LAW ON

NEGOTIABLE
INSTRUMENTS

Prepared and Presented by:

JAVIER, CHRISTIAN JADE M.
BSA - 5
 Section 7

When payable on demand. - An instrument is payable on demand

(a) When it is so expressed to be payable on demand, or at sight,

or on presentation; or

(b) In which no time for payment is expressed.

• 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.
When an instrument is payable on demand, the persons liable may
be required to pay at any time that the holder may so request. The
instrument should be paid the moment it is presented for payment.

Examples:
1. Examples of paragraph (a):

March 10, 2004 March 10, 2004

Pay to the order of Mr. X P1000.00 on Pay to the order of Mr. X P1000.00 at
demand. sight.

Sgd. Mr. Y Sgd. Mr. Y

To: Mr. Z To: Mr. Z

This instrument (above) is payable at sight, meaning at the

time Mr. Z sees the instrument upon presentment.
2. Example of letter [b]: In which no time for payment is expressed

March 10, 2004

Pay Mr. X or order P1000.00.

Sgd. Mr. Y

To: Mr. Z
Expressed to be payable on demand

Examples:

“I promise to pay to bearer on demand P10,000.00”

“I promise to pay P or order P10,000.00 upon receipt by me of my

share from the estate of X or upon demand.”

“Pay to P or order P10,000.00”

The above (a check) is an instrument payable on demand because

it does not express the time for payment.
Payable on demand as regards the maker

Example:
A note dated July 3, 2013 and payable “thirty days
after date” is issued on August 4, 2013 (when it is
already overdue).
Payable on demand as regards the acceptor

Example:
A bill payable on August 20, 2013 is accepted by
the drawee on August 21, 2013.
Payable on demand as regards the endorser

Example:
A note payable “thirty days” after August 1, 2013 is
indorsed on September 1, 2013.
 Section 8
When payable to order. - The instrument is payable to order where it is
drawn payable to the order of a specified person or to him or his order. It
may be drawn payable to the order of

(a) A payee who is not maker, drawer, or drawee; or

(b)The drawer or maker; or
(c) The drawee; or
(d) Two or more payees jointly; or
(e) One or some of several payees; or
(f) The holder of an office for the time being.

Where the instrument is payable to order, the payee must be named or

otherwise indicated therein with reasonable certainty.
 There are only two ways by which an instrument can be made payable to
order under Section 8 of the NIL. The instrument can either be:

a.) payable to the order of a specified person (i.e., “pay to the order of Mr.
X”); or
b.) to a specified person or his order (“pay to Mr. X or order”).

Section 8 of the NIL likewise identifies the person who can be designated as
payees in an order instrument – the persons to whose order the instrument may
be made payable.

Examples of payees under Section 8:

1. Example of paragraph [a] where the payee Mr. X is not the maker:

March 15, 2004

I promise to pay Mr. X or order

P8000.00 on or before January 10, 2006.

Sgd. Y
To: Mr. Z
 2. Example of paragraph [b] where the payee is the maker. In
this case, the instrument is not complete unless indorsed by the
maker. In other words, the maker must sign as maker and must also
sign as an endorser.
March 15, 2004

I promise to pay Mr. Y or order P8000.00

on or before June 10, 2004.

Sgd. Y

3. Example of paragraph [b] where the payee is the drawer himself:

March 10, 2004

Pay to the order of Mr. Y P1000.00 on

demand.

Sgd. Mr. Y
To: Mr. Z
4. Example of paragraph [c] where the payee is the drawee:
March 10, 2004

Pay to the order of Mr. Z P1000.00 at

sight.
Sgd. Mr. Y
To: Mr. Z

5. Example of paragraph [d]: two or more payees jointly

March 10, 2004

Pay to the order of Mr. X and Mr. A

P1000.00 on demand.

Sgd. Mr. Y
To: Mr. Z
 6. Example of paragraph [e]: one or more of several payees
March 15, 2004

I promise to pay to the order of Mr. X or

Mr. A P8000.00 on or before September 1,
2006.
Sgd. Y

7. Example of paragraph [f]: the holder of an office for the

time being

March 15, 2004

I promise to pay to the order of the

Registrar of Foundation University of
Dumaguete City

P8000.00 on June 12, 2006.

Sgd. Y