NEGOTIABLE INSTRUMENTS LAW Professor Larry P.

Ignacio

SAN SEBASTIAN
COLLEGE-RECOLETOS
MANILA

COLLEGE OF LAW

Let us not be
absorbed by
the titles we
get. Being a
NEGOTIABLE lawyer
gives you a
INSTRUMENTS license to
practice
LAW law, not a
license to
belittle
others.

ATTY. LARRY P. IGNACIO

1ST SEM AY 2017-2018

PART 1(a)
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

NEGOTIABLE INSTRUMENTS Characteristics or Features of

written contracts for the payment Nis
of money; by its form, they are 1. NEGOTIABILITY
intended as a substitute for money -the ability or attribute to pass
and intended to pass from hand to from hand to hand so as to give
hand, to give the holder in due the holder in due course the right
course the right to hold the same to hold the instrument and collect
and collect the sum due. free from any liability
2. ACCUMULATION OF
SECONDARY CONTRACTS
Functions & Importance of Nis -As the instrument is passed from
1.a. SUBSTITUTE FOR MONEY one person to another, secondary
2.a. MEDIUM OF EXCHANGE contracts are entered into thereby
3.a. MEDIUM OF CREDIT increasing the chances of the
TRANSACTIONS holder to collect the amount
payable on the instrument. For this
Legal tender in the Philippines reason, the marketability of the
MB Resolution No. 862, 06 July instrument is greatly increased.
2006
Coins:P 1.00
P 5.00 One thousand I promise to pay to PEDRO
pesos or order P10,000.00 after
P10.00 my dog Bantay dies.
C .05
C .10 One hundred pesos (sgd)
C .25 MARIO
ALL BILLS are legal tender up to To: Walter
any amount.
Checks and mercantile documents
NOT legal tender (Art. 1249) Common Form
1) PROMISSORY NOTE (PN):
NI not a legal tender an unconditional promise or
-it is mere a substitute for money writing made by one person
LEGAL TENDER: that currency to another, signed by the
with which a debtor can legally maker, engaging to pay
compel a creditor to accept in demand or at a fixed or
payment of a debt. determinable future time, a
-the currency which has been sum certain in money, to
made suitable by law for the order or bearer
purpose of tender of payment of 2) BILL OF EXCHANGE (BE):
debts an unconditional order in
writing addressed by one
person to another signed by
the person giving it, requiring
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

the person to whom it is

addressed, to pay on
demand or at a fixed or Parties to a BE
determinable future time a
sum certain in money to Drawer
order or to bearer -the person drawing or making the
3) CHECK: a bill of exchange instrument ; he gives the order to
drawn on a bank payable on pay
demand
Drawee
-the addressee of the order to pay,
PROMISSORY NOTE or the person required to pay the
instrument
P10,000 Quezon City,
Philippines Payee
01 -the person to whom the payment
December2016 is to be made

For value received, I CHECK

promise to pay PEDRO
or order the amount of Account No.:123-4 Check
Philippine Pesos: Ten No:654
Thousand (P10,000.00) 05 December
on 04 January 2017. 2016

(sgd) MARIA Pay to the order of PETER Ten

Thousand (P10,000.00).

BILL OF EXCHANGE (sgd) ROBERTO

Manila, CHINABANK
Philippines 321 Proj. 8,QC
05 December
2016

Thirty days after date, pay

PABLO or order the amount of
Philippines Pesos: Ten
Thousand (P10,000.00).

(sgd) ROGER
To: Wally
123 GSIS Village, QC
 NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

Difference between Negotiable Check Bill of Exchange

Instruments and Non- Always drawn may or may not be
Negotiable Instruments: upon a bank drawn against a
or banker bank
Always may be payable on
payable on demand or at a
NIs Non-NIs demand fixed or
determinable future
Contains all the Does not contain
time
requisites of Sec. 1 all the requisites of
of the NIL Sec. 1 of the NIL not necessary Necessary that it be
that it be presented for
Transferred by Transferred by
presented for acceptance
negotiation assignment
acceptance
Holder in due Transferee
Drawn on a not drawn on a
course may have acquires rights
deposit deposit
better rights than only of his
transferor transferor the death of a the death of the
drawer of a drawer of the
Prior parties Prior parties
check, with ordinary bill of
warrant payment merely warrant
knowledge by exchange does not
legality of title
the banks,
Transferee has Transferee has no
revokes the
right of recourse right of recourse
authority of
against
the banker
intermediate
pay
parties
must be may be presented
presented for for payment within
payment a reasonable time
Difference between Promissory
within a after its last
Note and Bill of Exchange:
reasonable negotiation
time after its
Promissory Note Bill of Exchange issue
(6 months)
Unconditional Unconditional
promise order
Involves 2 parties Involves 3 parties Promissory Check
Maker primarily Drawer only Note
liable secondarily liable There are two There are three (3)
Only 1 Generally 2 (2) parties, parties, the drawer,
presentment-for presentments-for the maker the drawee bank
payment acceptance and for and the payee and the payee
payment may be drawn Always drawn
against any against a bank
person, not
 NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

necessarily a by indorsement completed by

bank delivery.
May be Always payable on
payable on demand If the instrument is payable to
demand or at order, it must be negotiated by
a fixed or indorsement completed by
determinable delivery.
future time
a promise to An order to pay ESSENTIAL REQUISITES
pay (Section 1)

Incidents in the Life of a Requisites of a Negotiable Note

Negotiable Instruments (PN):
(WUDO)
1) Issue a. Be in writing signed by the
2) Negotiation maker
3) Presentment for acceptance b. Contains an unconditional
(Bills of Exchange [BE]) promise or order to pay a
4) Acceptance sum certain in money
5) Dishonor by non-acceptance c. Be payable on demand or at
6) Presentment for payment a fixed determinable future
7) Dishonor by non-payment time
8) Notice of dishonor d. Be payable to order or to
9) Protest (Foreign Bills only bearer
[FB]) Requisites of a Negotiable Bill
10) Discharge (BOE):
(WUDON)
Issue: the first delivery of the a. Be in writing signed by the
instrument, complete in form to a drawer
person who takes it as a holder b. Contains an unconditional
promise or order to pay a
Delivery: the transfer of sum certain in money
possession, actual or constructive, c. Be payable on demand or at
from one person to another with a fixed determinable future
intent to transfer title time
d. Be payable to order or to
Negotiation: the transfer of an bearer
instrument from person to another e. The drawee must be named
as to constitute the transferee the or otherwise indicated with
holder of the instrument. reasonable certainty
If the instrument is payable to
bearer, it may be negotiated by
mere delivery although the law
does not prohibit the negotiation
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

The instrument must be SIGNED

Determination of Negotiability by the maker or drawer.
1. by the provision of the
Negotiable Instrument Law, Manila, 03
particularly Section 1 thereof October 2016
2. by considering the whole
instrument I, Mario (with signature
3. by what appears on the face of on top of name), after date
the instrument and not elsewhere promise to pay Petra or her
order the sum of P10,000.00.
A check payable to the order of
cash is a check payable to (not signed at the bottom)
bearer.
Negotiable. The signature may be
The negotiability of the instrument made on any part of the
is not affected by the stipulations instrument.
of the parties.
It must contain an unconditional
In determining if the instrument is promise or order to pay a sum
negotiable, only the instrument certain in money
itself and no other, must be
examined and compared with the Substitute words sufficient to
requirements stated in Sec. 1 If it constitute
appears on the instrument that it a PROMISE TO PAY
lacks one of the requirements, it is
not negotiable and the provisions a. This is to certify that I have
of the NIL do not govern the to pay
instrument. The requirement b. Pedro obliges himself to pay
lacking cannot be supplied by using c. Paid when called for
a separate instrument in which that d. I guaranty to pay
requirement which is lacking e. Good for
appears. f. Holden for
g. To pay or cause to be paid
The instrument must be in h. I agree to pay
WRITING. i. I shall pay
In order to be negotiable, there j. Due to P or order
must be a writing of some kind, P5,000 payable on demand
else there would be nothing to be
negotiated or passed from hand to
hand. The writing may be in ink,
print or pencil. It may be upon
parchment, cloth, leather or any
other substitute of paper.
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

Promise to pay: Negotiable. It contains a promise

NOT merely an acknowledgment of to pay because the words payable
debt on demand necessarily imply a
promise to pay.
An acknowledgment of debt
becomes a promise to pay by I agree to pay to the order
addition implying a promise of of Pedro, P10,000.00
payment, such as payable
payable on a given day, (sgd)
payable on demand, paid Maria
when called for,
I.O.U
Negotiable. Although it does not
use the word promise, still the
Due Juan P10,000.00 word agree means a promise to
pay.
(sgd) Arthur
Good to Pablo or order
Not negotiable. It is nothing but P10,000.00
an acknowledgment of a debt. It is
merely an evidence of debt not a (sgd)
promissory note. Juan

I do acknowledge myself to be Negotiable. It contains a promise

indebted to Peter or order in to pay because the word good
the sum of P10,000.00 to be implies a promise to pay.
paid on demand.
SUBSTITUTE WORDS TO CONNOTE
(sgd) Darwin ORDER

Negotiable. There are other words Credit a named person or order

expressing the intention to pay or Let the bearer have
from which may be implied such The drawee will much oblige the
intention to pay. The words to be drawer by paying to a named
paid imply a promise to pay. person/

Due Peter or order P10,000.00 A mere REQUEST will not suffice.

payable on demand. An ORDER is a demand, a
command, and imperative
(sgd) Jose direction.
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

I hereby authorize you to pay sufficient to import an order to

P1,000.00 on our account, to pay.
the order of Pedro.

(sgd) UNCONDITIONAL
Dario
To Wally Absolute, not subject to
conditions, contigents, reservations
Not negotiable. It is not an order
to pay. It is a mere authorization a CONDITION is every future and
to pay. By its terms, the bill gives uncertain event which an obligation
a discretion to the drawee to pay or provision is made to depend.
or not to pay.
If subject to a condition, the
Please let the bearer have instrument is NOT negotiable and
P10,000.00 and place to my the happening of the condition will
account and you will oblige. not cure the defect.

(sgd) Pay to P or order P5,000 if he

Roger passes the CPA Board Exam
this year.
To Darwin
2067 XXX Bldg. Ayala Ave. PROMISE OR ORDER MUST BE
UNCONDITIONAL
Not negotiable. It does not
contain an order to pay. It is Pay to Edgar or bearer P10,000
nothing but a request to pay. if he marries Edgarda.

Doris will oblige Dennis by (sgd) Maria

paying Petra or order
P1,000.00 on her account. Not negotiable. It is conditional,
it is subject to the condition that
(sgd) Edgar marries Edgarda, which is
Dennis future and uncertain to happen.
To: Doris
I promise to pay Popoy or order
Negotiable. The mere fact that it P10,000.00, ten (10) days after
contains words of civility or the death of Solomon.
courtesy does not make it non-
negotiable. In spite of the words of (sgd) Miguel
courtesy of civility, the bill still
contains an order to pay. The Negotiable. The death of Solomon
words by paying are held is certain, and therefore there is no
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

condition but a mere suspensive Statement of a particular fund

period. transaction giving rise to the
instrument
I promise to pay Portia or
bearer P10,000 ten (10) days The particular fund indicated
after Juan passes the 2016 CPA should not be the direct source
Examinations. of payment, else it becomes
unconditional and therefore non-
(sgd) Roland negotiable. The fund should only
be the source of reimbursement.
Not negotiable. It is conditional.
Although the payment is a fixed A statement of the transaction
period after a specified event the does not destroy the negotiability
passing of the 2016 CPA Exams of the instrument.
such event is not certain to
happen. Exception: Where the promise to
pay or order is made subject to the
Suppose Juan passes the 2016 terms and conditions of the
Bar Exams, will it make the transaction stated.
note negotiable?

No. The happening of the condition Pay to Pandora or order

will not cure the defect.(Sec. 4) P10,000.00 and reimburse
yourself out of my money in
General Rule: The promise or your hands.
order should not depend on a
contingent event. If it is (sgd)
conditional, it is non-negotiable. Maricel

Exceptions: Negotiable. The indication of the

a. Indication of particular fund particular fund my money in your
from which the acceptor hands is merely a source of
disburses himself after reimbursement and not a fund
payment for direct payment.
b. Statement of the transaction
which gives rise to the Pay to the order of Pedro
instrument (Sec.3) P10,000.00 out of the rentals of
my car.
But an order or promise to pay out
of a particular fund is not (sgd) Deo
conditional.
Not negotiable. The particular
fund- the rentals of my car- is the
source of direct payment, and is
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

considered conditional because the If an event or happening is

particular fund may or may not be not uncertain as when it is
enough. sure to happen at some
future time, that event or
Pay Pamela or order P10,000 happening could not be a
on account of a contract condition. It is a term or
between you and the Torre de period.
Manila Construction, Inc.
A condition may also be a
(sgd) Mario past event unknown to
the parties. The event is
Negotiable. The instrument will certain, but the condition is
be paid first and afterwards, the the future knowledge of such
particular fund the account of a event, which may be shown
contract with Torre de Manila,Inc. by evidence.
will be debited.
PERIOD/TERM
I promise to pay Patricio or A future and certain event upon
order P10,000.00 in payment of the arrival of which, the obligation
a ring I bought from him the subject to it either arises or is
other day. extinguished.

(sgd) Matias INDICATIONS OF A TERM OR

PERIOD:
Negotiable. The statement of the When the debtor binds himself to
transaction the payment of a sale pay:
of a ring sold the other day 1. When his means permit him
which gave rise to the instrument to do so
does not destroy the unqualified 2. Little by little
promise of Matias to pay Patricio. 3. As soon as possible
4. From time to time
CONDITION: Concept and 5. As soon as I have the money
Nature 6. In partial payment
This is an event which is both 7. When in the position to pay
future and uncertain upon
which the existence or Basis Period/Ter Conditi
extinguishment of an m on
obligation is made to depend. Time Always Can
The elements of futurity refer to refer to
and uncertainty must FUTURE past
concur for a condition to events
exist. unknow
n to the
parties
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

Fulfillme Sure to May or which gave rise to the

nt happen at may not instrument does not destroy
an exact happen the unqualified promise of
date or Matias to pay Patricio.
indefinite
time but I promise to pay Patricia or
sure to order P10,000.00 subject to the
come stipulations in the Deed of Sale
Influenc Merely fixes May executed by us.
e the time for cause
the the (sgd)
demandabili arising Maria
ty or or
performanc cessatio Not negotiable. The payment is
e of n of the conditioned on the Deed of Sale. It
obligation obligatio will likewise require the
n determination of a separate
instrument the Deed of Sale in
Pay Pamela or order determining the negotiability of the
P10,000.00 on account of a instrument in violation of the
contract between you and the fundamental rule that the
Torre de Manila Construction, negotiability must be determined
Inc. only from the document itself and
not elsewhere.
(sgd)
Mario A statement of the transaction
does not destroy the
Negotiable.The instrument will be negotiability of the instrument.
paid first and afterwards, the Exception: Where the promise to
particular fund the account of a pay or order is made subject to the
contract with Torre de Manila, Inc. terms and conditions of the
will be debited. transaction stated.

I promise to pay Patricio or SUM CERTAIN IN MONEY

order P10,000.00 in payment of
a ring I bought from him the I promise to pay Pedro or order
other day. US$10,000.00

(sgd) (sgd)
Matias Marites

Negotiable. The statement of Negotiable. Although payable in

the transaction the payment of foreign currency, the amount has a
a sale of a ring sold the other day fixed value and can by simple
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

mathematical calculation be b. in stated installments

expressed in the value of our peso. c. in installments with
acceleration clause
I promise to pay Patricia or d. with exchange
order P10,000.00 thirty (30) e. costs of collection or
days from this date, at 6% attorneys fees
interest.
PAYMENT WITH INTEREST
(sgd)
Marty October 15,
2016
Negotiable. The addition of the
interest does not make the sum I promise to pay Patricia or
uncertain. The sum due can be order P10,000.00 with interest
computed. at 10% on January 15, 2017.

I promise to pay Perla or order (sgd)

P10,000.00 together with all Maria
the sums that may be due on
November 30, 2016. November 24,
2016
(sgd)
Melody I promise to pay Pedro or order
P10,000.00 after six months
Not negotiable. The sum is not with 12% interest per month.
certain. It includes all sums by
November 30, 2016 which is not (sgd)
stated and unknown until that Melvin
date.

I promise to pay Phoebe or Payment with Interest

order P10,000.00 in gold ring. Sum is still certain even with:
1) stated interest
(sgd) 2) increase/reduced interest rate
Mark 3) accrual/interest not specified
4) usurious interest

Not negotiable. The instrument is If the interest is stipulated but

not payable in money as not specified, the rate is
required by law. determined to be legal rate.

Sum is certain even if it is to be Payment with Interest

paid with: Where the instrument provides for
a. interest the payment of interest, without
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

specifying the date from which 1)

interest is to run, the interest runs I promise to pay P or order
from the date of the instrument, P10,000.00 in two equal
and if the instrument is undated, installments.
from the issue thereof. (sgd) M

2)
Payment in stated installments I promise to pay P or order
(Sec. 2 par. B)
P10,000.00 in two equal
To be negotiable, the amount to be
monthly installments.
paid in installments must be
(sgd) M
specified or could be made
certain.
Both are NOT NEGOTIABLE.
June 01,
The maturity of each installment is
2016
not known.
I promise to pay P or order
Payment in installment with
P10,000.00 in two installments,
ACCELERATION CLAUSE
as follows:

Jan 1, 2017 --- P8,000.00

December 01,
Feb 1, 2017 ---P2,000.00
2016
(sgd) M
I promise to pay Pedro or order
P10,000.00 in four equal
Negotiable. The sum is certain
monthly installments to begin
and the installments are stated.
on 01 January 2017.
Upon default in payment of any
January
installment, the whole sum
1, 2017
payable under this note shall
I promise to pay P or order
become payable at once.
P10,000.00 in two equal
installments beginning Feb. 14,
(sgd)
2017.
Melody
(sgd) M

Negotiable. The sum payable is

considered stated because there is
a beginning date for payment of
the first installment.
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

Payment with EXCHANGE the ring that was pledge - will not
render the note non-negotiable.
October 15,
2016 The additional act shall be
performed after the date of the
Pay or order P10,000.00 with maturity of the note, when it is no
exchange at the current rate. longer negotiable in the full
commercial sense. Before the date
(sgd) M of maturity, no additional act is to
be performed except the payment
Payment with ATTORNEYS of money.
FEES AND COST OF
COLLECTION Confession of Judgment

March 15, 2016 I promise to pay P or bearer

P10,000.00 on January 17,
I promise to pay P or order 2017. If not paid at maturity, I
P10,000.00 on Feb. 14, 2017. authorize any lawyer to appear
Upon failure, I agree to pay before any court and confess
collection and attorneys fees. judgment for the amount of
this note plus interests, costs,
(sgd) M and attorneys fees.

Exceptions: I promise to pay Pedro or order

a. sale of collateral securities on 05 January 2017. If not paid
b. confession of judgment on said date, I admit liability.
c. waives benefit of law
d. gives option to the holder to Kinds of Confession of
require something to be done judgment:
in lieu of money
a) Cognovit actionem: a written
Sale of Collateral Securities confession of an action by a
defendant, subscribed, but not
I promise to pay Perla or order sealed, and irrevocably authorizing
P10,000.00 on October 25, any attorney of any court of record
2016. If not paid at maturity, to confess judgment and issue
Perla may sell the ring I execution usually for a sum
pledged to her and apply the named. The purpose is to save
proceeds to the value of this expenses of litigation.
note.
b) Relicta verification: a
Negotiable. The performance of confession of judgment made after
an additional act the selling of plea is pleaded, accompanied by a
withdrawal of the plea.
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

Designates the kind of current

WAIVER OF BENEFITS money in which payment is to
be made
I promise to pay Pablo or order
P10,000.00 Notice of dishonor Mark issues a promissory note
waived. payable to the order of Pedro
payable in twenty-peso bills of the
(sgd) BSP. Is the note negotiable?
Mario
Yes. The valid and negotiable
Other benefits that may be character of an instrument are not
waived: affected by the fact that it
a. The right to presentment for designates a particular kind of
payment current money in which payment is
b. The right to protest to be made. (Sec. 6)
c. The time for payment maybe
extended without notice
Practical Exercises in
Gives option to the holder to Negotiable Instruments Law
require something to be done
in lieu of money State whether the following are
negotiable or not:
Pay Pedro or P10,000.00 or ten
(10) sacks of rice, at my I hereby authorize you to pay
option. P1,000.00 on my account, to
the order of Pedro Cruz.
(sgd)
Mario (sgd)
Jose Reyes
Not negotiable. If the option to To:Walter
perform an additional act belongs
to the maker, the instrument is not Answer: It is not negotiable
negotiable. The holder cannot because it is not an order to pay. It
demand the payment of money or is a mere authorization to pay. By
the delivery of the ten sacks of its terms, the bill gives a discretion
rice. to the drawee to pay or not to pay.

If the instrument is SILENT as to

whose option the performance of
an additional act, it is presumed
to belong to the maker.
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

I promise to pay B or order

Please let the bearer have P10,000.00 together with all
P10,000.00 and place to my sums that may be due him on
account and you will oblige. June 30, 2016.

(sgd) (sgd) A
Ernesto Cruz
Answer: Not negotiable. The
To: Mario Reyes sum is not certain. The amount of
P10,000.00 is not the only principal
Answer: It is not negotiable amount due. It includes all sums
because it does not contain an which may be due to B on June 30,
order to pay. It is nothing but a 2014. How much those sums are
mere request to pay. not stated and are unknown until
June 30, 2016.
Due X or order P10,000.00
I promise to pay X or order
(sgd) Y P10,000.00 on or before June
30.
Is this a negotiable promissory
note? (sgd) Y

Answer: No. It is nothing but a Answer: Not negotiable. The

mere acknowledgment of a time of payment is not
debt. It only evidences the determinable as the year is not
existence of a debt. stated. Neither is it payable on
demand as it is to be paid at a
I do acknowledge myself to be certain time, June 30. Hence, the
indebted to X order the sum of note is not negotiable.
P10,000.00 to be paid on
demand. Note: In case, the year is
(sgd) M determined. It will now be
negotiable.
Is this a negotiable promissory
note? Pay to B or his assigns
P10,000.00
Answer: YES. There are words
expressing the intention to pay or (sgd) A
from which may be implied such an
intention to pay. The words to be To: D
paid imply a promise to pay.
Answer: Negotiable. The
instrument is negotiable because it
is payable to order, although
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

instead of the word order, the account to be debited with the

word assigns is used. The reason amount.
is that the word assigns is
equivalent to the word order. I promise to pay B or order
P10,000.00 in payment for a
car I bought from him the other
Pay to B or order P10,000.00 day.
and reimburse yourself out of
my money in your hands. (sgd) A

(sgd) M Answer: Negotiable. The

statement of the transaction which
Answer: Negotiable. A promise gives rise to the instrument does
or order to pay is unconditional not destroy the unqualified promise
although couple with an indication of A to pay B. Instruments are not
of a particular fund out of which ordinarily issued without any
reimbursement is to be made or a transaction upon which they are
particular account to be debited based.
with the amount (Sec. 3) The
instrument, therefore, is negotiable I promise to pay B or order
because the order to pay is not P10,000.00 subject to the
rendered conditional. The fund is terms and stipulations
for reimbursement and not a fund contained in the Deed of Sale
for direct payment. executed by us.

(sgd) A

Answer: Not negotiable. The

Pay B or order P10,000.00 on promise is subject to the terms and
account of contract between conditions of the Deed of Sale. This
you and the Soriano will further necessitate the
Construction Co. examination of a separate
instrument- the Deed of Sale- for
(sgd) Y determining negotiability of the
note, thus violating the
Answer: Negotiable. The fundamental rule that the
instrument to be paid first and negotiability of an instrument must
afterwards, the particular account be determined only from the
indicated will be debited. Section 3 document itself and not elsewhere.
of the NIL provides that an
unqualified order or promise to pay
is unconditional though coupled
with a statement of a particular
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

I promise to pay Pedro or order Answer: Not negotiable. The

P10,000.00 pursuant to the payment of the installment is not
Contract of Sale dated June 1, known. It cannot be determined
2015. when to start paying and how
much is to be paid per installment.
(sgd) Maria

Answer: The words pursuant to (no date)

the Contract of Sale is merely a
statement of the transaction that I promise to pay Pablo or
gave rise to the obligation, and not bearer P10,000.00 30-days
an indication of the fund from after date.
which payment shall be taken.
(sgd)
MP will pay JR P10,000.00 in Mario
payment for his cellphone one
week from June 01, 2015. Answer: Negotiable. The
omission of the date will not affect
(sgd) MP the negotiability of the instrument.
The date is still certain. In the
Answer: Not negotiable. It is not absence of a date, the date of
negotiable as it is not payable to issue is deemed as the date of the
order or to bearer but to a instrument.
specified person, MP.
I promise to pay Pilar or order
I promise to pay Pedro or order P10,000.00 or deliver to him a
the sum of P10,000.00 TV set at my option.

(sgd) Juan (sgd)

Manny
Answer: Negotiable. All the
requirements of Section 1 of the Answer: Not negotiable. The
NIL are present. It is signed by option to pay money or the
Juan the maker; there is an performance of an act was given to
unconditional promise to pay; it is the debtor/promisor which
payable on demand, since no date destroys negotiability.
of maturity appears; and it is
payable to order.

I promise to pay Pablo or order

P10,000.00 in two equal
monthly installments.

(sgd) Manuel
NEGOTIABLE INSTRUMENTS LAW Professor Larry P. Ignacio

2) The note is not payable to

Pay to the order of Jose Rizal, bearer or order but to a
national hero, P10,000.00 specified person, Gabriela.

(sgd)
Romeo
To: Wally X executed a promissory note
in favor of Y or order agreeing
Answer: Negotiable. The to pay P10,000.00 plus
instrument is payable to bearer. It interests but without specifying
is payable to the order of a the rate. Is this negotiable?
fictitious payee. Can Y collect interest on the
note? Why or why not?
I promise to pay Pepe
P10,000.00 with interest at Answer: Negotiable. Y can collect
10% per annum. interest on the note at the legal
rate of 6% per annum.
(sgd)
Manuel R issued a check for P1.0
Million which he issued to pay S
Answer: Not negotiable. Not for killing his political enemy.
payable to order or bearer, but Can the check be considered a
rather, payable to specified person. negotiable instrument?

Answer: Negotiable. The check

I promise to pay Gabriela can be considered a negotiable
P10,000.00 three years after instrument. In ascertaining the
the unconditional demolition of character of the instrument the
China of the structures set up primordial and only consideration is
in Spratlys Island. its compliance with Sec. 1 of the
NIL. The presumption is that the
(sgd) instrument is negotiable and the
Mario illegality of consideration does not
hinder the negotiability thereof.
Answer: Not negotiable. The requisites of negotiability do
not delve into the validity of
1) The note is conditional consideration. Validity is an issue
because its enforceability is distinct and separate from the
subjected to the happening question of negotiability.
of a contingency; the
unconditional demolition of
the Chinese structures in
Spratlys Island; and