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NEGO July 1 (Sec70-88)

VI. PRESENTATION FOR PAYMENT

Sec. 70. Effect of want of demandon principal debtor. - Presentment for payment is not

necessary in order to charge the person primarily liable on the instrument; but if the

instrument is, by its terms, payable at a special place, and he is able and willing to pay it there atmaturity, such ability and willingness are equivalent to a tender of payment upon his part. But

except as herein otherwise provided, presentment for payment is necessary in order to charge

the drawer and indorsers.

Sec. 71. Presentment where instrument is not payable on demand and where payable on demand.

- 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

its 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.

Sec. 72. What constitutes a sufficient presentment. - Presentment for payment, to be sufficient,must be made:

(a) By the holder, or by some person authorized to receive payment on his behalf;

(b) At a reasonable hour on a business day;

(c) At a proper place as herein defined;

(d) To the person primarily liable on the instrument, or if he is absent or inaccessible, to

any person found at the place where the presentment is made.

Sec. 73. Place of presentment. - Presentment for payment is made at the proper place:

(a) Where a place of payment is specified in the instrument and it is there presented;

(b) Where no place of payment is specified but the address of the person to make

payment is given in the instrument and it is there presented;(c) Where no place of payment is specified and no address is given and the instrument

is presented at the usual place of business or residence of the person to make payment;

(d) In any other case if presented to the person to make payment wherever he can be

found, or if presented at his last known place of business or residence.

Sec. 74. Instrument must be exhibited. - The instrument must be exhibited to the person from

whom payment is demanded, and when it is paid, must be delivered up to the party paying it.

Sec. 75. Presentment where instrument payable at bank. - Where the instrument is payable at a

bank, presentment for payment must be made during banking hours, unless the person to make

payment has no funds there to meet it at any time during the day, in which case presentment at

any hour before the bank is closed on that day is sufficient.

Sec. 76. Presentment where principal debtor is dead. - Where the person primarily liable on the

instrument is dead and no place of payment is specified, presentment for payment must be

made to his personal representative, if such there be, and if, with the exercise of reasonable

diligence, he can be found.

Sec. 77. Presentment to persons liable as partners. - Where the persons primarily liable on the

instrument are liable as partners and no place of payment is specified, presentment for

payment may be made to any one of them, even though there has been a dissolution of the firm.

Sec. 78. Presentment to joint debtors. - Where there are several persons, not partners, primarilyliable on the instrument and no place of payment is specified, presentment must be made to

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them all.

Sec. 79. When presentment not required to charge the drawer. -Presentment for payment is not

required in order to charge the drawer where he has no right to expect or require that the

drawee or acceptor will pay the instrument.

Sec. 80. When presentment not required to charge the indorser. -Presentment is not required in

order to charge an indorser where the instrument was made or accepted for his

accommodation and he has no reason to expect that the instrument will be paid if presented.

Sec. 81. When delay in making presentment is excused. - Delay in making presentment for

payment is excused when the delay is caused by circumstances beyond the control of the holder

and not imputable to his default, misconduct, or negligence. When the cause of delay ceases to

operate, presentment must be made with reasonable diligence.

Sec. 82. When presentment for payment is excused. - Presentment for payment is

excused:chanroblesvirtuallawlibrary

(a) Where, after the exercise of reasonable diligence, presentment, as required by thisAct, cannot be made;

(b) Where the drawee is a fictitious person;(c) By waiver of presentment, express or implied.

Sec. 83. When instrument dishonored by non-payment. - The instrument is dishonored by non-

payment when:chanroblesvirtuallawlibrary

(a) It is duly presented for payment and payment is refused or cannot be obtained; or

(b) Presentment is excused and the instrument is overdue and unpaid.

Sec. 84. Liability of person secondarily liable, when instrument dishonored. - Subject to the

provisions of this Act, when the instrument is dishonored by non-payment, an immediate rightof recourse to all parties secondarily liable thereon accrues to the holder.

Sec. 85. Time of maturity. - Every negotiable instrument is payable at the time fixed therein

without grace. When the day of maturity falls upon Sunday or a holiday, the instruments falling

due or becoming payable on Saturday are to be presented for payment on the next succeeding

business day except that instruments payable on demand may, at the option of the holder, be

presented for payment before twelve o'clock noon on Saturday when that entire day is not a

holiday.

Sec. 86. Time; how computed. - When the instrument is payable at a fixed period after date, after

sight, or after that happening of a specified event, the time of payment is determined by

excluding the day from which the time is to begin to run, and by including the date of payment.

Sec. 87. Rule where instrument payable at bank. - Where the instrument is made payable at a

bank, it is equivalent to an order to the bank to pay the same for the account of the principal

debtor thereon.

Sec. 88. What constitutes payment in due course. - Payment is made in due course when it is

made at or after the maturity of the payment to the holder thereof in good faith and without

notice that his title is defective.

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FAR EAST REALTY INVESTMENT INC. v. CA

G.R. No. L-36549 October 5, 1988

Paras,J.

SOURCE: http://wrmanuel.wordpress.com/2010/09/22/cd-far-east-realty-investment-

inc-v-ca/

Doctrine: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.

Reasonable Time has been defined as so much time as is necessaryunder 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 peculiar factsand circumstances in each case.

Facts:

Private respondents asked the petitioner to extend an accommodation loan in the sum ofP4,500.00. Respondents delivered to the petitioner a check for P4,500.00, drawn by Dy Hian

Tat, and signed by them at the back of said check, with the assurance that after one month from

September 13, 1960, the said check would be redeemed by them by paying cash in the sum of

P4,500.00, or the said check can be presented for payment on or immediately after one month.

Petitioner agreed and extended an accommodation loan

The aforesaid check was presented for payment to the China Banking Corporation, but said

check bounced and was not cashed by said bank, for the reason that the current account of the

drawer thereof had already been closed. Petitioner demanded payment from the private but

the latter failed and refused to pay notwithstanding repeated demands.

Both private respondents raised the defense that both have been wholly discharged by delay in

presentment of the check for payment.The Lower Court ruled in favor of the petitioner. However, this was reversed by the CA upon

appeal by the respondents, ruling that the check was not given as collateral to guarantee a loan

secured since the check passed through other hands before reaching the petitioner and the said

check was not presented within a reasonable time. Hence this petition.

Petitioner argues that presentment for payment and notice of dishonor are not necessary as

when funds are insufficient to meet a check, thus the drawer is liable, whether such

presentment and notice be totally omitted or merely delayed.

Issues:

1. Whether or not presentment for payment can be dispensed with

2. Whether or not presentment for payment and notice of dishonor of the questioned check

were made within reasonable time

Held:1. No. 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 (Section 71,

Negotiable Instruments Law).

2. No. It is obvious in this case that presentment and notice of dishonor were not made within a

reasonable time.

Reasonable time has been defined as so much time as is necessary under the circu mstances

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 (Citizens Bank Bldg. v. L & E. Wertheirmer 189 S.W. 361, 362, 126 Ark, 38, Ann. Cas.1917 E, 520).

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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 (Section 102, Negotiable Instruments Law).

In the instant case, the check in question 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 by

the drawee bank, a formal notice of dishonor was made by the petitioner through a letter dated

April 27, 1968. Under these circumstances, the petitioner undoubtedly failed to exerciseprudence and diligence on what he ought to do al. required by law. The petitioner likewise

failed to show any justification for the unreasonable delay.

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 peculiarfacts and circumstances in each case

PNB v. Seeto, 1952

Facts:

On March 13, 1948, Respondent Seeto presented a check to PNB at Surigao, Surigao,dated March 10, 1948,, payable to cash or bearer, and drawn by one Gan Yek Kiao

against the Cebu branch of Philippine Bank of Communications.

Seeto made a general and unqualified indorsement of the check, and petitioner's agencyaccepted it and paid respondent the amount therefor.

The check was mailed to petitioner's Cebu branch on March 20, 1948 and it waspresented to the drawee bank for payment on April 9, 1948, but the check was

dishonored for "insufficient funds."

The check was returned to petitioner and it immediately sent a letter to the respondentherein demanding immediate refund of the value of the check.

Respondent refused to make the refund demanded, claiming that at the time of thenegotiation of the check the drawer had sufficient funds in the drawee bank, and that

had the petitioner not delayed to forward the check until the drawer's funds were

exhausted, the same would have been paid.

PNB invoked Section 84 of the Negotiable Instruments Law which states:o SEC. 84. Liability of person secondarily liable, when instrument dishonored.

Subject to the provisions of this Act, when the instrument is dishonored by

nonpayment, an immediate right of recourse to all parties secondarily liable

thereon accrues to the holder.

Issue:

Whether there was unreasonable delay in the presentation of the check for payment at the

drawee bank which discharges the respondents liability.

Ruling:Yes. The check is dated March 10 and was cashed by the petitioner's agency on March 13, 1948.

It was not mailed until seven days thereafter, i.e., on March 20, 1948, or ten days after issue. No

excuse was given for this delay. Assuming that it took one week, or say ten days, or until March

30, for the check to reach Cebu, neither can there be any excuse for not presenting it for

payment at the drawee bank until April 9, 1948, or 10 days after it reached Cebu. There was

unreasonable delay in the presentation of the check for payment at the drawee bank, and that

as a consequence thereof, the indorser, respondent herein, was thereby discharged.

It has been ruled in a lot of cases that unreasonable delay in the presentment of a negotiable

instrument discharges a drawer only to the extent of the loss caused thereby, but an indorser is

wholly discharged thereby irrespective of any question of loss or injury. Only when there is

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affirmative proof that the indorser knew when he cashed the check that there would be no

funds in the bank to meet it can this rule be avoided.

The Court was unable to find any authority sustaining the proposition that an indorser of a

check is not discharged from liability for an unreasonable delay in presentation for payment.

This is contrary to the essential nature and character of negotiable instruments - theirnegotiability. They are supposed to be passed on with promptness in the ordinary course of

business transactions; not to be retained or kept for such time as the holder may want,

otherwise the smooth flow of commercial transactions would be hindered.

Crystal v. CA

Facts:

(1) This is an MR by the petitioner Crystal(2) Assailing the SC committed grave abuse in its previous decision (25 February 1975),

which affirmed the decision of the CA,

a. SC and CA held that Raymundo Crystals (petitioner) redemption of the 4 parcels of landacquired by the de Gracias (Pelagia Ocang, Pacita, Teodulo, Felicisimo, Pablo, Lydia, Dioscoro

and Rodrigo) was INVALID.

b. Because the check Crystal used in paying the redemption price was either DISHONORED or

had become STALE

c. Ergo, the VALUE of the check (P11,200) was NEVER REALIZED by the de Gracias

Issue:

(1) Whether the court committed grave abuse NO (but SC said their previous decision beremanded)

(2) Whether the conflicting circumstances of the check being dishonored and becoming stale

affect the validity of the redemption sale - YES

Held:

(1) FIRST ISSUE: SC overrules the argument of jurisdiction or even abuse of discretion. SC

reiterates what it said in the previous decision. BUT SC sees the possible injustice on their

reliance to that previous decision because apparently there were 2 conflicting findings in that

previous decision namely (1) that the check had been dishonored and (2) the check had only

become stale.

(2) SECOND ISSUE: For a check to be dishonored upon presentment and to be stale for not

being presented at all in time are incompatible developments that have variant legalconsequences.

a. If indeed the questioned check was DISHONORED, the redemption was NULL AND VOID.

b. If it had only become STALE, one must determine the circumstances that caused its non-

presentment, for if it was NOT due to the FAULT OF the DRAWER (PETITIONER), it would be

unfair to deprive him of the rights he had acquired as redemptioner.

(3) For the SC, it now appears that there is a strong showing that: (1) the check was notdishonored, (2) although it became stale, and that (3) Ocang (Respondents) had actually been

paid the full value.

(4) SC is now convinced that it is fair that the trial court be allowed to receive all evidence todetermine WON respondents has already received the full amount of P11,200

(5) SC, thus, modified their previous decision & remanded the case to the trial court.

Papa vs AU Valencia

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G.R. No. 105188 January 23, 1998

Facts: Sometime in June 1982, A.U. Valencia and Co., Inc. and Felix Pearroyo, filed with the

Regional Trial Court of Pasig, Branch 151, a complaint for specific performance against Myron

C. Papa, in his capacity as administrator of the Testate Estate of one Angela M. Butte. Thecomplaint alleged that Papa, acting as attorney-in-fact of Angela M. Butte, sold to Pearroyo,

through Valencia, a parcel of land.

Prior to the alleged sale, the said property had been mortgaged by her to the Associated

Banking Corporation. After the alleged sale to Valencia and Penarroyo, but before the title to

the subject property had been released, Butte passed away. Despite representations made by

Valencia to the bank to release the title to the property sold to Pearroyo, the bank refused to

release it unless and until all the mortgaged properties of the late Butte were also redeemed.

In order to protect his rights and interests over the property, Pearroyo caused the annotation

on the title of an adverse claim.

Sometime in April 1977, that Valencia and Pearroyo discovered that the mortgage rights of the

bank had been assigned to Tomas L. Parpana, as special administrator of the Estate of Ramon

Papa. Jr. Since then, Papa had been collecting monthly rentals in the amount of P800.00 from

the tenants of the property, knowing that said property had already been sold to Valencia and

Pearroyo. Despite repeated demands from said respondents, Papa refused and failed to

deliver the title to the property.

Valencia and Pearroyo prayed that Papa be ordered to deliver to Pearroyo the title to the

subject property

RTC rendered a decision, allowing Papa to redeem from the Reyes spouses, who bought the

land at a public auction because of tax delinquency and ordering Papa to execute a Deed of

Absolute Sale in favor of Pearroyo.

Papas defense: The sale was never consummated as he did not encash the check (in theamount of P40,000.00) given by Valencia and Pearroyo in payment of the full purchase price

of the subject lot. He maintained that what Valencia and Pearroyo had actually paid was only

the amount of P5,000.00 (in cash) as earnest money.

Issue: Was there valid payment although Papa failed to encash the check?

Held:

Yes. Valencia and Pearroyo had given Papa the amounts of P5,000.00 in cash on 24 May 1973,

and P40,000.00 in check on 15 June 1973, in payment of the purchase price of the subject lot.

Papa himself admits having received said amounts, and having issued receipts therefor. Papas

assertion that he never encashed the aforesaid check is not substantiated and is at odds with

his statement in his answer that he can no longer recall the transaction which is supposed to

have happened 10 years ago.

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After more than 10 years from the payment in part by cash and in part by check, the

presumption is that the check had been encashed. Granting that Papa had never encashed the

check, his failure to do so for more than 10 years undoubtedly resulted in the impairment of the

check through his unreasonable and unexplained delay.

While it is true that the delivery of a check produces the effect of payment only when it iscashed, pursuant to Article 1249 of the Civil Code, the rule is otherwise if the debtor is

prejudiced by the creditors unreasonable delay in presentment. The acceptance of a checkimplies an undertaking of due diligence in presenting it for payment, and if he from whom it is

received sustains loss by want of such diligence, it will be held to operate as actual payment of

the debt or obligation for which it was given.

If no presentment is made at all, the drawer cannot be held liable irrespective of loss or injury

unless presentment is otherwise excused. This is in harmony with Article 1249 of the Civil Code

under which payment by way of check or other negotiable instrument is conditioned on its

being cashed, except when through the fault of the creditor, the instrument is impaired. The

payee of a check would be a creditor under this provision and if its non-payment is caused byhis negligence, payment will be deemed effected and the obligation for which the check was

given as conditional payment will be discharged.

Considering that Valencia and Pearroyo had fulfilled their part of the contract of sale by

delivering the payment of the purchase price, they, therefore, had the right to compel Papa to

deliver to them the owners duplicate of TCT 28993 of Angela M. Butte and the peacefulpossession and enjoyment of the lot in question.

International Corporate Bank v. Gueco

Facts:

Spouses, Francis and Ma. Luz Gueco (Respondents) obtained a loan from InternationalCorporate Bank (now Union Bank of the Philippines/ Petitioner) to purchase a car a

Nissan Sentra 1600 4DR, 1989 Model.

In consideration of the loan, the Guecos executed promissory notes which were payablein monthly installments and chattel mortgage over the car to serve as security for the

notes.

The Guecos defaulted in payment of the installments. The bank filed a civil action demanding payment. In a meeting between Francis and Desi Tomas (Banks Assistant Vice President), Gueco

was demanded to pay the unpaid balance of the car loan of P184,000, which was later

lowered to P154,000.

Because the Guecos were still unable to pay, the car was detained inside the bankscompound. When Francis talked with the Banks Administrative Support, Auto Loans/ Credit Card

Collection Head, Jefferson Rivera, the balance was further reduced to P150,000.

Francis delivered a managers check in the amount of P150,000 but the car was notreleased because of his refusal to sign the Joint Motion to Dismiss, which the Bank

claimed was a standard operating procedure to effect a compromise and to preclude

future filing of claims, counterclaims or suits for damages.

o The managers check was notencashed. The Guecos filed a civil action for damages against the bank, which the RTC decided in

their favor, ordering the bank:

o To return immediately the subject car to the appellants in good workingcondition, Bank may deposit the Managers check the proceeds of which have

long been under the control of the issuing bank in favor of the Bank since its

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issuance, whereas the funds have long been paid by the Guecos to secure the

Managers check, over which they have no control.

o Affirmed by CA. The Bank now questions the decision claiming that the lower court erred in holding that

the Bank return the car to the Guecos, without making any provision for the issuance of

the new Managers/ Cashiers check by the Guecos in favor of the Bank in lieu of theoriginal Managers check that already became stale.

The Guecos argue that the delivery of the original Managers check produced the effectof payment, and the Bank was negligent in opting not to deposit or use it and should

therefore suffer the loss as a result of the check becoming stale.

Issue: Whether the bank was negligent in opting not to deposit or use the Managers check?

Ruling: No. There was no bad faith or negligence in the position taken by the bank when it held

on to the check and refused to encash it because of the controversy surrounding the signing of

the joint motion to dismiss.

Stale check one which has not been presented for payment within a reasonable timeafter its issue.

o It is valueless and should not be paid. Sec. 71: 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 case of a bill of exchange, presentment is

sufficient if made within a reasonable time after the last negotiation thereof.

A check must be presented for payment within a reasonable time after its issue, and indetermining what is reasonable time, regard is to be had to the nature of the

instrument, the usage of trade or business with respect to such instruments, and the

facts of the particular case.

o Test: Whether the payee employed such diligence as a prudent man exercises inhis own affairs.

o Even a delay of 1 week or 2 days, under the some circumstances may constituteunreasonable time.

In this case however, the check involved is a managers check not an ordinary bill ofexchange.

o Managers check one drawn by the banks manager upon the bank itself. Similar to a cashiers check.

o Cashiers check check ofthe banks cashier on his own or another check. A bill of exchange drawn by the cashier of a bank upon the bank itself,

and accepted in advance by the act of issuance.

o Banks own check and may be treated as a promissory note with the bank asmaker.

o If treated as promissory note, the drawer would be the maker and in which casethe holder need not prove presentment for payment or present the bill to the

drawee for acceptance.

o Even assuming that presentment is needed, failure to present for paymentwithin 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.

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PNB v. CA

Augusto Lim deposited in his current account with the PCIB branch at Padre Faura,Manila, GSIS Check drawn against the PNB

o The check was, forwarded for clearing, through the Central Bank, to the PNBand paid its amount to the PCIB, as well as debited it against the account of the

GSIS.

o However, upon the demand from GSIS, PNB re-credited back the amount in thecheck to GSIS because the signatures of its officers (GSIS) on the check were

forge and that GSIS had notified the PNB, which acknowledged receipt of the

notice, that said check had been lost, and, accordingly, requested that its

payment be stopped.

Apparently, The General Manager and the Auditor of the GSIS on thecheck, as drawer are forged and that the person named in the check as

its payee is Mariano D. Pulido, who purportedly indorsed it to one

Manuel Go and subsequently indorsed to Augusto Lim, who, in turn,

deposited it with the PCIB where the PCIB stamped the following on theback of the check: "All prior indorsements and/or Lack of Endorsement

Guaranteed and that the PCIB sent the check to the PNB, for clearance,

through the Central Bank.

PNB demanded from the PCIB the refund of the amount of the check which the PCIBrefused to do. Lower court ruled in favor of PCIB. Hence, this appeal

PNB maintains that the lower court erred:o In not finding that the indorsements at the back of the check are forged.o In not finding the PCIB liable to the PNB by virtue of the former's warranty on

the back of the check

o In not holding that "clearing" is not "acceptance", in contemplation of theNegotiable Instruments law.

o In not finding the PCIB guilty of negligenceo In not finding that PNB is entitled to reimbursement

Issue: W/N the petition is with merit? NO

Ruling:

With regard issue on forgery, the court ruled that the question whether or not theindorsements have been falsified is immaterial to the PNB's liability as a drawee, or to

its right to recover from the PCIB, for, as against the drawee, the indorsement of an

intermediate bank does not guarantee the signature of the drawer,since the forgery of

the indorsement is notthe cause of the loss.

On the other hand, with respect to the warranty on the back of the check, to which thethird assignment of error refers, it should be noted that the PCIB thereby guaranteed

"all prior indorsements," not the authenticity of the signatures of the officers of the GSISwho signed on its behalf, because the GSIS is notan indorser of the check, but its

drawer.Said warranty is irrelevant, therefore, to the PNB's alleged right to recover from

the PCIB. It could have been availed of by a subsequent indorsee or a holder in due

coursesubsequent to the PCIB, but, the PNB is neither. Indeed, upon payment by the

PNB, as drawee, the checkceasedto be a negotiable instrument, and became a mere

voucher or proof of payment.

Similarly, with regard to the issue on acceptance, SC emphasized that, in general,"acceptance", in the sense in which this term is used in the Negotiable Instruments Law

is not required for checks, for the same are payable on demand. Indeed, "acceptance"

and "payment" are, within the purview of said Law, essentially different things, for the

former is "a promise to perform an act," whereas the latter is the "actual performance"

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o In the words of the Law, "the acceptance of a bill is the signification by thedrawee of his assentto the order of the drawer," which, in the case of checks, is

the payment, on demand, of a given sum of money. Actual payment of the

amount of a check implies not onlyan assent to said order of the drawer and a

recognition of the drawer's obligation to pay the aforementioned sum, but, also,

a compliance with such obligation. Lastly, with regard to the issue negligence and on the right of PNB for reimbursement.

The court ruled that assuming that there had been such negligence on the part of the

PCIB, it is undeniable, however, that the PNB has, also, been negligent, with the

particularity that the PNB had been guilty of agreater degree of negligence, because it

had a previous and formal notice from the GSIS that the check had been lost, with the

request that payment thereof be stopped. Hence, PNB's negligence was the main or

proximate cause for the corresponding loss.

o Further, by not returning the check to the PCIB, it indicates that the PNB hadfound nothing wrong with the check and would honor the same, and by actually

paying its amount to the PCIB, the PNB induced the latter, not only to believe

that the check was genuine and good in every respect, but, also, to pay its

amount to Augusto Lim. In other words, the PNB was the primary or proximatecause of the loss, and, hence, may not recover from the PCIB.

It is a well-settled maxim of law and equity that when one of two (2) innocent personsmust suffer by the wrongful act of a third person, the loss must be borne by the one

whose negligence was the proximate cause of the loss or who put it into the power of

the third person to perpetrate the wrong.

Then, it has been held that, where the collecting (PCIB) and the drawee (PNB) banks areequally at fault, the court will leave the parties where it finds them.