SECOND DIVISION

[G.R. No. 219037. October 19, 2016.]

RCBC SAVINGS BANK , petitioner, vs. NOEL M. ODRADA , respondent.

DECISION

CARPIO , J : p

The Case
Before the Court is a petition for review, on certiorari 1 assailing the 26 March
2014 Decision 2 and the 18 June 2015 Resolution 3 of the Court of Appeals in CA-G.R.
CV No. 94890.
The Facts
In April 2002, respondent Noel M. Odrada (Odrada) sold a second-hand
Mitsubishi Montero (Montero) to Teodoro L. Lim (Lim) for One Million Five Hundred Ten
Thousand Pesos (P1,510,000). Of the total consideration, Six Hundred Ten Thousand
Pesos (P610,000) was initially paid by Lim and the balance of Nine Hundred Thousand
Pesos (P900,000) was nanced by petitioner RCBC Savings Bank (RCBC) through a car
loan obtained by Lim. 4 As a requisite for the approval of the loan, RCBC required Lim to
submit the original copies of the Certi cate of Registration (CR) and Of cial Receipt
(OR) in his name. Unable to produce the Montero's OR and CR, Lim requested RCBC to
execute a letter addressed to Odrada informing the latter that his application for a car
loan had been approved.
On 5 April 2002, RCBC issued a letter that the balance of the loan would be
delivered to Odrada upon submission of the OR and CR. Following the letter and initial
down payment, Odrada executed a Deed of Absolute Sale on 9 April 2002 in favor of
Lim and the latter took possession of the Montero. 5
When RCBC received the documents, RCBC issued two manager's checks dated
12 April 2002 payable to Odrada for Nine Hundred Thousand Pesos (P900,000) and
Thirteen Thousand Five Hundred Pesos (P13,500). 6 After the issuance of the
manager's checks and their turnover to Odrada but prior to the checks' presentation,
Lim noti ed Odrada in a letter dated 15 April 2002 that there was an issue regarding
the roadworthiness of the Montero. The letter states: CAIHTE

April 15, 2002

Mr. Noel M. Odrada
C/o Kotse Pilipinas
Fronting Ultra, Pasig City
Thru: Shan Mendez
Dear Mr. Odrada,
Please be inform[ed] that I am going to cancel or exchange the (1) one unit
Montero that you sold to me thru Mr. Shan Mendez because it did not match
your representations the way Mr. Shan Mendez explained to me like:
1. You told me that the said vehicle has not experience[d]
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 collision. However, it is hidden, when you open its engine cover
there is a trace of a head-on collision. The condenser is smashed,
the fender support is not align[ed], both bumper support[s]
connecting [the] chassis were crippled and welded, the hood
support was repaired, etc.
2. The 4-wheel drive shift is not functioning. When Mr.
Mendez was asked about it, he said it would not function until you
can reach the speed of 30 miles.
3. During Mr. Mendez['s] representation, he said the odometer
has still an original mileage data but found tampered.
4. You represented the vehicle as model 1998 however; it is
indicated in the front left A-pillar inscribed at the identi cation
plate [as] model 1997.
Therefore, please show your sincerity by personally inspecting the said vehicle
at RCBC, Paci c Bldg. Pearl Drive, Ortigas Center, Pasig City. Let us meet at the
said bank at 10:00 A.M., April 17, 2002.
Meanwhile, kindly hold or do not encash the manager's check[s] issued to you
by RCBC until you have clarified and satisfied my complaints.
Sincerely yours,
Teodoro L. Lim
Cc: Dario E. Santiago, RCBC loan
Legal 7
Odrada did not go to the slated meeting and instead deposited the manager's
checks with International Exchange Bank (Ibank) on 16 April 2002 and redeposited
them on 19 April 2002 but the checks were dishonored both times apparently upon
Lim's instruction to RCBC. 8 Consequently, Odrada led a collection suit 9 against Lim
and RCBC in the Regional Trial Court of Makati. 10
In his Answer, 11 Lim alleged that the cancellation of the loan was at his instance,
upon discovery of the misrepresentations by Odrada about the Montero's
roadworthiness. Lim claimed that the cancellation was not done ex parte but through a
letter 12 dated 15 April 2002. 13 He further alleged that the letter was delivered to
Odrada prior to the presentation of the manager's checks to RCBC. 14
On the other hand, RCBC contended that the manager's checks were dishonored
because Lim had cancelled the loan. RCBC claimed that the cancellation of the loan was
prior to the presentation of the manager's checks. Moreover, RCBC alleged that despite
notice of the defective condition of the Montero, which constituted a failure of
consideration, Odrada still proceeded with presenting the manager's checks.
It was later disclosed during trial that RCBC also sent a formal notice of
cancellation of the loan on 18 April 2002 to both Odrada and Lim. 15 DETACa

The Regional Trial Court's Ruling

In its Decision 16 dated 1 October 2009, the trial court ruled in favor of Odrada.
The trial court held that Odrada was the proper party to ask for rescission. 17 The lower
court reasoned that the right of rescission is implied in reciprocal obligations where
one party fails to perform what is incumbent upon him when the other is willing and
ready to comply. The trial court ruled that it was not proper for Lim to exercise the right
of rescission since Odrada had already complied with the contract of sale by delivering
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 the Montero while Lim remained delinquent in payment. 18 Since Lim was not ready,
willing, and able to comply with the contract of sale, he was not the proper party
entitled to rescind the contract.
The trial court ruled that the defective condition of the Montero was not a
supervening event that would justify the dishonor of the manager's checks. The trial
court reasoned that a manager's check is equivalent to cash and is really the bank's
own check. It may be treated as a promissory note with the bank as maker. Hence, the
check becomes the primary obligation of the bank which issued it and constitutes a
written promise to pay on demand. 19 Being the party primarily liable, the trial court
ruled that RCBC was liable to Odrada for the value of the manager's checks.
Finally, the trial court found that Odrada suffered sleepless nights, humiliation,
and was constrained to hire the services of a lawyer meriting the award of damages. 20
The dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered:
(a) Directing defendant RCBC to pay plaintiff the
amount of Php913,500.00 representing the cash equivalent of the
two (2) manager's checks, plus 12% interest from the date of ling
of the case until fully paid;
(b) Directing defendants to solidarily pay moral
damages in the amount of Php500,000.00 and exemplary
damages in the amount of Php500,000.00;
(c) Directing defendants to solidarily pay attorney's
fees in the amount of Php300,000.00.
Finally, granting the cross-claim of defendant RCBC, Teodoro L. Lim is
hereby directed to indemnify RCBC Savings Bank for the amount adjudged for it
to pay plaintiff.
SO ORDERED. 21
RCBC and Lim appealed from the trial court's decision.
The Court of Appeals' Ruling
In its assailed 26 March 2014 Decision, the Court of Appeals dismissed the
appeal and affirmed the trial court's 1 October 2009 Decision. ATICcS

The Court of Appeals ruled that the two manager's checks, which were complete
and regular, reached the hands of Lim who deposited the same in his bank account with
Ibank. RCBC knew that the amount re ected on the manager's checks represented
Lim's payment for the remaining balance of the Montero's purchase price. The
appellate court held that when RCBC issued the manager's checks in favor of Odrada,
RCBC admitted the existence of the payee and his then capacity to endorse, and
undertook that on due presentment the checks which were negotiable instruments
would be accepted or paid, or both according to its tenor. 22 The appellate court held
that the effective delivery of the checks to Odrada made RCBC liable for the checks. 23
On RCBC's defense of want of consideration, the Court of Appeals af rmed the
nding of the trial court that Odrada was a holder in due course. The appellate court
ruled that the defense of want of consideration is not available against a holder in due
course. 24
Lastly, the Court of Appeals found that the award of moral and exemplary
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 damages and attorney's fees was excessive. Hence, modification was proper.
The dispositive portion of the Decision reads:
WHEREFORE, the impugned Decision of the court a quo in Civil Case No.
02-453 is hereby AFFIRMED with MODIFICATION insofar as the reduction of
awards for moral, exemplary damages and attorney's fees to P50,000.00,
P20,000.00, and P20,000.00 respectively.
SO ORDERED. 25 ETHIDa

RCBC and Lim led a motion for reconsideration 26 on 28 April 2014. In its 18
June 2015 Resolution, the Court of Appeals denied the motion for lack of merit. 27
RCBC alone 28 led this petition before the Court. Thus, the decision of the Court
of Appeals became final and executory as to Lim.
The Issues
RCBC presented the following issues in this petition:
A. The court a quo gravely erred in nding that as between Odrada as seller
and Lim as buyer of the vehicle, only the former has the right to rescind the
contract of sale nding failure to perform an obligation under the contract of
sale on the part of the latter only despite the contested roadworthiness of the
vehicle, subject matter of the sale.
1. Whether or not the court a quo erred in holding that Lim
cannot cancel the auto loan despite the failure in consideration
due to the contested roadworthiness of the vehicle delivered by
Odrada to him. 29
B. The court a quo gravely erred when it found that Odrada is a holder in
due course of the manager's checks in question despite being informed of the
cancellation of the auto loan by the borrower, Lim.
1. Whether or not Lim can validly countermand the manager's
checks in the hands of a holder who does not hold the same in
due course. 30
Odrada failed to file a comment 31 within the period prescribed by this Court. 32
The Ruling of this Court
We grant the petition.
Under the law on sales, a contract of sale is perfected the moment there is a
meeting of the minds upon the thing which is the object of the contract and upon the
price which is the consideration. From that moment, the parties may reciprocally
demand performance. 33 Performance may be done through delivery, actual or
constructive. Through delivery, ownership is transferred to the vendee. 34 However, the
obligations between the parties do not cease upon delivery of the subject matter. The
vendor and vendee remain concurrently bound by speci c obligations. The vendor, in
particular, is responsible for an implied warranty against hidden defects.
Article 1547 of the Civil Code states: "In a contract of sale, unless a contrary
intention appears, there is an implied warranty that the thing shall be free from any
hidden faults or defects." 35 Article 1566 of the Civil Code provides that "the vendor is
responsible to the vendee for any hidden faults or defects in the thing sold, even though
he was not aware thereof." 36 As a consequence, the law xes the liability of the vendor
for hidden defects whether known or unknown to him at the time of the sale.
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 The law de nes a hidden defect as one which would render the thing sold un t
for the use for which it is intended, or would diminish its tness for such use to such an
extent that, had the vendee been aware thereof, he would not have acquired it or would
have given a lower price for it. 37 cSEDTC

In this case, Odrada and Lim entered into a contract of sale of the Montero.
Following the initial downpayment and execution of the deed of sale, the Montero was
delivered by Odrada to Lim and the latter took possession of the Montero. Notably,
under the law, Odrada's warranties against hidden defects continued even after the
Montero's delivery. Consequently, a misrepresentation as to the Montero's
roadworthiness constitutes a breach of warranty against hidden defects.
In Supercars Management & Development Corporation v. Flores, 38 we held that a
breach of warranty against hidden defects occurred when the vehicle, after it was
delivered to respondent, malfunctioned despite repairs by petitioner. 39 In the present
case, when Lim acquired possession, he discovered that the Montero was not
roadworthy. The engine was misaligned, the automatic transmission was
malfunctioning, and the brake rotor disks needed refacing. 40 However, during the
proceedings in the trial court, Lim's testimony was stricken off the record because he
failed to appear during cross-examination. 41 In effect, Lim was not able to present
clear preponderant evidence of the Montero's defective condition.
RCBC May Refuse to Pay Manager's Checks
We address the legal question of whether or not the drawee bank of a manager's
check has the option of refusing payment by interposing a personal defense of the
purchaser of the manager's check who delivered the check to a third party.
In resolving this legal question, this Court will examine the nature of a manager's
check and its relation to personal defenses under the Negotiable Instruments Law. 42
Jurisprudence de nes a manager's check as a check drawn by the bank's
manager upon the bank itself and accepted in advance by the bank by the act of its
issuance. 43 It is really the bank's own check and may be treated as a promissory note
with the bank as its maker. 44 Consequently, upon its purchase, the check becomes the
primary obligation of the bank and constitutes its written promise to pay the holder
upon demand. 45 It is similar to a cashier's check 46 both as to effect and use in that the
bank represents that the check is drawn against sufficient funds. 47
As a general rule, the drawee bank is not liable until it accepts. 48 Prior to a bill's
acceptance, no contractual relation exists between the holder 49 and the drawee.
Acceptance, therefore, creates a privity of contract between the holder and the drawee
so much so that the latter, once it accepts, becomes the party primarily liable on the
instrument. 50 Accordingly, acceptance is the act which triggers the operation of the
liabilities of the drawee (acceptor) under Section 62 51 of the Negotiable Instruments
Law. Thus, once he accepts, the drawee admits the following: (a) existence of the
drawer; (b) genuineness of the drawer's signature; (c) capacity and authority of the
drawer to draw the instrument; and (d) existence of the payee and his then capacity to
endorse.
As can be gleaned in a long line of cases decided by this Court, a manager's
check is accepted by the bank upon its issuance. As compared to an ordinary bill of
exchange where acceptance occurs after the bill is presented to the drawee, the
distinct feature of a manager's check is that it is accepted in advance. Notably, the
mere issuance of a manager's check creates a privity of contract between the holder
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 and the drawee bank, the latter primarily binding itself to pay according to the tenor of
its acceptance. SDAaTC

The drawee bank, as a result, has the unconditional obligation to pay a manager's
check to a holder in due course irrespective of any available personal defenses.
However, while this Court has consistently held that a manager's check is automatically
accepted, a holder other than a holder in due course is still subject to defenses. In
International Corporate Bank v. Spouses Gueco , 52 which involves a delivered
manager's check, the Court still considered whether the check had become stale:
It has been held that, if the check had become stale, it becomes
imperative that the circumstances that caused its non-presentment be
determined. In the case at bar, there is no doubt that the petitioner bank held on
the check and refused to encash the same because of the controversy
surrounding the signing of the joint motion to dismiss. We see no bad faith or
negligence in this position taken by the bank. 53
In International Corporate Bank, this Court considered whether the holder presented the
manager's check within a reasonable time after its issuance — a circumstance required
for holding the instrument in due course. 54 AaCTcI

Similarly, in Rizal Commercial Banking Corporation v. Hi-Tri Development

Corporation, 55 the Court observed that the mere issuance of a manager's check does
not ipso facto work as an automatic transfer of funds to the account of the payee. 56 In
order for the holder to acquire title to the instrument, there still must have been
effective delivery. Accordingly, the Court, taking exception to the manager's check
automatic transfer of funds to the payee, declared that: "the doctrine that the deposit
represented by a manager's check automatically passes to the payee is inapplicable,
because the instrument — although accepted in advance remains undelivered." 57 This
Court ruled that the holder did not acquire the instrument in due course since title had
not passed for lack of delivery. 58
We now address the main legal question: if the holder of a manager's check is
not a holder in due course, can the drawee bank interpose a personal defense of the
purchaser?
Our rulings in Mesina v. Intermediate Appellate Court 59 and United Coconut
Planters Bank v. Intermediate Appellate Court 60 shed light on the matter.
In Mesina, Jose Go purchased a manager's check from Associated Bank. As he
left the bank, Go inadvertently left the check on top of the desk of the bank manager.
The bank manager entrusted the check for safekeeping to another bank of cial who at
the time was attending to a customer named Alexander Lim. 61 After the bank of cial
answered the telephone and returned from the men's room, the manager's check could
no longer be found. After learning that his manager's check was missing, Go
immediately returned to the bank to give a stop payment order on the check. A third
party named Marcelo Mesina deposited the manager's check with Prudential Bank but
the drawee bank sent back the manager's check to the collecting bank with the words
"payment stopped." When asked how he obtained the manager's check, Mesina claimed
it was paid to him by Lim in a "certain transaction." 62
While this Court acknowledged the general causes and effects of a manager's
check, it noted that other factors were needed to be considered, namely the manner by
which Mesina acquired the instrument. This Court declared:
Petitioner's allegations hold no water. Theories and examples advanced
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 by petitioner on causes and effects of a cashier's check such as (1) it cannot be
countermanded in the hands of a holder in due course and (2) a cashier's check
is a bill of exchange drawn by the bank against itself — are general principles
which cannot be aptly applied to the case at bar, without considering other
things. Petitioner failed to substantiate his claim that he is a holder in due
course and for consideration or value as shown by the established facts of the
case. Admittedly, petitioner became the holder of the cashier's check as
endorsed by Alexander Lim who stole the check. He refused to say how and why
it was passed to him. He had therefore notice of the defect of his title over the
check from the start. 63
Ultimately, the notice of defect affected Mesina's claim as a holder of the
manager's check. This Court ruled that the issuing bank could validly refuse
payment because Mesina was not a holder in due course . Unequivocally, the
Court declared: "the holder of a cashier's check who is not a holder in due
course cannot enforce such check against the issuing bank which dishonors
the same ." 64 EcTCAD

In the same manner, in United Coconut Planters Bank (UCPB), 65 this Court ruled
that the drawee bank was legally, justi ed in refusing to pay the holder of a manager's
check who did not hold the check in due course. In UCPB, Altiura Investors, Inc.
purchased a manager's check from UCPB, which then issued a manager's check in the
amount of Four Hundred Ninety Four Thousand Pesos (P494,000) to Makati Bel-Air
Developers, Inc. The manager's check represented the payment of Altiura Investors, Inc.
for a condominium unit it purchased from Makati Bel-Air Developers, Inc. Subsequently,
Altiura Investors, Inc. instructed UCPB to hold payment due to material
misrepresentations by Makati Bel-Air Developers, Inc. regarding the condominium unit.
66 Pending negotiations and while the stop payment order was in effect, Makati Bel-Air
Developers, Inc. insisted that UCPB pay the value of the manager's check. UCPB
refused to pay and led an interpleader to allow Altiura Investors, Inc. and Makati Bel-
Air Developers, Inc. to litigate their respective claims. Makati Bel-Air Developers, Inc.
also led a counterclaim against UCPB in the amount of Five Million Pesos
(P5,000,000) based on UCPB's violation of its warranty on its manager's check. 67
In upholding UCPB's refusal to pay the value of the manager's check, this Court
reasoned that Makati Bel-Air Developers, Inc.'s title to the instrument became defective
when there arose a partial failure of consideration. 68 We held that UCPB could validly
invoke a personal defense of the purchaser against Makati Bel-Air Developers, Inc.
because the latter was not a holder in due course of the manager's check:
There are other considerations supporting the conclusion reached by this
Court that respondent appellate court had committed reversible error. Makati
Bel-Air was a party to the contract of sale of an of ce condominium unit to
Altiura, for the payment of which the manager's check was issued. Accordingly,
Makati Bel-Air was fully aware, at the time it had received the manager's check,
that there was, or had arisen, at least partial failure of consideration since it was
unable to comply with its obligation to deliver of ce space amounting to 165
square meters to Altiura. Makati Bel-Air was also aware that petitioner Bank had
been informed by Altiura of the claimed defect in Makati Bel-Air's title to the
manager's check or its right to the proceeds thereof. Vis-a-vis both Altiura and
petitioner Bank, Makati Bel-Air was not a holder in due course of the manager's
check. 69
The foregoing rulings clearly establish that the drawee bank of a manager's
check may interpose personal defenses of the purchaser of the manager's check if the
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 holder is not a holder in due course. In short, the purchaser of a manager's check may
validly countermand payment to a holder who is not a holder in due course. Accordingly,
the drawee bank may refuse to pay the manager's check by interposing a personal
defense of the purchaser. Hence, the resolution of the present case requires a
determination of the status of Odrada as holder of the manager's checks.
In this case, the Court of Appeals gravely erred when it considered Odrada as a
holder in due course. Section 52 of the Negotiable Instruments Law de nes a holder in
due course as one who has taken the instrument under the following conditions:
(a) That it is complete and regular upon its face;
(b) That he became the holder of it before it was overdue, and without
notice that it has been previously dishonored, if such was the fact;
(c) That he took it in good faith and for value ;
(d) That at the time it was negotiated to him, he had no notice of any
in rmity in the instrument or defect in the title of the person negotiating it.
(Emphasis supplied)
To be a holder in due course, the law requires that a party must have acquired the
instrument in good faith and for value.
Good faith means that the person taking the instrument has acted with due
honesty with regard to the rights of the parties liable on the instrument and that at the
time he took the instrument, the holder has no knowledge of any defect or in rmity of
the instrument. 70 To constitute notice of an in rmity in the instrument or defect in the
title of the person negotiating the same, the person to whom it is negotiated must have
had actual knowledge of the in rmity or defect, or knowledge of such facts that his
action in taking the instrument would amount to bad faith. 71
Value, on the other hand, is de ned as any consideration suf cient to support a
simple contract. 72
In the present case, Odrada attempted to deposit the manager's checks on 16
April 2002, a day after Lim had informed him that there was a serious problem with the
Montero. Instead of addressing the issue, Odrada decided to deposit the manager's
checks. Odrada's actions do not amount to good faith. Clearly, Odrada failed to make
an inquiry even when the circumstances strongly indicated that there arose, at the very
least, a partial failure of consideration due to the hidden defects of the Montero.
Odrada's action in depositing the manager's checks despite knowledge of the
Montero's defects amounted to bad faith. Moreover, when Odrada redeposited the
manager's checks on 19 April 2002, he was already formally noti ed by RCBC the
previous day of the cancellation of Lim's auto loan transaction. Following UCPB, 73
RCBC may refuse payment by interposing a personal defense of Lim — that the title of
Odrada had become defective when there arose a partial failure or lack of
consideration. 74 AScHCD

RCBC acted in good faith in following the instructions of Lim. The records show
that Lim noti ed RCBC of the defective condition of the Montero before Odrada
presented the manager's checks. 75 Lim informed RCBC of the hidden defects of the
Montero including a misaligned engine, smashed condenser, crippled bumper support,
and defective transmission. RCBC also received a formal notice of cancellation of the
auto loan from Lim and this prompted RCBC to cancel the manager's checks since the
auto loan was the consideration for issuing the manager's checks. RCBC acted in good
faith in stopping the payment of the manager's checks.
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 Section 58 of the Negotiable Instruments Law provides: "In the hands of any
holder other than a holder in due course, a negotiable instrument is subject to the same
defenses as if it were non-negotiable. . . . ." Since Odrada was not a holder in due
course, the instrument becomes subject to personal defenses under the Negotiable
Instruments Law. Hence, RCBC may legally act on a countermand by Lim, the purchaser
of the manager's checks.
Lastly, since Lim's testimony involving the Montero's hidden defects was stricken
off the record by the trial court, Lim failed to prove the existence of the hidden defects
and thus Lim remains liable to Odrada for the purchase price of the Montero. Lim's
failure to le an appeal from the decision of the Court of Appeals made the decision of
the appellate court nal and executory as to Lim. RCBC cannot be made liable because
it acted in good faith in carrying out the stop payment order of Lim who presented to
RCBC the complaint letter to Odrada when Lim issued the stop payment order.
WHEREFORE , we GRANT the petition. We REVERSE and SET ASIDE the 26
March 2014 Decision and the 18 June 2015 Resolution of the Court of Appeals in CA-
G.R. CV No. 94890 only insofar as RCBC Savings Bank is concerned.
SO ORDERED.
Brion, Del Castillo and Mendoza, JJ., concur.
Leonen, * J., is on official leave.
Footnotes

* On official leave.
1. Rollo, pp. 9-23. Under Rule 45 of the 1997 Rules of Civil Procedure.
2. Id. at 29-36. Penned by Associate Justice Eduardo B. Peralta, Jr., with Associate Justices
Magdangal M. De Leon and Stephen C. Cruz concurring.
3. Id. at 52-53.
4. Id. at 29.
5. Id. at 30.

6. Id.
7. Records, p. 23.
8. Rollo, p. 30.
9. Civil Case No. 02-453.
10. Branch 66, Makati City.

11. Records, pp. 18-21.

12. Id. at 23.
13. Id. at 19.
14. Id.

15. Rollo, p. 30.

16. Id. at 55-62. Penned by Judge Joselito Villarosa.
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 17. Id. at 59.
18. Id.
19. Id. at 60.
20. Id. at 61.

21. Id. at 62.

22. Id. at 34.
23. Id.
24. Act No. 2031 (1911), Sec. 24.
25. Rollo, p. 35.

26. Id. at 38-50.

27. Id. at 52-53.
28. The records show that RCBC was the only party in the original case which led an appeal
to this Court.
29. Rollo, p. 13.
30. Id. at 19.
31. Rule 47, Sec. 7. Effect of failure to le comment. — When no comment is led by any of
the respondents, the case may be decided on the basis of the record, without
prejudice to any disciplinary action which the court may take against the disobedient
party.
32. Counsel for Odrada failed to le comment on the petition within the period prescribed in
the Resolution dated 30 September 2015, which period expired on 22 November
2015.

33. CIVIL CODE, Art. 1475.

34. CIVIL CODE, Art. 1478.
35. CIVIL CODE, Art. 1547 (2).
36. CIVIL CODE, Art. 1485.
37. CIVIL CODE, Art. 1561.

38. 487 Phil. 259 (2004).

39. Id. at 268.
40. Records, pp. 27-29.
41. Id. at 213.
42. Act No. 2031 (1911).

43. Rizal Commercial Banking Corporation v. Hi-Tri Development Corporation , 687 Phil. 481
(2012); Bank of the Philippine Islands v. Roxas , 562 Phil. 161 (2007); Bank of the
Philippine Islands v. Court of Appeals , 383 Phil. 538 (2000); Tan v. Court of Appeals ,
G.R. No. 108555, 20 December 1994, 239 SCRA 310.
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 44. Id.
45. Tan v. Court of Appeals, G.R. No. 108555, 20 December 1994, 239 SCRA 310.
46. For purposes of brevity and applying the previous rulings of this Court when the Court
refers to a manager's check, cashier's checks are also included.
47. Bank of the Philippine Islands v. Court of Appeals, 383 Phil. 538 (2000).
48. Act No. 2031 (1911), Sec. 127.
49. Payee or indorsee of a bill or note who is in possession of it, or the bearer thereof.

50. Act No. 2031 (1911), Sec. 127.

51. Sec. 62. Liability of Acceptor. — The acceptor, by accepting the instrument, engages that
he will pay it according to the tenor of his acceptance and admits:
(a) The existence of the drawer, the genuineness of his signature and his capacity and
authority to draw the instrument, and

(b) The existence of the payee and his then capacity to indorse.
52. 404 Phil. 353 (2001).
53. Id. at 368.

54. Sec. 53. When person not deemed holder in due course. — Where an instrument payable
on demand is negotiated on an unreasonable length of time after its issue, the holder
is not deemed a holder in due course.

55. 687 Phil. 481 (2012).

56. Id. at 499.

57. Id. at 500.

58. Notably, under Section 16 of the Negotiable Instruments Law, a complete yet undelivered
negotiable instrument gives rise to a personal defense.
59. 229 Phil. 495 (1986).

60. 262 Phil. 397 (1990).

61. Mesina v. Intermediate Appellate Court, supra at 498.

62. Mesina v. Intermediate Appellate Court, supra at 499.

63. Mesina v. Intermediate Appellate Court, supra at 502.

64. Mesina v. Intermediate Appellate Court, supra at 502.

65. United Coconut Planters Bank v. Intermediate Appellate Court, supra note 60.

66. United Coconut Planters Bank v. Intermediate Appellate Court, supra note 60 at 399.
67. United Coconut Planters Bank v. Intermediate Appellate Court, supra note 60 at 400.

68. United Coconut Planters Bank v. Intermediate Appellate Court, supra note 60 at 403.
69. United Coconut Planters Bank v. Intermediate Appellate Court, supra note 60 at 403.

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 70. Act No. 2031 (1911), Sec. 52.

71. Act No. 2031 (1911), Sec. 56.

72. Act No. 2031 (1911), Sec. 25.

73. Supra note 60.

74. Sec. 28. Effect of want of consideration. — Absence or failure of consideration is a matter
of defense as against any person not a holder in due course . . . .

75. Records, pp. 51-52.

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