De Ocampo vs.

Gatchalian Lesson applied- rights of the holder FACTS:

Sept 8 1953 evening: Anita C. Gatchalian was looking for a car for the use of her husband and the family and Manuel Gonzales who was accompanied by Emil Fajardois (personally known to Anita) offered her a car o Manuel Gonzales represented to defendant Anita that he was duly authorized by Ocampo Clinic, the owner of the car, to look for a buyer and negotiate for and accomplish the sale, but which facts were not known to Ocampo September 9 1953 o Anita requested Manuel to bring the car the day following together with the certificate of registration of the car so that her husband would be able to see same o Manuel Gonzales told her that unless there is a showing that the party interested in the purchase is ready he cannot bring the certificate of registration o Anita gave him a check which will be shown to the owner as evidence of buyer's GF in the intention to purchase, it being for safekeeping only of Manuel and to be returned o For the hospitalization of the wife of Manuel, he paid the check to Ocampo clinic P441.75 - payment of said fees and expenses P158.25 -given to Manual as balance Next Day: Manual did not appear so Anita issued a stop payment order Anita filed with the Office of the City Fiscal of Manila, a complaint for estafa against Manuel Appeal Manuel contends that: o the check is not a negotiable instrument, under the facts and circumstances stated in the stipulation of facts - no delivery (Section 16, Negotiable Instruments Law) because only for safekeeping (conditional delivery) o Ocampo is not a holder in due course no negotiation prior to acquiring the check check is not a personal check of Manuel could have inquired why a person would use the check of another to pay his own debt, Gatchalian being personally acquainted with V. R. de Ocampo

ISSUES: 1. W/N Ocampo is a holder in due course - NO 2. W/N prima facie holder in due course applies - NO

HELD: 1. NO

Sec. 191 o holder - payee or indorsee of a bill or note, who is in possession of it, or the bearer Sec. 52 o holder in due course - holder who has taken the instrument under the ff conditions:

1. That it is complete and regular on its face 2. That he became the holder of it before it was overdue, and without notice that it had been previously dishonored, it such was the fact. 3. That he took it in good faith and for value. 4. 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

circumstances o the amount of the check did not correspond exactly with the obligation of Matilde Gonzales to Dr. V. R. de Ocampo o check had two parallel lines in the upper left hand corner, which practice means that the check could only be deposited but may not be converted into cash It was payee's duty to ascertain from the holder Manuel what the nature of his title to the check was or the nature of his possession. - failure: guilty of gross neglect and legal absence of GF In order to show that the defendant had 'knowledge of such facts that his action in taking the instrument amounted to BF it is not necessary to prove that the defendant knew the exact fraud o It is sufficient that the buyer of a note had notice or knowledge that the note was in some way tainted with fraud

2. NO

Sec. 59 every holder is deemed prima facie to be a holder in due course a possessor of the instrument is prima facie a holder in due course does not apply because there was a defect in the title of the holder (Manuel Gonzales) because the instrument is not payable to him or to bearer.
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Yang vs. Court of appeals Lesson applied- rights of the holder FACTS: December 22, 1987: Cely Yang and Prem Chandiramani entered into an agreement whereby Yang was to give 2 P2.087M PCIB managers check in the amount of P4.2 million both payable to the order of Fernando David. Yang and Chandiramani agreed that the difference of P26K in the exchange would be their profit to be divided equally between them. Yang and Chandiramani also further agreed that the Yang would secure from FEBTC a dollar draft in the amount of US$200K, payable to PCIB FCDU Account No. 4195-01165-2, which Chandiramani would exchange for another dollar draft in the same amount to be issued by Hang Seng Bank Ltd. of Hong Kong. December 22, 1987, Yang procured the ff:

a) Equitable Cashiers Check No. CCPS 14-009467 in the sum of P2,087,000.00, dated December 22, 1987, payable to the order of Fernando David; b) FEBTC Cashiers Check No. 287078, in the amount of P2,087,000.00, dated December 22, 1987, likewise payable to the order of Fernando David; and c) FEBTC Dollar Draft No. 4771, drawn on Chemical Bank, New York, in the amount of US$200,000.00, dated December 22, 1987, payable to PCIB FCDU Account No. 4195-01165-2. December 22, 1987 1 p.m.: Yang gave the cashiers checks and dollar drafts to her business associate, Albert Liong, to be delivered to Chandiramani by Liongs messenger, Danilo Ranigo Ranigo was to meet Chandiramani at 2 p.m. at Philippine Trust Bank, Ayala Avenue, Makati where he would turn over Yangs cashiers checks and dollar draft to Chandiramani who, in turn, would deliver to Ranigo a PCIB managers check in the sum of P4.2 million and a Hang Seng Bank dollar draft for US$200K in exchange but Chandiramani did not appear December 22, 1987 4 p.m.: Ranigo reported the alleged loss of the checks and the dollar draft to Liong. Liong, in turn, informed Yang, and the loss was then reported to the police. Chandiramani was able to get hold of the instruments Chandiramani delivered the 2 cashiers checks to Fernando David at China Banking Corporation branch in San Fernando City, Pampanga o In exchange, he got US$360K from David, which he deposited in the savings account of his wife, Pushpa; and his mother, Rani Reynandas, who held FCDU Account No. 124 with the United Coconut Planters Bank branch in Greenhills o He also deposited FEBTC Dollar Draft No. 4771, dated December 22, 1987, drawn upon the Chemical Bank, New York for US$200K in PCIB FCDU Account No. 4195-01165-2 on the same date. Yang requested FEBTC and Equitable to stop payment on the instruments she believed to be lost o Both banks complied with her request Yang filed against David and Chandiramani CA affirms RTC: in favor of David

ISSUE: W/N David is a holder in due course HELD: Although negotiable instruments do not constitute legal tender, they often take the place of money as a means of payment checks were crossed 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 David took the step of asking the manager of his bank to verify from FEBTC and Equitable as to the genuineness of the checks and only accepted the same after being assured that there was nothing wrong with said checks o David did not close his eyes deliberately to the nature or the particulars of a fraud allegedly committed by Chandiramani upon the petitioner, absent any knowledge on his part that the action in taking the instruments amounted to bad faith Mesina vs. IAC

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.