1.

Mitra vs. People

G.R. NO. 191404 July 5, 2010
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.

Between September 15, 1998 and November 30, 1998, LNCC issued several checks to
Tarcelo, signed by Mitra and Cabrera, Jr. with an accumulated amount of P1,003,125.

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.

The MTCC found Cabrera, Jr. and Mitra guilty of violation of BP 22 and were ordered to
pay the sum of P925,000.00 with subsidiary imprisonment in all cases, in case of insolvency.

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]

Issue:

1. Are the contentions of Cabrera and Mitra correct?

Ruling:

1. NO, the contentions of Cabrera and Mitra are not correct.

The Supreme Court ruled in this wise:

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.

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.

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[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, 3rd paragraph of BP 22 provides:

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.

IN THE CASE AT BAR, 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.

THEREFORE, the contentions of Cabrera and Mitra are not correct.

2.
LBP vs MONETS EXPORT
G.R. No. 184971 April 19, 2010
FACTS:

On June 25, 1981 petitioner Land Bank of the Philippines (Land Bank) and respondent
Monets Export and Manufacturing Corporation (Monet) executed an Export Packing Credit Line
Agreement (Agreement) under which the bank gave Monet a credit line of P250,000.00,
secured by the proceeds of its export letters of credit, promissory notes, a continuing guaranty
executed by respondent spouses Vicente V. Tagle, Sr. and Ma. Consuelo G. Tagle (the Tagles),
and a third-party mortgage executed by one Pepita C. Mendigoria. Land Bank renewed and
amended this credit line agreement several times until it reached a ceiling of P5 million.

Land Bank claims that by August 31, 1992 Monets obligation under the Agreement had
swelled to P11,464,246.19. Since Monet failed to pay despite demands, the bank filed a
collection suit against Monet and the Tagles before the Regional Trial Court (RTC) of Manila.
[1]
In their answer, Monet and the Tagles claimed that Land Bank had refused to collect the
US$33,434.00 receivables on Monets export letter of credit against Wishbone Trading Company
of Hong Kong while making an unauthorized payment of US$38,768.40 on its import letter of
credit to Beautilike (H.K.) Ltd. This damaged Monets business interests since it ran short of
funds to carry on with its usual business. In other words, Land Bank mismanaged its clients
affairs under the Agreement.

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 After trial or on July 15, 1997 the RTC rendered a decision [2] that, among other things,
recognized Monet and the Tagles obligations to Land Bank in the amount reflected in Exhibit 39,
the banks Schedule of Amortization from its Loans and Discount Department, but sans any
penalty. The RTC ordered petitioners to pay Land Bank the same.

On appeal, the CA affirmed the decision of the RTC. The bank raised the issue to the
Supreme Court for review but the Supreme Court remanded the case to the RTC with
instruction to accept new evidence to determine how much is the total due indebtedness of
Monets.

In remanding the case, the Supreme Court noted that Exhibit 39, the Summary of
Availment and Schedule of Amortization, on which both the RTC and the CA relied, covered only
Monets debt of P2.5 million under Promissory Note P-981, a small amount compared to
the P11,464,246.19 that Land Bank sought to collect from it. The records showed, however, that
Monet executed not only one but several promissory notes in varying amounts in favor of the
bank. Indeed, the bank submitted a Consolidated Statement of Account dated August 31,
1992 in support of its claim of P11,464,246.19 but both the RTC and the CA merely glossed
over it. Land Bank also submitted a Summary of Availments and Payments from 1981 to 1989
that detailed the series of availments and payments Monet made.

Upon remand, the RTC held one hearing on October 30, 2006, at which the lawyer of
Land Bank told the court that, apart from what the bank already adduced in evidence, it had no
additional documents to present.

Issue:

1. Is the bank required to present all original documents of indebtedness to prove its
collection of P11,464,246.19?

Ruling:

1. NO, the bank is not required to present all original documents of indebtedness to prove
its collection of P11,464,246.19.

The Supreme Court ruled in this wise:

The CA of course places no value on the Consolidated Billing Statement that Land Bank
would have adduced in evidence had the RTC granted its motion for reconsideration and
reopened the hearing. Apparently, both courts believe that Land Bank needed to present in
evidence all original documents evidencing every transaction between Land Bank and Monet to
prove the current status of the latters loan accounts.

But a bank statement, properly authenticated by a competent bank officer, can serve as
evidence of the status of those accounts and what Monet and the Tagles still owe the bank.

Under Section 43, Rule 130[14] of the Rules of Court, entries prepared in the regular
course of business are prima facie evidence of the truth of what they state.

The billing statement reconciles the transaction entries entered in the bank records in
the regular course of business and shows the net result of such transactions.

Entries in the course of business are accorded unusual reliability because their
regularity and continuity are calculated to discipline record keepers in the habit of precision. If
the entries are financial, the records are routinely balanced and audited. In actual experience,
the whole of the business world function in reliance of such kind of records.[15]

Parenthetically, consider a borrower who takes out a loan of P10,000.00 from a bank
and executes a promissory note providing for interests, charges, and penalties and an
undertaking to pay the loan in 10 monthly installments of P1,000.00. If he pays the first five
months installments but defaults in the rest, how will the bank prove in court that the debtor still
owes it P5,000.00 plus interest?

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 The bank will of course present the promissory note to establish the scope of the debtors
primary obligations and a computation of interests, charges, and penalties based on its terms. It
must then show by the entries in its record how much it had actually been paid. This will in turn
establish how much the borrower still owes it.

The bank does not have to present all the receipts of payment it issued to all its clients
during the entire year, thousands of them, merely to establish the fact that only five of them,
rather than ten, pertains to the borrower.

The original documents need not be presented in evidence when it is numerous, cannot
be examined in court without great loss of time, and the fact sought to be established from them
is only the general result.[16]

Monet and the Tagles can of course dispute the banks billing statements by proof that
the bank had exaggerated what was owed it and that Monet had made more payments than
were reflected in those statements. They can do this by presenting evidence of those greater
payments. Notably, Monet and the Tagles have consistently avoided stating in their letters to the
bank how much they still owed it. But, ultimately, it is as much their obligation to prove this
disputed point if they deny the banks statements of their loan accounts.

THEREFORE, the bank is not required to present all original documents of indebtedness
to prove its collection of P11,464,246.19.

3.
Pencapital Investment Corp vs. Makilito B. Mahinay
G.R. No. 171736 July 5, 2010
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.

Issue:

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 1. Does Makilito Mahinay owe Pentacapital the sum of P1,936,800 plus interests and
penalties?

Ruling:

1. YES, Makilito Mahinay owe Pentacapital the sum of P1,936,800 plus interests and
penalties?

The Supreme Court ruled in this wise:

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] Surtida v. Rural
Bank of Malinao (Albay), Inc., G.R. No. 170563, December 20, 2006

IN THE CASE AT BAR, 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]

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 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.

THEREFORE, Makilito Mahinay owe Pentacapital the sum of P1,936,800 plus interests
and penalties

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