Thursday, November 5, 2015

Stale Checks and the Non-Extinguishment of Debt



By current banking practice, a check becomes stale after more than six (6) months, or 180 days, and the drawer is discharged from liability thereon to the extent of the loss caused by the delay. Under Section 186 of the Negotiable Instruments Law, "a check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay."

A stale check  is valueless and, therefore, should not be paid. This is because the nature and theory behind the use of a check points to its immediate use and payability. However, failure to present for payment within a reasonable time does not totally wipe out all liability. It will result only to the discharge of the drawer only to the extent of the loss caused by the delay.

In fact, the legal situation amounts to an acknowledgment of liability in the sum stated in the check, subject to deduction only for the proven losses or damages suffered by the drawer because of the delay or non-presentment. Definitely, the original obligation to pay certainly has not been erased.

Reference: THE INTERNATIONAL CORPORATE BANK (now UNION BANK OF THE PHILIPPINES) vs. SPS. FRANCIS S. GUECO and MA. LUZ E. GUECO [G.R. No. 141968, February 12, 2001]

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