G.R. No. 205956 - Marantan vs. Diokno

Plaintiff-Appellant: Chan Wan
Defendants-Appellees: Tan Kim and Chen So (Tan Kim’s husband)
Suit filed by Chan Wan to collect on eleven checks totaling ₱4,290.00, drawn by defendant Tan Kim on Equitable Banking Corporation.

The checks, payable to "cash or bearer", were presented by Chan Wan to the drawee bank for payment but were dishonored for insufficient funds and/or other causes attributable to the drawer.
Plaintiff did not testify personally; his lawyer identified the checks (Exhibits A to K) and the letters of demand sent to defendants.
Defendant Tan Kim declared without contradiction that the checks were issued to two persons named Pinong and Muy for shoes promised by the former and were intended as mere receipts.

Plaintiff failed to prove he was a holder in due course.
The checks, being crossed checks, should have been deposited with the bank named in the crossing instead of being presented directly for payment.

Defendants’ counterclaim was dismissed for lack of evidence; they did not appeal the dismissal.
The only issue left was the plaintiff’s right to collect on the eleven commercial documents.

The Negotiable Instruments Law in the Philippines does not specifically mention "crossed checks", but Art. 541 of the Code of Commerce refers to them.
English Bills of Exchange Act, 1882, contains provisions on crossed checks, which Philippine courts have applied supplementarily when the Negotiable Instruments Law is silent (Philippine National Bank vs. Zulueta).
Eight checks bore two parallel transverse lines with "non-negotiable China Banking Corporation" written between them, indicating they were crossed specially to that bank and should have been presented for payment through it.
Chan Wan presented these checks for payment himself rather than submitting them to China Banking Corporation; hence the trial court ruled no proper presentment occurred to bind the drawer.
Endorsements on the back of the checks indicated they were deposited with China Banking Corporation, which presented them to the drawee bank for collection; some returned dishonored with stamps such as "account closed".
Plaintiff did not explain how the checks reached him after dishonor and presented them in court with dishonor marks, showing his knowledge they were overdue.
The court held plaintiff not to be a holder in due course, due to his knowledge of previous dishonor.

Whether plaintiff Chan Wan, not a holder in due course, has the right to recover on the eleven checks drawn by defendant Tan Kim.
Whether the failure to make proper presentment of crossed checks to the designated bank absolves the drawer from liability.
Whether defendant Tan Kim proved any valid defense to bar recovery on these checks.