comsideration and transfer full text

7/23/2019 Comsideration and Transfer Full Text

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III. CONSIDERATION AND EFFECTS

Travel-On Inc. v. CA

Petitioner Travel-On. Inc. ("Travel-On") is a travel agency selling airline tickets oncommission basis for and in behalf of dierent airline companies. Private

respondent rt!ro . #iranda had a revolving credit line $ith petitioner. %e proc!redtickets from petitioner on behalf of airline passengers and derived commissionstherefrom.

On &' !ne &*+, Travel-On led s!it before the o!rt of /irst Instance ("/I") of#anila to collect on si0 (1) checks iss!ed by private respondent $ith a total faceamo!nt of P&&2,333.33. The complaint, $ith a prayer for the iss!ance of a $rit ofpreliminary attachment and attorney4s fees, averred that from 2 !g!st &1 to &1

an!ary &*3, petitioner sold and delivered vario!s airline tickets to respondent at atotal price of P+*5,+3&.2*6 that to settle said acco!nt, private respondent paid

vario!s amo!nts in cash and in kind, and thereafter iss!ed si0 (1) postdated checksamo!nting to P&&2,333.33 $hich $ere all dishonored by the dra$ee banks. Travel-On f!rther alleged that in #arch &*+, private respondent made another paymentof P&3,333.33 red!cing his indebtedness to P&32,333.33. The $rit of attachment$as granted by the co!rt a quo.

In his ans$er, private respondent admitted having had transactions $ith Travel-Ond!ring the period stip!lated in the complaint. Private respondent, ho$ever, claimedthat he had already f!lly paid and even overpaid his obligations and that ref!nds$ere in fact d!e to him. %e arg!ed that he had iss!ed the postdated checks forp!rposes of accommodation, as he had in the past accorded similar favors to

petitioner. 7!ring the proceedings, private respondent contested several ticketsalleged to have been erroneo!sly debited to his acco!nt. %e claimedreimb!rsement of his alleged over payments, pl!s litigation e0penses, ande0emplary and moral damages by reason of the allegedly improper attachment ofhis properties.

In s!pport of his theory that the checks $ere iss!ed for accommodation, privaterespondent testied that he bad iss!ed the checks in the name of Travel-On in orderthat its 8eneral #anager, 9lita #ontilla, co!ld sho$ to Travel-On4s :oard of 7irectorsthat the acco!nts receivable of the company $ere still good. %e f!rther stated that9lita #ontilla tried to encash the same, b!t that these $ere dishonored and $ere

s!bse;!ently ret!rned to him after the accommodation p!rpose had been attained.

Travel-On4s $itness, 9lita #ontilla, on the other hand e0plained that the"accommodation" e0tended to Travel-On by private respondent related to sit!ations$here one or more of its passengers needed money in %ongkong, and !pon re;!estof Travel-On respondent $o!ld contact his friends in %ongkong to advance%ongkong money to the passenger. The passenger then paid Travel-On !pon his


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ret!rn to #anila and $hich payment $o!ld be credited by Travel-On to respondent4sr!nning acco!nt $ith it.

In its decision dated


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@e have, ho$ever, e0amined the record and it sho$s that the * pril &*+tatement of cco!nt had simply not been !pdated6 that if $e !se as basis theg!re as of


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@e are !nable to accept the o!rt of ppeals4 concl!sion that the checks hereinvolved $ere iss!ed for "accommodation" and that accordingly private respondentmaker of those checks $as not liable thereon to petitioner payee of those checks.

In the rst place, $hile the Begotiable Instr!ments Ca$ does refer to

accommodation transactions, no s!ch transaction $as here sho$n. ection + ofthe Begotiable Instr!ments Ca$ provides as follo$sD

ec. +. Liability of accommodation party. A n accommodation party is one $hohas signed the instr!ment as maker, dra$er, acceptor, or indorser, $itho!treceiving val!e therefor, and for the p!rpose of lending his name to some otherperson. !ch a person is liable on the instr!ment to a holder for val!e,not$ithstanding s!ch holder, at the time of taking the instr!ment, kne$ him to beonly an accommodation party.

In accommodation transactions recogniEed by the Begotiable Instr!ments Ca$, an

accommodating party lends his credit to the accommodated party, by iss!ing orindorsing a check $hich is held by a payee or indorsee as a holder in d!e co!rse,$ho gave f!ll val!e therefor to the accommodated party. The latter, in other $ords,receives or realiEes f!ll val!e $hich the accommodated party then m!st repay tothe accommodating party, !nless of co!rse the accommodating party intended tomake a donation to the accommodated party. ut t!e accommodating party isbound on t!e c!ec" to t!e !older in due course #!o is necessarily a third party andis notthe accommodated party. %aving iss!ed or indorsed the check, theaccommodating party has $arranted to the holder in d!e co!rse that he $ill pay thesame according to its tenor. 3

In the case at bar, Travel-On $as payee of all si0 (1) checks, it presented thesechecks for payment at the dra$ee bank b!t the checks bo!nced. $ra%el&'nob%iously #as not an accommodated party( it reali)ed no %alue on t!e c!ec"s #!ic!

bounced.

Travel-On $as entitled to the benet of the stat!tory pres!mption that it $as aholder in d!e co!rse, 4that the checks $ere s!pported by val!ableconsideration. 5Private respondent maker of the checks did not s!ccessf!lly reb!tthese pres!mptions. The only evidence aliundethat private respondent oered $ashis o$n self-serving !ncorroborated testimony. %e claimed that he had iss!ed thechecks to Travel-On as payee to "accommodate" its 8eneral #anager $ho allegedly

$ished to sho$ those checks to the :oard of 7irectors of Travel-On to "prove" thatTravel-On4s acco!nt receivables $ere someho$ "still good." It $ill be seen that thisclaim $as in fact a claim that the checks $ere merely sim!lated, that privaterespondent did not intend to bind himself thereon. Only evidence of the clearest andmost convincing kind $ill s!=ce for that p!rpose6 6no s!ch evidence $as s!bmittedby private respondent. The latter4s e0planation $as denied by Travel-On4s 8eneral#anager6 that e0planation, in any case, appears merely contrived and ;!ite hollo$


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to !s. Fpon the other hand, the "accommodation" or assistance e0tended to Travel-On4s passengers abroad as testied by petitioner4s 8eneral #anager involved, notthe accommodation transactions recogniEed by the BIC, b!t rather thecirc!mvention of then e0isting foreign e0change reg!lations by passengers bookedby Travel-On, $hich incidentally involved receipt of f!ll consideration by private

respondent.

Th!s, $e believe and so hold that private respondent m!st be held liable on the si0(1) checks here involved. Those checks in themselves constit!ted evidence ofindebtedness of private respondent, evidence not s!ccessf!lly overt!rned orreb!tted by private respondent.

ince the checks constit!te the best evidence of private respondent4s liability topetitioner Travel-On, the amo!nt of s!ch liability is the face amo!nt of the checks,red!ced only by the P&3,333.33 $hich Travel-On admitted in its complaint to havebeen paid by private respondent sometime in #arch &+.

The a$ard of moral damages to Private respondent m!st be set aside, for thereason that Petitioner4s application for the $rit of attachment rested on s!=cientbasis and no bad faith $as sho$n on the part of Travel-On. If anyone $as in badfaith, it $as private respondent $ho iss!ed bad checks and then pretended to have"accommodated" petitioner4s 8eneral #anager by assisting her in a s!pposedscheme to deceive petitioner4s :oard of 7irectors and to misrepresent Travel-On4snancial condition.

O>7IB8CG, the o!rt >esolved to 8>BT d!e co!rse to the Petition for >evie$on *ertiorariand to >9H9>9 and 9T I79 the 7ecision dated ++ October &53

and the >esol!tion of +< an!ary &5& of the o!rt of ppeals, as $ell as the7ecision dated


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&52, he ?oined the acc!sed-appellant4s b!siness and formed $ith her a partnership!nder the style "Tag!mpay #an!fact!ring," $ith o=ces in :!lacan and eb! ity.

%o$ever, the partnership $as short lived. In an!ary, &51 the parties agreed toterminate their partnership. Fpon li;!idation of the b!siness the partnership had as

of #ay &51 receivables and stocks $orth P&,533,333.33. The complainant4s shareof the assets $as P33,333.33 to pay for $hich the acc!sed-appellant iss!ed thefollo$ing postdated checks, all dra$n against #etrobank :ranch in #anda!e, eb!D

%9J BO. 7T9 #OFBT

&) &3


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%erein respondent co!rt thereafter a=rmed on appeal the decision of the trial co!rt.Petitioner timely moved for a reconsideration, b!t this $as s!bse;!ently denied byrespondent co!rt in its >esol!tion7dated !ne &&, &!le '2 of the >!les of o!rt.

7!ring the pendency of this petition, this o!rt by a resol!tions

dated !g!st


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"b!y-o!t" of said complainant4s interest in the partnership, and not merely as acommitment on petitioner4s part to ret!rn the investment share of complainant,along $ith any prot pertaining to said share, in the partnership.

+. @hether the respondent co!rt erred in concl!ding that petitioner iss!ed the

s!b?ect check kno$ing at the time of iss!e that she did not have s!=cient f!nds inor credit $ith the dra$ee bank and $itho!t comm!nicating this fact of ins!=ciencyof f!nds to the complainant.

:oth in;!iries boil do$n into one !ltimate iss!eD 7id the respondent co!rt err ina=rming the trial co!rt4s ?!dgment that she violated :atas Pambansa :lg. ++L

onsidering that penal stat!tes are strictly constr!ed against the state and liberallyin favor of the acc!sed, it bears stressing that for an act to be p!nishable !nder the:.P. ++, it "m!st come clearly $ithin both the spirit and the letter of thestat!e. 13Other$ise, the act has to be declared o!tside the la$4s ambit and a plea

of innocence by the acc!sed m!st be s!stained.The relevant provisions of :.P. ++ state thatD

ec. &. hecks $itho!t s!=cient f!nds. A ny person $ho makes or dra$s andiss!es any check to apply on acco!nt or for val!e, "no#ing at t!e time of issue t!at!e does not !a%e su-cient funds in or credit #it! t!e dra#ee ban" for t!e payment

of suc! c!ec" in full upon its presentment, $hich check is s!bse;!ently dishonoredby the dra$ee bank for ins!=ciency of f!nds or credit or $o!ld have beendishonored for the same reason had not the dra$er, $itho!t any valid reason,ordered the bank to stop payment, shall be p!nished by imprisonment of not lessthan thirty days b!t not more than one (&) year or by a ne of not less than b!t notmore than do!ble the amo!nt of the check $hich ne shall in no case e0ceed T$oh!ndred tho!sand pesos, or both s!ch ne and imprisonment at the discretion ofthe co!rt.

The same penalty shall be imposed !pon any person $ho having s!=cient f!nds inor credit $ith the dra$ee bank $hen he makes or dra$s and iss!es a check, shallfail to keep s!=cient f!nds or to maintain a credit or to cover the f!ll amo!nt of thecheck if presented $ithin a period of ninety (3) days from the date appearingthereon, for $hich reason it is dishonored by the dra$ee bank.

@here the check is dra$n by a corporation, company or entity, the person orpersons $ho act!ally signed the check in behalf of s!ch dra$er shall be liable !nderthis ct.

ec. +. 9vidence of kno$ledge of ins!=cient f!nds. A The making, dra$ing andiss!ance of a check payment of $hich is ref!sed by the dra$ee beca!se ofins!=cient f!nds in or credit $ith s!ch bank, $hen presented $ithin ninety (3)days from the date of the check, shall beprima facieevidence of kno$ledge of s!ch


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ins!=ciency of f!nds or credit unless suc! ma"er or dra#er pays t!e !older t!ereoft!e amount due t!ereon or ma"es arrangements for payment in full by t!e dra#ee

of suc! c!ec" #it!in %e /50 ban"ing days after recei%ing notice t!at suc! c!ec"

!as not been paid by t!e dra#ee. (9mphasis s!pplied)

s decided by this o!rt, the elements of the oense penaliEed !nder :.P. ++, are asfollo$sD "(&) the making, dra$ing and iss!ance of any check to apply to acco!nt orfor val!e6 (+) the kno$ledge of the maker, dra$er or iss!er that at the time of iss!ehe does not have s!=cient f!nds in or credit $ith the dra$ee bank for the paymentof s!ch check in f!ll !pon its presentment6 and (


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(+) inding p 1ened

@inding !p is the process of settling b!siness aairs of dissol!tion.

(BOT9D 90amples of $inding !pD the paying of previo!s obligations6 t!e collecting ofassets pre%iously demandable6 even ne$ b!siness if needed to $ind !p, as the

contracting $ith a demolition company for the demolition of the garage !sed in a"!sed car" partnership.)

(


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$as not intended to apply on acco!nt or for val!e6 rather it sho!ld be deemed ashaving been dra$n $itho!t consideration at the time of iss!e.

bsent the rst element of the oense penaliEed !nder :.P. ++, $hich is "themaking, dra$ing and iss!ance of any check to apply on acco!nt or for val!e",

petitioner4s iss!ance of the s!b?ect check $as not an act contemplated in nor madep!nishable by said stat!te.

s to the second iss!e, the olicitor 8eneral contends that !nder the :o!ncinghecks Ca$, the elements of deceit and damage are not essential or re;!ired toconstit!te a violation thereof. In his vie$, the only essential element is thekno$ledge on the part of the maker or dra$er of the check of the ins!=ciency ofhisher f!nds at the time of the iss!ance of said check.

The :o!ncing hecks Ca$ makes the mere act of iss!ing a bad or $orthless check aspecial oense p!nishable by la$. "#alice or intent in iss!ing the $orthless check is

immaterial, the oense beingmalum

pro!ibitum," 17so goes the arg!ment for the p!blic respondents.

:!t of co!rse this co!ld not be an absol!te proposition $itho!t descending toabs!rdity. /or if a check $ere iss!ed by a kidnap victim to a kidnapper for ransom, it$o!ld be abs!rd to hold the dra$er liable !nder :.P. ++, if the check is dishonoredand !npaid. That $o!ld go against p!blic policy and common sense.

P!blic respondents f!rther contend that "since petitioner iss!ed the check in favorof complainant. larilla and $hen notied that it $as ret!rned for ins!=ciency off!nds, failed to make good the check, then petitioner is liable for violation of :.P.++.1gain, this matter co!ld not be all that simple. /or $hile "the maker4skno$ledge of the ins!=ciency of f!nds is legally pres!med from the dishonor of hischecks for ins!=ciency of f!nds,1!this pres!mption is reb!ttable.

In the instant case, there is only aprima faciepres!mption $hich did not precl!dethe presentation of contrary evidence.2"In fact, s!ch contrary evidence on t$opoints co!ld be gleaned from the record concerning (&) lack of act!al kno$ledge ofins!=ciency of f!nds6 and (+) lack of ade;!ate notice of dishonor.

Bote$orthy for the defense, kno$ledge of ins!=ciency of f!nds or credit in thedra$ee bank for the payment of a check !pon its presentment is an essentialelement of the oense.21It m!st be proved, partic!larly $here theprimafaciepres!mption of the e0istence of this element has been reb!tted. Theprimafaciepres!mption arising from the fact of dra$ing, iss!ing or making a check, thepayment of $hich $as s!bse;!ently ref!sed for ins!=ciency of f!nds is, moreover,not s!=cient proof of g!ilt by the iss!er.

In the case of ie%a %. *ourt of ppeals, 22it $as held that the s!bse;!ent dishonorof the s!b?ect check iss!ed by acc!sed merely engendered theprima


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faciepres!mption that she kne$ of the ins!=ciency of f!nds, b!t did not render theacc!sed a!tomatically g!ilty !nder :.P. ++.23

The prosec!tion has a d!ty to prove all the elements of the crime, incl!ding the actsthat give rise to theprima faciepres!mption6 petitioner, on the other hand, has a

right to reb!t theprima faciepres!mption. Therefore, if s!ch kno$ledge ofins!=ciency of f!nds is proven to be act!ally absent or non-e0istent, the acc!sedsho!ld not be held liable for the oense dened !nder the rst paragraph of ection& of :.P. ++. ltho!gh the oense charged is a malum pro!ibitum, the prosec!tion isnot thereby e0c!sed from its responsibility of proving beyond reasonable do!bt allthe elements of the oense, one of $hich is kno$ledge of the ins!=ciency of f!nds.

ec. & of :.P. ++ specically re;!ires that the person in making, dra$ing or iss!ingthe check, be sho$n that he kno$s at the time of iss!e, that he does not haves!=cient f!nds in or credit $ith the dra$ee bank for the payment of s!ch check inf!ll !pon its presentment.

In the case at bar, as earlier disc!ssed, petitioner iss!ed the check merely toevidence the proportionate share of complainant in the partnership assets !pon itsdissol!tion. Payment of that share in the partnership $as conditioned on thes!bse;!ent realiEation of prots from the !nsold goods and collection of thereceivables of the rm. This condition m!st be satised or complied $ith before thecomplainant can act!ally "encash" the check. The reason for the condition is thatpetitioner has no independent means to satisfy or discharge the complainant4sshare, other than by the f!t!re sale and collection of the partnership assets. Th!s,prior to the selling of the goods and collecting of the receivables, the complainantco!ld not, as of yet, demand his proportionate share in the b!siness. This sit!ation

$o!ld hold tr!e !ntil after the $inding !p, and s!bse;!ent termination of thepartnership. /or only then, $hen the goods $ere already sold and receivables paidthat cash money co!ld be availed of by the erst$hile partners.

omplainant did not present any evidence that petitioner signed and iss!ed fo!rchecks act!ally kno$ing that f!nds therefor $o!ld be ins!=cient at the timecomplainant $o!ld present them to the dra$ee bank. /or it $as !ncertain at thetime of iss!ance of the checks $hether the !nsold goods $o!ld have been sold, or$hether the receivables $o!ld have been collected by the time the checks $o!ld beencashed. s it t!rned o!t, three $ere f!lly f!nded $hen presented to the bank6 theremaining one $as settled only later on.

ince petitioner iss!ed these fo!r checks $itho!t act!al kno$ledge of theins!=ciency of f!nds, she co!ld not be held liable !nder :.P. ++ $hen one $as nothonored right a$ay. /or it is basic doctrine that penal stat!tes s!ch as :.P. ++ "m!stbe constr!ed $ith s!ch strictness as to caref!lly safeg!ard the rights of thedefendant . . ."24The element of kno$ledge of ins!=ciency of f!nds has to beproved by the prosec!tion6 absent said proof, petitioner co!ld not be held criminally


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liable !nder that la$. #oreover, the pres!mption ofprima faciekno$ledge of s!chins!=ciency in this case $as act!ally reb!tted by petitioner4s evidence.

/!rther, $e nd that the prosec!tion also failed to prove ade;!ate notice ofdishonor of the s!b?ect check on petitioner4s part, th!s precl!ding any nding

ofprima facieevidence of kno$ledge of ins!=ciency of f!nds. There is no proof thatnotice of dishonor $as act!ally sent by the complainant or by the dra$ee bank tothe petitioner. On this point, the record is bereft of evidence to the contrary.

:!t in fact, $hile the s!b?ect check initially bo!nced, it $as later made good bypetitioner. In addition, the terms of the parties4 compromise agreement, enteredinto d!ring the pendency of this case, eectively invalidates the allegation of fail!reto pay or to make arrangement for the payment of the check in f!ll. Herily, saidcompromise agreement constit!tes an arrangement for the payment in f!ll of thes!b?ect check.

The absence of notice of dishonor is cr!cial in the present case. s held by thiso!rt in prior casesD

:eca!se no notice of dishonor $as act!ally sent to and received by the petitioner,theprima faciepres!mption that she kne$ abo!t the ins!=ciency of f!nds cannotapply. ection + of :.P. ++ clearly provides that this pres!mption arises not from themere fact of dra$ing, making and iss!ing a b!m check6 there m!st also be asho$ing that, $ithin ve banking days from receipt of the notice of dishonor, s!chmaker or dra$er failed to pay the holder of the check the amo!nt d!e thereon or tomake arrangement for its payment in f!ll by the dra$ee of s!ch check. 25M9mphasiss!pplied.N

The absence of a notice of dishonor necessarily deprives an acc!sed an opport!nityto precl!de a criminal prosec!tion. ccordingly, proced!ral d!e process clearlyen?oins that a notice of dishonor be act!ally served on petitioner. Petitioner has aright to demand A and the basic post!lates of fairness re;!ire A that the notice ofdishonor be act!ally sent to and received by her to aord her the opport!nity toavert prosec!tion !nder:.P. 26

/!rther, $hat militates strongly against p!blic respondents4 stand is the fact thatpetitioner repeatedly notied the complainant of the ins!=ciency of f!nds.

Instr!ctive is the follo$ing prono!ncement of this o!rt in +agno %. *ourt ofppealsD

/!rthermore, the element of "kno$ing at the time of iss!e that he does not haves!=cient f!nds in or credit $ith the dra$ee bank for the payment of s!ch check inf!ll !pon its presentment, $hich check is s!bse;!ently dishonored by the dra$eebank for ins!=ciency of f!nds or credit or $o!ld have been dishonored for the samereason . . ." is inversely applied in this case. /rom the very beginning. petitioner


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never hid the fact that he did not have the f!nds $ith $hich to p!t !p the $arrantydeposit and as a matter of fact, he openly intimated this to the vital cond!it of thetransaction, oey 8omeE, to $hom petitioner $as introd!ced by #rs. Teng. It $o!ldhave been dierent if this predicament $as not comm!nicated to all the parties hedealt $ith regarding the lease agreement the nancing or $hich $as covered by

C.. /inance #anagement. "27

In the instant case, petitioner intimated to private complainant the possibility thatf!nds might be ins!=cient to cover the s!b?ect check, d!e to the fact that thepartnership4s goods $ere yet to be sold and receivables yet to be collected.

s #agno had $ell observedD

/or all intents and p!rposes, the la$ $as devised to safeg!ard the interest of thebanking system and the legitimate p!blic checking acco!nt !ser. It did not intend toshelter or favor nor enco!rage !sers of the system to enrich themselves thro!gh

manip!lations and circ!mvention of the noble p!rpose and ob?ective of the la$.Ceast sho!ld it be !sed also as a means of ?eopardiEing honest-to-goodnesstransactions $ith some color of "get-rich" scheme to the pre?!dice of $ell-meaningb!sinessmen $ho are the pillars of society.

000 000 000

Th!s, it behooves !pon a co!rt of la$ that in applying the p!nishment imposed!pon the acc!sed, the ob?ective of retrib!tion of a $ronged society, sho!ld bedirected against the "act!al and potential $rongdoers". In the instant case, there isno do!bt that petitioner4s fo!r (') checks $ere !sed to collateraliEe anaccommodation, and not to cover the receipt of an act!al "acco!nt or credit forval!e" as this $as absent, and therefore petitioner sho!ld not be p!nished for mereiss!ance of the checks in ;!estion. /ollo$ing the aforecited theory, in petitioner4sstead the "potential $rongdoer," $hose operation co!ld be a menace to society,sho!ld not be gloried by convicting the petitioner. 2

Fnder the circ!mstances obtaining in this case, $e nd the petitioner to haveiss!ed the check in good faith, $ith every intention of abiding by her commitmentto ret!rn, as soon as able, the investments of complainant in the partnership.9vidently, petitioner iss!ed the check $ith benign considerations in mind, and notfor the p!rpose of committing fra!d, deceit, or violating p!blic policy.

To recapit!late, $e nd the petition impressed $ith merit. Petitioner may not beheld liable for violation of :.P. ++ for the follo$ing reasonsD (&) the s!b?ect check$as not made, dra$n and iss!ed by petitioner in e0change for val!e received as to;!alify it as a check on acco!nt or for val!e6 (+) there is no s!=cient basis toconcl!de that petitioner, at the time of iss!e of the check, had act!al kno$ledge ofthe ins!=ciency of f!nds6 and (


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act!ally served on petitioner, thereby depriving her of the opport!nity to pay ormake arrangements for the payment of the check, to avoid criminal prosec!tion.

%aving resolved the foregoing principal iss!es, and nding the petition meritorio!s,$e no longer need to pass !pon the validity and legality or necessity of the

p!rported compromise agreement on civil liability bet$een the petitioner and thecomplainant.

@%9>9/O>9, the instant petition is hereby 8>BT97 B7 T%9 P9TITIOB9>FITT97. The 7ecision of the respondent o!rt of ppeals in -8.>. > Bo.&&13 is hereby >9H9>97 and the 7ecision of >egional Trial o!rt in riminal aseBo. &79>97.

Rodr#$%e& v. CA' 2"7 SCRA

(#neda vs. dela Ra)a

7ela >ama is a practising la$yer $hose services $ere retained by Pineda for thep!rpose of making representations $ith the chairman and general manager of theBational >ice and orn dministration (B>I) to stop or delay the instit!tion ofcriminal charges against Pineda $ho allegedly misappropriated &&,333 cavans of

palay deposited at his ricemill in oncepcion, Tarlac. The B>I general manager$as allegedly an intimate friend of 7ela >ama.

ccording to 7ela >ama, petitioner Pineda has !sed !p all his f!nds to b!y a bighacienda in #indoro and, therefore, borro$ed the P,ama also s!ed to collect P2,333.33 attorney4s feesfor legal services rendered as Pineda4s co!nsel in the case being investigated byB>I.

The o!rt of /irst Instance of #anila decided ivil ase Bo. '2*1+ in favor of

petitioner Pineda. The co!rt believed the evidence of Pineda that he signed thepromissory note for P,ama had told him that thisamo!nt had already been advanced to grease the palms of the 4hairman and8eneral #anager of B>I in order to save Pineda from criminal prosec!tion.

The co!rt statedD

000 000 000


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... The o!rt, after hearing the testimonies of the $itness and e0amining thee0hibits in ;!estion, nds that 90hibit proves that the defendant himself did notreceive the amo!nt stated therein, beca!se according to said e0hibit that amo!nt$as advanced by the plainti in connection $ith the defendant4s case, entirelycontradicting the testimony of the plainti himself, $ho stated in open o!rt that he

gave the amo!nt in cash in t$o installments to the defendant. The o!rt is moreinclined to believe the contents of 90hibit , than the testimony of the plainti. Onthis partic!lar matter, the defendant has established that the plainti made himbelieve that he $as giving money to the a!thorities of the B>I to grease theirpalms to s!spend the prosec!tion of the defendant, b!t the defendant, !ponin;!iry, fo!nd o!t that none of the a!thorities has received that amo!nt, and there$as no case that $as ever contemplated to be led against him. It clearly follo$s,therefore, that the amo!nt involved in this 90hibit $as imaginary. It $as given tothe defendant, not to somebody else. The p!rpose for $hich the amo!nt $asintended $as illegal.

%o$ever, the o!rt believes that plainti $as able to get from the defendant theamo!nt of P9/O>9, the o!rt nds by a preponderance of evidence that the amo!nt ofP,


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The appellate co!rt statedD

Bo r!le is more f!ndamental and by men of honor and good$ill more dearlycherished, than that $hich declares that obligations arising from contracts have theforce of la$ bet$een the contracting parties and sho!ld be complied $ith in good

faith. orollary to and in f!rtherance of this principle, ection +' of the Begotiableinstr!ments Ca$ (ct Bo. +3I o=cials.

7ela >ama himself admits that Pineda engaged his services to delay by one monththe ling of the B>I case against Pineda $hile the latter $as trying to $ork o!t an

amicable settlement. There is no ;!estion that 7ela >ama $as indeed a close friendof then B>I dministrator ose >odri;!eE having $orked $ith him in the Philippinecons!late at %ongkong and that 7ela >ama made $hat he calls "properrepresentations" $ith >odrig!eE and $ith other B>I o=cials in connection $iththe investigation of the criminal charges against Pineda.

@e agree $ith the trial co!rt $hich believed Pineda. It is indeed !n!s!al for a la$yerto lend money to his client $hom he had kno$n for only three months, $ith no


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sec!rity for the loan and on interest. 7ela >ama testied that he did not even kno$$hat Pineda $as going to do $ith the money he borro$ed from him. The petitionerhad ?!st p!rchased a hacienda in #indoro for P+&3,333.33, o$ned s!gar and ricelands in Tarlac of aro!nd 533 hectares, and had P13,333.33 deposits in three banks$hen he e0ec!ted the note. It is more logical to believe that Pineda $o!ld not

borro$ P2,333.33 and P',ama altho!gh the latter claims he paidP&,+23.33 for the !nit $hen he received it. Pineda, ho$ever, alleged that he gavethe air-conditioning !nit beca!se 7ela >ama told him that 7r. >odrig!eE $as askingfor one air-conditioning machine of &.2 horsepo$er for the latter4s B>I o=ce.Pineda f!rther testied that si0 cavans of rst class rice also intended for the B>Ihairman and 8eneral #anager, together $ith the airconditioning !nit, neverreached 7r. >odrig!eE b!t $ere kept by the la$yer.

onsidering the foregoing, $e agree $ith the trial co!rt that the promissory note$as e0ec!ted for an illegal consideration. rticles &'3 and &'&+ of the ivil odein part, provideD

rt. &'3. The follo$ing contracts are ine0istent and void from the beginningD

(&) Those $hose ca!se, ob?ect or p!rpose is contrary to la$, morals, good c!stoms,p!blic order and p!blic policy6

000 000 000

rt. &'&+. If the act in $hich the !nla$f!l or forbidden ca!se consists does notconstit!te a criminal oense, the follo$ing r!les shall be observedD

(&) @hen the fa!lt is on the part of both contracting parties, neither may recover$hat he has given by virt!e of the contract, or demand the performance of theother4s !ndertaking.

000 000 000

@hether or not the s!pposed cash advances reached their destination is of nomoment. The consideration for the promissory note - to inK!ence p!blic o=cers in

the performance of their d!ties - is contrary to la$ and p!blic policy. The promissorynote is void ab initio and no ca!se of action for the collection cases can arise fromit.

@%9>9/O>9, the decision of the o!rt of ppeals is 9T I79. The complaint andthe co!nterclaim in ivil ase Bo. '2*1+ are both 7I#I97.

O O>79>97.


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*a+aan C#$ar v. CA

Petitioner, :ataan igar Q igarette /actory, Inc. (:/I), a corporation involved inthe man!fact!ring of cigarettes, engaged one of its s!ppliers, Jing Tim P!a 8eorge(herein after referred to as 8eorge Jing), to deliver +,333 bales of tobacco leaf

starting October &*5. In consideration thereof, :/I, on !ly &elying on the s!pplier4s representation that he $o!ld complete delivery $ithinthree months from 7ecember 2, &*5, petitioner agreed to p!rchase additional+,233 bales of tobacco leaves, despite the s!pplier4s fail!re to deliver in accordance$ith their earlier agreement. gain petitioner iss!ed post dated crossed checks inthe total amo!nt of P&,&33,333.33, payable sometime in eptember &*.4

7!ring these times, 8eorge Jing $as sim!ltaneo!sly dealing $ith private

respondent I%I. On !ly &, &*5, he sold at a disco!nt check T:T22&5+15bearing an amo!nt of P&1',333.33, post dated #arch


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(b) That he became the holder of it before it $as overd!e, and $itho!t notice that ithad been previo!sly dishonored, if s!ch $as the fact6

(c) That he took it in good faith and for val!e6

(d) That at the time it $as negotiated to him he had no notice of any inrmity in the

instr!ment or defect in the title of the person negotiating it.

ection 2 of the BIC f!rther states that every holder is deemedprima faciea holderin d!e co!rse. %o$ever, $hen it is sho$n that the title of any person $ho hasnegotiated the instr!ment $as defective, the b!rden is on the holder to prove thathe or some person !nder $hom he claims, ac;!ired the title as holder in d!eco!rse.

The facts in this present case are on all fo!rs to the case of 6tate n%estmentouse, nc. (the very respondent in this case) %. ntermediate ppellate*ourt7$herein $e made a disco!rse on the eects of crossing of checks.

s preliminary, a check is dened by la$ as a bill of e0change dra$n on a bankpayable on demand. There are a variety of checks, the more pop!lar of $hich arethe memorand!m check, cashier4s check, traveler4s check and crossed check.rossed check is one $here t$o parallel lines are dra$n across its face or across acorner thereof. It may be crossed generally or specially.

check is crossed specially $hen the name of a partic!lar banker or a company is$ritten bet$een the parallel lines dra$n. It is crossed generally $hen only the$ords "and company" are $ritten or nothing is $ritten at all bet$een the parallellines. It may be iss!ed so that the presentment can be made only by a bank.

Heritably the Begotiable Instr!ments Ca$ (BIC) does not mention "crossed checks,"altho!gh rticle 2'& !of the ode of ommerce refers to s!ch instr!ments.

ccording to commentators, the negotiability of a check is not aected by its beingcrossed, $hether specially or generally. It may legally be negotiated from oneperson to another as long as the one $ho encashes the check $ith the dra$ee bankis another bank, or if it is specially crossed, by the bank mentioned bet$een theparallel lines. 1"This is specially tr!e in 9ngland $here the Begotiable Instr!mentCa$ originated.

In the Philippine b!siness setting, ho$ever, $e !sed to be beset $ith bo!ncing

checks, forging of checks, and so forth that banks have become ;!ite g!arded inencashing checks, partic!larly those $hich name a specic payee. Fnless one is aval!ed client, a bank $ill not even accept second indorsements on checks.

In order to preserve the credit $orthiness of checks, ?!rispr!dence has prono!ncedthat crossing of a check sho!ld have the follo$ing eectsD (a) the check may not beencashed b!t only deposited in the bank6 (b) the check may be negotiated onlyonce A to one $ho has an acco!nt $ith a bank6 (c) and the act of crossing the


21/187

check serves as#arningto the holder that the check has been iss!edfor a denitepurpose so that he m!st in;!ire if he has received the check p!rs!ant to thatp!rpose, other$ise, he is not a !older in due course. 11

The foregoing $as adopted in the case of 6 %. *, supra. In that case, Be$

ikat!na @ood Ind!stries, Inc. also sold at a disco!nt to I%I three post datedcrossed checks, iss!ed by nita PeRa h!a naming as payee Be$ ikat!na @oodInd!stries, Inc. >!ling that I%I $as not a holder in d!e co!rse, $e then saidD

The three checks in the case at bar had been crossed generally and iss!ed payableto Be$ ikat!na @ood Ind!stries, Inc. $hich co!ld only mean that the dra$er hadintended the same for deposit only by the rightf!l person, i.e. the payee namedtherein. pparently, it $as not the payee $ho presented the same for payment andtherefore, there $as no proper presentment, and the liability did not attach to thedra$er. Th!s, in the absence of d!e presentment, the dra$er did not become liable.onse;!ently, no right of reco!rse is available to petitioner (I%I) against the

dra$er of the s!b?ect checks, private respondent $ife (nita), considering thatpetitioner is not the proper party a!thoriEed to make presentment of the checks in;!estion.

000 000 000

That the s!b?ect checks had been iss!ed s!b?ect to the condition that privaterespondents (nita and her h!sband) on d!e date $o!ld make the back !p depositfor said checks b!t $hich condition apparently $as not made, th!s res!lting in thenon-cons!mmation of the loan intended to be granted by private respondents toBe$ ikat!na @ood Ind!stries, Inc., constit!tes a good defense against petitioner

$ho is not a holder in d!e co!rse.12

It is then settled that crossing of checks sho!ld p!t the holder on in;!iry and !ponhim devolves the d!ty to ascertain the indorser4s title to the check or the nat!re ofhis possession. /ailing in this respect, the holder is declared g!ilty of grossnegligence amo!nting to legal absence of good faith, contrary to ec. 2+(c) of theBegotiable Instr!ments Ca$, 13and as s!ch the consens!s of a!thority is to theeect that the holder of the check is not a holder in d!e co!rse.

In the present case, :/I4s defense in stopping payment is as good to I%I as it isto 8eorge Jing. :eca!se, really, the checks $ere iss!ed $ith the intention that

8eorge Jing $o!ld s!pply :/I $ith the bales of tobacco leaf. There being fail!reof consideration, I%I is not a holder in d!e co!rse. onse;!ently, :/I cannot beobliged to pay the checks.

The foregoing does not mean, ho$ever, that respondent co!ld not recover from thechecks. The only disadvantage of a holder $ho is not a holder in d!e co!rse is thatthe instr!ment is s!b?ect to defenses as if it $ere


22/187

non-negotiable. 14%ence, respondent can collect from the immediate indorser, inthis case, 8eorge Jing.

@%9>9/O>9, nding that the co!rt a quo erred in the application of la$, the instantpetition is hereby 8>BT97. The decision of the >egional Trial o!rt as a=rmed by

the o!rt of ppeals is hereby >9H9>97. ost against private respondent.O O>79>97.

Cal+e, (#ls./ v. CA

S0o%ses S#erra v. (AIC Sav#n$s and or+$a$e' Inc

On #ay osario ierra, and po!ses /eli08atlabayan and alome ierra mortgaged fo!r(') parcels of land in ntipolo ity,covered by TT Bos. T, docketed as ivil ase Bo. &-+&2


23/187

sec!re a loan.&*They $ere made to believe that they applied for a loan, theproceeds of $hich $o!ld be released thro!gh checks dra$n against !mma:ank.&5>elying in good faith on the checks&iss!ed to them, petitioners!ns!spectingly signed a doc!ment denominated as 7eed of >eal 9state #ortgage(s!b?ect deed), co!ched in highly technical legal terms, $hich $as notinterpreted in

a lang!agedialect kno$n to them, and $hich $as not accompanied by the loandoc!ments. %o$ever, $hen they presented for payment the earliest-dated checksto the dra$ee bank, the same $ere dishonored for the reason "cco!nt losed."Fpon confrontation, some members of the gro!p ass!red petitioners that there $asonly a mis!nderstanding and that their certicates of titles $o!ld beret!rned.+3!bse;!ently, petitioners learned thatD (a) the loan acco!nt sec!red bythe real estate mortgage $as in the nameof another person and not in their namesas they $ere made to !nderstand6 (b) despite lack of special a!thority from them,foreclos!re proceedings over the s!b?ect properties $ere initiated by P#: and not!mma :ank in $hose favor the mortgage $as e0ec!ted6 (c) the period ofredemption had already lapsed6 and (d) the o$nership over the s!b?ect propertieshad already been consolidated in the name of P#:.+&Petitioners like$ise lamentedthat they $ere not f!rnished copies of the loan and mortgage doc!ments, ornotiedapprised of the assignment to P#:, rendering them !nable to comply $iththeir obligations !nder the s!b?ect deed. They f!rther claimed that they$ere notf!rnished a copy of the statement of acco!nt, $hich $as bloated $ith!nconscionable and !nla$f!l charges, assessments, and fees, nor a copy of thepetition for foreclos!re prior to the precipitate e0tra?!dicial foreclos!re and a!ctionsale $hich failed to comply $ith the posting and notice re;!irements.++In light ofthe foregoing, petitioners prayed that the real estate mortgage and the s!bse;!entforeclos!re proceedings, and all derivative titles and rights arising therefrom be

declared n!ll and void ab initio, and that the s!b?ect properties be reconveyed backto them, $ith f!rther prayer for compensatory and e0emplary damages, andattorneys fees.+!ling

The petition lacks merit.

. Hitiation of onsent.

Time and again, the o!rt has stressed that allegations m!st be proven by s!=cient

evidence beca!se mere allegation is not evidence.'*Th!s,one $ho alleges anydefect or the lack ofa valid consent toa contract m!st establish the same by f!ll,clear, and convincing evidence, not merely by preponderance of evidence.'5Ther!le is that he $ho alleges mistake aecting a transaction m!st s!bstantiatehisallegation, since it is pres!med that a person takes ordinary care of his concernsand that private transactions have been fair and reg!lar.'@here mistake or error isalleged by parties $ho claim to have not had the benet of a good ed!cation, as inthis case, they m!st establish that their personal circ!mstances prevented themfrom giving their free, vol!ntary, and spontaneo!s consent to a contract.23

fter a ?!dicio!s per!sal of the records, the o!rt nds petitioners claim of mistakeor error (that they acted merely as accommodation mortgagors) gro!nded on their"very limited ed!cation" and "lack of proper instr!ction" not to be rmly s!pportedby the evidence on record.

s correctly observed by the , the testimony of petitioner /rancisco ierra as topetitioners respective ed!cational backgro!nds2&remained !ncorroborated. Theother petitioners-signatories to the deed never testied that their ed!cationalbackgro!nd prevented them from kno$ingly e0ec!ting the s!b?ect deed as mereaccommodation mortgagors. Petitioners claim of lack of "proper instr!ction on theintricacies in sec!ring MtheN loan from the bank" is f!rther belied by the fact that

petitioners /rancisco and >osario ierra had previo!sly mortgaged t$o (+) of thes!b?ect properties t$iceto the >!ral :ank of ntipolo.#oreover, petitioners did notD(a) demand for any loan doc!ment containingthe details of the transaction, i.e.,monthly amortiEation, interest rate, added charges, etc., and the release of theremaining amo!nt of their alleged loan6 and (b) oer to pay the p!rported partialloan proceeds they received at any time,2+complaining thereof only in && $henthey led their complaint. Indeed, the foregoing circ!mstances clearly sho$ that
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petitioners are a$are that they $ere mere accommodation mortgagors, deb!nkingtheir claim that mistake vitiated their consent to the mortgage.

Th!s, there being valid consent on the part of petitioners to act as accommodationmortgagors, no reversible error $as committed by the in setting aside the >Ts

7ecision declaring the real estate mortgage as void for vices of consent anda$ardingdamages to petitioners. s mere accommodation mortgagors, petitionersare not entitled to the proceeds of the loan, nor $ere re;!ired to be f!rnished $iththe loan doc!ments2


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P#:s letter dated !ne &&, &5' informing them of the sched!led foreclos!re saleon !ne +*, &5' d!e to 8Is breach of its loan obligation sec!red by the s!b?ectproperties, the discovery of the averred mistake sho!ld appear to be reckoned from

!ne &, &5', and not from the dishonor of the checks on an!ary , &5' as r!ledby the .:#p!i

. Caches.

s to this nal iss!e, the o!rt holds that Uaches applies.

s the records disclose, despite notice on !ne &, &5' of the sched!ledforeclos!re sale, petitioners, for !ne0plained reasons, failed to imp!gn the realestate mortgage and oppose the p!blic a!ction sale for a period of more than seven(*) years from said notice.1


28/187

the n!mber of dishonored checks, $ere led against glibot before the #!nicipalTrial o!rt in ities (#T), 7ag!pan ity, :ranch ?ITTEDof all co!nts of the crime of violation of the bo!ncing checksla$ on reasonable do!bt. %o$ever, the said acc!sed is ordered to pay the privatecomplainant the s!m of


29/187

On appeal, the >T rendered a 7ecision dated pril 9/O>9, premises considered, the oint 7ecision of the co!rt a quoregarding

the civil aspect of these cases is reversed and set aside and a ne$ one is entereddismissing the said civil aspect on the gro!nd of fail!re to f!lll, a conditionprecedent of e0ha!sting all means to collect from the principal debtor.

O O>79>97. 7

antia4s motion for reconsideration $as denied in the >T4s Order dated !ne &+,+33*. On petition for revie$ to the docketed as -8.>. P Bo.&333+&, antiainterposed the follo$ing assignment of errors, to $itD

"In br!shing aside the la$ and ?!rispr!dence on the matter, the >egional Trial o!rtserio!sly erredD

&.In reversing the ?oint decision of the trial co!rt by dismissing the civil aspect ofthese cases6

+.In concl!ding that it is the Pacic Cending and apital orporation and not theprivate respondent $hich is principally responsible for the amo!nt of the checksbeing claimed by the petitioner6


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c;!ittal $ill not bar a civil action in the follo$ing casesD (&) $here the ac;!ittal isbased on reasonable do!bt as only preponderance of evidence is re;!ired in civilcases6 (+) $here the co!rt declared the acc!sed4s liability is not criminal b!t onlycivil in nat!reM6N and (


31/187


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Fnder the above provision, concerning a g!aranty agreement, $hich is a promise toans$er for the debt or defa!lt of another, 17the la$ clearly re;!ires that it, orsome note or memorand!m thereof, be in $riting. Other$ise, it $o!ld be!nenforceable !nless ratied, 1altho!gh !nder rticle &


33/187

her personal acco!nt $ith #etrobank. It concl!ded that glibot intended topersonally ass!me the repayment of the loan, pointing o!t that in her o!nter-=davit, she even admitted that she $as personally indebted to antia, and onlyraised payment as her defense, a clear admission of her liability for the said loan.

The appellate co!rt ref!sed to give credence to glibot4s claim that she had an!nderstanding $ith antia that the checks $o!ld not be presented to the bank forpayment, b!t $ere to be ret!rned to her once she had made cash payments fortheir face val!es on mat!rity. It noted that glibot failed to present any proof thatshe had indeed paid cash on the above checks as she claimed. This is precisely$hy antia decided to deposit the checks in order to obtain payment of hisloan. cTIa

The facts belo$ present a clear sit!ation $here glibot, as the manager of PC,agreed to accommodate its loan to antia by iss!ing her o$n post-dated checks inpayment thereof. he is $hat the Begotiable Instr!ments Ca$ calls an

accommodation party. 23oncerning the liability of an accommodation party,ection + of the said la$ providesD

ec. +.Liability of an accommodation party.A n accommodation party is one $hohas signed the instr!ment as maker, dra$er, acceptor, or indorser, $itho!treceiving val!e therefor, and for the p!rpose of lending his name to some otherperson. !ch a person is liable on the instr!ment to a holder for val!enot$ithstanding s!ch holder at the time of taking the instr!ment kne$ him to beonly an accommodation party.

s elaborated in$!e P!il. an" of *ommerce %. ruegoD 24

n accommodation party is one $ho has signed the instr!ment as maker, dra$er,indorser, $itho!t receiving val!e therefor and for the p!rpose of lending his nameto some other person. !ch person is liable on the instr!ment to a holder for val!e,not$ithstanding s!ch holder, at the time of the taking of the instr!ment kne$ himto be only an accommodation party. In lending his name to the accommodatedparty, the accommodation party is in eect a s!rety for the latter. %e lends hisname to enable the accommodated party to obtain credit or to raise money. %ereceives no part of the consideration for the instr!ment b!t ass!mes liability to theother parties thereto beca!se he $ants to accommodate another. . . . . 25(itationomitted) Ta9c%

The relation bet$een an accommodation party and the party accommodated is, ineect, one of principal and s!rety A the accommodation party being the s!rety. It isa settled r!le that a s!rety is bo!nd e;!ally and absol!tely $ith the principal and isdeemed an original promisor and debtor from the beginning. The liability isimmediate and direct. 26It is not a valid defense that the accommodation party didnot receive any val!able consideration $hen he e0ec!ted the instr!ment6 nor is itcorrect to say that the holder for val!e is not a holder in d!e co!rse merely beca!se
http://cdasiaonline.com/jurisprudences/56503?hits%5B%5D%5Bid%5D=56503&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Aglibot+v.+Santia&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote23_0http://cdasiaonline.com/jurisprudences/56503?hits%5B%5D%5Bid%5D=56503&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Aglibot+v.+Santia&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote24_0http://cdasiaonline.com/jurisprudences/56503?hits%5B%5D%5Bid%5D=56503&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Aglibot+v.+Santia&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote25_0http://cdasiaonline.com/jurisprudences/56503?hits%5B%5D%5Bid%5D=56503&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Aglibot+v.+Santia&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote26_0http://cdasiaonline.com/jurisprudences/56503?hits%5B%5D%5Bid%5D=56503&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Aglibot+v.+Santia&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote23_0http://cdasiaonline.com/jurisprudences/56503?hits%5B%5D%5Bid%5D=56503&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Aglibot+v.+Santia&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote24_0http://cdasiaonline.com/jurisprudences/56503?hits%5B%5D%5Bid%5D=56503&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Aglibot+v.+Santia&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote25_0http://cdasiaonline.com/jurisprudences/56503?hits%5B%5D%5Bid%5D=56503&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Aglibot+v.+Santia&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote26_0


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at the time he ac;!ired the instr!ment, he kne$ that the indorser $as only anaccommodation party. 27

#oreover, it $as held inruegothat !nlike in a contract of s!retyship, the liability ofthe accommodation party remains not only primary b!t also !nconditional to a

holder for val!e, s!ch that even if the accommodated party receives an e0tension ofthe period for payment $itho!t the consent of the accommodation party, the latteris still liable for the $hole obligation and s!ch e0tension does not release himbeca!se as far as a holder for val!e is concerned, he is a solidary co-debtor.

The mere fact, then, that glibot iss!ed her o$n checks to antia made herpersonally liable to the latter on her checks $itho!t the need for antia to rst goafter PC for the payment of its loan. 2It $o!ld have been other$ise had it beensho$n that glibot $as a mere g!arantor, e0cept that since checks $ere iss!edostensibly in payment for the loan, the provisions of the Begotiable Instr!ments Ca$m!st take primacy in application.

BEREFORE, premises considered, the Petition for >evie$on *ertiorari is DENIEDand the 7ecision dated #arch &5, +335 of the o!rt ofppeals in -8.>. P Bo. &333+& is hereby AFFIRED.

SO ORDERED.

VVV/glibot %. 6antia, =.>. o. 85945, ;1ecember 5, 2?2oberto Boceda(Boceda).

In October &+, PI: granted a credit line to 8onEales thro!gh the e0ec!tion of aredit-On-%and Coan greement 3(O%C), in $hich the aggregate amo!nt of theacco!nts of 8onEales $ith PI: served as collateral for and his availment limit!nder the credit line. 8onEales dre$ from said credit line thro!gh the iss!ance ofcheck. t the instit!tion of the instant case, 8onEales had a /oreign !rrency

7eposit (/7) of F75,*&2.*+ $ith PI:.

On October


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(TT) Bo.


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fter d!e trial, on 7ecember &3, +33&, the >T rendered a 7ecision in favor of PI:.The decretal portion readsD

@%9>9/O>9, ?!dgment is rendered as follo$s A

(a)on the rst iss!e, plainti is liable to pay defendant :ank as principal !nder the

promissory notes, 90hibits , : and 6

(b)on the second iss!e, the o!rt nds that there is ?!stication on part of thedefendant :ank to dishonor the check, 90hibit %6 a%cT

(c)on the third iss!e, plainti and defendants are not entitled to damages from eachother.

Bo prono!ncement as to costs.

O O>79>97. 1"

The >T fo!nd 8onEales solidarily liable $ith the spo!ses Panlilio on the threepromissory notes relative to the o!tstanding >9# loan. The trial co!rt fo!nd no fa!ltin the termination by PI: of the O%C $ith 8onEales and in freeEing the latter4sacco!nts to ans$er for the past d!e PhP&,533,333 loan. The trial co!rt r!led thatthe dishonor of the check iss!ed by 8onEales in favor of Fnson $as properconsidering that the credit line !nder the O%C had already been terminated orrevoked before the presentment of the check.

ggrieved, 8onEales appealed the >T 7ecision before the .

Te R%l#n$ o8 +e CA

On eptember +1, +33*, the appellate co!rt rendered its 7ecisiondismissing 8onEales4 appeal and a=rmingin toto the >T 7ecision. Thefallo readsD

@%9>9/O>9, in vie$ of the foregoing, the decision, dated 7ecember &3, +33&, inivil ase Bo. -&


37/187


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learly, 8onEales is liable for the loans covered by the above promissorynotes.@irst,8onEales admitted that he is an accommodation party $hich PI: didnot disp!te. In his testimony, 8onEales admitted that he merely accommodated thespo!ses Panlilio at the s!ggestion of Ocampo, $ho $as then handling his acco!nts,in order to facilitate the fast release of the loan. 8onEales testiedD c9a7

TTG. 79 9FD

Bo$ in this case yo! led against the bank yo! mentioned there $as a loan alsoapplied for by the Panlilio4s in the s!m of P&.5 #illion Pesos. @ill yo! please tell thiso!rt ho$ this came abo!tL

8OBSC9D

#r. Panlilio re;!ested his acco!nt o=cer . . . . at that time it is a P'+.3 #illion loanand if he sec!res another P&.5 #illion loan the release $ill be longer beca!se it hasto pass to WO.

Dfter that $hat happenedL

Do as per s!ggestion since #r. Panlilio is a good friend of mine and $e co-o$nedthe property I agreed initially to !se my name so that the loan can be !tiliEedimmediately by #r. Panlilio.

D@ho is act!ally the borro$er of this P&.5 #illion PesosL

D@ell, in paper me and #r. Panlilio.

D@ho received the proceeds of said loanL

D#r. Panlilio.

D7o yo! have any proof that it $as #r. Panlilio $ho act!ally received the proceedsof this P&.5 #illion Pesos loanL

D check $as deposited in the acco!nt of #r. Panlilio. 16

000 000 000

D:y the $ay !pon $hose s!ggestion $as the loan of #r. Panlilio also placed !nderyo!r name initiallyL

D@ell it $as act!ally s!ggested by the acco!nt o=cer at that time 9dna Ocampo.

D%o$ abo!t this #r. >odolfo BocedaL

Ds yo! look at the a!thoriEation aspect of the loan #r. Boceda is the boss of 9dnaso he has been familiar $ith my acco!nt ever since its inception.
http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote16_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote16_0


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Do these t$o o=cers Ocampo and Boceda kne$ that this $as act!ally theacco!nt of #r. Panlilio and not yo!r acco!ntL

DGes, sir. In fact even if there is a change of acco!nt o=cer they are al$aysinforming me that the acco!nt $ill be debited to #r. Panlilio4s acco!nt. 17

#oreover, the rst note for PhP233,333 $as signed by 8onEales and his $ife asborro$ers, $hile the t$o s!bse;!ent notes sho$ed the spo!ses Panlilio sign asborro$ers $ith 8onEales. It is, th!s, evident that 8onEales signed, as borro$er, thepromissory notes covering the PhP&,533,333 loan despite not receiving any of theproceeds. aIc7

6econd,the records of PI: indeed bear o!t, and $as admitted by Boceda, that thePhP&,533,333 loan proceeds $ent to the spo!ses Panlilio, th!sD

TTG. 79 9FD Mon ross-90aminationN

Is it not a fact that as far as the records of the bank MareN concerned the proceeds ofthe &.5 million loan $as received by #r. PanlilioL

BO97D

Ges sir. 1

The fact that the loans $ere !ndertaken by 8onEales $hen he signed as borro$er orco-borro$er for the benet of the spo!ses Panlilio A as sho$n by the fact that theproceeds $ent to the spo!ses Panlilio $ho $ere servicing or paying the monthlyd!es A is beside the point. /or signing as borro$er and co-borro$er on the

promissory notes $ith the proceeds of the loans going to the spo!sesPanlilio, 8onEales has e0tended an accommodation to said spo!ses.

$!ird,as an accommodation party, 8onEales is solidarily liable $ith the spo!sesPanlilio for the loans. Inng %. ssociated an", 1!;!oting the denition of anaccommodation party !nder ection + of the Begotiable Instr!ments Ca$, theo!rt cited that an accommodation party is a person "$ho has signed theinstr!ment as maker, dra$er, acceptor, or indorser, $itho!t receiving val!etherefor, and for the p!rpose of lending his name to some other person." 2"Theo!rt f!rther e0plainedD

MNn accommodation party is one $ho meets all the three re;!isites,%i).D (&) hem!st be a party to the instr!ment, signing as maker, dra$er, acceptor, or indorser6(+) he m!st not receive val!e therefor6 and (


40/187

him or her to be merely an accommodation party, as if the contract $as not foraccommodation. Ic7

s petitioner ackno$ledged it to be, the relation bet$een an accommodation partyand the accommodated party is one of principal and s!rety A the accommodation

party being the s!rety. s s!ch, he is deemed an original promisor and debtor fromthe beginning6 he is considered in la$ as the same party as the debtor in relation to$hatever is ad?!dged to!ching the obligation of the latter since their liabilities areinter$oven as to be inseparable. ltho!gh a contract of s!retyship is in essenceaccessory or collateral to a valid principal obligation, the s!rety4s liability to thecreditor isimmediate, primary andabsolute6 he is directly andequally bo!nd $iththe principal. s an e;!ivalent of a reg!lar party to the !ndertaking, a s!retybecomes liable to the debt and d!ty of the principal obligor even $itho!t possessinga direct or personal interest in the obligations nor does he receive any benettherefrom. 21

Th!s, the kno$ledge, ac;!iescence, or even demand by Ocampo for anaccommodation by 8onEales in order to e0tend the credit or loan of PhP&,533,333to the spo!ses Panlilio does not e0onerate 8onEales from liability on the threepromissory notes.

@ourt!,the solidary liability of 8onEales is clearly stip!lated in the promissory notes$hich !niformly begin, "/or val!e received, the !ndersigned (the":O>>O@9>")o#n+l9 and severall9 promise to pay . . . ." olidary liability cannotbe pres!med b!t m!st be established by la$ or contract. 22rticle &+3* of the ivilode pertinently states that "there is solidary liability only $hen the obligatione0pressly so states, or $hen the obligation re;!ires solidarity." This is tr!e in the

instant case $here8onEales, as accommodation party, is immediately, e;!ally, andabsol!tely bo!nd $ith the spo!ses Panlilio on the promissory notes $hichind!bitably stip!lated solidary liability for all the borro$ers. #oreover, the threepromissory notes serve as the contract bet$een the parties. ontracts have theforce of la$ bet$een the parties and m!st be complied $ith in good faith. 23

Second Iss%e I)0ro0er D#sonor o8 Cec;

%aving r!led that 8onEales is solidarily liable for the three promissory notes, @eshall no$ to!ch !pon the ;!estion of $hether it $as proper for PI: to dishonor thecheck iss!ed by 8onEales against the credit line !nder the O%C.

@e ans$er in the negative.

s a r!le, an appeal bycertiorari !nder >!le '2 of the >!les of o!rt is limited torevie$ of errors of la$. 24The fact!al ndings of the trial co!rt, especially $hena=rmed by the appellate co!rt, are generally binding on !s !nless there $as amisapprehension of facts or $hen the inference dra$n from the facts $asmanifestly mistaken. 25The instant case falls $ithin the e0ception. 97%c
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The co!rtsa quo fo!nd and held that there $as a proper dishonor of thePhP+23,333 check iss!ed by 8onEales against the credit line, beca!se the credit line$as already closed prior to the presentment of the check by Fnson6 and the closingof the credit line $as like$ise proper p!rs!ant to the stip!lations in the promissorynotes on the bank4s right to set o or apply all moneys of the debtor in PI:4s hand

and the stip!lations in the O%C on the PI:4s right to terminate the credit line ongro!nds of defa!lt by 8onEales.

8onEales arg!es other$ise, pointing o!t that he $as not informed abo!t the defa!ltof the spo!ses Panlilio and that the eptember +&, &5 acco!nt statement of thecredit line sho$s a balance of PhP+*3,333 $hich $as like$ise borne o!t by the7ecember *, &5 PI:4s certication that he has F75,*&2.*+ in his /7 acco!nt$hich is more than s!=cient collateral to g!arantee the PhP+23,333 check, datedeptember


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Bo$ $hen #r. Panlilio4s $as enco!ntering problems $ith the bank did the defendantbank MadviseN yo! of any problem $ith the same acco!ntL

8OBSC9D aTI9

They never MadvisedN me in $riting.

D%o$ did yo! come to kno$ that there $as a problemL

D@hen my check bo!nced sir. 26

On the other hand, the PI: contends other$ise, as oraEon Bepom!ceno testiedD

TTG. P7ICCD

an yo! tell this %onorable o!rt $hat is it that yo! told #r. 8onEales $hen yo!spoke to him at the celphoneL

B9PO#F9BOD

I ?!st told him to !pdate the interest so that $e $o!ld not have to cancel the O%Cine and he co!ld $ithdra$ the money that $as in the deposit beca!se technically,if an acco!nt is past d!e $e are not allo$ed to let the client $ithdra$ f!ndsbeca!se they are allo$ed to oset f!nds so, ?!st to help him get his money, ?!st to!pdate the interest so that $e co!ld allo$ him to $ithdra$.

D@ithdra$ $hatL

D%is money on the O%, $hatever deposit he has $ith !s.

D7id yo! inform him that if he did not !pdate the interest he $o!ld not be able to$ithdra$ his moneyL

DGes sir, $e $ill be forced to hold on to any assets that he has $ith !s so that4s $hy$e s!ggested ?!st to !pdate the interest beca!se at the end of everything, he$o!ld be able to $ithdra$ more f!nds than the interest that the money he $o!ld beneeded to !pdate the interest. 27

/rom the foregoing testimonies, bet$een the denial of 8onEales and the assertionby PI: that 8onEales $as properly apprised, $e nd for 8onEales. @e nd thetestimonies of the former PI: employees to be self-serving and ten!o!s at best, for

there $as no proper $ritten notice given by the bank. The record is bereft of anydoc!ment sho$ing that, indeed, 8onEales $as formally informed by PI: abo!t thepast d!e periodic interests.

PI: is $ell a$are and did not disp!te the fact that 8onEales is an accommodationparty. It also acted in accordance $ith s!ch fact by releasing the proceeds of theloan to the spo!ses Panlilio and like$ise only informed the spo!ses Panlilio of theinterest d!es. The spo!ses Panlilio, thro!gh their acco!nt 2$ith PI:, $ere paying
http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote26_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote27_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote28_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote26_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote27_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote28_0


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the periodic interest d!es and $ere the ones periodically informed by the bank ofthe debiting of the amo!nts for the periodic interest payments. 8onEales never paidany of the periodic interest d!es. PI:4s Boceda admitted as m!ch in his cross-e0aminationD a%TI9

TTG. 79 9FD Mon ross-90aminationNnd there $as no instance that #r. 8onEales ever made even interest for this loan,is it not, it4s al$ays #r. Panlilio $ho $as paying the interest for this loanL

BO97D

Ges sir. 2!

Indeed, no evidence $as presented tending to sho$ that 8onEales $as periodicallysent notices or notied of the vario!s periodic interest d!es covering the threepromissory notes. Beither do the records sho$ that 8onEales $as a$are of amo!nts

for the periodic interests and the payment for them. !ch $ere serviced by thespo!ses Panlilio.

Th!s, PI: o!ght to have notied 8onEales abo!t the stat!s of the defa!lt ordelin;!ency of the interest d!es that $ere not paid starting !ly &5. nd s!chnotication m!st be formal or in $ritten form considering that the o!tstandingperiodic interests became d!e at vario!s dates,i.e., on !ly 5, &*, and +5, &5, andthe vario!s amo!nts have to be certain so that 8onEales is not only properlyapprised b!t is given the opport!nity to pay them being solidarily liable for theloans covered by the promissory notes.

It is the bank $hich comp!tes these periodic interests and s!ch d!es m!st be p!tinto $riting and formally served to 8onEales if he $ere asked to pay them, more so$hen the payments by the spo!ses Panlilio $ere charged thro!gh the acco!nt ofthe spo!ses Panlilio $here the interest d!es $ere simply debited. !ch arrangementdid not cover 8onEales4 bank acco!nt $ith PI:, since he is only an accommodationparty $ho has no personal interest in the PhP&,533,333 loan. @itho!t a clear anddeterminate demand thro!gh a formal $ritten notice for the e0act periodic interestd!es for the loans, 8onEales cannot be e0pected to pay for them.

In b!siness, more so for banks, the amo!nts demanded from the debtor or borro$erhave to be denite, clear, and $itho!t ambig!ity. It is not s!=cient simply to be

informed that one m!st pay over a h!ndred tho!sand aggregate o!tstandinginterest d!es $itho!t clear and certain g!res. Th!s, @e nd PI: negligent in notproperly informing 8onEales, $ho is an accommodation party, abo!t the defa!lt andthe e0act o!tstanding periodic interest d!es. @itho!t being properlyapprised,8onEales $as not given the opport!nity to properly act on them. %c9T

It $as only thro!gh a letter 3"sent by PI: dated October +, &5 b!tincongr!o!sly sho$ing the delin;!encies of the PhP&,533,333 loan at a m!ch later
http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote29_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote30_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote29_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote30_0


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date,i.e., as of October


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46/187

DThat is o!r letter advising them or reminding them of their !npaid interest andthat if he is able to !pdate his interest he can e0tend the promissory note orrestr!ct!re the o!tstanding.

DBo$, I call yo!r attention madam $itness, there is nothing in this letter to the

clients advising them or #r. 8onEales that his credit on hand facility $as alreadycancelledL %97T

DI don4t kno$ if there are other letters aside from this.

Do in this letter there is nothing to inform or to make #r. 9!sebio a$are that hiscredit on hand facility $as already cancelledL

DBo act!ally he can !nderstand it from the last sentence. "If yo! $ill be able to!pdate yo!r o!tstanding interest, $e can apply the e0tention of yo!r promissorynote" so in other $ords $e are saying that if yo! don4t, yo! cannot e0tend thepromissory note.

DGo! $ill notice that the s!b?ect matter of this October +, &5 letter is only theloan of &.5 million is it not, as yo! can see from the letterL OkayL

Dh. . .

DOkay. There is nothing there that $ill sho$ that that also refers to the credit onhand facility $hich $as being !tiliEed by #r. 8onEales is it notL

D:!t I don4t kno$ if there are other letters that are not presented to me no$. 34

The foregoing testimonies of PI: o=cers clearly sho$ that not only did PI: fail to

give prior notice to 8onEales abo!t the Oering Ticket for the process oftermination, s!spension, or revocation of the credit line !nder the O%C,b!t PI: like$ise failed to inform 8onEales of the fact that his credit line has beenterminated. Th!s, $e nd PI: grossly negligent in the termination, revocation, ors!spension of the credit line !nder the O%C. @hile PI: invokes its right on theso-called "cross defa!lt provisions," it may not $ith imp!nity ignore the rightsof 8onEales !nder the O%C.

Indeed, the b!siness of banking is impressed $ith p!blic interest and great relianceis made on the bank4s s$orn profession of diligence and metic!lo!sness in givingirreproachable service. Cike a common carrier $hose b!siness is imb!ed $ith p!blicinterest, a bank sho!ld e0ercise e0traordinary diligence to negate its liability to thedepositors. 35In this instance, PI: is sorely remiss in the diligence re;!ired intreating $ith its client, 8onEales. It may not $antonly e0ercise its rights $itho!trespecting and honoring the rights of its clients.

rt. & of the Be$ ivil ode clearly provides that "MeNvery person m!st, in thee0ercise of his rights and in the performance of his d!ties, act $ith ?!stice, give
http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote34_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote35_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote34_0http://cdasiaonline.com/jurisprudences/54257?hits%5B%5D%5Bid%5D=54257&hits%5B%5D%5Btype%5D=Jurisprudence&hits%5B%5D%5Bid%5D=15126&hits%5B%5D%5Btype%5D=Jurisprudence&path=%2Fjurisprudences%2Fsearch&q%5Bcitation_finder%5D=&q%5Bfull_text%5D=&q%5Bissue_no%5D=&q%5Bponente%5D=&q%5Bsyllabus%5D=&q%5Btitle%5D=Gonzales+v.+PCIB&q%5Butf8%5D=%E2%9C%93&q%5Byear_end%5D=&q%5Byear_start%5D=#footnote35_0


47/187


48/187

The same is tr!e for the O%C, $hich in its defa!lt cla!se providesD

&1.79/FCT A The CI9BT shall be considered in defa!lt !nder the O% if any of thefollo$ing events shall occ!rD

&.. . .

+.Hiolation of the terms and conditions of this greement or any contract of theCI9BT $ith the :BJ or any bank, persons, corporations or entities for thepayment of borro$ed money, or any other event of defa!lt in s!ch contracts. 42

The above pertinent defa!lt cla!se m!st be read in con?!nction $ith the eectivitycla!se (Bo. ' of the O%C, ;!oted above), $hich e0pressly provides for the right ofclient to prior notice. The rationale is simpleD in cases $here the bank has the rightto terminate, revoke, or s!spend the credit line, the client m!st be notied of s!chintent in order for the latter to act accordingly A $hether to correct any gro!ndgiving rise to the right of the bank to terminate the credit line and to dishonor any

check iss!ed or to act in accord $ith s!ch termination,i.e., not to iss!e any checkdra$n from the credit line or to replace any checks that had been iss!ed. This, thebank A $ith gross negligence A failed to accord 8onEales, a val!ed client for morethan &2 years. 7%I9Tc

Fo%r+. @e nd the testimony 43of Ocampo incredible on the point that theprincipal borro$er of the PhP&,533,333 loan covered by the three promissory notesis8onEales for $hich the bank o=cers had special instr!ctions to grant and that it$as thro!gh the instr!ctions of 8onEales that the payment of the periodic interestd!es $ere debited from the acco!nt of the spo!ses Panlilio.

/or one, $hile the rst promissory note dated October


49/187


50/187


51/187

giving act!al notice of the termination of the credit line A ?!sties the grant ofe0emplary damages of PhP&3,333. !ch an a$ard is imposed by $ay of e0ample orcorrection for the p!blic good.

/inally, an a$ard for attorney4s fees is like$ise called for from PI:4s negligence

$hich compelled 8onEales to litigate to protect his interest. In accordance $ith rt.++35 (&) of the ode, attorney4s fees may be recovered $hen e0emplary damagesare a$arded. @e nd that the amo!nt of PhP23,333 as attorney4s fees isreasonable.

BEREFORE, this petition is (ARTH RANTED. ccordingly, the 7ecisiondated October ++, +33* in -8.>. H Bo. *''11 is hereby REERSEDand SETASIDE. The Philippine ommercial and International :ank (no$ :anco 7e Oro)is ORDEREDto pay 9!sebio 8onEales PhP23,333 as nominal damages, PhP23,333as moral damages, PhP&3,333 as e0emplary damages, and PhP23,333 as attorney4sfees.

Bo prono!ncement as to costs.

SO ORDERED.

VVV/=on)ales %. P*, =.>. o. 8?257, ;@ebruary 23, 2?icardo . antos, r. $as the vice-president of #over 9nterprises,Inc. in-charge of marketing and sales6 and the president of the said corporation $astty. Oscar S. :enares. On pril icardo . antos, r., to sign the aforesaid check as an alternatesignatory. Plainti >icardo . antos, r. did sign the check.

"It appears that the check (90h. 4&4) $as iss!ed to defendant 9rnestina risologo-ose in consideration of the $aiver or ;!itclaim by said defendant over a certain

property $hich the 8overnment ervice Ins!rance y

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