NEGOTIABLE INSTRUMENTS LAW money, as a medium of exchange (most commercial

QandA transactions) and as a medium of credit

Atty. Sarah Castro transactions.

8. Define Negotiable Instruments

PRELIMINARY CONSIDERATIONS Sundiang and Aquino defines NI, as a written

I. Governing Laws contract for (1) payment of money and (2) it passes

from one person to another as money (3) in such

1. Is NIL an adopted statute? manner as to give a holder in due course the right

Yes. to hold the instrument free from defenses available

2. What is an adopted statute? to prior parties

It is patterned after an existing statute. 9. Is there a statutory provision that defines a

3. Where is NIL adopted? negotiable instrument?

It is adopted from the following: None, definitions available are based only on

a. US Uniform Negotiable Instruments Act annotations of the authors only.

b. US Uniform Commercial Code

c. Act. No. 2031 purpose of the act is to III. Classes of Negotiable Instrument

facilitate transactions in commercial paper and

to promote free flow of credit 10. What are the types of Negotiable Instrument?

d. Code of Commerce Promissory Note and Bill of Exchange

4. What is the implication if a statute is an adopted 11. What is a promissory note? Parties?

one? A promissory note is an (1) unconditional promise,

In interpreting the statute, if there is a (2) in writing, (3) made by one person to another, (4)

confusion, the jurisprudence of the country where signed by the maker engaging to pay (5) on demand

it originated shall be considered. or at a fixed or determinable future time (6) a sum

5. When is jurisprudence of foreign country be certain in money.

resorted to in the interpretation of an adopted

statute? There are two kinds of PN, Certificate of Deposit

When our own law is deficient in a specific and Bond. Cert of Deposit is a written

matter. acknowledgement of a bank of its receipt of a

6. When is NIL adopted? Published? Took effect? certain sum with a promise to repay the same.

Feb. 3, 1911; March 4, 1911; June 2, 1911 While, bond is a certificate or evidence of debt on

which the issuing company or governmental body

II. Concept of Negotiable Instrument promises to pay the bondholders a specified amount

of interest for a specific length of time and to

7. What is your concept of Negotiable Instrument? repay the loan on expiration date.

Negotiable instruments play an important role in

the business world for they act as a substitute for

 The parties are the MAKER and the PAYEE. Right to limit Maker may not Drawer may

Maker is the person who makes the promissory note liability stipulate stipulate

and the Payee is the person who is to receive a negation on his limitation on

payment. liability his liability

12. What is a bill of exchange? Parties?

A bill of exchange is an (1) unconditional order, BoE Check

(2) in writing, (3) addressed by one person to When payable On demand or Always on

another (4) signed by the person giving it (5) at a fixed demand

requiring the person to whom it is addressed (6) to determinable

pay on demand or at a fixed determinable time (7) a time

sum certain in money, to order or to bearer. Presentment Must be Need not be

presented for presented

The parties are the DRAWER, DRAWEE and the acceptance unless

PAYEE. The drawer Is the person who draws the requested

BoE and orders the drawee to pay a sum certain in Drawn on Need not be Need be

money. The drawee is the person to whom the order Deposit drawn on drawn on

to pay is addressed in the BoE. He becomes the deposit deposit or

acceptor when he accepts the order to pay made by else its fraud

the drawer. The payee is the party in whose favor When Maybe Must be

the bill is drawn or is payable. presentment presented for presented

13. What is a check? made payment within for payment

It is the most common form of BoE, it is drawn reasonable within a

on a bank payable on demand. time after last reasonable

14. Distinguish one from another. (Not quite sure kung negotiation time after its

ano pinapadistinguish nya so here) issuance

Effect of If accepted If certified
PN BoE
acceptance/ drawer drawer are
Nature Unconditional Unconditional
certification becomes liable discharged
Promise Order
Effect of If w/ If w/
Number of 2 3 *drawer not yet a
drawers death knowledge of knowledge of
party unless he
Parties
the bank, does the bank,
accepts bill

Liability Maker is Drawee- not revoke the revokes the

primarily liable acceptor is authority of authority of

primarily liable the drawee to the banker to

Presentment 1 for payment 1 for pay pay

acceptance 1

for payment 15. Is the NI legal tender?

 No, they dont constitute legal tender. c. The third holder can exercise only the rights

16. What is a legal tender? and defects it acquired from the assignor

They are coins or banknotes that must be

accepted if offered in payment of a debt. That kind V. Characteristics of Negotiable Instrument

of money that the law compels a creditor to accept Negotiability and Accumulation of secondary contracts

in payment of his debt when tendered by the debtor

in the right amount. A. Negotiability

17. Is there a statutory provision that defines legal 22. Define negotiability

tender? It is an attribute whereby (1) a bill/note/check,

????? may pass from hand to hand similar to money (2) so

as to give the holder in due course the right to hold

IV. Functions of Negotiable Instrument the instrument and to collect the sum payable for

himself free from personal defenses

18. What are the functions of NI? B. Accumulation of Secondary Contracts

The functions are SMC-PP 23. What is your understanding of ASC?

a. Substitute for money When negotiable instruments are transferred

b. Medium of exchange through negotiation, secondary contracts are

c. Credit instrument that increases credit accumulated because the indorsers become

circulation secondarily liable not only to their immediate

d. Increases purchasing power in circulation transferees but also to any holder any party. These

e. Proof of transaction indorsers are liable to said holder or whoever may

19. If negotiable instruments are substitute for money, be compelled to pay the instruments.

is non-negotiable instruments also substitute for

money? VI. Negotiable Instruments Compared with Other Papers

Yes, the issue is what is a better substitute. 24. Compare

20. What is better?

NI Non-NI
The negotiable instrument, because, it has

characteristics that make the holder be a holder in Applicable Law NIL Application of

due course. NIL is only by

21. What are the benefits of a holder in due course? analogy

Benefits are: Transferability Transferable by Transferable by

a. The holder is free from all defects compared negotiation or assignment only

with a non-holder in due course assignment

b. If the instrument is non-negotiable, the third Transferee The transferee The transferee

holder is only an assignee which stand in the can be a holder in remains to be an

shoes of the assignor due course if all assignee and can

the requirements
 (Sec. 52) are never be a holder

complied with in due course

Defenses A holder in due All defenses FORMS AND INTERPRETATION OF NEGOTIABLE

course takes the available to prior INSTRUMENTS

NI free from parties may be

personal raised against I. Requisites of Negotiability

defenses and the last 25. Recite Sec. 1 NIL

defects in title transferee Section 1 of NIL provides:

Nature of title Requires clean Transferee Section 1. Form of negotiable instruments. An

title, one that is acquires instrument to be negotiable must conform to the

free from any derivative title following requirements:

infirmities in the only (a) It must be in writing and signed by the maker or

instrument and drawer;

defects of title (b) Must contain an unconditional promise or order to

of prior pay a sum certain in money;

transferors (c) Must be payable on demand, or at a fixed or

Solvency of Solvency of Solvency of determinable future time;

debtor debtor is in a debtor is not (d) Must be payable to order or to bearer; and

sense guaranteed guaranteed (e) Where the instrument is addressed to a drawee,

by the indorsers unless expressly he must be named or otherwise indicated therein

because they stipulated with reasonable certainty.

engage that the 26. What do you mean by written, does it mean that the

instrument will instrument must be written by the maker?

be accepted, paid No, it must be in writing. The term "instrument"

or both and that indicates a writing. The instrument must be in writing

they will pay if or reduced in tangible form; otherwise, nothing could

the instrument is be negotiated or passed from hand to hand. Writing

dishonored includes not only that which has been written on paper

and with a pen or pencil but also that which is in print.

(Sec. 191.) or has been typed. The writing may be made

VII. Legal Tender upon leather, doth or any other substitute for paper as

Discussed already long as it is movable in nature. Such materials, however,

are no longer used in the usual exercise of business.

CASE: Phil Educ Co. Vs. Soriano The usual way is to have the instrument written or

FACTS: printed in durable paper.

ISSUE: 27. Where the instruments is ____ he must be named or

HELD: otherwise stated therein.

 No, it must be indicated, not stated.

10,000 PHP

A. Must be in writing and signed by the maker or 1 year after this date I promise to pay

drawer Miggy or order the sum of ten thousand

28. Is the instrument be entirely written by the pesos

maker or drawer?

No. Shanny

29. What is the participation of the maker or the BoE

drawer? November 14, 2016

He is required to sign only. CBTL, Cubao

a. May appear in any part of the instrument

b. Handwritten statement is considered a 10,000 PHP

signature 1 year after this date, pay Miggy or

c. Preferable full name order the sum of ten thousand pesos

d. Need not be the genuine signature what is

important is the signer has intended to obligate Shanny

himself

30. Why is the instrument need be in writing? To: Selina

To effectively substitute for money President Meow Company

31. Where should it be written?

In any paper or substitute for paper as long as it 35. How does PN differ from BoE?

is movable in nature.

32. May I write it on the board? PN BoE

No, it should be written on something that can be Nature Unconditional Unconditional

passed on. Promise Order

B. Must contain an unconditional promise or order to Number of 2 3 *drawer not yet a

party unless he
pay a sum certain in money Parties
accepts bill

i. promise or order to pay must be conditional

Liability Maker is Drawee-
33. What is your understanding of
primarily liable acceptor is
condition?
primarily liable
Art. 1179 provides that it must be a
Presentment 1 for payment 1 for
future and uncertain event
acceptance 1
34. Draw a promissory note and BoE at the
for payment
board
Right to limit Maker may not Drawer may
PN
liability stipulate stipulate
November 14, 2016

CBTL, Cubao
 negation on his limitation on information that it was issued in connection with a

liability his liability particular transaction or document. It must not

make the order or promise dependent on or

36. May condition refer to a past event? burdened by the other transaction

Yes.

37. Why? 40. Do you agree that a promissory note be

Because the happening of the past event is still unknown made without a previous transaction?

to the parties. No. Because generally, a person will not

38.Why should the presence of condition negates attempt to make a PN w/o any previous

negotiability? transaction that made him liable to pay the

??????? money.

39. Will it defeat the purpose of negotiable instruments if 41. Is it necessary to indicate the very

there is a condition? transaction that give rise to the

Yes, for negotiable instrument may not be an effective instrument?

substitute for money. No. It is not stated in Sec. 1. NIL

42. Will the omission or referral to the

(a.) reference to transaction transaction affects negotiability?

NOTE: No. It is not stated in Sec. 1. NIL

Sec. 3. When promise is unconditional. An 43. What if you are subjecting the payment

unqualified order or promise to pay is unconditional of the instrument to that prior

within the meaning of this Act, though coupled with transaction?

Negotiability is now affected. Only

(a) An indication of a particular fund out of which recital to the transaction will render no

reimbursement is to be made, or a particular effect upon the negotiability of the

account to be debited With the amount; or instruments.

(b) A statement of the transaction which gives rise 44. What if subjected to the transaction

to the instrument. but the transaction being subjected

But an order or promise to pay out of a particular contains no conditions?

fund is not unconditional. Still, it will affect the negotiability upon

the fact that on the face of the note, it

** Sec. 3 provides that a statement of the could not be determined it negotiability for

transaction that gave rise to the obligation covered it requires inspection outside the face of

by the note or the bill does not destroy the the instruments. PRINCIPLE: WE LOOK

negotiability of the instrument. However, reference AT ONLY THE FACE OF THE

to another transaction or document MUST BE INSTRUMENT. Why? Because if

DESCRIPTIVE RATHER THAN RESTRICTIVE. In negotiated to others, they dont have the

other words, the instrument must give only the opportunity to inquire the condition
 imposed upon the instruments which result

to a defeat of the purpose of its (i.) payable with interest

negotiability. 50. What is an interest?

A sum charge for borrowing money. It is

(b.) source or payment or account to be debited represented by a rate.

51. Is it accessory or principal?

ii. payable in sum certain in money Accessory

45. Recite Sec. 1 52. What is an accessory?

46. Is the sum payable be fixed?

53. What type of accessory is interest?

No.

47. Is the law requiring it to be fixed?
54. Why does the creditor impose
No. Only sum certain. Thus, determinable capable of
interest?
ascertaining the certainty of sum.
To earn money his money
48. What if the maker or drawer is given the option to
55. Will an imposition of interest affect
pay in money or to render some services? What is the
the negotiability of the instrument?
effect?
No, because the sum payable is still
It destroys negotiability.
determinable.
49. Why does it destroy negotiability?
56. How come that interest will not affect
Because it become conditional dependent upon the will
the negotiability of the instrument?
of the make or acceptor to pay or not.
Since a negotiable instrument is a device

intended as a substitute for money, it is,

(a.) provision which do not affect certainty of sum
therefore, essential that it represents a
payable
fixed amount to be paid wholly in money.
NOTE:
provision for the payment of interest is a
Sec. 2. Certainty as to sum; what constitutes. The
mere incident; it does not render the
sum payable is a sum certain within the meaning of
instrument non- negotiable because it does
this Act, although it is to be paid
not make uncertain the sum payable.
(a) With interest; or
57. What if there is an intention to pay an
(b) By stated installments; or
interest but the interest is not stated?
(c) By stated installments, with a provision that upon
Will it affect the negotiability of the
default in payment of any installment or of interest
instrument?
the whole shall become due; or
No, the legal interest must be deemed
(d) With exchange, whether at a fixed rate or at
included in the instrument as provided in
the current rate; or
Art. 1175 NCC.
(e) With costs of collection or an attorney's fee, in

case payment shall not be made at maturity.

(ii.) payment by installments

58. In four installments

 Non-negotiable. It must be four equal the right to continue payment on

installments. installments

59. Does payment by installment affect the 66. Why does a creditor establish such

negotiability of the instruments? acceleration clause?

It depends. If the installment is not It is for the protection of the creditor

stated it is non-negotiable, if it is, 67. How does it provide protection for the

negotiable. creditor?

60. What do you mean by stated It gives him the assurance that the

installments? debtor will pay as promised and provides

Stated installments, within the meaning him remedy in case of breach

of Section 2, means that: (a) the interest 68. Will the acceleration clause affect

of each installment, and (b) the due date of negotiability?

each installment must be fixed in the No. The sum is still certain although

instrument. payable by stated installments with an

61. Is four monthly equal installments acceleration clause, it does not make an

starting July 2008 negotiable? instrument payable upon contingency (and

Yes. so non-negotiable) since the time of

62. What if incase of default of payment payment will surely come and the exact

at maturity the whole amount shall become value of the instrument can be ascertained.

due is stated in the installment?

Still negotiable (iv.) payment with exchange

NOTE: extension clauses are the opposite

(iii.) acceleration clause of acceleration clauses. They appear in

63. What is an acceleration clause? instruments with fixed future maturity

A statement that hastens an occurrence date and provide that under certain

of an event. i.e. a promise that if any circumstances, the date shall be further

installment or interest is not paid as extended. An instrument is negotiable if,

agreed, the whole shall become due by its terms, it is payable at a definite time

64. What is the event that accelerate the subject to extension at the option of the

maturity date? holder, or to extension to a further

Default of payment of any installment or definite time at the option of the maker or

interest acceptor or automatically upon or after a

65. Why default of payment accelerates specified event

the maturity date?

Because upon default, it breaches the 69. What is an exchange? What is the

conditions that allows the obligor to lose difference of value of currency of

different countries?
 exchange is the charge for the expense CASE: MBTC vs. CA

of providing funds at the place where the FACTS:

instrument is payable to cover such ISSUES:

instrument which is issued at another place. HELD:

It may be at a fixed rate or at the current

rate. Follow up questions:

77. What are treasury warrants?

It is a government warrant for the payment of money such

70. Do they affect negotiability?

as that issued in favor of a public officer or employee

No. Because the current rate of

covering payment or replenishment of cash advances for

exchange at any given time may easily be

official expenditures. It is payable out of a specific fund or

ascertained by inquiry from the banks

appropriation.

dealing on exchange or foreign currencies

78. What if the court decide the treasury warrants as

and such rate is a matter of common

negotiable?

commercial knowledge. An instrument

MBTC can then have a refund

whether payable "at a fixed exchange rate

79. What is the courts decision?

or at the current rate" is deemed by the

Treasury warrants are not negotiable

law to meet the "sum certain" requirement.

80. Why are treasury warrants not negotiable?

71. May the debtor or creditor fix the

Because they are payable out of a particular fund

exchange rate?
81. What fund?

Yes.
Fund 501

82. Would it matter if the fund is sufficient or not for the

(v.) payment of attorneys fees

payment of the sum payable?

72. What is an attorneys fee?

No. The fact that the source of payment is our of

particular fund it will suffice to be non-negotiable
73. Who will collect the note payable? Is it
83. Why?
the attorney?
Because it will be subjected to a condition

74. May the parties fix the attorneys

84.
fees?
CASE: Caltex Phils. vs. CA

FACTS:
75. What if the fixed attorneys fees is

ISSUES:
lesser than the actual cost of attorneys

HELD:
fees?

Follow up questions:

85. To whom the certificate of deposit issued?

76. Angel dela Cruz

86. Why is the determination of certificate of deposit Where an instrument is issued, accepted, or

important? indorsed when overdue, it is, as regards the person

If negotiable, Caltex can claim, if not they have no claim. so issuing, accepting, 6r indorsing it, payable on

87. What is the ruling of CA? demand.

The certificate of deposit is non-negotiable because (2.) when payable at determinable

there is an evidence that Angel is the bearer described in 95. Recite Sec. 4.

the certificate of deposit, thus payable to a specified Sec. 4. Determinable future time; what

person. constitutes. An instrument is payable at a

88. What is the ruling of the Supreme Court? determinable future time, within the meaning of

They are negotiable instruments because upon this Act, which is expressed to be payable

determination of the face of the instruments, the (a) At a fixed period after date or sight; or

instruments is repayable to the bearer of the instruments. (b) On or before a fixed or determinable future

If it should be the intention to be repayable to a specified time specified therein; or

person/ Angel dela Cruz, the same must be indicated therein (c) On or at a fixed period after the occurrence of

and not the word BEARER. a specified event, which is certain to happen, though

89. How did the SC argue on the place of evidence that Angel the time of happening be uncertain.

is the one described as the depositor of the Certificate of An instrument payable upon a contingency is not

Deposit? negotiable, and the happening of the event does not

cure the defect.

C. Payable on demand or at a fixed determinable future time

96. What do you mean by at sight?

90. Recite Sec. 1

91. What is the third paragraph? 97. What is an event?

Must be payable on demand, or at a fixed or determinable

98. Is the event contemplated in the provisions, a

future time

condition?
92. What is an instrument payable on demand?

No, it is a period
It is an instrument to be paid upon demand by the buyer

99. What is the difference between a period and a

or upon pleasure of the buyer?

condition?
93. What are the other words similar to upon demand?

Period is a future certain event while a condition

Upon his pleasure, upon his option

is a future uncertain event

100.Due 10 days before the death of Juan dela

(1.) when payable on demand

Cruz Negotiable or not?

94. Recite sec. 7

Non-negotiable, unable to determine the

Sec. 7. When payableon demand. A n

certainty of the date

instrument is

(a) Where it is expressed to be payable on demand,

D. payable to order or bearer

or at sight, or on presentation; or

101. What does these words mean?

(b) In which no time for payment is expressed.
 words of negotiability Note that only instrument under subsections (a)

102. What is the importance of words of negotiability? and (b) are bearer instruments on the face. Those

serves as consent to transfer the instruments through under subsections (c), (d), and (e) are order

negotiation instruments

103. 10 days after the date March 10, 2017 issued, when is on the face. If the instrument is originally a bearer

it due? instrument, then regardless of any indorsement

March 21, 2017. Exclude the first day, include the last thereafter, it is still a bearer instrument. If the

day. instrument is originally an Order instrument, then it

104. What is the difference between A. I promise to pay b can change character depending on the nature of

or order and B. I promise to pay B? the latest indorsement. So it can go from OI to BI

in A, I promise to pay B or I promise to pay upon his order; if there was a blank indorsement, or if the last

in B, I only promise to pay B indorsement specially declared subsequent

105. What is the meaning of I promise to pay B or bearer negotiation to be to bearer. So it can go from OI to

It means I promise to pay B or the bearer of the note BI if there was a blank indorsement, or if the last

indorsement specially declared subsequent

(1) When payable to bearer negotiation to be to bearer.

106. Recite Sec. 9 110. When is an indorsement in blank?

Section 9 provides that The instrument is indorsed in blank by simply

Sec. 9. When payable to bearer. The instrument writing

is payable to bearer his name on the back thereof. The blank

(a) When it is expressed to be so payable; or indorsement makes the instrument payable to

(b) When it is payable to a person named therein or bearer.

bearer; or 111. May a bearer instrument be an order instrument

(c) When it is payable to the order of a fictitious or if indorsed in a special indorsement?

non-existing person, and such fact was known to the No. If the instrument is originally a bearer

person making it so payable; or instrument, then regardless of any indorsement

(d) When the name of the payee does not purport to thereafter, it is still a bearer instrument.

be the name of any person; or 112. Rule when the bearer is a fictitious person

(e) When the only or last indorsement is an The word "fictitious" is not limited to a person

indorsement in blank. having no real existence, as otherwise the word

107. Can a bearer be a juridical person? "non-existing" would have been sufficient without

Of course, the NIL only requires that holder to more. A fictitious person is meant to be one who,

be a "person" and a juridical person is a person though named or specified as payee in an

108. May an order instrument be a bearer instrument, has no right to it because the maker or

instrument? drawer so intended and it matters not, therefore,

Yes whether the name of the payee used by him be that

109. In what instances? one living or dead, or one who never existed. It is
 essential that the payee is known to the maker or been given therefor; or

drawer to be a fictitious or non-existing person, (c) Does not specify the place where it is drawn or the place

otherwise, it would not be a bearer instrument but where it is payable; or

an order instrument (d) Bears a seal; or

(e) Designates a particular kind of current money in which

(2) When payable to order payment is to be made.

(a) To whose order the instrument be made payable But nothing in this section shall alter or repeal any statue

Sec. 8. When payable to order. The requiring in certain cases the nature of the consideration to

instrument is payable to order where it is drawn be

payable to the order of a specified person or to stated in the instrument.

him or his order. It may be drawn payable to 116. What is the purpose of the seal?

the order of one way of proving the authenticity of the instrument

(a) A payee who is not maker, drawer, or

drawee; or F. Additional provisions not affecting negotiability

(b) The drawer or maker; or Sec. 5. Additional provisions not affecting negotiability.

(c) The drawee; or An instrument which contains an order or promise to do any

(d) Two or more payees jointly; or act in addition to the payment of money is not negotiable.

(e) One or more several payees; or But the negotiable character of an instrument otherwise

(f) The holder of an office for the time being. negotiable is not affected by a provision which

Where the instrument is payable to order the (a) Authorizes the sale of collateral securities in case the

payee must be named or otherwise indicated instrument be not paid at maturity; or

therein with reasonable certainty. (b) Authorizes a confession of judgment if the instrument

be not paid at maturity; or

CASE: Ang Tek Lian vs. CA (c) Waives the benefit of any law intended for the advantage

113. Is there a valid negotiation in this case? or protection of the obligor; or

Yes (d) Gives the holder an election to require something to be

114. What is the instrument in controversy in this case? done in lieu of payment of money. But nothing in this section

Check payable to CASH shall validate any provision or stipulation otherwise illegal.

E. omissions that dont affect negotiability (1.) sale of collateral securities

115. enumerate omissions that dont affect negotiability

Sec. 6. Omissions; seal; particular money. The validity and 117. What is a collateral security?

negotiable character of an instrument are not affected by The promise is secured by a thing which the bearer could

the fact sell when failed to pay

that 118. Is it a principal or accessory contract?

(a) It is not dated; or accessory

(b) Does not specify the value given, or that any value has 119. What is an accessory contract?
 is a contract that is entered into primarily for the purpose Yes. the second paragraph of Section 5 contains a proviso

of carrying out a principal contract. It is made for the that nothing in said section "shall validate any provision or

purpose of assuring the performance of a prior contract. stipulation otherwise illegal."

120. Example of a collateral agreement 128. What is the implication of confession of judgement is

"I promise to pay P or order the sum of P30,000.00 on allowed?

November 25,2010 secured by a ring I delivered to him by He is authorizing judgment without giving his day in court

way 129. How does it affect negotiability of instrument?

of pledge and which he could sell should I fail to pay him at No effect

maturity."

121. How can a diamond ring be made as a collateral in a PN? (3.) waiver of benefit

"I promise to pay P or order the sum of P30,000.00 on 130. What is a waiver of benefit

November 25,2010 secured by a ring I delivered to him by waiver of benefits intended by law for the advantage or

way protection of the obligor

of pledge and which he could sell should I fail to pay him at 131. What is an example of this?

maturity." "Pay bearer P10,000.00. Notice of dishonor waived."

122. Why does collateral agreement not give an effect to "Three months, after date, I promise to pay to the order of

NI? P

it is still payable in sum certain in money P10,000.00, waiving the benefit of the homestead and all

123. How about an act to be done in addition to a sum other

payment, will it affect NI? statutory exemptions as to the debt evidenced by this note."

It depends, if it is upon the option of the holder it will not

affect negotiability, if it is upon the option of the maker, it 2. Rules to be followed in interpreting NI

will become non-negotiable. 132. What are the rules in interpreting NI

124. What is the reason that made an instrument non- Sec. 17. Construction where instrument is ambiguous. -

negotiable of the act be upon the option of the maker? Where the language of the instrument is ambiguous or there

It will be a conditional payment of sum certain in money are omissions therein, the following rules of construction

(a) Where the sum payable is expressed in words and also in

(2.) confession of judgement figures and there is a discrepancy between the two, the sum

125. What is a confession of judgement? denoted by the words is the sum payable; but if the words

A confession of judgment enables the holder to obtain a are ambiguous or uncertain, reference may be had to the

judgment without the delay usually incident to a law suit, as figures to fix the amount;

it eliminates the necessity of a trial. It is a written

statement signed by the defendant, setting forth the basis (b) Where the instrument provides for the payment of

of liability and authorizing the entry of judgment thereon. interest, without specifying the date from which interest is

126. Who is affected by a confession judgement? to run, the interest runs from the date of the instrument,

holder obtains judgement w/o delay and if the instrument is undated, from the issue thereof;

127. Is there a waiving of right in confession of judgement?

(c) Where the instrument is not dated, it will be considered

to be dated as of the time it was issued;

(d) Where there is a conflict between the written and

printed provisions of the instrument, the written provisions

prevail;

(e) Where the instrument is so ambiguous that there is

doubt whether it is a bill or note, the holder may treat it as

either at his election;

(f) Where a signature is so placed upon the instrument that

it is not clear in what capacity the person making the same

intended to sign, he is to be deemed an indorser;

(g) Where an instrument containing the word "I promise to

pay" is signed by two or more persons, they are deemed to

be jointly and severally liable thereon

CASES:

RPB vs. CA

Evangelista vs. Mercanor

Ilano vs. Espanol