NEGOTIABLE INSTRUMENTS NOTES

BASED ON AGBAYANIS BOOK AND ATTY. MERCADOS LECTURES

Page 99 of 190


BY: MA. ANGELA LEONOR C. AGUINALDO
ATENEO LAW 2D BATCH 2010
TIME FOR MAKING PRESENTMENT
At a reasonable hour on a business day

CASE DIGESTS: SECTION 72

135 STATE INVESTMENT HOUSE V. IAC
175 SCRA 310

FACTS:
New Sikatuna requested for a loan from Spouses Chua. Latter issued post-
dated crossed checks in favor of former. Thereafter, Sikatuna sold checks
to SIHI which upon deposit, checks were dishonored. The trial court
decided the case in favor of SIHI.

HELD:
Jurisprudence provides the following effects of crossing a check:
1. The check may not be encashed but only deposited in the bank
2. The check may be negotiated only onceto one who has an
account with a bank
3. The act of crossing the check serves the warning to the holder
that the check has been issued for a definite purpose so that he
must inquire if he has received the check pursuant to that
purpose, otherwise, he is not a holder in due course.

The checks in issue were crossed generally and issued payable to New
Sikatuna Wood which could only mean that the drawer has intended the
same for deposit only by the rightful person. Apparently, it was not the
payee who presented the same for payment and therefore, there was no
proper presentment and the liability didn't attach to the drawer. Thus, in
the absence of due presentment, the drawer didn't become liable.
Consequently, no right of recourse is available to petitioner against the
drawer of the subject checks considering that the petitioner is the proper
party authorized to make presentment of the checks in question.

Nonetheless, the holder could still collect from New Sikatuna if the latter
doesn't have a valid excuse from refusing payment.

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. (ORDER OF PREFERENCE)

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.

NECESSITY OF EXHIBITION OF INSTRUMENT
Presentment includes not only demand for payment but also the
exhibition of the instrument
Purpose is to enable the debtor to determine the genuineness of the
instrument and the right of the holder to receive payment and to
enable him to retain possession upon payment

A DEMAND BY TELEPHONE IS INSUFFICIENT

WHEN EXHIBITION EXCUSED
1. When the debtor doesnt demand to see the instrument but
refuses payment on some other grounds
2. When the instrument is lost or destroyed

CASE DIGESTS: SECTION 74

136 ANSALDO V. CA
177 SCRA 8

FACTS:
TFC issued promissory notes in favor of PCIB. At about the same time,
TFC extended loans to Ansaldo and Reyes. These loans were evidenced by
promissory notes, each waiving demand, presentment, protest, and notice
of protest and non-payment. TFC then paid part of its obligation with
PCIB. To pay for its outstanding balance, it endorsed the notes issued by
Ansaldo and Reyes. Claiming that the notes have matured without
payment by Ansaldo and Reyes, the bank instituted actions against them.