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G.R.No. 156132, October 16, 2006
FACTS: Petitioner Citibank is a banking corporation duly authorized under the laws of the USA to do
commercial banking activities n the Philippines. Sabeniano was a client of both Petitioners Citibank
and FNCB Finance. Respondent filed a complaint against petitioners claiming to have substantial
deposits, the proceeds of which were supposedly deposited automatically and directly to
respondents account with the petitioner Citibank and that allegedly petitioner refused to despite
repeated demands. Petitioner alleged that respondent obtained several loans from the former and in
default, Citibank exercised its right to set-off respondents outstanding loans with her deposits and
money. RTC declared the act illegal, null and void and ordered the petitioner to refund the amount
plus interest, ordering Sabeniano, on the other hand to pay Citibank her indebtedness. CA affirmed
the decision entirely in favor of the respondent.
ISSUE: Whether petitioner may exercise its right to set-off respondents loans with her deposits and
money in Citibank-Geneva
RULING: Petition is partly granted with modification.
1. Citibank is ordered to return to respondent the principal amount of P318,897.34 and P203,150.00
plus 14.5% per annum
2. The remittance of US $149,632.99 from respondents Citibank-Geneva account is declared illegal,
null and void, thus Citibank is ordered to refund said amount in Philippine currency or its equivalent
using exchange rate at the time of payment.
3. Citibank to pay respondent moral damages of P300,000, exemplary damages for P250,000,
attorneys fees of P200,000.
4. Respondent to pay petitioner the balance of her outstanding loans of P1,069,847.40 inclusive off


This is a petition for review on certiorari of the Decision1 of the Court of Appeals in
CA-G.R. CR No. 22861 affirming on appeal the Decision 2 of the Regional Trial Court
of Lucena City, Branch 59, in Criminal Case No. 93-135 convicting the accused
therein, now the petitioner, for violation of Batas Pambansa (B.P.) Blg. 22.
On February 9, 1993, Leodegario Bayani was charged with violation of B.P. Blg. 22 in
an Information which reads:
That on or about the 20th day of August 1992, in the Municipality of Candelaria,
Province of Quezon, Philippines, and within the jurisdiction of this Honorable Court,
the above-named accused did then and there willfully, unlawfully and feloniously
issue and make out Check No. 054936 dated August 29, 1992, in the amount of
FIFTY-FIVE THOUSAND PESOS (P55,000.00) Philippine Currency, drawn against the
PSBank, Candelaria Branch, Candelaria, Quezon, payable to "Cash" and give the
said check to one Dolores Evangelista in exchange for cash although the said
accused knew fully well at the time of issuance of said check that he did not have
sufficient funds in or credit with the drawee bank for payment of said check in full
upon presentment; that upon presentation of said check to the bank for payment,
the same was dishonored and refused payment for the reason that the drawer
thereof, the herein accused, had no sufficient fund therein, and that despite due
notice, said accused failed to deposit the necessary amount to cover said check or
to pay in full the amount of said check, to the damage and prejudice of said Dolores
Evangelista in the aforesaid amount.
Contrary to law.3
The Case for the Prosecution
At about noon on August 20, 1992, Alicia Rubia arrived at the grocery store of
Dolores Evangelista in Candelaria, Quezon, and asked the latter to rediscount
Philippine Savings Bank (PSBank) Check No. 054936 in the amount ofP55,000.00.
The check was drawn by Leodegario Bayani against his account with the PSBank
and postdated August 29, 1992.4 Rubia told Evangelista that Bayani asked her to
rediscount the check for him because he needed the money. 5 Considering that Rubia
and Bayani were long-time customers at the store and she knew Bayani to be a
good man, Evangelista agreed to rediscount the check. 6 After Rubia endorsed the
check, Evangelista gave her the amount of P55,000.00.7 However, when Evangelista
deposited the check in her account with the Far East Bank & Trust Company on
September 11, 1992, it was dishonored by the drawee bank for the reason that on
September 1, 1992, Bayani closed his account with the PSBank. 8 The reason for the
dishonor of the check was stamped at its dorsal portion. As of August 27, 1992, the
balance of Bayanis account with the bank was P2,414.96.9 Evangelista then
informed Rubia of the dishonor of the check and demanded the return of
her P55,000.00. Rubia replied that she was only requested by Bayani to have the
check rediscounted and advised Evangelista to see him. When Evangelista talked to
Bayani, she was told that Rubia borrowed the check from him. 10

Thereafter, Evangelista, Rubia, Bayani and his wife, Aniceta, had a conference in the
office of Atty. Emmanuel Velasco, Evangelistas lawyer. Later, in the Office of the
Barangay Captain Nestor Baera, Evangelista showed Bayani a photocopy of the
dishonored check and demanded payment thereof. Bayani and Aniceta, on one
hand, and Rubia, on the other, pointed to each other and denied liability thereon.
Aniceta told Rubia that she should be the one to pay since the P55,000.00 was with
her, but the latter insisted that the said amount was in payment of the pieces of
jewelry Aniceta purchased from her. 11 Upon Atty. Velascos prodding, Evangelista
suggested Bayani and Rubio to pay P25,000.00 each. Still, Bayani and Rubio pointed
to the other as the one solely liable for the amount of the check. 12 Rubia reminded
Aniceta that she was given the check as payment of the pieces of jewelry Aniceta
bought from her.
The Case for the Petitioner
Bayani testified that he was the proprietor of a funeral parlor in Candelaria, Quezon.
He maintained an account with the PSBank in Candelaria, Quezon, and was issued a
checkbook which was kept by his wife, Aniceta Bayani. Sometime in 1992, he
changed his residence. In the process, his wife lost four (4) blank checks, one of
which was Check No. 05493613 which formed part of the checks in the checkbook
issued to him by the PSBank.14 He did not report the loss to the police authorities.
He reported such loss to the bank after Evangelista demanded the refund of
the P55,000.00 from his wife.15 He then closed his account with the bank on
September 11, 1992, but was informed that he had closed his account much earlier.
He denied ever receiving the amount of P55,000.00 from Rubia.16
Bayani further testified that his wife discovered the loss of the checks when he
brought his wife to the office of Atty. Emmanuel Velasco. 17 He did not see
Evangelista in the office of the lawyer, and was only later informed by his wife that
she had a conference with Evangelista. His wife narrated that according to
Evangelista, Rubia had rediscounted a check he issued, which turned out to be the
check she (Aniceta) had lost. He was also told that Evangelista had demanded the
refund of the amount of the check.18 He later tried to contact Rubia but failed. He
finally testified that he could not recall having affixed his signature on the check. 19
Aniceta Bayani corroborated the testimony of her husband. She testified that she
was invited to go to the office of Atty. Velasco where she, Rubia and Evangelista had
a conference. It was only then that she met Evangelista. Rubia admitted that she
rediscounted the complainants check with Evangelista. When Evangelista asked her
to pay the amount of the check, she asked that the check be shown to her, but
Evangelista refused to do so. She further testified that her husband was not with her
and was in their office at the time.
At the conclusion of the trial, the court rendered judgment finding Bayani guilty
beyond reasonable doubt of violation of Section 1 of B.P. Blg. 22. The decretal
portion of the decision reads:
WHEREFORE, premises considered, the Court finds the accused Leodegario Bayani
guilty beyond reasonable doubt of violation of Section 1, Batas Pambansa Bilang 22
and hereby sentences him to suffer an imprisonment of ONE (1) YEAR, or to pay a
fine of ONE HUNDRED TEN THOUSAND PESOS (P110,000.00), to pay to complaining
witness Dolores Evangelista the sum of FIFTY-FIVE THOUSAND PESOS (P55,000.00),
the value of the check and to pay the costs.

On appeal, the petitioner averred that the prosecution failed to adduce evidence
that he affixed his signature on the check, or received from Rubia the amount
of P55,000.00, thus negating his guilt of the crime charged.
The petitioner asserts that even Teresita Macabulag, the bank manager of PSB who
authenticated his specimen signatures on the signature card he submitted upon
opening his account with the bank, failed to testify that the signature on the check
was his genuine signature.
On January 30, 2002, the Court of Appeals rendered judgment 21 affirming the
decision of the RTC with modification as to the penalty imposed on the petitioner.
The petitioner asserts in the petition at bar that
The petitioner contends that the prosecution failed to prove all the essential
elements of the crime of violation of Section 1, B.P. Blg. 22. He asserts that the
prosecution failed to prove that he issued the check. He avers that even assuming
that he issued the check, the prosecution failed to prove that it was issued for
valuable consideration, and that he received the amount of P55,000.00 from Rubia.
Hence, in light of the ruling of this Court in Magno vs. Court of Appeals, 23 he is
entitled to an acquittal on such grounds.
The petitioner further contends that Evangelistas testimony, that Rubia told her
that it was the petitioner who asked her to have the check rediscounted, is hearsay
and, as such, even if he did not object thereto is inadmissible in evidence against
him. He avers that the prosecution failed to present Rubia as a witness, depriving
him of his right to cross-examine her. He contends that any declaration made by
Rubia to Evangelista is inadmissible in evidence against him.
The petition is denied.
We agree with the submission of the petitioner that Evangelistas testimony, that
Rubia told her that the petitioner requested that the subject check be rediscounted,
is hearsay. Evangelista had no personal knowledge of such request of the petitioner
to Rubia. Neither is the information relayed by Rubia to Evangelista as to the
petitioners request admissible in evidence against the latter, because the
prosecution failed to present Rubia as a witness, thus, depriving the petitioner of his
right of cross-examination.
However, the evidence belies the petitioners assertion that the prosecution failed
to adduce evidence that he issued the subject check. Evangelista testified that
when she talked to the petitioner upon Rubias suggestion, the petitioner admitted
that he gave the check to Rubia, but claimed that the latter "borrowed" the check
from him.
Q When this check in question was returned to you because of the closed account,
what did you do, if you did anything?
A I talked to Alicia Rubia, Sir.
Q And what did Alicia Rubia tell you in connection with the check in question?

A Alicia Rubia told me that she was just requested by Leodegario Bayani, Sir.
Q And what else did she tell you?
A She advised me to go to Leodegario Bayani, Sir.
Q Did you go to Leodegario Bayani as per instruction of Alicia Rubia?
A Yes, Sir.
Q And what did Leodegario Bayani tell you in connection with this check?
A He told me that Alicia Rubia borrowed the check from him, Sir. 24
Evangelista testified that she showed to the petitioner and his wife, Aniceta, a
photocopy of the subject check in the office of Atty. Velasco, where they admitted to
her that they owned the check:
Q When you shown (sic) the check to Leodegario Bayani and his wife in the law
office of Atty. Velasco, what did they tell you?
Misleading. The question is misleading because according to the question, Your
Honor, he had shown the check but that was not the testimony. The testimony was
the xerox copy of the check was the one shown.
"The xerox copy of the check."
As modified, answer the question.
A They told me they owned the check but they were pointing to each other as to
who will pay the amount, Sir.25
The petitioner cannot escape criminal liability by denying that he received the
amount of P55,000.00 from Rubia after he issued the check to her. As we ruled
in Lozano vs. Martinez:26
The gravamen of the offense punished by BP 22 is the act of making and issuing a
worthless check or a check that is dishonored upon its presentation for payment. It
is not the non-payment of an obligation which the law punishes. The law is not
intended or designed to coerce a debtor to pay his debt. The thrust of the law is to
prohibit, under pain of penal sanctions, the making of worthless checks and putting
them in circulation. Because of its deleterious effects on the public interest, the
practice is proscribed by the law. The law punishes the act not as an offense against
property, but an offense against public order. 27 The evidence on record shows that
Evangelista rediscounted the check and gave P55,000.00 to Rubia after the latter
endorsed the same. As such, Evangelista is a holder of the check in due
course.28 Under Section 28 of the Negotiable Instruments Law (NIL), absence or
failure of consideration is a matter of defense only as against any person not a
holder in due course, thus:
SECTION 28. Effect of want of consideration. Absence or failure of consideration is
a matter of defense as against any person not a holder in due course; and partial

failure of consideration is a defense pro tanto, whether the failure is an ascertained

and liquidated amount or otherwise.
Moreover, Section 24 of the NIL provides the presumption of consideration, viz:
SECTION 24. Presumption of consideration. Every negotiable instrument is
deemed prima facie to have been issued for a valuable consideration; and every
person whose signature appears thereon to have become a party thereto for value.
Such presumption cannot be overcome by the petitioners bare denial of receipt of
the amount of P55,000.00 from Rubia.
The petitioner cannot, likewise, seek refuge in the ruling of this Court in Magno vs.
Court of Appeals29 because the facts and issues raised therein are substantially
different from those extant in this case. Indeed, the Court ruled in the said case
It is intriguing to realize that Mrs. Teng did not want the petitioner to know that it
was she who "accommodated" petitioners request for Joey Gomez, to source out
the needed funds for the "warranty deposit." Thus, it unfolds the kind of transaction
that is shrouded with mystery, gimmickry and doubtful legality. It is in simple
language, a scheme whereby Mrs. Teng as the supplier of the equipment in the
name of her corporation, Mancor, would be able to "sell or lease" its goods as in this
case, and at the same time, privately financing those who desperately need petty
accommodations as this one. This modus operandi has in so many instances
victimized unsuspecting businessmen, who likewise need protection from the law,
by availing of the deceptively called "warranty deposit" not realizing that they also
fall prey to leasing equipment under the guise of lease-purchase agreement when it
is a scheme designed to skim off business clients. 30
Equally futile is the petitioners contention that the prosecution failed to prove the
crime charged. For the accused to be guilty of violation of Section 1 of B.P. Blg. 22,
the prosecution is mandated to prove the essential elements thereof, to wit:
1. That a person makes or draws and issues any check.
2. That the check is made or drawn and issued to apply on account or for value.
3. That the person who makes or draws and issues the check knows at the time of
issue that he does not have sufficient funds in or credit with the drawee bank for
the payment of such check in full upon its presentment.
4. That the check is subsequently dishonored by the drawee bank for insufficiency
of funds or credit, or would have been dishonored for the same reason had not the
drawer, without any valid reason, ordered the bank to stop payment.31
In this case, the prosecution adduced documentary evidence that when the
petitioner issued the subject check on or about August 20, 1992, the balance of his
account with the drawee bank was only P2,414.96. During the conference in the
office of Atty. Emmanuel Velasco, Evangelista showed to the petitioner and his wife
a photocopy of the subject check, with the notation at its dorsal portion that it was
dishonored for the reason "account closed." Despite Evangelistas demands, the
petitioner refused to pay the amount of the check and, with his wife, pointed to
Rubia as the one liable for the amount. The collective evidence of the prosecution
points to the fact that at the time the petitioner drew and issued the check, he knew
that the residue of the funds in his account with the drawee bank was insufficient to
pay the amount of the check.

decision of the Court of Appeals is AFFIRMED.
No costs.


This petition assails the decision 1 dated December 29, 1993 of the Court of
Appeals in CA-G.R. CV No. 29546, which affirmed the judgment 2 of the Regional
Trial Court of Pasay City, Branch 113 in Civil Case No. PQ-7854-P, dismissing
Firestone's complaint for damages.
The facts of this case, adopted by the CA and based on findings by the trial court,
are as follows:
. . . [D]efendant is a banking corporation. It operates under a certificate of authority
issued by the Central Bank of the Philippines, and among its activities, accepts
savings and time deposits. Said defendant had as one of its client-depositors the
Fojas-Arca Enterprises Company ("Fojas-Arca" for brevity). Fojas-Arca maintaining a
special savings account with the defendant, the latter authorized and allowed
withdrawals of funds therefrom through the medium of special withdrawal slips.
These are supplied by the defendant to Fojas-Arca.
In January 1978, plaintiff and Fojas-Arca entered into a "Franchised Dealership
Agreement" (Exh. B) whereby Fojas-Arca has the privilege to purchase on credit and
sell plaintiff's products.
On January 14, 1978 up to May 15, 1978. Pursuant to the aforesaid Agreement,
Fojas-Arca purchased on credit Firestone products from plaintiff with a total amount
of P4,896,000.00. In payment of these purchases, Fojas-Arca delivered to plaintiff
six (6) special withdrawal slips drawn upon the defendant. In turn, these were
deposited by the plaintiff with its current account with the Citibank. All of them were
honored and paid by the defendant. This singular circumstance made plaintiff
believe [sic] and relied [sic] on the fact that the succeeding special withdrawal slips
drawn upon the defendant would be equally sufficiently funded. Relying on such

confidence and belief and as a direct consequence thereof, plaintiff extended to

Fojas-Arca other purchases on credit of its products.
On the following dates Fojas-Arca purchased Firestone products on credit (Exh. M, I,
J, K) and delivered to plaintiff the corresponding special withdrawal slips in payment
thereof drawn upon the defendant, to wit:



June 15, 1978 42127


July 15, 1978



Aug. 15, 1978 42129


Sep. 15, 1978 42130


These were likewise deposited by plaintiff in its current account with Citibank and in
turn the Citibank forwarded it [sic] to the defendant for payment and collection, as
it had done in respect of the previous special withdrawal slips. Out of these four (4)
withdrawal slips only withdrawal slip No. 42130 in the amount of P981,500.00 was
honored and paid by the defendant in October 1978. Because of the absence for a
long period coupled with the fact that defendant honored and paid withdrawal slips
No. 42128 dated July 15, 1978, in the amount of P981,500.00 plaintiff's belief was
all the more strengthened that the other withdrawal slips were likewise sufficiently
funded, and that it had received full value and payment of Fojas-Arca's credit
purchased then outstanding at the time. On this basis, plaintiff was induced to
continue extending to Fojas-Arca further purchase on credit of its products as per
agreement (Exh. "B").
However, on December 14, 1978, plaintiff was informed by Citibank that special
withdrawal slips No. 42127 dated June 15, 1978 for P1,198,092.80 and No. 42129
dated August 15, 1978 for P880,000.00 were dishonored and not paid for the reason
'NO ARRANGEMENT.' As a consequence, the Citibank debited plaintiff's account for
the total sum of P2,078,092.80 representing the aggregate amount of the abovetwo special withdrawal slips. Under such situation, plaintiff averred that the
pecuniary losses it suffered is caused by and directly attributable to defendant's
gross negligence.
On September 25, 1979, counsel of plaintiff served a written demand upon the
defendant for the satisfaction of the damages suffered by it. And due to defendant's
refusal to pay plaintiff's claim, plaintiff has been constrained to file this complaint,
thereby compelling plaintiff to incur litigation expenses and attorney's fees which
amount are recoverable from the defendant.
Controverting the foregoing asseverations of plaintiff, defendant asserted, inter
alia that the transactions mentioned by plaintiff are that of plaintiff and Fojas-Arca
only, [in] which defendant is not involved; Vehemently, it was denied by defendant
that the special withdrawal slips were honored and treated as if it were checks, the
truth being that when the special withdrawal slips were received by defendant, it
only verified whether or not the signatures therein were authentic, and whether or
not the deposit level in the passbook concurred with the savings ledger, and
whether or not the deposit is sufficient to cover the withdrawal; if plaintiff treated
the special withdrawal slips paid by Fojas-Arca as checks then plaintiff has to blame
itself for being grossly negligent in treating the withdrawal slips as check when it is

clearly stated therein that the withdrawal slips are non-negotiable; that defendant is
not a privy to any of the transactions between Fojas-Arca and plaintiff for which
reason defendant is not duty bound to notify nor give notice of anything to plaintiff.
If at first defendant had given notice to plaintiff it is merely an extension of usual
bank courtesy to a prospective client; that defendant is only dealing with its
depositor Fojas-Arca and not the plaintiff. In summation, defendant categorically
stated that plaintiff has no cause of action against it (pp. 1-3, Dec.; pp. 368370, id).3
Petitioner's complaint4 for a sum of money and damages with the Regional Trial
Court of Pasay City, Branch 113, docketed as Civil Case No. 29546, was dismissed
together with the counterclaim of defendant.
Petitioner appealed the decision to the Court of Appeals. It averred that respondent
Luzon Development Bank was liable for damages under Article 2176 5 in relation to
Articles 196 and 207 of the Civil Code. As noted by the CA, petitioner alleged the
following tortious acts on the part of private respondent: 1) the acceptance and
payment of the special withdrawal slips without the presentation of the depositor's
passbook thereby giving the impression that the withdrawal slips are instruments
payable upon presentment; 2) giving the special withdrawal slips the general
appearance of checks; and 3) the failure of respondent bank to seasonably warn
petitioner that it would not honor two of the four special withdrawal slips.
On December 29, 1993, the Court of Appeals promulgated its assailed decision. It
denied the appeal and affirmed the judgment of the trial court. According to the
appellate court, respondent bank notified the depositor to present the passbook
whenever it received a collection note from another bank, belying petitioner's claim
that respondent bank was negligent in not requiring a passbook under the subject
transaction. The appellate court also found that the special withdrawal slips in
question were not purposely given the appearance of checks, contrary to
petitioner's assertions, and thus should not have been mistaken for checks. Lastly,
the appellate court ruled that the respondent bank was under no obligation to
inform petitioner of the dishonor of the special withdrawal slips, for to do so would
have been a violation of the law on the secrecy of bank deposits.
Hence, the instant petition, alleging the following assignment of error:
25. The CA grievously erred in holding that the [Luzon Development] Bank was free
from any fault or negligence regarding the dishonor, or in failing to give fair and
timely advice of the dishonor, of the twointermediate LDB Slips and in failing to
award damages to Firestone pursuant to Article 2176 of the New Civil Code. 8
The issue for our consideration is whether or not respondent bank should be held
liable for damages suffered by petitioner, due to its allegedly belated notice of nonpayment of the subject withdrawal slips.
The initial transaction in this case was between petitioner and Fojas-Arca, whereby
the latter purchased tires from the former with special withdrawal slips drawn upon
Fojas-Arca's special savings account with respondent bank. Petitioner in turn
deposited these withdrawal slips with Citibank. The latter credited the same to
petitioner's current account, then presented the slips for payment to respondent
bank. It was at this point that the bone of contention arose.
On December 14, 1978, Citibank informed petitioner that special withdrawal slips
Nos. 42127 and 42129 dated June 15, 1978 and August 15, 1978, respectively, were
refused payment by respondent bank due to insufficiency of Fojas-Arca's funds on

deposit. That information came about six months from the time Fojas-Arca
purchased tires from petitioner using the subject withdrawal slips. Citibank then
debited the amount of these withdrawal slips from petitioner's account, causing the
alleged pecuniary damage subject of petitioner's cause of action.
At the outset, we note that petitioner admits that the withdrawal slips in question
were non-negotiable.9 Hence, the rules governing the giving of immediate notice of
dishonor of negotiable instruments do not apply in this case. 10Petitioner itself
concedes this point.11 Thus, respondent bank was under no obligation to give
immediate notice that it would not make payment on the subject withdrawal slips.
Citibank should have known that withdrawal slips were not negotiable instruments.
It could not expect these slips to be treated as checks by other entities. Payment or
notice of dishonor from respondent bank could not be expected immediately, in
contrast to the situation involving checks.
In the case at bar, it appears that Citibank, with the knowledge that respondent
Luzon Development Bank, had honored and paid the previous withdrawal slips,
automatically credited petitioner's current account with the amount of the subject
withdrawal slips, then merely waited for the same to be honored and paid by
respondent bank. It presumed that the withdrawal slips were "good."
It bears stressing that Citibank could not have missed the non-negotiable nature of
the withdrawal slips. The essence of negotiability which characterizes a negotiable
paper as a credit instrument lies in its freedom to circulate freely as a substitute for
money.12 The withdrawal slips in question lacked this character.
A bank is under obligation to treat the accounts of its depositors with meticulous
care, whether such account consists only of a few hundred pesos or of millions of
pesos.13 The fact that the other withdrawal slips were honored and paid by
respondent bank was no license for Citibank to presume that subsequent slips
would be honored and paid immediately. By doing so, it failed in its fiduciary duty to
treat the accounts of its clients with the highest degree of care. 14
In the ordinary and usual course of banking operations, current account deposits are
accepted by the bank on the basis of deposit slips prepared and signed by the
depositor, or the latter's agent or representative, who indicates therein the current
account number to which the deposit is to be credited, the name of the depositor or
current account holder, the date of the deposit, and the amount of the
deposit either in cash or in check.15
The withdrawal slips deposited with petitioner's current account with Citibank were
not checks, as petitioner admits. Citibank was not bound to accept the withdrawal
slips as a valid mode of deposit. But having erroneously accepted them as such,
Citibank and petitioner as account-holder must bear the risks attendant to the
acceptance of these instruments. Petitioner and Citibank could not now shift the risk
and hold private respondent liable for their admitted mistake.
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals in CAG.R. CV No. 29546 is AFFIRMED. Costs against petitioner.
QUERIMIT, respondent.

This is a petition for review on certiorari seeking review of the decision, dated March
6, 2001, and resolution, dated June 19, 2001, of the Court of Appeals [1] in CA-G.R. CV
No. 67147, entitled Estrella O.Querimit v. Far East Bank and Trust Company, which
affirmed with modification the decision of the Regional Trial Court, Branch 38,
Manila,[2] ordering petitioner Far East Bank and Trust Co. (FEBTC) to allow
respondent Estrella O. Querimit to withdraw her time deposit with the FEBTC.
The facts are as follows:
Respondent Estrella O. Querimit worked as internal auditor of the Philippine Savings
Bank (PSB) for 19 years, from 1963 to 1992.[3] On November 24, 1986, she opened a
dollar savings account in petitioners Harrison Plaza branch, [4] for which she was
issued four (4) Certificates of Deposit (Nos. 79028, 79029, 79030, and 79031), each
certificate representing the amount of $15,000.00, or a total amount of
$60,000.00. The certificates were to mature in 60 days, on January 23, 1987, and
were payable to bearer at 4.5% interest per annum. The certificates bore the word
accrued, which meant that if they were not presented for encashment or preterminated prior to maturity, the money deposited with accrued interest would be
rolled over by the bank and annual interest would accumulate automatically.
The petitionerbanks manager assured respondent that her deposit would be
renewed and earn interest upon maturity even without the surrender of the
certificates if these were not indorsed and withdrawn. [6] Respondent kept her dollars
in the bank so that they would earn interest and so that she could use the fund after
she retired.[7]
In 1989, respondent accompanied her husband Dominador Querimit to the United
States for medical treatment. She used her savings in the Bank of the Philippine
Islands (BPI) to pay for the trip and for her husbands medical expenses. [8] In January
1993, her husband died and Estrella returned to the Philippines. She went to
petitioner FEBTC to withdraw her deposit but, to her dismay, she was told that her
husband had withdrawn the money in deposit. [9] Through counsel, respondent sent a
demand letter to petitioner FEBTC. In another letter, respondent reiterated her
request for updating and payment of the certificates of deposit, including interest
earned.[10] As petitioner FEBTC refused respondents demands, the latter filed a
complaint, joining in the action Edgardo F. Blanco, Branch Manager of FEBTC
Harrison Plaza Branch, and Octavio Espiritu, FEBTC President.[11]
Petitioner FEBTC alleged that it had given respondents late husband Dominador an
accommodation to allow him to withdraw Estrellas deposit.[12] Petitioner presented
certified true copies of documents showing that payment had been made, to wit:
1. Four FEBTC Harrison Plaza Branch Dollar Demand Drafts Nos. 886694903,
886694904, 886694905 and 886694906 for US$15,110.96 each, allegedly issued by
petitioner to respondents husbandDominador after payment on the certificates of
2. A letter of Alicia de Bustos, branch cashier of FEBTC at Harrison Plaza, dated
January 23, 1987, which was sent to Citibank, N.A., Citibank
Center, Paseo de Roxas, Makati, Metro Manila, informing the latter that FEBTC had
issued the four drafts and requesting Citibank New York to debit from petitioners
account $60,443.84, the aggregate value of the four drafts; [14]
3. Citicorp Remittance Service: Daily Summary and Payment Report dated January
23, 1987;[15]

4. Debit Ticket dated January 23, 1987, showing the debit of US$60,443.84 or its
equivalent at the time of P1,240,912.04 from the FEBTC Harrison Plaza Branch;
5. An Interbranch Transaction Ticket Register or Credit Ticket dated January 23,
1987 showing that US$60,443.84 or P1,240,912.04 was credited to petitioners
International Operation Division (IOD).[17]
On May 6, 2000, the trial court rendered judgment for respondent.
The dispositive portion of the decision stated:
WHEREFORE, judgment is hereby rendered in favor of plaintiff [Estrella O. Querimit]
and against defendants [FEBTC et al.]:
1. ORDERING defendants to allow plaintiff to withdraw her U.S.$ Time Deposit of
$60,000.00 plus accrued interests;
2. ORDERING defendants to pay moral damages in the amount of P50,000.00;
3. ORDERING defendants to pay exemplary damages in the amount of P50,000.00;
4. ORDERING defendants to pay attorneys fees in the amount of P100,000.00
plus P10,000.00 per appearance of counsel; and
5. ORDERING defendants to pay the costs of the suit.
On May 15, 2000, petitioner appealed to the Court of Appeals which, on March 6,
2001, affirmed through its Fourteenth Division the decision of the trial court, with
the modification that FEBTC was declared solely liable for the amounts adjudged in
the decision of the trial court. The appeals court stated that petitioner FEBTC failed
to prove that the certificates of deposit had been paid out of its funds, since the
evidence by the [respondent] stands unrebutted that the subject certificates of
deposit until now remain unindorsed, undelivered and unwithdrawn by [her].[19] But
the Court of Appeals held that the individual defendants, Edgardo F. Blanco, FEBTCHarrison Plaza Branch Manager, and Octavio Espiritu, FEBTC President, could not be
held solidarily liable with the FEBTC because the latter has a personality separate
from its officers and stockholders.[20]
Hence this appeal.
As stated by the Court of Appeals, the main issue in this case is whether the subject
certificates of deposit have already been paid by petitioner. [21] Petitioner contends
thatI. Petitioner is not liable to respondent for the value of the four (4) Certificates of
Deposit, including the interest thereon as well as moral and exemplary damages,
attorneys and appearance fees.
II. The aggregate value - both principal and interest earned at maturity - of the four
(4) certificates of deposit was already paid to or withdrawn at maturity by the
late Dominador Querimit who was the respondents deceased husband.
III. Respondent is guilty of laches since the four (4) certificates of deposit were all
issued on 24 November 1986 but she attempted to withdraw their aggregate value
on 29 July 1996 only on or after the lapse of more than nine (9) years and eight (8)

IV. Respondent is not liable to petitioner for attorneys fees. [22]

After reviewing the records, we find the petition to be without merit.
First. Petitioner bank failed to prove that it had already paid Estrella Querimit, the
bearer and lawful holder of the subject certificates of deposit. The finding of the trial
court on this point, as affirmed by the Court of Appeals, is that petitioner did not
pay either respondent Estrella or her husband the amounts evidenced by the
subject certificates of deposit. This Court is not a trier of facts and generally does
not weigh anew the evidence already passed upon by the Court of Appeals. [23] The
finding of respondent court which shows that the subject certificates of deposit are
still in the possession of Estrella Querimit and have not been indorsed or delivered
to petitioner FEBTC is substantiated by the record and should therefore stand. [24]
A certificate of deposit is defined as a written acknowledgment by a bank or banker
of the receipt of a sum of money on deposit which the bank or banker promises to
pay to the depositor, to the order of the depositor, or to some other person or his
order, whereby the relation of debtor and creditor between the bank and the
depositor is created. The principles governing other types of bank deposits are
applicable to certificates of deposit,[25] as are the rules governing promissory notes
when they contain an unconditional promise to pay a sum certain of money
absolutely.[26] The principle that payment, in order to discharge a debt, must be
made to someone authorized to receive it is applicable to the payment of
certificates of deposit. Thus, a bank will be protected in making payment to the
holder of a certificate indorsed by the payee, unless it has notice of the invalidity of
the indorsement or the holders want of title.[27] A bank acts at its peril when it pays
deposits evidenced by a certificate of deposit, without its production and surrender
after proper indorsement.[28] As a rule, one who pleads payment has the burden of
proving it. Even where the plaintiff must allege non-payment, the general rule is
that the burden rests on the defendant to prove payment, rather than on the
plaintiff to prove payment. The debtor has the burden of showing with legal
certainty that the obligation has been discharged by payment. [29]
In this case, the certificates of deposit were clearly marked payable to bearer, which
means, to [t]he person in possession of an instrument, document of title or security
payable to bearer or indorsed in blank. [30] Petitioner should not have paid
respondents husband or any third party without requiring the surrender of the
certificates of deposit.
Petitioner claims that it did not demand the surrender of the subject certificates of
deposit since respondents husband, Dominador Querimit, was one of the banks
senior managers. But even long after respondents husband had allegedly been paid
respondents deposit and before his retirement from service, the FEBTC never
required him to deliver the certificates of deposit in question. [31] Moreover, the
accommodation given to respondents husband was made in violation of the banks
policies and procedures.[32]
Petitioner FEBTC thus failed to exercise that degree of diligence required by the
nature of its business.[33] Because the business of banks is impressed with public
interest, the degree of diligence required of banks is more than that of a good father
of the family or of an ordinary business firm. The fiduciary nature of their
relationship with their depositors requires them to treat the accounts of their clients
with the highest degree of care.[34] A bank is under obligation to treat the accounts
of its depositors with meticulous care whether such accounts consist only of a few
hundred pesos or of millions of pesos. Responsibility arising from negligence in the

performance of every kind of obligation is demandable. [35] Petitioner failed to prove

payment of the subject certificates of deposit issued to the respondent and,
therefore, remains liable for the value of the dollar deposits indicated thereon with
accrued interest.
Second. The equitable principle of laches is not sufficient to defeat the rights of
respondent over the subject certificates of deposit.
Laches is the failure or neglect, for an unreasonable length of time, to do that
which, by exercising due diligence, could or should have been done earlier. It is
negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has abandoned it or declined
to assert it.[36]
There is no absolute rule as to what constitutes laches or staleness of demand; each
case is to be determined according to its particular circumstances. The question
of laches is addressed to the sound discretion of the court and, being an equitable
doctrine, its application is controlled by equitable considerations. It cannot be used
to defeat justice or perpetrate fraud and injustice. Courts will not be guided or
bound strictly by the statute of limitations or the doctrine of laches when to do so,
manifest wrong or injustice would result.[37]
In this case, it would be unjust to allow the doctrine of laches to defeat the right of
respondent to recover her savings which she deposited with the petitioner. She did
not withdraw her deposit even after the maturity date of the certificates of deposit
precisely because she wanted to set it aside for her retirement. She relied on the
banks assurance, as reflected on the face of the instruments themselves, that
interest would accrue or accumulate annually even after their maturity. [38]
Third. Respondent is entitled to moral damages because of the mental anguish and
humiliation she suffered as a result of the wrongful refusal of the FEBTC to pay her
even after she had delivered the certificates of deposit. [39] In addition, petitioner
FEBTC should pay respondent exemplary damages, which the trial court imposed by
way of example or correction for the public good. [40] Finally, respondent is entitled to
attorneys fees since petitioners act or omission compelled her to incur expenses to
protect her interest, making such award just and equitable. [41] However, we find the
award of attorneys fees to be excessive and accordingly reduce it to P20,000.00.[42]
WHEREFORE, premises considered, the present petition is hereby DENIED and the
Decision in CA-G.R. CV No. 67147 AFFIRMED, with the modification that the award of
attorneys fees is reduced toP20,000.00.


G.R. NO. 191404


- versus -


CARPIO, J., Chairperson,

ABAD, and

July 5, 2010

This is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the July 31, 2009 Decision[1] and the February 11, 2010 Resolution of the
Court of Appeals (CA) in CA-G.R. CR No. 31740. The subject decision and resolution
affirmed the August 22, 2007 Decision of the Regional Trial Court, Branch 2,
Batangas City (RTC) which, in turn, affirmed the May 21, 2007 Decision of the
Municipal Trial Court in Cities, Branch 2, Batangas City (MTCC).
Petitioner Eumelia R. Mitra (Mitra) was the Treasurer, and Florencio L. Cabrera, Jr.
(now deceased) was the President, of Lucky Nine Credit Corporation (LNCC), a
corporation engaged in money lending activities.
Between 1996 and 1999, private respondent Felicisimo S. Tarcelo (Tarcelo) invested
money in LNCC. As the usual practice in money placement transactions, Tarcelo was
issued checks equivalent to the amounts he invested plus the interest on his
investments. The following checks, signed by Mitra and Cabrera, were issued by
LNCC to Tarcelo.[2]
When Tarcelo presented these checks for payment, they were dishonored for the
reason account closed. Tarcelo made several oral demands on LNCC for the
payment of these checks but he was frustrated. Constrained, in 2002, he caused the
filing of seven informations for violation of Batas Pambansa Blg. 22 (BP 22) in the
total amount of P925,000.00 with the MTCC in Batangas City.[3]
After trial on the merits, the MTCC found Mitra and Cabrera guilty of the charges.
The fallo of the May 21, 2007 MTCC Decision[4] reads:

WHEREFORE, foregoing premises considered, the accused FLORENCIO I.

CABRERA, JR., and EUMELIA R. MITRA are hereby found guilty of the offense of
violation of Batas Pambansa Bilang 22 and are hereby ORDERED to respectively
pay the following fines for each violation and with subsidiary imprisonment in all
cases, in case of insolvency:

1. Criminal Case No. 43637 - P200,000.00

2. Criminal Case No. 43640 - P100,000.00
3. Criminal Case No. 43648 - P100,000.00
4. Criminal Case No. 43700 - P125,000.00
5. Criminal Case No. 43702 - P200,000.00
6. Criminal Case No. 43704 - P100,000.00
7. Criminal Case No. 43706 - P100,000.00
Said accused, nevertheless, are adjudged civilly liable and are ordered to pay, in
solidum, private complainant Felicisimo S. Tarcelo the amount of NINE HUNDRED
Mitra and Cabrera appealed to the Batangas RTC contending that: they signed the
seven checks in blank with no name of the payee, no amount stated and no date of
maturity; they did not know when and to whom those checks would be issued; the
seven checks were only among those in one or two booklets of checks they were
made to sign at that time; and that they signed the checks so as not to delay the
transactions of LNCC because they did not regularly hold office there. [5]
The RTC affirmed the MTCC decision and later denied their motion for
reconsideration. Meanwhile, Cabrera died. Mitra alone filed this petition for
review[6] claiming, among others, that there was no proper service of the notice of
dishonor on her. The Court of Appeals dismissed her petition for lack of merit.
Mitra is now before this Court on a petition for review and submits these issues:
The Court denies the petition.
A check is a negotiable instrument that serves as a substitute for money and as a
convenient form of payment in financial transactions and obligations. The use of
checks as payment allows commercial and banking transactions to proceed without
the actual handling of money, thus, doing away with the need to physically count
bills and coins whenever payment is made. It permits commercial and banking

transactions to be carried out quickly and efficiently. But the convenience afforded
by checks is damaged by unfunded checks that adversely affect confidence in our
commercial and banking activities, and ultimately injure public interest.
BP 22 or the Bouncing Checks Law was enacted for the specific purpose of
addressing the problem of the continued issuance and circulation of unfunded
checks by irresponsible persons. To stem the harm caused by these bouncing
checks to the community, BP 22 considers the mere act of issuing an unfunded
check as an offense not only against property but also against public order. [7]The
purpose of BP 22 in declaring the mere issuance of a bouncing check as malum
prohibitum is to punish the offender in order to deter him and others from
committing the offense, to isolate him from society, to reform and rehabilitate him,
and to maintain social order.[8] The penalty is stiff. BP 22 imposes the penalty of
imprisonment for at least 30 days or a fine of up to double the amount of the check
or both imprisonment and fine.
Specifically, BP 22 provides:
SECTION 1. Checks Without Sufficient Funds. Any person who makes or draws and
issues any check to apply on account or for value, knowing at the time of issue that
he does not have sufficient funds in or credit with the drawee bank for the payment
of such check in full upon its presentment, which check is subsequently dishonored
by the drawee bank for insufficiency of funds or credit or would have been
dishonored for the same reason had not the drawer, without any valid reason,
ordered the bank to stop payment, shall be punished by imprisonment of not less
than thirty days but not more than one (1) year or by a fine of not less than but not
more than double the amount of the check which fine shall in no case exceed Two
Hundred Thousand Pesos, or both such fine and imprisonment at the discretion of
the court.
The same penalty shall be imposed upon any person who, having sufficient funds in
or credit with the drawee bank when he makes or draws and issues a check, shall
fail to keep sufficient funds or to maintain a credit to cover the full amount of the
check if presented within a period of ninety (90) days from the date appearing
thereon, for which reason it is dishonored by the drawee bank.
Where the check is drawn by a corporation, company or entity, the person or
persons who actually signed the check in behalf of such drawer shall be liable under
this Act.
SECTION 2. Evidence of Knowledge of Insufficient Funds. The making, drawing and
issuance of a check payment of which 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, shall be prima facie evidence of knowledge of such
insufficiency of funds or credit unless such maker or drawer pays the holder thereof
the amount due thereon, or makes arrangements for payment in full by the drawee
of such check within five (5) banking days after receiving notice that such check has
not been paid by the drawee.
Mitra posits in this petition that before the signatory to a bouncing corporate check
can be held liable, all the elements of the crime of violation of BP 22 must first be
proven against the corporation. The corporation must first be declared to have
committed the violation before the liability attaches to the signatories of the checks.

The Court finds Itself unable to agree with Mitras posture. The third paragraph of
Section 1 of BP 22 reads: "Where the check is drawn by a corporation, company or
entity, the person or persons who actually signed the check in behalf of such drawer
shall be liable under this Act." This provision recognizes the reality that a
corporation can only act through its officers. Hence, its wording is unequivocal and
mandatory that the person who actually signed the corporate check shall be held
liable for a violation of BP 22. This provision does not contain any condition,
qualification or limitation.
In the case of Llamado v. Court of Appeals,[10] the Court ruled that the accused was
liable on the unfunded corporate check which he signed as treasurer of the
corporation. He could not invoke his lack of involvement in the negotiation for the
transaction as a defense because BP 22 punishes the mere issuance of a bouncing
check, not the purpose for which the check was issued or in consideration of the
terms and conditions relating to its issuance. In this case, Mitra signed the LNCC
checks as treasurer. Following Llamado, she must then be held liable for violating BP

Another essential element of a violation of BP 22 is the drawers knowledge that he

has insufficient funds or credit with the drawee bank to cover his check. Because
this involves a state of mind that is difficult to establish, BP 22 creates the prima
facie presumption that once the check is dishonored, the drawer of the check gains
knowledge of the insufficiency, unless within five banking days from receipt of the
notice of dishonor, the drawer pays the holder of the check or makes arrangements
with the drawee bank for the payment of the check. The service of the notice of
dishonor gives the drawer the opportunity to make good the check within those five
days to avert his prosecution for violating BP 22.
Mitra alleges that there was no proper service on her of the notice of dishonor and,
so, an essential element of the offense is missing. This contention raises a factual
issue that is not proper for review. It is not the function of the Court to re-examine
the finding of facts of the Court of Appeals. Our review is limited to errors of law and
cannot touch errors of facts unless the petitioner shows that the trial court
overlooked facts or circumstances that warrant a different disposition of the
case[11] or that the findings of fact have no basis on record. Hence, with respect to
the issue of the propriety of service on Mitra of the notice of dishonor, the Court
gives full faith and credit to the consistent findings of the MTCC, the RTC and the CA.

The defense postulated that there was no demand served upon the accused, said
denial deserves scant consideration. Positive allegation of the prosecution that a
demand letter was served upon the accused prevails over the denial made by the
accused. Though, having denied that there was no demand letter served on April
10, 2000, however, the prosecution positively alleged and proved that the
questioned demand letter was served upon the accused on April 10, 2000,
that was at the time they were attending Court hearing before Branch I of
this Court. In fact, the prosecution had submitted a Certification issued by the
other Branch of this Court certifying the fact that the accused were present during
the April 10, 2010 hearing. With such straightforward and categorical testimony of
the witness, the Court believes that the prosecution has achieved what was dismally
lacking in the three (3) cases of Betty King, Victor Ting and Caras evidence of
the receipt by the accused of the demand letter sent to her. The Court accepts the

prosecutions narrative that the accused refused to sign the same to evidence their
receipt thereof. To require the prosecution to produce the signature of the accused
on said demand letter would be imposing an undue hardship on it. As well, actual
receipt acknowledgment is not and has never been required of the prosecution
either by law or jurisprudence. [12] [emphasis supplied]
With the notice of dishonor duly served and disregarded, there arose the
presumption that Mitra and Cabrera knew that there were insufficient funds to cover
the checks upon their presentment for payment. In fact, the account was already
To reiterate the elements of a violation of BP 22 as contained in the above-quoted
provision, a violation exists where:
1. a person makes or draws and issues a check to apply on account or for value;
2. the person who makes or draws and issues the check knows at the time of issue
that he does not have sufficient funds in or credit with the drawee bank for the full
payment of the check upon its presentment; and
3. the check is subsequently dishonored by the drawee bank for insufficiency of
funds or credit, or would have been dishonored for the same reason had not the
drawer, without any valid reason, ordered the bank to stop payment. [13]

There is no dispute that Mitra signed the checks and that the bank dishonored the
checks because the account had been closed. Notice of dishonor was properly
given, but Mitra failed to pay the checks or make arrangements for their payment
within five days from notice. With all the above elements duly proven, Mitra cannot
escape the civil and criminal liabilities that BP 22 imposes for its breach. [14]
WHEREFORE, the July 31, 2009 Decision and the February 11, 2010 Resolution of
the Court of Appeals in CA-G.R. CR No. 31740 are hereby AFFIRMED.