G.R. No. 70145 – 145 SCRA 497 – Mercantile Law – Negotiable Instruments Law – Rights of the Holder – What Constitutes a Holder in Due Course -Stolen Check
Jose Go maintains an account with Associated Bank. He needed to transfer P800,000.00 from Associated Bank to another bank but he realized that he does not want to be carrying that cash so he bought a cashier’s check from Associated Bank worth P800,000.00. Associated Bank then issued the check but Jose Go forgot to get the check so it was left on top of the desk of the bank manager. The bank manager, when he found the check, entrusted it to Albert Uy for the later to safe keep it. The check was however stolen from Uy by a certain Alexander Lim.
Jose Go learned that the check was stolen son he made a stop payment order against the check. Meanwhile, Associated Bank received the subject check from Prudential Bank for clearing. Apparently, the check was presented by a certain Marcelo Mesina for payment. Associated Bank dishonored the check.
When asked how Mesina got hold of the check, he merely stated that Alfredo Lim, who’s already at large, paid the check to him for “a certain transaction”.
ISSUE: Whether or not Mesina is a holder in due course.
HELD: No. Admittedly, Mesina became the holder of the cashier’s check as endorsed by Alexander Lim who stole the check. Mesina however refused to say how and why it was passed to him. Mesina 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. The check in question suffers from the infirmity of not having been properly negotiated and for value by Jose Go who is the real owner of said instrument.
