Facts:

This case involves a petition for review on certiorari filed by the Bank of the Philippine Islands (BPI) against Gregorio C. Roxas. The events leading to the case transpired in 1993, starting when Roxas, a trader, delivered vegetable oil to spouses Rodrigo and Marissa Cawili. As payment, the Cawilis issued a personal check worth P348,805.50, which was later dishonored by the drawee bank. The Cawilis assured Roxas that they would replace the bounced check with a cashier's check from BPI. On March 31, 1993, Roxas and Rodrigo went to BPI's branch on Shaw Boulevard, Mandaluyong City, where Elma Capistrano, the branch manager, personally attended to the transaction. Following her instructions, a BPI Cashier's Check No. 14428 for the same amount was prepared, drawn against Marissa Cawili's account. Rodrigo handed this check to Roxas in Elma's presence.

However, when Roxas returned to encash the check on April 1, 1993, he was informed that the account was closed, a

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Facts:

Background of the Transaction

• In March 1993, respondent Gregorio C. Roxas, a trader, delivered stocks of vegetable oil to spouses Rodrigo and Marissa Cawili.
• As payment for the vegetable oil, the spouses issued a personal check in the amount of P348,805.50, which was later dishonored by the drawee bank.

Issuance of the Cashieras Check

• Following the dishonor of the personal check, spouses Cawili assured respondent that they would replace it with a cashieras check issued by the Bank of the Philippine Islands (BPI), the petitioner.
• On March 31, 1993, respondent and Rodrigo Cawili visited the BPI branch at Shaw Boulevard in Mandaluyong City.
• At the branch, under the personal attention of branch manager Elma Capistrano and teller Lita Sagun, BPI prepared Cashieras Check No. 14428 in the amount of P348,805.50, drawn against Marissa Cawili’s account and made payable to respondent.

Attempt to Encash the Cashieras Check

• On April 1, 1993, respondent returned to the BPI branch to encash the cashieras check.
• The check was dishonored due to the closure of Marissa Cawili’s account, which had been closed on that same day.
• Bank officers, instead of honoring the check, attempted to retrieve it from respondent despite his insistence to have it cashed.

Subsequent Legal Proceedings

• On September 23, 1993, respondent filed a complaint for sum of money before the Regional Trial Court (RTC), Branch 263 in Pasig City, seeking:
• The principal amount of P348,805.50 (face value of the cashieras check) with legal interest from April 1, 1993;
• Additional damages including moral damages of P50,000.00, exemplary damages of P50,000.00;
• Attorney’s fees amounting to P25,000.00; and
• Costs of the suit.
• In its answer, petitioner (BPI) denied the allegations, claiming that:
• The check was issued by mistake and in good faith;
• It was dishonored due to the lack of consideration; and
• Respondent’s proper remedy was to sue Rodrigo Cawili, who purchased the check.
• Petitioner also filed a counterclaim for attorney’s fees and litigation expenses and subsequently a third-party complaint against spouses Cawili, who were later declared in default.
• The RTC rendered a decision in favor of respondent, awarding the sums as prayed.
• The Court of Appeals later affirmed the RTC’s judgment.
• Petitioner elevated the case by filing a petition for review on certiorari before the Supreme Court.

Contention Raised by Petitioner

• Petitioner asserted that:
• The respondent was not a holder in due course because the element of “value” was lacking;
• Consequently, BPI should not be held liable for the amount of the cashieras check.

Issue:

Holder in Due Course Status

• Whether respondent, having received the cashieras check as payment for the vegetable oil, qualifies as a holder in due course under Section 52 of the Negotiable Instruments Law.
• Whether the fact that Rodrigo Cawili purchased the cashieras check from petitioner affects respondent’s status as a holder for value.

Liability of the Bank

• Whether the issuance of the cashieras check by BPI, once accepted by respondent without conditions, automatically renders the bank liable to honor the check upon presentment.
• Whether the bank’s defense that the check was issued erroneously and that its dishonor stemmed from a lack of consideration holds merit.

Interpretation of “Value” in the Context of Cashieras Check

• Whether the consideration involved in the transaction (delivery of vegetable oil in exchange for the check) constitutes sufficient “value” under Section 25 of the Negotiable Instruments Law.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)