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INTERPRETATION OF INSTRUMENTS

1. EQUITABLE BANKING CORP V IACIn this Petition for Review on certiorri !etitioner" E#$it%&e Bn'in( Cor!ortion" !r)stht the *verse +$*(,ent (inst it ren*ere* %) res!on*ent A!!e&&te Co$rt" 1 *te* -Octo%er 1/0" n* its ,+orit) Reso&$tion" *te* / A!ri& 1/2" *en)in( !etitioner3s4otion for Reconsi*ertion" %e nn$&&e* n* set si*e.

The fcts !ertinent to this Petition" s s$,,ri5e* %) the Tri& Co$rt n* *o!te* %)reference %) Res!on*ent A!!e&&te Co$rt" e,nte* fro, the cse entit&e* 6E*wr* 7.Ne&& Co. vs. Li%erto V. Cs&s" Csvi&&e Enter!rises" Inc." n* E#$it%&e Bn'in(Cor!ortion6 of the Co$rt of 8irst Instnce of Ri5& 9Civi& Cse No. 011:" n* re*;

8ro, the evi*ence s$%,itte* %) the !rties" the Co$rt fin*s tht so,eti,e in 1


2/68

A coverin( &etter 9E?hi%it 66: ws &so sent n* when the three *oc$,ents were!resente* to >everino >ntos" e?ec$tive vice !resi*ent of *efen*nt %n'" >ntos *i*not cce!t the, %ec$se the ter,s n* con*itions re#$ire* %) the %n' for the o!enin(of the &etter of cre*it h* not )et %een (ree* on.

On A$($st " 1


3/68

Reso&vin( tht iss$e" the Tri& Co$rt ren*ere* +$*(,ent" ffir,e* %) Res!on*ent Co$rtin toto" the !ertinent !ortion of which re*s;

??? ??? ???

=efen*nts Cs&s n* Csvi&&e Enter!rises n* E#$it%&e Bn'in( Cor!ortion reor*ere* to !) !&intiff" +oint&) n* sever&&)" the s$, of P-O OR=ERE=.

The cr$ci& iss$e to reso&ve is whether or not !etitioner E#$it%&e Bn'in( Cor!ortion9%rief&)" the Bn': is &i%&e to !rivte res!on*ent E*wr* 7. Ne&& Co. 9NELL" for short: forthe v&$e of the secon* chec' iss$e* %) NELL" E?hi%it 6E@&"6 which ws ,*e !)%&e

to the or*er of EQUITABLE Ashvi&&e BANIUNG CORPORATION ADC O8 CA>VILLE

ENTERPRI>E> INC.

n* which the Bn' te&&er cre*ite* to the cco$nt of Csvi&&e.

The Tri& Co$rt fo$n* tht the ,o$nt of the secon* chec' h* %een erroneo$s&)cre*ite* to the Csvi&&e cco$nt he&* the Bn' &i%&e for the ,ist'e of its e,!&o)eesn* or*ere* the Bn' to !) NELL the v&$e of the chec' in the s$, of P-VILLE ENTERPRI>E> INC. 6!!eron the fce of the chec' fter or $n*er the n,e of *efen*nt %n'" the !)ee ws sti&&the &tter. The **ition of si* wor*s *i* not in n) w) ,'e Csvi&&e Enter!rises" Inc.the P)ee of the instr$,ent for the wor*s ,ere&) in*icte* for whose cco$nt or in

connection with wht cco$nt the chec' ws iss$e* %) the !&intiff.

In*ee*" the %n' te&&er who receive* it ws f$&&) wre tht the chec' ws notne(oti%&e since he st,!e* thereon the wor*s 6NON@NEGOTIABLE 8or P)ee3s

Acco$nt On&)6 n* 6NON@NEGOTIABLE TELLER NO. -" A$($st 1VILLEENTERPRI>E>" INC.

the !)ee cese* to %e in*icte* with reson%&e certint) in contrvention of >ection / of theNe(oti%&e Instr$,ents Lw. As wor*e*" it co$&* %e cce!te* s *e!osit to the cco$nt of the!rt) n,e* fter the s),%o&s 6ADC"6 or !)%&e to the Bn' s tr$stee" or s n (ent" forCsvi&&e Enter!rises" Inc." with the &tter %ein( the $&ti,te %eneficir). Tht ,%i($it) is to %et'en contr !roferente, tht is" constr$e* (inst NELL who c$se* the ,%i($it) n* co$&*hve &so voi*e* it %) the e?ercise of &itt&e ,ore cre. Th$s" Artic&e 1


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its own *efr$*tion; 9: The ori(in& chec' of 0 A$($st 1hn(hi Bn'in( Cor!ortion" / Phi&. (*.: VICENTE LEGAR=A Presi*ent 9>(*.: VICENTE LEGAR=A

9>(*.: 7O>E > >ARTE

6P&ese iss$e chec' to S 4r. 7ose >. >rte6

U!on the fi&in( of the co,!&int the *efen*nts !resente* their nswer in which the) &&e(e thtthe co@,'er the !ro,issor) note =on Vicente L. Le(r* *ie* on 8e%r$r) -" 1-2 n* hisestte is in the !rocess of +$*ici& *eter,intion in >!eci& Procee*in(s No. 2 of the Co$rtof 8irst Instnce of 4ni&. On the %sis of this &&e(tion it is !r)e*" s s!eci& *efense" thtthe estte of si* *ecese* Vicente L. Le(r* %e inc&$*e* s !rt)@*efen*nt. The co$rt in its


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*ecision r$&e* tht the inc&$sion of si* *efen*nt is $nnecessr) n* i,,teri&" inccor*nce with the !rovisions of Artic&e 112 of the =en) Civi& Co*e n* section 1ection 1< 9(: of the Ne(oti%&e Instr$,ents Lw !rovi*es s fo&&ows;

>EC. 1. >rte" the !)ee of the !ro,issor) note h* theri(ht to ho&* n) one or n) two of the si(ners of the !ro,issor) note res!onsi%&e forthe !),ent of the ,o$nt of the note. This +$*(,ent of the &ower co$rt sho$&* %effir,e*.

O$r ttention hs %een ttrcte* to the *iscre!ncies in the !rinte* recor* on !!e&.e note" first" tht the n,es of the *efen*nts" who re evi*ent&) the Conce!cion

4inin( Co." Inc. n* 7ose >. >rte" *o not !!er in the !rinte* recor* on !!e&. Thetit&e of the co,!&int set forth in the recor* on !!e& *oes not contin the n,e of7ose >rte" when it sho$&*" s two *efen*nts re n,e* in the co,!&int n* the on&)*efense of the *efen*nts is the non@inc&$sion of the *ecese* Vicente L. Le(r* s *efen*nt in the ction. e &so note tht the co!) of the !ro,issor) note which is setforth in the recor* on !!e& *oes not contin the n,e of the thir* ,'er 7ose >.>rte. 8ort$nte&)" the %rief of !!e&&ee on !(e - sets forth si* n,e of 7ose >. >rtes one of the co@,'er of the !ro,issor) note. Evi*ent&)" there is n tte,!t to ,is&e*the co$rt into %e&ievin( tht 7ose >. >rte is no one of the co@,'ers. The ttorne) forthe *efen*nts Att). 7ose >. >rte hi,se&f n* he sho$&* %e he&* !ri,ri&) res!onsi%&e

for the correctness of the recor* on !!e&. e" therefore" or*er the si* Att). 7ose >. >rte toe?!&in wh) in his recor* on !!e& his own n,e s one of the *efen*nts *oes not !!ern* neither *oes his n,e !!er s one of the co@si(ners of the !ro,issor) note in #$estion.>o or*ere*.. REPUBLIC PLANTER> BANK V CAThis is n !!e& %) w) of Petition for Review on Certiorri fro, the *ecision of the Co$rtof A!!e&s in CA G.R. CV No.


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>O OR=ERE=. 1

8ro, the %ove *ecision on&) *efen*nt 8er,in Cn&s !!e&e* to the thenInter,e*ite Co$rt 9now the Co$rt A!!e&s:. is contention ws tht ins,$ch s hesi(ne* the !ro,issor) notes in his c!cit) s officer of the *ef$nct or&*wi*eGr,ent 4n$fct$rin(" Inc" he sho$&* not %e he&* !erson&&) &i%&e for s$ch $thori5e*cor!orte cts tht he !erfor,e*. It is now the contention of the !etitioner Re!$%&icP&nters Bn' tht hvin( $ncon*ition&&) si(ne* the nine 9: !ro,issor) notes with>ho5o ,($chi" +oint&) n* sever&&)" *efen*nt 8er,in Cn&s is so&i*rit) &i%&ewith >ho5o ,($chi on ech of the nine notes.

e fin* ,erit in this !!e&.

8ro, the recor*s" these fcts re est%&ishe*; =efen*nt >ho5o ,($chi n*!rivte res!on*ent 8er,in Cn&s were Presi*entDChief O!ertin( Officer n*Tres$rer res!ective&)" of or&*wi*e Gr,ent 4n$fct$rin(" Inc.. B) virt$e of Bor*Reso&$tion No.1 *te* A$($st 1" 1


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for the entire ,o$nt" n* not ,ere&) for his !ro!ortionte shre. B) ,'in( +ointn* sever& !ro,ise to !) to the or*er of Re!$%&ic P&nters Bn'" !rivte res!on*ent8er,in Cn&s ss$,e* the so&i*r) &i%i&it) of *e%tor n* the !)ee ,) choose toenforce the notes (inst hi, &one or +oint&) with ,($chi n* Pinch 4n$fct$rin(Cor!ortion s so&i*r) *e%tors.

As to whether the inter!o&tion of the !hrse 6n* 9in: his !erson& c!cit)6 %e&ow thesi(nt$res of the ,'ers in the notes wi&& ffect the &i%i&it) of the ,'ers" e *o notfin* it necessr) to reso&ve n* *eci*e" %ec$se it is i,,teri& n* wi&& not ffect tothe &i%i&it) of !rivte res!on*ent 8er,in Cn&s s +oint n* sever& *e%tor of thenotes. ith or witho$t the !resence of si* !hrse" !rivte res!on*ent 8er,in Cn&sis !ri,ri&) &i%&e s co@,'er of ech of the notes n* his &i%i&it) is tht of so&i*r)*e%tor.

8in&&)" the res!on*ent Co$rt ,*e (rve error in ho&*in( tht n ,en*,ent in cor!ortion3s Artic&es of Incor!ortion effectin( chn(e of cor!orte n,e" in thiscse fro, or&*wi*e Gr,ent ,n$fct$rin( Inc to Pinch 4n$fct$rin( Cor!ortione?tin($ishe* the !erson&it) of the ori(in& cor!ortion.

The cor!ortion" $!on s$ch chn(e in its n,e" is in no sense new cor!ortion" northe s$ccessor of the ori(in& cor!ortion. It is the s,e cor!ortion with *ifferentn,e" n* its chrcter is in no res!ect chn(e*. 1

A chn(e in the cor!orte n,e *oes not ,'e new cor!ortion" n* whethereffecte* %) s!eci& ct or $n*er (ener& &w" hs no ffect on the i*entit) of thecor!ortion" or on its !ro!ert)" ri(hts" or &i%i&ities. 11

The cor!ortion contin$es" s %efore" res!onsi%&e in its new n,e for && *e%ts or other&i%i&ities which it h* !revio$s&) contrcte* or inc$rre*. 1

As (ener& r$&e" officers or *irectors $n*er the o&* cor!orte n,e %er no !erson&&i%i&it) for cts *one or contrcts entere* into %) officers of the cor!ortion" if *$&)$thori5e*. Ins,$ch s s$ch officers cte* in their c!cit) s (ent of the o&*cor!ortion n* the chn(e of n,e ,ent on&) the contin$tion of the o&* +$ri*ic&entit)" the cor!ortion %erin( the s,e n,e is sti&& %o$n* %) the cts of its (ents if$thori5e* %) the Bor*. Un*er the Ne(oti%&e Instr$,ents Lw" the &i%i&it) of !ersonsi(nin( s n (ent is s!ecific&&) !rovi*e* for s fo&&ows;

>ec. . Li%i&it) of !erson si(nin( s (ent n* so forth. here the instr$,entcontins or !erson **s to his si(nt$re wor*s in*ictin( tht he si(ns for or on%eh&f of !rinci!& " or in re!resenttive c!cit)" he is not &i%&e on the instr$,ent ifhe ws *$&) $thori5e* %$t the ,ere **ition of wor*s *escri%in( hi, s n (ent" ors fi&&in( re!resenttive chrcter" witho$t *isc&osin( his !rinci!&" *oes not e?e,!thi, fro, !erson& &i%i&it).

here the (ent si(ns his n,e %$t nowhere in the instr$,ent hs he *isc&ose* thefct tht he is ctin( in re!resenttive c!cit) or the n,e of the thir* !rt) for

who, he ,i(ht hve cte* s (ent" the (ent is !erson&&) &i%&e to t'e ho&*er of theinstr$,ent n* cnnot %e !er,itte* to !rove tht he ws ,ere&) ctin( s (ent of nother n*!ro& or e?trinsic evi*ence is not *,issi%&e to voi* the (ent3s !erson& &i%i&it). 1

On the !rivte res!on*ent3s contention tht the !ro,issor) notes were *e&ivere* to hi, in %&n'for his si(nt$re" we r$&e otherwise. A cref$& e?,intion of the notes in #$estion shows thtthe) re the stereot)!e !rinte* for, of !ro,issor) notes (ener&&) $se* %) co,,erci& %n'in(instit$tions to %e si(ne* %) their c&ients in o%tinin( &ons. >$ch !rinte* notes re inco,!&ete%ec$se there re %&n' s!ces to %e fi&&e* $! on ,teri& !rtic$&rs s$ch s !)ee3s n,e",o$nt of the &on" rte of interest" *te of iss$e n* the ,t$rit) *te. The ter,s n*con*itions of the &on re !rinte* on the note for the %orrower@*e%tor 3s !er$s&. An inco,!&eteinstr$,ent which hs %een *e&ivere* to the %orrower for his si(nt$re is (overne* %) >ection1- of the Ne(oti%&e Instr$,ents Lw which !rovi*es" in so fr s re&evnt to this cse" th$s;

>ec. 1-. B&n's; when ,) %e fi&&e*. S here the instr$,ent is wntin( in n) ,teri&!rtic$&r" the !erson in !ossesion thereof hs !ri, fcie $thorit) to co,!&ete it %) fi&&in( $!the %&n's therein. ... In or*er" however" tht n) s$ch instr$,ent when co,!&ete* ,) %eenforce* (inst n) !erson who %ec,e !rt) thereto !rior to its co,!&etion" it ,$st %efi&&e* $! strict&) in ccor*nce with the $thorit) (iven n* within reson%&e ti,e...

Proof tht the notes were si(ne* in %&n' ws on&) the se&f@servin( testi,on) of !rivteres!on*ent 8er,in Cn&s" s *eter,ine* %) the tri& co$rt" so tht the tri& co$rt 33*o$%ts the*efen*nt 9Cn&s: si(ne* in %&n' the !ro,issor) notes6. e chose to %e&ieve the %n'3s

testi,on) tht the notes were fi&&e* $! %efore the) were (iven to !rivte res!on*ent 8er,inCn&s n* *efen*nt >ho5o ,($chi for their si(nt$res s +oint n* sever& !ro,issors.8or si(nin( the notes %ove their t)!ewritten n,es" the) %o$n* the,se&ves s $ncon*ition&,'ers. e t'e +$*ici& notice of the c$sto,r) !roce*$re of co,,erci& %n's of re#$irin(their c&iente&e to si(n !ro,issor) notes !re!re* %) the %n's in !rinte* for, with %&n' s!ces&re*) fi&&e* $! s !er (ree* ter,s of the &on" &evin( the %orrowers@*e%tors to *o nothin(%$t re* the ter,s n* con*itions therein !rinte* n* to si(n s ,'ers or co@,'ers. henthe notes were (iven to !rivte res!on*ent 8er,in Cn&s for his si(nt$re" the notes wereco,!&ete in the sense tht the s!ces for the ,teri& !rtic$&r h* %een fi&&e* $! %) the %n's !er (ree,ent. The notes were not inco,!&ete instr$,ents neither were the) (iven to!rivte res!on*ent 8er,in Cn&s in %&n' s he c&i,s. Th$s" >ection 1- of the Ne(oti%IeInstr$,ents Lw is not !!&ic%&e.

The r$&in( in cse of Refor,in vs. To,o& re&ie* $!on %) the !!e&&te co$rt in re*$cin( the

interest rte on the !ro,issor) notes fro, 12F to 1F !er nn$, *oes not s#$re&) !!&) tothe instnt !etition. In the %ovecite* cse" the rte of 1F ws !!&ie* to fore%ernces of,one)" (oo*s or cre*it n* co$rt +$*(e,ets thereon" on&) in the %sence of n) sti!$&tion%etween the !rties.

In the cse t %r however " it ws fo$n* %) the tri& co$rt tht the rte of interest is F !ernn$," which interest rte the !&intiff ,) t n) ti,e witho$t notice" rise within the &i,its&&owe* &w. An* so" s of 8e%r$r) 12" 1/- " the !&intiff h* fi?e* the interest t 12F !ernn$,.


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This Co$rt hs he&* tht the rtes $n*er the Us$r) Lw" s ,en*e* %) Presi*enti&=ecree No. 112" re !!&ic%&e on&) to interests %) w) of co,!enstion for the $se orfore%ernce of ,one). Artic&e of the Civi& Co*e" on the other hn*" (overnsinterests %) w) of *,(es. 10 This fine *istinction ws not t'en into consi*ertion%) the !!e&&te co$rt" which inste* ,*e (ener& stte,ent tht the interest rte %et 1F !er nn$,.

Ins,$ch s this Co$rt h* *ec&re* tht increses in interest rtes re not s$%+ect ton) cei&in( !rescri%e* %) the Us$r) Lw" the !!e&&te co$rt erre* in &i,itin( the interestrtes t 1F !er nn$,. Centr& Bn' Circ$&r No. 0" >eries of 1/ re,ove* theUs$r) Lw cei&in( on interest rtes. 12

In the 1i(ht of the fore(oin( n&)sis n* $n*er the !&in &n($(e of the stt$te n*+$ris!r$*ence on the ,tter" the *ecision of the res!on*ent; Co$rt of A!!e&s %so&vin(!rivte res!on*ent 8er,in Cn&s is REVER>E= n* >ET A>I=E. 7$*(e,ent ishere%) ren*ere* *ec&rin( !rivte res!on*ent 8er,in Cn&s +oint&) n* sever&&) &i%&eon && the nine !ro,issor) notes with the fo&&owin( s$,s n* t 12F interest !er nn$,fro, the *tes in*icte*" to wit;

Un*er the !ro,issor) note ,r'e* s e?hi%it A" the s$, of P". with interestfro, 7n$r) " 1/1 $nti& f$&&) !i* $n*er !ro,issor) note ,r'e* s E?hi%it B" thes$, of P-". with interest fro, Nove,%er


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On A!ri& 0" 1i? $n*re* Ei(hteen Pesos /2D1 9P101"21/./2: s of A$($st 10" 1AN= >EVEN UN=RE= NINETEIGT PE>O> O> /2D1 9P101"21/."/2: s of A$($st10" 1ELLER ATLANTIC GUL8 AN=PACI8IC CO4PAN O8 4ANILA =I= NOT APPROVE =E8EN=ANT>@APPELLANT> CLAI4O8 ARRANT.

II

TAT TE LOER COURT ERRE= IN 8IN=ING TAT PLAINTI88@ APPELLEE I> A OL=ERIN =UE COUR>E O8 TE PRO4I>>OR NOTE AN= >UE= UN=ER >AI= NOTE A>OL=ER TEREO8 IN =UE COUR>E.

On 7$&) 1


10/68

o&*in( tht %rech of wrrnt) if n)" is not *efense vi&%&e to !!e&&nts either towith*rw fro, the contrct n*Dor *e,n* !ro!ortionte re*$ction of the !rice with*,(es in either cse 9Art. 102ec. 0ec. 2" NIL:.

In view of the essenti& e&e,ents fo$n* in the #$estione* !ro,issor) note" e o!inetht the s,e is &e(&&) n* conc&$sive&) enforce%&e (inst the *efen*nts@!!e&&nts.

ERE8ORE" fin*in( the *ecision !!e&e* fro, ccor*in( to &w n* evi*ence" efin* the !!e& witho$t ,erit n* th$s ffir, the *ecision in toto. ith costs (inst the!!e&&nts. 9!!. 0@00" Ro&&o:

The !etitioners3 ,otion for reconsi*ertion of the *ecision of 7$&) 1>OR NOTE I> CLEARL NOT A NEGOTIABLEIN>TRU4ENT A> =E8INE= UN=ER TE LA >INCE IT I> NEITER PAABLE TOOR=ER NOR TO BEARER.

II

TE RE>PON=ENT I> NOT A OL=ER IN =UE COUR>E; AT BE>T" IT I> A 4EREA>>IGNEE O8 TE >UB7ECT PRO4I>>OR NOTE.

III.

>INCE TE IN>TANT CA>E INVOLVE> A NON@NEGOTIABLE IN>TRU4ENT AN= TETRAN>8ER O8 RIGT> A> TROUG A 4ERE A>>IGN4ENT" TE PETITIONER> 4ARAI>E AGAIN>T TE RE>PON=ENT ALL =E8EN>E> TAT ARE AVAILABLE TO IT A>

AGAIN>T TE >ELLER@ A>>IGNOR" IN=U>TRIAL PRO=UCT> 4ARKETING.

IV.

TE PETITIONER> ARE NOT LIABLE 8OR TE PA4ENT O8 TE PRO4I>>OR NOTEBECAU>E;

A: TE >ELLER@A>>IGNOR I> GUILT O8 BREAC O8 ARRANT UN=ER TE LA

B: I8 AT ALL" TE RE>PON=ENT 4A RECOVER ONL 8RO4 TE >ELLER@A>>IGNORO8 TE PRO4I>>OR NOTE.

V.

TE A>>IGN4ENT O8 TE CATTEL 4ORTGAGE B TE >ELLER@ A>>IGNOR IN 8AVORO8 TE RE>PON=ENT =OE> NOT CANGE TE NATURE O8 TE TRAN>ACTION 8RO4BEING A >ALE ON IN>TALL4ENT> TO A PURE LOAN.

VI.

TE PRO4I>>OR NOTE CANNOT BE A=4ITTE= OR U>E= IN EVI=ENCE IN ANCOURT BECAU>E TE REQUI>ITE =OCU4ENTAR >TA4P> AVE NOT BEEN A88IE=TEREON OR CANCELLE=.

The !etitioners !r)e* tht +$*(,ent %e ren*ere* settin( si*e the *ecision *te* 7$&) 1


11/68

Pre&i,inri&)" it ,$st %e est%&ishe* t the o$tset tht we consi*er the instnt !etition tohve %een fi&e* on ti,e %ec$se the !etitioners3 ,otion for reconsi*ertion ct$&&)rise* new iss$es. It cnnot" therefore" %e consi*ere* !ro@ for,&.

The !etition is i,!resse* with ,erit.

8irst" there is no #$estion tht the se&&er@ssi(nor %reche* its e?!ress @*) wrrnt)%ec$se the fin*in(s of the tri& co$rt" *o!te* %) the res!on*ent !!e&&te co$rt" tht61- *)s fter *e&iver)" the first trctor %ro'e *own n* *)s" therefter" the secon*trctor %ec,e ino!er%&e6 re s$stine* %) the recor*s. The !etitioner ws c&er&) victi, of wrrnt) not honore* %) the ,'er.

The Civi& Co*e !rovi*es tht;

ART. 1021. The ven*or sh&& %e res!onsi%&e for wrrnt) (inst the hi**en *efectswhich the thin( so&* ,) hve" sho$&* the) ren*er it $nfit for the $se for which it isinten*e*" or sho$&* the) *i,inish its fitness for s$ch $se to s$ch n e?tent tht" h* theven*ee %een wre thereof" he wo$&* not hve c#$ire* it or wo$&* hve (iven &ower!rice for it %$t si* ven*or sh&& not %e nswer%&e for !tent *efects or those which,) %e visi%&e" or for those which re not visi%&e if the ven*ee is n e?!ert who" %)reson of his tr*e or !rofession" sho$&* hve 'nown the,.

ART. 102. In s&e of (oo*s" there is n i,!&ie* wrrnt) or con*ition s to the #$&it)or fitness of the (oo*s" s fo&&ows;

91: here the %$)er" e?!ress&) or %) i,!&iction ,'es 'nown to the se&&er the!rtic$&r !$r!ose for which the (oo*s re c#$ire*" n* it !!ers tht the %$)er re&ieson the se&&ers s'i&& or +$*(e +$*(,ent 9whether he %e the (rower or ,n$fct$rer ornot:" there is n i,!&ie* wrrnt) tht the (oo*s sh&& %e reson%&) fit for s$ch!$r!ose

??? ??? ???

ART. 102-. An i,!&ie* wrrnt) or con*ition s to the #$&it) or fitness for !rtic$&r!$r!ose ,) %e nne?e* %) the $s(e of tr*e.

??? ??? ???

ART. 1022. The ven*or is res!onsi%&e to the ven*ee for n) hi**en f$&ts or *efects inthe thin( so&* even tho$(h he ws not wre thereof.

This !rovision sh&& not !!&) if the contrr) hs %een sti!$&te*" n* the ven*or wsnot wre of the hi**en f$&ts or *efects in the thin( so&*. 9E,!hsis s$!!&ie*:.

It is !tent then" tht the se&&er@ssi(nor is &i%&e for its %rech of wrrnt) (inst the!etitioner. This &i%i&it) s (ener& r$&e" e?ten*s to the cor!ortion to who, it ssi(ne*

its ri(hts n* interests $n&ess the ssi(nee is ho&*er in *$e co$rse of the !ro,issor) note in#$estion" ss$,in( the note is ne(oti%&e" in which cse the &tter3s ri(hts re %se* on thene(oti%&e instr$,ent n* ss$,in( f$rther tht the !etitioner3s *efenses ,) not !revi&(inst it.

>econ*&)" it &i'ewise cnnot %e *enie* tht s soon s the trctors %ro'e *own" the !etitioner@cor!ortion notifie* the se&&er@ssi(nor3s sister co,!n)" AG P" %o$t the %re'*own %se*on the se&&er@ssi(nor3s e?!ress @*) wrrnt)" with which the &tter co,!&ie* %) sen*in( its,echnics. owever" *$e to the se&&er@ssi(nor3s *e&) n* its fi&$re to co,!&) with itswrrnt)" the trctors %ec,e tot&&) $nservice%&e n* $se&ess for the !$r!ose for which the)were !$rchse*.

Thir*&)" the !etitioner@cor!ortion" therefter" $ni&ter&&) rescin*e* its contrct with the se&&er@ssi(nor.

Artic&es 111 n* 102< of the Civi& Co*e !rovi*e tht;

ART. 111. The !ower to rescin* o%&i(tions is i,!&ie* in reci!roc& ones" in cse one of theo%&i(ors sho$&* not co,!&) with wht is inc$,%ent $!on hi,.

The in+$re* !rt) ,) choose %etween the f$&fi&&,ent n* the rescission of the o%&i(tion withthe !),ent of *,(es in either cse. e ,) &so see' rescission" even fter he hschosen f$&fi&&,ent" if the &tter sho$&* %eco,e i,!ossi%&e.

??? ??? ???

ART. 102


12/68

Goin( %c' to the core iss$e" we r$&e tht the !ro,issor) note in #$estion is not ne(oti%&e instr$,ent.

The !ertinent !ortion of the note is s fo&&ows;

8OR VALUE RECEIVE=" IDwe +oint&) n* sever&&) !ro,ise to !) to the IN=U>TRIALPRO=UCT> 4ARKETING" the s$, of ONE 4ILLION NINET TREE TOU>AN=>EVEN UN=RE= EIGT NINE PE>O> N." 8e%r$r) 1" 1/:.

>econ*&)" even conce*in( for !$r!oses of *isc$ssion tht the !ro,issor) note in #$estion is ne(oti%&e instr$,ent" the res!on*ent cnnot %e ho&*er in *$e co$rse for ,ore si(nificntreson.

The evi*ence !resente* in the instnt cse shows tht !rior to the s&e on inst&&,ent of the

trctors" there ws n rrn(e,ent %etween the se&&er@ssi(nor" In*$stri& Pro*$cts 4r'etin("n* the res!on*ent where%) the &tter wo$&* !) the se&&er@ssi(nor the entire !$rchse !ricen* the se&&er@ssi(nor" in t$rn" wo$&* ssi(n its ri(hts to the res!on*ent which c#$ire* theri(ht to co&&ect the !rice fro, the %$)er" herein !etitioner Conso&i*te* P&)woo* In*$stries" Inc.

A ,ere !er$s& of the =ee* of >&e with Chtte& 4ort((e with Pro,issor) Note" the =ee* ofAssi(n,ent n* the =isc&os$re of LonDCre*it Trnsction shows tht si* *oc$,entsevi*encin( the s&e on inst&&,ent of the trctors were && e?ec$te* on the s,e *) %) n*,on( the %$)er" which is herein !etitioner Conso&i*te* P&)woo* In*$stries" Inc. the se&&er@ssi(nor which is the In*$stri& Pro*$cts 4r'etin( n* the ssi(nee@finncin( co,!n)"


13/68

which is the res!on*ent. Therefore" the res!on*ent h* ct$& 'now&e*(e of the fcttht the se&&er@ssi(nor3s ri(ht to co&&ect the !$rchse !rice ws not $ncon*ition&" n*tht it ws s$%+ect to the con*ition tht the trctors @so&* were not *efective. Theres!on*ent 'new tht when the trctors t$rne* o$t to %e *efective" it wo$&* %e s$%+ectto the *efense of fi&$re of consi*ertion n* cnnot recover the !$rchse !rice fro,the !etitioners. Even ss$,in( for the s'e of r($,ent tht the !ro,issor) note isne(oti%&e" the res!on*ent" which too' the s,e with ct$& 'now&e*(e of thefore(oin( fcts so tht its ction in t'in( the instr$,ent ,o$nte* to %* fith" is not ho&*er in *$e co$rse. As s$ch" the res!on*ent is s$%+ect to && *efenses which the!etitioners ,) rise (inst the se&&er@ssi(nor. An) other inter!rettion wo$&* %e ,ostine#$ito$s to the $nfort$nte %$)er who is not on&) s**&e* with two $se&ess trctors%$t ,$st &so fce &ws$it fro, the ssi(nee for the entire !$rchse !rice n* && itsinci*ents witho$t %ein( %&e to rise v&i* *efenses vi&%&e s (inst the ssi(nor.

Lst&)" the res!on*ent fi&e* to !resent n) evi*ence to !rove tht it h* no 'now&e*(eof n) fct" which wo$&* +$stif) its ct of t'in( the !ro,issor) note s not ,o$ntin( to%* fith.

>ections 0 n* 02 of the Ne(oti%&e Instr$,ents Lw !rovi*e tht; ne(otitin( it.

??? ??? ???

>EC. 0. AT CON>TITUTE> A OL=ER IN =UE COUR>E. S A ho&*er in *$e

co$rse is ho&*er who hs t'en the instr$,ent $n*er the fo&&owin( con*itions;

??? ??? ???

??? ??? ???

9c: Tht he too' it in (oo* fith n* for v&$e

9*: Tht the ti,e it ws ne(otite* %) hi, he h* no notice of n) infir,it) in theinstr$,ent of *effect in the tit&e of the !erson ne(otitin( it

??? ??? ???

>EC. 02. AT CON>TITUTE> NOTICE O8 =E88ECT. S To constit$te notice of n

infir,it) in the instr$,ent or *efect in the tit&e of the !erson ne(otitin( the s,e" the!erson to who, it is ne(otite* ,$st hve h* ct$& 'now&e*(e of the infir,it) or*efect" or 'now&e*(e of s$ch fcts tht his ction in t'in( the instr$,ent ,o$nts to%* fith. 9E,!hsis s$!!&ie*:

e s$%scri%e to the view of C,!os n* C,!os tht finncin( co,!n) is not ho&*er in (oo* fith s to the %$)er" to wit;

In inst&&,ent s&es" the %$)er $s$&&) iss$es note !)%&e to the se&&er to cover the!$rchse !rice. 4n) ti,es" in !$rs$nce of !revio$s rrn(e,ent with the se&&er"

finnce co,!n) !)s the f$&& !rice n* the note is in*orse* to it" s$%ro(tin( it to the ri(ht toco&&ect the !rice fro, the %$)er" with interest. ith the incresin( fre#$enc) of inst&&,ent%$)in( in this co$ntr)" it is ,ost !ro%%&e tht the ten*enc) of the co$rts in the Unite* >ttes to!rotect the %$)er (inst the finnce co,!n) wi&& " the finnce co,!n) wi&& %e s$%+ect to the*efense of fi&$re of consi*ertion n* cnnot recover the !$rchse !rice fro, the %$)er. As(inst the r($,ent tht s$ch r$&e wo$&* serio$s&) ffect 6 certin ,o*e of trnsctin(%$siness *o!te* thro$(ho$t the >tte"6 co$rt in one cse stte*;

It ,) %e tht o$r ho&*in( here wi&& re#$ire so,e chn(es in %$siness ,etho*s n* wi&& i,!ose (reter %$r*en on the finnce co,!nies. e thin' the %$)er@4r. 4rs. Gener& P$%&ic@sho$&* hve so,e !rotection so,ewhere &on( the &ine. e %e&ieve the finnce co,!n) is%etter %&e to %er the ris' of the *e&er3s inso&venc) thn the %$)er n* in fr %etter !ositionto !rotect his interests (inst $nscr$!$&o$s n* inso&vent *e&ers. . . .

If this o!inion i,!oses (ret %$r*ens on finnce co,!nies it is !otent r($,ent in fvor of r$&e which win ffor* !$%&ic !rotection to the (ener& %$)in( !$%&ic (inst $nscr$!$&o$s*e&ers in !erson& !ro!ert). . . . 94$t$& 8innce Co. v. 4rtin" 2 >o. * 2-" -- ALR * 110: 9C,!os n* C,!os" Notes n* >e&ecte* Cses on Ne(oti%&e Instr$,ents Lw"Thir* E*ition" !. 1/:.

In the cse of Co,,erci& Cre*it Cor!ortion v. Orn(e Co$ntr) 4chine or's 9- C&. *4I>>E=.


14/68

. >E>BRENO V CAOn 8e%r$r) 1/1" !etitioner R$& >es%reXo ,*e ,one) ,r'et !&ce,ent in the,o$nt of P". with the Phi&i!!ine Un*erwriters 8innce Cor!ortion96Phi&finnce6:" Ce%$ Brnch the !&ce,ent" with ter, of thirt)@two 9: *)s" wo$&*,t$re on 1 4rch 1/1" Phi&finnce" &so on 8e%r$r) 1/1" iss$e* the fo&&owin(*oc$,ents to !etitioner;

9: the Certificte of Confir,tion of >&e" 6witho$t reco$rse"6 No. -2 of one 91:=e&t 4otors Cor!ortion Pro,issor) Note 96=4C PN6: No. BANK4'ti >toc' E?chn(e B&*(."

A)& Aven$e" 4'ti"4etro 4ni&

8e%r$r) " 1/1SSSSSSSVALUE =ATE

TO R$& >es%reXo

A!ri& 2" 1/1SSSSSSSS4ATURIT =ATE

NO. 1/0

=ENO4INATE= CU>TO=IAN RECEIPT

This confir,s tht s *$&) C$sto*in Bn'" n* $!on instr$ction of PILIPPINEUN=ERRITE> 8INANCE CORPORATION" we hve in o$r c$sto*) the fo&&owin( sec$rities to)o$ sic the e?tent herein in*icte*.

>ERIAL 4AT. 8ACE I>>UE= REGI>TERE= A4OUNTNU4BER =ATE VALUE B OL=ER PAEE

ec$rities C$sto*inshi! A(ree,ent6

%etween Pi&i!ins n* Phi&finnce. Phi&finnce *i* not !rovi*e the !!ro!rite instr$ctionsPi&i!ins never re&ese* =4C PN No.


15/68

In the ,enti,e" Phi&finnce" on 1/ 7$ne 1/1" ws !&ce* $n*er the +oint,n(e,ent of the >ec$rities n* e?chn(e co,,ission 96>EC6: n* the Centr&Bn'. Pi&i!ins *e&ivere* to the >EC =4C PN No. e!te,%er 1/ n ction for *,(es with the Re(ion& Tri& Co$rt 96RTC6: of Ce%$Cit)" Brnch 1" (inst !rivte res!on*ents =e&t n* Pi&i!ins. 0 The tri& co$rt" in

*ecision *te* 0 A$($st 1/


16/68

8irst&)" it is i,!ortnt to %er in ,in* tht the ne(otition of ne(oti%&e instr$,ent,$st %e *istin($ishe* fro, the ssi(n,ent or trnsfer of n instr$,ent whether tht %ene(oti%&e or non@ne(oti%&e. On&) n instr$,ent #$&if)in( s ne(oti%&e instr$,ent$n*er the re&evnt stt$te ,) %e ne(otite* either %) in*orse,ent thereof co$!&e*with *e&iver)" or %) *e&iver) &one where the ne(oti%&e instr$,ent is in %erer for,. Ane(oti%&e instr$,ent ,)" however" inste* of %ein( ne(otite*" &so %e ssi(ne* ortrnsferre*. The &e(& conse#$ences of ne(otition s *istin($ishe* fro, ssi(n,ent of ne(oti%&e instr$,ent re" of co$rse" *ifferent. A non@ne(oti%&e instr$,ent ,)"

o%vio$s&)" not %e ne(otite* %$t it ,) %e ssi(ne* or trnsferre*" %sent n e?!ress!rohi%ition (inst ssi(n,ent or trnsfer written in the fce of the instr$,ent;

The wor*s 6not ne(oti%&e"6 st,!e* on the fce of the %i&& of &*in(" *i* not *estro) itsssi(n%i&it)" %$t the so&e effect ws to e?e,!t the %i&& fro, the stt$tor) !rovisionsre&tive thereto" n* %i&&" tho$(h not ne(oti%&e" ,) %e trnsferre* %) ssi(n,entthe ssi(nee t'in( s$%+ect to the e#$ities %etween the ori(in& !rties. 1 9E,!hsis**e*:

=4C PN No.


17/68

*vnce tht it wo$&* %e e?!en*itio$s&) trnscte* n* trnsferre* to n)investorD&en*er witho$t nee* of notice to si* iss$er. In !rctice" no notifiction is (ivento the %orrower or iss$er of co,,erci& !!er of the s&e or trnsfer to the investor.

??? ??? ???

There is nee* to in*ivi*$te ,one) ,r'et trnsction" re&tive&) nove& instit$tion inthe Phi&i!!ine co,,erci& scene. It hs %een inten*e* to fci&itte the f&ow n*c#$isition of c!it& on n i,!erson& %sis. An* s s!ecific&&) re#$ire* %)

Presi*enti& =ecree No. 2ison v. !@Tico" 1the Co$rt e?!&ine* tht;

no ,n is %o$n* to re,in *e%tor he ,) !) to hi, with who, he contcte* to !) n* ifhe !) %efore notice tht his *e%t hs %een ssi(ne*" the &w ho&*s hi, e?onerte*" for thereson tht it is the *$t) of the !erson who hs c#$ire* tit&e %) trnsfer to *e,n* !),entof the *e%t" to (ive his *e%t or notice.

At the ti,e tht =e&t ws first !$t to notice of the ssi(n,ent in !etitioner3s fvor on 1- 7$&)1/1" =4C PN No. ince the ssi(norPhi&finnce co$&* not hve then co,!e&&e* !),ent new %) =e&t of =4C PN No.


18/68

co$&* hve notifie* =e&t on 2 4rch 1/1 when !etitioner receive* fro, Phi&finncethe =eno,inte* C$sto*inshi! Recei!t 96=CR6: No. 1/0 iss$e* %) !rivteres!on*ent Pi&i!ins in fvor of !etitioner. Petitioner co$&*" in fine" hve notifie* =e&t tn) ti,e %efore the ,t$rit) *te of =4C PN No. es%reXo s %eneficir) of thec$sto*inshi! or *e!ositor) (ree,ent. e *o not consi*er tht this is si,!&e cse of sti!$&tion !o$r $tri. The c$sto*inshi! or *e!ositr) (ree,ent ws est%&ishe* s ninte(r& !rt of the ,one) ,r'et trnsction entere* into %) !etitioner with Phi&finnce.Petitioner %o$(ht !ortion of =4C PN No.


19/68

In the cse t %r" the c$sto*in@*e!ositr) %n' Pi&i!ins ref$se* to *e&iver thesec$rit) *e!osite* with it when !etitioner first *e,n*e* !h)sic& *e&iver) thereof on

A!ri& 1/1. e ,$st (in note" in this connection" tht on A!ri& 1/1" =4C PN No.r." sittin( on the Bor* of =irectors of && three 9:co,!nies. Petitioner hs neither &&e(e* nor !rove* tht one or nother of the three

9: conce*e*&) re&te* co,!nies $se* the other two 9: s ,ere &ter e(os or tht thecor!orte ffirs of the other two 9: were *,inistere* n* ,n(e* for the %enefit of one.There is si,!&) not eno$(h evi*ence of recor* to +$stif) *isre(r*in( the se!rte cor!orte!erson&ities of *e&t n* Pi&i!ins n* to ho&* the, &i%&e for n) ss$,e* or $n*eter,ine*&i%i&it) of Phi&finnce to !etitioner. /

ERE8ORE" for && the fore(oin(" the =ecision n* Reso&$tion of the Co$rt of A!!e&s [email protected]. CV No. 1010 *te* 1 ,rch 1/ n* 1< 7$&) 1/" res!ective&)" re here%)4O=I8IE= n* >ET A>I=E" to the e?tent tht s$ch =ecision n* Reso&$tion h* *is,isse*

!etitioner3s co,!&int (inst Pi&i!ins Bn'. Privte res!on*ent Pi&i!ins %n' is here%)OR=ERE= to in*e,nif) !etitioner for *,(es in the ,o$nt of P-"0." !&$s &e(&interest thereon t the rte of si? !ercent 92F: !er nn$, co$nte* fro, A!ri& 1/1. As so,o*ifie*" the =ecision n* Reso&$tion of the Co$rt of A!!e&s re here%) A88IR4E=. No!rono$nce,ent s to costs.

A==ITIONAL; AGUILAR V CIT TRU>T

>o,eti,e in 4) 1" 7ose!hine A($i&r 97ose!hine: cnvsse*" vi te&e!hone" !rices ofcrs fro, *ifferent cr *e&ers &iste* in the )e&&ow !(es of the Phi&i!!ine Lon( =istnceTe&e!hone *irector).

On 4) " 1" or&* Crs" Inc. 9or&* Crs: sent its re!resenttive 7ose&ito Pere5 9Pere5:n* Vn(ie T)( 9Vn(ie: to the A($i&r resi*ence in New 4ni&" Q$e5on Cit) %rin(in( with

the, c&&in( cr*s" %roch$res n* !rice &ist for *ifferent cr ,o*e&s" ,on( other thin(s. Thetwo re!resenttives *isc$sse* with 7ose!hine the *vnt(es n* *is*vnt(es of the*ifferent ,o*e&s" their !rices n* ter,s of !),ent. 1

7ose!hine hvin( *eci*e* to !$rchse white 1 Nissn C&iforni t the (ree* !rice ofP


20/68

The A($i&rs *i* e?ec$te too chtte& ,ort((e 0 in fvor of or&* Crs whiche,%o*ie* *ee* of ssi(n,ent 2 in fvor of Cit)tr$st 8innce Cor!ortion 9Cit)tr$st:. &e Contrcts" =ee* ofChtte& 4ort((es" Tr$st Recei!ts" Contrcts of Lese n* other evi*ences ofin*e%te*ness or choses in ction" si(ne* %) the c$sto,ers evi*encin( the $n!i*o%&i(tions *$&) ne(otite* n*Dor ssi(ne* in fvor of Cit)tr$st %) virt$e of =ee* of

Assi(n,ent *$&) notri5e*

. =isco$ntin( of the inst&&,ent !!ers %) virt$es hereof sh&& %e on witho$t@reco$rsen* offer@n*@cce!tnce %sis" n* tht if Cit)tr$st fin*s the s,e cce!t%&e" it sh&&!$rchse n* !) or&* Crs the %&nce *$e n* o$tstn*in( on the res!ectiveinst&&,ent !!ers so !$rchse* fter *e*$ctin( the finncin( n* other chr(es.=isco$ntin( n* !$rchse of inst&&,ent !!ers sh&& %e t the so&e o!tion n**iscretion of Cit)tr$st

??? ??? ???

0. As f$rther wrrnties" or&* Crs here%) (rees n* sh&& %e %o$n* %) thefo&&owin(;

. or&* Crs ($rntees to Cit)tr$st its s$ccessors" n* ssi(ns" tht it hs f$&& ri(htn* &e(& $thorit) to ,'e the ssi(n,ent or *isco$ntin( tht the inst&&,ent !!ersso *isco$nte* %) virt$e of this (ree,ent" re s$%sistin(" v&i*" enforce%&e n* in &&res!ects wht the) !$r!ort to %e tht the !!ers contin the entire (ree,ent %etweenthe c$sto,ers n* or&* Crs tht si* !!ers re not s$%+ect to n) *efense" offsetor co$nterc&i, tht the !erson&t) covere* %) si* !!ers hve %een *e&ivere* to n*cce!te* %) the c$sto,ers in f$&& co,!&ince with the or*ers n* s!ecifictions of the&tter tht the re#$ire* *own!),ent hs %een !i* in f$&& %) the c$sto,er n* tht the

%&nces !!erin( in si* *oc$,ents re net n* cc$rte n* there re no contr@cco$nts" set@offs" or co$nterc&i,s whtsoever (inst si* ,o$nts tht the!),ent thereof is not contin(ent or con*itione* on the f$&fi&&,ent of n) contrct"con*ition or wrrnt)" !st or f$t$re" e?!ress or i,!&ie* tht it hs %so&$te n* (oo*tit&e to s$ch contrcts n* the !erson&ties covere* there%) n* the ri(ht to se&& n*trnsfer the s,e in fvor of Cit)tr$st n* tht si* contrcts n* !erson&ties hvenot %een !revio$s&) so&*" *isco$nte*" ssi(ne* or !&e*(e* to n) other !rt) nor wi&&or&* Crs se&&" ssi(n" *isco$nt or !&e*(e the s,e herefter =IE>C

??? ??? ???

2. In the event tht it sh&& t n) ti,e !!er tht n inst&&,ent !!er which Cit)tr$st!$rchse* fro, or&* Crs *o not confor, to the wrrnties $n*er this A(ree,ent or to the#$&ifictions (iven in !r(r!h 0" Cit)tr$st sh&& ressi(n" n* or&* Crs re!$rchse" theinst&&,ent !!er9s: n* the &tter sh&& !) Cit)tr$st the $n!i* %&nce of the cco$nt &essn) $nerne* service chr(es within ten 91: *)s fro, or&* Cr3s recei!t of notice ofressi(n,ent. >i* notice wi&& contin stte,ent of the ,o$nt !)%&e %) or&* Crs s

foresi*. No ten*er or !resenttion of the !!er ressi(ne* sh&& %e necessr).

??? ??? ??? 9E,!hsis n* $n*erscorin( s$!!&ie*:

Cit)tr$st !r)e* in its Crossc&i, (inst or&* Crs tht 6in the re,ote event tht theco,!&int is not *is,isse* . . . or&* Crs %e or*ere* to !) && n* whtever $n!i*o%&i(tion *$e to it risin( fro, the !ro,issor) note . . .6 0

In its Answer with Co$nterc&i," 2 or&* Crs c&i,e* tht" ,on( other thin(s" it receive*on&) the chec' in the ,o$nt of P1-/". 9Chec' No. 11


22/68

B) =ecision / *te* 7n$r) 1" 1" Brnch ERIOU> ERROR> O8 8ACT AN= O8 LA IN NOTOL=ING TAT >POU>E> AGUILAR ARE LIABLE TO CITTRU>T 8OR TE PA4ENTO8 TE PRO4I>>OR NOTE 9PN: 9E. 6I6: AN= ARE BOUN= B TE TER4> AN=CON=ITION> O8 >AI= PN AN= CATTEL 4ORTGAGE 9E. 66:.

II.

TAT A>>U4ING" TAT >POU>E> AGUILAR ARE NOT LIABLE ON TE PRO4I>>ORNOTE" TE COURT A QUO CO44ITTE= >ERIOU> ERROR> O8 8ACT AN= O8 LA INNOT OL=ING TAT ORL= CAR> I> LIABLE TO CITTRU>T A> GENERAL EN=OR>ER

O8 TE PRO4I>>OR NOTE AN= 8OR VIOLATION O8 IT> ARRANT UN=ER TERECEIVABLE> 8INANCING AGREE4ENT 9R8A:. Tc>A

III.

TE COURT A QUO" CO44ITTE= >ERIOU> ERROR> IN 8ACT AN= IN LA EN ITA=7U=GE= CITTRU>T 7OINTL AN= >EVERALL LIABLE TO >POU>E> AGUILAR. 9E,!hsis s$!!&ie*:

or&* Crs !!e&e* too" conten*in( tht the tri& co$rt erre* in;

I.

. . . OL=ING ORL= CAR>" INC." LIABLE 8OR TE PER>ONAL ACTION> OR ACTION>

BEON= TE >COPE O8 AUTORIT O8 IT> >ALE> AGENT 7O>ELITO PEREY.II.

. . . OL=ING TAT TE >ALE I> A CA> >ALE AN= NOT AN IN>TALL4ENT >ALE A>EVI=ENCE= B TE PRO4I>>OR NOTE AN= CATTEL 4ORTGAGE EECUTE= B>POU>E> AGUILAR IN 8AVOR O8 ORL= CAR> AN= A>>IGNE= TO CITTRU>T.

III.


23/68

. . . AAR=ING =A4AGE> TO >POU>E> AGUILAR. -

B) =ecision -1 of =ece,%er 0" " the !!e&&te co$rt ,o*ifie* tht of the tri& co$rt"the *is!ositive !ortion of which re*s ver%ti,;

ERE8ORE" !re,ises consi*ere*" the =ecision of the co$rt #$o is here%)4O=I8IE= to re* s fo&&ows;

1. Or*erin( the A($i&rs to !) Cit)tr$st the ,o$nt of P0"-/2.0/ re!resentin( the

$n!i* %&nce of the !ro,issor) note.

. Or*erin( or&* Crs to !) the A($i&rs the fo&&owin( ,o$nt" to wit;

9: P0"-/2.0/ re!resentin( the $n!i* %&nce of the !ro,issor) note whichs!o$ses A($i&r were heretofore or*ere* to !) Cit)tr$st

9%: P0". s ,or& *,(es P1". s e?e,!&r) *,(es P0".s ttorne)3s fees n* P". s &iti(tion e?!enses.

. Or*erin( or&* Crs to !) Cit)tr$st the fo&&owin( ,o$nt" to wit;

: Pen&t) chr(es %se* on P0"-/2.0/ t the rte of 0F !er ,onth fro, *te of*ef$&t $nti& f$&&) !i*

%: P0". s ttorne)3s fees n* !!ernce fee of P0. !er herin(.

c: P0". s &i#$i*te* *,(es" cost of s$it n* other &iti(tion e?!enses.9Un*erscorin( s$!!&ie*:

ence" the !resent se!rte !etitions of the A($i&rs n* or&* Crs.

The A($i&rs f$&t the !!e&&te co$rt in;

A.

. . . GIVING LEGAL E88ECT TO TE PRO4I>>OR NOTE 9PN: AN= IT>=ERIVATIVE IN>TRU4ENT> EN IT RULE= TE >A4E NULL AN= VOI= >INCEIT I> NOT REALL =E>IRE= OR INTEN=E= TO PRO=UCE LEGAL E88ECT.EcTC=

B.

. . . RULING CITTRU>T A OL=ER IN =UE COUR>E CONTRAR TO EVI=ENCEON RECOR=.

C.

. . . RULING >POU>E> AGUILAR LIABLE ON TE PN CONTRAR TO EVI=ENCE ONRECOR=.

=.

. . . RULING CITTRU>T NOT 7OINTL AN= >EVERALL LIABLE IT ORL= CAR>8OR =A4AGE> AN= ATTORNE3> 8EE> CONTRAR TO EVI=ENCE ON RECOR=. -9Un*erscorin( s$!!&ie*:

On the other hn*" or&* Crs conten* tht;

A. TE A>>AILE= =ECI>ION> O8 TE ONORABLE COURT O8 APPEAL> ARECONTRAR TO LA AN= PREVAILING 7URI>PRU=ENCE.

B. CON>I=ERING TAT TE A>>AILE= =ECI>ION> O8 TE ONORABLE COURT O8APPEAL> ARE CONTRAR TO LA AN= PREVAILING 7URI>PRU=ENCE TE AAR=>O8 4ORAL =A4AGE> AGAIN>T ORL= CAR>" INC. ARE AL>O CONTRAR TO LA.

C. LIKEI>E" TE AAR=> O8 EE4PLAR =A4AGE>" ATTORNE3> 8EE> AN=APPEARANCE 8EE>" LITIGATION EPEN>E> AN= TE CO>T O8 >UIT AGAIN>T ORL=CAR> ARE AL>O CONTRAR TO LA. - 9Un*erscorin( s$!!&ie*:

C&er&)" Pere5 ws the (ent of or&* Crs n* ws *$&) $thori5e* to cce!t !),ent for the

cr. 7ose!hine3s testi,on) tht %efore iss$in( the chec's in the n,e of Pere5" she verifie*fro, his s$!ervisor n* the &tter confir,e* Pere53 $thorit) to receive !),ent re,ins$nref$te* %) or&* Crs. In fct" or&* Crs *,itte* in its Answer with Co$nterc&i, tht6wht ws ct$&&) !i* %) the A($i&rs n* receive* %) it ws 7ose!hine3s chec' in the,o$nt of P1-/". s *own!),ent for the si* cr.6 -- Prenthetic&&)" s er&ier stte*"when 7ose!hine s!o'e to or&* Crs3 Vice Presi*ent =o,on*on" the &tter infor,e* her thtthe &st !),ent h* not %een receive*. -0 This infor,tion of =o,on*on *oes not +i%e withthe c&i, of or&* Crs tht it receive* on&) 7ose!hine3s first chec' in the ,o$nt ofP1-/". s *own!),ent.

As the %ove t%&e of chec's iss$e* %) 7ose!hine shows" the chec' in the ,o$nt ofP1-/"." Chec' No. 11ince the A($i&rs3 !),ent to Pere5 is *ee,e* !),ent to or&* Crs" the !ro,issor) note"chtte& ,ort((e n* other ccessor) *oc$,ents the) e?ec$te* which were to t'e effect on&)in the event the chec's wo$&* %e *ishonore* were *ee,e* n$&&ifie*" && the chec's hvin( %eenc&ere*.

>ince the con*ition for the instr$,ents to %eco,e effective ws f$&fi&&e*" the o%&i(tion on the!rt of the A($i&rs to %e %o$n* there%) *i* not rise n* or&* Crs *i* not th$s c#$ire ri(htsthere$n*er fo&&owin( Art. 11/1 of the Civi& Co*e which !rovi*es;


24/68

ARTICLE 11/1. In con*ition& o%&i(tions" the c#$isition of ri(hts" s we&& s thee?tin($ish,ent or &oss of those &re*) c#$ire*" sh&& *e!en* $!on the h!!enin( ofthe event which constit$tes the con*ition. 9E,!hsis s$!!&ie*: c=EC

As no ri(ht (inst the A($i&rs ws c#$ire* %) or&* Crs $n*er the !ro,issor) noten* chtte& ,ort((e" it h* nothin( to ssi(n to Cit)tr$st. Conse#$ent&)" Cit)tr$stcnnot enforce the instr$,ents (inst the A($i&rs" for n ssi(nee cnnot c#$ire(reter ri(hts thn those !ertinin( to the ssi(nor. -2

At && events" the A($i&rs hvin( f$&&) !i* the cr %efore the) %ec,e wre of thessi(n,ent of the instr$,ents to Cit)tr$st when the) receive* notice thereof %)Cit)tr$st" the) were re&ese* of their o%&i(tion there$n*er. The Civi& Co*e so !rovi*es;

ARTICLE 122. The *e%tor who" %efore hvin( 'now&e*(e of the ssi(n,ent" !)s hiscre*itor" sh&& %e re&ese* fro, the o%&i(tion.

hi&e Cit)tr$st cnnot enforce the instr$,ents (inst the A($i&rs" since $n*er theR8A" s!ecific&&) !r(r!h 09: thereof" or&* Crs ($rntee* s fo&&ows;

0. As f$rther wrrnties" or&* Crs here%) (rees n* sh&& %e %o$n* %) thefo&&owin(;

. or&* Crs ($rntees to Cit)tr$st its s$ccessors" n* ssi(ns" tht it hs f$&& ri(ht

n* &e(& $thorit) to ,'e the ssi(n,ent or *isco$ntin( tht the inst&&,ent !!ersso *isco$nte* %) virt$e of this (ree,ent" re s$%sistin(" v&i*" enforce%&e n* in &&res!ects wht the) !$r!ort to %e tht the !!ers contin the entire (ree,ent %etweenthe c$sto,ers n* or&* Crs . . . tht it hs %so&$te n* (oo* tit&e to s$chcontrcts n* the !erson&ties covere* there%) n* the ri(ht to se&& n* trnsfer thes,e in fvor of Cit)tr$st . . . 9E,!hsis n* $n*erscorin( s$!!&ie*:"

Cit)tr$st3s &&e(tions in its Crossc&i, (inst or&* Crs Inc." to wit;

??? ??? ???

2. Tht $n*er the ter,s n* con*itions of the R8A" $!on vio&tion of the *e&er3swrrnties n* $n*ert'in(s" *efen*nt Cit)tr$st 8innce Cor!ortion is entit&e* toreco$rse the *isco$nte*Dssi(ne* inst&&,ents !!ers to the for,er


25/68

D.DELIVERY

1. LI4 V CA4ANUEL LI4 n* RO>ITA LI4" s!o$ses" were chr(e* %efore the Re(ion& Tri& Co$rtof 4&%on with estf on three 9: co$nts $n*er Art. 10" !r. 9*:" of The Revise*Pen& Co*e" *oc'ete* s Cri,. Cses Nos. 122@4N to 12/@4N. The Infor,tionss$%stnti&&) &&e(e* tht 4n$e& n* Rosit" cons!irin( to(ether" !$rchse* (oo*sfro, Linton Co,,erci& Co,!n)" Inc. 9LINTON:" n* with *eceit iss$e* sevenConso&i*te* Bn' n* Tr$st Co,!n) 9>OLI=BANK: chec's si,$&tneo$s&) with the*e&iver) s !),ent therefor. hen !resente* to the *rwee %n' for !),ent the

chec's were *ishonore* s !),ent on the chec's h* %een sto!!e* n*Dor forins$fficienc) of f$n*s to cover the ,o$nts. =es!ite re!ete* notice n* *e,n* theLi, s!o$ses fi&e* n* ref$se* to !) the chec's or the v&$e of the (oo*s.

On the %sis of the s,e chec's" 4n$e& n* Rosit Li, were &so chr(e* with seven9OLI=BANK Chec' No. OLI=BANK Chec' No.


26/68

On the %sis of the evi*ence th$s !resente* the tri& co$rt he&* %oth cc$se* ($i&t) ofestf n* vio&tion of B.P. B&(. in its *ecision *te* 0 7n$r) 1/. In Cri,. CseNo. 122@4N the) were sentence* to n in*eter,inte !en&t) of si? 92: )ers n* one91: *) of !rision ,)or s ,ini,$, to twe&ve 91: )ers n* one 91: *) of rec&$sionte,!or& s ,?i,$, !&$s one 91: )er for ech **ition& P1". with && theccessor) !en&ties !rovi*e* for %) &w" n* to !) the costs. The) were &so or*ere*to in*e,nif) LINTON in the ,o$nt of P-1"/.. >i,i&r&) sentences were i,!ose*in Cri,. Cses Nos. 12ec. 1-.P&ce where ction is to %e instit$te*. S 9: In && cri,in& !rosec$tions the ction sh&&%e instit$te* n* trie* in the co$rt of the ,$nici!&it) or !rovince wherein the offense wsco,,itte* or n) one of the essenti& in(re*ients thereof too' !&ce.

If && the cts ,teri& n* essenti& to the cri,e n* re#$isite of its cons$,,tion occ$rre* inone ,$nici!&it) or territor)" the co$rt therein hs the so&e +$ris*iction to tr) the cse. There

re certin cri,es in which so,e cts ,teri& n* essenti& to the cri,es n* re#$isite to theircons$,,tion occ$r in one ,$nici!&it) or territor) n* so,e in nother" in which event" theco$rt of either hs +$ris*iction to tr) the cses" it %ein( $n*erstoo* tht the first co$rt t'in(co(ni5nce of the cse e?c&$*es the other. - These re the so@c&&e* trnsitor) or contin$in(cri,es $n*er which vio&tion of B.P. B&(. is cte(ori5e*. In other wor*s" !erson chr(e*with trnsitor) cri,e ,) %e v&i*&) trie* in n) ,$nici!&it) or territor) where the offense wsin !rt co,,itte*. 0

In *eter,inin( !ro!er ven$e in these cses" the fo&&owin( cts ,teri& n* essenti& to echcri,e n* re#$isite to its cons$,,tion ,$st %e consi*ere*; 9: the seven 9


27/68

o%&i(tion. An $n*e&ivere* %i&& or note is ino!ertive. Unti& *e&iver)" the contrct isrevoc%&e. An* the iss$nce s we&& s the *e&iver) of the chec' ,$st %e to !ersonwho t'es it s ho&*er" which ,ens 39t:he !)ee or in*orsee of %i&& or note" who isin !ossession of it" or the %erer thereof.3 =e&iver) of the chec' si(nifies trnsfer of!ossession" whether ct$& or constr$ctive" fro, one !erson to nother with intent totrnsfer tit&e thereto . . .

A&tho$(h LINTON sent co&&ector who receive* the chec's fro, !etitioners t their!&ce of %$siness in K&oo'n Cit)" the) were ct$&&) iss$e* n* *e&ivere* to LINTON

t its !&ce of %$siness in B&$t" Nvots. The recei!t of the chec's %) the co&&ector ofLINTON is not the iss$nce n* *e&iver) to the !)ee in conte,!&tion of &w. Theco&&ector ws not the !erson who co$&* t'e the chec's s ho&*er" i.e." s !)ee orin*orsee thereof" with the intent to trnsfer tit&e thereto. Neither co$&* the co&&ector %e*ee,e* n (ent of LINTON with res!ect to the chec's %ec$se he ws ,eree,!&o)ee. As this Co$rt f$rther e?!&ine* in Peo!&e v. %$t < S

4o*esto ,%o3s recei!t of the %* chec's fro, Ceci&i O$e %$t or Ge,inino%$t" 7r." in C&oocn Cit) cnnot" contrr) to the ho&*in( of the res!on*ent 7$*(es"%e &icit&) t'en s *e&iver) of the chec's to the co,!&innt A&i* P. An*n t C&oocnCit) to fi? the ven$e there. e *i* not t'e *e&iver) of the chec's s ho&*er" i.e." s3!)ee3 or 3in*orsee.3 An* there !!ers to %e no contrct of (enc) %etween ,%on* An*n so s to %in* the &tter for the cts of the for,er. A&ici P. An*n *ec&re* intht sworn testi,on) %efore the investi(tin( fisc& tht ,%o is %$t her 3,essen(er3

or 3!rt@ti,e e,!&o)ee.3 There ws no s!eci& fi*$cir) re&tionshi! tht !er,ete* their*e&in(s. 8or contrct of (enc) to e?ist" the consent of %oth !rties is essenti&. The!rinci!& consents tht the other !rt)" the (ent" sh&& ct on his %eh&f" n* the (entconsents so s to ct. It ,$st e?ist s fct. The &w ,'es no !res$,!tion thereof.The !erson &&e(in( it hs the %$r*en of !roof to show" not on&) the fct of its e?istence"%$t &so its nt$re n* e?tent . . .

>ection of B.P. B&(. est%&ishes !ri, fcie evi*ence of 'now&e*(e of ins$fficientf$n*s s fo&&ows S

The ,'in(" *rwin( n* iss$nce of chec' !),ent of which is ref$se* %) the %n'%ec$se of ins$fficient f$n*s in or cre*it with s$ch %n'" when !resente* within ninet)9: *)s fro, the *te of the chec'" sh&& %e !ri, fcie evi*ence of 'now&e*(e ofs$ch ins$fficienc) of f$n*s or cre*it $n&ess s$ch ,'er or *rwer !)s the ho&*erthereof the ,o$nt *$e thereon" or ,'es rrn(e,ent for !),ent in f$&& %) the*rwee of s$ch chec' within five 90: %n'in( *)s fter receivin( notice tht s$ch chec'hs not %een !i* %) the *rwee.

The !ri, fcie evi*ence hs not %een overco,e %) !etitioners in the cses %efore $s%ec$se the) *i* not !) LINTON the ,o$nts *$e on the chec's neither *i* the),'e rrn(e,ents for !),ent in f$&& %) the *rwee %n' within five 90: %n'in( *)sfter receivin( notices tht the chec's h* not %een !i* %) the *rwee %n'. InPeo!&e v. Gros!e / citin( Peo!&e v. 4n5ni&& we he&* tht 6. . . 'now&e*(e on the

!rt of the ,'er or *rwer of the chec' of the ins$fficienc) of his f$n*s is %) itse&f contin$in(event$&it)" whether the cc$se* %e within one territor) or nother.6

Conse#$ent&)" ven$e or +$ris*iction &ies either in the Re(ion& Tri& Co$rt of K&oo'n Cit) or4&%on. 4oreover" we r$&e* in the s,e Gros!e n* 4n5ni&& cses s reiterte* in Li, v.Ro*ri(o tht ven$e or +$ris*iction is *eter,ine* %) the &&e(tions in the Infor,tion. TheInfor,tions in the cses $n*er consi*ertion &&e(e tht the offenses were co,,itte* in the

4$nici!&it) of Nvots which is contro&&in( n* s$fficient to vest +$ris*iction $!on the Re(ion&Tri& Co$rt of 4&%on. 1

e therefore s$stin &i'ewise the conviction of !etitioners %) the Re(ion& Tri& Co$rt of4&%on for vio&tion of B.P. B&(. th$s S

Acc$se*@!!e&&nts c&i, tht the) or*ere* !),ent of the chec's to %e sto!!e* %ec$se the(oo*s *e&ivere* were not those s!ecifie* %) the,. The) ,intin tht the) h* s$fficient f$n*sto cover the ,o$nt of the chec's. The recor*s of the %n'" however" reve& otherwise. Thetwo &etters 9E?hs. 1 n* : *te* 7$&) " n* A$($st 1" 1/ which the) c&i, the) sent toLinton Co,,erci&" co,!&inin( (inst the #$&it) of the (oo*s *e&ivere* %) the &tter" *i* notrefer to the *e&iver) of ,i&* stee& !&tes 92 ,, ? - ? /: n* 6Y6 !$r&ins 912 ? < ? @1D ,ts: forwhich the chec's in #$estion were iss$e*. Rther" the &etters referre* to B.1. L&&) co&$,ns9>ch. Z:" which were the s$%+ect of other !$rchse or*ers.

It is tr$e" s cc$se*@!!e&&nts !oint o$t" tht in cse %ro$(ht %) the, (inst theco,!&innt in the Re(ion& Tri& Co$rt of K&oo'n Cit) 9Civi& Cse No. C@11: theco,!&innt ws he&* &i%&e for ct$& *,(es %ec$se of the *e&iver) of (oo*s of inferior#$&it) 9E?h. :. B$t the s$!!&ies invo&ve* in tht cse were those of B.1. !i!es" whi&e the!$rchses ,*e %) cc$se*@!!e&&nts" for which the) iss$e* the chec's in #$estion" were!$rchses of ,i&* stee& !&tes n* 6Y6 !$r&ins.

In*ee*" the on&) #$estion here is whether cc$se*@!!e&&nts ,intine* f$n*s s$fficient tocover the ,o$nts of their chec's t the ti,e of iss$nce n* !resent,ent of s$ch chec's.>ection of B.P. B&(. !rovi*es tht 3notwithstn*in( recei!t of n or*er to sto! !),ent" the*rwee %n' sh&& stte in the notice of *ishonor tht there were no s$fficient f$n*s in or cre*itwith s$ch %n' for the !),ent in f$&& of the chec'" if s$ch %e the fct.3

The !$r!ose of this !rovision is !recise&) to !rec&$*e the ,'er or *rwer of worth&ess chec'fro, or*erin( the !),ent of the chec' to %e sto!!e* s !rete?t for the &c' of s$fficientf$n*s to cover the chec'.

In the cse t %r" the notice of *ishonor iss$e* %) the *rwee %n'" in*ictes not on&) tht!),ent of the chec' ws sto!!e* %$t &so tht the reson for s$ch or*er ws tht the ,'eror *rwer *i* not hve s$fficient f$n*s with which to cover the chec's. . . . 4oreover" the %n'&e*(er of cc$se*@!!e&&nts3 cco$nt in Conso&i*te* Bn' shows tht t the ti,e the chec'swere !resente* for encsh,ent" the %&nce of cc$se*@!!e&&nts3 cco$nt ws in*e#$te tocover the ,o$nts of the chec's. . . .


28/68

??? ??? ???

ERE8ORE" the *ecision of the Co$rt of A!!e&s *te* 1/ >e!te,%er 1ffir,in( the conviction of !etitioners 4n$e& Li, n* Rosit Li, S

In [email protected]. CR No. E BURGO>" Presi*in( 7$*(e" RTC" n* RAUL .>E>BRE[O" res!on*ents.

>LLABU>

1.RE4E=IAL LA PROVI>IONAL RE4E=IE> ATTAC4ENT GARNI>4ENT =E8INE=.S Grnish,ent is consi*ere* s s!ecies of ttch,ent for rechin( cre*its %e&on(in( to the

+$*(,ent *e%tor owin( to hi, fro, strn(er to the &iti(tion. E,!hsis is &i* on the !hrse6%e&on(in( to the +$*(,ent *e%tor6 since it is the foc& !oint in reso&vin( the iss$es rise*.

.I=. I=. I=. I=. RULE IN CA>E O8 >ALAR CECK O8 GOVERN4ENT O88ICER ORE4PLOEE. S As Assistnt Cit) 8isc&" the so$rce of the s&r) of 4%nto 7r." is !$%&icf$n*s. e receives his co,!enstion in the for, of chec's fro, the =e!rt,ent of 7$sticethro$(h !etitioners Cit) 8isc& of 4n*$e Cit) n* he* of office. Un*er >ec. 12 of the

Ne(oti%&e Instr$,ents Lw" ever) contrct on ne(oti%&e instr$,ent is inco,!&ete n*revoc%&e $nti& *e&iver) of the instr$,ent for the !$r!ose of (ivin( effect thereto. As or*inri&)$n*erstoo*" *e&iver) ,ens the trnsfer of the !ossession of the instr$,ent %) the ,'er or*rwer with intent to trnsfer tit&e to the !)ee n* reco(ni5e hi, s the ho&*er thereof.

Accor*in( to the tri& co$rt" the chec's of 4%nto" 7r." were &re*) re&ese* %) the=e!rt,ent of 7$stice *$&) si(ne* %) the officer concerne* thro$(h !etitioner n* $!on serviceof the writ of (rnish,ent %) the sheriff !etitioner ws $n*er o%&i(tion to ho&* the, for the

+$*(,ent cre*itor. It reco(ni5e* the ro&e of !etitioner s c$sto*in of the chec's. At the s,eti,e however it consi*ere* the chec's s no &on(er (overn,ent f$n*s n* !res$,e* *e&ivere*to the !)ee %se* on the &st sentence of >ec. 12 of the Ne(oti%&e Instr$,ents Lw whichsttes; 6An* where the instr$,ent is no &on(er in the !ossession of !rt) whose si(nt$re!!ers thereon" v&i* n* intention& *e&iver) %) hi, is !res$,e*.6 et" the !res$,!tion isnot conc&$sive %ec$se the &st !ortion of the !rovision s)s 6$nti& the contrr) is !rove*.6owever this !hrse ws *e&ete* %) the tri& co$rt for no !!rent reson. Proof to the contrr)is its own fin*in( tht the chec's were in the c$sto*) of !etitioner. Ins,$ch s si* chec'sh* not )et %een *e&ivere* to 4%nto" 7r." the) *i* not %e&on( to hi, n* sti&& h* thechrcter of !$%&ic f$n*s. In Tiro v. ontnoss 9No. L@1" 0 Nove,%er 1/" 10 >CRA2


29/68

>CRA 212: tht S The f$nctions n* !$%&ic services ren*ere* %) the >tte cnnot %e&&owe* to %e !r&)5e* or *isr$!te* %) the *iversion of !$%&ic f$n*s fro, their&e(iti,te n* s!ecific o%+ects" s !!ro!rite* %) &w.

.I=. I=. I=. I=. GENERALL" GARNI>EE NEE= NOT INQUIRE OR 7U=GE 8ORIT>EL8 ETER OR NOT TE OR=ER 8OR TE A=VANCE EECUTION O8 A7U=G4ENT I> VALI= ECEPTION. S In *en)in( !etitioner3s ,otion forreconsi*ertion" the tri& co$rt e?!resse* the **ition& rtiocintion tht it ws not the*$t) of the (rnishee to in#$ire or +$*(e for hi,se&f whether the iss$nce of the or*er of

e?ec$tion" the writ of e?ec$tion" n* the notice of (rnish,ent ws +$stifie*" citin( o$rr$&in( in Phi&i!!ine Co,,erci& In*$stri& Bn' v. Co$rt of A!!e&s. O$r !recise r$&in(in tht cse ws tht 6It is not inc$,%ent $!on the (rnishee to in#$ire or to +$*(e foritse&f whether or not the or*er for the *vnce e?ec$tion of +$*(,ent is v&i*.6 B$ttht is invo'in( on&) the (ener& r$&e. e hve &so est%&ishe* therein the co,!e&&in(resons" s e?ce!tions thereto" which were not t'en into cco$nt %) the tri& co$rte.(." *efect on the fce of the writ or ct$& 'now&e*(e %) the (rnishee of &c' ofentit&e,ent on the !rt of the (rnisher. It is worth to note tht the r$&in( referre* to thev&i*it) of *vnce e?ec$tion of +$*(,ents" %$t cref$& scr$tin) of tht cse n*si,i&r cses reve&s tht it ws !!&ic%&e to notice of (rnish,ent s we&&. In thecse t %ench" it ws inc$,%ent $!on !etitioner to in#$ire into the v&i*it) of the noticeof (rnish,ent s he h* ct$& 'now&e*(e of the non@entit&e,ent of !rivteres!on*ent to the chec's in #$estion. Conse#$ent&)" we fin* no *iffic$&t) conc&$*in(tht the tri& co$rt e?cee*e* its +$ris*iction in iss$in( the notice of (rnish,ent

concernin( the s&r) chec's of 4%nto" 7r." in the !ossession of Petitioner.

=AVI=E" 7R." 7." se!rte o!inion;

RE4E=IAL LA PROVI>IONAL RE4E=IE> ATTAC4ENT GARNI>4ENT 8ORVALI=IT TEREO8 IN CA>E O8 >ALAR CECK> =UE TO GOVERN4ENTE4PLOEE>" TI4E AN= NOTICE TEREO8 4U>T BE CON>I=ERE=. S 7$stice=vi*e" 7r. res!ectf$&&) s$%,its tht if these s&r) n* RATA chec's corres!on*e*"res!ective&)" to !)ro&& !erio* n* to ,onth which h* &re*) &!se* t the ti,ethe notice of (rnish,ent ws serve*" the (rnish,ent wo$&* %e v&i*" s the chec'swo$&* then cese to %e !ro!ert) of the Govern,ent n* wo$&* %eco,e !ro!ert) of4%nto. U!on the e?!irtion of s$ch !erio* n* ,onth" the s$,s in*icte* thereinwere *ee,e* $to,tic&&) se(re(te* fro, the %$*(etr) &&octions for the=e!rt,ent of 7$stice $n*er the Gener& A!!ro!ritions Act. 7$stice =vi*e" 7r.therefore votes to (rnt the !etition on&) if the s&r) n* RATA chec's (rnishe*corres!on*s to n $ne?!ire* !)ro&& !erio* n* RATA ,onth" res!ective&).

= E C I > I O N

BELLO>ILLO" 7 !;

RAUL . >E>BRE[O fi&e* co,!&int for *,(es (inst Assistnt Cit) 8isc&sBienveni*o N. 4%nto" 7r." n* =rio =. R," 7r." %efore the Re(ion& Tri& Co$rt ofCe%$ Cit). After tri& 7$*(,ent ws ren*ere* or*erin( the *efen*nts to !)

P11". to the !&intiff" !rivte res!on*ent herein. The *ecision hvin( %eco,e fin& n*e?ec$tor)" on ,otion of the &tter" the tri& co$rt or*ere* its e?ec$tion. This or*er ws#$estione* %) the *efen*nts %efore the Co$rt of A!!e&s. owever" on 10 7n$r) 1 writof e?ec$tion ws iss$e*.

On - 8e%r$r) 1 notice of (rnish,ent ws serve* on !etitioner Loreto =. *e & Victoris Cit) 8isc& of 4n*$e Cit) where *efen*nt 4%nto" 7r." ws then *eti&e*. The Notice*irecte* !etitioner not to *is%$rse" trnsfer" re&ese or conve) to n) other !erson e?ce!t to the*e!$t) sheriff concerne* the s&r) chec's" ,onies" or csh *$e or %e&on(in( to 4%nto" 7r."

$n*er !en&t) of &w.1 On 1 4rch 1 !rivte res!on*ent fi&e* ,otion %efore the tri&co$rt for e?,intion of the (rnishees.

On 0 4) 1 the !etition !en*in( %efore the Co$rt of A!!e&s ws *is,isse*. Th$s the tri&co$rt" fin*in( no ,ore &e(& o%stc&e to ct on the ,otion for e?,intion of the (rnishees"*irecte* !etitioner on - Nove,%er 1 to s$%,it his re!ort showin( the ,o$nt of the(rnishe* s&ries of 4%nto" 7r." within 910: *)s fro, recei!t t'in( into consi*ertion the!rovisions of >ec. 1" !rs. 9f: n* 9i:" R$&e of the R$&es of Co$rt.

On - Nove,%er 1 !rivte res!on*ent fi&e* ,otion to re#$ire !etitioner to e?!&in wh) hesho$&* not %e cite* in conte,!t of co$rt for fi&in( to co,!&) with the or*er of - Nove,%er1.

On the other hn*" on 1 7n$r) 1 !etitioner ,ove* to #$sh the notice of (rnish,ent

c&i,in( tht he ws not in !ossession of n) ,one)" f$n*s" cre*it" !ro!ert) or n)thin( ofv&$e %e&on(in( to 4%nto" 7r." e?ce!t his s&r) n* RATA chec's" %$t tht si* chec's werenot )et !ro!erties of 4%nto" 7r." $nti& *e&ivere* to hi,. e f$rther c&i,e* tht" s s$ch" the)were sti&& !$%&ic f$n*s which co$&* not %e s$%+ect to (rnish,ent.

On 4rch 1 the tri& co$rt *enie* %oth ,otions n* or*ere* !etitioner to i,,e*ite&)co,!&) with its or*er of - Nove,%er 1. It o!ine* tht the chec's of 4%nto" 7r." h*&re*) %een re&ese* thro$(h !etitioner %) the =e!rt,ent of 7$stice *$&) si(ne* %) theofficer concerne*. U!on service of the writ of (rnish,ent" !etitioner s c$sto*in of thechec's ws $n*er o%&i(tion to ho&* the, for the +$*(,ent cre*itor. Petitioner %ec,e virt$&!rt) to" or force* intervenor in" the cse n* the tri& co$rt here%) c#$ire* +$ris*iction to%in* hi, to its or*ers n* !rocesses with view to the co,!&ete stisfction of the +$*(,ent.

A**ition&&) there ws no s$fficient reson for !etitioner to ho&* the chec's %ec$se the) wereno &on(er (overn,ent f$n*s n* !res$,%&) *e&ivere* to the !)ee" confor,%&) with the &stsentence of >ec. 12 of the Ne(oti%&e Instr$,ents Lw.

ith re(r* to the conte,!t chr(e" the tri& co$rt ws not ,or&&) convince* of !etitioner3s($i&t. 8or" whi&e his e?!&ntion s$ffere* fro, !roce*$r& infir,ities neverthe&ess he too' !insin en&i(htenin( the co$rt %) sen*in( written e?!&ntion *te* 7$&) 1 re#$estin( for the&iftin( of the notice of (rnish,ent on the (ro$n* tht the notice sho$&* hve %een sent to the8innce Officer of the =e!rt,ent of 7$stice. Petitioner insists tht he h* no $thorit) tose(re(te !ortion of the s&r) of 4%nto" 7r. The e?!&ntion however ws not s$%,itte* tothe tri& co$rt for ction since the steno(r!hic re!orter fi&e* to ttch it to the recor*. -


30/68

On A!ri& 1 the ,otion for reconsi*ertion ws *enie*. The tri& co$rt e?!&ine*tht it ws not the *$t) of the (rnishee to in#$ire or +$*(e for hi,se&f whether theiss$nce of the or*er of e?ec$tion" writ of e?ec$tion n* notice of (rnish,ent ws

+$stifie*. is on&) *$t) ws to t$rn over the (rnishe* chec's to the tri& co$rt whichiss$e* the or*er of e?ec$tion. 0

Petitioner rises the fo&&owin( re&evnt iss$es; 91: whether chec' sti&& in the hn*s of

the ,'er or its *$&) $thori5e* re!resenttive is owne* %) the !)ee %efore !h)sic&*e&iver) to the &tter n*" 9: whether the s&r) chec' of (overn,ent offici& ore,!&o)ee f$n*e* with !$%&ic f$n*s cn %e s$%+ect to (rnish,ent.

Petitioner reitertes his !osition tht the s&r) chec's were not owne* %) 4%nto" 7r."%ec$se the) were not )et *e&ivere* to hi," n* tht !etitioner s (rnishee hs no&e(& o%&i(tion to ho&* n* *e&iver the, to the tri& co$rt to %e !!&ie* to 4%nto" 7r.3 s

+$*(,ent *e%t. The thesis of !etitioner is tht the s&r) chec's sti&& for,e* !rt of!$%&ic f$n*s n* therefore %e)on* the rech of (rnish,ent !rocee*in(s.

Petitioner hs we&& r($e* his cse.

Grnish,ent is consi*ere* s s!ecies of ttch,ent for rechin( cre*its %e&on(in( tothe 7$*(,ent *e%tor owin( to hi, fro, strn(er to the &iti(tion.2 E,!hsis is &i* on

the !hrse 6%e&on(in( to the +$*(,ent *e%tor6 since it is the foc& !oint in reso&vin( theiss$es rise*.

As Assistnt Cit) 8isc&" the so$rce of the s&r) of 4%nto" 7r." is !$%&ic f$n*s. ereceives his co,!enstion in the for, of chec's fro, the =e!rt,ent of 7$sticethro$(h !etitioner s Cit) 8isc& of 4n*$e Cit) n* he* of office. Un*er >ec. 12 ofthe Ne(oti%&e Instr$,ents Lw" ever) contrct on ne(oti%&e instr$,ent isinco,!&ete n* revoc%&e $nti& *e&iver) of the instr$,ent for the !$r!ose of (ivin( effectthereto. As or*inri&) $n*erstoo*" *e&iver) ,ens the trnsfer of the !ossession of theinstr$,ent %) the ,'er or the *rwer with intent to trnsfer tit&e to the !)ee n*reco(ni5e hi, s the ho&*er thereof. n =ie(o 1 tht S

The f$nctions n* !$%&ic services ren*ere* %) the >tte cnnot %e &&owe* to %e !r&)5e* or*isr$!te* %) the *iversion of !$%&ic f$n*s fro, their &e(iti,te n* s!ecific o%+ects" s!!ro!rite* %) &w.

In *en)in( !etitioner3s ,otion for reconsi*ertion" the tri& co$rt e?!resse* the **ition&rtiocintion tht it ws not the *$t) of the (rnishee to in#$ire or +$*(e for hi,se&f whether theiss$nce of the or*er of e?ec$tion" the writ of e?ec$tion" n* the notice of (rnish,ent ws

+$stifie*" citin( o$r r$&in( in Phi&i!!ine Co,,erci& In*$stri& Bn' v. Co$rt of A!!e&s. 11 O$r!recise r$&in( in tht cse tht 6It is not inc$,%ent $!on the (rnishee to in#$ire or to +$*(efor itse&f whether or not the or*er for the *vnce e?ec$tion of +$*(,ent is v&i*.6 B$t tht isinvo'in( on&) the (ener& r$&e. e hve &so est%&ishe* therein the co,!e&&in( resons" s

e?ce!tions thereto" which were not t'en into cco$nt %) the tri& co$rt" e.(." *efect on thefce of the writ or ct$& 'now&e*(e %) the (rnishee of &c' of entit&e,ent on the !rt of the(rnisher. It is worth to note tht the r$&in( referre* to the v&i*it) of *vnce e?ec$tion of

+$*(,ents" %$t cref$& scr$tin) of tht cse n* si,i&r cses reve&s tht it ws !!&ic%&e to notice of (rnish,ent s we&&. In the cse t %ench" it ws inc$,%ent $!on !etitioner toin#$ire into the v&i*it) of the notice of (rnish,ent s he h* ct$& 'now&e*(e of the non@entit&e,ent of !rivte res!on*ent to the chec's in #$estion. Conse#$ent&)" we fin* no *iffic$&t)conc&$*in( tht the tri& co$rt e?cee*e* its +$ris*iction in iss$in( the notice of (rnish,entconcernin( the s&r) chec's of 4%nto" 7r." in the !ossession of !etitioner.

ERE8ORE" the !etition is GRANTE=. The or*ers of 4rch 1 n* A!ri& 1 of theRe(ion& Tri& Co$rt of Ce%$ Cit)" Br. 1i, ei" !)%&e to !etitioner" n* *rwn(inst the Chin Bn'in( Cor!ortion" to !) the %&nce *$e on the !ro,issor) note.


31/68

E?ce!t for Lee Kin $t" *efen*nts fi&e* their se!rte 4otions to =is,iss &&e(in( co,,on (ro$n* tht the co,!&int sttes no c$se of ction. The tri& co$rt (rnte* the*efen*nts3 4otions to =is,iss. The Co$rt of A!!e&s ffir,e* this *ecision" to whichthe !etitioner Bn'" re!resente* %) its Le(& Li#$i*tor" fi&e* this Petition for Review %)Certiorri" ssi(nin( the fo&&owin( s the &&e(e* errors of the Co$rt of A!!e&s. 1

91:TE COURT O8 APPEAL> ERRE= IN OL=ING TAT TE PLAINTI88@PETITIONER A> NO CAU>E O8 ACTION AGAIN>T =E8EN=ANT>@

RE>PON=ENT> EREIN. Li%Le?

9:TE COURT O8 APPEAL> ERRE= IN OL=ING TAT >ECTION 1" RULE O8TE REVI>E= RULE> O8 COURT ON ALTERNATIVE =E8EN=ANT> I> NOT

APPLICABLE TO EREIN =E8EN=ANT>@RE>PON=ENT>.

The ntece*ent fcts of this cse re s fo&&ows;

In consi*ertion for &on e?ten*e* %) !etitioner Bn' to res!on*ent >i, ei" the&tter e?ec$te* n* *e&ivere* to the for,er !ro,issor) note" en((in( to !) the!etitioner Bn' or or*er the ,o$nt of P1"/". on or %efore 7$ne -" 1/ withinterest t F !er nn$,. >i, ei ,*e !rti& !),ents on the note" &evin( %&nce of P1""-0.. On Nove,%er 1/" 1/" >i, ei iss$e* two crosse*chec's !)%&e to !etitioner Bn' *rwn (inst Chin Bn'in( Cor!ortion" %erin(

res!ective&) the seri& n$,%ers /--" for the ,o$nt of P00". n* /-0"for the ,o$nt of P0".. The si* chec's were &&e(e*&) iss$e* in f$&& sett&e,entof the *rwer3s cco$nt evi*ence* %) the !ro,issor) note. These two chec's were not*e&ivere* to the !etitioner@!)ee or to n) of its $thori5e* re!resenttives. 8orresons not shown" these chec's c,e into the !ossession of res!on*ent Lee Kin$t" who *e!osite* the chec's witho$t the !etitioner@!)ee3s in*orse,ent 9for(e* orotherwise: to the cco$nt of res!on*ent P&stic Cor!ortion" t the B&intw' %rnch"C&oocn Cit)" of the Pro*$cers Bn'. Chen( U)" Brnch 4n(er of the B&intw'Brnch of Pro*$cers Bn'" re&)in( on the ss$rnce of res!on*ent >,son T$n("Presi*ent of P&stic Cor!ortion" tht the trnsction ws &e(& n* re($&r" instr$cte*the cshier of Pro*$cers Bn' to cce!t the chec's for *e!osit n* to cre*it the, tothe cco$nt of si* P&stic Cor!ortion" ins!ite of the fct tht the chec's were crosse*n* !)%&e to !etitioner Bn' n* %ore no in*orse,ent of the &tter. ence" !etitionerfi&e* the co,!&int s forestte*.

The ,in iss$e %efore Us is whether !etitioner Bn' hs c$se of ction (inst n)or && of the *efen*nts" in the &terntive or otherwise.

A c$se of ction is *efine* s n ct or o,ission of one !rt) in vio&tion of the &e(&ri(ht or ri(hts of nother. The essenti& e&e,ents re; 91: &e(& ri(ht of the !&intiff 9:corre&tive o%&i(tion of the *efen*nt n* 9: n ct or o,ission of the *efen*nt invio&tion of si* &e(& ri(ht.

The nor,& !rties to chec' re the *rwer" the !)ee n* the *rwee %n'. Co$rts hve&on( reco(ni5e* the %$siness c$sto, of $sin( !rinte* chec's where %&n's re !rovi*e* for the*te of iss$nce" the n,e of the !)ee" the ,o$nt !)%&e n* the *rwer3s si(nt$re. A&&the *rwer hs to *o when he wishes to iss$e chec' is to !ro!er&) fi&& $! the %&n's n* si(nit. owever" the ,ere fct tht he hs *one these *oes not (ive rise to n) &i%i&it) on his !rt"$nti& n* $n&ess the chec' is *e&ivere* to the !)ee or his re!resenttive. A ne(oti%&einstr$,ent" of which chec' is" is not on&) written evi*ence of contrct ri(ht %$t is &so s!ecies of !ro!ert). 7$st s *ee* to !iece of &n* ,$st %e *e&ivere* in or*er to conve) tit&eto the (rntee" so ,$st ne(oti%&e instr$,ent %e *e&ivere* to the !)ee in or*er to evi*ence

its e?istence s %in*in( contrct. >ection 12 of the Ne(oti%&e Instr$,ents Lw" which(overns chec's" !rovi*es in !rt;

6Ever) contrct on ne(oti%&e instr$,ent is inco,!&ete n* revoc%&e $nti& *e&iver) of theinstr$,ent for the !$r!ose of (ivin( effect thereto. . . .6

Th$s" the !)ee of ne(oti%&e instr$,ent c#$ires no interest with res!ect thereto $nti& its*e&iver) to hi,. =e&iver) of n instr$,ent ,ens trnsfer of !ossession" ct$& orconstr$ctive" fro, one !erson to nother. - itho$t the initi& *e&iver) of the instr$,ent fro,the *rwer to the !)ee" there cn %e no &i%i&it) on the instr$,ent. 4oreover" s$ch *e&iver),$st %e inten*e* to (ive effect to the instr$,ent. Le?Li%

The &&e(tions of the !etitioner in the ori(in& co,!&int show tht the two 9: Chin Bn'chec's" n$,%ere* /-- n* /-0" were not *e&ivere* to the !)ee" the !etitioner herein.

itho$t the *e&iver) of si* chec's to !etitioner@!)ee" the for,er *i* not c#$ire n) ri(ht orinterest therein n* cnnot therefore ssert n) c$se of ction" fo$n*e* on si* chec's"whether (inst the *rwer >i, ei or (inst the Pro*$cers Bn' or n) of the otherres!on*ents.

In the ori(in& co,!&int" !etitioner Bn'" s !&intiff" s$e* res!on*ent >i, ei on the!ro,issor) note" n* the &terntive *efen*nts" inc&$*in( >i, ei" on the two chec's. On!!e& fro, the or*ers of *is,iss& of the Re(ion& Tri& Co$rt" !etitioner Bn' &&e(e* tht itsc$se of ction ws not %se* on co&&ectin( the s$, of ,one) evi*ence* %) the ne(oti%&einstr$,ents stte* %$t on #$si@ *e&ict S c&i, for *,(es on the (ro$n* of fr$*$&ent ctsn* evi*ent %* fith of the &terntive res!on*ents. This ws c&er&) n tte,!t %) the!etitioner Bn' to chn(e not on&) the theor) of its cse %$t the %sis of his c$se of ction. Itis we&&@sett&e* tht !rt) cnnot chn(e his theor) on !!e&" s this wo$&* in effect *e!rivethe other !rt) of his *) in co$rt. 0

Notwithstn*in( the %ove" it *oes not necessri&) fo&&ow tht the *rwer >i, ei is free*fro, &i%i&it) to !etitioner Bn' $n*er the &on evi*ence* %) the !ro,issor) note (ree* to %)her. er &&e(tion tht she hs !i* the %&nce of her &on with the two chec's !)%&e to!etitioner Bn' hs no ,erit for" s e hve er&ier e?!&ine*" these chec's were never*e&ivere* to !etitioner Bn'. An* even (rntin(" witho$t *,ittin(" tht there ws *e&iver) to!etitioner Bn'" the *e&iver) of chec's in !),ent of n o%&i(tion *oes not constit$te !),ent$n&ess the) re cshe* or their v&$e is i,!ire* thro$(h the f$&t of the cre*itor. 2 None ofthese e?ce!tions were &&e(e* %) res!on*ent >i, ei.


32/68

Therefore" $n&ess res!on*ent >i, ei !roves tht she hs %een re&ieve* fro, &i%i&it)on the !ro,issor) note %) so,e other c$se" !etitioner Bn' hs ri(ht of ction(inst her for the %&nce *$e thereon.

owever" insofr s the other res!on*ents re concerne*" !etitioner Bn' hs no!rivit) with the,. >ince !etitioner Bn' never receive* the chec's on which it %se* itsction (inst si* res!on*ents" it never owne* the, 9the chec's: nor *i* it c#$ire

n) interest therein. Th$s" n)thin( which the res!on*ents ,) hve *one with res!ectto si* chec's co$&* not hve !re+$*ice* !etitioner Bn'. It h* no ri(ht or interest inthe chec's which co$&* hve %een vio&te* %) si* res!on*ents. Petitioner Bn' hstherefore no c$se of ction (inst si* res!on*ents" in the &terntive or otherwise. Ift &&" it is >i, ei" the *rwer" who wo$&* hve c$se of ction (inst her co@res!on*ents" if the &&e(tions in the co,!&int re fo$n* to %e tr$e.

ith res!ect to the secon* ssi(n,ent of error rise* %) !etitioner Bn' re(r*in( the!!&ic%i&it) of >ection 1" R$&e of the R$&es of Co$rt" e fin* it $nnecessr) to*isc$ss the s,e in view of O$r fin*in( tht the !etitioner Bn' *i* not c#$ire n)ri(ht or interest in the chec's *$e to &c' of *e&iver). It therefore hs no c$se of ction(inst the res!on*ents" in the &terntive or otherwise.

In the &i(ht of the fore(oin(" the +$*(,ent of the Co$rt of A!!e&s *is,issin( the

!etitioner3s co,!&int is A88IR4E= insofr s the secon* c$se of ction is concerne*.On the first c$se of ction" the cse is RE4AN=E= to the tri& co$rt for tri& on the,erits" consistent with this *ecision" in or*er to *eter,ine whether res!on*ent >i,ei is &i%&e to the =eve&o!,ent Bn' of Ri5& for n) ,o$nt $n*er the !ro,issor)note &&e(e*&) si(ne* %) her. c*!hi&

-. RCBC V I@TRI =EVT CORPBefore the Co$rt is R$&e -0 Petition for Review on Certiorri fi&e* %) !etitioner Ri5&Co,,erci& Bn'in( Cor!ortion 9RCBC: (inst res!on*ents i@Tri =eve&o!,entCor!ortion 9i@Tri: n* L$5 R. B'$nw 9B'$nw:. Petitioner see's to !!e& fro,the 2 Nove,%er =ecision n* < 4) 1 Reso&$tion of the Co$rt of A!!e&s9CA:" 1 which reverse* n* set si*e the 1 4) / =ecision n* Nove,%er /Or*er of the 4'ti Cit) Re(ion& Tri& Co$rt 9RTC: in Civi& Cse No. 2@--. Thecse %efore the RTC invo&ve* the Co,!&int for Eschet fi&e* %) the Re!$%&ic of thePhi&i!!ines 9Re!$%&ic: !$rs$nt to Act No. 2" s ,en*e* %) Presi*enti& =ecreeNo. 2!o$sesB'$nw rescin*e* the s&e n* offere* to ret$rn to 4i&&n her *own!),ent ofP1"1"01-.. owever" 4i&&n ref$se* to cce!t %c' the P1"1"01-. *own!),ent.Conse#$ent&)" the >!o$ses B'$nw" thro$(h their co,!n)" the i@Tri =eve&o!,entCor!ortion 96i@Tri6: too' o$t on Octo%er /" 11" 4n(er3s Chec' fro, RCBC@Er,it inthe ,o$nt of P1"1"01-." !)%&e to 4i&&n3s co,!n) Ros,i& Re&t) n* =eve&o!,entCor!ortion 96Ros,i&6: cDo Teresit 4i&&n n* $se* this s one of their %sis for co,!&int(inst 4i&&n n* 4onte,)or which the) fi&e* with the Re(ion& Tri& Co$rt of Q$e5on Cit)"Brnch " *oc'ete* s Civi& Cse No. Q@1@1!o$ses B'$nw" $!on *vice of their co$nse&" retine* c$sto*) ofRCBC 4n(er3s Chec' No. ER --2 n* refrine* fro, cnce&in( or ne(otitin( it. c=TIE

A&& thro$(ho$t the !rocee*in(s in Civi& Cse No. Q@1@1!o$ses B'$nw" . . . RCBC re!orte* the 6P1"1"01-.@cre*ite?istin( in fvor of Ros,i&6 to the B$re$ of Tres$r) s ,on( its 6$nc&i,e* %&nces6 s of


33/68

7n$r) 1" . A&&e(e*&)" co!) of the >worn >tte,ent e?ec$te* %) 8&orentino N.4en*o5" 4n(er n* e* of RCBC3s Asset 4n(e,ent" =is%$rse,ent >$n*r)=e!rt,ent 96A4=>=6: ws !oste* within the !re,ises of RCBC@Er,it.

On =ece,%er 1-" 2" . . . Re!$%&ic" thro$(h the Office of the >o&icitor Gener&9O>G:" fi&e* with the RTC the ction %e&ow for Eschet 9Civi& Cse No. 2@--:.

On A!ri& " /" >!o$ses B'$nw sett&e* ,ic%&) their *is!$te with Ros,i& n*4i&&n. Inste* of on&) the ,o$nt of 6P1"1"01-.6" >!o$ses B'$nw (ree* to

!) Ros,i& n* 4i&&n the ,o$nt of 6P"".6" which is inc&$sive of the,o$nt of 6P1"1"01-.6. B$t *$rin( ne(otitions n* evi*ent&) !rior to si*sett&e,ent" 4n$e& B'$nw" thro$(h i@Tri in#$ire* fro, RCBC@Er,it thevi&%i&it) of the P1"1"01-. $n*er RCBC 4n(er3s Chec' No. ER --2. i@Trin* >!o$ses B'$nw were however *is,)e* when the) were infor,e* tht the,o$nt ws &re*) s$%+ect of the eschet !rocee*in(s %efore the RTC.

On A!ri& 1ince the !)ee re+ecte* the ne(otite* 4n(er3s Chec'"!resenttion of the 4n(er3s Chec' ws never ,*e. Ec=AT

Conse#$ent&)" the *e!osit tht ws s$!!ose* to %e &&octe* for the !),ent of the4n(er3s Chec' ws s$!!ose* to re,in !rt of the Cor!ortion3s RCBC %n'cco$nt" which" therefter" contin$e* to %e ctive&) ,intine* n* o!erte*. 8or thisreson" e here%) *e,n* )o$r confir,tion tht the ,o$nt of Ph!1"1"01-.contin$es to for, !rt of the f$n*s in the Cor!ortion3s RCBC %n' cco$nt" since !)@o$t of si* ,o$nt ws never or*ere*. e wish to !oint o$t tht if there ws n)tte,!t on the !rt of RCBC to consi*er the ,o$nt in*icte* in the 4n(er3s Chec'se!rte fro, the Cor!ortion3s %n' cco$nt" RCBC wo$&* hve iss$e* stte,entto tht effect" n* re!ete*&) re,in*e* the Cor!ortion tht the *e!osit wo$&* %econsi*ere* *or,nt %sent n) f$n* ,ove,ent. >ince the Cor!ort

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