WEEK 1 o An indication of a particular fund out of

which reimbursement is to be made or

Requisites of negotiability o a particular account to be debited
with the amount or
Sec 1. o a statement of the transaction which
Form of negotiable instruments gives rise to the instrument.
Requirements But an order or promise to pay out of a particular
1. Writing and signed by maker or drawer fund is not unconditional.
2. Contain
unconditional promise / order Sum payable must be certain
to pay a sum certain in money
3. Payable on Sec. 2 What constitutes certainty as to sum
demand the sum payable is a sum certain although it is to be
Fixed paid
determinable future time
4. Payable to order or to bearer In-Ins-P-E-CA
5. Where instrument is addressed to a drawee With interest
must be named or otherwise indicated By stated installments
with reasonable certainty By stated installments
o With a provision that
Sec. 184 o Upon default in payment of any
PROMISSORY NOTE installment/ of interest
Unconditional promise in writing o The whole amount shall become due
Made by one person to another (acceleration clause)
Signed by maker With exchange
Engaging to pay on demand or at a fixed o Fixed or current rate
determinable future time (D,F/DFT) With costs of collection or an attorneys fee
A sum certain in money o In case payment shall not be made at
To order or to bearer maturity
Where the note is drawn to makers order, it is not
complete until INDORSED. Certainty of time of payment
When payable on demand

Parties in PN : Maker Payee Sec 7. When instruement payable on demand

Sec. 126 Edsp-N-Is,Ac,In

BILL OF EXCHANGE So expressed to be payable on
Unconditional order in writing o Demand
Addressed by one person to another o At sight
Signed by the person giving it (drawer) o Or on presentation or
Requiring the person to whom it is addressed in which no time for payment is expressed
(drawee) Where an instrument is
To pay on demand or at a fixed or determinable o Issued, accepted, or indorsed when
future time (D,F/DFT) overdue
a sum certain in money o It is as regards the person so issuing,
to order or to bearer accepting, or indorsing is payable on
demand

Parties in BOE : Drawer, Drawee, Payee Certainty of time of payment

Payable at a determinable future time

Written form and signature
Sec 18
Liability of person signing in trade or assumed name
No person is liable on the instrument
o whose signature does not appear thereon
o Except as herein otherwise expressly
provided
But one who signs in a trade or assumed name
o Will be liable to the same extent
o As if he has signed in his own name
Sec 19
Signature by agent; authority; how shown
The signature of any party
may be made by a duly authorized agent
No particular form of appointment is necessary for
this purpose
& authority of the agent may be established as in
other cases of agency
Unconditional order or promise to pay:
When conditional
Sec 3.
When promise unconditional
An unqualified order or promise to pay
although coupled with
Sec 4. Payable in determinable future time when
expressed to be payable
At a fixed period
o After date or sight
On or before
o A fixed or determinable future time
specified
On or at
o Fixed period
o after the occurrence of a specified event
which is certain to happen,
o though the time of happening be
uncertain
Sec 11. Date presumption as to
Where instrument
or an acceptance
or any indorsement thereon is dated
o such date is prima facie to be the true
date
o of the making, drawing, acceptance,
or indorsement as the case may be
Sec 17. Construction where instrument is ambiguous
Where language of instrument is ambiguous or there are
omissions therein , FF rules of construction applies
where sum payable is expressed in words and in
figures and there is discrepancy between them
 o the sum denoted by words is the sum
payable
o but if words are ambigious or uncertain
reference may be had to figures
to fix the amount
where instrument provides for payment of
interest, without specifiying the date from
which interest is to run
o the intrest runs from the date of the
instrument
o if instrument is undated
from issue thereof
where instrument is not dated
o it will be considered to be dated as of the
time it was issued
where there is conflict between the written or
printed provisions
o written provisions prevail
where instrument is ambigious as to whether it is a
bill or note
o holder may treat it at his election
where signature is so placed upon the instrument
that it is not clear in what capacity the person
making the same intended to sign
o he is deemed an indorser
where an instrument containing the words I
promise to pay is signed by 2 or more persons
o theyre deemed to be jointly and
severally liable (solidary liability)
Must be payable to order or bearer : when instrument
is payable to order
WEEK 2
Sec 8. When PAYABLE TO ORDER
Instrument is payable to oder when it is
drawn payable to the order of a specified
person
or to him or his order
It may be drawn payable to the order of:
P-D-D-2-1-H
payee , not the maker, drawer, or drawee
drawer / maker
drawee
2/more payees jointly
1 /some of several payees
the holder of an office for the time being
where the instrument is payable to order ,
the payee must be
named /
otherwise indicated with reasonable certainty
Parties designated with CERTAINTY
Certainty: Payee
Sec 9. When PAYABLE TO BEARER
Instrument is payable to bearer when it is
so expressed to be so payable
payable to a person named or bearer
payable to an order of a fictitious or non-
existing person,
o and such fact was known to the person
making it so payable
when the name of payee does not purport to
be the name of any person
when the only or last indorsement is an
indorsement in blank
Certainty: draweee
Provisions not affecting negotiability
Sec 5.
An instrument
which contains an order or promise to do any act
in addition to the payment of money
is not negotiable
But the negotiable character of the instrument is not
affected by a provision which:
authorizes the sale of collateral securities
o in case the instrument be not paid at
maturity
authorizes a confession of judgment
o if instrument be not paid at maturity
waives the benefit of any law
o intended for advantage or protection of
the obligor
gives the holder an election to require something
to be done
o in lieu of payment of money
But nothing in this section shall validate any
provision or stipulation otherwise illegal.
Sec 6. Omissions, seal, particular money
The valdity and negotiability of an instrument are not
affected by the fact that
it is not dated
does not specify value given or that any value had
been given therefor
does not specify the plave where it is drawn or the
place where it is payable
bears a seal
designates a particular kind of current money
in which payment is to be made
But nothing in this section shall alter or repeal any
statute requiring in certain cases the nature of the
consideration to be stated in the instrument.
Sec 17.
Chp 2. Transfer- Delivery and Issuance
Sec 16.
Negotiation
Sec 30.
An instrument is negotiated when it is
transferred from one person to another
in such a manner as to constitute the transferee
the holder of it
If payable to bearer, it is negotiated
by delivery
if payable to order, it is negotiated
by the indorsement of the holder
and completed by delivery
Sec 191.
How indorsement is made:
by signature on instrument / allonge
Sec 31
name mispelled
Sec 43
Indorsement must be of entire instrument
Sec 32
Kinds of indorsement
Sec 33.
4 kinds CRS-Q
An inforsement may either be
special blank
and it may also be restrictive, qualified/
conditional
Special indorsement & Blank indorsement

Sec 34

Sec 40

Sec 35

Qualified indorsement

Sec 38

Conditional indorsement

Sec 39.

Restrictive indorsement

Sec 36.
An indorsement is restrictive which either
prohibits the further negotiation of the instrument
constitutes the indorsee
o the agent of the indorser
vests the title in the indorsee
o in trust or
o to the use of some other person
But the mere absence of the words implying power to
negotiate does not make an indorsement restrictive.

Sec 37. Effect of indorsement; rights of indorsee

WEEK 3

Chp. 3
HOLDER IN DUE COURSE

Sec 52. What constitutes a holder in due course

A holder who has taken instrument under the ff conditions:
instrument complete and regular upon the face
he became holder before it was overdue
o and without notice that it has been
previously dishonored if such was fact
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.

Rights of a holder in due course

HOLDER FOR VALUE

What constitutes value ; Burden of proof
Sec 24

Sec 25

What constitutes holder for value

Sec 26
212122111
Where holder has a lien on instrument

27