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013. Dino v.


Robert Dino v. Maria Luisa Judal-Loot, joined by her husband Vicente Loot

April 19, 2010


Carpio, J.

Recit-Ready Version:
Dino was swindled by a group of people into issuing 3 Metrobank checks. He was only able to stop payment
on one of the checks, which had been indorsed to Labitana, who subsequently indorsed it in favour of the
Loots. The Loots had checked if the check was funded with Metrobank, who assured them that it was.
However, the check was dishonoured because the payment had been stopped. The Loots filed a collection
suit against Dino, claiming that they were holders in due course. The RTC and CA ruled in their favour.

However, the SC held that they were not holders in due course. Because the subject check had been crossed,
the Loots had been grossly negligent in not ascertaining Labitana’s title. As such, they were not the holders in
due course. In turn, the presentment was not proper, and Dino could not be held liable as drawer. Neither
could he be held liable on the instrument, even as non-negotiable, because, there being no loan as result of
the swindle, there was no consideration.


Sometime in December, 1992, a syndicate of people1 who posed as owners of parcels of land in Canjulao,
Lapu-lapu City, approached Dino and induced him to lend them P3M, secured by REMs on the properties.
One of the members of the syndicate, pretending to be a certain Vivencia Ompok Concing, offered to
execute a deed of absolute sale covering the properties.

Enticed by the offer, Dino issued 3 Metrobank checks totalling P3M, one of which, a postdated check in the
amount of P1M, Check No. C-MA-142119406-CA (the check), was made payable to Vivencia Ompok
Consing and/or Fe Lobitana.

However, upon scrutinizing the documents involving the properties, Dino discovered that they referred to
government properties. Realizing he had been deceived, he told Metrobank to stop payment of his checks.

However, only the check issued to Concing was stopped, as the other two had already been encashed.
Meanwhile, Fe Lobitana negotiated and indorsed the check to Maria Luisa Judal-Loot and her husband
Vicente Loot (the Loots), in exchange for P948k in cash, borrowed from Metrobank and charged against
their credit line. Before the Loots accepted the check, they first asked Metrobank if it was sufficiently funded,
which the latter said it was.

However, when the Loots tried to encash the check, it was dishonoured, the reason given being “PAYMENT
STOPPED.” Thus the Loots filed a collection suit against Dino and Lobitana, alleging that they were holders
in due course and for value of the check and that they had no prior information concerning the transaction
between Dino and Lobitana. Dino made a denial, while Lobitana claimed that the transaction leading to the

Not sure, but the full roster of swindlers, based on the CA decision, might be Consing, Labitana, Condordio Toring

and Cecila VIllacarlos.

issuance of the check was between Consing and Dino, and that she was only made payee to facilitate

RTC-Mandaue ruled that the Loots were holders in due course and ordered Dino and Lobitana to solidarily
pay the face value of the check. Only Dino appealed.

CA Affirmed, but deleted award of interest, moral damages, attorney’s fees, and litigation expenses, on the
ground that Dino was only exercising what he perceived to be his right to stop the payment of the check. MR
denied. Hence this petition for review.


1. (surprise procedural issue) WON the crossing of the check was passable by the SC.

2. WON the Loots were holders in due course (No.)


1. Dino filed an MR in the CA, raising the defense that the check was a crossed check. The CA found
that it could not pass on the issue, in the interests of fair play, justice and due process, and that a
change in his theory would be improper.

However, the SC found that the defense of a crossed check is consistent with Dino’s main argument
that the Loots are not holders in due course, which is one of the possible effects of crossing a check.
Crossing a check serves as a warning to the holder that the check has been issued for a definite
purpose so that the holder thereof must inquire if he has received the check pursuant to that
purpose. Otherwise, he is not a holder in due course.

Thus, Dino never changed his theory that the Loots are not the holders in due course. Besides, the
check was presented and admitted at evidence during the trial, and it cannot be denied that it is a
crossed check.

In any event, the SC is clothed with ample authority to entertain issues not raised in the lower courts
in the interest of substantial justice. Technicality should not be allowed to stand in the way of
equitably and completely resolving the rights and obligations of the parties.

2. Sec. 52, which I’m assuming you’ve memorized by now, defines a holder in due course. In the case of
a cross check, the ff. must be considered:

a. A crossed check may not be encashed but only deposited in a bank.

b. It may only be negotiated once, to one who has an account with a bank, and

c. It warns the holder that it has been issued for a definite purpose so that the holder thereof
msut inquire if he has received the check pursuant to that purpose, otherwise he is not a
holder in due course.

The Loots had the duty to ascertain the indorser’s, i.e. Lobitana’s title to the check and the nature of
her possession. They failed to do so. The verification from Metrobank that the check was funded
was not determinative of Lobitana’s title to the check. Thus, the Loots were grossly negligent,
amounting to absence of good faith, contrary to Sec. 52(c) of the NIL, and not holders in due course.

The crossing of the check relates to the mode of its presentment for payment; it must be made by a
holder or by some authorized person, whose authority depends on the instructions on the face of the
check. In the absence of such due presentment, the drawer is not liable.( State Investment House v. IAC,
(Campos, pp. 149-153)

Here, the payees, Lobitana or Consing, were not the ones who presented the check for payment. As
a result, presentment was not proper, and Dino, the drawer, is not liable. No recourse is available to
the Loots against Dino.

However, this does not mean that they automatically cannot collect upon the checks, as the NIL
does not provide that holders not in due course may not in any case recover on the instrument. The
only disadvantage to holders not in due course is that the negotiable instrument is subject to defences
as if it were non-negotiable.

Among such defences is the absence or failure of consideration, which is the case here. Dino issued
the check for a simulated loan in favour of Consing’s syndicate. Since there was, in fact, no loan,
there is no consideration for the issuance of the check. Thus, Dino cannot be made to pay the face
value of the check.

Instead, the Loots can collect from the immediate indorser, Lobitana. Because the later did not not
appeal, the trial court’s decision had long become final and executory as to her.

Petition Granted. CA Decision Set Aside.