Professional Documents
Culture Documents
10/02/16
NEGOTIABLE INSTRUMENTS LAW
BOE (drawee graduating to become an ACCEPTOR)
- When you issue a check, bank is usually the drawee
- When check is cleared, drawee bank becomes acceptor
- Don din sa bank ni payee magdedeposit
- Once cleared, acceptor becomes principally liable
- Recourse to secondarily liable parties (Drawer, party-indorsers)
- Dishonoured for non-payment by bank (ie. Closed accounts, Insufficient funds)
NOTICE OF DISHONOR = equivalent to a demand NOD is not only applicable to checks, but to all negotiable
instruments.
PROTEST = foreign BOE/N.I. (foreign bills pwede issued here, and payable outside PH and vice versa)
LETTER OF PROTEST (technical term sa foreign boe) its the same as NOD. You have to notify in order to have
your right of recourse.
SPECIAL BOE
- Checks are special kind of BOE
- You can draw your own BOE (not necessarily na check palagi)
- Parties: drawer, payee, draweeacceptor
*DRAWER and DRAWEE one and the same in case of Managers Check/Cashiers Check/ Certified Check.
Section 143
Sec. 143. When presentment for acceptance must be made. - Presentment for acceptance must be made:.
(a) Where the bill is payable after sight, or in any other case, where presentment for acceptance is necessary in order to fix the maturity of the
instrument; or
(b) Where the bill expressly stipulates that it shall be presented for acceptance; or
(c) Where the bill is drawn payable elsewhere than at the residence or place of business of the drawee.
In no other case is presentment for acceptance necessary in order to render any party to the bill liable.
EXAMPLE
- YY issues a BDO check on October 2 and was accepted on the same date for the
amount of P10M pay to XX, payable 100 DAYS after sight.
- *present this for acceptance
CLEARING = ACCEPTANCE
**deemed accepted within 24 HOURS by the bank when not acted upon it**
EXAMPLE
- BDO Makati issued a check
- Payable at BDO Davao
- Expressly written that it be payable elsewhere
- Correlate Section 1 kasi unconditional pa rin kahit may additional stipulations = not conditions!!
What is the effect on the instrument when the bank is closed. Can you now proceed against parties secondarily
liable? Can you go to PDIC for relief? Take note, the maximum relief in PDIC is P500K only, and your claim is P10M.
- Both recourses are proper.
- PDIC = pwede rin kasi the bank is already closed, pero maco-collect mo eh up to the extent of P500K only.
However, in liquidation, you can recover the remaining difference from your P10M claim.
- LIQUIDATION = Government (taxes) > Prioritization of payment > Others will share the remaining
- Proceed against secondarily liable parties because this is NOT PAID yet, pero 500 DAYS after sight is
required to be paid. more chances to this second remedy, kung wala naman, zero ka.
**INDORSEMENTS = CONDITIONS ARE ALLOWED** but during the negotiation process, NO. ????
- Before NOD = secondarily liable palang (yung indorsers) QUALIFY YOUR ANSWER!! Magiging primarily
liable lang pag may issued NOD na.
- primarily liable = does not only refer to maker, acceptor, drawer
Payment by Accommodating Party ( *you did not receive any consideration therefor.)
EXAMPLE
- X is the accommodated party; A is the NPN holder, subsequently indorsing it to B and C; Y is
the accommodating party
- The NPN is for P1M
- A wants X to be accommodated by Y
- A then accepts Xs NPN with Y as Xs AP.
- Y receives P10K from X (not from the P1M)
- Iba ang effect pag dependent yung accommodation sa P1M!!
- **parties after principal are secondarily liable.
- Jointly and solidarily liable ang accommodated party at accommodating party
ZANDALEE R. BILLONES [2013-0221] ARELLANO UNIVERSITY SCHOOL OF LAW 3
COMMERCIAL LAW REVIEW under ATTY. MINDA GAPUZ (OCTOBER 2016)
Novation
- You discharge the N.I. upon change of the terms in the instrument.
- *obligation to pay is NOT EXTINGUISHED. Yung NI lang.
EXAMPLE
- Car pinambayad. Novation to. Pag not delivered yung car, another cause of action ito.
Renunciation
- Equivalent to DONATION
- Renounce against principal
- **INSTRUMENT only is discharged NOT the obligation
*deliver certain goods to Order/Bearer = in order to negotiate pero hindi pa din ito NI, however some rules on NIL
may apply.
BP 22
Effectivity: April 3, 1979
What are the elements of BP22?
Your client is the drawer who issued a check which bounced. What is your remedy?
- Ask your client what is the reason for issuing the check (EXCEPTIONS ito like estoppels)
*Establish that there is knowledge of insufficiency of funds/ no more funds/ closed account - COMPLY WITH THE
LAW
*However, insofar as BP22 is concerned, the payment of an obligation, check was not issued
*non-payment of debts
EXAMPLE
- PRIOR OBLIGATION September 1, 2016
- Check was issued on October 2, 2016 as payment for prior obligation
- Pre-existing obligation you issued the check after, to pay the pre-existing obligation
ZANDALEE R. BILLONES [2013-0221] ARELLANO UNIVERSITY SCHOOL OF LAW 4
COMMERCIAL LAW REVIEW under ATTY. MINDA GAPUZ (OCTOBER 2016)
ESTAFA
EXAMPLE
- October 2, issued/accepted/no delivery of the car (as payment).
- To be deposited on October 30, a postdated check was issued
IMPRISONMENT: 6 YEARS
Effect of Notice = you have already established DECEIT refusal to receive NOD = sufficient
*you parted with your property by the drawers act of flashing the check = conclusive presumption of DECEIT.