Caltex Philippines vs.

Court of Appeals 212

SCRA 448 G.R. No. 97753 || Negotiability
FACTS:
280 Certificates of Time Deposit (CTDs) were
issued by the Security Bank and Trust Company
in favor of Angel Dela Cruz, who deposited a
collective amount of Php 1,120,000. Such CTDs
were then delivered by Dela Cruz to Caltex
Phils. for the purchase of fuel products. Dela
Cruz lost all the CTDs in March 1982 and
informed the manager of Security Bank. The
manager arranged for the replacement of the
lost CTDs upon compliance of Dela Cruz to their
bank procedure which entails execution of a
notarized Affidavit of Loss. Upon replacement
of the allegedly lost CTDs, Dela Cruz obtained a
loan of P875,000 from same bank. He then
executed a notarized Deed of Assignment of
Time Deposit, surrendering to the bank full
control of the time deposit account, allowing
the latter to apply the said time deposits to the
payment of whatever amounts may be due on
the loan upon maturity.
On the other hand, in November 1982, Mr.
Aranas, the credit manager of Caltex, presented
to Security Bank for verification the CTDs
declared lost by Dela Cruz. Aranas claimed that
the same were delivered to Caltex as security
for purchases made. Accordingly, Security
Bank rejected Caltexs demand for the payment
of the value of the CTDs.
In April 1983, the loan of Dela Cruz with the
Security Bank matured and the latter applied
the time deposits in question as payment of the
matured loan. Caltex then filed a complaint
demanding payment of the value of the CTDs
plus accrued interest and compounded interest.
The Regional Trial Court dismissed the case. The
Court of Appeals also dismissed the case.
ISSUE(S):
1. Whether or not the subject Certificates of
Time Deposit are negotiable instruments

2. Whether or not Caltex can recover the value

of the CTDs
HELD:
1. YES. A sample text of the CTD states: This is
to Certify that B E A R E R has deposited in this
Bank the sum of PESOS: FOUR THOUSAND
ONLY, SECURITY BANK SUCAT OFFICE P4,000 &
00 CTS Pesos, Philippine Currency, repayable to
said depositor 731 days. After date, upon
presentation and surrender of this certificate,
with interest at the rate of 16% per cent per
annum.
Section 1 of the NIL requires among others, that
for an instrument to be negotiable, it must be
payable to the order or to bearer (par. D). The
accepted rule is that the negotiability or nonnegotiability of an instrument is determined
from the writing, that is, from the face of the
instrument itself. The documents provide that
the amounts deposited shall be repayable to
the depositor. The court ruled that the
depositor indicated is actually the bearer.
The documents do not say that the depositor is
Angel Dela Cruz and that the amounts
deposited are payable only to him. If it was
really the intention of the bank to pay the
amount to Dela Cruz only, then it could have so
expressed in clear and categorical terms instead
of having the word bearer stamped on the
space provided for the name of the depositor in
each CTD. The Security Bank, through its
manager, testified that the depositor referred
to is Angel Dela Cruz. However, the court ruled
that the manager merely declared that Dela
Cruz is the depositor, insofar as the bank is
concerned, but obviously other parties not
privy to the transaction between them would
not know that the depositor is not the bearer
stated in the CTDs. Hence, the situation would
require any party dealing with the CTDs to go
behind the plain import of what is written
thereon. This need for resort to extrinsic
evidence is what is sought to be avoided by the
NIL and calls for application of the elementary
rule that the interpretation of obscure words or

stipulations in a contract shall not favor the

party who caused the obscurity.
2. NO. Unfortunately for Caltex, although the
CTDs are bearer instruments, a valid negotiation
thereof for the purpose and agreement
between it and Dela Cruz, requires both
delivery and indorsement.
As stated by Mr. Aranas in a letter addressed to
the bank, these certificates of deposit were
negotiated to us by Mr. Dela Cruz to guarantee
his purchases of fuel products. This admission
is conclusive upon Caltex. Under the doctrine of
Estoppel, an admission is rendered conclusive
upon the person making it and cannot be
denied against the person relying thereon. If it
were true that the CTDs were delivered as
payment and not as security, Aranas could have
easily said so, instead of using the words to
guarantee. Under the NIL, an instrument is
negotiated when it is transferred from one
person to another in such a manner as to
constitute the transferee the holder thereof,
and a holder may be the payee or indorsee of a
bill or note, who is in possession of it, or the
bearer thereof. In the present case, however,
there was no negotiation in the sense of a
transfer of a legal title, in which case delivery
would have sufficed. Here, the delivery of the
CTDs was only as security for the purchases of
Dela Cruz. Therefore, Caltex could only have
been a holder for value by reason of lien.
Accordingly, a negotiation for such purpose
cannot be effected by mere delivery of the
instrument because the terms thereof and the
subsequent disposition of such security, in the
event of non-payment of the principal
obligation, must be contractually provided for.

Philippine Bank of Commerce vs. Aruego GR L25836-37 || Liability of persons signing as

agent. (Section 20)

FACTS;
On December 1, 1959, the Philippine Bank of
Commerce instituted against Jose M. Aruego
Civil Case No. 42066 for the recovery of the
total sum of about P35,000.00 with daily
interest thereon from November 17, 1959 until
fully paid and commission equivalent to 3/8%
for every thirty (30) days or fraction thereof
plus attorney's fees equivalent to 10% of the
total amount due and costs. The complaint filed
by the Philippine Bank of Commerce contains
twenty-two (22) causes of action referring to
twenty-two (22) transactions entered into by
the said Bank and Aruego on different dates
covering the period from August 28, 1950 to
March 14, 1951. The sum sought to be
recovered represents the cost of the printing of
"World Current Events," a periodical published
by the defendant. To facilitate the payment of
the printing the defendant obtained a credit
accommodation from the plaintiff. Thus, for
every printing of the "World Current Events,"
the printer, Encal Press and Photo Engraving,
collected the cost of printing by drawing a draft
against the plaintiff, said draft being sent later
to the defendant for acceptance. As an added
security for the payment of the amounts
advanced to Encal Press and Photo-Engraving,
the plaintiff bank also required defendant
Aruego to execute a trust receipt in favor of
said bank wherein said defendant undertook to
hold in trust for plaintiff the periodicals and to
sell the same with the promise to turn over to
the plaintiff the proceeds of the sale of said
publication to answer for the payment of all
obligations arising from the draft. Defendant
filed an answer interposing for his defense that
he signed the drafts in a representative
capacity; that he signed only as accommodation
party and that the drafts signed by him were
not really bills of exchange but mere pieces of

evidence of indebtedness because payments

were made before acceptance.
ISSUE: 1. WHether the drafts Aruego signed
were bills of exchange? 2. Whether Aruego can
be held liable by the petitioner although he
signed the supposed bills of exchange only as an
agent of Philippine Education Foundation
Company.

RULING: 1. YES. Under the Negotiable

Instruments Law, a bill of exchange is an
unconditional order in writting addressed by
one person to another, signed by the person
giving it, requiring the person to whom it is
addressed to pay on demand or at a fixed or
determinable future time a sum certain in
money to order or to bearer. As long as a
commercial paper conforms with the definition
of a bill of exchange, that paper is considered a
bill of exchange. The nature of acceptance is
important only in the determination of the kind
of liabilities of the parties involved, but not in
the determination of whether a commercial
paper is a bill of exchange or not. 2. Yes. Section
20 of the Negotiable Instruments Law provides
that "Where the instrument contains or a
person adds to his signature words indicating
that he signs for or on behalf of a principal or in
a representative capacity, he is not liable on the
instrument if he was duly authorized; but the
mere addition of words describing him as an
agent or as filing a representative character,
without disclosing his principal, does not
exempt him from personal liability."An
inspection of the drafts accepted by the
defendant shows that nowhere has he disclosed
that he was signing as a representative of the
Philippine Education Foundation Company. He
merely signed as follows: JOSE ARUEGO
(Acceptor) (SGD) JOSE ARGUEGO For failure to

disclose his principal, Aruego is personally liable

for the drafts he accepted.

Banco de Oro Savings and Mortgage Bank vs

Equitable Banking Corporation
No. L-7491

3.)

20 Jan 1988

Was Banco de Oro negligent and thus

responsible for any undue payment?

Ratio decidendi:

Facts:
Equitable Banking Corp. drew 6 crossed
Managers Check payable to certain member of
its establishment. Subsequently, the Checks
were deposited with Banco de Oro to the credit
of its depositor, a certain Aida Trencio.

1.)

The Checks were accepted for deposit by Banco

de Oro stamping thereon its guarantee, in order
that it can clear said Checks with Equitable
Banking Corp

Following the normal procedures, and after

stamping at the back of the of the Checks the
usual endorsements: All prior and/or lack of
endorsement guaranteed, Banco de Oro sent
the checks for clearing through PCHC.
Accordingly, Equitable Banking Corp. paid the
Checks. Its clearing account was debited for the
value of the Checks and Banco de Oros clearing
account was credited for the same amount.

Thereafter, Equitable Banking Corp. discovered

that the endorsements at the back of the
Checks were forged or otherwise belong to the
persons other than the payees. Pursuant to the
PCHC Clearing Rules and Regulations, Equitable
Bank presented the checks directly to the Banco
de Oro to claim reimbursement. However, the
latter refused.
Issue:
1.)
2.)

Were the subject Checks non-negotiable?

Is the Negotiable Instruments Law applicable
in deciding controversies of this nature by the
PCHC?

Banco de Oro by its own acts, stamped its

guarantee is now estopped from claiming that
the checks under consideration are not
negotiable instruments.

By such deliberate and positive attitude of

Banco de Oro, it has for all legal intents and
purposes treated the said Checks as negotiable
instruments and accordingly assumed the
warranty of the endorser when it stamped its
guarantee of prior endorsement at the back
2.)

The participation of the two banks in the

clearing operation of PCHC is a manifestation of
their submission to its jurisdiction.

3.)

Although the subject Checks are nonnegotiable, the responsibility of petitioner as

endorser thereof remains. While the drawer
generally owes no duty of diligence to the
collecting banks, the law imposes a duty of
diligence in the collecting bank to scrutinize
Checks deposited with it for the purpose of
determining their genuineness and regularity.
The collecting bank being primarily engaged in
banking holds itself out to the public as the
expert and the law holds it to a high standard of
conduct.

Case:
Garcia
vs.
Llamas
Citation: 417 SCRA 292; G.R. No. 154127 Dec.
8,
2003
FACTS:
Petitioner Romeo Garcia and Eduardo de Jesus
borrowed P 400,000 from respondent Dionisio
Llamas on Dec. 23, 1996. Garcia and de
Jesus executed a promissory note for that
purpose
binding
themselves
jointly and severally the loan on or before Jan.
23, 1997 with 5% interest per month. When the
debt was due, they failed to pay. Despite
repeated demands, they still failed to pay
prompting
Llamas
to institute a collection suit against the two.
Petitioner Garcia in his answer averred that he
assumed no responsibility under the promissory
not, for he merely signed it as an
accommodation
party
for
de
Jesus.
Furthermore, that since de Jesus already made
a payment through the delivery of a check
which was also accepted by Llamas, the
obligation
was
already
novated
and superseded. However, the check delivered
bounced
upon
presentment.
De Jesus, on the other hand, averred that
Llamas had been in bad faith in instituting the
case against him for there had been a previous
agreement between he and Llamas that the
latter would take as payment de Jesus'
retirement benefits which was still on
process while the suit was instituted. De Jesus
further averred that he had already paid a total
of P 120,000 by way of interests, the
breakdown as follows: (1) P40,000 collected as
advance interest from the principal of P400,000
because he only in fact received P 360,000
from that loan; (2) P 40,000 collected from him

by Llamas daughter which was derived from the

peso equivalent of his accumulated leave
credits from his employment in the Central
Police District Bicutan; (3) P 40,000 collected
from him as payment of the interests for the
months of
March
and
April
1997.
RTC rendered a judgment based on the
pleadings, ordering Garcia and de Jesus to pay
jointly and severally the amount of P 400,000
plus 5% interest per month from Jan 23, 1997
less the P120,000 paid by de Jesus, P 100,000 as
atty's fees + P2,000 appearance fee per day
in court,
and
the
cost
of
suit.
CA said that the RTC erred in rendering a
decision based on the pleadings because de
Jesus answer raised some genuinely
contentious issues, therefore, Llamas could not
be ipso facto entitled to the RTC
judgment. The case of de Jesus must be
remanded to the RTC for receipt of evidence.
On the part of Garcia, CA held that
Garcia's answer failed to raise a single genuine
issue,
that
there
could
be
no
novation, express or implied, and that Llamas
acceptance of the for the reason that the
obligation incurred was joint and solidary in the
first place and that the check issued bounced
upon
presentment.
Hence, an appeal to review was filed by
petitioner Garcia with the Supreme Court.
ISSUE:
Whether or not the original obligation as
evidenced by a promissory note was
subsequently novated when Llamas accepted
the payment of de Jesus through a check which
also subsequently bounced upon presentment?

HELD:

Pacifica Jimenez vs Bucoy

The check could not have extinguished the

obligation
because it
bounced
upon
presentment. By law, the delivery of a
check produces the effect of payment only
when it is cashed. No novation took place
because:

103 Phil. 40 Mercantile Law Negotiable

Instruments Law Negotiable Instruments in
General Unconditional Promise To Pay

1. The parties did not unequivocally declare that

the old obligation had been extinguished by the
issuance and the acceptance of the check, or
that the check would take the place of the note.
2. There is no incompatibility between the
promissory note and the check. The check had
been issued precisely to answer the obligation.
The note evidences the loan obligation, while
the check answers it. Verily, the 2 can stand
together.
There is also no novation by substitution of
debtors. In order to change the person of the
debtor, the old debtor must be expressly
released from the obligation and the new
debtor to assume the former's place. In the
present case, petitioner Garcia has not shown
that he was expressly released from the
obligation, that a third person was substituted
in his place and that the joint and solidary
obligation was cancelled by the solitary
undertaking of de Jesus

During the Japanese occupation, Pacita Young

issued three promissory notes to Pacifica
Jimenez. The total sum of the notes was P21k.
All three promissory notes were couched in this
manner:
Received from Miss Pacifica Jimenez the total
amount of ___________ payable six months
after the war, without interest.
When the promissory notes became due,
Jimenez presented the notes for payment.
Pacita and her husband died and so the notes
were presented to the administrator of the
estate of the spouses (Dr. Jose Bucoy). Bucoy
manifested his willingness to pay but he said
that since the loan was contracted during the
Japanee occupation the amount should be
deducted and the Ballantyne Schedule should
be used, that is peso-for-yen (which would
lower the amount due from P21k). Bucoy also
pointed out that nowhere in the not can be
seen an express promise to pay because of
the absence of the words I promise to pay
ISSUE: Whether or not Bucoy is correct.
HELD: No. The Ballantyne schedule may not be
used here because the debt is not payable
during the Japanese occupation. It is expressly
stated in the notes that the amounts stated
therein are payable six months after the war.
Therefore, no reduction could be effected, and
peso-for-peso payment shall be ordered in
Philippine currency.

[G.R. No. 157943. September 4, 2013.]

The notes also amounted in effect to a promise
to pay the amounts indicated therein. An
acknowledgment may become a promise by the
addition of words by which a promise of
payment is naturally implied, such as,
payable, payable on a given day, payable
on demand, paid . . . when called for, . . . To
constitute a good promissory note, no precise
words of contract are necessary, provided they
amount, in legal effect, to a promise to pay. In
other words, if over and above the mere
acknowledgment of the debt there may be
collected from the words used a promise to pay
it, the instrument may be regarded as a
promissory note.

PEOPLE OF

THE

PHILIPPINES, plaintiffappellee, vs.

GILBERT

REYES WAGAS, accusedappellant.

DECISION

BERSAMIN, J p:
The Bill of Rights guarantees the right of an
accused to be presumed innocent until the
contrary is proved. In order to overcome the
presumption of innocence, the Prosecution is
required to adduce against him nothing less
than proof beyond reasonable doubt. Such
proof is not only in relation to the elements of
the offense, but also in relation to the identity
of the offender. If the Prosecution fails to
discharge its heavy burden, then it is not only
the right of the accused to be freed, it becomes
the Court's constitutional duty to acquit him.
The Case
Gilbert

R. Wagas appeals

his

conviction

for estafa under the decision rendered on July

11, 2002 by the Regional Trial Court, Branch 58,
in Cebu City (RTC), meting on him the
indeterminate penalty of 12 years of prision

mayor, as minimum, to 30 years of reclusion

payment of an obligation, but

perpetua, as maximum.

which check when presented

for encashment with the

Antecedents

bank, was dishonored for the

Wagas was

charged

with estafa under

the

reason

information that reads:

"drawn

against

insufficient funds" and inspite

That on or about the 30th day

of

of

for

demands made upon said

and

accused to make good said

subsequent thereto, in the

check or replace the same

City of Cebu, Philippines, and

with cash, he had failed and

within the jurisdiction of this

refused and up to the present

Honorable Court, the said

time still fails and refuses to

accused,

deliberate

do so, to the damage and

intent, with intent to gain and

prejudice of Alberto Ligaray in

by means of false pretenses

the amount aforestated.

April,

1997,

sometime

and

prior

with

or fraudulent acts executed

notice

and

several

CONTRARY TO LAW.1

prior to or simultaneously
with the commission of the

After Wagas entered a plea of not guilty, 2 the

fraud, to wit: knowing that he

pre-trial was held, during which the Defense

did not have sufficient funds

admitted that the check alleged in the

deposited with the Bank of

information had been dishonored due to

Philippine

insufficient funds. 3 On its part, the Prosecution

without

Islands,
informing

and
Alberto

made no admission. 4

Ligaray of that circumstance,

At

with intent to defraud the

complainant Alberto Ligaray as its lone witness.

latter, did then and there

Ligaray

issue Bank of the Philippine

1997, Wagas placed an order for 200 bags of

Islands Check No. 0011003,

rice over the telephone; that he and his wife

dated May 08, 1997 in the

would not agree at first to the proposed

amount

P200,000.00,

payment of the order by postdated check, but

which check was issued in

because of Wagas' assurance that he would not

of

the

trial,

the

testified

Prosecution

that

on

presented

April

30,

disappoint them and that he had the means to

In his defense, Wagas himself testified. He

pay them because he had a lending business

admitted having issued BPI Check No. 0011003

and money in the bank, they relented and

to Caada, his brother-in-law, not to Ligaray. He

accepted the order; that he released the goods

denied having any telephone conversation or

to Wagas on April 30, 1997 and at the same

any dealings with Ligaray. He explained that the

time received Bank of the Philippine Islands

check was intended as payment for a portion of

(BPI) Check No. 0011003 for P200,000.00

Caada's property that he wanted to buy, but

payable to cash and postdated May 8, 1997;

when the sale did not push through, he did not

that he later deposited the check with Solid

anymore fund the check. 9

Bank, his depository bank, but the check was

dishonored due to insufficiency of funds; 5 that
he called Wagas about the matter, and the
latter told him that he would pay upon his
return to Cebu; and that despite repeated

On

cross-examination,

the

Prosecution

confronted Wagas with a letter dated July 3,

1997 apparently signed by him and addressed
to Ligaray's counsel, wherein he admitted owing
Ligaray P200,000.00 for goods received, to wit:

demands, Wagas did not pay him. 6 cTEICD

This is to acknowledge receipt
On cross-examination, Ligaray admitted that he
did not personally meet Wagas because they
transacted through telephone only; that he
released the 200 bags of rice directly to Robert
Caada, the brother-in-law of Wagas, who
signed the delivery receipt upon receiving the
rice. 7

1997

which

is

self-

explanatory. It is worthy also

to discuss with you the
environmental facts of the
case for your consideration,
to wit:

After Ligaray testified, the Prosecution formally

offered

of your letter dated June 23,

the

following: (a) BPI Check

No.

0011003 in the amount of P200,000.00 payable

to "cash;" (b) the return slip dated May 13,
1997 issued by Solid Bank; (c) Ligaray's affidavit;
and (d) the delivery receipt signed by Caada.
After the RTC admitted the exhibits, the
Prosecution then rested its case. 8

1.It is true that I

obtained goods from
your

client

P200,000.00
promised to

worth
and

settle

the same last May 10,

1997, but to no avail.
On this point, let me
inform you that I sold

my real property to a

And as to its status,

buyer in Manila, and

said funds will be

promised to pay the

rele[a]sed

consideration on the

thirty (30) days from

same

today.

date

as

promised with your

client. Unfortunately,
said buyer likewise
failed to make good
with such obligation.

within

In view of the foregoing, it is

my

sincere

promise

request

and

settle

said

to

obligation

on

or

before

August 15, 1997.

Hence, I failed to
fulfill

my

promise

Lastly,

would

like

to

resultant

manifest that it is not my

thereof. (sic)

intention to shy away from

any

2.

Again,

made

financial

obligation. SaDICE

another promise to
settle said obligation
on or before June 15,
1997, but still to no
avail attributable to

xxx xxx xxx

Respectfully yours,
(SGD.) GILBERT R. WAGAS 10

the same reason as

Wagas admitted the letter, but insisted that it

aforementioned.(sic)

was Caada who had transacted with Ligaray,

3.To

arrest

this

problem, we decided
to source some funds
using

the

subject

property as collateral.
This other means is
resorted to for the
purpose of settling
the herein obligation.

and that he had signed the letter only because

his sister and her husband (Caada) had begged
him to assume the responsibility. 11 On redirect
examination, Wagas declared that Caada, a
seafarer, was then out of the country; that he
signed the letter only to accommodate the
pleas of his sister and Caada, and to avoid
jeopardizing Caada's application for overseas
employment. 12 The Prosecution subsequently

offered and the RTC admitted the letter as

4.the costs of suit.

rebuttal evidence. 13

SO ORDERED. 14

Decision of the RTC

The RTC held that the Prosecution had proved

As stated, the RTC convicted Wagas of estafa on

beyond reasonable doubt all the elements

July 11, 2002, viz.:

constituting

the

crime

of estafa,

premises

namely: (a) that Wagas issued the postdated

considered, the Court finds

check as payment for an obligation contracted

the accused GUILTY beyond

at the time the check was issued; (b) that he

reasonable doubt as charged

failed to deposit an amount sufficient to cover

and he is hereby sentenced as

the check despite having been informed that

follows:

the check had been dishonored; and (c) that

WHEREFORE,

Ligaray released the goods upon receipt of the

1.To

suffer

an

indeterminate

postdated check and upon Wagas' assurance

that the check would be funded on its date.

penalty

of

from

twelve

(12)

years

Wagas filed a motion for new trial and/or

of pris[i]on mayor, as

reconsideration, 15 arguing

that

the

minimum, to thirty

Prosecution did not establish that it was he who

(30) years of reclusion

had transacted with Ligaray and who had

perpetua as

negotiated the check to the latter; that the

maximum;

records showed that Ligaray did not meet him

at any time; and that Ligaray's testimony on

2.To indemnify the

complainant,

reliable because it was not shown that Ligaray

Albert[o] Ligaray in
the

sum

of

P200,000.00; CAHaST
3.To

had been familiar with his voice. Wagas also

sought the reopening of the case based on
newly discovered evidence, specifically: (a) the

said

testimony of Caada who could not testify

complainant the sum

during the trial because he was then out of the

of P30,000.00 by way

country,

of

against Wagas in another criminal case for

and

pay

their alleged telephone conversation was not

attorney's

fees;

and (b) Ligaray's

testimony

violation of Batas Pambansa Blg. 22.

given

On October 21, 2002, the RTC denied the

The Court also directed Wagas to explain why

motion for new trial and/or reconsideration,

his bail should not be cancelled for having been

opining that the evidence Wagas desired to

erroneously

present at a new trial did not qualify as newly

memorandum dated September 27, 2006, the

discovered, and that there was no compelling

OCA manifested to the Court that it had

ground to reverse its decision. 16 DSAEIT

meanwhile filed the administrative complaint

Wagas appealed directly to this Court by notice

of appeal. 17

granted. 23 Finally,

in

its

against the RTC Judge. 24

Issues

Prior to the elevation of the records to the

In this appeal, Wagas insists that he and Ligaray

Court, Wagas filed a petition for admission to

were neither friends nor personally known to

bail pending appeal. The RTC granted the

one other; that it was highly incredible that

petition

at

Ligaray, a businessman, would have entered

P40,000.00. 18 Wagas then posted bail for his

into a transaction with him involving a huge

provisional liberty pending appeal. 19

amount of money only over the telephone; that

and

fixed Wagas'

bond

The resolution of this appeal was delayed by

incidents bearing on the grant of Wagas'
application for bail. On November 17, 2003, the
Court required the RTC Judge to explain
why Wagas was out on bail. 20 On January 15,
2004, the RTC Judge submitted to the Court a
so-called manifestation and compliance which
the Court referred to the Office of the Court
Administrator (OCA) for evaluation, report, and
recommendation. 21 On July 5, 2005, the Court,
upon the OCA's recommendation, directed the
filing of an administrative complaint for simple
ignorance

of

the

law

against

the

RTC

Judge. 22 On September 12, 2006, the Court

directed the OCA to comply with its July 5, 2005
directive, and to cause the filing of the
administrative complaint against the RTC Judge.

on the contrary, the evidence pointed to

Caada as the person with whom Ligaray had
transacted,

considering

that

the

delivery

receipt, which had been signed by Caada,

indicated that the goods had been "Ordered by
ROBERT CAADA," that the goods had been
received by Caada in good order and
condition, and that there was no showing that
Caada had been acting on behalf ofWagas;
that he had issued the check to Caada upon a
different

transaction;

that

Caada

had

negotiated the check to Ligaray; and that the

element of deceit had not been established
because it had not been proved with certainty
that it was him who had transacted with Ligaray
over the telephone. AcHSEa

The circumstances beg the question: did the

check has been dishonored for lack or

Prosecution establish beyond reasonable doubt

insufficiency of funds shall be prima

the existence of all the elements of the crime

facie evidence of deceit constituting

of estafa as charged, as well as the identity of

false pretense or fraudulent act. ICaDHT

the perpetrator of the crime?

Ruling

In

order

to

constitute estafa under

this

statutory provision, the act of postdating or

issuing a check in payment of an obligation

The appeal is meritorious.

must be the efficient cause of the defraudation.

Article 315, paragraph 2 (d) of the Revised Penal
Code, as amended, provides:

This means that the offender must be able to

obtain money or property from the offended

Article 315.Swindling (estafa). Any

party by reason of the issuance of the check,

person who shall defraud another by

whether dated or postdated. In other words,

any

the Prosecution must show that the person to

of

the

means

mentioned

hereinbelow shall be punished by:

xxx xxx xxx

whom the check was delivered would not have

parted with his money or property were it not
for the issuance of the check by the

2.By means of any of the following false

offender. 25

pretenses or fraudulent acts executed

prior to or simultaneously with the
commission of the fraud:

The essential elements of the crime charged are

that: (a) a check is postdated or issued in
payment of an obligation contracted at the time

xxx xxx xxx

the check is issued; (b) lack or insufficiency of

(d)By postdating a check, or issuing a

funds to cover the check; and (c) damage to the

check in payment of an obligation when

payee thereof. 26 It is the criminal fraud or

the offender had no funds in the bank,

deceit in the issuance of a check that is

or his funds deposited therein were not

punishable,

sufficient to cover the amount of the

debt. 27 Prima facie evidence of deceit exists by

check. The failure of the drawer of the

law upon proof that the drawer of the check

check to deposit the amount necessary

failed to deposit the amount necessary to cover

to cover his check within three (3) days

his check within three days from receipt of the

from receipt of notice from the bank

notice of dishonor.

and/or the payee or holder that said

not

the

non-payment

of

The Prosecution established that Ligaray had

dealt with and to whom he had made the

released the goods to Caada because of the

demand for payment, and that he had talked

postdated check the latter had given to him;

with him only over the telephone, to wit:

and that the check was dishonored when

presented

for

payment

because

of

the

Q:After the check was (sic) bounced,

what did you do next? STcaDI

insufficiency of funds.
A:I made a demand on them.
In every criminal prosecution, however, the
identity of the offender, like the crime itself,

Q:How did you make a demand?

must

A:I called him over the phone.

be

reasonable
Prosecution

established
doubt. 28 In
did

not

by

proof

that

beyond

regard,

establish

the

beyond

reasonable doubt that it was Wagas who had

Q:Who is that "him" that you are

referring to?

defrauded Ligaray by issuing the check.

A:Gilbert Wagas. 30

Firstly, Ligaray expressly admitted that he did

Secondly, the check delivered to Ligaray was

not personally meet the person with whom he

made payable to cash. Under the Negotiable

was transacting over the telephone, thus:

Instruments Law, this type of check was payable

Q:On April 30, 1997, do you remember

having a transaction with the accused in
this case?

to the bearer and could be negotiated by mere

delivery

without

indorsement. 31 This

the

need

rendered

of
it

an
highly

probable that Wagas had issued the check not

A:Yes, sir. He purchased two hundred

to Ligaray, but to somebody else like Caada,

bags of rice from me.

his brother-in-law, who then negotiated it to

Q:How did this purchase of rice

Ligaray. Relevantly, Ligaray confirmed that he

transaction started? (sic)

did not himself see or meet Wagas at the time

of the transaction and thereafter, and expressly

A:He talked with me over the phone

and told me that he would like to

stated that the person who signed for and

received the stocks of rice was Caada.

purchase two hundred bags of rice and

he will just issue a check. 29

It bears stressing that the accused, to be guilty

of estafa as charged, must have used the check

Even after the dishonor of the check, Ligaray did

not personally see and meet whoever he had

in order to defraud the complainant. What the

law punishes is the fraud or deceit, not the

mere

issuance

check. Wagas could

of
not

the
be

worthless
held

or

any

other

means. 32 Without

the

guilty

authentication, incriminating another person

of estafa simply because he had issued the

just by adverting to the telephone conversation

check used to defraud Ligaray. The proof of

with him would be all too easy. In this respect,

guilt must still clearly show that it had

an identification based on familiarity with the

been Wagas as the drawer who had defrauded

voice of the caller, or because of clearly

Ligaray by means of the check.

recognizable peculiarities of the caller would

Thirdly, Ligaray admitted that it was Caada

who received the rice from him and who
delivered the check to him. Considering that the
records are bereft of any showing that Caada
was then acting on behalf of Wagas, the RTC
had no factual and legal bases to conclude and
find that Caada had been acting for Wagas.
This lack of factual and legal bases for the RTC

have sufficed. 33 The identity of the caller could

also be established by the caller's selfidentification, coupled with additional evidence,
like the context and timing of the telephone
call, the contents of the statement challenged,
internal

patterns,

and

other

distinctive

characteristics, and disclosure of knowledge of

facts known peculiarly to the caller. 34

to infer so obtained despite Wagas being

Verily, it is only fair that the caller be reliably

Caada's brother-in-law.

identified

Finally,

Ligaray's

declaration

that

it

was Wagas who had transacted with him over

the telephone was not reliable because he did
not explain how he determined that the person

first

before

telephone

communication is accorded probative weight.

The identity of the caller may be established by
direct or circumstantial evidence. According to
one ruling of the Kansas Supreme Court:

with whom he had the telephone conversation

Communications

by

telephone

are

was really Wagas whom he had not yet met or

admissible in evidence where they are

known before then. We deem it essential for

relevant to the fact or facts in issue, and

purposes of reliability and trustworthiness that

admissibility is governed by the same

a telephone conversation like that one Ligaray

rules of evidence concerning face-to-

supposedly had with the buyer of rice to be first

face conversations except the party

authenticated before it could be received in

against whom the conversations are

evidence. Among others, the person with whom

sought to be used must ordinarily be

the witness conversed by telephone should be

identified. It is not necessary that the

first satisfactorily identified by voice recognition

witness be able, at the time of the

conversation, to identify the person

was whether he had known and why he had

with whom the conversation was had,

known Wagas, and he answered as follows:

provided subsequent identification is

Q:Do you know the accused in this

proved by direct or circumstantial

evidence

somewhere

in

case?

the

development of the case. The mere

A:Yes, sir.

statement of his identity by the party

Q:If he is present inside the courtroom

calling is not in itself sufficient proof of

[. . .]

such identity, in the absence of

A:No, sir. He is not around.

corroborating circumstances so as to
render the conversation admissible.

Q:Why do you know him?

However, circumstances preceding or

A:I know him as a resident of

following the conversation may serve

Compostela because he is an ex-mayor

to sufficiently identify the caller. The

of Compostela. 36

completeness of the identification goes

During cross-examination, Ligaray was allowed

to the weight of the evidence rather

than

its

admissibility,

and

another opportunity to show how he had

the

determined that his caller was Wagas, but he

responsibility lies in the first instance

still failed to provide a satisfactory showing, to

with the district court to determine

wit:

within its sound discretion whether the

threshold of admissibility has been

Q:Mr. Witness, you mentioned that you

met. 35 (Bold

and the accused entered into [a]

emphasis

supplied) CHTcSE

transaction of rice selling, particularly

Yet, the Prosecution did not tender any

plausible explanation or offer any proof to
definitely

establish

that

it

had

been Wagas whom Ligaray had conversed with

on the telephone. The Prosecution did not show
through Ligaray during the trial as to how he
had determined that his caller was Wagas. All
that the Prosecution sought to elicit from him

with these 200 sacks of rice subject of

this

case,

through

telephone

conversation? SIcCEA
A:Yes, sir.
Q:But you cannot really ascertain that
it was the accused whom you are
talking with?

A:I know it was him because I know

Ligaray's statement that he could tell that it

him.

was Wagas who had ordered the rice because

Q:Am I right to say [that] that was the

first time that you had a transaction
with the accused through telephone
conversation, and as a consequence of
that alleged conversation with the
accused through telephone he issued a

he "know[s]" him was still vague and unreliable

for

not

assuring

certainty

of

the

identification, and should not support a finding

of Ligaray's familiarity with Wagas as the caller
by his voice. It was evident from Ligaray's
answers

that Wagas was

acquaintance

check in your favor?

the

of

not

Ligaray's

prior

even

an

to

the

transaction. Thus, the RTC's conclusion that

A:No. Before that call I had a talk[ ]

Ligaray had transacted with Wagas had no

with the accused.

factual basis. Without that factual basis, the RTC

Q:But still through the telephone?

was speculating on a matter as decisive as the

identification of the buyer to be Wagas. DIESHT

A:Yes, sir.
Q:There was no instant (sic) that the
accused went to see you personally
regarding

the

200

bags

rice

transaction?

The

letter

of Wagas did not

competently

establish that he was the person who had

conversed with Ligaray by telephone to place
the order for the rice. The letter was admitted
exclusively as the State's rebuttal evidence to

A:No. It was through telephone only.

controvert or impeach the denial of Wagas of

Q:In fact[,] you did not cause the

entering into any transaction with Ligaray on

delivery of these 200 bags of rice

the rice; hence, it could be considered and

through the accused himself?

appreciated only for that purpose. Under the

law of evidence, the court shall consider

A:Yes. It was through Robert.

evidence solely for the purpose for which it is

Q:So, after that phone call[,] you

offered, 38not

deliver[ed] th[ose] 200 sacks of rice

purpose. 39 Fairness to the adverse party

through somebody other than the

demands such exclusivity. Moreover, the high

accused?

plausibility of the explanation of Wagas that he

A:Yes, sir. 37

for

any

other

had signed the letter only because his sister and

her husband had pleaded with him to do so
could not be taken for granted.

It is a fundamental rule in criminal procedure

identity of the accused beyond reasonable

that the State carries the onus probandi in

doubt, there can be no conviction. 42

establishing the guilt of the accused beyond a

reasonable doubt, as a consequence of the
tenet ei incumbit probation, qui dicit, non qui
negat, which means that he who asserts, not he
who denies, must prove, 40 and as a means of
respecting the presumption of innocence in
favor of the man or woman on the dock for a
crime. Accordingly, the State has the burden of
proof to show: (1) the correct identification of
the author of a crime, and (2) the actuality of
the commission of the offense with the
participation of the accused. All these facts
must be proved by the State beyond reasonable
doubt on the strength of its evidence and
without solace from the weakness of the

There is no question that an identification that

does not preclude a reasonable possibility of
mistake cannot be accorded any evidentiary
force. 43 Thus,

considering

that

the

circumstances of the identification of Wagas as

the person who transacted on the rice did not
preclude a reasonable possibility of mistake, the
proof of guilt did not measure up to the
standard of proof beyond reasonable doubt
demanded in criminal cases. Perforce, the
accused's constitutional right of presumption of
innocence until the contrary is proved is not
overcome,

and

he

is

entitled

to

an

acquittal, 44 even though his innocence may be

doubted. 45

defense. That the defense the accused puts up

may be weak is inconsequential if, in the first

Nevertheless, an accused, though acquitted

place, the State has failed to discharge

of estafa, may still be held civilly liable where

the onus of his identity and culpability. The

the preponderance of the established facts so

presumption of innocence dictates that it is for

warrants. 46 Wagas as the admitted drawer of

the Prosecution to demonstrate the guilt and

the check was legally liable to pay the amount

not

of

for

the

accused

to

establish

it

to

Ligaray,

holder

in

due

being

course. 47 Consequently, we pronounce and

presumed innocent, carries no burden of proof

hold him fully liable to pay the amount of the

on his or her shoulders. For this reason, the first

dishonored check, plus legal interest of 6% per

duty of the Prosecution is not to prove the

annum from the finality of this decision.

crime but to prove the identity of the criminal.

WHEREFORE,

For even if the commission of the crime can be

ASIDE the decision rendered on July 11, 2002 by

established, without competent proof of the

the Regional Trial Court, Branch 58, in Cebu

innocence. 41 Indeed,

the

accused,

the

Court REVERSES and SETS

City; and ACQUITS Gilbert R.Wagas of the crime

of estafa on the ground of reasonable doubt,

PNB vs Erlando Rodriguez

but ORDERS him to pay Alberto Ligaray the

G.R. No. 170325 September 26, 2008

amount of P200,000.00 as actual damages, plus

interest of 6% per annum from the finality of

Lessons
Applicable:
Fictitious
(Negotiable Instruments Law)

this decision. LLpr

FACTS:

No pronouncement on costs of suit.

Spouses Erlando and Norma Rodriguez were

engaged in the informal lending business and
had a discounting arrangement with the
Philnabank Employees Savings and Loan
Association (PEMSLA), an association of PNB
employees

SO ORDERED.

Persons

The association maintained current and savings

accounts with Philippine National Bank (PNB)
PEMSLA regularly granted loans to its members.
Spouses Rodriguez would rediscount the
postdated checks issued to members whenever
the association was short of funds.
As was customary, the spouses would replace
the postdated checks with their own checks
issued in the name of the members.
It was PEMSLAs policy not to approve
applications for loans of members with
outstanding debts.
To subvert this policy, some PEMSLA officers
devised a scheme to obtain additional loans
despite their outstanding loan accounts.
They took out loans in the names of unknowing
members, without the knowledge or consent of
the latter.
The officers carried this out by forging the
indorsement of the named payees in the checks
Rodriguez checks were deposited directly by
PEMSLA to its savings account without any
indorsement from the named payees.

This was an irregular procedure made possible

through the facilitation of Edmundo Palermo,
Jr., treasurer of PEMSLA and bank teller in the
PNB Branch.
this became the usual practice for the parties.
November 1998-February 1999: spouses issued
69 checks totalling to P2,345,804. These were
payable to 47 individual payees who were all
members of PEMSLA
PNB eventually
fraudulent acts

found

out

about

these

To put a stop to this scheme, PNB closed the

current account of PEMSLA.
As a result, the PEMSLA checks deposited by the
spouses were returned or dishonored for the
reason Account Closed.
The amounts were duly debited from the
Rodriguez account
Spouses filed a civil complaint for damages
against PEMSLA, the Multi-Purpose Cooperative
of Philnabankers (MCP), and PNB.
PNB credited the checks to the PEMSLA account
even without indorsements = PNB violated its
contractual obligation to them as depositors so PNB should bear the losses
RTC: favored Rodriguez
makers, actually did not intend for the named
payees to receive the proceeds of the checks =
fictitious payees (under the Negotiable
Instruments Law) = negotiable by mere delivery
CA: Affirmed - checks were obviously meant by
the spouses to be really paid to PEMSLA =
payable
to
order

ISSUE: W/N the 69 checks are payable to order

for not being issued to fictitious persons
thereby dismissing PNB from liability
HELD: NO. CA Affirmed
GR: when the payee is fictitious or not intended
to be the true recipient of the proceeds, the
check is considered as a bearer instrument
(Sections 8 and 9 of the NIL)
EX: However, there is a commercial bad faith
exception to the fictitious-payee rule.
A
showing of commercial bad faith on the part of
the drawee bank, or any transferee of the check
for that matter, will work to strip it of this
defense. The exception will cause it to bear the
loss.
The distinction between bearer and order
instruments lies in their manner of negotiation
order instrument - requires an indorsement
from the payee or holder before it may be
validly negotiated
bearer instrument - mere delivery
US jurisprudence: fictitious if the maker of the
check did not intend for the payee to in fact
receive the proceeds of the check
In a fictitious-payee situation, the drawee bank
is absolved from liability and the drawer bears
the loss
When faced with a check payable to a fictitious
payee, it is treated as a bearer instrument that
can be negotiated by delivery
underlying theory: one cannot expect a
fictitious payee to negotiate the check by
placing his indorsement thereon

lack of knowledge on the part of the payees,

however, was not tantamount to a lack of
intention on the part of respondents-spouses
that the payees would not receive the checks
proceeds
PNB did not obey the instructions of the
drawers when it accepted absent indorsement,
forged or otherwise. It was negligent in the
selection and supervision of its employees

Consolidated Plywood Industries vs IFC Leasing

& Acceptance Corp.
G.R. No. 72593 April 30, 1987
Lessons Applicable: Requisites of negotiability
to antedated and postdated instruments
(Negotiable Instruments Law)
FACTS: Consolidated (buyer pays promossor
note) > IPM (seller-assignor who violated
warranty) > IFC (holder in due course or merely
an assignee?)
Consolidated
Plywood
Industries,
Inc
(Consolidated) is a corporation engaged in the
logging business
For the purpose of opening of additional roads
and simultaneous logging operations along the
route of roads, it needed 2 additional units of
tractors
Atlantic Gulf & Pacific Company of Manila,
through its sister company and marketing arm,
Industrial Products Marketing (IPM) (sellerassignor) offered to sell 2 "Used" Allis Crawler
Tractors
IPM inspected the job site and assured that the
tractors were fit for the job and gave a 90-days
performance warranty of the machines and
availability of parts.
Consolidated purchased on installment.
It paid the down payment of P210,000
April 5, 1978: IPM issued the sales invoice and
the deed of sale with chattel mortgage with
promissory note was executed
IPM, by means of a deed of assignment,
assigned its rights and interest in the chattel

mortgage in favor of
Acceptance Corp. (IFC)

IFC

Leasing

and

After 14 days, one of the tractors broke down

and after another 9 days, the other tractor too
Because of the breaking down of the tractors,
the road building and simultaneous logging
operations were delayed
Consolidated unilaterally rescinded the contract
w/ IPM
April 7, 1979: Wee of Consolidated asked IPM
to pull out the units and have them
reconditioned, and thereafter to offer them for
sale.
The proceeds were to be given to IFC and the
excess will be divided between:
IPM
Consolidated which offered to bear one-half 1/2
of the reconditioning cost
IPM didn't do anything
IFC filed against Consolidated for the recovery
of the principal sum P1,093,789.71, interest and
attorney's fees
RTC and CA: favored IFC
breach of warranty if any, is not a defense
available to Consolidated either to withdraw
from the contract and/or demand a
proportionate reduction of the price with
damages in either case
ISSUE: W/N IFC is a holder in due course of the
negotiable promissory note so as to bar
completely all the available defenses of the
Consolidated against IPM

HELD: CA reversed and set aside

Consolidated is a victim of warranrty
The Civil Code provides that:
ART. 1561. The vendor shall be responsible for
warranty against the hidden defects which the
thing sold may have, should they render it unfit
for the use for which it is intended, or should
they diminish its fitness for such use to such an
extent that, had the vendee been aware
thereof, he would not have acquired it or would
have given a lower price for it; but said vendor
shall not be answerable for patent defects or
those which may be visible, or for those which
are not visible if the vendee is an expert who,
by reason of his trade or profession, should
have known them.
ART. 1562. In a sale of goods, there is an
implied warranty or condition as to the quality
or fitness of the goods, as follows:
(1) Where the buyer, expressly or by implication
makes known to the seller the particular
purpose for which the goods are acquired, and
it appears that the buyer relies on the sellers
skill or judge judgment (whether he be the
grower or manufacturer or not), there is an
implied warranty that the goods shall be
reasonably fit for such purpose;
ART. 1564. An implied warranty or condition as
to the quality or fitness for a particular purpose
may be annexed by the usage of trade.
ART. 1566. The vendor is responsible to the
vendee for any hidden faults or defects in the
thing sold even though he was not aware
thereof.
This provision shall not apply if the contrary has
been stipulated, and the vendor was not aware

of the hidden faults or defects in the thing sold.

(Emphasis supplied).
GR: extends to the corporation to whom it
assigned its rights and interests
EX: assignee is a holder in due course of the
promissory note
assuming the note is negotiable
Consolidated's defenses may not prevail against
it.
Articles 1191 and 1567 of the Civil Code provide
that:
ART. 1191. The power to rescind obligations is
implied in reciprocal ones, in case one of the
obligors should not comply with what is
incumbent upon him.
The injured party may choose between the
fulfillment and the rescission of the obligation
with the payment of damages in either case. He
may also seek rescission, even after he has
chosen fulfillment, if the latter should become
impossible.
ART. 1567. In the cases of articles 1561, 1562,
1564, 1565 and 1566, the vendee may elect
between withdrawing from the contract and
demanding a proportionate reduction of the
price, with damages in either case. (Emphasis
supplied)
Consolidated,
having
unilaterally
and
extrajudicially rescinded its contract with the
seller-assignor, can no longer sue IPM except by
way of counterclaim if IPM sues it because of
the rescission

Considering that paragraph (d), Section 1 of the

Negotiable Instruments Law requires that a
promissory note "must be payable to order or
bearer" - in this case it is non-negotiable
= expression of consent that the instrument
may be transferred
consent is indispensable since a maker assumes
greater risk under a negotiable instrument than
under a non-negotiable one
When instrument is payable to order
SEC. 8. WHEN PAYABLE TO ORDER. - The
instrument is payable to order where it is drawn
payable to the order of a specified person or to
him or his order. . . .
Without the words "or order" or"to the order
of, "the instrument is payable only to the
person designated therein and is therefore nonnegotiable.
Any subsequent purchaser thereof will not
enjoy the advantages of being a holder of a
negotiable instrument but will merely "step into
the shoes" of the person designated in the
instrument and will thus be open to all defenses
available against the latter
Even conceding for purposes of discussion that
the promissory note in question is a negotiable
instrument, the IFC cannot be a holder in due
course due to absence of GF for knowing that
the tractors were defective
SEC. 52. WHAT CONSTITUTES A HOLDER IN DUE
COURSE. - A holder in due course is a holder
who has taken the instrument under the
following conditions:
(c) That he took it in good faith and for value

(d) That the time it was negotiated by him he

had no notice of any infirmity in the instrument
of defect in the title of the person negotiating it

Ponce de Leon vs Rehabilitation Finance

36 SCRA 289 Commercial Law Negotiable
Instruments Law Payable on Demand

SEC. 56. WHAT CONSTITUTES NOTICE OF

DEFFECT. - To constitute notice of an infirmity in
the instrument or defect in the title of the
person negotiating the same, the person to
whom it is negotiated must have had actual
knowledge of the infirmity or defect, or
knowledge of such facts that his action in taking
the instrument amounts to bad faith. (Emphasis
supplied)
We believe the finance company is better able
to bear the risk of the dealer's insolvency than
the buyer and in a far better position to protect
his interests against unscrupulous and insolvent
dealers. . .

On October 8, 1951, Jose Ponce De Leon and

Francisco Soriano took out a loan from the
Rehabilitation Finance Corporation or RFC (now
Development Bank of the Philippines) for
P495,000.00. The loan was secured by a parcel
of land owned by Soriano. A deed of mortgage
was then executed in view of the loan. Soriano
and Ponce de Leon also executed a promissory
note in the amount of P495k, payable in
monthly installments of P28,831.64.
Part of the P495k was used to pay off the
previous encumbrances amounting to P135k on
the property of Soriano. The rest were released
to Ponce de Leon in various amounts from
December 1951 to July 1952, still pursuant to
the deed of mortgage.
The loan went unpaid and so RFC initiated a
foreclosure proceeding on the mortgaged
property. According to RFC, the monthly
payments were supposed to be due in October
1952.
In his defense, Ponce de Leon insists that the
amortizations never became due because
allegedly,

RFC

did

not

complete

the

disbursement of the loan to him (allegedly,

P19k was withheld). He also invokes that on the
face of the promissory note it was written that
the installments have no fixed or determined
dates of payment. Hence, the monthly
payments were never due therefore the
foreclosure is void. He insists that the court
should first determine the date of maturity
of the loan.

ISSUE: Whether or not Ponce de Leon is right.

Buencamino v. Hernandez

HELD: No. During trial and based on the

Facts:

records, Ponce de Leons lawyer admitted that

all the remainder of the loan was released to
Ponce de Leon so he cannot invoke that not all
of the P495k was released by RFC.
Anent the issue of the loans maturity date,
under Secs. 13 and 14 of the Negotiable
Instruments Law, when a promissory note
expresses no time for payment, it is deemed
payable on demand. Therefore, when RFC
demanded payment on October 24, 1952, the
installments become due.

The Land Tenure Administration (LTA)

purchased from Buencamino et. Al their
Hacienda for a total price of Php.2, 746,000.00.
For the purpose, a Memorandum Agreement
was executed which declared that the
LTA was purchasing the hacienda upon petition
of the tenants and in accordance with R.A 1400
or the Land Reform Act of 1955. The parties
agreed that 50% of the full price or
Php.1,373,000.00 was to be paid in cash and the
balance in negotiable land certificates. The
condition in the certificate regarding its
encashment only after the lapse of five years
from the date of the execution of the Deed of
Sale. The
Beuncaminos later on presented the
instruments to the City Treasurer in payment of
their tax obligations. The treasurer rejected the
certificates on the ground that the certificates
were payable to bearer not on demand, but,
only upon the expiration of the five year period
specified in the certificates.
Issue: Are the instruments "payable on
demand"?
Court Ruling:
An instrument, to be "payable on demand" is
one which (a) is expressed to be payable on
demand, or at sight, or on presentation; or (b)
expresses no time for payment.
The 5-year period within which the certificates
could be encashed was an expression of time
for payment contrary to paragraph "b", sec.7 of
the Negotiable Instruments Law.

She received only P35,000.00 - deduct the

previous loan of P10K as well as the 10%
interest of P5,000.00

Virginia asked for the return of the 1st

check but Mrs. Vicencio told her that her
filing clerk was absent. Despite several
demands for the return of the first check,
but was told that it could no longer locate it

For the new loan, they required the same

requirements in the issuance of the 3 more
checks:

2 checks of P20K

1 check of P10K

June 20 and July 21, 1989: Virginia obtained

2 more loans:

P10K

P15K

Issuing 2 checks of P15k

All the checks were undated at the time

given to Mrs. Vicencio

July 1989: The Pachecos were able to settle

and pay in cash P60K out of P75K

August 3, 1992: Because the loan was

Pacheco vs CA
G.R. No. 126670 December 2, 1999
Lessons Applicable: Requisites of negotiability
to antedated and postdated instruments
(negotiable instruments)

May 17, 1989: Due to financial difficulties

arising from the repeated delays in the
payment of their receivables for
the construction projects from the DPWH,
the spouses Pacheco obtain a loan of P10K
from Mrs. Luz Vicencio who owns a
pawnshop in Samar.
Despite being informed by petitioners that
their bank account no longer had any funds,
Mrs. Vicencio insisted that they issue the
check, as evidence of the loan and only a
formality
Virginia Pacheco issued
RCBC check for P10K

an

undated

she received P9,000.00 - 10% interest

already deducted
Ernesto Pacheco was also required to sign
the check o
June 14, 1989: Virginia obtained
another loan of P50,000.00 from Mrs.
Vicencio.

unpaid when due, Mrs. Vicencio with her

husband and daughter went to the
Pachecos residence to persuade Virginia to

place the date August 15, 1992 on the

checks

Despite being informed by petitioner

Virginia that their account with RCBC had
been closed as early as August 17, 1989
August 29, 1992: The Pachecos were
surprised to receive a demand letter from
Mrs. Vicencios spouse informing them that
the checks were dishonored due to

drawer who issues a check as security or

evidence of investment is not liable
for estafa

Mrs. Vicencio could not have been deceived

nor defrauded by petitioners in order to
obtain the loans because she was informed
that they no longer have funds in their
RCBC accounts

Moreover, a check must be presented

Account Closed.

RTC and CA: charged the Pachecos of estafa

relying on the allegation of the Vicencios

that it is a payment for the jewelry

ISSUE: W/N the Pachecos should be charged

with Estafa
HELD: NO. CA reversed

Estafa elements:

1. that the offender postdated or issued a

check in payment of an obligation contracted at
the time the check was issued - not present
2. that such postdating or issuing a check was
done when the offender had no funds in the
bank, or his funds deposited therein were not
sufficient to cover the amount of the check present
3. deceit or damage to the payee thereof - not
preset

within a reasonable time from issue.

By current banking practice, a check

becomes stale after more than 6 months here 3 years

Pacheco still have an outstanding obligation

of P15K in favor of Mrs. Vicencio

||| (Gonzales v. Pe, G.R. No. 167398, [August 8,

2011], 670 PHIL 597-615)
DECISION

Respondent Quirico Pe was engaged in the

business of construction materials, and had
been transacting business with petitioner
Spouses Nestor Victor Rodriguez and Ma.

PERALTA, J p:

Lourdes Rodriguez. The Department of Public

Before the Court is a petition for review

Works and Highways (DPWH) awarded two

on certiorari seeking

set

aside

the

contracts

23,

2004

and

Rodriguez for the following projects, namely,

Resolution 2 dated February 23, 2005 of the

construction of "Lanot-Banga Road (Kalibo

Court of Appeals (CA), Twentieth Division, in

Highway) km. 39 + 200 to km. 40 + 275 Section

CA-G.R. SP No. 73171, entitled Quirico Pe v.

IV (Aklan side)" and concreting of "Laua-an

Honorable Judge Rene Hortillo, in his capacity as

Pandan Road (Tibial-Culasi Section), Province of

Presiding Judge of the Regional Trial Court of

Antique." In 1998, respondent agreed to supply

Iloilo City, Branch 31, Augustus Gonzales and

cement for the construction projects of

Spouses Engr. Nestor Victor and Dr. Ma. Lourdes

petitioner Spouses Rodriguez. Petitioner Nestor

Rodriguez, which

of

Rodriguez availed of the DPWH's pre-payment

respondent Quirico Pe. The CA Decision

program for cement requirement regarding the

reversed and set aside the Order 3 dated

Lanot-Banga Road, Kalibo Highway project

September 23, 2002 of the Regional Trial Court

(Kalibo project), wherein the DPWH would give

(RTC) of Iloilo City, Branch 31, which dismissed

an advance payment even before project

respondent's appeal for non-payment of docket

completion upon his presentment, among

and other lawful fees, and directing the

others, of an official receipt for the amount

issuance of the writ of execution for the

advanced. Petitioner Nestor Rodriguez gave

implementation of its Decision 4 dated June 28,

Land Bank of the Philippines (LBP) Check No.

2002 in favor of the petitioners and against the

6563066 to respondent, which was signed by

respondent. The CA Decision also directed the

co-petitioners (his wife Ma. Lourdes Rodriguez

RTC to assess the appellate docket fees to be

and his business partner Augustus Gonzales),

paid by the respondent, if it has not done so,

but leaving the amount and date in blank. The

and allow him to pay such fees and give due

blank LBP check was delivered to respondent to

course to his appeal.

guarantee the payment of 15,698 bags of

Decision 1 dated

to

June

granted

the

The antecedents are as follows:

petition

in

favor

of

petitioner

Nestor

Portland cement valued at P1,507,008.00,

covered by Official Receipt No. 1175, 5 issued

by

respondent

(as

owner

of

Antique

so far delivered 40,360 bags of cement to

Commercial), in favor of petitioner Nestor

petitioners

Rodriguez (as owner of Greenland Builders).

thereby leaving an outstanding amount of

However, a year later, respondent filled up

P2,062,000.00.

blank LBP Check No. 6563066, by placing

petitioners stopped the bank-to-bank online

P2,062,000.00

1999,

payments to him, he filled up the amount of

corresponding to the amount and date. DHECac

P2,062,000.00 and made the LBP check payable

and

June

30,

On December 9, 1999, petitioners filed an

Amended

Complaint 6 for

Declaration

of

Payment, Cancellation of Documents and

Damages against respondent with the RTC,
Branch 31, Iloilo City, docketed as Civil Case No.
25945. The amended complaint alleged that
they entrusted blank LBP Check No. 6563066 to

who

remitted

He

P2,306,500.00,

countered

that

when

on June 30, 1999. The LBP check was

dishonored for being "drawn against insufficient
funds

(DAIF)."

By

way

of

compulsory

counterclaim, he sought recovery of the

balance of P2,062,000.00, with interest at 24%
from January 29, 1999 until fully paid as actual
damages.

respondent so as to facilitate the approval of

In the Pre-trial Order 8 dated January 28, 2000,

the pre-payment application of petitioner

the trial court determined the following to be

Nestor Rodriguez with the DPWH. They stated

the delimited issues, to wit: ECSaAc

that the blank LBP check would "serve as

collateral" to guarantee the payment for 15,698
bags to be used for the Kalibo project,
amounting to P1,507,008.00, and that after
payment of the said amount, respondent would
return the LBP check. According to them, after
having

paid

respondent

the

amount

of

P2,306,500.00, which is P139,160.00 more than

the amount of P2,167,340.00 (representing the
value for 23,360 bags of cement taken for the

(1)whether
petitioners]

plaintiffs'
liability

to

[herein
defendant

[herein respondent] for 15,698 bags

priced at P1,507,008.00 subject of the
earlier-mentioned

pre-payment

program and covered by the "blank"

LBP Check No. 6563066 has already
been paid, hence, plaintiffs are no
longer liable to the defendant for this
amount;

Kalibo project), they were cleared of any

liability.

(2)whether this LBP Check No. 6563066

should not be returned by defendant to

On January 6, 2000, respondent filed an Answer

to Amended Complaint, 7 averring that he had

plaintiffs, or failing in which, should

now be declared as cancelled, null and

WHEREFORE,

void;

rendered in favor of the plaintiffs and

(3)whether plaintiffs have completely

judgment

is

hereby

against the defendant, as follows:

paid to the defendant the price of the

1.Declaring plaintiffs' obligation to the

cement used for the Kalibo project

defendant for the cement supplied for

which specifically is the amount of

the

23,360 bags of cement valued in the

Construction Project in the amount of

total amount of P2,167,340.00;

P2,167,340.00 as already and fully paid,

(4)whether plaintiffs are entitled to

damages and attorney's fees; and
(5)whether this case be dismissed and
with the dismissal of the complaint to
proceed with the counterclaim. 9

Kalibo

(Lanot-Banga)

Road

hence, plaintiffs are no longer liable to

the defendant;
2.Declaring Land Bank Check No.
6563066 dated June 30, 1999 for
P2,062,000.00 as null and void and
without any legal effect;

In a Decision dated June 28, 2002, the trial

court, applying Section 14 10 of the Negotiable
Instruments Law, found that respondent's
subsequent filling up of LBP Check No. 6563066
in the amount of P2,062,000.00 was not made
strictly in accordance with the authority given
to him by petitioner Nestor Rodriguez, and that
since one year had already lapsed, the same
was not done within a reasonable time. As to
the 23,360 bags of cement for the Kalibo
project, valued at P2,167,340.00 which was
subject of previous transactions, the trial court

3.Ordering defendant to pay each

plaintiff the sums of P100,000.00 as
actual damages; P500,000.00 as moral
damages; P200,000.00 as attorney's
fees and P2,000.00 per hearing as
appearance

fee;

P50,000.00

as

miscellaneous actual and necessary

litigation expenses; and
4.To pay the costs.
Defendant's counterclaim is hereby
DISMISSED.

ruled that the same had been fully paid and

considered a settled issue. Consequently, the

SO ORDERED. 11

RTC rendered judgment in favor of the

After receipt of a copy of the said RTC Decision

petitioners and against the respondent, the

on July 26, 2002, respondent filed a Notice of

dispositive portion of which reads: DIESaC

Appeal on July 30, 2002.

In an Order 12 dated August 5, 2002, the trial

of Execution 15 directing the execution of the

court gave due course to respondent's appeal,

RTC Decision dated June 28, 2002.

and directed the Branch Clerk of Court to

transmit the entire records of the case to the
CA.

On October 7, 2002, respondent filed a Petition

for Certiorari and Prohibition with Application
for Writ of Preliminary Injunction and Prayer for

On August 26, 2002, petitioners filed a Motion

Temporary Restraining Order, 16 seeking to set

for Reconsideration, to Dismiss Appeal, and for

aside the RTC Order dated September 23, 2002

Issuance of Writ of Execution, 13 stating that

(which dismissed his appeal and directed the

respondent's appeal should be dismissed as the

issuance of a writ of execution to implement

same was not perfected due to non-payment of

the RTC Decision dated June 28, 2002), and to

docket and other lawful fees as required under

enjoin the implementation of the Writ of

Section 4, Rule 41 of the Rules of Court.

Execution dated October 2, 2002.

Claiming that since the respondent's appeal was

not perfected and, as a consequence, the RTC
Decision dated June 28, 2002 became final and
executory, petitioners sought the issuance of a
writ of execution for the implementation of the
said RTC Decision. To buttress their motion,
petitioners

also

appended

In a Resolution 17 dated October 9, 2002, the

CA granted the respondents' prayer for
Temporary Restraining Order and, in the
Resolution 18 dated August 20, 2003, approved
the respondent's injunction bond and directed
the Division Clerk of Court to issue the writ of
preliminary injunction.

Certification 14 dated August 19, 2002, issued

by the Clerk of Court of the Office of the Clerk

On August 20, 2003, the Division Clerk of Court

of Court (OCC) of the RTC, Iloilo City, certifying

issued

that no appeal fees in the case had been paid

Injunction, 19 thereby

and received by the OCC. CDAHIT

implementation of the Writ of Execution dated

the

Writ

of

Preliminary

enjoining

the

October 2, 2002.
In the Order dated September 23, 2002, the
trial court dismissed respondent's appeal and

On June 23, 2004, the CA rendered a Decision in

directed the issuance of a writ of execution to

favor of the respondent, the dispositive portion

implement the RTC Decision dated June 28,

of which reads:

2002.

WHEREFORE, the petition is granted.

On October 2, 2002, the Clerk of Court and Ex-

The assailed order and writ of execution

officio Provincial Sheriff of Iloilo issued the Writ

of the Regional Trial Court must be, as it

is hereby, SET ASIDE. The trial court is

appeal has been perfected by the mere filing of

hereby ordered to assess the appellate

the notice of appeal. Respondent theorizes that

docket fees, if it has not done so, and

with the perfection of his appeal, the trial court

allow the petitioner to pay such fees

is now divested of jurisdiction to dismiss his

and give due course to the petitioner's

appeal and, therefore, only the CA has

appeal. No costs.

jurisdiction to determine and rule on the

SO ORDERED. 20

propriety of his appeal. He raises the defense

that his failure to pay the required docket and

Aggrieved, petitioners filed a Motion for

other legal fees was because the RTC Branch

Reconsideration 21 on August 24, 2004, which,

Clerk of Court did not make an assessment of

however, was denied by the CA in a

the appeal fees to be paid when he filed the

Resolution 22 dated February 23, 2005. cAISTC

notice of appeal.

Hence, petitioner filed this present petition

The petition is meritorious.

raising the sole issue that:

In cases of ordinary appeal, Section 2, Rule 41
THE COURT OF APPEALS PATENTLY

of the Rules of Court provides that the appeal

ERRED IN REVERSING THE DECISION OF

to the CA in cases decided by the RTC in the

THE LOWER COURT AND ALLOWING

exercise of its original jurisdiction shall be taken

RESPONDENT TO BELATEDLY PAY THE

by filing a notice of appeal with the RTC (the

REQUIRED APPELLATE DOCKET AND

court which rendered the judgment or final

OTHER LEGAL FEES.

order appealed from) and serving a copy

Petitioners allege that since respondent failed

thereof upon the adverse party. Section 3

to pay the docket and other legal fees at the

thereof states that the appeal shall be taken

time he filed the Notice of Appeal, his appeal

within fifteen (15) days from notice of the

was deemed not perfected in contemplation of

judgment or final order appealed from.

the law. Thus, petitioners pray that the CA

Concomitant with the filing of a notice of appeal

decision be set aside and a new one be

is the payment of the required appeal fees

rendered dismissing the respondent's appeal

within the 15-day reglementary period set forth

and ordering the execution of the RTC Decision

in Section 4 of the said Rule. Thus, TIaCcD

dated June 28, 2002.

SEC. 4.Appellate court docket and other

On the other hand, respondent, citing Section 9,

lawful fees. Within the period for

Rule 41 of the Rules of Court, maintains that his

taking an appeal, the appellant shall pay

to the clerk of the court which rendered

pay the docket and other legal fees, claiming

the judgment or final order appealed

that the Branch Clerk of Court did not issue any

from, the full amount of the appellate

assessment. This procedural lapse on the part

court docket and other lawful fees.

of the respondent rendered his appeal with the

Proof of payment of said fees shall be

CA to be dismissible and, therefore, the RTC

transmitted to the appellate court

Decision, dated June 28, 2002, to be final and

together with the original record or the

executory.

record on appeal.

In Far Corporation v. Magdaluyo, 24 as with

In reversing the ruling of the trial court, the CA

other subsequent cases 25 of the same ruling,

cited Yambao

the Court explained that the procedural

justification

v.

Court

of

for

giving

due

Appeals 23 as
to

requirement under Section 4 of Rule 41 is not

respondent's petition and ordering the belated

merely directory, as the payment of the docket

payment of docket and other legal fees.

and other legal fees within the prescribed

In Yambao,

therein

period is both mandatory and jurisdictional. It

petitioners' appeal from the RTC decision for

bears stressing that an appeal is not a right, but

failure to pay the full amount of the required

a mere statutory privilege. An ordinary appeal

docket fee. Upon elevation of the case, the

from a decision or final order of the RTC to the

Court, however, ordered the CA to give due

CA must be made within 15 days from notice.

course to their appeal, and ruled that their

And within this period, the full amount of the

subsequent payment of the P20.00 deficiency,

appellate court docket and other lawful fees

even before the CA had passed upon their

must be paid to the clerk of the court which

motion for reconsideration, was indicative of

rendered the judgment or final order appealed

their good faith and willingness to comply with

from. The requirement of paying the full

the Rules.

amount of the appellate docket fees within the

the

CA

course

dismissed

The ruling in Yambaois not applicable to the

present case as herein respondent never made
any payment of the docket and other lawful
fees, not even an attempt to do so,
simultaneous with his filing of the Notice of
Appeal. Although respondent was able to file a
timely Notice of Appeal, however, he failed to

prescribed period is not a mere technicality of

law or procedure. The payment of docket fees
within the prescribed period is mandatory for
the perfection of an appeal. Without such
payment, the appeal is not perfected. The
appellate court does not acquire jurisdiction
over the subject matter of the action and the
Decision sought to be appealed from becomes

final and executory. Further, under Section 1

Laohoo, 27 we ruled that therein counsel's

(c), Rule 50, an appeal may be dismissed by the

failure to file the appeal in due time does not

CA, on its own motion or on that of the

amount to excusable negligence. The non-

appellee, on the ground of the non-payment of

perfection of the appeal on time is not a mere

the docket and other lawful fees within the

technicality.

reglementary period as provided under Section

petitioner's plea for the relaxation of the rules

4 of Rule 41. The payment of the full amount of

on technicality would disturb a well-entrenched

the docket fee is an indispensable step for the

ruling that could make uncertain when a

perfection of an appeal. In both original and

judgment attains finality, leaving the same to

appellate cases, the court acquires jurisdiction

depend upon the resourcefulness of a party in

over the case only upon the payment of the

concocting implausible excuses to justify an

prescribed docket fees. cECaHA

unwarranted departure from the time-honored

Respondent's claim that his non-payment of

docket and other lawful fees should be treated
as

mistake

and

excusable

negligence,

Besides,

to

grant

therein

policy of the law that the period for the

perfection of an appeal is mandatory and
jurisdictional.

attributable to the RTC Branch Clerk of Court, is

The CA took cognizance over the case, based on

too superficial to warrant consideration. This is

the wrong premise that when the RTC issued

clearly negligence of respondent's counsel,

the Order dated August 5, 2002 giving due

which is not excusable. Negligence to be

course to respondent's Notice of Appeal and

excusable must be one which ordinary diligence

directing the Branch Clerk of Court to transmit

and

guarded

the entire records of the case to the CA, it ipso

against. 26 Respondent's counsel filed a notice

facto lost jurisdiction over the case. Section

of appeal within the reglementary period for

9, 28 Rule 41 of the Rules explains that the

filing the same without, however, paying the

court of origin loses jurisdiction over the case

appellate docket fees. He simply ignored the

only upon the perfection of the appeal filed in

basic procedure of taking an appeal by filing a

due time by the appellant and the expiration of

notice of appeal, coupled with the payment of

the time to appeal of the other parties. Withal,

the full amount of docket and other lawful fees.

prior to the transmittal of the original records of

Respondent's counsel should keep abreast of

the case to the CA, the RTC may issue orders for

procedural laws and his ignorance of the

the protection and preservation of the rights of

procedural

the prevailing party, as in this case, the issuance

prudence

could

not

requirements

have

shall

bind

the

respondent. In National Power Corporation v.

of

the

writ

of

execution

because

the

respondent's appeal was not perfected.

Moreover, Section 13, Rule 41 of the Rules

appeal for failure to pay the appeal fees, and

declare that the RTC Decision dated June 28,
2002 has now become final and executory.

states that the CA may dismiss an appeal taken

As an incidental matter on the propriety of

from the RTC on the ground of non-payment of

petitioners'

the docket and other lawful fees within the 15-

on certiorari under Rule 45 of the Rules,

day reglementary period: CDAEHS

respondent raises the argument that since the

SEC. 13.Dismissal of appeal. Prior to

the transmittal of the original record or
the record on appeal to the appellate
court,

the

trial

court

may motu

proprio or on motion dismiss the appeal

for having been taken out of time, or
for non-payment of the docket and
other

lawful

fees

within

the

reglementary period. (As amended by

A.M. No. 00-2-10-SC, May 1, 2000.)

petition

for

review

subject of the present petition is the writ of

preliminary injunction granted by the CA (in
favor of the respondent enjoining the execution
of the RTC Decision dated June 28, 2002), in CAG.R. SP No. 73171, which is interlocutory in
nature, petitioners' petition should be denied
for being the wrong remedy. In other words,
respondent advances the theory that since the
assailed CA Decision dated June 23, 2004
partakes

of

an

interlocutory

order, i.e., enjoining the finality of the RTC

Since respondent's appeal was not perfected

Decision dated June 28, 2002, petitioners

within the 15-day reglementary period, it was

should have availed of the remedy of a petition

as if no appeal was actually taken. Therefore,

for certiorari under Rule 65, not a petition for

the RTC retains jurisdiction to rule on pending

review on certiorari under Rule 45.

incidents lodged before it, such as the

petitioner's Motion for Reconsideration, to
Dismiss Appeal, and for Issuance of Writ of
Execution, filed on August 26, 2002, which
sought to set aside its Order dated August 5,
2002 that gave due course to respondent's
Notice of Appeal, and directed the issuance of a
writ of execution. Having no jurisdiction over
the case, the prudent thing that the CA should
have done was to dismiss the respondent's

Respondent's argument is unfounded. The

proper remedy of a party aggrieved by a
decision of the CA is a petition for review
on certiorari under Rule 45, which is not
identical to a petition for certiorari under Rule
65. Rule 45 provides that decisions, final orders
or

resolutions

of

the

CA

in

any

case, i.e., regardless of the nature of the action

or proceedings involved, may be appealed to Us

by

filing

on certiorari, which

petition

continuation of the appellate process over the

likewise be lifted. Thus, the RTC Decision dated

original case. 29 Therefore, petitioners' filing of

June 28, 2002 is reinstated and, as the said

the

decision having become final and executory, the

for

but

overturned, and the Writ of Preliminary

Injunction issued on August 20, 2003 should

petition

be

review
a

present

would

for

review

on certiorari under Rule 45 is the proper and

adequate remedy to challenge the Decision
dated June 24, 2004 and Resolution dated
February 23, 2005 of the CA. EDSHcT

case is remanded for its prompt execution.

While every litigant must be given the amplest
opportunity

for

the

proper

and

just

determination of his cause, free from the

To recapitulate, one who seeks to avail of the

constraints of technicalities, the failure to

right to appeal must strictly comply with the

perfect an appeal within the reglementary

requirements of the rules, and failure to do so

period is not a mere technicality. It raises

leads to the loss of the right to appeal. 30 The

jurisdictional problem, as it deprives the

rules require that from the date of receipt of

appellate court of its jurisdiction over the

the assailed RTC order denying one's motion for

appeal. After a decision is declared final and

reconsideration, an appellant may take an

executory, vested rights are acquired by the

appeal to the CA by filing a notice of appeal

winning party. Just as a losing party has the

with the RTC and paying the required docket

right to appeal within the prescribed period, the

and other lawful fees with the RTC Branch Clerk

winning party has the correlative right to enjoy

of Court, within the 15-day reglementary period

the finality of the decision on the case. 31

for the perfection of an appeal. Otherwise, the

appellant's appeal is not perfected, and the CA
may dismiss the appeal on the ground of nonpayment of docket and other lawful fees. As a
consequence, the assailed RTC decision shall
become final and executory and, therefore, the
prevailing parties can move for the issuance of a

WHEREFORE, the petition is GRANTED. The

Decision dated June 23, 2004 and Resolution
dated February 23, 2005 of the Court of
Appeals, in CA-G.R. SP No. 73171, are
REVERSED and SET ASIDE. The Writ of
Preliminary Injunction, issued by the Court of
Appeals on August 20, 2003, is LIFTED. HICEca

writ of execution.
The Decision dated June 28, 2002 of the
Since the CA erroneously took cognizance over
the case, its Decision dated June 23, 2004 and
Resolution dated February 23, 2005 should be

Regional Trial Court, Branch 31, Iloilo City

is REINSTATED and, in view of its finality, the
case is REMANDED for its prompt execution.

SO ORDERED.

(Borromeo v. Sun, G.R. No. 75908, [October 22,

1999], 375 PHIL 595-605)

Carpio, * Velasco, Jr.,

SYNOPSIS

Brion ** and Sereno, *** JJ., concur.

Private respondent brought before the then

Court of the First Instance of Rizal, an action,
against Lourdes O. Borromeo, Federico O.
Borromeo and Federico O. Borromeo, Inc.
(FOB), to compel the transfer to his name in the
books of FOB 23, 223 shares of stock registered
in the name of Federico Borromeo, as
evidenced by a Deed of Assignment dated
January 16, 1974. After trial, the lower court
came out with a decision declaring the
questioned signature on subject Deed of
Assignment as the genuine signature of
Federico Borromeo. On appeal by petitioners,
the Court of Appeals adjudged as forgery the
controverted signature of herein petitioner
Borromeo.

However,

after

the

private

respondent filed a motion for reconsideration,

the appellate court reversed its decision and
affirmed in toto the decision of the trial court.
Aggrieved by the decision, petitioners filed the
instant petition contending that the appellate
court erred in holding that the signature of
Federico Borromeo in Deed of Assignment is a
genuine signature.
The Supreme Court found the petition devoid of
merit. The Court ruled that respondent court
erred not in affirming the decision of the

Regional Trial Court in Civil Case No. 19466.

world.' 3 According to the private respondent,

Accordingly, the petition was dismissed for lack

on January 16, 1974 Federico O. Borromeo

of merit and the assailed resolution is affirmed.

executed in his favor a Deed of Assignment with

respect to the said 23,223 shares of stock.

Facts:
At

bar

is

Petition

for

review

on Certiorari under Rule 45 of the Revised Rules

of Court seeking to set aside the Resolution of
the then Intermediate Appellate Court 1 , dated
March 13, 1986, in AC-G.R. CV NO. 67988,

On the other hand, petitioner Federico O.

Borromeo disclaimed any participation in the
execution of the Deed of Assignment, theorizing
that his supposed signature thereon was
forged. LLpr

which reversed its earlier Decision dated

After trial, the lower court of origin came out

February 12, 1985, setting aside the Decision of

with a decision declaring the questioned

the former Court of the First Instance of Rizal,

signature on subject Deed of Assignment, dated

Branch X, in Civil Case No. 19466. dctai

January 16, 1974, as the genuine signature of

Federico O. Borromeo; ratiocinating thus:

The antecedent facts are as follows:

Private respondent Amancio Sun brought
before the then Court of the First Instance of
Rizal, Branch X, an action against Lourdes O.
Borromeo (in her capacity as corporate
secretary), Federico O. Borromeo and Federico
O. Borromeo (F.O.B.), Inc., to compel the
transfer to his name in the books of F.O.B., Inc.,
23,223 shares of stock registered in the name of
Federico O. Borromeo, as evidenced by a Deed

'After considering the testimonies of

the two expert witnesses for the parties
and after a careful and judicious study
and

analysis

of

the

questioned

signature as compared to the standard

signatures, the Court is not in a position
to

declare

that

the

questioned

signature in Exh. A is a forgery. On the

other hand, the Court is of the opinion
that the questioned signature is the real

of Assignment dated January 16, 1974.

signature of Federico O. Borromeo

Private respondent averred 2 that all the shares

between the years 1954 to 1957 but

of stock of F.O.B. Inc. registered in the name of

definitely is not his signature in 1974 for

Federico O. Borromeo belong to him, as the

by then he has changed his signature.

said shares were placed in the name of Federico

Consequently, to the mind of the Court

O. Borromeo 'only to give the latter personality

Exhibit A was signed by defendant

and

Federico O. Borromeo between the

importance

in

the

business

years 1954 to 1957 although the words

"The testimony of Mr. Segundo Tabayoyong on

in the blank were filled at a much later

March 5, 1980, part of which is cited on pages

date.' 4

19-23 of the petition, shows admissions which

On appeal by petitioners, the Court of Appeals

are summarized by the petitioner as follows:

adjudged as forgery the controverted signature

'He never finished any degree in

of Federico O. Borromeo; disposing as follows:

Criminology. Neither did he obtain any

'WHEREFORE, the judgment of the

Court a quo as to the second cause of
action dated March 12, 1980 is hereby
reversed and set aside and a new

degree in physics or chemistry. He was

a mere trainee in the NBI laboratory. He
said he had gone abroad only once-to
Argentina which, according to him 'is
the only one country in the world that

judgment is hereby rendered:

gives this degree (?) . . . 'People go

1. Ordering

the

dismissal

of

the

there where they obtain this sort of

complaint as to defendant-appellants;

degree (?) where they are authorized to

2. Ordering

practice (sic) examination of questioned

plaintiff-appellee

on

appellants' counterclaim to pay the

documents.'

latter:

'His civil service eligibility was second

a) P20,000.00 as moral damages;

grade (general clerical). His present

b) P10,000.00 as exemplary damages;

position

had

to

be

're-classified'

'confidential' in order to qualify him to

c) P10,000.00 as attorney's fees.

it.

3. Ordering plaintiff-appellee to pay the

Examination. cda

costs.' 5

'He has never authored any book on the

On March 29, 1985, Amancio Sun interposed a

subject on which he claimed to be an

motion for reconsideration of the said decision,

'expert.' Well, he did 'write' a so-called

contending

pamphlet

that

Segundo

Tabayoyong,

He

never

passed

any

pretentiously

called

petitioners' expert witness, is not a credible

'Fundamentals

witness as found and concluded in the following

Documents Examination and Forgery

disposition by this Court in Cesar vs. Sandigan

Detection.'

Bayan 6'

mentioned some references' (some)

In

of

Board

that

Questioned

pamphlet,

he

are Americans and one I think is a

British, sir, like in the case of Dr. Wilson

movement, good quality of lines, skills

Harrison, a British' (he repeated with

and

emphasis). Many of the 'theories'

characteristics.

contained in his pamphlet were lifted

individual

handwriting

2. By process of interpolation the

body and soul from those references,

questioned signature fits in and can be

one of them being Albert Osborn. His

bracketed in time with the standard

pamphlet has neither quotations nor

signatures written in the years between

footnotes, although he was too aware

1956 to 1959. Microscopic examination

of the crime committed by many an

of the ink used in the questioned

author called 'plagiarism.' But that did

signature and the standard signature in

not deter him, nor bother him in the

document dated 30 July 1959 marked

least. 'He has never been a member of

Exh. 'E' indicate gallotanic ink.'LLphil

any professional organization of experts

xxx xxx xxx

in his supposed field of expertise,

because he said there is none locally.

'1. The questioned signature FEDERICO

Neither is he on an international

O. BORROMEO marked 'Q' appearing in

level.' 7

the original Deed of Assignment dated

16 January 1974 and the submitted
standard signatures of Federico O.

Acting

on

the

reconsideration,

aforesaid
the

Court

motion
of

for

Appeals

reconsidered its decision of February 12, 1985

Borromeo

marked

'S-1'

to

'S-49'

inclusive were written BY ONE AND THE

SAME PERSON.

aforementioned. Thereafter, the parties agreed

to have subject Deed of Assignment examined

2. The questioned signature FEDERICO

by the Philippine Constabulary (PC) Crime

O. BORROMEO marked 'Q' COULD HAVE

Laboratory, which submitted a Report on

BEEN SIGNED IN THE YEARS BETWEEN

January 9, 1986, the pertinent portion of which,

1950-1957.' 8

stated:

After hearing the arguments the lawyers of

and

record advanced on the said "Report" of the PC

analysis of the questioned and the

Crime Laboratory, the Court of Appeals

standard signature reveal significant

resolved:

'1. Comparative

similarities

in

examination

the

freedom

of

'xxx xxx xxx

1) to ADMIT the Report dated Jan. 9,

AGREED TO THE SUGGESTION OF

1986 of the PC Crime Laboratory on the

RESPONDENT COURT TO HAVE THE

Deed of Assignment

in evidence,

QUESTIONED DOCUMENT EXAMINED

without

the

BY THE PC CRIME LABORATORY THEY

prejudice

assailing

the

to

credibility

parties'
of

said

Report; cdrep

COULD NO LONGER QUESTION THE

COMPETENCY OF THE DOCUMENT.

2) to GIVE both parties a non-extendible

period of FIVE (5) DAYS from February
27,

1986,

within

which

to

file

simultaneous memoranda. 9

II
THE COURT OF APPEALS ERRED IN
HOLDING

THAT

THE

QUESTIONED

DOCUMENT WAS SIGNED IN 1954 BUT

On March 13, 1986, the Court of Appeals

reversed its decision of February 12, 1985,

WAS DATED IN 1974.

III

which affirmed in toto the decision of the trial

THE COURT OF APPEALS ERRED IN

court of origin; resolving thus:

HOLDING THAT THE SIGNATURE OF

"WHEREFORE, finding the Motion for
Reconsideration

meritorious,

We

hereby set aside our Decision, dated

FEDERICO O. BORROMEO IN THE DEED

OF ASSIGNMENT (EXHIBIT "A") IS A
GENUINE SIGNATURE CIRCA 1954-1957.

February 12, 1985 and in its stead a

new judgment is hereby rendered

The Petition is barren of merit.

affirming in toto the decision of the trial

Well-settled is the rule that "factual findings of

Court, dated March 12, 1980, without

the Court of Appeals are conclusive on the

pronouncement as to costs.

parties and not reviewable by the Supreme

SO ORDERED." 10

Court and they carry even more weight when

the Court of Appeals affirms the factual findings

Therefrom, petitioners found their way to this

of the trial court." 11

court via the present Petition; theorizing

In the present case, the trial court found that

that: prLL
I

the signature in question is the genuine

signature of Federico O. Borromeo between the

THE RESPONDENT COURT ERRED IN

years 1954 to 1957 although the words in the

HOLDING THAT WHEN PETITIONER

blank space of the document in question were

written on a much later date. The same

found to be circa 1954-1957, and not that of

conclusion was arrived at by the Court of

1974, is of no moment. It does not necessarily

Appeals on the basis of the Report of the PC

mean, that the deed is a forgery. Pertinent

crime Laboratory corroborating the findings of

records reveal that the subject Deed of

Col. Jose Fernandez that the signature under

Assignment is embodied in blank form for the

controversy is genuine.

assignment of shares with authority to transfer

It is significant to note that Mr. Tabayoyong,

petitioners'

expert

witness,

limited

his

comparison of the questioned signature with

the 1974 standard signature of Federico O.
Borromeo. No comparison of the subject
signature

with

the

1950-1957

standard

signature was ever made by Mr. Tabayoyong

despite his awareness that the expert witness
of private respondent, Col. Jose Fernandez,
made a comparison of said signatures and
notwithstanding his (Tabayoyong's) access to
such signatures as they were all submitted to
the lower Court. As correctly ratiocinated 12 by
the Court of origin, the only conceivable reason
why Mr. Tabayoyong avoided making such a
comparison must have been, that even to the
naked eye the questioned signature affixed to
the Deed of Assignment, dated January 16,

such shares in the books of the corporation. It

was clearly intended to be signed in blank to
facilitate the assignment of shares from one
person to another at any future time. This is
similar

to Section

14

of

the

Negotiable

Instruments Law where the blanks may be filled

up by the holder, the signing in blank being with
the assumed authority to do so. Indeed, as the
shares were registered in the name of Federico
O. Borromeo just to give him personality and
standing in the business community, private
respondent had to have a counter evidence of
ownership of the shares involved. Thus, the
execution of the deed of assignment in blank, to
be filled up whenever needed. The same
explains the discrepancy between the date of
the deed of assignment and the date when the
signature was affixed thereto.

1974, is strikingly similar to the 1950 to 1954

While it is true that the 1974 standard signature

standard signature of Federico O. Borromeo,

of Federico O. Borromeo is to the naked eye

such that if a comparison thereof was made by

dissimilar to his questioned signature circa

Mr. Tabayoyong, he would have found the

1954-1957, which could have been caused by

questioned signature genuine.

sheer lapse of time, Col. Jose Fernandez,

That the Deed of Assignment is dated January

16, 1974 while the questioned signature was

respondent's expert witness, found the said

signatures similar to each other after subjecting
the same to stereomicroscopic examination and

analysis because the intrinsic and natural

trial Court, the Court of Appeals merely

characteristic

Borromeo's

exercised its discretion. There being no grave

handwriting were present in all the exemplar

abuse in the exercise of such judicial discretion,

signatures used by both Segundo Tabayoyong

the findings by the Court of Appeals should not

and Col. Jose Fernandez. LexLib

be disturbed on appeal.

It is therefore beyond cavil that the findings of

Premises studiedly considered, the Court is of

the Court of origin affirmed by the Court of

the irresistible conclusion, and so holds, that

Appeals on the basis of the corroborative

the respondent Court erred not in affirming the

findings of the Philippine Constabulary Crime

decision of the Regional Trial Court a quo in Civil

Laboratory confirmed the genuineness of the

Case No. 19466.

of

Federico

O.

signature of Federico O. Borromeo in the Deed

of Assignment dated January 16, 1974.

WHEREFORE, the Petition is DISMISSED for lack

of merit and the assailed Resolution, dated

Petitioners, however, question the "Report" of

March 13, 1986, AFFIRMED. No pronouncement

the document examiner on the ground that

as to costs. cdphil

they were not given an opportunity to cross-

SO ORDERED.

examine the Philippine Constabulary document

examiner; arguing that they never waived their

Melo, Vitug, Panganiban and Gonzaga-Reyes,

right to question the competency of the

JJ., concur.

examiner concerned. While the Court finds

|||

merit in the contention of petitioners, that they

did not actually waive their right to crossexamine on any aspect of subject Report of the
Philippine Constabulary Crime Laboratory, the
Court discerns no proper basis for deviating
from the findings of the Court of Appeals on the
matter. It is worthy to stress that courts may
place whatever weight due on the testimony of
an expert witness. 13 Conformably, in giving
credence and probative value to the said
"Report" of the Philippine Constabulary Crime
Laboratory, corroborating the findings of the

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 petitionerpayee'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.