Agency Cases and Digest

5/23/2018 Agency Cases and Digest

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Eurotech Industrial Technologies, Inc. v. Edwin Cuizon and Erwin Cuizon

G.R. No. 167552 April 23, 2007Chico-Nazario, J.

FACTS:

Eurotech is engaged in the business of importation and distribution of various European industrial

equipment, it has as one of its customers Impact Systems Sales which is a sole proprietorship owned by

Erwin Cuizon.

Eurotech sold to Impact Systems various products allegedly amounting to P91,338.00. Cuizons sought to

buy from Eurotech 1 unit of sludge pump valued at P250,000.00 with Cuizons making a down payment

of P50,000.00. When the sludge pump arrived from the United Kingdom, Eurotechre fused to deliver the

same to Cuizons without their having fully settled their indebtedness toEurotech. Thus, Edwin Cuizon

and Alberto de Jesus, general manager of Eurotech, executed a Deed of Assignment of receivables in

favor of Eurotech.

Cuizons, despite the existence of the Deed of Assignment, proceeded to collect from Toledo Power

Company the amount of P365,135.29. Eurotech made several demands upon Cuizons to pay their

obligations. As a result, Cuizons were able to make partial payments to Eurotech. Cuizons total

obligations stood at P295,000.00 excluding interests and attorneys fees.

Edwin Cuizon alleged that he is not a real party in interest in this case. According to him, he was acting

as mere agent of his principal, which was the Impact Systems, in his transaction with Eurotech and the

latter was very much aware of this fact.

ISSUE:

WON Edwin exceeded his authority when he signed the Deed of Assignment thereby binding himself

personally to pay the obligations to Eurotech

HELD:

No.

Edwin insists that he was a mere agent of Impact Systems which is owned by Erwin and that his status as

such is known even to Eurotech as it is alleged in the Complaint that he is being sued in his capacity as


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the sales manager of the said business venture. Likewise, Edwin points to the Deed of Assignment which

clearly states that he was acting as a representative of Impact Systems in said transaction.

Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts,

unless he expressly binds himself or exceeds the limits of his authority without giving such party

sufficient notice of his powers.

In a contract of agency, a person binds himself to render some service or to do something in

representation or on behalf of another with the latters consent.Its purpose is to extend the personality

of the principal or the party for whom another acts and from whom he or she derives the authority to

act. The basis of agency is representation, that is, the agent acts for and on behalf of the principal on

matters within the scope of his authority and said acts have the same legal effect as if they were

personally executed by the principal.

elements of the contract of agency: (1) consent, express or implied, of the parties to establish the

relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the

agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority

An agent, who acts as such, is not personally liable to the party with whom he contracts. There are

2instances when an agent becomes personally liable to a third person. The first is when he expresslybinds himself to the obligation and the second is when he exceeds his authority. In the last instance, the

agent can be held liable if he does not give the third party sufficient notice of his powers. Edwin does

not fall within any of the exceptions contained in Art. 1897.

In the absence of an agreement to the contrary, a managing agent may enter into any contracts that

he deems reasonably necessary or requisite for the protection of the interests of his principal entrusted

to his management.

Edwin Cuizon acted well-within his authority when he signed the Deed of Assignment. Eurotech refused

to deliver the 1 unit of sludge pump unless it received, in full, the payment for ImpactSystems

indebtedness. Impact Systems desperately needed the sludge pump for its business since after it paid

the amount of P50,000.00 as down payment it still persisted in negotiating with Eurotech which

culminated in the execution of the Deed of Assignment of its receivables from Toledo Power Company.

The significant amount of time spent on the negotiation for the sale of the sludge pump underscores


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Impact Systems perseverance to get hold of the said equipment. Edwins participationin the Deed of

Assignment was reasonably necessary or was required in order forhim to protect the business of his

principal.

G.R. No. 167552 April 23, 2007

EUROTECH INDUSTRIAL TECHNOLOGIES, INC., Petitioner,vs.EDWIN CUIZON and ERWIN CUIZON, Respondents.

D E C I S I O N

CHICO-NAZARIO,J.:

Before Us is a petition for review by certiorari assailing the Decision1of the Court of Appeals dated

10 August 2004 and its Resolution2dated 17 March 2005 in CA-G.R. SP No. 71397 entitled,"Eurotech Industrial Technologies, Inc. v. Hon. Antonio T. Echavez." The assailed Decision andResolution affirmed the Order3dated 29 January 2002 rendered by Judge Antonio T. Echavezordering the dropping of respondent EDWIN Cuizon (EDWIN) as a party defendant in Civil Case No.CEB-19672.

The generative facts of the case are as follows:

the pertinent part of which states:

1.) That ASSIGNOR5has an outstanding receivables from Toledo Power Corporation in theamount of THREE HUNDRED SIXTY FIVE THOUSAND (P365,000.00) PESOS as payment

for the purchase of one unit of Selwood Spate 100D Sludge Pump;

2.) That said ASSIGNOR does hereby ASSIGN, TRANSFER, and CONVEY unto theASSIGNEE6the said receivables from Toledo Power Corporation in the amount of THREEHUNDRED SIXTY FIVE THOUSAND (P365,000.00) PESOS which receivables the

ASSIGNOR is the lawful recipient;

3.) That the ASSIGNEE does hereby accept this assignment.7

Following the execution of the Deed of Assignment, petitioner delivered to respondents the sludgepump as shown by Invoice No. 12034 dated 30 June 1995.8

Allegedly unbeknownst to petitioner, respondents, despite the existence of the Deed of Assignment,proceeded to collect from Toledo Power Company the amount of P365,135.29 as evidenced by

Check Voucher No. 09339prepared by said power company and an official receipt dated 15 August1995 issued by Impact Systems.10Alarmed by this development, petitioner made several demandsupon respondents to pay their obligations. As a result, respondents were able to make partialpayments to petitioner. On 7 October 1996, petitioners counsel sent respondents a final demandletter wherein it was stated that as of 11 June 1996, respondents total obligations stoodat P295,000.00 excluding interests and attorneys fees.11Because of respondents failure to abide by

said final demand letter, petitioner instituted a complaint for sum of money, damages, with
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application for preliminary attachment against herein respondents before the Regional Trial Court ofCebu City.12

On 8 January 1997, the trial court granted petitioners prayer for the issuance of writ of preliminaryattachment.13

On 25 June 1997, respondent EDWIN filed his Answer14wherein he admitted petitioners allegationswith respect to the sale transactions entered into by Impact Systems and petitioner between Januaryand April 1995.15He, however, disputed the total amount of Impact Systems indebtedness topetitioner which, according to him, amounted to only P220,000.00.16

By way of special and affirmative defenses, respondent EDWIN alleged that he is not a real party ininterest in this case. According to him, he was acting as mere agent of his principal, which was theImpact Systems, in his transaction with petitioner and the latter was very much aware of this fact. Insupport of this argument, petitioner points to paragraphs 1.2 and 1.3 of petitioners Complaint stating

1.2. Defendant Erwin H. Cuizon, is of legal age, married, a resident of Cebu City. He is the

proprietor of a single proprietorship business known as Impact Systems Sales ("ImpactSystems" for brevity), with office located at 46-A del Rosario Street, Cebu City, where hemay be served summons and other processes of the Honorable Court.

1.3. Defendant Edwin B. Cuizon is of legal age, Filipino, married, a resident of Cebu City. Heis the Sales Manager of Impact Systems and is sued in this action in such capacity.17

On 26 June 1998, petitioner filed a Motion to Declare Defendant ERWIN in Default with Motion forSummary Judgment. The trial court granted petitioners motion to declare respondent ERWIN indefault "for his failure to answer within the prescribed period despite the opportunity granted "18but itdenied petitioners motion for summary judgment in its Order of 31 August 2001 and scheduled thepre-trial of the case on 16 October 2001.19However, the conduct of the pre-trial conference was

deferred pending the resolution by the trial court of the special and affirmative defenses raised byrespondent EDWIN.20

After the filing of respondent EDWINs Memorandum21in support of his special and affirmativedefenses and petitioners opposition22thereto, the trial court rendered its assailed Order dated 29January 2002 dropping respondent EDWIN as a party defendant in this case. According to the trialcourt

A study of Annex "G" to the complaint shows that in the Deed of Assignment, defendant Edwin B.Cuizon acted in behalf of or represented [Impact] Systems Sales; that [Impact] Systems Sale is asingle proprietorship entity and the complaint shows that defendant Erwin H. Cuizon is theproprietor; that plaintiff corporation is represented by its general manager Alberto de Jesus in thecontract which is dated June 28, 1995. A study of Annex "H" to the complaint reveals that [Impact]

Systems Sales which is owned solely by defendant Erwin H. Cuizon, made a down paymentof P50,000.00 that Annex "H" is dated June 30, 1995 or two days after the execution of Annex "G",

thereby showing that [Impact] Systems Sales ratified the act of Edwin B. Cuizon; the records furthershow that plaintiff knew that [Impact] Systems Sales, the principal, ratified the act of Edwin B.Cuizon, the agent, when it accepted the down payment of P50,000.00. Plaintiff, therefore, cannot

say that it was deceived by defendant Edwin B. Cuizon, since in the instant case the principal hasratified the act of its agent and plaintiff knew about said ratification. Plaintiff could not say that thesubject contract was entered into by Edwin B. Cuizon in excess of his powers since [Impact]Systems Sales made a down payment of P50,000.00 two days later.
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In view of the Foregoing, the Court directs that defendant Edwin B. Cuizon be dropped as partydefendant.23

Aggrieved by the adverse ruling of the trial court, petitioner brought the matter to the Court ofAppeals which, however, affirmed the 29 January 2002 Order of the court a quo. The dispositiveportion of the now assailed Decision of the Court of Appeals states:

WHEREFORE, finding no viable legal ground to reverse or modify the conclusions reached by thepublic respondent in his Order dated January 29, 2002, it is hereby AFFIRMED.24

Petitioners motion for reconsideration was denied by the appellate court in its Resolutionpromulgated on 17 March 2005. Hence, the present petition raising, as sole ground for its allowance,the following:

THE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR WHEN IT RULED THATRESPONDENT EDWIN CUIZON, AS AGENT OF IMPACT SYSTEMS SALES/ERWIN CUIZON, ISNOT PERSONALLY LIABLE, BECAUSE HE HAS NEITHER ACTED BEYOND THE SCOPE OF HIS

AGENCY NOR DID HE PARTICIPATE IN THE PERPETUATION OF A FRAUD.25

To support its argument, petitioner points to Article 1897 of the New Civil Code which states:

Art. 1897. The agent who acts as such is not personally liable to the party with whom he contracts,unless he expressly binds himself or exceeds the limits of his authority without giving such partysufficient notice of his powers.

Petitioner contends that the Court of Appeals failed to appreciate the effect of ERWINs act ofcollecting the receivables from the Toledo Power Corporation notwithstanding the existence of theDeed of Assignment signed by EDWIN on behalf of Impact Systems. While said collection did notrevoke the agency relations of respondents, petitioner insists that ERWINs action repudiatedEDWINs power to sign the Deed of Assignment. As EDWIN did not sufficiently notify it of the extent

of his powers as an agent, petitioner claims that he should be made personally liable for theobligations of his principal.26

Petitioner also contends that it fell victim to the fraudulent scheme of respondents who induced it intoselling the one unit of sludge pump to Impact Systems and signing the Deed of Assignment.Petitioner directs the attention of this Court to the fact that respondents are bound not only by theirprincipal and agent relationship but are in fact full-blooded brothers whose successive contraveningacts bore the obvious signs of conspiracy to defraud petitioner.27

In his Comment,28respondent EDWIN again posits the argument that he is not a real party in interestin this case and it was proper for the trial court to have him dropped as a defendant. He insists thathe was a mere agent of Impact Systems which is owned by ERWIN and that his status as such isknown even to petitioner as it is alleged in the Complaint that he is being sued in his capacity as thesales manager of the said business venture. Likewise, respondent EDWIN points to the Deed of

Assignment which clearly states that he was acting as a representative of Impact Systems in saidtransaction.

We do not find merit in the petition.

In a contract of agency, a person binds himself to render some service or to do something inrepresentation or on behalf of another with the latters consent.29The underlying principle of the
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contract of agency is to accomplish results by using the services of othersto do a great variety ofthings like selling, buying, manufacturing, and transporting.30Its purpose is to extend the personalityof the principal or the party for whom another acts and from whom he or she derives the authority toact.31It is said that the basis of agency is representation, that is, the agent acts for and on behalf ofthe principal on matters within the scope of his authority and said acts have the same legal effect asif they were personally executed by the principal.32By this legal fiction, the actual or real absence of

the principal is converted into his legal or juridical presencequi facit per alium facit per se.33

The elements of the contract of agency are: (1) consent, express or implied, of the parties toestablish the relationship; (2) the object is the execution of a juridical act in relation to a third person;(3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of hisauthority.34

In this case, the parties do not dispute the existence of the agency relationship between respondentsERWIN as principal and EDWIN as agent. The only cause of the present dispute is whetherrespondent EDWIN exceeded his authority when he signed the Deed of Assignment thereby bindinghimself personally to pay the obligations to petitioner. Petitioner firmly believes that respondentEDWIN acted beyond the authority granted by his principal and he should therefore bear the effect

of his deed pursuant to Article 1897 of the New Civil Code.

We disagree.

Article 1897 reinforces the familiar doctrine that an agent, who acts as such, is not personally liableto the party with whom he contracts. The same provision, however, presents two instances when anagent becomes personally liable to a third person. The first is when he expressly binds himself to theobligation and the second is when he exceeds his authority. In the last instance, the agent can beheld liable if he does not give the third party sufficient notice of his powers. We hold that respondentEDWIN does not fall within any of the exceptions contained in this provision.

The Deed of Assignment clearly states that respondent EDWIN signed thereon as the salesmanager of Impact Systems. As discussed elsewhere, the position of manager is unique in that itpresupposes the grant of broad powers with which to conduct the business of the principal, thus:

The powers of an agent are particularly broad in the case of one acting as a general agent ormanager; such a position presupposes a degree of confidence reposed and investiture with liberalpowers for the exercise of judgment and discretion in transactions and concerns which are incidentalor appurtenant to the business entrusted to his care and management. In the absence of anagreement to the contrary, a managing agent may enter into any contracts that he deemsreasonably necessary or requisite for the protection of the interests of his principal entrusted to hismanagement. x x x.35

Applying the foregoing to the present case, we hold that Edwin Cuizon acted well-within his authoritywhen he signed the Deed of Assignment. To recall, petitioner refused to deliver the one unit of

sludge pump unless it received, in full, the payment for Impact Systems indebtedness.36We mayvery well assume that Impact Systems desperately needed the sludge pump for its business sinceafter it paid the amount of fifty thousand pesos (P50,000.00) as down payment on 3 March 1995 ,37it

still persisted in negotiating with petitioner which culminated in the execution of the Deed ofAssignment of its receivables from Toledo Power Company on 28 June 1995.38The significantamount of time spent on the negotiation for the sale of the sludge pump underscores ImpactSystems perseverance to get hold of the said equipment. There is, therefore, no doubt in our mindthat respondent EDWINs participation in the Deed of Assignment was "reasonably necessary" orwas required in order for him to protect the business of his principal. Had he not acted in the way he
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did, the business of his principal would have been adversely affected and he would have violated hisfiduciary relation with his principal.

We likewise take note of the fact that in this case, petitioner is seeking to recover both fromrespondents ERWIN, the principal, and EDWIN, the agent. It is well to state here that Article 1897 ofthe New Civil Code upon which petitioner anchors its claim against respondent EDWIN "does not

hold that in case of excess of authority, both the agent and the principal are liable to the othercontracting party."39To reiterate, the first part of Article 1897 declares that the principal is liable incases when the agent acted within the bounds of his authority. Under this, the agent is completelyabsolved of any liability. The second part of the said provision presents the situations when theagent himself becomes liable to a third party when he expressly binds himself or he exceeds thelimits of his authority without giving notice of his powers to the third person. However, it must bepointed out that in case of excess of authority by the agent, like what petitioner claims exists here,the law does not say that a third person can recover from both the principal and the agent .40

As we declare that respondent EDWIN acted within his authority as an agent, who did not acquireany right nor incur any liability arising from the Deed of Assignment, it follows that he is not a realparty in interest who should be impleaded in this case. A real party in interest is one who "stands to

be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit."

41

Inthis respect, we sustain his exclusion as a defendant in the suit before the court a quo.

WHEREFORE, premises considered, the present petition is DENIED and the Decision dated 10August 2004 and Resolution dated 17 March 2005 of the Court of Appeals in CA-G.R. SP No.71397, affirming the Order dated 29 January 2002 of the Regional Trial Court, Branch 8, Cebu City,is AFFIRMED.

Let the records of this case be remanded to the Regional Trial Court, Branch 8, Cebu City, for thecontinuation of the proceedings against respondent Erwin Cuizon.
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G.R. No. L-42847 April 29, 1977

THE PEOPLE OF THE PHILIPPINES, petitioner,vs.CECILIA QUE YABUT and HON. JESUS DE VEGA, as Judge of the Court of First Instance ofBulacan, Branch II, respondents.

G.R. No. L-42902 April 29, 1977

THE PEOPLE OF THE PHILIPPINES,petitioner,vs.GEMINIANO YABUT, JR., respondent.

Provincial Fiscal Pascual Kliatchko and Office of the Solicitor General, for petitioner.

Z oilo P. Perlas as private prosecutor.

Geminiano F. Yabut for private respondents.

MARTIN, J .:

Two novel questions of law are presented to Us in these petitions to review on certiorari the quashalorders of the Court of First Instance of Bulacan, sitting at Malolos, first, the rule on venue or

jurisdiction in a case of estafa for postdating or issuing a check without insufficient funds,and second, whether the new law on checks punishes the postdating or issuance thereof in paymentof a pre-existing obligation.

Private respondent Cecilia Que Yabut in L-42847 was accused of estafa by means of false

pretenses before the Court of First Instance of Bulacan, presided over by respondent Judge Jesusde Vega. The information, docketed as criminal case 1404, charges:

That during the period from February 22, to February 26, 1975, in the Municipality ofMalolos, Province of Bulcan, Philippines, and within the jurisdiction of this HonorableCourt, the said accused Cecilia Que Yabut, as treasurer of the Yabut Transit Line, bymeans of false pretenses and pretending to have sufficient funds in the MerchantsBanking Corporation, located and doing business in Caloocan City, prepared issuedand make out Check Nos. CB-19035 B, CB-190396 and CB-190397, dated February22, 1975, February 24, 1975 and February 26, 1975, in the total sum of P6,568.94,drawn against the Merchants Banking Corporation, payable to Freeway Tires Supply,owned and operated by Alicia P. Andan, in payment of articles and merchandise

delivered to and received by said accused, gave and delivered the said checks to thesaid Freeway Tires Supply, the said accused Cecilia Que Yabut well knowing that atthe time there was no or insufficient funds in the said Merchants BankingCorporation, and upon presentation of the said checks to the bank, the checks weredishonored and inspite of repeated demands by the owner of the Freeway TiresSupply to deposit the necessary funds to cover the checks within the reglementaryperiod enjoined by law, failed and refused to do so, to the damage and prejudice of

Alicia P. Andan, owner and operator of the Freeway Tires Supply, in the total amountof P6,568.94.


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Instead of entering a plea, respondent Cecilia Que Yabut filed a motion to quash on September 1,1975, contending that the acts charged do not constitute the offense as there is no allegation thatthe postdated checks were issued and delivered to the complainant prior to or simultaneously withthe delivery of the merchandise, the crime of estafa not being indictable ,when checks are postdatedor issued in payment of pre-existing obligation; and the venue was improperly laid in Malolos,Bulacan, because the postdated checks were issued and delivered to, and received by, the

complainant in the City of Caloocan, where she (respondent Que Yabut) holds office.

An opposition was interposed by the People, maintaining that the new law on checks (Rep. Act4885, amending Art. 315, par. 2 (d), Revised Penal Code), penalizes the postdating or issuancethereof in payment of pre-existing obligation and that the Malolos court can exercise jurisdiction overthe case, since the last ingredient of the offense, i.e., damage, transpired in Bulacan (residence ofcomplainant) after the dishonor of the checks for lack of funds.

Judge Jesus de Vega quashed the information, as prayed for by respondent Que Yabut, onNovember 10, 1975 for the reason "that the proper venue in this case is Caloocan City and notBulacan." Whether estafa lies for postdating or issuing a check in payment of a pre-existingobligation was not by respondent Judge.

The People's motion for reconsideration of this dismissal order was denied on January 12, 1976.

The other private respondent, Germiniano Yabut, Jr. (L-42902), husband of respondent Cecilia QueYabut, stood charged in criminal case 1405-M before the Court of First Instance of Bulacan,presided over by Judge Edgardo L. Paras, of the crime of estafa under Art. 315, par. 2 (d) of theRevised Penal Code in that:

(D)uring the period from February 23 to April 9, 1975, in the municipality of Malolos,Province of Bulacan, Philippines, and within the jurisdiction of this Honorable Court,the said accused Geminiano Yabut, Jr., as presided of the Yabut Transit Line, bymeans of false pretenses and pretending to have sufficient funds in the MerchantsBanking Corporation and Manufacturers Bank and Trust Company, located anddoing business in Caloocan City, prepared, issued and make out Check Nos. CB-192042 B, CB-192043 B, 423123, CB-191988 B, 423124, CB-192044 B, CB-192045B, CB-193737 B, CB-193738 B, CB-193739 B, CB-199953 B, CB-199954 B, CB-199955 B, and CB-199956 B, dated February 23, 26, 27, March 1, 3, 10, 11, 12, April4, 7, 8 and 9, 1975 in the total sum of P37,206.00,drawn against the MerchantsBanking Corporation and Manufacturers Bank and Trust Company, payable to theFree Tires Supply and Free Caltex Station, owned and operated by Alicia P. Andan,in payment articles and merchandise delivered to and received by said accused,gave and delivered the said checks to said Freeway Tires Supply and FreewayCaltex Station, the said accused Geminiano Yabut, Jr. well knowing that at the timethere was no or insufficient funds in the said Merchants Banking Corporation andManufacturers Bank and Trust Company, and upon presentation of the said checks

to the bank, the checks were dishonored and inspite of repeated demands by theowner of the Freeway Tires Supply and Freeway Caltex Station to deposit thenecessary funds to cover the cheeks within the reglementary period enjoined by law,failed and refused to do so, to the damage and Prejudice of Alicia P. Andan, ownerand operator of the Freeway Tires Supply and Freeway Caltex Station in the totalsum of P37,206.00.

Like his wife, respondent Geminiano Jr. moved to quash the information on two grounds: (1) thefacts recited do not constitute an offense because the checks were issued in payment of a pre-


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existing obligation; and (2) the venue was improperly laid, considering that the postdated checkswere issued and delivered to and received by the complainant in City of Caloocan, whererespondent holds office.

On October 13, 1975, Judge Paras quashed the information because "(t)he elements of the crime(issuance of the rubber check, attempted encashment, and refusal to honor) alleged in the

Information all took place within the territorial jurisdiction, not of Bulacan, but of Caloocan City."

The People moved for reconsideration, but on February 9, 1976, the motion was denied.

Hence, the two petitions for review on certiorari were filed by the People of the Philippines.

We find both peti t ions to b e impressed wi th meri ts.

1. Estafa by postdating or issuing a bad check under Art. 315, par. 2 (d) of the Revised Penal Codemay be a transitory or continuing offense. 1Its basic elements of deceit and damage2mayindependently arise in separate places. In the event of such occurrence, the institution of the criminalaction in either place is legally allowed. Section 14(a), Rule 110 of the Revised Rules of Court provides:

"In all criminal prosecutions the action shall be instituted and tried in the Court of the municipality orprovince wherein the offense was committed or any one of the essential ingredients thereof took place ."The theory is that a person indicted with a transitory offense may be validly tried in any jurisdiction wherethe offense wasin part committed. 3However, if all the acts material and essential to the crime andrequisite of its consummation occurred in one municipality or province, the court of that municipality orprovince has the sole jurisdiction to try the case.

The estafa charged in the two informations involved in the case before Us appears to be transitory orcontinuing in nature. Deceit has taken place in Malolos, Bulacan, while the damage in CaloocanCity, where the checks were dishonored by the drawee banks there. Jurisdiction can, therefore, beentertained by either the Malolos court or the Caloocan court. While the subject checks were written,signed, or dated in Caloocan City, they were not completely made or drawn there, butin Malolos,Bulacan, where they were uttered and delivered. That is the place of business and residence of the

payee. The place where the bills were written, signed, or dated does not necessarily fix or determinethe place where they were executed. What is of decisive importance is the delivery thereof.Thedelivery of the instrument is the final act essentialto its consummationas an obligation. 4Anundelivered bill or note is inoperative. Until delivery, the contract is revocable. 5And the issuance as wellas the delivery of the check must be to a person who takes it as a holder,which means "(t)hepayee orindorseeof a bill or note, who is in possession of it, or the bearer thereof." 6Delivery of the check signifiestransfer of possession, whether actual or constructive, from one person to another with intent to transfertitlethereto. 7Thus, the penalizing clause of the provision of Art. 315, par. 2 (d) states: "By postdating acheck, or issuing a check inpayment of an obligationwhen the offender had no funds in the bank, or hisfunds deposited therein were not sufficient to cover the amount of the check." Clearly, therefore, theelement of deceit thru the issuance and delivery of the worthless checks to the complainant took place inMalolos, Bulcan, conferring upon a court in that locality jurisdiction to try the case.

Modesto Yambao's receipt of the bad checks from Cecilia Que Yabut or Geminiano Yabut Jr. inCaloocan City cannot, contrary to the holding of the respodent Judges, be licitly taken as delivery ofthe checks to the complainant Alicia P. Andan at Caloocan City to fix the venue there. He did nottake delivery of the checks as holder, i.e., as "payee" or "indorse". And there appears to be nocontract of agency between Yambao and Andan so as to bind the latter for the acts of theformer. Alicia P. Andan declared in that sworn testimony before the investigating fiscal that

Yambao is but her "messenger" or "part-time employee."8There was no specialfiduciaryrelationship that permeated their dealings. For a contract of agency to exist, the consent ofboth parties is essential, the principal consent of both parties is essential, the principal consents


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that the other party, the agent, shall act on his behalf, and the agent consents so to act. 9It mustexist as a fact.The law makes no presumption thereof. The person alleging it has the burden of proof toshow, not only the fact of its existence, but also its nature and extent. 10This is more imperative when it isconsidered that the transaction dealt with involves checks, which are not legal tender, andthecreditormay validly refuse the same as payment of obligation. 11

Furthermore, the place of business of the offended party, the Freeway Tires Supply and FreewayCaltex Station, is at Malolos, Bulacan, from where the tire and gas purchases were amade by thetwo private respondents. As a consequence, payment thereof should be considered effected atMalolos, Bulacan. "(I)f the undertaking is to deliver a determinate thing, the payment shall be madewherever the thing might be at the moment the obligation was constituted.12The receipt by the twoprivate respondents at Caloocan City of the tires and gas supplies from Malolos, Bulacan, signifies butthe consummation of the contract between the parties. It was the result of anobligationpreviouslycontracted at Malolos, Bulacan. 13The averments in the informations do not indicatethat the complainant is an ambulant peddler of tires and gas, butmaintains a fixed and determinate placeof business at Malolos, Bulacan. Obligations, therefore, contracted as regards her business mustpresumptively be at her place of business.

2. In general terms, a prosecution for issuing a worthless check with intent to defraud is in the county

where the check was uttered and delivered. 14Thus, where a check was drawnin Merced Countyandmade payableat a Merced County bank, butdelivered to a merchant in Sacramento County by thedrawer's agent, the Sacramento County courts and had jurisdiction of a prosecution against the drawerfor uttering a check without funds or credit with intent to defraud. 15The venue of the offense lies at theplace where the check was executed and delivered to the payee. 16Since in the instant case it was inMalolos, Bulacan where the checks were uttered and delivered to complaint Andan, at which place, herbusiness and residence were also located, the criminal prosecution of estafa may be lodged therein.17Asearlier pointed out, the giving of the checks by the two private respondents in Caloocan City to ModestoYambo cannot be treated as valid delivery of the checks, because Yambo is a mere "messenger" or "part-time employee" and not an agent of complaint Alicia P. Andan.

3. The next point of inquiry is whether or not the postdating or issuing of a worthless check inpayment of apre-existing obligation constitutes estafa under Art. 315, par. 2 (d) of the Revised

Penal Code. We feel, however, that due to the absence of concrete evidenceon the specificnatureof the obligation assumed or supposedly discharged by the issuance of the bad checks,resolution of this controversial issue on the basis of the averments in the criminal informations aloneis not yet ripe. As revealed by the pleadings, the parties are at divergence on the character of theobligation for which the private respondents issued the checks intended as payment thereof. Privaterespondents maintain that the obligation is a pre-existing one. The prosecution, on the other hand,represented to the trial courts in its Opposition to the Motions to Quash: "We will prove by ourevidence that said checks are notin payment of a pre-existing obligation." 18The deferment of theresolution becomes more imperative when it is considered that the question raised is one of firstimpression and of consequential far-ranging effects on transactions in checks.

4.Ad interim, We hold that the facts charged in the informations against private respondents,

contrary to their claim, constitute estafa under Art. 315, par. 2 (d) of the Revised Penal Code. Inconsidering a motion to quash based on the ground "(t)hat the facts charged do not constitute anoffense," 19the point of resolution is whether the facts alleged, if hypothetically admitted, would meet theessential elements of the offense as defined in the law. 20The facts alleged in the criminal charge shouldbe taken as they are. 21An analysis of the two informations involved in the present case convinces Usthat the facts charged therein substantially constitute the integral elements of the offense as defined inthe law. And the averments in the two informations sufficiently inform the two private respondents of thenature and cause of the accusations against them, thereby defeating any constitutional objection of lackof notice. 22


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ACCORDINGLY, the appealed orders of the respondent trial courts ordering the quashal of theestafa informations against the two private respondents in the petitions at bar are hereby reversedand set aside. The informations, as they are, substantially conform with the crime charged asdefined in the law. Let the arraignment of the private respondents in the criminal cases below be setat the earliest date and, thereafter, the trial on the merits to proceed immediately. No costs.

SO ORDERED.

Makasiar, and Antonio JJ., concur.

Muoz Palma, J., concur in the results.

Separate Opinions

TEEHANKEE, J., concurring:

I concur on the ground that the informations expressly allege that the crimes of estafa werecommitted by respondents-accused "inthe Municipality of Malolos, Province of Bulacan."Respondents' motions to quash on the ground of improper venue, viz, that the checks issued bythem were issued by them and received by complainant elsewhere (in Caloocan City) must yield tothe express allegations of the informations, bearing in mind that what determines jurisdiction are theallegations in the information and that venue is sufficiently conferred wherein any one of theessential ingredients of the offense charged took place.

A quashal motion raising the question of lack of jurisdiction of the offense charged raises a simplequestion of law imports on the part of the accused-movant a hypothetical admission of the factsalleged in the information. (Rule 117 secs. 2 and 6; cf. IV Moran's Rules of Court 1970 ed., pp. 224,238 and cases cited).

The informations actually charge that estafa was committed in two aspects: by obtaining the goodsby means of false pretenses and pretending to have sufficient funds for the checks issued inpayment of the goods, and by issuing checks without sufficient funds. (Article 315, pars. 2(a) and (d),Revised Penal Code). The questions of jurisdiction re the first aspects has been duly resolved byupholding the lower court's jurisdiction under the allegations of the informations. The question raisedas to the second aspect, viz,whether the amendatory Act on checks (Republic Act No. 4885approved June 17, 1967) now includes the act of issuing a bad check in payment of a pre-existingobligation in the crime of estafa, has been properly ruled as premature. The question of law raisedthereby cannot now be resolved until the facts, e.g. whether or not the checks were issued inpayment of pre-existing obligations, shall have been duly established at the trial.

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