Antonio issued the following instrument:
August 10,2013
Makati City
P100,000.00
Sixty days after date, I promise to pay Bobby or his designated .representative the sum of ONE HUNDRED THOUSAND PESOS(P 100,000.00) from my BPI Acct. No. 1234 if, by this due date, the sun still sets in the west to usher in the evening and rises in the east the following morning to welcome the day.
(Sgd.) Antonio Reyes
Explain each requirement of negotiability present or absent in the instrument. (8%)
Suggested answer only. Not an official answer and not legal advice.
The instrument is non-negotiable because it is payable out of a particular fund and lacks words of negotiability.
Under Section 1 of the Negotiable Instruments Law, a negotiable instrument must be signed, contain an unconditional promise to pay a sum certain, be payable at a determinable future time, and be payable to order or bearer. Section 3 provides that a promise to pay out of a particular fund is conditional.
Here, writing, signature, sum certain (P100,000), determinable time (60 days), and the sun setting clause (certain to happen under Section 4) are present. However, paying out of "BPI Acct. No. 1234" makes the promise conditional under Section 3. Paying "Bobby or his representative" lacks words of negotiability under Section 1(d).
Therefore, the instrument is non-negotiable due to these statutory defects.
This is not an official scoring system and carries no weight with the Supreme Court or any bar review provider. It measures how much of the suggested answer's wording your response covers, not whether your reasoning is correct. For practice only.
Quick check
What is the legal effect on negotiability when a promissory note states that payment shall be made from a specific bank account?
Under Section 3 of Act 2031, a promise to pay out of a particular fund is conditional and destroys negotiability.
Does an instrument payable to 'Bobby or his designated representative' satisfy the statutory requirement under Section 1(d)?
An instrument payable to a specified person or representative without 'order' or 'bearer' words is non-negotiable.
Is a condition based on a natural event that is certain to happen, such as the sun rising tomorrow, considered a valid determinable future time?
Under Section 4(c), an instrument payable upon an event which is certain to happen is payable at a determinable future time.
Which statutory requirement of negotiability under Section 1 is violated when an instrument lacks the words 'to order' or 'to bearer'?
Section 1(d) requires the instrument to contain words of negotiability such as 'to order' or 'to bearer'.
Which primary statute governs the requisites of negotiability, particular fund rules, and order or bearer requirement in the Philippines?
Act Number 2031 is the Negotiable Instruments Law of the Philippines.
Learn more about these topics
1. Requisites of Negotiability
Under Section 1 of the Negotiable Instruments Law (Act Number 2031), an instrument to be negotiable must be in writing and signed by the maker or drawer, contain an unconditional promise or order to pay a sum certain in money, be payable on demand or at a fixed or determinable future time, and be payable to order or to bearer. The failure to comply with any single statutory requirement under Section 1 renders the instrument non-negotiable.
2. Particular Fund Doctrine
Under Section 3 of the Negotiable Instruments Law, an order or promise to pay out of a particular fund is not unconditional, which destroys the negotiability of the instrument. While indicating a particular account to be debited or a particular fund for reimbursement does not affect negotiability, specifying that payment must be made strictly out of a designated bank account restricts payment to that fund alone, making the obligation conditional.
3. Words of Negotiability
Under Section 1(d) and Sections 8 and 9 of Act Number 2031, an instrument is negotiable only if it is payable to order or to bearer. An instrument payable to a specified person or his designated representative lacks words of negotiability. Without the words 'to order' or 'to bearer', the instrument is non-negotiable, and its transfer operates merely as an ordinary assignment of a chose in action subject to defenses.