The Negotiable Instruments Law (Act No. 2031)

Topics: Negotiable instrument, Holder in due course, Commercial paper Pages: 39 (12131 words) Published: April 8, 2011
ACT NO. 2031
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;    
(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. Sec. 2. What constitutes certainty as to sum. - The sum payable is a sum certain within the meaning of this Act, although it is to be paid: (a) with interest; or 

(b) by stated installments; or 
(c) by stated installments, with a provision that, upon default in payment of any installment or of interest, the whole shall become due; or    
(d) with exchange, whether at a fixed rate or at the current rate; or    
(e) with costs of collection or an attorney's fee, in case payment shall not be made at maturity. Sec. 3. When promise is unconditional. - An unqualified order or promise to pay is unconditional within the meaning of this Act though coupled with: (a) An indication of a particular fund out of which reimbursement is to be made or a particular account to be debited with the amount; or    

(b) A statement of the transaction which gives rise to the instrument. But an order or promise to pay out of a particular fund is not unconditional.chan robles virtual law library   
Sec. 4. Determinable future time; what constitutes. - An instrument is payable at a determinable future time, within the meaning of this Act, which is expressed to be payable: (a) At a fixed period after date or sight; or 

(b) On or before a fixed or determinable future time specified therein; or    
(c) On or at a fixed period after the occurrence of a specified event which is certain to happen, though the time of happening be uncertain. An instrument payable upon a contingency is not negotiable, and the happening of the event does not cure the defect.    

Sec. 5. Additional provisions not affecting negotiability. - 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 an instrument otherwise negotiable is not affected by a provision which: (a) authorizes the sale of collateral securities in case the instrument be not paid at maturity; or    

(b) authorizes a confession of judgment if the instrument be not paid at maturity; or    
(c) waives the benefit of any law intended for the advantage or protection of the obligor; or    
(d) gives the holder an election to require something to be done 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 validity and negotiable character of an instrument are not affected by the fact that: (a) it is not dated; or 
(b) does not specify the value given, or that any value had been given therefor; or    
(c) does not specify the place where it is drawn or the place where it is payable; or    
(d) bears a seal; or 
(e) 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. 7. When payable on demand. - An instrument is payable on  demand:
(a) When it is so 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.    
Sec. 8. When payable to order. - The instrument is payable...
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