NEGOTIABLE INSTRUMENTS NOTES

BASED ON AGBAYANIS BOOK AND ATTY. MERCADOS LECTURES

Page 81 of 190


BY: MA. ANGELA LEONOR C. AGUINALDO
ATENEO LAW 2D BATCH 2010
of the checks she believed to be lost, relying on the report of her
messenger. The stoppage order was eventually lifted by the banks and the
drafts and checks were able to be encashed. Yang then filed an action for
injunction and damages against the banks, Chandimari and David. The
trial court and CA held in favor of David as a holder in due course.

HELD:
Every holder of a negotiable instrument is presumed to be a holder in due
course. This is specially true if one is a holder because he is the payee or
indorsee of the instrument. In the case at bar, it is evident that David was
the payee of the checks. The prima facie presumption of him being a
holder in due course is in his favor. Nonetheless, this presumption is
disputable. On whether he took the check under the conditions set forth in
Section 52 must be proven. Petitioner relies on two arguments on why
David isnt a holder in due coursefirst, because he took the checks
without valuable consideration; and second, he failed to inquire on
Chandimaris title to the checks given to him.

The law gives rise to the presumption of valuable consideration. Petitioner
has the burden of debunking such presumption, which it failed to do so.
Her allegation that David received the checks without consideration is
unsupported and devoid of any evidence.

Furthermore, petitioner wasn't able to show any circumstance which should
have placed David in inquiry as to why and wherefore of the possession of
the checks by Chandimari. David wasn't a privy to the transactions
between Yang and Chandimari. Instead, Chandimari and David had the
agreement between themselves of the delivery of the checks. David even
inquired with the banks on the genuineness of the checks in issue. At that
time, he wasn't aware of any request for the stoppage of payment. Under
these circumstances, David had no obligation to ascertain from Chandimari
what the nature of the latters title to the checks was, if any, or the nature
of his possession.

107 MESINA V. IAC
145 SCRA 497

FACTS:
Jose Go purchased from Associate Bank a Cashiers Check, which he left on
top of the managers desk when left the bank. The bank manager then
had it kept for safekeeping by one of its employees. The employee was
then in conference with one Alexander Lim. He left the check in his desk
and upon his return, Lim and the check were gone. When Go inquired
about his check, the same couldn't be found and Go was advised to request
for the stoppage of payment which he did. He executed also an affidavit of
loss as well as reported it to the police.

The bank then received the check twice for clearing. For these two times,
they dishonored the payment by saying that payment has been stopped.
After the second time, a lawyer contacted it demanding payment. He
refused to disclose the name of his client and threatened to sue. Later, the
name of Mesina was revealed. When asked by the police on how he
possessed the check, he said it was paid to him Lim. An information for
theft was then filed against Lim.

A case of interpleader was filed by the bank and Go moved to participate
as intervenor in the complaint for damages. Mesina moved for the
dismissal of the case but was denied. The trial court ruled in the
interpleader case ordering the bank to replace the cashiers check in favor
of Go.

HELD:
Petitioner cannot raise as arguments that a cashiers check cannot be
countermanded from the hands of a holder in due course and that a
cashiers check is a check drawn by the bank against itself. Petitioner
failed to substantiate that he was a holder in due course. Upon
questioning, he admitted that he got the check from Lim who stole the
check. He refused to disclose how and why it has passed to him. It simply
means that he has notice of the defect of his title over the check from the
start. The holder of a cashiers check who is not a holder in due course
cannot enforce payment against the issuing bank which dishonors the
same. If a payee of a cashiers check obtained it from the issuing bank by
fraud, or if there is some other reason why the payee is not entitled to
collect the check, the bank would of course have the right to refuse
payment of the check when presented by payee, since the bank was aware
of the facts surrounding the loss of the check in question.

108 ASIA BANKING CORPORATION V. TEN SEN GUAN
44 PHIL 511

FACTS:
Ten Sen Guan ordered from Snows Ltd. ten cases of mercerized bastite to
be shipped from New York to Manila. Upon the arrival of the merchandise,
a draft drawn by Snows Ltd. against Ten Sen Guan was presented to them
for acceptance. The delivery of the bill of lading and other documents were
being put on hold pending acceptance of the draft that is why Ten Sen
Guan accepted the same. When the cases were opened however, it was
found out that the merchandise wasn't bastite but instead were burlap.