Going to the completeness of an instrument based on Sec.
14 and the allowing you to encash it or take advantage of the instrument, I was requiring
following sections, the instrument is only complete when all the material
particulars are present. A material particular (MP) refers to any part of the
instrument which makes it valid and negotiable. So, 2 concepts: validity and
negotiability. For purposes of material particulars (MPs), these are now the
details or pieces of information which make the instrument valid and
negotiable.
First things first, in a promissory note, we have the following MPs: date
of issue, amount payable, time of payment, name of the payee (promisee),
W/N the instrument is payable to bearer or payable to order, the name and
signature of the maker (promisor). Note that you can have additional items
BUT for as long as you have these in the instrument, you have a valid
instrument. Although this is not how your basic PNs look like. Sa batas kasi
natin, kahit maliit lang ok lang BUT since people had started to become
cautious or sometimes too cautious, dumami yan, may 3 pages, 4 pages,
notarized pa and so on and so forth.
In a BoE, same thing. You have the: date of issue, drawee, name of
payee, W/N the instrument is payable to bearer or order, amount payable (in
words and in figures), time of payment, and the name and signature of the
drawer.
There is NO issue if the instrument is complete. The problem only
comes if the instrument is incomplete and worst if it was issued incomplete or
negotiated while it is incomplete. Because when you go into your rules, first, it
must contain all the MPs for the instrument to be complete. That being said, it
cannot be issued or negotiated if it is incomplete. You NEVER sign a contract
or document IF there are BLANKS. You NEVER issue or release a document
IF there are BLANKS. In the same way, you NEVER accept a document IF
there are BLANKS. You NEVER notarize a document IF there are BLANKS,
KAHIT KAIBIGAN MO PA YAN, sige na pre tatakan mo na, pirmahan mo na
para maiuwi ko na. HINDI PWEDE! Pirmahan muna nila in your presence bago
ka pumirma.
If the instrument is issued or negotiated while it is incomplete, this is
what will going to happen, the transferor was requiring the transferee to
complete it. I am the transferor and you are the transferee. I issued you an
instrument which is incomplete, may blank sya. What will I do? Before even
you to fill it. It usually happens when you are given a blank check.
SOMETIMES, PEOPLE ARE TOO TRUSTING. Magkano utang ko sayo?
P10k lang. O sige heto ikaw bahala, pirmahan mo na. buti sana kung P10k
lang nilagay mo, what if nilakihan mo? Buti sana kung binawasan mo. Pero
what if dinagdagan mo? So the transferor will require the transferee to
complete the instrument. If the transferee completes the instrument, he will do
so strictly in accordance with the authority given and must be done within a
reasonable time (Sec. 14). Again, that phrase “within reasonable time”, it now
refers to the opportunity of the transferee to complete the instrument. Kasi
kung titignan natin, you were issued a blank check, it contains the date, your
name, signature of the maker, ang kulang lang is the amount payable. Bakit
kulang? Kasi ang hirap isulat nung fifty-five thousand seven hundred ninety six
pesos and seventy eight centavos (P55, 796. 78). Medyo matagal eh, o sige
ikaw na magsulat. Question: do you have an opportunity to complete the
instrument? If so, then do it. Pero what if marami kang ginagawa? What if you
don’t have time to complete the instrument? What if you don’t have opportunity
to complete the instrument yet? What is reasonable time? What is time which
is unreasonable? You get what I mean? Your job is to complete it. If you do
have the opportunity, then as much as you can, completer the instrument
because if you failed to take advantage of that opportunity, it becomes
unreasonable or delayed.
In case the date of issue is missing or lacking, there are instruments
that were issued undated. It could be because they simply forgot to indicate
the date. What if that happened, what is the presumption? Is the instrument
undated? NO. The presumption is the date of the instrument is the date of the
actual issue. If the instrument is issued to you today, then today is the actual
date. What if it so happened that the instrument is accomplished yesterday or
the other day, filled out, drawn out yesterday and it was ONLY TODAY that
you received the instrument, what is the date of the instrument? Whatever the
date it is today because as far as you are concern, today is the actual date of
issue.
If the time of payment was NOT specified, the presumption is that it is
payable on demand.
*** In case an instrument does NOT contain the signature of the
drawer, this is the ONLY kind of instrument which the transferee is NOT
allowed to fill out. Why not? Signature na ng drawer yan eh. Meaning, the
instrument is NOT only incomplete. The instrument is also unsigned. And you
know very well that an unsigned instrument or document is a mere scrap of
paper and it does not have any effect whatsoever. What if natanggap mo ung
instrument, nandyan yung pangalan ng drawer pero walng pirma, can you
indicate the signature? Kabisado ko naman yung pirma niya eh, sanay na
sanay ako jan nung highschool. Alam ko naman yung pirma nya eh, can I just
indicate his signature? Everyone just close your eyes and let’s just get over it.
Pikit-mata nlalang natin. The instrument still has no effect. That only tells that
the instrument may have been procured through fraud and when an instrument
was procured through fraud, that would be a defect that affects all parties
except the HiDC (when we go to forgery, pag-uusapan natin yan).
In case the instrument does NOT contain the amount payable, when
the transferor issued an instrument which contains blanks or which is NOT
complete to the transferee, under Sec. 14, the transferee has the duty to
complete the instrument, first strictly in accordance to the instructions given,
and second within a reasonable time. That being a relative term “reasonable
time”, let’s concentrate on the word “strictly.” Hindi pwedeng substantial
compliance. Kelangan strictly through the letter. Pag sinabing fill upan mo yan
ng P99, 999.86, huwag mong gagawing P100k yan.
Note also, if no completion is being required under Sec. 14, the
instrument is invalid. The question is, if the transferee disobeys instructions
from the transferor, what are the consequences?
First, the instrument cannot be used as against any party before the
completion. That means to say, you are not even given the authority to encash
it. Apektado yung status mo.
Second consequence, the instrument is not a valid instrument if in the
hands of the transferee, but if the instrument is in the hands of a HiDC, the rule
is WE PROTECT THE HiDC. Sabi nga natin noon, ang kapareha ng HiDC ay
ang buyer in GF for value. We protect the buyer if GF, we protect the HiDC.
The HiDC must get paid.
Example:
Rupert Tuason issued an incomplete instrument (amount payable is missing)
to Geraldine Lopez. The instrument is a BoE (not because there are 3 parties
BUT because there is a drawee, Leonard Gonzales). Note that you can have
4 parties, 5 parties and so on BUT if you don’t have a drawee, that is not a
BoE. It is the presence of a drawee that makes it a BoE.
Geraldine was instructed by Rupert to fill in the amount of P20k. but Geraldine
filled it with P40k. Did Geraldine satisfied the requirement in Sec. 14? NO
because even if she probably filled it up within a reasonable time, she did NOT
strictly obeyed the instructions given. Ang usapan nila, P20k, pero nilagay niya
P40k.
Geraldine disobeyed the instructions but when she improperly completed the
instrument, she negotiated it to Andrew Emata. So the situation now is, there
was a wrongful completion of the instrument and a subsequent negotiation.
Ang magiging question natin dyan is that is Andrew a HiDC? Presumption is
YES. The rule is whoever claims that any holder is NOT a HiDC has the burden
of proof. Parang GF lang yan (GOOD FAITH HA, HINDI GIRLFRIEND XD).
BUT what if Andrew knew that Geraldine improperly completed the
instrument, can he demand P40k? NO because he is not a HiDC, he is in BF.
Instead of encashing the instrument, Andrew negotiated it to Philip
Castillo. We now have a present holder. Is Philip Castillo a HiDC? An
instrument was negotiated, una mong isipin ang transferee ba HiDC. Yun ang
una mong isipin, na-transfer na naman, HiDC ba to and so on. Negotiated,
negotiated, negotiated, HiDC ba tong mga to? If your answer is NO, wag mo
nang patagalin. But if your answer is YES, protect the holder. Anyway, Andrew
negotiated the instrument to Philip Castillo. Is Philip Castillo a HiDC? If he has
no idea that the instrument was improperly completed, he is a HiDC. Now, can
he demand payment of P40k? YES. That is one of the rights of a HiDC. He
can demand payment for the full amount of the instrument.
The instrument is originally payable to how much? 20k. Hindi ba sobra
ang kukunin ni Philip? Is he not demanding too much? Diba? Hindi ba unfair
kay Rupert kasi ang nilabas ni Rupert ay 20k lang? hindi ba unfair kay Rupert
yan? What does your law tell you? What does your heart tell you? xD If you
were Rupert? It is actually unfair for Rupert. How come? He only committed to
pay P20k and the order of Rupert to Leonard is to pay P20k but why do we
pay Philip P40k? Because he is a HiDC. He has a right for the full payment of
the instrument.
 What if alam ni Philip yung kalokohang ginawa ni Geraldine? Can he
demand P40k? No. He can only demand P20k. Hindi naman tama na wala
syang madedemand. He can demand but only for the original amount.
We go now to instruments payable to order (Sec. 8) or to bearer (Sec.
9). We skip few items. We establish these first before we go to the messy parts
of the law.
We have instruments which are payable to order or to bearer. When
the instrument is payable to order, it means to say that there is now an
unconditional order to pay given by the drawer to the drawee, an order made
by the drawer against the drawee requiring the drawee to pay the payee. If
there is now an instrument that is payable to order, it must be negotiated by
indorsement, by delivery. Meaning to say pag sinabing ‘drawer order the drawe
to pay the payee’, if you are the payee and you would now like to negotiate the
instrument, you order the drawee to pay someone else.
An instrument is payable to order if it is payable a specified person or
his order. Note how each instrument is worded. Question, does it matter? For
as long as the instrument contains the word ‘order’ or any similar word, it is still
payable to order (Sec. 8).
If Geraldine decides to encash the check, she will go to Leonard
Gonzales, why Leonard? Because he is the drawee. What is now the job of
Leonard upon presentment of the instrument? Kasasabi lang natin, as far as a
BoE is concerned, it is NOT the drawer who will pay. It is the drawee. Unlike
in a PN, it is the promisor or maker who will pay.I issue you an instrument,
when the instrument falls due, against who will you ask payment? From me
because I am the promisor. In a BoE, it is different. I issued to you a BoE, the
drawee is Leoanard, when the instrument falls due, kanino ka maniningil? Kay
Leonard.
If Geraldine decides to encash the check, she will go to Leonard
Gonzales, why Leonard? Because he is the drawee. Not Rupert because he
is the drawer. Rupert will only pay Geraldine if Leonard refuses to pay.
If the instrument is presented to Leonard and Leonard accepted the
instrument, he must now indicate his acceptance. Karapatan niya yan, that’s
why if ever you have checks deposited or you have checks encashed, that will
be stamped either accepted or dishonoured, as the case may be. Dishonour
is a rejection of an instrument. It could be because the instrument is invalid. It
could be because the drawer has insufficient funds. BUT if ever the drawee
accepts the instrument, he has to mark his acceptance.
Alternatively, if Geraldine wishes to negotiate the bill to Alvarez, she
will do so by indorsement, followed by delivery. When an instrument is to be
negotiated, the law requires indorsement, followed by delivery. Note how the
indorsement looks like. Sino ang inuutusan ni Geraldine na magbayad kay
Alvarez? Si Leonard (drawee). BUT if it is a bearer instrument, it would be
unnecessary. So when is an instrument payable to bearer? First, when it is
payable to a person who is named or the bearer. Simple enough. This is where
the problem lies:
An instrument is also payable to bearer:
1. If the instrument is made payable to the order of a FICTITIOUS
OR NON-EXISTENT PERSON.
2. When the name of the payee does not purport to be the name of
any person.
When using the phrase ‘FICTITIOUS PERSON’, we may be using a
real name but as far as we are concern, wala namang taong ganyan. For
example, I made this instrument payable to the order of Francisco Carino,
personally I don’t know him. You may know the person in the name of
Francisco Carino. You may even be related to a Francisco Carino, BUT as far
as I am concerned, wala akong kilalang Francisco Carino. Pero bakit ko
nilagyan ng Francisco Carino yung payee? Because as far as I am concerned,
that person is fictitious.
What about NON-EXISTENT? This is a person who may be by fiction,
non-existent, e.g. movie character or a person already dead. Pay to the order
of Gat/Supremo Andres Bonifacio. He is dead. He is not fictitious but he is non-
existent (although he exists in the hearts of every Filipino xD) because he is
already dead. If that is the case, the instrument is payable to bearer.
Now looking at it from the perspective of the drawer, if you are the
drawer, is the payee a fictitious person? Is the payee a non-existent person?
Because in the perspective of a third person, he may say non-existent yan,
fictitious yan. But what about the drawer? Pano kung sa isip ng drawer, totoong
tao yan. Yes I know someone who goes by that name and I met him, I
transacted with him that’s why I’m issuing him ac check worth P10k. I know indorsement. So she may decide to negotiate it by simple delivery;
him to be a real person. Is that still payable to bearer? NOT anymore because or
this time in the mind of the drawer, that person is real. That person is not b) She could indicate in the indorsement to deliver the bill to Alvarez.
fictitious. That person is existing.

Conversely, what if the drawer knows that person to be fictitious. ‘Pare If an instrument is payable to order, it should be negotiated by
sino tong Supreme Enforcer of the Galactic Empire? Wala lang. wala akong indorsement followed by delivery. It is the delivery that completes the
masulat eh.’ That is fictitious. negotiation. There is no delivery, then there is no negotiation. Without delivery,
there is no transfer of ownership.
What if this case, the name of the payee does not purport to be the
name of any person? E.g. ‘Pay to CASH’. There are people who may go with An instrument payable to bearer is always negotiated through delivery.
the nickname CASH. Anong full name niya? CASHandra xD. When we are
If the instrument is payable to order pero nung nagnegotiate ka, hindi
dealing with this, always put yourself in the position of the drawer. Does he
ikaw yung nakalagay. As a transferee, what is your right? You can compel your
know for sure that this person is fictitious or non-existing person? Kasi kung
transferor to make an indorsement in your favour. Otherwise, how can you
CASH ang nakalagay, pwedeng sabihin full name nyan CASHandra.
prove your title over it? Pano mo maju-justify? Kasi isipin natin, payable to
3. Finally, an instrument is also payable to bearer if the last order sya, ni-negotiate sayo by simple delivery. Pupunta ka ngayon sa drawee
indorsement is an indorsement in BLANK. and demand payment, anong sasabihin ng drawe? Hindi naman ikaw to ah
xD. Wala naming indorsement para sayo. Pano mo nakuha to? Ninakaw mo
A BLANK indorsement does not specify who the indorsee is or the new
siguro noh? xD (si Ser talaga xD).
payee is. We are not specifying who to transfer. It may also happen this way,
‘Pay to CASH’, we are not specifying who the new payee is unless again in the The rule is: PAG ORIGINALLY BEARER, FOREVER BEARER
mind of Geraldine, this person (CASH) is a real person. Unless yun. (walang forever -_- charot xD). An originally bearer instrument can NEVER
become an order instrument but an order instrument may become a bearer
Going to a basic blank indorsement, we have an order instrument that
instrument. Pwedeng bumalik sa order, pwedeng bumalik sa bearer, order
is converted into a bearer instrument because there is a blank indorsement.
bearer, order, bearer, as the case may be, depende kung anong klaseng
Why the conversion? From an order instrument why does it become a bearer
indorsement ang ginamit mo.
instrument in such a way that any person can encash it and walk away? If you
happened to the holder of an indorsement in blank, how will you negotiate this ‘whoever shall be named as payee’ – payable to order because the payee
instrument now? Kelangan mo ba ng indorsement? Hindi na. Delivery lang. so (Geraldine) will name the new payee
thev instrument is payable to bearer.
‘whoever shall hold this instrument’ – payable to bearer
If Geraldine wishes to encash, she will present the instrument to
Leonard Gonzales. Same thing, Leonard will indicate his acceptance in the
front of the bill.

If Geraldine decided to negotiate the instrument to Alvarez, she may:

a) Simply deliver the bill to Alvarez because being a blank

indorsement, this instrument has been converted to a bearer