FIRST DIVISION

BANK OF PHILIPPINEISLANDS,

THE Petitioner,

G.R. No. 157833

-versus-

Present:

PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA, and GREGORIO C. ROXAS, Respondent. GARCIA, JJ.

Promulgated:

October 15, 2007 x-----------------------------------------------------------------------------------------x

DECISION SANDOVAL-GUTIERREZ, J.: For our resolution is the instant Petition for Review on Certiorari assailing the Decision[1] of the Court of Appeals (Fourth Division) dated February 13, 2003 in CA-G.R. CV No. 67980.

The facts of the case, as found by the trial court and affirmed by the Court of Appeals, are:

Gregorio C. Roxas, respondent, is a trader. Sometime in March 1993, he delivered stocks of vegetable oil to spouses Rodrigo and Marissa Cawili. As payment therefor, spouses Cawili issued a personal check in the amount of P348,805.50. However, when respondent tried to encash the check, it was dishonored by the drawee bank. Spouses Cawili then assured him that they would replace the bounced check with a cashiers check from the Bank of the Philippine Islands (BPI),petitioner.

On March 31, 1993, respondent and Rodrigo Cawili went to petitioners branch at Shaw Boulevard,MandaluyongCity where Elma Capistrano, the branch manager, personally attended to them. Upon Elmas instructions, Lita Sagun, the bank teller, prepared BPI Cashiers Check No. 14428 in the amount of P348,805.50, drawn against the account of Marissa Cawili, payable to respondent.Rodrigo then handed the check to respondent in the presence of Elma.

The following day, April 1, 1993, respondent returned to petitioners branch at Shaw Boulevard to encash the cashiers check but it was dishonored. Elma informed him that Marissas account was closed on that date.

Despite respondents insistence, the bank officers refused to encash the check and tried to retrieve it from respondent.He then called his lawyer who advised him to deposit the check in his (respondents) account at Citytrust, Ortigas Avenue. However, the check was dishonored on the ground Account Closed.

On September 23, 1993, respondent filed with the Regional Trial Court, Branch 263, PasigCity a complaint for sum of money against petitioner, docketed as Civil Case No. 63663.Respondent prayed that petitioner be ordered to pay the amount of the check, damages and cost of the suit.

In its answer, petitioner specifically denied the allegations in the complaint, claiming that it issued the check by mistake in good faith; that its dishonor was due to lack of consideration; and that respondents remedy was to sue Rodrigo Cawili who purchased the check.As a counterclaim,petitioner prayed that respondent be ordered to pay attorneys fees and expenses of litigation.

Petitioner filed a third-party complaint against spouses Cawili. They were later declared in default for their failure to file their answer.

After trial, the RTC rendered a Decision, the dispositive portion of which reads:

cralawWHEREFORE,

in view of the foregoing premises, this Court hereby renders judgment in favor of herein plaintiff and orders the defendant, Bank of the Philippine Islands, to pay Gerardo C. Roxas:

1)

The sum of P348,805.50, the face value of the cashiers check, with legal interest thereon computed from April 1, 1993 until the amount is fully paid; The sum of P50,000.00 for moral damages; The sum of P50,000.00 as exemplary damages to serve as an example for the public good; The sum of P25,000.00 for and as attorneys fees; and the Costs of suit.

2) 3)

4)

5)

As to the third-party complaint, third-party defendants Spouses Rodrigo and Marissa Cawili are hereby ordered to indemnify defendant Bank of the Philippine Islands such amount(s) adjudged and actually paid by it to herein plaintiff Gregorio C. Roxas, including the costs of suit.

SO ORDERED.

On appeal, the Court of Appeals, in its Decision, affirmed the trial courts judgment.

Hence, this petition.

Petitioner ascribes to the Court of Appeals the following errors: (1) in finding that respondent is a holder in due course; and (2) in holding that it (petitioner) is liable to respondent for the amount of the cashiers check.

Section 52 of the Negotiable Instruments Law provides:

SEC. 52. What constitutes a holder in due course. A holder in due course is a holder who has taken the instrument under the following conditions: (a) That it is complete and regular upon its face; (b) That he became the holder of it before it was overdue and without notice that it had been previously dishonored, if such was the fact; (c) That he took it in good faith and for value; (d) That at the time it was negotiated to him, he had no notice of any infirmity in the instrument or defect in the title of person negotiating it.
cralaw

As a general rule, under the above provision, every holder is presumed prima facie to be a holder in due course.One who claims otherwise has the onus probandi to prove that one or more of the

conditions required to constitute a holder in due course are lacking. In this case, petitioner contends that the element of value is not present, therefore, respondent could not be a holder in due course.

Petitioners contention lacks merit. Section 25 of the same law states:

cralawSEC.

25. Value, what constitutes. Value is any consideration sufficient to support a simple contract. An antecedent or pre-existing debt constitutes value; and is deemed as such whether the instrument is payable on demand or at a future time.

In Walker Rubber Corp. v. Nederlandsch Indische & Handelsbank, N.V. and South Sea Surety & Insurance Co., Inc.,[2] this Court ruled that value in general terms may be some right, interest, profit or benefit to the party who makes the contract or some forbearance, detriment, loan, responsibility, etc. on the other side. Here, there is no dispute that respondent received Rodrigo Cawilis cashiers check as payment for the formers vegetable oil.The fact that it was Rodrigo who purchased the cashiers check from petitioner will not affect respondents status as a holder for value since the check was delivered to him as payment for the vegetable oil he sold to spouses Cawili. Verily, the Court of Appeals did not err in concluding that respondent is a holder in due course of the cashiers check.

Furthermore, it bears emphasis that the disputed check is a cashiers check. In International Corporate Bank v. Spouses Gueco,[3] this Court held that a cashiers check is really the banks own check and may be treated as a promissory note with the bank as the maker.The check

becomes the primary obligation of the bank which issues it and constitutes a written promise to pay upon demand. In New Pacific Timber & Supply Co. Inc. v. Seeris,[4] this Court took judicial notice of the well-known and accepted practice in the business sector that a cashiers check is deemed as cash.This is because the mere issuance of a cashiers check is considered acceptance thereof.

In view of the above pronouncements, petitioner bank became liable to respondent from the moment it issued the cashiers check.Having been accepted by respondent, subject to no condition whatsoever, petitioner should have paid the same upon presentment by the former.

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals (Fourth Division) in CA-G.R. CV No. 67980 is AFFIRMED. Costs against petitioner.

SO ORDERED.

MESINA V. IAC 145 SCRA 497

FACTS:
Jose Go purchased from Associate Bank a Cashiers Check, which he left on top of the managers desk when left the bank. The bank manager then had it kept for safekeeping by one of its employees. The employee was then in conference with one Alexander Lim. He left the check in his desk and upon his return, Lim and the check were gone. When Go inquired about his check, the same couldn't be found and Go was advised to request for the stoppage of payment which he did. He executed also an affidavit of loss as well as reported it to the police. The bank then received the check twice for clearing. For these two times, they dishonored the payment by saying that payment has been stopped. After the second time, a lawyer contacted it demanding payment. He refused to disclose the name of his client and threatened to sue. Later, the name of Mesina was revealed. When asked by the police on how he possessed the check, he

said it was paid to him Lim. An information for theft was then filed against Lim. A case of interpleader was filed by the bank and Go moved to participate as intervenor in the complaint for damages. Mesina moved for the dismissal of the case but was denied. The trial court ruled in the interpleader case ordering the bank to replace the cashiers check in favor of Go.

HELD:
Petitioner cannot raise as arguments that a cashiers check cannot be countermanded from the hands of a holder in due course and that a cashiers check is a check drawn by the bank against itself. Petitioner failed to substantiate that he was a holder in due course. Upon questioning, he admitted that he got the check from Lim who stole the check. He refused to disclose how and why it has passed to him. It simply means that he has notice of the defect of his title over the check from the start. The holder of a cashiers check who is not a holder in due course cannot enforce payment against the issuing bank which dishonors the same. If a payee of a cashiers check obtained it from the issuing bank by fraud, or if there is some other reason why the payee is not entitled to collect the check, the bank would of course have the right to refuse payment of the check when presented by payee, since the bank was aware of the facts surrounding the loss of the check in question.

MONTINOLA V. PNB
88 PHIL 178
FACTS:
Ramos, as a disbursing officer of an army division of the USAFE, made cash advancements w/ the Provincial Treasurer of Lanao. In exchange, the Provl Treasurer of Lanao gave him a P500,000 check. Thereafter, Ramos presented the check to Laya for encashment. Laya in his capacity as Provincial Treasurer of Misamis Oriental as drawer, issued a check to Ramos in the sum of P100000, on the Philippines National Bank as drawee; the P400000 value of the check was paid in military notes. Ramos was unable to encash the said check for he was captured by the Japanese. But after his release, he sold P30000 of the check to Montinola for P90000 Japanese Military notes, of which only P45000 was paid by the latter. The writing made by Ramos at the back of the check was to the effect that he was assigning only P30000 of the value of the document with an instruction to the bank to pay P30000 to Montinola and to deposit the balance to Ramos's credit. This writing was, however, mysteriously obliterated and in its place, a supposed indorsement appearing on the back of the check was made for the whole amount of the check. At the time of the transfer of this check to Montinola, the check was long overdue by about 2-1/2 years. Montinola instituted an action against the PNB and the Provincial Treasurer of Misamis Oriental to collect the sum of P100,000, the amount of the aforesaid check. There now appears on the face of said check the words in parenthesis "Agent, Phil. National Bank" under the signature of Laya purportedly showing that Laya issued the check as agent of the Philippine National Bank.

HELD:
The words "Agent, Phil. National Bank" now appearing on the face of the check were added or placed in the instrument after it was issued by the Provincial Treasurer Laya to Ramos. The check was issued by only as Provincial Treasurer and as an official of the Government, which was under obligation to provide the USAFE with advance funds, and not as agent of the bank, which had no such obligation. The addition of those words was made after the check had been transferred by Ramos to Montinola. The insertion of the words "Agent, Phil. National Bank," which converts the bank from a mere drawee to a drawer and therefore changes its liability, constitutes a material

alteration of the instrument without the consent of the parties liable thereon, and so discharges the instrument