Cayanan vs North Star (G.R. No. 172954 October 5, 2011)

Cayanan vs North Star International Travel Inc.
G.R. No. 172954 October 5, 2011

Facts: North Star International Travel Incorporated (North Star) is a corporation engaged in the travel agency business while petitioner is the owner/general manager of JEAC International Management and Contractor Services, a recruitment agency.   On March 17, 1994, Virginia Balagtas, the General Manager of North Star, in accommodation and upon the instruction of its client, petitioner herein, sent the amount of US$60,000 to View Sea Ventures Ltd., in Nigeria from her personal account in Citibank Makati. On March 29, 1994, Virginia again sent US$40,000 to View Sea Ventures by telegraphic transfer, with US$15,000 coming from petitioner. Likewise, on various dates, North Star extended credit to petitioner for the airplane tickets of his clients, with the total amount of such indebtedness under the credit extensions eventually reaching P510,035.47. To cover payment of the foregoing obligations, petitioner issued five checks to North Star. When presented for payment, the checks in the amount of P1,500,000 and P35,000 were dishonored for insufficiency of funds while the other three checks were dishonored because of a stop payment order from petitioner. North Star, through its counsel, wrote petitioner on September 14, 1994 informing him that the checks he issued had been dishonored. North Star demanded payment, but petitioner failed to settle his obligations. Hence, North Star instituted Criminal Case Nos. 166549-53 charging petitioner with violation of Batas Pambansa Blg. 22, or the Bouncing Checks Law before the Metropolitan Trial Court (MeTC) of Makati City.

Issue: Whether or not the checks were issued for a valuable consideration entitling respondent to damages.

Held: Yes. We have held that upon issuance of a check, in the absence of evidence to the contrary, it is presumed that the same was issued for valuable consideration which may consist either in some right, interest, profit or benefit accruing to the party who makes the contract, or some forbearance, detriment, loss or some responsibility, to act, or labor, or service given, suffered or undertaken by the other side. Under the Negotiable Instruments Law , it is presumed that every party to an instrument acquires the same for a consideration or for value. As petitioner alleged that there was no consideration for the issuance of the subject checks, it devolved upon him to present convincing evidence to overthrow the presumption and prove that the checks were in fact issued without valuable consideration. Sadly, however, petitioner has not presented any credible evidence to rebut the presumption, as well as North Stars assertion, that the checks were issued as payment for the US$85,000 petitioner owed.

Petitioner claims that North Star did not give any valuable consideration for the checks since the US$85,000 was taken from the personal dollar account of Virginia and not the corporate funds of North Star. The contention, however, deserves scant consideration. The subject checks, bearing petitioners signature, speak for themselves. The fact that petitioner himself specifically named North Star as the payee of the checks is an admission of his liability to North Star and not to Virginia Balagtas, who as manager merely facilitated the transfer of funds. Indeed, it is highly inconceivable that an experienced businessman like petitioner would issue various checks in sizeable amounts to a payee if these are without consideration. Moreover, we note that Virginia Balagtas averred in her Affidavit that North Star caused the payment of the US$60,000 and US$25,000 to View Sea Ventures to accommodate petitioner, which statement petitioner failed to refute. In addition, petitioner did not question the Statement of Account No. 8639 dated August 31, 1994 issued by North Star which contained itemized amounts including the US$60,000 and US$25,000 sent through telegraphic transfer to View Sea Ventures per his instruction. Thus, the inevitable conclusion is that when petitioner issued the subject checks to North Star as payee, he did so to settle his obligation with North Star for the US$85,000. And since the only payment petitioner made to North Star was in the amount of P220,000.00, which was applied to interest due, his liability is not extinguished. Having failed to fully settle his obligation under the checks, the appellate court was correct in holding petitioner liable to pay the value of the five checks he issued in favor of North Star.

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