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Page 183 of 190

In this case, far from it, the fear, if any, harbored by Ty wasnt real or
imminent. Ty claims that she was compelled to issue the checksa
condition the hospital commanded of her before her mother can be
discharged. This is only speculative fear.

It is also bereft of merit to raise the justifying circumstance of state of
necessity, which has the following elements
1. That the evil sought to be avoided actually exists
2. That the injury feared be greater than the one done to avoid it
3. That there be no other practical and less harmful means of
preventing it

And to her claim of lack of consideration because she wasnt the patient, it
is no defense to an action on a promissory note for the maker to say that
there was no consideration which was beneficial to him personally. It is
sufficient if the consideration was a benefit conferred upon a third person,
or a detriment suffered by the promisee, at the instance of the promissor.
It is enough that the obligee foresees some right or privilege or suffers
some detriment and the release and extinguishment of the original

381 SCRA 557

Great Asian Sales was a business engaged in the selling and buying of
merchandise. In 2 of its board resolutions, it first authorized Arsenio, its
treasurer, to secure a loan from Bancasia as well as to sign any pertinent
documents related to such. Second, it authorized Arsenio to obtain from
Bancasia a discounting line. Pursuant to these, deeds of assignments were
issued by Great Asian in favor of Bancasia for receivablesspecifically
checks. Almost all the checks assigned by Great Asian were dishonored.
Notice of dishonor was sent by the bank and its lawyer to Tan Chong Lin.
Later, Great Asian filed for insolvency and in its petition, Bancasia was one
of those listed as its creditors. In the meanwhile, a complaint was filed
against Great Asian and Tan Chong Lin because of the surety agreement it
signed in favor of Bancasia.

First, under the 2 board resolutions, indeed Arsenio was authorized to
obtain a loan and sign any document related to the securing of the loan.
The question is whether the deeds of assignment signed by Arsenio was
within the ambits of his authority.

The deeds of assignment enabled Great Asian to generate instant cash,
with checks which were not due and demandable then.

In the financing industry, a discounting line means a credit facility with a
financing bank or company, which allows a business entity to sell, on a
continuing basis, its accounts receivable at a discount. The term discount
means the sale of a receivable at less than its face value. The purpose of
discounting line is to enable a business entity to generate instate cash out
of its receivables which are still to mature at future debts. The financing
company or bank which buys the receivables makes its profits out of the
difference between the face value of the receivable and the discounted

Clearly, the discounting arrangements entered into by Arsenio were the
same arrangements authorized under the board resolutions.

Second, on the issue of breach of contract, Bancasia alleged that Great
Asian committed a breach. In the deeds of assignment, it was stipulated
that there is a vital suspensive conditionin case the drawers fail to pay
the checks on maturity, Great Asian obligated itself to pay Bancasia the full
face value of the dishonored checks, including penalties and other costs.
Failure to pay would give rise to the obligation to pay Bancasia.

Great Asian and Bancasia agreed on this specific with recourse stipulation,
despite that the receivables were negotiable instruments. The contracting
parties are allowed such stipulation in addition to the warranties of an
indorser under the NIL. The explicit with recourse stipulation against Great
Asian enlarges the liability of Great Asian beyond that of a mere indorser of
a negotiable instrument. Thus, whether or not Bancasia gives notice of
dishonor to Great Asian, the latter remains liable because of the with
recourse stipulation.

The recourse of Bancasia to file an action for breach of contract doesnt
leave Great Asian with an empty bag. It is then subrogated back as
creditor of the receivables. Great Asian can now proceed against the
drawers who issued the checks. Even if there was no timely notice of
dishonor, Great Asian is not prejudiced. A notice of dishonor is not
required if the drawer has no right to expect or require the bank to honor
the check, or if the drawer has countermanded payment.

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