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MANUEL LIM V.

COURT OF
APPEALS
251 SCRA 408

FACTS:
Spouses Lim were charged with estafa
and violations of BP22 for allegedly
purchasing goods from Linton
Commercial Corporation and issuing
checks as payment thereof. The
checks when presented to the
bank were dishonored for
insufficiency of funds or the
payment for the checks has been
stopped.

HELD:
It is settled that venue in criminal
cases is a vital ingredient of
jurisdiction. It shall be where the
crime or offense was committed or
any one of the essential ingredients
thereof took place. In determining the
proper venue for these cases, the
following are material factsthe
checks were issued at the place of
business of Linton; they were
delivered to Linton at the same place;
they were dishonored in Kalookan City;
petitioners had knowledge of the
insufficiency of funds in their account.

Under Section 191 of the


Negotiable Instruments Law, issue
means the first delivery of the
instrument complete in its form to a
person who takes it as holder. The
term holder on the other hand refers

to the payee or indorsee of a bill or


note who is in possession of it or the
bearer thereof. The important place to
consider in the consummation of a
negotiable instrument is the place of
delivery. Delivery is the final act
essential to its consummation as
an obligation.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 107898 December 19,


1995
MANUEL LIM and ROSITA
LIM, petitioners,
vs.
COURT OF APPEALS and PEOPLE
OF THE PHILIPPINES, respondents.

BELLOSILLO, J.:
MANUEL LIM and ROSITA LIM, spouses,
were charged before the Regional Trial
Court of Malabon with estafa on three
(3) counts under Art. 315, par. 2 (d),
of The Revised Penal Code, docketed
as Crim. Cases Nos. 1696-MN to 1698MN. The Informations substantially
alleged that Manuel and Rosita,
conspiring together, purchased goods
from Linton Commercial Company, Inc.
(LINTON), and with deceit issued
seven Consolidated Bank and Trust
Company (SOLIDBANK) checks

simultaneously with the delivery as


payment therefor. When presented to
the drawee bank for payment the
checks were dishonored as payment
on the checks had been stopped
and/or for insufficiency of funds to
cover the amounts. Despite repeated
notice and demand the Lim spouses
failed and refused to pay the checks or
the value of the goods.
On the basis of the same checks,
Manuel and Rosita Lim were also
charged with seven (7) counts of
violation of B.P. Blg. 22, otherwise
known as the Bouncing Checks Law,
docketed as Crim. Cases Nos. 1699MN to 1705-MN. In substance, the
Informations alleged that the Lims
issued the checks with knowledge that
they did not have sufficient funds or
credit with the drawee bank for
payment in full of such checks upon
presentment. When presented for
payment within ninety (90) days from
date thereof the checks were
dishonored by the drawee bank for
insufficiency of funds. Despite receipt
of notices of such dishonor the Lims
failed to pay the amounts of the
checks or to make arrangements for
full payment within five (5) banking
days.
Manuel Lim and Rosita Lim are the
president and treasurer, respectively,
of Rigi Bilt Industries, Inc. (RIGI). RIGI
had been transacting business with
LINTON for years, the latter supplying
the former with steel plates, steel
bars, flat bars and purlin sticks which
it uses in the fabrication, installation
and building of steel structures. As
officers of RIGI the Lim spouses were

allowed 30, 60 and sometimes even


up to 90 days credit.
On 27 May 1983 the Lims ordered 100
pieces of mild steel plates worth
P51,815.00 from LINTON which were
delivered on the same day at their
place of business at 666 7th Avenue,
8th Street, Kalookan City. To pay
LINTON for the delivery the Lims
issued SOLIDBANK Check No. 027700
postdated 3 September 1983 in the
amount of P51,800.00. 1
On 30 May 1983 the Lims ordered
another 65 pieces of mild steel plates
worth P63,455.00 from LINTON which
were delivered at their place of
business on the same day. They issued
as payment SOLIDBANK Check No.
027699 in the amount of P63,455.00
postdated 20 August 1983. 2
The Lim spouses also ordered 2,600
"Z" purlins worth P241,800.00 which
were delivered to them on various
dates, to wit: 15 and 22 April 1983;
11, 14, 20, 23, 25, 28 and 30 May
1983; and, 2 and 9 June 1983. To pay
for the deliveries, they issued seven
SOLIDBANK checks, five of which were

Check No. Date of Issue


Amount
027683
027684
027719
027720
027721

16 July 1983 P27,900.00 3


23 July 1983 P27,900.00 4
6 Aug. 1983 P32,550.00 5
13 Aug. 1983 P27,900.00 6
27 Aug. 1983 P37,200.00 7

William Yu Bin, Vice President and


Sales Manager of LINTON, testified

that when those seven (7) checks


were deposited with the Rizal
Commercial Banking Corporation they
were dishonored for "insufficiency of
funds" with the additional notation
"payment stopped" stamped thereon.
Despite demand Manuel and Rosita
refused to make good the checks or
pay the value of the deliveries.
Salvador Alfonso, signature verifier of
SOLIDBANK, Grace Park Branch,
Kalookan City, where the Lim spouses
maintained an account, testified on
the following transactions with respect
to the seven (7) checks:
CHECK NO. DATE PRESENTED REASON
FOR DISHONOR
027683 22 July 1983 Payment Stopped
(PS) 8
027684 23 July 1983 PS and Drawn
Against
Insufficient Fund (DAIF) 9
027699 24 Aug. 1983 PS and DAIF 10
027700 5 Sept. 1983 PS and DAIF 11
027719 9 Aug. 1983 DAIF 12
027720 16 Aug. 1983 PS and DAIF 13
027721 30 Aug. 1983 PS and DAIF 14
Manuel Lim admitted having issued
the seven (7) checks in question to
pay for deliveries made by LINTON but
denied that his company's account
had insufficient funds to cover the
amounts of the checks. He presented
the bank ledger showing a balance of
P65,752.75. Also, he claimed that he
ordered SOLIDBANK to stop payment
because the supplies delivered by
LINTON were not in accordance with
the specifications in the purchase
orders.

Rosita Lim was not presented to testify


because her statements would only be
corroborative.
On the basis of the evidence thus
presented the trial court held both
accused guilty of estafa and violation
of B.P. Blg. 22 in its decision dated 25
January 1989. In Crim. Case No. 1696MN they were sentenced to an
indeterminate penalty of six (6) years
and one (1) day of prision mayor as
minimum to twelve (12) years and one
(1) day of reclusion temporal as
maximum plus one (1) year for each
additional P10,000.00 with all the
accessory penalties provided for by
law, and to pay the costs. They were
also ordered to indemnify LINTON in
the amount of P241,800.00. Similarly
sentences were imposed in Crim.
Cases Nos. 1697-MN and 1698-MN
except as to the indemnities awarded,
which were P63,455.00 and
P51,800.00, respectively.
In Crim. Case No. 1699-MN the trial
court sentenced both accused to a
straight penalty of one (1) year
imprisonment with all the accessory
penalties provided for by law and to
pay the costs. In addition, they were
ordered to indemnify LINTON in the
amount of P27,900.00. Again, similar
sentences were imposed in Crim.
Cases Nos. 1700-MN to 1705-MN
except for the indemnities awarded,
which were P32,550.00, P27,900.00,
P27,900.00, P63,455.00, P51,800.00
and P37,200.00 respectively. 15
On appeal, the accused assailed the
decision as they imputed error to the
trial court as follows: (a) the regional

Trial Court of malabon had no


jurisdiction over the cases because the
offenses charged ere committed
outside its territory; (b) they could not
be held liable for estafa because the
seven (7) checks were issued by them
several weeks after the deliveries of
the goods; and, (c) neither could they
be held liable for violating B.P. Blg. 22
as they ordered payment of the
checks to be stopped because the
goods delivered were not those
specified by them, besides they had
sufficient funds to pay the checks.
In the decision of 18 September
1992 16 respondent Court of Appeals
acquitted accused-appellants of estafa
on the ground that indeed the checks
were not made in payment of an
obligation contracted at the time of
their issuance. However it affirmed the
finding of the trial court that they were
guilty of having violated B.P. Blg.
22. 17 On 6 November 1992 their
motion for reconsideration was
denied. 18
In the case at bench petitioners
maintain that the prosecution failed to
prove that any of the essential
elements of the crime punishable
under B.P. Blg. 22 was committed
within the jurisdiction of the Regional
Trial Court of Malabon. They claim that
what was proved was that all the
elements of the offense were
committed in Kalookan City. The
checks were issued at their place of
business, received by a collector of
LINTON, and dishonored by the
drawee bank, all in Kalookan City.
Furthermore, no evidence whatsoever
supports the proposition that they

knew that their checks were


insufficiently funded. In fact, some of
the checks were funded at the time of
presentment but dishonored
nonetheless upon their instruction to
the bank to stop payment. In fine,
considering that the checks were all
issued, delivered, and dishonored in
Kalookan City, the trial court of
Malabon exceeded its jurisdiction
when it tried the case and rendered
judgment thereon.
The petition has no merit. Section 1,
par. 1, of B.P. Blg. 22 punishes "[a]ny
person who makes or draws and
issues any check to apply on account
or for value, knowing at the time of
issue that he does not have sufficient
funds in or credit with the drawee
bank for the payment of such check in
full upon its presentment, which check
is subsequently dishonored by the
drawee bank for insufficiency of funds
or credit or would have been
dishonored for the same reason had
not the drawer, without any valid
reason, ordered the bank to stop
payment . . ." The gravamen of the
offense is knowingly issuing a
worthless check. 19 Thus, a
fundamental element is knowledge on
the part of the drawer of the
insufficiency of his funds in 20 or credit
with the drawee bank for the payment
of such check in full upon
presentment. Another essential
element is subsequent dishonor of the
check by the drawee bank for
insufficiency of funds or credit or
would have been dishonored for the
same reason had not the drawer,
without any valid reason, ordered the
bank to stop payment. 21

It is settled that venue in criminal


cases is a vital ingredient of
jurisdiction. 22 Section 14, par. (a), Rule
110, of the Revised Rules of Court,
which has been carried over in Sec.
15, par. (a), Rule 110 of the 1985
Rules on Criminal Procedure,
specifically provides:
Sec. 14. Place where
action is to be instituted.
(a) In all criminal
prosecutions the action
shall be instituted and
tried in the court of the
municipality or province
wherein the offense was
committed or anyone of
the essential ingredients
thereof took place.
If all the acts material and essential to
the crime and requisite of its
consummation occurred in one
municipality or territory, the court
therein has the sole jurisdiction to try
the case. 23 There are certain crimes in
which some acts material and
essential to the crimes and requisite to
their consummation occur in one
municipality or territory and some in
another, in which event, the court of
either has jurisdiction to try the cases,
it being understood that the first court
taking cognizance of the case
excludes the other. 24 These are the socalled transitory or continuing crimes
under which violation of B.P. Blg. 22 is
categorized. In other words, a person
charged with a transitory crime may
be validly tried in any municipality or
territory where the offense was in part
committed. 25

In determining proper venue in these


cases, the following acts material and
essential to each crime and requisite
to its consummation must be
considered: (a) the seven (7) checks
were issued to LINTON at its place of
business in Balut, Navotas; b) they
were delivered to LINTON at the same
place; (c) they were dishonored in
Kalookan City; and, (d) petitioners had
knowledge of the insufficiency of their
funds in SOLIDBANK at the time the
checks were issued. Since there is no
dispute that the checks were
dishonored in Kalookan City, it is no
longer necessary to discuss where the
checks were dishonored.
Under Sec. 191 of the Negotiable
Instruments Law the term "issue"
means the first delivery of the
instrument complete in form to a
person who takes it as a holder. On the
other hand, the term "holder" refers to
the payee or indorsee of a bill or note
who is in possession of it or the bearer
thereof. In People v. Yabut 26 this Court
explained
. . . The place where the
bills were written, signed,
or dated does not
necessarily fix or
determine the place
where they were
executed. What is of
decisive importance is
the delivery thereof. The
delivery of the instrument
is the final
act essential to
its consummation as an
obligation. An
undelivered bill or note is

inoperative. Until
delivery, the contract is
revocable. And the
issuance as well as the
delivery of the check
must be to a person who
takes it as a holder,
which means
"(t)he payee or
indorsee of a bill or note,
who is in possession of it,
or the bearer thereof."
Delivery of the check
signifies transfer of
possession, whether
actual or constructive,
from one person to
another with intent
to transfer
titlethereto . . .
Although LINTON sent a collector who
received the checks from petitioners
at their place of business in Kalookan
City, they were actually issued and
delivered to LINTON at its place of
business in Balut, Navotas. The receipt
of the checks by the collector of
LINTON is not the issuance and
delivery to the payee in contemplation
of law. The collector was not the
person who could take the checks as a
holder, i.e., as a payee or indorsee
thereof, with the intent to transfer title
thereto. Neither could the collector be
deemed an agent of LINTON with
respect to the checks because he was
a mere employee. As this Court further
explained in People v. Yabut 27
Modesto Yambao's receipt
of the bad checks from
Cecilia Que Yabut or
Geminiano Yabut, Jr., in

Caloocan City cannot,


contrary to the holding of
the respondent Judges,
be licitly taken as
delivery of the checks to
the complainant Alicia P.
Andan at Caloocan City to
fix the venue there. He
did not take delivery of
the checks as holder, i.e.,
as "payee" or "indorsee."
And there appears to be
no contract of agency
between Yambao and
Andan so as to bind the
latter for the acts of the
former. Alicia P. Andan
declared in that sworn
testimony before the
investigating fiscal that
Yambao is but her
"messenger" or "parttime employee." There
was no special
fiduciary relationship that
permeated their dealings.
For a contract of agency
to exist, the consent of
both parties is essential.
The principal consents
that the other party, the
agent, shall act on his
behalf, and the agent
consents so as to act. It
must exist as a fact. The
law makes no
presumption thereof. The
person alleging it has the
burden of proof to show,
not only the fact of its
existence, but also its
nature and extent . . .

Section 2 of B.P. Blg. 22 establishes


a prima facie evidence of knowledge
of insufficient funds as follows
The making, drawing and
issuance of a check
payment of which is
refused by the bank
because of insufficient
funds in or credit with
such bank, when
presented within ninety
(90) days from the date
of the check, shall
be prima facie evidence
of knowledge of such
insufficiency of funds or
credit unless such maker
or drawer pays the holder
thereof the amount due
thereon, or makes
arrangement for payment
in full by the drawee of
such check within five (5)
banking days after
receiving notice that such
check has not been paid
by the drawee.
The prima facie evidence has not been
overcome by petitioners in the cases
before us because they did not pay
LINTON the amounts due on the
checks; neither did they make
arrangements for payment in full by
the drawee bank within five (5)
banking days after receiving notices
that the checks had not been paid by
the drawee bank. InPeople
v. Grospe 28 citing People
v. Manzanilla 29 we held that ". . .
knowledge on the part of the maker or
drawer of the check of the
insufficiency of his funds is by itself a

continuing eventuality, whether the


accused be within one territory or
another."
Consequently, venue or jurisdiction
lies either in the Regional Trial Court of
Kalookan City or Malabon. Moreover,
we ruled in the
same Grospe and Manzanilla cases as
reiterated in Lim v. Rodrigo 30 that
venue or jurisdiction is determined by
the allegations in the Information. The
Informations in the cases under
consideration allege that the offenses
were committed in the Municipality of
Navotas which is controlling and
sufficient to vest jurisdiction upon the
Regional Trial Court of Malabon. 31
We therefore sustain likewise the
conviction of petitioners by the
Regional Trial Court of Malabon for
violation of B.P. Blg. 22 thus
Accused-appellants claim
that they ordered
payment of the checks to
be stopped because the
goods delivered were not
those specified by them.
They maintain that they
had sufficient funds to
cover the amount of the
checks. The records of
the bank, however,
reveal otherwise. The two
letters (Exhs. 21 and 22)
dated July 23, and August
10, 1983 which they
claim they sent to Linton
Commercial, complaining
against the quality of the
goods delivered by the
latter, did not refer to the

delivery of mild steel


plates (6mm x 4 x 8) and
"Z" purlins (16 x 7 x 2-1/2
mts) for which the checks
in question were issued.
Rather, the letters
referred to B.1. Lally
columns (Sch. #20),
which were the subject of
other purchase orders.
It is true, as accusedappellants point out, that
in a case brought by
them against the
complainant in the
Regional Trial Court of
Kalookan City (Civil Case
No. C-10921) the
complainant was held
liable for actual damages
because of the delivery of
goods of inferior quality
(Exh. 23). But the
supplies involved in that
case were those of B.I.
pipes, while the
purchases made by
accused-appellants, for
which they issued the
checks in question, were
purchases of mild steel
plates and "Z" purlins.
Indeed, the only question
here is whether accusedappellants maintained
funds sufficient to cover
the amounts of their
checks at the time of
issuance and
presentment of such
checks. Section 3 of B.P.
Blg. 22 provides that

"notwithstanding receipt
of an order to stop
payment, the drawee
bank shall state in the
notice of dishonor that
there were no sufficient
funds in or credit with
such bank for the
payment in full of the
check, if such be the
fact."
The purpose of this
provision is precisely to
preclude the maker or
drawer of a worthless
check from ordering the
payment of the check to
be stopped as a pretext
for the lack of sufficient
funds to cover the check.
In the case at bar, the
notice of dishonor issued
by the drawee bank,
indicates not only that
payment of the check
was stopped but also that
the reason for such order
was that the maker or
drawer did not have
sufficient funds with
which to cover the
checks. . . . Moreover, the
bank ledger of accusedappellants' account in
Consolidated Bank shows
that at the time the
checks were presented
for encashment, the
balance of accusedappellants' account was
inadequate to cover the

amounts of the
checks. 32 . . .
WHEREFORE, the decision of the Court
of Appeals dated 18 September 1992
affirming the conviction of petitioners
Manuel Lim and Rosita Lim
In CA-G.R. CR No. 07277 (RTC Crim.
Case No. 1699-MN); CA-G.R. CR No.
07278 (RTC Crim. Case No. 1700-MN);
CA-G.R. CR No. 07279 (RTC Crim. Case
No. 1701-MN); CA-G.R. CR No. 07280
(RTC Crim. Case No. 1702-MN); CAG.R. CR No. 07281 (RTC Crim. Case No.
1703-MN); CA-G.R. CA No. 07282 (RTC
Crim. Case No. 1704-MN); and CA-G.R.
CR No. 07283 (RTC Crim Case No.
1705-MN), the Court finds the
accused-appellants

appellants are hereby ordered to


indemnify the offended party in the
sum of P27,900.00.
In CA-G.R CR No. 07282 (RTC Crim.
Case No. 1704-MN) both accusedappellants are hereby ordered to
indemnify the offended party in the
sum of P51,800.00, and as well as its
resolution of 6 November 1992
denying reconsideration thereof, is
AFFIRMED. Costs against petitioners.
SO ORDERED.
Padilla, Davide, Jr., Kapunan and
Hermosisima, Jr., JJ., concur.

MANUEL LIM and ROSITA LIM guilty


beyond reasonable doubt of violation
of Batas Pambansa Bilang 22 and are
hereby sentenced to suffer a
STRAIGHT PENALTY OF ONE (1) YEAR
IMPRISONMENT in each case, together
with all the accessory penalties
provided by law, and to pay the costs.
In CA-G.R. CR No. 07277 (RTC Crim.
Case No. 1699-MN), both accusedappellants are hereby ordered to
indemnify the offended party in the
sum of P27,900.00.
In CA-G.R. CR No. 07278 (RTC Crim.
Case No. 1700-MN) both accusedappellants are hereby ordered to
indemnify the offended party in the
sum of P32,550.00.
In CA-G.R. CR No. 07278 (RTC Crim.
Case No. 1701-MN) both accused-

[G.R. No. 138074. August 15,


2003]

CELY

YANG, petitioner, vs. HON.


COURT
OF
APPEALS,

PHILIPPINE
COMMERCIAL
INTERNATIONAL BANK, FAR
EAST
BANK
&
TRUST
CO.,EQUITABLE
BANKING
CORPORATION,
PREM CHANDIRAMANI
and
FERNANDO
DAVID, respondents.
DECISION
QUISUMBING, J.:
For review on certiorari is the
decision[1] of the Court of Appeals,
dated March 25, 1999, in CA-G.R. CV
No. 52398, which affirmed with
modification the joint decision of the
Regional Trial Court (RTC) of Pasay
City, Branch 117, dated July 4, 1995,
in Civil Cases Nos. 5479[2] and 5492.
[3]
The trial court dismissed the
complaint against herein respondents
Far East Bank & Trust Company
(FEBTC),
Equitable
Banking
Corporation (Equitable), and Philippine
Commercial International Bank (PCIB)
and ruled in favor of respondent
Fernando David as to the proceeds of
the two cashiers checks, including the
earnings
thereof pendente
lite.
Petitioner Cely Yang was ordered to
pay
David
moral
damages
of P100,000.00 and attorneys fees
also in the amount of P100,000.00.
The facts of this case are not
disputed, to wit:
On or before December 22, 1987,
petitioner Cely Yang and private
respondent
Prem
Chandiramani
entered into an agreement whereby
the latter was to give Yang a PCIB
managers check in the amount of P4.2
million in exchange for two (2) of
Yangs managers checks, each in the
amount
of P2.087
million,
both
payable to the order of private
respondent Fernando David. Yang and
Chandiramani
agreed
that
the

difference
of P26,000.00
in
the
exchange would be their profit to be
divided equally between them.
Yang and Chandiramani also
further agreed that the former would
secure from FEBTC a dollar draft in the
amount of US$200,000.00, payable to
PCIB FCDU Account No. 4195-01165-2,
which Chandiramani would exchange
for another dollar draft in the same
amount to be issued by Hang Seng
Bank Ltd. of Hong Kong.
Accordingly, on December 22,
1987, Yang procured the following:
a) Equitable Cashiers Check
No. CCPS 14-009467 in
the sum
of P2,087,000.00, dated
December 22, 1987,
payable to the order of
Fernando David;
b) FEBTC Cashiers Check No.
287078, in the amount
of P2,087,000.00, dated
December 22, 1987,
likewise payable to the
order of Fernando David;
and
c) FEBTC Dollar Draft No. 4771,
drawn on Chemical Bank,
New York, in the amount
of US$200,000.00, dated
December 22, 1987,
payable to PCIB FCDU
Account No. 4195-011652.
At about one oclock in the
afternoon of the same day, Yang gave
the aforementioned cashiers checks
and dollar drafts to her business
associate, Albert Liong, to be delivered
to Chandiramani by Liongs messenger,
Danilo Ranigo. Ranigo was to meet
Chandiramani at Philippine Trust Bank,
Ayala Avenue, Makati City, Metro

Manila where he would turn over


Yangs cashiers checks and dollar draft
to Chandiramani who, in turn, would
deliver to Ranigo a PCIB managers
check in the sum of P4.2 million and a
Hang Seng Bank dollar draft for
US$200,000.00 in exchange.
Chandiramani did not appear at
the rendezvous and Ranigo allegedly
lost the two cashiers checks and the
dollar draft bought by petitioner.
Ranigo reported the alleged loss of the
checks and the dollar draft to Liong at
half past four in the afternoon of
December 22, 1987. Liong, in turn,
informed Yang, and the loss was then
reported to the police.
It transpired, however, that the
checks and the dollar draft were not
lost, for Chandiramani was able to get
hold of said instruments, without
delivering the exchange consideration
consisting of the PCIB managers check
and the Hang Seng Bank dollar draft.
At three oclock in the afternoon or
some
two
(2)
hours
after
Chandiramani and Ranigo were to
meet in Makati City, Chandiramani
delivered to respondent Fernando
David at China Banking Corporation
branch
in
San
Fernando
City,
Pampanga, the following: (a) FEBTC
Cashiers Check No. 287078, dated
December 22, 1987, in the sum
of P2.087 million; and (b) Equitable
Cashiers Check No. CCPS 14-009467,
dated December 22, 1987, also in the
amount of P2.087 million. In exchange,
Chandiramani
got
US$360,000.00
from David, which Chandiramani
deposited in the savings account of his
wife, Pushpa Chandiramani; and his
mother, Rani Reynandas, who held
FCDU Account No. 124 with the United
Coconut Planters Bank branch in
Greenhills, San Juan, Metro Manila.
Chandiramani also deposited FEBTC
Dollar
Draft
No.
4771,
dated

December 22, 1987, drawn upon the


Chemical
Bank,
New
York
for
US$200,000.00 in PCIB FCDU Account
No. 4195-01165-2 on the same date.
Meanwhile, Yang requested FEBTC
and Equitable to stop payment on the
instruments she believed to be lost.
Both banks complied with her request,
but upon the representation of PCIB,
FEBTC subsequently lifted the stop
payment order on FEBTC Dollar Draft
No. 4771, thus enabling the holder of
PCIB FCDU Account No. 4195-01165-2
to
receive
the
amount
of
US$200,000.00.
On December 28, 1987, herein
petitioner
Yang
lodged
a
Complaint[4] for
injunction
and
damages
against
Equitable,
Chandiramani, and David, with prayer
for a temporary restraining order, with
the Regional Trial Court of Pasay City.
The Complaint was docketed as Civil
Case No. 5479. The Complaint was
subsequently amended to include a
prayer for Equitable to return to Yang
the amount of P2.087 million, with
interest thereon until fully paid.[5]
On January 12, 1988, Yang filed a
separate case for injunction and
damages, with prayer for a writ of
preliminary injunction against FEBTC,
PCIB, Chandiramani and David, with
the RTC of Pasay City, docketed as
Civil Case No. 5492. This complaint
was later amended to include a prayer
that defendants therein return to Yang
the amount of P2.087 million, the
value of FEBTC Dollar Draft No. 4771,
with interest at 18% annually until
fully paid.[6]
On February 9, 1988, upon the
filing of a bond by Yang, the trial court
issued a writ of preliminary injunction
in Civil Case No. 5479. A writ of
preliminary
injunction
was
subsequently issued in Civil Case No.
5492 also.

Meanwhile,
herein
respondent
David moved for dismissal of the
cases
against
him
and
for
reconsideration of the Orders granting
the writ of preliminary injunction, but
these motions were denied. David
then elevated the matter to the Court
of Appeals in a special civil action for
certiorari docketed as CA-G.R. SP No.
14843, which was dismissed by the
appellate court.
As Civil Cases Nos. 5479 and 5492
arose from the same set of facts, the
two cases were consolidated. The trial
court then conducted pre-trial and trial
of the two cases, but the proceedings
had to be suspended after a fire
gutted the Pasay City Hall and
destroyed the records of the courts.
After
the
records
were
reconstituted,
the
proceedings
resumed and the parties agreed that
the money in dispute be invested in
Treasury Bills to be awarded in favor of
the prevailing side. It was also agreed
by the parties to limit the issues at the
trial to the following:
1. Who, between David and
Yang, is legally entitled to
the proceeds of Equitable
Banking Corporation (EBC)
Cashiers Check No. CCPS
14-009467 in the sum
of P2,087,000.00
dated
December 22, 1987, and Far
East
Bank
and
Trust
Company (FEBTC) Cashiers
Check No. 287078 in the
sum of P2,087,000.00 dated
December
22,
1987,
together with the earnings
derived therefrom pendente
lite?
2. Are the defendants FEBTC
and PCIB solidarily liable to
Yang for having allowed the
encashment of FEBTC Dollar
Draft No. 4771, in the sum

of
US$200,000.00
plus
interest thereon despite the
stop payment order of Cely
Yang?[7]
On July 4, 1995, the trial court
handed down its decision in Civil
Cases Nos. 5479 and 5492, to wit:
WHEREFORE, the Court renders
judgment in favor of defendant
Fernando David against the plaintiff
Cely Yang and declaring the former
entitled to the proceeds of the two (2)
cashiers checks, together with the
earnings derived therefrom pendente
lite; ordering the plaintiff to pay the
defendant Fernando David moral
damages in the amount
of P100,000.00; attorneys fees in the
amount of P100,000.00 and to pay the
costs. The complaint against Far East
Bank and Trust Company (FEBTC),
Philippine Commercial International
Bank (PCIB) and Equitable Banking
Corporation (EBC) is dismissed. The
decision is without prejudice to
whatever action plaintiff Cely Yang will
file against defendant Prem
Chandiramani for reimbursement of
the amounts received by him from
defendant Fernando David.
SO ORDERED.[8]
In finding for David, the trial court
ratiocinated:
The evidence shows that defendant
David was a holder in due course for
the reason that the cashiers checks
were complete on their face when
they were negotiated to him. They
were not yet overdue when he became
the holder thereof and he had no
notice that said checks were
previously dishonored; he took the
cashiers checks in good faith and for
value. He parted some $200,000.00
for the two (2) cashiers checks which

were given to defendant


Chandiramani; he had also no notice
of any infirmity in the cashiers checks
or defect in the title of the drawer. As
a matter of fact, he asked the
manager of the China Banking
Corporation to inquire as to the
genuineness of the cashiers checks
(tsn, February 5, 1988, p. 21,
September 20, 1991, pp. 13-14).
Another proof that defendant David is
a holder in due course is the fact that
the stop payment order on [the]
FEBTC cashiers check was lifted upon
his inquiry at the head office (tsn,
September 20, 1991, pp. 24-25). The
apparent reason for lifting the stop
payment order was because of the
fact that FEBTC realized that the
checks were not actually lost but
indeed reached the payee defendant
David.[9]
Yang
then
moved
for
reconsideration of the RTC judgment,
but the trial court denied her motion in
its Order of September 20, 1995.

In affirming the trial courts


judgment with respect to herein
respondent David, the appellate court
found that:
In this case, defendant-appellee had
taken the necessary precautions to
verify, through his bank, China
Banking Corporation, the genuineness
of whether (sic) the cashiers checks he
received from Chandiramani. As no
stop payment order was made yet (at)
the time of the inquiry, defendantappellee had no notice of what had
transpired earlier between the
plaintiff-appellant and Chandiramani.
All he knew was that the checks were
issued to Chandiramani with whom he
was he had (sic) a transaction. Further
on, David received the checks in
question in due course because
Chandiramani, who at the time the
checks were delivered to David, was
acting as Yangs agent.

On March 25, 1999, the appellate


court decided CA-G.R. CV No. 52398 in
this wise:

David had no notice, real or


constructive, cogent for him to make
further inquiry as to any infirmity in
the instrument(s) and defect of title of
the holder. To mandate that each
holder inquire about every aspect on
how the instrument came about will
unduly impede commercial
transactions, Although negotiable
instruments do not constitute
legal tender, they often take the
place of money as a means of
payment.

WHEREFORE, this court AFFIRMS the


judgment of the lower court with
modification and hereby orders the
plaintiff-appellant to pay defendantappellant PCIB the amount of
Twenty-Five Thousand Pesos
(P25,000.00).

The mere fact that David and


Chandiramani knew one another for a
long time is not sufficient to establish
that they connived with each other to
defraud Yang. There was no concrete
proof presented by Yang to support
her theory.[11]

SO ORDERED.[10]

The
appellate
court
awarded P25,000.00 in attorneys fees
to PCIB as it found the action filed by

In the belief that the trial court


misunderstood the concept of a holder
in due course and misapprehended
the factual milieu, Yang seasonably
filed an appeal with the Court of
Appeals, docketed as CA-G.R. CV No.
52398.

Yang against said bank to be clearly


unfounded and baseless. Since PCIB
was compelled to litigate to protect
itself, then it was entitled under Article
2208[12] of the Civil Code to attorneys
fees and litigation expenses.
Hence,
the
instant
recourse
wherein
petitioner
submits
the
following issues for resolution:
a - WHETHER THE CHECKS
WERE ISSUED TO PREM
CHANDIRAMANI BY
PETITIONER;
b - WHETHER THE ALLEGED
TRANSACTION BETWEEN
PREM CHANDIRAMANI
AND FERNANDO DAVID IS
LEGITIMATE OR A
SCHEME BY BOTH
PRIVATE RESPONDENTS
TO SWINDLE PETITIONER;
c - WHETHER FERNANDO
DAVID GAVE PREM
CHANDIRAMANI
US$360,000.00 OR JUST
A FRACTION OF THE
AMOUNT REPRESENTING
HIS SHARE OF THE LOOT;
d - WHETHER PRIVATE
RESPONDENTS
FERNANDO DAVID AND
PCIB ARE ENTITLED TO
DAMAGES AND
ATTORNEYS FEES.[13]
At the outset, we must stress that
this is a petition for review under Rule
45 of the 1997 Rules of Civil
Procedure. It is basic that in petitions
for review under Rule 45, the
jurisdiction of this Court is limited to
reviewing questions of law, questions
of fact are not entertained absent a
showing that the factual findings
complained of are totally devoid of

support in the record or are glaringly


erroneous.[14] Given the facts in the
instant case, despite petitioners
formulation, we find that the following
are the pertinent issues to be
resolved:
a) Whether the Court of
Appeals erred in holding
herein respondent
Fernando David to be a
holder in due course; and
b) Whether the appellate court
committed a reversible
error in awarding
damages and attorneys
fees to David and PCIB.
On the first issue, petitioner Yang
contends that private respondent
Fernando David is not a holder in due
course of the checks in question.
While it is true that he was named the
payee thereof, David failed to inquire
from Chandiramani about how the
latter acquired possession of said
checks. Given his failure to do so, it
cannot be said that David was
unaware of any defect or infirmity in
the title of Chandiramani to the checks
at
the
time
of
their
negotiation. Moreover, inasmuch as
the checks were crossed, then David
should have, pursuant to our ruling
in Bataan Cigar & Cigarette Factory,
Inc. v. Court of Appeals, G.R. No.
93048, March 3, 1994, 230 SCRA 643,
been put on guard that the checks
were issued for a definite purpose and
accordingly,
made
inquiries
to
determine if he received the checks
pursuant to that purpose. His failure to
do so negates the finding in the
proceedings below that he was a
holder in due course.
Finally, the petitioner argues that
there is no showing whatsoever that
David
gave
Chandiramani
any

consideration of value in exchange for


the aforementioned checks.
Private respondent Fernando David
counters that the evidence on record
shows that when he received the
checks, he verified their genuineness
with his bank, and only after said
verification did he deposit them. David
stresses that he had no notice of
previous dishonor or any infirmity that
would have aroused his suspicions, the
instruments being complete and
regular upon their face. David stresses
that the checks in question were
cashiers checks. From the very nature
of cashiers checks, it is highly unlikely
that he would have suspected that
something was amiss. David also
stresses negotiable instruments are
presumed to have been issued for
valuable consideration, and he who
alleges otherwise must controvert the
presumption with sufficient evidence.
The petitioner failed to discharge this
burden, according to David. He points
out that the checks were delivered to
him as the payee, and he took them
as holder and payee thereof. Clearly,
he concludes, he should be deemed to
be their holder in due course.
We shall now resolve the first
issue.
Every holder of a negotiable
instrument is deemed prima facie a
holder in due course. However, this
presumption arises only in favor of a
person who is a holder as defined in
Section
191 of
the
Negotiable
Instruments Law,[15] meaning a payee
or indorsee of a bill or note, who is in
possession of it, or the bearer thereof.
In the present case, it is not
disputed that David was the payee of
the checks in question. The weight of
authority sustains the view that a
payee may be a holder in due course.
[16]
Hence, the presumption that he is
a prima facie holder in due course

applies in his favor. However, said


presumption may be rebutted. Hence,
what is vital to the resolution of this
issue is whether David took possession
of the checks under the conditions
provided for in Section 52[17] of the
Negotiable Instruments Law. All the
requisites provided for in Section 52
must concur in Davids case, otherwise
he cannot be deemed a holder in due
course.
We find that the petitioners
challenge to Davids status as a holder
in due course hinges on two
arguments: (1) the lack of proof to
show that David tendered any
valuable
consideration
for
the
disputed checks; and (2) Davids failure
to inquire from Chandiramani as to
how the latter acquired possession of
the checks, thus resulting in Davids
intentional ignorance tantamount to
bad faith. In sum, petitioner posits that
the last two requisites of Section 52
are missing, thereby preventing David
from being considered a holder in due
course.
Unfortunately
for
the
petitioner, her arguments on this score
are less than meritorious and far from
persuasive.
First, with respect to consideration,
Section
24[18] of
the
Negotiable
Instruments
Law
creates
a
presumption that every party to an
instrument acquired the same for a
consideration[19] or for value.[20] Thus,
the law itself creates a presumption in
Davids favor that he gave valuable
consideration for the checks in
question. In alleging otherwise, the
petitioner has the onus to prove that
David got hold of the checks absent
said consideration. In other words, the
petitioner must present convincing
evidence
to
overthrow
the
presumption. Our scrutiny of the
records, however, shows that the
petitioner failed to discharge her
burden of proof. The petitioners

averment that David did not give


valuable consideration when he took
possession
of
the
checks
is
unsupported, devoid of any concrete
proof to sustain it. Note that both the
trial court and the appellate court
found that David did not receive the
checks gratis,
but
instead
gave
Chandiramani
US$360,000.00
as
consideration for the said instruments.
Factual findings of the Court of
Appeals are conclusive on the parties
and not reviewable by this Court; they
carry great weight when the factual
findings of the trial court are affirmed
by the appellate court.[21]
Second, petitioner fails to point
any circumstance which should have
put David on inquiry as to the why and
wherefore of the possession of the
checks by Chandiramani. David was
not privy to the transaction between
petitioner and Chandiramani. Instead,
Chandiramani and David had a
separate dealing in which it was
precisely Chandiramanis duty to
deliver the checks to David as payee.
The
evidence
shows
that
Chandiramani performed said task to
the letter. Petitioner admits that David
took the step of asking the manager of
his bank to verify from FEBTC and
Equitable as to the genuineness of the
checks and only accepted the same
after being assured that there was
nothing wrong with said checks. At
that time, David was not aware of any
stop payment order. Under these
circumstances, David thus had no
obligation
to
ascertain
from
Chandiramani what the nature of the
latters title to the checks was, if any,
or the nature of his possession. Thus,
we cannot hold him guilty of gross
neglect amounting to legal absence of
good faith, absent any showing that
there was something amiss about
Chandiramanis
acquisition
or
possession of the checks. David did
not close his eyes deliberately to the

nature or the particulars of a fraud


allegedly committed by Chandiramani
upon the petitioner, absent any
knowledge on his part that the action
in taking the instruments amounted to
bad faith.[22]
Belatedly, and we say belatedly
since petitioner did not raise this
matter in the proceedings below,
petitioner now claims that David
should have been put on alert as the
instruments in question were crossed
checks. Pursuant to Bataan Cigar &
Cigarette Factory, Inc. v. Court of
Appeals, David should at least have
inquired as to whether he was
acquiring said checks for the purpose
for which they were issued, according
to petitioners submission.
Petitioners reliance on the Bataan
Cigar case, however, is misplaced. The
facts in the present case are not on all
fours with Bataan Cigar. In the latter
case, the crossed checks were
negotiated and sold at a discount by
the payee, while in the instant case,
the payee did not negotiate further
the checks in question but promptly
deposited them in his bank account.
The Negotiable Instruments Law is
silent with respect to crossed checks,
although
the
Code
of
Commerce[23] makes reference to such
instruments. Nonetheless, this Court
has taken judicial cognizance of the
practice that a check with two parallel
lines in the upper left hand corner
means that it could only be deposited
and not converted into cash.[24] The
effects of crossing a check, thus,
relates to the mode of payment,
meaning that the drawer had intended
the check for deposit only by the
rightful person, i.e., the payee named
therein.
In Bataan
Cigar, the
rediscounting of the check by the
payee knowingly violated the avowed
intention of crossing the check. Thus,

in accepting the cross checks and


paying cash for them, despite the
warning
of
the
crossing,
the
subsequent holder could not be
considered in good faith and thus, not
a holder in due course. Our ruling
in Bataan Cigar reiterates that in De
Ocampo & Co. v. Gatchalian.[25]
The factual circumstances in De
Ocampo and in Bataan Cigar are not
present in this case. For here, there is
no dispute that the crossed checks
were delivered and duly deposited by
David, the payee named therein, in his
bank account. In other words, the
purpose behind the crossing of the
checks was satisfied by the payee.
Proceeding to the issue of
damages, petitioner merely argues
that respondents David and PCIB are
not entitled to damages, attorneys
fees, and costs of suit as both acted in
bad faith towards her, as shown by her
version of the facts which gave rise to
the instant case.
Respondent David counters that
he
was
maliciously
and
unceremoniously dragged into this suit
for reasons which have nothing to do
with him at all, but which arose from
petitioners failure to receive her share
of the profit promised her by
Chandiramani. Moreover, in filing this
suit which has lasted for over a
decade now, the petitioner deprived
David of the rightful enjoyment of the
two checks, to which he is entitled,
under the law, compelled him to hire
the services of counsel to vindicate his
rights, and subjected him to social
humiliation
and
besmirched
reputation, thus harming his standing
as a person of good repute in the
business community of Pampanga.
David thus contends that it is but
proper that moral damages, attorneys
fees, and costs of suit be awarded
him.

For its part, respondent PCIB


stresses that it was established by
both the trial court and the appellate
court that it was needlessly dragged
into this case. Hence, no error was
committed by the appellate court in
declaring PCIB entitled to attorneys
fees as it was compelled to litigate to
protect itself.
We have thoroughly perused the
records of this case and find no reason
to disagree with the finding of the trial
court, as affirmed by the appellate
court, that:
[D]efendant David is entitled to [the]
award of moral damages as he has
been needlessly and unceremoniously
dragged into this case which should
have been brought only between the
plaintiff and defendant Chandiramani.
[26]

A careful reading of the findings of


facts made by both the trial court and
appellate court clearly shows that the
petitioner, in including David as a
party in these proceedings, is barking
up the wrong tree. It is apparent from
the factual findings that David had no
dealings with the petitioner and was
not privy to the agreement of the
latter with Chandiramani. Moreover,
any loss which the petitioner incurred
was apparently due to the acts or
omissions of
Chandiramani, and
hence, her recourse should have been
against him and not against David. By
needlessly dragging David into this
case all because he and Chandiramani
knew each other, the petitioner not
only unduly delayed David from
obtaining the value of the checks, but
also caused him anxiety and injured
his business reputation while waiting
for its outcome. Recall that under
Article 2217[27] of the Civil Code, moral
damages include mental anguish,
serious
anxiety,
besmirched

reputation, wounded feelings, social


humiliation, and similar injury. Hence,
we find the award of moral damages
to be in order.

[5]

Id. at 8.

[6]

Id. at 141.

[7]

Rollo, p. 84.

The appellate court likewise found


that like David, PCIB was dragged into
this case on unfounded and baseless
grounds. Both were thus compelled to
litigate to protect their interests, which
makes an award of attorneys fees
justified under Article 2208 (2) [28] of
the Civil Code. Hence, we rule that the
award of attorneys fees to David and
PCIB was proper.

[8]

CA Rollo, p. 131.

[9]

Id. at 195-196.

WHEREFORE, the instant petition


is DENIED. The assailed decision of the
Court of Appeals, dated March 25,
1999, in CA-G.R. CV No. 52398 is
AFFIRMED.
Costs
against
the
petitioner.
SO ORDERED.
Bellosillo, (Chairman), AustriaMartinez, and Tinga, JJ., concur.
Callejo, Sr., J., on leave.

[1]

[2]

[3]

[4]

Penned
by
Associate
Justice
Bernardo P. Abesamis with
Associate Justices Jainal D.
Rasul and Conchita Carpio
Morales (now a member of this
Court) concurring. See Rollo, pp.
95-108.
The

case
is
entitled Cely
Yang v. Equitable
Banking
Corporation,
Prem
Chandiramani, and Fernando
David. See Rollo, pp. 38-41.

Entitled Cely Yang v. Far East Bank


& Trust Company, Philippine
Commercial and International
Bank, Prem Chandiramani, and
Fernando David. See Rollo, pp.
42-46.
Records, Vol. I, pp. 1-4.

[10]

Id. at 462.

[11]

Id. at 456.

[12]

ART. 2208. In the absence of


stipulation, attorneys fees and
expenses of litigation, other
than judicial costs, cannot be
recovered, except:

When

exemplary
awarded;

damages

are

When the defendants act or omission


has compelled the plaintiff to
litigate with third persons or to
incur expenses to protect his
interest;
In

criminal
cases
of
malicious
prosecution against the plaintiff;

In case of a clearly unfounded civil


action or proceeding against the
plaintiff;
Where the defendant acted in gross
and evident bad faith in refusing
the plaintiffs plainly valid, just,
and demandable claim;
In actions for legal support;
In actions for the recovery of wages of
household helpers, laborers,
and skilled workers;
In

actions for indemnity under


workmens compensation and
employers liability laws;

In a separate civil action to recover


civil liability arising from a
crime;
When at least double judicial costs are
awarded;

In any other case where the court


deems it just and equitable that
attorneys fees and expenses of
litigation should be recovered.

become a party thereto, for


value.
[19]

SEC. 25. Value; What constitutes.


Value is any consideration
sufficient to support a simple
contract. An antecedent or preexisting debt constitutes value,
and is deemed such whether
the instrument is payable on
demand or at a future date.

[20]

SEC. 191. Definitions and meaning


of terms. In this Act, unless the
context otherwise requires:

In all cases, the attorneys fees and


expenses of litigation must be
reasonable.
[13]

Rollo, p. 230.

[14]

Producers Bank of the Phil. v. Court


of Appeals, 417 Phil. 646, 656
(2001).

[15]

[16]

[17]

Fossum v. Fernandez Hermanos, 44


Phil. 713, 716 (1923).
Merchants National Bank v. Smith,
59 Mont. 280, 196 P. 523, 15
ALR 430; Boston Steel & Iron
Co. v. Steur, 183 Mass. 140, 66
NE 646.
SEC. 52. What constitutes a holder
in due course. A holder in due
course is a holder who has
taken the instrument under the
following conditions:

xxx
Value means valuable consideration.
[21]

See Fernandez v. Fernandez,


Phil. 322, 337 (2001).

[22]

See Ozark Motor Co. v. Horton, 196


SW 395. See also Davis v. First
National Bank, 26 Ariz. 621, 229
P. 391.

[23]

ART. 541. The maker or any legal


holder of a check shall be
entitled to indicate therein that
it be paid to a certain banker or
institution, which he shall do by
writing across the face the
name
of
said
banker
or
institution, or only the words
and company.

[24]

State Investment House v. IAC, G.R.


No. 72764, 13 July 1989, 175
SCRA 310, 315.

[25]

13 Phil. 574 (1961). We held that


under
the
following
circumstances: (1) the drawer
had no account with the payee;
(2) the check was crossed; (3)
the crossed check was used to
pay an obligation which did not
correspond to the amount of the
check; and (4) the holder did
not show or tell the payee why
he had the check in his
possession and why he was

That it is complete and regular upon


its face;
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;
That he took it in good faith and for
value;
That at the time it was negotiated to
him, he had no notice of any
infirmity in the instrument or
defect of the title of the person
negotiating it.
[18]

SEC.
24. Presumption
of
consideration. Every negotiable
instrument is deemed prima
facie to have been issued for
valuable
consideration;
and
every person whose signature
appears
thereon
to
have

416

using to pay his personal


account, then the payee had
the duty to ascertain from the
holder what the nature of the
latters title to the check was or
the nature of his possession.
[26]

CA Rollo, p. 130.

[27]

ART. 2217. Moral damages include


physical
suffering,
mental
anguish, fright, serious anxiety,
besmirched
reputation,

wounded feelings, moral shock,


social humiliation and similar
injury. Though incapable of
pecuniary computation, moral
damages may be recovered if
they are the proximate result of
the defendants wrongful act or
omission.
[28]

See note 12.