Atty D.

Questions:

FIRST MEETING

B is a prostitute, in exchange for a sexual favor, asked A for P10,000.

A only has P2,000 but the sexual favor was already consummated.
He gave a promissory note

I promise to pay B P8,000 (signed B)

B used the promissory note to pay C.

1. Is the note a negotiable instrument?

2. Who are liable C?

I promise to pay C or to order P8,000.

1. Is this a negotiable instrument?

2. Who are liable to C?

Promissory Note:

I promise to pay P20,000 to B with interest.

1. Is this a negotiable instrument?

2. What if it is an order instrument?

“I promise to pay B or to order P4,000 monthly installment beginning August 16, 2019?”

Is this a negotiable instrument?

 How many drawees are allowed?

“ I promise to pay B or C or oder P20,000 addressed to W and Y”

Is this a negotiable Instrument?

“I promise to pay B or order P20,000 or to deliver my only car”

Is this a negotiable Instrument?

If it is payable to order, and there are two or more payees, How can they effect negotiation?
If there are two or or more payees who may indorse?

Is delivery enough in an order instrument?

Is delivery enough for bearer instrument.

When is negotiation effected?

Notes: All of the examples above are not negotiable instrument because the example did not provide
that it was signed. Make sure to know the requirements under Section 1!

Without words of negotiation such as “to order” or “to beaerer” it becomes not negotiable.

Assignee v. Warrantty of Negotiation.

Section 1 is important. Sections 1-9 explains section 1.

Take note of Sections, 14, 15, 16, 23.

If there is conflict: Negotiable Instrument Law prevails and the civil code on Obligations and Contracts
will be supplicatory.

SECOND MEETING

First question:
May a holder not in due course enforce a personal defense?
• what if maturity date does not appear, how will he know?
• How can he be defrauded? By who? and how can it be done?
• what if the defect is for an illegal consideration? How do you collect

Second Example:

A to B, if B passes the Bar exam signed by the indorser. Is it negotiable?

• A is the maker gave an instrument to B (payee).

• B made a special indorsement to C
• C made a blank indorsement to D
• D delivered to E
• E delivered to F

Question
Who are liable if the instrument started as
1. An order instrument
2. A bearer instrument
NOTES:

Answer: E is not liable in both cases (ito kasi sagot ng most)

The last sentence of Section 65 regarding immediate parties presupposes that there is a breach of
warranty
• in the example there is no breach of warranty, so deemed that warranties are present

• E will only be liable if there is defect

1st (order instrument): the indorsement is necessary for it to be covered by the warrant
•if B and C did not indorse there is no holder
• indorsmeent is important

2nd (bearer instrument) ; the indorsement is not necessary.

• there is negotiation with or without indorsement
•if B delivered, C delivered, D delivered, is D a holder? Yes

Note:
• unless you become an irregular indorser - separate liability
•make sure you know the warranties
• know the different kinds of holder of value
• learn shelter rule

THIRD MEETING

 To Whom is a an accommodation party liable?

 Examples in the photo

FOURTH MEETING

 who are liable in procuration?

 In a bearer Instrument, who are liable?
 In an order instrument where the party affixes his signature prior to the issuance and was
negotiated by mere delivery who are liable?
 In Qualified Indorsement who are liable?
 In Restrictive Indorsement, what would be the liability to subsequent parties?
 Check Photo for example

FIFTH MEETING

 How do you reconcile the last paragraph of Section 7 (When an instrument is issued, accepted,
or indorsed when overdue, it is, as regards the person so issuing, accepting, or indorsing it,
 payable on demand) and Section 52 which provides that a holder in due course must have
become the holder of the instrument before it was overdue?

 What is the effect of incomplete indorsement (e.g., multiple indorsers need to indorse the
instrument)?

 Who is liable if an instrument with procuration is indorsed but the same is not done within the
authority of the agent?

 How do you negative personal liability under Sec 44?

 A issues a promissory note to B or his order who conditionally indorses the same to C who
then specially indorses the same to D. A disregards the condition and pays D. The condition is
not fulfilled. From whom can B collect the money?

 Sec 55 provides that the title of a person who negotiates an instrument is defective within the
meaning of the act when he negotiates it in breach of faith. What does breach of faith mean?

 Say the instrument is signed with procuration and the instrument is indorsed within the
authority of the agent, can a subsequent holder of the instrument be considered a holder in
due course even if he does not make an inquiry as regards the procuration?

 A issues an promissory note to B who qualifiedly indorses it to C who indorses it without

consideration to D who then qualifiedly indorses it to E who qualifiedly indorses it to F.
Assuming A dishonors the instrument may E be held liable if he knew that C indorsed without
consideration? (May the fact that C indorsed without consideration to D be considered as a
breach of the 4th warranty of E as a qualified indorser?)

 May a restrictive indorsee, in failure of the Primarily Liable party to pay, go after the persons
secondarily liable?

 Yung holder na nanakawan ng instrument(bearer) must inform the PPL about it otherwise
payment in good faith will discharge

 Renegotiation pag bumalik sa maker=confusion/merger if napunta sakanya at or after

maturity so di na niya pwede i renegotiate sa new hands. Otherwise pwede pa?

 Can a drawee bank, having paid to an innocent holder the amount of an uncertified, altered
check in GF and w/o negligence which contributed to the loss, recover from the person to
whom payment was made as for money paid by mistake? Otherwise stated, can a collecting
bank debit the amount of a payee (HDC) if a collecting bank returned the amount of the
altered check to the drawee bank?
NO.

 A draws a note where B is the payee, C stile the note negotiated it to D; D to C again, Will the
defect be cured, since it is C who become the payee again?
NO, otherwise we would be circumventing what the law prohibits which is to steal
 What if in an NI, the date placed therein was inexistent will it affect the negotiability as will it
be presumed as payable on demand?
June 31, 2020
I promise to pay A or order P1, 000, 10 days after date.
YES. It will be payable on demand.

 draws a note payable to bearer to P then P negotiated it by delivery to A then A to B then B to

C. If M refuses to pay the note, may C hold B liable for him to pay the note?
NO. Under sec 65 B doesn’t warrant the solvency of M.

 M draws a note payable to bearer to P then P negotiated to A then A to B then B to C, all were
negotiated by special indorsement and delivery. If D stole the instrument from C then forged
C’s signature and indorsed it specially to E, then E indorsed it specially to F. Who are liable to
F?
D the forger, and E the immediate transferor.