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Case Doctrines On Negotaible Instruments Law (San Beda)
Case Doctrines On Negotaible Instruments Law (San Beda)
In the accommodation transactions recognized by the NIL, an accommodating party lends his credit to the
accommodated party, by issuing or indorsing a check which is held by the payee or indorsee as a holder in due
course, who gave full value which the accommodated party must repay the accommodating party, unless of course
the accommodating party intended to make a donation to the accommodated party. But the accommodating party is
bound on the check to the holder in due course who is necessarily a third party and is not the accommodated party.
Having issued or indorsed the check, the accommodating party has warranted to the holder in due course that he
will pay the same according to its tenor.
Recourse means resort to a person who is secondarily liable after the default of the person who is primarily liable. A
person who indorses without qualification engages that on due presentment, the note shall be accepted or paid, or
both as the case maybe, and that if it be dishonored, he will pay the amount thereof to the holder.
The International Corporate Bank vs. Francis S. Gueco and Ma. Luz E Gueco
A stale check is one which has not been presented for payment within a reasonable time after its issue. It is valueless
and, therefore, should not be paid. Under the negotiable instruments law, 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 the 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 in determining what is a "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.
The test is whether the payee employed suchdiligence as a prudent man exercises in his own affairs. This is because
the nature and theory behind the useof a check points to its immediate use and payability.