MIDTERM EXAMS PART 2: NEGOTIABLE INSTRUMENTS LAW

Test 1: Determine whether the instrument is negotiable or not. Give your Reasons. 5 pts. Each.

A.

November 26, 2020

I promise to pay Juan the sum of ten thousand pesos, 30 days after date.
(Sgd.) Maria

July 9, 2017
Yes, the instrument is negotiable because it conforms all the following requisites which are
stated in Section 1 of the Negotiable Instrument Law:
1) It must be in writing signed by the maker or drawer
2) Must contain an unconditional promise or order to pay a sum certain in money
3) Must be payable on demand or at a fixed or determinable future time
4) Must be payable to order or bearer
5) Where the instrument is addressed to a drawee, he must be named or otherwise indicated
therein with reasonable certainty.

B.

I promise to pay to Maria or order the sum of ten thousand pesos (P10,000.00) or to deliver
an air conditioning unit at my option, on or December 27, 2020.

(Sgd.) Juan

No, the instrument is not negotiable because:

1) According to Section 5 of the Negotiable Instrument Law, Additional provisions not affecting
negotiability- an instrument which contains an order or promise to do any act in addition to the
payment of money is not negotiable. And also the option is with the promissor, the instrument
is non-negotiable because the holder cannot compel him to make payment in money.

C.

Pay to Optimus Prime the sum of fifty thousand pesos (50,000.00) on Christmas Day 2020.

(Sgd.) Pedro

To: Spiderman
 Yes, the instrument is negotiable because according section 9 of the Negotiable Instrument
Law part 3, 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. In this case the payee named Optimus
Prime is one who does not exist and has never existed. Since endorsement is obviously
impossible, my manifest intention as a drawer is to make the instrument a bearer paper
negotiable by delivery.

D.

I obliged myself to pay Pedro or bearer the sum of ten thousand pesos (10,000.00) and to
deliver a diamond ring.

(Sgd.) Mario

No, the instrument above is not negotiable because as a general rule in section 5, the instrument
is non-negotiable if it contains a promise or order to do any act in addition to the payment of
money.

E.

I promise to pay the bearer the sum of ten thousand pesos (P10,000.00) out of the rentals of
my house this month.

(Sgd.) Maria

No, the instrument above is not negotiable because according to Section 3 of the Negotiable
Instrument part 2, an instrument payable out of a particular or specified fund is non-negotiable
because the amount to be paid is made to depend upon the adequacy or existence of the fund
designated.

F.

Pay to Mario or bearer the sum of 10,000.00 in 5 installments.

(Sgd.) Maria
 Yes, the Instrument above is negotiable because under the law the promise or order to pay
"by stated installments" does not affect negotiability. Stated installments, within the
meaning of this meaning of section 2, means that: a) the interest of each installment, and b)
the due date of each Installment must be fixed in the instrument. But a promise to pay
P10,000 in "five installments" does not fulfill the requirements of law.

G.

Pay to the order of Cash the sum of ten thousand pesos (10,000.00).

(Sgd.) Maria

To; Mario

Cauayan City

Yes, the instrument above is negotiable because according section 9 of the Negotiable
Instrument Law part 4, the instrument is payable to bearer when the name of the payee does
not purport to be the name of any person. The above examples does not purport to designate a
specific payee.

Test 2:
1.How do you negotiate an instrument that is payable to:
a. Superman. Why? ( 5pts.)
* In this case the payee named Superman is one who does not exist and has never
existed. Since endorsement is obviously impossible, my manifest intention as a drawer is to
make the instrument a bearer paper negotiable by delivery.

b. the order of Juan Dela Cruz. Why?(5 pts.)

*in this type of instrument, I know that the payee is not capable of indorsing because of
Juan Dela Cruz is a fictitious person, I cannot expect the instrument to circulate through the
endorsement of the payee, and therefore, I must have intended the same to be transferred by mere
delivery just like an instrument payable to bearer

2.Draw a negotiable Bill of exchange in accordance with Section 1 of the Negotiable Instruments
Law.

November 27, 2020

Isabela
P12,000
I promise to pay to bearer on demand the sum of Twelve Thousand Pesos
(12,000)
(Sgd.) Hazel N. Surbida

To Rose Medina
3.Make a negotiable Promissory note in accordance with Section 1 of the Negotiable Instruments Law.

November 27, 2020

Isabela
P32, 000
Thirty days after date, I promise to pay Jena Tomas or order the sum of Thirty-two
Thousand Pesos (32,000).
(Sgd.) Hazel N. Surbida