No.

88-CA-0525 November 10, 1988

SCHULINGKAMP vs. AICKLEN

(Landmark Case)

FACTS:

In this case, defendants Doris and William Aicklen

executed a promissory note to plaintiff Helener
Schulingkamp for a certain amount dated November 15,
1984 for the offer to purchase a real estate. On December
21, 1984, the defendants withdrew their offer to purchase
the property. However, plaintiff allegedly accepted the offer
on December 26, 1984 and notified the defendants through
her attorney. Plaintiff then filed a case for the collection of
the consideration pursuant to the note. The matter was
elevated to the Commissioner which rendered a report that
the defendant already withdrew their offer before the
plaintiff accepted it; and that the promissory note does not
have any consideration or value. The trial court affirmed the
decision of the Commissioner and dismissed the case;
hence, this appeal.

ISSUES:

Whether or not the presumption that the instrument

was given for a sufficient consideration applicable in this
case

RULING:

No. It is apparent that the note does not have any

consideration or value. It is settled that in a case involving a
promissory note, there is a presumption that the instrument
was issued for value or consideration; however, once the
maker casts uncertainty to the issuance of the
consideration, the payee has the burden to prove such
consideration by preponderance of evidence.

In the instant case, the defendant alleged that there is

lack of consideration to the note because the offer was not
accepted before they withdrew it. The agreement between
the defendant and plaintiff clearly shows that mere delivery
of the documents did not signify such acceptance of the
offer because the note itself consists of a notation that “as
soon as the contract has been signed by the seller”; hence,
it would not bind the parties. Also, according to the plaintiff,
they even shake hands on the agreement; though, it does
not suggest an acceptance of the offer. Hence, the plaintiff
failed to prove the existence of the consideration of the note
issued to him. Therefore, the presumption that the
instrument was given for a sufficient consideration or value
is not applicable to this case.
CONTRIBUTED BY:
UCOL, JEAN PAULINE I.

G.R. NO. 170782 JUNE 22, 2009

SIAIN ENTERPRISES INC., petitioner, -vs-

CUPERTINO REALTY CORP. and EDWIN CATACUTAN,
respondents

(Case in Favor of Respondent)

FACTS:

In this case, petitioner Siain obtained a loan with the

amount of 37 million from respondent Cupertino which is
covered by a promissory note signed by both of their
representatives, Cua Le Leng and Wilfredo Lua. It also
provides that it is a non-bearing loan. The note allows
Cupertino to place in escrow the loan proceeds with
Metropolitan Bank to pay off petitioners loan obligation with
the Development Bank of the Philippines; such loan was
secured by a real estate mortgage. Thereafter, an
amendment to increase the interest to 17% per annum was
made in the promissory note which was agreed by both
parties. The petitioner then paid the loan with 7,895,039.08
and leaves a balance of 29,014,960.92.

After some time, Cua Le Leng executed another

promissory note in favor of Cupertino for 160 million stating
that as a co-maker, she is liable in her personal capacity;
also, an amendment to the real estate mortgage was made
as to the amount of the loan secured from 37million to
197million. However, Cupertino failed and refused to
release the additional 160million loan with no apparent
reason. After repeated demands by petitioner Siain, the
respondent Cupertino still refuses to release the amount of
160million; this prompted petitioner Siain to pay the
remaining balance of the first loan in order to discharge the
same. However, respondent Cupertino refused the
acceptance thereof stating that the first payment of
7,895,039.05 was applied as payment for the interest due
thereon. Then, without the knowledge of petitioner Siain,
respondent Cupertino made arrangements for the
foreclosure of the real estate mortgage even if he does not
have any right to foreclose the same.

A complaint was then filed with the RTC by the

petitioner Siain for the implementation of interest despite
being non-bearing interest loan and the unauthorized
foreclosure of the real estate mortgage. Respondent
Cupertino answered that there was an interest made which
is 17% per annum and that they already received the
amount of the loan prior to the execution of the promissory
note and the amendment of the real estate mortgage. The
parties failed to settle the matter, hence, trial ensued and
the presentation of oral and documentary evidences was
conducted. After trial, the RTC ruled in favor of the
respondent Cupertino and ordered the petitioner Siain to
pay the corresponding damages. On appeal, CA affirmed the
ruling of the RTC that petitioner Siain failed to overcome
the evidence presented by Cupertino that the amended real
estate mortgage had a consideration; hence, this appeal was
filed by petitioner Siain insisting on the nullity of the
amended real estate mortgage.

ISSUE:

Whether or not the real estate mortgage was given for

a sufficient consideration

RULING:

Yes. The real estate mortgage was given for a sufficient

consideration because it suggests the indebtedness of
petitioner Siain to respondent Cupertino. As settled by the
Rules of Court, specifically, Rule 131, Section 3 specifies
that a disputable presumption is satisfactory if not rebutted
and not overcome by the evidence. In relation thereto,
paragraphs (r) and (s) thereof and Section 24 of the
Negotiable Instruments Law read:
 SEC. 3. Disputable presumptions. The following
presumptions are satisfactory if uncontradicted,
but may be contradicted and overcome by other
evidence:

xxxx

(r) That there was sufficient consideration for a

contract;

(s) That a negotiable instrument was given or

indorsed for a sufficient consideration;

xxx

SEC. 24. Presumption of consideration. Every

negotiable instrument is deemed prima facie to
have been issued for a valuable consideration;
and every person whose signature appears
thereon to have become a party thereto for value.

In the instant case, the petitioner is the one who

brought the suit against the respondent; therefore, it had
the burden of proof to establish its claim against the latter.
The evidence presented only consisted of bare denial of the
transaction made. Hence, for failure to rebut the evidences
presented by the respondent Cupertino, the presumption
that a consideration was given to the instrument used
prevails.

CONTRIBUTED BY:

UCOL, JEAN PAULINE I.

G.R. NO.L-56169 JUNE 26, 1992

TRAVEL-ON, INC., petitioner, vs. COURT OF APPEALS

and ARTURO S. MIRANDA, respondents.

(Case in favor of Petitioner)

FACTS:

In this case, petitioner Travel-On is a travel agency

was selling tickets on commission basis for and in behalf of
different airlines, and private respondent Miranda procured
those tickets from the petitioner and derived commissions
therefrom. Private respondent bought several tickets from
the petitioner and the payment was made in cash and in
kind, resulting to the issuance of 6 post-dated checks which
was all dishonored by the drawee banks. Sometime in June
1972, petitioner filed a suit with the CFI (now RTC) against
the private respondent for the collection of the amount of
115,000 due from the checks issued. Thereafter, it was
reduced to 105,000 after the private respondent paid
10,000. However, private respondent denied having balance
from the petitioner and further alleged that all was fully
paid and he even overpaid his obligation, and that the post-
dated checks were issued for purposes of accommodation.

The trial court ruled in favor of the private respondent

and ordered petitioner to pay for the corresponding
damages; furthermore, the indebtedness was not
satisfactorily established because the post-dated checks
were merely issued for the purposes of accommodation. A
motion for reconsideration was filed but was denied by the
trial court. On appeal, the CA affirmed the decision of the
trial court; hence, this petition for review.

ISSUE:

Whether or not the checks were issued for a

consideration

RULING:

Yes. The checks were issued for a consideration. In this

case, the appellate court erred when it did not give
importance to the post-dated checks because it clearly
established private respondents indebtedness to petitioner.
It is settled that a check which is regular on its face is
deemed prima facie to have been issued for a valuable
consideration; hence, by mere presentation of the
instrument entitles the other party for recovery. Also, it is
provided under the Rules of Court, specifically, Rule 131,
Section 3 specifies that a disputable presumption is
satisfactory if not rebutted and not overcome by the
evidence. In relation thereto, paragraphs (r) and (s) thereof
and Section 24 of the Negotiable Instruments Law read:
 SEC. 3. Disputable presumptions. The following
presumptions are satisfactory if uncontradicted,
but may be contradicted and overcome by other
evidence:

xxxx

(r) That there was sufficient consideration for a

contract;

(s) That a negotiable instrument was given or

indorsed for a sufficient consideration;

xxx

SEC. 24. Presumption of consideration. Every

negotiable instrument is deemed prima facie to
have been issued for a valuable consideration;
and every person whose signature appears
thereon to have become a party thereto for value.

Also, the appellate court placed the burden of proving

the existence of valuable consideration to the petitioner;
however, it cannot prosper because the private respondent
has the burden of proof that he had indeed issued the
checks without sufficient consideration. This court found
that the private respondent failed to rebut satisfactorily
such presumption; hence, the private respondent was
ordered to pay the petitioner for the indebtedness due
thereon plus its interest.
CONTRIBUTED BY:

UCOL, JEAN PAULINE I.

NO. 27827 APRIL 8, 1929

GIBBONS vs. LONGINO and REID

(Landmark Case)

FACTS:

A case was filed by Gibbons against Longino Reid, a

firm of A.C. Longino and Sam Reid, based on the three
promissory notes in the sum of fifty dollars each, which is
dated February 26, 1925. The three notes were identical
except for the dates of maturity which are April 26, June 26,
and August 26, 1925, respectively. These notes are payable
to J.A. Boyd, and are indorsed on the back by him. It is not
unclear that the maturity dates were written after they were
signed and delivered to Boyd. The interest rate was left
blank and was filled in by the number eight after execution
and delivery. The same handwriting as the maturity dates of
the notes was apparent in the alteration regarding the
attorney’s fees because the ten percent was substituted by
the word reasonable. Gibbons testified that the notes
presented in the Court were the same as he received them.
It is also not disputed that the value of the notes were paid,
without knowledge regarding its infirmity, two days after
their execution. On defense, they argued that Gibbons was
not a holder for due course because there is difference in
the color of the ink and it seemed to be fresh, hence, the
notes were not indorsed by Boyd before the maturity
thereof. The justice court rendered judgment in favor of the
appellees; however it was reversed in the county court. It
was again appealed to the circuit court where it affirmed
the ruling of the county court. Hence, this appeal.

ISSUE:
 Whether or not the instrument was indorsed before it
was overdue

RULING:

Yes. An indorsement of a negotiable instrument was

made before the instrument was overdue. It is settled that
what constitutes a holder for value to that effect it must be
complete and regular in its face; that he became the holder
before it was overdue, without notice of its dishonor; that he
took it in good faith for value; and that he had no notice of
any infirmity in the instrument. A holder in due course is
also entitled to the recovery based on the instrument; also,
where the notes were negotiated within reasonable time,
two days after the date of their execution, holder thereof in
due course in good faith was regarded as having acquired
them before they became overdue.

In the present case, the notes and the evidence

presented by Gibbons suggest that there is no bad faith
present. Also, there is a presumption that the indorsement
was effected before the instrument was overdue together
with the positive testimony of the holder; such presumption
could not be overcome by appearance of ink indorsement on
the back of the note. Hence, the court was not warranted in
finding that there was transfer without indorsement.
CONTRIBUTED BY:

UCOL, JEAN PAULINE I.

G.R. No. 17230 March 17, 1922

JOSE VELASCO, plaintiff-appelle, vs. TAN LIUAN &

CO., TAN LIUAN, UY TENGPIAO, and AW YONG
CHIOW SOO, defendants. AW YONG CHIOW
SOO, appellant.

(Case in favor of the plaintiff)

FACTS:

This case involves four promissory notes which are

executed by Defendant Tan Liuan and Co. to defendant Aw
Yong Chiow Soo. Defendant Aw Yong Chiow Soo then
executed a bill of exchange or sight draft for the amount of
33,500 Yen in favor of the Philippine National Bank;
however, it was refused to be cashed. It was only cashed by
the bank upon the indorsement of the plaintiff Velasco, in
which he is induced and he has no part in it, all the money
was paid to Tan Liuan and Co. The plaintiff also executed a
promissory note in favor of the PNB because the subject
draft was dishonored when presented.

Tan Liuan on his statement allege that he will pay

Velasco for the request to indorse the draft and all the
expenses accrued thereon; Velasco also stated that if Aw
Yong Chiow Soo shall pay the amount of the draft he will be
released from his responsibility and he will reassign the
claim to Aw Yong Chiow Soo, however if he be obliged to
pay such responsibility, she will received the claim assigned
to him; and Aw Yong Chiow Soo stated that he assign,
transfer, and delivers the four promissory notes against Tan
Liuan and Co. At the maturity of the promissory notes, they
were duly presented to Tan Liuan and Co.; and that payment
was refused. Defendant Aw Yong Chiow Soo was duly
informed regarding the refusal; however, he made a general
denial and further alleged that the sight draft was for the
purpose of accommodation only, pursuant to the agreement,
and it was indorsed by the plaintiff Velasco.

The trial court then ruled against the defendant Tan

Liuan and Co. and Tan Liuan and Uy Tengpiao for the full
amount of the note; and that Velasco should receive
reasonable amount to compensate him as an indorser of the
draft and the excess would be delivered to defendant Aw
Yong Chiow Soo. On appeal, Aw Yong Chiow Soon allege
that the trial court erred in its judgment regarding the four
promissory notes.

ISSUE:

Whether or not the instrument was indorsed before it

was overdue

RULING:

No. This case should be governed by the law on

negotiable instrument. In this case, Aw Yong Chiow Soo is
not a qualified indorser; hence, he should be liable under
the law. It is apparent that the defendant Aw Yong Chiow
Soo indorsed the notes after it was already overdue and at
the time when the agreements were signed. He also knew
that Tan LIuan and Co. is insolvent and that the
presentation of such notes would be not have been
accepted. It is not disputed in the presentation of evidence
that the first two notes was already presented and
dishonored before it was indorsed. Hence, the statements
made by Aw Yong Chiow and Tan Liuan and Co were not
contended to discharge any liability as an indorser.
Therefore, the negotiable instrument in this case is indorsed
after it was overdue.

CONTRIBUTED BY:

UCOL, JEAN PAULINE I.

NO. 8516 JANUARY 29, 1918

METROPOLITAN DISCOUNT CO. vs. DAVIS

(Case in Favor of Plaintiff)

FACTS:

This case involves five negotiable bills of acceptance

payable to order of National Novelty Import Company. The
plaintiff corporation assert that they are the owner and
holder of the bills which are issued for valuable
consideration and by due indorsement before maturity;
however the defendant denied the contention of the
plaintiff. Thereafter, the defendant amended his answer and
stated that bills were transferred and indorsed for a
valuable consideration before it is overdue. It is also stated
that the said bill is pursuant to the agreement between the
defendant and National Novelty Import Company for the
purchase of certain articles of jewelries; and that damages
was sustained by the defendant for breach of contract. As
evidence presented, the payee then indorse the bill of
acceptance to the plaintiff for a valuable consideration. The
trial court then ruled in favor of the defendant and refused
to declare the plaintiff an innocent purchaser for value and
holder in due course; hence, this appeal.

ISSUE:

Whether or not the instrument is indorsed before its

maturity

RULING:

Yes. It is settled that except where an indorsement

bears a date after the maturity of the instrument, every
negotiation is deemed prima facie to have been effected
before the instrument was overdue. In the instant case, the
indorsement bears no date, hence, they must be presumed
to have been made before its maturity. The defendant failed
to rebut such presumption because there was no evidence
presented. He only presented evidence which shows that
the indorsements were made by the use of a rubber stamp;
however, it was not sufficient. It will only be sufficient if
such indorsement was made by the authority of the payee,
and there is no presumption of want of such authority when
the indorsee in a suit on the instrument alleges due
indorsement such allegation being taken as true, unless the
denial is proven.

CONTRIBUTED BY:

UCOL, JEAN PAULINE I.