MACASAET, LENIA JANEL L.

OF BSA – A3A
PART 1

THE NEGOTIABLE INSTRUMENTS LAW

(ACT NO. 2031)
INTRODUCTION

Applicability of the Negotiable Instruments Law.

(1) Limited application – Act applies only to negotiable instruments

(2) Supplementary application of other laws – The Civil Code only supplies any deficiency in cases not covered by the Act

Function and importance of negotiable instruments. (3)

(1) Used as a substitute for money (but do not constitute legal tender)
a. Negotiability – go from hand to hand in the commercial markets; take part of money in commercial transactions
b. Law’s purpose – to make negotiable instruments freely acceptable in financial transactions and facilitate trade.
(2) Constitute, at present, the media of exchange for most commercial transactions
a. Without them, more money would be needed in circulation
b. Eliminate the risk of dealing in cash
(3) Serve as a medium of credit transaction
a. A man does not always have cash in hand, so negotiable instruments enable him to conduct and complete
business transactions through credit.
b. Check: immediate payment; bill of exchange and promissory note: credit circulation

Characteristic or features of negotiable instruments. (2)

(1) Negotiability – it may pass from one person to another

(2) Accumulation of secondary contracts – most important feature

Example: A issues a promissory note payable to the order of B. B transfers his right to the instrument to C.
Primary Secondary
A B C
(Maker) (Transferor) (Holder)

*Primary contract: A and B *Primarily liable to C: A

*Secondary contract: B and C *Secondarily liable to C (in case A did not pay): B

Forms of negotiable instruments. (2) “The more debts are added, the more advantageous it
will be to the holder (C) as he can proceed not only against
(1) Common forms the maker (A), but also against all transferors (B).”
a. Promissory notes – issuer has promised to pay
b. Bills of exchange – issuer has ordered a third person to pay
*Checks – special form or kind of bill of exchange
(2) Special forms
a. Certificate of deposits, bank notes, due bills and bonds  Promissory notes
b. Drafts, trade acceptances and banker’s acceptances  Bills of exchange

Doubt resolved in favor of negotiability – Purpose: To encourage the free circulation of negotiable papers
Reason: Performs necessary function
Instruments with limited negotiability. (Refer to pp. 6-8 for examples) in commercial business transactions

- Widely used in commercial transactions, but considered non-negotiable because they do not have the essential
requisites under the Negotiable Instruments Law.
- Governed by other laws

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.
 MACASAET, LENIA JANEL L. OF BSA – A3A
TITLE I

NEGOTIABLE INSTRUMENTS IN GENERAL

CHAPTER I

FORMS AND INTERPRETATION

Section 1. Form of negotiable instruments. – An instrument to be negotiable must conform to the following
requirements:

a. It must be in writing and signed by the maker or drawer;

b. Must contain an unconditional promise or order to pay a sum certain in money;
Note
Bill c. Must be payable on demand or at a fixed or determinable future time;
d. Must be payable to order or bearer;
e. Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein
with reasonable certainty

Commercial paper defined.

- Written promises or obligations that arise out of commercial transactions from the use of such instruments as
promissory notes and bills of exchange
- Either negotiable or non-negotiable

Negotiable instrument defined. (Refer to Section 1)

Formal requirements of negotiability in general.

(1) Form and content – briefly stated, negotiable instrument  a contractual obligation to pay money (+Section 1)
(2) Matters to be considered (3) – in determining negotiability
a. Whole of the instrument
b. Only what appears on the face of the instrument
c. Provisions of the Negotiable Instruments Law  Section 1

Applicability of formal requirements. (Refer to Section 1 – c. and d. are applicable to both; e. is applicable to bill only)

Formal requirements explained.

(1) The instrument must be in writing – reduced to tangible form; otherwise, nothing could be negotiated
a. Written – literally written or printed in a durable paper
a. b. NO oral negotiable instrument – oral promise  difficult to determine liability and creates
danger of fraud
(2) The instrument must be signed by the maker or drawer
– General rule: Signature is placed at the lower right hand corner of the instrument
– Exception: It may appear in any part.
– Signature  valid and binding as long as the person who signed intended to make the instrument his own
a. Prima facie evidence of his intention to be bound; if unclear  deemed indorser
b. Usually written; preferably full name or at least, surname, but initials or any mark will be sufficient
c. Presumed valid – so if its genuineness is denied, he who alleges must prove its invalidity
d. Signer – must intend to adopt the signature as his own and to obligate himself for its payment
(like a parent’s responsibility to his/her child/ren)
*Use of pencil is undesirable  easy to tamper

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.
 MACASAET, LENIA JANEL L. OF BSA – A3A

(3) The instrument must contain an unconditional promise or order to pay – Section 3
b.
(4) The instrument must be payable in a sum certain in money
a. Money – the on standard of value in actual business
b. Money – medium of exchange authorized or adopted by a domestic or foreign government as part of its
currency; cash (literal sense)
*Legal tender – debtor can legally compel a creditor to accept in payment of a debt in money when
tendered in the right amount ; Philippine Peso

c. (5) The instrument must be payable at a fixed or determinable future time or on demand – Sections 4 and 7
(6) The instrument must be payable to order – Section 8
d.
(7) The instrument must be payable to bearer – Section 9
e. (8) The drawee must be named – only applies to bills and checks
a. An order not addressed to any person ≠ bill;
but if the drawee is indicated therein with reasonable certainty (though not named) = bill
b. Reason – to enable payee or holder to know upon whom he is to call for acceptance or payment
c. Promissory note – not drawee, but payee, who must also be named with reasonable certainty

Non-negotiable instruments defined.

- Does not meet the requirements in Section 1

- Negotiable but has lost its quality of negotiability
a. Check payable only to a specified person – prohibits further negotiation
b. May not be negotiated, but may be assigned or transferred
c. Transfers of such – governed by the Civil Code on assignment of (contract rights)
d. Legal consequences of negotiation v.s. assignment

Nature of non-negotiable instrument.

(1) Merely a simple contract in writing – covered by the general provisions of the Civil Code
(2) May not be negotiated, but may be assigned or transferred
Promissory note defined.
- Brief definition: A written promise to pay a sum of
money
- May be a demand instrument,
but normally a time instrument
- P2: Promise paper or 2-party paper
Original parties to a promissory note.
(1) Maker – makes the promise to pay the payee or holder
and signs the instrument
– his signature must appear on the face of the
note for him to be liable thereon
(2) Payee – party to whom the promise is made;
– specifically designated by name, or office
or title, or may be unspecified
*For examples and explanation: See pp. 17-18
Idea and purpose of a bill of exchange.
(1) Drawer has funds in the hands of drawee (or drawee must owe the drawer a debt to be offset)
(2) Liability of drawee for non-payment
a. Drawee refuses to accept when he has funds – liable to the drawer
b. Drawee has no funds – go after the drawee for reimbursement
Bill of exchange defined.
- Brief definition: An order made by one person to
another to pay money to a third person
- Check  drawn on a bank + payable on demand
- 3O/Trio: 3-party paper or Order paper
Original parties to a bill of exchange.
(1) Drawer – issues and draws
– gives the order to pay money
(2) Drawee – party upon whom the bill is drawn
– ordered and expected to pay
– can be natural or juridical person
(3) Payee – party in whose favor the bill is originally
Issued
– may be specifically designated or unspecified
*For examples and explanation: See pp. 21-22

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.
MACASAET, LENIA JANEL L. OF BSA – A3A
Sec. 2. Certainty as to sum; what constitutes.

(a) – (e) on p. 23  Only relates to the manner of payment. Amount due can still be ascertained.

Certainty of sum payable.

- A requisite for negotiability to assure clarity and certainty in determining the value of the instrument
(1) Payment of fixed amount of money
– since a negotiable instrument intends to take the place of money, it should represent a fixed amount to be
paid wholly in money; amount to be paid must be determinably and plainly stated on the face of the instrument
– holder must be able to determine from the instrument itself the amount he is entitled to receive at maturity
– if the instrument calls for an act, other than the payment of money  non-negotiable
(2) Permissible clauses or stipulations (letters a-e on p. 23)
– the basic test: whether the holder can determine by calculation or computation the amount payable when the
instrument is due

Sum to be paid with interest (a).

(1) Interest at fixed rate

DOES NOT render the
(2) Interest at increased or reduced rate
instrument non-negotiable
(3) Accrual/Rate of interest not specified – legal rate: 6%

Sum payable by stated installments (b).

(a) Interest of each installment

Must be fixed in the instrument
(b) Due date of each installment

Sum to be paid by stated installments with acceleration clause (c).

Acceleration – a promise that if any installment or interest is not paid as agreed, the whole shall become due

(1) Acceleration dependent on maker – negotiable

(2) Acceleration at option of holder – non-negotiable  payee/holder cannot accelerate the note unless the maker
fails to pay an installment

Sum to be paid with exchange (d).

- Refers to instruments payable in foreign currency

- Applies to instruments drawn in one country and payable in another
- Does not impair negotiability  current rate of exchange at any given time may easily be ascertained
- Exchange is applicable only to foreign bills

*Inland or domestic bill – drawn and payable at the same place  exchange is not applicable

Sum to be paid with costs of collection or an attorney’s fee (e).

(1) Increase in amount due effective after maturity

– Negotiability is not affected
– The added value to the amount due on the note arises after maturity date when the instrument is
no longer negotiable
(2) Liability for attorney’s fee – reasonable sum
(3) Acquisition of instrument after maturity – transferee ≠ holder in due course

*Letters (a) – (e), except (c) 2., does not render an instrument non-negotiable.

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.
MACASAET, LENIA JANEL L. OF BSA – A3A
Sec. 3. When promise is unconditional.

When promissory note contains a promise to pay.

(1) Implied promise to pay – any words equivalent to a promise should be used
(2) Bare acknowledgment of indebtedness – non-negotiable

When bill of exchange contains an order to pay.

(1) Words equivalent to an order to pay

(2) Order ≠ Request; Order = Demand = Command
(3) Liability of drawer (primary) – it is immaterial whether the drawee obeys the order to pay or not

When promise or order to pay is unconditional.

(1) Instrument payable absolutely – not subject to any condition or contingency

(2) Reason for requisite – greatly enhances the ability of the instrument to circulate freely from one person to
another  no one would accept a paper for debt if the right to recover were not absolute or unconditional
(3) Terms not affecting unconditional liability – refers to bills of exchange only
a. Indication of a particular fund out of which reimbursement is to be made  negotiable
An act subsequent to the payment
b. Indication of a particular fund our of which payment is to be made  non-negotiable
Contingent: Depend upon the adequacy or existence of the fund.
*Test of negotiability: whether the instrument carries the general personal credit of the maker/drawer.

c. Indication of a particular account to be debited with the amount  negotiable

Statement of transaction which gives rise to instrument.

(1) Mere recital of consideration for instrument or origin of transaction  negotiable

(2) Terms and conditions contained in another paper  non-negotiable because the obligation to pay is burdened
with the terms and conditions of another contract
*Negotiability or non-negotiability – determinable from what appears on its face alone and not elsewhere

Sec. 4. Determinable future time. (p. 35)

Certainty of time of payment.

(1) Instrument payable at all events – payment will certainly become due and demandable one time or another
(2) When time of payment certain – holder may call for payment at any time (demand/sight instrument)
(3) Reasons why time must be certain – to know when an obligation will arise

*Hindi mo alam kung kelan, pero alam mong mangyayari.

When instrument payable at determinable future time. (See pp. 37-39)

*Contingency – not negotiable because it does not appear on its face whether or not it will be paid
*After sight – after the instrument is seen by the drawee upon presentment for acceptance

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.
MACASAET, LENIA JANEL L. OF BSA – A3A
Sec. 5. Additional provisions not affecting negotiability.

Acts in addition to payment of money.

(1) General rule:

Instrument containing a promise or order to do any act in addition to payment of money  non-negotiable
(2) Exceptions:
a. Sale of collateral securities (accessory) – additional act is to be performed after the date of maturity when
the instrument is no longer negotiable  negotiable
b. Confession of judgment – written acknowledgment of indebtedness or liability  negotiable
c. Waiver of benefit granted by law  negotiable
d. Election of holder to require some other act  negotiable
Election of maker  non-negotiable – holder cannot compel the maker to pay in money

Sec. 6. Omissions; seal; particular money. (See p. 42)

Matter
Effect of omission of date.
Effect of omission of value.
Effect of omission of place.
Effect of presence of seal.
Effect of designation of particular
kind of current money payable.
Negotiability/Discussion
(1) Date of instrument generally not necessary – no date
(considered issue date)  Negotiable
(2) When date necessary – to determine the date of maturity
a. Maturity date is tied to the date of issue
b. Interest is stipulated – to know when it is to run
c. To determine whether a party acted within a reasonable time in
making presentment for payment
(3) Date stated not in calendar – deem the nearest date of the month the
date intended (e.g. Feb. 30  Feb 28.)
Negotiable – it is usual to state in the instrument that it is given for value
received without specifying what that value is; consideration  presumed
Negotiable – presumed to be payable at the place of residence or business of
the maker or drawer
Negotiable
Negotiable – the law does not require that payment should be made in legal
tender

Sec. 7. When payable on demand. – An instrument is payable on demand –

(a) Where it is expressed to be payable on demand, or at sight, or on presentation; or

(b) In which no time for payment is expressed.

Where an instrument is issued, accepted, or indorsed when overdue, it is, as regards the person so issuing, accepting,
or indorsing it, payable on demand.

*Payable on demand – due and payable immediately after delivery  demand instrument
*Not payable on demand  time instrument

(See pp. 46-47 for examples and further discussion)

Secs. 8 and 9.  Better refer to the book (pp. 47-55) or to your own notes

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.
MACASAET, LENIA JANEL L. OF BSA – A3A
Sec. 10. Terms, when sufficient.

Criterion of negotiability – it is not required to use the exact words of the law

(1) Clear intention of the parties

– Substance over form
– As long as the clear intention can be determined, the law will give the instrument force and effect
(2) Use of foreign language  negotiable
(3) Mere defect in language or grammatical error  negotiable

Sec. 11. Date, presumption as to.

Presumption as to date.
– date on the instrument  presumed to be the date when it is made by the maker, drawn by the drawer, accepted by
the drawee, or indorsed by the payee or holder
*He who claims that some other date is the true date had the burden to establish such claim.

Date in instrument payable at a fixed future date.

- General rule: Date is not essential to make an instrument negotiable

- Exception to the rule: Date is necessary to determine the maturity (but not for negotiability)
(1) Instrument is payable at a fixed period after date
(2) Instrument is payable at a fixed period after sight

Date in instrument payable on demand.

– ordinarily need not be dated since it is demandable at any time

(1) Date of issue or last negotiation

Required: a. Promissory note  presented for payment within reasonable time after its issue
b. Bill of exchange  presented within a reasonable time after the last negotiation
(2) Importance of the date – to determine whether a party has acted within a reasonable time

Sec. 12. Ante-dated and post-dated.

– instrument is valid, provided that ante-dating and post-dating is not done for an illegal or fraudulent purpose

(1) Ante-dated – a date earlier than the true date of issuance

(2) Post-dated – a date later than the true date of its issuance

Sec. 13. When date may be inserted.

(1) Two cases

a. Instrument payable at a fixed period after date, but issued undated
b. Instrument payable at a fixed period after sight, but the acceptance is undated
(2) Date of issue or acceptance to be specified – necessary to determine the date of maturity because unless the
true date is inserted, one will not know when the instrument will be due
*Date of acceptance – the date when the bill was presented to the drawee,
not the date when it was actually accepted by him
(3) Application to other cases – see p. 60

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.
MACASAET, LENIA JANEL L. OF BSA – A3A
Effect of insertion of wrong date.

(1) As to holder with knowledge – will avoid the instrument as to him, not as to a subsequent holder in due course
(2) As to subsequent holder in due course – wrong date will be regarded as the true date

Secs. 14-16. Better refer to the book (pp. 62-70) or to your own notes

Sec. 17. Construction where instrument is ambiguous.

Rules of construction in case of ambiguity or omission.

– applicable only when the instrument in question is ambiguous or uncertain or when there are omissions therein

(1) and (2) Words v.s. Figures

i. 1st priority: Words – because figures form no part of the instrument; written only for convenience
ii. 2nd priority: Figures – if words are ambiguous/uncertain
(2)
(3) Date when stipulated interest to run not specified
– No date  run from the date of issue
– No rate  legal rate
(4) Instrument undated  date of issue – first delivery of the instrument complete in form to a holder
(5) Written and printed words in conflict – written would prevail  express the true intention of the maker/drawer
(6) Whether instrument bill or note in doubt – holder may treat either at his election
(7) Capacity in which person signed in doubt – ambiguous location of the signature  indorser (assumes the least liability)
(8) Instrument signed by two or more persons
a. Solidary – I promise to pay; anyone of the signers is liable for the whole amount
b. Jointly – We promise to pay; there are as many debts as there are debtors

Sec. 18. Liability of person signing in trade or assumed name.

Persons liable on an instrument.

(1) General rule – only persons whose signatures appear on an instrument are liable
(2) Exceptions
a. A person signs in a trade or assumed name
– liable as if he signed in his own name; not really an exception, but rather an instance
b. The principal is liable if a duly authorized agent signs on his own behalf
c. The forger is liable even if his signature does not appear on the instrument
d. An acceptor who makes his acceptance of a bill on a separate paper  maarte
e. A person who makes a written promise to accept a bill before it is drawn  excited

Sec. 19. Signature by agent; authority; how shown.

Signature by an authorized agent.

– the maker or drawer may sign the instrument personally or
by another duly authorized by him  agent/attorney-in-fact – extension of the principal’s personality

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.
MACASAET, LENIA JANEL L. OF BSA – A3A
Sec. 20. Liability of person signing as agent, etc.

When agent may escape personal liability.

(1) He is duly authorized;

(2) He adds words to his signature indicating that he signs as an agent for or on behalf of a principal or in a
representative capacity
(3) He discloses his principal.

*The foregoing must be complied with for an agent to escape liability.

Sec. 21. Signature by procuration; effect of.

Procuration – the act by which a principal gives power to another to act in his place as he could himself

Effect of signature by procuration.

– Agent has but a limited authority, so principal is not bound if the agent has exceeded the actual limits of his authority.

Sec. 22. Effect of indorsement by infant or corporation.

Effect of indorsement by incapacitated persons.

(1) Minors. – General rule: Contracts entered into by a minor are voidable.
a. Just because one is a minor, that doesn’t mean he/she cannot transfer title. He/She won’t be bound for
that title he/she transferred by defense of minority.  real defense
b. A minor may also disaffirm and recover the instrument from a holder in due course.
c. A minor may be held bound by his signature  fraud  stating he/she is of age when in fact he’s not
(2) Other incapacitated persons. – No capacity to give consent  insane or demented persons and deaf-mutes who
do not know how to write  real defense

Effect of indorsement by a corporation.

- Corporation liable  acts within authority and power given

- Corporation not liable  acts beyond its powers (ultra vires acts)

Sec. 23. Forged signature; effect.

Forgery – the counterfeit-making or fraudulent alteration of any writing; may consist in the signing of another’s name or
alteration of an instrument, with intent thereby to defraud

Application of Section 23.

(1) Two cases

a. Not an agent, no authority
b. An agent, no authority
(2) Effect of forged signature – wholly inoperative  no right can be acquired through it (real defense)
(3) Proof of forgery – It is not presumed  must be proven with clear and convincing evidence

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.
MACASAET, LENIA JANEL L. OF BSA – A3A
Cases of forgery in general.

(1) Promissory notes.

a. Forgery of an indorsement on the note; and
b. Forgery of the maker’s signature
(2) Bills of exchange.
a. Forgery of an indorsement on the bill; and
b. Forgery of the drawer’s signature, either:
i. With acceptance by the drawee; or
ii. Without such acceptance but the bill is paid by the drawee

Extent of the effect of forgery. (refer to pp. 84-85)

Exceptions to the general rule.

(1) Setting up the forgery

(2) Forged signature is not necessary to the holder’s title  forgery may be disregarded

Persons precluded from setting up the defense of forgery.

(1) Those estopped from setting up the defense of forgery

(2) Those who warrant or admit the genuineness of the signatures in question
a. Indorsers
b. Acceptors
c. Persons negotiating by delivery

Rights of parties in cases of forged indorsements.

Instrument Payable to Liability of the party whose signature is forged

NOTE ORDER Not liable to any holder, even holder in due course
NOTE BEARER Liable to a holder in due course
BILL ORDER Not liable to any holder, even holder in due course
BILL BEARER Liable to a holder in due course

*All the foregoing are qualified in those cases where there is estoppel against the party desiring
to set-up the defense of forgery.

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.
MACASAET, LENIA JANEL L. OF BSA – A3A
CHAPTER II

CONSIDERATION
Sec. 24. Presumption of consideration.

- Every negotiable instrument  deemed prima facie to have been issued for a valuable consideration
- Every person whose signature appears thereon  deemed to have become a party thereto for value

Consideration (or cause)

– the immediate, direct or essential reason which induces a party to enter into a contract
– not necessary to be expressly stated in the instrument since it is already presumed (prima facie – rebuttable)

Sec. 25. Value; what constitutes.

- Any consideration sufficient to support a simple contract

- A valuable consideration need not be adequate, but sufficient (e.g. Antecedent or pre-existing debt)

Sec. 26. What constitutes holder for value.

- One who has given a valuable consideration for the instrument issued or negotiated to him, in respect to all
those who became parties prior to the time when value was given.
- Holder for value  holder of a negotiable instrument, unless a contrary is shown and proven by those claiming
otherwise

Sec. 27. When lien on instrument constitutes holder for value.

- Holder with a lien on the instrument  holder for value to the extent of his lien  encumbrance

Where a holder has a lien on the instrument.

Negotiable instrument = collateral security for a debt

(1) Amount of instrument > Debt

– pledgee (creditor) is a holder for value to the extent of his lien
 collect full value + deliver surplus back to the pledger (debtor)
(2) Amount of instrument ≤ Debt
– pledgee is a holder for value for the full amount
 may recover all
(3) Party (pledgee) has liable defenses.
– he can collect only to the extent of the amount of the debt
– real defenses  he can recover nothing

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.
MACASAET, LENIA JANEL L. OF BSA – A3A
Sec. 28. Effect of want of consideration.

- Absence or failure of consideration – a matter of defense as against any person not a holder in due course
 personal defense not available/not valid against a holder in due course

Absence or want of consideration.

– means a total lack of any valid consideration

Failure of consideration.
– the failure or refusal of one of the parties to do, perform or comply with the consideration agreed upon

Sec. 29. Liability of accommodation party.

- One who has signed the instrument as maker, drawer, acceptor or indorser, without receiving value therefor, for
the purpose of lending his name to some other person

Definition of terms.

(1) Accommodation note or bill – a loan of one’s credit

(2) Accommodation party – one who lends his credit
(3) Accommodated party – to whom the credit of one is being lent

*Defense than an accommodated party can set up can also be set up by the accommodation party.

Accommodation party and regular party distinguished.

ACCOMODATION Party REGULAR Party

Signs an instrument without receiving value therefor Signs the instrument for value
Signs an instrument for the purpose of lending his name Does not sign to lend his name
to some other person
May always show by evidence that he is only such Cannot disclaim or limit his personal liability as appearing
on the instrument by evidence
Cannot avail of the defense of absence or failure of May avail of the said defense against a holder not in due
consideration against a holder not in due course course
After paying the holder, may sue for reimbursement the May not sue any subsequent party for reimbursement
accommodated party

--END—

Source: De Leon, H. M., & De Leon, H. S. (2016, August). The law on negotiable instruments. Quezon City: REX Printing Company, Inc.