PART I

PRELIMINARIES

1. Memorize section 1 of the negotiable instruments law

Section 1. Form of negotiable instrument. - 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 bearer; and

(e) Where the instrument is addressed to a drawee, he must be named or otherwise

indicated therein with reasonable certainty.

2. Define a negotiable instrument according to the Supreme Court of the Philippines.

3. What is/are the function/s of negotiable instrument/s?

4. What are the common forms of negotiable instruments?

5. What is the important characteristic or feature of negotiable instrument?

6. Define a negotiable promissory note.

7. Define a negotiable bill exchange.

8. Define a negotiable check?

LESSON 2 – REQUISITES OF NEGOTIABILITY

9. What are the essential requisites of a negotiable instrument?

10. What are the essential requisites of a negotiable promissory note?

The requisites of a negotiable promissory note are:

a) It must be I writing and signed by the maker;

b) Must contain an unconditional promise 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 bearer;

11. What are the essential requisites of a negotiable bill of exchange?

The requisites of a negotiable bill of exchange are:

a) It must be in writing and signed by the drawer;

b) Must contain an unconditional 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;

e) Where the instrument is addressed to a drawee, he must be named or otherwise

indicated therein with reasonable certainty.

12. What are the essential requisites of a negotiable check?

The requisites of a negotiable check are:

a) It must be in writing and signed by the drawer;

b) Must contain an unconditional order to pay;

c) Must be payable on demand;

d) Must be payable to order or bearer;

e) Where the instrument is addressed to a bank, it must be named or otherwise

indicated therein with reasonable certainty.

LESSON 3– WRITING

13. What constitutes in writing?

14. What is doctrine of substantial compliance?

15. For an instrument to be negotiable must if follow literally the language of the Negotiable
Instrument Law?
 16. What is the difference between written and printed?

LESSON 4 – SIGNATURE

17. What are the rules regarding signature?

18. What is general rule as to the liability of a person whose signature does not appear on the
instrument?

19. What are the exceptions to this general rule?

20. What are requisites must be followed so that the agent in so signing his principal will not be
personal liable?

21. Suppose an agent sign as follows:

(Sgd.) Juan de la Cruz

Agent of Pedro Reyes:

Under such signature who shall liable?

22. What is meant by “disclosure of the principal”?

23. Must disclosure of the principal be made always on signature?

24. What is signature per procuration?

25. How is signature per procuration made?

26. What is the effect of signature per procuration?

27. Define forgery.

28. In how many ways may forgery of signature be done?

29. What are the other forms of forgery?

30. Explain fraud in factum?

31. How is duress amounting to forgery done?

32. Supposing A represents himself to be Jose Reyes, when in fact he is not. Through this
misrepresentation A obtains from X a negotiable note payable to the order of Jose Reyes.
Then A endorses the note, signing “JOSE REYES” Is this forgery?

33. What are the effects of forgery of a signature on the instrument in general?

34. Who are the persons precluded from setting up the defense of forgery?
 35. If a broker or agent negotiates an instrument by delivery who shall be liable? Is it the agent
or the principal?

LESSON 5– PARTIES

36. Who is a payee? Holder? Bearer?

37. Who is a maker?

38. Who is a drawer?

39. Who is a drawee?

40. What is a bank?

41. Who is an acceptor?

42. Who is an accommodation party?

43. Who is an accommodated party?

44. How many kinds of accommodation parties are there?

LESSON 7A – LIABILITIES OF PARTIES

45. What kind of liability has the maker?

46. What are the warranties of maker?

47. What kind of liability has the drawer?

48. What is the warranties doe’s drawer make?

49. What kind of liability has the drawee?

50. As Acceptor, what kind of liability does he have?

51. What warranties does an acceptor make?

52. In what respect does a maker differ from the acceptor as regards their primary liability?

53. Must an accommodation party not receive any consideration at all?

54. What is the legal position of an accommodated party?

55. Is the accommodation party liable to the accommodated party?

56. To whom, then shall an accommodation party be liable on the instrument?

LESSON 7 – UNCONDITIONAL PROMISE OR ORDER

57. When promise or order is considered unconditional within the meaning of the Act?

58. In the following instrument, is the promise unconditional?

“I promise to pay to the order of B P1, 000 out of the proceeds of the sale of my car.”

(Sgd. )“A”

59. Suppose the fund stated on the instrument is the source of reimbursement, will the promise
or order remain unconditional?

60. Is the following instrument negotiable:

Pay to order of B P5, 000 on Dec. 1, 1987 and reimburse yourself out of my deposit with
you.

To: X (Sgd.)”A”

61. Will an indication of a particular account to be debited with the amount affect negotiability?

62. Is the following instrument negotiable:

“I promise to pay to the order of B P5, 000 in payment of the car I purchased B.
(Sgd.)”A”

63. If on the face of the instrument there are additional provisions as something to be done or
added, will the instrument be negotiable?

64. What is the test to determine whether additional acts will or will not impair negotiability?

65. What acts in addition to payment of money will not affect negotiability?

66. Is the following instrument negotiable?

“I promise to pay the order of B P1, 000 on Dec. 1, 1987. In case of default I hereby
authorize the sale of my law books I pledge as a security. (Sgd.)”A”

67. What is meant by “confession of judgment”?

68. If an instrument contains a confession of judgment, will the instrument remain negotiable?

69. In case there is an option to require something to be done in lieu of money on the
instrument, will that affect negotiability?

LESSON 9 – SUM CERTAIN MONEY

70. What constitutes sum certain in money?

 71. If the instrument contains the following:

“To pay P1, 000 and all other sums due”, is the sum certain in money?

72. What is meant by the phrase “stated installment”?

73. If the instrument contains the following: that the sum of P1, 000 is payable in two equal
instruments”, will that satisfy the stated installments as required by law?

74. Suppose the phrase is the following:

“The sum of P1,000 payable in two equal monthly installments to start on August 1, 1987” is
the sum certain in money?

75. How does an acceleration clause affect the certainty of the sum payable?

76. What is meant by “exchange”?

77. Does the phrase “with exchange” destroy negotiability?

78. Suppose the instrument is payable in foreign currency, will that destroy negotiability?

79. How does the stipulation on costs and attorney’s fees affect negotiability?

LESSON 9 – DEMAND

80. When an instrument is considered payable on demand?

Jan. 10, 1987.

81. I promise to pay to the order B P1, 000 on Jan. 15, 1987.

(Sgd.) A

This note though made by A last Jan. 1, 2010 was issued by A to B only last Jan. 18, 2010.
When is this note payable?

82. But if the note above was issued by A to B last Jan. 10, 2010 but was only endorsed by B to C
last Jan. 20, 2010, when is it payable?

LESSON 10 – FIXED DATE

83. What are the rules regarding fixed date?

LESSON 11 – DETERMINABLE FUTURE TIME

84. When is an instrument said to be payable at determinable future time?

85. To what does the phrase “after date” refer?

 86. To what does the phrase “after sight” refer?

87. Can a promissory note be made payable either at a fixed period after date or after sight?

88. Can a bill of exchange be drawn payable at a fixed period after date or sight?

89. If a bill of exchange payable “10 days after sight” has been presented for acceptance on Aug.
1, 1986 but at that same time it was refused acceptance by the drawee, when shall maturity
date be?

90. If an instrument is payable on or before Dec. 1, 1987, can the maker be compelled to pay
before Dec. 1, 1987?

91. Where the determinable future time specified on the instrument is sure to happen or is
certain when it shall happen, can the instrument be payable at a fix period before such
event?

92. Suppose the event mentioned is “death of a person”, can the instrument be made payable
before such event?

93. I promise to pay to the order of B when X gets married to Y. is the instrument payable on a
determinable future time?

LESSON 12 – ORDER

94. In how many ways may an instrument be made payable to order?

95. To whose order may an instrument be drawn?

96. I promise to pay to the order of the Treasurer P1, 000 on demand. Is the above instrument
payable to order?

97. Must the payee to whose order the instrument is payable be always named?

98. Can you consider the note complete, if it is .payable to the order of the maker himself?

LESSON 13– BEARER

99. When is an instrument payable to bearer?

100. Does the Negotiable Instruments Law distinguish between fictitious person and a non –
existing person?

101. What requisites must be present so that an instrument where the payee named therein
is fictitious or non – existing be considered payable to bearer?

102. I promise to pay to Santa Claus P5, 000 on demand.

 (Sgd.)”A”

Here A knows that his payee is non – existing, is the instrument payable to bearer?

103. If an instrument payable to order has been endorsed in blank, can it be subsequently
negotiated by mere delivery?

LESSON 14 – RULES ON CONTRUCTION

104. State the rules of construction where the instrument is ambiguous.

105. When are the above rules applicable

LESSON 15– RULES REGARDING DATE

106. What are the rules regarding date?

107. Is date of issuance essential for negotiability?

108. When is an instrument considered ante – dated?

109. When is the instrument considered post – dated?

110. Does ante – dating or post – dating an instrument invalidate the instrument?

111. As of what date shall a person acquire title to an instrument which is ante – dated or
post – dated but not for an illegal or fraudulent purpose?

112. Under what instances may date of issuance or acceptance be inserted in the
instrument?

113. What is the authority of the holder as regards the insertion of the date?

114. Will insertion of wrong date invalidated the instrument?

LESSON 16 – OMISSIONS NOT AFFECTING NEGOTIABILITY

115. What factor may be omitted on the face of the instrument, yet will not impair
negotiability?