= ‘THE LAW ON NECOTIABLE INSTRUMENTS Sec.2 amount to be pai ly in money. The amount to be paid must be stated plainly on the face of the instrument and must be determinable from the face of the instrument itself without reference to any outside source. It meets the “sum i irement if the holder can determine from the Af the amount he is entitled to receive at ma- Accordingly, the following clauses do not express a sum certain: EXAMPLES: ‘To pay P1,000 or what may be due on my current pay P1,000 and also all other sums which may be iy P1,000 and the reasonable wage for six (6) days of work.” If the instrument calls for an act, other than the pay- ment of money, it is not negotiable because a negotiable instrument is intended as a substitute for money. (see Sec. 5) 2) Permissible clauses or stipulations, — The sum is not rendered uncertain by a clause in the instrument that itis to be paid with interest, by stated installments, with exchange, with costs of collection, or with attorney's fees. Neither is the'certainty of the sum affected by an accel- eration provision in an installment note. The basic test is whether the holder can determine by calculation or compu- tation the amount payable when the instrument is due. But a promissory note giving the maker the right to ascertain the amount rightly payable thereunder is non-negotiable. ‘Sum to be paid with interest. (1) Interest at fixed rate. — A provision for the payment of interest does not render the instrument non-negotiable because it does not make uncertain the sum payable, sec.2 [NEGOTIABLE INSTRUMENTS IN GENERAL 2 Form and Interpretation EXAMPLE: “1 promise to pay P* or order P10,000, with interest at 15% per annum.” ‘The entire sum is still certain because the principal sum of P10,000 is certain and the amount of interest due at any given time can easily be computed. In other words, the sum absolutely payable upon the instrument is specified as the principal of P10,000 and the interest of 15%, (2) Interest at increased or reduced rate. provision for increased interest rate if the not at maturity, or for a reduced rate if payment is made at or before maturity, or for payment of interest on interests, does not destroy negotiability. (3) Accrual/rate of interest not specified. — If the instru- ment provides for the payment of inter jout stating the date from which interest is to run, it shall be computed EXAMPLE: “I promise to pay P or order P10,000 with interest at 15% per annum, from date until paid; 12% if paid when due.” Here, the increase (3%) is really a penalty, not part of the note bears the same rate of interest 6, 12% ‘Sum payable by stated installments. The promise or order to pay “by stated installments” does not effect negotiability. Unless otherwise indicated, “P” refers to PAYEE,