7 1. NEGOTIABLE INSTRUMENTS LAW 59 uncertain. (Section 4 of NIL) The dying of the dog is a day which is certain to come although the time of the happening is uncertain. b. Abank issued a certificate of time deposit to Angel Dela Cruz. The certificate certifies that the bearer has deposited a sum certain in money (Php1000,000 with 12% per annum) repayable to said depositor on or before a fixed date, Negotiable. It is considered payable to bearer for the depositor is the bearer. The documents do not say that the depositor is (Angel dela Cruz) and that the amounts deposited are repayable specifically to him, but the amounts are to be tepayable to the bearer of the documents or, for that matter, whosoever may be the bearer at the time of presentment,’ c. A writes a promissory note in favor of his creditor, B. It says: “Subject to my option, I promise to pay B Phpl Million or his order or give Php! Millie. Worth of cement or to authorize him to sell my house worth Php! Million, Signed, A.” Nonnegotiable, because the exercise of the option to pay lies with A, the maker and debtor. dB borrowed Php1 million from L and offered to him his BMW car worth Php1 Million as collateral, B then executed a promissory note that reads: “I, B, promise to pay L or bearer the amount of Php! Million and to keep my BMW car (loan collateral) free from any other encumbrance, Signed, B.” Nonnegotiable, since it contains a promise to do an act in addition to the payment of money. e. A promissory note states, on its face: “I, X, promise to pay Y the amount of Php5,000.00 five days after completion of the on-going construction of my house. Signed, X.” Nonnegotiable, since it is payable at a fixed period after the occurrence of an event which may not happen. *Caltex (Philippines), Inc. v. Court of Appeals and Security Bank and Trust pany, G.R. No. 97753, August 10, 1992. “BAR 2011. Scanned with CamScanneroe DIVINA ON COMMERCIAL LAW: A COMPREHENSIVE GUIDE VOLUME II £ X bought a jeep from Reliable Motors Company fo, a consideration of P50,000. He paid P25,000 in cash and executed the following promissory note on the balance: September 1, 1989 I promise to pay the sum of P25,000 to Reliable Motors Company on or before December 81, 1989, Sgd.X At the bottom of the note, X wrote in his own handwriting the following: “I will not sell the jeep until I shall have paid it in full.” Nonnegotiable because the instrument is payable to Reliance Motors and not to “order” or “bearer.”"” g. Manila, September 1, 2021 P2,500.00 I promise to pay Pedro San Juan or order the sum of P2,500.00 (Sgd.) NOEL CASTRO Manila, June 3, 1993 P10,000.00 For value received, I promise to pay Sergio Dee or order the sum of P10,000.00 in five(5) installments, with the first installment payable on October 5, 2021 and the other installments on or before the fifth day of the succeeding month thereafter. (Sgd.) LITO VILLA Negotiable, all the elements of negotiability are present. h. January 1, 2021 I promise to pay to the order of Juan dela Cruz the amount of 100,000 on or before December 31, 2022, if the sun sets in the west and rises in the east- “BAR 1989, 1992. Scanned with CamScanner599 ‘7, NEGOTIABLE INSTRUMENTS LAW Negotiable, it is payable on or before a fixed time and the sun ill surely set in the west and rise in the east. 15. Which of the following stipulations or feature of a promissory note (PN) affect or do not affect its negotiability, assuming that the PNis otherwise negotiable? Indicate your answer by writing the paragraph number of the stipulation or feature of the PN as shown below and explain your Corresponding answer, either “Affected” or "Not affected.” Explain, a, The date of the PN is “February 30, 2002.” Not affected. The date is not one of the requirements for negotiability, b. The PN bears interest each calendar quarter Not affected. The intere time and is determinable. It d promise conditional. st is to be computed at a particular loes not make the sum uncertain or the c. The PN gives the holder the option either to require Payment in money or to require the maker to serve as the bodyguard or escort of the holder for 30 days. Not affected. Giving the option to the holder does not make the promise conditional.” d, It names two alternative drawees, Affected. A bill addressed to two alternative drawees make the order to pay conditional.* 2. ind: ii instru S 16. Cite other examples of negotiable instruments similar to promissory notes. Certificates of deposit and bonds are similar to promissory notes. They can be negotiable instruments if they contain the elements of negotiability under the NIL. “BAR 2002. “BAR 1997. Scanned with CamScannerco) DIVINA ON COMMERCIAL LAW: A COMPREHENSIVE GUIDE VOLUME Il 17%, Cite examples of bills of exchange. Draft which may be sight draft or term draft, trade acceptancg and banker's acceptance. Sight draft means payable upon demang while term draft, or also called usance draft, is a written demand foy payment that comes due at a specified future date. Draft is a common mode of payment in letter of credit transactions. A banker's acceptance is an instrument representing promised future payment by a bank. The payment is accepted and guaranteed by the bank as a time draft to be drawn on a deposit, A trader's acceptance is a bill of exchange drawn by the seller on the buyer of the goods and accepted by the latter. The buyer basically agrees to pay the seller or its/his endorsee. 18. Are the following negotiable instruments? a. Postal money orders — They are not negotiable instruments, the reason being that in establishing and operating a postal money order system, the government is not engaged in the commercial transactions but merely exercises a governmental power for the public benefit. Some of the restrictions imposed upon money orders by postal laws and regulations are inconsistent with the character of negotiable instruments. For instance, such laws and regulations usually provide for not more than one indorsement; payment of money orders may be withheld under a variety of circumstances.” b. Treasury Warrants - They are not negotiable instruments because they are payable out of a particular fund. This makes the order to pay conditional. In one case, it was held that not being negotiable instruments, then the warranties of a general indorser could not be enforced against the person who deposited the treasury warrants with the collecting bank when such depositor did not have any knowledge that the warrants had been issued without government authority. “Philippine Education Co., Inc. v. Mauricio A. Soriano, et al., @.R. No.1-22406, June 80, 1971. “Metropolitan Bank & Trust Company v. Court of Appeals, GR. No. 88868, February 18, 1991. Scanned with CamScanner7. NEGOTIABLE INSTRUMENTS LAW oor c. Withdrawal slips—They are not negotiable instruments. The essence of negotiability which characterizes a negotiable paper as a credit instrument lies in its freedom to circulate freely as a substitute for money. The withdrawal slips lack this character. In one case, a client maintained a special savings account with his drawee bank. He was allowed to withdraw funds therefrom through the medium of special withdrawal slips and used the withdrawal slips in payment of certain purchases, as if they were checks. The creditor deposited these withdrawal slips to its bank which in turn would send them for collection to the drawee bank. It was held that the withdrawal slips are Not negotiable instruments. Thus, the fact that other withdrawal slips were honored and paid by the drawee bank was no license for the collecting bank to presume that subsequent withdrawal slips would be honored and paid immediately. The drawee bank was under no obligation to give immediate notice that it would make payment on the subject withdrawal slips. d. Bank Passbook — In one case, the Supreme Court held that a certificate of deposit is a written acknowledgement by a bank of the receipt of a sum of. money on deposit which the bank promises to pay to the depositor or the order of the depositor or to some other person or his order whereby the relation of debtor and creditor between the bank and the depositor is created. A document to be considered a certificate of deposit need not be in a specific form. Thus, a passbook of an interest-earning deposit account issued by a bank is a certificate of deposit drawing interest because it is considered a written acknowledgment by a bank that it has accepted a deposit of a sum of money from a depositor. The ratio decidendi in this case is that a passbook which has the same features as a certificate of deposit is subject to documentary stamp tax.” But based on the same principle, if a certificate of deposit which is payable to bearer is a negotiable instrument then bank passbook which has all the features of a negotiable Sa : stone Tire & Rubber Company of the Philippines v. Court of Appeals an ‘Yon Development Bank, G.R. No. 119236, March 5, 2001 oo eyage’PFudential Bank v. Commissioner of Internal Revenue (CIR), 0280, July 27,2011. Scanned with CamScanner