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Negotiable Instruments Laws

Based on 2015 Bar Exam


Syllabus for Commercial Law

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)

NOTES
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

Prepared By
Lawrence P. Villamar

Negotiable Instrument*
A 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.

Forms and Interpretation


Discrepancy Between the Amount in Figures and that in
Words

The word prevail, but if the words are ambiguous, reference will be made to
the figures to fix the amount

Instrument Not Dated

Considered dated on date of issue

Conflict Between Written and Printed Provisions

Written provisions prevail

Interest Provided for but No Starting Date Specified

Starting date is the date of instrument, in the absence of said date, from date
of issue

Forms and Interpretation


When instrument is ambigous

Such that there is doubt whether it is a bill or note, the holder may treat it as
a note or a bill (1998 Bar)

Signature on Instrument Does Not Indicate Capacity in


Which Made

Deemed as indorser with secodary liability

When Promissory Note Worder I Promise to Pay is


Signed By Two Makers

The 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

Requisites of Negotiability
In General (Sec. 1, NIL):

Must be in writing and signed by the maker or drawer


Must contain an unconditional promise or order to pay a sum certain in
money
Must be payable on demand or at a fixed or determinable future time
Must be payable to order or to bearer
Where the instrument is addressed to a drawee, he must be named or
otherwise indicated therein with reasonable certainty.

Requisites of Negotiability
PROMISSORY NOTE (1961 Bar)

Must
Must
Must
Must

be in writing and signed by the maker


contain an unconditional promise to pay a sum certain in money
be payable on demand or at a fixed or determinable future time
be payable to order or to bearer

Requisites of Negotiability
Bill of Exchange (1961 Bar)

Must be in writing and signed by the drawer


Must contain an unconditional promise to pay a sum certain in money
Must be payable on demand or at a fixed or determinable future time
Must be payable to order or to bearer
The drawee must be named or otherwise indicated with reasonable certainty

Quick Notes on Particular Requisites


Unconditional Promise or Order

Where the promise or order to pay is made to depend on contingent even, it


is conditional and makes the instrument non negotiable

Note that an indication of a particular fund from which the acceptor reimburses
himself after paying the holder
And a statement of transaction which gives rise to the instrument.

Certainty of Sum

If the amount is fixed

Note 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
STATED should include date, amount to be paid, and number of installment
(Ortha)

Quick Notes on Particular Requisites


In Money
General rule: If payment is not by money, the instrument is non-negotiable. However,
note that additional acts do not affect negotiability.
Need not be legal tender, may be in foreign currency ( Ortha)
Additional acts:

Authorizing sale of collateral securities on default

Authorizes confession of judgment on default

Waive benefit of law intended to protect debtor

Allows the creditor the option to require something in lieu of money

Payable on Demad
Where expressed to be payable on demand, at sight, or on presentation
Where no period of payment is stated
Where issued, accepted, or indorsed after maturity
SC: A PN payable on demand is immediately due and demandable and an action
prescribes in ten years.

Quick Notes on Particular Requisites


Determinable Future Time

At a fixed period after date or sight


On or before a specified fixed or determinable future time
On or at a fixed period after the concurrence of a specified event, certain to
happen, although the exact date is not certain
Tambasacan: Solar eclipse is a natural phenomenon certain to happen.

Payable to Order

Where drawn payable to the order of a specified person, or to him or his


order

Quick Notes on Particular Requisites


Payable to Bearer

When expressed to be so payable


When payable to a person named therein or bearer
When payable to the order of a fictitious or non-existing person and such
fact was known to the drawer or maker
When the name of the payee is not the name of a person
When the only and last indorsement is an indorsement in blank
NOTE:

Where payee is vaguely designated, the loss will be borned by the party who
cause it the drawer.
Non- 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)

Kinds of Negotiable Instruments


Promissory Note

An 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

Bill of Exchange

An 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

Cheque

A bill of exchange drawn on a bank payable on demand

Kinds of Negotiable Instruments


Other forms:

Certificate of deposit issued by banks payable to the depositor or his order


or to bearer
Trade acceptance
Bonds which are in the nature of promissory notes
Drafts which are bills of exchange drawn by one bank upon another
Letter of Credit*

NOT NEGOTIABLE: Treasury Warrants

There 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.

Completion and Delivery

Insertion of Date
Tambasacan: Dates are not material but only for
maturity

Insertion of Date
RULES AS TO DATES

Where the instrument, its acceptance, or indorsement is dated, such date is


presumed to be the corresponding true date
Antedating or postdating an instrument does not affect validity or
negotionability unless done for fraudulent or illegal purpose
Date is important:

Where 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
When 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;
When the instrument is an interest bearing one, to determine when the interest starts to run

Completion of Blanks
A person in possessor of a check has prima facie
authority to complete by filling up the blanks therein
(Miravite (2002), p. 91)

Incomplete and Undelivered


Instruments
Sec. 15, NIL

If completed and delivered without authority, the


instrument is not a valid contact against any person who
signed before delivery.

Complete but Undelivered


Instruments
Between 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

If the instrument is in the hands of a holder in due course


all prior deliveries are conclusively prwesumed to be
valid

If the instrument is out of the hands of the person who


signed it, a valid and intentional delivery is disputably
presumed

Incomplete but Delivered


Instruments
Holder has prima facie authority to complete the
instrument

Completion to be fone within a reasonable time and


according to the authority given

Holder in due course of the instrument previously


completed in breach of instructions can enforce the same
as if regularly completed

Signature
Ortha: Not needed to be customary.

Signature per Procuration

One 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
Made by adding per procuration, per proc. or p.p. under agent's
signature

Signing in Trade Name


The person signing his trade name or assumed name is
liable if the name were his own

Signature of Agent
Requisites:

Must be authorized
Must disclose his principal
Must sign for and in behalf of the principal

Without disclosing principal, personal liability (Sec. 20,


NIL)

Indorsement by Minor or
Corporation
Mindors 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

Forgery
Counterfeit making or fraudulent alteration of any writing

It may consist of:

Signung of another's name with intent to defraud


Alteration of an instrument in the name, amount, description of payee, etc
with intent to defraud.

The 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.

Forgery

Forgery

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).

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)

Accommodation Party
Accomodation

A legal arrangement under which a person called the accommodation party


lends his name and credit to another called the accomodated party, without
consideration

A 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

Accommodation Party
A 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)

Liability: solidary party, unconditional and is not affected


by an extension of payment granted by the creditor to
the debtor

Negotiation
The transfer of a negotiable instrument from one person
to another as to constitute the transferer the holder
thereof

Distinguished from Assignment


2009, 2012 Bar Exam

Assignability pertains to contracts in general,


negotiability pertains to negotiable instrument (Sundiang
& Aquino (2014 ed), p. 14)

One 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.)

Modes of Negotiation
By Delivery of the Instrument Alone

Negotiation 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

By Indorsement Followed By Delivery

A 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
Delivery of an instrument means transfer of possession from one person to
another.

Kinds of Indorsements
Special

The name of the indorsee is specified (vis a vis General). Ex. Pay to A

Blank

An 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.

Restrictive

Limits 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
Ex. Pay to A only restricts negotiation
Other cases can still be negotiated subject to restriction of original restricve
indorsement (Ortha)

Kinds of Indorsements
Conditional

The 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.

Qualified

One 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)

Regular

One placed after the issue of the instrument

Irregular

One placed in blank before the issue of the instrument.

Rights of the Holder


In general

May sue thereunder in his own name, and payment to him in due course
discharges the instrument
If 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.
Fact that PN was executed after the effectivity date of the merger does not
militate against the petitioner.

Holder in Due Course


Requisites under Sec. 52:

One who takes the instrument in good faith and for value
At the time the instrument was negotiated to him, he had not notice at any
defect in the title of the person negotiating it
Every holder is deemed prima facie to be a holder in due course
Complete and regular on its face (UPLC)

SC: Fact that postdated checks were merely issued as


security not a ground for discharged as against the HIDC

If 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)

Holder Not in Due Course


Without any, some , or all of the requisites under Sec. 52,
NIL

HOLDER 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.

SHELTER RULE Acquires title from HIDC and not a party on the fraud, acquires rights of HIDC but do
not become an HIDC himself (Ortho)

Defenses Against the HIDC


REAL or ABSOLUTE DEFENSES

A 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
Available against all holders, whether in due course or not

PERSONAL or EQUITABLE DEFENSES

A 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.
Not available against a holder in due course.
Minority is a real defense, but personal to the minor ( Ortho)

Liabilities of Parties
Parties Primarily Liable

Maker
Acceptor or the Drawee Who Accepts the Instrument

Parties Secondarily Liable

The Drawer
The General Indorser
The Irregular Indorser

Parties with Limited Liability

The Qualified Indorser


Person Negotiating by Delivery

Maker
Enagages to pay according to the tenor of the instrument

Admits the existence of the payee and his capacity to


indorse

Drawer
Admits the existence of the payee and his capacity to
endorse

Engages that the instrument will be accepted or paid by


the party primarily liable

Engages that if the instrument is dishonored and proper


proceedings are brought, he will pay to the party entitled
to be paid

Acceptor
Engages to pay according to the tenor of his acceptance

Admits the existence of the drawer, the genuineness of


his signatue, and his capacity and authority to draw the
instrument

Admits the existence of the payee and his capacity to


indorse

Indorser

GENERAL INDORSER

Warrants the genuiness of the instrument, his good title to it, the capacity to
contract prior parties, amd the instrument is valid and subsitsting
Engages that the instrument will be paid by the party primarily liable
Engages that if the instrument is dishonored, and proper proceedings are
taken, he will pay the party entitled to be paid

A collecting bank which endorses a check bearing a


forged indorsement and presents it to the drawee bank
guarantees prior indorsement, including the forged
indorsement.

Indorser
IRREGULAR INDORSER A person, not otherwie a party
to an instrument, places his signature thereon in blank.

If instrument payable to the order of a 3rd person, he isnliablemto the payee and
subsequent parties
If instrument payable to order of maker or drawer, he is liable to all parties
subsequent to the maker or drawer.
If he signs for accomodation of the payee, he is liable to all parties subsequent to the
payee.

QUALIFIED INDORSER One of the parties with limited


liability. He warrants that:

Instrument is genuine and in all respects what it


purports to be

Has good title to it

All prior parties had capacity to contract

Person Negotiating By Delivery


Warranties same as qualified Indorser
Liability only to immediate transferees

Warranties
Ortha: Different from primary obligation, and requires present
and notice of dishonor in order that obbligation for breach of
warranties to arise.

Presentment for Payment


The presentation of an instrument to thn person
primarily liable for the purpose of demanding and
receiving payment (Ortha)

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)

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.

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)

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)

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.

Parties to Be Notified
Parties secondarily liable(or his agent)
Not necessary for qualified indorser or person who negotiated BI
by delivery (Ortha)

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

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

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)

Form of Notice
Either verbally or in writing (Ortha)

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

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

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

Effect of Failure to Give Notice


Parties liable are discharged (Ortha)

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)

Right of Party Who Discharged


Instrument

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)

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

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

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.

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)

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)

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)

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_

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

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)

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)

Presentment for Acceptance

HOW MADE (Manner):

Made by or on behalf of the holder


At a reasonable hour
On a business day
Before the bill is overdue and within reasonable time
To the drawee or some person authorized to acdept
or refuse acceptance on his behalf

Presentment for Acceptance

DAYS PRESENTMENT MAY BE MADE if date of presentment is:

Sunday or a holiday mst be made on the next


succeeding business day
Saturday before 12 nn on Saturday prvided that is
not a holiday

Presentment for Payment

The presentation of an instrument to the person primarily liable


for the purpose of demanding and receiving payment

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

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

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

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

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

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)

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

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)

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)

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

KINDS
TRAVELERS CHECK the purchasers signature must
appear twice one at the time he buysnit and als at the
time he uses it.