Case Digest

SAN BEDA UNIVERSITY
College of Arts and Sciences

1st Semester, A.Y. 2018-2019
In partial fulfillment of the

course requirements for the subject
LMG05 – Negotiable Instruments Law
A compilation of
CASE DIGESTS
Presented to:
Atty. Oliver Cachapero, Jr.
Submitted by:
3-ALM
24 November 2018
TABLE OF CONTENTS
FORM AND INTERPRETATION
Sec. 1. Requisites of Negotiability
HSBC v. CIR, G.R. No. 166018...............................................................1
CONSIDERATION AND NEGOTIATION
Sec. 24. Presumption of Consideration
Ubas v. Chan, G.R. No. 215910 .............................................................4
Pua v. Tiong and Teng, G.R. No. 198660 ................................................6
Sec 29. Liability of an Accommodation Party
Nissan v. Felipe, G.R. No. 199067 ........................................................10
RIGHTS OF A HOLDER
Sec 52. Holder in Due Course
Patriminio v. Gutierrez and Marasigan, G.R. No. 187769......................12
RCBC v. Odrada, G.R. No. 219037........................................................14
LIABILITIES OF PARTIES
Sec 66. Liability of a General Indorser
BDO v. Lao, G.R. No. 227005...............................................................16
BILLS OF EXCHANGE, PROMISSORY NOTES AND CHECKS
ii
Issuance of Promissory Note
Philacor Credit Corporation v. CIR, G.R. No. 169899 ...........................18
Rivera v. Sps Chua, G.R. No. 184458 ...................................................21
Checks
Areza v. Express Savings Bank, G.R. No. 176697..................................24
Metrobank v. Chiong, G.R. No. 172652 ................................................26
Crossed Checks
Metrobank v. Bank of Commerce, G.R. No. 235511..............................28
Batas Pambansa Blg. 22
Sps Argovan and Gadtiano v. San Miguel, G.R. No. 188767..................31
Campos v. People of the Philippines, G.R. No. 187401..........................33
Lim v. People of the Philippines, G.R. No. 190834................................35
Navarra v. People of the Philippines, G.R. No. 203750..........................37
Lim v. Blue Pacific Holdings, Inc, G.R. No.224979 ...............................39
Alburo v. People of the Philippines, G.R. No. 196289............................41
Sumbilla v. Matrix Finance Corporation, G.R. No. 197582....................42
Alivio v. People of the Philippines, G.R. No. 213470..............................44
Magallanes v. Palmer Asia, Inc., G.R. No. 205179.................................46
Estafa
Metrobank v. Rosales, G.R. No. 1832040..............................................49
People of the Philippines v. Wagas, G.R. No.157943 .............................51
Chua v. People of the Philippines, G.R. No. 196853..............................53
iii
REAL AND PERSONAL DEFENSES
Sec 16. Delivery; When Effectual; When Presumed
Asia Brewery, Inc., G.R. No. 190432 ....................................................56
Sec 23. Forged Signature; Effect of
Land Bank v. Kho, G.R. No. 205839 ....................................................58
Sec 125.Material Alteration
Bognot v. RRI, G.R. No. 180144............................................................61
PRESENTMENT FOR ACCEPTANCE AND PAYMENT
NOTICE OF DISHONOR
Acceleration Clause
KT Construction, Inc. v. Philippine Savings Bank, G.R. No. 228435......63
Sec 102. Time within which notice must be given
Dela Cruz v. People of the Philippines, G.R. No. 163494........................65
PROTEST
DISCHARGE OF NEGOTIABLE INSTRUMENTS
Evangelista v. Screenex, Inc., G.R. No. 211564.....................................67
iv
FLORES, JOSEF REINARD
TOPIC: Requisites of Negotiability
-----------------------------------------------------------------------------------------
THE HONGKONG AND SHANGHAI CORPORATION LIMITED-

PHILIPPINE BRANCHES, Petitioner,
vs.
COMMISIONER OF INTERNAL REVENUE, Respondent
FACTS:
HSBC performs, among others, custodial services on behalf of its

investor-clients, corporate and individual, resident or non-
resident of the Philippines, with respect to their passive
investments in the Philippines, particularly investments in
shares of stocks in domestic corporations. As a custodian bank,
HSBC serves as the collection/payment agent with respect to
dividends and other income derived from its investor-clients’
passive investments. HSBC’s investor-clients maintain Philippine
peso and/or foreign currency accounts, which are managed by
HSBC through instructions given through electronic messages.
Pursuant to the electronic messages of its investor-clients, HSBC
purchased and paid Documentary Stamp Tax (DST) from
September to December 1997 and also from January to
December 1998 amounting to ₱19,572,992.10 and
₱32,904,437.30, respectively. On August 1999, BIR
commissioner, Beethoven Rualo, issued BIR ruling no. 132-99 to
the effect that instructions or advises from abroad on the
management of funds located in the Philippines which do not
involve transfer of funds from abroad are not subject to DST. BIR
Ruling No. 132-99 (which pertains to negotiable instruments,
BOE in this case). however, while the payor is residing outside
the Philippines, he maintains a local and foreign currency
account in the Philippines from where he will draw the money
intended to pay a named recipient. The instruction or order to
pay shall be made through an electronic message, i.e., SWIFT MT
100 or MT 202 and/or MT 521. Consequently, there is no
negotiable instrument to be made, signed or issued by the payee.
Such electronic instructions cannot be considered as transaction
considering that the same do not involve any transfer of funds. It
can only be considered as memorandum. With the BIR ruling as
its basis, HSBC filed an administrative claim for the refund of the
amount allegedly representing erroneously paid DST to the BIR
for the periods stated. CTA decisions ruled in favor of HSBC. The
commissioner of BIR was ordered to refund representing the
erroneously paid DST because it does not apply to electronic
message instructions transmitted by HSBC’s non resident
investor-clients. However, the CA reversed the decision and ruled
that the electronic messages of HSBC are subject to DST. HSBC
brought the case upon the SC HSBC asserts that the Court of
Appeals committed grave error when it disregarded the factual
and legal conclusions of the CTA. According to HSBC, in the
absence of abuse or improvident exercise of authority, the CTA’s
ruling should not have been disturbed as the CTA is a highly
specialized court which performs judicial functions, particularly
for the review of tax cases. SC ruled in favor of HSBC.
ISSUE:
Whether or not the electronic messages are in compliance with

section 1 of the negotiable instruments law. Subject to DST.
RULING:
The electronic messages are not signed by the investor-clients as

supposed drawers of a bill of exchange; they do not contain an
unconditional order to pay a sum certain in money as the
payment is supposed to come from a
2
specific fund or account of the investor-clients; and, they are not
payable to order or bearer but to a specifically designated third
party. Thus, the electronic messages are not bills of exchange. As
there was no bill of exchange or order for the payment drawn
abroad and made payable here in the Philippines.
WHEREFORE, the petitions are hereby GRANTED and the CTA

are REINSTATED.
3
GEROLAGA, JUAN CARLO
TOPIC: Presumption of Consideration
-----------------------------------------------------------------------------------------
MANUEL C. UBAS, SR., Petitioner

vs.
WILSON CHAN, Respondent
FACTS:
On January 1,1998, petitioner entered into a verbal

agreement with respondent for the supply of gravel, sand and
boulders for the Macagtas Dam Project. He presented as the only
proof of their business transaction the are three checks issued by
the respondent, payable to “CASH” in the amount of P500,000
each. When the petitioner deposited the checks at the behest of
the respondent, the same were dishonored. Petitioner demanded
from respondent the value of the dishonored checks, but to no
avail.
On the other hand, respondent alleges that the latter was

contracted by DPWH for the Macagtas Dam Project; that one
Engr. ErebertoMerelos was hired as project engineer tasked to
supervise the work, hiring of laborers, the delivery and payment
of aggregates and the revolving fund for its payments; that the
subject checks were not issued to the petitioner, but to Engr.
Merelos for purposes of replenishing the project’s revolving fund;
and that the petitioner was not among their suppliers of
aggregates for the Macagtas Dam Project.
RTC decided in favor of the of the petitioner, stating that the

petitioner had a cause of action against the respondent. It
observed that petitioners demand letter, which clearly stated the
4
serial numbers of checks, including the dates and amount, was
not disputed by respondent.
CA reversed the decision of RTC, stating that the defendant

is not a proper party defendant to the case, considering that the
drawer of the subject checks were from a corporate entity, which
has a separate and distinct personality from respondent.
ISSUE:
Whether or not respondent is liable for the unpaid checks

issued to petitioner.
RULING:
Yes, Section 24 of the NIL states 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. In case
at bar, respondent neither disputes the fact that he had indeed
signed the subject checks nor denies the demand letter sent to
him by petitioner. Also petitioner had presented in evidence the
three dishonored checks which were undeniably signed by
respondent. Hence, it is presumed that the subject checks were
issued for a valid consideration, which, therefore, dispensed with
the necessity of any documentary evidence to support petitioners
monetary claim.
5
TEE, JOSHUA JULIUS
TOPIC: Presumption of Consideration
-----------------------------------------------------------------------------------------
TING TING PUA, Petitioner,

vs.
SPOUSES BENITO LO BUN TIONG and CAROLINE SIOK
CHING TENG, Respondents.
FACTS:
INSTRUMENT: CHECK DRAWER: SPS BENITO AND

CAROLINE
DRAWEE: ASIATRUST- BINONDO PAYEE: TING TING PUA
The controversy arose from a Complaint for a Sum of Money filed

by petitioner Pua against respondent-spouses Benito Lo Bun
Tiong Benito) and Caroline Siok Ching Teng Caroline). In the
complaint, Pua prayed that, among other things, respondents, or
then defendants, pay Pua the amount eight million five hundred
thousand pesos (PhP 8,500,000), covered by a check. (Exhibit
"A," for plaintiff)
During trial, petitioner Pua clarified that the PhP 8,500,000

check was given by respondents to pay the loans they obtained
from her under a compounded interest agreement on various
dates in 1988. As Pua narrated, her sister, Lilian Balboa (Lilian),
vouched for respondents’ ability to pay so that when respondents
approached her, she immediately acceded and lent money to
respondents without requiring any collateral except post-dated
checks bearing the borrowed amounts. In all, respondents issued
17 checks for a total amount of one million nine hundred
seventy-five thousand pesos (PhP 1,975,000). These checks were
dishonored upon presentment to the drawee bank.
6
As a result of the dishonor, petitioner demanded payment.
Respondents, however, pleaded for more time because of their
financial difficulties. Petitioner Pua obliged and simply reminded
the respondents of their indebtedness from time to time.
Sometime in September 1996, when their financial situation

turned better, respondents allegedly called and asked petitioner
Pua for the computation of their loan obligations. Hence,
petitioner handed them a computation dated October 2, 1996
which showed that, at the agreed 2% compounded interest rate
per month, the amount of the loan payable to petitioner rose to
thirteen million two hundred eighteen thousand five hundred
forty-four pesos and 20/100 (PhP 13,218,544.20). On receiving
the computation, the respondents asked petitioner to reduce
their indebtedness to PhP 8,500,000. Wanting to get paid the
soonest possible time, petitioner Pua agreed to the lowered
amount.
Respondents then delivered to petitioner Asiatrust Check No.

BND057750 bearing the reduced amount of PhP 8,500,000 dated
March 30, 1997 with the assurance that the check was good. In
turn, respondents demanded the return of the 17 previously
dishonored checks. Petitioner, however, refused to return the bad
checks and advised respondents that she will do so only after the
encashment of Asiatrust Check No. BND057750.
Like the 17 checks, however, Check No. BND057750 was also

dishonored when it was presented by petitioner to the drawee
bank. Hence, as claimed by petitioner, she decided to file a
complaint to collect the money owed her by respondents.
ISSUE:
7
Whether or not the 17 checks, completed and delivered to the
petitioner, are sufficient by themselves to prove the existence of
the loan obligation of the respondents to petitioner.
HELD:
SEC. 24 PRESUMPTION OF CONSIDERATION NIL
YES. The court in its decisionsexpressly recognized that a check

"constitutes an evidence of indebtedness" and is a veritable "proof
of an obligation." Hence, it can be used "in lieu of and for the
same purpose as a promissory note." In fact, in the seminal case
of Lozano v. Martinez, We pointed out that a check functions
more than a promissory note since it not only contains an
undertaking to pay an amount of money but is an "order
addressed to a bank and partakes of a representation that the
drawer has funds on deposit against which the check is drawn,
sufficient to ensure payment upon its presentation to the bank."
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 for value.
In the case at bar, respondent Caroline had not denied the

genuineness of these checks.Instead, respondents argue that
they were given to various other persons and petitioner had
simply collected all these 17 checks from them in order to
damage respondents’ reputationThis account is not only
incredible; it runs counter to human experience, as enshrined in
Sec. 16 of the NIL which provides that when an instrument is no
longer in the possession of the person who signed it and it is
complete in its terms "a valid and intentional delivery by him is
presumed until the contrary is proved." Hence, respondents’
8
contention that the respondents had delivered is clearly contrary
to the evidence on record.
9
DAQUIGAN, DOMINICO JOSE
TOPIC: Accommodation Party
-----------------------------------------------------------------------------------------
NISSAN GALLERY-ORTIGAS, Petitioner,

vs.
PURIFICACION F. FELIPE, Respondent.
FACTS:
This case arose from a criminal complaint filed by petitioner

against the respondent, for violation of B.P. 22 with the Office of
the City Prosecutor of Quezon City. The office filed an
information in Metropolitan Court in Quezon City, to accuse
respondent Purificacion Felipe for her issuance of a postdated
check in the amount of ₱1,020,000.00, which was subsequently
dishonored upon presentment due to "STOP PAYMENT”.
Purificacion issued the check for the payment of her son’s

(Frederick Felipe) purchase of a Nissan Terrano 4x4 sports and
utility vehicle (SUV) from Nissan. Despite delivery on May 14,
1997, Frederick failed to pay on delivery and was able to enjoy
the vehicle for almost 4 months without paying.
Nissan sent a total of 3 demand letters on different dates.

Frederick then asked for a grace period within which to pay his
full obligation amounting to ₱1,020,000.00. On November 25,
1997, Purificacion issued a post-dated which was subsequently
dishonored due to a “STOP PAYMENT”. Despite demand letters,
Purificacion refused to pay since she was not the one who
purchased the vehicle. Thus, the criminal case was filed. MeTC
ruled acquitting Purificacion from the criminal charges but still
holding her civilly liable. RTC affirmed MeTC, also stating that
Purificacion is an accommodation party who was "liable on the
instrument to a holder for value even though the holder at the
time of taking the instrument knew him or her to be merely an
10
accommodation party." CA ruled in favor of Purificacion, stating
there is no privity between Nissan and Purificacion, and that the
latter cannot be an accommodation party because she only came
in after Frederick failed to pay the purchase price, or six (6)
months after the execution of the contract between Nissan and
Frederick.
ISSUE:
Whether or not Purificacion is an accommodation party.
HELD:
NO. It cannot be attained that Purificacion is an

accommodation party. Even if she was, the same is still bound
to her instrument according to Section 29 of the Negotiable
Instruments Law.
According to the Negotiable Instruments Law, Section 29,

an accommodation party is liable on the instrument to a holder
for value, notwithstanding such holder at the time of taking the
instrument knew him to be only an accommodation party.
11
DELA PENA, MARGARET LOUISE B.
TOPIC: Holder In Due Course
ALVIN PATRIMONIO, Petitioner,

vs.
NAPOLEON GUTIERREZ and OCTAVIO MARASIGAN III,
Respondents.
FACTS:
Petitioner Patrimonio and Respondent Gutierrez entered into a

business venture. To answer for the expenses to be incurred,
petitioner entrusted blank, pre-singed checks to Gutierrez, with
the special instruction not to fill out any of the checks without
prior authorization of petitioner.
Sometime in 1993, Gutierrez went to Marasigan, a former

teammate of petitioner, to secure a loan of P200,000, saying that
the loan was for the construction of petitioner’s house, and even
reassured him an interest rate of 5% per month from March to
May 1994.
On May 24, 1994, Marasigan deposited the check and the same
was dishonored by the bank. It was later revealed that the
account had been closed since May 1993. Marasigan sought to
recover from Gutierrez, sent several demand letters, but all were
disregarded by the latter. He then filed a criminal case for
violation of B.P. 22.
On September 10, 1997, the petitioner filed before the Regional

Trial Courta Complaint for Declaration of Nullity of Loan and
Recovery of Damages against Gutierrez and co-respondent
Marasigan. He completely denied authorizing the loan or the
12
check’s negotiation, and asserted that he was not privy to the
parties’ loan agreement.
ISSUE:
Whether Marasigan is a holder in due course.
RULING:
Gutierrez was only authorized to use the check for business

expenses; thus, he exceeded the authority when he used the
check to pay the loan he supposedly contracted for the
construction of petitioner's house. This is a clear violation of the
petitioner's instruction to use the checks for the expenses of the
business venture. It cannot be validly concluded that the check
was completed strictly in accordance with the authority given by
the petitioner.
Considering that Marasigan is not a holder in due course, the

petitioner can validly set up the personal defense that the blanks
were not filled up in accordance with the authority he gave.
Consequently, Marasigan has no right to enforce payment
against the petitioner and the latter cannot be obliged to pay the
face value of the check.
13
CHAVEZ, Ryan Joshua N.
Negotiable Instruments Law
TOPIC: Personal Defense/HIDC
RCBC SAVINGS BANK, Petitioner,

v.
NOEL M. ODRADA, Respondent.
FACTS:
Noel Odrada sold a secondhand Mitsubishi Montero to

Teodoro Lim for One Million Five Hundred Ten Thousand Pesos
(P1,510,000). Six Hundred Ten Thousand Pesos (P610,000) was
initially paid by Lim and the balance of Nine Hundred Thousand
Pesos (P900,000) was paid in manager’s check issued by RCBC
dated April 12, 2002.
After the issuance of the manager’s check and their turnover to

Odrada but prior to the checks’ presentation, Lim notified
Odrada in a letter dated April 15 2002 that there was an issue
regarding the roadworthiness of the Montero. The issues with the
Mistubishi Montero had hidden defects such as the misalignment
of engine and signs of head collision, despite Odrada’s claim that
the car never had any collision. A meeting was requested with
regard to the matter, however, Odrada did not go to the meeting
and instead deposited the manager’s check but the checks were
dishonored both times apparently upon Lim’s instruction to
RCBC. Consequently, Odrada filed a collection suit against Lim
and RCBC in the Regional Trial Court of Makati.
Lim alleged that the cancellation of the manager’s check was at

his instance, upon discovery of the misrepresentation by Odrada
about the Montero’s roadworthiness. Lim claimed that the
cancellation was not done ex partebut through a letter dated
April 15 2002. He further alleged that the letter was delivered to
Odrada prior to the presentation of the manager’s check to RCBC
on the other hand RCBC claimed that the cancellation of the
14
check was prior to the presentation of the manager’s check.
Moreover, RCBC alleged that despite notice of the defective
condition of the Montero, which constituted a failure of
consideration, Ordara Still proceeded with presenting the
manager’s checks.
ISSUE:
Whether drawee bank can still deny payment of a manager’s

check due to the Personal Defense of Lim that a defective
Montero was sold to Lim.
RULING:
The court ruled that RCBC can deny payment.
Odrada is not Holder in due course because not all the requisites
of section 52 were complied with,
XXX
c. that he took it in good faith and for value
XXX
Odrada did not acquire the instrument in good faith as he sold a

defective Montero.
Since Odrada is not a HIDC, the instrument becomes subject to a

personal defense under the NIL.
15
BATTUNG III, JUSTO P.
TOPIC: Liability of General Indorsers
BDO UNIBANK, Petitioner,

v.
ENGR. SELWYN LAO, doing business under the name and
style "SELWYN F. LAO CONSTRUCTION" AND "WING AN
CONSTRUCTION AND DEVELOPMENT CORPORATION" and
INTERNATIONAL EXCHANGE BANK (now UNION BANK OF
THE PHILIPPINES), Respondents
FACTS:
On March 9, 1999, respondent Engineer Selwyn S. Lao filed

before the RTC a complaint for collection of sum of money
against Equitable Banking Corporation, now petitioner Banco de
Oro Unibank (BDO), Everlink Pacific Ventures, Inc. and Wu
Hsieh (George Wu). In his complaint, Lao alleged that he was
doing business under the name and style of "Selwyn Lao
Construction", that he was a majority stockholder of Wing An
Construction and Development Corporation (Wing An); that he
entered into a transaction with Everlink, through its authorized
representative Wu, under which, Everlink would supply him with
"HCG sanitary wares" and that for the down payment, he issued
two Equitable crossed checks payable to Everlink: Check No.
0127-242249 and Check No. 0127-242250, in the amounts of
P273,300.00 and P336,500.00, respectively.
On August 24, 2001, Lao filed an Amended Complaint, wherein

he impleaded Union Bank as additional defendant for allowing
the deposit of the crossed checks in two bank accounts other
than the payee's, in violation of its obligation to deposit the same
only to the payee's account. In its answer, Union Bank argued
that Check No. 0127-242249 was deposited in the account of
Everlink; that Check No. 0127-242250 was validly negotiated by
Everlink to New Wave, that Check No. 0127-242250 was
16
presented for payment to BDO, and the proceeds thereof were
credited to New Wave's account, that it was under no obligation
to deposit the checks only in the account of Everlink because
there was nothing on the checks which would
indicate such restriction, and that a crossed check continues to

be negotiable, the only limitation being that it should be
presented for payment by a bank.
ISSUE:
Whether or not the Union Bank pay Lao the value of check NO.
0127-242250, moral damages; exemplary damages; and
attorney's fees.
RULING:
Yes, the Union Bank should pay Lao the amount of ₱336,500.00,
representing the value of Check No. 0127-242250; ₱50,000.00 as
moral damages; ₱l00,000.00 as exemplary damages; and
₱50,000.00 as attorney's fees. The RTC observed that there was
nothing irregular with the transaction of Check No. 0127-242249
because the same was deposited in Everlink's account with
Union Bank. It, however, found that Check No. 0127-242250 was
irregularly deposited and encashed because it was not issued for
the account of Everlink, the payee, but for the account of New
Wave. The trial court noted further that Check No. 0127-242250
was not even endorsed by Everlink to New Wave. Thus, it opined
that Union Bank was negligent in allowing the deposit and
encashment of the said check without proper endorsement.
17
SUDARIO, THERESE
TOPIC: Issuance of Promissory Notes
PHILACOR CREDIT CORPORATION, Petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, Respondent.
FACTS:
Philacor is a domestic corporation engaged in the business of

retail financing. A prospective buyer of a home appliance with
neither cash nor any credit card may purchase appliances on
installment basis from an appliance dealer. After Philacor
conducts a credit investigation and approves the buyer’s
application, the buyer executes a unilateral promissory note in
favor of the appliance dealer. Pursuant to Letter of Authority,
revenue officer examined Philacor’s books of accounts and other
accounting records for the fiscal year 1992 to 1993. Philacor
received tentative computations of deficiency taxes for this year.
Philacor’s Finance Manager, contested the tentative
computations of deficiency taxes (totaling P20,037,013.83)
through a letter. Philacor protested the PANs, with a request for
reconsideration and reinvestigation. It alleged that the assessed
deficiency income tax was erroneously computed when it failed to
take into account the reversing entries of the revenue accounts
and income adjustments, such as repossessions, write-offs and
legal accounts. Similarly, the Bureau of Internal Revenue (BIR)
failed to take into account the reversing entries of repossessions,
legal accounts, and write-offs when it computed the percentage
tax; thus, the total income reported, that the BIR arrived at, was
not equal to the actual receipts of payment from the customers.
As for the deficiency DST, Philacor claims that the accredited
appliance dealers were required by law to affix the documentary
stamps on all promissory notes purchased until the enactment of
18
Republic Act No. 7660, otherwise known as an act which took
effect on 1994. In addition, Philacor filed, on the following day, a
supplemental protest, arguing that the assessments were void for
failure to state the law and the facts on which they were based.
CTA Division rendered decision. It concluded that Philacor failed
to declare part of its income, making it liable for deficiency
income tax and percentage tax. However, it also found that the
(CIR) erred in his analysis of the entries in Philacor’s books
thereby considerably reducing Philacor’s liability to a deficiency
income tax and a deficiency percentage tax. The CTA also ruled
that Philacor is liable for the DST on the issuance of the
promissory notes and their subsequent transfer or assignment.
Noting that Philacor failed to prove that the DST on its
promissory notes had been paid for these two transactions, the
CTA held Philacor liable for deficiency DST.
ISSUE:
WON Philacor is liable for the DST on the issuance of the PN.
RULING:
Under Section 173 of the National Internal Revenue Code, the

persons primarily liable for the payment of DST are the persons
(1) making; (2) signing; (3) issuing; (4) accepting; or (5)
transferring the taxable documents, instruments or papers.
Should these parties be exempted from paying tax, the other
party who is not exempt would then be liable. In this case,
petitioner Philacor is engaged in the business of retail financing.
Through retail financing, a prospective buyer of home appliance
may purchase an appliance on installment by executing a
unilateral promissory note in favor of the appliance dealer, and
the same promissory note is assigned by the appliance dealer to
Philacor. Thus, under this arrangement, Philacor did not make,
sign, issue, accept or transfer the promissory notes. It is the
19
buyer of the appliances who made, signed and issued the
documents subject to tax while it is the appliance dealer who
transferred these documents to Philacor which likewise
indisputably received or “accepted” them. Acceptance, however,
is an act that is not even applicable to promissory notes, but only
to bills of exchange. Under the Negotiable Instruments Law, the
act acceptance refers solely to bills of exchange. In a ruling by
the Bureau of Internal Revenue, “acceptance” has been defined
as having reference to incoming foreign bills of exchange which
are accepted in the Philippines by the drawees thereof, and not
as referring to the common usage of the word as in receiving.
Thus, a party to a taxable transaction who “accepts” any
documents or instruments in the plainand ordinary meaning
does not become primarily liable for the tax.
20
AMORIN, JOSE LORENZO
TOPIC: Issuance of Promissory Notes
RODRIGO RIVERA, Petitioner,

vs.
SPOUSES SALVADOR CHUA AND VIOLETA S. CHUA,
Respondents
FACTS:
The parties were long-time friends since 1973. Rivera is the

godfather of the Spouses Chua’s son. On 24 February 1995,
Rivera obtained a loan from the Spouses Chua, which Rivera
promises to pay an amount of 120,000php to said spouses.
Further on, the promissory note says that it is agreed and
understood that failure on Rivera’s part to pay the said amount
on December 31, 1995 agrees to pay the sum equivalent to 5%
interest monthly from the date of default until the entire
obligation is fully paid for.
In October 1998, three years from the date of payment stipulated

in the promissory note, Rivera issued and delivereda 25,000php
check dated 30 December 1998 to said spouses and another
check that appeared as a blank check as to payee. The second
check was issued, as per understanding by the parties, n the
amount of 133,454.00 with “cash” as payee. Both checks were
dishonored for the reason “account closed.”
Because of Rivera’s unjustified refusal to pay, the respondent

spouses filed a suit before the MeTC on June 11, 1999 which
ruled against Rivera requiring him to pay the spouses Chua
P120,000.00 plus stipulated interest at the rate of 5% per month
from 1 January 1996, and legal interest at the rate of 12%
percent per annum from 11 June 1999. RTC Manila affirmed. In
21
furtherance, The Court of Appeals also affirmed the decision
upon appeal of the two inferior courts but with modification of
lowering the stipulated interest to 12% per annum. The petition
went up to Supreme Court.
ISSUE:
Whether or not the Promissory Note executed is a negotiable

instrument and has met the requisitesSec. 1 of Negotiable
Instruments Law.
RULING:
No. It is not a negotiable instrument and has not met the

requisites of Sec. 1 NIL which states;
(a)It must be in writing and signed by the maker or drawer;
(b)Must contain an unconditional promise or order to pay a sum

certain in money;
(c)Must be payable on demand, or at a fixed or determinable

future time;
(d)Must be payable to order or to bearer; and
(e)Where the instrument is addressed to a drawee, he must be

named or otherwise indicated therein with reasonable certainty.
Thus, Sec. 1 of NIL is not applicable to this case. However, Sec.

184 of the NIL defines; Negotiable promissory note within the
meaning of this Act is an unconditional promise in writing made by
one person to another, signed by the maker, engaging to pay on
demand, or at a fixed or determinable future time, a sum certain in
money to order or to bearer. Where a note is drawn to the maker’s
own order, it is not complete until indorsed by him.
22
Furthermore, it is also not within the ambit of Section 70 of the
NIL which provides that presentment for payment is not necessary
to charge the person liable on the instrument. Thus, Rivera is still
liable under the terms of the Promissory Note that he issued to
the spouses Chua.
23
JISON, SAMANTHA GEM
TOPIC: Checks
CESAR V. AREZA and LOLITA B. AREZA, Petitioners,

vs.
EXPRESS SAVINGS BANK, INC. and MICHAEL
POTENCIANO, Respondents.
FACTS:
Petitioners, Cezar and Lolita Areza received an order for the

purchase of a motor vehicle from Gerry Mambuay where the
latter paid petitioners with nine (9) Philippine Veterans Affairs
Office (PVAO) checks payable to different payees and drawn
against the Philippine Veterans Bank (drawee), each valued at
Two Hundred Thousand Pesos (₱200,000.00). Petitioners
deposited the said checks in their savings account with the
Express Savings Bank which, in turn, deposited the checks with
its depositary bank, Equitable-PCI Bank and the latter presented
the checks to the drawee, the Philippine Veterans Bank, which
honored the checks. However, the subject checks were returned
by PVAO to the drawee on the ground that the amount on the
face of the checks was altered from the original amount of
₱4,000.00 to ₱200,000.00. After informing Express Savings Bank
that the drawee dishonored the checks, Equitable-PCI Bank
debited the deposit account of ESB in the amount of P1.8M.
Express Savings Bank then withdrew the amount of P1.8M
representing the returned checks from petitioners saving
account.
ISSUE:
Whether or not Express Savings Bank had the right to debit

₱1,800,000.00 from petitioners’ accounts.
24
HELD:
No, Express Savings Bank cannot debit the savings account of

petitioners. A depositary/collecting bank where a check is
deposited, and which endorses the check upon presentment with
the drawee bank, is an endorser. Under Section 66 of the
Negotiable Instruments Law, an endorser warrants “that the
instrument is genuine and in all respects what it purports to be;
that he has good title to it; that all prior parties had capacity to
contract; and that the instrument is at the time of his
endorsement valid and subsisting.” As collecting bank, Express
Savings Bank is liable for the amount of the materially altered
checks. It cannot further pass the liability back to the petitioners
absent any showing in the negligence on the part of the
petitioners which substantially contributed to the loss from
alteration.
25
CRUZ, MA. FRANCESSCA O.
TOPIC: Checks
METROPOLITAN BANK AND TRUST COMPANY, Petitioner,

vs.
WILFRED N. CHIOK, Respondent.
FACTS:
Chiok had been engaged in dollar trading for several years. He

usually buys dollars from Nuguid at the exchange rate prevailing
on the date of the sale. Chiok pays Nuguid either in cash or
manager’s check. Chiok maintained accounts with
petitioners Metrobank and Global Bank, the latter being then
referred to as the Asian Bank. Chiok likewise entered into a Bills
Purchase Line Agreement with Asian Bank. Under the BPLA,
checks drawn in favor of Chiok.Asian Bank “bills purchased”
Security Bank & Trust Company Manager’s Check issued in the
name of Chiok. He then deposited the three checks in Nuguid’s.
account. Nuguid was supposed to deliver the dollar equivalent of
the three checks as agreed upon, in the afternoon of the same
day. Nuguidfailed to do so.
ISSUE:
1. Whether or not the Court of Appeals detracted from well-

settled concepts and principles in commercial law regarding the
nature, causes, and effects of a manager’s check ?
2. Whether or not BPI is a holder in due course?
RULING:
The legal effects of a manager’s check and a cashier’s check are

the same. A manager’s check or a cashier’s check is regarded
26
substantially to be as good as the money it represents.Manager’s
and cashier’s checks are still the subject of clearing to ensure
that the same have not been materially altered or counterfeited.A
cashier’s check is a primary obligation of the issuing bank
and accepted in advance by its mere issuance. In this
case, PCIB by issuing the check created an unconditional
credit in favor of any collecting bank.
BPI is not a holder in due course with respect to manager’s

checks. Said checks were never indorsed by Nuguid to FEBTC,
the predecessor-in-interest of BPI, for the reason that they were
deposited by Chiok directly to Nuguid’s account with FEBTC.
However, BPI has the rights of an equitable assignee for value
under Section 49 of the Negotiable Instruments Law.
27
AQUINO, JHON IVAN
TOPIC: Crossed Checks

vs
JUNNEL'S MARKETING CORPORATION, PURIFICACION
DELIZO, AND BANK OF COMMERCE, Respondents.
FACTS:
Respondent Junnel's Marketing Corporation (JMC) is a domestic

corporation engaged in the business of selling wines and liquors.
It has a current account with Metrobank from which it draws
checks to pay its different suppliers. Among JMC's suppliers are
Jardine Wines and Spirits (Jardine) and Premiere Wines
(Premiere).
In 2000 JMC discovered an Anomaly involving 11 crossed checks

it has issued to the orders of Jardine and Premiere on various
dates between October 1998 to May 1999. As it was, the subject
checks had already been charged against JMC's current account
but were, for some reason, not covered by any official receipt
from Jardine or Premiere. 7 crossed check is payable to the order
of Jardine and the other 4 is for Premiere which all amounted
P1,481,292.00.
Examination of the dorsal portion of the subject checks revealed

that all had been deposited with Bankcom, Dau branch, under
Account No. 0015-32987-7. Upon inquiring with Jardine and
Premiere, however, JMC was able to confirm that neither of the
said suppliers owns Bankcom Account No. 0015-32987-7.
On 30 April 2000, respondent PurificacionDelizo former

accountant of JMC meanwhile execute a letter addressed to one
NelviaYusi, President of JMC. That she stole several check drawn
28
against JMC current account and forwarded by her to one
LitaBituin. Delizo further admitted that she, Bituin and an
unknown bank manager colluded to cause the deposit and
encashing of the stolen checks and shared in the proceeds
thereof.
ISSUE:
Does JMC has cause of action to be reimbursed by Metrobank

for the crossed check that were encashed by a person different
from the payee??
RULING:
The RTC's decision was in favor of JMC.
The involvement of Bankcom and Metrobank on the wrongful

encashment of the subject checks, however, were clearly
established:
Bankcom accepted the subject checks for deposit under Account
No. 0015-32987-7, endorsed them and sent them for clearance
with the Philippine Clearing House Corporation (PCHC).
Bankcom did all these despite the fact that the subject checks
were ll crossed checks and that Account No. 0015-32987-7
neither belongs to Jardine nor Premiere-the payees named in the
subject checks. In this regard, Bankcom was clearly negligent.
Metrobank, on the other hand, is also negligent for its failure to

scrutinize the subject checks before clearing and honoring them.
Since all the checks were crossed metrobank should not accept
the check if it would be encashed by a person other than the
payee.
Bankom should reimbursed metrobank for the amount paid. A

collecting or presenting bank that receives a check for deposit
and that presents the same to the drawee bank for payment-is an
29
indorser of such check. When a collecting bank presents a check
to the drawee bank for payment, the former thereby assumes the
same warranties assumed by an indorser of a negotiable
instrument pursuant to Section 66 of the Negotiable Instruments
Law. These warranties are: (1) that the instrument is genuine
and in all respects what it purports to be (2) that the indorser
has good title to it (3) that all prior parties had capacity to
contract and (4) that the instrument is, at the time of the
indorsement, valid and subsisting. If any of the foregoing
warranties turns out to be false, a collecting hank becomes liable
to the drawee bank for payments made under such false
warranty.
30
MICAY, ALTHEA
TOPIC: Batas Pambansa Blg. 22
SPOUSES ARGOVAN AND FLORIDA GADITANO, Petitioners,

vs
SAN MIGUEL CORPORATION, Respondent
FACTS:
Spouses Argovan and Florida Gaditano, who were engaged in the

buying and selling of beer and softdrink products, purchased
beer products from San Miguel Corporation (SMC) in the amount
of Php285,504.00. Petitioners paid through a check signed by
Florida and drawn against Asia Trust Bank. However, said check
was dishonored for having been drawn against insufficient funds
when presented for payment. Petitioner failed to make good of the
check despite three written demands which led to the case at
bar.
Petitioners narrated that Fatima Padua delivered an Allied Bank

Check payable to Florida in the amount of Php378,000.00 as
payment for a loan borrowed by the former. Florida then
deposited said check to her and her husband’s joint Asia Trust
Savings Account. The check was cleared and was credited to
their account. Petitioners claimed that when they issued the
check to SMC, their joint savings account had a balance of
Php330,353.17.
Later, Gregorio Guevarra of Asia Trust Bank advised Florida that

the Allied Bank Check handed to her by Fatima was not cleared
due to a material alteration in the name of the payee. Asia Trust
Bank then garnished the Php378,000.00 from the petitioners’
joint savings account. Consequently, the check issued by the
31
petitioners to SMC was dishonored having been drawn against
insufficient funds.
ISSUE:
Whether or not petitioners are liable under B.P. 22.
RULING:
YES. To be liable for violation of B.P. 22, the following essential

elements must be present: (1) the making, drawing, and issuance
of any check to apply for 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 the check in full upon its presentment; and (3)
the 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. First, petitioners issued a check to SMC for the
payment of beer products. Second, three notices of dishonor were
sent to petitioners, who then, should have immediately funded
the check. When they failed to fund the check upon notice of
dishonor, their liabilities under the bouncing checks law
attached. Third, Asia Trust Bank subsequently dishonored the
check for insufficiency of funds. All three elements were complied
with. Hence, petitioners are liable under B.P. 22.
32
ELLAZO, EMMANUEL
MA. ROSARIO P. CAMPOS, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES and FIRST WOMEN'S CREDIT
CORPORATION, Respondents.
FACTS:
Ma. Rosario P. Campos obtained a loan payable in instalments

with the First Women’s Credit Corporation with the amount of
50,000 pesos on March 17,1995. She then issued a number of
post-dated checks to pay for her balance in instalments which
was drawn against her account with BPI Family Savings Bank
account number 6005-05449-92. These checks were
dishonoured because the bank said that the said account was
already a “closed account”. Because of this FWCC filed a case
against the defendant at the Regional Trial Court for violation of
BP-22 or “Bouncing Checks Law” which was subsequently won
with the costs for the defendant.
ISSUES:
1. Notice of Dishonor
- Whether or not Ma. Rosario P Campos was not
knowledgeable nor notified by the drawee bank that she
had insufficient funds to complete her transaction.
Although, two requisites were present which is the 1.
Issuance of making of a check for an applied amount of
value and 3. The dishonour of a check for insufficiency of
funds.
2. Demands were made
- Whether or not there was a crystal clear fact that there
was a notification of dishonour of check and subsequent
33
demand from the FWCC to Ma. Campos and that Campos
herself willingly tried to reach an amicable settlement in
good faith in order for her debt to be paid.
3. Insufficient Funds from drawing account
- Whether or Not Campos was not notified that her
account was lacking the necessary funds to pay for her
debt with the FWCC. Although there was a notice made
by BPI to FWCC that, the said account was closed and
dishonoured due to the lack of funds by the drawer.
HELD:
The Supreme Court denied the petition of the defendant and

approved the prior judgement by the Court of Appeals as it does
not see any valid nor convincing evidence that supports the
petitioner and absolves her of her offense. The Court cited and
the respondents have proven that all three requisites of BP-22
were met and violated by the defendant as she 1. Drew a check
with a considerable amount of money for payment to another, 2.
She was suitably knowledgeable at the time of payments that her
account was insufficient in funds then she was notified by FWCC
for demand of payment and ,3. She had knowledge of the
dishonour of the checks made and drawn against BPI.
34
MAMAYOG, RANIA P.
ARIEL T. LIM, Petitioner,

vs.
PEOPLE OF THE PHILIPPINES, Respondent.
FACTS:
Petitioner issued Bank of Commerce Checks No. 0013813 and

0013814, payable to CASH, in the amount of One Hundred
Thousand Pesos (P100,000.00) for each check. He gave the
checks to Willie Castor as his campaign donation to the latter’s
candidacy in the elections of 1998, to which Castor used said
checks to buy printing materials for his campaign, to be delivered
by the seller Ms. Magna B. Badiee. However, Castor claimed that
the printing materials were delivered to late, and therefore
instruct petitioner to issue a “Stop Payment” order for the two
checks.
Private Complainant Ms. Madiee sent two demand letters to

petitioner, and subsequently, Ms. Madiee filed a complaint
against petitioner Lim before the Office of the Prosecutor. After
one month after receiving said demand letters, and after receiving
the subpoena from the Office of the Prosecutor, petitioner Lim
issued a replacement check in the amount of Two Hundred
Thousands Pesos (P200,000.00) to Ms. Magna B. Badiee, who
then was able to encash said replacement check.
On March 19, 1999, two informations were filed against

petitioner before the MeTC, to which Ms. Baidee accuses Mr.
Ariel T. Lim of, “willfully, unlawfully, and feloniously issuing to
MAGNA B. BAIDEE a check payable to Cash amounting to
P100.000.00 knowing fully well that at the time of issue he did
not have sufficient funds in or credit with the drawee bank for
35
payment.” The lower courts find the petitioner guilty beyond
reasonable doubt for Violation of BP 22.
In this present petition, petitioner relies on the jurisprudences of

Griffith v. CA, in which their jurisprudence dictates the dismissal
of the criminal case against him on the ground that accused has
fully paid the dishonored checks even before the information was
filed against him. The Supreme Court finds this petition to be
with merit.
As stated in Griffith vs. CA, “it is a consistent rule that penal

statutes are construed against the State and liberally in favor of
the accused.” Therefore, the aforementioned case show that the
court acknowledges cases where even if all elements of the crime
are present, the conviction of the accused would be proven to
abhor justice. The fact that petitioner had already paid with the
replacement check after receiving the subpoena from the Office of
the Prosecutor should be enough to forestall the filing of the
Information.
In effect, the payment of the checks before the filing of the

Informations is already the attainment of the purpose of the said
filing.
WHEREFORE, the Decision of the Court of Appeals, dated June

30, 2009, in CA-GR. Cr No. 31725, is hereby REVERSED and
SET ASIDE. Petitioner Ariel T. Lim is ACQUITTED in Criminal
Case No. 07-249932.
36
PAYOS, THERESA
JORGE B. NAVARRA, Petitioner,
v.
PEOPLE OF THE PHILIPPINES, HONGKONG AND SHANGHAI
BANKING CORPORATION, Respondents.
FACTS:
Navarra is the Chief Finance Officer of Reynolds Philippines
Corporation. The said corporation has been a long time client of
respondent Hong Kong and Shanghai Banking Corporation
(HSBC). HSBC granted Reynolds a loan line and a foreign
exchange line. Subsequently, Reynolds issued several promissory
notes in HSBC’s favor. In line with this, Reynolds, through
Navarra, issued seven Asia Trust checks amounting to P45.2
million for the payment of its loan obligation. On July 11, 2000,
HSBC presented the said checks for payment but the checks
were dishonored and returned for being “Drawn against
insufficient funds”. On July 21, 2000, the bank sent Reynolds a
notice of dishonor which Navarra received. Navarra then
requested HSBC to reconsider its decision to declare Reynolds in
default. On September 8, 2000, HSBC sent another notice of
dishonor with respect to another check and demanded payment
as well as six other checks which were previously dishonored.
Despite repeated demands, Reynolds refused to pay. In line with
this, HSBC filed cases against Navarra for violation of BP 22
before the MeTC. The MeTC and RTC found Navarra guilty of the
offense charged. Navarra’s petition for review before the CA was
denied due to the failure of Navarra to attach a certification of
non-forum shopping.
ISSUE:
Is Navarra guilty beyond reasonable doubt of violation of BP 22?
RULING:
YES. There are two ways of violating BP22: (1) by making or
drawing and issuing a check to apply on account or for value,
37
knowing at the time of issue that the check is not sufficiently
funded; and (2) by having sufficient funds in or credit with the
drawee bank at the time of issue but failing to do so to cover the
amount of the check when presented to the drawee bank within a
period of ninety (90) days. The case falls within the first way of
violating BP 22. Under the first scenario, the following elements
must be present: (1) The making, drawing, and issuance of any
check to apply for 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 suck check in full upon its presentment; and (3) the
subsequent dishonor of the check by the drawee bank for
insufficiency of funds or credit or dishonor the same reason had
not the drawer, without any valid cause, ordered the bank to stop
the payment. Navarra argued that the first element is absent as
the checks were presented to reconstruct the loan. This
argument lies in folly since the trial courts have already ruled
that the checks were, in fact, issued for payment of a pre-existing
obligation.
The fact that Navarra represented Reynolds when he signed the

checks is not enough to absolve him from liability. Accordingly,
Sec 1 of BP 22 provides that “where the check is drawn by a
corporation, company or entity, the person or persons, who
actually signed the check in behalf of such drawer shall be liable
under this Act.” BP 22 is malumprohibitum which means that the
act of issuing a bum check, regardless of motive or intent, is
punishable by law.
38
DAVID, JOHN VIANNI
IVY LIM, Petitioner,

vs.
BLUE PACIFIC HOLDINGS, INC., Respondent
FACTS:
Ivy issued 11 checks to blue pacific holdings to accommodate her

sister, Rochelle
10 checks were dishonoured for reason that account is closed
Upon trial, ivy was convicted of violation of B.P. 22
Ivy appealed to the supreme court contesting that the demand

letter and registry receipt where not authenticated and that the
remedies failed in the lower courts
ISSUES:
Whether or not Ivy Lim violated B.P. 22
Whether demand letter and registry receipt authenticated
RULING:
Enriquez personally saw Ivy signing the promissory note and the
checks, so he is familiar with ivy’s signature as appearing in the
registry receipt, and as the court said “If the service of the written
notice is by registered mail, the proof of service consists not only
in the presentation as evidence of the registry return receipt but
also of the registry receipt together with the authenticating
affidavit of the person mailing the notice of dishonor. Without the
authenticating affidavit, the proof of giving the notice of dishonor
39
is insufficient, unless the mailer personally testifies in court on
the sending thereof by registered mail.
40
CORTEZ, RENNE KRISTEN D.C.
ELIZABETH ALBURO, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent
FACTS:
Alburo, with her husband, bought a house and lot from her
sister-in-law through the latter’s attorney-in-fact, Aurelio
Tapang. The house and lot is worth $50,000 or its peso
equivalent. Alburo paid the down payment at the value of &21,
000 while the rest of the balance was paid through four post-
dated checks. The checks bounced, and therefore became the
subject of a criminal case against Alburo for violation of BP Blg.
22. The MTCC found Alburo guilty of violating BP Blg. 22. Both
the RTC and the CA affirmed the lower court’s decision.
ISSUE:
Whether or not Alburo is liable for violation of BP Blg. 22
RULING:
NO. The RTC failed to mention that petitioner eceived any
notice of dishonor which showed her knowledge that she had
insufficient funds when she issued the checks. The court simply
stated that a representative of Landbank testified that notices of
dishonor were issued. The absence of proof that petitioner
received any notice informing her of the fact that her checks were
dishonored and giving her five banking days within which to
make arrangements for payment of the said checks prevents the
application of the disputable presumption that she had
knowledge of the insufficiency of her funds at the time she issued
the checks. It is a general rule that when service of the notice is
an issue, the person alleging that the notice was served must
prove the fact of the service. The burden of proof rests upon the
party asserting the existence.
41
CLEMENTE, GAMALIEL ADAM B.
JULIE SUMBILLA, Petitioner,

vs.
MATRIX FINANCE CORPORATION, Respondent
FACTS:
Petitioner obtained a cash loan from respondent Matrix Finance

Corporation. As partial payment for her loan, petitioner issued
Philippine Business Bank Check Nos. 0032863 to 0032868. The
six checks have a uniform face value of ₱6,667.00 each.
However, all of the checks presented were dishonoured because
it was drawn on a closed account. Petitioner's refusal to heed the
demand letter of respondent for the payment of the face value of
the dishonored checks culminated in her indictment for six
counts of violation of Batas PambansaBlg. 22 (BP 22). The cases
were docketed as Criminal Case Nos. 321169 to 321174, and
were raffled off to Branch 67, MeTC of Makati.
Here, the court renders judgment finding accused Julie S.

Sumbilla guilty beyond reasonable doubt of six counts of
violation of Batas PambansaBlg. 22. For each count, she is
sentenced to pay a fine of ₱80,000.00, with subsidiary
imprisonment in cases of non-payment. She is likewise ordered
by the court to indemnify the private complainant Matrix Finance
Corporation the total amount of ₱40,002.00 plus 12% annual
legal interest from September 21, 2002 until full payment.
ISSUE:
Whether or not the petitioner is liable to pay the amount set by

the courts in relation to Batas PambansaBlg. 22
RULING:
42
B.P. 22 states that the penalty for such erroneous act are the
following: (1) imprisonment of not less than 30 days, but not
more than one year or (2) a fine of not less or more than double
the amount of the check, and shall not exceed ₱200,000.00 or (3)
both such fine and imprisonment.
Here, the face value of each of the six checks that bounced is
₱6,667.00. Under Section 1 of BP 22, the maximum penalty of
fine that can be imposed on petitioner is only 13,334.00, or the
amount double the face value of each check. Indubitably, the
MeTC meted the petitioner a penalty of fine way beyond the
maximum limits prescribed under Section 1 of BP 22. The fine of
₱80,000.00 is more than 11 times the amount of the face value
of each check that was dishonored. Instead of using it as basis of
the face value of each check ₱6,667.00, the MeTC incorrectly
computed the amount of fine using the total face value of the six
checks ₱40,002.00.
In general, BP 22 is an exercise of police power and does not

hamper the constitutional inhibition against imprisonment for
debt.
Wherefore the petition is granted and the Criminal Case is

modified. The accused will now be bound to pay the fine and be
sentenced fo₱13,334.00 for each count, and to indemnify private
complainant Matrix Finance Corporation the total amount of
₱40,002.00 plus 6% interest per annum from September 21,
2002 until full payment.
43
MORFE, ROIE
ELVIRA ALIVIO, Petitioner,

vs.
FACTS:
This is a petition for certiorari on the rulings of the Court of

Appeals and MTC, which convicted petitioner Elvira Alivio for (2)
two counts of B.P. Blg. 22 for issuing (2) bounced checks. Elvira
Alivio or the petitioner issued (2) blank checks for the loans of
Alivio and several others whom Alivio referred to Magboo, the
complainant. Alivio issued blank checks to cover whatever the
amount the other borrowers would not pay. He issued it as a
security. The first check is a Banco Filipino check no. 0153254
in the amount of ₱1,321,500.00 and the second check is Real
Bank Check no. 0051621 in the amount of ₱10,600.00. However,
upon presentment, the banks dishonored the check because it is
a closed account, thus giving rise to a violation of BP 22. Alivio
alleged that the checks were given in blank thus it is an
incomplete instrument.
ISSUES:
(1) Whether or not Elvira Alivio, the petitioner, violates B.P. Blg.
22
(2) Whether or not the instrument, given in blank, is negotiable
RULING:
According to the law, to be liable for violation of B.P. 22, the

following essential elements must be present: (1) the making,
44
drawing, and issuance of any check to apply for 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 the check in full upon
its presentment; and (3) the 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. According to the prosecution,
all these elements are present in the case of Alviro.
The instrument, according to the facts is negotiable. It being ae

blank check does not render it an invalid instrument. According
to the Section 14 of the NIL, checks filled in blanks are valid. The
holder or the person in possession has prima facie authority to
complete an incomplete instrument. In the case given, the checks
are in blank in order for the complainant to put whatever the
borrowers did not pay.
45
JUANILLO, JOSHUA
GERVE MAGALLANES, Petitioner,

vs.
PALMER ASIA, INC., Respondent
FACTS:
Andrews International Product, Inc. (Andrews) is a domestic

corporation that manufactures and sells fire extinguishers. Gerve
Magallanes (Magallanes) was a sales agent for Andrews.
Magallanes negotiated with three (3) buyers of fire extinguishers:
Cecile Arboleda, Jose Cruz, and ProcesoJarobilla, who all issued
checks but all bounced. In 1995, Andrews and Palmer Asia, Inc.
(Palmer), entered into an agreement where Palmer will run the
business of Andrews.
A change of name was in order to appeal to a bigger and more

sophisticated market. Hence, Palmer Asia was born. Thus,
Andrews remained to be existing, but not operational. There was
no liquidation or transfer of assets, Palmer simply took over the
business of Andrew. Andrews demanded payment of the value of
the checks from Magallanes but demands were not met so
Magallanes is charged with Batas PambansangBilang 22 (B.P.
22)
On 16 March 1998, a case entitled Palmer Asia, Inc. v. Gerve

Magallanes, filed before the Metropolitan Trial Court. The docket
numbers as stated in the Entry of Appearance differ from the
docket numbers of the cases filed by Andrews. Furthermore,
there was no mention of the relationship between Andrews and
Palmer. Lastly, there was indication of tying Magallanes to the
documents.
46
Palmiery appeared before the MeTC and claimed that assets are
transferred to Palmer and relinquished the business to Palmer
Inc. Magallanes defended that the party actually involved is
Andrews since they hired Palmer to run the business.
Thus, Palmer’s defense to the opposition is that the business of

Andrews is run under the banner of Palmer with the same
employees, location and merchandise sold. The MeTC denied the
motion filed by Magallanes for lack of merit. Magallanes’ defense
that the checks had no valid consideration and being a sales
agent he had no power to bum the checks. Thus he is not civilly
liable for the value of the checks.
ISSUE:
Whether or not Magallanes is liable for the consideration of the

Check to Palmer Inc.
RULING:
Although Andrews relinquished control of its business to Palmer,

it was never dissolved and thus remained existing. Given the
foregoing facts, it is clear that the real party in interest here is
Andrews. Following the Rules of Court, the action should be in
the name of Andrews. It appears that Palmer is suing Magallanes
in its own right, not as agent of Andrews, the real party in
interest.
The rationale for this rule was discussed in the earlier case of
Goyanko, Jr. v. United Coconut Planters Bank: the accused loses
sight of the fact that Mr. Palmiery is an ordinary layman, not
versed with the technicalities of the law. Expectedly, ordinary
laymen, such as Mr. Palmiery, do not fully appeciate and
understand the legal implications of technical and legal terms.
47
Thus, since Magallanes timely filed a motion to dismiss based on
valid grounds, we rule that the CA erred in denying the said
motion.
WHEREFORE, the petition is GRANTED. The Decision of the

Court of Appeals dated 17 September 2012 and the Resolution
dated 14 January 2013 are hereby REVERSED and SET ASIDE.
The Decision of the Makati Regional Trial Court, Branch 61, is
hereby REINSTATED.
SO ORDERED.
48
DOMINGO, ATHENA
TOPIC: ESTAFA

v.
ANA GRACE ROSALES, Respondent
FACTS:
Respondent Ana Grace Rosales, owner of a travel agency

and her mother Yo Yuk To opened a Joint Peso Account with
petitioner bank. Respondent Rosales accompanied her client Liu
Chiu Fang, a Taiwanese National applying for a retiree’s visa
from Philippine Leisure and Retirement Authority (PLRA), to
petitioner’s branch in Escolta to open a savings account.
Petitioner bank issued a "Hold Out" order against respondents’
accounts. Petitioner filed a criminal case for Estafa through False
Pretenses, Misrepresentation, Deceit and Use of Falsified
Documents against the respondent. It was alleged that the
respondents are the one responsible for the unauthorized
withdrawal from Liu Chiu Fang’s account. Petitioner bank
alleged that it received from the PLRA a Withdrawal Clearance for
the account of Liu Chiu Fang, that in the afternoon of the same
day, respondents went to inform the branch head Gutierrez that
Liu Chiu Fang was going to withdraw her deposits in cash.
Gutierrez told respondents to come back the following day for the
bank did not have enough dollars. Respondents accompanied an
unidentified impostor to the bank with enabled them to withdraw
Liu Chiu Fang’s dollar deposit. Respondents opened a Joint
Dollar Account with petitioner bank then the bank later
discovered that the serial numbers of the dollar notes deposited
by respondents were the same as those withdrawn by the
impostor. Respondents a Complaint for Breach of Obligation and
Contract with Damages, against petitioner. Respondents alleged
49
that they attempted several times to withdraw their deposits but
were unable to because petitioner had placed their accounts
under "Hold Out" status. Petitioner alleged that respondents have
no cause of action because it has a valid reason for issuing the
"Hold Out" order. It averred that due to the fraudulent scheme of
respondent Rosales, it was compelled to reimburse Liu Chiu
Fang and to file a criminal complaint for Estafa against
respondent Rosales.
ISSUE:
Whether or not the Metrobank breached its contract with

respondents Rosales.
HELD:
Yes. The Court held that Metrobank’s reliance on the “Hold

Out” clause in the Application and Agreement for Deposit
Account is misplaced. Bank deposits, which are in the nature of
a simple loan or mutuum, must be paid upon demand by the
depositor.
In fact, it is significant to note that at the time petitioner

issued the “Hold Out” order, the criminal complaint had not yet
been filed. Thus, considering that respondent Rosales is not
liable under any of the five sources of obligation, there was no
legal basis for petitioner to issue the “Hold Out” order.
Accordingly, we agree with the findings of the RTC and the CA
that the “Hold Out” clause does not apply in the instant case.
In view of the foregoing, the Court found that petitioner is

guilty of breach of contract when it unjustifiably refused to
release respondents’ deposit despite demand. Having breached
its contract with respondents, petitioner is liable for damages.
50
CENON, THEA COLEEN
TOPIC: ESTAFA
PEOPLE OF THE PHILIPPINES, Petitioner,

v.
GILBERT REYES WAGAS, Respondent
FACTS:
April 30, 1997, Gilbert Wagas placed an order for 200 bags of
rice over the telephone to Alberto Ligaray but Alberto and his wife
did not agree at first to the proposed payment of the order by
postdated check, but because of Wagas’ assurance that he would
not 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. Later on 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
₱200,000.00 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.
Alberto 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.
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 Cañada, the brother-in-law of
Wagas, who signed the delivery receipt upon receiving the rice.
In his defense, Wagas explained to court, He admitted having

issued BPI Check No. 0011003 to Cañada, his brother-in-law,
not to Ligaray. He denied having any telephone conversation or
any dealings with Ligaray. He explained that the check was
51
intended as payment for a portion of Cañada’s property that he
wanted to buy, but when the sale did not push through, he did
not anymore fund the check.
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 Cañada
as the person with whom Ligaray had transacted.
ISSUE:
Whether or not Wagas is liable for estafa?
RULING:
No, Wagas is not liable for estafa. 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. Ligaray did not personally see
and meet whoever he had dealt with and to whom he had made
the demand for payment. 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.
Thirdly, Ligaray admitted that it was Cañada who received the
rice from him and who delivered the check to him. Considering
that the records are bereft of any showing that Cañada was then
acting on behalf of Wagas, the RTC had no factual and legal
bases to conclude and find that Cañada had been acting for
Wagas. But Wagas may still be held civilly liable as the admitted
drawer of the check was legally liable to pay the amount of it to
Ligaray, a holder in due course.
52
TUQUILAR, MARK V.
TOPIC: ESTAFA
ROBERT CHUA, Petitioner,

v.
FACTS:
From 1992 until 1993, herein petitioner issued several

postdated PS Bank checks of varying amounts to private
complainant Philip See pursuant to their rediscounting
arrangement at a 3% rate. However, the latter claimed that when
he deposited the checks, they were dishonored either due to
insufficient funds or closed account. Despite demands, Chua
failed to make good the checks. See filed on December 23, 1993 a
Complaint for violations of BP 22 before the Office of the City
Prosecutor of Quezon City. He attached thereto a demand letter
dated December 10, 1993. The prosecutor found probable cause
and recommended the filing of charges against
Chua. Accordingly, 54 counts of violation of BP 22 (Batas
PambansaBlg. 22) were filed against him before the Metropolitan
Trial Court (MeTC) of Quezon City. MeTCfound accused Robert
Chua guilty, beyond reasonable doubt, of fifty four (54) counts of
violation of BP 22.Chua then appealed to the Regional Trial Court
(RTC). The RTC affirmed the MeTC decision. The Court of Appeals
(CA) likewise affirmed the decision of the RTC. Hence, this
Petition for Review on Certiorari. Chua asserts that the absence
of the date of his actual receipt on the face of the demand letter
dated November 30, 1993 prevented the legal presumption of
knowledge of insufficiency of funds from arising. On the other
hand, the MeTC opined that while the date of Chua’s actual
receipt of the subject demand letter is not affixed thereon, it is
53
presumed that he received the same on the date of the demand
letter.
ISSUE:
Whether or not the absence of the date actual receipt on the face
of the demand letter prevented the legal presumption of
knowledge of insufficiency of funds from arising, making herein
petitioner not liable for violation of BP 22.
RULING:
Yes. The Supreme Court (SC) held that in order to successfully

hold an accused liable for violation of BP 22, the following
essential elements must be present: "(1) the making, drawing,
and issuance of any check to apply for 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 the check in full upon its
presentment; and (3) the 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." "Of the three (3) elements,
the second element is the hardest to prove as it involves a state
of mind. Thus, Section 2 of BP 22 creates a presumption of
knowledge of insufficiency of funds, which, however, arises only
after it is proved that the issuer had received a written notice of
dishonor and that within five days from receipt thereof, he failed
to pay the amount of the check or to make arrangements for its
payment. In the instant case, what is in dispute is the existence
of the second element. Chua contends that the absence of the
date of his actual receipt on the face of the demand letter dated
November 30, 1993 prevented the legal presumption of
knowledge of insufficiency of funds from arising. While the date
of Chua’s actual receipt of the subject demand letter is not
54
affixed thereon, it is presumed that he received the same on the
date of the demand letter (November 30, 1993In the present case,
there is no way to ascertain when the five-day period under
Section 22 of BP 22 would start and end since there is no
showing when Chua actually received the demand letter dated
November 30, 1993. Petitioner also has consistently denied
having received subject demand letter. He maintains that the
paper used for the purported demand letter was still blank when
presented to him for signature and that he signed the same for
another purpose. Given Chua’s denial, it behooved upon the
prosecution to present proof of his actual receipt of the November
30, 1993 demand letter. The SC grants this petition, and herein
petitioner was found not guilty of all the fifty four (54) charges of
violation of BP 22. He is ordered, however, to indemnify the
private complainant Philip See the total value of the 54 checks
subject of this case plus legal interest of 12% per annum from the
time the said sum became due and demandable until June 30,
2013 and 6% per annum from July 1, 2013 until fully paid.
55
MAYUGA, EUNICE ALLAINE
TOPIC: Delivery, When Effectual and When Presumed
ASIA BREWERY INC., Petitioner,

v.
EQUITABLE PCI BANK, Respondent
FACTS:
Charlie S. Go was the assistant vice president for finance at

Asia Brewery, Inc. (petitioner). ABI is a corporation organized and
existing under the laws of the Philippines.Within the period of
September 1996 to July 1998, Equitable PCI Bank (respondent)
issued10 checks and 16 demand drafts with a total value of
₱3,785,257.38in the name of Charlie Go. However, none of the
said checks and demand drafts reached payee, Charlie S. Go.
Instead, all of the above checks and demand drafts fell into the
hands of a certain Raymond U.Keh, a Sales Accounting Manager
of Asia Brewery, Inc., whopretending tobe the payee, co-plaintiff
Charlie S. Go, succeeded in opening accounts with defendant
Equitable PCI Bank in the name of Charlie Go and thereafter
deposited the said checks and demand drafts in said accounts
and withdrew the proceeds thereof to the damage and prejudice
of plaintiff Asia Brewery, Inc. Subsequently,RaymondKehwas
charged with and convicted of theft and ordered to pay the value
of the checks, but not a single centavo was collected, because he
jumped bail and left the country while the cases were still being
tried.As a result,Asia Breqery, Inc. filed a complaint for payment,
reimbursement, or restitution against respondent before the RTC
of Makati City.The RTCdismissedpetitioners' Complaint for lack
of cause of action and denied their motion for
reconsideration.Itagreed with respondent that the case
Development Bank v.SimaWeiwas applicableand said thatABI did
56
not acquire any right or interest in the instruments since the
firm never received them.
ISSUE:
Whether or not there was delivery as contemplated in Section 16
ofthe NIL.
HELD:
Yes. In order to resolve whether the Complaintlackeda cause
of action, respondent must have presented evidence to dispute
the presumption that the signatories validly and intentionally
delivered the instrument.
Therefore, the Court ruled thatit was erroneous for the RTC
to have concluded that there was no delivery, just because the
checks did not reach the payee. It failed to consider Section 16 of
the Negotiable Instruments Law, which envisions instances when
instruments may have been delivered to a person other than the
payee. Pursuant to the last sentence of Section 16 of the NIL,
where the instrument is no longer in the possession of a party
whose signature appears thereon, a valid and intentional delivery
by him is presumed until the contrary is proved
The SC, however, stressed that a complaint cannot be
dismissed on the ground of lack of cause of action because the
issue may only be raised after questions of fact have been
resolved in a full-blown trial.
57
PENOLIO, AIRRA MAE
TOPIC: Forged Signature
LAND BANK OF THE PHILIPPINES, Petitioner,

v.
NARCISO L. KHO, Respondent
FACTS:
Respondent Narciso Kho is the sole proprietor of United Oil

Petroleum. He entered into a verbal agreement to purchase
lubricants from Red Orange International Trading represented by
Rudy Medel. Red Orange insisted that it would only accept a
Land Bank manager’s check as payment. Kho, accompanied by
Rudy Medel, opened Savings Account at the Araneta Branch of
Land Bank of the Philippines. He deposited manager’s checks
with the enitial amount of ₱25,993,537.37. Kho also purchased
Land Bank Manager’s Check No. 07410 leveraged by his newly
opened savings account.Thecheck was valued at ₱25,000,000.00
payable to Red Orange. Kho had a photocopy of the manager’s
check to provide Red Orange with proof that he had available
funds for the transaction. Unfortunately, his deal with Red
Orange did not push through. On January 3, Bank of the
Philippine Islands called Land Bank, Araneta Branch, to inform
them that Red Orange had deposited check No. 07410 for
payment. Flores confirmed with BPI that Land Bank had issued
the check to Kho. The next day, the Central Clearing Department
of the Land Bank Head Office faxed a copy of the deposited check
to the Araneta branch for payment then Araneta branch
examined the fax copy and thought that the details matched the
check purchased by Kho. Thus, Land Bank confirmed the
deposited check. Flores informed Kho by phone that Check No.
07410 was cleared and paid by the BPI, Kamuning branch.
Shocked, Kho informed Flores that he never negotiated the check
58
and the actual check was still in his possession. Kho immediately
went to Land Bank with the check No. 07410. They discovered
that what was deposited and encashed with BPI was a spurious
manager’s check. Kho demanded the cancellation of his
manager’s check and the release of the remaining money in his
account. However, Flores refused his request because she had no
authority to do so at the time.Kho returned to the Land Bank,
Araneta, with the same demands but the bank did not comply.
Afterwards, Kho filed a Complaint for Specific Performance and
Damages against Land Bank,
ISSUE:
Whether or not Kho can invoke forgery in order to cancel check

No. 07410 and release the remaining money in his account.
RULING:
Yes. Kho can invoke forgery in order to cancel check No. 07410
and release the remaining money in his account. The genuine
check No. 07410 remained in Kho’s possession the entire time
and Land Bank admits that the check it cleared was a fake.
When Land Bank’s CCD forwarded the deposited check to its
Araneta branch for inspection, its officers had every opportunity
to recognize the forgery of their signatures or the falsity of the
check. Whether by error or neglect, the bank failed to do so,
which led to the withdrawal and eventual loss of the
₱25,000,000.00. Land Bank breached its duty of diligence and
assumed the risk of incurring a loss on account of a forged or
counterfeit check. Hence, it should suffer the resulting
damage.Kho is not precluded from invoking the forgery. A drawer
or a depositor of the bank is precluded from asserting the forgery
if the drawee bank can prove his failure to exercise ordinary care
and if this negligence substantially contributed to the forgery or
the perpetration of the fraud.Kho’s act of giving Medel a
59
photocopy of the check may have allowed the latter to create a
duplicate, this cannot possibly excuse Land Bank’s failure to
recognize that the check itself –not just the signatures – is a fake
instrument. More importantly, Land Bank itself furnished Kho
the photocopy without objecting to the latter’s intention of giving
it to Medel.
Whether or not the deal pushed through, the check remained in

Kho's possession. He was entitled to a reasonable expectation
that the bank would not release any funds corresponding to the
check. Thus, Land Bank of the Philippines is ordered to:
(1) to PAY Narciso Kho the sum of TWENTY FIVE MILLION

PESOS (₱25,000,000.00), plus interest at the legal rate reckoned
from the filing of the complaint; and
(2) to ALLOW Narciso Kho to withdraw his remaining funds from

Savings Account No. 0681-0681-80.
60
ALBANO, ANGELICA R.
TOPIC: Material Alteration
LEONARDO BOGNOT, Petitioner,

vs.
RRI LENDING CORPORATION, represented by its General
Manager, DARIO J. BERNARDEZ, Respondent
FACTS:
In September 1996, petitioner Leonardo Bognot and his

younger brother, Rolando A. Bognot, applied for and obtained a
loan of five hundred thousand pesos (₱500,000.00) from the
respondent RRI Lending Corporation, payable on November 30,
1996. The loan was evidenced by a promissory note and was
secured by a post-dated check dated November 30, 1996. The
petitioner renewed the loan several times on a monthly basis and
as security, he also issued a new post-dated check and executed
and/or renewed the promissory note previously issued. RRI
Lending Corporation on the other hand, which was duly
represented by its general manager Mr. Dario J. Bernardez,
cancelled and returned to the petitioner the post-dated checks
issued prior to their renewal. Subsequently, the loan was again
renewed until June 30, 1997, and the disclosure statement dated
May 30, 1997 duly signed by Bernardez. The petitioner
purportedly paid the renewal fees and issued a post-dated check
dated June 30, 1997 as security. In order to make it appear that
it would mature on the said date, Bernardez superimposed the
date “June 30, 1997” on the upper right portion of promissory
note no. 97-035.
Julie Bognot, Rolando’s wife, went to the respondent’s office

and applied for another renewal of the loan. On the excuse that
she needs to bring home the loan documents for the Bognot
61
sibling’s signatures and replacement, she convinced the
respondent’s clerk to release to her the promissory note and
other loan documents (the disclosure statement and the check
dated July 30, 1997). She never returned these documents nor
issued a new post-dated check. Despite repeated demands from
RRI Lending Corporation, the Bognot siblings failed to pay their
joint and solidary obligation. On November 27, 1997, the
respondent, through Bernardez, filed a complaint for the
payment of the loan, plus interest and penalty charges, before
the Regional Trial Court against the Bognot siblings.
ISSUE:
Whether or not petitioner Leonardo Bognot is relieved from

liability by reason of the material alteration in the promissory
note
RULING:
The alteration of the promissory note did not relieve Leonardo

Bognot from liability. The petitioner alleged that the respondent’s
superimposition of the due date “June 30, 1997” on the
promissory note without his consent effectively relieved him of
liability. Significantly, the petitioner admitted that part of its
company practice is to rubber stamp, or make a superimposition
through a rubber stamp, the old promissory note which has been
renewed to make it appear that there is a new loan obligation.
Under this present petition, it is found that the totality of the
evidence on record sufficiently established the petitioner’s
indebtedness and liability based on the contract of loan. Even
with the tampered promissory note, the petitioner can still be
held liable for the unpaid loan.
62
PALANCA, NAOMI C.
TOPIC: Acceleration Clause
KT CONSTRUCTION SUPPLY, INC., Petitioner,

v.
PHILIPPINE SAVINGS BANK, Respondent
FACTS:
A loan was obtained by KT Construction Supply, Inc. (KTCSI)

from Philippine Savings Bank (PSB) in the amount of P2.5M on
October 12,2006. The loan was evidenced by a promissory note
executed on the same date. The note stipulated that the loan was
payable within a period of 60 months (5 years) from November
12,2006 to October 12,2011 to be paid on installment basis, with
a stipulation to include attorney’s fees in case of litigation. It also
expressly stated that the entire obligation shall immediately
become due and payable upon default of any installment. On
January 3,2011 (9 months and 9 days before maturity date), PSB
sent a demand letter asking payment from KTCSI for its
outstanding obligation in the amount of P725,438.81 excluding
interests, penalties, legal fees, and other charges. Failing to
comply with the demand, PSB filed a complaint for sum of money
against KTCSI. KTCSI asserted that the complaint is premature
and is not valid since the demand letter came before the maturity
date hence the balance is not due and hence not demandable.
ISSUE:
WON the demand of PSB claiming payment before maturity date

was valid and enforceable
RULING:
63
YES. It has long been settled that acceleration clause is valid and
produces legal effects. In the case at bench, the promissory note
explicitly stated that default in any of the installments shall
make the entire obligation due and demandable even without
notice or demand. Thus, the court held that KTCSI was
erroneous in saying that PSB’s complaint was premature on the
ground that the loan was due only on October 12,2011. KT
Construction’s entire obligation became due and demandable
when it failed to pay an installment pursuant to the acceleration
clause.
64
DE LEON, JOSHUA MARTIN C.
TOPIC: Time within which Notice must be given
JESUSA T. DELA CRUZ, Petitioner,

vs.
FACTS:
Tan Tiacchiong/ Ernesto Tan entered into several business

transactions whereby he is to deliver and supply to the petioner
sometime in 1984-1985 worth P20, 090,641.25. For every
delivery tan delivers, petitioner issued postdated checks made
payable to cash. When it was presented for payment, some of the
checks issued by the petitioner to tan were dishonored by the
drawee-bank for being drawn against “Insufficient funds” or
“Account Closed”. The replacement checks later issued by the
petitioner were still dishonored upon the presentment of
payment. Tan became a subject of his complaint. All checks were
dated march 30 1987 and drawn against Family bank & Trust
Co. (FTBC) but were issued for different amounts totaling
P6,226,390.29 thus leading t violation of B.P 22 also known as
bouncing check law were filed at the in court against the
petitioner. As between the parties to this case, the dispute only
pertains to the presence or absence of the second element. In
order to support her plea for acquittal, petitioner insists that she
failed to receive any notice of dishonor on the subject checks,
which rendered absent the element of knowledge of insufficient
funds
ISSUE:
Is the requirement on proof of notice of dishonor important?
RULING:
65
Yes
The requirement is taken strictly due to the fact that on the B.P
22 The drawer is given the opportunity to give effect full payment
of the amount that is written on said check, within 5 banking
days from the notice of dishonor. Procedural due process
demands that the notice of dishonor shall serve on the petitioner
in order to fulfill the requirement. It is important that the notice
should be sent and received by her to afford her opportunity to
aver prosecution under the bouncing check law however it is not
an element of the offense, evidence that the notice of dishonor
has been sent or received.
In this Case, The prosecution failed in their part to establish the

presence of all elements of violation of B.P Blg. 22, the petitioner
was acquitted from the previous 23 counts of the offense
charged. That said failure proved that and the fact that she was
given 5 banking days within which to settle her account will
constitute sufficient ground for her acquittal. Therefore she will
pay the face value of said checks due not for criminal liability but
civil liability.
66
CABRERA, DANIEL ANTHONY L.
TOPIC: Discharge of a Negotiable Instrument
BENJAMIN EVANGELISTA, Petitioner,

vs.
SCREENEX INC. REPRESENTED BY ALEXANDER YU,
Respondent
FACTS:
In 1991, Benjamin Evangelista obtained a loan from the
respondent Screenex, Inc. in the amount of P1,500,000.00. As
security for the payment of the loan, Evangelista gave two open-
dated UCPB Check Nos. 616656 and 616657, both payable to the
order of Screenex, Inc. The checks were safe kept together with
all other documents and papers by Philip Gotuaco, Sr, father-in-
law of respondent Alexander Yu, until his death on November 19,
2004. Before the checks were deposited, respondent Yu,
through counsel, sent a demand letter to Evangelista demanding
payment. Thereafter, petitioner Evangelista was charged for
violation of BP 22 before Branch 61 of the Metropolitan Trial
Court of Makati (MeTC). The complaint alleged that the
Petitioner, at the time of the issuance of the checks, know fully
well, that he did not have sufficient funds in the drawee bank for
the payment of the checks in full. When the checks were
presented, they were dishonored by the drawee bank for the
reason “Account Closed” and despite receipt of notice of
dishonor, Evangelista failed to pay the said checks or make
arrangement for full payment within five banking days after
receipt of notice.
The Metropolitan Trial Court acquitted Evangelista, for failure of

the prosecution to establish all the elements constituting the
offense of BP 22. Evangelista is however ordered to pay the
amount of P1,500,000.00 plus 12% interest per annum from
date of filing of the Information until fully paid and to pay costs
of suit.
67
Evangelista appealed the case, concerning the payment of the
obligation in the amount of P1.5M, before the Regional Trial
Court with the additional ground on prescription. Regional Trial
Court dismissed the appeal and affirmed the decision of MeTC in
toto. Evangelista further appealed this before the Court of
Appeals which also affirmed the decision of the Regional Trial
Court.
ISSUES:
a) Whether or not the checks or obligations have been discharged
and/or barred by prescription?
b) Whether or not Petitioner Evangelista is still liable to pay the
obligation of P1,500,000.00?
RULING:
SC reversed the decision of the lower court and ruled in favor of
the petitioner, Evangelista. Evangelista is considered to have
been discharged from his obligation to pay the amount of P1.5M,
in accordance with Section 119 of the Negotiable Instruments
Law, which provides that “a negotiable instrument like a check
may be discharged by any other act which will discharge a simple
contract for the payment of money”. A check is subject to
prescription of actions upon a written contract and must be
brought within ten years from the time the right of actions
accrues (Article 1144, New Civil Code).
Considering that the check issued by Evangelista is undated, the

cause of action is reckoned from the date of the issuance of the
check in accordance with Section 17 of the Negotiable
Instruments Law which provides that “an undated check is
presumed dated as of the time of its issuance”. While Assuming
that Yu had the authority to insert the dates in the checks, the
fact that he did so after a lapse of more than 10 years from their
issuance certainly cannot qualify as changes made within a
reasonable time.
68

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SAN BEDA UNIVERSITY

College of Arts and Sciences

In partial fulfillment of the

FORM AND INTERPRETATION

Sec. 1. Requisites of Negotiability

HSBC v. CIR, G.R. No. 166018...............................................................1

CONSIDERATION AND NEGOTIATION

Sec. 24. Presumption of Consideration

Ubas v. Chan, G.R. No. 215910 .............................................................4

Pua v. Tiong and Teng, G.R. No. 198660 ................................................6

Sec 29. Liability of an Accommodation Party

Nissan v. Felipe, G.R. No. 199067 ........................................................10

Sec 52. Holder in Due Course

Patriminio v. Gutierrez and Marasigan, G.R. No. 187769......................12

RCBC v. Odrada, G.R. No. 219037........................................................14

Sec 66. Liability of a General Indorser

BDO v. Lao, G.R. No. 227005...............................................................16

BILLS OF EXCHANGE, PROMISSORY NOTES AND CHECKS

Philacor Credit Corporation v. CIR, G.R. No. 169899 ...........................18

Rivera v. Sps Chua, G.R. No. 184458 ...................................................21

Areza v. Express Savings Bank, G.R. No. 176697..................................24

Metrobank v. Chiong, G.R. No. 172652 ................................................26

Metrobank v. Bank of Commerce, G.R. No. 235511..............................28

Batas Pambansa Blg. 22

Sps Argovan and Gadtiano v. San Miguel, G.R. No. 188767..................31

Campos v. People of the Philippines, G.R. No. 187401..........................33

Lim v. People of the Philippines, G.R. No. 190834................................35

Navarra v. People of the Philippines, G.R. No. 203750..........................37

Lim v. Blue Pacific Holdings, Inc, G.R. No.224979 ...............................39

Alburo v. People of the Philippines, G.R. No. 196289............................41

Sumbilla v. Matrix Finance Corporation, G.R. No. 197582....................42

Alivio v. People of the Philippines, G.R. No. 213470..............................44

Magallanes v. Palmer Asia, Inc., G.R. No. 205179.................................46

Metrobank v. Rosales, G.R. No. 1832040..............................................49

People of the Philippines v. Wagas, G.R. No.157943 .............................51

Chua v. People of the Philippines, G.R. No. 196853..............................53

Sec 16. Delivery; When Effectual; When Presumed

Asia Brewery, Inc., G.R. No. 190432 ....................................................56

Sec 23. Forged Signature; Effect of

Land Bank v. Kho, G.R. No. 205839 ....................................................58

Sec 125.Material Alteration

Bognot v. RRI, G.R. No. 180144............................................................61

PRESENTMENT FOR ACCEPTANCE AND PAYMENT

KT Construction, Inc. v. Philippine Savings Bank, G.R. No. 228435......63

Sec 102. Time within which notice must be given

Dela Cruz v. People of the Philippines, G.R. No. 163494........................65

DISCHARGE OF NEGOTIABLE INSTRUMENTS

Evangelista v. Screenex, Inc., G.R. No. 211564.....................................67

THE HONGKONG AND SHANGHAI CORPORATION LIMITED-

HSBC performs, among others, custodial services on behalf of its

Whether or not the electronic messages are in compliance with

The electronic messages are not signed by the investor-clients as

WHEREFORE, the petitions are hereby GRANTED and the CTA

MANUEL C. UBAS, SR., Petitioner

On January 1,1998, petitioner entered into a verbal

On the other hand, respondent alleges that the latter was

RTC decided in favor of the of the petitioner, stating that the

CA reversed the decision of RTC, stating that the defendant

Whether or not respondent is liable for the unpaid checks

Yes, Section 24 of the NIL states that “Every negotiable

TING TING PUA, Petitioner,

INSTRUMENT: CHECK DRAWER: SPS BENITO AND