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BANK OF PHILIPPINE ISLANDS v. GREGORIO C. ROXAS

FACTS:

The case involves a trader named Gregorio C. Roxas who delivered stocks of vegetable oil to spouses Rodrigo and Marissa Cawili in exchange for a personal check worth P348,805.50. However, when Roxas tried to encash the check, it bounced. The Cawili couple assured him that they would replace the check with a cashier's check from the Bank of the Philippine Islands (BPI). Roxas and Rodrigo Cawili then went to the BPI branch where the branch manager, Elma Capistrano, personally attended to them. A cashier's check was prepared by the bank teller, Lita Sagun, in the amount of P348,805.50. The following day, Roxas tried to encash the cashier's check but it was dishonored due to the closure of Marissa's account. Despite Roxas' insistence, the bank refused to encash the check and tried to retrieve it. Roxas then deposited the check in his account at Citytrust, but it was dishonored with the reason "Account Closed." Roxas filed a complaint for sum of money against BPI, praying for the payment of the amount of the check, damages, and the cost of the suit. The trial court ruled in favor of Roxas and ordered BPI to pay him the face value of the cashier's check, with interest and damages, while also holding the Cawili couple liable to indemnify BPI. The Court of Appeals affirmed the trial court's decision. BPI then filed a petition for review with the Supreme Court, raising the issues of whether Roxas is a holder in due course and whether BPI is liable for the cashier's check.

ISSUES:

  1. Whether or not respondent is a holder in due course.

  2. Whether or not petitioner is liable to respondent for the amount of the cashier's check.

RULING:

  1. The Court ruled that respondent is a holder in due course. The Court stated that every holder is presumed prima facie to be a holder in due course. The burden of proving otherwise lies on the party claiming that the holder in due course requirements are lacking. In this case, petitioner argued that the element of "value" is not present, thus respondent cannot be a holder in due course. However, the Court held that value can be any consideration sufficient to support a simple contract and an antecedent or pre-existing debt constitutes value. Since the cashier's check was delivered to respondent as payment for the vegetable oil he sold to spouses Cawili, he is considered a holder in due course.

  2. The Court held that petitioner is liable to respondent for the amount of the cashier's check. The Court stated that a cashier's check is considered the bank's own check and may be treated as a promissory note where the bank is the maker. The check becomes the primary obligation of the bank and constitutes a written promise to pay upon demand. The issuance of a cashier's check is considered acceptance thereof. Therefore, petitioner became liable to respondent from the moment it issued the cashier's check and should have paid the same upon presentment by the latter. The Court affirmed the decision of the trial court ordering petitioner to pay the amount of the cashier's check, damages, attorney's fees, and costs of the suit.

PRINCIPLES:

  • A holder is presumed prima facie to be a holder in due course, and the burden of proving the absence of the requirements to constitute a holder in due course lies on the party claiming otherwise.

  • Value can be any consideration sufficient to support a simple contract, and an antecedent or pre-existing debt constitutes value.

  • A cashier's check is considered the bank's own check and may be treated as a promissory note with the bank as the maker. It becomes the primary obligation of the bank and is considered acceptance thereof.