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Negotiable
Instruments Law
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INSERTION OF A WRONG DATE
Sec. 13. When date may be inserted. - Where an instrument
expressed to be payable at a fixed period after date is issued
undated, or where the acceptance of an instrument payable at
a fixed period after sight is undated, any holder may insert
therein the true date of issue or acceptance, and the
instrument shall be payable accordingly. The insertion of a wrong
date does not avoid the instrument in the hands of a subsequent
holder in due course; but as to him, the date so inserted is to
be regarded as the true date.
Effects of insertion of wrong date:
Knowingly inserting the wrong date in an undated
instrument will avoid it as to the party so inserting the
wrong date
It is implied that the instrument is void as to the person who
knowingly inserted the wrong date
Also, under Section 12, it is void for ante-dating an
instrument for fraudulent purposes
To a holder in due course, the instrument is not void,
after the instrument is indorsed to him. The insertion of the
wrong date doesnt avoid the instrument in the hands of a
holder in due course.
Q: What if whats inserted is a wrong date?
S: The holder can go to the person who did that first.
Q: What is the consequence of the insertion of a wrong date?
S: It doesnt affect the subsequent holders(holder in due course).
Q: How do you classify if he has knowledge of the defect?
S: a holder not in due course. So acquires no right.
Q: Who can now raise the defences?
S: Personal defences are granted to prior parties.
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Q: What are the remedies or liabilities?
S: D can go to M who is primarily liable to pay.
Q: So what will M do? It will either pay or not. You know that its not
issued on July 1. And now, it has not yet matured.
(b)
(c)
That
That
he
all
prior
has
parties
good
had
title
capacity
to
to
it;
contract;
(d) That he has no knowledge of any fact which would impair the
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Negotiable
Instruments Law
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because of their warranties under sec 65 and 66 becomes the basis
of the liabilities among the parties.
So, here F can go to C, D and E who warrants that the instrument is
genuine and in all respects what it purports to be. Why does it
matter? WHATEVER is the date of the instrument it is deemed
genuine, they are then precluded from saying it not genuine because
F is a holder in due course.
F can go to M, A AND B while they are prior parties and they have
defenses available to them the same cannot be raised against a
holder in due course. And F can go to C,D AND E because as
indorsers they warrant that the instrument is genuine and in all
respects what it purports to be.
Q: WHAT IF F IS NOT A HOLDER IN DUE COURSE?
A: F may be considered a holder through a holder in due course by
proving that he acquired the instrument through a holder in due
course. Absence of any information, E is a holder in due course. As
such, F can go to to M, A AND B while they are prior parties and they
have personal defences of an insertion of a wrong date cannot raise
it as a defense and F can go to C,D AND E because as indorsers they
warrant that the instrument is genuine and in all respects what it
purports to be.
Q: ULTIMATELY WHERE CAN F GO?
A: F can go to C not M because C is the one who perpetrate the fraud
and we do not tolerate fraud in commercial transactions.
Q: What if it is a bearer instrument?
A: F can go to M the person primarily liable?
Q: Can he successfully get payment from M?
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A: Because C was the one responsible perpetrating the fraud and we
do not tolerate fraud in commercial transactions. Thats a ground for
damages, its a ground for a criminal case.
To: L
Q: Class, all this applies if its a promissory note. Now what if its a
BILL OF EXCHANGE?
Example:
Sgd. F
Example:
F -> M -> X -> Y -> E -> B
To: L
Pay to M or order P10,000 40 days after sight,
(Sgd. F)
F -> M -> X -> Y -> E -> D
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what it purports to be. Just like Y and E; they are also
indorsers. Why are they indorsers? Because when F
negotiated the instrument to M, he has to indorse &
sign it; and M would have to sign when he indorses
the instrument to X; the same to Y and E. But then
again, they are prior parties who supposedly can raise
personal defenses against a current holder, but the
same does not matter because D is a holder through
a holder in due course.
Y and E = They indorsed the instrument and warrant that the
instrument is genuine and in all respects what it purports to
be.
Y = He is ultimately liable because he perpetrated the fraud
and we do not tolerate fraud in commercial transactions.
Q: Now if this is a bearer instrument?
A: Since E is presumed to be a holder in due course, D is considered
as a holder through a holder in due course. He can go to:
L = He cannot be subjected to personal defense of insertion
of wrong date of prior parties.
E = Sec. 65 provides that if the instrument is negotiated by
delivery only, the warranty only extends to the immediate
transferee. Based on this provision, D can go to E, who is the
only person who warrants that the instrument is genuine
and in all respects what it purports to be.
ATTY AMAGO: You have to specify in the exam what type of
personal defense is it. I will not accept if you only say personal
defense. Thats why the first analysis you do is determine what
type of infirmity is in the instrument so you will know what the
personal defense is.
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ATTY AMAGO: Sa 1st instance, you can fill up whatever is the
material particular missing. But on the 2nd instance, you can only fill
it up with the amount.
o Because there is an intention to issue a negotiable
instrument, then it is deemed that the contract will just be
created and all the person has to do is insert the amount. All
the other circumstances will have to be filled up in
accordance with the situation that actually happened. What
do I mean by that? If there is a blank instrument and it
contains the signature of the person who intends it to be a
negotiable instrument, when I negotiated it to you (there
has to be delivery in this case), all that has to be done there
is the wordings of the negotiable instrument has to be filled
up, but in relation to the situation that actually happened. So
it would have to state whoever is the person to whom this
was delivered, thats all that has to be added there. There is
no other authority provided.
o
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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 be converted into a
negotiable instrument operates as a prima facie
authority to fill it up as such for any amount. In
order, however, that any such instrument when
completed may be enforced against any person who
became a party thereto prior to its completion, it
must be filled up strictly in accordance with the
authority given and within a reasonable time. But if
any such instrument, after completion, is negotiated
to a holder in due course, it is valid and effectual for
all purposes in his hands, and he may enforce it as if it
had been filled up strictly in accordance with the
authority given and within a reasonable time.
Any instrument which is incomplete but already completed
(whatever the completion made, true or not) and that
instrument is already in the hands of a holder in due course,
it is as if the instrument was filled up strictly in accordance
with the authority given. This means that, there could be no
defense of an incomplete but undelivered instrument
available to a holder in due course because in his hands, it is
always completed strictly in accordance with the authority
given. In fact, it is considered valid and effectual for all
purposes. It is as if the instrument was never incomplete in
the first place if you are a holder in due course. This only
happens if the instrument was completed after it has passed
from the maker or the drawer which at the time was initially
an incomplete instrument.
If it falls upon the hands of the holder in due course and the
instrument is incomplete, there is no way of knowing that
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No, it will not change the answer because E can be
considered a holder through a holder in due course as he
acquired title from D who is presumed to be a holder in due
course. That being the case, E can go after M, X and A
because they cannot raise the personal defense of an
incomplete but delivered instrument to E who is a holder
through a holder in due course. E can also demand payment
from B, C and D because as indorsers they warrant that the
instrument is genuine and in all respects what it purports to
be. Ultimately, E can go to B who perpetrated of the fraud
because the law does not tolerate fraud in commercial
transactions.
Q: If E is not a holder in due course and D is also not a holder in due
course, will that change your answer?
Yes. E cannot successfully demand payment from M because
M can now raise the personal defense of an incomplete but
delivered instrument considering that E is not a holder in
due course and same goes to X and A. However, E can
successfully demand payment from B, C and D because as
indorsers they warrant that the instrument is genuine and in
all respects what it purports to be. Ultimately, E successfully
demand payment from B who perpetrated of the fraud
because the law does not tolerate fraud in commercial
transactions.
Question: DILI MAKLARO AND QUESTION NI RED SAMOT KAY SI
PHOENIX NITINGOG. HAHAHAHAHA!!!
(You dont have to follow exactly what I have said. You can express it
on your own words. But please dont make to long that I am reading
a novel already. Be brief and consice on your answers! )
Remedy of a holder in due course: Ultimately you can go the one who
perpetrated the fraud. You can also go to prior parties who cannot
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good title to it. It matters now that they have good title to it
kay delivery naman ang issue. So duha na ang imu
memorizon class in section 15. That: 1) the instrument is
genuine and in all respects what it purports to be PLUS 2)
that they have good title to it.
ATTY AMAGO: So lets have a situtation, this is the most
common class. Here is a boss who wrote I promise to pay
______ or order Php 1 million Sgd. M put it in his cabinet
and store it there. He did not know that his secretary stole
the instrument, place his name on the instrument and
delivered. Lets name the secretary as X. So M is the one
who make the instrument what it is incomplete as to payee.
P stole it and after completing it, negotiated it to A, to B, to
C, and then to D. What are the rights of D? Does it matter if
D is a holder in due course?
A: The answer si NO. it wont matter if D is a holder in due
course because again this is a REAL DEFENSE. M can raise
the real defense that the instrument being incomplete and
undelivered.
Q: But D can after to P, A, B, and C. Why?
A: Because they are all indorsers and they warrant that the
instrument is genuine and in all respects what it purports to
be PLUS that they have good title to it.
Q: So far what defense have we discussed?
1. Insertion of wrong date - PERSONAL
2. Incomplete but delivered instrument - PERSONAL
3. Incomplete and undelivered REAL
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