G.R. No. 198660, 23 October 2013


A Complaint for Sum of Money was filed by the petitioner against the Sps. Tiong for the amount of Php 8,500,00.00 covered by a check given by the latter as payment of the loans obtained from her. It was petitioner’s sister, Lilian, who vouched for the spouses’ ability to pay so that when the spouses approached her, she immediately acceded and lent money to them without requiring any collateral except post-dated checks bearing the borrowed amounts.

The spouses then issued 17 checks for a total amount of PhP 1,975,000. These checks were dishonored upon presentment to the drawee bank. As a result of the dishonor, petitioner demanded payment, however, the couple pleaded for more time because of their financial difficulties. When their financial situation turned better, the spouses called and asked the petitioner for computation of their loan obligations, the total of which reached to Php 13,218,544.20 due to the 2% compounded interest every month.

The spouses asked petitioner to reduce their indebtedness to Php 8,500,000.00 in which, the latter agreed. The spouses then delivered to petitioner Asiatrust Check No. BND057750 bearing the reduced amount of PhP 8,500,000 with the assurance that the check was good and demanded the return of the 17 previously dishonored checks.

Petitioner, however, refused to return the bad checks and advised respondents that she will do so only after the encashment of the latest issued check but such was also dishonored when it was presented by petitioner to the drawee bank. For the defense, the spouses categorically denied obtaining a loan from petitioner.

Caroline, one of the spouses, narrated that she and Lilian (petitioner’s sister) forged a partnership that operated a mahjong business and that she also agreed to use her personal checks to pay for the operational expenses including the payment of the winners of the games. Since Caroline was not always in town to prepare these checks, she left with Lilian 5 pre-signed and consecutively numbered checks on the condition that these checks will only be used to cover the costs of the business operations and in no circumstance will the amount of the checks exceed PhP 5,000.

However, she and Lilian had a serious disagreement that resulted in the cessation of their business. Caroline had forgotten about the five (5) pre-signed checks she left with Lilian. It was only when Lilian’s husband, Vicente Balboa, filed a complaint for sum of money in February 1997 against the spouses to recover PhP 5,175,250, covering three of the five post-dated and pre-signed checks.

Caroline categorically denied having completed Check No. BND057750 by using a check writer or typewriter as she had no check writer and she had always completed checks in her own handwriting. She insisted that petitioner and her sister completed the check after its delivery. Furthermore, she could not have gone to see petitioner Pua with her husband as they had been separated in fact for nearly 10 years. As for the 17 checks issued by her in 1988, Caroline alleged that they were not intended for Pua but were issued for the benefit of other persons. Ms. Tuazon, who was then the OIC-Manager of Asiatrust-Binondo Branch estified that respondent Caroline opened Asiatrust Account No. 5513-0054-9 and maintained that Caroline had always completed her checks with her own handwriting and not with a check writer and that Caroline’s checking account was closed at the instance of the bank due to 69 instances of check issuance against insufficient balance.

The RTC ruled in favor of petitioner and stated that the possession by petitioner of the checks signed by Caroline, under the Negotiable Instruments Law, raises the presumption that they were issued and delivered for a valuable consideration. Sps. Tiong was ordered to pay the principal amount of the 17 checks. This was, however, reversed by the CA on the ground that Asiatrust Bank Check No. BND057550 was an incomplete delivered instrument and that petitioner has failed to prove the existence of respondents’ indebtedness to her.

Hence, petitioner does not have a cause of action against the respondent spouses.


Whether the checks delivered to petitioner were issued to pay for the spouses’ loan obligation as consideration.


YES. The Court has expressly recognized that a check “constitutes an evidence of indebtedness” and is a veritable “proof of an obligation.” Hence, it can be used “in lieu of and for the same purpose as a promissory note.” In fact, a check functions more than a promissory note since it not only contains an undertaking to pay an amount of money but is an “order addressed to a bank and partakes of a representation that the drawer has funds on deposit against which the check is drawn, sufficient to ensure payment upon its presentation to the bank.” As reiterated in the case of Lim v. Mindanao Wines and Liquour Galleria, “a check, the entries of which are in writing, could prove a loan transaction.”

This very same principle underpins Section 24 of the Negotiable Instruments Law (NIL):

Section 24. Presumption of consideration. – Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration; and every person whose signature appears thereon to have become a party for value.

Consequently, the 17 original checks, completed and delivered to petitioner, are sufficient by themselves to prove the existence of the loan obligation of the respondents to petitioner. As for the Asiatrust check issued by Caroline to substitute the compounded value of the 17 checks, the claim of Caroline that the three (3) checks were part of the blank checks she issued and delivered to Lilian Balboa and intended solely for the operational expenses of their mahjong business is belied by her admission in the case that Lilian’s husband, Vicente, filed wherein she admitted that she issued three (3) checks because Vicente showed the listing of their account totaling ₱5,175,250.00.

Clearly, respondents’ defense that Caroline left blank checks with petitioner’s sister who, it is said, is now determined to recoup her past losses and bring financial ruin to respondents by falsifying the same blank checks, had already been thoroughly passed upon and rejected by the Court.

It cannot, therefore, be used to support respondents’ denial of their liability.

As for the interest, Sps. Tiong are not obliged to pay the interest of the loan on the ground that the supposed agreement to pay such interest was not reduced to writing. Article 1956 of the Civil Code, which refers to monetary interest, specifically mandates that no interest shall be due unless it has been expressly stipulated in writing.

Motion for reconsideration is granted. RTC ruling is reinstated with modification that the respondents are ordered to pay only the principal amount of the loan plus allowable legal interests and attorney’s fees.

*Case Digest by Radolf Zell L. Adasa, JD – 4, Andres Bonifacio College, SY 2019 – 2020