NEGOTIABLE

INSTRUMENTS
LAW
DEFINITION
A written contract for the payment of money which complies with
the requirements of Sec. 1 of the Negotiable Instruments Law,
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 (HDC) the right to hold the instrument
free from defenses available to prior parties.
FORM
To determine whether the instrument is negotiable or not, the following
must be considered:
1. The whole of the instrument
2. Those only appear on the face of the instrument
3. Compliance with the requirement under Section 1 of the Act.

The instrument need not follow the language of the Negotiable

Instruments Law, but any terms are sufficient which clearly indicate an
intention to conform to the requirements hereof.
FEATURES
1. NEGOTIABILITY - it is that attribute or property whereby a
bill or note or check may pass from hand to hand similar to
money, so as to give the holder in due course the right to hold
the instrument and to collect the sum payable for himself free
from defenses.
2. ACCUMULATION OF SECONDARY CONTRACTS -
secondary contracts are picked up and carried along with
Negotiable Instruments as they are negotiated from one
person to another; or in the course of negotiation of
negotiable instruments, a series of juridical ties between the
parties thereto arise either by law or by privity. The indorsers
become secondarily liable to the holder
APPLICABILITY
The law applies only to negotiable instruments or those that
meet the requirements under Sec. 1 of Act No. 2031.
INSTRUMENTS WITH LIMITED
NEGOTIABILITY
1. Letter of credit - Payable to specified person.
2. Treasury warrant - Payable out of specific fund or appropriation,
hence conditional
3. Postal money order - Subject to restriction and limitation under
postal laws and regulation. (1 indorsement is allowed)
4. Bill of lading - Not contain an unconditional promise or order to pay
a sum certain in money
5. Certificate of stock - Not contain an unconditional promise or order
to pay a sum certain in money
6. Warehouse receipt - Not contain an unconditional promise or order
to pay a sum certain in money.
7. Quedan - Not contain an unconditional promise or order to pay a
sum certain in money.
8. Now account - Not payable to order or bearer
NEGOTIABLE VS. NON-NEGOTIABLE
INSTRUMENTS
NEGOTIABLE NON-NEGOTIABLE
Requires compliance with Sec. 1 of Did not comply with the
the NIL requirements of Sec. 1 of the NIL
Transfer can be by negotiation or Transfer can only be made by
assignment assignment
Holder in due course acquires the Transferee does not acquire title
instrument free from defenses better than the transferor. Hence,
personal to the prior parties subject to personal defenses of
prior parties
Prior parties have a warranty as to Prior parties warrant only that they
payment have legal title
Governed by NIL NIL only applies by analogy
Only real defenses are available Both real and personal defenses
against holder are available against the holder
KINDS OF NEGOTIABLE INSTRUMENTS
1. PROMISSORY NOTES – An unconditional promise in writing
mace by one person to another, signed by the maker,
engaging to pay on demand, or at a fixed or determinable
future time, a sum certain in money to order or to bearer.

2. BILLS OF EXCHANGE – An unconditional order in writing

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 a fixed or determinable future time, a sum
certain in money to order or bearer.
PROMISSORY NOTES VS.
BILLS OF EXCHANGE
PROMISSORY NOTES BILLS OF EXCHANGE

2 parties – Maker and 3 parties – Drawer, Payee and

Payee Drawee
There is unconditional There is unconditional ORDER
PROMISE by the maker by the drawer to the drawee
Presentment for payment Some Bills need prior
without prior acceptance acceptance by the drawee
before presentment for
payment
Liability of the maker is Liability of the drawer is
primary and absolute secondary and conditional
WHEN MAY A BILL BE TREATED AS A
NOTE?
1. The drawer and drawee are the same person
2. The drawee is a fictitious person
3. The drawee is a person not having capacity to contract
4. Where the instrument is so ambiguous that there is doubt
whether it is a bill or note

The holder may treat the instrument at his option either as a bill
of exchange or as a promissory note.
QUESTION
D drew a bill of exchange as follows:

To: Aquaman

Pay P or order P100,000 and reimburse yourself from my

account with you
Sgd. D

In this case, the instrument is:

A. The instrument is negotiable and may be treated only as a bill of
exchange
B. The instrument is non-negotiable and may be treated only as a bill
of exchange
C. The instrument is negotiable and may be treated as a promissory
note
D. The instrument is non-negotiable and may be treated as a
promissory note
QUESTION
D drew a bill of exchange as follows:

To: Aquaman

Pay P or order P100,000 and reimburse yourself from my

account with you
Sgd. D

In this case, the instrument is:

A. The instrument is negotiable and may be treated only as a bill of
exchange
B. The instrument is non-negotiable and may be treated only as a bill
of exchange
C. The instrument is negotiable and may be treated as a
promissory note
D. The instrument is non-negotiable and may be treated as a
promissory note
REQUISITES OF NEGOTIABILITY
An instrument to be negotiable must conform to the following
requirements (WUPOA):

1. It must be in writing and signed by the maker or drawer;

2. Must contain an unconditional promise or order to pay a
sum certain in money;
3. Must be payable on demand, or at a fixed or
determinable future time;
4. Must be payable to order or to bearer; and
5. Where the instrument is addressed to a drawee, he must
be named or otherwise indicated therein with
reasonable certainty.
QUESTION
Which of the following requisites of negotiability does not apply
to a promissory note?

A. It must be in writing and signed by the maker or drawer

B. Must contain an unconditional promise or order to pay a sum
certain in money
C. Must be payable on demand, or at a fixed or determinable
future time
D. Must be payable to order or to bearer
E. Where the instrument is addressed to a drawee, he must be
named or otherwise indicated therein with reasonable
certainty.
QUESTION
Which of the following requisites of negotiability does not apply
to a promissory note?

A. It must be in writing and signed by the maker or drawer

B. Must contain an unconditional promise or order to pay a sum
certain in money
C. Must be payable on demand, or at a fixed or determinable
future time
D. Must be payable to order or to bearer
E. Where the instrument is addressed to a drawee, he
must be named or otherwise indicated therein with
reasonable certainty.
QUESTION
Which of the following is not a requisite of negotiability of a
promissory note:
A. That the instrument is written and signed by the drawer
B. That the instrument contains an unconditional promise to pay
a sum certain in money
C. That the instrument is payable on demand or at a fixed or
determinable future time
D. That the instrument is payable to order or to bearer.
QUESTION
Which of the following is not a requisite of negotiability of a
promissory note:
A. That the instrument is written and signed by the
drawer
B. That the instrument contains an unconditional promise to pay
a sum certain in money
C. That the instrument is payable on demand or at a fixed or
determinable future time
D. That the instrument is payable to order or to bearer.
1. IT MUST BE IN WRITING AND
SIGNED BY THE MAKER OR DRAWER
“Written” includes printed, and “writing” includes print.

Signature of the maker or drawer is usually written, preferably

with the full name or at least the surname. However, initials or
any mark will be sufficient, provided that such signature be used
as a substitute and the maker or drawer intends to be bound by
it.
1. IT MUST BE IN WRITING AND
SIGNED BY THE MAKER OR DRAWER
General Rule: No person is liable on the instrument whose
signature does not appear thereon (Sec. 18)

Exceptions:
1. One who signs in a trade or assumed name will be liable to
the same extent as if he had signed in his own name. (Sec
18, (2))
2. The principal is bound by the signature of his duly authorized
agent (Sec 19)
3. Forgery (Sec 23)
4. Acceptance by the acceptor in a separate paper (Sec 134)
5. Written promise by a person to accept the bill before it is
drawn. (Sec 135)
1. IT MUST BE IN WRITING AND
SIGNED BY THE MAKER OR DRAWER
Presumptions:
1. Where a signature is so placed upon the instrument that it is
not clear in what capacity the person making the same
intended to sign, he is to be deemed an indorser; (Sec 17, f)
2. A person placing his signature upon an instrument otherwise
than as maker, drawer, or acceptor, is deemed to be indorser
unless he clearly indicates by appropriate words his intention
to be bound in some other capacity. (Sec 63)
2. IT MUST CONTAIN AN
UNCONDITIONAL PROMISE OR ODER
TO PAY A SUM CERTAIN IN MONEY
UNCONDITIONAL PROMISE OR ORDER:
An unqualified order or promise to pay is unconditional though
coupled with:

a. An indication of a particular fund out of which

reimbursement is to be made or a particular account to be
debited with the amount; or
b. A statement of the transaction which gives rise to the
instrument.

But an order or promise to pay out of a particular fund is not

unconditional.
2. IT MUST CONTAIN AN
UNCONDITIONAL PROMISE OR ODER
TO PAY A SUM CERTAIN IN MONEY
A SUM CERTAIN IN MONEY
The sum payable is a sum certain, although it is to be paid:

a. with interest; or
b. by stated installments; or
c. by stated installments, with a provision that, upon default in
payment of any installment or of interest, the whole shall
become due; or
d. with exchange, whether at a fixed rate or at the current rate;
or
e. with costs of collection or an attorney's fee, in case payment
shall not be made at maturity.
2. IT MUST CONTAIN AN
UNCONDITIONAL PROMISE OR ODER
TO PAY A SUM CERTAIN IN MONEY
ADDITIONAL PROVISIONS

General Rule: An instrument which contains an order or promise

to do any act in addition to the payment of money is not
negotiable.

Exceptions:
a. If it is at the option of the holder.
b. The act is to be performed after non-payment, such as:
i. authorizes the sale of collateral securities
ii. authorizes a confession of judgment
iii. waives the benefit of any law intended for the advantage
or protection of the obligor
2. IT MUST CONTAIN AN
UNCONDITIONAL PROMISE OR ODER
TO PAY A SUM CERTAIN IN MONEY
OMISSIONS; SEAL; PARTICULAR MONEY: The validity and
negotiable character of an instrument are not affected by the fact
that:

a. it is not dated; or
b. does not specify the value given, or that any value had
been given therefor; or
c. does not specify the place where it is drawn or the place
where it is payable; or
d. bears a seal; or
e. designates a particular kind of current money in which
payment is to be made.
QUESTION
Which of the following is not negotiable?
A. I promise to pay B or bearer P10,000 in 2 equal installments
of P5,000 each. Sgd. A
B. I promise to pay B or order P10,000 or deliver 5 sacks of rice,
at his option. Sgd. A
C. I promise to pay to the order of B P10,000 in 5 equal monthly
installments due at the end of each month from issuance.
However, if I miss one installment, the whole remaining
amount shall become due and demandable. Sgd. A
D. I promise to pay bearer P10,000, 60 days from issuance,
subject to a one month extension at the option of the maker.
Sgd. A
QUESTION
Which of the following is not negotiable?
A. I promise to pay B or bearer P10,000 in 2 equal
installments of P5,000 each. Sgd. A
B. I promise to pay B or order P10,000 or deliver 5 sacks of rice,
at his option. Sgd. A
C. I promise to pay to the order of B P10,000 in 5 equal monthly
installments due at the end of each month from issuance.
However, if I miss one installment, the whole remaining
amount shall become due and demandable. Sgd. A
D. I promise to pay bearer P10,000, 60 days from issuance,
subject to a one month extension at the option of the maker.
Sgd. A
3. PAYABLE ON DEMAND OR AT A FIXED
OR DETERMINABLE FUTURE TIME
WHEN PAYABLE ON DEMAND:
An instrument is payable on demand:
a. When it is so expressed to be payable on demand, or at sight,
or on presentation; or
b. In which no time for payment is expressed.

Where an instrument is issued, accepted, or indorsed when

overdue, it is, as regards the person so issuing, accepting, or
indorsing it, payable on demand.
3. PAYABLE ON DEMAND OR AT A FIXED
OR DETERMINABLE FUTURE TIME
WHEN PAYABLE AT A DETERMINABLE FUTURE TIME: An
instrument is payable at a determinable future time, within the
meaning of this Act, which is expressed to be payable:
a. At a fixed period after date or sight; or
b. On or before a fixed or determinable future time specified
therein; or
c. On or at a fixed period after the occurrence of a specified
event which is certain to happen, though the time of
happening be uncertain.

An instrument payable upon a contingency is not negotiable, and

the happening of the event does not cure the defect.
4. PAYABLE TO ORDER OR BEARER
WHEN PAYABLE TO ORDER: The instrument is payable to
order where it is drawn payable to the:
1. Order of a specified person or
2. To him or his order.

PAYEE: It may be drawn payable to the order of:

a. A payee who is not maker, drawer, or drawee; or
b. The drawer or maker; or
c. The drawee; or
d. Two or more payees jointly; or
e. One or some of several payees; or
f. The holder of an office for the time being.

Where the instrument is payable to order, the payee must be

named or otherwise indicated therein with reasonable certainty.
4. PAYABLE TO ORDER OR BEARER
WHEN PAYABLE TO BEARER: The instrument is payable to
bearer:
a. When it is expressed to be so payable; or
b. When it is payable to a person named therein or bearer; or
c. When it is payable to the order of a fictitious or non-existing
person, and such fact was known to the person making it so
payable; or
d. When the name of the payee does not purport to be the
name of any person; or
e. When the only or last indorsement is an indorsement in blank
5. IDENTITY OF DRAWEE
This requisite pertains only to a Bill of Exchange since a
Promissory Note does not have a Drawee.

Two or More Drawees:

1. Jointly – allowed;
2. Alternative or in Succession – not allowed.
QUESTION
An instrument reads:
February 19, 2019
BGC, Taguig City

P1,000,000

30 days after date, I promise to pay Gretchen Yona or his

authorized representative the sum of one million pesos
(P1,000,000) from my Maybank Account number 667183029
if, by this due date, the sun still sets in the west to usher in
the evening and rises in the east the following morning to
welcome the day.

Sgd. Donnabel Calleja

QUESTION
The instrument is not negotiable because:
I. It is not signed by the maker
II. It does not contain an unconditional promise to pay a sum
certain in money
III. It is not payable on demand, or at a fixed, or determinable
future time
IV. It is not payable to order or to bearer

A. I, II, III and IV C. II and III only

B. II, III and IV only D. II and IV only
QUESTION
The instrument is not negotiable because:
I. It is not signed by the maker
II. It does not contain an unconditional promise to pay a sum
certain in money
III. It is not payable on demand, or at a fixed, or determinable
future time
IV. It is not payable to order or to bearer

A. I, II, III and IV C. II and III only

B. II, III and IV only D. II and IV only
QUESTION
Which of the following is a negotiable instrument?
A. Pay P or order P10,000 on 30 days after date sgd. D
B. I promise to pay X or bearer P200,000 in two equal
installments of P100,000 each sgd. M
C. I promise to pay bearer P20,000 on March 20, 2019, sgd. M
D. Pay P or bearer P50,000 30 days after the death of X sgd. D
QUESTION
Which of the following is a negotiable instrument?
A. Pay P or order P10,000 on 30 days after date sgd. D
B. I promise to pay X or bearer P200,000 in two equal
installments of P100,000 each sgd. M
C. I promise to pay bearer P20,000 on March 20, 2019,
sgd. M
D. Pay P or bearer P50,000 30 days after the death of X sgd. D
QUESTION
Which of the following is not a negotiable instrument?
A. Pay to the order of P P100,000 at UST, Espana, Manila. Sgd. D
to X, UST, Espana, Manila; Accepted: Payable at 1 Loans St.
Proj. 8, QC. Sgd. X
B. Pay to X P50,000. Sgd. D to X; Accepted: For entire amount
Sgd. X
C. Pay to P or bearer P20,000. Sgd. M to D; Accepted: For
P10,000 only Sgd. D
D. Pay to Gelo or bearer P10,000. Sgd. Kim to Don and Tyron;
Accepted: If Gelo graduates by 2018. Sgd. Don
QUESTION
Which of the following is not a negotiable instrument?
A. Pay to the order of P P100,000 at UST, Espana, Manila. Sgd. D
to X, UST, Espana, Manila; Accepted: Payable at 1 Loans St.
Proj. 8, QC. Sgd. X
B. Pay to X P50,000. Sgd. D to X; Accepted: For entire
amount Sgd. X
C. Pay to P or bearer P20,000. Sgd. M to D; Accepted: For
P10,000 only Sgd. D
D. Pay to Gelo or bearer P10,000. Sgd. Kim to Don and Tyron;
Accepted: If Gelo graduates by 2018. Sgd. Don
PROVISIONS ON JOINT PARTIES
As to payees and indorsees:
1. There may be two or more payees jointly;
2. There may be one or some of several payees.
3. Where an instrument is payable to the order of two or more
payees or indorsees who are not partners, all must indorse
unless the one indorsing has authority to indorse for the others.
(Sec 41)
4. Joint payees or joint indorsees who indorse are deemed to
indorse jointly and severally. (Sec 68)
5. Notice to joint persons who are not partners must be given to
each of them unless one of them has authority to receive such
notice for the others. (Sec 100)
6. An indorsement which purports to transfer to two or more
indorsees severally, does not operate as a negotiation of the
instrument. (Sec 32)
PROVISIONS ON JOINT PARTIES
As to persons liable on the instrument:
1. “I promise to pay" is signed by two or more persons, they are
deemed to be jointly and severally liable thereon. (Sec 17 g)
2. Where there are several persons, not partners (Joint debtors),
primarily liable on the instrument and no place of payment is
specified, presentment must be made to them all (Sec 78)
3. Where two or more persons offer to pay a bill for the honor of
different parties, the person whose payment will discharge
most parties to the bill is to be given the preference. (Sec
174)
PROVISIONS ON JOINT PARTIES
As to drawees:
1. A bill may be addressed to two or more drawees jointly,
whether they are partners or not; but not to two or more
drawees in the alternative or in succession. (Sec 128)
2. Where a bill is addressed to two or more drawees who are
not partners, presentment must be made to them all unless
one has authority to accept or refuse acceptance for all, in
which case presentment may be made to him only. (Sec 145)
RULES ON DATE
1. The validity and negotiable character of an instrument are not
affected by the fact that (a) It is not dated; (Sec 6)
2. Where the instrument or an acceptance or any indorsement
thereon is dated, such date is deemed prima facie to be the
true date of the making, drawing, acceptance, or
indorsement, as the case may be. (Sec 11)
3. The instrument is not invalid for the reason only that it is
ante-dated or post-dated, provided this is not done for an
illegal or fraudulent purpose. The person to whom an
instrument so dated is delivered acquires the title thereto as
of the date of delivery. (Sec 12)
RULES ON DATE
4. Any holder may insert therein the true date of issue or
acceptance, and the instrument shall be payable accordingly.
The insertion of a wrong date does not avoid the instrument
in the hands of a subsequent holder in due course; but as to
him, the date so inserted is to be regarded as the true date.
The date may be inserted in the following cases:
a. Where an instrument expressed to be payable at a fixed
period after date is issued undated (e.g. 30 days after
date, pay to the order of X (Sgd Y)
b. Where the acceptance of an instrument payable at a fixed
period after sight is undated (e.g. 30 days after sight, pay
to the order of X (sgd Y))
RULES ON DATE
5. Where the instrument is not dated, it will be considered to be
dated as of the time it was issued. (Sec 17, c)
6. Except where an indorsement bears date after the maturity of
the instrument, every negotiation is deemed prima facie to
have been effected before the instrument was overdue. (Sec
45)
7. Any alteration which changes the: a.) The date (Sec 124) – is
considered Material Alteration.
QUESTION
On January 1, 2019, D issued a check to X for P10,000 without
indicating any date on the check. In this case:

I. If X indicated in the check a date other than Jan. 1, 2019,

the same will not invalidate the instrument.
II. If X negotiated the note to A on September 30, 2019 and put
July 1, 2019 as the date, such date is controlling if A is a
holder in due course.
III. If X negotiated the note to A on September 1, 2019, A can
still enforce the instrument against D by putting July 1, 2019
as the date.

Which of the above is true?

A. I, II and III C. I and III only
B. I and II only D. II and III only
QUESTION
On January 1, 2019, D issued a check to X for P10,000 without
indicating any date on the check. In this case:

I. If X indicated in the check a date other than Jan. 1, 2019,

the same will not invalidate the instrument.
II. If X negotiated the note to A on September 30, 2019 and put
July 1, 2019 as the date, such date is controlling if A is a
holder in due course.
III. If X negotiated the note to A on September 1, 2019, A can
still enforce the instrument against D by putting July 1, 2019
as the date.

Which of the above is true?

A. I, II and III C. I and III only
B. I and II only D. II and III only
CONSTRUCTION WHERE INSTRUMENT
IS AMBIGUOUS
Where the language of the instrument is ambiguous or there are
omissions therein, the following rules of construction apply:

a. Where the sum payable is expressed in words and also in

figures and there is a discrepancy between the two, the sum
denoted by the words is the sum payable; but if the words
are ambiguous or uncertain, reference may be had to the
figures to fix the amount;
b. Where the instrument provides for the payment of interest,
without specifying the date from which interest is to run, the
interest runs from the date of the instrument, and if the
instrument is undated, from the issue thereof;
c. Where the instrument is not dated, it will be considered to be
dated as of the time it was issued;
d. Where there is a conflict between the written and printed
provisions of the instrument, the written provisions prevail;
CONSTRUCTION WHERE INSTRUMENT
IS AMBIGUOUS
e. Where the instrument is so ambiguous that there is doubt
whether it is a bill or note, the holder may treat it as either at
his election;
f. Where a signature is so placed upon the instrument that it is
not clear in what capacity the person making the same
intended to sign, he is to be deemed an indorser;
g. Where an instrument containing the word "I promise to pay"
is signed by two or more persons, they are deemed to be
jointly and severally liable thereon.
FORGERY
When a signature is forged or made without the authority of the
person whose signature it purports to be, it is wholly inoperative,
and no right to retain the instrument, or to give a discharge
therefor, or to enforce payment thereof against any party
thereto, can be acquired through or under such signature, unless
the party against whom it is sought to enforce such right is
precluded from setting up the forgery or want of authority.

A forged signature, whether it be that of the drawer, maker,

payee or any other party, is wholly inoperative and no one can
gain title to the instrument through such forged signature against
parties prior to the forgery.
FORGERY
Forgery of Maker’s Signature – the maker is not liable to all
subsequent parties whether the instrument is an order or bearer
instrument. However, indorsers after the forgery are still
secondarily liable to the holder by virtue of their warranty.

Forgery of Indorser’s Signature in a promissory note

payable to ORDER – Where the instrument of the payee is
forged in a note payable to order, the instrument cannot be
enforced against the payee and the maker. But the indorsers
after the forgery are liable because they warrant that they have
good title to the instrument.
FORGERY
Forgery of Indorser’s Signature in a promissory note (or
Bill of Exchange) payable to BEARER – the signature of the
payee or holder is unnecessary to pass title to the instrument.
Hence, the maker may still be liable to a holder in due course
even if an indorsement was forged after the issuance of the note
since according to Sec. 60 he is to pay the instrument “according
to its tenor” and considering that the “tenor” of the instrument is
that he engages to pay any bearer of the instrument. However, if
the holder is not a holder in due course, the person whose
signature is forged may raise the defense of non-delivery of a
complete instrument
QUESTION
A makes a promissory note payable to B or bearer. A delivered
the note to B. B indorsed the note to C. C placed the note in his
wallet which was stolen by X, who, finding the note, indorsed it
to D by forging C’s signature. D indorsed the note to E, who in
turn delivered the note to F, a holder in due course. Which is not
correct?
A. A is liable to F, who is a holder in due course
B. F may go against D because his signature is genuine
C. F can go against E because he is F’s immediate transferor
D. If F was not a holder in due course, B or C can validly raise
the defense of non-delivery of a complete instrument.
QUESTION
A makes a promissory note payable to B or bearer. A delivered
the note to B. B indorsed the note to C. C placed the note in his
wallet which was stolen by X, who, finding the note, indorsed it
to D by forging C’s signature. D indorsed the note to E, who in
turn delivered the note to F, a holder in due course. Which is not
correct?
A. A is liable to F, who is a holder in due course
B. F may go against D because his signature is genuine
C. F can go against E because he is F’s immediate transferor
D. If F was not a holder in due course, B or C can validly raise
the defense of non-delivery of a complete instrument.
FORGERY
Forgery of Drawer’s Signature – barring gross negligence on
the part of the drawer where his signature is forged, he is not
liable whether or not the instrument is payable to bearer or order
because the drawer was never a party to the instrument – he did
not promise to pay anybody.

Forgery of Indorser’s Signature in a bill of exchange

payable to ORDER – subsequent holders cannot enforce
payment against the drawee, drawer, payee or the indorser
whose signature was forged, or those parties prior to the forged
indorsement. Indorsers AFTER the forgery are still secondarily
liable because of their warranties.
QUESTION
A makes a note payable to the order of B. B indorses it to C. X
obtains possession of the note fraudulently and indorses it to D,
and D to E. Which of the following is not correct?
A. C can recover from A and B because his rights against them
were not affected by the forgery.
B. E cannot enforce the note against C because of C’s signature
is wholly inoperative.
C. E cannot enforce the note against A and B because E’s rights
against them are cut-off by the forged signature of C which is
inoperative.
D. E cannot enforce the note against D who derived his
title through the forged signature of C which is wholly
inoperative.
QUESTION
A makes a note payable to the order of B. B indorses it to C. X
obtains possession of the note fraudulently and indorses it to D,
and D to E. Which of the following is not correct?
A. C can recover from A and B because his rights against them
were not affected by the forgery.
B. E cannot enforce the note against C because of C’s signature
is wholly inoperative.
C. E cannot enforce the note against A and B because E’s rights
against them are cut-off by the forged signature of C which is
inoperative.
D. E cannot enforce the note against D who derived his title
through the forged signature of C which is wholly inoperative.
FORGERY
Situation with a COLLECTING BANK
1. Drawer and Collecting Bank – the drawer cannot opt to
recover from the collecting bank since there is no privity of
contract between him and the collecting bank
2. Warranty of Collecting Bank - The collecting bank which
indorses a check bearing a forged indorsement and presents
it to the drawee bank guarantees all prior indorsements,
including the forged indorsement itself, and ultimately should
be held liable therefor. An EXCEPTION is when the issuance
of the check itself was attended with negligence.
3. Recourse of Collecting Bank – the collecting bank may
recover from its depositor who had not given value for the
money paid to him.
QUESTION
A executes a check drawn against XYZ Bank payable to the order
of B. Later, C stole the check and forged the indorsement of B. C
deposited the check in ABC Bank by way of savings deposit.
When the check was cleared. C withdrew the money from ABC
Bank. Who shall bear the loss?
A. A, because the check was complete when delivered to B.
B. XYZ Bank, because the indorsement of the payee was forged.
C. ABC Bank, because it is bound to investigate the genuineness
of the indorsement.
D. A, B, C, XYZ Bank, and ABC Bank pro-rata
QUESTION
A executes a check drawn against XYZ Bank payable to the order
of B. Later, C stole the check and forged the indorsement of B. C
deposited the check in ABC Bank by way of savings deposit.
When the check was cleared. C withdrew the money from ABC
Bank. Who shall bear the loss?
A. A, because the check was complete when delivered to B.
B. XYZ Bank, because the indorsement of the payee was forged.
C. ABC Bank, because it is bound to investigate the
genuineness of the indorsement.
D. A, B, C, XYZ Bank, and ABC Bank pro-rata
CONSIDERATION
1. Every negotiable instrument is deemed prima facie to have
been issued for a valuable consideration; and every person
whose signature appears thereon to have become a party
thereto for value. (Sec 24)
2. Value is 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. (Sec 25)
3. What constitutes holder for value. Where value has at any
time been given for the instrument, the holder is deemed a
holder for value in respect to all parties who become such
prior to that time. (Sec 26)
4. When lien on instrument constitutes holder for value. Where
the holder has a lien on the instrument arising either from
contract or by implication of law, he is deemed a holder for
value to the extent of his lien. (Sec 27)
CONSIDERATION
5. Effect of want of consideration. Absence or failure of
consideration is a matter of defense as against any person
not a holder in due course; and partial failure of
consideration is a defense pro tanto, whether the failure is an
ascertained and liquidated amount or otherwise. (Sec 28)
6. An accommodation party is one 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. Such a person is liable on the
instrument to a holder for value, notwithstanding such
holder, at the time of taking the instrument, knew him to be
only an accommodation party. (Sec. 29)
ISSUANCE AND DELIVERY
"Delivery" means transfer of possession, actual or constructive,
from one person to another.

"Issue" means the first delivery of the instrument, complete in

form, to a person who takes it as a holder.
NEGOTIATION
Negotiation is when an instrument transferred from one person
to another in such manner as to constitute the transferee the
holder thereof.

How made:
1. Bearer Instrument – Delivery
2. Order Instrument – Indorsement + Delivery.

Assignment is the transfer of the title to an instrument, with

the assignee generally taking only such title or rights as his
assignor has, subject to all defenses available against his
assignor.
NEGOTIATION VS. ASSIGNMENT
NEGOTIATION ASSIGNMENT

Applicable Law Negotiable Civil Code of the

Instruments Law Philippines
Type of Negotiable Contracts in general or
transaction or instruments only assignable rights
instrument:

Nature of the Transferee is a Transferee is a mere

transferee: holder who may assignee and can never
be a holder in due be a holder in due
course course
NEGOTIATION VS. ASSIGNMENT
NEGOTIATION ASSIGNMENT
Rights The transferee-holder Transferee cannot
acquired: may acquire more acquire more rights than
rights than the the transferor because
transferor if he is a he merely steps into the
holder in due course shoes of the transferor
Availability Transferee-holder may Transferee is always
of personal be free from personal subject to personal
defenses defenses if he is a defenses
holder in due course
QUESTION
M issued a promissory note to A or order for P5,000 payable on
March 31, 2019. Later, A delivered the note to B on March 1,
2019. In this case,
A. B is considered a holder in due course absent any facts to the
contrary
B. B is not a holder in due course
C. There was proper negotiation by A to B
D. A cannot validly negotiate the note
QUESTION
M issued a promissory note to A or order for P5,000 payable on
March 31, 2019. Later, A delivered the note to B on March 1,
2019. In this case,
A. B is considered a holder in due course absent any facts to the
contrary
B. B is not a holder in due course
C. There was proper negotiation by A to B
D. A cannot validly negotiate the note
NEGOTIATION OF A BEARER
INSTRUMENT
Where an instrument, payable to bearer, is indorsed specially, it
may nevertheless be further negotiated by delivery; but the
person indorsing specially is liable as indorser to only such
holders as make title through his indorsement. (Sec 40)

An instrument payable to bearer is not converted into an

instrument payable to order by being indorsed specially.

Instruments originally payable to order: Sec. 40 does not

apply to instruments originally payable to order which was
indorsed in blank.
NEGOTIATION OF A BEARER
INSTRUMENT
Where a person places his indorsement on an instrument
negotiable by delivery, he incurs all the liability of an indorser.
(Sec. 67)

The holder may at any time strike out any indorsement which is
not necessary to his title. The indorser whose indorsement is
struck out, and all indorsers subsequent to him, are thereby
relieved from liability on the instrument. (Sec 48)
NEGOTIATION OF A BEARER
INSTRUMENT
Every person negotiating an instrument by delivery warrants:
1. That the instrument is genuine and in all respects what it
purports to be;
2. That he has a good title to it;
3. That all prior parties had capacity to contract;
4. That he has no knowledge of any fact which would impair the
validity of the instrument or render it valueless.

The warranty however, extends in favor of no holder other than

the immediate transferee. (Sec 65)
QUESTION
M issued a bill of exchange which was pre-accepted by D,
payable to P or bearer in the amount of P100,000 on December
31, 2019. P never delivered the goods for which the bill was
issued but nevertheless delivered the note to K who had
knowledge of the failure of consideration; then K to J; then J to
L; then L to H. In the event that D dishonors the bill, H can hold
A. P, K, J and L liable being prior parties who negotiated the note
B. L liable, since he is the immediate transferor of the note
C. K, for his knowledge of the absence of consideration
D. P, for his failure to deliver the goods
QUESTION
M issued a bill of exchange which was pre-accepted by D,
payable to P or bearer in the amount of P100,000 on December
31, 2019. P never delivered the goods for which the bill was
issued but nevertheless delivered the note to K who had
knowledge of the failure of consideration; then K to J; then J to
L; then L to H. In the event that D dishonors the bill, H can hold
A. P, K, J and L liable being prior parties who negotiated the note
B. L liable, since he is the immediate transferor of the
note
C. K, for his knowledge of the absence of consideration
D. P, for his failure to deliver the goods
QUESTION
M made the following promissory note:
I promise to Pay P or bearer P20,000 payable on
March 31, 2018.

Sgd. M

Which of the following is false?

A. P indorsed the note to A and A indorsed it to B. P is liable to
both A and B.
B. P indorses the note to X and X indorsed it to Y, Y can
negotiate the note to Z by mere delivery
C. P delivered the note to A and A indorses it to B, P is liable to
both A and B.
D. P delivered the note to X and X indorsed it to Y who indorsed
it to Z. Z can hold X and Y liable.
QUESTION
M made the following promissory note:
I promise to Pay P or bearer P20,000 payable on
March 31, 2018.

Sgd. M

Which of the following is false?

A. P indorsed the note to A and A indorsed it to B. P is liable to
both A and B.
B. P indorses the note to X and X indorsed it to Y, Y can
negotiate the note to Z by mere delivery
C. P delivered the note to A and A indorses it to B, P is
liable to both A and B.
D. P delivered the note to X and X indorsed it to Y who indorsed
it to Z. Z can hold X and Y liable.
INDORSEMENT
1. In case of an order instrument, negotiation means an
indorsement completed by deliver (Sec 191)
2. The indorsement must be written on the instrument itself or
upon paper attached thereto (allonge) (Sec 31)
3. The indorsement must be an indorsement of the entire
instrument. Except when the instrument has been paid in part,
it may indorsed as to the residue.
4. A signature by "procuration” operates as notice that the agent
has but a limited authority to sign, and the principal is bound
only in case the agent in so signing acted within the actual
limits of his authority.
5. Where an instrument is payable to the order of two or more
payees or indorsees who are not partners, all must indorse
unless the one indorsing has authority to indorse for the
others.
INDORSEMENT
6. Where an instrument is drawn or indorsed to a person as
"cashier” or other fiscal officer of a bank or corporation, it is
deemed prima facie to be payable to the bank or corporation
of which he is such officer, and may be negotiated by either
the indorsement of the bank or corporation or the
indorsement of the officer.
7. Where the name of a payee or indorsee is wrongly designated
or misspelled, he may indorse the instrument as therein
described adding, if he thinks fit, his proper signature.
8. Where any person is under obligation to indorse in a
representative capacity, he may indorse in such terms as to
negative personal liability.
9. Except where an indorsement bears date after the maturity of
the instrument, every negotiation is deemed prima facie to
have been effected before the instrument was overdue
KINDS OF INDORSEMENT
1. Special
2. Blank
3. Qualified
4. Conditional
5. Restrictive
6. Joint
7. Successive
8. Irregular
SPECIAL INDORSEMENT
A special indorsement specifies the person to whom, or to whose
order, the instrument is to be payable, and the indorsement of
such indorsee is necessary to the further negotiation of the
instrument.
BLANK INDORSEMENT
An indorsement in blank specifies no indorsee, and an instrument
so indorsed is payable to bearer, and may be negotiated by
delivery.

The holder may convert a blank indorsement into a special

indorsement by writing over the signature of the indorser in blank
any contract consistent with the character of the indorsement.
QUALIFIED INDORSEMENT
A qualified indorsement constitutes the indorser a mere assignor
of the title to the instrument. It may be made by adding to the
indorser's signature the words "without recourse" or any words of
similar import. Such an indorsement does not impair the
negotiable character of the instrument.

A qualified indorser is subject to the same warranties as that of a

person who negotiates by mere delivery.
QUESTION
X issued a promissory note payable to Z or order for P10,000. Z
negotiated the note to A. A indorsed the note to B, which reads
“Pay to B without recourse”. Which of the following is true?
A. B can no longer negotiate the note further
B. If B negotiates the note to C, C can hold Z, A and B liable
since he can trace his title through their indorsements
C. A is still liable on the note in case of breach of warranty of a
qualified indorser
D. B is treated as a mere assignee
QUESTION
X issued a promissory note payable to Z or order for P10,000. Z
negotiated the note to A. A indorsed the note to B, which reads
“Pay to B without recourse”. Which of the following is true?
A. B can no longer negotiate the note further
B. If B negotiates the note to C, C can hold Z, A and B liable
since he can trace his title through their indorsements
C. A is still liable on the note in case of breach of
warranty of a qualified indorser
D. B is treated as a mere assignee
CONDITIONAL INDORSEMENT
Where an indorsement is conditional, the party required to pay
the instrument may disregard the condition and make payment to
the indorsee or his transferee whether the condition has been
fulfilled or not. But any person to whom an instrument so
indorsed is negotiated will hold the same, or the proceeds thereof,
subject to the rights of the person indorsing conditionally.
QUESTION
M made a promissory note in favor of P for P10,000. P
negotiated the note to A and A negotiated the note to B by
writing at the back of the note: “Pay to C in case he passes the
board exam”, in this case:
A. M is constrained to wait until the condition is fulfilled since
that is the order of A
B. The instrument is no longer negotiable because promise to
pay a sum certain in money is already conditional.
C. M will pay B and the latter will be the one to deliver to C after
the condition is fulfilled
D. M can pay C regardless if the condition is fulfilled or not
QUESTION
M made a promissory note in favor of P for P10,000. P
negotiated the note to A and A negotiated the note to B by
writing at the back of the note: “Pay to C in case he passes the
board exam”, in this case:
A. M is constrained to wait until the condition is fulfilled since
that is the order of A
B. The instrument is no longer negotiable because promise to
pay a sum certain in money is already conditional.
C. M will pay B and the latter will be the one to deliver to C after
the condition is fulfilled
D. M can pay C regardless if the condition is fulfilled or
not
RESTRICTIVE INDORSEMENT
An indorsement is restrictive which either:

1. Prohibits the further negotiation of the instrument; or

2. Constitutes the indorsee the agent of the indorser; or
3. Vests the title in the indorsee in trust for or to the use of
some other persons.

But the mere absence of words implying power to negotiate does

not make an indorsement restrictive.
RESTRICTIVE INDORSEMENT
A restrictive indorsement confers upon the indorsee the right:

1. to receive payment of the instrument;

2. to bring any action thereon that the indorser could bring;
3. to transfer his rights as such indorsee, where the form of the
indorsement authorizes him to do so.

But all subsequent indorsees acquire only the title of the first
indorsee under the restrictive indorsement.
QUESTION
Which of the following is not a restrictive indorsement?
A. Pay to X only
B. Pay to B in trust for Z
C. Pay to M for collection
D. Pay to A without recourse
QUESTION
Which of the following is not a restrictive indorsement?
A. Pay to X only
B. Pay to B in trust for Z
C. Pay to M for collection
D. Pay to A without recourse
JOINT INDORSEMENT
Where an instrument is payable to the order of two or more
payees or indorsees who are not partners, all must indorse
unless the one indorsing has authority to indorse for the others.
SUCCESSIVE INDORSEMENT
Where an instrument is negotiated back to a prior party:
1. It does not affect negotiability;
2. The instrument is not yet discharged, if the prior party is a
party secondarily liable;
3. Such party may reissue and further negotiable the same;
4. But he is not entitled to enforce payment thereof against any
intervening party to whom he was personally liable;
5. Such party may also strike-out the indorsements of the
intervening parties since they are no longer necessary for his
title.
QUESTION
M issued a promissory note payable to P or order for P10,000. P
negotiated the note to A, the A to B then B to P. In this case,
A. The note is discharged by confusion or merger
B. A and B are no longer liable to P being intervening parties
C. P can no longer further negotiate the instrument
D. M is not liable to P anymore since he was the payee and now
the holder
QUESTION
M issued a promissory note payable to P or order for P10,000. P
negotiated the note to A, the A to B then B to P. In this case,
A. The note is discharged by confusion or merger
B. A and B are no longer liable to P being intervening
parties
C. P can no longer further negotiate the instrument
D. M is not liable to P anymore since he was the payee and now
the holder
IRREGULAR INDORSEMENT
Where a person, not otherwise a party to an instrument, places
thereon his signature in blank before delivery, he is liable as
indorser, in accordance with the following rules:

1. If the instrument is payable to the order of a third person, he

is liable to the payee and to all subsequent parties.
2. 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.
3. If he signs for the accommodation of the payee, he is liable to
all parties subsequent to the payee.
HOLDER
A Holder means the payee or indorsee of a bill or note who is in
possession of it or the bearer thereof (Sec. 191), who may sue
on his own name (Sec. 51).
HOLDER NOT IN DUE COURSE
Holder NOT in due course can still collect on the
instrument: The Negotiable Instruments Law does not provide
that a holder, who is not a holder in due course, may not in any
case, recover on the instrument. If B purchases an overdue
negotiable promissory note signed by A, he is not a holder in due
course; but he may recover from A, if the latter has no valid
excuse for refusing payment. The only disadvantage of holder
who is not a holder in due course is that the negotiable
instrument is subject to defense as if it were non- negotiable.
(CHAN WAN VS. TAN KIM, G.R. No. L-15380; September 30,
1960)
HOLDER IN DUE COURSE
A holder in due course is a holder who has taken the instrument
under the following conditions (COVN):
1. That it is complete and regular upon its face;
2. That he became the holder of it before it was overdue, and
without notice that it has been previously dishonored, if such
was the fact;
3. That he took it in good faith and for value;
4. That at the time it was negotiated to him, he had no notice
of any infirmity in the instrument or defect in the title
of the person negotiating it.
QUESTION
A personal defense may be used against
A. Holder in due course
B. Holder for value
C. Both A and B
D. Neither A nor B
QUESTION
A personal defense may be used against
A. Holder in due course
B. Holder for value
C. Both A and B
D. Neither A nor B
1. THAT THE INSTRUMENT IS
COMPLETE AND REGULAR UPON ITS
FACE
Complete - it is complete when it is not wanting of any
material particular or particular proper to be inserted in a
negotiable instrument without which the same will not be
complete.

Regular – It is regular upon its face when it does not contain

any material alterations or if there are, they are not
apparent or visible on the face of the instrument.

A Holder upon receiving an instrument which is incomplete or

irregular (containing visible and apparent alterations) must be
put on inquiry why it is such. If he fails to do so, he won’t be
regarded as a holder in due course.
2. HE TOOK IT BEFORE IT WAS
OVERDUE OR NO NOTICE OF
PREVIOUS DISHONOR
Overdue – an instrument is overdue after the date of
maturity fixed therein or upon happening of an event certain,
and a person taking an overdue instrument must be put on
inquiry why the instrument is still in circulation

Dishonor may be by non-acceptance (bills of exchange) or by

non-payment (promissory notes and bills of exchange).

A holder who has knowledge that the instrument was previously

dishonored is not a holder in due course.
3. HE TOOK IT IN GOOD FAITH AND
FOR VALUE
General Rule: every holder is deemed prima facie a holder a
due course.

Exception: When it is shown that the title of any person who

has negotiated the instrument was defective, the burden is on
the holder to prove that he or some person under whom he
claims acquired the title as holder in due course. But the last-
mentioned rule does not apply in favor of a party who became
bound on the instrument prior to the acquisition of such
defective title.

When inquiry should be made: If the holder acquires a

negotiable instrument under circumstances which should have
put him in inquiry, he should do so. Otherwise, he may not be
considered in good faith for gross neglect.
HOLDER FOR VALUE
Value is 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.

Where value has at any time been given for the instrument, the
holder is deemed a holder for value in respect to all parties
who become such prior to that time.

Note that taking the instrument for value is only one requisite for
a holder in due course. As such, all Holders in Due Course are
Holders for Value; but not all Holders for Value are Holders in
Due Course.
4. NO NOTICE OF ANY INFIRMITY IN THE
INSTRUMENT OR DEFECT IN THE TITLE OF
THE PERSON NEGOTIATING IT
To constitutes notice of an infirmity in the instrument or defect in
the title of the person negotiating the same, the person to
whom it is negotiated must have had actual knowledge
of the infirmity or defect, or knowledge of such facts that
his action in taking the instrument amounted to bad
faith.

The title of a person who negotiates an instrument is defective

when he obtained the instrument, or any signature thereto, by
fraud, duress, or force and fear, or other unlawful means, or for
an illegal consideration, or when he negotiates it in breach of
faith, or under such circumstances as amount to a fraud.
PAYEE AS HOLDER IN DUE COURSE
Section 191 defines "holder" as the payee or indorsee of a bill or
note, who is in possession of it, or the bearer thereof. Sec. 52
defines a holder in due course as "a holder who has taken the
instrument under the conditions enumerated therein. ”Since
"holder", as defined in sec. 191, includes a payee who is
in possession the word holder in the first clause of sec.
52 and in the second subsection may be replaced by the
definition in sec. 191 so as to read "a holder in due
course is a payee or indorsee who is in possession," etc.
(Brannan's on Negotiable Instruments Law, 6th ed., p. 543).
(VICENTE DE OCAMPO VS. ANITA GATCHALIAN)
RIGHTS OF A HOLDER IN DUE COURSE
1. He may sue in its own name; (Sec 51)
2. A holder in due course holds the instrument free from any
defect of title of prior parties,
3. Free from defenses available to prior parties among
themselves; (Sec 57)
4. May enforce payment of the instrument for the full amount
thereof against all parties liable thereon. (Sec 57) and
payment to him in due course discharged the instrument.
(Sec 51)
PARTIAL HOLDER IN DUE COURSE
Where the transferee receives notice of any infirmity in the
instrument or defect in the title of the person negotiating the
same before he has paid the full amount agreed to be paid
therefor, he will be deemed a holder in due course only to the
extent of the amount therefore paid by him.
SHELTER RULE
If a Holder is not a holder in due course, he is subject to
personal defenses as between prior parties. The only exception is
an ordinary holder who derived his title from a holder in due
course, this is known in American case law as “Shelter Rule”.

The rule does not apply, however, to a holder who repurchased

the instrument either personally or through an agent.

If the original payee of a note unenforceable for lack of

consideration repurchases the instrument after transferring it to a
holder in due course, the paper again becomes subject in the
payee's hands to the same defenses to which it would have been
subject if the paper had never passed through the hands of a
holder in due course. The same is true where the instrument is
retransferred to an agent of the payee. (CHARLES FOSSUM VS.
FERNANDEZ HERMANOS, GR No. L-19461)
CLASSIFICATION OF PARTIES AS TO
LIABILITY
Primarily Liable:
1. Maker of a promissory note;
2. Drawee-acceptor of a bill of exchange (including a certifier of
a check);

A drawee is not liable on a bill unless he accepts the same.

Secondarily Liable:
1. Drawer of a bill of exchange;
2. General indorsers;
3. Acceptor for honor.
ENFORCEMENT OF LIABILITY
Parties Primary Liable: presentment for payment must be
made to enforce liability.

Parties Secondarily Liable: presentment for acceptance or

payment must be made; the bill or note must be dishonored; a
notice of dishonor is given.
ENFORCEMENT OF LIABILITY
Condition of Drawer for Secondary liability (Sec 61)
1. That the bill is presented for acceptance (Sec. 143) when
required or presented for payment (Sec. 70), as the case may
be, to the drawer.
2. That the bill is dishonored by non acceptance (Sec. 149) or
non payment (Sec 83) as the case may be.
3. That the necessary proceedings on dishonor be duly taken
such as notice of dishonor is given to the drawer or in case of
a foreign bills, protest is made followed by a notice of protest.
(Sec 152)
ENFORCEMENT OF LIABILITY
Condition of General Indorser for Secondary liability (Sec
61)
1. That the instrument is presented for acceptance (Sec. 143)
when required or presented for payment (Sec. 70), as the
case may be, to the drawer.
2. That the instrument is dishonored by non-acceptance (Sec.
149) or non-payment (Sec 83) as the case may be.
3. That the necessary proceedings on dishonor be duly made.
MAKER VS. DRAWER
MAKER DRAWER
Party to a Promissory note Party to a bill of exchange
Primary liable Secondary liable
Cannot limit his liability Can limit his liability
Unconditionally bound to pay Conditionally bound to pay the
the instrument instrument
MAKER VS. ACCEPTOR
MAKER ACCEPTOR
Party to a promissory note Party to a bill of exchange
Engage to pay the instrument Engage to pay the instrument
according to its tenor according to its acceptance.
No drawer to consider Admit the existence of the
drawer, the genuineness of his
signature, and his capacity and
authority to draw the
instrument
Admits the existence of the same
payee and his then capacity to
indorse
QUALIFIED VS. GENERAL INDORSER
QUALIFIED INDORSER GENERAL INDORSER
1. That the instrument is genuine Same
and in all respects what it
purports to be;
2. That he has a good title to it;
3. That all prior parties had
capacity to contract
4. That he has no knowledge of 4. Warrant that the instrument
any fact which would impair the is, at the time of his indorsement,
validity of the instrument or render valid and subsisting
it valueless

There is no secondary liability. There is secondary liability

DEFENSES
PERSONAL DEFENSES REAL DEFENSES
Incomplete but delivered (Sec 14) Incomplete and undelivered (Sec
15)
Complete but undelivered (Sec 16) Indorsement by infant or
corporation (available to minor or
corporation only) (Sec 22)

Insertion of a wrong date (Sec 13) Forgery (Sec 23)

Ante date or post dated (Sec 12) Want of authority, apparent and
real (Sec 23)
DEFENSES
PERSONAL DEFENSES REAL DEFENSES
Absence or failure of consideration Material alteration (Sec 124)
(Sec 28)

Simple fraud or fraud in Prescription

inducement (Sec 55)

Acquisition of instrument by fraud, Fraud in factum or fraud in esse

duress, or force and fear contractus

Acquisition of instrument by
unlawful means
Acquisition of instrument for an
illegal consideration
DEFENSES
PERSONAL DEFENSES REAL DEFENSES
By negotiation of the instrument in
breach of faith
By negotiation under
circumstances that amount to
fraud
INCOMPLETE BUT DELIVERED
INSTRUMENT
Where the instrument is wanting in any material particular, the
person in possession thereof has a prima facie authority to
complete it by filling up the blanks therein. And a signature on a
blank paper delivered by the person making the signature in
order that the paper may be converted into a negotiable
instrument operates as a prima facie authority to fill it up as such
for any amount. In order, however, that any such instrument
when completed may be enforced 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 if any such instrument, after completion, is
negotiated to a holder in due course, it is valid and effectual for
all purposes in his hands, and he may enforce it as if it had been
filled up strictly in accordance with the authority given and within
a reasonable time. (Sec 14)
INCOMPLETE AND UNDELIVERED
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
signature was placed thereon before delivery. (Sec. 15)
COMPLETE BUT UNDELIVERED
Complete but undelivered - Every contract on a negotiable
instrument is incomplete and revocable until delivery of the
instrument for the purpose of giving effect thereto. As between
immediate parties and as regards a remote party other than a
holder in due course, the delivery, in order to be effectual, must
be made either by or under the authority of the party making,
drawing, accepting, or indorsing, as the case may be; and, in
such case, the delivery may be shown to have been conditional,
or for a special purpose only, and not for the purpose of
transferring the property in the instrument. But where the
instrument is in the hands of a holder in due course, a valid
delivery thereof by all parties prior to him so as to make them
liable to him is conclusively presumed. And where the instrument
is no longer in the possession of a party whose signature appears
thereon, a valid and intentional delivery by him is presumed until
the contrary is proved. (Sec. 16)
QUESTION
A delivers to B a promissory note payable to the order of B
without specifying the amount but A authorized B to place the
amount of PhP5,000 in the promissory note, which was signed by
A. B, in violation of the instruction of A, placed PhP50,000 as the
amount payable. Later, B indorsed the note to C. The holder C
A. Can recover from either A or B.
B. Cannot recover from either A or B if they know the defect.
C. Cannot recover from A but can recover from B.
D. Cannot recover from B since he does not know of the defect
QUESTION
A delivers to B a promissory note payable to the order of B
without specifying the amount but A authorized B to place the
amount of PhP5,000 in the promissory note, which was signed by
A. B, in violation of the instruction of A, placed PhP50,000 as the
amount payable. Later, B indorsed the note to C. The holder C
A. Can recover from either A or B.
B. Cannot recover from either A or B if they know the defect.
C. Cannot recover from A but can recover from B.
D. Cannot recover from B since he does not know of the defect
QUESTION
A issued a negotiable promissory note to B with the amount in
blank, but with authority given to B to fill up the blank for
PhP100,000. B filled it up for P400,000 and negotiated it to C. If
C is a holder in due course, how much can he collect from either
A or B?
A B
A. P100,000 P400,000
B. P100,000 P100,000
C. P400,000 P400,000
D. P400,000 P100,000
QUESTION
A issued a negotiable promissory note to B with the amount in
blank, but with authority given to B to fill up the blank for
PhP100,000. B filled it up for P400,000 and negotiated it to C. If
C is a holder in due course, how much can he collect from either
A or B?
A B
A. P100,000 P400,000
B. P100,000 P100,000
C. P400,000 P400,000
D. P400,000 P100,000
QUESTION
Assuming in the preceding number that B filled it up in
accordance with the authority given, i.e., P100,000, and
negotiated it to C, who changed the amount to P400,000 and
later on negotiated the instrument to H who took it in good faith
and for value, how much can C collect?
A. P400,000 if he is a holder in due course
B. P100,000 if he is a holder in due course
C. P400,000 whether he is a holder in due course or not
D. P100,000 whether he is a holder in due course or not
QUESTION
Assuming in the preceding number that B filled it up in
accordance with the authority given, i.e., P100,000, and
negotiated it to C, who changed the amount to P400,000 and
later on negotiated the instrument to H who took it in good faith
and for value, how much can C collect?
A. P400,000 if he is a holder in due course
B. P100,000 if he is a holder in due course
C. P400,000 whether he is a holder in due course or not
D. P100,000 whether he is a holder in due course or not
PRESENTMENT FOR PAYMENT
General Rule: Presentment for payment is not necessary to
charge the person primarily liable but it is necessary to charge
the Drawer and Indorser.

Exceptions:
1. Drawer - The drawer has no right to expect or require that
the drawee or acceptor will pay the instrument. (Sec 79)
2. Indorser The instrument was made or accepted for indorser
accomodation and he has no reason to expect that the
instrument will be paid if presented. (Sec 80)
3. When presentment is dispensed with (Sec 82)
a. Presentment cannot be made after exercise of reasonable
diligence
b. Drawee is a fictitious person
c. Waiver f presentment, express or implied
4. When the bill is dishonored by non acceptance (Sec 151
SUFFICIENT PRESENTMENT
How: The instrument 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. (Sec 74)

By whom: Holder or person authorized to received payment on

his behalf.

To whom: Person primarily liable or in his absence, any person

found at the place where presentment is made. Exception:
When no place of payment is specified:
1. When principal debtor is dead (Sec. 76) - Personal
representative if there be, and if, with the exercise of
reasonable diligence he can be found.
2. Persons liable as Partners (Sec 77) - Any partner
3. Joint Debtor (Sec 78) - Each of them
SUFFICIENT PRESENTMENT
When:
1. Not payable on demand (Sec 71) - On the day it falls due
2. Payable on demand
a. Promissory note - Reasonable time after its issue
b. Bill of exchange - Reasonable time after the last negotiation
3. Payable at bank (Sec 75)
a. Has fund - during banking hours
b. No funds to meet it - at any time during the day, any hour
before the bank is closed.

Time of Maturity
1. Time fixed without grace
2. If it falls on a Sunday or Holiday, the next business day
3. If it falls on a Saturday:
a. Payable on demand – 12:00nn if Saturday is not a holiday;
b. Not payable on demand – next business day
SUFFICIENT PRESENTMENT
Where:
1. Place of payment specified - Place specified (Sec 73)
2. Place not specified but the address of the person to make is
given - Address indicated in the instrument;
3. Place of payment and address not given - Usual place of
business or residence of the person to make payment.
4. Other cases - Where the person to make payment he can be
found or if presented at his last known place of business or
residence
NOTICE OF DISHONOR
When a negotiable instrument has been dishonored by
nonacceptance or non-payment, notice of dishonor must be given to
the drawer and to each indorser, and any drawer or indorser to
whom such notice is not given is discharged.

Who should give: the holder or any party who may be compelled
to pay (like indorsers) or their authorized representative.

Effect of Notice: immediate recourse against the indorsers arise. It

is as if the indorsers become primarily liable in the payment in the
sense that the holder need not claim payment from the person
primarily liable.

Waiver: Notice of dishonor may be waived either before the time of

giving notice has arrived or after the omission to give due notice,
and the waiver may be expressed or implied.
NOTICE OF DISHONOR
Who will benefit (those no longer required to give notice)
1. Given by or on behalf of the holder – to the benefit of all
subsequent holders (if negotiated after dishonor) and all prior
parties (to the holder) who have a right of recourse against
the party to whom it is given.

Example: M to P to A to B to C to H. If H gives notice to P, it

inures to the benefit of A, B and C, such that they need not
provide notice to P also.

2. Given by the indorser who may be compelled to pay – inures

to the benefit of the holder and parties subsequent to the
party to whom notice is given.

Example: M to P to A to B to C to H. If notice is given by B to

A, it inures to the benefit of C and H as well.
NOTICE OF DISHONOR
Time of giving notice:
1. Parties reside in the same place:
a. Business place – before close of business hours on the day
following
b. Residence – before usual hours of rest on the day following
c. Sent by mail – deposited in the post office in time t reach him
in the usual course on the day following
2. Parties reside in different places
a. Sent by mail –
i. deposited in the post office in time to go by mail the day
following the day of dishonor
ii. if there is no mail at a convenient hour on the last day,
by the next mail thereafter
b. Otherwise – within the time that notice would have been
received in due course of mail if it would have been
deposited in the post office.
NOTICE OF DISHONOR
When not required as to DRAWER:
1. When the drawer and the drawee are the same person
2. When the drawee is a fictitious person or a person not having
capacity to contract
3. When the drawer is the person to whom the instrument is
presented for payment
4. Where the drawer has no right to expect or require that the
drawee or acceptor will honor the instrument
5. Where the drawer has countermanded payment (e.g., when a
stop payment order is issued)
NOTICE OF DISHONOR
1. When the drawee is a fictitious person or person not having
capacity to contract, and the indorser was aware of that fact
at the time he indorsed the instrument;
2. Where the indorser is the person to whom the instrument is
presented for payment;
3. Where the instrument is made or accepted for his
accommodation (he is ultimately the one liable on the
instrument)
DISCHARGE OF NEGOTIABLE
INSTRUMENTS
Discharge of 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. It may be effected:
1. By payment in due course by or on behalf of the principal
debtor;
2. By payment in due course by the party accommodated,
where the instrument is made or accepted for his
accommodation;
3. By the intentional cancellation thereof by the holder;
4. By any other act which will discharge a simple contract for
the payment of money;
5. When the principal debtor becomes the holder of the
instrument at or after maturity in his own right.
PAYMENT BY PARTY SECONDARILY
LIABLE
Where the instrument is paid by a party secondarily liable
thereon, it is not discharged; but the party so paying it is
remitted to his former rights as regard all prior parties, and he
may strike out his own and all subsequent indorsements and
against negotiate the instrument, except:
1. Where it is payable to the order of a third person and has
been paid by the drawer; and
2. Where it was made or accepted for accommodation and has
been paid by the party accommodated
RENUNCIATION BY HOLDER
The holder may expressly renounce his rights against any party
to the instrument before, at, or after its maturity. An absolute
and unconditional renunciation of his rights against the principal
debtor made at or after the maturity of the instrument
discharges the instrument. But a renunciation does not affect the
rights of a holder in due course without notice.

A renunciation must be in writing unless the instrument is

delivered up to the person primarily liable thereon
INTENTIONAL CANCELLATION
Intentional Cancellation by the Holder discharges the instrument.

However, a cancellation made unintentionally or under a

mistake or without the authority of the holder, is
inoperative but where an instrument or any signature thereon
appears to have been cancelled, the burden of proof lies on the
party who alleges that the cancellation was made unintentionally
or under a mistake or without authority.
INTENTIONAL CANCELLATION
Intentional Cancellation by the Holder discharges the instrument.

However, a cancellation made unintentionally or under a

mistake or without the authority of the holder, is
inoperative but where an instrument or any signature thereon
appears to have been cancelled, the burden of proof lies on the
party who alleges that the cancellation was made unintentionally
or under a mistake or without authority.
DISCHARGE OF PARTIES
SECONDARILY LIABLE
1. By any act which discharges the instrument;
2. By the intentional cancellation of his signature by the holder;
3. By the discharge of a prior party;
4. By a valid tender or payment made by a prior party;
5. By a release of the principal debtor unless the holder's right
of recourse against the party secondarily liable is expressly
reserved;
6. 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.
MATERIAL ALTERATION
What constitutes a material alteration. – A material
alteration is any alteration which changes:
1. The date;
2. The sum payable, either for principal or interest;
3. The time or place of payment:
4. The number or the relations of the parties;
5. The medium or currency in which payment is to be made;
6. Or which adds a place of payment where no place of payment
is specified, or
7. Any other change or addition which alters the effect of the
instrument in any respect.
MATERIAL ALTERATION
Where a negotiable instrument is materially altered without the
assent of all parties liable thereon, it is avoided, except as
against a party who has himself made, authorized, or assented to
the alteration and subsequent indorsers.

But when an instrument has been materially altered and is in the

hands of a holder in due course not a party to the alteration, he
may enforce payment thereof according to its original tenor
QUESTION
A issued a negotiable promissory note to B with the amount in
blank, but with authority given to B to fill up the blank for
PhP100,000. B filled it up for P400,000 and negotiated it to C. If
C is a holder in due course, how much can he collect from either
A or B?
A B
A. P100,000 P400,000
B. P100,000 P100,000
C. P400,000 P400,000
D. P400,000 P100,000
QUESTION
A issued a negotiable promissory note to B with the amount in
blank, but with authority given to B to fill up the blank for
PhP100,000. B filled it up for P400,000 and negotiated it to C. If
C is a holder in due course, how much can he collect from either
A or B?
A B
A. P100,000 P400,000
B. P100,000 P100,000
C. P400,000 P400,000
D. P400,000 P100,000
QUESTION
Assuming in the preceding number that B filled it up in
accordance with the authority given, i.e., P100,000, and
negotiated it to C, who changed the amount to P400,000 and
later on negotiated the instrument to H who took it in good faith
and for value, how much can C collect?
A. P400,000 if he is a holder in due course
B. P100,000 if he is a holder in due course
C. P400,000 whether he is a holder in due course or not
D. P100,000 whether he is a holder in due course or not
QUESTION
Assuming in the preceding number that B filled it up in
accordance with the authority given, i.e., P100,000, and
negotiated it to C, who changed the amount to P400,000 and
later on negotiated the instrument to H who took it in good faith
and for value, how much can C collect?
A. P400,000 if he is a holder in due course
B. P100,000 if he is a holder in due course
C. P400,000 whether he is a holder in due course or not
D. P100,000 whether he is a holder in due course or not
PRESENTMENT FOR ACCEPTANCE
Presentment for Acceptance, when required:
1. Where the bill is payable after sight, or in any other case,
where presentment for acceptance is necessary in order to fix
the maturity of the instrument; or
2. Where the bill expressly stipulates that it shall be presented
for acceptance; or
3. Where the bill is drawn payable elsewhere than at the
residence or place of business of the drawee.
PRESENTMENT FOR ACCEPTANCE
The holder of a bill which is required to present it for acceptance
must either present it for acceptance or negotiate it within a
reasonable time. If he fails to do so, the drawer and all indorsers
are discharged.

Exceptions:
Presentment for acceptance is excused and a bill may be treated
as dishonored by non-acceptance in either of the following cases:
1. Where the drawee is dead, or has absconded, or is a fictitious
person or a person not having capacity to contract by bill.
2. Where, after the exercise of reasonable diligence,
presentment can not be made.
3. Where, although presentment has been irregular, acceptance
has been refused on some other ground.
PRESENTMENT FOR ACCEPTANCE
1. Presentment for acceptance must be made by or on behalf of
the holder at a reasonable hour, on a business day and before
the bill is overdue, to the drawee or some person authorized
to accept or refuse acceptance on his behalf;
2. Where a bill is addressed to two or more drawees who are
not partners, presentment must be made to them all unless
one has authority to accept or refuse acceptance for all, in
which case presentment may be made to him only;
3. Where the drawee is dead, presentment may be made to his
personal representative;
4. Where the drawee has been adjudged a bankrupt or an
insolvent or has made an assignment for the benefit of
creditors, presentment may be made to him or to his trustee
or assignee.
PRESENTMENT FOR ACCEPTANCE
5. Where the holder of a bill drawn payable elsewhere than at
the place of business or the residence of the drawee has no
time, with the exercise of reasonable diligence, to present
the bill for acceptance before presenting it for payment on
the day that it falls due, the delay caused by presenting the
bill for acceptance before presenting it for payment is
excused and does not discharge the drawers and indorsers.
6. Where a bill is duly presented for acceptance and is not
accepted within the prescribed time, the person presenting it
must treat the bill as dishonored by nonacceptance or he
loses the right of recourse against the drawer and indorsers
7. When a bill is dishonored by nonacceptance, an immediate
right of recourse against the drawer and indorsers accrues to
the holder and no presentment for payment is necessary.
ACCEPTANCE
ACCEPTANCE is the signification of the drawee of his assent to
the order of the drawer.

Requisites:
1. It must be in writing
2. Signed by the drawee
3. Drawee must assent to the promise to pay a sum certain in
money and not by any other means.

Where:
1. The instrument itself or
2. In a separate piece of paper.

But under Sec. 133, the holder may require the acceptance to be
on the bill, and if such request is refused, the bill may be treated
as dishonored.
ACCEPTANCE
When deemed accepted:
1. When the bill is delivered to the drawee and he destroys the
bill
2. The bill is delivered to the drawee but the drawee refuses
within 24 hours or within such period as the holder may allow
to return the bill accepted or non-accepted. (137)

Future bills (135): an acceptance issued before a bill is

drawn is deemed an actual acceptance in favor of every person
who, upon the faith thereof, receives the bill for value.
ACCEPTANCE
Kinds of Acceptance:
1. Conditional – payment by the acceptor is dependent on the
fulfillment of the condition.
2. Partial – acceptance to pay a part only of the amount for
which the bill is drawn
3. Local – acceptance to pay at a particular place.
4. Qualified as to time
5. Acceptance of some, on or more of the drawees but not of all
ACCEPTANCE
Unqualified acceptance: the holder may refuse to take a
qualified acceptance and if he does not obtain an unqualified
acceptance, he may treat the bill as dishonored by non-
acceptance.

Where a qualified acceptance is taken, the drawer and indorsers

are discharged from liability on the bill unless they have
expressly or impliedly authorized the holder to take a qualified
acceptance, or subsequently assent thereto.

When a drawer or indorsee receives notice of a qualified

acceptance he must, within a reasonable time, express his
dissent thereto or he will be deemed to have assented thereto.
PROTEST
PROTEST is a formal declaration, drawn and signed by a notary,
that the foreign bill has been presented for acceptance or
payment and that the acceptance or payment is refused.

When Necessary:
1. In case of a foreign bill dishonored by non-acceptance or non-
payment
2. If a stranger to a bill will accept the instrument for honor
3. If the bill will be presented for payment to acceptor for honor
or referee in case of need; and
4. When the bill is dishonored by the acceptor for honor
ACCEPTANCE FOR HONOR
Acceptance for Honor:
1. is an undertaking by a stranger to a bill
2. after protest
3. for the benefit of:
a. any party liable thereon or
b. for the honor of the person for whose account the bill was
drawn
4. which acceptance inures also the benefit of all parties
subsequent the person for whose honor it is accepted and
5. conditioned to pay the bill when it becomes due if the original
drawee does not pay it.

Where an acceptance for honor does not expressly state for

whose honor it is made, it is deemed to be an acceptance for the
honor of the drawer.
ACCEPTANCE FOR HONOR
Liability of Acceptor for Honor: The acceptor for honor, by such
acceptance, engages that he will, on due presentment, pay the
bill according to the terms of his acceptance provided it shall not
have been paid by the drawee and provided also that is shall
have been duly presented for payment and protested for non-
payment and notice of dishonor given to him.

The acceptor for honor is liable to the holder and to all parties to
the bill subsequent to the party for whose honor he has
accepted.
CHECKS
A check is a bill of exchange drawn on a bank payable on demand.

A check must be presented for payment within a reasonable time

after its issue or the drawer will be discharged from liability thereon
to the extent of the loss caused by the delay. (Sec 186)

Where a check is certified by the bank on which it is drawn, the

certification is equivalent to an acceptance.

Where the holder of a check procures it to be accepted or certified,

the drawer and all indorsers are discharged from liability thereon.
(Sec 188)

A check of itself does not operate as an assignment of any part of

the funds to the credit of the drawer with the bank, and the bank is
not liable to the holder unless and until it accepts or certifies the
check.
EFFECT OF CROSSING A CHECK
1. The check may not be encashed but only deposited in the
bank;
2. The check may be negotiated only once to one who has an
account with a bank; and
3. The act of crossing the check serves as a warning to the
holder that the check has been issued for a definite purpose
so that he must inquire if he has received the check pursuant
to that purpose, otherwise he is not a holder in due course.
(STATE INVESTMENT HOUSE INC. VS. IAC)

Issuing a crossed check imposes no obligation on the drawee not

honor such a check. It is more of a warning to the holder that the
check cannot be presented to the drawee bank for payment in
cash. (GEMPESAW VS. CA)
ANTI-BOUNCING CHECKS LAW
BP Blg 22 was enacted to prevent the proliferation of worthless
checks in the mainstream of daily business and to avert not only the
undermining of the banking system of the country but also the
infliction of damage and injury upon trade and commerce
occasioned by the indiscriminate issuances of such checks.

ELEMENTS:
1. The making, drawing and issuance of any check to apply for
account or for value;
2. The knowledge of the maker, drawer, or issuer that at the time of
issue he does not have sufficient funds in or credit with the
drawee bank for the payment of such check in full upon its
presentment; and
3. The subsequent dishonor of the check by the drawee bank for
insufficiency of funds or credit or dishonor for the same reason
had not the drawer, without any valid cause, ordered the bank to
stop payment.
ANTI-BOUNCING CHECKS LAW
KNOWLEDGE OF INSUFFICIENT FUNDS: The making, drawing
and issuance of a check payment of which is refused by the drawee
because of insufficient funds in or credit with such bank, when
presented within ninety (90) days from the date of the
check, shall be prima facie evidence of knowledge of such
insufficiency of funds or credit unless such maker or drawer pays
the holder thereof the amount due thereon, or makes
arrangements for payment in full by the drawee of such check
within (5) banking days after receiving notice that such check
has not been paid by the drawee.
ANTI-BOUNCING CHECKS LAW
Prescriptive period of BP 22 Violation of B.P. Blg. 22 prescribes in
four (4) years from the commission of the offense or, if the
same be not known at the time, from the discovery. thereof
ESTAFA
Any person who shall defraud another by postdating a check, or
issuing a check in payment of an obligation when the
offender had no funds in the bank, or his funds deposited
therein were not sufficient to cover the amount of the
check. The failure of the drawer of the check to deposit the
amount necessary to cover his check within three (3) days from
receipt of notice from the bank and/or payee or holder that said
check has been dishonored for lack or insufficiency of funds shall
be prima facie evidence of deceit constituting false pretense or
fraudulent act.
ESTAFA
ESSENTIAL ELEMENTS:
1. That the offender postdated or issued a check in payment of
an obligation contracted at the time the check was issued;
2. That such postdating or issuing a check was done when the
offender had no funds in the bank, or his funds deposited
therein were not sufficient to cover the amount of the check;
3. Deceit or damage to the payee thereof.
QUESTION
X drew a check dated Jan. 1, 2018 which he issued in favor of A
as payment for previously rendered services. A then negotiated
the check to B for the purchase of goods, which B immediately
delivered. On April 3, 2018, B went to the drawee bank to have
the check encashed but the same was dishonored for
insufficiency of funds. A notified X and B of the dishonor on the
same day. Assuming X was not able to make payment within the
prescribed period from notice, X can be held liable for:

Anti-Bouncing Checks Estafa

A Yes Yes
B No No
C Yes No
D No Yes
QUESTION
X drew a check dated Jan. 1, 2018 which he issued in favor of A
as payment for previously rendered services. A then negotiated
the check to B for the purchase of goods, which B immediately
delivered. On April 3, 2018, B went to the drawee bank to have
the check encashed but the same was dishonored for
insufficiency of funds. A notified X and B of the dishonor on the
same day. Assuming X was not able to make payment within the
prescribed period from notice, X can be held liable for:

Anti-Bouncing Checks Estafa

A Yes Yes
B No No
C Yes No
D No Yes
QUESTION
Assuming A was not able to make payment within the prescribed
period from notice, A can be held liable for:

Anti-Bouncing Checks Estafa

A Yes Yes
B No No
C Yes No
D No Yes
QUESTION
Assuming A was not able to make payment within the prescribed
period from notice, A can be held liable for:

Anti-Bouncing Checks Estafa

A Yes Yes
B No No
C Yes No
D No Yes
END