f.

Date of presentment of checks

Sec. 185. Checks defined.--A check is a bill of exchange drawn on a bank payable on demand. Except as herein otherwise provided, the provisions of this Act applicable to a bill of exchange payable on demand apply to a check. 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. Check is intended for immediate use Unlike in ordinary bills of exchange, the transfer of a check to successive holders DOES NOT EXTEND the time for presentment (See Sec. 186) If no such loss is shown by the drawer, he remains liable despite the unreasonable delay o Usual cause: Subsequent insolvency of the drawee bank o In harmony with NCC 1249 - payment conditioned on its being encashed, EXCEPT where through the fault of the creditor, the instrument is impaired Would an INDORSER be fully discharged in case of unreasonable delay [because the provisions only talk of DRAWER]? o SC, in PNB v. Seeto: Yes, regardless of any loss suffered by him REASONABLE TIME - reckoned from the LAST NEGOTIATION, not from date of issue o Despite the lapse of reasonable time, the check remains effective as an order of the drawer to the drawee bank o Banks however usually refuse to honor a check which has remained outstanding for more than 6 months (stale check) Holder usually required to get a new check from the drawer, or drawee bank will pay it only after consulting the drawer

Fick v. Jones Presentment, demand, and notice of dishonor are essential pre-requisites to an action against the drawer on a check. Gordon v. Levine Where the drawer, drawee and 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. Its 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. Morrison v. McCartney 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 omission to demand payment at an earlier date, of the bank or banker on whom the check is drawn. PNB v. Seeto Presentment for acceptance of a CHECK is not required. Although the DRAWER of a check is discharged only to the extent of the loss caused by unreasonable delay in presentment, an INDORSER is wholly discharged thereby, irrespective of any question of loss or injury. Supposed assurances of refund in case of dishonor of the check are precisely the ordinary obligations of an indorser, and these obligations are considered discharged by an unreasonable delay in the presentation of the check for payment. There was no express obligation assumed by the indorser in this case that the drawer would always have funds, or that he [indorser] would refund the amount of the check even if there was delay in its presentation. Campos notes that the Court failed to make reference to Sections 66 (due presentment is a condition to the indorser's liability) and 77 (presentment for payment of a demand bill is sufficient if made within a reasonable time from its last negotiation). Crystal v. CA This case involved a redemption of property. In the end, it was remanded to determine WON the check became stale in the hands of the creditor. If the check had been DISHONORED -- redemption was NULL and VOID

If the check only became STALE -- need to determine circumstances which caused check's nonpresentment o If not due to the fault of the petitioner, it would be unfair to deprive him of the rights he had acquired as a redemptioner (if the value of the check has been received or realized by the party concerned) When delay in presentment excused

g.

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 the delay ceases to operate, presentment must be made with reasonable diligence. h. Manner of presentment

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. i. Requirement of exhibition is inseparable from the requirement of surrender of the instrument to the payor o To be certain that the one demanding payment is the holder o To guard against a lawsuit by a subsequent holder HOWEVER, when the maker has EXPRESSLY WAIVED demand, presentment, protest, and notice of protest and non-payment, the requirement of exhibition is UNNECESSARY Demand by TELEPHONE is NOT sufficient to charge indorser Personal demand WITHOUT INSTRUMENT is NOT due presentment o BUT if refused on some other grounds, there is a WAIVER of the right to an exhibition of the note Instrument is LOST or DESTROYED - holder is EXCUSED from exhibiting, but he may recover only if he executes a sufficient BOND What constitutes sufficient presentment

Sec. 72. What constitutes 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 a 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. (1) By whom Party in wrongful possession (such as a possessor of an instrument with a FORGED indorsement) o Not a holder o Not a proper party to make presentment Party in rightful possession, although not a holder, but with authority to make due presentment

Crossed checks Crossing gives some measure of protection to the drawer and to the drawee bank Negotiability of a check is NOT affected by its being crossed If the name of the bank appears between the parallel lines o Check is SPECIALLY crossed o Payment should be made only if presented BY the named bank If no name appears between the parallel lines o Check is GENERALLY crossed o Payment should be made only upon presentment BY some bank o Presentment by anyone else would not be proper, and payment by the drawee bank to such other person would be wrongful FOR PAYEE'S ACCOUNT ONLY o Bank in which it is deposited cannot credit it to anyone else's account but the payee's

Chan Wan v. Tan Kim In this case, the court said that the indorsee was correctly held to be NOT a HIDC, since he knew that the checks had already been dishonored when he took them. If it were true that the checks had been issued in payment for shoes that were never made and delivered, the drawer would have a good defense as against a holder who is not a holder in due course. Campos notes that a check, on its face, normally has all the requisites of negotiability, and the addition of the words "non-negotiable" should not change its character as a negotiable instrument. Associated bank v. CA The effects of crossing a check Check may not be encashed but only deposited in the bank It may be negotiated only once--to one who has an account with the bank The act of crossing a check serves as a 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 The effects of crossing a check relate to the mode of its presentment for payment The position of a bank taking the check on the forged or unauthorized indorsement is the same as if it had taken the check and collected without indorsement at all To simplify proceedings, the payee of the illegally encashed checks should be allowed to recover directly from the bank responsible for such encashment, regardless of WON the checks were actually delivered to the payee (2) Time of presentment Sec. 72. [] Presentment for payment, to be sufficient, must be made -b. At a reasonable hour on a business day; 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 any time during the day, in which case presentment at any hour before the bank is closed on that day is sufficient.

Where presented BEFORE or AFTER banking hours Presentment INEFFECTIVE if payment is refused by bank Where maker has NO FUNDS on the date of maturity Even if presentment was made after banking hours but during office hours of the same day, SUFFICIENT to charge secondary parties Demand earlier in the day is PREMATURE (since person to make payment has until the close of banking hours to pay it)

(3) Place of presentment 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 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.

Presentment made at a place not authorized is NOT due presentment; not sufficient to charge indorsers

(4) To whom presentment must be made Sec. 72 (d). To the person primarily liable on the instrument, or if he absent or inaccessible, to any person found at the place where the presentment is made. 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. j. What constitutes dishonor by non-payment

Sec. 83. When instrument dishonored by non-payment.--The instrument is dishonored by non-payment when: a. If 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. k. Effect of dishonor by non-payment

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.

12. a.

This immediate right of recourse is further conditioned upon the giving of due notice An indorser whose liability has become fixed by demand and notice, is, as to the holder, a principal debtor Notice of dishonor When necessary

Sec. 89. To whom notice of dishonor must be given. --Except as herein otherwise provided, 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.

Notice of dishonor - bringing, either verbally or in writing, to the knowledge of the drawer or indorser the fact that a specified negotiable instrument, upon proper proceedings taken, has not been accepted, or has not been paid, and that the party notified is expected to pay it Holder is enforcing his right against them under their contract to pay should the instrument not be paid or accepted at maturity Indorser's knowledge that the maker was in default on a note does not dispense with notice of dishonor, and failure to notify the indorser discharges his obligation Situations Primary party is dead Presentment is excused because no administrator has been appointed Notice of dishonor must be given if the instrument is OVERDUE and UNPAID Accommodation indorsers Entitled to notice of dishonor Joint maker Not an indorser Primarily liable, so not entitled to notice of dishonor Re: Acceleration clause No acceleration clause - failure to notify indorser of the non-payment of previous installments does not affect liability for later installments; each installment is considered a SEPARATE note Acceleration clause optional on holder - holder has a reasonable time for the exercise of the option; bringing of an ACTION is a valid exercise thereof, and is also a notice of dishonor Automatic acceleration clause - notice of dishonor must be given at once; not sufficient to give it upon commencement of action

Gullas v. PNB Notice of dishonor is necessary in order to charge an indorser and that the right of action against him does not accrue until the notice is given

b.

Form and contents of notice

Sec. 95. When notice sufficient.--A written notice need not be signed and an insufficient written notice may be supplemented and validated by verbal communication. A misdescription of the instrument does not vitiate the notice unless the party to whom the notice is given is in fact misled thereby. Sec. 96. Form of notice.--The notice may be in writing or merely oral, and may be given in any terms which sufficiently identify the instrument, and indicate that it has been dishonored by non-acceptance or non-payment. It may in all cases be given by delivering it personally or through the mails.

c.

The notice must be accompanied by language which will inform the party addressed that the instrument had been duly presented. General language however will be sufficient. Failure to state the date of the making and maturity of the note, and the name of the payee does not invalidate the notice. Time within which notice must be given

Sec. 102. Time within which notice must be given. - Notice may be given as soon as the instrument is dishonored and, unless delay is excused as hereinafter provided, must be given within the time fixed by this Act. Sec. 103. Where parties reside in same place. - Where the person giving and the person to receive notice reside in the same place, notice must be given within the following times: a. If given at the place of business of the person to receive notice, it must be given before the close of business hours on the day following. b. If given at his residence, it must be given before the usual hours of rest on the day following. c. If sent by mail, it must be deposited in the post office in time to reach him in usual course on the day following. Sec. 104. Where parties reside in different places. - Where the person giving and the person to receive notice reside in different places, the notice must be given within the following times: a. If sent by mail, it must be deposited in the post office in time to go by mail the day following the day of dishonor, or if there be no mail at a convenient hour on last day, by the next mail thereafter. b. If given otherwise than through the post office, then within the time that notice would have been received in due course of mail, if it had been deposited in the post office within the time specified in the last subdivision. Sec. 105. When sender deemed to have given due notice. - Where notice of dishonor is duly addressed and deposited in the post office, the sender is deemed to have given due notice, notwithstanding any miscarriage in the mails. Sec. 106. Deposit in post office; what constitutes. - Notice is deemed to have been deposited in the post-office when deposited in any branch post office or in any letter box under the control of the post-office department. Sec. 107. Notice to subsequent party; time of. - Where a party receives notice of dishonor, he has, after the receipt of such notice, the same time for giving notice to antecedent parties that the holder has after the dishonor. Sec. 113. Delay in giving notice; how excused. - Delay in giving notice of dishonor 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, notice must be given with reasonable diligence.

These provisions apply to all cases of dishonor--WON by non-payment or non-acceptance Notice of dishonor by non-payment before maturity is PREMATURE and ineffective If a notice is not given within the time fixed, the notice is INOPERATIVE and the secondary party so notified is DISCHARGED Should a notice be given on a Sunday or a holiday, it is sufficient Effect of delay in giving notice of dishonor of a check on the liability of the drawer Drawer is discharged No distinction between the drawer of a check and the drawer of an ordinary bill The time within which notice must be given or sent is fixed by the location of the place to which he chooses to send the notice Although non-receipt of a duly mailed notice does not discharge an indorser, evidence of such non-receipt is admissible on the question of WON the notice was actually mailed

Each party who receives notice is given the same period of time within which to notify prior indorsers that the last holder had to give notice to those indorsers notified by him

State Bank of East Moline v. Standaert To charge an indorser with the payment of a note, the plaintiff must establish that the notice of dishonor was addressed and actually mailed In this case, the evidence merely consisted of stating the custom of the bank of notifying indorsers. There must be some evidence on the part of the person whose general practice it was to post the mail that the custom was complied with on the date in question.