EN BANC

G.R. No. L-15126 November 30, 1961

VICENTE R. DE OCAMPO & CO., plaintiff-appellee,

vs.
ANITA GATCHALIAN, ET AL., defendants-appellants.

Vicente Formoso, Jr. for plaintiff-appellee.

Reyes and Pangalañgan for defendants-appellants.

LABRADOR, J.:

Appeal from a judgment of the Court of First Instance of Manila, Hon. Conrado M. Velasquez,
presiding, sentencing the defendants to pay the plaintiff the sum of P600, with legal interest from
September 10, 1953 until paid, and to pay the costs.

The action is for the recovery of the value of a check for P600 payable to the plaintiff and drawn
by defendant Anita C. Gatchalian. The complaint sets forth the check and alleges that plaintiff
received it in payment of the indebtedness of one Matilde Gonzales; that upon receipt of said
check, plaintiff gave Matilde Gonzales P158.25, the difference between the face value of the
check and Matilde Gonzales' indebtedness. The defendants admit the execution of the check but
they allege in their answer, as affirmative defense, that it was issued subject to a condition, which
was not fulfilled, and that plaintiff was guilty of gross negligence in not taking steps to protect
itself.

At the time of the trial, the parties submitted a stipulation of facts, which reads as follows:

Plaintiff and defendants through their respective undersigned attorney's respectfully submit the
following Agreed Stipulation of Facts;

First. — That on or about 8 September 1953, in the evening, defendant Anita C. Gatchalian who
was then interested in looking for a car for the use of her husband and the family, was shown and
offered a car by Manuel Gonzales who was accompanied by Emil Fajardo, the latter being
personally known to defendant Anita C. Gatchalian;

Second. — That Manuel Gonzales represented to defend Anita C. Gatchalian that he was duly
authorized by the owner of the car, Ocampo Clinic, to look for a buyer of said car and to negotiate
for and accomplish said sale, but which facts were not known to plaintiff;

Third. — That defendant Anita C. Gatchalian, finding the price of the car quoted by Manuel
Gonzales to her satisfaction, requested Manuel Gonzales to bring the car the day following
together with the certificate of registration of the car, so that her husband would be able to see
same; that on this request of defendant Anita C. Gatchalian, Manuel Gonzales advised her that the
owner of the car will not be willing to give the certificate of registration unless there is a showing
that the party interested in the purchase of said car is ready and willing to make such purchase and
that for this purpose Manuel Gonzales requested defendant Anita C. Gatchalian to give him
(Manuel Gonzales) a check which will be shown to the owner as evidence of buyer's good faith in
the intention to purchase the said car, the said check to be for safekeeping only of Manuel
Gonzales and to be returned to defendant Anita C. Gatchalian the following day when Manuel
Gonzales brings the car and the certificate of registration, but which facts were not known to
plaintiff;

Fourth. — That relying on these representations of Manuel Gonzales and with his assurance that
said check will be only for safekeeping and which will be returned to said defendant the following
day when the car and its certificate of registration will be brought by Manuel Gonzales to
defendants, but which facts were not known to plaintiff, defendant Anita C. Gatchalian drew and
issued a check, Exh. "B"; that Manuel Gonzales executed and issued a receipt for said check, Exh.
"1";

Fifth. — That on the failure of Manuel Gonzales to appear the day following and on his failure to
bring the car and its certificate of registration and to return the check, Exh. "B", on the following
day as previously agreed upon, defendant Anita C. Gatchalian issued a "Stop Payment Order" on
the check, Exh. "3", with the drawee bank. Said "Stop Payment Order" was issued without
previous notice on plaintiff not being know to defendant, Anita C. Gatchalian and who
furthermore had no reason to know check was given to plaintiff;

Sixth. — That defendants, both or either of them, did not know personally Manuel Gonzales or
any member of his family at any time prior to September 1953, but that defendant Hipolito
Gatchalian is personally acquainted with V. R. de Ocampo;

Seventh. — That defendants, both or either of them, had no arrangements or agreement with the
Ocampo Clinic at any time prior to, on or after 9 September 1953 for the hospitalization of the
wife of Manuel Gonzales and neither or both of said defendants had assumed, expressly or
impliedly, with the Ocampo Clinic, the obligation of Manuel Gonzales or his wife for the
hospitalization of the latter;

Eight. — That defendants, both or either of them, had no obligation or liability, directly or
indirectly with the Ocampo Clinic before, or on 9 September 1953;

Ninth. — That Manuel Gonzales having received the check Exh. "B" from defendant Anita C.
Gatchalian under the representations and conditions herein above specified, delivered the same to
the Ocampo Clinic, in payment of the fees and expenses arising from the hospitalization of his
wife;

Tenth. — That plaintiff for and in consideration of fees and expenses of hospitalization and the
release of the wife of Manuel Gonzales from its hospital, accepted said check, applying P441.75
(Exhibit "A") thereof to payment of said fees and expenses and delivering to Manuel Gonzales the
amount of P158.25 (as per receipt, Exhibit "D") representing the balance on the amount of the said
check, Exh. "B";

Eleventh. — That the acts of acceptance of the check and application of its proceeds in the manner
specified above were made without previous inquiry by plaintiff from defendants:

Twelfth. — That plaintiff filed or caused to be filed with the Office of the City Fiscal of Manila, a
complaint for estafa against Manuel Gonzales based on and arising from the acts of said Manuel
Gonzales in paying his obligations with plaintiff and receiving the cash balance of the check, Exh.
"B" and that said complaint was subsequently dropped;

Thirteenth. — That the exhibits mentioned in this stipulation and the other exhibits submitted
previously, be considered as parts of this stipulation, without necessity of formally offering them
in evidence;

WHEREFORE, it is most respectfully prayed that this agreed stipulation of facts be admitted and
that the parties hereto be given fifteen days from today within which to submit simultaneously
their memorandum to discuss the issues of law arising from the facts, reserving to either party the
right to submit reply memorandum, if necessary, within ten days from receipt of their main
memoranda. (pp. 21-25, Defendant's Record on Appeal).

No other evidence was submitted and upon said stipulation the court rendered the judgment
already alluded above.

In their appeal defendants-appellants contend that the check is not a negotiable instrument, under
the facts and circumstances stated in the stipulation of facts, and that plaintiff is not a holder in due
course. In support of the first contention, it is argued that defendant Gatchalian had no intention to
transfer her property in the instrument as it was for safekeeping merely and, therefore, there was
no delivery required by law (Section 16, Negotiable Instruments Law); that assuming for the sake
of argument that delivery was not for safekeeping merely, delivery was conditional and the
condition was not fulfilled.

In support of the contention that plaintiff-appellee is not a holder in due course, the appellant
argues that plaintiff-appellee cannot be a holder in due course because there was no negotiation
prior to plaintiff-appellee's acquiring the possession of the check; that a holder in due course
presupposes a prior party from whose hands negotiation proceeded, and in the case at bar,
plaintiff-appellee is the payee, the maker and the payee being original parties. It is also claimed
that the plaintiff-appellee is not a holder in due course because it acquired the check with notice of
defect in the title of the holder, Manuel Gonzales, and because under the circumstances stated in
the stipulation of facts there were circumstances that brought suspicion about Gonzales'
possession and negotiation, which circumstances should have placed the plaintiff-appellee under
the duty, to inquire into the title of the holder. The circumstances are as follows:

The check is not a personal check of Manuel Gonzales. (Paragraph Ninth, Stipulation of Facts).
Plaintiff could have inquired why a person would use the check of another to pay his own debt.
Furthermore, plaintiff had the "means of knowledge" inasmuch as defendant Hipolito Gatchalian
is personally acquainted with V. R. de Ocampo (Paragraph Sixth, Stipulation of Facts.).

The maker Anita C. Gatchalian is a complete stranger to Manuel Gonzales and Dr. V. R. de
Ocampo (Paragraph Sixth, Stipulation of Facts).

The maker is not in any manner obligated to Ocampo Clinic nor to Manuel Gonzales. (Par. 7,
Stipulation of Facts.)

The check could not have been intended to pay the hospital fees which amounted only to P441.75.
The check is in the amount of P600.00, which is in excess of the amount due plaintiff. (Par. 10,
Stipulation of Facts).

It was necessary for plaintiff to give Manuel Gonzales change in the sum P158.25 (Par. 10,
Stipulation of Facts). Since Manuel Gonzales is the party obliged to pay, plaintiff should have
been more cautious and wary in accepting a piece of paper and disbursing cold cash.

The check is payable to bearer. Hence, any person who holds it should have been subjected to
inquiries. EVEN IN A BANK, CHECKS ARE NOT CASHED WITHOUT INQUIRY FROM
THE BEARER. The same inquiries should have been made by plaintiff. (Defendants-appellants'
brief, pp. 52-53)

Answering the first contention of appellant, counsel for plaintiff-appellee argues that in
accordance with the best authority on the Negotiable Instruments Law, plaintiff-appellee may be
considered as a holder in due course, citing Brannan's Negotiable Instruments Law, 6th edition,
page 252. On this issue Brannan holds that a payee may be a holder in due course and says that to
this effect is the greater weight of authority, thus:

Whether the payee may be a holder in due course under the N. I. L., as he was at common law, is a
question upon which the courts are in serious conflict. There can be no doubt that a proper
interpretation of the act read as a whole leads to the conclusion that a payee may be a holder in
due course under any circumstance in which he meets the requirements of Sec. 52.

The argument of Professor Brannan in an earlier edition of this work has never been successfully
answered and is here repeated.

Section 191 defines "holder" as the payee or indorsee of a bill or note, who is in possession of it,
or the bearer thereof. Sec. 52 defendants defines a holder in due course as "a holder who has taken
the instrument under the following conditions: 1. That it is complete and regular on its face. 2.
That he became the holder of it before it was overdue, and without notice that it had been
previously dishonored, if such was the fact. 3. That he took it in good faith and for value. 4. 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."
Since "holder", as defined in sec. 191, includes a payee who is in possession the word holder in
the first clause of sec. 52 and in the second subsection may be replaced by the definition in sec.
191 so as to read "a holder in due course is a payee or indorsee who is in possession," etc.
(Brannan's on Negotiable Instruments Law, 6th ed., p. 543).

The first argument of the defendants-appellants, therefore, depends upon whether or not the
plaintiff-appellee is a holder in due course. If it is such a holder in due course, it is immaterial that
it was the payee and an immediate party to the instrument.

The other contention of the plaintiff is that there has been no negotiation of the instrument,
because the drawer did not deliver the instrument to Manuel Gonzales with the intention of
negotiating the same, or for the purpose of giving effect thereto, for as the stipulation of facts
declares the check was to remain in the possession Manuel Gonzales, and was not to be
negotiated, but was to serve merely as evidence of good faith of defendants in their desire to
purchase the car being sold to them. Admitting that such was the intention of the drawer of the
check when she delivered it to Manuel Gonzales, it was no fault of the plaintiff-appellee drawee if
Manuel Gonzales delivered the check or negotiated it. As the check was payable to the plaintiff-
appellee, and was entrusted to Manuel Gonzales by Gatchalian, the delivery to Manuel Gonzales
was a delivery by the drawer to his own agent; in other words, Manuel Gonzales was the agent of
the drawer Anita Gatchalian insofar as the possession of the check is concerned. So, when the
agent of drawer Manuel Gonzales negotiated the check with the intention of getting its value from
plaintiff-appellee, negotiation took place through no fault of the plaintiff-appellee, unless it can be
shown that the plaintiff-appellee should be considered as having notice of the defect in the
possession of the holder Manuel Gonzales. Our resolution of this issue leads us to a consideration
of the last question presented by the appellants, i.e., whether the plaintiff-appellee may be
considered as a holder in due course.

Section 52, Negotiable Instruments Law, defines holder in due course, thus:

A holder in due course is a holder who has taken the instrument under the following conditions:

(a) That it is complete and regular upon its face;

(b) That he became the holder of it before it was overdue, and without notice that it had been
previously dishonored, if such was the fact;

(c) That he took it in good faith and for value;

(d) 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.

The stipulation of facts expressly states that plaintiff-appellee was not aware of the circumstances
under which the check was delivered to Manuel Gonzales, but we agree with the defendants-
appellants that the circumstances indicated by them in their briefs, such as the fact that appellants
had no obligation or liability to the Ocampo Clinic; that the amount of the check did not
correspond exactly with the obligation of Matilde Gonzales to Dr. V. R. de Ocampo; and that the
check had two parallel lines in the upper left hand corner, which practice means that the check
could only be deposited but may not be converted into cash — all these circumstances should have
put the plaintiff-appellee to inquiry as to the why and wherefore of the possession of the check by
Manuel Gonzales, and why he used it to pay Matilde's account. It was payee's duty to ascertain
from the holder Manuel Gonzales what the nature of the latter's title to the check was or the nature
of his possession. Having failed in this respect, we must declare that plaintiff-appellee was guilty
of gross neglect in not finding out the nature of the title and possession of Manuel Gonzales,
amounting to legal absence of good faith, and it may not be considered as a holder of the check in
good faith. To such effect is the consensus of authority.

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. Paika v. Perry,
225 Mass. 563, 114 N.E. 830.

It is sufficient that the buyer of a note had notice or knowledge that the note was in some way
tainted with fraud. It is not necessary that he should know the particulars or even the nature of the
fraud, since all that is required is knowledge of such facts that his action in taking the note
amounted bad faith. Ozark Motor Co. v. Horton (Mo. App.), 196 S.W. 395. Accord. Davis v. First
Nat. Bank, 26 Ariz. 621, 229 Pac. 391.

Liberty bonds stolen from the plaintiff were brought by the thief, a boy fifteen years old, less than
five feet tall, immature in appearance and bearing on his face the stamp a degenerate, to the
defendants' clerk for sale. The boy stated that they belonged to his mother. The defendants paid the
boy for the bonds without any further inquiry. Held, the plaintiff could recover the value of the
bonds. The term 'bad faith' does not necessarily involve furtive motives, but means bad faith in a
commercial sense. The manner in which the defendants conducted their Liberty Loan department
provided an easy way for thieves to dispose of their plunder. It was a case of "no questions asked."
Although gross negligence does not of itself constitute bad faith, it is evidence from which bad
faith may be inferred. The circumstances thrust the duty upon the defendants to make further
inquiries and they had no right to shut their eyes deliberately to obvious facts. Morris v. Muir, 111
Misc. Rep. 739, 181 N.Y. Supp. 913, affd. in memo., 191 App. Div. 947, 181 N.Y. Supp. 945."
(pp. 640-642, Brannan's Negotiable Instruments Law, 6th ed.).

The above considerations would seem sufficient to justify our ruling that plaintiff-appellee should
not be allowed to recover the value of the check. Let us now examine the express provisions of the
Negotiable Instruments Law pertinent to the matter to find if our ruling conforms thereto. Section
52 (c) provides that a holder in due course is one who takes the instrument "in good faith and for
value;" Section 59, "that every holder is deemed prima facie to be a holder in due course;" and
Section 52 (d), that in order that one may be a holder in due course it is necessary that "at the time
the instrument was negotiated to him "he had no notice of any . . . defect in the title of the person
negotiating it;" and lastly Section 59, that every holder is deemed prima facieto be a holder in due
course.

In the case at bar the rule that a possessor of the instrument is prima faciea holder in due course
does not apply because there was a defect in the title of the holder (Manuel Gonzales), because the
instrument is not payable to him or to bearer. On the other hand, the stipulation of facts indicated
by the appellants in their brief, like the fact that the drawer had no account with the payee; that the
holder did not show or tell the payee why he had the check in his possession and why he was
using it for the payment of his own personal account — show that holder's title was defective or
suspicious, to say the least. As holder's title was defective or suspicious, it cannot be stated that the
payee acquired the check without knowledge of said defect in holder's title, and for this reason the
presumption that it is a holder in due course or that it acquired the instrument in good faith does
not exist. And having presented no evidence that it acquired the check in good faith, it (payee)
cannot be considered as a holder in due course. In other words, under the circumstances of the
case, instead of the presumption that payee was a holder in good faith, the fact is that it acquired
possession of the instrument under circumstances that should have put it to inquiry as to the title
of the holder who negotiated the check to it. The burden was, therefore, placed upon it to show
that notwithstanding the suspicious circumstances, it acquired the check in actual good faith.

The rule applicable to the case at bar is that described in the case of Howard National Bank v.
Wilson, et al., 96 Vt. 438, 120 At. 889, 894, where the Supreme Court of Vermont made the
following disquisition:

Prior to the Negotiable Instruments Act, two distinct lines of cases had developed in this country.
The first had its origin in Gill v. Cubitt, 3 B. & C. 466, 10 E. L. 215, where the rule was distinctly
laid down by the court of King's Bench that the purchaser of negotiable paper must exercise
reasonable prudence and caution, and that, if the circumstances were such as ought to have excited
the suspicion of a prudent and careful man, and he made no inquiry, he did not stand in the legal
position of a bona fide holder. The rule was adopted by the courts of this country generally and
seem to have become a fixed rule in the law of negotiable paper. Later in Goodman v. Harvey, 4 A.
& E. 870, 31 E. C. L. 381, the English court abandoned its former position and adopted the rule
that nothing short of actual bad faith or fraud in the purchaser would deprive him of the character
of a bona fide purchaser and let in defenses existing between prior parties, that no circumstances
of suspicion merely, or want of proper caution in the purchaser, would have this effect, and that
even gross negligence would have no effect, except as evidence tending to establish bad faith or
fraud. Some of the American courts adhered to the earlier rule, while others followed the change
inaugurated in Goodman v. Harvey. The question was before this court in Roth v. Colvin, 32 Vt.
125, and, on full consideration of the question, a rule was adopted in harmony with that
announced in Gill v. Cubitt, which has been adhered to in subsequent cases, including those cited
above. Stated briefly, one line of cases including our own had adopted the test of the reasonably
prudent man and the other that of actual good faith. It would seem that it was the intent of the
Negotiable Instruments Act to harmonize this disagreement by adopting the latter test. That such is
the view generally accepted by the courts appears from a recent review of the cases concerning
what constitutes notice of defect. Brannan on Neg. Ins. Law, 187-201. To effectuate the general
purpose of the act to make uniform the Negotiable Instruments Law of those states which should
enact it, we are constrained to hold (contrary to the rule adopted in our former decisions) that
negligence on the part of the plaintiff, or suspicious circumstances sufficient to put a prudent man
on inquiry, will not of themselves prevent a recovery, but are to be considered merely as evidence
bearing on the question of bad faith. See G. L. 3113, 3172, where such a course is required in
construing other uniform acts.

It comes to this then: When the case has taken such shape that the plaintiff is called upon to prove
himself a holder in due course to be entitled to recover, he is required to establish the conditions
entitling him to standing as such, including good faith in taking the instrument. It devolves upon
him to disclose the facts and circumstances attending the transfer, from which good or bad faith in
the transaction may be inferred.

In the case at bar as the payee acquired the check under circumstances which should have put it to
inquiry, why the holder had the check and used it to pay his own personal account, the duty
devolved upon it, plaintiff-appellee, to prove that it actually acquired said check in good faith. The
stipulation of facts contains no statement of such good faith, hence we are forced to the conclusion
that plaintiff payee has not proved that it acquired the check in good faith and may not be deemed
a holder in due course thereof.

For the foregoing considerations, the decision appealed from should be, as it is hereby, reversed,
and the defendants are absolved from the complaint. With costs against plaintiff-appellee.

Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and De Leon, JJ.,
concur.
Bengzon, C.J., concurs in the result.

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Philippine Supreme Court Jurisprudence > Year 2003 > August 2003 Decisions > G.R. No.
138074 August 15, 2003 - CELY YANG v. COURT OF APPEALS, ET AL.:
PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

[G.R. No. 138074. August 15, 2003.]

CELY YANG, Petitioner, v. HON. COURT OF APPEALS, PHILIPPINE COMMERCIAL

INTERNATIONAL BANK, FAR EAST BANK & TRUST CO., EQUITABLE BANKING
CORPORATION, PREM CHANDIRAMANI and FERNANDO DAVID, Respondents.

DECISION

QUISUMBING, J.:

For review on certiorari is the decision 1 of the Court of Appeals, dated March 25, 1999, in CA-
G.R. CV No. 52398, which affirmed with modification the joint decision of the Regional Trial
Court (RTC) of Pasay City, Branch 117, dated July 4, 1995, in Civil Cases Nos. 5479 2 and 5492.
3 The trial court dismissed the complaint against herein respondents Far East Bank & Trust
Company (FEBTC), Equitable Banking Corporation (Equitable), and Philippine Commercial
International Bank (PCIB) and ruled in favor of respondent Fernando David as to the proceeds of
the two cashier’s checks, including the earnings thereof pendente lite. Petitioner Cely Yang was
ordered to pay David moral damages of P100,000.00 and attorney’s fees also in the amount of
P100,000.00.chanrob1es virtua1 1aw 1ibrary

The facts of this case are not disputed, to wit:chanrob1es virtual 1aw library

On or before December 22, 1987, petitioner Cely Yang and private respondent Prem
Chandiramani entered into an agreement whereby the latter was to give Yang a PCIB manager’s
check in the amount of P4.2 million in exchange for two (2) of Yang’s manager’s checks, each in
the amount of P2.087 million, both payable to the order of private respondent Fernando David.
Yang and Chandiramani agreed that the difference of P26,000.00 in the exchange would be their
profit to be divided equally between them.

Yang and Chandiramani 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
Chandiramani would exchange for another dollar draft in the same amount to be issued by Hang
Seng Bank Ltd. of Hong Kong.

Accordingly, on December 22, 1987, Yang procured the following:chanrob1es virtual 1aw library
a) Equitable Cashier’s Check No. CCPS 14-009467 in the sum of P2,087,000.00, dated
December 22, 1987, payable to the order of Fernando David;

b) FEBTC Cashier’s Check No. 287078, in the amount of P2,087,000.00, dated December 22,
1987, likewise payable to the order of Fernando David; and

c) FEBTC Dollar Draft No. 4771, drawn on Chemical Bank, New York, in the amount of
US$200,000.00, dated December 22, 1987, payable to PCIB FCDU Account No. 4195-01165-2.

At about one o’clock in the afternoon of the same day, Yang gave the aforementioned cashier’s
checks and dollar drafts to her business associate, Albert Liong, to be delivered to Chandiramani
by Liong’s messenger, Danilo Ranigo. Ranigo was to meet Chandiramani at Philippine Trust
Bank, Ayala Avenue, Makati City, Metro Manila where he would turn over Yang’s cashier’s
checks and dollar draft to Chandiramani who, in turn, would deliver to Ranigo 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.

Chandiramani did not appear at the rendezvous and Ranigo allegedly lost the two cashier’s checks
and the dollar draft bought by petitioner. Ranigo reported the alleged loss of the checks and the
dollar draft to Liong at half past four in the afternoon of December 22, 1987. Liong, in turn,
informed Yang, and the loss was then reported to the police.

It transpired, however, that the checks and the dollar draft were not lost, for Chandiramani 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 Chandiramani and Ranigo were to
meet in Makati City, Chandiramani delivered to respondent Fernando David at China Banking
Corporation branch in San Fernando City, Pampanga, the following: (a) FEBTC Cashier’s Check
No. 287078, dated December 22, 1987, in the sum of P2.087 million; and (b) Equitable Cashier’s
Check No. CCPS 14-009467, dated December 22, 1987, also in the amount of P2.087 million. In
exchange, Chandiramani got US$360,000.00 from David, which Chandiramani deposited in the
savings account of his wife, Pushpa Chandiramani; and his mother, Rani Reynandas, who held
FCDU Account No. 124 with the United Coconut Planters Bank branch in Greenhills, San Juan,
Metro Manila. Chandiramani also deposited FEBTC Dollar Draft No. 4771, dated December 22,
1987, 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, Yang 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, 1987, herein petitioner Yang lodged a Complaint 4 for injunction and damages
against Equitable, Chandiramani, and David, 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 Yang the
amount of P2.087 million, with interest thereon until fully paid. 5

On January 12, 1988, Yang filed a separate case for injunction and damages, with prayer for a writ
of preliminary injunction against FEBTC, PCIB, Chandiramani and David, 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 Yang 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, 1988, upon the filing of a bond by Yang, 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 David 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. David 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:chanrob1es virtual 1aw
library

1. Who, between David and Yang, 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, 1987, and Far East Bank and Trust Company (FEBTC) Cashier’s Check No.
287078 in the sum of P2,087,000.00 dated December 22, 1987, together with the earnings derived
therefrom pendente lite?

2. Are the defendants FEBTC and PCIB solidarily liable to Yang for having allowed the
encashment of FEBTC Dollar Draft No. 4771, in the sum of US$200,000.00 plus interest thereon
despite the stop payment order of Cely Yang? 7

On July 4, 1995, the trial court handed down its decision in Civil Cases Nos. 5479 and 5492, to
wit:chanrob1es virtual 1aw library
WHEREFORE, the Court renders judgment in favor of defendant Fernando David against the
plaintiff Cely Yang and declaring the former entitled to the proceeds of the two (2) cashier’s
checks, together with the earnings derived therefrom pendente lite; ordering the plaintiff to pay the
defendant Fernando David moral damages in the amount of P100,000.00; attorney’s fees in the
amount of P100,000.00 and to pay the costs. The complaint against Far East Bank and Trust
Company (FEBTC), Philippine Commercial International Bank (PCIB) and Equitable Banking
Corporation (EBC) is dismissed. The decision is without prejudice to whatever action plaintiff
Cely Yang will file against defendant Prem Chandiramani for reimbursement of the amounts
received by him from defendant Fernando David.

SO ORDERED. 8

In finding for David, the trial court ratiocinated:chanrob1es virtual 1aw library

The evidence shows that defendant David was a holder in due course for the reason that the
cashier’s checks were complete on their face when they were negotiated to him. They were not yet
overdue when he became the holder thereof and he had no notice that said checks were previously
dishonored; he took the cashier’s checks in good faith and for value. He parted some $200,000.00
for the two (2) cashier’s checks which were given to defendant Chandiramani; he had also no
notice of any infirmity in the cashier’s checks or defect in the title of the drawer. As a matter of
fact, he asked the manager of the China Banking Corporation to inquire as to the genuineness of
the cashier’s checks (tsn, February 5, 1988, p. 21, September 20, 1991, pp. 13–14). Another proof
that defendant David is a holder in due course is the fact that the stop payment order on [the]
FEBTC cashier’s check was lifted upon his inquiry at the head office (tsn, September 20, 1991,
pp. 24–25). The apparent reason for lifting the stop payment order was because of the fact that
FEBTC realized that the checks were not actually lost but indeed reached the payee defendant
David. 9

Yang then moved for reconsideration of the RTC judgment, but the trial court denied her motion in
its Order of September 20, 1995.

In the belief that the trial court misunderstood the concept of a holder in due course and
misapprehended the factual milieu, Yang seasonably filed an appeal with the Court of Appeals,
docketed as CA-G.R. CV No. 52398.

On March 25, 1999, the appellate court decided CA-G.R. CV No. 52398 in this wise:chanrob1es
virtual 1aw library

WHEREFORE, this court AFFIRMS the judgment of the lower court with modification and
hereby orders the plaintiff-appellant to pay defendant-appellant PCIB the amount of Twenty-Five
Thousand Pesos (P25,000.00).

SO ORDERED. 10
In affirming the trial court’s judgment with respect to herein respondent David, the appellate court
found that:chanrob1es virtual 1aw library

In this case, defendant-appellee had taken the necessary precautions to verify, through his bank,
China Banking Corporation, the genuineness of whether (sic) the cashier’s checks he received
from Chandiramani. As no stop payment order was made yet (at) the time of the inquiry,
defendant-appellee had no notice of what had transpired earlier between the plaintiff-appellant and
Chandiramani. All he knew was that the checks were issued to Chandiramani with whom he was
he had (sic) a transaction. Further on, David received the checks in question in due course because
Chandiramani, who at the time the checks were delivered to David, was acting as Yang’s agent.

David had no notice, real or constructive, cogent for him to make further inquiry as to any
infirmity in the instrument(s) and defect of title of the holder. To mandate that each holder inquire
about every aspect on how the instrument came about will unduly impede commercial
transactions, Although negotiable instruments do not constitute legal tender, they often take the
place of money as a means of payment.

The mere fact that David and Chandiramani knew one another for a long time is not sufficient to
establish that they connived with each other to defraud Yang. There was no concrete proof
presented by Yang to support her theory. 11

The appellate court awarded P25,000.00 in attorney’s fees to PCIB as it found the action filed by
Yang against said bank to be "clearly unfounded and baseless." Since PCIB was compelled to
litigate to protect itself, then it was entitled under Article 2208 12 of the Civil Code to attorney’s
fees and litigation expenses.

Hence, the instant recourse wherein petitioner submits the following issues for
resolution:chanrob1es virtual 1aw library

a WHETHER THE CHECKS WERE ISSUED TO PREM CHANDIRAMANI BY

PETITIONER;

b WHETHER THE ALLEGED TRANSACTION BETWEEN PREM CHANDIRAMANI

AND FERNANDO DAVID IS LEGITIMATE OR A SCHEME BY BOTH PRIVATE
RESPONDENTS TO SWINDLE PETITIONER;

c WHETHER FERNANDO DAVID GAVE PREM CHANDIRAMANI US$360,000.00 OR

JUST A FRACTION OF THE AMOUNT REPRESENTING HIS SHARE OF THE LOOT;

d WHETHER PRIVATE RESPONDENTS FERNANDO DAVID AND PCIB ARE

ENTITLED TO DAMAGES AND ATTORNEY’S FEES. 13

At the outset, we must stress that this is a petition for review under Rule 45 of the 1997 Rules of
Civil Procedure. It is basic that in petitions for review under Rule 45, the jurisdiction of this Court
is limited to reviewing questions of law, questions of fact are not entertained absent a showing that
the factual findings complained of are totally devoid of support in the record or are glaringly
erroneous. 14 Given the facts in the instant case, despite petitioner’s formulation, we find that the
following are the pertinent issues to be resolved:chanrob1es virtual 1aw library

a) Whether the Court of Appeals erred in holding herein respondent Fernando David to be a
holder in due course; and

b) Whether the appellate court committed a reversible error in awarding damages and attorney’s
fees to David and PCIB.

On the first issue, petitioner Yang contends that private respondent Fernando David is not a holder
in due course of the checks in question. While it is true that he was named the payee thereof,
David failed to inquire from Chandiramani about how the latter acquired possession of said
checks. Given his failure to do so, it cannot be said that David was unaware of any defect or
infirmity in the title of Chandiramani to the checks at the time of their negotiation. Moreover,
inasmuch as the checks were crossed, then David should have, pursuant to our ruling in Bataan
Cigar & Cigarette Factory, Inc. v. Court of Appeals, G.R. No. 93048, March 3, 1994, 230 SCRA
643, been put on guard that the checks were issued for a definite purpose and accordingly, made
inquiries to determine if he received the checks pursuant to that purpose. His failure to do so
negates the finding in the proceedings below that he was a holder in due course.

Finally, the petitioner argues that there is no showing whatsoever that David gave Chandiramani
any consideration of value in exchange for the aforementioned checks.

Private respondent Fernando David counters that the evidence on record shows that when he
received the checks, he verified their genuineness with his bank, and only after said verification
did he deposit them. David stresses that he had no notice of previous dishonor or any infirmity that
would have aroused his suspicions, the instruments being complete and regular upon their face.
David stresses that the checks in question were cashier’s checks. From the very nature of cashier’s
checks, it is highly unlikely that he would have suspected that something was amiss. David also
stresses negotiable instruments are presumed to have been issued for valuable consideration, and
he who alleges otherwise must controvert the presumption with sufficient evidence. The petitioner
failed to discharge this burden, according to David. He points out that the checks were delivered to
him as the payee, and he took them as holder and payee thereof. Clearly, he concludes, he should
be deemed to be their holder in due course.

We shall now resolve the first issue.

Every holder of a negotiable instrument is deemed prima facie a holder in due course. However,
this presumption arises only in favor of a person who is a holder as defined in Section 191 of the
Negotiable Instruments Law, 15 meaning a "payee or indorsee of a bill or note, who is in
possession of it, or the bearer thereof."cralaw virtua1aw library
In the present case, it is not disputed that David was the payee of the checks in question. The
weight of authority sustains the view that a payee may be a holder in due course. 16 Hence, the
presumption that he is a prima facie holder in due course applies in his favor. However, said
presumption may be rebutted. Hence, what is vital to the resolution of this issue is whether David
took possession of the checks under the conditions provided for in Section 52 17 of the Negotiable
Instruments Law. All the requisites provided for in Section 52 must concur in David’s case,
otherwise he cannot be deemed a holder in due course.

We find that the petitioner’s challenge to David’s status as a holder in due course hinges on two
arguments: (1) the lack of proof to show that David tendered any valuable consideration for the
disputed checks; and (2) David’s failure to inquire from Chandiramani as to how the latter
acquired possession of the checks, thus resulting in David’s intentional ignorance tantamount to
bad faith. In sum, petitioner posits that the last two requisites of Section 52 are missing, thereby
preventing David from being considered a holder in due course. Unfortunately for the petitioner,
her arguments on this score are less than meritorious and far from persuasive.

First, with respect to consideration, Section 24 18 of the Negotiable Instruments Law creates a
presumption that every party to an instrument acquired the same for a consideration 19 or for
value. 20 Thus, the law itself creates a presumption in David’s favor that he gave valuable
consideration for the checks in question. In alleging otherwise, the petitioner has the onus to prove
that David got hold of the checks absent said consideration. In other words, the petitioner must
present convincing evidence to overthrow the presumption. Our scrutiny of the records, however,
shows that the petitioner failed to discharge her burden of proof. The petitioner’s averment that
David did not give valuable consideration when he took possession of the checks is unsupported,
devoid of any concrete proof to sustain it. Note that both the trial court and the appellate court
found that David did not receive the checks gratis, but instead gave Chandiramani US$360,000.00
as consideration for the said instruments. Factual findings of the Court of Appeals are conclusive
on the parties and not reviewable by this Court; they carry great weight when the factual findings
of the trial court are affirmed by the appellate court. 21

Second, petitioner fails to point any circumstance which should have put David on inquiry as to
the why and wherefore of the possession of the checks by Chandiramani. David was not privy to
the transaction between petitioner and Chandiramani. Instead, Chandiramani and David had a
separate dealing in which it was precisely Chandiramani’s duty to deliver the checks to David as
payee. The evidence shows that Chandiramani performed said task to the letter. Petitioner admits
that David took the step of asking the manager of his bank to verify from FEBTC and Equitable as
to the genuineness of the checks and only accepted the same after being assured that there was
nothing wrong with said checks. At that time, David was not aware of any "stop payment" order.
Under these circumstances, David thus had no obligation to ascertain from Chandiramani what the
nature of the latter’s title to the checks was, if any, or the nature of his possession. Thus, we cannot
hold him guilty of gross neglect amounting to legal absence of good faith, absent any showing that
there was something amiss about Chandiramani’s acquisition or possession of the checks. David
did not close his eyes deliberately to the nature or the particulars of a fraud allegedly committed
by Chandiramani upon the petitioner, absent any knowledge on his part that the action in taking
the instruments amounted to bad faith. 22

Belatedly, and we say belatedly since petitioner did not raise this matter in the proceedings below,
petitioner now claims that David should have been put on alert as the instruments in question were
crossed checks. Pursuant to Bataan Cigar & Cigarette Factory, Inc. v. Court of Appeals, David
should at least have inquired as to whether he was acquiring said checks for the purpose for which
they were issued, according to petitioner’s submission.

Petitioner’s reliance on the Bataan Cigar case, however, is misplaced. The facts in the present case
are not on all fours with Bataan Cigar. In the latter case, the crossed checks were negotiated and
sold at a discount by the payee, while in the instant case, the payee did not negotiate further the
checks in question but promptly deposited them in his bank account.

The Negotiable Instruments Law is silent with respect to crossed checks, although the Code of
Commerce 23 makes reference to such instruments. Nonetheless, this Court has taken judicial
cognizance of the practice that a check with two parallel lines in the upper left hand corner means
that it could only be deposited and not converted into cash. 24 The effects of crossing a check,
thus, relates to the mode of payment, meaning that the drawer had intended the check for deposit
only by the rightful person, i.e., the payee named therein. In Bataan Cigar, the rediscounting of the
check by the payee knowingly violated the avowed intention of crossing the check. Thus, in
accepting the cross checks and paying cash for them, despite the warning of the crossing, the
subsequent holder could not be considered in good faith and thus, not a holder in due course. Our
ruling in Bataan Cigar reiterates that in De Ocampo & Co. v. Gatchalian.25cralaw:red

The factual circumstances in De Ocampo and in Bataan Cigar are not present in this case. For
here, there is no dispute that the crossed checks were delivered and duly deposited by David, the
payee named therein, in his bank account. In other words, the purpose behind the crossing of the
checks was satisfied by the payee.

Proceeding to the issue of damages, petitioner merely argues that respondents David and PCIB are
not entitled to damages, attorney’s fees, and costs of suit as both acted in bad faith towards her, as
shown by her version of the facts which gave rise to the instant case.

Respondent David counters that he was maliciously and unceremoniously dragged into this suit
for reasons which have nothing to do with him at all, but which arose from petitioner’s failure to
receive her share of the profit promised her by Chandiramani. Moreover, in filing this suit which
has lasted for over a decade now, the petitioner deprived David of the rightful enjoyment of the
two checks, to which he is entitled, under the law, compelled him to hire the services of counsel to
vindicate his rights, and subjected him to social humiliation and besmirched reputation, thus
harming his standing as a person of good repute in the business community of Pampanga. David
thus contends that it is but proper that moral damages, attorney’s fees, and costs of suit be awarded
him.
For its part, respondent PCIB stresses that it was established by both the trial court and the
appellate court that it was needlessly dragged into this case. Hence, no error was committed by the
appellate court in declaring PCIB entitled to attorney’s fees as it was compelled to litigate to
protect itself.

We have thoroughly perused the records of this case and find no reason to disagree with the
finding of the trial court, as affirmed by the appellate court, that:chanrob1es virtual 1aw library

[D]efendant David is entitled to [the] award of moral damages as he has been needlessly and
unceremoniously dragged into this case which should have been brought only between the
plaintiff and defendant Chandiramani. 26

A careful reading of the findings of facts made by both the trial court and appellate court clearly
shows that the petitioner, in including David as a party in these proceedings, is barking up the
wrong tree. It is apparent from the factual findings that David had no dealings with the petitioner
and was not privy to the agreement of the latter with Chandiramani. Moreover, any loss which the
petitioner incurred was apparently due to the acts or omissions of Chandiramani, and hence, her
recourse should have been against him and not against David. By needlessly dragging David into
this case all because he and Chandiramani knew each other, the petitioner not only unduly delayed
David from obtaining the value of the checks, but also caused him anxiety and injured his business
reputation while waiting for its outcome. Recall that under Article 2217 27 of the Civil Code,
moral damages include mental anguish, serious anxiety, besmirched reputation, wounded feelings,
social humiliation, and similar injury. Hence, we find the award of moral damages to be in order.

The appellate court likewise found that like David, PCIB was dragged into this case on unfounded
and baseless grounds. Both were thus compelled to litigate to protect their interests, which makes
an award of attorney’s fees justified under Article 2208 (2) 28 of the Civil Code. Hence, we rule
that the award of attorney’s fees to David and PCIB was proper.

WHEREFORE, the instant petition is DENIED. The assailed decision of the Court of Appeals,
dated March 25, 1999, in CA-G.R. CV No. 52398 is AFFIRMED. Costs against the
petitioner.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.

Bellosillo, Austria-Martinez and Tinga, JJ., concur.

Callejo, Sr., J., is on leave.

Endnotes:

1. Penned by Associate Justice Bernardo P. Abesamis with Associate Justices Jainal D. Rasul
and Conchita Carpio Morales (now a member of this Court) concurring. See Rollo, pp. 95–108.
2. The case is entitled "Cely Yang v. Equitable Banking Corporation, Prem Chandiramani, and
Fernando David." See Rollo, pp. 38–41.

3. Entitled "Cely Yang v. Far East Bank & Trust Company, Philippine Commercial and
International Bank, Prem Chandiramani, and Fernando David." See Rollo, pp. 42–46.

4. Records, Vol. I, pp. 1–4.

5. Id. at 8.

6. Id. at 141.

7. Rollo, p. 84.

8. CA Rollo, p. 131.

9. Id. at 195–196.

10. Id. at 462.

11. Id. at 456.

12. ART. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:chanrob1es virtual 1aw library

(1) When exemplary damages are awarded;

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons
or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing the plaintiff’s plainly
valid, just, and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers, and skilled workers;

(8) In actions for indemnity under workmen’s compensation and employer’s liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney’s fees and expenses
of litigation should be recovered.

In all cases, the attorney’s fees and expenses of litigation must be reasonable.

13. Rollo, p. 230.

14. Producers Bank of the Phil. v. Court of Appeals, 417 Phil. 646, 656 (2001).

15. Fossum v. Fernandez Hermanos, 44 Phil. 713, 716 (1923).

16. Merchants’ National Bank v. Smith, 59 Mont. 280, 196 P. 523, 15 ALR 430; Boston Steel &
Iron Co. v. Steur, 183 Mass. 140, 66 NE 646.

17. SEC. 52. What constitutes a holder in due course. — A holder in due course is a holder who
has taken the instrument under the following conditions:chanrob1es virtual 1aw library

(a) That it is complete and regular upon its face;

(b) That he became the holder of it before it was overdue, and without notice that it has been
previously dishonored, if such was the fact;

(c) That he took it in good faith and for value;

(d) That at the time it was negotiated to him, he had no notice of any infirmity in the instrument
or defect of the title of the person negotiating it.

18. SEC. 24. Presumption of consideration. — 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.

19. SEC. 25. Value; What constitutes. — Value is any consideration sufficient to support a simple
contract. An antecedent or pre-existing debt constitutes value, and is deemed such whether the
instrument is payable on demand or at a future date.

20. SEC. 191. Definitions and meaning of terms. — In this Act, unless the context otherwise
requires:chanrob1es virtual 1aw library

x x x
"Value" means valuable consideration.

21. See Fernandez v. Fernandez, 416 Phil. 322, 337 (2001).

22. See Ozark Motor Co. v. Horton, 196 SW 395. See also Davis v. First National Bank, 26 Ariz.
621, 229 P. 391.

23. ART. 541. — The maker or any legal holder of a check shall be entitled to indicate therein
that it be paid to a certain banker or institution, which he shall do by writing across the face the
name of said banker or institution, or only the words "and company."cralaw virtua1aw library

24. State Investment House v. IAC, G.R. No. 72764, 13 July 1989, 175 SCRA 310, 315.

25. 113 Phil. 574 (1961). We held that under the following circumstances: (1) the drawer had no
account with the payee; (2) the check was crossed; (3) the crossed check was used to pay an
obligation which did not correspond to the amount of the check; and (4) the holder did not show or
tell the payee why he had the check in his possession and why he was using to pay his personal
account, then the payee had the duty to ascertain from the holder what the nature of the latter’s
title to the check was or the nature of his possession.

26. CA Rollo, p. 130.

27. ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar
injury. Though incapable of pecuniary computation, moral damages may be recovered if they are
the proximate result of the defendant’s wrongful act or omission.

28. See note 12.

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Philippine Supreme Court Jurisprudence > Year 1923 > February 1923 Decisions > G.R. No.
19397 February 16, 1923 - ASIA BANKING CORP. v. TEN SEN GUAN Y SOBRINOS, ET AL.

044 Phil 511:

PHILIPPINE SUPREME COURT DECISIONS

FIRST DIVISION

[G.R. No. 19397. February 16, 1923. ]

ASIA BANKING CORPORATION, Plaintiff-Appellant, v. TEN SEN GUAN Y SOBRINOS and

YU BIAO SONTUA, Defendants-Appellees.

J. A. Wolfson for Appellant.

Crossfield & O’Brien for Appellees.

SYLLABUS

1. BURDEN OF PROOF. — Where an action is brought on a New York draft payable ninety days
after sight by a foreign corporation against a local merchant, in which the plaintiff alleges that the
draft was duly endorsed and that it is owner and holder of it in due course of business, that
demand has been made and payment refused, and the answer makes a specific denial and pleads
an affirmative defense, the burden of proof is upon the plaintiff to prove by competent evidence
that the draft was duly endorsed and that it is the owner and holder of the draft in due course of
business.

2. WHEN PAROL EVIDENCE IS ADMISSIBLE. — Where a draft purports to have been drawn
for the value of ten cases of mercerized batiste to be shipped from New York and delivered to the
defendants in Manila, in the absence of competent proof that the plaintiff was the owner and
holder of the draft for value and in due course of business, to defeat defendant’s liability on the
draft parol testimony is admissible to show that the cases shipped contained nothing but "burlap"
of little value.

3. WHEN PLAINTIFF CANNOT RECOVER. — Where the proof tends to show that the plaintiff
held the draft for collection only, and that the acceptance of it by the defendants was conditional,
and that after such an acceptance the defendants refused to accept the goods evidenced by the
draft, which were returned to and accepted by the plaintiff, who agreed to release the defendants
from any liability, plaintiff cannot thereafter recover on the draft.

DECISION

STATEMENT

Plaintiff alleges that it is a foreign corporation duly licensed to do a banking business in the City
of Manila. That the defendant is a duly registered partnership with its principal office in the City
of Manila and is indebted to it in the sum of $10,475.51, with interest and exchange, for and on
account of a New York draft for that amount drawn by "Snow’s Ltd." on Ten Sen Guan payable
ninety days after sight. That the draft was duly endorsed, and that the plaintiff is the owner and
holder of it in due course of business. That demand therefor has been made and payment refused.
Wherefore, plaintiff prays for judgment against the defendants for the amount of the draft, with
interest thereon at the rate of 8 per cent annum from May 12, 1920, to the date of payment, plus
exchange at the rate of 14 per centum with costs. The complaint was filed August 4, 1921.

For answer, the defendants deny all of the material allegations of the complaint, except such as are
hereinafter admitted, and, as a further and separate defense, specifically deny that are indebted to
the plaintiff in the amount alleged or in any other sum, or that the plaintiff is the holder of the draft
in due course of business or for value. It is then alleged that on February 25, 1910, the defendants
ordered from "Snow’s, LTD." ten cases of mercerized batiste of the value $10,266.98 to be
shipped from New York freight prepaid to Manila where they were to be delivered to the
defendants. That the merchandise in question arrived in Manila about June 28,1920, at which time
a draft for the amount alleged drawn by "Snow’s, Ltd." against the defendants was presented to
them through the plaintiff as agent of Snow’s, Ltd." for acceptance. That the delivery of the bill of
landing and other documents relating to the merchandise was refused by the plaintiff until the draft
was accepted by the defendants, and that delivery was contingent upon the acceptance of the draft.
That the defendants, being assured by plaintiff, and believing that the merchandise described in
the bill of lading was the "batiste" ordered, accepted the draft and received delivery of the bill of
lading and made entry of the goods at the Customs House in Manila, and paid charges thereon
amounting to P628.07; that when the cases supposed to contain the "batiste" were opened they
were found to contain "burlap" of little value, which was not in any sense or manner the "batiste"
ordered and guaranteed to be contained in the cases. That immediately the defendants declined to
receive the goods and left them in the possession of the Customs authorities, and at once notified
the plaintiff and returned to it the bill of lading, and demanded that their acceptance of the draft be
cancelled. That plaintiff accepted the return of the bill of lading and documents, and agreed to
cancel defendants’ acceptance of the draft, for the reason that it was without consideration.
Wherefore, defendants pray for judgment, with costs.

The lower court found for the defendants for whom judgment was entered, and the plaintiff
appeals, claiming that the court erred in failing to make any findings of fact, in dismissing the
complaint, and in failing to render judgment for the plaintiff, and in the admission of parol
evidence tending to vary the terms of the written acceptance of the bill of exchange, that the
plaintiff had cancelled defendants’ acceptance, that defendants were released, and in the admission
of certain exhibits, and the denial of plaintiff’s motion for a new trial.

JOHNS, J. :

The draft in question was endorsed by "Snow’s, Ltd." and, with the invoice, bill of lading and
other shipping documents, delivered to the plaintiff at its place of business in New York City from
where and by which it was sent to its Manila branch and presented to the defendants for
acceptance. At first the defendants refused to accept the draft, because the merchandise had not
arrived and it had no opportunity to inspect it. It is then claimed, and, in legal effect, the trial court
found, that upon the representation of the local bank that the draft was drawn for the ten cases of
mercerized batiste in question and that they would arrive, as ordered, June 28, 1920, the
defendants accepted the draft, and the plaintiff now claims that they are legally bound upon the
acceptance, and that parol testimony is not admissible to vary or contradict the force and effect of
their legal liability as it appears upon the face of the draft. It is undisputed that the defendants
placed the order with "Snow’s, Ltd." for ten cases of mercerized batiste, and that draft was drawn
for the corresponding value of ten cases of mercerized batiste, including incidental expenses. That
when the cases evidenced by the draft arrived and were examined, they were found to contain
"burlap" only which had but little, if any, commercial value, which the plaintiff was at once
notified, and that the defendants refused to received the goods. Plaintiff alleges that it is the holder
of the draft for value and in due course of business. The testimony upon that point is not clear or
convincing, and is entitled to but little weight. If it be a fact, as the plaintiff claims, that it was in
good faith the purchaser of the draft, it would have been a very easy matter to establish that fact by
competent evidence, showing the nature of the transaction in its New York office, when and how it
acquired the draft and when and to whom it paid the money and how much it paid the money and
how much it paid and by whom it was actually paid. In other words, to give an authentic account
of the whole transactions. There is no such evidence in the record. Upon that point the plaintiff
was content to call a local employee of the bank who testified as to the alleged meaning of certain
entries made in the bank records. Standing alone that is not sufficient or competent to show that
standing alone that is not sufficient or competent to show that the bank in New York was the
purchaser and holder for value. If it be a fact, as the evidence tends to show, that the plaintiff is not
a bona fide holder of the draft, and that it was held for collection only, it follows that the
defendants would have a right to make any defense to the draft which would have a right to make
against "Snow’s Ltd."cralaw virtua1aw library

The trial court found and the evidenced sustains the finding that the acceptance of the draft by the
defendants was conditional, and that oral evidence was admissible to explain the terms and
conditions of the acceptance. That would specially be true where the plaintiff held the draft for
collection. It also found, in legal effect, that the plaintiff released and discharged the defendants
from any liability upon the draft, and the evidence sustains that finding. It will be noted that the
original draft was dated May 12, 1920, payable ninety days after sight, and that it was accepted by
the defendants on June 28, 1920, and that the complaint was filed on August 4, 1921, more than
fourteen months after it was accepted and almost one year after it became due.

We are not impressed with plaintiff’s case on the merits. The record indicates that in truth and in
fact the plaintiff held the draft for collection; that relying upon the statements and representations
of the plaintiff, the defendants conditionally accepted the draft; that immediately upon discovery
of the fraud the defendants promptly notified the bank. Its then officials recognized the fraud and
the conditional acceptance of the draft, and accepted the return of the papers and the "burlap," and
agreed to release the defendants from all liability. There is no merit in plaintiffs claim that it is an
innocent holder for value.

The judgment is affirmed, with costs. So ordered.

Araullo, C.J., Malcolm, Avanceña, Villamor, Ostrand, and Romualdez, JJ., concur.

Separate Opinions

STREET, J., concurring:chanrob1es virtual 1aw library

The gross fraud which has come to light in this case, consisting of the sending of jute to the
defendants upon a contract calling for mercerized batiste, must be imputed to the drawer of the
draft in question, that is, to Snow’s, Ltd., of New York City; for it must be assumed, in the absence
of proof to the contrary, that the cases arriving in this port upon the documents of shipment
transmitted through the bank are the same cases that were shipped from New York City by that
firm. This being true, it was a fraud on the part of Snow’s, Ltd., to negotiate the draft now in
question to the New York branch of the Asia Banking Corporation, the plaintiff in this case.

This fraud having been set up in the defendants’ answer and established by the proof, it became
incumbent upon the plaintiff in this case to prove that it occupies the position of a bona fide
purchaser of said draft for value and without notice. This requirement is not met by the
presumption which the law raises in favor of the holder of a negotiable instrument, arising from
the mere fact of the possession of the instrument and the form in which the document is indorsed.
The plaintiff must go further and prove, as a fact, that it is such a purchaser. Proof upon this point
is wanting in the record; and the judgment should therefore be affirmed, not precisely for the
reasons given by the trial judge, but because the document had its inception in fraud and the
plaintiff has filed to prove that it is an innocent purchaser for value and without notice. (Bills and
Notes, 8 C. J., 894.)

The reason for this salutary rule given by the courts in innumerable decisions is that the guilty
maker or holder of an instrument vitiated by fraud or illegality will naturally seek to put it in the
hands of some other person in order to cut off the defense to which the instrument is subject, and a
presumption arises against the bona fides of the transfer. The law therefore requires the holder of
such paper to manifest the most complete candor and show exactly the circumstances under which
the paper was acquired.

In section 59 of the Negotiable Instruments Law (act No. 2031), it is declared that every holder of
a negotiable instrument is deemed prima facie to be a holder in due course, but when it is shown
that the title of any person who has negotiated the instrument was defective, the burden is on the
holder to prove that he or some person under whom he claims acquired the title as holder in due
course. In section 55 of the same Law it is declared, among other things that the title of a person
who negotiates an instrument is defective when he negotiates it under such circumstances as
amount to a fraud. These provisions are clearly applicable to the present case, and in my opinion
they determine the issue against the plaintiff.

It Goetz v. Bank of Kansas City (119 U. S., 551; 30 L. ed., 515), relied on by the appellant, the
plaintiff bank had discounted at face value certain drafts which were accompanied by forged bills
of lading. The bank was admittedly in the position of an innocent purchaser for value and without
notice; and the Supreme Court of the United States held that it could recover on the defect in their
origin. In the present case we know nothing about the circumstances under which the branch of
the Asia Banking Corporation acquired the draft in question in New York City, for upon this point
the indorsements tell nothing, and no independent proof relative thereto has been submitted.

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February-1923 Jurisprudence

G.R. No. 19233 February 5, 1923 - PEOPLE OF THE PHIL. ISLANDS v. FORTUNATO
CANETE

044 Phil 478

G.R. No. 19676 February 7, 1923 - PEOPLE OF THE PHIL. ISLANDS v. GERARDO AGNIS

047 Phil 945

G.R. No. 18688 February 10, 1923 - PEOPLE OF THE PHIL. ISLANDS v. EUSEBIO C.
CAMACHO

044 Phil 484

G.R. No. 19205 February 13, 1923 - EDUARDO REYES CRISTOBAL v. JOSE M. OCSON

044 Phil 489

G.R. No. 19397 February 16, 1923 - ASIA BANKING CORP. v. TEN SEN GUAN Y
SOBRINOS, ET AL.

044 Phil 511

G.R. No. L-18666 February 17, 1923 - FLORENCIA VELAZQUEZ, ET AL. v. JUSTO
TEODORO, ET AL.

046 Phil 757

G.R. No. 19586 February 17, 1923 - PEOPLE OF THE PHIL. ISLANDS v. ANACLETO
TEMBREVILLA, ET AL.

044 Phil 517

G.R. No. 19539 February 20, 1923 - FRANCISCO SORIANO v. JUAN RAMIREZ

044 Phil 519

G.R. No. 19766 February 20, 1923 - LA CENTRAL DE LA CARLOTA v. ILDEFONSO

COSCOLLUELA
044 Phil 527

G.R. No. 19621 February 23, 1923 - UNION GUARANTEE CO. LTD. v. JING KEE & CO., ET
AL.

044 Phil 533

G.R. No. 19192 February 28, 1923 - PEOPLE OF THE PHIL. v. TEODORICO ANGELES, ET
AL.

044 Phil 539

G.R. No. 19192A February 28, 1923 - PEOPLE OF THE PHIL. v. MIGUEL G. CONCEPCION

044 Phil 544

G.R. No. L-19034 February 17, 1923 - PEOPLE OF THE PHIL. ISLANDS v. PEDRO
CRISOSTOMO, ET AL.

046 Phil 775

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Philippine Supreme Court Jurisprudence > Year 2016 > October 2016 Decisions > G.R. No.
219037, October 19, 2016 - RCBC SAVINGS BANK, Petitioner, v. NOEL M. ODRADA,
Respondent.:
G.R. No. 219037, October 19, 2016 - RCBC SAVINGS BANK, Petitioner, v. NOEL M.
ODRADA, Respondent.
PHILIPPINE SUPREME COURT DECISIONS

SECOND DIVISION

G.R. No. 219037, October 19, 2016

RCBC SAVINGS BANK, Petitioner, v. NOEL M. ODRADA, Respondent.

DECISION

CARPIO, J.:

The Case

Before the Court is a petition for review on certiorari1 assailing the 26 March 2014 Decision2 and
the 18 June 2015 Resolution3 of the Court of Appeals in CA-G.R. CV No. 94890.

The Facts

In April 2002, respondent Noel M. Odrada (Odrada) sold a secondhand Mitsubishi Montero
(Montero) to Teodoro L. Lim (Lim) for One Million Five Hundred Ten Thousand Pesos
(P1,510,000). Of the total consideration, Six Hundred Ten Thousand Pesos (P610,000) was
initially paid by Lim and the balance of Nine Hundred Thousand Pesos (P900,000) was financed
by petitioner RCBC Savings Bank (RCBC) through a car loan obtained by Lim.4 As a requisite
for the approval of the loan, RCBC required Lim to submit the original copies of the Certificate of
Registration (CR) and Official Receipt (OR) in his name. Unable to produce the Montero's OR
and CR, Lim requested RCBC to execute a letter addressed to Odrada informing the latter that his
application for a car loan had been approved.

On 5 April 2002, RCBC issued a letter that the balance of the loan would be delivered to Odrada
upon submission of the OR and CR. Following the letter and initial down payment, Odrada
executed a Deed of Absolute Sale on 9 April 2002 in favor of Lim and the latter took possession of
the Montero.5chanrobleslaw

When RCBC received the documents, RCBC issued two manager's checks dated 12 April 2002
payable to Odrada for Nine Hundred Thousand Pesos (P900,000) and Thirteen Thousand Five
Hundred Pesos (P13,500).6 After the issuance of the manager's checks and their turnover to
Odrada but prior to the checks' presentation, Lim notified Odrada in a letter dated 15 April 2002
that there was an issue regarding the roadworthiness of the Montero. The letter states:
chanRoblesvirtualLawlibrary
April 15, 2002

Mr. Noel M. Odrada

C/o Kotse Pilipinas
Fronting Ultra, Pasig City

Thru: Shan Mendez;.

Dear Mr. Odrada,

Please be inform[ed] that I am going to cancel or exchange the (1) one unit Montero that you sold
to me thru Mr. Shan Mendez because it did not match your representations the way Mr. Shan
Mendez explained to me like:ChanRoblesVirtualawlibrary
1. You told me that the said vehicle has not experience [d] collision. However, it is hidden, when
you open its engine cover there is a trace of a head-on collision. The condenser is smashed,; the
fender support is not align[ed], both bumper supports] connecting [the] chassis were crippled and
welded, the hood support was repaired, etc.

2. The 4-wheel drive shift is not functioning. When Mr. Mendez was asked about it, he said it
would not function until you can reach the speed of 30 miles.

3. During Mr. Mendez['s] representation, he said the odometer has still an original mileage data
but found tampered.

4. You represented the vehicle as model 1998 however; it is indicated in the front left A-pillar
inscribed at the identification plate [as] model 1997.
Therefore, please show your sincerity by personally inspecting the said vehicle at RCBC, Pacific
Bldg. Pearl Drive, Ortigas Center, Pasig City. Let us meet at the said bank at 10:00 A.M., April 17,
2002.

Meanwhile, kindly hold or do not encash the manager's check[s] issued to you by RCBC until you
have clarified and satisfied my complaints.

Sincerely yours,

Teodoro L. Lim

Cc: Dario E. Santiago, RCBC loan

Legal7
Odrada did not go to the slated meeting and instead deposited the manager's checks with
International Exchange Bank (Ibank) on 16 April 2002 and redeposited them on 19 April 2002 but
the checks were dishonored both times apparently upon Lim's instruction to RCBC.8
Consequently, Odrada filed a collection suit9 against Lim and RCBC in the Regional Trial Court
of Makati.10chanrobleslaw

In his Answer,11 Lim alleged that the cancellation of the loan was at his instance, upon discovery
of the misrepresentations by Odrada about the Montero's roadworthiness. Lim claimed that the
cancellation was not done ex parte but through a letter12 dated 15 April 2002.13 He further
alleged that the letter was delivered to Odrada prior to the presentation of the manager's checks to
RCBC.14chanrobleslaw

On the other hand, RCBC contended that the manager's checks were dishonored because Lim had
cancelled the loan. RCBC claimed that the cancellation of the loan was prior to the presentation of
the manager's checks. Moreover, RCBC alleged that despite notice of the defective condition of
the Montero, which constituted a failure of consideration, Odrada still proceeded with presenting
the manager's checks.

It was later disclosed during trial that RCBC also sent a formal notice of cancellation of the loan
on 18 April 2002 to both Odrada and Lim.15chanrobleslaw

The Regional Trial Court's Ruling

In its Decision16 dated 1 October 2009, the trial court ruled in favor of Odrada. The trial court
held that Odrada was the proper party to ask for rescission.17 The lower court reasoned that the
right of rescission is implied in reciprocal obligations where one party fails to perform what is
incumbent upon him when the other is willing and ready to comply. The trial court ruled that it
was not proper for Lim to exercise the right of rescission since Odrada had already complied with
the contract of sale by delivering the Montero while Lim remained delinquent in payment.18
Since Lim was not ready, willing, and able to comply with the contract of sale, he was not the
proper party entitled to rescind the contract.

The trial court ruled that the defective condition of the Montero was not a supervening event that
would justify the dishonor of the manager's checks. The trial court reasoned that a manager's
check is equivalent to cash and is really the bank's own check. It may be treated as a promissory
note with the bank as maker. Hence, the check becomes the primary obligation of the bank which
issued it and constitutes a written promise to pay on demand.19 Being the party primarily liable,
the trial court ruled that RCBC was liable to Odrada for the value of the manager's checks.

Finally, the trial court found that Odrada suffered sleepless nights, humiliation, and was
constrained to hire the services of a lawyer meriting the award of damages.20chanrobleslaw

The dispositive portion of the Decision reads:

chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, judgment is hereby rendered:ChanRoblesVirtualawlibrary
(a) Directing defendant RCBC to pay plaintiff the amount of Php 913,500.00 representing the cash
equivalent of the two (2) manager's checks, plus 12% interest from the date of filing of the case
until fully paid;

(b) Directing defendants to solidarity pay moral damages in the amount of Php 500,000.00 and
exemplary damages in the amount of Php 500,000.00;

(c) Directing defendants to solidarity pay attorney's fees in the amount of Php 300,000.00.
Finally, granting the cross-claim of defendant RCBC, Teodoro L. Lim is hereby directed to
indemnify RCBC Savings Bank for the amount adjudged for it to pay plaintiff.

SO ORDERED.21

RCBC and Lim appealed from the trial court's decision.

The Court of Appeals' Ruling

In its assailed 26 March 2014 Decision, the Court of Appeals dismissed the appeal and affirmed
the trial court's 1 October 2009 Decision.

The Court of Appeals ruled that the two manager's checks, which were complete and regular,
reached the hands of Lim who deposited the same in his bank account with Ibank. RCBC knew
that the amount reflected on the manager's checks represented Lim's payment for the remaining
balance of the Montero's purchase price. The appellate court held that when RCBC issued the
manager's checks in favor of Odrada, RCBC admitted the existence of the payee and his then
capacity to endorse, and undertook that on due presentment the checks which were negotiable
instruments would be accepted or paid, or both according to its tenor.22 The appellate court held
that the effective delivery of the checks to Odrada made RCBC liable for the
checks.23chanrobleslaw

On RCBC's defense of want of consideration, the Court of Appeals affirmed the finding of the trial
court that Odrada was a holder in due course. The appellate court ruled that the defense of want of
consideration is not available against a holder in due course.24chanrobleslaw

Lastly, the Court of Appeals found that the award of moral and exemplary damages and attorney's
fees was excessive. Hence, modification was proper.

The dispositive portion of the Decision reads:

chanRoblesvirtualLawlibrary
WHEREFORE, the impugned Decision of the court a quo in Civil Case No. 02-453 is hereby
AFFIRMED with MODIFICATION insofar as the reduction of awards for moral, exemplary
damages and attorney's fees to P50,000.00, P20,000.00, and P20,000.00 respectively.

SO ORDERED.25cralawred
RCBC and Lim filed a motion for reconsideration26 on 28 April 2014. In its 18 June 2015
Resolution, the Court of Appeals denied the motion for lack of merit.27chanrobleslaw

RCBC alone28 filed this petition before the Court. Thus, the decision of the Court of Appeals
became final and executory as to Lim.

The Issues

RCBC presented the following, issues in this petition:

chanRoblesvirtualLawlibrary
A. The court a quo gravely erred in finding that as between Odrada as seller and Lim as buyer of
the vehicle, only the former has the right to rescind the contract of sale finding failure to perform
an obligation under the contract of sale on the part of the latter only despite the contested
roadworthiness of the vehicle, subject matter of the sale.
1. Whether or not the court a quo erred in holding that Lim cannot cancel the auto loan despite the
failure in consideration due to the contested roadworthiness of the vehicle delivered by Odrada to
him.29
B. The court a quo gravely erred when it found that Odrada is a holder in due course of the
manager's checks in question despite being informed of the cancellation of the auto loan by the
borrower, Lim.
1. Whether or not Lim can validly countermand the manager's checks in the hands of a holder who
does not hold the same in due course.30

Odrada failed to file a comment31 within the period prescribed by this Court.32chanrobleslaw

The Ruling of this Court

We grant the petition.

Under the law on sales, a contract of sale is perfected the moment there is a meeting of the minds
upon the thing which is the object of the contract and upon the price which is the consideration.
From that moment, the parties may reciprocally demand performance.33 Performance may be
done through delivery, actual or constructive. Through delivery, ownership is transferred to the
vendee.34 However, the obligations between the parties do not cease upon delivery of the subject
matter. The vendor and vendee remain concurrently bound by specific obligations. The vendor, in
particular, is responsible for an implied warranty against hidden defects.

Article 1547 of the Civil Code states: "In a contract of sale, unless a contrary intention appears,
there is an implied warranty that the thing shall be free from any hidden faults or defects."35
Article 1566 of the Civil Code provides that "the vendor is responsible to the vendee for any
hidden faults or defects in the thing sold, even though he was not aware thereof."36 As a
consequence, the law fixes the liability of the vendor for hidden defects whether known or
unknown to him at the time of the sale.

The law defines a hidden defect as one which would render the thing sold unfit for the use for
which it is intended, or would diminish its fitness for such use to such an extent that, had the
vendee been aware thereof, he would not have acquired it or would have given a lower price for
it.37chanrobleslaw

In this case, Odrada and Lim entered into a contract of sale of the Montero. Following the initial
downpayment and execution of the deed of sale, the Montero was delivered by Odrada to Lim and
the latter took possession of the Montero. Notably, under the law, Odrada's warranties against
hidden defects continued even after the Montero's delivery. Consequently, a misrepresentation as
to the Montero's roadworthiness constitutes a breach of warranty against hidden defects.

In Supercars Management & Development Corporation v. Flores,38 we held that a breach of

warranty against hidden defects occurred when the vehicle, after it was delivered to respondent,
malfunctioned despite repairs by petitioner.39 In the present case, when Lim acquired possession,
he discovered that the Montero was not roadworthy. The engine was misaligned, the automatic
transmission was malfunctioning, and the brake rotor disks needed refacing.40 However, during
the proceedings in the trial court, Lim's testimony was stricken off the record because he failed to
appear during cross-examination.41 In effect, Lim was not able to present clear preponderant
evidence of the Montero's defective condition.

RCBC May Refuse to Pay Manager's Checks

We address the legal question of whether or not the drawee bank of a manager's check has the
option of refusing payment by interposing a personal defense of the purchaser of the manager's
check who delivered the check to a third party.

In resolving this legal question, this Court will examine the nature of a manager's check and its
relation to personal defenses under the Negotiable Instruments Law.42chanrobleslaw

Jurisprudence defines a manager's check as a check drawn by the bank's manager upon the bank
itself and accepted in advance by the bank by the act of its issuance.43 It is really the bank's own
check and may be treated as a promissory note with the bank as its maker.44 Consequently, upon
its purchase, the check becomes the primary obligation of the bank and constitutes its written
promise to pay the holder upon demand.45 It is similar to a cashier's check46 both as to effect and
use in that the bank represents that the check is drawn against sufficient funds.47chanrobleslaw

As a general rule, the drawee bank is not liable until it accepts.48 Prior to a bill's acceptance, no
contractual relation exists between the holder49 and the drawee. Acceptance, therefore, creates a
privity of contract between the holder and the drawee so much so that the latter, once it accepts,
becomes the party primarily liable on the instrument.50 Accordingly, acceptance is the act which
triggers the operation of the liabilities of the drawee (acceptor) under Section 6251of the
Negotiable Instruments Law. Thus, once he accepts, the drawee admits the following: (a)
existence of the drawer; (b) genuineness of the drawer's signature; (c) capacity and authority of the
drawer to draw the instrument; and (d) existence of the payee and his then capacity to endorse.

As can be gleaned in a long line of cases decided by this Court, a manager's check is accepted by
the bank upon its issuance. As compared to an ordinary bill of exchange where acceptance occurs
after the bill is presented to the drawee, the distinct feature of a manager's check is that it is
accepted in advance. Notably, the mere issuance of a manager's check creates a privity of contract
between the holder and the drawee bank, the latter primarily binding itself to pay according to the
tenor of its acceptance.

The drawee bank, as a result, has the unconditional obligation to pay a manager's check to a holder
in due course irrespective of any available personal defenses. However, while this Court has
consistently held that a manager's check is automatically accepted, a holder other than a holder in
due course is still subject to defenses. In International Corporate Bank v. Spouses Gueco,52 which
involves a delivered manager's check, the Court still considered whether the check had become
stale:

chanRoblesvirtualLawlibrary
It has been held that, if the check had become stale, it becomes imperative that the circumstances
that caused its non-presentment be determined. In the case at bar, there is no doubt that the
petitioner bank held on the check and refused to encash the same because of the controversy
surrounding the signing of the joint motion to dismiss. We see no bad faith or negligence in this
position taken by the bank.53

In International Corporate Bank, this Court considered whether the holder presented the manager's
check within a reasonable time after its issuance - a circumstance required for holding the
instrument in due course.54chanrobleslaw

Similarly, in Rizal Commercial Banking Corporation v. Hi-Tri Development Corporation,55 the

Court observed that the mere issuance of a manager's check does not ipso facto work as an
automatic transfer of funds to the account of the payee.56 In order for the holder to acquire title to
the instrument, there still must have been effective delivery. Accordingly, the Court, taking
exception to the manager's check automatic transfer of funds to the payee, declared that: "the
doctrine that the deposit represented by a manager's check automatically passes to the payee is
inapplicable, because the instrument - although accepted in advance remains undelivered."57 This
Court ruled that the holder did not acquire the instrument in due course since title had not passed
for lack of delivery.58chanrobleslaw

We now address the main legal question: if the holder of a manager's check is not a holder in due
course, can the drawee bank interpose a personal defense of the purchaser?

Our rulings in Mesina v. Intermediate Appellate Court59 and United Coconut Planters Bank v.
Intermediate Appellate Court60 shed light on the matter.
In Mesina, Jose Go purchased a manager's check from Associated Bank. As he left the bank, Go
inadvertently left the check on top of the desk of the bank manager. The bank manager entrusted
the check for safekeeping to another bank official who at the time was attending to a customer
named Alexander Lim.61 After the bank official answered the telephone and returned from the
men's room, the manager's check could no longer be found. After learning that his manager's
check was missing, Go immediately returned to the bank to give a stop payment order on the
check. A third party named Marcelo Mesina deposited the manager's check with Prudential Bank
but the drawee bank sent back the manager's check to the collecting bank with the words
"payment stopped." When asked how he obtained the manager's check, Mesina claimed it was
paid to him by Lim in a "certain transaction."62chanrobleslaw

While this Court acknowledged the general causes and effects of a manager's check, it noted that
other factors were needed to be considered, namely the manner by which Mesina acquired the
instrument. This Court declared:

chanRoblesvirtualLawlibrary
Petitioner's allegations hold no water. Theories and examples advanced by petitioner on causes
and effects of a cashier's check such as (1) it cannot be countermanded in the hands of a holder in
due course and (2) a cashier's check is a bill of exchange drawn by the bank against itself - are
general principles which cannot be aptly applied to the case at bar, without considering other
things. Petitioner failed to substantiate his claim that he is a holder in due course and for
consideration or value as shown by the established facts of the case. Admittedly, petitioner became
the holder of the cashier's check as endorsed by Alexander Lim who stole the check. He refused to
say how and why it was passed to him. He had therefore notice of the defect of his title over the
check from the start.63

Ultimately, the notice of defect affected Mesina's claim as a holder of the manager's check. This
Court ruled that the issuing bank could validly refuse payment because Mesina was not a holder in
due course. Unequivocally, the Court declared: "the holder of a cashier's check who is not a holder
in due course cannot enforce such check against the issuing bank which dishonors the
same."64chanrobleslaw

In the same manner, in United Coconut Planters Bank (UCPB),65 this Court ruled that the drawee
bank was legally justified in refusing to pay the holder of a manager's check who did not hold the
check in due course. In UCPB, Altiura Investors, Inc. purchased a manager's check from UCPB,
which then issued a manager's check in the amount of Four Hundred Ninety Four Thousand Pesos
(P494,000) to Makati Bel-Air Developers, Inc. The manager's check represented the payment of
Altiura Investors, Inc. for a condominium unit it purchased from Makati Bel-Air Developers, Inc.
Subsequently, Altiura Investors, Inc. instructed UCPB to hold payment due to material
misrepresentations by Makati Bel-Air Developers, Inc. regarding the condominium unit.66
Pending negotiations; and while the stop payment order was in effect, Makati Bel-Air Developers,
Inc. insisted that UCPB pay the value of the manager's check. UCPB refused to pay and filed an
interpleader to allow Altiura Investors, Inc. and Makati Bel-Air Developers, Inc. to litigate their
respective claims. Makati Bel-Air Developers, Inc. also filed a counterclaim against UCPB in the
amount of Five Million Pesos (P5,000,000) based on UCPB's violation of its warranty on its
manager's check.67chanrobleslaw

In upholding UCPB's refusal to pay the value of the manager's check, this Court reasoned that
Makati Bel-Air Developers, Inc.'s title to the instrument became defective when there arose a
partial failure of consideration.68 We held that UCPB could validly invoke a personal defense of
the purchaser against Makati Bel-Air Developers, Inc. because the latter was not a holder in due
course of the manager's check:

chanRoblesvirtualLawlibrary
There are other considerations supporting the conclusion reached by this Court that respondent
appellate court had committed reversible error. Makati Bel-Air was a party to the contract of sale
of an office condominium unit to Altiura, for the payment of which the manager's check was
issued. Accordingly, Makati Bel-Air was fully aware, at the time it had received the manager's
check, that there was, or had arisen, at least partial failure of consideration since it was unable to
comply with its obligation to deliver office space amounting to 165 square meters to Altiura.
Makati Bel-Air was also aware that petitioner Bank had been informed by Altiura of the claimed
defect in Makati Bel-Air's title to the manager's check or its right to the proceeds thereof. Vis-a-vis
both Altiura and petitioner Bank, Makati Bel-Air was not a holder in due course of the manager's
check.69

The foregoing rulings clearly establish that the drawee bank of a manager's check may interpose
personal defenses of the purchaser of the manager's check if the holder is not a holder in due
course. In short, the purchaser of a manager's check may validly countermand payment to a holder
who is not a holder in due course. Accordingly, the drawee bank may refuse to pay the manager's
check by interposing a personal defense of the purchaser. Hence, the resolution of the present case
requires a determination of the status of Odrada as holder of the manager's checks.

In this case, the Court of Appeals gravely erred when it considered Odrada as a holder in due
course. Section 52 of the Negotiable Instruments Law defines a holder in due course as one who
has taken the instrument under the following conditions:

chanRoblesvirtualLawlibrary
(a) That it is complete and regular upon its face;

(b) That he became the holder of it before it was overdue, and without notice that it has been
previously dishonored, if such was the fact;

(c) That he took it in good faith and for value;

(d) 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. (Emphasis supplied)

To be a holder in due course, the law requires that a party must have acquired the instrument in
good faith and for value.

Good faith means that the person taking the instrument has acted with due honesty with regard to
the rights of the parties liable on the instrument and that at the time he,took the instrument, the
holder has no knowledge of any defect or infirmity of the instrument.70 To constitute notice of an
infirmity in the instrument or defect in the title of the person negotiating the same, the person to
whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowledge of
such facts that his action in taking the instrument would amount to bad faith.71chanrobleslaw

Value, on the other hand, is defined as any consideration sufficient to support a simple
contract.72chanrobleslaw

In the present case, Odrada attempted to deposit the manager's checks on 16 April 2002, a day
after Lim had informed him that there was a serious problem with the Montero. Instead of
addressing the issue, Odrada decided to deposit the manager's checks. Odrada's actions do not
amount to good faith. Clearly, Odrada failed to make an inquiry even when the circumstances
strongly indicated that there arose, at the very least, a partial failure of consideration due to the
hidden defects of the Montero. Odrada's action in depositing the manager's checks despite
knowledge of the Montero's defects amounted to bad faith. Moreover, when Odrada redeposited
the manager's checks on 19 April 2002, he was already formally notified by RCBC the previous
day of the cancellation of Lim's auto loan transaction. Following UCPB,73 RCBC may refuse
payment by interposing a personal defense of Lim - that the title of Odrada had become defective
when there arose a partial failure or lack of consideration.74chanrobleslaw

RCBC acted in good faith in following the instructions of Lim. The records show that Lim
notified RCBC of the defective condition of the Montero before Odrada presented the manager's
checks.75 Lim informed RCBC of the hidden defects of the Montero including a misaligned
engine, smashed condenser, crippled bumper support, and defective transmission. RCBC also
received a formal notice of cancellation of the auto loan from Lim and this prompted RCBC to
cancel the manager's checks since the auto loan was the consideration for issuing the manager's
checks. RCBC acted in good faith in stopping the payment of the manager's checks.

Section 58 of the Negotiable Instruments Law provides: "In the hands of any holder other than a
holder in due course, a negotiable instrument is subject to the same defenses as if it were non-
negotiable, x x x." Since Odrada was not a holder in due course, the instrument becomes subject to
personal defenses under the Negotiable Instruments Law. Hence, RCBC may legally act on a
countermand by Lim, the purchaser of the manager's checks.

Lastly, since Lim's testimony involving the Montero's hidden defects was stricken off the record
by the trial court, Lim failed to prove the existence of the hidden defects and thus Lim remains
liable to Odrada for the purchase price of the Montero. Lim's failure to file an appeal from the
decision of the Court of Appeals made the decision of the appellate court final and executory as to
Lim. RCBC cannot be made liable because it acted in good faith in carrying out the stop payment
order of Lim who presented to RCBC the complaint letter to Odrada when Lim issued the stop
payment order.

WHEREFORE, we GRANT the petition. We REVERSE and SET ASIDE the 26 March 2014
Decision and the 18 June 2015 Resolution of the Court of Appeals in CA-G.R. CV No. 94890 only
insofar as RCBC Savings Bank is concerned.

SO ORDERED.chanRoblesvirtualLawlibrary

Brion, Del Castillo, and Mendoza, JJ., concur.

Leonen, J., on official leave.

Endnotes:

1Rollo, pp. 9-23. Under Rule 45 of the 1997 Rules of Civil Procedure.

2 Id. at 29-36. Penned by Associate Justice Eduardo B. Peralta, Jr., with Associate Justices
Magdangal M.De Leon and Stephen C. Cruz concurring.

3 Id. at 52-53.

4 Id. at 29.

5 Id. at 30.

6 Id.

7 Records, p. 23.

8Rollo, p. 30.

9 Civil Case No. 02-453.

10 Branch 66, Makati City.

11 Records, pp. 18-21.

12 Id. at 23.

13 Id. at 19.

14 Id.

15Rollo, p. 30.
16 Id. at 55-62. Penned by Judge Joselito Villarosa.

17 Id. at 59.

18 Id.

19 Id. at 60.

20 Id. at 61.

21 Id. at 62.

22 Id. at 34.

23 Id.

24 Act No. 2031 (1911), Sec. 24.

25cralawred Rollo, p. 35.

26 Id. at 38-50.

27 Id. at 52-53.

28 The records show that RCBC was the only party in the original case which filed an appeal to
this Court.

29Rollo, p. 13.

30 Id. at 19.

31 Rule 47, Sec. 7: Effect of failure to file comment. - When no comment is filed by any of the
respondents, the case may be decided on the basis of the record, without prejudice to any
disciplinary action which the court may take against the disobedient party.

32 Counsel for Odrada failed to file comment on the petition within the period prescribed in the
Resolution dated 30 September 2015, which period expired on 22 November 2015.

33 CIVIL CODE, Art. 1475.

34 CIVIL CODE, Art. 1478.

35 CIVIL CODE, Art. 1547(2).

36 CIVIL CODE, Art. 1485.

37 Civil Code, Art. 1561.

38 487 Phil. 259 (2004).

39 Id. at 268.

40 Records, pp. 27-29.

41 Id. at 213.

42 Act No. 2031 (1911).

43Rizal Commercial Banking Corporation v. Hi-Tri Development Corporation, 687 Phil. 481
(2012); Bank of the Philippine Islands v. Roxas, 562 Phil. 161 (2007); Bank of the Philippine
Islands v. Court of Appeals, 383 Phil. 538 (2000); Tan v. Court of Appeals, G.R. No. 108555, 20
December 1994, 239 SCRA 310.

45Tan v. Court of Appeals, G.R. No. 108555, 20 December 1994, 239 SCRA 310.

46 For purposes of brevity and applying the previous rulings of this Court when the Court refers to
a manager's check, cashier's checks are also included.

47Bank of the Philippine Islands v. Court of Appeals, 383 Phil. 538 (2000).

48 Act No. 2031 (1911), Sec. 127.

49 Payee or indorsee of a bill or note who is in possession of it, or the bearer thereof.

50 Act No. 2031 (1911), Sec. 127.

51 Sec. 62. Liability of Acceptor. - The acceptor, by accepting the instrument, engages that he will
pay it according to the tenor of his acceptance and admits:ChanRoblesVirtualawlibrary
(a) The existence of the drawer, the genuineness of his signature and his capacity and authority to
draw the instrument, and
(b) The existence of the payee and his then capacity to indorse.
52 404 Phil. 353(2001).

53 Id. at 368.

54 Sec. 53. When person not deemed holder in due course. - Where an instrument payable on
demand is negotiated on an unreasonable length of time after its issue, the holder is not deemed a
holder in due course.
55 687 Phil. 481 (2012).

56 Id. at 499.

57 Id. at 500.

38 Notably, under Section 16 of the Negotiable Instruments Law, a complete yet undelivered
negotiable instrument gives rise to a personal defense.

59 229 Phil. 495 (1986).

60 262 Phil. 397(1990).

61Mesina v. Intermediate Appellate Court, supra at 498.

62 Mesina v. Intermediate Appellate Court, supra at 499.

63Mesina v. Intermediate Appellate Court, supra at 502.

64Mesina v. Intermediate Appellate Court, supra at 502.

65 United Coconut Planters Bank v. Intermediate Appellate Court, supra note 60.

66United Coconut Planters Bank v. Intermediate Appellate Court, supra note 60 at 399.

67United Coconut Planters Bank v. Intermediate Appellate Court, supra note 60 at 400.

68United Coconut Planters Bank v. Intermediate Appellate Court, supra note 60 at 403.

69United Coconut Planters Bank v. Intermediate Appellate Court, supra note 60 at 403.

70 Act No. 2031 (1911), Sec. 52.

71 Act No. 2031 (1911), Sec. 56.

72 Act No. 2031 (1911), Sec. 25.

73 Supra note 60.

74 Sec. 28. Effect of want of consideration. - Absence or failure of consideration is a matter of

defense as against any person not a holder in due course x x x.

75 Records, pp. 51-52.

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SANTOS, SURIGAO DEL SUR FEDERATION OF AGRICULTURAL COOPERATIVES
(SUFAC) AND MORO FARMERS ASSOCIATION OF ZAMBOANGA DEL SUR (MOFAZS),
REPRESENTED BY ROMEO C. ROYANDOYAN, Intervenors.; G.R. No. 178193 - DANILO B.
URSUA, Petitioner, v. REPUBLIC OF THE PHILIPPINES, Respondent.

A.C. No. 7388, October 19, 2016 - ATTY. RUTILLO B. PASOK, Complainant, v. ATTY. FELIPE
G. ZAPATOS, Respondent.

G.R. No. 220761, October 03, 2016 - PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v.
EDDIE OLAZO, MIGUEL CORDIS, CHARITO FERNANDEZ AND ROGELIO LASCONIA,
Accused,; CHARITO FERNANDEZ, Accused-Appellant.

G.R. No. 214875, October 17, 2016 - PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v.
ARIELLAYAG ACCUSED-APPELLANTS., Respondent.

G.R. No. 219584, October 17, 2016 - PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v.
PLACIDO GOCO Y OMBROG, Accused-Appellant.

G.R. No. 192679, October 17, 2016 - ANTONIO ESCOTO, Petitioner, v. PHILIPPINE
AMUSEMENT AND GAMING CORPORATION, Respondent.

G.R. No. 216023, October 05, 2016 - DR. RESTITUTO C. BUENVIAJE, Petitioner, v. SPOUSES
JOVITO R. AND LYDIA B. SALONGA, JEBSON HOLDINGS CORPORATION AND
FERDINAND JUAT BAÑEZ, Respondent.

G.R. No. 206691, October 03, 2016 - ATTY. RAYMUND P. PALAD, Petitioner, v. LOLIT SOLIS,
SALVE V. ASIS, AL G. PEDROCHE AND RICARDO F. LO, Respondents.

G.R. No. 206534, October 05, 2016 - JULIA LIM ROSARIO, MERCEDES LIM CUSTODIO AS
REPRESENTED BY DONNO CUSTODIO, NORMA LICARDO, AND LEILA ESPIRITU,
Petitioners, v. ALFONSO LIM, Respondent.

G.R. No. 198782, October 19, 2016 - ALLAN BAZAR, Petitioner, v. CARLOS A. RUIZOL,
Respondent.

G.R. No. 191823, October 05, 2016 - DEE JAY'S INN AND CAFE AND/OR MELINDA
FERRARIS, Petitioners, v. MA. LORINA RAÑESES, Respondent.

G.R. No. 207898, October 19, 2016 - ERROL RAMIREZ, JULITO APAS, RICKY ROSELO
AND ESTEBAN MISSION, JR., Petitioners, v. POLYSON INDUSTRIES, INC. AND WILSON
S. YU, Respondent.

G.R. No. 223561, October 19, 2016 - PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v.
JIMMY PITALLA, JR. Y DIOSA A.K.A. "BEBE," Accused-Appellant.
G.R. No. 196670, October 12, 2016 - ALLIED BANKING CORPORATION, Petitioner, v.
SPOUSES RODOLFO AND GLORIA MADRIAGA, Respondents.

G.R. No. 192282, October 05, 2016 - A. NATE CASKET MAKER AND/OR ARMANDO AND
ANELY NATE, Petitioners, v. ELIAS V. ARANGO, EDWIN M. MAPUSAO, JORGE C.
CARIÑO, JERMIE MAPUSAO, WILSON A. NATE, EDGAR A. NATE, MICHAEL A.
MONTALES, CELSO A. NATE, BENJES A. LLONA AND ALLAN A. MONTALES,
Respondent.

A.C. No. 6767, October 05, 2016 - ELIZABETH RECIO, Complainant, v. ATTY. JOSELITO I.
FANDIÑO, Respondent.

G.R. No. 187544, October 03, 2016 - MARILOU BALASBAS, FELIPE OLEGARIO, JOSE
NARYAEZ, RODOLFO BUMANLAG,* TEODORO MISIA, MARCELINO VILA, HILARIO
ALCALA, MACARIO CORDOVA, SALVADOR ABAIGAR, ATILANO BACUD & LEONIDES
BOLVIDO, Petitioners, v. ROBERTO L. UY REALTY & DEVELOPMENT CORPORATION,
Respondent.

G.R. No. 211539, October 17, 2016 - THAMERLANE M. PEREZ, Petitioner, v. DOMINADOR
PRISCILLA RASACEÑA, NAVARRO AND ADELFA LIM, Respondent.

G.R. No. 179566, October 19, 2016 - SPOUSES LORETO G. NICOLAS AND LOLITA
SARIGUMBA, Petitioners, v. AGRARIAN REFORM BENEFICIARIES ASSOCIATION
(ARBA), AND FARMERS ASSOCIATION OF DAVAO CITY KMPI, FELIPE RAMOS,
HILARIO PASIOL, ROGELIO ASURO, ARTURO ATABLANCO, RODRIGO ATABLANCO,
BONIFACIO ATIMANA, PATRICIO AVILA, CRISANTO BACUS, ERNESTO DONAHAN,
SR., NESTOR LOCABERTE, MANILO REYES, ANDRES SAROL, SHERLITO TAD-I,
ANTONIO TANGARO, OLIGARIO TANAGARO,* CRISITUTO TANGARO,** FELICIANO
TANGARO, GODOFREDO NABASCA, WENNIE ALIGARME, PEDRO TATOY, JR., FELIPE
UMAMALIN, PEDRO TATOY, SR., ANTONIO YANGYANG, ROMEO GANTUANGCO,
VICTOR ALIDON, JAIME TATOY AND JESUS TATOY, JR., Respondents.

G.R. No. 208410, October 19, 2016 - PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v.
MARY JOY CILOT Y MARIANO AND ORLANDO BRIGOLE Y APON, Accused-Appellants.

G.R. No. 168134, October 05, 2016 - FERRO CHEMICALS, INC., Petitioner, v. ANTONIO M.
GARCIA, ROLANDO NAVARRO, JAIME Y. GONZALES AND CHEMICAL INDUSTRIES
OF THE PHILIPPINES, INC., Respondents.; G.R. NO. 168183 - JAIME Y. GONZALES,
Petitioner, v. HON. COURT OF APPEALS AND FERRO CHEMICALS, INC., Respondents.;
G.R. NO. 168196 - ANTONIO M. GARCIA, Petitioner, v. FERRO CHEMICALS, INC.,
Respondent.

G.R. Nos. 188642 & 189425, October 17, 2016 - AGDAO RESIDENTS INC., THE DIRECTORS
LANDLESS LANDLESS ASSOCIATION, BOARD OF OF AGDAO ASSOCIATION, INC., IN
THEIR PERSONAL CAPACITY NAMELY: ARMANDO JAVONILLO, MA. ACELITA
ARMENTANO, ALEX JOSOL, ANTONIA AMORADA, JULIUS ALINSUB, POMPENIANO
ESPINOSA, JR., SALCEDO DE LA CRUZ, CLAUDIO LAO, CONSORCIO DELGADO,
ROMEO CABILLO, RICARDO BACONG, RODOLFO GALENZOGA, BENJAMIN LAMIGO,
AND ASUNCION A. ALCANTARA, Petitioners, v. ROLANDO MARAMION, LEONIDAS
JAMISOLA, VIRGINIA CANOY, ELIZABETH GONZALES, CRISPINIANO QUIRE-QUIRE,
ERNESTINO DUNLAO, ELLA DEMANDANTE, ELLA RIA DEMANDANTE, ELGIN
DEMANDANTE, SATURNINA WITARA, VIRGILIO DAYONDON, MELENCIA
MARAMION, ANGELICA PENKIAN, PRESENTACION TAN, HERNANI GREGORY, RUDY
GIMARINO, VALENTIN CAMEROS, RODEL CAMEROS, ZOLLO JABONETE, LUISITO
TAN, JOSEPH QUIRE-QUIRE, ERNESTO DUNLAO, JR., FRED DUNLAO, LIZA
MARAMION, CLARITA ROBILLA, RENATO DUNLAO AND PRUDENCIO JUARIZA, JR.,
Respondents.; G.R. NOS. 188888-89 - ROLANDO MARAMION, LEONIDAS JAMISOLA,
VIRGINIA CANOY, ERNESTINO DUNLAO, ELLA DEMANDANTE, ELLA RIA
DEMANDANTE, ELGIN DEMANDANTE, SATURNINA WITARA, MELENCIA
MARAMION, LIZA MARAMION, ANGELICA PENKIAN, PRESENTACION TAN, AS
SUBSTITUTED BY HIS LEGAL HEIRS: HERNANI GREGORY, RUDY GIMARINO, RODEL
CAMEROS, VALENTIN CAMEROS, VIRGILIO DAYONDON, PRUDENCIO JUARIZA, JR.,
ZOILO JABONETE, LUISITO TAN, ERNESTINO DUNLAO, JR., FRED DUNLAO, CLARITA
ROBILLA, AND RENATO DUNLAO, Petitioners, v. AGDAO LANDLESS RESIDENTS
ASSOCIATION, INC., THE DIRECTORS LANDLESS BOARD OF OF AGDAO RESIDENTS
ASSOCIATION, INC., IN THEIR PERSONAL CAPACITY, NAMELY: ARMANDO
JAVONILLO, MA. ACELITA ARMENTANO, ALEX JOSOL, ANTONIA AMORADA, JULIUS
ALINSUB, POMPENIANO ESPINOSA, JR. JACINTO BO-OC, HERMENIGILDO
DUMAPIAS, SALCEDO DE LA CRUZ, CLAUDIO LAO, CONSORCIO DELGADO, ROMEO
CABILLO, RICARDO BACONG, RODOLFO GALENZOGA, BENJAMIN LAMIGO, ROMEO
DE LA CRUZ, ASUNCION ALCANTARA AND LILY LOY, Respondents.

G.R. No. 183416, October 05, 2016 - PROVINCIAL ASSESSOR OF AGUSAN DEL SUR,
Petitioner, v. FILIPINAS PALM OIL PLANTATION, INC., Respondent.

G.R. No. 212980, October 10, 2016 - BUENAVISTA PROPERTIES, INC., AND/OR
JOSEPHINE CONDE, Petitioners, v. RAMON G. MARIÑO, REPRESENTED BY ATTY.
OSWALDO F. GABAT AS ATTORNEY-IN-FACT AND COUNSEL VICE ATTY. AMADO
DELORIA, FORMER ATTORNEY-IN-FACT AND COUNSEL, Respondent.

G.R. No. 203610, October 10, 2016 - REPUBLIC OF THE PHILIPPINES AND HOUSING AND
URBAN DEVELOPMENT COORDINATING COUNCIL (HUDCC), Petitioners, v. GONZALO
ROQUE, JR., MANUELA ALMEDA ROQUE, EDUVIGIS A. PAREDES, MICHAEL A.
PAREDES, PURIFICACION ALMEDA, JOSE A. ALMEDA, MICHELLE A. ALMEDA,
MICHAEL A. ALMEDA, ALBERTO DELURA, AND THERESA ALMEDA, Respondent.

G.R. No. 199271, October 19, 2016 - PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v.
JEHAR REYES, Accused-Appellant.

G.R. No. 211977, October 12, 2016 - MARIANO LIM, Petitioner, v. PEOPLE OF THE
PHILIPPINES, Respondent.

G.R. No. 222419, October 05, 2016 - RAMIL R. VALENZUELA, Petitioner, v. ALEXANDRA
MINING AND OIL VENTURES, INC. AND CESAR E. DETERA, Respondent.

G.R. No. 197557, October 05, 2016 - MAUREEN P. PEREZ, Petitioner, v. COMPARTS
INDUSTRIES, INC., Respondent.

G.R. No. 212562, October 12, 2016 - AVELINO ANGELES Y OLANO, Petitioner, v. PEOPLE
OF THE PHILIPPINES, Respondent.

A.M. No. MTJ-10-1755, October 18, 2016 - WILFREDO F. TUVILLO, Complainant, v. JUDGE
HENRY E. LARON, RESPONDENT.; A.M. NO. MTJ-10-1756 - MELISSA J. TUVILLO A.K.A
MICHELLE JIMENEZ, Complainant, v. JUDGE HENRY E. LARON, Respondent.

G.R. No. 215802, October 19, 2016 - RIZALINA GEMINA, ROSARIO ACANTILADO,
JUANITA REYES, EFREN EUGENIO, ROMELIA EUGENIO, AMADOR EUGENIO, JR.,
ANTONIO EUGENIO, LERMA E. RIBAC, ELVIRA E. SIMEON AND TOMAS EUGENIO,
ALL REPRESENTED BY CANDIDO GEMINA, JR., Petitioners, v. JUANITO EUGENIO,
LOLITA EUGENIO-SEV1LLA, BONIFACIO EUGENIO, ELEONOR EUGENIO, JOSE
EUGENIO, AND THE SPOUSES LAUREL AND ZENAIDA MARIANO, Respondents.

G.R. No. 224889, October 19, 2016 - PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. MC
HENRY SUAREZ Y ZURITA, JOHN JOSEPH RAVENA Y ACOSTA AND JOHN PAUL
VICENCIO Y BARRANCO, Accused-Appellants.

G.R. No. 193321, October 19, 2016 - TAKENAKA CORPORATION-PHILIPPINE BRANCH,

Petitioner, v. COMMISSIONER OF INTERNAL REVENUE, Respondent.

G.R. No. 172948, October 05, 2016 - PHILIPPINE ASSOCIATED SMELTING AND REFINING
CORPORATION, Petitioner, v. PABLITO O. LIM, MANUEL A. AGCAOILI, AND CONSUELO
M. PADILLA, Respondents.

G.R. No. 219558, October 19, 2016 - HEIRS OF JOHNNY AOAS, REPRESENTED BY BETTY
PUCAY, Petitioners, v. JULIET AS-IL, Respondent.

G.R. No. 217455, October 05, 2016 - OYSTER PLAZA HOTEL, ROLITO GO, AND JENNIFER
AMPEL, Petitioners, v. ERROL O. MELIVO, Respondent.

G.R. No. 195295, October 05, 2016 - REPUBLIC OF THE PHILIPPINES, Petitioner, v.
SANDIGANBAYAN, FOURTH DIVISION, FERDINAND "BONGBONG" R. MARCOS, JR.,
MA. IMELDA "IMEE" R. MARCOS-MANOTOC, GREGORIO MA. ARANETA III, AND
IRENE R. MARCOS ARANETA, Respondents.

G.R.No. 204261, October 05, 2016 - EDWARD C. DE CASTRO AND MA. GIRLIE F. PLATON,
Petitioners, v. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION,
SILVERICON, INC., AND/OR NUVOLAND PHILS., INC., AND/OR RAUL MARTINEZ,
RAMON BIENVENIDA, AND THE BOARD OF DIRECTORS OF NUVOLAND, Respondents.

G.R. No. 201074, October 19, 2016 - SPOUSES RAMON SY AND ANITA NG, RICHARD SY,
JOSIE ONG, WILLIAM SY AND JACKELINE DE LUCIA, Petitioners, v. WESTMONT BANK
(NOW UNITED OVERSEAS BANK PHILIPPINES) AND PHILIPPINE DEPOSIT
INSURANCE CORPORATION, AS ASSIGNEE OF UNITED OVERSEAS BANK
PHILIPPINES, Respondents.

G.R. No. 203072, October 18, 2016 - DEVELOPMENT ACADEMY OF THE PHILIPPINES,
Petitioner, v. CHAIRPERSON MA. GRACIA M. PULIDO TAN, COMMISSIONER JUANITO
G. ESPINO, JR., COMMISSIONER HEIDI L. MENDOZA, AND COMMISSION ON AUDIT,
Respondents.

G.R. No. 220383, October 05, 2016 - SONEDCO WORKERS FREE LABOR UNION
(SWOFLU) / RENATO YUDE, MARIANITO REGINO, MANUEL YUMAGUE, FRANCISCO
DACUDAG, RUDY ABABAO, DOMINIC SORNITO, SERGIO CAJUYONG, ROMULO
LABONETE, GENEROSO GRANADA, EMILIO AGUS, ARNOLD CAYAO, BEN GENEVE,
VICTOR MAQUE, RICARDO GOMEZ, RODOLFO GAWAN, JIMMY SULLIVAN,
FEDERICO SUMUGAT, JR., ROMULO AVENTURA, JR., JURRY MAGALLANES, HERNAN
EPISTOLA, JR., ROBERTO BELARTE, EDMON MONTALVO, TEODORO MAGUAD,
DOMINGO TABABA, MAXIMO SALE, CYRUS DIONILLO, LEONARDO JUNSAY, JR.,
DANILO SAMILLION, MARIANITO BOCATEJA, JUANITO GEBUSION, RICARDO MAYO,
RAUL ALIMON, ARNEL ARNAIZ, REBENCY BASOY, JIMMY VICTORIO BERNALDE,
RICARDO BOCOL, JR., JOB CALAMBA, WOLFRANDO CALAMBA, RODOLFO CASISID,
JR., EDGARDO DELA PENA, ALLAN DIONILLO, EDMUNDO EBIDO, JOSE ELEPTICO,
JR., MARCELINO FLORES, HERNANDO FUENTEBILLA, SAUL HITALIA, JOSELITO
JAGODILLA, NONITO JAYME, ADJIE JUANILLO, JEROLD JUDILLA, EDILBERTO
NACIONAL, SANDY NAVALES, FELIPE NICOLASORA, JOSE PAMALO-AN, ISMAEL
PEREZ, JR., ERNESTO RANDO, JR., PHILIP REPULLO, VICENTE RUIZ, JR., JOHN
SUMUGAT, CARLO SUSANA, ROMEO TALAPIERO, JR., FERNANDO TRIENTA, FINDY
VILLACRUZ, JOEL VILLANUEVA, AND JERRY MONTELIBANO, Petitioners, v.
UNIVERSAL ROBINA CORPORATION, SUGAR DIVISION-SOUTHERN NEGROS
DEVELOPMENT CORPORATION (SONEDCO), Respondent.

G.R. No. 174964, October 05, 2016 - SANGGUNIANG PANLALAWIGAN OF BATAAN,

Petitioner, v. CONGRESSMAN ENRIQUE T. GARCIA, JR., MEMBERS OF THE FACULTY,
CONCERNED STUDENTS AND THE BOARD OF TRUSTEES OF THE BATAAN
POLYTECHNIC STATE COLLEGE, Respondents.
G.R. No. 218902, October 17, 2016 - HELEN EDITH LEE TAN, Petitioner, v. PEOPLE OF THE
PHILIPPINES, Respondent.

G.R. No. 221773, October 18, 2016 - RG CABRERA CORPORATION, INC., Petitioner, v.
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, AND COMMISSION ON AUDIT,
Respondents.

G.R. No. 209086, October 17, 2016 - ANGELITO R. PUBLICO, Petitioner, v. HOSPITAL
MANAGERS, INC., ARCHDIOCESE OF MANILA - DOING BUSINESS UNDER THE
TRADENAME AND STYLE OF "CARDINAL SANTOS MEDICAL CENTER", Respondents.

G.R. No. 199480, October 12, 2016 - PEOPLE OF THE PHILIPPINES, Petitioner, v. TESS S.
VALERIANO, Respondent.

A.C. No. 7927, October 19, 2016 - SANDY V. DOMINGO, Complainant, v. ATTY. PALMARIN
E. RUBIO AND ATTY. NICASIO T. RUBIO, Respondents.

G.R.No. 213939, October 12, 2016 - LYLITH B. FAUSTO, JONATHAN FAUSTO, RICO
ALVIA, ARSENIA TOCLOY, LOURDES ADOLFO AND ANECITA MANCITA, Petitioners, v.
MULTI AGRI-FOREST AND COMMUNITY DEVELOPMENT COOPERATIVE (FORMERLY
MAF CAMARINES SUR EMPLOYEES COOPERATIVE, INC.), Respondent.

G.R. No. 200087, October 12, 2016 - YOLANDA LUY Y GANUELAS, Petitioner, v. PEOPLE
OF THE PHILIPPINES, Respondent.

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