RAYMUNDO A. CRYSTAL, petitioner, vs.

COURT OF APPEALS and PELAGIA OCANG, PACITA, TEODULO, FELICISIMO, PABLO, LYDIA, DIOSCORA and RODRIGO, all
surnamed DE GRACIA, respondents.
G.R. No. L-35767 | June 18, 1976 | BARREDO, J.

FACTS:
The Supreme Court, in its decision of 25 February 1975, affirmed the decision of the Court of Appeals, holding that
Raymundo Crystal’s redemption of the property acquired by Pelagia Ocang, Pacita, Teodulo, Felicisimo, Pablo, Lydia,
Dioscoro and Rodrigo, all surnamed de Garcia, was invalid as the check which Crystal used in paying the redemption price
has been either dishonored or had become stale (Ergo, the value of the check was never realized). Crystal filed a motion
for reconsideration.

ISSUE:
Whether or not the conflicting circumstances of the check being dishonored and becoming stale affect the validity of the
redemption sale.

HELD:
Yes. 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. If indeed the questioned check was dishonored, the redemption was
null and void. If it had only become stale, it becomes imperative that the circumstances that caused its non-presentment
be determined, for if it was not due to the fault of the drawer, it would be unfair to deprive him of the rights he had
acquired as redemptioner. In the present case, it appears that there is a strong showing that the check was not dishonored,
although it became stale, and that Pelagia Ocang had actually been paid the full value thereof. The Supreme Court, thus,
reconsidered its decision and remanded the case to the trial court for further proceedings.
PHILIPPINE NATIONAL BANK, petitioner, vs.
BENITO SEETO, respondent.
G.R. No. L-4388 | August 13, 1952 | LABRADOR, J.

FACTS:
On March 13, 1948, Benito Seeto presented to the Philippine National Bank at Surigao a check in the amount of P5,000,
payable to cash or bearer, and drawn by one Gan Yek Kiao against the Cebu branch of the Philippine National Bank of
Communications. After consultation with the bank employees, Seeto made a general and unqualified endorsement of the
check, which was accepted by PNB’s agency, which paid Seeto the value of the check therefore. Upon being presented to
the drawee bank for payment, however, the check was dishonored for “insufficient funds.” PNB demanded refund from
Seeto. Seeto, however, refused, claiming that at the time of the negotiation of the check, the drawer had sufficient funds
in the drawee bank, and had not PNB delayed in forwarding the check until the drawer’s funds were exhausted, the same
would have been paid. PNB alleged that Seeto gave assurances that the drawer of the check had sufficient funds with the
bank, and that Seeto had made a general and unqualified indorsement thereon. As evidence, PNB presented two
witnesses at the trial, who testified that the check was cashed due to assurances given by Seeto and the promise that he
would refund the amount paid by PNB should the check be dishonored.

ISSUE:
Whether or not unreasonable delay in presentation of payment discharges the indorser from liabilities.

HELD:
No. Innumerable decisions have already been rendered in the state courts of the United States to the effect that although
the drawer of a check is discharged only to the extent of loss caused by unreasonable delay in presentment, an indorser
is wholly discharged thereby irrespective of any question of loss or injury.

The Court said that they have been 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.

There seems to be an intimation in the decision appealed from that inasmuch as the check was drawn payable elsewhere
than at the place of business of the drawer, it must be presented for acceptance or negotiable within a reasonable time,
and upon failure to do so the drawer and all indorsers thereof are discharged pursuant to Section 144 of the law. Against
this insinuation the petitioner argues that the application of sections 143 and 144 is not proper, and that it may not be
presumed that the check in question was not drawn and executed in Cebu, the residence or place of business of the
drawer. There is no evidence at all as to the place where the check was drawn. However, as the Court has already pointed
out above that neither Section 143 nor Section 144 is applicable. But the ruling that respondent was discharged upon the
dishonor of the check is based on Sections 84 and 186, the latter expressly requiring that a check must be presented for
payment within a reasonable time after issue.
VIOLET MCGUIRE SUMACAD, ET AL., Plaintiffs-Appellees, vs.
THE PROVINCE OF SAMAR, ET AL., Defendants; THE PHILIPPINE NATIONAL BANK, Defendant-Appellant.
G.R. No. L-8155 | October 23, 1956 | PARAS, J.

FACTS:
While the province of Samar was still occupied by Japanese military forces, a check was issued by said province to Paulino
M. Santos (then postmaster of Borongan) for the sum of P25,000, drawn against the Philippine National Bank Cebu Branch.
The payee negotiated the check with James McGuire, an American citizen and resident of the municipality of Borongan.
James McGuire presented the check to the municipal treasurer of Borongan for payment, but the latter (who merely noted
it) was not able or did not choose to pay the same.

James McGuire wrote letters to the Bureau of Posts seeking payment of the check, which were in turn referred to the
PNB. As of this date the province of Samar still had a deposit of P84,287.47 in the PNB. PNB requested James McGuire to
present the check to the provincial treasurer and the provincial auditor for certification. Before the check could be certified
by the authorities concerned as being in order and entitled to priority of payment, the province of Samar, withdraw the
amount of P83,504.07, leaving a balance of only P743.43.

In the meantime, James McGuire transferred his rights to the check to the herein Plaintiffs who, unable to cash it.

ISSUE:
Whether or not defendants are solidarily liable to pay the check.

HELD:
No. PNB implied acceptance of the check was assumed. The request of PNB of photostatic copies of the check and the
subsequent requirement of presentment of the check for presentation by James McGuire would be a mere empty gesture
if the bank did not mean to assume the obligation of paying the check. However, PNBs liability is merely subsidiary,
Province of Samar is the one primarily liable.
PHILIPPINE NATIONAL BANK, plaintiff-appellee, vs.
THE NATIONAL CITY BANK OF NEW YORK, and MOTOR SERVICE COMPANY, INC., defendants.
MOTOR SERVICE COMPANY, INC., appellant.
G.R. No. L-43596 | October 31, 1936 | RECTO, J.

FACTS:
On April 7 and 9, 1933, an unknown person or persons negotiated with Motor Service Company, Inc., two checks in
payment for automobile tires purchased from MSCI's stores, purporting to have been issued by the 'Pangasinan
Transportation Co., Inc. by J.L. Klar, Manager and Treasurer', against the Philippine National Bank (PNB) and in favor of
the International Auto Repair Shop, for P144.50 and P215.75. Said checks were indorsed by said unknown persons in the
manner indicated at the back thereof, the MSCI, believing at the time that the signatures of J.L. Klar, Manager and
Treasurer of Pantranco on both checks were genuine. The checks were then indorsed for deposit by MSCI at the National
City Bank of New York and the former was accordingly credited with the amounts thereof, or P144.50 and P215.75. On
April 8 and 10, 1933, the said checks were cleared at the clearing house and PNB credited the National City Bank for the
amounts thereof, believing at the time that the signatures of the drawer were genuine, that the payee is an existing entity
and the endorsements at the bank thereof regular and genuine. The PNB then found out that the purported signatures of
J.L. Klar, as Manager and Treasurer of Pantranco were forged when so informed by the said Company, and it accordingly
demanded from the National City Bank and MSCI and the reimbursement of the amounts for which it credited the National
City Bank at the clearing house and for which the latter credited MSCI, but MSCI and National City Bank refused, and
continue to refuse, to make such reimbursements. Pantranco objected to have the proceeds of said check deducted from
their deposit. PNB filed the case in the municipal court of Manila against National City Bank and MSCI. Upon PNB's motion,
the case was dismissed before trial as to the National City Bank. A decision was thereafter rendered giving PNB judgment
for the total amount of P360.25, with interest and costs. From this decision MSCI appealed.

ISSUE:
Whether or not the payment of the checks in question made by the drawee bank constitutes an "acceptance", and,
consequently, the case should be governed by the provisions of section 62 of the Negotiable Instruments Law.

HELD:
No. A check is a bill of exchange payable on demand and only the rules governing bills of exchange payable on demand
are applicable to it, according to section 185 of the Negotiable Instruments Law. In view of the fact that acceptance is a
step unnecessary in so far as bills of exchange payable on demand are concerned, it follows that the provisions relative to
"acceptance" are without application to checks. Acceptance implies, in effect, subsequent negotiation of the instrument,
which is not true in case of the payment of a check because from the moment a check is paid it is withdrawn from
circulation. The warranty established by section 62, is in favor of holders of the instrument after its acceptance. When the
drawee bank cashes or pays a check, the cycle of negotiation is terminated, and it is illogical thereafter to speak of
subsequent holders who can invoke the warranty provided in section 62 against the drawee. Moreover, according to
section 191, "acceptance" means "an acceptance completed by delivery or notification" and this concept is entirely
incompatible with payment, because when payment is made the check is retained by the bank, and there is no such thing
as delivery or notification to the party receiving the payment. There can be no such thing as "acceptance" in the ordinary
sense of the term. A check being payable immediately and on demand, the bank can fulfill its duty to the depositor only
by paying the amount demanded. The holder has no right to demand from the bank anything but payment of the check,
and the bank has no right, as against the drawer, to do anything but pay it. A check is not an instrument which in the
ordinary course of business calls for acceptance. The holder can never claim acceptance as his legal right. He can present
for payment, and only for payment.