Cely Yang vs. Court of Appeals, et, al. - GR No.
138074 a holder as defined in Section 191 of the Negotiable Instruments Law,
Facts: Petitioner Cely Yang agreed with private respondent Prem
Chandiramani to procure from Equitable Banking Corp. and Far east Bank
and Trust Company (FEBTC) two cashier’s checks in the amount of P2.087
million each, payable to Fernando david and FEBTC dollar draft in the amount
of US$200,000.00 payable to PCIB FCDU account No. 4195-01165-2. Yang
gave the checks and the draft to Danilo Ranigo to be delivered to
Chandiramani. Ranigo was to meet Chandiramani to turn over the checks and
the dollar draft, and the latter would in turn deliver to the former Phil.
Commercial International Bank (PCIB) manager’s check in the sum of P4.2
million and the dollar draft in the same amount to be issued by Hang Seng
Bank Ltd. of HongKong. But Chandiramani did not appear at the rendezvous
and Ranigo allegedly lost the two cashier’s checks and the dollar draft.
The loss was then reported to the police. It transpired, however that the
checks and the dollar draft were never lost, for Chandiramani was able to get
hold of them without delivering the exchange consideration consisting of PCIB
Manager’s checks. Two hours after Chandiramani was able to meet Ranigo,
the former delivered to David the two cashier’s checks of Yang and, in
exchange, got US $360,000 from David, who in turn deposited them.
Chandiramani also deposited the dollar draft in PCIG FCDU No. 4194-0165-2.
Meanwhile, Yang requested FEBTC and Equitable to stop payment on the
instruments she believed to be lost. Both Banks complied with her request,
but upon the representation of PCIB, FEBTC subsequently lifted the stop
payment order on FEBTC Dollar Draft No. 4771, thus, enabling the holder
PCIB FCDU Account No. 4194-0165-2 to received the amount of US $ 200,
000.
Issues:
(1) Whether or not David may be considered a holder in due course.
(2) Whether or not the presumption that every party to an instrument acquired
the same for a consideration is applicable in this case.
Held:
(1) Every holder of a negotiable instrument is deemed prima facie a holder in
due course. However, this presumption arises only in favor of a person who is
meaning a “payee or indorsee of a bill or note, who is in possession of it, or
the bearer thereof.”
In the present case, it is not disputed that David was the payee of the checks
in question. The weight of authority sustains the view that a payee may be a
holder in due course. Hence, the presumption that he is a prima facie holder
in due course applies in his favor.
(2) The presumption is that every party to an instrument acquired the same
for a consideration. However, said presumption may be rebutted. Hence, what
is vital to the resolution of this issue is whether David took possession of the
checks under the conditions provided for in Section 52 of the Negotiable
Instruments Law. All the requisites provided for in Section 52 must concur in
David’s case, otherwise he cannot be deemed a holder in due course.
Section 24 of the Negotiable Instruments Law creates a presumption that
every party to an instrument acquired the same for a consideration or for
value. Thus, the law itself creates a presumption in David’s favor that he gave
valuable consideration for the checks in question. In alleging otherwise, the
petitioner has the onus to prove that David got hold of the checks absent said
consideration. However, petitioner failed to discharge her burden of proof.
The petitioner’s averment that David did not give valuable consideration when
he took possession of the checks is unsupported, devoid of any concrete
proof to sustain it. Note that both the trial court and the appellate court found
that David did not receive the checks gratis, but instead gave Chandiramani
US$ 360,000 as consideration for the said instruments.
Marcelo A. Mesina vs. Intermediate Appellate Court
G.R. No. 70145 November 13, 1986, 145 SCRA 497
--holder in due course
FACTS: Jose Go purchased from Associated Bank a cashier's check for
P800,000.00. Unfortunately, he left said check on the top of the desk of the
bank manager when he left the bank. The bank manager entrusted the check
for safekeeping to a bank official, a certain Albert Uy. While Uy went to the
men's room, the check was stolen by his visitor in the person of Alexander
Lim. Upon discovering that the check was lost, Jose Go accomplished a
"STOP PAYMENT" order. Two days later, Associated Bank received the lost
check for clearing from Prudential Bank. After dishonoring the same check
twice, Associated Bank received summons and copy of a complaint for
damages of Marcelo Mesina who was in possession of the lost check and is
demanding payment. Petitioner claims that a cashier's check cannot be
countermanded in the hands of a holder in due course.
ISSUE: Whether or not petitioner can collect on the stolen check on the
ground that he is a holder in due course.
RULING: No. Petitioner failed to substantiate his claim that he is a holder in
due course and for consideration or value as shown by the established facts
of the case. Admittedly, petitioner became the holder of the cashier's check
as endorsed by Alexander Lim who stole the check. He refused to say how
and why it was passed to him. He had therefore notice of the defect of his title
over the check from the start. The holder of a cashier's check who is not a
holder in due course cannot enforce such check against the issuing bank
which dishonors the same.
**A person who became the holder of a cashier's check as endorsed by the
person who stole it and who refused to say how and why it was passed to him
is not a holder in due course.
Atrium Management v. Court of Appeals [G.R. No. 109491. February
28, 2001]
FACTS: Hi-Cement Corporation borrowed money from E.T. Henry and Co.
The said loan was secured by 4 checks amounting to P2 million in total. The
checks were signed by Lourdes M. de Leon,[2] treasurer, and the late Antonio
de las Alas, Chairman.
E.T. Henry and Co., Inc., in turn, endorsed the four checks to petitioner Atrium
Management Corporation for valuable consideration, after Enrique Tan, or
E.T. Henry approached Atrium for financial assistance, offering to discount
four RCBC checks.
Atrium agreed to Tan's offer based on two letters, dated February 6, 1981 and
February 9, 1981 issued by Hi-Cement through Lourdes M. de Leon, as
treasurer, confirming the issuance of the four checks in favor of E.T. Henry in
payment for petroleum products.
Upon presentment for payment, the drawee bank dishonored all four checks
for the common reason payment stopped. Atrium, thus, instituted this action
after its demand for payment of the value of the checks was denied.
ISSUE: Whether Atrium was not a holder in due course and for value?
HELD: The checks were crossed checks and specifically indorsed for deposit
to payee’s account only. From the beginning, the corporation was aware of
the fact that the checks were all for deposit only to payee’s account. Clearly
then, it could not be considered a holder in due course. However, it does not
follow as a legal proposition that simply because it was not a holder in due
course for having taken the instruments in question, with notice that the same
was for deposit only, that it was altogether precluded from recovering on the
instrument. The disadvantage in not being a holder in due course is that the
negotiable instrument is subject to defenses as if it were non-negotiable.
BATAAN CIGAR AND CIGARETTE FACTORY, INC., petitioner, vs. THE
COURT OF APPEALS and STATE INVESTMENT HOUSE, INC.,
respondents G.R. No. 93048 March 3, 1994
Facts: Petitioner, Bataan Cigar & Cigarette Factory, Inc. (BCCFI), a
corporation involved in the manufacturing of cigarettes, engaged one of its
suppliers, King Tim Pua George (herein after referred to as George King), to
deliver 2,000 bales of tobacco leaf starting October 1978. In consideration
thereof, BCCFI, on July 13, 1978 issued crossed checks post dated sometime
in March 1979 in the total amount of P820,000.00. Petitioner agreed to
purchase additional 2,500 bales of tobacco leaves, despite the supplier's
failure to deliver in accordance with their earlier agreement. Again petitioner
issued post dated crossed checks in the total amount of P1,100,000.00,
payable sometime in September 1979.
During these times, George King sold at a discount the checks drawn by
petitioner to private respondent SIHI. In as much as George King failed to
deliver the bales of tobacco leaf as agreed despite petitioner's demand,
BCCFI issued on March 30, 1979, a stop payment order on all checks
payable to George King. Efforts of SIHI to collect from BCCFI having failed,
it instituted the present case, naming only BCCFI as party defendant. The trial
court pronounced SIHI as having a valid claim being a holder in due
course.
Issue: Whether or not SIHI, a second indorser, a holder of crossed checks,
is a holder in due course, to be able to collect from the drawer, BCCFI.
Held: YES. As preliminary, a check is defined by law as a bill of exchange
drawn on a bank payable on demand. There are a variety of checks, the
more popular of which are the memorandum check, cashier's check, traveler's
check and crossed check. Crossed check is one where two parallel lines
are drawn across its face or across a corner thereof. It may be crossed
generally or specially.According to commentators, the negotiability of a
check is not affected by its being crossed, whether specially or
generally. It may legally be negotiated from one person to another as long as
the one who encashes the check with the drawee bank is another bank, or if it
is specially crossed, by the bank mentioned between the parallel lines.
In order to preserve the credit worthiness of checks, jurisprudence has
pronounced that crossing of a check should have the following effects:
(a) the check may not be encashed but only deposited in the bank; (b) the
check may be negotiated only once — to one who has an account with a
bank; (c) and the act of crossing the check serves as warning to the
holder that the check has been issued for a definite purpose so that he must
inquire if he has received the check pursuant to that purpose, otherwise, he is
not a holder in due course.
It is then settled that crossing of checks should put the holder on inquiry
and upon him devolves the duty to ascertain the indorser's title to the
check or the nature of his possession.There being failure of consideration,
SIHI is not a holder in due course. Consequently, BCCFI cannot be
obliged to pay the checks.
WHEREFORE, finding that the court a quo erred in the application of law, the
instant petition is hereby GRANTED. The decision of the Regional Trial Court
as affirmed by the Court of Appeals is hereby REVERSED.
STELCO MARKETING V. CA
210 SCRA 51
FACTS:
Petitioner was engaged in the distribution and sale of structural steel bars.
RYL bought on several occasion large quantities of steel bars but the same
were never paid for despite several demands by petitioner.
On a relevant date, RYL gave to Armstrong Industries a check in payment
of its obligations. The check was drawn by Steelweld Corporation—
allegedly the owner of RYL persuaded the president of Steelweld to
accommodate the former in its obligation. The check, when deposited was
thereafter dishonored due to insufficient funds. A case ensued for violations
of BP22 but the case was dismissed as the check was held to be for
accommodation purposes only.
Thereafter a complaint was filed by petitioner against RYL and Steelweld
for the recovery of sum of money in payment of the steel bars ordered. RYL
was nowhere to be found that is why the proceedings commenced as against
Steelweld only. The trial court decided in favor of petitioner but this was
reversed by the CA.
HELD:
Petitioner contends that the acquittal of Lim and Tianson didn't operate to
release Steelweld from its liability as an accommodation party. Noteworthy is
that neither said pronouncement nor any other part of the judgment of
acquittal declared it liable to petitioner. To be sure, as regards an
accommodation party, the condition of lack of notice of any infirmity or defect
in title of the persons negotiating it is of no application since the law
preserves the right of recourse of a holder for value against an
accommodation party notwithstanding knowledge that at the time of taking the
instrument, knew him only as an accommodation party.
Further, there is no evidence to show that petitioner possessed the check
before the instrument’s presentment and dishonor. In what transpired during
the transactions involving the check, evidence and facts show that there was
any participation or intervention on the part of petitioner. What the record
shows is that only after the check was deposited and dishonored, petitioner
came into possession of it in some way and was able to give it in evidence at
the trial of the civil case it has instituted against the drawers of the check.