[G.R. No. 138074.

August 15, 2003]

CELY YANG, petitioner, vs. HON. COURT OF APPEALS, PHILIPPINE COMMERCIAL INTERNATIONAL
BANK, FAR EAST BANK & TRUST CO., EQUITABLE BANKING CORPORATION, PREM CHANDIRAMANI
and FERNANDO DAVID, respondents.

FACTS:

Cely Yang and Prem Chandiramani agreed to exchange the latter's manager's check to two of Yang's checks both
payable to the order of Fernando David. They also agreed that Yang would secure a dollar draft in exchange for
Chandiramani's dollar draft.

At the time of exchange, Yang gave the checks to Danilo Ranigo. Ranigo said that Chandaramani did not appear
the rendezvous and that he lost the checks and draft, but in fact, the exchange transpired.

Yang requested the respective banks to stop payment on the instruments but was subsequently denied. Yang filed
a complaint for the return of the checks and for damages against Chandaramani and David.

The lower court sided with David and was held as holder in due course. The checks were complete in its face
when they were negotiated and that he had no notice that the checks were dishonored and took the checks in
good faith. The lower courts also said that David had taken the necessary precautions to verify the genuineness
of the checks.

ISSUE: Whether David was a holder in due course.

RULING:
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. However, said presumption may be rebutted. 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.

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.

G.R. No. 93048 March 3, 1994

BATAAN CIGAR AND CIGARETTE FACTORY, INC., petitioner,

vs.
THE COURT OF APPEALS and STATE INVESTMENT HOUSE, INC., respondents.

FACTS:

Bataan Cigar & Cigarette Factory, Inc. (BCCFI), engaged with King Tim Pua George, to deliver 2,000 bales of
tobacco leaf. BCCFI issued post dated crossed checks in exchange. Trusting King's words, BCCFI issued another
post-dated cross check for another purchase of tobacco leaves.

During these time, King was dealing with State Investment House Inc.. On two separate occasions King sold the
post-dated cross checks to SIHI, that was drawn by BCCFI in favor of King.
Because King failed to deliver the leaves, BCFI issued a stop payment to all the checks, including those sold to
SIHI.

The RTC held that SIHI had a valid claim of being a holder in due course and to collect the
checks issued by BCCFI.

ISSUE: Whether SIHI is a holder in due course.

Held: No

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

BCCFI's defense in stopping payment is as good to SIHI as it is to George King. Because, really, the checks were
issued with the intention that George King would supply BCCFI with the bales of tobacco leaf. There being failure
of consideration, SIHI is not a holder in due course.

G.R. No. 96160 June 17, 1992

STELCO MARKETING CORPORATION, petitioner,

vs.
HON. COURT OF APPEALS and STEELWELD CORPORATION OF THE PHILIPPINES, INC., respondent.

FACTS:
Stelco Marketing Corporation sold structural steel bars to RYL Construction Inc. RYL gave Stelcos sister
corporation, Armstrong Industries, a MetroBank check from Steelweld Corporation. The check was issued by
Steelwelds President to Romeo Lim, President of RYL, by way of accommodation, as a guaranty and not in
payment of an obligation. When Armstrong deposited the check at its bank, it was dishonored because it was
drawn against insufficient funds. When so deposited, the check bore two indorsements, i.e. RYL and
Armstrong. Subsequently, Stelco filed a civil case against RYL and Steelweld to recover the value of the steel
products. STELCO claimed it was a holder in due course and for value of a check that had been deposited and
dishonored. STELCO came into possession of it in some way, and was able, several years after the dishonor of
the check.

Issue: Whether or not STELCO was a holder in due course

Held: STELCOs reliance on the RTCs decision in the previous criminal case is misplaced. Although the RTC
maintained that Steelweld was liable for issuing a check for accommodation, the RTC did not specify to whom it
was liable. Despite the records showing that STELCO was in possession of the check, such possession does not
give a presumption that the holder is one for value. There was no evidence that STELCO had possession before
the checks were presented and dishonoured nor evidence that the checks were given to STELCO, indorsed to
STELCO in any manner or form of payment. Only after said checks were dishonoured were they acquired by
STELCO.

STELCO never became a holder for value since nowhere in the check was STELCO identified as payee,
indorsee, or depositor. Evidence shows that Armstrong was the intended payee, that it was the injured party, and
the proper party to bring the action.