maturity date, but PN did not show up. PN lost his right to recover the interest due subsequent to the maturity of the note and the costs of collection. (2000 Bar Question) Q: What are the requisites for a sufficient PP? A: 1. Made by the holder, or his agent 2. At a reasonable hour on a business day 3. At a proper place
4. PP was made to the person primarily liable, or if he is absent or inaccessible, to any person found at the place where the presentment is made (Sec. 72)
Note: Where the person/s primarily liable is/are: 1. Dead – payment must be made to his
personal representative (Sec. 76)
2. Liable as partners and no place of payment specified – payment may be made to any of them though there has been a dissolution of the firm (Sec. 77) 3. Several persons, not partners, and no
place of payment is specified – payment must be made to all of them (Sec. 78)
Q: When must presentment for payment be made? A: INSTRUMENT TIME FOR PRESENTMENT Payable at a fixed or determinable future time GR: On the day it falls due. (Sec. 85)
XPN: If the due date falls on a Saturday, presentment must be made on the next Monday.
Note: If presentment for payment is made before maturity; it will not result to a discharge of the instrument (Sec. 50).
Promissory note payable on demand
Within a reasonable time after its issue.
Bill of exchange payable on demand
Within a reasonable time after the last negotiation thereof (Sec.71).
Note: “Last negotiation” means the last transfer for value. Subsequent transfers between banks for purposes of collection are not negotiations within Sec. 71.
Note: Reasonable time means not more than 6 months from the date of issue. Beyond said period
the check becomes stale and valueless and thus, should not be paid.
Q: Is the bank liable to the payee for depositing and encashing the crossed checks to an unauthorized person?
A: Yes. The effects of crossing a check relate to
the mode of its presentment for payment. Under Sec. 72 of the NIL, presentment for payment, to be sufficient, must be made by the holder or by some person authorized to receive on his behalf. Who the holder or authorized person depends on the instruction stated on the face of the check. The checks here had been crossed and issued “for payee’s account only.” This only signifies that the drawers had intended the same for deposit only by the person indicated (Associated Bank v. CA,
G.R. No. 89802, May 7, 1992).
Q: What is the order of preference with regard to the place of presentment?
A:
1. Specified place in the instrument 2. Address of the person to make the
payment if given in the instrument 3. Usual place of business or residence of
the person to make the payment 4. Wherever he can be found; or
5. At his Last known place of business or residence (Sec. 73)
Q: How must presentment be made where the instrument is payable at a bank?
A: Must be made during banking hours, unless
the person to make payment has no funds there to meet it at any time during the day, in which case presentment at any hour before the bank is closed on that day is sufficient. (Sec. 75) B. PARTIES TO WHOM PRESENTMENT FOR PAYMENT SHOULD BE MADE
Q: Who are the parties to whom presentment for payment should be made?
A: Presentment for payment must be made the
primary party – to the (1) maker in case of a promissory note, or to the (2) acceptor in case of an accepted bill. If the bill of exchange or check is payable on demand, the presentment must be made to the drawee although he is not liable on the bill.
Note: If the person primarily liable is absent or inaccessible, then presentment must be made to any
person of sufficient discretion at the proper place of presentment. C. DISPENSATION WITH PRESENTMENT OF PAYMENT
Q: What is the effect when presentment is not made?
A: Drawer and the indorsers are discharged from
their secondary liability unless such presentment is excused.
Q: When is the delay in making presentment excused?
A:
3. When caused by circumstances beyond the control of the holder; and
4. Not imputable to his default, misconduct, or negligence (Sec. 81).
Note: Only the delay in presentment is excused and not the presentment itself. Hence, as soon as the cause of delay ceases to operate, presentment must be made with reasonable diligence (Sec. 81).
D. DISHONOR BY NON‐PAYMENT
Q: When is an instrument dishonored by non‐ payment?
A:
1. Non‐payment upon due presentation. Happens when:
a. The instrument is duly presented for payment to party primarily liable;&
b. It is either refused or cannot be obtained.
2. Non‐payment without presentation. Happens when:
c. Presentment is excused d. the instrument is overdue e. it is unpaid
Q: What is the effect of dishonor by non‐ payment?
A: As to the holder, after an instrument has been
dishonored by non‐payment, the person secondarily liable becomes the principal debtors and he need not proceed against the person primarily liable. XI. NOTICE OF DISHONOR Q: What is notice of dishonor? A: Given by the holder to the parties secondarily
liable, drawer and each indorser, that the instrument was dishonored by non‐payment or non‐acceptance by the drawee/maker.
Note: Persons primarily liable need not be given notice of dishonor because they are the ones who dishonored the instrument. Q: What are the purposes for requiring notice of dishonor? A: 1. To inform parties secondarily liable that the maker or acceptor has failed to meet his engagement.
2. To advise them that they are required to make payment. Q: When is a PN considered dishonored? A: 1. If not accepted 2. Not paid when presented; or
3. Where presentment is excused, instrument is overdue and unpaid. (Sec.
83)
Q: What is the liability of person secondarily liable when instrument dishonored?
A: After the necessary proceedings for dishonor
had been duly taken, an immediate right of recourse to all parties secondarily liable thereon accrues to the holder. (Sec. 84) A. PARTIES TO BE NOTIFIED Q: To whom must notice be given? A: Notice of dishonor should be given to: 1. The drawer; or 2. His agent (Sec. 97)
3. Where party is dead – to a personal representative or sent to the last residence or last place of business of the deceased (Sec. 98)
4. When the parties to be notified are
partners – notice to any one partner
though there has been a dissolution