Outline for Negotiable Instruments Law (Bar Exam 2015)

1. 1. Negotiable Instruments Laws Based on 2015 Bar Exam Syllabus for Commercial Law
2. 2. References: Miravite, Jorge. Commercial Law Reviewer. 2002 ed. Sundiang and
Aquino. Commercial Law Reviewer. 2014 ed. Lecture Notes for Commercial Law
Review 1 under Fiscal R. S. Aquino- Tambasacan (San Sebastian, PUP College of Law)
Lecture and Handout of Atty George Ortha II for Jurists Review Center Handout by
Atty. Danilo G. Ballena (PUP College of Law)
3. 3. Miravite serves as the primary reference for this simple reviewer as it closely
resembles the flow of the syllabus prescribed by the Supreme Court. It is supplemented
by Sundiang (2014) and further annotated and updated with lecture notes from
Tambasacan, Ortha, and Guzman This is not meant to be in depth, but rather as a brisk
reviewer that touches substantially the topic under the syllabus. It is still preferable to
read any book for fuller understanding. Key feature of this reviewer are the tables on
liability in case of forgery NOTES
4. 4. Prepared By Lawrence P. Villamar
5.
6. 5. Negotiable Instrument* lA written contract for the payment of money which by its form
and on its face is intended as a substitute for money and passes from hand to hand as
money, so as to give the holder in due course the right to hold the instrument and collect
the sum for himself (UPLC, 2005,1949 Bar) *Peculiar that this is not part of the 2015
syllabus, but this is of primary importance that is why this is included in this reviewer.
7. 6. Forms and Interpretation lDiscrepancy Between the Amount in Figures and that in
Words lThe word prevail, but if the words are ambiguous, reference will be made to the
figures to fix the amount lInstrument Not Dated lConsidered dated on date of issue
lConflict Between Written and Printed Provisions lWritten provisions prevail lInterest
Provided for but No Starting Date Specified lStarting date is the date of instrument, in the
absence of said date, from date of issue
8. 7. Forms and Interpretation lWhen instrument is ambigous lSuch that there is doubt
whether it is a bill or note, the holder may treat it as a note or a bill (1998 Bar) lSignature
on Instrument Does Not Indicate Capacity in Which Made lDeemed as indorser with
secodary liability lWhen Promissory Note Worder I Promise to Pay is Signed By Two
Makers lThe payee of the promissory note had the right to hold any one of the two
signers of the promissory note responsibility for the payment of the whole amount of the
note
9. 8. Requisites of Negotiability lIn General (Sec. 1, NIL): lMust be in writing and signed by
the maker or drawer lMust contain an unconditional promise or order to pay a sum
certain in money lMust be payable on demand or at a fixed or determinable future time
lMust be payable to order or to bearer lWhere the instrument is addressed to a drawee,
he must be named or otherwise indicated therein with reasonable certainty.
10. 9. Requisites of Negotiability lPROMISSORY NOTE (1961 Bar) lMust be in writing and
signed by the maker lMust contain an unconditional promise to pay a sum certain in
money lMust be payable on demand or at a fixed or determinable future time lMust be
payable to order or to bearer
11. 10. Requisites of Negotiability lBill of Exchange (1961 Bar) lMust be in writing and
signed by the drawer lMust contain an unconditional promise to pay a sum certain in
money lMust be payable on demand or at a fixed or determinable future time lMust be
payable to order or to bearer lThe drawee must be named or otherwise indicated with
reasonable certainty
12. 11. Quick Notes on Particular Requisites lUnconditional Promise or Order lWhere the
promise or order to pay is made to depend on contingent even, it is conditional and
makes the instrument non negotiable lNote that an indication of a particular fund from
which the acceptor reimburses himself after paying the holder lAnd a statement of
transaction which gives rise to the instrument. lCertainty of Sum lIf the amount is fixed
lNote that negotiability is not affected although to be paid with interest, by stated
installments, by stated installments with acceleration clause, with exchange, and with
costs of collection or attorney's fees lSTATED should include date, amount to be paid,
and number of installment (Ortha)
13. 12. Quick Notes on Particular Requisites lIn Money lGeneral rule: If payment is not by
money, the instrument is non-negotiable. However, note that additional acts do not affect
negotiability. l Need not be legal tender, may be in foreign currency (Ortha) lAdditional
acts: lAuthorizing sale of collateral securities on default lAuthorizes confession of
 judgment on default lWaive benefit of law intended to protect debtor lAllows the creditor
the option to require something in lieu of money lPayable on Demad lWhere expressed
to be payable on demand, at sight, or on presentation lWhere no period of payment is
stated lWhere issued, accepted, or indorsed after maturity lSC: A PN payable on
demand is immediately due and demandable and an action prescribes in ten years.
14. 13. Quick Notes on Particular Requisites lDeterminable Future Time lAt a fixed period
after date or sight lOn or before a specified fixed or determinable future time lOn or at a
fixed period after the concurrence of a specified event, certain to happen, although the
exact date is not certain lTambasacan: Solar eclipse is a natural phenomenon certain to
happen. lPayable to Order lWhere drawn payable to the order of a specified person, or
to him or his order
15. 14. Quick Notes on Particular Requisites lPayable to Bearer lWhen expressed to be so
payable lWhen payable to a person named therein or bearer lWhen payable to the order
of a fictitious or non-existing person and such fact was known to the drawer or maker
lWhen the name of the payee is not the name of a person lWhen the only and last
indorsement is an indorsement in blank lNOTE: lWhere payee is vaguely designated, the
loss will be borned by the party who cause it the drawer. lNon- negotiable: payable to a
specified person and not to his order or to bearer (governed by some other law e.g. Civil
Code or Special Laws)
16. 15. Kinds of Negotiable Instruments lPromissory Note lAn unconditional promise in
writing by one person to another signed by the maker engaging to pay on demand or at
a fixed determinable future time a sum certain in money to order or to beaer lBill of
Exchange lAn unconditional order in wiriting addressed by one person to another, signed
by the person giving it, requiring the person to whom it is addressed to pay on demand
or at requiring the person to whom it is addressed to pay on demand or at a fixed or
determinable future time a sum certain in money to order or to bearer lCheque lA bill of
exchange drawn on a bank payable on demand
17. 16. Kinds of Negotiable Instruments lOther forms: lCertificate of deposit issued by banks
payable to the depositor or his order or to bearer lTrade acceptance lBonds which are in
the nature of promissory notes lDrafts which are bills of exchange drawn by one bank
upon another lLetter of Credit* lNOT NEGOTIABLE: Treasury Warrants lThere is an
indication of the fund as the source of payment of the disbursement. *Ortha: LC has lots
of condition before bank may honor it. Therefore, not negotiable.
18. 17. Completion and Delivery
19. 18. Insertion of Date lTambasacan: Dates are not material but only for maturity
20. 19. Insertion of Date lRULES AS TO DATES lWhere the instrument, its acceptance, or
indorsement is dated, such date is presumed to be the corresponding true date
lAntedating or postdating an instrument does not affect validity or negotionability unless
done for fraudulent or illegal purpose lDate is important: lWhere the instrument is
payable within specified period after date, or after acceptance, in which case the date of
the instrument and the date of acceptance are needed to determine the date of maturity
of the instrument, in these cases, the holder may insert the true date lWhen the
instrument is payable on demand, date is necessary to determine whether the
instrument was presented within a reasonable time from issue in the case of notes or
from last negtiation in case of bills, as these factors will show whether the last holder is a
holder in due course or not; lWhen the instrument is an interest bearing one, to
determine when the interest starts to run
21. 20. Completion of Blanks lA person in possessor of a check has prima facie authority to
complete by filling up the blanks therein (Miravite (2002), p. 91)
22. 21. Incomplete and Undelivered Instruments lSec. 15, NIL lIf completed and delivered
without authority, the instrument is not a valid contact against any person who signed
before delivery.
23. 22. Complete but Undelivered Instruments lBetween immediate parties and a remote
party not a holder in dure course, delivery to be effectual must be made by or under the
authority of the maker, drawer, acceptor or indorser, as the case may be lIf the
instrument is in the hands of a holder in due course all prior deliveries are conclusively
prwesumed to be valid lIf the instrument is out of the hands of the person who signed it,
a valid and intentional delivery is disputably presumed
24. 23. Incomplete but Delivered Instruments lHolder has prima facie authority to complete
the instrument lCompletion to be fone within a reasonable time and according to the
authority given lHolder in due course of the instrument previously completed in breach of
instructions can enforce the same as if regularly completed
25. 24. Signature Ortha: Not needed to be customary. lSignature per Procuration lOne
made by an agent with a limited authority to sign, and the principal is bound only if the
agent acts within the limits of the authority lMade by adding per procuration, per proc.
or p.p. under agent's signature
26. 25. Signing in Trade Name lThe person signing his trade name or assumed name is
liable if the name were his own
27. 26. Signature of Agent lRequisites: lMust be authorized lMust disclose his principal lMust
sign for and in behalf of the principal lWithout disclosing principal, personal liability (Sec.
20, NIL)
28. 27. Indorsement by Minor or Corporation lMindors and disqualified corporations although
incapacitated to make or draw instruments, can negotiate instruments, transferring valid
titled thereto, but are not liable as indorsers under the said signatures
29. 28. Forgery lCounterfeit making or fraudulent alteration of any writing lIt may consist of:
lSignung of another's name with intent to defraud lAlteration of an instrument in the
name, amount, description of payee, etc with intent to defraud. lThe signature is wholly
inoperative, and no right to retain the instrument or to give a discharge therefor, or to
enforce payment thereof against any party to it, is acquired through or under such
signatue.
30. 29. Forgery
31. 30. Forgery
32. 31. Consideration Presumption of Consideration every negotiable instrument is
deemed prima facie to have been issued for a vauable consideration; and every person
whose signature appears thereon to have become a party thereto for value (Ortha)
Value any consideration sufficient to support a simple contract. An antecedent or pre
existing debt constitutes value; and is deemed such whether the instrument is payable
on demand or at a future time (Ortha).
33. 32. Consideration Effect of want of consideration a matter of defense as againsty any
person not a holder in due course; and partial failure of consideration is a defense pro
tatnto, whether the failure os am ascertained and liquidated amount or otherwise (Ortha)
Absence of consideration total lack of any valid consideration for the contract is only a
personal defense (Ortha) Failure of consideration failure or refusal or one party to do,
perform or comply with the consideration agreed upon is also only a personal defense
(Ortha)
34. 33. Accommodation Party lAccomodation lA legal arrangement under which a person
called the accommodation party lends his name and credit to another called the
accomodated party, without consideration lA person to whom the instrument thus
executed is subsequently negotiated has a right of recourse against the accommodation
party inspite of the former's knowledge that no consideration passed between the
accommodation and accommodated parties
35. 34. Accommodation Party lA person who has signed the instrument as maker, drawer,
acceptor or indorser, without receiving value therefor, and for the purpose of lending his
name to some other person, is under the law liable on the instrument to a holder for
value notwithstanding that such holder at the time of taking the instrument knew him only
to be an accomodation party (1952 Bar) lLiability: solidary party, unconditional and is not
affected by an extension of payment granted by the creditor to the debtor
36. 35. Negotiation lThe transfer of a negotiable instrument from one person to another as to
constitute the transferer the holder thereof
37. 36. Distinguished from Assignment l2009, 2012 Bar Exam lAssignability pertains to
contracts in general, negotiability pertains to negotiable instrument (Sundiang & Aquino
(2014 ed), p. 14) lOne who takes an instrument by assignment takes the instrument
subject to the defenses obtaining among the original parties, whereas a person, who
takes the instrument by negotiation, takes it free from personal defenses available
among the parties (Ibid.)
38. 37. Modes of Negotiation lBy Delivery of the Instrument Alone lNegotiation of NI may be
effected by the delivery alone of the instrument to the transferrer those NI which are
originally payable to bearer, o originally payable to order instruments where the last
indorsement is an indorsement in blank lBy Indorsement Followed By Delivery lA NI
payable to the order of a pecified person, or to him or his order, may be negotiated by
the payee by indorsement followed by delivery of the instrument to the indorsee.
Subsequent negotiations may be made in this manner if the holder who indorses
acquired the instrument under special indorsement lDelivery of an instrument means
transfer of possession from one person to another.
39. 38. Kinds of Indorsements lSpecial lThe name of the indorsee is specified (vis a vis
General). Ex. Pay to A lBlank lAn indorsement which does not specify the name of the
indorsee and usually consists of the indorsers signature, and nothing else found at the
back of the instrument. lRestrictive lLimits the right of the indorsee by restricting further
negotiation, or making the indorsee the collecting agent of the indorser, or makin him a
trustee of a person named in the indorsement l Ex. Pay to A only restricts negotiation l
Other cases can still be negotiated subject to restriction of original restricve indorsement
(Ortha)
40. 39. Kinds of Indorsements lConditional lThe right of the indorsee under the instrument is
made to depend on the happening of the contingent event stated in the instrument.Said
indorsee however negotiate the instrument succeeding indorsees acquiring right to it
subject to the condition in the origina indorsement. lQualified lOne where the indorser
places under his signature the words without recourse or the like. Does not become
liable secondarily under his indorsement. SC: With recourse meams indorser is a
general indorser (Ortha) lRegular lOne placed after the issue of the instrument lIrregular
lOne placed in blank before the issue of the instrument.
41. 40. Rights of the Holder lIn general lMay sue thereunder in his own name, and payment
to him in due course discharges the instrument lIf PN is non negotiable, subsequent
holders can never be holders in due course but are mere assignees against whom
defenses may be raised by prior parties. lFact that PN was executed after the effectivity
date of the merger does not militate against the petitioner.
42. 41. Holder in Due Course lRequisites under Sec. 52: lOne who takes the instrument in
good faith and for value lAt the time the instrument was negotiated to him, he had not
notice at any defect in the title of the person negotiating it lEvery holder is deemed prima
facie to be a holder in due course lComplete and regular on its face (UPLC) lSC: Fact
that postdated checks were merely issued as security not a ground for discharged as
against the HIDC lIf instrument was acquired when overdue, not HIDC for lack of good
faith. An instrument becomes overdue the day after its maturity. A holder accepting an
instrument on its date of maturity is not an HIDC (Ortho)
43. 42. Holder Not in Due Course lWithout any, some , or all of the requisites under Sec. 52,
NIL lHOLDER FOR VALUE one who has all the requisites for a holder in due course
except notice of want of consideration. Prior parties may avail of defense against said
holder. lSHELTER RULE Acquires title from HIDC and not a party on the fraud,
acquires rights of HIDC but do not become an HIDC himself (Ortho)
44. 43. Defenses Against the HIDC lREAL or ABSOLUTE DEFENSES lA defense which
attaches to the instrument irrespective of the parties and is predicated on the principle
that the right sought to be enforced has never existed or has ceased to exist lAvailable
against all holders, whether in due course or not lPERSONAL or EQUITABLE
DEFENSES lA defense growing out of an agreement or conduct of a particular person in
regard to an instrument which renders it inequitable for him, although owner of it, to
enforce it against the defendant. lNot available against a holder in due course. lMinority
is a real defense, but personal to the minor (Ortho)
45. 44. Liabilities of Parties lParties Primarily Liable lMaker lAcceptor or the Drawee Who
Accepts the Instrument lParties Secondarily Liable lThe Drawer lThe General Indorser
lThe Irregular Indorser lParties with Limited Liability lThe Qualified Indorser lPerson
Negotiating by Delivery
46. 45. Maker lEnagages to pay according to the tenor of the instrument lAdmits the
existence of the payee and his capacity to indorse
47. 46. Drawer lAdmits the existence of the payee and his capacity to endorse lEngages that
the instrument will be accepted or paid by the party primarily liable lEngages that if the
instrument is dishonored and proper proceedings are brought, he will pay to the party
entitled to be paid
48. 47. Acceptor lEngages to pay according to the tenor of his acceptance lAdmits the
existence of the drawer, the genuineness of his signatue, and his capacity and authority
to draw the instrument lAdmits the existence of the payee and his capacity to indorse
49. 48. Indorser lGENERAL INDORSER lWarrants the genuiness of the instrument, his
good title to it, the capacity to contract prior parties, amd the instrument is valid and
subsitsting lEngages that the instrument will be paid by the party primarily liable
lEngages that if the instrument is dishonored, and proper proceedings are taken, he will
pay the party entitled to be paid lA collecting bank which endorses a check bearing a
forged indorsement and presents it to the drawee bank guarantees prior indorsement,
including the forged indorsement.
50. 49. Indorser lIRREGULAR INDORSER A person, not otherwie a party to an
instrument, places his signature thereon in blank. lIf instrument payable to the order of a
3rd person, he isnliablemto the payee and subsequent parties lIf instrument payable to
order of maker or drawer, he is liable to all parties subsequent to the maker or drawer. lIf
he signs for accomodation of the payee, he is liable to all parties subsequent to the
payee. lQUALIFIED INDORSER One of the parties with limited liability. He warrants
that: lInstrument is genuine and in all respects what it purports to be lHas good title to it
lAll prior parties had capacity to contract lHe has no knowledge of any fact which would
impair the validity of instrument or render it valueless.
51. 50. Person Negotiating By Delivery Warranties same as qualified Indorser Liability only
to immediate transferees
52. 51. Warranties Ortha: Different from primary obligation, and requires present and notice
of dishonor in order that obbligation for breach of warranties to arise.
53. 52. Presentment for Payment The presentation of an instrument to thn person primarily
liable for the purpose of demanding and receiving payment (Ortha)
54. 53. Necessity of Presentment for Payment General Rule: Presentment for payment is
nit necessary to charge persons primarily liable Necessary to charge persons
secondarily liable; otherwise, they are dicharged (Ortha)
55. 54. Parties to Whom Presentment for Payment Should Be Made Presentment for
payment is not necessary to charge persons primarily liable Presentment for payment is
necessary to charge persons secondarily liable; otherwise, they are discharged.
56. 55. Dispensation with Presentment for Payment Exceptions to Need for Presentment for
Payment (Ortho): Drawer where her has no right to expect or require that the drawee
or acceptor will pay the instrument (Sec. 79) Indorser where the instrument was made
of accepted for his accommodation and he has no reason to expect that the instrument
will be paid if presented. When dispensed: Where, after the exercise of reasonable
diligence, presentment as required cannot be made Where th drawee is a fictatious
person By waiver of presentment, express or implied (Sec. 82) When the instrument
has been dishonored b non-acceptance (sec. 151)
57. 56. Dishonor by Non-Payment When instrument dishonored by non-payment: It is duly
presented for payment and payment is refused or cannot be obtained; or Presentment is
excused and the instrument is overdue and unpaid (Ortha)
58. 57. Notice of Dishonor Bringing, either verbally or in writing, to the knowledge of the
drawer and indorser the fact that a NI, upon proper proceedings taken, has not been
accepted or paid and the party notified is expected to pay it.
59. 58. Parties to Be Notified Parties secondarily liable(or his agent) Not necessary for
qualified indorser or person who negotiated BI by delivery (Ortha)
60. 59. Parties Who May Give Notice and Dishonor Notice of dishonor given by or on behalf
of a holder inures to the benefit of: All parties prior to the holder who have right of
recourse against the party to whom the notice is given; and All holders subsequent to
the holder giving notice Notice of dishonor given by or on beahlf of a party entitled to
give notice inures to the benefit of: The holder; and All parties subsequent to the party to
whome notice is given
61. 60. Parties Who May Give Notice and Dishonor A party giving notice is deemed to have
given due notice where: The notice of dishonor is duly addressed; and, Deposited in the
post office, even when there is miscarriage of mail
62. 61. Effect of Notice Upon valid notice of dishonor, immediate right of recourse against
the indorser arises. It is as if the indorser becomes primarily liable in the sense that the
holder need not claim payment from the person primarily liable (Sundiang, p. 67)
63. 62. Form of Notice Either verbally or in writing (Ortha)
64. 63. Waiver Notice may be waived either before the time of giving notice, or after the
omission to give due notice. Waiver may be expressed or implied. (Ortha) As to who are
affected by an express waiver depends on where the waiver is written: If it appears in
the body or on the face of the instrument, it bind all parties; but If it is written above the
signature of an indorser, it binds him only
65. 64. Dispensation with Notice Notice of dishonor is not required to be given to the drawer
in any or the ff cases (Ortha): 1.Drawer and drawee are the same 2.Drawee is a fictitious
person or not having the capacity to contract 3.Drawer is the person to whom the
instrument is presented for payment 4.Drawer has no right to expect or require that the
drawee or acceptor will honor the instrument 5.Where the drawer has countermanded
payment
66. 65. Dispensation with Notice Notice of dishonor is not required to be given to an
indorser in any or the ff cases: (Ortha): 1.Indorser is a fictitious person or does not
having the capacity to contract, and indorser was aware of that fact at the time he
indorsed the instrument; 2.Indorser is the person to whom the instrument is presented
for payment 3.Indorser was made or accepted for his accomodation
67. 66. Effect of Failure to Give Notice Parties liable are discharged (Ortha)
68. 67. Discharge of Negotiable Instrument A release of all parties whether primary or
secondary, from the obligations arising thereunder. It renders the instrument without
force and effect and, consequently, it can no longer be negotiated (Ortha)
69. 68. Right of Party Who Discharged Instrument
70. 69. Discharge of Negotiable Instrument By payment in due course by or in behalf of the
principal debtor By payment in due course by the party accommodated, where the
instrument is made or accepted for his accomodation By intentional cancellation thereof
by the holder By any other act which will discharge a simple contract for the payment of
money When the principal debtor becomes the holder of the instrument at or after
maturity in his own right (Sec. 119, NIL)
71. 70. Discharge of Parties Secondarily Liable Sec. 120 of the NIL provides that a person
secondarily liable on the instrument is discharged (Sundiang, p. 73): By any act which
discharges the instrument By the intentional cancellation of his signature by the holder
By the discharge of a prior party By a valid tender or payment made by a prior party By a
release of the principal debtor unless the holder's right of recourse against the party
secondarily liable is expressly reserved By any agreement binding upon the holder to
extend the time of payment or to postpone the holder's right to enforce the instrument
unless made with the assent of the party secondarily liable or unless the right of
recourse against such party is expressly reserved
72. 71. Renunciation by Holder Effects: A renunciation in favor of a secondary party may be
made by the holder before, at or after maturity of the instrument Effect: only such
secondary party is discharged and all parties subsequent to him but the instrument itself
remains in force A renunciation in favor of the principal debtor may be effected at or after
maturity Effect: the instrument is discharged and all parties thereto provided the
renunciation is made unconditionally and absolutely In either case, renunciation does
not affect the rights of a holder in due course without notice
73. 72. Material Alteration Concept: Any alteration which changes the date, the sum
payable, the time or place of payment, number or relation of the parties, or medium or
curreny of payment, or adds a place of payment where none isspecified, or which alters
the effect of the instrument in any respect is a material alteration (Miravite (2002), p. 95)
A serial number is not an essential requisite for negotiability.
74. 73. Effect of Material Alteration Avoids the instrument, except as against the party who
made, authorized, or assented to the alteration and subsequent indorsers. HDC can
enforcemit according to original tenor. (Sundiang and Aquino)
75. 74. Acceptance Definition: The signification by the drawee of his assent to the order of
the drawee. The acceptance must be in writing and signed by the drawee. It must not
express that the drawee will perform his promise by any other means than the payment
of money. Acceptance is presumed to be unqualified or absolute (Sundiang, p. 66)
76. 75. Manner Conditional makes payment by the acceptor dependent on the fulfillment
of a condition therein stated. Partial an acceptance to pay only of the amount for
which the bill is drawn. Local an acceptance to pay only at a particular place.
Qualified as to time The acceptance of some, one or more of the drawees but not of
all (Sundiang, p. 65)
77. 76. Time for Acceptance Period for drawee to accept 24 hours after presentment in
which to decide whether or not he will accept the bill; if acceptance is given, it dates as
of the dat of presentation (Sec. 136, NIL_
78. 77. Rules Governing Acceptance REQUISITES: The acceptance must be in writing The
written acceptance myst be signed by the drawee The drawee must assent to the
promise to pay a sum certain in money and not by any other means (Sundiang, p. 63)
79. 78. Presentment for Acceptance Mandatory (Sec. 143, NIL): Where the bill is payable
within a fixed period after sight, or in any other case, where presentment for acceptance
is necessary in order to fix the maturity of the instrument Where the bill expressly
stipulates that is shall be presented for acceptance Where the bill drawn is payable
elsewhere than at the residence or place of business of the drawee NOTE: It is not
necessary to present a check for acceptance because it is not one of those required to
be presented for acceptance under Sec. 143 (Sundiang, p. 62)
80. 79. Presentment for Acceptance The production or exhibition of a bill of exchange to the
drawee for his accetance Acceptance the signification by the drawee of his assent to
the order of the drawer
81. 80. Presentment for Payment The presentation of an instrument to the person primarily
liable for the purpose of demanding and receiving payment
82. 81. Time of Presentment Where the instrument is payable at a fixed or determinable
future time, presentment must be made on the day it falls due Where it is payable on
demand Promissory note: within a reasonable time after its issue Bill of exchange: within
a reasonable time after the last negotiation
83. 82. Time of Presentment Time of maturity Every negotiable nstrument is payable at the
time fixed therein without grace When the day of maturity falls upon a Sunday or a
holiday, the instruments are to be presented for payment on the next succeeding
business day When the day of maturity falls upon a Saturday Instrument is payable at a
fixed or determinable future time (time instrument) presented for payment is on the
next sycceedin business day
84. 83. Time of Presentment Time of maturity When the day of maturity falls upon a
Saturday Instrument is payable on demand at the option of the holder, be presented
for payment Before 12nn on Saturday when that entire day is not a holiday or The next
succeeding business day HOW COMPUTED Excluding the day from which the time is
to begin to run, and by including the date of payment Applies to instruments which are
payable at a fixed period after date, after sight, or after the happenin of a specified event
85. 84. Place of Presentment Place specified in the instrument Where no place of payment
is specified by the address of the person to make payment is given in the instrument If
no place specified nor address of person to make payment, usual place of business or
residence of the person to make payment In any other case if presented to the person
to make payment wherever he can be found or if presented at his last known place of
business or residence
86. 85. Manner of Presentment Personal demand for payment at the proper place
Readiness to exhibit the instrument if required and to receive patment and to surrender
the instrument if the debtor is willing to pay
87. 86. Effect of Failure to Make Presentment A check must be presented for payment
within a reasonable time after its issue r the drawer will be discharged from liability
thereon to the extent of the loss caused by the delay (but indorsers are discharged w/n
they suffered any loss) (Ortha)
88. 87. Dishonor by Non-Acceptance Instances: When it is duly prsented for acceptance
and such an acceptance is refused or can not be obtained When presentment for
acceptance is excusded and the bill is not accepted (Sec. 149) (Ortha) EFFECT: An
immediate right of recourse against the drawer and indorsers accrues to the holder and
no presentment for payment is necessary
89. 88. Promissory Notes KINDS OF PROMISSORY NOTES Certificate of deposit written
acknowledgment of a bank of its receipt of a certain sum with a promise to repay the
same Bonds certificate or evidence of a debt on which the issuing company or
governemental body promises to pay the bondholders a specified amunt of interest for a
specified length of time, and to repay the loan on the expiration date Debenture- a
promissory note or bond backed by the general credit of a corporation and usually not
secured by a mortgage or lien on any specific property (Sundiang, p. 10)
90. 89. Checks Definition: A bill of exchange drawn from a bank payable on demand (Sec.
185) Stale check one which has not been presented for payment withina reasonable
time after its issue (Ortha) Death of the drawer of a check, with the knowledge of
bank,revokes the authority of the banker to pay (Ortha) Need not be presented for
acceptance (Ortha)
91. 90. Kinds MANAGERS/ CASHIER'S CHECK drawn by a bank on itself, it is a primary
obligation if thr bank. Presumption is they are supported by sufficient funds (Ortha)
MEMORANDUM CHECK like ordinary check except the word memorandum or its
variant on the face of the check. Not to be presented for payment, but will be redeemed
bybthe drawer himself CERTIFIED CHECK A proper officer of thenbank certifies that
the check will be paid when dulym presented for payment CROSSED PAYMENT -2
parallel lines across, for deposit.
92. 91. KINDS TRAVELERS CHECK the purchasers signature must appear twice one
at the time he buysnit and als at the time he uses it.