Sec 74

First Acceptance and Investment Corp v. Amado Dimayuga and Tamaraw Taxicab Co. Inc , defendants, Tamaraw
Taxicab Co. Inc, defendant and appellee.

GR No. 35092-R, January 31, 1967

1. NEGOTIABLE INSTRUMENTS; PROMISSORY NOTE; LIABILITY OF GENERAL INDORSER; CONDITIONS. – The liability
of general indorser of a promissory note is subject to the fulfillment of two conditions, to wit: (1) presentment for
payment to the maker or person primarily liable on the instrument; and (2) due notice of dishonor if the
instrument be dishonored.

2. ID; ID; ID; ID; REASON FOR EXHIBITION OF NOTE TO PERSON FROM WHOM THE PAYMENT IS DEMANDED.-
Presentment and demand are distinct acts. A demand is only part of presentment (Langenberber vs. Kroeger 48
CAL 147). The instrument must be exhibited to the person from whom payment is demanded (Sec 74, Act. 2031),
in order that the maker or acceptor may be able to determine the genuineness of the instrument, the right of the
holder to receive payment, and so that he may immediately reclaim possession upon paying the amount. When
the note is not in readiness for exhibition or surrender, and could not have been exhibited or surrendered, there is
no proper presentment for payment (Greco v. La Monte) in order to charge the drawer and indorsers (Sec 70, Act.
2031).

Facts:
Defendant Dimayuga duly executed in favor of of defendant Tamaraw Taxicab Co. Inc a promissory note for
P11,892 with 12% interest (per annum) payable in monthly installments from Sept to Aug 1960 providing that in
case of default in the payment of any one installment, the outstanding obligation shall automatically be due and
demandable; Dimayuga also executed chattel mortgage in order to secure payment. Subsequently, Taxicab Co.
indorsed the prommisory note and assigned the chattel mortgage to plaintiff First Acceptance and Investment
Corp. Both defendants defaulted in payment of installation. Plaintiff demanded delivery of the car or in alternative
ordering solidary payment of both defendant of the remaininng balance of P5,953.00 plus interest.

Taxicab Co. denied the allegations on default of payment, or that demands were made.

Carlos Cortez testified in behalf of plaintiff that First Acceptance Corp. sent monthly statements of account to
Dimayuga and that Dimayuga did not make payment. Lower court held that Dimayuga and Taxicab Co. not liable.

Issue:
Whether or not the Taxicab Co. is liable to the plaintiff?

Held:
No. The liability of general indorser of a promissory note is subject to the fulfillment of two conditions, to wit: (1)
presentment for payment to the maker or person primarily liable on the instrument; and (2) due notice of
dishonor if the instrument be dishonored. Appellant failed to comply with the two requirements. It did not allege
in the complaint nor did it prove at the trial the presentment of payment to Dimayuga was made, or that the
notice to dishonor was sent to the appellee. Appellant contends that by sending a letter of demand, it in effect
made a presentment for payment. The Court disagrees. Presentment and demand are distinct acts. A demand is
only part of presentment (Langenberber vs. Kroeger 48 CAL 147). The instrument must be exhibited to the person
from whom payment is demanded (Sec 74, Act. 2031), in order that the maker or acceptor may be able to
determine the genuineness of the instrument, the right of the holder to receive payment, and so that he may
immediately reclaim possession upon paying the amount. When the note is not in readiness for exhibition or
surrender, and could not have been exhibited or surrendered, there is no proper presentment for payment (Greco
v. La Monte) in order to charge the drawer and indorsers (Sec 70, Act. 2031). Presentment for payment not having
been made, appellant cannot charge appellee, for “presentment for payment is necessary to charge the drawer or
indorsers.” (Sec 70, Act 2031)

Thus, it is alleged that Dimayuga executed the note which was subsequently endorsed by the taxicab company to
the plaintiff; that inspite of demands neither the maker or indorser paid the balance. These allegations, according
to court a quo, were proved. The Court held that the lower court should have sentenced Dimayuga to pay P5,953
plus interest and 25% of Attorney’s fees.