Negotiable Instruments Law – Negotiability


Memory Aid

Based on the Outline of the 1994 Edition of Campos & Campos


  1. 1.    in writing and signed by maker or drawer
  • no person liable on the instrument whose signature does not appear thereon ( subject to exceptions)
  • one who signs in a trade or assumed name liable to the same extent as if he had signed in his own name
  • signature of any party may be made by a duly authorized agent, no particular form of appt. necessary


  1. unconditional promise or order to pay
  • unqualified order or promise to pay is unconditional though coupled with
  1. an indication of a particular fund out of which reimbursement to be made, or a particular account to be debited with amount, or
    1. a statement of the transaction which gives rise to the instrument
  • an order or promise to pay out of a particular fund is not unconditional

a sum certain in money

  • even if stipulated to be paid—
  1. with interest, or
  2. by stated installments, or
  3. by stated installments with a provision that upon default in payment of any installment/interest, the whole shall become due, or
  4. with exchange, whether at a fixed rate or at the current rate, or
  5. with costs of collection or an attorney’s fee, in case payment not made at maturity


  1. 3.    payable on demand,
  • when expressed to be payable on demand, or at sight, or on presentation;
  • when no time for payment  expressed, or
  • where an instrument is issued, accepted or indorsed when overdue, it is, as regards the person so issuing, accepting, or indorsing it, payable on demand


or at a fixed or determinable future time

  • when it’s expressed to be payable at a fixed period after date or sight, or
  • on or before a fixed or determinable future time fixed therein, or
  • on or at a fixed period after the occurrence of a specified event which is certain to happen, though the time of happening be uncertain
  • an instrument payable upon a contingency not negotiable, and happening of event doesn’t cure it

relate to  sec. 11 ( presumption as to date) and sec. 17 (construction where instrument ambiguous)

* note effect of acceleration provisions, p. 30 Campos

* note effect of provisions extending time of payment, p. 40 Campos


  1. 4.    payable to order
  • where it is drawn payable to the order of a specified person or to him or his order. May be drawn payable to order of —
  • when the instrument is payable to order the payee must be named or otherwise indicated therein with reasonable certainty
  1. a payee not the maker/drawer/drawee, or
  2. drawer or maker, or
  3. drawee, or
  4. two or more payees jointly, or
  5. holder of an office for time being

or bearer,

  • when expressed to be so payable
  • when payable to person named therein or bearer
  • when payable to order or fictitious/non-existent person, and such fact known to the person making it so payable, or
  • when name of payee doesn’t purport to be the name of any person, or
  • when the only/last indorsement is in blank
  1. 5.    where addressed to drawee: such drawee named/ indicated therein with reasonable certainty
  • bill may be addressed to two or more drawees jointly, whether partners or not, but not to two or more drawees in the alternative or in succession
  • bill may be treated as a PN, at option of holder, where
  1. drawer and drawee are same person
  2. drawee is fictitious/incapacitated


Gen. Rule: order/promise to do any act in addition to the payment of money renders instrument non-negotiable.

Exception: negotiability not affected by provisions w/c

  1. authorize sale of collateral security if instrument not paid at maturity
  2. authorize confession  of judgment…
  3. waives benefit of any law intended for advantage/protection of obligor
  4. give holder election to require something to be done in lieu of money



  1. restrictively indorsed
  2. discharged by payment or otherwise

Reference:  University of the Philippines

BarOps ’99

Commercial Law – Val Feria, Mina Herrera, Gary Mallari & Rachel Ramos


About Magz

First of all, I am not a lawyer. I'm a graduate of AB Political Science and went to the College of Law but stopped going to law school for some reasons. I'm a passionate teacher who has been teaching English to speakers of other languages and a person who likes writing and blogging. I lost some important files and software when my computer broke down so the reason I created this website is to preserve the notes, reviewers and digests I collected when I was at the law school and at the same time, I want to help out law students who do not have enough time to go and read books in the library.

Posted on December 19, 2011, in Negotiable Instruments Law and tagged . Bookmark the permalink. 5 Comments.

  1. thanks you po…

  2. aba nasa UP ka pla ha ehehe

  3. thanks for the goodwill

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