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 manager’s
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 Yang’s 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 isn’t a holder in due course—first, because he took the checks
without valuable consideration; and second, he failed to inquire on Chandimari’s 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 Davi
d 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 latter’s
title to the checks was, if any, or the nature of his possession.