33 Yang vs. CA each amounting to P2.

087 BOTH PAYABLE

G.R. NO. 138074 | August 15, 2003 | PONENTE: J. to Fernando David (payee). The difference of
QUISUMBING P26k will be their profit equally divided b/w
DIGESTED BY: MINA, ADRIAN PAOLO R. them. They further agreed that Yang will
secure from FEBTC a dollar draft $200k
TOPIC: Holders in Due Course payable to PCIB FCDU account, which Prem
would exchange for another dollar draft
DOCTRINE/S: issued by an HK bank.
 Both of them had an agreement to meet at
 Every holder of a negotiable instrument is Ayala, Makati for the exchange of the
deemed prima facie a holder in due course. checks. Yang, thru its messenger, delivered
However, this presumption arises only in to Prem’s messenger the cashier’s checks &
favor of a person who is a holder as defined dollar draft. Prem’s messenger & Prem was
in Section 191 of the Negotiable Instruments to meet somewhere in Makati so that Prem’s
Law, meaning a “payee or indorsee of a bill messenger can give it to Prem, and in return
or note, who is in possession of it, or the Prem could give the agreed checks & dollar
bearer thereof.” However, said presumption drafts to Yang. But allegedly Prem didn’t
may be rebutted. show up. And according to Prem’s
 Section 24 of the Negotiable Instruments messenger, the 2 cashier’s check & the
Law creates a presumption that every party dollar drafts were “lost”. Yang was informed
to an instrument acquired the same for a about this occurrence and Yang reported it to
consideration or for value. the police. HOWEVER, the checks & dollar
draft were actually not lost since Prem was
EMERGENCY RECIT: able to get those without delivering the
exchange of the PCIB manager’s check &
Yang and Chandimari entered into an agreement that the HK bank dollar draft.
the latter would issue to the former a manager’s check  Also, Prem was able to deliver to David the
in exchange for two checks that Yang has payable to FEBTC and Equitable cashier’s checks.
the order of David. The difference in amount would be  In exchange, Prem got $369K from David
the profit of the two of them. It was further agreed then Prem deposited it to the saving’s
upon that Yang would secure a dollar draft, which account of his wife and mother. Prem also
Chandimari would exchange with another dollar draft deposited the FEBTC dollar draft given by
to be secured from a Hong Kong bank. At the agreed Yang.
time of rendezvous, it was reported by Yang’s  Due to this, Yang requested FEBTC &
messenger that Chandimari didn't show up and the Equitable to stop payment on the
drafts and checks were allegedly stolen. This wasn't instruments that she thought were lost. But
true however. Chandimari was able to get hold of the this was subsequently lifted which enabled
drafts and checks. He was even able to deliver to the holder of the PCIB FCDU account to
David the two checks and was able to get money in receive the amount of $200K.
return. Consequently, Yang asked for the stoppage of  Yang filed a complaint against the banks,
payment of the checks she believed to be lost, relying Prem & David
on the report of her messenger. The banks eventually  RTC: Ruled in favor of David (payee), on the
lifted the stoppage order and the drafts and checks ground that he was a holder in due course.
were encashed. Yang then filed an action for  CA: Affirmed RTC & ruled that: 1) David took
injunction and damages against the banks, the necessary precaution to verify thru his
Chandimari and David. The RTC and CA held in favor bank (China Bank) the genuineness of the
of David as a holder in due course to which the SC cashier’s checks he got from Prem; 2) Since
agreed. The law itself creates a presumption in there was no stop payment order YET when
David’s favor that he gave valuable consideration for the payee inquired, he had NO NOTICE of
the checks in question, to which Yang failed to rebut. what transpired b/w Yang & Prem. All he
Second, petitioner fails to point any circumstance knew that the checks were issued to Prem.
which should have put David on inquiry as to the why David had no notice (real/constructive) for
and wherefore of the possession of the checks by him to make further inquiry as to the infirmity
Chandiramani. David was not privy to the transaction of the instruments and defect of title of the
between petitioner and Chandiramani. holder; 3) David received those check in due
course because Prem was acting as Yang’s
FACTS: agent at that time; 4) To mandate that each
holder inquire about every aspect on how the
 Petitioner Cely Yang & Prem Chandiramani instrument came about will unduly impede
entered into an agreement wherein Prem will commercial transactions. Although
give Yang a PCIB manager’s check (P4.2M) negotiable instruments do not constitute
in exchange for 2 of Yang’s manager’s check
 legal tender, they often take the place of First, with respect to consideration, Section 24 of the
money as a means of payment. Negotiable Instruments Law creates a presumption
 Yang contends that the last 2 requisites of that every party to an instrument acquired the same
Sec. 52 of NIL (what constitutes a holder in for a consideration or for value. Thus, the law itself
due course) are missing. No proof that David creates a presumption in David’s favor that he gave
tendered any valuable consideration for the valuable consideration for the checks in question. In
disputed checks, and David failed to inquire alleging otherwise, the petitioner has the onus to
from Prem as to how Prem acquired prove that David got hold of the checks absent said
possession of the checks and this resulted to consideration. In other words, the petitioner must
intentional ignorance tantamount to bad faith. present convincing evidence to overthrow the
Also, since they were crossed checks David presumption. Our scrutiny of the records, however,
should have, pursuant to Bataan vs. Cigar shows that the petitioner failed to discharge her
case, been put on guard that the checks burden of proof. The petitioner’s averment that David
were issued for a definite purpose & made did not give valuable consideration when he took
inquired to determine if he received the possession of the checks is unsupported, devoid of
checks pursuant to that purpose. any concrete proof to sustain it. Note that both the trial
 David argued that when he got the checks, court and the appellate court found that David did not
he verified their genuineness with his bank & receive the checks gratis, but instead gave
only after they was verified that he deposited Chandiramani US$360,000.00 as consideration for
them. No notice of previous dishonor/infirmity the said instruments. Factual findings of the Court of
which could have aroused his suspicions. Appeals are conclusive on the parties and not
Negotiable instruments are presumed to reviewable by this Court; they carry great weight when
have been issued for valuable consideration, the factual findings of the trial court are affirmed by
and he who alleges otherwise must the appellate court.
controvert the presumption with sufficient
evidence to which Yang filed to discharge Second, petitioner fails to point any circumstance
this burden. Checks were delivered to him which should have put David on inquiry as to the why
as payee & he took them as holder & payee and wherefore of the possession of the checks by
thereof. Hence, he should be deemed to be Chandiramani. David was not privy to the transaction
their holder in due course. between petitioner and Chandiramani. Instead,
Chandiramani and David had a separate dealing in
ISSUE/S: which it was precisely Chandiramani’s duty to deliver
the checks to David as payee. The evidence shows
Whether David was a holder in due course. that Chandiramani performed said task to the letter.
Petitioner admits that David took the step of asking
HELD: the manager of his bank to verify from FEBTC and
Equitable as to the genuineness of the checks and
YES. only accepted the same after being assured that there
was nothing wrong with said checks. At that time,
Every holder of a negotiable instrument is David was not aware of any “stop payment” order.
deemed prima facie a holder in due course. However, Under these circumstances, David thus had no
this presumption arises only in favor of a person who obligation to ascertain from Chandiramani what the
is a holder as defined in Section 191 of the Negotiable nature of the latter’s title to the checks was, if any, or
Instruments Law, meaning a “payee or indorsee of a the nature of his possession. Thus, we cannot hold
bill or note, who is in possession of it, or the bearer him guilty of gross neglect amounting to legal
thereof.” absence of good faith, absent any showing that there
was something amiss about Chandiramani’s
We find that the petitioner’s challenge to David’s acquisition or possession of the checks. David did not
status as a holder in due course hinges on two close his eyes deliberately to the nature or the
arguments: (1) the lack of proof to show that David particulars of a fraud allegedly committed by
tendered any valuable consideration for the disputed Chandiramani upon the petitioner, absent any
checks; and (2) David’s failure to inquire from knowledge on his part that the action in taking the
Chandiramani as to how the latter acquired instruments amounted to bad faith.
possession of the checks, thus resulting in David’s
intentional ignorance tantamount to bad faith. In sum, As regards petitioner’s reliance on the Bataan
petitioner posits that the last two requisites of Section Cigar case, however, is misplaced. The facts in the
52 are missing, thereby preventing David from being present case are not on all fours with Bataan Cigar. In
considered a holder in due course. Unfortunately for the latter case, the crossed checks were negotiated
the petitioner, her arguments on this score are less and sold at a discount by the payee, while in the
than meritorious and far from persuasive. instant case, the payee did not negotiate further the
checks in question but promptly deposited them in his
bank account.