NEGO – Holder Holder #01
Vicente R. De Ocampo v. Anita Gatchalian et. al. GR No. L-15126 30Nov1961 J. Labrador Parties: Anita Gatchalian – Gatchalian – drawer drawer of check Manuel Gonzales – Gonzales – husband husband of Matilde G.; recipient of check from Anita Gonzales Matilde Gonzales – Gonzales – wife wife of Manuel; her hospitalization expenses expenses were paid by Manuel using the check Vicente de Ocampo – Ocampo – recipient recipient and holder of check from Gonzales FACTS Manuel Gonzales offered to sell a car to Anita Gatchalian, who was looking for a car for her husband’s use. Manuel represented represented that he was duly authorized by Ocampo Clinic, the car owner, to look for buyer, negotiate and accomplish the sale of the car. Anita requested Manuel to bring the car and Certificate of Registration for her husband to see; but Manuel said that he can bring the car on the condition that Anita gives him a check to show to the owner as evidence of Anita’s good faith in the intention to buy the car. Anita gave Manuel a check in the amount of P600, on the condition that the check will only be for safekeeping and will be returned to her the following day when the car and Certficate of Registration Registration will be brought by Manuel. Manuel failed to appear the following day, so Anita issued a Stop Payment Order on the check with the drawee bank, which was issued without previous notice to holder. Meanwhile, Manuel delivered the check to Ocampo Clinic, in payment of the hospitalization expenses of his wife, Matilde Gonzales. Vicente de Ocampo gave Manuel change of P158.25 – P158.25 – difference of P600 value of check less P441.75 total hospitalization fees.
Vicente de Ocampo sued Manuel for estafa for not paying his obligations to the Ocampo Clinic and for receiving the cash balance of the check. Action in the CFI : recovery of the value of the P600 check CFI decision: sentenced Anita Gatchalian Gatchalian et al to pay de Ocampo the P600 P600 value of the check check plus legal interest interest plus costs costs of suit On appeal: Defendants contend that the check is not a negotiable instrument because Gatchalian had no intention to transfer the instruments as it was only for safekeeping so there is no delivery required by law; and de Ocampo is not a holder in due course because there was no negotiation prior to his acquiring the possession of the check and that he received it with notice of defect in the title of the holder, Manuel Gonzales
NEGO – Holder #01
ISSUE before the Supreme Court Whether de Ocampo may be considered as a holder in due course and consequently recover the value of the check (i.e. whether the presumption of holder in due course will apply) HELD/RATIO NO, because de Ocampo was guilty of gross negligence in not finding out the nature of the title and possession of Manuel Gonzales, amounting to legal absence of good faith; hence he cannot be considered as holder of the check in good faith. The presumption does not apply in this case because there was a defect in the title of the holder because the instrument is not payable to him or to bearer and the circumstances show that that Manuel’s title is at least suspicious, if not defective.
*** Section 52(d) of the NIL provides that in order that one may be considered a holder in due course, it is necessary that “at the time the instrument was negotiated to him, he had no notice of any xxx defect in the title of the person negotiating it.” Meanwhile, Section 59 of the NIL states that every holder is deemed prima facie to be a holder in due course. The Court found circumstances that should have put de Ocampo to inquiry as to why and wherefore the possession of the check by Manuel and why he used it to pay Matilde’s hospitalization expenses: De Ocampo was not aware of the circumstances how the check was delivered to Manuel Gatchalian had no obligation whatsoever with Ocampo Clinic The check had two parallel lines in the upper left hand corner, which practice means that the check could only be deposited but may not be converted into cash.
These considerations would seem sufficient to justify the ruling that Gatchalian should not be allowed to recover the value of the check. Where a holder’s title is defective or suspicious, it cannot be stated that the payee acquired the check without the knowledge, of said defect in holder’s title, and for this reason the presumption that it is a holder in due course or that it acquired the instrument in good faith does not exist. Where the payee required the check under circumstances which should have put it to inquiry, why the holder had the check and used it, to pay his own personal account, the duty developed upon it to prove that it actually acquired said check in good faith.
