It is to be noted, however, that petitioner signed the promissory note as a solidary co-maker and not

as a guarantor. This is patent even from the first sentence of the promissory note which states as
follows:

"Ninety one (91) days after date, for value received, I/we, JOINTLY and SEVERALLY promise to pay
to the PHILIPPINE BANK OF COMMUNICATIONS at its office in the City of Cagayan de Oro,
Philippines the sum of FIFTY THOUSAND ONLY (P50,000.00) Pesos, Philippine Currency, together
with interest x x x at the rate of SIXTEEN (16) per cent per annum until fully paid."

A solidary or joint and several obligation is one in which each debtor is liable for the entire obligation,
and each creditor is entitled to demand the whole obligation. On the other hand, Article 2047 of the
Civil Code states:

"By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the
principal debtor in case the latter should fail to do so.

***************

Because the promissory note involved in this case expressly states that the three signatories
therein are jointly and severally liable, any one, some or all of them may be proceeded
against for the entire obligation. The choice is left to the solidary creditor to determine
against whom he will enforce collection. (Citations omitted)70

In the instant case, petitioner agreed to be "jointly and severally" liable under the two promissory
notes that he co-signed with Antonio Ang Eng Liong as the principal debtor. This being so, it is
completely immaterial if the bank would opt to proceed only against petitioner or Antonio Ang Eng
Liong or both of them since the law confers upon the creditor the prerogative to choose whether to
enforce the entire obligation against any one, some or all of the debtors. Nonetheless, petitioner, as
an accommodation party, may seek reimbursement from Antonio Ang Eng Liong, being the party
accommodated.71

It is plainly mistaken for petitioner to say that just because the bank failed to serve the notice of
appeal and appellant's brief to Antonio Ang Eng Liong, the trial court's judgment, in effect, became
final and executory as against the latter and, thereby, bars his (petitioner's) cross-claims against
him: First, although no notice of appeal and appellant's brief were served to Antonio Ang Eng Liong,
he was nonetheless impleaded in the case since his name appeared in the caption of both the notice
and the brief as one of the defendants-appellees;72 Second, despite including in the caption of the
appellee's brief his co-debtor as one of the defendants-appellees, petitioner did not also serve him a
copy thereof;73 Third, in the caption of the Court of Appeals' decision, Antonio Ang Eng Liong was
expressly named as one of the defendants-appellees;74 and Fourth, it was only in his motion for
reconsideration from the adverse judgment of the Court of Appeals that petitioner belatedly chose to
serve notice to the counsel of his co-defendant-appellee.75

Likewise, this Court rejects the contention of Antonio Ang Eng Liong, in his "special appearance"
through counsel, that the Court of Appeals, much less this Court, already lacked jurisdiction over his
person or over the subject matter relating to him because he was not a party in CA-G.R. CV No.
53413. Stress must be laid of the fact that he had twice put himself in default – one, in not filing a
pre-trial brief and another, in not filing his answer to petitioner's cross-claims. As a matter of course,
Antonio Ang Eng Liong, being a party declared in default, already waived his right to take part in the
trial proceedings and had to contend with the judgment rendered by the court based on the evidence
presented by the bank and petitioner. Moreover, even without considering these default judgments,
Antonio Ang Eng Liong even categorically admitted having secured a loan totaling P80,000. In his
Answer to the complaint, he did not deny such liability but merely pleaded that the bank "be ordered
to submit a more reasonable computation" instead of collecting excessive interest, penalty charges,
and attorney's fees. For failing to tender an issue and in not denying the material allegations stated
in the complaint, a judgment on the pleadings76 would have also been proper since not a single issue
was generated by the Answer he filed.

As the promissory notes were not discharged or impaired through any act or omission of the bank,
Sections 119 (d)77 and 12278 of the NIL as well as Art. 124979 of the Civil Code would necessarily find
no application. Again, neither was petitioner's right of reimbursement barred nor was the bank's right
to proceed against Antonio Ang Eng Liong expressly renounced by the omission to serve notice of
appeal and appellant's brief to a party already declared in default.

Consequently, in issuing the two promissory notes, petitioner as accommodating party warranted to
the holder in due course that he would pay the same according to its tenor.80 It is no defense to state
on his part that he did not receive any value therefor81 because the phrase "without receiving value
therefor" used in Sec. 29 of the NIL means "without receiving value by virtue of the instrument" and
not as it is apparently supposed to mean, "without receiving payment for lending his name."82 Stated
differently, when a third person advances the face value of the note to the accommodated party at
the time of its creation, the consideration for the note as regards its maker is the money advanced to
the accommodated party. It is enough that value was given for the note at the time of its
creation.83 As in the instant case, a sum of money was received by virtue of the notes, hence, it is
immaterial so far as the bank is concerned whether one of the signers, particularly petitioner, has or
has not received anything in payment of the use of his name.84

Under the law, upon the maturity of the note, a surety may pay the debt, demand the collateral
security, if there be any, and dispose of it to his benefit, or, if applicable, subrogate himself in the
place of the creditor with the right to enforce the guaranty against the other signers of the note for
the reimbursement of what he is entitled to recover from them.85 Regrettably, none of these were
prudently done by petitioner. When he was first notified by the bank sometime in 1982 regarding his
accountabilities under the promissory notes, he lackadaisically relied on Antonio Ang Eng Liong,
who represented that he would take care of the matter, instead of directly communicating with the
bank for its settlement.86 Thus, petitioner cannot now claim that he was prejudiced by the supposed
"extension of time" given by the bank to his co-debtor.

Furthermore, since the liability of an accommodation party remains not only primary but
also unconditional to a holder for value, even if the accommodated party receives an extension of
the period for payment without the consent of the accommodation party, the latter is still liable for the
whole obligation and such extension does not release him because as far as a holder for value is
concerned, he is a solidary co-debtor.87 In Clark v. Sellner,88 this Court held:

x x x The mere delay of the creditor in enforcing the guaranty has not by any means impaired
his action against the defendant. It should not be lost sight of that the defendant's signature
on the note is an assurance to the creditor that the collateral guaranty will remain good, and
that otherwise, he, the defendant, will be personally responsible for the payment.

True, that if the creditor had done any act whereby the guaranty was impaired in its value, or
discharged, such an act would have wholly or partially released the surety; but it must be
born in mind that it is a recognized doctrine in the matter of suretyship that with respect to
the surety, the creditor is under no obligation to display any diligence in the enforcement of
his rights as a creditor. His mere inaction indulgence, passiveness, or delay in proceeding
against the principal debtor, or the fact that he did not enforce the guaranty or apply on the
payment of such funds as were available, constitute no defense at all for the surety, unless
the contract expressly requires diligence and promptness on the part of the creditor, which is
not the case in the present action. There is in some decisions a tendency toward holding that
the creditor's laches may discharge the surety, meaning by laches a negligent forbearance.
This theory, however, is not generally accepted and the courts almost universally consider it
essentially inconsistent with the relation of the parties to the note. (21 R.C.L., 1032-1034)89

Neither can petitioner benefit from the alleged "insolvency" of Antonio Ang Eng Liong for want of
clear and convincing evidence proving the same. Assuming it to be true, he also did not exercise
diligence in demanding security to protect himself from the danger thereof in the event that he
(petitioner) would eventually be sued by the bank. Further, whether petitioner may or may not obtain
security from Antonio Ang Eng Liong cannot in any manner affect his liability to the bank; the said
remedy is a matter of concern exclusively between themselves as accommodation party and
accommodated party. The fact that petitioner stands only as a surety in relation to Antonio Ang Eng
Liong is immaterial to the claim of the bank and does not a whit diminish nor defeat the rights of the
latter as a holder for value. To sanction his theory is to give unwarranted legal recognition to the
patent absurdity of a situation where a co-maker, when sued on an instrument by a holder in due
course and for value, can escape liability by the convenient expedient of interposing the defense that
he is a merely an accommodation party.90

TOMAS ANG, petitioner,

vs.
ASSOCIATED BANK AND ANTONIO ANG ENG LIONG, G.R. No. 146511 September 5,
2007

*************

Anent the civil aspect of the B.P. Blg 22 cases, her defense of lack of consideration for the checks
fails to persuade. Apart from having admitted the authenticity and due execution of the promissory
1âwphi1

note, Lim also failed to present clear and convincing evidence to overturn the disputable
presumptions24 that there were sufficient considerations for the said contract which she signed as a
co-maker, and for the negotiable instruments consisting of 11 checks issued under her name as
security for the payment of the loan. Besides, as a co-maker who agreed to be jointly and severally
liable on the promissory note, Lim cannot validly claim that she hardly received any consideration
therefor, as the fact that the loan was granted to the principal debtor, her sister Benito, already
constitutes sufficient consideration.
All told, the Court of Appeals committed no reversible error in affirming the RTC decision, which
upheld the conviction of Lim for 10 counts of violation ofB.P. Blg. 22 and her civil liability for the face
value of the 11 checks.

December 13, 2017

G.R. No. 224979

IVY LIM, Petitioner

vs.
PEOPLE OF THE PHILIPPINES and BLUE PACIFIC HOLDINGS, INC

***********************

Accordingly, it would be best for you to examine once more the provisions of the contract which
you and your friend signed so that you can determine exactly the extent of your liability. Once
you have determined the extent of your liability, you must settle the same when it becomes due
and demandable. This is because obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith (Article 1159, New
Civil Code of the Philippines).

Co-Maker
One who becomes obligated, an obligor, under a negotiable instrument—
such as a check or promissory note—
by signing hisor her name along with the name of the original obligor, thereby promising to pay on it in full
.

legal-dictionary.thefreedictionary.com

Sec. 60. Liability of maker. - The maker of a negotiable instrument, by making it,
engages that he will pay it according to its tenor, and admits the existence of the
payee and his then capacity to indorse.

MAKER PRIMARILY LIABLE

• Engagement of the maker is to pay absolutely for the note according to its tenor
• His liability is primarily and unconditional
• One who has signed an instrument as a maker is presumed to have acted
with care and to have signed the instrument with full knowledge of its contents, unless
of course, if fraud is proved

MAKER MUST PAY ACCORDING TO THE TERMS OF THE

NOTE
• The maker bound himself to pay personally. He cannot shift the obligation
without the consent of the payee. He cannot allege that he
spend the money on expenses which should be charged to a trust
administered by a creditor because it is not the payee’s concern to know how the
proceeds should be spent. That is the sole concern of the maker. The payee’s interest
is merely to see that the note is paid according to its term.
LIABILITY OF 2 OR MORE MAKERS
• When 2 or more makers sign jointly or severally, each of them is individually
liable for the payment of the full amount of their obligation even if one of them didn’t
receive part of the value given therefor, as he would be considered as an
accommodation party

Sec. 60. Liability of maker. - The maker of a negotiable instrument,

by making it, engages that he will pay it according to its tenor, and
admits the existence of the payee and his then capacity to indorse.

SECTION 28. Effect of want of consideration.— Absence or failure of consideration is a

matter of defense as against any person not a holder in due course; and partial failure of
consideration is a defense pro tanto, whether the failure is an ascertained and liquidated
amount or otherwise.

Moreover, Section 24 of the NIL provides the presumption of consideration, viz:

SECTION 24. Presumption of consideration.— Every negotiable instrument is deemed prima

facie to have been issued for a valuable consideration; and every person whose signature
appears thereon to have become a party thereto for value.

Such presumption cannot be overcome by the petitioner’s bare denial of receipt of the amount
of P55,000.00 from Rubia.

The petitioner cannot, likewise, seek refuge

***************

Anent the civil aspect of the B.P. Blg 22 cases, her defense of lack of consideration for the checks
fails to persuade. Apart from having admitted the authenticity and due execution of the promissory
1âwphi1

note, Lim also failed to present clear and convincing evidence to overturn the disputable
presumptions24 that there were sufficient considerations for the said contract which she signed as a
co-maker, and for the negotiable instruments consisting of 11 checks issued under her name as
security for the payment of the loan. Besides, as a co-maker who agreed to be jointly and severally
liable on the promissory note, Lim cannot validly claim that she hardly received any consideration
therefor, as the fact that the loan was granted to the principal debtor, her sister Benito, already
constitutes sufficient consideration.

Xxx

The accused then stood to benefit from the loan. The allegation of human trafficking, fraud and
payment remains allegations as no evidence was presented to the Court to prove [them]. The pieces
of evidence presented, testimonial and documentary, show that this is a business transaction
between Blue Pacific and the accused.

IVY LIM, Petitioner

vs.
PEOPLE OF THE PHILIPPINES and BLUE PACIFIC HOLDINGS, INC., December 13, 2017

G.R. No. 224979

*************
Under Article 1354 of the Civil Code, it is presumed that consideration28 exists and is lawful unless
the debtor proves the contrary.29 Moreover, under Section 3(r) of Rule 131 of the Rules of Court, it is
presumed that there is a sufficient consideration for a contract. The presumption that a contract has
sufficient consideration cannot be overthrown by a mere assertion that it has no consideration.30 To
overcome the presumption of consideration, the alleged lack of consideration must be shown by
preponderance of evidence.31

Citing: Santos v. Heirs of Jose P. Mariano & Erlinda Mariano-Villanueva, G.R. No. 143325, 24
26

October 2000, 344 SCRA 284, 292; Insular Life Assurance Company, Ltd. v. Asset Builders
Corporation, G.R. No. 147410, 05 February 2004, 422 SCRA 148, 161. See Article 1318, Civil Code
of the Philippines.

SEC. 4. Judicial admissions. – An admission, verbal or written, made by a party in the course of the
27

proceedings in the same case, does not require proof. The admission may be contradicted only by
showing that it was made through palpable mistake or that no such admission was made.

28
In this jurisdiction, cause and consideration are used interchangeably.

29
Nuguid v. Court of Appeals, G.R. No. 77423, 13 March 1989, 171 SCRA 213, 218.

30
Fernandez v. Fernandez, G.R. No. 143256, 28 August 2001, 363 SCRA 811, 828.

31
Ong v. Ong, G.R. No. L-67888, 8 October 1985, 139 SCRA 133, 136.

SPOUSES NORA SAGUID and ROLANDO P. SAGUID, Petitioners,

vs.
SECURITY FINANCE, INC., G.R. No. 159467 December 9, 2005

************************************

It is important to note at this point that in the determination of the nullity of a contract based on the
lack of consideration, the debtor has the burden to prove the same. Article 1354 of the Civil Code
provides that "[a]though the cause is not stated in the contract, it is presumed that it exists and is
lawful, unless the debtor proves the contrary."

UNION BANK OF THE PHILIPPINES, Petitioner,

vs.
SPOUSES RODOLFO T. TIU AND VICTORIA N. TIU, G.R. Nos. 173090-91 September 7,
2011

**********************

Defect or lack of valid consent, in order to make the contract voidable, must be established by full,
clear and convincing evidence, and not merely by a preponderance thereof.22 Petitioner’s mere
allegations that respondent threatened his mother with harm if she will not sign the contract failed to
measure up to the yardstick of evidence required, not only to prove vitiation of consent, but also to
overturn the presumption that private transactions have been fair and regular.23

ANTONIO S. LIM, JR., represented by his attorney-in-fact, PAZ S. LIM, petitioner,

vs.
VICTOR K. SAN and ELINDO LO, r G.R. No. 159723 September 9, 2004

***********************

A promissory note is a solemn acknowledgment of a debt and a formal commitment to repay it on

the date and under the conditions agreed upon by the borrower and the lender. A person who signs
such an instrument is bound to honor it as a legitimate obligation duly assumed by him through the
signature he affixes thereto as a token of his good faith. If he reneges on his promise without cause,
he forfeits the sympathy and assistance of this Court and deserves instead its sharp repudiation. So
must it be in the case at bar.

G.R. No. 90270 July 24, 1992

ARMANDO V. SIERRA, petitioner,

vs.
HON. COURT OF APPEALS, EPIFANIA EBARLE, SOL AND ELE EBARLE,

*****************
 Said petitioners are not only ordinary laborers but mature, educated and intelligent people
with college degrees, and considering the size of their group, it is unbelievable that they
could have been easily duped into doing something against their will and self-interest.
Absent a showing that they were indeed victims of trickery and deception, outside of their
own self-serving affidavits, the petitioners' allegation does not hold water.

Here, the petitioners and other employees legally separated were in fact given termination or
separation pay despite the staggering loss sustained by the Bank. They were given a very good
bargain in the compromise agreement. They, therefore, have no reason to complain. Without the
subject compromise agreement, they would not have received any separation pay in light of our
ruling in State Investment House, Inc. v. CA,19 and North Davao Mining Corporation v.
NLRC,20 where we held that in cases of serious losses or financial reverses, the Labor Code does
not impose any obligation upon the employer to pay separation benefits, for obvious reasons.

Records reveal that when the Bank offered termination or separation pay to its remaining employees
by way of a compromise agreement, a great majority of them accepted the amount as justifiable
settlement of their claims.21Like these quitclaims and releases, there are voluntary agreements which
represent reasonable settlements and are considered binding on the parties.22 Petitioners, therefore,
cannot renege on the compromise agreement they entered into after accepting benefits earlier
simply because they may have felt that they committed a mistake in accepting their
termination/separation pay. As no proof was presented to show that the compromise agreement in
dispute was entered into through fraud, misrepresentation or coercion, the same must be recognized
as valid and binding upon all the 529 employees of the Bank. In fine, the petitioners and the other
employees are estopped from questioning the validity of the Compromise Agreement.

citing:

22 Centenera v. Palicio, 29 Phil. 470 (1915).

23 Rules of Court, Rule 131, Section 3, paragraph p.

**************

Further, the subject checks in the total amount of P743, 794. 15

(Exhibits “E” to “O”), as further basis of petitioner’s civil liability,
rests on the legal presumption, in the absence of evidence to the
contrary, that the same was issued for valuable consideration and
that every party to an instrument acquired the same for a
consideration. (Sec. 24, The Negotiable Instruments Law) and that
the value of the checks are sufficient to support a simple contract
(SEC. 25 of the Negotiable Instruments Law);

13. Petitioner assails the affirmed award of P20, 000.00

Attorney’s Fees to private respondent since her view is that, there
were no testimonial nor documentary basis therefore.

On the contrary, as may be culled from page 19 of Transcript of

Stenographic Notes (December 12, 2007) prosecution’s witness
testified on the matter re the incurrence of attorney’s fees by private
respondent when it was prompted to refer the case to its Counsel
owing to the deliberate, adamant and persistent refusal of the
Petitioner to pay the loan obligation or to make good the subject
checks despite repeated demands. The P20, 000.00 attorney’s fees
award is warranted by the factual milieu of the case due to
petitioner’s adamant, unwarranted and bad faith failure and refusal
to pay its obligation to private respondent which constrained the
latter to secure the services of a counsel to enforce its rights, valid
claims against petitioner and protect its interests thereby meriting
said award pursuant to the cases of - SIME DARBY PILIPINAS, INC.
Vs. GOODYEAR PHILIPPINES, INC. and MACGRAPHICS CARRANZ
INTERNATIONAL CORPORATION,

G.R. No. 182148, June 8, 2011 and GOODYEAR PHILIPPINES, INC.

Vs. SIME DARBY PILIPINAS, INC. and MACGRAPHICS CARRANZ
INTERNATIONAL CORPORATION, G.R. No. 183210 wherein the
Honorable Supreme Court held:

“Art. 2208 of the Civil Code authorizes an award of

attorney’s fees and expenses of litigation, other than
judicial costs, when as in this case the plaintiff's act or
omission has compelled the defendant to litigate and to
incur expenses of litigation to protect her interest (par.
2), and where the Court deems it just and equitable that
attorney’s fees and expenses of litigation should be
recovered. x x x. To stress, attorney’s fees may be
awarded when a party is compelled to litigate or to
incur expenses to protect its interest by reason of an
unjustified act by the other.”

14. In its entirety, Petitioner’s Memoramdum presents no valid

and cogent reasons to merit the reversal and setting aside of the
Decision dated September 30, 2013 of the Honorable Appellate
Court which affirmed the Affirmed the Decision of the Honorable
Trial Court a quo;
**********

Accused–appellant asserts that she and her sister were victims of

illegal human trafficking scheme of the private complainant which allegedly
loaned out moneys to teachers so they can go abroad under private
complainant’s alleged scheme. But as aptly found by the Honorable Court a
quo, the allegation of human trafficking, fraud inter alia remains allegations
as no evidence were presented to prove them. It may not be amiss to state
that the alleged admissions of the prosecutions witness as pointed out by
accused–appellant, viz: (a) the practice of issuing loans to teachers [page 6
of TSN, 26 September 2008]), (b) that prosecution witness came to know of
accused – appellant and her sister [Page 20 of TSN, 26 September 2008]);
(c) Indictment of Florita Tolentino and her plea of guilty to the charges
(Exhibits “6” and “7” for accused – appellant) are not evidence of Human
Trafficking since they were not presented as a fact under our own
Procedural Laws or Rules of Evidence. Foreign judgment and its
authenticity must be be proven as facts under our rules on evidence
(GERBERT R. CORPUZ Vs. DAISYLYN TIROL STO. TOMAS and The
SOLICITOR GENERAL, G.R. No. 186571, August 11, 2010).

(b) that prosecution witness came to know of the petitioner and

her sister [Page 20 of TSN, 26 September 2008]); (c) Indictment of
Florita Tolentino and her plea of guilty to the charges (Exhibits “6”
and “7” for the Petitioner) are not evidence of Human Trafficking
since they were not presented as a fact under our own Procedural
Laws or Rules of Evidence. Foreign judgment and its authenticity
must be proven as facts under our rules on evidence (GERBERT R.
CORPUZ Vs. DAISYLYN TIROL STO. TOMAS and The SOLICITOR
GENERAL, G.R. No. 186571, August 11, 2010);

(b) that prosecution witness came to know of the petitioner and

her sister [Page 20 of TSN, 26 September 2008]); (c) Indictment of
Florita Tolentino and her plea of guilty to the charges (Exhibits “6”
and “7” for the Petitioner) are not evidence of Human Trafficking
since they were not presented as a fact under our own Procedural
Laws or Rules of Evidence. Foreign judgment and its authenticity
must be proven as facts under our rules on evidence (GERBERT R.
CORPUZ Vs. DAISYLYN TIROL STO. TOMAS and The SOLICITOR
GENERAL, G.R. No. 186571, August 11, 2010);
***********

The Court's Ruling

The petition is meritorious.

Cause of action is defined as the act or omission by which a party violates a right of another. It is
well-settled that the existence of a cause of action is determined by the allegations in the complaint.33

In this case, petitioner's cause of action is anchored on his claim that respondent personally entered
into a contract with him for the delivery of construction materials amounting to ₱l,500,000.00, which
was, however, left unpaid. He also avers that respondent is guilty of fraud in the performance of said
obligation because the subject checks issued to him by respondent were dishonored on the ground
of stop payment. As proof, petitioner offered in evidence, among others, the demand letter he sent to
respondent detailing the serial numbers of the checks that were issued by the latter, including the
dates and amounts thereof. He also offered the dishonored checks which were in his possession.

Respondent neither disputes the fact that he had indeed signed the subject checks nor denies the
demand letter sent to him by petitioner. Nevertheless, he claims that the checks were not issued to
1âwphi1

petitioner but to the project engineer of Unimasters who, however, lost the same. He also disclaims
any personal transaction with petitioner, stating that the subject checks were in fact, issued by
Unimasters and not him. Besides, petitioner failed to present any documentary proof that he or his
firm delivered construction materials for the Macagtas Dam project.

The Court finds for petitioner.

Jurisprudence holds that "in a suit for a recovery of sum of money, as here, the plaintiff-creditor
[(petitioner in this case)] has the burden of proof to show that defendant [(respondent in this case)]
had not paid [him] the amount of the contracted loan. However, it has also been long established
that where the plaintiff-creditor possesses and submits in evidence an instrument showing the
indebtedness, a presumption that the credit has not been satisfied arises in [his] favor. Thus, the
defendant is, in appropriate instances, required to overcome the said presumption and present
evidence to prove the fact of payment so that no judgment will be entered against him."34 This
presumption stems from Section 24 of the NIL, which provides that:

Section 24. Presumption of Consideration. - Every negotiable instrument is deemed prima facie to
have been issued for a valuable consideration; and every person whose signature appears thereon
to have become a party thereto for value.

As mentioned, petitioner had presented in evidence the three (3) dishonored checks which were
undeniably signed by respondent. During trial, respondent admitted to the following:

[Atty. Arturo Villarin] Q: Showing to you this check dated January 31, 1998 x x x, please go over this
check and tell the Honorable Court if that is the same check that you issued as replenishment for the
revolving fund?

x x xx

[Respondent] A: Yes, this is the check I signed.

Q: At the right bottom portion of this check is a signature, whose signature is this?

A: That is my signature.

Q: Likewise, for the month of March 13, 1998 [,] there is a check in the amount of [₱500,000.00]. Is
this also the check that you issued as replenishment for the project?

A: Yes, Sir.35 (Emphases supplied)

Hence, as the RTC correctly ruled, 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 petitioner's monetary claim. Unless otherwise rebutted, the legal presumption of
consideration under Section 24 of the NIL stands. Verily, "the vital function of legal presumption is to
dispense with the need for proof."36

Respondent's defense that the subject checks were lost and, thus, were not actually issued to
petitioner is a factual matter already passed upon by the RTC. As aptly pointed out by the trial court,
it would have been contrary to human nature and experience for petitioner to send respondent a
demand letter detailing the particulars of the said checks if he indeed unlawfully obtained the same.
In fact, it is glaring that respondent did not present Engr. Merelos, the project engineer who had
purportedly lost the checks, to personally testify on the circumstances surrounding the checks' loss.
Further, Unimasters' comptroller, Murillo, testified during trial that "she came to know that the lost
checks were deposited in the account of [petitioner as] she was informed by the [o]ffice[r]-in-charge
of the drawee bank, the Far East Bank of Tacloban, City Branch."37 However, there was no showing
that Unimasters and/or respondent commenced any action against petitioner to assert its interest
over a significant sum of ₱l,500,000.00 relative to the checks that were supposedly lost/ stolen.
Clearly, this paucity of action under said circumstances is again, inconsistent with ordinary human
nature and experience. Thus, absent any cogent reason to the contrary, the Court defers to the
RTC's findings of fact on this matter. In Madrigal v. CA,38 it was explained that:

The Supreme Court's jurisdiction is limited to reviewing errors of law that may have been committed
by the lower court. The Supreme Court is not a trier of facts. It leaves these matters to the lower
court, which [has] more opportunity and facilities to examine these matters. This same Court has
declared that it is the policy of the Court to defer to the factual findings of the trial judge, who has the
advantage of directly observing the witnesses on the stand and to determine their demeanor
whether they are telling or distorting the truth.39

Besides, Section 16 of the NIL 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," as in this case.

In Pacheco v. CA,40 the Court has expressly recognized that a check "constitutes an evidence of
indebtedness" and is a veritable "proof of an obligation." Hence, petitioner may rely on the same as
proof of respondent's personal obligation to him.
Although the checks were under the account name of Unimasters, it should be emphasized that the
manner or mode of payment does not alter the nature of the obligation. The source of obligation, as
claimed by petitioner in this case, stems from his contract with respondent. When they agreed upon
the purchase of the construction materials on credit for the amount of ₱l,500,000,00, the contract
between them was perfected.41 Therefore, even if corporate checks were issued for the payment of
the obligation, the fact remains that the juridical tie between the two (2) parties was already
established during the contract's perfection stage and, thus, does not preclude the creditor from
proceeding against the debtor during the contract's consummation stage.

That a privity of contract exists between petitioner and respondent is a conclusion amply supported
by the averments and evidence on record in this case.

First, the Court observes that petitioner was consistent in his account that he directly dealt with
respondent in his personal and not merely his representative capacity. In his Complaint, petitioner
alleged that "[Chan, doing business under the name and style of Unimaster] is indebted to [him] in
the amount [₱l,500,000.00] x x x."42

Moreover, the demand letter, which was admitted by respondent, was personally addressed to
respondent and not to Unimasters as represented by the latter.43

Also, it deserves mentioning that in his testimony before the RTC, petitioner explained that he
delivered the construction materials to respondent absent any written agreement due to his trust on
the latter, viz.:

[Atty. Daniel Arnold Añover] Q: So, when you delivered the aggregates, did you agree to deliver the
aggregates to Mr. Chan the defendant in this case, you did not put the terms into writing? Am I
correct?

[Petitioner] A: None, because it is verbal only, because I trusted him being a contractor.

x x xx

Q: Now, Mr. Witness you said that you trusted Mr. Chan, am I correct?

A: Yes, Sir.

Q: And that he promised you several times that he would pay you?

A: Yes, he promised me many times.

Q: And yet you still hold all these checks for security? Correct?

A: Yes Sir.

Q: Now, Mr. Witness, you said that you trusted Mr. Chan, then why did you not just handed [sic] over
the checks to him, because you said you trusted him?

A: How many times I gone to Tacloban and I went to Unimaster Office but they referred me to the
Leyte Park Hotel, since they are no longer in good terms with Mr. Wilson Chan so they referred me
to Leyte Park Hotel and then I went to Mr. Chan he promised that he will pay me and after several
months again, the same will be paid next month because there will be final inspection I even let him
borrow my equipment for free and hoping that the checks will be funded but again he lied.44

This squares with respondent's own testimony, wherein he stated that every time he wanted to have
supplies delivered for the Macagtas Dam project, he would not enter into any written contract:

[Atty. Marlonfritz Broto] Q: [Okay], now having read this particular statement Mr. Witness would you
agree with this representation that every time you want to have supplies in Macagtas dam you do
not enter into contract as you testified here a while ago?

[Respondent] A: Yes, Sir.45 (Emphasis supplied)

Petitioner further testified that he personally demanded the value of the subject checks from
respondent in his office, viz.:

[Atty. Daniel Arnold Añover] Q: Now, Mr. Witness you said that you visited Leyte Park Hotel several
times, am I correct?
[Petitioner] A: I think once or twice to demand from Mr. Wilson Chan.

Q: And of course, you were able to see Mr. Chan personally?

A: Yes, we had the conversation.

x x xx

Q: So you are saying you are talking to him in his office?

A: Yes, apparently, it was his Office.

x x xx

Q: You said that when you were there you were just talking each other [sic] and you were taking
coffee and made promises, right?

A: Yes, sir.46

Notably, these statements were considered undisputed. Hence, the same are binding on the parties.

In fine, the Court holds that the CA erred in dismissing petitioner's complaint against respondent on
the ground of lack of cause of action. Respondent was not able to overcome the presumption of
consideration under Section 24 of the NIL and establish any of his affirmative defenses. On the other
hand, as the holder of the subject checks which are presumed to have been issued for a valuable
consideration, and having established his privity of contract with respondent, petitioner has
substantiated his cause of action by a preponderance of evidence. "'Preponderance of evidence' is a
phrase that, in the last analysis, means probability of the truth. It is evidence that is more convincing
to the court as worthy of belief than that which is offered in opposition thereto."47 Consequently,
petitioner's Complaint should be granted.

WHEREFORE, the petition is GRANTED. The Decision dated October 28, 2014 of the Court of
Appeals in CA-G.R. CV No. 04024 is hereby SET ASIDE. The Decision dated January 30, 2008 of
the Regional Trial Court of Catarman, Northern Samar, Branch 19 in Civil Case No. C-1071
is REINSTATED.

SO ORDERED.

ESTELA M. PERLAS-BERNABE
Associate Justice

WE CONCUR:

MARIA LOURDES P.A. SERENO

February 6, 2017

G.R. No. 215910

MANUEL C. UBAS, SR., Petitioner

vs.
WILSON CHAN, Respondent

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