MANUEL and ROSITA LIM vs.

CA and PEOPLE OF THE PHILIPPINES [December 19, 1995]

Manuel and Rosita Lim are the president and treasurer, respectively, of Rigi Bilt Industries, Inc. RIGI had been transacting
business with LINTON for years. As officers of RIGI, the Lim spouses were allowed 30, 60 and even up to 90 days credit. For
payment of their various orders(steel plates, purlins), the Lims issued several postdated Solidbank checks.

William Yu Bin, VP and Sales Manager of Linton testified that seven checks were deposited with RCBC and they were
dishonored for "insufficiency of funds" with the additional notation "payment stopped" stamped thereon. Despite
demand Manuel and Rosita refused to make good the checks or pay the value of the deliveries.

RTC-Malabon: held both accused guilty of estafa and violation of BP 22.

CA: acquitted accused-appellants of estafa on the ground that indeed the checks were not made in payment of an
obligation contracted at the time of their issuance. However it affirmed the finding of the trial court that they were guilty
of having violated BP 22.

LIMS: maintain that the prosecution failed to prove that any of the essential elements of the crime punishable under BP
22 was committed within the jurisdiction of the RTC-Malabon. They claim that what was proved was that all the elements
of the offense were committed in Kalookan City. The checks were issued at their place of business, received by a
collector of LINTON, and dishonored by the drawee bank, all in Kalookan City. In fine, considering that the checks were
all issued, delivered, and dishonored in Kalookan City, the trial court of Malabon exceeded its jurisdiction when it tried the
case and rendered judgment thereon.

ISSUE: W/N the RTC of Malabon had jurisdiction to try the case.

SC: It is settled that venue in criminal cases is a vital ingredient of jurisdiction. In determining proper venue in TRANSITORY
CRIMES, the following acts material and essential to each crime and requisite to its consummation must be considered: (a)
the seven (7) checks were issued to LINTON at its place of business in Balut, Navotas; b) they were delivered to LINTON at
the same place; (c) they were dishonored in Kalookan City; and, (d) petitioners had knowledge of the insufficiency of their
funds in SOLIDBANK at the time the checks were issued. Since there is no dispute that the checks were dishonored in
Kalookan City, it is no longer necessary to discuss where the checks were dishonored.

Under Sec. 191 of the Negotiable Instruments Law the term "issue" means the first delivery of the instrument complete in
form to a person who takes it as a holder. On the other hand, the term "holder" refers to the payee or indorsee of a bill or
note who is in possession of it or the bearer thereof. In People v. Yabut, it was held that:

. . . The place where the bills were written, signed, or dated does not necessarily fix or determine the place where they were executed.
What is of decisive importance is the delivery thereof. The delivery of the instrument is the final act essential to its consummation as an
obligation. An undelivered bill or note is inoperative. Until delivery, the contract is revocable. And the issuance as well as the delivery of the
check must be to a person who takes it as a holder, which means "the payee or indorsee of a bill or note, who is in possession of it, or the
bearer thereof." Delivery of the check signifies transfer of possession, whether actual or constructive, from one person to another with
intent to transfer title thereto . . .

Although LINTON sent a collector who received the checks from petitioners at their place of business in Kalookan City,
they were actually issued and delivered to LINTON at its place of business in Balut, Navotas. The receipt of the checks by
the collector of LINTON is not the issuance and delivery to the payee in contemplation of law. The collector was not the
person who could take the checks as a holder, i.e., as a payee or indorsee thereof, with the intent to transfer title thereto.
Neither could the collector be deemed an agent of LINTON with respect to the checks because he was a mere employee.

Consequently, venue or jurisdiction lies either in the Regional Trial Court of Kalookan City or Malabon.
LORETO DE LA VICTORIA, as City Fiscal of Mandaue City vs. JOSE BURGOS, Judge of RTC-Cebu City, and RAUL SESBREÑO
[June 27, 1995]

RAUL SESBREÑO filed a complaint for damages against Assistant City Fiscals Bienvenido Mabanto, Jr., and Dario Rama, Jr.,
before RTC-Cebu. Judgment was rendered ordering the defendants to pay SESBREÑO P11,000. The decision having
become final and executory, the trial court ordered its execution. This order was questioned by the defendants before the
Court of Appeals, but was later dismissed. Nonetheless, a writ of execution was issued.

A notice of garnishment was served on Loreto de la Victoria as City Fiscal of Mandaue City where Mabanto, Jr., was then
detailed. The notice directed de la Victoria not to disburse, transfer, release or convey to any other person except to the
deputy sheriff concerned the salary checks due to Mabanto, Jr.

DE LA VICTORIA: moved to quash the notice of garnishment claiming that he was not in possession of any money
belonging to Mabanto, Jr., except his salary and RATA checks, but that said checks were not yet properties of Mabanto, Jr.,
until delivered to him. The salary checks were not owned by Mabanto, Jr., because they were not yet delivered to him,
and petitioner as garnishee has no legal obligation to hold and deliver them to the trial court to be applied to Mabanto,
Jr.'s judgment debt. The salary checks still formed part of public funds and therefore beyond the reach of garnishment
proceedings.

RTC: denied both motions and ordered petitioner to immediately comply with its order. It opined that the checks of
Mabanto, Jr., had already been released through petitioner by the Department of Justice duly signed by the officer
concerned. Upon service of the writ of garnishment, petitioner as custodian of the checks was under obligation to hold
them for the judgment creditor. There was no sufficient reason for petitioner to hold the checks because they were no
longer government funds and presumably delivered to the payee, conformably with the last sentence of Sec. 161 of the
Negotiable Instruments Law.

ISSUE: W/N a check still in the hands of the maker or its duly authorized representative is owned by the payee before
physical delivery to the latter

SC: Garnishment is considered as a species of attachment for reaching credits belonging to the judgment debtor owing to
him from a stranger to the litigation. The source of the salary of Mabanto, Jr. is public funds. He receives his compensation
in the form of checks from the Department of Justice through petitioner as City Fiscal of Mandaue City and head of office.

Based on the last sentence of Sec. 16 of the Negotiable Instruments Law, "Where the instrument is no longer in the
possession of a party whose signature appears thereon, a valid and intentional delivery by him is presumed." Yet, the
presumption is not conclusive because the last portion of the provision says "until the contrary is proved." However this
phrase was deleted by the trial court for no apparent reason. Proof to the contrary is its own finding that the checks were
in the custody of petitioner. Inasmuch as said checks had not yet been delivered to Mabanto, Jr., they did not belong to
him and still had the character of public funds. In Tiro v. Hontanosas, it was held that, “The salary check of a government
officer or employee such as a teacher does not belong to him before it is physically delivered to him. Until that time the
check belongs to the government. Accordingly, before there is actual delivery of the check, the payee has no power over
it; he cannot assign it without the consent of the Government.”

As a necessary consequence of being public fund, the checks may not be garnished to satisfy the judgment. The
rationale behind this doctrine is obvious consideration of public policy. The functions and public services rendered by the
State cannot be allowed to be paralyzed or disrupted by the diversion of public funds from their legitimate and specific
objects, as appropriated by law.

1SEC. 16, NIL- Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto. As
ordinarily understood, delivery means the transfer of the possession of the instrument by the maker or drawer with intent to transfer title to the payee and
recognize him as the holder thereof.
DEVELOPMENT BANK OF RIZAL vs. SIMA WEI et. al [March 9,1993]

In consideration for a loan extended by petitioner Bank, Sima Wei executed and delivered to the former a promissory
note, engaging to pay the Bank or order the amount of P1,820,000 on or before June 24, 1983 with interest at 32% per
annum. Sima Wei made partial payments on the note, leaving a balance of P1,032,450.02. On November 18, 1983, Sima
Wei issued two crossed checks payable to the Bank drawn against China Banking Corporation, for the amount of P550,000
and P500,000. The said checks were allegedly issued in full settlement of the drawer's account evidenced by the
promissory note. These two checks were not delivered to the Bank or to any of its authorized representatives.

For reasons not shown, these checks came into the possession of Lee Kian Huat, who deposited the checks without the
Bank’s indorsement to the account of Plastic Corporation, at the Producers Bank-Balintawak. Cheng Uy, Branch Manager
of Producers Bank-Balintawak, relying on the assurance of Samson Tung, President of Plastic Corporation, that the
transaction was legal and regular, instructed the cashier of Producers Bank to accept the checks for deposit and to
credit them to the account of said Plastic Corporation, inspite of the fact that the checks were crossed and payable to
petitioner Bank and bore no indorsement of the latter.

Hence, petitioner Bank filed the complaint for a sum of money against Sima Wei and/or Lee Kian Huat, Cheng Uy, Samson
Tung, Plastic Corporation and the Producers Bank of the Philippines.

ISSUE: W/N petitioner Bank has a cause of action2 against any or all of the defendants, in the alternative or otherwise.

SC: A negotiable instrument is not only a written evidence of a contract right but is also a species of property. Just as a
deed to a piece of land must be delivered in order to convey title to the grantee, so must a negotiable instrument be
delivered to the payee in order to evidence its existence as a binding contract. Section 16 of the Negotiable Instruments
Law provides in part that every contract on a negotiable instrument is incomplete and revocable until delivery of the
instrument for the purpose of giving effect thereto.

The payee of a negotiable instrument acquires no interest with respect thereto until its delivery to him. Delivery of an
instrument means transfer of possession, actual or constructive, from one person to another. Without the initial delivery
of the instrument from the drawer to the payee, there can be no liability on the instrument. Moreover, such delivery must
be intended to give effect to the instrument.

The two China Bank checks were not delivered to petitioner Bank. Without the delivery of said checks, the Bank did not
acquire any right or interest therein and cannot therefore assert any cause of action, founded on said checks, whether
against the drawer Sima Wei or against the Producers Bank or any of the other respondents.

Notwithstanding, it does not necessarily follow that the drawer Sima Wei is freed from liability to petitioner Bank under
the loan evidenced by the promissory note agreed to by her. Her allegation that she has paid the balance of her loan with
the two checks payable to petitioner Bank has no merit for these checks were never delivered to the Bank.

Even granting, without admitting, that there was delivery to petitioner Bank, the delivery of checks in payment of an
obligation does not constitute payment unless they are cashed or their value is impaired through the fault of the creditor.
None of these exceptions were alleged by respondent Sima Wei. Therefore, unless respondent Sima Wei proves that she
has been relieved from liability on the promissory note by some other cause, petitioner Bank has a right of action against
her for the balance due thereon. However, insofar as the other respondents are concerned, petitioner Bank has no privity
with them since it never received the checks on which it based its action against said respondents, it never owned the
checks nor did it acquire any interest therein. Thus, anything which the respondents may have done with respect to said
checks could not have prejudiced petitioner Bank. It had no right or interest in the checks which could have been violated
by said respondents.

2 CAUSE OF ACTION – an act or omission of one party in violation of the legal right or rights of another. The essential elements are: (1) legal right of the plaintiff;

(2) correlative obligation of the defendant; and (3) an act or omission of the defendant in violation of said legal right.
RIZAL COMMERCIAL BANKING CORPORATION vs. HI-TRI DEV’T CORP. and LUZ BAKUNAWA [June 13, 2012]

Luz Bakunawa and her husband Manuel are registered owners of six parcels of land covered by six TCTs. These lots were
sequestered by the Presidential Commission on Good Government. In 1990, Teresita Millan, through her representative,
Jerry Montemayor, offered to buy said lots for ₱6,724,085.71, with the promise that she will take care of clearing
whatever preliminary obstacles there may be to effect a completion of the sale. The Spouses Bakunawa gave to Millan the
Owners Copies of said TCTs and in turn, Millan made a downpayment of ₱1,019,514.29 for the intended purchase.
However, for one reason or another, Millan was not able to clear said obstacles. As a result, the Spouses Bakunawa
rescinded the sale and offered to return to Millan her downpayment. However, Millan refused to accept back the
downpayment.

Consequently, Spouses Bakunawa, through their company, Hi-Tri, took out a Managers Check from RCBC-Ermita in the
amount of ₱1,019,514.29, payable to Millan’s company Rosmil Realty c/o Teresita Millan. They used this as one of their
basis for a complaint against Millan and Montemayor which they filed with RTC-Quezon City, praying that Millan and
Montemayor be ordered to return the TCTs, and praying that Millan be ordered to receive the amount. The Spouses
Bakunawa retained custody of RCBC Managers Check and refrained from canceling or negotiating it.

In 2003, during the pendency of the abovementioned case and without the knowledge of Hi-Tri and Spouses Bakunawa,
RCBC reported the ₱1,019,514.29-credit existing in favor of Rosmil to the Bureau of Treasury as among its unclaimed
balances as of January 31, 2003. In 2006, the Republic filed with the RTC the action for Escheat.

In 2008, Spouses Bakunawa settled amicably their dispute with Rosmil and Millan. Instead of only the amount of
₱1,019,514.29, Spouses Bakunawa agreed to pay Rosmil and Millan the amount of ₱3,000,000. But during negotiations,
spouses Bakunawa were informed that the amount was already subject of the escheat proceedings before the RTC.

BAKUNAWA: the deposit that was allocated for the payment of the Managers Check was supposed to remain part of the
Corporation’s RCBC bank account since pay-out of said amount was never ordered.

RTC: declared the deposits, credits, and unclaimed balances escheated to the Republic. Among those included in the order
of forfeiture was the amount of ₱1,019,514.29 held by RCBC as allocated funds intended for the payment of the Managers
Check issued in favor of Rosmil.

CA: reversed the order of the RTC. According to the appellate court, RCBC failed to prove that the latter had
communicated with Hi-Tri and/or Spouses Bakunawa or the designated payee, Rosmil, immediately before the bank filed
its Sworn Statement on the dormant accounts held therein. The banks failure to notify respondents deprived them of an
opportunity to intervene in the escheat proceedings and to present evidence to substantiate their claim, in violation of
their right to due process.

ISSUE: W/N the allocated funds may be escheated in favor of the Republic

BANK: contends that sps. Bakunawa were not the owners of the unclaimed balances and were thus not entitled to notice
from the RTC Clerk of Court. It hinges its claim on the theory that the funds represented by the Managers Check were
deemed transferred to the credit of the payee or holder upon its issuance.

SC: Accordingly, the CA committed reversible error when it ruled that the issuance of individual notices upon respondents
was a jurisdictional requirement, and that failure to effect personal service on them rendered the Decision and the Order
of the RTC void for want of jurisdiction. Escheat proceedings are actions in rem, whereby an action is brought against the
thing itself instead of the person. Thus, an action may be instituted and carried to judgment without personal service upon
the depositors or other claimants. Jurisdiction is secured by the power of the court over the res. Consequently, a judgment
of escheat is conclusive upon persons notified by advertisement, as publication is considered a general and constructive
notice to all persons interested.

Nevertheless, we find sufficient grounds to affirm the CA on the exclusion of the funds allocated for the payment of the
Managers Check in the escheat proceedings.
Escheat proceedings refer to the judicial process in which the state, by virtue of its sovereignty, steps in and claims
abandoned, left vacant, or unclaimed property, without there being an interested person having a legal claim thereto. In
the case of dormant accounts, the state inquires into the status, custody, and ownership of the unclaimed balance to
determine whether the inactivity was brought about by the fact of death or absence of or abandonment by the depositor.

It is a proceeding whereby the state compels the surrender to it of unclaimed deposit balances when there is
substantial ground for a belief that they have been abandoned, forgotten, or without an owner.

PETITIONER: asserts that the CA committed a reversible error when it required RCBC to send prior notices to respondents
about the forthcoming escheat proceedings involving the funds allocated for the payment of the Managers Check. It
explains that, pursuant to the law, only those whose favor such unclaimed balances stand are entitled to receive notices.
Since the funds represented by the Managers Check were deemed transferred to the credit of the payee upon issuance
of the check, the proper party entitled to the notices was the payee Rosmil and not respondents.

An ORDINARY CHECK refers to a bill of exchange drawn by a depositor (drawer) on a bank (drawee), requesting the latter
to pay a person named therein (payee) or to the order of the payee or to the bearer, a named sum of money. The
issuance of the check does not of itself operate as an assignment of any part of the funds in the bank to the credit of the
drawer. Here, the bank becomes liable only after it accepts or certifies the check. After the check is accepted for payment,
the bank would then debit the amount to be paid to the holder of the check from the account of the depositor-drawer.

There are checks of a special type called MANAGER’S or CASHIER’S CHECKS. These are bills of exchange drawn by the
banks manager or cashier, in the name of the bank, against the bank itself. Typically, a manager’s or a cashier’s check is
procured from the bank by allocating a particular amount of funds to be debited from the depositors account or by
directly paying or depositing to the bank the value of the check to be drawn. Since the bank issues the check in its name,
with itself as the drawee, the check is deemed accepted in advance. Ordinarily, the check becomes the primary obligation
of the issuing bank and constitutes its written promise to pay upon demand.

Nevertheless, the mere issuance of a manager’s check does not ipso facto work as an automatic transfer of funds to the
account of the payee. In case the procurer of the managers or cashiers check retains custody of the instrument, does not
tender it to the intended payee, or fails to make an effective delivery, Sec. 16 of the NIL on undelivered instruments
provides that “Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for
the purpose of giving effect thereto. As between immediate parties and as regards a remote party other than a holder in
due course, the delivery, in order to be effectual, must be made either by or under the authority of the party making,
drawing, accepting, or indorsing, as the case may be; and, in such case, the delivery may be shown to have been
conditional, or for a special purpose only, and not for the purpose of transferring the property in the instrument.”

Since there was no delivery, presentment of the check to the bank for payment did not occur. An order to debit the
account of respondents was never made. In fact, petitioner confirms that the Managers Check was never negotiated or
presented for payment to its Ermita Branch, and that the allocated fund is still held by the bank. As a result, the assigned
fund is deemed to remain part of the account of Hi-Tri, which procured the Managers Check. The doctrine that the
deposit represented by a managers check automatically passes to the payee is inapplicable, because the instrument
although accepted in advance remains undelivered. Hence, respondents should have been informed that the deposit had
been left inactive for more than 10 years, and that it may be subjected to escheat proceedings if left unclaimed.

It is undisputed that there was no effective delivery of the check, rendering the instrument incomplete. In addition, the
respondents retained ownership of the funds. As it is obvious from their foregoing actions that they have not abandoned
their claim over the fund, the allocated deposit, subject of the Managers Check, should be excluded from the escheat
proceedings. We reiterate our pronouncement that the objective of escheat proceedings is state forfeiture of unclaimed
balances.
JOHN DY vs. PEOPLE OF THE PHILIPPINES and CA [November 14, 2008]

Since 1990, John Dy has been the distributor of W.L. Food Products in Naga City, Bicol, under the business name Dyna
Marketing. Dy would pay W.L. Foods in either cash or check upon pick up of stocks of snack foods at the latter’s branch or
main office in Quezon City. At times, he would entrust the payment to one of his drivers.

In 1992, Dy’s driver went to the branch office of W.L. Foods to pick up stocks of snack foods. He introduced himself to the
checker, Mary Jane Maraca, who upon confirming Dy’s credit with the main office, gave him merchandise worth
P106,579.60. In return, the driver handed her a blank Far East Bank and Trust Company Check. The check was signed by
Dy though it did not indicate a specific amount. This happened twice. In both instances, the driver was issued an
unsigned delivery receipt. The amounts for the purchases were filled in later by Evelyn Ong, accountant of W.L. Foods,
based on the value of the goods delivered. When presented for payment, FEBTC dishonored the checks for insufficiency
of funds. Apparently, Dy only had an available balance of P2,000. The first check, however, was returned to the drawee
bank for the reasons stop payment order and drawn against uncollected deposit (DAUD), and not because it was drawn
against insufficient funds as stated in the first letter.

William Lim, owner of W.L. Foods, charged Dy with two counts of estafa under Article 315 of the RPC and two counts of
violation of BP 22. Dy was arrested in Naga City. On arraignment, he pleaded not guilty to all charges. Thereafter, the
cases against him were tried jointly.

RTC: convicted Dy on two counts each of estafa and violation of BP 22; CA: affirmed the RTC, but modified the sentence.

ISSUE: W/N whether John Dy is liable for estafa and for violation of BP 22.

PETITIONER: contends that the checks were ineffectively issued. Not only were the checks blank, but W.L. Foods
accountant had no authority to fill the amounts. Dy also claims failure of consideration to negate any obligation to W.L.
Foods. Ultimately, petitioner denies having deceived Lim inasmuch as only the two checks bounced since he began dealing
with him. He maintains that it was his long established business relationship with Lim that enabled him to obtain the
goods, and not the checks issued in payment for them.

OSG: avers that the delivery of the checks by Dy’s driver to Maraca, constituted valid issuance. The OSG sustains Ong’s
prima facie authority to fill the checks based on the value of goods taken. Nothing in the records showed that W.L. Foods
accountant filled up the checks in violation of Dy’s instructions or their previous agreement.

SC: Section 191 of the Negotiable Instruments Law defines issue as the first delivery of an instrument, complete in form,
to a person who takes it as a holder. Significantly, delivery is the final act essential to the negotiability of an instrument.
Delivery denotes physical transfer of the instrument by the maker or drawer coupled with an intention to convey title to
the payee and recognize him as a holder. It means more than handing over to another; it imports such transfer of the
instrument to another as to enable the latter to hold it for himself.

In this case, even if the checks were given to W.L. Foods in blank, this alone did not make its issuance invalid. When the
checks were delivered to Lim, through his employee, he became a holder with prima facie authority to fill the blanks. This
was, in fact, accomplished by Lims accountant. Section 14 of the NIL provides that, “where the instrument is wanting in
any material particular, the person in possession thereof has a prima facie authority to complete it by filling up the blanks
therein. A signature on a blank paper delivered by the person making the signature in order that the paper may be
converted into a negotiable instrument operates as a prima facie authority to fill it up as such for any amount.”

Hence, the law merely requires that the instrument be in the possession of a person other than the drawer or maker.
From such possession, together with the fact that the instrument is wanting in a material particular, the law presumes
agency to fill up the blanks. Because of this, the burden of proving want of authority or that the authority granted was
exceeded, is placed on the person questioning such authority. Petitioner failed to fulfill this requirement.
SAN MIGUEL CORPORATION vs. BARTOLOME PUZON, JR., [September 22, 2010]

Bartolome Puzon, Jr. was a dealer of beer products of San Miguel Corporation for Paranaque City. Puzon purchased SMC
products on credit. To ensure payment and as a business practice, SMC required him to issue postdated checks
equivalent to the value of the products purchased on credit before the same were released to him. Said checks were
returned to Puzon when the transactions covered by these checks were paid or settled in full.

In 2000, Puzon purchased products on credit amounting to P11,820,327 for which he issued, and gave to SMC, two BPI
checks to cover the said transaction. In 2001, Puzon, together with his accountant, visited the SMC Sales Office in
Paranaque City to reconcile his account with SMC and Puzon allegedly requested to see one of the BPI Checks issued.
However, when he got hold of the checks, he immediately left the office, bringing the checks with them. SMC sent a
letter to Puzon demanding the return of the said checks but Puzon ignored the demand. Hence, SMC filed a complaint
against him for theft with the City Prosecutors Office of Paranaque City.

PROSECUTOR: the relationship between SMC and Puzon appears to be one of credit or creditor-debtor relationship. The
problem lies in the reconciliation of accounts and the non-payment of beer empties which cannot give rise to a criminal
prosecution for theft.

CA: the postdated checks were issued by Puzon merely as a security for the payment of his purchases and that these
were not intended to be encashed. It thus concluded that SMC did not acquire ownership of the checks as it was duty
bound to return the same checks to Puzon after the transactions covering them were settled. The CA agreed with the
prosecutor that there was no theft, considering that a person cannot be charged with theft for taking personal property
that belongs to himself.

ISSUE: W/N Puzon may be charged with theft.

SC: Considering that the second element of theft under Art. 308 of the RPC is that the thing taken belongs to another, it is
relevant to determine whether ownership of the subject check was transferred to petitioner. Section 12 of NIL provides
that “the instrument is not invalid for the reason only that it is antedated or postdated, provided this is not done for an
illegal or fraudulent purpose. The person to whom an instrument so dated is delivered acquires the title thereto as of the
date of delivery.”

However, “delivery” as the term is used in the aforementioned provision means that the party delivering did so for the
purpose of giving effect thereto. Otherwise, it cannot be said that there has been delivery of the negotiable instrument.
Once there is delivery, the person to whom the instrument is delivered gets the title to the instrument completely and
irrevocably.

If the subject check was given by Puzon to SMC in payment of the obligation, the purpose of giving effect to the
instrument is evident thus title to or ownership of the check was transferred upon delivery. However, if the check was not
given as payment, there being no intent to give effect to the instrument, then ownership of the check was not
transferred to SMC.

The evidence of SMC failed to establish that the check was given in payment of the obligation of Puzon. There was no
provisional receipt or official receipt issued for the amount of the check. What was issued was a receipt for the
document, a POSTDATED CHECK SLIP.

The evidence proves that the check was accepted, not as payment, but in accordance with the long-standing policy of SMC
to require its dealers to issue postdated checks to cover its receivables. The check was only meant to cover the transaction
and in the meantime Puzon was to pay for the transaction by some other means other than the check. This being so, title
to the check did not transfer to SMC; it remained with Puzon. The second element of the felony of theft was therefore not
established. Petitioner was not able to show that Puzon took a check that belonged to another. Hence, the prosecutor and
the DOJ were correct in finding no probable cause for theft.
RAFAEL LUNARIA vs. PEOPLE OF THE PHILIPPINES [November 11, 2008]

In October 1988, Rafael Lunaria entered into a partnership agreement with Nemesio Artaiz, in the conduct of a money-
lending business, with Lunaria as industrial partner and Artaiz as the financer. Lunaria, who was then a cashier of Far East
Bank and Trust Company in Meycauayan, Bulacan, would offer loans to prospective borrowers which his branch was
unable to accommodate. Lunaria would first inform Artaiz of the amount of the proposed loan, then Artaiz would issue a
check charged against his account in the bank, proceeds of which will go to a borrower, while Lunaria would in turn issue a
check to Artaiz corresponding to the amount lent plus the agreed share of interest.

The lending business progressed satisfactorily and sufficient trust was established between the parties that they both
agreed to issue pre-signed checks to each other, for their mutual convenience. The checks were signed but had no
payee's name, date or amount, and each was given the authority to fill these blanks based on each other's advice.

On November 1989, Artaiz was no longer willing to continue the partnership. One of the checks issued by petitioner to
Artaiz was dishonored for insufficient funds. Apparently, Lunaria had been implicated in a murder case and therefore
could not raise the money to fund the check. After Lunaria was eventually acquitted in 1990, Artaiz went to petitioner and
demanded payment for the money owed Artaiz. It was eventually agreed upon that petitioner owed Artaiz P844,000 and
Lunaria issued a check in that amount, post-dated to December 1990.

When the check became due and demandable, Artaiz deposited it. The check was dishonored as the account had been
closed. A demand letter was subsequently sent to petitioner, informing him of the dishonor of his check, with a demand
that he pay the obligation. According to Artaiz, Lunaria proposed that his house and lot be given as security, but after
Artaiz's lawyer had prepared the document, Lunaria refused to sign. At this point, Artaiz filed the instant case.

RTC: found Lunaria guilty for violation of BP 22; CA: found no error and affirmed the decision in toto.

ISSE: W/N the check was "made" or "drawn" within the contemplation of the law

LUNARIA: the check was not "made" or "drawn" within the contemplation of the law, nor was it for a consideration. Citing
the Negotiable Instruments Law, he could not have "drawn" and "issued" the subject check because "it was not complete
in form at the time it was given to Artaiz."

SC: At the outset, it should be borne in mind that the exchange of the pre-signed checks without date and amount
between the parties had been their practice for almost a year by virtue of their money-lending business. They had
authority to fill up blanks upon information that a check can then be issued.

Under the Negotiable Instruments Law, Section 14 provides that “Where the instrument is wanting in any material
particular, the person in possession thereof has prima facie authority to complete it by filling up the blanks therein." This
practice is allowed.

Because of the presumption of authority, the burden of proof that there was no authority or that authority granted was
exceeded is carried by the person who questions such authority. Records show that Lunaria had not proven lack of
authority on the part of Artaiz to fill up such blanks. Having failed to prove lack of authority, it can be presumed that Artaiz
was within his rights to fill up blanks on the check.

Under the second element, Lunaria states that the making and issuing of the check was devoid of consideration. He
claimed that the transaction for which the check was issued did not materialize. However, it should be noted that when
lack of consideration is claimed, it pertains to total lack of consideration. In this case, records show that Lunaria
recognized that there was an amount due to Artaiz, such that he had his own version of computation with respect to
the amount he owed to Artaiz. As to the second element of the crime, consideration was duly established in Artaiz's
testimony.