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

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

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

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

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

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

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:

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)

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

balance

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

1.
2.

That it is complete and regular on its face

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.
4.

That he took it in good faith and for value.

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

the amount of the check did not correspond exactly with the obligation of Matilde Gonzales to Dr.
V. R. de Ocampo

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

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.

suspicious circumstance

138074
Lessons

Applicable:

Rights

August
of

the

holder

15,
(Negotiable

Instruments

2003
Law)

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

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

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

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

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

Republic
SUPREME
Manila
SECOND DIVISION

of

the

Philippines
COURT

G.R. No. 70145 November 13, 1986

MARCELO
A.
MESINA, petitioner,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT, HON. ARSENIO M. GONONG, in his capacity as
Judge of Regional Trial Court Manila (Branch VIII), JOSE GO, and ALBERT UY, respondents.

PARAS, J.:
This is an appeal by certiorari from the decision of the then Intermediate Appellate Court (IAC for short), now the
Court of Appeals (CA) in AC-G.R. S.P. 04710, dated Jan. 22, 1985, which dismissed the petition for certiorari and
prohibition filed by Marcelo A. Mesina against the trial court in Civil Case No. 84-22515. Said case (an Interpleader)
was filed by Associated Bank against Jose Go and Marcelo A. Mesina regarding their conflicting claims over
Associated Bank Cashier's Check No. 011302 for P800,000.00, dated December 29, 1983.
Briefly, the facts and statement of the case are as follows:
Respondent Jose Go, on December 29, 1983, purchased from Associated Bank Cashier's Check No. 011302 for
P800,000.00. Unfortunately, Jose Go 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, who had then a
visitor in the person of Alexander Lim. Uy had to answer a phone call on a nearby telephone after which he
proceeded to the men's room. When he returned to his desk, his visitor Lim was already gone. When Jose Go
inquired for his cashier's check from Albert Uy, the check was not in his folder and nowhere to be found. The latter
advised Jose Go to go to the bank to accomplish a "STOP PAYMENT" order, which suggestion Jose Go immediately
followed. He also executed an affidavit of loss. Albert Uy went to the police to report the loss of the check, pointing
to the person of Alexander Lim as the one who could shed light on it.
The records of the police show that Associated Bank received the lost check for clearing on December 31, 1983,
coming from Prudential Bank, Escolta Branch. The check was immediately dishonored by Associated Bank by
sending it back to Prudential Bank, with the words "Payment Stopped" stamped on it. However, the same was again
returned to Associated Bank on January 4, 1984 and for the second time it was dishonored. Several days later,
respondent Associated Bank received a letter, dated January 9, 1984, from a certain Atty. Lorenzo Navarro
demanding payment on the cashier's check in question, which was being held by his client. He however refused to
reveal the name of his client and threatened to sue, if payment is not made. Respondent bank, in its letter, dated
January 20, 1984, replied saying the check belonged to Jose Go who lost it in the bank and is laying claim to it.
On February 1, 1984, police sent a letter to the Manager of the Prudential Bank, Escolta Branch, requesting
assistance in Identifying the person who tried to encash the check but said bank refused saying that it had to
protect its client's interest and the Identity could only be revealed with the client's conformity. Unsure of what to do
on the matter, respondent Associated Bank on February 2, 1984 filed an action for Interpleader naming as
respondent, Jose Go and one John Doe, Atty. Navarro's then unnamed client. On even date, respondent bank
received summons and copy of the complaint for damages of a certain Marcelo A. Mesina from the Regional Trial
Court (RTC) of Caloocan City filed on January 23, 1984 bearing the number C-11139. Respondent bank moved to
amend its complaint, having been notified for the first time of the name of Atty. Navarro's client and substituted
Marcelo A. Mesina for John Doe. Simultaneously, respondent bank, thru representative Albert Uy, informed Cpl.
Gimao of the Western Police District that the lost check of Jose Go is in the possession of Marcelo Mesina, herein
petitioner. When Cpl. Gimao went to Marcelo Mesina to ask how he came to possess the check, he said it was paid
to him by Alexander Lim in a "certain transaction" but refused to elucidate further. An information for theft (Annex J)
was instituted against Alexander Lim and the corresponding warrant for his arrest was issued (Annex 6-A) which up
to the date of the filing of this instant petition remains unserved because of Alexander Lim's successful evation
thereof.
Meanwhile, Jose Go filed his answer on February 24, 1984 in the Interpleader Case and moved to participate as
intervenor in the complain for damages. Albert Uy filed a motion of intervention and answer in the complaint for
Interpleader. On the Scheduled date of pretrial conference inthe interpleader case, it was disclosed that the "John
Doe" impleaded as one of the defendants is actually petitioner Marcelo A. Mesina. Petitioner instead of filing his
answer to the complaint in the interpleader filed on May 17, 1984 an Omnibus Motion to Dismiss Ex Abudante
Cautela alleging lack of jurisdiction in view of the absence of an order to litigate, failure to state a cause of action
and lack of personality to sue. Respondent bank in the other civil case (CC-11139) for damages moved to dismiss
suit in view of the existence already of the Interpleader case.

The trial court in the interpleader case issued an order dated July 13, 1984, denying the motion to dismiss of
petitioner Mesina and ruling that respondent bank's complaint sufficiently pleaded a cause of action for
itnerpleader. Petitioner filed his motion for reconsideration which was denied by the trial court on September 26,
1984. Upon motion for respondent Jose Go dated October 31, 1984, respondent judge issued an order on November
6, 1984, declaring petitioner in default since his period to answer has already expirecd and set the exparte presentation of respondent bank's evidence on November 7, 1984.
Petitioner Mesina filed a petition for certioari with preliminary injunction with IAC to set aside 1) order of respondent
court denying his omnibus Motion to Dismiss 2) order of 3) the order of default against him.
On January 22, 1985, IAC rendered its decision dimissing the petition for certiorari. Petitioner Mesina filed his Motion
for Reconsideration which was also denied by the same court in its resolution dated February 18, 1985.
Meanwhile, on same date (February 18, 1985), the trial court in Civil Case #84-22515 (Interpleader) rendered a
decisio, the dispositive portion reading as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered ordering plaintiff Associate
Bank to replace Cashier's Check No. 011302 in favor of Jose Go or its cas equivalent with legal
rate of itnerest from date of complaint, and with costs of suit against the latter.
SO ORDERED.
On March 29, 1985, the trial court in Civil Case No. C-11139, for damages, issued an order, the
pertinent portion of which states:
The records of this case show that on August 20, 1984 proceedings in this case was (were)
ordered suspended because the main issue in Civil Case No. 84-22515 and in this instant case are
the same which is: who between Marcelo Mesina and Jose Go is entitled to payment of Associated
Bank's Cashier's Check No. CC-011302? Said issue having been resolved already in Civil casde No.
84-22515, really this instant case has become moot and academic.
WHEREFORE, in view of the foregoing, the motion sholud be as it is hereby granted and this case
is ordered dismissed.
In view of the foregoing ruling no more action should be taken on the "Motion For Reconsideration
(of the order admitting the Intervention)" dated June 21, 1984 as well as the Motion For
Reconsideration dated September 10, 1984.
SO ORDERED.
Petitioner now comes to Us, alleging that:
1. IAC erred in ruling that a cashier's check can be countermanded even in the hands of a holder in due course.
2. IAC erred in countenancing the filing and maintenance of an interpleader suit by a party who had earlier been
sued on the same claim.
3. IAC erred in upholding the trial court's order declaring petitioner as in default when there was no proper order for
him to plead in the interpleader complaint.
4. IAC went beyond the scope of its certiorari jurisdiction by making findings of facts in advance of trial.
Petitioner now interposes the following prayer:
1. Reverse the decision of the IAC, dated January 22, 1985 and set aside the February 18, 1985 resolution denying
the Motion for Reconsideration.
2. Annul the orders of respondent Judge of RTC Manila giving due course to the interpleader suit and declaring
petitioner in default.

Petitioner's allegations hold no water. Theories and examples advanced by petitioner on causes and effects of a
cashier's check such as 1) it cannot be countermanded in the hands of a holder in due course and 2) a cashier's
check is a bill of exchange drawn by the bank against itself-are general principles which cannot be aptly applied to
the case at bar, without considering other things. 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. If a payee of a cashier's 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 respondent bank would, of course, have
the right to refuse payment of the check when presented by the payee, since respondent bank was aware of the
facts surrounding the loss of the check in question. Moreover, there is no similarity in the cases cited by petitioner
since respondent bank did not issue the cashier's check in payment of its obligation. Jose Go bought it from
respondent bank for purposes of transferring his funds from respondent bank to another bank near his
establishment realizing that carrying money in this form is safer than if it were in cash. The check was Jose Go's
property when it was misplaced or stolen, hence he stopped its payment. At the outset, respondent bank knew it
was Jose Go's check and no one else since Go had not paid or indorsed it to anyone. The bank was therefore liable
to nobody on the check but Jose Go. The bank had no intention to issue it to petitioner but only to buyer Jose Go.
When payment on it was therefore stopped, respondent bank was not the one who did it but Jose Go, the owner of
the check. Respondent bank could not be drawer and drawee for clearly, Jose Go owns the money it represents and
he is therefore the drawer and the drawee in the same manner as if he has a current account and he issued a check
against it; and from the moment said cashier's check was lost and/or stolen no one outside of Jose Go can be
termed a holder in due course because Jose Go had not indorsed it in due course. The check in question suffers
from the infirmity of not having been properly negotiated and for value by respondent Jose Go who as already been
said is the real owner of said instrument.
In his second assignment of error, petitioner stubbornly insists that there is no showing of conflicting claims and
interpleader is out of the question. There is enough evidence to establish the contrary. Considering the
aforementioned facts and circumstances, respondent bank merely took the necessary precaution not to make a
mistake as to whom to pay and therefore interpleader was its proper remedy. It has been shown that the
interpleader suit was filed by respondent bank because petitioner and Jose Go were both laying their claims on the
check, petitioner asking payment thereon and Jose Go as the purchaser or owner. The allegation of petitioner that
respondent bank had effectively relieved itself of its primary liability under the check by simply filing a complaint
for interpleader is belied by the willingness of respondent bank to issue a certificate of time deposit in the amount
of P800,000 representing the cashier's check in question in the name of the Clerk of Court of Manila to be awarded
to whoever wig be found by the court as validly entitled to it. Said validity will depend on the strength of the parties'
respective rights and titles thereto. Bank filed the interpleader suit not because petitioner sued it but because
petitioner is laying claim to the same check that Go is claiming. On the very day that the bank instituted the case in
interpleader, it was not aware of any suit for damages filed by petitioner against it as supported by the fact that the
interpleader case was first entitled Associated Bank vs. Jose Go and John Doe, but later on changed to Marcelo A.
Mesina for John Doe when his name became known to respondent bank.
In his third assignment of error, petitioner assails the then respondent IAC in upholding the trial court's order
declaring petitioner in default when there was no proper order for him to plead in the interpleader case. Again, such
contention is untenable. The trial court issued an order, compelling petitioner and respondent Jose Go to file
theirAnswers setting forth their respective claims. Subsequently, a Pre-Trial Conference was set with notice to
parties to submit position papers. Petitioner argues in his memorandum that this order requiring petitioner to file his
answer was issued without jurisdiction alleging that since he is presumably a holder in due course and for value,
how can he be compelled to litigate against Jose Go who is not even a party to the check? Such argument is trite
and ridiculous if we have to consider that neither his name or Jose Go's name appears on the check. Following such
line of argument, petitioner is not a party to the check either and therefore has no valid claim to the Check.
Furthermore, the Order of the trial court requiring the parties to file their answers is to all intents and purposes an
order to interplead, substantially and essentially and therefore in compliance with the provisions of Rule 63 of the
Rules of Court. What else is the purpose of a law suit but to litigate?
The records of the case show that respondent bank had to resort to details in support of its action for Interpleader.
Before it resorted to Interpleader, respondent bank took an precautionary and necessary measures to bring out the
truth. On the other hand, petitioner concealed the circumstances known to him and now that private respondent
bank brought these circumstances out in court (which eventually rendered its decision in the light of these facts),
petitioner charges it with "gratuitous excursions into these non-issues." Respondent IAC cannot rule on whether
respondent RTC committed an abuse of discretion or not, without being apprised of the facts and reasons why
respondent Associated Bank instituted the Interpleader case. Both parties were given an opportunity to present
their sides. Petitioner chose to withhold substantial facts. Respondents were not forbidden to present their side-this
is the purpose of the Comment of respondent to the petition. IAC decided the question by considering both the facts
submitted by petitioner and those given by respondents. IAC did not act therefore beyond the scope of the remedy
sought in the petition.

WHEREFORE, finding that the instant petition is merely dilatory, the same is hereby denied and the assailed orders
of the respondent court are hereby AFFIRMED in toto.
SO ORDERED.
Feria (Chairman), Fernan, Alampay and Gutierrez, Jr., JJ., concur.
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.