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MWSS v.

CA (1986)
G.R. No. L-62943 July 14, 1986
Lessons Applicable: Forgery (Negotiable Instruments Law)

FACTS:
Metropolitan Waterworks and Sewerage System (MWSS) is a GOCC and successor-in- interest of the
defunct NWSA.

The authorized signature for PNB Account No. 6 were those of MWSS treasurer Jose Sanchez, its auditor
Pedro Aguilar, and its acting General Manager Victor L. Recio.

Specimen signatures were submitted by the MWSS to and on file with the PNB

By special arrangement with the PNB, the MWSS used personalized checks in drawing from this account.

printed for MWSS by its printer, F. Mesina Enterprises

March, April and May 1969: 23 checks were prepared, processed, issued and released by NWSA, all of
which were paid and cleared by PNB and debited by PNB against NWSA Account No. 6

deposited by the fictitious payees Raul Dizon, Arturo Sison and Antonio Mendoza in their respective
current accounts with the Philippine Commercial and Industrial Bank (PCIB) and Philippine Bank of
Commerce (PBC)

At the time of their presentation to PNB these checks bear the standard indorsement which reads 'all prior
indorsement and/or lack of endorsement guaranteed'

NWSA filed against PNB before the CFI

PNB also filed a 3rd party complaint against the negotiating banks PBC and PCIB on the ground that they
failed to ascertain the Identity of the payees and their title to the checks which were deposited in the
respective new accounts of the payees with them

February 6, 1976: CFI favored MWSS

CA: reversed and favored PNB

applied Section 24 of the Negotiable Instruments Law

ISSUE: W/N MWSS can can claim against PNB

HELD: NO. CA reversed.

Every negotiable instrument is deemed prima facie to have been issued for valuable consideration and
every person whose signature appears thereon to have become a party thereto for value
A bank is bound to know the signatures of its customers; and if it pays a forged check it must be
considered as making the payment out of its obligation funds, and cannot ordinarily charge the amount so
paid to the account of the depositor whose name was forged.
NBI showed that the MWSS fraud was an "inside job" and that the MWSS' delay in the reconciliation of
bank statements and the laxity and loose records control in the printing of its personalized checks
facilitated the fraud. These reports did not touch on the inherent qualities of the signatures which are
indispensable in the determination of the existence of forgery. There must be conclusive findings that
there is a variance in the inherent characteristics of the signatures and that they were written by 2 or more
different persons.

Forgery cannot be presumed. It must be established by clear, positive, and convincing evidence. This was
not done in the present case.

SEC. 23. FORGED SIGNATURE; EFFECT OF.- When the signature is forged or made without authority
of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the
instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto can be
acquired through or under such signature unless the party against whom it is sought to enforce such right
is precluded from setting up the forgery or want of authority.
Gross negligence in the printing of its personalized checks - MWSS failed to

give its printer, Mesina Enterprises, specific instructions relative to the safekeeping and disposition of
excess forms, check vouchers, and safety papers

retrieve from its printer all spoiled check forms

provide any control regarding the paper used in the printing of said checks

furnish the respondent drawee bank with samples of typewriting, cheek writing, and print used by its
printer in the printing of its checks and of the inks and pens used in signing the same

send a representative to the printing office during the printing of said checks

to reconcile the bank statements with its own records

MWSS requested the PNB to discontinue the practice of mailing the bank statements, but instead to
deliver it to Mr. Emiliano Zaporteza. However, he was unreasonably delayed in taking prompt deliveries of
the bank statements and credit and debit memos. As a consequence, Mr. Zaporteza failed to reconcile the
bank statements. If Mr. Zaporteza had not been remiss in his duty of taking the bank statements and
reconciling them with the petitioner's records, the fraudulent encashments of the first checks should have
been discovered, and further frauds prevented. This negligence was, therefore, the proximate cause of
the failure to discover the fraud.

One factor which facilitate this fraud was the delay in the reconciliation of PNB statements with the
NAWASA bank accounts. x x x. Had the NAWASA representative come to the PNB early for the
statements and had the bank been advised promptly of the reported bogus check, the negotiation of
practically all of the remaining checks on May, 1969 could have been prevented.

The records likewise show that the petitioner failed to provide appropriate security measures over its own
records thereby laying confidential records open to unauthorized persons. The petitioner's own Fact
Finding Committee, in its report submitted to their General manager underscored this laxity of records
control. It observed that the "office of Mr. Ongtengco (Cashier No. VI of the Treasury Department at the
NAWASA) is quite open to any person known to him or his staff members and that the check writer is
merely on top of his table

Even if the 23 checks in question are considered forgeries, considering the petitioner's gross negligence,
it is barred from setting up the defense of forgery under Section 23 of the Negotiable Instruments Law

PNB had taken the necessary measures in the detection of forged checks and the prevention of their
fraudulent encashment. In fact, long before the encashment of the 23 checks in question, the it had
issued constant reminders to all Current Account Bookkeepers informing them of the activities of forgery
syndicates.

Under the circumstances, MWSS was in a better position to detect and prevent the fraudulent
encashment of its checks

Republic v. Ebrada (1975)

G.R. No. L-40796 July 31, 1975


Lessons Applicable: Forgery (Negotiable Instruments Law)

FACTS:
February 27, 1963: Mauricia T. Ebrada, encashed Back Pay Check dated January 15, 1963 for P1,246.08
at Republic Bank

check was issued by the Bureau of Treasury

Bureau advised Republic Bank that the indorsement on the reverse side of the check by the payee,
"Martin Lorenzo" was a forgery because he died as of July 14, 1952 and requested a refund

July 11, 1966: Ebrada filed a Third-Party complaint against Adelaida Dominguez who, in turn, filed on
September 14, 1966 a Fourth-Party complaint against Justina Tinio.

March 21, 1967: City Court of Manila favored Republic against Ebrada, for Third-Party plaintiff against
Adelaida Dominguez, and for Fourth-Party plaintiff against Justina Tinio

CA: reversed Mauricia T. Ebrada claim against Adelaida Dominguez and Domiguez against Justina Tinio

W/N: Ebrada should be held liable.

HELD: YES. Affirmed in toto.


under Section 65 of the Negotiable Instruments Law:

Every person negotiating an instrument by delivery or by qualified indorsement, warrants:


(a) That the instrument is genuine and in all respects what it purports to be.
(b) That she has good title to it.
xxx xxx xxx
Every indorser who indorses without qualification warrants to all subsequent holders in due course:
(a) The matters and things mentioned in subdivisions (a), (b), and (c) of the next preceding sections;
(b) That the instrument is at the time of his indorsement valid and subsisting.
Under action 23 of the Negotiable Instruments Law (Act 2031):

When a signature is forged or made without the authority of the person whose signature it purports to be,
it is wholly inoperative, and no right to retain the instruments, or to give a discharge thereof against any
party thereto, can be acquired through or under such signature unless the party against whom it is sought
to enforce such right is precluded from setting up the forgery or want of authority.
Martin Lorenzo (forged as original payee) > Ramon R. Lorenzo (2nd indorser) = NO EFFECT

Ramon R. Lorenzo(2nd indorser)> Adelaida Dominguez (third indorser)>Adelaida Dominguez to Ebrada


who did not know of the forgery = valid and enforceable barring any claim of forgery

drawee of a check can recover from the holder the money paid to him on a forged instrument

not its duty to ascertain whether the signatures of the payee or indorsers are genuine or not

indorser is supposed to warrant to the drawee that the signatures of the payee and previous indorsers
(NOT only holders in due course) are genuine

RATIONALE: . indorsers own credulity or recklessness, or misplaced confidence was the sole cause of
the loss. Why should he be permitted to shift the loss due to his own fault in assuming the risk, upon the
drawee, simply because of the accidental circumstance that the drawee afterwards failed to detect the
forgery when the check was presented

Ebrada , upon receiving the check in question from Adelaida Dominguez, was duty-bound to ascertain
whether the check in question was genuine before presenting it to plaintiff Bank for payment

Based on the doctrine from Great Eastern Life Ins. Co. v. Hongkong Shanghai Bank (1922) , bank should
suffer the loss when it paid the amount of the check in question to Ebrada, but it has the remedy to
recover from the Ebrada the amount it paid

Ebrada immediately turning over to Adelaida Dominguez (Third-Party defendant and the Fourth-Party
plaintiff) who in turn handed the amount to Justina Tinio on the same date would not exempt her from
liability because by doing so, she acted as an accommodation party in the check for which she is also
liable under Section 29 of the Negotiable Instruments Law (Act 2031):

An accommodation party is one who has signed the instrument as maker, drawer, acceptor, or indorser,
without receiving value therefor, and for the purpose of lending his name to some other person. Such a
person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking
the instrument knew him to be only an accommodation party.

REPUBLIC BANK, Petitioner, v. COURT OF APPEALS and FIRST NATIONAL CITY BANK

FACTS:

San Miguel Corporation (SMC for short), drew a dividend Check No. 108854 for P240, Philippine
currency, on its account in the respondent First National City Bank ("FNCB" for brevity) in favor of J.
Roberto C. Delgado, a stockholder. After the check had been delivered to Delgado, the amount on its
face was fraudulently and without authority of the drawer, SMC, altered by increasing it from P240 to
P9,240. The check was indorsed and deposited on March 14, 1966 by Delgado in his account with
the petitioner Republic Bank.

Republic accepted the check for deposit without ascertaining its genuineness and regularity. Later,
Republic endorsed the check to FNCB by stamping on the back of the check "all prior and/or lack of
indorsement guaranteed" and presented it to FNCB for payment through the Central Bank Clearing
House. Believing the check was genuine, and relying on the guaranty and endorsement of Republic
appearing on the back of the check, FNCB paid P9,240 to Republic through the Central Bank
Clearing House.

SMC notified FNCB of the material alteration in the amount of the check in question. FNCB lost no
time in recrediting P9,240 to SMC. On May 19, 1966, FNCB informed Republic in writing of the
alteration and the forgery of the endorsement of J. Roberto C. Delgado. By then, Delgado had
already withdrawn his account from Republic.

FNCB demanded that Republic refund the P9,240 on the basis of the latter’s endorsement and guaranty.
Republic refused, claiming there was delay in giving it notice of the alteration; that it was not guilty of
negligence; that it was the drawer’s (SMC’s) fault in drawing the check in such a way as to permit the
insertion of numerals increasing the amount; that FNCB, as drawee, was absolved of any liability to the
drawer (SMC), thus, FNCB had no right of recourse against Republic.

The trial court rendered judgment ordering Republic to pay P9,240 to FNCB with 6% interest per annum.

ISSUE:

Whether Republic, as the collecting bank, is protected, by the 24-hour clearing house rule, found in CB
Circular No. 9, as amended, from liability to refund the amount paid by FNCB, as drawee of the SMC
dividend check.

RULING:

Yes, The 24-hour clearing house rule embodied in Section 4(c) of Central Bank Circular No. 9, as
amended, provides:

"Items which should be returned for any reason whatsoever shall be returned directly to the bank,
institution or entity from which the item was received. For this purpose, the Receipt for Returned Checks
(Cash Form No. 9) should be used. The original and duplicate copies of said Receipt shall be given to the
Bank, institution or entity which returned the items and the triplicate copy should be retained by the bank,
institution or entity whose demand is being returned. At the following clearing, the original of the Receipt
for Returned Checks shall be presented through the Clearing Office as a demand against the bank,
institution or entity whose item has been returned. Nothing in this section shall prevent the returned items
from being settled by direct reimbursement to the bank, institution or entity returning the items. All items
cleared at 11:00 o’clock A.M. shall be returned not later than 2:00 o’clock P.M. on the same day and all
items cleared at 3:00 o’clock P.M. shall be returned not later than 8:30 A.M. of the following business day
except for items cleared on Saturday which may be returned not later than 8:30 A.M. of the following day.”

The 24-hour clearing house rule is a valid rule applicable to commercial banks (Republic v. Equitable
Banking Corporation, 10 SCRA 8 [1964]; Metropolitan Bank & Trust Co. v. First National City Bank, 118
SCRA 537).

It is true that when an endorsement is forged, the collecting bank or last endorser, as a general rule,
bears the loss (Banco de Oro Savings & Mortgage Bank v. Equitable Banking Corp., 167 SCRA 188). But
the unqualified endorsement of the collecting bank on the check should be read together with the 24-hour
regulation on clearing house operation (Metropolitan Bank & Trust Co. v. First National City Bank, supra).
Thus, when the drawee bank fails to return a forged or altered check to the collecting bank within the 24-
hour clearing period, the collecting bank is absolved from liability.

WHEREFORE, the petition for review is granted. The decision of the Court of Appeals is hereby reversed
and set aside, and another is entered absolving the petitioner Republic Bank from liability to refund to the
First National City Bank the sum of P9,240, which the latter paid on the check in question.

Patrimonio vs Gutierrez and Marasigan

G.R. 176697

FACTS: The petitioner and the respondent Gutierrez entered into a business venture under the name of
Slam Dunk Corporation, a production outfit that produced mini-concerts and shows related to basketball.

Patrimonio pre-signed several checks to answer for the expenses of Slam Dunk. Although signed, these
checks had no payee’s name, date or amount. The blank checks were entrusted to Gutierrez with the
specific instruction not to fill them out without previous notification to and approval by the petitioner.

Without the petitioner’s knowledge and consent, Gutierrez went to Marasigan to secure a loan in the
amount of P200,000.00 on the excuse that the petitioner needed the money for the construction of his
house. In addition to the payment of the principal, Gutierrez assured Marasigan that he would be paid an
interest of 5% per month.

Marasigan acceded to Gutierrez’ request and gave him P200,000.00. Gutierrez simultaneously delivered
to Marasigan one of the blank checks the petitioner pre-signed with Pilipinas Bank with the blank portions
filled out with the words “Cash” “Two Hundred Thousand Pesos Only”, and the amount of “P200,000.00.”

Marasigan deposited the check but it was dishonored for the reason “ACCOUNT CLOSED.” It was later
revealed that petitioner’s account with the bank had been closed.

Marasigan sought recovery from Gutierrez, to no avail. He thereafter sent several demand letters to the
petitioner asking for the payment of P200,000.00, but his demands likewise went unheeded.
Consequently, he filed a criminal case for violation of B.P. 22 against the petitioner.

RTC— in favor of Marasigan. It found that the petitioner, in issuing the pre-signed blank checks, had the
intention of issuing a negotiable instrument, albeit with specific instructions to Gutierrez not to negotiate or
issue the check without his approval. RTC declared Marasigan as a holder in due course and accordingly
dismissed the petitioner’s complaint for declaration of nullity of the loan. It ordered the petitioner to pay
Marasigan the face value of the check with a right to claim reimbursement from Gutierrez. CA— affirmed
the RTC ruling.

ISSUE: Whether or not Marasigan is a holder in due course thus may hold Patrimonio liable
HELD: No. Section 14 of the Negotiable Instruments Law provides for when blanks may be filled. This
provision applies to an incomplete but delivered instrument. Under this rule, if the maker or drawer
delivers a pre-signed blank paper to another person for the purpose of converting it into a negotiable
instrument, that person is deemed to have prima facie authority to fill it up. It merely requires that the
instrument be in the possession of a person other than the drawer or maker and from such possession,
together with the fact that the instrument is wanting in a material particular, the law presumes agency to
fill up the blanks.

In order however that one who is not a holder in due course can enforce the instrument against a party
prior to the instrument’s completion, two requisites must exist: (1) that the blank must be filled strictly in
accordance with the authority given; and (2) it must be filled up within a reasonable time. If it was proven
that the instrument had not been filled up strictly in accordance with the authority given and within a
reasonable time, the maker can set this up as a personal defense and avoid liability.

Section 52(c) of the NIL states that a holder in due course is one who takes the instrument “in good faith
and for value.” It also provides in Section 52(d) that in order that one may be a holder in due course, it is
necessary that at the time it was negotiated to him he had no notice of any infirmity in the instrument or
defect in the title of the person negotiating it.

Acquisition in good faith means taking without knowledge or notice of equities of any sort which could
beset up against a prior holder of the instrument. It means that he does not have any knowledge of fact
which would render it dishonest for him to take a negotiable paper. The absence of the defense, when the
instrument was taken, is the essential element of good faith.

In order to show that the defendant had “knowledge of such facts that his action in taking the instrument
amounted to bad faith,” it is not necessary to prove that the defendant knew the exact fraud that was
practiced upon the plaintiff by the defendant’s assignor, it being sufficient to show that the defendant had
notice that there was something wrong about his assignor’s acquisition of title, although he did not have
notice of the particular wrong that was committed. In the present case, Marasigan’s knowledge that the
petitioner is not a party or a privy to the contract of loan, and correspondingly had no obligation or liability
to him, renders him dishonest, hence, in bad faith.

Yet, it does not follow that simply because he is not a holder in due course, Marasigan is already totally
barred from recovery.

Notably, Gutierrez was only authorized to use the check for business expenses; thus, he exceeded the
authority when he used the check to pay the loan he supposedly contracted for the construction of
petitioner’s house. This is a clear violation of the petitioner’s instruction to use the checks for the
expenses of Slam Dunk. It cannot therefore be validly concluded that the check was completed strictly in
accordance with the authority given by the petitioner.

Case Title and Citation : WESLEYAN UNIVERSITY PHILIPPINES v. REYES, G.R. No. 208321 July 30,
2014

Facts : Reyes was appointed as WUP's University Treasurer initially on probationary basis but after a
year, as full time.

The new WUP's Board of Trustees engaged in the services of Nepomuceno Suner & Associates
Accounting Firm ("External Auditor") to investigate the rumors on alleged anomalies in the contracts
entered into by WUP and in its finances. The External Auditor discovered irregularities in handling WUP's
finances including the encashment of various crossed checks payable to the University Treasurer by
Chinabank despite the management's intention to merely have the funds covered thereby transferre from
one of WUP's bank accounts to another.
Reyes was put under preventive suspension while the investigation was conducted, but eventually,
dismissed. She filed a complaint for illegal dismissal.

Issue : Whether or not the encashment of crossed checks is proper

SC Ruling : No, the encashment of crossed checks is not proper for it contradicts the management's
intention to merely transfer the funds to another WUP's bank account.

Jurisprudence has pronounced that the crossing of a check means that the check may not be encashed
but only deposited in the bank. As Treasurer, Reyes knew or at least expected to be aware of and abide
by this basic banking practice and commercial custom. Clearly, the issuance of a crossed check reflects
management's intention to safeguard the funds covered thereby, its special instruction to have the same
deposited to another account and its restriction on its encashment.

In this case, Reyes disregarded management's intentions and ignored the measures in place to secure
the handling of WUP's funds. By encashing the crossed checks, Reyes put the funds covered thereby
under the risk of being lost, stolen, co-mingled with other funds or spent for other purposes. That the
encashment of crossed checks has been a practice of the previous and present administration of WUP is
of no moment. The prevalence of this practice could have been contained if only Reyes consistently
observed the regular procedure for encashing crossed checks.

Hence, such practice of encashing crossed checks cannot be considered proper.

The Petition is GRANTED.

The CA Decision is SET ASIDE.

The NLRC Decision is REINSTATED.

Cesar Areza and Lolita Areza v. Express Savings Bank, Inc. and Michael Potenciano
G.R. No. 176697, September 10, 2014

Facts:
Petitioners received an order for the purchase of a motor vehicle from Gerry Mambuay where the latter
paid petitioners with nine (9) Philippine Veterans Affairs Office (PVAO) checks payable to different payees
and drawn against the Philippine Veterans Bank (drawee), each valued at Two Hundred Thousand Pesos
(₱200,000.00). Petitioners deposited the said checks in their savings account with the Express Savings
Bank which, in turn, deposited the checks with its depositary bank, Equitable-PCI Bank and the latter
presented the checks to the drawee, the Philippine Veterans Bank, which honored the checks. However,
the subject checks were returned by PVAO to the drawee on the ground that the amount on the face of
the checks was altered from the original amount of₱4,000.00 to ₱200,000.00. After informing Express
Savings Bank that the drawee dishonored the checks, Equitable-PCI Bank debited the deposit account of
ESB in the amount of P1.8M. Express Savings Bank then withdrew the amount of P1.8M representing the
returned checks from petitioners saving account.

Issue:
Whether or not Express Savings Bank had the right to debit ₱1,800,000.00 from petitioners’accounts.
Ruling:
No, Express Savings Bank cannot debit the savings account of petitioners. A depositary/collecting bank
where a check is deposited, and which endorses the check upon presentment with the drawee bank, is an
endorser. Under Section 66 of the Negotiable Instruments Law, an endorser warrants “that the instrument
is genuine and in all respects what it purports to be; that he has good title to it; that all prior parties had
capacity to contract; and that the instrument is at the time of his endorsement valid and subsisting.” As
collecting bank, Express Savings Bank is liable for the amount of the materially altered checks. It cannot
further pass the liability back to the petitioners absent any showing in the negligence on the part of the
petitioners which substantially contributed to the loss from alteration.

Bognot vs. RRI Lending


GR No. 180144, September 24, 2014
Facts:
In September 1996, Leonardo Bognot and his younger brother, Rolando Bognot applied for and obtained
a loan of P500,000.00 from RRI Lending, payable on November 30, 1996. The loan was evidenced by a
promissory note and was secured by a post dated check dated November 30, 1996. Evidence on record
shows that Leonardo renewed the loan several times on a monthly basis. He paid a renewal fee of
P54,600.00 for each renewal, issued a new post-dated check as security, and executed and/or renewed
the promissory note previously issued. RRI Lending on the other hand, cancelled and returned to
Leonardo the post-dated checks issued prior to their renewal. Leonardo paid the renewal fees and issued
a post-dated check dated June 30, 1997 as security. As had been done in the past, RRI Lending
superimposed the date
"June 30, 1997"
on the promissory note to make it appear that it would mature on the said date.
Several days before the loan’s maturity, Rolando’s wife, Julieta, went to the respondent’s office
and applied for another renewal of the loan. She issued in favor of RRI Lending a promissory note and a
check dated July 30, 1997, in the amount of P54,600.00 as renewal fee. On the excuse that she needs to
bring home the
loan documents for the Bognot siblings’ signatures and
replacement, Julieta asked the RRI Lending clerk to release to her the promissory note, the disclosure
statement, and the check dated
July 30, 1997
. Julieta, however, never returned these documents nor issued a new post-dated check. Consequently,
RRI Lending sent Leonardo follow-up letters demanding payment of the loan, plus interest and penalty
charges. These demands went unheeded. In his Answer, Leonardo, claimed, among other things, that the
complaint states no cause of action
because RRI Lending’s claim had been
paid, waived, abandoned or otherwise extinguishe
d, and that the one (1) month loan contracted by Rolando and his wife in November 1996 which was lastly
renewed in March 1997 had already been fully paid and extinguished in April 1997.
Issue:
Whether the parties’ obligation was extinguished by
payment
Held:
No, Leonardo failed to satisfactorily prove that his obligation had already been extinguished by payment.
As the CA correctly noted, the petitioner failed to present any evidence that RRI Lending had in fact
encashed his check and applied the proceeds to the payment of the loan. Neither did he present official
receipts evidencing payment, nor any proof that the check had been dishonored. Leonardo
merely relied on the respondent’s
cancellation and return to him of the check dated April 1, 1997. The evidence shows that this check was
issued to secure the indebtedness. The acts imputed on the respondent, standing alone, do not constitute
sufficient evidence of payment.
Article 1249, paragraph 2 of the Civil Code provides:
x x x x The delivery of promissory notes payable to order, or bills of exchange or other mercantile
documents shall produce the effect of payment only when they have been cashed, or when through the
fault of the creditor they have been impaired.
Also, as held in Bank of the Philippine Islands v. Spouses Royeca:
Settled is the rule that payment must be made in legal tender. A check is not legal tender and, therefore,
cannot constitute a valid tender of payment. Since a negotiable instrument is only a substitute for money
and not money, the delivery of such an instrument does not, by itself, operate as payment. Mere delivery
of checks does not discharge the obligation under a judgment. The obligation is not extinguished and
remains suspended until the payment by commercial document is actually realized. Although Article 1271
of the Civil Code provides for a legal presumption of renunciation of action (in cases where a private
document evidencing a credit was voluntarily returned by the creditor to the debtor), this presumption is
merely prima facie and is not conclusive; the presumption loses efficacy when faced with evidence to the
contrary. Moreover, the cited provision merely raises a presumption, not of payment, but of the
renunciation of the credit where more convincing evidence would be required than what normally would
be called for to prove payment. Thus, reliance by the petitioner on the legal presumption to prove
payment is misplaced. To reiterate, no cash payment was proven by the petitioner. The cancellation and
return of the check dated April 1, 1997, simply established his renewal of the loan

not the fact of payment. Furthermore, it has been established during trial, through repeated acts, that the
respondent cancelled and surrendered the post-dated check previously issued whenever the loan is
renewed