LIABILITY OF PARTIES

1. Primary and secondary liability Primary - engagement of a party to an instrument that on its due date he will accept or ay or both the instrument to the payee or to any one to whom it is negotiated according to its tenor.

Secondary- engagement by a party to an instrument that on its due presentment, it shall be accepted or paid or both as the case may be according to its tenor and that if it be dishonored and the necesary proceedings of dishonor be duly taken, he will pay the amount thereof to the payee or to whom it is negotiated or to any subsequent indorser who may be compelled to pay it.

2. Liability vs. warranty Warranty- a party's undertaking that, at the time of his negotiation, he had title to the instrument and it is valid and subsisting. - Not of much legal consequence in the case of indorsers who are secondarily liable since seondary iability is a n immediate or affords an immediate right of recourse to a holder which is a much more effective remedy than alling for any warranty reparation.

3. Liability/Warranty of parties a. Maker - The maker of a negotiable instrument, by making it, engages that he will pay it according to its tenor, and admit the existence of the payee and his then capacity to indorse. (Sec. 60) b. Drawer - The drawee, by drawing the instrument admits the existence of the payee and his then capacity to indorse and engages that, on due preentment, the instrument will be acceted or paid, or both, accoding to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be compelled to pay it. But the drawer may insert in the instrument an express stipulation regativing or imiting his wn liability to the holder. 1. Relationship with the drawee - Until the bill has been accepted, the drawer is the primary debtor and after the acceptance, the drawee or acceptor is the principal debtor and the drawer becomes only secondarily liable. 2. No unjust enrichment.

c. Acceptor - The acceptor, by accepting the instrument, engages that he will pay it according to the tenor of its acceptance and admits: a. The existence of the drawer, the genuineness of his signature and his capacity and authority to draw the instrument; b. The existence of the payee and his then capacity to indorse.

Sec. 127 - Bill not an assignment of funds in hands of drawee - A bill of itself does not operate as an assignment of the funds in the hands of the drawee vailable for the payment thereof, and the drawee is not iable on the bill unless and until he accepts the same. d. Indorsers - In the absence of any indicaion in what capacity a person whose signature is written on the instrument intends to be bound, he shall be deemed an indorser. But one making a note payable to his own order does not, by indorsement thereof, assume liability as indorser. (Sec. 62) 1. General Indorser - Every indorser who indorses by delivery or without qualification warrants to all subsequent holders in due course: a. The matters and things mentioned in subdivisions a,b,c, of the next preceeding section. b. That the instrument is, at the time of his indorsement, valid and subsisting; And in addition, he engages that, on due presentment it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly take, he will pay the amount thereof to the holder, or to any sunsequent indorser who may be compelled to pay it. (Sec. 66)

2. Qualified Indrorser - Warranty where negotiation by delivery and so forth - Every person negotiating an instrument by delivery or by a qualified indorsement, warrants: a. That the instrument is genuine and in all respects what it purports to be; b. That he has good title to it; c. That all prior parties had capacity to contract; d. That he has no knowedge of any fact which would impair the vaidity of the instrument or render it valueless. But when the negotiation is by delivery only, the warranty extends in favor of no holder other than the immediate transferee. The provisions of subdivision c of this section do not apply to persons negotiationg public or corporation securities, other than bills and notes.

3. Order of liability - As respects one another, indorsers are liable prima facie in the order in which they indorse; but evidence is admissible to show that, as between or among themselves, they have agreed otherwise. Joint payees or joint indorsees who indorse are deemed to indorse jointly and severally. (Sec. 68) * Applicable only with respect to an indorser as aginst another but not as against a holder in due course. * Liable to all indorsers subsequentnot prior.

e. Parties negotiating by mere delivery - Aperson negotiating by mere delivey becomes liable to the holder only when the holder cannot obtain payment from the person primarily liable by reason of the fact that any of the warranties of the person negotiating by delivery is or becomes false.

* Also Sec. 65 f. Other cases 1. Irregular indorser - Where a person, not otherwise a party to an instrument, places thereon this signature in blank before delivery, he is liable as indorser, in accordance with the following rules: a. If the instrument is payable to the order of a third person, he is liable to the payee and to all subsequent parties. b. If the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer. c. If he signs for the accomodation of the payee, he is iable to all parties subsequent to the payee. (Sec. 64) 2. Indorsers of bearer instrument - Where a person oaces his indorseent on an instrument negotiable by delivery, he incurs all the liability of an indorser. (Sec. 67) 3. Acconodation party - An accoodation party is one who assigned the instrument as maker, drawer, acceptor or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is iable on the instrument to a hoder for value, notwithstanding such holder, at the time of taking the instrument, knew him to be only an accomodation party. (Sec. 29) Requisites: 1. Must be a party to the instrument, signing as maker, drawer, acceptor or indorser; 2. Must not receive value therefor, and 3. Sign for the purpose of lending gis name or credit.

4. Agents signing on behalf of principal - The signature of any party may be made by a duly authorized agent. No particular form of appointment is necessary for this purpose; and the authoirty if the agent may be established as in other cases of agency. (Sec. 19) Requisites for agent to escape liability: 1. Duly authorized 2. Add words to his signature indicating that he signs as an agent, that is for or on behalf of a principal or in a representative capacity 3. Disclose the principal.

DEFENSES

1. Real and personal defenses Real - available against all holders, whether in due course or not, but only by the party or parties entitled to raise them. Ex. 1. Minority 2. Forgery 3. Non-delivery of incomplete instrument 4. Material Alterations 5. Ultra-vires act of corporation 6. Fraud in FActum or Esse Contractus 7. Illegality - if declared void for any purpose 8. Vicious force or violence 9. Want of authority 10. Prescription 11. Discharge in insolvency

Personal Defenses - available only against the holder wh stands in privity with the party who is entitled to set up or those who are not or do not have the rights of a holder in due course. 1. Failure or absence of consideration 2. Illegal consideration 3. Non-delivery of complete instrument 4. Conditional delivery of complete instrument 5. Fraud in inducement 6. Filling up blank not within authority 7. Duress or intimidation 8. Filling up blank beyond reasonable time 9. Transfer in breach of faith 10. Mistake 11. Insertion of wrong date 12. Ante-dating or post-dating for illegal or fraudulent purposes

2. Real Defenses a. minority and ultra vires act (Sec. 22) - The indorsement or assignment of teh instrument by a corporation or by an infant passes the property therein, notwithstanding that for want of capacity, the corporation or infant may incur no iability thereon. b. non-delivery of an incompete instument (Sec. 15) - Where an incomplete instrument has not been delivered, it will not, if completed and negotiated without authority, be a valid contract in the hands of any holder as against any person whose signatre thereon before delivery. c. fraud in factum -

DEFENSES

I.

Real and Personal Defenses distinguished

Real defenses attach to the instrument and are available against all holders whether in due course or not but only by the party or parties entitled to raise them. Personal defenses available only against the holder who stands in privity with the party who is entitled to set up or those who are not or do not have the rights of a holder in due course.

II. Real Defenses a. Minority and ultra vires act (Sec. 22) - Passes the property notwithstanding that the corporation or infant may incur no liability thereon. - Viodable b. Non-delivery of an incomplete instrument (sec. 15) - Will not, if completed and negotiated without authority, be a valid contract in the hands of any holder as against any person whose signature was placed thereon before delivery c. Fraud in factum - NIL has no provision on fraud in factum - Common law defense - Exists in cases in which a person, without negligence has signed an instrument which was, in fact a negotiable instrument, but was deceived as to the character of the instrument and without knowledge of it. - Essential Element: 1. Maker or indorser must have exercised ordinary diligence and in no manner contributed negligently to the imposition d. Forgery and want of authority (sec. 23) - Wholly inoperative and no right to retain the instrument, give a discharge or enforce payment against any party - Unless the party against who it is sought to enforce is precluded from setting up the forgery or want of authority 1. Forgery of maker s signature He cannot be liable to any holder whether HDC or not.

2. Forgery of indorser s signature : - Payable to order signature of rightful holder is essential to transfer title to same instrument. All parties prior to forgery may raise the defense against all parties subsequent thereto. - Payable to bearer party whose signature is forged and parties prior to him including the maker may be held liable by a HDC only provided that the note was mechanically complete before the forgery 3. Drawer s signature Drawer can recover from the drawee bank. No drawee bank has the right to pay a forged check. If it does, it shall have to re-credit the amount of the check to the account of the drawer and therefore he cannot thereafter be heard to say that the signature is a forgery. 4. Bearer instruments signature of the payee or holder is unnecessary to pass title to the instrument. Only the person whose signature is forged can raise the defense of forgery against a HDC. e. Material alterations (Sec. 124 and 125) y Sec. 124: - Materially altered without assent of all parties, it is avoided - Except against a party who has made, authorized or assented to the alteration and subsequent indorsers - If in the hands of HDC not a party to the alteration, he may enforce payment according to original tenor y Sec. 125. What constitutes material alteration - Date - Sum payable either for principal or interest - Time or place of payment - Number or relations of the parties - Medium or currency - Adds a place of payment where no place of payment is specified or any other change or addition which ALTERS the effect of instrument. (as in those mentioned in Sec. 1) f. Extinctive prescription - 10 years from the time the cause of action accrued. - In case of checks the action of the depositor against drawee bank commences to run from the time he is given notice of payment

III.

Personal defenses

a. Ante-dating or post dating (Sec. 12) - Valid provided it is not done for an illegal or fraudulent purpose - Person to whom an instrument so dated is delivered acquires the title thereto as of the date of delivery b. Insertion of a wrong date (Sec. 13) - Does not avoid the instrument in the hands of a subsequent HDC - But as to him, the date so inserted is to be regarded as the true date c. Filling up blanks beyond authority (Sec. 14) - Wanting any material particular - Person in possession has PRIMA FACIE authority to complete it by filling up the blanks therein. - Signature on blank paper delivered by the person making the signature in order to convert it to a negotiable instrument operates as PRIMA FACIE authority to fill it up as such for any amount.

In order to enforce against any person who became a party thereto prior to its completion it must be filled up strictly in accordance with the authority given and within a reasonable time. - But is after completion it is negotiated to HDC, it is valid and effectual for all purposes in his hands and may enforce it as if it had been filled up strictly in accordance with authority given and within reasonable time. d. Want of delivery of a complete instrument (sec. 16) e. Absence or failure of consideration (Sec. 28) - Absolute or failure defense against not HDC - Partial failure defense pro tanto whether failure is an ascertained and liquidated amount or otherwise. f. Simple fraud, duress, intimidation, force, or fear, illegality of consideration, breach of faith (Sec. 55, 56, 57) y Sec. 55 - Title of a person who negotiates an instrument is defective - When obtained the instrument or signature by: i. Fraud ii. Duress iii. Force or fear iv. Other unlawful means v. Illegal consideration vi. Breach of faith vii. Any circumstances amounting to fraud. y Sec. 56 What constitutes notice of infirmity in instrument or defect in title - Actual knowledge of infirmity or defect - Knowledge of such facts that his action in taking the instrument amounted to bad faith y Sec. 57 Rights of HDC HDC holds instrument free from any defect of title of prior parties and free from defenses available to prior parties amonth themselves Enforce payment of the instrument for the full amount against all parties liable

ENFORCEMENT OF LIABILITY A. Parties Primarily and secondarily liable a. Primary - Maker - Drawee - Acceptor b. Secondarily - Drawer B. General steps in enforcing liability a. Promissory notes 1. Presentment for payment production of a bill of exchange to the drawee for his acceptance or to the drawee or acceptor for payment or the production of a promissory note to the party liable for payment i. Personal demand for payment at the proper place ii. Readiness to exhibit, and to receive payment and surrender it if the debtor is willing to pay

Sec. 70- Effect of want of demand on principal debtor Not necessary in order to charge the person primarily liable But if payable at a special place, and able and willing to pay at maturity, such ability and willingness are equivalent to tender of payment upon his part. - But presentment is not necessary to charge the drawee and indorser unless otherwise provided 2. Notice of dishonour- bringing either verbally or by writing to the knowledge of the drawer or indorser of an instrument, the fact that a specified negotiable instrument, upon proper proceedings taken has not been accepted or paid and that party notified is expected to pay it Sec. 89 - To whom given When dishonoured by non-acceptance or non-payment, given to drawer, each indorser Any drawer or indorser to whom such notice is not given is discharged -

b. Bills of Exchange 1. Presentment for acceptance (sec. 143) - When the bill is payable after sight or when necessary to fix the maturity - Express stipulation - Drawn payable elsewhere than at the residence or business of the drawee - Not applicable in any other cases a. How made Sec. 132. Acceptance Signification by the drawee of his assent to the order of the drawee In writing, signed by the drawee Must not express that drawee will perform promise by any other means than money Communicated or delivered to the holder Sec. 133 Holder entitled to acceptance on face of the bill Holder may require that acceptance be written on the bill If refused, may treat the bill as dishonoured Sec. 134 Acceptance by separate instrument Does not bind the acceptor Except in favour of a person to whom it is shown and who, on the faith thereof receives the bill for value Sec. 135 Promise to accept, when equivalent to acceptance Unconditional promise in writing to accept before it is drawn Deemed and actual acceptance Infavor of every person who upon the faith thereof, receives the bill for value

b. Time to accept (Sec. 136)

Drawee allowed 24 hours after presentment to decide whether to accept the bill Acceptance dates as of the day of presentment

c. Rule when incomplete bill is accepted (Sec. 138) Before the bill has been signed by drawer Incomplete Overdue After it has been dishonoured by non-acceptance or non-payment

d. Kinds of acceptance Sec. 139 Kinds General: Assents without qualification to the order of the drawer Qualified: Varies the bill as drawn

Sec. 140 What constitutes general acceptance Acceptance to pay at a particular place is a general acceptance Unless expressly states that the bill is to be paid there only and not elsewhere

Sec. 141 Kinds of Qualified Conditional: Makes payment dependent on the fulfilment of a condition Partial: acceptance to pay only part of the amount Local: Particular place Time Acceptance of some, one or more of the drawee but not of all

Sec. 142 Rights of parties as to qualified acceptance Holder may refuse to take qualified acceptance If he does not obtain an unqualified acceptance, may treat the bill as dishonoured by non acceptance When qualified acceptance is taken, drawer or indorsers are discharged from liability on the bill unless have expressly authorized holder to take qualified acceptance or subsequently assents Drawer/ maker must express dissent to the holder within a reasonable time, otherwise he will be deemed to have assented.

2. If dishonoured by non-acceptance a. Sec. 89 notice of dishonour

Given to drawer and to each indorser Any drawer or indorser not given notice is discharged b. Rule in case of Foreign Bills Sec. 152 Where protest necessary Foreign bill appearing on its face is dishonoured Must be duly protested for non-acceptance When bill not previously dishonoured by non-acceptance is dishonoured by nonpayment, duly protested for non-payment If not protested, drawer and indorsers are discharged. When it doesn t appear on ints face as a foreign bill, protest is unnecessary Sec. 153- How protest made

y y y y

Protest annexed to the bill or contain a copy Under the hand and seal of the notary making it and specify: Time and place of presentment Fact that presentment was made and the manner Cause or reason for protesting Demand made and answer given or the fact that drawee or acceptor could not be found

Sec. 154 By whom made Notary public Any respectable resident of the place where the bill is dishonoured in the presence of two or more credible witnesses Sec. 155 When to be made On the day of dishonour, unless delay is excused When bill is duly noted, protest may be subsequently extended as of the date of noting

Sec. 156- Where to be made At the place where it is dishonoured But when the bill drawn payable at the place of business or residence of some person other than drawee has been dishonoured by non-acceptance, it must be protested for non-payment at the place where it is expressed to be payable No further presentment for payment to or demand on the drawee is necessary

Sec. 158 Protest before maturity Acceptor adjudged bankrupt or insolvent, or has made an assignment for the benefit of creditors before the bill matures, holder may cause the bill to be protested for better security against the drawer and indorsers

Sec. 159 When dispensed with

Dispensed with by any circumstances which would dispense with notice of dishonour Delay in noting or presenting is excused- when delay is caused by circumstances beyond the control of the holder and not imputable to his default, misconduct or negligence When the cause of delay ceases to operate, the bill must be noted or protested with reasonable diligence

Sec. 160 Protest where bill is lost and so forth May be made on a copy or written particulars

3. If accepted a. Presentment for payment to acceptor b. Rule if dishonoured upon presentment for payment c. Rule in case of foreign bill

C. Presentment for payment a. Concept of presentment b. Requisites for sufficiency (Sec. 72) i. By the holder or some other authorized person to receive payment ii. At reasonable hour on a business day iii. Proper place iv. To person primarily liable on the instrument or any person found at the place where presentment is made 1. Date of presentment (Sec. 71) - When not payable on demand- on the date it falls due - On demand within a reasonable time after its issue - Bill of exchange reasonable time after negotiation a. Rule in determining maturity date (Sec. 85) - Payable at the time fixed without grace - If falling on a Sunday or holiday next succeeding business day - Saturday next succeeding business day Payable on demand 0 before 12 noon on Saturday when that entire day is not a holiday b. Rule in computing time (Sec. 86) Payable at a fixed period after date, after sight or happening of a specified event excluding the day from which the time is to begin to run and including the date of payment

c. Rule if payable at a bank (Sec. 75) During banking hours Unless person to make payment has no funds there to meet it at any time during the day- in which case, presentment at any hour before the bank is closed on that day

2. Place of presentment (Sec. 73)

Specified Not specified - address of the person to make payment is given Not specified, no address- usual place of business or residence of the person to make the payment Any other case presented to person to make payment wherever he can be found or last known place of business or residence a. If payable at a special place (Sec. 70) If payable at a special place and able and willing to pay it there at maturity, such ability and willingness are equivalent to tender of payment upon his part. But unless otherwise provided, it must be presented But generally no presentment needed unless specified at special place

3. Presentment to the party primarily liable a. How presentment made (Sec. 74) Must be exhibited to the person from whom payment is demanded and when it is paid, must be delivered up to the party paying it b. Rule when party primarily liable is dead (Sec. 76) Made on personal representative if there be, and with exercise of reasonable diligence he can be found c. Presentment to partners (Sec. 77) To any of them, even though there has been a dissolution of the firm d. Presentment to joint debtors (Sec. 78) Made to all

c. Instances where presentment is excused Sec. 79- To drawer - No right to expect or require that the drawee or acceptor will pay Sec. 82 When excused - After reasonable diligence, cannot be made - Drawee is fictitious person - Waiver of presentment, express or implied d. When delay excused (Sec. 81) - Caused by circumstances beyond the control of the holder and not imputable to his default, misconduct or negligence - When cause of delay ceases to operate, presentment must be made with reasonable diligence

4. Notice of dishonour a. When dishonour of instrument occurs: 1. Non-payment (Sec. 83) Duly presented for payment and payment is refused or cannot be obtained Presentment is excused and instrument is overdue and unpaid 2. Non-acceptance (Sec. 81) Duly presented for acceptance and is refused or cannot be obtained When presentment for acceptance is excused and the bill is not accepted b. Who should give notice: 1. Holder

2. Agent 3. Party who may be compelled to pay c. Form of notice Sec. 43 Name of payee or indorsee is misspelled or wrongly designated, indorse instrument as therein with describing Sec. 44 Representative capacity indorse in such terms as to negative personal liability d. To whom notice is given 1. Party secondarily liable or agent (Sec. 97) 2. Party is dead (Sec. 98) Death is known to party giving notice Given to personal rep, if there be one and with reasonable diligence he can be found No representative- last residence or last place of business of deceased 3. Partners (Sec. 99) Notice to one partner is notice to the firm even if there be dissolution 4. Jointly liable (Sec. 100) Given to each of them unless one has the authority to receive for others 5. Bankrupt (Sec. 101) To party himself or trustee or assignee e. Time and place of notice Sec. 103 Where parties reside in same place Place of business of the person to receive notice, given before the close of business hours on the day following If sent by mail, deposited in the post office in time to reach him in the usual course on the day following Sec. 104 Parties reside in different places By mail deposited in post office in time to go by mail the day following the day of dishonour, or next mail thereafter if not available Other than post office within the time the notice would have been received in due course of mail if deposited in post office within time specified in previous subdivision. Sec. 105 Sender deemed to have given due notice

Duly addressed and deposited in the post office, sender is deemed to have given due notice notwithstanding miscarriage in the mails Sec. 106 Deposit in post office what constitutes When deposited in any branch post-office or in any letter box under the control of the post office department

Sec. 107 Notice of subsequent party Party receiving notice has, after the receipt of such notice the same time for giving notice to antecedent parties that holder has after the dishonour Sec. 108- Where notice sent Address If none:

Post office nearest to his place of residence or where accustomed to receive letters ii. Either in his residence or place of business iii. Where he is sojourning Where notice is actually received by the party within the time specified in this act, it will be sufficient though not sent inaccordance with this section f. When notice excused or unnecessary Sec. 109 Waiver

i.

Notice may be waived either before the time of giving notice has arrived or after the omission to give due notice May be express or implied Sec. 110 Whom affected

If embodied in the instrument binding upon all parties Above signature of indorser Binds him only Sec. 111 Waiver of protest

Deemed a waiver not only of a formal protest but also presentment and notice of dishonour Sec. 112 When notice dispensed with

After exercise of reasonable diligence, it cannot be given or does not reach the parties to be charged Sec. 114 When notice need not be given to drawer

Drawer and drawee the same person Drawee is fictitious person or a person not having capacity to contract Drawer is the person to whom instrument is presented for payment Drawer has no right to expect or reacquire that the drawee or acceptor will honor the instrument Drawer has countermanded payment Sec. 115 Notice need not be given to indorser

Drawee is a fictitious person or a person not having capacity to contract and indorser was aware of such fact at the time he indorsed the instrument Indorser is the person to whom the instrument is presented for payment Instrument was made or accepted for his accommodation g. When delay is excused (Sec. 113) Caused by circumstances beyond the control of the holder and not imputable to his default, misconduct or negligence When cause of delay ceases to operate, notice must be given with reasonable diligence

DISCHARGE OF ISNTRUMENTS 1. Concept of discharge

An NI is usuall discharged by payment in due course by or on behalf of the principl debtor as per Sec. 119 NIL. But where the one paying is a party, secondarily liable on the instrument, it is not discharged as per Sec. 121

2. How instrument is discharged (Sec. 119) - Payment in due course by or on behalf of the principal debtor - Payment in due course by party accommodated where the instrument is made or accepted for accommodation - Intentional cancellation thereof by the holder - 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

a. Payment in Due course (Sec. 88) Made in due course when it is made at or after maturity of the payment to the holder thereof in good faith and without notice that his title is defective 1. Principal Debtor (Sec. 119 a) 2. By accommodated party (Sec. 119 b) b. Intentional Cancellation - Drawing of criss cross lines - Tearing - Obliteration - Erasures - Burning y Rule in intentional cancellation (Sec. 123) - Intentional - Made by the holder - Made unintentionally under mistake or without authority of holder InoperativeCancellation - Burden of proof lies on the party who alleges that the cancellation was made unintentionally or under a mistake or without authority c. Any act that discharge simple contracts (Sec. 123) - Novation - Sec. 196 - as determined by existing legislation d. Principal debtor becomes the holder Reacquisition made by i. Principal Debtor ii. In his own right not in a representative capacity iii. At or after the date of maturity - If before maturity, it will not discharge, it will merely constitute a negotiation back to the principal debtor

3. Discharge of persons secondarily liable (Sec. 120) - Any act which discharges the instrument - Intentional cancellation of signature by the holder - Discharge of a prior party

Release of the principal debtor unless holder s right of recourse against the party secondarily liable is expressly reserved 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.

CHECKS 1. Checks Defined (Sec. 185) - Bill of exchange - Drawn on a bank - Payable on demand

2. Distinguished from draft Draft written order by first party, called the drawer instructing a second party called the drawee to pay money to a third party called payee. Order to pay a sum certain in money signed by the drawer, payable in demand or at a definite time and to order or bearer. 3. Relationship between drawer, drawee or payee 4. Kinds of Checks a. Cashier s and manager s check y Shall not issue: - Payable to cash - Payable to bearer - Fictituous payee - Numbered account

Exceptions: Amount of each check shall not exceed 10k Buyer is properly identified under Circ. 259 Register of said checks shall be maintained with ff. Minimum information a. Date issued b. Amount c. Name of buyer d. Date paid e. Aggregate instruments purchased by same person within any 30 day period amounts to 50k, stating the purpose of buyer - Banks shall take measures as may be necessary to ensure that said instruments are not being used/resorted to by the buyer or depositor in furtherance of money laundering activity - Each deposit shall be subject to same requirements/ scrutiny applicable to cash deposits - Transactions involving said instruments accordingly reported to BSP if there are grounds to suspect that transactions are being used to launder funds of illegitimate origin b. Certified Check Sec. 187 - Where check is certified by the bank on which it is drawn, certification s equivalent to acceptance y -

Sec. 188 Effect where holder of check procures it to be accepted or certified Drawer and all indorsers are discharged from liability Sec. 189 Check operates as an assignment Check does not operate as assignment of any part of funds to the credit of drawer and the bank is not liable to the holder, unless and until it accepts or certifies the check c. Crossed check (Art. 541 Code of Commerce) - One where two parallel lines are drawn across its face or across a corner thereof. - Crossed specially name of particular banker or company is written between the parallel lines drawn. - Crossed Generally only the words and company are written or nothing is writtem at all between the parallel lines. y Effects of crossing a check - May not be encashed but only deposited in the bank - May be negotiated only once-to the one who has an account with a bank - Serves as a warning to the holder that the check has been issued for a definite purpose so that me must inquire if he has received the check pursuant to that purpose, otherwise he is not HDC d. Memorandum and traveller s check Memorandum Given by borrower to lender for the amount of short loan with the understanding that it is not to be presented at the bank but will ne redeemed by the maker himself when the loan falls due. Mem Traveler s Check instrument purchased from bank, express company or the like, in various denominations, which can be used as cash upon second signature by purchaser. It has the characteristics of a cashier s check on the issuer. It requires the signature of the purchaser at the time he buys it and also at the time when he uses it. 5. When required to be presented for payment (Sec. 185) - Check is a bill of exchange drawn on a bank payable on demand. Except as herein otherwise provided, the provisions of this Act applicable to a bill of exchange payable on demand apply to a check. -