nil cases (chapters 3-4).doc

8/10/2019 NIL Cases (Chapters 3-4).doc

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CHAPTER 3

JOHN DY, Petitioner,- versus -PEOPLE OF THE PHILIPPINES and Te HONORA!LE CO"RT OF APPEALS, Res#ondents$%$R$ No$ &'(3&) Nove*+er &, )(

DECISION

."IS"/!IN%,Acting C.J$0This appeal prays for the reversal of the Decision 1&2dated January 23, 2003 and the Resolution1)2datedMay 14, 2003 of the Court of Appeals in CA!"R" CR #o" 23$02" The appellate court affir%ed &ith%odification the Decision132dated #ove%'er 1(, 1))) of the Re*ional Trial Court +RTC, -ranch $2 of.ue/on City, &hich had convicted petitioner John Dy of t&o counts of estafain Cri%inal Cases #os" .)34(11 and .)34(13, and t&o counts of violation ofBatas Pambansa Bilang 2212+B.P. Blg. 22 inCri%inal Cases #os" .)34(12 and .)34(14"The facts are undisputedince 1))0, John Dy has 'een the distri'utor of "" 5ood 6roducts +"" 5oods in #a*a City, -icol,

under the 'usiness na%e Dyna Mar7etin*" Dy &ould pay "" 5oods in either cash or chec7 upon pic7up of stoc7s of snac7 foods at the latter8s 'ranch or %ain office in .ue/on City" At ti%es, he &ouldentrust the pay%ent to one of his drivers"9n June 24, 1))2, Dy8s driver &ent to the 'ranch office of "" 5oods to pic7 up stoc7s of snac7foods" :e introduced hi%self to the chec7er, Mary Jane D" Maraca, &ho upon confir%in* Dy8s credit&ith the %ain office, *ave hi% %erchandise &orth 610,;()"0"


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and fraudulent representation &hich he %ade to co%plainant to the effect that 5ar =ast -an7 and TrustCo" chec7 #o" ;;302 dated July 22, 1))2 in the a%ount of 610,;()"0, paya'le to "" 6roducts is a*ood chec7 and &ill 'e honored 'y the 'an7 on its %aturity date, and 'y %eans of other deceit of si%ilari%port, induced and succeeded in inducin* the said co%plainant to receive and accept the aforesaid chec7in pay%ent of snac7 foods, the said accused 7no&in* fully &ell that all his %anifestations andrepresentations &ere false and untrue and &ere %ade solely for the purpose of o'tainin*, as in fact he did

o'tain the aforesaid snac7 foods valued at 610,;()"0 fro% said co%plainant as upon presentation ofsaid chec7 to the 'an7 for pay%ent, the sa%e &as dishonored and pay%ent thereof refused for the reasonstop pay%ent and the said accused, once in possession of the aforesaid snac7 foods, &ith intent todefraud, &illfullyB, unla&fully and feloniously %isapplied, %isappropriated and converted the sa%e orthe value thereof to his o&n personal use and 'enefit, to the da%a*e and preudice of said "" 6roducts,herein represented 'y R9D959 -9RJA, in the afore%entioned a%ount of 610,;()"0, 6hilippineCurrency"Contrary to la&"142

9n even date, i% also char*ed Dy &ith t&o counts of violation ofB.P. Blg. 22in t&o T9 A"1(2

9n #ove%'er 23, 1))4, Dy &as arrested in #a*a City" 9n arrai*n%ent, he pleaded not *uilty to allchar*es" Thereafter, the cases a*ainst hi% &ere tried ointly"

9n #ove%'er 1(, 1))) the RTC convicted Dy on t&o counts each of estafaand violation ofB.P. Blg.22" The trial court disposed of the case as follo&s:=R=59R=, accused J9:# J=RR> D> AD=# +J9:# D> is here'y found !@ 'eyondreasona'le dou't of s&indlin* +=TA5A as char*ed in the


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Dy 'rou*ht the case to the Court of Appeals" AD=# +J9:# D> is here'y sentenced to suffer an indeter%inate penalty of i%prison%ent

ran*in* fro% si? + years and one +1 day ofprision mayoras %ini%u% to t&enty +20 years ofreclusiontemporalas %a?i%u% plus ei*ht +$ years in e?cess of 6B22,000"00"


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insufficiency of funds to cover the chec7 and +3 da%a*e to the payee thereof" 1&32 These ele%ents arepresent in the instant case"ection 1)1 of the #e*otia'le


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issuance is reEuired, the pu'lic8s faith in the sta'ility and co%%ercial value of chec7s as currencysu'stitutes &ill certainly erode"13&2

Moreover, the *rava%en of the offense underB.P. Blg. 22is the act of %a7in* or issuin* a &orthlesschec7 or a chec7 that is dishonored upon present%ent for pay%ent" The act effectively declares theoffense to 'e one of malum prohibitum" The only valid Euery, then, is &hether the la& has 'een'reached, i.e.,'y the %ere act of issuin* a 'ad chec7, &ithout so %uch re*ard as to the cri%inal intent of

the issuer"13)2


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punish the offender &hile the other is intended to repair the da%a*e suffered 'y the a**rieved party" o,for the purpose of inde%nifyin* the latter, the offense need not 'e proved 'eyond reasona'le dou't 'utonly 'y preponderance of evidence"12

e therefore sustain the appellate court8s a&ard of da%a*es to "" 5oods in the total a%ountof 6333,3(3"), representin* the su% of the chec7s petitioner issued for *oods ad%ittedly delivered to hisco%pany"

As to the appropriate penalty, petitioner &as char*ed &ith estafaunder Article 31;, para*raph 2+d of theRevised 6enal Code, as a%ended 'y 6residential Decree #o" $1$1'2+6"D" #o" $1$"

@nder ection 112of 6"D" #o" $1$, if the a%ount of the fraud e?ceeds 622,000, the penaltyof reclusi%n temporalis i%posed in its %a?i%u% period, addin* one year for each additional 610,000 'utthe total penalty shall not e?ceed thirty +30 years, &hich shall 'e ter%ed reclusi%n perpetua"142&eclusi%n perpetuais not the prescri'ed penalty for the offense, 'ut %erely descri'es the penaltyactually i%posed on account of the a%ount of the fraud involved"?HEREFORE, the petition is PARTLY %RANTED$ John Dy is here'y AC."ITTED in Cri%inalCase #o" .)34(11 for estafa, and Cri%inal Case #o" .)34(12 for violation ofB.P. Blg. 22, 'ut heis ORDEREDto pay "" 5oods the a%ount of 610,;()"0 for *oods delivered to his co%pany"


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DI%EST

FACTS0ince 1))0, John Dy under the 'usiness na%e Dyna Mar7etin! has 'een the distri'utor of "" 5ood6roducts +"" 5oodsDy &ould pay "" 5oods in either cash or chec7 upon pic7 up of stoc7s of snac7 foods

At ti%es, he &ould entrust the pay%ent to one of his drivers"June 24, 1))2 DyOs driver &ent to the 'ranch office of "" 5oods to pic7 up stoc7s of snac7 foods":e introduced hi%self to the chec7er, Mary Jane D" Maraca, &ho upon confir%in* DyOs credit &ith the%ain office, *ave hi% %erchandise &orth 610,;()"0


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=C" 14" -lan7s &hen %ay 'e filled"here the instru%ent is &antin* in any %aterial particular,theperson in possession thereof has a pri%a facie authority to co%plete it 'y fillin* up the 'lan7s therein"And a si*nature on a 'lan7 paper delivered 'y the person %a7in* the si*nature in order that the paper %ay'e converted into a ne*otia'le instru%ent operates as apri%a facie authority to fill it up as such for anya%ount"The la& %erely reEuires that the instru%ent 'e in the possession of a person other than the dra&er or

%a7er5ro% such possession, to*ether &ith the fact that the instru%ent is &antin* in a %aterial particular, thela& presu%es a*ency to fill up the 'lan7s 'urden of provin* &ant of authority or that the authority*ranted &as e?ceeded, is placed on the person Euestionin* such authority Dy didnOt fulfill this estafapunished under Article 31;, para*raph 2+d of the Revised 6enal Code is co%%itted &hen a chec7 isdishonored for 'ein* dra&n a*ainst insufficient funds or closed account, and not a*ainst uncollecteddeposit" Corollarily, the issuer of the chec7 is not lia'le for estafa if the re%ainin* 'alance and theuncollected deposit, &hich &as duly collected, could satisfy the a%ount of the chec7 &hen presented forpay%ent"-"6" -l*" 22 ele%ents Q %alu% prohi'itu%the %a7in*, dra&in* and issuance of any chec7 to apply to account or for value the 7no&led*e of the%a7er, dra&er or issuer that at the ti%e of issue he does not have sufficient funds in or credit &ith the

dra&ee 'an7 for the pay%ent of such chec7 in full upon its present%ent su'seEuent dishonor of the chec7'y the dra&ee 'an7 for insufficiency of funds or credit or dishonor for the sa%e reason had not thedra&er, &ithout any valid cause, ordered the 'an7 to stop pay%ent considered 'y the 'an7 toretroactively have had 610,;)"3) in his account on July 22, 1))2 &hich &as %ore than enou*h to coverthe first chec7" Dy ad%itted that he issued the chec7s, and that the si*natures appearin* on the% &ere hisection 2 of -"6" -l*" 22, petitioner &as pri%a facie presu%ed to 7no& of the inadeEuacy of his funds&ith the 'an7 &hen he did not pay the value of the *oods or %a7e arran*e%ents for their pay%ent in full&ithin ; 'an7in* days upon notice


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%$R$ No$ &&&&5 June )4, &55'LORETO D$ DE LA @ICTORIA, as Cit; Fis


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of e?ecution and notice of *arnish%ent &as ustified" :is only duty &as to turn over the *arnished chec7sto the trial court &hich issued the order of e?ecution" '

6etitioner raises the follo&in* relevant issues +1 &hether a chec7 still in the hands of the %a7er or itsduly authori/ed representative is o&ned 'y the payee 'efore physical delivery to the latter and, +2&hether the salary chec7 of a *overn%ent official or e%ployee funded &ith pu'lic funds can 'e su'ect to*arnish%ent"

6etitioner reiterates his position that the salary chec7s &ere not o&ned 'y Ma'anto, Jr", 'ecause they &erenot yet delivered to hi%, and that petitioner as *arnishee has no le*al o'li*ation to hold and deliver the%to the trial court to 'e applied to Ma'anto, Jr"Os ud*%ent de't" The thesis of petitioner is that the salarychec7s still for%ed part of pu'lic funds and therefore 'eyond the reach of *arnish%ent proceedin*s"6etitioner has &ell ar*ued his case"!arnish%ent is considered as a species of attach%ent for reachin* credits 'elon*in* to the ud*%entde'tor o&in* to hi% fro% a stran*er to the liti*ation" =%phasis is laid on the phrase P'elon*in* to theud*%ent de'torP since it is the focal point in resolvin* the issues raised"As Assistant City 5iscal, the source of the salary of Ma'anto, Jr", is pu'lic funds" :e receives hisco%pensation in the for% of chec7s fro% the Depart%ent of Justice throu*h petitioner as City 5iscal ofMandaue City and head of office" @nder ec" 1 of the #e*otia'le


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advance e?ecution of ud*%ents, 'ut a careful scrutiny of that case and si%ilar cases reveals that it &asapplica'le to a notice of *arnish%ent as &ell"


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DI%EST

FACTS0Assistant City 5iscal -ienvenido #" Ma'anto &as ordered to pay herein private respondent Raul es'reVo611,000"00 as da%a*es" A notice of *arnish%ent &as served on herein petitioner oreto D" de la Hictoriaas City 5iscal of Mandaue City &here Ma'anto &as detailed" H &as directed not to dis'urse, transfer,

release or convey to any other person e?cept to the deputy sheriff concerned the salary chec7s or otherchec7s, %onies, or cash due or 'elon*in* to Ma'anto, Jr", under penalty of la&" ater, H &as directed tosu'%it his report sho&in* the a%ount of the *arnished salaries" H %oved to Euash the notice of*arnish%ent clai%in* that he &as not in possession of any %oney, funds, credit, property or anythin* ofvalue 'elon*in* to Ma'anto, Jr", e?cept his salary and RATA chec7s, 'ut that said chec7s &ere not yetproperties of Ma'anto, Jr", until delivered to hi%" :e further clai%ed that, as such, they &ere still pu'licfunds &hich could not 'e su'ect to *arnish%ent"

ISS"E0# a chec7 still in the hands of the %a7er or its duly authori/ed representative is o&ned 'y the payee'efore physical delivery to the latter"

R"LIN%0As Assistant City 5iscal, the source of the salary of Ma'anto, Jr", is pu'lic funds" :e receives hisco%pensation in the for% of chec7s fro% the D9J throu*h H as City 5iscal of Mandaue City and head ofoffice" @nder ec" 1 of the #e*otia'le


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!AN OF THE PHILIPPINE ISLANDS, Petitioner,-versus-%RE%ORIO C$ ROAS, Res#ondent$%$R$ No$ &'4(33O


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9n appeal, the Court of Appeals, in its Decision, affir%ed the trial court8s ud*%ent":ence, this petition"6etitioner ascri'es to the Court of Appeals the follo&in* errors +1 in findin* that respondent is a holderin due course and +2 in holdin* that it +petitioner is lia'le to respondent for the a%ount of the cashier8schec7"ection ;2 of the #e*otia'le


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DI%EST

FACTS0!re*orio Ro?as, as trader, delivered stoc7s of ve*eta'le oil to pouses Rodri*o and MarissaCa&ili" Aspay%ent, they issued a personal chec7 a%ountin* to 6:634$,$0;";0 &hich &asdishonored 'y the dra&ee'an7 &hen respondent tried to encash"The pouses Ca&ili replaced the chec7 &ith a cashierOs chec7 fro%

-an7 of the 6hilippine


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%$R$ No$ 5343 Dea%a*uchi and 5er%in Canlas to pay, ointly and severally,the plaintiff 'an7 the follo&in* su%s &ith interest thereon at 1I per annu% fro% the dates indicated, to&it

@nder the pro%issory note +=?hi'it PAP, the su% of 6300,000"00 &ith interest fro% January 2), 1)$1until fully paid under pro%issory note +=?hi'it P-P, the su% of 640,000"00 &ith interest fro% #ove%'er2(, 1)$0 under the pro%issory note +=?hi'it PCP, the su% of 61,4"00 &hich interest fro% January2), 1)$1 under the pro%issory note +=?hi'it P=P, the su% of 6$,130"31 &ith interest fro% January 2),1)$1 under the pro%issory note +=?hi'it P!P, the su% of 612,(03"(0 &ith interest fro% #ove%'er 2(,1)$0 under the pro%issory note +=?hi'it P:P, the su% of 62$1,$(;")1 &ith interest fro% January 2),1)$1 and under the pro%issory note +=?hi'it P


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5ro% the records, these facts are esta'lished Defendant ho/o >a%a*uchi and private respondent 5er%inCanlas &ere 6residentChief 9peratin* 9fficer and Treasurer respectively, of orld&ide !ar%entManufacturin*,


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a%a*uchi and 6inch Manufacturin* Corporation as solidaryde'tors"As to &hether the interpolation of the phrase Pand +in his personal capacityP 'elo& the si*natures of the%a7ers in the notes &ill affect the lia'ility of the %a7ers, e do not find it necessary to resolve anddecide, 'ecause it is i%%aterial and &ill not affect to the lia'ility of private respondent 5er%in Canlas asa oint and several de'tor of the notes" ith or &ithout the presence of said phrase, private respondent5er%in Canlas is pri%arily lia'le as a co%a7er of each of the notes and his lia'ility is that of a solidaryde'tor"5inally, the respondent Court %ade a *rave error in holdin* that an a%end%ent in a corporationOs Articles

of


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'orro&erde'tor Os perusal" An inco%plete instru%ent &hich has 'een delivered to the 'orro&er for hissi*nature is *overned 'y ection 14 of the #e*otia'le


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January 2), 1)$1 and the pro%issory note %ar7ed as =?hi'it


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DI%EST

FACTS0


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the 'urden is on the holder to prove that he or so%e person under &ho% he clai%s, acEuired the title asholder in due course"The facts in this present case are on all fours to the case of )tate nvestment (ouse, nc" +the veryrespondent in this case v. ntermediate !ppellate "ourt4&herein &e %ade a discourse on the effects ofcrossin* of chec7s"As preli%inary, a chec7 is defined 'y la& as a 'ill of e?chan*e dra&n on a 'an7 paya'le on

de%and" (There are a variety of chec7s, the %ore popular of &hich are the %e%orandu% chec7, cashierOschec7, travelerOs chec7 and crossed chec7" Crossed chec7 is one &here t&o parallel lines are dra&n acrossits face or across a corner thereof"


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DI%EST

FACTS0 -ataan Ci*ar X Ci*arette 5actory,


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%$R$ No$ 4)4 Ju7; &3, &5(5STATE IN@EST/ENT HO"SE,petitioner,vs"INTER/EDIATE APPELLATE CO"RT, ANITA PEBA CH"A and HARRIS CH"A, respondents"

7acalino, )alonga 3 !ssociates for petitioner.8dgardo 9. )undiam for respondents.

FERNAN, C$J$0

6etitioner tate


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9n the third party co%plaint, third party defendant #e& i7atuna ood


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The pay%ent %ade to a person other than the 'an7er or institution shall not e?e%pt the person on &ho% itis dra&n, if the pay%ent &as not correctly %ade"@nder usual practice, crossin* a chec7 is done 'y placin* t&o parallel lines dia*onally on the left topportion of the chec7" The crossin* %ay 'e special &herein 'et&een the t&o parallel lines is &ritten thena%e of a 'an7 or a 'usiness institution, in &hich case the dra&ee should pay only &ith the interventionof that 'an7 or co%pany, or crossin* %ay 'e *eneral &herein 'et&een t&o parallel dia*onal lines are

&ritten the &ords Pand Co"P or none at all as in the case at 'ar, in &hich case the dra&ee should notencash the sa%e 'ut %erely accept the sa%e for deposit"The effect therefore of crossin* a chec7 relates to the %ode of its present%ent for pay%ent" @nder ection(2 of the #e*otia'le


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DI%EST

FACTS#ora Moulic issued to Cora/on Hictoriano, as security for pieces of e&ellery to 'e sold on co%%ission,t&o postdated chec7s in the a%ount of fifty thousand each" Thereafter, Hictoriano ne*otiated the chec7s totate


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@ICENTE R$ DE OCA/PO G CO$,plaintiffappellee,vs"ANITA %ATCHALIAN, ET AL$,defendantsappellants"1icente 9ormoso, r. for plaintiff:appellee.

&eyes and Pangala4gan for defendants:appellants.

LA!RADOR,J.:

Appeal fro% a ud*%ent of the Court of 5irst


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)ith" S That defendants, 'oth or either of the%, did not 7no& personally Manuel !on/ales or any%e%'er of his fa%ily at any ti%e prior to epte%'er 1);3, 'ut that defendant :ipolito !atchalian ispersonally acEuainted &ith H" R" de 9ca%po)eventh" S That defendants, 'oth or either of the%, had no arran*e%ents or a*ree%ent &ith the 9ca%poClinic at any ti%e prior to, on or after ) epte%'er 1);3 for the hospitali/ation of the &ife of Manuel!on/ales and neither or 'oth of said defendants had assu%ed, e?pressly or i%pliedly, &ith the 9ca%po

Clinic, the o'li*ation of Manuel !on/ales or his &ife for the hospitali/ation of the latter8ight" S That defendants, 'oth or either of the%, had no o'li*ation or lia'ility, directly or indirectly &iththe 9ca%po Clinic 'efore, or on ) epte%'er 1);3inth" S That Manuel !on/ales havin* received the chec7 =?h" P-P fro% defendant Anita C" !atchalianunder the representations and conditions herein a'ove specified, delivered the sa%e to the 9ca%po Clinic,in pay%ent of the fees and e?penses arisin* fro% the hospitali/ation of his &ife$enth" S That plaintiff for and in consideration of fees and e?penses of hospitali/ation and the release ofthe &ife of Manuel !on/ales fro% its hospital, accepted said chec7, applyin* 6441"(; +=?hi'it PAPthereof to pay%ent of said fees and e?penses and deliverin* to Manuel !on/ales the a%ount of 61;$"2;+as per receipt, =?hi'it PDP representin* the 'alance on the a%ount of the said chec7, =?h" P-P8leventh" S That the acts of acceptance of the chec7 and application of its proceeds in the %annerspecified a'ove &ere %ade &ithout previous inEuiry 'y plaintiff fro% defendants

$welfth" S That plaintiff filed or caused to 'e filed &ith the 9ffice of the City 5iscal of Manila, aco%plaint for estafa a*ainst Manuel !on/ales 'ased on and arisin* fro% the acts of said Manuel !on/alesin payin* his o'li*ations &ith plaintiff and receivin* the cash 'alance of the chec7, =?h" P-P and that saidco%plaint &as su'seEuently dropped$hirteenth" S That the e?hi'its %entioned in this stipulation and the other e?hi'its su'%itted previously,'e considered as parts of this stipulation, &ithout necessity of for%ally offerin* the% in evidence:=R=59R=, it is %ost respectfully prayed that this a*reed stipulation of facts 'e ad%itted and that theparties hereto 'e *iven fifteen days fro% today &ithin &hich to su'%it si%ultaneously their %e%orandu%to discuss the issues of la& arisin* fro% the facts, reservin* to either party the ri*ht to su'%it reply%e%orandu%, if necessary, &ithin ten days fro% receipt of their %ain %e%oranda" +pp" 212;,DefendantOs Record on Appeal"#o other evidence &as su'%itted and upon said stipulation the court rendered the ud*%ent already

alluded a'ove"


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presented 'y the appellants, i"e", &hether the plaintiffappellee %ay 'e considered as a holder in duecourse"ection ;2, #e*otia'le


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5or the fore*oin* considerations, the decision appealed fro% should 'e, as it is here'y, reversed, and thedefendants are a'solved fro% the co%plaint" ith costs a*ainst plaintiffappellee"


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DI%EST

FACTSAnita !atchalian &as interested in 'uyin* a car &hen she &as offered 'y Manuel !on/ales to a car o&ned'y the 9ca%po Clinic" !on/ales clai% that he &as duly authori/ed to loo7 for a 'uyer, ne*otiate andacco%plish the sale 'y the 9ca%po Clinic" Anita accepted the offer and insisted to deliver the car &ith the

certificate of re*istration the ne?t day 'ut !on/ales advised that the o&ners &ould only co%ply only uponsho&in* of interest on the part of the 'uyer" !on/ales reco%%ended issuin* a chec7 +600 paya'leto'earer crosschec7ed as evidence of the 'uyer8s *ood faith" !on/ales added that it &ill only 'e forsafe7eepin* and &ill 'e returned to her the follo&in* day"

The ne?t day, !on/ales never appeared" The failure of !on/ales to appeal resulted in !atchalian to issuea T96 6A>M=#T 9RD=R on the chec7"


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RO!ERT DINO, Petitioner,- versus -/ARIA L"ISA J"DAL-LOOT,oined +; er us+and @ICENTE LOOT, Res#ondents$%$R$ No$ &45&) A#ri7 &5, )&D E C I S I O NCARPIO,J$0

Te Case This is a petition for revie&1Bof the 1 Au*ust 200; Decision2Band 30 #ove%'er 200;Resolution3Bof the Court of Appeals in CA!"R" CH #o" ;())4" The Court of Appeals affir%ed thedecision of the Re*ional Trial Court, (thJudicial Re*ion, -ranch ;, Mandaue City +trial court, &ith thedeletion of the a&ard of interest, %oral da%a*es, attorney8s fees and liti*ation e?penses" The trial courtruled that respondents Maria uisa Judaloot and Hicente oot are holders in due course of Metro'an7Chec7 #o" CMA 14211)40 CA and ordered petitioner Ro'ert Dino as dra&er, to*ether &ith codefendant 5e o'itana as indorser, to solidarily pay respondents the face value of the chec7, a%on*others"

Te Fa


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1" defendants to pay to 6laintiff, and severally, the a%ount of 61,000,000"00 representin* the facevalue of su'ect Metro'an7 chec72" to pay to 6laintiff herein, ointly and severally, the su% of 6101,(4$"00 for accrued and paidinterest3" to pay to 6laintiff, ointly and severally, %oral da%a*es in the a%ount of 6100,000"004" to pay to 6laintiff, ointly and severally, the su% of 6200,000"00 for attorney8s fees and

;" to pay to 6laintiff, ointly and severally, liti*ation e?penses in the su% of 610,000"00 and costsof the suit" 9 9RD=R=D" 9nly petitioner filed an appeal" o'itana did not appeal the trial court8s ud*%ent"

Te Ru7in= o9 te Court o9 A##ea7s The Court of Appeals affir%ed the trial court8s findin* that respondents are holders in due courseof Metro'an7 Chec7 #o" CMA 14211)40CA" The Court of Appeals pointed out that petitioner8so&n ad%ission that respondents &ere never parties to the transaction a%on* petitioner, o'itana,Concordio Torin*, Cecilia Hillacarlos, and Consin*, proved respondents8 lac7 of 7no&led*e of anyinfir%ity in the instru%ent or defect in the title of the person ne*otiatin* it" Moreover, respondentsverified fro% Metro'an7 &hether the chec7 &as sufficiently funded 'efore they accepted it" Therefore,

respondents %ust 'e e?cluded fro% the a%'it of petitioner8s stop pay%ent order"The Court of Appeals %odified the trial court8s decision 'y deletin* the a&ard of interest, %oral

da%a*es, attorney8s fees and liti*ation e?penses" The Court of Appeals opined that petitioner F&as onlye?ercisin* +althou*h incorrectly, &hat he perceived to 'e his ri*ht to stop the pay%ent of the chec7&hich he rediscounted"G The Court of Appeals ruled that petitioner acted in *ood faith in orderin* thestoppa*e of pay%ent of the su'ect chec7 and thus, he %ust not 'e %ade lia'le for those a%ounts" D=MA#D T:AT T:= C9@RT 95A66=A :9@D :AH= MAD= A# =KC=6T


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Te Ru7in= o9 tis Court The petition is %eritorious" Respondents point out that petitioner raised the defense that Metro'an7 Chec7 #o" CMA14211)40CA is a crossed chec7 for the first ti%e in his %otion for reconsideration 'efore the Court ofAppeals" Respondents insist that issues not raised durin* the trial cannot 'e raised for the first ti%e onappeal as it &ould 'e offensive to the ele%entary rules of fair play, ustice and due process" Respondents

further assert that a chan*e of theory on appeal is i%proper"


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-ased on the fore*oin*, respondents had the duty to ascertain the indorser8s, in this case o'itana8s,title to the chec7 or the nature of her possession" This respondents failed to do" Respondents8 verificationfro% Metro'an7 on the fundin* of the chec7 does not a%ount to deter%ination of o'itana8s title to thechec7" 5ailin* in this respect, respondents are *uilty of *ross ne*li*ence a%ountin* to le*al a'sence of*ood faith,1;Bcontrary to ection ;2+c of the #e*otia'le M=#T T966=D"G


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?HEREFORE, &e %RANTthe petition" e SET ASIDEthe 1 Au*ust 200; Decision and 30#ove%'er 200; Resolution of the Court of Appeals in CA!"R" CH #o" ;())4" SO ORDERED"


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DI%EST

FACTS6etitioner &as induced to lend a syndicate 63,000,000"00 to 'e secured 'y a real estate %ort*a*e onseveral parcels of land situated in Canulao, apulapu City" @pon scrutini/in* the docu%ents involvin*the properties, petitioner discovered that the docu%ents covered ri*hts over *overn%ent properties"

Reali/in* he had 'een deceived, petitioner advised Metro'an7 tostop pay%ent of his chec7s" :o&ever,only the pay%ent of Chec7 #o" CMA 14211)40CA&as ordered stopped" The other t&o chec7s &erealready encashed 'y the payees" Mean&hile, Chec7 #o" CMA 14211)40CA +a crosschec7 &asne*otiated and indorsed to respondents 'y petitioner in e?chan*e for cash in the su% of 6)4$,000"00,&hich respondents 'orro&ed fro% Metro'an7 and char*ed a*ainst their credit line" Dra&ee 'an7,Metro'an7, Ce'uMa'olo -ranch, &hich is also their depositary 'an7, ans&ered that the chec7s &eresufficiently funded" :o&ever, the sa%e &as dishonored 'y the dra&ee 'an7 &hen they tried to deposit itfor reason F6A>M=#T T966=D"G Respondents filed a collection suit a*ainst petitioner and o'itana'efore the trial court" The trial court ruled in favor of respondents and declared the% due course holdersof the su'ect chec7, since there &as no privity 'et&een respondents and defendants" CA affir%ed'ut%odified the trial court8s decision 'y deletin* the a&ard of interest, %oral da%a*es, attorney8s fees andliti*ation e?penses" The Court of Appeals opined that petitioner F&as only e?ercisin* +althou*h

incorrectly, &hat he perceived to 'e his ri*ht to stop the pay%ent of the chec7 &hich he rediscounted"GThe Court of Appeals ruled that petitioner acted in *ood faith in orderin* the stoppa*e of pay%ent of thesu'ect chec7 and thus, he %ust not 'e %ade lia'le for those a%ounts"

ISS"Ehether or not The respondents &ere holders in due courseL

HELD6=T


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%$R$ No$ L-))) Nove*+er 3, &5)'THE PHILIPPINE NATIONAL !AN,plaintiffappellee,vs"RA/ON /AA and FRANCISCO /ECENAS,defendantsappellants"#utero, #utero and 7a'a for appellants.&oman . #acson for appellee.

/ALCOL/,J.:

The 6hilippine #ational -an7 is suin* Ra%on Ma/a and 5rancisco Mecenas on five pro%issory notes often thousand pesos +610,000 each"Ma/a and Mecenas e?ecuted t&o of the pro%issory notes on January 20, 1)21, due three %onths afterdate" The three other notes due four %onths after date" The three other notes due four %onths after date&ere e?ecuted 'y the sa%e parties on January 21, 1)21" 9ne of the a'ove%entioned notes, typical of therest reads as follo&s610,000


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DI%EST

FACTS0Ma/a and Macenas e?ecuted a total of five pro%issory notes" These &ere not paid at %aturity" And torecover the a%ounts stated on the face of the pro%issory notes, 6#- initiated an action a*ainst thet&o" The special defense posed 'y the t&o is that the pro%issory notes &ere delivered to

the% in 'lan7 'y a certain =nchaus and &ere %ade to si*n the notes so that the latter couldsecure a loan fro% the 'an7" They also alle*ed that they never ne*otiated the notes &ith the 'an7 norhave they received any value thereof" They also prayed that =nchaus 'e i%pleaded in theco%plaint 'ut such &as denied" The trial court then held in favor of the 'an7"

HELD0The defendants attested to the *enuineness of the instru%ents sued on" #either did they pointout any %ista7e in re*ard to the a%ount and interest that the lo&er court sentenced the% topay" !iven such, the defendants are lia'le" They appear as the %a7ers of the pro%issory notesand as such, they %ust 7eep their en*a*e%ent and pay as pro%ised"And assu%in* that they are acco%%odation parties, the defendants havin* si*ned the instru%ents &ithoutreceivin* value thereof, for the purpose of lendin* their na%es to so%e other person, are still lia'le for the

pro%issory notes" The la& no& is such that an acco%%odation party cannot clai% no 'enefit as such,'ut he is lia'le accordin* to the face of his underta7in*, the sa%e as he hi%self financially interestin the transaction"


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June )5, &5'%$R$ Nos$ L-)4(4-(J$ ANTONIO ARANETA,plaintiffappellee,vs"ANTONIO PERE,defendantappellant"!raneta, 7endo'a and Papa for plaintiff:appellee.

!lfonso 9eli, r. for defendant:appellant.

!A"TISTA AN%ELO,J.:9n June 1, 1)1, Antonio M" 6ere/ e?ecuted a pro%issory note &herein he a*reed to pay J" AntonioAraneta, or order, the su% of 63,(00"00 11) days fro% said date, or on 9cto'er 13, 1)1, and if it is notpaid on the date of %aturity, to pay interest at )I per annu% on the a%ount of the loan, and 63(0"00 asattorneyOs fees in addition to costs and other dis'urse%ents ta?a'le under the Rules of Court"The note havin* 'eco%e due and Antonio M" 6ere/ havin* failed to pay it despite de%and %ade uponhi% to do so, Araneta filed on 9cto'er 31, 1)1 a co%plaint in the Municipal Court of Manila to collectits i%port under the ter%s therein stipulated +Civil Case #o" )22;"


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court a 6uocorrectly ruled in reEuirin* Antonio 6ere/ to pay the a'ove a%ount to Antonio Araneta,nevertheless, the court a 6uoerred in failin* to reEuire Araneta in his capacity as trustee of the aforesaidchildren to rei%'urse Antonio 6ere/ that a%ount upon proof 'y the latter of the pay%ent %ade 'y hi% ofsaid a%ount"1" The pro%issory note si*ned 'y appellant clearly states that he a*reed to pay Araneta or order the su%of 63,(00"00 on 9cto'er 13, 1)1 and if the sa%e is not paid on said date to pay )I interest thereon per

annu% until fully paid, plus the su% of 63(0"00 as attorneyOs fees, in addition to the costs and otherdis'urse%ents ta?a'le under the Rules of Court" @nder these ter%s it is clear that appellant 'ound hi%selfto pay personally said pro%issory note &hich he cannot shift to another &ithout the consent of the payee"uch is the underta7in* of the %a7er"


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%$R$ No$ &()4 Au=ust ), )(FAR EAST !AN G TR"ST CO/PANY,petitioner,vs"%OLD PALACE JE?ELLERY CO$, as re#resented +; Jud; L$ Yan=, Ju7ie Yan=-%o and o SoonHuat,respondent"

D E C I S I O N

NACH"RA,J.05or the revie& of the Court throu*h a Rule 4; petition are the follo&in* issuances of the Court of Appeals+CA in CA!"R" CH #o" (1$;$ +1 the March 1;, 200; Decision1&hich reversed the trial courtOs rulin*,and +2 the May 2, 200; Resolution2&hich denied the %otion for reconsideration of the said CAdecision"The instant controversy traces its roots to a transaction consu%%ated so%eti%e in June 1))$, &hen aforei*ner, identified as a%uel Ta*oe, purchased fro% the respondent !old 6alace Je&ellery Co"Os +!old6alaceOs store at M#orth =DA several pieces of e&elry valued at62;$,000"00" 3


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loss &here it finds it"40


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FACTS June 1))$ a%uel Ta*oe, a forei*ner, purchased fro% !old 6alace Je&ellery Co"Os +!old

6alaceOs store at M#orth =DA several pieces of e&elry valued at 62;$,000 paid & 5orei*n Draft issued 'y the @nited 9verseas -an7 +Malaysia to and -an7 of

the 6hilippines, Manila +-6 for 63$0,000 Teller of 5ar =ast -an7, ne?t door tenant, infor%ed Julie >an*!o +%ana*er of !old 6alace that

a forei*n draft has si%ilar nature to a %ana*erOs chec7, 'ut advised her not to release the pieces ofe&elry until the draft had 'een cleared

>an* issued Cash an* released the pieces of e&elry and

his chan*e, 5ar =ast Chec7 of 6122,000 paid 'y the 'an7 June 2, 1))$ -6 infor%ed 5ar =ast that the 5orei*n Draft had 'een %aterially altered fro%

6300 to 6300,000and that it &as returnin* the sa%e

5ar =ast refunded the a%ount to -6 and de'it only 61$,0;3"3 of the a%ount left in!old 6alaceO account &ithout a prior &ritten notice to the account holder 5ar =ast only notified 'y phone the representatives of the !old 6alace

Au*ust 12, 1))$ 5ar =ast de%anded fro% !old 6alace the pay%ent of 'alance and upon refusalfiled in the RTC

RTC in favor of 5ar =ast on the 'asis that !old 6alace &as lia'le under the lia'ilities of a *eneralindorser

CA reversed since 5ar =ast failed to under*o the proceedin*s on the protest of the forei*n draftor to notify !old 6alace of the draftOs dishonor thus, 5ar =ast could not char*e !old 6alace on itssecondary lia'ility as an indorser

ISS"E

hether or not !old 6alace should 'e lia'le for the altered 5orei*n Draft

HELD#9" A55


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!old 6alace had no facility to ascertain &ith the dra&er, @9- Malaysia, the true a%ountinthe draft"


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!AN OF THE PHILIPPINE ISLANDS, Petitioner,- versus -CO"RT OF APPEALS, ANNA!ELLE A$ SALAAR, and J"LIO R$ TE/PLON"E@O,Res#ondents$%$R$ No$ &3)) Januar; )', )4

DECISION

AC"NA,J.0This is a petition for revie& under Rule 4; of the Rules of Court see7in* the reversal of theDecision1Bdated April 3, 1))$, and the Resolution 2Bdated #ove%'er ), 1))$, of the Court of Appeals inCA!"R" CH #o" 42241The facts3Bare as follo&sA"A" ala/ar Construction and =n*ineerin* ervices filed an action for a su% of %oney &ith da%a*esa*ainst herein petitioner -an7 of the 6hilippine


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2" The a%ount of 630,000"00 as and for actual da%a*es3" The a%ount of 6;0,000"00 as and for %oral da%a*es4" The a%ount of 6;0,000"00 as and for e?e%plary da%a*es;" The a%ount of 630,000"00 as and for attorney8s fees and" Costs of suit"The counterclai% is here'y ordered D


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2" ala/ar failed to adduce sufficient evidence to prove that her possession of the three chec7s&as la&ful despite her alle*ations that these chec7s &ere deposited pursuant to a prior internalarran*e%ent &ith Te%plonuevo and that petitioner &as privy to the arran*e%ent"3" The CA should have applied the Civil Code provisions on le*al co%pensation 'ecause indeductin* the su'ect a%ount fro% ala/ar8s account, petitioner &as %erely rectifyin* the undue pay%entit %ade upon the chec7s and e?ercisin* its prero*ative to alter or %odify an erroneous credit entry in the

re*ular course of its 'usiness"4" The de'it of the a%ount fro% the account of A"A" ala/ar Construction and =n*ineerin*ervices &as proper even thou*h the value of the chec7s had 'een ori*inally credited to the personalaccount of ala/ar 'ecause A"A" ala/ar Construction and =n*ineerin* ervices, an unincorporated sin*leproprietorship, had no separate and distinct personality fro% ala/ar";" Assu%in* the deduction fro% ala/ar8s account &as i%proper, the CA should not havedis%issed petitioner8s thirdparty co%plaint a*ainst Te%plonuevo 'ecause the latter &ould have the le*alduty to return to petitioner the proceeds of the chec7s &hich he previously received fro% it"" There &as no factual 'asis for the a&ard of da%a*es to ala/ar"The petition is partly %eritorious"5irst, the issue raised 'y petitioner reEuires an inEuiry into the factual findin*s %ade 'y the CA" The CA8sconclusion that the deductions fro% the 'an7 account of A"A" ala/ar Construction and =n*ineerin*

ervices &ere i%proper ste%%ed fro% its findin* that there &as no ineffective pay%ent to ala/ar &hich&ould call for the e?ercise of petitioner8s ri*ht to set off a*ainst the for%er8s 'an7 deposits" This findin*,in turn, &as dra&n fro% the pleadin*s of the parties, the evidence adduced durin* trial and upon thead%issions and stipulations of fact %ade durin* the pretrial, %ost si*nificantly the follo&in*+a That ala/ar previously had in her possession the follo&in* chec7s+1 olid -an7 Chec7 #o" C-(;; dated January 30, 1))0 in the a%ount of 6;(,(12";0+2 olid -an7 Chec7 #o" C-$)$)($ dated July 31, 1))0 in the a%ount of 6;;,1$0"00 and,+3 =Euita'le -an7in* Corporation Chec7 #o" 323$03$ dated Au*ust 2$, 1))0 for the a%ountof 61;4,$00"00+' That these chec7s &hich had an a**re*ate a%ount of 62(,)2";0 &ere paya'le to the order ofJRT Construction and Tradin*, the na%e and style under &hich Te%plonuevo does 'usiness+c That despite the lac7 of endorse%ent of the desi*nated payee upon such chec7s, ala/ar &as

a'le to deposit the chec7s in her personal savin*s account &ith petitioner and encash the sa%e+d That petitioner accepted and paid the chec7s on three +3 separate occasions over a span ofei*ht %onths in 1))0 and+e That Te%plonuevo only protested the purportedly unauthori/ed encash%ent of the chec7safter the lapse of one year fro% the date of the last chec7"10B

6etitioner concedes that &hen it credited the value of the chec7s to the account of private respondentala/ar, it %ade a %ista7e 'ecause it failed to notice the lac7 of endorse%ent thereon 'y the desi*natedpayee" The CA, ho&ever, did not lend credence to this clai% and concluded that petitioner8s actions &eredeli'erate, in vie& of its ad%ission that the F%ista7eG &as co%%itted three ti%es on three separateoccasions, indicatin* acEuiescence to the internal arran*e%ent 'et&een ala/ar and Te%plonuevo" TheCA e?plained thus


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correspondin* indorse%ent 'y their payee"


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ne*otia'le instru%ent does not in itself conclusively esta'lish either the ri*ht of the possessor to receivepay%ent, or of the ri*ht of one &ho has %ade pay%ent to 'e dischar*ed fro% lia'ility" Thus, so%ethin*%ore than %ere possession 'y persons &ho are not payees or indorsers of the instru%ent is necessary toauthori/e pay%ent to the% in the a'sence of any other facts fro% &hich the authority to receive pay%ent%ay 'e inferred"1$B

The CA and the trial court sur%ised that the su'ect chec7s 'elon*ed to private respondent ala/ar 'ased

on the pretrial stipulation that Te%plonuevo incurred a oneyear delay in de%andin* rei%'urse%ent forthe proceeds of the sa%e" To the Court8s %ind, ho&ever, such period of delay is not of such unreasona'lelen*th as to estop Te%plonuevo fro% assertin* o&nership over the chec7s especially considerin* that it&as readily apparent on the face of the instru%ents1)Bthat these &ere crossed chec7s"


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:ence, the relationship 'et&een 'an7s and depositors has 'een held to 'e that of creditor and de'tor"Thus, le*al co%pensation under Article 12($ of the Civil Code %ay ta7e place P&hen all the reEuisites%entioned in Article 12() are present,P as follo&s+1 That each one of the o'li*ors 'e 'ound principally, and that he 'e at the sa%e ti%e a principalcreditor of the other+2 That 'oth de'ts consist in a su% of %oney, or if the thin*s due are consu%a'le, they 'e of the

sa%e 7ind, and also of the sa%e Euality if the latter has 'een stated+3 That the t&o de'ts 'e due+4 That they 'e liEuidated and de%anda'le+; That over neither of the% there 'e any retention or controversy, co%%enced 'y third persons andco%%unicated in due ti%e to the de'tor"hile, ho&ever, it is conceded that petitioner had the ri*ht of setoff over the a%ount it paid toTe%plonuevo a*ainst the deposit of ala/ar, the issue of &hether it acted udiciously is an entirelydifferent %atter"2;BAs 'usinesses affected &ith pu'lic interest, and 'ecause of the nature of theirfunctions, 'an7s are under o'li*ation to treat the accounts of their depositors &ith %eticulous care, al&ayshavin* in %ind the fiduciary nature of their relationship"2B


64/172

These chec7s, it %ust 'e e%phasi/ed, &ere su'seEuently dishonored, there'y causin* private respondentala/ar undue e%'arrass%ent and inflictin* da%a*e to her standin* in the 'usiness co%%unity" @nderthe circu%stances, she &as clearly not *iven the opportunity to protect her interest &hen petitionerunilaterally &ithdre& the a'ove a%ount fro% her account &ithout infor%in* her that it had already doneso"5or the a'ove reasons, the Court finds no reason to distur' the a&ard of da%a*es *ranted 'y the CA

a*ainst petitioner" This &hole incident &ould have 'een avoided had petitioner adhered to the standard ofdili*ence e?pected of one en*a*ed in the 'an7in* 'usiness" A depositor has the ri*ht to recover reasona'le%oral da%a*es even if the 'an78s ne*li*ence %ay not have 'een attended &ith %alice and 'ad faith, if thefor%er suffered %ental an*uish, serious an?iety, e%'arrass%ent and hu%iliation" 31BMoral da%a*es arenot %eant to enrich a co%plainant at the e?pense of defendant"


65/172

DI%EST

FACTSTe%plonuevo de%anded pay%ent fro% petitioner of a su% of %oney representin* the a**re*atevalue of three chec7s &hich &ere alle*edly paya'le to hi% 'ut &hich &ere deposited &ith thepetitioner to ala/ar8s account, &ithout his 7no&led*e and correspondin* endorse%ent" 5indin*

%erit in the de%ands of Te%plonuevo, the 'an7 then fro/e the account of the en*ineerin* fir% as theaccount of ala/ar &as already closed or had insufficient funds" 5ailure of any settle%ent 'et&eenTe%plonuevo and ala/ar, this pro%pted the 'an7 to de'it the account of ala/ar and *ive 'ac7 the%oney to Te%plonuevo throu*h cashier8s chec7" The account of ala/ar &as also de'ited for &hateverchar*es incurred for the issuance of the cashier8s chec7"The trial court held in favor of ala/ar"ISS"EDoes a collectin* 'an7, over the o'ections of its depositor, have the authority to &ithdra&unilaterally fro% such depositor8s account the a%ount it had previously paid upon certain unendorsedorder instru%ents deposited 'y the depositor to another account that she later closedL

HELD


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Te%plonuevo &as therefore &arranted under the circu%stances despite the fact that Te%plonuevo%ay not have clearly de%onstrated that he never authori/ed ala/ar to deposit the chec7s or to encashthe sa%e" #ote&orthy also is the fact that petitioner sta%ped on the 'ac7 of the chec7s the&ords PAll prior endorse%ents andor lac7 of endorse%ents *uaranteed,P there'y %a7in* theassurance that it had ascertained the *enuineness of all prior endorse%ents" :avin* assu%edthe lia'ility of a *eneral indorser, petitioner8s lia'ility to the desi*nated payee cannot 'e

denied"

ConseEuently, petitioner, as the collectin* 'an7, had the ri*ht to de'it ala/ar8s account for thevalue of the chec7s it previously credited in her favor" :o&ever, the issue of &hether it actedudiciously is an entirely different %atter" As 'usinesses affected &ith pu'lic interest, and 'ecauseof the nature of their functions, 'an7s are under o'li*ation to treat the accounts of theirdepositors &ith %eticulous care, al&ays havin* in %ind the fiduciary nature of their relationship"


67/172


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of spouses Tua/on, re*istered a fictitious Deed of ale on July 1), 1)$$ ? ? ? over a residential lot locatedat #ueva =cia" Another si%ulated sale of a Toyota illys &as e?ecuted on January 2;, 1)$$ in favor oftheir other son, copetitionerB Aleandro Tua/on ? ? ?" As a result of the said sales, the titles of theseproperties issued in the na%es of spouses Tua/on &ere cancelled and ne& ones &ere issued in favor of thecoBdefendants spouses -uenaventura, Aleandro Tua/on and Melecio Tua/on" Resultantly, 'y the saidantedated and si%ulated sales and the correspondin* transfers there &as no %ore property left re*istered

in the na%es of spouses Tua/on ans&era'le to creditors, to the da%a*e and preudice of respondentsB" F5or their part, defendants denied havin* purchased ? ? ? rice fro% -artolo%eB Ra%os" Theyalle*ed that it &as Ma*dalena Ra%os, &ife of said deceased, &ho o&ned and traded the %erchandise andMaria Tua/on &as %erely her a*ent" They ar*ued that it &as =van*eline antos &ho &as the 'uyer of therice and issued the chec7s to Maria Tua/on as pay%ents therefor"


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ellentrenched is the rule that the upre%e Court8s role in a petition under Rule 4; is li%ited torevie&in* errors of la& alle*edly co%%itted 'y the Court of Appeals" 5actual findin*s of the trial court,especially &hen affir%ed 'y the CA, are conclusive on the parties and this Court" $B 6etitioners have not*iven us sufficient reasons to deviate fro% this rule"


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DI%ESTTua/on, et" Al" vs" :eirs of -artolo%e Ra%os" !"R" #o" 1;22, July 14, 200;

FACTS:eirs of -artolo%e Ra%os alle*ed that spouses eonilo and Maria Tua/on purchased a total of $,32cavans of rice fro% the deceased -artolo%eB Ra%os predecessorininterest of respondentsB" That of this

Euantity,B " " " only 4,43( cavans have 'een paid for so farB, leavin* unpaid 3,$$) cavans valued at61,211,)1)"00"


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%$R$ No$ &')5 Nove*+er )5, )/EL@A THERESA AL@IAR %ONALES, 6etitioner,vs"RIAL CO//ERCIAL !ANIN% CORPORATION,Respondent"

D E C I S I O N

%ARCIA,J.:

An action for a su% of %oney ori*inatin* fro% the Re*ional Trial Court +RTC of Ma7ati City, -ranch1, thereat doc7eted as Civil Case #o" $$1;02, &as decided in favor of therein plaintiff, no& respondentRi/al Co%%ercial -an7in* Corporation +RC-C" 9n appeal to the Court of Appeals +CA in CA!"R"CH #o" 4$;), that court, in a decision 1dated Au*ust 30, 2002, affir%ed the RTC %inus the a&ard ofattorney8s fees" @pon the instance of herein petitioner Melva Theresa Alviar !on/ales, the case is no&'efore this Court via this petition for revie& on certiorari, 'ased on the follo&in* undisputed facts asunani%ously found 'y the RTC and the CA, &hich the latter su%%ari/ed as follo&s!on/ales &as an e%ployee of Ri/al Co%%ercial -an7in* Corporation +or RC-C as #e& AccountsCler7 in the Retail -an7in* Depart%ent at its :ead 9ffice"

A forei*n chec7 in the a%ount of Y(,;00 &as dra&n 'y Dr" Don Uapanta of the Ade Medical !roup &ithaddress at ;) estern Avenue, os An*eles, California, a*ainst the dra&ee 'an7 ilshire Center -an7,#"A", of os An*eles, California, @""A", and paya'le to !on/ales8 %other, defendant =va Alviar +orAlviar" Alviar then endorsed this chec7" ince RC-C *ives special acco%%odations to its e%ployees toreceive the chec78s value &ithout a&aitin* the clearin* period, !on/ales presented the forei*n chec7 to9livia !o%e/, the RC-C8s :ead of Retail -an7in*" After e?a%inin* this, 9livia !o%e/ reEuested!on/ales to endorse it &hich she did" 9livia !o%e/ then acEuiesced to the early encash%ent of the chec7and si*ned the chec7 'ut indicated thereon her authority of Pup to 61(,;00"00 onlyP" After&ards, 9livia!o%e/ directed !on/ales to present the chec7 to RC-C e%ployee Carlos Ra%os and procure hissi*nature" After inspectin* the chec7, Carlos Ra%os also si*ned it &ith an Po7P annotation" After *ettin*the said si*natures !on/ales presented the chec7 to Rolando Uornosa, upervisor of the Re%ittancesection of the 5orei*n Depart%ent of the RC-C :ead 9ffice, &ho after scrutini/in* the entries and

si*natures therein authori/ed its encash%ent" !on/ales then received its peso eEuivalent of 61;;,2(0"$;"RC-C then tried to collect the a%ount of the chec7 &ith the dra&ee 'an7 'y the latter throu*h itscorrespondent 'an7, the 5irst


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da%a*es, and 620,000"00 as attorney8s fees and liti*ation e?penses" Defendant =va Alviar, on the otherhand, &as declared in default for havin* filed her Ans&er out of ti%e"After trial, the RTC, in its threepa*e decision,2held t&o of the three defendants lia'le as follo&s:=R=59R=, pre%ises a'ove considered and plaintiff havin* esta'lished its case a*ainst the defendantsas a'ove stated, ud*%ent is here'y rendered for plaintiff and as a*ainst defendant =HA" 6" AH

And, in addition, he en*a*es that, on due present%ent, it shall 'e accepted or paid, or 'oth, as the case%ay 'e, accordin* to its tenor, and that if it 'e dishonored and the necessary proceedin*s on dishonor 'eduly ta7en, he &ill pay the a%ount thereof to the holder, or to any su'seEuent indorser &ho %ay 'eco%pelled to pay it"The %atters and thin*s %entioned in su'divisions +a, +' and +c of ection ; are the follo&in*+a That the instru%ent is *enuine and in all respects &hat it purports to 'e+' That he has a *ood title to it+c That all prior parties had capacity to contract
http://www.lawphil.net/judjuris/juri2006/nov2006/gr_156294_2006.html#fnt2http://www.lawphil.net/judjuris/juri2006/nov2006/gr_156294_2006.html#fnt3http://www.lawphil.net/judjuris/juri2006/nov2006/gr_156294_2006.html#fnt3http://www.lawphil.net/judjuris/juri2006/nov2006/gr_156294_2006.html#fnt2http://www.lawphil.net/judjuris/juri2006/nov2006/gr_156294_2006.html#fnt3


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@nder ection , the &arranties for &hich Alviar and !on/ales are lia'le as *eneral endorsers in favor ofsu'seEuent endorsers e?tend only to the state of the instru%ent at the ti%e of their endorse%ents,specifically, that the instru%ent is *enuine and in all respects &hat it purports to 'e that they have *oodtitle thereto that all prior parties had capacity to contract and that the instru%ent, at the ti%e of theirendorse%ents, is valid and su'sistin*" This provision, ho&ever, cannot 'e used 'y the party &hichintroduced a defect on the instru%ent, such as respondent RC-C in this case, &hich Eualifiedly endorsed

the sa%e, to hold prior endorsers lia'le on the instru%ent 'ecause it results in the a'surd situation&here'y a su'seEuent party %ay render an instru%ent useless and inutile and let innocent parties 'ear theloss &hile he hi%self *ets a&ay scotfree"


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DI%EST

FACTS !on/ales, #e& Accounts Cler7 in the Retail -an7in* Depart%ent at RC-C :ead 9ffice Dr" Don Uapanta of the Ade Medical !roup dre& a forei*n chec7 of Y(,;00 a*ainst the dra&ee

'an7 ilshire Center -an7, A, California paya'le to =va Alviar +Alviar, !on/ales %other" Alviar then endorsed this chec7"

ince RC-C *ives special acco%%odations to its e%ployees to receive the chec78s value &oa&aitin* the clearin* period, !on/ales presented the forei*n chec7 to 9livia !o%e/, the RC-C8s:ead of Retail -an7in*

9livia !o%e/ reEuested !on/ales to endorse it &hich she did" 9livia !o%e/ thenacEuiesced to the early encash%ent of the chec7 and si*ned the chec7 'ut indicatedthereon her authority of Pup to 61(,;00"00 onlyP"

Carlos Ra%os si*ned it &ith an Po7P annotation" 6resented the chec7 to Rolando Uornosa, upervisor of the Re%ittance section of the

5orei*n Depart%ent of the RC-C :ead 9ffice, &ho after scrutini/in* the entries andsi*natures authori/ed its encash%ent"

!on/ales received its peso eEuivalent 61;;,2(0"$; RC-C tried to collect throu*h its correspondent 'an7, the 5irst


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@nder ection , the &arranties for &hich Alviar and !on/ales are lia'le as *eneral endorsers infavor of su'seEuent endorsers e?tend only to the state of the instru%ent at the ti%e of theirendorse%ents,

This provision cannot 'e used 'y the party &hich introduced a defect on the instru%ent +RC-C&c Eualifiedly endorsed it

:ad it not 'een for the Eualified endorse%ent Pup to 61(,;00"00 onlyP of 9livia !o%e/,

&ho is the e%ployee of RC-C, there &ould have 'een no reason for the dishonor of thechec7

The holder or su'seEuent endorser &ho tries to clai% under the instru%ent &hich had 'eendishonored for Pirre*ular endorse%entP %ust not 'e the irre*ular endorser hi%self &ho *avecause for the dishonor"

9ther&ise, a clear inustice results &hen any su'seEuent party to the instru%ent %aysi%ply %a7e the instru%ent defective and later clai% fro% prior endorsers &ho have no7no&led*e or participation in causin* or introducin* said defect to the instru%ent, &hichthere'y caused its dishonor"


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%$R$ No$ 5)) Fe+ruar; 5, &553NATI@IDAD %E/PESA?,petitioner,vs"THE HONORA!LE CO"RT OF APPEALS and PHILIPPINE !AN OFCO//"NICATIONS, respondents"

#.B. "amins for petitioner.!ngara, !bello, "oncepcion, &egals 3 "ru' for private respondent

CA/POS, JR$,J.:5ro% the adverse decision of the Court of Appeals +CA!"R" CH #o" 144(, petitioner, #atividad!e%pesa&, appealed to this Court in a 6etition for Revie&, on the issue of the ri*ht of the dra&er torecover fro% the dra&ee 'an7 &ho pays a chec7 &ith a for*ed indorse%ent of the payee, de'itin* thesa%e a*ainst the dra&erOs account"The records sho& that on January 23, 1)$;, petitioner filed a Co%plaint a*ainst the private respondent6hilippine -an7 of Co%%unications +respondent dra&ee -an7 for recovery of the %oney value ofei*htyt&o +$2 chec7s char*ed a*ainst the petitionerOs account &ith the respondent dra&ee -an7 on the*round that the payeesO indorse%ents &ere for*eries" The Re*ional Trial Court, -ranch CKKH

T:= AM9@#T 95 61,20$,0"$)


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respondent dra&ee 'an7, %ay accept a second indorse%ent on a chec7 for deposit" " Ro%ero and -enito a% in their respective'ranches"9n #ove%'er (, 1)$4, petitioner %ade a &ritten de%and on respondent dra&ee -an7 to credit her

account &ith the %oney value of the ei*htyt&o +$2 chec7s totallin* 61,20$"0"$) for havin* 'een&ron*fully char*ed a*ainst her account" Respondent dra&ee -an7 refused to *rant petitionerOs de%and"9n January 23, 1)$;, petitioner filed the co%plaint &ith the Re*ional Trial Court"This is not a suit 'y the party &hose si*nature &as for*ed on a chec7 dra&n a*ainst the dra&ee 'an7" Thepayees are not parties to the case" Rather, it is the dra&er, &hose si*nature is *enuine, &ho instituted thisaction to recover fro% the dra&ee 'an7 the %oney value of ei*htyt&o +$2 chec7s paid out 'y the dra&ee'an7 to holders of those chec7s &here the indorse%ents of the payees &ere for*ed" :o& and 'y &ho% thefor*eries &ere co%%itted are not esta'lished on the record, 'ut the respective payees ad%itted that theydid not receive those chec7s and therefore never indorsed the sa%e" The applica'le la& is the #e*otia'le


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" Ro%ero and-enito a% &ere accepted for deposit at the -uendia 'ranch of respondent dra&ee -an7 to the credit of

their respective savin*s accounts in the -uendia, 9n*pin and =lcaVo 'ranches of the sa%e 'an7" The totala%ount of 61,20$,0"$), represented 'y ei*htyt&o +$2 chec7s, &ere credited and paid out 'yrespondent dra&ee -an7 to Alfredo >" Ro%ero and -enito a%, and de'ited a*ainst petitionerOs chec7in*account #o" 130003$1, Caloocan 'ranch"As a rule, a dra&ee 'an7 &ho has paid a chec7 on &hich an indorse%ent has 'een for*ed cannot char*ethe dra&erOs account for the a%ount of said chec7" An e?ception to this rule is &here the dra&er is *uiltyof such ne*li*ence &hich causes the 'an7 to honor such a chec7 or chec7s"


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failure to %a7e such adeEuate inEuiry constituted ne*li*ence &hich resulted in the 'an7Os honorin* of thesu'seEuent chec7s &ith for*ed indorse%ents" 9n the other hand, since the record %entions nothin* a'outsuch a co%plaint, the possi'ility e?ists that the chec7s in Euestion covered ine?istent sales" -ut even insuch a case, considerin* the len*th of a period of t&o +2 years, it is hard to 'elieve that petitioner did not7no& or reali/e that she &as payin* %ore than she should for the supplies she &as actually *ettin*" Adepositor %ay not sit idly 'y, after 7no&led*e has co%e to her that her funds see% to 'e disappearin* or

that there %ay 'e a lea7 in her 'usiness, and refrain fro% ta7in* the steps that a careful and prudent'usiness%an &ould ta7e in such circu%stances and if ta7en, &ould result in stoppin* the continuance ofthe fraudulent sche%e"


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??? ??? ???


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DI%ESTFACTS0#atividad !e%pesa& issued chec7s, prepared 'y her 'oo77eeper, a total of $2 chec7s in favor of severalsupplies" Most of the chec7s for a%ounts in e?cess of actual o'li*ations as sho&n in their correspondin*invoices"


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%$R$ No$ L-35& Fe+ruar; )(, &5(3/ETROPOL 8!ACOLOD: FINANCIN% G IN@EST/ENT CORPORATION,plaintiffappellee,vs"SA/!O /OTORS CO/PANY and N% SA/!O SONS /OTORS CO$, LTD$, defendantsappellants"&i'al *uimpo 3 "ornelio P. &evena for plaintiff:appellee.

Diosdado -aringalao for defendants:appellants.DE CASTRO,J.:The for%er Court of Appeals, 'y its resolution dated 9cto'er 1, 1)(4 certified this case to this Court theissue issued therein 'ein* one purely of la&"9n April 1;, 1)) Dr" Javier Hillaruel e?ecuted a pro%issory note in favor of #* a%'o7 ons MotorsCo", td", in the a%ount of 61;,)3)"00 paya'le in t&elve +12 eEual %onthly install%ents, 'e*innin* May1$, 1)), &ith interest at the rate of one percent per %onth"


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dishonored 'y the %a7er on present%ent, it &ill pay the a%ount to the holder that it only &arrants thefollo&in* pursuant to ection ; of the #e*otia'le


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DI%EST

FACTSa%'o7 Motors Co%pany ne*otiated and indorsed the note in favor of plaintiff Metropol 5inancin* X


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%$R$ No$ &4)3 /aron* Chio& oo dre& a 'ill of e?chan*e or si*ht draft, for 633,;00>en on Jin* ee and Co", 2 aisandori ;Chone, o'e, in favor of the 6hilippine #ational -an7, &hich atfirst it refused to cash" The plaintiff &as then induced to, and did, endorse it, and the 'an7 cashed thedraft, no part of &hich plaintiff received, and it is clai%ed that all of the %oney &as paid to Tan iauanand Co" en, < pro%ise to pay to Jose Helasco, or oder,&ithin ten days after he shall have 'een o'li*ated to pay the a%ount of said draft, or any part thereof, thefull a%ount &ith all costs, e?penses and attorneyOs fees &hich he shall pay on account of his indorse%entof said draft, &ith interest on the a%ount paid 'y hi% at 10 per cent per annu% thereon fro% the ti%e ofpay%ent"9n the sa%e day, the plaintiff %ade the follo&in* &ritten state%entA& >on* Chio& oo havin* this day transferred to %e his clai% of credit a*ainst the fir% of Tan iuan

and Co" as collateral security in consideration of %y havin* indorsed his draft %ade 'y hi% on Messrs"Jin* ee and Co" for the su% of 33,;00 >en and presented to the 6hilippine #ational -an7 'y &hich it&as cashed, no& if the dra&er of said draft or the said A& >on* Chio& oo shall pay the said draft so that< a% relieved fro% all responsi'ility in connection there&ith and the e?penses incurred on accountthereof, then < &ill reassi*n the said clai% a*ainst Tan iuan and Co" to hi%, and if < a% o'li*ed to paysaid draft, any a%ount &hich < %ay receive on account of said clai% assi*ned to %e over and a'ove thea%ount paid 'y %e, includin* all e?penses and attorneyOs fees, shall 'e delivered to the said A& >on*Chio& oo"Au*ust 22, 1)1), the defendant A& >on* Chio& oo %ade the follo&in* &ritten state%ent5or value received and to %e in hand paid, < here'y assi*n, transfer and deliver to Jose Helasco the &holea%ount of %y credit a*ainst Tan iuan and Co", a%ountin* to ei*htyseven thousand pesos +6$(,000,evidenced 'y four +4 pro%issory notes, &hich are descri'ed as follo&s

1" 6ro%issory note dated Manila, 5e'ruary 1$, 1)1), for the su% of 612,000 for si? + %onths2" 6ro%issory note dated Manila, 5e'ruary 23, 1)1), for the su% of 61,000 for si? + %onths3" 6ro%issory note dated Manila, March 1(, 1)1), for the su% of 63$,000 for si? + %onths4" 6ro%issory note dated Manila, March 2(, 1)1), for the su% of 621,000 for si? + %onthsthe a'ove%entioned pro%issory notes 'ein* attached hereto and %ade a part hereof, and fully autnori/ethe said Jose Helasco to collect and receive the said a%ount fro% Tan iuan and Co", or fro% the le*alrepresentative of, or liEuidator of said Tan iuan and Co"Concurrent there&ith, the defendant unEualifiedly indorsed the four pro%issory notes to the plaintiff,&ho, on 5e'ruary 1), 1)20, co%%enced this action a*ainst the defendants"


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The co%plaints alle*es the e?ecution of the notes 'y the defendant Tan iuan and Co" to the defendantA& >on* Chio& oo" That the defendant A& >on* Chio& oo indorsed the notes to the plaintiff that attheir %aturity they &ere duly presented to Tan iuan and Co" and that pay%ent &as refused, of &hichrefusal the defendant A& >on* Chio& oo &as duly notified"5or ans&er, A& >on* Chio& oo %a7es a *eneral denial, and, as a further and separate defense, alle*esthe dra&in* of the si*ht draft, and that it &as an acco%%odation only, and that, confor%in* to the

a*ree%ent, it &as duly indorsed 'y the plaintiff, and A& >on* Chio& o delivered the %oney to thedefendant Tan iuan" The defendant then alle*es the %a7in* of the &ritten state%ent 'y Tan iuan ofAu*ust 1$, 1)1), a'ove Euoted" 9n that date, A& >on* Chio& oo &as a creditor of the defendant Taniuan and Co", evidenced 'y the pro%issory notes a'ove descri'ed, and that Tan iuan and Co" &asinsolvent" That 'y reason thereof, one of the pro%issory notes &as e?ecuted to *uarantee A& >on* Chio&oo a*ainst any lia'ility in case that Tan iuan or the plaintiff &ould not pay the si*ht draft, and 'ecausethe 'an7 had reEuested the plaintiff to pay the draft, this defendant and the plaintiff a*reed that thisdefendant should transfer to hi% all of its interest in the four pro%issory notes, under an a*ree%ent that,in case Jin* ee and Co" should pay the draft, the plaintiff &ould transfer the note to this defendant, 'ut inthe event that the plaintiff &as reEuired to pay the draft, the he &ould endeavor to collect the notes in full,and fro% the proceeds &ould first rei%'urse hi%self and then pay any re%ainder to the defendant"


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that, if he is reEuired to pay the draft, any a%ount &hich he %ay receive on account of the pro%issorynotes over and a'ove the a%ount &hich he is reEuired to pay, he &ill then pay any re%ainder to thedefendant A& >on* Chio& oo" The indorse%ent of A& >on* Chio& oo of the notes to the plaintiff &asunEualified, and the la& fi?es the lia'ility of an unEualified indorser, and oral testi%ony is not ad%isi'leto vary or contradict the ter%s of a &ritten instru%ent"ection 30 of Act #o" 2031, of the 6hilippine e*islature, 7no&n as PThe #e*otia'le on* Chio& oo, and it &as the 'ill of e?chan*e &hich &asindorsed 'y the plaintiff, and the testi%ony is conclusive taht plaintiffOs indorse%ent &as reEuired 'y the'an7 as one of the conditions upon &hich it &ould cash the draft" Three of the notes had %atured at theti%e they &ere indorsed and the &ritten instru%ents si*ned" Althou*h the draft &as dra&n 'y A& >on*Chio& oo, it &as dishonored, and the plaintiff &as reEuired 'y the 'an7 to e?ecute his note for itsa%ount" At the ti%e of the e?ecution of the notes, A& >on* Chio& oo &as a creditor of Tan iuan andCo" for the a%ount of the notes"


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The action here is not 'ased upon the draft" on* Chio& oo 7ne& it, and that none of the notes

&ould 'e paid if presented, and the evidence sho&s that, 'efore they &ere indorsed, the first t&o had 'eenduly presented and dishonored" on*Chio& oo to palintiff, as collateral, to protect and hold hi% har%less in his indorse%ent of the draft, anto specify that A& >on* Chio& oo should have any proceeds fro% the notes after the draft had 'een fullypaid therefro% and the plaintiff released fro% his lia'ility as an indorser" The state%ents do not %a7e anyreference to the le*al lia'ility of A& >on* Chio& oo as an indorser of the notes, do not and &ere never

contended to fully dischar*e and release that fir% fro% its lia'ility as an indorser"ith all due respect to the a'le and in*enious 'rief for the appellant, there is no %erit in the defense, andthe ud*%ent of the lo&er court is affir%ed, &ith costs in favor of the plaintiff" o ordered

CHAPTER '%$R$ No$ 4)4 Ju7; &3, &5(5


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9n the third party co%plaint, third party defendant #e& i7atuna ood


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ec" ;41" The %a7er or any le*al holder of a chec7 shall 'e entitled to indicate thereinthat it 'e paid to a certain 'an7er or institution, &hich he shall do 'y &ritin* across theface the na%e of said 'an7er or institution, or only the &ords Pand co%pany"PThe pay%ent %ade to a person other than the 'an7er or institution shall not e?e%pt theperson on &ho% it is dra&n, if the pay%ent &as not correctly %ade"

@nder usual practice, crossin* a chec7 is done 'y placin* t&o parallel lines dia*onally on the left top

portion of the chec7" The crossin* %ay 'e special &herein 'et&een the t&o parallel lines is &ritten thena%e of a 'an7 or a 'usiness institution, in &hich case the dra&ee should pay only &ith the interventionof that 'an7 or co%pany, or crossin* %ay 'e *eneral &herein 'et&een t&o parallel dia*onal lines are&ritten the &ords Pand Co"P or none at all as in the case at 'ar, in &hich case the dra&ee should notencash the sa%e 'ut %erely accept the sa%e for deposit"The effect therefore of crossin* a chec7 relates to the %ode of its present%ent for pay%ent" @nder ection(2 of the #e*otia'le


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DI%EST

FACTS#e& i7atuna ood


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%$R$ No$ L-&44 Nove*+er )), &5)&R$ N$ CLAR,plaintiffappellant,vs"%EOR%E C$ SELLNER,defendantappellee"0olfson, 0olfson 3 )chwar'kopf for appellant.0illiams 3 9errier for appellee.

RO/"ALDE,J.:The defendant, in conunction &ith t&o other persons, si*ned the follo&in* note in favor of the plaintiff

612,000"00 MA#=C"i? %onths after date, for value received, &e ointly and severally pro%ise to pay to the order ofR" #" Clar7 at his office in the city of Manila, the su% of t&elve thousand pesos, 6hilippinecurrency, &ith interest thereon in li7e currency fro% date until paid at the rate of ten per cent perannu%, paya'le Euarterly"


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The trial ud*e too7 into account the fact that at the ti%e of the %aturity of the note, the collateral security*iven to *uarantee the pay%ent &as &orth %ore than &hat &as due on the note, 'ut it depreciated to suchan e?tent that, at the ti%e of the institution of this action, it &as entirely valueless" And ta7in* thiscircu%stance, to*ether &ith the fact that this case &as not co%%enced until after the lapse of four yearsfro% the date on &hich the pay%ent fell due, and &ith the further fact that the defendant had not receivedany part of the a%ount %entioned in the note, he &as of the opinion, and so decided, that the defendant

could not 'e held lia'le" The theory of the ud*e a Euo &as that the plaintiffOs failure to enforce the*uaranty for the pay%ent of the de't, and his delay in institutin* this action constitute laches, &hich hadthe effect of e?tin*uishin* his ri*ht of action"e see no sufficient *round for applyin* such a theory to the case 'efore us" As stated, the defendantOsposition 'ein*, as it is, that of a oint surety, he %ay, at any ti%e after the %aturity of the note, %a7epay%ent, thus su'ro*atin* hi%self in the place of the creditor &ith the ri*ht to enforce the *uarantya*ainst the other si*ners of the note for the rei%'urse%ent of &hat he is entitled to recover fro% the%"The %ere delay of the creditor in enforcin* the *uaranty has not 'y any %eans i%paired his action a*ainstthe defendant"


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DI%EST

FACTS0ellner &ith t&o other persons, si*ned a pro%issory note solidarily 'indin* the%selves to pay to theorder of R"# Clar7" The note %atured 'ut the a%ount &asnOt paid" The defendant alle*es thathe didnOt receive any a%ount of the de't that the instru%ent &asnOt presented to hi% for

pay%ent and 'ein* an acco%%odation party, he is not lia'le unless the note is ne*otiated, &hich&asnOt done"

ISS"EShether or not ellner is an acco%%odation party lia'le for the note

HELD0The lia'ility of ellner as one of the si*ners of the note, is not dependent on &hether he has or has not,received any part of the de't" The defendant is really and e?pressly one of the oint and severalde'tors of the note and as such he is lia'le under the provisions of ection 0 of the #e*otia'le


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%$R$ No$ L-3'5 O


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respondents the pay%ent of their aforesaid loan o'li*ation, 'ut the latter failed and refused to paynot&ithstandin* repeated de%ands therefor +Rollo, pp" 3;3("

6rivate respondent !a& uy An filed an ans&er &ith co%pulsory counterclai% dated July $, 1)$denyin* the %aterial alle*ations contained in the co%plaint and 'y &ay of special and affir%ativedefenses alle*ed that the petitioner has no cause of action a*ainst hi% 'ecause as it appears on the

endorse%ent at the 'ac7 of C-C Chec7 #o" H#)1;;4, he si*ned said endorse%ent for his principal, theHictory :ard&are and not for his o&n individual account, hence, could not 'e %ade personally lia'letherefor and *rantin* that he acted in his o&n capacity as the endorser, he has 'een &holly dischar*ed 'ydelay in present%ent of the chec7 for pay%ent" +Rollo, pp" 3)40"

6rivate respondent Dy :ian Tat li7e&ise filed his ans&er &ith co%pulsory counterclai%, dated 5e'ruary2(, 1)(0, denyin* the %aterial alle*ations contained in the co%plaint and 'y &ay of special andaffir%ative defenses alle*ed that he never had any transaction or ne*otiation of any chec7 &ith thepetitioner at anyti%e, so it could not 'e true that he and the other defendants approached the petitioner onepte%'er 13, 1)0, for an acco%%odation loan of 64,;00"00 for &hich they delivered to the petitionerC-C Chec7 #o" H#)1;;4 dated epte%'er 13, 1)0 'ecause as far as he could re%e%'er, said chec7&as delivered 'y hi% to in Chin Juat !rocery and not to the petitioner that the %anner the said chec7

&as ne*otiated is clearly evident 'y the endorse%ent at its 'ac7 &hich clearly 'elies the clai% of thepetitioner that he +Dy :ian Tat &as one of those &ho approached the petitioner at its office on epte%'er13, 1)0 to deliver the chec7 in e?chan*e for an acco%%odation loan of 64,;00"00 that accordin* to thei%%ediate endorser, !a& uy An, &ho endorsed the chec7 for his principal, Hictory :ard&are, this chec7&as delivered to the Asian urety X


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cannot recover the a%ount of 64,;00"00 &hich &as in fact not delivered to the private respondents nor thea%ount of the chec7 for lac7 of consideration"


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DI%EST

Do


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2" hether or not present%ent for pay%ent and notice of dishonor of the Euestioned chec7 &ere %ade&ithin reasona'le ti%e

HELD

1" #o" here the instru%ent is not paya'le on de%and, present%ent %ust 'e %ade on the day it falls due"here it is paya'le on de%and, present%ent %ust 'e %ade &ithin a reasona'le ti%e after issue, e?ceptthat in the case of a 'ill of e?chan*e, present%ent for pay%ent &ill 'e sufficient if %ade &ithin areasona'le ti%e after the last ne*otiation thereof +ection (1, #e*otia'le


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'een paid 'y appellants to secure said Mana*er8s Chec7, over &hich appellants have nocontrol

2" to pay the appellants the su% of 6;0,000"00 as %oral da%a*es 62;,000"00 as e?e%plaryda%a*es, and 62;,000"00 as attorney8s fees, and

3" to pay the cost of suit"


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-ein* an affir%ative alle*ation, petitioner has the 'urden of evidence to prove his clai% that the oralco%pro%ise entered into 'y the parties on Au*ust 2$, 1)); included the stipulation that the parties &ouldointly file a %otion to dis%iss" This petitioner failed to do" #ota'ly, even the Metropolitan Trial Court,&hile rulin* in favor of the petitioner and there'y dis%issin* the co%plaint, did not %a7e a factualfindin* that the co%pro%ise a*ree%ent included the condition of the si*nin* of a oint %otion to dis%iss"

The Court of Appeals %ade the factual findin*s in this &ise

adao, et al" 21 CRA 1, ( 1))2B, failed to %a7e a cate*orical findin* on theissue"


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co%prehension" The appellees &ould li7e this Court to 'elieve that Dr" !ueco &as infor%ed 'y Mr"Rivera of the 'an7 reEuire%ent of si*nin* the oint %otion on Au*ust 2$, 1)); 'ut he did not 'other tosho& a copy thereof to his fa%ily or le*al counsel that day Au*ust 2$, 1));" This part of the theory ofappellee is too co%plicated for any si%ple oral a*ree%ent" The idea of a Joint Motion to Dis%iss 'ein*si*ned as a condition to the pushin* throu*h a deal surfaced only on Au*ust 2), 1));"

[This Court is not convinced 'y the appellees8 posturin*" uch clai% rests on too slender a fra%e, 'ein*inconsistent &ith hu%an e?perience" Considerin* the effect of the si*nin* of the Joint Motion to Dis%isson the appellants8 su'stantive ri*ht, it is %ore in accord &ith hu%an e?perience to e?pect Dr" !ueco, upon'ein* sho&n the Joint Motion to Dis%iss, to refuse to pay the Mana*er8s Chec7 and for the 'an7 to refuseto accept the %ana*erOs chec7" The only lo*ical e?planation for this inaction is that Dr" !ueco &as notsho&n the Joint Motion to Dis%iss in the %eetin* of Au*ust 2$, 1));, 'olsterin* his clai% that its si*nin*&as never put into consideration in reachin* a co%pro%ise"8 ???")B

e see no reason to reverse"

Anent the issue of a&ard of da%a*es, &e find the clai% of petitioner %eritorious"


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e, li7e&ise, find for the petitioner &ith respect to the third assi*ned error"


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&hich case the holder need not prove present%ent for pay%ent or present the 'ill to the dra&ee foracceptance"31B

=ven assu%in* that present%ent is needed, failure to present for pay%ent &ithin a reasona'le ti%e&ill result to the dischar*e of the dra&er only to the e?tent of the loss caused 'y the delay" 32B5ailure topresent on ti%e, thus, does not totally &ipe out all lia'ility"


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DI%EST

FACTS

Respondent !ueco spouses o'tained a loan fro% petitioner


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The JMD cannot in any &ay have preudiced Dr" !ueco" The %otion to dis%iss &as in fact also for the

'enefit of Dr" !ueco, as the case filed 'y petitioner a*ainst it 'efore the lo&er court &ould 'e dis%issed

&ith preudice" The &hole point of the parties enterin* into the co%pro%ise a*ree%ent &as in order that

Dr" !ueco &ould pay his outstandin* account and in return petitioner &ould return the car and drop the

case for %oney and replevin 'efore the Metropolitan Trial Court" The oint %otion to dis%iss &as 'ut a

natural conseEuence of the co%pro%ise a*ree%ent and si%ply stated that Dr" !ueco had fully settled his

o'li*ation, hence, the dis%issal of the case" 6etitioner8s act of reEuirin* Dr" !ueco to si*n the oint

%otion to dis%iss cannot 'e said to 'e a deli'erate atte%pt on the part of petitioner to rene*e on the

co%pro%ise a*ree%ent of the parties"

The la& presu%es *ood faith" Dr" !ueco failed to present an iota of evidence to overco%e this

presu%ption"


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CHAPTER

%$R$ No$ 4(( De


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o%eti%e in 1)(, the defendantappellant ceased 'usiness operation +sic" 9n Dece%'er2), 1)), defendantappellantOs factory &as leased 'y >upan*co Cotton Mills for anannual rental of 6200,000"00 +=?hi'it


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there is no e?press contract 'et&een the parties and there is a clear sho&in* that the pay%ent is ustified"


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H


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of credit plus credit or co%%it%ent fees %utually a*reed upon" &)


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6ara*raph $ of the Trust Receipt &hich reads PMyour lia'ility for pay%ent at %aturity of anyaccepted draft, 'ill of e?chan*e or inde'tedness shall not 'e e?tin*uished or %odifiedP &4doesnot, contrary to the holdin* of the pu'lic respondent, conte%plate prior acceptance 'y 6hilippineRayon, 'ut 'y the petitioner" Acceptance, ho&ever, &as not even necessary in the first place'ecause the drafts &hich &ere eventually issued &ere si*ht drafts And even if these &ere notsi*ht drafts, there'y necessitatin* acceptance, it &ould 'e the petitioner S and not 6hilippine

Rayon S &hich had to accept the sa%e for the latter &as not the dra&ee" 6resent%ent foracceptance is defined an the production of a 'ill of e?chan*e to a dra&ee for acceptance" &(Thetrial court and the pu'lic respondent, therefore, erred in rulin* that present%ent for acceptance&as an indispensa'le reEuisite for 6hilippine RayonOs lia'ility on the drafts to attach" Contrary to'oth courtsO pronounce%ents, 6hilippine Rayon i%%ediately 'eca%e lia'le thereon uponpetitionerOs pay%ent thereof" uch is the essence of the letter of credit issued 'y the petitioner" Adifferent conclusion &ould violate the principle upon &hich co%%ercial letters of credit arefounded 'ecause in such a case, 'oth the 'eneficiary and the issuer, #issho Co%pany td" and thepetitioner, respectively, &ould 'e placed at the %ercy of 6hilippine Rayon even if the latter hadalready received the i%ported %achinery and the petitioner had fully paid for it" The typicalsettin* and purpose of a letter of credit are descri'ed in(ibernia Bank and $rust "o"vs""!ron3 "o", nc", &5thus

Co%%ercial letters of credit have co%e into *eneral use in international sales transactions&here %uch ti%e necessarily elapses 'et&een the sale and the receipt 'y a purchaser ofthe %erchandise, durin* &hich interval *reat price chan*es %ay occur" -uyers and sellersstru**le for the advanta*e of position" The seller is desirous of 'ein* paid as surely andas soon as possi'le, reali/in* that the vendee at a distant point has it in his po&er to reecton trivial *rounds %erchandise on arrival, and cause considera'le hardship to the shipper"etters of credit %eet this condition 'y affordin* celerity and certainty of pay%ent" Theirpurpose is to insure to a seller pay%ent of a definite a%ount upon presentation ofdocu%ents" The 'an7 deals only &ith docu%ents"


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has a*ain and a*ain 'een reco*ni/ed and protected 'y the courts" 9f course, the title is at'otto% a security title, as it has so%eti%es 'een called, and the 'an7er is al&ays underthe o'li*ation to reconvey 'ut only after his advances have 'een fully repaid and afterthe i%porter has fulfilled the other ter%s of the contract"

As further stated inational Bank vs"1iuda e (iAos de !ngel ose, ))trust receipts

" " " upan*coCotton Mills,P and that Pas trustees of the property covered 'y the trust receipt, " " " and therefore actin* infiduciary +sic capacity, defendants have &illfully violated their duty to account for the &herea'outs ofthe %achinery covered 'y the trust receipt or for the proceeds of any lease, sale or other disposition of thesa%e that they %ay have %ade, not&ithstandin* de%ands therefor defendants have fraudulently%isapplied or converted to their o&n use any %oney reali/ed fro% the lease, sale, and other disposition ofsaid %achinery"P )3hile there is no specific prayer for the delivery to the petitioner 'y 6hilippine Rayonof the proceeds of the sale of the %achinery covered 'y the trust receipt, such relief is covered 'y the*eneral prayer for Psuch further and other relief as %ay 'e ust and eEuita'le on the pre%ises"P)Andalthou*h it is true that the petitioner co%%enced a cri%inal action for the violation of the Trust Receiptsa&, no le*al o'stacle prevented it fro% enforcin* the civil lia'ility arisin* out of the trust, receipt in aseparate civil action" @nder ection 13 of the Trust Receipts a&, the failure of an entrustee to turn overthe proceeds of the sale of *oods, docu%ents or instru%ents covered 'y a trust receipt to the e?tent of thea%ount o&in* to the entruster or as appear in the trust receipt or to return said *oods, docu%ents orinstru%ents if they &ere not sold or disposed of in accordance &ith the ter%s of the trust receipt shallconstitute the cri%e of estafa, punisha'le under the provisions of Article 31;, para*raph 1+' of theRevised 6enal Code" )'@nder Article 33 of the Civil Code, a civil action for da%a*es, en

nil cases (chapters 3-4).doc

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