Professional Documents
Culture Documents
1. Irma L. Idos, is a businesswoman engaged in leather tanning. She was accused for violation of B.P. 22 by her
erstwhile supplier and business partner, the
complainant below, Eddie Alarilla.
2. Complainant Eddie Alarilla supplied chemicals and rawhide to the accused Irma L. Idos for use in the latter's
business of manufacturing leather. In 1985, he
joined the accused-appellant's business and formed with her a partnership
3. The partnership was short lived so they agreed to terminate it. Upon liquidation of the business as of May 1986 there
were receivables and stocks worth
P1,800,000.00. The complainant's SHARE of the assets was P900,000.00 to pay for which the accused-appellant issued
postdated checks, all drawn against
Metrobank Branch in Mandaue, Cebu.
4. The complainant was able to encash the first, second, and fourth checks, but the third check which is the subject of
this case, was dishonored on October 14,
1986 for insufficiency of funds. The complainant demanded payment from the accused-appellant but the latter failed to
pay. After formal demand, complaint was
filed.
5. Accused-appellant denied liability. She claimed that the check had been given upon demand of complainant in May
1986 only as "assurance" of his share in
the assets of the partnership and that it was not supposed to be deposited until the stocks had been sold.
She insisted that the complainant had known that the checks were to be funded from the proceeds of the sale of the
stocks and the collection of receivables. She
claimed that the complainant himself asked for the checks because he did not want to continue in the tannery business
and had no use for a share of the stocks.
TC: guilty, CA affirmed
issues: WON the subject check was issued by petitioner to APPLY on account or for value, that is, as part of the
consideration of a "buy-out" of said
complainant's interest in the partnership, OR merely as a commitment on petitioner's part to return the investment share
of complainant, along with any profit
pertaining to said share, in the partnership. NO.
WON THERE WAS VIOLATION OF BP 22. NO.
[ elements of BP 22 (1) the making, drawing and issuance of any check to apply to account or for value; (2) the
knowledge of the maker, drawer or issuer that at
the time of issue he does not have sufficient funds in or credit with the drawee bank for the payment of such check in
full upon its presentment; and (3)
subsequent dishonor of the check by the drawee bank for insufficiency of funds or credit or dishonor for the same
reason had not the drawer, without any valid
cause, ordered the bank to stop payment. ]
(1) the making, drawing and issuance of any check to apply to account or for value - here, check was issued not to apply
on account for value.
HELD : here there was NO DEBT. subject check was to be funded from receivables to be collected and goods to be sold
by the partnership, and only when such
collection and sale were realized. Thus, there is sufficient basis that the subject check evidence only complainant's
SHARE OR INTEREST or at best, to show her
commitment that when RECEIVABLES ARE COLLECTED and GOODS ARE SOLD, then she would give to
complainant the net amount due him
Even the third check was redeemed by petitioner. Secondly, even private complainant admitted that there was no
consideration whatsoever for the issuance of the
check, whose funding was dependent on future sales of goods and receipts of payment of account receivables.
(2) Process of Winding UP - dissolution [CC1828,1829 ceasing to be associated in the carrying on of the business],
winding up [settling business affairs of
dissolution.], termination [after all the partnership affairs have been wound up].
HELD: Since the partnership has not been terminated, they remained as co-partners. The check was thus issued not as
payment from a debtor to a creditor.
The check was issued merely to evidence the complainant's share to assure the latter that he would receive in time his
due share therein.
Nothing suggests that petitioner ever became interested in acquiring, much less keeping, the shares of the complainant.
Petitioner exerted her best efforts to sell the remaining goods and to collect the receivables of the partnership
(3) WON theres knowledge on the part of the maker or drawer of the check of the insufficiency of his/her funds at the
time of the issuance of said check.
HELD: NO. Prior to the selling of the goods and collecting of the receivables, the complainant could not, as of yet,
demand his proportionate share in the
business. For only after termination, when the goods were already sold and receivables paid that cash money could be
availed of by the erstwhile partners.
It was uncertain at the time of issuance of the checks whether the unsold goods would have been sold, or whether the
receivables would have been collected by
the time the checks would be encashed.Since petitioner issued these four checks without actual knowledge of the
insufficiency of funds, she could not be held
liable under B.P. 22
RULE: For while "the maker's KNOWLEDGE of the insufficiency of funds is legally PRESUMED from the dishonor
of his checks for insufficiency of funds, this
presumption is rebuttable.
Knowledge of insufficiency of funds or credit in the drawee bank for the payment of a check upon its presentment is an
essential element of the offense. It must
be proved, particularly where the prima facie presumption of the existence of this element has been rebutted.
The prima facie presumption arising from the fact of drawing, issuing or making a check, the payment of which was
subsequently refused for insufficiency of
funds is, moreover, not sufficient proof of guilt by the issuer.
Sec. 1 of B.P. 22 specifically requires that the person in making, drawing or issuing the check, be shown that he knows
at the time of issue, that he does not have
sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment.
(4) the prosecution also failed to prove adequate notice of dishonor of the subject check on petitioner's part, thus
precluding any finding of prima facie evidence
of knowledge of insufficiency of funds. There is no proof that notice of dishonor was actually sent by the complainant
or by the drawee bank to the petitioner. On
this point, the record is bereft of evidence to the contrary.
(5) Because no notice of dishonor was actually sent to and received by the petitioner, the prima facie presumption that
she knew about the insufficiency of funds
cannot apply. Section 2 of B.P. 22 clearly provides that this presumption arises not from the mere fact of drawing,
making and issuing a bum check; there must
also be a showing that, within five banking days from receipt of the notice of dishonor, such maker or drawer failed to
pay the holder of the check the amount
due thereon or to make arrangement for its payment in full by the drawee of such check.
2. Upon demand petitioner issued a pay-to-cash check which was, however, dishonored for lack of funds, the account
having been closed two months earlier.
3. Allias assigned its credit to Private respondent Lucman evidenced by a Deed of Assignment executed before
Philippine consular officials
4. The assignee / LUCMAN filed an action to collect the indebtedness. TC ordered Rodriguez to pay Lucman..CA
affirmed.
issue: WON the obligation of Rodriguez exists. Yes
Petitioner assails the consideration given for the deed of assignment which is stated as "HK$ 1.00 and other valuable
considerations."
held : A valuable considerations, however small or nominal if given or stipulated in good faith is, in the absence of
fraud, SUFFICIENT. A stipulation in consideration of $1 is just as effectual and valuable a consideration as a larger
sum stipulated for or paid. It is not clear what considerations led to the assignment but they must have been sufficiently
valuable to the assignor in view of the amount involved.
Hence, by virtue of the deed of assignment whose existence and legality remains unrebutted, the respondent acquired all
the rights of the assignor including the right to sue in his own name as the legal assignee. The contract was not executed
merely to enable the foreign corporation to sue in the Philippines because even without the assignment, the foreign
corporation can also sue in the Philippines for isolated transactions even if not licensed to engage in business in this
country.
SUBISSUES
a) The documents had sufficiently proven the unpaid balance which arose from the importation of the 800 bales of
Hessian sacks. The unpaid balance was evidenced by a record of transactions between Allied Overseas Co., Ltd. and
Ben Rodriguez, including purchase Orders, Bills of Lading, Delivery Receipts, and other evidences of the purchase of a
barge and other goods.
If the importation was made in the name of Madipo Mercantile this was pursuant to the petitioner's request that his
importations be carried out in the names of different companies.
b) THERE WAS NO SUBROGATION, AS RODRIGUEZ INSISTS; HE SAYS consent of the debtor is essential to the
subrogation. Since there was no consent on his part, then he allegedly is not bound. = no.
In subrogation, the third party pays the obligation of the debtor to the creditor with the latter's consent. As a
consequence, the PAYING third party STEPSinto the shoes of the original creditor as subrogee of the latter.
An assignment of credit, on the other hand, is the process of transferring the right of the assignor to the assignee who
would then have the right to proceed against the debtor. The assignment may be done either gratuitously or onerously, in
which case, the assignment has an effect similar to that of a sale
here, the deed of assignment clearly states that the private respondent became an assignee and, therefore, he became the
only party entitled to collect the indebtedness. As a result of the Deed of Assignment, the plaintiff acquired all rights of
the assignor including the right to sue in his own name as the legal assignee. Moreover, in assignment, the debtor's
consent is not essential for the validity of the assignment (Art. 1624 in relation to Art. 1475, Civil Code), his knowledge
thereof affecting only the validity of the payment he might make (Article 1626, Civil Code).
Article 1626 also shows that payment of an obligation which is already existing does not depend on the consent of the
debtor. It, in effect, mandates that such payment of the existing obligation shall already be made to the new creditor
from the time the debtor acquires knowledge of the assignment of the obligation.
What the law requires in an assignment of credit is not the consent of the debtor but merely notice to him. A creditor
may, therefore, validly assign his credit and its accessories WITHOUT the debtor's consent .
PINEDA VS DELA RAMA
1. Lawyer Dela Rama' services was retained by Pineda for the purpose of making representations with the chairman and
general manager of the NARIC to stop the institution of criminal charges against Pineda who allegedly misappropriated
11,000 cavans of palay. The NARIC general manager was allegedly an intimate friend of Dela Rama.
2. Lawyer says Pineda has used up all his funds to buy a big hacienda in Mindoro and, therefore, borrowed the
P9,300.00 subject of his complaint for collection. Lawyer Dela Rama also sued to collect P5,000.00 attorney's fees.
Now lawyer is suing for these amounts.
3. CFI: court believed the evidence of Pineda that he signed the promissory note for P9,300.00 only because Dela
Rama had told him that this amount had already been advanced to grease the palms of the 'Chairman and General
Manager of NARIC in order to save Pineda from criminal prosecution.
the amount of P9,300.00 evidenced by Exhibit A was not received by the defendant, thus plaintiff cannot
recover
it was not given to any party for the defendant's benefit.
The amount of P3,000.00 was given by the defendant to grease the palms of the NARIC officials. The
purpose was illegal, null and void. Besides, it was not given at all, nor was it true that there was a
contemplated case against the defendant.
Such amount should be returned to the defendant. The services rendered by the plaintiff to the defendant is
worth only P400.00, taking into consideration that the plaintiff received an air-conditioner and six sacks of
rice.
The court orders that the plaintiff should return to the defendant the amount of P3,000.00, minus P400.00
plus costs.
CA: reversed the decision of the trial court on a finding that Pineda, being a person of more than average intelligence,
astute in business, and wise in the ways of men would not "sign any document or paper with his name unless he was
fully aware of the contents thereof;
obligations arising from contracts have the force of law between the contracting parties and should be
complied with in good faith.
in furtherance of this principle, Section 24 NIL(Act No. 2031) explicitly provides that every negotiable
instrument is deemed prima facie to have been issued for a valuable consideration, and every person whose
signature appears thereon to have become a party thereto for value.
ISSUE: WON PLAINTIFF DELA RAMA CAN RECOVER FROM PINEDA. NO.
HELD: Although there is a presumption that a NI is issued for a valuable consideration, this was rebutted by proof in
THE PROMISSORY NOTE'S second sentence which reads - "This represents the cash advances made by him IN
CONNECTION WITH MY CASE for which he is my attorney-in- law." The terms of the note sustain the version of
Pineda (CLIENT) that he signed the P9,300.00 promissory note because he BELIEVED Dela Rama's story that
these amounts had already been advanced by Dela Rama and given as gifts for NARIC officials. HOWEVER,
SINCE THE CONSIDERATION IS ILLEGAL, NEITHER CAN RECOVER. PROMISSORY NOTE VOID AS IT
WAS MADE TO INFLUENCE PUBLIC OFFICIALS.
1) CA RELIED ON NIL: SECTION 24. Presumption of consideration.Every negotiable instrument is deemed prima
facie to have been issued for a valuable consideration; and every person whose signature appears thereon to have
become a party thereto for value.
Reliance on the above provision is misplaced. The presumption that a negotiable instrument is issued for a valuable
consideration is only puma facie. It can be rebutted by proof to the contrary.
According to Dela Rama, he loaned the P9,300.00 to Pineda (CLIENT) in two installments on two occasions five days
apart - first loan for P5,000.00 and second loan for P4,300.00, both given in cash. He also alleged that previously he
loaned P3,000.00 but Pineda paid this other loan two days afterward. but Dela Rama himself admits that Pineda
engaged his services to delay by one month the filing of the NARIC case against Pineda while the latter was trying to
work out an amicable settlement. There is no question that Dela Rama was indeed a close friend of then NARIC
Administrator Jose Rodriquez having worked with him in the Philippine consulate at Hongkong and that Dela Rama
made what he calls "proper representations" with Rodriguez and with other NARIC officials in connection with the
investigation of the criminal charges against Pineda.
It is indeed unusual for a lawyer to lend money to his client whom he had known for only three months, with no
security for the loan and on interest. Dela Rama testified that he did not even know what Pineda was going to do with
the money he borrowed from him. HOWEVER Pineda would not borrow P5,000.00 and P4,300.00 five days apart from
a man whom he calls a "fixer" and whom he had known for only three months.
2) ILLEGAL CONSIDERATION: the promissory note was executed for an illegal consideration. Articles 1409 and
check is one where two parallel lines are drawn across its face or across a corner thereof. It may be crossed generally or
specially. A check is crossed specially when the name of a particular banker or a company is written between the
parallel lines drawn. It is crossed generally when only the words "and company" are written or nothing is written at all
between the parallel lines. It may be issued so that the presentment can be made only by a bank.
In order to preserve the credit worthiness of checks, jurisprudence has pronounced that crossing of a check should have
the following effects:
(a) the check may not be encashed but ONLY DEPOSITED in the bank;
(b) the check may be negotiated only once to one who has an account with a bank;
(c) and the act of crossing the check serves as warning to the holder that the check has been ISSUED FOR A DEFINITE
PURPOSE so that he must inquire if he has received the check PURSUANT TO THAT PURPOSE, OTHERWISE, he
is NOT a holder in due course.
Crossing of checks should put the holder on inquiry and upon him devolves the duty to ascertain the indorser's title to
the check or the nature of his possession. Failing in this respect, the holder is declared guilty of gross negligence
amounting to legal absence of good faith, contrary to Sec. 52(c) of the Negotiable Instruments Law, and as such the
consensus of authority is to the effect that the holder of the check is not a holder in due course.
DISADVANTAGE - SUBJECT TO DEFENSES, BUT CAN STILL COLLECT: The foregoing does not mean,
however, that respondent could not recover from the checks. The only disadvantage of a holder who is not a holder in
due course is that the instrument is subject to defenses as if it were non-negotiable.
Hence, respondent can collect from the immediate indorser, in this case, George King.
CALTEX VS CA and SECURITY BANK
1. Bank issued 280 certificates of deposit CTDs in favor of Angel dela Cruz (depositor) who deposited with herein
defendant the aggregate amount of P1,120,000.00
2. Angel DELIVERED the said CTD's to plaintiff Caltex in connection with his purchase of fuel products
3. Angel Informed Bank that he lost all the CTD's in dispute! Thus he executed an affidavit of loss, afterwhich, 280
replacement CTD's were issued in favor of angel.
4. Angel negotiated and obtained a loan from bank; and following this he executed a notarized Deed of Assignment of
Time deposited where Angel surrenders to defendant bank "full control of the indicated time deposits, authorizes said
bank to pre-terminate, set-off and "apply the said time deposits to the payment of whatever amounts may be due
5. CALTEX'S credit mgr went to bank and presented for verifcation the CTD's declared lost by Angel, saying these
were delivered to them (caltex) as security for purchases made by Angel... Bank received a letter from Caltex formally
informing it of its possession of the CTDs in question and of its decision to pre-terminate the same.
7. Bank requested Caltex to send a copy of document evidenceing the guarantee agreement, and details of
Angel's obligation to it, but these werent furnished. So Bank rejected Caltex's demand for payment of THE VALUE
OF THE CTDS.
8. Then loan of Angel dela Cruz with the bank matured and fell due! So the bank set-off and applied the time
deposits in question to the payment of the matured loan with BANK. (here, Caltex is still unpaid with the VALUE
of the CTDs)
Thus Caltex filed a complaint praying for payment of the value of the CTDs
RTC: dimssissed complaint against bank
CA: Affirmed; non negotiable - the text of the instrument(s) themselves manifest with clarity that they are payable, not
to whoever purports to be the "bearer" but only to the specified person indicated therein, the depositor. In effect, the
appellee bank acknowledges its depositor Angel dela Cruz as the person who made the deposit and further engages
itself to pay said depositor. Bank not liable to Caltex as caltex wasnt the payee.
CTD: 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.
B. Aside from the fact that the CTDs were only delivered but not indorsed, the factual findings of respondent court
quoted at the start of this opinion show that petitioner FAILED TO PRODUCE ANY DOCUMENT evidencing any
contract of pledge or guarantee agreement between it and Angel de la Cruz.
Consequently, the mere delivery of the CTDs did not legally vest in petitioner any right effective against and binding
upon respondent bank. The requirement under Article 2096 aforementioned is not a mere rule of adjective law
prescribing the mode whereby proof may be made of the date of a pledge contract, but a rule of substantive law
prescribing a condition without which the execution of a pledge contract cannot affect third persons adversely. 26C. BANK HAS BETTER RIGHT THAN CALTEX, THUS, IT CAN KEEP THE PROCEEDS OF THE LOAN PAID
BY ANGEL THROUGH CTDS.
THE ASSIGNMENT MADE BY ANGEL IN FAVOR OF BANK WAS EMBODIED IN A PUBLIC INSTRUMENT.
With regard to this other mode of transfer, the Civil Code specifically declares:
Art. 1625.
An assignment of credit, right or action shall produce no effect as against third persons, unless it
appears in a public instrument, or the instrument is recorded in the Registry of Property in case the assignment involves
real property.
Respondent bank duly complied with this statutory requirement. Whereas CALTEX,never proved the amount of its
credit or extent of lien nor exection of any public instrument.
ERNESTINA CRISOLOGO-JOSE, petitioner, vs.
COURT OF APPEALS and RICARDO S. SANTOS, JR. in his own behalf and as Vice-President for Sales of Mover
Enterprises, Inc., respondents.
1. Atty Benares (President of Mover corp) IN ACCOMMODATION of his clients, spouses Ong, issued Check drawn
against Traders Royal Bank payable to defendant Ernestina Crisologo-Jose. Since at that time, the treasurer was not
available, Atty. Benares prevailed upon plaintiff, Santos, Jr., to sign the aforesaid check.
2. this check was replaced by Benares because the approval of the comprise agreement1 was not made within the
expected time. Such replacement check was also signed by Benared and Santos Jr.
3. When defendant Ernestina deposited this replacement check with her account at Family Savings Bank, it was
dishonored for insufficiency of funds. A subsequent redepositing of the said check was likewise dishonored by the bank
for the same reason. Ernetina was constrained to file a criminal complaint for violation of BP22 against Atty. Oscar Z.
Benares and Santos, Jr.
4. during the preliminary investigation against Benares and the plaintiff Santos; plaintiff Ricardo S. Santos, Jr.
tendered a cashier's check for P45,000.00 to the defendant Ernestina Crisologo-Jose, the complainant in that
criminal case. (SANTOS TRIED TO PAY ERNESTINA!)
5.. The defendant ERNESTINA refused to receive the cashier's check in payment of the dishonored check in the amount
of P45,000.00.
6. Hence, SANTOS encashed the aforesaid cashier's check and subsequently deposited said amount of P45,000.00
with the Clerk of Court
Incidentally, the cashier's check adverted to above was purchased by Atty. Oscar Z. Benares and given to the plaintiff
herein to be applied in payment of the dishonored check.
TC: consignation in CC 1256 is not applicable; plaintiff's complaint for CONSIGNATION was dismissed. CA reversed
and revived complaint for consiganation.
before SC, Ernestina says private respondent SANTOS, signatory of the check issued under the account of Mover
Enterprises, Inc., is NOT an accommodation party under the Negotiable Instruments Law and a debtor of petitioner
to the extent of the amount of said check. She says the accommodation party is Mover Inc, and not Santos who
merely signed the check in a representative capactiy as VP. Hence, he is not liable.
1The check was issued to defendant Ernestina Crisologo-Jose in consideration of the waiver over a certain property
which GSIS agreed to sell the spouses Ong (client of Benares), with the understanding that upon approval by the GSIS
of the compromise agreement with the spouses Ong, the check will be encashed accordingly
Hence, one who has taken the instrument with knowledge of the accommodation nature thereof cannot recover
against a corporation where it is only an accommodation party.
EFFECT : Signatories should be liable where the facts show that the accommodation involved was for their
personal account, undertaking or purpose and the creditor was aware thereof. Since such accommodation
paper cannot thus be enforced against the corporation, especially since it is not involved in any aspect of the
corporate business or operations, the signatories thereof shall be PERSONALLY LIABLE therefor, as well
as the consequences arising from their acts in connection therewith.
HERE, Petitioner knows that the check was issued at the instance and for the personal account of Atty. Benares who
merely prevailed upon respondent Santos to act as co-signatory. She knows that it was a personal undertaking of
said corporate officers and the fact that she actually had no transaction directly with said corporation.
ISSUE 2: no creditor-debtor relationship exists between the parties, hence consignation is not proper.
Concomitantly, this argument was premised on the assumption that private respondent Santos is not an
accommodation party. (PET SUGGESTS)
HELD: NO. SANTOS , AS DICUSSED IS AN ACCOMMODATION PARTY, THEREFORE liable for the value of the
check. With the dishonor of the check, there was created a debtor-creditor relationship, as between Atty. Benares and
respondent Santos, on the one hand, and petitioner, on the other. This circumstance enables respondent Santos to
resort to an action of consignation where his tender of payment had been refused by petitioner.
A co-maker or co-drawer under the circumstances in this case is as much an accommodation party as the other cosignatory or, for that matter, as a lone signatory in an accommodation instrument.
Under the doctrine in Philippine Bank of Commerce vs. Aruego, supra, he is in effect a co-surety for the accommodated
party with whom he and his co-signatory, as the other co-surety, assume solidary liability ex lege for the debt involved.
2Based on the foregoing requisites, it is not a valid defense that the accommodation party did not receive any valuable consideration when he
executed the instrument. From the standpoint of contract law, he differs from the ordinary concept of a debtor therein in the sense that he has not
received any valuable consideration for the instrument he signs. Nevertheless, he is liable to a holder for value as if the contract was not for
accommodation 5 in whatever capacity such accommodation party signed the instrument, whether primarily or secondarily. Thus, it has been held that
in lending his name to the accommodated party, the accommodation party is in effect a surety for the latter.