Santos [Negotiable Instruments]
HI-CEMENT CORP. v. INSU!R "!N# O$ !SI!
%re-(e(u&te( interest3 t,e %ost-(ate( &,e&s o/
To%i&' Hol(ers in )ue Course
t,eir &lients "e&ause o/ t,is agreement3 t,e %etitioner E.T.
)OCTRINE'
Henr4 6 Co. as able to re-(is&ount its &lient:s
Se&tion *+'
&,e&s
! ,ol(er in (ue &ourse is a ,ol(er ,o ,as ta en t,e
$or ever4 transa&tion3 res%on(ent re5uire( E.T.
instrument un(er t,e /olloing &on(itions'
Henr4 to e;e&ute a %romissor4 note an( a (ee(
0a1 it is &om%lete an( regular on i ts /a&e2
o/ assignment bearing t,e &on/ormit4 o/ t,e
0b1 ,e be&ame t,e ,ol(er o/ it be/ore it as over(ue3
&lient to t,e re-(is&ounting.
an( it,out noti&e t,at it ,as %reviousl4 been
Hoever3 in $ebruar4 78<73 += &,e&s o/ Hi-
(is,onore(3 i/ su&, as t,e /a&t2
Cement ere (is,onore(3 so it, t,e ot,er
0&1 ,e too it in goo( /ait, an( /or value an(
&ustomers o/ E.T. Henr4 6 Co.
0(1 at t,e time it as negotiate( to ,im3 ,e ,a( no
Res%on(ent ban /ile( a &om%laint /or sum o/
noti&e o/ an4 in/irmit4 in t,e instrument or (e/e&t in t,e
mone4 against E.T. Henr4 6 Co.3 S%s. Tan3 Hi-
title o/ t,e %erson negotiating it.
Cement3 an( t,e ot,er &ustomers
!bsent an4 o/ t,e elements set /ort, in Se&tion *+3 t,e
!&&or(ing to res%on(ent3 t,e (is,onore( &,e&s
,ol(er is not a ,ol(er in (ue &ourse. In t,e &ase at bar3
ma(e t,em su//er a&tual (amages
t,e last to re5uirements ere not met.
Hi-Cement argue( t,at 071 its general manager an( treasurer ere not aut,ori>e( to issue t,e
$!CTS'
%ost-(ate( &rosse( &,e&s in E.T. Henr4?s /avor2
Petitioners S%ouses Tan ere &ontrolling
0+1 t,e (ee( o/ assignment %ur%orte(l4 e;e&ute(
sto&,ol(ers o/ E.T. Henr4 Henr4 6 Co.3 a &om%an4 t,at
b4 Hi-Cement assigning t,em to res%on(ent onl4
is engage( in t,e business o/ %ro&essing an(
bore t,e &on/ormit4 o/ its treasurer an( 0@1
(istributing buner /uel
res%on(ent as not a ,ol(er in (ue &ourse as it
Hi-Cement as among t,e &ustomers o/
s,oul( not ,ave (is&ounte( t,em /or being
Petitioner S%ouses
A&rosse( &,e&s.A
Hi-Cement issue( %ost-(ate( &,e&s /or t,eir
ISSUE' B,et,er or not t,e res%on(ent ban is a ,ol(er
%ur&,ases /rom E .T. Henr4 6 Co
in (ue &ourse
In 78983 res%on(ent ban3 Insular "an o/ !sia
HE)'
an( !meri&a grante( E.T. Henr4 Henr4 6 Co. a &re(it /a&ilit4 ,i&, enables t,e latter to en&as,3 it,
No
Santos [Negotiable Instruments]
Res%on(ent ban /aile( to meet t,e re5uisites o/ a ,ol(er in (ue &ourse3 s%e&i/i&all4 0&1 o/ Se&tion *+ o/ t,e Negotiable Instruments a It (i( not s,o goo( /ait, ,en res%on(ent ban a&&e%te( an( (is&ounte( Hi-Cement:s %ost-(ate( &rosse( &,e&s /rom E.T. Henr4 6 Co. oo( /ait, ,erein is negate( b4 gross negligent &on(u&t in (ealing it, t,e subDe&te( &,e&s Res%on(ent ban as ell aare t,at t,e sai( &,e&s ere &rosse( an( t,ere/ore bore restri&tions t,at t,e4 ere /or (e%osit to t,e %a4ee:s a&&ount onl4 In a((ition3 re&or(s s,o t,at res%on(ent ban &om%letel4 (isregar(e( a telling sign o/ irregularit4 in t,e r e-(is&ounting o/ t,e &,e&s ,en t,e general manager (i( not a&5uies&e or &onsent to it. Onl4 t,e treasurer:s signature a%%eare( on t,e (ee( o/ assignment "ans are e;%e&te( to observe e;traor(inar4 (iligen&e in ever transa&tion C!SE REM!N)E) TO THE TRI! COURT $OR COMPUT!TION O$ PETITIONERS: I!"IITIES
