Myline Cordial

Far East Realty Investment Inc. vs. The Honorable Court of Appeals, Dy Hian Tat, Siy Chee and Gaw Suy An
G.R. No. L-36549, October 5, 1988
166 SCRA 256

FACTS: On September 13, 1960, the private respondents, because of business needs, applied for an accommodation loan in the amount of Php4,500.00  with petitioner Far East Realty Investment Inc. They promised to pay jointly and severally, in one month time and delivered to petitioner a check dated September 13, 1960, for P4,500.00, drawn by Dy Hian Tat, and signed by them at the back. They assured the petitioner that they would redeem the said check by paying in cash the said amount after a month from September 13, 1960, or that the said check could be presented for payment on or after a month from the date indicated on the check.

The accommodation loan was extended to the respondents, however, on March 5, 1964, when the check was presented for payment to the the China Banking Corporation, said check bounced because the current account of the drawer had already been closed. Demand for payment failed so the petitioner filed an action for the collection and payment of P4,500.00 representing the face value of the unpaid and dishonored check.

ISSUE: Whether or not presentment for payment and notice of dishonor of the questioned check were made within reasonable time.

RULING: The Court ruled that, in this case, presentment and notice of dishonor were not made within a reasonable time. The check was issued on September 13, 1960, but was presented to the drawee bank only on March 5, 1964, and dishonored on the same date. After dishonor by the drawee bank, a formal notice of dishonor was made by the petitioner through a letter dated April 27, 1968. The petitioner failed to exercise prudence and diligence on what he ought to do as required by law. Likewise, it failed to show any justification for the unreasonable delay.

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 a regard for the rights, and possibility of loss, if any, to the other party (Citizens’ Bank Bldg. v. L & E. Wertheirmer 189 S.W. 361, 362, 126 Ark, 38, Ann. Cas. 1917 E, 520).

NOTES:

Where an instrument is payable on demand, presentment must be made within a reasonable time after issue; Reasonable time depends upon the peculiar facts and circumstances in each case. – 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).

Notice may be given as soon as the instrument is dishonored; and unless delay is excused must be given within the time fixed by the law (Section 102, Negotiable Instruments Law).

No hard and fast demarcation line can be drawn between what may be considered as a reasonable or an unreasonable time, because “reasonable time” depends upon the peculiar facts and circumstances in each case (Tolentino, Commentaries and Jurisprudence on Commercial Laws of the Philippines, Vol. I, Eighth Edition, p. 327).