G.R. No. 170912 - Dino vs. Judal-Loot

In December 1992, a syndicate – which included a member falsely representing ownership of several parcels of land in Canjulao, Lapu-Lapu City – approached petitioner Robert Dino.
The syndicate induced petitioner to lend them ₱3,000,000.00, purportedly to be secured by a real estate mortgage on the properties.
One member of the syndicate, pretending to be Vivencia Ompok Consing, even offered to execute a Deed of Absolute Sale in lieu of the usual mortgage contract, which enticed petitioner to go through with the transaction.

Enticed by the syndicate’s offer, petitioner issued three Metrobank checks totaling ₱3,000,000.00.
One of these checks, Check No. C-MA-142119406-CA (postdated February 13, 1993) for ₱1,000,000.00 payable to Vivencia Ompok Consing and/or Fe Lobitana, became the subject matter of controversy.
Upon later scrutinizing the property documents, petitioner discovered that they purported rights over government properties, thereby realizing he had been deceived.
Acting on this discovery, petitioner instructed Metrobank to stop payment on his checks; however, only the aforementioned check was officially stopped while the other two were already encashed.

Fe Lobitana negotiated and indorsed the subject check to respondents, Maria Luisa Judal-Loot and her husband Vicente Loot, in exchange for ₱948,000.00, which the respondents had previously borrowed and charged to their credit line with Metrobank.
Before accepting the check, respondents inquired with Metrobank – their depositary bank – regarding the sufficiency of funds on the check and received an affirmative response.
Despite the inquiry, when the check was deposited it was dishonored by Metrobank with the notation “PAYMENT STOPPED.”
Consequently, respondents filed a collection suit in the Regional Trial Court, alleging, among other things, that they were holders in due course and for value of the check, having no notice of any irregularities.

The trial court ruled in favor of respondents, declaring them holders in due course of the check and ordering petitioner (and co-defendant Lobitana) to pay the face value of the check along with additional damages, interest, attorney’s fees, and litigation expenses.
The Court of Appeals affirmed the trial court’s decision regarding the respondents as holders in due course but modified the decision by deleting the award for interest, moral damages, attorney’s fees, and litigation expenses.
Petitioner appealed the decision while Lobitana did not, leaving the final and executory judgment on her part regarding her liability as an indorser.

Whether the respondents, who negotiated the check, can rightfully be considered holders in due course given that the check was crossed.
Whether the fact that the check was crossed provided sufficient warning obligating the respondents to exercise extraordinary diligence regarding the indorser’s title, thereby negating their status as holders in due course.

Whether the Court of Appeals erred in denying petitioner’s motion for reconsideration on the ground that the defense (i.e., the check being crossed) was raised for the first time on appeal.
Whether equity demands that the lower court should have made an exception to prevent manifest wrong and injustice against petitioner despite the late raising of this argument.