BPI vs Sps.

Reynaldo and Victoria Royeca

(G.R. No. 176664; July 21, 2008)

Facts: BPI claims that the Spouses Royeca failed to pay 4 monthly amortization payments for the period of May 18, 1997
to August 18, 1997. This prompted FEBTC to send a formal demand to the spouses, asking them to pay their obligation.
The Spouses, on the other hand, claimed that their obligation had already been paid when they delivered 8 postdated
checks in different amounts to FEBTC. These checks were received by FEBTC as evidenced by an Acknowledgement
Receipt.

The respondents further averred that they did not receive any notice from the drawee banks or from FEBTC that these
checks were dishonored. They explained that, considering this and the fact that the checks were issued three years ago,
they believed in good faith that their obligation had already been fully paid. 

The petitioner insists that the respondents did not sufficiently prove the alleged payment. It avers that, under the law and
existing jurisprudence, delivery of checks does not constitute payment. It points out that this principle stands despite the
fact that there was no notice of dishonor of the two checks and the demand to pay was made three years after default.

Issue: Whether the tender of checks constitutes payment?

Ruling: 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.

To stress, the obligation to prove that the checks were not dishonored, but were in fact encashed, fell upon the
respondents who would benefit from such fact. That payment was effected through the eight checks was the respondents’
affirmative allegation that they had to establish with legal certainty. If the petitioner were seeking to enforce liability upon
the check, the burden to prove that a notice of dishonor was properly given would have devolved upon it. The fact is that
the petitioner’s cause of action was based on the original obligation as evidenced by the Promissory Note and the Chattel
Mortgage, and not on the checks issued in payment thereof.

Further, it should be noted that the petitioner, as payee, did not have a legal obligation to inform the respondents of the
dishonor of the checks. A notice of dishonor is required only to preserve the right of the payee to recover on the check. It
preserves the liability of the drawer and the indorsers on the check. Otherwise, if the payee fails to give notice to them,
they are discharged from their liability thereon, and the payee is precluded from enforcing payment on the check. The
respondents, therefore, cannot fault the petitioner for not notifying them of the non-payment of the checks because
whatever rights were transgressed by such omission belonged only to the petitioner.

Eumelia R. Mitra vs PP and Felicisimo Tarcelo

(G.R. No. 191404; July 5, 2010)

Facts: 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. Several checks, signed by Mitra and Cabrera, were issued by LNCC to Tarcelo.

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.

Mitra, on the other hand, avers 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.
MTCC, RTC, and CA found Mitra guilty of BP 22.

Issue: Functions and importance of Negotiable Instrument.

Ruling: 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. 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. 8The 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.

"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.

Donnina C. Halley vs. Printwell Inc.

G.R. No. 157549; May 30, 2011

Facts: The petitioner was an incorporator and original director of Business Media Philippines, Inc. (BMPI). Printwell, on
the other hand, is engaged in commercial and industrial printing. BMPI commissioned Printwell for the printing of the
magazine Philippines, Inc. (together with wrappers and subscription cards) that BMPI published and sold. In the period
from October 11, 1988 until July 12, 1989, BMPI placed with Printwell several orders on credit, evidenced by invoices and
delivery receipts totaling P316,342.76. Considering that BMPI paidonlyP25,000.00, Printwell sued BMPI on January 26,
1990 for the collection of the unpaid balance of P291,342.76 in the RTC.

The defendants filed a consolidated answer, averring that they all had paid their subscriptions in full by the issuance of
several checks.

Issue: Is check money? Quick Answer: NO, it is only a substitute for money but not legal tender.
When does a bill of exchange produce the fact of payment? Quick Answer: It only produces a fact of payment
when the bill has been encashed.

Ruling: Payment is defined as the delivery of money. Yet, because a check is not money and only substitutes for money,
the delivery of a check does not operate as payment and does not discharge the obligation under a judgment. The
delivery of a bill of exchange only produces the fact of payment when the bill has been encashed. The following passage
from Bank of Philippine Islands v. Royeca is enlightening:

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.

To establish their defense, the respondents therefore had to present proof, not only that they delivered the checks to the
petitioner, but also that the checks were encashed. The respondents failed to do so. Had the checks been actually
encashed, the respondents could have easily produced the cancelled checks as evidence to prove the same. Instead,
they merely averred that they believed in good faith that the checks were encashed because they were not notified of the
dishonor of the checks and three years had already lapsed since they issued the checks.
Because of this failure of the respondents to present sufficient proof of payment, it was no longer necessary for the
petitioner to prove non-payment, particularly proof that the checks were dishonored. The burden of evidence is shifted
only if the party upon whom it is lodged was able to adduce preponderant evidence to prove its claim.

Ostensibly, therefore, the petitioner’s mere submission of the receipt issued in exchange of the check did not satisfactorily
establish her allegation of full payment of her subscription. Indeed, she could not even inform the trial court about the
identity of her drawee bank, and about whether the check was cleared and its amount paid to BMPI. In fact, she did not
present the check itself.

PP vs Roberto Tongko
(G.R. No. 123567; June 5, 1998)

Facts: Tongko This is an appeal by accused Roberto Tongko from the Decision of the RTC of Pasig City, Branch 156
finding him guilty of estafa under Article 315 (2) (d) of the Revised Penal Code. Tongko issued 5 postdated checks in
favor of Carmelita Santos to convince the latter to extend to him a loan of 50,000php. When these checks were presented
to Amanah Bank, such checks were dishonored as Tongko’s account had already been closed. He promised to make
good the checks, but he failed to redeem such promise.

He was sentenced to suffer twenty seven (27) years of reclusion perpetua  and to indemnify Carmelita v. Santos by way of
actual damages in the sum of P100,000.00 and to pay the cost of suit. Tongko contends that the penalty of twenty seven
(27) years of reclusion perpetua is too harsh and out of proportion to the crime he committed. He submits that his
sentence violates section 19(1), Article III of the Constitution which prohibits the infliction of cruel, degrading or inhuman
punishment.

Issue: What is the history of Article 315 (2) (d) of the Revised Penal Code? Is a NI a medium of commercial transaction?

Ruling: The legislature was not thoughtless in imposing severe penalties for violation of par. 2(d) of Article 315 of the
Revised Penal Code. The history of the law will show that the severe penalties were intended to stop the upsurge of
swindling by issuance of bouncing checks. It was felt that unless aborted, this kind of estafa ". . . would erode the people's
confidence in the use of negotiable instruments as a medium of commercial transaction and consequently result in the
retardation of trade and commerce and the undermining of the banking system of the country."  The Court cannot impugn
the wisdom of Congress in setting this policy.

Note: Just in case Sir asks, what are the elements of estafa? Estafa, under Article 315, paragraph 2(d) of the Revised
Penal Code, as amended by Republic Act. No. 4885, has the following elements: (1) postdating or issuance of a check in
payment of an obligation contracted at the time the check was issued; (2) lack of sufficiency of funds to cover the check;
and (3) damage to the payee thereof.