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the affirmative inducing negligence of the maker in its preparation and

issuance, the Bank being without negligence.

Foutch v Alexandria Bank & Trust Co.


April 5, 1941
Chambliss, J.
Digest by Joydee
FACTS:
W. L. Foutch purchased a cow from B. W. Foutch for $18, for which he gave
a check to B. W. Foutch, payable to his order. In accordance with a practice
which W.L. Foutch testifies he followed of having checks which he gave
filled out by the parties to whom his checks were made, this check was
written wholly by the payee. It was drawn on Alexandria Bank.
WL Foutch testifies that the figures 18.00 were so placed in the blank
provided on the check for that purpose that ample space was left between
the figures and the dollar mark for the insertion of an additional figure. On
the line lower down on the check provided for that purpose, and beginning
at a point about midway of the line, were written the words, Eighteen and
no /100, just before the printed word, Dollars. On the left-hand corner,
lower down, the words were written, For cow.
When this check was presented to the Bank for payment by B. W. Foutch,
the payee, the figure 4 appeared between the dollar mark and the figures
18. And on the line below, in front of the word Eighteen, appeared the
words, Four Hundred, the check thus calling for $418; and following the
words, For cow, in the left-hand corner, appeared the words, &note.
All of the figures and writing on the check, as it was presented to the Bank,
except the signature, were in the same handwriting, that of the payee.
The Bank paid to B. W. Foutch the sum of $418 called for by the check, and
charged it to the account of the WL Foutch. This amount over-drew the
account of W. L. Foutch, the testimony showing that a special arrangement
had been made between Foutch and the Bank for protecting his overdrafts.
The Bank at once notified W. L. Foutch that his account was overdrawn,
and he advised the Bank that this check had been raised without his
knowledge or consent to the extent and in the manner above indicated. B.
W. Foutch was thereupon arrested and prosecuted and, meanwhile, a note
was executed to the Bank for a sum whichmade good the account, pending
disposition of the question as to whether the loss would be borne by the
Bank or the depositor, in the event it was not recovered from B. W. Foutch.
Some months later this action was brought in the Circuit Court by W. L.
Foutch, seeking to recover from the Bank this sum of $400.
The Bank defended, relying upon estoppel, insisting, first, that W. L. Foutch
had ratified the payment of the check by the Bank by making good the
over-draft, and failing promptly to disaffirm; and, second, that the Bank
had been induced to pay the amount called for by the face of the check by

ISSUE:
WON WL Foutchs negligence in the preparation and issuance of the check would
bar his recovery from Alexandria Bank YES
HELD:
We are constrained to reverse the decree of the Court of Appeals and affirm the
judgment of the Circuit Court.
RATIO:
1. The CA is correct insofar as the general rule is that the Bank must bear the loss when it
cashes an altered check; BUT the great weight of authority recognizes an exception where
the drawer of the checks has been guilty of such negligence in its issuance, as to facilitate and
induce its alteration so as proximately to cause its payment in its altered form.

Reasons adduced from the authorities supporting the rule that the loss resulting
from the payment of a raised check must fall on the drawer, when the alteration in
amount has been facilitated by the drawer's negligence, may be thus summarized:
1. That the true proximate cause of the loss is the negligence of the drawer in
issuing the check in such form that it may readily be so altered that the
alteration cannot be detected by the use of ordinary care.
2. That where one of two innocent persons must suffer, the loss should fall on
the one whose negligence has facilitated the loss.
3. That the negligence of the drawer implies an invitation or authority to fill out
blanks which estops the drawer as to a drawer who has, while exercising due
care, honored the instrument in its thus altered amount.
4. That the relationship of a depositor with his banker imports an obligation to
exercise reasonable care in the preparation and issuance of his mandate order
on the banker to pay, a breach of which obligation renders the depositor liable
for a loss.
2. THUS, the SC disagrees with the CAs use of the criminal instrumentality rule as
expounded in its cited authorities. (There are many cited American jurisprudence, please see
case). The SC says there is an essential distinction between bank checks and negotiable
instruments of the note and bill class.

In the case of P/Ns, one who purchases a note, or like negotiable instrument, is
under no manner of compulsion and acts purely at his option or election, under
which the principle of caveat emptor may be applied; whereas, the Bank is under
a direct and peculiarly delicate obligation, which requires prompt discharge,
usually with little opportunity for investigation, to pay the check of its depositor,
upon presentation, or subject itself to the risk of damages. Furthermore, the
depositor, on the other hand, owes to his bank the duty to exercise care in drawing
his checks in order to avoid possible loss.

In the case of checks drawn by a customer on his banker, there is a special duty to
exercise care in the framing of what is a mandate a special duty which does not
exist in the same fashion in the instance of the acceptor of a bill of exchange.
o A drawer of a check has the duty to fill it up, so that when it leaves his
hands as a signed instrument, tampering with its contents or filling in a
sum different from what was meant shall be prevented.
o In case this duty is not complied with, and loss results due to tampering
or unauthorized filling up for a greater amount, the customer, and not
the bank should suffer the loss. The payee, having been authorized to fill
out the check in his handwriting, with the words and figures placed as
herein shown, no possibility of detection of the check having been thus
raised was left open to the Bank; no negligence can be imputed to the
Bank.

AS APPLIED TO THE CASE:


(1) a check for a depositor on his banker, as distinguished from a promissory note or
negotiable bill of exchange
(2) with spaces or blanks, left in such positions, and to such extent, as not only to facilitate,
but to invite, the filling in of additional figures and words requisite to present the appearance
of a completed instrument
(3) written in pencil, with the words and figures altogether in the handwriting of the payee to
it was delivered, but conveying an application of authority in the draftsman to make
additions thereto
(4) an element of agency in the matter of the preparation of the instrument, universally
recognized as fixing responsibility upon the depositor

THE MARINE NATIONAL BANK v. THE NATIONAL CITY BANK


November 17, 1874
Allen, J.
Digest by Kiko del Valle
Topic/Provisions: Effect of Drawees Payment of Acceptance of the Altered Check
Facts:
On 1 December 1869, LUNT BROTHERS, merchants in New York, gave to a stranger in
exchange for $25, a check for the same amount, drawn upon MARINE, payable to the order
of Henry Smith. The next day, a person called upon DERIPPE & CO, gold brokers, and bought
$3,334 in gold currency at the price of $4,079.96. Payment for this purchase was sought to be
effected with the check mentioned above but with alteration of the date, payee and amount
such that it appeared to have been issued on December 2, to DERIPPE for the amount of
$4,079.96.
DERIPPE sent the check to MARINE, which duly certified the check upon presentation. At this
certification, DERIPPE delivered the gold to the buyer and indorsed the check for deposit in
their account at NATIONAL. MARINE paid the check to NATIONAL in the morning of
December 3 but, upon discovering the alterations later that same day, notified the defendant
bank, offered to return the check and requested repayment. NATIONAL refused and MARINE
sued them to recover the amounts they have paid.
The referee found, as conclusions of law, that the plaintiff in certifying the check did not
guarantee the genuineness of the filling-up of the check and was not estopped to raise the
defense of alteration. Thus, MARINE was entitled to judgment for the amount paid.
The General Term of the Superior Court of the city of New York issued an Order reversing the
findings of the referee and ruling in favor of the defendant.
Upon appeal to the Court of Appeals of New York, the Court reversed the Order of the
General Term. It stated that the certification of the bank did not include an assertion of the
genuineness of the check in all its parts, saying:
But if the doctrine contended for in opposition to this view is correct and
the certifying bank is bound to warrant, not only the genuineness of the
drawers' signature and the sufficiency of their credit, but also the
genuineness of the check in all its parts then obviously there must
occur an immediate and complete change in the modes of doing
business, which would defeat and practically put an end to the use of
certified checks. For no bank, under such a rule, could safely certify a
check without, in the first instance, investigating its origin and history by
inquiry of its makers and payees. The burden of such inquiries could not
be borne without interfering with, or interrupting the other necessary
business of the bank, and the practice of certifying checks would have to
be abandoned, or a staff of inquirers instituted in every bank, specially
charged with these duties. It is plain that banks, in self-protection, would
be compelled to refuse altogether to certify checks, and that this
convenient and useful invention of modern business would come to an
end. (Emphasis supplied.)
The Court being unwilling to attribute such a violent construction to the parties acts that
would necessitate a change in the usual way of business, they held that the certification of
the bank only covered facts within the knowledge of the certifying bank and did not include

alterations. Thus, plaintiff was not estopped by the certification from raising the alteration
and the judgment entered on the report of the referee was affirmed.
Defendant filed a Motion for Reargument upon affidavits of distinguished bankers and
merchants seeking to have the certification interpreted as including a warranty of the
genuineness of the check in all its parts.
Issues/Held:
1. WON the Court may grant the present Motion for Reargument on the affidavits of
distinguished businessmen? NO.
2. WON a certification by a drawee bank includes warranty as to the genuineness of the
check in all its parts? NO.
Dispositive:
Motion for Reargument DENIED. Judgment based on report of referee REINSTATED and
NATIONAL is ORDERED to repay the amounts paid by MARINE.
Ratio:
1. The present motion is not founded upon any allegation that a question decisive of the case
and duly submitted by counsel was overlooked by the court, or that the decision is in conflict
with an express statute or with a controlling decision.
Usage and custom properly proved can impress upon words and phrases a particular or
technical meaning, and control the interpretation of commercial contracts but these must be
proved as a question of fact and such proof cannot be received by an appellate tribunal.
Neither affidavit submitted by the businessmen drew attention to any custom or usage on
which to base the enlarged liability sought by the defendants in this case.
If the gentlemen are correct in their assertion that the interpretation given by the Court is
narrower than stakeholders in the industry would wish, such stakeholders are not precluded
from assuming such enlarged liability by plainly changing the terms of their undertaking.
2. When the bill is presented for acceptance, the acceptor looks to the handwriting of the
drawer with which he is presumed to be acquainted, but he cannot be presumed to have
any such knowledge of the other facts upon which the rights of the holder may depend.
Money paid on such checks and drafts which have been forgeries, either in the body or the
indorsements, or in any respect except the name of the drawer, have been held as
recoverable as for money paid by mistake.
An inquiry may reasonably be made of the drawee as to the genuineness of the signature of
the drawer and the state of his account, but a resort would be had to other sources of
information to learn the consideration of the check, by whom the body was written, the
genuineness of the indorsement and the title of the payee. As to such matters, the drawee
could not be supposed, ordinarily, to have any information, and would not be called upon
or expected to give answer in respect to them.
Hence, in all reason, as well as legally, the inquiring of a drawee in respect to a check, and
the response, whether verbally or in writing, that it is good, must be held, in the absence
of circumstances indicating a wider reach of inquiry and a broader answer, to relate to
those facts, and those only, of which the drawee is presumed to have knowledge.

C.I.T. Corp. v. Panac


December 28, 1944
Carter, J.
Digest by: Lao
Topic: Fraud
Short Facts:
The plaintiff, a holder in due course, brought this action against the defendants for the
payment of two promissory notes. The defendants alleged fraud in the execution of the
promissory notes because William Hart, the agent of the payee, deceived them into signing
the said promissory notes.
This was possible because the defendants were illiterate, not being able to read or write the
English language and Mr. William Hart knew of this fact. They were made to believe that they
were signing a contract to repair dwelling houses and nothing else, and that they were
ignorant of the fact that they were signing notes.
Facts:
The defendant spouses Panac were immigrants from Italy who were able to acquire several
pieces of real property. Though they eventually became citizens of America, they were
unable to read or write the English language. Mrs. Panac testified to the effect that she had
never attended school in America nor in her native country, Italy, and that she could only sign
her name and copy.
On one particular instance, Krajer, the neighbor of the defendants, introduced to them
William Hart, an agent of the Home Improvement Company. William Hart quickly gained the
trust and confidence of the defendants, and Mr. Panac testified that we was a very cordial, a
lovely sort of a man, a good salesman and gave you the impression that he was your best
friend.
After having been introduced, the Panac spouses accompanied defendants to the premises
where repairs on the property of the defendants were made. Hart made notes of the details
of the work to be done, on a memorandum book, which the spouses referred to as the black
book. They then went to the house of the defendants, where Hart prepared a document
which purported to embody the understanding arrived at on the work to be performed. He
presented it to the defendants with a request that they sign it. Both defendants refused to
sign it stating that they could not read it and they wished to see an attorney before signing.
Hart assured the defendants that it was not necessary and that the contract had to be signed
immediately so that work could get started. Hart the offered to read the contents of the
paper, and in doing so, he read off the black book and assured the spouses that the paper
was substantially the same with the records on the black book. He again urged the spouses
to sign but they still refused. Finally, the spouses were prevailed over and were overcome by
Harts assurance that they merely represented the same contents as the black book.
Another note was signed by the spouses under the similar circumstances. The spouses
further testified that at the time their signatures were obtained, the price of some of the

items of the work had not yet been ascertained nor agreed upon. They also testified that
they agreed that the payment of the work would be in installments to commence sixty days
after the completion of the work, but never did they contemplate the giving of notes for the
payment. Eventually, the work was never completed.
Issue:
WON fraud is a real defense that may be raised against a holder in due course. YES.

THE PEOPLE OF THE PHILIPPINES, vs. CECILIA QUE YABUT and HON. JESUS DE VEGA, as
Judge of the Court of First Instance of Bulacan, Branch II,
THE PEOPLE OF THE PHILIPPINES, vs. GEMINIANO YABUT, JR.,
April 29, 1977
Martin, J.
Digest by Doms Gana
Topic and Provision: Complete instrument which is undelivered, Sec. 16 NIL

Ratio:
The SC of California ruled that where there is in fact no contract, or there is fraud in the
execution, it is not enforceable by a holder in due course in the absence of negligence on the
part of the maker; that is, the maker has a real defense to an action thereon.

Facts:

The words defect of title in the NIL and by the definition of holder [in due course] do not
indicate with perfect clearness that it is only personal or equitable defenses from which the
holder is freed, but there was probably no intention to change the law in regard to the
matter, and there is no reason to suppose that a change has been effected.
There was sufficient evidence to convince the court that fraud was in fact employed by the
agent of the payee because of the following circumstances:
1. the defendants were illiterate;
2. the high pressure method pursued by Hart;
3. the reading of only the contract of repairs and not the notes;
4. the insistence by Hart of an immediate execution; and
5. Harts brushing aside the suggestion that a legal advice from an attorney be sought.

The Court further noted that while it is true that there were other persons present during the
execution of the contract, these persons were friend of Hart. Therefore, the defense of the
defendants was good against a holder in due course.

Cecilia Yabut and Germiniano Yabut, Jr. were both separately accused of estafa by
means of false pretenses before the Court of First Instance of Bulacan.
Cecilia was accused, as treasurer of Yabut Transit Line, by means of false pretenses
and pretending to have sufficient funds in the Merchants Banking Corporation,
located Caloocan City, for preparing, issuing and making out 3 Checks dated
February 22, 1975, February 24, 1975 and February 26, 1975, in the total sum of
P6,568.94, drawn against the Merchants Banking Corporation, payable to Freeway
Tires Supply, owned by Alicia P. Andan, in payment of articles and merchandise
delivered to and received by said accused, and delivered said checks to Freeway
Tires Supply, knowing that at the time there was no or insufficient funds in the said
Merchants Banking Corporation, and upon presentation of the said checks to the
bank, the checks were dishonored and inspite of repeated demands to deposit the
necessary funds to cover the checks within the reglementary period enjoined by
law, failed and refused to do so.
Geminiano Yabut, Jr., as president of the Yabut Transit Line, was accused by means
of false pretenses and pretending to have sufficient funds in the Merchants
Banking Corporation and Manufacturers Bank and Trust Company, located in
Caloocan City, for preparing, issuing and making out 12 Checks dated February 23,
26, 27, March 1, 3, 10, 11, 12, April 4, 7, 8 and 9, 1975 in the total sum of
P37,206.00,drawn against the Merchants Banking Corporation and Manufacturers
Bank and Trust Company, payable to the Free Tires Supply and Free Caltex Station,
in payment articles and merchandise delivered to and received by said accused,
gave and delivered the said checks to said Freeway Tires Supply and Freeway Caltex
Station, and knowing that at the time there was no or insufficient funds in the said
Merchants Banking Corporation and Manufacturers Bank and Trust Company, and
upon presentation of the said checks to the bank, the checks were dishonored and
inspite of repeated demands by the owner of the Freeway Tires Supply and
Freeway Caltex Station to deposit the necessary funds to cover the cheeks within
the reglementary period enjoined by law, failed and refused to do so.
Both accused filed a motion to quash, claiming that (1) the facts recited do not
constitute an offense because the checks were issued in payment of a pre-existing
obligation; and (2) the venue was improperly laid, considering that the postdated
checks were issued and delivered to and received by the Andan in City of Caloocan,
where Yabut holds office. The motion to quash were granted.

Issue: Was the motion to quash proper? NO!

Held: The motion to quash was not proper. Venue was proper since the last element of the
crime occurred in Bulacan and the facts properly constituted the crime of estafa despite
checks being issued for payment of a pre-existing obligation.
Dispositive: ACCORDINGLY, the appealed orders of the respondent trial courts ordering the
quashal of the estafa informations against the two private respondents in the petitions at bar
are hereby reversed and set aside. The informations substantially conform with the crime
charged as defined in the law.
Ratio:
1.

2.

present case convinces Us that the facts charged therein substantially


constitute the integral elements of the offense as defined in the law.
Lim v CA
December 19, 1995
Bellosillo, J.
Digest by Joydee
Topic and Provisions: Transfer and Negotiation: Issuance and Delivery

Venue was Proper (main issue)

Estafa by postdating or issuing a bad check under Art. 315, par. 2 (d) of the
Revised Penal Code may be a transitory or continuing offense. Its basic
elements of deceit and damage may independently arise in separate places.

Deceit has taken place in Malolos, Bulacan, while the damage in Caloocan City,
where the checks were dishonored by the drawee banks there. Jurisdiction
can, therefore, be entertained by either the Malolos court or the Caloocan
court. While the subject checks were written, signed, or dated in Caloocan
City, they were not completely made or drawn there, but in Malolos, Bulacan,
where they were uttered and delivered. That is the place of business and
residence of the payee.

The place where the bills were written, signed, or dated does not necessarily
fix or determine the place where they were executed. What is of decisive
importance is the delivery thereof. The delivery of the instrument is the final
act essential to its consummation as an obligation. An undelivered bill or
note is inoperative. Until delivery, the contract is revocable. And the
issuance as well as the delivery of the check must be to a person who takes it
as a holder. Delivery of the check signifies transfer of possession, whether
actual or constructive, from one person to another with intent to transfer
title thereto.

Modesto Yambao's receipt of the bad checks from Cecilia or Geminiano in


Caloocan City cannot be licitly taken as delivery of the checks to the Andan at
Caloocan City to fix the venue there. Yambao was merely Andans
messenger/part time employee, and no there was no contract of agency.

The venue of the offense lies at the place where the check was executed and
delivered to the payee. In this case, it was in Malolos, Bulacan where the
checks were uttered and delivered to complaint Andan, at which place, her
business and residence were also located, the criminal prosecution of estafa
may be lodged therein.
Facts properly constituted Estafa

We hold that the facts charged in the informations against the Yabuts
constitute estafa under Art. 315, par. 2 (d) of the Revised Penal Code. In
considering a motion to quash based on the ground "(t)hat the facts charged
do not constitute an offense," the point of resolution is whether the facts
alleged, if hypothetically admitted, would meet the essential elements of the
offense as defined in the law. The facts alleged in the criminal charge should
be taken as they are. An analysis of the two informations involved in the

Facts:

Manuel Lim and Rosita Lim are the president and treasurer, respectively, of Rigi Bilt
Industries, Inc. (RIGI) located at Kalookan. RIGI had been transacting business with
LINTON (business address at Navotas) for years, the latter supplying the former
with steel plates, steel bars, flat bars and purlin sticks which it uses in the
fabrication, installation and building of steel structures.
o As officers of RIGI the Lim spouses were allowed 30, 60 and sometimes
even up to 90 days credit.

27 May 1983: Lims ordered 100 pieces of mild steel plates from LINTON which
were delivered on the same day To pay LINTON for the delivery the Lims issued
SOLIDBANK Check No. 027700 postdated 3 September 1983.

30 May 1983: Lims ordered another 65 pieces of mild steel plates which were
delivered at their place of business on the same day. They issued as payment
SOLIDBANK Check No. 027699 postdated 20 August 1983.

Lim spouses also ordered 2,600 "Z" purlins which were delivered to them on
various dates, to wit: 15 and 22 April 1983; 11, 14, 20, 23, 25, 28 and 30 May 1983;
and, 2 and 9 June 1983. To pay for the deliveries, they issued seven SOLIDBANK
checks.

LINTON alleged that when those seven (7) checks were deposited with the Rizal
Commercial Banking Corporation they were dishonored for "insufficiency of funds"
with the additional notation "payment stopped" stamped thereon.

Despite demand Manuel and Rosita refused to make good the checks or pay the
value of the deliveries. Manuel alleged that there were no insuficiency of funds (as
evidenced by the ledger) and that he ordered SOLIDBANK to stop payment because
the supplies delivered by LINTON were not in accordance with the specifications in
the purchase orders. Thus, LINTON charged the spouses in RTC MALABON with
with estafa on three (3) counts under Art. 315, par. 2 (d), of The Revised Penal
Code. The spouses were also charged with seven (7) counts of violation of B.P. Blg.
22, otherwise known as the Bouncing Checks Law.

RTC held that both of the accused were guilty of estafa and violation of B.P. Blg. 22.
CA set aside and acquitted both of estafa on the ground that indeed the checks

were not made in payment of an obligation contracted at the time of their


issuance. However it affirmed the finding of the trial court that they were guilty of
having violated B.P. Blg. 22.
Issue:
1. W/N RTC has jurisdiction.
2. W/N spouses were guilty of violating BP 22.
Held:
1.
2.
Dispositive: WHEREFORE, the decision of the Court of Appeals dated 18 September 1992
affirming the conviction of petitioners Manuel Lim and Rosita Lim
In CA-G.R. CR No. 07277 (RTC Crim. Case No. 1699-MN); CA-G.R. CR No. 07278 (RTC
Crim. Case No. 1700-MN); CA-G.R. CR No. 07279 (RTC Crim. Case No. 1701-MN);
CA-G.R. CR No. 07280 (RTC Crim. Case No. 1702-MN); CA-G.R. CR No. 07281 (RTC
Crim. Case No. 1703-MN); CA-G.R. CA No. 07282 (RTC Crim. Case No. 1704-MN);
and CA-G.R. CR No. 07283 (RTC Crim Case No. 1705-MN), the Court finds the
accused-appellants
MANUEL LIM and ROSITA LIM guilty beyond reasonable doubt of violation of Batas
Pambansa Bilang 22 and are hereby sentenced to suffer a STRAIGHT PENALTY OF
ONE (1) YEAR IMPRISONMENT in each case, together with all the accessory
penalties provided by law, and to pay the costs.
In CA-G.R. CR No. 07277 (RTC Crim. Case No. 1699-MN), both accused-appellants
are hereby ordered to indemnify the offended party in the sum of P27,900.00.
In CA-G.R. CR No. 07278 (RTC Crim. Case No. 1700-MN) both accused-appellants
are hereby ordered to indemnify the offended party in the sum of P32,550.00.
In CA-G.R. CR No. 07278 (RTC Crim. Case No. 1701-MN) both accused-appellants
are hereby ordered to indemnify the offended party in the sum of P27,900.00.
In CA-G.R. CR No. 07280 (RTC Crim. Case No. 1702-MN) both accused-appellants
are hereby ordered to indemnify the offended party in the sum of P27,900.00.
In CA-G.R. CR No. 07281 (RTC Crim. Case No. 1703-MN) both accused are hereby
ordered to indemnify the offended party in the sum of P63,455.00.
In CA-G.R CR No. 07282 (RTC Crim. Case No. 1704-MN) both accused-appellants are
hereby ordered to indemnify the offended party in the sum of P51,800.00, and
In CA-G.R. CR No. 07283 (RTC Crim. Case No. 1705-MN) both accused-appellants
are hereby ordered to indemnify the offended party in the sum of P37,200.00 33
as well as its resolution of 6 November 1992 denying reconsideration thereof, is AFFIRMED.
Costs against petitioners.

Ratio:
1.

Jurisdiction of the Court


Petitioner spouses: Prosecution failed to prove that any of the essential elements
of the crime punishable under B.P. Blg. 22 was committed within the jurisdiction of
the Regional Trial Court of Malabon. They claim that what was proved was that all
the elements of the offense were committed in Kalookan City. The checks were
issued at their place of business, received by a collector of LINTON, and
dishonored by the drawee bank, all in Kalookan City. Considering that the checks
were all issued, delivered, and dishonored in Kalookan City, the trial court of
Malabon exceeded its jurisdiction when it tried the case and rendered judgment
thereon.
COURT: Venue in criminal cases is a vital ingredient of jurisdiction. Violation of BP
22 is categorized as transitory or continuing crimes. In other words, a person
charged with a transitory crime may be validly tried in any municipality or
territory where the offense was in part committed.
o The following acts material and essential to each crime and requisite to
its consummation must be considered: (a) the seven (7) checks were
issued to LINTON at its place of business in Balut, Navotas; b) they were
delivered to LINTON at the same place; (c) they were dishonored in
Kalookan City; and, (d) petitioners had knowledge of the insufficiency of
their funds in SOLIDBANK at the time the checks were issued. Since there
is no dispute that the checks were dishonored in Kalookan City, it is no
longer necessary to discuss where the checks were dishonored.
o Sec. 191 of the Negotiable Instruments Law: the term "issue" means the
first delivery of the instrument complete in form to a person who takes
it as a holder. On the other hand, the term "holder" refers to the payee
or indorsee of a bill or note who is in possession of it or the bearer
thereof. Although LINTON sent a collector who received the checks from
petitioners at their place of business in Kalookan City, they were actually
issued and delivered to LINTON at its place of business in Balut, Navotas.
The receipt of the checks by the collector of LINTON is not the issuance
and delivery to the payee in contemplation of law. The collector was not
the person who could take the checks as a holder, i.e., as a payee or
indorsee thereof, with the intent to transfer title thereto. Neither could
the collector be deemed an agent of LINTON with respect to the checks
because he was a mere employee.
o (Just in case sir asks, the Court relied heavily in People v Yabut in deciding
the jurisdiction)
o Thus, venue or jurisdiction lies either in the Regional Trial Court of
Kalookan City or Malabon. Further, venue or jurisdiction is determined by
the allegations in the Information. The Informations in the cases under
consideration allege that the offenses were committed in the
Municipality of Navotas which is controlling and sufficient to vest
jurisdiction upon the Regional Trial Court of Malabon.

2. Spouses were guilty of BP 22


Petitioners: Furthermore, no evidence whatsoever supports the proposition that they knew
that their checks were insufficiently funded. In fact, some of the checks were funded at the

time of presentment but dishonored nonetheless upon their instruction to the bank to stop
payment.
Court: Section 2 of B.P. Blg. 22 establishes a prima facie evidence of knowledge of insufficient
funds. The prima facie evidence has not been overcome by petitioners in the cases before us
because they did not pay LINTON the amounts due on the checks; neither did they make
arrangements for payment in full by the drawee bank within five (5) banking days after
receiving notices that the checks had not been paid by the drawee bank. Further, the notice
of dishonor issued by the drawee bank, indicates not only that payment of the check was
stopped but also that the reason for such order was that the maker or drawer did not have
sufficient funds with which to cover the checks.

Linick v. A. J. Nutting Co.


Supreme Court of New York
Burr, J.
Digest by: CG
Topic: Defenses and Equities > Duress > Incomplete Instrument which delivered
Facts:
-

On July 20, 1909, Linick signed his name to a blank check. David Ryckoft and
Benjamin Silberman stole the check, filled in the name of F. A. Mann as payee and
the sum of $147.87 as the amount thereof. They presented it to the State Bank,
where plaintiff kept his account, and procured it to be certified.
They indorsed said check with the name of F. A. Mann and passed it to defendant
for value, who collected the amount thereof from the said bank.
Plaintiff, having taken up said check from the bank, now sues defendant for money
received for the amount of the check.

Issue: WON defendant acquired a valid title on the check


Held: No. Plaintiff is not liable to a holder for value on a blank check stolen and completed
by the thief.
Dispositive: The judgment appealed from must be reversed, and a new trial ordered; costs to
abide the event.
Ratio:
-

As a general rule, one can only part with title to personal property by his voluntary
act or by conduct sufficient to create an estoppel. In the case of commercial paper
it was long ago held that, when by voluntary act a party intrusts another with such
paper with a blank thereon designed to be filled up with a stipulated amount, such
party is liable to a bona fide holder of the instrument, although the amount
inserted was larger than that agreed upon.
The rule that the bona fide holder of an incomplete instrument, negotiable but for
some lack capable of being supplied, has an implied authority to supply the
omission, and to hold the maker thereon, only applies where the latter has by his
own act, or the act of another, authorized, confided in, or invested with apparent
authority by him, put the instrument in circulation as negotiable paper. In other
words, the maker becomes liable for an incomplete instrument if he delivers it.
None of the circumstances connected with the theft of this paper appear, except
that it was stolen, and that the persons guilty of the crime have been tried,
convicted, and sentenced for the same. Plaintiff, therefore, cannot be charged with
negligence giving rise to an estoppel, unless a man is guilty of negligence in writing
his name upon a piece of paper which by some possibility may afterwards be stolen
from him, which paper afterwards comes into the hands of a third person who is an
entire stranger to the transaction, with words written over the signature which are
sufficient in form to make it a check or note.
Where the instrument is in the hands of a holder in due course, a valid delivery
thereof by all parties prior to him so as to make them liable to him is conclusively
presumed, (Section 16) must be read in connection with the provision declaring
that Where an incomplete instrument has not been delivered it will not, if
completed and negotiated, without authority, be a valid contract in the hands of

any holder, as against any person whose signature was placed thereon before
delivery. (Section 15)

FEDERICO O. BORROMEO, LOURDES O. BORROMEO and FEDERICO O. BORROMEO, INC,


petitioners vs. AMANCIO SUN and the COURT OF APPEALS, respondents.
October 22, 1999
PURISIMA, J.
Digest by Eugenio Leynes
Topic and Provisions: Interpretation and Construction; Blanks; When Filled
NIL, Sec. 14. Blanks; when may be filled. - Where the instrument is wanting in any
material particular, the person in possession thereof has a prima facie authority to
complete it by filling up the blanks therein. And a signature on a blank paper
delivered by the person making the signature in order that the paper may be
converted into a negotiable instrument operates as a prima facie authority to fill it
up as such for any amount. In order, however, that any such instrument when
completed may be enforced against any person who became a party thereto prior
to its completion, it must be filled up strictly in accordance with the authority given
and within a reasonable time. But if any such instrument, after completion, is
negotiated to a holder in due course, it is valid and effectual for all purposes in his
hands, and he may enforce it as if it had been filled up strictly in accordance with
the authority given and within a reasonable time.
Facts:

Private respondent filed an action against petitioners to compel the transfer to his
name in the books of F.O.B., Inc., 23,223 shares of stock registered in the name of
Federico O. Borromeo, as evidenced by a Deed of Assignment dated January 16,
1974.
Petitioner Federico O. Borromeo disclaimed any participation in the execution of
the Deed of Assignment, theorizing that his supposed signature thereon was
forged.
The Deed of Assignment was dated January 16, 1974. However, the signature (as
found by the private respondents expert witness and the PC Crime Laboratory)
was found to be circa 1954-1957.
The trial court found that the signature in question is the genuine signature of
Federico O. Borromeo between the years 1954 to 1957 although the words in the
blank space of the document in question were written on a much later date. The
same conclusion was arrived at by the Court of Appeals on the basis of the Report
of the PC crime Laboratory corroborating the findings of Col. Jose Fernandez that
the signature under controversy is genuine.

Issue:
1)

WON the Deed of Assignment is valid.

Held:
1) YES. The Deed is valid.
Dispositive: WHEREFORE, the Petition is DISMISSED for lack of merit and the assailed
Resolution, dated March 13, 1986, AFFIRMED. No pronouncement as to costs.

SO ORDERED.
Ratio:

That the Deed of Assignment is dated January 16, 1974 while the questioned
signature was found to be circa 1954-1957, and not that of 1974, is of no moment.
It does not necessarily mean, that the deed is a forgery.
Pertinent records reveal that the subject Deed of Assignment is embodied in a
blank form for the assignment of shares with authority to transfer such shares in
the books of the corporation. It was clearly intended to be signed in blank to
facilitate the assignment of shares from one person to another at any future time.
This is similar to Section 14 of the Negotiable Instruments Law where the blanks
may be filled up by the holder, the signing in blank being with the assumed
authority to do so.
Indeed, as the shares were registered in the name of Federico O. Borromeo just to
give him personality and standing in the business community, private respondent
had to have a counter evidence of ownership of the shares involve.
Thus the execution of the deed of assignment in blank, to be filled up whenever
needed. The same explains the discrepancy between the date of the deed of
assignment and the date when the signature was affixed thereto.

Pacheco v. CA
December 2, 1999
Ynares-Santiago
Digest by: CGo
Topic: Dates of Instrument
Facts:
-

Petitioners (Virginia Pacheco and spouse) are engaged in the construction business,
due to financial difficulties they had to obtain loans from the complainant Vicencios
(pawn shop owners). FIRST LOAN: 10,000, instead of asking for a promissory note,
the spouses required the petitioners to write a check, which will allegedly not be
presented to the bank. The understanding was the check is not to be encashed but
merely intended as an evidence of indebtedness, which cannot be negotiated.
SECOND LOAN: P50,000.00 from Mrs. Vicencio. She received only P35,000.00 as the
previous loan of P10,000.00 as well as the 10% interest amounting to P5,000.00 on
the new loan were deducted by the latter. With the payment of the previous debt,
Virginia Pacheco asked for the return of the first check, but the spouses Vicencio
can no longer locate the check. She also required Virginia to issue three (3) more
checks in various amounts two checks for P20,000.00 each and the third check for
P10,000.00. Virginia issued three undated RCBC checks numbered 101783 and
101784 in the sum of P20,000.00 each and 101785 for P10,000.00, and again
informed Mrs. Vicencio that the checks cannot be encashed as the same were not
funded. Petitioner Ernesto also signed the three checks as required by Mrs.
Vicencio on the same conditions as the first check.
THIRD LOAN: one for P10,000.00 and another for P15,000.00. Again she issued two
more RCBC checks (No. 101768 for P10,000.00 and No. 101774 for P15,000.00) as
required by Mrs. Vicencio with the same assurance that the checks shall not be
presented for payment but shall stand only as evidence of indebtedness in lieu of
the usual promissory note.
The six checks represent a total obligation of P85,000.00. However, since the loan
of P10,000.00 under the first check was already paid when the amount thereof was
deducted from the proceeds of the second loan, the remaining account was only
P75,000.00. Of this amount, petitioners were able to settle and pay in cash
P60,000.00 in July 1989. Petitioners never had any transaction nor ever dealt with
Mrs. Vicencios husband, the complainant herein.
When the remaining balance became due and demandable, petitioners were not
able to pay despite demands to do so. Respondents went to petitioners residence
to persuade Virginia to place the date August 15, 1992 on checks nos. 101756
and 101774, although said checks were respectively given undated to Mrs. Vicencio
on May 17, 1989 and July 21, 1989. Check no. 101756 was required by Mrs.
Vicencio to be dated as additional guarantee for the P15,000.00 unpaid balance
allegedly under check no. 101774. Despite being informed by petitioner Virginia
that their account with RCBC had been closed as early as August 17, 1989, Mrs.
Vicencio and her daughter insisted that she place a date on the checks allegedly so
that it will become evidence of their indebtedness. The former reluctantly wrote
the date on the checks for fear that she might not be able to obtain future loans
from Mrs. Vicencio.

Petitioners were surprised to receive on August 29, 1992 a demand letter from
Mrs. Vicencios spouse informing them that the checks when presented for
payment on August 25, 1992 were dishonored due to Account Closed.
Consequently, upon the complaint of Mrs. Vicencios husband with whom
petitioners never had any transaction, two informations for estafa, defined in
Article 315(2)(d) of the Revised Penal Code, were filed against them.

Issue: WON Guilty of Estafa


Held: No
Dispositive: WHEREFORE, the assailed Decision is REVERSED and SET ASIDE. Petitioners are
ACQUITTED of the charge of estafa but they are ORDERED to pay Mrs. Vicencio the amount
of P15,000.00 without interest. However, from the time this judgment becomes final and
executory, the amount due shall earn legal interest of twelve percent (12%) per annum until
full payment.
Ratio:
- The essential elements in order to sustain a conviction under the above paragraph
are:
1. that the offender 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 offender had no
funds in the bank, or his funds deposited therein were not sufficient to cover
the amount of the check;
3. deceit or damage to the payee thereof.
The first 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. By mutual agreement of the parties, the negotiable character
of a check may be waived and the instrument may be treated simply as proof
of an obligation. There cannot be deceit on the part of the obligor,
petitioners herein, because they agreed with the obligee at the time of the
issuance and postdating of the checks that the same shall not be encashed or
presented to the banks. As per assurance of the lender, the checks are
nothing but evidence of the loan or security thereof in lieu of and for the
same purpose as a promissory note. By their own covenant, therefore, the
checks became mere evidence of indebtedness. It has been ruled that a
drawer who issues a check as security or evidence of investment is not
liable for estafa. Mrs. Vicencio could not have been deceived nor defrauded
by petitioners in order to obtain the loans because she was informed that
they no longer have funds in their RCBC accounts. In 1992, when the Vicencio
family asked Virginia to place a date on the check, the latter again informed
Mrs. Vicencio that their account with RCBC was already closed as early as
August 1989. With the assurance, however, that the check will only stand as a
firm evidence of indebtedness, Virginia placed a date on the check. Under
these circumstances, Mrs. Vicencio cannot claim that she was deceived or
defrauded by petitioners in obtaining the loan. In the absence of the essential
element of deceit, no estafa was committed by petitioners.
The Respondent need not even ask the petitioners to place a date on the check,
because as holder of the check, he could have inserted the date pursuant to
Section 13 of the Negotiable Instruments Law (NIL). Moreover, as stated in

Section 14 thereof, complainant, as the person in possession of the check,


has prima facie authority to complete it by filling up the blanks therein. Besides,
pursuant to Section 12 of the same law, a negotiable instrument is not rendered
invalid by reason only that it is antedated or postdated. Thus, the 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 sufficient funds in the bank at the time it was issued to him does not give
rise to a case for estafa through bouncing checks.
Moreover, a check must be presented within a reasonable time from issue. By
current banking practice, a check becomes stale after more than six (6) months.
In fact a check long overdue for more than two and one-half years is considered
stale. In this case, the checks were issued more than three years prior to their
presentment. In his complaint, complainant alleged that petitioners bought
jewelry from him and that he would not have parted with his jewelry had not
petitioners issued the checks. The evidence on record, however, does not support
the theory of the crime.

Dougherty vs Salt
1919
Cardozo, J
Martin Lagmay
Topic and Provisions:
Facts:

The plaintiff, a boy of eight years, received from his aunt, the defendants testatrix,
a promissory note for $3,000, payable at her death or before. Use was made of a
printed form, which contains the words value received.

How the note came to be given was explained by the boys guardian, who was a
witness for his ward. The following is the testimony of the guardian

The aunt was visiting her nephew. When she saw Charley coming in, she said, Isnt
he a nice boy? I answered her, Yes; that he is getting along very nice, and getting
along nice in school; and I showed where he had progressed in school, having good
reports, and so forth, and she told me that she was going to take care of that child;
that she loved him very much. I said, I know you do, Tillie, but your taking care of
the child will be done probably like your brother and sister done, take it out in
talk. She said, I dont intend to take it out in talk; I would like to take care of him
now. I said, Well, that is up to you. She said, Why cant I make out a note to
him? I said, You can, if you wish to. She said, Would that be right? And I said,
I do not know, but I guess it would; I do not know why it would not. And she said,
Well, will you make out a note for me? I said, Yes, if you wish me to, and she
said, Well, I wish you would. A blank was then produced, filled out, and signed.
The aunt handed the note to her nephew, with these words: You have always
done for me, and I have signed this note for you. Now, do not lose it. Some day it
will be valuable.

The trial judge submitted to the jury the question whether there was any
consideration for the promised payment. Afterwards, he set aside the verdict in
favor of the plaintiff, and dismissed the complaint

The Appellate Division, by a divided court, reversed the judgment of dismissal, and
reinstated the verdict on the ground that the note was sufficient evidence of
consideration
Issue: WON the note is enforceable
Held: No
Dispositive: We hold, therefore, that the verdict of the jury was contrary to law, and that the
trial judge was right in setting it aside
Ratio:

The inference of consideration to be drawn from the form of the note has been so
overcome and rebutted as to leave no question for a jury. This is not a case where
witnesses, summoned by the defendant and friendly to the defendants cause,
supply the testimony in disproof of value.

This is a case where the testimony in disproof of value comes from the plaintiffs
own witness, speaking at the plaintiffs instance. The transaction thus revealed
admits of one interpretation,and one only. The note was the voluntary and
unenforceable promise of an executory gift.

This child of eight was not a creditor, nor dealt with as one. The aunt was not
paying a debt. She was conferring a bounty

The promise was neither offered nor accepted with any other purpose. Nothing is
consideration that is not regarded as such by both parties.
A note so given is not made for value received, however its maker may have
labeled it. The formula of the printed blank becomes, in the light of the conceded
facts, a mere erroneous conclusion, which cannot overcome the inconsistent
conclusion of the law
The plaintiff through his own witness, has explained the genesis of the promise,
and consideration has been disproved

In other words:
The note was voluntary and not an enforceable promise of an executory gift. There was no
consideration. There was no value received by the aunt for her promise. A promise to make a
future gift is not enforceable under contract law. Mere recitals of consideration are not
consideration.

Francisco v. CA
November 29, 1999
J. Gonzaga Reyes
Ortiz
Topic: Indorsement by Agent
Provisions:
Sec. 20. Liability of person signing as agent, and so forth. - Where the instrument contains or
a person adds to his signature words indicating that he signs for or on behalf of a principal or
in a representative capacity, he is not liable on the instrument if he was duly authorized; but
the mere addition of words describing him as an agent, or as filling a representative
character, without disclosing his principal, does not exempt him from personal liability.
Sec. 44. Indorsement in representative capacity. - Where any person is under obligation to
indorse in a representative capacity, he may indorse in such terms as to negative personal
liability
Facts:
- Petitioner Adalia Francisco (P) is the president of A. Francisco Realty and Development
Corporation (AFRDC)
- Respondent Jaime Ong (R) is the president and general manager of Herby Commercial and
Construction Corporation (HCCC)
- Land Development and Construction Contract (LDCC) was entered into by AFRDC and HCCC:
Financed by GSIS
HCCC to construct 35 housing units and the development of 35 hectares of land
Payment = 'turn-key' basis = HCCC was to be paid on the basis of the completed
houses and developed lands delivered to and accepted by AFRDC and the GSIS
AFRDC authorized, through a Deed of Assignment, HCCC to collect payments
directly from GSIS
AFRDC and GSIS put up an Executive Committee Account with the Insular Bank
of Asia & America (IBAA) in the amount of P4,000,000.00 from which checks would be issued
and co-signed by petitioner Francisco and the GSIS Vice-President Armando Diaz
- HCCC filed a case against P, AFRDC and GSIS for the collection of the unpaid balance under
the LDCC in the amount of PhP 515k
Amicable settlement: GSIS still owes PhP 520k representing incomplete
construction of housing, incomplete land development and 5% retention. HCCC turned over
83 housing units which have been accepted and paid for by GSIS. HCC indebted to AFDRDC in
the amount of PhP 180k, which will be paid out of the proceeds from the 40 housing units
still to be turned over by HCCC or from any amount due to HCCC from GSIS
- A year later, R discovered that GSIS VP Diaz and P had executed and signed 7 checks of
various dates and amounts (amounting to PhP 370k) drawn against IBAA and payable to
HCCC for completed and delivered work under LDCC
Never delivered to R
GSIS gave P custody of the checks. The latter promised to deliver the same to
HCCC
P forged the signature of R at the dorsal portion of the checks. P then indorsed
the checks for a second time by signing her name at the back of the checks and deposited the

checks in her IBAA savings account


IBAA credited P's account with the amount of the checks and the latter
withdrew the amount so credited
- R filed a case of estafa thru falsification of commercial documents against P
- Defense of P: R Ong allegedly issued a Certification authorizing P to collect HCCC's
receivables from GSIS, thus making him an agent
- TC: In favor of R. Signatures were indeed forged according to NBI experts. IBAA liable since
it allowed for the withdrawal despite obvious irregularities as the lack of initials to validate
the alterations made on the check, absence of the signature of a co-signatory in the
corporate checks of HCCC and the depsit of checks on a second indorsement in the savings
account of P
- CA: affirmed
Issue: WON Francisco forged the signature of Ong on the seven checks
Held: YES. P had no authority to encash checks
Dispositive: WHEREFORE, we AFFIRM the respondent courts decision promulgated on June
29, 1992, upholding the February 16, 1988 decision of the trial court in favor of private
respondents, with the modification that the interest upon the actual damages awarded shall
be at six percent (6%) per annum, which interest rate shall be computed from the time of the
filing of the complaint on November 19, 1979. However, the interest rate shall be twelve
percent (12%) per annum from the time the judgment in this case becomes final and
executory and until such amount is fully paid. The basis for computation of the six percent
and twelve percent rates of interest shall be the amount of P370,475.00. No pronouncement
as to costs.
Ratio:
- The forgery was satisfactorily established in the trial court upon the strength of the findings
of the NBI handwriting expert. Other than petitioners self-serving denials, there is nothing in
the records to rebut the NBIs findings.
- P asserts that she had authority, citing the Certification executed by Ong in her favor giving
her the authority to collect all the receivables of HCCC from the GSIS, including the
questioned checks.
The Negotiable Instruments Law provides that where any person is under
obligation to indorse in a representative capacity, he may indorse in such terms as to
negative personal liability
An agent, when so signing, should indicate that he is merely signing in behalf of
the principal and must disclose the name of his principal; otherwise he shall be held
personally liable
Assuming arguendo that Francisco was authorized by HCCC to sign Rs name,
still, P did not indorse the instrument in accordance with law. Instead of signing Rs name, P
should have signed her own name and expressly indicated that she was signing as an agent of
HCCC. Thus, the Certification cannot be used by P to validate her act of forgery.