Nocon, Ma. Luisa C.

1. According to Sec. 125. What constitutes a material alteration. - Any alteration which
changes:
(a) The date;
(b) The sum payable, either for principal or interest
(c) The time or place of payment:
(d) The number or the relations of the parties;
(e) The medium or currency in which payment is to be made;
(f) Or which adds a place of payment where no place of payment is specified, or any
other change or addition which alters the effect of the instrument in any respect, is a material
alteration.
2. Sec. 89. To whom notice of dishonor must be given. - Except as herein otherwise
provided, when a negotiable instrument has been dishonored by non-acceptance or non-
payment, notice of dishonor must be given to the drawer and to each indorser, and any drawer
or indorser to whom such notice is not given is discharged.
When an instrument considered dishonored:
A negotiable instrument is considered to be dishonored:
1. If it is not accepted when presented for acceptance; or
2. If it is not paid when presented for payment at maturity; or
3. If presentment is excused or waived and the instrument is past due and unpaid.
3. Protest is required when it is a foreign bill, it must be written. It includes presentment, notice of
dishonor, and all the steps accompanying dishonor; it is made by notary public or any
respectable resident where the instrument was dishonored in the presence of two or more
credible witnesses. It is made on the day of dishonor and at the place of dishonor.
On the other hand, Notice of dishonor is required on any negotiable instrument, in form of
verbal or written. It is limited to notice of dishonor only. It is made by a party or his agent. It not
essential where it is made and it should be made within the time prescribed.
4. When a note is indorsed by the payee, it becomes just like a bill. The maker corresponds to the
acceptor, the indorser, to the drawer, and the indorsee, to the payee. Both the maker and the
acceptor are primarily liable and both the indorsee in the note and the payee in the bill are the
holders. The holder is the bearer of the instrument if the note is indorsed payable to bearer or if
the bill is originally payable to bearer.
Likewise, after a bill of exchange has been accepted, it becomes very similar to a promissory
note. The acceptance is a promise to pay, and the position of the acceptor is that of promisor,
principal debtor, or maker, while the drawer is in the position of first indorser or surely of the
acceptor. A certified check is practically a promissory note with a bank as a maker. It discharges
the drawer the liability thereon.
5. Sec. 119. Instrument; how discharged. - A negotiable instrument is discharged:
(a) By payment in due course by or on behalf of the principal debtor
(b) By payment in due course by the party accommodated, where the instrument is
made or accepted for his accommodation;
(c) By the intentional cancellation thereof by the holder
(d) By any other act which will discharge a simple contract for the payment of money
 (e) When the principal debtor becomes the holder of the instrument at or after maturity
in his own right.
6. Presentment for payment or acceptance of an instrument is excused if (i) the person entitled to
present the instrument cannot with reasonable diligence make presentment, (ii)
the maker or acceptor has repudiated an obligation to pay the instrument or is dead or in
insolvency proceedings, (iii) by the terms of the instrument presentment is not necessary to
enforce the obligation of indorsers or the drawer, (iv) the drawer or indorser whose obligation is
being enforced has waived presentment or otherwise has no reason to expect or right to require
that the instrument be paid or accepted, or (v) the drawer instructed the drawee not to pay or
accept the draft or the drawee was not obligated to the drawer to pay the draft.
7. Sec. 83. When instrument dishonored by non-payment. - The instrument is dishonored by non-
payment when:
(a) It is duly presented for payment and payment is refused or cannot be obtained; or
(b) Presentment is excused and the instrument is overdue and unpaid
8. Sec. 132, Acceptance; how made, etc.- The acceptance of a bill is the signification by the drawee
of his assent to the order of the drawer. The acceptance must be in writing and signed by the
drawee. It must not express that the drawee will perform his promise by any other means than
the payment of money.
Until the bill is accepted, the drawer (Stanley) is the principal debtor. But upon the acceptance
of Greg, the bill, in effect, becomes a note. Therefore, Greg assumes the liability of the maker
and the drawer (Stanley), that of a first indorser.
9. According to Sec. 118. When protest need not be made; when must be made. - Where any
negotiable instrument has been dishonored, it may be protested for non-acceptance or non-
payment, as the case may be; but protest is not required except in the case of foreign bills of
exchange. In this case, Alex can make protest of foreign bill when such protest is required by
the law of the place where it is drawn.
10. Sec. 90. By whom given. - The notice may be given by or on behalf of the holder, or by or on
behalf of any party to the instrument who might be compelled to pay it to the holder, and who,
upon taking it up, would have a right to reimbursement from the party to whom the notice is
given.
NOTICE MAY BE GIVEN BY
1. The holder (June or his agent may give notice of dishonor to Jio, Ian, Rafi, Rome and Mark)
2. Another in behalf of the holder (If June only notifies Rome, the latter, who thereby can be
compelled by June to pay, may, in turn notify Jio, Ian, Rafi, Rome and Mark)
3. Any party to the instrument who may be compelled to pay it to the holder—against
any party whom he has a right of reimbursement should such party giving notice pay the
instrument (Rafi may give notice to Ian, Jio, and Mark whom he can hold liable. Likewise Ian is
the one liable to Rafi who is a subsequent party and, therefore, Ian has no right to
reimbursement from Rafi. For the same reason, Mark would have no right to notify Ian)
4. Another person in behalf of such party (if June gives notice only to Rafi, the effect is
discharge Rome due to lack of notice since Rafi would have no right to notify Rome)
11. Sec. 145. Presentment; how made. - Presentment for acceptance must be made by or on behalf
of the holder at a reasonable hour, on a business day and before the bill is overdue, to the
drawee or some person authorized to accept or refuse acceptance on his behalf; and
(a) Where a bill is addressed to two or more drawees who are not partners, presentment must
be made to them all unless one has authority to accept or refuse acceptance for all, in which
case presentment may be made to him only;
(b) Where the drawee is dead, presentment may be made to his personal representative;
(c) Where the drawee has been 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. (In this case, Gabe and James may made a presentment to Beau or to his trustees or
assignees).