FORMS OF NEGOTIABLE INSTRUMENTS

Sec. 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.

Promissory Note Bill of Exchange

1) it must be in 1) it must be in writing and signed by the
writing and drawer
signed by the 2) it must contain an unconditional order to pay
maker a sum certain in money
2) it must contain 3) it must be payable on demand, or at a fixed
an or determinable future time
unconditional 4) it must be payable to order or bearer
promise to pay a 5) the drawee must be named or otherwise
sum certain in indicated with reasonable certainty
money
3) it must be Agbayani: The name of the person on whom a
payable on bill is drawn should appear on its face.
demand, or at a Otherwise the instrument would not be
fixed or negotiable. But under Section 14, the drawee’s
determinable name may be omitted and be filled in under
future time implied authority like any other blank. And, an
4) it must be acceptance may supply the omission of a
payable to order designation.
or to bearer
Sebastain: If the instrument is addressed to a
drawee, he must be named or otherwise
indicated with reasonable certaintly. This
suggests that there are two types of negotiable
instruments. This requirement is only applied in
bills of exchange where there is a drawee.

The authority to pay is different from a direct

instruction to pay. Therefore, “I authorize
(drawee) to pay…” is a nonnegotiable
instrument.

Agbayani: The formalities required are essential for the security of mercantile transactions. They distinguish the
negotiable instrument from the ordinary nontransferrable written contract.

The negotiability of an instrument is to be determined: (1) by Section 1; (2) by considering the whole of the instrument;
and (3) by what appears on the face of the instrument and not elsewhere. In other words, to determine whether an
instrument is negotiable or not, only the instrument itself, and no other, must be examined and compared with the
requirements of Section 1. If it appears on the instrument that it lacks one of the requirements, it is not negotiable. The
requirement lacking cannot be supplied by using a separate instrument in which that requirement which is lacking
appears.