Additional Cases in Negotiable Instruments Law

8/9/2019 Additional Cases in Negotiable Instruments Law

1/83

G.R. No. 125851 July 11, 2006

ALLIED BANKING CORPORATION, petitioner,vs.COURT OF APPEALS, G.G. SPORTS EAR!ANUFACTURING CORPORATION, NARIGID ANI, SPOUSES LETICIA AND LEON DE"ILLA AND ALCRON INTERNATIONAL

LTD., respondents.

D E C I S I O N

#UISU!BING, J .$

This petition for review on certiorari assails (a) theJul !", "##$ Decision " of the Court of %ppeals,orderin& respondent '.'. Sportswear anufacturin&Corp. to rei *urse petitioner +S - , /01 ande2oneratin& the &uarantors fro lia*ilit 1 and (*) theJanuar "3, "##3 4esolution - den in& the otion for reconsideration.

The facts are undisputed.

On Januar $, "#/", petitioner %llied 5an6, anila(%77IED) purchased E2port 5ill No. 5DO8/"8 - inthe a ount of +S - , /0. fro respondent '.'.Sportswear f&. Corporation (''S). The *ill, drawnunder a letter of credit No. 55$9 09# covered en:s;alvoline Trainin& Suit that was in transit to


2/83

On appeal, the Court of %ppeals odified the rulin&of the trial court holdin& respondent ''S lia*le torei *urse petitioner %77IED the peso eAuivalent of the e2port *ill, *ut it e2onerated the &uarantors frotheir lia*ilities under the 7etters of 'uarant . The C%decision reads as follows

?or the fore&oin& considerations, appellee

''S is o*li&ed to rei *urse appellant %llied5an6 the a ount ofB"0",939.0- which wasthe eAuivalent of ''S:s contractedo*li&ation of +S - , /0. .

The lower court however correctle2onerated the &uarantors fro their lia*ilitunder their 7etters of 'uarant . % &uarantis an accessor contract.


3/83

'uarant >Co prehensive Suret , holdin&the selves ointl and severall lia*le on an and allcredit acco odations, instru ents, loans,advances, credits and>or other o*li&ation that a*e &ranted * the petitioner %77IED to respondent''S. # The suret also contained a clause where*said sureties waive protest and notice of dishonor of an and all such instru ents, loans, advances,

credits and>or o*li&ations."

These letters of &uarantand suret are now the *asis of the petitioner:saction.

%t this uncture, we ust stress that o*li&ationsarisin& fro contracts have the force of law *etweenthe parties and should *e co plied with in &oodfaith. "" Nothin& can stop the parties fro esta*lishin&stipulations, clauses, ter s and conditions as the

a dee convenient, provided the are notcontrar to law, orals, &ood custo s, pu*lic order,or pu*lic polic ."-

@ere, %rt. - 93 of the New Civil Code is pertinent. %rt. - 93 states,

%rt. - 93. 5 &uarant a person, called the&uarantor, *inds hi self to the creditor tofulfill the o*li&ation of the principal de*tor incase the latter should fail to do so.

If a person *inds hi self solidaril with theprincipal de*tor, the provisions of Section 9,

Chapter !, Title I of this 5oo6 shall *eo*served. In such case the contract is calleda suret ship.

In this case, the 7etters of 'uarant and Suretclearl show that respondents undertoo6 and *oundthe selves as &uarantors and suret to pa the fulla ount of the e2port *ill.

4espondents clai that the petitioner did notprotes t"! upon dishonor of the e2port *ill *Che6ian& ?irst 5an6, 7td. %ccordin& to respondents,since there was no protest ade upon dishonor of the e2port *ill, all of the , as indorsers weredischar&ed under Section "0- of the Ne&otia*leInstru ents 7aw.

Section "0- of the Ne&otia*le Instru ents 7awpertainin& to indorsers, relied on * respondents, isnot pertinent to this case. There are well8defined

distinctions *etween the contract of an indorser andthat of a &uarantor>suret of a co ercial paper,which is what is involved in this case. The contract of indorse ent is pri aril that of transfer, while thecontract of &uarant is that of personalsecurit ."9 The lia*ilit of a &uarantor>suret is*roader than that of an indorser. +nless the *ill ispro ptl presented for pa ent at aturit and due

notice of dishonor &iven to the indorser within areasona*le ti e, he will *e dischar&ed fro lia*ilitthereon. "0 On the other hand, e2cept where reAuired* the provisions of the contract of suret ship, ade and or notice of default is not reAuired to fi2 thesuret :s lia*ilit ."$ @e cannot co plain that thecreditor has not notified hi in the a*sence of aspecial a&ree ent to that effect in the contract of suret ship ."3 Therefore, no protest on the e2port *illis necessar to char&e all the respondents ointland severall lia*le with '.'. Sportswear since therespondents held the selves lia*le upon de and in

case the instru ent was dishonored and on thesuret , the even waived notice of dishonor asstipulated in their 7etters of 'uarantee.

%s to respondent %lcron, it is *ound * the 7etter of 'uarant e2ecuted * its representative @ans8Joachi Schloer. %s to the other respondents, not to*e overloo6ed is the fact that, the HSuret ship

%&ree entH the e2ecuted, e2pressl conte plateda solidar o*li&ation, providin& as it did that H thesureties here* &uarantee jointly and severally thepunctual pa ent of an and all such creditacco odations, instru ents, loans, which is>arenow or a hereafter *eco e due or owin& *the *orrowerH ."/ It is a cardinal rule that if the ter sof a contract are clear and leave no dou*t as to theintention of the contractin& parties, the literal

eanin& of its stipulation shall control. "# In thepresent case, there can *e no ista6in& a*outrespondents: intent, as sureties, to *e ointl andseverall o*li&ated with respondent '. '.Sportswear.

4espondents also aver that, (") the onl si&nedsaid docu ents in *lan61 (-) the were never adeaware that said docu ents will cover the pa ent of the e2port *ill1 and (!) laches have set in.

4espondents: stance lac6s erit. +nder Section !(d), 4ule "!" of the 4ules of Court, it is presu edthat a person ta6es ordinar care of his concerns.

3 | P a g eC O M M E R C I A L L A W R E V I E W D E A N S U N D I A N G
http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt9http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt9http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt10http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt10http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt11http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt12http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt12http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt13http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt13http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt14http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt14http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt15http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt16http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt16http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt17http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt17http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt18http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt18http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt19http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt9http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt10http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt11http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt12http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt13http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt14http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt15http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt16http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt17http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt18http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt19


4/83

@ence, the natural presu ption is that one does notsi&n a docu ent without first infor in& hi self of itscontents and conseAuences. Said presu ptionacAuires &reater force in the case at *ar where notonl one docu ent *ut several docu ents weree2ecuted at different ti es and at different places *the herein respondent &uarantors and sureties. -

In this case, havin& affi2ed their consentin&si&natures in several docu ents e2ecuted atdifferent ti es, it is safe to presu e that the had full6nowled&e of its ter s and conditions, hence, theare precluded fro assertin& i&norance of the le&aleffects of the underta6in& the assu ed thereunder.It is also presu ed that private transactions have*een fair and re&ular -" and that he who alle&es hasthe *urden of provin& his alle&ation with the reAuisiteAuantu of evidence. -- 5ut here the records of thiscase do not support their clai s.

7ast, we find the defense of laches unavailin&. TheAuestion of laches is addressed to the sounddiscretion of the court and since laches is aneAuita*le doctrine, its application is controlled *eAuita*le considerations. -! 4espondents, however,failed to show that the collection suit a&ainst the assureties was ineAuita*le. 4e edies in eAuitaddress onl situations tainted with ineAuit , notthose e2pressl &overned * statutes. -9

%fter considerin& the facts of this case vis--vis the

pertinent laws, we are constrained to rule for thepetitioner.

%EREFORE , the instant petition is GRANTED .Theassailed Decision of the Court of %ppeals ishere* !ODIFIED , and we hold that respondent

%lcron International 7td. is su*sidiaril lia*le, whilerespondents Nari 'idwani, and Spouses 7eon and7eticia de ;illa are ointl and severall lia*leto&ether with '.'. Sportswear, to pa petitioner 5an6 the su of B"0",939.0- with interest at thele&al rate fro the filin& of the co plaint, and thecosts.

SO ORDERED.

http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt20http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt21http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt22http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt23http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt24http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt20http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt21http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt22http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt23http://www.lawphil.net/judjuris/juri2006/jul2006/gr_125851_2006.html#fnt24


5/83

G.R. No. 1&8211 July 25, 2006

SINCERE '. "ILLANUE"A, petitioner,vs.

!ARL(N P. NITE, respondent.

D E C I S I O N

CORONA, J .$

In this petition for review on certiorari under 4ule 90,petitioner su* its that the Court of %ppeals (C%)

erred in annullin& and settin& aside the 4e&ionalTrial Court (4TC) decision on the &round of e2trinsicfraud.

The facts follow. "

4espondent alle&edl too6 out a loan of B 9 #,fro petitioner. To secure the loan, respondent

issued petitioner an %sian 5an6 Corporation (%5C)chec6 (Chec6 No. % % - "#0) in the a ountof B!-0,0 dated ?e*ruar /, "##9. The date waslater chan&ed to June /, "##9 with the consent andconcurrence of petitioner.

The chec6 was, however, dishonored due toa material alteration when petitioner deposited thechec6 on due date. On %u&ust -9, "##9, respondent,throu&h her representative E il B. %*o ada,re itted B-!0, to petitioner as partial pa ent of the loan. The *alance of B"39, was due on or *efore Dece *er /, "##9.

On %u&ust -9, "##9, however, petitioner filed anaction for a su of one and da a&es (Civil CaseNo. K8#98-"9#0) a&ainst %5C for the full a ount of the dishonored chec6. %nd in a decision dated a-!, "##3, the 4TC of KueLon Cit , 5ranch " " ruledin his favor. -


6/83

") the su of B"9$,0 as actual da a&esplus interest at "-Q per annu fro %u&ust-0, "##3 until full pa ent1

-) the su of B30, as oral da a&es1

!) the su of B0 , as e2e plarda a&es1 and

9) the su of B0 , as attorne Ms feesand cost of suit.

SO ORDERED .9

Thus, this petition.


7/83

applica*le to a *ill of e2chan&e pa a*le onde and appl to a chec6. # (e phasis ours)

SEC. "/#. < hen chec" operates as anassignment. # % chec6 of itself does notoperate as an assi&n ent of an part of thefunds to the credit of the drawer with the*an6, and + 3-/4 /o l -3l o +

+ol , u/l -/ u/ l -77 o 7 9 + 7+ 74.(e phasis ours)

If a *an6 refuses to pa a chec6 (notwithstandin& thesufficienc of funds), the pa ee8holder cannot, inview of the cited sections, sue the *an6. The pa eeshould instead sue the drawer who i&ht in turn suethe *an6. Section "/# is sound law *ased on lo&icand esta*lished le&al principles no privit of contracte2ists *etween the drawee8*an6 and the pa ee.Indeed, in this case, there was no such privit of contract *etween %5C and petitioner.

Betitioner should not have sued %5C. Contracts ta6eeffect onl *etween the parties, their assi&ns andheirs, e2cept in cases where the ri&hts ando*li&ations arisin& fro the contract are nottrans issi*le * their nature, or * stipulation or *provision of law ." None of the fore&oin& e2ceptionsto the relativit of contracts applies in this case.

The contract of loan was *etween petitioner andrespondent. No collection suit could prosper without

respondent who was an indispensable party . 4ule !,Sec. 3 of the 4ules of Court states

Sec. 3. Co pulsor oinder of indispensa*leparties. R Barties in interest * +ou *+o/o 9 /-l /- o/ 7-/ 3 +- o9 -/-7 o/ shall *e oined either as plaintiffs or defendants. (e phasis ours)

%n indispensa*le part is one whose interest in thecontrovers is such that a final decree willnecessaril affect his ri&hts. The court cannotproceed without his presence. "" If an indispensa*lepart is not i pleaded, an ud& ent isineffective ."- On this, Aracelona v. ourt of

Appeals "! declared

4ule !, Section 3 of the 4ules of Courtdefines indispensa*le parties as parties8in8interest without who there can *e no final

deter ination of an action. %s such, theust *e oined either as plaintiffs or as

defendants. The &eneral rule with referenceto the a6in& of parties in a civil actionreAuires, of course, the oinder of allnecessar parties where possi*le, and the

oinder of all indispensa*le parties under anand all conditions, their presence *ein& sine

!ua non for the e2ercise of udicial power. Itis precisel Hwhen an indispensa*le part isnot *efore the court (that) the action should*e dis issed.H The a*sence of anindispensa*le part renders all su*seAuentactions of the court null and void for want of authorit to act, not onl as to the a*sentparties *ut even as to those present.

%EREFORE , the petition is here* DENIED . Thedecision of the Court of %ppeals in C%8'.4. SB No.99#3" is AFFIR!ED in toto .

Costs a&ainst petitioner.

SO ORDERED.

http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt9http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt10http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt10http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt11http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt11http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt12http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt12http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt13http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt9http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt10http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt11http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt12http://www.lawphil.net/judjuris/juri2006/jul2006/gr_148211_2006.html#fnt13


8/83

G.R. No. 1:;002 July 2;, 2006

BANK OF T%E P%ILIPPINE ISLANDS, petitioner,vs.CO!!ISSIONER OF INTERNALRE"ENUE, respondent.

D E C I S I O N

C%ICO


9/83

e2e ption privile&es pursuant to 4esolution No. !08/0 dated ! a "#/0 of the ?iscal Incentive 4eview5oard. @owever, in "#/0, Bresidential Decree No."##9 88 %n %ct ?urther % endin& Certain Brovisionsof the National Internal 4evenue Code was enacted.This law a ended Section --- (now "3!) of theNational Internal 4evenue Code (NI4C), * addin&the fore&oin&

< henever one part to the ta2a*ledocu ent en o s e2e ption fro the ta2herein i posed, the other part thereto whois not e2e pt shall *e the one directl lia*lefor the ta2.

In "#//, respondent CI4 ordered an investi&ation to*e ade on 5BI:s sale of forei&n currenc . %s aresult thereof, the CI4 issued a pre8assess entnotice infor in& 5BI that in accordance with Section"#0 (now Section "/-) 9 of the NI4C, 5BI was lia*lefor docu entar sta p ta2 at the rate of B .!per B- . on all forei&n e2chan&e sold to theCentral 5an6. Total ta2 lia*ilit was assessedat B!, "$,!"$. $, which consists of a docu entarsta p ta2 lia*ilit of B-,9"-,/"-./0, a -0Qsurchar&e of B$ !,- !.-", and a co pro isepenalt ofB! . .0

5BI disputed the findin&s contained in the pre8assess ent notice. Nevertheless, the CI4 issued

%ssess ent No. ?%S808/$8//8 ! --, dated !

Septe *er "#//, which 5BI received on "" Octo*er "#//. 5BI for all protested the assess ent, *utthe protest was denied. On " Jul "## , 5BIreceived the final notice and de and for pa ent of its "#/$ assess ent for deficienc docu entarsta p ta2 in the a ount of B!, "$,!"$. $.ConseAuentl , a petition for review was filed with theCT% on # %u&ust "## . $

On !" a "##9, the CT% rendered the Decisionholdin& 5BI lia*le for docu entar sta p ta2 inconnection with the sale of forei&n e2chan&e to theCentral 5an6 fro the period -# Jul "#/$ to /Octo*er "#/$ onl , thus su*stantiall reducin& theCI4:s ori&inal assess ent. The dispositive portion of the said Decision reads


10/83

%ppeals affir ed the Decision of the CT%. The Courtof %ppeals ruled that the docu entar sta p ta2i posed under Section "#0 (now Section "/-) is notli ited onl to forei&n *ills of e2chan&e and letters of credit *ut also includes the orders ade *tele&raph or * an other eans for the pa ent of

one ade * an person drawn in *ut pa a*leout of the Bhilippines. The Court of %ppeals also

aintained that tele&raphic transfers, such as theone 5BI sent to its correspondent *an6 in the +.S.,are proper su* ects for the i position of docu entar sta p ta2 under Section "#0 (nowSection "/-) and Section 0" of 4evenue 4e&ulationNo. -$. The Court of %ppeals li6ewise affir ed theCT%:s Decision i posin& a - Q delinAuenc on thereduced assess ent, in accordance with Section-9(c)(!) of the NI4C and the case of %hilippine&efining ompany v. ourt of Appeals ."

Betitioner filed a Bartial otion for 4econsideration

on # Septe *er "##/, which the Court of %ppealsdenied on -# Dece *er "##/ .""

@ence this petition, wherein the petitioner raised thefollowin& issues

I


11/83

Sec. "-$. 5ill of e2chan&e defined. R % *ill of e2chan&e is an unconditional order in writin&addressed * one person to another, si&ned* the person &ivin& it, reAuirin& the personto who it is addressed to pa on de andor at fi2ed or deter ina*le future ti e a sucertain in one to order or to *earer.

Section "-# of the sa e law classifies *ills of e2chan&e as inland and forei&n, the distinction is laiddown * where the *ills are drawn and paid. Thus, aHforei&n *ill of e2chan&eH a *e drawn outside theBhilippines, pa a*le outside the Bhilippines, or *othdrawn and pa a*le outside of the Bhilippines.

Sec. "-#. Inland and forei&n *ills of e2chan&e. 88 %n inland *ill of e2chan&e is a*ill which is, or on its face purports to *e,*oth drawn and pa a*le within theBhilippines. %n other *ill is a forei&n *ill. 2 22

The Code of Co erce loosel defines a Hletter of creditH and provides for its essential conditions, thus

%rt. 0$3. 7etters of credit are those issued* one erchant to another or for thepurpose of attendin& to a co ercialtransaction.

%rt 0$/. The essential conditions of letters of

credit shall *e

". To *e issued in favor of a definiteperson and not to order.

-. To *e li ited to a fi2ed andspecified a ount, or to one or oreundeter ined a ounts, *ut within a

a2i u the li its of which has to*e stated e2actl .

% ore e2plicit definition of a letter of credit can *efound in the co entaries

% letter of credit is one where* one personreAuests so e other person to advance

one or &ive credit to a third person, andpro ises that he will repa the sa e to theperson a6in& the advance ent, or accept

the *ills drawn upon hi self for the li6ea ount. "!

% *ill of e2chan&e and a letter of credit a differ asto their ne&otia*ilit , and as to who owns the fundsused for the pa ent at the ti e pa ent is ade.@owever, in *oth *ills of e2chan&e and letters of credit, a person orders another to pa one to a

third person.

The phrase Horders, * tele&raph or otherwise, for the pa ent of one H used in reference todocu entar sta p ta2es a *e found in an earlier docu entar ta2 provision, Section "99#(i) of the

%d inistrative Code of "#"3, which wassu*stantiall reproduced in Section "#0 (nowSection "/-) of the NI4C. 4e&ulations No. -$, whichprovided the rules and &uidelines for thedocu entar sta p ta2 i posed under the

%d inistrative Code of "#"3, contains ane2planation for the phrase Horders, * tele&raph or otherwise, for the pa ent of one H

$hat may be regarded as telegraphic transfer . P a local *an6 ca*les to a certain*an6 in a forei&n countr with which *an6said local *an6 has a credit, and directs thatforei&n *an6 to pa to another *an6 or person in the sa e localit a certain su of

one , the docu ent for and in respectsuch transaction will *e re&arded as a

tele&raphic transfer, ta2a*le under theprovisions of Section "99#(i) of the %d inistrative Code.

In this case, 5BI ordered its correspondent *an6 inthe +.S. to pa the ?ederal 4eserve 5an6 in New

or6 a su of one , which is to *e credited to theaccount of the Central 5an6. These are the sa eacts descri*ed under Section 0" of 4e&ulations No.-$, interpretin& the docu entar sta p ta2 provisionin the %d inistrative Code of "#"3, which issu*stantiall identical to Section "#0 (now Section"/-) of the NI4C. These acts perfor ed * 5BIincidental to its sale of forei&n e2chan&e to theCentral 5an6 are included a on& those ta2ed under Section "#0 (now Section "/-) of the NI4C.

5BI alle&es that the assailed decision ust *ereversed since the sale *etween 5BI and the Central5an6 of forei&n e2chan&e, as distin&uished fro

http://www.lawphil.net/judjuris/juri2006/jul2006/gr_137002_2006.html#fnt13http://www.lawphil.net/judjuris/juri2006/jul2006/gr_137002_2006.html#fnt13


12/83

forei&n *ills of e2chan&e, is not su* ect to thedocu entar sta p ta2es prescri*ed in Section "#0(now Section "/-) of the NI4C. This ar&u entleaves uch to *e desired. In this case, it is not thesale of forei&n e2chan&e per se that is *ein& ta2edunder Section "#0 of the NI4C. This section refersto a docu entar sta p ta2, which is an e2ciseupon the facilities used in the transaction of the

*usiness separate and apart fro the *usinessitself ."9 It is not a ta2 upon the *usiness itself whichis so transacted, *ut it is a dut upon the facilities

ade use of and actuall e plo ed in thetransaction of the *usiness, and separate and apartfro the *usiness itself. "0

Section "#0 (now Section "/-) of the NI4C coversforei&n *ills of e2chan&e, letters of credit, and ordersof pa ent for one , drawn in Bhilippines, *utpa a*le outside the Bhilippines. ?ro thisenu eration, two co on ele ents need to *e

present (") drawin& the instru ent or orderin& adrawee, within the Bhilippines1 and (-) orderin& thatdrawee to pa another person a specified a ount of

one outside the Bhilippines.


13/83

% draft is a for of a *ill of e2chan&e usedainl in transactions *etween persons

ph sicall re ote fro each other. It is anorder ade * one person, sa the *u er of &oods, addressed to a person havin& in hispossession funds of such *u er orderin& theaddressee to pa the purchase price to theseller of the &oods.


14/83

The sa e principle was used in &oss v. +.'. -" whenthe +.S. Supre e Court ruled that it was onleAuita*le for the &overn ent to collect interest froa ta2pa er who, * the &overn ent:s error, receiveda refund which was not due hi .

Even thou&h the ta2pa er here did notreAuest the refund ade to hi , and the

situation is entirel due to an error on thepart of the &overn ent, ta2pa er and not the&overn ent has had the use of the onedurin& the period involved and it is notun ustl penaliLin& ta2pa er to reAuire hi topa co pensation for this use of one .

5ased on esta*lished doctrine, these char&esincident to delinAuenc are co pensator in natureand are i posed for the ta2pa ers: use of the fundsat the ti e when the State should have control of said funds. Collectin& such char&es is andator .Therefore, the Decision of the Court of %ppealsi posin& a - Q delinAuenc interest over theassess ent reduced * the CT% was ustified and inaccordance with Section -9#(c)(!) of the NI4C.

%EREFORE , pre ises considered, thisCourt DENIES this petition and AFFIR!S theDecision of the Court of %ppeals in C%8'.4. SB No.03!$- dated "9 %u&ust "##/, orderin& that petitioner 5an6 of the Bhilippine Islands to pa 4espondentCo issioner of Internal 4evenue the deficienc

docu entar sta p ta2 in the a ountofB$# , ! . inclusive of surchar&e andco pro ise penalt , plus - Q annual interest fro3 June "## until full paid. Costs a&ainst thepetitioner.

SO ORDERED.

http://www.lawphil.net/judjuris/juri2006/jul2006/gr_137002_2006.html#fnt21http://www.lawphil.net/judjuris/juri2006/jul2006/gr_137002_2006.html#fnt21http://www.lawphil.net/judjuris/juri2006/jul2006/gr_137002_2006.html#fnt21


15/83

G.R. No. 1561:2 O7 o3 12, 2006

CITIBANK, N.A. >Fo ly F N- o/-l C yB-/4? -/ IN"ESTORS@ FINANCECORPORATION, o /= 3u / u/ + /--/ yl o9 FNCB F /-/7 , petitioners,vs.

!ODESTA R. SABENIANO, respondent.

D E C I S I O N

C%ICO


16/83

Sa*eniano of the fore&oin& co pensation throu&hletters, dated -/ Septe *er "#3# and !" Octo*er "#3#. Betitioners were therefore surprised when si2

ears later, in "#/0, respondent and her counselade repeated reAuests for the withdrawal of

respondent:s deposits and one ar6etplace ents with petitioner Citi*an6, includin& her dollar accounts with Citi*an68'eneva and her

one ar6et place ents with petitioner ?NC5?inance. Thus, petitioners pra ed for the dis issalof the Co plaint and for the award of actual, oral,and e2e plar da a&es, and attorne :s fees.


17/83

(ii) Citi*an6 NNBN Serial No. -!!03(Cancels and Supersedes NNBN No.--0-/) issued on "3 arch"#33, B- !,"0 . with "9.0 interest p.a.1

(iii) ?NC5 NNBN Serial No. 0303 (Cancelsand Supersedes NNBN No. 9#0-), issuedon - June "#33, B0 , . with "3Qinterest p.a.1

(iv) ?NC5 NNBN Serial No. 030/ (Cancelsand Supersedes NNBN No. 9#$-), issuedon - June "#33, B0 , . with "3Qinterest per annu 1

(v) The Two illion (B-, , . ) onear6et place ents of s. Sa*eniano with

the % ala Invest ent Develop entCorporation (%IDC) with le&al interest at therate of twelve percent ("-Q) per annuco pounded earl , fro ! Septe *er "#3$ until full paid1

9. Orderin& defendants8appellants to ointl andseverall pa the plaintiff8appellant the su of ?I;E @+ND4ED T@O+S%ND BESOS(B0 , . ) * wa of oral da a&es, ?I;E@+ND4ED T@O+S%ND BESOS (B0 , . )as e2e plar da a&es, and ONE @+ND4EDT@O+S%ND BESOS (B" , . ) asattorne :s fees.

%pparentl , the parties to the case, na el , therespondent, on one hand, and the petitioners, on theother, ade separate atte pts to *rin& the

afore entioned Decision of the Court of %ppeals,dated -$ arch - -, *efore this Court for review.

'.4. No. "0-#/0

4espondent no lon&er sou&ht a reconsideration of the Decision of the Court of %ppeals in C%8'.4. C;No. 0"#! , dated -$ arch - -, and instead, filedi ediatel with this Court on ! a - - a otionfor E2tension of Ti e to ?ile a Betition for 4eview, "! which, after pa ent of the doc6et andother lawful fees, was assi&ned the doc6et nu *er '.4. No. "0-#/0. In the said otion, respondentalle&ed that she received a cop of the assailedCourt of %ppeals Decision on "/ %pril - - and,thus, had "0 da s therefro or until ! a - -within which to file her Betition for 4eview. Since sheinfor ed her counsel of her desire to pursue anappeal of the Court of %ppeals Decision onl on -#

%pril - -, her counsel neither had enou&h ti e tofile a otion for reconsideration of the said Decisionwith the Court of %ppeals, nor a Betition

for ertiorari with this Court. et, the otion failed tostate the e2act e2tension period respondent wasreAuestin& for.

Since this Court did not act upon respondent:sotion for E2tension of Ti e to file her Betition for

4eview, then the period for appeal continued to runand still e2pired on ! a - -. "9 4espondent failedto file an Betition for 4eview within the prescri*ed

period for appeal and, hence, this Court issued a4esolution, "0 dated "! Nove *er - -, in which itpronounced that R

G.R. No. 152985 (Modesta R. Sabenianovs. Court of Appea s! et a .". R It appearin&that petitioner failed to file the intendedpetition for review on certiorari within theperiod which e2pired on a !, - -, theCourt 4esolves to #$C%AR$ &' S CAS$ &$RM NA&$# and # R$C& the DivisionCler6 of Court to N)*RM the parties that the

ud& ent sou&ht to *e reviewed has*eco e final and e2ecutor .

The said 4esolution was dul recorded in the 5oo6of Entries of Jud& ents on ! Januar - !.

'.4. No. "0$"!-

eanwhile, petitioners filed with the Court of %ppeals a otion for 4econsideration of its Decisionin C%8'.4. C; No. 0"#! , dated -$ arch - -.

%ctin& upon the said otion, the Court of %ppealsissued the 4esolution, "$ dated - Nove *er - -,

odif in& its Decision of -$ arch - -, as follows

R

%EREFORE, pre ises considered, theinstant *otion for&econsideration is PARTIALL(GRANTED as Su*8para&raph (;) para&raph! of the assailed ecision s dispositiveportion is here* ordered DELETED .

The challen&ed -$ arch - - ecision othe Courtis AFFIR!ED with !ODIFICATION.

%ssailin& the Decision and 4esolution of the Court of %ppeals in C%8'.4. C; No. 0"#! , dated -$ arch- - and - Nove *er - -, respectivel ,petitioners filed the present Betition, doc6eted as'.4. No. "0$"!-. The Betition was initialldenied "3 * this Court for failure of the petitioners toattach thereto a Certification a&ainst ?oruShoppin&. @owever, upon petitioners: otion and

http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt13http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt13http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt14http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt14http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt15http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt15http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt16http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt17http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt17http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt13http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt14http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt15http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt16http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt17


18/83

co pliance with the reAuire ents, this Courtresolved "/ to reinstate the Betition.

The Betition presented fourteen ("9) assi&n ents of errors alle&edl co itted * the Court of %ppealsin its Decision, dated -$ arch - -, involvin& *othAuestions of fact and Auestions of law which thisCourt, for the sa6e of e2pedienc , discusses ointl ,whenever possi*le, in the succeedin& para&raphs.

I

&+e Reso ution of t+is Court! dated 1, Nove-ber 2 2! in G.R. No. 152985! de/ arin0 t+e #e/isionof t+e Court of Appea s! dated 2 Mar/+ 2 2!fina and e e/utor3! pertains to respondent Sabeniano a one.

5efore proceedin& to a discussion of the erits of the instant Betition, this Court wishes to address firstthe ar&u ent, persistentl advanced * respondentin her pleadin&s on record, as well as her nu erous

personal and unofficial letters to this Court whichwere no lon&er ade part of the record, that theDecision of the Court of %ppeals in C%8'.4. C; No.0"#! , dated -$ arch - -, had alread *eco efinal and e2ecutor * virtue of the 4esolution of thisCourt in '.4. No. "0-#/0, dated "! Nove *er - -.

'.4. No. "0-#/0 was the doc6et nu *er assi&ned* this Court to respondent:s otion for E2tension of Ti e to ?ile a Betition for 4eview. 4espondent,thou&h, did not file her supposed Betition. Thus,after the lapse of the prescri*ed period for the filin&of the Betition, this Court issued the 4esolution,

dated "! Nove *er - -, declarin& the Decision of the Court of %ppeals, dated -$ arch - -, final ande2ecutor . It should *e pointed out, however, that the4esolution, dated "! Nove *er - -, referred onlto '.4. No. "0-#/0, respondent:s appeal, which shefailed to perfect throu&h the filin& of a Betition for 4eview within the prescri*ed period. The declarationof this Court in the sa e 4esolution would *indrespondent solel , and not petitioners which filedtheir own separate appeal *efore this Court,doc6eted as '.4. No. "0$"!-, the Betition at *ar.This would ean that respondent, on her part,should *e *ound * the findin&s of fact and law of

the Court of %ppeals, includin& the onetara ounts conseAuentl awarded to her * theappellate court in its Decision, dated -$ arch - -1and she can no lon&er refute or assail an partthereof. "#

This Court alread e2plained the atter torespondent when it issued a 4esolution - in '.4. No."0$"!-, dated - ?e*ruar - 9, which addressed

her +r&ent otion for the 4elease of the Decisionwith the I ple entation of the Entr of Jud& ent inthe followin& anner R

% ctin& on Citi*an6:s and ?NC5?inance:s *otion for &econsideration , weresolved to &rant the otion, reinstate thepetition and reAuire Sa*eniano to file aco ent thereto in our &esolution of June

-!, - !. Sa*eniano filed a omment datedJul "3, - ! to which Citi*an6 and ?NC5?inance filed a &eply dated %u&ust - ,- !.

?ro the fore&oin&, it is clear thatSa*eniano had 6nowled&e of, and in factparticipated in, the proceedin&s in '.4. No."0$"!-. She cannot fei&n i&norance of theproceedin&s therein and clai thatthe ecision of the Court of %ppeals has*eco e final and e2ecutor . ore precisel ,the ecision *eca e final ande2ecutor on 3 4it+ re0ard toSabeniano in view of her failure to file apetition for review within the e2tended period&ranted * the Court, and not to Citi*an6and ?NC5 ?inance whose %etition for&eview was dul reinstated and is nowsu* itted for decision.

%ccordin&l , the instant +rgent *otion ishere* DENIED. (E phasis supplied.)

To sustain the ar&u ent of respondent would resultin an un ust and incon&ruous situation wherein one

part a frustrate the efforts of the opposin& partto appeal the case * erel filin& with this Court aotion for E2tension of Ti e to ?ile a Betition for

4eview, ahead of the opposin& part , then notactuall filin& the intended Betition. -" The part whofails to file its intended Betition within there&le entar or e2tended period should solel *ear the conseAuences of such failure.

Respondent Sabeniano did not /o--it foru-s+oppin0.

%nother issue that does not directl involve the

erits of the present Betition, *ut raised *petitioners, is whether respondent should *e heldlia*le for foru shoppin&.

Betitioners contend that respondent co ittedforu shoppin& on the *asis of the followin& facts


19/83

- -, was still pendin& *efore the Court of %ppeals,respondent alread filed with this Court on ! a- - her otion for E2tension of Ti e to ?ile aBetition for 4eview of the sa e Court of %ppealsDecision, doc6eted as '.4. No. "0-#/0. Thereafter,respondent continued to participate in theproceedin&s *efore the Court of %ppeals in C%8'.4.C; No. 0"#! * filin& her Co ent, dated "3 Jul- -, to petitioners: otion for 4econsideration1 anda 4e oinder, dated -! Septe *er - -, topetitioners: 4epl . Thus, petitioners ar&ue that *see6in& relief concurrentl fro this Court and theCourt of %ppeals, respondent is undenia*l &uilt of foru shoppin&, if not indirect conte pt.

This Court, however, finds no sufficient *asis to holdrespondent lia*le for foru shoppin&.

?oru shoppin& has *een defined as the filin& of two or ore suits involvin& the sa e parties for thesa e cause of action, either si ultaneousl or successivel , for the purpose of o*tainin& afavora*le ud& ent. -- The test for deter inin& forushoppin& is whether in the two (or ore) casespendin&, there is an identit of parties, ri&hts or causes of action, and relief sou&ht. -! To &uarda&ainst this deplora*le practice, 4ule 3, Section 0 of the revised 4ules of Court i poses the followin&reAuire ent R

SEC. 0. ertification against forumshopping. R The plaintiff or principal partshall certif under oath in the co plaint or other initiator pleadin& assertin& a clai for relief, or in a sworn certification anne2edthereto and si ultaneousl filed therewith(a) that he has not theretofore co encedan action or filed an clai involvin& thesa e issues in an court, tri*unal or Auasi8

udicial a&enc and, to the *est of his6nowled&e, no such other action or clai ispendin& therein1 (*) if there is such other pendin& action or clai , a co pletestate ent of the present status thereof1 and(c) if he should thereafter learn that thesa e or si ilar action or clai has *eenfiled or is pendin&, he shall report that factwithin five (0) da s therefro to the courtwherein his aforesaid co plaint or initiatorpleadin& has *een filed.

?ailure to co pl with the fore&oin&reAuire ents shall not *e cura*le * erea end ent of the co plaint or other initiator pleadin& *ut shall *e cause for thedis issal of the case without pre udice,unless otherwise provided, upon otion andafter hearin&. The su* ission of a false

certification or non8co pliance with an of the underta6in&s therein shall constituteindirect conte pt of court, without pre udiceto the correspondin& ad inistrative andcri inal actions. If the acts of the part or hiscounsel clearl constitute willful anddeli*erate foru shoppin&, the sa e shall*e &round for su ar dis issal withpre udice and shall constitute directconte pt, as well as cause for ad inistrative sanctions.

%lthou&h it a see at first &lance that respondentwas si ultaneousl see6in& recourse fro the Courtof %ppeals and this Court, a careful and closer scrutin of the details of the case at *ar would revealotherwise.

It should *e recalled that respondent did nothin&ore in '.4. No. "0-#/0 than to file with this Court

a otion for E2tension of Ti e within which to fileher Betition for 4eview. ?or une2plained reasons,respondent failed to su* it to this Court her intended Betition within the re&le entar period.ConseAuentl , this Court was pro pted to issue a4esolution, dated "! Nove *er - -, declarin&'.4. No. "0-#/0 ter inated, and the thereinassailed Court of %ppeals Decision final ande2ecutor . '.4. No. "0-#/0, therefore, did notpro&ress and respondent:s appeal was unperfected.

The Betition for 4eview would constitute theinitiator pleadin& *efore this Court, upon the ti elfilin& of which, the case *efore this Courtco ences1 uch in the sa e wa a case isinitiated * the filin& of a Co plaint *efore the trialcourt. The Betition for 4eview esta*lishes theidentit of parties, ri&hts or causes of action, andrelief sou&ht fro this Court, and without such aBetition, there is technicall no case *efore thisCourt. The otion filed * respondent see6in&e2tension of ti e within which to file her Betition for 4eview does not serve the sa e purpose as theBetition for 4eview itself. Such a otion erelpresents the i portant dates and the ustification for the additional ti e reAuested for, *ut it does not &ointo the details of the appealed case.


20/83

should have *een respondent:s Betition for 4eview.It is in that Certification wherein respondent certifies,under oath, that (a) she has not co enced anaction or filed an clai involvin& the sa e issues inan court, tri*unal or Auasi8 udicial a&enc and, tothe *est of her 6nowled&e, no such other action or clai is pendin& therein1 (*) if there is such other pendin& action or clai , that she is presentin& aco plete state ent of the present status thereof1and (c) if she should thereafter learn that the sa eor si ilar action or clai has *een filed or ispendin&, she shall report that fact within five da stherefro to this Court.


21/83

notes she had si&ned.


22/83

the transcript of steno&raphic notes ta6endurin& the trial as *asis of his decision.

%ccused8appellant:s contention that the trial ud&e did not have the opportunit too*serve the conduct and de eanor of thewitnesses since he was not the sa e ud&ewho conducted the hearin& is alsountena*le.


23/83

supposed to earn an interest of "$Q p.a. and for which BN No. - 33! was issued. 4espondent didnot et clai the proceeds of her place ent and,instead, rolled8over or re8invested the principal andproceeds several ti es in the succeedin& ears for which new BNs were issued * petitioner Citi*an6 toreplace the ones which atured. Betitioner Citi*an6accounted for respondent:s ori&inal place ent andthe su*seAuent roll8overs thereof, as follows R

D-> yyyy? PN No. C-/7 l PN No.

"-> $>"#3$ - 33! None

">"9>"#33 -"$/$ - 33!

-> #>"#33--0-$ -"$/$

--0-/ -"$/$

!>"3>"#33-!!0$ --0-$

-!!03 --0-/

Betitioner Citi*an6 alle&ed that it had alread paidto respondent the principal a ounts and proceedsof BNs No. -!!0$ and -!!03, upon their aturit .Betitioner Citi*an6 further averred that respondentused theB0 , . fro the pa ent of BNsNo. -!!0$ and -!!03, plus B$ , . sourcedfro her other funds, to open two ti e deposit(TD) accounts with petitioner Citi*an6, na el , TD

%ccounts No. "33/! and "33/9.

Betitioner Citi*an6 did not den the e2istence nor Auestioned the authenticit of BNs No. -!!0$ and-!!03 it issued in favor of respondent for her

one ar6et place ents. In fact, it ad itted the&enuineness and due e2ecution of the said BNs,*ut Aualified that the were no lon&er outstandin& .!" In 1ibberd v. &ohde and *c*illian ,!- this Court delineated theconseAuences of such an ad ission R

5 the ad ission of the &enuineness and duee2ecution of an instru ent, as provided in thissection, is eant that the part whose si&natureit *ears ad its that he si&ned it or that it wassi&ned * another for hi with his authorit 1 that

at the ti e it was si&ned it was in words andfi&ures e2actl as set out in the pleadin& of thepart rel in& upon it1 that the docu ent wasdelivered1 and that an for al reAuisitesreAuired * law, such as a seal, anac6nowled& ent, or revenue sta p, which itlac6s, are waived * hi . @ence, such defensesas that the si&nature is a for&er (Buritan f&.Co. vs. Toti 'radi, "9 N. ., 9-01

Co2 vs. Northwestern Sta&e Co., " Idaho, !3$1


24/83

to prove non8pa ent. The de*tor has the*urden of showin& with le&al certaint that theo*li&ation has *een dischar&ed * pa ent.


25/83

K %nd outside this B0 , . which ou saidwas *oo6ed out of the proceeds of E2hs. H93H andH9/H, were there other ti e deposits opened *

rs. odesta Sa*eniano at that ti e.

% es, she also opened another ti e depositfor B$ , . .

K So all in all r.


26/83

ar6et place ents were of su*stantiala ounts R consistin& of the principal a ountof B0 , . , plus the interest it shouldhave earned durin& the ears of place ent

R and it is difficult for this Court to *elievethat petitioner Citi*an6 would not have haddocu ented the pa ent thereof.

C ODEST%4. S%5ENI%NO.H T pewritten on C No."##-0! is the phrase H4ef. Broceeds of TD"33/!,H and on C No. "##-0" is a si ilar phrase, H4ef. Broceeds of TD "33/9.H Thesephrases purportedl esta*lished that the

Cs were paid fro the proceeds of respondent:s pre8ter inated TD accountswith petitioner Citi*an6. +pon receipt of the

Cs, petitioner ?NC5 ?inance depositedthe sa e to its account with ?eati 5an6 andTrust Co., as evidenced * the ru**er sta p

ar6 of the latter found at the *ac6 of *othCs. In e2chan&e, petitioner ?NC5 ?inance

*oo6ed the a ounts received as onear6et place ents, and accordin&l issued

BNs No. 9#0- and 9#$-, for the a ountsof B0 , . and B$ , .

respectivel , pa a*le to respondent:ssavin&s account with petitioner Citi*an6, S>%No. -08"!3 !89, upon their aturit on "June "#33. Once a&ain, respondent rolled8over several ti es the principal a ounts of her one ar6et place ents withpetitioner ?NC5 ?inance, as follows R

http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt39http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt40http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt40http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt41http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt42http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt43http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt39http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt40http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt41http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt42http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt43


27/83

yy) PN No. C-/7 l PN No.!- u y D-> yyyy?

A ou/>P?

9#0- None $> ">"#33 0 , .

9#$- None $> ">"#33 $ , .

0303 9#0- />!">"#33 0 , .

030/ 9#$- />!">"#33 0 , .

/"$3 0303 />-0>"#3/ 0 , ./"$# 030- />-0>"#3/ 0 , .

%s presented * the petitioner ?NC5 ?inance,respondent rolled8over onl the principal a ounts of her one ar6et place ents as she chose toreceive the interest inco e therefro . Betitioner ?NC5 ?inance also pointed out that when BN No.9#$-, with principal a ount of B$ , . ,

atured on " June "#33, respondent received apartial pa ent of the principal which, to&ether withthe interest, a ounted to B" -,$!!.!!1 99 thus, onl

the a ount of B0 , . fro BN No. 9#$- wasrolled8over to BN No. 030/.

5ased on the fore&oin& records, the principala ounts of BNs No. 0303 and 030/, upon their

aturit , were rolled over to BNs No. /"$3 and/"$#, respectivel . BN No. /"$3 90 e2presslcanceled and superseded BN No. 0303, while BNNo. /"$# 9$ also e2plicitl canceled and supersededBN No. 030/. Thus, it is patentl erroneous for theCourt of %ppeals to still award to respondent theprincipal a ounts and interests covered * BNs No.0303 and 030/ when these were alread canceled

and superseded. It is now incu *ent upon this Courtto deter ine what su*seAuentl happened to BNsNo. /"$3 and /"$#.

Betitioner ?NC5 ?inance presented four chec6s asproof of pa ent of the principal a ounts andinterests of BNs No. /"$3 and /"$# upon their

aturit . %ll the chec6s were pa a*le torespondent:s savin&s account with petitioner Citi*an6, with the followin& details R

D- o9 I u-/7> yyyy?

C+ 74No.

A ou/>P?

No - o/

#> ">"#3/ 3$#$- "-,/!!.!9 Interestpa entonBN= /"$3

#> ">"#3/ 3$#$" "-,/!!.!9 Interestpa ent

onBN= /"$#

#> 0>"#3/ 33 !0 0 , . ?ullpa ent of principalonBN= /"$3which ishere*cancelled

#> 0> "#3/ 33 !9 0 , . ?ullpa ent of principalonBN= /"$#which ishere*cancelled

Then a&ain, Chec6s No. 33 !0 and 33 !9 werelater returned to petitioner ?NC5 ?inance to&ether with a e o, 93 dated $ Septe *er "#3/, fro r.Tan of petitioner Citi*an6, to a r. 5o** endoLaof petitioner ?NC5 ?inance. %ccordin& to the e o,the two chec6s, in the total a ountof B", , . , were to *e returned torespondent:s account with instructions to *oo6 thesaid a ount in one ar6et place ents for one

ore ear. Bursuant to the said e o, Chec6s No.33 !0 and 33 !9 were invested * petitioner ?NC5?inance, on *ehalf of respondent, in one ar6etplace ents for which it issued BNs No. - "!/ and- "!#. The BNs each covered B0 , . , to earn""Q interest per annu , and to ature on !

Septe *er "#3#.

On ! Septe *er "#3#, petitioner ?NC5 ?inanceissued Chec6 No. " "$/, pa to the order of HCiti*an6 N.%. %>C odesta Sa*eniano,H in thea ount of B", --,#"$.$$, as full pa ent of theprincipal a ounts and interests of *oth BNs No.- "!/ and - "!# and, resultantl , cancelin& the saidBNs. 9/ 4espondent actuall ad itted the issuanceand e2istence of Chec6 No. " "$/, *ut with theAualification that the proceeds thereof were turnedover to petitioner Citi*an6. 9# 4espondent did notclarif the circu stances attendin& the supposed

turn over, *ut on the *asis of the alle&ations of petitioner Citi*an6 itself, the proceeds of BNs No.- "!/ and - "!#, a ountin& to B", --,#"$.$$, wasused * it to liAuidate respondent:s outstandin&loans. Therefore, the deter ination of whether or notrespondent is still entitled to the return of theproceeds of BNs No. - "!/ and - "!# shall *edependent on the resolution of the issues raised asto the e2istence of the loans and the authorit of

http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt44http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt45http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt46http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt47http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt48http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt49http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt44http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt45http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt46http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt47http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt48http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt49


28/83

petitioner Citi*an6 to use the proceeds of the saidBNs, to&ether with respondent:s other deposits and

one ar6et place ents, to pa for the sa e.

Savin&s and current accounts with petitioner Citi*an6

4espondent presented and su* itted *efore the4TC deposit slips and *an6 state ents to prove

deposits ade to several of her accounts withpetitioner Citi*an6, particularl , %ccounts No.9/9- -, 0# #", and 93-830", which would have

a ounted to a total of B!,/"-,3"-.!-, had there*een no withdrawals or de*its fro the saidaccounts fro the ti e the said deposits were ade.

%lthou&h the 4TC and the Court of %ppeals did nota6e an definitive findin&s as to the status of

respondent:s savin&s and current accounts withpetitioner Citi*an6, the Decisions of *oth the trial andappellate courts effectivel reco&niLed onlthe B!", 3#."9 co in& fro respondent:s savin&s

account which was used to off8set her alle&edoutstandin& loans with petitioner Citi*an6. 0

Since *oth the 4TC and the Court of %ppeals hadconsistentl reco&niLed onl the B!", 3#."9 of respondent:s savin&s account with petitioner Citi*an6, and that respondent failed to ove for reconsideration or to appeal this particular findin& of fact * the trial and appellate courts, it is alread*indin& upon this Court. 4espondent is alreadprecluded fro clai in& an &reater a ount in her savin&s and current accounts with petitioner Citi*an6. Thus, this Court shall li it itself to

deter inin& whether or not respondent is entitled tothe return of the a ount ofB!", 3#."9 should theoff8set thereof * petitioner Citi*an6 a&ainst her supposed loans *e found invalid.

Dollar accounts with Citi*an68'eneva

4espondent ade an effort of preparin& andpresentin& *efore the 4TC her own co putations of her one ar6et place ents and dollar accountswith Citi*an68'eneva, purportedl a ountin& to atotal of +nited States (+S) !9!,-- .#/, as of -!June "#/0 .0" In her e orandu filed with the 4TC,

she clai ed a uch *i&&er a ount of deposits andone ar6et place ents with Citi*an68'eneva,totalin& +S ",!!$,$!/.$0. 0- @owever, respondentherself also su* itted as part of her for al offer of evidence the co putation of her one ar6etplace ents and dollar accounts with Citi*an68'eneva as deter ined * the latter .0! Citi*an68'eneva accounted for respondent:s one ar6etplace ents and dollar accounts as follows R

ODEST% S%5ENIW W W W W W W W W W W W W W W W W

+S ! : .88 Brincip

X +S !!#. $ Interest -0." .3#

8 +S #0.88 Co is

+S ! :-99. $ Total proc

+S ""9: .88 Brincipa

X +S ":!0/.0 Interest -0." .3#

8 +S 9"."3 Co issi

+S ""0:!"3.!! Total proce

+S "90:0$".!# Total pro-0." ."#

X +S "":!/".!" total of *oth

+S "0$:#9-.3 Total fund8 +S "9#:$!-.## Transfer

(counte

+S 3:! #.3" 5alance in

8 +S $:##/./9 Transfer ton arc

+S !" ./3 various ch

%ccordin& to the fore&oin& co putation, * -0Octo*er "#3#, respondent had a total of +S "0$,#9-.3 , fro which, +S "9#,$!-.## wastransferred * Citi*an68'eneva to petitioner Citi*an6in anila, and was used * the latter to off8setrespondent:s outstandin& loans. The *alance of respondent:s accounts with Citi*an68'eneva, after the re ittance to petitioner Citi*an6 in anila,a ounted to +S 3,! #.3", which was su*seAuentle2pended * a transfer to another account withCiti*an68Vuerich, in the a ount of +S $,##/./9, and* pa ent of various *an6 char&es, includin&closin& char&es, in the a ount of +S !" ./3.4i&htl so, *oth the 4TC and the Court of %ppeals&ave ore credence to the co putation of Citi*an68'eneva as to the status of respondent:s accountswith the said *an6, rather than the one prepared *respondent herself, which was evidentl self8servin&.Once a&ain, this Court shall li it itself to deter inin&whether or not respondent is entitled to the return of the a ount of +S "9#,$!-.## should the off8setthereof * petitioner Citi*an6 a&ainst her alle&edoutstandin& loans *e found invalid. 4espondentcannot clai an &reater a ount since she did notperfect an appeal of the Decision of the Court of

http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt50http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt51http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt51http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt52http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt52http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt53http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt53http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt50http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt51http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt52http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt53


29/83

%ppeals, dated -$ arch - -, which found that sheis entitled onl to the return of the said a ount, asfar as her accounts with Citi*an68'eneva isconcerned.

III

etitioner Citiban 4as ab e to estab is+ b3 preponderan/e of eviden/e t+e e isten/e of

respondent;s oans.

Betitioners: version of events

In su , the followin& a ounts were used *petitioner Citi*an6 to liAuidate respondent:spurported outstandin& loans R

D 7 o/

Brincipal and interests of BNs No. - "!/ and - "!#( one ar6et place ents with petitioner ?NC5?inance)

Savin&s account with petitioner Citi*an6

Dollar re ittance fro Citi*an68'eneva (peso eAuivalentof +S "9#,$!-.##)

To -l

%ccordin& to petitioner Citi*an6, respondent incurredher loans under the circu stances narrated *elow.

%s earl as # ?e*ruar "#3/, respondent o*tained

her first loan fro petitioner Citi*an6 in the principala ount ofB- , . , for which she e2ecuted BNNo. !"0 9 .09 Betitioner Citi*an6 e2tended to her several other loans in the succeedin& onths. So eof these loans were paid, while others were rolled8over or renewed. Si&nificant to the Betition at *ar arethe loans which respondent o*tained fro Jul "#3/to Januar "#3#, appropriatel covered * BNs (firstset) .00 The a&&re&ate principal a ount of theseloans was B",#- , . , which could *e *ro6endown as follows R

D- o9

u-/7yyyy?

D- o9 !- u y> yyyy?

P /7 -lA ou/

D- o9 R l -> yyyy?

3>- >"#3/ #>"/>"#3/ B 9 , . 3>- >"#3/

>"!>"#3/ "->"->"#3/ " , . +nrecovered

>"#>"#3/ ""> !>"#3/ " , . " >"#>"#3/

">"0>"#3/ ">"0>"#3# "0 , . "">"$>"#3/

"">-">"#3/ ">"#>"#3# -0 , . "">-">"#3/

"-> 9>"#3/ ">"/>"#3# " , . "-> 0>"#3

"->-$>"#3/ ->-!>"#3# ! , . "->-$>"#3/

"> #>"#3# !> #>"#3# "0 , . "> #>

">"3>"#3# !>"#>"#3# "0 , . ">"3>"#

">! >"#3# !>! >"#3# -- , . ">! >"#

P 1, 20,000.00

yyyy?

!90""> ">"#3#

!90 # "> ->"#3#

!90!9 "> #>"#3#

!9$"- ">"#>"#3#

!939" ">-$>"#3#

!0$/# ->-!>"#3#

!0$#9 !>"#>"#3#

!0$#0 !>"#>"#3#

http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt54http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt54http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt55http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt55http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt56http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt56http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt54http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt55http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt56


30/83

!0$#9$ !>- >"#3# 0>-#>"#3#

!0$#3 !>! >"#3# 0>-#>"#3#

To -l

%ll the BNs stated that the purpose of the loanscovered there* is HTo liAuidate e2istin& o*li&ation,He2cept for BN No. !90!9, which stated for itspurpose Hpersonal invest ent.H

4espondent secured her fore&oin& loans withpetitioner Citi*an6 * e2ecutin& Deeds of

%ssi&n ent of her one ar6et place ents withpetitioner ?NC5 ?inance. On - arch "#3/,respondent e2ecuted in favor of petitioner Citi*an6 aDeed of %ssi&n ent 03 of BN No. /"$#, which wasissued * petitioner ?NC5 ?inance, to securepa ent of the credit and *an6in& facilities e2tendedto her * petitioner Citi*an6, in the a&&re&ateprincipal a ount of B0 , . . On # arch "#3/,respondent e2ecuted in favor of petitioner Citi*an6another Deed of %ssi&n ent, 0/ this ti e, of BN No./"$3, also issued * petitioner ?NC5 ?inance, tosecure pa ent of the credit and *an6in& facilitiese2tended to her * petitioner Citi*an6, in thea&&re&ate a ount of B0 , . .


31/83

respondent. The letter was a&ain printed on paper *earin& the letterhead of C %dore InternationalBalace. The pertinent para&raphs of the said letter are reproduced *elow R

Ber instructions of rs. odesta 4.Sa*eniano, we would li6e to reAuest for a re8co putation of the interest and penaltchar&es on her loan in the a&&re&ate

a ount of B",#- , . with aturit dateof all pro issor notes at June ! , "#3#. %sshe has personall discussed with ou

esterda , this date will ore or less assureou of earl settle ent.

In this re&ard, please entrust to *earer, our Co trust chec6 for B$-,$/!.!! to *ereplaced * another chec6 with a ountresultin& fro the new co putation. %lso, tofacilitate the processin& of the sa e, awe reAuest for another set of pro issornotes for the si&nature of rs. Sa*enianoand to cancel the previous ones she hassi&ned and forwarded to ou.

This was followed * a tele&ra , $0 dated 0 June"#3#, and received * petitioner Citi*an6 thefollowin& da . The tele&ra was sent * a Dewe '.Soriano, 7e&al Counsel. The tele&raac6nowled&ed receipt of the tele&ra sent *petitioner Citi*an6 re&ardin& the Hre8past dueo*li&ationH of c%dore International Balace.@owever, it reported that respondent, the Bresidentand Chair an of C %dore International Balace,was presentl a*road ne&otiatin& for a *i& loan.Thus, he was reAuestin& for an e2tension of the duedate of the o*li&ation until respondent:s arrival on or *efore !" Jul "#3#.

The ne2t letter ,$$ dated -" June "#3#, was si&ned *respondent herself and addressed to r. 5o**

endoLa, a ana&er of petitioner ?NC5 ?inance.4espondent wrote therein R

4e BN No. - "!/ for B0 , . BN No. - "!# for B0 , .

totallin& B" illion, *oth BNs willature on #>!>"#3#.

This is to authoriLe ou to release theaccrued Auarterl interests pa ent fro captioned place ents and forward directlto Citi*an6, anila %ttention r. ?. %. Tan,

ana&er, to appl to interest pa a*le on outstandin& loan with Citi*an6.

Blease note that the captioned twoplace ents are continuouslpled&ed>h pothecated to Citi*an6, anila tosupport personal outstandin& loan.Therefore, please do not release thecaptioned place ents upon aturit until

ou have received the instruction froCiti*an6, anila.

On even date, respondent sent another letter $3

to r.Tan of petitioner Citi*an6, statin& that R

4e S>% No. -08--0#-/and C>% No. 9/98#9$

This letter serves as an authorit to de*itwhatever the outstandin& *alance fro captioned accounts and credit the a ount to

loan outstandin& account with ou.

+nli6e respondent:s earlier letters, *oth letters, dated-" June "#3#, are printed on plain paper, without the

letterhead of her co pan , C %dore InternationalBalace.

5 0 Septe *er "#3#, respondent:s outstandin& andpast due o*li&ations to petitioner Citi*an6totaledB-,"-!,/9!.- , representin& the principala ounts plus interests. 4el in& on respondent:sDeeds of %ssi&n ent, petitioner Citi*an6 applied theproceeds of respondent:s one ar6et place entswith petitioner ?NC5 ?inance, as well as her depositaccount with petitioner Citi*an6, to partl liAuidaterespondent:s outstandin& loan *alance, $/ as follows

R

4espondent:s outstandin& o*li&ation (principal a

7ess Broceeds fro respondent:s one ar6e

with petitioner ?NC5 ?inance (principal a

Deposits in respondent:s *an6 accounts w

Citi*an6

5alance of respondent:s o*li&ation

r. Tan of petitioner Citi*an6 su*seAuentl sent a

letter ,$#

dated -/ Septe *er "#3#, notif in&respondent of the status of her loans and thefore&oin& co pensation which petitioner Citi*an6effected. In the letter, r. Tan infor ed respondentthat she still had a re ainin& past8due o*li&ation inthe a ount of B", $#,/93.9 , as of 0 Septe *er "#3#, and should respondent fail to pa the a ount* "0 Octo*er "#3#, then petitioner Citi*an6 shallproceed to off8set the unpaid a ount with

http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt65http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt66http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt66http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt67http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt68http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt68http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt69http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt69http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt65http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt66http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt67http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt68http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt69


32/83

respondent:s other collateral, particularl , a onear6et place ent in Citi*an68@on&6on&.

On 0 Octo*er "#3#, respondent wrote r. Tan of petitioner Citi*an6, on paper *earin& the letterheadof C %dore International Balace, as re&ardsthe B",#- , . loan account supposedl of C

%dore ?inance Invest ent, Inc., and reAuested for a state ent of account coverin& the principal and

interest of the loan as of !" Octo*er "#3#. Shestated therein that the loan o*li&ation shall *e paidwithin $ da s fro receipt of the state ent of account.

%l ost three wee6s later, or on -0 Octo*er "#3#, acertain %tt . oises Tolentino dropped * the officeof petitioner Citi*an6, with a letter, dated # Octo*er "#3#, and printed on paper with the letterhead of C

%dore International Balace, which authoriLed the*earer thereof to represent the respondent in settlin&the overdue account, this ti e, purportedl , of C

%dore International Balace @otel. The letter wassi&ned * respondent as the Bresident andChair an of the 5oard.

Eventuall , %tt . %ntonio %&caoili of %&caoili %ssociates, as counsel of petitioner Citi*an6, sent aletter to respondent, dated !" Octo*er "#3#,infor in& her that petitioner Citi*an6 had effected anoff8set usin& her account with Citi*an68'eneva, inthe a ount of +S "9#,$!-.##, a&ainst her Houtstandin&, overdue, de anda*le and unpaido*li&ationH to petitioner Citi*an6. %tt . %&caoiliclai ed therein that the co pensation or off8set was

ade pursuant to and in accordance with theprovisions of %rticles "-3/ throu&h "-# of the CivilCode. @e further declared that respondent:so*li&ation to petitioner Citi*an6 was now full paidand liAuidated.

+nfortunatel , on 3 Octo*er "#/3, a fire &utted the3 th floor of petitioner Citi*an6:s *uildin& at Baseo de4o2as St., a6ati, etro anila. Betitionerssu* itted a Certification 3 to this effect, dated "3Januar "##", issued * the Chief of the %rsonInvesti&ation Section, ?ire District III, a6ati ?ireStation, etropolitan Bolice ?orce. The 3 thfloor of petitioner Citi*an6:s *uildin& housed its ControlDivision, which was in char&e of 6eepin& thenecessar docu ents for cases in which it wasinvolved. %fter co pilin& the docu entar evidencefor the present case, %tt . 4enato J. ?ernandeL,internal le&al counsel of petitioner Citi*an6,forwarded the to the Control Division. The ori&inalcopies of the Cs, which supposedl represent theproceeds of the first set of BNs, as well as that of other docu entar evidence related to the case,were a on& those *urned in the said fire. 3"

4espondent:s version of events

4espondent disputed petitioners: narration of thecircu stances surroundin& her loans with petitioner Citi*an6 and the alle&ed authorit she &ave for theoff8set or co pensation of her one ar6etplace ents and deposit accounts with petitionersa&ainst her loan o*li&ation.

4espondent denied outri&ht e2ecutin& the first set of BNs, e2cept for one (BN No. !90!9 in particular). %lthou&h she ad itted that she o*tained severalloans fro petitioner Citi*an6, these onl a ountedto B","0 , . , and she had alread paid the .She secured fro petitioner Citi*an6 two loansof B0 , . each. She e2ecuted in favor of petitioner Citi*an6 the correspondin& BNs for theloans and the Deeds of %ssi&n ent of her one

ar6et place ents with petitioner ?NC5 ?inance assecurit .3- To prove pa ent of these loans,respondent presented two provisional receipts of petitioner Citi*an6 R No. "#93", 3! dated "" %u&ust"#3/, and No. "-3-!, 39 dated " Nove *er "#3/ R*oth si&ned * r. Tan, and ac6nowled&in& receiptfro respondent of several chec6s in the totala ount of B0 ,399. and B0 , . ,respectivel , for HliAuidation of loan.H

She *orrowed another B"0 , . fro petitioner Citi*an6 for personal invest ent, and for which shee2ecuted BN No. !90!9, on # Januar "#3#. Thus,she ad itted to receivin& the proceeds of this loanvia C No. --/-3 . She invested the loan a ount inanother one ar6et place ent with petitioner ?NC5 ?inance. In turn, she used the ver sa e

one ar6et place ent with petitioner ?NC5?inance as securit for her B"0 , . loan fropetitioner Citi*an6.


33/83

these chec6s, not as proceeds of loans, *ut aspa ent of the principal a ounts and>or interestsfro her one ar6et place ents with petitioner Citi*an6. She also raised dou*ts as to the notationon each of the chec6s that reads H4E Broceeds of BN= correspondin& BN No. ,H sa in& that suchnotation did not appear on the Cs when sheori&inall received the and that the notationappears to have *een written * a t pewriter different fro that used in writin& all other infor ation on the chec6s ( i.e. , date, pa ee, anda ount) .3$ She even testified that Cs were notsupposed to *ear notations indicatin& the purposefor which the were issued.

%s to the second set of BNs, respondentac6nowled&ed havin& si&ned the all. @owever, sheasserted that she onl e2ecuted these BNs as partof the si ulated loans she and r. Tan of petitioner Citi*an6 concocted. 4espondent e2plained that shehad a pendin& loan application for a *i& a ount withthe Develop ent 5an6 of the Bhilippines (D5B), andwhen r. Tan found out a*out this, he su&&estedthat the could a6e it appear that the respondenthad outstandin& loans with petitioner Citi*an6 andthe latter was alread de andin& pa ent thereof1this i&ht persuade D5B to approve respondent:sloan application. r. Tan ade the respondent si&nthe second set of BNs, so that he a haveso ethin& to show the D5B investi&ator who i&htinAuire with petitioner Citi*an6 as to respondent:sloans with the latter. On her own copies of the saidBNs, respondent wrote * hand the notation, HThisisa ( sic ) si ulated non8ne&otia*le note, si&ned cop&iven to r. Tan., ( sic ) per a&ree ent to *e shown toD5B representative. itwill ( sic ) *e returned to e if the B""W ( sic ) loan for C %dore Balace @otel isapproved * D5B.H 33

?indin&s of this Court as to the e2istence of theloans

%fter &oin& throu&h the testi onial and docu entarevidence presented * *oth sides to this case, it isthis Court:s assess ent that respondent did indeedhave outstandin& loans with petitioner Citi*an6 at theti e it effected the off8set or co pensation on -0Jul "#3# (usin& respondent:s savin&s deposit withpetitioner Citi*an6), 0 Septe *er "#3# (usin& theproceeds of respondent:s one ar6et place entswith petitioner ?NC5 ?inance) and -$ Octo*er "#3#(usin& respondent:s dollar accounts re itted froCiti*an68'eneva). The totalit of petitioners:evidence as to the e2istence of the said loanspreponderates over respondent:s. Breponderantevidence eans that, as a whole, the evidenceadduced * one side outwei&hs that of the adversepart .3/

4espondent:s outstandin& o*li&ationfor B",#- , . had *een sufficientl docu ented* petitioner Citi*an6.

The second set of BNs is a ere renewal of the prior loans ori&inall covered * the first set of BNs,e2cept for BN No. !90!9. The first set of BNs issupported, in turn, * the e2istence of the Cs thatrepresent the proceeds thereof received * the

respondent.

It *ears to e phasiLe that the proceeds of the loanswere paid to respondent in Cs, with the respondentspecificall na ed as pa ee. Cs chec6s are drawn* the *an6:s ana&er upon the *an6 itself andre&arded to *e as &ood as the one itrepresents. 3# oreover, the Cs were crossedchec6s, with the words HBa ee:s %ccount Onl .H

In &eneral, a crossed chec6 cannot *e presented tothe drawee *an6 for pa ent in cash. Instead, thechec6 can onl *e deposited with the pa ee:s *an6

which, in turn, ust present it for pa ent a&ainstthe drawee *an6 in the course of nor al *an6in&hours. The crossed chec6 cannot *e presented for pa ent, *ut it can onl *e deposited and thedrawee *an6 a onl pa to another *an6 in thepa ee:s or indorser:s account ./ The effect ofcrossin& a chec6 was descri*ed * this Courtin %hilippine ommercial International Ban" v. ourt of Appeals /" R

T he crossin& of a chec6 with the phraseHBa ee:s %ccount Onl H is a warnin& that thechec6 should *e deposited in the account of

the pa ee. Thus, it is the dut of thecollectin& *an6 BCI 5an6 to ascertain thatthe chec6 *e deposited in pa ee:s accountonl . It is *ound to scrutiniLe the chec6 andto 6now its depositors *efore it can a6e theclearin& indorse ent Hall prior indorse entsand>or lac6 of indorse ent &uaranteed.H

The crossed Cs presented * petitioner 5an6 wereindeed deposited in several different *an6 accountsand cleared * the Clearin& Office of the Central5an6 of the Bhilippines, as evidenced * the sta p

ar6s and notations on the said chec6s. The

crossed Cs are alread in the possession of petitioner Citi*an6, the drawee *an6, which wasulti atel responsi*le for the pa ent of the a ountstated in the chec6s. 'iven that a chec6 is orethan ust an instru ent of credit used in co ercialtransactions for it also serves as a receipt or evidence for the drawee *an6 of the cancellation of the said chec6 due to pa ent, /- then, thepossession * petitioner Citi*an6 of the said Cs,dul sta ped HBaidH &ives rise to the presu ption

http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt76http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt76http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt77http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt78http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt78http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt79http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt79http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt80http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt80http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt81http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt82http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt82http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt76http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt77http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt78http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt79http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt80http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt81http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt82


34/83

that the said Cs were alread paid out to theintended pa ee, who was in this case, therespondent.

This Court finds applica*le herein the presu ptionsthat private transactions have *een fair andre&ular ,/! and that the ordinar course of *usinesshas *een followed ./9 There is no Auestion that theloan transaction *etween petitioner Citi*an6 and the

respondent is a private transaction. The transactionsrevolvin& around the crossed Cs R fro their issuance * petitioner Citi*an6 to respondent aspa ent of the proceeds of her loans1 to its depositin respondent:s accounts with several different*an6s1 to the clearin& of the Cs * an independentclearin& house1 and finall , to the pa ent of the

Cs * petitioner Citi*an6 as the drawee *an6 of the said chec6s R are all private transactions whichshall *e presu ed to have *een fair and re&ular toall the parties concerned. In addition, the *an6sinvolved in the fore&oin& transactions are alsopresu ed to have followed the ordinar course of *usiness in the acceptance of the crossed Cs for deposit in respondent:s accounts, su* ittin& thefor clearin&, and their eventual pa ent andcancellation.

The afore8stated presu ptions are disputa*le,eanin&, the are satisfactor if uncontradicted, *uta *e contradicted and overco e * other

evidence. /0 4espondent, however, was una*le topresent sufficient and credi*le evidence to disputethese presu ptions.

It should *e recalled that out of the nine Cspresented * petitioner Citi*an6, respondentad itted to receivin& one as proceeds of a loan ( CNo. --/-3 ), denied receivin& two ( Cs No. -- 3 "and --$9$3), and ad itted to receivin& all the rest,*ut not as proceeds of her loans, *ut as return onthe principal a ounts and interests fro her one

ar6et place ents.

4espondent ad itted receivin& C No. --/-3representin& the proceeds of her loan covered *BN No. !90!9. %lthou&h the principal a ount of theloan is B"0 , . , respondent onlreceived B"9$,!"-.0 , *ecause the interest andhandlin& fee on the loan transaction were alreaddeducted therefro ./$ Sta ps and notations at the*ac6 of C No. --/-3 reveal that it was depositedat the 5an6 of the Bhilippine Islands (5BI), Cu*ao5ranch, in %ccount No. "-!8 03-8-/. /3 The chec6also *ore the si&nature of respondent at the*ac6. // %nd, althou&h respondent would later ad itthat she did si&n BN No. !90!9 and received CNo. --/-3 as proceeds of the loan e2tended to her * petitioner Citi*an6, she contradicted herself

when, in an earlier testi on , she clai ed that BNNo. !90!9 was a on& the BNs she e2ecuted assi ulated loans with petitioner Citi*an6 . /#

4espondent denied ever receivin& Cs No. -- 3 "and --$9$3. @owever, considerin& that the saidchec6s were crossed for pa ee:s account onl , andthat the were actuall deposited, cleared, and paid,then the presu ption would *e that the said chec6s

were properl deposited to the account of respondent, who was clearl na ed the pa ee in thechec6s. 4espondent:s *are alle&ations that she didnot receive the two chec6s fail to convince thisCourt, for to sustain her, would *e for this Court toconclude that an irre&ularit had occurredso ewhere fro the ti e of the issuance of the saidchec6s, to their deposit, clearance, and pa ent,and which would have involved not onl petitioner Citi*an6, *ut also 5BI, which accepted the chec6sfor deposit, and the Central 5an6 of the Bhilippines,which cleared the chec6s. It falls upon therespondent to overco e or dispute the presu ptionthat the crossed chec6s were issued, accepted for deposit, cleared, and paid for * the *an6s involvedfollowin& the ordinar course of their *usiness.

The ere fact that Cs No. -- 3 " and --$9$3 donot *ear respondent:s si&nature at the *ac6 does notne&ate deposit thereof in her account. The lia*ilitfor the lac6 of indorse ent on the Cs no lon&er fallon petitioner Citi*an6, *ut on the *an6 who receivedthe sa e for deposit, in this case, 5BI Cu*ao5ranch. Once a&ain, it ust *e noted that the Cswere crossed, for pa ee:s account onl , and thepa ee na ed in *oth chec6s was none other thanrespondent. The crossin& of the Cs was alread awarnin& to 5BI to receive said chec6s for depositonl in respondent:s account. It was up to 5BI toverif whether it was receivin& the crossed Cs inaccordance with the instructions on the face thereof.If, indeed, the Cs were deposited in accounts other than respondent:s, then the respondent would havea cause of action a&ainst 5BI. #

5BI further sta ped its &uarantee on the *ac6 of thechec6s to the effect that, H%ll prior endorse entand>or 7ac6 of endorse ent &uaranteed.H Thus, 5BI*eca e the indorser of the Cs, and assu ed allthe warranties of an indorser, #" specificall , that thechec6s were &enuine and in all respects what thepurported to *e1 that it had a &ood title to the chec6s1that all prior parties had capacit to contract1 andthat the chec6s were, at the ti e of their indorse ent, valid and su*sistin&. #- So even if the

Cs deposited * 5BI:s client, whether it *e *respondent herself or so e other person, lac6ed thenecessar indorse ent, 5BI, as the collectin& *an6,is *ound * its warranties as an indorser and cannot

http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt83http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt83http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt84http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt84http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt85http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt85http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt86http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt86http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt87http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt87http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt88http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt88http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt89http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt89http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt90http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt91http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt92http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt83http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt84http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt85http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt86http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt87http://www.lawphil.net/judjuris/juri2006/oct2006/gr_156132_2006.html#fnt88http://www.lawphil.net/judjuris/juri2006/oct2006/gr_

Documents

Additional Cases in Negotiable Instruments Law