What are the requisites for a negotiable note?

A Promissory note, to be negotiable , must conform to the following requirements:

1. it must be in writing and signed by the maker;
2. Must contain an unconditional promise 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 bearer

What are the requisites of a negotiable bill?

A bill of exchange, to be negotiable, must conform to the following requirements:
1. in writing and signed by the drawer
2. contain an unconditional; order to pay a sum certain in money
3. payable on demand or at a fixed or determinable future time
4. payable to order or bearer
5. the drawee must be named or otherwise indicated therein with reasonable
certainty

When is an instrument payable on demand?

In accordance with Sec. 7, a note is payable on demand:
1. When it is so expressed to be payable on demand or at sight or on
presentation;
2. when no time for payment is expressed;
3. when an instrument is issued, accepted or indorsed when overdue- as to the
party so issuing, accepting or indorsing, it is payable on demand.

When is an instrument payable at a fixed or determinable future time?

It is payable at a fixed time when a date is specified. But where the date is
given as “Dec. 2,” it is not fixed because the time of payment is not determinable as
the year is not given.
In accordance with Sec. 4, an instrument is payable at a determinable future time
when it is expressed to be payable-
1. at a fixed period “after date or sight; or
2. on or before a fixed or determinable future time specified therein; or
3. 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.

When is an instrument payable to order? To bearer?

In accordance with Sec. 9b, an instrument is payable to bearer when
1. it is expressed to be so payable;
2. it is payable to a specified person or bearer;
 3. it is payable to the order of a fictitious or non-existing person and this fact is
known to the maker or drawer;
4. when the name of the payee does not purport to be the name of any person;
5. when the only or last indorsement is an indorsement in blank

What is an escalation clause? A de-escalation clause?

An escalation clause is a stipulation in an agreement pertaining to a loan or
forbearance of money, goods or credits providing that the rate of interest agreed
upon may be increased in the event that the applicable maximum rate of interest, is
increased by law or by the Monetary Board. De-escalation clause is stipulation in
the agreement that the rate of interest agreed upon shall be reduced if the maximum
rate of interest is decreased by law or by the Monetary Board. The escalation clause
is valid if there is also a de-escalation clause in the agreement.

What are the requirements as regards payment of installments?

1. The amount of installment must be stated – (the sum payable for each
installment must not be uncertain. It can be ascertainable.)
2. The maturity date of each installment must be fixed or determinable.

What are the 2 steps in execution of NI?

 The mechanical act of writing the instrument completely and in accordance
with sec. 1, of NI; and
 The delivery of the instrument with the intention of giving effect to it.

What is a holder for value?

One who gives valuable consideration for an instrument issued or negotiated
to him is a holder for value.

What is an accommodation party?

An accommodation party is one who has signed the instrument as maker, drawer,
acceptor or indorser without receiving value therefore, and for the purpose of
lending his name to some other person. The requisites therefore are : (1) he must be
a party to the instrument, signing as maker, drawer, acceptor or indorser; (2) he
must not receive value therefore; and (3) he must sign for the purpose of lending his
name or credit.

1. Transfer- to convey property from one person to another;

2. Holder- the payee or indorsee of a bill or note who is in possession of it or the
bearer thereof (Sec. 191).

What is negotiation?
It is the transfer of an instrument form one person to another so as to constitute the
other the holder thereof.

What is the nature of indorsements?

Indorsement is the writing of the name of the indorser on the instrument with the
intent either in transfer the title to the same, or to strengthen the security to the
holder by assuming a contingent liability for its future payment, or both.

What is the effect of striking out indorsement?

(1) the indorser whose indorsement is struck out is relieved form liability
(secondary) on the instrument; and
(2) all subsequent indorsers are also relieved from their liability on the
instrument.
NOTE: conditional indorsements may not be struck out even if they are not
necessary to the title.
What are the rights of the transferee for value?
(1) the transferee acquires only the rights of the transferor, such that if a defense
is available against the transferee.
(2) The transferee has also the right to require the transferor to indorse the
instrument.

Who is a holder?
The holder is the person who is physically in possession of the instrument.

Sec. 52. What constitutes a holder in due course. - A holder in due course is a
holder who has taken the instrument under the following conditions:
(a) That it is complete and regular upon its face;
(b) 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;
(c) That he took it in good faith and for value;
 
 (d) 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.

What are the rights of a HIDC?

(1) he may sue on the instrument in his own (sec. 51);
(2) he may receive payment and if payment is in due course, the instrument
is discharged (sec.51);
(3) he holds the instrument free from any defect of title of prior parties;
(4) he holds the instrument free from defenses available to prior parties
among themselves; and
(5) he may enforce payment of the instrument for the full amount thereof
against all parties liable thereon.

What are the purposes of a notice of dishonor?

(1)to inform the parties secondarily liable that the maker or acceptor, as the
case may be has failed to meet his engagement;
(2) to advice such parties that they will be required to make payment.

What must the notice of dishonor contain?

(1) sufficient description of the instrument to identify it;
(2) a statement that it has been presented for payment or for acceptance, and that it
has been dishonored. (If protest is necessary, the notice must also contain a
statement that it has been protested); and
(3) a statement that the party giving notice to look for the party addressed for
payment.

Sec. 119. Instrument; how discharged. - A negotiable instrument is discharged:

(a) By payment in due course by or on behalf of the principal debtor;
(b) By payment in due course by the party accommodated, where
the instrument is made or accepted for his accommodation;
(c) By the intentional cancellation thereof by the holder;
(d) By any other act which will discharge a simple contract for the
payment of money;
(e) When the principal debtor becomes the holder of the instrument
at or after maturity in his own right.
Sec. 120. When persons secondarily liable on the instrument are discharged. - A
person secondarily liable on the instrument is discharged:
(a)By any act which discharges the instrument;
(b) By the intentional cancellation of his signature by the holder
(c) By the discharge of a prior party;
(d) By a valid tender or payment made by a prior party;
(e) By a release of the principal debtor unless the holder's right of
recourse against the party secondarily liable is expressly reserved;
(f) 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.

Sec. 125. What constitutes a material alteration. - Any alteration which changes:
(a)The date;
(b) The sum payable, either for principal or interest;
(c) The time or place of payment:
(d) The number or the relations of the parties;
(e) The medium or currency in which payment is to be made;
(f) Or which adds a place of payment where no place of payment
is specified, or any other change or addition which alters the
effect of the instrument in any respect, is a material alteration.

Sec. 129. Inland and foreign bills of exchange. - An inland bill of exchange is a
bill which is, or on its face purports to be, both drawn and payable within the
Philippines. Any other bill is a foreign bill. Unless the contrary appears on the
face of the bill, the holder may treat it as an inland bill.

Sec. 126. Bill of exchange, defined. - A bill of exchange is 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 to
bearer.

What are the requisites to perform a valid payment for honor?

1. The bill has been dishonored for non-payment
2. The bill has been protested for non-payment
3. Payment supra protest is made by any person, even a party thereto and as to form
4. the payment must be attested by notarial act appended to the protest, or form an
extension to it
5. The notarial act must be based on the declaration by the payer for honor or his
agent of his intention to pay the bill for honor and for whose honor he pays.

What is the procedure for payment for honor?

1. The payer or his agent goes to a notary public and declares his intention to pay
the bill and for whose honor he pays.
2. The notary then records the declaration in the protest or in a separate paper
attached to it.

What are the effects of payment for honor?

1. All parties subsequent to the party whose honor it is paid are discharged; and
2. The payer for honor is subrogated for, and succeeds to, both the rights and
duties of the holder as regards the party whose honor he pays and all parties
liable to the latter.

What are the rights of the rights of the payer for honor?
1. He acquires the rights of the holder (Sec. 175); and
2. He has also the right to receive the bill and the protest.
The purpose of (2) is to enable him to enforce his rights against those who are
liable to him by virtue of Sec. 175.

Sec. 185. Check, defined. - A check is a bill of exchange drawn on a bank

payable on demand. Except as herein otherwise provided, the provisions of this
Act applicable to a bill of exchange payable on demand apply to a check.
 
What are the requisites in order to discharge the drawer?
1. The check is not presented within a reasonable time after its issue;
2. The drawer suffers loss; and
3. The loss suffered by the drawer is attributable to the delay.