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Far East Realty Investment, Inc. v.

Court of Appeals  Petitioner failed to exercise prudence and diligence on what he is required to do by
DOCTRINE: There is no hard and fast demarcation line that can be drawn between what law and likewise failed to show any justification for the unreasonable delay.
may be considered as a reasonable or an unreasonable time, because reasonable time
depends upon the facts and circumstances in each case.

FACTS:
 Petitioner alleged that, on September 1960, private respondents approached its
office and asked the former to extend to the latter and accommodation loan in the
sum of P4, 500.00, which they promised to pay, jointly and severally, in a month’s
time.
 Private respondents proposed to pay at the rate of 14% per annum, and delivered
to the petitioner a China Banking Corporation Check, dated September 13, 1960,
for P4, 500.00 drawn by Dy Hian Tat, and signed by them at the back of the check.
 The check comes with the assurance that after one month from September 13,
1960, it would be redeemed by private respondents by paying cash in the sum of
P4, 500.00, or the check can be presented for payment on or immediately after one
month and China Banking Corporation would honor the same.
 Petitioner agreed and extended to private respondents the accommodation loan.
 On March 15, 1964, the check was presented for payment to the China Banking
Corporation, but it bounced and was not cashed for the reason that the current
account of the drawer had already been closed.
 Petitioner then demanded from private respondents the payment of the loan, but
the latter refused t pay despite repeated demands.
 Respondent court ruled that the check was not presented within a reasonable time.

ISSUE: Whether or not presentment for payment and notice of dishonor of the check were
made within reasonable time.

HELD:
 No. Presentment and notice of dishonor were not made within a reasonable time.
 Section 71 of the NIL provides that: “Where the instrument is not payable on
demand, presentment must be made on the day it falls due. Where it is payable on
demand, presentment must be made within a reasonable time after issue, except
that in the case of a bill of exchange, presentment for payment will be sufficient if
made within a reasonable time after the last negotiation thereof.”
 Moreover, Section 102 provides that: “Notice may be given as soon as the
instrument is dishonored and, unless delay is excused must be given within the
time fixed by the law.”
 Reasonable time – time necessary under the circumstances for a reasonable
prudent and diligent man to do, conveniently, what the contract or duty requires
should be done, having a regard for the rights and possibility of loss, if any, to the
other party.
 No hard and fast demarcation line can be drawn between what may be considered
as a reasonable or an unreasonable time, because reasonable time depends upon
the facts and circumstances in each case.
 In this case, the check was issued on September 13, 1960, but was presented to the
drawee bank only on March 5, 1964, and dishonored on the same date. After
dishonor, petitioner made a formal notice of dishonor on April 27, 1968.
Asia Banking Corporation v. Javier
DOCTRINE: If, after a negotiable instrument is dishonored for non-acceptance or non-
payment, the indorser is not notified of the fact in the time and manner prescribed by the
law, said indorser is released from all liability upon the instrument.

FACTS:
 On May 10, 1920, Salvador B. Chaves drew a check on the Philippine National Bank
for P11, 000.00 in favor of La Insular. The check was indorsed by the limited
partners of La Insular, and then deposited by Chaves in his current account with the
plaintiff on July 14, 1920.
 On June 25, 1920, Chaves drew another check for P18, 785.30 on the Philippine
National Bank in favor of La Insular. The check was also indorsed by the limited
partners of La Insular, and was likewise deposited by Chaves in his current account
with the plaintiff on July 6, 1920.
 Chaves used the amount represented by both checks after they were deposited in
the plaintiff bank, by drawing checks on the plaintiff.
 However, upon presentment by plaintiff bank to the Philippine National Bank for
payment, the latter refused to pay on the ground that Chaves had no funds therein.
 The lower court ordered the plaintiff to pay the defendant the value of the checks
with interest thereon.

ISSUE: Whether or not the petitioner’s contention that its liability as the indorser of the
checks was extinguished.

HELD:
 The liability of the respondent never arose in the first place. The judgment of the
lower court was reversed.
 Section 89 of the NIL provides that, when a negotiable instrument has been
dishonored by non-acceptance or non-payment, notice thereof must be given to
the drawer and each of the indorsers, and those who are not notified shall be
discharged from liability, except where the law provides otherwise.
 Indorsers are not liable unless they are notified that the document was dishonored.
 Under the general principle of the law, it will be incumbent upon the plaintiff, who
seeks to enforce the defendant’s liability upon the checks as indorser, to establish
said liability by proving that notice was given to the defendant within the time, and
in the manner required by the law that the checks had been dishonored.
 There is no evidence showing that the petitioner gave any notice whatsoever to the
respondent that the checks in question had been dishonored. Therefore, it has not
established its cause of action.