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Negotiable Instruments Law EH 403 A.Y. 2016-2017 Atty.


Bouncing Checks Law Case Digests paragraph c, intentional cancellation of instrument is impossible. As
provided by paragraph d, the acts which will discharge a simple
contract of payment of money will discharge the instrument.
Correlating Article 1231 of the Civil Code which enumerates the
1.) State Investment House, Inc. vs CA, 217 SCRA 32
modes of extinguishing obligation, none of those modes outlined
therein is applicable in the instant case. Thus, Moulic may not
unilaterally discharge herself from her liability by mere expediency of
Facts: withdrawing her funds from the drawee bank. She is thus liable as she
Nora Moulic issued to Corazon Victoriano, as security for pieces of has no legal basis to excuse herself from liability on her check to a
jewellery to be sold on commission, two postdated checks in the holder in due course. Moreover, the fact that the petitioner failed to
amount of fifty thousand each. Thereafter, Victoriano negotiated the
give notice of dishonor is of no moment. The need for such notice is
checks to State Investment House, Inc. When Moulic failed to sell the
not absolute; there are exceptions provided by Sec 114 of NIL.
jewellry, she returned it to Victoriano before the maturity of the
checks. However, the checks cannot be retrieved as they have been
negotiated. Before the maturity date Moulic withdrew her funds from
the bank contesting that she incurred no obligation on the checks 2.) Papa vs A.U. Valencia & Co., Inc, 284 SCRA 648
because the jewellery was never sold and the checks are negotiated
without her knowledge and consent. Upon presentment of for
payment, the checks were dishonoured for insufficiency of funds.
Issues: In 1973, Angela Butte sold a parcel of land to Penarroyo. Prior to the
1. Whether or not State Investment House inc. was a holder of the alleged sale, property was mortgaged to Associated Bank. After the
check in due course
alleged sale but before the title was transferred Butte died. Penarroyo
2. Whether or not Moulic can set up against the petitioner the defense
asked the bank to release the title but the bank refused until all the
that there was failure or absence of consideration
mortgaged properties are also redeemed. Only in 1977 did they have
Held: knowledge of the mortgaged. Penarroyo filed a complaint for specific
Yes, Section 52 of the NIL provides what constitutes a holder in due performance praying that the petitioner PAPA—attorney-in fact of
course. The evidence shows that: on the faces of the post dated Butte deliver the title of the property and the accrued rentals. While
checks were complete and regular; that State Investment House Inc. the case was pending, Jao intervened saying that he bought the
bought the checks from Victoriano before the due dates; that it was property from Penarroyo praying that title be released in favor of
taken in good faith and for value; and there was no knowledge with Penarroyo so that it will be transferred to him from Penarroyo.
regard that the checks were issued as security and not for value. A
prima facie presumption exists that a holder of a negotiable TC ruled in favor of Penarroyo ordering PAPA to execute Deed of
instrument is a holder in due course. Moulic failed to prove the Absolute Sale in favor of Penarroyo. Papa on appeal contended that
contrary. the sale was never consummated as he did not encash the check
given by Penarroyo in payment of the full purchase price of the
No, Moulic can only invoke this defense against the petitioner if it was subject lot, therefore, its delivery never produced the effect of
a privy to the purpose for which they were issued and therefore is not payment. He maintained that respondents had actually paid only the
a holder in due course. Section 119 of NIL provides how an instruments amount of P5000 for the earnest money. Petitioner, while admitting
be discharged. Moulic can only invoke paragraphs c and d as that he issued receipts for the payments, asserts that said receipts do
possible grounds for the discharge of the instruments. Since Moulic not prove payment. Petitioner avers that there must be a showing that
failed to get back the possession of the checks as provided by said check had been encashed.|||

1988 for 2 . Amago CA affirmed the decision of TC Tan filed a motion for reconsideration with the MTC denying the receipt of the demand letter dated October 30. notice of dishonor must be in writing. People. This motion was denied. had the right to compel petitioner to deliver to created a prima facie presumption that the drawer had knowledge of them the owner's duplicate of TCT No. pursuant to Art. said In Ongson vs. a formal demand to pay in cash for the dishonored Eduardo Vaca is the president and owner of Ervine International while checks was sent to Tan.) Vaca vs CA. Thus only after failure to pay and receipt of dishonor will the presumption arise. 2016-2017 Atty. it will be held to operate as actual payment of the debtor or obligation for which it There was insufficient proof of notice. 28993 and the peaceful the insufficiency of the funds at time of issuance and the check’s possession and enjoyment to the lot in question. his failure to do so for ISSUE: more than ten (10) years resulted in the impairment of the check through his unreasonable and unexplained delay. guilty of the crime charged. For payment of such. the court expounded that the statute itself has respondents. but still there was no payment. Zaragoza filed a case to the Municipal Trial court which found him They issued a check to the General Agency for Reconnaissance. 1995 and alleged ISSUE: that said evidence was not included in the formal letter of evidence. When the check was presented to the bank on March 29. therefore. thus presumption of knowledge was given. Considering that respondents had fulfilled their part of the does not arise. a verbal notice is not enough. While it is true that Whether or not there was sufficient proof of notice of dishonor served the delivery of a check produces the effect of payment only when it is to the accused to create a prima facie presumption that the drawer cashed. is the firm’s purchasing manager.) Tan vs People. and if he from whom it is HELD: received sustains loss by want of such diligence. If no proof notice of 3. 298 SCRA 658 Carolyn Zaragoza (complainant) granted a loan to Tan amounting to P1. David Tan was charged with 6 counts of violation of BP 22 from the following facts: 4. WON the sale had been consummated. Negotiable Instruments Law EH 403 A. RULING: Tan also appealed to RTC and CA. Thus. 500 SCRA 172 nonpayment was served on the drawer. but same was dismissed. contract of sale by delivering the payment of the purchase price. the debtor is prejudiced by the creditor's unreasonable delay in presentment. Zaragoza contacted Tan several times but was refused. Vaca’s son-in-law.00. The acceptance of a check implies an undertaking of due diligence in presenting it for payment.000. Fernando Nieto. presentment if he fails to pay the amount of the check within 5 banking days from notices of dishonor.Y. Furthermore. Thereafter. Tan issued several checks which all bounced upon deposit to Zaragoza’s account for the reason that FACTS: the account was closed. there is no way to reckon the crucial 5 day period. Detection and Security (GARDS) and drawn against China Bank. Granting that petitioner had never encashed the check. Lack of notice is fatal to the FACTS: prosecution. the rule is otherwise if had knowledge of insufficiency of funds in or credit with the bank. 1249 of the Civil Code. Tan is acquitted. The Supreme Court finds no merit in petitioner's arguments. 000.

instead of the 1 year 13.00 as requires that such check be given within 5 days from the notice of stipulated by the parties the moment she breaches the terms and dishonor to them. On April Note: In this case. Macalalag issued result of the issuance of the bouncing check. 1. 3 . but the latter failed to do check involved is an appropriate penalty to impose on each of the so petitioners.) Whether or not damage to the payee is an element of the crime 5. On 16 April 1996 and 1 May 1996. Finding the interest rates so such insufficiency of funds or credit unless such maker or drawer pays burdensome. a fine of double the amount of the check involved was imposed as check.000.) Whether the sentence of imprisonment can be deleted FACTS: HELD: On two separate occasions. However. 2.000.) Macalaglag vs People. in payee is not an element of the crime punished in BP 22. petitioner Theresa Macalalagobtained loans from 1. Macalalag consistently paid the insufficient funds . penalty. Estrella sent a notice of dishonor and demand to believe that a fine in an amount equal to double amount of the make good the said checks to Macalalag. C-889835 and integrity of the banking system cannot be denied.000. Even if such check was intended to replace the bad one. 1988. the damage to the two Philippine National Bank (PNB) Checks (Check No. drawing & issuance of Grace Estrella (Estrella). each a check payment of which is refused by the drawee because of bearing an interest of 10% per month. 511 SCRA 400 3.000. 889836) on 30 June 1996.000. 2016-2017 Atty.00 as liquidated funds to cover the amount of their previous check. They are Filipino entrepreneurs reason that the account against which the same was drawn was who presumably contribute to the national economy. . each in the amount of P100. Macalalag requested Estrella for a reduction of the the holder thereof the amount due thereon. conditions thereof. or makes arrangement same to which the latter agreed.00. shall be prima facie evidence of knowledge of interests starting 30 August 1995. its amount of P200. Under the two on March 29. the same were dishonored for the 3. Negotiable Instruments Law EH 403 A.) Yes. when Estrella presented said checks for payment with the drawee bank. petitioners issued a new check to replace the dishonored imprisonment. the check was dishonored for insufficiency of funds. and that to serve the ends of criminal justice. 1988 15 days after petitioners had been notified execution plus 6% interest per month for each loan.00 within two months from the date of its issuance on April 13.) Petitioners are first-time offenders. The petitioners contended that this case was simply a result of a misunderstanding & that GARDS did not really suffered damage thus they should be acquitted. 1988 of the dishonor of their previous check—cannot Acknowledgment/Affirmation Receipts. In this case we already closed.00. particularly on 30 July 1995 and 16 October 1995.) Whether or not petitioners had knowledge of lack of funds 2. Damage to the No. the Court recognized the contribution of Filipino entrepreneurs to the national economy. Section 2 of BP 22 provides “The making. . Even if the payee suffered no damage as a As security for the payment of the aforesaid loans.Y. This was made to redeem valuable human material and prevent unnecessary deprivation of personal liberty and economic usefulness with due regard to the ISSUE: protection of the social order. Section 2 of BP 22 damages and attorney's fees in the total sum of P40. she further obligated herself negate the presumption that petitioners knew of the insufficiency of to pay for the two (2) loans the total sum of P100.) No. each in the amount of P100. Amago deposit. favor of Estrella. for payment in full by the drawee of such check within 5 banking days Macalalag executed Acknowledgment/Affirmation Receipts after receiving notice that such check has not been paid by the promising to pay Estrella the face value of the loans in the total drawee.

petitioner.00 but it was reduced rate of 6% per month. 22. she deposited P100. present. 000. or dishonor for the same reason had Justice to file an information for violation of B. he admitted that she already remitted the amount of P100. We to petitioner. In its Decision.Y. are higher than the interest dishonored by the drawee bank due to "account closed" on rates declared unconscionable in Medel case and in several December 29. b) the petition and directed the Secretary of Justice to file the proper knowledge of the maker[. Macalalag admitted having issued the said check and that said check. the account of respondent. s. 1996. ordered the bank to stop petitioner payment are. she issued to respondent the check and parties to a loan agreement have been given wide as a guarantee for the loan of spouses Arturo and Malou Ventura latitude to agree on any interest rate. 22 against not the drawer. without any valid cause. 1996. Respondent alleged that petitioner 1) The stipulated interest of 10% per month. and even the reduced rate of 6% per month. he sent the notice of dishonor other cases with allegations of unconscionable interests. the Court of Appeals granted respondent’s issuance of any check to apply to account or for value. 22? On June 5. RULING: In the respondent’s complaint. 515 SCRA 89 1) Whether or not the stipulated interest of 10% per month. Bank Circular No. In 1987.) Blg. or credit with. On January to a hemorrhaging of their assets 16. On January 5.P. All the review under Rule 43 of the 1997 Rules of Civil Procedure. the drawee bank for the payment of the check in full upon its presentment. and even the issued to him an undated check in the sum of P100. 4 . 1982. she forgot to ask for the return of the check. as elements of violation of B. 000. However. However. still stipulated interest obtained from him. Nothing in the said loan.00 in . 1996 when she learned that her check was dishonored. Amago ISSUES: 6. Quezon City a complaint for violation of Batas Pambansa (B.) Cruz vs Cruz. 1995. therefore. 1996. 2016-2017 Atty. held that while the Usury Law has been suspended by Central deposited P100. Without his knowledge. 1983. 1996. Blg. Blg.00 in his savings account. she forgot having issued the check. they informed her that they had paid the rates are illegal if they are unconscionable. 905. For ten years. drawing or amended. in his reply. issue he does not have sufficient funds in. Negotiable Instruments Law EH 403 A.P. Blg. Petitioner declared that in 1986. 000. is a valid interest? FACTS: 2) Whether or not the petitioner violated the Batas Pambansa Blg. 22 against petitioner. circular grants lenders carte blanche authority to raise interest she closed her account and opened a new one with the drawee rates to levels which will either enslave their borrowers or lead bank. on January 16. 22.00 on January 16. 1996. Zuño dismissed respondent’s bankbounced for the reason "account closed".] drawer.2) There is no doubt that Macalalag is liable under B. or issuer that at the time of the information against petitioner. 000. Macalalag failed to make good the said check.P. effective on January 1.P. Later. viz: a) the making. and. or only after eleven (11) days from January 5. he alleged that petitioner failed to pay the amount of the check. Respondent then filed with the Court of Appeals a petition for dishonor. respondent filed with the Office of the City HELD: Prosecutor. when presented for payment for payment with the drawee Chief State Prosecutor Jovencito R. ISSUE: c) the subsequent dishonor of the check by the drawee bank for Whether the Court of Appeals erred in directing the Secretary of insufficiency of funds or credit. Despite notice of petition.

had knowledge that he did not have enough funds or credit in the bank for payment thereof Considering that petitioner had paid the amount of the check even upon its presentment. The law gives the accused the opportunity to satisfy the amount indicated in the check upon a receipt of notice of dishonor. FACTS: Thus. The matter of which among the accused.680. with an unauthenticated In the BP 22 cases. Estrella filed signature do not meet the required proof beyond reasonable doubt demurrer to Evidence claiming. they must be properly added that such letter was defective because it sought payment of authenticated in order to serve as proof of receipt of letters. does not arise when the issuer pays the amount of the checks or makes arrangement for its payment within 5 banking 7. Estrella. It is an element in BP 22 that it must be shown that the system and the legitimate checking account users. 22 is the act of for gross ignorance of law issuing worthless checks. Since the second element involves a state of before respondent filed his complaint. issuer. Martinez. Bulacan while case for violation of BP 22 was aspect of the BP 22 cases for failure to establish that Estrella received raffled to Judge Cedillo.) Del Rosario vs Cedillo. (on the OH) The issue on falsification of the real estate mortgages is still In this case.P. In Sia v. Blg. 441 SCRA 70 days after receiving notice that such check has not been paid by the drawee. the criminal case but also the civil case for violation of BP 22 for such reason. Del Rosario filled an administrative case against Judge Cedillo While indeed the gravamen of violation of B. The said checks were dishonored for the notice of dishonor in the form of demand latter. the amount of P 13. 2016-2017 Atty. nonetheless. # when the first and third elements of the offense are present. dismissed not only paid the amount of the check in question. inter alia. Section 2 of BP 22 creates a injury was caused to the public interests or the banking system. the prosecution never made an effort to identify the person checks was only P 12. questioned or to make arrangement for its payment. he failed to pay the amount of the check mortgages. of the said letter and the registry receipt.000. and that said demand did not state the who allegedly received the latter and signed the registry receipt as A. at the time of the checks issuance.000 when the total amount of the dishonored Moreover.680.Y. or presumption juris tantum that the second element prima facie exists specifically to herein respondent. we explained that the law is intended to safeguard the interests of the banking No. Amago Respondent filed the complaint almost six months after petitioner had Judge Cedillo granted such Demurrer to Evidence. Negotiable Instruments Law EH 403 A. People. the respondent Judge correctly dismissed the criminal pending in Malolos. we held that the Bouncing Checks Law is aimed Whether or not the third element of BP 22 (notice of dishonor) was at putting a stop to or curbing the practice of issuing worthless checks proven in this case or those that end up being dishonored for payment because of the RULING: injury it causes to the public interests. The presentation insufficiency of funds upon presentment on their due dates. The rule is that receipt for registered letters prosecution was truly received by her or her authorized agent. ISSUE: In Lozano v. after the prosecution rested its case. This presumption however. All such securities were however. that the requisite of notice that Estrella received such notice. Also and return receipts do not prove themselves. Estrella herself or her 5 . date and number of checks. courts should not apply the law strictly or harshly. Its spirit and purpose must be considered. we believe and so hold that no mind which is difficult to verify. the presumption that the issuer had knowledge of the insufficiency of funds is brought into existence only after it is proved Del Rosario allegedly extended 12 million pesos to Estrella and was that the issuer had received a notice of dishonor and that within 5 secured by the latter with 3 postdated checks and 2 real estate days from receipt thereof. especially considering that she of dishonor in the form of a demand letter presented by the denied receipt thereof. account number as well as the amount.

2005. drawn.  both of which were dishonored upon presentment for having 1. 22 no declaration as to the civil liability of Tessie Sy. 6 . 171762 and 71860 for P300. if there is any liability of the 1. The private complainant civil liability of accused respondents. 2005 on account of the failure of inexistent. 22 cases. in payment of ISSUE: their loan. the same is purely civil. Amago authorized agent signed the registry receipt was never proven by the dishonor by registered mailto be regarded as clear proof of the giving prosecution.P. the mere presentment of registry return before the RTC. 681 SCRA 592 9. 8.) Resterio vs People.00 each. petitioner to identify the accused respondents in open court. RTC. Hence.) Cheng vs Sy. 98-969953 contained a statement.  for issuing to her Philippine Bank of Commerce (PBC) Check Nos. Yes. of the notices of dishonor to predicate the existence of the second element of the offense. 1999. petitioner lodged against respondents return receipt. HELD:  On the other hand. 22 when she issued a postdated check sometime on May 2002 allegedly being aware that  Petitioner Anita Cheng filed two (2) estafa cases before the the account to be drawn against does not have sufficient funds.000.00 covered by written notices of dishonor. or issued.P. petitioner. second element or the knowledge of the petitioner as the against respondents two (2) cases for violation of Batas issuer of the check that at the time of issue there were Pambansa Bilang (BP Blg. 2. the law did not look either at the actual ownership of the accused. The authentication by affidavit of the the two PBC checks previously subject of the estafa and BP mailer or mailers is necessary in order for the giving of the notices of Blg. Whether or not B.) 22 before the Metropolitan Trial no sufficient funds in or credit with the drawee bank for Court (MeTC). 592 SCRA 155 FACTS: FACTS: The petitioner was charged for violation of B.  based on the same facts. 2016-2017 Atty. 22 requires that the dishonored check must been drawn against a closed account be owned by the accused  On March 16. 2004. Whether or not the lack of a written notice of dishonor is fatal  The Order dismissing Criminal Case No.000. on demurrer. the BP Blg. No. the accused contends that she does not own the check Tessie Sy 7 she used as collateral thus she should not be held liable for B. the MeTC. 22.P. Branch 25. dismissed. on January 20.P. a complaint for collection receipts is not sufficient but must be accompanied by the of a sum of money with damages authenticating affidavit of the person who had actually mailed the  based on the same loaned amount of P600. Manila  Later. the Order in Criminal Case No. filed 2.Y. sent his notice of dishonor byregistered mail and presented the registry  On April 26. Branch 18. To establish the existence of the second element written notice of the  The Order also did not make any pronouncement as to the dishonor to the drawer should be presented. maker or issuer. or at the intention of the drawee. Branch 7. 98-969952 contained to a case for violation of B. Negotiable Instruments Law EH 403 A. Manila against respondent spouses William and During trial. the RTC dismissed the estafa cases for failure of the prosecution to prove the elements of the crime. Manila. check or of the account against which it was made. not criminal in nature. 22 cases in the payment of such check in full upon its presentment is its Order dated February 7. However.

22 cases. establish the identities of the accused during the trial and nor arise from. para (b) of Rule 111 of the Revised Rules of Court. express reservation to litigate separately.  Thus. of the prosecution to identify both the accused (respondents herein)?  However. the public prosecutor neglected to equip himself instituted the corresponding civil action to collect the amount with the knowledge of the proper procedure for BP Blg. 1. Ponferrada that Blg.000.  The rule is that upon the filing of the estafa and BP Blg. simultaneously available to the  By this failure. resort prosecution of criminal cases under BP Blg. 22 cases were filed on January 20.00 with damages was  Under the present revised Rules. 2006. procedural laws.000. the 2000  It is in this light that we find petitioners contention that she was Revised Rules on Criminal Procedure promulgated on not assisted by a private prosecutor during the BP Blg. 22 of P600. the 2000 Revised Rules on Criminal Procedure applies in this case. 57-97 on the Rules and Guidelines in the filing and proceedings before the court trying the BP Blg. waiver. 22 against respondents. Negotiable Instruments Law EH 403 A. petitioner was denied her day in court to complaining party. where the petitioner has not made any cases. or has not  Apparently. 22. for failure of petitioner bouncing checks against the respondents was [based] on the failure to appeal the civil aspect of the cases. civil case after the criminal complaint is filed in court. it SC RULING: appears that petitioner would be left without a remedy to Yes.00 and damages prior to the criminal action. the only remaining remedy available to the possible single civil liability arising from the act of issuing a petitioner to be able to recover the money she loaned to bouncing check can be the subject of both civil actions respondents. i. we are constrained to digress from this rule. action to collect the amount ofP600. as a general rule. 22 cases in light of the Rodriguez v. failed to appeal the civil action impliedly instituted with the BP  This is consonant with our ruling in Rodriguez v. 22 cases. Amago  In the assailed Order dated January 2. 22 cases. 22 cases in light of separate civil action. one can no longer file a separate Sec.  BP Blg. loan. the inability to recover the loaned separately on account of the dismissal of the estafa cases on amount would be tantamount to unjust enrichment of reasonable doubt.e. 1999. the Rules encourages the consolidation of the civil and criminal cases WON Sec. for violation of BP Blg. the petitioner was deemed to have also respondents 7 . in applying the procedure discussed above. 22 are applicable to the to a separate action to recover civil liability is clearly present case where the nature of the order dismissing the cases for unwarranted on account of res judicata. although this civil action could have been litigated  if the loan be proven true.Y. the RTC dismissed elected that such civil action be prosecuted together with the the complaint for lack of jurisdiction. Ponferrada ruling. without traversing the prohibition against prosecute the respondents for their obligation to pay their forum shopping. 22 December 1. 2016-2017 Atty.00 allegedly loaned from her.  It is now settled that rules of procedure apply even to cases  Petitioner indirectly protests that the public prosecutor failed to already pending at the time of their promulgation. recover from respondents the P600. no vested right may attach to. it prohibits the reservation of a already impliedly instituted in the BP Blg. where petitioners rights may be fully adjudicated in the SC Circular No. 2000. ISSUE:  Even then. The reason protect and prosecute her cause when he failed to have her for this is that. ratiocinating that the civil BP Blg. when he failed to appeal the civil action deemed impliedly instituted with the BP Blg. 22 cases  due to the gross mistake of the prosecutor in the BP Blg. the cases under the 2000 Rules on Criminal Procedure such that he civil action is deemed instituted with the criminal cases.. upon the dismissal of the criminal cases on deemed instituted with the estafa case and the prosecution demurrer.000. proceedings critical. 1 of Rule 111 of the 2000 Rules of Criminal Procedure and  Thus.  The only instance when separate proceedings are allowed is when the civil action is filed ahead of the criminal case.

Negotiable Instruments Law EH 403 A. 8 . in favor of petitioner. For reasons of substantial justice and equity.  The dispensation of justice and vindication of legitimate grievances should not be barred by technicalities. 2016-2017 Atty. 05-112452 entitled Anita Cheng v. and a liberal interpretation and application of the rules which will give the parties the fullest opportunity to adduce proof is the best way to ferret out the truth. Amago  Court litigations are primarily designed to search for the truth. Civil Case No. WHEREFORE. we thus rule. the petition is GRANTED. pro hac vice. Spouses William Sy and Tessie Sy is hereby ordered REINSTATED.Y.