payable to the order of a specified person

I promise to pay to the order of B. Nauna ung word order

Or payable to a specified person or order
I promise to pay B or order
Issue: Ilan ang pwede mong gawing payee
A and B
If dalawa, both of them should indorse the instrument. Hindi pwedeng isa lang
ang mag-iindorse.
Except: If one was authorized to indorse or if they are partners
A or B
Kahit sino pwede magnegotiate.
Ilan ang pwedeng gawing indorsee?
Madalas isa. Partial indorsement is not allowed.
Exception: A 60k, the remaining unpaid amount. It is an indorsement of the full
amount because the 60k is still the balance.
Hindi ipinagbabawal ang partial payment, ang bawal, partial indorsement.
You can have to or more indorsee. But you cannot split the instrument.
Kailan naman siya sinasabing payable to bearer?
If it so expressed to be payable to bearer.
Bearer - who is in possession
I promise to pay B or bearer. Bearer instrument ito.
I promise to B, bearer. Hindi negotiable iyan.
payable to the order of a fictitious person
I promise to pay to the order of Superman. Bearer yan.
whose name does not purport top be the name of any person
to the order of cash. yan ay bearer instrument
4. Payable on demand or at a fixed or determinable future time

this is a promissory note payable to order given by A to B. Negotiated by B to

C, C to D, D to E.
by special indorsement.
if A cannot pay, can C collect from B? Yes. The people to the right are the
creditors. people to the left of the holder are the debtors.
kung ang may hawak ay si D, maniningil siya kay C or kay B. it is a choice available
to D.
why is be liable to E? because the indorsement of B is necessary to the title
of E. in an order instrument, indorsement is necessary and therefore,
kung yan naman ay bearer instrument na galing kay A, binigay kay B pinasa kay
C kay D kay E.
how do we negotiate a bearer instrument? by mere delivery.
If the holder is C, he can go after B. but if the holder is D, he can go after
C but he cannot go after B.
Persons negotiating by mere delivery are liable only to the immediate transferee.

Order instrument from A to B to (special) C to (blank) D to (delivery) E to

(delivery) F
The holder is E. If A cannot pay, can E collect from D? Yes. From C? Yes. From
B? Yes.
Why are B, C, and D liable to E? Kasi kung wala 'yung indorsement nila, hindi
siya holder

The indorsements made by B and C are necessary to the title of E because if B

did not indorse, there is no negotiation.
If C did not make a blank indorsement, there is no negotiation.
Kung si C hindi nagindorse and si D magdedeliver kay E, hindi siya holder kasi
kailangan mo ng indorsement. Pero dahil nagblank, cinonvert sa bearer.
so your blank indorsement, made E a holder. and if you did not indorse B, C will
not be a holder, there will be no further negotiation.
Ikaw ang dahilan kaya ako ay holder. thus, hahabulin kita.
Can F go after E? Yes. After D? No. After C? Yes. After B? Yes.
Bakit nahahabol ni F si E? Because E is the reason why F is a holder.
Why not D? Because he did not become a holder because of D even if D is not there,
he is a holder.

Bearer instrument from A to B to (special) C to (blank) D to (delivery) E to

(delivery) F
The holder is E. If A cannot pay, can E collect from D? Yes. From C? No. From
B? No.
Why are B and C not liable to E? Because you would only be liable if the title
of the holder came from your indorsement or negotiation.
If not, you are not liable.
Dito, kahit wala yung indorsement nila, holder siya.
Here, remove the indorsements of B and C, is he a holder? Yes. The indorsements
are not needed.
E's title did not derive from B and C.
Nakay F. After E? Yes. After D? No. After C? No. After B? No.
Kapag nagdedeliver ka, sa isang tao ka lang liable.

Order Instument
A to B to (special) C to (blank) D to (deliver) E to (deliver) F to (special)
G to (qualified) H
to (facultative) I to (conditional) J to (blank) K to (deliver) L to (special)
M to (restrictive) N
Persons who made you the holder. the persons from who you derive your title are
liable to you.
kapag nakita mo na ang negotiation puro new parties and walang defect ang
instrument sa isang order instrument,
1. all indorsers except qualified are liable (bear that in mind)
2. all those who negotiate by delivery are liable only to one person, the immediate
transferee.
Kung walang pambayad si maker at ikaw si C, sino sisingilin mo? si B.
D can collect from C and B.
C? yes
D? yes, yes
E? yes, yes, yes
F? yes, no, yes, yes
G? yes, no, no, yes, yes
H? no, yes, no, no, yes, yes
I? yes, no, yes, no, no, yes, yes
J? yes, yes, no, yes, no, no, yes, yes
K? yes, yes, yes, no, yes, no, no, yes, yes
L? yes, yes, yes, yes, no, yes, no, no, yes, yes
M? yes, no, yes, yes, yes, no, yes, no, no, yes, yes
N? yes, yes, no, yes, yes, yes, no, yes, no, no, yes, yes
Bearer Instrument
A to B to (special) C to (blank) D to (deliver) E to (deliver) F to (special)
G to (qualified) H
to (facultative) I to (conditional) J to (blank) K to (deliver) L to (special)
M to (restrictive) N
No re-negotiation, no defect
Shortcut:
1. If there will be continuous indorsement, these indorsers whose indorsements
were extended by continuous indorsements
are liable except qualified.
But the moment the indorsement ended, the liability ends.
and those who negotiate by mere delivery are liable only to the immediate
transferee.
C? yes
D? yes, yes
E? yes, no, no
F? yes, no, no, no
G? yes, no, no, no, no
H? no, yes, no, no, no, no
I? yes, no, yes, no, no, no, no
J? yes, yes, no, yes, no, no, no, no
K? yes, yes, yes, no, yes, no, no, no, no
L? yes, no, no, no, no, no, no, no, no, no, no
M? yes, no, no, no, no, no, no, no, no, no, no, no
N? yes, yes, no, no, no, no, no, no, no, no, no, no, no

In an order instument, being immediate and being remote is not measured by distance
but by relation.

Order Instrument
A to B to (special) C to (blank) D to (deliver) E to (deliver) F to (special)
G to (qualified) H
to (facultative) I to (conditional) J to (blank) K to (deliver) L to (special)
M
M asks, if M negotiates to N, against whom can N collect if A did not pay? B,
C, E, F, G, I, L and M
M was alarmed because M loves I. If M transferred this to N and A will not pay,
then N will go after I.
And makikita ni I ang pirma ni M. Baka magtampo siya. Hindi man lang ako gumawa
ng paraan para wala ng makasingil sa kaniya.
M asked, what can M do so that before I negotiate to N, I will make I no longer
liable without destroying this instrument?
If you want an indorser to be discharged, all you have to do is to strike out
his indorsement.
Catch: If you strike out an indorsement, that indorser is discharged and all
parties subsequent to him.
Condition: You can only strike out if that indorsment is not necessary to your
title.
I cannot be removed. The indorsement of I is necessary.
*walang defect and re-negotiation to a prior party
Ito lang ang tatandaan mo: order instrument
1. never strike out the indorsement of the payee

2. do not strike out unless you see that the immediately preceeding is blank
Here, the only indorsement that M could strike out to discharge I is F.
He does not F's indorsement because the immediately preceeding is blank.
Dahil ang blank, hindi nangangailangan ng indorsement.
Pag binura mo si F, si F madidischarge until L.
Bakit pwede?
Hindi magtataka si A bakit nakay M. E wala namang indorsement eh. Ang makikita
lang niya pirma ni C. Anybody can be the holder

Exception: may re-negotiation

A to B to C to D to E to F to G to H to E (all special indorsements)
If A cannot pay, against whom can E collect?
Bakit hindi masingil ni E si F, G and H e ayan ay kaniyang prior party? Useless
exercise kasi sisingilin din siya niyan.
Kaya si F, G, and H sa kamay ni E, discharged na sila. Bakit? kasi sila ay
intervening parties. nagkaroon ng compensation.
Eh kaso, ipinasa ni E kay I by special indorsement. Is I now the holder? Yes.
Kung walang pambayad si A, can I collect from E? Yes. from H? yes. G? yes. up
to B yes.
Hindi sila discharged sa kamay ni I kasi I is not a debtor. I is a creditor. Kaya
ang obligation ni F, G, and H are revived.
Why? They are not intervening parties, but prior parties in the hands of I.
Eh ayaw ni E ipasa kay I. Pinasa niya kay G by SI. Pwede? Syempre bawal.
*Ang negotiation ng isang instrument ay pwede lang sa prior parties, new parties.
wag na wag sa intervening parties in order to avoid multiplicity of suits.
Dito, kaya naipasa ni H kay E, E is a prior party. Naipasa ni E kay I, I is a
new party.
hindi niya maipasa kay G kasi si G ay intervening party. Pag intervening, nasa
gitna ka ng isang kamay.
pag isang kamay nilagay ka sa gitna, discharged na.

Here, is there an indorsement not necessary to the title of E? Yes. therefore,

he can strike out. evein if the preceeding negotiation is not in blank because
in this case, there is renegotiation.
bakit pumwede?
what if ipinasa ni E kay I by special indorsement.
Kung walang pambayad si A, can I collect from E? Yes. H? No.
Bakit hindi nabuhay ang obligation nila? Discharged na sila. Naputol na.

WARRANTIES
Why are they liable?
Kasi the moment na ikaw ay pipirma sa isang NI, magkakaroon ka ng admission at
warranties na magreresulta sayong liabilities bilang maker.
ano ang bagay na inaadmit at winawarrant ni maker?
yun nilagay niyang payee.
A maker admits that the payee he wrote there exists and that the payee is
capacitated.
so pag naglagay ka ng payee, you can question sa ibang bagay wag lang sa existence
and capacity.
Drawer admits that the payee exists and capacity.

and that upon presentment, the instrument will be accepted or paid or both.
if dishonored, so long as the necessary proceedings are followed, I will pay.
Drawee
Ang drawee walang admission. Siya lang ang party to the instrument na walang
admission, walang warranty. unless siya ay maging isang acceptor, doon pa lang
siya magkakaroon.
kapag inaccept niya, siya ay magiging party liable thereto. kaya tinatanggap niya
rin na ung payee nageexist and may capacity.
drawee admits that the drawer exists yung drawer may capacity and may authority
to draw the instrument and that the signature of the drawer is genuine.
hindi siya pwede magrefuse ng payment on the ground that the signature is forged
siya ay sec 23 last sentence
drawee says that he will pay according to the tenor of his acceptance kaya siya
ay isang PML.

Indorser
Qualified v. General
General kasi all other indorsements maliban sa qualified.
Warranties common to both:
1. the instrument is genuine and in all respects what it purports to be
2. that they have good title to it
3. that prior parties have the capacity
Qualified - 4. wala po akong knowledge of any fact that will affect the validity
of the instrument or something to render it valueless
General - 4. the instrument is valid and subsisting; 5. pag yan ay ippresent,
yan ay babayaran (if presented, it will be accepted or paid or both, and if
iddishonor, i will pay
Indorsers are PSL.
Payable to order A in favor of B for merchandise which B did not deliver.
Therefore, may defect, may personal defense.
B to (qualified) C to (special) D to (qualified) E to (special) F (minor) to
(special) G to (qualified) H.
Hindi napansin ni E na si F minor
3 GI; 3 QI
If HDC, can collect from A.
what if si A walang pambayad so hindi issue kung HDC or HFV kasi nga walang pambayad
si A.
Question: If a refuses to pay and the holder is C. Can C collect from B? Yes.
B cannot hide under a qualified indorsement. B violated the warranty of good title.
B knows that the title is defective.
Nakay D. maniningil siya from C or B. Kasi sinabi ni C na mababayaran kasi kung
hindi, siya magbabayad.
kung nakay E, ang sisingilin ba niya si D? wag. qualified si D. si C at B lang
ang pagpipilian niya.
kung nakay F, kanino maniningil si F? Kay E. wag kay D.
Bakit hindi masingil si D? Kasi qualified yun. wala siyang pangakong magbabayad.
nakay G. makakasingil ba kay F? hindi. kasi may real defense kasi minor siya.

itong si G makakasingil ba kay E? Yes. Si D, wag. kay C at B oo.

nakay H. makakasingil ba siya kay G na nagqualified? Yes.
B? yes
C,B? yes, yes
D, C, B? no, yes, yes
E, D, C, B? yes, no, yes, yes
F, E, D, C, B? no, yes, no, yes, yes
G, F, E, D, C, B? yes, no, yes, no, yes, yes
G violated a warranty na ung prior parties have capacity.

Irregular/Anomalous Indorser
liable ba? Yes. Kanino? titingnan kanino payable.
I promise to pay to the order of B. Payable to the order of a third person. Liable
si indorser sa payee na yan and to all parties subsequent to that payee.
Eh ang nakalagay pala I promise to pay to the order of myself or payable to the
order of the maker/drawer or siya ay isang bearer instrument - payable siya to
all parties subsequent to that maker/drawer
Eh pano naman kung siya ay ginawa lang for the accomodation the payee - liable
to all parties subsequent to that payee