check – a bill of exchange drawn on a bank payable on demand (Negotiable Instruments Law, sec. 185).
A check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability to the extent of the loss caused by the delay. (Negotiable Instruments Law, sec. 186).
Under section 186, there are 3 requisites in order that the drawer may be discharged from liability: (a) the check is not presented within a reasonable time; (b) the drawer suffers a loss; and (c) the loss suffered by the drawer is attributable to the delay.
Failure to present the check on time does not totally wipe out the original obligation. The only loss which would be sustained by the drawer in case the check is not presented within a reasonable time would be caused by the insolvency of the bank subsequent to the delivery, and prior to the presentment, of the check. (see Philippine Negotiable Instruments Law, p. 390 ).
X sold a parcel of land to Y. X gave Y PhP5,000 in cash and a check in the amount of PhP40,000. Y never encashed the check and 10 years after, Y claimed that because he did not encash the check, the sale was not consummated. Is there basis for X’s position? (see Philippine Negotiable Instruments Law, p. 392 ).