Nego - Reviewer

NEGOTIABLE INSTRUMENTS – REVIEWER  By payment in due course by the accommodated
party, where the instrument was made or accepted

I. Characteristics of Negotiable Instruments for his accommodation
 Negotiability  By intentional cancellation of the instrument by the
 Accumulation of secondary contracts holder
II. Kinds of Negotiable Instruments  By any other act which discharges a simple contract
 Promissory Note for the payment of money
 Bills of Exchange  When the principal debtor becomes the holder of
 Check the instrument at or after maturity in his own right
III. Functions of Negotiable Instruments XI. Requisite of a Negotiable Instrument
 Serves as a substitute for money  It must be in writing and signed by the maker or
 Increase purchasing medium in circulation drawer
 Intended like money to have a definite value to be  Must contain an unconditional promise or order to
taken at sight without the need of investigating into pay a sum certain in money
the outside facts  Must be payable on demand or at a fixed or
 When genuine it ought to serve as equivalent of determinable future time
money  Must be payable to order or bearer
IV. Instances where BE is treated as PN  When the instrument is addressed to a drawee, he
 Drawee and drawer are the same person must be named or otherwise indicated therein with
 Drawee is a fictitious person reasonable certainty
 Drawee does not have the capacity to contract XII. The sum certain in money is not affected although it
 Bill is ambiguous and the holder treated it as PN at is to be paid:
his option  With interest
V. Parties to a PN  By stated installments
 Maker  By stated installments with a provision that upon
 Payee default of payment of any installment or of interest
VI. Parties to a BE the whole shall become due
 Drawer  With exchange, whether at a fixed rate or at a
 Drawee (acceptor when he indicates his willingness current rate
to pay)  With costs of collection or attorney’s fee, in case
 Payee payment shall not be made at maturity
VII. Requisites for Presentment for acceptance XIII. Unconditional nature of an instrument is not
 When the bill is payable at a fixed period after sight, affected by
or in cases where it is necessary to fix the maturity of  An indication of a particular fund out of which
the instrument; or reimbursement is to be made or a particular account
 When the bill expressly stipulates that it shall be to be debited with the amount;
presented for acceptance; or  A statement of transaction which gives rise to the
 When the bill of exchange is payable elsewhere than instrument
the residence or place of business of the drawee XIV. An instrument is payable at a fixed or determinable
VIII. Dishonor by non-acceptance future time which is expressed to be payable
 When it is duly presented for acceptance and such  At a fixed period after date or sight;
acceptance is refused or cannot be obtained; or  On or before a fixed or determinable future time
 When the presentment for acceptance is excused specified therein;
and the bill is not accepted  On or at a fixed period after the occurrence of a
IX. Dishonor by non-payment specified event which is certain to happen, though
 When it is duly presented for payment and such the happening of the event be uncertain
payment is refused or cannot be obtained; or XV. Additional provisions not affecting negotiability:
 When the presentment for payment is excused and  Authorizes the sale of collateral securities in case the
the instrument is overdue and unpaid instrument be not paid at maturity;
X. Discharge of Instrument  Authorizes a confession of judgement if the
 By payment in due course by or on behalf of the instrument be not paid at maturity
principal debtor;
 Waives the benefit of any law intended for the reference may be had to the figures to fix the
advantage and protection of the obligor; or amount
 Gives the holder an election to require something to  Where the instrument provides for the payment of
be done in lieu of payment of money interest, without specifying the date from which the
XVI. Kinds of Confession of Judgment interest is to run, the interest runs from the date of
 Cognovit actionem the instrument, and if it is undated from the issue
 Relicta Verificatione thereof
XVII. Extension clause:  Where the instrument is not dated, it will be
 At the option of the holder considered to be dated as of the time it was issued
 Extension to a further definite time at the option of  Where there is conflict between the written and
the maker or acceptor printed provisions, written provisions prevail
 Automatically upon or after a specified act or event  Where the instrument is so ambiguous that there is
XVIII. Payable on Demand doubt whether it is a bill or note, the holder may
 When it is expressed to be payable on demand, or at treat it as either at his election
sight, or on presentation;  Where a signature is so placed upon an instrument
 In which no time of payment is expressed that it is not clear in what capacity the person
 Where the instrument is issued, accepted, or making the same intended to sign, he is to be
indorsed, when overdue, it is, as regards the person deemed an indorser
so issuing, accepting, or indorsing it, payable on  Where an instrument containing the words “I
demand. promise to pay” is signed by two or more persons,
XIX. Payable to order they are deemed to be jointly and severally liable
 Payee who is not the maker, drawer or drawee XXIII. Kinds of Indorsement
 Drawer or maker  Special
 Drawee  Blank
 2 or more payees jointly  Absolute
 One or some of several payees  Qualified
 The holder of an office for the time being  Restrictive
XX. Payable to bearer  Conditional
 When it is expressed to be so payable to bearer  Irregular
 Payable to a person named therein or to bearer  Joint
 Payable to a fictitious or non-existing person, and XXIV. Kinds of restrictive indorsement
such fact was known to the person making it so  Prohibits further negotiation of the instrument;
payable  Constitutes the indorsee the agent of the indorser
 When the name of the payee does not purport to be (agency type: “for collection”); or
the name of any person  Vests the title in the indorsee in trust for or to the
 When the only or last indorsement is a blank use of some other person (trust type: “in trust for”)
indorsement XXV. Holder in Due Course
XXI. Omissions and provisions not affecting negotiability  That it is complete and regular upon its face
 It is not dated  That he becomes the holder of it before it was
 It does not specify the value given or that any value overdue, without notice that it had been previously
has been given dishonored, if such was the fact
 It does not specify the place where is drawn or  That he took it in good faith and for value
where it is payable  That at the time it was negotiated to him, he had no
 It bears a seal notice of any infirmity in the instrument or defect in
 It designates a particular kind of current of money in title of the person negotiating it
which payment is to be made XXVI. Rights of a holder in due course
XXII. Interpretation of Negotiable Instruments (DIDWBSJ)  To sue on the instrument in his own name
 Where the sum payable is expressed in words and  To receive payment of the instrument, and if the
also in figures and there is a discrepancy between payment is in due course, the instrument is
the two, the sum denoted by words is the sum discharged
payable; but if the words are ambiguous or uncertain
 To hold the instrument free from any defect of title  Admits the existence of a payee and his capacity to
of prior parties and free from defenses available to indorse
prior parties among themselves  Engages that he will pay it according to the tenor of
 To enforce payment of the instrument for the full his acceptance
amount thereof against all parties liable thereon XXXIII. Liabilities of Drawer
XXVII. Rights of a holder not in due course  Admits the existence of the payee and his capacity to
 To sue on the instrument in his own name indorse
 To receive payment of the instrument, and if the  Engages that on due presentment, the instrument
payment is in due course, the instrument is will be accepted or paid or both, according to its
discharged tenor, and that if it be dishonored and the
 To hold the instrument but is subject to the same proceedings of dishonor be duly taken, he will pay
defenses as if were non-negotiable the amount thereof to the holder or to any
 To have all the rights of a holder in due course if he subsequent indorser who may be compelled to pay it
derives his title through such holder and he himself is XXXIV. Liabilities of a person negotiating by delivery
not a party to any fraud or illegality affecting the  That the instrument is genuine and in all respect
instrument what it purports to be
XXVIII. Personal Defense  That he has good title to it
 Fraud in inducement  That all the prior parties had the capacity to contract
 Wanting of delivery of a complete instrument  That he had no knowledge of any fact which would
 Conditional delivery of a complete instrument impair the validity of the instrument or render it
 Failure or absence of consideration valueless
 Duress or Intimidation  His warranty extends in favor of no holder other than
 Filling up blank not within authority the immediate transferee
 Transfer in breach of faith XXXV. Liabilities of a qualified indorser
 Illegal Consideration  That the instrument is genuine and in all respect
 Mistake what it purports to be
 Insertion of wrong date  That he has good title to it
 Ante-dating or post-dating for illegal or fraudulent  That all prior parties had the capacity to contract
purpose  That he had no knowledge of the fact which would
 Filling up blank beyond reasonable time impair the validity of the instrument or render it
XXIX. Real Defense valueless
 Minority XXXVI. Liabilities of a general indorser
 Forgery  That the instrument is genuine and in all respect
 Fraud in factum or Esse Contractus what it purports to be
 Non-delivery of incomplete instrument  That he has a good title to it
 Illegality  That all prior parties had the capacity to contract
 Material alteration  That the instrument is, at the time of his
 Want of authority indorsement, valid and subsisting
 Prescription  Engages that on due presentment, the instrument
 Discharge by Insolvency will be accepted or paid or both, according to its
XXX. Liability of a person whose signature does not tenor, and that if it be dishonored and proceedings
appear on the instrument for dishonor be duly taken, he will pay the amount
thereof to the holder or to any subsequent indorser
XXXI. Liabilities of Maker who may be compelled to pay it
XXXVII. Liability of an irregular indorser
 Admits the existence of the payee and his capacity to
indorse  If the instrument is payable to a third person, he is
liable to all subsequent parties
 Engages that he will pay it according to its tenor
XXXII. Liabilities of Acceptor  If the instrument is payable to the order of the
maker or drawer, or is payable to bearer, he is liable
 Admits the existence of the drawer, the genuineness
to all parties subsequent to the maker or drawer
of his signature, and his capacity and authority to
draw the instrument  If
XXXVIII. Material Alteration
 Date
 Sum payable, either for principal or interest
 Time or place of payment
 Number of relations of the parties
XXXIX. Kinds of Acceptance
 Actual acceptance
 Constructive acceptance
 Qualified acceptance
 General acceptance
XL. Requisites of Acceptance for Honor
 The must have been previously protested for non-
acceptance or for better security
 Must be made before the bill was overdue
 Must be made by a person who is not already a party
liable on the bill
 Holder must give his consent to the acceptance for
honor
XLI. Requisites of Payment for Honor
 Bill must have been previously protested for non-
payment
 Must be attested by a notarial act of honor which
may be appended to the protest or form an
extension of it
 The notarial act of honor must be founded on a
declaration made by the payer for honor of his
intention to pay the bill for honor and for whose
honor he pays

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NEGOTIABLE INSTRUMENTS – REVIEWER  By payment in due course by the accommodated

party, where the instrument was made or accepted

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