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Bill in Set continued….

A bill in set is a BoE that is drawn in multiple copies. Note that there is nothing under the
law that prohibits the issuance of a PN in a set, of course, if that happens, the PN should be payable
to order or at least partake some provisions of a bill in set. In the same way, you will disregard all
provisions with regard to drawees in case a PN is issued.
We have a BoE drawn in multiple copies. In fact, each copy is numbered and must have
reference to the other parts of the bill. What is most important in a bill in set is the numbering and
referencing. 2/4 is read as two of four which means that it is the 2 nd bill in a set of 4. Dapat may
numbering, dapat may referencing. One reason why people issue bills in set is for security (ma-
holdap ka), for convenience in case one or some parts get lost or destroyed, you have reserves.
Mawala ang primary mo, may secondary ka. Mawala ang secondary mo, may tertiary ka. Mawala ang
tertiary mo, may nakapila pa jan that you can use in case the first one gets lost or destroyed. Of
course with conveniences, there are dangers. If the drawer lost a BoE in a set of 4, 5 or 10
(regardless of the number of parts in a set), the requirement is that the drawer should deliver ALL
parts to his payee. If the payee will present the parts of the BoE for acceptance or payment, as the
case may be, the payee must present ALL parts to the drawee. If the drawee accepts, the drawee
must accept only one part and must mark acceptance on only one part.
When a bill in set is discharged, the whole part is discharged.
Once one part of the instrument is paid, the entire set is discharged.
 Can a payee negotiate a bill in set? YES.

 How? If the payee shall negotiate a bill in set to a transferee, the requirement is all parts must
also be delivered. You do not negotiate everything, you only negotiate one part BUT you must
deliver all the other parts. In indorsement, you only indorse one part BUT you deliver all the
other parts.

 What if your transferee again negotiates the set to another person delivering ALL the
parts? Then there is NO problem.

 The 2nd transferee further negotiates the instrument to a 3 rd transferee delivering ALL
the parts, then there is still NO problem

 The 3rd transferee now presents the set to the drawee, the drawee accepts one part
indicating his acceptance in only one part, pays only one part, then there is still NO
problem and once one part of the set is paid, the entire set is discharged.

In the worst case scenario wherein each part of a set will find themselves in the hands of
different holders or if different parts of the set will be negotiated to different HiDC, dyan tayo
nagkakaproblema, or if the acceptor accepts more than one part, there is where issues or problems
will arise.
Remember that each part of the set is a part of the whole.

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What is so important is a bill in set, regardless of the number of parts, is only one BoE. What
is so important in dealing with bill in set is to treat them as only one bill because what happens to
one part affects the others. If one part is discharged, all parts are discharged. If one part is rendered
non-negotiable, all parts are non-negotiable. One part is rendered null and void, all parts are
rendered null and void. Yan ang dahilan why we treat a set. Regardless of the number of parts in a
set, as only one bill. So, each part of the bill must be numbered and referenced to belong in a set.
When you are asked to draft bills in set, DO NOT FORGET THE NUMBERING AND REFENCING (nasa
exam ito).
If you are the drawer and you forgot to indicate numbering and referencing, you are liable
for all (for all parts as if they are separate bills) not because it is your intention but because of
operation of law.
When a bill in set is issued, all parts of the set must be issued by the drawer to the payee.
When a bill in set is negotiated, all pieces of the set must be delivered to the transferee regardless of
whether the instrument is payable to order or payable to bearer. If only one part is delivered, the
holder may demand it. Bakit? Ikaw ngayon ang present holder. What was delivered to you is 2 of 4.
Sabi ko nga noon, if you received a document and there is that figure (e.g. 2/4), what will you think?
There are 4 parts and where are they? You are saying that because you are a law student. What if
you are not a law student and you have no knowledge as to how these figures (e.g. 2/4) operate?
With civil capacity, tinanggap mo yan (2/4), ang problema, you only got one part of the whole.
 What right do you have when you got only one part of the whole? The law grants you the
right to demand or to compel the delivery of the other parts. Note, however, that that right
could be waived but if you waived that, you suffer the consequences kasi pag nagkataon na
yung isang part na yan, napunta sa isa pang HiDC at nauna syang nag-demand kesa sayo (sabi
natin if one part is paid, the other parts are discharged), discharged na yan, wala ng kwenta
yan.
If the holder negotiates the instrument to different holders, the negotiating party will be
secondarily liable to all persons to whom the instrument is negotiated as if there were
individual instruments that are negotiated.
Ang pinag-uusapan natin dito is if the holder decided to negotiate the instrument to
different holders, it was not Morales (drawee) you did that, it was the Cristina (payee/holder) who
did that. So, it will be as if there are four different instruments.
To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
1/4 Sgd. Rowan Domingo
2/4
Pay to Chris Tan
Pay to John Torio

To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.

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3/4 Sgd. Rowan Domingo
4/4
Pay to Jane Tiu
Pay to Ever Solis

How many parts does Cristina hold? 4.


How many times did she transfer? 4.
To how many different people? 4.
As far as the law is concern, it says that if each part of the set was negotiated to 4 different
people, it will be as if there are 4 different instruments. But looking at the example above, how many
BoEs do we have? ONLY ONE. Still one because that is a bill in set. Ang pinag-uusapan natin ngayon
is the liability of the parties. So from here, we have Cristina Bailey who negotiated each part of the
set to 4 different people, jan palang alam na natin na apat na tao ang may hawak ng instrument. It
was Cristina who did that, kasalanan ni Cristina.
Now, assuming Chris Tan went to Claudine Morales and presented the instrument for
acceptance and the instrument was accepted. Subsequently, the instrument was paid. Insofar as
Chris Tan is concerned, he received P40k, what happens to the others? Discharged.
Ngayon, John Torio also went to Morales and presented the instrument for acceptance. If
you were Morales, anong gagawin mo? Deé jaà vu! Nangyari na to ah XD. What will you do, will you
accept? NO. Inutusan ka lang ni Rowna to pay P40k, not P160k so you dishonour. The same thing
when jane Tiu presented the instrument to Morales, dishonour lahat yan.
Ang problema ngayon, what happens after dishonour and the requisite notice of dishonour
was issued? Secondary liability will arise.
 Who will be secondarily liable? First, we have Cristina (as an indorser) and Rowan (drawer).
 Is Claudine Morales (drawee) liable to any other part? Not anymore. Free na sya jan.
 Is Rowan secondarily liable? Yes.
 Is Cristina secondarily liable? Yes. For how much? P160k because she negotiated 4 different
parts.
 For how much is Rowan liable? Only P40k because it is Cristina’s fault that the parts of the
instrument are in different holders. It was not Rowan’s. [1 st lesson: Kung kasalanan mo,
panagutan mo].
 What about Rowan, will he be affected by Cristina’s actions? No. [2nd lesson: Kung wala
kang kinalaman, wag kang makialam].
When a bill in set is accepted, the acceptance may be indicated in ANY part on the condition
that the acceptance must only be indicated in one part ONLY. Still, you only have ONE BoE.
Ang pinag-uusapan natin is the liability that will arise by reason of the multiple acceptances
but for all intents and purposes, we only have one BoE. If the acceptance is signed in more than one
part, as if there were 4 different parts. Again, liability ang pinag-uusapan.
So, we have a BoE drawn in a set of 4 by Rowan Domingo issued by him to Cristina Bailey.
Ang ginawa ni Cristina, she presented all parts to Claudine Morales. Morales accepted ALL [3 rd

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lesson: wag excited xD]. The legal consequence is that Morales will be liable for each as if there were
4 different bills. Ang problema, how much will Claudine pay? P160k because she accepted all.
We have 2 modes of acceptance: 1) presentment for acceptance; and 2) presentment for
payment. And we have 2 kinds of dishonour: 1) Dishonor by non-acceptance; and 2) dishonour by
non-payment.
Dishonour by non-acceptance happens when you presented an instrument for acceptance
and acceptance was dishonoured. If could also happen that an instrument is already accepted but
subsequently, refused payment (dishonour by non-payment). It could happen that the presentment
was made today, acceptance was made today on the condition that payment will be made next week,
after one week biglang sinabi ng acceptor that there are no more funds to pay you, I cannot pay you.
Ang nangyari dito, tinanggap ni Morales lahat. So for how much will she be laible? P160k.
What if at the time of payment, she could not pay all of them? Then, there will be secondary liability.
Rowan will be secondarily liable but only for P40k because insofar as Rowan is concerned, he only
required Claudine to pay P40k. there is NO order from Rowan requiring Claudine to accept
everything. What if meron? What if Rowan impliedly ordered Claudine to accept all parts?
Then, Rowan will be liable for P160k kasi this time kasalanan din ni Rowan eh [4 th lesson:
Kasalanan mo din eh, panagutan mo rin].
If each of the parts are negotiated to different HiDCs, the acceptor must pay them all. The
rule (now) is the HiDC who FIRST RECEIVED a part is the true owner of the bill.
There are 2 concepts here: 1) the HiDC; and 2) Receipt. Remember double sales wherein the
owner of the property subject of the double sale is the 1) first registrant in GF; 2) first possessor in
GF. The first keyword there is GOOD FAITH. Second keyword is FIRST. First come, first serve in GF.
(remember, yung inaral natin sa sales guys, “first in time, preferred in right”).
Yan ang issue dito. The HiDC who first takes possession of a part of the instrument in GF, he
is the owner of the bill.
Now, what about the others? They are also HiDC.
When the acceptor pays the instrument to the holder, the acceptor must require the holder to
deliver all parts of the set.
All parts of the set must be delivered for the protection of the acceptor. It’s for your own
good, wag mong susuwayin ang batas. Bakit? Kasi if that part of the instrument that the acceptor left
with the payee is subsequently found in the hands of a HiDC, you (acceptor) are liable to pay. If any
part is found in the hands of HiDC, the acceptor is liable to pay. Wala syang magagawa kasi ang HiDC
has a right to demand full payment. You cannot demand reimbursement from anyone, sorry nalang.
***If there is discrepancy in one of the copies (e.g. one is P40k but all the other three are P400k),
circumstantial evidence wise, majority wins. It would not be logically correct to disregard the
majority. If it is 50-50, then go to the intention of the parties, reform the contract.
***A holder is always presumed as a HiDC. (GO back to the requisites of a HiDC). So even if there is
numbering and referencing, if it not automatically a notice of defect. It is only a notice of defect if
you know what it is. If ignorance of the law is the defense, the counter may be “ignorantia legis non
excusat” is not absolute. Nakatanggap ka ng part ng bill of set, you should know that there are other

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parts BUT we do interpret the law as not to unduly prejudice one who has no opportunity to know
the law. You know that there is something wrong because you are a law student but what if grade 3
lang natapos nyan, wala syang kaalam-alam about negotiable instruments. Most people, especially
in rural areas, have NO exposure to the laws or at least they have very limited knowledge of the law.
If that person has reason to know or reason to believe that there is an infirmity in the instrument,
it’s a matter of evidence. Of course, if you are the one saying that a person is NOT a HiDC, you have
to establish that.
***If one part is NOT signed but the others are signed (meaning that one is not negotiable because
there is no pirma), will it render the others non-negotiable? For sir, YES if that is the case na hinidi
mo napirmahan lahat because all parts operate as one.
***Each part of the set was delivered to different people and they negotiated their respective parts
to different people. What if along the line, one of them indicated a restrictive indorsement which
ended the negotiable character of the instrument, will the other parts which are existing or
outstanding in the hands of other HiDC be affected by the restrictive indorsement? NO.
Circumstantial yan eh.
Exercises:
The following was issued:
To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
1/4 Sgd. Rowan Domingo
2/4

To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
3/4 Sgd. Rowan Domingo
4/4

How many bills are there? One.


How many parts of the set? 4.
How much will Claudine be liable for if she properly accepts? P40k.
--------------------------------------------------------------------------------------------------------------------------------
To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
Sgd. Rowan Domingo

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To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
Sgd. Rowan Domingo

How many bills are there? 4 because there is no numbering and referencing.
How many parts of set? None.
How much is Claudine liable for if she properly accepts? P160k.
--------------------------------------------------------------------------------------------------------------------------------
To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
1/4 Sgd. Rowan Domingo
2/4

To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
3/4 Sgd. Rowan Domingo
4/4

Where may Claudine indicate acceptance? Any part but must be indicated in only one part.
What must Claudine do if she decides to pay the bill? Require the delivery of all the parts.
How much is Claudine liable is she properly accepts? P40k.
--------------------------------------------------------------------------------------------------------------------------------
To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
1/4 Sgd. Rowan Domingo
2/4

Accepted: Sgd. CM
Accepted: Sgd. CM

To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
3/4 Sgd. Rowan Domingo

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4/4
Accepted: Sgd. CM
Accepted: Sgd. CM

How many bills are there? Still ONE. It is still a bill in set. Do not be distracted with the number of
acceptances. It is still ONE bill, it is only the liability that is multiplied.
How many parts is CM liable? 4.
How much is CM liable for? P40k per part, totally P160k.
--------------------------------------------------------------------------------------------------------------------------------
To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
1/4 Sgd. Rowan Domingo
2/4
Pay to Chris Tan
Pay to John Torio

To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
3/4 Sgd. Rowan Domingo
4/4
Pay to Jane Tiu
Pay to Ever Solis

How many bills are there? One.


For how many part is Claudine M. liable? Only one part, that is only one bill.
How is Cristina B. become liable? If CM dishonors the instrument. CB being the payee and being
the indorser. She will only become liable if CM dishonors the instrument. Secondary liability ang i-
enter.
What is the basis of CB’s liability? Secondary liability.
--------------------------------------------------------------------------------------------------------------------------------
The BoE is negotiated by Cristina Bailey to several persons on the following dates:
To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
1/4 Sgd. Rowan Domingo
2/4
Pay to Chris Tan
November 17, 2015 Pay to John Torio
October 19, 2015

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To: Claudine Morales October 14, 2015 To: Claudine Morales October 14,
Pay to Cristina Bailey or order the amount of 2015
FORTY THOUSAND PESOS (P40, 000) on her Pay to Cristina Bailey or order the amount of
demand. FORTY THOUSAND PESOS (P40, 000) on her
Sgd. Rowan Domingo demand.
3/4 Sgd. Rowan Domingo
4/4
Pay to Jane Tiu
October 16, 2015 Pay to Ever Solis
October 17, 2015

How many holders are there? 4.


Who has the right to payment? All of them.
Who is the true owner of the bill? Jane Tiu because she took delivery (or she received) of the
instrument FIRST. Ang problema is that if Jane is NOT a HiDC, then the true owner of the bill is Ever
Solis. If Ever is not a HiDC, John TOrio is the true owner. If John Torio is not a HiDC, kahit huli pa si
Chris Tan, Chris Tan is the true owner of the bill
What if ALL OF THEM are not HiDCs? Then, NO ONE owns the bill. But then again, even holders
who are NOT in due course have a right to demand payment. Una-unahan nalang yan.
If CM pay Jane Tiu who is the owner of the bill, what is the effect of payment? DISCHARGED.
And so CM can validly refuse payment from Chris, Ever and John.
What is the remedy of Chris, Ever John? Enforce secondary liability against Cristina Bailey for full
amount or against Rowan but only for P40k.
***As the true owner of the bill, you can defend your right as against others. you can preclude
others from claiming the money. You can use whatever necessary legal means to prevent others
from the possession and ownership of your property. Sabihin natin, all of the HiDCs, ikaw ang unang
nakatanggap pero yung pangalawang nakatanggap, sya ang unang nagpunta sa drawee kasi sya ang
pinakamalapit. Si drawee inaaccept at binayaran niya. Pumunta ka ngayon kay drawee, pinresent
mo, sabi niya dishonour. Patingin nga nung instrument, tapos nakita mo nauna kang naka-received.
What do you do? You can sue for recovery from drawee and payee on the cause of action that you
have a SUPERIOR right of payment. Hindi niya pwedeng sabihin na first come, first serve because
your right arises from law.

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