Credit Transactions

New Pacific Timber & Supply Co, Inc vs Seneris, 101 SCRA 686;
GR No. L-41764, December 19, 1980, digested
Posted by Pius Morados on December 1, 2011
(Credit Transactions; Negotiable Instruments Check; Remedial Law
Judgments)
Doctrine:
1.

2.

creditor shall be equivalent to a delivery to the creditor in cash in an

amount equal to the amount credited to his account.
And Article 1249 of the New Civil Code which provides for payment
of debts in money shall be made in the currency stipulated or the
currency that is legal tender in the Philippines.
Likewise, respondent judge sustained the contention of the private
respondent that he has a right to refuse payment of the amount of P13,
130 in cash because the said amount is less than the judgment
obligation, which is a partial payment as provided in Article 1248 of
the New Civil Code.

Cashiers check deemed as cash.

Certification of check by drawee bank equivalent to
acceptance.

Facts: In a complaint for a collection of sum of money, petitioner

failed to comply with his judgment obligation in an amicable
settlement with the respondent. Hence, a writ of execution was issued
for the amount of P63, 140.00 pursuant to which, petitioners
properties were levied and was set for an auction sale. Prior to the set
date for the auction sale, petitioner deposited with the Clerk of Court,
CFI, in his capacity as Ex-Officio Sheriff, the sum of P63, 130.00 for
payment of the judgment obligation, consisting of P50, 000.00
Cashiers Check and P13,130.00 in cash.
Private respondent refused to accept the check as well as the cash
deposit and requested the scheduled auction sale. Respondent judge
uphold private respondents claim that he has the right to refuse
payment by means of a check and cited Section 63 of the Central Bank
Act:
Sec 63. Legal Character Checks representing deposit money do not
have legal tender power and their acceptance in payment of debts, both
public and private, is at the option of the creditor. Provided, however,
that a check which has been cleared and credited to the account of the

Petitioner filed an ex-parte motion for issuance of certificate of

satisfaction of judgment after his levied properties were all sold during
the auction sale. Petitioner question the order of the judge for denial of
the said motion alleging that said judge capriciously and whimsically
abused his discretion on the ground that there was already a full
satisfaction of the judgment before the auction sale was conducted.
Issue: WON there was a valid refusal to accept the payment of the
judgment obligation made by the petitioner consisting of P50, 000.00
in Cashiers Check and P13, 130.00 in cash.
Held: No. A cashiers check of the Equitable Bank Corporation is not
an ordinary check. It is a well-known and accepted practice in the
business sector that a Cashiers Check is deemed as cash.
Where a check is certified by the bank on which it is drawn, the
certification is equivalent to acceptance. By the certification of drawee
bank, the funds represented by the check are transferred from the
credit of the maker to that of the payee or holder, and for all intents
and purposes, the latter becomes the depositor of the drawee bank.
Said certification implies that the check is drawn upon sufficient funds
in the hands of the drawee that they have been set apart for its
satisfaction, that they shall be so applied whenever the check is
presented for payment. The object of certifying a check, as regards to
both parties, is to enable the holder to use it as money. When the

holder procures the check to be certified, the check operates as

an assignment of a part of the funds to the creditors. Certification of a
check is an exception to the rule enunciated under Sec 63 of the CB
Act.

and affirmed with modification by the CA, remained unsatisfied. PAL

opposed the motion, stating that it had already fully paid its obligation
to plaintiff through the issuance of checks payable to the deputy sheriff
who later did not appear with his return and instead absconded.

Considering that the whole amount deposited by the petitioner

consisting of Cashiers Check of P50, 000.00 and P13, 130.00 in cash
covers the judgment obligation of P63,000.00 as mentioned in the writ
of execution, then, we see no valid reason for the private respondent to
have refused acceptance of the payment of the obligation in his favor.

The CA denied the issuance of the alias writ for being premature. After
two months the CA granted her an alias writ of execution for the full
satisfaction of the judgment rendered, when she filed another motion.
Deputy Sheriff del Rosario is appointed special sheriff for enforcement
thereof.

Philippine Airlines, Inc. vs Court of Appeals, 181 SCRA 557, GR

No. 49188, January 30, 1990, digested

PAL filed an urgent motion to quash the alias writ of execution stating
that no return of the writ had as yet been made by Deputy Sheriff
Reyes and that judgment debt had already been fully satisfied by the
former as evidenced by the cash vouchers signed and received by the
executing sheriff.

Posted by Pius Morados on November 30, 2011

(Civil Procedure Alias Writ of Execution; Civil Law Payment;
Commercial Law Check)
THE FACTS:
Amelia Tan commenced a complaint for damages before the Court of
First Instance against Philippine Airlines, Inc. (PAL). The Court
rendered a judgment in favor of the former and against the latter.

Deputy Sheriff del Rosario served a notice of garnishment on the

depository bank of PAL, through its manager and garnished the latters
deposit. Hence, PAL brought the case to the Supreme Court and filed a
petition for certiorari.
THE ISSUES:
1.

PAL filed its appeal with the Court of Appeals (CA), and the appellate
court affirmed the judgment of the lower court with the modification
that PAL is condemned to pay the latter the sum of P25, 000.00 as
damages and P5, 000.00 as attorneys fee.
Judgment became final and executory and was correspondingly
entered in the case, which was remanded to the trial court for
execution. The trial court upon the motion of Amelia Tan issued an
order of execution with the corresponding writ in favor of the
respondent. Said writ was duly referred to Deputy Sheriff Reyes for
enforcement.
Four months later, Amelia Tan moved for the issuance of an alias writ
of execution, stating that the judgment rendered by the lower court,

2.

3.

WON an alias writ of execution can be issued without prior

return of the original writ by the implementing officer.
WON payment of judgment to the implementing officer as
directed in the writ of execution constitutes satisfaction of
judgment.
WON payment made in checks to the sheriff and under his
name is a valid payment to extinguish judgment of debt.

THE RULING:
1. Affirmative. Technicality cannot be countenanced to defeat the
execution of a judgment for execution is the fruit and end of the suit
and is very aptly called the life of the law. A judgment cannot be

rendered nugatory by unreasonable application of a strict rule of

procedure. Vested right were never intended to rest on the requirement
of a return. So long as judgment is not satisfied, a plaintiff is entitled to
other writs of execution.
2. Negative. In general, a payment, in order to be effective to
discharge an obligation, must be made to the proper person. Article
1240 of the Civil Code provides:
Payment made to the person in whose favor the obligation has been
constituted, or his successor in interest, or any person authorized to
receive it.
Under ordinary circumstances, payment by the judgment debtor in the
case at bar, to the sheriff should be valid payment to extinguish
judgment of debt.
However, under the peculiar circumstances of this case, the payment to
the absconding sheriff by check in his name did not operate as a
satisfaction of the judgment debt.
3. Negative. Article 1249 of the Civil Code provides:
The payment of debts in money shall be made in the currency
stipulated, and if it is not possible to deliver such currency, then in the
currency which is legal tender in the Philippines.
Unless authorized to do so by law or by consent of the obligee, a
public officer has no authority to accept anything other than money in
payment of an obligation under a judgment being executed. Strictly
speaking, the acceptance by the sheriff of the petitioners checks does
not, per se, operate as a discharge of the judgment of debt.
A check, whether managers check or ordinary check, is not legal
tender, and an offer of a check in payment of a debt is not a valid
tender or payment and may be refused receipt by the oblige or creditor.
Hence, the obligation is not extinguished.
THE TWIST: Payment in cash is logical, but it was not proper.

Payment in cash to the implementing officer may be deemed absolute

payment of judgment debt but the Court has never, in the least bit,
suggested that judgment debtors should settle their obligations by
turning over huge amounts of cash or legal tender to the executing
officers. Payment in cash would result in damage or endless litigations
each time a sheriff with huge amounts of cash in his hands decides to
abscond.
As a protective measure, the courts encourage the practice of payment
of check provided adequate controls are instituted to prevent wrongful
payment and illegal withdrawal or disbursement of funds.
However, in the case at bar, it is out of the ordinary that checks
intended for a particular payee are made out in the name of another.
The issuance of the checks in the name of the sheriff clearly made
possible the misappropriation of the funds that were withdrawn.
The Court of Appeals explained:
Knowing as it does that the intended payment was for the respondent
Amelia Tan, the petitioner corporation, utilizing the services of its
personnel who are or should be knowledgeable about the accepted
procedure and resulting consequences of the checks drawn,
nevertheless, in this instance, without prudence, departed from what is
generally observed and done, and placed as payee in the checks the
name of the errant Sheriff and not the name of the rightful payee.
Petitioner thereby created a situation which permitted the said Sheriff
to personally encash said checks and misappropriate the proceeds
thereof to his exclusive benefit. For the prejudice that resulted, the
petitioner himself must bear the fault
Having failed to employ the proper safeguards to protect itself, the
judgment debtor whose act made possible the loss had but itself to
blame.
Medel vs Court of Appeals, 299 SCRA 481; GR No. 131622,
November 27, 1998, digested
Posted by Pius Morados on November 30, 2011

(Credit Transactions Loans, Usury Law, Interest Rates)

Facts: Defendants obtained a loan from Plaintiff in the amount P50,
000.00, payable in 2 months and executed a promissory note. Plaintiff
gave only the amount of P47, 000.00 to the borrowers and retained P3,
000.00 as advance interest for 1 month at 6% per month.
Defendants obtained another loan from Defendant in the amount of
P90, 000.00, payable in 2 months, at 6% interest per month. They
executed a promissory note to evidence the loan and received only
P84, 000.00 out of the proceeds of the loan.
For the third time, Defendants secured from Plaintiff another loan in
the amount of P300, 000.00, maturing in 1 month, and secured by a
real estate mortgage. They executed a promissory note in favor of the
Plaintiff. However, only the sum of P275, 000.00, was given to them
out of the proceeds of the loan.
Upon maturity of the three promissory notes, Defendants failed to pay
the indebtedness.

payment of the amount of the first 3 loans with a 12% interest per
annum and 1% per month as penalty.
On appeal, Plaintiff-appellants argued that the promissory note, which
consolidated all the unpaid loans of the defendants, is the law that
governs the parties.
The Court of Appeals ruled in favor of the Plaintiff-appellants on the
ground that the Usury Law has become legally inexistent with the
promulgation by the Central Bank in 1982 of Circular No. 905, the
lender and the borrower could agree on any interest that may be
charged on the loan, and ordered the Defendants to pay the Plaintiffs
the sum of P500,000, plus 5.5% per month interest and 2& service
charge per annum , and 1% per month as penalty charges.
Defendants filed the present case via petition for review on certiorari.
Issue: WON the stipulated 5.5% interest rate per month on the loan in
the sum of P500, 000.00 is usurious.
Held: No.

Defendants consolidated all their previous unpaid loans totalling P440,

000.00, and sought from Plaintiff another loan in the amount of P60,
000.00, bringing their indebtedness to a total of P50,000.00. They
executed another promissory note in favor of Plaintiff to pay the sum
of P500, 000.00 with a 5.5% interest per month plus 2% service charge
per annum, with an additional amount of 1% per month as penalty
charges.
On maturity of the loan, the Defendants failed to pay the indebtedness
which prompt the Plaintiffs to file with the RTC a complaint for
collection of the full amount of the loan including interests and other
charges.
Declaring that the due execution and genuineness of the four
promissory notes has been duly proved, the RTC ruled that although
the Usury Law had beenrepealed, the interest charged on the loans
was unconscionable and revolting to the conscience and ordered the

A stipulated rate of interest at 5.5% per month on the P500, 000.00

loan is excessive, iniquitous, unconscionable and exorbitant, but it
cannot be considered usurious because Central Bank Circular No.
905 has expressly removed the interest ceilings prescribed by the
Usury Law and that the Usury Law is now legally inexistent.
Doctrine: A CB Circular cannot repeal a law. Only a law can
repeal another law.
Jurisprudence provides that CB Circular did not repeal nor in a way
amend the Usury Law but simply suspended the latters effectivity
(Security Bank and Trust Co vs RTC). Usury has been legally nonexistent in our jurisdiction. Interest can now be charged as lender and
borrower may agree upon.
Law: Article 2227, Civil Code

The courts shall reduce equitably liquidated damages, whether

intended as an indemnity or a penalty if they are iniquitous or
unconscionable.

(c)

That the property has not been distrained or taken for a tax assessment or a fine pursuant to law, or seized under a

Note: While the Usury Law ceiling on interest rates was lifted by the
CB Circular 905, nothing in the said circular could possibly be read
as granting carte blanche authority to lenders to raise interest rates to
levels which would either enslave their borrowers or lead to a
haemorrhaging of their assets (Almeda vs. CA, 256 SCRA 292
[1996]).

(d) The actual market value of the property.

writ of execution or preliminary attachment, or otherwise placed under custodialegis, or if so seized, that it is exempt from
such seizure or custody; and

The applicant must also give a bond, executed to the adverse party in double the value of the property as stated in the
affidavit aforementioned, for the return of the property to the adverse party if such return be adjudged, and for the
payment to the adverse party of such sum as he may recover from the applicant in the action.

The SC held that there is nothing in the afore-quoted provision which requires the applicant to make a prior demand on the
Navarro vs. Escobido, GR 153788, November 27, 2009
(Provisional Remedies: Replevin: Prior demand is not a condition precedent)

Facts: Private respondent (Karen Go) files a complaint with a prayer for the issuance of a writ of replevin against
petitioner (Navarro) for the seizure of 2 motor vehicles under lease agreement. Petitioner maintains among others in the

possessor of the property before he can file an action for a writ of replevin. Thus, prior demand is not a condition
precedent to an action for a writ of replevin.

Rivera vs. Vargas, GR 165895, June 5, 2009

(Procedural Remedies: Improper service of writ of replevin)

case at bar that the complaints were premature because no prior demand was made on him to comply with the provisions
of the lease agreements before the complaints for replevin were filed.

Facts: Petitioner avers that the writ of replevin was served upon and signed by the security guard on duty where the rockcrushing plant to be seized was located contrary to the sheriffs return stating that both the writ and the summons was

Issue: WON prior demand is a condition precedent to an action for a writ of replevin.

Held: No. Petitioner erred in arguing that prior demand is required before an action for a writ of replevin is filed since we
cannot liken a replevin action to an unlawful detainer.

For a writ of replevin to issue, all that the applicant must do is to file an affidavit and bond, pursuant to Section 2, Rule 60
of the Rules, which states:

served upon petitioner. Nine (9) days after the writ was served on the security guard, petitioner filed an answer to the
complaint accompanied by a prayer for the approval of her redelivery bond. The RTC, however, denied the redelivery
bond for having been filed beyond the five-day mandatory period prescribed in Sections 5 and 6 of Rule 60.

Petitioner argues in the case at bar via the petition on Rule 45 that the RTC committed grave abuse of discretion in
denying her counterbond on the ground that it was filed out of time. She contends that the mandatory five-day period did
not even begin to run in this case due to the improper service of the writ of replevin, contrary to Section 4 of Rule 60.

Sec. 2. Affidavit and bond.

Issue: WON the denial of counterbond filed beyond the 5 day mandatory period is erroneous considering the writ was
The applicant must show by his own affidavit or that of some other person who personally knows the facts:

improperly served.

(a)

Held: Yes. Before a final judgment, property cannot be seized unless by virtue of some provision of law. The Rules of

That the applicant is the owner of the property claimed, particularly describing it, or is entitled to the possession

thereof;

Court, under Rule 60, authorizes such seizure in cases of replevin. However, a person seeking a remedy in an action for
replevin must follow the course laid down in the statute, since the remedy is penal in nature. When no attempt is made to

(b)

That the property is wrongfully detained by the adverse party, alleging the cause of detention thereof according to

the best of his knowledge, information, and belief;

comply with the provisions of the law relating to seizure in this kind of action, the writ or order allowing the seizure is
erroneous and may be set aside on motion by the adverse party.

The process regarding the execution of the writ of replevin in Section 4 of Rule 60 is unambiguous: the sheriff, upon

writ of habeas corpus is the proper legal remedy to enable parents to regain the custody of a minor child even if the latter

receipt of the writ of replevin and prior to the taking of the property, must serve a copy thereof to the adverse party

be in the custody of a third person of his own free will.

(petitioner, in this case) together with the application, the affidavit of merit, and the replevin bond. The reasons are simple,
i.e., to provide proper notice to the adverse party that his property is being seized in accordance with the courts order
upon application by the other party, and ultimately to allow the adverse party to take the proper remedy consequent
thereto.

Service of the writ upon the adverse party is mandatory in line with the constitutional guaranty on procedural due process
and as safeguard against unreasonable searches and seizures.

In the case at bar since the writ was invalidly served, petitioner is correct in contending that there is no reckoning point
from which the mandatory five-day period shall commence to run.

The writ must satisfy proper service in order to be valid and effective: i.e. it should be directed to the officer who is
authorized to serve it; and it should be served upon the person who not only has the possession or custody of the property
involved but who is also a party or agent of a party to the action. Consequently, a trial court is deemed to have acted
without or in excess of its jurisdiction with respect to the ancillary action of replevin if it seizes and detains a personalty

Moncupa vs. Enrile , No. L-63345, January 30, 1986

(Special Proceedings Temporary release with involuntary restraints does not render the petition for writ of habeas
corpus moot and academic)

Facts: Petitioners were arrested and detained on the allegation that they were members of a subversive organization.
Petitioners filed a petition for a writ of habeas corpus.

Respondents filed a motion to dismiss after the petitioner was temporarily released from detention on the ground that the
petition for habeas corpus may be deemed moot and academic since the petitioner is free and no longer under the
respondents custody. Petitioner argues that his temporary release did not render the instant petition moot and academic
because of the restrictions imposed by the respondents which constitute an involuntary and illegal restraint on his freedom.

Issue: WON a petition for a writ of habeas corpus becomes moot and academic in view of the detained persons release
with restrictions.

on the basis of a writ that was improperly served, such as what happened in this case.
Held: No. Restraints attached to temporary release of a detained person warrant the Supreme Courts inquiry into the
Petitioners proper remedy should have been to file a motion to quash the writ of replevin or a motion to vacate the order
of seizure. Nevertheless, petitioners filing of an application for a redelivery bond, while not necessary, did not thereby
waive her right to question the improper service. The trial for the main action shall continue. Respondent may, however,
file a new application for replevin should he choose to do so.

Tijing vs. CA, 354 SCRA 17; GR No. 125901, March 8, 2001 (Special
Proceedings Habeas Adoption: Custody of a minor)

nature of the involuntary restraint and relieving him of such restraints as may be illegal. Reservation of the military in the
form of restrictions attached to the detainees temporary release constitutes restraints on the liberty of the detainee. It is not
physical restraint alone which is inquired into by the writ of habeas corpus. Temporary release of detainee from detention
with involuntary restraints does not render the petition for writ of habeas corpus moot and academic. It is available where
a person continue to be unlawfully denied of one or more of his constitutional freedoms, where there is denial of due
process, where the restraints are not merely involuntary but are necessary, and where a deprivation of freedom originally
valid has later become arbitrary.

Facts: Petitioners filed a petition for habeas corpus in order to recover their son from respondent and presented witnesses
to substantiate their petition. Respondent claimed on the other hand that she is the natural mother of the child. The trial
court held in favor of the petitioners and granted the petition for habeas corpus. On appeal, the CA reversed and set aside

BPI vs. IAC, 206 SCRA 408, February 21, 1992

the decision rendered by the trial court. The appellate court expressed its doubts on the propriety of the habeas corpus.

(Bank; Negligence; Meticulous Care in treatment of accounts)

Issue: WON habeas corpus is the proper remedy to regain custody of a minor.

Facts: When the respondent spouses opened their joint current account, the new accounts teller of the bank by mistake,
placed the old existing separate personal account number of Arthur Canlas on the deposit slip for the new joint checking

Held: Yes. The writ of habeas corpus extends to all cases of illegal confinement or detention by which any person is
deprived of his liberty, or by which the rightful custody of any person is withheld from the person entitled thereto. The

account of the spouses so that the initial deposit for the joint checking account was miscredited to Arthurs personal
account .

Because of this, one of the checks issued by one of the spouse was dishonoured for insufficient funds prompting private
respondents to file a complaint for damages against petitioner bank. Petitioner bank argues that it is not considered

BPI Family Savings Bank, Inc. vs First Metro Investment GR

132390, May 21, 2004

negligent and liable for damages on account of the inadvertence of its bank employee considered that it was an honest
mistake and not tainted with malice and bad faith.

Facts:On August 25, 1989, FMIC, through its Executive Vice President Antonio Ong, opened current account and
deposited METROBANK check no. 898679 of P100 million with BPI Family Bank (BPI FB). Ong made the deposit upon

Issue: WON the petitioner bank was guilty of gross negligence in the handling of private respondents bank account.

request of his friend, Ador de Asis, a close acquaintance of Jaime Sebastian, then Branch Manager of BPI FB San
Francisco del Monte Branch. Sebastians aim was to increase the deposit level in his Branch.

Held: There is no merit in petitioners argument that it should not be considered negligent, much less held liable for
damages on account of the inadvertence of its bank employee for Article 1173 of the Civil Code only requires it to

BPI FB, through Sebastian, guaranteed the payment of P14,667,687.01 representing17% per annum interest of P100

exercise the diligence of a good father of a family.As a business affected with public interest and because of the nature of

million deposited by FMIC. The latter, in turn, assured BPI FB that it will maintain its deposit of P100 million for a period

its functions, the bank is under obligation to treat the accounts of its depositors with meticulous care, always having in

of one year on condition that the interest of 17% per annum is paid in advance. This agreement between the parties was

mind the fiduciary nature of their relationship (Simex vs CA, 183 SCRA 360).

reached through their communications in writing. Subsequently, BPI FB paid FMIC 17% interest or P14,667,687.01 upon
clearance of the latters check deposit. However, on August 29, 1989, on the basis of an Authority to Debit signed by Ong

BPI vs. Intermediate Appellate Court GR# L-66826, August 19,

1988
Facts: Rizaldy T. Zshornack and his wife maintained in COMTRUST a dollar savings account and a peso current account.
An application for a dollar drat was accomplished by Virgillo Garcia branch manager of COMTRUST payable to a certain
Leovigilda Dizon. In the PPLICtion, Garcia indicated that the amount was to be charged to the dolar savings account of
the Zshornacks. There wasa no indication of the name of the purchaser of the dollar draft. Comtrust issued a check
payable to the order of Dizon. When Zshornack noticed the withdrawal from his account, he demanded an explainaiton

and Ma. Theresa David, Senior Manager of FMIC, BPI FB transferred P80 million from FMICs current account to the
savings account of Tevesteco Arrastre Stevedoring,Inc. FMIC denied having authorized the transfer of its funds to
Tevesteco, claiming that the signatures of Ong and David were falsified.

Thereupon, to recover immediately its deposit, FMIC, on September 12, 1989, issued BPI FB check no. 129077
forP86,057,646.72 payable to itself and drawn on its deposit with BPI FB SFDM branch. But upon presentation for
payment on September 13, 1989, BPI FB dishonored thecheck as it was drawn against insufficient funds. Consequently,
FMIC filed a complaint against BPI FB.

from the bank. In its answer, Comtrust claimed that the peso value of the withdrawal was given to Atty. Ernesto
Zshornack, brother of Rizaldy. When he encashed with COMTRUST a cashiers check for P8450 issued by the manila

FMIC filed an Information for estafa against Ong, de Asis, Sebastian and four others. However, the Information was

banking corporation payable to Ernesto.

dismissed on the basis of a demurrer to evidence filed by the accused.

Issue: Whether the contract between petitioner and respondent bank is a deposit?

Issues: 1. Was the transaction between FMIC and BPI, a time deposit or an interest-bearing current account which, under
existing bank regulations, was an illegal transaction?

Held: The document which embodies the contract states that the US$3,000.00 was received by the bank for safekeeping.
The subsequent acts of the parties also show that the intent of the parties was really for the bank to safely keep the dollars

2. Is the bank liable for the unauthorized transfer of respondents funds to Tevesteco?

and to return it to Zshornack at a later time. Thus, Zshornack demanded the return of the money on May 10, 1976, or over
five months later.

Decisions: 1.We hold that the parties did not intend the deposit to be treated as a demanddeposit but rather as an interestearning time deposit not withdrawable anytime. When respondent FMIC invested its money with petitioner BPI FB, they

The above arrangement is that contract defined under Article 1962, New Civil Code, which reads:

intended the P100 million as a time deposit, to earn 17% per annum interest and to remain intactuntil its maturity date one
year thereafter.

Art. 1962. A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of
safely keeping it and of returning the same. If the safekeeping of the thing delivered is not the principal purpose of the

Ordinarily, a time deposit is defined as one the payment of which cannot legally be required within such a specified

contract, there is no deposit but some other contract.

number of days.In contrast, demand deposits are all those liabilities of the Bangko Sentral and of other banks which are

denominated in Philippine currency and are subject to payment in legal tender upon demand by the presentation of

Facts: Ramon Tan, a businessman from Puerto Princesa, secured a Cashiers Check from PhilippineCommercial Industrial

(depositors) checks.

Bank (PCIBank) to P30,000 payable to his order to avoid carrying cash while enrouteto Manila. He deposited the check in
his account in Rizal Commercial Banking Corporation (RCBC) in itsBinondo Branch. RCBC sent the check for clearing

While it may be true that barely one month and seven days from the date of deposit, respondent FMIC demanded the
withdrawal of P86,057,646.72 through the issuance of a check payable to itself, the same was made as a result of the
fraudulent and unauthorized transfer by petitioner BPI FB of its P80 million deposit to Tevestecos savings account.
Certainly, such was a normal reaction of respondent as a depositor to petitioners failure in its fiduciary duty to treat its
account with the highest degree of care.

Under this circumstance, the withdrawal of deposit by respondent FMIC before the one-year maturity date did not change
the nature of its time deposit to one of demand deposit. We have held that if a corporation knowingly permits its officer, or
any other agent, to perform acts within the scope of an apparent authority, holding him out to the public as possessing
power to do those acts, the corporation will, as against any person who has dealt in good faith with the corporation through
such agent, be estopped from denying such authority.

Petitioner maintains that respondent should have first inquired whether the deposit of P100 Million and the fixing of the
interest rate were pursuant to its (petitioners) internal procedures. Petitioners stance is a futile attempt to evade an
obligation clearly established by the intent of the parties. What transpires in the corporate boardroom is entirely an internal
matter. Hence, petitioner may not impute negligence on the part of respondents representative in failing to find out the
scope of authority of petitioners Branch Manager.

to the Central Bank which was returned for having beenmissent or misrouted. RCBC debited Tans account without
informing him. Relying on commonknowledge that a cashiers check was as good as cash, and a month after depositing
the check, he issued twopersonal checks in the name of Go Lak and MS Development Trading Corporation. Both checks
bounced dueto insufficiency of funds. Tan filed a suit for damages against RCBC.

Issue: Whether a cashiers check is as good as cash, so as to have funded the two checks subsequently drawn.

Held: An ordinary check is not a mere undertaking to pay an amount of money. There is an element ofcertainty or
assurance that it will be paid upon presentation; that is why it is perceived as a convenientsubstitute for currency in
commercial and financial transactions. Herein, what is involved is more than anordinary check, but a cashiers check. A
cashiers check is a primary obligation of the issuing bank andaccepted in advance by its mere issuance. By its very
nature, a cashiers check is a banks order to pay what isdrawn upon itself, committing in effect its total resources,
integrity and honor beyond the check. Herein,PCIB by issuing the check created an unconditional credit in favor any
collecting bank. Reliance on thelaymans perception that a cashiers check is as good as cash is not entirely misplaced, as
it is rooted inpractice, tradition and principle.

Solidbank vs CA, Central Bank GR 120010

Facts: The Pacific Banking Corporation (PBC) was placed under receivership. A Liquidator was designated for the

Indeed, the public has the right to rely on the trustworthiness of bank managers and their acts. Obviously, confidence in
the banking system, which necessarily includes reliance on bank managers, is vital in the economic life of our society.
Significantly, the transaction was actually acknowledged and ratified by petitioner when it paid respondent in advance the
interest for one year. Thus, petitioner is estopped from denying that it authorized its Branch Manager to enter into

liquidation process. The Central Bank invited several banks to buy the assets and the franchise of the various offices of
PBC and to assume its liabilities. The Far East Bank and Trust Company (FEBTC) was one of the bidders, and its bid was
found to be the most advantageous. PBC and Central Bank on the one hand and FEBTC on the other, signed: (a) Purchase
Agreement; and (b) Memorandum of Agreement.

anagreement with respondents Executive Vice President concerning the deposit withthe corresponding 17% interest per
annum.

The Solidbank Corporation (a.k.a. the Consolidated Bank and Trust Corporation, hereafter, Solidbank) through its Senior
Vice-President/Comptroller Ms. Corazon R. Dayao, filed its claims with the Liquidator of PBC, Mr. Renan V. Santos,

2.Yes. We uphold the finding of both lower courts that petitioner failed to exercise that degree of diligence required by the

namely:

nature of its obligations to its depositors. A bank is under obligation to treat the accounts of its depositors with meticulous
care, whether such account consists only of a few hundred pesos or of million of pesos. Here, petitioner cannot claim it

(1) P8,024,007.27 (excluding interests and surcharges) covering eight (8) receivables (computer machines and other

exercised such adegree of care required of it and must, therefore, bear the consequence.

accessories connected with their operations and the right to collect rentals therefrom) due from PBC and assigned to
Solidbank by the United Pacific Leasing and Finance Corporation, a subsidiary of PBC, which amount due as of totalled

Tan vs. CA GR 108555, 20 December 1994

P24,158,263.10;

(2) several deposits (proceeds of collection items evidenced by registers of collection items and balances of the current

Ruling: Summary judgment is a procedural device resorted to in order to avoid long drawn out litigations and useless

accounts in the various branches of PBC).

delays. When the pleadings on file show that there are no genuine issues of fact to be tried, the Rules of Court allows a
party to obtain immediate relief by way of summary judgment. That is, when the facts are not in dispute, the court is

Solidbank filed with the liquidation court a Motion for Summary Judgment in connection with the claims aforementioned,

allowed to decide the case summarily by applying the law to the material facts.

citing the following grounds: there is no genuine issue as to any material fact; there is no substantial controversy in the
case; and, it is entitled to summary judgment as a matter of law.

In the case at bar, it cannot be said that the foregoing requisites are present. There is a genuine issue, the resolution of
which requires the presentation of evidence, i.e., whether or not Solidbanks claim is included in the purchase agreement

FEBTC filed its Comment alleging: FEBTC did not specifically deny the claims of Solidbank in the Motion to Implead;
the issues before the liquidation court are not purely legal, but factual, i.e., whether the subject receivables as well as
deposit liabilities were included in the Purchase Agreement as among those purchased by FEBTC.

Issues: Whether or not the deposit liabilities are included in the Purchase Agreement as among those purchased by FEBTC
with Solidbank?

Whether or not summary judgment is proper in the case at bar.

as among the properties and items purchased and assumed by FEBTC from Pacific Bank/Central Bank. While the counsel
for FEBTC did say that in principle he is not objecting to the motion for summary judgment and that they will have no
objection if the Court will just require the parties to submit affidavit and counter-affidavits in support to their respective
contentions, this should not be taken out of context for in the same manifestation, said counsel clearly expressed that he
does not agree that there are no material issues raised in the pleadings.

SC: Solidbank lost. The party who moves for summary judgment has the burden of demonstrating clearly the absence of
any genuine issue of fact, or that the issue posed in the complaint is patently unsubstantial so as not to constitute a genuine
issue for trial.