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    Chan Wan Vs Tan Kin 109 Phil 706 (1960)

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    brahms
    This case involves a suit to collect on 11 checks totaling 4,290 pesos that were dishonored due to insufficient funds. The lower court declined to order payment because the plaintiff failed to prove he was a holder in due course and because the checks were crossed checks that should have been deposited at the bank indicated rather than presented by the plaintiff. The Supreme Court agrees with the legal premises but notes that endorsements on the checks show they were deposited at and presented by the indicated bank. However, the plaintiff did not explain how he came to possess the dishonored checks. While the plaintiff is not a holder in due course, that alone does not prevent recovery if the defendant cannot prove a valid defense. The record lacks

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    Chan Wan Vs Tan Kin 109 Phil 706 (1960)

    Uploaded by

    brahms
    38 views3 pages
    This case involves a suit to collect on 11 checks totaling 4,290 pesos that were dishonored due to insufficient funds. The lower court declined to order payment because the plaintiff failed to prove he was a holder in due course and because the checks were crossed checks that should have been deposited at the bank indicated rather than presented by the plaintiff. The Supreme Court agrees with the legal premises but notes that endorsements on the checks show they were deposited at and presented by the indicated bank. However, the plaintiff did not explain how he came to possess the dishonored checks. While the plaintiff is not a holder in due course, that alone does not prevent recovery if the defendant cannot prove a valid defense. The record lacks

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    Chan Wan vs Tan Kin 109 Phil 706 (1960)

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    This case involves a suit to collect on 11 checks totaling 4,290 pesos that were dishonored due to insufficient funds. The lower court declined to order payment because the plaintiff failed to prove he was a holder in due course and because the checks were crossed checks that should have been deposited at the bank indicated rather than presented by the plaintiff. The Supreme Court agrees with the legal premises but notes that endorsements on the checks show they were deposited at and presented by the indicated bank. However, the plaintiff did not explain how he came to possess the dishonored checks. While the plaintiff is not a holder in due course, that alone does not prevent recovery if the defendant cannot prove a valid defense. The record lacks

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    38 views3 pages

    Chan Wan Vs Tan Kin 109 Phil 706 (1960)

    Uploaded by

    brahms
    This case involves a suit to collect on 11 checks totaling 4,290 pesos that were dishonored due to insufficient funds. The lower court declined to order payment because the plaintiff failed to prove he was a holder in due course and because the checks were crossed checks that should have been deposited at the bank indicated rather than presented by the plaintiff. The Supreme Court agrees with the legal premises but notes that endorsements on the checks show they were deposited at and presented by the indicated bank. However, the plaintiff did not explain how he came to possess the dishonored checks. While the plaintiff is not a holder in due course, that alone does not prevent recovery if the defendant cannot prove a valid defense. The record lacks

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    of 3

    Republic of the Philippines

    SUPREME COURT
    Manila

    EN BANC

    G.R. No. L-15380             September 30, 1960

    CHAN WAN, plaintiff-appellant,
    vs.
    TAN KIM and CHEN SO, defendants-appellees.

    Manuel Domingo for appellant.


    C.M. de los Reyes for appellees.

    BENGZON, J.:

    This suit to collect eleven checks totalling P4,290.00 is here for decision because it involves no issue of fact.

    Such checks payable to "cash or bearer" and drawn by defendant Tan Kim (the other defendant is her
    husband) upon the Equitable Banking Corporation, were all presented for payment by Chan Wan to the
    drawee bank, but they "were all dishonored and returned to him unpaid due to insufficient funds and/or
    causes attributable to the drawer."

    At the hearing of the case, in the Manila court of first instance, the plaintiff did not take the witness stand.
    His attorney, however, testified only to identify the checks — which are Exhibits A to K — plus the letters
    of demand upon defendants.

    On the other hand, Tan Kim declared without contradiction that the checks had been issued to two persons
    named Pinong and Muy for some shoes the former had promised to make and "were intended as mere
    receipts".

    In view of such circumstances, the court declined to order payment for two principal reasons: (a) plaintiff
    failed to prove he was a holder in due course, and (b) the checks being crossed checks should not have been
    deposited instead with the bank mentioned in the crossing.

    It may be stated in this connection, that defendants asserted a counterclaim, the court dismissed it for failure
    of proof, and from such dismissal they did not appeal.

    The only issue is, therefore, the plaintiff's right to collect on the eleven commercial documents.

    The Negotiable Instruments Law regulating the issuance of negotiable checks, the rights and the liabilities
    arising therefrom, does not mention "crossed checks". Art. 541 of the Code of Commerce refers to such
    instruments. 1 The bills of Exchange Act of England of 1882, contains several provisions about them, some
    of which are quoted in the margin.  2 In the Philippine National Bank vs. Zulueta, 101 Phil., 1071; 55 Off.
    Gaz., 222, we applied some provisions of said Bills of Exchange Act because the Negotiable Law,
    originating from England and codified in the United States, permits resort thereto in matters not covered by
    it and local legislation.3

    Eight of the checks here in question bear across their face two parallel transverse lines between which these
    words are written: non-negotiable — China Banking Corporation. These checks have, therefore, been
    crossed specially to the China Banking Corporation, and should have been presented for payment by China
    Banking, and not by Chan Wan.4 Inasmuch as Chan Wan did present them for payment himself — the
    Manila court said — there was no proper presentment, and the liability did not attach to the drawer.
    We agree to the legal premises and conclusion. It must be remembered, at this point, that the drawer in
    drawing the check engaged that "on due presentment, the check would be paid, and that if it be
    dishonored . . . he will pay the amount thereof to the holder". 5 Wherefore, in the absence of due presentment,
    the drawer did not become liable.

    Nevertheless we find, on the backs of the checks, endorsements which apparently show they had been
    deposited with the China Banking Corporation and were, by the latter, presented to the drawee bank for
    collection. For instance, on the back of the check Exhibit A (same as in Exh. B), this endorsement appears:

    For deposit to the account of White House Shoe Supply with the China Banking Corporation.

    and then this:

    Cleared through the clearing office of Central Bank of the Philippines. All prior endorsements and/or lack of
    endorsements guaranteed. China Banking Corporation.

    And on the back of Exh. G:

    For deposit to the credit of our account. Viuda e Hijos de Chua Chiong Pio. People's Shoe Company.

    followed by the endorsement of China Banking Corporation as in Exhibits A and B. All the crossed checks
    have the "clearance" endorsement of China Banking Corporation.

    These circumstances would seem to show deposit of the checks with China Banking Corporation and
    subsequent presentation by the latter through the clearing office; but as drawee had no funds, they were
    unpaid and returned, some of them stamped "account closed". How they reached his hands, plaintiff did not
    indicate. Most probably, as the trial court surmised, — this is not a finding of fact — he got them after they
    had been thus  returned, because he presented them in court with such "account closed" stamps, without
    bothering to explain. Naturally and rightly, the lower court held him not to be a holder in due course under
    the circumstances, since he knew, upon taking them up, that the checks had already been dishonored.6

    Yet it does not follow as a legal proposition, that simply because he was not a holder in due course Chan
    Wan could not recover on the checks. The Negotiable Instruments Law does not provide that a holder 7 who
    is not a holder in due course, may not in any case, recover on the instrument. If B purchases an overdue
    negotiable promissory note signed by A, he is not a holder in due course; but he may recover from A, 8 if the
    latter has no valid excuse for refusing payment. The only disadvantage of holder who is not a holder in due
    course is that the negotiable instrument is subject to defense as if it were non- negotiable.9

    Now what defense did the defendant Tan Kim prove? The lower court's decision does not mention any;
    evidently His Honor had in mind the defense pleaded in defendant's answer, but though it unnecessary to
    specify, because the "crossing" and presentation incidents sufficed to bar recovery, in his
    opinion.1awphîl.nèt

    Tan Kim admitted on cross-examination either that the checks had been issued as evidence of debts to
    Pinong and Muy, and/or that they had been issued in payment of shoes which Pinong had promised to make
    for her.

    Seeming to imply that Pinong had to make the shoes, she asserted Pinong had "promised to pay the checks
    for me". Yet she did not complete the idea, perhaps because she was just answering cross- questions, her
    main testimony having referred merely to their counter-claim.

    Needless to say, if it were true that the checks had been issued in payment for shoes that were never made
    and delivered, Tan Kim would have a good defense as against a holder who is not a holder in due course. 10
    Considering the deficiency of important details on which a fair adjudication of the parties' right depends, we
    think the record should be and is hereby returned, in the interest of justice, to the court below for additional
    evidence, and such further proceedings as are not inconsistent with this opinion. With the understanding
    that, as defendants did not appeal, their counterclaim must be and is hereby definitely dismissed. So ordered.

    Paras, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Gutierrez David,
    Paredes and Dizon, JJ., concur.

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