Engr.
Cayanan v North Star International Travel Inc,
Topic: Consideration
Doctrine:
Upon the issuance of a check, in the absence of evidence to the
contrary, it is presumed that it was issued for valuable
consideration.
Facts:
North Star extended credit to Cayanan for payment to View Sea
Ventures ($100,000) and airplane tickets on various dates
(P510,035.47).
Cayanan issued 2 checks from PCIB and 3 checks from Republic
Planters Bank. The checks from PCIB were dishonored for
insufficient funds while the checks from Republic Planters were
dishonored due to a stop payment order from Cayanan. North
Star demanded payment but Cayanan failed to settle his
obligations.
North Star instituted 5 criminal cases against Cayanan charging
him with violation of the Bouncing Checks Law (BP 22). The
MeTC found Cayanan guilty.
On appeal, the RTC acquitted him of criminal charges holding
that there is no basis for the imposition of the civil liablity on
Cayanan. The RTC stated that the checks issued were presented
beyond the period of 90 days and therefore, there is no violation
of the provision of BP 22.
North Star elevated the case to the CA and the CA reversed the
decision of the RTC and held Cayanan civilly liable for the value
of the checks. According to the CA, although he was acquitted of
criminal charges, Cayanan may still be held civilly liable because
he never denied issuing the 5 postdated checks which were
dishonored.
Issue:
1. WON the checks issued were for valuable consideration
2. WON Cayanan is civilly liable to North Star for the value of the
checks
Held:
1. YES.
Under the Negotiable Instruments Law, it is presumed that every
party to an instrument acquires the same for a consideration or
for value.
As Cayanan alleged that there was no consideration for the
issuance of the checks, it devolved upon him to present
convincing evidence to overthrow the presumption and prove
that the checks were issued without valuable consideration.
However, he failed to present any credible evidence to rebut the
presumption.
In addition, the transaction between North Star and Cayanan is
in the nature of a loan and the checks were issued as payment of
the principal and interest. North Star only sends the money
through telegraphic transfer in exchange for the issued checks
and it is Cayanan who actually had a contract with View Sea
Ventures.
2. YES.
The checks, bearing Cayanans signature, specifically named
North Star as the payee of the checks which is an admission of
Cayanans liability to North Star.
Having failed to fully settle his obligation under the checks, the
CA was correct in holding Cayanan liable to pay the value of the 5
checks he issued in favor of North Star.
Petition denied.