NEGO July 1 (Sec70-88) VI. PRESENTATION FOR PAYMENT Sec. 70. Effect of want of demand on principal debtor.

- Presentment for payment is not necessary in order to charge the person primarily liable on the instrument; but if the instrument is, by its terms, payable at a special place, and he is able and willing to pay it there at maturity, such ability and willingness are equivalent to a tender of payment upon his part. But except as herein otherwise provided, presentment for payment is necessary in order to charge the drawer and indorsers. Sec. 71. Presentment where instrument is not payable on demand and where payable on demand. - Where the instrument is not payable on demand, presentment must be made on the day it falls due. Where it is payable on demand, presentment must be made within a reasonable time after its issue, except that in the case of a bill of exchange, presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof. Sec. 72. What constitutes a sufficient presentment. - Presentment for payment, to be sufficient, must be made: (a) By the holder, or by some person authorized to receive payment on his behalf; (b) At a reasonable hour on a business day; (c) At a proper place as herein defined; (d) To the person primarily liable on the instrument, or if he is absent or inaccessible, to any person found at the place where the presentment is made. Sec. 73. Place of presentment. - Presentment for payment is made at the proper place: (a) Where a place of payment is specified in the instrument and it is there presented; (b) Where no place of payment is specified but the address of the person to make payment is given in the instrument and it is there presented; (c) Where no place of payment is specified and no address is given and the instrument is presented at the usual place of business or residence of the person to make payment; (d) In any other case if presented to the person to make payment wherever he can be found, or if presented at his last known place of business or residence. Sec. 74. Instrument must be exhibited. - The instrument must be exhibited to the person from whom payment is demanded, and when it is paid, must be delivered up to the party paying it. Sec. 75. Presentment where instrument payable at bank. - Where the instrument is payable at a bank, presentment for payment must be made during banking hours, unless the person to make payment has no funds there to meet it at any time during the day, in which case presentment at any hour before the bank is closed on that day is sufficient. Sec. 76. Presentment where principal debtor is dead. - Where the person primarily liable on the instrument is dead and no place of payment is specified, presentment for payment must be made to his personal representative, if such there be, and if, with the exercise of reasonable diligence, he can be found. Sec. 77. Presentment to persons liable as partners. - Where the persons primarily liable on the instrument are liable as partners and no place of payment is specified, presentment for payment may be made to any one of them, even though there has been a dissolution of the firm. Sec. 78. Presentment to joint debtors. - Where there are several persons, not partners, primarily liable on the instrument and no place of payment is specified, presentment must be made to

them all. Sec. 79. When presentment not required to charge the drawer. -Presentment for payment is not required in order to charge the drawer where he has no right to expect or require that the drawee or acceptor will pay the instrument. Sec. 80. When presentment not required to charge the indorser. -Presentment is not required in order to charge an indorser where the instrument was made or accepted for his accommodation and he has no reason to expect that the instrument will be paid if presented. Sec. 81. When delay in making presentment is excused. - Delay in making presentment for payment is excused when the delay is caused by circumstances beyond the control of the holder and not imputable to his default, misconduct, or negligence. When the cause of delay ceases to operate, presentment must be made with reasonable diligence. Sec. 82. When presentment for payment is excused. - Presentment for payment is excused:chanroblesvirtuallawlibrary (a) Where, after the exercise of reasonable diligence, presentment, as required by this Act, cannot be made; (b) Where the drawee is a fictitious person; (c) By waiver of presentment, express or implied. Sec. 83. When instrument dishonored by non-payment. - The instrument is dishonored by nonpayment when:chanroblesvirtuallawlibrary (a) It is duly presented for payment and payment is refused or cannot be obtained; or (b) Presentment is excused and the instrument is overdue and unpaid. Sec. 84. Liability of person secondarily liable, when instrument dishonored. - Subject to the provisions of this Act, when the instrument is dishonored by non-payment, an immediate right of recourse to all parties secondarily liable thereon accrues to the holder. Sec. 85. Time of maturity. - Every negotiable instrument is payable at the time fixed therein without grace. When the day of maturity falls upon Sunday or a holiday, the instruments falling due or becoming payable on Saturday are to be presented for payment on the next succeeding business day except that instruments payable on demand may, at the option of the holder, be presented for payment before twelve o'clock noon on Saturday when that entire day is not a holiday. Sec. 86. Time; how computed. - When the instrument is payable at a fixed period after date, after sight, or after that happening of a specified event, the time of payment is determined by excluding the day from which the time is to begin to run, and by including the date of payment. Sec. 87. Rule where instrument payable at bank. - Where the instrument is made payable at a bank, it is equivalent to an order to the bank to pay the same for the account of the principal debtor thereon. Sec. 88. What constitutes payment in due course. - Payment is made in due course when it is made at or after the maturity of the payment to the holder thereof in good faith and without notice that his title is defective.

FAR EAST REALTY INVESTMENT INC. v. CA G.R. No. L-36549 October 5, 1988 Paras, J. SOURCE: http://wrmanuel.wordpress.com/2010/09/22/cd-far-east-realty-investmentinc-v-ca/ Doctrine: Where the instrument is not payable on demand, presentment must be made on the day it falls due. Where it is payable on demand, presentment must be made within a reasonable time after issue, except that in the case of a bill of exchange, presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof. Reasonable Time has been defined as so much time as is necessary under the circumstances for a reasonable prudent and diligent man to do, conveniently, what the contract or duty requires should be done, having a regard for the rights, and possibility of loss, if any, to the other party. No hard and fast demarcation line can be drawn between what may be considered as a reasonable or an unreasonable time, because reasonable time depends upon the peculiar facts and circumstances in each case. Facts: Private respondents asked the petitioner to extend an accommodation loan in the sum of P4,500.00. Respondents delivered to the petitioner a check for P4,500.00, drawn by Dy Hian Tat, and signed by them at the back of said check, with the assurance that after one month from September 13, 1960, the said check would be redeemed by them by paying cash in the sum of P4,500.00, or the said check can be presented for payment on or immediately after one month. Petitioner agreed and extended an accommodation loan The aforesaid check was presented for payment to the China Banking Corporation, but said check bounced and was not cashed by said bank, for the reason that the current account of the drawer thereof had already been closed. Petitioner demanded payment from the private but the latter failed and refused to pay notwithstanding repeated demands. Both private respondents raised the defense that both have been wholly discharged by delay in presentment of the check for payment. The Lower Court ruled in favor of the petitioner. However, this was reversed by the CA upon appeal by the respondents, ruling that the check was not given as collateral to guarantee a loan secured since the check passed through other hands before reaching the petitioner and the said check was not presented within a reasonable time. Hence this petition. Petitioner argues that presentment for payment and notice of dishonor are not necessary as when funds are insufficient to meet a check, thus the drawer is liable, whether such presentment and notice be totally omitted or merely delayed. Issues: 1. Whether or not presentment for payment can be dispensed with 2. Whether or not presentment for payment and notice of dishonor of the questioned check were made within reasonable time Held: 1. No. Where the instrument is not payable on demand, presentment must be made on the day it falls due. Where it is payable on demand, presentment must be made within a reasonable time after issue, except that in the case of a bill of exchange, presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof (Section 71, Negotiable Instruments Law). 2. No. It is obvious in this case that presentment and notice of dishonor were not made within a reasonable time. Reasonable time has been defined as so much time as is necessary under the circu mstances for a reasonable prudent and diligent man to do, conveniently, what the contract or duty requires should be done, having a regard for the rights, and possibility of loss, if any, to the other party (Citizens Bank Bldg. v. L & E. Wertheirmer 189 S.W. 361, 362, 126 Ark, 38, Ann. Cas. 1917 E, 520).

Notice may be given as soon as the instrument is dishonored; and unless delay is excused must be given within the time fixed by the law (Section 102, Negotiable Instruments Law). In the instant case, the check in question was issued on September 13, 1960, but was presented to the drawee bank only on March 5, 1964, and dishonored on the same date. After dishonor by the drawee bank, a formal notice of dishonor was made by the petitioner through a letter dated April 27, 1968. Under these circumstances, the petitioner undoubtedly failed to exercise prudence and diligence on what he ought to do al. required by law. The petitioner likewise failed to show any justification for the unreasonable delay. No hard and fast demarcation line can be drawn between what may be considered as a reasonable or an unreasonable time, because reasonable time depends upon the peculiar facts and circumstances in each case PNB v. Seeto, 1952 Facts: On March 13, 1948, Respondent Seeto presented a check to PNB at Surigao, Surigao, dated March 10, 1948,, payable to cash or bearer, and drawn by one Gan Yek Kiao against the Cebu branch of Philippine Bank of Communications. Seeto made a general and unqualified indorsement of the check, and petitioner's agency accepted it and paid respondent the amount therefor. The check was mailed to petitioner's Cebu branch on March 20, 1948 and it was presented to the drawee bank for payment on April 9, 1948, but the check was dishonored for "insufficient funds." The check was returned to petitioner and it immediately sent a letter to the respondent herein demanding immediate refund of the value of the check. Respondent refused to make the refund demanded, claiming that at the time of the negotiation of the check the drawer had sufficient funds in the drawee bank, and that had the petitioner not delayed to forward the check until the drawer's funds were exhausted, the same would have been paid. PNB invoked Section 84 of the Negotiable Instruments Law which states: o SEC. 84. Liability of person secondarily liable, when instrument dishonored. Subject to the provisions of this Act, when the instrument is dishonored by nonpayment, an immediate right of recourse to all parties secondarily liable thereon accrues to the holder.

Issue: Whether there was unreasonable delay in the presentation of the check for payment at the drawee bank which discharges the respondents liability. Ruling: Yes. The check is dated March 10 and was cashed by the petitioner's agency on March 13, 1948. It was not mailed until seven days thereafter, i.e., on March 20, 1948, or ten days after issue. No excuse was given for this delay. Assuming that it took one week, or say ten days, or until March 30, for the check to reach Cebu, neither can there be any excuse for not presenting it for payment at the drawee bank until April 9, 1948, or 10 days after it reached Cebu. There was unreasonable delay in the presentation of the check for payment at the drawee bank, and that as a consequence thereof, the indorser, respondent herein, was thereby discharged. It has been ruled in a lot of cases that unreasonable delay in the presentment of a negotiable instrument discharges a drawer only to the extent of the loss caused thereby, but an indorser is wholly discharged thereby irrespective of any question of loss or injury. Only when there is

affirmative proof that the indorser knew when he cashed the check that there would be no funds in the bank to meet it can this rule be avoided. The Court was unable to find any authority sustaining the proposition that an indorser of a check is not discharged from liability for an unreasonable delay in presentation for payment. This is contrary to the essential nature and character of negotiable instruments - their negotiability. They are supposed to be passed on with promptness in the ordinary course of business transactions; not to be retained or kept for such time as the holder may want, otherwise the smooth flow of commercial transactions would be hindered.

Crystal v. CA Facts: (1) This is an MR by the petitioner Crystal (2) Assailing the SC committed grave abuse in its previous decision (25 February 1975), which affirmed the decision of the CA, a. SC and CA held that Raymundo Crystals (petitioner) redemption of the 4 parcels of land acquired by the de Gracias (Pelagia Ocang, Pacita, Teodulo, Felicisimo, Pablo, Lydia, Dioscoro and Rodrigo) was INVALID. b. Because the check Crystal used in paying the redemption price was either DISHONORED or had become STALE c. Ergo, the VALUE of the check (P11,200) was NEVER REALIZED by the de Gracias Issue: (1) Whether the court committed grave abuse NO (but SC said their previous decision be remanded) (2) Whether the conflicting circumstances of the check being dishonored and becoming stale affect the validity of the redemption sale - YES Held: (1) FIRST ISSUE: SC overrules the argument of jurisdiction or even abuse of discretion. SC reiterates what it said in the previous decision. BUT SC sees the possible injustice on their reliance to that previous decision because apparently there were 2 conflicting findings in that previous decision namely (1) that the check had been dishonored and (2) the check had only become stale. (2) SECOND ISSUE: For a check to be dishonored upon presentment and to be stale for not being presented at all in time are incompatible developments that have variant legal consequences. a. If indeed the questioned check was DISHONORED, the redemption was NULL AND VOID. b. If it had only become STALE, one must determine the circumstances that caused its nonpresentment, for if it was NOT due to the FAULT OF the DRAWER (PETITIONER), it would be unfair to deprive him of the rights he had acquired as redemptioner. (3) For the SC, it now appears that there is a strong showing that: (1) the check was not dishonored, (2) although it became stale, and that (3) Ocang (Respondents) had actually been paid the full value. (4) SC is now convinced that it is fair that the trial court be allowed to receive all evidence to determine WON respondents has already received the full amount of P11,200 (5) SC, thus, modified their previous decision & remanded the case to the trial court. Papa vs AU Valencia

G.R. No. 105188 January 23, 1998 Facts: Sometime in June 1982, A.U. Valencia and Co., Inc. and Felix Pearroyo, filed with the Regional Trial Court of Pasig, Branch 151, a complaint for specific performance against Myron C. Papa, in his capacity as administrator of the Testate Estate of one Angela M. Butte. The complaint alleged that Papa, acting as attorney-in-fact of Angela M. Butte, sold to Pearroyo, through Valencia, a parcel of land. Prior to the alleged sale, the said property had been mortgaged by her to the Associated Banking Corporation. After the alleged sale to Valencia and Penarroyo, but before the title to the subject property had been released, Butte passed away. Despite representations made by Valencia to the bank to release the title to the property sold to Pearroyo, the bank refused to release it unless and until all the mortgaged properties of the late Butte were also redeemed. In order to protect his rights and interests over the property, Pearroyo caused the annotation on the title of an adverse claim. Sometime in April 1977, that Valencia and Pearroyo discovered that the mortgage rights of the bank had been assigned to Tomas L. Parpana, as special administrator of the Estate of Ramon Papa. Jr. Since then, Papa had been collecting monthly rentals in the amount of P800.00 from the tenants of the property, knowing that said property had already been sold to Valencia and Pearroyo. Despite repeated demands from said respondents, Papa refused and failed to deliver the title to the property. Valencia and Pearroyo prayed that Papa be ordered to deliver to Pearroyo the title to the subject property RTC rendered a decision, allowing Papa to redeem from the Reyes spouses, who bought the land at a public auction because of tax delinquency and ordering Papa to execute a Deed of Absolute Sale in favor of Pearroyo. Papas defense: The sale was never consummated as he did not encash the check (in the amount of P40,000.00) given by Valencia and Pearroyo in payment of the full purchase price of the subject lot. He maintained that what Valencia and Pearroyo had actually paid was only the amount of P5,000.00 (in cash) as earnest money. Issue: Was there valid payment although Papa failed to encash the check? Held: Yes. Valencia and Pearroyo had given Papa the amounts of P5,000.00 in cash on 24 May 1973, and P40,000.00 in check on 15 June 1973, in payment of the purchase price of the subject lot. Papa himself admits having received said amounts, and having issued receipts therefor. Papas assertion that he never encashed the aforesaid check is not substantiated and is at odds with his statement in his answer that he can no longer recall the transaction which is supposed to have happened 10 years ago.

After more than 10 years from the payment in part by cash and in part by check, the presumption is that the check had been encashed. Granting that Papa had never encashed the check, his failure to do so for more than 10 years undoubtedly resulted in the impairment of the check through his unreasonable and unexplained delay. While it is true that the delivery of a check produces the effect of payment only when it is cashed, pursuant to Article 1249 of the Civil Code, the rule is otherwise if the debtor is prejudiced by the creditors unreasonable delay in presentment. The acceptance of a check implies an undertaking of due diligence in presenting it for payment, and if he from whom it is received sustains loss by want of such diligence, it will be held to operate as actual payment of the debt or obligation for which it was given. If no presentment is made at all, the drawer cannot be held liable irrespective of loss or injury unless presentment is otherwise excused. This is in harmony with Article 1249 of the Civil Code under which payment by way of check or other negotiable instrument is conditioned on its being cashed, except when through the fault of the creditor, the instrument is impaired. The payee of a check would be a creditor under this provision and if its non-payment is caused by his negligence, payment will be deemed effected and the obligation for which the check was given as conditional payment will be discharged. Considering that Valencia and Pearroyo had fulfilled their part of the contract of sale by delivering the payment of the purchase price, they, therefore, had the right to compel Papa to deliver to them the owners duplicate of TCT 28993 of Angela M. Butte and the peaceful possession and enjoyment of the lot in question. International Corporate Bank v. Gueco Facts: Spouses, Francis and Ma. Luz Gueco (Respondents) obtained a loan from International Corporate Bank (now Union Bank of the Philippines/ Petitioner) to purchase a car a Nissan Sentra 1600 4DR, 1989 Model. In consideration of the loan, the Guecos executed promissory notes which were payable in monthly installments and chattel mortgage over the car to serve as security for the notes. The Guecos defaulted in payment of the installments. The bank filed a civil action demanding payment. In a meeting between Francis and Desi Tomas (Banks Assistant Vice President), Gueco was demanded to pay the unpaid balance of the car loan of P184,000, which was later lowered to P154,000. Because the Guecos were still unable to pay, the car was detained inside the banks compound. When Francis talked with the Banks Administrative Support, Auto Loans/ Credit Card Collection Head, Jefferson Rivera, the balance was further reduced to P150,000. Francis delivered a managers check in the amount of P150,000 but the car was not released because of his refusal to sign the Joint Motion to Dismiss, which the Bank claimed was a standard operating procedure to effect a compromise and to preclude future filing of claims, counterclaims or suits for damages. o The managers check was not encashed. The Guecos filed a civil action for damages against the bank, which the RTC decided in their favor, ordering the bank: o To return immediately the subject car to the appellants in good working condition, Bank may deposit the Managers check the proceeds of which have long been under the control of the issuing bank in favor of the Bank since its

issuance, whereas the funds have long been paid by the Guecos to secure the Managers check, over which they have no control. o Affirmed by CA. The Bank now questions the decision claiming that the lower court erred in holding that the Bank return the car to the Guecos, without making any provision for the issuance of the new Managers/ Cashiers check by the Guecos in favor of the Bank in lieu of the original Managers check that already became stale. The Guecos argue that the delivery of the original Managers check produced the effect of payment, and the Bank was negligent in opting not to deposit or use it and should therefore suffer the loss as a result of the check becoming stale.

Issue: Whether the bank was negligent in opting not to deposit or use the Managers check? Ruling: No. There was no bad faith or negligence in the position taken by the bank when it held on to the check and refused to encash it because of the controversy surrounding the signing of the joint motion to dismiss. Stale check one which has not been presented for payment within a reasonable time after its issue. o It is valueless and should not be paid. Sec. 71: An instrument not payable on demand must be presented for payment on the day it falls due. When the instrument is payable on demand, presentment must be made within a reasonable time after its issue. In case of a bill of exchange, presentment is sufficient if made within a reasonable time after the last negotiation thereof. A check must be presented for payment within a reasonable time after its issue, and in determining what is reasonable time, regard is to be had to the nature of the instrument, the usage of trade or business with respect to such instruments, and the facts of the particular case. o Test: Whether the payee employed such diligence as a prudent man exercises in his own affairs. o Even a delay of 1 week or 2 days, under the some circumstances may constitute unreasonable time. In this case however, the check involved is a managers check not an ordinary bill of exchange. o Managers check one drawn by the banks manager upon the bank itself. Similar to a cashiers check. o Cashiers check check of the banks cashier on his own or another check. A bill of exchange drawn by the cashier of a bank upon the bank itself, and accepted in advance by the act of issuance. o Banks own check and may be treated as a promissory note with the bank as maker. o If treated as promissory note, the drawer would be the maker and in which case the holder need not prove presentment for payment or present the bill to the drawee for acceptance. o Even assuming that presentment is needed, failure to present for payment within a reasonable time will result to the discharge of the drawer only to the extent of the loss caused by the delay. Failure to present on time, thus, does not totally wipe out all liability. In fact, the legal situation amounts to an acknowledgment of liability in the sum stated in the check. In this case, the Gueco spouses have not alleged, much less shown that they or the bank which issued the manager's check has suffered damage or loss caused by the delay or non-presentment. Definitely, the original obligation to pay certainly has not been erased.

PNB v. CA Augusto Lim deposited in his current account with the PCIB branch at Padre Faura, Manila, GSIS Check drawn against the PNB o The check was, forwarded for clearing, through the Central Bank, to the PNB and paid its amount to the PCIB, as well as debited it against the account of the GSIS. o However, upon the demand from GSIS, PNB re-credited back the amount in the check to GSIS because the signatures of its officers (GSIS) on the check were forge and that GSIS had notified the PNB, which acknowledged receipt of the notice, that said check had been lost, and, accordingly, requested that its payment be stopped. Apparently, The General Manager and the Auditor of the GSIS on the check, as drawer are forged and that the person named in the check as its payee is Mariano D. Pulido, who purportedly indorsed it to one Manuel Go and subsequently indorsed to Augusto Lim, who, in turn, deposited it with the PCIB where the PCIB stamped the following on the back of the check: "All prior indorsements and/or Lack of Endorsement Guaranteed and that the PCIB sent the check to the PNB, for clearance, through the Central Bank. PNB demanded from the PCIB the refund of the amount of the check which the PCIB refused to do. Lower court ruled in favor of PCIB. Hence, this appeal PNB maintains that the lower court erred: o In not finding that the indorsements at the back of the check are forged. o In not finding the PCIB liable to the PNB by virtue of the former's warranty on the back of the check o In not holding that "clearing" is not "acceptance", in contemplation of the Negotiable Instruments law. o In not finding the PCIB guilty of negligence o In not finding that PNB is entitled to reimbursement Issue: W/N the petition is with merit? NO Ruling: With regard issue on forgery, the court ruled that the question whether or not the indorsements have been falsified is immaterial to the PNB's liability as a drawee, or to its right to recover from the PCIB, for, as against the drawee, the indorsement of an intermediate bank does not guarantee the signature of the drawer,since the forgery of the indorsement is not the cause of the loss. On the other hand, with respect to the warranty on the back of the check, to which the third assignment of error refers, it should be noted that the PCIB thereby guaranteed "all prior indorsements," not the authenticity of the signatures of the officers of the GSIS who signed on its behalf, because the GSIS is not an indorser of the check, but its drawer. Said warranty is irrelevant, therefore, to the PNB's alleged right to recover from the PCIB. It could have been availed of by a subsequent indorsee or a holder in due course subsequent to the PCIB, but, the PNB is neither. Indeed, upon payment by the PNB, as drawee, the check ceased to be a negotiable instrument, and became a mere voucher or proof of payment. Similarly, with regard to the issue on acceptance, SC emphasized that, in general, "acceptance", in the sense in which this term is used in the Negotiable Instruments Law is not required for checks, for the same are payable on demand. Indeed, "acceptance" and "payment" are, within the purview of said Law, essentially different things, for the former is "a promise to perform an act," whereas the latter is the "actual performance"

In the words of the Law, "the acceptance of a bill is the signification by the drawee of his assent to the order of the drawer," which, in the case of checks, is the payment, on demand, of a given sum of money. Actual payment of the amount of a check implies not only an assent to said order of the drawer and a recognition of the drawer's obligation to pay the aforementioned sum, but, also, a compliance with such obligation. Lastly, with regard to the issue negligence and on the right of PNB for reimbursement. The court ruled that assuming that there had been such negligence on the part of the PCIB, it is undeniable, however, that the PNB has, also, been negligent, with the particularity that the PNB had been guilty of a greater degree of negligence, because it had a previous and formal notice from the GSIS that the check had been lost, with the request that payment thereof be stopped. Hence, PNB's negligence was the main or proximate cause for the corresponding loss. o Further, by not returning the check to the PCIB, it indicates that the PNB had found nothing wrong with the check and would honor the same, and by actually paying its amount to the PCIB, the PNB induced the latter, not only to believe that the check was genuine and good in every respect, but, also, to pay its amount to Augusto Lim. In other words, the PNB was the primary or proximate cause of the loss, and, hence, may not recover from the PCIB. It is a well-settled maxim of law and equity that when one of two (2) innocent persons must suffer by the wrongful act of a third person, the loss must be borne by the one whose negligence was the proximate cause of the loss or who put it into the power of the third person to perpetrate the wrong. Then, it has been held that, where the collecting (PCIB) and the drawee (PNB) banks are equally at fault, the court will leave the parties where it finds them. o