351 SCRA 516


Gueco spouses obtained a loan from ICB (now Union Bank) to purchase a car.  In  consideration  thereof,  the  debtors  executed  PNs,  and  a  chattel mortgage  was  made  over  the  car.    As  the  usual  story  goes,  the  spouses defaulted  in  payment  of  their  obligations  and  despite  the  lowering  of  the  amount  to  be  paid,  they  still  failed  to  pay.    Thereafter,  they  tendered  a manager’s  check  in  favor  of  the  bank.    Nonetheless,  the  car  was  still detained for the spouses refused to sign the joint motion to dismiss.  The bank  averred  that  the  joint  motion  to  dismiss  is  part  of  standard  office procedure  to  preclude  the  filing  of  other  claims.    Because  of  this,  the spouses filed an action for damages against the bank.  And by the time the case was instituted, the check had become stale in the hands of the bank.


The main issue though unrelated to Negotiable Instruments Law in this case was whether or not the signing of the joint motion to dismiss a part of the compromise agreement between the spouses and the bank.  The answer is no, it is not a part of the compromise agreement entered by the parties.  And thus, the signing is dispensible in releasing the car to the spouses.  And on the ancillary issue of the case, which is the relevant issue for the subject, whether or not the spouses should replace the check they paid to the  bank  after  it  became  stale,  the  answer  is  yes.  It  appeared  that  the check has not been encashed. The delivery of the manager’s check did not constitute payment. The original obligation to pay still exists. Indeed, the circumstances  that  caused  the  non-presentment  of  the  check  should  be considered to determine who  should bear the  loss. In this case, ICB held on the check and refused to encash the same because of the controversy surrounding the signing of the joint motion to dismiss. There is no bad faith
or negligence on the part of ICB. 
A  stale  check  is  one  which  has  not  been  presented  for  payment  within  a reasonable time after its issue. It is valueless and, therefore, should not be paid.  A  check  should  be  presented  for  payment  within  a  reasonable  time after  its  issue.  Here,  what  is  involved  is  a  manager’s  check,  which  is
essentially a bank’s own check and may be treated as a PN with the bank as a maker. Even assuming that presentment is needed, failure to present for  payment  within  a  reasonable  time  will  result  to  the  discharge  of  the drawer only to the extent of the loss caused by the delay—but here there is
no loss sustained. Still, such failure to present on time does not wipe out liability.