1

COOLIDGE V PAYSON 2 Wheat 66, 4 L. Ed. 185 (1817) ~jojo~ FACTS DRAWER: Cornhwaite & Cary DRAWEE: Collidge & Co. (defendant) PAYEE: John Randall INDORSEE: Payson & Co. (plaintiff) - Coolidge held proceeds of the cargo of the Hiram claimed by Cornthwaite. Corthwaite executed bonds of indembity an executed srolls and drew on them for $2,700, payable to Randall, and endorsed by him to Payson. Coolidge wrote to Corthwaite stating that, since there is no seal to any of the signatures, it is necessary to ascertain the legality of the scrolls. Coolidge wrote to its friend, William, who was to determine whether the draft was to be honored. William replied, approving the bond. -Cornthwaithe called on William to inquire whether he had satisfied Coolidge respecting the bond. Williams stated the substance of the letter he had written, and read to him a part of it. Payson also called on him to make the same inquiry, to whom he gave the same information and also read the letter he had written. -2 days later, a bill was drawn by Cornthwaite and paid to Payson in part of the protested bill of $2,700.it was presented to Coolidge, who refused to accept it. ISSUE WON Coolidge is deemed to have accepted the bill, hence liable to Payson HELD: YES -A promise to accept a bill amounts to an acceptance to a person who has taken it on the credit of that promise, although the promise was made before the existence of the bill, and although it is drawn in favor of a person who takes it for a pre-existing debt -Upon a review of several cases, the court holds that a letter written within a reasonable time before or after the bill of exchange, describing it in terms not to be mistaken, and promising to accept it, is if shown to the person who afterwards takes the bill on the credit of the letter, a virtual acceptance binding the person who makes the promise. REPUBLIC V PHIL. NATL BANK L-No. 16106, Dec. 30, 1961; 3 SCRA 851 ~kiyo~ FACTS -RP filed a complaint for escheat of certain unclaimed bank deposit balances against several banks under Act. 3936 which provides that unclaimed balances (w/c includes credits or deposits of money, bullion, security and other evidence of indebtedness of any kind + interest) in favor of persons not heard from for 10 years or more, with the increase and proceeds thereof, shall be deposited with the Insular Treasurer to the credit of the Phil. Government. Among these banks was the First National City Bank of New York who argued that some of its credits didnt fall within the purview of the Act. The court held that cashiers checks and demand drafts fall under the Act but upon MFR changed its view and excluded drafts, hence this appeal.

ISSUE WON demand drafts create a creditor-debtor relationship between drawee and payee, thus falling within the meaning of credits in Act. 3969 HELD: NO -A demand draft is not of the same category as a cashiers check which should fall under the Act. In banking terminology, the term bank draft is used interchangeably with a bill of exchange. A bill of exchange under the NIL (sec. 127) does not operate as an assignment of funds in the hands of the drawee who is not liable on the instrument until he accepts. In fact, the law requires presentment w/in a reasonable time or else the drawer is discharged from liability. Since it is admitted in this case that the drafts in question were never presented either for acceptance or payment, appellee bank never became a debtor of the payees, hence the drafts never became credits under the Act. -Drafts must however be distinguished from cashiers checks, which is simply a bill of exchange drawn by the bank on itself; it is equivalent to a certified check and its deposit passes to the credit of the holder who then becomes a depositor of that amount. Disposition TC decision modified; telegraphic transfer payment orders should be escheated to RP (see case for telegraphic orders) PAL V CA, Galano, del Rosario, Tan G.R. No. 24188; Jan 30, 1990; Gutierrez, Jr. ~athe~ FACTS -Amelia Tan commenced a complaint for damages. The CFI of Manila rendered judgment in favor of Tan and against PAL. PAL appealed and the amount of damages was lowered to a total of P30, 000.00. The judgment became final and executory there being no further appeal taken. -Tan filed a motion for the issuance of a writ of execution of the judgment. Judge Galano issued its order of execution and it was duly referred to Deputy Sheriff Emilio Z. Reyes. -Four months later, Tan moved for the issuance of an alias writ of execution stating that the judgment remained unsatisfied. -PAL filed an opposition stating that it had already fully paid its obligation to Tan through the deputy sheriff Reyes as evidenced by cash vouchers properly signed and receipted by Sheriff Reyes (PAL issued a check amounting to P30,000.00 in the name of Sherriff Reyes and not in the name of Tan). However, Sherriff Reyes encashed the check but failed to surrender the amount to Tan. He, instead, absconded. -Judge Galano granted Tans Motion for Alias Writ of Execution and directed Special Sheriff del Rosario to levy on execution. Consequently, Del Rosario served a notice of garnishment on the depository bank of PAL. Because of this, PAL filed this instant petition ISSUES 1. WON an alias writ of execution be issued without a prior return of the original writ by the implementing officer 2. WON payment of judgment to the implementing officer as directed in the writ of execution constitutes satisfaction of judgment HELD 1. YES. Ratio 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 the unreasonable application of a strict rule of procedure. Vested rights were never intended

to rest on the requirement of a return, the office of which is merely to inform the court and the parties, of any and all actions taken under the writ of execution. Where such information can be established in some other manner, the absence of an executing officer's return will not preclude a judgment from being treated as discharged or being executed through an alias writ of execution as the case may be. 2. General Rule (under ordinary circumstances): YES Article 1240, NCC. "Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive it." Exception (under peculiar circumstances like in this case): NO a. 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 petitioner's checks, in the case at bar, does not, per se, operate as a discharge of the judgment debt. Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment (Sec. 189, Act 2031 on Negs. Insts.; Art. 1249, Civil Code) 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. Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended until the payment by commercial document is actually realized (Art. 1249, Civil Code, par. 3). b. It is argued that if PAL had paid in cash to Sheriff Reyes, there would have been payment in full legal contemplation. The reasoning is logical but is it valid and proper? Logic has its limits in decision making. We should not follow rulings to their logical extremes if in doing so we arrive at unjust or absurd results. c. PAL was negligent. Making the checks payable to the judgment creditor would have prevented the encashment or the taking of undue advantage by the sheriff, or any person into whose hands the checks may have fallen, whether wrongfully or in behalf of the creditor. The issuance of the checks in the name of the sheriff clearly made possible the misappropriation of the funds that were withdrawn. Disposition Petition dismissed. NARVASA, Dissenting Opinion -A sheriff is authorized to receive payments on account of the judgment debt tendered by "a person indebted to the judgment debtor," and his "receipt shall be a sufficient discharge for the amount so paid or directed to be credited by the judgment creditor on the execution" (sec. 41, Rule 39). -The sheriff is an adjunct of the court; a court functionary whose competence involves both discretion and personal liability. Being an officer of the court and acting within the scope of his authorized functions, the sheriff's receipt of the checks in payment of the judgment execution, may be deemed, in legal contemplation, as received by the court itself. -If payment had been in cash, no question about its validity or of the authority and duty of the sheriff to accept it in settlement of PAL's judgment obligation would even have arisen. Simply because it was made by checks issued in the sheriff's name does not warrant reaching any different conclusion. FELICIANO, Dissenting Opinion -The risk of the sheriff faithfully performing his duty as a public officer is most appropriately borne NOT by the judgment debtor/creditor, nor upon those members of the general public who are compelled to deal with him, but by the STATE itself. The judgment creditor, in circumstances like those of the instant case, could be allowed to execute upon the absconding sheriffs bond. PADILLA, Dissenting Opinion -He has underscored the obligation of the sheriff, imposed upon him by the nature of his office and the law, to turn over such legal tender, checks and proceeds of execution sales to the judgment creditor. The failure of a sheriff to effect such turnover and his conversion of the funds (or goods) held by him to his

own uses, do not have the effect of frustrating payment by and consequent discharge of the judgment debtor. -If the plaintiff fails to receive it, his only remedy is against the officer. -When PAL delivered the checks to the Sheriff, the latter was accompanied by the counsel of Tan. Prudence dictates that the counsel of Tan should have insisted on their immediate encashment by the Sheriff with the drawee bank in order to promptly get hold of the amount belonging to his client. FORTUNADO V CA, Campano, Bautista, Register of Deeds, and National Steel Corporation GR 78556; 196 SCRA 269; Cruz; April 21, 1991 ~giulia~ FACTS -In a civil case, the RTC rendered judgment ordering Angel Bautista to pay damages to Alfero Fortunado. Pursuant to said judgment, the Sheriff levied upon 2 parcels of land registered in the name of Bautista, but 1 of the said parcels of land was already sold to the National Steel Corporation (NSC). The properties were sold to the petitioner as the only bidder in a public auction. -NSC then gave notice to the sheriff of its intention to redeem the property it owned. The sheriff suggested as the 2 lots were sold together that both of them should be redeemed. NSC filed with the TC an urgent motion to redeem, which was opposed by the petitioners on the ground that the movant did not have the personality to intervene. -As the motion remained unresolved, the NSC issued to the sheriff a PNB check for the properties.Bautista sent the sheriff a letter bearing NSC's conformity in which he availed himself of SC's check to redeem the properties. His letter contained the ff reservation: This redemption is made solely for the purpose of effecting the execution and delivery to me of the necessary certificate of redemption and the same shall not be taen to mean my accknowledgment of the validity of the said writ of execution and sale, both of which I shall continue to contest, nor shall this be taken to mean as a waiverr on my part of the legal reights and remedies available to me under the circumstances. -Sheriff issued the certificate of redemption in favor of NSC and Bautista. Bautista later on wrote to the sheriff that he would no longer effect the redemption because there was nothing to redeem, the auction sale being null and void. -Bautista, in an Urgent Motion, prayed that the sum covered by the PNB check be delivered to and kept by the clerk of court until such time as all incidents relative to the validity of the auction sale were finally resolved. Sheriff notified the petitioners' counsel of the deposit of the PN check. Counsel told the check that he was rejecting the check as it was not legal tender. -Respondent court held that NSC's redemption was absolute and unconditional in view of its refusal to join Bautista in contesting the validity of the sale. However, the validity of the redemption was dependent on the validity of the certificate of sale, which still has to be resolved by the TC. Motion for partial reconsideration by petitioner was denied. ISSUE WON there was valid redemption. HELD: YES. Although the private respondents in the case did not file a redemption case against the petitioners, NSC filed an urgent motion for redemption within the redemption period. In the US, it has been held and recognized that a payment by check or draft or bank bill or currency which is not legal tender is effective if the officer accepts such payment. If in good faith, the redemptioner

pays, and the officer receives before the expiration of the time of redemption, an ordinary banker's check, the payment is regarded as sufficient. The Court does not, by this decision, sanction the use of check for the payment of obligations over the objection of the creditor. It is just that a check may be used for the exercise of the right of redemption, the same being a right and not an obligation. The tender of a check is sufficient to compel redemption but it is not in itself a payment that relieves the redemption bt is not in itself a payment that relieves the redemtioner from his liiability t pay the redemption price. While the private respondents have properly exercised their right of redemption, they remain liable for the payment of the redemption price. MESINA V IAC [Gonong, Go and Uy] L-70145; Nov. 13, 1986; 145 sCRA 499; Paras ~ajang~ FACTS -Jose Go purchased from Associated Bank a cashiers check worth P800,000. Accidentally, he left the check on top of the desk of the bank manager when he left the bank. The bank manager entrusted the check for safekeeping to bank official, Albert Uy, who then had a visitor, Alexander Lim. Uy had to answer a telephone call, then he went t the mens room. When he returned to the desk, his visitor Lim was already gone and so was the check. When Jose Go returned to the bank, the check was nowhere to be found. -Uy advised Go to accomplish a sop payment order. Go also executed an affidavit of loss. Uy also went to the police station to report the loss, pointing to Alexander Lim as the one who could shed light on it. -Associated Bank received the lost check 2 days after for clearing, coming from Prudential bank. The check was immediately dishonored by Associated Bank and returned to Prudential with the words, Stop Payment. The check was again returned to Associated Bank and for the 2nd time, it was dishonored. -Several days later, Associated Bank received a letter from Atty. Lorenzo Navarro demanding payment for the check and threatened to sue. He refuses to reveal who his client is. Unsure with what to do with the matter, Associated Bank filed for an Interpleader. The client turned out to be one named Mesina. He said the check was paid to him by Alexander Lim in a certain transaction but refused to elucidate further. Mesina filed a complaint for damages. -TC rendered a decision on the interpleader ordering Associated Bank to replace Jose Gos check or pay its cash equivalent. Mesinas complaint on the other hand was dismissed. The issue in that case is who between Mesina and Go are entitled for the payment of the check. Since this issue had been resolved in the other case, it has become moot and academic. ISSUE: WON the lower courts ruling in the interpleader case should be set aside. HELD: NO. Mesina invokes theories on causes and effects of a cashiers checks such as 1) it cannot be countermanded in the hands of a holder in due course and 2) a cashiers check is a bill of exchange drawn by the bank against itself. But these are general principles which cannot be aptly applied to the case at bar without considering other things. -Mesina failed to substantiate that he is a holder in due course. He refused to say how and why the check was passed to him. He therefore had notice of the defect of his title over the check from the start. -Next, the check was bought by Jose Go from the bank for purposes of transferring his bank from Associated Bank to a nearby bank, thinking that carrying a check would be safer than carrying cash; it was not issued in payment of an obligation. The check was Jose Gos property when it was misplaced or stolen. Bank was therefore liable to no one else but Jose Go.

-When the payment was stopped, it was not the bank who did it but Jose Go. The bank could not be the drawer and drawee for clearly, Jose Go owns the money it represents and he is therefore the drawer and drawee in the same manner as if he has a current account and he issued a check against it. No one outside Jose Go can be termed a holder in due course because Go had not indorsed it in due course. NOTE: Clear implication from the case is that if Mesina had been a holder in due course, the court would have granted recovery.