LICEL M.

MONTILLA
Law 222 – Negotiable Instruments
Seatwork 1

1. The instrument in the example is non-negotiable. It is because provided in Section 3(b) of Act No.
2031, that an order or promise to pay out of a particular fund is not unconditional. Additionally,
under Section 1(b) of the same aforementioned law, an instrument to be negotiable, must contain
an unconditional promise or order to pay a sum certain in money. The given example is an order
to pay out of a particular fund which is not an unconditional promise, and is contrary to the
requisite provided under Section 1(b) of Act No. 2031, in order for an instrument to be negotiable.
Therefore, the instrument not containing an unconditional promise, renders the instrument non-
negotiable.

2. The instrument in the example is negotiable. Under Section 3(a) of Act No. 2031, a promise is
unconditional when there is an indication of a particular fund out of which reimbursement is to be
made, or a particular account to be debited with the amount. In the example given, there was an
indication of a particular fund from which reimbursement is to be made, which was the funds in the
hands of the drawee. Also, since the instrument does not contain a fixed period of time when it is
payable, it is presumed that the instrument is payable on demand. Thus, the instrument in the
given example is negotiable, because it complies with all the requisites for an instrument to be
negotiable provided in Section 1 of Act No. 2031.

3. The instrument is negotiable. Stated in Section 3(b) of Act No. 2031 that, an unqualified order or
promise to pay is unconditional within the meaning of the Act, though coupled with a statement of
the transaction which gives rise to the instrument. In the example, the payment of P100,000 was
for the car bought by Anna from Jose, which is a statement of the transaction and the reason why
the instrument was executed in the first place. Hence, the instrument in the example is a
negotiable instrument.

4. The instrument in the example is negotiable. Section 1(c) of Act No. 2031 provides that, an
instrument to be negotiable must be payable on demand, or at a fixed or determinable future time.
In the example given, the determinable future time is the death of Jose’s father which is inevitable,
which complies with the requirement stated in Section 1(c) of the aforementioned law. Therefore,
the instrument in the example is negotiable.

5. The instrument in the example is a negotiable one. It is because, to constitute an order to pay
certain in money as part of the requisites for an instrument to be negotiable, the sum payable, is a
sum certain in money although it is to be paid with interest (Section 2(a) of Act No. 2031), and with
costs of collection or an attorney's fee, in case payment shall not be made at maturity (Section
2(e) of Act No. 2031). In the example given, although the payment of P20,000 bears an interest of
12% per annum and a 14% interest as penalty for failure to pay at maturity, does not make the
instrument non-negotiable, based on the aforementioned provisions. Thus, the instrument in the
example is a negotiable instrument.

6. The instrument in the example is non-negotiable. According to Section 2(b) of Act No. 2031, to
constitute an order to pay certain in money as part of the requisites for an instrument to be
negotiable, the sum payable is a sum certain in money although it is to be paid with by stated
installments. This means that, although the sum certain in money is to be paid through
installments, each installment’s maturity date should also be indicated in the instrument, which
was lacking in the example given. Therefore, not being paid by stated installments, the instrument
is non-negotiable.

7. The instrument in the example is non-negotiable. It is for the reason that, provided in Section 1(b)
of Act No. 2031, an instrument to be negotiable must contain an unconditional promise or order to
pay a sum certain in money. The use of the conjunction “or” in the instrument, does not comply
with the aforesaid provision which requires an instrument to be paid in a sum certain in money,
because a delivery of a horse is offered in case money can’t be given. Hence, not being an
unconditional promise, the instrument in the example is non-negotiable.

8. The instrument in the example is non-negotiable. As what Section 5 of Act No. 2031 provides, an
instrument which contains an order or promise to do any act in addition to the payment of money
 is not negotiable. In the example given, Anna not just promises to pay Jose in money, but also
promises to deliver Jose a horse, which is an act in addition to the payment of money. As a
consequence, because of the kind of promise indicated in the instrument, it renders the instrument
as non-negotiable based on the aforesaid provision.

9. The instrument in the example is a negotiable one. Provided in Section 4(a) of Act No. 2031 that,
an instrument is payable at a determinable future time, within the meaning of the Act, which is
expressed to be payable at a fixed period after date or sight. In the given example, the phrase
“sixty days after date”, indicates that the period when the instrument is to be paid falls within the
aforesaid provision. Thus, it makes the instrument a negotiable instrument.

10. The instrument is non-negotiable. Section 1(c) of Act No. 2031 provides that, an instrument to be
negotiable must be payable on demand, or at a fixed or determinable future time. In the given
example, the time indicated is when Jose turns 18 years old, which is uncertain. It is because
there could be unforeseen events or factors that would prevent the future time indicated in the
instrument from happening. As what the aforesaid provision states, an instrument must be payable
at a determinable future time or at a time which is certain for it to be negotiable. Hence, because
of the uncertainty of the fixed time in the instrument, this makes the instrument as non-negotiable.