QUIRINO GONZALES LOGGING CONCESSIONAIRE v. v. THE COURT OF APPEALS. G.R. No. 126568. April 30, 2003. FACTS: Petitioner Quirino Gonzales Logging Concessionaire (QGLC) applied for credit accommodation which the Bank approved. Their obligation was secured by a real estate mortgage of parcels of land. QGLC executed a promissory note in which they defaulted. The Bank foreclosed the property and was subsequently owned by the Bank. The Bank then filed a complaint for a sum of money in regards to the unpaid notes. The notes were payable 30 days after date and provided for the solidary liability in their nonpayment at maturity. Petitioners deny having received the value of the promissory notes. The RTC sided with petitioner but the CA reversed the decision. ISSUE: Whether the promissory notes were valid. RULING: Petitioner claims that they signed the notes in blank but did not receive the value of the notes. They also admit the th e genuineness and due execution of the notes. The promissory notes were negotiable as they met the requirements of Sec. 1 of the NIL. The notes are prima facie deemed to have issued for consideration. In any case, it is no defense that the promissory notes were signed in blank as Section 14 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. The SC remanded the issue concerning the notes to the court of origin.
Quirino Gonzales, et, al. vs. Court of Appeals, et, al. - GR No. 126568 Case Digest Facts: Petitioners applied for credit accommodations with respondent bank, which the bank approved granting a credit line of Php900,000.00. Petitioner’s obligations were secured by a real estate e state mortgage on four parcels of land. Also, A lso, petitioners had made certain advances in separate transactions from the bank in connection with QGLC’s exportation of logs logs and executed a promissory note in 1964. Due to petitioner’s long default in the payment of their obligations under the credit line, the bank foreclosed the mortgage and sold the properties covered to the highest bidder in the auction. Respondent bank, alleging non-payment non-payment of the balance of QGLC’s obligation after the proceedings of the foreclosure sale were applied and non-payment of promissory notes despite repeated demands, filed a complaint for sum of money against petitioners. Petitioners, on the other hand, asserted that the complaint states no cause of action and assuming that it does, the same is barred by prescription or void for want of consideration. Issue:
Whether
or
not
the
cause
of
action
is
barred
by
prescription.
Held: An action upon a written contract, an obligation created by law, and a judgment must be brought within 10 years from the time the right of action accrues. The finding of the trial court that more than ten years had elapsed since the right to bring an action on the Bank’s first to sixth causes had arisen 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 the running of the prescriptive period. The Bank’s contention has no merit. 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. The law specifically requires a written extrajudicial demand by the creditor 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 that the notices interrupted the running of the prescriptive period, the argument would still not lie for the following reasons: 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 to enforce the mortgage contract. A mortgage action prescribes after ten years from the time the right of action accrued. 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 proceedings. 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. as it filed the complaint only on January 27, 1977, more than ten years had already elapsed, hence, the action had then prescribed.
Borromeo vs. Sun PURISIMA,
G.R. No. 75908
October
22,
1999 J
Facts: Amancio Sun brought before the then Court of the First Instance of Rizal an action against Lourdes O. Borromeo (in her capacity as corporate secretary), Federico O. Borromeo and Federico O. Borromeo (F.O.B.), Inc., to compel the transfer to his name in the books of F.O.B., Inc., shares of stock registered in the name of Federico O. Borromeo, as evidenced by a Deed of Assignment. Private respondent averred that all the shares of stock of F.O.B. Inc. registered in the name of Federico O. Borromeo belong to him, as the said shares were placed in the name of Federico O. Borromeo 'only to give the latter personality and importance in the business world.' On the other hand, petitioner Federico O. Borromeo disclaimed any participation in the execution of the Deed of Assignment, theorizing that his supposed signature thereon was forged. LL The lower court of origin came out with a decision declaring the questioned signature on subject Deed of Assignment as the genuine signature of Federico O. Borromeo. After
considering the testimonies of the two expert witnesses for the parties and after a careful and judicious study and analysis of the questioned signature as compared to the standard signatures. On appeal by petitioners, the Court of Appeals adjudged as forgery the controverted signature of Federico O. Borromeo. Amancio Sun interposed a motion for reconsideration of the said decision, contending that Segundo Tabayoyong, petitioners' expert witness, is not a credible witness. Acting on the aforesaid motion for reconsideration, the Court of Appeals reconsidered its decision. Issue: WON the signature of Frederico O. Borromeo in the Deed of Assignments is a genuine signature. Pertinent records reveal that the subject Deed of Assignment is embodied in blank Held: form for the assignment of shares with authority to transfer such shares in the books of the corporation. It was clearly intended to be signed in blank to facilitate the assignment of shares from one person to another at any future time. This is similar to Section 14 of the Negotiable Instruments Law where the blanks may be filled up by the holder, the signing in blank being with the assumed authority to do so. Indeed, as the shares were registered in the name of Federico O. Borromeo just to give him personality and standing in the business community, private respondent had to have a counter evidence of ownership of the shares involved. Thus, the execution of the deed of assignment in blank, to be filled up whenever needed. The same explains the discrepancy between the date of the deed of assignment and the date when the signature was affixed thereto. While it is true that the 1974 standard signature of Federico O. Borromeo is to the naked eye dissimilar to his questioned signature circa 1954-1957, which could have been caused by sheer lapse of time, Col. Jose Fernandez, respondent's expert witness, found the said signatures similar to each other after subjecting the same to stereomicroscopic examination and analysis because the intrinsic and natural characteristic of Federico O. Borromeo's handwriting were present in all the exemplar signatures used by both Segundo Tabayoyong and Col. Jose Fernandez.
Bank of America vs. Philippine Racing Club G.R. 150228 July 30, 2009 Ponente: Leonardo-De Castro, J: Facts: 1. Plaintiff PRCI is a domestic corporation which maintains a current account with petitioner Bank of America. Its authorized signatories are the company President and Vice-President. By virtue of a travel abroad for these officers, they pre-signed checks to accommodate any expenses that may come up while they were abroad for a business trip. The said pre-signed checks were left for safekeeping by PRCs accounting officer. Unfortunately, the two (2) of said checks came into the hands of one of its employees who managed to encash it with petitioner bank. The said check was filled in with the use of a check-writer, wherein in the blank for the 'Payee', the amount in words was written, with the word 'Cash' written above it.
2. Clearly there was an irregularity with the filling up of the blank checks as both showed similar infirmities and irregularities and yet, the petitioner bank did not try to verify with the corporation and proceeded to encash the checks. 3. PRC filed an action for damages against the bank. The lower court awarded actual and exemplary damages. On appeal, the CA affirmed the lower court's decision and held that the bank was negligent. Hence this appeal. Petitioner contends that it was merely doing its obligation under the law and contract in encashing the checks, since the signatures in the checks are genuine. Issue: Whether or not the petitioner can be held liable for negligence and thus should pay damages to PRC Both parties are held to be at fault but the bank has the last clear chance to prevent the fraudulent encashment hence it is the one foremost liable . 1. There was no dispute that the signatures in the checks are genuine but the presence of irregularities on the face of the check should have alerted the bank to exercise caution before encashing them. It is well-settled that banks are in the business impressed with public interest that they are duty bound to protect their clients and their deposits at all times. They must treat the accounts of these clients with meticulousness and a highest degree of care considering the fiduciary nature of their relationship. The diligence required of banks are more than that of a good father of a family. 2. The PRC officers' practice of pre-signing checks is a seriously negligent and highly risky behavior which makes them also contributor to the loss. It's own negligence must therefore mitigate the petitioner's liability. Moreover, the person who stole the checks is also an employee of the plaintiff, a cleck in its accounting department at that. As the employer, PRC supposedly should have control and supervision over its own employees. 3. The court held that the petitioner is liable for 60% of the total amount of damages while PRC should shoulder 40% of the said amount. VICENTE R. DE OCAMPO & CO. v. ANITA GATCHALIAN. G.R. No. L-15126. November 30, 1961. FACTS: Anita Gatchalian was interested in buying a car. Manuel Gonzales offered to her a car owned by plaintiff. Gonzales claimed that he was authorized by the plaintiff to sell the car. Gonzales order defendant to issue a cross-check to comply on showing interest in buying the car. Gonzales promised to return the check the next day. When Gonzales never appeared after, defendant issue a stop payment order on the check. She found out that Gonzales used the check as payment to plaintiff's clinic for his wife's fees. Plaintiff now demands defendant for payment of the check, in which defendant refused citing that plaintiff is a not a holder in due course.
The ISSUE:
lower
court
Whether
or
held not
that De
defendant
Ocampo
is
a
should holder
pay in
due
plaintiff. course.
RULING: The SC held that plaintiff is a not a holder in due course. There were obvious instances to show that the check was negligently acquired like plaintiff having no liability with defendant and that the check was crossed. Plaintiff failed to exercise prudence and caution. Plaintiff should have asked questions to further inquire upon suspicion. The presumption of good faith did not apply to plaintiff because the defect was apparent on the instruments face – it was not payable to defendant or bearer. De Ocampo vs. Gatchalian (3 SCRA 596) Facts: Anita Gatchalian was interested in buying a car when she was offered by Manuel Gonzales to a car owned by the Ocampo Clinic. Gonzales claim that he was duly authorized to look for a buyer, negotiate and accomplish the sale by the Ocampo Clinic. Anita accepted the offer and insisted to deliver the car with the certificate of registration the next day but Gonzales advised that the owners would only comply only upon showing of interest on the part of the buyer. Gonzales recommended issuing a check (P600 / payable-to-bearer /crosschecked) as evidence of the buyer’s good faith. Gonzales added that it will only be for safekeeping and will be returned to her the following day. The next day, Gonzales never appeared. The failure of Gonzales to appeal resulted in Gatchalian to issue a STOP PAYMENT ORDER on the check. It was later found out that Gonzales used the check as payment to the Vicente de Ocampo (Ocampo Clinic) for the hospitalization fees of his wife (the fees were only P441.75, so he got a refund of P158.25). De Ocampo now demands payment for the check, which Gatchalian refused, arguing that de Ocampo is not a holder in due course and that there is no negotiation of the check. The Court of First Instance ordered Gatchalian to pay the amount of the check to De Ocampo. Hence this case. Issue: Whether
or
not
De
Ocampo
is
a
holder
in
due
course.
Held: NO. De Ocampo is not a holder in due course. De Ocampo was negligent in his acquisition of the check. There were many instances that arouse suspicion: the drawer in the check (Gatchalian) has no liability with de Ocampo ; it was cross-checked(only for deposit) but was used a payment by Gonzales; it was not the exact amount of the medical fees. The circumstancesshould have led him to inquire on the validity of the check. However, he failed to exercise reasonable prudence and caution. In showing a person had knowledge of facts that his action in taking the instrument amounted to bad faith need not prove that he knows the exact fraud. It is sufficient to show that the person had NOTICE that there was something wrong.
The bad faith here means bad faith in the commercial sense – obtaining an instrument with no questions asked or no further inquiry upon suspicion. The presumption of good faith did not apply to de Ocampo because the defect was apparent on the instruments face – it was not payable to Gonzales or bearer. Hence, the holder’s title is defective or suspicious. Being the case, de Ocampo had the burden of proving he was a holder in due course, but failed.
Sapiera vs Court of Appeals [G.R. No. 128927. September 14, 1999] FACTS: Petitioner Remedios Sapiera, a sari-sari store owner, was issued by one Arturo de Guzman checks as payment for purchases he made at her store. She used said checks to pay for certain items she purchased from the grocery store of Ramon Sua. These checks were signed at the back by petitioner. When presented for payment the checks were dishonored because the drawer’s account was already closed. Sua informed Arturo de Guzman and petitioner about the dishonor but both failed to pay the value of the checks. Petitioner was acquitted in the charge of estafa filed against her but she was found liable for the value of the checks. ISSUE: Whether petitioner is liable for the value of the checks even if she signed the subject checks only for the identification of the signature of Arturo de Guzman. RULING: Petitioner is liable for the value of the checks. As she (petitioner) signed the subject checks on the reverse side without any indication as to how she should be bound thereby, she is deemed to be an unqualified indorser thereof. Every indorser who indorses without qualification, warrants to all subsequent holders in due course that, on due presentment, it shall be accepted or paid or both, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be compelled to pay it.
Sapiera vs Court of Appeals Facts: Remedios Nota Sapiera, a sari-sari store owner, on several occasions, purchased from Monrico Mart grocery items, mostly cigarettes and paid for them with checks issued by one Arturo de Guzman. These checks were signed by Sapiera on the back. When they were presented for payment, the checks were dishonoured because the drawer’s account was already closed. Respondent Ramon Samua informed Arturo de Guzman and petitioner but both failed to pay. Hence, four charges of Estafa were filed against Sapiera while two counts of BP 22 was filed against Arturo de Guzman. These cases were consolidated. On December 27 1999, the RTC Dagupan city acquitted Sapiera of all charges of Estafa but did not rule on the civil aspect of the case. Arturo de Guzman was held liable for the 2 BP 22 cases and was
ordered to pay Sua 167,150 Php as civil indemnity and was sentenced for imprisonment of 6 months and 1 day. Respondent Sua appealed regarding the civil aspect of Sapiera’s case but the courtdenied it saying that the acquittal of petitioner was absolute. Respondent filed a petition for mandamus with the Court of Appeals praying that the appeal be given due course, this was granted. On January 1996, CA rendered a decision ordering Sapiera to pay 335000 php to Sua. Sapiera filed a motion for reconsideration. The CA the issued a resolution noting that the admission of both parties that Sua already collected 125000 for the 2 check paid by De Guzman on the BP 22 cases. It appears that the payment should be deducted on her liability as they involved the same two checks which Sapiera was involved in. the CA deducted the liability to 210,000 Php. Hence this petition by Sapiera claiming that the CA erred in rendering such decision because she was acquitted and the fact from which the civil liability exists did not exist. Issue: Whether or not Sapiera could be held civilly liable when she was acquitted in the criminal charges against her. Held: Yes. Sec. 2 of rule 111 of the rules of court provides that extinction of the penal action does not carry with it the extinction of the civil, unless this shows that the fact from which the civil liability is based is proven to not have existed because of such acquittal. Civil liability is not extinguished where: (a) the acquittal is not based on reasonable doubt. (b) Where the court expressly declares that the liability is not criminal but only civil, (c) where the civil liability is not derived from or based on the criminal act. The decision of the case would show that the acquittal was based on failure of the prosecution to present sufficient evidence showing conspiracy between her and De Guzman. Since all checks were signed by Sapiera on the back, sec 17 of Negotiable instruments law says that she would be considered an indorser of the bill of exchange and under section 66 thereof would be held liable for breach of warranty and is held liable to pay the holder who may be compelled to pay the instrument.
ADALIA FRANCISCO vs. COURT OF APPEALS, ET AL. G.R. No. 116320 November 29, 1999 FACTS: A. Francisco Realty & Development Corporation (AFRDC), of which petitioner Francisco is the president, entered into a Land Development and Construction Contract with private respondent Herby Commercial & Construction Corporation (HCCC), represented by its President and General Manager private respondent Ong. Under the contract, HCCC was to be paid on the basis of the completed houses and developed lands delivered to and accepted by AFRDC and the GSIS. Sometime in 1979, Ong discovered that Diaz and Francisco, the VicePresident of GSIS, had executed and signed seven checks of various dates and amounts payable to HCCC for completed and delivered work under the contract. Ong, however, claims that these checks were never delivered to HCCC. It turned out that Francisco forged the indorsement of Ong on the checks and indorsed the checks for a second time by signing her name at the back of the checks, petitioner then deposited said checks in her savings account. A case was brought by private respondents against petitioner to recover the value of said checks. Petitioner however claims that she was authorized to sign Ong's name on the checks by virtue of the Certification executed by Ong in her favor giving her the authority to collect all the receivables of HCCC from the GSIS, including the questioned checks. ISSUE: Whether petitioner cannot be held liable on the questioned checks by virtue of the Certification executed by Ong giving her the authority to collect such checks from the GSIS. RULING: Petitioner is liable. The Negotiable Instruments Law provides that where any person is under obligation to indorse in a representative capacity, he may indorse in such terms as to negative personal liability. An agent, when so signing, should indicate that he is merely signing in behalf of the principal and must disclose the name of his principal; otherwise he shall be held personally liable. Even assuming that Francisco was authorized by HCCC to sign Ong's name, still, Francisco did not indorse the instrument in accordance with law. Instead of signing Ong's name, Francisco should have signed her own name and expressly indicated that she was signing as an agent of HCCC. Thus, the Certification cannot be used by Francisco to validate her act of forgery.
Francisco V. CA (1999) G.R. No. 116320 November Lessons Applicable: Forgery (Negotiable
29, Instruments
1999 Law)
FACTS: June 23, 1977: Adalia Francisco (Francisco) president of A. Francisco Realty & Development Corporation (AFRDC) and Jaime C. Ong (Ong) President and General Manager of Herby Commercial & Construction Corporation (HCCC), entered into a contract where HCCC agreed to undertake the construction of 35 housing units and the development of 35 hectares of land. HCCC was to be paid on turn-key basis (basis of the completed houses and developed lands delivered to and accepted by AFRDC and the GSIS) To facilitate payment, AFRDC executed a Deed of Assignment in favor of HCCC to enable it to collect payments directly from the GSIS. Furthermore, the GSIS and AFRDC put up an Executive Committee Account with the Insular Bank of Asia & America (IBAA) of P4M from which checks would be issued and co-signed by petitioner Francisco and the GSIS Vice-President Armando Diaz (Diaz). February 10, 1978: HCCC filed a complaint w/ the RTC against Francisco, AFRDC and the GSIS for the collection of the unpaid balance under the Land Development and Construction Contract in the amount of P515,493.89 for completed and delivered housing units and land development. Sometime in 1979: Ong discovered that Diaz and Francisco had executed and signed 7 checks drawn against the IBAA and payable to HCCC but were never delivered to HCCC GSIS gave Francisco custody of the checks since she promised that she would deliver the same to HCCC. Francisco forged the signature of Ong, without his knowledge or consent, at the dorsal portion of the said checks to make it appear that HCCC had indorsed the checks; Francisco then indorsed the checks for a second time by signing her name at the back of the checks and deposited the checks in her IBAA savings account June 7, 1979: Ong filed complaints charging Francisco with estafa thru falsification of commercial documents - dismmised by the Assistant City Fiscal
According to Francisco, she agreed to grant HCCC the loans in the total amount of P585K and covered by 18 promissory notes in order to obviate the risk of the noncompletion of the project. As a means of repayment, Ong allegedly issued a Certification authorizing Francisco to collect HCCCs receivables from the GSIS RTC: favored Ong and against IBAA and Francisco. November 21, 1989: IBAA and HCCC entered into a Compromise Agreement which was approved by the trial court, wherein HCCC acknowledged receipt of the amount of P370,475.00 in full satisfaction of its claims against IBAA, without prejudice to the right of IBAA to pursue its claims against Francisco. CA affirmed RTC. Francisco claims that she was, in any event, authorized to sign Ongs name on the checks by virtue of the Certification executed by Ong in her favor giving her the authority to collect all the receivables of HCCC from the GSIS, including the questioned checks. ISSUE: W/N Francisco can sign Ongs name on the checks and it was not forgery HELD: NO. Francisco had custody of the checks, as proven by the check vouchers bearing her uncontested signature. Francisco forged the signature of Ong on the checks to make it appear as if Ong had indorsed said checks. The Negotiable Instruments Law provides that where any person is under obligation to indorse in a representative capacity, he may indorse in such terms as to negative personal liability. An agent, when so signing, should indicate that he is merely signing in behalf of the principal and must disclose the name of his principal; otherwise he shall be held personally liable. Instead of signing Ongs name, Francisco should have signed her own name and expressly indicated that she was signing as an agent of HCCC. Philippine Bank of Commerce vs. Aruego GR L-25836-37, 31 January 1981, 102 scra 530 FACTS: To facilitate payment of the printing of a periodical called “World Current Events.”, Aruego, its publisher, obtained a credit accommodation from the Philippine Bank of Commerce. For every printing of the periodical, the printer collected the cost of printing by drawing a draft against the bank, said draft being sent later to Aruego for acceptance. As an added security for the payment of the amounts advanced to the printer, the bank also required Aruego to execute a trust receipt in favor of the bank wherein Aruego undertook to hold in trust for the bank the periodicals and to
sell the same with the promise to turn over to the bank the proceeds of the sale to answer for the payment of all obligations arising from the draft. The bank instituted an action against Aruego to recover the cost of printing of the latter’s periodical. Aruego however argues that he signed the supposed bills of exchange only as an agent of the Philippine Education Foundation Company where he is president. ISSUES: Whether Aruego can be held liable by the petitioner although he signed the supposed bills of exchange only as an agent of Philippine Education Foundation Company. RULING: Aruego did not disclose in any of the drafts that he accepted that he was signing as representative of the Philippine Education Foundation Company. For failure to disclose his principal, Aruego is personally liable for the drafts he accepted, pursuant to Section 20 of the NIL which provides that when a person adds to his signature words indicating that he signs for or on behalf of a principal or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere addition of words describing him as an agent or as filing a representative character, without disclosing his principal, does not exempt him from personal liability. Negotiable Instruments Case Digest: Philippine Bank Of Commerce V. Jose M. Aruego (1961) G.R. Nos. L-25836-37 January 31, 1981 FACTS: December 1, 1959: Philippine Bank of Commerce (PBC) instituted against Jose M. Aruego for the recovery of the total sum of about P 35K with interest from November 17, 1959 and commission of 3/8% for every thirty 30 days plus attorney's fees of 10% of the total amount due and costs represents the cost of the printing the periodical published by the Aruego "World Current Events". To facilitate the payment of the printing, Aruego obtained a credit accommodation from the PBC the printer, Encal Press and Photo Engraving, collected the cost of every printing by drawing a draft against the PBC, which PBC later accepts. As an added security for the payment of the amounts advanced to Encal Press and Photo-Engraving, PBC required Aruego to execute a trust receipt (PBC hold in trust for Aruego the periodicals and to sell the same with the promise to turn over to the Aruego the proceeds for the payment of all obligations arising from the draft)
trial court: Aruego to pay to the PBC Aruego: signed the supposed bills of exchange as an agent of the Philippine Education Foundation Company where he is president Section 20 of the Negotiable Instruments Law "Where the instrument contains or a person adds to his signature words indicating that he signs for or on behalf of a principal or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere addition of words describing him as an agent or as filing a representative character, without disclosing his principal, does not exempt him from personal liability." signed the drafts only as an accommodation party and as such, should be made liable only after a showing that the drawer is incapable of paying not really bills of exchange but mere pieces of evidence of indebtedness because payments were made before acceptance ISSUE: W/N Aruego should be personally liable HELD: YES. CFI AFFIRMED. Nowhere has he disclosed that he was signing as a representative of the Philippine Education Foundation Company. For failure to disclose his principal, Aruego is personally liable for the drafts he accepted. An accommodation party is one who has signed the instrument as maker, drawer, indorser, without receiving value therefor and for the purpose of lending his name to some other person. Such person is liable on the instrument to a holder for value, notwithstanding such holder, at the time of the taking of the instrument knew him to be only an accommodation party he signed as a drawee/acceptor. Under the Negotiable Instrument Law, a drawee is primarily liable. As long as a commercial paper conforms with the definition of a bill of exchange, that paper is considered a bill of exchange. The nature of acceptance is important only in the determination of the kind of liabilities of the parties involved, but not in the determination of whether a commercial paper is a bill of exchange or not.
