Week 9 Nego
Week 9 Nego
Week 9 Nego
Sec
126
1.
Republic
v.
First
National
Bank
of
New
York
DONDON
Emergency
Recit:
Definition:
Escheat
a.
Reversion
of
property
to
the
state
in
the
absence
of
legal
heirs
or
claimants.
b.
Property
that
has
reverted
to
the
state
when
no
legal
heirs
or
claimants
exist.
Pursuant
to
Act
No.
3936,
banks
submitted
sworn
statement
of
all
credits
and
deposits
held
by
them
in
favour
of:
1) Persons
known
to
be
dead
or
2) Who
have
not
made
further
deposits
or
withdrawals
during
the
period
of
10
years
or
more.
The
purpose
is
for
the
government
to
subject
these
to
escheat
proceedings.
Banks
were
ordered
to
deposit
these
amounts
to
government
account
of
Treasurer
of
the
Philippines.
First
National
Bank
claims
that
it
inadvertently
included
a
total
amount
of
Php18,589.89
in
its
sworn
statement
representing
Cashiers
or
Managers
checks,
demand
drafts,
and
telegraphic
transfer
payments.
It
claims
that
these
items
do
not
fall
within
the
credits
and
deposits
of
unclaimed
balances
contemplated
by
Act
No.
3936
which
should
be
subject
to
escheat.
In
other
words,
it
asks
that
these
items
be
excluded.
RTC
decision:
Cashiers
or
Managers
check
INCLUDED
Demand
drafts
and
telegraphic
orders
NOT
included
Issue:
W/N
Demand
drafts
and
telegraphic
orders
come
within
the
meaning
of
the
term
credits
or
deposits
employed
in
law
The
SC
held
1) Demand
drafts
(see
definition
below)
NOT
included
not
escheated
due
to
non-
presentment,
no
liability
yet
2) Telegraphic
payment
orders
included
should
be
escheated!
DEMAND
DRAFT
should
NOT
be
escheated:
A
Bill
of
Exchange
under
NIL
does
not
operate
as
an
assignment
of
funds
in
the
hands
of
the
drawee
who
is
not
liable
on
the
instrument
until
he
accepts
it.
Since
it
is
admitted
that
the
demand
drafts
herein
involved
have
not
been
presented
either
for
acceptance
or
for
payment,
The
inevitable
consequence
is
that
the
appellee
bank
never
had
any
chance
of
accepting
or
rejecting
them.
Verily,
appellee
bank
never
became
a
debtor
of
the
payee
concerned
and
as
such
the
aforesaid
drafts
cannot
be
considered
as
credits
subject
to
escheat
within
the
meaning
of
the
law.
TELEGRAPHIC
PAYMENT
ORDER
should
be
escheated
(this
is
actually
already
the
entire
ratio
on
telegraphic
order
from
the
case):
The
transaction
is
for
the
establishment
of
a
telegraphic
or
cable
transfer.
The
agreement
to
remit
creates
a
contractual
obligation
and
has
been
termed
a
purchase
and
sale
The
purchaser
of
a
telegraphic
transfer
upon
making
payment
completes
the
transaction
insofar
as
he
is
concerned,
though
insofar
as
the
remitting
bank
is
concerned
the
contract
is
executory
until
the
credit
is
established
SC
agreed
with
Solicitor
General
comment
(main
ratio
about
telegraphic
order):
This
is
so
because
the
drawer
bank
was
already
paid
the
value
of
the
telegraphic
transfer
payment
order.
In
the
particular
cases
under
consideration
it
appears
in
the
books
of
the
defendant
bank
that
the
amounts
represented
by
the
telegraphic
payment
orders
appear
in
the
names
of
the
respective
payees.
If
the
latter
choose
to
demand
payment
of
their
telegraphic
transfers
at
the
time
the
same
was
(were)
received
by
the
defendant
bank,
there
could
be
no
question
that
this
bank
would
have
to
pay
them.
Now,
the
question
is,
if
the
payees
decide
to
have
their
money
remain
for
sometime
in
the
defendant
bank,
can
the
latter
maintain
that
the
ownership
of
said
telegraphic
payment
orders
is
now
with
the
drawer
bank?
The
latter
was
already
paid
the
value
of
the
telegraphic
payment
orders
otherwise
it
would
not
have
transmitted
the
same
to
the
defendant
bank.
Hence,
it
is
absurd
to
say
that
the
drawer
banks
are
still
the
owners
of
said
telegraphic
payment
orders.
If
you
want
pogi
points
and
discuss
also
about
managers
or
cashiers
checks,
see
ratio
below
BAUTISTA
ANGELO,
J:
FACTS:
September
25,
1957
Republic
of
Philippines
filed
complaint
for
escheat
of
certain
unclaimed
bank
deposit
balances
under
Act
No.
3936
against
several
banks
(one
of
which
was
First
National
City
Bank
of
New
York)
Pursuant
to
Section
2
of
Act
No.
3936
First
National
Bank
claims:
The
pre-war
inactive
accounts
it
submitted
totalling
more
than
Php100,000
are
subject
to
escheat
However,
it
inadvertently
included
certain
items
amounting
to
Php18,589.89
which
are
not
credits
and
deposits
contemplated
in
Act
No.
3936
o More
specifically,
this
pertained
to
Cashiers
or
Managers
checks,
demand
drafts,
and
telegraphic
transfer
payments
Hence,
it
claims
for
that
amount
NOT
to
be
included
in
plaintiffs
complaint
Trial
court
judgment:
Cashiers
or
Managers
checks
and
demand
drafts
COME
WITHIN
the
purview
of
Act
No.
3936
Telegraphic
transfer
payments
are
NOT
included
Trial
Court
(after
Motion
for
Reconsideration)
judgment:
Amended
initial
judgment:
Demand
drafts
are
also
NOT
included
now
Section
1,
Act
No.
3936,
provides:
Unclaimed
balances
within
the
meaning
of
this
Act
shall
include
credits
or
deposits
of
money,
bullion,
security
or
other
evidence
of
indebtedness
of
any
kind,
and
interest
thereon
with
banks,
as
hereinafter
defined,
in
favor
of
any
person
unheard
from
for
a
period
of
ten
years
or
more.
Such
unclaimed
balances,
together
with
the
increase
and
proceeds
thereof,
shall
be
deposited
with
the
Insular
Treasurer
to
the
credit
of
the
Government
of
the
Philippine
Islands
to
be
used
as
the
Philippine
Legislature
may
direct.
[Republic
vs.
First
National
City
Bank
of
New
York,
3
SCRA
851(1961)]
The
term
unclaimed
balances
that
are
subject
to
escheat
include
credits
or
deposits
of
money,
or
other
evidence
of
indebtedness
of
any
kind,
with
banks,
in
favor
of
any
person
unheard
from
for
a
period
of
10
years
or
more.
ISSUE:
W/N
Demand
drafts
and
telegraphic
orders
come
within
the
meaning
of
the
term
credits
or
deposits
employed
in
law
Can
their
import
be
considered
as
a
sum
credited
on
the
books
of
the
bank
to
a
person
who
appears
to
be
entitled
to
it?
Do they create a creditor-debtor relationship between the drawee and the payee?
HELD:
1) Demand
drafts
NOT
included
not
escheated
due
to
non-presentment,
no
liability
yet
2) Telegraphic
payment
orders
included
should
be
escheated!
WHEREFORE,
the
decision
of
the
trial
court
is
hereby
modified
in
the
sense
that
the
items
specifically
referred
to
and
listed
under
paragraph
3
of
appellee
banks
answer
representing
telegraphic
transfer
payment
orders
should
be
escheated
in
favor
of
the
Republic
of
the
Philippines.
No
costs.
RATIO:
Credit
in
its
usual
meaning
the
sum
credited
on
the
books
of
a
company
to
a
person
who
appears
entitled
to
it.
It
presupposes
a
creditor-debtor
relationship
and
maybe
said
to
imply
ability,
by
reason
of
property
or
estates,
to
make
a
promised
payment.
The
same
is
with
deposits
in
a
bank
where
a
creditor-debtor
relationship
arises.
Discussion
on
DEMAND
DRAFT
Bill
of
exchange
payable
on
demand
As
a
bill
of
exchange,
it
is
an
open
letter
of
request
from,
and
an
order
by
one
person
on
another
to
pay
a
sum
of
money
therein
mentioned
to
a
third
person,
on
demand
or
at
a
future
time
therein
specified
In
regular
practice:
o Draft
is
often
used,
and
is
the
common
term,
for
all
bills
of
exchange.
o And
the
words
draft
and
bill
of
exchange
are
used
indiscriminately
However,
a
Bill
of
Exchange
under
Negotiable
Instruments
Law:
Does
not
operate
as
an
assignment
of
funds
in
the
hands
of
the
drawee
who
is
not
liable
on
the
instrument
until
he
accepts
it.
This
is
the
clear
import
of
Section
127:
o A
bill
of
exchange
of
itself
does
not
operate
as
an
assignment
of
the
funds
in
the
hands
of
the
drawee
available
for
the
payment
thereon
and
the
drawee
is
not
liable
on
the
bill
unless
and
until
he
accepts
the
same.
Since
it
is
admitted
that
the
demand
drafts
herein
involved
have
not
been
presented
either
for
acceptance
or
for
payment,
The
inevitable
consequence
is
that
the
appellee
bank
never
had
any
chance
of
accepting
or
rejecting
them.
Verily,
appellee
bank
never
became
a
debtor
of
the
payee
concerned
and
as
such
the
aforesaid
drafts
cannot
be
considered
as
credits
subject
to
escheat
within
the
meaning
of
the
law.
Discussion
on
MANAGERS
or
CASHIERS
CHECK
A
cashiers
or
managers
check
is
a
primary
obligation
of
the
bank
which
issues
it
and
constitutes
its
written
promise
to
pay
upon
demand.
A
Managers
or
Cashiers
check
is
very
different
from
a
demand
draft:
A
cashiers
check
is
a
check
of
the
banks
cashier
on
his
or
another
bank.
It
is
in
effect
a
bill
of
exchange
drawn
by
a
bank
on
itself
and
accepted
in
advance
by
the
act
of
its
issuance
A
cashiers
check
issued
on
request
of
a
depositor
is
the
substantial
equivalent
of
a
certified
check
and
the
deposit
represented
by
the
check
passes
to
the
credit
of
the
checkholder,
who
is
thereafter
a
depositor
to
that
amount
A
cashiers
check,
being
merely
a
bill
of
exchange
drawn
by
a
bank
on
itself,
and
accepted
in
advance
by
the
act
of
its
issuance,
is
not
subject
to
countermand
by
the
payee
after
indorsement,
and
has
the
same
legal
effects
as
a
certificate
of
deposit
or
a
certified
check
A
demand
draft
is
not
therefore
of
the
same
category
as
a
cashiers
check
which
should
come
within
the
purview
of
the
law.
Discussion
on
TELEGRAPHIC
PAYMENT
ORDER
should
be
escheated!
The
transaction
is
for
the
establishment
of
a
telegraphic
or
cable
transfer.
The
agreement
to
remit
creates
a
contractual
obligation
and
has
been
termed
a
purchase
and
sale
The
purchaser
of
a
telegraphic
transfer
upon
making
payment
completes
the
transaction
insofar
as
he
is
concerned,
though
insofar
as
the
remitting
bank
is
concerned
the
contract
is
executory
until
the
credit
is
established
SC
agreed
with
Solicitor
General
comment
(Main
ratio
about
telegraphic
payment
order):
This
is
so
because
the
drawer
bank
was
already
paid
the
value
of
the
telegraphic
transfer
payment
order.
In
the
particular
cases
under
consideration
it
appears
in
the
books
of
the
defendant
bank
that
the
amounts
represented
by
the
telegraphic
payment
orders
appear
in
the
names
of
the
respective
payees.
If
the
latter
choose
to
demand
payment
of
their
telegraphic
transfers
at
the
time
the
same
was
(were)
received
by
the
defendant
bank,
there
could
be
no
question
that
this
bank
would
have
to
pay
them.
1962
PRM
entered
into
a
contract
with
Nissho
Co.,
Ltd.
of
Japan
for
the
importation
of
textile
machineries
under
a
5-year
deferred
payment
plan
o [Nego]
To
effect
payment
for
said
machineries,
PRM
applied
for
a
commercial
letter
of
credit
with
PB
in
favor
of
Nissho.
By
virtue
of
said
application,
PB
opened
Letter
of
Credit
for
$128,548.
Against
this
Letter
of
Credit,
drafts
were
drawn
and
issued
by
Nissho,
which
were
all
paid
by
PB
through
its
correspondent
in
Japan,
the
Bank
of
Tokyo,
Ltd.
As
indicated
on
their
faces,
2
of
these
drafts
accepted
by
the
PRM
through
its
president,
Anacleto
R.
Chi,
while
the
others
were
not.
o Upon
the
arrival
of
the
machineries,
PB
indorsed
the
shipping
documents
to
PRM,
which
accepted
delivery
of
the
same.
o To
enable
PRM
to
take
delivery
of
the
machineries,
PRM
executed,
by
prior
arrangement
with
PB,
a
trust
receipt,
which
was
signed
by
Anacleto
R.
Chi
in
his
capacity
as
President
(sic)
of
PRM
Included
a
stipulation
on
sureties
1967
PRM
ceased
business
operations
1969
PRMs
factory
was
leased
by
Yupangco
Cotton
Mills
for
an
annual
rental
of
P200,000.00
1973
Lease
renewed
1974
All
the
textile
machineries
in
the
PRMs
factory
were
sold
to
AIC
Development
Corporation
for
P300,000.00
The
obligation
of
PRM
arising
from
the
letter
of
credit
and
the
trust
receipt
remained
unpaid
and
unliquidated.
o Repeated
formal
for
the
payment
of
the
said
trust
receipt
yielded
no
result
o Hence,
the
present
action
for
the
collection
of
the
principal
amount
of
P956,384.95
was
filed
on
October
3,
1974
against
the
PRM
and
Anacleto
R.
Chi.
o In
their
respective
answers,
the
PRM
and
Chi
interposed
identical
special
defenses,
viz.,
1) The
complaint
states
no
cause
of
action;
if
there
is,
the
same
has
prescribed;
and
2) PB
is
guilty
of
laches
Lower
Courts
[skip
if
pressed
for
time]
CFI
Rizal
o WHEREFORE,
judgment
is
hereby
rendered
sentencing
the
defendant
Philippine
Rayon
Mills,
Inc.
to
pay
plaintiff
the
sum
of
P153,645.22,
the
amounts
due
under
Exhibits
"X"
&
"X-1"
(the
accepted
drafts),
with
interest
at
6%
per
annum
beginning
September
15,
1974
until
fully
paid.
o Insofar
as
the
amounts
involved
in
drafts
Exhs.
"X"
(sic)
to
"X-11",
inclusive,
the
same
not
having
been
accepted
by
defendant
Philippine
Rayon
Mills,
Inc.,
IAC
o
o
Affirmed
in
toto
Pertinent
Ratio
With
respect
to
the
last
ten
(10)
drafts
which
had
not
been
presented
to
and
were
not
accepted
by
PRM,
PB
was
not
justified
in
unilaterally
paying
the
amounts
stated
therein.
The
IAC
did
NOT
agree
with
the
PBs
claim
that
the
drafts
were
sight
drafts,
which
did
not
require
presentment
for
acceptance
to
PRM
because
paragraph
8
of
the
trust
receipt
presupposes
prior
acceptance
of
the
drafts.
Since
the
ten
(10)
drafts
were
not
presented
and
accepted,
no
valid
demand
for
payment
can
be
made.
II.
Issues
1) [This
is
so
Nego]
Whether
presentment
for
acceptance
of
the
drafts
was
indispensable
to
make
Philippine
Rayon
liable
thereon;
NAY
2) Whether
Philippine
Rayon
is
liable
on
the
basis
of
the
trust
receipt;
3) Whether
private
respondent
Chi
is
jointly
and
severally
liable
with
Philippine
Rayon
for
the
obligation
sought
to
be
enforced
and
if
not,
whether
he
may
be
considered
a
guarantor;
in
the
latter
situation,
whether
the
case
should
have
been
dismissed
on
the
ground
of
lack
of
cause
of
action
as
there
was
no
prior
exhaustion
of
Philippine
Rayon's
properties.
III.
Held
WHEREFORE,
the
instant
Petition
is
hereby
GRANTED.
The
appealed
Decision
the
IAC
and
the
CFI
are
hereby
REVERSED
and
SET
ASIDE
and
another
is
hereby
entered:
o [Nego]
Declaring
PRM
liable
on
the
12
drafts
in
question
and
on
the
trust
receipt
and
ordering
it
to
pay
petitioner:
The
amounts
due
thereon
in
the
total
sum
of
P956,384.95
with
interest
thereon
at
six
percent
(6%)
per
annum
less
whatever
may
have
been
applied
thereto
by
virtue
of
foreclosure
of
mortgages,
if
any;
A
sum
equal
to
ten
percent
(10%)
of
the
aforesaid
amount
as
attorney's
fees;
and
The
costs.
o [Not
Nego]
Declaring
Anacleto
R.
Chi
secondarily
liable
on
the
trust
receipt
and
ordering
him
to
pay
the
face
value
thereof,
with
interest
at
the
legal
rate,
commencing
from
the
date
of
the
filing
of
the
complaint
in
Civil
Case
No.
Q-
19312
until
the
same
is
fully
paid
as
well
as
the
costs
and
attorney's
fees
in
the
Ratio
Both
lower
courts
concluded
that
acceptance
of
the
drafts
by
PRM
was
indispensable
to
make
the
latter
liable
thereon.
We
are
unable
to
agree
with
this
proposition.
LETTER
OF
CREDIT
As
correctly
ruled
by
the
trial
court
in
its
Order
of
6
March
1975:
o .
.
.
By
virtue
of
said
Application
and
Agreement
for
Commercial
Letter
of
Credit,
PB
was
under
obligation
to
pay
through
its
correspondent
bank
in
Japan
the
drafts
that
Nissho
Company,
Ltd.,
periodically
drew
against
said
letter
of
credit
from
1963
to
1968,
pursuant
to
PBs
contract
with
PRM.
o In
turn,
PRM.,
was
obligated
to
pay
PB
the
amounts
of
the
drafts
drawn
by
Nissho
Company,
Ltd.
against
said
plaintiff
bank
together
with
any
accruing
commercial
charges,
interest,
etc.
pursuant
to
the
terms
and
conditions
stipulated
in
the
Application
and
Agreement
of
Commercial
Letter
of
Credit
Annex
"A".
A
letter
of
credit
is
defined
as
an
engagement
by
a
bank
or
other
person
made
at
the
request
of
a
customer
that
the
issuer
will
honor
drafts
or
other
demands
for
payment
upon
compliance
with
the
conditions
specified
in
the
credit.
o Through
a
letter
of
credit,
the
bank
merely
substitutes
its
own
promise
to
pay
for
one
of
its
customers
who
in
return
promises
to
pay
the
bank
the
amount
of
funds
mentioned
in
the
letter
of
credit
plus
credit
or
commitment
fees
mutually
agreed
upon.
In
the
instant
case
then,
the
drawee
was
necessarily
PB.
o It
was
to
PB
that
the
drafts
were
presented
for
payment.
SIGHT
DRAFTS
DO
NOT
REQUIRE
PRESENTMENT
FOR
PAYMENT
In
fact,
there
was
no
need
for
acceptance
as
the
issued
drafts
are
sight
drafts.
o Presentment
for
acceptance
is
necessary
only
in
the
cases
expressly
provided
for
in
Section
143
of
the
Negotiable
Instruments
Law
(NIL):
Sec.
143.
When
presentment
for
acceptance
must
be
made.
Presentment
for
acceptance
must
be
made:
(a)
Where
the
bill
is
payable
after
sight,
or
in
any
other
case,
where
presentment
for
acceptance
is
necessary
in
order
to
fix
the
maturity
of
the
instrument;
or
(b)
Where
the
bill
expressly
stipulates
that
it
shall
be
presented
for
acceptance;
or
THE
DRAFTS
IN
QUESTION
ARE
SIGHT
DRAFTS
The
parties
herein
agree,
and
the
trial
court
explicitly
ruled,
that
the
subject,
drafts
are
sight
drafts.
Said
the
latter:
o .
.
.
In
the
instant
case
the
drafts
being
at
sight,
they
are
supposed
to
be
payable
upon
acceptance
unless
plaintiff
bank
has
given
the
Philippine
Rayon
Mills
Inc.
time
within
which
to
pay
the
same
THE
DRAFTS
IN
QUESTION
ARE
PAYABLE
ON
DEMAND
Corollarily,
they
are,
pursuant
to
Section
7
of
the
NIL,
payable
on
demand.
Section
7
provides:
Sec.
7.
When
payable
on
demand.
An
instrument
is
payable
on
demand
(a)
When
so
it
is
expressed
to
be
payable
on
demand,
or
at
sight,
or
on
presentation;
or
(b)
In
which
no
time
for
payment
in
expressed.
Where
an
instrument
is
issued,
accepted,
or
indorsed
when
overdue,
it
is,
as
regards
the
person
so
issuing,
accepting,
or
indorsing
it,
payable
on
demand.
(emphasis
supplied)
EVEN
ASSUMING
PRESENTMENT
FOR
ACCEPTANCE
IS
REQUIRED,
PB
IS
THE
PARTY
TO
WHOM
PRESENTMENT
FOR
ACCEPTANCE
MUST
BE
MADE
Even
if
these
were
not
sight
drafts,
thereby
necessitating
acceptance,
it
would
be
PB
and
not
PRM
which
had
to
accept
the
same
for
the
latter
was
not
the
drawee.
o Presentment
for
acceptance
is
defined
as
the
production
of
a
bill
of
exchange
to
a
drawee
for
acceptance.
The
trial
court
and
the
public
respondent,
therefore,
erred
in
ruling
that
presentment
for
acceptance
was
an
indispensable
requisite
for
PRMs
liability
on
the
drafts
to
attach.
4.
New
Pacific
Timber
Company
vs.
Hon.
Seneris,
Ricardo
Tong,
Sheriff
Hakim
Abdulwahid
(Geraldez)
Emergency
Recit:
There
was
a
judgment
for
collection
of
sum
of
money
against
New
Pacific
Timber
COMPANY
and
for
Ricardo
TONG.
A
compromise
agreement
was
struck.
COMPANY
did
not
comply.
Writ
of
execution
was
ordered
against
it
for
P63,130.
COMPANY
offered
P50,000
in
cashiers
check,
P13,130
in
cash.
TONG
refused.
Eventually,
auction
happens.
COMPANY
claims
judge
committed
grave
abuse
for
allowing
sale
to
happen
and
not
forcing
TONG
to
accept
check
and
cash.
SC
rules
for
COMPANY.
SC
says
that
a
cashiers
check
is
deemed
as
cash.
By
certifying
a
check:
cash
of
drawer
is
segregated;
it
is
equivalent
to
acceptance
by
drawee
bank;
enables
user
thereof
to
use
it
as
money;
operates
as
assignment
of
funds
to
creditor.
Auction
sale
is
nullified
and
TONG
is
ordered
to
accept
tender
by
COMPANY.
Facts:
1. There
was
a
complaint
for
collection
of
a
sum
of
money
against
COMPANY
filed
by
Ricardo
TONG.
2. On
July
19,
1974,
a
compromise
judgment
was
rendered
by
the
respondent
Judge
in
accordance
with
an
amicable
settlement
entered
into
by
the
parties
the
terms
and
conditions
of
which,
are
as
follows:
(1)
That
defendant
will
pay
to
the
plaintiff
P54,500.00
at
6%
interest
per
annum
to
be
reckoned
from
August
25,
1972;
(2)
That
defendant
will
pay
P6,000.00
as
attorney's
fees
for
which
P5,000.00
had
been
acknowledged
received
by
the
plaintiff;
(3)
That
the
entire
amount
of
P54,500.00
plus
interest,
plus
the
balance
of
P1,000.00
for
attorney's
fees
will
be
paid
within
five
months
from
today;
and,
(4)
Failure
to
comply
with
any
condition,
a
writ
of
execution
may
be
issued
by
this
Court
for
the
satisfaction
of
the
obligation.
3. COMPANY
failed
to
comply.
Writ
of
execution
was
issued
for
the
amount
of
P63,130.00
pursuant
to
which,
the
Ex-Officio
Sheriff
levied
upon
the
following
personal
properties
of
the
petitioner,
to
wit:
It
is
to
be
emphasized
in
this
connection
that
the
check
deposited
by
the
petitioner
in
the
amount
of
P50,000.00
is
not
an
ordinary
check
but
a
Cashier's
Check
of
the
Equitable
Banking
Corporation,
a
bank
of
good
standing
and
reputation.
As
testified
to
by
the
Ex-
Officio
Sheriff
with
whom
it
has
been
deposited,
it
is
a
certified
crossed
check.
9
o It
is
a
well-known
and
accepted
practice
in
the
business
sector
that
a
Cashier's
Check
is
deemed
as
cash.
Moreover,
since
the
said
check
had
been
certified
by
the
drawee
bank,
by
the
certification,
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,
with
rights
and
duties
of
one
in
such
situation.
10
o
Where
a
check
is
certified
by
the
bank
on
which
it
is
drawn,
the
certification
is
equivalent
to
acceptance.
11
o 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,
and
that
they
shall
be
so
applied
whenever
the
check
is
presented
for
payment.
It
is
an
understanding
that
the
check
is
good
then,
and
shall
continue
good,
and
this
agreement
is
as
binding
on
the
bank
as
its
notes
in
circulation,
a
certificate
of
deposit
payable
to
the
order
of
the
depositor,
or
any
other
obligation
it
can
assume.
The
object
of
certifying
a
check,
as
regards
both
parties,
is
to
enable
the
holder
to
use
it
as
money."
12
5.
Velasquez
v.
Solidbank
Corporation
[Narvasa]
Emergency
Recit:
Velasquez
is
engaged
in
the
export
business
to
South
Korea.
Opened
a
letter
of
credit
with
Bank
of
Seoul.
Also
applied
for
credit
accommodation
with
Solidbank
for
pre-
shipment
financing.
On
his
3rd
shipment,
he
wanted
to
be
paid
in
advance
so
he
negotiated
for
a
documentary
sight
draft
to
be
drawn
against
the
letter
of
credit
in
Seoul.
As
a
condition
of
issuance,
Solidbank
asked
for
a
letter
of
undertaking
from
Velasquezpromising
the
draft
will
be
accepted
and
paid
according
to
its
tenor.
Subsequently,
Bank
of
Seoul
dishonored
it
by
non-acceptance.
Solidbank
did
not
protest.
Filed
suit
for
collection
instead.
SC:
Though
Velasquez
was
discharged
on
the
draft,
due
to
lack
of
protest.
On
the
basis
of
a
letter
of
undertaking,
this
became
is
a
straightforward
case
of
collection
of
sum
of
money.
Solidbank
advanced
the
export
payment
to
Velasquez
on
the
understanding
that
the
draft
will
be
honored
and
paid.
Doctrine:
PARTIES
may
not
impugn
the
effectivity
of
a
contract,
after
much
benefit
has
been
gained
to
the
prejudice
of
another.
They
are
bound
by
the
obligations
they
expressly
set
out
to
do.
I.
FACTS
Velasquez
is
engaged
in
the
export
business
operating
under
the
name
Wilderness