Title
Far East Realty Investment, Inc. vs. Court of Appeals
Case
G.R. No. L-36549
Decision Date
Oct 5, 1988
Petitioner sued over a dishonored check issued in 1960, presented for payment in 1964. Supreme Court ruled unreasonable delay in presentment discharged respondents' liability under Negotiable Instruments Law.

Case Digest (G.R. No. L-36549)
Expanded Legal Reasoning Model

Facts:

  • The Transaction and Alleged Loan
    • The petitioner, Far East Realty Investment, Inc., filed a complaint on May 9, 1968, with the City Court of Manila seeking the collection of P4,500.00, plus interest at 14% per annum, and attorney’s fees.
    • The complaint alleged that on September 13, 1960:
      • The private respondents approached the petitioner at its office in Manila asking for an accommodation loan of P4,500.00.
      • It was agreed that the respondents would pay the petitioner's amount, plus interest, under the condition that a check (CBC Check No. VN-915564, drawn by Dy Hian Tat) would serve as security.
      • The check, issued on the same day, was endorsed by the respondents, with assurances that after one month it would be either redeemed by cash or presented for payment by the drawee bank.
    • The petitioner delivered the P4,500.00 loan amount to the respondents under the agreed conditions.
  • Events Following the Transaction
    • The check was presented for payment:
      • On March 5, 1964, the check was presented to the China Banking Corporation.
      • The bank refused to honor it because the drawer’s current account had been closed.
    • Subsequent actions:
      • The petitioner repeatedly demanded payment from the respondents for the unpaid loan obligation.
      • Private respondent Siy Chee was declared in default on March 31, 1970.
  • Respondents’ Defenses and Counterclaims
    • Private respondent Gaw Suy An:
      • Filed an answer with a compulsory counterclaim on July 8, 1968.
      • Denied the allegations and claimed:
        • He signed the check endorsement on behalf of his principal, Victory Hardware, not in his individual capacity.
        • He was discharged by a delay in the presentment of the check.
    • Private respondent Dy Hian Tat:
      • Filed his answer and compulsory counterclaim on February 27, 1970.
      • Contended that:
        • He never negotiated or was involved with any check transaction with the petitioner.
        • The check in question was delivered to Sin Chin Juat Grocery, not to the petitioner.
        • The endorsement in favor of Victory Hardware further evidenced that the check was not given in exchange for an accommodation loan.
        • The delay in presentment (with the check deposited on March 5, 1964) discharged liability due to the unreasonable delay.
  • Series of Court Proceedings
    • The City Court of Manila rendered a decision in favor of the petitioner ordering:
      • The three private respondents to pay the petitioner P4,500.00 with 14% interest from September 13, 1960 until full payment.
      • Payment of attorney’s fees and costs of suit, while dismissing the respondents’ counterclaims.
    • The decision was appealed to the Court of First Instance of Manila:
      • The Court of First Instance, after de novo proceedings, affirmed the decision of the City Court.
    • The private respondents then elevated the case to the Court of Appeals:
      • In its February 12, 1973 decision, the appellate court reversed the decision of the Court of First Instance.
      • It ruled that the check was not given as collateral for the alleged loan and that the delay in presentment was unreasonable.
    • Petitioner then filed the instant petition for review with the Supreme Court.
  • Core Factual Dispute
    • The primary point of contention was whether or not:
      • The presentment for payment of the check was made within a “reasonable time.”
      • The notice of dishonor by the drawee bank was timely given the long delay between the issue date (September 13, 1960) and its presentment (March 5, 1964) as well as the subsequent notice (April 27, 1968).
    • The petitioner argued that presentment is not indispensable if it proves useless due to insufficient funds or the conduct of the drawer, thereby maintaining liability.
    • The respondents maintained that the delay nullified the petitioner's claim and that proper presentment and timely notice were prerequisites in charging the drawer and endorsers.

Issues:

  • Was the presentment for payment of the check made within a reasonable time, given that the check was issued on September 13, 1960 but presented only on March 5, 1964?
    • Consideration of whether the delay in presentment discharged the liability of the drawer and endorsers.
  • Was the notice of dishonor given within a reasonable period after the check was dishonored, considering it was sent on April 27, 1968?
  • Is the petitioner’s claim valid as that of a holder of the check for value, particularly given the respondents’ contention that the check was not delivered for the alleged accommodation loan?
  • Do the circumstances allow for the waiver of the presentment requirement when such presentment would be futile, especially in cases involving insufficient funds or nonpayment due to lack of available funds?

Ruling:

  • (Subscriber-Only)

Ratio:

  • (Subscriber-Only)

Doctrine:

  • (Subscriber-Only)
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