1|Page STUDY ON THE EXISTENCE & USEFULNESS OF NEGOTIABLE INSTRUMENTS ON SELECTED ENTITIES

EXECUTIVE SUMMARY

This study aims to apply our knowledge learned in our classroom discussion in Law on Negotiable Instruments. There are kinds of instruments that were described in the book as negotiable but most of them are not usually being used. There were terms that sound unfamiliar to us and check is the only one we are all familiar of as to its used and transferability in a business transactions. Check is the most common bill of exchange that is circulating among business entities today. As accountancy students, the very basic application that we should make is the identification of which of those negotiable instruments are currently used and which of those are continually being negotiated.

In order to answer this question, we conducted this study to some of the entities known here in Bukidnon. We had an interview with the personnel in charge of the negotiable instruments related transactions. Through this, we were able to clutch the answer to most of the questions we had related to the existence and usefulness of negotiable instruments. We were able to obtain facts and other information about the negotiability of some of the instruments being used by the business entities. This experience helped us understand the nature and transactions of the entity that we chose. And this study helped us retain the things we have learned in the class.

2|Page STUDY ON THE EXISTENCE & USEFULNESS OF NEGOTIABLE INSTRUMENTS ON SELECTED ENTITIES

CHAPTER I INTRODUCTION I. BACKGROUND OF THE STUDY Negotiable Instruments, in law, are contracts in writing that can be transferred from one person to another by indorsement and/or by delivery and to which the holder or the bearer acquire title free from any defenses to their validity that might have been good against the transferor. These instruments are governed by the Act No. 2031, known as the Negotiable Instruments Law. The Negotiable Instrument Law or NIL is patterned after the Uniform Instrument Law of the United States, approved by the National Conference of Commissioner in 1896. This was followed and modified by all states of the union. The law was codified in England and in the United States to make uniform the rules and principles applicable to negotiable paper, and to settle confusions and conflicts in the common law arising from the several decisions of the various courts. This study initiated learning that negotiable instruments play a significant role in the world of business. They can be used as substitute for money, medium of exchange and medium of credit transaction. While in todays complex and competitive business environment, there are now advanced technologies used in every business transaction. Because of this technological advancement, there might things that are useful in the past that has become obsolete in the present. Thus, it is important that the students should be exposed in the real business world to determine whether the things taught inside the class are still applicable. Also, it is good for them so that they will give importance to study the subject, Negotiable Instruments Law and to be ready to stay in the world of business in the near future. This study is tackled towards partial fulfilment of the subject BUS LAW 3 entitled Negotiable Instruments. This subject is concerned with the provisions of the law on negotiable instruments. It introduces negotiability of the instruments, functions and kinds

3|Page STUDY ON THE EXISTENCE & USEFULNESS OF NEGOTIABLE INSTRUMENTS ON SELECTED ENTITIES

of negotiable instrument, requisites of negotiability, consideration, negotiation, kinds of indorsements, rights of indorsee, kinds of defense of parties, parties and their liabilities, presentment for payment, discharge of negotiable instruments, dishonor, acceptance, protest, acceptance for honor, payment for honor, promissory notes and bills of exchange. Some topics mentioned are already known to the students and some are new terms for them. We, the presenters, decided to select different types of business engaged in different lines of products and services as our subjects in this study. The selected entities are in different types of business, namely, merchandising (supermarket), cooperative, and industrial. It is in different type of business so that we, the researchers would be able to determine if the negotiable instruments really exist or are being applied in certain types of businesses. This study also serves as immersion for us students to the real business environment, for us to develop values like, critical thinking skills, social skills, positive inter-dependence, and individual accountability.

4|Page STUDY ON THE EXISTENCE & USEFULNESS OF NEGOTIABLE INSTRUMENTS ON SELECTED ENTITIES

II.

STATEMENT OF THE PROBLEM The study aims to answer the following question: 1. What are existing negotiable instruments that are used in the present transactions? 2. Is a promissory note still applicable today? 3. Is there existing primary and secondary contract in negotiating the instruments nowadays? 4. What are the primary or main purposes of using such instruments? 5. Is there a holder of a negotiable instrument aside from the payee at present? 6. Can there be any other holder aside from the payee? 7. Can there be bearer instrument? 8. What are the other Bills of exchange instruments used as a media of exchange? 9. What are the kinds of checks that most of the entity use in their transactions? 10. Are there endorsements that follows after receiving the negotiable instruments? What are these instruments? 11. At present, how many times can a check be negotiated? 12. Are there negotiations that happen after first issuance of negotiable instruments? 13. What are the actions taken by the entity to ensure payment of negotiable instruments? 14. Is accommodation of an instrument still applicable today?

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III.

ASSUMPTIONS OF THE STUDY

We assumed that these negotiable instruments; promissory notes and bills of exchange are still circulating and are used in the present times. We assumed its validity according to the Law on Negotiable Instrument, Act No. 2031. We assumed its negotiability, that it can be transferred from one person to another provided that, it is taken in legal means and it undergoes the process of its issuance followed by indorsement. Negotiable instruments are used as substitute for money and are used as media of exchange in most commercial transactions. The following are the assumptions observe: PROMISSORY NOTES: Involves primary contracts and secondary contracts Maker as the primary liable ;and payee and its subsequent indorsers as the secondary liable Signed by maker Contained unconditional promise and is payable by a certain sum of money at a fixed or determinable future time or on demand Could be indorse by special or blank indorsement

BILLS OF EXCHANGE: Involves primary contracts and secondary contracts Maker as the primary agreement. In any, drawer can be the primary liable if accepted in accordance to the acceptance agreement. Payee and subsequent indorsers including the maker as the secondarily liable. Contained unconditional order and is payable by a certain sum of money at a fixed or determinable future time or on demand Signed by the maker Involves primary contracts and secondary contracts Could be indorsed by special or blank indorsement

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IV.

SIGNIFICANCE OF THE STUDY

There are different kinds of negotiable instruments and its laws introduced in school that need to be confirmed in the actual business world. Due to global business competitions and technological advancement, there might be changes in credit transactions and money transfers, and new medium of exchange and instruments for immediate payments used as replacement of negotiable instruments. This study will meet this need, and it is essential to the students for their preparation to be globally competitive individuals in the field of business.

7|Page STUDY ON THE EXISTENCE & USEFULNESS OF NEGOTIABLE INSTRUMENTS ON SELECTED ENTITIES

CHAPTER II REVIEW OF RELATED LITERATURE

Negotiable Instrument Definition: it is a contractual obligation to pay money. (De Leon, 2009) Functions and Importance: 1. used as substitute for money 2. media of exchange for most commercial transactions 3. served as a medium of credit transactions (De Leon, 2009) Principal Features: 1. Negotiability 2. Accumulation of secondary contracts Common Forms of Negotiable Instruments a) Promissory Notes- unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable future time, a sum certain in money to order or bearer. b) Bills of Exchange- is unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. c) Check- form of a bill of exchange issued by a drawer ordering his drawee bank to pay on demand the person named on the check.

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Parties of the Negotiable Instrument and their liabilities Parties: (Promissory Note) a) Maker- the one issuing the promissory note. b) Payee- the person to whom the promise to pay is made. (Bill of Exchange) a) Drawer- person drawing or making the instrument or the person giving the order to pay. b) Drawee- addressee of the order to pay, or the person required to pay the instrument. c) Payee- person to whom payment is to be made. If the payee of an instrument transfers it to another by signing it at the back, he is said to have negotiated or indorsed the same and thereby becomes an indorser, and to whom it was negotiated is called an indorsee. Liability: (Primarily Liable) Maker (Secondarily Liable) Drawer of a bill (Not Liable) Drawee, until he accepts (Reviewer) Indorsers of a bill or a note Acceptor of a bill

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Special Types of a Promissory Note a) Certificate of deposit- a written acknowledgment by a receipt of money engaging to pay to the lawful holder upon proper indorsement. b) Bond- a promissory note under seal, involving a public borrowing on a usually long-term basis. c) Bank note- a promissory note of an issuing bank payable to bearer on demand and intended to circulate as money. d) Due bill- a note whereby a person acknowledges his debt to another and he promises to pay bearer or to order a sum owed which is certain in money. Special Types of a Bill of Exchange a) Draft- a bill of exchange drawn usually by a bank against its branch or another bank. b) Trade acceptance- a bill of exchange drawn by a seller on the purchaser of goods and accepted by the purchaser. c) Bankers acceptance- a bill of exchange drawn against bank and accepted by the latter. d) Clean bill of exchange- a bill of exchange to which no document is attached when presented for payment or acceptance. e) Documentary bill of exchange- a bill of exchange to which documents like shipping documents or invoices are attached when presented for acceptance or payment. f) Sight bills- a bill of exchange which are payable upon presentation or at sight or on demand. g) Time bills- bills of exchange which are payable at a fixed future time or at a determinable future time.

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Formal Requirements of Negotiability 1) The instrument must be in writing. The instrument must be written with a pen or pencil, or that which is print or printed. It may be written upon parchment, cloth, leather or any other substitute for paper. 2) The instrument must be signed by the maker or drawer. The full name may be written, or at least the surname, or initial are sufficient, or any mark which the party uses to indicate his intention to bind himself. Signature is placed at the lower right hand corner of the instrument. It may appear any part of the instrument because the place of signature is less important. 3) The instrument must contain an unconditional promise or order to pay. Unconditional promise may any form of expression sufficient which can be deducted as a direct promise to pay a sum certain in money will suffice as a promise. Unconditional order, the bill of exchange or draft must contain an order for payment as distinguished from a mere request. 4) The instrument must be payable in a sum certain in money. Money is the one standard of value in actual business. All other commodities may rise and fall in value but in theory, at least, money always measures this rise and fall, and remains the same. (De Leon, 2009) 5) The instrument must be payable at a fixed determinable future time or on demand. The time must be certain so that the holder will know when he may enforce the instrument, and the person liable when he may be required to pay, or the secondary parties when his obligation will rise. (De Leon, 2009) 6) The instrument must be payable to order or to bearer. If not payable to order or bearer, the instrument is not negotiable. Bearer Instrument- payable to bearer, or to a fictitious or impersonal payee or bearer, or to an estate, or to cash, or when the only or last indorsement is an indorsement in blank, is in effect payable to bearer.

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Order Instrument- payable to a named person or his order or to the order of a named person is considered negotiable being payable to order. 7) The drawee must be named. Drawee must be named or otherwise indicated with reasonable certainty. Methods of transfer of a negotiable instrument 1) Issue, first delivery of the instrument complete in form, to a person who takes it as a holder. It is the first transfer of an instrument to a payee. 2) Negotiation, the transfer of a negotiable instrument from one person to another made in such a manner as to constitute the transferee the holder thereof. 3) Assignment, the transfer of the title to an instrument with the assignee generally taking only such title or rights as his assignor has, subject to all defenses available against his assignor. Indorsement how made The indorsement must be written on the instrument itself or upon a paper attached thereto. The signature of the indorser, without additional words, is a sufficient indorsement. (Sec. 31) Kinds of Indorsement An indorsement may be either special or in blank; and it may also be either restrictive or qualified or conditional. (Sec. 33) a) Special Indorsement- specifies the person to whom, or to whose order, the instrument is to be payable, and the indorsement of such indorsee is necessary to the further negotiation of the instrument. b) Indorsement in Blank- specifies no indorsee, and an instrument so indorsed is payable to bearer, and may be negotiated by delivery. (Sec. 34) c) Restrictive Indorsement- one so worded that it either restricts or prohibits entirely the further negotiation of an instrument, or modifies the rights of the holder or the liabilities of the indorser. (De Leon, 2009)

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d) Qualified Indorsement- constitutes the indorser a mere assignor of the instrument. It may be made by adding to the indorsers signature the words without recourse or any words of similar import. Such an indorsement does not impair the negotiable character of the instrument. (Sec. 38) e) Conditional Indorsement- where an indorsement is conditional, a party required to pay the instrument may disregard the condition and make payment to the indorsee of his transferee, whether the condition has been fulfilled or not. (Sec. 39) Holder in Due Course Holder in due course is a holder who took the instrument under the conditions: that it is complete and regular upon its face; that he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; that he took it in good faith and for value; 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. (Sec. 52) Rights of a Holder in Due Course 1) He may sue on the instrument in his own name. 2) He may receive payment and if the payment is in due course, the instrument is discharged. 3) He holds the instrument free from any defect of title of prior parties. 4) He holds the instrument free from defenses available to prior parties among themselves. 5) He may enforce payment of the instrument for the full amount thereof against all parties liable thereon. (De Leon, 2009)

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Defenses in general Defenses- are grounds or reasons pleaded or offered by the defendant in a case, showing why the plaintiff, as a matter of law or fact, should not be given the relief he seeks. 2 Kinds of Defenses: 1) Real Defenses- are those that are assertable against all parties, both immediate and remote, including holders in due course or holders through the latter. (De Leon, 2009) Examples: Incapacity Insolvency Fraud in factum Forgery Illegality Discharge Alteration Incompleteness

2) Personal Defenses- are those available to prior parties among themselves but which are not good against a holder in due course.(De Leon, 2009) Examples: No consideration Fraud in inducement Illegality Alteration (unintentional) Set-off Duress (intimidation) Discharge before maturity Incompleteness (delivered)

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Presumption of Consideration Consideration- an inducement to a contract, that is, the cause, price or impelling influence which induces a contracting party to enter into the contract. (De Leon, 2009) Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration, and every person whose signature appears thereon to have become a party thereto for value. (Sec. 24) Holder for Value- one who has given a valuable consideration for the instrument issued or negotiated to him. Absence of Consideration- a total lack of any valid consideration for the contract, in consequence of which the alleged contract must fail. (De Leon, 2009) Failure of Consideration- failure or refusal of one of the parties to do, perform or comply with the consideration agreed upon. (De Leon, 2009) Accommodation Party- is one which has signed the instrument as maker, drawer, acceptor or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. (Sec. 29) Accommodation Bill or Note- is one to which the accommodation party has put his name, without consideration, for the purpose of accommodating some other party who is to use it, and is expected to pay it. Accommodated Party- is one whose favor a person, without receiving value therefor, signs an instrument for the purpose of lending his credit and enabling said party to raise money upon it. (De Leon, 2009)

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How acceptance made 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. (Sec. 132) Kinds of Acceptance 1) General Acceptance- assents without qualification to the order of the drawer. 2) Qualified Acceptance- in express terms varies the effect of the bill as drawn. Presentment for Acceptance Presentment for Acceptance- is the production or exhibition of a bill of exchange to the drawee for his acceptance or payment. Presentment for acceptance must be made: a) Where the bill is payable after sight, or in any other case, where presentment for acceptance is necessary in order to fix the maturity of the instrument. b) Where the bill expressly stipulates that it shall be presented for acceptance. c) Where the bill is drawn payable elsewhere than at the residence or place of business of the drawee. (Sec. 143) In order that presentment for acceptance may be proper, it is necessary that it: 1) Must be made by or on behalf of the holder. 2) At a reasonable hour. 3) On a business day. 4) Before the bill is overdue and within a reasonable time.

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5) To the drawee or some person authorized to accept or refuse acceptance on his behalf. A bill may be presented for acceptance on any day on which negotiable instrument may be presented for payment under the provisions of Section seventy-two and eighty-five of this Act. When Saturday is not otherwise a holiday, presentment for acceptance may be made before twelve oclock noon on that day. (Sec. 146) Presentment for Payment By presentment for payment is meant the presentation of an instrument to the person primarily liable for the purpose of demanding and receiving payment. (De Leon, 2009) Place of Presentment Presentment for payment is made at the proper place: a) Where a place specified in the instrument and it is there presented. b) No place is specified, but address of the person to make payment is given and it is there presented. c) No place of payment is specified and no address is given and instrument is presented at the usual place of business or residence of the person to make payment. d) In any other case if presented to the person to make payment wherever he can be found, or if presented at his last known place of business or residence. Presentment must be exhibited The instrument must be exhibited to the person from whom payment is demanded, and when it is paid must be delivered up to the party paying it. (Sec. 74)

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To whom Notice of Dishonor must be given When a negotiable instrument has been dishonored by non-acceptance or nonpayment, 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. (Sec. 89) Notice of Dishonor- bringing either verbally or by writing, to the knowledge of the drawer or indorser of an instrument, the fact that a specified negotiable instrument, upon proper proceedings taken, has not been accepted or has not been paid and that the party notified is expected to pay it. Cases that Protest is necessary Where a foreign bill appearing on its face to be such is dishonored by nonacceptance, it must be duly protested for non-acceptance, and where such a bill which has not been previously dishonored by non-acceptance is dishonored by non-payment, it must be duly protested for non-payment. If it is not so protested, the drawer and indorsers are discharged. Where a bill does not appear on its face to be a foreign bill, protest thereof in case of dishonor is unnecessary. (Sec. 152) How Protest made The protest must be annexed to the bill or must contain a copy thereof, and must be under the hand and seal of the notary making it, and specify: a) The time and place of presentment. b) The fact that presentment was made and the manner thereof. c) The cause or reason for protesting the bill. d) The demand made and the answer given, if any, or the fact that drawee or acceptor could not be found. (Sec.153) Protest may be made by: a) A notary public. b) By any respectable resident of the place where the bill is dishonored, in the presence of two or more credible witnesses.

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Acceptance for Honor Acceptance for honor is an undertaking by a stranger to a bill after protest for the benefit of any party liable thereon, or for the honor of the person for whose account the bill is drawn which acceptance inures also to the benefit of all parties subsequent to the person for whose honor it is accepted, and conditioned to pay the bill when it becomes due if the original drawee does not pay it. (De Leon, 2009) Formal Requisites of Acceptance for Honor 1) The acceptance for honor must be in writing. 2) It must indicate that it is an acceptance for honor. 3) It must be signed by the acceptor for honor. 4) It must contain an express or implied promise to pay money. 5) The accepted bill for honor must be delivered to the holder. Who may make Payment for Honor Where a bill has been protested for non-payment, any person may intervene and pay it supra protest for the honor of any person liable thereon or for the honor of the person for whose account it was drawn. (Sec.171) Payment for Honor- is payment made by a person, whether a party to the bill or not, after it has been protested for non-payment, for the benefit of any party liable thereon or for the benefit of the person for whose account it was drawn. How Payment for Honor made The payment for honor supra protest, in order to operate as such and not as a mere voluntary payment, must be attested by a notarial act of honor which may be appended to the protest or form an extension to it.

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Requisites of valid Payment for Honor 1) The bill has been dishonored by non-payment. 2) It has been protested for non-payment. 3) Payment supra protest is made by any person, even a party thereto. 4) The payment is attested by a notarial act of honor which must be appended to the protest or form an extension of it. 5) The notarial act must be based on the declaration made by the payer for honor or his agent of his intention to pay the bill for honor and for whose honor he pays. (Sec.173) How instrument be 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 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. (Sec. 119) Discharge of an instrument- means a release of all parties, whether primary or secondary, from the obligations arising under the instrument rendering it without force and effect and, consequently, no longer negotiable. (De Leon, 2009)

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CHAPTER III METHODOLOGY Selecting Entities The presenters selected three entities in different nature of business: merchandising, utility cooperative, and sand and gravel business. Entities A. TWINS SUPERMART Twins Supermart is owned and managed by Judith L. Tecson. It has two branches namely, Twins Supertmart Quezon Branch and Twins Supermart in Don Carlos Public Market. It supplies grocery items and other dry goods, and their key accounts are retailers and general public. B. FIRST BUKIDNON ELECTRIC COOPERATIVE, INC. First Bukidnon Electric Cooperative, Inc. (FIBECO) provides and distributes industrial, commercial and residential power requirements of southern part of Bukidnon. FIBECO is at core and by law, utility corporation of people, being among the 119 rural electric cooperatives (REC) of the Philippines. It is a non-stock, non-profit and service oriented distribution utility. It serves City of Valencia and municipalities of San Fernando, Maramag, Don Carlos, Pangantucan, Kalilangan, Quezon, Dangcagan, Kitaotao, Kibawe, Kadingilan and Damulog. The cooperative provide sub-offices on every municipality for convenient payments by their clients. C. BESOYO SAND AND GRAVEL Besoyo Sand, Gravel and Boulders Quarry was owned and managed by Ruben Narisma Besoyo. It is a SAND & GRAVEL nature and category of business. It is located at Maug River, Barangay San Salvador, Prosperidad Agusan Del Sur, containing an area of 30, 430.40 square

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meter/ 3.04 hectares sand and gravel materials. Its annual rated capacity of extraction is 35,000 cubis meters. Place and Time of Visit a) TWINS SUPERMART Its main store/office is located at Lopez Jaena St., Don Carlos, Bukidnon. The actual visit to the entity was on August 16, 2012 around 3 oclock in the afternoon. b) FIRST BUKIDNON ELECTRIC COOPERATIVE, INC. Its main office is located Anahawon, Maramag, Bukidnon, and its suboffice in Don Carlos is located in Syre Hi-way South Poblacion Don Carlos, Bukidnon. Actual visit was on August 16, 2012 around 2 oclock in the afternoon. c) BESOYO SAND AND GRAVEL Due to a long distance of the entity, presenters interviewed Mr. Besoyo through phone call. The interview was conducted on August 19, 2012 around 9 oclock in the morning, and questionnaire was signed by Mr. Besoyos representative. Gathering of Data The method used in gathering the data was interview, and the researchers provide questionnaires answered by interviewees. Questionnaires contained the following questions: 1. Does the company accept/use negotiable instruments for its business transactions? 2. Is there an existing policy for the usage of negotiable instruments? 3. Does the company strictly follow the policy for its transactions involving negotiable instruments? 4. Does majority of the customers use negotiable instruments as payment to the company?

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5. Does the company prefer issuance of negotiable instruments rather than paying cash for a valuable consideration obtained? 6. Does the company issue Bearer Instrument (instrument payable to bearer, or to a fictitious or impersonal payee or bearer, or to cash)? 7. Does the company issue Order Instrument (instrument payable to a named person or his order or to the order of a named person)? 8. Does the company engage in writing Pay to Cash rather than Pay to (a specific name of a person)? 9. Does the company accept Accommodation Bill or Note (one to which the accommodation party has put his name, without consideration, for the purpose of accommodating some other party who is to use it)? 10. Does the company indorse a negotiable instrument? 11. Does the company indorse a negotiable instrument by qualified indorsement (without recourse)? 12. Does the company accept negotiable instrument indorsed by a qualified indorsement (without recourse)? 13. In case of dishonored checks due to No Sufficient Fund, does the company take legal action immediately?

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CHAPTER IV PRESENTATION AND ANALYSIS OF DATA DATA:

BESOYO FIBECO SAND & GRAVEL

NEGOTIABLE INSTRUMENTS USAGE

Does the company accept/use negotiable instruments for its business transactions?

TWINS SUPERMART

RATIO (YES:3)

YES

YES

YES

3:3

Is there an existing policy for the usage of negotiable instruments?

YES

YES

YES

3:3

YES
Does the company strictly follow the policy for its transactions involving negotiable instruments? *strictly followed by the cashiers and disbursing officer

YES
*strictly followed by tellers in every sub-office

YES
*strictly followed by cashier/owner

3:3

Does majority of the customers use negotiable instruments as payment to the company?

NO
*there are only few selected major customers

NO *only government
offices and agencies and major clients

NO
*only few customers

3:3

Does the company prefer issuance of negotiable instruments rather than paying cash for a valuable consideration obtained?

YES
*for convenience and part of its security measures

YES
*for convenience

YES
*for convenience

3:3

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Does the company issue Bearer Instrument (instrument payable to bearer, or to a fictitious or impersonal payee or bearer, or to cash)?

NO
*its not in their policy

NO
*its not their policy

NO
*it is not in their policy

0:3

Does the company issue Order Instrument (instrument payable to a named person or his order or to the order of a named person)?

YES
*based on the imposed policy

YES
*based on their policy

YES
*based on their policy

3:3

Does the company engage in writing Pay to Cash rather than Pay to (a specific name of a person)?

NO
*its not in their policy

NO
*its not in their policy

NO
*it is not in their policy

0:3

Does the company accept Accommodation Bill or Note (one to which the accommodation party has put his name, without consideration, for the purpose of accommodating some other party who is to use it)?

NO
*Its not allowed because the company avoids hassle in running after accommodated party.

NO
*its not in their policy

NO
*it is not in their policy

0:3

Does the company indorse a negotiable instrument?

NO

NO

NO

0:3

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Does the company indorse a negotiable instrument by qualified indorsement (without recourse)?

NO

NO

NO

0:3

Does the company accept negotiable instrument indorsed by a qualified indorsement (without recourse)?

NO NO

NO

0:3

YES
In case of dishonored checks due to No Sufficient Fund or with stop payment orders, does the company take legal action immediately? *First they call up the attention of the customer after receiving the NSF check returned by the bank.

YES
*there is an immediate action followed.

YES
*the owner take immediate action to avoid losses

3:3

Negotiable Instrument/s Used

Check
*accept only firstendorsed check

Check
*accept only firstendorsed check

Check
*accept only first- endorsed check

Presenters assumed that interviewees will answer positively. So, the ratio (YES: 3) means that among the three entities only a number of them answered YES. Based on the data gathered, as to existence of negotiable instrument, the entities uses

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negotiable instrument but they only accept and issue checks. Acceptance of checks limited only to the first endorsement. The three entities do not accept promissory notes. All of them prefer to issue checks in paying their accountabilities to the suppliers and other payees for convenience and safety. As to issuance, they strictly put name of the specified person in the instrument as payee. Only few of their customers or clients can pay checks to them. They only accept checks from government offices, agencies and major customers or clients from private companies. They require their customers some valid identifications and account advice for checks from government. In case of dishonored checks, they immediately make legal actions provided in the policy guidelines. Some common policy guidelines they have are the following: 1. Check should be payable to specific payees name. 2. Check should be payable on demand. 3. Customer should provide two valid Identification cards. 4. Checks from government should have account advice from LGU and signed by municipal accountant and banks representative. 5. The company should not accept accommodation bill. 6. Call the attention of the customer immediately in case of NSF checks.

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CHAPTER V CONCLUSION AND RECOMMENDATION As years passed, changes and adjustments are rampant in all aspects due to technological advancement. Many of the instruments used in the past are not applicable today. Only few of them are continuously circulating. One of them is check, especially on demand check or on date checks but very few of them used postdated check. Checks still exist but are subject to certain limitations. It is most commonly used among all entities. Promissory notes are no longer applicable in business transactions. For convenience, they prefer to use check than any other instrument, for the reason of security and for payment on demand or at a determinable future time. There is secondary contract involved, since after the first issuance of the maker, there is only one endorsement followed by the payee. This would mean that there could be holders aside from the payee. In addition, most of the entity doesnt favor the issuance of the bearer instrument. They wanted to be specifically addressed to them, same reason as stated above. If in case there so they can immediately follow up their customer. Because they have the necessary information of the costumer, they can easily trace them. This would prevent uncollectible accounts. We recommend them to be strict in terms of the information given by their customer. They have to tighten their rules and regulation followed in the issuance of the check. To be ensured of the sufficiency of the fund, there must be a call first of the said stated bank together with the information of the customer. Furthermore, it is advisable to require the customer to issue an on-demand check than a postdated one for its easily encashment if ever there is an urgent expenditure needed. It must specify the payee. Also, they may require their customer to fill up a form that would easily make them identified. They may accept credit card but not the promissory notes for security purposes. All in all, checks are used as negotiable instruments for today and very few of them uses credit card.

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CURRICULUM VITAE

PATRICIA JARA ARPILLEDA

PERSONAL PARTICULARS Name Address Phone E-Mail Age Civil Status : : : : : : Patricia Jara Arpilleda Purok 13, Poblacion, Valencia City, Bukidnon, 8709 (+63) 9177183689 jumpaicirtskte@yahoo.com 19 Single

EDUCATIONAL BACKGROUND 2009 Present : Central Mindanao University Musuan, Maramag, Bukidnon, 8710 Bachelor of Science in Accountancy Central Mindanao University Laboratory High School Musuan, Maramag, Bukidnon, 8710 First Fruits Christian Academy Hindangon, Valencia City, Bukidnon, 8709 Class Salutatorian

2005 2009

1999 - 2005

EXTRACURRICULAR ACTIVITIES VP-Audit, RFJPIA, 2012-2013 College Councilor , CMU Supreme Student Council, 2012-2013 President, JPIA, 2011-2012 Vice President for Publication and Information, JPIA, 2010-2011 SKILLS______________________________________________________________________ Literate in MS Applications Strong Accounting Foundation Good communication skills AWARDS/ACHIEVEMENTS 1st Runner-up, Palaro-Futsal, 2009 Champion, Photo Exhibit, 9th Mid Year Convention, 2010 Class Salutatorian, Elementary, 2005 MTAP(2005-2007) Deans List (S.Y.2009-2010), (S.Y. 2010-2011)

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20th Place Investigatory Project Pure Science Division in the 19th Intel Philippines Science Research Fair

Ether Celly P. Besoyo ______________________________________________________________________ Personal Information Status: Single Religious Affiliates: Pentecostal

Sex: Female Citizenship: Filipino ______________________________________________________________________ Educational Attainment ---2009 2005 Central Mindanao Universiity Musuan Maramag, Bukidnon Agusan Sur National High School Purok 4 Brgy. San Francisco, Agusan Del Sur

San Martin Elementary School Purok 1 San Martin Prosperidad, Agusan Del Sur ______________________________________________________________________ Special Skills Singing

______________________________________________________________________ References Wilfredo Murillo Motorpole Musuan Maramag, Bukidnon

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Maricor B. Rocamora ______________________________________________________________________ Personal Information Status: Single Religious Affiliates: Roman Catholic

Sex: Female Citizenship: Filipino ______________________________________________________________________ Educational Attainment ---2007 2003 Central Mindanao Universiity Musuan Maramag, Bukidnon Saint Marys Academy of Tagoloan Tagoloan Misamis Oriental

Vicente N. Chaves Memorial Central School Villanueva Misamis Oriental ______________________________________________________________________ Special Skills Eating Cooking ______________________________________________________________________ References Marcelito Salomon Tagoloan Misamis Oriental

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REFERENCES De Leon, H. S. (2009). The Law on Negotiable Instruments. http://www.congress.gov.ph/press/details.php?pressid=6422 http://ph-accountancy.blogspot.com/search/?q=negotiable+instruments http://fibeco.tripod.com/ http://lawphilreviewer.wordpress.com/tag/negotiable-instruments-law-holder-indue-course/ http://home.comcast.net/~jasonkilborn/PaymentSys_Neg_Inst_Rev.htm http://uclaw.lefora.com/2009/12/04/negotiable-instruments-law-reviewer/#post0 http://www.oppapers.com/essays/Negotiable-Instruments-Act-1881/290728 http://www.bukidnon.gov.ph/index.php?option=com_content&task=view&id=241& Itemid=320&limit=1&limitstart=1 http://durianpost.wordpress.com/2012/05/27/first-bukidnon-electric-cooperativeinc-fibeco-40th-anniversary/

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APPENDIX
QUESTIONNAIRES DOCUMENTATION

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QUESTIONNAIRES

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DOCUMENTATION

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