Petitioner Cely Yang and private respondent Prem Chandiramani entered into an agreement where Yang’s manager’s checks shall be payable to the order of private respondent Fernando David. Dispute between Yang and Chandiramani arose, stopping payment of David’s checks. David was not notified, and the stopping failed.
Whether or not David is grossly negligent amounting to legal absence of good faith.
NO. David had no obligation to ascertain from Chandiramani what the nature of the latter’s title to the checks was, if any, or the nature of his possession. He cannot be guilty of gross neglect amounting to legal absence of good faith, absent any showing that there was something amiss about Chandiramani’s acquisition or possession of the checks.