Sec 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;
(c) Must be payable on demand, or at a fixed or determinable future time;
(d) Must be payable to order or to bearer; and
(e) Where the instrument is addressed to a drawee, he must be named or
otherwise indicated therein with reasonable certainty.
General Indorser- warrants the solvency of prior parties
Assignor- does not warrant the solvency
Indorser- not liable unless there be presentment and notice of dishonor
Assignor- liable even without notice of dishonor
Negotiation- governed by Negotiable Instruments Law
Assignment- governed by Art 1624-1635 of the Civil Code

Commercial Paper- written promises/obli that arise out of com transactions Indorsement (indorsa “writing on the back)- is the writing of the name of the
Negotiable Instrument- a contractual obli to pay money payee on the instrument with the intent either to transfer the title to the same, or
Maker- person issuing a promissory note to strengthen the security of the holder by assuming a contingent liability for its
Drawer- person issuing a bill of exchange future payment, or both.
Promissory Note- unconditional promise; has no drawee a) Indorser- payee delivering the instrument to another person
a) Maker- who makes and signs the instrument b) Indorsee- one who receives the indorsed instrument
b) Payee- to whom the promise is made
Bill of Exchange- unconditional order Joint payees- indorsing the instrument to 2 or more persons
a) Drawer- who issues and draws the order bill Alternative payees- indorsing instrument to either of the payees
b) Drawee- whom the bill is drawn; one who is expected to pay
c) Payee- whose favor the bill is originally issued or payable Classification of endorsement
As to methods of Negotiation
Check- drawn on bank and payable on demand a) Special Indorsement- name of the payee is specified
Prima Facie- evidence; signature, full name or atleast surname should appear b) Blank Indorsement- specifies no particular indorsee
Money- medium of exchange; current money wc has fixed value As to the kind of title transferred
Legal Tender- currency which a debtor can legally compel a creditor to accept in a) Restrictive- either restricts or prohibits further negotiation
payment of a debt in money when tendered by the debtor in right amount. b) Non-Restrictive
Contingency- an uncertain event which may or may not happen As to scope of liability of indorser
Confession of judgement- a written acknowledgement by the defendant of his a) Qualified- constitutes the indorsee a mere assignor of the ins title
indebtedness or liability to the plaintiff b) Unqualified/General
Bearer- the person in possession of a bill or note wc is payable to bearer As to presence or absence of limitations
Fictitious Person- one who has no right to an instrument bc he never existed a) Conditional- indorser imposes condition to his liability
Ante-dated- contains a date earlier than the true date of its issuance b) Unconditional
Post-dated- contains a date later than the true date of its issuance The other kinds of indorsements
Delivery- transfer of possession a) Joint
Issue- the first delivery of the instrument b) Successive
Holder- the payee or indorsee of a bill or note who is in possession of it, or the c) Irregular/Anomalous
bearer thereof d) Facultative
Remote Parties- parties who are not in direct contractual relation to each other Absolute Indorsement- indorser binds himself to pay and of due notice to him of
such failure.
An undated instrument is considered dated as of the date of its issue.
Sec. 52. What constitutes a holder in due course. - A holder in due course is a
Procuration- act by wc a principal gives power to another to act in his place as he holder who has taken the instrument under the following conditions:
could himself. It gives a warning that the agent has but a limited authority (a) That it is complete and regular upon its face;
Forgery- fraudulent alteration of any writing (b) That he became the holder of it before it was overdue, and without notice that
Consideration- is the immediate, direct, or essential reason which induces a party it has been previously dishonored, if such was the fact;
to enter into a contract. (c) That he took it in good faith and for value;
Holder for value- one who has given a valuable consideration (d) That at the time it was negotiated to him, he had no notice of any infirmity in
Absence of consideration- means total lack of any valid consideration the instrument or defect in the title of the person negotiating it.
Failure of consideration- failure or refusal of one of the parties to do, perform, or
comply with the consideration agreed upon.
Accommodation note or bill- one to wc accommodation party has put his name
Accommodation party- one who has signed the instrument as maker, drawer,
acceptor, or indorser wo receiving value
Accommodated party- one in whose favor a person signs an instrument for the
purpose of lending his credit and enabling said party to raise money upon it
Accommodation maker- issues a promissory note
Accommodation drawer- signs a bill of exchange
Accommodation acceptor- accepts a bill drawn on him
Accommodation indorser- signs as an indorser

Negotiation- transfer of negotiable instrument

Assignment- transfer of rights under a contract; transfer of title to an instrument

Negotiable Instrument- can be negotiated or assigned

Non-negotiable Instrument- can only be assigned or transferred, not negotiated

Negotiation- transferee is a holder

Assignment- transferee s an assignee

Holder in due course- subject only to real defense

Assignee- subject to both real and personal defenses

Holder in due course- may acquire a better title or greater rights

Assignee- merely steps into the shoes of assignor