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Sec. 5. Additional provisions not affecting

negotiability.
General Rule:
The general rule is that an instrument
must not contain an order or promise
to do any act in addition to the
payment of money. Otherwise, the
instrument wouldnt be negotiable.
Exceptions to the GR: (4)(SCWH)
1. SALE of Collateral Securities if the
instrument were not paid at maturity.
2. Authorizes CONFESSION of
Judgment if the instrument were not
paid at maturity.
3. WAIVER of Benefit of Law for the
protection and benefit of the obligor
4. Gives the HOLDER an Election to
require something to be done in lieu
of payment

2. Confession of Judgment
Not authorized if not
expressly provided by statute
Effect of Confession of Judgment
In Philippines it is
considered void as it is against public
policy.
1. Because they enlarge the field of
fraud
2. Because under this treatment, the
promissory bargains away his right to
a day in court
3. Because the effect of the instrument
is to strike down the right to appeal
accorded by statute

Example:

Before the date of maturityINSTRUMENT is non-negotiable.

Confession of Judgment must be after

the date of maturity.

1. Sale of Collateral Securities

Dec. 13, 2014
I promise to pay Juan D. Cruz or order the sum of
P10,000 on Dec. 31, 2014 secured by a ring I delivered to
him by way of pledge and which he could sell should I fail to
pay him at maturity
(SGD)RIEL P. VILLALON

Here the additional act is to be

performed after the maturity when
the instrument is no longer
negotiable in the full commercial
sense. Until the maturity date, the
promise is to pay money only.

The additional act is to be performed

only after the date of maturity, when
the instrument ceases to be
negotiable in full commercial sense.

Dec. 13, 2014

For value received, I promise to pay P or
order the sum of P10,000 with interest of 15% per
annum and I hereby authorize my attorney-at-law to
appear in any court of record after the obligation
becomes due and waive the issuing and service process
and confess a judgment against me in favor of the
holder of the note for such amount as may appear to be
unpaid thereon, together with the costs of suit and
12% attorneys fees, and thereupon to waive all errors
in any such proceedings and waive all rights of appeal.
(SGD) RIEL VILLALON

Two classes of confession of Judgment

1. COGNOVIT ACTIONEM

Is a written confession of an
action by the defendant,
subscribed but not sealed, and
irrevocable authorizing any
attorney of any court of record to
confess judgment and issue
execution usually for the sum
named.

A written confession of action

acknowledging his indebtedness
to the plaintiff after the action has
been filed.

It is given in order to save

expense.

2. CONFESSION RELICTA
VERIFICATIONE

Is a confession of judgment made

after the plea is pleaded.

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a confession of judgment by
withdrawal of the defense.

Warrant of attorney
Instrument in writing addressed to
one or more attorneys named therein,
authorizing them, generally to appear
in court, or in some specified court on
behalf of the person giving it, and to
confess judgment in favor of some
particular person named therein in
action for debt.

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3. Waiver of benefit granted by law
Waives the benefit of any law
intended for the advantage and
protection of the obligor
Examples: Presentment for payment,
notice of dishonor, protest.
Dec. 13, 2014
Pay bearer P10,000. Notice of dishonor waived.
(SGD) RIEL VILLALON
Dec. 13, 2014
Three months, after date, I promise to pay to the
order of P10,000, waiving the benefit of the homestead
and all other statutory exemptions as to the debt
evidenced by this note.
(SGD) RIEL VILLALON

EFFECT OF OMISSION OF DATE

Date in the bill or note is not
necessary. Hence, Omission of the
date will not make the instrument
non-negotiable.
if the date is stated but there is no
such date in the calendar it is
presumed the nearest date of the
month.
o Ex. Sept. 31. it presumed to be
on Sept. 30.

4. Election of holder to require some other

act
Valid as long as the right to choose
between payment of money or
performance of the additional act is in
the hands of the holder
Dec. 13, 2014
I promise to pay X or order P10000 or an air
conditioner at the option of the holder.
(SGD) RIEL VILLALON

In this case the holder has the choice.

The instrument is still negotiable as it
is as good as an instrument payable in
money

Sec. 6. Omissions; Seal; Particular money.

The validity and negotiable character of an
instrument are not affected by the fact that
a. It is not dated
b. Does not specify the value given, or
that any value has been given
therefor; or
c. Does not specify the place where it is
drawn or the place where it is
payable; or
d. Bears a seal; or
e. Designates a particular kind of
current money in which payment is to
be made.
But nothing in this section shall alter or
repeal any statute requiring in certain cases
the nature of the consideration to be stated
in the instrument.

INSTANCES when date is necessary:

a. When it is payable in a period
after date or after sight. (Allow
insertion of date sec. 13)
(Ex. I promise to pay X or order
10000 thirty days after date)
b. Where interest is stipulated for
the purpose of determining when
the interest is to run

EFFECT OF OMISSION OF VALUE

Usually, what is stated in the
instrument is that it is being used for
value received without specifying
what the value is.
absence of the value does not render
the instrument non-negotiable.
EFFECT OF OMISSION OF PLACE
It is not require to specify the place
where it is drawn or where it is
payable.

Sec. 73-where presentment is to be

made if place is not specified.
1. In the place stipulated
2. No place of payment specified
but the address of person to make
payment is specified. it is the
address of the one who will make
payment
3. No place of payment and no
address of person who will make
payment-the place of business or
residence of the person to make
payment

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4. In any other case if presented to
the person to make payment
wherever he can be found, or if
presented at his last known place
of business or residence.

EFFECT OF PRESENCE OF SEAL

There is no difference between a
sealed and unsealed private writings.
Advisable that a bill or note be in a
public instrument so that it will be
included in the preferred credits with
respect to other property of the
debtor.
EFFECT OF DESIGNATION OF
PARTICULAR KIND OF CURRENT MONEY
PAYABLE
The law does not require that
payment should be made in legal
tender.
It includes any particular kind of
current money or foreign money
which has a fixed value in relation to
our money.

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Sec. 10. Terms, When sufficient. The
instruments need not follow the language of
this act, but any terms are sufficient which
clearly indicate an intention to conform to
the requirement hereof.
1. Clear intention of the parties- The
substance of the transaction rather its form
is the CRITERION of negotiability.
2. Use of foreign language
3. Mere defect in language or grammatical
error does not destroy the negotiability.
Sec. 11. Presumption as to date:

General rule:
If the instrument or acceptance
indorsement is dated such date is
prima facie to be the true date

Prima facie
On its first view or as it appears on its
face or evidence produces for the
time being a certain
If wrong date appears in the
instrument it can be rebutted by
proof to the contrary.
Any person who claims that the date
is different from true date must prove
in court that it is not the true date.

Sec. 12. Ante-Dated and Post-Dated

GR: An instrument is NOT INVALID even
ante-dated or post-dated as long as it is not
for ILLEGAL OR FRAUDULENT purpose.
POST DATED
An instrument is post dated if the
date of the instrument is a date after
the true date.
FOR EXAMPLE:
MR. A the maker prepared and signed
the promissory note on Jan. 1, 2014.
However the date appearing in the

instrument is Jan. 15, 2014 . in this example

MR. A postdated the instrument when he
signed it on Jan. 1, 2014.
ANTE-DATED
Is one which indicates a date that is
earlier than the true date.
FOR EXAMPLE:
Mr. A prepared and signed the
instrument on Oct. 1, 2014 but he purposely
wrote Nov. 1, 2014 to make it appear that it
was signed on Nov. 1, 2014, then the
instrument is said to have been ante-dated.
EFFECT OF ANTE-DATING or POSTDATING
It does not render the instrument
invalid or non-negotiable provided it
is not done for illegal or fraudulent
purpose.
Ex. of Illegal or fraudulent purpose
If ante-dating is done to CONCEAL the
charge of usurious interest
If the post dating is done to issue a
post dated check in payment of
obligation because of insufficiency of
funds without the bona fide intention
to cover the amount of check-but if
payee is informed then drawer would
not be guilty of estafa since no deceit
is present.
Date when the instrument takes effect:
The date of delivery not date that it
bears.

Sec. 13. When Date may be inserted:

1. Where the instrument is payable at a
fixed period after date but is issued
undated
(Ex. I promise to pay X or order
10000 thirty days after date)
-In this case the date of maturity cannot be
determined unless we know the true date of

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issue of the note. the true date maybe
inserted by X and the holder after him.
2. Where an instrument is payable after
sight but the acceptance is undated.
(Ex. I promise to pay X or order
10000 thirty days after sight)

-In this case X or any holder may insert the true

date of acceptance.
EFFECT OF INSERTION OF WRONG
DATE.
If the person knows the true date of
issue or acceptance but inserted the
wrong date the instrument will be
avoided as to him but not to holder in
due course.

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Sec. 14. Blank instrument: Incomplete but

delivered
Scope of Sec. 14
2 STEPS in execution of negotiable
instruments
1. The act of writing the instrument
completely and in accordance with sec.
1 of NIL
2. The delivery with the intention of
giving effect to it.
Sec. 14 contemplates an INCOMPLETE BUT
DELIVERED INSTRUMENT
RULES:
1. A person in possession of an instrument that
is wanting a material particular has prima
facie authority to complete it by filling up
the blanks strictly in accordance with the
authority given and within a reasonable time.
2. If a person delivers a blank paper to another
person containing his signature for the purpose
of converting it into a negotiable instrument,
the person to whom the instrument is
delivered has prima facie authority to fill it
for any amount.
3. If the holder of the instrument, after it was
filled up, is a holder in due course, the holder
may enforce the instrument as if it has been
filled up strictly in accordance with the
authority given and within a reasonable time.

Material Particular:
The omission of which will render the
instrument non-negotiable
Material particular is not limited to Sec.
1. It may include matters on Sec. 125 of
NIL. which states the material alteration
includes changes in:
1. Date
2. Sum payable: either for
principal or interest
3. The time and place of
payment
4. The member or the relations
of the parties

5. The medium or currency in

which payment is to be
made;
6. Or which adds a place of
payment where no place of
payment is specified, or any
other changes or addition
which alters the effect of the
instrument in any respect, is
a material alteration.