De Ocampo v. Gatchalian

8/10/2019 De Ocampo v. Gatchalian

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EN BANC

[G.R. No. L-15126. November 30, 1961.]

VICENTE R. DE OCAMPO & CO. , plaintiff-appellee , vs . ANITAGATCHALlAN, ET AL. , defendants-appellants.

Vicente Formoso, Jr. for plaintiff-appellee.

Reyes & Pangalangan for defendants-appellants.

SYLLABUS

1. BILLS, NOTES AND CHECKS; NEGOTIABLE INSTRUMENTS; HOLDER IN

DUE COURSE. Section 52 (c) provides that a holder in due course is one whotakes the instrument "in good faith and for value;" Section 59, "that every holder

is deemed prima facie to be holder in due course;" and Section 52 (d), that inorder that one may be a holder in due course it is necessary that "at the time the

instrument was negotiated" to him "he had no notice of any . . . defect in the titleof the person negotiating it;" and lastly Section 59, that every holder is

deemed prima facie to be a holder in due course.

2. ID.; ID.; WHEN A HOLDER IS NOT A HOLDER IN DUE COURSE. Wherea 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 theinstrument in good faith does not exist.

3. ID.; ID.; HOLDER IN DUE COURSE; WHEN PROOF OF GOOD FAITH

REQUIRED. Where the payee acquired the check under circumstances whichshould have put it to inquiry, why the holder had the check and used it, to pay his

own personal account, the duty devolved upon it to prove that it actually acquiredsaid check in good faith.


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D E C I S I O N

LABRADOR , J p:

Appeal from a judgment of the Court of First Instance of Manila, Hon.Conrado M. Vasquez, presiding, sentencing the defendants to pay the plaintiffthe sum of P600, with legal interest from September 10, 1953 until paid, and

to pay the costs.

The action is for the recovery of the value of a check for P600 payable to theplaintiff and drawn by defendant Anita C. Gatchalian. The complaint sets forth the

check and alleges that plaintiff received it in payment of the indebtedness of one

Matilde Gonzales; that upon receipt of said check, plaintiff gave MatildeGonzales P158.25, the difference between the face value of the check and

Matilde Gonzales' indebtedness. The defendants admit the execution of thecheck but they allege in their answer, as affirmative defense, that it was issuedsubject to a condition, which was not fulfilled, and that plaintiff was guilty of gross

negligence in not taking steps to protect itself.

At the time of the trial, the parties submitted a stipulation of facts, which reads as

follows:

"Plaintiff and defendants through their respective

undersigned attorney's respectfully submit the following Agreed

Stipulation of Facts;

First . That on or about 8 September 1953, in the evening,

defendant Anita C. Gatchalian who was then interested in looking

for a car for the use of her husband and the family, was shown and

offered a car by Manuel Gonzales who was accompanied by Emil

Fajardo, the latter being personally known to defendant Anita C.

Gatchalian;

Second . That Manuel Gonzales represented to defendant

Anita C. Gatchalian that he was duly authorized by the owner of the


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car, Ocampo Clinic, to look for a buyer of said car and to negotiate

for and accomplish said sale, but which facts were not known to

plaintiff;

Third . That defendant Anita C. Gatchalian, finding the

price of the car quoted by Manuel Gonzales to her satisfaction,

requested Manuel Gonzales to bring the car the day following

together with the certificate of registration of the car, so that her

husband would be able to see same; that on this request of

defendant Anita C. Gatchalian, Manuel Gonzales advised her that

the owner of the car will not be willing to give the certificate of

registration unless there is a showing that the party interested in

the purchase of said car is ready and willing to make such

purchase and that for this purpose Manuel Gonzales requested

defendant Anita C. Gatchalian to give him, (Manuel Gonzales) a

check which will be shown to the owner as evidence of buyer's

good faith in the intention to purchase the said car, the said check

to be for safekeeping only of Manuel Gonzales and to be returned

to defendant Anita C. Gatchalian the following day when Manuel

Gonzales brings the car and the certificate of registration, but which

facts were not known to plaintiff;

Fourth . That relying on these representations of Manuel

Gonzales and with this assurance that said check will be only for

safekeeping and which will be returned to said defendant the

following day when the car and its certificate of registration will be

brought by Manuel Gonzales to defendants, but which facts were

not known to plaintiff, defendant Anita C. Gatchalian drew and

issued a check, Exh. 'B'; that Manuel Gonzales executed and

issued a receipt for said check, Exh. '1';

Fifth . That on the failure of Manuel Gonzales to appear

the day following and on his failure to bring the car and its

certificate of registration and to return the check, Exh. 'B' on the


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following day as previously agreed upon, defendant Anita C.

Gatchalian issued a 'Stop Payment Order' on the check, Exh. '3',

with the drawee bank. Said 'Stop Payment Order' was issued

without previous notice on plaintiff, not being known to defendant,

Anita C. Gatchalian and who furthermore had no reason to know

check was given to plaintiff;

Sixth . That defendants, both or either of them, did not

know personally Manuel Gonzales or any member of his family at

any time prior to September 1953; but that defendant Hipolito

Gatchalian is personally acquainted with V. R. de Ocampo;

Seventh . That defendants, both or either of them, had no

arrangements or agreement with the Ocampo Clinic at any time

prior to, on or after 9 September 1953 for the hospitalization of the

wife of Manuel Gonzales and neither or both of said defendants

had assumed, expressly or impliedly, with the Ocampo Clinic, the

obligation of Manuel Gonzales or his wife for the hospitalization of

the latter;

Eight . That defendants, both or either of them, had no

obligation or liability, directly or indirectly with the Ocampo Clinic

before, or on 9 September 1953;

Ninth . That Manuel Gonzales having received the check

Exh. 'B' from defendant Anita C. Gatchalian under the

representations and conditions herein above specified, delivered

the same to the Ocampo Clinic, in payment of the fees andexpenses arising from the hospitalization of his wife;

Tenth . That plaintiff for and in consideration of fees and

expenses of hospitalization and the release of the wife of Manuel

Gonzales from its hospital, accepted said check, applying P441.75

(Exhibit 'A') thereof to payment of said fees and expenses and

delivering to Manuel Gonzales the amount of P158.25 (as per


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receipt, Exhibit 'D') representing the balance on the amount of the

said check, Exh. 'B';

Eleventh . That the acts of acceptance of the check and

application of its proceeds in the manner specified above were

made without previous inquiry by plaintiff from defendants;

Twelfth . That plaintiff filed or caused to be filed with the

Office of the City Fiscal of Manila, a complaint for estafa against

Manuel Gonzales based on and arising from the acts of said

Manuel Gonzales in paying his obligations with plaintiff and

receiving the cash balance of the check, Exh. 'B' and that said

complaint was subsequently dropped;

Thirteenth . That the exhibits mentioned in this stipulation

and the other exhibits submitted previously, be considered as parts

of this stipulation, without necessity of formally offering them in

evidence;

WHEREFORE, it is most respectfully prayed that this agreedstipulation of facts be admitted and that the parties hereto be given

fifteen days from today within which to submit simultaneously their

memorandum to discuss the issues of law arising from the facts,

reserving to either party the right to submit reply memorandum, if

necessary, within ten days from receipt of their main memoranda."

(pp. 21-25, Defendant's Record on Appeal)

No other evidence was submitted and upon said stipulation the court rendered

the judgment already alluded to above.

In their appeal defendants-appellants contend that the check is not a negotiableinstrument, under the facts and circumstances stated in the stipulation of facts,

and that plaintiff is not a holder in due course. In support of the first contention, itis argued that defendant Gatchalian had no intention to transfer her property in

the instrument as it was for safekeeping merely and, therefore, there was nodelivery required by law (Section 16, Negotiable Instruments Law); that assuming


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of P600.00, which is in excess of the amount due plaintiff. (Par. 10,

Stipulation of Facts).

"It was necessary for plaintiff to give Manuel Gonzales

change in the sum of P158.25 (Par. 10, Stipulation of Facts). Since

Manuel Gonzales is the party obliged to pay, plaintiff should have

been more cautious and wary in accepting a piece of paper and

disbursing cold cash.

"The check is payable to bearer. Hence, any person who

holds it should have been subjected to inquiries. EVEN IN A BANK,

CHECKS ARE NOT CASHED WITHOUT INQUIRY FROM THE

BEARER. The same inquiries should have been made by plaintiff."

(Defendants-appellants brief, pp. 52-53).

Answering the first contention of appellant, counsel for plaintiff-appellee arguesthat in accordance with the best authority on the Negotiable Instruments Law,

plaintiff-appellee may be considered as a holder in due course, citing Brannan's

Negotiable Instruments Law, 6th edition, page 252. On this issue Brannan holdsthat a payee may be a holder in due course and says that to this effect is the

greater weight of authority, thus:

"Whether the payee may be a holder in due course under

the N. I. L., as he was at common law, is a question upon which the

courts are in serious conflict. There can be no doubt that a proper

interpretation of the act read as a whole leads to the conclusion

that a payee may be a holder in due course under any

circumstance in which he meets the requirements of Sec. 52.

"The argument of Professor Brannan in an earlier edition of

this work has never been successfully answered and is here

repeated

"Section 191 defines 'holder' as the payee or indorsee of a

bill or note, who is in possession of it, or the bearer thereof. Sec. 52

defines a holder in due course as 'a holder who has taken the


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instrument under the following conditions: 1. That it is complete and

regular on its face. 2. That he became the holder of it before it was

overdue, and without notice that it had been previously dishonored,

it such was the fact. 3. That he took it in good faith and for value. 4.

That at the time it was negotiated to him he had no notice of any

infirmity in the instrument or defect in the title of the person

negotiating it.'

"Since 'holder', as defined in sec. 191, includes a payee who

is in possession the word holder in the first clause of sec. 52 and in

the second subsection may be replaced by the definition in sec.

191 so as to read 'a holder in due course is a payee or indorsee

who is in possession,' etc." (Brannan's on Negotiable Instruments

Law, 6th ed., p. 543).

The first argument of the defendants-appellants, therefore, depends uponwhether or not the plaintiff-appellee is a holder in due course. If it is such a holderin due course, it is immaterial that it was the payee and an immediate party to the

instrument.

The other contention of the plaintiff is that there has been no negotiation of the

instrument, because the drawer did not deliver the instrument to ManuelGonzales with the intention of negotiating the same, or for the purpose of givingeffect thereto, for as the stipulation of facts declares the check was to remain in

the possession of Manuel Gonzales, and was not to be negotiated, but was toserve merely as evidence of good faith of defendants in their desire to purchase

the car being sold to them. Admitting that such was the intention of the drawer ofthe check when she delivered it to Manuel Gonzales, it was no fault of theplaintiff-appellee drawee if Manuel Gonzales delivered the check or negotiated it.

As the check was payable to the plaintiff-appellee, and was entrusted to Manuel

Gonzales by Gatchalian, the delivery to Manuel Gonzales was a delivery by thedrawer to his own agent; in other words, Manuel Gonzales was the agent of thedrawer Anita Gatchalian insofar as the possession of the check is concerned. So,

when the agent of drawer Manuel Gonzales negotiated the check with the


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intention of getting its value from plaintiff- appellee, negotiation took place

through no fault of the plaintiff- appellee, unless it can be shown that the plaintiff-appellee should be considered as having notice of the defect in the possession of

the holder Manuel Gonzales. Our resolution of this issue leads us to a

consideration of the last question presented by the appellants, i.e., whether theplaintiff-appellee may be considered as a holder in due course.

Section 52, Negotiable Instruments Law, defines holder in due course, thus:

"A holder in due course is a holder who has taken the

instrument under the following conditions:

(a) That it is complete and regular upon its face;

(b) That he became the holder of it before it was overdue,

and without notice that it had been previously dishonored, if such

was the fact;

(c) That he took it in good faith and for value;

(d) That at the time it was negotiated to him he had no notice

of any infirmity in the instrument or defect in the title of the person

negotiating it."

The stipulation of facts expressly states that plaintiff-appellee was not aware of

the circumstances under which the check was delivered to Manuel Gonzales, butwe agree with the defendants-appellants that the circumstances indicated by

them in their briefs, such as the fact that appellants had no obligation or liability

to the Ocampo Clinic; that the amount of the check did not correspond exactly

with the obligation of Matilde Gonzales to Dr. V. R. de Ocampo; and that thecheck 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 allthese circumstances should have put the plaintiff-appellee to inquiry as to the

why and wherefore of the possession of the check by Manuel Gonzales, and why

he used it to pay Matilde's account. It was payee's duty to ascertain from theholder Manuel Gonzales what the nature of the latter's title to the check was or


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the nature of his possession. Having failed in this respect, we must declare that

plaintiff-appellee was guilty of gross neglect in not finding out the nature of thetitle and possession of Manuel Gonzales, amounting to legal absence of good

faith, and it may not be considered as a holder of the check in good faith, to such

effect is the consensus of authority.

"In order to show that the defendant had 'knowledge of such

facts that his action in taking the instrument amounted to bad faith,'

it is not necessary to prove that the defendant knew the exact fraud

that was practiced upon the plaintiff by the defendant's assignor, it

being sufficient to show that the defendant had notice that there

was something wrong about his assignor's acquisition of title,

although he did not have notice of the particular wrong that was

committed. Paika v. Perry, 225 Mass. 563, 114 N. E. 830.

"It is sufficient that the buyer of a note had notice or

knowledge that the note was in some way tainted with fraud. It is

not necessary that he should know the particulars or even the

nature of the fraud, since all that is required is knowledge of suchfacts that his action in taking the note amounted to bad faith. Ozark

Motor Co. v. Horton (Mo. App.), 196 S. W. 395. Accord. Davis v.

First Nat. Bank, 26 Ariz. 621, 229 Pac. 391.

"Liberty bonds stolen from the plaintiff were brought by the

thief, a boy fifteen years old, less than five feet tall, immature in

appearance and bearing on his face the stamp of a degenerate, to

the defendants' clerk for sale. The boy stated that they belonged tohis mother. The defendants paid the boy for the bonds without any

further inquiry. Held, the plaintiff could recover the value of the

bonds. The term 'bad faith' does not necessarily involve furtive

motives but means bad faith in a commercial sense. The manner in

which the defendants conducted their Liberty Loan department

provided an easy way for thieves to dispose of their plunder. It was

a case of 'no questions asked' Although gross negligence does not


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of itself constitute bad faith, it is evidence from which bad faith may

be inferred. The circumstances thrust the duty upon the defendants

to make further inquiries and they had no right to shut their eyes

deliberately to obvious facts. Morris v. Muir, 111 Misc. Rep. 739,

181 N. Y. Supp. 913, affd. in memo., 191 App. Div. 947, 181 N. Y.

Supp. 945." (pp. 640-642, Brannan's Negotiable Instruments Law,

6th ed.).

The above considerations would seem sufficient to justify our ruling that plaintiff-

appellee should not be allowed to recover the value of the check. Let us now

examine the express provisions of the Negotiable Instruments Law pertinent tothe matter to find if our ruling conforms thereto. Section 52 (c) provides that a

holder in due course is one who takes the instrument "in good faith and for

value;" Section 59, "that every holder is deemed prima facie to be a holder in duecourse;" and Section 52 ( d ), that in order that one may be a holder in due courseit is necessary that "at the time the instrument was negotiated to him "he had no

notice of any . . . defect in the title of the person negotiating it;" and lastly Section59, that every holder is deemed prima facie to be a holder in due course.

In the case at bar the rule that a possessor of the instrument is prima facie aholder in due course does not apply because there was a defect in the title of the

holder (Manuel Gonzales), because the instrument is not payable to him or tobearer. On the other hand, the stipulation of facts indicated by the appellants in

their brief, like the fact that the drawer had no account with the payee; that theholder did not show or tell the payee why he had the check in his possession and

why he was using it for the payment of his own personal account show thatholder's title was defective or suspicious, to say the least. As holder's title was

defective or suspicious, it cannot be stated that the payee acquired the checkwithout 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. And having presented no evidence that it acquired thecheck in good faith, it (payee) cannot be considered as a holder in due course. In

other words, under the circumstances of the case, instead of the presumption


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that payee was a holder in good faith, the fact is that it acquired possession of

the instrument under circumstances that should have put it to inquiry as to thetitle of the holder who negotiated the check to it. The burden was, therefore,

placed upon it to show that notwithstanding the suspicious circumstances, it

acquired the check in actual good faith.

The rule applicable to the case at bar is that describe in the case of Howard

National Bank v. Wilson, et al., 96 Vt. 438, 120 At. 889, 894, where the SupremeCourt of Vermont made the following disquisition:

"Prior to the Negotiable Instruments Act, two distinct lines of

cases had developed in this country. The first had its origin in Gill v.

Cubitt, 3 B. & C. 466, 10 E. L. 21b, where the rule was distinctly

laid down by the court of King's Bench that the purchaser of

negotiable paper must exercise reasonable prudence and caution,

and that, if the circumstances were such as ought to have excited

the suspicion of a prudent and careful man, and he made no

inquiry, he did not stand in the legal position of a bona fide holder.

The rule was adopted by the courts of this country generally and

seem to have become a fixed rule in the law of negotiable paper.

Later in Goodman v. Harvey, 4 A. & E. 870 31 E. C. L. 381, the

English court abandoned its former position and adopted the rule

that nothing short of actual bad faith or fraud in the purchaser

would deprive him of the character of a bona fide purchaser and let

in defenses existing between prior parties, that no circumstances ofsuspicion merely, or want of proper caution in the purchaser, would

have this effect, and that even gross negligence would have no

effect, except as evidence tending to establish bad faith or fraud.

Some of the American courts adhered to the earlier rule, while

others followed the change inaugurated in Goodman vs. Harvey.

The question was before this court in Roth vs. Colvin, 32 Vt. 125,

and, on full consideration of the question, a rule was adopted in


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harmony with that announced in Gill vs. Cubitt, which has been

adhered to in subsequent cases, including those cited above.

Stated briefly, one line of cases including our own had adopted the

test of the reasonably prudent man and the other that of actual

good faith. It would seem that it was the intent of the Negotiable

Instruments Act to harmonize this disagreement by adopting the

latter test. That such is the view generally accepted by the courts

appears from a recent review of the cases concerning what

constitutes notice of defect. Brannan on Neg. Ins. Law, 187-201. To

effectuate the general purpose of the act to make uniform theNegotiable Instruments Law of those states which should enact it,

we are constrained to hold (contrary to the rule adopted in our

former decisions) that negligence on the part of the plaintiff, or

suspicious circumstances sufficient to put a prudent man on

inquiry, will not of themselves prevent a recovery, but are to be

considered merely as evidence bearing on the question of bad

faith. See G. L. 3113, 3172, where such a course is required in

construing other uniform acts.

"It comes to this then: When the case has taken such shape

that the plaintiff is called upon to prove himself a holder in due

course to be entitled to recover, he is required to establish the

conditions entitling him to standing as such, including good faith in

taking the instrument. It devolves upon him to disclose the facts

and circumstances attending the transfer, from which good or bad

faith in the transaction may be inferred."

In the case at bar as the payee acquired the check under circumstances whichshould have put it to inquiry, why the holder had the check and used it to pay his

own personal account, the duty devolved upon it, plaintiff-appellee, to prove that

it actually acquired said check in good faith. The stipulation of facts contains nostatement of such good faith, hence we are forced to the conclusion that plaintiff


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payee has not proved that it acquired the check in good faith and may not be

deemed a holder in due course thereof.

For the foregoing considerations, the decision appealed from should be, as it is

hereby, reversed, and the defendants are absolved from the complaint. Withcosts against plaintiff-appellee.

Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes,Dizon and De Leon, JJ., concur.

Bengzon, C.J., concurs in the result.

||| (Vicente R. De Ocampo & Co. v. Gatchalian, G.R. No. L-15126, November 30,1961)


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SECOND DIVISION

[G.R. No. 70145. November 13, 1986.]

MARCELO A. MESINA , petitioner , vs. THE HONORABLEINTERMEDIATE APPELLATE COURT, HON. ARSENIO M.GONONG, in his capacity as Judge of Regional Trial Court Manila (Branch VIII), JOSE GO, and ALBERT UY , respondents .

D E C I S I O N

PARAS , J p:

This is an appeal by certiorari from the decision of the then IntermediateAppellate Court (IAC for short), now the Court of Appeals (CA) in AC-G.R. S.P.

04710, dated Jan. 22, 1985, which dismissed the petition for certiorari and

prohibition filed by Marcelo A. Mesina against the trial court in Civil Case No. 84-22515. Said case (an Interpleader) was filed by Associated Bank against Jose

Go and Marcelo A. Mesina regarding their conflicting claims over Associated

Bank Cashier's Check No. 011302 for P800,000.00, dated December 29, 1983.

Briefly, the facts and statement of the case are as follows:

Respondent Jose Go, on December 29, 1983, purchased from Associated Bank

Cashier's Check No. 011302 for P800,000.00. Unfortunately, Jose Go left said

check on the top of the desk of the bank manager when he left the bank. Thebank manager entrusted the check for safekeeping to a bank official, a certain

Albert Uy, who had then a visitor in the person of Alexander Lim, Uy had toanswer a phone call on a nearby telephone after which he proceeded to themen's room. When he returned to his desk, his visitor Lim was already gone.

When Jose Go inquired for his cashier's check from Albert Uy, the check was notin his folder and nowhere to be found. The latter advised Jose Go to go to the

bank to accomplish a "STOP PAYMENT" order, which suggestion Jose Go


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immediately followed. He also executed an affidavit of loss. Albert Uy went to the

police to report the loss of the check, pointing to the person of Alexander Lim asthe one who could shed light on it.

The records of the police show that Associated Bank received the lost check forclearing on December 31, 1983, coming from Prudential Bank, Escolta Branch.The check was immediately dishonored by Associated Bank by sending it back to

Prudential Bank, with the words "Payment Stopped" stamped on it. However, thesame was again returned to Associated Bank on January 4, 1984 and for the

second time it was dishonored. Several days later, respondent Associated Bank

received a letter, dated January 9, 1984, from a certain Atty. Lorenzo Navarrodemanding payment on the cashier's check in question, which was being held by

his client. He however refused to reveal the name of his client and threatened to

sue, if payment is not made. Respondent bank, in its letter, dated January 20,1984, replied saying the check belonged to Jose Go who lost it in the bank and islaying claim to it.

On February 1, 1984, police sent a letter to the Manager of the Prudential Bank,

Escolta Branch, requesting assistance in identifying the person who tried toencash the check but said bank refused saying that it had to protect its client's

interest and the identity could only be revealed with the client's conformity.

Unsure of what to do on the matter, respondent Associated Bank on February 2,1984 filed an action for Interpleader naming as respondent, Jose Go and one

John Doe, Atty. Navarro's then unnamed client. On even date, respondent bankreceived summons and copy of the complaint for damages of a certain Marcelo

A. Mesina from the Regional Trial Court (RTC) of Caloocan City filed on January23, 1984 bearing the number C-11139. Respondent bank moved to amend its

complaint, having been notified for the first time of the name of Atty. Navarro'sclient and substituted Marcelo A. Mesina for John Doe. Simultaneously,

respondent bank, thru representative Albert Uy, informed Cpl. Gimao of the

Western Police District that the lost check of Jose Go is in the possession ofMarcelo Mesina, herein petitioner. When Cpl. Gimao went to Marcelo Mesina to

ask how he came to possess the check, he said it was paid to him by Alexander


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Lim in a "certain transaction" but refused to elucidate further. An information for

theft (Annex J) was instituted against Alexander Lim and the correspondingwarrant for his arrest was issued (Annex 6-A) which up to the date of the filing of

this instant petition remains unserved because of Alexander Lim's successful

evasion thereof.

Meanwhile, Jose Go filed his answer on February 24, 1984 in the Interpleader

Case and moved to participate as intervenor in the complaint for damages. AlbertUy filed a motion for intervention and answer in the complaint for Interpleader.

On the scheduled date of pre-trial conference in the interpleader case, it was

disclosed that the "John Doe" impleaded as one of the defendants is actuallypetitioner Marcelo A. Mesina. Petitioner instead of filing his answer to the

complaint in the interpleader filed on May 17, 1984 an Omnibus Motion to

Dismiss Ex Abudante Cautela alleging lack of jurisdiction in view of the absenceof an order to litigate, failure to state a cause of action and lack of personality tosue. Respondent bank in the other civil case (CC-11139) for damages moved to

dismiss suit in view of the existence already of the Interpleader case.

The trial court in the interpleader case issued an order dated July 13, 1984,denying the motion to dismiss of petitioner Mesina and ruling that respondent

bank's complaint sufficiently pleaded a cause of action for interpleader. Petitioner

filed his motion for reconsideration which was denied by the trial court onSeptember 26, 1984. Upon motion for respondent Jose Go dated October 31,

1984, respondent judge issued an order on November 6, 1984 declaringpetitioner in default since his period to answer has already expired and set

the ex-parte presentation of respondent bank's evidence on November 7, 1984.

Petitioner Mesina filed a petition for certiorari with preliminary injunction with IACto set aside 1) order of respondent court denying his omnibus Motion to Dismiss

2) order of respondent court denying his Motion for Reconsideration and 3) the

order of default against him.


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On January 22, 1985, IAC rendered its decision dismissing the petition for

certiorari. Petitioner Mesina filed his Motion for Reconsideration which was alsodenied by the same court in its resolution dated February 18, 1985.

Meanwhile, on same date (February 18, 1985), the trial court in Civil Case #84-22515 (Interpleader) rendered a decision, the dispositive portion reading asfollows:

"WHEREFORE, in view of the foregoing, judgment is hereby rendered

ordering plaintiff Associate Bank to replace Cashier's Check No. 011302

in favor of Jose Go or its cash equivalent with legal rate of interest from

date of complaint, and with costs of suit against the latter.

SO ORDERED."

On March 29, 1985, the trial court in Civil Case No. C-11139, for damages,issued an order, the pertinent portion of which states:

"The records of this case show that on August 20, 1984 proceedings in

this case was (were) ordered suspended because the main issue in Civil

Case No. 84-22515 and in this instant case are the same which is: whobetween Marcelo Mesina and Jose Go is entitled to payment of

Associated Bank's Cashier's Check No. CC-011302? Said issue having

been resolved already in Civil Case No. 84-22515, really this instant

case has become moot and academic.

WHEREFORE, in view of the foregoing, the motion should be as it is

hereby granted and this case is ordered dismissed.

In view of the foregoing ruling no more action should be taken on the

"Motion For Reconsideration (of the Order admitting the Intervention)"

dated June 21, 1984 as well as the Motion For Reconsideration dated

September 10, 1984.

SO ORDERED."

Petitioner now comes to Us, alleging that:


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1. IAC erred in ruling that a cashier's check can be countermanded even

in the hands of a holder in due course.

2. IAC erred in countenancing the filing and maintenance of an

interpleader suit by a party who had earlier been sued on the same

claim.

3. IAC erred in upholding the trial court's order declaring petitioner as in

default when there was no proper order for him to plead in the

interpleader complaint.

4. IAC went beyond the scope of its certiorari jurisdiction by makingfindings of facts in advance of trial.

Petitioner now interposes the following prayer:

1. Reverse the decision of the IAC, dated January 22, 1985 and set

aside the February 18, 1985 resolution denying the Motion for

Reconsideration.

2. Annul the orders of respondent Judge of RTC Manila giving due

course to the interpleader suit and declaring petitioner in default.

Petitioner's allegations hold no water. Theories and examples advanced by

petitioner on causes and effects of a cashier's check such as 1) it cannot be

countermanded in the hands of a holder in due course and 2) a cashier's check isa bill of exchange drawn by the bank against itself are general principles

which cannot be aptly applied to the case at bar, without considering other

things. Petitioner failed to substantiate his claim that he is a holder in due course

and for consideration or value as shown by the 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 waspassed 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. Ifa payee of a cashier's check obtained it from the issuing bank by fraud, or if there


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is some other reason why the payee is not entitled to collect the check, the

respondent bank would, of course, have the right to refuse payment of the checkwhen presented by the payee, since respondent bank was aware of the facts

surrounding I he loss of the check in question. Moreover, there is no similarity in

the cases cited by petitioner since respondent bank did not issue the cashier'scheck in payment of its obligation. Jose Go bought it from respondent bank for

purposes of transferring his funds from respondent bank to another bank near his

establishment realizing that carrying money in this form is safer than if it whereincash. The check was Jose Go's property when it was misplaced or stolen hence

he stopped its payment. At the outset, respondent bank knew it was Jose Go'scheck and no one else since Go had not paid or indorsed it to anyone. The bankwas therefore liable to nobody on the check but Jose Go. The bank had no

intention to issue it to petitioner but only to buyer Jose Go. When payment on it

was therefore stopped, respondent bank was not the one who did it but Jose Go,the owner of the check. Respondent bank could not be drawer and drawee for

clearly, Jose Go owns the money it represents and he is therefore the drawer

and the drawee in the same manner as if he has a current account and he issued

a check against it; and from the moment said cashier's check was lost and orstolen no one outside of Jose Go can be termed a holder in due course because

Jose Go had not indorsed it in due course. The check in question suffers fromthe infirmity of not having been properly negotiated and for value by respondent

Jose Go who as already been said is the real owner of said instrument.

In his second assignment of error, petitioner stubbornly insists that there is noshowing of conflicting claims and interpleader is out of the question. There is

enough evidence to establish the contrary. Considering the aforementioned factsand circumstances, respondent bank merely took the necessary precaution not

to make a mistake as to whom to pay and therefore interpleader was its proper

remedy. It has been shown that the interpleader suit was filed by respondentbank because petitioner and Jose Go were both laying their claims on the check,

petitioner asking payment thereon and Jose Go as the purchaser or owner. The


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allegation of petitioner that respondent bank had effectively relieved itself of its

primary liability under the check by simply filing a complaint for interpleader isbelied by the willingness of respondent bank to issue a certificate of time deposit

in the amount of P800,000 representing the cashier's check in question in the

name of the Clerk of Court of Manila to be awarded to whoever will be found bythe court as validly entitled to it. Said validity will depend on the strength of the

parties' respective rights and titles thereto. Bank filed the interpleader suit not

because petitioner sued it but because petitioner is laying claim to the samecheck that Go is claiming. On the very day that the bank instituted the case in

interpleader, it was not aware of any suit for damages filed by petitioner against itas supported by the fact that the interpleader case was first entitled AssociatedBank vs. Jose Go and John Doe, but later on changed to Marcelo A. Mesina for

John Doe when his name became known to respondent bank.

In his third assignment of error, petitioner assails the then respondent IAC inupholding the trial court's order declaring petitioner in default when there was no

proper order for him to plead in the interpleader case. Again, such contention isuntenable. The trial court issued an order, compelling petitioner and respondent

Jose Go to file their Answers setting forth their respective claims. Subsequently,a Pre-Trial Conference was set with notice to parties to submit position papers.Petitioner argues in his memorandum that this order requiring petitioner to file his

answer was issued without jurisdiction alleging that since he is presumably a

holder in due course and for value, how can he be compelled to litigate againstJose Go who is not even a party to the check? Such argument is trite andridiculous if we have to consider that neither his name or Jose Go's name

appears on the check. Following such line of argument. petitioner is not a party tothe check either and therefore has no valid claim to the Check. Furthermore, the

Order of the trial court requiring the parties to file their answers is to all intents

and purposes an order to interplead, substantially and essentially and thereforein compliance with the provisions of Rule 63 of the Rules of Court. What else is

the purpose of a law suit but to litigate? LLphil


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The records of the case show that respondent bank had to resort to details in

support of its action for Interpleader. Before it resorted to Interpleader,respondent bank took all precautionary and necessary measures to bring out the

truth. On the other hand, petitioner concealed the circumstances known to him

and now that private respondent bank brought these circumstances out in court(which eventually rendered its decision in the light of these facts), petitioner

charges it with "gratuitous excursions into these non-issues." Respondent IAC

cannot rule on whether respondent RTC committed an abuse of discretion or not,without being apprised of the facts and reasons why respondent Associated

Bank instituted the Interpleader case. Both parties were given an opportunity topresent their sides. Petitioner chose to withhold substantial facts. Respondentswere not forbidden to present their side this is the purpose of the Comment of

respondent to the petition. IAC decided the question by considering both the

facts submitted by petitioner and those given by respondents. IAC did not acttherefore beyond the scope of the remedy sought in the petition.

WHEREFORE, finding that the instant petition is merely dilatory, the same ishereby denied and the assailed orders of the respondent court are hereby

AFFIRMED in toto .

SO ORDERED.

Feria, Fernan, Alampay and Gutierrez, Jr ., JJ ., concur.

||| (Mesina v. Intermediate Appellate Court, G.R. No. 70145, November 13, 1986)

De Ocampo v. Gatchalian

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Transcript of De Ocampo v. Gatchalian