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12. Foreign Bill of Exchange- is a bill which is, The law speaks of material particular. It
or on its face purports to be, drawn or may be defines as any particular proper
payable outside the Philippine Islands. to be inserted in a negotiable instrument
a. to be drawn in the Philippines but to make it complete. Thus, blanks for
payable outside thereof; or date, due date, name of payee, amount,
b. to be payable in the Philippines but or rate of interest may be filled in.
drawn outside thereof.
1. Insertion of Date
The invalidity of the above instrument No person liable on the instrument whose
is only with reference to the parties signature does not appear thereon, except as
whose signature appear on the herein otherwise provided. But one who signs
instrument BEFORE and not after in a trade name will be liable to the same
delivery. extent as if he signed in his own name. (Sec.
18)
4. Complete but Undelivered
Instruments 2. Signature of Agent
Every contract on a negotiable instrument is The signature of any party may be made by a
incomplete and revocable until delivery of the duly authorized agent. No particular form of
instrument for the purpose of giving effect appointment is necessary for this purpose
thereto. As between immediate parties, and and the authority of the agent may be
as regards a remote party other than a holder established as in other cases of agency. (Sec.
in due course, the delivery, in order to be 19)
effectual, must be made either by or under
the authority of the party making, drawing, Where the instrument contains or a person
accepting, or indorsing, as the case may be; adds to his signature words indicating that he
and in such case the delivery may be shown signs for or on behalf of a principal, or in a
to have been conditional, or for a special representative capacity, he is not liable on
purpose only, and not for the purpose of the instrument if he was duly authorized; but
transferring the property in the instrument. the mere addition of words describing him as
But where the instrument is in the hands of a an agent, or as filling a representative
holder in due course, a valid delivery thereof character, without disclosing his principal,
by all parties prior to him so as to make them does not exempt him from personal liability.
liable to him is conclusively presumed. And (Sec.20)
where the instrument is no longer in the
possession of a party whose signature When agent may escape liability:
appears thereon, a valid and intentional
delivery by him is presumed until the a. He is duly authorized;
contrary is proved. (Sec. 16)
b. He adds words to his signature indicating
a. Even if it is completely written it is that he signs as an agent, that is , for or
incomplete and revocable until its on behalf of a principal, or in a
delivery. representative capacity; and
i. If endorser’s signature is forged, loss will 10. If the drawee has not accepted the bill
be borne by the forger and parties but has paid it, the drawee cannot recover
subsequent thereto from the drawer or the recipient of the
proceeds,
Forgery absent
is the any act of
counterfeiting negligence on
of any
j. Drawee bank is not conclusively presumed their part.
writing, consisting of the signing of
to know the signature of the indorser. The another’s name with intent to defraud, is
responsibility falls on the bank which last forgery. The bank which allows the
guaranteed the indorsement and not the payment on a check where the signature
drawee bank is forged is liable to the depositor-drawer.
When one of two persons suffers the
k. Where the payee’s signature is forged, wrongful act of a third person, he whose
payments made by the drawee bank to the negligence was the proximate cause of
collecting bank are ineffective. No the loss must bear the loss. Pursuant to its
debtor/creditor relationship is created. An prime duty to ascertain well the
agency to collect is created between the genuineness of the signatures of its client
person depositing and the collecting bank. depositors, the drawee-bank is expected
The drawee bank may recover from collecting to use reasonable business prudence. In
bank who may, in turn, recover from the the performance of that obligation, it is
person depositing. bound by its internal banking rules and
regulation that form part of the contract it
Rules on Liabilities of Parties on a Forged enters into with its depositors. A drawee
Instrument bank must restore to the account of the
drawer the amounts of checks on which
the signature of its president was forged
even of the forger was the independent
auditor of the drawer, who was in charge
An instrument is negotiated when it is
transferred from one person to another in
such manner as to constitute the transferee
the holder thereof. If payable to bearer, it is
negotiated by delivery; if payable to order, it
is negotiated by the indorsement of the
holder and completed by delivery (sec 30)
2. That he has taken it in good faith and for The right of the holder to enforce payment of
Value; a negotiable instrument may be defeated by
• Good faith refers to the good faith of the the defenses that may be raised by the
indorsee or transferee and not the seller person primarily or secondarily liable.
of the instrument.
• Bad faith does not require actual Real Defenses Personal Defenses
knowledge of the exact truth; it is NATURE:
sufficient that the facts within the Those that attach to the Those which are available
knowledge tend to show that there was instrument itself and are only against a person not
something wrong with the transaction. available against all an HDC or a subsequent
holders, whether in due holder who stands in
• Value is any consideration sufficient to
course or not, but only by privity with him
support a simple contract. But Love and
the parties entitled to
affection do not constitute value within
raise them.
the meaning of the law. Adequacy of
STATUS OF CONTRACT:
consideration is not required (1355 civ
Void Voidable
code)
AVAILABLE AGAINST
• Purchase of the instrument at a discount
HDC: Not available against
does not prevent the holder from being
Available against HDC HDC
HDC. However, where the discount is
DEFENSES:
usually large, this fact together with other
Key: (PAID-WIFI-MUD- Key: (CUBIC-RAIN-WIFI-
facts, may be material on determining
FEM) MICU)
whether the holder was in good faith.
1.Presciption 1.Non-delivery of
3. That at the time of its negotiation to him,
2.Material Alteration Complete instrument
he has No Notice of any infirmity in the
3.Illegality – if declared (sec 16)
instrument or defect in the title of the
void for any purpose 2.Ultra vires acts of
person negotiating it.
4.Duress amounting to corporation where the
forgery corpo has the power
5.Want of authority of to issue negotiable such age (estoppel); 2) the minor kept the fruits
agent paper but the or benefits; and 3) the minor spent the money in
6.Non-delivery of issuance was not good faith (art 1427, NCC)
Incomplete authorized for the
instrument particular purpose for 2. Fraud
7.Forgery which it was issued
8.Insanity where the 3.Negotiation in Breach a. Fraud In Factum (real defense)
insane person has a of faith (sec 55) The person who signs the instrument lacks
guardian appointed 4.Insertion of wrong knowledge of or essential terms of the
by the court date in an instrument instrument. But the defense is not available if
9.Minority (available (sec 13) the party involved had reasonable
only to the minor) 5.Conditional delivery opportunity to obtain such knowledge.
10. Ultra Vires Act of of compete
Corpo instrument An essential element is that the maker or
11. Discharge in 6.Filling up blank indorser must have exercised ordinary
Insolvency beyond Reasonable diligence and in no manner contributed
12. Fraud in Factum time (sec14) negligently to the imposition.
or Esse contractus or 7.Absence or failure of
Fraud in Execution consideration, b. Fraud in Inducement (personal defense)
13. Execution of whether partial or The person who signs the instrument intends
instrument between total (sec28) to sign the same as a Negotiable Instrument
public enemies 8.Illegal consideration (NI) but was induced by fraud.
14. Marriage in the (sec55)
case of a wife 9.Filling up blank Not 3. Incomplete but Delivered NI (sec 14)
within authority (sec
Note: an instrument 14) a. Prima Facie Authority to Complete the
subject to real defense 10. Want of authority Instrument
cannot be enforced of agent where he has Requisites:
against the person to apparent authority
whom the defense is 11. Fraud in a) Want of a material particular in the
available but it can be Inducement instrument (note: it includes the matters
enforced against those 12. Acquisition by stated in Sec 125 of the NIL)
who such defense is not Force, duress or fear b) Possession thereof by a person;
available such as under (sec55) c) That such person had authority to fill up
sec. 23. 13. Intoxication the blank:
14. Mistake 1. strictly in accordance with the
15. Insanity where authority given; and
there is no notice of 2. within a reasonable time
insanity on the part of
the one contracting b. Prima Facie Authority to Fill up for Any
with the insane Amount
person Requisites:
16. Negotiation a) Signature on a blank paper
under Circumstances b) Person signing in blank delivers it to
that amount to fraud another
(sec55) c) Delivery was for the purpose of
17. Acquisition of the converting it into a negotiable
instrument by instrument.
Unlawful means
(sec55) If the holder of the instrument, after it was
filled up, is a HDC, the holder may enforce
Effects of Certain Defenses the instrument as if it has been filled up
strictly in accordance with the authority given
1. Minority and within a reasonable time. (Aquino, Notes
and Cases on Banks, Negotiable Instruments
Negotiation by a minor passes title to the and other Commercial Documents, 2006ed)
instrument (sec 22). Furthermore, under Secs 60,
61, 62, the maker, drawer and acceptor, by 4. Incomplete and Undelivered NI (sec 15)
making, drawing and accepting the instrument, Two steps in the execution of a negotiable
admits the capacity of the payee to indorse. But instrument:
the minor is not liable and the defense is personal 1. The act of writing the instrument
to him. Thus, other parties who are capacitated completely and in accordance with Sec.
cannot invoke such defense. 1; and
2. The delivery of the instrument with the
However, the minor shall be liable under the ff intention of giving effect thereto.
exceptions: 1) the minor actively misrepresents
his age and it appears that he is physically of
Note: if completed and negotiated without a) When a signature is forged or made
authority, not a valid contract against a person without the authority of the person, the
who has signed before delivery of the contract signature (not the instrument itself and
even in the hands of HDC but subsequent the genuine signatures) is wholly
indorsers are liable. This is REAL defense which inoperative.
belongs to the drawer (or parties, if any, prior to b) No right to retain the instrument, or
the delivery of the instrument to the payee) to give discharge therefore, or to enforce
against “any holder” payment thereof against any party
thereto, can be acquired.
Reason: The law does not make any distinction Exception: UNLESS the party against
between a HDC and one who is not a HDC. whom it is sought to enforce such right is
precluded from setting up the forgery or
NOTE: Where an INCOMPLETE and want of authority. (sec23)
UNDELIVERED instrument I sin the hands of
HDC, there is a PRIMA FACIE presumption of H. LIABILITIES OF PARTIES
delivery which the maker may rebut by proof of
non-delivery Primary Liability
• AS TO THE MAKER, the unconditional
promise attaches the moment the maker
makes the instrument
• AS TO THE ACCEPTOR, the acceptor’s
assent to the unconditional order
5. Complete but Undelivered (sec 15) attaches the moment he accepts the
instrument. No further act is necessary in
Every contract on a negotiable instrument is order for the liability to accrue. What is
incomplete and revocable until delivery of the necessary only is for the holder to
instrument for the purpose of giving effect enforce such liability by presenting it for
thereto. payment.
Counterfeiting or fraudulent alteration of any NOTE: neither can the maker escape
writing, which may consist of: liability by virtue of the non-benefit to
him of the proceeds of the note since that
a. Signing of another’s name with intent to is of no concern to the payee. [Araneta vs
defraud; or Perez, (1965)]
b. Alteration of an instrument in the name,
amount, name of payee, etc. with intent to d. Solidary liability of Joint Makers
defraud.
Effects:
• As a co-maker, he binds himself to be compelled to pay the instrument on account of
jointly and severally liable with the Sec 66.
principal debtor in case the latter defaults
in the payment of the loan, such Irregular Indorser - usually they are
undertaking is deemed to be that of a accommodation parties.
surety as an insurer of the debt, and not To be considered as an irregular indorser:
as a guarantor who warrants the solvency 1. A person must not be a party to the
of the debtor. The creditor’s right to instrument
proceed against the surety exists 2. He must have signed it in blank; and
independently of his right to proceed 3. He must have signed before delivery.
against the principal.
“irregular” or “anomalous” indorser because
2. Liability of Drawer he indorses in an unusual, singular, or
peculiar manner. His name appears where we
a. Drawer, by merely signing his name on naturally expect another name.
the bill as drawer, admits that: He is liable as a general indorser because he
indorses without qualification.
• Payee exists
• Payee has capacity to endorse 5. Warranties
• Drawee will accept or pay or both
a. Maker: he warrants that:
according to tenor of bill.
a) He will pay according to the tenor
• in case of non-acceptance or non-
of the promissory note;
payment, drawer will pay b) The payee exists; and
c) The payee has capacity to
b. Drawer does not engage to pay the bill indorse
absolutely. He engages that the bill will be b. Acceptor: he warrants that:
accepted or paid or both, according to its a) The existence of the drawer;
tenor, and that he will pay only when: b) Genuineness of drawer’s
i. it is dishonored; and signature;
ii. the necessary proceedings of c) Capacity and authority of drawer
dishonor are duly taken. to draw the instrument
d) Existence of payee and his then
NOTE: There is a contractual relation capacity to indorse.
between the drawer and the drawee; a c. One who negotiates by delivery and qualified
drawer may not unilaterally discharge himself indorsement (completed by delivery)
from liability on checks issued by him as warrants (Sec. 65):
security and not for value and negotiated to a a) That the instrument is genuine and in
holder in due course by the mere expediency all respects what it purports to be;
of withdrawing his funds from the drawee b) That he has a good title to it;
bank (State Investment House Inc v. CA, ’93); c) That all prior parties had capacity
when the holder deposits his check with the to contract;
collecting bank, the nature of relationship d) That he has no knowledge of any fact
created is one of agency, i.e., the bank is to which would impair the validity of the
collect from the drawee of the check the instrument or render it valueless.
corresponding proceeds. Thus, the privity of
contract is between the holder-depositor and NOTE: But when the negotiation is by
the collecting bank. There is no privity of delivery only, the warranty extends in favor
contract between the drawer and the of no holder other than the immediate
collecting bank. transferee. The provisions of subdivision (c)
of this section do not apply to a person
3. Liability of Acceptor negotiating public or corporation securities
other than bills and notes.(sec 65)
• engages to pay acc to the tenor of his
acceptance d. General Indorser: every indorser who
• admits the existence of the drawer, the indorses without qualification warrants to all
genuineness of his signature and his capacity subsequent holders in due course:
and authority to draw the instrument; and The matters and things mentioned in
• admits the existence of the payee and his subdivisions (a), (b), and (c) of the next
capacity to indorse preceding section 65 and
that the instrument is, at the time of his
4. Liability of Indorser indorsement, valid and subsisting.
And, in addition, he engages that, on due
General Indorser - indorses the instrument presentment, it shall be accepted or paid,
without any qualification; secondarily liable to the or both, as the case may be, according to
holder or any subsequent indorser who may be its tenor, and that if be dishonored and
the necessary proceedings on dishonor
be duly taken, he will pay the amount
thereof to the holder, or to any Reason: If the drawee is fictitious, there is no
subsequent indorser who may be one to whom presentment is to be mad
compelled to pay it.
c) By waiver of presentment, express or implied
2. Parties who may give notice of dishonor Waiver – the intentional abandonment of a known
right; with reference to a notice of dishonor, it is
The notice may be given: the willingness on the part of the drawer or the
1. by the holder or indorser concerned to be bound as such even
2. another in behalf of the holder or without due notice of dishonor
3. by a party to the instrument who may
be compelled to pay it to the holder • it may be made before the time of giving
and who, upon taking it up, would notice or after the omission to give notice
have a right to reimbursement from • express waiver – made orally or in writing (ex.
the party to whom notice is given or
when “notice of dishonor waived” appears
4. another person in behalf of such
above the indorser’s signature)
party
• implied waiver – inferred from act or
3. Effect of notice language and it usually takes place after
there has been tan omission to give notice
a) When notice of dishonor is given by or on
behalf of the holder, it inures to the Who are affected by an express waiver?
benefit of
• If the waiver is embodied in the instrument
• all holders subsequent to the holder who itself (i.e.,it appears in the body or on the
has given notice, and face of the instrument), it binds all parties
• all parties prior to the holder but • If it is written above the signature of an
subsequent to the party to whom the indorser, it binds only him
notice has been given and against whom
they have a right of recourse Effect of waiver of protest
b) When notice of dishonor is given by or on Protest – the formal instrument executed usually
behalf of the party entitled to give notice, it by a notary public certifying that the legal steps
inures to the benefit of necessary to fix the liability of the drawee and
the indorsers have been taken
Where protest is waived, the following are also the instrument to the drawee for acceptance
deemed waived and notify the drawer and indorsers is
acceptance is refused (Sec.117)
a) presentment and
b) notice of dishonor K. DISCHARGE OF NEGOTIABLE INSTRUMENT
a) Notice of dishonor is dispensed with when, • Principal debtor – the person ultimately
after the exercise of reasonable diligence, it bound to pay the debt and not
cannot be given or does not reach the parties necessarily the person primarily liable on
sought to be reached.(Sec. 112) the instrument
1) Where the drawer and the drawee are c. to the holder thereof
the same person
2) When the drawee is a fictitious d. in good faith and without notice
person or a person not having that the holder’s title is defective
capacity to contract
3) When the drawer is the person to
whom the instrument is presented for
b) By payment in due is course by the party
payment
accommodated, where the instrument is
4) Where the drawer has no right to
made or accepted for his accommodation
expect or require the drawer has
countermanded payment
c) When notice need not be given to the c) By the intentional cancellation thereof by the
indorser (Sec. 115): holder
i. When the drawee is a fictitious
• Cancellation may be done by writing the
person or a person not having
word “cancelled” or “paid” on the face of
capacity to contract, and the indorser
the instrument or by tearing, burning,
was aware of the fact at the time he
mutilating or destroying the instrument
indorsed the instrument
(de Leon)
ii. Where the indorser is the person to
whom the instrument is presented for
payment
iii. Where the instrument is made or d) By any other act which will discharge simple
accepted for his accommodation contract for the payment of money
d) When it is waived expressly or impliedly (Sec. • Obligations are extinguished by (Article
109)
1231 New Civil Code):
a. By payment or performance
7. Effect of failure to give notice of
dishonor by non-acceptance b. By the loss of the thing due
• Failure of a previous holder to give a notice of c. By the condonation or remission
dishonor by non-acceptance cannot prejudice of the debts
a holder in due course who may still present
d. By the confusion or merger of the recourse against such party is expressly
rights of creditor and debtor reserved (Sec. 120)
• “agreement binding on the holder”
e. By compensation means agreement binding on the holder
made with the principal debtor
f. By novation • Agreement must be supported by a
valuable consideration and for a definite
period
e) When the principal debtor becomes the g) By failure to give notice of dishonor to him
holder of the instrument at or after maturity unless excused (Sec. 89)
in his own right
NOTE: Generally, a discharge of a party
• Requisites: secondarily liable does not effect a discharge of the
instrument itself
a. Reacquisition must be by the
principal debtor 3. Right of a party who discharged
instrument
b. In his own right (not in a
representative capacity)
General Rule: Where the instrument is paid by a
party secondarily liable thereon, it is not discharged
c. at or after the date of maturity
but the party paying is remitted to his former rights
as regards all prior parties, and he may strike out
2. Discharge of parties secondarily liable
his own and all subsequent indorsement, and
(Sec. 120):
renegotiate the instrument.
Exceptions:
a) By any act which discharges the instrument
a) Where it is payable to the order of a third
(any of those acts mentioned in Sec. 119)
person and has been paid by the drawer
b) By the intentional cancellation of his
b) Where it is made or accepted for his
signature by the holder
accommodation and has been paid by the
• The holder’s right to cancel an indorser’s
party accommodated
signature is subject to the limitation that
the indorsement is not necessary to the 4. Renunciation by the holder
holder’s title
c) By the discharge of a prior party How it is made:
• Applies only to discharge by a holder and
not to discharge by operation of law a) Renunciation must be in writing unless the
instrument is delivered up to the person
d) By a valid tender of payment made by a prior primarily liable thereon, or
party b) in oral accompanied by a surrender of the
• “Tender of Payment” – the act by which instrument to the person primarily liable
one produces and offers a person holding thereon
a claim or demand against him the
amount of money which he considers and Effect of renunciation
admits to be due, in satisfaction of such
claim or demand without any stipulation a) If it is in favor of a secondary party made by
or condition the holder before, at or after the maturity of
• An accepted valid tender of payment the instrument, it discharges the such
made by a prior party discharges the secondary party and all parties subsequent to
latter and all parties subsequent to him him but the instrument remains in force
b) If in favor a the principal debtor, made at or
e) By a release of the principal debtor, unless after maturity, it discharges the instrument
the holder’s right of recourse against the and all parties thereto, provided, renunciation
party secondarily liable is expressly reserved is made absolutely and unconditionally
• The release of the principal debtor c) In either case, the renunciation does not
discharges the instrument, thus, all the affect the rights of a holder in due course
secondary parties are also discharged without notice
• The release of the principal debtor must
be by the act of the holder and not by L. MATERIAL ALTERATION
operation of law
1. Concept
f) By any agreement binding upon the holder to
extend the time of payment, or to postpone • Material alteration is defined to be any
the holder’s right to enforce the instrument, change in the instrument which affects or
unless made with the assent of the party changes the liability of the parties in any
secondarily liable, or unless the right of way. Any other alteration is immaterial
and, therefore, inoperative to affect the refused, may treat the bill as dishonored.
liability of any party to the instrument (Sec. 133)
prior to the alteration.
- Where an acceptance is written on a paper
• It is any alteration which changes
other than the bill itself, it does not bind the
a) The date
acceptor except in favor of a person to
b) The sum payable, either for
whom it is shown and who, on the faith
principal or interest
thereof, receives the bill for value. (Sec. 134)
c) The time or place of payment
d) The number or relations of the
parties
e) The medium or currency in which Types of Acceptance
payment is to be made 1. Actual
f) or which adds a place of payment
where no place of payment is (a) In writing
specified, or any other change or (b) Signed by the drawee
addition which alters the effect of
the instrument in any respect (c) Must not express that the drawee will
(Sec.125) perform his promise by any other means
than payment of money
2. Effects of material alteration
(d) Communicated or delivered to the holder
a) If done by a holder – discharges the 2. Constructive
instrument and all prior parties thereto who
did not give their consent to the alteration Where the drawee:
(a) destroys the bill, or
Exceptions:
(b) refuses within 24hrs or such other period
a. It does not discharge the instrument as the holder may allow, to return the bill
as against a party who has made the accepted or non-accepted to the holder
alteration, and
b. A party who has authorized or (c) Under the clearing house rules, the
assented to the alteration, and drawee bank’s failure to return within the
c. Indorsers who indorsed subsequent to prescribed time will be deemed payment
the alteration or acceptance of the check.
b) If done by a stranger (spoliation) – has no (d) If there is not demand for the return of
effect upon the instrument if the original the bill and the drawee keeps it until
meaning can be ascertained (Brooks v. Allen after the expiration of said period without
62 Ind. 401; Singer Sewing Machine Co. v. expressly accepting or refusing it; two
Bayer B9 N.W. 741) views:
i. Constitutes constructive notice
c) Material alteration avoids the instrument in
the hands of a person who is not a holder in ii. Constitutes dishonor because
due course as against any prior party who
has not assented to the alteration Sec.137, NIL uses the word "refuses"
d. Acceptance, if given, will retroact to date of
d) If an altered instrument is negotiated to a presentation.
holder in due course, he may enforce
payment thereof according to its original 3. General
tenor regardless of whether the alteration A general acceptance assents without
was innocent or fraudulent qualification to the order of the drawer.
M. ACCEPTANCE An acceptance to pay at a particular place is
a general acceptance unless it expressly
1. Definition - the signification by the drawee states that the bill is to be paid there only
of his assent to the order of the drawer. It is an and not elsewhere. (Sec. 140)
act by which a person on whom the BOE is
drawn assents to the request of the drawer to 4. Qualified
pay it
A qualified acceptance in express terms
2. Manner varies the effect of the bill as drawn.
The acceptance must be communicated or Types:
delivered to the holder.
(a) Conditional; that is to say, which makes
- The holder of a bill presenting the same for payment by the acceptor dependent on
acceptance may require that the acceptance the fulfillment of a condition therein
be written on the bill, and, if such request is stated
(b) Partial; that is to say, an acceptance to and is not accepted within prescribed time,
pay part only of the amount for which the person presenting it must treat the bill as
the bill is drawn; dishonored by nonacceptance or he loses
right of recourse against the drawer and
(c) Local; that is to say, an acceptance to indorsers. (Sec. 150, NIL)
pay only at a particular place;
Constructive Acceptance
(d) Qualified as to time;
Sec. 137. Where a drawee to whom a bill is
delivered for acceptance destroys the same, or
3. Time for Acceptance refuses within twenty-four hours after such delivery,
or within such other period as the holder may allow,
The drawee is allowed twenty-four hours after to return the bill accepted or non-accepted to
presentment in which to decide whether or not the holder, he will be deemed to have accepted the
he will accept the bill; the acceptance, if given, same.
dates as of the day of presentation. (Sec. 136)
N. PRESENTMENT FOR ACCEPTANCE
1. Time/Place/Manner of Presentment
4. Rules Governing Acceptance
When presentment for acceptance must be made
A holder has a right to:
(a) bill payable after sight, or in other cases
1. require that acceptance be written on the where presentment for acceptance necessary
bill and if refused, treat it as if dishonored to fix maturity
(Sec.133)
(b) where bill expressly stipulates that it shall be
2. refuse to accept a qualified acceptance presented for acceptance
and may treat it as dishonored (Sec. 142)
(c) where bill is drawn payable elsewhere than at
residence or place of business of drawee
Acceptance of an INCOMPLETE bill (d) In no other case is presentment for
1. A bill may be accepted: acceptance necessary in order to render any
party to the bill liable.
a) before it has been signed by the drawer,
or How made? (Sec. 145, NIL)
1. Duty of holder: must treat the bill as (a) the check may not be encashed but only
dishonored by nonacceptance or he loses the deposited in the bank;
right of recourse against the drawer and (b) the check may be negotiated only once – to one
indorsers. (Sec. 150, NIL) who has an account with the bank; and
2. Right of holder: immediate right of recourse (c) the act serves as a warning to the holder that the
against the drawer and indorsers and no check has been issued for a definite purpose so that
presentment for payment is necessary. (Sec. he must inquire if he has received the check pursuant
151NIL) to that purpose, otherwise, he is not a HDC.
NOTICE OF DISHONOR (Statement Investment v IAC)