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ACT NO. 2031 2. What constitutes certainty as to sum.

Enacted: February 03, 1911 The sum payable is a sum certain within the meaning of this Act,
although it is to be paid:
WEEK 1 (b) by stated installments; or
1. Form of negotiable instruments. (5)
(c) by stated installments, with a provision that, upon default in
An instrument to be negotiable must conform to the following payment of any installment or of interest, the whole shall become due;
requirements: or
(a) It must be in writing and signed by the maker or drawer;
(d) with exchange, whether at a fixed rate or at the current rate; or
(b) Must contain an unconditional promise or order to pay a sum
(e) with costs of collection or an attorney's fee, in case payment shall
certain in money;
not be made at maturity.
(c) Must be payable on demand, or at a fixed or determinable future
time; 7. When payable on demand. (3) +1
(d) Must be payable to order or to bearer; and An instrument is payable on demand:
(e) Where the instrument is addressed to a drawee, he must be (a) When it is so expressed to be payable on demand, or at sight, or
named or otherwise indicated therein with reasonable certainty. on presentation; or
(b) In which no time for payment is expressed.
184. Promissory note, defined. (5)
Where an instrument is issued, accepted, or indorsed when overdue, it
A negotiable promissory note within the meaning of this Act is
is, as regards the person so issuing, accepting, or indorsing it, payable
- an unconditional promise in writing made by one person to
on demand.
- signed by the maker,
4. Determinable future time; what constitutes. (4) +1
- engaging to pay on demand, or at a fixed or determinable
An instrument is payable at a determinable future time, within the
future time, a sum certain in money
meaning of this Act, which is expressed to be payable:
- to order or to bearer.
- Where a note is drawn to the maker's own order, it is not (a) At a fixed period after date or sight; or
complete until indorsed by him. (b) On or before a fixed or determinable future time specified therein;
Original Parties PN (2)
- Maker (c) On or at a fixed period after the occurrence of a specified event
- Payee which is certain to happen, though the time of happening be
126. Bill of exchange, defined. (5) An instrument payable upon a contingency is not negotiable, and the
A bill of exchange is happening of the event does not cure the defect.
- an unconditional order in writing addressed by one person to
another, 11. Date, presumption as to. (1)
- signed by the person giving it, Where the instrument or an acceptance or any indorsement thereon is
- requiring the person to whom it is addressed to pay on dated,
demand or at a fixed or determinable future time a sum such date is deemed prima facie to be the true date of
certain in money the making, drawing, acceptance, or indorsement, as the case may be.
- to order or to bearer.
17. Construction where instrument is ambiguous. (7)
Original Parties BE (3) Where the language of the instrument is ambiguous or there are
- Drawer omissions therein,
- Drawee the following rules of construction apply:
- Payee (a) Where the sum payable is expressed in words and also in figures
and there is a discrepancy between the two,
18. Liability of person signing in trade or assumed name. (1) the sum denoted by the words is the sum payable;
No person is liable on the instrument whose signature does not appear but if the words are ambiguous or uncertain,
thereon, reference may be had to the figures to fix the amount;
except as herein otherwise expressly provided.
(b) Where the instrument provides for the payment of interest,
But one who signs in a trade or assumed name without specifying the date from which interest is to run,
will be liable to the same extent as if he had signed in his own name. the interest runs from the date of the instrument,
and if the instrument is undated,
19. Signature by agent; authority; how shown. (1) from the issue thereof;
The signature of any party may be made by a duly authorized agent.
(c) Where the instrument is not dated,
No particular form of appointment is necessary for this purpose; it will be considered to be dated as of the time it was issued;
and the authority of the agent may be established as in other cases of
agency. (d) Where there is a conflict between the written and printed
provisions of the instrument,
the written provisions prevail;
3. When promise is unconditional. (3) +1 (e) Where the instrument is so ambiguous that there is doubt whether
An unqualified order or promise to pay is unconditional within the it is a bill or note,
meaning of this Act though coupled with: the holder may treat it as either at his election;
(a) An indication of a particular fund out of which reimbursement is to
(f) Where a signature is so placed upon the instrument that it is not
be made or a particular account to be debited with the amount; or
clear in what capacity the person making the same intended to sign,
(b) A statement of the transaction which gives rise to the instrument. he is to be deemed an indorser;
But an order or promise to pay out of a particular fund is not (g) Where an instrument containing the word "I promise to pay" is
unconditional. signed by two or more persons,
they are deemed to be jointly and severally liable thereon.

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8. When payable to order. (7) +1 33. Kinds of indorsement. (3)
The instrument is payable to order where it is drawn payable to the An indorsement may be either special or in blank;
order of a specified person or to him or his order. and it may also be either restrictive or qualified or conditional.
It may be drawn payable to the order of:
(a) A payee who is not maker, drawer, or drawee; or 36. When indorsement restrictive. (3)
An indorsement is restrictive which either: FAT
(b) The drawer or maker; or
PDD-TOH (a) Prohibits the further negotiation of the instrument; or
(c) The drawee; or
(b) Constitutes the indorsee the agent of the indorser; or
(d) Two or more payees jointly; or
(c) Vests the title in the indorsee in trust for or to the use of some
(e) One or some of several payees; or other persons.
(f) The holder of an office for the time being. But the mere absence of words implying power to negotiate does not
Where the instrument is payable to order, the payee must be named make an indorsement restrictive.
or otherwise indicated therein with reasonable certainty.
9. When payable to bearer. (5) 52. What constitutes a holder in due course. (4) COGI
The instrument is payable to bearer:
EPFNB A holder in due course is a holder who has taken the instrument under
the following conditions:
(a) When it is expressed to be so payable; or
(a) That it is complete and regular upon its face;
(b) When it is payable to a person named therein or bearer; or
(b) That he became the holder of it before it was overdue, and without
(c) When it is payable to the order of a fictitious or non-existing
notice that it has been previously dishonored, if such was the fact;
and such fact was known to the person making it so payable; or (c) That he took it in good faith and for value;
(d) When the name of the payee does not purport to be the name of (d) That at the time it was negotiated to him, he had no notice of any
any person; or infirmity in the instrument or defect in the title of the person
negotiating it.
(e) When the only or last indorsement is an indorsement in blank.
57. Rights of holder in due course. (3)
A holder in due course holds the instrument
5. Additional provisions not affecting negotiability. (4)
- free from any defect of title of prior parties, and
An instrument which contains an order or promise to do any act in
- free from defenses available to prior parties among
addition to the payment of money is not negotiable.
themselves, and
But the negotiable character of an instrument otherwise negotiable is - may enforce payment of the instrument for the full amount
not affected by a provision which: CJ-LE thereof against all parties liable thereon.
(a) authorizes the sale of collateral securities in case the instrument be
not paid at maturity; or 58. When subject to original defense. (2)
In the hands of any holder other than a holder in due course,
(b) authorizes a confession of judgment if the instrument be not paid a negotiable instrument is subject to the same defenses as if it were
at maturity; or non-negotiable.
(c) waives the benefit of any law intended for the advantage or But a holder who derives his title through a holder in due course,
protection of the obligor; or and who is not himself a party to any fraud or illegality affecting the
(d) gives the holder an election to require something to be done in lieu instrument,
of payment of money. has all the rights of such former holder in respect of all parties prior to
But nothing in this section shall validate any provision or stipulation the latter.
otherwise illegal.
26. What constitutes holder for value. (1)
6. Omissions; seal; particular money. (5) Where value has at any time been given for the instrument,
The validity and negotiable character of an instrument are not affected the holder is deemed a holder for value
by the fact that: in respect to all parties who become such prior to that time.

(a) it is not dated; or DV-PSP WEEK 4

(b) does not specify the value given, or that any value had been given 55. When title defective. (7)
therefor; or The title of a person who negotiates an instrument is defective within
the meaning of this Act
(c) does not specify the place where it is drawn or the place where it is
when he obtained the instrument, or any signature thereto,
payable; or
- by fraud,
(d) bears a seal; or - duress, or
- force and fear, or
(e) designates a particular kind of current money in which payment is
to be made. - other unlawful means, or
- for an illegal consideration, or
But nothing in this section shall alter or repeal - when he negotiates it in breach of faith, or
any statute requiring in certain cases - under such circumstances as amount to a fraud.
the nature of the consideration to be stated in the instrument.
56. What constitutes notice of defect. (3)
30. What constitutes negotiation. (3) To constitutes notice of
An instrument is negotiated when an infirmity in the instrument or
it is transferred from one person to another defect in the title of the person negotiating the same,
in such manner as to constitute the transferee the holder thereof. the person to whom it is negotiated must have had
If payable to bearer, it is negotiated by delivery; - actual knowledge of the infirmity or defect, or
if payable to order, it is negotiated by the indorsement of the holder - knowledge of such facts that his action in taking the
and completed by delivery. instrument amounted to bad faith.

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54. Notice before full amount is paid. (1) WEEK 7
Where the transferee receives notice of 23. Forged signature; effect of. (5)
any infirmity in the instrument or When a signature is forged or made without the authority of the
defect in the title of the person negotiating the same person whose signature it purports to be,
before he has paid the full amount agreed to be paid therefor, - it is wholly inoperative, and IR-DEP
he will be deemed a holder in due course - no right to retain the instrument, or
only to the extent of the amount therefore paid by him. - to give a discharge therefor, or
- to enforce payment thereof against any party thereto,
29. Liability of accommodation party. (4) can be acquired through or under such signature,
An accommodation party is unless the party against whom it is sought to enforce such right is
- one who has signed the instrument as maker, drawer, precluded from setting up the forgery or want of authority.
acceptor, or indorser,
- without receiving value therefor, and Primarily Liable (3)
- for the purpose of lending his name to some other person. - Maker of PN
Such a person is liable on the instrument to a holder for value, - Acceptor of BoE MAC
notwithstanding such holder, - Certifier of a check
at the time of taking the instrument,
knew him to be only an accommodation party. Secondarily Liable (2)
- Drawer of a bill DI
WEEK 5 - Indorser of a note or bill
124. Alteration of instrument; effect of. (2)
Where a negotiable instrument is materially altered without the assent Not Liable (1)
of all parties liable thereon, - Drawee, until he accepts the instrument in which case he
it is avoided, becomes an acceptor
except as against
a party who has himself made, authorized, or assented to the 62. Liability of acceptor. (2)
alteration and The acceptor, by accepting the instrument,
subsequent indorsers. engages that he will pay it according to the tenor of his acceptance
and admits:
But when an instrument has been materially altered and
is in the hands of a holder in due course not a party to the alteration, (a) The existence of the drawer, the genuineness of his signature, and
he may enforce payment thereof according to its original tenor. his capacity and authority to draw the instrument; and
(b) The existence of the payee and his then capacity to indorse.
53. When person not deemed holder in due course. (1)
Where an instrument payable on demand 125. What constitutes a material alteration. (7)
is negotiated on an unreasonable length of time after its issue, Any alteration which changes:
the holder is not deemed a holder in due course. (a) The date; DST-NC-PO
(b) The sum payable, either for principal or interest;
WEEK 6 (c) The time or place of payment;
12. Ante-dated and post-dated. (2) (d) The number or the relations of the parties;
The instrument is not invalid for the reason only that it is ante-dated (e) The medium or currency in which payment is to be made;
or post-dated, (f) Or which adds a place of payment where no place of payment is
provided this is not done for an illegal or fraudulent purpose. specified, or
The person to whom an instrument so dated is delivered acquires the - any other change or addition which alters the effect of the
title thereto as of the date of delivery. instrument in any respect,
is a material alteration.
59. Who is deemed holder in due course. (2)
Every holder is deemed prima facie to be a holder in due course; Sec. 28. Effect of want of consideration. (2)
Absence or failure of consideration is
but when it is shown that the title of any person who has negotiated a matter of defense as against any person not a holder in due course;
the instrument was defective,
the burden is on the holder to prove that he or some person under and partial failure of consideration is a defense pro tanto,
whom he claims acquired the title as holder in due course. whether the failure is an ascertained and liquidated amount or
But the last-mentioned rule does not apply
in favor of a party who became bound on the instrument Attorneys Oath (7)
prior to the acquisition of such defective title. I ___________ do solemnly swear that
1) I will maintain allegiance to the Republic of the Philippines;
49. Transfer without indorsement; effect of. (3) 2) I will support its Constitution and obey the laws as well as
Where the holder of an instrument payable to his order the legal orders of the duly constituted authorities therein;
transfers it for value without indorsing it, 3) I will do no falsehood, nor consent to the doing of any in
- the transfer vests in the transferee such title as the court;
transferor had therein, and 4) I will not wittingly or willingly promote or sue any
- the transferee acquires in addition, groundless, false or unlawful suit, nor give aid nor consent
the right to have the indorsement of the transferor. to the same;
But for the purpose of determining whether the transferee is a holder 5) I will delay no man for money or malice, and
in due course, 6) will conduct myself as a lawyer according to the best of my
the negotiation takes effect as of the time when the indorsement is knowledge and discretion with all good fidelity as well to the
actually made. courts as to my clients; and
7) I impose upon myself this voluntary obligation without any
mental reservation or purpose of evasion.
So help me God.

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