9. [CTA favored HSBC]: DST does not apply to electronic message Acceptance or payment that is subjected to DST is done after
instructions. These instructions cannot be considered negotiable presentment for acceptance or presentment for payment. In this case,
instruments as they lack the feature of negotiability, which is the ability the EMs do not qualify to the latter. The EMs did not constitute the
to be transferred. written and signed manifestation of HSBC to a drawers order to pay,
[CA reversed]: HSBC required to pay DST based on its acceptance of thus HSBC is not an acceptor.
electronic messages.
There being neither presentment for acceptance nor presentment for
ISSUE: Whether or not the electronic message instructions are subject to payment, then there was no acceptance or payment that is subjected to
DST because they are bills of exchange. NO DST. HSBC, not an acceptor, could not be liable for DST.
HELD:
No. First, the electronic messages (EMs) is not the transaction
contemplated under Sec. 181 of the Tax Code as they are parallel to an
automatic bank transfer of local funds from a savings acount to a
checking account. The EMs cannot be considered negotiable
instruments, as they do not comply with the requisites of negotiability
under Sec. 1 of the NIL:
1 EMs are not signed by the investor-clients as supposed drawers of a
bill of exchange.
2 EMs do not contain an unconditional order to pay a sum certain in
money as payment is supposed to come from a specific fund or account
of the investor-clients.
3 EMs are not payable to order or bearer but to a specifically
designated third party.
One cannot avail himself of the NILs provisions on the liabilities and HELD:
defenses of an accommodation party if the said instrument is not a NO and NO
negotiable instrument. First and foremost, the Court herein ruled that the said
promissory note is not a negotiable instrument because the
VOCABULARY
note was made payable to a specific person rather than to a
1. Accommodation Party - An accommodation party is one who
bearer or to order.
has signed the instrument as maker, drawer, acceptor, or
Second, with the aforementioned ruling, Garcia cannot invoke
indorser, without receiving value therefor, and for the purpose
the liabilities and defense of accommodated party under the
of lending his name to some other person. Such a person is
NIL simply because the said promissory note is not a negotiable
liable on the instrument to a holder for value, notwithstanding
instrument.
such holder, at the time of taking the instrument, knew him to
be only an accommodation party. (Section 29, NIL)
xxx
FACTS:
Petitioner Garcia and de Jesus borrowed Php 400,000 from
respondent Llamas
On the same day, Garcia and de Jesus executed a promissory
note wherein they bound themselves jointly and severally to
pay the loan on or before 23 January 1997 with a 5% interest
per month
The loan became overdue, despite repeated demands
A case was filed against petitioner Garcia and de Jesus
Garcia argued that he assumed no liability under the
promissory note because he signed it merely as an Firestone Tire and Rubber v CA ***
accommodation party
RTC ruled in favor of Llamas
ISSUE:
Whether W.L. Foods accountant had authority to fill in the amounts Alvin Patrimonio v Napoleon Gutierrez
Topic: Incomplete but delivered instruments
HELD:
YES Petitioner: Alvin Patrimonio
Respondent: Napoleon Gutierrez and Octavio Marasigan III
Even if the checks were given to W.L. Foods in blank, this alone did
not make its issuance invalid. When the checks were delivered to Lim,
through his employee, he became a holder with prima facie authority DOCTRINE:
to fill the blanks. This was, in fact, accomplished by Lim's accountant In order that one who is not a holder in due course can enforce the
SEC. 14. Blanks; when may be filled. Where the instrument is instrument against a party prior to the instruments completion, two
wanting in any material particular, the person in possession thereof requisites must exist: (1) that the blank must be filled strictly in
has a prima facie authority to complete it by filling up the blanks accordance with the authority given; and (2) it must be filled up within
therein. And a signature on a blank paper delivered by the person a reasonable time. If it was proven that the instrument had not been
making the signature in order that the paper may be converted into a filled up strictly in accordance with the authority given and within a
negotiable instrument operates as a prima facie authority to fll it up reasonable time, the maker can set this up as a personal defense and
as such for any amount. . . avoid liability.
The law merely requires that the instrument be in the possession of a Sec. 14, NIL, Blanks; when may be filled.- Where the instrument is
person other than the drawer or maker. From such possession, wanting in any material particular, the person in possession thereof
together with the fact that the instrument is wanting in a material has a prima facie authority to complete it by filling up the blanks
particular, the law presumes agency to fill up the blanks therein. And a signature on a blank paper delivered by the person
VOCABULARY: HELD:
1. Holder in due course: is one who takes the instrument "in good
No.
faith and for value."
The Supreme Court found that Gutierrez was only authorized to use
the check for business expenses; thus, he exceeded the authority when
FACTS: he used the check to pay the loan he supposedly contracted for the
construction of petitioner's house. It cannot therefore be validly
Patrimonio and Gutierrez entered into a business venture under the concluded that the check was completed strictly in accordance with
name Slam Dunk Corp. the authority given by the petitioner.
Petitioner then pre-signed several checks for the expenses of Slam No
Dunk but left the payees name, date and amount blank. The blank
checks were then entrusted to Gutierrez with specific instruction not The Court further held that Marasigan is not a holder in due course.
Marasigans knowledge that the petitioner is not a party or a privy to
to fill them out with out notification and approval by petitioner.
the contract of loan, and correspondingly had no obligation or liability
Gutierrez obtained a P200,000 loan from Marasigan with a 5% per to him, renders him dishonest, hence, in bad faith.
month interest. Gutierrez then delivered one of the blank checks to
Marasigan and filled it out with the amount of P200,000. The petitioner can validly set up the personal defense that the blanks
were not filled up in accordance with the authority he gave.
When Marasigan deposited the check, it was dishonored for the reason Consequently, Marasigan has no right to enforce payment against the
account closed. Gutierrez failed to pay despite repeated demands petitioner and the latter cannot be obliged to pay the face value of the
which led Marsigan to file a BP22 case against Patrimonio. check.
Petitioner Patrimonio filed a case against Gutierrez and Marasigan. He
denied authorizing the loan or the check negotiation and asserted that DECISION OF THE CA IS HEREBY ANNULLED AND SET ASIDE
he was not privy to the loan agreement between the two.
The RTC ruled that when Patrimonio issued pre-signed blank checks,
he had the intention of issuing a negotiable instrument. RTC also