Negotiable Instruments

Lecture Series

Lecture 1

You bought merchandise (lawful object) and gave a lawful promissory note

Mere Assignment

I promise to pay B ten thousand pesos

signed a (Use contracts)

B (assignor) to C (assignee)- pag lipat ay assignment

Can C singil from A. Can the assignee collect? -Yes

What if on due date ayaw magbayad ni A or walang pambayad. Makakasingil ba si C kay B?

What is warantee of assignor?

An assignor warrrants existence and legality of the credit.

Does he warranty solvency or collectivity- not in warranty unless stipulated

Does the credit exist-yes

Is the credit lawful- yes

Therefore no violation of warantee and therefore you do not collect from B

Negotiable Instrument

I promise to pay B or order ten thousand pesos

signed a (Negotiable)

Between the parties they know their obligations and rights to the contract because they are privy to
the contract.

B (Indorsor) to C (Indorsee)- negotiation Can holder collect?- Yes

What if on due date ayaw magbayad ni A or walang pambayad. Makakasingil ba si C kay B?

B- Indorser- hanggang di sinabi aling indorser siya, general yan.

5th warranty- upon due presentment, it will be accepted or paid or both and if not paid and the
necessary proceedings for dishonor are observed, I will pay. Since there is dishonor, masisingil.

In these cases you only occupy the shoes from your assignor

or shabu (unlawful object) and you gave a promissory note

I promise to pay B ten thousand

Signed A

Promissory note is void and non-negotiable.

Makakasingil ba si B kay A? The contract between them is void. B cannot go to court. They are in pari
delicto. Between them they know what transpired.

Next: Pinasa ni B kay C in good faith. In this case holder si C. Can C collect from A?

You only occupy the shoes of assignor. B however does not have shoes as he does not have the right
to collect from A. C does not also.

Can C collect from B?

C- My credit exist and is legal.

Credit does not exist as it is void. -thus B violate his warranty and as such is liable

Next

I promose to pay B or order then thousand

Signed A
Promissory note is void but negotiable

Makakasingil ba si B kay A? The contract between them is void. B cannot go to court. They are in pari
delicto. Between them they know what transpired. At this time law of negotiable instrument has not
kicked in.

C (holder). Thus holder in due course. Illegal consideration- only a personal defense. Hence C can
collect from A.

Here no problem if C wants to collect from B in case of dishonor because of last warranty.

How to know if negotiable -Section 1 of Negotiable instrument law

Requisistes

(1) It must be in writing and signed by the maker or drawer

-Kahit saan pwedeng isulat (writing) (bond paper, index card, even tissue paper)

-Pipirmahan ni Maker or Drawer

-Dapat ba ang ipang pipirma mo true name? Pwede ba ang assumed name? And if true
name need ba complete? What if abbreviated? What if mispelled?

-Bakit di ka gagamit ng name? For business or trade. E.g. Pokwang (assumed name),
Security reasons (e.g., authors, writers), yung iba symbol lang.- The important thing is that it
is signed.

(2) Must contain an unconditional promise or order to pay a sum certain in money

- The moment nilagyan mo ng condition, wala na yan

-E.g. You made two promissory notes.

I promise to pay B or order P100,000 if B will pass the Bar this November

Signed A

B passed

-Not negotiable. The fulfillment of the condition does not make it negotiable. From the
outset must be negotiable

-Can B collect?
 -Yes. Because the contract is valid despite non negotiable. The fulfillment of the
condition gives B the right to collect

I promose to pay B or order P100,000 if B will kill C

Signed A

B killed C

-Not negotiable. The fulfillment of the condition does not make it negotiable. From the
outset must be negotiable

Can B collect?

-No. At the outset, the contract is void. So B cannot collect

How to know if Condition?- (review negotiable instrument provisions

-Also have to be sum certain in money

Date

I promise to pay B or Order 100,000 Php on March 20 2018 with 10 percent interest per
annum signed A.

- Is the sum certain?- Yes. Can we determine the maturity value? Formula is Prt- where t
stands for the interest on the time, P stands for the amount of the original investment and r
is the interest rate. Ano yung time? 1 year. What if di pinakita yung umpisa?- Kailan umpisa,
we start the counting from the time the instrument was issued. What is no Start, has
interest- is it still negotiable- as per rule, if it not dated, make it payable on demand. If only
10 percent nakalagay lang assume per annum.

-What if payable on installment?

I promise to pay B or Order 100,000 in 4 monthly installments beginning April 20 2017 and
every month thereafter signed A.

- No.

I promise to pay B or Order 100,000 in 4 equal monthly installments beginning April 20

2017 and every month thereafter signed A.

-Still no. Because if it is payable on installment it must on stated installment (1 st one does
not)- because hindi mo alam kailan darating ang installment.
 I promise to pay B or Order 100,000 in 4 equal monthly installments beginning April 20
2017 and every month (april, may, june, july) thereafter signed A. - now negotiable

Clarificatory Question:

(1) Monthly stated installments

- I promise to pay B or Order 100,000 in 4 monthly installments beginning September 14, 2019
and consequently in October, November, December and January.

Signed A- Negotiable or needed pa yung exact date sa month?