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GR 76974, 18 November 1988 Third Division, Fernan (J)
! The venue of the offense lies at the place where the check was
executed and delivered to the payee and that the place where a check was
written, signed or dated does not fix the place where it was executed, as
what is of decisive importance is the delivery thereof which is the final act
essential to its consummation as an obligation. The delivery contemplated
by law must be to a person who takes the check as a holder, i.e. the
payee or indorsee of a bill or note, who is in possession of it, or the bearer
thereof. Vicente Lim, Benitos brother, cannot be said to have taken the
checks in the concept of a holder for he is neither the payee or indorsee
thereof. Neither could he be deemed to be Benitos agent with respect
thereto, for he was purposely sent to Ko Hu to get certain stock certificates
and not the checks in question (This is similar to the People vs. Yabut case).
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" #! GR 130038, 18 September 2000 En Banc, Pardo (J)
Rosa Lim bought various kinds of jewelry worth P300,000 from the
store of Maria Antonia Seguan, by issuing a check payable to cash drawn
against MetroBank. The next day, Lim again purchased jewelry valued at
P241,668 by issuing another check payable to cash likewise drawn against
MetroBank. Seguan deposited the checks with her bank. The checks were
returned with a notice of dishonor as Lims accounts in said bank were
already closed. Upon demand, Lim promised to pay Seguan the amounts of
the two dishonored checks. She never did. Rosa Lim was charge for two
counts of violation of BP 22, where she was found guilty, and sentenced to 1
year imprisonment with fine (P200,000).
!The elements of BP22 are (1) the making, drawing and issuance of
any check to apply for account or for value, (2) the knowledge of the maker,
drawer or issuer that at the time of issue he does not have sufficient funds in
or credit with the drawee bank for the payment of such check in full upon its
presentment, and (3) the subsequent dishonor of the check by the drawee
bank for insufficiency of funds or credit or dishonor for the same reason had
not the drawer, without any valid cause, ordered the bank to stop payment.
Lim never denied issuing the check. Section 2 of BP 22 creates a
presumption juris tantum that the second element prima facie exists when
the first and third elements are present. If not rebutted, it suffices to sustain
a conviction.
It must be noted that similar to the Vaca case, the Court deleted the prison
sentences imposed upon Lim, holding that the two fines imposed for each of
the violation (P200,000 each ) are appropriate and sufficient. Subsidiary
imprisonment not exceeding 6 months is provided in case of insolvency or
non-payment of the fines as decreed.
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() GR 107898, 19 December 1995 First Division, Bellosillo (J)
Spouses Manuel and Rosita Lim are the president and treasurer,
respectively, of RIGI Built Industries Inc. RIGI had been transacting business
with Linton Commercial Company for years, the latter supplying the former
with steel plates, steel bars, flat bars and purlin sticks which the company
uses in the fabrication, installation and building of steel structures. The Lims
ordered steel plates from Linton Commercial, delivering checks to the latters
collector as payment. The checks were dishonored for insufficiency of
funds with the additional notation payment stopped (The Lims claimed
that the supplies delivered by Linton Commercial were not in accordance
with the specifications of purchase orders). Despite demands, the Lims
refused to make good the checks or to pay value of the deliveries.
! Issue means the first delivery of the instrument complete in form to
a person who takes it as a holder. Holder refers to the payee or indorsee of
a note or who is in possession of it or the bearer thereof. The issuance as
well as the delivery of the check must be to a person who takes it as a
holder. Delivery of the checks signifies transfer of possession (actual or
constructive) from one person to another with intent to transfer title thereto;
the delivery being the final act essential to its consummation as an
obligation. The collector was not the person who could take the checks as a
holder. Neither could the collector be deemed an agent of Linton Commercial
with respect to the checks because he was a mere employee.
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() GR 105461, 11 November 1993 Second Division, Padilla
(J)
Marlyn Lazaro received from Rudy Chua the amount of P90,000 as
advanced payment for deliveries of sugar, etc. Lazaro was only able to
deliver partial delivery. To refund the undelivered goods, she issued a check
for P72,000. When deposited, the check was dishonored and stamped
account closed. To make up for the dishonor, Lazaro indorsed a check
issued by one Lolita Soriano, payable to Cash. It was likewise dishonored
and marked account closed. Chua sent a demand letter asking for the
payment of the amount covered by the first check within days from receipt
of letter. For failure of the accused to pay the amount, Chua filed cases for
estafa and violation of BP 22.
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() GR 119178, 20 June 1997 Third Division, Panganiban (J)
Lim Lim Lao was a junior officer of Premier Investment House in its
Binondo branch. She was authorized to sign checks for and in behalf of the
corporation. In the course of business, she met Fr. Artelijo Palijo, provincial
treasurer of the Society of the Divine Word. Fr. Palijo was authorized to
invest donations of the society and had been investing the societys money
with Premiere. Fr. Palijo was issued checks in payment of interest for the
societys investments. The checks were dishonored for insufficiency of
funds. Fr. Palijo was only able to acquire P5,000 for his efforts in
demanding the payment of the checks. Premiere, subsequently, was placed
under receivership. Fr. Palijo filed a suit against Lim Lao and his co-
signatory, Teodulo Asprec, head of operations for violation of BP 22.
!The checks co-signed by Lim Lao were signed in advance and in blank,
delivered to the head of operations, who subsequently filled in the name of
he payee, the amounts and corresponding dates of maturity; this procedure
followed in keeping with her duties as a junior officer. Though BP 22
provides the presumption that a drawer is knowledgeable of the fact of
insufficiency of funds, such presumption may be debunked by contrary
evidence. Herein, Lim Lao does not have the power, duty or responsibility to
monitor and assess the balances against the issuance, nor to make sure that
the checks were funded. Such responsibility devolved upon the corporations
Treasury Department in Cubao, Quezon City. Furthermore, no notice of
dishonor was actually sent or received by Lim Lao to support the prima facie
evidence of knowledge of insufficient funds. She was thus acquitted.
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, GR L-27782, 31 July 1970 En Banc, Zaldivar (J)
Whether the rate of exchange of dollar to peso are those at the time
of the payment of the judgment or at the time when the research institute
project became due and demandable.
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21 GR L-10221, 28 February 1958 En Banc, Bengzon (J)
In the proceedings in the intestate of Luther Young and Pacita Young
who died in 1954 and 1952, respectively, Pacifica Jimenez presented for
payment 4 promissory notes signed by Pacita for different amounts totalling
P21,000. Acknowledging receipt by Pacita during the Japanese occupation, in
the currency then prevailing, the Administrator manifested willingness to pay
provided adjustment of the sums be made in line with the Ballantyne
schedule. The claimant objected to the adjustment insisting on full payment
in accordance with the notes. The court held that the notes should be paid in
the currency prevailing after the war, and thus entitling Jimemez to recover
P21,000 plus P2,000 as attorneys fees. Hence, the appeal.
! If the loan was expressly agreed to be payable only after the war, or
after liberation, or became payable after those dates, no reduction could be
effected, and peso-for-peso payment shall be ordered in Philippine currency.
The Ballantyne Conversion Table does not apply where the monetary
obligation, under the contract, was not payable during the Japanese
occupation. Herein, the debtor undertook to pay six months after the war,
peso for peso payment is indicated.
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() GR 117488, 5 September 1996 Third Division, Davide Jr.
(J)
The Ibasco spouses requested credit accommodation fro the supply
of ingredients in the manufacture of animal feeds from the Trivinio spouses.
Ibasco issued 3 checks for 3 deliveries of darak. The checks bounced and the
Ibasco spouses were notified of the dishonor. Ibasco instead offered a
property in Daet. The property, being across the sea, the Trivinio spouses
did not inspect the property. For the failure of the Ibasco spouses to settle
their account, the Trivinio spouses filed criminal cases against the former for
violation of BP22.
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" #! 62/3/7 GR L-28226,
30 September 1970 First Division, Fernando (J)
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() GR 92244, 9 February 1993 Second Division, Campos
Jr. (J)
Who shall bear the loss resulting from the forged indorsements.
The check was intended as part of the payment of Ines Chaves debt.
When presented to the Security Bank and Trust Co. by Firestone, the check
was returned for insufficiency of funds. Despite repeated demands, Ines
Chaves failed to settle its account; hence, the suit.
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2 GR 111190, 27 June 1995 First Division,
Bellosillo (J)
Raul Sesbreno filed a complaint for damages against Assistant City
Fiscal Bienvenido Mabanto before the RTC of Cebu City. After trial, judgment
was rendered ordering Mabanto to pay Sesbreno P11,000. The decision
having become final and executory, the trial court ordered its execution
upon Sesbrenos motion. The writ of execution was issued despite Mabantos
objection. A notice of garnishment was served upon Loreto de la Victoria as
City Fiscal of Mandaue City where Mabanto was then detailed. De la Victoria
moved to quash the notice of garnishment claiming that he was not in
possession of any money, funds, etc. belonging to Mabanto until delivered to
him, and as such are still public funds which could not be subject of
garnishment..
Whether the checks subject of garnishment belong to Mabanto or
whether they still belong to the government.
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() GR 43596, 31 October 1936 En Banc, Recto (J)
Eduardo Vaca is the president and owner of Ervine International while
Fernando Nieto, Vacas son-in-law, is the firms purchasing manager. They
issued a check for P10,000 to the General Agency for Reconnaissance,
Detection and Security (GARDS) and drawn against China Bank. When
deposited with PCIBank, the check was dishonored for insufficiency of funds.
GARDS sent a demand letter but the drawers failed to pay within the time
given (7 days from notice). A few days later, however, Vaca issued a check
to GARDS for P19,866.16, drawn against Associated Bank, replacing the
dishonored check. GARDS did not return the dishonored check. Later on,
GARDS Acting Operations Manager filed a criminal suit against Vaca and
Nieto for violation of BP 22. The trial court sentenced each to 1 year
imprisonment and to pay a fine of P10,000 and costs.
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9 # GR L-222, 26 April 1950 Second Division,
Moran (CJ)
On 16 February 1935, Dr. Jose Eduque secured two loans from
Mariano Ocampo de Leon, Dona Escolastica delos Reyes and Don Jose M.
Ocampo, with amount s of P40,000 and P15,000, both payable within 20
years with interest of 5% per annum. Payment of the loans was guaranteed
by mortgage on real property. On 6 December 1943, Salvacion F. Vda de
Eduque, as administratrix of the estate of Dr. Jose Eduque, tendered
payment by means of a cashiers check representing Japanese War notes to
Jose M. Ocampo, who refused payment. By reason of such refusal, an action
was brought and the cashiers check was deposited in court. After trial,
judgment was rendered against Ocampo compelling him to accept the
amount, to pay the expenses of consignation, etc. Ocampo accepted the
judgment as to the second loan but appealed as to the first loan.
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() GR L-35767, 18 June 1976 Resolution of the Second
Division, Barredo (J)
The Supreme Court, in its decision of 25 February 1975, affirmed the
decision of the Court of Appeals, holding that Raymundo Crystals
redemption of the property acquired by Pelagia Ocang, Pacita, Teodulo,
Felicisimo, Pablo, Lydia, Dioscoro and Rodrigo, all surnamed de Garcia, was
invalid as the check which Crystal used in paying the redemption price has
been either dishonored or had become stale (Ergo, the value of the check
was never realized). Crystal filed a motion for reconsideration.
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() GR 108738, 17 June 1994 First Division, Kapunan (J)
Whether Cruz is liable for violating BP 22, even upon the claim that
the check was issued to serve a mere evidence of indebtedness, and not for
circulation or negotiation.
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"c2 GR L-51767, 29 June 1982 Second Division, Barredo (J)
George Sellner, with WH Clarke and John Mave, signed a note in
favor of RN Clark dated 1 July 1914 in Manila for the amount of P12,000.
The note matured, but its amount was not paid. Action was filed in court.
Sellners counsel allege that Sellner did not receive anything of value for the
transaction, that the instrumnet was not presented to sellner for payment,
and that Sellner, being an accommodation party is not liable unless the note
is negotiated, which was allegedly not done.
! Sellner, as one of the signers of the note, is one of the joint and
several debtors on the note, and as such he is liable under Section 60 of the
Negotiable Instruments Law/ Sellner lent his name, not to the creditor, but
to those who signed with him placing himself with respect to the creditor in
the same position and with the same liability as the said signers; and thus is
a joint surety rather than an accommodation party. As to the presentment
for payment, such action is not necessary in order to charge the person
primarily liable, as is Sellner (Section 70, Negotiable Instruments Law).
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() GR 92591, 30 April 1991 Third Division,
Gutierrez Jr. (J)
William Samara purchased from Citytrust Bank Draft 23681 for US$
40,000 the payee being Thai International Airways and the corresponding
drawee bank in the United States is Marine Midland. Samara executed a
stop-payment order of the bank draft instructing Citytrust to inform Marine
Midland about the order through telex. Marine Midland noted the order, and
thus Citytrust credited Samaras account. Seven months later, Citytrust re-
debited Samaras account upon discovery that Marine Midland had already
debited Citytrusts account.
!Citytrust and Marine Midland were not in privity with each other in a
transaction involving payment through a bank draft. A bank draft is a bill of
exchange drawn by a bank upon its correspondent bank issued at the
solicitation of a stranger who purchases and pays therefor. It is an order for
payment of money. Citytrust was the drawer of the draft through which it
ordered Marine Midland, the drawee bank, to pay Thai Airways. The drawee
bank acting as payor bank is solely liable for acts not done in accordance
with the instructions of the drawer bank or the purchaser of the draft. The
drawee bank has the burden of proof that it did not so violate. Meanwhile,
the drawer, if sued by the purchaser of the draft, is liable for the act of
debiting the customers account despite an instruction to stop payment. The
drawer has the duty to prove that he complied with the order to inform the
drawee.
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(/ AM MTJ0830849, 26 October
1994 First Division, Davide Jr. (J)
On various dates, Security Bank and Trust Co. (SEBTC), through its
Sucat branch, issued 280 certificates of time deposit (CTD) in favor of one
Angel dela Cruz who deposited with the bank the aggregate amount of P1.12
million. Anger de la Cruz delivered the CTDs to Caltex in connection with his
purchase of fuel products from the latter. Subsequently, dela Cruz informed
the bank that he lost all the CTDs, and thus executed an affidavit of loss to
facilitate the issuance of the replacement CTDs. De la Cruz was able to
obtain a loan of P875,000 from the bank, and in turn, he executed a
notarized Deed of Assignment of Time Deposit in favor of the bank.
Thereafter, Caltex presented for verification the CTDs (which were declared
lost by de la Cruz) with the bank. Caltex formally informed the bank of its
possession of the CTDs and its decision to preterminate the same. The bank
rejected Caltex claim and demand, after Caltex failed to furnish copy of the
requested documents evidencing the guarantee agreement, etc. In 1983, de
la Cruz loan matured and the bank set-off and applied the time deposits as
payment for the loan. Caltex filed the complaint, but which was dismissed.
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() GR 93048, 3 March
1994 Second Division, Nocon (J)
Bataan Cigar and Cigarette Factory Inc. (BCCFI) engaged one of its
suppliers, Kim Tim Pua George (George King), to deliver bales of tobacco
leaf. In consideration thereof, BCCFI issued postdated cross checks to King.
King sold the checks, at a discount, to the State Investment House Inc.
(SIHI). As King failed to deliver the bales of tobacco leaf despite demand,
BCCFI issued stop payment orders on the checks. Efforts by SIHI to collect
from BCCFI failed. SIHI filed suit.
Whether SIHI can recover the value of the checks, premised on the
issue whether SIHI is a holder in due course.
!The facts of the case are on all fours to the case of SIHI vs.
Intermediate Appellate Court. The crossing of the checks should put the
holder on inquiry and upon him devolves the duty to ascertain the indorsers
title to the check or the nature of his possession. Failing in this respect, the
holder is declared guilty of gross negligence amounting to legal absence of
good faith, contrary to Section 52 (c) of the Negotiable Instruments Law,
and as such the consensus of authority is to the effect that the holder of the
check is not a holder in due course. BCCFI cannot be obliged to pay the
checks as there is a failure of consideration (King being unable to supply the
bales of tobacco leaf, for which the checks were intended for). Still, SIHI a
holder not in due course can collect from the immediate indorser, George
King. Such is the disadvantage of a holder not in due course, i.e. the
instrument is subject to defenses as if it were non-negotiable.
The Province of Tarlac maintains a current account with the Philippine
National Bank (PNB Tarlac Branch) where the provincial funds are deposited.
Portions of the funds were allocated to the Concepcion Emergency Hospital.
Checks were issued to it and were received by the hospitals administrative
officer and cashier (Fausto Pangilinan). Pangilinan, through the help of
Associated Bank but after forging the signature of the hospitals chief (Adena
Canlas), was able to deposit the checks in his personal account. All the
checks bore the stamp All prior endorsement guaranteed Associated Bank.
Through post-audit, the province discovered that the hospital did not receive
several allotted checks, and sought the restoration of the debited amounts
from PNB. In turn, PNB demanded reimbursement from Associated Bank.
Both banks resisted payment. Hence, the present action.
Who shall bear the loss resulting from the forged checks.
! PNB is not negligent as it is not required to return the check to the
collecting bank within 24 hours as the banks involved are covered by Central
Bank Circular 580 and not the rules of the Philippine Clearing House.
Associated Bank, and not PNB, is the one duty-bound to warrant the
instrument as genuine, valid and subsisting at the time of indorsement
pursuant to Section 66 of the Negotiable Instruments Law. The stamp
guaranteeing prior indorsement is not an empty rubric; the collecting bank is
held accountable for checks deposited by its customers. However, due to the
fact that the Province of Tarlac is equally negligent in permitting Pangilinan
to collect the checks when he was no longer connected with the hospital, it
shares the burden of loss from the checks bearing a forged indorsement.
Therefore, the Province can only recover 50% of the amount from the
drawee bank (PNB), and the collecting bank (Associated Bank) is liable to
PNB for 50% of the same amount.
!Crossing a check means that the drawee bank should not encash the
check but merely accept it for deposit, that the check may be negotiated
only once by one who has an account in a bank, and that the check serves
as warning that it was issued for a definite purpose so that he must inquire if
he has received the check pursuant to that purpose. The effect, thus, relate
to the mode of its presentment for payment, in accordance with Section 72
of the Negotiable Instruments Law. The bank paid the checks
notwithstanding that title had not passed to the indorser, as the checks had
been crossed and issued for payees account only. It does did so in its own
peril and became liable to the payee for the value of the checks. The failure
of the bank to make an inquiry as to Saysons authority was a breach of its
duty. The bank is negligent and is thus liable to Reyes.
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( GR L-15645, 31
January 1964 En Banc, Regala (J)
On 19 May 1952, Paz and Vitaliado Arrieta participated in the public
bidding called by NARIC for the supply of 20,000 metric tons of Burmese
rice. Ad her bid of $203 per metric ton was the lowest, she was awarded the
contract for the same. As a result of the delay in the opening of the letter of
credit by NARIC, the allocation of Arrietas supplier in Rangoon was cancelled
and the 5% deposit amounting to an equivalent of P200,000 was forfeited.
Arrieta endeavored but failed to restore the cancelled Burmese rice
allocation, and thus offered Thailand rice instead. Such offer was rejected by
NARIC. Subsequently, Arrieta sent a letter to NARIC, demanding
compensation for the damages caused her in the sum of US$286,000
representing unrealized profit. The demand having been rejected, she
instituted the case.
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7/ GR L-26767, 22 February 1968 En Banc, Castro (J)
Lorenzo Ting issued a check for P4,000 payable to cash or bearer.
With Felipe Angs signature (indorsement in blank) at the back thereof, the
instrument was received by Ang Tiong who thereafter presented it to the
bank for payment. The drawee bank dishonored it. Ang Tiong made written
demands on both Ting and Ang to make good the amount represented by
the check. These demands unheeded. Ang Tiong filed suit for collection. The
trial court adjudged for Ang Tiong. Only Ang appealed, maintaining that he is
only an accommodation party.