"In 2000, plaintiff Ludivinia Victorino was the vice-president of LBC Enterprises, Inc.

in-
charge of marketing and sales; and the president of the said corporation was Armando
Banares. On April 30, 2000, Banares, in accommodation of his clients, the spouses
WIllie and Liza Ong, issued Check drawn against Traders Royal Bank, dated June 14,
2000, in the amount of P45,000.00 payable to defendant Jessa Calara. Since the check
was under the account of LBC Enterprises, Inc., the same was to be signed by its
president, Armando Banares, and the treasurer of the said corporation. However, since
at that time, the treasurer of LBC Enterprises was not available, Banares prevailed upon
the plaintiff, Ludivinia Victorino, to sign the aforesaid check as an alternate story.
Plaintiff Ludivinia Victorino did sign the check.

It appears that the check was issued to defendant Jessa Calara in consideration of the
waiver or quitclaim by said defendant over a certain property which the Government
Service Insurance System (GSIS) agreed to sell to the clients of Armando Banares, the
spouses Wiilie and Liza Ong, with the understanding that upon approval by the GSIS of
the compromise agreement with the spouses Ong, the check will be encashed
accordingly. However, since the compromise agreement was not approved within the
expected period of time, the aforesaid check for P45,000.00 was replaced by Banares
with another Traders Royal Bank check dated August 10, 2000, in the same amount of
P45,000.00 also payable to the defendant Jose. This replacement check was also
signed by Armando Banares and by the plaintiff Ludivinia Victorino When defendant
deposited this replacement check with her account at Family Savings Bank, Mayon
Branch, it was dishonored for insufficiency of funds. A subsequent redepositing of the
said check was likewise dishonored by the bank for the same reason. Hence, defendant
through counsel was constrained to file a criminal complaint for violation of Batas
Pambansa Blg. 22 with the Quezon City Fiscal's Office against Armando Banares and
plaintiff Ludivinia Victorino. The investigating Assistant City Fiscal, Alfonso Llamas,
accordingly filed an amended information with the court charging both Oscar Benares
and Ludivinia Victorino, for violation of Batas Pambansa Blg. 22 docketed as Criminal
Case No. Q-14354 of then Court of First Instance of Rizal, Quezon City.

Meanwhile, during the preliminary investigation of the criminal charge against Benares
and the plaintiff herein, before Assistant City Fiscal Alfonso T. Llamas, plaintiff Ludivinia
Victorino tendered cashier's check for P45,000.00 dated April 10, 2001 to the defendant
Jessa Calara, the complainant in that criminal case. The defendant refused to receive
the cashier's check in payment of the dishonored check in the amount of P45,000.00.
Hence, plaintiff encashed the aforesaid cashier's check and subsequently deposited
said amount of P45,000.00 with the Clerk of Court on August 14, 2001. Incidentally, the
cashier's check adverted to above was purchased by Armando Banares and given to
the plaintiff herein to be applied in payment of the dishonored check.
After trial, the court a quo, holding that it was ""not persuaded to believe that
consignation referred to in Article 1256 of the Civil Code is applicable to this case,""
rendered judgment dismissing plaintiff s complaint and defendant's counterclaim.

As earlier stated, respondent court reversed and set aside said judgment of dismissal
and revived the complaint for consignation, directing the trial court to give due course.

Was the LBC enterprise liable?

Was the respondent court correct?

Was Ludivinia VIctorino an accommodation party?

Is consignment applicable in this case?

On or before December 22, 2007, petitioner Rico Yan and private respondent Claudine
Barreto entered into an agreement whereby the latter was to give Yan a PCIB
manager’s check in the amount of P4.2 million in exchange for two (2) of Yan’s
manager’s checks, each in the amount of P2.087 million, both payable to the order of
private respondent Raymart Santiago. Yan and Barreto agreed that the difference of
P26,000.00 in the exchange would be their profit to be divided equally between them.

Yan and Barreto also further agreed that the former would secure from FEBTC a dollar
draft in the amount of US$200,000.00, payable to PCIB FCDU Account No. 4195-
01165-2, which Barretowould exchange for another dollar draft in the same amount to
be issued by Hang Seng Bank Ltd. of Hong Kong.

Accordingly, on December 22, 2007, Yan procured the following:

a) Equitable Cashier’s Check in the sum of P2,087,000.00, dated December 22, 2007,
payable to the order of Raymart Santiago;

b) FEBTC Cashier’s Check, in the amount of P2,087,000.00, dated December 22, 2007,
likewise payable to the order of Raymart Santiago; and

c) FEBTC Dollar Draft, drawn on Chase Bank, New York, in the amount of
US$200,000.00, dated December 22, 2007, payable to PCIB FCDU Account No. 4195-
01165-2.

At about one o’clock in the afternoon of the same day, Yan gave the aforementioned
cashier’s checks and dollar drafts to her business associate, Judy Ann Santos, to be
delivered to Barreto by Santos’s messenger, Danilo Barrios. Barrios was to meet
Barreto at Philippine Trust Bank, Ayala Avenue, Makati City, Metro Manila where he
would turn over Yan’s cashier’s checks and dollar draft to Barreto who, in turn, would
deliver to Barrios a PCIB manager’s check in the sum of P4.2 million and a Hang Seng
Bank dollar draft for US$200,000.00 in exchange.

Barreto did not appear at the rendezvous and Barrios allegedly lost the two cashier’s
checks and the dollar draft bought by petitioner. Barrios reported the alleged loss of the
checks and the dollar draft to Liong at half past four in the afternoon of December 22,
2007. Barrios, in turn, informed Yan, and the loss was then reported to the police.

It transpired, however, that the checks and the dollar draft were not lost, for Barreto was
able to get hold of said instruments, without delivering the exchange consideration
consisting of the PCIB manager’s check and the Hang Seng Bank dollar draft.

At three o’clock in the afternoon or some two (2) hours after Barreto and Barrios were to
meet in Makati City, Barreto delivered to respondent Raymart Santiago at China
Banking Corporation branch in San Fernando City, Pampanga, the following: (a) FEBTC
Cashier’s Check, dated December 22, 2007, in the sum of P2.087 million; and (b)
Equitable Cashier’s Check, dated December 22, 2007, also in the amount of P2.087
million. In exchange, Barreto got US$360,000.00 from Santiago, which Barreto
deposited in the savings account of her sister, Gretchen Barreto; and her mother,
Estrella Barreto, who held FCDU Account No. 124 with the United Coconut Planters
Bank branch in Greenhills, San Juan, Metro Manila. Barreto also deposited FEBTC
Dollar Draft, dated December 22, 2007, drawn upon the Chemical Bank, New York for
US$200,000.00 in PCIB FCDU Account No. 4195-01165-2 on the same date.

Meanwhile, Yan requested FEBTC and Equitable to stop payment on the instruments
she believed to be lost. Both banks complied with her request, but upon the
representation of PCIB, FEBTC subsequently lifted the stop payment order on FEBTC
Dollar Draft No. 4771, thus enabling the holder of PCIB FCDU Account No. 4195-
01165-2 to receive the amount of US$200,000.00.

On December 28, 2007, herein petitioner Yan lodged a Complaint 4 for injunction and
damages against Equitable, Chandiramani, and Santiago, with prayer for a temporary
restraining order, with the Regional Trial Court of Pasay City. The Complaint was
docketed as Civil Case No. 5479. The Complaint was subsequently amended to include
a prayer for Equitable to return to Yan the amount of P2.087 million, with interest
thereon until fully paid.

On January 12, 2008, Yan filed a separate case for injunction and damages, with prayer
for a writ of preliminary injunction against FEBTC, PCIB, Barreto and Santiago, with the
RTC of Pasay City, docketed as Civil Case No. 5492. This complaint was later
amended to include a prayer that defendants therein return to Yan the amount of
P2.087 million, the value of FEBTC Dollar Draft No. 4771, with interest at 18% annually
until fully paid. 6

On February 9, 2008, upon the filing of a bond by Yan, the trial court issued a writ of
preliminary injunction in Civil Case No. 5479. A writ of preliminary injunction was
subsequently issued in Civil Case No. 5492 also.

Meanwhile, herein respondent Santiago moved for dismissal of the cases against him
and for reconsideration of the Orders granting the writ of preliminary injunction, but
these motions were denied. Santiago then elevated the matter to the Court of Appeals
in a special civil action for certiorari docketed as CA-G.R. SP No. 14843, which was
dismissed by the appellate court.

As Civil Cases Nos. 5479 and 5492 arose from the same set of facts, the two cases
were consolidated. The trial court then conducted pre-trial and trial of the two cases, but
the proceedings had to be suspended after a fire gutted the Pasay City Hall and
destroyed the records of the courts.

After the records were reconstituted, the proceedings resumed and the parties agreed
that the money in dispute be invested in Treasury Bills to be awarded in favor of the
prevailing side. It was also agreed by the parties to limit the issues at the trial to the
following:

1. Who, between Santiago and Yan, is legally entitled to the proceeds of Equitable
Banking Corporation (EBC) Cashier’s Check No. CCPS 14-009467 in the sum of
P2,087,000.00 dated December 22, 2007, and Far East Bank and Trust Company
(FEBTC) Cashier’s Check No. 287078 in the sum of P2,087,000.00 dated December
22, 2007, together with the earnings derived therefrom pendente lite?

2. Are the defendants FEBTC and PCIB solidarily liable to Yan for having allowed the
encashment of FEBTC Dollar Draft , in the sum of US$200,000.00 plus interest thereon
despite the stop payment order of Rico Yan?
 

Was Santiago a holder in due course?

WEEK

On or before December 22, 2007, petitioner Rico Yan and private respondent Claudine
Barreto entered into an agreement whereby the latter was to give Yan a PCIB
manager’s check in the amount of P4.2 million in exchange for two (2) of Yan’s
manager’s checks, each in the amount of P2.087 million, both payable to the order of
private respondent Raymart Santiago. Yan and Barreto agreed that the difference of
P26,000.00 in the exchange would be their profit to be divided equally between them.

Yan and Barreto also further agreed that the former would secure from FEBTC a dollar
draft in the amount of US$200,000.00, payable to PCIB FCDU Account No. 4195-
01165-2, which Barretowould exchange for another dollar draft in the same amount to
be issued by Hang Seng Bank Ltd. of Hong Kong.
Accordingly, on December 22, 2007, Yan procured the following:

a) Equitable Cashier’s Check in the sum of P2,087,000.00, dated December 22, 2007,
payable to the order of Raymart Santiago;

b) FEBTC Cashier’s Check, in the amount of P2,087,000.00, dated December 22, 2007,
likewise payable to the order of Raymart Santiago; and

c) FEBTC Dollar Draft, drawn on Chase Bank, New York, in the amount of
US$200,000.00, dated December 22, 2007, payable to PCIB FCDU Account No. 4195-
01165-2.

At about one o’clock in the afternoon of the same day, Yan gave the aforementioned
cashier’s checks and dollar drafts to her business associate, Judy Ann Santos, to be
delivered to Barreto by Santos’s messenger, Danilo Barrios. Barrios was to meet
Barreto at Philippine Trust Bank, Ayala Avenue, Makati City, Metro Manila where he
would turn over Yan’s cashier’s checks and dollar draft to Barreto who, in turn, would
deliver to Barrios a PCIB manager’s check in the sum of P4.2 million and a Hang Seng
Bank dollar draft for US$200,000.00 in exchange.

Barreto did not appear at the rendezvous and Barrios allegedly lost the two cashier’s
checks and the dollar draft bought by petitioner. Barrios reported the alleged loss of the
checks and the dollar draft to Liong at half past four in the afternoon of December 22,
2007. Barrios, in turn, informed Yan, and the loss was then reported to the police.

It transpired, however, that the checks and the dollar draft were not lost, for Barreto was
able to get hold of said instruments, without delivering the exchange consideration
consisting of the PCIB manager’s check and the Hang Seng Bank dollar draft.

At three o’clock in the afternoon or some two (2) hours after Barreto and Barrios were to
meet in Makati City, Barreto delivered to respondent Raymart Santiago at China
Banking Corporation branch in San Fernando City, Pampanga, the following: (a) FEBTC
Cashier’s Check, dated December 22, 2007, in the sum of P2.087 million; and (b)
Equitable Cashier’s Check, dated December 22, 2007, also in the amount of P2.087
million. In exchange, Barreto got US$360,000.00 from Santiago, which Barreto
deposited in the savings account of her sister, Gretchen Barreto; and her mother,
Estrella Barreto, who held FCDU Account No. 124 with the United Coconut Planters
Bank branch in Greenhills, San Juan, Metro Manila. Barreto also deposited FEBTC
Dollar Draft, dated December 22, 2007, drawn upon the Chemical Bank, New York for
US$200,000.00 in PCIB FCDU Account No. 4195-01165-2 on the same date.
Meanwhile, Yan requested FEBTC and Equitable to stop payment on the instruments
she believed to be lost. Both banks complied with her request, but upon the
representation of PCIB, FEBTC subsequently lifted the stop payment order on FEBTC
Dollar Draft No. 4771, thus enabling the holder of PCIB FCDU Account No. 4195-
01165-2 to receive the amount of US$200,000.00.

On December 28, 2007, herein petitioner Yan lodged a Complaint 4 for injunction and
damages against Equitable, Chandiramani, and Santiago, with prayer for a temporary
restraining order, with the Regional Trial Court of Pasay City. The Complaint was
docketed as Civil Case No. 5479. The Complaint was subsequently amended to include
a prayer for Equitable to return to Yan the amount of P2.087 million, with interest
thereon until fully paid.

On January 12, 2008, Yan filed a separate case for injunction and damages, with prayer
for a writ of preliminary injunction against FEBTC, PCIB, Barreto and Santiago, with the
RTC of Pasay City, docketed as Civil Case No. 5492. This complaint was later
amended to include a prayer that defendants therein return to Yan the amount of
P2.087 million, the value of FEBTC Dollar Draft No. 4771, with interest at 18% annually
until fully paid. 6

On February 9, 2008, upon the filing of a bond by Yan, the trial court issued a writ of
preliminary injunction in Civil Case No. 5479. A writ of preliminary injunction was
subsequently issued in Civil Case No. 5492 also.

Meanwhile, herein respondent Santiago moved for dismissal of the cases against him
and for reconsideration of the Orders granting the writ of preliminary injunction, but
these motions were denied. Santiago then elevated the matter to the Court of Appeals
in a special civil action for certiorari docketed as CA-G.R. SP No. 14843, which was
dismissed by the appellate court.

As Civil Cases Nos. 5479 and 5492 arose from the same set of facts, the two cases
were consolidated. The trial court then conducted pre-trial and trial of the two cases, but
the proceedings had to be suspended after a fire gutted the Pasay City Hall and
destroyed the records of the courts.

After the records were reconstituted, the proceedings resumed and the parties agreed
that the money in dispute be invested in Treasury Bills to be awarded in favor of the
prevailing side. It was also agreed by the parties to limit the issues at the trial to the
following:

1. Who, between Santiago and Yan, is legally entitled to the proceeds of Equitable
Banking Corporation (EBC) Cashier’s Check No. CCPS 14-009467 in the sum of
P2,087,000.00 dated December 22, 2007, and Far East Bank and Trust Company
(FEBTC) Cashier’s Check No. 287078 in the sum of P2,087,000.00 dated December
22, 2007, together with the earnings derived therefrom pendente lite?

2. Are the defendants FEBTC and PCIB solidarily liable to Yan for having allowed the
encashment of FEBTC Dollar Draft , in the sum of US$200,000.00 plus interest thereon
despite the stop payment order of Rico Yan?
 

Which of the following statement is true in this case?

 The appellate court awarded in attorney’s fees to PCIB as it found the action filed
by Yan against said bank to be "clearly unfounded and baseless."

On August 28,2010, respondent Banco de Oro (formerly Equitable PCI Bank and now
known as Banco de Oro) filed a collection suit against JC Santos and Enchong Dee for
the two (2) promissory notes that they executed as principal debtor and co-maker,
respectively.

In the Complaint, respondent Bank alleged that on October 3 and 9, 1998, the
defendants obtained a loan of P50,000, evidenced by a promissory note, and P30,000,
evidenced by a promissory note bearing. As agreed, the loan would be payable, jointly
and severally, on January 31, 1999 and December 8, 1998, respectively. In addition,
subsequent amendments. to the promissory notes as well as the disclosure statements
stipulated that the loan would earn 14% interest rate per annum, 2% service charge per
annum from due date.

Despite repeated demands for payment, the latest of which were on September 13,
2008 and September 9, 2006, on JC Santos and Enchong Dee, respectively,
respondent Bank claimed that the defendants failed and refused to settle their
obligation, resulting in a total indebtedness of P539,638.96 as of July 31, 1990, broken
down as follows:

     

Outstanding P50,000.00 P30,000.00

Balance
Add Past due charges for 4,199 days Past due charges for 4,253 days
(from 01-31-99 to 07-31-2010) (from 12-8-98 to 07-31-2010)

14% Interest P203,538.98 P125,334.41

2% Service P11,663.89 P7,088.34

Charge

12% Overdue P69,983.34 P42,530.00

Charge

Total P285,186.21 P174,952.75

Less: Charges P500.00 None

paid

Amount Due P334,686.21 P204,952.75

In his Answer, JC Santos only admitted to have secured a loan amounting to P80,000.
He pleaded though that the bank "be ordered to submit a more reasonable
computation" considering that there had been "no correct and reasonable statement of
account" sent to him by the bank, which was allegedly collecting excessive interest,
penalty charges, and attorney's fees despite knowledge that his business was
destroyed by fire, hence, he had no source of income for several years.

For his part, Enchong Dee filed an Answer with Counterclaim and Cross-claim.He
interposed the affirmative defenses that: the bank is not the real party in interest as it is
not the holder of the promissory notes, much less a holder for value or a holder in due
course; the bank knew that he did not receive any valuable consideration for affixing his
signatures on the notes but merely lent his name as an accommodation party; he
accepted the promissory notes in blank, with only the printed provisions and the
signature of JC Santos appearing therein; it was the bank which completed the notes
upon the orders, instructions, or representations of his co-defendant; Promissory note
amounting to P50,000 was completed in excess of or contrary to the authority given by
him to his co-defendant who represented that he would only borrow P30,000 from the
bank; his signature in promissory note amounting to P30,000 was procured through
fraudulent means when his co-defendant claimed that his first loan did not push
through; the promissory notes did not indicate in what capacity he was intended to be
bound; the bank granted his co-defendant successive extensions of time within which to
pay, without his (Enchong Dee) knowledge and consent; the bank imposed new and
additional stipulations on interest, penalties, services charges and attorney's fees more
onerous than the terms of the notes, without his knowledge and consent, in the absence
of legal and factual basis and in violation of the Usury Law; the bank caused the
inclusion in the promissory notes of stipulations such as waiver of presentment for
payment and notice of dishonor which are against public policy; and the notes had been
impaired since they were never presented for payment and demands were made only
several years after they fell due when his co-defendant could no longer pay them.

Regarding his counterclaim, Enchong Dee argued that by reason of the bank's acts or
omissions, it should be held liable for the amount of P50,000 for attorney's fees and
expenses of litigation. Furthermore, on his cross-claim against JC Santos, he averred
that he should be reimbursed by his co-defendant any and all sums that he may be
adjudged liable to pay, plus P30,000, P20,000 and P50,000 for moral and exemplary
damages, and attorney's fees, respectively.

In its Reply, respondent Bank countered that it is the real party in interest and is the
holder of the notes since the Equitable PCI Bank are its predecessors-in-interest.

The fact that Enchong Dee never received any moneys in consideration of the two (2)
loans and that such was known to the bank are immaterial because, as an
accommodation maker, he is considered as a solidary debtor who is primarily liable for
the payment of the promissory notes. Citing Section 29 of the Negotiable Instruments
Law (NIL), the bank posited that absence or failure of consideration is not a matter of
defense; neither is the fact that the holder knew him to be only an accommodation
party.

It was denied by the bank that there were extensions of time for payment accorded to
JC Santos. Granting that such were the case, it said that the same would not relieve
Tomas Ang from liability as he would still be liable for the whole obligation less the
share of his co-debtor who received the extended term.

The bank also asserted that there were no additional or new stipulations imposed other
than those agreed upon. The penalty charge, service charge, and attorney's fees were
reflected in the amendments to the promissory notes and disclosure statements.
Reference to the Usury Law was misplaced as usury is legally non-existent; at present,
interest can be charged depending on the agreement of the lender and the borrower.

Lastly, the bank contended that the provisions on presentment for payment and notice
of dishonor were expressly waived by Enchong Dee and that such waiver is not against
public policy pursuant to Sections 82 (c) and 109 of the NIL. In fact, there is even no
necessity therefor since being a solidary debtor he is absolutely required to pay and
primarily liable on both promissory notes.

On October 19, 2010, the trial court issued a preliminary pre-trial order directing the
parties to submit their respective pre-trial guide. When JC Santos failed to submit his
brief, the bank filed an ex-parte motion to declare him in default..Per Order of November
23, 2010, the court granted the motion and set the ex-parte hearing for the presentation
of the bank's evidence. Despite Enchong Dee's motion to modify the Order so as to
exclude or cancel the ex-parte hearing based on then Sec. 4, Rule 18 of the old Rules
of Court, the hearing nonetheless proceeded.

Eventually, a decision was rendered by the trial court on February 21, 2011. For his
supposed bad faith and obstinate refusal despite several demands from the bank, JC
Santos was ordered to pay the principal amount of P80,000 plus 14% interest per
annum and 2% service charge per annum. The overdue penalty charge and attorney's
fees were, however, reduced for being excessive, thus:

WHEREFORE, judgment is rendered against defendant Enchong Dee and in favor of

plaintiff, ordering the former to pay the latter:

On the first cause of action:

1) the amount of P50,000.00 representing the principal obligation with 14% interest per
annum from June 27, 1983 with 2% service charge and 6% overdue penalty charges
per annum until fully paid;

2) P11,663.89 as accrued service charge; andcralawlibrary

3) P34,991.67 as accrued overdue penalty charge.

On the second cause of action:

1) the amount of P50,000.00 (sic) representing the principal account with 14% interest

from June 27, 1983 with 2% service charge and 6% overdue penalty charges per
annum until fully paid;

2) P7,088.34 representing accrued service charge;

3) P21,265.00 as accrued overdue penalty charge;

4) the amount of P10,000.00 as attorney's fees; andcralawlibrary

5) the amount of P620.00 as litigation expenses and to pay the costs.

SO ORDERED.

The decision became final and executory as no appeal was taken therefrom. Upon the
bank's ex-parte motion, the court accordingly issued a writ of execution on April 5, 2011.
Thereafter, on June 3, 2011, the court set the pre-trial conference between the bank
and Enchong Dee, who, in turn, filed a Motion to Dismiss on the ground of lack of
jurisdiction over the case in view of the alleged finality of the February 21, 2011
Decision. He contended that Sec. 4, Rule 18 of the old Rules sanctions only one
judgment in case of several defendants, one of whom is declared in default. Moreover,
in his Supplemental Motion to Dismiss, Enchong Dee maintained that he is released
from his obligation as a solidary guarantor and accommodation party because, by the
bank's actions, he is now precluded from asserting his cross-claim against JC Santos,
upon whom a final and executory judgment had already been issued.

The court denied the motion as well as the motion for reconsideration thereon. Enchong
Dee subsequently filed a Petition for Certiorari and prohibition before this Court, which,
however, resolved to refer the same to the Court of Appeals. In accordance with the
prayer of Enchong Dee, the appellate court promulgated its Decision on January 29,
2012, which annulled and set aside the portion of the Order dated November 23, 2010
setting the ex-parte presentation of the bank's evidence against JC Santos, the
Decision dated February 21, 2011 rendered against him based on such evidence, and
the Writ of Execution issued on April 5, 2011.

Trial then ensued between the bank and Enchong Dee. Upon the latter's motion during
the pre-trial conference, JC Santos was again declared in default for his failure to
answer the cross-claim within the reglementary period.

When Enchong was about to present evidence in his behalf, he filed a Motion for
Production of Documents, reasoning:

The bank is not a holder in due course when it accepted the [PNs] in blank.

- The real borrower is JC Santos which fact is known to the bank.

- That the PAYEE not being a holder in due course and knowing that defendant
Enchong Dee is merely an accommodation party, the latter may raise against such
payee or holder or successor-in-interest (of the notes) PERSONAL and EQUITABLE
DEFENSES such as FRAUD in INDUCEMENT, DISCHARGE ON NOTE, Application of
[Articles] 2079, 2080 and 1249 of the Civil Code, NEGLIGENCE in delaying collection
despite JC Santos's OVERDRAFT in C.A. No. 470, etc.

After the trial, Tomas Ang offered in evidence several documents, which included a
copy of the Trust Agreement between the Republic of the Philippines and the Asset
Privatization Trust, as certified by the notary public, and news clippings from the Manila
Bulletin dated May 18, 2014 and May 30, 2014. All the documentary exhibits were
admitted for failure of the bank to submit its comment to the formal offer. Thereafter,
Enchong Dee elected to withdraw his petition before the Court of Appeals, which was
then granted.

On January 5, 2016, the trial court rendered judgment against the bank, dismissing the
complaint for lack of cause of action. It held that:

Exh. "9" and its [sub-markings], the Trust Agreement dated 27 February 2007 for the
defense shows that: the Equitable Bank as of June 30, 2006 is one of BDO's or Banco
De Oro non-performing accounts for transfer; on February 27, 2007 through Deeds of
Transfer executed by and between the Banco De Oro and the National Government,
both financial institutions assigned, transferred and conveyed their non-performing
assets to the National Government; the National Government in turn and as TRUSTOR,
transferred, conveyed and assigned by way of trust unto the Asset Privatization Trust
said non-performing assets, [which] took title to and possession of, [to] conserve,
provisionally manage and dispose[,] of said assets identified for privatization or
disposition; one of the powers and duties of the APT with respect to trust properties
consisting of receivables is to handle the administration, collection and enforcement of
the receivables; to bring suit to enforce payment of the obligations or any installment
thereof or to settle or compromise any of such obligations, or any other claim or demand
which the government may have against any person or persons[.]

The Manila Bulletin news clippings dated May 18, 2014 and May 30, 2014, Exh. "9-A",
"9-B", "9-C", and "9-D", show that the Monetary Board of the Bangko Sentral ng
Pilipinas approved the rehabilitation plan of the Equitable PCI Bank. One main feature
of the rehabilitation plan included the financial assistance for the bank by the Philippine
Deposit Insurance Corporation (PDIC) by way of the purchase of AB Assets
worth P1.3945 billion subject to a buy-back arrangement over a 10 year period. The
PDIC had approved of the rehab scheme, which included the purchase of AB's bad
loans worth P1.86 at 25% discount. This will then be paid by AB within a 10-year period
plus a yield comparable to the prevailing market rates x x x.

Based then on the evidence presented by the defendant Enchong Dee, it would readily
appear that at the time this suit for Sum of Money was filed which was on August [28],
2010, the notes were held by the Asset Privatization Trust by virtue of the Deeds of
Transfer and Trust Agreement, which was empowered to bring suit to enforce payment
of the obligations. Consequently, defendant Enchong Dee has sufficiently established
that plaintiff at the time this suit was filed was not the holder of the notes to warrant the
dismissal of the complaint.

Was the trial court correct?

  No. It should deny the claims of the bank for service, penalty and overdue
charges as well as attorney's fees on the ground that the promissory notes made
no mention of such charges/fees.

Was Banco De Oro a holder in due course?

 Yes. The bank is a "holder" under Sec. 191 of the NIL. The Asset Privatization
Trust cannot be declared as the "holder" of the subject promissory notes for the
reason that it is neither the payee or indorsee of the notes in possession thereof
nor is it the bearer of said notes.

Based on additional information, was the court correct in its first decision?cra lawlibrary 

 Yes. the Court notes that these were the very same questions of fact raised on
appeal before the Court of Appeals, although at times couched in different terms
and explained more lengthily in the petition. Suffice it to say that the same, being
factual, have been satisfactorily passed upon and considered both by the trial
and appellate courts. It is doctrinal that only errors of law and not of fact are
reviewable by this Court in Petitions for Review on Certiorari under Rule 45 of the
Rules of Court. Save for the most cogent and compelling reason, it is not our
function under the rule to examine, evaluate or weigh the probative value of the
evidence presented by the parties all over again.

Was Enchong Dee an accommodation party?

 Yes.  Section 29 of the NIL defines an accommodation party as a person "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.The accommodation party is liable on the instrument to a holder for value
even though the holder, at the time of taking the instrument, knew him or her to
be merely an accommodation party, as if the contract was not for
accommodation.
The rule is that the intentional cancellation of a person secondarily liable results in the
discharge of the latter. With respect to an indorser, the holder's right to cancel his
signature is:

 limited to the case where the indorsement is not necessary to his title.

Notice of dishonor is not required to be given to the drawer in the following cases,

except

 Where the drawee is a minor

A bill of exchange states on its face: "One (1) month after sight, pay to the order of Mr.
R the amount of Php50,000.00, chargeable to the account of Mr. S. Signed, Mr. T." Mr.
S, the drawee, accepted the bill upon presentment by writing on it the words "I shall pay
Php30,000.00 three (3) months after sight." May he accept under such terms, which
varies the command in the bill of exchange?

 Yes, since a drawee accepts according to the tenor of his acceptance.

The following are functions of a negotiable instrument, choose the exception

 It extinguishes obligations if its delivery is accepted by the creditor.

A issued a negotiable bill of exchange payable to the order of B. Subsequent

indorsement are: B to D, D to E and E to F. When F presented the instrument for
acceptance, the drawee C dishonored the instrument. F gave notice of dishonor to D.
Later F indorsed the bill to G who likewise indorsed the bill to H, a holder in
due course. If the bill is again dishonored by non - acceptance in the hands of H, which
of the following is correct?

 The notice previously given to D take effect to the benefit of E, F, G and H

The requirements before payment can be considered as payment in due course are as

follows; except

 Payment made by the indorser where the instrument was previously accepted
for the honor of such indorser

Notice of dishonor is not required to be made in all cases. One instance where such
notice is not necessary is when the indorser is the one to whom the instrument is
suppose to be presented for payment. The rationale here is that the indorser

 Already knows of the dishonor and it makes no sense to notify him of it

Ordinary acceptance as distinguished from acceptance for honor

 Consent of the holder is necessary

Which of the following is not a requirement for the sufficiency of presentment for

payment?

 There must be a previous notice of dishonor to the parties secondarily liable

except if notice is excused

May the indorsee of a promissory note indorsed to him "for deposit" file a suit against
the indorser?

 Yes, as long as the indorser received value for the restrictive indorsement.

If a negotiable promissory note is not presented for payment and presentment is not

excused, which of the following is correct?

 Neither the maker nor the indorser is discharged because the holder can still give
notice of dishonor

X executed a promissory note in favor of Y by way of accommodation. It says: "Pay to Y

or order the amount of Php50,000.00. Signed, X." Y then indorsed the note to Z, and Z
to T. When T sought collection from Y, the latter countered as indorser that there should
have been a presentment first to the maker who dishonors it. Is Y correct?

  No, since Y is the real debtor and thus, there is no need for presentment for
payment and dishonor by the maker.

To whom notice of dishonor should be given?

Answer 1 - Where the parties to be notified are partners, notice to anyone partner is

notice to the firm,
even though there has been dissolution

Answer 2 - Notice to persons jointly liable who are partners must be given to each of

them unless one of them has authority to receive such notice for the others

 Only answer I is correct

A transfer of negotiable instrument where the holder of the instrument dies and his title
thereto is transferred to his heirs or personal representative

 By operation of law
If notice was given by or on behalf of the holder, who will be benefited by such notice of
dishonor?

Answer 1 - All subsequent holders

Answer 2 - All prior parties who have a right of recourse against the party to
whom notice is given

 Both answers are correct