Alvin Patrimonio v. Napoleon Gutierrez , et. al. G.R. No. 187769 June 04, 2014 reasonable time.
reasonable time. If it was proven that the instrument had not been filled up strictly in accordance
FACTS: The petitioner and the respondent Gutierrez entered into a business venture under
the name of Slam Dunk Corporation, a production outfit that produced mini-concerts and shows
related to basketball.
Patrimonio pre-signed several checks to answer for the expenses of Slam Dunk. Although
signed, these checks had no payee’s name, date or amount. The blank checks were entrusted
to Gutierrez with the specific instruction not to fill them out without previous notification to and
approval by the petitioner.
Without the petitioner’s knowledge and consent, Gutierrez went to Marasigan to secure a loan
in the amount of P200,000.00 on the excuse that the petitioner needed the money for the
construction of his house. In addition to the payment of the principal, Gutierrez assured
Marasigan that he would be paid an interest of 5% per month.
Marasigan acceded to Gutierrez’ request and gave him P200,000.00. Gutierrez simultaneously
delivered to Marasigan one of the blank checks the petitioner pre-signed with Pilipinas Bank
with the blank portions filled out with the words “Cash” “Two Hundred Thousand Pesos Only”,
and the amount of “P200,000.00.”
Marasigan deposited the check but it was dishonored for the reason “ACCOUNT CLOSED.” It
was later revealed that petitioner’s account with the bank had been closed.
Marasigan sought recovery from Gutierrez, to no avail. He thereafter sent several demand
letters to the petitioner asking for the payment of P200,000.00, but his demands likewise went
unheeded. Consequently, he filed a criminal case for violation of B.P. 22 against the petitioner.
RTC— in favor of Marasigan. It found that the petitioner, in issuing the pre-signed blank checks,
had the intention of issuing a negotiable instrument, albeit with specific instructions to Gutierrez
not to negotiate or issue the check without his approval. RTC declared Marasigan as a holder
in due course and accordingly dismissed the petitioner’s complaint for declaration of nullity of
the loan. It ordered the petitioner to pay Marasigan the face value of the check with a right to
claim reimbursement from Gutierrez. CA— affirmed the RTC ruling.
ISSUE: Whether or not Marasigan is a holder in due course thus may hold Patrimonio liable?
HELD: No. Section 14 of the Negotiable Instruments Law provides for when blanks may be
filled. This provision applies to an incomplete but delivered instrument. Under this rule, if the
maker or drawer delivers a pre-signed blank paper to another person for the purpose of
converting it into a negotiable instrument, that person is deemed to have prima facie authority
to fill it up. It merely requires that the instrument be in the possession of a person other than
the drawer or maker and from such possession, together with the fact that the instrument is
wanting in a material particular, the law presumes agency to fill up the blanks.
In order however that one who is not a holder in due course can enforce the instrument against
a party prior to the instrument’s completion, two requisites must exist: (1) that the blank must
be filled strictly in accordance with the authority given; and (2) it must be filled up within a
with the authority given and within a reasonable time, the maker can set this up as a personal
defense and avoid liability.
Section 52(c) of the NIL states that a holder in due course is one who takes the instrument “in
good faith and for value.” It also provides in Section 52(d) that in order that one may be a holder
in due course, it is necessary that at the time it was negotiated to him he had no notice of any
infirmity in the instrument or defect in the title of the person negotiating it.
Acquisition in good faith means taking without knowledge or notice of equities of any sort which
could be set up against a prior holder of the instrument. It means that he does not have any
knowledge of fact which would render it dishonest for him to take a negotiable paper. The
absence of the defense, when the instrument was taken, is the essential element of good faith.
In order to show that the defendant had “knowledge of such facts that his action in taking the
instrument amounted to bad faith,” it is not necessary to prove that the defendant knew the
exact fraud that was practiced upon the plaintiff by the defendant’s assignor, it being sufficient
to show that the defendant had notice that there was something wrong about his assignor’s
acquisition of title, although he did not have notice of the particular wrong that was committed.
In the present case, Marasigan’s knowledge that the petitioner is not a party or a privy to the
contract of loan, and correspondingly had no obligation or liability to him, renders him
dishonest, hence, in bad faith.
Yet, it does not follow that simply because he is not a holder in due course, Marasigan is
already totally barred from recovery.
Notably, 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 Slam Dunk. It cannot therefore be validly concluded that
the check was completed strictly in accordance with the authority given by the petitioner.
De La Victoria vs. Burgos G.R. No. 111190. June 27, 1995
FACTS: Assistant City Fiscal Bienvenido N. Mabanto was ordered to pay herein private
respondent Raul Sesbreño P11,000.00 as damages. A notice of garnishment was served on
herein petitioner Loreto D. de la Victoria as City Fiscal of Mandaue City where Mabanto was
detailed. V was directed not to disburse, transfer, release or convey to any other person except
to the deputy sheriff concerned the salary checks or other checks, monies, or cash due or
belonging to Mabanto, Jr., under penalty of law. Later, V was directed to submit his report
showing the amount of the garnished salaries. V moved to quash the notice of garnishment
claiming that he was not in possession of any money, funds, credit, property or anything of
value belonging to Mabanto, Jr., except his salary and RATA checks, but that said checks were
not yet properties of Mabanto, Jr., until delivered to him. He further claimed that, as such, they
were still public funds which could not be subject to garnishment.
ISSUE: W/N a check still in the hands of the maker or its duly authorized representative is
owned by the payee before physical delivery to the latter.
RULING: As Assistant City Fiscal, the source of the salary of Mabanto, Jr., is public funds. He
receives his compensation in the form of checks from the DOJ through V as City Fiscal of
Mandaue City and head of office. Under Sec. 16 of the Negotiable Instruments Law, every
contract on a negotiable instrument is incomplete and revocable until delivery of the instrument
for the purpose of giving effect thereto. As ordinarily understood, delivery means the transfer
of the possession of the instrument by the maker or drawer with intent to transfer title to the
payee and recognize him as the holder thereof.
Inasmuch as said checks had not yet been delivered to Mabanto, Jr., they did not belong to
him and still had the character of public funds. The salary check of a government officer or
employee does not belong to him before it is physically delivered to him. Until that time the
check belongs to the government. Accordingly, before there is actual delivery of the check, the
payee has no power over it; he cannot assign it without the consent of the Government. Being
public fund, the checks may not be garnished to satisfy the judgment in consideration of public
policy.
DEVELOPMENT BANK OF RIZAL vs. SIMA WEI, ET AL.
G.R. No. 85419 March 9, 1993
--complete undelivered
FACTS: Respondent Sima Wei executed and delivered to petitioner Bank a promissory
note engaging to pay the petitioner Bank or order the amount of P1,820,000.00. Sima Wei
subsequently issued two crossed checks payable to petitioner Bank drawn against China
Banking Corporation in full settlement of the drawer's account evidenced by the promissory
note. These two checks however were not delivered to the petitioner-payee or to any of its
authorized representatives but instead came into the possession of respondent Lee Kian Huat,
who deposited the checks without the petitioner-payee's indorsement to the account of
respondent Plastic Corporation with Producers Bank. Inspite of the fact that the checks were
crossed and payable to petitioner Bank and bore no indorsement of the latter, the Branch
Manager of Producers Bank authorized the acceptance of the checks for deposit and credited
them to the account of said Plastic Corporation.
ISSUE: Whether petitioner Bank has a cause of action against Sima Wei for the undelivered
checks.
RULING: No. A negotiable instrument must be delivered to the payee in order to evidence its
existence as a binding contract. Section 16 of the NIL provides that every contract on a
negotiable instrument is incomplete and revocable until delivery of the instrument for the
purpose of giving effect thereto. Thus, the payee of a negotiable instrument acquires no
interest with respect thereto until its delivery to him. Without the initial delivery of the instrument
from the drawer to the payee, there can be no liability on the instrument. Petitioner however
has a right of action against Sima Wei for the balance due on the promissory note.
Lim vs. CA
G.R. No. 107898. December 19, 1995
Manuel and Rosita Lim, spouses, and president and treasurer respectively of Rigi Bilt
Industries, Inc., allegedly issued 7 Solid bank checks as payment for goods purchased from
and delivered by Linton Commercial Company, Inc. When deposited with Rizal Commercial
Banking Corporation, said checks were dishonored for “insufficiency of funds” with the
additional notation “payment stopped” stamped thereon. Despite demand, spouses Lim
refused to make good the checks or pay the value of the deliveries. The RTC held spouses
Lim guilty of estafa and violation of BP22. On appeal, the CA acquitted accused-appellants of
estafa on the ground that the checks were not made in payment of an obligation contracted at
the time of their issuance but affirmed the finding that they were guilty of having violated B.P.
Blg. 22. In the present case, petitioners maintain that the prosecution failed to prove that any
of the essential elements of the crime punishable under B.P. Blg. 22 was committed within the
jurisdiction of RTC-Malabon claiming that what was proved was that all the elements of the
offense were committed in Kalookan City.
RULING: Under Sec. 191 NIL, the term “issue” means the first delivery of the instrument
complete in form to a person who takes it as a holder. On the other hand, the term “holder”
refers to the payee or indorsee of a bill or note who is in possession of it or the bearer thereof.
Although LINTON sent a collector who received the checks from petitioners at their place of
business in Kalookan City, they were actually issued and delivered to LINTON at its place of
business in Balut, Navotas. The receipt of the checks by the collector of LINTON is not the
issuance and delivery to the payee in contemplation of law. The collector was not the person
who could take the checks as a holder, i.e., as a payee or indorsee thereof, with the intent to
transfer title thereto. Neither could the collector be deemed an agent of LINTON with respect
to the checks because he was a mere employee.
Section 2 of B.P. Blg. 22 establishes a prima facie evidence of knowledge of insufficient funds
as follows
The making, drawing and issuance of a check payment of which is refused
by the bank because of insufficient funds in or credit with such bank, when
presented within ninety (90) days from the date of the check, shall be prima
facie evidence of knowledge of such insufficiency of funds or credit unless
such maker or drawer pays the holder thereof the amount due thereon, or
makes arrangement for payment in full by the drawee of such check within
five (5) banking days after receiving notice that such check has not been paid
by the drawee.
The prima facie evidence has not been overcome by petitioners in the cases before us
because they did not pay LINTON the amounts due on the checks; neither did they make
arrangements for payment in full by the drawee bank within five (5) banking days after receiving
notices that the checks had not been paid by the drawee bank. In People v. Grospe citing
People v. Manzanilla we held that “. . . knowledge on the part of the maker or drawer of the
check of the insufficiency of his funds is by itself a continuing eventuality, whether the accused
be within one territory or another.” Consequently, venue or jurisdiction lies either in the RTC of
Kalookan City or Malabon. Moreover, we ruled in the same Grospe and Manzanilla cases as
reiterated in Lim v. Rodrigo that venue or jurisdiction is determined by the allegations in the
Information. The Informations in the cases under consideration allege that the offenses were
committed in the Municipality of Navotas which is controlling and sufficient to vest jurisdiction
upon the Regional Trial Court of Malabon. We therefore sustain likewise the conviction of
petitioners by RTC-Malabon for violation of BP22.
RCBC vs. Hi-Tri Dev. Corp. , et. al, G.R. No. 192413, June 13, 2012
Facts: Luz Bakunawa and her husband Manuel, now deceased (Spouses Bakunawa) are
registered owners of six (6) parcels of land in Quezon City. These lots were sequestered by
the Presidential Commission on Good Government [(PCGG)]. Sometime in 1990, a certain
Teresita Millan (Millan), through her representative, Jerry Montemayor, offered to buy said lots
for ₱6,724,085.71, with the promise that she will take care of clearing whatever preliminary
obstacles there may be to effect a completion of the sale.
The Spouses Bakunawa gave to Millan the Owners Copies of said TCTs and in turn, Millan
made a downpayment of ₱1,019,514.29 for the intended purchase. However, for one reason
or another, Millan was not able to clear said obstacles. As a result, the Spouses Bakunawa
rescinded the sale and offered to return to Millan her downpayment of ₱1,019,514.29.
However, Millan refused to accept back the ₱1,019,514.29 down payment.
Consequently, the Spouses Bakunawa, through their company, the Hi-Tri Development
Corporation (Hi-Tri) took out on October 28, 1991, a Managers Check from RCBC-Ermita in
the amount of ₱1,019,514.29, payable to Millan’s company Rosmil Realty and Development
Corporation (Rosmil) c/o Teresita Millan and used this as one of their basis for a complaint
against Millan and Montemayor which they filed with the Regional Trial Court of Quezon City,
Branch 99.
On January 31, 2003, during the pendency of the above mentioned case and without the
knowledge of [Hi-Tri and Spouses Bakunawa], RCBC reported the ₱1,019,514.29-credit
existing in favor of Rosmil to the Bureau of Treasury as among its unclaimed balances as of
January 31, 2003. Allegedly, a copy of the Sworn Statement executed by Florentino N.
Mendoza, Manager and Head of RCBCs Asset Management, Disbursement & Sundry
Department (AMDSD) was posted within the premises of RCBC-Ermita.
Issue: Whether or not the escheat (the reversion of property to the state on the owner’s dying
without legal heirs) of the account in RCBC is proper.
Held: No. There are checks of a special type called managers or cashiers checks. These are
bills of exchange drawn by the banks manager or cashier, in the name of the bank, against the
bank itself. Typically, a managers or a cashiers check is procured from the bank by allocating
a particular amount of funds to be debited from the depositors account or by directly paying or
depositing to the bank the value of the check to be drawn. Since the bank issues the check in
its name, with itself as the drawee, the check is deemed accepted in advance. Ordinarily, the
check becomes the primary obligation of the issuing bank and constitutes its written promise
to pay upon demand.
Nevertheless, the mere issuance of a managers check does not ipso facto work as an
automatic transfer of funds to the account of the payee. In case the procurer of the managers
or cashiers check retains custody of the instrument, does not tender it to the intended payee,
or fails to make an effective delivery, we find the following provision on undelivered instruments
under the Negotiable Instruments Law applicable:
Sec. 16. Delivery; when effectual; when presumed. Every contract on a negotiable
instrument is incomplete and revocable until delivery of the instrument for the purpose
of giving effect thereto. As between immediate parties and as regards a remote party
other than a holder in due course, the delivery, in order to be effectual, must be made
either by or under the authority of the party making, drawing, accepting, or indorsing, as
the case may be; and, in such case, the delivery may be shown to have been conditional,
or for a special purpose only, and not for the purpose of transferring the property in the
instrument. But where the instrument is in the hands of a holder in due course, a valid
delivery thereof by all parties prior to him so as to make them liable to him is
conclusively presumed. And where the instrument is no longer in the possession of a
party whose signature appears

On December 14, 2006, x x x Republic, through the [Office of the Solicitor General (OSG)],
filed with the RTC the action below for Escheat [(Civil Case No. 06-244)].

On April 30, 2008, [Spouses Bakunawa] settled amicably their dispute with Rosmil and Millan.
Instead of only the amount of ₱1,019,514.29, [Spouses Bakunawa] agreed to pay Rosmil and
Millan the amount of ₱3,000,000.00, [which is] inclusive [of] the amount of []₱1,019,514.29.
But during negotiations and evidently prior to said settlement, [Manuel Bakunawa, through Hi-
Tri] inquired from RCBC-Ermita the availability of the ₱1,019,514.29 under RCBC Managers
Check No. ER 034469. [Hi-Tri and Spouses Bakunawa] were however dismayed when they
were informed that the amount was already subject of the escheat proceedings before the
RTC.