NEGOTIABLE INSTRUMENTS LAW- WWW

PRE-FINALS

OCTOBER 09, 2018

1. What are the rights of a holder?

1. 1.To receive payment
2. 2.To sue in his own name

2. Why the need to emphasize that the holder may sue in his own name?
Because it is possible that there are a lot of parties to an instrument

3. What is the 3 right?

rd

Free from the defenses of prior parties

Also, to be able to further negotiate or transfer your right if the instrument allows so.

4. Who is a holder in due course?

Section 52. What constitutes a holder in due course – A holder in due course is a holder
who has taken the instrument under the following conditions:

(a) That it is complete and regular upon its face

(b) That he became the holder of it before it was overdue, and without notice that it had
been previously dishonoured, if such was the fact
(c) That he took it in good faith and for value
(d) That at the time it was negotiated to him he had no notice of any infirmity in the
instrument or defect in the title of the person negotiating it.

5. What does it mean that you take the instrument complete and regular upon its face?

COMPLETE when the essential requisites are present on its face. Example. The payee or
amount is stated.

REGULAR when nothing on the instrument that will pipe his interest to inquire whether that
instrument is in fact genuine or not because on its face its really it is genuine. Probably like no
erasures or alterations.

Regular and Complete are TWO different things (No need to explain kay Sir left it to us kay naa
daw sa transcript)

6. What does it mean that the instrument is overdue?

Failure to pay at the date of maturity of the instrument.

7. What if payable on demand?

Depends:

If promissory note – it must be within reasonable time on the date of issuance

If bill of exchange- reasonable time from the last date it was negotiated

8. Why the distinction?

In a bill of exchange you do not know yet the person who is primarily liable, and it is usually the
person who last held the instrument who presents the instrument for acceptance to the drawee
then only then will the parties will be able to determine who is the person primarily liable.

In case of promissory note, the moment it is issued you know already who is primarily liable.
Unlike BOE when issued, we would not know until it after someone presented it for acceptance,
the practice then was it is the person who last held it who presents it for acceptance and present
for payment.

9. In Sec 52 (b), it also talks about no notice that it is previously dishonored. So is it

possible for a instrument will be dishonored and the party would not know?

Yes. True in a BOE, where an instrument is not yet presented for payment but presented for
acceptance but was not accepted. Such fact may not be known to subsequent parties.

10. Good faith and Value meaning?

Good faith- when in the absence of Bad faith. Honesty in your dealings.
Case of De Ocampo – landmark case in NIL. You have not passed NIL if you have not
read De Ocampo vs Gatchalian.

Holder for Value – the instrument may not be paid for the full amount if the parties understood
that this is how much the worth of your consideration is. You could already be deemed holder
for value there.
Besides, even if you have not paid for the full amount you can still be considered holder for
value to the extent that you have given.

11. What is meant by infirmity? Where is the infirmity in the instrument?

NOT ANSWERED

TN: Next meeting to be continued, 1 hour with Mr. Buniel daw.