Wong v.

Court of Appeals

G.R. No. 117857, 2 February 2001, 351 SCRA 100

FACTS:

Petitioner Wong was an agent of Limtong Press. Inc. (LPI), a manufacturer of calendars.
LPI would print sample calendars, then give them to agents to present to customers. The
agents would get the purchase orders of customers and forward them to LPI. After
printing the calendars, LPI would ship the calendars directly to the customers.

Thereafter, the agents would come around to collect the payments. Petitioner, however,
had a history of unremitted collections, which he duly acknowledged in a confirmation
receipt he co-signed with his wife. Hence, petitioner’s customers were required to issue
postdated checks before LPI would accept their purchase orders.

In early December 1985, Wong issued six (6) postdated checks totaling P18,025.00, all
dated December 30, 1985 and drawn payable to the order of LPI. These checks were
initially intended to guarantee the calendar orders of customers who failed to issue post-
dated checks.

However, following company policy, LPI refused to accept the checks as guarantees.
Instead, the parties agreed to apply the checks to the payment of petitioner’s unremitted
collections for 1984 amounting to P18,077.07. LPI waived the P52.07 difference. Before
the maturity of the checks, petitioner prevailed upon LPI not to deposit the checks and
promised to replace them within 30 days. However, petitioner reneged on his promise.

Hence, on June 5, 1986, LPI deposited the checks with Rizal Commercial Banking
Corporation (RCBC). The checks were returned for the reason “account closed.” The
dishonor of the checks was evidenced by the RCBC return slip.

On June 20, 1986, complainant through counsel notified the petitioner of the dishonor.
Petitioner failed to make arrangements for payment within five (5) banking days.

On November 6, 1987, petitioner was charged with three (3) counts of violation of B.P.
Blg. 224 under three separate Informations for the three checks amounting to P5,500.00,
P3,375.00, and P6,410.00.

Petitioner was similarly charged in Criminal Case No. 12057 for ABC Check No. 660143463
in the amount of P3,375.00, and in Criminal Case No. 12058 for ABC Check No. 660143464
for P6,410.00. Both cases were raffled to the same trial court. The version of the defense
is that petitioner issued the six (6) checks to guarantee the 1985 calendar bookings of his
customers. According to petitioner, he issued the checks not as payment for any
obligation, but to guarantee the orders of his customers. Petitioner appealed his
conviction to the Court of Appeals.
On October 28, 1994, it affirmed the trial court’s decision in toto. Hence, the present
petition.

ISSUE:

Whether or not the prosecution was able to establish beyond reasonable doubt all the
elements of the offense penalized under B.P. Blg. 22.

RULING:

Yes.

As to the second element, B.P. Blg. 22 creates a presumption juris tantum that the second
element prima facie exists when the first and third elements of the offense are present.
Thus, the maker’s knowledge is presumed from the dishonor of the check for insufficiency
of funds.

Petitioner contends that the first element does not exist because the checks were not
issued to apply for account or for value. He attempts to distinguish his situation from the
usual “cut-and-dried” B.P. 22 case by claiming that the checks were issued as guarantee
and the obligations they were supposed to guarantee were already paid.

This flawed argument has no factual basis, the RTC and CA having both ruled that the
checks were in payment for unremitted collections, and not as guarantee. Likewise, the
argument has no legal basis, for what B.P. Blg. 22 punishes is the issuance of a bouncing
check and not the purpose for which it was issued nor the terms and conditions relating
to its issuance. As to the second element, B.P. Blg. 22 creates a presumption juris
tantum that the second element prima facie exists when the first and third elements of
the offense are present. Thus, the maker’s knowledge is presumed from the dishonor of
the check for insufficiency of funds.

An essential element of the offense is “knowledge” on the part of the maker or drawer
of the check of the insufficiency of his funds in or credit with the bank to cover the check
upon its presentment. Since this involves a state of mind difficult to establish, the statute
itself creates a prima facie presumption of such knowledge where payment of the check
“is refused by the drawee because of insufficient funds in or credit with such bank when
presented within ninety (90) days from the date of the check.”

To mitigate the harshness of the law in its application, the statute provides that such
presumption shall not arise if within five (5) banking days from receipt of the notice of
dishonor, the maker or drawer makes arrangements for payment of the check by the
bank or pays the holder the amount of the check.

The clear import of the law is to establish a prima facie presumption of knowledge of such
insufficiency of funds under the following conditions (1) presentment within 90 days from
date of the check, and (2) the dishonor of the check and failure of the maker to make
arrangements for payment in full within 5 banking days after notice thereof.

That the check must be deposited within ninety (90) days is simply one of the conditions
for the prima facie presumption of knowledge of lack of funds to arise. It is not an element
of the offense.
 The International Corporate Bank v. Sps. Gueco

G.R. No. 141968, 12 February 2001, 351 SCRA 516

FACTS:

The respondent Gueco Spouses obtained a loan from petitioner International Corporate
Bank (now Union Bank of the Philippines) to purchase a car – a Nissan Sentra 1600 4DR,
1989 Model. In consideration thereof, the Spouses executed promissory notes which were
payable in monthly installments and chattel mortgage over the car to serve as security
for the notes. The Spouses defaulted in payment of installments.

Consequently, the Bank filed on August 7, 1995 a civil action docketed as Civil Case No.
658-95 for “Sum of Money with Prayer for a Writ of Replevin” before the Metropolitan Trial
Court of Pasay City, Branch 45.

On August 25, 1995, Dr. Francis Gueco was served summons and was fetched by the
sheriff and representative of the bank for a meeting in the bank premises. Desi Tomas,
the Bank’s Assistant Vice President demanded payment of the amount of P184,000.00
which represents the unpaid balance for the car loan.

After some negotiations and computation, the amount was lowered to P154,000.00,
However, as a result of the non-payment of the reduced amount on that date, the car
was detained inside the bank’s compound.

On August 28, 1995, Dr. Gueco went to the bank and talked with its Administrative
Support, Auto Loans/Credit Card Collection Head, Jefferson Rivera. The negotiations
resulted in the further reduction of the outstanding loan to P150,000.00. Dr. Gueco
delivered a manager’s check in amount of P150,000.00 but the car was not released
because of his refusal to sign the Joint Motion to Dismiss. It is the contention of the Gueco
spouses and their counsel that Dr. Gueco need not sign the motion for joint dismissal
considering that they had not yet filed their Answer.

Petitioner, however, insisted that the joint motion to dismiss is standard operating
procedure in their bank to effect a compromise and to preclude future filing of claims,
counterclaims or suits for damages.

After several demand letters and meetings with bank representatives, the respondents
Gueco spouses initiated a civil action for damages before the Metropolitan Trial Court of
Quezon City, Branch 33.

The Metropolitan Trial Court dismissed the complaint for lack of merit. On appeal to the
Regional Trial Court, Branch 227 of Quezon City, the decision of the Metropolitan Trial
Court was reversed.

The Court of Appeals essentially relied on the respect accorded to the finality of the
findings of facts by the lower court and on the latter’s finding of the existence of fraud
which constitutes the basis for the award of damages.
The petitioner comes to this Court by way of petition for review on certiorari under Rule
45 of the Rules of Court.

ISSUE:

Whether or not the Court of Appeals erred in holding that the petitioner return the subject
car to the respondents, without making any provision for the issuance of the new
manager’s/cashier’s check by the respondents in favour of the petitioner in lieu of the
original cashier’s check that already became stale.

RULING:

Yes.

In the meeting of August 29, 1995, respondent Dr. Gueco delivered a manager’s check
representing the reduced amount of P150,000.00. Said check was given to Mr. Rivera, a
representative of respondent bank. However, since Dr. Gueco refused to sign the joint
motion to dismiss, he was made to execute a statement to the effect that he was
withholding the payment of the check. Subsequently, in a letter addressed to Ms. Desi
Tomas, vice president of the bank, dated September 4, 1995, Dr. Gueco instructed the
bank to disregard the ‘hold order” letter and demanded the immediate release of his
car, to which the former replied that the condition of signing the joint motion to dismiss
must be satisfied and that they had kept the check which could be claimed by Dr.
Gueco anytime. While there is controversy as to whether the document evidencing the
order to hold payment of the check was formally offered as evidence by petitioners, it
appears from the pleadings that said check has not been encashed.

Respondents would make us hold that petitioner should return the car or its value and
that the latter, because of its own negligence, should suffer the loss occasioned by the
fact that the check had become stale. It is their position that delivery of the manager’s
check produced the effect of payment and, thus, petitioner was negligent in opting not
to deposit or use said check. Rudimentary sense of justice and fair play would not
countenance respondents’ position.

In the case at bar, however, the check involved is not an ordinary bill of exchange but a
manager’s check. A manager’s check is one drawn by the bank’s manager upon the
bank itself. It is similar to a cashier’s check both as to effect and use. A cashier’s check is
a check of the bank’s cashier on his own or another check. In effect, it is a bill of
exchange drawn by the cashier of a bank upon the bank itself, and accepted in
advance by the act of its issuance. It is really the bank’s own check and may be treated
as a promissory note with the bank as a maker. The check becomes the primary
obligation of the bank which issues it and constitutes its written promise to pay upon
demand. The mere issuance of it is considered an acceptance thereof. If treated as
promissory note, the drawer would be the maker and in which case the holder need not
prove presentment for payment or present the bill to the drawee for acceptance.

Even assuming that presentment is needed, failure to present for payment within a
reasonable time will result to the discharge of the drawer only to the extent of the loss
caused by the delay. Failure to present on time, thus, does not totally wipe out all liability.
In fact, the legal situation amounts to an acknowledgment of liability in the sum stated in
the check. In this case, the Gueco spouses have not alleged, much less shown that they
or the bank which issued the manager’s check has suffered damage or loss caused by
the delay or non-presentment.

Definitely, the original obligation to pay certainly has not been erased.
 Arceo Jr. vs People of the Philippines 495 SCRA 204. July 17, 2006

Facts:

Pacifico Arceo obtained a loan amounting to P100,000 from private

complainant Josefino Cenizal. Several weeks thereafter, he obtained an additional loan
of P50,000 then issued in favor of Cenizal, BPI Check, postdated August 4, 1991, for
P150,000. When August 4 came, Cenizal did not deposit the check immediately because
Arceo promised that he would replace the check with cash. Such promise was made
verbally seven times. When his patience ran out, Cenizal brought the check to the bank
for encashment, however, the check bounced because of insufficient funds.

Thereafter, Cenizal went to the house of Arceo but found out that he had left
the place. So Cenizal referred the matter to a lawyer who wrote a letter giving Arceo
three days from receipt thereof to pay the amount of check. Arceo still failed to make
good the amount of the check. As a consequence, Cenizal executed on January 20,
1992 his affidavit and submitted documents in support of his complaint for estafa and
violation of BP 22 agaisnt Arceo. The check in question and the return slip were however
lost by Ceniza as a result of a fire that occurred near his residence. He executed an
Affidavit of Loss.

After trial, petitioner was found guilty as charged. The Court of Appeals affirmed
the trial court’s decision in toto.

Issue:

1. Whether or not petitioner should not be held for the dishonor of the check.

2. Whether or not petitioner was deprived of the period of five banking days from
receipt of notice of dishonor within which to pay the amount of check.

3. Whether or not the presentation of the check in evidence is a condition is a

condition for conviction under BP 22.

Ruling:

1. No.

The Court ruled that the 90-day period provided in the law is not an element of the
offense. Neither does it discharge petitioner from his duty to maintain sufficient funds in
the account within a reasonable time from the date
indicated in the check. According to current banking practice, the reasonable p
eriod within which to present a check to the drawee bank is six months. Thereafter, the
check becomes stale and the drawer is discharged from liability thereon to the extent of
the loss caused by the delay.

Thus, Cenizals presentment of the check to the drawee bank 120 days (four
months) after its issue was still within the allowable
period. Petitioner was freed neither from the obligation to keep sufficient funds in
his account nor from liability resulting from the dishonor of the check.

2. No.

Petitioner cannot claim that he was deprived of the period of five banking days
from receipt of notice of dishonor within which to pay the amount of the check. While
petitioner may have been given only three days to pay the value of the check, the trial
court found that the amount due thereon remained unpaid even after five banking days
from his receipt of the notice of
dishonor. This negated his claim that he had already paid Cenizal
and should therefore be relieved of any liability.

Moreover, petitioners claim of payment was nothing more than a mere all
egation. He presented no proof to support it. If indeed there was payment, petitioner
should have redeemed or taken the check back in the ordinary course of business.
Instead, the check remained in the possession of the payee who demanded the
satisfaction of petitioners obligation when the check became due as well as when the
check was dishonored by the drawee bank.

3. No.

Petitioner’s insistence on the presentation of the check in evidence as a

condition sine qua non for conviction under BP 22 is wrong. Rule 130, Section 3, of the
Rules of Court, otherwise known as the best evidence rule, applies only where the content
of the document is the subject of the inquiry. Where the issue is the execution or existence
of the document or the circumstances surrounding its execution, the best evidence rule
does not apply and testimonial evidence is admissible.

The fact in issue is the act of drawing and issuing a worthless check. Hence, the
subject of the inquiry is the fact of issuance or execution of the check, not its content.
Although the check and the return slip were among the documents lost, Cenizal was
nevertheless able to adequately establish the due execution, existence and loss of the
check and the return slip in an affidavit of loss as well as in his testimony during the trial of
the case.
Moreover, Arceo himself admitted that he issued the check. He never denied that the
check was presented for payment to the drawee bank and was dishonored for having
been drawn against insufficient funds.
 Allied Banking v. Court of Appeals

G.R. No. 125851, 11 July 2006

FACTS:

Allied Banking Corp. purchased an export bill from G.G. Sportswear Mfg. Corp, which
was drawn under a letter of credit. The said bill was issued by Chekiang First Bank Ltd.
Upon purchase, Allied credited GGS the peso equivalent of the bill.

Respondents Nari Gidwani and Alcron International Ltd.then executed letters of

guaranty, holding themselves liable if the export bill is dishonored. Respondents Spouses
de Villa and Gidwani also executed a Continuing Surety.

Allied negotiated the export bill to Chekiang, but was dishonored due to some material
discrepancies in the documents. Allied demanded payment from all the respondents
pursuant to the guaranties and sureties.

Respondents refused to pay because Allied admitted not having protested the dishonor
of the export bill, thereby discharging GGS from liability. The Regional Trial Court dismissed
the case. Upon appeal, the Court of Appeals modified the ruling ofthe RTC. The CA held
GGS liable to reimburse Allied, but exonerated the guarantors from their liabilities.

ISSUE:

Whether or not respondents, as guarantors and sureties, may be held jointly and severally
liable with GGS in the absence of protest made upon dishonor of the export bill.

RULING:

Yes. This case is a discounting arrangement on the export bill between Allied and GGS.
GGS, as beneficiary of the export bill, went to Allied instead of Chekiang to have the bill
discounted.

Allied, thereafter, required respondents to execute letters of guaranty. The letters of

guaranty and surety clearly show that respondents undertook and bound themselves to
pay the full amount of the export bill. Respondent’s reliance on Section 152 of the
Negotiable Instruments Law is misplaced because it pertains to indorsers, not to
guarantors/sureties. Contracts of indorsement pertain to transfer, while contracts of
guaranty/surety are personal securities.

In the former, unless the bill is promptly presented for payment at maturity and due notice
of dishonor is given to the indorser, the indorser is discharged from liability. In the latter,
demand or notice of default is not required.
Therefore, no protest on the export bill is necessary to charge respondent guarantors as
jointly and severally liable with GGS. Moreover, the surety agreement itself contained a
clause whereby sureties waive protest and notice of dishonor.