Far East Realty Investment Inc. vs. Court of Appeals
No. L-36549. October 5, 1988
Private Respondents Tat, Chee and An asked petitioner Far East Realty Investment Inc. to extend an accommodation loan in the sum of Php 4500 which they needed in their business.
They promised to pay, jointly and severally, in one month time; with 14% payment of interest and they delivered China Banking Corporation Check No. VN-915564, dated September 13, 1960, for P4,500.00, drawn by Dy Hian Tat, and signed by them at the back of said check.
In 1964, the check was presented for payment to Chinabank but the check bounced and was not cashed by said bank for the reason that the current account of the drawer had already been closed.
Far East demanded from private respondents the payment but the latter failed and refused to pay even after repeated demands.
One of the argument of the private respondents is that petitioner not being a holder of the check for value, considering that this check in question was dated September 13, 1960 and deposited only for payment on March 5, 1964, this unreasonable delay in presentment wholly discharged not only the endorser but also the drawer.
The City Court of Manila ruled in favor of Far East.
CFI Manila affirmed the decision of the city court.
CA reversed and decided in favor of respondents. The court found that the questioned check was not given as collateral to guarantee a loan secured by the respondents who allegedly came as a group to the Far East, but passed through other hands before reaching Far East and the said check was not presented within a reasonable time.
W/N presentment for payment and notice of dishonor of the questioned check were made within reasonable time
No, the presentment and notice of dishonor were not made within a reasonable time. Reasonable time has been defined as so much time as is necessary under the circumstances for a reasonable prudent and diligent man to do, conveniently, what the contract or duty requires should be done, having regard for the rights and loss of the party.
The check was issued on Sept. 13, 1960 but was presented to the drawee bank only on March 5, 1964, and dishonored on the same date. After the dishonor, a formal notice of dishonor was made by the petitioner through a letter April 27, 1968. Far East failed to exercise prudence and diligence on what he ought to do as required by law. Far East failed to show any justification for the unreasonable delay.
Where the instrument is not payable on demand, presentment must be made on the day it falls due. Where it is payable on demand, presentment must be made within a reasonable time after issue, except that in the case of a bill of exchange, presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof. (Section 71, Negotiable Instruments Law).