Petitioner Citibank, N.A. (formerly known as the First National City
Bank) is a banking corporation dly athori!ed and e"isting nder the laws of the #nited $tates of America and licensed to do commercial banking acti%ities and perform trst fnctions in the Philippines. Petitioner &n%estor's Finance Corporation, which did bsiness nder the name and style of FNCB Finance, was an affiliate company of petitioner Citibank, specifically handling money market placements for its client (espondent )odesta (. $abeniano was a client of both petitioners Citibank and FNCB Finance. (espondent (($) filed a complaint against petitioners before (*C claiming she had sbstantial deposits and ))P with petitioners and A&+C, proceeds of which were spposedly deposited atomatically and directly to respondent's acconts with petitioner Citibank. (espondent alleged that petitioners refsed to retrn her deposits and the proceeds of her money market placements despite her repeated demands, ths, compelling respondent to file Ci%il Case for ,Acconting, $m of )oney and +amages., Petitioners admitted that respondent had deposits and money market placements with them, inclding dollar acconts in the Citibank branch in -ene%a, $wit!erland (Citibank.-ene%a). Petitioners frther alleged that the respondent later obtained se%eral loans from petitioner Citibank, for which she e"ected Promissory Notes (PNs), and secred by (a) a +eclaration of Pledge of her dollar acconts in Citibank.-ene%a, and (b) +eeds of Assignment of her money market placements with petitioner FNCB Finance. When respondent failed to pay her loans despite repeated demands by petitioner Citibank, the latter exercised its right to off-set or copensate respondent!s o"tstanding loans #ith her deposits and oney ar$et placeents% pursuant to the Declaration of Pledge and the Deeds of Assignment executed by respondent in its favor. Petitioner Citibank spposedly informed respondent $abeniano. Petitioners were therefore srprised when si" years later, in /012, respondent and her consel made repeated re3ests for the withdrawal of respondent's deposits and money market placements with petitioner Citibank, inclding her dollar acconts with Citibank.-ene%a and her money market placements with petitioner FNCB Finance. *hs, petitioners prayed for the dismissal of the Complaint and for the award of actal, moral, and e"emplary damages, and attorney's fees. (*C4 declared set off illegal . set off of the dollar deposits with Citibank $wt!rlnd. ordered pet to refnd it (5/60k). &t declared ($ indebted to Bank P/.780) CA4 affirmed bt declared Citibank failed to establish by competent e%idence the alleged indebtedness of plaintiff.appellant, $C4 /. 9:; C&*&BAN< &$ =&AB=> *? (>$P?N+>N* Petitioner Citibank alleged that it :A+ A=(>A+; PA&+ to respondent the principal amonts and proceeds of PNs No. @AA28 and @AA2B, pon their matrity. Petitioner Citibank frther a%erred that respondent sed the P277,777.77 from the payment of PNs No. @AA28 and @AA2B, pls P877,777.77 sorced from her other fnds, to open t#o tie deposit &T'( acco"nts #ith petitioner Citi)an$% naely% T' Acco"nts No* +,,-. and +,,-/* Petitioner Citibank did not deny the e"istence nor 3estioned the athenticity of PNs No. @AA28 and @AA2B it issed in fa%or of respondent for her money market placements. In fact% it aditted the gen"ineness and d"e exec"tion of the said 0Ns% )"t 1"alified that they #ere no longer o"tstanding* $ince the genineness and de e"ection of PNs No. @AA28 and @AA2B are ncontested, 2espondent had esta)lished a pria facie case that petitioner Citi)an$ is o)ligated to her for the amonts stated in PNs No. @AA28 and @AA2B, and as petitioner Citibank failed to present sufficient proof of payment of the said PNs and the use by the respondent of the proceeds thereof to open her TD accounts, this Cort finds that PNs No. @AA28 and @AA2B are still otstanding and petitioner Citibank is still liable to respondent for the amonts stated therein. +>F>N$> ?N *:> *+'$4 According to petitioners, respondent's *+ Acconts No. /BB1A and /BB16, in the total amont of P/,/77,777.77, were spposed to matre on /2 )arch /0B1. :owe%er, respondent pre-terinated the said *+ acconts and transferred all the proceeds thereof to petitioner 3NCB 3inance for money market placement. Prsant to her instrctions, *+ Acconts No. /BB1A and /BB16 were pre-terinated and petitioner Citibank (then still named First National City Bank) issed )anager's Checks ()C) No. /00@2A6/ and /00@2/6@ for the amonts of P277,777.77 and P877,77.77, respecti%ely. *he )cs &$$#>+ B; P>* C&*&BAN< were paid from the proceeds of respondent's pre.terminated *+ acconts with petitioner Citibank. #pon receipt of the )Cs, petitioner FNCB Finance deposited the same to its accont with Feati Bank and *rst Co., &n e"change, petitioner FNCB Finance booked the amonts recei%ed as money market placements, and accordingly issed PNs No. 602@ and 608@, for the amonts of P277,777.77 and P877,777.77, respecti%ely, payable to respondent's sa%ings accont with petitioner Citibank. (espondent rolled.o%er only the principal amonts of her money market placements as she chose to recei%e the interest income therefrom. C@. 9:; $AB>N&AN? &$ =&AB=> *? P>*&*&?N>($ =?AN$4 respondent obtained her first loan from petitioner Citibank in the principal amont of P@77,777.77, for which she e"ected PN No. A/276. 0etitioner Citi)an$ extended to her se4eral other loans in the s"cceeding onths* $ome of these loans were paid, while others were rolled.o%er or renewed. (espondent sec"red her foregoing loans with petitioner Citibank )y exec"ting 'eeds of Assignent of her money market placements with petitioner FNCB Finance. &n addition to the +eeds of Assignment of her money market placements with petitioner FNCB Finance, respondent also exec"ted a 'eclaration of 0ledge, in which she spposedly pledged ,DaEll present and ftre fidciary placements held in my personal andFor Goint name with Citibank, $wit!erland,, to secre all claims the petitioner Citibank may ha%e or, in the ftre, ac3ire against respondent. 9hen respondent failed to pay the second set of PNs pon their matrity, an e"change of letters ensed between respondent andFor her representati%es, on one hand, and the representati%es of petitioners, on the other. (espondents claim that by 2 $eptember /0B0, respondent!s o"tstanding and past d"e o)ligations to petitioner Citi)an$ totaled 05%+5.%-/.*56% representing the principal amonts pls interests. *hs relying on respondent's +eeds of Assignment, petitioner Citi)an$ applied the proceeds of respondent!s oney ar$et placeents #ith petitioner 3NCB 3inance% as well as her deposit acco"nt #ith petitioner Citibank, to partly li3idate respondent's otstanding loan :?9>H>(, ACC+- *? (>$P?N+>N*4 Althogh she admitted that she obtained se%eral loans from petitioner Citibank, these only ao"nted to 0+%+76%666*66% and she had already paid the* $he secred from petitioner Citibank two loans of P277,777.77 each. $he e"ected in fa%or of petitioner Citibank the corresponding PNs for the loans and the +eeds of Assignment of her money market placements with petitioner FNCB Finance as secrity. A. W89 0ET!S OB:I;ATION O3 0A9<ENT O3 PROCEEDS O3 :OAN TO SABENIANO A2E 'EE<E' 0AI'= (espondent did indeed ha%e otstanding loans with petitioner Citibank at the time it effected the off.set or compensation on @2 Ily /0B0 (sing respondent's sa%ings deposit with petitioner Citibank), 2 $eptember /0B0 (sing the proceeds of respondent's money market placements with petitioner FNCB Finance) and @8 ?ctober /0B0 (sing respondent's dollar acconts remitted from Citibank. -ene%a). *he second set of PNs is a mere renewal of the prior loans originally co%ered by the first set of PNs, e"cept for PN No. A62A6. *he first set of PNs is spported, in trn, by the e"istence of the )Cs that represent the proceeds thereof recei%ed by the respondent. &t bears to emphasi!e that the proceeds of the loans were paid to respondent $AB>N&AN? in )Cs, with the respondent specifically named as PA;>>. W8AT A2E <ANA;E2S C8ECKS= )Cs checks are drawn by the bank's manager >0ON T8E BANK ITSE:3 and regarded to be as -??+ A$ *:> )?N>; &* (>P(>$>N*$. )oreo%er, the )Cs were crossed chec$s, with the words ,Payee's Accont ?nly., &n general, a crossed check cannot be presented to the drawee bank for payment in cash. &nstead, the check can only )e deposited 9&*: *:> PA;>>'$ BAN< ...J which, in trn, mst present it for payment against the drawee bank in the corse of normal banking hors. *he crossed check cannot be presented for payment, bt it CAN ?N=; B> +>P?$&*>+ and the drawee bank ay only pay to another )an$ in the payee!s or indorser!s acco"nt. the effect of crossing a check was described by this Cort in Philippine Commercial &nternational Bank %. Cort of Appeals ?T@he crossing of a chec$ #ith the phrase A0ayee!s Acco"nt OnlyA is a #arning that the chec$ sho"ld )e deposited IN T8E ACCO>NT O3 T8E 0A9EE* *hs, it is the dty of the collecting bank PC& Bank to ascertain that the check be deposited in payee's accont only. &t is bond to scrtini!e the check and to know its depositors before it can make the clearing indorsement ,all prior indorsements andFor lack of indorsement garanteed., *he crossed )Cs presented by petitioner Bank were indeed deposited in se%eral different bank acconts and cleared by the Clearing ?ffice of the Central Bank of the Philippines, as e%idenced by the stamp marks and notations on the said checks. The crossed <Cs are already in the possession of petitioner Citi)an$% the dra#ee )an$% #hich #as "ltiately responsi)le for the payent of the ao"nt stated in the chec$s* :>=+4 -i%en that a check is more than Gst an instrment of credit sed in commercial transactions for it also ser%es as a receipt or e4idence for the dra#ee )an$ of the cancellation of the said chec$ d"e to payent% then, the possession by petitioner Citibank of the said )Cs, dly stamped ,Paid, gi4es rise to the pres"ption that the said <Cs #ere A:2EA'9 0AI' ot to the intended payee, who was in this case, the respondent. *his Cort finds applicable herein the presmptions that pri%ate transactions ha%e been fair and reglar, and that the ordinary corse of bsiness has been followed. *he transactions re%ol%ing arond the crossed )Cs K from their issance by petitioner Citi)an$ to respondent as payent of the proceeds of her loansL to its deposit in respondent!s acco"nts with se%eral different banksL to the clearing of the <Cs )y an independent clearing ho"seB and finally, to the payent of the <Cs )y petitioner Citibank as the dra#ee )an$ of the said checks K are all pri%ate transactions which shall be presmed to ha%e been fair and reglar to all the parties concerned. &n addition, the banks in%ol%ed in the foregoing transactions are also presmed to ha%e followed the ordinary corse of bsiness in the acceptance of the crossed )Cs for deposit in respondent's acconts, sbmitting them for clearing, and their e%ental payment and cancellation. Considering that the said checks were crossed for payee's account only, and that they were actually deposited, cleared, and paid, then the presmption wold be that the said checks were properly deposited to the acco"nt of respondent% who was clearly named the payee in the checks. (espondent's bare allegations that she did not recei%e the two checks fail to con%ince this Cort, for to sstain her, wold be for this Cort to conclde that an irreglarity had occrred somewhere from the time of the issance of the said checks, to their deposit, clearance, and payment, and which wold ha%e in%ol%ed not only petitioner Citibank, bt also BP&, which accepted the checks for deposit, and the Central Bank of the Philippines, which cleared the checks. &t falls pon the respondent to o%ercome or dispte the presmption that the crossed checks were issed, accepted for deposit, cleared, and paid for by the banks in%ol%ed following the ordinary corse of their bsiness. *he mere fact that )Cs No. @@7B7/ and @@868B do not bear respondent's signatre at the back does not negate deposit thereof in her acco"nt. *he liability for the lack of indorsement on the )Cs no longer fall on petitioner Citibank, bt on the bank who recei%ed the same for deposit, in this case, BP& Cbao Branch. ?nce again, it mst be noted that the <Cs #ere crossed% for payee!s acco"nt only% and the payee naed in )oth chec$s #as none other than respondent. *he crossing of the )Cs was already a #arning to B0I to recei4e said chec$s for deposit only in respondent!s acco"nt* It #as "p to B0I to %erify whether it was recei%ing the crossed )Cs in accordance with the instrctions on the face thereof. &f, indeed, the )Cs were deposited in acconts other than respondent's, then the respondent wold ha%e a case of action against BP&. BP& frther stamped its garantee on the back of the checks to the effect that, ,All prior endorsement andFor =ack of endorsement garanteed., *hs, BP& became the indorser of the )Cs, and assmed all the warranties of an indorser, specifically, that the checks were genine and in all respects what they prported to beL that it had a good title to the checksL that all prior parties had capacity to contractL and that the checks were, at the time of their indorsement, %alid and sbsisting $o e%en if the )Cs deposited by BP&'s client, whether it be by respondent herself or some other person, lacked the necessary indorsement, BP&, as the collecting bank, is bond by its warranties as an indorser and cannot set p the defense of lack of indorsement as against petitioner Citibank, the drawee bank. 6. Cort finds that the preponderance of e%idence spports the e"istence of the respondent's loans, in the principal sm of P/,0@7,777.77, as of 2 $eptember /0B0. 2. 9:; =>-A= C?)P>N$A*&?N 9A$ &==>-A=. ))P'$ 9&*: FNCB ..J (espondent's money market placements were with petitioner FNCB Finance, and after se%eral roll.o%ers, they were ltimately co%ered by PNs No. @7/A1 and @7/A0, which, by A $eptember /0B0, the date the check for the proceeds of the said PNs were issed, amonted to P/,7@@,0/8.88, inclsi%e of the principal amonts and interests. As to these money market placements, respondent #as the creditor and petitioner 3NCB 3inance the de)torB while, as to the otstanding loans, petitioner Citi)an$ #as the creditor and respondent the de)tor* Conse3ently, legal compensation, nder Article /@B1 of the Ci%il Code, wold not apply since the first re3irement for a %alid compensation, that each one of the obligors be bond principally, and that he be at the same time a principal creditor of the other, was not met. 9hat petitioner Citibank actally did was to e"ercise its rights to the proceeds of respondent's money market placements with petitioner FNCB Finance by %irte of the +eeds of Assignment e"ected by respondent in its fa%or. . end. CITIBANK and FNCB FINANCE v. SABENIANO 2006 / Chico-Nazario
FACTS Modesta Sabeniano was a client of both Citibank and FNCB Finance.
Sabeniano filed a complaint for accounting, um of mone! and damage againt t"e t#o corporation. . She claimed to hae s!bstantial de"osits and mone# market "lacements $MM%s& with Citibank and FNCB Finance . She also had MM%s with the '#ala (nestment and )eelo"ment Cor"oration $'()C&* the "roceeds of which were s!""osedl# a!tomaticall# de"osited to Sabeniano+s Citibank acco!nts . She alle,ed that Citibank and FNCB Finance ref!sed to ret!rn her de"osits and the "roceeds of her MM%s des"ite her demands
'n amended com"laint was filed to incl!de additional claims to de"osits and MM%s inadertentl# left o!t of the ori,inal com"laint.
$"at "appened %according to Citiban& and FNCB Finance' Sabeniano obtained loans from Citibank* for which she iss!ed "romissor# notes $%Ns& o Some were "aid- other loans were rolled- oer or renewed* and new %Ns were e.ec!ted 'll %Ns /e.ce"t one0 stated as "!r"ose 1to li2!idate e.istin, obli,ation1- the other %N+s "!r"ose was for 1"ersonal inestment1 3he loans were sec!red b#4 o )eeds of 'ssi,nment of her MM%s with FNCB Finance /these were e.ec!ted in faor of Citibank0 o )eclaration of %led,e of her dollar acco!nts in Citibank-5enea /e.ec!ted in faor of Citibank0 Sabeniano s!""osedl# "led,ed all "resent and f!t!re fid!ciar# "lacements held in her "ersonal and/or 6oint name with Citibank- 5enea Sabeniano failed to "a# her loans* so an e.chan,e of letters ens!ed Sabeniano sent a letter to a Citibank mana,er* statin, that it sered as an a!thorit# to debit whateer the o!tstandin, balance from certain amo!nts and credit the amo!nt to the loan o!tstandin, with Citibank Citibank e.ercised its ri,ht to off-set or com"ensate Sabeniano+s o!tstandin, loans with her Citibank de"osit acco!nt and MM%s with FNCB Finance "!rs!ant to the doc!ments she e.ec!ted /to "artl# li2!idate Sabeniano+s o!tstandin, loan balance0 Citibank s!""osedl# informed Sabeniano thro!,h letters abo!t this Citibank+s co!nsel informed Sabeniano that Citibank effected an off-set !sin, her Citibank-5enea acco!nt a,ainst her o!tstandin, obli,ation to Citibank o NCC 7289-72:0 !sed as basis o Co!nsel also declared that Sabeniano+s obli,ation to Citibank was now f!ll# "aid and li2!idated
Sabeniano( verion She denied e.ec!tin, the first set of %Ns e.ce"t for one /the one with the 1for "ersonal inestment1 notation0 She said she alread# "aid her loans with Citibank o 3here was one loan from Citibank which she !sed to inest in a MM% with FNCB Finance* and this MM% was !sed to sec!re said loan o ;hen she failed to "a# the loan when it became d!e* Citibank alle,edl# forfeited her MM% with FNCB Finance* so this loan was alread# "aid S"e )uetioned t"e manager( c"ec& preented b! t"e corporation %e*cept for one manager( c"ec&' a proof t"at "e received t"e proceed of t"e loan covered b! t"e firt et of +N o S"e denied receiving , manager( c"ec&, a!ing t"at aid c"ec& did not bear "er indorement o 's to all other checks* she said that she receied them not as "roceeds of the loans* b!t as "a#ment of the "rinci"al amo!nts and/or interests from her MM%s with Citibank o She also 2!estioned the notation on the checks /<=4 %roceeds of %N>....0* sa#in, that s!ch notation did not a""ear on the checks when she ori,inall# receied them and that the notation a""ears to hae been written b# a different t#"ewriter 's to the second set of %Ns* Sabeniano said that she onl# e.ec!ted them as "art of the sim!lated loans she and a Citibank mana,er concocted /in relation to Sabeniano+s "endin, loan a""lication with )B%0
-TC ruling Set-off b# Citibank is (??=5'? Citibank ordered to ref!nd Sabeniano her de"osit and MM%s Sabeniano still indebted to Citibank
CA ruling 'ffirmed <3C r!lin, Citibank failed to establish Sabeniano+s indebtedness b# com"etent eidence* so the set-off is witho!t le,al and fact!al basis
ISS.E / 0O12IN3 ;@N Sabeniano+s lack of indorsement on the checks ne,ates the de"osit of the checks in her acco!nt. NO ;ho is liable for the lack of indorsementA Collecting ban& B+I Cubao ;@N collectin, bank B%( C!bao can set !" a,ainst drawee bank Citibank the defense of lack of indorsement. NO, becaue B+I i bound b! it #arrantie a an indorer.
-ATIO 3he S!"reme Co!rt assessed that Sabeniano had o!tstandin, loans with Citibank at the time it effected the off-set or com"ensation.
3he second set of %Ns is a mere renewal of the "rior loans ori,inall# coered b# the first set of %Ns /e.ce"t for 7 %N0. 3he first set of %Ns is s!""orted b# the e.istence of the mana,er+s checks that re"resent the "roceeds receied b# Sabeniano.
3he "roceeds of the loans were "aid to Sabeniano in mana,er+s checks* with Sabeniano s"ecificall# named as "a#ee* and these were also crossed checks* with the words 1"a#ee+s acco!nt onl#.1 3he checks were de"osited in seeral different bank acco!nts and were cleared b# the BS% clearin, office* as eidenced b# the stam" marks and notations on the checks. 3he crossed checks are alread# in the "ossession of the drawee bank Citibank* which ,ies rise to the "res!m"tion that the checks were alread# "aid o!t to the intended "a#ee Sabeniano.
<emember that Sabeniano denied receiin, two checks in "artic!lar beca!se the# do not bear her si,nat!res at the back of said checks /see Sabeniano+s ersion aboe0. Boweer* the S!"reme Co!rt said that t"i doe not negate depoit of t"e aid c"ec& in "er account. 3he liabilit# for the lack of indorsement no lon,er falls on Citibank* b!t on the bank which receied the same for de"osit /in this case* B%( C!bao branch0. 3he crossin, of the checks is alread# a warnin, to B%( to receie said checks for de"osit onl# in Sabeniano+s acco!nt. It #a up to B+I to verif! #"et"er it #a receiving t"e croed c"ec& in accordance #it" t"e intruction on t"e face t"ereof.
B+I furt"er tamped it guarantee on t"e bac& of t"e c"ec&4 t"u, B+I became t"e indorer of t"e c"ec&* and ass!med all the warranties of an indorser4 Checks are ,en!ine and in all res"ects what the# "!r"orted to be (t had a ,ood title to the checks 'll "rior "arties had ca"acit# to contract Checks were* at the time of their indorsement* alid and s!bsistin,
B%( /collectin, bank0 is bo!nd b# its warranties as an indorser and cannot set !" the defense of lack of indorsement as a,ainst Citibank /drawee bank0.
OT0E- ISS.ES ;@N the com"ensation was alidl# done. 5ES* as to de"osits in Citibank o 'll re2!irements for com"ensation "resent /m!t!al debtors and creditors* both debts consist in a s!m of mone# and are d!e* li2!idated* and demandable* and no retention or controers# oer both debts0 5ES* as to MM%s with FNCB Finance $b# irt!e of the )eeds of 'ssi,nment& NO* as to the dollar acco!nt in Citibank-5enea $the )eclaration of %led,e is not alid& o )eclaration of %led,e was not notarized o )ate of e.ec!tion was not established o (t was irre,!larl# filled o!t $the "led,or and "led,ee stated was the same entit# Citibank& o 3here was a fail!re to com"l# with the "rod!ction of the ori,inal )eclaration of %led,e $this is fatal considerin, that there was an iss!e as re,ards its for,er#& :& C>)>N* H$ &N$#=A( /. :& C>)>N* 9A$ A C=&>N* ?F >* :>N(; C?(P?(A*&?N with bsiness of distribting bnker fel. For their prchases these corporations issed postdated checks to >.*. :enry. @. &n /0B0, respondent Ins"lar Ban$ of Asia and Aerica granted E*T* 8enry a credit facility known as ,Prchase of $hort *erm (ecei%ables., here >.*. :enry was a)le to encash% #ith pre-ded"cted interest% the postdated chec$s of its clients. &n other words, >.*. :enry and respondent were into ,re.disconting, of checks. For e%ery transaction, respondent re3ired >.*. :enry to e"ecte a promissory note and a deed of assignment bearing the conformity of the client to the re.disconting. A. From /0B0 to /01/, >.*. :enry was able to re.discont its clients' checks (with deeds of assignment) with respondent. :owe%er, in Febrary /01/ % 56 chec$s of 8i-Ceent &#hich #ere crossed and #hich )ore the restriction Adeposit to payeeMs accont only,) #ere dishonored* $o were the checks of (i%erside and <anebo. 6. &nslar filed a complaint for sm of money against >.*. :enry, the sposes *an, :i.Cement (inclding its general manager and its treasrer /7 as signatories of the postdated crossed checks), (i%erside and <anebo. 2. :i.Cement4 (/) its general manager and treasrer were not athori!ed to isse the postdated crossed checks in >.*. :enry's fa%orL (@) the deed of assignment prportedly e"ected by :i. Cement assigning them to respondent only bore the conformity of its treasrer and (A) respondent was not a holder in de corse as it shold not ha%e disconted them for being ,crossed checks.,/A 8. (i%erside and <anebo soght the dismissal of the case against them, arging that they were not pri%y to the re. disconting arrangement between respondent and >.*. :enry. *C4 ordered Cement, (i%erside and <ane to pay. &n -.(. No. /A@67A, petitioner :i.Cement disclaims liability for the postdated crossed checks becase (/) it did not athori!e their issanceL (@) respondent was not a holder in de corse and (A) there was no basis for the lower cortMs holding that it was solidarily liable for the face %ale of (i%ersideMs and <aneboMs checks. $CC/4 trial cort and the CA conclded that :i.Cement athori!ed its general manager and treasrer to isse the sbGect postdated crossed checks. *hey both held that :i.Cement was already estopped from denying sch athority since it ne%er obGected to the signatories' issance of all pre%ios checks to >.*. :enry which the latter, in trn, was able to re.discont with respondent. SCC5= INS>:A2 BANK IS NOT A 8O:'E2 IN '>E CO>2SE a. $>C /0/ AN+ 2@L sec /0/ 4 ,:older, means the payee or indorsee of a bill or a note, or the person who is in possession of it, or the bearer thereof. b. Bataan Cigar Factory %s CA4 holder of crossed checks was not a holder in de corse . crossing of a check shold ha%e the following effects4 (a) the check may not )e encashed )"t only deposited in the )an$B (b) the check may be negotiated only once D to one #ho has an acco"nt #ith a )an$ ?and@B (c) the act of crossing the checks ser%es as #arning to the holder that the chec$ has )een iss"ed for a definite p"rpose so that he mst in3ire if he has recei%ed the check prsant to that prpose, otherwise, he is not a holder in de corse. Atrim )gt %s CA4 held that Atrim (with which the checks were re.disconted) was not a holder in de corse. &n that case, >.*. :enry was the payee of for :i.Cement postdated checks which it endorsed to Atrim. 9hen the latter presented the crossed checks to the drawee bank, :i.Cement stopped payment.@B 9e held that Atrim was not a holder in de corse.
(>44 respondent claims that it acted in good faith when it accepted and disconted :i.CementMs postdated crossed checks from >.*. :enry (as payee therein) :>=+4 (espondent was all too aware that $#BI>C* C:>C<$ 9>(> C(?$$>+ AN+ B?(> (>$*(&C*&?N$ that they were for deposit to payee's accont onlyL hence, they cold not be frther negotiated to it. respondent completely disregarded a telling sign of irreglarity in the re.disconting of the checks when the general manager did not ac3iesce to it as only the treasrer's signatre appeared on the deed of assignment. As a banking instittion, it behoo%ed respondent to act with e"traordinary diligence in e%ery transaction.@ &t is then settled that crossing of checks shold pt the holder on in3iry and pon him de%ol%es the dty to ascertain the indorserMs title to the check or the natre of his possession. Failing in this respect, the holder is declared gilty of gross negligence amonting to legal absence of good faithNand as schD,E the consenss of athority is to the effect that the holder of the check is not a holder in de corse. $CCA :& C>)>N* CANN?* B> )A+> =&AB=> F?( *:> C:>C<$ . no proper presentment to drawee, ths, no liability attached to the drawer as in $&:& %s &AC4 *he three sbGect checks in the case at bar had been crossedNwhich cold only mean that the drawer had intended the same for deposit only by the rightfl person, i.e., the payee named therein. Apparently, it was not the payee who presented the same for payment and therefore, there was no proper presentment, and the liability did not attach to the drawer. *hs, in the absence of de presentment, the drawer did not become liable :>=+4 *he drawer of the postdated crossed checks was not liable to the holder who was deemed not a holder in de corse. *he N&= does not absoltely bar a holder who is not a holder in de corse from reco%ering on the checks. &n both, we rled that it may reco%er from the party who indorsedFencashed the checks ,if the latter has no %alid e"cse for refsing payment., :ere, there was no dobt that it was >.*. :enry that re. disconted :i.Cement's checks and recei%ed their %ale from respondent. $ince >.*. :enry had no Gstification to refse payment, it shold pay respondent. $CC64 :i.Cement cold not also be made solidarily liable with (i%erside and <anebo for the face %ale of their checks. :i. Cement had nothing to do with the checks of these two corporations. SI'E= Crossed chec$= EAny chec$ that is crossed #ith t#o parallel lines% either across the #hole chec$ or thro"gh the top left hand corner of the chec$* This sy)ol eans that the chec$ can only )e deposited directly into a )an$ acco"nt and cannot )e iediately cashed )y a )an$ or any other credit instit"tion*F can 8i-Ceent still )e ade lia)le for the chec$sG NOH o *he checks in 3estion are crossed. *his means that the drawer (:i. Cement) had intended the same for deposit only by the rightfl person, i.e., the payee (>* :enry) named therein. o &t was not the payee >* :enry who presented the same for payment bt &nslar Bank. *herefore, there was no proper presentment, and the liability did not attach to the drawer. OT8E2 <ATTE2S= =ower corts erred in applying Opiercing the corporate %eilP doctrine with regard to >* :enry and sposes *an. *rial cort failed to pro%ide a clear grond why the doctrine was sed. Also, mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sfficient grond for disregarding the separate corporate personality. >* :enryMs properties were foreclosed. >* :enry claimed that there was inade3acy in the bid price. $C agreed with the CA that the ,mere inade3acy of the price obtained at the DsEheriffMs sale, nless shocking to the conscience, (was) not sfficient to set aside the sale if there (was) no showing that, in the e%ent of a reglar sale, a better price (cold) be obtained., A::IE' BANK VS CA FAC*$4 Ianary 8, /01/4 Allied Bank (Allied) (B#;>() p"rchased Export Bill of I56%6-7 fro ;*;* Sports#ear <fg* Corporation &;-$) *he bill, drawn nder a letter of credit co%ered )en's Hal%oline *raining $it that was in transit to 9est -ermany *he e"port bill was issed by Chekiang First Bank =td., :ongkong. 9ith the prchase of the bill, A::IE' credited ;;S the peso e1"i4alent of the )ill amonting to P/2/,6B6.2@ Nari -idwani and Alcron &nternational =td. (Alcron) e"ected their respecti%e =etters of -aranty, holding themsel%es lia)le on the export )ill if it sho"ld )e dishonored or retired by the drawee for any reason. sposes =eon and =eticia de Hilla and Nari -idwani also e"ected a Contin"ing ;"arantyJCoprehensi4e S"rety (srety), g"aranteeing payent of any and all sch credit accommodations which A==&>+ may e"tend to --$ 9hen A==&>+ negotiated the export )ill to Che$iang% payent #as ref"sed d"e to soe aterial discrepancies in the docments submitted by GGS relati%e to the e"portation co%ered by the letter of credit. A==&>+ demanded payment --$ and Nari -idwani (+>F>N$>)4 signed )lan$ fors of the :etters of ;"aranty and the S"rety, and the blanks were only filled p by A==&>+ after they had affi"ed their signatres. *hey also added that the docments did not co%er the transaction in%ol%ing the sbGect e"port bill. sposes de Hilla4 not aware of the e"istence of the e"port billL they signed )lan$ fors of the s"retyL and a%erred that the garanty was not meant to secre the e"port bill Alcron4 foreign corporation doing bsiness in the Philippines, its branch in the Philippines is merely a liaison officeL neither its liaison office in the Philippines nor its then representati%e, :ans. Ioachim $chloer, had the athority to isse =etters of -aranty for and in behalf of local entities and persons (*C4 in fa%or of Allied CA4 modified holding --$ liable to reimbrse Allied, bt it e"onerated the garantors from their liabilities nder the =etters of -aranty &$$#>4 9FN -idwani, Alcron and $poses Hilla can be held Gointly and se%erally liable becase of their capacity as garantors and srety in the absence of protest on the bill in accordance with $ection /2@ of the Negotiable &nstrments =awQ :>=+4 ;>$. CA modified. Nari -idwani, and $poses =eon and =eticia de Hilla are Kointly and se4erally lia)le together #ith ;*;* Sports#ear Art. @76B. By garanty a person, called the g"arantor% )inds hiself to the creditor to flfill the obligation of the principal debtor in case the latter should fail to do so. &f a person )inds hiself solidarily #ith the principal de)tor% the pro%isions of $ection 6, Chapter A, *itle & of this Book shall be obser%ed. &n sch case the contract is called a s"retyship* $ection /2@ / of the Negotiable &nstrments =aw pertaining to indorsers, relied on by respondents, is not pertinent to this case. *here are well.defined distinctions between the contract of an indorser and that of a garantorFsrety of a commercial paper, which is what is in%ol%ed in this case. *he contract of indorsement is primarily that of transfer% while the contract of garanty is that of personal sec"rity 7 Sec. 7C2. (n what cases "rotest necessar#. - ;here a forei,n bill a""earin, on its face to be s!ch is dishonored b# nonacce"tance* it m!st be d!l# "rotested for nonacce"tance* b# nonacce"tance is dishonored and where s!ch a bill which has not "reio!sl# been dishonored b# non"a#ment* it m!st be d!l# "rotested for non"a#ment. If it i not o proteted, t"e dra#er and indorer are dic"arged. ;here a bill does not a""ear on its face to be a forei,n bill* "rotest thereof in case of dishonor is !nnecessar#. *he liability of a garantorFsrety is broader than that of an indorser. #nless the bill is promptly presented for payment at matrity and de notice of dishonor gi%en to the indorser within a reasonable time, he #ill )e discharged fro lia)ility thereon. ?n the other hand, e"cept where re3ired by the pro%isions of the contract of sretyship, a deand or notice of defa"lt is not re1"ired to fix the s"rety!s lia)ility* *herefore, no protest on the e"port bill is necessary to charge all the respondents Gointly and se%erally liable ha%ing affi"ed their consenting signatres in se%eral docments e"ected at different times, it is safe to presme that they had full knowledge of its terms and conditions, hence, they are precluded from asserting ignorance of the legal effects of the undertaking they assumed thereunder P! "# $%D$&'()* FAC*$4 $poses >rlando and Norma (odrige! were engaged in the informal lending bsiness and had a disconting arrangement with the Philnabank >mployees $a%ings and =oan Association (P>)$=A), an association of PNB employees *he association maintained crrent and sa%ings acconts with Philippine National Bank (PNB) P>)$=A reglarly granted loans to its members. $poses (odrige! wold rediscont the postdated checks issed to members whene%er the association was short of fnds. As was cstomary, the sposes wold replace the postdated checks with their own checks issed in the name of the members. &t was P>)$=AMs policy not to appro%e applications for loans of members with otstanding debts. *o sb%ert this policy, some P>)$=A officers de%ised a scheme to obtain additional loans despite their otstanding loan acconts. *hey took ot loans in the names of nknowing members, withot the knowledge or consent of the latter. *he officers carried this ot by forging the indorsement of the named payees in the checks (odrige! checks were deposited directly by P>)$=A to its sa%ings accont withot any indorsement from the named payees. *his was an irreglar procedre made possible throgh the facilitation of >dmndo Palermo, Ir., treasrer of P>)$=A and bank teller in the PNB Branch. this became the sal practice for the parties. No%ember /001.Febrary /0004 sposes issed 80 checks totalling to P@,A62,176. *hese were payable to 6B indi%idal payees who were all members of P>)$=A PNB e%entally fond ot abot these fradlent acts *o pt a stop to this scheme, PNB closed the crrent accont of P>)$=A. As a reslt, the P>)$=A checks deposited by the sposes were retrned or dishonored for the reason OAccont Closed.P *he amonts were dly debited from the (odrige! accont $poses filed a ci%il complaint for damages against P>)$=A, the )lti.Prpose Cooperati%e of Philnabankers ()CP), and PNB. PNB credited the checks to the P>)$=A accont e%en withot indorsements R PNB %iolated its contractal obligation to them as depositors . so PNB shold bear the losses (*C4 fa%ored (odrige! makers, actally did not intend for the named payees to recei%e the proceeds of the checks R fictitios payees (nder the Negotiable &nstrments =aw) R negotiable by mere deli%ery CA4 Affirmed . checks were ob%iosly meant by the sposes to be really paid to P>)$=A R payable to order &$$#>4 9FN the 80 checks are payable to order for not being issed to fictitios persons thereby dismissing PNB from liability :>=+4 N?. CA Affirmed -(4 when the payee is fictitios or not intended to be the tre recipient of the proceeds, the check is considered as a bearer instrment ($ections 1 and 0 of the N&=) >S4 :owe%er, there is a commercial bad faith e"ception to the fictitios.payee rle. A showing of commercial bad faith on the part of the drawee bank, or any transferee of the check for that matter, will work to strip it of this defense. *he e"ception will case it to bear the loss. *he distinction between bearer and order instrments lies in their manner of negotiation order instrment . re3ires an indorsement from the payee or holder before it may be %alidly negotiated bearer instrment . mere deli%ery #$ Grisprdence4 OfictitiosP if the maker of the check did not intend for the payee to in fact recei%e the proceeds of the check &n a fictitios.payee sitation, the drawee bank is absol%ed from liability and the drawer bears the loss 9hen faced with a check payable to a fictitios payee, it is treated as a bearer instrment that can be negotiated by deli%ery nderlying theory4 one cannot e"pect a fictitios payee to negotiate the check by placing his indorsement thereon lack of knowledge on the part of the payees, howe%er, was not tantamont to a lack of intention on the part of respondents. sposes that the payees wold not recei%e the checksM proceeds PNB did not obey the instrctions of the drawers when it accepted absent indorsement, forged or otherwise. &t was negligent in the selection and sper%ision of its employees B>ENCA<INO VS 8E2NAN'EL *he =and *enre Administration (=*A) prchased from Bencamino et. al their :acienda for a total price of Php.@, B68,777.77. 3or the p"rpose% a <eorand" Agreeent #as exec"ted which declared that the =*A was prchasing the hacienda pon petition of the tenants and in accordance with (.A /677 or the =and (eform Act of /022. *he parties agreed that 76M of the f"ll price or 0hp*+%.,.%666*66 #as to )e paid in cash and the balance in neotiable land certificates. *? 9&*4 N>-?*&AB=> =AN+ C>(*&F&CA*> *:> -?H>(N)>N* ?F *:> (>P#B=&C ?F *:> P:&=&PP&N>$ is inde)ted "nto the BEA2E2 in the s" of TEN T8O>SAN' 0ESOS* SSS Encashent of this certificate ay not )e ade "ntil after fi4e &7( years fro the date of exec"tion of the +eed of $ale of :acienda de =eon moa4 the H>N+?($ shall not, within fi%e (2) years, present for encashent the negotia)le land certificates amonting to (P/,ABA,777.77) bt ne%ertheless, shall be authori!ed to use the same for payment of land ta"es or obliations due and payable in fa#or of the Go#ernment and sch other ses or prposes pro%ided for by Section +6 of 2ep")lic Act No* +/66 within the said period of fi%e (2) years from this date. Bencaminos later on presented the instrments to the City *reasrer in payment of their ta" obligations. D*he treasrer reGected the certificates on the grond that the certificates were payable to bearer not on demand, bt, only pon the e"piration of the fi%e year period specified in the certificates. FFFFE The petitioners #ere th"s o)liged to settle in cash the +N7, tax o)ligation . $bse3ently, howe%er, the petitioners tendered once more the same certificates in payment of their /021 realty ta"es and the respondent Treas"rer siilarly reKected the tender* As a reslt, the petitioners filed the instant mandams proceedings with the Cort of First &nstance of Te!on City. isse4 whether or not the said certificates where drawn payable on demand as re3ired by $ection 0 of (epblic Act /677. (espondent *reasrer4 contends that the certificates in 3estion were not issed strictly in accordance with the pro%isions of (epblic Act No. /677 becase while $ection 0 of that Act in3ires that ,negotiable land certificates shall be issed in denominations of one thosand pesos or mltiples of one thosand pesos and shall be payable to bearer on demand . . ., , the ones issue to the petitioners $ere payable to bearer NOT on demand but, only pon the e"piration of the fi%e.year period there in specified. :>=+4 the refsal of the respondent *reasrer to accept the land certificates to be legally Gstified. *hey failed to comply with the re3irements of (epblic Act No. /677. /) #nder the law, the land certificates ,shall be payable to bearer on demand., ($ection 0) *he one issed, howe%er, were payable to bearer only after the lapse of fi%e years from a gi%en period. ?b%iosly then, the re3irement that they shold be payable on demand was not met since an instrment payable on demand is one which (a) is e"pressed to be payable on demand, or at sight, or on presentationL or (b) expresses no tie for payment ($ec. B, Negotiable &nstrments =aw) &)P*4 *he 2.year period within which the certificates cold not be encashed was an expression of the tie for payent contrary to paragraph (b) of the last law cited. @) *he petitioners maintain, as already indicated abo%e, that althogh the 3estioned certificates may not really be payable on demand, they may ne%ertheless be sed for the payment of realty obligations to the -o%ernment becase of $ection /7 of (epblic Act No. /677. As e"pressed by the petitioners, ,as to -o%ernment agencies and instrmentalities, the certificate is payable to bearer on demand dring that first fi%e.year period., :>=+4 *here is no merit in the abo%e assertion. &t is a conclsion nspported by any pro%ision of law. 9hile $ection /7 of (epblic Act No. /677 e"pressly athori!es the se of the said certificates for the ,payment of all ta" obligations of the holder thereof,, the said section can only ha%e meant sch certificates as were &$$#>+ $*(&C*=; in accordance with $ection 0 of the same Act, i.e., that the instrment is payable on demand. And, as discssed abo%e, the certificates issed were not payable on demand, then the benefits of $ection /7 cannot be properly in%oked. ACENAS VS SISON $eptember, /028, Angela $ison e"ected a promissory note, promising to pay >mma $. Acenas the sm of P1,/87 in @8 installments, the first falling de on No%ember A7, /028 and the last on No%ember A7, /087. *he note pro%ided that failre to pay two consecti%e installments wold make the balance de and demandable. )rs. $ison was able to pay p to Agst A/, /02B only. #pon her failre to pay the balance of the note, alleged to be in the sm of P1,A0/.87, she was sed. :er hsband, *eofilo $ison, was Goined as a defendant prsant to Article //A of the Ci%il Code. &n their answer, )r $ison denied liabity on the grond that he didnt sign the promissory note. +ring the hearing, Co"nsel for the defendants o4ed for the postponeent in %iew of the absence of his clients and to confer with them for the prpose of amicably settling this case. Consel for the plaintiffs obGected. 9hen the co"rt indicated to the defendant!s co"nsel that there sees to )e no defense on the part of the defendants in this case, and that it #o"ld )e for the )est interest of the latter if the case IS TE2<INATE' B9 WA9 O3 K"dgent on the pleadings or CON3ESSION O>';E<ENT% consel for defendants offered NO OBOECTION and asked that confession of Gdgment by the defendants may be entered pro%ided that the corresponding writ of e"ection thereof shold not be issed ntil Ine A7, /087, to which consel for the plaintiffs agreed. *hs, Gdgment is rendered, one in fa%or of the plaintiffs and against the defendants, by ordering the defendants, Gointly and se%erally, to pay to plaintiffs the sm of P1,A0/. &$$#>4 9?N C?NF>$$&?N I#+->)>N* 9A$ HA=&+=; A-(>>+ *? B; +>F>N+AN*$' C?#N$>=. N?. :e had no athority. / before the $C, it was fond that that Atty. $ison (consel for defendants) had NO a"thority to confess K"dgent* ?n the contrary, the decision of )arch B, /087 states that Atty. $ison ,mo%ed for the postponement of the hearing hereof in %iew of the absence of his clients and that he needs tie #ithin #hich to confer #ith the for the p"rpose of aica)ly settling this case., @ *his indicates that Atty. $ison =AC<>+ A#*:?(&*; to confess Gdgment, otherwise, there wold ha%e been no need for him to confer with his clients. This circ"stance sho"ld ha4e p"t the trial co"rt on an in1"iry as to co"nsel!s a"thority* A (#=>4 &n Nati%idad %. Nati%idad9e held that the compromise of cases and confession of K"dgents appear to stand "pon the sae footing and that since the coproise ay not )e effected )y co"nsel #itho"t special a"thority%/ so may not an agreement to permit Gdgment to be entered against his client be athori!ed e"cept with the knowledge and at the instance of the client. $ch Gdgment may be set aside or reopened. 6 Appellees cite decisions of the corts of -eorgia which hold that where a settlement of a sit is made by an attorney accepting less than the fll amont of the claim in cash, the agreement B&N+$ *:> C=&>N* if the settlement is carried ot by a consent %erdict and Gdgment and the settlement was made withot frad on the part of the attorney or any instrction of the client to the contrary. $C $A;$4 J these cases do not apply here becase the -eorgia statte is different from or law. *hs, in the Coweta Fertili!er case, spra, the Cort of Appeals of -eorgia held4 9e do not think that section 6028 of the Ci%il Code of /0/7 is applicable to the facts of the present case. *hat section pro%ides as follows4 ,9ithot special athority, attorneys cannot recei%e anything in discharge of a client's claim bt the fll amont in cash.,. J $ection @/ of (le /@B >SP(>$$=; (>T#&(>$ that attorneys ha%e $P>C&A= A#:*?(&*; not only to recei%e anything in discharge of a client's claim bt the fll amont in cash B#* A=$? *? C?)P(?)&$> their client's litigation. Appellees also rely on :olker and others %. Parker, B Cranch 6A8, 8 =aw >d. 6AA. Bt that case does not spport appellees' position, for it was held there that U ,Althogh an attorney at law, merely as sch has strictly speaking no right to make a compromise, yet a cort wold be disinclined to distrb one which was not so nreasonable in itself as to be e"claimed against by all, and to create an impression that the Gdgment of the attorney has been imposed on, or not fairly e"ercised in the case. Bt where the sacrifice is sch as to lea%e B>&N- #NA#*:?(&V>+ t scarcely possible that, with a fll knowledge of e%ery circmstance, sch a compromise cold be fairly made, there can be no hesitation in saying that the compromise, being nathori!ed and being therefore itself %oid, oght not to bind the inGred party. *hogh it may assme the form of an award or of a Gdgment at law, the inGred party, if his own condct has been perfectly blameless, oght to be relie%ed against it. . . ., held4 9e hold therefore that it was error for the trial cort to accept the confession made by consel withot ascertaining his athority to do so, at least with respect to *eofilo $ison. 9ith respect to Angela $ison, howe%er, the Gdgment will be maintained, there being no claim in this appeal that the confession of Gdgment made in her behalf was nathori!ed. &n fact her liability is admitted here. 9:>(>F?(>, the decision dated )arch B, /087 of the lower cort is modified in the sense that defendant *eofilo $ison is not liable and that defendant Angela $ison alone is liable to the plaintiffs for the amont adGdged in the decision. SPS PACHECO V CA AND PEOPLE Sps Pacheco were engaged in the construction business. Complainant Romualdo Vicencio is a former judge and his wife Luz Vicencio owns a pawnship. 1st loan: May 1989: Sps Pacheco, because of delay in the payment of their receivables (in the construction business, DPWH projects), obtained a loan of 10K from Luz Vicencio. Her husband Romualdo required the sps Pacheco to issue an undated check to evidence the loan. Sps pacheco informed Sps Vicencio that their account with RCBC has long been closed and has no funds . Nevertheless, Sps Vicencio forced them to issue checks . They said that the checks will not be presented to the banks and will only serve as proof of the Sps Pachecos indebtedness. 2nd and 3rd loan: Sps Pacheco obtained another loan of 10K and another for 50K. Luz Vicencio required the issuance of a checks for each loan obligation. Sps Pacheco paid of the frst 10K loan. They asked that the frst check they issued be returned to them. Luz Vicencio was, however, unable to return the check as it got lost in her records. She assured them that the checks wont be presented, in any case, to the bank for payment. Sps Pacheco obtained 2 more loans. Check were again issued to cover them. (Total of 6 loans made) All checks were undated. A total of 6 checks were issued and they represent a total obligation of 85K. Sps Pacheco were able to pay and settle 60K, leaving a balance of 15K. In all of these transactions, Sps Pacheco never interacted with Mr. Vicencio and only dealt with Luz Vicencio. Despite several demands, the Sps Pacheco failed to pay the 15K balance. Hence in August 1992, Mrs Vicencio and her daughter persuaded Mrs Pacheco to place the date August 15 1992 on 2 checks. Despite being informed by Mrs Pacheco that the account they have with RCBC has no funds, Mrs Vicencio that they be dated. Later on, Pachecos were surprised to learn that Mr Vicencio fled an information for estafa against them. It was alleged that the 2 checks were presented to RCBC and were subsequently dishonored for account closed. The information alleged that Sps Pacheco through fraud and false pretenses, and in payment of a diamond ring issued the said checks which were then dishonored. WON Pachecos were guilty of estafa. NO WON the checks were negotiable. NO. Negotiability was waived by the parties. The essential elements in order to sustain a conviction under the above paragraph are: 1. that the ofender postdated or issued a check in payment of an obligation contracted at the time the check was issued; 2. that such postdating or issuing a check was done when the ofender had no funds in the bank, or his funds deposited therein were not sufcient to cover the amount of the check; 3. deceit or damage to the payee thereof. The frst and third elements are not present in this case. A check has the character of negotiability and at the same time it constitutes an evidence of indebtedness. Not liable for estafa. In this case, the parties mutually agreed to waive the negotiability of the checks, and agreed to simply treat the instruments as proof of obligation. There was no deceit on the part of the Pachecos. They have long informed the Vicencios that their account in RCBC has been closed and has no funds. The Vicencios even assured them that the checks would not be presented to the bank for payment and that they will only serve as evidence of their indebtedness. It was upon this assurance that the Pachecos reluctantly issued and eventually dated the checks. Hence, the Vicencios cannot claim that they were deceived and defrauded by the ptrs. If the checks were indeed negotiable, Mr Vicencio (a former judge), would have known that they need not ask the Pacheco to date the checks. As holders in due course, he himself couldve placed the date therein pursuant to sec 13 & 14 NIL. A negotiable instrument is not rendered invalid by reason only that it is antedated or postdated. Thus, th e allegation of Mrs. Vicencio that the date to be placed by Virginia was necessary so as to make the check evidence of indebtedness is nothing but a ploy. Petitioners openly disclosed and never hid the fact that they no longer have funds in the bank as their bank account was already closed. Knowledge by the complainant that the drawer does not have sufcient funds in the bank at the time it was issued to him does not give rise to a case for estafa. Liable for balance of 15K. Although the pachecos are not criminally liable for estafa, they are still liable for the remaining 15K. They cannot be liable for interest, although it has been alleged in the facts that a 10% interest was stipulated. The stipulation on interest was not made in writing therefore it cannot be valid. From the time this judgment becomes fnal and executory, the amount due shall earn legal interest of twelve percent (12%) per annum until full payment. Side: Story and allegation by Vicencios not given credence by court. -If the checks were made in payment of jewelry, why were only 2 checks presnted and not all 6? -The complaint alleges that the jewelry was bought in 1992, however the checks were issued in 1989.