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VI – PRESENTATION FOR PAYMENT Necessary steps to charge persons secondarily liable in

bills of exchange –

1. Presentment for acceptance to the drawee or


SECTION 70 – EFFECT OF WANT OF DEMAND ON PRINCIPAL negotiation within reasonable time from acquisition is
DEBTOR necessary –

Presentment for payment – the production of a bill of a. Where the bill is payable after sight, or
exchange to the drawee for his acceptance or to the drawee or in any other case, where presentment
acceptor for payment or the production of the promissory note for acceptance is necessary to fix the
to the party liable for payment of the same. maturity of the instrument;
b. Where the bill expressly stipulates that
Presentment for payment consists of – it shall be presented for acceptance; or
c. Where the bill is drawn payable
1. Personal demand for payment at the proper place elsewhere than at the residence or place
2. With the bill or note in readiness to exhibit it if of business of the drawee.
required and to received payment and surrender it if *Aside from the three, there is no need
the debtor is willing to pay. for presentment for acceptance.

The following are not considered sufficient presentment – 2. If the bill is dishonored by non-acceptance –

1. Mere informal talk asking for payment without a. Notice of dishonor by non-acceptance must
exhibition of the note be given to persons secondarily liable unless
2. Demand over the telephone excused; and
b. In case of foreign bills, protest for dishonor
Rule1: Presentment for payment is not necessary in order to the by non-acceptance must be made unless
charge the person primarily liable on the instrument. excused.

*Rule applicable to demand notes 3. But if the bill is accepted, or f the bill is not required
to be presented for acceptance, it must be presented
Example: A draws a bill payable to B or order. X, for payment to the persons primarily liable unless
drawee accepts the bill which is due on March 31, excused.
1950. B negotiates the bill to C, C to D, D to E, E to F,
now holder. On April 1, 1950, the bill is still unpaid. 4. If the bill is dishonored by non-payment –
But F failed to make presentment for payment to X,
acceptor. Can F file an action against X and hold him a. Notice of dishonor by nonpayment must also
liable? be given to the person secondarily liable
unless excused; and
A: Yes because presentment for payment is not b. In case of foreign bills, a protest of dishonor
necessary to charge the person primarily liable on the by non-acceptance must be made unless
instrument. This rule applies also to the maker. excused.

*Presentment for payment is not the operative act Necessary steps to charge persons secondarily liable in
that makes the acceptor liable under his acceptance. promissory notes –

Payable at a special place 1. Presentment for payment must be made within the
period required to the person primarily liable unless
Rule2: If the instrument by its terms, payable at a special place, excused; and
and he (person primarily liable) is able and willing to pay it there 2. If the note is dishonored by non-payment, notice of
at maturity, such ability and willingness are equivalent to a dishonor by nonpayment must be given to the
tender of payment upon his part. persons secondarily liable unless excused.
It means payable at a specified bank. Necessary steps to charge persons secondarily in other
cases –
The rule is the same presentment for payment is not
necessary in order to charge the person primarily 1. Protest for non-payment by drawee is necessary to
liable. The only effect is that if the person primarily charge an acceptor for honor or a referee in case of
liable is able and willing to pay the bill, it is equivalent need.
to the tender of payment on his part and the holder 2. Protest for non-payment by the acceptor for honor is
loses his right to recover interest due subsequent to also required.
maturity and costs of collection but he can still hold
the drawee/acceptor liable.

Rule3: Presentment for payment to the person primarily liable SECTION 71 – PRESENTMENT WHERE INSTRUMENT IS NOT
(drawee/acceptor) is necessary in order to charge persons PAYABLE ON DEMAND AND WHERE PAYABLE ON DEMAND
secondarily liable (drawer and indorsers).
Instrument is payable at a fixed or determinable future
Example: If F holder fails to make presentment for time (not payable on demand) –
payment for payment to X, acceptor, the drawer A,
and the indorsers B, C, D and E are discharged and F Rule: The presentment must be made at the date of
cannot file an action against them. Hence, only one maturity (the day it falls due).
debtor X would be left against whom he can enforce
the bill. Example: In the above example, F must
present for payment to X on March 31, 1950.
Effect if not presented for payment first to person A presentment before maturity is not
primarily liable – Persons secondarily liable are discharged proper.
from liability and only the person primarily liable is left to
answer for payment of the instrument.

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Instrument is payable on demand – the usual place of business of the person to make
payment;
1. If the instrument is a note, it must be presented for 4. In any other case if presented to the person to make
payment within a reasonable time for issue. payment wherever he can be found or if presented at
his last known place of business or residence.
Example: A makes a note payable to B or
order issued on April 1, 1950. B negotiates Examples:
to C, C to D, D to E and E to F. The holder, F,
must present the note for payment to A, 1. Place specified
maker, within a reasonable time after April
1, 1950, the date of issue. A makes a note: I promise to pay at PNB, Manila, to X
or order P1000. The proper place for making the
2. If the instrument is a bill, it must be presented for presentment for payment is at PNB, Manila, the place
payment within a reasonable time from last specified.
negotiation. If the name of the bank is substituted, presentment at
the substituted named bank not the original named
Example: A issues a bill to B or order on bank is sufficient.
April 1, 1950. The date of its last negotiation Where payable at a designated branch, presentment
is December 31, 1950. The presentment to the principal office or at any other branch is not
must be made within reasonable time after sufficient.
December 31, 1950, not after April 1, 1950.
2. Address given
Last negotiation- the last transfer for value
Promissory note signed as follows: (Sgd) Y, 404
What constitutes reasonable time Regina Bldg., Manila. The prper place is 404 Regina
Bldg., Manila.
Section 193, NIL – The term is relative and depends upon:
3. Usual place of business; last known place of business or
1. The nature of the instrument residence
2. The usages of business or trade if any and
3. The facts of the particular case No place is specified not any address is given. But the
maker or acceptor resides in 12 Quiricada St. and has
a business office at 240 Calvo Bldg., Manila. Either
place is proper.
SECTION 72 – WHAT CONSTITUTES A SUFFICIENT
PRESENTMENT 4. Any other place

Presentment for payment, to be sufficient, must be made – When the holder meets the maker or acceptor while
waiting at the Escolta, presentment may properly be
1. By the holder, or by some persons authorized to made there.
receive payment on his behalf;
2. At a reasonable hour on a business day;
3. At a proper place as herein defined;
4. To the person primarily liable on the instrument or if SECTION 74 – INSTRUMENT MUST BE EXHIBITED
he is absent or inaccessible, to any person found at the
place where the presentment is made. Rule: The instrument must be exhibited to the person from
whom payment is demanded and when it is pad, must be
Application of Section 72 – If the requisites are not complied delivered up to the party paying it.
with, the effect is the same as if no presentment is made i.e. the
persons secondarily liable are discharged. Unless special circumstances are shown to excuse its
absence
Who makes presentment – holder or his authorized
representative; presentment for payment of a promissory note Purpose of exhibition—
by bank having it for collection is sufficient.
1. To determine the genuineness of the instrument and
Time for making presentment – what is a reasonable hour on the right of the holder to receive payment; and
business day depends upon the general custom at the place of 2. To enable him to reclaim possession upon payment.
the particular transaction. Presentment for payment cannot be
made on a Sunday or a holiday. Demand by telephone- not sufficient because exhibition of the
instrument is not possible.
Where presentment is made – at the proper place as defined
in Section 73 When (actual) exhibition excused –

To whom presentment is made – the maker if a note or the 1. When the debtor does not demand to see the
acceptor if a bill, not to the person secondarily liable. instrument but refuses on some other grounds; and
2. When the instrument is lost or destroyed

Effect where presentment is not accompanied by


SECTION 73 – PLACE OF PRESENTMENT exhibition – The presentment is not sufficient and persons
secondarily liable are discharged
Presentment for payment is made at the proper place –

1. Where a place of payment is specified in the


instrument and it is there presented; SECTION 75 – PRESENTMENT WHERE INSTRUMENT
2. Where no place of payment is specified but the PAYABLE AT BANK
address of the person to make payment is given in the
instrument and it is there presented. GR: Presentment must be made during banking hours
3. Where no place of payment is specified and no
address is given and the instrument is presented at EXC: Unless the person to make the payment has no funds
there to meet it at any time during the day, in which case

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presentment at any hour before the bank is closed on that day 2. The indorser (Section 80) – where the instrument
is sufficient. was made or accepted for his accommodation and he
has no reason to expect that the instrument will be
Effect if not made during banking hour -- presentment is not paid if presented
sufficient and persons secondarily liable are discharged
Application of Sections 79 and 80 – Only the drawer or
Example: indorser referred in these sections is not discharged, but all
other parties secondarily liable are relieved from their liability.
A bill is drawn against PNB where the banking hours
start from 9:00 AM and ends at 2:30 PM. There are no Examples:
banking hours in Saturdays. Presentment for
payment must be made between 9:00 AM to 2:30 PM Where presentment is not required to charge the drawer –
on ordinary days.
1. Where the drawer withdraws his funds from the
But the person to make payment has until the close of drawee so that they are not sufficient to pay the bill,
banking hours of the bank where the instrument is he has no right to expect or require that the drawee or
made payable in which to pay it and before the close acceptor would pay the instrument. Consequently
of such hours, he deposits funds there enough to pay where the holder does not make a presentment to the
it, a demand earlier in the day is premature. drawee, the drawer would not be discharged by this
failure. But other parties secondarily liable are
When presentment may be made after banking hours discharged.
2. In case a check upon which payment has been
Example: Where X has no funds sufficient to meet the stopped
bill on the day of presentment, the presentment may 3. Where the drawer’s balance is less than the amount of
be made before 4:00 pm and such would be sufficient the check unless the holder has reasonable grounds to
as the bill cannot be paid even if presented during believe that the instrument will be paid, particularly
banking hours. when provision has been made for payment of any bill
drawn by the drawer on the drawee.
4. Where the drawer of a bill containing the words “Pay
from balance” had no money on deposit with the
Presentment for Payment drawee but expected to arrange with the broker to
Where To persons To joint cover drafts.
principal liable as debtors
debtor is partners (Section Where presentment not required to charge the indorser
dead (Section (Section 77) 78)
76) Example: A makes a note for accommodation of B,
payee. B indorses to C, C to D, D to E, E to F. F need not
To whom To his At any one of GR: Must make presentment for payment to A, in order to
presentmen personal the partners be made to charge B, indorser. The reason is that as B did not give
t is made representativ even if their ALL of value to A, B has no reason to expect that the note will
e (executor or partnership them. be paid upon presentment. But C, D and E are
administrator) has been discharged as no presentment has been made.
– dissolved.
Reason: Here the accommodated party is the person
1. if there be Reason: Each EXC: Unless primarily liable. Hence following the rule that failure
one; and partner is an one of them to make presentment for payment will not discharge
2. He can be agent of the is duly the person primarily liable, the accommodated payee-
found partnership. authorized indorser, being in effect the person primarily liable is
by the not discharged even if no presentment for payment is
others for made to the accommodation party.
The holder In case of the
must use death of one purpose,
reasonable of the makers presentmen
diligence to who are t to him SECTION 81 – WHEN DELAY IN MAKING PRESENTMENT IS
find the partners, would be EXCUSED
personal presentment sufficient.
representative must be made Rules:
if any. to the
surviving 1. When the delay is caused by circumstances
Although the partner, not beyond the control of the holder and not
indorser to the imputable to his default, misconduct or
himself be the personal negligence.
personal representativ 2. When the cause of delay ceases to operate,
representative, e of the presentment must be made with reasonable
presentment deceased diligence.
has been held partner.
necessary. Application of Section 81 – What is excused here is not the
making of presentment but only the delay in making
presentment.
GR: Presentment for payment to person primarily liable is
necessary to charge persons secondarily liable (drawer and Excusable circumstances- those events which could not be
indorser) foreseen or which though foreseen, are inevitable.

EXC: When presentment for payment is not required to Excuses for delay:
charge –
1. Overwhelming calamity
1. The drawer (Section 79) – where he has no right to 2. Malignant disease
expect or require that the drawee or acceptor will pay 3. Interruption of trade negotiations by political
the instrument circumstances
4. War between maker’s and holder’s countries

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5. Suspension of commercial intercourse by public 2. But presentment for payment to persons primarily
enemy liable is necessary to charge person secondarily liable
6. Occupation of country where parties reside or where except –
instrument is payable a. As to drawer under Section 79;
7. Public and positive interdictions and prohibitions of b. As to indorser under Section 80
state c. When dispensed with under Section 82; and
8. Impracticability of finding maker or his place of d. When the instrument has been dishonored by
residence non-acceptance under Section 151

SECTION 82 – WHEN PRESENTMENT FOR PAYMENT IS


EXCUSED
SECTION 83 – WHEN INSTRUMENT DISHONORED BY NON-
1. Where after the exercise of reasonable diligence, PAYMENT
presentment cannot be made;
2. Where the drawee is a fictitious person; 1. It is duly presented for payment and payment is
3. By waiver of presentment, express or implied refused or cannot be obtained; or
2. Presentment is excused and the instrument is overdue
Application of Section 82 – What is excused is the failure to and unpaid
make presentment for payment, not mere delay under Section
81. When payment refused, etc- requisites:

Reasonable diligence exercised 1. The instrument must be duly presented for payment;
and
Reasonable diligence implies active search. In other 2. Payment is either effused or cannot be ontained
words, the holder must take all steps likely to discover
the whereabouts of the party whom presentment is to Example: F holder makes presentment for payment to X,
be made. acceptor and X refuses to pay or F cannot obtain payment
as although X is willing, he has no money to pay or he fails
An insolvency of the maker even if known to the to pay on the date of maturity but promises to pay 5 days
indorser will not excuse presentment for payment. later.

Where drawee is ficititious When presentment excused- requisites:

Reason for not requiring presentment – There is no 1. Presentment for payment must be excused
one to whom presentment is to be made. 2. The instrument be overdue; and
3. It is unpaid
Waiver
Example: Supposes that presentment is waived and the bill
Must be express or implied is due on March 1, 1950. The bill is deemed dishonored
when on March 2, 1950, it is not paid even f the holder did
Implied waiver may be manifested by any language not make presentment. But if presentment is not excused,
or conduct or agreement between the parties the bill is not dishonored by the mere fact that the bill is
reasonably calculated to leas the holder to believe that overdue and unpaid.
presentment is waived or to mislead or prevent him
from treating the bill as he otherwise would.

Examples if implied waiver – SECTION 84 – LIABILITY OF PERSON SECONDARILY LIABLE

1. Declarations, acts or conduct which mislead Rule: When the instrument is dishonored by non-payment, an
the holder and induce him from taking the immediate right of recourse to all parties secondarily liable
necessary steps to make presentment. thereon accrues to the holder.
2. Drawer A tells holder F that he will take care
of collecting the bill. Reason: The persons secondarily liable on the instrument
3. Holder failed to make presentment to the cease to be secondarily liable after dishonor of the instrument
drawee. Thereafter, the drawer paid part of by non-payment. They become principal debtors and their
the bill and promised orally t pay the rest. liabilty is the same as the original obligors.
4. Where the maker, before maturity of the
note, was willingly adjudged bankrupt partly Caveat: This is provided of course that notice of dishonor us
upon his written admission of inability to given to them otherwise they are discharged from liability. The
pay the debts. holder can then bring an action against any one of them
5. Where the indorsers of a note payable at a without necessity of first bringing an action against the person
bank has assured the holder that it could not primarily liable.
be paid at maturity and knew that the
maker, a corporation, had no money to pay But while they become principal debtors to the holder, as
for it. regards each other, they are presumed liable in the order they
6. Where the indorser assured the holder become parties to the instrument.
before maturity of the note, that a note for
the same amount with his indorsement will
be given in renewal, such assurance, if relied
by the holder. SECTION 85 – TIME OF MATURITY
7. When the maker on the day of maturity of
the note telephoned the holder that he could Rule: Every negotiable instrument is payable at the time fixed
not then pay the note and the holder then therein without grace.
telephoned the maker consenting in giving
further time to the maker. Payment where instrument payable at a fixed time

Summary of Rules as to Presentment for Payment Example: If the instrument is payable on June 16,
1950, presentment must be made on that date and no
1. Presentment for payment is not necessary to charge grace is to be granted.
persons primarily liable.

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Q: When should presentment be made if June 16,
1950 falls on a Sunday or a holiday?
SECTION 88 – WHAT CONSTITUTE PAYMENT IN DUE
A: It is payable on Monday or the succeeding business COURSE
day. Presentment therefore must be made on that
succeeding business day. 1. Payment must be made at or after the date of maturity
2. Payment must be to the holder; and
Rule where the instrument is falling due or becoming 3. Payment must be made by the debtor in good faith
payable on a Saturday and without notice that the holder’s title is defective

Must be presented for payment on the next Where payment is not considered payment in due course –
succeeding business day except that instruments
payable on demand may, at the option of the holder, 1. Payment is made before maturity would constitute a
be presented for payment 12 o’clock noon on negotiation back to the person primarily liable and he
Saturday when that entire day is not a holiday. can renegotiate it. The payment does not discharge
the instrument
Falling due on a Saturday, meaning -- When an instrument is 2. Payment to indorsee who is not in possession of the
payable on a Saturday, it is said to be falling due on a Saturday instrument is not payment in due course as he is not a
holder
Becoming payable on a Saturday 3. Payment to the original payee after the note had been
transferred by him to a holder in due course does not
Example: Where a bill is payable on June 16, 1950, a discharge the note as he is not a holder
Friday and if it is a holiday, the bill is said to have 4. Payment to person by the debtor who knows such
become payable on a Saturday person stole it is not payment in due course as such
payment is not in good faith.
When presentment is to be made where the instrument
falls due on a Saturday or becomes payable on a Saturday Payment must be made to the possessor of the instrument

1. Where the instrument is payable on a fixed The party making payment must insist on the
determinable future time – presentment in order to make sure that it is at the
The presentment must be made on the next time in his possession and not outstanding in another.
succeeding business day
2. Where the instrument is payable on demand The possession of notes by the maker is presumptive
The presentment must be made on Saturday, evidence that the notes are paid. But the payee’s
June 17, 1950 before 12 noon or on Monday possession of the instrument raises the presumption
June 19, 1950, at the option of the holder that they are not paid.

Medium of payment

SECTION 86 – TIME; HOW COMPUTED 1. Must be in the currency stipulated or if not possible,
the currency which is legal tender in the Philippines
Rule: When instrument is payable at a fixed period after date, 2. Payment shall be effected only upon encashment of
after sight or after the happening of a specified event, the time such instruments or if upon the fault of the creditor,
of payment is determined by excluding the day from which the they have been impaired.
time is to begin to run and by including the date of payment. 3. In case of extraordinary inflation or deflation of the
currency stipulated, the value of the currency at the
Example: time of establishment of the obligation shall be the
basis of payment unless there is an agreement to the
1. A draws a bill dated March 1, 1950 thus: To X: 30 contrary
days from date, to pay B or order P1000 (Sgd) A. To
compute the period, exclude March 1 then count 30 Payment other than legal tender
days and include the 30th day, March 31, 1950, the
date of payment. GR: Payment will not be considered absolute until
2. If dated January 31 and payable one month after date, the paper given in payment has been itself paid
it will mature on February 28 or February 29, if a leap
year. EXC: Where the parties expressly or impliedly agree
that the claim shall be discharged by such payment.
Caveat: On the day of payment, the party liable is entitled to
that whole day within which to make payment. *Taking of a renewal note is not a payment of the
original

Payment through banks


SECTION 87 – RULE WHERE INSTRUMENT IS PAYABLE AT
BANK A bank to which a note is sent for collection is the
agent of the owner.
Rule: it is equivalent to an order of the bank to pay the same
for the account of the principal debtor thereon. It is immaterial that the maker has requested the
holder to send the note to this bank for collection.
Application of Section 87 – this section applies only where
instrument is payable to a particular bank Crediting of account constitutes payment

Example: “I promise to pay to B or order P1000 at the


PNB (Sgd) A.” PNB may charge the amount of the note
from the account of A without any further authority
from A.

Effect of failure to make presentment for payment

The better view seems to be that the maker is not


discharged because he is primarily liable

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