Negotiable Instruments Law (Atty.
Amago Discussion)
404 (A.Y. 2018-2019)
November 13, 2018
Sec. 119. Instrument; how discharged. - A negotiable
instrument is discharged:
(a) By payment in due course by or on behalf of the
principal debtor;
(b) By payment in due course by the party
accommodated, where the instrument is made or
accepted for his accommodation;
(c) By the intentional cancellation thereof by the
holder;
(d) By any other act which will discharge a simple
contract for the payment of money;
(e) When the principal debtor becomes the holder of
the instrument at or after maturity in his own right.
1. What discharges an instrument? See Sec 119. All
parties to the instrument are discharged.
2. When is there payment in due course? it is payment
made at or after the maturity made to the holder in good
faith and without notice that his title defective
3. Does it have to be by the person primarily liable that
it can be considered payment in due course? no, it
does not have to be by the person primarily liable to be
considered payment in due course. It’s only that
payment in due course by the person primarily liable or
the agent of the principal debtor is the one that causes
the discharge of the instrument. Payment in due course
by one liable does not cause the discharge of the
instrument
4. “By payment in due course by the party
accommodated”— If ever the accommodation party
made the payment, he will still ask for reimbursement
from the accommodated party. This is why if payment is
made by the accommodated party, it’s like a shortcut, it
discharges the instrument.
The accommodated party as regards the holder is
considered a party secondarily liable but as between the
accommodated party and the accommodation party it is
actually the accommodated party who is the person
primarily liable. Thus, the payment of the
accommodated party discharges the instrument
5. “By the intentional cancellation by the holder”—
What is the presumption if there is a cancellation of
the instrument? There is a presumption that the
cancellation was made intentionally. The burden to
prove that the cancellation was made accidentally falls
upon the person alleging the same
Requisites for intentional cancellation:
(1) there is cancellation
(2) cancellation is intentionally done by the holder
Cancellation can be done in writing with the words
“cancelled” or making marks on the instrument
signifying its cancellation or even through such acts as
obliterating, tearing or mutilating the instrument with the
intent to cancel or discharge the parties from the
obligation.
6. “By any act which will discharge a simple contract
for the payment of money”— This makes a reference
to the obligations and contracts to the modes of
extinguishment of obligations such as (1) payment or
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performance, (2) loss of the thing due, (3) remission, (4)
merger, (5) compensation, (6) novation, (7) annulment,
(8) rescission, (9) fulfillment of a resolutory condition
and (10) prescription.
After all, a negotiable instrument contains an obligation.
So whatever extinguishes an obligation would also
extinguish an instrument
7. “Principal debtor becomes the holder”— After all, if
there is a merger in the person of the creditor and the
principal debtor, it extinguishes an obligation, and so,
the negotiable instrument is discharged. This provision
is merely for emphasis, it’s a surplusage because even
if it is not stated, it will cause the discharge of the
instrument
The principal debtor should become the holder at or
after maturity in his own right and not in a representative
capacity
8. Are there grounds for the discharge of a person
primarily liable? No, but it can be manifested in Sec
119. A person primarily liable is bound on the instrument
and it can only be discharged under the instances in
Sec 119
Sec. 120. When persons secondarily liable on the instrument
are discharged. - A person secondarily liable on the
instrument is discharged:
(a) By any act which discharges the instrument;
(b) By the intentional cancellation of his signature by
the holder;
(c) By the discharge of a prior party;
(d) By a valid tender or payment made by a prior party;
(e) By a release of the principal debtor unless the
holder's right of recourse against the party
secondarily liable is expressly reserved;
(f) By any agreement binding upon the holder to
extend the time of payment or to postpone the
holder's right to enforce the instrument unless
made with the assent of the party secondarily liable
or unless the right of recourse against such party is
expressly reserved.
9. What discharges a person secondarily liable? See
Sec 120. Only persons secondarily liable can be
discharged and not even all of the persons secondarily
liable. It depends on the ground for the discharge and
who may be discharged.
Sec 120(a), By any act which would discharge the
instrument—the person primarily liable is discharged,
this also causes the discharge of the parties secondarily
liable
Sec 120(b), By the intentional cancellation of his
signature by the holder— If the holder cancels the
signature of one of the indorsers of the instrument, it
would discharge the person secondarily liable and
those parties subsequent to him who would have been
able to ask reimbursement from him had they been
made to pay
10. What principle have we discussed in relation to Sec
120(b)? Striking out. When we strike out the signature
of one of the indorser, it will also inure to the benefit of
those subsequent to him for the reason that those
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subsequent parties will be deprived their right of
recourse against that party.
It has to be intentional cancellation, not just by mistake.
You can only cancel a signature if it is not necessary to
your title so if you committed a mistake of cancelling the
indorsement of any of the parties to the instrument, and
it is just by mistake then that person and those
subsequent to him will not be discharged from the
liability because it was a mistake.
Supposedly, if you are the holder, you may only cancel
the indorsement that is not necessary to your
indorsement. If you cancel the signature of an
indorsement necessary to your title, it is as if you also
discharge that indorser and the subsequent parties after
him.
11. What is the cause of the discharge in Sec 120(c), by
the discharge of a prior party? Once there is a
discharge of a prior party from his liability, it will also
inure to the benefit of those subsequent to him for the
reason that once that prior party is discharged from his
obligation, those subsequent parties will be deprived of
their right of recourse against prior parties.
It should be the discharge caused by the holder and not
discharge caused by operation of law. Even if the
person prior to you has been discharged, if it is just by
operation of law, then it does not mean that you will not
be pursued by parties subsequent to you. There are
other remedies available to them so that you can be
made liable even if you are a party subsequent to the
discharge.
Example, the failure to give a notice of dishonor is a
discharge by operation of law, and therefore does not
fall under Sec 120(c).
It has to be discharge caused by the holder because it
is really the intention of the holder that he loses his right
of recourse against the party he discharged and the
parties subsequent to him. Sec 120(c) is therefore just
a complement of Sec 120(b). For example, there is A,
B, C and D and B was discharged by the holder E but
then he goes after D and C anyway. In that case D and
C would go after B so then the cancellation would be
futile.
12. When should this valid tender of payment happen
(Sec 120d)? This is an offer of payment made by a prior
party in case the person primarily liable refuses to pay.
It should happen at or after maturity date of the
instrument and when the party primarily liable refused
to make payment.
If a party secondarily liable would make that valid tender
of payment after such requisites and refused by the
holder, the party secondarily liable who made the tender
of payment and the subsequent parties will be
discharged. The parties subsequent to him will be
discharged but not the prior parties since he can still go
after them.
If the tender of payment was made before the maturity,
it is not the payment contemplated here. The instrument
may still be negotiated and the party secondarily liable
making such payment would at best, have the rights of
the holder.
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13. Sec 120(e), By a release of the principal debtor
unless the holder's right of recourse against the
party secondarily liable is expressly reserved— For
example the holder decided to release the principal
debtor, such will inure to the benefit of the persons
secondarily liable. However, in case the holder
expressly reserves his right of recourse against any
parties secondarily liable then he can still go after them
but according to De Leon it is also an implied
reservation of their right of recourse against the
principal debtor
Actually the exception there is not really an exception.
The party primarily liable may have been released as to
the holder but the parties who paid may still have a right
of reimbursement to him.
Sec. 122. Renunciation by holder. - The holder may
expressly renounce his rights against any party to the
instrument before, at, or after its maturity. An absolute and
unconditional renunciation of his rights against the principal
debtor made at or after the maturity of the instrument
discharges the instrument. But a renunciation does not
affect the rights of a holder in due course without notice. A
renunciation must be in writing unless the instrument is
delivered up to the person primarily liable thereon.
14. How should renunciation be made?
Sec 122 provides for when there could be renunciation.
It can be done before, at or after maturity by the holder.
Only the holder can make the renunciation. But for it to
have effect, the law provides for formalities.
(1) In writing
(2) Done at or after maturity
(3) In favor of the person primarily liable
(4) Renunciation has to be absolute and unconditional
It has to be absolute and unconditional for it to cause a
discharge of the instrument. But, it need not be absolute
and unconditional since you can always make the
renunciation subject to a condition or just a portion of it.
However, if the absolute and unconditional renunciation
happens at or after maturity, that is when there is a
discharge of the instrument. It is synonymous to when
the holder cancels the instrument. If the absolute and
unconditional renunciation happens before maturity, it
cannot cause the discharge of the instrument.
The renunciation does not necessarily affect third
parties who have no knowledge or notice about the
renunciation so, it is incumbent upon the holder to
cause that renunciation to be in writing so anyone can
have notice of the act. If the HIDC has no notice of the
renunciation, it will still allow them to go after the person
primarily liable.
15. When is it allowed to be not in writing? If the
instrument is already in the possession of the party
primarily liable then there is already a presumption that
payment has already been made. The instrument in
possession of the person primarily liable could be
shown as proof that payment has already been made.
The holder need not put the renunciation in writing.
16. “By any agreement binding upon the holder to
extend the time of payment or to postpone the
holder's right to enforce the instrument unless
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made with the assent of the party secondarily liable
or unless the right of recourse against such party is
expressly reserved”—It will cause the discharge of
persons secondarily liable because the parties
secondarily liable did not give their consent to such
extension. If you look at it, it is prejudicial as to them that
the maturity date of the instrument was extended
because their liability to pay would also extend. In effect,
it’s no longer the contract that they’ve agreed when they
became parties to the contract. It’s like a unilateral
novation. It does not matter that it is for their benefit or
not, it causes the discharge to the parties secondarily
liable because the terms and conditions of the contract
they’ve entered into have changed without their
consent. That is the intention of the law.
Sec 119—discharges the instrument so all parties are
discharged from their liabilities
Sec 120—only those affected parties secondarily liable
are discharged
If a holder reserves his right to go after the person
secondarily liable, then he is not discharged from his
liability. But it goes without saying that if you reserve
your right against the person secondarily liable all those
other parties who may be required to make payment to
such secondary party would also not be discharged.
Example: If you do not agree to the postponement of
the payment of the instrument. A, B, C and D but B did
not agree. Here is E who reserves the right of D to go
after him. Will D be discharged of his liability still? D will
not be discharged from liability.
It is different from Section 120(e) because he is the
principal debtor who was released from their liability
there. But in Section 120(f), it could pertain to a person
secondarily liable who may be pursued by another
person secondarily liable. In that case then the prior
party secondarily liable may be discharged from his
liability because it is the fault of the subsequent
secondary party that he accepted or assented to the
extension of the time for payment.
Sec. 178. Bills in set constitute one bill. - Where a bill is
drawn in a set, each part of the set being numbered and
containing a reference to the other parts, the whole of the
parts constitutes one bill.
17. What is Bills in set? Where a bill is drawn in a set,
each part of the set being numbered and containing a
reference to the other parts, the whole of the parts
constitute one bill.
18. Why did it come about? It is to ensure that a certain
bill would reach its destination. The modes of
transportation before were not very reliable. This is why
the drawer, to be assured that the bill will reach its
destination made several copies of the same bill to
reach the payee. There was no assurance years then
that the instrument could reach the supposed
addressee of the instrument. You have a hope that one
of the carriers will reach ashore. The same reason with
carriages-- because of the rampant mugging in the road
then.
Sec. 179. Right of holders where different parts are
negotiated. - Where two or more parts of a set are negotiated
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to different holders in due course, the holder whose title first
accrues is, as between such holders, the true owner of the
bill. But nothing in this section affects the right of a person
who, in due course, accepts or pays the parts first presented
to him.
19. What if all the bills in set will reach its destination
but to different addressees or persons? Then the
liability of the person primarily liable is to the party
whose right first accrues. “First in time, first in right”
✓ You know that he is the party whose right first accrues
when he is the one who first receives it. That preference
however will be superseded by the holder who first
presents it for acceptance to the person primarily liable
because then you will only be able to compel the
drawee to make payment if you are able to present a
copy of the bill that bears his acceptance. The person
primarily liable cannot be compelled to make payment
other than to the person who can show the copy of the
bill which bears his acceptance. After all, what he has
inspected at that point in time is the copy of the bill which
bears his acceptance, he was able to scrutinize that
copy of the bill so he can only be compelled to make
payment on that particular copy. Otherwise, if he will
accept each of the bill, then he may be compelled to
make payment to each of them.
20. What is the remedy then of the person whose right
first accrues that was superseded? Most likely to the
person from whom he received the instrument. After all,
you are talking about the one and the same bill. It could
be from the person from whom received the instrument
and not necessarily from the drawer, although there is
no prohibition to go to the drawer.
However, this presupposes about individuals who are
ALL HOLDERS IN DUE COURSE who must have
received that instrument not knowing about the defect
of their title. This cannot apply to instances where one
is a holder in due course and the other is not a holder in
due course who is not really entitled to receive the
instrument. But, if it happens to be delivered already to
holders in due course then they may be able to present
their individual rights to the drawee. It will then depend
on whoever is the person to receive the acceptance of
the drawee.
Sec. 181. Acceptance of bill drawn in sets. - The acceptance
may be written on any part and it must be written on one part
only. If the drawee accepts more than one part and such
accepted parts negotiated to different holders in due course,
he is liable on every such part as if it were a separate bill.
21. How about in the case of the drawee who accepted
several copies of the bill? The drawee is bound to pay
all the instruments that he accepted
Sec. 180. Liability of holder who indorses two or more parts
of a set to different persons. - Where the holder of a set
indorses two or more parts to different persons he is liable
on every such part, and every indorser subsequent to him is
liable on the part he has himself indorsed, as if such parts
were separate bills.
22. What about the indorser who indorsed several
copies of the bill? Different copies of the bill will be
treated as different bills. He shall be liable for each
because of his bad faith because he indorsed different
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copies of the same bill to different individuals. He should
be held liable to any of those to whom he has given the
instrument.
Sec. 182. Payment by acceptor of bills drawn in sets. - When
the acceptor of a bill drawn in a set pays it without requiring
the part bearing his acceptance to be delivered up to him,
and the part at maturity is outstanding in the hands of a
holder in due course, he is liable to the holder thereon.
Sec. 183. Effect of discharging one of a set. - Except as
herein otherwise provided, where any one part of a bill
drawn in a set is discharged by payment or otherwise, the
whole bill is discharged.
23. If the acceptor pays a copy of the bill that does not
contain his acceptance, what is the effect? The
acceptor is still liable to pay upon the bill he accepted.
The acceptor should then ask for the surrender of the
bill that has his acceptance before making payment.
That person who now presents the instrument for
payment which does not have his acceptance will have
to request for reimbursement from the party from whom
he received the instrument or he follows the line of
liabilities based on the chain of indorsements.
After all, when part of the bill has been discharged, all
other parts of the bill will be discharged, since it is just
one and the same bill.
Sec. 185. Check, defined. - A check is a bill of exchange
drawn on a bank payable on demand. Except as herein
otherwise provided, the provisions of this Act applicable to
a bill of exchange payable on demand apply to a check.
Sec. 186. Within what time a check must be presented. - A
check must be presented for payment within a reasonable
time after its issue or the drawer will be discharged from
liability thereon to the extent of the loss caused by the delay.
24. What is a check? It is a form of BOE but 2 things make
it special: (1) the drawee is always the bank; and (2) it
is always payable on demand
25. How would you call it if the drawer is also a bank?
It is called a bank draft. The laws pertaining to check
would still be applicable
26. When must the check be presented for payment? In
practice, it is 6 months before it is considered stale.
27. Why do you have to know when the instrument is
presented for payment? What will be the
consequence if it is presented beyond the maturity
date? It may discharge the parties secondarily liable.
There will be no liability on the part of the drawee if it is
not presented for payment. The check must be
presented one-time both for acceptance and for
payment within reasonable time. It may discharge the
drawer but only to the extent of the loss caused by the
delay
28. “To: ABC Bank. Pay to the order of Y P10k. Sgd. X”
The date of the check is August 10, 2018. How will
you illustrate “loss caused by the delay”? loss
contemplated here is the insolvency of the bank and the
holder could not anymore collect from the bank. When
the bank is insolvent, the assets will be frozen and PDIC
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will manage it. Every depositor will be entitled to receive
a maximum amount of 500k.
Supposing that the only check issued by X is 10k, then
if the bank is insolvent, the payee could still be paid.
However, it is possible that there could be other checks
drawn by X. In that case, you would need to pro-rate the
amount of 500k to whatever other liabilities the
depositor may have. So you don't just automatically
conclude that just because the amount granted is less
than 500k that all the 500k will go to the person who is
holding this check because there may be other liabilities
and other checks which are not yet paid. In this case,
you should pro-rate to know which portion would pertain
to the loss caused by the delay or which portion remains
payable.
How?
You have to know how much the deposit of the drawer
is to know which portion is considered loss in
comparison to whatever amount he may receive from
the PDIC.
Example: If the deposit is 1.5M, the amount you will get
from PDIC is only 500k. You have to know how much
the drawer received from PDIC. To know the extent of
the loss, you divide the loss over the amount of the
deposit. In that case:
Amount of the deposit= 1.5 M
LESS: Amount from PDIC= 500k
Amount of the loss= 1M
Amount of the Loss= 1M
OVER: Amount of the deposit= 1.5M
Extent of the loss (percentage)= 66.6667% OR 2/3
In that case, for the amount of 10k, X is discharged to
the extent of 2/3 of 10k or P6,666.67. X is required to
pay only P3,333.33.
Sec. 187. Certification of check; effect of. - Where a check is
certified by the bank on which it is drawn, the certification is
equivalent to an acceptance.
Sec. 188. Effect where the holder of check procures it to be
certified. - Where the holder of a check procures it to be
accepted or certified, the drawer and all indorsers are
discharged from liability thereon
Sec. 189. When check operates as an assignment. - A check
of itself does not operate as an assignment of any part of the
funds to the credit of the drawer with the bank, and the bank
is not liable to the holder unless and until it accepts or
certifies the check.
29. What is the effect of certification of the check?
(1) It is equivalent to an acceptance by the bank
making the bank primarily liable on the instrument
(2) It discharges persons secondarily liable if procured
by the holder.
(3) It operates as an assignment of the funds of the
drawer in the hands of the drawee-bank.
(4) The payee or holder, for all intents and purposes
becomes the depositor of the bank.
It is akin to acceptance by the drawee. Once the bank
certifies the check, it already sets aside a portion of the
amount for the payment of the check. That means that
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amount can no longer be withdrawn by the drawer. All
other parties secondarily liable would be discharged
from their liability. It goes without saying that the drawer
is discharged from liability the moment there is
certification issued by the bank on the check that was
issued.
Sec. 126. Bill of exchange, defined. - A bill of exchange is an
unconditional order in writing addressed by one person to
another, signed by the person giving it, requiring the person
to whom it is addressed to pay on demand or at a fixed or
determinable future time a sum certain in money to order or
to bearer.
Sec. 127. Bill not an assignment of funds in hands of drawee.
- A bill of itself does not operate as an assignment of the
funds in the hands of the drawee available for the payment
thereof, and the drawee is not liable on the bill unless and
until he accepts the same.
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not just applicable supposedly to foreign bills of
exchange.
Also, a foreign bill is considered such from the moment
any of the portion in the incidence of the life of the bill
happens abroad so when it is issued abroad, even if
payable in the PH then still a foreign bill. Or if it is issued
here in the PH but payable abroad it will still be
considered as a foreign bill.
When a bill may be treated as a PN. A bill may be
treated as a PN where the drawer and drawee are the
same person. There’s no need to present the instrument
for acceptance. When the drawee is a fictitious person,
the drawer would still be held liable as if he was the
person primarily liable because kinsa man ka muadto
for acceptance or payment. Also, when the drawee has
no capacity to contract, the holder may treat the bill as
a PN

Sec. 128. Bill addressed to more than one drawee. - A bill In all these three instances, the holder of the instrument
may be addressed to two or more drawees jointly, whether may treat the instrument as a promissory note.
they are partners or not; but not to two or more drawees in
the alternative or in succession. 31. Bouncing Checks Law. People may think that you only
get to be imposed a fine for violation of the bouncing
Sec. 129. Inland and foreign bills of exchange. - An inland checks law because of the circular of the SC but the SC
bill of exchange is a bill which is, or on its face purports to actually clarified that that is not correct. What we said is
be, both drawn and payable within the Philippines. Any other that we may encourage the court to just impose a fine
bill is a foreign bill. Unless the contrary appears on the face but it's up to them if they will impose a fine or
of the bill, the holder may treat it as an inland bill. imprisonment. So it continues to be a crime, to be exact
it's just called an infraction basta special law.
Sec. 130. When bill may be treated as promissory note. -
Where in a bill the drawer and drawee are the same person
or where the drawee is a fictitious person or a person not
having capacity to contract, the holder may treat the
instrument at his option either as a bill of exchange or as a
promissory note.

Sec. 131. Referee in case of need. - The drawer of a bill and

any indorser may insert thereon the name of a person to
whom the holder may resort in case of need; that is to say,
in case the bill is dishonored by non-acceptance or non-
payment. Such person is called a referee in case of need. It
is in the option of the holder to resort to the referee in case
of need or not as he may see fit.

30. Is this not true for all bills of exchange that

certification is tantamount to assignment of the
funds of the drawer in the hands of the drawee-bank
to pay the amount of the bill? No, it will never amount
to assignment of funds of the drawer even if it is
accepted. On the part of the drawee, you will try to set
aside the funds but it will not preclude the drawer from
getting those funds. In a regular BOE, it is only
considered an order by a drawer to the drawee to pay
to whoever is the holder. It only becomes an assignment
of funds when the check is certified or accepted.

Checks as opposed to BOE—it is not really very

different. The provisions pertaining to checks will only
be applicable as to checks. But, provisions pertaining to
BOE will also apply to checks.

Remember, a referee in case of need is just a person

you refer to as written by the drawer or the indorser on
the face of the instrument or on the indorsement at the
back. Before you can go after them it's always required
to protest the instrument for non-payment. This is then

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November 19, 2018 payment of the check in full or without any valid reason,
ordered a stop payment.

2. What are the 2 instances when this law is violated?

(1) Making, drawing or issuing a check without
sufficient funds or credit
(2) Order the bank to stop payment without valid
reason

3. Requisites when there can be presumption of

knowledge
(1) Check is presented within 90 days from the date of
the check
(2) Drawer or maker of the check receives notice that
such check has not been paid by the drawee; and

Receipt of notice—must make sure that it was

received not merely sent or given

(3) Drawer or maker of the check fails to pay the holder

of the check the amount due thereon, or to make
arrangements for its payment in 5 working days
after receipt of notice that such check was unpaid
by the drawee

Sec 1 and 2 are important in BP 22 (focus on these

sections).

4. Case of State Investment v Moulic.

Facts: Moulic is engaged in the business of selling jewelry for
commission. Victoriano supplied the jewelry. Instead of keeping
the checks issued by Moulic as security for the jewelry, Victoriano
negotiated it to State Investment so the checks could not be
anymore returned upon demand by Moulic when she did not sell
the jewelry. Before their maturity dates, Moulic withdrew her
funds from the bank

Private respondent Nora B. Moulic issued to Corazon Victoriano,

as security for pieces of jewelry to be sold on commission, two
(2) post- dated Equitable Banking Corporation checks in the
amount of Fifty Thousand Pesos (P50,000.00) each, one dated
30 August 1979 and the other, 30 September 1979. Thereafter,
the payee negotiated the checks to petitioner State Investment
House. Inc. (STATE).

MOULIC failed to sell the pieces of jewelry, so she returned them

to the payee before maturity of the checks. The checks, however,
could no longer be retrieved as they had already been
negotiated. Consequently, before their maturity dates, MOULIC
withdrew her funds from the drawee bank.

Upon presentment for payment, the checks were dishonored for

insufficiency of funds. On 20 December 1979, STATE allegedly
notified MOULIC of the dishonor of the checks and requested
that it be paid in cash instead, although MOULIC avers that no
such notice was given her.

On 6 October 1983, STATE sued to recover the value of the

checks plus attorney's fees and expenses of litigation. In her
Answer, MOULIC contends that she incurred no obligation on the
checks because the jewelry was never sold and the checks were
1. What is BP Blg 22? Bouncing Checks Law—An Act
negotiated without her knowledge and consent. She also
Penalizing the Making or Drawing and Issuance of a
instituted a Third-Party Complaint against Corazon Victoriano,
Check Without Sufficient Funds or Credit and for other
who later assumed full responsibility for the checks.
purposes
Held:

Bouncing Check Law, is the making, drawing or
issuance of a check to apply on account or for value
knowing that at the time of issue he does not have 1. Yes. The STATE is a holder in due course.
sufficient funds in or credit with the drawee bank for the
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A prima facie presumption exists that the holder of a negotiable
instrument is a holder in due course. Consequently, the burden
of proving that STATE is not a holder in due course lies in the
person who disputes the presumption. In this regard, MOULIC
failed.
The evidence clearly shows that: (a) on their faces the post-dated
checks were complete and regular: (b) petitioner bought these
checks from the payee, Corazon Victoriano, before their due
dates; (c) petitioner took these checks in good faith and for value,
albeit at a discounted price; and, (d) petitioner was never
informed nor made aware that these checks were merely issued
to payee as security and not for value.
Consequently, STATE is indeed a holder in due course. As such,
it holds the instruments free from any defect of title of prior
parties, and from defenses available to prior parties among
themselves; STATE may, therefore, enforce full payment of the
checks.
While there may be absence of consideration since the checks
were issued for security, such personal defense cannot be raised
against STATE, a HIDC
2. No. There is no discharge of the instrument.
Sec. 119. Instrument; how discharged. — A negotiable
instrument is discharged: (a) By payment in due course by or on
behalf of the principal debtor; (b) By payment in due course by
the party accommodated, where the instrument is made or
accepted for his accommodation; (c) By the intentional
cancellation thereof by the holder; (d) By any other act which will
discharge a simple contract for the payment of money; (e) When
the principal debtor becomes the holder of the instrument at or
after maturity in his own right.
Obviously, MOULIC may only invoke paragraphs (c) and (d) as
possible grounds for the discharge of the instrument. But, the
intentional cancellation contemplated under paragraph (c) is that
cancellation effected by destroying the instrument either by
tearing it up, burning it, or writing the word "cancelled" on the
instrument. The act of destroying the instrument must also be
made by the holder of the instrument intentionally. Since
MOULIC failed to get back possession of the post-dated checks,
the intentional cancellation of the said checks is altogether
impossible.
On the other hand, the acts which will discharge a simple contract
for the payment of money under paragraph (d) are determined
by other existing legislations since Sec. 119 does not specify
what these acts are, e.g., Art. 1231 of the Civil Code which
enumerates the modes of extinguishing obligations. Again, none
of the modes outlined therein is applicable in the instant case as
Sec. 119 contemplates of a situation where the holder of the
instrument is the creditor while its drawer is the debtor. In the
present action, the payee, Corazon Victoriano, was no
longer MOULIC's creditor at the time the jewelry was
returned. Correspondingly, MOULIC may not unilaterally
discharge herself from her liability by the mere expediency
of withdrawing her funds from the drawee bank. She is thus
liable as she has no legal basis to excuse herself from
liability on her checks to a holder in due course.
3. Notice of dishonor is not necessary in this case since MOULIC
has no right to expect or require that the drawee or acceptor will
honor the instrument.
Sec. 114. When notice need not be given to drawer. — Notice of
dishonor is not required to be given to the drawer in the following
7
cases: (a) Where the drawer and the drawee are the same
person; (b) When the drawee is a fictitious person or a person
not having capacity to contract; (c) When the drawer is the
person to whom the instrument is presented for payment: (d)
Where the drawer has no right to expect or require that the
drawee or acceptor will honor the instrument; (e) Where the
drawer had countermanded payment.
Indeed, MOULIC'S actuations leave much to be desired. She
simply withdrew her funds from her drawee bank and transferred
them to another to protect herself. After withdrawing her funds,
she could not have expected her checks to be honored. In other
words, she was responsible for the dishonor of her checks,
hence, there was no need to serve her Notice of Dishonor, which
is simply bringing to the knowledge of the drawer or indorser of
the instrument, either verbally or by writing, the fact that a
specified instrument, upon proper proceedings taken, has not
been accepted or has not been paid, and that the party notified
is expected to pay it.
5. Case of Papa v A.U Valencia
There was a transaction of a parcel of land between Myron C.
Papa as attorney-in-fact of Butte and Penarroyo through
respondent Valencia. There was supposed to be a downpayment
of 5k pesos, the balance of 40k was to be payable in check.
Papa said that he can no longer remember that there was an
issuance of a check but then again he issued a receipt for the
check that was issued to him. SC said that you’re saying that you
can’t remember but then again you are saying that you have not
encashed the check. Thus, there seems to be a contradiction as
to what Petitioner said that he did not encash the check and that
he did not remember such check being issued.
The SC said that if you did not encash the check but waited 10
years to encash it, there is already a presumption that the check
was already encashed but even if it was not encashed, SC used
as basis Art 1249 of the Civil Code which provides that payment
of the check shall produce the effect of payment only when they
have been encashed or when through the fault of the creditor
they have been impaired. Herein, the value of the check was
impaired due to the acts of the creditor. What is peculiar about
this case is that the person waited for 10 years before the check
was supposedly encashed.
6. Case of David Tan v People
Zaragosa met accused David Tan through a common friend.
They had multiple loan transactions, the latest in the amount of
P1 million, and for which she gave the accused a Metrobank
check in the amount of P950,000 having deducted the 5%
interest from said loan. Thereafter, the accused issued several
PCI Bank Checks which were deposited at her account with City
Trust Bank. The checks bounced for reason “Account Closed”.
She thereafter tried to contact the accused but Tan refused to
talk to her. The accused was sent, by her lawyer, a formal
demand through registered mail for him to pay cash in the
bounced checks but to no avail.
Supposedly David Tan should have been made liable but by
some strike of luck he was able to get away with it. There was a
failure of the prosecution to present the notice of dishonor: the
Oct. 30, 1995 Demand Letter which just came out on the formal
offer of evidence but it was never verified through the testimony
of the witnesses that were presented.
There was no question that there was really an issuance of the
check and that it was not paid but for you to violate BP 22, there
is a requirement that you must have knowledge of the
insufficiency of funds at the time of the issuance and the only way
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that you could do that is by using the elements of presumption
under Sec. 2 of BP 22, the five days should be reckoned from the
issuance of notice. Their failure to present evidence of notice
of dishonor means that there is no notice given.
Notwithstanding that there is failure to give notice, SC said that
David Tan still has the obligation to pay the check that was issued
and in fact interest should begin to accrue for his failure to give
payment.
7. Case of Resterio v People
Here the SC said that there cannot be an oral notice, it has to
be written. Aside from that, if ever you present the registered mail
it is not enough that you just present the registry receipt, it must
be duly authenticated by an affidavit or service.
8. Cruz v Cruz as compared to Vaca v CA
Amanda Cruz—liberal construction
In Cruz v Cruz, the act that was done by Amanda Cruz should
have been sufficient ground to make her liable but then again it
was just filed as a revenge since the husband of Amanda Cruz
filed a criminal case against Carlos Cruz Jr. which is the brother
of respondent.
Even so what is interesting in this case is that Amanda still paid
100K despite there having been payment already made by the
supposed persons who got the proceeds of the loan for the
reason that she issued the 100k check.
Considering that petitioner had paid the amount of the check
even before respondent filed his complaint, SC held that no injury
was caused to the public interests or the banking system, or
specifically to herein respondent. In the case of Amanda Cruz,
there was already payment even before the complaint was filed.
It was only after 6 months where a case was filed. In the
complaint itself of Wilfredo, it was really written there that there
was payment received. Thus, SC decided that you have to look
at the purpose of the law and that it should not be strictly or
harshly applied.
Vaca Case—strict construction
The law was applied strictly where the injury was attributed to the
integrity of the banking system
In Vaca v CA, the case was filed before payment was made.
Good thing that they were able to get affidavits of desistance from
the guards and considering that they are actually entrepreneurs
which help in the economy of the Philippines, SC decided that
they should be forgiven. So instead of imposing the imprisonment
penalty of 1 year and payment of 10k there was just given a fine
of 20k.
In BP 22 cases, SC said that even if there is payment, it still
does not exonerate the person from liability. Their basis is
that even though payee suffered no damage as to the result of
the issuance of the bouncing check, the damage to the integrity
of the banking system cannot be denied.
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SUMMARY OF DIGESTS
PAPA v VALENCIA & CO.
Myron C. Papa, acting as attorney-in-fact of Butte, sold to
respondent Peñarroyo, through respondent Valencia, a parcel of
land. Prior to the alleged sale, the said property, together with
several other parcels of land likewise owned by Angela M. Butte,
had been mortgaged by her to the Associated Banking
Corporation. The bank refused to release it unless and until all
the mortgaged properties of the late Butte were also redeemed.
Private respondent Delfin Jao was allowed to intervene in the
case. Making common cause with respondents Valencia and
Peñarroyo, respondent Jao alleged that the subject lot which had
been sold to respondent Peñarroyo through respondent Valencia
was in turn sold to him on 20 August 1973 for the sum of
P71,500.00, upon his paying earnest money in the amount of
P5,000.00.
The subject decision is the one rendered by the trial court
ordering plaintiff Felix Peñarroyo to execute and deliver to
intervenor a deed of absolute sale over the same property, upon
the latter's payment to the former of the balance of the purchase
price of P71,500.00.
Petitioner appealed the aforesaid decision of the trial court to the
Court of Appeals, alleging among others that the sale was never
"consummated" as he did not encash the check (in the amount
of P40,000.00) given by respondents Valencia and Peñarroyo in
payment of the full purchase price of the subject lot. He
maintained that what said respondent had actually paid was only
the amount of P5,000.00 (in cash) as earnest money.
ISSUE: Whether or not the sale has been consummated.
HELD: Yes. It is an undisputed fact that respondents Valencia
and Peñarroyo had given petitioner Myron C. Papa the amounts
of P5,000.00 in cash on 24 May 1973, and P40,000.00 in check
on 15 June 1973, in payment of the purchase price of the subject
lot. Petitioner himself admits having received said amounts, and
having issued receipts therefor. Petitioner's assertion that he
never encashed the aforesaid check is not substantiated and is
at odds with his statement in his answer that "he can no longer
recall the transaction which is supposed to have happened 10
years ago.
After more than ten (10) years from the payment in party by cash
and in part by check, the presumption is that the check had been
encashed. As already stated, he even waived the presentation of
oral evidence. Granting that petitioner had never encashed the
check, his failure to do so for more than ten (10) years
undoubtedly resulted in the impairment of the check through his
unreasonable and unexplained delay.
While it is true that the delivery of a check produces the effect of
payment only when it is cashed, pursuant to Art. 1249 of the Civil
Code, the rule is otherwise if the debtor is prejudiced by the
creditor's unreasonable delay in presentment.
The acceptance of a check implies an undertaking of due
diligence in presenting it for payment, and if he from whom it is
received sustains loss by want of such diligence, it will be held to
operate as actual payment of the debt or obligation for which it
was given. It has, likewise, been held that if no presentment is
made at all, the drawer cannot be held liable irrespective of loss
or injury unless presentment is otherwise excused.
This is in harmony with Article 1249 of the Civil Code under which
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payment by way of check or other negotiable instrument is
conditioned on its being cashed, except when through the fault
of the creditor, the instrument is impaired. The payee of a check
would be a creditor under this provision and if its no-payment is
caused by his negligence, payment will be deemed effected and
the obligation for which the check was given as conditional
payment will be discharged.
TAN v PEOPLE
Carolyn Zaragosa met the accused David Tan through a
common friend. They had multiple loan transactions, the latest in
the amount of P1 million, and for which she gave the accused a
Metrobank check in the amount of P950,000 having deducted the
5% interest from said loan. Thereafter, the accused issued
several PCI Bank Checks which were deposited at her account
with City Trust Bank. The checks bounced for reason “Account
Closed”. She thereafter tried to contact the accused but tan
refused to talk to her. The accused was sent, by her lawyer, a
formal demand through registered him for him to pay cash in the
bounced checks but to no avail.
They filed a case against Tan and the MTC found him guilty
beyond reasonable doubt of the crime of violation of BP22.
Petitioner filed a motion for reconsideration where he argued that
no evidentiary weight should be given to the demand letter sent
to him because, although included in the formal offer of evidence
of the prosecution but it was not presented during trial. Petitioner
insists that prosecution did not have proof of notice of dishonor,
thus his guilt has not been proven beyond reasonable doubt.
ISSUE: Whether or not a notice of dishonor is indispensable in
determining guilt of the maker or drawer.
HELD: Yes. For prima facie evidence of knowledge to arise in so
far as insufficiency of funds are concerned, there are three
requisites:
(a) That the check is presented within 90 days from the
date of the check.
(b) Drawer/Maker receives notice that such check has not
been paid by the drawee
(c) The drawer/maker of the check fails to pay the holder of
the check the amount due thereon, or make
arrangements for payment in full within 5 banking days
after receiving notice that such check has not been paid
by the drawee.
Thus, the presumption or the prima facie evidence cannot arise
when such notice is not sent to the maker, drawer or of there is
no proof as to when such notice was received. There would be
no way of reckoning the crucial 5-day period. Moreover, a written,
not verbal notice, is required. Since the prosecution failed to
present the evidence during trial that a written demand had been
sent to and received by petitioner, the second element, that the
accused had knowledge of insufficiency of funds has not been
established.
VACA v CA
Petitioners, Eduarda Vaca and Fernando Nieto are the President
and Purchasing Manager of Ervine International Inc.,
respectively. They issued a check for P10,000 to the General
Agency for Reconnaissance Detection & Security Inc. (GARDS)
in partial payment for the security services rendered by the latter
to the former’s company. However, when GARDS deposited the
check in PCI Bank, the same has dishonored for insufficiency of
funds. Thus, a demand letter for the payment in cash of the
amount of the check within 7 days was sent to Ervine Int’l but no
such payment was made within the time given.
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Meanwhile, petitioners issued another check for P19,860.16 to
GARDS supposedly as a replacement for the dishonored check,
the P9,860.16 excess being partial payment for Ervine’s
outstanding account.
The following day, a criminal complaint for violation of BP22 was
filed against petitioners by GARDS. When said case was
dismissed upon motion of the prosecution on the ground that
Ervine had already paid the amount of the check, another
criminal complaint for violation of BP22 was instituted against
petitioners, where petitioners were found guilty of the charge and
each was sentenced to 1-year imprisonment and a fine of
P10,000. Thus, this petition.
ISSUE: Whether petitioners are guilty of violation of BP22.

HELD: Yes. Petitioners’ conviction was well founded. All the
elements of the offense are present in the case at bar, which are:
(1) Making, drawing and issuance of any check to apply to
the account. 

(2) Knowledge of the maker, drawer or issuer that at the
time of issue, he does not have sufficient funds in a
credit with drawee bank. 

(3) Subsequent dishonor of the check by the drawee bank
for 
insufficiency of funds. 

It bears stressing that the maker’s knowledge is presumed from
the dishonor of the checks for the insufficiency of funds.
Petitioners cannot pretend ignorance of the insufficiency of
funds, because while it may be true that it was the company’s
accountant who actually prepared the check, the fact remains
that petitioners are the owners and officers of the company.
Section 1 of BP 22 provides that “Where the check is drawn by a
company, the persons who actually signed the check in behalf of
such drawer shall be liable.
However, as regards the penalty, the sentence of imprisonment
is deleted, doubling only the fine each had to pay (P20,000 each).
This is so not just because petitioners are first time offenders but
also because they brought the appeal, believing in good faith,
although mistakenly, that they had not committed a violation of
BP 22.
It would best serve the ends of criminal justice in fixing the
penalty within the range of discretion allowed under the law to
redeem the valuable human material and preventing
unnecessary deprivation of personal liberty and economic
usefulness with due regard to the protection of social order.
MACALALAG v PEOPLE
On two separate occasions, Macalalag obtained loans from
Estrella, each in the amount of P100,000 each bearing an
interest of 10% per month.
As security for the payment of the aforesaid loans, Macalalag
issued two Philippine National Bank (PNB) Checks each in the
amount of P100,000 in favor of Estrella. However, when Estrella
presented said checks for payment with the drawee bank, the
same were dishonored for the reason that the account against
which the same was drawn was already closed. Estrella sent a
notice of dishonor and demand to make good the said checks to
Macalalag, but the latter failed to do so.
ISSUE: Whether the petitioner violated the Batas Pambansa Blg.
22?
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HELD: Yes. There is no violation of Batas Pambansa Blg. 22 if
the complainant was actually told by the drawer that he has no
sufficient funds in a bank. Where, as in the case at bar, the
checks were issued as security for a loan, payment by the
accused of the amount of the check prior to its presentation for
payment would certainly serve the same purpose.
However, petitioner is guilty for violation of BP 22.
Petitioner Macalalag herself declares she has made a total
payment of P156,000 Applying this amount to the first check,
what will be left is P56,000, an amount insufficient to cover her
obligation with respect to the second check. When Estrella
presented the checks for payment, the same were dishonored on
the ground that they were drawn against a closed account.
Despite notice of dishonor, petitioner Macalalag failed to pay the
full face value of the second check issued. Only a full payment of
the face value of the second check at the time of its presentment
or during the five-day grace period could have exonerated her
from criminal liability.
A contrary interpretation would defeat the purpose of BP 22 –
that of safeguarding the interest of the banking system and the
legitimate public checking account user, as the drawer could very
well have himself exonerated by the mere expediency of paying
a minimal fraction of the face value of the check.
Subsequent payment will not affect criminal liability
Neither could petitioner Macalalag's subsequent payment during
the pendency of the cases against her before the MTCC result in
freeing her from criminal liability because the same had already
attached after the check was dishonored. Said subsequent
payments can only affect her civil, not criminal, liability. A
subsequent payment by the accused would not obliterate the
criminal liability theretofore already incurred.
The gravamen of BP 22 is the issuance of a check
The gravamen of BP 22 is the issuance of a check, not the non-
payment of an obligation. The law has made the act of issuing a
bum check a malum prohibitum. Consequently, the lack of
criminal intent on the part of the accused is irrelevant, and the
accused will be convicted for violation thereof as long as the
following elements are proven:
1. The accused makes, draws or issues any check to
apply to account or for value.
2. The accused knows at the time of the issuance that he
or she does not have sufficient funds in, or credit with,
the drawee bank for the payment of the check in full
upon its presentment; and
3. The check is subsequently dishonored by the drawee
bank for insufficiency of funds or credit, or it would have
been dishonored for the same reason had not the
drawer, without any valid reason, ordered the bank to
stop payment.
All these elements have been conclusively proven in Court, the
second element by the prima facie evidence established by
Section 2 of Batas Pambansa Blg. 22, which provides:
SEC. 2. Evidence of knowledge of insufficient funds. — the
making, drawing and issuance of a check payment of which is
refused by the drawee because of insufficient funds in or credit
with such bank, when presented within ninety (90) days from the
date of the check, shall be prima facie evidence of knowledge of
such insufficiency of funds or credit unless such maker or drawer
pays the holder thereof the amount due thereon, or makes
arrangements for payment in full by the drawee of such check
within five (5) banking days after receiving notice that such check
has not been paid by the drawee.
10
CRUZ v CRUZ
On June 5, 1996, respondent filed a complaint for violation of
Batas Pambansa (B.P.) Blg. 22 against petitioner. Respondent
alleged that petitioner issued to him an undated check in the sum
of P100,000 On December 29, 1995, he placed this date on the
check and deposited the same, but it was dishonored by the
drawee bank due to account closed. On January 5, 1996, he sent
the notice of dishonor to petitioner. Without his knowledge,
petitioner, on January 16, 1996, deposited P100,000 in his
savings account.
In her Counter-Affidavit, petitioner declared that in 1986, she
issued to respondent BPI Check No. 349866 as a guarantee for
the loan of spouses Arturo and Malou Ventura obtained from him.
Later, they informed her that they had paid the loan. However,
she forgot to ask for the return of the check. In 1987, she closed
her account and opened a new one with the drawee bank. For
10 years, she forgot having issued the check. She claimed that
respondent filed the complaint against her because her husband,
Atty. Francisco Galman Cruz, instituted criminal and civil
complaints against Carlos Cruz. Jr., respondents brother,
involving a parcel of land.
Only after 11 days from January 5, 1996 when she learned that
her check was dishonored, she deposited P100,000 in the
account of respondent at the Westmont Bank, Sta. Mesa Branch.
ISSUE: Whether petitioner is liable for violation of BP 22.
HELD: No. In paragraph 7 of respondents complaint, he alleged
that petitioner failed to pay the amount of the check. However, in
paragraph 7 (d) of his reply, he admitted that she already remitted
the amount of P100,000 on January 16, 1996. Respondent filed
the complaint almost six (6) months after petitioner had paid the
amount of the check in question.
In Griffith v. Court of Appeals, we ruled that where the creditor
had collected more than a sufficient amount to cover the value of
the checks, charging the debtor with a criminal offense under the
Bouncing Checks Law, two years after the collection, is no longer
tenable nor justified by law or equitable consideration.
While indeed the gravamen of violation of B.P. Blg. 22 is the act
of issuing worthless checks, nonetheless, courts should not apply
the law strictly or harshly. Its spirit and purpose must be
considered.
In Lozano v. Martinez, we held that the Bouncing Checks Law is
aimed at putting a stop to or curbing the practice of issuing
worthless checks or those that end up being dishonored for
payment because of the injury it causes to the public interests. In
Sia v. People, we explained that the law is intended to safeguard
the interests of the banking system and the legitimate checking
account users.
Considering that petitioner had paid the amount of the check
even before respondent filed his complaint, we believe and so
hold that no injury was caused to the public interests or the
banking system, or specifically to herein respondent.
DEL ROSARIO v CEDILLO
Complainant extended P12 Million loan to Filipina Estrella which
was secured by 3 postdated checks and 2 real estate mortgages.
The TCT of the lots were later discovered to be fake hence a
criminal case for falsification was filed. Thereafter, upon
presentment of the three checks, the same were dishonored for
insufficiency of funds prompting the filing of a criminal case for
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violation of BP22.
Estrella contended that the requisite notice of dishonor was not
sent to her.
ISSUE: Whether or not there was violation of BP22.
RULING: No. Sec. 24 of BP22 creates a presumption that the
second element prima facie exist when the first and third
elements are present. The presumption is brought only after it is
proved that the issuer had received a notice of dishonor and that
he failed to pay within 5 days thereafter
In the case at bar, there was failure to establish receipt of notice
of dishonor in the form of a demand letter. The presentation of
said letter and said registry of receipts, with an unauthenticated
signature do not meet the required proof of notice. Receipts for
registered letter and return receipts do not prove themselves;
they must be properly authenticated in the order to serve as proof
of receipt of the letters.
In addition, no effort was made to show that the demand letter
was received by petitioners or their agent. Insufficient proof of
notice that the checks had been dishonored were received by
petitioners, the presumption that they knew of the insufficiency of
the funds cannot arise.
RESTERIO v PEOPLE
Amada Resterio issued Chinabank check worth P50,000 to
Bernardo Villadolid. When the check became due, Villadolid tried
to encash it but the same was dishonored because the account
was closed. Thereafter, Villadolid sent 2 notices of dishonor to
Resterio via registered mail. Resterio however failed to make
good the check compelling Villadolid to file a case for violation of
BP22.
During trial, Villadolid presented the registry return receipts as
proof that the notices of dishonor were sent and received by
Resterio. Resterio was convicted by the trial court and was
affirmed by the Court of Appeals.
ISSUES:
(1) Whether or not BP22 applied if the issuer of the check
is not the account/check owner. 
 petitioner to appeal the civil aspect of the cases.
(2) Whether or not registry return receipts constitute as
sufficient proof of service of notice of dishonor. 

RULING:
1. Yes. BP22 punished the mere act of issuing a worthless check.
The law does not look either at the actual ownership of the check
or of the account against which it was made, drawn, or issued or
at the intention of the drawee, maker or issuer.
2. No. The notice of dishonor required by BP 22 to be given to
the drawer, maker or issuer of a check should be written. If the
service of the written notice of dishonor is by registered mail, the
proof of service consists not only in the presentation or evidence
of the registry return receipt but it must be accompanied by the
authenticating affidavit of the person mailing the notice of
dishonor. Without the authenticating affidavit, the proof of giving
notice of dishonor is insufficient unless the mailer personally
testifies in court on the sending by registered mail.
Resterio was acquitted of BP22 for failure to establish guilt
beyond reasonable doubt but was ordered to pay the face value
of the Chinabank check with legal interest.
11
CHENG v SY
Petitioner Cheng filed 2 cases of estafa against spouses Sy and
2 cases for violation of BP Blg. 22, both for issuing to her 2 PBC
Checks in payment of their loan for which were dishonoured upon
presentment for having been drawn against a closed account.
Estafa cases were dismissed for failure to prove elements of the
crime and BP Blg. 22 were dismissed due to failure of petitioner
to identify accused in open court. A complaint for collection of
sum of money with damages filed by petitioner was likewise
denied.
ISSUE: Whether the Rules of Criminal Procedure and Supreme
Court Circular on the Rules and Guidelines in the filing and
prosecution of criminal cases under BP Blg. 22 are applicable to
the present cases where the nature of the order dismissing the
cases for bouncing checks against respondent was based on
failure of prosecution to identify both of the accused.
HELD: The rule is that upon filing of the estafa and BP Blg. 22
cases against respondents, where petitioner has not made any
waiver, express reservation to litigate separately, or has not
instituted the corresponding civil action to collect and damages
prior to the criminal action, the civil action is deemed instituted
with criminal cases. During the pendency of both cases, the
action to recover civil action is deemed instituted with criminal
cases. During the pendency of both cases, the action to recover
civil liability was impliedly instituted and remained pending before
respective trial courts.
Although civil action could have been litigated separately on
account of the dismissal of estafa cases on reasonable doubt,
petitioner was deemed to have elected that such civil action be
prosecuted together with BP Blg. 22 cases.
The 2000 Rules on Criminal Procedure may apply even to cases
already pending of its time of promulgation. Under these Rules,
the criminal violation of BO Blg.22 includes the corresponding
civil action to recover amounts of the checks to discourage
separate filing of civil action. The Rules encourage consolidation
of Civil and Criminal cases. Thus, where petitioner’s rights may
be fully adjudicated in the proceedings before the court trying the
BP Blg.22 cases, resort to a separate action to recover civil
liability is unwarranted on account of res judicata for failure of
VANILLAELA