Professional Documents
Culture Documents
September
30, 1960]
30 Jul
FACTS
Checks payable to cash or bearer were drawn by
defendant Tan Kim and were all presented for payment
by Chan Wan to the drawee bank, but they were all
dishonored. Defendant argued that plaintiff is a holder
not in due course.
ISSUE
Whether or not a holder not in due course is barred from
collecting the value of checks issued to him.
RULING
NO. It does not 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 who is not a holder in due course,
may not in any case, recover on the instrument. 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.
HELD: No.
The gravamen of the offense punished by BP 22 is the
act of making and issuing a worthless check or a check
that is dishonored upon its presentation for payment. It
is not the non-payment of an obligation which the law
punishes. The law is not intended or designed to coerce
a debtor to pay his debt. The thrust of the law is to
prohibit, under pain of penal sanctions, the making of
worthless checks and putting them in circulation.
Because of its deleterious effects on the public interest,
the practice is proscribed by the law. The law punishes
the act not as an offense against property, but an
offense against public order.
The effects of the issuance of a worthless check
transcends the private interests of the parties directly
involved in the transaction and touches the interests of
the community at large. The mischief it creates is not
only a wrong to the payee or holder, but also an injury to
the public. The harmful practice of putting valueless
commercial papers in circulation, multiplied a thousand
fold, can very wen pollute the channels of trade and
commerce, injure the banking system and eventually
hurt the welfare of society and the public interest.
The enactment of BP 22 is a declaration by the
legislature that, as a matter of public policy, the making
and issuance of a worthless check is deemed public
nuisance to be abated by the imposition of penal
sanctions.
ISSUE: W/N BP 22 impairs the freedom to contract.
HELD: No. The freedom of contract which is
constitutionally protected is freedom to enter into
"lawful" contracts. Contracts which contravene public
policy are not lawful. Besides, we must bear in mind that
checks can not be categorized as mere contracts. It is a
commercial instrument which, in this modem day and
age, has become a convenient substitute for money; it
forms part of the banking system and therefore not
entirely free from the regulatory power of the state.
ISSUE: W/N it violates the equal protection clause.
HELD: No. Petitioners contend that the payee is just as
responsible for the crime as the drawer of the check,
since without the indispensable participation of the
payee by his acceptance of the check there would be no
crime. This argument is tantamount to saying that, to
give equal protection, the law should punish both the
swindler and the swindled. Moreover, the clause does
not preclude classification of individuals, who may be
o
ISSUE: W/N the CBCI is a negotiable instrument
certificate of indebtedness
o
o
similar to a "bond"
properly understood as
acknowledgment of an
obligation to pay a fixed sum of
money
2. NO.
although the CTDs are bearer instruments, a
valid negotiation thereof for the true purpose
and agreement between it and De la Cruz, as
ultimately ascertained, requires both delivery
and indorsement
1. YES.
Section 1 Act No. 2031, otherwise known as the
Negotiable Instruments Law, enumerates the requisites
for an instrument to become negotiable, viz:
negotiability or non-negotiability of an
instrument is determined from the writing, that
is, from the face of the instrument itself
ISSUE:
1. W/N the CTDs are negotiable
2.
depositor = bearer