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 !ed or determinable future time; (d) Must be payable to order or to bearer; and (e) "here the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty# certainty#
Holder in Due Course A holder in due course is a holder who has taken the instrument under the following conditions: (a) $hat it is complete and regular upon its face; (b) $hat he became the holder of it before it was o%erdue, and without notice that it had been pre%iously dishonored, if such was the fact; (c) $hat he took it in good faith and for %alue; (d) $hat at the time it was negotiated to him he had no notice of any inrmity in the instrument or defect in the title of the person negotiating it#
Violago vs BA Finance and Avelino Violago G.R. No. 15!"! #ul$ !1% !&& 'onente &elasco 'r#, '#
FAC() A%elino &iolago, resident of &iolago Motor ales *orporation (&M*), persuaded his cousins to buy a $oyota *ressida Model +-. to increase the sales quota to his cousin, petitioners edro /# &iolago and his wife, /lorencia (pouses &iolago)# etitioners would pay a down payment of 01,211 while the balance would be nanced by 3A /inance# etitioners would pay the monthly installments to 3A /inance while A%elino would take care of the documentation and appro%al of nancing of the car# etitioners and A%elino signed a promissory note under which they bound themsel%es to pay 4ointly and se%erally to the order of &M* the amount of h 51,01+ in .0 monthly installments of 2,-55#52 a month, the rst installment to be due and payable on eptember +0, +-.# A chattel mortgage of the car in fa%or of 3A /inance was e!ecuted# $he promissory note was indorsed to 3A /inance# $he note reads: Makati, Metro Manila, hilippines, August 6, +-. /or %alue recei%ed, I7we, 4ointly and se%erally, promise to pay to the order of &I89A8 M8$8 A9< *88A$I8=, its o>ce, the principal sum of $"8 ?@=< =I=< $?8@A= IB ?@=< 8=< 8=9C esos (51,01+#11), hilippines *urrency, with interest at the rate stipulated herein below, in installments as follows: $hirty i! (.0) successi%e monthly installments of 2,-55#52, the rst installment to be paid on D+0D-., and the succeeding monthly installments on the +0th day of each and e%ery succeeding month
thereafter until the account is fully paid, pro%ided that the penalty charge of three (.E) per cent per month or a fraction thereof shall be added on each unpaid installment from maturity thereof until fully paid# !!!! =otice of demand, presentment, dishonor and protest are hereby wai%ed# (gd#) <8 /# &I89A8 (gd#) /98<=*IA # &I89A8 F0. *onstancia t#, ampaloc, Manila (Address) same (Address) (gd#) Mari%ic A%aria (gd#) 'esus $uaGon ("I$=<) ("I$=<) AC $8 $?< 8< 8/ 3A /I=A=*< *88A$I8= "I$?8@$ <*8@< &I89A8 M8$8 A9< *88A$I8= 3y: (gd#) A&<9I=8 A# &I89A8, res#
?owe%er, it turned out, without the knowledge of the pouses &iolago, that A%elino had already sold the car to another cousin,
I))*+ "hether or not the instrument is a negotiable instrument# And if it was, whether or not 3A /inance was a holder in due course#
R*,ING $he =I9 pro%ides: ection +# /orm of =egotiable Instruments# H 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 !ed or determinable future time; (d) Must be payable to order or to bearer; and (e) "here the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty#
$he promissory note clearly satises the requirements of a negotiable instrument under the =I9# It is in writing; signed by the &iolago spouses; has an unconditional promise to pay a certain amount, i#e#, h 51,01+, on specic dates in the future which could be determined from the terms of the note; made payable to the order of &M*; and names the drawees with certainty# $he indorsement by &M* to 3A /inance appears likewise to be %alid and regular# $he more important issue now is whether or not 3A /inance is a holder in due course# $he resolution of this issue will determine whether petitioners defense of fraud and nullity of the sale could %alidly be raised against respondent corporation# ec# 25 of the =I9 pro%ides:
ection 25# "hat constitutes a holder in due course#HHA holder in due course is a holder who has taken the instrument under the following conditions: (a) $hat it is complete and regular upon its face; (b) $hat he became the holder of it before it was o%erdue, and without notice that it had been pre%iously dishonored, if such was the fact; (c) $hat he took it in good faith and for %alue; (d) $hat at the time it was negotiated to him he had no notice of any inrmity in the instrument or defect in the title of the person negotiating it#
$he law presumes that a holder of a negotiable instrument is a holder thereof in due course# In the present recourse, on its face, (a) the Jromissory =oteJ,
$hus, petitioners are liable to respondent corporation for the payment of the amount stated in the instrument#