Scribd
Upload
78 views19 pages

Lecture - 2 Law On Negotiable Instruments

The document outlines the requirements for an instrument to be considered negotiable under Philippine law. It states that to be negotiable, an instrument must: (1) be in writing and signed by the maker or drawer; (2) contain an unconditional promise or order to pay a sum certain in money; (3) be payable on demand, or at a fixed or determinable future time; (4) be payable to order or to bearer; and (5) where addressed to a drawee, the drawee must be named or indicated with reasonable certainty. It provides examples of valid promissory notes and bills of exchange that meet these requirements.

Uploaded by

Daryll Oraiz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
78 views19 pages

Lecture - 2 Law On Negotiable Instruments

The document outlines the requirements for an instrument to be considered negotiable under Philippine law. It states that to be negotiable, an instrument must: (1) be in writing and signed by the maker or drawer; (2) contain an unconditional promise or order to pay a sum certain in money; (3) be payable on demand, or at a fixed or determinable future time; (4) be payable to order or to bearer; and (5) where addressed to a drawee, the drawee must be named or indicated with reasonable certainty. It provides examples of valid promissory notes and bills of exchange that meet these requirements.

Uploaded by

Daryll Oraiz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 19

Section 1. Form of negotiable instruments.

- An instrument to be negotiable must


conform to the following requirements:
P
R
(a) It must be in writing and signed by the maker or drawer;
B
I O
M
L
L
I
S
(b) Must contain an unconditional promise or order to pay a sum certain in money;
S
O O
F R
Y (c) Must be payable on demand, or at a fixed or determinable future time;
E
N
X O
C T (d) Must be payable to order or to bearer; and
H E
A
N
G (e) Where the instrument is addressed to a drawee, he must be named or otherwise
E indicated therein with reasonable certainty.
EXAMPLES
BILL OF EXCHANGE
PROMISSORY NOTE
Sept 08, 2020
Sept 08, 2020

Pay to Thea Flores or order the sum of Ten


I promise to pay or order the sum of Thousand Pesos on or before December 31,
Ten Thousand Pesos on or before December 31, 2020.
2020.

Sgd. Liza Soberano


Sgd. Sharon Cuneta
To: Kathryn Bernardo
Sept 08, 2020
Sept 08, 2020

Thirty days after date, Pay to Thea Flores or


Thirty days after date, I promise to pay Thea
bearer the sum of Ten Thousan Pesos.
Flores or bearer the sum of Ten Thousand Pesos.

Sgd. Liza Soberano


Sgd. Sharon Cuneta
To: Kathryn Bernardo
Sum is certain even if it is to be paid with:

a. interest

b. in installments

c. in installments with acceleration clause

d. with exchange

e. costs of collection or attorney’s fees


from quiz #4:

“I promise to pay Adam or order the sum of P23,200 in three


installments which is to be paid accordingly: P10,000 on or before
September 5, 2020, P10,000 on or before September 10, 2020, and
P3,200 on or before September 15, 2020.” Signed, Eve.
Is this a negotiable instrument? Why or why not? (7.5pts)
valid. Sec 2 -Sum is certain even in installments (NOTE: what is
important is there is maturity date for each installment).

“I promise to pay Adam or order the sum of P23,200 in three installments in


which the first installment is to be paid on or before Sept 10, 2020. Is this a negotiable
instrument? Why or why not?
General Rule: The promise or order should not depend on a contingent event. If it is
conditional, it is non-negotiable.

Exceptions:
a. indication of particular fund from which the acceptor reimburses himself after
payment
b. statement of the transaction which gives rise to the instrument.

But an order or promise to pay out of a particular fund is not unconditional.


Instrument is payable upon a determinable future time if:
: “Sight” means presentment /
a. there is a fixed period after sight/date issuance. Relate to Sec13 - insertion of
the date.

b. on or before a specified date/fixed determinable future time

c. on or at a fixed date after the occurrence of an event certain to happen though the
exact date is not certain
I promise to pay Viy or order the sum of P17,500 upon her reaching the age of majority
(18 years old). Signed Cong.
Non-negotiable. Payable upon contingency (possible death before 18). Sec4 determinable
future time. Sec4c - Event not certain to happen.

In 2020, Elsa made a promissory note stating “I promise to pay Ana or bearer the sum of
Php 85,000 if Ana shall pass the 2021 CPA board exams.” Signed, Elsa. Later, Ana indeed
passed the 2021 CPA board exams.
 Is this negotiable? Why or why not? (7.5pts)
not valid. The instrument is not an unconditional promise or order to pay a sum certain in
money since payment depends upon the happening of an event [Sec. 1 (b) NIL]. sec 4(last) -
happening of the event does not cure the defect.
General Rule: If some other act is required other than the payment of money, it is non-
negotiable.

Exceptions:

a. sale of collateral securities

b. confession of judgment

c. waives benefit of law

d. gives option to the holder to require something to be done in lieu of money


I promise to pay Jun or order P65,000 or if he wants a brand new
Louis Vuitton bag. Signed Vien.
Negotiable. Sec 5d - election on the part of the holder is valid (note:
election on the part of the maker is NOT valid).
The validity and negotiability of an instrument is not affected by the fact that:

1. it is not dated

2. does not specify the value given or that any had been given

3. does not specify the place where it is drawn or payable

4. bears a seal

5. designates the kind of current money in which payment is to be made


from Quiz #3
Q: Indicate whether it is a VALID or NOT VALID bill of exchange or promissory note to be qualified as a
negotiable instrument if:
1.It is not dated;
VALID. Date is not a material particular required by Sec. 1, NIL, for the negotiability of an instrument. - sec 6
- date may be inserted

2.The date written is February 31, 2021;


A: VALID. Date is not one of the requirements for negotiability therefore it is not essential except when the date
is necessary to determine when the note is due. sec 6, Sec. 1.
The date must be the nearest date.

3.The day and month, but not the year of its maturity, is given;
A: NOT VALID. The time for payment is not determinable in this case. The year is not stated sec 1, sec 4.
Instrument is payable upon demand if:

a. it is expressed to be so payable on sight or upon presentation


“ P a y t o M a r i a Ta n o r o r d e r
P10,000.”
b. no period of payment is stipulated
Sgd. Mario Ten
c. issued, accepted, or endorsed after maturity

Where an instrument is issued, accepted or indorsed when overdue, it is, as regards to the person so issuing,
accepting, or indorsing it, payable on demand.
Instrument is payable to order:
– where it is drawn payable to the order of a specified person or
– to a specified person or his order It may be drawn payable to the order of:
a payee who is not a maker, drawer, or drawee
the drawer or maker
the drawee
two or more payees jointly
one or some of several payees
the holder of an office for the time being
Questions:

Sept 08, 2020


Sept 08, 2020

I promise to pay to the order of myself


Pay to the order of myself P10,000.
P10,000.
Sgd. Eugene
Sgd. Eugene

To: Ned

Sept 08, 2020

Pay to the order of yourself, P10,000.

Sgd. Eugene

To: Ned
Instrument is payable to bearer :
a. when it is expressed to be so payable
b. when payable to the person named or bearer
c. payable to order of fictitious or non-existent person and this fact was known to drawer
d. name of payee not name of any person
e. only and last indorsement is an indorsement in blank (Sec. 9 NIL)
Q: Indicate whether it is a VALID or NOT VALID bill of exchange or promissory note to be
qualified as a negotiable instrument if:
4.It is payable to “cash”.
A: VALID. Sec. 9(d), NIL, makes the instrument payable to bearer because the name of the
payee does not purport to be the name of any person.

Pay to the order of Mickey Mouse the sum of P10,000 on or before Dec 31,
2020.
Sgd. Thea Flores

To: Maria Cruz


from quiz #4:

: Is ante-dating or post-dating a negotiable instrument allowed? Why or why


not? (5pts)
valid so long not for fraudulent/illegal purposes (sec 12)
Any Questions?

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy