Alvin Patrimonio v. Napoleon Gutierrez , et. al. G.R. No. 187769 June 04, 2014 HELD: No.
HELD: No. Section 14 of the Negotiable Instruments Law provides for when blanks may be
FACTS: The petitioner and the respondent Gutierrez entered into a business venture under
the name of Slam Dunk Corporation, a production outfit that produced mini-concerts and
shows related to basketball.
Patrimonio pre-signed several checks to answer for the expenses of Slam Dunk. Although
signed, these checks had no payee’s name, date or amount. The blank checks were
entrusted to Gutierrez with the specific instruction not to fill them out without previous
notification to and approval by the petitioner.
Without the petitioner’s knowledge and consent, Gutierrez went to Marasigan to secure a
loan in the amount of P200,000.00 on the excuse that the petitioner needed the money for
the construction of his house. In addition to the payment of the principal, Gutierrez assured
Marasigan that he would be paid an interest of 5% per month.
Marasigan acceded to Gutierrez’ request and gave him P200,000.00. Gutierrez
simultaneously delivered to Marasigan one of the blank checks the petitioner pre-signed
with Pilipinas Bank with the blank portions filled out with the words “Cash” “Two Hundred
Thousand Pesos Only”, and the amount of “P200,000.00.”
Marasigan deposited the check but it was dishonored for the reason “ACCOUNT CLOSED.” It
was later revealed that petitioner’s account with the bank had been closed.
Marasigan sought recovery from Gutierrez, to no avail. He thereafter sent several demand
letters to the petitioner asking for the payment of P200,000.00, but his demands likewise
went unheeded. Consequently, he filed a criminal case for violation of B.P. 22 against the
petitioner.
RTC— in favor of Marasigan. It found that the petitioner, in issuing the pre-signed blank
checks, had the intention of issuing a negotiable instrument, albeit with specific instructions
to Gutierrez not to negotiate or issue the check without his approval. RTC declared
Marasigan as a holder in due course and accordingly dismissed the petitioner’s complaint for
declaration of nullity of the loan. It ordered the petitioner to pay Marasigan the face value of
the check with a right to claim reimbursement from Gutierrez. CA— affirmed the RTC ruling.
ISSUE: Whether or not Marasigan is a holder in due course thus may hold Patrimonio liable?
filled. This provision applies to an incomplete but delivered instrument. Under this rule, if
the maker or drawer delivers a pre-signed blank paper to another person for the purpose of
converting it into a negotiable instrument, that person is deemed to have prima facie
authority to fill it up. It merely requires that the instrument be in the possession of a person
other than the drawer or maker and from such possession, together with the fact that the
instrument is wanting in a material particular, the law presumes agency to fill up the blanks.
In order however that one who is not a holder in due course can enforce the instrument
against a party prior to the instrument’s completion, two requisites must exist: (1) that the
blank must be filled strictly in accordance with the authority given; and (2) it must be filled
up within a reasonable time. If it was proven that the instrument had not been filled up
strictly in accordance with the authority given and within a reasonable time, the maker can
set this up as a personal defense and avoid liability.
Section 52(c) of the NIL states that a holder in due course is one who takes the instrument
“in good faith and for value.” It also provides in Section 52(d) that in order that one may be a
holder in due course, it is necessary that at the time it was negotiated to him he had no
notice of any infirmity in the instrument or defect in the title of the person negotiating it.
Acquisition in good faith means taking without knowledge or notice of equities of any sort
which could be set up against a prior holder of the instrument. It means that he does not
have any knowledge of fact which would render it dishonest for him to take a negotiable
paper. The absence of the defense, when the instrument was taken, is the essential element
of good faith.
In order to show that the defendant had “knowledge of such facts that his action in taking
the instrument amounted to bad faith,” it is not necessary to prove that the defendant knew
the exact fraud that was practiced upon the plaintiff by the defendant’s assignor, it being
sufficient to show that the defendant had notice that there was something wrong about his
assignor’s acquisition of title, although he did not have notice of the particular wrong that
was committed. In the present case, Marasigan’s knowledge that the petitioner is not a
party or a privy to the contract of loan, and correspondingly had no obligation or liability to
him, renders him dishonest, hence, in bad faith.
Yet, it does not follow that simply because he is not a holder in due course, Marasigan is
already totally barred from recovery.
Notably, Gutierrez was only authorized to use the check for business expenses; thus, he
exceeded the authority when he used the check to pay the loan he supposedly contracted
for the construction of petitioner’s house. This is a clear violation of the petitioner’s
instruction to use the checks for the expenses of Slam Dunk. It cannot therefore be validly
concluded that the check was completed strictly in accordance with the authority given by
the petitioner.
De La Victoria vs. Burgos G.R. No. 111190. June 27, 1995
FACTS: Assistant City Fiscal Bienvenido N. Mabanto was ordered to pay herein
private respondent Raul Sesbreño P11,000.00 as damages. A notice of garnishment
was served on herein petitioner Loreto D. de la Victoria as City Fiscal of Mandaue
City where Mabanto was detailed. V was directed not to disburse, transfer, release or
convey to any other person except to the deputy sheriff concerned the salary checks
or other checks, monies, or cash due or belonging to Mabanto, Jr., under penalty of
law. Later, V was directed to submit his report showing the amount of the garnished
salaries. V moved to quash the notice of garnishment claiming that he was not in
possession of any money, funds, credit, property or anything of value belonging to
Mabanto, Jr., except his salary and RATA checks, but that said checks were not yet
properties of Mabanto, Jr., until delivered to him. He further claimed that, as such,
they were still public funds which could not be subject to garnishment.
ISSUE: W/N a check still in the hands of the maker or its duly authorized
representative is owned by the payee before physical delivery to the latter.
RULING: As Assistant City Fiscal, the source of the salary of Mabanto, Jr., is
public funds. He receives his compensation in the form of checks from the DOJ
through V as City Fiscal of Mandaue City and head of office. Under Sec. 16 of the
Negotiable Instruments Law, every contract on a negotiable instrument is incomplete
and revocable until delivery of the instrument for the purpose of giving effect thereto.
As ordinarily understood, delivery means the transfer of the possession of the
instrument by the maker or drawer with intent to transfer title to the payee and
recognize him as the holder thereof.
Inasmuch as said checks had not yet been delivered to Mabanto, Jr., they did not
belong to him and still had the character of public funds. The salary check of a
government officer or employee does not belong to him before it is physically
delivered to him. Until that time the check belongs to the government. Accordingly,
before there is actual delivery of the check, the payee has no power over it; he cannot
assign it without the consent of the Government. Being public fund, the checks may
not be garnished to satisfy the judgment in consideration of public policy.
DEVELOPMENT BANK OF RIZAL vs. SIMA WEI, ET AL.
G.R. No. 85419 March 9, 1993
--complete undelivered
FACTS:
Respondent Sima Wei executed and delivered to petitioner Bank a
promissory note engaging to pay the petitioner Bank or order the
amount of P1,820,000.00. Sima Wei subsequently issued two crossed
checks payable to petitioner Bank drawn against China Banking
Corporation in full settlement of the drawer's account evidenced by the
promissory note. These two checks however were not delivered to the
petitioner-payee or to any of its authorized representatives but instead
came into the possession of respondent Lee Kian Huat, who deposited
the checks without the petitioner-payee's indorsement to the account of
respondent Plastic Corporation with Producers Bank. Inspite of the
fact that the checks were crossed and payable to petitioner Bank and
bore no indorsement of the latter, the Branch Manager of Producers
Bank authorized the acceptance of the checks for deposit and credited
them to the account of said Plastic Corporation.
ISSUE:
Whether petitioner Bank has a cause of action against Sima Wei for
the undelivered checks.
RULING:
No. A negotiable instrument must be delivered to the payee in order to
evidence its existence as a binding contract. Section 16 of the NIL
provides that every contract on a negotiable instrument is incomplete
and revocable until delivery of the instrument for the purpose of giving
effect thereto. Thus, the payee of a negotiable instrument acquires no
interest with respect thereto until its delivery to him. Without the initial
delivery of the instrument from the drawer to the payee, there can be
no liability on the instrument. Petitioner however has a right of action
against Sima Wei for the balance due on the promissory note.
Lim vs. CA
G.R. No. 107898. December 19, 1995
Bellosillo, J.
Manuel and Rosita Lim, spouses, and
president and treasurer respectively of Rigi Bilt Industries, Inc., allegedly issued 7 Solidbank checks as
payment for goods purchased from and delivered by Linton Commercial Company, Inc. When deposited
with Rizal Commercial Banking Corporation, said checks were dishonored for “insufficiency of funds” with
the additional notation “payment stopped” stamped thereon. Despite demand, spouses Lim refused to
make good the checks or pay the value of the deliveries. The RTC held spouses Lim guilty of estafa and
violation of BP22. On appeal, the CA acquitted accused-appellants of estafa on the ground that the checks
were not made in payment of an obligation contracted at the time of their issuance but affirmed the finding
that they were guilty of having violated B.P. Blg. 22. In the present case, petitioners maintain that the
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 RTC-Malabon claiming that what was proved was that all the
elements of the offense were committed in Kalookan City.
RULING:
Under Sec. 191 NIL, 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.
Section 2 of B.P. Blg. 22 establishes a prima facie evidence of knowledge of insufficient funds as follows
The making, drawing and issuance of a check payment of which is refused by the bank because
of insufficient funds in or credit with such bank, when presented within ninety (90) days from
the date of the check, shall be prima facie evidence of knowledge of such insufficiency of
funds or credit unless such maker or drawer pays the holder thereof the amount due thereon, or
makes arrangement for payment in full by the drawee of such check within five (5) banking
days after receiving notice that such check has not been paid by the drawee.
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. In People
v. Grospe citing People v. Manzanilla we held that “. . . knowledge on the part of the maker or drawer of the check of
the insufficiency of his funds is by itself a continuing eventuality, whether the accused be within one territory or
another.” Consequently, venue or jurisdiction lies either in the RTC of Kalookan City or Malabon. Moreover, we
ruled in the same Grospe and Manzanilla cases as reiterated in Lim v. Rodrigo that 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. We therefore sustain likewise the conviction of petitioners by RTC-Malabon for
violation of BP22.

RCBC vs. Hi-Tri Dev. Corp. , et.
al, G.R. No. 192413, June 13,
2012
Full Text
Facts: Luz Bakunawa and her husband Manuel, now
deceased (Spouses Bakunawa) are registered owners of six (6)
parcels of land in Quezon City. These lots were sequestered by the
Presidential Commission on Good Government [(PCGG)]. Sometime in
1990, a certain Teresita Millan (Millan), through her representative,
Jerry Montemayor, offered to buy said lots for ₱6,724,085.71, with the
promise that she will take care of clearing whatever preliminary
obstacles there may be to effect a completion of the sale.
The Spouses Bakunawa gave to Millan the Owners Copies of said
TCTs and in turn, Millan made a downpayment of ₱1,019,514.29 for
the intended purchase. However, for one reason or another, Millan was
not able to clear said obstacles. As a result, the Spouses Bakunawa
rescinded the sale and offered to return to Millan her downpayment of
₱1,019,514.29. However, Millan refused to accept back the
₱1,019,514.29 down payment.
Consequently, the Spouses Bakunawa, through their company, the Hi-
Tri Development Corporation (Hi-Tri) took out on October 28, 1991, a
Managers Check from RCBC-Ermita in the amount of ₱1,019,514.29,
payable to Millan’s company Rosmil Realty and Development
Corporation (Rosmil) c/o Teresita Millan and used this as one of their
basis for a complaint against Millan and Montemayor which they filed
with the Regional Trial Court of Quezon City, Branch 99.
On January 31, 2003, during the pendency of the above mentioned
case and without the knowledge of [Hi-Tri and Spouses Bakunawa],
RCBC reported the ₱1,019,514.29-credit existing in favor of Rosmil to
the Bureau of Treasury as among its unclaimed balances as of
January 31, 2003. Allegedly, a copy of the Sworn Statement executed
by Florentino N. Mendoza, Manager and Head of RCBCs Asset
Management, Disbursement & Sundry Department (AMDSD) was
posted within the premises of RCBC-Ermita.
On December 14, 2006, x x x Republic, through the [Office of the
Solicitor General (OSG)], filed with the RTC the action below for
Escheat [(Civil Case No. 06-244)].
On April 30, 2008, [Spouses Bakunawa] settled amicably their dispute
with Rosmil and Millan. Instead of only the amount of ₱1,019,514.29,
[Spouses Bakunawa] agreed to pay Rosmil and Millan the amount of
₱3,000,000.00, [which is] inclusive [of] the amount of []₱1,019,514.29.
But during negotiations and evidently prior to said settlement, [Manuel
Bakunawa, through Hi-Tri] inquired from RCBC-Ermita the availability
of the ₱1,019,514.29 under RCBC Managers Check No. ER 034469.
[Hi-Tri and Spouses Bakunawa] were however dismayed when they
were informed that the amount was already subject of the escheat
proceedings before the RTC.
Issue: Whether or not the escheat (the reversion of property to the
state on the owner’s dying without legal heirs) of the account in RCBC
is proper.
Held: No. There are checks of a special type called managers or
cashiers checks. These are bills of exchange drawn by the banks
manager or cashier, in the name of the bank, against the bank itself.
Typically, a managers or a cashiers check is procured from the bank
by allocating a particular amount of funds to be debited from the
depositors account or by directly paying or depositing to the bank the
value of the check to be drawn. Since the bank issues the check in its procured the Managers Check. The doctrine that the deposit
name, with itself as the drawee, the check is deemed accepted in represented by a managers check automatically passes to the payee is
advance. Ordinarily, the check becomes the primary obligation of the inapplicable, because the instrument although accepted in advance
issuing bank and constitutes its written promise to pay upon demand. remains undelivered. Hence, respondents should have been informed
that the deposit had been left inactive for more than 10 years, and that
Nevertheless, the mere issuance of a managers check does not ipso it may be subjected to escheat proceedings if left unclaimed.
facto work as an automatic transfer of funds to the account of the
payee. In case the procurer of the managers or cashiers check retains
custody of the instrument, does not tender it to the intended payee, or
fails to make an effective delivery, we find the following provision on
undelivered instruments under the Negotiable Instruments Law
applicable:

Sec. 16. Delivery; when effectual; when presumed. Every contract on a

negotiable instrument is incomplete and revocable until delivery of the
instrument for the purpose of giving effect thereto. As between
immediate parties and as regards a remote party other than a holder in
due course, the delivery, in order to be effectual, must be made either
by or under the authority of the party making, drawing, accepting, or
indorsing, as the case may be; and, in such case, the delivery may be
shown to have been conditional, or for a special purpose only, and not
for the purpose of transferring the property in the instrument. But
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. And where the instrument is no longer in
the possession of a party whose signature appears thereon, a valid
and intentional delivery by him is presumed until the contrary is proved.

Since there was no delivery, presentment of the check to the bank for
payment did not occur. An order to debit the account of respondents
was never made. In fact, petitioner confirms that the Managers Check
was never negotiated or presented for payment to its Ermita Branch,
and that the allocated fund is still held by the bank. As a result, the
assigned fund is deemed to remain part of the account of Hi-Tri, which