Commercial Law Summer Reviewer

ATENEO CENTRAL BAR OPERATIONS 2007

entrustee by virtue of such interest or having Negotiable Instruments vs. Non-Negotiable

given the entrustee liberty of sale or other Instruments (see Annex G)
disposition of the goods, documents or
instruments under the terms of the trust Negotiable Instruments vs. Negotiable
receipt transaction. Documents of Title (see Annex F)
2. Who bears risk of loss – Entrustee
3. Rights of a purchaser for value and in
good faith of the goods covered by the
Trust Receipt – He acquires said goods,
documents or instruments free from the PROMISSORY NOTE
entruster's security interest.
An unconditional promise to pay in writing made by
4. Novation of a trust agreement - Supreme
one person to another, signed by the maker,
Court ruled that a Memorandum of
engaging to pay on demand or a fixed determinable
Agreement entered into betweenthe
future time a sum certain in money to order or bearer.
bankentruster and entrustee extinguished the
When the note is drawn to maker’s own order, it is not
obligation under the existing trust receipt
complete until indorsed by him. (Sec. 184)
because the agreement did not only
reschedule the debts of the entrustee but it
provided principal conditions which are BILL OF EXCHANGE
incompatible with the trust agreement. Hence, An unconditional order in writing addressed by one
the liability for breach of the Memorandum of person to another, signed by the person giving it,
Agreement would be purely civil in nature and requiring the person to whom it is addressed to pay
no criminal liability under the Trust receipt on demand or at a fixed or determinable future time a
Law can be imposed. (Philippines Bank v. sum certain in money to order or to bearer. (Sec.
Alfredo T. Ong, GR No. 126)
133176, August 8, 2002)
CHECK
A bill of exchange drawn on a bank and payable on
demand. (Sec. 185)

NEGOTIABLE INSTRUMENTS
LAW

Promissory Note vs. Bill of Exchange

NEGOTIABLE INSTRUMENT
Written contracts for the payment of money; by its Promissory Note Bill of Exchange
form, intended as a substitute for money and intended
to pass from hand to hand, to give the holder in due Unconditional promise unconditional order
course the right to hold the same and collect the sum Involves 2 parties involves 3 parties (drawer,
due. (maker, payee) payee, drawee)
Maker primarily liable drawer only secondarily
CHARACTERISTICS OF NEGOTIABLE liable
Only 1 presentment - for generally 2 presentments -
INSTRUMENTS: QuickTime™ and a

TIFF (Uncompressed) decompressorare needed to see this picture.

payment for acceptance and for
payment
1. Negotiability - right of transferee to hold the
instrument and collect the sum due
Check vs. Bill of Exchange
2. Accumulation of secondary contracts -
CHECK BOE
instrument is negotiated from person to
person - always drawn upon a - may or may not be
bank or banker drawn against a bank

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- always payable on - may be payable on charged with the collection of its tax liabilities, such
demand demand or at a fixed or bank must be deemed to have assumed the risk of a
determinable future time possible misuse thereof, as it appears to have fallen
short of the diligence expected from it. It may still,
- not necessary that it be - necessary that it be however, pursue an action against the person
presented for acceptance presented for responsible or who may have unjustly benefited.
acceptance
- drawn on a deposit - not drawn on a deposit
- the death of a drawer of a - the death of the drawer Pabugais vs. Sahijwani, 423 SCRA 596 (2004)
Generally, a manager’s check is not legal tender and
check, with knowledge by of the ordinary bill of
the creditor may accept or refuse it. But, payment by
the banks, revokes the exchange does not check may be accepted as valid if no prompt
authority of the banker to revoke the authority of objection is made.
pay the banker to pay
- must be presented for - may be presented for 2. Crossed check
payment within a payment within a Though the NIL is silent as to crossed checks, courts
reasonable time after reasonable time after its can take judicial cognizance of the practice that a
its issue (6 months) last negotiation. check crossed with two parallel lines in the upper left
hand corner means that it can only be deposited and
not converted to cash. The effects of a crossed check
Promissory Note vs. Check thus relate to the mode of payment – meaning that
PN CHECK the drawer intends it to be only for deposit by the
there are two (2) parties, there are three (3) parties, rightful person, the named payee.
the maker and the payee the drawer, the drawee
bank and the payee Bataan Cigar vs. CA
A holder of crossed-checks is not obliged to inquire,
may be drawn against always drawn against a when he acquires them, as to purpose for which the
any person, not bank checks were issued. A payee who further negotiates
necessarily a bank cross-checks that he accepted from someone cannot
may be payable on always payable on demand be considered a holder in good faith (and thus not a
demand or at a fixed or HIDC) is not applicable to this case. Here, when the
determinable future time payee acquired the checks, he duly deposited them in
his bank account, and therefore, the purpose behind
a promise to pay An order to pay the crossing was satisfied by the payee.

Ngo vs. People, 434 SCRA 522 (2004)

TYPES OF CHECKS The law does not require the payee to be interested in
the obligation in consideration for which the check
1. Manager’s check - One drawn by the bank’s was issued. The cause or reason of issuance is
manager upon the bank itself; and it is similar to a inconsequential (in connection with BP 22) in
cashier’s check both as to effect and use. determining criminal liability.
[International Corporate Bank v Gueco 351 SCRA
516 (2001) Associated Bank v. Court of Appeals, 208 SCRA
465
BPI Family Savings Bank v Manikan, 395 SCRA The payee of crossed checks issued with the notation
373 (2003)] QuickTime™ and a
“for payee’s account only” can sue a collecting bank
By its peculiar character and general use in TIFF which allowed an unauthorized third person to deposit
(Uncompressed) decompressorare needed to see this picture. commerce, a
the checks in his own account and to withdraw the
manager’s check is regarded substantially to be as proceeds of the checks, because the proceeds of the
good as the money it represents checks belonged to the payee and the bank paid the
checks although the third person had no title to the
Consequently, when a bank allows the delivery of
checks.
a manager’s check to a person who is not directly

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become due; or
(d) With costs of collection or an attorney’s fee, in

case payment shall not be made at maturity.

EFFECT OF A CONDITIONAL PROMISE OR

ORDER
A promise or order should not depend on a contingent
REQUISITES OF A NEGOTIABLE INSTRUMENT event. If it is conditional, it is nonnegotiable.

Sec. 1. An instrument to be negotiable, must conform

to the following requirements: WHEN PROMISE IS UNCONDITIONAL
(a) It must be in writing and signed by the maker
or drawer; Sec 3. An unqualified order or promise to pay is
(b) Must contain an unconditional promise or unconditional within the meaning of this Act, though
order to pay a certain sum in money; coupled with —
(c) Must be payable on demand, or at a fixed or
determinable future time; (a) An indication of a particular fund out of which
(d) Must be payable to order or to bearer; and reimbursement is to be made, or a particular account
to be debited with the amount; or
Where the instrument is addressed to a drawee, he (b) A statement of the transaction which gives rise to
must be named or otherwise indicated therein with the instrument.
reasonable certainty.
is not unconditional.
HOW NEGOTIABILITY IS DETERMINED But an order or promise to pay out of a particular fund
1. By the provisions of the Negotiable
Instrument Law, particularly Section 1 WHAT CONSTITUTES DETERMINABLE FUTURE
thereof TIME
2. By considering the whole instrument
3. By what appears on the face of the Sec 4. An instrument is payable at a determinable
instrument and not elsewhere future time, within the meaning of this Act, which is
expressed to be payable —
NOTE: In determining whether the instrument is
negotiable, only the instrument itself and no other, (a) At a fixed period after date or sight; or
must be examined and compared with the (b) On or before a fixed or determinable future time
requirements stated in Sec. 1. If it appears on the specified therein; or
instrument that it lacks one of the requirements, it is (c) On or at a fixed period after the occurrence of a
not negotiable and the provisions of the NIL do not specified event, which is certain to happen, though the
govern the instrument. The requirement lacking time of happening be uncertain.
cannot be supplied by using a separate instrument in
which that requirement appears. An instrument payable upon a contingency is not
negotiable, and the happening of the event does not
WHEN A SUM IS CERTAIN cure the defect.
Sec 2. The sum payable is a sum certain within the
meaning of this Act, although it is to be paid: WHEN SOME OTHER ACT IS REQUIRED OTHER
(a) With interest; or THAN PAYMENT OF MONEY IN AN INSTRUMENT
(b) By stated installments; or TIFF (Uncompressed)
decompressorQuickTime™ and a
Sec 5. An instrument which contains an order or
(c) By stated installments, with a provision that, are
promise to do any act in addition to the payment of
needed to see this picture.
upon default in payment of any money is not negotiable. But the negotiable character
installment or of interest, the whole shall of an instrument otherwise negotiable is not affected

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by a provision which — (b) In which no time for payment is expressed.

Where an instrument is issued, accepted, or indorsed
(a) Authorizes the sale of collateral securities in
when overdue, it is, as regards the person so issuing,
case the instrument be not paid at maturity; or
(b) Authorizes a confession of judgment if the accepting, or indorsing it, payable on demand.
instrument be not paid at maturity; or
WHEN AN INSTRUMENT IS PAYABLE TO ORDER
(c) Waives the benefit of any law intended for the
An instrument is payable to order when it is drawn
advantage or protection of the obligor; or
payable to the order of a specified person or to a
(d) Gives the holder an election to require something
specified person or his order.
to be done in lieu of payment of money.

But nothing in this section shall validate any provision

or stipulation otherwise illegal. Notes on Section 5:
1. Limitation on the provision: it cannot require
something illegal. FOR WHOSE ORDER AN INSTRUMENT CAN BE
2. There are two kinds of judgments by DRAWN
confession:
a. cognovit actionem Sec. 8 The instrument is payable to order where it is
b. relicta verificatione drawn payable to the order of a specified person or to
3. Confessions of judgment in the Philippines him or his order. It may be drawn payable to the
order of —
are void as against public policy.
4. If the choice lies with the debtor, the
(a) A payee who is not maker, drawer, or drawee; or
instrument is rendered non-negotiable.
(b) The drawer or maker; or
INSTANCES THAT DO NOT AFFECT THE (c) The drawee; or
VALIDITY AND NEGOTIABILITY OF AN (d) Two or more payees jointly; or
INSTRUMENT (e) One or some of several payees; or
(f) The holder of an office for the time being.
Sec 6. The validity and negotiable character of an
instrument are not affected by the fact that — Where the instrument is payable to order the payee
must be named or otherwise indicated therein with
(a) It is not dated; or reasonable certainty.
(b) Does not specify the value given, or that any
value has been given therefor; or INSTRUMENTS PAYABLE TO BEARER
(c) Does not specify the place where it is drawn or Sec. 9 The instrument is payable to bearer —
the place where it is payable; or
(d) Bears a seal; or (a) When it is expressed to be so payable; or
(e) Designates particular kind of current money in (b) When it is payable to a person named therein or
which payment is to be made. bearer; or
(c) When it is payable to the order of a fictitious or
But nothing in this section shall alter or repeal any non-existing person, and such fact was known to the
person making it so payable; or
statute requiring in certain cases the nature of the
(d) When the name of the payee does not purport
consideration to be stated in the instrument.
to be the name of any person; or
(e) When the only or last indorsement is an
WHEN AN INSTRUMENT IS PAYABLE UPON indorsement in blank.
DEMAND
Sec. 7 An instrument is payable on demand — INSTANCES WHEN A DATE MAY BE INSERTED
IN AN INSTRUMENT
(a) Where it is expressed to be payable on
demand, or at sight, or on presentation; or TIFF (Uncompressed)
decompressorQuickTime™ and a Sec. 13. Where an instrument expressed to be
are needed to see this picture.
payable at a fixed period after date is issued undated,

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or where the acceptance of an instrument payable at a. Holder has prima facie authority to fill up
QuickTime™ and a TIFF (Uncompressed) decompressor the
a fixed period after sight is undated, any holder may
blanks therein. are needed to see this picture.
insert therein the true date of issue or acceptance,
and the instrument shall be payable accordingly. The b. It must be filled up strictly in accordance
insertion of a wrong date does not avoid the with the authority given and within a
instrument in the hands of a subsequent holder in reasonable time.
due course; but as to him, the date so inserted is to c. If negotiated to a holder in due course, it
is valid and effectual for all purposes as
be regarded as the true date.
though it was filled up strictly in
accordance with the authority given and
EFFECT WHEN A DATE IS INSERTED IN AN
within reasonable time. (Sec. 14)
INSTRUMENT
A holder may insert the true date of issuance or
acceptance, the insertion of a wrong date does not 2. Where only a signature on a blank paper
avoid the instrument in the hands of a subsequent was delivered:
holder in due course. As regards to the holder in due a. It was delivered by the person making it
course, the date inserted (even if it is a wrong date) is in order that it may be converted into a
regarded as the true date. negotiable instrument
b. The holder has prima facie authority to fill
it up as such for any amount. (Sec. 14)
DEFICIENCIES THAT DO NOT AFFECT THE
WHEN AN INSTRUMENT IS INCOMPLETE AND
RIGHTS OF A SUBSEQUENT HOLDER IN DUE
COURSE UNDELIVERED
1. Incomplete but delivered instrument (Sec.
14) Sec. 15. Where an incomplete instrument has not
2. Complete but undelivered (Sec. 16) been delivered, it will not, if completed and negotiated
3. Complete and delivered issued without without authority, be a valid contract in the hands of
consideration or a consideration consisting of any holder, as against any person whose signature
a promise which was not fulfilled (Sec 28) was placed thereon before delivery.

DEFICIENCIES/ABNORMALITIES THAT AFFECT Note: It is a real defense. It can be interposed

THE RIGHTS OF A HOLDER IN DUE COURSE against a holder in due course. Delivery is not
1. Incomplete and undelivered instrument (Sec. conclusively presumed where the instrument is
15) incomplete. Defense of the maker is to prove
2. Maker/drawer’s signature forged (Sec. 23) nondelivery of the incomplete instrument.

Republic Bank v. Court of Appeals, 196 SCRA 100 WHEN AN INSTRUMENT IS COMPLETE BUT
Where the amount of the check was altered by UNDELIVERED
increasing it but the drawee bank failed to return it to
the collecting bank within 24 hours, the collecting Sec. 16. Every contract on a negotiable instrument is
bank is absolved from liability for the drawee bank incomplete and revocable until delivery of the
should detect the alteration. instrument for the purpose of giving effect thereto. As
between immediate parties, and as regards a remote
PNB v. Court of Appeals, 256 SCRA 491 party other than a holder in due course, the delivery,
The alteration of a serial number of a check is not in order to be effectual, must be made either by or
material and does not entitle the drawee bank which under the authority of the party making, drawing,
paid it to recover the payment. 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
WHEN INSTRUMENTS ARE INCOMPLETE BUT the purpose of transferring the property in the
DELIVERED instrument. But where the instrument is in the hands
1. Where an instrument is wanting in any of a holder in due course, a valid delivery thereof by
material particular: all parties prior to him so as to make them liable to

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him is conclusively presumed. And where the duly authorized; but the mere addition of words
instrument is no longer in the possession of a party describing him as an agent, or as filling a
whose signature appears thereon, a valid and representative character, without disclosing his
intentional delivery by him is presumed until the principal, does not exempt him from personal liability.
contrary is proved.
SIGNATURE BY PROCURATIONQuickTime™ and a -
Rules On Delivery Of Negotiable Instruments operates as
1. Delivery is essential to the validity of any notice that the agent has a limited authority to sign.
TIFF (Uncompressed) decompressorare needed to see this picture.
negotiable instrument
2. As between immediate parties or those in like Effects:
cases, delivery must be with intention of 1. The principal is only bound if the agent acted
passing title within the limits of the authority given
3. An instrument signed but not completed by 2. The person who takes the instrument is
the drawer or maker and retained by him is bound to inquire into the extent and nature of
invalid as to him for want of delivery even in the authority given. (Sec. 21)
the hands of a holder in due course
4. But there is prima facie presumption of LIABILITY OF INFANTS AND CORPORATIONS
delivery of an instrument signed but not FOR THEIR INDORSEMENT OR ASSIGNMENT
completed by the drawer or maker and Sec. 22. The indorsement or assignment of the
retained by him if it is in the hands of a holder instrument by a corporation or by an infant passes the
in due course. This may be rebutted by proof property therein, notwithstanding that from want of
of non-delivery. capacity the corporation or infant may incur no liability
5. An instrument entrusted to another who thereon.
wrongfully completes it and negotiates it to a
holder in due course, delivery to the agent or EFFECT OF A FORGED SIGNATURE OR ONE
custodian is sufficient delivery to bind the MADE WITHOUT AUTHORITY
maker or drawer.
6. If an instrument is completed and is found in Sec. 23. When a signature is forged or made without
the possession of another, there is prima the authority of the person whose signature it
facie evidence of delivery and if it be a holder purports to be, it is wholly inoperative, and no right to
in due course, there is conclusive retain the instrument, or to give a discharge therefor,
presumption of delivery. or to enforce payment thereof against any party
7. Delivery may be conditional or for a special thereto, can be acquired through or under such
purpose but such do not affect the rights of a signature, unless the party against whom it is sought
holder in due course.
to enforce such right is precluded from setting up the
forgery or want of authority.
PERSONS LIABLE IN AN INSTRUMENT Notes:
General rule: A person whose signature does not
appear on the instrument is not liable. 1. Section 23 applies only to forged
Exception: signatures or signatures made without
1. One who signs in a trade or assumed name authority
2. Alterations such as to amounts or the like
(Sec. 18)
fall under section 124
2. A duly authorized agent (Sec. 19)
3. Forms of forgery are a) fraud in factum;
3. A forger (Sec. 23)
b) duress amounting to fraud; c)
fraudulent impersonation
WHEN AN AGENT IS LIABLE ON THE
4. Only the signature forged or made
INSTRUMENT
without authority is inoperative, the
instrument or other signatures which are
Sec. 20. Where the instrument contains or a person
genuine are not affected
adds to his signature words indicating that he signs
for or on behalf of a principal, or in a representative
capacity, he is not liable on the instrument if he was

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5. The instrument can be enforced by 3. The drawee bank can recover from the
holders to whose title the forged collecting bank
signature is not necessary 4. The payee can recover from the drawer
6. Persons who are precluded from setting 5. The payee can recover from the recipient of
up the forgery are a) those who warrant the payment, such as the collecting bank
or admit the genuineness of the signature 6. The payee cannot collect from the drawee
b) those who are estopped. bank
7. Persons who are precluded by warranting 7. The collecting bank bears the loss but can
are: a) indorsers; b) persons negotiating recover from the person to whom it paid
by delivery; c) acceptors. 8. If payable to bearer, the rules are the same
8. drawee bank is conclusively presumed to as in PN.
know the signature of its drawer 9. If the drawee has accepted the bill, the
9. if endorser’s signature is forged, loss will drawee bears the loss and his remedy is to
be borne by the forger and parties QuickTime™ and a

subsequent thereto go after the forger TIFF (Uncompressed) decompressorare needed

10. drawee bank is not conclusively to see this picture.

presumed to know the signature of the 10. If the drawee has not accepted the bill but has
indorser. The responsibility falls on the paid it, the drawee cannot recover from the
bank which last guaranteed the drawer or the recipient of the proceeds,
indorsement and not the drawee bank. absent any act of negligence on their part.
11. Where the payee’s signature is forged,
payments made by the drawee bank to LIABILITY OF BANK FOR ALLOWING PAYMENT
the collecting bank are ineffective. No ON CHECKS WHERE THE DRAWER’S
debtor/creditor relationship is created. An SIGNATURE IS FORGED
agency to collect is created between the
person depositing and the collecting Bank of P.I. vs. Casa Montessori Internationale,
bank. The drawee bank may recover 430 SCRA 261 (2004]
from collecting bank who may, in turn, Forgery is the counterfeiting of any writing, consisting
recover from the person depositing. of the signing of another’s name with intent to
defraud, is forgery.
Rules On Liabilities Of Parties On A Forged The bank which allows the payment on a check where
Instrument the signature is forged is liable to the depositor-
In a PN drawer. When one of two persons suffers the
1. A party whose indorsement is forged on a wrongful act of a third person, he whose negligence
note payable to order and all parties prior to was the proximate cause of the loss must bear the
him including the maker cannot be held liable loss. Pursuant to its prime duty to ascertain well the
by any holder genuineness of the signatures of its clientdepositors,
2. A party whose indorsement is forged on a the drawee-bank is expected to use reasonable
note originally payable to bearer and all business prudence. In the performance of that
parties prior to him including the maker may obligation, it is bound by its internal banking rules and
be held liable by a holder in due course regulation that form part of the contract it enters into
provided that it was mechanically complete with its depositors.
before the forgery A drawee bank must restore to the account of the
3. A maker whose signature was forged drawer the amounts of checks on which the signature
cannot be held liable by any holder of its president was forged even of the forger was the
independent auditor of the drawer, who was in charge
of reconciling the bank statements with the records of
In a BOE
the drawer.
1. The drawer’s account cannot be charged by
the drawee where the drawee paid
2. The drawer has no right to recover from the Astro-Electronics Corp. vs. Philguarantee, 411
collecting bank SCRA 462 (2003)
The Pres is personally liable. In signing his name
apart from being the Pres., he became a co-maker.

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Persons who write their names on the fact of PNs are to that time.
makers. Sec. 28. Absence or failure of consideration is matter
of defense as against any person not a holder in due
Metropolitan Waterworks & Sewerage System v. course; and partial failure of consideration is a
Court of Appeals, 143 SCRA 20 defense pro tanto, whether the failure is an
Where a depositor who was allowed to print its ascertained and liquidated amount or otherwise.
checks privately adopted no security measures in the Notes:
printing of the checks, 23 checks with forged 1. Absence of consideration is where no
signatures of the authorized signatories were consideration was intended to pass.
deposited over a period of three months, and the 2. Failure of consideration implies that
fraud was not discovered because of the failure of the consideration was intended but that it failed to
depositor to reconcile the bank statements with its
pass
records, the depositor must bear the loss because of
its negligence. 3. The defense of want of consideration is TIFF
(Uncompressed) decompressorQuickTime™ and a ineffective
against a holder in due course are needed to see this picture.
Philippine National Bank v. Court of Appeals, 25
SCRA 693 4. A drawee who accepts the bill cannot allege
A drawee bank which paid a check on which the want of consideration against the drawer
signature of the drawer had been forged cannot
recover the payment from the collecting bank, Yang vs. CA, 409 SCRA 159 (2003)
because payment implies acceptance and an He who posits that there was no consideration, is
acceptor admits the genuineness of the signature of obliged to present convincing evidence to overthrow
the drawer. the presumption that every Negotiable Instrument is
acquired by every party for value.
Associated Bank v. Court of Appeals, 252 SCRA
620
While a drawee bank which paid several checks Samson v. Court of Appeals, 402 SCRA 348 Since
payable to order with forged endorsements can consideration is presumed, the maker is liable to pay
recover the payment from the collecting bank under a negotiable promissory note.
because the forged endorsement is inoperative, the
drawer must share one-half of the loss where the Villaluz v. Court of Appeals, 278 SCRA 540
drawer substantially contributed to the loss by Since a check which was dishonored for lack of funds
continuing to release the check to the forger although is presumed to have been issued for valuable
it knew the forger was no longer the cashier of the consideration. The drawer should be ordered to pay
drawer. its value if he failed to rebut the presumption.

Banco de Oro Savings & Mortgage Bank v. ACCOMMODATION PARTY

Equitable banking Corporation, 157 SCRA 188 An accommodation party is one who signs the
Where the endorsements on a check presented by a instrument as maker, drawer, acceptor, or indorser
collecting bank for clearing are forged, the drawee without receiving value for it and for the purpose of
bank can recover the payment, for it is the duty of the lending his name to some other person.
collecting bank to see to it that the endorsements are
genuine.

CONSIDERATION LIABILITY OF AN ACCOMMODATION PARTY

Sec. 24. Every negotiable instrument is deemed Sec. 29. An accommodation party is one who has
prima facie to have been issued for a valuable signed the instrument as maker, drawer, acceptor, or
consideration; and every person whose signature indorser, without receiving value therefor, and for the
appears thereon to have become a party thereto for purpose of lending his name to some other person.
value. Such a person is liable on the instrument to a holder
Sec. 26. Where value has at any time been given for for value, notwithstanding such holder at the time of
the instrument, the holder is deemed a holder for taking the instrument knew him to be only an
value in respect to all parties who became such prior

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accommodation party. 2. Blank (Sec. 35)

Notes: 3. Restrictive (Sec. 36)
1. The accommodated party cannot recover 4. Qualified (Sec. 38)
from the accommodation party 5. Conditional (Sec. 39)
2. Want of consideration cannot be interposed
by the accommodation party
3. An accommodation maker may seek EFFECTS OF INDORSING AN INSTRUMENT
reimbursement from a co-maker even in the ORIGINALLY PAYABLE TO BEARER
absence of any provision in the NIL; the
deficiency is supplied by the New Civil Code. Sec. 40. Where an instrument, payable to bearer, is
4. He may do this even without first proceeding indorsed specially, it may nevertheless be further
against the debtor provided: negotiated by delivery; but the person indorsing
a. He paid by virtue of judicial demand specially is liable as indorser to only such holders as
b. Principal debtor is insolvent make title through his indorsement.

Prudencio v. Court of Appeals, 143 SCRA 7 To be EFFECTS WHEN A HOLDER STRIKES OUT AN TIFF
entitled to recover from an accommodation party, the (Uncompressed) decompressorQuickTime™ and a INDORSEMENT, WHICH
holder of a negotiable instrument must be a holder in IS NOT NECESSARY TO are needed to see this picture.
due course except for the notice of want of
consideration. HIS TITLE

Caneda v. Court of Appeals, 181 SCRA 762 Sec. 48. The holder may at any time strike out any
A party who signed a promissory note as indorsement, which is not necessary to his title. The
accommodation maker in favor of the payees, who indorser whose indorsement is struck out, and all
then indorsed it to a financing company, cannot raise indorsers subsequent to him, are thereby relieved
the defense that he did not receive any value but is from liability on the instrument.
entitled to reimbursement from the party
accommodated.

People v. Maniego, 148 SCRA 30 EFFECTS OF A TRANSFER

Where a party indorsed several checks as WITHOUT ENDORSEMENT:
accommodation endorser and the checks were Sec. 49. Where the holder of an instrument payable
dishonored for lack of funds, she is liable to the holder to his order transfers it for value without indorsing it,
for the payment of the checks. the transfer vests in the transferee such title as the
transferor had therein, and the transferee acquires, in
WHEN AN INSTRUMENT IS NEGOTIATED addition, the right to have the indorsement of the
Sec. 30. An instrument is negotiated when it is transferor. But for the purpose of determining
transferred from one person to another in such whether the transferee is a holder in due course, the
manner as to constitute the transferee the holder negotiation takes effect as of the time when the
thereof. If payable to bearer, it is negotiated by indorsement is actually made.
delivery; if payable to order, it is negotiated by the
indorsement of the holder completed by delivery. RIGHTS OF A HOLDER
Sec. 51. The holder of a negotiable instrument may
REQUISITES OF A VALID INDORSEMENT Sec. 31. sue thereon in his own name; and payment to him in
The indorsement must be written on the instrument due course discharges the instrument.
itself or upon a paper attached thereto. The signature
of the indorser, without additional words, is a REQUISITES FOR A HOLDER IN DUE COURSE
sufficient indorsement. (HDC)
Sec. 52. A holder in due course is a holder who has
KINDS OF INDORSEMENTS taken the instrument under the following conditions:
1. Special (Sec. 34)

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(a) That it is complete and regular upon its

face; Personal Defenses Real Defenses
(b) That he became the holder of it before 1. absence or failure of Alteration
it was overdue, and without notice that it consideration
had been previously dishonored, if such 2. want of delivery of Want of delivery of
was the fact; (c) That he took it in good complete instrument incomplete instrument
faith and for value; 3. insertion of wrong Duress amounting to
(d) That at the time it was negotiated to him he had date where payable at a forgery
no notice of any infirmity in the instrument or defect in fixed period after date
the title of the person negotiating it. and issued undated; or at
Notes: a fixed period after sight
1. Every holder is presumed to be a HDC (Sec. and acceptance is
59) undated
2. The person who questions such has the 4. filling up the blanks Fraud in factum or in esse
burden of proof to prove otherwise if one of contrary to authority contractus
the requisites are lacking, the holder is not given or not within
HDC reasonable time
3. An instrument is considered complete and 5. fraud in inducement Minority
regular on its face if: a) the omission is
6. acquisition of the Marriage in case of a wife
immaterial; b) the alteration on the instrument instrument by force,
was not apparent on its face kTime™ and a
duress or fear TIFF (UncompreQuicssed) decompressor
4. An instrument is overdue after the date of
7. acquisition of the are neededo see this picture.
maturity. t Insanity where the insane
5. On the date of maturity, the instrument is not person has a guardian
overdue and the holder is a HDC instrument by unlawful
appointed by the court
6. Acquisition of the transferee or indorsee must means
be in good faith 8. acquisition of the Ultra vires acts of a
7. Good faith means the lack of knowledge or instrument for an illegal corporation where its
notice of defect or infirmity consideration charter or by statue, it is
8. A holder is not a HDC where an instrument prohibited from issuing
payable on demand is negotiated at an commercial paper
unreasonable length of time after its issue 9. negotiation in breach Want of authority of agent
(Sec. 53) of faith

10. negotiation under Execution of instrument

RIGHTS OF A HOLDER IN DUE COURSE
circumstances between public enemies
Sec. 57. A holder in due course holds the instrument
amounting to fraud
free from any defect of title of prior parties, and free
11. Mistake Illegality of contract made
from defenses available to prior parties among
by statue
themselves, and may enforce payment of the
12. intoxication Forgery
instrument for the full amount thereof against all
13. ultra vires acts of
parties liable thereon.
corporations
14. want of authority of the
Notes:
agent where he has
1. Personal or equitable defenses are those
apparent authority
which grow out of the agreement or conduct
15. illegality of contract
of a particular person in regard to the
where form or
instrument which renders it inequitable for him
through legal title to enforce it. Can be set up consideration is illegal
against holders not HDC 16. insanity where there is
2. Legal or real defenses are those which attach no notice of insanity
to the instrument itself and can be set up
against the whole world, including a HDC. WHEN SUBJECT TO ORIGINAL DEFENSES

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although the check was already due, is not a holder in

Sec. 58 In the hands of any holder other than a due course and cannot recover from the drawer in
holder in due course, a negotiable instrument is case the check is dishonored.
subject to the same defenses as if it were
nonnegotiable. But a holder who derives his title State Investment House v. Intermediate Appellate
through a holder in due course, and who is not Court, 175 SCRA 310
himself a party to any fraud or illegality affecting the Where the postdated checks issued by the drawer as
instrument, has all the rights of such former holder in a loan to the payee were crossed, were indorsed by
respect of all parties prior to the latter. the payee to an investment house and were
dishonored for lack of funds, the investment house
cannot hold the drawer liable, because it is not a
holder in due course. Since the checks were crossed
RIGHTS OF A HOLDER NOT A HDC
and could only be deposited, it should have
1. may sue in his own name
ascertained the title to the check and the nature of the
2. may receive payment and if it is in due
possession by the payee. If it failed to do so, it is not
course, the instrument is discharged a holder in good faith. Hence, if the issuance of the
3. holds the instrument subject to the same check was subject to the condition that the payee
defenses as if it were non-negotiable would deposit funds for the check and failed to do so,
4. if he derives his title through a HDC and is not the drawer can raise this defense.
a party to any fraud or illegality thereto, has
all the rights of such HDC
State Investment House, Inc. v. Court of Appeals,
217 SCRA 32
WHO IS A HOLDER IN DUE COURSE
A drawer who issued two checks as security for
Sec. 59. Every holder is deemed prima facie to be a jewelry to be sold by the drawer is liable to an
holder in due course; but when it is shown that the endorsee to whom the payee negotiated the checks
title of any person who has negotiated the instrument even if the drawer returned the pieces of jewelry to
was defective, the burden is on the holder to prove the payee, since the payee is presumed to be a TIFF
that he or some person under whom he claims (Uncompressed) decompressor
QuickTime™ and a
holder in due course and
acquired the title as holder in due course. But the the drawer cannot invoke are needed to see this picture. want of
last-mentioned rule does not apply in favor of a party consideration between the drawer and the payee as a
who became bound on the instrument prior to the defense.
acquisition of such defective title.
LIABILITIES OF A MAKER
Sec. 60. The maker of a negotiable instrument by
making it engages that he will pay it according to its
tenor, and admits the existence of the payee and his
then capacity to indorse.
Yang vs. CA, 409 SCRA 159 (2003)
Every holder is presumed to be a HDC. Also, a Notes:
holder is not obliged to show that there was valuable 1. A maker’s liability is
consideration, since the same is presumed. He does primarily and unconditional
not also have to show that he made the 2. One who has signed as such is presumed to
aforementioned inquiry. Absence the showing of a have acted with care and to have signed with
circumstance that should have put the holder into full knowledge of its contents, unless fraud is
such an inquiry, the failure to inquire is no tantamount proved
to bad faith. 3. The payee’s interest is only to see to it that
the note is paid according to its terms
Banco Atlantico v. Auditor General, 81 SCRA 335 4. When two or more makers sign jointly, each is
A collecting bank which allowed the depositor to individually liable for the full amount even if
withdraw the proceeds of a check although the check one did not receive the value given
had not been cleared and was told by the depositor 5. The maker is precluded from setting up the
not to present the check for payment until a later date defense that a) the payee is fictional, b) that

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the payee was insane, a minor or a (a) That the instrument is genuine and in all respects
corporation acting ultra vires. what it purports to be; (b) That he has a good title to
it;
LIABILITY OF A DRAWER (c) That all prior parties had capacity to contract; (d)
A drawer is secondarily liable. By drawing the That he has no knowledge of any fact which would
instrument, the drawer: impair the validity of the instrument or render it
1. Admits the existence of the payee, valueless.
2. The capacity of such payee to indorse
3. Engages that on due presentment, the But when the negotiation is by delivery only, the
instrument will be accepted or paid or both warranty extends in favor of no holder other than the
according to its tenor. immediate transferee.

Notes: The provisions of subdivision (c) of this section do not

1. If the instrument is dishonored, and the apply to persons negotiating public or corporation
necessary proceedings on dishonor duly securities, other than bills and notes.
taken Notes:
a. The drawer will pay the amount thereof to 1. A qualified indorser is one who indorses
the holder without recourse
b. Will pay to any subsequent indorser who 2. Recourse - resort to a person secondarily
may be compelled to pay it. (Sec. 61) liable after default of person primarily liable
2. A drawer may insert an express stipulation to 3. A qualified indorser cannot raise the defense
negative or limit his liability of a) forgery b) defect of his title or that it is
void c) the incapacity of the maker, drawer or
ACCEPTOR - By accepting the instrument, an previous indorsers.
acceptor: 4. A qualified indorsement makes the indorser
1. Engages that he will pay according to the mere assignor of title of instrument, relieves
tenor of his acceptance him of general obligation to pay if instrument
2. Admits the existence of the drawer, the is dishonored, but he is still liable for the
genuineness of his signature and his capacity warranties arising from instrument only up to
and authority to draw the instrument warranties of general indorser TIFF (Uncompressed)
decompressorQuickTime™ and a
3. The existence of the payee and his then 5. The warranty is to the capacity of prior are needed to
capacity indorse see this picture.
parties at the time the instrument was
negotiated. Subsequent incapacity does not
IRREGULAR INDORSER - a person not otherwise a breach the warranty.
party to an instrument places his signature in blank 6. Lack of knowledge of the indorser as to any
before delivery is liable as an indorser in the following fact that would impair the validity or the value
manner: of the instrument must be subsisting all
1. If payable to order of a third person – liable to throughout.
the payee and to all subsequent parties 7. A person Negotiating by Delivery warrants
2. If payable to order of the maker or drawer – the same as those of qualified indorser and
liable to all parties subsequent to the maker extends to immediate transferees only
or drawer
3. If payable to bearer – liable to all parties WARRANTIES OF A GENERAL INDORSER
subsequent to the maker or drawer Sec. 66. Every indorser who indorses without
4. If signs for an accommodation party – liable to qualification warrants, to all subsequent holders in
all parties subsequent to the payee (Sec. due course —
64)
(a) The matters and things mentioned in
WARRANTIES AND ITS LIMITATIONS subdivisions (a), (b), and (c) of the next preceding
Sec. 65. Every person negotiating an instrument by section; and
delivery or by a qualified indorsement warrants — (b) That the instrument is at the time of his
indorsement valid and subsisting.

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4. Presentment is necessary to charge persons

And, in addition, he engages that on due secondarily liable otherwise they are
presentment, it shall be accepted or paid, or both, as discharged
the case may be, according to its tenor, and that if it 5. Acts needed to charge persons secondarily
be dishonored, and the necessary proceedings on liable: a) presentment for
dishonor be duly taken, he will pay the amount payment/acceptance; b) dishonor by
thereof to the holder, or to any subsequent indorser nonpayment/non-acceptance; c) notice of
who may be compelled to pay it. dishonor to secondary parties
6. Acts needed to charge persons secondarily
Notes: liable in other cases: a) protest for
1. The indorser under Section 66 warrants the nonpayment by the drawee; b) protest for
solvency of a prior party nonpayment by the acceptor for honor
2. The indorser warrants that the instrument is
valid and subsisting regardless of whether he REQUISITES FOR PROPER PRESENTMENT
is ignorant of that fact or not. Sec. 72. Presentment for payment, to be sufficient,
3. Warranties extend in favor of a) a HDC b) must be made —
persons who derive their title from HDC c)
immediate transferees even if not HDC (a) By the holder, or by some person authorized to
4. The indorser does not warrant the receive payment on his behalf;
genuineness of the drawer’s signature (b) At a reasonable hour on a business day;
5. General indorser is only secondarily liable (c) At a proper place as herein defined;
(d) To the person primarily liable on the instrument,
or if he is absent or inaccessible, to any person found
PRESENTMENT FOR PAYMENT at the place where the presentment is made.
Sec. 70. Presentment for payment is not necessary
in order to charge the person primarily liable on the
instrument; but if the instrument is, by its terms,
payable at a special place, and he is able and willing If the instrument is payable on demand:
to pay it there at maturity, such ability and willingness 1. Presentment must be made
are equivalent to a tender of payment upon his part. within reasonable time after issue (if a note)
But, except as herein otherwise provided, 2. Presentment QuickTime™ and amust be

presentment for payment is necessary in order to made within

charge the drawer and indorsers. reasonable time after last negotiation (if a TIFF
Notes: (Uncompressed) decompressorare needed to see this picture. bill)

PRESENMENT FOR PAYMENT – production of Notes:

a BOE to the drawee for his acceptance, or to a
drawee or acceptor for payment. Also 1. Presentment not required to charge the
presentment of a PN to the party liable for drawer:
payment of the same. a. He has no right to expect
b. He has no right to require
1. It consists of: a) a personal demand for c. That the drawee or acceptor will pay (Sec
payment at a proper place; and, b) the bill or 79)
note must be ready to be exhibited if required 2. Presentment not required to charge the
and surrendered upon payment. indorser where:
2. Parties primarily liable – persons by the terms a. The instrument was made or accepted for
of the instrument are absolutely required to his accommodation
pay the same. E.g. maker and acceptors. b. He has no reason to expect that the
They can be sued directly. instrument will be paid if presented (Sec.
3. If payable at the special place, and the person 80)
liable is willing to pay there at maturity, such 3. Summary of rules as to presentment for
willingness and ability is equivalent to tender payment:
of payment.

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a. Presentment not necessary to charge

persons primarily liable Sec. 96. The notice may be in writing or merely oral
b. Necessary to charge persons secondarily and may be given in any terms which sufficiently
liable identify the instrument and indicate that it has been
Except: dishonored by non-acceptance or non-payment. It
i. The drawer under Sec. 79 may in all cases be given by delivering it personally
ii. The indorser under Sec. 80 or through the mails
4. When excused under Sec. 82
a. After due diligence, presentment cannot WHEN NOTICE CAN BE WAIVED
be made Sec. 109. Notice of dishonor may be waived, either
b. Presentment is waived before the time of giving notice has arrived or after
c. The drawee is a fictitious person the omission to give due notice, and the waiver may
d. When the instrument has been be express or implied.
dishonored by non-acceptance under
Sec. 83
Notes:
5. How dishonored by non-acceptance:
a. The instrument was duly presented but 1. Protest may be waived. It is also deemed a
payment is refused or cannot be waiver of presentment and notice of dishonor
obtained (Sec. 111)
b. Presentment is excused 2. Where notice is waived, presentment is not
and the instrument is overdue waived
and unpaid (Sec. 3. Where presentment is waived, notice is also
83) waived
6. Effects of dishonor by non-payment: 4. Where protest is waived, notice and
a. An immediate right of recourse to all presentment is waived
parties secondarily liable accrues to the
holder. (Sec. 84) Notice of Dishonor - given by the holder to the
parties secondarily liable, drawer and each indorser,
REQUISITES OF A PAYMENT IN DUE COURSE that the instrument was dishonored by
nonacceptance or non-payment by the
Sec. 88. Payment is made in due course when it is
drawee/maker
made at or after the maturity of the instrument to the
holder thereof in good faith and without notice that his
General rule: Any drawer or indorser to whom such
title is defective.
notice is not given is discharged.
TO WHOM A NOTICE OF DISHONOR MAY BE Exceptions:
GIVEN 1. Waiver (Sec. 109)
Sec. 90. The notice may be given by or on behalf of
2. Notice is dispensed (Sec. 112) QuickTime™ and a
the holder, or by or on behalf of any party to the
3. Not necessary to Drawer (Sec. 114) TIFF
instrument who might be compelled to pay it to the (Uncompressed) decompressorare needed to see this picture.

holder, and who, upon taking it up, would have a right 4. Not necessary to Indorser (Sec. 115)

WHEN NOTICE OF DISHONOR IS NOT

to reimbursement from the party to whom the notice NECESSARY TO A DRAWER
is given. Sec. 114. Notice of dishonor is not required to be
given to the drawer in either of the following cases:
FORM OF A NOTICE
Sec. 95. A written notice need not be signed, and an (a) Where the drawer and drawee are the same
insufficient written notice may be supplemented and
person.
validated by verbal communication. A misdescription
(b) When the drawee is a fictitious person or a
of the instrument does not vitiate the notice unless
person not having capacity to contract.
the party to whom the notice is given is in fact misled
(c) When the drawer is the person to whom the
thereby.

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instrument is presented for payment. (c) By the intentional cancellation thereof

(d) Where the drawer has no right to expect or by the
require that the drawee or acceptor will honor the holder;
instrument. (d) By any other act which will discharge
(e) Where the drawer has countermanded a simple contract for the payment of
payment. money; (e) When the principal debtor
becomes the holder of the instrument at
WHEN NOTICE TO AN INDORSER IS NOT or after maturity in his own right.
REQUIRED
Sec. 115. Notice of dishonor is not required to be Notes:
given to an indorser in either of the following cases:
1. Discharge of the instrument discharges all
the parties thereto
(a) Where the drawee is a fictitious person or a
2. Payment must be in due course, and by the
person not having capacity to contract, and the
principal debtor or on his behalf
indorser was aware of the fact at the time he indorsed
3. If payment is not made by the principal
the instrument;
(b) Where the indorser is the person to whom the debtor, payment only cancels the liability of
the payor and those obligated after him but
instrument is presented for payment;
does not discharge the instrument.
(c) Where the instrument was made or accepted for
4. Payment by an accommodation party does
his accommodation
not discharge the instrument.
Note:
HOW A SECONDARY PARTY IS DISCHARGED
1. Omission to give notice of dishonor by
Sec. 120. A person secondarily liable on the
nonacceptance does not prejudice a HDC (Sec.
instrument is discharged —
117) (a) By any act which discharges the instrument; (b)
2. Protest only necessary for a foreign bill of By the intentional cancellation of his signature by the
exchange. Protest for other negotiable holder;
instruments is optional. (Sec. 118) (c) By the discharge of a prior party;
(d) By a valid tender of payment made by a prior
State Investment House, Inc. v. Court of Appeals, party;
217 SCRA 32 (e) By a release of the principal debtor, unless the
The holder of two checks which were dishonored holder's right of recourse against the party secondarily
because the drawer withdrew her funds from the bank liable is expressly reserved;
can hold the drawer liable even if no notice of (f) By any agreement binding upon the holder to
dishonor was given to the drawer, since the drawer extend the time of payment, or to postpone the
had no right to expect that the drawee bank would holder's right to enforce the instrument, unless made
honor the checks. with the assent of the party secondarily liable, or
unless the right of recourse against such party is
Associate Bank v. Tan, 446 SCRA 282 A drawee expressly reserved.
bank is liable for damages to a drawer whose checks
were dishonored for lack of funds because, it did not RIGHTS OF A PARTY SECONDARILY LIABLE
give him notice that the check he deposited in his WHO ALREADY PERFORMED HIS OBLIGATION
account was dishonored TO PAY
1. The instrument is not discharged
CAUSES OF DISCHARGE OF THE INSTRUMENT 2. The party is remitted to his former rights as to
Sec. 119. A negotiable instrument is discharged — QuickTime™ and a

(a) By payment in due course by or on behalf of the all prior parties TIFF (Uncompressed) decompressorare needed to see
principal debtor; this picture.

(b) By payment in due course by the 3. The party may strike out his own and all
party accommodated, where the subsequent indorsements
instrument is made or accepted for 4. The party may negotiate the instrument again
accommodation;

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EXCEPTIONS: 1. The drawer and the drawee are one and the
1. An instrument cannot be renegotiated where same
it is payable to order of a 3 rd person and has 2. The drawee is a fictitious person
been paid by the drawer 3. The drawee has no capacity to contract.
2. Instrument cannot be renegotiated where it
was made or accepted for accommodation Acceptance - the signification by the drawee of his
and it has been paid by the party assent to the order of the drawer. It is an act by
accommodated. which a person on whom the BOE is drawn assents
to the request of the drawer to pay it.
WHEN RENUNCIATION BY A HOLDER
DISCHARGES AN INSTRUMENT ACCEPTANCE MAY BE:
1. Made in favor of a person primarily liable 1. actual
2. Made at or after maturity of the instrument 2. constructive
3. In writing or the instrument is delivered up to 3. general
the person primarily liable . 4. qualified
Notes:
1. If renounced in favor of a party secondarily liable, REQUISITES OF AN ACTUAL ACCEPTANCE
only he is exonerated from liability and all parties
subsequent to him. 2. Discharge by novation is 1. In writing
allowed. 2. Signed by the drawee
3. Must not express that the drawee will perform
General rule: When materially altered, without his promise by any other means than
the consent of all parties liable, the instrument is payment of money
avoided 4. Communicated or delivered to the holder
Except as against:
1. The party who has made the alteration Note:
2. The party who authorized or A holder has a right to:
assented to the alteration. 1. require that acceptance be written on the bill
Subsequent indorsers Exception: and if refused, treat it as if dishonored (Sec.
If in the hands of a HDC, may be enforced 133)
according to its original tenor 2. refuse to accept a qualified acceptance and
may treat it as dishonored (Sec. 142)
Material Alteration - if it alters the effect of the
instrument. CONSTRUCTIVE ACCEPTANCE
Sec. 137. Where a drawee to whom a bill is delivered
Sec. 125 Any alteration, which changes — (a) for acceptance destroys the same, or refuses within
The date; twenty-four hours after such delivery, or within such
(b) The sum payable, either for principal or interest; other period as the holder may allow, to return the bill
(c) The time or place of payment;
accepted or non-accepted to the holder, he will be
(d) The number or the relations of the parties; (e)
deemed to have accepted the same.
The medium or currency in which payment is to be
made;
PRESENTMENT FOR ACCEPTANCE
1. If necessary to fix the maturity of the bill
Or which adds a place of payment where no place of
2. If it is expressly stipulated that it shall be
payment is specified, or any other change or addition
presented for acceptance
which alters the effect of the instrument in any
3. If the bill is drawn payable elsewhere than the
respect, is a material alteration.
residence or place of business of the drawee.
QuickTime™ and a

INSTANCES WHEN A BOE MAY BE TREATED AS SUMMARY ON TIFF (Uncompressed) decompressorare needed to see this
A PN picture.PRESENTMENT FOR
ACCEPTANCE OF BILLS OF EXCHANGE:

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1. To make the drawee primarily liable and for

the accrual of secondary liability (Sec. 144) Lee v. CA, 375 SCRA 5579 (2002) Although drafts
2. Necessary to fix maturity date, where bill issued in connection with letters of credit are
expressly stipulates presentment, bill payable negotiable instruments.
other than place of drawee (Sec. 143)
3. When presentment is excused:
a. drawee is dead, hides, is fictitious,
incapacitated person,
b. after due diligence presentment
cannot be made,
c. presentment is refused on another
ground although presentment is
irregular
(Sec. 148)

General rule: Protest is required only for foreign bills

Exception: Inland bills and notes may also be
protested if desired

WHEN PROTEST REQUIRED

Sec. 152. Where a foreign bill appearing on its face
to be such is dishonored by non-acceptance, it must
be duly protested for non-acceptance, and where
such bill which has not previously been dishonored
by non-acceptance is dishonored by non-payment, it
must be duly protested for non-payment. If it is not so
protested, the drawer and indorsers are discharged.
Where a bill does not appear on its face to be a
foreign bill, protest thereof in case of dishonor is
unnecessary.

Notes:
1. Protest - formal statement in writing made by
a notary under his seal of office at the request
of the holder, in which it is declared that the
same was presented for payment or
acceptance (as the case may be) and such
was refused
2. It means all steps or acts accompanying the
dishonor of a bill or note necessary to charge
an indorser
3. Required when the instrument is a foreign bill
of exchange.
4. It must be made on the same date of
dishonor, by a notary/respectable citizen of
the place in the presence of 2 credible
witnesses so recourse to secondary parties

Bill in Set - a bill of exchange drawn in several parts,

each part of the set being numbered and containing a
reference to the other parts, the whole of the parts
just constituting one bill.

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