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Negotiable Instruments Case Digest: Wee Sion Ben v. Semexco/Zest Markering Corp. (2007)

G.R. No. 153898 October 18, 2007
Lesson Applicable:Promissory notes and checks (Negotiable Instruments Law)

FACTS:
  • In payment for the fruit juices, Wee Sion Ben issued Metro Bank Check dated August 15, 1995 in the sum of P104,277.80 payable to cash.   

  • Maloney Sorolla, Semexco’s sales representative, received and encashed the check but did not remit the money

  • Upon learning of the delivery of the check to Sorolla, Nelson Azarcon, district sales manager, inquired from Wee Sion Ben why he issued a “pay to cash” check when the Charge Invoice states that all payments must be made payable to the order of  the corporation.  

    • Thereupon, Wee Sion Ben issued Metro Bank Check dated September 1, 1995 to replace the “pay to cash” check.   

      • However, when presented for payment, Wee Sion Ben directed it to “stop payment” or not to pay the new check.

  • Wee Sion Ben filed with the Regional Trial Court, Branch 35, Ozamis City a complaint for sum of money

  • RTC: favored Wee Sion Ben - obligation had been extinguished when they delivered the “pay to cash” check to Sorolla

  • CA: affirmed with modification

ISSUE: W/N Wee Sion Ben's issuance of the check payable to cash delivered and received by Sorolla constitutes a valid payment

HELD: NO. CA AFFIRM 
  • Charge Invoice issued by respondent to petitioners clearly states that they shall “make all checks payable to SEMEXCO Marketing Corporation only.” 

    • issuance of the “pay to cash” check is a clear violation on their part of the term or condition stipulated in the Charge Invoice

  • Sorolla himself who requested them to issue the check payable to cash, they should have been warned of potential risk

Article 1595(1) of the Civil Code provides:
Where, under a contract of sale, the ownership of the goods has passed to the buyer and he wrongfully neglects or refuses to pay for the goods according to the terms of the contract of sale, the seller may maintain an action against him for the price of the goods.