New Sikatuna Wood Industries, Inc. (NSWI) secured a loan from respondent Anita Chua in the form of crossed checks. NWSI negotiated the checks to petitioner. The checks were dishonored.
Whether or not petitioner may be considered a holder in due course.
NO. Petitioner’s failure to inquire from the holder, party defendant NWSI, the purpose for which the three checks were cross despite the warning of the crossing, prevents him from being considered in good faith and thus he is not a holder in due course. Being not a holder in due course, plaintiff is subject to personal defenses, such as lack of consideration between appellants and New Sikatuna Wood Industries.