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Negotiable Instruments Laws: Based On 2015 Bar Exam Syllabus For Commercial Law
Negotiable Instruments Laws: Based On 2015 Bar Exam Syllabus For Commercial Law
Words
The word prevail, but if the words are ambiguous, reference will be made to
the figures to fix the amount
Instrument Not Dated
Starting date is the date of instrument, in the absence of said date, from date
of issue
Forms and Interpretation
When instrument is ambigous
Such that there is doubt whether it is a bill or note, the holder may treat it as
a note or a bill (1998 Bar)
Signature on Instrument Does Not Indicate Capacity in
Which Made
Deemed as indorser with secodary liability
When Promissory Note Worder “I Promise to Pay” is
*Ortha: LC has lots of condition before bank may honor it. Therefore, not
negotiable.
Completion and Delivery
Insertion of Date
Tambasacan: “Dates are not material but only for
maturity”
Insertion of Date
RULES AS TO DATES
Must be authorized
Must disclose his principal
Must sign for and in behalf of the principal
Without disclosing principal, personal liability (Sec. 20,
NIL)
Indorsement by Minor or
Corporation
Mindors and disqualified corporations although
incapacitated to make or draw instruments, can
negotiate instruments, transferring valid titled thereto,
but are not liable as indorsers under the said signatures
Forgery
Counterfeit making or fraudulent alteration of any writing
It may consist of:
Signung of another's name with intent to defraud
Alteration of an instrument in the name, amount, description of payee, etc
with intent to defraud.
The signature is wholly inoperative, and no right to retain
The name of the indorsee is specified (vis a vis General). Ex. Pay to A
Blank
An indorsement which does not specify the name of the indorsee and usually
consists of the indorser’s signature, and nothing else found at the back of
the instrument.
Restrictive
The right of the indorsee under the instrument is made to depend on the
happening of the contingent event stated in the instrument.Said indorsee
however negotiate the instrument succeeding indorsees acquiring right to it
subject to the condition in the origina indorsement.
Qualified
One where the indorser places under his signature the words “without
recourse” or the like. Does not become liable secondarily under his
indorsement. SC: “With recourse” meams indorser is a general indorser
(Ortha)
Regular
May sue thereunder in his own name, and payment to him in due course
discharges the instrument
If PN is non negotiable, subsequent holders can never be holders in due
course but are mere assignees against whom defenses may be raised by
prior parties.
Fact that PN was executed after the effectivity date of the merger does not
militate against the petitioner.
Holder in Due Course
Requisites under Sec. 52:
One who takes the instrument in good faith and for value
At the time the instrument was negotiated to him, he had not notice at any
defect in the title of the person negotiating it
Every holder is deemed prima facie to be a holder in due course
Complete and regular on its face (UPLC)
SC: Fact that postdated checks were merely issued as
security not a ground for discharged as against the HIDC
If instrument was acquired when overdue, not HIDC for
lack of good faith. An instrument becomes overdue the
day after its maturity. A holder accepting an instrument on
its date of maturity is not an HIDC (Ortho)
Holder Not in Due Course
Without any, some , or all of the requisites under Sec. 52,
NIL
HOLDER FOR VALUE – one who has all the requisites for a
holder in due course except notice of want of
consideration. Prior parties may avail of defense against
said holder.
SHELTER RULE – Acquires title from HIDC and not a party on the fraud, acquires rights of HIDC but do
Maker
Acceptor or the Drawee Who Accepts the Instrument
Parties Secondarily Liable
The Drawer
The General Indorser
The Irregular Indorser
Parties with Limited Liability