Jurisprudence: G.R. No. 76788 January 22, 1990

THIRD DIVISION

 G.R. No. 76788 January 22, 1990

JUANITA SALAS, petitioner,
vs.
HON. COURT OF APPEALS and FIRST FINANCE & LEASING CORPORATION, respondents.

Arsenio C. Villalon, Jr. for petitioner.

Labaguis, Loyola, Angara & Associates for private respondent.



FERNAN, C.J.:

Assailed in this petition for review on certiorari is the decision of the Court of Appeals in C.A.-G.R. CV No. 00757 entitled "Filinvest Finance & Leasing Corporation v. Salas", which modified the decision of the Regional Trial Court of San Fernando, Pampanga in Civil Case No. 5915, a collection suit between the same parties.

Records disclose that on February 6, 1980, Juanita Salas (hereinafter referred to as petitioner) bought a motor vehicle from the Violago Motor Sales Corporation (VMS for brevity) for P58,138.20 as evidenced by a promissory note. This note was subsequently endorsed to Filinvest Finance & Leasing Corporation (hereinafter referred to as private respondent) which financed the purchase.

Petitioner defaulted in her installments beginning May 21, 1980 allegedly due to a discrepancy in the engine and chassis numbers of the vehicle delivered to her and those indicated in the sales invoice, certificate of registration and deed of chattel mortgage, which fact she discovered when the vehicle figured in an accident on 9 May 1980.

This failure to pay prompted private respondent to initiate Civil Case No. 5915 for a sum of money against petitioner before the Regional Trial Court of San Fernando, Pampanga.

In its decision dated September 10, 1982, the trial court held, thus:

WHEREFORE, and in view of all the foregoing, judgment is hereby rendered ordering the defendant to pay the plaintiff the sum of P28,414.40 with interest thereon at the rate of 14% from October 2, 1980 until the said sum is fully paid; and the further amount of P1,000.00 as attorney's fees.

The counterclaim of defendant is dismissed.

With costs against defendant. 1

Both petitioner and private respondent appealed the aforesaid decision to the Court of Appeals.

Imputing fraud, bad faith and misrepresentation against VMS for having delivered a different vehicle to petitioner, the latter prayed for a reversal of the trial court's decision so that she may be absolved from the obligation under the contract.

On October 27, 1986, the Court of Appeals rendered its assailed decision, the pertinent portion of which is quoted hereunder:

The allegations, statements, or admissions contained in a pleading are conclusive as against the pleader. A party cannot subsequently take a position contradictory of, or inconsistent with his pleadings (Cunanan vs. Amparo, 80 Phil. 227). Admissions made by the parties in the pleadings, or in the course of the trial or other proceedings, do not require proof and cannot be contradicted unless previously shown to have been made through palpable mistake (Sec. 2, Rule 129, Revised Rules of Court; Sta. Ana vs. Maliwat, L-23023, Aug. 31, 1968, 24 SCRA 1018).

When an action or defense is founded upon a written instrument, copied in or attached to the corresponding pleading as provided in the preceding section, the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party, under oath, specifically denied them, and sets forth what he claims to be the facts (Sec. 8, Rule 8, Revised Rules of Court; Hibbered vs. Rohde and McMillian, 32 Phil. 476).

A perusal of the evidence shows that the amount of P58,138.20 stated in the promissory note is the amount assumed by the plaintiff in financing the purchase of defendant's motor vehicle from the Violago Motor Sales Corp., the monthly amortization of winch is Pl,614.95 for 36 months. Considering that the defendant was able to pay twice (as admitted by the plaintiff, defendant's account became delinquent only beginning May, 1980) or in the total sum of P3,229.90, she is therefore liable to pay the remaining balance of P54,908.30 at l4% per annum from October 2, 1980 until full payment.

WHEREFORE, considering the foregoing, the appealed decision is hereby modified ordering the defendant to pay the plaintiff the sum of P54,908.30 at 14% per annum from October 2, 1980 until full payment. The decision is AFFIRMED in all other respects. With costs to defendant. 2

Petitioner's motion for reconsideration was denied; hence, the present recourse.

In the petition before us, petitioner assigns twelve (12) errors which focus on the alleged fraud, bad faith and misrepresentation of Violago Motor Sales Corporation in the conduct of its business and which fraud, bad faith and misrepresentation supposedly released petitioner from any liability to private respondent who should instead proceed against VMS. 3

Petitioner argues that in the light of the provision of the law on sales by description 4 which she alleges is applicable here, no contract ever existed between her and VMS and therefore none had been assigned in favor of private respondent.

She contends that it is not necessary, as opined by the appellate court, to implead VMS as a party to the case before it can be made to answer for damages because VMS was earlier sued by her for "breach of contract with damages" before the Regional Trial Court of Olongapo City, Branch LXXII, docketed as Civil Case No. 2916-0. She cites as authority the decision therein where the court originally ordered petitioner to pay the remaining balance of the motor vehicle installments in the amount of P31,644.30 representing the difference between the agreed consideration of P49,000.00 as shown in the sales invoice and petitioner's initial downpayment of P17,855.70 allegedly evidenced by a receipt. Said decision was however reversed later on, with the same court ordering defendant VMS instead to return to petitioner the sum of P17,855.70. Parenthetically, said decision is still pending consideration by the First Civil Case Division of the Court of Appeals, upon an appeal by VMS, docketed as AC-G.R. No. 02922. 5

Private respondent in its comment, prays for the dismissal of the petition and counters that the issues raised and the allegations adduced therein are a mere rehash of those presented and already passed upon in the court below, and that the judgment in the "breach of contract" suit cannot be invoked as an authority as the same is still pending determination in the appellate court.

We see no cogent reason to disturb the challenged decision.

The pivotal issue in this case is whether the promissory note in question is a negotiable instrument which will bar completely all the available defenses of the petitioner against private respondent.

Petitioner's liability on the promissory note, the due execution and genuineness of which she never denied under oath is, under the foregoing factual milieu, as inevitable as it is clearly established.

The records reveal that involved herein is not a simple case of assignment of credit as petitioner would have it appear, where the assignee merely steps into the shoes of, is open to all defenses available against and can enforce payment only to the same extent as, the assignor-vendor.

Recently, in the case of Consolidated Plywood Industries Inc. v. IFC Leasing and Acceptance Corp., 6 this Court had the occasion to clearly distinguish between a negotiable and a non-negotiable instrument.

Among others, the instrument in order to be considered negotiable must contain the so-called "words of negotiability — i.e., must be payable to "order" or "bearer"". Under Section 8 of the Negotiable Instruments Law, there are only two ways by which an instrument may be made payable to order. There must always be a specified person named in the instrument and the bill or note is to be paid to the person designated in the instrument or to any person to whom he has indorsed and delivered the same. Without the words "or order or "to the order of", the instrument is payable only to the person designated therein and is therefore non-negotiable. Any subsequent purchaser thereof will not enjoy the advantages of being a holder of a negotiable instrument, but will merely "step into the shoes" of the person designated in the instrument and will thus be open to all defenses available against the latter. Such being the situation in the above-cited case, it was held that therein private respondent is not a holder in due course but a mere assignee against whom all defenses available to the assignor may be raised. 7

In the case at bar, however, the situation is different. Indubitably, the basis of private respondent's claim against petitioner is a promissory note which bears all the earmarks of negotiability.

The pertinent portion of the note reads:

PROMISSORY NOTE
(MONTHLY)

P58,138.20
San Fernando, Pampanga, Philippines
Feb. 11, 1980

For value received, I/We jointly and severally, promise to pay Violago Motor Sales Corporation or order, at its office in San Fernando, Pampanga, the sum of FIFTY EIGHT THOUSAND ONE HUNDRED THIRTY EIGHT & 201/100 ONLY (P58,138.20) Philippine currency, which amount includes interest at 14% per annum based on the diminishing balance, the said principal sum, to be payable, without need of notice or demand, in installments of the amounts following and at the dates hereinafter set forth, to wit: P1,614.95 monthly for "36" months due and payable on the 21st day of each month starting March 21, 1980 thru and inclusive of February 21, 1983. P_________ monthly for ______ months due and payable on the ______ day of each month starting _____198__ thru and inclusive of _____, 198________ provided that interest at 14% per annum shall be added on each unpaid installment from maturity hereof until fully paid.

xxx xxx xxx

Maker; Co-Maker:

(SIGNED) JUANITA SALAS _________________

Address:

____________________ ____________________

WITNESSES

SIGNED: ILLEGIBLE SIGNED: ILLEGIBLE
TAN # TAN #

PAY TO THE ORDER OF
FILINVEST FINANCE AND LEASING CORPORATION

VIOLAGO MOTOR SALES CORPORATION
BY: (SIGNED) GENEVEVA V. BALTAZAR
Cash Manager 8

A careful study of the questioned promissory note shows that it is a negotiable instrument, having complied with the requisites under the law as follows: [a] it is in writing and signed by the maker Juanita Salas; [b] it contains an unconditional promise to pay the amount of P58,138.20; [c] it is payable at a fixed or determinable future time which is "P1,614.95 monthly for 36 months due and payable on the 21 st day of each month starting March 21, 1980 thru and inclusive of Feb. 21, 1983;" [d] it is payable to Violago Motor Sales Corporation, or order and as such, [e] the drawee is named or indicated with certainty. 9

It was negotiated by indorsement in writing on the instrument itself payable to the Order of Filinvest Finance and Leasing Corporation 10 and it is an indorsement of the entire instrument. 11

Under the circumstances, there appears to be no question that Filinvest is a holder in due course, having taken the instrument under the following conditions: [a] it is complete and regular upon its face; [b] it became the holder thereof before it was overdue, and without notice that it had previously been dishonored; [c] it took the same in good faith and for value; and [d] when it was negotiated to Filinvest, the latter had no notice of any infirmity in the instrument or defect in the title of VMS Corporation. 12

Accordingly, respondent corporation holds the instrument free from any defect of title of prior parties, and free from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof. 13 This being so, petitioner cannot set up against respondent the defense of nullity of the contract of sale between her and VMS.

Even assuming for the sake of argument that there is an iota of truth in petitioner's allegation that there was in fact deception made upon her in that the vehicle she purchased was different from that actually delivered to her, this matter cannot be passed upon in the case before us, where the VMS was never impleaded as a party.

Whatever issue is raised or claim presented against VMS must be resolved in the "breach of contract" case.

Hence, we reach a similar opinion as did respondent court when it held:

We can only extend our sympathies to the defendant (herein petitioner) in this unfortunate incident. Indeed, there is nothing We can do as far as the Violago Motor Sales Corporation is concerned since it is not a party in this case. To even discuss the issue as to whether or not the Violago Motor Sales Corporation is liable in the transaction in question would amount, to denial of due process, hence, improper and unconstitutional. She should have impleaded Violago Motor Sales. 14

IN VIEW OF THE FOREGOING, the assailed decision is hereby AFFIRMED. With costs against petitioner.

SO ORDERED.

Gutierrez, Jr., Feliciano, Bidin and Cortés, JJ., concur.

Jurisprudence: G.R. No. 72110 November 16, 1990

SECOND DIVISION
G.R. No. 72110  November 16, 1990

ROMAN CATHOLIC BISHOP OF MALOLOS, INC., petitioner, vs. INTERMEDIATEAPPELLATE COURT, and ROBES-FRANCISCO REALTY AND DEVELOPMENTCORPORATION, respondents.Rodrigo Law Office for petitioner.Antonio P. Barredo and Napoleon M. Malinas for private respondent.

D E C I S I O N

SARMIENTO, J

This is a petition for review on certiorari which seeks the reversal and setting aside of thedecision 1 of the Court of Appeals, 2 the dispositive portion of which reads:

WHEREFORE, the decision appealed from is hereby reversed and set aside and another oneentered for the plaintiff ordering the defendant-appellee Roman Catholic Bishop of Malolos, Inc.to accept the balance of P124,000.00 being paid by plaintiff-appellant and thereafter to executein favor of Robes-Francisco Realty Corporation a registerable Deed of Absolute Sale over 20,655 square meters portion of that parcel of land situated in San Jose del Monte, Bulacan described inOCT No. 575 (now Transfer Certificates of Title Nos. T-169493, 169494,169495 and 169496) of the Register of Deeds of Bulacan. In case of refusal of the defendant to execute the Deed of Final Sale, the clerk of court is directed to execute the said document. Without pronouncementas to damages and attorney’s fees. Costs against the defendant-appellee. The case at bar arose from a complaint filed by the private respondent, then plaintiff, against thepetitioner, then defendant, in the Court of First Instance (now Regional Trial Court) of Bulacan, atSta. Maria, Bulacan, 4 for specific performance with damages, based on a contract 5 executedon July 7, 1971. The property subject matter of the contract consists of a 20,655 sq.m.-portion, out of the 30,655sq.m. total area, of a parcel of land covered by Original Certificate of Title No. 575 of theProvince of Bulacan, issued and registered in the name of the petitioner which it sold to theprivate respondent for and in consideration of P123,930.00. cdphilThe crux of the instant controversy lies in the compliance or non-compliance by the privaterespondent with the provision for payment to the petitioner of the principal balance of P100,000.00 and the accrued interest of P24,000.00 within the grace period.A chronological narration of the antecedent facts is as follows:On July 7, 1971, the subject contract over the land in question was executed between thepetitioner as vendor and the private respondent through its then president, Mr. Carlos F. Robes,as vendee, stipulating for a downpayment of P23,930.00 and the balance of P100,000.00 plus12% interest per annum to be paid within four (4) years from execution of the contract, that is, onor before July 7, 1975. The contract likewise provides for cancellation, forfeiture of previouspayments, and reconveyance of the land in question in case the private respondent would fail tocomplete payment within the said period. On March 12, 1973, the private respondent, through its new president, Atty. Adalia Francisco,addressed a letter 6 to Father Vasquez, parish priest of San Jose Del Monte, Bulacan,requesting to be furnished with a copy of the subject contract and the supporting documents. On July 17, 1975, admittedly after the expiration of the stipulated period for payment, the sameAtty. Francisco wrote the petitioner a formal request 7 that her company be allowed to pay theprincipal amount of P100,000.00 in three (3) equal installments of six (6) months each with thefirst installment and the accrued interest of P24,000.00 to be paid immediately upon approval of the said request. On July 29, 1975, the petitioner, through its counsel, Atty. Carmelo Fernandez, formally deniedthe said request of the private respondent, but granted the latter a grace period of five (5) daysfrom the receipt of the denial 8 to pay the total balance of P124,000.00, otherwise, the provisionsof the contract regarding cancellation, forfeiture, and reconveyance would be implemented. On August 4, 1975, the private respondent, through its president, Atty. Francisco, wrote 9 thecounsel of the petitioner requesting an extension of 30 days from said date to fully settle itsaccount. The counsel for the petitioner, Atty. Fernandez, received the said letter on the sameday. Upon consultation with the petitioner in Malolos, Bulacan, Atty. Fernandez, as instructed,wrote the private respondent a letter 10 dated August 7, 1975 informing the latter of the denial of the request for an extension of the grace period. Consequently, Atty. Francisco, the private respondent’s president, wrote a letter 11 dated August22, 1975, directly addressed to the petitioner, protesting the alleged refusal of the latter to accepttender of payment purportedly made by the former on August 5, 1975, the last day of the graceperiod. In the same letter of August 22, 1975, received on the following day by the petitioner, theprivate respondent demanded the execution of a deed of absolute sale over the land in questionand after which it would pay its account in full, otherwise, judicial action would be resorted to.On August 27, 1975, the petitioner’s counsel, Atty. Fernandez, wrote a reply 12 to the privaterespondent stating the refusal of his client to execute the deed of absolute sale due to its (privaterespondent’s) failure to pay its full obligation. Moreover, the petitioner denied that the privaterespondent had made any tender of payment whatsoever within the grace period. In view of thisalleged breach of contract, the petitioner cancelled the contract and considered all previouspayments forfeited and the land as ipso facto reconveyed. From a perusal of the foregoing facts, we find that both the contending parties have conflictingversions on the main question of tender of payment.The trial court, in its ratiocination, preferred not to give credence to the evidence presented bythe private respondent. According to the trial court:. . . What made Atty. Francisco suddenly decide to pay plaintiff’s obligation on August 5, 1975, goto defendant’s office at Malolos, and there tender her payment, when her request of August 4,1975 had not yet been acted upon until August 7, 1975? If Atty. Francisco had decided to pay theobligation and had available funds for the purpose on August 5, 1975, then there would havebeen no need for her to write defendant on August 4, 1975 to request an extension of time.Indeed, Atty. Francisco’s claim that she made a tender of payment on August 5, 1975 — suchalleged act, considered in relation to the circumstances both antecedent and subsequent thereto,being not in accord with the normal pattern of human conduct — is not worthy of credence. The trial court likewise noted the inconsistency in the testimony of Atty. Francisco, president of the private respondent, who earlier testified that a certain Mila Policarpio accompanied her onAugust 5, 1975 to the office of the petitioner. Another person, however, named Aurora Oracion,was presented to testify as the secretary-companion of Atty. Francisco on that same occasion. Furthermore, the trial court considered as fatal the failure of Atty. Francisco to present in courtthe certified personal check allegedly tendered as payment or, at least, its xerox copy, or evenbank records thereof. Finally, the trial court found that the private respondent had insufficientfunds available to fulfill the entire obligation considering that the latter, through its president, Atty.Francisco, only had a savings account deposit of P64,840.00, and although the latter had a  money-market placement of P300,000.00, the same was to mature only after the expiration of the 5-day grace period.Based on the above considerations, the trial court rendered a decision in favor of the petitioner,the dispositive portion of which reads:WHEREFORE, finding plaintiff to have failed to make out its case, the court hereby declares thesubject contract cancelled and plaintiff’s downpayment of P23,930.00 forfeited in favor of defendant, and hereby dismisses the complaint; and on the counterclaim, the Court ordersplaintiff to pay defendant.(1) Attorney’s fees of P10,000.00;(2) Litigation expenses of P2,000.00; and(3) Judicial costs. SO ORDERED. 14Not satisfied with the said decision, the private respondent appealed to the respondentIntermediate Appellate Court (now Court of Appeals) assigning as reversible errors, amongothers, the findings of the trial court that the available funds of the private respondent wereinsufficient and that the latter did not effect a valid tender of payment and consignation. The respondent court, in reversing the decision of the trial court, essentially relies on thefollowing findings: . . . We are convinced from the testimony of Atty. Adalia Francisco and her witnesses that inbehalf of the plaintiff-appellant they have a total available sum of P364,840.00 at her and at theplaintiff’s disposal on or before August 4, 1975 to answer for the obligation of the plaintiff-appellant. It was not correct for the trial court to conclude that the plaintiff-appellant had onlyabout P64,840.00 in savings deposit on or before August 5, 1975, a sum not enough to pay theoutstanding account of P124,000.00. The plaintiff-appellant, through Atty. Francisco proved andthe trial court even acknowledged that Atty. Adalia Francisco had about P300,000.00 in moneymarket placement. The error of the trial court has in concluding that the money market placementof P300,000.00 was out of reach of Atty. Francisco. But as testified to by Mr. Catalino Estrella, arepresentative of the Insular Bank of Asia and America, Atty. Francisco could withdraw anytimeher money market placement and place it at her disposal, thus proving her financial capability of meeting more than the whole of P124,000.00 then due per contract. This situation, We believe,proves the truth that Atty. Francisco apprehensive that her request for a 30-day grace periodwould be denied, she tendered payment on August 4, 1975 which offer defendant through itsrepresentative and counsel refused to receive. . .15 (Emphasis supplied) In other words, the respondent court, finding that the private respondent had sufficient availablefunds, ipso facto concluded that the latter had tendered payment. Is such conclusion warrantedby the facts proven? The petitioner submits that it is not. LexLibHence, this petition. 16The petitioner presents the following issues for resolution:xxx xxx xxxA. Is a finding that private respondent had sufficient available funds on or before the graceperiod for the payment of its obligation proof that it (private respondent) did tender of (sic)payment for its said obligation within said period?xxx xxx xxxB. Is it the legal obligation of the petitioner (as vendor) to execute a deed of absolute sale infavor of the private respondent (as vendee) before the latter has actually paid the completeconsideration of the sale — where the contract between and executed by the parties stipulates—“That upon complete payment of the agreed consideration by the herein VENDEE, the VENDORshall cause the execution of a Deed of Absolute Sale in favor of the VENDEE.”xxx xxx xxx.C. Is an offer of a check a valid tender of payment of an obligation under a contract whichstipulates that the consideration of the sale is in Philippine Currency? 17We find the petition impressed with merit. With respect to the first issue, we agree with the petitioner that a finding that the privaterespondent had sufficient available funds on or before the grace period for the payment of itsobligation does not constitute proof of tender of payment by the latter for its obligation within thesaid period. Tender of payment involves a positive and unconditional act by the obligor of offeringlegal tender currency as payment to the obligee for the former’s obligation and demanding thatthe latter accept the same. Thus, tender of payment cannot be presumed by a mere inferencefrom surrounding circumstances. At most, sufficiency of available funds is only affirmative of thecapacity or ability of the obligor to fulfill his part of the bargain. But whether or not the obligor avails himself of such funds to settle his outstanding account remains to be proven byindependent and credible evidence. Tender of payment presupposes not only that the obligor isable, ready, and willing, but more so, in the act of performing his obligation. Ab posse ad actunon vale illatio. “A proof that an act could have been done is no proof that it was actually done.” The respondent court was therefore in error to have concluded from the sheer proof of sufficientavailable funds on the part of the private respondent to meet more than the total obligation withinthe grace period, the alleged truth of tender of payment. The same is a classic case of non-sequitur.On the contrary, the respondent court finds itself remiss in overlooking or taking lightly the moreimportant findings of fact made by the trial court which we have earlier mentioned and which as arule, are entitled to great weight on appeal and should be accorded full consideration and respectand should not be disturbed unless for strong and cogent reasons. While the Court is not a trier of facts, yet, when the findings of fact of the Court of Appeals are atvariance with those of the trial court, 19 or when the inference of the Court of Appeals from itsfindings of fact is manifestly mistaken, 20 the Court has to review the evidence in order to arriveat the correct findings based on the record.Apropos the second issue raised, although admittedly the documents for the deed of absolutesale had not been prepared, the subject contract clearly provides that the full payment by theprivate respondent is an a priori condition for the execution of the said documents by thepetitioner.That upon complete payment of the agreed consideration by the herein VENDEE, the VENDORshall cause the execution of a Deed of Absolute Sale in favor of the VENDEE. The private respondent is therefore in estoppel to claim otherwise as the latter did in thetestimony in cross-examination of its president, Atty. Francisco, which reads:Q Now, you mentioned, Atty. Francisco, that you wanted the defendant to execute the finaldeed of sale before you would given (sic) the personal certified check in payment of your balance, is that correct?A Yes, sir. 22xxx xxx xxxArt. 1159 of the Civil Code of the Philippines provides that “obligations arising from contractshave the force of law between the contracting parties and should be complied with in good faith.”And unless the stipulations in said contract are contrary to law, morals, good customs, publicorder, or public policy, the same are binding as between the parties.
What the private respondent should have done if it was indeed desirous of complying with itsobligations would have been to pay the petitioner within the grace period and obtain a receipt of such payment duly issued by the latter. Thereafter, or, allowing a reasonable time, the privaterespondent could have demanded from the petitioner the execution of the necessary documents.In case the petitioner refused, the private respondent could have had always resorted to judicialaction for the legitimate enforcement of its right. For the failure of the private respondent toundertake this more judicious course of action, it alone shall suffer the consequences. With regard to the third issue, granting arguendo that we would rule affirmatively on the twopreceding issues, the case of the private respondent still can not succeed in view of the fact thatthe latter used a certified personal check which is not legal tender nor the currency stipulated,and therefore, can not constitute valid tender of payment. The first paragraph of Art. 1249 of theCivil Code provides that “the payment of debts in money shall be made in the currencystipulated, and if it is not possible to deliver such currency, then in the currency which is legaltender in the Philippines. The Court en banc in the recent case of Philippine Airlines v. Court of Appeals, 24 G.R. No. L-49188, stated thus:Since a negotiable instrument is only a substitute for money and not money, the delivery of suchan instrument does not, by itself, operate as payment (citing Sec. 189, Act 2031 on Negs. Insts.;Art. 1249, Civil Code; Bryan London Co. v. American Bank, 7 Phil. 255; Tan Sunco v. Santos, 9Phil. 44; 21 R.C.L. 60, 61). A check, whether a manager’s check or ordinary check, is not legaltender, and an offer of a check in payment of a debt is not a valid tender of payment and may berefused receipt by the obligee or creditor. Hence, where the tender of payment by the private respondent was not valid for failure to complywith the requisite payment in legal tender or currency stipulated within the grace period and assuch, was validly refused receipt by the petitioner, the subsequent consignation did not operateto discharge the former from its obligation to the latter.In view of the foregoing, the petitioner in the legitimate exercise of its rights pursuant to thesubject contract, did validly order therefore the cancellation of the said contract, the forfeiture of the previous payment, and the reconveyance ipso facto of the land in question.

WHEREFORE, the petition for review on certiorari is GRANTED and the DECISION of the respondent court promulgated on April 25, 1985 is hereby SET ASIDE and ANNULLED and the DECISION of the trial court dated May 25, 1981 is hereby REINSTATED. Costs against the private respondent.SO ORDERED

Jurisprudence: G.R. No. 123031 October 12, 1999

SECOND DIVISION

G.R. No. 123031 October 12, 1999

CEBU INTERNATIONAL FINANCE CORPORATION, petitioner,
vs.
COURT OF APPEALS, VICENTE ALEGRE, respondents.

QUISUMBING, J.:

This petition for review on certiorari assails respondent appellate court's Decision, 1 dated December 8, 1995, in CA G.R. CV No. 44085, which affirmed the ruling of the Regional Trial Court of Makati, Branch 132. The dispositive portion of the trial court's decision reads:

WHEREFORE, judgment is hereby rendered ordering defendant [herein petitioner] to pay plaintiff [herein private respondent]:

(1) the principal sum of P514,390.94 with legal interest thereon computed from August 6, 1991 until fully paid; and

(2) the costs of suit.

SO ORDERED. 2

Based on the records, the following are the pertinent facts of the case:

Cebu International Finance Corporation (CIFC), a quasi-banking institution, is engaged in money market operations.

On April 25, 1991, private respondent, Vicente Alegre, invested with CIFC, five hundred thousand (P500,000.00) pesos, in cash. Petitioner issued a promissory note to mature on May 27, 1991. The note for five hundred sixteen thousand, two hundred thirty-eight pesos and sixty-seven centavos (P516,238.67) covered private respondent's placement plus interest at twenty and a half (20.5%) percent for thirty-two (32) days.

On May 27, 1991, CIFC issued BPI Check No. 513397 (hereinafter the CHECK) for five hundred fourteen thousand, three hundred ninety pesos and ninety-four centavos (P514,390.94) in favor of the private respondent as proceeds of his matured investment plus interest. The CHECK was drawn from petitioner's current account number 0011-0803-59, maintained with the Bank of the Philippine Islands (BPI), main branch at Makati City.1âwphi1.nêt

On June 17, 1991, private respondent's wife deposited the CHECK with Rizal Commercial Banking Corp. (RCBC), in Puerto Princesa, Palawan. BPI dishonored the CHECK with the annotation, that the "Check (is) Subject of an Investigation." BPI took custody of the CHECK pending an investigation of several counterfeit checks drawn against CIFC's aforestated checking account. BPI used the check to trace the perpetrators of the forgery.

Immediately, private respondent notified CIFC of the dishonored CHECK and demanded, on several occasions, that he be paid in cash. CIFC refused the request, and instead instructed private respondent to wait for its ongoing bank reconciliation with BPI. Thereafter, private respondent, through counsel, made a formal demand for the payment of his money market placement. In turn, CIFC promised to replace the CHECK but required an impossible condition that the original must first be surrendered.

On February 25, 1992, private respondent Alegre filed a complaint 3 for recovery of a sum of money against the petitioner with the Regional Trial Court of Makati (RTC-Makati), Branch 132.

On July 13, 1992, CIFC sought to recover its lost funds and formally filed against BPI, a separate civil action 4 for collection of a sum of money with the RTC-Makati, Branch 147. The collection suit alleged that BPI unlawfully deducted from CIFC's checking account, counterfeit checks amounting to one million, seven hundred twenty-four thousand, three hundred sixty-four pesos and fifty-eight centavos (P1,724,364.58). The action included the prayer to collect the amount of the CHECK paid to Vicente Alegre but dishonored by BPI.

Meanwhile, in response to Alegre's complaint with RTC-Makati, Branch 132, CIFC filed a motion for leave of court to file a third-party complaint against BPI. BPI was impleaded by CIFC to enforce a right, for contribution and indemnity, with respect to Alegre's claim. CIFC asserted that the CHECK it issued in favor of Alegre was genuine, valid and sufficiently funded.

On July 23, 1992, the trial court granted CIFC's motion. However, BPI moved to dismiss the third-party complaint on the ground of pendency of another action with RTC-Makati, Branch 147. Acting on the motion, the trial court dismissed the third-party complaint on November 4, 1992, after finding that the third party complaint filed by CIFC against BPI is similar to its ancillary claim against the bank, filed with RTC-Makati Branch 147.

Thereafter, during the hearing by RTC-Makati, Branch 132, held on May 27, and June 22, 1993, Vito Arieta, Bank Manager of BPI, testified that the bank, indeed, dishonored the CHECK, retained the original copy and forwarded only a certified true copy to RCBC. When Arieta was recalled on July 20, 1993, he testified that on July 16, 1993, BPI encashed and deducted the said amount from the account of CIFC, but the proceeds, as well as the CHECK remained in BPI's custody. The bank's move was in accordance with the Compromise Agreement 5 it entered with CIFC to end the litigation in RTC-Makati, Branch 147. The compromise agreement, which was submitted for the approval of the said court, provided that:

1. Defendant [BPI] shall pay to the plaintiff [CIFC] the amount of P1,724,364.58 plus P20,000 litigation expenses as full and final settlement of all of plaintiff's claims as contained in the Amended Complaint dated September 10, 1992. The aforementioned amount shall be credited to plaintiff's current account No. 0011-0803-59 maintained at defendant's Main Branch upon execution of this Compromise Agreement.

2. Thereupon, defendant shall debit the sum of P514,390.94 from the aforesaid current account representing payment/discharge of BPI Check No. 513397 payable to Vicente Alegre.

3. In case plaintiff is adjudged liable to Vicente Alegre in Civil Case No. 92-515 arising from the alleged dishonor of BPI Check No. 513397, plaintiff cannot go after the defendant: otherwise stated, the defendant shall not be liable to the plaintiff. Plaintiff [CIFC] may however set-up the defense of payment/discharge stipulated in par. 2 above. 6

On July 27, 1993, BPI filed a separate collection suit 7 against Vicente Alegre with the RTC-Makati, Branch 62. The complaint alleged that Vicente Alegre connived with certain Lina A. Pena and Lita A. Anda and forged several checks of BPI's client, CIFC. The total amount of counterfeit checks was P1,724,364.58. BPI prevented the encashment of some checks amounting to two hundred ninety five thousand, seven hundred seventy-five pesos and seven centavos (P295,775.07). BPI admitted that the CHECK, payable to Vicente Alegre for P514,390.94, was deducted from BPI's claim, hence, the balance of the loss incurred by BPI was nine hundred fourteen thousand, one hundred ninety-eight pesos and fifty-seven centavos (P914,198.57), plus costs of suit for twenty thousand (P20,000.00) pesos. The records are silent on the outcome of this case.

On September 27, 1993, RTC-Makati, Branch 132, rendered judgment in favor of Vicente Alegre.

CIFC appealed from the adverse decision of the trial court. The respondent court affirmed the decision of the trial court.

Hence this appeal, 8 in which petitioner interposes the following assignments of errors:

1. The Honorable Court of Appeals erred in affirming the finding of the Honorable Trial Court holding that petitioner was not discharged from the liability of paying the value of the subject check to private respondent after BPI has debited the value thereof against petitioner's current account.

2. The Honorable Court of Appeals erred in applying the provisions of paragraph 2 of Article 1249 of the Civil Code in the instant case. The applicable law being the Negotiable Instruments Law.

3. The Honorable Court of Appeals erred in affirming the Honorable Trial Court's findings that the petitioner was guilty of negligence and delay in the performance of its obligation to the private respondent.

4. The Honorable Court of Appeals erred in affirming the Honorable Trial Court's decision ordering petitioner to pay legal interest and the cost of suit.

5. The Honorable Court of Appeals erred in affirming the Honorable Trial Court's dismissal of petitioner's third-party complaint against BPI.

These issues may be synthesized into three:

1. WHETHER OR NOT ARTICLE 1249 OF THE NEW CIVIL CODE APPLIES IN THE PRESENT CASE;

2. WHETHER OR NOT "BPI CHECK NO. 513397" WAS VALIDLY DISCHARGED; and

3. WHETHER OR NOT THE DISMISSAL OF THE THIRD PARTY COMPLAINT OF PETITIONER AGAINST BPI BY REASON OF LIS PENDENS WAS PROPER?

On the first issue, petitioner contends that the provisions of the Negotiable Instruments Law (NIL) are the pertinent laws to govern its money market transaction with private respondent, and not paragraph 2 of Article 1249 of the Civil Code. Petitioner stresses that it had already been discharged from the liability of paying the value of the CHECK due to the following circumstances:

1) There was "ACCEPTANCE" of the subject check by BPI, the drawee bank, as defined under the Negotiable Instruments Law, and therefore, BPI, the drawee bank, became primarily liable for the payment of the check, and consequently, the drawer, herein petitioner, was discharged from its liability thereon;

2) Moreover, BPI, the drawee bank, has not validly DISHONORED the subject check; and,

3) The act of BPI, the drawee bank of debiting/deducting the value of the check from petitioner's account amounted to and/or constituted a discharge of the drawer's (petitioner's) liability under the instrument/subject check. 9

Petitioner cites Section 137 of the Negotiable Instruments Law, which states:

Liability of drawee retaining or destroying bill — Where a drawee to whom a bill is delivered for acceptance destroys the same, or refuses within twenty-four hours after such delivery or such other period as the holder may allow, to return the bill accepted or non-accepted to the Holder, he will be deemed to have accepted the same.

Petitioner asserts that since BPI accepted the instrument, the bank became primarily liable for the payment of the CHECK. Consequently, when BPI offset the value of CHECK against the losses from the forged checks allegedly committed by the private respondent, the check was deemed paid.

Art. 1249 of the New Civil Code deals with a mode of extinction of an obligation and expressly provides for the medium in the "payment of debts." It provides that:

The payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such currency, then in the currency, which is legal tender in the Philippines.

The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired.

In the meantime, the action derived from the original obligation shall be held in abeyance.

Considering the nature of a money market transaction, the above-quoted provision should be applied in the present controversy. As held in Perez vs. Court of Appeals, 10 a "money market is a market dealing in standardized short-term credit instruments (involving large amounts) where lenders and borrowers do not deal directly with each other but through a middle man or dealer in open market. In a money market transaction, the investor is a lender who loans his money to a borrower through a middleman or dealer. 11

In the case at bar, the money market transaction between the petitioner and the private respondent is in the nature of a loan. The private respondent accepted the CHECK, instead of requiring payment in money. Yet, when he presented it to RCBC for encashment, as early as June 17, 1991, the same was dishonored by non-acceptance, with BPI's annotation: "Check (is) subject of an investigation." These facts were testified to by BPI's manager. Under these circumstances, and after the notice of dishonor, 12 the holder has an immediate right of recourse against the drawer, 13 and consequently could immediately file an action for the recovery of the value of the check.

In a loan transaction, the obligation to pay a sum certain in money may be paid in money, which is the legal tender or, by the use of a check. A check is not a legal tender, and therefore cannot constitute valid tender of payment. In the case of Philippine Airlines, Inc. vs. Court of Appeals, 14 this Court held:

Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment (citation omitted). A check, whether a manager's check or ordinary check, is not legal tender, and an offer of a check in payment of a debt is not a valid tender of payment and may be refused receipt by the obligee or creditor. Mere delivery of checks does not discharge the obligation under a judgment. The obligation is not extinguished and remains suspended until the payment by commercial document is actually realized (Art. 1249, Civil Code, par. 3.) 15

Turning now to the second issue, when the bank deducted the amount of the CHECK from CIFC's current account, this did not ipso facto operate as a discharge or payment of the instrument. Although the value of the CHECK was deducted from the funds of CIFC, it was not delivered to the payee, Vicente Alegre. Instead, BPI offset the amount against the losses it incurred from forgeries of CIFC checks, allegedly committed by Alegre. The confiscation of the value of the check was agreed upon by CIFC and BPI. The parties intended to amicably settle the collection suit filed by CIFC with the RTC-Makati, Branch 147, by entering into a compromise agreement, which reads:

xxx xxx xxx

2. Thereupon, defendant shall debit the sum of P514,390.94 from the aforesaid current account representing payment/discharge of BPI Check No. 513397 payable to Vicente Alegre.

3. In case plaintiff is adjudged liable to Vicente Alegre in Civil Case No. 92-515 arising from the alleged dishonor of BPI Check No. 513397, plaintiff cannot go after the defendant; otherwise stated, the defendant shall not be liable to the plaintiff. Plaintiff however (sic) set-up the defense of payment/discharge stipulated in par. 2
above. 16

A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. 17 It is an agreement between two or more persons who, for preventing or putting an end to a lawsuit, adjust their difficulties by mutual consent in the manner which they agree on, and which everyone of them prefers in the hope of gaining, balanced by the danger of losing. 18 The compromise agreement could not bind a party who did not sign the compromise agreement nor avail of its benefits. 19 Thus, the stipulations in the compromise agreement is unenforceable against Vicente Alegre, not a party thereto. His money could not be the subject of an agreement between CIFC and BPI. Although Alegre's money was in custody of the bank, the bank's possession of it was not in the concept of an owner. BPI cannot validly appropriate the money as its own. The codal admonition on this issue is clear:

Art. 1317 —

No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him.

A Contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party. 20

BPI's confiscation of Alegre's money constitutes garnishment without the parties going through a valid proceeding in court. Garnishment is an attachment by means of which the plaintiff seeks to subject to his claim the property of the defendant in the hands of a third person or money owed to such third person or a garnishee to the defendant. 21 The garnishment procedure must be upon proper order of RTC-Makati, Branch 62, the court who had jurisdiction over the collection suit filed by BPI against Alegre. In effect, CIFC has not yet tendered a valid payment of its obligation to the private respondent. Tender of payment involves a positive and unconditional act by the obligor of offering legal tender currency as payment to the obligee for the former's obligation and demanding that the latter accept the same. 22 Tender of payment cannot be presumed by a mere inference from surrounding circumstances.

With regard to the third issue, for litis pendentia to be a ground for the dismissal of an action, the following requisites must concur: (a) identity of parties or at least such as to represent the same interest in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same acts; and (c) the identity in the two cases should be such that the judgment which may be rendered in one would, regardless of which party is successful, amount to res judicata in the other. 23

The trial court's ruling as adopted by the respondent court states, thus:

A perusal of the complaint in Civil Case No. 92-1940, entitled Cebu International Finance Corporation vs. Bank of the Philippine Islands now pending before Branch 147 of this Court and the Third Party Complaint in the instant case would readily show that the parties are not only identical but also the cause of action being asserted, which is the recovery of the value of BPI Check No. 513397 is the same. In Civil Case No. 92-1940 and in the Third Party Complaint the rights asserted and relief prayed for, the reliefs being founded on the facts, are identical.

xxx xxx xxx

WHEREFORE, the motion to dismiss is granted and consequently, the Third Party Complaint is hereby ordered dismissed on ground of lis pendens. 24

We agree with the observation of the respondent court that, as between the third party claim filed by the petitioner against BPI in Civil Case No. 92-515 and petitioner's ancillary claim against the bank in Civil Case No. 92-1940, there is identity of parties as well as identity of rights asserted, and that any judgment that may be rendered in one case will amount to res judicata in another.

The compromise agreement between CIFC and BPI, categorically provided that "In case plaintiff is adjudged liable to Vicente Alegre in Civil Case No. 92-515 arising from the alleged dishonor of BPI Check No. 513397, plaintiff (CIFC) cannot go after the defendant (BPI); otherwise stated, the defendant shall not be liable to the plaintiff." 25 Clearly, this stipulation expressed that CIFC had already abandoned any further claim against BPI with respect to the value of BPI Check No. 513397. To ask this Court to allow BPI to be a party in the case at bar, would amount to res judicata and would violate terms of the compromise agreement between CIFC and BPI. The general rule is that a compromise has upon the parties the effect and authority of res judicata, with respect to the matter definitely stated therein, or which by implication from its terms should be deemed to have been included therein. 26 This holds true even if the agreement has not been judicially approved. 27

WHEREFORE, the instant petition is hereby DENIED. The Decision of the Court of Appeals in CA-G.R. CV No. 44085 is AFFIRMED. Costs against petitioner.1âwphi1.nêt

SO ORDERED.

Mendoza and Buena, JJ., concur.

Bellosillo, J., on official leave.

Negotiable Instruments Case Digest: Salas v. CA (1990)

G.R. No. 76788 January 22,1990

Lessons Applicable: Introduction to Negotiable Instruments (Negotiable Instruments Law)

FACTS:

• February 6, 1980: Juanita Salas bought a motor vehicle from the Violago Motor Sales Corp. (VMS) for P58,138.20 as evidence by a promissory note
• This note was subsequently endorsed to Filinvest Finance &Leasing Corp. (FFLC) 
• May 21, 1980: Salas defaulted in her installments allegedly due to discrepancies in the engine and chassis number of the vehicle delivered and discovery of certificate of reg. and deed of mortgage
• VMS initiated for a sum of money at the RTC
• RTC: favored VMS
• CA: Affirmed

ISSUE: W/N the promissory note is a negotiable which will bar completely all defenses of Salas against VMS

HELD:  YES. Affirmed

• Requisites under the law (Sec. 1 of Negotiable Instruments Law)
1. it is in writing and signed by the maker (Salas)
2. it contains an unconditional promise to pay the amount P58,138.20
3. it is payable at a fixed or determinable future time which is P1,614.95 monthly for 36 months due and payable on the 21st day of each month starting March 21, 1980 thru and inclusive of Feb 21 1983
4. It is payable to VMS or order and as such
5. drawee is named or indicated with certainty
• Filinvest = holder in due course

Negotiable Instruments Case Digest: Roman Catholic Bishop of Malolos v. IAC (1990)

G.R. No. 72110 November 16, 1990
Lessons Applicable: Introduction to Negotiable Instruments (Negotiable Instruments Law)

FACTS:

• July 7, 1971: A contract over the land was executed between the Roman Catholic Bishop of Malolos (bishop) as vendor and the through its then president, Mr. Carlos F. Robes, as vendee, stipulating for a downpayment of P23,930 and the balance of P100,000 plus 12% interest per annum to be paid within 4 years from execution of the contract. 
• The contract likewise provides for cancellation, forfeiture of previous payments, and reconveyance of the land in case of failure to pay within the period
• March 12, 1973: private respondent, through its new president, Atty. Adalia Francisco, addressed a letter 6 to Father Vasquez, parish priest of San Jose Del Monte, Bulacan, requesting to be furnished with a copy of the subject contract and the supporting documents
• July 17, 1975: after the expiration of the stipulated period for payment, Atty. Francisco wrote the  formal request that her company be allowed to pay the principal amount of P100,000 in 3 equal installments of 6 months each with the 1st installment and the accrued interest of P24,000 to be paid immediately upon approval
• July 29, 1975: Bishop through its counsel, Atty. Carmelo Fernandez, formally denied the request but granted a grace period of 5 days from the receipt of the denial to pay the total balance of P124,000
• August 4, 1975: private respondent, through its president, Atty. Francisco, wrote the counsel of the petitioner requesting an extension of 30 days from to fully settle its account. - denied
• RTC: favored Bishop declaring the down payment as forfeited

ISSUE: W/N there is tender of payment by issuance of a certified check

HELD: NO. RTC reinstated.

• Tender of payment involves a positive and unconditional act by the obligor of offering legal tender currency as payment to the obligee for the former’s obligation and demanding that the latter accept the same. 
• tender of payment cannot be presumed by a mere inference from surrounding circumstances
• sheer proof of sufficient available funds to meet more than the total obligation within the grace period - NOT sufficient
• On the contrary, the respondent court finds itself remiss in overlooking or taking lightly the more important findings of fact made by the trial court which are entitled to great weight on appeal and should be accorded full consideration and respect and should not be disturbed unless for strong and cogent reasons
• certified personal check which is not legal tender nor the currency stipulated, and therefore, can not constitute valid tender of payment
• Since a negotiable instrument is only a substitute for money and not money, the delivery of such an instrument does not, by itself, operate as payment

Negotiable Instruments Case Digest: Cebu International Finance Corp. v. CA (1999)

G.R. No. 123031 October 12, 1999

Lessons Applicable: Introduction to Negotiable Instruments (Negotiable Instruments Law)

FACTS:

• April 25, 1991: Vicente Alegre (Alegre), invested with Cebu International Finance Corporation (CIFC),a quasi-banking institution, P500,000.00  
• CIFC issued a promissory note to mature on May 27, 1991. The note for P516,238.67 covered private respondent's placement plus 20.5% interest for 32 days.
• May 27, 1991:  CIFC issued BPI Check No. 513397 for P514,390.94 in favor of Alegre as proceeds of his matured investment plus interest. The CHECK was drawn from CIFC's current account in the Bank of the Philippine Islands (BPI)
• June 17, 1991: Alegre's wife deposited the check with Rizal Commercial Banking Corp. (RCBC) in Puerto Princesa, Palawan. 
• BPI dishonored the CHECK with the annotation, that the "Check (is) Subject of an Investigation
• BPI took custody of the CHECK pending an investigation of several counterfeit checks drawn against CIFC's aforestated checking account. 
• BPI used the check to trace the perpetrators of the forgery.
• Immediately, Alegre notified CIFC of the dishonored CHECK and demanded, on several occasions, that he be paid in cash. 
• CIFC refused the request, and instead instructed him to wait for its ongoing bank reconciliation with BPI. 
• Alegre, through counsel, made a formal demand for the payment of his money market placement 
• CIFC promised to replace the CHECK but required an impossible condition that the original must first be surrendered.
• February 25, 1992: Alegre filed a complaint for recovery of a sum of money w/ the RTC against CIFC
• CIFC filed a motion for leave of court to file a third-party complaint against BPI - dismissed bec. of the other case
• CIFC asserted that the CHECK it issued in favor of Alegre was genuine, valid and sufficiently funded.
• July 13, 1992: CIFC sought to recover its lost funds and formally filed against BPI
• alleged that BPI unlawfully deducted from CIFC's checking account, counterfeit checks amounting to P1,724,364.58
• compromise agreement, which was submitted for the approval of the court
• BPI pay CFIC P1,724,364.58 + P20,000 litigation expenses
• BPI shall debit of P514,390.94 from the current account of CFIC payable to Alegre 
• In case BPI shall be adjudge liable to Alegre, he cannot go after BPI
• July 27, 1993: BPI filed a separate collection suit against Alegre 
• alleged that Alegre connived w/ Lina A. Pena and Lita A. Anda and forged several checks of CIFC totalling to P1,724,364.58 deducting P514,390.94 = P914,198.57 + P20,000 cost of suit
• September 27, 1993: RTC favored Alegre
• CIFC appealed but CA Affirmed 

ISSUE: W/N a check is of legal tender thereby extinguishing the obligation of CIFC to pay Alegre

HELD: NO. CA Affirmed.

• Section 137 of the Negotiable Instruments Law
• BPI primarily liable for accepting the checks
• Art. 1249 of the New Civil Code
• The payment of debts in money shall be made in the currency stipulated, and if it is not possible to deliver such currency, then in the currency, which is legal tender in the Philippines.
  The delivery of promissory notes payable to order, or bills of exchange or other mercantile documents shall produce the effect of payment only when they have been cashed, or when through the fault of the creditor they have been impaired.
• money market - a market dealing in standardized short-term credit instruments (involving large amounts) where lenders and borrowers do not deal directly with each other but through a middle man or dealer in open market. In a money market transaction, the investor is a lender who loans his money to a borrower through a middleman or dealer.
• In the case at bar, the money market transaction between the CIFC and the Alegre is in the nature of a loan. 
• Alegre accepted the CHECK, instead of requiring payment in money. 
• Yet, when he presented it to RCBC for encashment, as early as June 17, 1991, the same was dishonored by non-acceptance, with BPI's annotation: "Check (is) subject of an investigation." 
• Under these circumstances, and after the notice of dishonor, the holder has an immediate right of recourse against the drawer, and consequently could immediately file an action for the recovery of the value of the check.
• In a loan transaction, the obligation to pay a sum certain in money may be paid in money, which is the legal tender or, by the use of a check.
• A check is not a legal tender, and therefore cannot constitute valid tender of payment.
• Although the value of the CHECK was deducted from the funds of CIFC, it was not delivered to Alegre - did not not ipso facto operate as a discharge or payment
• A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced 
• unenforceable against Alegre who is not a party
• BPI's confiscation of Alegre's money constitutes garnishment without the parties going through a valid proceeding in court.
• In effect, CIFC has not yet tendered a valid payment of its obligation to theAlegre
• GR compromise has upon the parties the effect and authority of res judicata, with respect to the matter definitely stated therein
• holds true even if the agreement has not been judicially approved
• CIFC cannot go against BPI