BL - Nego PDF

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COMMERCIAL LAW
NEGOTIABLE INSTRUMENTS
BILL OF EXCHANGE
- contain an order to pay
FORMS AND INTERPRETATION - in here, the drawer is commanding a drawee

to pay the payer or the holder
REQUISITES OF NEGOTIABILITY June 30, 2012
I order x to pay y or holder the sum of

1. it must be in writing and signed by the
maker
2. must contain an unconditional promise or

1k, on July 15, 2012
order to pay a sum certain in money

3. must be payable on demand,or at a fixed
sgd Z
THE FF CONSTITUTE A SUM CERTAIN IN

determinable future time MONEY; although paid
4. must be payable to order or bearer; and 1. with interest; or
5. where the instrument is addressed to a 2. by stated installments; or
drawee, he must be named or otherwise 3. by stated installments, with a provision that,
indicated therein with reasonable certainty
NOTE: NEGOTIABILITY OF THE

upon default in payment of any installment
or of interest, the whole shall become due;
(with acceleration clause) or
INSTRUMENT IS DETERMINED 4. with exchange, whether at a fixed rate or at
ONLY BASED ON the current rate; or
1. the whole instrument 5. with costs of collection or an attorney's fee,
2. what appears in the face of the in case payment shall not be made at
instrument; and

3. provisions of NIL, especially sec. 1
maturity.
HENCE; DEEMED NOT

HENCE: it is not determined by looking NEGOTIABLE WHEN

at a separate document
IT MUST BE IN WRITING SIGNED BY THE

the amount supposed to be paid is a
sum certain plus another
undetermined amount. (profits from the

MAKER OR DRAWER
LAW DOES NOT SPECIFY WHAT KIND IF

bakery, or the collection of credit)
INTEREST
WRITING does not affect the certainty of the
- hence, it may be handwritten, printed, sum, as there is an unconditional

engraved etc.
SAME; as to the signature of the maker.

principal amount
INSTALLMENT

signature may be in writing, printed, etc.
W H AT I S I M P O R TA N T F O R
TO BE DETERMINABLE; the ff
requisites:
1. the date of each installment must
SIGNATURE IS be fixed or at least determinable
the maker affixed as his own signature 2. the amount to be paid for each

of authentication installment must also be stated or
IT MUST CONTAIN AN UNCONDITIONAL at least determinable

PROMISE OR AN ORDER TO PAY
NEGOTIABLE PROMISSORY NOTE

Hence; the ff are not determinable
when the date of each installments
are not fixed

- contains unconditional promise to pay
as well as the amount to be paid on
NOTE: promise may not be used, so
long as words that are equivalent are
each installments
PAYABLE WITH EXCHANGE

used. although the amount stated may be in
US currency, actual payment may be

june 30, 2012
due x or order 1k payable on July 5,

made in Phil currency.
- in such case, it is necessary to place
the exchange rate in order to know the

2012 exact amount to be paid in pesos.
either stated as:

sgd y
NOTE: mere acknowledgement of a

40 PHP : 1 USD
current rate of exchange at

debt does not constitute a promise the time of payment
prepared by: ronie ablan

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COMMERCIAL LAW
THE PROMISE OR ORDER MUST BE PAYABLE ON DEMAND OR AT A FIXED OR

UNCONDITIONAL
IT IS CONDITIONAL WHEN

DETERMINABLE FUTURE TIME
PAYABLE ON DETERMINABLE FUTURE

the promise or order is made to depend on a TIME
contingent event, or past unknown event to the
parties, the happening of which will either give
rise to an obligation or extinguish existing

- payable on or before Christmas this year.
F F A R E D E E M E D PAYA B L E A T A
obligation. DETERMINABLE FUTURE TIME; when

- whether suspensive or resolutory

payable
STIPULATIONS THAT MAKE PROMISE OR

ORDER CONDITIONAL
1. indication of fund or account out of which

At a fixed period after date or sight; or
- 25 days after date (date of the

payment shall be made (ie. rental ng instrument), or
apartment) - 25 days after sight (date from
2. when payment is made to depend upon a

contingency
presentment for acceptance)
On or before a fixed or determinable future

STIPULATIONS THAT DO NOT MAKE THE
PROMISE CONDITIONAL
time specified therein; or
1. indication of particular fund out of which

reimbursement is to be made
2. indication of particular account to be

- on or before Dec. 25, 2012
On or at a fixed period after the occurrence

debited with the amount of a specified event which is certain to
3. a statement of the transaction which gives happen, though the time of happening be

rise to the instrument

uncertain.
EXE FOR #3; it becomes conditional

when the statement of transaction
- 10 days after death of X

~ restricts the instrument
Pay x or order 10k on or before July

NOTE: the secific event here must be
certain to happen.
15, 2013 subject to the terms and An instrument payable upon a contingency is
conditions of Deed of Sale executed not negotiable, and the happening of the event

by the parties

does not cure the defect.

dapat, reference lang WHEN PAYABLE ON DEMAND
When it is so expressed to be payable on
Pay to X or order 10k, on or before
July 15 of this year. The bill is being demand, or at sight, or on presentation; or
executed by virtue of the contract of

sale executed by the parties June 10, 2012
Pay to the order of X 10k on demand

RATION FOR #1 and #2
as absolute obligation to pay is still
existing. and even if the account

(or at sight or upon presentation)
sgd Y
turned out to be insufficient, payment
should still be made.
TO: Z
~ usually,the reimbursement debiting if

account transpire after payment has
In which no time for payment is expressed.

been made.

Pay X or order 10k
June 10, 2012
sgd Y
TO: Z
WHEN DEEMED PAYABLE ON DEMAND

Where an instrument is issued, accepted, or
indorsed when overdue,
it is, as regards the person so issuing,
accepting, or indorsing it, payable on
demand.

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COMMERCIAL LAW

PAYABLE TO ORDER OR BEARER
INSTRUMENT IS PAYABLE TO BEARER

INSTRUMENT IS PAYABLE TO ORDER
WHEN
it is drawn payable to the order of a specified

WHEN person or to him or his order. It may be drawn

payable to the order of:

When it is expressed to be so payable; or
A payee who is not maker, drawer, or
June 10, 2012

drawee; or

Pay to bearer 10k upon demand
June 10, 2012
sgd Y I promise to pay x or order 10k upon

demand
When it is payable to a person named therein

or bearer; or sgd Y
June 10, 2012

The drawer or maker; or

Pay X or bearer 10k upon demand June 10, 2012
I promise to pay Y or order 10k upon
sgd Y demand
sgd Y
When it is payable to the order of a fictitious
or non-existing person, and such fact was
sgd: Y
known to the person making it so payable; or NOTE: for this instrument to be

complete, when the maker/drawer is
June 10, 2012 also the payee, he must be the one

who first indorse it and sign his name

Pay to Superman 10k upon demand
as indorsee
sgd Y

The drawee; or
When the name of the payee does not

purport to be the name of any person; or June 10, 2012
I promise to pay Z or order 10k upon
June 10, 2012
Pay to Flower or order 10k upon

demand
sgd: Z
sgd Y

demand
(di ko to magets)
sgd Y

Two or more payees jointly; or
When the only or last indorsement is an
indorsement in blank. June 10, 2012
I promise to pay upon order of Y and Z
June 10, 2012 10k upon demand

sgd X
Pay to the order of x 10k upon
demand. sgd: A

TO: blank
sgd Y

One or some of several payees; or
June 10, 2012
I promise to pay Y or X 10k upon

demand
sgd Z

The holder of an office for the time being.
June 10, 2012
I promise to pay to the order of SSCR

Law 10k on July 15, 2012
sgd Y
sgd: Y

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COMMERCIAL LAW
Where the instrument is payable to order, the Sec. 6. Omissions; seal; particular money. -
payee must be named or otherwise indicated The validity and negotiable character of an

therein with reasonable certainty.
IF THE INSTRUMENT IS ADDRESSED TO A

instrument are not affected by the fact that:
1. it is not dated; or
2. does not specify the value given, or that
DRAWER; HE MUST BE NAMED OR any value had been given therefor; or
OTHERWISE INDICATED THEREIN WITH 3. does not specify the place where it is drawn

REASONABLE CERTAINTY
RATION:
or the place where it is payable; or
4. bears a seal; or
5. designates a particular kind of current
essential for persons who will take a bill of
exchange to know the person who will be money in which payment is to be made.

primarily liable under the instrument.
FF ARE NOT ACCEPTABLE DESIGNATION

But nothing in this section shall alter or repeal
any statute requiring in certain cases the
nature of the consideration to be stated in the

OF DRAWEE
TO MR X or MR Y

instrument.
Sec. 10. Terms, when sufficient. -

- where the instrument is addressed to The instrument need not follow the language of
2 or more drawees in the alternative this Act, but any terms are sufficient which
clearly indicate an intention to conform to the
TO MR X or IN HIS ABSENCE OR FAILURE
TO PAY, TO MR. Y
- where the instrument is addressed to

requirements hereof.
THE FF INSTRUMENTS ARE NOT

2 or more drawees in succession
PWEDE; where the instrument is addressed

NEGOTIABLE
TREASURY WARRANT; it is a check drawn on

to 2 or more drawees, jointly the treasury of the govt, whose payment is

- TO MR X and MR Y subject to a condition (being subject to
governmental regulation and usually payable

MISCELLANEOUS
Sec. 5. Additional provisions not affecting

out of a particular fund)
LETTERS OR CREDIT; does not contain an

negotiability. - unconditional promise to pay, as payment is
An instrument which contains an order or dependent upon the presentment of certain
promise to do any act in addition to the

payment of money is not negotiable.
documents.
CERTIFICATE OF STOCKS; as merely a

But the negotiable character of an instrument written evidence of shareholdings of a person
otherwise negotiable is not affected by a
provision which:
1. authorizes the sale of collateral securities in

in a corp.
BILL OF LADING; a form of document of title. it

case the instrument be not paid at maturity; represent goods rather than a promise or order
or
2. authorizes a confession of judgment if the
instrument be not paid at maturity; or

to pay money.
3. waives the benefit of any law intended for

the advantage or protection of the obligor;
or
4. gives the holder an election to require
something to be done in lieu of payment of
money.
But nothing in this section shall validate any

provision or stipulation otherwise illegal.

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COMMERCIAL LAW
KINDS OF NEGOTIABLE KINDS OF BILL OF EXCHANGE

INSTRUMENT 1. CHECK; drawn on a bank, payable on

2 BASIC TYPES OF NEGOTIABLE
demand
2. TIME DRAFT; payable at a fixed date
3. SIGHT OR DEMAND DRAFT; payable

INSTRUMENT
PROMISSORY NOTE
when the holder present it for payment
4. TRADE ACCEPTANCE; used in contracts
of sake whereby the seller as drawer orders
an unconditional promise in writing made by the buyer (as drawee) to pay a sum certain
one person to another, signed by the maker, to the same seller (payee)
engaging to pay on demand, or at a 5. DRAFT; synonymous with bill of exchange
fixed or determinable future time, (in letter or credit transaction)
a sum certain in money to 6. INLAND BILL; bill which is, or on its face
order or to bearer. purports to be, both drawn and payable
Where a note is drawn to the maker's own within the Phil.

order, it is not complete until indorsed by him
BILL OF EXCHANGE
7. FOREIGN BILL; bill which on its face, does
not purports to be both drawn and payable
within the Phil.
an unconditional order in writing addressed by 8. BANKER'S ACCEPTANCE; a time draft
one person to another, signed by the person across the face of which the drawee which
giving it, is a bank has written word "accepted"
requiring the person to whom it is 9. CLEAN BILL OF EXCHANGE; a bill of
addressed exchange to which no doc/s is/are attached
to pay on demand or at a fixed when presented for payment or acceptance
or determinable future time a 10. DOCUMENTARY BILL OF EXCHANGE; a
sum certain in money to order bill of exchange to which a doc/s is/are
or to bearer. attached when presented for payment or
acceptance
PROMISSORY BILL OF 11. BILLS IN SET; a bill of exchange drawn on
NOTE EXCHANGE a set, each part of the set being numbered
and containing a reference to the other
part, the whole of the part constitutes but

2 parties on its face
i. MAKER; the one

3 parties on its face
i. DRAWER; he is one bill.
who promises to pay the person who KINDS OF PROMISSORY NOTES

the amount state in draws and signs the 1. CERTIFICATE OF DEPOSIT; a written
acknowledgment of a bank of its receipt of

the promissory note instrument. he
orders the drawee to a certain sum with promise to repay the
same.
ii. PAYEE; he is the
person who is
supposed to be paid

pay
ii. DRAWEE; he is
2. BONDS; certificate or evidence of a debt in
which the issuing company or government
by the maker the person who is body promises to pay the bondholder a
being ordered to specified amount if interest for a specified
pay. his liability is length of time, and to repay the loan on the
conditioned upon his expiration date.
acceptance. once 3. DEBENTURE; pn or bond backed by the
accepted, he is general credit of a corporation and usually
not secured by a mortgage or lien on any

called Acceptor
iii. PAYEE; the one specific property.
to whom payment W H E N B I L L M AY B E T R E AT E D A S
should be made by PROMISSORY NOTE
the acceptor 1. when the drawer and the drawee of the bill
are the same person
person who signs it the person who 2. drawee is a fictitious person
(maker) is the signs it (drawer) is 3. drawee has no capacity to contract
person primarily secondarily liable 4. when the instrument is so ambiguous that
liable - the person
primarily liable is the there is a doubt whether is a bill or a note.
drawee-acceptor
there is only ine there are 2

presentment presentments; 1st is
for acceptance & the
2nd is for payment

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COMMERCIAL LAW
COMPLETION AND DELIVERY

INSERTION OF DATE
WHEN HOLDER MAY INSERT THE TRUE

DATE OF ISSUE OR ACCEPTANCE
an instrument expressed to be payable at a
fixed period after date
is issued undated, or

NOT INCLUDED IN THE SYLLABUS
Sec. 11. Date, presumption as to. -

where the acceptance of an instrument
payable at a fixed period after sight
Where the instrument or an acceptance or any
indorsement thereon is dated, such date is is undated,
NOTE: The insertion of a wrong date does not

deemed prima facie to be the true date of the
making, drawing, acceptance, or indorsement, avoid the instrument in the hands of a
subsequent holder in due course;

as the case may be.
but as to him, the date so inserted is to
NOTE: but it only results to rebuttable
be regarded as the true date.
presumption.
Sec. 12. Ante-dated and post-dated. -

R AT I O N W H Y I N S E RT I O N O F D AT E
ALLOWED
The instrument is not invalid for the reason - to determine the maturity date of the
only that it is ante-dated or post-dated,
provided this is not done for an illegal or
instrument.
fraudulent purpose. The person to whom an

instrument so dated is delivered acquires the
COMPLETION OF BLANKS
[WHEN DEEMED PRESUMED TO HAVE AN

title thereto as of the date of delivery.
NOTES
AUTHORITY TO FILL THE BLANKS]
POST DATED; contain a date later Where the instrument is wanting in any
material particular,

than the date of the issuance
ANTE DATED; contain a date earlier

the person in possession thereof has a
prima facie authority to complete it by

than the date of the issuance
filling up the blanks therein.
And a signature on a blank paper delivered

BANK SHALL NOT HONOR POST
DATED CHECKS by the person making the signature in order
- pag ante dated, pwede, so long as it that the paper may be converted into a
it does not exceed 6 mos, or said negotiable instrument
operates as a prima facie authority to

check is not a state check.
IN RE: SIGNIFICANCE AS TOTHE fill it up as such for any amount.
HOLDER [LIMITATIONS]
In order, however, that any such instrument
IF IN DUE COURSE; the date
appearing in the instrument is when completed may be enforced against any
controlling and not the date of person who became a party thereto prior to its
issuance completion,
it must be filled up
IF NOT IN DUE COURSE; the date
of issuance is controlling and not 1. strictly in accordance with the
the date appearing on the authority given and
instrument.
2. within a reasonable time.
~ personal defect only

[EXE] does not apply to signed blank
paper
~~~~~~~~~~~~~~~~~~~~~~~~~~
But if any such instrument, after
completion, is negotiated to a holder in
due course,
1. it is valid and effectual for all
purposes in his hands, and
2. he may enforce it as if it had been
filled up strictly in accordance with
the authority given and within a
reasonable time.
NOTE: stipulation to be not held liable

in case the instrument is stolen against
holder in due course
- VOID STIPULATION

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COMMERCIAL LAW
MATERIAL PARTICULAR REQUISITES FOR FILLING SIGNED

those matter constituting as material BLANK PIECE OF PAPER
element of negotiability of an 1. there must be a delivery of a
instrument, and any other where if paper to another person
unauthorized, constitute as material 2. the paper that was delivered was
alteration, such as the insertion of a blank paper containing the
1. date signature of the person who will
2. the sum payable, either the deliver; and
principal or the interest 3. the delivery was for the purpose of
3. the time and place of payment converting the paper into a
4. the member or the relations of the
parties
5. the medium or currency in which
negotiable instrument.
HENCE; the supposed maker cannot

payment is to be made be held liable on a signed blank
6. adds a place of payment where no instrument, when
place of payment is specified, of - it was stolen from him
any other changes or addition - he did not intend to convert it to a
which alters the effect of the

instrument in any respect. negotiable instrument.
INCOMPLETE UNDELIVERED INSTRUMENT

ILLUSTRATION Where an incomplete instrument has not been
M issued a PN payable to bearer or P, delivered,
to P, but he forgot to state the amount IT WILL NOT
of 10k, the amount he owes to the if completed and negotiated without
latter. authority,
~ in here, P has prima facie authority be a valid contract in the

to fill the amount of 10k on the PN.
supposing P filled the PN with 20k

hands of any holder,
as against any person
whose signature was
instead, and indorsed it to A (not placed thereon before
holder in due course) and in which A

subsequently negotiated to B. delivery.
if B is not a holder in due course,

~ he can only collect from M. P is not

REAL DEFENSE; available even against HDC
COMPLETE BUT UNDELIVERED

bound to he instrument, as P INSTRUMENT
exceeded his authority in filling the Every contract on a negotiable instrument is
instrument. incomplete and revocable
~ A is liable for the amount, for breach UNTIL delivery of the instrument for the

of warranty of genuineness
if B is a holder in due course

purpose of giving effect thereto.
As between immediate parties and as regards

~ both M and P are liable. M is liable, a remote party other than a holder in due
as although P exceeded in his course,
authority in filling the blanks, with the delivery, in order to be effectual, must
respect to a holder in due course, NIL be made
deems P to have filled it strictly in either by or under the authority of the
accordance with the authority given party making, drawing, accepting, or

and within reasonable time.
NOTE: HOLDER IN DUE COURSE

indorsing, as the case may be; and,
in such case, the delivery may be
shown to have been conditional, or for
APPLIES ONLY TO FILLING OF a special purpose only, and not for the
BLANKS AND NOT TO A SIGNED purpose of transferring the property in
BLANK PAPER!
~ as fraud in factum (no intention to
convert an signed blank paper into a

the instrument.
But where the instrument is in the hands of a

negotiable instrument) is a real holder in due course,
defense which can be assailed even a valid delivery thereof by all parties prior

against holder in due course. to him so as to make them liable to him is
conclusively presumed.
And where the instrument is no longer in
the possession of a party whose
signature appears thereon,
a valid and intentional delivery
by him is presumed until the
contrary is proved.
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COMMERCIAL LAW
WHEN A NEGOTIABLE INSTRUMENT EFFECT OF DELIVERY AS TO HOLDER

DEEMED COMPLETE IN DUE COURSE AND NOT HOLDER IN
WHEN it has all the matters specified in DUE COURSE BETWEEN IMMEDIATE
Sec. 1 and other material particulars that

are necessary to complete the instrument.
PARTIES
IN RE: NOT HOLDER IN DUE COURSE

WHY THERE IS NEED TO DELIVER A the delivery is not deemed for purposes
COMPLETE INSTRUMENT of transferring title.
AS OTHERWISE: it is deemed incomplete - it is conditional or for special
and revocable, and no right is transferred

to the transferee purpose only
it may be established that there is no

DELIVERY; defined
transfer of possession of the negotiable
instrument by one person to another
delivery at all.
IN RE: HOLDER IN DUE COURSE

with the intention to transfer title to as delivery is conclusive as to him if he
the instrument
DELIVERY IS EFFECTED BY
is in possession of the complete
instrument.
and that the same is unconditional, for
issuance or negotiation the purposes of transferring title, without
must be either by or under the authority
of the party making, drawing, accepting any reservation or condition.
or indorsing the instrument
ISSUANCE; defined
HENCE; barred to established
that there is no delivery at all and
that the transfer is for special
first delivery of the instrument from the

maker or drawer to the payee/bearer
purpose or conditional
IMMEDIATE PARTIES; defined

NEGOTIATION; defined persons who are familiar with the
transfer from one person to another that circumstances regarding the transfer
constitute the transferee the holder of the NOT to the position of the parties

instrument
AUTHORITY TO DELIVER

in the chain of negotiation.
SIGNIFICANCE FROM REMOTE PARTY

- if without authority, the instrument is - remote parties, are those persons who

deemed incomplete and revocable. are not familiar with the circumstances of
the transfer.

Q: must there be a SPA?
PRESUMPTION OF DELIVERY
hence, if the negotiation/issuance
is only for special purpose, such
cannot be assailed against a
presumed delivered by the maker/drawer remote party who is in possession
or indorser to another (payee/ indorsee as of a complete instrument.
the case may be) for the purpose of ~ as with regard to him, the
issuing the same or transferring title
thereto.
note: yung transferring title, with respect

instrument is unconditional.
SEC. 14 SEC. 15 SEC. 16

yun sa indorser, and yung for the purpose
of issuing the instrument, with respect yun

sa maker or drawer. incomplete but
delivered inst
incomplete
undelivered
inst
complete
undelivered
inst
p e r s o n a l real defense p e r s o n a l

defense
exe:
defebse
constituting as
fraud in factum

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COMMERCIAL LAW

NOT INCLUDED IN THE SYLLABUS
CONSTRUCTION OF INSTRUMENT
SEC. 17 where the language of the
instrument is ambiguous or there are
omissions therein, the following rules of
construction apply:
1. Where the sum payable is expressed
in words and also in figures and there
is a discrepancy between the two, the
sum denoted by the words is the sum
payable; but if the words are
ambiguous or uncertain, reference may
be had to the figures to fix the amount;
2. Where the instrument provides for the
payment of interest, without specifying
the date from which interest is to run,
the interest runs from the date of the
instrument, and if the instrument is
undated, from the issue thereof;
3. Where the instrument is not dated, it
will be considered to be dated as of the
time it was issued;
4. Where there is a conflict between the
written and printed provisions of the
instrument, the written provisions
prevail;
5. Where the instrument is so ambiguous
that there is doubt whether it is a bill or
note, the holder may treat it as either at
his election;
6. Where a signature is so placed upon
the instrument that it is not clear in
what capacity the person making the
same intended to sign, he is to be
deemed an indorser;
7. Where an instrument containing the
word "I promise to pay" is signed by
two or more persons, they are deemed
to be jointly and severally liable
thereon.

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COMMERCIAL LAW
INDORSEMENT BY MINOR OR
SIGNATURE
CORPORATION
EFFECTS
The indorsement or assignment of the
instrument by a corporation or by an infant
passes the property therein,

PRELIMINARY
GEN RULE:
notwithstanding that from want of
capacity,
no person is liable to the instrument whose the corporation or infant may
signature dies not appear thereon.
- necessarily that the maker must sign in
incur no liability thereon.
IN RE: INDORSEMENT MADE BY A MINOR

his own name
EXE: ff instances where a person may be

~ the transfer of title by a minor is effective
although he is incapacitated.
held liable on the instrument even if he did ~ minor can use as a defense that he is a
not sign the same minor. thus, minor can refuse to pay in the
1. one who signs in trade name or
assumed name
instrument.
HOWEVER; defense of minority can

2. one who signs through an agent or
authorized representative be invoked only by the minor, and not
3. incapacitated persons who sign
through their legal guardians
by the maker or drawer or indorsees
IN RE: INDORSEMENT MADE BY A

4. forgers of signature
5. persons whose signatures were forged CORPORATION
but who are precluded from setting up although a corporation lacks authority to
the defense of forgery negotiate,
6. in case of constructive acceptance but negotiation made by the
(sec. 137) corporation through its officers
7. indorsers who sign on a separate piece
of paper known as allonge; and
effectively transfers title.
H O W E V E R ; g a y a s a m i n o r,
8. persons who negotiated by mere
delivery. liable for breach of warranty

corporation can invoke incapacity.
although they did not sign the same

FORGERY
When a signature is forged or made without
the authority of the person whose signature it

SIGNING IN TRADE NAME
LIABILITY OF THE PERSON WHO SIGNS IN

purports to be,
[EFFECTS]
TRADE NAME OR ASSUMED NAME it is wholly inoperative, and
will be liable to the same extent as if he had no right to
1. retain the instrument, or

signed in his own name.
SIGNATURE OF AGENT
2. give a discharge therefor, or
3. enforce payment thereof against
No particular form of appointment is necessary any party thereto,
for this purpose; and the authority of the agent = can be acquired through or under such
may be established as in other cases of

signature,

agency.
AGENT IS NOT LIABLE PERSONALLY ON

EXE:
the party against whom it is sought to
THE INSTRUMENT IF enforce such right
1. adds to his signature words indicating that is precluded from setting up the
he signs for or on behalf of a principal or in
a representative capacity, AND
forgery or want of authority.
SAME EFFECTS TO BE APPLIED IN THE

2. discloses/ indicate the name of his
FF INSTANCES
principal.
SIGNATURE BY PROCURATION; effects:

1. presence of duress amounting to
forgery
operates as notice that 2. alteration amounting to foregery
1. the agent has but a limited authority to sign,
and
3. fraud in factum
ie.
2. the principal is bound only in case the
agent in so signing acted within the actual FORGERY; copying of signature
limits of his authority. without knowledge and consent of
the maker

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COMMERCIAL LAW
S I G N AT U R E W I T H O U T THE DRAWEE BANK CANNOT ALSO

AUTHORITY; drawing a bill of RECOVER THE AMOUNT HONORED
exchange, for an in behalf of D, AGAINST THE CLEARING BANK
with the knowledge and consent ~ as when DW pays the amount of the
of D.
FORGE INSTRUMENT MAKES IT

check to CB, DW warrants the
genuineness of the signature of drawer in
the process.

WHOLLY INOPERATIVE may mga sample signature kasi
na available whenever checking
AS: forgery is a real defense against

subsequent holder. account is opened with a bank
HOWEVER:
BUT NOT AGAINST: this only applies to incomplete
the forger and indorsees subsequent to undelivered instrument.
the indorsement made by the forger, - ie. blank check, stolen, and

regardless on whether he is a holder
in due course, being a real defense.
forged the signature of the drawer.
HENCE:
KASAMA DITO if the instrument is complete but
yung forged signature ng indorsee. undelivered
- any party prior to the forgery, has - ie. checks, with stated amount,
real defense against the forger and date and signature of the drawer,

subsequent indorsees
EXE: if the instrument is

but was stolen, and the thief
forged the signature of the payee
to make it appear that it was
payable to bearer indorsed to him, and subsequently
- drawer and drawee are still
liable, as the forged
instrument is does not affect

encashed the check
IN HERE:
the title. if payable to bearer Clearing Bank is liable to
kasi, delivery alone is reimburse Drawee Bank
sufficient to transfer title.
RATION OF LIABILITY:
- as CB guaranteed all
indorsements when it presented
the check to DW for clearing, and
based on their secondary liability on it is clear breach of warranty if the
the instrument, being inoperative as signature of the payee was
against the persons primarily liable
to it (and in case of bill of exchange,
the drawer, secondarily liable)
forged.
PERSONS WHO CANNOT INVOKE

their warranty that the instrument is FORGERY
genuine and in all respect what it 1. persons who extended warranties
purports to be 2. persons who were negligent

parties after the forgery cannot use
the forgery as a defense.
3. persons who ratified the forgery
NOTE HOWEVER THAT:

IF THE DRAWEE PAYS A FORGED
INSTRUMENT
he can no longer recover what he paid or
ask for reimbursement from the drawer.
~ as the drawer did not sign the
instrument, and with respect to
him, the instrument is wholly
inoperative.
IF A BANK HONOR A FORGED CHECK

duty bound to reimburse the amount
deducted from the account of the drawer
(account holder against whom the check
was drawn).
~ as against the latter, no right to
give discharge to the checks were
acquired by virtue of the forged
signature drawer

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COMMERCIAL LAW
WHAT CONSTITUTE HOLDER FOR VALUE

Where value has at any time been given for
CONSIDERATION the instrument,
the holder is deemed a holder for
value
in respect to all parties who
PRESUMPTION OF CONSIDERATION become such prior to that
Every negotiable instrument is deemed prima
facie to have been issued for a valuable
time.
HENCE IN HERE;
consideration; and
P negotiated a an instrument to A. A
every person whose signature appears
thereon to have become a party thereto for negotiated it to B, and B negotiated it
to C as form of payment. C negotiated
value.
NOTE: not mere consideration, but it must be a

it to D by way of Gift.
- D is deemed a holder for value even
valuable consideration. if he did not give any valuable
HOWEVER; a person need not
acquire it for valuable consideration
consideration.
EFFECTS OF WANT OF CONSIDERATION

- as the presumes that there is
Absence or failure of consideration is

valuable consideration.
a matter of defense as against any
BURDEN OF PROOF:
- rests upon the party who claim person not a holder in due course; and
partial failure of consideration

otherwise
VALUABLE CONSIDERATION; concept

is a defense pro tanto, whether the
failure is an ascertained and liquidated
negotiable instrument is deemed transferred
for valuable consideration if amount or otherwise.
it was transferred in consideration if

the obligation of the transferee to give
PERSONAL DEFENSE LANG!
EXAMPLE:
or deliver a thing, or to perform
A purchased a tv from B, and negotiated a PN.
service.
B negotiated the PN to C. B however failed to
WHAT CONSTITUTE VALUE
VALUE IS
deliver the TV to A.
can A be held liable to C, the holder of

any consideration sufficient to support a
simple contract. the PN?
An antecedent or pre-existing debt yes. as although there was a failure
constitutes value; to deliver the tv, the want of
and is deemed such whether the consideration is only a personal
instrument is payable on demand or at defense not assailable against a
holder in due course.
a future time.
HENCE;
hence; refusal to honor the PN is
only available as against a holder
ONEROUS CONSIDERATION ONY
- bawal ang pagmamahal at pag not in due course.
supposing, obligation to deliver 5

kalinga lol.
WHEN LIEN ON INSTRUMENT CONSTITUTE

sacks in lieu of the pn executed valued
at 5k (1k per sack), but only 3 sacks
HOLDER FOR VALUE were delivered.
when the lien on the instrument arising either as against holder not in due course,
from A can be held liable only for the PN
issued for the amount of 3k.
contract or
by implication of law, as against a holder in due course, A
= he is deemed a holder for value to the extent is liable for the whole amount of the

of his lien.

NOTE:
PN, 5k.
LIEN; defined
a charge against or interest in property a holder in due course is always a holder for
to secure payment of a debt or value, but a holder for value is not always a
performance of an obligation.

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COMMERCIAL LAW
ACCOMMODATION PARTY

MODES OF NEGOTIATION
IF IT IS PAYABLE BEARER
it is negotiated by delivery;
IF PAYABLE TO ORDER
WHO IS AN ACCOMMODATION PARTY it is negotiated by the indorsement of
is one who has signed the instrument as
maker, drawer, acceptor, or indorser,
NOTES:

the holder and completed by delivery
without receiving value therefor, and

for the purpose of lending his name to if a negotiable instrument is transferred by
mere assignment, the transferee does not

some other person.
LIABILITY OF ACCOMMODATION PARTY

become the holder,
he merely steps into the shoes of the
Such a person is liable on the instrument to a transferor
holder for value if the instrument is non-negotiable, it can only
notwithstanding such holder, at the be transferred by assignment. the transferee
time of taking the instrument, knew cannot be a holder in due and thereby
him to be only an accommodation
subject to the defenses of prior parties.
party.
NOTE: if there is an accommodation

NEGOTIATION ASSIGNMENT

NOTES
indorser.... anu?
applicable law
- NIL

- NCC
accommodation party after payment must
present the instrument to the accommodated type of transaction
party in order to be reimbursed
it is possible that the accommodation party
received consideration from the
or instrument
involved
- negotiable

- contracts and
accommodated party, but only for lending his instruments only assignable rights
name
a corporation cannot be an accommodation
part, unless authorized in its AOI.
as to the nature of
the transferee

- transferee may be - transferee can
a holder in due never become a
course holder in due course
NEGOTIATION as to the rights

acquired

- transferee-holder - transferee can
may acquire more never acquire

PRELIMINARY
S TA G E S I N T H E L I F E O F
rights than the
transferor if he is a
HDC
greater right than
the transferor as he
merely steps in to

NEGOTIABLE INSTRUMENT the shoes of the
same

PREPARATION; note, requisites
ISSUANCE; first delivery by the maker

as to availability of
personal defense

or drawer to the payee (or bearer)
TRANSFER; the instrument is

- transferee-holder
may be free from
personal defenses if
- transferee is
always subject to
the personal
transferred to another to make the he is a HDC defenses.
transferee the owner of the instrument.
this is done either by assignment or
negotiation.
NEGOTIATION; defined
is transferred from one person to another in
such manner as to constitute the transferee

the holder thereof.

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COMMERCIAL LAW

INDORSEMENT

SPECIAL INDORSEMENT

HOW INDORSEMENT IS APMADE
The indorsement must be

A special indorsement
specifies the person to whom, or to whose
order, the instrument is to be payable, and
1. written on the instrument itself or upon a the indorsement of such indorsee is
paper attached thereto (allonge). necessary to the further negotiation of the
2. The signature of the indorser, without
a d d i t i o n a l w o r d s , i s a s u f fi c i e n t instrument.
indorsement.
3. The indorsement must be an indorsement
ie. pay to A. Sgd. P

of the entire instrument.
THE FF DOES NOT CONSTITUTE AS

INDORSEMENT WHE PAYABLE TO 2/MORE
PERSONS
Where an instrument is payable to the order of
A VALID NEGOTIATION two or more payees or indorsees who are not
An indorsement which partners,
transfer to the indorsee a part only all must indorse
of the amount payable, or UNLESS
to transfer the instrument to two or the one indorsing has authority
more indorsees severally,
EXE:
to indorse for the others.
EFFECT OF AN INSTRUMENT DRAWN OR

but where the instrument has been INDORSED TO A PERSON AS CASHIER
paid in part, it may be indorsed as to or other fiscal officer of a bank or corporation,

the residue.
example when the transfer the

it is deemed prima facie to be payable
to the bank or corporation of which he
is such officer,
instrument is to 2/more persons and may be negotiated by
severally. either the indorsement of the
- if delivered to A "and" B bank or
- but if A "or" B, in the alternative corporation or

(pwede)
ie. instrument payable to the order of

the officer.
RESTRICTIVE INDORSEMENT
Juan dela Cruz. Juan indorsed it to A

or B, payable to A or B, sgd. Juan.
An indorsement is restrictive which either:
Prohibits the further negotiation of the

KINDS OF INDORSEMENT
1. special
instrument; or
2. blank
3. restrictive
4. qualified

Pay to C only. sgd. A
Constitutes the indorsee the agent of the

5. conditional

indorser; or
BLANK INDORSEMENT
an indorsement that specifies no indorsee, and
an instrument so indorsed is payable to bearer,

Pay to C, for collection. sgd A
Vests the title in the indorsee in trust for or to

and may be negotiated by mere delivery

the use of some other persons.
The holder may convert a blank

indorsement into a special indorsement
by writing over the signature of the indorser in
Pay to C, in trust for me. sgd. A
NOTE: But the mere absence of words

blank implying power to negotiate does not make an
any contract consistent with the

character of the indorsement.
indorsement restrictive.
EFFECTSOF RESTRICTIVE INDORSEMENT

- dito; P negotiated to A a blank indorsement 1. A restrictive indorsement confers upon the
(sgd. P). P may convert it to a special indorsee the right
indorsement by writing Pay to A over the 2. to receive payment of the instrument;

instrument signed by P. 3. to bring any action thereon that the indorser
could bring;
4. to transfer his rights as such indorsee,
where the form of the indorsement
authorizes him to do so.

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COMMERCIAL LAW
NOTE: But all subsequent indorsees acquire

only the title of the first indorsee under the
NOTES:

restrictive indorsement.
QUALIFIED INDORSEMENT
IF BEARER INSTRUMENT IS INDORSED
SPECIALLY
it may nevertheless be further negotiated by
A qualified indorsement constitutes the delivery;
indorser a mere assignor of the title to the but the person indorsing specially is
instrument. liable as indorser to only such holders
BUT: Such an indorsement does not as make title through his indorsement.
impair the negotiable character of the [same liability of an indorser in
instrument.
It may be made by
an order instrument; parang di
na secondarily liable yung
party who did not indorse it
adding to the indorser's signature the words
"without recourse" or any words of similar specially.
import.
USUALLY; 2 CONTRACTS ARE INVOLVED

HENCE; the special indorsement of a bearer
instrument, does not convert it to an order
instrument. kasi, pwede parin i-indorse further
HERE
1. contract for the assignment or transfer of
his right over the instrument; and

by mere delivery.
INDORSEMENT WHERE THE NAME IS

2. the secondary contract where he assumes MISSPELLED AND SO FRTH
secondary liability
IN ORDER TO AVOID SECONDARY

Where the name of a payee or indorsee is
wrongly designated or misspelled,
he may indorse the instrument as
LIABILITY OF THE INDORSER therein described
- he may add a notation "without adding, if he thinks fit, his
recourse" or "sans recourse" on his proper signature. (or correct

special or blank indorsement.
CONDITIONAL INDORSEMENT

name or spelling)
INDORSEMENT IN REPRESENTATIVE
Where an indorsement is conditional, the party CAPACITY
required to pay the instrument may disregard Where any person is under obligation to
the condition and make payment to the indorse in a representative capacity,
indorsee or his transferee whether the he may indorse in such terms
condition has been fulfilled or not. as to negative personal
But any person to whom an instrument
so indorsed is negotiated will hold the
same, or the proceeds thereof, subject

liability.
Pay to A, Sgd. M as the agent of the

to the rights of the person indorsing
conditionally. payee P.
PRESUMPTION OF THE TIME OF

ie. in the indorsement of a negotiable INDORSEMENT
instrument, the indorsee indicates the ff: every negotiation is deemed prima facie to
Pay to A when he graduates in his LLB on or have been effected before the instrument was

before April 30, 2013
NOTE: the condition may be disregarded.

overdue.
Except where an indorsement bears
date after the maturity of the
however, payee shall hold it in trust or subject
to the rights of the indorser who made the
condition of the indorsement.
instrument,
IMPORTANCE: to determine whether the

~ that is, he shall hold it until condition has
been fulfilled.
~ in case the condition is not fulfilled, he is

holder is a holder in due course or not.
PRESUMPTION OF PLACE OF

bound to receive the amount that he received. INDORSEMENT
every indorsement is presumed prima facie to
have been made at the place where the
instrument is made, prepared or executed.
EXE: where the contrary appears,
IMPORTANCE: to determine the governing

law.

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COMMERCIAL LAW
C O N T I N U AT I O N O F N E G O T I A B L E
CHARACTER
An instrument negotiable in its origin continues NEGOTIATION
to be negotiable
UNTIL it has been restrictively
indorsed or discharged by payment or
otherwise. HOLDER
is the payee or the indorsee of a bill or a note
STRIKING OUT INDORSEMENT
The holder may at any time strike out any
indorsement which

who is in possession of it or the bearer thereof
RIGHTS OF THE HOLDER
is not necessary to his title.
The indorser whose indorsement is struck out,

whether he is a holder in due course or not, he
has the ff rights to
1. sue in his own name
and all indorsers subsequent to him, 2. receive payment and
are thereby relieved from liability on 3. transfer his right through negotiation or
the instrument.
assignment.

TRANSFER WITHOUT INDORSEMENT HOLDER IN DUE COURSE
is a holder who has taken the instrument under
Where the holder of an instrument payable to
his order transfers it for value without indorsing
it,

the following conditions:
1. That it is complete and regular upon its

the transfer vests in the transferee face;
such title as the transferor had 2. That he became the holder of it before it
therein (akin to assignment lang) was overdue, and without notice that it has
and been previously dishonored, if such was
the transferee acquires in addition, the fact;
the right to have the indorsement of 3. That he took it in good faith and for value;
the transferor.
But for the purpose of determining

4. That at the time it was negotiated to him, he
had no notice of any infirmity in the
instrument or defect in the title of the
whether the transferee is a holder in
due course,
person negotiating it.
INSTRUMENT IS COMPLETE
- the negotiation takes effect as of the
time when the indorsement is actually
made.

if it contains all requisites for negotiability
INSTRUMENT IS REGULAR
- from here onward, he is deemed a if on its face, there appears to be no any
WHEN PRIOR PARTY MAY NEGOTIATE

material alteration.
NOTE: the instrument is still deemed

Where an instrument is negotiated back to a regular even if there is a material
prior party, alteration, but such is not apparent and
such party may, subject to the cannot be discovered even by close
provisions of this Act,
- reissue and further negotiable the scrutiny.
same.
But he is not entitled to enforce

NOTE: knowledge of the agent of any infirmity
in the instrument or defect in the title of a prior
party, received while acting within the scope of
payment thereof against his authority
- any intervening party to whom he

was personally liable.
- is notice to the principal.
HOLDER IN GOOD FAITH

P-A-B-C-D-A is one who has no knowledge of any infirmity
A; is remitted to his former rights as the in the instrument or defect in his title or the title
indorsee of the payee.
but he cannot enforce it against B and
of prior parties.

C, being an intervening party.
ewan ang gulo. tanung mo nlang to. no

INFIRMITY; the ff constitutes infirmity
in the instrument
1. insertion of a wrong date

concrete example. 2. incomplete delivered instrument
3. incomplete undelivered instrument
4. complete undelivered instrument
5. forgery
6. material alteration

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COMMERCIAL LAW
DEFECTIVE TITLE; when he obtained WHAT CONSTITUTE NOTICE OF DEFECT

the instrument or any signature thereto the person to whom it is negotiated must have
by had
1. fraud actual knowledge of the infirmity or defect, or
2. duress knowledge of such facts that his action in
3. force
4. other unlawful means
5. illegal consideration
taking the instrument amounted to bad faith.
HENCE: actual knowledge of defect is

6. negotiation in breach of faith; or not required.
7. other circumstances as to amount ie. crossed checks are supposed to be
to fraud
HOLDER FOR VALUE

deposited. if the holder accepted a
crossed check, such circumstance is a
fact that renders the taking of the

if he acquired it for valuable consideration
PRESUMPTION THAT THE HOLDER IS A

instrument as amounting to bf.
DEFENSE AGAINST THE HOLDER

HOLDER IN DUE COURSE
EXE: when it is shown that the title of any

In the hands of any holder other than a holder
in due course, a negotiable instrument is
subject to the same defenses as if it were non-
person who has negotiated the instrument was
defective,
the burden is on the holder

negotiable.
WHEN A HOLDER WHO IS NOT A HDC BUT

- to prove that he or some person HAS THE SAME RIGHTS AS HDC
under whom he claims acquired the derives his title through a holder in due

title as holder in due course.
But the last-mentioned rule does not

course, and
not himself a party to any fraud or illegality
affecting the instrument,
apply in favor of a party who became = has all the rights of such former holder in
bound on the instrument
prior to the acquisition of such
respect of all parties prior to the latter.
defective title.
RIGHTS OF A HOLDER IN DUE COURSE KINDS OF DEFENSES
A holder in due course holds the instrument

PERSONAL DEFENSE REAL
1. free from any defect of title of prior parties, DEFENSE
2. free from defenses available to prior parties
among themselves, and available only against a available both to HDC and
3. may enforce payment of the instrument for holder who is not a HDC HNDC
the full amount thereof against all parties
1. fraud in inducement 1. minority
liable thereon.
PRESUMPTION THAT A HOLDER IS NOT A

2. complete undelivered
inst
3. absence or failure of
2. forgery
3. incomplete undelivered
inst
HOLDER IN DUE COURSE consideration 4. negotiation is an ultra
4. insertion of a wrong vires act of the corp
Where an instrument payable on demand date when necessary 5. fraud in factum
is negotiated on an unreasonable 5. duress, force or fear 6. material alteration

length of time after its issue.
NOTICE BEFORE PAYMENT

6. filling up blanks in
excess of authority
7. negotiation in breach of
faith
7. want of authority
8. vicious force or duress
amounting to forgery
9. illegality when there is a
Where the transferee receives notice of any 8. illegal consideration declaration in law that the
infirmity in the instrument or defect in the title 9. ante/post-sating for contract is void for any
illegal or fraudulent purpose
of the person negotiating the same purpose ( if there is no such
before he has paid the full amount 10. acquisition through declaration, it is only
agreed to be paid therefor, unlawful means treated as a personal
11. negotiation amounting defense)
he will be deemed a holder in to fraud
due course only to the extent
of the amount therefore paid

by him.


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COMMERCIAL LAW
PRESUMPTION OF BEING AN INDORSER

A person placing his signature upon an
LIABILITIES OF PARTIES instrument otherwise than as maker, drawer, or
acceptor,
is deemed to be indorser
UNLESS:

see tables of liabilities.
IN RE: PROMISSORY NOTES

he clearly indicates by
appropriate words his intention
to be bound in some other
STEPS TO BE TAKEN TO CHARGE THE

INDORSER: capacity.
IRREGULAR INDORSER
1. presentment for payment must be made a person who is not really party to the
within the required period instrument, but he affixed his signature on the
2. notice of dishonor should be given, if instrument before its delivery.

promissory note is dishonored by non-
payment by the maker
~ usually, he is an accommodation party.
GENERAL INDORSER
IN RE: BILL OF EXCHANGE is one who indorsed the instrument without any
STEPS TO BE TAKEN TO CHARGE THE

PERSON SECONDARILY LIABLE:
qualifications
ORDER IN WHICH INDORSERS ARE

Presentment for Acceptance or Negotiation
within reasonable time after it was required
ONLY IN THE FF INSTANCES

LIABLE
As respect one another,

1. where the bill is payable after indorsers are liable prima facie in the
sight, or in other case, where order in which they indorse;
presentment for acceptance is BUT evidence is admissible to
necessary in order to fix the show that, as between or
maturity of the instrument among themselves, they have
2. where the bill expressly stipulates
that it shall be presented for
acceptance

agreed otherwise.
Joint payees or joint indorsees

3. where the bill is drawn payable who indorse are deemed to

elsewhere than at the residence or
place of business of the drawee
ILLUSTRATION.

indorse jointly and severally.
If Dishonored by Non-Acceptance DR, issued bill to the payee, P, payable to P or

1. notice of dishonor should be given order. the drawee is DW.
to the indorsers and drawers
2. if the bill is a foreign bill, there
must be a protest for dishonor by

P indorsed and delivered to A - B - C and D.
in the above given scenario, the indorsers are
non-acceptance
If the Bill is Accepted

P, A, B and C.
~ should DW dishonor the bill and proper
proceedings on dishonor where duly taken,
1. presentment for payment to the any among P, A, B, and C can be made
acceptor should be made secondarily liable by D, who is the holder.
2. i f t h e b i l l i s d i s h o n o r e d u p o n
presentment for payment
a. a notice must be given to the

~ D need not follow any particular order.
However, following the order of liability among

person secondarily liable indorsers
b. if the bill is a foreign bill, protest for ~ if D recovered from C, C had the right to be
dishonor by non-acceptance must reimbursed by B, and cannot go directly to P.
be made. ~ if B paid C, he in turn must recover from A

and not from P.
LIABILITY OF AN AGENT OR BROKER

Where a broker or other agent negotiates an
instrument without indorsement, he incurs all
the liabilities prescribed by Section Sixty-five of
this Act, unless he discloses the name of his
principal and the fact that he is acting only as

agent.
~ see page 10

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COMMERCIAL LAW
usual place of business or residence of

the person to make payment; In any
PRESENTMENT FOR PAYMENT other case if presented to the person to
make payment wherever he can be
found, or if presented at his last known

PRELIMINARY place of business or residence.
TIME OF MATURITY
WHAT CONSTITUTES A SUFFICIENT Every negotiable instrument is payable at
PRESENTMENT
Presentment for payment, to be sufficient,
the time fixed therein without grace.

must be made:
1. By the holder, or by some person

When the day of maturity falls upon
Sunday or a holiday,
the instruments falling due or becoming
authorized to receive payment on his payable on Saturday are to be presented
behalf; for payment on the next succeeding
2. At a reasonable hour on a business business day
day; EXE that instruments payable on
3. At a proper place as herein defined; demand may, at the option of the
4. To the person primarily liable on the holder,
instrument, or if he is absent or be presented for payment
inaccessible, to any person found at before twelve o'clock
the place where the presentment is noon on Saturday when
made (provided: not incapacitated) that entire day is not a
5. The instrument must be exhibited to
the person from whom payment is
demanded, and when it is paid, must

holiday.
COMPUTATION OF TIME
be delivered up to the party paying it When the instrument is payable at a fixed
(exhibited and surrendered)
EXHIBITION OF AN INSTRUMENT;
period after date, after sight, or after that
happening of a specified event,
the time of payment is determined
that it must be produced by the holder or by
any persons who is presenting it for excluding the day from which

payment. the time is to begin to run, and
by including the date of
HENCE: not proper when it is
done by telephone or by mere payment.

demand letter or through telegram
RATION:
Sec. 87. Rule where instrument payable at
bank. - Where the instrument is made payable
1. to give the maker or the at a bank, it is equivalent to an order to the
acceptor the change to bank to pay the same for the account of the
determine if the instrument is principal debtor thereon.
genuine
2. to facilitate the surrender of Sec. 88. What constitutes payment in due
the instrument.
SURRENDER OF THE INSTRUMENT

course. - Payment is made in due course when
it is made at or after the maturity of the
payment to the holder thereof in good faith and
AFTER PAYMENT
- to prevent any person to wrongly
negotiate it further even if he already

without notice that his title is defective.

received payment
PLACE OF PRESENTMENT
Presentment for payment is made at the
proper place:
1. Where a place of payment is specified
in the instrument and it is there
presented;
2. Where no place of payment is
specified but the address of the person
to make payment is given in the
instrument and it is there presented;
3. Where no place of payment is
specified and no address is given and
the instrument is presented at the

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COMMERCIAL LAW
NECESSITY OF PRESENTMENT FOR

PAYMENT
WHEN PRESENTMENT IS TO BE MADE
IF NOT PAYABLE ON DEMAND

NOT NECESSARY presentment must be made on the day
- to charge the person primarily liable on the

instrument, drawee (be) and maker (pn) it falls due.
IF IT IS PAYABLE ON DEMAND
NOTE: DEEMED EQUIVALENT TO presentment must be made within a
TENDER OF PAYMENT
1. if the instrument is, by its terms,
payable at a special place, and

reasonable time after its issue,
EXE: that in the case of a bill of

2. he is able and willing to pay it exchange,

there at maturity,
= such ability and willingness are

presentment for payment will be
sufficient if made
- within a reasonable time after

equivalent to a tender of payment
P R E S E N T M E N T F O R PAY M E N T I S
the last negotiation thereof.
WHAT CONSTITUTE REASONABLE

NECESSARY TIME:

in order to charge the drawer and indorsers. this depends on the
1. nature of the instrument

EXE TO EXE:
IN RE: DRAWER
2. the usage of trade or business
with respect to such instrument;
and
- where he has no right to expect or
require that the drawee or acceptor will
3. the facts of a particular case
pay the instrument.
ie. DR issued a check to P. DR closed

TEST
whether the payee employed
such diligence as a prudent
the account. in here, no sense for P to man exercises in his own
present the check to DW in order to

charge DR for the check. affairs.
IF THE INSTRUMENT IS PAYABLE AT

IN RE: INDORSER BANK
where the instrument was made or presentment for payment must be
accepted for his accommodation and made

he has no reason to expect that the
instrument will be paid if presented.
---> during banking hours,
UNLESS
ration: as the indorser here, being an the person to make payment
accomodating party, act as surety and has no funds there to meet
thereby become primarily liable on the it at any time during the
instrument. being such the case, no day,
need for presentment for payment to in which case presentment

person primarily liable. ---> at any hour before the
bank is closed on that day is
IN ADDITION: THE FF INSTANCES
WHERE PRESENTMENT FOR
sufficient.
PAYMENT ARE EXCUSED
1. W h e r e , a f t e r t h e e x e r c i s e o f
WHEN DELAY IN PRESENTMENT FOR
PAYMENT IS EXCUSED
when the delay is caused by
reasonable diligence, presentment, 1. circumstances beyond the control of
as required by this Act, cannot be the holder and
made; 2. n o t i m p u t a b l e t o h i s d e f a u l t ,
2. Where the drawee is a fictitious
person;
3. By waiver of presentment, express or
misconduct, or negligence.
When the cause of delay ceases to

implied. operate,
4. when there is waiver of protest, when presentment must be made with

protest is necessary. (foreign bill)
reasonable diligence

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COMMERCIAL LAW
PARTIES TO WHOM PRESENTMENT FOR

PAYMENT SHOULD BE MADE

IN GENERAL: the indorsers and drawer.
PRESENTMENT WHERE THE PRINCIPAL

DEBTOR IS DEAD

IF NO: no place of payment is specified,
IT SHOULD BE MADE TO
his personal representative, if such
there be,
and if, with the exercise of
reasonable diligence, he can
be found.
(the administrator, or in absence, the
heirs)
PRESENTMENT TO PERSONS LIABLE AS

PARTNERS

IF NO: place of payment is specified,
any one of them,
even though there has been a
dissolution of the firm.
PRESENTMENT FOR JOINT DEBOTRS

Where there are several persons, not partners,

primarily liable on the instrument

IF NO: place of payment is specified,
them all.
DISHONOR BY NON-PAYMENT
The instrument is dishonored by non-payment
when:
1. It is duly presented for payment and
payment is refused or cannot be obtained;
or
2. Presentment is excused and the instrument
is overdue and unpaid.
LIABILITY OF PERSONS SECONDARILY

LIABLE WHEN THE INSTRUMENT IS
DISHONORED
an immediate right of recourse to all parties
secondarily liable thereon accrues to the

holder.

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COMMERCIAL LAW
NOTICE TO PARTNERS
notice to any one partner is notice to the
NOTICE OF DISHONOR firm, even though there has been a

dissolution.
HENCE; notice to only one

PARTIES TO BE NOTIFIED
GEN RULE:
partner is sufficient and will bind

the partnership.
when a negotiable instrument has been NOTICE TO JOINT PERSONS WHO ARE
dishonored by non-acceptance or non-
payment, notice of dishonor must be given
to the drawer and

NOT PARTNERS
GEN RULE:
to each indorser,
OTHERWISE:

notice must be given to each of them.
ration: as each persons are liable

any drawer or indorser to whom such only to the share in the obligation

notice is not given is discharged
NOTE: notice may be given either to

EXE:
and not in its entirety.
the person of the drawer or indorser, or one of them has authority to receive such
EXE:
to their agent in that behalf.

notice for the others.

Except as herein otherwise provided:
NOTICE WHERE PARTY IS DEAD

NOTICE TO BANKRUPT
Where a party
has been adjudged a bankrupt or an
When any party is dead and his death is insolvent, or
known to the party giving notice, has made an assignment for the benefit
the notice must be given to a
personal representative, if there
be one, and if with reasonable
of creditors,
NOTICE MAY BE GIVEN EITHER TO

diligence, he can be found.
If there be no personal
1. the party himself or

2. to his trustee or assignee.
representative, notice may be sent PARTIES WHO MAY GIVE NOTICE OF

to the
last residence or
last place of business of the

DISHONOR
BY WHOM
deceased.
REQUISITES WHEN NOTICE CAN BE

The notice may be given
1. by or on behalf of the holder, or
2. by or on behalf of any party to the
GIVEN TO THE PERSONAL instrument
REPRESENTATIVE OF THE DECEASED WHO
1. the person who should give notice might be compelled to pay it to the
knows that the person to receive notice holder, and
is dead upon taking it up, would have a right
2. the person who is supposed to receive to reimbursement from the party to
notice has personal representatives whom the notice is given.
3. the personal representative could be (eto yung: party entitled to the
found after the exercise of reasonable instrument)
diligence
HENCE; it also follows that notice to the

NOTICE GIVEN BY AN AGENT
either in his own name or in the name of any
personal representative of the deceased party entitled to given notice,
cannot be had when whether that party be his principal or
1. if there was in fact, no personal not.
representative
2. if the person to give notice is not aware WHEN AGENT MAY GIVE NOTICE
of the death of the person who is Where the instrument has been dishonored in
supposed to receive notice; or the hands of an agent, he may either himself
3. if the personal representative cannot give notice to the parties liable thereon, or he
be found despite the exercise of may give notice to his principal. If he gives
reasonable diligence notice to his principal, he must do so within the

same time as if he were the holder, and the
principal, upon the receipt of such notice, has

AAA - BASTE / ATB
COMMERCIAL LAW
himself the same time for giving notice as if the FORM OF NOTICE

agent had been an independent holder. 1. in writing or merely oral and
2. given in any terms which sufficiently identify

EFFECT OF NOTICE GIVEN the instrument, and
3. indicate that it has been dishonored by
IF BY THE HOLDER OR ON BEHALF OF
THE HOLDER
it inures to the benefit of
non-acceptance or non-payment.
NOTE: It may in all cases be given by

1. all subsequent holders and
2. all prior parties who have a right of
recourse against the party to whom it is

delivering it personally or through the mails.
NOTICE OF DISHONOR; defined

given.
ILLUSTRATION
bringing, either verbally or in writing to the
knowledge of the drawer or the indorser of an
instrument, the fact that
M-P-A-B-C (holder) a specified negotiable instrument,
- notice given by C to P, A and B will upon proper proceedings taken, had
not only benefit C, but also A and B, in not been accepted, or has not been
the sense that should they pay the paid
instrument, they need not give any

notice to P for reimbursement.
and that the party notified is expected to pay it.
WHEN NOTICE IS DEEMED SUFFICIENT

supposed C negotiated the instrument A written notice need not be signed and an
to D, after giving notice of dishonor, i n s u f fi c i e n t w r i t t e n n o t i c e m a y b e
and thereafter D negotiated the supplemented and validated
instrument to E
- in here, the notice given by C to PAB
will also benefit DE, tue subsequent
by verbal communication.
A misdescription of the instrument does not

holders vitiate the notice
UNLESS the party to whom the notice
IF GIVEN BY OR ON BEHALF A PARTY
ENTITLED TO GIVE NOTICE
it inures to the benefit of
is given is in fact misled thereby.
MARTIN v BROWN
1. the holder and NOTICE OF DISHONOR MUST CONTAIN
2. all parties subsequent to the party to whom THE FF:
notice is given.
ILLUSTRATION
1. it must contain sufficient description of the
bill or note
2. a statement that the instrument has been
M order instrument, payee P. delivered dishonored upon presentment for
and indorsed to P-A-B-C. acceptance or for payment
- should M dishonor the the 3. a statement that the instrument has been
instrument, C can give notice to either protested if protest is required
of PAB. 4. an announcement of the intention to look to
- should he give notice to B, and
should he pay, B can ask for the party addressed for payment.
reimbursement from P and A.

- should B instead of paying, give
notice of dishonor to P and A, It

WAIVER
WHEN WAIVER OF NOTICE OF DISHONER

benefits C, and can compel either of CAN BE MADE
them to pay, even though he did not either
personally given notice of dishonor. 1. before the time of giving notice has arrived
- should B give notice only to P, will or
benefit A, in the sense that should A be
compelled to pay, he can claim from
him for reimbursement even if no

2. after the omission to give due notice,
FORM OF WAIVER
notice of dishonor were given waiver may be expressed or implied.

personally.

WHOM AFFECTED BY THE WAIVER
IF EMBODIED IN THE INSTRUMENT ITSELF

it is binding upon all parties;
BUT IF WRITTEN ABOVE THE SIGNATURE

OF AN INDORSER
it binds him only.
ie. dito, bale yung waiver nasa indorsement
and not on the instrument itself.

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COMMERCIAL LAW

DISPENSATION WITH NOTICE
IN GENERAL; NOTICE OF DISHONOR IS

EFFECT OF FAILURE TO GIVE NOTICE
An omission to give notice of dishonor by non-
acceptance
DISPENSED WITH WHEN does not prejudice the rights of a
after the exercise of reasonable diligence, holder in due course subsequent to the
it cannot be given to or
does not reach omission.
the parties sought to be charged.

ILLUSTRATION
WHEN NOTICE NEED NOT BE GIVEN TO

THE DRAWER
1. Where the drawer and drawee are the

DR, bill, payee P. P - A - B
should B presented it to payee, DW, and

same person; refused the payment.
2. When the drawee is fictitious person or a ~ he must give notice to DR, P and A, to hold
person not having capacity to contract; them secondarily liable.
3. When the drawer is the person to whom the ~ otherwise, failure to do so, the secondary
instrument is presented for payment; (ie. if
the drawer is the authorized agent or
representative of the drawee)

liability of P and A will cease.
should B, after dishonor by DW, indorsed the

4. Where the drawer has no right to expect or bill to C and subsequently D.
require that the drawee or acceptor will ~ if D is a holder in due course, not being
honor the instrument; (ie. closed account aware of the previous dishonor, he can still go
with the drawee bank) after P and A to enforce their secondary
5. Where the drawer has countermanded liability. this includes B and C.
payment. (ie. stop payment order was given ~ but if he is not a hdc, he cannot contend the
by the drawer, no reason to expect that the
drawee bank will honor the check that the
secondary liability of P and A.
drawer had issued.)
WHEN NOTICE NEED NOT BE GIVEN TO

THE INDORSER
1. When the drawee is a fictitious person or
person not having capacity to contract, and
the indorser was aware of that fact at the
time he indorsed the instrument; (as
although the indorser does not admits the
existence of the drawer when he indorsed
the bill, but he has nor reason to expect
that the instrument will be honored in the
hands of the subsequent holders if he was
already aware of such fact at the time of the
indorsement)
2. Where the indorser is the person to whom
the instrument is presented for payment;
3. Where the instrument was made or
accepted for his accommodation. (kasi, sya
yung persons primarily liabile on the
instrument, whose notice in case of
dishonor is not required.
WHEN NOTICE OF DISHONOR FOR NON-

PAYMENT IS DISPENSED WITH
Where due notice of dishonor by non-
acceptance has been given,
notice of a subsequent dishonor by

non-payment is not necessary
EXE: in the meantime the instrument has been

accepted.

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COMMERCIAL LAW
~ FF NOT INCLUDED IN THE SYLLABUS ~ Sec. 108. Where notice must be sent. -
Where a party has added an address to his
Sec. 102. Time within which notice must be signature, notice of dishonor must be sent to
given. - that address; but if he has not given such
Notice may be given as soon as the instrument address, then the notice must be sent as
is dishonored and, unless delay is excused as follows:
hereinafter provided, must be given within the 1. Either to the post-office nearest to his place
time fixed by this Act. of residence or to the post-office where he
is accustomed to receive his letters; or
Sec. 103. Where parties reside in same 2. If he lives in one place and has his place of
place. - business in another, notice may be sent to
Where the person giving and the person to either place; or
receive notice reside in the same place, notice 3. If he is sojourning in another place, notice
must be given within the following times: may be sent to the place where he is so
1. If given at the place of business of the
person to receive notice, it must be given
before the close of business hours on the
sojourning.
But where the notice is actually received by the

day following. party within the time specified in this Act, it will
2. If given at his residence, it must be given be sufficient, though not sent in accordance
before the usual hours of rest on the day
following.
3. If sent by mail, it must be deposited in the

with the requirement of this section.
Sec. 113. Delay in giving notice; how

post office in time to reach him in usual excused. -
course on the day following.
Sec. 104. Where parties reside in different

Delay in giving notice of dishonor is excused
when the delay is caused by circumstances
beyond the control of the holder and not
places. - Where the person giving and the imputable to his default, misconduct, or
person to receive notice reside in different negligence. When the cause of delay ceases
places, the notice must be given within the to operate, notice must be given with
following times:
1. If sent by mail, it must be deposited in the
post office in time to go by mail the day

reasonable diligence.
Sec. 118. When protest need not be made;

following the day of dishonor, or if there be when must be made. -
no mail at a convenient hour on last day, by Where any negotiable instrument has been
the next mail thereafter. dishonored, it may be protested for non-
2. If given otherwise than through the post acceptance or non-payment, as the case may
office, then within the time that notice would be; but protest is not required except in the
have been received in due course of mail, if case of foreign bills of exchange. robles virtual
it had been deposited in the post office
within the time specified in the last
law library
subdivision.
Sec. 105. When sender deemed to have

Sec. 111. Waiver of protest. - A waiver of
protest, whether in the case of a foreign bill of
exchange or other negotiable instrument, is
given due notice. - deemed to be a waiver not only of a formal
Where notice of dishonor is duly addressed protest but also of presentment and notice of
and deposited in the post office, the sender is
deemed to have given due notice,
dishonor.
notwithstanding any miscarriage in the mails.
Sec. 106. Deposit in post office; what

~ Fin ~
constitutes. -
Notice is deemed to have been deposited in
the post-office when deposited in any branch
post office or in any letter box under the control
of the post-office department.
Sec. 107. Notice to subsequent party; time

of. -
Where a party receives notice of dishonor, he
has, after the receipt of such notice, the same
time for giving notice to antecedent parties that
the holder has after the dishonor.

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COMMERCIAL LAW
ACTS THAT DISCHARGES SIMPLE

DISCHARGE OF NEGOTIABLE
INSTRUMENT

CONTRACTS
ART. 1231 NCC:

1. payment or performance
2. loss of the thing due
DISCHARGE; defined 3. condonation or remission of the debt
release of all parties, primarily or secondarily 4. confusion or merger of the rights of
liable, from further liability, obligation or from creditor and debtor

the binding effect of the negotiable instrument.
DISCHARGE OF NEGOTIABLE
5. compensation
6. novation
7. annulment or rescission

INSTRUMENT
INSTRUMENT IS DISCHARGE BY:

8. fulfillment of a resolutory condition

9. prescription
1. By payment in due course by or on behalf PRINCIPAL DEBTOR BECOMES THE

of the principal debtor; HOLDER
2. By payment in due course by the party NOTE: dapat, in his own rights.
accommodated, where the instrument is - hence, if the maker acquires an
made or accepted for his accommodation; instrument purely in a representative
3. By the intentional cancellation thereof by capacity, no discharge of instrument
the holder;
4. By any other act which will discharge a
simple contract for the payment of money;

transpires.
DISCHARGE OF PARTIES SECONDARILY

5. When the principal debtor becomes the LIABLE
holder of the instrument at or after maturity A person secondarily liable on the instrument
in his own right. is discharged:

1. B y a n y a c t w h i c h d i s c h a r g e s t h e

PAYMENT IN DUE COURSE
REQUISITES:
instrument;
2. By the intentional cancellation of his
signature by the holder;
1. it must be made by or in behalf of the 3. By the discharge of a prior party;
principal debtor or the accommodated 4. By a valid tender or payment made by a
party, where the instrument is made or prior party;
accepted for his accommodation 5. By a release of the principal debtor unless
2. payment must be made to the holder the holder's right of recourse against the
3. the payor must be in gf and without party secondarily liable is expressly
notice that his title is defective; and reserved;
4. payment must be made at or after 6. By any agreement binding upon the holder
maturity of the instrument
BY WHOM MADE
to extend the time of payment or to
postpone the holder's right to enforce the
instrument unless made with the assent of
1. person primarily liable (maker or the party secondarily liable or unless the
acceptor) right of recourse against such party is
2. if the primary party is a surety for a
principal debtor who signed as a
secondary party,
expressly reserved.
DISCHARGE OF PRIOR PARTY

3. payment on behalf of the principal discharge of a prior party discharges all

debtor
4. payment by accommodated party
subsequent party
M-P-A-B-C-D
HENCE: Where the instrument is ~ discharge of A by C, by canceling the
paid by a party secondarily liable signature of A, B will be released from any
thereon, liability on the instrument.
- it is not discharged; RATION: by discharging A, B

loses his right to be reimbursed by
TO WHOM

to the holder. A.
REQ: that the discharge must be by virtue

note: if the payee is no longer in
possession of the instrument,
payment to the said payee will not

of some acts of the creditor
HENCE: it does not include

discharge the instrument discharge by operation of law,
such as: (insolvency, bankruptcy,
prescription and failure to give
notice of dishonor)

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COMMERCIAL LAW
TENDER OF PAYMENT been paid by the party

the act by one which produces and offers accommodated.
to a person holding a claim or demand - same reason, the
against him the amount of money which he accommodated party is
considers and admits to be due, in the person primarily liable
satisfaction of such claim or demand

without any stipulation or condition.
on the instrument.
RENUNCIATION BY HOLDER
RATION: The holder may expressly renounce his rights
kasi, should the holder accepted the against any party to the instrument before, at,
payment, the subsequent party would

have been discharge
or after its maturity.
EFFECT OF ABSOLUTE AND

RELEASE OF PRINCIPAL DEBTOR UNCONDITIONAL RENUNCIATION
RATION: as persons secondarily liable has of his rights against the principal debtor
no more right of recourse against the made at or after the maturity of the

principal debtor.
EXE: when the release was made with

instrument
- discharges the instrument.
reservation of the right of recourse against EXE: does not affect the rights of a

the principal debtor.
EXTENSION OF TERM FORM

holder in due course without notice.
RATION: as the assurance of the drawer IN WRITING

and indorsers is payment according the UNLESS: the instrument is delivered
tenor of the instrument. Hence, should the up to the person primarily liable
term be extended, the engagement of thereon.
indorsers and drawer will no longer be
present. GENERAL RULE: renunciation by the holder

~ same rule un Guaranty and Suretyship.
ALSO:

must be express
EXE: implied, when the instrument itself was

RIGHT OF PARTY WHO DISCHARGED
THE INSTRUMENT
WHEN PERSON SECONDARILY LIABLE

delivered to the principal debtor.
WHEN CANCELLATION IS INOPERATIVE

IS REMITTED TO HIS FORMER RIGHTS when cancellation was made

AS REGARD ALL PRIOR PARTIES 1. unintentionally
2. under a mistake or
ILLUSTRATION:

M-P-A-B-C-A
3. without the authority of the holder,
BURDEN OF PROOF
IN HERE: where an instrument or any signature thereon
in here, when the pn was negotiated back appears to have been cancelled,
to A, A is remitted to his former right, as if lies on the party who alleges that the

he is in his original position.
EFFECT:
cancellation was made unintentionally
or under a mistake or without authority.
he may strike out his own and all

subsequent indorsements and against
negotiate the instrument
~ AS: the subsequent indorsement can

now be disregarded.
E X E : W H E N R E S U LT S T O
DISCHARGE OF THE

INSTRUMENT
Where it is payable to the order

of a third person and has been
paid by the drawer; and
- as the drawer is the

person primarily liable
Where it was made or accepted

for accommodation and has

AAA - BASTE / ATB
COMMERCIAL LAW
8. Plaintiff, without consent of the defendant,

struck out the name of the defendant as
MATERIAL ALTERATION payee and inserted the name of the maker
of the original note.
9. Striking out the name of the payee and
substituting that of the person who actually
Sec. 125. What constitutes a material discounted the note.
alteration. - 10. Substituting the address of the maker for
Any alteration which changes:
1. The date;
2. The sum payable, either for principal or
the name of a co-maker
THE FF ARE IMMATERIAL ALTERATION

interest; 1. Changing I promise to pay to We promise
3. The time or place of payment: to pay, where there are two makers.
4. The number or the relations of the parties; 2. Adding the word annual after the interest
5. The medium or currency in which payment clause.
is to be made; Or 3. Adding the date of maturity as a marginal
6. which adds a place of payment where no notation.
place of payment is specified, or any other 4. Filling in the date of the actual delivery
change or addition which alters the effect of where the makers of a note gave it with the
the instrument in any respect, is a material date in blank, July . . .
alteration.
CONCEPT
5. An alteration of the marginal figures of a
note where the sum stated in words in the
body remained unchanged.
WHEN ALTERATION IS DEEMED MATERIAL 6. The insertion of the legal rate of interest
An alteration is said to be material if it alters where the note had a provision for interest

the effect of the instrument.
IT MEANS
at . . . per cent.
7. A printed form of promissory note had on
the margin the printed words, Extended
unauthorized change in an instrument that to . . . The holder on or after maturity wrote
purports to in the blank space the words May 1, 1913,
modify in any respect the obligation of as a reference memorandum of a promise
a party or made by him to the principal maker at the
unauthorized addition of words or numbers or time the words were written to extend the
other change time of payment.
to an incomplete instrument relating to 8. Where there was a blank for the place of

the obligation of a party.
In other words, a material alteration is one

payment, filling in the blank with the place
desired
9. Adding to an indorsees name the
which abbreviation Cash when it had been
~ changes the items which are required to be agreed that the draft should be discounted
stated under Section 1 of the Negotiable by the trust company of which the indorsee

Instrument Law.
T H E F F A R E D E E M E D M AT E R I A L
was cashier
10. The indorsement of a note by a stranger
after its delivery to the payee at the time the
ALTERATION (PNB vs CA April 25, 1996) note was negotiated to the plaintiff.
1. Substituting the words or bearer for 11. An extension of time given by the holder of
order. a note to the principal maker, without the
2. Writing protest waived above blank
indorsements.
3. A change in the date from which interest is
consent of the a surety co-maker.
EFFECTS OF MATERIAL ALTERATION

to run. R E S U LT S T O AV O I D A N C E O F T H E
4. A check was originally drawn as follows:
Iron County Bank, Crystal Falls, Mich. Aug.
5, 1901. Pay to G.L. or order $9 fifty cents

INSTRUMENT
EXE:
CTR. The insertion of the figure 5 before 1. when done with the consent of all of the
the figure 9, the instrument being otherwise parties; or
unchanged. 2. as against a party who has himself made,
5. Adding the words with interest with or authorized, or assented to the alteration
without a fixed rate. and subsequent indorsers.
6. An alteration in the maturity of a note, 3. if in the hands of a HDC, he may enforce it
whether the time for payment is thereby according to its original tenor (but only to
curtailed or extended. those who are not party to the alteration,
7. An instrument was payable First Natl hence, as to the person who made such
Bank, the plaintiff added the word and indorsees subsequent to him, are liable
Marion. to the terms of altered instrument, due to
warranty of genuineness)

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COMMERCIAL LAW
~ NOT INCLUDED IN THE SYLLABUS ~
Sec. 126. Bill of exchange, defined. - A bill of

copy thereof, and must be under the hand and
seal of the notary making it and must
specify:chanroblesvirtuallawlibrary
exchange is an unconditional order in writing (a) The time and place of presentment;
addressed by one person to another, signed by
the person giving it, requiring the person to (b) The fact that presentment was made and
whom it is addressed to pay on demand or at a the manner thereof;
fixed or determinable future time a sum certain
in money to order or to bearer. (c) The cause or reason for protesting the bill;
Sec. 127. Bill not an assignment of funds in (d) The demand made and the answer given, if
hands of drawee. - A bill of itself does not any, or the fact that the drawee or acceptor
operate as an assignment of the funds in the could not be found.
hands of the drawee available for the payment Sec. 154. Protest, by whom made. - Protest
thereof, and the drawee is not liable on the bill may be made by:chanroblesvirtuallawlibrary
unless and until he accepts the same. (a) A notary public; or
Sec. 128. Bill addressed to more than one (b) By any respectable resident of the place
drawee. - A bill may be addressed to two or where the bill is dishonored, in the presence of
more drawees jointly, whether they are two or more credible witnesses.
partners or not; but not to two or more drawees Sec. 155. Protest; when to be made. - When a
in the alternative or in succession. bill is protested, such protest must be made on
the day of its dishonor unless delay is excused
Sec. 129. Inland and foreign bills of exchange. as herein provided. When a bill has been duly
- An inland bill of exchange is a bill which is, or noted, the protest may be subsequently
on its face purports to be, both drawn and extended as of the date of the noting.
payable within the Philippines. Any other bill is
a foreign bill. Unless the contrary appears on Sec. 156. Protest; where made. - A bill must be
the face of the bill, the holder may treat it as an protested at the place where it is dishonored,
inland bill. except that when a bill drawn payable at the
place of business or residence of some person
Sec. 130. When bill may be treated as other than the drawee has been dishonored by
promissory note. - Where in a bill the drawer nonacceptance, it must be protested for non-
and drawee are the same person or where the payment at the place where it is expressed to
drawee is a fictitious person or a person not be payable, and no further presentment for
having capacity to contract, the holder may payment to, or demand on, the drawee is
treat the instrument at his option either as a bill necessary.
of exchange or as a promissory note.
Sec. 157. Protest both for non-acceptance and
Sec. 131. Referee in case of need. - The non-payment. - A bill which has been protested
drawer of a bill and any indorser may insert for non-acceptance may be subsequently
thereon the name of a person to whom the protested for non-payment.
holder may resort in case of need; that is to
say, in case the bill is dishonored by non- Sec. 158. Protest before maturity where
acceptance or non-payment. Such person is acceptor insolvent. - Where the acceptor has
called a referee in case of need. It is in the been adjudged a bankrupt or an insolvent or
option of the holder to resort to the referee in has made an assignment for the benefit of

case of need or not as he may see fit.
XII. PROTEST
creditors before the bill matures, the holder
may cause the bill to be protested for better
security against the drawer and indorsers.
robles virtual law library
Sec. 152. In what cases protest necessary. -
Where a foreign bill appearing on its face to be Sec. 159. When protest dispensed with. -
such is dishonored by nonacceptance, it must Protest is dispensed with by any
be duly protested for nonacceptance, by circumstances which would dispense with
nonacceptance is dishonored and where such notice of dishonor. Delay in noting or protesting
a bill which has not previously been is excused when delay is caused by
dishonored by nonpayment, it must be duly circumstances beyond the control of the holder
protested for nonpayment. If it is not so and not imputable to his default, misconduct,
protested, the drawer and indorsers are or negligence. When the cause of delay
discharged. Where a bill does not appear on ceases to operate, the bill must be noted or
its face to be a foreign bill, protest thereof in protested with reasonable diligence.
case of dishonor is unnecessary.
Sec. 160. Protest where bill is lost and so forth.
Sec. 153. Protest; how made. - The protest - When a bill is lost or destroyed or is wrongly
must be annexed to the bill or must contain a detained from the person entitled to hold it,

AAA - BASTE / ATB
COMMERCIAL LAW
protest may be made on a copy or written for payment to the acceptor for honor must be

particulars thereof.
XIII. ACCEPTANCE FOR HONOR

made as follows:chanroblesvirtuallawlibrary
(a) If it is to be presented in the place where
the protest for non-payment was made, it must
be presented not later than the day following
Sec. 161. When bill may be accepted for its maturity.
honor. - When a bill of exchange has been
protested for dishonor by non-acceptance or (b) If it is to be presented in some other place
protested for better security and is not than the place where it was protested, then it
overdue, any person not being a party already must be forwarded within the time specified in
liable thereon may, with the consent of the Section one hundred and four.
holder, intervene and accept the bill supra Sec. 169. When delay in making presentment
protest for the honor of any party liable thereon is excused. - The provisions of Section eighty-
or for the honor of the person for whose one apply where there is delay in making
account the bill is drawn. The acceptance for presentment to the acceptor for honor or
honor may be for part only of the sum for which referee in case of need.
the bill is drawn; and where there has been an
acceptance for honor for one party, there may Sec. 170. Dishonor of bill by acceptor for
be a further acceptance by a different person honor. - When the bill is dishonored by the
for the honor of another party. acceptor for honor, it must be protested for
non-payment by him.
Sec. 162. Acceptance for honor; how made. -
An acceptance for honor supra protest must be XIV. PAYMENT FOR HONOR
in writing and indicate that it is an acceptance
for honor and must be signed by the acceptor Sec. 171. Who may make payment for honor. -
for honor. chanrobles law Where a bill has been protested for non-
payment, any person may intervene and pay it
Sec. 163. When deemed to be an acceptance supra protest for the honor of any person liable
for honor of the drawer. - Where an thereon or for the honor of the person for
acceptance for honor does not expressly state whose account it was drawn.
for whose honor it is made, it is deemed to be
an acceptance for the honor of the drawer. Sec. 172. Payment for honor; how made. - The
payment for honor supra protest, in order to
Sec. 164. Liability of the acceptor for honor. - operate as such and not as a mere voluntary
The acceptor for honor is liable to the holder payment, must be attested by a notarial act of
and to all parties to the bill subsequent to the honor which may be appended to the protest
party for whose honor he has accepted. or form an extension to it.
Sec. 165. Agreement of acceptor for honor. - Sec. 173. Declaration before payment for
The acceptor for honor, by such acceptance, honor. - The notarial act of honor must be
engages that he will, on due presentment, pay founded on a declaration made by the payer
the bill according to the terms of his for honor or by his agent in that behalf
acceptance provided it shall not have been declaring his intention to pay the bill for honor
paid by the drawee and provided also that is and for whose honor he pays.
shall have been duly presented for payment
and protested for non-payment and notice of Sec. 174. Preference of parties offering to pay
dishonor given to him. for honor. - Where two or more persons offer to
pay a bill for the honor of different parties, the
Sec. 166. Maturity of bill payable after sight; person whose payment will discharge most
accepted for honor. - Where a bill payable after parties to the bill is to be given the preference.
sight is accepted for honor, its maturity is
calculated from the date of the noting for non- Sec. 175. Effect on subsequent parties where
acceptance and not from the date of the bill is paid for honor. - Where a bill has been
acceptance for honor. paid for honor, all parties subsequent to the
party for whose honor it is paid are discharged
Sec. 167. Protest of bill accepted for honor, but the payer for honor is subrogated for, and
and so forth. - Where a dishonored bill has succeeds to, both the rights and duties of the
been accepted for honor supra protest or holder as regards the party for whose honor he
contains a referee in case of need, it must be pays and all parties liable to the latter.
protested for non-payment before it is
presented for payment to the acceptor for Sec. 176. Where holder refuses to receive
honor or referee in case of need. payment supra protest. - Where the holder of a
bill refuses to receive payment supra protest,
Sec. 168. Presentment for payment to he loses his right of recourse against any party
acceptor for honor, how made. - Presentment who would have been discharged by such
payment.

AAA - BASTE / ATB
COMMERCIAL LAW
Sec. 177. Rights of payer for honor. - The

payer for honor, on paying to the holder the
amount of the bill and the notarial expenses
incidental to its dishonor, is entitled to receive
both the bill itself and the protest.

XV. BILLS IN SET
Sec. 178. Bills in set constitute one bill. -

Where a bill is drawn in a set, each part of the
set being numbered and containing a
reference to the other parts, the whole of the
parts constitutes one bill.
Sec. 179. Right of holders where different parts

are negotiated. - Where two or more parts of a
set are negotiated to different holders in due
course, the holder whose title first accrues is,
as between such holders, the true owner of the
bill. But nothing in this section affects the right
of a person who, in due course, accepts or
pays the parts first presented to him.
Sec. 180. Liability of holder who indorses two

or more parts of a set to different persons. -
Where the holder of a set indorses two or more
parts to different persons he is liable on every
such part, and every indorser subsequent to
him is liable on the part he has himself
indorsed, as if such parts were separate bills.
Sec. 181. Acceptance of bill drawn in sets. -

The acceptance may be written on any part
and it must be written on one part only. If the
drawee accepts more than one part and such
accepted parts negotiated to different holders
in due course, he is liable on every such part
as if it were a separate bill.
Sec. 182. Payment by acceptor of bills drawn

in sets. - When the acceptor of a bill drawn in a
set pays it without requiring the part bearing
his acceptance to be delivered up to him, and
the part at maturity is outstanding in the hands
of a holder in due course, he is liable to the
holder thereon.
Sec. 183. Effect of discharging one of a set. -

Except as herein otherwise provided, where
any one part of a bill drawn in a set is
discharged by payment or otherwise, the

whole bill is discharged.

~ Fin ~


AAA - BASTE / ATB
COMMERCIAL LAW
TIME FOR ACCEPTANCE

The drawee is allowed 24 HRS after
ACCEPTANCE presentment
in which to decide whether or not he
ACCEPTANCE; defined

will accept the bill;
the acceptance, if given, dates as of

The acceptance of a bill is
the signification by the drawee of his the day of presentation.
MANNER

assent to the order of the drawer. ILLUSTRATION
if the bill was presented for acceptance on
July 15, the drawee has 24 hrs to decide
The acceptance must be whether to accept it or not, or up to July 16.
1. in writing however, if the bill states that the payment
2. signed by the drawee; and shall be made within 5 days from
3. It must not express that the drawee will acceptance, and the bill was presented to the
perform his promise by any other means drawee on July 15,
than the payment of money
WHEN ACCEPTANCE MUST BE IN

the counting of the 5 day period will
commence in July 15 and not July 16,
ff under NIL, that the acceptance, if

WRITING
The holder of a bill presenting the same

given, shall be the date of the
presentation (and not the acceptance)
for acceptance may require that the ACCEPTANCE OF AN INCOMPLETE

acceptance be written on the bill, BILL
and, if such request is refused, A bill may be accepted
1. before it has been signed by the

may treat the bill as dishonored.
an acceptance written on a paper

drawer, or while otherwise incomplete,
2. when it is overdue, or
3. after it has been dishonored by a
other than the bill itself,
previous refusal to accept, or by non
it does not bind the acceptor
EXE: in favor of a person
1. to whom it is shown and
payment.
GEN RULE: the date of the acceptance

2. who, on the faith thereof,
shall be deemed the date when the
receives the bill for value.

acceptance was made.

PROMISE TO ACCEPT
GEN RULE:
EXE: the date of the acceptance shall be
deemed the date when the first (refused)
presentment for acceptance was made;

not equivalent to acceptance
EXE: deemed as an actual acceptance

a bill payable after sight is
dishonored by non-acceptance
when and the drawee subsequently
1. it is an unconditional promise to accept accepts it,
a bill the holder, in the absence of any
2. in writing; and different agreement,
is entitled to have the bill

3. made before the bill is drawn
accepted as of the date of
is deemed an actual acceptance
in favor of every person who,
upon the faith thereof, receives
the first presentment.
the bill for value.
CONSTRUCTIVE ACCEPTANCE
Where a drawee to whom a bill is
delivered for acceptance, deemed to have
constructively accepted the bill, when he:
1. destroys the same, or
2. refuses within 24 HRS after such
delivery or within such other period as
the holder may allow, to return the bill
accepted or non-accepted to the
holder

AAA - BASTE / ATB
COMMERCIAL LAW

RULES GOVERNING ACCEPTANCE
KINDS OF ACCEPTANCE
WHEN THERE IS DEEMED AN
IMPLED AUTHORIZATION FOR
QUALIFIED ACCEPTANCE
When the drawer or an indorser
GENERAL QUALIFIED r e c e i v e s n o t i c e o f a q u a l i fi e d
ACCEPTANCE ACCEPTANCE acceptance,
he must (and fails), within a
nature reasonable time,
- express his dissent to the
assents without
qualification to the
order of the drawer.
in express terms
varies the effect of
the bill as drawn.
holder.
NOTE: the law presumes unqualified or

absolute acceptance.
- as; if the drawee intends to qualify his
manner acceptance, he must do so distinctly and
unmistakably or else his acceptance will be
An acceptance to
pay at a particular
1. Conditional; that
i s t o s a y, w h i c h

taken as absolute.

place
UNLESS
makes payment by
the acceptor
dependent on the
it expressly states f u l fi l l m e n t o f a
that the bill is to be condition therein
paid there only and
not elsewhere
stated;
2. Partial; that is to
say, an acceptance
to pay part only of
the amount for
which the bill is

drawn;
3. Local; that is to
say, an acceptance
to pay only at a

particular place;
4. Qualified as to

time;
5. The acceptance
of some, one or
more of the drawees
but not of all.

IN RE: QUALIFIED ACCEPTANCE

RIGHT OF THE PARTIES AS TO QA
RIGHT OF THE HOLDER

1. may refuse to take a qualified acceptance
and
2. if he does not obtain an unqualified
acceptance, he may treat the bill as
dishonored by non-acceptance.
SHOULD QUALIFIED ACCEPTANCE BE

MADE; RIGHT OF THE DRAWER AND
INDORSERS
discharged from liability on the bill
UNLESS: they have
1. expressly or impliedly authorized the holder
to take a qualified acceptance, or
2. subsequently assent thereto.

AAA - BASTE / ATB
COMMERCIAL LAW
TIME OF PRESENTMENT
A bill may be presented for acceptance
PRESENTMENT FOR - on any day on which negotiable instruments
ACCEPTANCE may be presented for payment ( the day fixed
TIME, PLACE AND MANNER OF

in the instrument)
When Saturday is not otherwise a

PRESENTMENT holiday,
presentment for acceptance may be
WHEN PRESENTMENT FOR ACCEPTANCE
MUST BE MADE
1. Where the bill is payable after sight, or in
made before 12 noon on that day.
(if not, on the next succeeding

any other case, where presentment for business day)
acceptance is necessary in order to fix the
maturity of the instrument; PLACE WHERE PRESENTMENT SHOULD
2. Where the bill expressly stipulates that it
shall be presented for acceptance; or
3. Where the bill is drawn payable elsewhere

BE MADE
GEN RULE:
than at the residence or place of business the place of business or residence of the
of the drawee.
In no other case is presentment for acceptance

drawer
EXE:
necessary in order to render any party to the payable elsewhere than at the place of
bill liable. business or the residence of the drawee has
MANNER
Presentment for acceptance must be

no time,
I N H E R E ; D E L AY I N T H E
1. made by or on behalf of the holder PRESENTMENT MAY BE EXCUSED;
2. at a reasonable hour, on a business day provided, in the delay, the holder
and exercised reasonable diligence, to

3. before the bill is overdue,
TO THE
present the bill for acceptance
before presenting it for payment on
the day that it falls due,
drawee or some person authorized to the delay caused by
accept or refuse acceptance on his presenting the bill for
behalf;
Where a bill is addressed to two or more

acceptance before presenting
it for payment is excused
- and does not discharge the
drawees who are not partners,
presentment must be made to
drawers and indorsers.
them all UNLESS

one has authority to accept or
refuse acceptance for all, in which
ILLUSTRATION
July 15, 2012
case presentment may be made Pay to the order of P, 200k on July 17,

to him only;
Where the drawee is dead,

2012, at PNB Recto.

sgd. DR
presentment may be made to his TO: DW
personal representative;
Where the drawee has been adjudged a

Samar
dito, grabe naman na 2 days lang yung

bankrupt or an insolvent or has made an pagitan, when presentment is to be
assignment for the benefit of creditors, made in Samar, and payment in
presentment may be made to him Manila. hence, any delay here, will be
or to his trustee or assignee. excused. provided syempre,

reasonable diligence, exercised.

AAA - BASTE / ATB
COMMERCIAL LAW
E F F E C T O F FA I L U R E TO M A K E

PRESENTMENT
GEN RULE
PROMISSORY NOTES

the drawer and all indorsers are discharged
EXE: NEGOTIABLE PROMISSORY NOTES;

Presentment for acceptance is excused in defined
either of the following cases: 1. is an unconditional promise in writing
1. Where the drawee is dead, or has 2. made by one person to another,
absconded, or is a fictitious person or a 3. signed by the maker,
person not having capacity to contract by 4. engaging to pay
bill. on demand, or at a fixed or determinable
2. Where, after the exercise of reasonable future time,
diligence, presentment can not be made. a sum certain in money to order or to
3. Where, although presentment has been
irregular, acceptance has been refused on bearer.
some other ground.
ie. #3
Where a note is drawn to the maker's own
order,
it is not complete until indorsed by him.
- presentment for acceptance was
made during Holiday, hence irregular.
but the drawee refused the acceptance
on other ground. (ie. insufficiency of CHECKS

funds)
EFFECT: a bill may be treated as dishonored

by non-acceptance CHECK; defined
is a bill of exchange drawn on a bank payable
DISHONOR BY NON-ACCEPTANCE
A bill is dishonored by non-acceptance:
1. When it is duly presented for acceptance

on demand.
Except as herein otherwise provided,

and such an acceptance as is prescribed - the provisions of this Act applicable to
by this Act is refused or can not be a bill of exchange payable on demand
obtained; or
2. When presentment for acceptance is
apply to a check.
excused and the bill is not accepted.
DUTY OF THE HOLDER WHERE BILL NOT

KINDS OF CHECK
CASHIER'S CHECK AND MANAGER'S

ACCEPTED CHECK
must treat the bill as dishonored by is a bill of exchange drawn by a bank upon
nonacceptance itself, and is accepted by its issuance.
OTHERWISE ~ signed by the cashier or manager
he loses the right of recourse against
the drawer and indorsers.
~ that is, by giving notice of

respectively.
NOTE: both the drawer and the

dishonor within reasonable
tome, to persons secondarily
liable on the instrument.
drawee of this check is the bank itself.
CERTIFIED CHECKS
is one drawn by a depositor upon funds to his
RIGHT OF THE HOLDER WHERE THE BILL credit in a bank
NOT ACCEPTED which a proper officer of the bank
1. an immediate right of recourse against the certifies will be paid when duly
drawer and indorsers accrues to the holder
and presented for payment

2. no presentment for payment is necessary. AKIN TO: certificate of deposit of a

certifying bank.
EFFECT OF CERTIFICATION:
is the same as though the money has been
paid by the bank to the holder and

redeposited by him in his own credit.

AAA - BASTE / ATB
COMMERCIAL LAW
EXE:
if the bank certifies a check through
mistake or fraud

PRESENTMENT FOR PAYMENT
TIME
- it can revoke its certification if A check must be presented for payment
the rights of 3rd parties are not
affected and
the payee has not changed his

within a reasonable time after its issue
OTHERWISE: EFFECT OF DELAY

position in reliance of the the drawer will be discharged from

certification.
IF THE CERTIFICATION IS PROCURED

liability thereon to the extent of the loss
caused by the delay.
BY THE HOLDER EFFECT OF CERTIFICATION OF CHECK

drawer and all indorsers are discharged Where a check is certified by the bank on
from the check which it is drawn
AS: the holder, by requesting such the certification is equivalent to an
certification instead of payment, acceptance.
enters into a new contract with the
bank, and the one within the IF THIS IS PROCURED BY THE
contemplation of the drawer or a HOLDER

CROSSED CHECKS
prior indorser. the drawer and all indorsers are
discharged from liability thereon.
is done by writing 2 parallel lines diagonally on WHERE CHECKS OPERATES AS AN

the left top portion of the check
KINDS
ASSIGNMENT
A check of itself does not operate as an
assignment of any part of the funds to the
SPECIAL; where the name of the bank credit of the drawer with the bank, and the
or a business institution is written bank is not liable to the holder
between the 2 lines UNLESS AND UNTIL: it accepts or
which means, that the drawee
should pay only with the
intervention of that company
certifies the check.
GENERAL; where word written between

2 parallel lines are "and Co." or "for
payee's account only"
EFFECTS
1. the check many not be encashed but
only deposited in the bank
2. the check may be negotiated only one,
to the one who has an account with the
bank; and
3. the act of crossing serves as a warning
to the holder that the check has been
issued for a definite purpose so that he
must inquire if he has received the
check pursuant to that purpose.
4. failure to inquire by the holder of the
purpose of the check, cannot be said a
MEMORANDUM CHECK
in the form of an ordinary check with the word
"memorandum, memo or mem" written across
its face
signifying that the maker or drawer
engages to pay the bona fide holder
absolutely,
- without any condition concerning its

presentment.
TRAVELER'S CHECK
are instrument purchased from banks, express
companies, or the like, in various
denomination, which can be used like cash
upon second signature by the purchaser.

AAA - BASTE / ATB
COMMERCIAL LAW
XVII. GENERAL PROVISIONS Sec. 195. Application of Act. - The provisions of

this Act do not apply to negotiable instruments
Sec. 190. Short title. - This Act shall be known made and delivered prior to the taking effect
as the Negotiable Instruments Law. hereof. chanrobles law
Sec. 191. Definition and meaning of terms. - In Sec. 196. Cases not provided for in Act. - Any
this Act, unless the contract otherwise case not provided for in this Act shall be
requires:chanroblesvirtuallawlibrary governed by the provisions of existing
"Acceptance" means an acceptance completed legislation or in default thereof, by the rules of
by delivery or notification;
"Action" includes counterclaim and set-off;

the law merchant.
Sec. 197. Repeals. - All acts and laws and

parts thereof inconsistent with this Act are
"Bank" includes any person or association of hereby repealed.
persons carrying on the business of banking,
whether incorporated or not; Sec. 198. Time when Act takes effect. - This
Act shall take effect ninety days after its
"Bearer" means the person in possession of a publication in the Official Gazette of the
bill or note which is payable to bearer; Philippine Islands shall have been completed.
"Bill" means bill of exchange, and "note"

means negotiable promissory note;
"Delivery" means transfer of possession, actual

or constructive, from one person to another;
"Holder" means the payee or indorsee of a bill

or note who is in possession of it, or the bearer
thereof;
"Indorsement" means an indorsement

completed by delivery;
"Instrument" means negotiable instrument;
"Issue" means the first delivery of the

instrument, complete in form, to a person who
takes it as a holder;
"Person" includes a body of persons, whether

incorporated or not;
"Value" means valuable consideration;
"Written" includes printed, and "writing"

includes print.
Sec. 192. Persons primarily liable on
instrument. - The person "primarily" liable on
an instrument is the person who, by the terms
of the instrument, is absolutely required to pay
the same. All other parties are "secondarily"
liable.
Sec. 193. Reasonable time, what constitutes. -

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.
Sec. 194. Time, how computed; when last day

falls on holiday. - Where the day, or the last
day for doing any act herein required or
permitted to be done falls on a Sunday or on a
holiday, the act may be done on the next
succeeding secular or business day.

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THE AWESOME NOTES 1 of 37

REQUISITES OF NEGOTIABILITY June 30, 2012

I order x to pay y or holder the sum of

order to pay a sum certain in money

THE FF CONSTITUTE A SUM CERTAIN IN

NOTE: NEGOTIABILITY OF THE

HENCE; DEEMED NOT

IT MUST BE IN WRITING SIGNED BY THE

LAW DOES NOT SPECIFY WHAT KIND IF

SAME; as to the signature of the maker.

NEGOTIABLE PROMISSORY NOTE

PAYABLE WITH EXCHANGE

due x or order 1k payable on July 5,

NOTE: mere acknowledgement of a

prepared by: ronie ablan

THE PROMISE OR ORDER MUST BE PAYABLE ON DEMAND OR AT A FIXED OR

PAYABLE ON DETERMINABLE FUTURE

STIPULATIONS THAT MAKE PROMISE OR

- 25 days after date (date of the

On or before a fixed or determinable future

1. indication of particular fund out of which

On or at a fixed period after the occurrence

EXE FOR #3; it becomes conditional

Pay x or order 10k on or before July

executed by virtue of the contract of

Pay to the order of X 10k on demand

~ usually,the reimbursement debiting if

WHEN DEEMED PAYABLE ON DEMAND

INSTRUMENT IS PAYABLE TO BEARER

June 10, 2012

sgd Y I promise to pay x or order 10k upon

June 10, 2012

I promise to pay Y or order 10k upon

known to the person making it so payable; or NOTE: for this instrument to be

June 10, 2012 also the payee, he must be the one

When the name of the payee does not

I promise to pay Z or order 10k upon

June 10, 2012

Pay to Flower or order 10k upon

When the only or last indorsement is an

indorsement in blank. June 10, 2012

I promise to pay upon order of Y and Z

June 10, 2012 10k upon demand

June 10, 2012

I promise to pay Y or X 10k upon

June 10, 2012

I promise to pay to the order of SSCR

prepared by: ronie ablan

IF THE INSTRUMENT IS ADDRESSED TO A

FF ARE NOT ACCEPTABLE DESIGNATION

Sec. 10. Terms, when sufficient. -

THE FF INSTRUMENTS ARE NOT

PWEDE; where the instrument is addressed

TREASURY WARRANT; it is a check drawn on

Sec. 5. Additional provisions not affecting

LETTERS OR CREDIT; does not contain an

CERTIFICATE OF STOCKS; as merely a

BILL OF LADING; a form of document of title. it

3. waives the benefit of any law intended for

prepared by: ronie ablan

KINDS OF NEGOTIABLE KINDS OF BILL OF EXCHANGE

i. MAKER; the one

i. DRAWER; he is one bill.