EH 401 TRANSCRIPTS | AMAGO | 2019-2020
August 16, 2019
Q: What’s the applicable law on negotiable instruments?
A: Act 2031, The Negotiable Instruments Law, enacted
on February 3, 1911 and effective 90 days after the
publication in the Official Gazette which is June 2, 1911.
It celebrated its centennial last 2011.
Q: Where was the law based?
A: It is based on the US Uniform Negotiable Instruments
Law of 1896. Such law was based on the English Bill of
Exchange Act of 1882.
Q: Why is it important to know where it is based?
A: Interpretations of the law in the US can be applied in
the PH.
Q: Is NIL only applicable to Negotiable Instruments?
A: Act 2031 will only be applicable if it's negotiable
instruments although there were instances that the
Supreme Court applied the provisions of the NIL to non-
negotiable instruments as in the case of Section 14
being applied to an instance of an instrument which has
blank spaces that needed to be filled up. Section 14 of
the NIL was applied in order to discuss the authority or
the right of the party in relation to filling in blanks in a
document. The US Supreme Court also had the
opportunity to apply by analogy the provision on checks
to an instance of an electronic fund transfer but
primarily Act 2031 will only be applicable to negotiable
instruments.
Q: How should it be decided if it is not covered by the
provision of the NIL?
A: Resort to existing legislation such as the NCC. There
are other existing legislation. Originally, the negotiable
instruments are governed by the provisions of the Code
of Commerce specifically articles 149-566, thereof. But
now it has been impliedly repealed by the provisions of
the NIL. Nonetheless, the provisions pertaining to cross
checks continue to be existing and still governed by the
Code of Commerce.
Q: What if there is no existing legislation?
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A: Section 196 of theNIL actually provided that resort
may be had to the law merchant or lex mercatoria which
is a collection of the practices of merchants since time
immemorial in relation to the use of commercial paper.
Since there is no specific provision in any law that can
be resorted to for purposes of determining the rights
and obligations of the parties, you can just look into
traditions or practices in the commercial law. For
example, there is no specific provision in relation to the
obligation of the drawee in case there is forgery in the
signature of an indorser in an instrument. A drawee
bank is supposedly only privy to the signature of its
client. Someone issues a check, when you issue a check
it is because you have a bank account in a particular
bank. You order that bank to pay whoever is the address
of the check. The drawee is your bank. If that check is
indorsed to another person, although this is not
anymore practiced now because there is only one
indorsement allowed for a check, it is now in the hands
of the third party and lost the check, it is now found by
someone else who forged the signature of the indorsee
and had it encashed by the bank. Can the drawer of the
check be allowed to get the money back from the bank
which was paid erroneously. There is no specific
provision in the NIL governing that and no specific
provision in any existing legislation. The Supreme Court
in discussing this matter resorts to practices where it is
common that since the bank is not privy to the signature
of the indorser, it is not expected to bear the loss. The
bank should not be required to return the money to the
drawer because it is not negligent and has not breached
its warranty in relation to handling the account of the
client. It is only privy to the signature of its client.
Q: What could be the function of a negotiable
instrument?
A: The functions are:
● Substitute for money - A negotiable
instrument is assigned a certain value in the
same way that cash or money in itself is a
storage for value. A negotiable instrument is
also a storage for value depending on what you
place there as value. Afterall, money is just a
piece of paper, the same with negotiable
instruments. The difference though is that it is
only a substitute for money and not money itself
because a negotiable instrument is not legal
EH 401 TRANSCRIPTS | AMAGO | 2019-2020
tender. It reduces the risk involved in cash
dealings and this the reason why negotiable
instruments came about because of the
experiences of merchants back then where they
have to deal with money across distances and
they may be robbed along the way. It is
convenient and safer.
● Medium of exchange - you can hand in the
negotiable instruments in exchange for goods or
services because it is a substitute for money
after all. It stores value.
● Medium of credit transaction - the
value/worth of a negotiable instrument is
actually dependent on the
reputation/credence/credibility of the person
who issued it. When it is circulated in the
market, it is actually a circulation of the credit
of the person who issued the instrument. After
all, it is not cash. It is based on the promise of
the person or representation of that obligation
to pay. You are actually engaged in a credit
transaction.
● Means of immediate payment - negotiable
instrument is a substitute for money, if
someone actually allows it to be a payment for
goods/services, in a way it actually allows
immediate payment. Although, a negotiable
instrument in a legal sense does not amount to
payment. It will only amount to payment once
it is encashed or impaired due to the fault of the
holder of the instrument. Negotiable instrument
allows transactions to be perfected when the
other party allows it to be a form of payment.
● Evidence of transaction - When you receive a
negotiable instrument from someone else, that
represents that value must have been given in
exchange. There must have been a transaction
between you and that person. Another example
is when you receive the check that you’ve issued
previously, that connotes that you’ve actually
made payment in relation to the check. You get
the check back because if not, someone may go
to you and demand payment again. It is
common practice that when you make payment
The Chill Group
on a check, you get the check back. That is proof
of a transaction that has been paid.
2 main characteristics of negotiable instruments:
● Negotiability - the instrument can be
transferred from one to another constituting the
person who received it as a holder. If it happens
that he is a holder in due course, then he is free
from the personal defenses of prior parties. This
means that you can have better rights than the
parties before you who may have transacted
with that negotiable instrument. You don’t get a
derivative title but a clean title. This is the
difference between negotiation and
assignment/transfer. If there’s negotiation, you
acquired not only the rights of the person before
you but you have better rights as if it’s the first
time that that instrument was issued to you,
free from defects of title of previous title.
Whereas if it’s an assignment or transfer of
nonnegotiable instrument, you only acquired
the rights of the transferor. You have a
derivative title based on the title of the person
from whom you had the assignment.
For example, I have a negotiable instrument
and placed it on a table. Someone stole it and
negotiated to a third person who is not aware of
the theft. He encashed it. Will I be obligated to
pay that person? Yes. Because that person is a
holder in due course and whatever may be the
defect on the title of the person from whom he
received the instrument cannot be used against
him. Had it just been an assignment of rights
and not negotiation, I would have been allowed
to interpose defenses available against the
person who transferred the instrument.
● Accumulation of secondary contracts - as
the instrument is negotiated from one person to
another, it also accumulates separate contracts
for each of the person who becomes parties to
the instrument. As the instrument moves along,
it also creates along with it additional contracts
so that each party has separate rights and
obligations in relation to that instrument. It
being a separate contract, persons who become
parties to the instrument are obligated
separately. Just because you let go of the
 EH 401 TRANSCRIPTS | AMAGO | 2019-2020
instrument already doesn’t mean that you will
not have any obligation related to it. The
instrument once passed through your hands
already creates an obligation on your part. You
can demand payment from series of person.
Common forms of negotiable instruments:
● Promissory Note (PN) - Section 184. It is an
unconditional promise in writing made by one
person to another, signed by the maker,
engaging to pay on demand, or at a fixed or
determinable future time, a sum certain in
money to order or to bearer. It is actually the
provision of Section 1a-1d. Ex. bank notes,
bonds
● Bill of Exchange (BoE) - Section 126. A bill of
exchange is an unconditional order in writing
addressed by one person to another, signed by
the person giving it, requiring the person to
whom it is addressed to pay on demand or at a
fixed or determinable future time a sum certain
in money to order or to bearer. Based on
Section 1a-1e. Ex. banker’s acceptances, draft,
bank draft, trade acceptance.
● Check - special type of bill of exchange drawn
on a bank payable on demand. Always drawn on
a bank and always payable on demand. Ex.
manager’s check, cashier's checks, cross-check,
memorandum checks
Incidences in the life of a negotiable instrument:
Common to both PN and BoE:
● Preparation and signing
● Issuance - first time the instrument is
delivered to the payee
● Negotiation
- Mere delivery
- Indorsement + delivery
PN:
● Presentation for payment
- If paid, parties are discharged
- If not paid, dishonored by
nonpayment - notice is required
to go after people who are
secondarily liable within 24
hours, otherwise, they will be
discharged from their liability
The Chill Group
BoE:
● Presentation for acceptance by the
drawee
- Accepted, drawee-acceptor
becomes the person primarily
liable
- If not accepted, dishonored by
non-acceptance - notice is still
required to go after people who
are secondarily liable within 24
hours, otherwise, they will be
discharged from their liability
● Presentation for payment
- If paid, parties are discharged
- If not paid, dishonored by
nonpayment - notice is required
to go after people who are
secondarily liable within 24
hours, otherwise, they will be
discharged from their liability
Q: When is an instrument negotiable?
A: For an instrument to be negotiable, it is for
commercial transactions and it conforms with the
requirements of Section 1.
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.
August 17, 2019
Q: Why do we have to put emphasis on the compliance
on the form? Why do we have to impose such a form?
A: There is so much emphasis on the form of a
negotiable instrument as a security of the commercial
 EH 401 TRANSCRIPTS | AMAGO | 2019-2020
transaction. If you allow an instrument to be just like
any other form of instrument, then how can there be
reliance as a substitute for money. The law has to be
strict in determining what is a negotiable instrument so
that people can rely on it and is ensured that they are
only dealing with negotiable instruments. One is not left
to determine that it may or may not be a negotiable
instrument because if that is allowed then there is a
possibility that people may just gamble on dealing with
that particular instrument in the hope that it will be
considered a negotiable instrument.
Q: Can there be a negotiable instrument based on
estoppel?
A: In a case decided by the Supreme Court, Banco de
Oro vs. Equitable PCI Bank where it wo was
mentioned that the parties are estopped from raising
the defense of non-negotiability of the instrument. In a
way it is said that there is a negotiable instrument by
estoppel. But a lot of authors and even myself find it
unsound because then people can just play around with
any paper and consider it as a negotiable instrument
and you will be estopped from claiming otherwise
because you already dealt with the instrument. The
sound principle is that there cannot be any instrument
which is not compliant with Section 1 of the NIL.
Q: What makes an instrument negotiable?
A: Section 1 of the NIL.
Q: It says it must be in writing, what does that mean?
A: Section 191. "Written" includes printed, and "writing"
includes print.
Q: Is there any form of writing that is required?
A: No.
Q: When it says that it has to be in writing, where will
you write it?
A: There has been no distinction as to the law. It can be
written anywhere as long as the material can be
transferred from one to another.
Q: If I write it on a grain of rice? What if you use an
invisible ink? What if you put it on a big rock? Does it
comply with the requirement?
A: Yes. As long as the material can be transferred from
one hand to another, it will comply with the requirement
The Chill Group
that it is in writing. As long as it can be perceived and
physically transferred.
Q: What if it is done through email?
A: It does not comply with Section 1 because the law
did not actually contemplate that much. What it was
actually contemplating was that the instrument itself
can actually be transferred by manual tradition,
something has to be delivered for it to be considered as
a negotiable instrument. In a US case, the courts had
the opportunity to discuss an instruction made by the
bank for the debiting of an account to pay someone and
the Supreme Court of the US said that it is not a
negotiable instrument because it is not in writing.
Nothing is actually printed, it is just in an electronic form
and not in physical form.
Q: The other requirement is that it has to be signed by
the maker or drawer. The maker is a party to a PN
whereas a drawer is a party to BoE. When it says:
I promise to pay X or order P10,000.
Sgd.
Does this comply with the requirement of Section 1, at
least in relation to it being signed?
What is the requirement when it says it has to be signed
by the maker or drawer?
A: Yes, it complies. The US Uniform NIL actually defines
what a signature is. It says that it is any form or
indicator representing a substitute for the name of the
person with the intention to authenticate the writing on
an instrument. That means that when you place any
sign/symbol/indicator on the instrument with the
intention of authenticating/confirming what is written,
that already amounts to a signature. As long as the
intention is to be bound by such a symbol creating
obligations then it complies with the requirement that it
is signed by the maker or drawer. There is no particular
form required. The law is permissive in whatever form
you may want to use. It may not affect the negotiability
of the instrument but it may affect the acceptability of
the instrument, the same with the material used in
writing the instrument. But if you want it to be
convenient, you adhere to what is traditional signature
- in cursive.
 EH 401 TRANSCRIPTS | AMAGO | 2019-2020
Q: The next requirement is that it must contain an
unconditional promise to pay or order a sum certain in
money. What is a condition?
A: A condition is any future and uncertain event or a
past unknown event both could give rise to an obligation
or extinguish an obligation.
Q: What is a suspensive and resolutory condition?
A: A condition can be a past or a future event. If it is a
future event, it must be uncertain to happen and if it is
a past event, it must be unknown to the parties. If those
events will give rise to an obligation, it is a suspensive
condition. If it will extinguish an obligation, it is a
resolutory condition. Either way, it cannot be attached
to a promise or an order.
Q: If a provision of the instrument says:
I promise to pay X or order P10,000 from my
monthly salary.
Sgd. Y
Does this comply with the requirement?
A: No. This is conditional and does not comply with
Section 3b, last sentence, of the NIL which provides that
an order or promise to pay out of a particular fund is not
unconditional. The payment of Y to X is dependent on
the existence and sufficiency of the monthly salary. The
instrument is therefore, non-negotiable.
Q: If instead it says:
To Z:
Pay X or bearer P10,000 and debit my
account from you.
Sgd. Y
Will your answer change?
A: Yes. Section 3a provides that if it is only an indication
of a particular fund out of which reimbursement is to be
made or a particular account to be debited with the
amount, it is unconditional. The payment of Y to X is not
based on particular fund. What is based on the account
of Y is only the reimbursement. What is conditioned on
The Chill Group
the existence/sufficiency of the account is not the
promise to pay or order a sum certain in money but just
the reimbursement of Z from the account of Y. This is
not a condition and therefore, the instrument is
negotiable.
Q: If it says:
I promise to pay X or order P10,000
pursuant to our contract of lease.
Sgd. Y
Is it negotiable or not?
A: It is negotiable based on Section 3b which provides
that a statement of the transaction which gives rise to
the instrument will not render the promise or order
conditional. It you just state the reason for the
instrument, it will not affect the negotiability of the
instrument. The reason why there is a promise to pay is
because of the contract of lease.
Q: If it says:
To Z:
Pay X or bearer P10,000 subject to our
contract of lease.
Sgd. Y
Is it negotiable or not?
A: No. It is already subject to the terms of the contract
of lease. That requires you to not just limit yourself to
what is stated in the instrument but as well as to what
is stated in the contract of lease. They may be
conditions or terms in the contract which will not allow
the payment of P10,000. There is now a condition. The
negotiability of the instrument is supposed to be
inferred only or determined on what is stated in the face
of the instrument. If it requires you to look into other
document, then it will render the instrument non-
negotiable.
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August 23, 2019
EXAMPLE 1 :
I promise to pay to pay X P10,000.
Sgd.Z
Q : Is this negotiable or not?
A: It’s not negotiable because the one in the example is
paid to a specified person; there is no word of
negotiability.
EXAMPLE 2 :
I promise to pay X or to bearer P10,000
plus interest.
Sgd. Z
In this example, the instrument does not indicate when
the instrument is payable. The law assumes then the
instrument is payable upon demand and is therefore, a
negotiable instrument.
In order to ascertain the amount to be paid, we
use the formula in getting the interest which is Principal
Amount x Legal Rate (6%) x Time Element (Reckoned
from the date of issuance until the date of demand)
Q : Given the facts and the date of issuance is
today (August 23,2019) and the date of demand
is 7 days from now ( note : the given example was
that the date of demand was a week after issuance),
how do you compute the interest?
A : That’s P10,000 x 6% x 7/365 days or 360 days if we
follow the BIR number of days. Thus, another reason
why it is considered a negotiable instrument is because
one can still compute how much the sum is. It need not
be exactly P10,000, nonetheless, it is a common
commercial knowledge on how to compute interest
because there is no need for you to resort to extrinsic
resource.
EXAMPLE 3 :
I promise to pay X or order, P10,000 in five
installments as follows:
The Chill Group
● 2,000 payable on August 1,2019
● 2,000 payable on September 1, 2019
xxx
Sgd. Z
It’s necessary to put a currency for it to be a sum
certain in money. For all we know, it can refer to
carabaos. This is what you call an instrument payable
by stated installment.
Q : For it to be called an instrument payable by
stated installment, what has to be present?
A : Two things must be present, otherwise, it would just
be called installment – not stated installment –
1. Sum that has to be due per installment; and
2. The date on when such installment will be due.
EXAMPLE 4:
To : Z
$10,000
Payable to the order of B with the current
exchange rate.
Sgd. KC
Q : Is this a negotiable instrument?
A: This example could be understood depending on the
circumstance. As it is, this should be considered is non-
negotiable because you wouldn’t know what currency
this is referring to. Even if this is presented here in the
Philippines, one does not assume that one can only use
Philippine currency as the basis of the exchange rate
because the Philippines has already abrogated the law
pertaining use of PH currency as the only currency for
transaction.
Although, one can still argue that it must be the
intention why it was placed there based on the current
exchange rate because there is an expectation that the
given example will be paid in the Philippines. It initially
refer to US dollars because perhaps it was issued in the
US but intended to be paid in the Philippines although
not stated so one cannot ascertain that fact.
BUT because it did not state what the currency
is, then one cannot determine what exchange rate to
 EH 401 TRANSCRIPTS | AMAGO | 2019-2020

use and there is really sense in saying that this could

also refer to carabaos because it did not mention that it
has to be currency. Although that is going beyond what
is contemplated by the law but because there is that
possibility, there is that uncertainty, then it makes the
sum uncertain.

The Chill Group

 EH 401 TRANSCRIPTS | AMAGO | 2019-2020
August 23, 2019 - Second Half
Section 2(e). Cost of collection:
Example: “I promise to pay X or order P10000 plus cost
of collection upon default.”
Student (S): Negotiable because the term upon default
means it is mature. Moreover, the provision on
attorney’s fees under Section 2 does not affect
negotiability.
Atty. Amago (ABA): The certainty of the sum is not
affected by the fact that the cost of collection is
uncertain, because the certainty of the sum is to be
reckoned only until the maturity date of the instrument.
So, when it says plus the cost of collection upon default,
it is payable upon demand. Here, there is only default
when there is demand. Moreover, this instrument will
only require payment of the cost of collection after its
maturity date because it presupposes that there should
be demand before there could be default.
When is it payable on demand?
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;
(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.
Section 7(a). Expressed to be payable on demand:
Example: “To Z. P10000 Pay to the order of B P10000
upon demand. Signed J.”
ABA: This is an example of an instrument which is
payable on demand because it says so in the
instrument.
Section 7(a). At sight:
Example: “To Z. P10000 Pay to the order of B P10000
at sight. Signed J.”
The Chill Group
Negotiable. This only applies to BOE. The instrument is
payable as soon as it is seen by the party primarily liable
(drawee).
Here, the term “at sight” is only applicable to BOE
because “at sight” means it is to be seen for
presentment of acceptance. PNs do not need to be
presented for acceptable.
Section 7(a). On presentation:
When the NI is presented to the drawee or maker for
payment. Both PN and BOE. Only applies when there is
no time for payment is expressed.
Section 7(b). No time for payment is expressed:
Example: “I promise to pay X or order P10000.”
ABA: An instrument is not rendered non-negotiable by
the fact that there is no date stated on when it is
payable. Instead, it is presumed to be payable on
demand.
Sec. 4. Determinable future time; what constitutes. –
An instrument is payable at a determinable future time,
within the meaning of this Act, which expressed to be
payable:
(a) at a fixed period after date or sight
(b) on or before a fixed or determinable future time
specified therein;
(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.
Section 4(c). On or at a fixed period after the
occurrence of a specified event which is certain to
happen but the time of the happening of which is
uncertain:
The NI reads, “I promise to pay A or bearer P10,000, 15
days after his father’s death” Herein, it is determinable
since the event of his father’s death is certain to happen.
What is wrong when it is before the death?
 EH 401 TRANSCRIPTS | AMAGO | 2019-2020

Not negotiable. contingency because we do not know if there is going to

be a wedding or not.
First, because it renders the instrument always overdue.
By the time of his death, the period to pay has already Section 4(b). Payable at a fixed or determinable
lapsed. future time.

Second, the law (Section 4(c)) expressly states that it [Caveat: ABA’s questions here were vacillating. It is not
should be after the occurrence of a specified event clear whether the examples below are payable on or
certain to happen, and not before. before a fixed or determinable future time]

What are other examples other than death? Give an example of an instrument which is
payable on or before a fixed future time:
[rampage ensues as the class gives examples which
were in the end, all incorrect] Example:

ABA: An example of which would be “I promise to pay “I promise to pay to X or order on or before Christmas
P10000 to X or order on the next full moon.” Day of 2020.”

It does not apply to anything involving human What makes it determinable?

intervention such as: pregnancies, religious holidays or
examinations.
It must be a natural phenomenon. Examples would
be like when the sun rises in the east, or on the next full
moon.
What if the NI reads, “I promise to pay A or bearer
P10,000, 5 days after his death from malaria.”?
ABA: It is determinable because it presents an option as
to the date as long as it is on or before Christmas Day
of 2020. Here, it is determinable, but on a fixed period,
not an event.
[Here, the example was supposedly “fixed,” but his
succeeding question was on the instrument being
“determinable.” Clarification is needed].

Not negotiable. The death is predicated that it be caused

by malaria which qualifies as a condition not certain to
happen.

Section 4(a). At a fixed period after date or sight

What if the NI reads, “I promise to pay X or order

P10,000, 10 days after date.”

Negotiable. Date here means the date of the

instrument. When there is no date indicated, it pertains
to the date when the instrument was issued.

How about if it indicates, “at the wedding date?”

It can be the wedding date if the date of issuance is

indeed the wedding date. Supposing in the face of the
instrument, the date bears a description that it is the
wedding date. But otherwise, it shall be considered a

The Chill Group

 EH 401 TRANSCRIPTS | AMAGO | 2019-2020

August 24, 2019 - First Half Where the instrument is payable to order, the payee
must be named or otherwise indicated therein with
WWW: Jeah Alicante (congratulations) reasonable certainty.

Section 4(b). Payable on or before at a fixed or Example: “I promise to pay 10000 to P or his order.
determinable future time: Signed A.”

Example: I promise to pay X or bearer on or before Good Negotiable, specifically payable to a specified person or
Friday of 2020. order.

Generally, not negotiable. This is not an example of a

future determinable time because it is premised on
religion which is subject to human intervention and
abolishment. Good Friday may or may not be
celebrated; thus making it non-negotiable.

Section 4(b). Payable on or before at a

determinable future time:

[ABA emphasised that when asked an example for an

instrument payable on or before a future determinable
time, DO NOT NAME A CERTAIN EVENT, instead
name a future time which needs to be determined.]

Example: I promise to pay X or bearer P10000 on or

before 60 days after August 30, 2019.

Here in this case there is still a need to determine the

time which is 60 days after August 30, 2019 which
makes it payable on or before a future determinable
time.

Section 8. Payable to order:

When is an instrument payable to order? (Section 8)

Section 8. When payable to order—The instrument is

payable to order where it is drawn payable to the order
of a specified person or to him or to his order. It may be
drawn payable to the order of:
(a) Payee who is not the maker, drawer or
drawee
(b) Drawer or maker
(c) Drawee
(d) 2 or more payees jointly
(e) One or some of several payees
(f) Holder of an office for the time being

The Chill Group

 EH 401 TRANSCRIPTS | AMAGO | 2019-2020
August 24, 2019 - Second Half
Q : When is it payable to bearer?
A : Sec.9 When payable to bearer – The instrument is
payable to bearer –
a. When it is expressed to be so payable; or
b. When it is payable to a person named therein or
bearer; or
c. When it is payable to the order of a fictitious or
non-existing person, and such fact was known to the
person making it so payable ; or
d. When the name of the payee does not purport
to be the name of any person; or
e. When the only or last indorsement is an
indorsement in blank.
Q: Give an example of the first type of bearer
instrument.
A : I promise to pay P10,000 to bearer Sgd. B
Q : What if I say, I promise to pay P10,000 to holder,
Sgd. B , will it still apply?
A: Yes, because holder is synonymous to bearer. It can
even be named as a possessor. BOTTOMLINE (wew) is
you can use words of similar import; it need not be the
word bearer.
Q: Which on its face is payable to bearer?
A : The first two enumerated items ( payable to bearer
or to a specified person or bearer) are payable to bearer
on its face. The third one seemed like payable to order
on its face but the law deemed it to be payable to
bearer.
Q: What if its “ I promise to pay to bearer or E, P10,000,
Sgd B?”
A : This instrument is still a negotiable instrument
which is payable to bearer and falls under the second
enumerated item (payable to a specified person or to
bearer). You can interchange the bearer with the name
of a specified person.
Q : Can the same be true with an order instrument
where it says it is payable to a specified person or his
order? Supposing you change it to “his order or a
specified person”, how would you understand “his”
there?
A : No, because after all you can just say, ”to the order
of a specified person.” But in the case of a bearer
The Chill Group
instrument, it doesn’t matter if the bearer comes before
the specified person because after all, the specified
person doesn’t need to name the bearer.
Q: If it states instead, “I promise to pay to bearer, E,
P10,000, Sgd. B”? Is it a non-negotiable instrument,
bearer instrument, or order instrument?
A : Let’s take note that the purpose of a negotiable
instrument is for it to be passed on from one person to
another. In the above example, the one who can
demand payment here is only E and not to whom he
passes it on. The term bearer is merely descriptive of E,
thus non-negotiable.
Q : Supposing the instrument says, “pay to the order of
Nelson Mandela P10,000”, is it payable to bearer or
order instrument, or not negotiable instrument?
A:
Q: Supposing this was issued prior to the death of
Nelson Mandela?
A:
Q : But if later on, before the instrument matures,
Nelson Mandela dies?
A:
MEMAI :I’m not sure what the answers are because it
was not clear but I believe that what Atty. Amago was
trying to point out was that
“the person to whose order the instrument is made
payable may is in fact be existing but still is fictitious or
non-existent under paragraph © of Section 9 of the NIL
if the person making it so payable does not intent to pay
the specified person ( Aquino,2018)."
Q : Supposed the instrument says, pay to the order of
Superman and the party who made it really think that
Superman is alive? Is it a non-negotiable, bearer, or
order instrument?
A : It would be non-negotiable because it will not
comply with the requirement that such fact was known
to the person who drafted the instrument.