Sec. 11. Date, presumption as to.
— Where the fixed period after sight is undated, any holder
instrument or an acceptance or any indorsement
thereon is dated, such date is deemed prima facie to
be the true date of the making, drawing, acceptance
or indorsement, as the case may be.
 presumed that said date is the date when it
was made or drawn.
 Acceptance or indorsement is dated said date
is considered the date of such acceptance or
indorsement.
He who claims that some other date is the true date
has the burden to establish such claim.
Generally, a date is not essential to make an
instrument negotiable. This is true of instruments
which are payable at a fixed future date and which do
not stipulate for the payment of interest.
Date is necessary to determine maturity of
instrument:
(1) Where instrument is payable at a fixed period
after date
(2) Where instrument is payable at a fixed period
after sight or presentment
Date in instrument payable on demand
Ordinarily, an instrument payable on demand need
not be dated since it is demandable at any time.
 promissory note must be presented for payment
within a reasonable time after its issue and in
case of a bill of exchange, within a reasonable
time after the last negotiation thereof, otherwise,
persons secondarily liable may be released from
their liability
Sec. 12. Ante-dated and post-dated. — The
Instrument is not invalid for the reason only that
it is ante-dated or post-dated, provided this is
not done for an illegal or fraudulent purpose.
The person to whom an instrument so dated is
delivered acquires the title thereto as of the date
of delivery.
 ante-dated- contains a date earlier that the true
date of its issuance
 post-dated- contains a date later than the true
date of its issuance.
 ante-dating or post-dating an instrument does
not render it invalid or non-negotiable by that fact
alone, provided this is not done for an illegal or
fraudulent purpose. It may be negotiated before
or after the date given as long as it is not
negotiated after its maturity.
 The person to whom the instrument so dated is
delivered acquires title or ownership over it, not
as of the date it bears, but as of the date it is
delivered.
Sec. 13. When date may be inserted. — Where
an instrument expressed to be payable at a fixed
period after date is issued undated, or where
the acceptance of an instrument payable at a
may insert therein the true date of issue or
acceptance, and the instrument shall be payable
accordingly. The insertion of a wrong date does
not avoid the instrument in the hands of a
subsequent holder in due course; but as to,him,
the date so inserted is to be regarded as the true
date.
When date may be inserted:
(a)where an instrument is payable at a fixed period
after date but is issued undated; and
(b)where an instrument is payable at a fixed period
after sight but the acceptance is undated.
Date of issue or acceptance to be specified. —
Any holder may insert therein the true date of issue
or acceptance and the instrument shall be payable
accordingly; necessary that the date of issue or
acceptance, as the case may be, be specified so as to
determine the date of maturity.
 if the acceptance is undated the insertion of the
true date of such acceptance is necessary
because the "thirty days" is to be counted not
from the date of issue but from "sight" or
acceptance.
 The date of acceptance must be the date when it
was actually accepted by him
Effect of insertion of wrong date.
one having knowledge of the true date of issue or
acceptance will avoid the instrument as to him or any
one claiming under him but not as to a subsequent
holder in due course who may enforce the same
notwithstanding the improper date.
In the hands of a holder in due course, the date
inserted, even if wrong, is to be regarded as the
true date.
"one who signs such an instrument furnishes the
means of fraud and is estopped to deny his liability
thereon."
Sec. 14. Blanks, when may be filled. — Where
the instrument is wanting in any material
particular, the person in possession thereof has
a prima facie authority to complete it by filling
up the blanks therein. And a signature ona blank
paper delivered by the person making the
signature in order that the paper may be
converted into a negotiable instrument operates
as a prima facie authority tofill it up as such for
any amount. In order, however, thatany such
instrument when completed may be enforced
against any person who became a party thereto
prior to its completion, it must be filled up
strictly in accordance with the authority given
and within a reasonable time. But if any such
instrument, after completion, is negotiated to a
holder in due course, it is valid and effectual for
all purposes in his hands, and he may enforce it
as if it had been filled up strictly in accordance
with the authority given and within a reasonable
time.
Such instrument, complete and delivered, is
negotiable and may be enforced accordingly.
Infirmary instruments:
 Incomplete instrument but delivered
 Incomplete instrument and undelivered
 Complete instrument but undelivered
Two classes:
Those in which obvious blanks are left at the time they
are made or indorsed, of such a character as
manifestly to indicate that the instruments are
incomplete until such blanks shall be filled up;
 one who signs or indorses is liable to bona fide
holders thereof on the doctrine of implied
authority
Those which are apparently complete, containing
blanks only because the written matter does not so
fully occupy the entire paper as to preclude the
insertion of additional words or figures, or both.
 the liability for the amount of the instrument
which has been increased by filling up unoccupied
spaces therein is placed upon the doctrine of
negligence
The holder or the person in possession has
prima facie authority to complete an incomplete
instrument by filling up the blanks therein.
 Material(necessary) particular-any particular
proper to be inserted in a NI to make it complete;
Power to fill in blanks extends to every incomplete
feature.
Blanks for date, due date, name of payee, amount, or
rate of interest may be filled in. It has been held that
even the blank for the name of the drawer may be
filled in. blank for the place of payment for the amount
of attorney's fees where it supplies a manifest
omission and is in accord with the character and
object of the blank
The holder has no authority to change the amount
after it has been filled in or to insert the words "or
order" or "or bearer" after the name of the payee.
Neither may authority be presumed, unless the
character of the instrument directly indicates it, to add
at die end of the instrument the words "with interest."
A signature on a blank paper delivered in order
that it may be converted into a negotiable
instrument operates as a prima facie authority
to fill it up as such for any amount.
 Thus, if M signs his name on a piece of paper and
delivers it to P for the purpose of identifying or
comparing it with M's other signatures. M will not
be liable even to a holder in due course after it is
converted into a negotiable instrument.
Right against party prior to completion. — The
instrument may be enforced only against a party
prior to completion if filled up strictly in
accordance with the authority given and within
a reasonable time.
 If an instrument is incomplete when delivered,
holder has prima facie authority to fill up the
blanks
 If a blank paper is delivered by the person making
the signature, holder has prima facie authority to
fill it up for any amount if the person making the
signature intended to convert it into a negotiable
instrument
Presumption is that the blank was filled up in
accordance with the authority given and within a
reasonable time
The person who signed his name has the burden to
rebut the presumption of agency by contrary proof of
want of authority, or proving that the authority
granted was exceeded
Reasonable time for filling up the Instrument is to
be reckoned from the time of the issuance of the
instrument because the interest involved is that of
the issuer, and not from the time of each successive
negotiation
The implication of the law is that when one or both
requisites are absent, the holder not in due course
cannot recover. Such a holder is to be treated the
same way as a holder not in due course of a materially
altered instrument, (see Sec. 124.)
SECTION 14 MERELY RAISES A PERSONAL
DEFENSE where one of two persons must suffer by
the bad faith of another, the loss must fall upon the
one who first reposed confidence and made it possible
for the loss to occur
Sec. 15. Incomplete instrument not delivered. —
Where an incomplete instrument has not been
delivered it will not, if completed and
negotiated, without authority, be a valid
contract in the hands of any holder, as against
any person whose signature was placed thereon
before delivery. REAL DEFENSE
law is specific that the instrument is not a valid
contract in the hands of any holder.
Example
Suppose M makes a note for PI,000.00 with the name
of the payee in blank and keeps it in his drawer. P
steals the note and inserts his name as payee and
then indorses the note to A, A to B, B to C, and C to
D, a holder in due course. (Sec. 52.) Can D enforce
the note against M? NO.
As the signature of M was placed thereon before
delivery, he does not assume any responsibility
whatsoever. Both the two steps in the execution of a
negotiable instrument are not complied with
negligence on the part of M may render him liable to
a holder in due course.
 Invalidity of the above instrument is only
with reference to the parties whose
signatures appear on the instrument before
and not after delivery.
 As their signatures appear on the instrument
after delivery, the instrument is valid as to
them.
Defense available to parties prior to delivery.—
An incomplete instrument, completed without
authority, has not been delivered, is a defense even
against a holder in due course. Read sec 65&66
Sec. 16. Delivery; when effectual; when
presumed. —Every contract on a negotiable
instrument is incomplete and revocable until
delivery of the instrument for the purpose of
giving effect thereto. As between immediate
parties, and as regards a remote party other
than a holder in due course, the delivery in order
to be effectual, must be made either by or under
the authority of the party making,drawing,
accepting, or indorsing as the case may be; an
in such case the delivery may be shown to have
been conditional, or for a special purpose only,
and not for thepurpose of transferring the
property in the instrument. But where the
instrument is in the hands of a holder in due
course, a valid delivery thereof by all parties
prior to him
Rules where instrument mechanically complete:
 Undelivered even if it is completely written
is incomplete and revocable until its delivery
for die purpose of giving it effect.
 GR: negotiable instrument has no legal
inception or existence until it has been
delivered in accordance with the purpose and
intent of the parties
 Delivery means transfer of possession,
actual or constructive, from one person to
another (Sec. 191, par. 6.) with intent to
transfer title thereto.
 Issue is defined as the first delivery of the
instrument, complete in form, to a person
who takes it as holder,
 absence of delivery, there is no contract
 Delivered. delivery of the instrument is the
final act essential to its consummation as an
obligation
 note drawn by a testator and found among
his effects after his death is not enforceable,
no delivery being shown
 In possession of party other than a
holder in due course. prima facie
presumption of delivery but subject to
rebuttal.
 An undelivered instrument is inoperative
because delivery is a prerequisite to liability.
 if the instrument is no longer in the
possession of the person who signed it and it
is complete in its terms, "a valid and
intentional delivery by him is presumed until
the contrary is proved
 Immediate parties contemplate privity;sense
of having or being held to know the
conditions and limitations placed upon
delivery.
 Under this provision, a payee who is a holder
in due course is not an immediate party
 Remote parties are parties not in direct
contractual relation to each other; But if they
are chargeable knowledge or notice of any
infirmities in the instrument or defect in the
title of the person negotiating the same, they
become immediate parties.
 Delivered conditionally or for a special
purpose not for the purpose of
transferring the property (title) to the
instrument.
 In the hands of a holder in due course.
complete instrument is in the hands of a
holder in due course, a valid delivery thereof
by all parties prior to him is conclusively
presumed.
 A presumption is said to be conclusive when
it admits of no evidence to the contrary
general principle that when one of two
persons must suffer by the acts of a third, he
who has enabled such third person to
occasion the loss must bear it.
 principle of manifest justice-party who is
made to suffer the loss has reposed
confidence in the third person whose acts
have occasioned the loss
 where there was no actual delivery to anyone
for any purpose by the maker of a
promissory note who was a victim of theft or
robbery (no negligence) it would be
unreasonable to hold him liable even to an
innocent holder for value.
Right of holder in due course. — The defense that
the instrument had not been filled up in accordance
with the authority given and within a reasonable time
is not available as against a holder in due course.
Holder in due course
Holder means the payee or indorsee of a bill or note
who is in possession of it, or the bearer thereof.
- In order therefore to be a holder one must be in
possession of the note or the bearer
•Every holder is prima facie deemed to be a holder in
due course.
•So, anyone who alleges that he is not a holder in
due course is given the burden of proof.
•But the above rule does not apply in favor of a
party who became bound on the instrument prior to
the acquisition of such defective title
•A holder in due course is a holder who has takeń
the instrument under the following conditions:
C That it is complete and regular upon its face O 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
-on the date of maturity= instrument is not
overdue, and the holder who acquires the instrument
on that date is still considered a holder in due course
because the principal debtor has the whole day to
pay
-overdue as to acceleration interest.
* knowledge of the holder at the time of acquisition
thereof that one installment or interest, or both is
unpaid. It is a notice that the instrument is overdue=
not a holder in due course
*one who purchases in good faith an instrument
upon which the interest is overdue= holder in due
course
*upon default of the payment of interest the one
who takes the instrument upon which the interest is
overdue is not a holder in due course
-holder has a knowledge that instrument has been
dishonored= not a holder in due course That he took
it in good faith and for value
-Where the holder gave no valuable consideration for
the transfer of the instrument to him=not a holder in
due course
-Article 1355 of the Civil Code states that except in
cases specified by law, lesion inadequacy of cause
shall not invalidate a contract, unless there has been
fraud, mistake or undue influence
The inadequacy of the cause alone has little
weight,when standing alone, but when coupled with
other elements tending to show fraud, it becomes a
very material factor of determining constructive
fraud. 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.
-"without notice"meant that the person must not
have any notice, either actual or constructive, of any
facts or acts that may be considered as a defect by
commercially honest men.
- transferee receives notice of any infirmity in the
instrument or defect in the title of the person
negotiating the same before he has paid the full
amount= deemed a holder in due course only to the
extent of the amount therefore paid by him before
he has notice of infirmity
Rights of holder in due course
a) He may sue on the instrument in his own name.
-This means that the party holding the instrument
with legal title to it may sue in his name, although
there are parties beneficially interested in it.
b) He may receive payment and if payment is in due
course, the instrument is discharged.
Requisites of payment in due course
1. Payment must be made at or after maturity.
-If payment is made before maturity= not payment
in due course
2. lt must be paid to the holder of the instrument.
-Payment to the possessor of an order note not
endorsed = not payment in due course.
3. It must be made in good faith and without notice
that the holder's title is defective.
c) He holds the instrument free from any defect of
title of prior parties.
*The person negotiating an instrument is defective
when he obtained the instrument, or any signature
thereto:
1. By fraud-as when an agent-broker employed to
buy stock and received a check therefore, but had
not in fact bought a stock.
2.By duress, force and fear-as when the maker signs
a note under threat of liquidation to his family .
3. By other unlawful means.
4. For an illegal consideration- such as, when a note
or bill is issued to stifle a criminal prosecution.
*When the holder negotiates it in breach of trust or
under circumstances amounting to fraud.
1. When a payee negotiates a note which is already
paid
2. When a payee negotiates a note which was only
given as a security.
3. When a payee negotiates a note after he fails to
deliver the valuable consideration he agreed
To give in return for the note.
d) He holds the instrument free from defenses
available to prior parties among themselves.
-the defenses referred to are personal or equitable
defenses only
-means that the holder can enforce the instruments
to the liable parties because the defects or infirmities
can only be used as a personal defense of the prior
parties
-if it is a real or absol ute defense= can be used by
the maker or prior parties in good faith against any
holder, the holder can only enforce the instrument to
the guilty & subsequent parties after defect or
infirmities happen
-examples of personal defenses
•Complete but undelivered instrument
-can only be a defense against a holder not in due
course
•Fraud in inducement or Simpl e fraud
-The deception is not in the character of the
instrument but in its amount or its term
-the issuer has the intention to issue the instrument
voluntarily , only to be deceived as to the character,
quantity , value of the consideration, quality or cause
of the instrument.
-matter of negligence
•Intoxication or drunkeness
-a man has voluntarily put himself in such a
condition that a loss must fall on one of the innocent
persons, it should fall on him who occasioned it
e) He may enforce payment of the instrument for the
full amount thereof against all parties liable.
Sec. 9. When payable to bearer. — The
instrument is payable to bearer —
(a) When it is expressed to be so payable;
(b) When it is payable to a person named
therein or bearer;
(c) When it is payable to the order of a fictitious
or non-existing person, and such fact was
known to the person making it so payable; or
(d) When the name of the payee does not
purport to be the name of any person; or
(e) When the only or last indorsement is an
indorsement in blank.
Indorsement:
 Without signature – nothing
 Blank indorsement- you just affixed your
signature at the back of the instrument
 Sec 9. When the instrument has been indorsed in
blank it is now converted from an instrument
payable to order to an instrument payable to
bearer.
 Pay to X signed by: special indorsement
because you mentioned the name of the
intended transferee
 Indorse initiative
 Indorse qualifiedly?
Payment to any person in possession thereof in good
faith and without notice that his title is defective, at
or after maturity discharges the
instrument.
- an instrument payable to the "bearer, (specific
person)" is not negotiable
Payable to person named therein or bearer.
Specific person or bearer not the other way.
Payable to order of a fictitious person.
It is essential that the payee is known to the maker or
drawer to be a fictitious or non-existing person,
otherwise, it would not be a bearer instrument but an
order instrument. Since the maker or drawer knows
that the payee is not capable of indorsing, he cannot
expect the instrument to circulate the indorsement of
the payee, and, therefore, he must have intended the
same to be transferred by mere delivery just like an
instrument payable to bearer.
Payable to order of a non-existing person
Payee named is one who does not exist and had never
existed. Since indorsement is obviously impossible,
the manifest intention of the drawer is to make the
instrument a bearer paper negotiable by delivery. The
maker or drawer intends that the payee shall have no
right or interest whatsoever in the instrument so that
the instrument is, in effect, payable to a nonentity.
Name of payee not name of person.
The instrument does not purport to designate a
specific payee. The indorsement of this bearer
instrument by the payee is impossible.
Only indorsement in blank.
The instrument is indorsed in blank by P by simply
writing his name on the back thereof.
Last indorsement in blank
Blank indorsement cannot make a non-negotiable
instrument, it is negotiable as a bearer instrument
payable to a specified person
 Pay to bearer or payable to a specified payee or
bearer or
 the name of the payee does not purport to be
the name of any person
"pay to cash, pay to account, pay to sundry"
o fictitious means no existence or non existent
nagissue ng instrument senator benigno aquino jr.
eh wala na so you can just hand it to whoever you
want and that will be negotiation.
qualification
o provided that such fact is known to the person
making it so payable.
o last indorsement is blank indorsement
maker payable to the order of P
indorsed by P to A - blank indorsement -payable to
bearer
A indorsed it specially to b blank order instrument
if b wants to indorse it, he must deliver it to c-
indorsement + delivery
c indorsed in blank in the hands of d it is now
payable to bearer
D may negotiate it to E through delivery.
M------->P------>A-------->B-------->C--------->D-------->E
Issue BI SI I+D BI delivery
P-A transfer from the payee to another it may be an
instrument payable to order to be negotiated must
involve two acts:
 write the intended transferee and then sign, or
 if the instrument is payable to bearer there is no
need to make indorsement because the
instrument can be simply negotiated by mere
delivery.
Order involves a command when you issue a bill to a
drawee and the debtor of the order if di tinanggap ni
drawee, you will notify the drawer for notice of
dishonor and he immediately becomes liable
there's no need for you to wait for the maturity
of the instrument
Payable to order: Sec 8 the instrument shall be
payable to order if it is so issued payable to order of
the drawer
a--b---c
b&a - drawer and drawee- c- 3rd person
Is it possible that the drawer may command the
drawee to pay himself?
Yes, this time when the bill is issued payable to the
order of the drawee if its payable to order, please pay
to the order of himself.
I promise to pay to the order of myself= payee is the
maker
Please pay to the order of myself= drawer ang
babayaran ikaw inuutusan na bayaran sya
Sino ang posibleng payee ng isang instrument
payable to order?
 if not the maker, the drawer,
 if not the drawer, the drawee
 if not the drawee, 3rd person, jointly A and
B or one or more several payees in a bill.
2nd requisite: Must contain an unconditional
promise or order to pay a sum certain in
money;
pano malalaman if ang promise or order ay
unconditional?when is an obligation becomes
conditional?
- when demandability is dependent upon the
happening of a certain, specified event.
 when the event is uncertain or may or may
not happen, it becomes conditional
If event is certain to happen, it is a future
determinable time.
 When the promise is conditioned upon the
happening of an event which is not certain
to happen the instrument cannot become a
negotiable one.
section 3- contemplates a situation where the drawer
is offering the drawee to effect payment to the payee
and instructing him to charge his account
 To mr. G pay to the order of ms. M,
100,000. charge it to my account in due
 when the order to pay is subject to
indorsement do not consider it a conditional
order. payment has no condition.
 when there is a particular fund, out of which
reimbursement or debiting has to be made
does not make it a conditional one. when it
mentions the reason why you are making
 the promise or giving the order to pay do
not consider the instrument conditional.
Sec 3. Pagbabanggit ng dahilan o konsiderasyon wag
mong gagawin na conditional sapagkat pwede
namna gumawa ng note ng di kinakailangan
banggitin ang dahilan. Presumption of the law is that
you won't make a note if there's no consideration.
Sec 6. even if there's condition on the date of
instrument, will not affect the nego char of
instrument.
Infirmities must include things that are wrong
with instrument itself
a) Wrong date inserted where the instrument is
expressed to be payable at a fixed period after sight
is undated (Sec. 13)
• The insertion of a wrong date does not avoid the
instrument in the hands of a subsequent holder in
due course
-for the person who knowingly insert wrong date, the
instrument is avoided but to subsequent holder in
due course, the date written is the true date
b) Filling up without authority of a blank instrument
(Sec. 14)
• If person is only affixing a signature for verification
and authenticity- Fraud in factum
• Does not intend to convert it into a negotiable
instrument
• Not filled up in accordance with the authority given
and within a reasonable time
• Personal defense
• Defense for holder in due course
-can enforce instrument as completed against parties
prior or subsequent to the completion
• Defense for holder not in due course
-only against parties subsequent to the completion
c) Filling up an incomplete and undelivered
instrument. (Sec. 15)
• To parties signing before delivery: The non-
delivery of an incomplete instrument is a valid
defense, not only between the original parties but
also against a holder in due course
• Holder of an originally incomplete and undelivered
instrument may enforce payment against parties
signing the instrument after its completion and
delivery
• Real defense
d) Lack of valid and intentional delivery of a
mechanically complete instrument. (Sec. 16)
• Cannot be used as a defense against a holder in
due course but can be against holder not in due
course
• Personal defense
e) Agent signing as "per procuration". (Sec. 21)
• Procuration is an act where principal gives power to
another to act in his place as he could himself.
• Operate as notice that the agent has but a limited
authority to sign, and the principal is bound only in
case the agent in so signing acted within the actual
limits of his authority.
f) Forgery (Sec. 23)
• Forgery is the counterfeit making or fraudulent
alteration of any writing, and may consist in the
signing of another's name, or the alteration in the
name, amount, description of the person and the like
with intent to defraud.
• The intent to defraud distinguishes forgery from
innocent alterations and spoilation.
• Guilty of falsification of private documents
-any private person who shall counterfeit or imitate
any handwriting or rubric in any kind of commercial
document, or cause it to appear that persons are
parties thereto when in fact they are not
(Art. 172, Revised Penal Code)
• not necessary that the forger attempts to imitate
simulate the signature being forged
-mere writing of name with the intent of making it
look like the person's whose name is illegally used
will be participating in a transaction, even in fact, he
had no idea. It can be classify as forgery
• Real defense
• If it's an alteration in amount, Section 23 does not
apply,it is covered by Section 124 of the Negotiable
lnstruments Law.
• Signature are wholly inoperative, and no right to
retain the instrument, or to give a discharge, or to
enforce payment against any party, unless:
*The person is precluded from setting up forgery or
want of authority:
1. Those persons who by their act silence, or
negligence, are estopped from setting the defense of
forgery. These are called person by estoppel
2. Those persons by specific provision of law who
warrant the genuiness of the signatures appearing in
the instrument, such as, the indorser, acceptor, and
person negotiating by delivery
*Where the forged signature is not necessary to the
holder's title in which case the forgery may be
disregarded.
-Instrument that can be negotiated by mere delivery
(promissory notes)-which means, the holder can
enforce it against all the parties but the forger is
criminally liable
• Instrument itself & genuine signatures are valid
-order instrument:
1. all parties prior to forgery are not liable
2. the forger and the subsequent parties are the
ones liable
3. a drawee bank which pays a forged check
3. cannot charge the depositor's (drawer) account.
- it must be considered as making the payment out
of its own funds
-it is conclusively presumed that drawee knows the
signature of the drawer
g) Material alteration (Sections 124/125)
• an alteration that alters the effect of the
instrument.
• include changes in:
1. Date
-date hastens or postpones the time of paymént
-Also, a change in the date from which interest is to
run is a material alteration
2. Sum payable (principal or interest)
-increases
-ex. adding the words "with interest" with or without
a fixed rate
-but ff are not material alteration:
*striking out a figure showing the amount of the
instrument
*inserting figure showing instrument's amount
*inserting figure showing the balance after deducting
the amount previously paid
*no agreements as to interest but the note
had a provision for "interest at-percent"- not a
material alteration to insert the legal interest
3. Time and place of payment
-An alteration in the maturity of a note
-time of payment is thereby curtailed, shortened, or
extended
-Or which adds a place of payment where no place of
payment is specified
4. Change of the number or relations of the parties
-Change in the payee's name
-addition of a co-maker without the first maker's
consent
5. The medium or currency in which payment is to
be made
6. Any other change or addition which alters a
the effect of the instrument in any respect is a
material alteration
-To change the words "or bearer" for the words "or
orde".
-Writing "protest waived" above a blank
indorsement.
-Substituting the address of the maker for the name
of a co-maker.
-Striking out the name of the payee and substituting
another person in his place.
Effect of Materially Altered Instrument
• For the holder in due course not a party to the
alteration
-Can enforce payment according to its original tenor
regardless of whether alteration was innocent or
fraudelent
• For the holder not in due course
-he cannot enforce it to the parties who not assented
to the alteration
-only to:
1. The party who has made the alteration.
2. the party who authorized or assented the
alteration
3. indorser, because of his warranty.
• Simple alteration= permissible
Person who signed but not liable
-Person whose name has been forged (real defense)
-Authorized Agent provided that
• He indicate his capacity as agent- mere addition of
words describing him without disclosing his principal
will make him liable
• He only signs for or on behalf of a principal
-Incapacitated Person (real defense)
• Minor- endorsement of a minor passes title to the
holder. Therefore, the holder can enforce payment
against maker or acceptor or other parties prior to
the minor
• Lunatics, Imbeciles,Insane
-Person whose name is used as a trade or assumed
name
-Person affixing a signature for verification &
authenticity
Person whose name not appear but liable
-Forger
-Person signed using a trade or assumed name
-Person negotiating by mere delivery- sign is not
necessary
When can subsequent parties be liable to prior
party?
-When it involves an accomodation party
Accommodation party one who has signed the
instrument as maker, drawer, acceptor or indorser,
without receiving value and for the purpose of
lending his name to some other person.
Liability: He is liable on the instrument to a holder
for
value eventhough such holder at the time of taking
the instrument knew him to be only an
accommodation party. -exception to the rule that
person not receiving any consideration cannot be
held liable
-his payment will not discharge the instrument
Right: Proceed against accomodated party and
reimbursed the amount he paid
*Subsequent party here is the accomodating party
and the prior party is the accomodated party
*the accomodated party has to pay because he is
the real debtor and he cannot recover what he
paidSEC. 24.
Valuable Consideration- a benefit conferred or a
detriment incurred by a party in exchange for
another's promise.
- may be non-monetary as long as it is of some
value to one or both parties.
-promise of something of value given by a promissor
in exchange for something of value given by a
promisee; and typically the thing of value is goods,
money, or an act
Value is any consideration sufficient to support a
simple contract
Consideration means inducement to a contract,
cause

Presumptions

1. Every negotiable instrument is deemed prima

facie to have been issued for a valuable
consideration
2. Every person whose signature for value appears
thereon to have become a party thereto for value
This presumption need not be alleged or proved,
although rebuttable, by presenting evidence to the
contrary. Besides, under the law in obligations and
contracts, it is stated that even if the cause is not
stated in the contract, it is presumed that it exists
and at the same time it is lawful. (Art. 1354, Civil
Code).

SEC.25.

-An antecedent or pre-existing debt constitutes

value; and is deemed such time whether the
instrument is payable on demand or at a future time

sec. 26.
Holder for value -one who has given a valuable
consideration for the instrument issued or negotiated
to him.
-He is considered a holder for value in respect to all
parties who become such prior to that time.
-a holder for value is not always a holder in due
course
-Where value has at any time been given for the
instrument, the holder is deemed a holder for value
in respect to all parties who become such prior to
that time
-Where the holder has a lien on the instrument,
arising from contract, or by implication of law, he is
deemed a holder for value to the extent of his lien

Absence of consideration
-no consideration is intended to pass
Failure of consideration
-there's an intention for consideration but conflict
arise that cause the holder for value to not be given
Partial Failure
-pro tanto defense
-both are only available as a defense to holder not in
due course