Nego Case List 6 and 7 Sec 70 To 118

NEGO
CASE LIST 6 and 7 Sec 70 to 118

CASE LIST 6
1. Far East Realty v. CA

Emergency Recit

Dy Hiat Tat, Gaw Suy, and Siy Chee (RESPONDENTS) approached Far East Realty Investment (FERI) in its office to ask for
an accommodation loan of Php4500. On September 13, 1960, respondents issued a Php4500 China Bank check to be
paid after one month to repay the loan.
March 5, 1964 the check was presented to China Bank but it bounced because the account was already closed. FERI
made multiple demands but failed to collect. Hence, they filed a case in the RTC to collect the Php4500.

Respondents defense:
1) They never asked for a loan from FERI. As can be seen from the endorsements at the back of the check, it
wasnt directly delivered to FERI and that the check passed through other hands since they issued the check
for other purposes (to pay their grocery bills from Sin Chin Juat Grocery). It wasnt, as FERI claims, a security
for their loan. Hence, respondents invoke the defense of lack of consideration for the check against FERI.
2) There is unreasonable delay in the presentment of the check hence, the are absolved from liability.

FERI responds:
1) Presentment and notice is not necessary when such would be useless anyway. It was seen that the account
was closed. Hence, the conduct of the drawer shows that he would have expected that the check would not
have been honoured anyway hence, the presentment was unnecessary
2) If there was delay, the drawer/endorsers are not absolved from liability, but only to the extent of the damage
they suffered by reason of the delay. And in this case, respondents didnt show any proof of damage suffered
therefore they are still liable for the entire amount.

HELD: There is unreasonable delay. Respondents are NOT liable to pay

RATIO:
(see ratio below for applicable general rules)

In the case at bar, it is obvious that notice and presentment were not made within reasonable time
Check was issued September 13, 1960 but only presented March 5, 1964
After dishonour by the bank, formal notice of dishonour to the respondents was only made April 27, 1968
FERI undoubtedly failed to exercise prudence and diligence as required by law
Also, he presented no justification for the unreasonable delay.

PARAS. J:

FACTS

September 13, 1960 Dy Hiat Tat, Gaw Suy, and Siy Chee (RESPONDENTS) approached Far East Realty Investment
(FERI) in its office to ask for an accommodation loan of Php4500
Needed the money for their business
Promised to pay solidarily after one month
Stipulated 14% interest rate
Delivered China Banking Corp. Check for Php4500 drawn by Dy Hian Tat and signed by all of them at the back
o Agreement that after one month, the check will be redeemed by them by paying cash, or the check
can be presented to the bank who hill honor it and pay

May 5, 1964 the check was presented to China Bank but bounced
Reason: the current account of the Dy Hiat Tat was already closed
Petitioner made multiple demands for payment but respondents didnt pay

Private Respondent Gaw Suys defense with counterclaim:
2C AQUINO. BASCARA. DEL ROSARIO. DURAN. FU. GERALDEZ. KING. LAGOS. LIBONGCO. LOPA. PEREZ DE TAGLE. NARVASA. RIVERA. SANTOS. TIU. VELASQUEZ
NEGO CASE LIST 6 and 7 Sec 70 to 118

1)
2)
Petitioner has no cause of action against him because it appears that his endorsement on the back of the
check was for and on behalf of his principal, Victory Hardware, and not for his own individual account
hence, he cannot be made personally liable
Assuming arguendo that he acted in his own capacity as endorser, he is still discharged from paying
because in the delay in presentment of the check for payment

RESPONDENTS answer with counterclaim:
1) They never had any transaction with FERI they never approached FERI to ask for a loan. From his
memory, what happened was:
o The check was drawn by Dy Bun Kim (son of Di Hiat Tat) and delivered to Sin Chin Juat Grocery in
payment for groceries for the GoodYear Lumber
o Hence, the check was not delivered directly to FERI as FERI claims. Therefore, the Php4500 cash
alleged to have been delivered by FERI could not be considered as the consideration for FERI as
holder of the check because such check was not even delivered to them
o Therefore, FERI cannot be considered a HIDC or for value
o Hence, they cannot collect due to RESPONDENTS defense of lack of consideration
2) There was unreasonable delay in the presentment of the check
o The check was dated September 13, 1960 and deposited only March 5, 1964. Hence, the
unreasonable delay in presentment wholly discharged the endorser and drawer
o In order to charge persons secondarily liable, such as drawers and indorsers, the instrument must be
presented for payment on the date and period therein mentioned in the instrument, if it is payable on
a fixed date, or within a reasonable time after issuance otherwise the drawer and indorsers are
discharged from liability
o The delay in in the presentment cannot be construed as a reasonable time

May 9, 1968 - complaint filed in RTC Manila against private respondents for collection and payment of Php4500
representing the face value of an unpaid and dishonoured check

RTC Decision ruled in favour of petitioner
Judgment ordering the 3 defendants to solidarily pay Php4500

CA petition of review reversed RTC decision!
Basis:
o The check was not given as collateral to guarantee a loan secured by respondents because it passed
through other hands before reaching FERI
o Check was not presented within reasonable time after its issuance

FERI argues:
1) Presentment for payment may be dispensed with if it will be useless. Presentment for payment is not
required in order to charge the drawer and that notice of dishonour is not required to be given to the
drawer where he has no right to expect or require that the drawee or acceptor will pay or honor the
instrument.
o Since it was found that the account was closed, presentment would have been useless since by the
conduct of the drawer (by closing his account or issuing the check knowing he had insufficient or no
funds), he didnt expect that the check would be honoured anyway
o Hence, drawer will still be liable even if there was no presentment because such presentment would
have been useless because of the conduct and action of the drawer in the matter where the check is
drawn on insufficient or no funds
Therefore, where presentment for payment and notice of dishonour are not necessary as when funds are
insufficient to meet a check, the drawer is liable, whether such notice or presentment be totally omitted or
merely delayed

2) Also, when presentment/notice is required to be made without reasonable delay, the drawer is
discharged pro tanto or only up to the degree of loss suffered by reason of delay and in this case, FERI
has not shown any evidence of any loss they suffered

ISSUES:
W/N Far East Realty presented the check for payment within reasonable time NO

W/N Far East Realty can collect NO

HELD: Petition DENIED. CA decision AFFIRMED

RATIO:

General Rule on when presentment should be made:
Where the instrument is not payable on demand, presentment must be made on the day it falls due.
Where it is payable on demand, presentment must be made within a reasonable time after issue
o Except in the case of a bill of exchange, presentment for payment will be sufficient if made within a
reasonable time after the last negotiation thereof

General Rule on notice of dishonor:
Notice may be given as soon as the instrument is dishonoured; and unless delay is excused must be given
within the time fixed by law

General Rule regarding reasonable time
No hard and fast demarcation line can be drawn between what may be considered as a reasonable or an unreasonable
time, because reasonable time depends upon the peculiar facts and circumstances in each case.
Reasonable time so much time as is necessary under the circumstances for a reasonable prudent and diligent
man to do, conveniently, what the contract or duty requires should be done, having a regard for the rights and
possibility of loss, if any, to the other party

In the case at bar, it is obvious that notice and presentment were not made within reasonable time
Check was issued September 13, 1960 but only presented March 5, 1964
After dishonour by the bank, formal notice of dishonour to the respondents was only made April 27, 1968
FERI undoubtedly failed to exercise prudence and diligence as required by law
Also, he presented no justification for the unreasonable delay.

Hence, petition DENIED.

2. PNB v Seeto
Emergency Recits:
-
Seeto indorsed a check in the amount of P5,000 to PNB, Surigao
-
The check was dishonored. Seeto would not refund the amount of the check.
-
PNB sued Seeto.
-
The silence of 186 as to the indorser is due to the fact that his discharge is already expressly covered by the
provision of Section 84, the indorser being a person secondarily liable on the instrument. The reason for the
difference between the liability of the indorser and that of the drawer in case of dishonor is that the drawer is
not probably or necessarily prejudiced thereby, while an indorser is, actually or by legal presumption.
-
Any prior or contemporaneous conversation in connection with a note or its indorsement, may be proved by
parol evidence. An extrinsic agreement between indorser and indorsee which cannot be embodied in the
instrument without impairing its credit is provable by parol.

Facts:
-
Parties to the instrument:
o Gan Yek Kiao (drawer); PNB, Cebu branch (drawee bank); Benito Seeto (indorser); PNB, Surigao
branch (indorsee/payee)
-
Mar. 1948: Benito Seeto (Seeto) presented a check at the Philippine National Bank (PNB), Surigao branch, in
the amount of P5,000 dated at Cebu in March 10, 1948, payable to cash or bearer, and drawn by Gan Yek Kiao
against the PNB, Cebu branch.
-
Seeto made a general and unqualified indorsement of the check. PNBs agency accepted it and paid Seeto the
amount of P5,000.
-
The check was mailed to the Cebu branch (Mar 20,1948) and was presented (April 9,1948) but the check was
dishonored for insufficiency of fund. The check was returned to the Surigao agency. Said branch immediately
sent a letter to Seeto demanding the refund of the value of the check.

A second communication of the same tenor was sent. Seeto answered asking that a suit be deferred
while he was making inquiries about the reasons for the dishonor of the check.
o Seeto still refused to refund the value of the check, claiming that at the time of the negoation, Gan
Yek Kiao (Gan) had sufficient funds in the Cebu branch. That if the Surigao branch had not delayed to
forward the check until Gans funds were exhausted, the same would have been paid.
-
PNB filed a complaint in the CFI of Surigao, alleging that Seeto gave assurance to the Surigao agency that Gan
had sufficient funds in the Cebu branch and that upon these assurances they delivered the amount to Seeto
after he had made a general and unqualified indorsement.
-
Seeto denied having made the assurances.
-
PNB presented 2 witnesses who testified that Seeto made said assurances and that if the check be dishonored
he would refund the amount paid.
-
The CFI found that, notwithstanding his denial, Seeto made an undertaking to refund the amount in the event
of dishinor.
o It was impossible for PNBs agency to make an independent verification of Gans solvency and must
have taken precautions to protect itself against loss by requiring Seeto to make assurances that he
would return the amount in the case of non-payment.
o There was also no unreasonable delay, therefore, Seeto had to make the refund.
-
On appeal, the CA held that PNB was guilty of unreasonably retaining and with-holding the check and that this
delay in presentment for payment was inexcusable. Seeto was discharged from liability.
-
Hence this appeal.
Primary Issue:
W/N Seeto is liable for the check (No)

Ratio:
-
PNB contends that the CA erred in applying Secs. 143 and 144 of the NIL and that Seeto be discharged of
liability.
o PNB: A check need not be presented for acceptance, unlike bills of exchange as required by Secs. 143-
144. And that Sec. 84 was applicable.

SEC. 84. Liability of person secondarily liable, when instrument dishonored. Subject to the
provisions of this Act, when the instrument is dishonored by nonpayment, as immediate right of
recourse to all parties secondarily liable thereon accrues to the holder.
o
SC agreed that Secs.143-144 are not applicable and that Sec. 84 was applicable but its application is
subject to the condition imposed by Section 186, to the effect that the check must be presented for
payment within a reasonable time after its issue.
SEC. 186. Within what time a check must be presented. A check must be presented for
payment within a reasonable time after its issue or the drawer will be discharged from liability
thereon to the extent of the loss caused by the delay.
PNB, however, argues that Sec. 186 is silent as to the liability of the indorser, and that he may not be
considered discharged from liability by reason of the delay in the presentment of payment under the
general principle inclusio unius est exclusion alterius. We find no reason nor merit in the argument.
The silence of 186 as to the indorser is due to the fact that his discharge is already expressly covered
by the provision of Section 84, the indorser being a person secondarily liable on the instrument. The
reason for the difference between the liability of the indorser and that of the drawer in case of
dishonor is that the drawer is not probably or necessarily prejudiced thereby, while an indorser is,
actually or by legal presumption.
We have been unable to find any authority sustaining the proposition that an indorser of a check is
not discharged from liability for an unreasonable delay in presentation for payment. This is contrary
to the essential nature and character of negotiable instruments their negotiability. They are
supposed to be passed on with promptness in the ordinary course of business transactions; not to be
retained or kept for such time as the holder may want, otherwise the smooth flow of commercial
transactions would be hindered.
It is not claimed by PNB on this appeal finding that there was unreasonable delay in the presentation
of the check for payment is erroneous. PNB concedes the correctness of this conclusion, although for
purposes of argument merely. We find that the conclusion is correct. The fact, admitted by the
witnesses for PNB, the checks for the drawer issued subsequent to Mar. 13, 1948, drawn against the
same bank and cashed at the same Surigao agency, were not dishonored positively shows that the

drawer had enough funds when he issued the check in question, and that had it not been for the
unreasonable delay in its presentation for payment, the petitioner herein would have been able to
receive payment therefor.
PNB also argues that the verbal assurances given by Seeto to the employees of the bank that he was ready to
refund the amount if the check should be dishonored by the Cebu branch is a collateral agreement, separate
and distinct from the indorsement, by virtue of which petitioner herein was induced to cash the check, and,
therefore, admissible as an exception that the parol evidence rule.
o SC: any prior or contemporaneous conversation in connection with a note or its indorsement, may be
proved by parol evidence. An extrinsic agreement between indorser and indorsee which cannot be
embodied in the instrument without impairing its credit is provable by parol.
o The supposed assurances of refund in case of dishonor of the check are precisely the ordinary
obligations of an indorser, and these obligations are, under the law, considered discharged by an
unreasonable delay in the presentation of the check for payment.
SEC. 66. Liability of general indorser. . . . .
And, in addition, he engages that on due presentment, it shall be accepted or paid, or both, as the
case may be, according to its tenor, and that if it be dishonored, and the necessary proceedings on
dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser
who may be compelled to pay it.
o
There was no express obligation assumed by the respondent herein that the drawer would always
have funds, or that he (the indorser) would refund the amount of the check even if there was delay in
its presentation.

3. RAYMUNDO A. CRYSTAL vs. COURT OF APPEALS AND PELAGIA OCANG, PACITA, TEODULO, FELICISIMO PABLO,
LYDIA DIOSCORA and, RODRIGO, all surnamed DE GRACIA

Perez de Swag-leh

Emergency Recit:
Crystal acquired 4 parcels of land through an assigned right of redemption

o He paid by depositing a check for PHP 11,200 with the Sheriff of Cebu
Was dispossessed by former owner Ocang, who justified her actions by alleging that the redemption was void
due to the check allegedly being dishonored due to lack of sufficient funds
In an existing civil case, Crystal filed a motion to hold Ocang in contempt, which was denied.
A writ of possession granted to Ocang in an existing civil case concerning the property
Contested by Crystal; FAIL
Appealed to CA by Crystal; FAIL
SC by Crystal; FAIL
MR in SC by Crystal; WIN
o Court held that there needed to be a determination of whether the check was dishonored or if it was
rendered stale
o If dishonored, doubtless the redemption would be void.
o If rendered stale, however, then it becomes imperative that the circumstances that caused its non-
presentment be determined, for if this was not due to the fault of the petitioner, then it would be
unfair to deprive him of the rights he had acquired as redemptioner, particularly, the value of the
check has otherwise been received or realized by the party concerned.
Furthermore, there were circumstances that led the SC to believe that Ocang may have actually received the
money, after all.

For these reasons, the SC remanded the case to the CFI Cebu to, among other things, receive evidence and
determine w/n the redemption was valid particularly w/ respect to the check issued by Crystal

I.

II.

III.
IV.
Facts
st
(1 case) Civil case, CFI Cebu:
o Pelagia Ocang, et al. vs. Vidal Montayre, as administrator of the estate of Nicolas Rafols
o Judgment was rendered ordering the defendant to pay the plaintiffs P 30,609.00 as damages.
On appeal SC affirmed the decision of the trial court.
After the judgment had become final, a writ of execution was issued
o 5 parcels of land belonging to the estate, situated at Toledo, Cebu, were sold at public auction to
Ocang as the highest bidder for P 10,000.00
1958, the heirs of Nicolas Rafols assigned their right of redemption over 4 of the 5 parcels of land to Crystal
1958, by virtue of the order, Crystal deposited a check for P 11,200.00 with the Provincial Sheriff of Cebu
1958, the Provincial Sheriff issued a deed of redemption
o Pursuant to the deed, Crystal took possession of the lands and cultivated the same.
1960, Ocang, in contempt, took of the 4 parcels of land, claiming that:
o Since the check for the redemption was dishonored for lack of sufficient finds, the redemption was
null and void.
st
Crystal then filed a motion in the 1 case seeking to cite Ocang in contempt of court.
o The trial court denied the motion to hold Ocang in contempt of court

nd
(2 case) Crystal filed a case against Ocang seeking declaration of ownership in his favor, plus damage.
nd
o During the pendency of 2 case, however, Crystal was able to regain possession of the four (4)
parcels of land.
o [Swag-leh] this case is not so important, SC holds it moot and academic later.

st
1969, trial court in 1 case granted a writ of possession of the four (4) parcels of land to Ocang
o Writ was set aside pursuant to motion to set aside by Crystal
o 1971, Writ was revived, deed of sale from public auction confirmed as valid
1971, MR by Crystal denied
[CA] Petition for certiorari with by Crystal denied
o Held that petitioner's redemption of the property acquired by said respondents in an execution sale
st
pursuant to a final judgment of the trial court in 1 case was invalid inasmuch as the check which
Crystal had used in paying the redemption price had been either dishonored or had become state
[SC] Petition for certiorari
o 1975, Affirmed CA, however
o 1975, MR by Crystal granted as well as a TRO
Issues in the MR
W/N the redemption was valid given the status of the check issued by Crystal
o Not enough evidence, remanded to CFI for further proceedings
Held
WHEREFORE, the decision of this Court of February 25, 1975 is hereby reconsidered and modified in line with
the foregoing opinion and this case is remanded to the trial court for further proceedings as therein indicated.

Ratio (only pertinent to Nego; there is a lot more on jurisdiction etc, but so boring!)
More importantly, what impresses Us in the motion for reconsideration is the possible injustice that might
result from our unqualified reliance in our decision on the finding of the Court of Appeals that the check for
P11,200 paid by petitioner for the redemption in dispute had been dishonored, in the face of the other finding
in the same decision of the Court of Appeals indicating that instead of having been dishonored, the said check
had become stale, albeit it was being replaced with new ones from time to time.
Surely, for a check to the dishonored upon presentment on the one hand, and to be stale for not being
presented at all in time, on the other, are incompatible developments that naturally have variant legal
consequences.

Thus, if needed the check in question had been dishonored, then there can be no doubt that
petitioner's redemption was null and void.
o On the other hand, if it had only become stale, then it becomes imperative that the circumstances
that caused its non-presentment be determined, for if this was not due to the fault of the petitioner,
then it would be unfair to deprive him of the rights he had acquired as redemptioner, particularly, the
value of the check has otherwise been received or realized by the party concerned.
From the motion for reconsideration and its annexes, We gather that petitioner has ready evidence showing
that when Pelagia Ocang secured the writ of possession in question, she had already been paid the full amount
of the check in dispute.

o
4. MYRON PAPA, Administrator of the Testate Estate of Angela Butte v. A. U. VALENCIA and CO. INC., FELIX
PENARROYO, SPS. REYES & AMANDA SANTOS AND DELFIN

Emergency Recit:

Penarroyo and Valencia bought a lot in QC from Papa, acting as attorney-in-fact of Angela M. Butte. Long story short, 2
payments given: (1) cash P5,000 in earnest money and (2) check worth P40,000. Papa did not want to transfer the TCTs
in their name for many reasons but the relevant one is that he alleges that the payment was not completed because he
did not encash the checks.

Papas claim relies on Art. 1249 of the Civil Code which provides that payment by checks shall produce the effect of
payment only when they have been cashed or when through the fault of the creditor they have been impaired. Court
held that check payment was valid for the following reasons (doctrines):
After more than ten (10) years from the payment in part by cash and in part by check, the presumption is that
the check had been encashed.
Granting that petitioner had never encashed the check, his failure to do so for more than ten (10) years
undoubtedly resulted in the impairment of the check through his unreasonable and unexplained delay.
While it is true that the delivery of a check produces the effect of payment only when it is cashed, pursuant to
Art. 1249 of the Civil Code, the rule is otherwise if the debtor is prejudiced by the creditors unreasonable
delay in presentment. The acceptance of a check implies an undertaking of due diligence in presenting it for
payment, and if he from whom it is received sustains loss by want of such diligence, it will be held to
operate as actual payment of the debt or obligation for which it was given.
If no presentment is made at all, the drawer cannot be held liable irrespective of loss or injury unless
presentment is otherwise excused.
Article 1249 of the Civil Code
o Payment by way of check or other negotiable instrument is conditioned on its being cashed, except
when through the fault of the creditor, the instrument is impaired. The payee of a check would be a
creditor under this provision and if its non-payment is caused by his negligence, payment will be
deemed effected and the obligation for which the check was given as conditional payment will be
discharged.

FACTS:
A.U. Valencia and Co., Inc. (Valencia) and Felix Pearroyo (Pearroyo), filed with the RTC a complaint for
specific performance against Myron C. Papa, in his capacity as administrator of the Testate Estate of one
Angela M. Butte.

Facts according to the respondents:
Papa, acting as attorney-in-fact of Angela M. Butte, sold to Pearroyo, through Valencia, a parcel of land
located at corner Retiro and Cadiz Streets, La Loma, Quezon City (TCT 28993, Register of Deeds QC)
Butte mortgaged several pieces of land, including the aforementioned, to the Associated Banking Corporation.
Butte passed away after the alleged sale but before the title to the subject property had been released.
Bank refused to release the title to Penarroyo until all the mortgaged properties of Butte were also redeemed.
In order to protect his rights and interests over the property, Penarroyo caused the annotation on the title of
an adverse claim.
When the title was released, Valencia and Penarroyo discovered that the mortgage rights of the bank had
been assigned to one Parpana (deceased) as a special administrator of the Estate of Ramon Papa Jr.
o since then, Myron Papa (petitioner) had been collecting monthly rentals in the amount of P800 from
the tenants of the property with the knowledge that the same had already been sold to private
respondents
Despite repeated demands from Valencia and Penarroyo, Papa refused and failed to deliver the title to the
property.
Valencia and Penarroyo filed a complaint for specific performance praying for the ff:
o delivery of the title to the subject property
o turn over the sum of P72,000 as accrued rentals
o pay P20,000 as attorneys fees
o pay costs of the suit

Facts according to the petitioner:
Admitted that the lot had been mortgaged to the Associated Banking Corporation.
Contended that the complaint did not state a cause of action.
The real property in interest was the testate estate of Butte, which should have been joined as a party
defendant. Should have been filed in Special Proceedings before the Probate Court in QC.
If as alleged in the complaint, the property had been assigned to Tomas L. Parpana, as special administrator of
the Estate of Ramon Papa, Jr., said estate should be impleaded.
Petitioner claimed that he could not remember the transaction of sale. He also claimed that he did not have
TCT in his possession.
He could not be held personally liable as he signed the deed merely as attorney-in-fact of Butte.
Charged the respondents P20,000 for attorneys fees.
Jao was allowed to intervene in the case. He alleged that the lot had been sold to Penarroyo through Valencia
and was in turn sold to him for P71,500
o He prayed that judgment be rendered in favor of Valencia and Penarroyo, and after the delivery of
the title to the respondents, the latter be ordered to execute in his favor the appropriate deed of
conveyance as well as to pay him rentals being sought from Papa.
o Sought payment for moral damages, attorneys fees and costs

Papa filed a third-party complaint against spouses Reyes

o alleged that Butte was the owner of the property but due to non-payment of real estate taxes, the
property was sold at public auction to Reyes spouses
o Period of redemption had expired
o Valencia and Penarroyo sued petitioner Papa as administrator of Buttes estate
o spouses Reyes admitted that the price paid by them was insufficient and that they were willing to add

the amount or a minimum of P55,000 upon delivery of the property

Papa was willing to reimburse Reyes for whatever amount they paid for taxes and other charges because
property was still registered in Buttes name
Prayers:
judgment be rendered cancelling the tax sale to respondent Reyes spouses
restoring the subject property to him upon payment by him to said respondent Reyes spouses of the
amount of P14,000.00, plus legal interest
Valencia and Pearroyo to pay him at least P55,000.00 plus everything they might have to pay the
Reyes spouses in recovering the property.
Ruling of RTC:
1)
2)
Allowing defendant to redeem from third-party defendants and ordering the latter to allow the former to
redeem the property in question, by paying the sum of P14,000.00 plus legal interest of 12% thereon from
January 21, 1980;
Ordering defendant to execute a Deed of Absolute Sale in favor of plaintiff Felix Pearroyo covering the
property in question and to deliver peaceful possession and enjoyment of the said property to the said plaintiff,
free from any liens and encumbrances;
Should this not be possible, for any reason not attributable to defendant, said defendant is ordered to pay to
plaintiff Felix Pearroyo the sum of P45,000.00 plus legal interest of 12% from June 15, 1973;
3)
Ordering plaintiff Felix Pearroyo to execute and deliver to intervenor a deed of absolute sale over the same
property, upon the latters payment to the former of the balance of the purchase price of P71,500.00;
Should this not be possible, plaintiff Felix Pearroyo is ordered to pay intervenor the sum of P5,000.00 plus
legal interest of 12% from August 23, 1973; and
4)
Ordering defendant to pay plaintiffs the amount of P5,000.00 for and as attorneys fees and litigation expenses.

Appeal in the CA:
Papa alleged that the sale never consummated as he did not encash the chech (P40,000) given by Valencia and
Penarroyo in payment of the full purchase price of the lot. Claimed that only amount paid was P5,000 in cash
as earnest money

Ruling of the CA:
WHEREFORE, the second paragraph of the dispositive portion of the appealed decision is MODIFIED, by ordering the
defendant-appellant to deliver to plaintiff-appellees the owners duplicate of TCT No. 28993 of Angela M. Butte and the
peaceful possession and enjoyment of the lot in question or, if the owners duplicate certificate cannot be produced, to
authorize the Register of Deeds to cancel it and issue a certificate of title in the name of Felix Pearroyo. In all other
respects, the decision appealed from is AFFIRMED. Costs against defendant-appellant Myron C. Papa.

CA held that contrary to petitioners claim that he did not encash the aforesaid check, and therefore, the sale
was not consummated, there was no evidence at all that petitioner did not, in fact, encash said check.
o Pearroyo testified in court that petitioner Papa had received the amount of P45,000.00 and issued
receipts therefor.
o The presumption is that the check was encashed, especially since the payment by check was not
denied by Papa who, in his Answer, merely alleged that he can no longer recall the transaction which
is supposed to have happened 10 years ago.

ISSUES:
1.
W/N THE FINDING OF THE CA THAT THE SALE WAS CONSUMMATED IS GROUNDED ON SPECULATION
OR CONJECTURE, AND IS CONTRARY TO THE APPLICABLE LEGAL PRINCIPLE

(Non-Nego Issues)
2.
W/N THE CA ERRED BECAUSE IT, IN EFFECT, CANCELLED OR NULLIFIED AN ASSIGNMENT OF THE SUBJECT
PROPERTY IN FAVOR OF THE ESTATE OF RAMON PAPA, WHICH IS NOT A PARTY IN THIS CASE.
3.
W/N THE CA ERRED IN NOT HOLDING THAT THE ESTATE OF BUTTE AND THE ESTATE OF R. PAPA ARE
INDISPENSIBLE PARTIES IN THIS CASE

RATIO:
Art. 1249 of the Civil Code

o payment by checks shall produce the effect of payment only when they have been cashed or when
through the fault of the creditor they have been impaired.

Petitioner, while admitting that he had issued receipts for the payments, asserts that said receipts, particularly
the receipt of PCIB Check No. 761025 in the amount of P40,000.00, do not prove payment.
o Claims that if the check had been encashed, respondent Pearroyo should have presented PCIB
Check No. 761025 duly stamped received by the payee, or at least its microfilm copy.
2 Payments in the case:
1.
2.
Cash P5,000 in cash as earnest money

Check P40,000 for purchase price
After more than ten (10) years from the payment in part by cash and in part by check, the presumption is that
the check had been encashed.
Granting that petitioner had never encashed the check, his failure to do so for more than ten (10) years
undoubtedly resulted in the impairment of the check through his unreasonable and unexplained delay.
While it is true that the delivery of a check produces the effect of payment only when it is cashed, pursuant to
Art. 1249 of the Civil Code, the rule is otherwise if the debtor is prejudiced by the creditors unreasonable
delay in presentment. The acceptance of a check implies an undertaking of due diligence in presenting it for
payment, and if he from whom it is received sustains loss by want of such diligence, it will be held to
operate as actual payment of the debt or obligation for which it was given.
If no presentment is made at all, the drawer cannot be held liable irrespective of loss or injury unless
presentment is otherwise excused.
Article 1249 of the Civil Code
o Payment by way of check or other negotiable instrument is conditioned on its being cashed, except
when through the fault of the creditor, the instrument is impaired. The payee of a check would be a
creditor under this provision and if its non-payment is caused by his negligence, payment will be
deemed effected and the obligation for which the check was given as conditional payment will be
discharged.

(End of Nego Issues)
Despite the assignment of mortgage rights, the title to the subject property has remained in the name of the
late Angela M. Butte. Admitted by all parties.
Estates of Butte and R. Papa are not indispensable parties.
WHEREFORE, the petition for review is hereby DENIED and the Decision of the Court of Appeals, dated 27 January
1992 is AFFIRMED.
SO ORDERED.
Davide, Jr., Bellosillo, and Vitug, JJ., concur.


5. THE INTERNATIONAL CORPORATE BANK vs SPOUCES GUECO

Emergency Recit: (Sorry its kinda long, a lot of doctrines. Dont know what to omit.)
Gueco spouces obtained a loan from ICB to purchase a car. They executed PNS and a chattel over the car, in
consideration of the loan. They defaulted. The bank and the spouces agreed to lower the debt, and still they didnt pay.
Thereafter, they tendered a managers check in favor of the bank. Nonetheless, the car was still kept from the spouses
because they refused to sign the joint motion to dismiss. The bank averred that the joint motion to dismiss is part of
standard office procedure to preclude the filing of other claims. Because of this, the spouses filed an action for
damages against the bank. And by the time the case was instituted, the check had become stale in the hands of the
bank.
Issue: Whether the bank was negligent in opting not to deposit or use the managers check.
Held: NO.
A stale check is one, which has not been presented for payment within a reasonable time after its issue. It is
valueless and, therefore, should not be paid.
Under the negotiable instruments law, an instrument not payable on demand must be presented for payment
on the day it falls due.
When the instrument is payable on demand, presentment must be made within a reasonable time after its
issue. In the case of a bill of exchange, presentment is sufficient if made within a reasonable time after the last
negotiation thereof.
A check must be presented for payment within a reasonable time after its issue, and in determining what is a
"reasonable time," regard is to be had to the nature of the instrument, the usage of trade or business with
respect to such instruments, and the facts of the particular case. The test is whether the payee employed such
diligence as a prudent man exercises in his own affairs. This is because the nature and theory behind the use of
a check points to its immediate use and payability. In a case, a check payable on demand which was long
overdue by about two and a half (2-1/2) years was considered a stale check.
Herein, the check involved is not an ordinary bill of exchange but a manager's check. A manager's check is one
drawn by the bank's manager upon the bank itself. It is similar to a cashier's check both as to effect and use. A
cashier's check is a check of the bank's cashier on his own or another check. In effect, it is a bill of exchange
drawn by the cashier of a bank upon the bank itself, and accepted in advance by the act of its issuance. It is
really the bank's own check and may be treated as a promissory note with the bank as a maker.
The check becomes the primary obligation of the bank which issues it and constitutes its written promise to
pay upon demand. The mere issuance of it is considered an acceptance thereof. If treated as promissory note,
the drawer would be the maker and in which case the holder need not prove presentment for payment or
present the bill to the drawee for acceptance.
Even assuming that presentment is needed, failure to present for payment within a reasonable time will result
to the discharge of the drawer only to the extent of the loss caused by the delay. Failure to present on time,
thus, does not totally wipe out all liability. In fact, the legal situation amounts to an acknowledgment of
liability in the sum stated in the check.
In this case, the Gueco spouses have not alleged, much less shown that they or the bank which issued the
manager's check has suffered damage or loss caused by the delay or non-presentment. Definitely, the original
obligation to pay certainly has not been erased. It has been held that, if the check had become stale, it
becomes imperative that the circumstances that caused its non-presentment be determined. Herein, the bank
held on the check and refused to encash the same because of the controversy surrounding the signing of the
joint motion to dismiss. The Court saw no bad faith or negligence in this position taken by the Bank.
I. FACTS

The respondent Gueco Spouses obtained a loan from The petitioner International Corporate Bank(The Bank)
(now Union Bank of the Philippines) to purchase a car - a Nissan Sentra 1600 4DR, 1989 Model.
o In consideration thereof, the Spouses executed promissory notes which were payable in monthly
installments and chattel mortgage over the car to serve as security for the notes.
o The Spouses defaulted in payment of installments.
Consequently, the Bank filed a civil action docketed for "Sum of Money with Prayer for a Writ of
1
Replevin" before the Metropolitan Trial Court of Pasay City.
Dr. Francis Gueco was served summons and was fetched by the sheriff and representative of the bank for a
meeting in the bank premises. Desi Tomas, the Bank's Assistant Vice President demanded payment of the
amount of P184,000.00 which represents the unpaid balance for the car loan.
After some negotiations and computation, the amount was lowered to P154,000.00, However, as a result of
the non-payment of the reduced amount on that date, the car was detained inside the bank's compound.
Dr. Gueco went to the bank and talked with its Administrative Support, Auto Loans/Credit Card Collection
Head, Jefferson Rivera. The negotiations resulted in the further reduction of the outstanding loan to
P150,000.00.
Dr. Gueco then delivered a manager's check in amount of P150,000.00 but the car was not released because of
his refusal to sign the Joint Motion to Dismiss.
It is the contention of the Gueco spouses and their counsel that Dr. Gueco need not sign the motion for joint
dismissal considering that they had not yet filed their Answer.
The Bank, however, insisted that the joint motion to dismiss is standard operating procedure in their bank to
effect a compromise and to preclude future filing of claims, counterclaims or suits for damages.
After several demand letters and meetings with bank representatives, the respondents Gueco spouses
initiated a civil action for damages before the Metropolitan Trial Court of Quezon City, which dismissed the
complaint for lack of merit.
RTC reversed MTC decision. It held that there was a meeting of the minds between the parties as to the
reduction of the amount of indebtedness and the release of the car but said agreement did not include the
signing of the joint motion to dismiss as a condition sine qua non for the effectivity of the compromise. The
court further ordered the bank: to return the car, and pay damages.
CA: Affirmed RTC decision

Issue/Held:
1. THE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS NO AGREEMENT WITH RESPECT TO THE
EXECUTION OF THE JOINT MOTION TO DISMISS AS A CONDITION FOR THE COMPROMISE AGREEMENT. NO! CA
& RTC were correct.
a. The issue as to what constitutes the terms of the oral compromise or any subsequent novation is a
question of fact that was resolved by the Regional Trial Court and the Court of Appeals in favor of The
Bank. It is well settled that the findings of fact of the lower court, especially when affirmed by the
Court of Appeals, are binding upon this Court. While there are exceptions to this rule, the present
case does not fall under anyone of them, The Bank's claim to the contrary, notwithstanding.
2. THE COURT OF APPEALS ERRED IN GRANTING MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES IN
FAVOR OF THE RESPONDENTS.
a. Fraud has been defined as the deliberate intention to cause damage or prejudice. It is the voluntary
execution of a wrongful act, or a willful omission, knowing and intending the effects which naturally
and necessarily arise from such act or omission;
b. We fail to see how the act of The Bank bank in requiring the respondent Gueco Spouces to sign the
joint motion to dismiss could constitute as fraud.
3. NEGO ISSUE: THAT THE COURT OF APPEALS ERRED IN HOLDING THAT THE BANK RETURN THE SUBJECT CAR TO
THE RESPONDENTS, WITHOUT MAKING ANY PROVISION FOR THE ISSUANCE OF THE NEW
MANAGER'S/CASHIER'S CHECK BY THE RESPONDENTS IN FAVOR OF THE BANK IN LIEU OF THE OF THE
ORIGINAL CASHIER'S CHECK THAT ALREADY BECAME STALE
a. We, likewise, find for The Bank with respect to the third assigned error. Guecos have to pay.

Ratio:

Third Issue (NEGO ISSUE)
We, likewise, find for The Bank with respect to the third assigned error.
In the meeting with The Bank, respondent Dr. Gueco delivered a manager's check representing the reduced
amount of P150,000.00.
o Said check was given to Mr. Rivera, a representative of respondent bank.
However, since Dr. Gueco refused to sign the joint motion to dismiss, he was made to execute a statement to
the effect that he was withholding the payment of the check.
Subsequently, in a letter addressed to Ms. Desi Tomas, vice president of the bank, Dr. Gueco instructed the
bank to disregard the 'hold order" letter and demanded the immediate release of his car,
To which the VP Tomas replied that the condition of signing the joint motion to dismiss must be satisfied and
that they had kept the check which could be claimed by Dr. Gueco anytime.
While there is controversy as to whether the document evidencing the order to hold payment of the check

was formally offered as evidence by petitioners, it appears from the pleadings that said check has not been
encashed.
The decision of the Regional Trial Court, which was affirmed in toto by the Court of Appeals, orders the petitioner:
1.
2.
To return immediately the subject car to the appellants in good working condition.
The Bank may deposit the Manager's Check - the proceeds of which have long been under the control of the
issuing bank in favor of The Bank since its issuance, whereas the funds have long been paid by the spouces
Guecos to secure said Manager's Check over which the spouces have no control.
The Spouces Guecos would make us hold that The Bank should return the car or its value and that the latter,

because of its own negligence, should suffer the loss occasioned by the fact that the check had become stale. It
is their position that delivery of the manager's check produced the effect of payment and, thus, petitioner was
negligent in opting not to deposit or use said check. Rudimentary sense of justice and fair play would not
countenance respondents' position.
Doctrines
A stale check is one which has not been presented for payment within a reasonable time after its issue. It is
valueless and, therefore, should not be paid. Under the negotiable instruments law, an instrument not payable
on demand must be presented for payment on the day it falls due. When the instrument is payable on demand,
presentment must be made within a reasonable time after its issue. In the case of a bill of exchange,
presentment is sufficient if made within a reasonable time after the last negotiation thereof.

A check must be presented for payment within a reasonable time after its issue, and in determining what is a
"reasonable time," regard is to be had to the nature of the instrument, the usage of trade or business with
respect to such instruments, and the facts of the particular case. The test is whether the payee employed such
diligence as a prudent man exercises in his own affairs. This is because the nature and theory behind the use of
a check points to its immediate use and payability. In jurisprudence, a check payable on demand which was
long overdue by about two and a half (2-1/2) years was considered a stale check. Failure of a payee to encash
a check for more than ten (10) years undoubtedly resulted in the check becoming stale. Thus, even a delay of

one (1) week or two (2) days, under the specific circumstances of the cited cases constituted unreasonable
time as a matter of law.
Applied to the case
The check involved is not an ordinary bill of exchange but a manager's check. A manager's check is one drawn
by the bank's manager upon the bank itself.
o It is similar to a cashier's check both as to effect and use. A cashier's check is a check of the bank's
cashier on his own or another check.
o In effect, it is a bill of exchange drawn by the cashier of a bank upon the bank itself, and accepted in
advance by the act of its issuance. It is really the bank's own check and may be treated as a
promissory note with the bank as a maker.
o The check becomes the primary obligation of the bank which issues it and constitutes its written
promise to pay upon demand. The mere issuance of it is considered an acceptance thereof. If treated
as promissory note, the drawer would be the maker and in which case the holder need not prove
presentment for payment or present the bill to the drawee for acceptance.
Even assuming that presentment is needed, failure to present for payment within a reasonable time will result
to the discharge of the drawer only to the extent of the loss caused by the delay.
o Failure to present on time, thus, does not totally wipe out all liability. In fact, the legal situation

amounts to an acknowledgment of liability in the sum stated in the check.

In this case, the Gueco spouses have not alleged, much less shown that they or the bank which issued the
manager's check has suffered damage or loss caused by the delay or non-presentment. Definitely, the original
obligation to pay certainly has not been erased.
It has been held that, if the check had become stale, it becomes imperative that the circumstances that caused
its non-presentment be determined.
In the case at bar, there is no doubt that the petitioner bank held on the check and refused to encash the
same because of the controversy surrounding the signing of the joint motion to dismiss. We see no bad faith
or negligence in this position taken by the Bank.
The Bank wins. CA decision set aside. Spouces pay 150,000.

6. PNB vs. CA and PCIB (Geraldez)
Emergency Recit:
-
-
-
-
-
-
Lim deposited a check with PCIB. GSIS was drawer. PNB was drawee.
PCIB deposited the check in Lims account. PCIB was paid by PNB. PNB debited GSISs account.
GSIS demanded to be re-credited. PNB did this. Sought repayment from PCIB, latter refused.
Turns out the check was stolen and signatures of GSISs officers were forged. This fact was reported to PNB 2
months ago and GSIS issued stop payment order.
Payee was one Pulido, indorsed it to Go, indorsed it to Lim, deposited in PCIB.

Ultimately, PNB loses. Because:
o As against the drawee, indorsement by intermediate bank does not guarantee signature of drawer
o The stamp on the back, guarantying all prior indorsements, only refers to indorsements
o Most importantly, regardless of negligence on PCIBs part, if any, PNB is the more negligent one, since
it received a report on the lost check already beforehand. Also, following regular banking practice,
since it kept the check after it was given by PCIB, it signified regularity in the check, making PCIB
believe that it was safe to pay Lim for the check. PNB was thus proximate cause of loss.
Facts:
Stipulation of Facts:
1.
2.
3.
4.
5.
Jan. 15, 1962, Augusto Lim deposited in his current account with PCIB a Check from GSIS for P57, 415. It was
drawn against PNB.
Following an established banking practice in the Philippines, the check was, on the same date, forwarded, for
clearing, through the Central Bank, to the PNB, which did not return said check the next day, or at any other
time.
PNB paid PCIB. It then debited the account of GSIS.
GSIS demanded that PNB re-credit its account, as the signatures of its (GSISs) officers were forged.
PNB re-credited GSIS. Sought repayment from PCIB. PCIB refused. Hence this action.
Other pertinent facts (records of the case I guess):

1.
2.
3.
4.
No doubt that the signatures of the GM and Auditor of GSIS, as drawer, have been forged.
The payee of the check was one Mariano Pulido, who indorsed it to Manuel Go, who indorsed it to Augusto
Lim, who deposited it with PCIB.
PCIB stamped on the back "All prior indorsements and/or Lack of Endorsement Guaranteed, Philippine
Commercial and Industrial Bank,"
2 months before all this, GSIS informed PNB, with the latter acknowledging it, that the said check had been
lost. GSIS requested that payment be stopped.

Issues:
Whether or not:
1.
2.
3.
4.
5.
6.
The PCIB is guilty of negligence

The indorsements at the back of the check are forged
The PCIB liable to the PNB by virtue of the former's warranty on the back of the check
"Clearing" is not "acceptance", in contemplation of the Negotiable Instruments law
That, since the check had not been accepted by the PNB, the latter is entitled to reimbursement therefor;
PNB has a right to recover from the PCIB.
Held: Decision appealed from is hereby affirmed, with costs against the Philippine National Bank. It is so ordered.
Ratio:
The first assignment of error will be discussed later, together with the last,with which it is interrelated.
As regards the second assignment of error, the PNB argues that, since the signatures of the drawer are forged, so
must the signatures of the supposed indorsers be; this does not necessarily follow.
No evidence, and the PNB has not even tried to prove that the aforementioned indorsements are spurious.
Whether or not the indorsements have been falsified is immaterial to the PNB's liability as a drawee, or to its
right to recover from the PCIB, for, as against the drawee, the indorsement of an intermediate bank does not
guarantee the signature of the drawer, since the forgery of the indorsement is not the cause of the loss.
With respect to the warranty on the back of the check, to which the third assignment of error refers, it should be
noted that the PCIB thereby guaranteed "all prior indorsements," not the authenticity of the signatures of the
officers of the GSIS, who is the drawer.
Said warranty is irrelevant, therefore, to the PNB's alleged right to recover from the PCIB.
It could have been availed of by a subsequent indorsee or a holder in due course subsequent to the PCIB, but
the PNB is neither.
Indeed, upon payment by the PNB, as drawee, the check ceased to be a negotiable instrument, and became a
mere voucher or proof of payment.

Referring to the fourth and fifth assignments of error, we must bear in mind that, in general, "acceptance", in the
sense in which this term is used in the Negotiable Instruments Law is not required for checks, for the same are
payable on demand.
Acceptance and payment are 2 different things.
o Acceptance is a promise to perform an act. It signifies his assent.
o Payment is actual performance. It signifies assent and compliance.

Let us now consider the first and sixth assignments of error.
Assuming that there had been such negligence on the part of the PCIB, it is undeniable, however, that the PNB
has, also, been negligent
o PNB had been guilty of a greater degree of negligence, because it had a previous and formal notice
from the GSIS that the check had been lost, with the request that payment thereof be stopped.
o The PNB's negligence was the main or proximate cause for the corresponding loss.
In this connection, it will be recalled PCIB only allowed Augusto Lim to draw from his account after all these
following precautionary steps:
o Upon presentment, PCIB did not cash the check, merely deposited it in his account.
o Sent the check through the CB to PNB for clearing.
o PNB did not return the check to PCIB next day or any other day, implying under current banking
practice, that the PNB considered the check good
o All the above steps show that PNB induced PBIC to pay Lim, believing the check was good. Hence, it
was the proximate cause of loss.
It is a well-settled maxim of law and equity that when one of two (2) innocent persons must suffer by the
wrongful act of a third person, the loss must be borne by the one whose negligence was the proximate cause
of the loss or who put it into the power of the third person to perpetrate the wrong.

Lastly, Section 62 of Act No. 2031 (NIL Liability of Acceptor) applies in the case of a drawee who pays a bill
without having previously accepted it.
Case List 7 Sec 89 to 118

1. Metropol (Bacolod) Financing & Investment Corporation vs. Sambok Motors Company and Ng Sambok Sons
Motors Co (notice of dishonor). Keith King

Facts:
On April 15, 1969 Dr. Javier Villaruel executed a promissory note in favor of Ng Sambok Sons Motors Co., Ltd.,
in the amount of P15,939.00 payable in twelve (12) equal monthly installments, beginning May 18, 1969, with
interest at the rate of one percent per month.
There was stipulation an acceleration clause plus the additional interest of 25% of the total amount due.
Sambok motors company, a sister company of Ng Sambok Sons Motors, negotiated and indorsed the note in
favor of plaintiff Metropol.
Indorsement states: Pay to the order of Metropol with recourse. Notice of Demand; Dishonor; Protest; and
Presentment are hereby waived.
The maker Dr. Villaruel defaulted.
Plaintiff Metropol presented the promissory note to the maker and the maker failed to pay.
Plaintiff then notified Sambok, the indorser, that the note was dishonored and demanded payment from
them.
Sambok failed to pay.
Plaintiff Metropol filed a complaint for collection before CFI Iloilo
Sambok did not deny liability but contended that it could not be obliged to pay until after the maker, Dr.
Villaruel has been declared insolvent.
During pendency of case, Dr. Villaruel died.
RTC: Sambok Motors Company is liable to pay P15, 939.00 with legal interest plus the 25% interest of the
15,939.00 plus legal interest.
Hence the appeal.
Appellant Sambok argues that by adding the words "with recourse" in the indorsement of the note, it becomes
a qualified indorser that being a qualified indorser, it does not warrant that if said note is dishonored by the
maker on presentment, it will pay the amount to the holder;
That it only warrants the following pursuant to Section 65 of the Negotiable Instruments Law: (a) that the
instrument is genuine and in all respects what it purports to be; (b) that he has a good title to it; (c) that all
prior parties had capacity to contract; (d) that he has no knowledge of any fact which would impair the validity
of the instrument or render it valueless

Issue: WON Sambok is liable? YES due to dishonor of Dr. Villaruel, the maker. Also, they are also considered as general
indorsers due to the waivers they made.

HELD: Decision of lower court is hereby affirmed. Sambok is liable.

Ratio:
That they are qualified indorsers is incorrect.
If they were qualified indorsers, they are relieved of the general obligation to pay if the instrument is dishonored. Their
liability arises only from the violation of the warranties on the instrument as provided in Section 65 of the Negotiable
Instruments Law already mentioned herein.

However, appellant Sambok indorsed the note "with recourse" and even waived the notice of demand, dishonor,
protest and presentment.

"Recourse" means resort to a person who is secondarily liable after the default of the person who is primarily
liable. Appellant, by indorsing the note "with recourse" does not make itself a qualified indorser but a general indorser
who is secondarily liable, because by such indorsement, it agreed that if Dr. Villaruel fails to pay the note, plaintiff-
appellee can go after said appellant.

The effect of such indorsement (with the waivers) is that the note was indorsed without qualification. (They became
general indorsers)

Sec. 66 Liability of general indorser
A person who indorses without qualification engages that on due presentment, the note shall be accepted or paid, or
both as the case may be, and that if it be dishonored, he will pay the amount thereof to the holder.

Appellant Sambok's intention of indorsing the note without qualification is made even more apparent by the fact that
the notice of demand, dishonor, protest and presentment were waived. The words added by said appellant do not limit
his liability, but rather confirm his obligation as a general indorser.

The lower court did not err in not declaring appellant as only secondarily liable because after an instrument is
dishonored by non-payment, the person secondarily liable thereon ceases to be such and becomes a principal
debtor. His liability becomes the same as that of the original obligor. Consequently, the holder need not even proceed
against the maker before suing the indorser.
2. JUDE JOBY LOPEZ VS. PEOPLE OF THE PHILIPPINES(by ALEXIS AQUINO)

Emergency Recit:

Lopez made and drew a DBP check in the amount of P20,000.00. He knew that he had insufficient funds. The
check was dishonored by the Legaspi Savings Bank (drawee). Ables (payee) made repeated demands but
Lopez refused to pay the former. Lopez argued that Ables knew at the time of the issuance of the check that
he had no funds in the bank and therefore, the element of deceit was absent. He was denied by both trial
court and CA. Hence, the appeal to SC. Lopez asserts that the prosecution was not able to prove that he
received notice of dishonor. According to the Court, there are other ways of giving notice of dishonor. In this
case, Ables called up petitioner to inform him of the dishonor of the check. Lopez disclaims employing
deceit by asserting that Ables knew he had no funds with the bank. Assuming that Lopez did so, he still could
not escape culpability because he was not in a position to make good the check at any time since his current
account was already closed. Since Lopezs bank account was already closed even before the issuance of the
subject check, he had no right to expect or require the drawee bank to honor his check. Therefore, Lopez is
not entitled to be given a notice of dishonor.

G.R. No. 166810

LEONARDO-DE CASTRO, J.:

I. FACTS

An Information for Estafa was filed against Lopez:

o He made and drew a DBP check in the amount of P20,000.00. He knew that he had insufficient funds.
The check was dishonored by the Legaspi Savings Bank (drawee). Ables (payee) made repeated
demands but Lopez refused to pay the former.
Evidence presented by the prosecution:
Exhibits A to E with submarkings consisting of the check issued by Lopez.
The demand letter sent by Ables.
Bank records to show that the said check was dishonored .
The trial court convicted Lopez of the crime of estafa

In his Motion for Reconsideration, Lopez argued that Ables knew at the time of the issuance of the check that
he had no funds in the bank and therefore, the element of deceit was absent.
o Denied
Lopez appealed to the CA, reiterating his argument that the element of deceit was not proven.
CA: Affirmed trial courts decision.
Issue
Whether or not deceit was proven by the prosecution.
Held:
Petition DENIED.
Ratio:
The elements of the crime of estafa, are as follows:

o The offender has postdated or issued a check in payment of an obligation contracted at the time of
the postdating or issuance
o At the time of postdating or issuance of said check, the offender has no funds in the bank or the funds
deposited are not sufficient to cover the amount of the check; and
o The payee has been defrauded.
o Damage and deceit are essential elements of the offense and must be established with satisfactory
proof to warrant conviction, xxx The drawer of the dishonored check is given three days from receipt
of the notice of dishonor to cover the amount of the check, otherwise, a prima facie presumption of
deceit arises.

Concealment which the law denotes as fraudulent implies a purpose or design to hide facts which the other
party ought to have. The postdating or issuing of a check in payment of an obligation when the offender had
no funds in the bank xxx is a false pretense or a fraudulent act.

The trial court and the CA found the elements of the crime charged present in this case. Ables gave the sum of
P20,000.00 to the Lopez in exchange for a postdated check in the same amount and that the said check was
dishonored by the bank.

Lopez argued that no deceit was established by the prosecution. He claims that the prosecution failed to prove

that he received notice of dishonor of the check. Lopez said that no presumption or prima facie evidence of
guilt would arise if there is no proof as to the date of receipt by the drawer of the said notice since there
would simply be no way of reckoning the crucial 3-day period from receipt of notice of dishonor of the check
within which the amount necessary to cover the check may be done
However, this presumption does not preclude the presentation of other evidence to prove deceit. Ables
called up petitioner to inform him of the dishonor of the check
Lopez disclaims employing deceit by asserting that Ables knew he had no funds with the bank. Assuming that
Lopez did so, he still could not escape culpability because he was not in a position to make good the check at
any time since his current account was already closed.
Section 114(d) of the Negotiable Instruments Law provides:
Sec. 114 When notice need not be given to drawer. Notice of dishonor
is not required to be given to the drawer in either of the following cases:
Xxx
d. Where the drawer has no right to expect or require that the drawee or
acceptor will honor the check.
Since Lopezs bank account was already closed even before the issuance of the subject check, he had
no right to expect or require the drawee bank to honor his check. Therefore, Lopez is not entitled to
be given a notice of dishonor.


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CASE LIST 6 and 7 Sec 70 to 118

NEGO CASE LIST 6 and 7 Sec 70 to 118

NEGO CASE LIST 6 and 7 Sec 70 to 118

NEGO CASE LIST 6 and 7 Sec 70 to 118

NEGO CASE LIST 6 and 7 Sec 70 to 118

Crystal acquired 4 parcels of land through an assigned right of redemption

NEGO CASE LIST 6 and 7 Sec 70 to 118

NEGO CASE LIST 6 and 7 Sec 70 to 118

NEGO CASE LIST 6 and 7 Sec 70 to 118

Papa filed a third-party complaint against spouses Reyes

NEGO CASE LIST 6 and 7 Sec 70 to 118

the amount or a minimum of P55,000 upon delivery of the property

NEGO CASE LIST 6 and 7 Sec 70 to 118

Art. 1249 of the Civil Code

Cash P5,000 in cash as earnest money

NEGO CASE LIST 6 and 7 Sec 70 to 118

NEGO CASE LIST 6 and 7 Sec 70 to 118

NEGO CASE LIST 6 and 7 Sec 70 to 118

NEGO CASE LIST 6 and 7 Sec 70 to 118

amounts to an acknowledgment of liability in the sum stated in the check.

Other pertinent facts (records of the case I guess):

NEGO CASE LIST 6 and 7 Sec 70 to 118

The PCIB is guilty of negligence

NEGO CASE LIST 6 and 7 Sec 70 to 118

NEGO CASE LIST 6 and 7 Sec 70 to 118

NEGO CASE LIST 6 and 7 Sec 70 to 118

An Information for Estafa was filed against Lopez:

Evidence presented by the prosecution:

Exhibits A to E with submarkings consisting of the check issued by Lopez.

The demand letter sent by Ables.

Bank records to show that the said check was dishonored .

The trial court convicted Lopez of the crime of estafa

The elements of the crime of estafa, are as follows:

NEGO CASE LIST 6 and 7 Sec 70 to 118

Section 114(d) of the Negotiable Instruments Law provides:

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