1

[G.R. No. 138074. August 15, 2003]

CELY YANG vs. HON. COURT OF APPEALS, PHILIPPINE COMMERCIAL INTERNATIONAL
BANK,
FAR
EAST
BANK
&
TRUST
CO.,EQUITABLE BANKING CORPORATION,
PREM CHANDIRAMANI and FERNANDO DAVID
DECISION
QUISUMBING, J.:
For review on certiorari is the decision[1] of the Court of Appeals, dated March 25, 1999, in
CA-G.R. CV No. 52398, which affirmed with modification the joint decision of the Regional Trial
Court (RTC) of Pasay City, Branch 117, dated July 4, 1995, in Civil Cases Nos. 5479 [2] and 5492.
[3]
The trial court dismissed the complaint against herein respondents Far East Bank & Trust
Company (FEBTC), Equitable Banking Corporation (Equitable), and Philippine Commercial
International Bank (PCIB) and ruled in favor of respondent Fernando David as to the proceeds of
the two cashiers checks, including the earnings thereof pendente lite. Petitioner Cely Yang was
ordered to pay David moral damages of P100,000.00 and attorneys fees also in the amount
of P100,000.00.
The facts of this case are not disputed, to wit:
On or before December 22, 1987, petitioner Cely Yang and private respondent Prem
Chandiramani entered into an agreement whereby the latter was to give Yang a PCIB managers
check in the amount of P4.2 million in exchange for two (2) of Yangs managers checks, each in
the amount of P2.087 million, both payable to the order of private respondent Fernando David.
Yang and Chandiramani agreed that the difference of P26,000.00 in the exchange would be their
profit to be divided equally between them.
Yang and Chandiramani also further agreed that the former would secure from FEBTC a
dollar draft in the amount of US$200,000.00, payable to PCIB FCDU Account No. 4195-01165-2,
which Chandiramani would exchange for another dollar draft in the same amount to be issued by
Hang Seng Bank Ltd. of Hong Kong.
Accordingly, on December 22, 1987, Yang procured the following:
a)
b)
c)

Equitable Cashiers Check No. CCPS 14-009467 in the sum of P2,087,000.00, dated
December 22, 1987, payable to the order of Fernando David;
FEBTC Cashiers Check No. 287078, in the amount of P2,087,000.00, dated December
22, 1987, likewise payable to the order of Fernando David; and
FEBTC Dollar Draft No. 4771, drawn on Chemical Bank, New York, in the amount of
US$200,000.00, dated December 22, 1987, payable to PCIB FCDU Account No. 419501165-2.

At about one oclock in the afternoon of the same day, Yang gave the aforementioned
cashiers checks and dollar drafts to her business associate, Albert Liong, to be delivered to
Chandiramani by Liongs messenger, Danilo Ranigo. Ranigo was to meet Chandiramani at
Philippine Trust Bank, Ayala Avenue, Makati City, Metro Manila where he would turn over Yangs
cashiers checks and dollar draft to Chandiramani who, in turn, would deliver to Ranigo a PCIB
managers check in the sum of P4.2 million and a Hang Seng Bank dollar draft for
US$200,000.00 in exchange.
Chandiramani did not appear at the rendezvous and Ranigo allegedly lost the two cashiers
checks and the dollar draft bought by petitioner. Ranigo reported the alleged loss of the checks

and the dollar draft to Liong at half past four in the afternoon of December 22, 1987. Liong, in
turn, informed Yang, and the loss was then reported to the police.
It transpired, however, that the checks and the dollar draft were not lost, for Chandiramani
was able to get hold of said instruments, without delivering the exchange consideration consisting
of the PCIB managers check and the Hang Seng Bank dollar draft.
At three oclock in the afternoon or some two (2) hours after Chandiramani and Ranigo
were to meet in Makati City, Chandiramani delivered to respondent Fernando David at China
Banking Corporation branch in San Fernando City, Pampanga, the following: (a) FEBTC
Cashiers Check No. 287078, dated December 22, 1987, in the sum of P2.087 million; and (b)
Equitable Cashiers Check No. CCPS 14-009467, dated December 22, 1987, also in the amount
of P2.087 million. In exchange, Chandiramani got US$360,000.00 from David, which
Chandiramani deposited in the savings account of his wife, Pushpa Chandiramani; and his
mother, Rani Reynandas, who held FCDU Account No. 124 with the United Coconut Planters
Bank branch in Greenhills, San Juan, Metro Manila. Chandiramani also deposited FEBTC Dollar
Draft No. 4771, dated December 22, 1987, drawn upon the Chemical Bank, New York for
US$200,000.00 in PCIB FCDU Account No. 4195-01165-2 on the same date.
Meanwhile, Yang requested FEBTC and Equitable to stop payment on the instruments she
believed to be lost. Both banks complied with her request, but upon the representation of PCIB,
FEBTC subsequently lifted the stop payment order on FEBTC Dollar Draft No. 4771, thus
enabling the holder of PCIB FCDU Account No. 4195-01165-2 to receive the amount of
US$200,000.00.
On December 28, 1987, herein petitioner Yang lodged a Complaint [4] for injunction and
damages against Equitable, Chandiramani, and David, with prayer for a temporary restraining
order, with the Regional Trial Court of Pasay City. The Complaint was docketed as Civil Case No.
5479. The Complaint was subsequently amended to include a prayer for Equitable to return to
Yang the amount of P2.087 million, with interest thereon until fully paid.[5]
On January 12, 1988, Yang filed a separate case for injunction and damages, with prayer
for a writ of preliminary injunction against FEBTC, PCIB, Chandiramani and David, with the RTC
of Pasay City, docketed as Civil Case No. 5492. This complaint was later amended to include a
prayer that defendants therein return to Yang the amount of P2.087 million, the value of FEBTC
Dollar Draft No. 4771, with interest at 18% annually until fully paid.[6]
On February 9, 1988, upon the filing of a bond by Yang, the trial court issued a writ of
preliminary injunction in Civil Case No. 5479. A writ of preliminary injunction was subsequently
issued in Civil Case No. 5492 also.
Meanwhile, herein respondent David moved for dismissal of the cases against him and for
reconsideration of the Orders granting the writ of preliminary injunction, but these motions were
denied. David then elevated the matter to the Court of Appeals in a special civil action for
certiorari docketed as CA-G.R. SP No. 14843, which was dismissed by the appellate court.
As Civil Cases Nos. 5479 and 5492 arose from the same set of facts, the two cases were
consolidated. The trial court then conducted pre-trial and trial of the two cases, but the
proceedings had to be suspended after a fire gutted the Pasay City Hall and destroyed the
records of the courts.

2
After the records were reconstituted, the proceedings resumed and the parties agreed that
the money in dispute be invested in Treasury Bills to be awarded in favor of the prevailing side. It
was also agreed by the parties to limit the issues at the trial to the following:

WHEREFORE, this court AFFIRMS the judgment of the lower court with modification and
hereby orders the plaintiff-appellant to pay defendant-appellant PCIB the amount of TwentyFive Thousand Pesos (P25,000.00).SO ORDERED.[10]

1. Who, between David and Yang, is legally entitled to the proceeds of Equitable Banking
Corporation (EBC) Cashiers Check No. CCPS 14-009467 in the sum of P2,087,000.00
dated December 22, 1987, and Far East Bank and Trust Company (FEBTC) Cashiers
Check No. 287078 in the sum of P2,087,000.00 dated December 22, 1987, together with
the earnings derived therefrom pendente lite?

In affirming the trial courts judgment with respect to herein respondent David, the appellate
court found that:

2. Are the defendants FEBTC and PCIB solidarily liable to Yang for having allowed the
encashment of FEBTC Dollar Draft No. 4771, in the sum of US$200,000.00 plus interest
thereon despite the stop payment order of Cely Yang? [7]
On July 4, 1995, the trial court handed down its decision in Civil Cases Nos. 5479 and
5492, to wit:
WHEREFORE, the Court renders judgment in favor of defendant Fernando David against the
plaintiff Cely Yang and declaring the former entitled to the proceeds of the two (2) cashiers
checks, together with the earnings derived therefrom pendente lite; ordering the plaintiff to pay the
defendant Fernando David moral damages in the amount of P100,000.00; attorneys fees in the
amount of P100,000.00 and to pay the costs. The complaint against Far East Bank and Trust
Company (FEBTC), Philippine Commercial International Bank (PCIB) and Equitable Banking
Corporation (EBC) is dismissed. The decision is without prejudice to whatever action plaintiff Cely
Yang will file against defendant Prem Chandiramani for reimbursement of the amounts received
by him from defendant Fernando David. SO ORDERED.[8]
In finding for David, the trial court ratiocinated:
The evidence shows that defendant David was a holder in due course for the reason that the
cashiers checks were complete on their face when they were negotiated to him. They were not
yet overdue when he became the holder thereof and he had no notice that said checks were
previously dishonored; he took the cashiers checks in good faith and for value. He parted some
$200,000.00 for the two (2) cashiers checks which were given to defendant Chandiramani; he
had also no notice of any infirmity in the cashiers checks or defect in the title of the drawer. As a
matter of fact, he asked the manager of the China Banking Corporation to inquire as to the
genuineness of the cashiers checks (tsn, February 5, 1988, p. 21, September 20, 1991, pp. 1314). Another proof that defendant David is a holder in due course is the fact that the stop payment
order on [the] FEBTC cashiers check was lifted upon his inquiry at the head office (tsn,
September 20, 1991, pp. 24-25). The apparent reason for lifting the stop payment order was
because of the fact that FEBTC realized that the checks were not actually lost but indeed reached
the payee defendant David.[9]
Yang then moved for reconsideration of the RTC judgment, but the trial court denied her
motion in its Order of September 20, 1995.
In the belief that the trial court misunderstood the concept of a holder in due course and
misapprehended the factual milieu, Yang seasonably filed an appeal with the Court of Appeals,
docketed as CA-G.R. CV No. 52398.
On March 25, 1999, the appellate court decided CA-G.R. CV No. 52398 in this wise:

In this case, defendant-appellee had taken the necessary precautions to verify, through his bank,
China Banking Corporation, the genuineness of whether (sic) the cashiers checks he received
from Chandiramani. As no stop payment order was made yet (at) the time of the inquiry,
defendant-appellee had no notice of what had transpired earlier between the plaintiff-appellant
and Chandiramani. All he knew was that the checks were issued to Chandiramani with whom he
was he had (sic) a transaction. Further on, David received the checks in question in due course
because Chandiramani, who at the time the checks were delivered to David, was acting as Yangs
agent.
David had no notice, real or constructive, cogent for him to make further inquiry as to any infirmity
in the instrument(s) and defect of title of the holder. To mandate that each holder inquire about
every aspect on how the instrument came about will unduly impede commercial transactions,
Although negotiable instruments do not constitute legal tender, they often take the place of
money as a means of payment.
The mere fact that David and Chandiramani knew one another for a long time is not sufficient to
establish that they connived with each other to defraud Yang. There was no concrete proof
presented by Yang to support her theory.[11]
The appellate court awarded P25,000.00 in attorneys fees to PCIB as it found the action
filed by Yang against said bank to be clearly unfounded and baseless. Since PCIB was
compelled to litigate to protect itself, then it was entitled under Article 2208 [12] of the Civil Code to
attorneys fees and litigation expenses.
Hence, the instant recourse wherein petitioner submits the following issues for resolution:
a -

WHETHER THE CHECKS WERE ISSUED TO PREM CHANDIRAMANI BY

PETITIONER;

b -

WHETHER THE ALLEGED TRANSACTION BETWEEN PREM CHANDIRAMANI AND

FERNANDO DAVID IS LEGITIMATE OR A SCHEME BY BOTH PRIVATE
RESPONDENTS TO SWINDLE PETITIONER;

c -

WHETHER FERNANDO DAVID GAVE PREM CHANDIRAMANI US$360,000.00 OR

JUST A FRACTION OF THE AMOUNT REPRESENTING HIS SHARE OF THE LOOT;

d-

WHETHER PRIVATE RESPONDENTS FERNANDO DAVID AND PCIB ARE ENTITLED

TO DAMAGES AND ATTORNEYS FEES.[13]

At the outset, we must stress that this is a petition for review under Rule 45 of the 1997
Rules of Civil Procedure. It is basic that in petitions for review under Rule 45, the jurisdiction of
this Court is limited to reviewing questions of law, questions of fact are not entertained absent a
showing that the factual findings complained of are totally devoid of support in the record or are

3
glaringly erroneous.[14] Given the facts in the instant case, despite petitioners formulation, we find
that the following are the pertinent issues to be resolved:
a)

Whether the Court of Appeals erred in holding herein respondent Fernando

David to be a holder in due course; and

b)

Whether the appellate court committed a reversible error in awarding damages

and attorneys fees to David and PCIB.

On the first issue, petitioner Yang contends that private respondent Fernando David is not a
holder in due course of the checks in question. While it is true that he was named the payee
thereof, David failed to inquire from Chandiramani about how the latter acquired possession of
said checks. Given his failure to do so, it cannot be said that David was unaware of any defect or
infirmity in the title of Chandiramani to the checks at the time of their negotiation. Moreover,
inasmuch as the checks were crossed, then David should have, pursuant to our ruling in Bataan
Cigar & Cigarette Factory, Inc. v. Court of Appeals, G.R. No. 93048, March 3, 1994, 230 SCRA
643, been put on guard that the checks were issued for a definite purpose and accordingly, made
inquiries to determine if he received the checks pursuant to that purpose. His failure to do so
negates the finding in the proceedings below that he was a holder in due course.
Finally, the petitioner argues that there is no showing whatsoever that David gave
Chandiramani any consideration of value in exchange for the aforementioned checks.
Private respondent Fernando David counters that the evidence on record shows that when
he received the checks, he verified their genuineness with his bank, and only after said
verification did he deposit them. David stresses that he had no notice of previous dishonor or any
infirmity that would have aroused his suspicions, the instruments being complete and regular
upon their face. David stresses that the checks in question were cashiers checks. From the very
nature of cashiers checks, it is highly unlikely that he would have suspected that something was
amiss. David also stresses negotiable instruments are presumed to have been issued for valuable
consideration, and he who alleges otherwise must controvert the presumption with sufficient
evidence. The petitioner failed to discharge this burden, according to David. He points out that
the checks were delivered to him as the payee, and he took them as holder and payee thereof.
Clearly, he concludes, he should be deemed to be their holder in due course.

We find that the petitioners challenge to Davids status as a holder in due course hinges on
two arguments: (1) the lack of proof to show that David tendered any valuable consideration for
the disputed checks; and (2) Davids failure to inquire from Chandiramani as to how the latter
acquired possession of the checks, thus resulting in Davids intentional ignorance tantamount to
bad faith. In sum, petitioner posits that the last two requisites of Section 52 are missing, thereby
preventing David from being considered a holder in due course. Unfortunately for the petitioner,
her arguments on this score are less than meritorious and far from persuasive.
First, with respect to consideration, Section 24 [18] of the Negotiable Instruments Law creates
a presumption that every party to an instrument acquired the same for a consideration [19] or for
value.[20] Thus, the law itself creates a presumption in Davids favor that he gave valuable
consideration for the checks in question. In alleging otherwise, the petitioner has the onus to
prove that David got hold of the checks absent said consideration. In other words, the petitioner
must present convincing evidence to overthrow the presumption. Our scrutiny of the records,
however, shows that the petitioner failed to discharge her burden of proof. The petitioners
averment that David did not give valuable consideration when he took possession of the checks is
unsupported, devoid of any concrete proof to sustain it. Note that both the trial court and the
appellate court found that David did not receive the checks gratis, but instead gave Chandiramani
US$360,000.00 as consideration for the said instruments. Factual findings of the Court of Appeals
are conclusive on the parties and not reviewable by this Court; they carry great weight when the
factual findings of the trial court are affirmed by the appellate court.[21]
Second, petitioner fails to point any circumstance which should have put David on inquiry
as to the why and wherefore of the possession of the checks by Chandiramani. David was not
privy to the transaction between petitioner and Chandiramani. Instead, Chandiramani and David
had a separate dealing in which it was precisely Chandiramanis duty to deliver the checks to
David as payee. The evidence shows that Chandiramani performed said task to the letter.
Petitioner admits that David took the step of asking the manager of his bank to verify from FEBTC
and Equitable as to the genuineness of the checks and only accepted the same after being
assured that there was nothing wrong with said checks. At that time, David was not aware of any
stop payment order. Under these circumstances, David thus had no obligation to ascertain from
Chandiramani what the nature of the latters title to the checks was, if any, or the nature of his
possession. Thus, we cannot hold him guilty of gross neglect amounting to legal absence of good
faith, absent any showing that there was something amiss about Chandiramanis acquisition or
possession of the checks. David did not close his eyes deliberately to the nature or the particulars
of a fraud allegedly committed by Chandiramani upon the petitioner, absent any knowledge on his
part that the action in taking the instruments amounted to bad faith. [22]

We shall now resolve the first issue.

Every holder of a negotiable instrument is deemed prima facie a holder in due course.
However, this presumption arises only in favor of a person who is a holder as defined in Section
191 of the Negotiable Instruments Law,[15] meaning a payee or indorsee of a bill or note, who is in
possession of it, or the bearer thereof.
In the present case, it is not disputed that David was the payee of the checks in question.
The weight of authority sustains the view that a payee may be a holder in due course. [16]Hence,
the presumption that he is a prima facie holder in due course applies in his favor. However, said
presumption may be rebutted. Hence, what is vital to the resolution of this issue is whether David
took possession of the checks under the conditions provided for in Section 52[17] of the Negotiable
Instruments Law. All the requisites provided for in Section 52 must concur in Davids case,
otherwise he cannot be deemed a holder in due course.

Belatedly, and we say belatedly since petitioner did not raise this matter in the proceedings
below, petitioner now claims that David should have been put on alert as the instruments in
question were crossed checks. Pursuant to Bataan Cigar & Cigarette Factory, Inc. v. Court of
Appeals, David should at least have inquired as to whether he was acquiring said checks for the
purpose for which they were issued, according to petitioners submission.
Petitioners reliance on the Bataan Cigar case, however, is misplaced. The facts in the
present case are not on all fours with Bataan Cigar. In the latter case, the crossed checks were
negotiated and sold at a discount by the payee, while in the instant case, the payee did not
negotiate further the checks in question but promptly deposited them in his bank account.
The Negotiable Instruments Law is silent with respect to crossed checks, although the
Code of Commerce[23] makes reference to such instruments. Nonetheless, this Court has taken
judicial cognizance of the practice that a check with two parallel lines in the upper left hand corner
means that it could only be deposited and not converted into cash. [24] The effects of crossing a

4
check, thus, relates to the mode of payment, meaning that the drawer had intended the check for
deposit only by the rightful person, i.e., the payee named therein. In Bataan Cigar, the
rediscounting of the check by the payee knowingly violated the avowed intention of crossing the
check. Thus, in accepting the cross checks and paying cash for them, despite the warning of the
crossing, the subsequent holder could not be considered in good faith and thus, not a holder in
due course. Our ruling in Bataan Cigar reiterates that in De Ocampo & Co. v. Gatchalian.[25]
The factual circumstances in De Ocampo and in Bataan Cigar are not present in this
case. For here, there is no dispute that the crossed checks were delivered and duly deposited by
David, the payee named therein, in his bank account. In other words, the purpose behind the
crossing of the checks was satisfied by the payee.
Proceeding to the issue of damages, petitioner merely argues that respondents David and
PCIB are not entitled to damages, attorneys fees, and costs of suit as both acted in bad faith
towards her, as shown by her version of the facts which gave rise to the instant case.
Respondent David counters that he was maliciously and unceremoniously dragged into this
suit for reasons which have nothing to do with him at all, but which arose from petitioners failure
to receive her share of the profit promised her by Chandiramani. Moreover, in filing this suit which
has lasted for over a decade now, the petitioner deprived David of the rightful enjoyment of the
two checks, to which he is entitled, under the law, compelled him to hire the services of counsel to
vindicate his rights, and subjected him to social humiliation and besmirched reputation, thus
harming his standing as a person of good repute in the business community of Pampanga. David
thus contends that it is but proper that moral damages, attorneys fees, and costs of suit be
awarded him.
For its part, respondent PCIB stresses that it was established by both the trial court and the
appellate court that it was needlessly dragged into this case. Hence, no error was committed by
the appellate court in declaring PCIB entitled to attorneys fees as it was compelled to litigate to
protect itself.
We have thoroughly perused the records of this case and find no reason to disagree with
the finding of the trial court, as affirmed by the appellate court, that:
[D]efendant David is entitled to [the] award of moral damages as he has been needlessly and
unceremoniously dragged into this case which should have been brought only between the
plaintiff and defendant Chandiramani.[26]
A careful reading of the findings of facts made by both the trial court and appellate court
clearly shows that the petitioner, in including David as a party in these proceedings, is barking up
the wrong tree. It is apparent from the factual findings that David had no dealings with the
petitioner and was not privy to the agreement of the latter with Chandiramani. Moreover, any loss
which the petitioner incurred was apparently due to the acts or omissions of Chandiramani, and
hence, her recourse should have been against him and not against David. By needlessly
dragging David into this case all because he and Chandiramani knew each other, the petitioner
not only unduly delayed David from obtaining the value of the checks, but also caused him
anxiety and injured his business reputation while waiting for its outcome. Recall that under Article
2217[27] of the Civil Code, moral damages include mental anguish, serious anxiety, besmirched
reputation, wounded feelings, social humiliation, and similar injury. Hence, we find the award of
moral damages to be in order.

The appellate court likewise found that like David, PCIB was dragged into this case on
unfounded and baseless grounds. Both were thus compelled to litigate to protect their interests,
which makes an award of attorneys fees justified under Article 2208 (2) [28] of the Civil Code.
Hence, we rule that the award of attorneys fees to David and PCIB was proper.
WHEREFORE, the instant petition is DENIED. The assailed decision of the Court of Appeals,
dated March 25, 1999, in CA-G.R. CV No. 52398 is AFFIRMED. Costs against the petitioner. SO
ORDERED.
G.R. No. 117857
February 2, 2001
LUIS S. WONG vs. COURT OF APPEALS and PEOPLE OF THE PHILIPPINES
QUISUMBING, J.:
For review on certiorari is the decision dated October 28, 1994 of the Court of Appeals in C.A.
G.R. CR 118561which affirmed the decision of the Regional Trial Court of Cebu City, Branch 17,
convicting petitioner on three (3) counts of Batas Pambansa Blg. 22 (the Bouncing Checks Law)
violations, and sentencing him to imprisonment of four (4) months for each count, and to pay
private respondent the amounts of P5,500.00, P6,410.00 and P3,375.00, respectively,
corresponding to the value of the checks involved, with the legal rate of interest from the time of
filing of the criminal charges, as well as to pay the costs.1wphi1.nt
The factual antecedents of the case are as follows:
Petitioner Wong was an agent of Limtong Press. Inc. (LPI), a manufacturer of calendars. LPI
would print sample calendars, then give them to agents to present to customers. The agents
would get the purchase orders of customers and forward them to LPI. After printing the calendars,
LPI would ship the calendars directly to the customers. Thereafter, the agents would come around
to collect the payments. Petitioner, however, had a history of unremitted collections, which he duly
acknowledged in a confirmation receipt he co-signed with his wife. 2Hence, petitioners customers
were required to issue postdated checks before LPI would accept their purchase orders.
In early December 1985, Wong issued six (6) postdated checks totaling P18,025.00, all dated
December 30, 1985 and drawn payable to the order of LPI, as follows:
(1) Allied Banking Corporation (ABC) Check No. 660143464-C for P6,410.00 (Exh. "B");
(2) ABC Check No. 660143460-C for P540.00 (Exh. "C");
(3) ABC Check No. PA660143451-C for P5,500.00 (Exh. "D");
(4) ABC Check No. PA660143465-C for P1,100.00 (Exh. "E");
(5) ABC Check No. PA660143463-C for P3,375.00 (Exh. "F");
(6) ABC Check No. PA660143452-C for P1,100.00 (Exh. "G").
These checks were initially intended to guarantee the calendar orders of customers who failed to
issue post-dated checks. However, following company policy, LPI refused to accept the checks as
guarantees. Instead, the parties agreed to apply the checks to the payment of petitioners
unremitted collections for 1984 amounting to P18,077.07.3 LPI waived the P52.07 difference.
Before the maturity of the checks, petitioner prevailed upon LPI not to deposit the checks and
promised to replace them within 30 days. However, petitioner reneged on his promise. Hence, on
June 5, 1986, LPI deposited the checks with Rizal Commercial Banking Corporation (RCBC). The
checks were returned for the reason "account closed." The dishonor of the checks was evidenced
by the RCBC return slip.

5
On June 20, 1986, complainant through counsel notified the petitioner of the dishonor. Petitioner
failed to make arrangements for payment within five (5) banking days.
On November 6, 1987, petitioner was charged with three (3) counts of violation of B.P. Blg.
224 under three separate Informations for the three checks amounting to P5,500.00, P3,375.00,
and P6,410.00.5
The Information in Criminal Case No. CBU-12055 reads as follows: 6
That on or about the 30th day of December, 1985 and for sometime subsequent thereto, in the
City of Cebu, Philippines, and within the jurisdiction of this Honorable Court, the said accused,
knowing at the time of issue of the check she/he does not have sufficient funds in or credit with
the drawee bank for the payment of such check in full upon its presentment, with deliberate
intent, with intent of gain and of causing damage, did then and there issue, make or draw Allied
Banking Corporation Check No. 660143451 dated 12-30-85 in the amount of P5,500.00
payable to Manuel T. Limtong which check was issued in payment of an obligation of said
accused, but when the said check was presented with said bank, the same was dishonored for
reason ACCOUNT CLOSED and despite notice and demands made to redeem or make good
said check, said accused failed and refused, and up to the present time still fails and refuses to
do so, to the damage and prejudice of said Manuel T. Limtong in the amount of P5,500.00
Philippine Currency. Contrary to law.
Petitioner was similarly charged in Criminal Case No. 12057 for ABC Check No. 660143463 in the
amount of P3,375.00, and in Criminal Case No. 12058 for ABC Check No. 660143464 for
P6,410.00. Both cases were raffled to the same trial court.
Upon arraignment, Wong pleaded not guilty. Trial ensued.
Manuel T. Limtong, general manager of LPI, testified on behalf of the company, Limtong averred
that he refused to accept the personal checks of petitioner since it was against company policy to
accept personal checks from agents. Hence, he and petitioner simply agreed to use the checks to
pay petitioners unremitted collections to LPI. According to Limtong, a few days before maturity of
the checks, Wong requested him to defer the deposit of said checks for lack of funds. Wong
promised to replace them within thirty days, but failed to do so. Hence, upon advice of counsel,
he deposited the checks which were subsequently returned on the ground of "account closed."
The version of the defense is that petitioner issued the six (6) checks to guarantee the 1985
calendar bookings of his customers. According to petitioner, he issued the checks not as payment
for any obligation, but to guarantee the orders of his customers. In fact, the face value of the six
(6) postdated checks tallied with the total amount of the calendar orders of the six (6) customers
of the accused, namely, Golden Friendship Supermarket, Inc. (P6,410.00), New Society Rice and
Corn Mill (P5,500.00), Cuesta Enterprises (P540.00), Pelrico Marketing (P1,100.00), New Asia
Restaurant P3,375.00), and New China Restaurant (P1,100.00). Although these customers had
already paid their respective orders, petitioner claimed LPI did not return the said checks to him.
On August 30, 1990, the trial court issued its decision, disposing as follows:7
"Wherefore, premises considered, this Court finds the accused Luis S. Wong GUILTY beyond
reasonable doubt of the offense of Violations of Section 1 of Batas Pambansa Bilang 22 in
THREE (3) Counts and is hereby sentenced to serve an imprisonment of FOUR (4) MONTHS
for each count; to pay Private Complainant Manuel T. Limtong the sums of Five Thousand Five

Hundred (P5,500.00) Pesos, Six Thousand Four Hundred Ten (P6,410.00) Pesos and Three
Thousand Three Hundred Seventy-Five (P3,375.00) Pesos corresponding to the amounts
indicated in Allied Banking Checks Nos. 660143451, 66[0]143464 and 660143463 all issued on
December 30, 1985 together with the legal rate of interest from the time of the filing of the
criminal charges in Court and pay the costs."8
Petitioner appealed his conviction to the Court of Appeals. On October 28, 1994, it affirmed the
trial courts decision in toto.9
Hence, the present petition.10 Petitioner raises the following questions of law -11
May a complainant successfully prosecute a case under BP 22 --- if there is no more
consideration or price or value ever the binding tie that it is in contracts in general and in
negotiable instruments in particular behind the checks? if even before he deposits the
checks, he has ceased to be a holder for value because the purchase orders (POs)
guaranteed by the checks were already paid?
Given the fact that the checks lost their reason for being, as above stated, is it not then the duty
of complainant knowing he is no longer a holder for value to return the checks and not to
deposit them ever? Upon what legal basis then may such a holder deposit them and get paid
twice?
Is petitioner, as the drawer of the guarantee checks which lost their reason for being, still bound
under BP 22 to maintain his account long after 90 days from maturity of the checks?
May the prosecution apply the prima facie presumption of "knowledge of lack of funds"
against the drawer if the checks were belatedly deposited by the complainant 157 days after
maturity, or will it be then necessary for the prosecution to show actual proof of "lack of funds"
during the 90-day term?
Petitioner insists that the checks were issued as guarantees for the 1985 purchase orders (POs)
of his customers. He contends that private respondent is not a "holder for value" considering that
the checks were deposited by private respondent after the customers already paid their orders.
Instead of depositing the checks, private respondent should have returned the checks to him.
Petitioner further assails the credibility of complainant considering that his answers to crossexamination questions included: "I cannot recall, anymore" and "We have no more record."
In his Comment,12 the Solicitor General concedes that the checks might have been initially
intended by petitioner to guarantee payments due from customers, but upon the refusal of LPI to
accept said personal checks per company policy, the parties had agreed that the checks would be
used to pay off petitioners unremitted collections. Petitioners contention that he did not demand
the return of the checks because he trusted LPIs good faith is contrary to human nature and
sound business practice, according to the Solicitor General.
The issue as to whether the checks were issued merely as guarantee or for payment of
petitioners unremitted collections is a factual issue involving as it does the credibility of
witnesses. Said factual issue has been settled by the trial court and Court of Appeals. Although
initially intended to be used as guarantee for the purchase orders of customers, they found the
checks were eventually used to settle the remaining obligations of petitioner with LPI. Although
Manuel Limtong was the sole witness for the prosecution, his testimony was found sufficient to
prove all the elements of the offense charged. 13 We find no cogent reason to depart from findings

6
of both the trial and appellate courts. In cases elevated from the Court of Appeals, our review is
confined to allege errors of law. Its findings of fact are generally conclusive. Absent any showing
that the findings by the respondent court are entirely devoid of any substantiation on record, the
same must stand.14 The lack of accounting between the parties is not the issue in this case. As
repeatedly held, this Court is not a trier of facts. 15 Moreover, in Llamado v. Court of Appeals,16 we
held that "[t]o determine the reason for which checks are issued, or the terms and conditions for
their issuance, will greatly erode the faith the public reposes in the stability and commercial value
of checks as currency substitutes, and bring about havoc in trade and in banking communities. So
what the law punishes is the issuance of a bouncing check and not the purpose for which it was
issued nor the terms and conditions relating to its issuance. The mere act of issuing a worthless
check is malum prohibitum." Nothing herein persuades us to hold otherwise.
The only issue for our resolution now is whether or not the prosecution was able to establish
beyond reasonable doubt all the elements of the offense penalized under B.P. Blg. 22.
There are two (2) ways of violating B.P. Blg. 22: (1) by making or drawing and issuing a check to
apply on account or for value knowing at the time of issue that the check is not sufficiently funded;
and (2) by having sufficient funds in or credit with the drawee bank at the time of issue but failing
to keep sufficient funds therein or credit with said bank to cover the full amount of the check when
presented to the drawee bank within a period of ninety (90) days.17

Section 2 of B.P. Blg. 22 provides:

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.
An essential element of the offense is "knowledge" on the part of the maker or drawer of the
check of the insufficiency of his funds in or credit with the bank to cover the check upon its
presentment. Since this involves a state of mind difficult to establish, the statute itself creates
a prima facie presumption of such knowledge where payment of the check "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." To mitigate the harshness of the law in its application, the
statute provides that such presumption shall not arise if within five (5) banking days from receipt
of the notice of dishonor, the maker or drawer makes arrangements for payment of the check by
the bank or pays the holder the amount of the check.22

Petitioner contends that the first element does not exist because the checks were not issued to
apply for account or for value. He attempts to distinguish his situation from the usual "cut-anddried" B.P. 22 case by claiming that the checks were issued as guarantee and the obligations they
were supposed to guarantee were already paid. This flawed argument has no factual basis, the
RTC and CA having both ruled that the checks were in payment for unremitted collections, and
not as guarantee. Likewise, the argument has no legal basis, for what B.P. Blg. 22 punishes is the
issuance of a bouncing check and not the purpose for which it was issued nor the terms and
conditions relating to its issuance.19

Contrary to petitioners assertions, nowhere in said provision does the law require a maker to
maintain funds in his bank account for only 90 days. Rather, the clear import of the law is to
establish a prima facie presumption of knowledge of such insufficiency of funds under the
following conditions (1) presentment within 90 days from date of the check, and (2) the dishonor
of the check and failure of the maker to make arrangements for payment in full within 5 banking
days after notice thereof. That the check must be deposited within ninety (90) days is simply one
of the conditions for the prima facie presumption of knowledge of lack of funds to arise. It is not an
element of the offense. Neither does it discharge petitioner from his duty to maintain sufficient
funds in the account within a reasonable time thereof. Under Section 186 of the Negotiable
Instruments Law, "a check must be presented for payment within a reasonable time after its issue
or the drawer will be discharged from liability thereon to the extent of the loss caused by the
delay." By current banking practice, a check becomes stale after more than six (6) months, 23 or
180 days. Private respondent herein deposited the checks 157 days after the date of the check.
Hence said checks cannot be considered stale. Only the presumption of knowledge of
insufficiency of funds was lost, but such knowledge could still be proven by direct or circumstantial
evidence. As found by the trial court, private respondent did not deposit the checks because of
the reassurance of petitioner that he would issue new checks. Upon his failure to do so, LPI was
constrained to deposit the said checks. After the checks were dishonored, petitioner was duly
notified of such fact but failed to make arrangements for full payment within five (5) banking days
thereof. There is, on record, sufficient evidence that petitioner had knowledge of the insufficiency
of his funds in or credit with the drawee bank at the time of issuance of the checks. And despite
petitioners insistent plea of innocence, we find no error in the respondent courts affirmance of his
conviction by the trial court for violations of the Bouncing Checks Law.

As to the second element, B.P. Blg. 22 creates a presumption juris tantum that the second
element prima facieexists when the first and third elements of the offense are present. 20 Thus, the
makers knowledge is presumed from the dishonor of the check for insufficiency of funds.21

However, pursuant to the policy guidelines in Administrative Circular No. 12-2000, which took
effect on November 21, 2000, the penalty imposed on petitioner should now be modified to a fine
of not less than but not more than double the amount of the checks that were dishonored.

Petitioner avers that since the complainant deposited the checks on June 5, 1986, or 157 days
after the December 30, 1985 maturity date, the presumption of knowledge of lack of funds under
Section 2 of B.P. Blg. 22 should not apply to him. He further claims that he should not be
expected to keep his bank account active and funded beyond the ninety-day period.

WHEREFORE, the petition is DENIED. Petitioner Luis S. Wong is found liable for violation of
Batas Pambansa Blg. 22 but the penalty imposed on him is hereby MODIFIED so that the
sentence of imprisonment is deleted. Petitioner is ORDERED to pay a FINE of (1) P6,750.00,
equivalent to double the amount of the check involved in Criminal Case No. CBU-12057, (2)
P12,820.00, equivalent to double the amount of the check involved in Criminal Case No. CBU-

The elements of B.P. Blg. 22 under the first situation, pertinent to the present case, are:18
"(1) The making, drawing and issuance of any check to apply for account or for value;
(2) 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
(3) The 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."

7
12058, and (3) P11,000.00, equivalent to double the amount of the check involved in Criminal
Case No. CBU-12055, with subsidiary imprisonment 24 in case of insolvency to pay the aforesaid
fines. Finally, as civil indemnity, petitioner is also ordered to pay to LPI the face value of said
checks totaling P18,025.00 with legal interest thereon from the time of filing the criminal charges
in court, as well as to pay the costs. SO ORDERED.