NEGOTIABLE INSTRUMENTS LAW

Memory Aid

Based on the Outline of the 1994 Edition of Campos & Campos
DEFINITIONS
NEGOTIABLE INSTRUMENT

Written contract for the payment of money, by its form intended as substitute for money and
intended to pass from hand to hand to give the holder in due course the right to hold the same
and collect the sum due

PROMISSORY NOTE


unconditional promise in writing made 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
where a note is drawn to the maker’s own order, it is not complete until indorsed by him

BILL OF EXCHANGE



1.
2.
3.
4.

1.
2.
3.

1.
2.

unconditional order in writing addressed by one person to another signed by the person giving it
requiring the person to whom it’s addressed to pay on demand or at a fixed or determinable
future time a sum certain in money to order or to bearer
check: bill of exchange drawn on a bank payable on demand. Kinds of checks:
personal check
manager’s/cashier’s check – drawn by a bank on itself. Issuance has the effect of acceptance
memorandum check – ―memo‖ is written across its face, signifying that drawer will pay holder
absolutely without need of presentment
crossed check –
effects:
check may not be encashed but only deposited in bank
may be negotiated only once, to one who has an acct. with a bank
warning to holder that check has been issued for a definite purpose so that he must inquire if he
received check pursuant to such purpose, otherwise not HDC
kinds:
general (no word between lines, or ―co‖ between lines)
special (name of bank appearing between parallel lines)

BEARER

Person in possession of a bill/note payable to bearer

HOLDER
Payee or indorsee of a bill or note who is in possession of it, or the bearer thereof.

THE LIFE OF A NEGOTIABLE INSTRUMENT:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

issue
negotiation
presentment for acceptance in certain bills
acceptance
dishonor by on acceptance
presentment for payment
dishonor by nonpayment
notice of dishonor
protest in certain cases
discharge

NEGOTIABLE INSTRUMENTS LAW
Memory Aid

Based on the Outline of the 1994 Edition of Campos & Campos

NEGOTIABILITY
REQUISITES

1.

1.



no person liable on the instrument whose signature does not appear thereon ( subject to exceptions)

in writing and signed by maker or drawer

1.

unconditional promise or order to pay

unqualified order or promise to pay is unconditional though coupled with

1.

an indication of a particular fund out of which reimbursement to be made, or a particular account to be debited with amount, or

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

one who signs in a trade or assumed name liable to the same extent as if he had signed in his own name
signature of any party may be made by a duly authorized agent, no particular form of appt. necessary

1.

a statement of the transaction which gives rise to the instrument

a sum certain in money

even if stipulated to be paid—

1.
2.

with interest, or
by stated installments, or

3.
4.

by stated installments with a provision that upon default in payment of any installment/interest, the whole shall become due, or
with exchange, whether at a fixed rate or at the current rate, or

5.

with costs of collection or an attorney’s fee, in case payment not made at maturity

1.

3.


when expressed to be payable on demand, or at sight, or on presentation;

payable on demand,

when no time for payment expressed, or

it is. or when the only/last indorsement is in blank where addressed to drawee: such drawee named/ indicated therein with reasonable certainty succession  bill may be treated as a PN. drawee is fictitious/incapacitated EFFECT OF ADDITIONAL PROVISIONS Gen. 3. accepted or indorsed when overdue. authorize sale of collateral security if instrument not paid at maturity authorize confession of judgment… 3. 5. two or more payees jointly. or 2. 40 Campos 1. or when name of payee doesn’t purport to be the name of any person. drawer and drawee are same person 2. – The procedure in the Municipal Trial Courts shall be the same as in the Regional Trial Courts. or (b) in civil cases governed by the Rule on Summary Procedure. drawer or maker. Rule: order/promise to do any act in addition to the payment of money renders instrument non-negotiable. Exception: negotiability not affected by provisions w/c 1.      when expressed to be so payable 1. and happening of event doesn’t cure it * relate to sec. payable on demand or at a fixed or determinable future time     when it’s expressed to be payable at a fixed period after date or sight. Uniform procedure.  bill may be addressed to two or more drawees jointly. p. or holder of an office for time being when the instrument is payable to order the payee must be named or otherwise indicated therein with reasonable certainty or bearer. 2. 30 Campos * note effect of provisions extending time of payment. where an instrument is issued. 2. at option of holder. or on or before a fixed or determinable future time fixed therein. and such fact known to the person making it so payable. or 4.   where it is drawn payable to the order of a specified person or to him or his order. 4. whether partners or not. but not to two or more drawees in the alternative or in when payable to person named therein or bearer when payable to order or fictitious/non-existent person. 17 (construction where instrument ambiguous) * note effect of acceleration provisions. as regards the person so issuing. p. a payee not the maker/drawer/drawee. waives benefit of any law intended for advantage/protection of obligor give holder election to require something to be done in lieu of money CONTINUATION OF NEGOTIABLE CHARACTER Until 1. accepting. restrictively indorsed discharged by payment or otherwise Section 1. though the time of happening be uncertain an instrument payable upon a contingency not negotiable. where 1. or indorsing it. or drawee. 4. or on or at a fixed period after the occurrence of a specified event which is certain to happen. except (a) where a particular provision expressly or impliedy applies only to either of said courts. 5. May be drawn payable to order of — payable to order 1. 11 ( presumption as to date) and sec. .

of value) sec. 191 RIGHTS OF HOLDER 1. etc. 124 (effect of alteration) sec. – The term ―Municipal Trial Courts‖ as used in these rules shall include Metropolitan Trial Courts. against all parties liable . Meaning of terms. and Municipal Circuit Trial Courts. sue thereon in his own name 2. or fraudulent circumstances RIGHTS OF HOLDER IN DUE COURSE: 1. illegal consideration/means. 27 (lien as value) at time negotiated to him. without notice of any previous dishonor sec. infirmity in instrument 2. NEGOTIABLE INSTRUMENTS LAW Memory Aid Based on the Outline of the 1994 Edition of Campos & Campos HOLDER IN DUE COURSE HOLDER Sec. nego after unreasonable length of time: not HDC) sec. 54-notice before full amt.   1. 24 (presumption of consideration) sec 25 (definition. holder for value) sec. 56-def. Municipal Trial Courts. payment to him in due course discharges instrument HOLDER IN DUE COURSE: REQUISITIES 1. may enforce payment of instrument for full amount. 53 (demand inst.     1. complete and regular upon its face sec. defect in title of person negotiating 1. holds instrument free of any defect of title of prior parties 2.Section 2.. 12 (effect antedating/postdating) taken in good faith and for value sec. 26 (definition. instrument negotiated in breach of faith. or 2. paid) of — 1. free from defenses available to prior parties among themselves 3.   1. instrument/signature obtained through fraud. 125 (what constitute material alterations) holder became such before it was overdue. Municipal Trial Courts in Cities. he had no notice (sec.

Exception: holder who derives title through HDC and who is not himself a party to any fraud or illegality has all rights of such former holder in respect to all parties prior to the latter. where defense is not his own) NEGOTIABLE INSTRUMENTS LAW Memory Aid Based on the Outline of the 1994 Edition of Campos & Campos DEFENSES AND EQUITIES KINDS OF DEFENSES 1. forged 2. made without authority of person whose signature it purports to be.* if in the hand of any holder (note definition of holder) other than a HDC. ILLEGALITY: personal.. General Rule: 1. defendant DEFENSES 1. NI is subject to same defenses as if it were non-negotiable.e. WHO DEEMED HDC    prima facie presumption in favor of holder but when shown that title of any person who has negotiated instrument was defective (sec. renders it inequitable to be enforced vs. on the principle that the right sought to be enforced never existed/there was no contract at all 2. personal defense – growing out of agreement. vulnerable to same defenses as if non-negotiable RIGHTS OF PURCHASER FROM HOLDER IN DUE COURSE: General Rule: in the hands of any holder other than a HDC. even if no K because void under CC 1409 1. FORGERY: real (lack of consent): 1. indorsement/assign by corp/infant: passes property but corp/infant no liability 1. 55— when title defective): burden reversed (now with holder) but no reversal if party being made liable became bound prior to acquisition of defective title (i. wholly inoperative . INCAPACITY: real. real defense – attaches to instrument.

1. 3. delivery conclusively presumed INCOMPLETE. unless so serious as to give rise to a real defense for lack of contractual intent COMPLETE. tenor of instrument.    1. 2.2. UNDELIVERED INSTRUMENT Personal defense (sec. either for principal or interest time of payment number/relations of parties medium/currency of payment. 1. *material alteration a personal defense when used to deny liability according to org. if completed and negotiated without authority. 1.  1. other change/addition altering effect of instrument in any respect. as against any person whose signature was placed thereon before delivery . avoided. any party. But when an instrument has been materially altered and is in the hands of a HDC not a party to the alteration. 2. or enforce payment vs. HDC may enforce payment thereof according to orig. 2. 3. parties who make certain warranties. Of party who signed. a party who has himself made. 1. estopped/negligent parties * note rules on Acceptance/Payment Under Mistake as applied to: 1. except as vs. delivery prima facie presumed If holder is HDC. 15) Instrument will not. be a valid contract in the hands of any holder. tenor Material Alteration change date sum payable. or give discharge. overdraft stop payment order forged indorsements MATERIAL ALTERATION Where NI materially altered w/o assent of all parties liable thereon. 3.  1. 5. 4. no right to retain instrument. UNDELIVERED INSTRUMENT Real defense (sec. 2. 2. adds place of payment where none specified. 16) If instrument not in poss. like a general indorser or acceptor 2. 3. but real defense when relied on to deny liability according to altered terms. can be acquired through or under such signature (unless forged signature unnecessary to holder’s title) Exception: unless the party against whom it is sought to enforce such right is precluded from setting up forgery/want of authority precluded: 1.   FRAUD fraud in execution: real defense (didn’t know it was NI) fraud in inducement: personal defense (knows it’s NI but deceived as to value/terms) DURESS Personal. authorized or assented to alteration and subsequent indorsers.   1.

 Sec.10. when completed. Where instrument is wanting in any material particular: person in possession has prima facie authority to complete it by filing up blanks therein 2. Liability of Acceptor Promises to pay inst according to its tenor Admits the following: existence of drawer genuineness of his signature his capacity and authority to draw the instrument existence of payee and his then capacity to endorse . NEGOTIABLE INSTRUMENTS LAW Memory Aid Based on the Outline of the 1994 Edition of Campos & Campos LIABILITIES OF PARTIES 1. DELIVERED  Personal defense (sec. ma be enforced vs. Promises to pay it according to its tenor 3. within a reasonable time  but if any such instrument after completion is negotiated to HDC. 2. 14)  2 Kinds of Writings: 1. it’s valid for all purposes in his hands. 70 (effect of want of demand on principal debtor) 1. 3. Liability of Maker 2. admits existence of payee and his then capacity to indorse 1. INCOMPLETE. must be filled up strictly in accordance w/ authority given 2. PRIMARY PARTIES  Person primarily liable: person who by the terms of the instrument is absolutely required to pay the same.   1. Signature on blank paper delivered by person making the signature in order that the paper may be converted into a NI: prima facie authority to fill up as such for any amount  In order that any such instrument. he may enforce it as if it had been filled up properly. 189 (when check operates as assignment) 1. 127 (bill not an assignment of funds in hands of drawee)  sec. Status of drawee prior to acceptance or payment  sec. 4. any person who became a party thereto prior to its completion: 1.

conditional 2. certification obtained at request of drawer: secondary parties not released 5. partial 3. 150 — constructive acceptance sec. 138 — formal requisites of acceptance sec. and the necessary proceedings on dishonor be duly taken. 135 — acceptance on a separate instrument Kinds of Acceptance: general qualified 1. drawer and all indorsers discharged from al liability 3. qualified as to time 5. or paid. 2. and bank is not liable to holder. 2. 142 (rights of parties as to qualified acceptance)  Certification: Principles 1. 3. 2. SECONDARY PARTIES Liability of Drawer Admits existence of payee and his then capacity to endorse Engages that on due presentment instrument will be accepted. he will pay the amount thereof to the holder or to an subsequent indorser who may be compelled to pay it  1. 191. not all drawees * sec. according to its tenor and that 5. drawer may insert in the instrument an express stipulation negativing / limiting his own liability to holder Liability of Indorsers: Qualified Indorser and one Negotiating by Delivery Instrument genuine. local 4. when check certified by bank on which it’s drawn. check not operate as assignment of any part of funds to credit of drawer with bank. bank which certifies liable as an acceptor 6. checks cannot be certified before payable 1. 133. equivalent to acceptance 2. 3. 136. 4. unless and until it accepts or certifies check 4. or both. 134. sec. 137. 132. in all respects what it purports to be good title all prior parties had capacity to contract .    1.  1. If it be dishonored. where holder of check procures it to be accepted/certified.

places thereon his signature in blank before delivery. he’s liable as an indorser. Liability of Accomodation Party  Definition: one who signed instrument as maker/drawer/acceptor/ indorser w/o receiving value thereof. but holder may sue any of the indorsers. 3. joint payees/indorsees deemed to indorse jointly and severally 1. Liability of a General or Unqualified Indorser instrument genuine. but proof of another agreement admissible 2. Instrument payable to the order of maker/drawer. or both. Instrument payable to order of 3rd person: liable to payee and to all subsequent parties 2.4. 2. at time of taking instrument. it shall be accepted or paid. for the purpose of lending his name to some other person  AP liable on the instrument to holder for value even if holder. That he paid to the payee 2. according to tenor if it be dishonored. or to any subsequent indorser who may be compelled to pay it  Order of Liability among Indorsers 1. a joint and several accommodation maker of a negotiable promissory note may demand from the principal debtor reimbursement for the amt. capacity of prior parties instrument is at time of indorsement valid and subsisting on due presentment. To holder. he had no knowledge of any fact w/c would impair validity of instrument or render it valueless  in case of negotiation by delivery only. warranty only extends in favor of immediate transferee  1. good title. regardless of order of indorsement 3. he made the payment by virtue of a judicial demand 2. knew he was only an AP  Liability of Irregular Indorser  Where a person not otherwise a party to an instrument. in accordance w/ these rules: 1. 4. Signs for accommodation of payee. among themselves: liable prima facie in the order they indorse. the principal debtor provided: 1. and necessary proceedings on dishonor be duly taken. or the principal debtor is insolvent . a joint and several accommodation maker who pays on the said promissory note may directly demand reimbursement from his co-accommodation maker without first directing his action vs. liable to all parties subsequent to payee  Sadaya v Sevilla Rules: 1. or payable to bearer: liable to all parties subsequent to maker/drawer 3. he will pay the amt.

establish as in ordinary agency  Where instrument contains or a person adds to his signature words indicating that he signs for or on behalf of a principal.  Signature per procuration operates as notice that the agent has but a limited authority to sign. where bill expressly stipulates that it shall be presented for acceptance 3. Liability of an Agent  Signature of any party may be made by duly authorized agent. where bill is drawn payable elsewhere than at residence / place of business of drawee When failure to present releases drawer/indorser Failure to present for acceptance of negotiate bill of exchange within reasonable time Reasonable Time Must consider 1. 149 (when dishonored by non-acceptance) . facts of each case How and When Made Sec. usage of trade or business with respect to instrument 3. nature of instrument 2. unless he discloses name of principal and fact that he’s only acting as agent I. he incurs all liabilities in Sec. 65. or in other cases where presentment for acceptance necessary to fix maturity 2. 148 Dishonor and Effects  sec. 147 When Excused Sec.1. 145. 146. Presentment For Acceptance When presentment for acceptance must be made 1. and the principal is bound on ly in case the agent in so signing acted within the actual limits of his authority  Where a broker or agent negotiates an instrument without indorsement. he is not liable on the instrument if he was duly authorized. bill payable after sight. does not exempt from personal liability. but the mere addition of words describing him as an agent without disclosing his principal.

71) Check must be presented for payment within reasonable time after its issue or drawer will be discharged from liability thereon to extent of loss caused by delay Delay excused Sec. 84 Notice of Dishonor General rule: to drawer and to each indorser. 111 Date and time of presentment of instrument bearing fixed maturity Sec. 76. 70 Where not necessary Sec. 151. 75 Place Sec. 80. 151 (rights of holder where bill not accepted) sec. 89 (to whom notice of dishonor must be given) sec. 117 (effect of omission to give notice of non-acceptance) II.    sec. 150 (duty of holder where bill not accepted) sec. 74. it may be unreasonable time from issuance thus holder may not be HDC under sec. presentment for payment will be sufficient if made within a reasonable time after last negotiation (but note: though reasonable time from last negotiation. 72. For Payment Where necessary Sec. 72. 77. 78 Dishonor by nonpayment Sec. 81 Manner Sec. 85. and any drawer or indorser to whom such notice is not given is discharged . 71. 73 To Whom Sec. 82. 194 Date of presentment    Where instrument not payable on demand: presentment must be made on date it falls due Where payable on demand: presentment must be made within reasonable time after issue. except that in case of a bill of exchange. 83. 86. 79.

when given by/on behalf of holder: insures to benefit of 1. drawer/drawee same person drawee fictitious. 95. incapacitated. and b. 104. 2. where notice given by/on behalf of a party entitled to give notice: insures for benefit of a. would have a right to reimbursement from the party to whom the notice is given Notice of dishonor may be given by an agent either in his own name or in the name of any party entitled to give notice. drawee fictitious. he may either himself give notice to the parties liable thereon. Contents. 110 Where not necessary to charge drawer 1. all subsequent holders and 2. Time Sec. and who. 113 By Whom Given   By or on behalf of the holder or any party to the instrument who may be compelled to pay it to the holder. 102. all prior parties who have a right of recourse vs. all parties subsequent to party to whom notice given Waiver Sec. 5. instrument made/accepted for his accommodation . 109. 4. the party to whom it’s given 2. holder . whether that party be his principal or not  Where instrument has been dishonored in hands of agent. or he may give notice to his principal (as if agent an independent holder) In whose favor notice operates 1. upon taking it up. 106. 96. 3. 103. indorser is person to whom instrument presented for paymt 3. 108.Form. incapacitated drawer is person to whom instrument is presented for payment drawer has no right to expect/require that drawee/acceptor will honor instrument drawer countermanded payment Where not necessary to charge indorser 1. and indorser aware of the fact at time of indorsement 2. 105.

154 Time and Place: sec. 1. 159 Waiver: sec. 131. 161. 156 For better security: sec. or an officer of a corporation. 158 Excused: sec. Form and contents: sec.Protest Definition: testimony of some proper person that the regular legal steps to fix the liability of drawer and indorsers have been taken When necessary: sec. (b) In an action for money or property embezzled or fraudulently misapplied or converted to his own use by a public officer. broker. or clerk. or an attorney. – At the commencement of the action or at any time before entry of judgment. 153 By whom made: sec. in the course of his employment as such. a plaintiff or any proper party may have the property of the adverse party attached as security for the satisfaction of any judgment that may be recovered in the following cases: (a) In an action for the recovery of a specified amount of money or damages. . Grounds upon which attachment may issue. on a cause of action arising from law. 155. delict or quasi-delict against a party who is about to depart from the Philippines with intent to defraud his creditors. agent. other than moral and exemplary. or by any other person in a fiduciary capacity. 171 Bills in Set: 178-183 Rule 57 Sec. contract. 111 Acceptance for Honor Sec. or for a willful violation of duty. 152. quasi-contract. factor.

or is about to do so. has been concealed. broker or agent or clerk of the plaintiff. Consolidated Bank and Trust Company v. Sec. as may be sufficient to satisfy the applicant’s demand. (d) In an action against a party who has been guilty of a fraud in contracting the debt or incurring the obligation upon which the action is brought. Several writs may be issued at the same time to the sheriffs of the courts of different judicial regions. it is not necessary to establish his fiduciary capacity before the writ is granted as such fiduciary capacity is assumed from the nature of his position. – An order of attachment may be issued either ex-parte or upon motion with notice and hearing by the court in which the action is pending. or by the Court of Appeals or the Supreme Court. Issuance and contents of order. Court of Appeals 197 SCRA Where the basis for the application of a writ of attachment is embezzlement of money or property committed by a defendant who is an officer of a corporation. not exempt from execution. exclusive of costs. If prayer for writ of attachment is included in a Complaint. it is only when the misappropriation was committed by any other person that his fiduciary relationship with the plaintiff will have to be established. or disposed of to prevent its being found or taken by the applicant or an authorized person. separate affidavit is not necessary. or in the performance thereof. detained or converted. when the property. Such relationship does not have to be shown because it suffices that the questioned acts of employing illegal machinations in . which may be the amount sufficient to satisfy the applicant’s demand or the value of the property to be attached as stated by the applicant.(c) In an action to recover the possession of property unjustly or fraudulently taken. (e) In an action against a party who has removed or disposed of his property. removed. with intent to defraud his creditors. or an atorney. 2. a public officer. or any part thereof. verification in the Complaint is sufficient. factor. or (f) In an action against a party who does not reside and is not found in the Philippines. or on whom summons may be served by publication. and must require the sheriff of the court to attach so much of the property in the Philippines of the party against whom it is issued. unless such party makes deposit or gives a bond as hereinafter provided in an amount equal to that fixed in the order.

Valenzuela 116 SCRA Facts: Held: In pleading for attachment against a foreigner. must be duly filed with the court before the order issues. The affidavit. Affidavit and bond required. Inc. is as much as the sum for which the order is granted above all legal counterclaims.‖ Sec. that there is no other sufficient security for the claim sought to be enforced by the action.obtaining enormous credit facilities for the corporation were committed by the officers of UPLFC in the course of their duties and not by ―any other person in a fiduciary capacity.O. or the value of the property the possession of which he is entitled to recover. case is one of those mentioned in Sec 1(a) of Rule 57. Co. the amount due to the applicant for attachment or the value of the property of which he is entitled to recover is as much as the sum for which the order is granted above all legal counterclaims. and the bond required by the next succeeding section. 2. 3. the writ of attachment should be dissolved. allegation must not be merely that defendant is a foreigner. Requisites for issuance of writ of attachment: 1. that the case is one of those mentioned in section 1 hereof. or some other person who personally knows the facts. and that the amount due to the applicant. – An order of attachment shall be granted only when it appears by the affidavit of the applicant. 4.. Glass Const. v. Once defendant files a counter-bond. K. 3. . that a sufficient cause of action exists. there is no other sufficient security for the claim sought to be enforced by the action. or that he is a non-resident alien. a sufficient cause of action exists. there must also be a showing that defendant is about to leave the Philippines with intent to defraud their creditor.

– The party applying for the order must thereafter give a bond executed to the adverse party in the amount fixed by the court in its order granting the issuance of the writ. or contemporaneously accompanied. in an amount equal to the bond fixed by the court in the order of attachment or to the value of the property to be attached. unless the former makes a deposit with the court from which the writ is issued. . only so much of the property in the Philippines of the party against whom the writ is issued. as may be sufficient to satisfy the applicant’s demand. or gives a counter-bond executed to the applicant. together with a copy of the complaint. if the court shall finally adjudge that the applicant was not entitled thereto. Sec. or the defendant is a resident of the Philippines temporarily absent therefrom. Oñate v. conditioned that the latter will pay all the costs which may be adjudged to the adverse party and all damages which he may sustain by reason of the attachment. on the defendant within the Philippines. 5. by service of summons. No levy on attachment pursuant to the writ issued under section 2 hereof shall be enforced unless it is preceded. to await judgment and execution in the action. Abrogar 230 SCRA 181 Facts: Held: Writ of preliminary attachment may be validly applied for and granted even before the defendant is summoned or is heard from. Manner of attaching property. exclusive of costs. 4. The requirement of prior contemporaneous service of summons shall not apply where the summons could not be served personally or by substituted service despite diligent efforts. or the defendant is a non-resident of the Philippines.Sec. the application for attachment. not exempt from execution. Enforcement of the preliminary attachment is valid even if it preceded the actual service of summons where a previous attempt to serve the summons and the writ of attachment failed due to factors beyond the control of either the plaintiff or the process server. – The sheriff enforcing the writ shall without delay and with all reasonable diligence attach. Bond – undertaking done by the surety that it will pay the damages in case the party guaranteed does not comply with the orders of the court. or the action is one in rem or quasi in rem. and the order and writ of attachment. – Condition of applicant’s bond. the applicant’s affidavit and bond.

standing upon the records of the registry of deeds of the province in the name of the party against whom attachment is issued. Sec. by filing with the registry of deeds a copy of the order. Defendant may put his property beyond the reach of the plaintiff while the latter is trying to serve the summons and the writ anew. The registrar of deeds must index attachments filed under this section in the names of the applicant. with a full statement of his proceedings under the writ. a description sufficiently accurate for the identification of the land or interest to be affected shall be included in the registration of such attachment. recording thereof. together with a description of the property attached. 3. – Real and personal property shall be attached by the sheriff executing the writ in the following manner: (a) Real property. description. and a notice that it is attached. To discharge writ of preliminary attachment. or belonging to the party against whom attachment is issued and held by any other person. and notice with the occupant of the property. and by leaving a copy of such order. Court eventually acquired jurisdiction over the plaintiffs (6 days later). If the attachment is not claimed on the entire area of the land covered by the certificate of title. and serve copies thereof on the applicant. 2. defendant simply has to make a cash deposit or post a counter-bond equivalent to the value of the property attached. or growing crops thereon. Ease by which a writ of attachment can be obtained is counter-balanced by the ease with which the same can be discharged. and a complete inventory of the property attached. . or any interest therein. Attachment of real and personal property. the notice shall contain a reference to the number of the certificate of title. 6. the adverse party. Sheriff’s return. together with any counter-bond given by the party against whom attachment is issued.Reasons: 1. Sec. or with such other person or his agent if found within the province. and the registered owner or owners thereof. Where the Land Registration Act or the Property Registration Decree. the volume and page in the registration book where the certificate is registered. if any. 7. or the person by whom the property is held or in whose name it stands in the records. – After enforcing the writ. or standing on the records of the registry of deeds in the name of any other person. or that such real property and any interest therein held by or standing in the name of such other person are attached. or not appearing at all upon such records. the sheriff must likewise without delay make a return thereon to the court from which the writ issued.

whether as heir. commissions and other personal property not capable of manual delivery. are attached in pursuance of such writ. by serving the executor or administrator or other personal representative of the decedent with a copy of the writ and notice that said interest is attached. and a notice stating that the stock or interest of the party against whom the attachment is issued is attached in pursuance of such writ. by leaving with the person owing such debts. by leaving with the president or managing agent thereof. interest in such stocks or shares Leave with president or managing agent copy of the writ and notice that said stocks or shares or any interest therein is attached Debts and credits (bank deposits. (e) The interest of the party against whom attachment is issued in the property belonging to the estate of the decedent. legatee.(b) Personal property capable of manual delivery. issue receipt for the property being attached and take property in his custody Stocks or shares. or an interest in stocks or shares. such credits or other personal property. and notice that the debts owing by him to the party against whom attachment is issued. royalties. after issuing the corresponding receipt therefor. legatee or devisee concerned. financial interest. and the credits and other personal property in his possession or under his control. or having in his possession or under his control. Properties subject to attachment Real property. belonging to said party. description and notice with the occupant of the property Personal property capable of manual delivery Serve attachment order. royalties. and notice of the attachment served upon the custodian of such property. a copy of the writ. If the property sought to be attached is in custodia legis.commissions) Leave with person owing such debts or credits a copy of the writ and a notice that such debts or credits are attached . by taking and safely keeping it in his custody. of any corporation or company. (c) Stocks or shares. or devisee. (d) Debts and credits. or with his agent. any interest in such real property Manner of attachment File with register of deeds a copy of the order of attachment with notice that it is attached and a description of the property being attachedLeave copy of attachment order. a copy of the writ of attachment shall be filed with the proper court or quasi-judicial agency. a copy of the writ. A copy of said writ of attachment and of said notice shall also be filed in the office of the clerk of court in which said estate is being settled and served upon the heir. growing crops thereon. including bank deposits. financial interest.

Inc. legatee or devisee in the property of a decedent Serve executor or administrator with a copy of the writ and a notice that said interest is attached. It is a forced novation by the substitution of creditors: the judgment debtor. or any judgment recovered by him is satisfied. bound to comply with all . until the attachment is discharged. Garnishment – is a species of attachment for reaching any property or credits pertaining or payable to a judgment debtor. all that is necessary is the service of the writ of garnishment. sheriff. Perla Compania de Seguros. – All persons having in their possession or under their control any credits or other similar personal property belonging to the party against whom attachment is issued. who is the original creditor of the garnishee. the case and the trial court thereby acquires jurisdiction over his person. It serves as a warning to a person having in his possession property or credits of the judgment debtor. Through the service of the writ of garnishment.File copy of the writ and notice of attachment with clerk of court where estate is being settled. substituted by the judgment creditor who thereby becomes creditor of the garnishee. through the service of the writ of garnishment. not to pay the money or deliver the property to the latter. the person who has in his possession credits belonging to the judgment debtor becomes a ―virtual party‖ to or a ―forced intervenor‖ in. is. but rather to appear and answer the plaintiff’s suit. Ramolete 203 SCRA Facts: Held: Service of summons upon the person of the garnishee is not necessary to acquire jurisdiction over his person. to the clerk. unless such property is delivered or transferred. 8. Such person is. therefore. at the time of service upon them of the copy of the writ of attachment and notice as provided in the last preceding section. shall be liable to the applicant for the amount of such credits. credits and all other similar personal property. or owing any debts to him.Other personal property not capable of manual delivery Interest of an heir. or other proper officer of the court issuing the attachment. Effect of attachment of debts. or such debts are paid. Sec. debts or other similar personal property. v.

and in the order made upon such petition. distribution may be awarded to such heir. that the property attached is perishable. 11. order personal property capable of manual delivery belonging to him. – Any person owing debts to the party whose property is attached or having in his possession or under his control any credit or other personal property belonging to such party. or any person claiming under him. or devisee in the property belonging to the estate of a decedent shall not impair the powers of the executor. or devisee. When attached property may be sold after levy on attachment and before entry of judgment. delivery of property to sheriff. legatee. The party whose property is attached may also be required to attend for the purpose of giving information respecting his property. or before a commissioner appointed by the court. 9. Such interest may be garnished like any other credit. subject to the claim of such heir. may be required to attend before the court in which the action is pending. shall report the attachment to the court when any petition for distribution is filed. It is not necessary that the insured has effected payment to the injured third person in order that the obligation of the insurer may arise. in the possession of the person so required to attend before the court. – Whenever it shall be made to appear to the court in which the action is pending. or other personal representative of the decedent over such property for the purpose of administration. to await the judgment in the action. Effect of attachment of interest in property belonging to the estate of a decedent. after such examination. Sec. but the property attached shall be ordered delivered to the sheriff making the levy. Garnishment of third party liability insurance contract may be effected from the moment the insured became liable to the third person for it is also at that moment that the insured acquired an interest in the insurance contract. administrator. Sec. to be delivered to the clerk of court of sheriff on such terms as may be just. Examination of party whose property is attached and persons indebted to him or controlling his property. and be examined on oath respecting the same. the court may . or devisee. – The attachment of the interest of an heir. Sec. and may be examined on oath. however. or that the interests of all the parties to the action will be subserved by the sale thereof. Such personal representative. The court may. having reference to any lien thereon or claim against the same. upon hearing with notice to both parties. 10. legatee. legatee.orders and processes of the trial court with a view to the complete satisfaction of the judgment of the court.

If the motion be made on affidavits on the part of the movant but not otherwise. before or after levy or even after the release of the attached property. order the discharge of the attachment if the movant makes a cash deposit. – The party whose property has been ordered attached may file a motion with the court in which the action is pending. the property attached. The court shall. Sec. or that the bond is insufficient. the counter-bond shall be equal to the value of that property as determined by the court. after due notice and hearing. Discharge of attachment on other grounds. Upon the discharge of the attachment in accordance with the provisions of this section. the cash deposit or the counter-bond shall secure the payment of any judgment that the attaching party may recover in the action. In either case. or that the bond is insufficient.order such property to be sold at public auction in such manner as it may direct and the proceeds of such sale to be deposited in court to abide the judgment in the action. 13. Discharge of attachment upon giving counter-bond. If the attachment is excessive. shall be delivered to the party making the deposit or giving the counter-bond. the attaching party may oppose the motion by counter-affidavits or other evidence in addition to that on which the attachment was made. Court of Appeals . the attaching party may apply for a new order of attachment. Motion to Discharge cannot be acted upon ex-parte – must be accompanied by hearing. Sec. or the proceeds of any sale thereof. the deposit or counter-bond aforesaid standing in place of the property so released. or files a counter-bond executed to the attaching party with the clerk of the court where the application is made an amount equal to that fixed by the court in the order of attachment. After due notice and hearing. or that the attachment is excessive and the defect is not cured forthwith. may move for the discharge of the attachment wholly or in part on the security given. v. the court shall order the setting aside or the corresponding discharge of the attachment if it appears that it was improperly or irregularly issued or enforced. or to the person appearing on his behalf. A notice of the deposit shall forthwith be served on the attaching party. Should such counter-bond for any reason be found to be or become insufficient. But if the attachment is sought to be discharged with respect to a particular property. and the party furnishing the same fail to file an additional counterbond. 12. for an order to set aside or discharge the attachment on the ground that the same was improperly or irregularly issued or enforced. Peroxide Philippines Corp. the party whose property has been attached or the person appearing on his behalf. the discharge shall be limited to the excess. – After a writ of attachment has been enforced. exclusive of costs.

Satisfaction of judgment out of property attached. In case of disagreement as to such value. and if held liable therefor. the actual damages adjudged by the court shall be paid by the National Treasurer out of the funds to be appropriated for the purpose. the same shall be decided by the court issuing the writ of attachment. on demand of the sheriff. nor has there been a valid discharge thereof either by the filing of a counter-bond or for improper or irregular issuance. the filing of such bond shall not be required. and serves such affidavit upon the sheriff while the latter has possession of the attached property. the sheriff may cause the judgment to be satisfied out of the property attached. – If the property attached is claimed by any person other than the party against whom attachment had been issued or his agent. he shall be represented by the Solicitor General. Sec. Sec. 14. and in case the sheriff is sued for damages as a result of the attachment. and a copy thereof upon the attaching party. stating the grounds of such right or title. or prevent the attaching party from claiming damages against a third-party claimant who filed a frivolous or plainly spurious claim. When the writ of attachment is issued in favor of the Republic of the Philippines. in the same or separate action. and such person makes an affidavit of his title thereto. 15.199 SCRA Where the order lifting of the writ of attachment was improperly issued as the attaching creditor was not allowed to oppose the application for the discharge of the attachment by counteraffidavit or other evidence. return of sheriff. Proceedings where property claimed by third person. – If judgment be recovered by the attaching party and execution issue thereon. shall file a bond approved by the court to indemnify the third-party claimant in a sum not less than the value of the property levied upon. if such bond shall be filed. or right to the possession thereof. such order is void and does not have any effect at all to the writ of attachment. to any such third-party claimant. No claim for damages for the taking or keeping of the property may be enforced against the bond unless the action therefor is filed within one hundred twenty (120) days from the date of the filing of the bond. the sheriff shall not be bound to keep the property under attachment. Nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property. The writ continued to be valid from its issuance since the judgment had not been satisfied . unless the attaching party or his agent. if it be sufficient for that purpose in the following manner: . or any officer duly representing it. The sheriff shall not be liable for damages for the taking or keeping of such property.

the surety or sureties on any counter-bond given pursuant to the provisions of this Rule to secure the payment of the judgment shall become charged on such counter-bond and bound to pay the judgment obligee upon demand the amount due under the judgment. by selling so much of the property. including the proceeds of any debts or credits collected. Balance due collected upon execution. which amount may be recovered from such surety or sureties after notice and summary hearing in the same action. any balance shall remain due. and applying the proceeds to the satisfaction of the judgment. as may be necessary to satisfy the balance. Sec.(a) By paying to the judgment obligee the proceeds of all sales of perishable or other property sold in pursuance of the order of the court or so much as shall be necessary to satisfy the judgment. the amount of such credits and debts as determined by the court in the action. – If after realizing upon all the property attached. (b) If any balance remains due. Sec. (c) By collecting from all persons having in their possession credits belonging to the judgment obligor. and paying the proceeds of such collection over to the judgment obligee. real or personal. v. must return to the judgment obligor the attached property remaining in his hands. the sheriff must proceed to collect such balance as upon ordinary execution. or in those of the clerk of the court. Recovery upon the counter-bond. excess delivered to judgment obligor. it is necessary (1) that execution be first issued against the principal debtor and that such execution was returned unsatisfied in whole or in part. – When the judgment has become executory. and stated in the judgment. if enough for that purpose remain in the sheriff’s hands. 17. less the expenses of proceedings upon the judgment. Towers Assurance Co. The sheriff shall forthwith make a return in writing to the court of his proceedings under this section and furnish the parties with copies thereof. and any proceeds of the sale of the property attached not applied to the judgment. Whenever the judgment shall have been paid. less the expenses of proceedings upon the judgment. the sheriff. or owing debts to the latter at the time of the attachment of such credits or debts. (2) that the creditor made a demand upon the surety . Ororama Supermart 80 SCRA In order that the judgment creditor might recover from the surety on the counterbond. and applying the proceeds of any debts or credits collected. 16. upon reasonable demand.

– Where the party against whom attachment had been issued has deposited money instead of giving counter-bond. 18.for the satisfaction of the judgment. and (3) that the surety be given notice and a summary hearing in the same action as to his liability for the judgment under his counterbond. Sec. irregular or excessive attachment. or excessive attachment must be filed before the trial or before appeal is perfected or before the judgment becomes executory. 19. under the order of attachment. with due notice to the attaching party and his surety or sureties. irregular. If the judgment is in favor of the party against whom attachment was issued. Sec. setting forth the facts showing his right to damages and the amount thereof. and all property attached remaining in any such officer’s hands. with notice to the party in whose favor the attachment was issued or his surety or sureties. Nothing herein contained shall prevent the party against whom the attachment was issued from recovering in the same action the damages awarded to him from any property of the attaching party not exempt from execution should the bond or deposit given by the latter be insufficient or fail to fully satisfy the award. Court of Appeals 95 Phil 360 . shall be delivered to the party against whom attachment was issued. The appellate court may allow the application to be heard and decided by the trial court. before judgment of the appellate court becomes executory. If the judgment of the appellate court be favorable to the party against whom attachment was issued. it shall be applied under the direction of the court to the satisfaction of any judgment rendered in favor of the attaching party. Santos v. Disposition of money deposited. he must claim damages sustained during the pendency of the appeal by filing an application in the appellate court. Such damages may be awarded only after proper hearing and shall be included in the judgment on the main case. Claim for damages on account of improper. and the order of attachment discharged. all the proceeds of sales and money collected or received by the sheriff. the whole sum deposited must be refunded to him or his assignee. Disposition of attached property where judgment is for party against whom attachment was issued. 20. – An application for damages on account of improper. and after satisfying the judgment the balance shall be refunded to the depositor or his assignee. Sec. – If judgment be rendered against the attaching party.

Where a writ of attachment was issued and levied upon a property belonging to a third person not party to the main action. said third person may file a separate action for damages. important.  Of the Instrument payment in due course by or on behalf of principal debtor Payment in due course: made at or after maturity to the holder thereof in good faith and without notice that his title is defective payment in due course by party accommodated where party is made/ accepted for accommodation intentional cancellation by holder if unintentional or under mistake or without authority of holder. Burden of proof on party which alleges it was unintentional. 4. any party to the instrument. is not applicable where damages are sought not because the writ of attachment was illegally or wrongfully issued by the court. 5. The rule that recovery of damages on account of the issuance of a writ of attachment cannot be subject of a separate action. 3. Bacolod Milling Grave & irreparable injury – no fair or reasonable orders can be granted by the court Right in esse and clear for a writ of preliminary mandatory injunction NEGOTIABLE INSTRUMENTS LAW Memory Aid Based on the Outline of the 1994 Edition of Campos & Campos DISCHARGE 1. 2. any other act which discharges a simple contract principal debtor becomes holder of instrument at or after maturity in his own right renunciation of holder: holder may expressly renounce his rights vs. 3. 2. 2.  1. Rule on Third party Claim & §20. but because said writ was caused to levied upon the property of the plaintiff which was not a party in the case where the attachment was issued. inoperative. Status quo ante – refers to a legal situtation Preliminary writ of injunction – status quo Final injunction – change in legal relationship. Rule 57. etc.  1. before or after its maturity .

2. 7. 70. 3. 10.   Of secondary parties any act which discharges the instrument intentional cancellation of signature by holder discharge of prior party valid tender of payment made by prior party release of principal debtor. 4. but the party so paying it is remitted to his former rights as regard to all prior parties and he may strike out his own and all subsequent indorsements. material alteration (sec. unless made with assent of party secondarily liable. 2. 144) failure to give notice of dishonor certification of check at instance of holder reacquisition by prior party where instrument negotiated back to a prior party.   1. Failure to make due presentment (sec. it’s not discharged. 2ndary party reserved any agreement binding upon holder to extend time of payment.  Renunciation must be in writing unless instrument delivered up to person primarily liable thereon 1. 124: material alteration w/o assent of all parties liable avoids instrument except as against party to alteration and subsequent indorsers) 1. 5. unless holder’s right of recourse vs. and again negotiate instrument. principal debtor made at or after maturity discharges the instrument  renunciation does not affect rights of HDC w/o notice. but not entitled to enforce payment vs. such party may reissue and further negotiate. or unless right of recourse reserved. absolute and unconditional renunciation of his rights vs. any intervening party to whom he was personally liable where instrument is paid by party secondarily liable. 11. except where it’s payable to order of 3rd party and has been paid by drawer where it’s made/accepted for accommodation and has been paid by party accommodated. 6. or to postpone holder’s right to enforce instrument. . 8. 9.