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NEGO class notes (Dimalanta)

NEGO class notes (Dimalanta)

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Published by: saintkarri on Nov 06, 2010
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03/15/2013

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Page
1
of 
20
17 July 2010
AS A MATTER OF REVIEW
y
 
What makes a negotiable instrument? 
SUDOCSign and writeUnconditional promise or order to payDemand or fixed/determinable future timeOrder or bearerC
y
 
THE 
 
HO
W.
Phases in the life cycle of a (butterfly) negotiable instrument
o
 
M
ake or draw the instrument
o
 
I
ssuance - birth
o
 
N
egotiate  negotiation
 
I
ndorse and deliver
 
Deliver only
o
 
Holding patterns until you learn your lesson - Pwedeng magpaulit-ulit sha sha negotiation phase, his essence for being. The valueof the instrument is to be constantly circulated. Law created for it to reach this point in his life to facilitate commerce. This is thepeak of his career
o
 
Presentment
o
 
Discharged  by:
 
Payment or
 
Dishonor
o
 
I
babalik kay maker/drawer yung instrument
y
 
THE 
HO
.
Sino yung bida at certain phases
o
 
Holders v Assignee
o
 
Assignee pertains to the CC. At certain point in the codals, it also talks about assignees. Assignees also operate in the universe of thenegotiable instruments. There are transfers that do not amount to negotiation. But keep in mind that we only talk about negotiableinstruments here. When you start talking about assignees, you revert to the world of ordinary contracts and the
NI
L rules do notapply. When you see validity thats a tip that you think in terms of Oblicon.
o
 
Sec. 51: rights of the holder.
M
ay subset si CC at
N
ego in the persona of assignee.
o
 
Sec. 52: whole different animal altogether that exists only in this world.
N
o other universe you can find this. He is the king or queenin this universe, he rules.
y
 
How do we identify this creature who rules this universe.
What are the tell-tale signs? 
COG
I
(Domingo)Complete A
N
D regular on its face
if lacking, may not be H
I
DC but may be mere HolderOverdue A
N
D without notice of dishonorGood faith A
N
D for value
I
nfirmity in instrument OR defect of title of negotiation; no notice of 
y
 
N
ot necessarily valueless, some other contracts siguro.
y
 
I
sa-isahin natin yan.
ELEMENT1: COMPLETE AND REGULAR ON ITS FACE
When is an instrument C 
OMPLETE 
y
 
Walang sinabi sa code. But you look at Section 14 re: blanks in the document.
y
 
I
t is
complete
when instrument has all the
material
 
particulars
.
y
 
But what are material particulars?
o
 
Code has some rules on wrong date, absent date, what if you add the obligation that was initially covered by the issuance
theseare not material particulars. They do not make the instrument defective.
o
 
What happens
y
 
IF lacking in material particulars
 
, the
H
OLDER
(holder pa lang) has prima facie authority to
ill
 
it
 
up
 
whoever holds that instrument ispresumed to have validly obtained the instrument. He enjoys presumption that he obtained the instrument in gf and all these things, includingholding blank paper with someone elses signature.a.
 
Strictly in accordance with authority A
N
D (pag pinapirma ka ng classmate niyo sa ¼ sheet)b.
 
When reasonable time (no rule or jurisprudence on what constitutes RT, case by case basis yan.)
When is an instrument R
EGULA
R? 
y
 
K
aya gusto ko na icover yung next part ng outline.
I
rregular instruemtns are not automatically non-nego. Holders of irregular are notnecessarily not H
I
DC.
 
y
 
ategories of irregularity 
(A)
 
In
complete
BUT d
elivere
d
(Sec. 14)
 
 
Page
2
of 
20
 
H
I
DC enjoys conclusive presumption that instrument was filled up (a) strictly in accordance and (b) reasonable time
 
Later you will learn that some defenses do not apply to H
I
DC(B)
 
In
complete
AND
u
nd
elivere
d
(Sec. 15)
 
Why do we even talk about it?
M
ost likely nasa drawer mo lang yan. For some reason, it entered the world of 
NE
GO contracts
 
E
.g. Pay to cash! Woohoo! Duty of the bank is ot have it cleared sa clearing house. Yung drawee bank, negligent kung yun angspecimen signature, kinclear mo naman.
M
adaming pondo tong taong to. Liable ang bank for this negligence as you will see in thecases.
 
Completed and delivered with authority
umikot na thru derma.
K
inomplete niya kasi (Sec. 14 na ito)
 
Completed and delivered without authority1. Parties who signed prior to the
d
elivery
(e.g. me has check with amount and date but without signature -> classmate who pickedit up hindi agad pinresent sa bangko -> pinambayad muna sa derma niya -> tas si derma binigay kay supplier -> bank -> monthlystatement
V
AL
I
D D
E
F
EN
S
E
even against H
I
DC
y
 
Ang tanong at every stage, sino ang H
I
DC sa kanila? Yes H
I
DC silang lahat.
y
 
But as regards me and bank? Sino ba ung any person whose signature placed thereon before delivery this slice of time beforedelivery, ito lang naman yun. Delivery without authority nga lang. Point in time matters where the signature was placed.
y
 
E
.g.
I
bahin natin para the incompleteness is on the amount.
M
ay date and signature. Ganun pa rin yung scenario, nahulog sanotebook, nakuha ni classmate, derma then derma supplier then bank. As far as
ME
is concerned, sec 15 is not applicable.
y
 
Pag fraud, iba na yung usapan. Youll see in Gempesaw where the court penalized the drawer kasi iniwan lang sa drawer(C)
 
C
omplete
BUT
u
nd
elivere
d
(Sec. 16)
 
Revocable
 
All holder (except)
 
Rebuttable yung presumption U
N
L
E
SS that person is H
I
DC. For a H
I
DC, valid delivery is conclusively presumed.
 
Panno nangyari yan, babalikan natin si me: complete but undelivered (check with amount, pay to cash, with date signed) nilagay sadrawed, naipit sa notebook, nakuha ni classmate, derma to supplier to bank: CO
M
PL
E
T
E
P
E
RO U
N
D
E
L
I
V
E
R
E
D. All holders, exceptH
I
DC, enjoy the presumption that they obtained it. Bank, supplier and derma is H
I
DC (nadaanan yung compelte and regular).Classmate is not, pagdating sa kanya, rebuttable na lang.
N
apresent na ni
M
e na walang valid delivery, kailangan niya na iprove yungCOG
I
 
(check complete but undelivered somehow passed on to the hands of You)
M
e
You
Derma
Supplier
Bank : YOU, not H
I
DC,rebuttable presumption of delivery thus if delivery was proved not to have been made, YOU must show that he is a H
I
DC; D
E
R
M
A,SUPPL
IE
R, BA
NK
: H
I
DC thus enjoys conclusive presumption of delivery.
ELEMENT2: OBTAINED BEFORE OVERDUE
a
nd NO NOTICE OF DIS
H
ONOR
When is an instrument 
OVE 
RD
UE 
y
 
AFT
E
R maturity.
K
ung walang date, payable on demand therefore, always obtained before maturity
y
 
E
.g.
ME
(signed, payed to UP or order, with amount,
N
ov 5, 2010) -> Classmate orayt may tuition na ako. Out of the country then! ->
M
ahiraplumand sa
N
A
I
A so nakabalik shang
N
ov. 7, 2010 -> UP -> Derma -> Supplier.
y
 
Who is H
I
DC? Classmate is not (no gf and no value). After that UP etc, no because overdue
Without notice of dishonor 
y
 
N
OT
I
C
E
 Pwedeng nadishonor pero hindi niya lang alam.
y
 
Pwede bang nadishonor na, tapos inenegotiate pa?
I
istampan nila yun ng D
I
SHO
N
OR
E
D pero kung may connivance with the clerk na wag mona tatakan ayun umikot ulit sa commercial universe.
ELEMENT3: OBTAINED BEFORE OVERDUE
a
nd NO NOTICE OF DIS
H
ONOR
When are you in
GOO
D F 
 AITH
y
 
I
s it necessary that you know all of the facts/circumstances behind the obligation supporting the initial issuance? Are you required to inquireor get a certification from all previous holders that they were in GF so that you are in GF.
y
 
When are you in GF?
I
mportant ito kasi dito usually bumabagsak ang mga cases?
y
 
I
s actual knowledge required?
N
O. Ginawa ko na ngang absurb yung example. Thats the beauty of negotiable, hindi mo nahahalukayin yunghistory. You will just rely on the face of the instrument.
I
t sort of similar to LT because what found in the register is what you are entitled tonotice.
y
 
N
ot required to exert extra effort to look into history of the transactions.
y
 
But if you obtained instrument contrary to law OR public policy , not in GF. When will you fail this test?
E
.g. bribery (chieeef. Wala talagaakong cash.
M
ay checke akong napulot sa classmate ko. Wala pa sa daang matuwid yung pulis.
N
aglawschool hanggang 3
rd
year yung
MM
DA.)
y
 
Sino ba dapat may good faith? Si indorsee
y
 
N
o
 
actual
kn
owle
dg
e
 
o
the
 
historical
 
tra
n
sactio
n
is
 
require
d.
What constitutes
VALUE 
 
 
Page
3
of 
20
y
 
Under Sec. 25: any consideration sufficient to support a simple contract
y
 
I
n the quiz kanina: P2,000 vs. P10,000, theres a significant gap between value and the face of the check.
N
o requisite in law to beapproximate, any consideration is deemed sufficient. What if 5 centavos lang yung binigay, is that still for value? Yes.
K
asi nga walangthreshold. P
E
RO baka may fraud, duress or intimidation.
y
 
But what is the limitation?
V
alue alone will not infect the instrument/negotiation but its a clue for you to look into the element of good faith.
M
ay value kung value rin lang. Thats why if you look at the element here, A
N
D which is conjunctive and not OR
y
 
Theres no question on the value, just in terms of good faith.
y
 
I
n particular to ACCO
MM
ODAT
I
O
N
PARTY, not required ang value.
I
understand, hindi ka naman dapat may value.
y
 
Going back to the quiz: 2 things you look into kapag accommodation party:
o
 
N
o value
o
 
Lends his name(ST
E
V
EN
)
 A
stro Electronics v Phil Export 
 Roxas signed twice as president (maker) and personal capacity (accommodation party for the company; personal guaranty for the obligations of thecompany).Roxas defense in the claim:Lesson for today:
M
aging matipid sa pirma.
Prudencio v 
CA
 
y
 
I
to lang yung example natin na hindi liable yung accommodation party. What did P
N
B do para hindi liable si Prudencio? P
N
B was not a holderfor value because it extended the term of payment without Prudencios consent.
K
ung gusto niyo ng litigation, take note of the good theory of the defense.
I
nattack nila yung main obligation, Sec. 29
Pano natin magagawang hindi holder for value is P
N
B. Yung good faith element niyakasi wala. Sinimulan nila sa good faith, papunta yan sa value.
y
 
What is the extent of the liability of the accommodation party? Walang sinabi sa batas, pero ang laki ng responsibility niya. So by analysis,Court considered it a solidary co-debtor. Tiningnan niya yung limitations ng surety. When is a surety released from obligation. Tas pumasoksha sa ginawa ni P
N
B.
y
 
V
alue is no longer limited to good faith, kasi nga binago na yung mode of payment.
I
nextend mo yung liability niya with his knowledge.
y
 
L
iability
 
o
a
n
accommo
d
atio
n
party
such
 
that
 
y
 
M
a
d
e
 
to
 
believe,
n
o
 
other
 
co
nd
itio
n
s
 
will
 
alter

ravel-on
I
bang accommodation ito. This was an accommodation check.Compare
 A
trium
and
risologo-Jose
(JA
M
)
Can corporations act as an accommodation party? 
Y
E
S, if [1] the corporation is authorized in its charter/corporate document to act as one ORtheres no prohibition, [2] it passes the appropriate board resolution, [3] the signatory is the corporate officer authorized.
 A
trium
Atrium is not H
I
DC because on its face its not negotiableHow can corporation become an accommodation party? Hi-Cement says we didnt get value, issued only as financial assistance.
I
t wasnt foranything. Can the corporation validly do that?
risologo-Jose
What do we make of Sec. 29 does not apply?Sino nagcorp na, sha na lang kakausapin ko. Trust fund doctrine: held in trust to answer for liabilities of the corporation, e.g. cannot declaredividends if there is not unrestricted earning. For the corporation only and not for another entity.
N
ot expose itself, unless its in the business of doing so e.g. insurance company, cover contingent liabilities of others OR there is approval of 2/3 majority of the shareholders or accommodateliability of subsidiary or third-party.
I
f it acts beyond its authroity, primary or secondary purpose, that act is an ultra vires act. Yun yung sinasabi nicourt. A
N
o ba business ni
M
over? Trucking or dancersBakit naman niya igaguarantee, nandun ba sa charter niya. Yes as a rule
I
F[1] it has authority from its board/shareholders as the case may be[2] not prohibited OR authorized by its charter[3] signatory is authorized officer
specifically authorized to do so
kailangan specific yung authority niya.
M
ejo tricky ito.
I
f you take the cases independently, conflicting sha.
ELEMENT4: NO NOTICE OF INFIRMITY
i
n
the
 
i
n
strume
n
t
 
or
DEFECT
i
n
the
 
title
 
o
f n
e
g
otiator
y
 
M
ay pinag-iba ba yun or madaldal lang yung batas?
y
 
OR na ito ha

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