   p r o m p t l y   c o n d e m n e d   b y   t h e   c o u r t s ,   u n t i l   s u c h   t i m e   a s   t h e y   m a y rec
eive e#press statutory recognition.$ u c h
warrants of attorn! ar "o#$ as a%a#nst &'()#* &o)#*!
, because
theye n l a r g e   t h e   f i e l d   f o r   f r a u d ,   b e c a u s e   u n d e r   t h e s e   i n s t r u m e n t s   t h e  
promissor b a r g a i n s   a w a y   h i s   r i g h t   t o   a   d a y   i n   c o u r t ,   a n d   b e c a u
s e   t h e   e f f e c t   o f   t h e instrument is to strike down the right of appeal 
accorded by statute. her e c o g n i t i o n   o f   s u c h   a   f o r m   o f   o b l i g a t i o n  
w o u l d   b r i n g   a b o u t   a   c o m p l e t e reorgani&ation of commercial customs and practices,
with reference to short'termobligations. It can readily be seen that judgement notes, instead
of resulting tothe advantage of commercial life in the !hilippines might be the source of
abuse

NATIONAL BANK V. MANILA OIL REFINING  

43 PHIL 444
 

FACTS:
Manila  Oil  has  issued  a  promissory  note  in  favor  of  National  Bank  which included a provision on a
confession of judgment in case of failure to pay obligation.  Indeed, Manila Oil has failed to pay on
demand.  This prompted the bank to file a case in court, wherein an attorney associated with them
entered his appearance for the defendant.  To this the defendant objected.   
 

HELD:
Warrants   of   attorney   to   confess   judgment   aren’t   authorized   nor contemplated  by  our  law.   
Provisions  in  notes  authorizing  attorneys  to appear and confess judgments against makers should not
be recognized in our jurisdiction by implication and should only be considered as valid when given
express legislative sanction.  

8. Ang Tek Lian vs CA, 87 Phil 383 Negotiable Instruments signed in blank

ANG TEK LIAN V. CA  

87 PHIL 383
 

FACTS:
Knowing he had insufficient funds, Ang Tek Lian issued a check for P4000, payable  to  cash.    This 
was  given  to  Lee  Hua  Hong  in  exchange  for  cash.  Upon  presentment  of  the  check,  it  was
dishonored  for  having  insufficient funds.  It is argued that the check, being payable to cash, wasn’t
indorsed by the defendant, and thus, isn’t guilty of the crime charged.
 

HELD:
A  check  drawn  to  the  order  of  “cash”  is  payable  to  bearer,  and  the  bank may  pay  it  to  the 
person  presenting  it  for  payment  without  the  drawer’s indorsement.  Of course, if the bank is not sure
of the bearer’s identity or financial  solvency,  it  has  the  right  to  demand  for  identification  and/or
assurance  against  possible  complications—for  instance,  forgery  of  the drawer’s  signature,  loss  of 
the  check  by  the  rightful  owner,  raising  the amount payable, etc.  The bank therefore, requires for its
protection that the  indorsement  of  the  drawer—or  some  other  persons  known  to  it—be obtained.   
A  check  payable  to  bearer  is  authority  for  payment  to  the holder.  Where a check is in the ordinary
form and is payable to bearer so that  no  indorsement  is  required,  a  bank  to  which  it  is  presented 
for payment need not have the holder identified, and is not negligent in failing to do so.  

ISSUE:WON an instrument payable to the order of cash is a bearer instrument

.RULING:Yes. Under the Negotiable Instruments Law, a check drawn payable to

the order

9. Quirino Gonzales Logging vs CA, GR No. 126568 Section 14, 15 and 16

EMORY AID:
Petitioners executed a promissory note in favour to respondent Bank in orderto secure
certain advances from the Bank in connection with its exportationof logs. Petitioners
defaulted in the payment of the notes. They signed the promissory notes in
BlankI n c o m p l e t e N I , w h e n d e l i v e r e d , t h e p e r s o n i n p o s s e s s i o n o f s u c h
has the
prima facie authority to fill in the blanks
, to complete the NI. It has alsot h e   a u t h o r i t y   t o   f i l l   u p   f o r
any amount,
and in accordance with the
authority given
and within a
reasonable time
.
TITLE:
Quirino Gonzales Logging vs. CA
FACTS:
Spouses Quirino and Eufemia Gonzales of the Quirino Gonzales Log
g i n g Concessionaire (QGLC) executed promissory notes in favour to
respondentR e p u b l i c   P l a n t e r s   B a n k   t o   s e c u r e   c e r t a i n   a d v a n c
e s   f r o m   t h e   B a n k   i n connection with its exportation of logs. The notes were
payable 30 days afterdate and provided for the solidary liability of petitioners as well as
attorney’sf e e s   a t   t e n   p e r c e n t   o f   t h e   t o t a l   a m o u n t   d u e   i n   t h e   e v e n t 
o f   t h e i r   n o n - payment at maturity.Later on, petitioner QGLC has long been
defaulted in the payment of theirobligations with the promissory notes they
executed. The Bank then filed acomplaint against the petitioner for “sum
of money.”H o w e v e r ,   p e t i t i o n e r s   s e e k   t o   e v a d e   l i a b i l i t y   u n d e r   t h e  
B a n k ’ s   c a u s e s   o f   action by claiming that they Gonzales signed the
promissory notes inblank 
and that they had not received the value of said notes.
ISSUE:
W/N the petitioners would be held liable for the payment of the
promissorynotes they executed despite of the fact that they singed the notes in blank.
RULING:
 Yes, because as
Section 14
of the Negotiable Instruments Law allows
the
 prima facie
authority of the person in possession of negotiable instruments
, such as the notes herein,
to fill in the blanks
, to completean incomplete instrument.

10. Development Bank of Rizal vs Sima Wei, 219 scra 736

11. Patrimonio vs CA, GR No. 187769 Liability (Section 20)

12. PBC vs Aruego, 102 scra 530 Transfer and negotiability

13. Salas vs CA, GR No. 76788 Does a payee of a check have a cause of action against a drawee bank if
it is dishonored?

14. HSB vs Catalan, 440 SCRA 498 Section 23, forgery

15. Great Eastern Life Insurance vs HSBC, 43 Phil 678

16. National Bank vs National City Bank of New York, 63 Phil 710

17. 68 scra 29

18. Republic vs Ebrada, 65 scra 680

19. MWSS vs CA, 143 scra 157

20. Gempesaw vs CA, 218 scra 682

21. Ilusurio vs CA, GR No. 139130

22. Traders Royal vs RPN, GR No. 138510 Accomodations (Section 29)

23. Maulini vs Serrano, 28 Phil 640

24. Sadaya vs Sevilla, 19 scra 924

25. Crisologo Jose vs CA, 177 scra 594

26. Stell Co vs CA, 210 scra 596 Holder in due course

27. Ocampo vs Gatchalian, 3 scra 596

28. State Investment vs CA, 217 scra 32

29. Bataan Cigar vs CA, 230 scra 643

30. Yang vs CA, GR No. 138074

31. Dino vs Judal, GR No. 170912 Liability of a general indorsers

32. Metropol Financing vs Sambok Motors

33. Material Alteration (Section 125)

34. Metrobank vs 1st National City Bank, 118 scra 537

35. Republic Bank vs CA, 196 scra 100

36. PNB vs CA, GR No. 107508 Presentment for acceptance

37. Prudential Bank vs IAC, 216 scra 257 Presentment for payment

38. Luis Wong vs CA, GR No. 117857

39. Checks

40. Associated Bank vs CA, 208 scra 468

41. People vs Nitafan, GR No 75954 Prescription

42. Philip Commercial International vs CA, 350 scra 446

43. Papa vs Valencia, 248 scra 643 44. International Corporation Bank vs Sps. Gueco, 351 scra 516