CASE: NORBERTO TIBAJIA, JR. and CARMEN TIBAJIA, vs.

CA and EDEN TAN

DOCTRINE:  A check is not legal tender and that a creditor may validly refuse payment by check,
whether it be a manager's, cashier's or personal check.

FACTS:

Respondent filed a suit for collection of money against the petitioner. A writ of attachment was
issued by the trial court and the deputy sheriff filed a return stating that a deposit made by the
petitioners in the court of Kalookan in the amount of P442,750.00 had been garnished by him. Court
ruled in favor of respondent, ordering the petitioners to pay her an amount in excess of P300k. Upon
appeal, CA modified the decision by reducing the award of damages. The decision having become final,
respondent filed a motion for execution and thereafter, garnished funds which by then were on deposit
with the cashier of the RTC Manila, were levied upon.

The petitioners delivered to deputy sheriff the total money judgment in the following form:

Cashier's Check P262,750.00

Cash 135,733.70
————
Total P398,483.70

Respondent refused to accept the payment and insisted that the garnished funds deposited in the RTC
of Manila be withdrawn to satisfy the judgment obligation. Petitioners filed a motion to lift the writ of
execution on the ground that judgment had already been paid. The motion was denied by the court on
the ground that payment in cashier’s check is not payment in legal tender and it was made by a 3 rd
party other than the petitioners.  Payment by cashier's check is not payment in legal tender as
required by Republic Act No. 529. Petitioners contend that the check, which was a cashier's check of BPI
was a crossed check marked "For Payee's Account Only" and payable to private respondent Eden Tan. It
is considered legal tender which discharges them from their obligation.

ISSUES: Whether or not payment by means of check (even by cashier's check) is considered payment in
legal tender as required by the Civil Code, Republic Act No. 529, and the Central Bank Act.? NO

RULING:

Art. 1249 of CC. 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.

The delivery of promissory notes payable to order, or bills of exchange or other mercantile
documents shall produce the effect of payment only when they have been cashed, or when
through the fault of the creditor they have been impaired.

Section 1 of Republic Act No. 529. Every obligation heretofore and hereafter incurred, whether
or not any such provision as to payment is contained therein or made with respect thereto, shall
be discharged upon payment in any coin or currency which at the time of payment is legal
tender for public and private debts
 Section 63 of Republic Act No. 265. Legal Character. Checks representing deposit money do not
have legal tender power and their acceptance in the payment of debts, both public and private,
is at the option of the creditor:

The foregoing provisions stresses that the petitioner’s contention must fail. Jurisprudence provides that
a check, whether a manager's check or ordinary check, is not legal tender, and an offer of a check in
payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or
creditor.

DISPOSITIVE: WHEREFORE, the petition is DENIED. The appealed decision is hereby AFFIRMED, with
costs against the petitioners.

CASE: BENJAMIN ABUBAKAR v AUDITOR GENERAL

DOCTRINE: A treasury warrant "payable from the appropriation for food administration," is actually an
order for payment out of "a particular fund," and is not unconditional, and does not fulfill one of the
essential requirements of a negotiable instrument. In the United States, government warrants for the
payment of money are not negotiable instruments nor commercial paper.

FACTS:

Treasury warrant No. A-2867376 for P1000 was issued in favor of Placido Urbanes (the warrant
was issued to him originally in his capacity as disbursing officer of the Food Administration so he is a
public officer) and is now in the hands of the petitioner. Respondent refused to authorize the payment
of such treasury warrant on the grounds that:

1. The money available for the redemption of treasury warrants issued before January 2, 1942, is
appropriated by Republic Act No. 80 (Item F-IV-8) and this warrant does not come within the
purview of said appropriation
2. One of the requirements of his office had not been complied with: that it must be shown that
the holders of warrants covering payment or replenishment of cash advances for official
expenditures (as this warrant is) received them in payment of definite government obligations.

Petitioner argues that he is a holder in good faith and for value of a negotiable instrument and is
entitled to the rights and privileges of a holder in due course, free form defenses.

ISSUES: Whether or not the respondent erred in refusing to permit payment out of the particular
appropriation in Item-F-IV-8 of RA no. 80? NO

RULING:

There is no doubt as to the authenticity and date of the treasury warrant. It was also regularly
indorsed by Placido Urbanes and is now in the custody of petitioner who is a private individual.
Originally, the warrant was made payable to Placido Urbanes in his capacity as disbursing officer of the
Food Administration for additional cash advance for Food Production Campaign in La Union. Hence, this
is a treasury warrant issued in the favor of a public officer or employee and held in possession by a
private individual. Respondent cannot be blamed for not authorizing its redemption because the
warrant was not issued in favor of a private individual but in favor of a government employee. The
warrants issued to private individuals should be distinguished from those issued in favor of government
officials. Even if petitioner holds that he is a holder in good faith, this treasury warrant is not within the
scope of the negotiable instruments law. For one thing, the document bearing on its face the words
"payable from the appropriation for food administration," is actually an order for payment out of "a
particular fund," and is not unconditional, and does not fulfill one of the essential requirements of a
negotiable instrument.

DISPOSITIVE: Petition dismissed, with costs.

CASE: BALDOMERO INCIONG, JR., vs. COURT OF APPEALS and PHILIPPINE BANK OF COMMUNICATIONS

DOCTRINE: When the terms of an agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be, between the parties and their successors-in-
interest, no evidence of such terms other than the contents of the written agreement.

FACTS:

 February 3, 1983- Petitioner signed a promissory note in the amount of 50k which he signed
with Rene Naybe and Gregorio Pantanosas, holding themselves jointly and severally liable to
private respondents.
 May 5 1983- when the promissory note was due

Due date expired without promisors having paid their obligation. Respondents sent demands to
petitioner and Rene Naybe, both of which remained unheeded. Respondent then filed a collection for
sum of 50K against three obligors. Petitioner narrated on his end that he was approached by his friend,
Rudy Campos saying that he was a partner of Pio Tio. Campos said that Naybe was interested in the
business and had to make a loan. Campos persuaded petitioner to be a co-maker in the said loan.
Petitioner allegedly acceded but with the understanding that he would only be a co-maker for the loan
of P5,000.00. Petitioner alleged further that 5 copies of a blank promissory note were brought to him by
Campos at his office. Petitioner alleged that in signing the promissory note, his consent was vitiated by
fraud. Petitioner also assert that the promissory note is not a public deed with formalities prescribed
by law but only a commercial paper which does not bear the signature of the attesting witness so
parol evidence may overcome the contents of promissory note.

RTC found that the typewritten figure “50,000” clearly appears in the promissory note which was signed
by the petitioner. The testimony of petitioner cannot prevail over the presumed regularity and fairness
of the transaction under Sec 5(q) of Rule 131. CA affirmed the decision of lower court.

ISSUE: Whether or not the parol evidence may overcome the contents in the promissory note? NO

RULING:
On the argument that the petitioner’s consent was vitiated, the court is not a trier of facts. It must be
proven bu clear and convincing evidence which the petitioner failed to do. The argument of the
petitioner that the promissory note is not a public deed that needs no formalities has no merit. The first
paragraph of the parol evidence rule states that:

"When the terms of an agreement have been reduced to writing, it is considered as containing
all the terms agreed upon and there can be, between the parties and their successors-in-
interest, no evidence of such terms other than the contents of the written agreement."

The rule does not specify that the written agreement be a public document. It is only required to be in
writing for written evidence is much more certain and accurate than that rests in fleeting memory only.
Thus, for the parol evidence rule to apply, a written contract need not be in any particular form, or be
signed by both parties. As a general rule, bills, notes and other instruments of a similar nature are not
subject to be varied or contradicted by parol or extrinsic evidence.

DISPOSITIVE: WHEREFORE, the instant petition for review on certiorari is hereby DENIED and the
questioned decision of the Court of Appeals is AFFIRMED. Costs against petitioner.

CASE: TRADERS INSURANCE & SURETY COMPANY, vs. DY ENG GIOK, PEDRO LOPEZ DEE and PEDRO E.
DY-LIACCO

DOCTRINE: In the absence of express stipulation, a guaranty or suretyship operates prospectively and
not retroactively; that is to say, it secures only the debts contracted after the guaranty takes effect. This
rule is a consequence of the statutory directive that a guaranty is not presumed, but must be express,
and cannot extend to more than what is stipulated.

FACTS:

Dy Eng Giok was a provincial sales agent of Distillery Corporation, with the responsibility of
remitting sales proceeds to the principal corporation.  He has  a  running  balance  of P12, 989.61 and  to 
satisfy payment,  a  surety bond (P41,449.93) was  issued with petitioner as guarantor, whereby they
bound themselves jointly and severally liable to the distillery corporation.

One the same day that Dy entered in a surety bond with petitioner, he subscribed an indemnity
agreement as a principal and the other respondents as counterbondsmen in favor of petitioner. More
purchases were made by Dy and he was able to remit Distillery. However, distillery applied the
remittances first to his outstanding balance of P12k that was owed to the distillery corporation. There
was still a balance which was paid the petitioner. The petitioner then sought reimbursement from the
respodnents and upon failure to pay, began the present action to enforce collection.

The court absolved the counter-guarantors Pedro Dee and Pedro Liacco on the theory that the
payments must first have been applied to the surety bond and counter-guaranty than Dy’s previous
liability owed to Distillery Company. Court concluded that the Surety Company incurred no liability and
the counterbondsmen in turn had nothing to answer for.
ISSUE: Whether or not the guaranty or suretyship covers the obligations incurred prior to it? NO

RULING:

The remittances by Dy should be applied to the suretyship agreement.

Firstly because in the absence of express stipulation, a guaranty or suretyship operates

prospectively and not retroactively; that is to say, it secures only the debts contracted after the
guaranty takes effect. To apply the payments made by the principal debtor to the obligations he
contracted prior to the guaranty is, in effect, to make the surety answer for debts incurred outside of
the guaranteed period, and this cannot be done without the express consent of the guarantor. The
suretyship agreement did not guarantee the payment of any outstanding balance due form the principal
debtor, Dy Eng Giok,

Second, since the obligations of Dy Eng Giok between August 4, 1951 to August 4, 1952, were
guaranteed, while his indebtedness prior to that period was not secured, then in the absence of express
application by the debtor, or of any receipt issued by the creditor specifying a particular imputation of
the payment any partial payments made by him should be imputed or applied to the debts that were
guaranteed, since they are regarded as the more onerous debts from the standpoint of the debtor.
Debts covered by a guaranty are deemed more onerous to the debtor than the simple obligations
because, in their case, the debtor may be subjected to action not only by the creditor, but also by the
guarantor. Hence, the payment of the guaranteed debt liberates the debtor from liability to the creditor
as well as to the guarantor, while payment of the unsecured obligation only discharges him from
possible action by only one party, the unsecured creditor.

The reason is apparent: the legal rules of imputation of payments presuppose that the debtor
owes several distinct debts of the same nature; and does not distinguish between portions of the same
debt. Hence, where the debtor only owes one debt, all partial payments must necessarily be applied to
that debt, and the guarantor answers for any unpaid balance, provided it does not exceed the limits of
the guaranty. Any other solution would defeat the purpose of the security. In the case before us,
however, the guaranty secured the performance by the debtor of his obligation to remit to the distillery
company the proceeds of his sales during the period of the guaranty. This obligation is entirely distinct
and separate from his obligation to remit the proceeds of his sales during a different period, say before
August 4, 1951. The debtor, therefore, actually owed two distinct debts. There being two debts, his
partial payments had necessarily to be applied (in the absence of express imputation) first to the
obligation that was more onerous for him, which was the one secured by the guaranty.

DISPOSITIVE: Finding no error in the judgment appealed from, the same is affirmed. Costs against
appellant. So ordered.