GROUP EXERCISE:

Determine if the following are negotiable or not:

Instrument 1
October 30, 2014

I promise to pay to the order of Janet Napoles P1,000 or the value of our rice harvest at the end of the
year or if Janet Napoles is convicted for plunder.

(sgd.) Juan Ponce Enrile

ANSWER: NEGOTIABLE

Rationale:

Instruments, as a general rule, are deemed not negotiable if it contains a promise or order to do
any act in addition to the payment of money, an exception of which is if the instrument gives the
holder the option to require something to be done in lieu of money.
The above-mentioned instrument falls under the exception of Section 5 of the Negotiable
Instruments Law “…the negotiable character of an instrument otherwise negotiable is not affected by
a provision which: (d) gives the holder an election to require something to be done in lieu of payment
of money”. Thus, the instrument is negotiable.

Instrument 2

I promise to pay to bearer the sum of P 900,000, Philippine Currency, payable, without interest, on or
before January 30, 2014.
If not paid at maturity, it shall draw interest at 12% per annum, without demand;
that should it be necessary to bring suit to enforce payment of the note, the debtors shall pay a sum
equivalent to 10% of the total amount due for attorney’s fees;
and, in the event of failure to pay the indebtedness plus interest in accordance with its terms, I shall
execute a first mortgage in favor of the creditor over my property located in Cavite.

(sgd.) Ramon Revilla Jr.

ANSWER: NEGOTIABLE

Rationale:

The aforementioned instrument conforms properly to the rules indicated in The Negotiable
Instruments Law. It is an example of a “payable to bearer” instrument (Sec. 9), and the additional
provisions indicated does not affect the negotiability of the instrument as per Section 5 of the
Negotiable Instruments Law, thus making the instrument negotiable.

Instrument 3

.. for value received, we the undersigned ... JOINTLY, SEVERALLY and SOLIDARILY, promise to pay the
SOCIAL SECURITY SYSTEM the sum of . . . (P 30,000) Philippine Currency on Sept. 30, 2015, with
interest at the rate of six (6%) per centum compounded monthly payable in . . . (120)equal monthly
installments.
(sgd.) Juan Santos
ANSWER: NEGOTIABLE

Rationale:
The instrument, albeit ambiguous (only one undersigned, even if there was a statement
indicating that the persons therein are more than one due to the phrase “JOINTLY, SEVERALLY and
SOLIDARILY”; no indication of date.) does not make it not negotiable. Section 17 of the Negotiable
Instruments Law remedies such ambiguity with rules that provides clarity in case of such ambiguities
become present in an instrument. Thus, the instrument is still deemed negotiable.

Instrument 4

To the Secretary of the Dept. of Finance:

Pay to Eduardo Gomez the amount of P100,000 out of my Priority Development Assistance Fund

(sgd.)Sen. Jinggoy Estrada.

ANSWER: NOT NEGOTIABLE

Rationale:

Section 3 of the Negotiable Instruments law indicates that “…an order or promise to pay out of a
particular fund is not unconditional”, and Section 1.b of the said law states that An instrument to be
negotiable must conform to the following requirements: (b) Must contain an unconditional promise
or order to pay a sum certain in money . The aforementioned instrument is thus not negotiable due to
the fact that the order or promise to pay was out of a particular fund (specifically, the Priority
Development Assistance Fund) and such payment can be uncertain due to the instance that the fund
in question may be insufficient to pay for such obligation.