Negotiable_Instruments_Law

Art. 315 and BP 22 Swindling or Estafa Art. 315 has three subdivisions classifying the different forms of estafa according to the means by which the fraud is committed. Thus, estafa is committed – With unfaithfulness or abuse of confidence, namely:                                                             a. by altering the substance, quantity, or quality of anything of value which the offender shall deliver by virtue of an obligation to do so, even though such obligation be based on an immoral or illegal consideration;                                                                       b. by misappropriating or converting, to the prejudice of another, money, goods or any other personal property received by the offender in trust, or on commission, or for administration, or under any other obligation involving the duty to make delivery of, or to return the same, eventhough such obligation be totally or partially guaranteed by a bond; or by denying having received such money, goods, or other property;                                   c. by taking undue advantage of the signature of the offended party in blank, and by writing any document above such signature in blank, to the prejudice of the offended party or any third person. By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously with the commission of the fraud:                                                                     a. By using fictitious name, or falsely pretending to possess power, influence, qualifications, property, credit, agency, business or imaginary transactions; or by means of other similar deceits.                                                                                                             b. By altering the quality, fineness or weight of anything pertaining to his art or business.                                                                                                                                   c. By pretending to have bribed any Government employee, without prejudice to the action for calumny, which the offended party may deem proper to bring against the offender. In this case, the offender shall be punished by the maximum period of penalty.     d. By postdating a check, or issuing a check in payment of an obligation when the offender had no funds in the bank, or his funds deposited therein were not sufficient to cover the amount of the check. The failure of the drawer of the check to deposit the amount necessary to cover his check within three(3)days from receipt of notice from the bank and/or the payee or holder that said check has been dishonored for lack or insufficiency of funds shall be prima facie evidence of deceit constituting false pretense or fraudulent act.                                                                                          e. By obtaining any food, refreshment or accommodation at a hotel, inn, restaurant, boarding house, lodging house, or apartment house and the like without paying therefore, with intent to defraud the proprietor or manager thereof, or by obtaining credit at a hotel(etc.) by the use of any false pretense, or by abandoning or surreptitiously removing any part of his baggage from a hotel(etc.) after obtaining food, credit, refreshment, or accommodation therein without paying. Through any of the following fraudulent means:                                                                     a. By inducing another, by means of deceit, to sign any document;                                    b. By resorting to some fraudulent practice to insure success in a gambling game;             c. By removing, concealing, or destroying, in whole or in part, any court record, office files, document, or any other papers. Elements of estafa in general: That the accused defrauded another (a) by abuse of confidence, or (b) by means of deceit; and        2.  That damage or prejudice capable of pecuniary estimation is caused to the offended party or third person.                                                                                                                          **The first element covers the 3 different ways of committing estafa under Art. 315.                **The second element is the basis of the penalty.                                                                               Elements of Estafa with unfaithfulness:                 1. That the offender has an onerous obligation to deliver something of value. 2. That he alters its substance, quantity, or quality. 3. That the damage or prejudice is caused to another. Elements of estafa with abuse of confidence  1. That money, goods, or other property be received by the offender in trust, or on commission, or for administration, or under any other obligation involving the duty to make delivery of, or to return, the same; 2. That there be misappropriating or conversion of such money or property by the offender, or denial on his part of such receipt; 3. That such misappropriation or conversion or denial is to the prejudice of another; and 4. That there is a demand made by the offended party to the offender.                                             Elements of Estafa by taking undue advantage of the signature in blank. 1. That the paper with signature of the offended party in blank. 2. That the offended part should have delivered it to the offender. 3. That above the signature of the offended party a document is written by the offender without authority to do so. 4. That the document so written creates a liability of, or causes damage to, the offended party or any third person. Elements of Estafa by means of deceit: 1. That there must be a false pretense, fraudulent act or fraudulent means. 2. That such false pretense, fraudulent act or fraudulent means must be made or executed prior to or simultaneously with the commission of the fraud. 3. That the offended party must have relied on the false pretense, fraudulent act, or fraudulent means, that is, he was induced to part with his money or property because of the false pretense, fraudulent act, or fraudulent means. 4. That as a result thereof, the offended party suffered damage. ***There is no deceit if the complainant was aware of the fictitious nature of the pretense.   By means of any of the following false pretenses or fraudulent acts executed prior to or simultaneously with the commission of the fraud: a. by using fictitious name; b. by false pretending to possess : power, influence, qualifications, property, credit, agency, business or imaginary transactions; or c. by means of other similar deceits.   Elements of Estafa by postdating a check or issuing a check in payment of an obligation: 1. That the offender postdated a check, or issued a check in payment of an obligation; 2. That such postdating or issuing a check was done when the offender had no funds in the bank, or his funds deposited therein  were not sufficient to cover the amount of the check. ***The check issued must be genuine, and not falsified. ***The check must be postdated or issued in payment of an obligation contracted at the time of the issuance and delivery of the check. ***The rule that the issuance of a bouncing check in payment of a pre-existing obligation does not constitute estafa has not at all been altered by the amendatory act.(R.A. No. 4885) ***when check is issued in substitution of a promissory note it is in payment of pre-existing obligation. ***The accuse must be able to obtain something from the offended party by means of the check he issues and delivers. ***Exception: When the check issued is not "in payment of an obligation" When postdated checks are issued and intended by the parties only as promissory notes, there is no estafa even if there are no sufficient funds in the bank to cover the same. ***When the check is issued by a guarantor, there is no estafa.   BATAS PAMBANSA BLG. 22 Elements of the offense of the offense defined in the first paragraph of BP. 22 SEC.1: 1. That a person makes or draws and issues any check. 2. That the check is made or drawn and issued to apply on account or for value. 3. That the person who makes or draws and issues the check knows at the time of issue that he does not have sufficient funds in or credit with the drawee bank for the payment of such check in full upon its presentment. 4. That the check is subsequently dishonored by the drawee bank for insufficiency of funds or credit, or would have been dishonored for the same reason had not the drawer, without any valid reason, ordered the bank to stop payment.   Elements of the offense defined in the second paragraph of sec. 1: 1. That a person has sufficient funds in or credit with the drawee bank when he makes or draws and issues a check. 2. That he fails to keep sufficient funds or maintain a credit to cover the full amount of the check if presented within a period of 90 days from the date appearing thereon. 3. That the check is dishonored by the drawee bank. Rights of a Holder in Gen. Sue thereon in his own name, or the holder in rep. capacity Payment to him in due course                                                                                      In the hands of a holder, other than the HIDC, a N.I. is subject to the same defenses or if it were non-negotiable instrument. Exception: A Holder not HIDC but derives his title from HIDC is given the right of such HIDC provided he himself is not a party to any fraud or illegality affecting the instrument. Rights of HIDC (Sec. 52) Has taken the instrument: 1.Complete and regular upon its face. Instrument is incomplete when it is wanting in material particular to be inserted in an instrument. Irregular- apparent alteration Absence of the required doc. Stamp will not make the instrument incomplete                   Ex. “Pay to X Php1,000.00                                  (Sgd) Z ”                         -NO DATE, NO PLACE OF PAYMENT, NO CONSIDERATION       Question: In the above instrument, is it complete and regular'       Answer: Yes, these omissions can be supplied per authority of Secs. 17(c), 73 and 24, respectively. 2.He became the holder of it before  it was overdue  and  without notice that it had been previously dishonored, if such was the fact.                 a. “overdue” – often date of maturity;                 b. if payable on demand (sec. 71), the date of maturity is determined by the date of Presentment; c. an overdue instrument is an indication that it has been dishonored. d. an overdue instrument is still negotiable but it is subject to defenses available at the time of transfer;        e. Where the transferee receives notice of any infirmity in the instrument or defect in         the title of the person negotiating the same before he had paid the full amount as         agreed, he is deemed a HIDC only to the extent of the amount paid by him. (Sec. 54). 3.Took it in good faith and for value Good faith- refers to the good faith of the indorsee or transferee and not the seller of the instrument; Bad faith does not require actual knowledge of the exact truth; but something wrong or irregular in the transaction. If the instrument was purchased at a discount, holder does not prevent him from being HIDC; exception: when the discount is unusually large; Ex: Instrument has a value of Php5000.00. Later, it was indorsed at Php2,300.00. Possession of the holder thereof is questionable. 4.At the time the instrument is negotiated to him(HIDC), he had no notice of infirmity in the instrument or defect in the title of the person negotiating it. “Notice” to holder- covers  situations where the holder had actual or chargeable knowledge of the infirmity or defect, or must have acted in bad faith; Knowledge of the agent in constructive knowledge to the principal, hence he latter will not be considered a HIDC; Defective title – when the instrument is obtained or any signature thereto by fraud, duress or  force, fear, etc. unlawful means or for illegal consideration.   Cashier’s check(CC)                                                                                           August 30, 2011                 Pay to the order of W  5000pesos                                                                         (Sgd) A                         To ABC Bank Cavite                                                             W – X – Y (theft) ->Z                                 Question: Is Z a HIDC'                                 Answer:  No. A person who became the holder of said Cashier’s Check as indorsed by                              one (y) who stole it who fails to explain how and why it was passed to him is not a HIDC. A negotiable PN which is obtained by a party (usually a corp. or partnership) by virtue of a contract of merger  does not qualify him a HIDC since only a negotiation by indorsement could operate as a valid transfer to make such holder in due course. PRESUMPTION:                 Every holder is generally deemed prima facie to be a HIDC. He who claims otherwise has the burden of proof (Sec. 59). X - maker of  PN ->  Y(Payee) A – B – C – D – E  -> F                 All and each- HIDC until one of them or subsequent party assails the title to be defective.  Rights of a HIDC A.      To sue on the instrument. (Sec 51);  B.      To receive payment on the instrument; payment discharges the instrument (Sec. 51);  C.      To hold the instrument free from any defect of title of prior parties. (Sec. 57);  D.      To hold the instrument free from defenses available to prior parties among themselves (sec. 57);  Note: Real defenses are available even against a HIDC. E.       To enforce payment on the instrument to the full amount  against all parties liable  thereon (sec. 57)  “Several steps forward, one step backward.”    RVC- to discuss specifics and to give illustrations.: REAL DEFENSES: FIADIFIIP PERSONAL: DIDAFICS