YANG V.

COURT OF APPEALS 409 SCRA 159

FACTS:
Yang and Chandimari entered into an agreement that the latter would issue to the former a managers check in exchange for two checks that Yang has payable to the order of David. The difference in amount would be the profit of the two of them. It was further agreed upon that Yang would secure a dollar draft, which Chandimari would exchange with another dollar draft to be secured from a Hong Kong bank. At the agreed time of rendezvous, it was reported by Yangs messenger that Chandimari didn't show up and the drafts and checks were allegedly stolen. This wasn't true however. Chandimari was able to get hold of the drafts and checks. He was even able to deliver to David the two checks and was able to get money in return. Consequently, Yang asked for the stoppage of payment of the checks she believe to be lost, relying on the report of her messenger. The stoppage order was eventually lifted by the banks and the drafts and checks were able to be encashed. Yang then filed an action for injunction and damages against the banks, Chandimari and David. The trial court and CA held in favor of David as a holder in due course.

HELD:
Every holder of a negotiable instrument is presumed to be a holder in due course. This is specially true if one is a holder because he is the payee or indorsee of the instrument. In the case at bar, it is evident that David was the payee of the checks. The prima facie presumption of him being a holder in due course is in his favor. Nonetheless, this presumption is disputable. 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. Petitioner has the burden of debunking such presumption, which it failed to do so. Her allegation that David received the checks without consideration is unsupported and devoid of any evidence. 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.