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  NEGOTIABLE INSTRUMENTS LAW CASE DIGESTS - 2C  _____________________________________ I.ISSUANCE 1.TINGTINGPUAv.SPOUSESBENITOLO BUNTIONGandCAROLINESIOKCHING TENG October 23, 2013 FACTS:   Petitionerallegedthatshelentmoney totherespondentsonthegroundthather  sister,LilianBalboa,vouchedtherespondents’ abilitytopay.Thespousesissued17 post-datedchecksamountingto1,975,000 pesos,whichwerethereafterdishonoredupon presentmenttothedraweebank. Consequently,petitionerdemandedpayment. Thespousespleadedformoretimebecauseof  theirfinancialdifficulties.Petitionerobligedto theirrequest.Thedebtballoonedto8,500,000 pesos.Respondentsthendelivereda check(CheckA)topetitioner,bearingthesame amount.Inturn,respondentsdemandedthe returnofthe17previouslydishonoredchecks. Petitionerrefused,statingthatshewilldoso upontheencashmentofthelastcheck(Check  A)issued.However,CheckAwasalso dishonored.Hence,petitionerfiledacomplaint for collection of money. Fortheirdefense,respondentsdenied obtainingaloan.TheyallegedthatCaroline andpetitioner’ssister,Lilian,forgeda partnershipthatoperatedamahjongbusiness. TheiragreementwasforLiliantoserveasthe capitalistwhilerespondentCarolinewastoact asthecashier.Carolinealsoagreedtouseher  personalcheckstopayfortheoperational expenses.Asthepartnersanticipatedthat Carolinewillnotalwaysbeintowntoprepare thesechecks,sheleftwithLilianfive(5) pre-signedandconsecutivelynumbered checksontheconditionthatthesecheckswill onlybeusedtocoverthecostsofthebusiness operationsandinnocircumstancewillthe amountofthechecksexceedPhP5,000. However,duetoadisagreement,their  partnershipdissolved.Carolineallegedthat sheforgotaboutthepre-signedchecks. CarolinedeniedhavingcompletedCheckA. Shecontendedthatthepetitionerandher  sistercompletedthecheckafteritsdelivery.As forthe17checksearlierissued,sheinsisted thattheywereissuedforthebenefitofanother  person. ISSUE:   Whetherornotthereisaloan transaction. RULING:YES.   Thechecksissuedprovea   loantransaction.Sec.24oftheNILstatesthat everynegotiableinstrumentisdeemedprima facietohavebeenissuedforavaluable consideration;andeverypersonwhose signatureappearsthereontohavebecomea partyforvalue.Consequently,the17original checks,completedanddeliveredtopetitioner, aresufficientbythemselvestoprovethe existenceoftheloanobligationofthe respondentstopetitioner.Notethatrespondent Carolinehadnotdeniedthegenuinenessof  thesechecks.Therespondentsdidnotdeny thegenuinenessofthesechecks.Instead, respondentsarguethattheyweregivento variousotherpersonsandpetitionerhad simplycollectedallthese17checksfromthem inordertodamagerespondents’reputation. Thisaccountisnotonlyincredible;itruns countertohumanexperience,asenshrinedin Sec.16oftheNILwhichprovidesthatwhenan instrumentisnolongerinthepossessionofthe personwhosigneditanditiscompleteinits terms avalidandintentionaldeliverybyhimis presumed until the contrary is proved”.  2.QUIRINOGONZALESLOGGING CONCESSIONAIREv.CAandREPUBLIC PLANTERS BANK April 30, 2003 FACTS: PetitionerQuirinoGonzalesLogging Concessionaire(QGLC)appliedforcredit accommodationwhichtheBankapproved. Theirobligationwassecuredbyarealestate mortgageofparcelsofland.QGLCexecuteda promissorynote,withafacevalueof55,000 pesos,inwhichtheydefaulted.TheBank foreclosedthepropertyandwassubsequently ownedbytheBank.TheBankthenfileda complaintforasumofmoneyinregardstothe unpaid notes. Thenoteswerepayable30daysafter  dateandprovidedforthesolidaryliabilityin theirnon-paymentatmaturity.Petitionersdeny havingreceivedthevalueofthepromissory notesandtheyfurtherallegedthatpetitioners QuirinoandEufemiaGonzalessignedthePN’s in blank. ISSUE:   Whetherornotthepetitionersare liable. RULING:  Yes.Thepromissorynoteswere negotiableastheymettherequirementsof  Sec.1oftheNIL.Thenotesareprimafacie deemedtohavebeenissuedforconsideration. Inanycase,itisnodefensethatthe promissorynotesweresignedinblankas Section14   oftheNegotiableInstrumentsLaw   concedesthe    primafacie authorityofthe personinpossessionofnegotiable instruments,suchasthenotesherein,tofillin the blanks. 3.ALVINPATRIMONIOv.NAPOLEON GUTIERREZ June 4, 2014 FACTS:   Thepetitionerandtherespondent Gutierrezenteredintoabusinessventure underthenameofSlamDunkCorporation,a productionoutfitthatproducedmini-concerts and shows related to basketball. Patrimoniopre-signedseveralchecksto answerfortheexpensesofSlamDunk.  Althoughsigned,thesecheckshadnopayee’s name,dateoramount.Theblankcheckswere entrustedtoGutierrezwiththespecific instructionnottofillthemoutwithoutprevious notification to and approval by the petitioner. Withoutthepetitioner’sknowledgeand consent,GutierrezwenttoMarasiganto securealoanintheamountofP200,000.00on theexcusethatthepetitionerneededthe money for the construction of his house. MarasiganaccededtoGutierrez’ requestandgavehimP200,000.00.Gutierrez simultaneouslydeliveredtoMarasiganoneof  theblankchecksthepetitionerpre-signedwith PilipinasBankwiththeblankportionsfilledout withthewords“Cash”“TwoHundred ThousandPesosOnly”,andtheamountof  “P200,000.00.”Marasigandepositedthecheck butitwasdishonoredforthereason “ACCOUNTCLOSED.”Itwaslaterrevealed thatpetitioner’saccountwiththebankhad been closed. Marasigansoughtrecoveryfrom Gutierrez,tonoavail.Hethereaftersent severaldemandletterstothepetitionerasking forthepaymentofP200,000.00,buthis demandslikewisewentunheeded. Consequently,hefiledacriminalcasefor  violation of B.P. 22 against the petitioner. ISSUE: Whether or not Patrimonio is liable.  RULING:NO.   Section14oftheNegotiable   InstrumentsLawprovidesforwhenblanksmay befilled.Thisprovisionappliestoan incompletebutdeliveredinstrument.Underthis rule,ifthemakerordrawerdeliversa pre-signedblankpapertoanotherpersonfor  thepurposeofconvertingitintoanegotiable instrument,thatpersonisdeemedtohave primafacieauthoritytofillitup.Itmerely requiresthattheinstrumentbeinthe possessionofapersonotherthanthedrawer  ormakerandfromsuchpossession,together  withthefactthattheinstrumentiswantingina materialparticular,thelawpresumesagencyto fill up the blanks. Inorderhoweverthatonewhoisnota holderinduecoursecanenforcethe instrumentagainstapartypriortothe instrument’scompletion,tworequisitesmust exist:(1)thattheblankmustbefilledstrictlyin accordancewiththeauthoritygiven;and(2)it mustbefilledupwithinareasonabletime.Ifit wasproventhattheinstrumenthadnotbeen filledupstrictlyinaccordancewiththeauthority givenandwithinareasonabletime,themaker  cansetthisupasapersonaldefenseand avoid liability. Marasiganisnotaholderinduecourse. Hehadnoticethattherewassomethingwrong abouthisassignor’sacquisitionoftitle, althoughhedidnothavenoticeofthe particularwrongthatwascommitted.Inthe presentcase,Marasigan’sknowledgethatthe petitionerisnotapartyoraprivytothe contractofloan,andcorrespondinglyhadno obligationorliabilitytohim,rendershim dishonest,hence,inbadfaith.Hence, Patrimoniocannotbeheldliablebecausesec. 14 of the NIL is merely a personal defense. However,Marasiganmayclaim paymentfromGutierrezbecausethelatter  exceeded his authority. 4.)SAMSONCHING,   Petitioner,vs.   CLARITA NICDAO FACTS:  PetitionerChing,aChinesenational,instituted criminalcomplaintsforeleven(11)countsof  violation of BP 22 against respondent Nicdao Chingallegesthatthesaidaccuseddidthen andtherewillfullyandunlawfullymakeordraw andissueHermosaSavings&LoanBank,Inc. CheckNo.[002524]datedOctober06,1997in theamountof[ ₱ 20,000,000.00]inpaymentof  herobligationwithcomplainantSamsonT.Y. Ching, Moreover,Chingallegesthatthesaidaccused knowingfullywellthatatthetimesheissued thesaidcheckshedidnothavesufficientfunds inorcreditwiththedraweebankforthe paymentinfullofthesaidcheckupon presentment,whichcheckwhenpresentedfor  paymentwithinninety(90)daysfromthedate thereof,wasdishonoredbythedraweebank forthereasonthatitwasdrawnagainst insufficientfundsandnotwithstandingreceipt ofnoticeofsuchdishonorthesaidaccused failedandrefusedandstillfailsandrefusesto paythevalueofthesaidcheckintheamount of [P20,000,000.00] PetitionerChingaverredthatthecheckswere issuedtohimbyrespondentNicdaoassecurity fortheloansthatsheobtainedfromhim.Their  transactionbegansometimeinOctober1995 whenrespondentNicdao,proprietor/manager  ofVignetteSuperstore,togetherwithher  husband,approachedhimtoborrowmoneyin   orderforthemtosettletheirfinancial obligations.Theyagreedthatrespondent Nicdaowouldleavethechecksundatedand thatshewouldpaytheloanswithinoneyear. However,whenpetitionerChingwenttosee herafterthelapseofoneyeartoaskfor  payment,respondentNicdaoallegedlysaid that she had no cash. PetitionerChingreiteratedthatafterthelapse ofone(1)yearfromthetimerespondent Nicdaoissuedthecheckstohim,hewentto herseveraltimestocollectpayment.Inall theseinstances,shesaidthatshehadno cash.Finally,inSeptember1997,respondent Nicdaoallegedlywenttohishouseandtold himthatJanettewasonlywillingtopayhim between  ₱ 3,000,000.00and  ₱ 5,000,000.00 because,asfarasherdaughterwas concerned,thatwastheonlyamountborrowed from petitioner Ching. RespondentNicdaostatedthatsheonlydealt withNuguid.Shevehementlydeniedthe allegationthatshehadborrowedmoneyfrom bothpetitionerChingandNuguidinthetotal amountof   ₱ 22,950,000.00.RespondentNicdao admitted,however,thatshehadobtaineda loanfromNuguidbutonlyfor   ₱ 2,100,000.00 andthesamewasalreadyfullypaid.Asproof  ofsuchpayment,shepresentedaPlanters Bankdemanddraft.Theannotationattheback ofthesaiddemanddraftshowedthatitwas endorsedandnegotiatedtotheaccountof  petitioner Ching. Inaddition,respondentNicdaoalsopresented andidentifiedseveralcigarettewrappers   18 at thebackofwhichappearedcomputations.She explainedthatNuguidwenttothegrocerystore everydaytocollectinterestpayments.The principalloanwas  ₱ 2,100,000.00with12% interestperday.Nuguidallegedlywrotethe paymentsforthedailyinterestsatthebackof  thecigarettewrappersthatshegaveto respondent Nicdao. Withrespecttothe  ₱ 20,000,000.00check, respondentNicdaoadmittedthatthesignature thereonwashersbutdeniedthatsheissued thesametopetitionerChing.Anenttheother  ten(10)checks,shelikewiseadmittedthatthe signaturesthereonwereherswhilethe amountsandpayeethereonwerewrittenby eitherJocelynNicdaoorMelanieTolentino, whowereemployeesofVignetteSuperstore and authorized by her to do so. RespondentNicdaoclarifiedthat,exceptfor  the  ₱ 20,000,000.00check,theotherten(10) checkswerehandedtoNuguidondifferent occasions.Nuguidcametothegrocerystore everydaytocollecttheinterestpayments. RespondentNicdaosaidthatshepurposelyleft thechecksundatedbecauseshewouldstill havetonotifyNuguidifshealreadyhadthe money to fund the checks. RespondentNicdaoallegesthatwhatactually transpiredwasthatwhenshealreadyhadthe moneytopaythem,shewenttothemto retrieveherchecks.However,petitionerChing andNuguidrefusedtoreturnthechecks claimingthatshestillowedthemmoney.She demandedthattheyshowherthechecksin orderthatshewouldknowtheexactamountof  herdebt,buttheyrefused.Itwasatthispoint thatshegotangryanddaredthemtogoto court.  Afterthesaidincident,respondentNicdaowas surprisedtobenotifiedbyHSLBthathercheck intheamountof   ₱ 20,000,000.00wasjust presentedtothebankforpayment.She claimedthatitwasonlythenthatshe rememberedthatsometimein1995,shewas informedbyheremployeethatoneofher  

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