INTERNATIONAL CORPORATE BANK V.
SPS GUECO In the case at bar, however, the check involved is not an ordinary bill of exchange but a
February 12, 2001 | GR No. 141968 | Kapunan, J. | First Division | Cheques
DIGEST MADE BY:
Dave U
CLUE: Car Loan
PETITIONER: THE INTERNATIONAL CORPORATE BANK (now UNION BANK OF THE
PHILIPPINES)
RESPONDENTS: SPS. FRANCIS S. GUECO and MA. LUZ E. GUECO
DOCTRINE:
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. Under the negotiable instruments
law, an instrument not payable on demand must be presented for payment on the day it falls
due. When the instrument is payable on demand, presentment must be made within a
reasonable time after its issue. In the case of a bill of exchange, presentment is sufficient if
made within a reasonable time after the last negotiation thereof.
RECIT- READY SUMMARY:
Gueco Spouses obtained a loan from the petitioner International Corporate Bank to purchase
a Nissan Sentra. In consideration of the loan, they executed promissory notes payable in
monthly installments, and a chattel mortgage over the car. The spouses defaulted in their
monthly installments. As a result, the bank filed a civil action for Sum of Money with Prayer
for a Writ of Replevin. After negotiations, the amount that the Guecos are obliged to pay was
lowered to 150,000 pesos. On August 29, 1995, Dr. Gueco delivered a manager’s check in the
amount of Php 150,000. However, the car was not released because he refused to sign the
Joint Motion to Dismiss. The Guecos through their counsel argued that Dr. Gueco need not
to sign the motion for joint dismissal because they have yet to file an answer to the civil
complaint. The bank on the other hand argued that the signing is merely a standard operating
procedure. Hence, the Gueco Spouses inititated a civil action for damages against the bank
in the Metropolitan Trial Court. MTC dismissed the petition. This was reversed by the RTC
upon appeal. RTC’s decision was affirmed by the CA.
ISSUE: Has the manager’s cheque become stale? – NO
Court held in the negative. While it is true that Dr. Gueco delivered the manager’s check in
August 29, 1993, it has not yet become stale. 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. Under the negotiable instruments law, an instrument not payable on
demand must be presented for payment on the day it falls due. When the instrument is
payable on demand, presentment must be made within a reasonable time after its issue. In
the case of a bill of exchange, presentment is sufficient if made within a reasonable time after
the last negotiation thereof.
manager's check. A manager's check is one drawn by the bank's manager upon the bank
itself. It is similar to a cashier's check both as to effect and use. A cashier's check is a check
of the bank's cashier on his own or another check. In effect, it is a bill of exchange drawn by
the cashier of a bank upon the bank itself, and accepted in advance by the act of its issuance.
It is really the bank's own check and may be treated as a promissory note with the bank as a
maker. The check becomes the primary obligation of the bank which issues it and constitutes
its written promise to pay upon demand. The mere issuance of it is considered an acceptance
thereof. If treated as promissory note, the drawer would be the maker and in which case the
holder need not prove presentment for payment or present the bill to the drawee for
acceptance
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. Failure to present on time, thus, does not totally wipe out all liability. In fact, the
legal situation amounts to an acknowledgment of liability in the sum stated in the check. In
this case, the Gueco spouses have not alleged, much less shown that they or the bank which
issued the manager's check has suffered damage or loss caused by the delay or non-
presentment. Definitely, the original obligation to pay certainly has not been erased. It has
been held that, if the check had become stale, it becomes imperative that the circumstances
that caused its non-presentment be determined. In the case at bar, there is no doubt that the
petitioner bank held on the check and refused to encash the same because of the controversy
surrounding the signing of the joint motion to dismiss. We see no bad faith or negligence in
this position taken by the Bank.
FACTS:
1. Gueco Spouses obtained a loan from the petitioner International Corporate Bank to
purchase a Nissan Sentra. In consideration of the loan, they executed promissory notes
payable in monthly installments, and a chattel mortgage over the car to serve as security
to the notes.
2. The spouses defaulted in their monthly installments. As a result, the bank filed a civil
action for Sum of Money with Prayer for a Writ of Replevin. Francis Gueco was served a
summons and was fetched by the sheriff for a meeting with the bank in its premises.
After negotiations, the amount that the Guecos are obliged to pay was lowered to
150,000 pesos.
3. On August 29, 1995, Dr. Gueco delivered a manager’s check in the amount of Php
150,000. However, the car was not released because he refused to sign the Joint Motion
to Dismiss. The Guecos through their counsel argued that Dr. Gueco need not to sign the
motion for joint dismissal because they have yet to file an answer to the civil complaint.
However, the bank insists that the signing of a joint motion to dismiss was a standard
operating procedure to preclude the filing of future claims.
4. Hence, the Gueco Spouses inititated a civil action for damages against the bank in the
Metropolitan Trial Court.
PROCEDURAL AND CASE HISTORY:
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 be the maker and in which case the holder need not prove presentment for payment
or present the bill to the drawee for acceptance
MTC ● MTC dismissed the petition for lack of merit.
● 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
RTC ● RTC upon appeal reversed the MTC’s decision.
loss caused by the delay. Failure to present on time, thus, does not totally wipe out
● The trial court held that there was a meeting of the minds between the
all liability. In fact, the legal situation amounts to an acknowledgment of liability in
parties as to the reduction of the amount of indebtedness, and the release
the sum stated in the check. In this case, the Gueco spouses have not alleged, much
of the car upon payment. However, there was no agreement between the
less shown that they or the bank which issued the manager's check has suffered
parties that the signing of a joint motion to dismiss is a condition sine qua
damage or loss caused by the delay or non-presentment. Definitely, the original
non for the effectivity of the compromise agreement.
obligation to pay certainly has not been erased.
● As a result, the court ordered the bank to return the car to the Guecos. The
● It has been held that, if the check had become stale, it becomes imperative that the
bank in turn may encash the Manager’s check which was long under their
circumstances that caused its non-presentment be determined. In the case at bar,
control.
there is no doubt that the petitioner bank held on the check and refused to encash
the same because of the controversy surrounding the signing of the joint motion to
CA ● Upon appeal, the appellate court affirmed the trial court’s decision. dismiss. We see no bad faith or negligence in this position taken by the Bank.

ISSUE/S:

1. Has the manager’s cheque become stale? - NO

RULING:

WHEREFORE, The decision of the lower court is reversed, and judgment is hereby rendered
plaintiff for the sum of P3,290.25, and for the costs of both instances.

RATIO:
1. NO

● Court held in the negative. While it is true that Dr. Gueco delivered the manager’s
check in August 29, 1993, it has not yet become stale. 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. Under the negotiable instruments law,
an instrument not payable on demand must be presented for payment on the day it
falls due. When the instrument is payable on demand, presentment must be made
within a reasonable time after its issue. In the case of a bill of exchange,
presentment is sufficient if made within a reasonable time after the last negotiation
thereof.
● In the case at bar, however, the check involved is not an ordinary bill of exchange but
a manager's check. A manager's check is one drawn by the bank's manager upon
the bank itself. It is similar to a cashier's check both as to effect and use. A cashier's
check is a check of the bank's cashier on his own or another check. In effect, it is a
bill of exchange drawn by the cashier of a bank upon the bank itself, and accepted
in advance by the act of its issuance. It is really the bank's own check and may be
treated as a promissory note with the bank as a maker.
● The check becomes the primary obligation of the bank which issues it and
constitutes its written promise to pay upon demand. The mere issuance of it is
considered an acceptance thereof. If treated as promissory note, the drawer would
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