NSW received three post-‐dated and crossed checks issued on the condition that the drawer on due date would make sufficient deposits to cover the checks. NSW did not wait for the maturity and indorsed the check to an investment house, which deposited the same. The checks bounced. Is the investment house a holder in due course?
No, that the checks had been issued subject to the condition that the drawer on due date would make the back up deposit for said check which condition was not made, constitutes a good defense against the holder who is not a HIDC, particularly when the check was crossed. The crossing of a check serves a warning to the holder that the check had been issued for a definite purpose so that he must inquire if received the check pursuant to that purpose, otherwise, he is not a holder in due course. (State Investment House v. IAC, G.R. No. 72764, July 13, 1989)