Commercial Law

State Investment House, Inc. vs Court of Appeals (1993)

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G.R. No. 101163 – 217 SCRA 32 – Mercantile Law – Negotiable Instruments Law – Holder in Due Course – Notice of Dishonor

Corazon Victoriano provided pieces of jewelry to Nora Moulic so that the latter may sell the same. As security for the jewelries, Moulic issued to Victoriano two post-dated checks in the aggregate amount of P100,000.00. Moulic was not able to sell the jewelries so she returned the same to Victoriano. Victoriano was however unable to return the checks hence Moulic withdrew all her funds from the bank.

Apparently, the checks were negotiated by Victoriano to State Investment House, Inc. So when the checks were dishonored, State Investment demanded Moulic to pay. Moulic refused to pay because she said the checks were merely used as security for the jewelry. Moulic further averred that she received no notice of dishonor.

ISSUE: Whether or not State Investment House is entitled to be paid.

HELD: Yes. State Investment is a holder in due course as it met all the requirements to be one pursuant to Section 52 of the Negotiable Instruments Law. In particular, it is clearly shown that: (a) on their faces the post-dated checks were complete and regular: (b) State Investment bought these checks from Victoriano, before their due dates; (c) State Investment took these checks in good faith and for value, (d) State Investment was never informed nor made aware that these checks were merely issued to Victoriano as security and not for value.

Further, there is no need to issue a notice of dishonor to Moulic. After Moulic withdrew her funds, she could not have expected her checks to be honored. It would only be futile for State Investment to be sending her notices of dishonor for the two checks.

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