QUITAYEN, IANNA CARMEL Y.

JD – II LAW 202 Negotiable Instruments Law

April 26, 2021

Exercise #5 – Assignment

Question no. 1:
Discuss the significance of acceptance of a bill. (.5%)
The significance of an acceptance of a bill is in order to bind the drawee of a bill as an
acceptor, and to make him an actual party liable to the bill. Prior to an acceptance, the
drawee is not bound in any way as a party to the bill and the payee or holder of the bill
has no recourse against him, even if it should be found that such drawee holds funds of
the drawer sufficient to cover the amount drawn on the bill.

Question no. 2:
Discuss the essential requisites of acceptance of a bill. (.5%)
The essential requisites of the acceptance of a bill, which can be found in Section 132 of
the Negotiable Instruments Law, are the following:
1. The acceptance must be in writing;
2. The acceptance must be signed by the drawee; and
3. The acceptance must not express that the drawee will perform his obligation by
any other means than the payment of money.

Question no. 3:
Discuss the elements of a correct way of accepting a bill. (.5%)
The elements of a correct way of accepting a bill can be found in Sections 133, 134, 135
and 136 of the Negotiable Instruments Law.
Section 134 provides that when the acceptance is written on a paper separate from
the bill itself, it does not bind the acceptor except:
a. in favor a person to whom the acceptance is shown; and
b. such person, upon the faith thereof, receives the bill for value.
Although the law does not require that the acceptance must be done on the face
of the bill, Section 133 states that the holder may require that the acceptance be written
on the face of the bill and if it is refused, holder may treat the bill as dishonored.

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QUITAYEN, IANNA CARMEL Y.
JD – II LAW 202 Negotiable Instruments Law
April 26, 2021

Acceptance may also be done for a bill that is yet to be drawn which is expressly
provided under Section 135. There must be an unconditional promise in writing to accept
a bill before it is drawn, which is deemed an actual acceptance in favor of every person
who, upon the faith thereof, receives the bill for value.
Section 136 provides that the drawee is allowed to accept twenty-four hours after
presentment for acceptance in which to decide whether or not he will accept the bill.

Question no. 4:
What is “constructive acceptance” of a bill? (.5%)
Section 137 of the Negotiable Instruments Law provides that there is constructive
acceptance of a bill in the following cases:
1. Where the drawee to whom a bill is delivered for acceptance destroys it;
2. Where the drawee refuses, within twenty-four hours or within such period as the
holder may allow, to return the bill accepted or non-accepted.

Question no. 5:
Can the holder of the bill demand from the drawee that the acceptance be written on the
bill itself? What is the effect if the drawee refuses to do so? Discuss with reasons. (2%)
Yes, the holder of the bill may demand from the drawee that the acceptance be written
on the bill itself. Under Section 133 of the Negotiable Instruments Law, the holder of a bill
presenting the same for acceptance may require that the acceptance be made on the
face of the bill itself. In the same section, the holder, if such request is refused, may treat
the bill as dishonored.

Question no. 6:
Rex wants to buy goods from Pia to be covered by a bill in the amount of P1,000,000.00.
Before Rex draws the bill, Pia secures herself by writing to EW asking whether EW will
accept and honor the bill. EW confirms to accept and honor the bill. In view of such
confirmation, Pia sells her goods to Rex.

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QUITAYEN, IANNA CARMEL Y.
JD – II LAW 202 Negotiable Instruments Law
April 26, 2021

a. Is EW liable to Pia on the amount of the bill? Discuss with reasons. (1%)
Yes, EW is liable to Pia on the amount of the bill. As provided under Section 135
of the Negotiable Instruments Law, an unconditional promise in writing to accept a
bill before it is drawn is deemed an actual acceptance in favor of every person
who, upon the faith thereof, receives the bill for value. In the instant case, EW’s
confirmation to accept and honor bill is deemed an actual acceptance and EW
being the acceptor of the bill is, therefore, liable to Pia.

b. Suppose Pia negotiates the bill to Ana, is EW liable to Ana? Discuss with reasons.
(2%)
It depends. If Ana has not seen or has no knowledge of EW’s promise to
accept, EW is not liable to Ana. Section 135 of the Negotiable Instruments Law
states that an unconditional promise in writing to accept the bill before it is drawn
is binding in favor of every person who, upon faith thereof, receives the bill for
value. This presupposes that Ana should have knowledge of the acceptance and
upon the faith thereof, she relies upon such acceptance. In such case, EW will be
liable to Ana.

Question no. 7:
Distinguish between “general acceptance” and “qualified acceptance.” (.5%)
The Negotiable Instruments Law states that a general acceptance is an acceptance to
make payment in a particular place unless it expressly provides that the bill is to be paid
there only and not elsewhere.
While a qualified acceptance in express terms varies the effect of the bill as drawn. An
acceptance is deemed a qualified one when it is:
a. Conditional, in that, payment by acceptor depends upon the fulfillment of a
condition therein stated;
b. Partial, in that, acceptance to pay is for a part only of the amount for which the bill
is drawn;
c. Local, in that, acceptance is to pay only at a particular place;

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QUITAYEN, IANNA CARMEL Y.
JD – II LAW 202 Negotiable Instruments Law
April 26, 2021

d. Qualified as to time; or
e. The acceptance of some one or more of the drawees, but not of all.

Question no. 8:
Discuss the essential elements of proper presentment for acceptance. (.5%)
Under Section 145 of the Negotiable Instruments Law, presentment for acceptance must
be made by or on behalf of the holder at a reasonable hour, on a business day and before
a bill is overdue, to the drawee or some person authorized to accept or refuse acceptance
on his behalf:
a. In the case of a bill addressed to two or more drawees who are not partners,
presentment must be made to them all unless one has been expressly authorized
to accept or refuse acceptance for all, and in such case, presentment may be made
to him only;
b. In the case of a bill where drawee is dead, presentment may be made to his
personal representative;
c. In the case of a drawee adjudged a bankrupt or an insolvent or has made an
assignment for the benefit of creditors, presentment may be made to him or to his
trustee or assignee.

Question no. 9:
Is presentment for acceptance necessary on instruments that are payable on demand?
Discuss with reasons. (1%)
No, presentment for acceptance is not necessary on instruments payable on demand. As
provided in the first paragraph of Section 143 of the Negotiable Instruments Law,
presentment must be made where the bill is payable after sight or in any other case,
where presentment is necessary to fix the maturity of the instrument. The purpose for
which presentment must be made is in order to fix the maturity date of the instrument. In
the instant case, the instrument in question is one payable on demand, which is due and
demandable immediately. As its maturity is already ascertained, presentment for
acceptance is no longer required.

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QUITAYEN, IANNA CARMEL Y.
JD – II LAW 202 Negotiable Instruments Law
April 26, 2021

Question no. 10:

Suppose the bill is not accepted upon presentment:
a. What are the duties of the holder, if any? Discuss with reasons. (.5%)
Section 150 of the Negotiable Instruments Law provides that when a bill presented
for acceptance is not accepted by the drawee, the person presenting it must treat
the bill as dishonored by non-acceptance or loses his right of recourse against the
drawer and indorsers. He must take the necessary proceedings, such as the giving
the notice of dishonor or protesting in cases it is required, in order not to lose his
right of recourse as against the drawer and indorsers.

b. What are the rights of the holder, if any? Discuss with reasons. (.5%)
Section 151 of the Negotiable Instruments Law states that the holder of a bill
dishonored by non-acceptance has an immediate right of recourse against the
drawer and indorsers for the amount drawn on the bill, after taking the necessary
proceedings of giving notice of dishonor and protest when required. In case of
dishonor by non-acceptance, presentment for payment is no longer needed since
payment cannot be expected.

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