Eumelia R. M-Wps Office

1. EUMELIA R.
MITRA,
Petitioner,
- versus -
PEOPLE OF THE PHILIPPINES and FELICISIMO S. TARCELO,
Respondents.
G.R. NO. 191404
Present:
CARPIO, J., Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
Promulgated:
July 5, 2010
X --------------------------------------------------------------------------------------X
DECISION
MENDOZA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the July 31, 2009
Decision[1] and the February 11, 2010 Resolution of the Court of Appeals (CA) in CA-G.R. CR No. 31740.
The subject decision and resolution affirmed the August 22, 2007 Decision of the Regional Trial Court,
Branch 2, Batangas City (RTC) which, in turn, affirmed the May 21, 2007 Decision of the Municipal Trial
Court in Cities, Branch 2, Batangas City (MTCC).
THE FACTS:
Petitioner Eumelia R. Mitra (Mitra) was the Treasurer, and Florencio L. Cabrera, Jr. (now deceased) was
the President, of Lucky Nine Credit Corporation (LNCC), a corporation engaged in money lending
activities.
Between 1996 and 1999, private respondent Felicisimo S. Tarcelo (Tarcelo) invested money in LNCC. As
the usual practice in money placement transactions, Tarcelo was issued checks equivalent to the
amounts he invested plus the interest on his investments. The following checks, signed by Mitra and
Cabrera, were issued by LNCC to Tarcelo.[2]
Bank
Date Issued
Date of Check
Amount
Check No.
Security Bank
September 15, 1998
January 15, 1999

P 3,125.00
0000045804
-do-
September 15, 1998
January 15, 1999
125,000.00
0000045805
-do-
September 20, 1998
January 20, 1999
2,500.00
0000045809
-do-
September 20, 1998
January 20, 1999
100,000.00
0000045810
-do-
September 30, 1998
January 30, 1999
5,000.00
0000045814
-do-
September 30, 1998
January 30, 1999

200,000.00
0000045815
-do-
October 3, 1998
February 3, 1999
2,500.00
0000045875
-do-
October 3, 1998
February 3, 1999
100,000.00
0000045876
-do-
November 17, 1998
February17, 1999
5,000.00
0000046061
-do-
November 17, 1998
March 17, 1999
5,000.00
0000046062
-do-
November 17, 1998
March 17, 1999

200,000.00
0000046063
-do-
November 19, 1998
January 19, 1999
2,500.00
0000046065
-do-
November 19, 1998
February19, 1999
2,500.00
0000046066
-do-
November 19, 1998
March 19, 1999
2,500.00
0000046067
-do-
November 19, 1998
March 19, 1999
100,000.00
0000046068
-do-
November 20, 1998
January 20, 1999

10,000.00
0000046070
-do-
November 20, 1998
February 20, 1999
10,000.00
0000046071
-do-
November 20, 1998
March 20, 1999
10,000.00
0000046072
-do-
November 20, 1998
March 20, 1999
10,000.00
0000046073
-do-
November 30, 1998
January 30, 1999
2,500.00
0000046075
-do-
November 30, 1998
February 28, 1999

2,500.00
0000046076
-do-
November 30, 1998
March 30, 1999
2,500.00
0000046077
-do-
November 30, 1998
March 30, 1999
100,000.00
0000046078
When Tarcelo presented these checks for payment, they were dishonored for the reason account closed.
Tarcelo made several oral demands on LNCC for the payment of these checks but he was frustrated.
Constrained, in 2002, he caused the filing of seven informations for violation of Batas Pambansa Blg. 22
(BP 22) in the total amount of P925,000.00 with the MTCC in Batangas City.[3]
After trial on the merits, the MTCC found Mitra and Cabrera guilty of the charges. The fallo of the May
21, 2007 MTCC Decision[4] reads:
WHEREFORE, foregoing premises considered, the accused FLORENCIO I. CABRERA, JR., and EUMELIA R.
MITRA are hereby found guilty of the offense of violation of Batas Pambansa Bilang 22 and are hereby
ORDERED to respectively pay the following fines for each violation and with subsidiary imprisonment in
all cases, in case of insolvency:
1. Criminal Case No. 43637 - P200,000.00
Said accused, nevertheless, are adjudged civilly liable and are ordered to pay, in solidum, private
complainant Felicisimo S. Tarcelo the amount of NINE HUNDRED TWENTY FIVE THOUSAND PESOS
(P925,000.000).
SO ORDERED.
Mitra and Cabrera appealed to the Batangas RTC contending that: they signed the seven checks in blank
with no name of the payee, no amount stated and no date of maturity; they did not know when and to
whom those checks would be issued; the seven checks were only among those in one or two booklets of
checks they were made to sign at that time; and that they signed the checks so as not to delay the
transactions of LNCC because they did not regularly hold office there.[5]
The RTC affirmed the MTCC decision and later denied their motion for reconsideration. Meanwhile,
Cabrera died. Mitra alone filed this petition for review[6] claiming, among others, that there was no
proper service of the notice of dishonor on her. The Court of Appeals dismissed her petition for lack of
merit.
Mitra is now before this Court on a petition for review and submits these issues:
1. WHETHER OR NOT THE ELEMENTS OF VIOLATION OF BATAS PAMBANSA BILANG 22 MUST BE PROVED
BEYOND REASONABLE DOUBT AS AGAINST THE CORPORATION WHO OWNS THE CURRENT ACCOUNT
WHERE THE SUBJECT CHECKS WERE DRAWN BEFORE LIABILITY ATTACHES TO THE SIGNATORIES.
2. WHETHER OR NOT THERE IS PROPER SERVICE OF NOTICE OF DISHONOR AND DEMAND TO PAY TO THE
PETITIONER AND THE LATE FLORENCIO CABRERA, JR.
The Court denies the petition.
A check is a negotiable instrument that serves as a substitute for money and as a convenient form of
payment in financial transactions and obligations. The use of checks as payment allows commercial and
banking transactions to proceed without the actual handling of money, thus, doing away with the need
to physically count bills and coins whenever payment is made. It permits commercial and banking
transactions to be carried out quickly and efficiently. But the convenience afforded by checks is damaged
by unfunded checks that adversely affect confidence in our commercial and banking activities, and
ultimately injure public interest.
BP 22 or the Bouncing Checks Law was enacted for the specific purpose of addressing the problem of the
continued issuance and circulation of unfunded checks by irresponsible persons. To stem the harm
caused by these bouncing checks to the community, BP 22 considers the mere act of issuing an unfunded
check as an offense not only against property but also against public order.[7] The purpose of BP 22 in
declaring the mere issuance of a bouncing check as malum prohibitum is to punish the offender in order
to deter him and others from committing the offense, to isolate him from society, to reform and
rehabilitate him, and to maintain social order.[8] The penalty is stiff. BP 22 imposes the penalty of
imprisonment for at least 30 days or a fine of up to double the amount of the check or both
imprisonment and fine.
Specifically, BP 22 provides:
SECTION 1. Checks Without Sufficient Funds. Any person who makes or draws and issues any check to
apply on account or for value, knowing at the time of issue that he does not have sufficient funds in or
credit with the drawee bank for the payment of such check in full upon its presentment, which check is
subsequently dishonored by the drawee bank for insufficiency of funds or credit or would have been
dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop
payment, shall be punished by imprisonment of not less than thirty days but not more than one (1) year
or by a fine of not less than but not more than double the amount of the check which fine shall in no
case exceed Two Hundred Thousand Pesos, or both such fine and imprisonment at the discretion of the
court.
The same penalty shall be imposed upon any person who, having sufficient funds in or credit with the
drawee bank when he makes or draws and issues a check, shall fail to keep sufficient funds or to
maintain a credit to cover the full amount of the check if presented within a period of ninety (90) days
from the date appearing thereon, for which reason it is dishonored by the drawee bank.
Where the check is drawn by a corporation, company or entity, the person or persons who actually
signed the check in behalf of such drawer shall be liable under this Act.
SECTION 2. Evidence of Knowledge of Insufficient Funds. The making, drawing and issuance of a check
payment of which is refused by the drawee because of insufficient funds in or credit with such bank,
when presented within ninety (90) days from the date of the check, shall be prima facie evidence of
knowledge of such insufficiency of funds or credit unless such maker or drawer pays the holder thereof
the amount due thereon, or makes arrangements for payment in full by the drawee of such check within
five (5) banking days after receiving notice that such check has not been paid by the drawee.
Mitra posits in this petition that before the signatory to a bouncing corporate check can be held liable, all
the elements of the crime of violation of BP 22 must first be proven against the corporation. The
corporation must first be declared to have committed the violation before the liability attaches to the
signatories of the checks.[9]
The Court finds Itself unable to agree with Mitras posture. The third paragraph of Section 1 of BP 22
reads: "Where the check is drawn by a corporation, company or entity, the person or persons who
actually signed the check in behalf of such drawer shall be liable under this Act." This provision
recognizes the reality that a corporation can only act through its officers. Hence, its wording is
unequivocal and mandatory that the person who actually signed the corporate check shall be held liable
for a violation of BP 22. This provision does not contain any condition, qualification or limitation.
In the case of Llamado v. Court of Appeals,[10] the Court ruled that the accused was liable on the
unfunded corporate check which he signed as treasurer of the corporation. He could not invoke his lack
of involvement in the negotiation for the transaction as a defense because BP 22 punishes the mere
issuance of a bouncing check, not the purpose for which the check was issued or in consideration of the
terms and conditions relating to its issuance. In this case, Mitra signed the LNCC checks as treasurer.
Following Llamado, she must then be held liable for violating BP 22.
Another essential element of a violation of BP 22 is the drawers knowledge that he has insufficient funds
or credit with the drawee bank to cover his check. Because this involves a state of mind that is difficult to
establish, BP 22 creates the prima facie presumption that once the check is dishonored, the drawer of
the check gains knowledge of the insufficiency, unless within five banking days from receipt of the notice
of dishonor, the drawer pays the holder of the check or makes arrangements with the drawee bank for
the payment of the check. The service of the notice of dishonor gives the drawer the opportunity to
make good the check within those five days to avert his prosecution for violating BP 22.
Mitra alleges that there was no proper service on her of the notice of dishonor and, so, an essential
element of the offense is missing. This contention raises a factual issue that is not proper for review. It is
not the function of the Court to re-examine the finding of facts of the Court of Appeals. Our review is
limited to errors of law and cannot touch errors of facts unless the petitioner shows that the trial court
overlooked facts or circumstances that warrant a different disposition of the case[11] or that the findings
of fact have no basis on record. Hence, with respect to the issue of the propriety of service on Mitra of
the notice of dishonor, the Court gives full faith and credit to the consistent findings of the MTCC, the
RTC and the CA.
The defense postulated that there was no demand served upon the accused, said denial deserves scant
consideration. Positive allegation of the prosecution that a demand letter was served upon the accused
prevails over the denial made by the accused. Though, having denied that there was no demand letter
served on April 10, 2000, however, the prosecution positively alleged and proved that the questioned
demand letter was served upon the accused on April 10, 2000, that was at the time they were attending
Court hearing before Branch I of this Court. In fact, the prosecution had submitted a Certification issued
by the other Branch of this Court certifying the fact that the accused were present during the April 10,
2010 hearing. With such straightforward and categorical testimony of the witness, the Court believes
that the prosecution has achieved what was dismally lacking in the three (3) cases of Betty King, Victor
Ting and Caras evidence of the receipt by the accused of the demand letter sent to her. The Court
accepts the prosecutions narrative that the accused refused to sign the same to evidence their receipt
thereof. To require the prosecution to produce the signature of the accused on said demand letter would
be imposing an undue hardship on it. As well, actual receipt acknowledgment is not and has never been
required of the prosecution either by law or jurisprudence.[12] [emphasis supplied]
With the notice of dishonor duly served and disregarded, there arose the presumption that Mitra and
Cabrera knew that there were insufficient funds to cover the checks upon their presentment for
payment. In fact, the account was already closed.
To reiterate the elements of a violation of BP 22 as contained in the above-quoted provision, a violation

exists where:
1. a person makes or draws and issues a check to apply on account or for value;
2. the person who makes or draws and issues the check knows at the time of issue that he does not have
sufficient funds in or credit with the drawee bank for the full payment of the check upon its
presentment; and
3. the check is subsequently dishonored by the drawee bank for insufficiency of funds or credit, or would
have been dishonored for the same reason had not the drawer, without any valid reason, ordered the
bank to stop payment. [13]
There is no dispute that Mitra signed the checks and that the bank dishonored the checks because the
account had been closed. Notice of dishonor was properly given, but Mitra failed to pay the checks or
make arrangements for their payment within five days from notice. With all the above elements duly
proven, Mitra cannot escape the civil and criminal liabilities that BP 22 imposes for its breach.[14]
WHEREFORE, the July 31, 2009 Decision and the February 11, 2010 Resolution of the Court of Appeals in
CA-G.R. CR No. 31740 are hereby AFFIRMED.
SO ORDERED.
2. [G.R. No. 161865. March 10, 2005]
LAND BANK OF THE PHILIPPINES, petitioner, vs. MONETS EXPORT AND MANUFACTURING CORPORATION,
SPOUSES VICENTE V. TAGLE, SR. and MA. CONSUELO G. TAGLE, respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the October 9,
2003 Decision[1] of the Court of Appeals[2] in CA-G.R. CV No. 57436, and its January 20, 2004
Resolution[3] denying petitioners motion for reconsideration.
The factual antecedents are as follows:
On June 25, 1981, petitioner, Land Bank of the Philippines (Land Bank), and Monets Export and
Manufacturing Corporation (Monet) executed an Export Packing Credit Line Agreement[4] under which
Monet was given a credit line in the amount of P250,000.00, secured by the proceeds of its export letters
of credit,[5] the continuing guaranty of the spouses Vicente V. Tagle, Sr. and Ma. Consuelo G. Tagle,[6]
and the third party mortgage executed by Pepita C. Mendigoria.[7]
The credit line agreement was renewed and amended several times[8] until it was increased to
P5,000,000.00.[9] Owing to the continued failure and refusal of Monet, notwithstanding repeated
demands, to pay its indebtedness to Land Bank, which have ballooned to P11,464,246.19[10] by August
31, 1992, a complaint[11] for collection of sum of money with prayer for preliminary attachment was
filed by Land Bank with the Regional Trial Court of Manila, docketed as Civil Case No. 93-64350.[12]
In their joint Answer with Compulsory Counterclaim,[13] Monet and the Tagle spouses alleged that Land
Bank failed and refused to collect the receivables on their export letter of credit against Wishbone
Trading Company of Hong Kong in the sum of US$33,434.00, while it made unauthorized payments on
their import letter of credit to Beautilike (H.K.) Ltd. in the amount of US$38,768.40, which seriously
damaged the business interests of Monet.
On July 15, 1997, the trial court rendered decision,[14] the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered as follows:
1. Recognizing the obligation of the defendants as stated in the Schedule of Amortization from the Loans
and Discount Department of LAND BANK (Exh. 39), as well as the interest mentioned therein, but
deleting the penalty thereof as no penalty should be charged and sentencing defendants jointly and
severally to pay the amounts stated therein as verified;
2. Granting the counterclaim interposed by the defendants in the amount of US$30,000.00 payable in
Philippine Pesos at the official exchange rate when payment is to be made, to compensate for the
defendants lost income opportunities occasioned by defendants transaction with Wishbone Trading
Corporation and with Beautilike, the same to be deducted from the confirmed and computed obligation
mentioned in No. 1 hereof; and
3. Denying the claim for attorneys fees for lack of merit.[15]
From the foregoing decision, Land Bank filed an appeal[16] with the Court of Appeals.
On October 9, 2003, the Court of Appeals promulgated the decision subject of the present petition for
review. In affirming the trial court, the Court of Appeals found that, indeed, Land Bank was responsible
for the mismanagement of the Wishbone and Beautilike accounts of Monet. It held that because of the
non-collection and unauthorized payment made by Land Bank on behalf of Monet, and considering that
the latter could no longer draw from its credit line with Land Bank, it suffered from lack of financial
resources sufficient to buy the needed materials to fill up the standing orders from its customers.
The Court of Appeals disposed of Land Banks appeal in this wise:
WHEREFORE, premises considered, and finding no reversible error in the assailed Decision of the
Regional Trial Court of Manila, Branch 49, in Civil Case No. 93-64350 dated July 15, 1997, said Decision is
hereby AFFIRMED and UPHELD and the appeal is DISMISSED for lack of merit.
SO ORDERED.[17]
Land Banks Motion for Reconsideration[18] was denied by the Court of Appeals on January 20, 2004,[19]
hence, this petition raising the following issues:
1. Whether or not the respondent Court seriously erred in upholding the findings and conclusion of the
trial court limiting the liability of private respondents based on [the] Summary of Availment and
Schedule of Amortization and granting the latter opportunity losses anchored on the theory that
petitioner disrupted the cas[h] flow of respondent MONETs which led to its decline;
2. Whether or not the respondent Court palpably erred in not clearly establishing petitioners right to
collect payment from private respondents loan validly obtained in the sum of P11,464,246.19 Million
which has become long overdue and demandable.[20]
The petition is partly impressed with merit.
As regards the Beautilike account, the trial court and the Court of Appeals erred in holding that Land
Bank failed to protect Monets interest when it paid the suppliers despite discrepancies in the shipment
vis--vis the order specifications of Monet.
Our ruling in Bank of America, NT & SA v. Court of Appeals,[21] is pertinent:
A letter of credit is a financial device developed by merchants as a convenient and relatively safe mode
of dealing with sales of goods to satisfy the seemingly irreconcilable interests of a seller, who refuses to
part with his goods before he is paid, and a buyer, who wants to have control of the goods before paying.
To break the impasse, the buyer may be required to contract a bank to issue a letter of credit in favor of
the seller so that, by virtue of the letter of credit, the issuing bank can authorize the seller to draw drafts
and engage to pay them upon their presentment simultaneously with the tender of documents required
by the letter of credit. The buyer and the seller agree on what documents are to be presented for
payment, but ordinarily they are documents of title evidencing or attesting to the shipment of the goods
to the buyer.
Once the credit is established, the seller ships the goods to the buyer and in the process secures the
required shipping documents or documents of title. To get paid, the seller executes a draft and presents
it together with the required documents to the issuing bank. The issuing bank redeems the draft and
pays cash to the seller if it finds that the documents submitted by the seller conform with what the letter
of credit requires. The bank then obtains possession of the documents upon paying the seller. The
transaction is completed when the buyer reimburses the issuing bank and acquires the documents
entitling him to the goods. Under this arrangement, the seller gets paid only if he delivers the documents
of title over the goods, while the buyer acquires the said documents and control over the goods only
after reimbursing the bank.
What characterizes letters of credit, as distinguished from other accessory contracts, is the engagement
of the issuing bank to pay the seller once the draft and the required shipping documents are presented
to it. In turn, this arrangement assures the seller of prompt payment, independent of any breach of the
main sales contract. By this so-called independence principle, the bank determines compliance with the
letter of credit only by examining the shipping documents presented; it is precluded from determining
whether the main contract is actually accomplished or not. (Emphasis supplied)
Moreover, Article 3 of the Uniform Customs and Practice (UCP) for Documentary Credits provides that
credits, by their nature, are separate transactions from the sales or other contract(s) on which they may
be based and banks are in no way concerned with or bound by such contract(s), even if any reference
whatsoever to such contract(s) is included in the credit. Consequently, the undertaking of a bank to pay,
accept and pay draft(s) or negotiate and/or fulfill any other obligation under the credit is not subject to
claims or defenses by the applicant resulting from his relationships with the issuing bank or the
beneficiary.
In particular, Article 15 of the UCP states:
Banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or
legal effect of any documents, or for the general and/or particular conditions stipulated in the
documents or superimposed thereon; nor do they assume any liability or responsibility for the
description, weight, quality, condition, packing, delivery, value or existence of the goods represented by
any documents, or for the good faith or acts and/or omissions, solvency, performance or standing of the
consignor, the carriers, or the insurers of the goods, or any other person whomsoever. (Emphasis
supplied)
In Transfield Philippines, Inc. v. Luzon Hydro Corporation, et al.,[22] we held that the engagement of the
issuing bank is to pay the seller or beneficiary of the credit once the draft and the required documents
are presented to it. The so-called independence principle assures the seller or the beneficiary of prompt
payment independent of any breach of the main contract and precludes the issuing bank from
determining whether the main contract is actually accomplished or not.
For, if the letter of credit is drawable only after the settlement of any dispute on the main contract
entered into by the applicant of the said letter of credit and the beneficiary, then there would be no
practical and beneficial use for letters of credit in commercial transactions.
Accordingly, we find merit in the contention of Land Bank that, as the issuing bank in the Beautilike
transaction involving an import letter of credit, it only deals in documents and it is not involved in the
contract between the parties. The relationship between the beneficiary and the issuer of a letter of
credit is not strictly contractual, because both privity and a meeting of the minds are lacking. Thus, upon
receipt by Land Bank of the documents of title which conform with what the letter of credit requires, it is
duty bound to pay the seller, as it did in this case.
Thus, no fault or acts of mismanagement can be attributed to Land Bank relative to Monets import letter
of credit. Its actions find solid footing on the legal principles and jurisprudence earlier discussed.
Consequently, it was error for the trial court and for the Court of Appeals to grant opportunity losses to
the respondents on this account.
On the matter, however, of the Wishbone transaction where it is alleged by respondents that petitioner
failed in its duty to protect its (Monets) interest in collecting the amount due to it from its customers, we
find that the trial court and the Court of Appeals committed no reversible error in holding Land Bank
liable for opportunity losses. The trial court summarized the transaction in this manner:
The shipment to Wishbone Trading Company was for US16,119.00 on October 16, 1986. Documents
were submitted without requesting for purchase of export bills. This was sent by plaintiff (Land Bank) via
telex to Hongkong Bank requesting advice to pay as there were discrepancies. On advice of Hongkong
Bank plaintiff paid the first shipment. At this point defendants (Monet and the Tagle spouses) were
reluctant to release the two subsequent documents to the buyer until payment of the first shipment is
made. When LANDBANK paid the defendants, believing that everything was in order, defendants
released the documents for the two subsequent shipments, thinking that the LANDBANKs international
department had taken the necessary measures for them to be paid. Wishbone then came up with new
additional discrepancies not listed in the cable sent by LANDBANK. Defendants argue that if LANDBANK
had acted prudently on this as it used to do, Mantruste Hongkong could not have denied payment upon
the first instructions of the buyer based on the cable of LANDBANKs international department.
Defendants therefore asked LANDBANK to share with them the burden of compelling the shrewd buyers
to effect the payment of the export bills. Furthermore, referring to the telex of Mantruste Hongkong the
original documents to Wishbone were sent per requirement under the term of the Letter of Credit, but
the goods were consigned to the order of Wells Fargo Bank. Defendants believed that Wells Fargo Bank
should be responsible to the shipper. Thus the defendants requested for assistance to telex Wells Fargo
Bank to inquire about the whereabouts of the merchandise shipped to them as consignee. As early as
November 30, 1986, Mantruste Hongkong sent a telex addressed to the bank instructing it to pay
MONET the sum of US$16,119.00 for the first shipment despite discrepancies which were minor and
properly corrected. The evidence indicates that in the Wishbone case the foreign buyer was actually
putting one over the defendants, which LANDBANK could have properly prevented had it been more
aggressive as is expected of a bank.
Exhibits 27 and 27-A clearly show that the terms and conditions of the Letter of Credit were substantially
complied with by MONET. And the evidence shows that Wells Fargo Bank was included to receive the
bills of lading, notifying only Style Up of California, and yet LANDBANK did not consider this for purposes
of collection. These were testified to by defendant Consuelo Tagle who explained what happened,
including payments of account, which LANDBANK failed to rebut. LANDBANK did not pursue collection
on this despite the fact that the goods were acceptable merchandise.[23]
A careful review of the records reveal that the trial court correctly considered Land Bank as the attorney-
in-fact of Monet with regard to its export transactions with Wishbone Trading Company. It was stipulated
in the Deed of Assignment[24] executed between Monet and Land Bank on June 26, 1981:
That the ASSIGNOR/s (Monet) by these presents, does/do hereby appoint/s the ASSIGNEE (Land Bank)
their/his/her true and lawful attorney-in-fact and in their/his/her place and stead, to demand, collect
and receive the proceeds of the export letters of credit at a loan value of 80% to be applied to the
payment of the credit accommodation herein secured. (Underscoring supplied)
Clearly, petitioners refusal to own its responsibility in the handling of the Wishbone account fails against
the aforequoted provision.
As the attorney-in-fact of Monet in transactions involving its export letters of credit, such as the
Wishbone account, Land Bank should have exercised the requisite degree of diligence in collecting the
amount due to the former. The records of this case are bereft of evidence showing that Land Bank
exercised the prudence mandated by its contractual obligations to Monet.
The failure of Land Bank to judiciously safeguard the interest of Monet is not without any repercussions
vis--vis the viability of Monet as a business enterprise. As correctly observed by the Court of Appeals:
In fine, because of the non-collection defendants-appellees suffered from a lack of financial resources
sufficient to buy new materials. And since they also could no longer draw on their existing credit line
with Landbank, they could not purchase materials to fill up the orders of their customers. Because of this
the business reputation of Monets suffered which hastened its decline.[25]
The right of the respondents to be awarded opportunity losses having been established, we now go to
the determination of the proper amount to be awarded to them under the circumstances obtaining in
this case. The lower court awarded to herein respondents opportunity losses in the amount of
US$30,000.00 based on its findings of two (2) acts of mismanagement committed by Land Bank. The
Court of Appeals affirmed the amount of the award in the assailed decision. In view of our findings that
Land Bank is not guilty of mismanagement in its handling of Monets import letter of credit relative to the
Beautilike transaction, we hold that a reduction of the amount of the grant is in order. It is not possible
for us to totally do away with the award of opportunity losses having affirmed the findings of the trial
court and the Court of Appeals that Land Bank, as the attorney-in-fact of Monet in its transaction with
Wishbone Trading Company, committed acts of mismanagement. On account of the foregoing reasons,
we reduce the amount of opportunity losses granted to Monet to US$15,000.00 payable in Philippine
pesos at the official exchange rate when payment is to be made.
Anent the second issue, we find that the trial court erred in limiting the obligation of the respondents to
Land Bank to what was stated in the Schedule of Amortization from the Loans and Discounts Department
of LANDBANK, or Exhibit 39,[26] for the respondents.
Prefatorily, we restate the time honored principle that in a petition for review under Rule 45, only
questions of law may be raised. It is not our function to analyze or weigh all over again evidence already
considered in the proceedings below, our jurisdiction is limited to reviewing only errors of law that may
have been committed by the lower court.[27] The resolution of factual issues is the function of lower
courts, whose findings on these matters are received with respect. A question of law which we may pass
upon must not involve an examination of the probative value of the evidence presented by the litigants.
[28]
The above rule, however, admits of certain exceptions. The findings of fact of the Court of Appeals are
generally conclusive but may be reviewed when: (1) the factual findings of the Court of Appeals and the
trial court are contradictory; (2) the findings are grounded entirely on speculation, surmises or
conjectures; (3) the inference made by the Court of Appeals from its findings of fact is manifestly
mistaken, absurd or impossible; (4) there is grave abuse of discretion in the appreciation of facts; (5) the
appellate court, in making its findings, goes beyond the issues of the case and such findings are contrary
to the admissions of both appellant and appellee; (6) the judgment of the Court of Appeals is premised
on a misapprehension of facts; (7) the Court of Appeals fails to notice certain relevant facts which, if
properly considered, will justify a different conclusion; and (8) the findings of fact of the Court of Appeals
are contrary to those of the trial court or are mere conclusions without citation of specific evidence, or
where the facts set forth by the petitioner are not disputed by respondent, or where the findings of fact
of the Court of Appeals are premised on the absence of evidence but are contradicted by the evidence
on record.[29]
Our review of the records of this case reveal that the reversible error committed by the lower court, and
that of the Court of Appeals, partook of the form of over reliance and sole reliance on the figures
contained in Exhibit 39, to the exclusion of other pieces of documentary evidence annexed by Land Bank
to its complaint.
There is no doubt that the respondents indeed owed Land Bank a sum of money. This much was clearly
established by the series of letters[30] written by the officers of Monet to Land Bank acknowledging the
corporations indebtedness, albeit without specifying any amount, and asking for understanding and
more time within which they can settle their obligations. We note, however, that the respondents have
been consistent and persistent in their stand that they do not harbor any intention of evading the
payment of the amount they actually owed to the petitioner, provided that there be a reconciliation of
the payments made by the respondents on their loan obligations.[31]
Indeed, Exhibit 39 or the Summary of Availment and Schedule of Amortization, which was made by the
trial court as the basis in determining the amount of indebtedness of the respondents to the petitioner,
is a document issued by the Loans and Discounts Department of Land Bank itself. Nevertheless, we note
that the amount covered by the said summary pertains only to the indebtedness of Monet to Land Bank
amounting to P2,500,000.00, as covered by Promissory Note No. P-981. The amount reflected in Exhibit
39 is so small when compared to the P11,464,246.19 which Land Bank sought to collect from the
respondents in its complaint before the trial court. The records of this case show that respondents, in
the course of their credit transactions with Land Bank, executed not only one, but several promissory
notes in varying amounts in favor of the bank.
On the other hand, Land Bank submitted a Consolidated Statement of Account dated August 31,
1992[32] in support of its claim as to the amount owed to it. The said document illustrated how, based
on the computations made by Land Bank, the indebtedness of Monet ballooned to P11,464,246.19. Land
Bank also submitted a Summary of Availments and Payments from 1981 to 1989[33] which detailed the
series of availments and payments made by Monet.
Notwithstanding the above facts, and considering that Monets Exhibit 39 was prepared before its due
date of April 29, 1991, while Land Banks Consolidated Statement of Account was prepared much later on
August 31, 1992, the trial court chose to overlook them and conveniently held that the correct basis of
Monets indebtedness to Land Bank are the figures contained in Exhibit 39. Nonetheless, no explanation
was proferred why it used Exhibit 39 as basis in determining the actual indebtedness of Monet. We note
that instead of dealing squarely with the issue of resolving the total amount of indebtedness due to Land
Bank, the trial court and the Court of Appeals chose to expound on Land Banks alleged acts of
mismanagement.
In discussing this issue, all the trial court said was:
LANDBANK claims that as of August 31, 1992, the defendants owe them the sum of P11,464,246.19
payable with interest at the rate of 10% per annum. But this is disputed by the defendants as shown in
their Summary of Availment and Schedule of Amortization (Exh. 39).[34]
While both the petitioner and the respondents submitted their respective pieces of documentary
evidence in support of their contentions as to the amount of indebtedness due to petitioner, the trial
court failed to calibrate and harmonize them.
Unfortunately, despite the pieces of evidence submitted by the parties, our review of the same is
inconclusive in determining the total amount due to the petitioner. The petitioner had failed to establish
the effect of Monets Exhibit 39 to its own Consolidated Statement of Account as of August 31, 1992, nor
did the respondents categorically refute the said statement of account vis--vis its Exhibit 39. The interest
of justice will best be served if this case be remanded to the court of origin for the purpose of
determining the amount due to petitioner. The dearth in the records of sufficient evidence with which
we can utilize in making a categorical ruling on the amount of indebtedness due to the petitioner
constrains us to remand this case to the trial court with instructions to receive additional evidence as
needed in order to fully thresh out the issue and establish the rights and obligations of the parties. From
the amount ultimately determined by the trial court as the outstanding obligation of the respondents to
the petitioner, will be deducted the award of opportunity losses granted to the respondents in the
amount of US$ 15,000.00 payable in Philippine pesos at the official exchange rate when payment is to be
made.
WHEREFORE, the instant petition is GRANTED. The October 9, 2003 decision and the January 20, 2004
resolution of the Court of Appeals in CA-G.R. CV No. 57436, are MODIFIED insofar as the award of the
counterclaim to the respondents is concerned. Accordingly, there being no basis to award opportunity
costs to the respondents, Monets Export and Manufacturing Corporation and the spouses, Vicente V.
Tagle, Sr. and Ma. Consuelo G. Tagle, relative to the Beautilike account, but finding good cause to sustain
the award of opportunity costs to the respondents on account of the failure of the petitioner to
diligently perform its duties as the attorney-in-fact of the respondents in the Wishbone Trading Company
account, the amount of opportunity costs granted to the respondents, is REDUCED to US$15,000.00
payable in Philippine pesos at the official exchange rate when payment is to be made.
Insofar as the amount of indebtedness of the respondents to the petitioner is concerned, the October 9,
2003 decision and the January 20, 2004 resolution of the Court of Appeals in CA-G.R. CV No. 57436, are
SET ASIDE. The case is hereby remanded to its court of origin, the Regional Trial Court of Manila, Branch
49, for the reception of additional evidence as may be needed to determine the actual amount of
indebtedness of the respondents to the petitioner. The trial court is INSTRUCTED to deduct the award of
opportunity losses granted to the respondents, in the amount of US$15,000.00 payable in Philippine
pesos at the official exchange rate when payment is to be made, from the amount ultimately determined
as the actual amount of indebtedness of the respondents to the petitioner. No pronouncement as to
costs.
SO ORDERED.
3. SECOND DIVISION
PENTACAPITAL INVESTMENT CORPORATION,
Petitioner,
- versus -
MAKILITO B. MAHINAY,
Respondent.
x--------------------------------------------------x
PENTACAPITAL INVESTMENT CORPORATION,
Petitioner,
- versus -
MAKILITO B. MAHINAY,
Respondent.
G.R. No. 171736

G.R. No. 181482
Present:
CARPIO, J.,
Chairperson,
NACHURA,
PERALTA,
ABAD, and
MENDOZA, JJ.
Promulgated:
July 5, 2010
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
Before us are two consolidated petitions for review on certiorari under Rule 45 of the Rules of Court filed
by petitioner Pentacapital Investment Corporation. In G.R. No. 171736, petitioner assails the Court of
Appeals (CA) Decision[1] dated December 20, 2005 and Resolution[2] dated March 1, 2006 in CA-G.R. SP
No. 74851; while in G.R. No. 181482, it assails the CA Decision[3] dated October 4, 2007 and
Resolution[4] dated January 21, 2008 in CA-G.R. CV No. 86939.
The Facts
Petitioner filed a complaint for a sum of money against respondent Makilito Mahinay based on two
separate loans obtained by the latter, amounting to P1,520,000.00 and P416,800.00, or a total amount of
P1,936,800.00. These loans were evidenced by two promissory notes[5] dated February 23, 1996.
Despite repeated demands, respondent failed to pay the loans, hence, the complaint.[6]
In his Answer with Compulsory Counterclaim,[7] respondent claimed that petitioner had no cause of
action because the promissory notes on which its complaint was based were subject to a condition that
did not occur.[8] While admitting that he indeed signed the promissory notes, he insisted that he never
took out a loan and that the notes were not intended to be evidences of indebtedness.[9] By way of
counterclaim, respondent prayed for the payment of moral and exemplary damages plus attorneys fees.
[10]
Respondent explained that he was the counsel of Ciudad Real Development Inc. (CRDI). In 1994,
Pentacapital Realty Corporation (Pentacapital Realty) offered to buy parcels of land known as the Molino
Properties, owned by CRDI, located in Molino, Bacoor, Cavite. The Molino Properties, with a total area of
127,708 square meters, were sold at P400.00 per sq m. As the Molino Properties were the subject of a
pending case, Pentacapital Realty paid only the down payment amounting to P12,000,000.00. CRDI
allegedly instructed Pentacapital Realty to pay the formers creditors, including respondent who thus
received a check worth P1,715,156.90.[11] It was further agreed that the balance would be payable
upon the submission of an Entry of Judgment showing that the case involving the Molino Properties had
been decided in favor of CRDI.[12]
Respondent, Pentacapital Realty and CRDI allegedly agreed that respondent had a charging lien
equivalent to 20% of the total consideration of the sale in the amount of P10,277,040.00. Pending the
submission of the Entry of Judgment and as a sign of good faith, respondent purportedly returned the
P1,715,156.90 check to Pentacapital Realty. However, the Molino Properties continued to be haunted by
the seemingly interminable court actions initiated by different parties which thus prevented respondent
from collecting his commission.
On motion[13] of respondent, the Regional Trial Court (RTC) allowed him to file a Third Party
Complaint[14] against CRDI, subject to the payment of docket fees.[15]
Admittedly, respondent earlier instituted an action for Specific Performance against Pentacapital Realty
before the RTC of Cebu City, Branch 57, praying for the payment of his commission on the sale of the
Molino Properties.[16] In an Amended Complaint,[17] respondent referred to the action he instituted as
one of Preliminary Mandatory Injunction instead of Specific Performance. Acting on Pentacapital Realtys
Motion to Dismiss, the RTC dismissed the case for lack of cause of action.[18] The dismissal became final
and executory.
With the dismissal of the aforesaid case, respondent filed a Motion to Permit Supplemental Compulsory
Counterclaim.[19] In addition to the damages that respondent prayed for in his compulsory
counterclaim, he sought the payment of his commission amounting to P10,316,640.00, plus interest at
the rate of 16% per annum, as well as attorneys fees equivalent to 12% of his principal claim.[20]
Respondent claimed that Pentacapital Realty is a 100% subsidiary of petitioner. Thus, although petitioner
did not directly participate in the transaction between Pentacapital Realty, CRDI and respondent, the
latters claim against petitioner was based on the doctrine of piercing the veil of corporate fiction. Simply
stated, respondent alleged that petitioner and Pentacapital Realty are one and the same entity belonging
to the Pentacapital Group of Companies.[21]
Over the opposition of petitioner, the RTC, in an Order[22] dated August 22, 2002, allowed the filing of
the supplemental counterclaim. Aggrieved, petitioner sought recourse in the CA through a special
civil action for certiorari, seeking to reverse and set aside the RTC Order. The case was docketed as CA-
G.R. SP No. 74851. On December 20, 2005, the CA rendered the assailed Decision dismissing the
petition.[23] The appellate court sustained the allowance of the supplemental compulsory counterclaim
based on the allegations in respondents pleading. The CA further concluded that there was a logical
relationship between the claims of petitioner in its complaint and those of respondent in his
supplemental compulsory counterclaim. The CA declared that it was inconsequential that respondent did
not clearly allege the facts required to pierce the corporate separateness of petitioner and its subsidiary,
the Pentacapital Realty.[24]
Petitioner now comes before us in G.R. No. 171736, raising the following issues:
A.
WHETHER RESPONDENT MAHINAY IS BARRED FROM ASSERTING THE CLAIM CONTAINED IN HIS
SUPPLEMENTAL COMPULSORY COUNTERCLAIM ON THE GROUNDS OF (1) RES JUDICATA, (2) WILLFUL
AND DELIBERATE FORUM SHOPPING, AND (3) FAILURE TO INTERPOSE SUCH CLAIM ON TIME PURSUANT
TO SECTION 2 OF RULE 9 OF THE RULES OF COURT;
B.
WHETHER RESPONDENT MAHINAYS SUPPLEMENTAL COMPULSORY COUNTERCLAIM IS ACTUALLY A

THIRD-PARTY COMPLAINT AGAINST PENTACAPITAL REALTY, THE INTRODUCTION OF WHICH REQUIRES
THE PAYMENT OF THE NECESSARY DOCKET FEES;
C.
ASSUMING FOR THE SAKE OF PURE ARGUMENT THAT IT IS PROPER TO PIERCE THE CORPORATE VEIL AND
TO ALLOW RESPONDENT MAHINAY TO LODGE A SUPPLEMENTAL COMPULSORY COUNTERCLAIM
AGAINST HEREIN PETITIONER PENTACAPITAL INVESTMENT FOR AN ALLEGED OBLIGATION OF ITS
SUBSIDIARY, PENTACAPITAL REALTY, ON THE THEORY THAT THEY ARE ONE AND THE SAME COMPANY,
WHETHER PENTACAPITAL REALTY SHOULD HAVE AT LEAST BEEN MADE A PARTY TO THE CASE AS RULED
BY THIS HONORABLE COURT IN FILMERCO COMMERCIAL CO., INC. VS. INTERMEDIATE APPELLATE
COURT;
D.
WHETHER RESPONDENT MAHINAY SHOULD BE ALLOWED TO PRESENT EVIDENCE ON HIS SO-CALLED

SUPPLEMENTAL COMPULSORY COUNTERCLAIM INASMUCH AS (1) RESPONDENT MAHINAYS PLEADINGS
ARE BEREFT OF ANY ALLEGATIONS TO BUTTRESS THE MERGING OF PENTACAPITAL REALTY AND
PENTACAPITAL INVESTMENT INTO ONE ENTITY AND THE CONSEQUENT IMPUTATION ON THE LATTER OF
THE FORMERS SUPPOSED LIABILITY ON RESPONDENT MAHINAYS SUPPLEMENTAL COMPULSORY
COUNTERCLAIM, AND (2) THE INCIDENTS ALLEGEDLY PERTAINING TO, AND WHICH WOULD THEREBY
SUPPORT, THE PIERCING OF CORPORATE VEIL ARE NOT EVIDENTIARY MATTERS MATERIAL TO THE
PROCEEDINGS BEFORE THE COURT A QUO CONSIDERING THAT THE SAME ARE BEYOND THE SCOPE OF
THE PLEADINGS;
E.
WHETHER THE DOCTRINE OF PIERCING THE CORPORATE VEIL MAY BE INVOKED AND APPLIED IN ORDER
TO EVADE AN OBLIGATION AND FACILITATE PROCEDURAL WRONGDOING; AND
F.
WHETHER PETITIONER PENTACAPITAL INVESTMENT COMMITTED FORUM SHOPPING WHEN IT FILED THE
PRESENT PETITION DURING THE PENDENCY OF THE MOTION FOR RECONSIDERATION IT FILED BEFORE
THE COURT A QUO AND, SUBSEQUENTLY, OF THE APPEAL BEFORE THE COURT OF APPEALS TO QUESTION
THE JUDGMENT OF THE COURT A QUO.[25]
There being no writ of injunction or Temporary Restraining Order (TRO), the proceedings before the RTC
continued and respondent was allowed to present his evidence on his supplemental compulsory
counterclaim. After trial on the merits, the RTC rendered a decision[26] dated March 20, 2006, the
dispositive portion of which reads:
WHEREFORE, PREMISES CONSIDERED, plaintiffs complaint is hereby ordered dismissed for lack of merit.
This court, instead, finds that defendant was able to prove by a clear preponderance of evidence his
cause of action against plaintiff as to defendants compulsory and supplemental counterclaims. That,
therefore, this court hereby orders the plaintiff to pay unto defendant the following sums, to wit:
1. P1,715,156.90 representing the amount plaintiff is obligated to pay defendant as provided for in the
deed of sale and the supplemental agreement, plus interest at the rate of 16% per annum, to be
computed from September 23, 1998 until the said amount shall have been fully paid;
2. Php 10,316,640.00 representing defendants share of the proceeds of the sale of the Molino property
(defendants charging lien) plus interest at the rate of 16% per annum, to be computed from September
23, 1998 until the said amount shall have been fully paid;
3. Php 50,000.00 as attorneys fees based on quantum meruit;
4. Php 50,000.00 litigation expenses, plus costs of suit.
This court finds it unnecessary to rule on the third party complaint, the relief prayed for therein being
dependent on the possible award by this court of the relief of plaintiffs complaint.[27]
On appeal, the CA, in CA-G.R. CV No. 86939, affirmed in toto the above decision. The CA found no basis
for petitioner to collect the amount demanded, there being no perfected contract of loan for lack of
consideration.[28] As to respondents supplemental compulsory counterclaim, quoting the findings of the
RTC, the appellate court held that respondent was able to prove by preponderance of evidence that it
was the intent of Pentacapital Group of Companies and CRDI to give him P10,316,640.00 and
P1,715,156.90.[29] The CA likewise affirmed the award of interest at the rate of 16% per annum, plus
damages.[30]
Unsatisfied, petitioner moved for reconsideration of the aforesaid Decision, but it was denied in a
Resolution[31] dated January 21, 2008. Hence, the present petition in G.R. No. 181482, anchored on the
following arguments:
A.
Considering that the inferences made in the present case are manifestly absurd, mistaken or impossible,
and are even contrary to the admissions of respondent Mahinay, and inasmuch as the judgment is
premised on a misapprehension of facts, this Honorable Court may validly take cognizance of the errors
relative to the findings of fact of both the Honorable Court of Appeals and the court a quo.
B.
Respondent Mahinay is liable to petitioner PentaCapital Investment for the PhP1,936,800.00 loaned to
him as well as for damages and attorneys fees.
1.
The Honorable Court of Appeals erred in concluding that respondent Mahinay failed to receive the
money he borrowed when there is not even any dispute as to the fact that respondent Mahinay did
indeed receive the PhP1,936,800.00 from petitioner PentaCapital Investment.
2.
The Promissory Notes executed by respondent Mahinay are valid instruments and are binding upon him.
C.
Petitioner PentaCapital Investment cannot be held liable on the supposed supplemental compulsory
counterclaim of respondent Mahinay.
1.
The findings of fact as well as the conclusions arrived at by the Court of Appeals in its decision were
based on mistaken assumptions and on erroneous appreciation of the evidence on record.
2.
There is no evidence on record to support the merging of PentaCapital Realty and petitioner
PentaCapital Investment into one entity and the consequent imputation on the latter of the formers
supposed liability on respondent Mahinays supplemental compulsory counterclaim.
3.
Inasmuch as the claim of respondent Mahinay is supposedly against PentaCapital Realty, and considering
that petitioner PentaCapital Investment is a separate, distinct entity from PentaCapital Realty, the latter
should have been impleaded as it is an indispensable party.
D.
Assuming for the sake of pure argument that it is proper to disregard the corporate fiction and to
consider herein petitioner PentaCapital Investment and its subsidiary, PentaCapital Realty, as one and
the same entity, respondent Mahinays supplemental compulsory counterclaim must still necessarily fail.
1.
The cause of action of respondent Mahinay, as contained in his supplemental compulsory counterclaim,
is already barred by a prior judgment (res judicata).
2.
Considering that the dismissal on the merits by the RTC Cebu of respondent Mahinays complaint against
PentaCapital Realty for attorneys fees has attained finality, respondent Mahinay committed a willful act
of forum shopping when he interposed the exact same claim in the proceedings a quo as a supposed
supplemental compulsory counterclaim against what he claims to be one and the same company.
3.
Respondent Mahinays supplemental compulsory counterclaim is actually a third party complaint against
PentaCapital Realty; the filing thereof therefore requires the payment of the necessary docket fees.
E.
The doctrine of piercing the corporate veil is an equitable remedy which cannot and should not be
invoked, much less applied, in order to evade an obligation and facilitate procedural wrongdoing.[32]
Simply put, the issues for resolution are: 1) whether the admission of respondents supplemental
compulsory counterclaim is proper; 2) whether respondents counterclaim is barred by res judicata; and
(3) whether petitioner is guilty of forum-shopping.
The Courts Ruling

Admission of Respondents
Supplemental Compulsory Counterclaim
The pertinent provision of the Rules of Court is Section 6 of Rule 10, which reads:
Sec. 6. Supplemental pleadings. Upon motion of a party, the court may, upon reasonable notice and
upon such terms as are just, permit him to serve a supplemental pleading setting forth transactions,
occurrences or events which have happened since the date of the pleading sought to be supplemented.
The adverse party may plead thereto within ten (10) days from notice of the order admitting the
supplemental pleading.
As a general rule, leave will be granted to a party who desires to file a supplemental pleading that alleges
any material fact which happened or came within the partys knowledge after the original pleading was
filed, such being the office of a supplemental pleading. The application of the rule would ensure that the
entire controversy might be settled in one action, avoid unnecessary repetition of effort and
unwarranted expense of litigants, broaden the scope of the issues in an action owing to the light thrown
on it by facts, events and occurrences which have accrued after the filing of the original pleading, and
bring into record the facts enlarging or charging the kind of relief to which plaintiff is entitled. It is the
policy of the law to grant relief as far as possible for wrongs complained of, growing out of the same
transaction and thus put an end to litigation.[33]
In his Motion to Permit Supplemental Compulsory Counterclaim, respondent admitted that, in his
Answer with Compulsory Counterclaim, he claimed that, as one of the corporations composing the
Pentacapital Group of Companies, petitioner is liable to him for P10,316,640.00, representing 20%
attorneys fees and share in the proceeds of the sale transaction between Pentacapital Realty and CRDI.
In the same pleading, he further admitted that he did not include this amount in his compulsory
counterclaim because he had earlier commenced another action for the collection of the same amount
against Pentacapital Realty before the RTC of Cebu. With the dismissal of the RTC-Cebu case, there was
no more legal impediment for respondent to file the supplemental counterclaim.
Moreover, in his Answer with Compulsory Counterclaim, respondent already alleged that he demanded
from Pentacapital Group of Companies to which petitioner supposedly belongs, the payment of his 20%
commission. This, in fact, was what prompted respondent to file a complaint before the RTC-Cebu for
preliminary mandatory injunction for the release of the said amount.
Given these premises, it is obvious that the alleged obligation of petitioner already existed and was
known to respondent at the time of the filing of his Answer with Counterclaim. He should have
demanded payment of his commission and share in the proceeds of the sale in that Answer with
Compulsory Counterclaim, but he did not. He is, therefore, proscribed from incorporating the same and
making such demand via a supplemental pleading. The supplemental pleading must be based on matters
arising subsequent to the filing of the original pleading related to the claim or defense presented
therein, and founded on the same cause of action.[34] Supplemental pleadings must state transactions,
occurrences or events which took place since the time the pleading sought to be supplemented was
filed.[35]
Even on the merits of the case, for reasons that will be discussed below, respondents counterclaim is
doomed to fail.
Petitioners Complaint
In its complaint for sum of money, petitioner prayed that respondent be ordered to pay his obligation
amounting to P1,936,800.00 plus interest and penalty charges, and attorneys fees. This obligation was
evidenced by two promissory notes executed by respondent. Respondent, however, denied liability on
the ground that his obligation was subject to a condition that did not occur. He explained that the
promissory notes were dependent upon the happening of a remote event that the parties tried to
anticipate at the time they transacted with each other, and the event did not happen.[36] He further
insisted that he did not receive the proceeds of the loan.
To ascertain whether or not respondent is bound by the promissory notes, it must be established that all
the elements of a contract of loan are present. Like any other contract, a contract of loan is subject to
the rules governing the requisites and validity of contracts in general. It is elementary in this jurisdiction
that what determines the validity of a contract, in general, is the presence of the following elements: (1)
consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3)
cause of the obligation which is established.[37]
In this case, respondent denied liability on the ground that the promissory notes lacked consideration as
he did not receive the proceeds of the loan.
We cannot sustain his contention.
Under Article 1354 of the Civil Code, it is presumed that consideration exists and is lawful unless the
debtor proves the contrary.[38] Moreover, under Section 3, Rule 131 of the Rules of Court, the following
are disputable presumptions: (1) private transactions have been fair and regular; (2) the ordinary course
of business has been followed; and (3) there was sufficient consideration for a contract.[39] A
presumption may operate against an adversary who has not introduced proof to rebut it. The effect of a
legal presumption upon a burden of proof is to create the necessity of presenting evidence to meet the
legal presumption or the prima facie case created thereby, and which, if no proof to the contrary is
presented and offered, will prevail. The burden of proof remains where it is, but by the presumption, the
one who has that burden is relieved for the time being from introducing evidence in support of the
averment, because the presumption stands in the place of evidence unless rebutted.[40]
In the present case, as proof of his claim of lack of consideration, respondent denied under oath that he
owed petitioner a single centavo. He added that he did not apply for a loan and that when he signed the
promissory notes, they were all blank forms and all the blank spaces were to be filled up only if the sale
transaction over the subject properties would not push through because of a possible adverse decision
in the civil cases involving them (the properties). He thus posits that since the sale pushed through, the
promissory notes did not become effective.
Contrary to the conclusions of the RTC and the CA, we find such proof insufficient to overcome the
presumption of consideration. The presumption that a contract has sufficient consideration cannot be
overthrown by the bare, uncorroborated and self-serving assertion of respondent that it has no
consideration.[41] The alleged lack of consideration must be shown by preponderance of evidence.[42]
As it now appears, the promissory notes clearly stated that respondent promised to pay petitioner
P1,520,000.00 and P416,800.00, plus interests and penalty charges, a year after their execution.
Nowhere in the notes was it stated that they were subject to a condition. As correctly observed by
petitioner, respondent is not only a lawyer but a law professor as well. He is, therefore, legally presumed
not only to exercise vigilance over his concerns but, more importantly, to know the legal and binding
effects of promissory notes and the intricacies involving the execution of negotiable instruments
including the need to execute an agreement to document extraneous collateral conditions and/or
agreements, if truly there were such.[43] This militates against respondents claim that there was indeed
such an agreement. Thus, the promissory notes should be accepted as they appear on their face.
Respondents liability is not negated by the fact that he has uncollected commissions from the sale of the
Molino properties. As the records of the case show, at the time of the execution of the promissory notes,
the Molino properties were subject of various court actions commenced by different parties. Thus, the
sale of the properties and, consequently, the payment of respondents commissions were put on hold.
The non-payment of his commissions could very well be the reason why he obtained a loan from
petitioner.
In Sierra v. Court of Appeals,[44] we held that:
A promissory note is a solemn acknowledgment of a debt and a formal commitment to repay it on the
date and under the conditions agreed upon by the borrower and the lender. A person who signs such an
instrument is bound to honor it as a legitimate obligation duly assumed by him through the signature he
affixes thereto as a token of his good faith. If he reneges on his promise without cause, he forfeits the
sympathy and assistance of this Court and deserves instead its sharp repudiation.
Aside from the payment of the principal obligation of P1,936,800.00, the parties agreed that respondent
pay interest at the rate of 25% from February 17, 1997 until fully paid. Such rate, however, is excessive
and thus, void. Since the stipulation on the interest rate is void, it is as if there was no express contract
thereon. To be sure, courts may reduce the interest rate as reason and equity demand.[45] In this case,
12% interest is reasonable.
The promissory notes likewise required the payment of a penalty charge of 3% per month or 36% per
annum. We find such rates unconscionable. This Court has recognized a penalty clause as an accessory
obligation which the parties attach to a principal obligation for the purpose of ensuring the performance
thereof by imposing on the debtor a special prestation (generally consisting of the payment of a sum of
money) in case the obligation is not fulfilled or is irregularly or inadequately fulfilled.[46] However, a
penalty charge of 3% per month is unconscionable;[47] hence, we reduce it to 1% per month or 12% per
annum, pursuant to Article 1229 of the Civil Code which states:
Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or
irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be
reduced by the courts if it is iniquitous or unconscionable.[48]
Lastly, respondent promised to pay 25% of his outstanding obligations as attorneys fees in case of non-
payment thereof. Attorneys fees here are in the nature of liquidated damages. As long as said stipulation
does not contravene law, morals, or public order, it is strictly binding upon respondent. Nonetheless,
courts are empowered to reduce such rate if the same is iniquitous or unconscionable pursuant to the
above-quoted provision.[49] This sentiment is echoed in Article 2227 of the Civil Code, to wit:
Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably
reduced if they are iniquitous or unconscionable.
Hence, we reduce the stipulated attorneys fees from 25% to 10%.[50]
Respondents Counterclaim and Supplemental Counterclaim
The RTC, affirmed by the CA, granted respondents counterclaims as it applied the doctrine of piercing
the veil of corporate fiction. It is undisputed that the parties to the contract of sale of the subject
properties are Pentacapital Realty as the buyer, CRDI as the seller, and respondent as the agent of CRDI.
Respondent insisted, and the RTC and the CA agreed, that petitioner, as the parent company of
Pentacapital Realty, was aware of the sale transaction, and that it was the former who paid the
consideration of the sale. Hence, they concluded that the two corporations should be treated as one
entity.
Petitioner assails the CA Decision sustaining the grant of respondents counterclaim and supplemental
counterclaim on the following grounds: first, respondents claims are barred by res judicata, the same
having been adjudicated with finality by the RTC-Cebu in Civil Case No. CEB-25032; second, piercing the
veil of corporate fiction is without basis; third, the case is dismissible for failure to implead Pentacapital
Realty as indispensable party; and last, respondents supplemental counterclaim is actually a third party
complaint against Pentacapital Realty, the filing thereof requires the payment of the necessary docket
fees.
Petitioners contentions are meritorious.
Res judicata means a matter adjudged; a thing judicially acted upon or decided; a thing or matter settled
by judgment. It lays the rule that an existing final judgment or decree rendered on the merits, without
fraud or collusion, by a court of competent jurisdiction, upon any matter within its jurisdiction, is
conclusive of the rights of the parties or their privies, in all other actions or suits in the same or any
other judicial tribunal of concurrent jurisdiction on the points and matters in issue in the first suit.[51]
The requisites of res judicata are:
(1) The former judgment or order must be final;
(2) It must be a judgment on the merits;
(3) It must have been rendered by a court having jurisdiction over the subject matter and the
parties; and
(4) There must be between the first and second actions, identity of parties, subject matter, and
cause of action.[52]
These requisites are present in the instant case. It is undisputed that respondent instituted an action for
Preliminary Mandatory Injunction against Pentacapital Realty, before the RTC of Cebu City, docketed as
Civil Case No. CEB-25032. On motion of Pentacapital Realty, in an Order dated August 15, 2001, the court
dismissed the complaint on two grounds: 1) non-payment of the correct filing fee considering that the
complaint was actually a collection of sum of money although denominated as Preliminary Mandatory
Injunction; and 2) lack of cause of action. The court treated the complaint as a collection suit because
respondent was seeking the payment of his unpaid commission or share in the proceeds of the sale of
the Molino Properties. Additionally, the RTC found that respondent had no cause of action against
Pentacapital Realty, there being no privity of contract between them. Lastly, the court held that it was
CRDI which agreed that 20% of the total consideration of the sale be paid and delivered to respondent.
[53] Instead of assailing the said Order, respondent filed his supplemental compulsory counterclaim,
demanding again the payment of his commission, this time, against petitioner in the instant case. The
Order, therefore, became final and executory.
Respondents supplemental counterclaim against petitioner is anchored on the doctrine of piercing the
veil of corporate fiction. Obviously, after the dismissal of his complaint before the RTC-Cebu, he now
proceeds
against petitioner, through a counterclaim, on the basis of the same cause of action. Thus, if we follow
respondents contention that petitioner and Pentacapital Realty are one and the same entity, the latter
being a subsidiary of the former, respondent is barred from instituting the present case based on the
principle of bar by prior judgment. The RTC-Cebu already made a definitive conclusion that Pentacapital
Realty is not a privy to the contract between respondent and CRDI. It also categorically stated that it was
CRDI which agreed to pay respondents commission equivalent to 20% of the proceeds of the sale. With
these findings, and considering that petitioners alleged liability stems from its supposed relation with
Pentacapital Realty, logic dictates that the findings of the RTC-Cebu, which had become final and
executory, should bind petitioner.
It is well-settled that when material facts or questions in issue in a former action were conclusively
settled by a judgment rendered therein, such facts or questions constitute res judicata and may not
again be litigated in a subsequent action between the same parties or their privies regardless of the form
of the latter.[54] Absolute identity of parties is not required, and where a shared identity of interest is
shown by the identity of the relief sought by one person in a prior case and the second person in a
subsequent case, such was deemed sufficient.[55] There is identity of parties not only when the parties
in the cases are the same, but also between those in privity with them.
No other procedural law principle is indeed more settled than that once a judgment becomes final, it is
no longer subject to change, revision, amendment, or reversal, except only for correction of clerical
errors, or the making of nunc pro tunc entries which cause no prejudice to any party, or where the
judgment itself is void. The underlying reason for the rule is two-fold: (1) to avoid delay in the
administration of justice and thus make orderly the discharge of judicial business; and (2) to put judicial
controversies to an end, at the risk of occasional errors, inasmuch as controversies cannot be allowed to
drag on indefinitely and the rights and obligations of every litigant must not hang in suspense for an
indefinite period of time.[56]
In view of the foregoing disquisitions, we find no necessity to discuss the other issues raised by
petitioner.
Forum Shopping
For his part, respondent adopts the conclusions made by the RTC and the CA in granting his
counterclaims. He adds that the petition should be dismissed on the ground of forum-shopping. He
argues that petitioner is guilty of forum-shopping by filing the petition for review (G.R. No. 181482),
assailing the CA Decision dated October 4, 2007, despite the pendency of G.R. No. 171736 assailing the
CA Decision dated December 20, 2005.
We do not agree with respondent.
Forum-shopping is the act of a litigant who repetitively availed of several judicial remedies in different
courts, simultaneously or successively, all substantially founded on the same transactions and the same
essential facts and circumstances, and all raising substantially the same issues, either pending in or
already resolved adversely by some other court, to increase his chances of obtaining a favorable decision
if not in one court, then in another.[57]
What is important in determining whether forum-shopping exists is the vexation caused the courts and
parties-litigants by a party who asks different courts and/or administrative agencies to rule on the same
or related causes and/or grant the same or substantially the same reliefs, in the process creating the
possibility of conflicting decisions being rendered by the different fora upon the same issues.[58]
Forum-shopping can be committed in three ways: (1) by filing multiple cases based on the same cause of
action and with the same prayer, the previous case not having been resolved yet (where the ground for
dismissal is litis pendentia); (2) by filing multiple cases based on the same cause of action and with the
same prayer, the previous case having been finally resolved (where the ground for dismissal is res
judicata); and (3) by filing multiple cases based on the same cause of action but with different prayers
(splitting of causes of action, where the ground for dismissal is also either litis pendentia or res judicata).
[59]
More particularly, the elements of forum-shopping are: (a) identity of parties or at least such parties that
represent the same interests in both actions; (b) identity of rights asserted and reliefs prayed for, the
relief being founded on the same facts; (c) identity of the two preceding particulars, such that any
judgment rendered in the other action will, regardless of which party is successful, amount to res
judicata in the action under consideration.[60]
These elements are not present in this case. In G.R. No. 171736, petitioner assails the propriety of the
admission of respondents supplemental compulsory counterclaim; while in G.R. No. 181482, petitioner
assails the grant of respondents supplemental compulsory counterclaim. In other words, the first case
originated from an interlocutory order of the RTC, while the second case is an appeal from the decision
of the court on the merits of the case. There is, therefore, no forum-shopping for the simple reason that
the petition and the appeal involve two different and distinct issues.
WHEREFORE, premises considered, the petitions are hereby GRANTED. The Decisions and Resolutions of
the Court of Appeals dated December 20, 2005 and March 1, 2006, in CA-G.R. SP No. 74851, and
October 4, 2007 and January 21, 2008, in CA-G.R. CV No. 86939, are REVERSED and SET ASIDE.
Respondent Makilito B. Mahinay is ordered to pay petitioner Pentacapital Investment Corporation

P1,936,800.00 plus 12% interest per annum, and 12% per annum penalty charge, starting February 17,
1997. He
is likewise ordered to pay 10% of his outstanding obligation as attorneys fees. No pronouncement as to
costs.
SO ORDERED.
4.[G. R. No. 126568. April 30, 2003]
QUIRINO GONZALES LOGGING CONCESSIONAIRE, QUIRINO GONZALES and EUFEMIA GONZALES,

petitioners, vs. THE COURT OF APPEALS (CA) and REPUBLIC PLANTERS BANK, respondents.
DECISION
CARPIO-MORALES, J.:
In the expansion of its logging business, petitioner Quirino Gonzales Logging Concessionaire (QGLC),
through its proprietor, general manager - co-petitioner Quirino Gonzales, applied on October 15, 1962
for credit accommodations[1] with respondent Republic Bank (the Bank), later known as Republic
Planters Bank.
The Bank approved QGLCs application on December 21, 1962, granting it a credit line of P900,000.00[2]
broken into an overdraft line of P500,000.00 which was later reduced to P450,000.00 and a Letter of
Credit (LC) line of P400,000.00.[3]
Pursuant to the grant, the Bank and petitioners QGLC and the spouses Quirino and Eufemia Gonzales
executed ten documents: two denominated Agreement for Credit in Current Account,[4] four
denominated Application and Agreement for Commercial Letter of Credit,[5] and four denominated Trust
Receipt.[6]
Petitioners obligations under the credit line were secured by a real estate mortgage on four parcels of
land: two in Pandacan, Manila, one in Makati (then part of Rizal), and another in Diliman, Quezon City.[7]
In separate transactions, petitioners, to secure certain advances from the Bank in connection with QGLCs
exportation of logs, executed a promissory note in 1964 in favor of the Bank. They were to execute three
more promissory notes in 1967.
In 1965, petitioners having long defaulted in the payment of their obligations under the credit line, the
Bank foreclosed the mortgage and bought the properties covered thereby, it being the highest bidder in
the auction sale held in the same year. Ownership over the properties was later consolidated in the Bank
on account of which new titles thereto were issued to it.[8]
On January 27, 1977, alleging non-payment of the balance of QGLCs obligation after the proceeds of the
foreclosure sale were applied thereto, and non-payment of the promissory notes despite repeated
demands, the Bank filed a complaint for sum of money (Civil Case No. 106635) against petitioners before
the Regional Trial Court (RTC) of Manila.
The complaint listed ten causes of action. The first concerns the overdraft line under which the Bank
claimed that petitioners withdrew amounts (unspecified) at twelve percent per annum which were
unpaid at maturity and that after it applied the proceeds of the foreclosure sale to the overdraft debt,
there remained an unpaid balance of P1,224,301.56.
The Banks second to fifth causes of action pertain to the LC line under which it averred that on the
strength of the LCs it issued, the beneficiaries thereof drew and presented sight drafts to it which it all
paid after petitioners acceptance; and that it delivered the tractors and equipment subject of the LCs to
petitioners who have not paid either the full or part of the face value of the drafts.
Specifically with respect to its second cause of action, the Bank alleged that it issued LC No. 63-0055D on
January 15, 1963 in favor of Monark International Incorporated[9] covering the purchase of a tractor[10]
on which the latter allegedly drew a sight draft with a face value of P71,500.00,[11] which amount
petitioners have not, however, paid in full.
Under its third cause of action, the Bank charged that it issued LC No. 61-1110D on December 27, 1962
also in favor of Monark International covering the purchase of another tractor and other equipment;[12]
and that Monark International drew a sight draft with a face value of P80,350.00,[13] and while
payments for the value thereof had been made by petitioners, a balance of P68,064.97 remained.
Under the fourth cause of action, the Bank maintained that it issued LC No. 63-0182D on February 11,
1963 in favor of J.B.L. Enterprises, Inc.[14] covering the purchase of two tractors,[15] and J.B.L.
Enterprises drew on February 13, 1963 a sight draft on said LC in the amount of P155,000.00 but
petitioners have not paid said amount.
On its fifth cause of action, the Bank alleged that it issued LC No. 63-0284D on March 14, 1963 in favor of
Super Master Auto Supply (SMAS) covering the purchase of Eight Units GMC (G.I.) Trucks; that on March
14, 1963, SMAS drew a sight draft with a face value of P64,000.00[16] on the basis of said LC; and that
the payments made by petitioners for the value of said draft were deficient by P45,504.74.
The Bank thus prayed for the settlement of the above-stated obligations at an interest rate of eleven
percent per annum, and for the award of trust receipt commissions, attorneys fees and other fees and
costs of collection.
The sixth to ninth causes of action are anchored on the promissory notes issued by petitioners allegedly
to secure certain advances from the Bank in connection with the exportation of logs as reflected above.
[17] The notes were payable 30 days after date and provided for the solidary liability of petitioners as
well as attorneys fees at ten percent of the total amount due[18] in the event of their non-payment at
maturity.
The note dated June 18, 1964, subject of the sixth cause of action, has a face value of P55,000.00 with
interest rate of twelve percent per annum;[19] that dated July 7, 1967 subject of the seventh has a face
value of P20,000.00;[20] that dated July 18, 1967 subject of the eighth has a face value of P38,000.00;
[21] and that dated August 23, 1967 subject of the ninth has a face value of P11,000.00.[22] The interest
rate of the last three notes is pegged at thirteen percent per annum.[23]
On its tenth and final cause of action, the Bank claimed that it has accounts receivable from petitioners
in the amount of P120.48.
In their Answer[24] of March 3, 1977, petitioners admit the following: having applied for credit
accommodations totaling P900,000.00 to secure which they mortgaged real properties; opening of the
LC/Trust Receipt Line; the issuance by the Bank of the various LCs; and the foreclosure of the real estate
mortgage and the consolidation of ownership over the mortgaged properties in favor of the Bank. They
deny, however, having availed of the credit accommodations and having received the value of the
promissory notes, as they do deny having physically received the tractors and equipment subject of the
LCs.
As affirmative defenses, petitioners assert that the complaint states no cause of action, and assuming
that it does, the same is/are barred by prescription or null and void for want of consideration.
By Order of March 10, 1977, Branch 36 of the Manila RTC attached the preferred shares of stocks of the
spouses Quirino and Eufemia Gonzales with the Bank with a total par value of P414,000.00.
Finding for petitioners, the trial court rendered its Decision of April 22, 1992 the dispositive portion of
which reads:
WHEREFORE, judgment is rendered as follows:
1. All the claims of plaintiff particularly those described in the first to the tenth causes of action of its
complaint are denied for the reasons earlier mentioned in the body of this decision;
2. As regards the claims of defendants pertaining to their counterclaim (Exhibits 1, 2 and 3), they are
hereby given ten (10) years from the date of issuance of the torrens title to plaintiff and before the
transfer thereof in good faith to a third party buyer within which to ask for the reconveyance of the real
properties foreclosed by plaintiff,
3. The order of attachment which was issued against the preferred shares of stocks of defendants-
spouses Quirino Gonzales and Eufemia Gonzales with the Republic Bank now known as Republic Planters
Bank dated March 21, 1977 is hereby dissolved and/or lifted, and
4. Plaintiff is likewise ordered to pay the sum of P20,000.00, as and for attorneys fees, with costs against
plaintiff.
SO ORDERED.
In finding for petitioners, the trial court ratiocinated:[25]
Art. 1144 of the Civil Code states that an action upon a written contract prescribes in ten (10) years from
the time the right of action accrues. Art. 1150 states that prescription starts to run from the day the
action may be brought. The obligations allegedly created by the written contracts or documents
supporting plaintiffs first to the sixth causes of action were demandable at the latest in 1964. Thus when
the complaint was filed on January 27, 1977 more than ten (10) years from 1964 [when the causes of
action accrued] had already lapsed. The first to the sixth causes of action are thus barred by prescription.
...
As regards the seventh and eight causes of action, the authenticity of which documents were partly in
doubt in the light of the categorical and uncontradicted statements that in 1965, defendant Quirino
Gonzales logging concession was terminated based on the policy of the government to terminate logging
concessions covering less than 20,000 hectares. If this is the case, the Court is in a quandary why there
were log exports in 1967? Because of the foregoing, the Court does not find any valid ground to sustain
the seventh and eight causes of action of plaintiffs complaint.
As regards the ninth cause of action, the Court is baffled why plaintiff extended to defendants another
loan when defendants according to plaintiffs records were defaulting creditors? The above facts and
circumstances has (sic) convinced this Court to give credit to the testimony of defendants witnesses that
the Gonzales spouses signed the documents in question in blank and that the promised loan was never
released to them. There is therefore a total absence of consent since defendants did not give their
consent to loans allegedly procured , the proceeds of which were never received by the alleged debtors,
defendants herein. . . .
Plaintiff did not present evidence to support its tenth cause of action. For this reason, it must
consequently be denied for lack of evidence.
On the matter of [the] counterclaims of defendants, they seek the return of the real and personal
properties which they have given in good faith to plaintiff. Again, prescription may apply. The real
properties of defendants acquired by plaintiff were foreclosed in 1965 and consequently, defendants had
one (1) year to redeem the property or ten (10) years from issuance of title on the ground that the
obligation foreclosed was fictitious.
xxx
On appeal,[26] the Court of Appeals (CA) reversed the decision of the trial court by Decision[27] of June
28, 1996 which disposed as follows:[28]
WHEREFORE, premises considered, the appealed decision (dated April 22, 1992) of the Regional Trial
Court (Branch 36) in Manila in Civil Case No. 82-4141 is hereby REVERSED---and let the case be
remanded back to the court a quo for the determination of the amount(s) to be awarded to the [the
Bank]-appellant relative to its claims against the appellees.
SO ORDERED.
With regard to the first to sixth causes of action, the CA upheld the contention of the Bank that the
notices of foreclosure sale were tantamount to demand letters upon the petitioners which interrupted
the running of the prescriptive period.[29]
As regards the seventh to ninth causes of action, the CA also upheld the contention of the Bank that the
written agreements-promissory notes prevail over the oral testimony of petitioner Quirino Gonzales that
the cancellation of their logging concession in 1967 made it unbelievable for them to secure in 1967 the
advances reflected in the promissory notes.[30]
With respect to petitioners counterclaim, the CA agreed with the Bank that:[31]
Certainly, failure on the part of the trial court to pass upon and determine the authenticity and
genuineness of [the Banks] documentary evidence [the trial court having ruled on the basis of
prescription of the Banks first to sixth causes of action] makes it impossible for the trial court to
eventually conclude that the obligation foreclosed (sic) was fictitious. Needless to say, the trial courts
ruling averses (sic) the well-entrenched rule that courts must render verdict on their findings of facts.
(China Banking Co. vs. CA, 70 SCRA 398)
Furthermore, the defendants-appellees [herein petitioners] counterclaim is basically an action for the
reconveyance of their properties, thus, the trial courts earlier ruling that the defendants-appellees
counterclaim has prescribed is itself a ruling that the defendants-appellees separate action for
reconveyance has also prescribed.
The CA struck down the trial courts award of attorneys fees for lack of legal basis.[32]
Hence, petitioners now press the following issues before this Court by the present petition for review on
certiorari:
1. WHETHER OR NOT RESPONDENT COURT ERRED IN SO HOLDING THAT RESPONDENT-APPELLEES (SIC.)

REPUBLIC PLANTERS BANK[S] FIRST, SECOND, THIRD, FOURTH, FIFTH AND SIXTH CAUSES OF ACTION
HAVE NOT PRESCRIBED CONTRARY TO THE FINDINGS OF THE LOWER COURT, RTC BRANCH 36 THAT THE
SAID CAUSES OF ACTION HAVE ALREADY PRESCRIBED.
2. WHETHER OR NOT RESPONDENT COURT ERRED IN SO HOLDING THAT RESPODNENT-APPELLEES (SIC.)

REPUBLIC PLANTERS BANK[S] SEVENTH, EIGHT AND NINTH CAUSES OF ACTION APPEARS (SIC.) TO BE
IMPRESSED WITH MERIT CONTRARY TO THE FINDINGS OF THE LOWER COURT RTC BRANCH 36 THAT THE
SAID CAUSES HAVE NO VALID GROUND TO SUSTAIN [THEM] AND FOR LACK OF EVIDENCE.
3. WHETHER OR NOT RESPONDENT COURT [ERRED] IN REVERSING THE FINDINGS OF THE REGIONAL
TRIAL COURT BRANCH 36 OF MANILA THAT PETITIONERS-APPELLANT (SIC.) MAY SEEK THE RETURN OF
THE REAL AND PERSONAL PROPERTIES WHICH THEY MAY HAVE GIVEN IN GOOD FAITH AS THE SAME IS
BARRED BY PRESCRIPTION AND THAT PETITIONERS-APPELLANT (SIC.) HAD ONE (1) YEAR TO REDEEM THE
PROPERTY OR TEN (10) YEARS FROM ISSUANCE OF THE TITLE ON THE GROUND THAT THE OBLIGATION
FORECLOSED WAS FICTITIOUS.
4. WHETHER OR NOT RESPONDENT COURT ERRED IN SO HOLDING THAT PEITIONERS-APPELLANTS [SIC]

ARE NOT ENTITLED TO AN AWARD OF ATTORNEYS FEES.
The petition is partly meritorious.
On the first issue. The Civil Code provides that an action upon a written contract, an obligation created
by law, and a judgment must be brought within ten years from the time the right of action accrues.[33]
The finding of the trial court that more than ten years had elapsed since the right to bring an action on
the Banks first to sixth causes had arisen[34] is not disputed. The Bank contends, however, that the
notices of foreclosure sale in the foreclosure proceedings of 1965 are tantamount to formal demands
upon petitioners for the payment of their past due loan obligations with the Bank, hence, said notices of
foreclosure sale interrupted/forestalled the running of the prescriptive period.[35]
The Banks contention does not impress. Prescription of actions is interrupted when they are filed before
the court, when there is a written extrajudicial demand by the creditors, and when there is any written
acknowledgment of the debt by the debtor. [36]
The law specifically requires a written extrajudicial demand by the creditors which is absent in the case
at bar. The contention that the notices of foreclosure are tantamount to a written extrajudicial demand
cannot be appreciated, the contents of said notices not having been brought to light.
But even assuming arguendo that the notices interrupted the running of the prescriptive period, the
argument would still not lie for the following reasons:
With respect to the first to the fifth causes of action, as gleaned from the complaint, the Bank seeks the
recovery of the deficient amount of the obligation after the foreclosure of the mortgage. Such suit is in
the nature of a mortgage action because its purpose is precisely to enforce the mortgage contract.[37] A
mortgage action prescribes after ten years from the time the right of action accrued.[38]
The law gives the mortgagee the right to claim for the deficiency resulting from the price obtained in the
sale of the property at public auction and the outstanding obligation at the time of the foreclosure
proceedings.[39] In the present case, the Bank, as mortgagee, had the right to claim payment of the
deficiency after it had foreclosed the mortgage in 1965.[40] In other words, the prescriptive period
started to run against the Bank in 1965. As it filed the complaint only on January 27, 1977, more than ten
years had already elapsed, hence, the action on its first to fifth causes had by then prescribed. No other
conclusion can be reached even if the suit is considered as one upon a written contract or upon an
obligation to pay the deficiency which is created by law,[41] the prescriptive period of both being also
ten years.[42]
As regards the promissory note subject of the sixth cause of action, its period of prescription could not
have been interrupted by the notices of foreclosure sale not only because, as earlier discussed,
petitioners contention that the notices of foreclosure are tantamount to written extra-judicial demand
cannot be considered absent any showing of the contents thereof, but also because it does not appear
from the records that the said note is covered by the mortgage contract.
Coming now to the second issue, petitioners seek to evade liability under the Banks seventh to ninth
causes of action by claiming that petitioners Quirino and Eufemia Gonzales signed the promissory notes
in blank; that they had not received the value of said notes, and that the credit line thereon was
unnecessary in view of their money deposits, they citing Exhibits 2 to 2-B,[43] in, and unremitted
proceeds on log exports from, the Bank. In support of their claim, they also urge this Court to look at
Exhibits B (the Banks recommendation for approval of petitioners application for credit
accommodations), P (the Application and Agreement for Commercial Letter of Credit dated January 16,
1963) and T (the Application and Agreement for Commercial Letter of Credit dated February 14, 1963).
The genuineness and due execution of the notes had, however, been deemed admitted by petitioners,
they having failed to deny the same under oath.[44] Their claim that they signed the notes in blank does
not thus lie.
Petitioners admission of the genuineness and due execution of the promissory notes notwithstanding,
they raise want of consideration[45] thereof. The promissory notes, however, appear to be negotiable as
they meet the requirements of Section 1[46] of the Negotiable Instruments Law. Such being the case,
the notes are prima facie deemed to have been issued for consideration.[47] It bears noting that no
sufficient evidence was adduced by petitioners to show otherwise.
Exhibits 2 to 2-B to which petitioners advert in support of their claim that the credit line on the notes
was unnecessary because they had deposits in, and remittances due from, the Bank deserve scant
consideration. Said exhibits are merely claims by petitioners under their then proposals for a possible
settlement of the case dated February 3, 1978. Parenthetically, the proposals were not even signed by
petitioners but by certain Attorneys Osmundo R. Victoriano and Rogelio P. Madriaga.
In any case, it is no defense that the promissory notes were signed in blank as Section 14[48] of the
Negotiable Instruments Law concedes the prima facie authority of the person in possession of
negotiable instruments, such as the notes herein, to fill in the blanks.
As for petitioners reliance on Exhibits B, P and T, they have failed to show the relevance thereof to the
seventh up to the ninth causes of action of the Bank.
On the third issue, petitioners asseverate that with the trial courts dismissal of the Banks complaint and
the denial of its first to sixth causes of action, it is but fair and just that the real properties which were
mortgaged and foreclosed be returned to them.[49] Such, however, does not lie. It is not disputed that
the properties were foreclosed under Act No. 3135 (An Act to Regulate the Sale of Property under
Special Powers Inserted in or Annexed to Real Estate Mortgages), as amended. Though the Banks action
for deficiency is barred by prescription, nothing irregular attended the foreclosure proceedings to
warrant the reconveyance of the properties covered thereby.
As for petitioners prayer for moral and exemplary damages, it not having been raised as issue before the
courts below, it can not now be considered. Neither can the award attorneys fees for lack of legal basis.
WHEREFORE, the CA Decision is hereby AFFIRMED with MODIFICATION.

Republic Banks Complaint with respect to its first to sixth causes of action is hereby DISMISSED. Its
complaint with respect to its seventh to ninth causes of action is REMANDED to the court of origin, the
Manila Regional Trial Court, Branch 36, for it to determine the amounts due the Bank thereunder.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Corona, JJ., concur
5. cralaw_scresolutions_separator.NHAD
[G.R. No. 142047. July 10, 2006]
SPS. SERGIO AND MILAGROS OJEDA versus ANDRELINA ORBETA
Third Division
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution of this Court dated JULY 10, 2006.
G.R. No. 142047 (Sps. Sergio and Milagros Ojeda versus Andrelina Orbeta)
Petitioner spouses Sergio Ojeda and Milagros Ojeda seek a reversal of the February 24, 2000
Decision[1]cralaw rendered by the Court of Appeals in CA-G.R. CV No. 59985 entitled Andrelina Orbeta v.
Sps. Sergio Ojeda and Milagros Ojeda. The questioned decision affirmed the February 23, 1995
Decision[2]cralaw of the Regional Trial Court, Branch 106 of Quezon City in Civil Case No. Q-91-7794.
The facts of this case are not complicated.
From 1986 to 1989, the spouses Ojeda obtained various loans they would use as additional capital from
Andrelina Orbeta, a general merchandiser and former market stall holder. Over time, Orbeta extended a
total of 18 loans to the spouses.[3]cralaw Although the couple failed to pay their obligations on time,
Orbeta continued to accommodate them, and lent them more money on the assurance that they would
soon pay all their debts. Every time Orbeta would verbally demand payment, she was told that payment
was forthcoming and there was nothing to worry about since the spouses' business was doing well and
the couple had a daughter based in Japan who always sent them money. To their sincerity, they aver,
they even delivered a copy of the registration papers of one of their vehicles to Orbeta.
Notwithstanding all their promises, however, the spouses' obligations remained unpaid. Orbeta made
numerous demands but all attempts to collect from the couple proved futile. Frustrated by their failure
to pay, Orbeta through her lawyer sent a demand letter to the spouses on March 1989.[4]cralaw
Eventually, on July 1989, after an accounting of all outstanding loans due, Milagros Ojeda issued Security
Bank and Trust Company Check No. 027836 dated September 1, 1989 for P487,133.87, representing full
settlement of all obligations due in favor of Orbeta. When presented for payment, however, the check
was dishonored for having been drawn against an account already closed.
Consequently, Orbeta filed Criminal Case No. Q-90-10226 for violation of Batas Pambansa Bilang 22
against Milagros Ojeda with the Regional Trial Court of Quezon City.[5]cralaw After a plea of guilty,
judgment was rendered against the accused in a decision[6]cralaw dated October 11, 1990. The
dispositive portion of the decision read:
WHEREFORE, considering the plea of Guilty entered by accused Milagros Ojeda this morning, the Court
hereby renders judgment:
1. Finding said accused GUILTY beyond reasonable doubt of the offense charged;
2. Sentencing her to suffer the penalty of ONE (1) YEAR imprisonment; and
3. To pay costs.
The decision was promulgated in open Court this morning in the presence of the accused herself,
Assistant City Prosecutor Perpetuo LB Alonzo and Atty. Renerio S. Payumo.
SO ORDERED.
Consistent with the reservation made by Ojeda in the BP 22 case, Civil Case No. Q-91-7794 was
subsequently filed against the spouses to collect on the civil aspect of the BP 22 case. In the civil case,
the Regional Trial Court ruled as follows:
WHEREFORE, finding no cogent reason to deny the relief being prayed for, the cause of action of plaintiff
having been fully established and proven by preponderant evidence, judgment is hereby rendered
ordering defendants to pay plaintiff:
1. The amount of Four Hundred Eighty Seven Thousand One Hundred Thirteen and 87/100
(P487,113.87) pesos with 12% interest from filing of the case until fully paid.
2. 25% of the principal obligation as and by way of attorney's fees.
3. Cost of suit.
SO ORDERED.[7]cralaw
Aggrieved, the spouses brought their case to the Court of Appeals where the Regional Trial Court's
judgment was affirmed, to wit:
WHEREFORE, with the sole modification that the award for attorney's fee[s] is hereby eliminated, the
Judgment appealed from is in all other respects AFFIRMED, with the costs of this instance to be taxed
against the defendants-appellants.
SO ORDERED.[8]cralaw
Before us now are the following issues: (1) Are the spouses liable for issuing Security Bank and Trust
Company Check No. 027836? (2) Did the Court of Appeals err in upholding the propriety of the civil case
that was instituted separately from the BP 22 case?
To justify their prayer for a reversal of the Court of Appeals' decision, the spouses insist that there are
special and important reasons present in the case which constitute a question of law and there was a
misapprehension of facts committed by the Court of Appeals which must be rectified.
Petitioners maintain that any obligation arising from Security Bank and Trust Company Check No. 027836
is invalid and illegal since the same was issued in blank except for the signature of Milagros Ojeda. They
further claim that they already paid P55,000 to satisfy their obligation to Orbeta of P30,000 only. The
couple also aver that the motion of Orbeta to file a separate civil action was merely noted by the
Regional Trial Court in the BP 22 case and there was no order granting the institution of a separate civil
action.
Respondent Orbeta, on the other hand, counters that the errors raised by the spouses deal with
questions of fact which have already been passed upon and decided by the Regional Trial Court and the
Court of Appeals and cannot now be raised in this petition for review. Orbeta also contends that, the
couple cannot assert for the first time that the motion to file a separate civil action was merely noted
and no order was issued by the Regional Trial Court granting the same since a full blown trial had been
conducted without the said issue having been raised by the spouses, hence, they are barred from doing
so, since they are considered to have waived any objection they may have had on the subject. Finally,
Orbeta points out that the judgment in the BP 22 case did not contain an award for civil liability which is
tantamount to the Regional Trial Court's approval of the motion.[9]cralaw
To resolve the first issue, we must here emphasize that the jurisdiction of this Court in a petition such as
this is limited to reviewing errors of law that might have been committed by the lower court. The
allegation of the spouses that Security Bank and Trust Company Check No. 027836 was delivered to
Orbeta in blank except for the signature of Milagros Ojeda and the amount of P10,000 annotated at the
back of the check, and their contention that they cannot be held liable for the face value of the check
since Milagros Ojeda was not the one who filled up the date, name of the payee and the amount
appearing on the check, are questions of fact that require us to re-examine the evidence presented by
the contending parties during trial. This cannot be done in a petition for review. Under Rule 45, only
questions of law may be raised in a petition for review, except in very few specified instances, e.g. where
there is variance in the factual findings of the trial and appellate courts. Since both the Regional Trial
Court and the Court of Appeals agree on the cited facts, we are bound by their factual findings.
In any event, the spouses do not deny that the check was delivered to Orbeta and that the signature
appearing on the check belongs to Milagros Ojeda. Even if the check was delivered to Orbeta in blank,
we must stress that the presumption is that the latter had prima facie authority to complete the check
by filling up the same. Here, the provision of Section 14 of the Negotiable Instruments Law is pertinent:
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. (Emphasis supplied.)
The law 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.[10]cralaw Because of the presumption of
authority, the burden of proving that there was no authority or that the authority granted was exceeded
is placed on the person questioning such authority.[11]cralaw There is nothing on record to show that
the prima facie presumption created by the afore-quoted section was successfully refuted by the
spouses. Therefore, the couple's stance that they cannot be held liable for the check because they were
not the ones who wrote the date, the name of the payee and the amount, is untenable.
On the second issue, it appears that an urgent motion to file a separate civil action was filed by Orbeta
on October 11, 1990, which motion was correspondingly noted by the Regional Trial Court in its decision.
[12]cralaw Since the civil liability involved in this case is one that arises from a crime, the rule is that the
same is impliedly instituted with the criminal action unless the offended party expressly waives the civil
action; reserves his right to institute it separately; or institutes the civil action prior to the filing of the
criminal case.[13]cralaw The purpose of the rule requiring reservation is to prevent the offended party
from recovering damages twice for the same act or omission.[14]cralaw
Orbeta's intention to reserve her right to recover the civil liability arising from the BP 22 case is clear
from the time she filed the urgent motion.[15]cralaw The fact that the Regional Trial Court did not
provide for an award of damages in its decision is also a clear recognition of Orbeta's reservation.
Contrary to the spouses' argument, an order by the Regional Trial Court granting the urgent motion to
file a separate civil action is not necessary since the rules only require that the offended party make the
reservation before the prosecution starts to present its evidence and under circumstances affording the
offended party a reasonable opportunity to make such reservation.
Lastly, we agree with respondent that it is now too late for the spouses to question the institution of the
civil case separately from the BP 22 case. A full blown trial was conducted in the civil case with the
participation of the spouses, but they never raised any objection thereto, and they cannot be allowed
here and now to raise this issue for the first time.
WHEREFORE, the instant petition is DENIED. The February 24, 2000 Decision of the Court of Appeals
sustaining the February 23, 1995 Decision of the Regional Trial Court is AFFIRMED.
Costs against petitioners.
SO ORDERED.
6. THIRD DIVISION
SAMSON CHING, G.R. No. 141181

Petitioner,
Present:
YNARES-SANTIAGO, J.,
Chairperson,
- versus - AUSTRIA-MARTINEZ,
CALLEJO, SR.,
CHICO-NAZARIO, and
NACHURA, JJ.
CLARITA NICDAO and
HON. COURT OF APPEALS, Promulgated:
Respondents.
April 27, 2007
x-----------------------------------------------------------------------------------------x
DECISION
CALLEJO, SR., J.:
Before the Court is a petition for review on certiorari filed by Samson Ching of the Decision[1] dated
November 22, 1999 of the Court of Appeals (CA) in CA-G.R. CR No. 23055. The assailed decision
acquitted respondent Clarita Nicdao of eleven (11) counts of violation of Batas Pambansa Bilang (BP) 22,
otherwise known as The Bouncing Checks Law. The instant petition pertains and is limited to the civil
aspect of the case as it submits that notwithstanding respondent Nicdaos acquittal, she should be held
liable to pay petitioner Ching the amounts of the dishonored checks in the aggregate sum of
P20,950,000.00.
Factual and Procedural Antecedents
On October 21, 1997, petitioner Ching, a Chinese national, instituted criminal complaints for eleven (11)
counts of violation of BP 22 against respondent Nicdao. Consequently, eleven (11) Informations were
filed with the First Municipal Circuit Trial Court (MCTC) of Dinalupihan-Hermosa, Province of Bataan,
which, except as to the amounts and check numbers, uniformly read as follows:
The undersigned accuses Clarita S. Nicdao of a VIOLATION OF BATAS PAMBANSA BILANG 22, committed
as follows:
That on or about October 06, 1997, at Dinalupihan, Bataan, Philippines, and within the jurisdiction of
this Honorable Court, the said accused did then and there willfully and unlawfully make or draw and
issue Hermosa Savings & Loan Bank, Inc. Check No. [002524] dated October 06, 1997 in the amount of
[P20,000,000.00] in payment of her obligation with complainant Samson T.Y. Ching, the said accused
knowing fully well that at the time she issued the said check she did not have sufficient funds in or credit
with the drawee bank for the payment in full of the said check upon presentment, which check when
presented for payment within ninety (90) days from the date thereof, was dishonored by the drawee
bank for the reason that it was drawn against insufficient funds and notwithstanding receipt of notice of
such dishonor the said accused failed and refused and still fails and refuses to pay the value of the said
check in the amount of [P20,000,000.00] or to make arrangement with the drawee bank for the payment
in full of the same within five (5) banking days after receiving the said notice, to the damage and
prejudice of the said Samson T.Y. Ching in the aforementioned amount of [P20,000,000.00], Philippine
Currency.
CONTRARY TO LAW.
Dinalupihan, Bataan, October 21, 1997.
(Sgd.) SAMSON T.Y. CHING
Complainant
The cases were docketed as Criminal Cases Nos. 9433 up to 9443 involving the following details:
Check No. Amount Date Private Reason for
Complainant the Dishonor
002524[2] P 20,000,000 Oct. 6, 1997 Samson T.Y. Ching DAIF*
008856[3] 150,000 Oct. 6, 1997 " "
012142[4] 100,000 Oct. 6, 1997 " "
004531[5] 50,000 Oct. 6, 1997 " "
002254[6] 100,000 Oct. 6, 1997 " "
008875[7] 100,000 Oct. 6, 1997 " "
008936[8] 50,000 Oct. 6, 1997 " "
002273[9] 50,000 Oct. 6, 1997 " "
008948[10] 150,000 Oct. 6, 1997 " "
008935[11] 100,000 Oct. 6, 1997 " "
010377[12] 100,000 Oct. 6, 1997 " "
At about the same time, fourteen (14) other criminal complaints, also for violation of BP 22, were filed
against respondent Nicdao by Emma Nuguid, said to be the common law spouse of petitioner Ching.
Allegedly fourteen (14) checks, amounting to P1,150,000.00, were issued by respondent Nicdao to
Nuguid but were dishonored for lack of sufficient funds. The Informations were filed with the same
MCTC and docketed as Criminal Cases Nos. 9458 up to 9471.
At her arraignment, respondent Nicdao entered the plea of not guilty to all the charges. A joint trial was
then conducted for Criminal Cases Nos. 9433-9443 and 9458-9471.
For the prosecution in Criminal Cases Nos. 9433-9443, petitioner Ching and Imelda Yandoc, an employee
of the Hermosa Savings & Loan Bank, Inc., were presented to prove the charges against respondent
Nicdao. On direct-examination,[13] petitioner Ching preliminarily identified each of the eleven (11)
Hermosa Savings & Loan Bank (HSLB) checks that were allegedly issued to him by respondent Nicdao
amounting to P20,950,000.00. He identified the signatures appearing on the checks as those of
respondent Nicdao. He recognized her signatures because respondent Nicdao allegedly signed the
checks in his presence. When petitioner Ching presented these checks for payment, they were
dishonored by the bank, HSLB, for being DAIF or drawn against insufficient funds.
Petitioner Ching averred that the checks were issued to him by respondent Nicdao as security for the
loans that she obtained from him. Their transaction began sometime in October 1995 when respondent
Nicdao, proprietor/manager of Vignette Superstore, together with her husband, approached him to
borrow money in order for them to settle their financial obligations. They agreed that respondent Nicdao
would leave the checks undated and that she would pay the loans within one year. However, when
petitioner Ching went to see her after the lapse of one year to ask for payment, respondent Nicdao
allegedly said that she had no cash.
Petitioner Ching claimed that he went back to respondent Nicdao several times more but every time, she
would tell him that she had no money. Then in September 1997, respondent Nicdao allegedly got mad at
him for being insistent and challenged him about seeing each other in court. Because of respondent
Nicdao's alleged refusal to pay her obligations, on October 6, 1997, petitioner Ching deposited the
checks that she issued to him. As he earlier stated, the checks were dishonored by the bank for being
DAIF. Shortly thereafter, petitioner Ching, together with Emma Nuguid, wrote a demand letter to
respondent Nicdao which, however, went unheeded. Accordingly, they separately filed the criminal
complaints against the latter.
On cross-examination,[14] petitioner Ching claimed that he had been a salesman of the La Suerte Cigar
and Cigarette Manufacturing for almost ten (10) years already. As such, he delivered the goods and had a
warehouse. He received salary and commissions. He could not, however, state his exact gross income.
According to him, it increased every year because of his business. He asserted that aside from being a
salesman, he was also in the business of extending loans to other people at an interest, which varied
depending on the person he was dealing with.
Petitioner Ching confirmed the truthfulness of the allegations contained in the eleven (11) Informations
that he filed against respondent Nicdao. He reiterated that, upon their agreement, the checks were all
signed by respondent Nicdao but she left them undated. Petitioner Ching admitted that he was the one
who wrote the date, October 6, 1997, on those checks when respondent Nicdao refused to pay him.
With respect to the P20,000,000.00 check (Check No. 002524), petitioner Ching explained that he wrote
the date and amount thereon when, upon his estimation, the money that he regularly lent to
respondent Nicdao beginning October 1995 reached the said sum. He likewise intimated that prior to
1995, they had another transaction amounting to P1,200,000.00 and, as security therefor, respondent
Nicdao similarly issued in his favor checks in varying amounts of P100,000.00 and P50,000.00. When the
said amount was fully paid, petitioner Ching returned the checks to respondent Nicdao.
Petitioner Ching maintained that the eleven (11) checks subject of Criminal Cases Nos. 9433-9443
pertained to respondent Nicdaos loan transactions with him beginning October 1995. He also mentioned
an instance when respondent Nicdaos husband and daughter approached him at a casino to borrow
money from him. He lent them P300,000.00. According to petitioner Ching, since this amount was also
unpaid, he included it in the other amounts that respondent Nicdao owed to him which totaled
P20,000,000.00 and wrote the said amount on one of respondent Nicdaos blank checks that she
delivered to him.
Petitioner Ching explained that from October 1995 up to 1997, he regularly delivered money to
respondent Nicdao, in the amount of P1,000,000.00 until the total amount reached P20,000,000.00. He
did not ask respondent Nicdao to acknowledge receiving these amounts. Petitioner Ching claimed that
he was confident that he would be paid by respondent Nicdao because he had in his possession her
blank checks. On the other hand, the latter allegedly had no cause to fear that he would fill up the
checks with just any amount because they had trust and confidence in each other. When asked to
produce the piece of paper on which he allegedly wrote the amounts that he lent to respondent Nicdao,
petitioner Ching could not present it; he reasoned that it was not with him at that time.
It was also averred by petitioner Ching that respondent Nicdao confided to him that she told her
daughter Janette, who was married to a foreigner, that her debt to him was only between P3,000,000.00
and P5,000,000.00. Petitioner Ching claimed that he offered to accompany respondent Nicdao to her
daughter in order that they could apprise her of the amount that she owed him. Respondent Nicdao
refused for fear that it would cause disharmony in the family. She assured petitioner Ching, however,
that he would be paid by her daughter.
Petitioner Ching reiterated that after the lapse of one (1) year from the time respondent Nicdao issued
the checks to him, he went to her several times to collect payment. In all these instances, she said that
she had no cash. Finally, in September 1997, respondent Nicdao allegedly went to his house and told him
that Janette was only willing to pay him between P3,000,000.00 and P5,000,000.00 because, as far as
her daughter was concerned, that was the only amount borrowed from petitioner Ching. On hearing
this, petitioner Ching angrily told respondent Nicdao that she should not have allowed her debt to reach
P20,000,000.00 knowing that she would not be able to pay the full amount.
Petitioner Ching identified the demand letter that he and Nuguid sent to respondent Nicdao. He
explained that he no longer informed her about depositing her checks on his account because she
already made that statement about seeing him in court. Again, he admitted writing the date, October 6,
1997, on all these checks.
Another witness presented by the prosecution was Imelda Yandoc, an employee of HSLB. On direct-
examination,[15] she testified that she worked as a checking account bookkeeper/teller of the bank. As
such, she received the checks that were drawn against the bank and verified if they were funded. On
October 6, 1997, she received several checks issued by respondent Nicdao. She knew respondent Nicdao
because the latter maintained a savings and checking account with them. Yandoc identified the checks
subject of Criminal Cases Nos. 9433-9443 and affirmed that stamped at the back of each was the
annotation DAIF. Further, per the banks records, as of October 8, 1997, only a balance of P300.00 was
left in respondent Nicdaos checking account and P645.83 in her savings account. On even date, her
account with the bank was considered inactive.
On cross-examination,[16] Yandoc stated anew that respondent Nicdaos checks bounced on October 7,
1997 for being DAIF and her account was closed the following day, on October 8, 1997. She informed the
trial court that there were actually twenty-five (25) checks of respondent Nicdao that were dishonored
at about the same time. The eleven (11) checks were purportedly issued in favor of petitioner Ching
while the other fourteen (14) were purportedly issued in favor of Nuguid. Yandoc explained that
respondent Nicdao or her employee would usually call the bank to inquire if there was an incoming
check to be funded.
For its part, the defense proffered the testimonies of respondent Nicdao, Melanie Tolentino and Jocelyn
Nicdao. On direct-examination,[17] respondent Nicdao stated that she only dealt with Nuguid. She
vehemently denied the allegation that she had borrowed money from both petitioner Ching and Nuguid
in the total amount of P22,950,000.00. Respondent Nicdao admitted, however, that she had obtained a
loan from Nuguid but only for P2,100,000.00 and the same was already fully paid. As proof of such
payment, she presented a Planters Bank demand draft dated August 13, 1996 in the amount of
P1,200,000.00. The annotation at the back of the said demand draft showed that it was endorsed and
negotiated to the account of petitioner Ching.
In addition, respondent Nicdao also presented and identified several cigarette wrappers[18] at the back
of which appeared computations. She explained that Nuguid went to the grocery store everyday to
collect interest payments. The principal loan was P2,100,000.00 with 12% interest per day. Nuguid
allegedly wrote the payments for the daily interests at the back of the cigarette wrappers that she gave
to respondent Nicdao.
The principal loan amount of P2,100,000.00 was allegedly delivered by Nuguid to respondent Nicdao in
varying amounts of P100,000.00 and P150,000.00. Respondent Nicdao refuted the averment of
petitioner Ching that prior to 1995, they had another transaction.
With respect to the P20,000,000.00 check, respondent Nicdao admitted that the signature thereon was
hers but denied that she issued the same to petitioner Ching. Anent the other ten (10) checks, she
likewise admitted that the signatures thereon were hers while the amounts and payee thereon were
written by either Jocelyn Nicdao or Melanie Tolentino, who were employees of Vignette Superstore and
authorized by her to do so.
Respondent Nicdao clarified that, except for the P20,000,000.00 check, the other ten (10) checks were
handed to Nuguid on different occasions. Nuguid came to the grocery store everyday to collect the
interest payments. Respondent Nicdao said that she purposely left the checks undated because she
would still have to notify Nuguid if she already had the money to fund the checks.
Respondent Nicdao denied ever confiding to petitioner Ching that she was afraid that her daughter
would get mad if she found out about the amount that she owed him. What allegedly transpired was
that when she already had the money to pay them (presumably referring to petitioner Ching and
Nuguid), she went to them to retrieve her checks. However, petitioner Ching and Nuguid refused to
return the checks claiming that she (respondent Nicdao) still owed them money. She demanded that
they show her the checks in order that she would know the exact amount of her debt, but they refused.
It was at this point that she got angry and dared them to go to court.
After the said incident, respondent Nicdao was surprised to be notified by HSLB that her check in the
amount of P20,000,000.00 was just presented to the bank for payment. She claimed that it was only
then that she remembered that sometime in 1995, she was informed by her employee that one of her
checks was missing. At that time, she did not let it bother her thinking that it would eventually surface
when presented to the bank.
Respondent Nicdao could not explain how the said check came into petitioner Chings possession. She
explained that she kept her checks in an ordinary cash box together with a stapler and the cigarette
wrappers that contained Nuguids computations. Her saleslady had access to this box. Respondent
Nicdao averred that it was Nuguid who offered to give her a loan as she would allegedly need money to
manage Vignette Superstore. Nuguid used to run the said store before respondent Nicdaos daughter
bought it from Nuguids family, its previous owner. According to respondent Nicdao, it was Nuguid who
regularly delivered the cash to respondent Nicdao or, if she was not at the grocery store, to her saleslady.
Respondent Nicdao denied any knowledge that the money loaned to her by Nuguid belonged to
petitioner Ching.
At the continuation of her direct-examination,[19] respondent Nicdao said that she never dealt with
petitioner Ching because it was Nuguid who went to the grocery store everyday to collect the interest
payments. When shown the P20,000,000.00 check, respondent Nicdao admitted that the signature
thereon was hers but she denied issuing it as a blank check to petitioner Ching. On the other hand, with
respect to the other ten (10) checks, she also admitted that the signatures thereon were hers and that
the amounts thereon were written by either Josie Nicdao or Melanie Tolentino, her employees whom
she authorized to do so. With respect to the payee, it was purposely left blank allegedly upon instruction
of Nuguid who said that she would use the checks to pay someone else.
On cross-examination,[20] respondent Nicdao explained that Josie Nicdao and Melanie Tolentino were
caretakers of the grocery store and that they manned it when she was not there. She likewise confirmed
that she authorized them to write the amounts on the checks after she had affixed her signature
thereon. She stressed, however, that the P20,000,000.00 check was the one that was reported to her as
lost or missing by her saleslady sometime in 1995. She never reported the matter to the bank because
she was confident that it would just surface when it would be presented for payment.
Again, respondent Nicdao identified the cigarette wrappers which indicated the daily payments she had
made to Nuguid. The latter allegedly went to the grocery store everyday to collect the interest payments.
Further, the figures at the back of the cigarette wrappers were written by Nuguid. Respondent Nicdao
asserted that she recognized her handwriting because Nuguid sometimes wrote them in her presence.
Respondent Nicdao maintained that she had already paid Nuguid the amount of P1,200,000.00 as
evidenced by the Planters Bank demand draft which she gave to the latter and which was subsequently
negotiated and deposited in petitioner Chings account. In connection thereto, respondent Nicdao
refuted the prosecutions allegation that the demand draft was payment for a previous transaction that
she had with petitioner Ching. She clarified that the payments that Nuguid collected from her everyday
were only for the interests due. She did not ask Nuguid to make written acknowledgements of her
payments.
Melanie Tolentino was presented to corroborate the testimony of respondent Nicdao. On direct-
examination,[21] Tolentino stated that she worked at the Vignette Superstore and she knew Nuguid
because her employer, respondent Nicdao, used to borrow money from her. She knew petitioner Ching
only by name and that he was the husband of Nuguid.
As an employee of the grocery store, Tolentino stated that she acted as its caretaker and was entrusted
with the custody of respondent Nicdaos personal checks. Tolentino identified her own handwriting on
some of the checks especially with respect to the amounts and figures written thereon. She said that
Nuguid instructed her to leave the space for the payee blank as she would use the checks to pay
someone else. Tolentino added that she could not recall respondent Nicdao issuing a check to petitioner
Ching in the amount of P20,000,000.00. She confirmed that they lost a check sometime in 1995. When
informed about it, respondent Nicdao told her that the check could have been issued to someone else,
and that it would just surface when presented to the bank.
Tolentino recounted that Nuguid came to the grocery store everyday to collect the interest payments of
the loan. In some instances, upon respondent Nicdaos instruction, Tolentino handed to Nuguid checks
that were already signed by respondent Nicdao. Sometimes, Tolentino would be the one to write the
amount on the checks. Nuguid, in turn, wrote the amounts on pieces of paper which were kept by
respondent Nicdao.
On cross-examination,[22] Tolentino confirmed that she was authorized by respondent Nicdao to fill up
the checks and hand them to Nuguid. The latter came to the grocery store everyday to collect the
interest payments. Tolentino claimed that in 1995, in the course of chronologically arranging respondent
Nicdaos check booklets, she noticed that a check was missing. Respondent Nicdao told her that perhaps
she issued it to someone and that it would just turn up in the bank. Tolentino was certain that the
missing check was the same one that petitioner Ching presented to the bank for payment in the amount
of P20,000,000.00.
Tolentino stated that she left the employ of respondent Nicdao sometime in 1996. After the checks were
dishonored in October 1997, Tolentino got a call from respondent Nicdao. After she was shown a fax
copy thereof, Tolentino confirmed that the P20,000,000.00 check was the same one that she reported as
missing in 1995.
Jocelyn Nicdao also took the witness stand to corroborate the testimony of the other defense witnesses.
On direct-examination,[23] she averred that she was a saleslady at the Vignette Superstore from August
1994 up to April 1998. She knew Nuguid as well as petitioner Ching.
Jocelyn Nicdao further testified that respondent Nicdao was indebted to Nuguid. Jocelyn Nicdao used to
fill up the checks of respondent Nicdao that had already been signed by her and give them to Nuguid.
The latter came to the grocery store everyday to pick up the interest payments. Jocelyn Nicdao identified
the checks on which she wrote the amounts and, in some instances, the name of Nuguid as payee.
However, most of the time, Nuguid allegedly instructed her to leave as blank the space for the payee.
Jocelyn Nicdao identified the cigarette wrappers as the documents on which Nuguid acknowledged
receipt of the interest payments. She explained that she was the one who wrote the minus entries and
they represented the daily interest payments received by Nuguid.
On cross-examination,[24] Jocelyn Nicdao stated that she was a distant cousin of respondent Nicdao. She
stopped working for her in 1998 because she wanted to take a rest. Jocelyn Nicdao reiterated that she
handed the checks to Nuguid at the grocery store.
After due trial, on December 8, 1998, the MCTC rendered judgment in Criminal Cases Nos. 9433-9443
convicting respondent Nicdao of eleven (11) counts of violation of BP 22. The MCTC gave credence to
petitioner Chings testimony that respondent Nicdao borrowed money from him in the total amount of
P20,950,000.00. Petitioner Ching delivered P1,000,000.00 every month to respondent Nicdao from 1995
up to 1997 until the sum reached P20,000,000.00. The MCTC also found that subsequent thereto,
respondent Nicdao still borrowed money from petitioner Ching. As security for these loans, respondent
Nicdao issued checks to petitioner Ching. When the latter deposited the checks (eleven in all) on October
6, 1997, they were dishonored by the bank for being DAIF.
The MCTC explained that the crime of violation of BP 22 has the following elements: (a) the making,
drawing and issuance of any check to apply to account or for value; (b) the knowledge of the maker,
drawer or issuer that at the time of issue he does not have sufficient funds in or credit with the drawee
bank for the payment of such check in full upon its presentment; and (c) subsequent dishonor of the
check by the drawee bank for insufficiency of funds or credit or dishonor for the same reason had not
the drawer, without any valid cause, ordered the bank to stop payment.[25]
According to the MCTC, all the foregoing elements are present in the case of respondent Nicdaos
issuance of the checks subject of Criminal Cases Nos. 9433-9443. On the first element, respondent
Nicdao was found by the MCTC to have made, drawn and issued the checks. The fact that she did not
personally write the payee and date on the checks was not material considering that under Section 14 of
the Negotiable Instruments Law, 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 x x x. Respondent Nicdao admitted that she authorized her employees to provide the details on
the checks after she had signed them.
The MCTC disbelieved respondent Nicdaos claim that the P20,000,000.00 check was the same one that
she lost in 1995. It observed that ordinary prudence would dictate that a lost check would at least be
immediately reported to the bank to prevent its unauthorized endorsement or negotiation. Respondent
Nicdao made no such report to the bank. Even if the said check was indeed lost, the MCTC faulted
respondent Nicdao for being negligent in keeping the checks that she had already signed in an unsecured
box.
The MCTC further ruled that there was no evidence to show that petitioner Ching was not a holder in
due course as to cause it (the MCTC) to believe that the said check was not issued to him. Respondent
Nicdaos admission of indebtedness was sufficient to prove that there was consideration for the issuance
of the checks.
The second element was also found by the MCTC to be present as it held that respondent Nicdao, as
maker, drawer or issuer, had knowledge that at the time of issue she did not have sufficient funds in or
credit with the drawee bank for the payment in full of the checks upon their presentment.
As to the third element, the MCTC established that the checks were subsequently dishonored by the
drawee bank for being DAIF or drawn against insufficient funds. Stamped at the back of each check was
the annotation DAIF. The bank representative likewise testified to the fact of dishonor.
Under the foregoing circumstances, the MCTC declared that the conviction of respondent Nicdao was
warranted. It stressed that the mere act of issuing a worthless check was malum prohibitum; hence,
even if the checks were issued in the form of deposit or guarantee, once dishonored, the same gave rise
to the prosecution for and conviction of BP 22.[26] The decretal portion of the MCTC decision reads:
WHEREFORE, in view of the foregoing, the accused is found guilty of violating Batas Pambansa Blg. 22 in
11 counts, and is hereby ordered to pay the private complainant the amount of P20,950,000.00 plus 12%
interest per annum from date of filing of the complaint until the total amount had been paid. The prayer
for moral damages is denied for lack of evidence to prove the same. She is likewise ordered to suffer
imprisonment equivalent to 1 year for every check issued and which penalty shall be served successively.
SO ORDERED.[27]
Incidentally, on January 11, 1999, the MCTC likewise rendered its judgment in Criminal Cases Nos. 9458-
9471 and convicted respondent Nicdao of the fourteen (14) counts of violation of BP 22 filed against her
by Nuguid.
On appeal, the Regional Trial Court (RTC) of Dinalupihan, Bataan, Branch 5, in separate Decisions both
dated May 10, 1999, affirmed in toto the decisions of the MCTC convicting respondent Nicdao of eleven
(11) and fourteen (14) counts of violation of BP 22 in Criminal Cases Nos. 9433-9443 and 9458-9471,
respectively.
Respondent Nicdao forthwith filed with the CA separate petitions for review of the two decisions of the
RTC. The petition involving the eleven (11) checks purportedly issued to petitioner Ching was docketed
as CA-G.R. CR No. 23055 (assigned to the 13th Division). On the other hand, the petition involving the
fourteen (14) checks purportedly issued to Nuguid was docketed as CA-G.R. CR No. 23054 (originally
assigned to the 7th Division but transferred to the 6th Division). The Office of the Solicitor General (OSG)
filed its respective comments on the said petitions. Subsequently, the OSG filed in CA-G.R. CR No. 23055
a motion for its consolidation with CA-G.R. CR No. 23054. The OSG prayed that CA-G.R. CR No. 23055
pending before the 13th Division be transferred and consolidated with CA-G.R. CR No. 23054 in
accordance with the Revised Internal Rules of the Court of Appeals (RIRCA).
Acting on the motion for consolidation, the CA in CA-G.R. CR No. 23055 issued a Resolution dated
October 19, 1999 advising the OSG to file the motion in CA-G.R. CR No. 23054 as it bore the lowest
number. Respondent Nicdao opposed the consolidation of the two cases. She likewise filed her reply to
the comment of the OSG in CA-G.R. CR No. 23055.
On November 22, 1999, the CA (13th Division) rendered the assailed Decision in CA-G.R. CR No. 23055
acquitting respondent Nicdao of the eleven (11) counts of violation of BP 22 filed against her by
petitioner Ching. The decretal portion of the assailed CA Decision reads:
WHEREFORE, being meritorious, the petition for review is hereby GRANTED. Accordingly, the decision
dated May 10, 1999, of the Regional Trial Court, 3rd Judicial Region, Branch 5, Bataan, affirming the
decision dated December 8, 1998, of the First Municipal Circuit Trial Court of Dinalupihan-Hermosa,
Bataan, convicting petitioner Clarita S. Nicdao in Criminal Cases No. 9433 to 9443 of violation of B.P. Blg.
22 is REVERSED and SET ASIDE and another judgment rendered ACQUITTING her in all these cases, with
costs de oficio.
SO ORDERED.[28]
On even date, the CA issued an Entry of Judgment declaring that the above decision has become final
and executory and is recorded in the Book of Judgments.
In acquitting respondent Nicdao in CA-G.R. CR No. 23055, the CA made the following factual findings:
Petitioner [respondent herein] Clarita S. Nicdao, a middle-aged mother and housekeeper who only
finished high school, has a daughter, Janette Boyd, who is married to a wealthy expatriate.
Complainant [petitioner herein] Samson Ching is a Chinese national, who claimed he is a salesman of La
Suerte Cigar and Cigarette Factory.
Emma Nuguid, complainants live-in partner, is a CPA and formerly connected with Sycip, Gorres and
Velayo. Nuguid used to own a grocery store now known as the Vignette Superstore. She sold this grocery
store, which was about to be foreclosed, to petitioners daughter, Janette Boyd. Since then, petitioner
began managing said store. However, since petitioner could not always be at the Vignette Superstore to
keep shop, she entrusted to her salesladies, Melanie Tolentino and Jocelyn Nicdao, pre-signed checks,
which were left blank as to amount and the payee, to cover for any delivery of merchandise sold at the
store. The blank and personal checks were placed in a cash box at Vignette Superstore and were filled up
by said salesladies upon instruction of petitioner as to amount, payee and date.
Soon thereafter, Emma Nuguid befriended petitioner and offered to lend money to the latter which
could be used in running her newly acquired store. Nuguid represented to petitioner that as former
manager of the Vignette Superstore, she knew that petitioner would be in need of credit to meet the
daily expenses of running the business, particularly in the daily purchases of merchandise to be sold at
the store. After Emma Nuguid succeeded in befriending petitioner, Nuguid was able to gain access to the
Vignette Superstore where petitioners blank and pre-signed checks were kept.[29]
In addition, the CA also made the finding that respondent Nicdao borrowed money from Nuguid in the
total amount of P2,100,000.00 secured by twenty-four (24) checks drawn against respondent Nicdaos
account with HSLB. Upon Nuguids instruction, the checks given by respondent Nicdao as security for the
loans were left blank as to the payee and the date. The loans consisted of (a) P950,000.00 covered by ten
(10) checks subject of the criminal complaints filed by petitioner Ching (CA-G.R. CR No. 23055); and (b)
P1,150,000.00 covered by fourteen (14) checks subject of the criminal complaints filed by Nuguid (CA-
G.R. CR No. 23054). The loans totaled P2,100,000.00 and they were transacted between respondent
Nicdao and Nuguid only. Respondent Nicdao never dealt with petitioner Ching.
Against the foregoing factual findings, the CA declared that, based on the evidence, respondent Nicdao
had already fully paid the loans. In particular, the CA referred to the Planters Bank demand draft in the
amount of P1,200,000.00 which, by his own admission, petitioner Ching had received. The appellate
court debunked petitioner Chings allegation that the said demand draft was payment for a previous
transaction. According to the CA, petitioner Ching failed to adduce evidence to prove the existence of a
previous transaction between him and respondent Nicdao.
Apart from the demand draft, the CA also stated that respondent Nicdao made interest payments on a
daily basis to Nuguid as evidenced by the computations written at the back of the cigarette wrappers.
Based on these computations, as of July 21, 1997, respondent Nicdao had made a total of P5,780,000.00
payments to Nuguid for the interests alone. Adding up this amount and that of the Planters Bank
demand draft, the CA placed the payments made by respondent Nicdao to Nuguid as already amounting
to P6,980,000.00 for the principal loan amount of only P2,100,000.00.
The CA negated petitioner Chings contention that the payments as reflected at the back of the cigarette
wrappers could be applied only to the interests due. Since the transactions were not evidenced by any
document or writing, the CA ratiocinated that no interests could be collected because, under Article
1956 of the Civil Code, no interest shall be due unless it has been expressly stipulated in writing.
The CA gave credence to the testimony of respondent Nicdao that when she had fully paid her loans to
Nuguid, she tried to retrieve her checks. Nuguid, however, refused to return the checks to respondent
Nicdao. Instead, Nuguid and petitioner Ching filled up the said checks to make it appear that: (a)
petitioner Ching was the payee in five checks; (b) the six checks were payable to cash; (c) Nuguid was the
payee in fourteen (14) checks. Petitioner Ching and Nuguid then put the date October 6, 1997 on all
these checks and deposited them the following day. On October 8, 1997, through a joint demand letter,
they informed respondent Nicdao that her checks were dishonored by HSLB and gave her three days to
settle her indebtedness or else face prosecution for violation of BP 22.
With the finding that respondent Nicdao had fully paid her loan obligations to Nuguid, the CA declared
that she could no longer be held liable for violation of BP 22. It was explained that to be held liable under
BP 22, it must be established, inter alia, that the check was made or drawn and issued to apply on
account or for value. According to the CA, the word account refers to a pre-existing obligation, while for
value means an obligation incurred simultaneously with the issuance of the check. In the case of
respondent Nicdaos checks, the pre-existing obligations secured by them were already extinguished after
full payment had been made by respondent Nicdao to Nuguid. Obligations are extinguished by, among
others, payment.[30] The CA believed that when petitioner Ching and Nuguid refused to return
respondent Nicdaos checks despite her total payment of P6,980,000.00 for the loans secured by the
checks, petitioner Ching and Nuguid were using BP 22 to coerce respondent Nicdao to pay a debt which
she no longer owed them.
With respect to the P20,000,000.00 check, the CA was not convinced by petitioner Chings claim that he
delivered P1,000,000.00 every month to respondent Nicdao until the amount reached P20,000,000.00
and, when she refused to pay the same, he filled up the check, which she earlier delivered to him as
security for the loans, by writing thereon the said amount. In disbelieving petitioner Ching, the CA
pointed out that, contrary to his assertion, he was never employed by the La Suerte Cigar and Cigarette
Manufacturing per the letter of Susan Resurreccion, Vice-President and Legal Counsel of the said
company. Moreover, as admitted by petitioner Ching, he did not own the house where he and Nuguid
lived.
Moreover, the CA characterized as incredible and contrary to human experience that petitioner Ching
would, as he claimed, deliver a total sum of P20,000,000.00 to respondent Nicdao without any
documentary proof thereof, e.g., written acknowledgment that she received the same. On the other
hand, it found plausible respondent Nicdaos version of the story that the P20,000,000.00 check was the
same one that was missing way back in 1995. The CA opined that this missing check surfaced in the
hands of petitioner Ching who, in cahoots with Nuguid, wrote the amount P20,000,000.00 thereon and
deposited it in his account. To the mind of the CA, the inference that the check was stolen was anchored
on competent circumstantial evidence. Specifically, Nuguid, as previous manager/owner of the grocery
store, had access thereto. Likewise applicable, according to the CA, was the presumption that the person
in possession of the stolen article was presumed to be guilty of taking the stolen article.[31]
The CA emphasized that the P20,000,000.00 check was never delivered by respondent Nicdao to
petitioner Ching. As such, the said check without the details as to the date, amount and payee, was an
incomplete and undelivered instrument when it was stolen and ended up in petitioner Chings hands. On
this point, the CA applied Sections 15 and 16 of the Negotiable Instruments Law:
SEC. 15. Incomplete instrument not delivered. 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.
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. 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.
The CA held that the P20,000,000.00 check was filled up by petitioner Ching without respondent Nicdaos
authority. Further, it was incomplete and undelivered. Hence, petitioner Ching did not acquire any right
or interest therein and could not assert any cause of action founded on the
stolen checks.[32] Under these circumstances, the CA concluded that respondent could not be held
liable for violation of BP 22.
The Petitioners Case
As mentioned earlier, the instant petition pertains and is limited solely to the civil aspect of the case as
petitioner Ching argues that notwithstanding respondent Nicdaos acquittal of the eleven (11) counts of
violation of BP 22, she should be held liable to pay petitioner Ching the amounts of the dishonored
checks in the aggregate sum of P20,950,000.00.
He urges the Court to review the findings of facts made by the CA as they are allegedly based on a
misapprehension of facts and manifestly erroneous and contradicted by the evidence. Further, the CAs
factual findings are in conflict with those of the RTC and MCTC.
Petitioner Ching vigorously argues that notwithstanding respondent Nicdaos acquittal by the CA, the
Supreme Court has the jurisdiction and authority to resolve and rule on her civil liability. He invokes
Section 1, Rule 111 of the Revised Rules of Court which, prior to its amendment, provided, in part:
SEC. 1. Institution of criminal and civil actions. When a criminal action is instituted, the civil action for the
recovery of civil liability is impliedly instituted with the criminal action, unless the offended party waives
the civil action, reserves his right to institute it separately, or institutes the civil action prior to the
criminal action.
Such civil action includes the recovery of indemnity under the Revised Penal Code, and damages under
Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines arising from the same act or omission of
the accused. x x x
Supreme Court Circular No. 57-97[33] dated September 16, 1997 is also cited as it provides in part:
1. The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to necessarily include the
corresponding civil action, and no reservation to file such civil action separately shall be allowed or
recognized. x x x
Petitioner Ching theorizes that, under Section 1, Rule 111 of the Revised Rules of Court, the civil action
for the recovery of damages under Articles 32, 33, 34, and 2176 arising from the same act or omission of
the accused is impliedly instituted with the criminal action. Moreover, under the above-quoted Circular,
the criminal action for violation of BP 22 necessarily includes the corresponding civil action, which is the
recovery of the amount of the dishonored check representing the civil obligation of the drawer to the
payee.
In seeking to enforce the alleged civil liability of respondent Nicdao, petitioner Ching maintains that she
had loan obligations to him totaling P20,950,000.00. The existence of the same is allegedly established
by his testimony before the MCTC. Also, he asks the Court to take judicial notice that for a monetary loan
secured by a check, the check itself is the evidence of indebtedness.
He insists that, contrary to her protestation, respondent Nicdao also transacted with him, not only with
Nuguid. Petitioner Ching pointed out that during respondent Nicdaos testimony, she referred to her
creditors in plural form, e.g. [I] told them, most checks that I issued I will inform them if I have money.
Even respondent Nicdaos employees allegedly knew him; they testified that Nuguid instructed them at
times to leave as blank the payee on the checks as they would be paid to someone else, who turned out
to be petitioner Ching.
It was allegedly erroneous for the CA to hold that he had no capacity to lend P20,950,000.00 to
respondent Nicdao. Petitioner Ching clarified that what he meant when he testified before the MCTC
was that he was engaged in dealership with La Suerte Cigar and Cigarette Manufacturing, and not merely
its sales agent. He stresses that he owns a warehouse and is also in the business of lending money.
Further, the CAs reasoning that he could not possibly have lent P20,950,000.00 to respondent Nicdao
since petitioner Ching and Nuguid did not own the house where they live, is allegedly non sequitur.
Petitioner Ching maintains that, contrary to the CAs finding, the Planters Bank demand draft for
P1,200,000.00 was in payment for respondent Nicdaos previous loan transaction with him. Apart from
the P20,000,000.00 check, the other ten (10) checks (totaling P950,000.00) were allegedly issued by
respondent Nicdao to petitioner Ching as security for the loans that she obtained from him from 1995 to
1997. The existence of another loan obligation prior to the said period was allegedly established by the
testimony of respondent Nicdaos own witness, Jocelyn Nicdao, who testified that when she started
working in Vignette Superstore in 1994, she noticed that respondent Nicdao was already indebted to
Nuguid.
Petitioner Ching also takes exception to the CAs ruling that the payments made by respondent Nicdao as
reflected on the computations at the back of the cigarette wrappers were for both the principal loan and
interests. He insists that they were for the interests alone. Even respondent Nicdaos testimony allegedly
showed that they were daily interest payments. Petitioner Ching further avers that the interest payments
totaling P5,780,000.00 can only mean that, contrary to respondent Nicdaos claim, her loan obligations
amounted to much more than P2,100,000.00. Further, she is allegedly estopped from questioning the
interests because she willingly paid the same.
Petitioner Ching also harps on respondent Nicdaos silence when she received his and Nuguids demand
letter to her. Through the said letter, they notified her that the twenty-five (25) checks valued at
P22,100,000.00 were dishonored by the HSLB, and that she had three days to settle her ndebtedness
with them, otherwise, face prosecution. Respondent Nicdaos silence, i.e., her failure to deny or protest
the same by way of reply, vis--vis the demand letter, allegedly constitutes an admission of the statements
contained therein.
On the other hand, the MCTCs decision, as affirmed by the RTC, is allegedly based on the evidence on
record; it has been established that the checks were respondent Nicdaos personal checks, that the
signatures thereon were hers and that she had issued them to petitioner Ching. With respect to the
P20,000,000.00 check, petitioner Ching assails the CAs ruling that it was stolen and was never delivered
or issued by respondent Nicdao to him. The issue of the said check being stolen was allegedly not raised
during trial. Further, her failure to report the alleged theft to the bank to stop payment of the said lost or
missing check is allegedly contrary to human experience. Petitioner Ching describes respondent Nicdaos
defense of stolen or lost check as incredible and, therefore, false.
Aside from the foregoing substantive issues that he raised, petitioner Ching also faults the CA for not
acting and ordering the consolidation of CA-G.R. CR No. 23055 with CA-G.R. CR No. 23054. He informs
the Court that latter case is still pending with the CA.
In fine, it is petitioner Chings view that the CA gravely erred in disregarding the findings of the MCTC, as
affirmed by the RTC, and submits that there is more than sufficient preponderant evidence to hold
respondent Nicdao civilly liable to him in the amount of P20,950,000.00. He thus prays that the Court
direct respondent Nicdao to pay him the said amount plus 12% interest per annum computed from the
date of written demand until the total amount is fully paid.
The Respondents Counter-Arguments
Respondent Nicdao urges the Court to deny the petition. She posits preliminarily that it is barred under
Section 2(b), Rule 111 of the Revised Rules of Court which states:
SEC. 2. Institution of separate of civil action. - Except in the cases provided for in Section 3 hereof, after
the criminal action has been commenced, the civil action which has been reserved cannot be instituted
until final judgment in the criminal action.
xxxx
(b) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction
proceeds from a declaration in a final judgment that the fact from which the civil might arise did not
exist.
According to respondent Nicdao, the assailed CA decision has already made a finding to the effect that
the fact upon which her civil liability might arise did not exist. She refers to the ruling of the CA that the
P20,000,000.00 check was stolen; hence, petitioner Ching did not acquire any right or interest over the
said check and could not assert any cause of action founded on the said check. Consequently, the CA
held that respondent Nicdao had no obligation to make good the stolen check and cannot be held liable
for violation of BP 22. She also refers to the CAs pronouncement relative to the ten (10) other checks
that they were not issued to apply on account or for value, considering that the loan obligations secured
by these checks had already been extinguished by her full payment thereof.
To respondent Nicdaos mind, these pronouncements are equivalent to a finding that the facts upon
which her civil liability may arise do not exist. The instant petition, which seeks to enforce her civil
liability based on the eleven (11) checks, is thus allegedly already barred by the final and executory
decision acquitting her.
In any case, respondent Nicdao contends that the CA did not commit serious misapprehension of facts
when it found that the P20,000,000.00 check was a stolen check and that she never made any
transaction with petitioner Ching. Moreover, the other ten (10) checks were not issued to apply on
account or for value. These findings are allegedly supported by the evidence on record which consisted
of the respective testimonies of the defense witnesses to the effect that: respondent Nicdao had the
practice of leaving pre-signed checks placed inside an unsecured cash box in the Vignette Superstore; the
salesladies were given the authority to fill up the said checks as to the amount, payee and date; Nuguid
beguiled respondent Nicdao to obtain loans from her; as security for the loans, respondent Nicdao
issued checks to Nuguid; when the salesladies gave the checks to Nuguid, she instructed them to leave
blank the payee and date; Nuguid had access to the grocery store; in 1995, one of the salesladies
reported that a check was missing; in 1997, when she had fully paid her loans to Nuguid, respondent
Nicdao tried to retrieve her checks but Nuguid and petitioner Ching falsely told her that she still owed
them money; they then maliciously filled up the checks making it appear that petitioner Ching was the
payee in the five checks and the six others were payable to cash; and knowing fully well that these
checks were not funded because respondent Nicdao already fully paid her loans, petitioner Ching and
Nuguid deposited the checks and caused them to be dishonored by HSLB.
It is pointed out by respondent Nicdao that her testimony (that the P20,000,000.00 check was the same
one that she lost sometime in 1995) was corroborated by the respective testimonies of her employees.
Another indication that it was stolen was the fact that among all the checks which ended up in the hands
of petitioner Ching and Nuguid, only the P20,000,000.00 check was fully typewritten; the rest were
invariably handwritten as to the amounts, payee and date.
Respondent Nicdao defends the CAs conclusion that the P20,000,000.00 check was stolen on the ground
that an appeal in a criminal case throws open the whole case to the appellate courts scrutiny. In any
event, she maintains that she had been consistent in her theory of defense and merely relied on the
disputable presumption that the person in possession of a stolen article is presumed to be the author of
the theft.
Considering that it was stolen, respondent Nicdao argues, the P20,000,000.00 check was an incomplete
and undelivered instrument in the hands of petitioner Ching and he did not acquire any right or interest
therein. Further, he cannot assert any cause of action founded on the said stolen check. Accordingly,
petitioner Chings attempt to collect payment on the said check through the instant petition must fail.
Respondent Nicdao describes as downright incredible petitioner Chings testimony that she owed him a
total sum of P20,950,000.00 without any documentary proof of the loan transactions. She submits that it
is contrary to human experience for loan transactions involving such huge amounts of money to be
devoid of any documentary proof. In relation thereto, respondent Nicdao underscores that petitioner
Ching lied about being employed as a salesman of La Suerte Cigar and Cigarette Manufacturing. It is
underscored that he has not adequately shown that he possessed the financial capacity to lend such a
huge amount to respondent Nicdao as he so claimed.
Neither could she be held liable for the ten (10) other checks (in the total amount of P950,000,000.00)
because as respondent Nicdao asseverates, she merely issued them to Nuguid as security for her loans
obtained from the latter beginning October 1995 up to 1997. As evidenced by the Planters Bank demand
draft in the amount of P1,200,000.00, she already made payment in 1996. The said demand draft was
negotiated to petitioner Chings account and he admitted receipt thereof. Respondent Nicdao belies his
claim that the demand draft was payment for a prior existing obligation. She asserts that petitioner Ching
was unable to present evidence of such a previous transaction.
In addition to the Planters Bank demand draft, respondent Nicdao insists that petitioner Ching received,
through Nuguid, cash payments as evidenced by the computations written at the back of the cigarette
wrappers. Nuguid went to the Vignette Superstore everyday to collect these payments. The other
defense witnesses corroborated this fact. Petitioner Ching allegedly never disputed the accuracy of the
accounts appearing on these cigarette wrappers; nor did he dispute their authenticity and accuracy.
Based on the foregoing evidence, the CA allegedly correctly held that, computing the amount of the
Planters Bank demand draft (P1,200,000.00) and those reflected at the back of the cigarette wrappers
(P5,780,000.00), respondent Nicdao had already paid petitioner Ching and Nuguid a total sum of
P6,980,000.00 for her loan obligations totaling only P950,000.00, as secured by the ten (10) HSLB checks
excluding the stolen P20,000,000.00 check.
Respondent Nicdao rebuts petitioner Chings argument (that the daily payments were applied to the
interests), and claims that this is illegal. Petitioner Ching cannot insist that the daily payments she made
applied only to the interests on the loan obligations, considering that there is admittedly no document
evidencing these loans, hence, no written stipulation for the payment of interests thereon. On this point,
she invokes Article 1956 of the Civil Code, which proscribes the collection of interest payments unless
expressly stipulated in writing.
Respondent Nicdao emphasizes that the ten (10) other checks that she issued to Nuguid as security for
her loans had already been discharged upon her full payment thereof. It is her belief that these checks
can no longer be used to coerce her to pay a debt that she does not owe.
On the CAs failure to consolidate CA-G.R. CR No. 23055 and CA-G.R. CR No. 23054, respondent Nicdao
proffers the explanation that under the RIRCA, consolidation of the cases is not mandatory. In fine,
respondent
Nicdao urges the Court to deny the petition as it failed to discharge the burden of proving her civil
liability with the required preponderance of evidence. Moreover, the CAs acquittal of respondent Nicdao
is premised on the finding that, apart from the stolen check, the ten (10) other checks were not made to
apply to a valid, due and demandable obligation. This, in effect, is a categorical ruling that the fact from
which the civil liability of respondent Nicdao may arise does not exist.
The Courts Rulings
The petition is denied for lack of merit.

Notwithstanding respondent Nicdaos
acquittal, petitioner Ching is entitled
to appeal the civil aspect of the case
within the reglementary period
It is axiomatic that every person criminally liable for a felony is also civilly liable.[34] Under the pertinent
provision of the Revised Rules of Court, the civil action is generally impliedly instituted with the criminal
action. At the time of petitioner Chings filing of the Informations against respondent Nicdao, Section 1,
[35] Rule 111 of the Revised Rules of Court, quoted earlier, provided in part:
SEC. 1. Institution of criminal and civil actions. When a criminal action is instituted, the civil action for the
recovery of civil liability is impliedly instituted with the criminal action, unless the offended party waives
the civil action, reserves his right to institute it separately, or institutes the civil action prior to the
criminal action.
Such civil action includes the recovery of indemnity under the Revised Penal Code, and damages under
Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines arising from the same act or omission of
the accused.
xxxx
As a corollary to the above rule, an acquittal does not necessarily carry with it the extinguishment of the
civil liability of the accused. Section 2(b)[36] of the same Rule, also quoted earlier, provided in part:
(b) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction
proceeds from a declaration in a final judgment that the fact from which the civil might arise did not
exist.
It is also relevant to mention that judgments of acquittal are required to state whether the evidence of
the prosecution absolutely failed to prove the guilt of the accused or merely failed to prove his guilt
beyond reasonable doubt. In either case, the judgment shall determine if the act or omission from which
the civil liability might arise did not exist.[37]
In Sapiera v. Court of Appeals,[38] the Court enunciated that the civil liability is not extinguished by
acquittal: (a) where the acquittal is based on reasonable doubt; (b) where the court expressly declares
that the liability of the accused is not criminal but only civil in nature; and (c) where the civil liability is
not derived from or based on the criminal act of which the accused is acquitted. Thus, under Article 29
of the Civil Code
ART. 29. When the accused in a criminal prosecution is acquitted on the ground that his guilt has not
been proved beyond reasonable doubt, a civil action for damages for the same act or omission may be
instituted. Such action requires only a preponderance of evidence. Upon motion of the defendant, the
court may require the plaintiff to file a bond to answer for damages in case the complaint should be
found to be malicious.
If in a criminal case the judgment of acquittal is based upon reasonable doubt, the court shall so declare.
In the absence of any declaration to that effect, it may be inferred from the text of the decision whether
or not the acquittal is due to that ground.
The Court likewise expounded in Salazar v. People[39] the consequences of an acquittal on the civil
aspect in this wise:
The acquittal of the accused does not prevent a judgment against him on the civil aspect of the criminal
case where: (a) the acquittal is based on reasonable doubt as only preponderance of evidence is
required; (b) the court declared that the liability of the accused is only civil; (c) the civil liability of the
accused does not arise from or is not based upon the crime of which the accused is acquitted. Moreover,
the civil action based on the delict is extinguished if there is a finding in the final judgment in the
criminal action that the act or omission from which the civil liability may arise did not exist or where the
accused did not commit the act or omission imputed to him.
If the accused is acquitted on reasonable doubt but the court renders judgment on the civil aspect of the
criminal case, the prosecution cannot appeal from the judgment of acquittal as it would place the
accused in double jeopardy. However, the aggrieved party, the offended party or the accused or both
may appeal from the judgment on the civil aspect of the case within the period therefor.
From the foregoing, petitioner Ching correctly argued that he, as the offended party, may appeal the civil
aspect of the case notwithstanding respondent Nicdaos acquittal by the CA. The civil action was
impliedly instituted with the criminal action since he did not reserve his right to institute it separately
nor did he institute the civil action prior to the criminal action.
Following the long recognized rule that the appeal period accorded to the accused should also be
available to the offended party who seeks redress of the civil aspect of the decision, the period to appeal
granted to petitioner Ching is the same as that granted to the accused.[40] With petitioner Chings timely
filing of the instant petition for review of the civil aspect of the CAs decision, the Court thus has the
jurisdiction and authority to determine the civil liability of respondent Nicdao notwithstanding her
acquittal.
In order for the petition to prosper, however, it must establish that the judgment of the CA acquitting
respondent Nicdao falls under any of the three categories enumerated in Salazar and Sapiera, to wit:
(a) where the acquittal is based on reasonable doubt as only preponderance of evidence is required;
(b) where the court declared that the liability of the accused is only civil; and
(c) where the civil liability of the accused does not arise from or is not based upon the crime of which
the accused is acquitted.
Salazar also enunciated that the civil action based on the delict is extinguished if there is a finding in the
final judgment in the criminal action that the act or omission from which the civil liability may arise did
not exist or where the accused did not commit the act or omission imputed to him.
For reasons that will be discussed shortly, the Court holds that respondent Nicdao cannot be held civilly
liable to petitioner Ching.
The acquittal of respondent Nicdao
likewise effectively extinguished her
civil liability
A painstaking review of the case leads to the conclusion that respondent Nicdaos acquittal likewise
carried with it the extinction of the action to enforce her civil liability. There is simply no basis to hold
respondent Nicdao civilly liable to petitioner Ching.
First, the CAs acquittal of respondent Nicdao is not merely based on reasonable doubt. Rather, it is based
on the finding that she did not commit the act penalized under BP 22. In particular, the CA found that
the P20,000,000.00 check was a stolen check which was never issued nor delivered by respondent
Nicdao to petitioner Ching. As such, according to the CA, petitioner Ching did not acquire any right or
interest over Check No. 002524 and cannot assert any cause of action founded on said check,[41] and
that respondent Nicdao has no obligation to make good the stolen check and cannot, therefore, be held
liable for violation of B.P. Blg. 22.[42]
With respect to the ten (10) other checks, the CA established that the loans secured by these checks had
already been extinguished after full payment had been made by respondent Nicdao. In this connection,
the second element for the crime under BP 22, i.e., that the check is made or drawn and issued to apply
on account or for value, is not present.
Second, in acquitting respondent Nicdao, the CA did not adjudge her to be civilly liable to petitioner
Ching. In fact, the CA explicitly stated that she had already fully paid her obligations. The CA computed
the payments made by respondent Nicdao vis--vis her loan obligations in this manner:
Clearly, adding the payments recorded at the back of the cigarette cartons by Emma Nuguid in her own
handwriting totaling P5,780,000.00 and the P1,200,000.00 demand draft received by Emma Nuguid, it
would appear that petitioner [respondent herein] had already made payments in the total amount of
P6,980,000.00 for her loan obligation of only P2,100,000.00 (P950,000.00 in the case at bar and
P1,150,000.00 in CA-G.R. CR No. 23054).[43]
On the other hand, its finding relative to the P20,000,000.00 check that it was a stolen check necessarily
absolved respondent Nicdao of any civil liability thereon as well.
Third, while petitioner Ching attempts to show that respondent Nicdaos liability did not arise from or
was not based upon the criminal act of which she was acquitted (ex delicto) but from her loan
obligations to him (ex contractu), however, petitioner Ching miserably failed to prove by preponderant
evidence the existence of these unpaid loan obligations. Significantly, it can be inferred from the
following findings of the CA in its decision acquitting respondent Nicdao that the act or omission from
which her civil liability may arise did not exist. On the P20,000,000.00 check, the CA found as follows:
True, indeed, the missing pre-signed and undated check no. 002524 surfaced in the possession of
complainant Ching who, in cahoots with his paramour Emma Nuguid, filled up the blank check with his
name as payee and in the fantastic amount of P20,000,000.00, dated it October 6, 1997, and presented
it to the bank on October 7, 1997, along with the other checks, for payment. Therefore, the inference
that the check was stolen is anchored on competent circumstantial evidence. The fact already
established is that Emma Nuguid , previous owner of the store, had access to said store. Moreover, the
possession of a thing that was stolen , absent a credible reason, as in this case, gives rise to the
presumption that the person in possession of the stolen article is presumed to be guilty of taking the
stolen article (People v. Zafra, 237 SCRA 664).
As previously shown, at the time check no. 002524 was stolen, the said check was blank in its material
aspect (as to the name of payee, the amount of the check, and the date of the check), but was already
pre-signed by petitioner. In fact, complainant Ching himself admitted that check no. 002524 in his
possession was a blank check (TSN, Jan. 7, 1998, pp. 24-27, Annex J, Petition).
Moreover, since it has been established that check no. 002524 had been missing since 1995 (TSN, Sept.
9, 1998, pp. 14-15, Annex DD, Petition; TSN, Sept. 10, 1998, pp. 43-46, Annex EE, Petition), it is
abundantly clear that said check was never delivered to complainant Ching. Check no. 002524 was an
incomplete and undelivered instrument when it was stolen and ended up in the hands of complainant
Ching. Sections 15 and 16 of the Negotiable Instruments Law provide:
xxxx
In the case of check no. 002524, it is admitted by complainant Ching that said check in his possession
was a blank check and was subsequently completed by him alone without authority from petitioner.
Inasmuch as check no. 002524 was incomplete and undelivered in the hands of complainant Ching, he
did not acquire any right or interest therein and cannot, therefore, assert any cause of action founded on
said stolen check (Development Bank of the Philippines v. Sima We, 219 SCRA 736, 740).
It goes without saying that since complainant Ching did not acquire any right or interest over check no.
002524 and cannot assert any cause of action founded on said check, petitioner has no obligation to
make good the stolen check and cannot, therefore, be held liable for violation of B.P. Blg. 22.[44]
Anent the other ten (10) checks, the CA made the following findings:
Evidence sufficiently shows that the loans secured by the ten (10) checks involved in the cases subject of
this petition had already been paid. It is not controverted that petitioner gave Emma Nuguid a demand
draft valued at P1,200,000 to pay for the loans guaranteed by said checks and other checks issued to her.
Samson Ching admitted having received the demand draft which he deposited in his bank account.
However, complainant Samson Ching claimed that the said demand draft represents payment for a
previous obligation incurred by petitioner. However, complainant Ching failed to adduce any evidence to
prove the existence of the alleged obligation of the petitioner prior to those secured by the subject
checks.
Apart from the payment to Emma Nuguid through said demand draft, it is also not disputed that
petitioner made cash payments to Emma Nuguid who collected the payments almost daily at the
Vignette Superstore. As of July 21, 1997, Emma Nuguid collected cash payments amounting to
approximately P5,780,000.00. All of these cash payments were recorded at the back of cigarette cartons
by Emma Nuguid in her own handwriting, the authenticity and accuracy of which were never denied by
either complainant Ching or Emma Nuguid.
Clearly, adding the payments recorded at the back of the cigarette cartons by Emma Nuguid in her own
handwriting totaling P5,780,000.00 and the P1,200,000.00 demand draft received by Emma Nuguid, it
would appear that petitioner had already made payments in the total amount of P6,980,000.00 for her
loan in the total amount of P6,980,000.00 for her loan obligation of only P2,100,000.00 (P950,000.00 in
the case at bar and P1,150,000.00 in CA-G.R. CR No. 23054).[45]
Generally checks may constitute evidence of indebtedness.[46] However, in view of the CAs findings
relating to the eleven (11) checks - that the P20,000,000.00 was a stolen check and the obligations
secured by the other ten (10) checks had already been fully paid by respondent Nicdao they can no
longer be given credence to establish respondent Nicdaos civil liability to petitioner Ching. Such civil
liability, therefore, must be established by preponderant evidence other than the discredited checks.
After a careful examination of the records of the case,[47] the Court holds that the existence of
respondent Nicdaos civil liability to petitioner Ching in the amount of P20,950,000.00 representing her
unpaid obligations to the latter has not been sufficiently established by preponderant evidence.
Petitioner Ching mainly relies on his testimony before the MCTC to establish the existence of these
unpaid obligations. In gist, he testified that from October 1995 up to 1997, respondent Nicdao obtained
loans from him in the total amount of P20,950,000.00. As security for her obligations, she issued eleven
(11) checks which were invariably blank as to the date, amounts and payee. When respondent Nicdao
allegedly refused to pay her obligations despite his due demand, petitioner filled up the checks in his
possession with the corresponding amounts and date and deposited them in his account. They were
subsequently dishonored by the HSLB for being DAIF and petitioner Ching accordingly filed the criminal
complaints against respondent Nicdao for violation of BP 22.
It is a basic rule in evidence that the burden of proof lies on the party who makes the allegations Et
incumbit probatio, qui dicit, non qui negat; cum per rerum naturam factum negantis probatio nulla sit
(The proof lies upon him who affirms, not upon him who denies; since, by the nature of things, he who
denies a fact cannot produce any proof).[48] In civil cases, the party having the burden of proof must
establish his case by a preponderance of evidence. Preponderance of evidence is the weight, credit, and
value of the aggregate evidence on either side and is usually considered to be synonymous with the term
greater weight of evidence or greater weight of the credible evidence. Preponderance of evidence is a
phrase which, in the last analysis, means probability of the truth. It is evidence which is more convincing
to the court as worthy of belief than that which is offered in opposition thereto.[49] Section 1, Rule 133
of the Revised Rules of Court offers the guidelines in determining preponderance of evidence:
SEC. 1. Preponderance of evidence, how determined. In civil cases, the party having the burden of proof
must establish his case by a preponderance of evidence. In determining where the preponderance or
superior weight of evidence on the issues involved lies, the court may consider all the facts and
circumstances of the case, the witnesses manner of testifying, their intelligence, their means and
opportunity of knowing the facts to which they are testifying, the nature of the facts to which they
testify, the probability or improbability of their testimony, their interest or want of interest, and also
their personal credibility so far as the same may legitimately appear upon the trial. The court may also
consider the number of witnesses, though the preponderance is not necessarily with the greater
number.
Unfortunately, petitioner Chings testimony alone does not constitute preponderant evidence to establish
respondent Nicdaos civil liability to him amounting to P20,950,000.00. Apart from the discredited
checks, he failed to adduce any other documentary evidence to prove that respondent Nicdao still has
unpaid obligations to him in the said amount. Bare allegations, unsubstantiated by evidence, are not
equivalent to proof under our Rules.[50]
In contrast, respondent Nicdaos defense consisted in, among others, her allegation that she had already
paid her obligations to petitioner Ching through Nuguid. In support thereof, she presented the Planters
Bank demand draft for P1,200,000.00. The said demand draft was negotiated to petitioner Chings
account and he admitted receipt of the value thereof. Petitioner Ching tried to controvert this by
claiming that it was payment for a previous transaction between him and respondent Nicdao. However,
other than his self-serving claim, petitioner Ching did not proffer any documentary evidence to prove the
existence of the said previous transaction. Considering that the Planters Bank demand draft was dated
August 13, 1996, it is logical to conclude that, absent any evidence to the contrary, it formed part of
respondent Nicdaos payment to petitioner Ching on account of the loan obligations that she obtained
from him since October 1995.
Additionally, respondent Nicdao submitted as evidence the cigarette wrappers at the back of which were
written the computations of the daily payments that she had made to Nuguid. The fact of the daily
payments was corroborated by the other witnesses for the defense, namely, Jocelyn Nicdao and
Tolentino. As found by the CA, based on these computations, respondent Nicdao had made a total
payment of P5,780,000.00 to Nuguid as of July 21, 1997.[51] Again, the payments made, as reflected at
the back of these cigarette wrappers, were not disputed by petitioner Ching. Hence, these payments as
well as the amount of the Planters Bank demand draft establish that respondent Nicdao already paid the
total amount of P6,980,000.00 to Nuguid and petitioner Ching.
The Court agrees with the CA that the daily payments made by respondent Nicdao amounting to
P5,780,000.00 cannot be considered as interest payments only. Even respondent Nicdao testified that
the daily payments that she made to Nuguid were for the interests due. However, as correctly ruled by
the CA, no interests could be properly collected in the loan transactions between petitioner Ching and
respondent Nicdao because there was no stipulation therefor in writing. To reiterate, under Article 1956
of the Civil Code, no interest shall be due unless it has been expressly stipulated in writing.
Neither could respondent Nicdao be considered to be estopped from denying the validity of these
interests. Estoppel cannot give validity to an act that is prohibited by law or one that is against public
policy.[52] Clearly, the collection of interests without any stipulation therefor in writing is prohibited by
law. Consequently, the daily payments made by respondent Nicdao amounting to P5,780,000.00 were
properly considered by the CA as applying to the principal amount of her loan obligations.
With respect to the P20,000,000.00 check, the defense of respondent Nicdao that it was stolen and that
she never issued or delivered the same to petitioner Ching was corroborated by the other defense
witnesses, namely, Tolentino and Jocelyn Nicdao.
All told, as between petitioner Ching and respondent Nicdao, the requisite quantum of evidence -
preponderance of evidence - indubitably lies with respondent Nicdao. As earlier intimated, she cannot
be held civilly liable to petitioner Ching for her acquittal; under the circumstances which have just been
discussed lengthily, such acquittal carried with it the extinction of her civil liability as well.
The CA committed no reversible error
in not consolidating CA-G.R. CR No.
23055 and CA-G.R. CR No. 23054
During the pendency of CA-G.R. CR No. 23055 and CA-G.R. CR No. 23054 in the CA, the pertinent
provision of the RIRCA on consolidation of cases provided:
SEC. 7. Consolidation of Cases. Whenever two or more allied cases are assigned to different Justices, they
may be consolidated for study and report to a single Justice.
(a) At the instance of any party or Justice to whom the case is assigned for study and report, and with
the conformity of all the Justices concerned, the consolidation may be allowed when the cases to be
consolidated involve the same parties and/or related questions of fact and/or law.[53]
The use of the word may denotes the permissive, not mandatory, nature of the above provision, Thus,
no grave error could be imputed to the CA when it proceeded to render its decision in CA-G.R. CR No.
23055, without consolidating it with CA-G.R. CR No. 23054.
WHEREFORE, premises considered, the Petition is DENIED for lack of merit.
SO ORDERED.

Eumelia R. M-Wps Office

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1. EUMELIA R.

PEOPLE OF THE PHILIPPINES and FELICISIMO S. TARCELO,

G.R. NO. 191404

CARPIO, J., Chairperson,

September 15, 1998

January 15, 1999

September 15, 1998

January 15, 1999

September 20, 1998

January 20, 1999

January 20, 1999

September 30, 1998

January 30, 1999

September 30, 1998

January 30, 1999

November 17, 1998

March 17, 1999

November 17, 1998

March 17, 1999

November 19, 1998

January 19, 1999

November 19, 1998

March 19, 1999

November 19, 1998

March 19, 1999

November 20, 1998

January 20, 1999

November 20, 1998

February 20, 1999

November 20, 1998

March 20, 1999

March 20, 1999

November 30, 1998

January 30, 1999

November 30, 1998

February 28, 1999

November 30, 1998

March 30, 1999

November 30, 1998

March 30, 1999

1. Criminal Case No. 43637 - P200,000.00

2. Criminal Case No. 43640 - P100,000.00

3. Criminal Case No. 43648 - P100,000.00

4. Criminal Case No. 43700 - P125,000.00

5. Criminal Case No. 43702 - P200,000.00

6. Criminal Case No. 43704 - P100,000.00

7. Criminal Case No. 43706 - P100,000.00

The Court denies the petition.

To reiterate the elements of a violation of BP 22 as contained in the above-quoted provision, a violation

2. [G.R. No. 161865. March 10, 2005]

The factual antecedents are as follows:

WHEREFORE, in view of the foregoing, judgment is hereby rendered as follows:

3. Denying the claim for attorneys fees for lack of merit.[15]

The Court of Appeals disposed of Land Banks appeal in this wise:

The petition is partly impressed with merit.

Our ruling in Bank of America, NT & SA v. Court of Appeals,[21] is pertinent:

In particular, Article 15 of the UCP states:

In discussing this issue, all the trial court said was:

PENTACAPITAL INVESTMENT CORPORATION,

PENTACAPITAL INVESTMENT CORPORATION,

G.R. No. 171736

WHETHER RESPONDENT MAHINAYS SUPPLEMENTAL COMPULSORY COUNTERCLAIM IS ACTUALLY A