Negotiable Instruments Case Digest: Yang v.

CA
(2003)
G.R. No. 138074 August 15, 2003
Lessons Applicable: Rights of the holder (Negotiable Instruments 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

HELD: yes, he is holder in due course

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 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
latter’s title to the checks was, if any, or the nature of his possession.