Defenses and Equities a.
Pua’s sister, Lilian, and Caroline Teng were in a partnership operating a
G.R. No. 198660 – Pua v. Lo Bun Tiong (Oct. 23, 2013)
Velasco, Jr., J.
Spouses Benito and Caroline owed Pua a sum of money for which they gave 17 post-dated
checks. All of the checks, however, were dishonored. Pua demanded payment but granted
them extra time because of their financial difficulties. Eventually, the spouses approached her
to get the computation of their debt. After bargaining to lower their debt, they gave her
another postdated check but this was also dishonored by the drawee bank. Thus, Pua filed a
collection suit. The spouses deny the existence of the debt. They claim that Pua is simply
acting at the instance of her sister, Lilian, to file a false charge against them using a check
left to fund a mahjong business previously operated by Lilian and Caroline. RTC ruled IFO
Pua; but CA set aside the RTC decision ruling that the existence of the debt was not proven.
SC held that the 17 checks were sufficient to prove the loan obligation.
DOCTRINE
Checks, when completed and delivered, are sufficient by themselves to prove the existence
of a loan obligation. Sec. 16 of the NIL provides that when an instrument is no longer in the
possession of the person who signed it and it is complete in its terms, “a valid and intentional
delivery by him is presumed until the contrary is proved.”
FACTS
1. Sps. Benito Lo Bun Tiong and Caroline Teng obtained loans from Ting Ting Pua under a
compounded interest agreement in 1988.
a. Pua’s sister, Lilian, vouched for the spouses so Pua immediately lent them
money without requiring any collateral except for 17 post-dated checks
bearing the borrowed amounts totaling P1,975,000.
2. These checks were dishonored upon presentment to the drawee bank. Because of this,
Pua demanded payment from the spouses.
a. The spouses requested for more time because of financial difficulties, and Pua
obliged, simply reminding them from time to time of their indebtedness.
3. When the financial situation of the spouses turned better, they called Pua and asked for
the computation of their debt. Based on the 2% compounded interest rate per month
agreed upon, their debt amounted to P13,218,544.20.
a. The spouses asked that this be reduced to P8.5M and Pua agreed, wanting to
be paid as soon as possible.
4. The spouses delivered to Pua an Asiatrust Check No. BND057750 for the amount of
P8.5M dated March 30, 1997 with the assurance that it was good, and demanded for
the return of the 17 dishonored checks.
a. Pua refused to return the checks and said that she will do so only after
encashment of the Asiatrust Check; but when she presented the same to the
drawee bank, it was also dishonored. So, Pua filed a complaint for the
collection of the money owed to her by the spouses.
5. The spouses deny obtaining a loan from Pua, and allege the following:
mahjong business. Lilian was the capitalist and Caroline was the cashier.
Caroline also agreed to use her personal check to pay for the operational
expenses and to pay the winners of the games.
b. They anticipated that Caroline would not always be there to prepare the checks,
so she left 5 pre-signed, consecutively numbered checks with Lilian on
the condition that these will only be used to cover business operation expenses
and the amount of the checks should not exceed P5000.
c. This partnership was eventually dissolved because of a serious disagreement
between the two and Caroline forgot about the 5 checks.
i. It was only when Lilian’s husband filed a complaint for sum of money
in February 1997 against the spouses (different case) to recover
P5,175,250 covering three of the five post-dated and pre-signed
checks, that she remembered.
d. Caroline denied completing the Asiatrust Check No. BND057750 insisting
that it was completed by Pua and her sister after delivery.
i. The check was filled out using a check writer or a typewriter, but
Caroline said that she always completes checks in her own
handwriting;
ii. It was also impossible for her and her husband to have gone and seen
Pua as they have been separated for 10 years already. This was
corroborated by her husband, and he said that before this case, he
had never even seen Pua. He said the account from which the check
was issued was solely under Caroline’s name.
e. Ms. Tuazon, the OIC-Manager of Asiatrust-Binondo Branch, testified that
respondent Caroline opened an Asiatrust Account in September 1994 and
claimed that the average maintaining balance of respondent Caroline was
P2,000; the highest amount issued by Caroline from her account was
P435,000.33; and that Caroline had always completed her checks with her own
handwriting and not with a check writer. On October 15, 1996, Caroline’s
checking account was closed at the instance of the bank due to 69 instances of
check issuance against insufficient balance.
6. RTC rendered a decision IFO Pua stating that the possession by Pua of the checks
signed by Caroline, under the NIL, raises the presumption that they were
issued and delivered for a valuable consideration. However, they ordered the
spouses to only pay the principal amount of the loan because the stipulation on
compounded interest was not reduced into writing.
7. CA set aside RTC ruling: Asiatrust Check BND057550 was an incomplete
delivered instrument and that Pua failed to prove the existence of the spouses’
indebtedness to her. Hence, Pua does not have a cause of action against them.
8. Pua filed a petition for review on certiorari with the SC; this was denied. Hence, this
Motion for Reconsideration.
ISSUE with HOLDING
1. W/N there was a loan obligation – YES
a. This is a question of fact, but due to the conflicting findings of the RTC and the iii. The defense that Caroline left blank checks with Lilian who, it is said,
CA, SC will rule on the issue. is now determined to recoup her past losses and bring financial ruin to
b. In a suit for a recovery of sum of money, as here, the plaintiff-creditor has the spouses by falsifying the same blank checks, had already been
the burden of proof to show that defendant had not paid her the thoroughly passed upon and rejected by this Court. Thus, it
amount of the contracted loan. cannot be used to support their denial of liability.
i. However, where the plaintiff-creditor possesses and submits in f. However, the spouses cannot be obliged to pay the interest of the loan because
evidence an instrument showing the indebtedness, a the agreement to pay such interest was not reduced to writing.
presumption that the credit has not been satisfied arises in g. The husband, Benito, cannot escape the joint and solidary liability to pay the
her favor. Thus, the defendant is required to overcome the said loan on the ground that the obligation arose from checks solely issued by his
presumption and present evidence to prove the fact of payment. Caroline. Without any evidence to the contrary, it is presumed that the proceeds
c. The Court has expressly recognized that a check "constitutes an evidence of of the loan redounded to the benefit of their family.
indebtedness" and is a veritable "proof of an obligation."
i. A check functions more than a promissory note since it not only DISPOSITIVE PORTION
contains an undertaking to pay an amount of money but is an "order WHEREFORE, the Motion for Reconsideration is GRANTED. The Resolution of this Court dated
addressed to a bank and partakes of a representation that the drawer April 18, 2012 is set aside and a new one entered REVERSING and SETTING ASIDE the
has funds on deposit against which the check is drawn, sufficient to Decision dated March 31, 2011 and the Resolution dated September 26, 2011 of the Court of
ensure payment upon its presentation to the bank." Appeals The Decision of the Regional Trial Court of the City of Manila, Branch 29 is
ii. This very same principle is found in Sec. 24 of the NIL: Presumption REINSTATED with MODIFICATION.
of consideration. – Every negotiable instrument is deemed prima facie
to have been issued for a valuable consideration; and every person Accordingly, respondents Benito Lo Bun Tiong and Caroline Siok Ching Teng are ordered
whose signature appears thereon to have become a party for value. jointly and solidarily to pay petitioner PhP 1,975,000 plus 6% interest per annum from April
d. The 17 original checks, completed and delivered to petitioner, are sufficient 18, 1997, until fully paid, and ₱200,000.00 as attorney’s fees.
by themselves to prove the existence of the loan obligation.
i. Caroline does not deny the genuineness of these checks; and her
contention that these were issued to other people and merely collected DIGESTER: Liana
by Pua to damage her reputation is contrary to human experience.
ii. Also, in Sec. 16, NIL, it is provided that when an instrument is no
longer in the possession of the person who signed it and it is complete
in its terms "a valid and intentional delivery by him is presumed until
the contrary is proved."
e. As for the AsiaTrust Check, the spouses used the same defense in 2
previous cases related to the one at bar.
i. Those cases for violations of BP22 and collection for sum of money
involved 3 out of the 5 checks allegedly left by Caroline to Lilian. In
this case, Caroline is also saying that this check is one of the five.
ii. In those 2 cases, although there was no finding of criminal liability, the
spouses were still found civilly liable and ordered to pay the amount
of the checks.
1. This was because of Caroline’s own admission that she issued
3 checks because Lilian’s husband showed the listing of their
account totaling ₱5,175,250.00. This was contrary to her
initial claim that these were to be used merely for operational
expenses and are not to exceed P5000 in amount, (see Fact
5b); and that the same was an incompletely delivered
instrument.