II. General Discussion on NI
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Caltex Philippines vs. Court of Appeals 212 SCRA 448 G.R. No. 97753 || Negotiability FACTS: 280 Certificates of Time Deposit (CTDs) were issued by the Security Bank and Trust Company in favor of Angel Dela Cruz, who deposited a collective amount of Php 1,120,000. Such CTDs were then delivered by Dela Cruz to Caltex Phils. for the purchase of fuel products. Dela Cruz lost all the CTDs in March 1982 and informed the manager of Security Bank. The manager arranged for the replacement of the lost CTDs upon compliance of Dela Cruz to their bank procedure which entails execution of a notarized Affidavit of Loss. Upon replacement of the allegedly lost CTDs, Dela Cruz obtained a loan of P875,000 from same bank. He then executed a notarized Deed of Assignment of Time Deposit, surrendering to the bank full control of the time deposit account, allowing the latter to apply the said time deposits to the payment of whatever amounts may be due on the loan upon maturity. On the other hand, in November 1982, Mr. Aranas, the credit manager of Caltex, presented to Security Bank for verification the CTDs declared lost by Dela Cruz. Aranas claimed that the same were delivered to Caltex as security for purchases made. Accordingly, Security Bank rejected Caltexs demand for the payment of the value of the CTDs. In April 1983, the loan of Dela Cruz with the Security Bank matured and the latter applied the time deposits in question as payment of the matured loan. Caltex then filed a complaint demanding payment of the value of the CTDs plus accrued interest and compounded interest. The Regional Trial Court dismissed the case. The Court of Appeals also dismissed the case. ISSUE(S): 1. Whether or not the subject Certificates of Time Deposit are negotiable instruments
2. Whether or not Caltex can recover the value of the CTDs HELD: 1. YES. A sample text of the CTD states: This is to Certify that B E A R E R has deposited in this Bank the sum of PESOS: FOUR THOUSAND ONLY, SECURITY BANK SUCAT OFFICE P4,000 & 00 CTS Pesos, Philippine Currency, repayable to said depositor 731 days. After date, upon presentation and surrender of this certificate, with interest at the rate of 16% per cent per annum. Section 1 of the NIL requires among others, that for an instrument to be negotiable, it must be payable to the order or to bearer (par. D). The accepted rule is that the negotiability or non-negotiability of an instrument is determined from the writing, that is, from the face of the instrument itself. The documents provide that the amounts deposited shall be repayable to the depositor. The court ruled that the depositor indicated is actually the bearer. The documents do not say that the depositor is Angel Dela Cruz and that the amounts deposited are payable only to him. If it was really the intention of the bank to pay the amount to Dela Cruz only, then it could have so expressed in clear and categorical terms instead of having the word bearer stamped on the space provided for the name of the depositor in each CTD. The Security Bank, through its manager, testified that the depositor referred to is Angel Dela Cruz. However, the court ruled that the manager merely declared that Dela Cruz is the depositor, insofar as the bank is concerned, but obviously other parties not privy to the transaction between them would not know that the depositor is not the bearer stated in the CTDs. Hence, the situation would require any party dealing with the CTDs to go behind the plain import of what is written thereon. This need for resort to extrinsic evidence is what is sought to be avoided by the NIL and calls for application of the elementary rule that the interpretation of obscure words or
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stipulations in a contract shall not favor the party who caused the obscurity. 2. NO. Unfortunately for Caltex, although the CTDs are bearer instruments, a valid negotiation thereof for the purpose and agreement between it and Dela Cruz, requires both delivery and indorsement. As stated by Mr. Aranas in a letter addressed to
the bank, these certificates of deposit were
negotiated to us by Mr. Dela Cruz to guarantee
his purchases of fuel products. This admission
is conclusive upon Caltex. Under the doctrine of
Estoppel, an admission is rendered conclusive
upon the person making it and cannot be
denied against the person relying thereon. If it
were true that the CTDs were delivered as
payment and not as security, Aranas could have
easily said so, instead of using the words to
guarantee. Under the NIL, an instrument is
negotiated when it is transferred from one
person to another in such a manner as to
constitute the transferee the holder thereof,
and a holder may be the payee or indorsee of a
bill or note, who is in possession of it, or the
bearer thereof. In the present case, however,
there was no negotiation in the sense of a
transfer of a legal title, in which case delivery
would have sufficed. Here, the delivery of the
CTDs was only as security for the purchases of
Dela Cruz. Therefore, Caltex could only have
been a holder for value by reason of lien.
Accordingly, a negotiation for such purpose
cannot be effected by mere delivery of the
instrument because the terms thereof and the
subsequent disposition of such security, in the
event of non-payment of the principal
obligation, must be contractually provided for.
Philippine Bank of Commerce vs. Aruego GR L-25836-37 || Liability of persons signing as agent. (Section 20)
FACTS;
On December 1, 1959, the Philippine Bank of Commerce instituted against Jose M. Aruego Civil Case No. 42066 for the recovery of the total sum of about P35,000.00 with daily interest thereon from November 17, 1959 until fully paid and commission equivalent to 3/8% for every thirty (30) days or fraction thereof plus attorney's fees equivalent to 10% of the total amount due and costs. The complaint filed by the Philippine Bank of Commerce contains twenty-two (22) causes of action referring to twenty-two (22) transactions entered into by the said Bank and Aruego on different dates covering the period from August 28, 1950 to March 14, 1951. The sum sought to be recovered represents the cost of the printing of "World Current Events," a periodical published by the defendant. To facilitate the payment of the printing the defendant obtained a credit accommodation from the plaintiff. Thus, for every printing of the "World Current Events," the printer, Encal Press and Photo Engraving, collected the cost of printing by drawing a draft against the plaintiff, said draft being sent later to the defendant for acceptance. As an added security for the payment of the amounts advanced to Encal Press and Photo-Engraving, the plaintiff bank also required defendant Aruego to execute a trust receipt in favor of said bank wherein said defendant undertook to hold in trust for plaintiff the periodicals and to sell the same with the promise to turn over to the plaintiff the proceeds of the sale of said publication to answer for the payment of all obligations arising from the draft. Defendant filed an answer interposing for his defense that he signed the drafts in a representative capacity; that he signed only as accommodation party and that the drafts signed by him were not really bills of exchange but mere pieces of
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evidence of indebtedness because payments were made before acceptance. ISSUE: 1. WHether the drafts Aruego signed were bills of exchange? 2. Whether Aruego can be held liable by the petitioner although he signed the supposed bills of exchange only as an agent of Philippine Education Foundation Company.
RULING: 1. YES. Under the Negotiable
Instruments Law, a bill of exchange is an
unconditional order in writting addressed by
one person to another, signed by the person
giving it, requiring the person to whom it is
addressed to pay on demand or at a fixed or
determinable future time a sum certain in
money to order or to bearer. As long as a
commercial paper conforms with the definition
of a bill of exchange, that paper is considered a
bill of exchange. The nature of acceptance is
important only in the determination of the kind
of liabilities of the parties involved, but not in
the determination of whether a commercial
paper is a bill of exchange or not. 2. Yes. Section
20 of the Negotiable Instruments Law provides
that "Where the instrument contains or a
person adds to his signature words indicating
that he signs for or on behalf of a principal or in
a representative capacity, he is not liable on the
instrument if he was duly authorized; but the
mere addition of words describing him as an
agent or as filing a representative character,
without disclosing his principal, does not
exempt him from personal liability."An
inspection of the drafts accepted by the
defendant shows that nowhere has he disclosed
that he was signing as a representative of the
Philippine Education Foundation Company. He
merely signed as follows: JOSE ARUEGO
(Acceptor) (SGD) JOSE ARGUEGO For failure to
disclose his principal, Aruego is personally liable
for the drafts he accepted.
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Banco de Oro Savings and Mortgage Bank vs
Equitable Banking Corporation
No. L-7491
20 Jan 1988
Facts:
Equitable Banking Corp. drew 6 crossed
Managers Check payable to certain member of
its establishment. Subsequently, the Checks
were deposited with Banco de Oro to the credit
of its depositor, a certain Aida Trencio.
Following the normal procedures, and after
stamping at the back of the of the Checks the
usual endorsements: All prior and/or lack of
endorsement guaranteed, Banco de Oro sent
the checks for clearing through PCHC.
Accordingly, Equitable Banking Corp. paid the
Checks. Its clearing account was debited for the
value of the Checks and Banco de Oros clearing
account was credited for the same amount.
Thereafter, Equitable Banking Corp. discovered
that the endorsements at the back of the
Checks were forged or otherwise belong to the
persons other than the payees. Pursuant to the
PCHC Clearing Rules and Regulations, Equitable
Bank presented the checks directly to the Banco
de Oro to claim reimbursement. However, the
latter refused.
Issue:
1.) Were the subject Checks non-negotiable?
2.) Is the Negotiable Instruments Law applicable
in deciding controversies of this nature by the
PCHC?
3.) Was Banco de Oro negligent and thus
responsible for any undue payment?
Ratio decidendi:
1.) Banco de Oro by its own acts, stamped its
guarantee is now estopped from claiming that
the checks under consideration are not
negotiable instruments.
The Checks were accepted for deposit by Banco
de Oro stamping thereon its guarantee, in order
that it can clear said Checks with Equitable
Banking Corp
By such deliberate and positive attitude of
Banco de Oro, it has for all legal intents and
purposes treated the said Checks as negotiable
instruments and accordingly assumed the
warranty of the endorser when it stamped its
guarantee of prior endorsement at the back
2.) The participation of the two banks in the
clearing operation of PCHC is a manifestation of
their submission to its jurisdiction.
3.) Although the subject Checks are non-
negotiable, the responsibility of petitioner as
endorser thereof remains. While the drawer
generally owes no duty of diligence to the
collecting banks, the law imposes a duty of
diligence in the collecting bank to scrutinize
Checks deposited with it for the purpose of
determining their genuineness and regularity.
The collecting bank being primarily engaged in
banking holds itself out to the public as the
expert and the law holds it to a high standard of
conduct.
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Case: Garcia vs. Llamas
Citation: 417 SCRA 292; G.R. No. 154127 Dec.
8, 2003
FACTS:
Petitioner Romeo Garcia and Eduardo de Jesus
borrowed P 400,000 from respondent Dionisio
Llamas on Dec. 23, 1996. Garcia and de
Jesus executed a promissory note for that
purpose binding themselves
jointly and severally the loan on or before Jan.
23, 1997 with 5% interest per month. When the
debt was due, they failed to pay. Despite
repeated demands, they still failed to pay
prompting Llamas
to institute a collection suit against the two.
Petitioner Garcia in his answer averred that he
assumed no responsibility under the promissory
not, for he merely signed it as an
accommodation party for de Jesus.
Furthermore, that since de Jesus already made
a payment through the delivery of a check
which was also accepted by Llamas, the
obligation was already novated
and superseded. However, the check delivered
bounced upon presentment.
De Jesus, on the other hand, averred that
Llamas had been in bad faith in instituting the
case against him for there had been a previous
agreement between he and Llamas that the
latter would take as payment de Jesus'
retirement benefits which was still on
process while the suit was instituted. De Jesus
further averred that he had already paid a total
of P 120,000 by way of interests, the
breakdown as follows: (1) P40,000 collected as
advance interest from the principal of P400,000
because he only in fact received P 360,000
from that loan; (2) P 40,000 collected from him
by Llamas daughter which was derived from the
peso equivalent of his accumulated leave
credits from his employment in the Central
Police District Bicutan; (3) P 40,000 collected
from him as payment of the interests for the
months of March and April 1997.
RTC rendered a judgment based on the
pleadings, ordering Garcia and de Jesus to pay
jointly and severally the amount of P 400,000
plus 5% interest per month from Jan 23, 1997
less the P120,000 paid by de Jesus, P 100,000 as
atty's fees + P2,000 appearance fee per day
in court, and the cost of suit.
CA said that the RTC erred in rendering a
decision based on the pleadings because de
Jesus answer raised some genuinely
contentious issues, therefore, Llamas could not
be ipso facto entitled to the RTC
judgment. The case of de Jesus must be
remanded to the RTC for receipt of evidence.
On the part of Garcia, CA held that
Garcia's answer failed to raise a single genuine
issue, that there could be no
novation, express or implied, and that Llamas
acceptance of the for the reason that the
obligation incurred was joint and solidary in the
first place and that the check issued bounced
upon presentment.
Hence, an appeal to review was filed by
petitioner Garcia with the Supreme Court.
ISSUE:
Whether or not the original obligation as
evidenced by a promissory note was
subsequently novated when Llamas accepted
the payment of de Jesus through a check which
also subsequently bounced upon presentment?
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HELD:
The check could not have extinguished the
obligation because it bounced upon
presentment. By law, the delivery of a
check produces the effect of payment only
when it is cashed. No novation took place
because:
1. The parties did not unequivocally declare that
the old obligation had been extinguished by the
issuance and the acceptance of the check, or
that the check would take the place of the note.
2. There is no incompatibility between the
promissory note and the check. The check had
been issued precisely to answer the obligation.
The note evidences the loan obligation, while
the check answers it. Verily, the 2 can stand
together.
There is also no novation by substitution of
debtors. In order to change the person of the
debtor, the old debtor must be expressly
released from the obligation and the new
debtor to assume the former's place. In the
present case, petitioner Garcia has not shown
that he was expressly released from the
obligation, that a third person was substituted
in his place and that the joint and solidary
obligation was cancelled by the solitary
undertaking of de Jesus
Pacifica Jimenez vs Bucoy
103 Phil. 40 Mercantile Law Negotiable
Instruments Law Negotiable Instruments in
General Unconditional Promise To Pay
During the Japanese occupation, Pacita Young
issued three promissory notes to Pacifica
Jimenez. The total sum of the notes was P21k.
All three promissory notes were couched in this
manner:
Received from Miss Pacifica Jimenez the total
amount of ___________ payable six months
after the war, without interest.
When the promissory notes became due,
Jimenez presented the notes for payment.
Pacita and her husband died and so the notes
were presented to the administrator of the
estate of the spouses (Dr. Jose Bucoy). Bucoy
manifested his willingness to pay but he said
that since the loan was contracted during the
Japanee occupation the amount should be
deducted and the Ballantyne Schedule should
be used, that is peso-for-yen (which would
lower the amount due from P21k). Bucoy also
pointed out that nowhere in the not can be
seen an express promise to pay because of
the absence of the words I promise to pay
ISSUE: Whether or not Bucoy is correct.
HELD: No. The Ballantyne schedule may not be
used here because the debt is not payable
during the Japanese occupation. It is expressly
stated in the notes that the amounts stated
therein are payable six months after the war.
Therefore, no reduction could be effected, and
peso-for-peso payment shall be ordered in
Philippine currency.
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The notes also amounted in effect to a promise
to pay the amounts indicated therein. An
acknowledgment may become a promise by the
addition of words by which a promise of
payment is naturally implied, such as,
payable, payable on a given day, payable
on demand, paid . . . when called for, . . . To
constitute a good promissory note, no precise
words of contract are necessary, provided they
amount, in legal effect, to a promise to pay. In
other words, if over and above the mere
acknowledgment of the debt there may be
collected from the words used a promise to pay
it, the instrument may be regarded as a
promissory note.
[G.R. No. 157943. September 4, 2013.]
PEOPLE OF THE
PHILIPPINES, plaintiff-
appellee, vs. GILBERT
REYES WAGAS, accused-
appellant.
DECISION
BERSAMIN, J p:
The Bill of Rights guarantees the right of an
accused to be presumed innocent until the
contrary is proved. In order to overcome the
presumption of innocence, the Prosecution is
required to adduce against him nothing less
than proof beyond reasonable doubt. Such
proof is not only in relation to the elements of
the offense, but also in relation to the identity
of the offender. If the Prosecution fails to
discharge its heavy burden, then it is not only
the right of the accused to be freed, it becomes
the Court's constitutional duty to acquit him.
The Case
Gilbert R. Wagas appeals his conviction
for estafa under the decision rendered on July
11, 2002 by the Regional Trial Court, Branch 58,
in Cebu City (RTC), meting on him the
indeterminate penalty of 12 years of prision
-
mayor, as minimum, to 30 years of reclusion
perpetua, as maximum.
Antecedents
Wagas was charged with estafa under the
information that reads:
That on or about the 30th day
of April, 1997, and for
sometime prior and
subsequent thereto, in the
City of Cebu, Philippines, and
within the jurisdiction of this
Honorable Court, the said
accused, with deliberate
intent, with intent to gain and
by means of false pretenses
or fraudulent acts executed
prior to or simultaneously
with the commission of the
fraud, to wit: knowing that he
did not have sufficient funds
deposited with the Bank of
Philippine Islands, and
without informing Alberto
Ligaray of that circumstance,
with intent to defraud the
latter, did then and there
issue Bank of the Philippine
Islands Check No. 0011003,
dated May 08, 1997 in the
amount of P200,000.00,
which check was issued in
payment of an obligation, but
which check when presented
for encashment with the
bank, was dishonored for the
reason "drawn against
insufficient funds" and inspite
of notice and several
demands made upon said
accused to make good said
check or replace the same
with cash, he had failed and
refused and up to the present
time still fails and refuses to
do so, to the damage and
prejudice of Alberto Ligaray in
the amount aforestated.
CONTRARY TO LAW.1
After Wagas entered a plea of not guilty, 2 the
pre-trial was held, during which the Defense
admitted that the check alleged in the
information had been dishonored due to
insufficient funds. 3 On its part, the Prosecution
made no admission. 4
At the trial, the Prosecution presented
complainant Alberto Ligaray as its lone witness.
Ligaray testified that on April 30,
1997, Wagas placed an order for 200 bags of
rice over the telephone; that he and his wife
would not agree at first to the proposed
payment of the order by postdated check, but
because of Wagas' assurance that he would not
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disappoint them and that he had the means to
pay them because he had a lending business
and money in the bank, they relented and
accepted the order; that he released the goods
to Wagas on April 30, 1997 and at the same
time received Bank of the Philippine Islands
(BPI) Check No. 0011003 for P200,000.00
payable to cash and postdated May 8, 1997;
that he later deposited the check with Solid
Bank, his depository bank, but the check was
dishonored due to insufficiency of funds; 5 that
he called Wagas about the matter, and the
latter told him that he would pay upon his
return to Cebu; and that despite repeated
demands, Wagas did not pay him. 6 cTEICD
On cross-examination, Ligaray admitted that he
did not personally meet Wagas because they
transacted through telephone only; that he
released the 200 bags of rice directly to Robert
Caada, the brother-in-law of Wagas, who
signed the delivery receipt upon receiving the
rice. 7
After Ligaray testified, the Prosecution formally
offered the following: (a) BPI Check No.
0011003 in the amount of P200,000.00 payable
to "cash;" (b) the return slip dated May 13,
1997 issued by Solid Bank; (c) Ligaray's affidavit;
and (d) the delivery receipt signed by Caada.
After the RTC admitted the exhibits, the
Prosecution then rested its case. 8
In his defense, Wagas himself testified. He
admitted having issued BPI Check No. 0011003
to Caada, his brother-in-law, not to Ligaray. He
denied having any telephone conversation or
any dealings with Ligaray. He explained that the
check was intended as payment for a portion of
Caada's property that he wanted to buy, but
when the sale did not push through, he did not
anymore fund the check. 9
On cross-examination, the Prosecution
confronted Wagas with a letter dated July 3,
1997 apparently signed by him and addressed
to Ligaray's counsel, wherein he admitted owing
Ligaray P200,000.00 for goods received, to wit:
This is to acknowledge receipt
of your letter dated June 23,
1997 which is self-
explanatory. It is worthy also
to discuss with you the
environmental facts of the
case for your consideration,
to wit:
1.It is true that I
obtained goods from
your client worth
P200,000.00 and I
promised to settle
the same last May 10,
1997, but to no avail.
On this point, let me
inform you that I sold
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my real property to a
buyer in Manila, and
promised to pay the
consideration on the
same date as I
promised with your
client. Unfortunately,
said buyer likewise
failed to make good
with such obligation.
Hence, I failed to
fulfill my promise
resultant
thereof. (sic)
2. Again, I made
another promise to
settle said obligation
on or before June 15,
1997, but still to no
avail attributable to
the same reason as
aforementioned.(sic)
3.To arrest this
problem, we decided
to source some funds
using the subject
property as collateral.
This other means is
resorted to for the
purpose of settling
the herein obligation.
And as to its status,
said funds will be
rele[a]sed within
thirty (30) days from
today.
In view of the foregoing, it is
my sincere request and
promise to settle said
obligation on or before
August 15, 1997.
Lastly, I would like to
manifest that it is not my
intention to shy away from
any financial
obligation. SaDICE
xxx xxx xxx
Respectfully yours,
(SGD.) GILBERT R. WAGAS 10
Wagas admitted the letter, but insisted that it
was Caada who had transacted with Ligaray,
and that he had signed the letter only because
his sister and her husband (Caada) had begged
him to assume the responsibility. 11 On redirect
examination, Wagas declared that Caada, a
seafarer, was then out of the country; that he
signed the letter only to accommodate the
pleas of his sister and Caada, and to avoid
jeopardizing Caada's application for overseas
employment. 12 The Prosecution subsequently
-
offered and the RTC admitted the letter as
rebuttal evidence. 13
Decision of the RTC
As stated, the RTC convicted Wagas of estafa on
July 11, 2002, viz.:
WHEREFORE, premises
considered, the Court finds
the accused GUILTY beyond
reasonable doubt as charged
and he is hereby sentenced as
follows:
1.To suffer an
indeterminate
penalty of from
twelve (12) years
of pris[i]on mayor, as
minimum, to thirty
(30) years of reclusion
perpetua as
maximum;
2.To indemnify the
complainant,
Albert[o] Ligaray in
the sum of
P200,000.00; CAHaST
3.To pay said
complainant the sum
of P30,000.00 by way
of attorney's fees;
and
4.the costs of suit.
SO ORDERED. 14
The RTC held that the Prosecution had proved
beyond reasonable doubt all the elements
constituting the crime of estafa,
namely: (a) that Wagas issued the postdated
check as payment for an obligation contracted
at the time the check was issued; (b) that he
failed to deposit an amount sufficient to cover
the check despite having been informed that
the check had been dishonored; and (c) that
Ligaray released the goods upon receipt of the
postdated check and upon Wagas' assurance
that the check would be funded on its date.
Wagas filed a motion for new trial and/or
reconsideration, 15 arguing that the
Prosecution did not establish that it was he who
had transacted with Ligaray and who had
negotiated the check to the latter; that the
records showed that Ligaray did not meet him
at any time; and that Ligaray's testimony on
their alleged telephone conversation was not
reliable because it was not shown that Ligaray
had been familiar with his voice. Wagas also
sought the reopening of the case based on
newly discovered evidence, specifically: (a) the
testimony of Caada who could not testify
during the trial because he was then out of the
country, and (b) Ligaray's testimony given
against Wagas in another criminal case for
violation of Batas Pambansa Blg. 22.
-
On October 21, 2002, the RTC denied the
motion for new trial and/or reconsideration,
opining that the evidence Wagas desired to
present at a new trial did not qualify as newly
discovered, and that there was no compelling
ground to reverse its decision. 16 DSAEIT
Wagas appealed directly to this Court by notice
of appeal. 17
Prior to the elevation of the records to the
Court, Wagas filed a petition for admission to
bail pending appeal. The RTC granted the
petition and fixed Wagas' bond at
P40,000.00. 18 Wagas then posted bail for his
provisional liberty pending appeal. 19
The resolution of this appeal was delayed by
incidents bearing on the grant of Wagas'
application for bail. On November 17, 2003, the
Court required the RTC Judge to explain
why Wagas was out on bail. 20 On January 15,
2004, the RTC Judge submitted to the Court a
so-called manifestation and compliance which
the Court referred to the Office of the Court
Administrator (OCA) for evaluation, report, and
recommendation. 21 On July 5, 2005, the Court,
upon the OCA's recommendation, directed the
filing of an administrative complaint for simple
ignorance of the law against the RTC
Judge. 22 On September 12, 2006, the Court
directed the OCA to comply with its July 5, 2005
directive, and to cause the filing of the
administrative complaint against the RTC Judge.
The Court also directed Wagas to explain why
his bail should not be cancelled for having been
erroneously granted. 23 Finally, in its
memorandum dated September 27, 2006, the
OCA manifested to the Court that it had
meanwhile filed the administrative complaint
against the RTC Judge. 24
Issues
In this appeal, Wagas insists that he and Ligaray
were neither friends nor personally known to
one other; that it was highly incredible that
Ligaray, a businessman, would have entered
into a transaction with him involving a huge
amount of money only over the telephone; that
on the contrary, the evidence pointed to
Caada as the person with whom Ligaray had
transacted, considering that the delivery
receipt, which had been signed by Caada,
indicated that the goods had been "Ordered by
ROBERT CAADA," that the goods had been
received by Caada in good order and
condition, and that there was no showing that
Caada had been acting on behalf ofWagas;
that he had issued the check to Caada upon a
different transaction; that Caada had
negotiated the check to Ligaray; and that the
element of deceit had not been established
because it had not been proved with certainty
that it was him who had transacted with Ligaray
over the telephone. AcHSEa
-
The circumstances beg the question: did the
Prosecution establish beyond reasonable doubt
the existence of all the elements of the crime
of estafa as charged, as well as the identity of
the perpetrator of the crime?
Ruling
The appeal is meritorious.
Article 315, paragraph 2 (d) of the Revised Penal
Code, as amended, provides:
Article 315.Swindling (estafa). Any
person who shall defraud another by
any of the means mentioned
hereinbelow shall be punished by:
xxx xxx xxx
2.By means of any of the following false
pretenses or fraudulent acts executed
prior to or simultaneously with the
commission of the fraud:
xxx xxx xxx
(d)By postdating a check, or issuing a
check in payment of an obligation when
the offender had no funds in the bank,
or his funds deposited therein were not
sufficient to cover the amount of the
check. The failure of the drawer of the
check to deposit the amount necessary
to cover his check within three (3) days
from receipt of notice from the bank
and/or the payee or holder that said
check has been dishonored for lack or
insufficiency of funds shall be prima
facie evidence of deceit constituting
false pretense or fraudulent act. ICaDHT
In order to constitute estafa under this
statutory provision, the act of postdating or
issuing a check in payment of an obligation
must be the efficient cause of the defraudation.
This means that the offender must be able to
obtain money or property from the offended
party by reason of the issuance of the check,
whether dated or postdated. In other words,
the Prosecution must show that the person to
whom the check was delivered would not have
parted with his money or property were it not
for the issuance of the check by the
offender. 25
The essential elements of the crime charged are
that: (a) a check is postdated or issued in
payment of an obligation contracted at the time
the check is issued; (b) lack or insufficiency of
funds to cover the check; and (c) damage to the
payee thereof. 26 It is the criminal fraud or
deceit in the issuance of a check that is
punishable, not the non-payment of a
debt. 27 Prima facie evidence of deceit exists by
law upon proof that the drawer of the check
failed to deposit the amount necessary to cover
his check within three days from receipt of the
notice of dishonor.
-
The Prosecution established that Ligaray had
released the goods to Caada because of the
postdated check the latter had given to him;
and that the check was dishonored when
presented for payment because of the
insufficiency of funds.
In every criminal prosecution, however, the
identity of the offender, like the crime itself,
must be established by proof beyond
reasonable doubt. 28 In that regard, the
Prosecution did not establish beyond
reasonable doubt that it was Wagas who had
defrauded Ligaray by issuing the check.
Firstly, Ligaray expressly admitted that he did
not personally meet the person with whom he
was transacting over the telephone, thus:
Q:On April 30, 1997, do you remember
having a transaction with the accused in
this case?
A:Yes, sir. He purchased two hundred
bags of rice from me.
Q:How did this purchase of rice
transaction started? (sic)
A:He talked with me over the phone
and told me that he would like to
purchase two hundred bags of rice and
he will just issue a check. 29
Even after the dishonor of the check, Ligaray did
not personally see and meet whoever he had
dealt with and to whom he had made the
demand for payment, and that he had talked
with him only over the telephone, to wit:
Q:After the check was (sic) bounced,
what did you do next? STcaDI
A:I made a demand on them.
Q:How did you make a demand?
A:I called him over the phone.
Q:Who is that "him" that you are
referring to?
A:Gilbert Wagas. 30
Secondly, the check delivered to Ligaray was
made payable to cash. Under the Negotiable
Instruments Law, this type of check was payable
to the bearer and could be negotiated by mere
delivery without the need of an
indorsement. 31 This rendered it highly
probable that Wagas had issued the check not
to Ligaray, but to somebody else like Caada,
his brother-in-law, who then negotiated it to
Ligaray. Relevantly, Ligaray confirmed that he
did not himself see or meet Wagas at the time
of the transaction and thereafter, and expressly
stated that the person who signed for and
received the stocks of rice was Caada.
It bears stressing that the accused, to be guilty
of estafa as charged, must have used the check
in order to defraud the complainant. What the
law punishes is the fraud or deceit, not the
-
mere issuance of the worthless
check. Wagas could not be held guilty
of estafa simply because he had issued the
check used to defraud Ligaray. The proof of
guilt must still clearly show that it had
been Wagas as the drawer who had defrauded
Ligaray by means of the check.
Thirdly, Ligaray admitted that it was Caada
who received the rice from him and who
delivered the check to him. Considering that the
records are bereft of any showing that Caada
was then acting on behalf of Wagas, the RTC
had no factual and legal bases to conclude and
find that Caada had been acting for Wagas.
This lack of factual and legal bases for the RTC
to infer so obtained despite Wagas being
Caada's brother-in-law.
Finally, Ligaray's declaration that it
was Wagas who had transacted with him over
the telephone was not reliable because he did
not explain how he determined that the person
with whom he had the telephone conversation
was really Wagas whom he had not yet met or
known before then. We deem it essential for
purposes of reliability and trustworthiness that
a telephone conversation like that one Ligaray
supposedly had with the buyer of rice to be first
authenticated before it could be received in
evidence. Among others, the person with whom
the witness conversed by telephone should be
first satisfactorily identified by voice recognition
or any other means. 32 Without the
authentication, incriminating another person
just by adverting to the telephone conversation
with him would be all too easy. In this respect,
an identification based on familiarity with the
voice of the caller, or because of clearly
recognizable peculiarities of the caller would
have sufficed. 33 The identity of the caller could
also be established by the caller's self-
identification, coupled with additional evidence,
like the context and timing of the telephone
call, the contents of the statement challenged,
internal patterns, and other distinctive
characteristics, and disclosure of knowledge of
facts known peculiarly to the caller. 34
Verily, it is only fair that the caller be reliably
identified first before a telephone
communication is accorded probative weight.
The identity of the caller may be established by
direct or circumstantial evidence. According to
one ruling of the Kansas Supreme Court:
Communications by telephone are
admissible in evidence where they are
relevant to the fact or facts in issue, and
admissibility is governed by the same
rules of evidence concerning face-to-
face conversations except the party
against whom the conversations are
sought to be used must ordinarily be
identified. It is not necessary that the
witness be able, at the time of the
-
conversation, to identify the person
with whom the conversation was had,
provided subsequent identification is
proved by direct or circumstantial
evidence somewhere in the
development of the case. The mere
statement of his identity by the party
calling is not in itself sufficient proof of
such identity, in the absence of
corroborating circumstances so as to
render the conversation admissible.
However, circumstances preceding or
following the conversation may serve
to sufficiently identify the caller. The
completeness of the identification goes
to the weight of the evidence rather
than its admissibility, and the
responsibility lies in the first instance
with the district court to determine
within its sound discretion whether the
threshold of admissibility has been
met. 35 (Bold emphasis
supplied) CHTcSE
Yet, the Prosecution did not tender any
plausible explanation or offer any proof to
definitely establish that it had
been Wagas whom Ligaray had conversed with
on the telephone. The Prosecution did not show
through Ligaray during the trial as to how he
had determined that his caller was Wagas. All
that the Prosecution sought to elicit from him
was whether he had known and why he had
known Wagas, and he answered as follows:
Q:Do you know the accused in this
case?
A:Yes, sir.
Q:If he is present inside the courtroom
[. . .]
A:No, sir. He is not around.
Q:Why do you know him?
A:I know him as a resident of
Compostela because he is an ex-mayor
of Compostela. 36
During cross-examination, Ligaray was allowed
another opportunity to show how he had
determined that his caller was Wagas, but he
still failed to provide a satisfactory showing, to
wit:
Q:Mr. Witness, you mentioned that you
and the accused entered into [a]
transaction of rice selling, particularly
with these 200 sacks of rice subject of
this case, through telephone
conversation? SIcCEA
A:Yes, sir.
Q:But you cannot really ascertain that
it was the accused whom you are
talking with?
-
A:I know it was him because I know
him.
Q:Am I right to say [that] that was the
first time that you had a transaction
with the accused through telephone
conversation, and as a consequence of
that alleged conversation with the
accused through telephone he issued a
check in your favor?
A:No. Before that call I had a talk[ ]
with the accused.
Q:But still through the telephone?
A:Yes, sir.
Q:There was no instant (sic) that the
accused went to see you personally
regarding the 200 bags rice
transaction?
A:No. It was through telephone only.
Q:In fact[,] you did not cause the
delivery of these 200 bags of rice
through the accused himself?
A:Yes. It was through Robert.
Q:So, after that phone call[,] you
deliver[ed] th[ose] 200 sacks of rice
through somebody other than the
accused?
A:Yes, sir. 37
Ligaray's statement that he could tell that it
was Wagas who had ordered the rice because
he "know[s]" him was still vague and unreliable
for not assuring the certainty of the
identification, and should not support a finding
of Ligaray's familiarity with Wagas as the caller
by his voice. It was evident from Ligaray's
answers that Wagas was not even an
acquaintance of Ligaray's prior to the
transaction. Thus, the RTC's conclusion that
Ligaray had transacted with Wagas had no
factual basis. Without that factual basis, the RTC
was speculating on a matter as decisive as the
identification of the buyer to be Wagas. DIESHT
The letter of Wagas did not competently
establish that he was the person who had
conversed with Ligaray by telephone to place
the order for the rice. The letter was admitted
exclusively as the State's rebuttal evidence to
controvert or impeach the denial of Wagas of
entering into any transaction with Ligaray on
the rice; hence, it could be considered and
appreciated only for that purpose. Under the
law of evidence, the court shall consider
evidence solely for the purpose for which it is
offered, 38not for any other
purpose. 39 Fairness to the adverse party
demands such exclusivity. Moreover, the high
plausibility of the explanation of Wagas that he
had signed the letter only because his sister and
her husband had pleaded with him to do so
could not be taken for granted.
-
It is a fundamental rule in criminal procedure
that the State carries the onus probandi in
establishing the guilt of the accused beyond a
reasonable doubt, as a consequence of the
tenet ei incumbit probation, qui dicit, non qui
negat, which means that he who asserts, not he
who denies, must prove, 40 and as a means of
respecting the presumption of innocence in
favor of the man or woman on the dock for a
crime. Accordingly, the State has the burden of
proof to show: (1) the correct identification of
the author of a crime, and (2) the actuality of
the commission of the offense with the
participation of the accused. All these facts
must be proved by the State beyond reasonable
doubt on the strength of its evidence and
without solace from the weakness of the
defense. That the defense the accused puts up
may be weak is inconsequential if, in the first
place, the State has failed to discharge
the onus of his identity and culpability. The
presumption of innocence dictates that it is for
the Prosecution to demonstrate the guilt and
not for the accused to establish
innocence. 41 Indeed, the accused, being
presumed innocent, carries no burden of proof
on his or her shoulders. For this reason, the first
duty of the Prosecution is not to prove the
crime but to prove the identity of the criminal.
For even if the commission of the crime can be
established, without competent proof of the
identity of the accused beyond reasonable
doubt, there can be no conviction. 42
There is no question that an identification that
does not preclude a reasonable possibility of
mistake cannot be accorded any evidentiary
force. 43 Thus, considering that the
circumstances of the identification of Wagas as
the person who transacted on the rice did not
preclude a reasonable possibility of mistake, the
proof of guilt did not measure up to the
standard of proof beyond reasonable doubt
demanded in criminal cases. Perforce, the
accused's constitutional right of presumption of
innocence until the contrary is proved is not
overcome, and he is entitled to an
acquittal, 44 even though his innocence may be
doubted. 45
Nevertheless, an accused, though acquitted
of estafa, may still be held civilly liable where
the preponderance of the established facts so
warrants. 46 Wagas as the admitted drawer of
the check was legally liable to pay the amount
of it to Ligaray, a holder in due
course. 47 Consequently, we pronounce and
hold him fully liable to pay the amount of the
dishonored check, plus legal interest of 6% per
annum from the finality of this decision.
WHEREFORE, the Court REVERSES and SETS
ASIDE the decision rendered on July 11, 2002 by
the Regional Trial Court, Branch 58, in Cebu
City; and ACQUITS Gilbert R.Wagas of the crime
-
of estafa on the ground of reasonable doubt,
but ORDERS him to pay Alberto Ligaray the
amount of P200,000.00 as actual damages, plus
interest of 6% per annum from the finality of
this decision. LLpr
No pronouncement on costs of suit.
SO ORDERED.
PNB vs Erlando Rodriguez
G.R. No. 170325 September 26, 2008
Lessons Applicable: Fictitious Persons
(Negotiable Instruments Law)
FACTS:
Spouses Erlando and Norma Rodriguez were
engaged in the informal lending business and
had a discounting arrangement with the
Philnabank Employees Savings and Loan
Association (PEMSLA), an association of PNB
employees
The association maintained current and savings
accounts with Philippine National Bank (PNB)
PEMSLA regularly granted loans to its members.
Spouses Rodriguez would rediscount the
postdated checks issued to members whenever
the association was short of funds.
As was customary, the spouses would replace
the postdated checks with their own checks
issued in the name of the members.
It was PEMSLAs policy not to approve
applications for loans of members with
outstanding debts.
To subvert this policy, some PEMSLA officers
devised a scheme to obtain additional loans
despite their outstanding loan accounts.
They took out loans in the names of unknowing
members, without the knowledge or consent of
the latter.
The officers carried this out by forging the
indorsement of the named payees in the checks
Rodriguez checks were deposited directly by
PEMSLA to its savings account without any
indorsement from the named payees.
-
This was an irregular procedure made possible
through the facilitation of Edmundo Palermo,
Jr., treasurer of PEMSLA and bank teller in the
PNB Branch.
this became the usual practice for the parties.
November 1998-February 1999: spouses issued
69 checks totalling to P2,345,804. These were
payable to 47 individual payees who were all
members of PEMSLA
PNB eventually found out about these
fraudulent acts
To put a stop to this scheme, PNB closed the
current account of PEMSLA.
As a result, the PEMSLA checks deposited by the
spouses were returned or dishonored for the
reason Account Closed.
The amounts were duly debited from the
Rodriguez account
Spouses filed a civil complaint for damages
against PEMSLA, the Multi-Purpose Cooperative
of Philnabankers (MCP), and PNB.
PNB credited the checks to the PEMSLA account
even without indorsements = PNB violated its
contractual obligation to them as depositors -
so PNB should bear the losses
RTC: favored Rodriguez
makers, actually did not intend for the named
payees to receive the proceeds of the checks =
fictitious payees (under the Negotiable
Instruments Law) = negotiable by mere delivery
CA: Affirmed - checks were obviously meant by
the spouses to be really paid to PEMSLA =
payable to order
ISSUE: W/N the 69 checks are payable to order
for not being issued to fictitious persons
thereby dismissing PNB from liability
HELD: NO. CA Affirmed
GR: when the payee is fictitious or not intended
to be the true recipient of the proceeds, the
check is considered as a bearer instrument
(Sections 8 and 9 of the NIL)
EX: However, there is a commercial bad faith
exception to the fictitious-payee rule. A
showing of commercial bad faith on the part of
the drawee bank, or any transferee of the check
for that matter, will work to strip it of this
defense. The exception will cause it to bear the
loss.
The distinction between bearer and order
instruments lies in their manner of negotiation
order instrument - requires an indorsement
from the payee or holder before it may be
validly negotiated
bearer instrument - mere delivery
US jurisprudence: fictitious if the maker of the
check did not intend for the payee to in fact
receive the proceeds of the check
In a fictitious-payee situation, the drawee bank
is absolved from liability and the drawer bears
the loss
When faced with a check payable to a fictitious
payee, it is treated as a bearer instrument that
can be negotiated by delivery
underlying theory: one cannot expect a
fictitious payee to negotiate the check by
placing his indorsement thereon
-
lack of knowledge on the part of the payees,
however, was not tantamount to a lack of
intention on the part of respondents-spouses
that the payees would not receive the checks
proceeds
PNB did not obey the instructions of the
drawers when it accepted absent indorsement,
forged or otherwise. It was negligent in the
selection and supervision of its employees
Consolidated Plywood Industries vs IFC Leasing
& Acceptance Corp.
G.R. No. 72593 April 30, 1987
Lessons Applicable: Requisites of negotiability
to antedated and postdated instruments
(Negotiable Instruments Law)
FACTS: Consolidated (buyer pays promossor
note) > IPM (seller-assignor who violated
warranty) > IFC (holder in due course or merely
an assignee?)
Consolidated Plywood Industries, Inc
(Consolidated) is a corporation engaged in the
logging business
For the purpose of opening of additional roads
and simultaneous logging operations along the
route of roads, it needed 2 additional units of
tractors
Atlantic Gulf & Pacific Company of Manila,
through its sister company and marketing arm,
Industrial Products Marketing (IPM) (seller-
assignor) offered to sell 2 "Used" Allis Crawler
Tractors
IPM inspected the job site and assured that the
tractors were fit for the job and gave a 90-days
performance warranty of the machines and
availability of parts.
Consolidated purchased on installment.
It paid the down payment of P210,000
April 5, 1978: IPM issued the sales invoice and
the deed of sale with chattel mortgage with
promissory note was executed
IPM, by means of a deed of assignment,
assigned its rights and interest in the chattel
-
mortgage in favor of IFC Leasing and
Acceptance Corp. (IFC)
After 14 days, one of the tractors broke down
and after another 9 days, the other tractor too
Because of the breaking down of the tractors,
the road building and simultaneous logging
operations were delayed
Consolidated unilaterally rescinded the contract
w/ IPM
April 7, 1979: Wee of Consolidated asked IPM
to pull out the units and have them
reconditioned, and thereafter to offer them for
sale.
The proceeds were to be given to IFC and the
excess will be divided between:
IPM
Consolidated which offered to bear one-half 1/2
of the reconditioning cost
IPM didn't do anything
IFC filed against Consolidated for the recovery
of the principal sum P1,093,789.71, interest and
attorney's fees
RTC and CA: favored IFC
breach of warranty if any, is not a defense
available to Consolidated either to withdraw
from the contract and/or demand a
proportionate reduction of the price with
damages in either case
ISSUE: W/N IFC is a holder in due course of the
negotiable promissory note so as to bar
completely all the available defenses of the
Consolidated against IPM
HELD: CA reversed and set aside
Consolidated is a victim of warranrty
The Civil Code provides that:
ART. 1561. The vendor shall be responsible for
warranty against the hidden defects which the
thing sold may have, should they render it unfit
for the use for which it is intended, or should
they diminish its fitness for such use to such an
extent that, had the vendee been aware
thereof, he would not have acquired it or would
have given a lower price for it; but said vendor
shall not be answerable for patent defects or
those which may be visible, or for those which
are not visible if the vendee is an expert who,
by reason of his trade or profession, should
have known them.
ART. 1562. In a sale of goods, there is an
implied warranty or condition as to the quality
or fitness of the goods, as follows:
(1) Where the buyer, expressly or by implication
makes known to the seller the particular
purpose for which the goods are acquired, and
it appears that the buyer relies on the sellers
skill or judge judgment (whether he be the
grower or manufacturer or not), there is an
implied warranty that the goods shall be
reasonably fit for such purpose;
ART. 1564. An implied warranty or condition as
to the quality or fitness for a particular purpose
may be annexed by the usage of trade.
ART. 1566. The vendor is responsible to the
vendee for any hidden faults or defects in the
thing sold even though he was not aware
thereof.
This provision shall not apply if the contrary has
been stipulated, and the vendor was not aware
-
of the hidden faults or defects in the thing sold.
(Emphasis supplied).
GR: extends to the corporation to whom it
assigned its rights and interests
EX: assignee is a holder in due course of the
promissory note
assuming the note is negotiable
Consolidated's defenses may not prevail against
it.
Articles 1191 and 1567 of the Civil Code provide
that:
ART. 1191. The power to rescind obligations is
implied in reciprocal ones, in case one of the
obligors should not comply with what is
incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the obligation
with the payment of damages in either case. He
may also seek rescission, even after he has
chosen fulfillment, if the latter should become
impossible.
ART. 1567. In the cases of articles 1561, 1562,
1564, 1565 and 1566, the vendee may elect
between withdrawing from the contract and
demanding a proportionate reduction of the
price, with damages in either case. (Emphasis
supplied)
Consolidated, having unilaterally and
extrajudicially rescinded its contract with the
seller-assignor, can no longer sue IPM except by
way of counterclaim if IPM sues it because of
the rescission
Considering that paragraph (d), Section 1 of the
Negotiable Instruments Law requires that a
promissory note "must be payable to order or
bearer" - in this case it is non-negotiable
= expression of consent that the instrument
may be transferred
consent is indispensable since a maker assumes
greater risk under a negotiable instrument than
under a non-negotiable one
When instrument is payable to order
SEC. 8. WHEN PAYABLE TO ORDER. - The
instrument is payable to order where it is drawn
payable to the order of a specified person or to
him or his order. . . .
Without the words "or order" or"to the order
of, "the instrument is payable only to the
person designated therein and is therefore non-
negotiable.
Any subsequent purchaser thereof will not
enjoy the advantages of being a holder of a
negotiable instrument but will merely "step into
the shoes" of the person designated in the
instrument and will thus be open to all defenses
available against the latter
Even conceding for purposes of discussion that
the promissory note in question is a negotiable
instrument, the IFC cannot be a holder in due
course due to absence of GF for knowing that
the tractors were defective
SEC. 52. WHAT CONSTITUTES A HOLDER IN DUE
COURSE. - A holder in due course is a holder
who has taken the instrument under the
following conditions:
(c) That he took it in good faith and for value
-
(d) That the time it was negotiated by him he
had no notice of any infirmity in the instrument
of defect in the title of the person negotiating it
SEC. 56. WHAT CONSTITUTES NOTICE OF
DEFFECT. - To constitute notice of an infirmity in
the instrument or defect in the title of the
person negotiating the same, the person to
whom it is negotiated must have had actual
knowledge of the infirmity or defect, or
knowledge of such facts that his action in taking
the instrument amounts to bad faith. (Emphasis
supplied)
We believe the finance company is better able
to bear the risk of the dealer's insolvency than
the buyer and in a far better position to protect
his interests against unscrupulous and insolvent
dealers. . .
Ponce de Leon vs Rehabilitation Finance
36 SCRA 289 Commercial Law Negotiable
Instruments Law Payable on Demand
On October 8, 1951, Jose Ponce De Leon and
Francisco Soriano took out a loan from the
Rehabilitation Finance Corporation or RFC (now
Development Bank of the Philippines) for
P495,000.00. The loan was secured by a parcel
of land owned by Soriano. A deed of mortgage
was then executed in view of the loan. Soriano
and Ponce de Leon also executed a promissory
note in the amount of P495k, payable in
monthly installments of P28,831.64.
Part of the P495k was used to pay off the
previous encumbrances amounting to P135k on
the property of Soriano. The rest were released
to Ponce de Leon in various amounts from
December 1951 to July 1952, still pursuant to
the deed of mortgage.
The loan went unpaid and so RFC initiated a
foreclosure proceeding on the mortgaged
property. According to RFC, the monthly
payments were supposed to be due in October
1952.
In his defense, Ponce de Leon insists that the
amortizations never became due because
allegedly, RFC did not complete the
disbursement of the loan to him (allegedly,
P19k was withheld). He also invokes that on the
face of the promissory note it was written that
the installments have no fixed or determined
dates of payment. Hence, the monthly
payments were never due therefore the
foreclosure is void. He insists that the court
should first determine the date of maturity
of the loan.
-
ISSUE: Whether or not Ponce de Leon is right.
HELD: No. During trial and based on the
records, Ponce de Leons lawyer admitted that
all the remainder of the loan was released to
Ponce de Leon so he cannot invoke that not all
of the P495k was released by RFC.
Anent the issue of the loans maturity date,
under Secs. 13 and 14 of the Negotiable
Instruments Law, when a promissory note
expresses no time for payment, it is deemed
payable on demand. Therefore, when RFC
demanded payment on October 24, 1952, the
installments become due.
Buencamino v. Hernandez
Facts:
The Land Tenure Administration (LTA)
purchased from Buencamino et. Al their
Hacienda for a total price of Php.2, 746,000.00.
For the purpose, a Memorandum Agreement
was executed which declared that the
LTA was purchasing the hacienda upon petition
of the tenants and in accordance with R.A 1400
or the Land Reform Act of 1955. The parties
agreed that 50% of the full price or
Php.1,373,000.00 was to be paid in cash and the
balance in negotiable land certificates. The
condition in the certificate regarding its
encashment only after the lapse of five years
from the date of the execution of the Deed of
Sale. The
Beuncaminos later on presented the
instruments to the City Treasurer in payment of
their tax obligations. The treasurer rejected the
certificates on the ground that the certificates
were payable to bearer not on demand, but,
only upon the expiration of the five year period
specified in the certificates.
Issue: Are the instruments "payable on
demand"?
Court Ruling:
An instrument, to be "payable on demand" is
one which (a) is expressed to be payable on
demand, or at sight, or on presentation; or (b)
expresses no time for payment.
The 5-year period within which the certificates
could be encashed was an expression of time
for payment contrary to paragraph "b", sec.7 of
the Negotiable Instruments Law.
-
Pacheco vs CA
G.R. No. 126670 December 2, 1999 Lessons Applicable: Requisites of negotiability to antedated and postdated instruments (negotiable instruments)
May 17, 1989: Due to financial difficulties
arising from the repeated delays in the
payment of their receivables for
the construction projects from the DPWH,
the spouses Pacheco obtain a loan of P10K
from Mrs. Luz Vicencio who owns a
pawnshop in Samar.
Despite being informed by petitioners that
their bank account no longer had any funds,
Mrs. Vicencio insisted that they issue the
check, as evidence of the loan and only a
formality
Virginia Pacheco issued an undated
RCBC check for P10K
she received P9,000.00 - 10% interest
already deducted
Ernesto Pacheco was also required to sign
the check o
June 14, 1989: Virginia obtained
another loan of P50,000.00 from Mrs.
Vicencio.
She received only P35,000.00 - deduct the
previous loan of P10K as well as the 10%
interest of P5,000.00
Virginia asked for the return of the 1st
check but Mrs. Vicencio told her that her
filing clerk was absent. Despite several
demands for the return of the first check,
but was told that it could no longer locate it
For the new loan, they required the same
requirements in the issuance of the 3 more
checks:
2 checks of P20K
1 check of P10K
June 20 and July 21, 1989: Virginia obtained
2 more loans:
P10K
P15K
Issuing 2 checks of P15k
All the checks were undated at the time
given to Mrs. Vicencio
July 1989: The Pachecos were able to settle
and pay in cash P60K out of P75K
August 3, 1992: Because the loan was
unpaid when due, Mrs. Vicencio with her
husband and daughter went to the
Pachecos residence to persuade Virginia to
-
place the date August 15, 1992 on the
checks
Despite being informed by petitioner
Virginia that their account with RCBC had
been closed as early as August 17, 1989
August 29, 1992: The Pachecos were
surprised to receive a demand letter from
Mrs. Vicencios spouse informing them that
the checks were dishonored due to
Account Closed.
RTC and CA: charged the Pachecos of estafa
relying on the allegation of the Vicencios
that it is a payment for the jewelry
ISSUE: W/N the Pachecos should be charged
with Estafa
HELD: NO. CA reversed
Estafa elements:
1. that the offender postdated or issued a
check in payment of an obligation contracted at
the time the check was issued - not present
2. that such postdating or issuing a check was
done when the offender had no funds in the
bank, or his funds deposited therein were not
sufficient to cover the amount of the check -
present
3. deceit or damage to the payee thereof - not
preset
drawer who issues a check as security or
evidence of investment is not liable
for estafa
Mrs. Vicencio could not have been deceived
nor defrauded by petitioners in order to
obtain the loans because she was informed
that they no longer have funds in their
RCBC accounts
Moreover, a check must be presented
within a reasonable time from issue.
By current banking practice, a check
becomes stale after more than 6 months -
here 3 years
Pacheco still have an outstanding obligation
of P15K in favor of Mrs. Vicencio
-
||| (Gonzales v. Pe, G.R. No. 167398, [August 8,
2011], 670 PHIL 597-615)
DECISION
PERALTA, J p:
Before the Court is a petition for review
on certiorari seeking to set aside the
Decision 1 dated June 23, 2004 and
Resolution 2 dated February 23, 2005 of the
Court of Appeals (CA), Twentieth Division, in
CA-G.R. SP No. 73171, entitled Quirico Pe v.
Honorable Judge Rene Hortillo, in his capacity as
Presiding Judge of the Regional Trial Court of
Iloilo City, Branch 31, Augustus Gonzales and
Spouses Engr. Nestor Victor and Dr. Ma. Lourdes
Rodriguez, which granted the petition of
respondent Quirico Pe. The CA Decision
reversed and set aside the Order 3 dated
September 23, 2002 of the Regional Trial Court
(RTC) of Iloilo City, Branch 31, which dismissed
respondent's appeal for non-payment of docket
and other lawful fees, and directing the
issuance of the writ of execution for the
implementation of its Decision 4 dated June 28,
2002 in favor of the petitioners and against the
respondent. The CA Decision also directed the
RTC to assess the appellate docket fees to be
paid by the respondent, if it has not done so,
and allow him to pay such fees and give due
course to his appeal.
The antecedents are as follows:
Respondent Quirico Pe was engaged in the
business of construction materials, and had
been transacting business with petitioner
Spouses Nestor Victor Rodriguez and Ma.
Lourdes Rodriguez. The Department of Public
Works and Highways (DPWH) awarded two
contracts in favor of petitioner Nestor
Rodriguez for the following projects, namely,
construction of "Lanot-Banga Road (Kalibo
Highway) km. 39 + 200 to km. 40 + 275 Section
IV (Aklan side)" and concreting of "Laua-an
Pandan Road (Tibial-Culasi Section), Province of
Antique." In 1998, respondent agreed to supply
cement for the construction projects of
petitioner Spouses Rodriguez. Petitioner Nestor
Rodriguez availed of the DPWH's pre-payment
program for cement requirement regarding the
Lanot-Banga Road, Kalibo Highway project
(Kalibo project), wherein the DPWH would give
an advance payment even before project
completion upon his presentment, among
others, of an official receipt for the amount
advanced. Petitioner Nestor Rodriguez gave
Land Bank of the Philippines (LBP) Check No.
6563066 to respondent, which was signed by
co-petitioners (his wife Ma. Lourdes Rodriguez
and his business partner Augustus Gonzales),
but leaving the amount and date in blank. The
blank LBP check was delivered to respondent to
guarantee the payment of 15,698 bags of
Portland cement valued at P1,507,008.00,
covered by Official Receipt No. 1175, 5 issued
-
by respondent (as owner of Antique
Commercial), in favor of petitioner Nestor
Rodriguez (as owner of Greenland Builders).
However, a year later, respondent filled up
blank LBP Check No. 6563066, by placing
P2,062,000.00 and June 30, 1999,
corresponding to the amount and date. DHECac
On December 9, 1999, petitioners filed an
Amended Complaint 6 for Declaration of
Payment, Cancellation of Documents and
Damages against respondent with the RTC,
Branch 31, Iloilo City, docketed as Civil Case No.
25945. The amended complaint alleged that
they entrusted blank LBP Check No. 6563066 to
respondent so as to facilitate the approval of
the pre-payment application of petitioner
Nestor Rodriguez with the DPWH. They stated
that the blank LBP check would "serve as
collateral" to guarantee the payment for 15,698
bags to be used for the Kalibo project,
amounting to P1,507,008.00, and that after
payment of the said amount, respondent would
return the LBP check. According to them, after
having paid respondent the amount of
P2,306,500.00, which is P139,160.00 more than
the amount of P2,167,340.00 (representing the
value for 23,360 bags of cement taken for the
Kalibo project), they were cleared of any
liability.
On January 6, 2000, respondent filed an Answer
to Amended Complaint, 7 averring that he had
so far delivered 40,360 bags of cement to
petitioners who remitted P2,306,500.00,
thereby leaving an outstanding amount of
P2,062,000.00. He countered that when
petitioners stopped the bank-to-bank online
payments to him, he filled up the amount of
P2,062,000.00 and made the LBP check payable
on June 30, 1999. The LBP check was
dishonored for being "drawn against insufficient
funds (DAIF)." By way of compulsory
counterclaim, he sought recovery of the
balance of P2,062,000.00, with interest at 24%
from January 29, 1999 until fully paid as actual
damages.
In the Pre-trial Order 8 dated January 28, 2000,
the trial court determined the following to be
the delimited issues, to wit: ECSaAc
(1)whether plaintiffs' [herein
petitioners] liability to defendant
[herein respondent] for 15,698 bags
priced at P1,507,008.00 subject of the
earlier-mentioned pre-payment
program and covered by the "blank"
LBP Check No. 6563066 has already
been paid, hence, plaintiffs are no
longer liable to the defendant for this
amount;
(2)whether this LBP Check No. 6563066
should not be returned by defendant to
plaintiffs, or failing in which, should
-
now be declared as cancelled, null and
void;
(3)whether plaintiffs have completely
paid to the defendant the price of the
cement used for the Kalibo project
which specifically is the amount of
23,360 bags of cement valued in the
total amount of P2,167,340.00;
(4)whether plaintiffs are entitled to
damages and attorney's fees; and
(5)whether this case be dismissed and
with the dismissal of the complaint to
proceed with the counterclaim. 9
In a Decision dated June 28, 2002, the trial
court, applying Section 14 10 of the Negotiable
Instruments Law, found that respondent's
subsequent filling up of LBP Check No. 6563066
in the amount of P2,062,000.00 was not made
strictly in accordance with the authority given
to him by petitioner Nestor Rodriguez, and that
since one year had already lapsed, the same
was not done within a reasonable time. As to
the 23,360 bags of cement for the Kalibo
project, valued at P2,167,340.00 which was
subject of previous transactions, the trial court
ruled that the same had been fully paid and
considered a settled issue. Consequently, the
RTC rendered judgment in favor of the
petitioners and against the respondent, the
dispositive portion of which reads: DIESaC
WHEREFORE, judgment is hereby
rendered in favor of the plaintiffs and
against the defendant, as follows:
1.Declaring plaintiffs' obligation to the
defendant for the cement supplied for
the Kalibo (Lanot-Banga) Road
Construction Project in the amount of
P2,167,340.00 as already and fully paid,
hence, plaintiffs are no longer liable to
the defendant;
2.Declaring Land Bank Check No.
6563066 dated June 30, 1999 for
P2,062,000.00 as null and void and
without any legal effect;
3.Ordering defendant to pay each
plaintiff the sums of P100,000.00 as
actual damages; P500,000.00 as moral
damages; P200,000.00 as attorney's
fees and P2,000.00 per hearing as
appearance fee; P50,000.00 as
miscellaneous actual and necessary
litigation expenses; and
4.To pay the costs.
Defendant's counterclaim is hereby
DISMISSED.
SO ORDERED. 11
After receipt of a copy of the said RTC Decision
on July 26, 2002, respondent filed a Notice of
Appeal on July 30, 2002.
-
In an Order 12 dated August 5, 2002, the trial
court gave due course to respondent's appeal,
and directed the Branch Clerk of Court to
transmit the entire records of the case to the
CA.
On August 26, 2002, petitioners filed a Motion
for Reconsideration, to Dismiss Appeal, and for
Issuance of Writ of Execution, 13 stating that
respondent's appeal should be dismissed as the
same was not perfected due to non-payment of
docket and other lawful fees as required under
Section 4, Rule 41 of the Rules of Court.
Claiming that since the respondent's appeal was
not perfected and, as a consequence, the RTC
Decision dated June 28, 2002 became final and
executory, petitioners sought the issuance of a
writ of execution for the implementation of the
said RTC Decision. To buttress their motion,
petitioners also appended a
Certification 14 dated August 19, 2002, issued
by the Clerk of Court of the Office of the Clerk
of Court (OCC) of the RTC, Iloilo City, certifying
that no appeal fees in the case had been paid
and received by the OCC. CDAHIT
In the Order dated September 23, 2002, the
trial court dismissed respondent's appeal and
directed the issuance of a writ of execution to
implement the RTC Decision dated June 28,
2002.
On October 2, 2002, the Clerk of Court and Ex-
officio Provincial Sheriff of Iloilo issued the Writ
of Execution 15 directing the execution of the
RTC Decision dated June 28, 2002.
On October 7, 2002, respondent filed a Petition
for Certiorari and Prohibition with Application
for Writ of Preliminary Injunction and Prayer for
Temporary Restraining Order, 16 seeking to set
aside the RTC Order dated September 23, 2002
(which dismissed his appeal and directed the
issuance of a writ of execution to implement
the RTC Decision dated June 28, 2002), and to
enjoin the implementation of the Writ of
Execution dated October 2, 2002.
In a Resolution 17 dated October 9, 2002, the
CA granted the respondents' prayer for
Temporary Restraining Order and, in the
Resolution 18 dated August 20, 2003, approved
the respondent's injunction bond and directed
the Division Clerk of Court to issue the writ of
preliminary injunction.
On August 20, 2003, the Division Clerk of Court
issued the Writ of Preliminary
Injunction, 19 thereby enjoining the
implementation of the Writ of Execution dated
October 2, 2002.
On June 23, 2004, the CA rendered a Decision in
favor of the respondent, the dispositive portion
of which reads:
WHEREFORE, the petition is granted.
The assailed order and writ of execution
of the Regional Trial Court must be, as it
-
is hereby, SET ASIDE. The trial court is
hereby ordered to assess the appellate
docket fees, if it has not done so, and
allow the petitioner to pay such fees
and give due course to the petitioner's
appeal. No costs.
SO ORDERED. 20
Aggrieved, petitioners filed a Motion for
Reconsideration 21 on August 24, 2004, which,
however, was denied by the CA in a
Resolution 22 dated February 23, 2005. cAISTC
Hence, petitioner filed this present petition
raising the sole issue that:
THE COURT OF APPEALS PATENTLY
ERRED IN REVERSING THE DECISION OF
THE LOWER COURT AND ALLOWING
RESPONDENT TO BELATEDLY PAY THE
REQUIRED APPELLATE DOCKET AND
OTHER LEGAL FEES.
Petitioners allege that since respondent failed
to pay the docket and other legal fees at the
time he filed the Notice of Appeal, his appeal
was deemed not perfected in contemplation of
the law. Thus, petitioners pray that the CA
decision be set aside and a new one be
rendered dismissing the respondent's appeal
and ordering the execution of the RTC Decision
dated June 28, 2002.
On the other hand, respondent, citing Section 9,
Rule 41 of the Rules of Court, maintains that his
appeal has been perfected by the mere filing of
the notice of appeal. Respondent theorizes that
with the perfection of his appeal, the trial court
is now divested of jurisdiction to dismiss his
appeal and, therefore, only the CA has
jurisdiction to determine and rule on the
propriety of his appeal. He raises the defense
that his failure to pay the required docket and
other legal fees was because the RTC Branch
Clerk of Court did not make an assessment of
the appeal fees to be paid when he filed the
notice of appeal.
The petition is meritorious.
In cases of ordinary appeal, Section 2, Rule 41
of the Rules of Court provides that the appeal
to the CA in cases decided by the RTC in the
exercise of its original jurisdiction shall be taken
by filing a notice of appeal with the RTC (the
court which rendered the judgment or final
order appealed from) and serving a copy
thereof upon the adverse party. Section 3
thereof states that the appeal shall be taken
within fifteen (15) days from notice of the
judgment or final order appealed from.
Concomitant with the filing of a notice of appeal
is the payment of the required appeal fees
within the 15-day reglementary period set forth
in Section 4 of the said Rule. Thus, TIaCcD
SEC. 4.Appellate court docket and other
lawful fees. Within the period for
taking an appeal, the appellant shall pay
-
to the clerk of the court which rendered
the judgment or final order appealed
from, the full amount of the appellate
court docket and other lawful fees.
Proof of payment of said fees shall be
transmitted to the appellate court
together with the original record or the
record on appeal.
In reversing the ruling of the trial court, the CA
cited Yambao v. Court of Appeals 23 as
justification for giving due course to
respondent's petition and ordering the belated
payment of docket and other legal fees.
In Yambao, the CA dismissed therein
petitioners' appeal from the RTC decision for
failure to pay the full amount of the required
docket fee. Upon elevation of the case, the
Court, however, ordered the CA to give due
course to their appeal, and ruled that their
subsequent payment of the P20.00 deficiency,
even before the CA had passed upon their
motion for reconsideration, was indicative of
their good faith and willingness to comply with
the Rules.
The ruling in Yambaois not applicable to the
present case as herein respondent never made
any payment of the docket and other lawful
fees, not even an attempt to do so,
simultaneous with his filing of the Notice of
Appeal. Although respondent was able to file a
timely Notice of Appeal, however, he failed to
pay the docket and other legal fees, claiming
that the Branch Clerk of Court did not issue any
assessment. This procedural lapse on the part
of the respondent rendered his appeal with the
CA to be dismissible and, therefore, the RTC
Decision, dated June 28, 2002, to be final and
executory.
In Far Corporation v. Magdaluyo, 24 as with
other subsequent cases 25 of the same ruling,
the Court explained that the procedural
requirement under Section 4 of Rule 41 is not
merely directory, as the payment of the docket
and other legal fees within the prescribed
period is both mandatory and jurisdictional. It
bears stressing that an appeal is not a right, but
a mere statutory privilege. An ordinary appeal
from a decision or final order of the RTC to the
CA must be made within 15 days from notice.
And within this period, the full amount of the
appellate court docket and other lawful fees
must be paid to the clerk of the court which
rendered the judgment or final order appealed
from. The requirement of paying the full
amount of the appellate docket fees within the
prescribed period is not a mere technicality of
law or procedure. The payment of docket fees
within the prescribed period is mandatory for
the perfection of an appeal. Without such
payment, the appeal is not perfected. The
appellate court does not acquire jurisdiction
over the subject matter of the action and the
Decision sought to be appealed from becomes
-
final and executory. Further, under Section 1
(c), Rule 50, an appeal may be dismissed by the
CA, on its own motion or on that of the
appellee, on the ground of the non-payment of
the docket and other lawful fees within the
reglementary period as provided under Section
4 of Rule 41. The payment of the full amount of
the docket fee is an indispensable step for the
perfection of an appeal. In both original and
appellate cases, the court acquires jurisdiction
over the case only upon the payment of the
prescribed docket fees. cECaHA
Respondent's claim that his non-payment of
docket and other lawful fees should be treated
as mistake and excusable negligence,
attributable to the RTC Branch Clerk of Court, is
too superficial to warrant consideration. This is
clearly negligence of respondent's counsel,
which is not excusable. Negligence to be
excusable must be one wh