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THE INTERNATIONAL CORPORATE BANK V. SPOUSES

GUECO

351 SCRA 516

FACTS:Gueco spouses obtained a loan from ICB (now Union Bank) to purchase a car. In consideration thereof, the debtors executed PNs, anda chattel mortgage was made over the car. As the usual story goes, the spouses defaulted in payment of their obligations anddespite the lowering of the amount to be paid, they still failed to pay. Thereafter, they tendered a managers check in favor ofthe bank. Nonetheless, the car was still detained for the spouses refused to sign the joint motion to dismiss. The bank averred thatthe joint motion to dismiss is part of standard office procedure to preclude the filing of other claims. Because of this, thespouses filed an action for damages against the bank. And by the time the case was instituted, the check had become stale in the hands ofthe bank.

HELD:The main issue though unrelated to Negotiable Instruments Law in this case was whether or not the signing of the joint motion to dismiss apart of the compromise agreement between the spouses and the bank. The answer is no, it is not a part of the compromise agreement

entered by the parties. And thus, the signing is dispensible in releasing the car to the spouses. And on the ancillary issue of the case, whichis the relevant issue for the subject, whether or not the spouses should replace the check they paid to the bank after it became stale, theanswer is yes. It appeared that the check has not been encashed. The delivery of the managers check did not constitute payment. Theoriginal obligation to pay still exists. Indeed, the circumstances that caused the non-presentment of the check should be considered todetermine who should bear the loss. In this case, ICB held on the check and refused to encash the same because of the controversy

surrounding the signing of the joint motion to dismiss. There is no bad faithor negligence on the part of ICB.

A stale check is one which has not been presented for payment within a reasonable time after its issue. It is valueless and, therefore,should not be paid. A check should be presented for payment within a reasonable time after its issue. Here, what is involved is amanagers check, which isessentially a banks own check and may be t reated as a PN with the bank as a maker. Even assuming that presentment is needed, failure topresent for payment within a reasonable time will result to the discharge of the drawer only to the extent of the loss caused by thedelaybut here there isno loss sustained. Still, such failure to present on time does not wipe out liability.

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.

Lao vs. CA

GR 119178, 20 June 1997

Third Division, Panganiban (J)

Facts: Lim Lim Lao was a junior officer of Premier Investment House in its Binondo branch.

She was authorized to sign checks for and in behalf of the corporation. In the course of

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business, she met Fr. Artelijo Palijo, provincial treasurer of the Society of the Divine Word.

Fr. Palijo was authorized to invest donations of the society and had been investing the

societys money with Premiere. Fr. Palijo was issued checks in payment of interest for the

societys investments. The checks were dishonored for insufficiency of funds. Fr. Palijo was

only able to acquire P5,000 for his efforts in demanding the payment of the checks.

Premiere, subsequently, was placed under receivership. Fr. Palijo filed a suit against Lim Lao

and his co-signatory, Teodulo Asprec, head of operations for violation of BP 22.

Issue: Whether an employee who, as part of her regular duties, signs blank corporate

check, be held for violation of BP22.

Held: The checks co-signed by Lim Lao were signed in advance and in blank, delivered to

the head of operations, who subsequently filled in the name of he payee, the amounts and

corresponding dates of maturity; this procedure followed in keeping with her duties as a

junior officer. Though BP 22 provides the presumption that a drawer is knowledgeable of the

fact of insufficiency of funds, such presumption may be debunked by contrary evidence.Herein, Lim Lao does not have the power, duty or responsibility to monitor and assess the

balances against the issuance, nor to make sure that the checks were funded. Such

responsibility devolved upon the corporations Treasury Department in Cubao, Quezon City.

Furthermore, no notice of dishonor was actually sent or received by Lim Lao to support the

prima facie evidence of knowledge of insufficient funds. She was thus acquitted.