Mesina v. IACNo. L-70145November 13, 1986Secs. 56, 57 Holder in Due Course

FACTS: This case involves respondent Jose Go who purchased from Associated Bank Cashier’s Check for 800,000 PHP—he left the same check on the top desk of the bank manager. The bank manager entrusted the check to an Albert Uy (bank official) who had a visitor the same day who is Alexander Lim. When he left the desk, Lim was already gone and so was the check. Jose Go after inquiring with the bank accomplished a “STOP PAYMENT” order. Albert Uy went to the police to report the loss of the check, pointing to the person of Alexander Lim. The police reported that they received the lost checks for clearing from Prudential Bank—which was dishonored by Associate Bank. Respondent Associate Bank immediately dishonored the check prompting a certain Atty. Lorenzo Navarro to demand payment for the cashier’s check in question, which was being held by his client. The lawyer refused to reveal the name of his client and threatened to sue if payment is not made. After the bank denied revealing the person who tried to encash, the complaint has been substituted from a John Doe to a Marcelo Mesina, herein petitioner. According to Mesina, he came to possess the check since an Alexander Lim paid it to him—he failed to elucidate further what kind of transaction is it. ISSUES: Whether the IAC erred in ruling that a cashier’s check can be countermanded even in the hands of a holder in due course.

HELD: NO, petitioner is not a holder in due course. Petitioner failed to substantiate his claim that he is a holder in due course and for consideration or value as shown established facts of the case. Admittedly, petitioner became the holder of the cashier’s check as endorsed by Alexander Lim who stole the check. He refused to say how and why it was passed to him. He 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. If a payee’s cashier’s check was obtained from issuing bank by fraud, or if there is some other reason why the payee is not entitled to collect the check, the respondent bank have the right to refuse payment. The bank was liable to nobody on the check but Jose Go, the owner of the check.