Part 3

LESSON 1-DEFENSES

1. Distinguish between Real and Personal defense?

-Ans. Kinds of defenses in general and their differences:
a) Real or absolute defenses-these defenses are attached to the instrument itself and can
be set up against the whole world, including the holder in due course. It is a defense
against everybody because the right to be enforced has never existed or ceased to exist.
The person cannot be enforced against a person to whom the legal defenses are
available.
b) Personal and equitable defenses these are personal to the person or subsequent holder
against whom the instrument is being enforced. These defenses grow out of the
agreement or conduct of a particular person which renders it inequitable for him to
enforce it against the party sought to make liable, but not available against the holder in
due course. (Suarez, C.B., The Law on Negotiable Instruments for Business Students)
2. Under what case has a payee or holder the prime facie authority to complete an instrument
by filling up the blanks therein?
-Ans. 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 converted into a negotiable instrument operates as a prima facie authority to fill it
up as such for any amount (Section 14 of Act 2031).
3. If the instrument was completed not in accordance with the authority given can be
subsequent holder enforce the instrument against the maker or drawer?
-Ans. Yes, he can enforce the instrument because it was negotiated after completion, and
being a holder in course, the instrument is valid and effective for all purpose in his hands and
he may enforce it as if it had been filled up strictly in accordance with the authority given and
with a reasonable time. The right of the holder extends to all parties in the instrument.
(Suarez, C., The Law on Negotiable Instrument for Business Student)
4. In the case where the instrument after its completion is in the hands of a holder not in due
course, what defense can the maker or drawer against whom the instrument is sought to be
enforce set-up?
5. Can all the parties make use of the personal defense mentioned under section 14 against the
holder not in due course?
6. What kind of defense is mentioned under section 15?
7. To which holders can this defense be set-up?
8. Which parties to the instrument can make use of this real defense?
9. What are the rules applicable in case the instrument is mechanically complete but
undelivered?
10. What kind of defense is mentioned under section 16?
11. If a negotiable instrument is also a contract, must consideration be always stated on the face
of the instrument?
12. What is meant by “value”?
13. Who is deemed a holder for value?
14. When a holder is considered a holder for value for a part of the instrument?
15. State the defense respecting values?
16. What is meant be absence or want of consideration?
17. What is meant by partial failure of consideration?
18. What is the effect of an endorsement by an infant or corporation?
19. Can an accommodation party make use of the defense of absence consideration?

LESSON 2 - ACCEPTANCE

20. Define acceptance.

21. What is the effect of the acceptance by the drawee?
22. Where shall the drawee write his acceptance?
23. To whom shall an acceptor be bound his acceptance is on a separate instrument?
24. When is a promise to accept to equivalent to acceptance?
25. Within what time is the drawee allowed to accept?
26. What constitute constructive acceptance?
27. Can acceptance be made of an incomplete bill?
28. Where a bill payable after sight has been dishonored by non-acceptance and subsequently
been accepted by the drawee, as of what date is the bill considered accepted?
29. State the kinds of acceptance.
30. Define general acceptance.
31. Define qualified acceptance.
32. Give instances of qualified acceptance.
33. Is the following a qualified acceptance?
34. Is the holder duly bound to agree to a qualified acceptance?
35. What is the effect if the holder takes a qualified acceptance?
36. What is the duty of a holder who takes a qualified acceptance?

LESSON 3 – PRESENTMENT FOR ACCEPTANCE

37. When must presentment for acceptance must be made?

38. What is the effect if the holder fails present for acceptance?
39. Hos is presentment for acceptance made?
40. To whom shall presentment be made?
41. On what days must presentment for acceptance be made?
42. What is the effect id the holder has no sufficient time to present for acceptance?
43. Under what cases is the presentment for acceptance excused?
44. When is a bill considered dishonored by no acceptance?
45. What is the duty of the holder where the bill is not accepted?
46. What is the right of the holder where the bill is not accepted?

LESSON 4 – ACCEPTANCE FOR HONOR

47. Define acceptance for honor.

48. State the requisite for acceptance for honor.
49. How is an acceptance for honor made?
50. When is acceptance for honor deemed acceptance for honor of the drawer?
51. To whom shall an acceptor for honor be liable?
52. What kind of liability has the acceptor for honor?
53. What is the agreement of an acceptor for honor?
54. How is maturity date of a bill which has been accepted for honor determined?
55. What requirements must be observed before the presentment for payment is made to the
acceptor for honor?
56. How shall presentment for payment for honor be made?
57. What shall delay in making presentment for payment to the acceptor for honor be excused?
58. What must be holder do, if the bill is dishonored by the acceptor for honor?

LESSON 5 – PRESENTMENTFOR PAYMENT

59. What is meant by presentment for payment?

60. Why is it necessary to present for payment?
61. What constitutes tender of payment under the Negotiable Instrument Law?
62. When shall presentment for payment be made?
63. What constitutes sufficient presentment for payment?
64. When does the law allow presentment for payment to one who may not be primarily liable on
the instrument?
65. Which is the proper place of presentment?
66. What is the effect if the holder does not present for payment?
67. How is presentment for payment made?
68. Is demand for payment by telephone sufficient?
69. Where the instrument is payable at a bank, at what time shall it be presented for payment?
70. When may presentment for payment be made after banking hours?
71. To whom shall presentment for payment be made if the principal debtor is dead?
72. To whom shall presentment for payment be made in case the person primarily liable are
partners?
73. If there is no place specified on the instrument for presentment and the persons primarily
liable are joint debtors, to whom shall presentment of payment be made?
74. When is presentment not required in order to charge the drawer?
75. When is presentment of payment no required in order to charge the endorser?
76. When shall delay in making presentment for payment be excused?
77. When shall presentment for payment be dispensed with or excused?
78. Under what cases is the instrument considered dishonored by nonpayment?
79. What is the right of the holder, where the instrument is dishonored by nonpayment?
80. When is the presentment not required in order to charge the drawer?
81. When maturity date falls on a Sunday?
82. When maturity date falls on a Saturday?
83. When the instrument becomes payable on a Saturday?
84. What is meant by an instrument becoming payable on a Saturday?
85. How do you compute the time for payment, in case the instrument is payable at a fixed
period, after date, after sight, or after the happening of a specified event?
86. Where the instrument is payable at a bank, may the bank pay the instrument and charge the
amount of the instrument against the account of the principal debtor thereon, without further
authority from the latter?
87. What constitutes payment in due course?

LESSON 6 – PAYMENT FOR HONOR

88. What are the requisites for payment for honor?

89. In what form shall payment for honor be?
90. Where there are two or more parties offering to pay for honor, whose payment shall be
preferred?
91. What is the effect where a bill is paid for honor?
92. What is the effect of the holder’s refusal to receive payment supra protest?
93. What are the rights of a payer for honor?

LESSON 7 – NOTICE OF DISHONOR

94. To whom shall notice of dishonor be given?

95. What is the effect if the notice given to the drawer and each one or endorsers?
96. What are the kinds of notices of dishonor?
97. Who must give notice of dishonor?
98. If notice is given by an agent, in whose name shall notice be given?
99. To whose benefit does a notice of dishonor given by or on behalf of the holder inure?
100. What is the effect where notice of dishonor given by on or behalf of a party entitled to give
notice?
101. Where the instrument is dishonored in the hands of an agent, when must he give notice?
102. What constitutes sufficient notice of dishonor?
103. In what form shall notice of dishonor be?
104. To whom notice of dishonor be given?
105. When the person to be given notice of dishonor is dead, to whom shall notice be given?
106. To whom shall notice be given if the parties to be given notice are partners?
107. If the parties to be given are jointly liable, to whom shall notice be given?
108. If the party to be given notice has been adjudged a bankrupt or an insolvent, or has made an
assignment for the benefit of the creditors, notice may be given either?
109. Within what time shall notice of dishonor be given?
110. If it is a party who was given notice to give notice, within what time shall he give notice?
111. At what place shall notice of dishonor be sent?
112. May notice of dishonor be waived?
113. Who are affected by a waiver of notice of dishonor embodied in the instrument itself?
114. What is the effect if the waiver of notice of dishonor appears in a particular endorsement?
115. What are the deemed included in a waiver of protest?