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State Investment House v. CA

This case involves post-dated checks issued by Nora Moulic to Corazon Victoriano as security for jewelry to be sold on commission. Victoriano negotiated the checks to State Investment House before the jewelry was sold. Moulic withdrew her funds before the checks matured. When State presented the checks, they were dishonored. The Court of Appeals affirmed dismissing State's complaint. The Supreme Court held that State is a holder in due course under the Negotiable Instruments Law because the checks were complete and regular on their face, State acquired them before maturity without notice of issues, in good faith and for value. As a holder in due course, State can enforce full payment of the checks.

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Rouel F. Santiago
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108 views2 pages

State Investment House v. CA

This case involves post-dated checks issued by Nora Moulic to Corazon Victoriano as security for jewelry to be sold on commission. Victoriano negotiated the checks to State Investment House before the jewelry was sold. Moulic withdrew her funds before the checks matured. When State presented the checks, they were dishonored. The Court of Appeals affirmed dismissing State's complaint. The Supreme Court held that State is a holder in due course under the Negotiable Instruments Law because the checks were complete and regular on their face, State acquired them before maturity without notice of issues, in good faith and for value. As a holder in due course, State can enforce full payment of the checks.

Uploaded by

Rouel F. Santiago
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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STATE INVESTMENT HOUSE, INC.

VS COURT OF APPEALS
272 SCRA 32
Bellosillo, J.

Facts:
Nora B. Moulic issued to Corazon Victoriano, as security for pieces of jewelry to be sold
on commission, 2 post-dated Equitable Banking Corporation checks in the amount of P50,000.00
each, one dated 30 August 1979 and the other, 30 September 1979. Thereafter, the payee
negotiated the checks to petitioner State Investment House. Inc. (STATE).
MOULIC failed to sell the pieces of jewelry, so she returned them to the payee before
maturity of the checks. The checks, however, could no longer be retrieved as they had already
been negotiated. Consequently, before their maturity dates, MOULIC withdrew her funds from
the drawee bank.
When State presented the checks for payment, they were dishonored for insufficiency of
funds. State allegedly notified Moulic of the dishonor and demended to be paid in cash instead.
This fact, however, is denied by Moulic.
State sued Moulic for the recovery of the amount of the checks. In her answer, Moulic
avers that she incurred no obligation on the checks because the jewelry was never sold and the
checks were negotiated without her knowledge and consent.
The trial court dismissed the complaint and ordered State to pay the Moulic attorney’s
fees. The appellate court affirmed the trial court on the ground that the Notice of Dishonor to
MOULIC was made beyond the period prescribed by the NIL and that even if STATE did serve
such notice on MOULIC within the reglementary period it would be of no consequence as the
checks should never have been presented for payment. The sale of the jewelry was never
effected; the checks, therefore, ceased to serve their purpose as security for the jewelry.

Issue:
Whether State is a holder in due course of the checks

Held:
YES. STATE is h holder in due course of the checks.
Section 52 of the NIL provides
“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 was
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 in the instrument
or defect in the title of the person negotiating it."
Thus, a prima facie presumption exists that the holder of a negotiable instrument is a
holder in due course. Consequently, the burden of proving that State is not a holder in due course
lies in the person who disputes the presumption. In this regard, Moulic failed. The evidence
clearly shows that:
(a) on their faces the post-dated checks were complete and regular;
(b) State bought these checks from the payee, Corazon Victoriano, before their due dates;
(c) State took these checks in good faith and for value, albeit at a discounted price; and,
(d) State was never informed nor made aware that these checks were merely issued to payee as
security and not for value.
Consequently, State is indeed a holder in due course. As such, it holds the instruments
free from any defect of title of prior parties, and from defenses available to prior parties among
themselves; State may, therefore, enforce full payment of the checks.

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