COMPLETION AND DELIVERY

Sec. 11. Date, presumption as to. - Where the instrument or an acceptance or any
indorsement thereon is dated, such date is deemed prima facie to be the true date
of the making, drawing, acceptance, or indorsement, as the case may be.

NOTE: The negotiability of the instrument is not affected if the instrument is not dated.

Q: What is the effect of an “erroneous date”?

A: None. The negotiability of the instrument is not affected. However, Where the
instrument or an acceptance or any indorsement thereon is dated, such date is deemed
prima facie to be the true date of the making, drawing, acceptance, or indorsement. In
law, a prima facie presumption may be rebutted by proof to the contrary. Thus, if the date
appearing in the instrument is the wrong date, the party who is questioning the date or
who is alleging that the date is wrong may prove the true date.

Illustration

November 5, 2020
Thirty days after date, I promise to pay Gian Vergara the
sum of ₱100,000.00 .
Sgd. Ronaldo M. Villena Jr.

NOTE: November 5, 2020 is deemed prima facie to be the true date of the making of the
instrument. Accordingly, the date of maturity counting from such date is December 5,
2020.

Sec. 12. Ante-dated and post-dated. - The instrument is not invalid for the reason
only that it is ante-dated or post-dated, provided this is not done for an illegal or
fraudulent purpose. The person to whom an instrument so dated is delivered
acquires the title thereto as of the date of delivery.

Q: What do you mean by ante-dated?

A: An instrument is considered ante-dated if it is dated earlier than the date of issue, such
as a check dated earlier April 1, 2011 is issued on May 1, 2011.

Q: What do you mean by post-dated?

A: An instrument is considered post-dated if it is dated ahead of the issue, such as a
check dated May 1, 2011 is issued on April 1, 2011.

Q: What is the reason for post-dating?

 COMPLETION AND DELIVERY

A: A person may post date an instrument, usually a check, when he has no sufficient
funds at the time that he is drawing the check, but intends to deposit sufficient funds to
cover its amount by the date appearing thereon. He may also post-date a check to protect
himself when some act is to be performed by the payee before the date of the check. The
payee’s non-performance of such act before the date of the check will enable him to stop
its payment particularly if check is for deposit to the payee’s account only.

Q: What is the reason for ante-dating?

A: It may be ante-dated to evidence a pre-existing debt.

Example:
On November 1, 2020, Raven obtained a 60-day loan of ₱10,000.00 from Vimar with
promise that he will immediately issue a promissory note for such debt. However, Raven
forgot to issue the note immediately until he remembered if after a week. So on November
8, Raven issues a note to evidence the pre-existing debt placing on the instrument
November 1, 2020, the date when it was supposed to have been issued.

Q: What is the effect of ante-dating or post-dating?

A:
1. GR: The validity and negotiability of the instrument is not affected
XPN: When it is done for an illegal or fraudulent purpose

NOTE: Although the implication of Sec. 12 is that the instrument is rendered invalid
if the ante-dating and post-dating of the check is done for an illegal purpose, the
invalidity affects holders not in due course. In case of a holder-in-due-course, his
right to recover the amount of the instrument cannot be barred by any party on the
ground that the instrument was ante-dated or post-dated for an illegal or fraudulent
purpose.

2. If the instrument is a check, its post-dating has the effect of converting it from a
demand instrument to a time instrument because it is an order to pay a specified
amount at the future date indicated thereon. Accordingly, it cannot be cashed with
the bank against which it is drawn or be deposited before the date stated on the
check.

Q: When is title to ante-dated or post-dated instrument acquired?

A: The person to whom an ante-dated or post-dated instrument is delivered acquires the
title thereto not as of the date written thereon but as of the date of its delivery to him.

WHEN DATE MAY BE INSERTED

Sec. 13. When date may be inserted. - Where an instrument expressed to be payable
at a fixed period after date is issued undated, or where the acceptance of an
NEGOTIABLE INSTRUMENTS LAW

instrument payable at a fixed period after sight is undated, any holder may insert
therein the true date of issue or acceptance, and the instrument shall be payable
accordingly. The insertion of a wrong date does not avoid the instrument in the
hands of a subsequent holder in due course; but as to him, the date so inserted is
to be regarded as the true date.

a. When an instrument expressed to be payable at a fixed period after date is

issued undated

Illustration

(no date)
Thirty days after date, I promise to pay to the order of
Beida Santos the sum of ₱100,000.00
Sgd. Mae Anabel Santiago

b. When the acceptance of the instrument payable at a fixed period after sight is
undated.

Illustration

Thirty days after sight, I promise to pay to the order of

Beida Santos the sum of ₱100,000.00.

Sgd. Mae Anabel Santiago

To: Bernardo Santiago
Accepted (No ddate)
Sgd. Mae Anabel Santiago

WHO MAY INSERT DATE

The a.) payee or b.) any holder of the instrument may insert the true date of issue or
acceptance.

Q: What is the effect of insertion of wrong date?

A:
a. In the hands of a holder-in-due-course, the date so inserted, even though it is
wrong is to be regarded as the true date;

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 COMPLETION AND DELIVERY

b. In the hands of a holder who is not a holder-in-due-course:

1. As against parties before the wrongful insertion, the instrument is avoided
2. As against the party guilty of the wrongful insertion and parties subsequent to
him, the instrument is not avoided.

MECHANICALLY INCOMPLETE BUT UNDELIVERED INSTRUMENT

Sec. 14. Blanks; when may be filled. - Where the instrument is wanting in any
material particular, the person in possession thereof has a prima facie authority to
complete it by filling up the blanks therein. And a signature on a blank paper
delivered by the person making the signature in order that the paper may be
converted into a negotiable instrument operates as a prima facie authority to fill it
up as such for any amount. In order, however, that any such instrument when
completed may be enforced against any person who became a party thereto prior
to its completion, it must be filled up strictly in accordance with the authority given
and within a reasonable time. But if any such instrument, after completion, is
negotiated to a holder in due course, it is valid and effectual for all purposes in his
hands, and he may enforce it as if it had been filled up strictly in accordance with
the authority given and within a reasonable time.

Q: When does this section apply?

A: This refers to an instrument which is wanting in a material particular such as the
amount of the instrument, and it is delivered to another for him to fill the blank or blanks
and he negotiates it either for his own benefit or that of the person making the person.

Q: What are the rules under Sec. 14?

A:
1. A person in possession of an instrument that is wanting in a material particular has
prima facie authority to complete it by filling up the blanks therein strictly in
accordance with the authority given and within a reasonable time.
2. If a person delivers a blank paper to another person containing his signature for
the purpose of converting it into a negotiable instrument, the person to whom the
instrument is delivered has prima facie authority to fill it up for any amount
3. If the holder of the instrument, after it was filled up is a holder in due course, the
holder may enforce the instrument as if it has been filled up strictly in accordance
with the authority given and within a reasonable time.

MATERIAL PARTICULAR

Q: What are the matters mentioned in Sec. 25 which involves material alteration?
A:
NEGOTIABLE INSTRUMENTS LAW

1. Date
2. Sum payable, either for principal or interest
3. The time and place of payment
4. The member or the relations of the parties
5. The medium or currency in which payment is to be made
6. Which adds a place of payment where no place of payment is specified, or any
other changes or addition which alters the effect of the instrument in any respect

PRIMA FACIE AUTHORITY ON INCOMPLETE BUT DELIVERED INSTRUMENT

Q: What are the 2 kinds of prima facie which exists in a mechanically incomplete
but delivered instrument?
A:
1. Prima facie authority to fill up the blanks
2. Prima facie authority to fill up the instrument for any amount, provided the following
facts concur:
a. There is a signature on the blank
b. The person who signed the instrument in blank delivers it to another in order
that it may be converted into a negotiable instrument

Q: What do you mean by “the payee is deemed to have a prima facie authority to
fill it up”?

A: The moment the instrument is completed, the presumption is that the instrument was
completed with prior authority from the maker or the drawer and that the person who
completed the instrument did not exceed his authority.

NOTE: This presumption is conclusive in case of a holder-in-due-course. Filling up the

blanks not in accordance with the authority given is only a personal defense.

SIGNED BLANK PIECE OF PAPER

Q: What is the rule in case of a signed blank piece of paper delivered to another
person for the purpose of converting the same into a negotiable instrument?
A: If a person delivers a blank paper to another person containing his signature for the
purpose of converting it into a negotiable instrument, the person to whom the instrument
is delivered has prima facie authority to fill it up for any amount.

Q: What are the requisites?

A:
1. There must be delivery of a paper to another person
2. The paper that was delivered was a blank paper containing the signature of the
person who will deliver

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3. The delivery was for the purpose of converting it into a negotiable instrument

Examples:

1. If Andrea signs her name on a blank paper and delivers the said blank paper to
Guenever for the purpose of providing Guenever a specimen of signature. Andrea
will not be liable to Guenever if the latter converted the blank paper to a negotiable
instrument;

2. If Jonna negotiated the instrument to Jonnelyn who in turn negotiated the

instrument to Nina, the present holder is not a holder-in-due-course. In such a
situation, the purported maker is also not liable to Nina because there was no
authority to convert the paper into a negotiable instrument.

Q: What are the requisites in order to hold liable a person who became a party to
the instrument prior to completion?
A:
1. The blank must be filled up strictly in accordance with the authority given
2. The same must be filled up within reasonable time

Q: What are the rights and obligations of parties in case of wrongful completion?

HOLDER-IN-DUE-COURSE HOLDER-NOT-IN-DUE-COURSE
He may enforce the instrument as if it had He can enforce the instrument as
been filled up strictly in accordance with completed against:
the authority given and within a 1. The party guilty of the wrongful
reasonable time against: completion
1. The parties prior to the wrongful 2. The parties subsequent to the
completion wrongful completion
2. The party guilty of the wrongful
completion
3. The parties subsequent to the
wrongful completion

Q: Is the last sentence applicable to a HDC?

A: Yes, because under Sec. 14 “if any such instrument, after completion, is negotiated to
a holder in due course, it is valid and effectual for all purposes in his hands, and he may
enforce it as if it had been filled up strictly in accordance with the authority given and
within a reasonable time.”

Contra view: The HDC cannot recover from the purported maker because there was no
intention on the part of the said maker to issue the instrument. Fraud in factum is a real
defense which is available even against a HDC.
NEGOTIABLE INSTRUMENTS LAW

NATURE OF DEFENSE

1. If there was intention on the part of the person whose signature appears on the
blank paper to convert it into a negotiable instrument but the instrument is
wrongfully completed, the wrongful completion is only a personal defense. Such
defense is referred to a “want or lack of authority to complete instrument”

2. If there was no intention on the part of the person whose signature appears on the
blank paper to convert it into a negotiable instrument but the instrument, the
wrongful completion is a real defense referred to as “fraud in factum” (fraud in
factum) or fraud in esse contractus (fraud in the essence of the contract).

MECHANICALLY INCOMPLETE AND UNDELIVERED INSTRUMENT

Sec. 15. Incomplete instrument not delivered. - Where an incomplete instrument

has not been delivered, it will not, if completed and negotiated without authority,
be a valid contract in the hands of any holder, as against any person whose
signature was placed thereon before delivery.

This refers to an instrument which is wanting in a material particular, such as the amount
of the instrument or the name of the payee, and it is undelivered.

Q: What are the important circumstances under this situation?

A:
1. The instrument is incomplete
2. The incomplete instrument has not been delivered

NOTE: In Sec. 14, there was prima facie authority to fill up the incomplete instrument
because there was delivery, in Sec. 15, there is no such presumption.

Q: What is the effect if a mechanically incomplete instrument is completed and

delivered without authority?
A: The instrument shall not be valid in the hands of any holder, as against any person
whose signature was placed thereon before delivery.

Q: What are the rights and obligations of the parties if a mechanically incomplete
instrument is completed and delivered without authority?
A:
a. As against a party whose signature was placed on the instrument before delivery
He cannot be held liable because want or lack of delivery of an instrument is a real
defense.

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 COMPLETION AND DELIVERY

b. As against a party who signed the instrument after completion and delivery The
instrument can be enforced against the guilty party, as well as those subsequent
to him.

The instrument can be enforced against the guilty party, as well as those subsequent to
him.

MECHANICALLY COMPLETE AND UNDELIVERED INSTRUMENT

Sec. 16. Delivery; when effectual; when presumed. - Every contract on a negotiable
instrument is incomplete and revocable until delivery of the instrument for the
purpose of giving effect thereto. As between immediate parties and as regards a
remote party other than a holder in due course, the delivery, in order to be effectual,
must be made either by or under the authority of the party making, drawing,
accepting, or indorsing, as the case may be; and, in such case, the delivery may
be shown to have been conditional, or for a special purpose only, and not for the
purpose of transferring the property in the instrument. But where the instrument is
in the hands of a holder in due course, a valid delivery thereof by all parties prior
to him so as to make them liable to him is conclusively presumed. And where the
instrument is no longer in the possession of a party whose signature appears
thereon, a valid and intentional delivery by him is presumed until the contrary is
proved.

Q: What is the nature of the contract in case of mechanically complete but

undelivered instrument?
A: An instrument though complete in form is an incomplete and revocable contract until
the same is delivered for the purpose of giving effect thereto. Delivery is needed in order
to make the contract on the instrument complete. Before delivery, the maker or drawer
may cancel the instrument.

NEED FOR DELIVERY

Q: What is “delivery”?
A: It means the transfer of possession of the negotiable instrument by one person to
another with the intention to transfer title to the instrument. This involved:
a. Issue – first delivery of the instrument from the maker or drawer to the payee (or
bearer)
b. Negotiation – transfer from one person to another that constitutes the transferee
the holder of the instrument
NEGOTIABLE INSTRUMENTS LAW

Q: Who makes the delivery?

A:
1. Personally by the person who is supposed to transfer like the maker, drawer, or
indorser
2. Authorized agent or representative

NOTE: If the employee is not authorized to deliver the instrument, the contract of transfer
is still incomplete.

PRESUMPTIONS OF VALID DELIVERY

1. In the hands of a holder-in-due-course

A valid delivery of the instrument by all parties prior to him so as to make them liable to
him is conclusively presumed.

2. As between immediate parties and as regards a remote party other than a

holder-in-due-course

A valid and intentional delivery by the party sought to be charged is presumed until the
contrary is proved. The presumption of valid delivery is disputable.

The party sought to be charged (maker, drawer, acceptor, or endorser), in order to escape
liability, may prove:
1. That he made no delivery of the instrument
2. That if there was delivery, he did not authorize the same
3. That if he authorized or made the delivery, the same was conditional or for special
purpose only and not for the purpose of transferring the property in the instrument.

Q: Who is an “immediate party”?

A: One who, in relation to another party, may be physically remote, but is considered an
immediate party by reason of his knowledge of the conditions or limitations placed upon
the delivery of the instrument, or the fact that the instrument has not been delivered.

Q: What is the nature of the defense?

A: The defense of “want or lack of authority to complete instrument” or that the delivery
was conditional or for special purpose only and not for the purpose of transferring the
property in the instrument, is only a personal defense and may be availed of by any party
against a holder-not-in-due-course.

Examples:

a. Want of delivery of complete instrument

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Q: Sen executed a PN payable to the order of Princess for P10,000.00. He then

placed the instrument in his safe. Without the consent of Sen, Princess took the
instrument and indorsed it to Angela, then Angela to Nephi, Nephi to Cesiah,
and Cesiah to Jien, holder. Is Jien an immediate party? What are Jien’s rights?

A: If Jien was aware that Princess took the instrument without Sen’s authority, Jien is
an immediate party although he may be physically remote from Sen, the maker.

If Jien is a HDC, he can enforce the instrument against any party including Sen,
because a valid delivery of the instrument by all parties prior to him so as to make
them liable to him is conclusively presumed. In addition, Princess, Angela, Nephi and
Cesiah are liable as endorsers.

If Jien is not a HDC, he cannot enforce the instrument against Sen. However, he
can enforce it against , Princess, Angela, Nephi and Cesiah, who are liable on their
warranty as endorsers.

b. Conditional delivery

Q: Sen executed a PN payable to the order of Princess for P10,000.00 payable

to the order of Princess and delivered the same to Princess. Sen and Princess
agreed that the note shall become binding on Sen only after Sen has secured
the approval of his loan from the bank. Without Sen’s authority and before Sen
has obtained the required bank approval, Princess indorsed the note to Angela,
then Angela to Nephi, Nephi to Cesiah, and Cesiah to Jien, holder. What are the
rights and liabilities of the parties?
A: If Jien was a HDC, He can enforce the instrument against any party including Sen,
because a valid delivery of the instrument by all parties prior to him so as to make
them liable to him is conclusively presumed. In addition, Princess, Angela, Nephi and
Cesiah are liable as endorsers.

If Jien is not a HDC, he cannot enforce the instrument against Sen. For Sen, the non-
fulfillment of the condition is a valid defense against Jien. However, he can enforce it
against , Princess, Angela, Nephi and Cesiah, who are liable on their warranty as
endorsers.

c. Delivery for a special purpose

Example: Delivery for safe-keeping only

Q: Alaine was about to leave for a business trip. He signed several blank checks.
He instructed Ericka, his secretary, to fill them as payment for his obligations.
Ericka filled one check with her name as payee, placed P30,000.00 thereon,
endorsed and delivered it to Gladys. She accepted the check in good faith as
NEGOTIABLE INSTRUMENTS LAW

payment for goods she delivered to Ericka. Eventually, Ericka regretted what
she did and apologized to Jun. Immediately he directed the drawee bank to
dishonor the check. When Gladys encashed the check, it was dishonored.
a. Is Alaine liable to Gladys?
b. Supposing the check was stolen while, filled the blank check,
endorsed and delivered it to Gladys. Is Alaine liable to Gladys if the
check is dishonored?

A:
a. Yes. This covers the delivery of an incomplete instrument, under Section 14 of the
Negotiable Instruments Law, which provides that there was prima facie authority
on the part of Ericka to fill-up any of the material particulars thereof. Having done
so, and when it is first completed before it is negotiated to a holder in due course
like Gladys, it is valid for all purposes, and Gladys may enforce it within a
reasonable time, as if it had been filled up strictly in accordance with the authority
given.

b. No. Even though Gladys is a holder in due course, this is an incomplete and
undelivered instrument, covered by Section 15 of the Negotiable Instruments Law.
Where an incomplete instrument has not been delivered, it will not, if completed
and negotiated without authority, be a valid contract in the hands of any holder, as
against any person, including Alaine, whose signature was placed thereon before
delivery.

BASIC RULES

SECTION 14 SECTION 15 SECTION 16

Refers to an incomplete but
delivered instrument
The defense that is
available is a personal
defense that is available
only against a holder-not-
in-due-course
Refers to an incomplete
and undelivered instrument
The defense available to
the payor is a real defense
that can be set up even
against a HDC
Refers to a complete
instrument but delivered
The defense that is
available is a personal
defense that is available
only against a holder-not-
in-duecourse

NOTE: Soriano’s view:

1. If there was intention on

the part of the person
whose signature
appears on the blank
paper to convert it into a
negotiable instrument
but the instrument is

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 COMPLETION AND DELIVERY

wrongfully completed,
the wrongful completion
is only a personal
defense. Such defense
is referred to a “want or
lack of authority to
complete instrument”

2. If there was no intention

on the part of the person
whose signature
appears on the blank
paper to convert it into a
negotiable instrument
but the instrument, the
wrongful completion is a
real defense referred to
as “fraud in factum”
(fraud in factum) or
fraud in esse contractus
(fraud in the essence of
the contract).

Section 17. Construction where instrument is ambiguous. - Where the language of

the instrument is ambiguous or there are omissions therein, the following rules of
construction apply:
(a) Where the sum payable is expressed in words and also in figures and there
is a discrepancy between the two, the sum denoted by the words is the sum
payable; but if the words are ambiguous or uncertain, reference may be had to the
figures to fix the amount;
(b) Where the instrument provides for the payment of interest, without
specifying the date from which interest is to run, the interest runs from the date of
the instrument, and if the instrument is undated, from the issue thereof;
(c) Where the instrument is not dated, it will be considered to be dated as of the
time it was issued;
(d) Where there is a conflict between the written and printed provisions of the
instrument, the written provisions prevail;
(e) Where the instrument is so ambiguous that there is doubt whether it is a bill
or note, the holder may treat it as either at his election;
(f) Where a signature is so placed upon the instrument that it is not clear in
what capacity the person making the same intended to sign, he is to be deemed an
indorser; Where an instrument containing the word "I promise to pay" is signed by
two or more persons, they are deemed to be jointly and severally liable thereon.

Q: When is this provision applicable?

NEGOTIABLE INSTRUMENTS LAW

A: When the instrument is ambiguous or vague or there are omissions therein. The rules
on interpretation are intended to deal with the problems enumerated therein and how they
are to be resolved.

RULES

Where the sum payable is expressed in words and also in figures and there is
a discrepancy between the two, the sum denoted by the words is the sum
payable
Ratio: The sum in words is considered to have been more carefully written. Also, the sum
in words is more difficult to alter.

If the words are ambiguous or uncertain, reference may be had to the figures
to fix the amount

Instrument provides for the payment of interest, without specifying the date
from which interest is to run

1. If the instrument is dated, the interest runs from such date

2. If instrument is undated, interest runs from the date of its issue

I promise to pay to the order of Jonnel Hallado the sum

of ₱50,000 on June 30, 2020 with 12% interest.
Sgd. Marie Mar Dionisio

Thus, if the foregoing note is issued on May 10, 2020, then the interest runs from such
date.

If the instrument is not dated, it will be considered to be dated as of the time it

was issued

If there is conflict between the written and printed provisions of the

instrument, the written provisions prevail.

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Ratio: The written provisions are deemed to have been made at a later time and will be
considered an amendment of the printed provisions

Where the instrument is so ambiguous that there is doubt whether it is a bill or

note, the holder may treat it as either at his election

I promise to pay to the order of Jayvee Dionisio the

sum of ₱100,000.00
Sgd. Cel Marian Diaz
To: Lyka de Guzman

The instrument makes a promise and yet it contains a drawee which is a party in a bill of
exchange.
Q: In what instances may a bill of exchange (BOE) be treated as a promissory note?
A:
1. when the drawer and the draweee of the BOE are the same person
2. the drawee is a fictitious person
3. drawee has no capacity to contract
4. the instrument is so ambiguous that there is doubt whether it is a bill or a note

Where a signature is so placed upon the instrument that it is not clear in what
capacity the person making the same intended to sign, he is to be deemed an
indorser

GR: liable as indorser

XPN: He indicates the capacity he is signing

NOTE: The maker, drawer, or acceptor must indicate in what capacity they are signing.
NEGOTIABLE INSTRUMENTS LAW

Where an instrument containing the word "I promise to pay" is signed by two
or more persons, they are deemed to be jointly and severally liable thereon

JOINT LIABILITY SOLIDARY OR JOINT AND SEVERAL

LIABILITY
2 or more persons are bound to pay only 2 or more persons are bound to and can
their proportionate share in the obligation be made to comply with the entire
obligation
a. when the obligation expressly so
states
b. when the law
c. when the nature of the obligation
requires
Presumption under the law: Art.1207 of the NCC, the presumption is that the liability
of the debtors is joint.

I promise to pay to the order of Mark Joseph Flestado

the sum of ₱10,000.00.
Sgd. Micaella de Jesus Sgd. Kaira Buluran

Either Micaella or Kaira can be held liable by the holder for the whole amount of
₱10,000.00 since their liability is joint and several, i.e., solidary. However, if note uses the
words “we promise to pay,” Juan and Maria can each be held liable only for ₱5,000.00
since their liability is only joint.

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