Fick v.

Jones
185 Wash. 365, 55 P 2d. 334 1936 Blake, J.
petitioners E. P. Fick
respondents J. W. Jones
summary Drawer: Jones Drawee: People’s Bank and Trust Company Payee: Fick
In an action by the payee to recover $200 from the drawer, the former didn’t present any proof
of presentment to the drawee before going against the drawer. The Ct remanded the case to
the TC with instructions to dismiss it on the basis that presentment, demand, and notice
of dishonor are essential prerequisites to an action against the drawer on a check.

facts of the case

Fick brought an action on a check against J.W. Jones which contained the ff:

“Founded
“People’s Bank and Trust Company
“1889
“Seattle, Wash, Feb 18th 1929
“No. 3227
“Pay to the order of E.P. Fick, $200.00 Two Hundred Dollars

“J.W. Jones

The TC found that it was never proven or alleged that the check was presented to the BANK. The presentment
was made directly to the drawer (Jones) who refused to pay the same. It ruled in favor of Fick. Jones appealed,
arguing that an action cannot be had against the drawer of the check without allegation and proof of
presentment and demand on the drawee. Since there’s no proof of the aforementioned, the evidence against
him is insufficient. Fick on the other hand, argues that the failure to present a check to the DRAWEE doesn’t
release the drawer, unless he sustains loss or injury in consequence of such failure (loss isn’t shown in this
case).

issue
WoN an action on a check can be had against the drawer without presentment and demand on the drawee. NO.
TC reversed. Remanded with directions to dismiss.

ratio
The Court agreed with Jones.

Fick, in support of his position, cited several cases. Such cases however, only go to the extent of holding
that the debt, which the check’s designed to pay, is charged only to the extent that the drawer has sustained loss
by the failure or negligent delay of the payee to present the check to the drawee for presentment. The issue of
loss or injury to the drawer in these cases arises when he (drawer) claims that the debt’s discharged by reason of
negligence of the payee in presenting the check for payment.

Such cases do not in any degree encroach upon the rule that presentment, demand, and notice of
dishonor are essential prerequisites to an action against the drawer on a check (which is the case at bar).
This case is not an action on any debt which the check may have been designed to discharge.

! 2!
 Gordon v. Levine
194 Mass. 418 1907 Morton, J.
summary Topic – Date of presentment of checks:
SUBJECT: Check ||DRAWER: Levine || PAYEE: Gordon || DRAWEE: Boston Bank
Levine drew a check in favor of Gordon. The check was dishonored because of
insufficiency of funds. The check was then indorsed to subsequent indorsees who, the
last one presented it for collection 5 days after. Money never went out of the bank.
Levine argues that it was not presented within a reasonable time and the Court
agrees. Court notes that the instrument was a BOE payable on demand and as such
must be intended for immediate use (and in effect be presented immediately). Also,
the rule was laid down that circulation from hand to hand will not extend the time of
presentment to the detriment of the drawer.

facts of the case

Levine drew a check in favor of Gordon dated December 30, 1905 (a Saturday). Gordon is from Chelsea
and Levine is from Boston. Gordon testified that Levine asked him not to present the check for a couple of
days as he had insufficient funds in the account. Regardless, Gordon presented the check on January 1st and he
was informed that indeed Levine had insufficient funds.

Also, apparently after this event, Gordon passed the check to a person named Saievitz as payment for an
outstanding debt. After which Saievitz indorsed it to another person named Rootstein who deposited it on
January 4th. The following day, the bank in which it was drawn found the latter’s doors closed. (A/N: Went
out of business?). Lower court decided in favor of Gordon.

DEFENSE: Levine asked the judge to instruct the jury that a check must be presented for payment in a
reasonable time the check in suit should have been presented before the close of banking hours on Monday
(January 1st); that its transfer would not extend the time for presentment and that January 5th would not be
within a reasonable time for presentment. If the bank failed in the meantime and Levine sustained a loss in
consequence of delay in presenting the check, he would be discharged from liability to that extent.

issue
WON presentment on January 5th could be found to be within a reasonable time. NO.

ratio
The Negotiable Instruments Act provides that a check must be presented for payment within a reasonable
time after it is issued. If it is not so presented and the drawer sustains a loss by reason of the failure of the
drawee then he will be discharged from liability to the extend of such loss, continuing liable otherwise. This is
because the NIA provides that a bill of exchange drawn on a bank payable on demand is intended for
immediate use and not to circulate as a promissory note. As such it would be unjust to subject the drawer to
the loss, if any, resulting from failure to present it for payment within a reasonable time.

The NIA provides also that in determining what is reasonable time or an unreasonable time, regard is to be
had to the nature of the instrument, the usage of trade or business, if any, with respect to such instruments and the facts
of the particular case. The nature of the instrument and the facts of the particular case have always been
considered in passing upon the question of reasonable or unreasonable time.

One rule established is that where the drawer and drawee and the payee are all in the same city or town, a
check to be presented within a reasonable time should be presented at some time before the close of banking
hours on the day after it is issued and that circulation from hand to hand will not extend the time of
presentment to the detriment of the drawer. If it is presented and paid afterwards, the drawer suffers no
harm. But if not presented within the time thus fixed, and there is a loss, it falls not on him but on the holder.

! 3
 Morrison v. McCartney
30 Mo. 183 J. Napton
petitioners Morrison (indorser)
respondents McCartney (drawer of check)
summary A check was indorsed to Morrison on Oct. 2, 1857. He could not present the check for
payment the day after because the bank was closed. He was only able to present the
check on Jan. 29, 1858, which was refused by the bank.
The SC said that Morrison was entitled to recover the value of the check. The drawer
of a check is treated as the principal debtor, and is at all times liable to pay its value.
Delay of presentment does not affect this liability, unless the drawer actually suffers
by the delay (ex. Intermediate failure of his banker).

facts of the case

Drawer: McCartney; Drawee: EW Clark and Brothers (C&B); Payee: Bohn and Co.; Indorser: Morrison

Subject: a check delivered and transferred on Oct. 2, 1957.

What happened: This check was indorsed to Morrison the same day it was transferred (Oct. 2). However,
Morrison was only able to present the check for payment on Jan. 29, 1858.
Why the late presentment? Morrison tried to present the check on Oct. 3, 1857 but C&B (drawee bank) was
closed that day.
Conflict: McCartney withdrew his deposits with bank on Oct. 6, 1857. By the time the check was presented for
payment on Jan. 29, 1858 by Morrison, he refused to pay for its value.

issue
WoN Morrison is entitled to recover the value of the check notwithstanding the fact that he failed to present
the check for payment on the day it was indorsed to him. YES. He may recover.

ratio
1) The drawer of a check is treated as a principal debtor and is not discharged of liability by delay by the
holder in making presentment. Unless the drawer actually suffers by such delay, he has no reason to
complain.
The SC cited some legal sources explaining this nature of liability of a drawer of a check:

Kent’s Commentaries: The drawer of a check is not a surety, but a principal debtor. The check is the
acknowledgment of a certain sum due. It is an absolute appropriation of so much money in the hands of his
banker to the holder of the check. This liability exists until it is presented for payment; and unless the drawer
actually suffers by the delay, he has no reason to complain for such delay.

Judge Story: “the drawer of a check will at all times be liable to pay the same, if the holder can show that the
drawer has sustained and can sustain no loss or damage from the failure to demand payment at an earlier date.
The drawer is treated as a principal debtor and is not discharged by any laches of the holder in not making
due presentment thereof.

Why treat the drawer like a principal debtor?

- If the drawee, upon presentment, refuses to pay because of a lack of funds, the drawer is not injured.
On the other hand, if the drawee does have funds yet refuses to pay the check, the drawer still sustains
no loss.
- Every check is prima facie presumed to be given for value received by the drawer. Thus, in a case
where the holder does not present a check for payment, the drawer is totally exonerated. In effect, he
pockets both the original consideration and his funds in the bank.

! 4
 PNB v. SEETO
G.R. No. L-4388 August 13, 1952 J. Labrador
petitioners Philippine National Bank
respondents Benito Seeto
author Pagda
summary Seeto encashed a check (drawn by Kiao against drawee bank) in the PNB Surigao
branch. Almost a month later, PNB presented the check to the drawee bank but it was
dishonored for insufficient funds. PNB demanded a refund from Seeto. The CFI ruled
that Seeto was liable, but the CA reversed. The SC affirmed the CA and ruled that
Seeto was NOT liable. PNB was unreasonably in delay when they presented the check
before the drawee bank. Thus, the indorser (Seeto) was discharged of his obligation to
refund the check (being secondarily liable as an indorser).
facts of the case
Drawer – Gan Yek Kiao
Drawee – PHL National Bank of Communications (DIFFERENT FROM indorsee Philippine National Bank)
Indorser – Seeto
Indorsee – PNB
Instrument – Out-of-town check for P5,000 payable to cash/bearer

(Timeline important)
March 13 – Seeto called the PNB branch in Surigao and presented a P5,000 check dated March 10 in Cebu,
payable to cash/bearer, drawn by Gan Yek Kiao against the drawee bank, the Cebu Branch of the Philippine
National Bank of Communications. Seeto made a general and unqualified indorsement of the check to PNB
and the latter accepted it and paid him P5,000.
March 20 – Check was mailed to PNB’s Cebu Branch.
April 9 – PNB presented the check to the drawee bank but it was dishonored for insufficient funds. The check
was sent back to the PNB branch in Surigao.
April 14 – PNB branch in Surigao got the check and immediately wrote Seeto demanding a refund. Another
demand letter was sent to Seeto on April 26.
© Seeto replied, asking that the suit PNB contemplated filing against him be deferred while he was inquiring
about the reason for the dishonored check. Eventually, he informed PNB that he would NOT refund the
amount, claiming that at the time he negotiated the check to PNB, the account still had sufficient funds.
Had the Surigao branch of the PNB not delayed, they would have been paid. Because of his refusal to
refund, PNB filed a complaint in the CFI of Surigao.
© CFI – Ruled in favor of PNB. The Court explained that since the drawee bank was not in Cebu (I don’t get
this, the facts itself say that there was a Cebu branch), it was impossible for PNB to verify the drawer’s
solvency. Thus, PNB had to rely on Seeto’s assurance that he will refund them, as a precaution.
© CA – Reversed CFI. Seeto not liable. PNB guilty of unreasonably retaining and withholding the check, and
the delay in presentment was inexcusable so Seeto was discharged.
PNB’s argument – CA erred in (1) applying Secs. 143-144 of the NIL and declaring Seeto discharged of liability
as indorser of the check and (2) not admitting parole evidence to show that respondent made oral assurances
to refund the value of the check in case of dishonor.

issue
WON Seeto was liable. NO.
[Dispositive] The judgment appealed from is, therefore, affirmed, with costs against the petitioner.

ratio
PNB is correct in arguing that Secs. 143-144 of the NIL do not apply. These provisions are concerned with the
presentation of a bill of exchange for acceptance and are not applicable to a check, in which presentment for
acceptance is not required.

! 5
In this case, Sec. 841 is applicable, but its application is subject to a condition imposed by Sec. 1862. Even if PNB
was correct in arguing that 143-144 do not apply, Seeto is still not liable.
© The silence of Sec. 186 as regards the discharge of the indorser’s liability is due to the fact that the
indorser’s discharge is already expressly covered in Sec. 84, the indorser being a person secondarily liable
in an instrument. (#bobomoment -- I don’t get this at all. Doesn’t 84 say that when the instrument is dishonored by
non-payment, a right of recourse to those secondarily liable accrues to the holder? How can the indorser be discharged
then???)
o Reason for the difference in liability between the indorser and the drawer in case of dishonor – drawer
is not necessarily prejudiced thereby; on the other hand, the indorser is actually or by legal
presumption prejudiced.
o The proposition that an indorser of a check is not discharged from liability for an unreasonable delay in
presentation for payment is contrary to the 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.

© All told, there was inexcusable delay on the part of PNB in presenting the check for payment at the drawee
bank; as a consequence, indorser Seeto has to be discharged of his liability.
o Seeto cashed the check on the 13th. The check was only mailed to until seven days after, on the 20th.
Assuming it took 10 days to reach Cebu, then that would have been the 30th. And yet PNB only
presented it on the 9th of April.

© PNB was also correct in arguing that Seeto’s verbal assurance (to PNB that he was ready to refund the
amount should it be dishonored) was admissible as an exception to the parole evidence rule. Nonetheless,
Seeto is still discharged of liability.
o The supposed assurances of refund in case of dishonor of the check are precisely the ordinary
obligations of an indorser. These obligations are considered discharged by an unreasonable delay in the
presentation of the check for payment, as is the case here.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1 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.
2 Sec. 186 – Within what time a check must be presented. – A check must be presented for payment within a reasonable time after its issue

or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay.
! 6
 Crystal v. CA
G.R. No.L-35767 June 18, 1976 J. Barredo
petitioners Raymundo Crystal
respondents Court of Appeals, Pelagia Ocang, Pacita, Teodulo, Felecisimo, Pablo, Lydia, Dioscora,
and Rodrigo, all surnamed De Gracia.
summary Crystal wanted the issuance of writ of possession in favor of petitioners cancelled
because he averred that he had already paid the redemption price. SC in an earlier
ruling denied, relying on the CA decision that the check issued for payment had been
dishonored despite the fact that there was a finding in the decision that it had merely
become stale. In reconsidering, the Court held that dishonor and becoming stale of a
check produces different effects. If a check is dishonored the redemption is invalid
whole if it was merely stale, the Courts must look into the circumstances of non-
presentment. However, since the creditor was paid the full amount via compromise
agreement, the issue became moot.

facts of the case

This is a motion for reconsideration of the affirmation of a CA decision which held that the petitioner's
redemption of the property acquired by the respondents in an execution sale was invalid as the check issued
by the petitioner was stale or had been dishonored, thus upholding the jurisdiction of the trial court in ruling
on the validity of the redemption.

The main issue that needed to be resolved was whether the check that was issued was dishonored or
merely stale for not being presented in time. The Court observed that there could be injustice if they fully
relied on the CA decision, since dishonor and a staleness of a check produces different effects.

issue
Whether the check issued by petitioner Crystal was dishonored or merely stale. MOOT.

ratio
Difference between dishonored and stale check regarding their effects on the redemption - when a
check is dishonored, there is no doubt that the redemption of the petitioner was void because he had not paid
for the full value of the property. When it is stale, it becomes imperative that the circumstances for non-
presentment be determined, for this was not due to the petitioner's fault. It would be unfair to deprive him of
his rights if the value of the check was otherwise received or realized.

As applied - based on the evidence presented by the parties, it can be seen that when Ocang was issued the
writ of possession, she had already been paid the amount of the disputed check. in fact there was already a
compromise agreement and she had made admissions that the dishonor or becoming stale of the check is no
longer significant. Issue is moot and academic.

! 7
 CHAN WAN v. TAN KIM
G.R. No. L-15380 September 30, 1960 Bengzon, J.
petitioners Chan Wan
respondents Tan Kim and Chen So
summary The court refused to order the payment to Chan Wan of 11 crossed check with 8 being
specially crossed to China Bank, holding that the 8 checks should have been presented
by said bank but it was presented by Chan Wan, thus there was no proper
presentment and no liability had attached to the drawer. Tan Kim is not liable to pay
the checks to Chan Wan.

facts of the case

Tan Kim issued 11 checks payable to cash or bearer, allegedly in favor or Pinong and Muy for some shoes
Pinong had promised to make for her and were intended merely as receipts. The checks were presented for
payment by Chan Wan to Equitable Banking Corporation but were all dishonoured and returned due to
insufficient fund and/or other causes attributable to the drawer. The CFI declined to order the payment
because plaintiff failed to prove the he was a holder in due course and because the checks were crossed checks,
and should have been deposited with the bank.

issue
W/N Tan Kim is liable to pay for the 11 checks. – NO

ratio
Eight of the checks were specially crossed to China Bank (had “non-negotiable – China Banking Corporation”
written across its face) and should have been presented by said bank but because it was presented by Chan
Wan, there was no due presentment and no liability had attached to the drawer upon the check being
dishonored. Tan Kim is not liable to pay the checks to Chan Wan. [Syllabus]

The checks had been deposited with China Bank and presented to the drawee bank for collection with the clearance endorsement of
China Bank but were returned due to the lack of funds of the drawee, some checks being stamped as “account closed.” It was after that
Chan Wan had acquired the checks, thus he cannot be a holder in due course because he knew that the checks were already
dishonoured. Although he may recover, he is subject to the defense of Tan Kim (drawer) of issuing the check for shoes that were never
made.

! 8
 Associated Bank v.CA
G.R. No. 89802 May 7,1992 Cruz, J.
petitioners Associated Bank and Conrado Cruz
respondents Court of Appeals and Merle V. Reyes
summary Bank mistakenly paid out the amounts indicated in several crossed checks. It tried to
raise the defense that the intended recipient of the checks had no cause of action
against it. The court held that the bank’s negligence granted a cause of action against it.

facts of the case

Private respondent owned a business that was engaged in the business of manufacturing ready-to-wear
garments under the firm name “Melissa’s RTW.” The dispute in this case concerns several crossed checks that
were issued in favor of her business; 6 checks the aggregate amount of which was more or less 16k. When
Merle went to the bank to encash the aforementioned checks, she was infored that the same had been issued.
Apparently, the crossed checks had been had been deposited with and paid out to Rafael Sayson by
Associated Bank. According to the bank, Mr. Sayson was a trusted depositor—he did not possess
authorization from Merle to encash the checks on her behalf. Private respondent then sued the bank to recover
the amounts wrongfully disbursed to Sayson. As defense, the bank alleged that the private respondent had no
cause of action against it because her remedy was to go after the companies issued the checks.

RTC = ordered the bank to pay the amounts indicated on the checks along with actual and exemplary
damages, atty’s fees, and costs of litigation.
CA = affirmed the ruling of the RTC; the bank was at fault so the private respondent had a rightful cause of
action against it.

issue
WON the private respondent had a cause of action against the bank for paying out crossed checks issued in
her business’s favor to another party – YES

ratio
What is a crossed check?
A crossed check is (surprise, surprise) a check wherein two parallel lines are drawn downwards,
diagonally, from left to right, on its upper left portion. A crossed check may either be general or special. It is
general when the words “and co.” or “for payee’s account only” appear between the parallel lines—the effect
of this is that the drawee bank ought not to encash the check and should only deposit the amount indicated. It
is special when the name of a bank or business is written between the parallel lines—the effect if this is that the
drawee may only pay with the intervention of the company or bank indicated. The crossed checks in this case
were of a general nature.

What are the effects of crossing a check?

According to State Investment House vs. IAC:
1. The check may not be encashed but only deposited in the bank
2. May only be negotiated once to someone with an account in the bank
3. The fact that the check is crossed serves as warning to the holder that the same has been idsued for s
definite purpose and that it falls to him to determine whether or not he has received the check pursuant
to such purpose
In summary, crossing a check impacts the manner of its presentment.

As Applied to the Case

By virtue of the fact that the bank issued the checks despite the fact that Sayson had not been authorized to
indorse or encash them, the funds symbolized by the same were converted through the bank’s negligence. The
gravity of such negligence was further increased by the bank’s failure to afford extra attention to the checks
precisely because they were crossed. Hence, private respondent had a cause of action.
! 9
 Gullas v PNB
G.R.!No.!L(43191!!!!!!!!!!!!!! !!!!!!!!November!13,!1935! J. Malcolm
petitioners Paulino Gullas
respondents Philippine National Bank
summary Atty Gullas’ account was set off to pay for his indebtedness after the dishonor
of checks he issued. The court held that the improper enforcement of notice of
dishonor to him made the bank liable for damages.

facts of the case

Parties:
Atty. Paulino Gullas, account holder in the bank
Philippine National Bank, drawee bank

The Treasurer of the United States for the United States Veterans Bureau issued a Warrant in the amount of
$361, payable to the order of Francisco Bacos.

Paulino Gullas and Pedro Lopez signed as endorsers of this check. It was cashed by the Philippine National
Bank. Subsequently the treasury warrant was dishonored by the Insular Treasurer.

At that time the outstanding balance of Attorney Gullas on his bank account was P509. Against this balance he
had issued certain checks to pay for the warrant and other obligations, but for some reason, it could not be
paid, hence, his bank account was sequestered by the bank. Attorney Gullas left his residence for Manila after
issuing the checks but before the dishonor.

The bank on learning of the dishonor of the treasury warrant sent notices to Mr. Gullas which could not be
delivered to him at that time because he was in Manila. The bank informed him that the United States
Treasury warrant was dishonored by the Insular Treasurer. They also stated that they applied the outstanding
balances of the bank account as payment of the checks he issued. On the return of Attorney Gullas, notice of
dishonor was received and the unpaid balance of the warrant was immediately paid by him.

As a consequence of these happenings, two occurrences transpired which inconvenienced Attorney Gullas. In
the first place, as above indicated, checks including one for his insurance were not paid because of the lack of
funds standing to his credit in the bank. In the second place, the dishonor of his checks was reported in the
news to his prejudice.

issues
1. WON Philippine National Bank had a right to apply the amount of the deposit account to the debt of
the depositor to the bank. No
2. What damages should be given to Gullas? Nominal damages in the amount of Php 250

ratio
!
The Civil Code provides that compensation shall take place when two persons are reciprocally creditor and
debtor of each other. In his connection, it has been held that the relation existing between a depositor and a
bank is that of creditor and debtor.

Negotiable Instruments: When indorser exactly liable for dishonor

! 10
The Negotiable Instruments Law contains provisions establishing the liability of a general indorser and giving
the procedure for a notice of dishonor. The general indorser of negotiable instrument engages that if he be
dishonored and the, necessary proceedings of dishonor be duly taken, he will pay the amount thereof to the
holder. In this connection, it has been held a long line of authorities that notice of dishonor is in order to
charge all indorsers and that the right of action against him does not accrue until the notice is given.

Civil Law: No set off of depositor’s account with his indebtedness under the theory of confidential
contracts

As a general rule, a bank has a right of set off of the deposits in its hands for the payment of any indebtedness
to it on the part of a depositor. In Louisiana, however, a civil law jurisdiction, the rule is denied, and it is
held that a bank has no right, without an order from or special assent of the depositor to retain out of his
deposit an amount sufficient to meet his indebtedness. The basis of the Louisiana doctrine is the theory of
confidential contracts arising from irregular deposits, e. g., the deposit of money with a banker. With freedom
of selection and after full preference to the minority rule as more in harmony with modern banking practice.

Negotiable Instruments: Improper enforcement of the notice of dishonor in this case

Starting, therefore, from the premise that the Philippine National Bank had with respect to the deposit of
Gullas a right of set off, we next consider if that remedy was enforced properly. The fact we believe is
undeniable that prior to the mailing of notice of dishonor, and without waiting for any action by Gullas,
the bank made use of the money standing in his account to make good for the treasury warrant. At this
point recall that Gullas was merely an indorser and had issued in good faith.

Negotiable Instruments: majority view as regards actual notice to indorser to become liable

As to a depositor who has funds sufficient to meet payment of a check drawn by him in favor of a third party,
it has been held that he has a right of action against the bank for its refusal to pay such a check in the absence
of notice to him that the bank has applied the funds so deposited in extinguishment of past due claims held
against him. The decision cited represents the minority doctrine, for on principle it would seem that notice
is not necessary to a maker because the right is based on the doctrine that the relationship is that of creditor
and debtor. However this may be, as to an indorser the situation is different, and notice should actually
have been given him in order that he might protect his interests.

Civil Law: Nominal Damages

We accordingly are of the opinion that the action of the bank was prejudicial to Gullas. But to follow up that
statement with others proving exact damages is not so easy. For instance, for alleged libelous articles the bank
would not be primarily liable. The same remark could be made relative to the loss of business which Gullas
claims but which could not be traced definitely to this occurrence. Also Gullas having eventually been
reimbursed lost little through the actual levy by the bank on his funds. On the other hand, it was not agreeable
for one to draw checks in all good faith, then, leave for Manila, and on return find that those checks had not
been cashed because of the action taken by the bank. That caused a disturbance in Gullas' finances, especially
with reference to his insurance, which was injurious to him. All facts and circumstances considered, we are of
the opinion that Gullas should be awarded nominal damages because of the premature action of the bank
against which Gullas had no means of protection, and have finally determined that the amount should be
P250.

! 11
 STATE BANK OF EAST MOLINE V. STANDAERT, ET AL.
355 Ill. App. 519, 82 N.E. 2d 393 1948 Justice Bristow
petitioners State Bank of East Moline
respondents Alfons Standaert and Lena Standaert
summary Alfons and Lena made and delivered a Promissory Note to Alois and Anna De Vos.
The note recited that it was secured by real estate mortgage. Alois and Anna sold the
note and the mortgage to the plaintiff bank. Note was not paid. Bank sued the makers
and the indorsees. During trial, the bank offered the testimony of its teller-bookkeeper
who said that it was unswerving custom of the bank to send to the parties, 10 days
prior to its maturity date. Anna maintains she did not receive any notice that the note
was dishonored. The Court held that there was no notice of dishonor. When a
negotiable instrument has been dishonored by non-payment, notice of dishonor must
be given to the indorser, otherwise he is discharged.

! 12
facts of the case
On February 28, 1920 defendants Alfons Standaert and Lena Standaert made and delivered a
promissory note to Alois De Vos and Anna De Vos. The note was secured by a real estate mortgage. It
was for the amount of $6,737.50 at 6% interest, due 5 years after date, and payable at the office of
plaintiff bank.Before maturity, the defendants Alois and Anna De Vos sold the note and mortgage to
the plaintiff bank.
The note was not paid at maturity on Feb 28, 1925. Hence, this action was filed.
At the trial, plaintiff bank alleged that a notice of dishonor was sent to the defendant indorsers
when the note was not paid.
Plaintiff bank offered the testimony of its teller-bookkeeper in 1925, Leota Baker. Baker is charged
with the duty of attending to maturity notes.
! Baker testified that it is a custom of the bank to send to the parties, 10 days prior to the
due date of the note, a notice describing the note and specifying its maturity date, that
during the 7 years of service to the bank, she dies not know of an instance where the
bank failed to give a notice of dishonor. However, she also testified that she did not
recall preparing or sending out the particular notice of dishonor to defendant indorsers.
! She also testified that probably it was one Emma Callewaert who mailed the notice of
dishonor since the post office was on her way home.
Defendant Anna De Vos argued that she should not be charged with the payment of the note on
the ground that she did not receive a notice of dishonor, therefore, she should be discharged. She
alleged that she had no knowledge that the note was not paid until this action was filed in 1932 or 7
years after the maturity of the note.
issue
W/N the plaintiff Bank gave the defendant indorser notice of dishonor (NO)

ratio
Plaintiff failed to establish, by direct or circumstantial evidence, that it mailed the notice of dishonor to defendant Anna
De Vos.
• The Negotiable Instruments Law provides that when a negotiable instrument has been dishonored by
non-payment, notice of dishonor must be given to the indorser, otherwise he is discharged. Such
dishonor may be given through mail, and where it is duly addressed and deposited in a post office, the
sender is deemed to have given due notice, notwithstanding any miscarriage in the mails.
• Under the NIL, plaintiff had a duty to establish the fact that notice of dishonor was mailed to the
defendant in order to impose liability on her for the payment of the note.
• In this case, there was no evidence that the notice was prepared, or even deposited in a place where it
would ordinarily be taken up by an employee charged with the duty of posting the bank’s mail.
• The only evidence tending to prove that a notice of dishonor was prepared and mailed to defendant
was the inference from Leota Baker’s self-serving declaration that she always did her duty and never
failed to send out a notice of dishonor.
• It was also established that Emma Callewaert was not in the employ of the bank on the due date of the
note.

! 13
 ARTERBURN v. WAKEFIELD
G.R. No. ###### 1949 SIMS
petitioners Branham Arterburn
respondents JH and HA Wakefield
summary Drawer of a check is being sued since the drawee bank refused to pay the payee. He
argues that he is discharged from any liability since no notice of non-payment was
given to him, citing Sections 89 and 185 of the Negotiable Instruments Law. Court
disagreed with him and cites Sections 186 and 114 of the NIL. Based on these
provisions, while indeed a check is a bill of exchange, it is only when the delay by the
holder for presentment for payment has caused loss to the drawer will the latter be
discharged for such amount. In other cases, no notice is required. The court treats the
drawer of a check as the principal debtor since in drawing a check it is expected that
he should’ve deposited the funds in his account to pay for it. Also, if he didn’t deposit
funds to pay the check, then he should expect that the bank would fail in paying a
check presented for payment.

facts of the case

- Arterburn drew a check for $1k payable to the order of JH and HA Wakefield, doing business under
the name Wakefeild business company. The check was dishonored by drawee bank when it was
presented for payment by the Wakefields. Hence, the latter filed a suit against Arterburn
- The trial court ruled for the Wakefields. Arterburn is now on appeal. His main argument is that the
petition did not aver that notice was given to him of the non-payment of the check when presented at
the bank; hence no cause of action was stated and therefore the pleadings do not support the judgment.

issue
Whether or not in an action on a check he petition must aver that the maker or drawer was given notice that it
was dishonored by the bank. NO

Ratio
- Arterburn argues that since a check is a bill of exchange3, 356.0894 requires a notice of dishonor must be
given to the drawer of a bill of exchange, otherwise he is discharged.
“356.089. Notice of dishonor. Except as otherwise provided in this chapter, when a negotiable
instrument has been dishonored by non-acceptance or non-payment, notice of dishonor must be given
to the drawer and to each indorser, and any drawer or indorser to whom such notice is not given is
discharged”
- While the 2 provisions do imply that conclusion, the Court held that the provisions of the NIL should
not be isolated from the others. While 356.185 provides that a check is a bill of exchange, it does so
qualififedly by saying “except as herein otherwise provided”. Court then calls the attention to 356.186
which reads5:
“Time of presenting check; effect of delay. A check must be presented for payment within a reasonable
time after its issue, or the drawer will be discharged from liability thereon to the extent of the loss
caused by the delay.”
- There is a distinction between a bill of exchange and a check
o When notice of dishonor is not given the drawer, he is released; On the other hand, when there
is delay in presenting a check for payment, the maker is only released to the extent of the loss
caused by the delay

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
3 356.185(same as Sec. 185 NIL) Check defined. A check is a bill of exchange drawn on a bank payable on demand. Except as herein

otherwise provided, the provisions of this chapter applicable to a bill of exchange payable on demand apply to a check
4 Same as Sec. 89 of NIL

5 Same as Sec. 186 of NIL

! 14
 oIt can be seen that legislature intended to place a drawer of a bill of exchange on a different
footing with a drawer of a check: the Court regards the drawer of a check as the principal
debtor and the check supports to be drawn upon a fund deposited to meet it
- Furthermore 356.1146 states that notice of dishonor is not required “where the drawer has no right to
expect or require the drawee or acceptor will honor the instrument”. It is common knowledge that
when a bank refuses to honor or pay a check in the vast majority of cases it is because the maker has
no sufficient funds on deposit to meet it or that he has countermanded payment. If he has no
sufficient funds in the bank, then he has no right to expect or require the bank to pay his check,
o Of course, when he should countermand payment, no notice is required.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
6 Same as Sec. 114 of NIL
! 15
 Simon v. People’s Bank & Trust Co.
116 N.J.L. 390, 184 Atl 793 1936 J. Bodine
petitioners Ruth Simon
respondents People’s Bank & Trust Company of Passaic, Hamilton Trust Company of Paterson
summary To whom notice (of dishonor) must be given; if given by agent.
Plaintiff Simon was the holder of a note payable at the People’s Bank (PBTC). She
gave said note to Hamilton for collection, and Hamilton, in the ordinary course of
business, sent the note to PBTC. The note was then dishonored, and PBTC
immediately sent notices of dishonor addressed to each party liable on the note
through Hamilton. Hamilton then forwarded the notices to plaintiff Simon alone.
She brought suit against PBTC and Hamilton, alleging negligence in not mailing the
notices to the maker and indorsers.
The Court held that PBTC and Hamilton were mere agents of plaintiff Simon for
collection. Thus, as per Sec. 94 of the NIL, they had fully performed their duty by
giving Simon, their principal, notice of dishonor, absent any special instruction to
also notify the maker and indorsers.

facts of the case

A certain Frucht indorsed a note (made by Robert H. Simon) to the plaintiff, Ruth Simon. The note was
payable at the People’s Bank & Trust Co. of Passaic (PBTC). Plaintiff Simon gave the note to the Hamilton
Trust Co. of Paterson for collection.
Hamilton then sent the note to the Federal Reserve Bank in the usual course of business, and the Federal
Reserve Bank forwarded it to PBTC. PBTC then duly presented the note for payment, but it was dishonored.
Notice of dishonor was mailed to the care of Hamilton and addressed to each party liable on the note.
Upon receiving these notices, Hamilton mailed them to plaintiff Simon.
Simon, failing to collect by suit against the maker and indorser, then brought this action against PBTC, its
cashier, and Hamilton, alleging negligence.

issues
(1) What was the role of Hamilton? It was merely an agent for the plaintiff, collecting payment on her
behalf.
(2) What was the role of PBTC? It was a sub-agent of Hamilton for effecting the collection.
(3) Had PBTC and Hamilton been negligent in mailing the notice of dishonor to Simon alone, instead of to
all the parties? NO. As agents, notice to the principal, i.e. the holder, Simon, was sufficient.

ratio
Hamilton took the note only for collection, and as such was a mere agent of plaintiff Simon. PBTC was thus
a sub-agent of Hamilton for effecting the collection.
PBTC’s duty was only to make a legal demand upon the promisor for payment, and upon non-payment,
give due notice of dishonor to Hamilton. To hold PBTC to a greater duty would be unreasonable, because it
knew nothing concerning the indorsers or their residences. Had Simon desired that PBTC notify the
indorser itself, she could have given it specific instructions to do so.
Hamilton likewise knew nothing of the indorsers or where they lived. Hence, its duty to Simon was
fully performed when it gave her timely notice of the dishonor of the note. Then, she herself could notify
the parties to be charged.
Sec. 94 of the NIL provides:
“Where the instrument has been dishonored in the hands of an agent, he may either himself give
notice to the parties liable thereon, or he may give notice to his principal; if he gives notice to his
principal, he must do so within the same time as if he were the holder, and the principal upon
the receipt of such notice has himself the same time for giving notice as if the agent had been an
independent holder.”

! 16
 The rationale for the rule is that the holder of a note who takes it to a bank for collection is familiar with
the financial responsibility of the maker and indorsers. Thus, she can easily disclose the addresses of those
to be charged, and request that they be notified in the event of default. Absent such specific instructions, the
bank needs only to promptly report the fact of default to the holder, its principal. The latter may then notify
those to be charged. The statute makes mailing of notice to the principal sufficient to relieve the agent.
In this case, having done just that, neither PBTC nor Hamilton was negligent.

! 17
 PEOPLE’S NATIONAL BANK OF YPSILANTI v. DICKS
258 Mich. 441; 242 NW 825 June 6, 1932 Potter
petitioners People’s National Bank of Ypsilanti
respondents Edward Dicks
summary Waiver was printed at the back of the promissory note before it was delivered. Bank
suing the indorser. Held: Indorser only bound by a waiver embodied in the note. A
waiver placed at the back thereof is not embodied in the body of the instrument.

facts of the case

Maker: Harry Ives
Indorser: Edward Dicks
Holder: Bank

Bank sued Ives and Dicks on a promissory note. The note was signed by Ives and Dicks. Opposite their
signatures and directly opposite Dicks’ name was the word ‘indorsed’ stamped thereon. Above their
signatures there was no guaranty of payment, no waiver of demand or notice of nonpayment or protest, and
no waiver of extension. Such waiver was on the back of the note.

The note was neve presented to Ives. There was no notice of dishonor to Dicks, nor was there protest of the
note.

issue
In what capacity did Dicks sign? Indorser.
Is Dicks liable? No.
ratio
Court noted: If Dicks is a joint maker of the note he is liable. If Dicks guaranteed the payment of the note he
is liable. If Dicks is an indorser and is bound by the printed waiver on the note he is liable. If he is a mere
indorser, not bound by the waiver printed on the note or by the guaranty he is not liable.

No question of implied waiver is here involved. The language of negotiable instruments should be clear. Technical construction of the negotiable
instruments law should not be favored. Forced and unnatural construction of a negotiable instrument should be avoided. Negotiable instruments
should not be adapted, by construction, to trap the unwary. They should not be held to bind one who did not intend to be bound, and who relies upon
the fact he is not bound. They should not be readily adaptable instruments of fraud. 2 Comp. Laws 1929, § 9312, was incorporated in the negotiable
instruments law to clear up the question whether an indorser before delivery was a joint maker or not.

Negotiable instruments law was obviously intended to change the previous rule that a waiver written or
printed on the back of a note at the time of its execution had the same force and effect as though embodied in
the instrument. It makes a distinction between a waiver embodied in the instrument itself and a waiver
upon the back thereof, above the signature of an indorser. It is therefore apparent that an indorser is bound
by a waiver that is embodied in the body of the instrument. It is also obvious that he is not bound in all
events by a waiver that is not so embodied in the body of the instrument, but placed on the back thereof.

The NIL attempted to adopt a definite, universal rule in reference to these matters, as follows: 'When the
waiver is embodied in the instrument itself it is binding upon all parties; but when it is written above the
signature of an indorser, it binds him only.' ‘Embodied in the instrument' means 'embodied in the original
contract,' and that detached words on the back of the instrument at the time it is issued are not embodied in
the contract expressed on the face of the instrument.
A waiver may be contained in the body of the instrument, or in an endorsement thereon. The contract
evidenced by a promissory note is expressed upon its face at the time it is issued, and a waiver printed on the
back of the note when it is issued is of no force and effect until there is an endorsement placed on the back
of the note, in such a manner as to adopt such waiver. When an endorsement is placed on the back of the
note, new parties become interested and new contract relations are created. The statute recognizes and
provides for these two classes of waivers -- those appearing on the face of the note, and those appearing on
! 18
the back of the note. If those on the back are embodied in the instrument so as to be the same as those on the
face, then there is but one class and there is no class to which the second clause of said section may be applied.

Waivers which appear on the face of the instrument are the only ones which can be considered as
embodied in the instrument, and that waivers on the back, placed thereon before the instrument was issued,
and not referred to on the face of the instrument, should no longer be given the same effect as waivers on the
face of the instrument, but should be considered in the class referred to in the second clause of the quoted
section.
It is clear that Dicks was an indorser. He is not bound by the printed guaranty of payment, or the waiver
on the note. Nothing indicates that he signed, accepted, or approved of this printing upon the instrument, and
there was no presentment, demand, or notice of dishonor was given defendant. He is therefore not bound.

! 19
 SIHI v. CA
G.R. No. 101163 Jan. 11, 1993 J. Bellosillo
petitioners State Investment House, Inc.
respondents CA and Nora Moulic
summary The drawer issued 2 post-dated checks (PDCs), which were subsequently negotiated to SIHI.
Later, the drawer withdrew her funds in the drawee bank, so by the time that the holder SIHI
presented the PDCs to drawee bank for payment, drawee bank dishonored the PDCs because
of insufficiency of funds. Holder thereafter claimed from the drawer, but the latter interposed
the defense of lack of notice of dishonor. SC ruled that the requirement of notice of dishonor
is not absolute. It is subject to exceptions under Sec. 114 of NIL. As applied, the drawer is
liable because she countermanded payment by withdrawing her account, which is one of the
exceptions in Sec. 114.

facts of the case

Negotiable Instrument: 2 post-dated checks Payee: Corazon Victoriano
Drawer: Nora Moulic Holder/ Indorsee: SIHI
Drawee: Equitable Bank

" Nora Moulic issued 2 post-dated checks (PDCs) amounting to P50K each to Corazon Victoriano as security
for pieces of jewelry to be sold on commission. Victoriano thereafter negotiated the PDCs to SIHI.

" Moulic failed to sell the pieces of jewelry, so she returned them to Victoriano before the maturity date of
the checks. However, the checks could no longer be retrieved since they had already been negotiated. To
protect herself, Moulic withdrew her funds from the drawee bank before the maturity dates of the 2 PDCs.

" As expected, when the holder SIHI presented the PDCs for payment, these were dishonored by the drawee
bank for insufficiency of funds. SIHI allegedly notified Moulic of the dishonor of the checks and requested
that it be paid in cash instead. Moulic, on the other hand, denied this and contended that SIHI cannot
recover because it failed to give notice of dishonor.

issue
WON the drawer Moulic is liable for the value of the checks notwithstanding the holder SIHI’s failure to give
notice of dishonor. YES, because she countermanded payment by withdrawing her account. This is one of
the exceptions found in Sec. 114 NIL.

ratio

1. The fact that SIHI failed to give notice of dishonor to the drawer is of no moment. The need for such
notice is not absolute; there are exceptions under Sec. 114 of NIL.

Under said law, notice of dishonor is not required to be given to the drawer in the following cases:
a. Where the drawer and the drawee are the same person;
b. When the drawee is a fictitious person or a person not having capacity to contract;
c. When the drawer is the person to whom the instrument is presented for payment:
d. Where the drawer has no right to expect or require that the drawee or acceptor will honor the
instrument;
e. Where the drawer had countermanded payment. (APPLICABLE IN THE CASE AT BAR)

! 20
2. This fell under exception (e). The drawer herself was responsible for the dishonor of her checks because
she withdrew her funds.

" Drawer’s actuations leave much to be desired. She did not retrieve the checks when she returned the
jewelry. She simply withdrew her funds from her drawee bank and transferred them to another to
protect herself. After withdrawing her funds, she could not have expected her checks to be honored.

" In other words, she was responsible for the dishonor of her checks, hence, there was no need to serve
her notice of dishonor, which is simply bringing to the knowledge of the drawer or indorser of the
instrument, either verbally or by writing, the fact that a specified instrument, upon proper proceedings
taken, has not been accepted or has not been paid, and that the party notified is expected to pay it.

" The drawing and negotiation of a check create an implied representation that funds or credit are
available for the payment of the instrument in the bank upon which it is drawn. Consequently, the
withdrawal of the money from the drawee bank to avoid liability on the checks cannot prejudice the
rights of a holder in due course.

! 21
 Bishop v Dexter
2 Conn. 419 1987 Swift, C.J.
summary Bishop was the last indorsee of the note drawn by Wittlesey in favor of Dexter. Bishop
argues that since the note was first indorsed by Dexter after it was due, there is no
need for any notice of dishonor to Dexter for Bishop to recover. Court held that such
indorsement after due date does not dispense with the requirement of notice of
dishonor. The indorsement of the bill or note after due is equivalent to drawing a
new bill payable at sight; and demand must be made by the indorsee of the drawer
of the bill, or maker of the note, and notice given to the indorser, as in cases of bills
payable in sight.

Payee/Indorser: Dexter 1st Indorsee: Converse

Drawer: Wittlesey 2nd Indorsee: Judd
3rd Indorsee: Bishop

facts of the case (super short lang talaga)

Dexter indorsed a negotiable note after it was due and had been put in suit to Converse, Converse then
indorsed it to Judd then Judd to Bishop.
Argument of Bishop:
1. When a note is indorsed after it fell due, the indorsee has a right to presume that there had been
prior demand and notice of dishonor when it fell due.
2. Putting the note into suit served as demand and notice, for he knew that the note would not be
paid.
Because of such, indorsee can go after the indorser since the drawer never paid the promissory note on due
date.
Defense: There was never a demand made against the drawer and no notice (of dishonor siguro) was ever
given to him (Dexter), and therefore Bishop cannot collect.

issue
WON an indorsement after the due date dispenses with the requirement of notice of dishonor. NO

ratio
Doctrine: The indorsement of the bill or note after due is equivalent to drawing a new bill payable at sight;
and demand must be made by the indorsee of the drawer of the bill, or maker of the note, and notice given
to the indorser, as in cases of bills payable in sight.

Argument on presumption of demand and notice

Court held that the argument of Bishop is repugnant to the principle laid under the doctrine above.
Allowing others to do so would lead to the practice of the grossest fraud for a first indorsee might neglect to
make demand and give notice.

Argument on suit being demand and notice

Court held that the act of indorsing such note to another ended the suit, as the property is now vested in
the indorsee. Such indorsee is now bound to proceed with such note, as if no suit was ever made.

Separate Opinions:
J. Hosmer: A bill may be negotiated after it became due. The indorsement of a note after being due is
equivalent to the act of drawing a bill payable at sight. This makes the indorsee the new drawer, who has the
same right to insist that there should be demand for the collection on the note.

! 22
 Binghampton v. FNB
1915 Green, J.
petitioners Binghampton Pharmacy et. al.
respondents First National Bank
summary Maker: Binghampton et.al, Payee: “ourselves”. Indorsed and discounted to a bank
(bank bought it at a discount because it is not mature yet). It states it is payable at said
bank. This instrument is very similar to a check, which is a bill of exchange. The
difference is that the maker is still primarily liable. Therefore, presentment is not
necessary to charge the maker of a note.

facts of the case

Binghampton along with Kilpatrick Bros. executed a note payable (PN?) to the order of “ourselves”,
indorsed and discounted at Chickasaw Bank & Trust Company. The note states it was due Dec. 29, 1912 and
payable at said bank.
Chickasaw Bank rediscounted the note at FNB. The latter was not able to present the check at maturity to
the former. The makers had sufficient credit at Chickasaw at the date of maturity. It was presented on Jan. 1 of
the next year. FNB was not paid.
FNB now goes after the makers. The makers interposed the defense that they were discharged from
liability because the note was not presented on the date of its maturity at the bank but a few days after.
Applicable law: sec 87 NIL
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.

issue
WON the makers were discharged from liability because the check was not presented at the bank on the
maturity date. NO

ratio

Sec. 87 puts upon the holder of a note payable at a bank the same duties as a holder of an ordinary check.
However the maker is not turned into a drawer by virtue of such provision.

Sec. 70 of the NIL provides: 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.

The maker is the person primarily liable on a PN. Presentment is not required to make him liable. The
obligation of the maker of a note is not a conditional promise to pay only at a special place, but it is a promise
to pay generally even though a place of payment is named.

The purpose of sec. 87 is to settle the issue on the right of the bank to pay such type of note (kasi hindi nga sila
ung maker). But it doesn’t turn the note into a check.

! 23
 ELLENBOGEN v. STATE BANK
119 Misc 711 N.Y. Supp. 278 1922
petitioners Ellenbogen
respondents State Bank
summary Respondent drew a check with the Polish National Bank. However the check was not
paid despite due presentment because the drawer did not have an account with the
drawee bank. The court held that notice of dishonor and presentment is dispensed
with when the drawer has no right to expect or require that the drawee or acceptor
will honor the instrument.

facts of the case

THE INSTRUMENT: State Bank made a draft ($1,650) in favor of the petitioner upon the Polish National
Bank. (Drawer: State Bank; Payee: Ellenbogen; Drawee: Polish National Bank in Lublin) It was alleged that the
check7 was duly presented to the drawee bank and that payment was duly demanded. However the bank
refused to pay because the respondent had no money on deposit in the bank to pay the check.
THE CASE: As a result of the non-payment of the drawee bank, the petitioner then filed an action to
recover the value of the check from State Bank. Trial court dismissed the complaint because it was not alleged
that the draft was protested. Petitioner then appealed.

issue
WON protest is necessary when the drawer did not have sufficient deposit with the drawee bank? NO.

ratio
Sec. 185 NIL provides that notice of dishonor is not required to be given to the drawer, if the drawer has
no right to expect or require that the drawee or acceptor will honor the instrument. The same rule applies to
presentment for payment. It is not required when the drawer has no right to expect or require that the drawee
or acceptor will pay the instrument.
As applied, since the drawer do not have an account with the drawee bank, it could not expect that the
latter will pay for the check.

Nor is protest required because it is applicable only for foreign bills of exchange. Furthermore this is
dispensed with by any circumstances which would dispense with notice of dishonor. (A/N: Meaning that if
notice of dishonor is dispensed with, protest is also not required)

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
7 A/N: Weird kasi sabi sa facts, draft daw tapos ngayon check naman.
! 24
 Tan Leonco v. Go Inqui
8 Phil 531 1907 Johnson, J.
petitioners Tan Leonco
respondents Go Inqui
summary Drawee refused to pay cheque because of drawer’s order (not to pay). Drawer alleged
that Tan Leonco (holder) never duly protested after presentment, therefore, he
(drawer) cannot be held liable.
CH: In as much as the defendant had himself ordered the drawee not to pay the
said bill of exchange, protest and notice of nonpayment under these conditions,
was unnecessary in order to render the drawer, or defendant in this case, liable.

facts of the case

Instrument: Cheque - Bill of Exchange
Drawer: J.C. Mercantile Company (represented by Go Inqui)
Drawee: Lim Uyco
Executed and delivered to Tan Leonco (Plaintiff)

Plaintiff left for China in 1987, before leaving, he turned over the management of his abaca (hemp)
plantation to Tan Tonguan. Tan Tonguan obtained P800 worth of fiber that he delivered to Respondent’s
warehouse in exchange for a cheque.
Upon returning from China, Tan Leonco duly presented the Cheque to Lim Uyco, who refused payment
because he had received instructions to that effect from the company.
Respondent’s argument: Bill of exchange was not protested after presentment, and that there is some
question of the right of the plaintiff to recover upon said bill without the same having been duly protested.

issue
WON protest is needed in this case in order to hold respondent/drawer liable? NO (exception to the rule on
protest).

ratio

In as much as the defendant had himself ordered the drawee not to pay the said bill of exchange, protest
and notice of nonpayment under these conditions, was unnecessary in order to render the drawer, or
defendant in this case, liable.

! 25