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Section 16
MANUEL LIM V COURT OF APPEALS
Facts:
Spouses Lim are the president and treasurer, respectively of Rigi Bild
Industries Inc. (RIGI). For years, RIGI had been transacting with Linton
Commercial Co. Inc. (LINTON), wherein LINTO supplies RIGI with steel
plates, steel bars and purlin sticks for the fabrication, installation and
building of steel structures.
Spouses Lim ordered mild steel, mild steel plates and purlins on
different dates, all of which were delivered at 7th Avenue, Kalookan City.
To pay for these deliveries, the Lims issued seven SOLIDBANK checks.
When the seven checks were deposited with RCBC, the checks were
dishonoured for insufficiency of funds with the additional notation
payment stamped. Despite demand, the spouses lim refused to make
good the checks or pay the value of the deliveries.
Manuel Lim admitted having issued the seven checks, but denied that
his company had insufficient funds to cover the amounts of the checks.
The trial court of Malabon held the spouses guilty of estafa and violation
of B.P. Blg. 22.
Spouses Lim assailed the decision of the trial court, arguing that that
the RTC of Malabon had no jurisdiction over the cases because the
offenses charged and committed outside its territory.
CA acquitted the spouses of estafa on the ground that the checks were
not made in payment of an obligation contracted at the time of their
insurance. However it affirmed the trial courts finding that the spouses
were guilty of having violated B.P. Blg. 22.
Spouses maintain that the prosecution failed to prove any of the
essential elements of the crime under B.P. Blg. 22 was committed within
the RTC of Malabon. Spouses Lim claim that considering that the checks
were issued, delivered, and dishonoured in Kalookan City, the trial court
of Malabon exceeded its jurisdiction when it tried the case and extended
judgment theron.
Issue:
WON the trial court exceeded its jurisdiction when it tried the case and rendered
judgment thereon.
Held:
No.
Ratio:
! CADIZ. DELOS SANTOS. DYSANGCO. LENCIO. MANONGSONG. MONZON. PEDAYO. VERACRUZ!
1. It is settled that venue in criminal cases is a vital ingredient of
jurisdiction.
o Rule 110, Sec. 14. Place where action is to be instituted. (a)
In all criminal prosecutions the action shall be instituted and
tried in the court of the municipality or province wherein the
offense was committed or anyone of the essential ingredients
thereof took place.
o If the acts material and essential to the crime and requisite of
its consummation occurred in one municipality or territory, the
court therein has the sole jurisdiction to try the case.
2. In determining proper venue, the following acts material and essential
to each crime and requisite to its consummation must be considered:
o the seven (7) checks were issued to LINTON at its place of
business in Balut, Navotas;
o b) they were delivered to LINTON at the same place;
o (c) they were dishonored in Kalookan City; and,
o (d) petitioners had knowledge of the insufficiency of their funds
in SOLIDBANK at the time the checks were issued. Since there is
no dispute that the checks were dishonored in Kalookan City, it
is no longer necessary to discuss where the checks were
dishonored.
3. Under Sec. 191 of the Negotiable Instruments Law:
o Issue means first delivery of the instrument complete in form
to a person who takes it as a holder
o Holder payee or indorsee of a bill or note who is in possession
of it or the bearer thereof.
o Peo v. Yabut - The place where the bills were written, signed, or
dated does not necessarily fix or determine the place where they
were executed. What is of decisive importance is the delivery
thereof. The delivery of the instrument is the final act essential
to its consummation as an obligation. An undelivered bill or note
is inoperative. Until delivery, the contract is revocable. And the
issuance as well as the delivery of the check must be to a
person who takes it as a holder, which means the payee or
indorsee of a bill or note, who is in possession of it, or the
bearer thereof." Delivery of the check signifies transfer of
possession, whether actual or constructive, from one person to
another with intent to transfer title thereto .
4. Although LINTON sent a collector who received the checks from
petitioners at their place of business in Kalookan City, they were actually
issued and delivered to LINTON at its place of business in Balut,
Navotas. The receipt of the checks by the collector of LINTON is not the
issuance and delivery to the payee in contemplation of law.
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Consequently, venue or jurisdiction lies either in the RTC of Kalookan
City or Malabon.
DELA VICTORIA V BURGOS
Facts:
RAUL filed a complaint for damages against Assistant City Fiscal Mabanto,
judgment was rendered ordering Mabanto to pay P11,000.00.
A notice of garnishment was served on Fiscal Loreto(Boss of Mabanto) ordering
him to not release the salary checks of Mabanto.
Fiscal Loreto moved to quash the notice of garnishment claiming that he was
not in possession of any money belonging to Mabanto, except his salary and
RATA checks, but that said checks were not yet properties of Mabanto, until
delivered to him. He further claimed that, as such, they were still public funds
which could not be subject to garnishment.
Raul claimed that the checks of Mabanto, Jr., had already been released through
petitioner by the Department of Justice duly signed, making them not public
funds therefore may be garnished.
Issue:
(1) W/N a check (still in the hands of the maker or its duly authorized
representative) is owned by the payee before physical delivery?
(2) W/N the salary check of a government official or employee funded with
public funds can be subject to garnishment?
Held:
1. NO, there is need for actual delivery
2. NO
Ratio:
Garnishment is considered as a species of attachment for reaching credits
belonging to the judgment debtor owing to him from a stranger to the
! CADIZ. DELOS SANTOS. DYSANGCO. LENCIO. MANONGSONG. MONZON. PEDAYO. VERACRUZ!
litigation.
As Assistant City Fiscal, the source of the salary of Mabanto, is public funds. He
receives his compensation in the form of checks from the Department of Justice
through Loreto as City Fiscal of Mandaue City and head of office.
Under Sec. 16 of the Negotiable Instruments Law, every contract on a
negotiable instrument is incomplete and revocable until delivery of the
instrument for the purpose of giving effect thereto. As ordinarily understood,
delivery means the transfer of the possession of the instrument by the maker or
drawer with intent to transfer title to the payee and recognize him as the holder
thereof.
Raul considered the checks as no longer government funds and presumed
delivered to the payee based on the last sentence of Sec. 16 of the Negotiable
Instruments Law which states: "And where the instrument is no longer in the
possession of a party whose signature appears thereon, a valid and intentional
delivery by him is presumed."
Yet, the presumption is not conclusive because the last portion of the
provision says "until the contrary is proved."
Proof to the contrary is its own finding that the checks were in the custody of
petitioner. Inasmuch as said checks had not yet been delivered to Mabanto, Jr.,
they did not belong to him and still had the character of public funds.
The salary check of a government officer or employee such as a teacher does
not belong to him before it is physically delivered to him. Until that time the
check belongs to the government.
And public funds may not be subject of garnishment due to public policy.
DEVELOPMENT BANK OF RIZAL V SIMA WEI
FACTS:
Development Bank of Rizal (DBR) filed a complaint for sum of money against
respondent:
1) To enforce payment of the balance on a promissory note covering
P1,032,450.02; and
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2) To enforce payment of two checks, executed by Sima Wei, patable to
petitioner, and drawn against the China Banking Corp., to pay the
balance due on the promissory note.
It was found that Sima Wei executed and delivered DBR a promissory note
engaging to pay the petitioner bank or order the amount of Php 1.8 Million
before 24 June 1983 with 32% interest per annum. Respondent also issued two
crossed checks payable to the bank but said checks were not delivered to the
petitioner-payee or to any of its representative. But for reasons not shown,
these checks came into the possession of a Lee Kian Huat who deposited the
checks without the petitioners indorsement. Despite the fact that checks were
crossed and payable to petitioner bank and bore no indorsement of DBR, the
checks were encashed.
ISSUE: W/N the petitioner has cause of action against all the defendants.
HELD AND RATIO:
No, the Bank has no cause of action against all defendants. If anything at all, it
is Sima Wei who will have an action against her co-defendants, if the allegations
in the complaint are found to be true.
Courts have long recognized the business custom of using printed checks.
However, the mere fact that one has signed and filled up a check does not give
rise any to any liability on his part, until and unless the check is delivered to the
payee or his representative. Check is not only a written evidence of a contract
right but also a property.
Delivery of an instrument means transfer of possession, actual or constructive
from one person to another. Without the initial delivery of the instrument, there
can be no liability. Moreover, the delivery of checks in payment of an obligation
does not constitute payment unless they are cashed or their value impaired
through the fault of the creditor. The checks were not delivered to DBR and
unless Sima Wei proves that she has been relieved from liability on the
promissory note by some other cause, petitioner bank has a right of action
against her for the balance of her loan due. However, petitioner bank does not
have cause of action against the other defendants since the checks were never
delivered to it. Thus, it has never acquired interest therein.
The first cause of action with regards the liability of Sima Wei was remanded to
the trial court.
! CADIZ. DELOS SANTOS. DYSANGCO. LENCIO. MANONGSONG. MONZON. PEDAYO. VERACRUZ!
SAN MIGUEL CORP V PUZON JR
Facts:
Bartolome V. Puzon, Jr., (Puzon) owner of Bartenmyk Enterprises, was a dealer
of beer products of petitioner San Miguel Corporation (SMC) for Paraaque City.
Puzon purchased SMC products on credit. To ensure payment and as a business
practice, SMC required him to issue postdated checks equivalent to the value of
the products purchased on credit before the same were released to him. Said
checks were returned to Puzon when the transactions covered by these checks
were paid or settled in full.
On December 31, 2000, Puzon purchased products on credit amounting
to P11,820,327 for which he issued, and gave to SMC, Bank of the Philippine
Islands (BPI) Check Nos. 27904 and 27903 to cover the said transaction.
On January 23, 2001, Puzon, together with his accountant, visited the SMC
Sales Office in Paraaque City to reconcile his account with SMC. During that
visit Puzon allegedly requested to see BPI Check No. 17657. However, when he
got hold of BPI Check No. 27903 which was attached to a bond paper together
with BPI Check No. 17657 he allegedly immediately left the office with his
accountant, bringing the checks with them.
SMC sent a letter to Puzon on March 6, 2001 demanding the return of the said
checks. Puzon ignored the demand hence SMC filed a complaint against him for
theft with the City Prosecutors Office of Paraaque City.
Issue:
W/N the ownership of the subject check was transferred to SMC (To
substantiate the complaint of theft)
Held:
NO
Ratio:
Sec. 12. Antedated and postdated The instrument is not invalid for the reason
only that it is antedated or postdated, provided this is not done for an illegal or
fraudulent purpose. The person to whom an instrument so dated
is delivered acquires the title thereto as of the date of delivery. (Underscoring
supplied.)
Note however that delivery as the term is used in the aforementioned provision
means that the party delivering did so for the purpose of giving effect thereto.
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Otherwise, it cannot be said that there has been delivery of the negotiable
instrument. Once there is delivery, the person to whom the instrument is
delivered gets the title to the instrument completely and irrevocably.
If the subject check was given by Puzon to SMC in payment of the obligation,
the purpose of giving effect to the instrument is evident thus title to or
ownership of the check was transferred upon delivery. However, if the check
was not given as payment, there being no intent to give effect to the
instrument, then ownership of the check was not transferred to SMC.
The evidence of SMC failed to establish that the check was given in
payment of the obligation of Puzon. There was no provisional receipt or
official receipt issued for the amount of the check. What was issued was a
receipt for the document, a "POSTDATED CHECK SLIP."
Furthermore, the petitioner's demand letter sent to respondent states "As per
company policies on receivables, all issuances are to be covered by post-dated
checks. However, you have deviated from this policy by forcibly taking away the
check you have issued to us to cover the December issuance." Notably, the term
"payment" was not used instead the terms "covered" and "cover" were used.
Although the petitioner's witness, Gregorio L. Joven III, states in paragraph 6 of
his affidavit that the check was given in payment of the obligation of Puzon, the
same is contradicted by his statements in paragraph 4, where he states that "As
a standard company operating procedure, all beer purchases by dealers on
credit shall be covered by postdated checks equivalent to the value of the beer
products purchased"; and in paragraph 9 where he states that "the
transaction covered by the said check had not yet been paid for.
When taken in conjunction with the counter-affidavit of Puzon where he
states that "As the liquid beer contents are paid for, SMC returns to me the
corresponding PDCs or requests me to replace them with whatever was the
unpaid balance." it becomes clear that both parties did not intend for the check
to pay for the beer products. The evidence proves that the check was accepted,
not as payment, but in accordance with the long-standing policy of SMC to
require its dealers to issue postdated checks to cover its receivables. The check
was only meant to cover the transaction and in the meantime Puzon was to pay
for the transaction by some other means other than the check. This being so,
title to the check did not transfer to SMC; it remained with Puzon. The second
element of the felony of theft was therefore not established. Petitioner was not
able to show that Puzon took a check that belonged to another.
! CADIZ. DELOS SANTOS. DYSANGCO. LENCIO. MANONGSONG. MONZON. PEDAYO. VERACRUZ!
EXTRA: Elements of theft: (1) that there be a taking of personal property; (2)
that said property belongs to another; (3) that the taking be done with intent to
gain; (4) that the taking be done without the consent of the owner; and (5) that
the taking be accomplished without the use of violence or intimidation against
persons or force upon things.
Section 17
PEOPLE V ROMERO
(Note: This is a Criminal Law/Estafa case. Even sa case syllabus walang Nego
part. So konti ratio !).
Facts:
SAIDECOR is a marketing business, which later got engaged in the
business of soliciting funds and investments from the public.
The corporation guaranteed an 800% return of investment within 15 or
21 days. Investors were given coupons containing the capital and the
return on the capital collectible on the date agreed upon.
Defendants Martin Romero and Ernesto Rodriguez were the president
and the general manager of the corporation, respectively.
Complainant Ernesto Ruiz was a radio commentator of Radio DXRB in
Butuan City. He came to know the business of SAIDECOR when he
interviewed Romero and Rodriguez about the corporations investment
operations.
Complainant Ernesto Ruiz went to SAIDECOR office in Butuan City to
make an investment. After handing over the amount of P150,000 to
Ernesto Rodriguez, he received a postdated Butuan City Rural Bank
Check instead of the usual redeemable coupon.
The check indicated P1, 000, 200.00 as the amount in words, while
the amount in figures was for P1, 200, 000.00
Complainant Ruiz did not notice the discrepancy.
When the check was presented to the drawee bank, it was dishonored
for insufficiency of funds. Both accused could not be located after such
incident.
For their defense, Romero testified that when he issued the check, the
corporation had a deposit of P14, 000, 000 (P14M) and a balance of P4M
when SAIDECOR ended operations.
Romero also said that he was not aware that such check was
dishonored.
Romero was contending that there was discrepancy between the
words and the figures thats why the check was dishonored.
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Issue:
W/N the ambiguity in the check was the reason why it was not honored and not
insufficiency of funds.
Held:
NO.
Ratio:
The corporation was saying that had the amount in words been
followed, they would have sufficient funds for withdrawal. This was not
accepted by the court.
The rule in the Negotiable Instruments Law is that where there is
ambiguity in the amount in words and in the amount in figures. It
would be the amount in words that would prevail.
However, this rule of interpretation finds no application in the case.
The agreement was perfectly clear that at the end of 21 days, the
investment of P150, 000.00 would become P1, 200, 000.00.
PNB V CONCEPCION MINING
Facts:
This action was instituted by PNB to recover from Concepcion Mining the
face of a promissory note the pertinent part of which reads as follows:
Manila, March 12, 1954
NINETY DAYS after date, for value received, I promise to pay to the order of
the Philippine National Bank . . . .
In case it is necessary to collect this note by or through an attorney-at-law,
the makers and indorsers shall pay ten percent (10%) of the amount due on
the note as attorney's fees, which in no case shall be less than P100.00
exclusive of all costs and fees allowed by law as stipulated in the contract of
! CADIZ. DELOS SANTOS. DYSANGCO. LENCIO. MANONGSONG. MONZON. PEDAYO. VERACRUZ!
real estate mortgage. Demand and Dishonor Waived. Holder may accept
partial payment reserving his right of recourse again each and all indorsers.
(Purpose mining industry)
CONCEPCION MINING COMPANY, INC.,
By:
(Sgd.) VICENTE LEGARDA
President
(Sgd.) VICENTE LEGARDA
(Sgd.) JOSE S SARTE
"Please issue check to
Mr. Jose S. Sarte"
Upon the filing of the complaint, Concepcion Mining allege that the co-
maker of the promissory note Don Vicente Legarda died on February 24,
1946 and his estate is in the process of judicial determination.
Concepcion Mining prayed that the estate of deceased Vicente Legarda be
included as party-defendant. However, the court ruled that the inclusion of
Legardas estate is unnecessary and immaterial, in accordance with the
provisions of Article 1216 of the Deny Civil Code and section 17 (g) of the
Negotiable Instruments Law.
A motion to reconsider this decision was denied and Concepcion Mining
asked that the effects of the judgment be suspended for the reason that the
deceased Vicente Legarda should have been included as a party-defendant
and his liability should be determined in pursuance of the provisions of the
promissory note. (In short, they argue that the money claim should be
made against the estate of Legarda).
Issue: W/N Legardas estate should be included as party-defendant in order to
recover the value of the instrument.
Held: No.
Ratio:
Section 17 (g) of the Negotiable Instruments Law provides:
SEC. 17. Construction where instrument is ambiguous. Where the
language of the instrument is ambiguous or there are omissions therein,
the following rules of construction apply:
xxx xxx xxx
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(g) Where an instrument containing the word "I promise to pay" is
signed by two or more persons, they are deemed to be jointly and
severally liable thereon.
And Article 1216 of the Civil Code of the Philippines also provides as follows:
ART. 1216. The creditor may proceed against any one of the solidary
debtors or some of them simultaneously. The demand made against one
of them shall not be an obstacle to those which may subsequently be
directed against the others so long as the debt has not been fully
collected.
By virtue of Section 17, as the promissory note was executed jointly
and severally by the same parties Concepcion Mining Company, Inc.,
Vicente L. Legarda and Jose S. Sarte the payee of the promissory note
had the right to hold any one or any two of the signers of the promissory
note responsible for the payment of the amount of the note.
REPUBLIC PLANTERS BANK V COURT OF APPEALS
Facts
Fermin Canlas (private respondent) was the Treasurer of Worldwide
Garment Manufacturing, Inc. Shozo Yamaguchi was the President/Chief
Operating Officer. Canlas and Yamaguchi were authorized, by virtue of
Board Resolution No. 1, to apply for credit facilities with Republic
Planters Bank (petitioner) in the forms of export advances and letter of
credit/trust receipts accommodations.
Republic Planters Bank issued 9 promissory notes in favor of
Worldwide Garment Manufacturing, Inc. The promissory notes were
signed by the petitioner and private respondent. The promissory notes
contained the following typewritten entries: I/we jointly and severally
promise to pay to the order of the Republican Planters Bank xxx; and
(in) his personal capacity.
Worldwide Manufacturing, Inc. changed its corporate name to Pinch
Manufacturing Corporation.
Petitioner bank filed a complaint for the recovery of sums of money
covered by the 9 promissory notes. The complaint was originally brought
against Worldwide Garment Manufacturing, Inc. It was later amended to
make Pinch Manufacturing Corporation as the defendant.
Fermin Canlas denied having issued the promissory notes. According
to him, he was not an officer of Pinch Manufacturing Corporation. He
was an officer of Worldwide Garment Manufacturing, Inc. He claimed
that when he issued the promissory notes in behalf of Worldwide
! CADIZ. DELOS SANTOS. DYSANGCO. LENCIO. MANONGSONG. MONZON. PEDAYO. VERACRUZ!
Garment Manufacturing, Inc., they were in blank, the typewritten entries
did not appear prior to the time he affixed his signature.
Issue
Whether or not Fermin Canlas is solidarily liable together with Pinch
Manufacturing Corporation and Shozo Yamaguchi
Ruling
Yes, Fermin Canlas is solidarily liable on each of the promissory notes bearing
his signature.
Doctrine
The promissory notes are negotiable instruments and must be
governed by the Negotiable Instruments Law.
- Persons who write their names on the face of promissory notes
are makers and are liable as such.
- By signing the notes, the maker promises to pay to the order
of the payee or any holder according to the tenor thereof.
- Canlas, being one of the co-makers of the promissory notes,
cannot escape the liability arising therefrom.
An instrument containing the words "I promise to pay" and signed by
two or more persons are deemed to bejointly and severally liable.
- The fact that the singular pronoun is used indicates that the
promise is individual as to each other.
- Each of the co-signers is deemed to have made an
independent singular promise to pay the notes in full.
A joint and several note is one in which the makers bind themselves
both jointly and individually to the payee so that all may be sued
together for its enforcement, or the creditor may select one or more as
the object of the suit.
- A joint and several obligation in common law corresponds to a
civil law solidary obligation.
- One of several debtors bound is liable for the entire amount
and not merely for his proportionate share.
- By making a joint and several promise to pay to the order of
Republic Planters Bank, Fermin Canlas assumed the solidary
liability of a debtor. The payee may choose to enforce the notes
against him alone or jointly with Yamaguchi and Pinch
Manufacturing Corporation as solidary debtors.
A change in the corporate name does not make a new corporation, and
whether effected by special act or under a general law, has no effect on
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the identity of the corporation, or on its property, rights, or liabilities.
The change of name meant only the continuation of the old juridical
entity, the corporation bearing the same name is still bound by the acts
of its agents if authorized by the Board.
As a general rule, officers or directors under the old corporate name
bear no personal liability for acts done or contracts entered into by
officers of the corporation, if duly authorized. Where the agent signs his
name but nowhere in the instrument has he disclosed the fact that he is
acting in a representative capacity or the name of the third party for
whom he might have acted as agent, the agent is personally liable to
the holder of the instrument and cannot be permitted to prove that he
was merely acting as agent of another and parol or extrinsic evidence is
not admissible to avoid the agent's personal liability.
agreed terms of the loan, leaving the borrowers-debtors to do
nothing but read the terms and conditions therein printed and to
sign as makers or co-makers.
- When the notes were given to private respondent Fermin
Canlas for his signature, the notes were complete in the sense
that the spaces for the material particular had been filled up by
the bank as per agreement.
- The only evidence that the notes were signed blank was
Canlas' self serving testimony. The notes were not incomplete
instruments. Neither were they given to private respondent
Fermin Canlas in blank as he claims. Thus, Section 14 of the
Negotiable Instruments Law is not applicable.

Canlas cannot claim that the promissory notes were blank when he
signed. A careful examination of the notes shows that they are the
stereotype printed form of promissory notes generally used by
commercial banking institutions to be signed by their clients in obtaining
loans. Such printed notes are incomplete because there are blank
spaces to be filled up on material particulars such as payee's name,
amount of the loan, rate of interest, date of issue and the maturity date.
The terms and conditions of the loan are printed on the note for the
borrower-debtor's perusal. An incomplete instrument which has been
delivered to the borrower for his signature is governed by Section 14 of
the Negotiable Instruments Law which provides:
Sec. 14. Blanks; when may be filled. -- Where the instrument is
wanting in any material particular, the person in possession
thereof has a prima facie authority to complete it by filling up
the blanks therein. x x x x In order, however, that any such
instrument when completed may be enforced against any person
who became a party thereto prior to its completion, it must be
filled up strictly in accordance with the authority given and
within a reasonable time. x x x x.

The SC believed the bank's testimony that the notes were filled up
before they were given to private respondent Fermin Canlas and
defendant Shozo Yamaguchi for their signatures as joint and several
promissors.
- By signing the notes above their typewritten names, they
bound themselves as unconditional makers.
- This is the customary procedure of commercial banks of
requiring their clientele to sign promissory notes prepared by the
banks in printed form with blank spaces already filled up as per
! CADIZ. DELOS SANTOS. DYSANGCO. LENCIO. MANONGSONG. MONZON. PEDAYO. VERACRUZ!