Llorente vs. Star City Pty Limited, 928 SCRA 525, January 15, 2020

4/4/22, 1:23 AM SUPREME COURT REPORTS ANNOTATED VOLUME 928

G.R. No. 212050. January 15, 2020.*

QUINTIN ARTACHO LLORENTE, petitioner, vs. STAR
CITY PTY LIMITED, represented by the JIMENO AND
COPE LAW OFFICES as Attorney-in-Fact, respondent.

G.R. No. 212216. January 15, 2020.*

STAR CITY PTY LIMITED, represented by the JIMENO
COPE & DAVID LAW OFFICES as its Attorney-in-Fact,
petitioner, vs. QUINTIN ARTACHO LLORENTE and
EQUITABLE PCI BANK (now BDO Unibank, Inc.),
respondents.
_______________
* FIRST DIVISION.

526
526 SUPREME COURT REPORTS ANNOTATED

Llorente vs. Star City Pty Limited
Mercantile Law; Corporations; Foreign Corporations;

Capacity to Sue; On the capacity of a foreign corporation to sue
before Philippine courts, the applicable law is clear. Under
Republic Act (RA) No. 11232 or the Revised Corporation Code of
the Philippines (Revised Corporation Code), became effective on
February 23, 2019.—On the capacity of a foreign corporation to
sue before Philippine courts, the applicable law is clear. Under
Republic Act No. (RA) 11232 or the Revised Corporation Code of
the Philippines (Revised Corporation Code), which became
effective on February 23, 2019, the pertinent provision is Section
150, which states: SEC. 150. Doing Business Without a License.—
No foreign corporation transacting business in the Philippines
without a license, or its successors or assigns, shall be permitted
to maintain or intervene in any action, suit or proceeding in any
court or administrative agency of the Philippines; but such
corporation may be sued or proceeded against before Philippine
courts or administrative tribunals on any valid cause of action
recognized under Philippine laws. Section 150 of the Revised
Corporation Code is a verbatim reproduction of Section 133 of
Batas Pambansa Blg. (BP) 68 or the Corporation Code of the
Philippines (Corporation Code), which provided: Sec. 133. Doing
business without a license.—No foreign corporation transacting
business in the Philippines without a license, or its successors or
assigns, shall be permitted to maintain or intervene in any action,
suit or proceeding in any court or administrative agency of the
Philippines; but such corporation may be sued or proceeded
against before Philippine courts or administrative tribunals on
any valid cause of action recognized under Philippine laws. (69a)
https://central.com.ph/sfsreader/session/0000017ff075f2e018d9803e000d00d40059004a/t/?o=False 1/29
Same; Same; Same; Same; Isolated Transaction Rule; A

foreign corporation that is not doing business in the Philippines
must disclose such fact if it desires to sue in Philippine courts
under the “isolated transaction rule” because without such
disclosure, the court may choose to deny it the right to sue.—It
must be noted that the Revised Corporation Code repealed the
Corporation Code and any law, presidential decree or issuance,
executive order, letter of instruction, administrative order, rule or
regulation contrary or inconsistent with any provision of the
Revised Corporation Code is modified or repealed accordingly.
While the law (presently the Revised Corporation Code or its
predecessor, the Corporation Code) grants to foreign corporations
with Philippine license the right to sue in the Philippines, the
Court, however, in a long line of cases under the

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VOL. 928, JANUARY 15, 2020 527

regime of the Corporation Code has held that a foreign

corporation not engaged in business in the Philippines may not be
denied the right to file an action in the Philippine courts for an
isolated transaction. The issue on whether a foreign corporation
which does not have license to engage in business in the
Philippines can seek redress in Philippine courts depends on
whether it is doing business or it merely entered into an isolated
transaction. A foreign corporation that is not doing business in
the Philippines must disclose such fact if it desires to sue in
Philippine courts under the “isolated transaction rule” because
without such disclosure, the court may choose to deny it the right
to sue.
Same; Same; Same; Same; Same; As to a foreign corporation,
the qualifying circumstance that if it is doing business in the
Philippines, it is duly licensed or if it is not, it is suing upon a
singular and isolated transaction, is an essential part of the
element of the plaintiff’s capacity to sue and must be affirmatively
pleaded.—The right and capacity to sue, being, to a great extent,
matters of pleading and procedure, depend upon the sufficiency of
the allegations in the complaint. Thus, as to a foreign corporation,
the qualifying circumstance that if it is doing business in the
Philippines, it is duly licensed or if it is not, it is suing upon a
singular and isolated transaction, is an essential part of the
element of the plaintiff’s capacity to sue and must be affirmatively
pleaded.
Courts; Regional Trial Courts; Jurisdiction; Under Batas
Pambansa Bilang (BP Blg.) 129, Section 19, Regional Trial Courts
(RTCs) have exclusive jurisdiction “[i]n all other cases in which the
demand, exclusive of interest, damages of whatever kind,
attorney’s fees, litigation expenses, and costs or the value of
property in controversy exceeds P300,000.00 or, in such other cases
in Metro Manila, where the demand, exclusive of the above
mentioned items exceeds P400,000.00.”—It must be remembered
that the complaint filed by SCPL against Llorente and EPCIB is
for collection of sum of money, which is a civil case. Under BP
129, Section 19, RTCs have exclusive jurisdiction “[i]n all other
cases in which the demand, exclusive of interest, damages of
whatever kind, attorney’s fees, litigation expenses, and costs or
the value of property in controversy exceeds Three hundred

thousand pesos (P300,000.00) or, in such other cases in Metro
Manila, where the demand, exclusive of the above mentioned
items exceeds Four hundred thousand pesos (P400,000.00).” Since
the

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amount demanded by SCPL against Llorente and EPCIB in

solidary capacity, which is “USD $300,000.00 plus legal interest
from date of first demand on December 20, 2000 until full
payment,” is above P400,000.00, the RTC has jurisdiction over
SCPL’s complaint.
Same; Jurisdiction; Checks; From the point of view of
territorial jurisdiction in criminal cases involving checks, any of
the places where the check is drawn, issued, delivered, or
dishonored has jurisdiction.—From the point of view of territorial
jurisdiction in criminal cases involving checks, any of the places
where the check is drawn, issued, delivered, or dishonored has
jurisdiction. As the CA emphasized, “[w]hile it is true that the
stopped payment occurred in Australia per advice of Union Bank
of California to the Bank of New York, x x x the subject matter of
the instant complaint are the subject drafts drawn by EPCIB,
which is a Philippine bank.”
Mercantile Law; Negotiable Instruments Law; Drawers;
Generally, by drawing a check, the drawer: admits the existence of
the payee and his then capacity to endorse; impliedly represents
that he (the payee) has funds or credits available for its payment in
the bank in which it is drawn; engages that if the bill is not paid
by the drawee and due proceedings on dishonor are taken by the
holder, he will upon demand pay the amount of the bill together
with the damages and expenses accruing to the holder by reason of
the dishonor of the instrument; and, if the drawee refuses to accept
a bill drawn upon him, becomes liable to pay the instrument
according to his original undertaking.—When the bank, as the
drawer of a negotiable check, signs the instrument its
engagement is then as absolute and express as if it were written
on the check; and a dual promise is implied from the issuance of a
check: first, that the bank upon which it is drawn will pay the
amount thereof; and second, if such bank should fail to make the
payment, the drawer will pay the same to the holder. Generally,
by drawing a check, the drawer: admits the existence of the payee
and his then capacity to endorse; impliedly represents that he
(the payee) has funds or credits available for its payment in the
bank in which it is drawn; engages that if the bill is not paid by
the drawee and due proceedings on dishonor are taken by the
holder, he will upon demand pay the amount of the bill together
with the damages and expenses accruing to the holder by reason
of the dishonor of the instrument; and, if the drawee refuses to
accept a bill drawn

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VOL. 928, JANUARY 15, 2020 529

upon him, becomes liable to pay the instrument according to

his original undertaking.
Same; Same; Same; The liability of the drawer is not primary
but secondary, particularly after acceptance because it is
conditional upon proper presentment and notice of dishonor, and,
in case of a foreign bill of exchange, protest, unless such conditions
are excused or dispensed with.—The liability of the drawer is not
primary but secondary, particularly after acceptance because it
is conditional upon proper presentment and notice of dishonor,
and, in case of a foreign bill of exchange, protest, unless such
conditions are excused or dispensed with. Thus, under Section 84
of the NIL, when the instrument is dishonored by nonpayment, an
immediate right of recourse to all parties secondarily
liable thereon accrues to the holder, subject to the provisions of
the NIL.
Same; Same; Same; Stopping payment does not discharge the
liability of the drawer of a check or other bill to the payee or other
holder.—Regarding the effect of countermand or stopping
payment, the drawer of a bill, including a draft or check, as a
general rule, may by notice to the drawee prior to acceptance or
payment countermand his order and command the drawee not to
pay, in which case the drawee is obliged to refuse to accept or pay.
There are however cases which hold that a draft drawn by one
bank upon another and bought and paid for by a remitter, as the
equivalent of money or as an executed sale of credit by the
drawer, is not subject to rescission or countermand so as to avoid
the drawer’s liability thereon. Moreover, the right to stop
payment cannot be exercised so as to prejudice the rights of
holders in due course without rendering the drawer liable on the
instrument to such holders. Stated differently, stopping payment
does not discharge the liability of the drawer of a check or other
bill to the payee or other holder. However, where payment has
been stopped by the drawer the relation between the drawer and
payee becomes the same as if the instrument had been dishonored
and notice thereof given to the drawer. Thus, the drawer’s
conditional liability is changed to one free from the condition and
his situation is like that of the maker of a promissory note due on
demand; and he is liable on the instrument if he has no sufficient
defense.
Same; Same; Holder in Due Course; Under Section 57 of the
Negotiable Instruments Law (NIL), “[a] holder in due course holds

530

the instrument free from any defect in the title of prior parties,
and free from defenses available to prior parties among
themselves, and may enforce payment of the instrument for the full
amount thereof against all parties liable thereon.”—Under Section
57 of the NIL, “[a] holder in due course holds the instrument free
from any defect in the title of prior parties, and free from defenses
available to prior parties among themselves, and may enforce
payment of the instrument for the full amount thereof against all
parties liable thereon.” In addition, under Section 51 of the NIL,
every holder of a negotiable in instrument may sue thereon in his
own name; and payment to him in due course discharges the
instrument.
Civil Law; Unjust Enrichment; As provided in Article 2154 of
the Civil Code, if something is received when there is no right to
demand it, and it was unduly delivered through mistake, the
obligation to return it arises; and, under Article 2163, there is
payment by mistake if something which has never been due or has
already been paid is delivered.—For the unjust enrichment
principle to apply against SCPL, it should be the party who is
benefitted from the reimbursement or return of the funds by
EPCIB. In this case, the party who received the benefit was
Llorente. Any payment to SCPL arising from the subject
demand/bank drafts by EPCIB and/or Llorente can never be by
mistake. As provided in Article 2154 of the Civil Code, if
something is received when there is no right to demand it, and it
was unduly delivered through mistake, the obligation to return it
arises; and, under Article 2163, here is payment by mistake if
something which has never been due or has already been paid is
delivered.
Same; Solidary Liability; According to Article 1207 of the
Civil Code, there is solidary liability only when the obligation
expressly so states, or when the law or the nature of the obligation
requires solidarity.—According to Article 1207 of the Civil Code,
there is solidary liability only when the obligation expressly so
states, or when the law or the nature of the obligation requires
solidarity. In this case, there is no contract or agreement wherein
the solidary liability of EPCIB is expressly provided. Under the
NIL and the nature of the liability of the drawer, solidary
obligation is also not provided Thus, EPCIB’s liability is not
solidary but primary due to the SPO that Llorente issued against
the subject demand/bank drafts. Consequently both Llorente and
EPCIB are individually and primarily

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liable as endorser and drawer of the subject demand/bank

drafts, respectively. Given the nature of their liability, SCPL may
proceed to collect the damages hereinafter awarded
simultaneously against both Llorente and EPCIB, or alternatively
against either Llorente or EPCIB, provided that in no event can
SCPL recover from both more than the damages awarded. In the
event that SCPL is able to collect from EPCIB based on this
judgment, any amount that EPCIB pays to SCPL can be collected
by EPCIB from Llorente by virtue of its cross-claim against
Llorente and pursuant to the indemnity clause of the Indemnity
Agreement, which is valid as between Llorente and EPCIB.
PETITIONS for review on certiorari of the decision and

resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.

CAGUIOA, J.:

Before the Court are petitions for review on certiorari1
under Rule 45 of the Rules of Court respectively filed by
petitioner Quintin Llorente (Llorente) in G.R. No. 212050
and petitioner Star City Pty Limited (SCPL) in G.R. No.
212216 assailing the Decision2 dated September 30, 2013
(Decision) and the Resolution3 dated April 10, 2014 of the
Court of Appeals4 (CA) in C.A.-G.R. CV No. 94736. The
CA’s Decision affirmed with modification the Decision5
dated April 16, 2009 rendered by the Regional Trial Court,
Branch 134, City of
_______________
1 Rollo (G.R. No. 212050), pp. 10-23, excluding Annexes; Rollo (G.R. No.
212216), pp. 45-62, excluding Annexes.
2 Id., at pp. 24-38; id., at pp. 10-24. Penned by Associate Justice Elihu
A. Ybañez, with Associate Justices Japar B. Dimaampao and Victoria
Isabel A. Paredes, concurring.
3 Id., at pp. 55-57; id., at pp. 41-43.
4 Fourteenth Division and Former Fourteenth Division, respectively.
5 Rollo (G.R. No. 212050), pp. 39-54. Penned by Presiding Judge
Perpetua Atal-Paño.

532

Makati (RTC) in Civil Case No. 02-1423. The CA’s

Resolution dated April 10, 2014 denied the motions for
reconsideration filed by Llorente and SCPL.

The Facts and Antecedent Proceedings

The CA’s Decision narrates the factual antecedents as
follows:
x x x [SCPL] is an Australian corporation which operates

the Star City Casino in Sydney, New South Wales,
Australia. Claiming that it is not doing business in the
Philippines and is suing for an isolated transaction, it filed
on 25 November 2002 through its attorney-in-fact, Jimeno
Jalandoni and Cope Law Offices, a complaint for collection
of sum of money with prayer for preliminary attachment
against x x x Llorente, who was a patron of its Star City
casino and Equitable PCI Bank (EPCIB, for brevity). This
case was docketed as Civil Case No. 02-1423 and raffled to
Branch 134 of the Regional Trial Court (RTC) in the City of
Makati.
[SCPL] alleged that Llorente is one of the numerous
patrons of its casino in Sydney, Australia. As such, he
maintained therein Patron Account Number 471741. On 12
July 2000, he negotiated two (2) Equitable PCI bank drafts
with check numbers 034967 and 034968 worth US
$150,000.00 each or for the total amount of US $300,000.00
(“subject [demand/bank]6 drafts” [or simply “subject drafts”])
in order to play in the Premium Programme of the casino.
This Premium Programme offers the patron a 1%
commission rebate on his turnover at the gambling table

and a .10% rebate for complimentary expenses. Before
upgrading x x x Llorente to this programme, [SCPL]
contacted first EPCIB to check the
_______________
6 EPCIB in its “Comment on the Petition for Review” dated October 4,

2014 used the terms “demand/bank drafts,” “subject bank drafts” and
“bank drafts” to refer to the drafts which it drew with Llorente as payee.
Rollo (G.R. No. 212216), pp. 132-145.

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VOL. 928, JANUARY 15, 2020 533

status of the subject drafts. The latter confirmed that the

same were issued on clear funds without any stop payment
orders. Thus, Llorente was allowed to buy in on a Premium
Programme and his front money account in the casino was
credited with US $300,000.00.
On 18 July 2000, [SCPL] deposited the subject drafts
with Thomas Cook Ltd. On 1 August 2000, it received the
advice of Bank of New York about the “Stop Payment
Order” prompting it to make several demands, the final
being on 22 August 2002, upon Llorente to make good his
obligation. However, the latter refused to pay. It likewise
asked EPCIB on 30 August 2002 for a settlement which the
latter denied on the ground that it was Llorente who
requested the Stop Payment Order and no notice of
dishonor was given.
On 28 January 2003, the [RTC] deemed it proper to
grant and issue a writ of preliminary attachment because
the acts of Llorente, i.e., leaving the hotel premises without
informing [SCPL] of his whereabouts, failing to pay for all
the services he had availed and/or not making sure that
these would be paid y the checks he negotiated and
indorsed, requesting for a Stop Payment Order despite
knowledge that these checks are to answer for the payment
for all services he had availed, failing to communicate for
the settlement of his outstanding obligation and for leaving
and/or transferring residence without notifying [SCPL] of
his forwarding address, are clear indications of his intention
to renege on his obligation and defraud [SCPL].
For his part, Llorente alleged that he caused the
stoppage of the subject drafts’ payment because (SCPL’s]
personnel and representatives committed fraud and unfair
gaming practices during his stay in the casino on 12 July up
to 17 July 2000. He also countered that the case should be
dismissed on the ground that [SCPL] lacks the legal
capacity to sue since the “isolated transaction rule” for
which it anchored its right to bring action in our courts
presupposes that the transaction subject matter of the
complaint must have occurred in the Philippines,

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which however, is not the situation at bar since it is clear

from the narration that the same occurred in Australia.
On the other hand, EPCIB, in its Answer, not only
alleged [SCPL’s] lack of personality to sue before Philippine
courts, but denied also that it unjustifiably and maliciously
refused to settle the obligation since it merely complied with
the instructions of Llorente, as payee of the subject drafts,
to stop payment thereon. It further went on saying that
[SCPL] had no cause of action against it because there was
no privity of contract between them. EPCIB likewise filed a
cross-claim against Llorente since it already reimbursed the
lace value of the subject drafts, pursuant to the demand of
the latter. For such reason, it should be relieved of any and
all liabilities under the subject drafts.
Finding that [SCPL] had the legal capacity to sue and
seek judicial relief before Philippine courts, the [RTC], on
16 April 2009, rendered a Decision holding both [Llorente
and EPCIB] solidarily liable for the value of the subject
drafts. It ruled that when Llorente, as payee of the subject
drafts, signed at the back thereof, he is said to ha[ve]
become an indorser who warrants that on due presentment,
the instruments would be accepted or paid or both, as the
case may be, according to their tenor, and that if they be
dishonored and the necessary proceedings on dishonor be
duly taken, they will pay the amount thereof to the holder.
The same is also true for EPCIB, being the drawer of the
subject drafts. It is of no moment if the bank was not a
privy to the transaction for its liability as a drawer is not
based on direct transaction but by virtue of the warranties
it made within the purview of the Negotiable Instruments
Law. The [RTC] even pointed that [Llorente and EPCIB]
could not seek refuge on the alleged lack of notice of
dishonor to them since they were responsible for the
dishonor of the subject drafts aside from the fact that it
would be futile to require such notice since it was EPCIB
who countermanded the payment.
The trial court did not also consider Llorente’s
justification for ordering a stopped payment as it found that

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VOL. 928, JANUARY 15, 2020 535

it was done in order to escape liability of paying his

obligations with [SCPL]. The decretal portion of [the RTC]
Decision reads as:

“WHEREFORE, premises considered, judgment is
hereby rendered in favor of the plaintiff [SCPL] and
against both defendants Llorente and [EPCIB], as
follows:
1. Ordering defendants Quintin Llorente and
Equitable PCI Bank to pay the plaintiff [SCPL],
jointly and severally the amount of the subject bank
drafts in the sum of us $300,000[.00];
2. Ordering defendants Quintin Llorente and

Equitable PCI Bank to pay the plaintiff [SCPL],
jointly and severally, five (5%) percent of the amount
claimed, or US $15,000.00, x x x as and by way of
attorney’s fees; and,
3. Costs of suit.
For lack of merit, both defendants Llorente and
Equitable PCI Bank’s counterclaims as well as
defendant Equitable PCI Bank’s cross-claim against
defendant Llorente are DENIED.
SO ORDERED.”

Aggrieved with the said ruling, both [Llorente and
EPCIB] appealed before [the CA]. x x x7

Ruling of the CA

The CA identified the following 3 issues raised in the
appeals filed by Llorente and Equitable PCI Bank8
(EPCIB): (1) SCPL’s personality to sue before Philippine
courts under
_______________
7 Rollo (G.R. No. 212050), pp. 25-29; id., at pp. 11-15.

8 Now BDO Unibank, Inc.; id., at p. 132.

536

the isolated transaction rule; (2) SCPL’s being a holder in

due course; and (3) solidary liability of EPCIB.9
Anent the first issue, the CA held that SCPL has
pleaded the required averments in the complaint — it is a
foreign corporation not doing business in the Philippines
suing upon a singular and isolated transaction — which
sufficiently clothed it the necessary legal capacity to sue in
this jurisdiction.10 The CA emphasized that the subject
drafts were drawn by EPCIB, which is a Philippine bank,
and since the drawer is a bank organized and existing in
the Philippines then naturally a suit on the draft or check
it issued can be filed in any of the places where the check is
drawn, issued, delivered or dishonored, which, in this case,
can be either the Philippines where the drafts were drawn
and issued, or Australia where the indorsement and
dishonor happened.11
On the second issue, the CA held that, contrary to
EPCIB’s assertion that the subject drafts were drawn
without any value, the fact that Llorente used them to “buy
in” into the Premium Programme of SCPL’s casino which
would entitle him to earn 1% cash commission or 0.1%12
rebate on his gaming turn-over is enough to constitute as
the “value” contemplated by the law, making SCPL a
holder in due course.13
On SCPL’s good faith in view of Llorente’s averment
about the impossibility of having no face cards coming out
after seven consecutive deals, the CA found the following
explanation in the judicial affidavit of Paul Arbuckle14

(Arbuckle) sufficient:
_______________
9 Rollo (G.R. No. 212050), p. 31; id., at, p. 17.

10 Id., at pp. 32-33; id., at pp. 18-19.
11 Id., at pp. 33; id., at p. 19.
12 Erroneously reflected as 1% in CA’s Decision, id., at p. 36; id., at p.
22.
13 Rollo (G.R. No. 212050), pp. 36-37; Rollo (G.R. No. 212216), pp. 22-
23.
14 As Star City Casino’s Head of Gaming and given his 30 years work
experience in the different casinos located in Australia, Ar-

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VOL. 928, JANUARY 15, 2020 537

x x x The game of Baccarat as played at Star City uses 8

decks of cards by 52 cards in each deck. There are 416 cards
in total with 128 cards being denoted as “face” cards
including the “ten value card.” A single deal of [B]accarat
consists of a minimum of 4 cards to a maximum of 6 cards.
If we use 5 cards as an average then over 6 or 7 deals of
Baccarat approximately 35 to 42 cards will be expended.
Around 8.4% to a maximum of 10% of the total amount of
cards available, I would consider it possible, and in fact,
very likely that with such a small percentage of the total
number of cards exposed that no face cards would appear.15

Also, the CA pointed out that Llorente’s conduct — “in
spite of the alleged irregularities in the [B]accarat table,
continued to play in said casino x x x [and] he should have
stopped playing and betting because it would entail huge
losses on his part”16 — counteracted whatever truth his
claim has.17
Regarding the third issue, the CA deemed it proper to
discharge EPCIB from any responsibility considering that
it already paid Llorente the face amount of the subject
drafts amounting to US $300,000.00 as evidenced by the
Quitclaim, Indemnity and Confidentiality Agreement18
(Indemnity Agreement) executed on August 8, 2002.19 The
CA further reasoned that allowing EPCIB’s solidary
liability would sanction unjust enrichment on Llorente’s
part who would be allowed to profit or enrich himself
inequitably at EPCIB’s expense.20
_______________
buckle had gained knowledge and expertise in the different casino games
particularly Baccarat according to the CA. Id., at p. 35; id., at p. 21.
15 Id.; id.
16 Id., at p. 36; id., at p. 22, citing the RTC’s Decision dated April 16,
2009, Rollo (G.R. No. 212050), p. 49.
17 Id.; id.
18 Rollo (G.R. No. 212216), pp. 146-149.
19 Rollo (G.R. No. 212050), p. 37; id., at p. 23.

20 Id.; id.

538

Thus, the CA in its Decision dated September 30, 2013

ruled that Llorente’s appeal was bereft of any merit while
that of EPCIB was partially considered.21 The dispositive
portion of the CA’s Decision states:
WHEREFORE, premises considered, the instant appeal

is PARTIALLY GRANTED. The assailed Decision dated
16 April 2009 of the Regional Trial Court is AFFIRMED
with the modification that EPCIB is ABSOLVED from
any liability under Civil Case No. 02-1423.
SO ORDERED.22

Llorente filed a motion for reconsideration while SCPL
filed a motion for partial reconsideration. The CA denied
both motions in its Resolution23 dated April 10, 2014.
Hence, the instant Rule 45 petitions for review on
certiorari in G.R. No. 212050 filed by Llorente and in G.R.
No. 212216 filed by SCPL, respectively. Regarding G.R. No.
212050, SCPL filed its Comment24 dated September 24,
2014 and Llorente filed his Reply25 dated October 8, 2014.
Regarding G.R. No. 212216, EPCIB filed its Comment26
dated October 4, 2014. Llorente filed an Explanation27
dated August 14, 2015 wherein he manifested that he
deemed it more proper and appropriate to forego the filing
of a Comment in G.R. No. 212216 considering the
consolidation of the two petitions and the issues and
arguments raised therein are substantially the same and
inter-related with one another.28
_______________
21 Id., at p. 31; id., at p. 17.

22 Id., at pp. 37-38; id., at pp. 23-24.
23 Id., at pp. 55-57; id., at pp. 41-43.
24 Id., at pp. 82-97.
25 Id., at pp. 98-104.
26 Rollo (G.R. No. 212216), pp. 132-145.
27 Id., at pp. 165-170.
28 Id., at p. 166.

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The Issues

In G.R. No. 212050, Llorente raises the following issues:

1. whether the CA erred in affirming the RTC’s
Decision despite the latter’s lack of jurisdiction over the
subject matter of the complaint;
2. whether the CA erred in finding that SCPL has legal
capacity to sue under the isolated transaction rule; and
3. whether the designation of the law firm of Jimeno,
Jalandoni and Cope (JJC Law) as attorney-in-fact of SCPL
constitutes gross violation of Section 69 of the Corporation
Code.29
In G.R. No. 212216, SCPL raises the following issues:
1. whether the CA erred when it modified the RTC’s
Decision by absolving EPCIB of any liability; and
2. whether in absolving EPCIB the CA ignored the
express provisions of law and anchored its ratio on
evidence that was not at all proven in trial.30

The Court’s Ruling

G.R. No. 212050

Llorente’s Petition lacks any merit.
On the issue of jurisdiction, Llorente argues that except
for the mere issuance of the 2 bank drafts by EPCIB, all
the material acts and transactions between him and SCPL
transpired in Australia; and, in fact, his front money
account with SCPL was even credited while he was in
Australia.31 Thus, the sole jurisdiction to hear and decide
SCPL’s complaint
_______________
29 Rollo (G.R. No. 212050), p. 14.

30 Rollo (G.R. No. 212216), pp. 52-53.
31 Rollo (G.R. No. 212050), pp. 14-15.

540

pertains to the Australian Court rather than the Philippine

Court.32
On SCPL’s capacity to sue, Llorente argues that the
condition sine qua non of the application of the isolated
transaction rule is that the alleged delict or wrongful act
must have occurred in the Philippines and the transaction
between him and SCPL was in pursuance of the latter’s
casino business.33
Regarding the resignation of JJC Law as SCPL’s
attorney-in-fact, Llorente argues that it is violative of
Section 69 of the Corporation Code because SCPL is not
licensed to do business in the Philippines.34 As such, SCPL’s
complaint is a mere scrap of paper and any judgment
rendered in connection therewith is a nullity which may be
struck down even on appeal.35
On the capacity of a foreign corporation to sue before
Philippine courts, the applicable law is clear.
Under Republic Act No. (RA) 1123236 or the Revised

Corporation Code of the Philippines (Revised Corporation
Code), which became effective on February 23, 2019,37 the
pertinent provision is Section 150, which states:
SEC. 150. Doing Business Without a License.—No

foreign corporation transacting business in the Philippines
without a license, or its successors or assigns, shall be
permitted to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of the
Philippines; but such corporation may be sued or
_______________
32 Id., at p. 15.
33 Id., at pp. 15-16.
34 Id., at pp. 16-17.
35 Id., at p. 17.
36 An Act Providing for the Revised Corporation Code of the
Philippines. Approved on February 20, 2019.

37 Upon completion of its publication in Manila Bulletin and the
Business Mirror on February 23, 2019, see <http://www.sec.gov.ph/wp-
content/uploads/2019/03/2019Legislation_RevisedCorporationCode

Effectivity.pdf>.

541
VOL. 928, JANUARY 15, 2020 541

proceeded against before Philippine courts or

administrative tribunals on any valid cause of action
recognized under Philippine laws.

Section 150 of the Revised Corporation Code is a verbatim
reproduction of Section 133 of Batas Pambansa Blg. (BP)
68 or the Corporation Code of the Philippines (Corporation
Code), which provided:
Sec. 133. Doing business without a license.—No

foreign corporation transacting business in the Philippines
without a license, or its successors or assigns, shall be
permitted to maintain or intervene in any action, suit or
proceeding in any court or administrative agency of the
Philippines; but such corporation may be sued or proceeded
against before Philippine courts or administrative tribunals
on any valid cause of action recognized under Philippine
laws. (69a)

It must be noted that the Revised Corporation Code
repealed the Corporation Code and any law, presidential
decree or issuance, executive order, letter of instruction,
administrative order, rule or regulation contrary or
inconsistent with any provision of the Revised Corporation
Code is modified or repealed accordingly.38
While the law (presently the Revised Corporation Code
or its predecessor, the Corporation Code) grants to foreign
corporations with Philippine license the right to sue in the
Philippines, the Court, however, in a long line of cases

under the regime of the Corporation Code has held that a
foreign corporation not engaged in business in the
Philippines may not be denied the right to file an action in
the Philippine courts for an isolated transaction.39 The
issue on whether a foreign cor-
_______________
38 RA 11232, Sec. 187.

39 Commissioner of Customs v. K.M.K. Gani, 261 Phil. 717, 723; 182
SCRA 591, 596 (1990), citing Bulakhidas v. Navarro, 225 Phil. 500, 501;
142 SCRA 1, 2 (1986); Antam Consolidated, Inc. v. Court of

542

poration which does not have license to engage in business

in the Philippines can seek redress in Philippine courts
depends on whether it is doing business or it merely
entered into an isolated transaction.40 A foreign corporation
that is not doing business in the Philippines must disclose
such fact if it desires to sue in Philippine courts under the
“isolated transaction rule” because without such disclosure,
the court may choose to deny it the right to sue.41
The right and capacity to sue, being, to a great extent,
matters of pleading and procedure, depend upon the
sufficiency of the allegations in the complaint. Thus, as to a
foreign corporation, the qualifying circumstance that if it is
doing business in the Philippines, it is duly licensed or if it
is not, it is suing upon a singular and isolated transaction,
is an essential part of the element of the plaintiff’s capacity
to sue and must be affirmatively pleaded.42
These pronouncements equally obtain under the Revised
Corporation Code given the reproduction of the exact
wording of Section 133, Corporation Code in Section 150 of
the Revised Corporation Code.
Based on the parameters discussed above, the CA has
correctly ruled that SCPL has personality to sue before
Philippine courts under the isolated transaction rule, to
wit:
x x x [A] foreign corporation needs no license to sue

before Philippine courts on an isolated transaction.43
However, to say merely that a foreign corporation not do-
_______________
Appeals, 227 Phil. 267; 143 SCRA 288 (1986); Universal Rubber Products,
Inc. v. Court of Appeals, 215 Phil. 85; 130 SCRA 104 (1984).
40 Commissioner of Customs v. K.M.K. Gani, id.
41 Id., citing Atlantic Mutual Ins. Co. v. Cebu Stevedoring Co., Inc., 124
Phil. 463; 17 SCRA 1037 (1966).
42 Id., at p. 725; p. 598, citing Atlantic Mutual Insurance Co. v. Cebu
Stevedoring Co., id., at pp. 466-467; p. 1040.
43 Citing Lorenzo Shipping Corp. v. Chubb and Sons, Inc., 475 Phil.
159, 183; 431 SCRA 266, 277 (2004).

543
VOL. 928, JANUARY 15, 2020 543

ing business in the Philippines does not need a license in

order to sue in our courts does not completely resolve the
issue. When the allegations in the complaint have a bearing
on the plaintiff’s capacity to sue and merely state that the
plaintiff is a foreign corporation existing under the laws of a
country, such averment conjures two alternative
possibilities: either the corporation is engaged in business
in the Philippines, or it is not so engaged. In the first, the
corporation must have been duly licensed in order to
maintain the suit; in the second, and the transaction sued
upon is singular and isolated, no such license is required. In
either case, compliance with the requirement of license, or
the fact that the suing corporation is exempt therefrom, as
the case may be, cannot be inferred from the mere fact that
the party suing is a foreign corporation. The qualifying
circumstance being an essential part of the plaintiff’s
capacity to sue must be affirmatively pleaded. Hence, the
ultimate fact that a foreign corporation is not doing
business in the Philippines must first be disclosed for it to
be allowed to sue in Philippine courts under the isolated
transaction rule. Failing in his requirement, the complaint
filed by plaintiff with the trial court, it must be said, fails to
show its legal capacity to sue.44 x x x
In the case at bar, [SCPL] alleged in its complaint that
“it is a foreign corporation which operates its business at
the Star City Casino in Sydney, New South Wales,
Australia; that it is not doing business in the Philippines;
and that it is suing upon a singular and isolated
transaction.” It also appointed Jimeno, Jalandoni and Cope
Law Offices as its attorney-in-fact. Following the
pronouncement mentioned above and having pleaded these
averments in the complaint sufficiently clothed [SCPL] the
necessary legal capacity to sue before Philippine courts.45
_______________
44 Citing New York Marine Managers, Inc. v. Court of Appeals, 319 Phil.
538, 543-544; 249 SCRA 416, 420-421 (1995).
45 Rollo (G.R. No. 212050), pp. 32-33.

544

The appointment of JJC Law as attorney-in-fact of

SCPL is irrelevant on the latter’s capacity to sue in the
Philippines under an isolated transaction.
Further, the following observation of the RTC is
apropos:
Besides, it is observed that defendant Llorente in [his]

answer pleaded [an] affirmative relief for damages from
plaintiff [SCPL] by way of a counterclaim. This is contrary
to his position that plaintiff has no capacity to sue in the
Philippines because such contention likewise entails that
plaintiff may be sued in the Philippines as defendant
Llorente also prayed for affirmative relief against the
plaintiff. He is deemed to have admitted the capacity of
plaintiff to be subject of our judicial process. It would be
unfair to rule that plaintiff may be sued in the Philippines
without at the same time allowing it to sue on an isolated
transaction here.46

On the issue of jurisdiction, the argument of Llorente
that Australian courts have jurisdiction over the case
because all the material acts and transactions between him
and SCPL transpired in Australia, except for the mere
issuance of the two bank drafts by EPCIB in the
Philippines also fails.
It must be remembered that the complaint filed by
SCPL against Llorente and EPCIB is for collection of sum
of money, which is a civil case. Under BP 129, Section 19,
RTCs have exclusive jurisdiction “[i]n all other cases in
which the demand, exclusive of interest, damages of
whatever kind, attorney’s fees, litigation expenses, and
costs or the value of property in controversy exceeds Three
hundred thousand pesos (P300,000.00) or, in such other
cases in Metro Manila, where the demand, exclusive of the
above mentioned items exceeds Four hundred thousand
pesos (P400,000.00).”47 Since the amount demanded by
SCPL against Llorente and EPCIB in solidary capacity,
_______________
46 Id., at p. 44.
47 BP 129, Sec. 19(8), as amended by RA 7691.

545
VOL. 928, JANUARY 15, 2020 545

which is “USD $300,000.00 plus legal interest from date of

first demand on December 20, 2000 until full payment,”48 is
above P400,000.00, the RTC has jurisdiction over SCPL’s
complaint.
Also, from the point of view of territorial jurisdiction in
criminal cases49 involving checks, any of the places where
the check is drawn, issued, delivered, or dishonored has
jurisdiction.50 As the CA emphasized, “[w]hile it is true that
the stopped payment occurred in Australia per advice of
Union Bank of California to the Bank of New York, x x x
the subject matter of the instant complaint are the subject
drafts drawn by EPCIB, which is a Philippine bank.”51

G.R. No. 212216

SCPL’s Petition is meritorious.
The CA absolved EPCIB from any liability in this wise:
Relative to EPCIB’s solidary liability, We deem it proper

to discharge it from any responsibility considering that it
already paid Llorente the face value of the subject drafts
amounting to US $300,000.00 as evidenced by the
Quitclaim, Indemnity and Confidentiality Agreement
executed on 8 August 2002. It would be very unfair to hold
EPCIB solidarily liable with Llorente because it already
paid/refunded to the latter the total amount of the subject
drafts. Moreover, allowing such solidary liability would,
indeed, be to sanction unjust enrichment on the part of
Llorente, who will be allowed to profit or enrich himself
inequitabl[y] at EPCIB’s expense,52 since he was already
paid and yet, the latter, who was without any fault, is still
_______________
48 Rollo (G.R. No. 212050), p. 64.

49 Like violation of BP 22.
50 See Brodeth v. People, G.R. No. 197849, November 29, 2017, 847
SCRA 92, 110.
51 Rollo (G.R. No. 212050), p. 33.
52 Citing Grandteq Industrial Steel Products, Inc. v. Margallo, 611 Phil.
612, 627-628; 594 SCRA 223, 238 (2009).

546

bound to share the responsibility without any assurance of

being paid. Hence, it is only just and equitable to relieve the
bank from any liability to pay considering the execution of
the above agreement in favor of Llorente.53

In its Petition, SCPL posits that it is an established fact
that EPCIB issued the subject demand drafts since it was
never denied by EPCIB and was even confirmed by the
bank’s counsel in a letter dated September 16, 2002 to
SCPL’s counsel.54
According to SCPL, in issuing the subject demand
drafts, EPCIB is considered by law as the drawer and being
the drawer, it represented that on due presentment the
checks would be accepted or paid, or both, according to
their tenor and if they be dishonored and the necessary
proceedings be taken it would be the one who would pay
pursuant to Section 61 of the Negotiable Instruments Law
(NIL).55
Additionally, SCPL argues that under the NIL, while
the maker and the acceptor of the negotiable instrument
are primarily liable, the drawer and endorser are
secondarily liable; and the drawer’s secondary liability to
pay the amount of the checks arises from its warranties as
the drawer.56 Being a holder in due course, as the CA has
recognized, SCPL may enforce payment of the instrument
for its full amount against all parties liable thereon.57 SCPL
concludes that there is no room for the application of equity
and unjust enrichment because the rights, liabilities and
representations of the parties are explicitly provided in the
NIL and equity, being invoked only in the absence of law,

may supplement the law but it can neither contravene nor
supplant it.58
_______________
53 Rollo (G.R. No. 212050), p. 37; Rollo (G.R. No. 212216), p. 23.
54 Rollo (G.R. No. 212216), p. 53.
55 Id., at p. 54.
56 Id.
57 Id., at pp. 55-56.
58 Id., at p. 56.

547
VOL. 928, JANUARY 15, 2020 547

As to the Indemnity Agreement allegedly executed on

August 8, 2002, SCPL further posits that the CA has no
basis to give it weight as it was never presented as
evidenc1 e on EPCIB’s behalf and was never formally
offered or identified by a proper witness in court.59 Even
assuming that the Indemnity Agreement can be used as
evidence, SCPL takes the position that it is only valid
between Llorente and EPCIB and cannot be enforced to
defeat SCPL’s right as a holder in due course to enforce
payment of the instrument for the full amount thereof
against all parties liable thereon.60
In its Comment,61 EPCIB counters that the CA correctly
absolved EPCIB from any liability by reason of unjust
enrichment and cites Article 22 of the Civil Code, which
provides that every person who through an act or
performance of another, or any other means, acquires or
comes into possession of something at the expense of the
latter without just or legal ground, shall return the same to
him.62 EPCIB argues that the unjust enrichment principle
is applicable considering that Llorente already received the
value of the subject bank drafts from EPCIB; and requiring
it again to pay the face value of the bank drafts would
amount to Llorente’s unjust enrichment to its prejudice.63
As another ground, EPCIB argues that SCPL and
EPCIB have no privity of contract as they never transacted
with each other.64 Invoking the basic principle of relativity
of contracts, EPCIB states that it would be highly
iniquitous if it is made liable in any way for whatever
controversy that arose between SCPL and Llorente.65
_______________
59 Id., at p. 57.
60 Id., at p. 58.
61 Id., at pp. 132-145.
62 Id., at p. 139.
63 Id., at p. 140.
64 Id.
65 Id.


548

Given the foregoing, EPCIB has apparently abandoned

its arguments before the CA that: (1) SCPL is not a holder
in due course because it took the subject bank drafts
without any value since the funds corresponding thereto
had been withdrawn by Llorente, and (2) SCPL cannot be
considered in good faith because of Llorente’s averment
regarding the impossibility of having no face cards coming
out of several deals despite a considerable amount of time.66
The CA has rejected the said arguments and admitted
that SCPL is a holder in due course, viz.:
Section 52 of the [NIL] gives the conditions in order to

consider [a] person as a holder in due course, to wit:
“SEC. 52. What constitutes a holder in due
course.—A holder in due course is a holder who has
taken the instrument under the following conditions:
(a) That it is complete and regular upon its face;
(b) That he became the holder of it before it was
overdue and without notice that it had been
previously dishonored, if such was the fact;
(c) That he took it in good [faith] and for value;
(d) That at the time it was negotiated to him, he
had no notice of any infirmity or defect in the title of
[the] person negotiating it.”
As a general rule, under the above provision, every
holder is presumed prima facie to be a holder in due course.
One who claims otherwise has the onus probandi to prove
that one or more of the conditions required to con-
_______________
66 Id., at p. 19; Rollo (G.R. No. 212050), p. 33.

549
VOL. 928, JANUARY 15, 2020 549

stitute a holder in due course are lacking.67 At bar, EPCIB

failed to prove that the elements of good faith and value are
wanting.
Anent the element of good faith, [SCPL] showed that
Llorente’s averment about the impossibility of having no
face cards coming out after seven consecutive deals, is not
unusual in view of the small percentage of the total number
of cards exposed [as explained in the] judicial affidavit [of]
Paul Arbuckle, Head of Gaming of Star City Casino x x x [.]
x x x x
It bears to emphasize that Arbuckle had thirty (30) years
work experience in the different casinos located in Australia
such that his knowledge and expertise about the different
casino games particularly Baccarat, cannot easily be
disregarded and overturned by a simple allegation of
cheating which has not been substantiated in view of the

absence of a complaint [by] Llorente to [SCPL’s] personnel.
Moreover, Llorente’s conduct after he complained about
the purported fraud in the casino counteracted whatever
truth his claim has. For this purpose, We acknowledge the
[RTC’s] disquisition, viz[.]:

x x x x
The [c]ourt finds it quite interesting, and contrary
to human behavior, that x x x Llorente, in spite of the
alleged irregularities in the [B]accarat table,
continued to play in said casino. If there were indeed
irregularities, as being claimed by x x x Llorente, he
should have stopped playing and betting the cause it
would entail huge losses on his part. Considering that
the amount of capital involved was very substantial
and considering further that x x x Llorente, as his
qualifica-
_______________
67 Citing Bank of Philippine Islands v. Roxas, 562 Phil. 161, 165; 536
SCRA 168, 172-173 (2007).

550

tions show, is admittedly an experienced casino

player x x x, the court finds it hard to believe that, if
indeed there were unlawful activities going on in the
casino, specifically in the [B]accarat table, that x x x
Llorente would still choose to continue playing,
further risking his money.
x x x x

Contrary to EPCIB’s assertion that the subject drafts
were taken without any value, We would like to point out
that value “in general terms, may be some right, interest,
profit or benefit to the party who makes the contract or
some forbearance, detriment, loan, responsibility, etc. on the
other side.”68 Here, it was established that Llorente used the
subject drafts to buy-in into the Premium Programme of
[SCPL’s] casino which would entitle him to earn one x x x
percent [(1%)] cash commission or [zero point] one x x x
percent [(0.1%)] rebate on his gaming turn-over. This right
to play under the Premium Programme is enough to
constitute as a “value” contemplated by the law, thus,
making [SCPL] a holder in due course.
Said status of [SCPL] remained despite the withdrawal
of the funds because at the time Llorente negotiated the
subject drafts, [SCPL] had no notice that the same had been
previously dishonored. In fact, it even verified the status by
calling x x x EPCIB, who advised it through the latter’s
employee x x x Consuelo Conigado that the same were
issued on clear funds and there [was] no stop payment
orders.69

The Court notes that while Llorente testified that he

purportedly reported the fraud or “cheating” incident in
SCPL’s casino to the branch office of the Australian
Gaming Commission (AGC) at the ground floor of the
casino, he presented no proof, documentary or otherwise,
that he in fact did file a
_______________
68 Id.
69 Rollo (G.R. No. 212216), pp. 20-23.

551
VOL. 928, JANUARY 15, 2020 551

complaint; and the RTC found his account of how he

allegedly brought the matter to the AGC “not highly
persuasive” noting that Llorente never mentioned anything
about him having reported the incident to the AGC in his
Answer, an information so vital to support his claim of
fraud.70
American jurisprudence explains the nature of drafts in
this wise:
A draft in the law of bills and notes is a “drawing” and

has been defined as an open letter of request from, and an
order by, one person on another to pay a sum of money
therein mentioned to a third person on demand or at a
future time specified therein. A draft is a bill of exchange,
and the term “draft” is commonly employed as a synonym
for the words “bill of exchange” or “check,” although it
cannot be the latter if it lacks the requirements of a check
as distinguished from other bills of exchange. Banks are
perhaps the greatest users of drafts, and they sell them to
persons who desire to transmit funds. Thus a draft has
been defined as a check drawn by a bank, the only
distinguishing feature between a draft and an ordinary
check being the character of the drawer. The instrument
which is usually denominated a “bank draft”71 is in the
customary form of a check and is generally drawn by one
bank upon another bank in which it has deposits much the
same as the ordinary depositor draws his check upon his
bank. The general rule is that such instrument is a check
and subject to the rules applicable to checks. Since the term
check is limited to a demand instrument and “draft” is not
[as it may be payable on demand or at a fixed
_______________
70 Rollo (G.R. No. 212050), pp. 51-53.

71 Bank draft is a bill of exchange payable on demand. 11 Am. Jur. 2d,
Drafts, §14, note 6, p. 43 (1963), citing Bank of Republic v. Republic State
Bank, 328 Mo 848, 42 SW2d 27.

552

or determinable future time72], there is a distinction

between the two in this respect.
In its usual form a draft is a negotiable instrument.73
(Emphasis and underscoring provided)

When the CA recognized SCPL as a holder in due
course74 and it did not overturn the finding of the RTC that
the subject demand/bank drafts are negotiable
instruments, the CA in effect ruled that the two
75
demand/bank drafts drawn by EPCIB with Llorente as the

payee are negotiable instruments. The Court totally agrees
with the RTC’s finding, to wit:
A draft is a form of a bill of exchange used mainly in

transactions between persons physically remote from each
other. It is an order made by one person, say the buyer of
goods, addressed to a person having in his possession funds
of such buyer, ordering the addressee to pay the purchase
price to the seller of the goods. Where the order is made by
one bank to another bank, as in this case, it is referred to as
a bank draft. Needless to say, the bank drafts, subject of
this case are negotiable instruments and are therefore
governed by the provisions of the Negotiable Instruments
Law.76

Both the RTC and CA correctly recognized EPCIB as the
drawer of the subject demand/bank drafts. The liability of
the drawer is spelled out in Section 61 of the NIL, which
provides:
_______________
72 11 Am. Jur. 2d, Drafts, §14, note 12, p. 43 (1963), citing Branch
Banking & Trust Co. v. Bank of Washington, 255 NC 205, 120 SE2d 830.
73 Id., at pp. 43-44, citations omitted.
74 The CA found that the conditions in order to consider a person a
holder in due course are present in this case and discussed extensively the
elements of good faith, for value and lack of notice of infirmity or defect in
the title of the person negotiating the negotiable instrument. See Rollo
(G.R. No. 212216), pp. 20-23.
75 Rollo (G.R. No. 212050), p. 46.
76 Id.

553
VOL. 928, JANUARY 15, 2020 553

Sec. 61. Liability of drawer.—The drawer by drawing

the instrument admits the existence of the payee and his
then capacity to indorse; and engages that, on due
presentment, the instrument will be accepted or paid, or
both, according to its tenor, and that if it be dishonored and
the necessary proceedings on dishonor be duly taken, he
will pay the amount thereof to the holder or to any

subsequent indorser who may be compelled to pay it. But
the drawer may insert in the instrument an express
stipulation negativing or limiting his own liability to the
holder.

When the bank, as the drawer of a negotiable check,
signs the instrument its engagement is then as absolute
and express as if it were written on the check;77 and a dual
promise is implied from the issuance of a check: first, that
the bank upon which it is drawn will pay the amount
thereof; and second, if such bank should fail to make the
payment, the drawer will pay the same to the holder.78
Generally, by drawing a check, the drawer: admits the
existence of the payee and his then capacity to endorse;
impliedly represents that he (the payee) has funds or
credits available for its payment in the bank in which it is
drawn; engages that if the bill is not paid by the drawee
and due proceedings on dishonor are taken by the holder,
he will upon demand pay the amount of the bill together
with the damages and expenses accruing to the holder by
reason of the dishonor of the instrument; and, if the drawee
refuses to accept a bill drawn upon him, becomes liable to
pay the instrument according to his original undertaking.79
_______________
77 11 Am. Jur. 2d, Drawer, Generally, § 589, p. 657 (1963). Citations

omitted.
78 Gambord Meat Co. v. Corbari, 109 Cal App 2d 161, 240 P2d 342,
cited in 11 Am. Jur. 2d, id., note 20.
79 11 Am. Jur. 2d, Drawer, Generally, § 589, pp. 658-660 (1963).
Citations omitted.

554

However, the liability of the drawer is not primary but

secondary, particularly after acceptance because it is
conditional upon proper presentment and notice of
dishonor, and, in case of a foreign bill of exchange, protest,
unless such conditions are excused or dispensed with.80
Thus, under Section 84 of the NIL, when the instrument is
dishonored by nonpayment, an immediate right of
recourse to all parties secondarily liable thereon
accrues to the holder, subject to the provisions of the NIL.
Regarding the effect of countermand or stopping
payment, the drawer of a bill, including a draft or check, as
a general rule, may by notice to the drawee prior to
acceptance or payment countermand his order and
command the drawee not to pay, in which case the drawee
is obliged to refuse to accept or pay.81 There are however
cases which hold that a draft drawn by one bank upon
another and bought and paid for by a remitter, as the
equivalent of money or as an executed sale of credit by the
drawer, is not subject to rescission or countermand so as to
avoid the drawer’s liability thereon.82 Moreover, the right to
stop payment cannot be exercised so as to prejudice the

rights of holders in due course without rendering the
drawer liable on the instrument to such holders.83 Stated
differently, stopping payment does not discharge the
liability of the drawer of a check or other bill to the payee
or other holder.84 However, where payment has been
stopped by the drawer the relation between the drawer and
payee becomes the same as if the instrument had been
dishonored and notice thereof given to the drawer.85 Thus,
the drawer’s conditional liability is changed to one free
from the condition and his situation is like that of the
_______________
80 Id., at p. 659. Citations omitted.

81 Id., Countermand or stopping payment, § 590, p. 660. Citations
omitted.
82 Id.
83 Id., at pp. 660-661. Citations omitted.
84 Id., at p. 661.
85 Id.

555
VOL. 928, JANUARY 15, 2020 555

maker of a promissory note due on demand; and he is liable

on the instrument if he has no sufficient defense.86
In the instant case, on July 27, 2002 Llorente applied for
and executed a Stop Payment Order (SPO) on the subject
demand/bank drafts on the pretext that the said drafts
which he issued/negotiated to SCPL allegedly exceeded the
amount he was obliged to pay SCPL87 contrary to his
position that SCPL committed fraud and unfair gaming
practices. The execution of the SPO by Llorente did not
discharge the liability of EPCIB, the drawer, to SCPL, the
holder of the subject demand/bank drafts. Given that an
SPO was issued, the dishonor and nonpayment of the
subject demand/bank drafts were to be expected, triggering
the immediate right of recourse of the holder to all parties
secondarily liable, including the drawer, pursuant to the
NIL. As the RTC noted: “[Llorente and EPCIB] could not
seek refuge on the alleged lack of notice of dishonor to them
since they were responsible for the dishonor of the subject
drafts aside from the fact that it would be futile to require
such notice since it was EPCIB who countermanded the
payment.”88
The finding of both the RTC and the CA that SCPL is a
holder in due course is not even disputed by EPCIB in its
Comment89 dated October 4, 2014 to the SCPL Petition. To
recall, EPCIB merely argued that the CA was correct in
absolving it from liability by applying the principle of
unjust enrichment.90 EPCIB added that it had no privity of
contract between SCPL and Llorente.91
Under Section 57 of the NIL, “[a] holder in due course
holds the instrument free from any defect in the title of
prior par-
_______________
86 Id. Citations omitted.

87 Rollo (G.R. No. 212216), p. 146.
88 Rollo (G.R. No. 212050), p. 28; id., at p. 14.
89 Rollo (G.R. No. 212216), pp. 132-145.
90 Id., at pp. 139-140.
91 Id., at pp. 140-141.

556

ties, and free from defenses available to prior parties

among themselves, and may enforce payment of the
instrument for the full amount thereof against all parties
liable thereon.” In addition, under Section 51 of the NIL,
every holder of a negotiable in instrument may sue thereon
in his own name; and payment to him in due course
discharges the instrument.
Having recognized the status of SCPL as a holder in due
course and EPCIB as the drawer of the subject
demand/bank drafts, was the CA correct in absolving
EPCIB from any liability in view of the Indemnity
Agreement dated August 8, 2002 between Llorente and
EPCIB?
In absolving EPCIB from liability, the CA forwarded the
following justification:
Relative to EPCIB’s solidary liability, We deem it proper

to discharge it from any responsibility considering that it
already paid Llorente the face value of the subject drafts
amounting to US $300,00[0].00 as evidenced by the
Quitclaim, Indemnity and Confidentiality Agreement
executed on 8 August 2002. It would be very unfair to hold
EPCIB the total amount of the subject drafts. Moreover,
allowing such solidary liability would, indeed, be to sanction
unjust enrichment on the part of Llorente, who [would] be
allowed to profit or enrich himself inequitabl[y] at EPCIB’s
expense, since he was already paid and yet, the latter, who
was without any fault, is still bound to share the
responsibility without any assurance of being paid. Hence,
it is only just and equitable to relieve the bank from any
liability to pay considering the execution of the above
agreement in favor of Llorente.92

The Court finds, and so holds, that the CA erred in
discharging EPCIB from its liability as the drawer of the
subject demand/bank drafts.
_______________
92 Id., at p. 23.

557
VOL. 928, JANUARY 15, 2020 557

A review of the records confirms SCPL’s argument that

the Indemnity Agreement cannot be considered as evidence
because it was not formally offered. In addition, even if it
were given some evidentiary weight, it will nevertheless
not bind SCPL pursuant to the principle of relativity of
contracts under Article 1311 of the Civil Code, which
provides that “[c]ontracts take effect only between the
parties, their assigns and heirs, except in case where the
rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by
provision of law.”
As to the unjust enrichment principle applied by the CA,
the same is not proper. EPCIB’s invocation of unjust
enrichment to avoid its liability as the drawer of the
subject demand/bank draft evinces bad faith in that rather
than discharging its obligation as the drawer, EPCIB
presents the Indemnity Agreement as an afterthought to
shield itself from liability.
Firstly, the liability of EPCIB as the drawer cannot be
abrogated by virtue of the Indemnity Agreement because it
arises from the subject demand/bank drafts, which are
negotiable instruments, that it issued. Its secondary
liability under Section 61 of the NIL became primary when
the payment of the subject demand/bank drafts had been
stopped which had the same effect as if the instruments
had been dishonored and notice thereof was given to the
drawer pursuant to Section 84 of the NIL. Given the nature
of the liability of the drawer of a negotiable instrument,
EPCIB’s argument that it is not liable to SCPL because
they have no privity of contract is utterly without merit.
Secondly, the reimbursement/return by EPCIB to
Llorente of the face value of the subject demand/bank
drafts in the total amount of US$300,000.00 by virtue of
the Indemnity Agreement, assuming this had any
probative value, is subject to the following provision:

558

4. Claimant ([Llorente)] also agrees to execute and post

an indemnity bond in an amount equivalent to
US$300,000.00 in favor of EPCI Bank, Star Casino (US$
Drafts Holder/Endorsee), Union Bank of California:
(UBOC), and to any other person or entity who may have
been prejudiced by Claimant for whatever damages that
may be suffered by EPCI Bank, and other third parties as a
consequence of Claimant’s SPO [(Stop Payment Order)] and
reimbursement of the amount of US$300,000.00.93

Thus, if EPCIB is made liable on the subject demand/bank
drafts, it has a recourse against the indemnity bond. To be
sure, the posting of the indemnity bond required by EPCIB
of Llorente is in effect an admission of his liability to SCPL
and the provision in the Whereas clause that: “On 27 July
2002, Claimant [(Llorente)] applied for and executed a Stop

Payment Order (SPO) on the two drafts, citing as reason
that the drafts he issued/negotiated to Star Casino
exceeded the amount he was [obliged] to pay”94 may be
taken against him to weaken his allegation of fraud and
unfair gaming practices against SCPL.
Lastly, for the unjust enrichment principle to apply
against SCPL, it should be the party who is benefitted from
the reimbursement or return of the funds by EPCIB. In
this case, the party who received the benefit was Llorente.
Any payment to SCPL arising from the subject
demand/bank drafts by EPCIB and/or Llorente can never
be by mistake. As provided in Article 2154 of the Civil
Code, if something is received when there is no right to
demand it, and it was unduly delivered through mistake,
the obligation to return it arises; and, under Article 2163,
here is payment by mistake if something which has never
been due or has already been paid is delivered.
_______________
93 Id., at p. 147.
94 Id., at p. 146.

559
VOL. 928, JANUARY 15, 2020 559

While EPCIB is clearly liable as the drawer of the

subject demand/bank drafts, there is no legal basis to make
it solidarily liable with Llorente.
According to Article 1207 of the Civil Code, there is
solidary liability only when the obligation expressly so
states, or when the law or the nature of the obligation
requires solidarity. In this case, there is no contract or
agreement wherein the solidary liability of EPCIB is
expressly provided. Under the NIL and the nature of the
liability of the drawer, solidary obligation is also not
provided Thus, EPCIB’s liability is not solidary but
primary due to the SPO that Llorente issued against the
subject demand/bank drafts.
Consequently both Llorente and EPCIB are individually
and primarily liable as endorser and drawer of the subject
demand/bank drafts, respectively. Given the nature of their
liability, SCPL may proceed to collect the damages
hereinafter awarded simultaneously against both Llorente
and EPCIB, or alternatively against either Llorente or
EPCIB, provided that in no event can SCPL recover from
both more than the damages awarded.
In the event that SCPL is able to collect from EPCIB
based on this judgment, any amount that EPCIB pays to
SCPL can be collected by EPCIB from Llorente by virtue of
its cross-claim against Llorente and pursuant to the
indemnity clause of the Indemnity Agreement, which is
valid as between Llorente and EPCIB.
The monetary awards imposed by the RTC upon
Llorente and EPCIB have to be modified pursuant to Lara’s
Gifts & Decors, Inc. v. Midtown Industrial Sales, Inc.,95
wherein the majority of the Court En Banc revised the

guidelines on interest in Eastern Shipping Lines, Inc. v.
Court of Appeals96 and Nacar v. Gallery Frames97 and the
ponente filed a Concurring
_______________
95 G.R. No. 225433, August 28, 2019, 916 SCRA 1.

96 304 Phil. 236; 234 SCRA 78 (1994).
97 716 Phil. 267; 703 SCRA 439 (2013).

560

and Dissenting Opinion. Thus, the payment of the amount

of the subject bank drafts in the sum of US$300,000.00
should bear interest at the legal rate of 12% per annum
from the date of extrajudicial demand, which is August 30,
200298 (as this is the date the extrajudicial demand against
EPCIB that was made subsequent to the extrajudicial
demand for payment against Llorente), to June 30, 2013
and at 6% per annum from July 1, 2013 until full payment
and the payment of the attorney’s fees equivalent to 5% of
the amount of demand or US$15,000.00 should bear
interest at the rate of 6% per annum from finality of this
Decision until full payment.
WHEREFORE, the Petition in G.R. No. 212050 is
hereby DENIED while the Petition in G.R. No. 212216 is
GRANTED. The Decision dated September 30, 2013 and
the Resolution dated April 10, 2014 of the Court of Appeals
in CA-G.R. CV No. 94736 are PARTIALLY REVERSED
and SET ASIDE insofar as the Court of Appeals absolved
Equitable PCI Bank from any liability is concerned. The
Decision dated April 16, 2009 rendered by the Regional
Trial Court, Branch 134, Makati City in Civil Case No. 02-
1423 is REINSTATED with MODIFICATION:
WHEREFORE, premises considered, judgment is hereby

rendered in favor of the plaintiff Star City Pty Limited and
against both defendants Quintin Llorente and Equitable
PCI Bank, as follows:
1. Finding both defendants Quintin Llorente and
Equitable PCI Bank individually and primarily liable and:
(a) Ordering defendants Quintin Llorente and

Equitable PCI Bank to pay the plaintiff Star
City Pty Limited the amount of the subject bank
drafts in the sum of US $300,000.00 with
interest at 12% per annum from August 30, 2002
to June 30, 2013 and at 6% per annum from July
1, 2013 until full payment;
_______________
98 Rollo (G.R. No. 212050), p. 26; Rollo (G.R. No. 212216), p. 12.

561
VOL. 928, JANUARY 15, 2020 561

(b) Ordering defendants Quintin Llorente and

Equitable PCI Bank to pay the plaintiff Star
City Pty Limited 5% of the amount claimed, or
US $15,000.00, as and by way of attorney’s fees
with interest at 6% per annum from the finality
of this Decision until full payment; and,
2. Costs of suit.

For lack of merit, both defendants Quintin Llorente’s and
Equitable PCI Bank’s counterclaims are DENIED.
Defendant Equitable PCI Bank’s cross-claim against
defendant Quintin Llorente is GRANTED.
SO ORDERED.
Peralta (CJ., Chairperson), J. Reyes, Jr., Lazaro-Javier

and Lopez, JJ., concur.
Petition in G.R. No. 212050 denied, while that in G.R.

No. 212216 granted. Judgment and resolution dated April
10, 2014 partially reversed and set aside insofar as the
Court of Appeals absolved Equitable PCI Bank from any
liability. Judgment dated April 16, 2009 of Regional Trial
Court of Makati City, Br. 134 reinstated with modification.
Notes.—It is the State’s public policy to prevent a

person from unjustly retaining a benefit, money, or
property, at the expense of another, or against the
fundamental principles of justice, equity, and good
conscience. (Rodriguez vs. Your Own Home Development
Corporation [YOHDC], 877 SCRA 367 [2018])
Jurisprudence provides that an unregistered
association, having no separate juridical personality, lacks
the capacity to sue in its own name. (Alliance of Quezon
City Homeowners’ Association, Inc. vs. Quezon City
Government, 880 SCRA 349 [2018])

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Llorente vs. Star City Pty Limited, 928 SCRA 525, January 15, 2020

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4/4/22, 1:23 AM SUPREME COURT REPORTS ANNOTATED VOLUME 928

G.R. No. 212050. January 15, 2020.*

526 SUPREME COURT REPORTS ANNOTATED

Mercantile Law; Corporations; Foreign Corporations;

Same; Same; Same; Same; Isolated Transaction Rule; A

VOL. 928, JANUARY 15, 2020 527

regime of the Corporation Code has held that a foreign

the value of property in controversy exceeds Three hundred

528 SUPREME COURT REPORTS ANNOTATED

amount demanded by SCPL against Llorente and EPCIB in

VOL. 928, JANUARY 15, 2020 529

upon him, becomes liable to pay the instrument according to

530 SUPREME COURT REPORTS ANNOTATED

VOL. 928, JANUARY 15, 2020 531

liable as endorser and drawer of the subject demand/bank

PETITIONS for review on certiorari of the decision and

532 SUPREME COURT REPORTS ANNOTATED

Makati (RTC) in Civil Case No. 02-1423. The CA’s

x x x [SCPL] is an Australian corporation which operates

commission rebate on his turnover at the gambling table

6 EPCIB in its “Comment on the Petition for Review” dated October 4,

VOL. 928, JANUARY 15, 2020 533

status of the subject drafts. The latter confirmed that the

VOL. 928, JANUARY 15, 2020 535

which however, is not the situation at bar since it is clear

VOL. 928, JANUARY 15, 2020 535

it was done in order to escape liability of paying his

2. Ordering defendants Quintin Llorente and

7 Rollo (G.R. No. 212050), pp. 25-29; id., at pp. 11-15.

536 SUPREME COURT REPORTS ANNOTATED

the isolated transaction rule; (2) SCPL’s being a holder in

explanation in the judicial affidavit of Paul Arbuckle14

9 Rollo (G.R. No. 212050), p. 31; id., at, p. 17.

VOL. 928, JANUARY 15, 2020 537

x x x The game of Baccarat as played at Star City uses 8

19 Rollo (G.R. No. 212050), p. 37; id., at p. 23.

538 SUPREME COURT REPORTS ANNOTATED

Thus, the CA in its Decision dated September 30, 2013

WHEREFORE, premises considered, the instant appeal

21 Id., at p. 31; id., at p. 17.

VOL. 928, JANUARY 15, 2020 539

In G.R. No. 212050, Llorente raises the following issues:

29 Rollo (G.R. No. 212050), p. 14.

540 SUPREME COURT REPORTS ANNOTATED

pertains to the Australian Court rather than the Philippine

Under Republic Act No. (RA) 1123236 or the Revised

SEC. 150. Doing Business Without a License.—No

Philippines. Approved on February 20, 2019.

VOL. 928, JANUARY 15, 2020 541

proceeded against before Philippine courts or

Sec. 133. Doing business without a license.—No

Philippines, the Court, however, in a long line of cases

38 RA 11232, Sec. 187.

542 SUPREME COURT REPORTS ANNOTATED

poration which does not have license to engage in business

x x x [A] foreign corporation needs no license to sue

VOL. 928, JANUARY 15, 2020 543

ing business in the Philippines does not need a license in