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QUIRINO GONZALES LOGGING CONCESSIONAIRE 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 non-payment 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 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.

Papa v. AU Valencia (284 SCRA 643)


Facts: Myron Papa, acting as attorney-in-fact of Angela Butte,
allegedly sold a parcel of land in La Loma, Quezon City to Felix
Penarroyo. However, prior to the alleged sale, the land was
mortgaged by Butte to Associated Banking Corporation along with
other properties and after the alleged sale but prior to the
propertys release by delivery, Butte died. The Bank refused to
release the property despite Penarroyos unless and until the other
mortgaged properties by Butte have been redeemed and because of
this Penarroyo settled to having the title of the property annotated.
It was later discovered that the mortgage rights of the Bank were
transferred to one Tomas Parpana, administrator of the estate of
Ramon Papa Jr. and his since then been collecting rents. Despite
repeated demands of Penarroyo and Valencia, Papa refused to
deliver the property which led to a suit for specific performance. The
trial court ruled in favor of Penarroyo and Valencia.

On appeal to the CA, and ultimately in relation to negotiable


instruments, Papa averred that the sale of the property was not
consummated since the PCIB check issued by Penarroyo for
payment worth 40000 pesos was not encashed by him. However,
the CA saw the contrary and that Papa in fact encashed the check
by means of a receipt.

Finally on appeal to the SC, Papa cited that according to Art 1249 of
the Civil Code, payment of checks only produce effect once they
have been encashed and he insists that he never encashed the
check. He further alleged that if check was encashed, it should have
been stamped as such or at least a microfilm copy. It must be noted
that the check was in possession of Papa for ten (10) years from the
time payment was made to him.

Issue: Whether or not the check was encashed and can be


considered effective as payment

Held: YES. The Court held that acceptance of a check implies an


undertaking of due diligence in presenting it for payment, and if he
from whom it is received sustains loss by want of such diligence, it
will be held to operate as actual payment of the debt or obligation
for which it is given. In this case, granting that check was never
encashed, Papas failure to do so for more than ten (10) years
undoubtedly resulted in the impairment of the check through his
unreasonable and unexplained delay.

After more than ten (10) years from the payment in part by cash
and in part by check, the presumption is that the check had been
encashed.

HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED v.


CECILIA DIEZ CATALAN. G.R. No. 159590. October 18, 2004.
FACTS:

Frederick Arthur Thomson drew 5 checks payable to defendant


Cecilia. Catalan presented these checks to Hongkong and Shanghai
Banking Corporation Limited (HSBANK). The checks were dishonored
for having insufficient funds. Thomson demanded that the checks be
made good because he, in fact, had sufficient funds. Still, HSBANK
did not accept the checks.

Subsequently, Thomson died but Catalan was not paid yet. The
account was transferred to HSBC International Trustee Limited
(TRUSTEE). Catalan then requested TRUSTEE to pay her but still
refused and even asked her to submit back to them the original
checks for verification.

Catalan and her lawyer went to Hong Kong on their own expense to
personally submit the checks. They still were not honored, leading
Catalan to file a suit against HSBC to collect the money.

ISSUE: Whether the check can be encashed.

RULING:

The SC held that the HSBC was being sued becasue of their evident
failure to heed the instructions of Thomson. HSBANK cited Sec. 189
of the NIL but the SC said that what is being sued is how they acted
in relation to Catalan's claim for payment despite repeated requests
and not of the check's value.

The reason was likewise the same towards TRUSTEE as Catalan


even went to Hong Kong to personally deliver the checks.