BUSLAW4 October 2, 2018

 Payable to Order (The Order Instrument)

o It must be payable to the ORDER OF A SPECIFIED PERSON (Pay to
the order of Pedro)
 you can pay to Pedro or whoever Pedro authorizes
o It is payable to HIM OR HIS ORDER, meaning payable to a
SPECIFIED PERSON OR HIS ORDER (Pay to Pedro or order)
o The SPECIFIED PERSON may be
 The drawee (Pay to the order of yourself)
 Or the maker (Pay to the order of myself / myself or order)
 Or the holder of an office for the time being (Pay to the
order of the Chairman of PCGG)
o The payee in an order instruments must always be named or
indicated therein with reasonable certainty
o Thus, an instrument payable “to the order of the executor of the
estate of Pablo” is negotiable since the payee can be identified
with reasonable certainty
o But, if one pays: “I promise to pay to order P10,000” is NOT
negotiable; payee can not be identified
o Pay to Petrus or his assigns P10,000.00 (sgd) Mark
 NEGOTIABLE. It is payable to order. Instead of the word
“order”, the word “assigns” is used, which is equivalent to
the word “order”
o I promise to pay to the order of the Secretary of XXX Association
the sum of P10,000.00.
 NEGOTIABLE. It is an order instrument
 o Pay to the order of ______________ P10,000.
 Bearer instrument until it will be filled up (while it is left
blank)
 1st view: Negotiable. Considered as payable to bearer until
insertion of the name of a particular payee *most
accepted view
 2nd view: Not negotiable. Sec. 8 does not apply to an
instrument payable to bearer on its face.
o “Order of bearer”
 An instrument payable to the “order of bearer” is an order
instrument
 Payable to Bearer
o When expressed to be so payable (Pay to bearer);
o When payable to a person name therein or bearer) Pay to Pedro
of bearer);
o When payable to the order of a fictitious or non-existing person
and such fact was known to the person making it so payable (Pay
to the order of Malakas);
o When the name of payee does not purport to be the name of a
person (Pay to Cash); or
o When the last indorsement is an indorsement in blank.
o I promise to pay bearer Juan P10,000.00. or I promise to pay
Juan, bearer P10,000.00
 Both are the same. The word “bearer” are both descriptive
of Juan
 Not negotiable. It is not a bearer instrument.
o 18 June 2018 I promise to pay P or holder P10,000.00. (sgd) M

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  NEGOTIABLE. The instrument is payable to bearer.
“Holder” is equivalent to bearer.
o “Order of Cash”
 Must a check payable to the order of cash be still indorsed
by the person presenting it for payment?
 Need not be indorsed
o I promise to pay Petra or her agent P10,000.00. (sgd) Mario
 Not negotiable
o When payable to the order of a fictitious or non-existing person
and such fact was known to the person making it so payable (Pay
to the order of Malakas)
o When payable to the order of a fictitious or no-existing person
and such fact was known to the person making it so payable
o That the payee is a fictitious or non-existing person MUST be
known to the maker of drawer.
o Fictitious Person
 The words “fictitious person” are not limited to persona
having no real existence. An existing person may be
considered a fictitious payee, depending upon the
intention of the one making or drawing the instrument.
o The Fictitious Payee Rule
 It is not limited to persons having no real existence. An
existing person may be considered fictitious payee,
depending upon the intention of one making or drawing
the instrument
o CASE
 Sps. Rodriguez are engaged in rediscounting of checks.
PEMSLA officers fraudulently granted loans in the name of
its members without their knowledge. The proceeds of the

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 loan in the form of checks were rediscounted by Sps.
Rodriguez who in turn issued their own checks with the
PEMSLA members as payees. The Rodriguez checks were
deposited directly by PEMSLA to its saving account without
any indorsement from the named payees. This was an
irregular procedure made possible through the facilitation
of Edmundo Palermo, Jr., treasure of PEMSLA and bank
teller of PNB. PNB credited the checks to the account of
PEMSLA
o Order instrument is converted into a bearer instrument if the
last indorsement is a blank indorsement
 The order instrument that was converted into a
bearer instrument because of the blank indorsement may
be specifically indorse; it RE-ACQUIRES it status as an order
instrument
o Way of negotiation (in case of order or bearer instruments)
 A negotiable instrument that is payable to bearer may be
negotiated by mere delivery. No further act other than
delivery
o The Drawee must be named or otherwise indicated therein with
reasonable certainty
 Applied to BE
 To enable the payee or subsequent holder to know upon
whom he shall present the instrument for acceptance of
for payment
 Two or more drawees may be named JOINTLY< but
not in the alternative
o If named in the alternative or in succession,
the instrument is non-negotiable because the
holder has no right to proceed against the

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 drawer and the other parties secondarily liable
until the bill is dishonored by all drawees
o Thus, a BE addressed to “Walter AND Willard”
is negotiable, BUT not one address to “Walter
OR William” or “Walter or in his absence,
William”
 Date of the instrument
o Omission of the date will not affect negotiability
o If not dated, it will be considered to be dated as of the time it
was issued

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