Facts:
J.Y. Brothers Marketing (J.Y.
Bros., for short) is a corporation engaged in the business of selling sugar, rice
and other commodities.
On October 15, 1996,
Anamer Salazar, a freelance
sales agent, was approached by
Isagani Calleja and Jess
Kallos.Salazar with Calleja
and Kallos procured from
J. Y. Bros.
300 cavans of
rice worth P214,000.00. As
payment, Salazar negotiated
and indorsed to J.Y. Bros. Prudential Bank Check No.
067481 dated October 15, 1996 issued by Nena Jaucian Timario in the amount
of P214,000.00 with the
assurance that the
check is good
as cash. On that assurance, J.Y. Bros.
parted with 300 cavans
of rice to
Salazar. However, upon presentment, the
check was dishonored due to closed account.
Informed of
the dishonor of
the check, Calleja,
Kallos and Salazar
delivered to J.Y.
Bros. a replacement cross Solid
Bank Check No. PA365704 dated October 29, 1996 again issued by Nena Jaucian
Timario in the amount of P214,000.00 but which, just the same, bounced due to
insufficient funds. When despite the demand letter dated February 27, 1997,
Salazar failed to settle the amount due J.Y. Bros., the latter charged
Salazar and Timario
with the crime
of estafa before
the RTC.
Issue:
1.
Whether or not
there is novation
2.
Whether or not
petitioner is liable as an accommodation indorser for the payment of the
dishonored Prudential Bank Check
Ruling:
1.
No.
Section 119 of the Negotiable Instrument Law provides,
thus:
SECTION 119. Instrument; how discharged. A negotiable
instrument is discharged:
(a) By payment in due course by or on behalf of
the principal debtor;
(b)
By payment in due course by the party accommodated, where the instrument
is made or accepted for his accommodation;
(c)
By the intentional cancellation thereof by the holder;
(d)
By any other act which will discharge a simple contract for the payment
of money;
(e)
When the principal debtor becomes the holder of the instrument at or
after maturity in his own right.
There are only two ways which indicate the presence of
novation and thereby produce the effect of
extinguishing an obligation
by another which
substitutes the same.
First, novation must
be explicitly stated and
declared in unequivocal
terms as novation
is never presumed.
Secondly, the old and
the new obligations must
be incompatible on
every point. The
test of incompatibility is
whether or not
the two obligations can
stand together, each
one having its
independent existence. If
they cannot, they
are incompatible and the
latter obligation novates
the first.
In this
case, respondents acceptance
of the Solid
Bank check, which
replaced the dishonored
Prudential Bank check, did
not result to
novation as there
was no express
agreement to establish
that petitioner was
already discharged from his liability
to pay respondent the amount of P214,000.00 as payment for the 300 bags of
rice. As we said, novation is never presumed,
there must be
an express intention
to novate. In
fact, when the
Solid Bank check
was delivered to respondent, the
same was also
indorsed by petitioner
which shows petitioners
recognition of the
existing obligation to respondent to pay P214,000.00 subject of
the replaced Prudential Bank check. Moreover,
respondents acceptance of
the Solid Bank
check did not
result to any
incompatibility, since the
two checks − Prudential and Solid Bank checks − were precisely for the
purpose of paying the amount of P214,000.00, i.e., the credit obtained from the
purchase of the 300 bags of rice from respondent. Indeed, there was no
substantial change in the object or principal condition of the obligation of
petitioner as the indorser of the check to pay the amount of P214,000.00. It
would appear that respondent accepted the Solid Bank check to give petitioner
the chance to pay her obligation.
2.
Yes.
Among the different types of checks issued by a drawer is the crossed check. The Negotiable
Instruments Law is silent with respect to crossed checks, although the Code of
Commerce makes reference to such instruments. We have 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
could not be
converted into cash.
Thus, the effect
of crossing a check 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. The change
in the mode of paying the obligation was not a change in any of the objects or
principal condition of the contract for novation to take place.
Considering that when
the Solid Bank
check, which replaced
the Prudential Bank
check, was presented
for payment, the same
was again dishonored; thus,
the obligation which
was secured by
the Prudential Bank
check was not extinguished and the Prudential Bank
check was not discharged. Thus, the court held petitioner liable as an
accommodation indorser for the payment of the dishonored Prudential Bank check.
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