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San Beda 2005 Negotiable Instrument PDF
San Beda 2005 Negotiable Instrument PDF
San Beda 2005 Negotiable Instrument PDF
6
MEMORY AID IN COMMERCIAL LAW
NEGOTIABLE INSTRUMENTS LAW (NIL)
(Act No. 2031, effective June 2, 1911)
requirements of Sec. 1 of the NIL. (Caltex the drawee pays particular fund
Phils. v. CA, 212 SCRA 448) himself from the indicated. Payment is
particular fund subject to the
indicated. condition that the
The acceptance of a bill of exchange is fund is sufficient.
not important in the determination of its Particular fund Particular fund
negotiability. The nature of acceptance is indicated is NOT the indicated is the
important only on the determination of direct source of direct source of
the kind of liabilities of the parties payment but only the payment.
source of
involved (PBCOM vs. Aruego, 102 SCRA reimbursement.
530)
Postal money orders are not negotiable
REQUISITES OF NEGOTIABILITY
instruments. Some of the restrictions
a. It must be writing and signed by the
imposed by postal laws and regulations
maker or drawer
are inconsistent with the character of
Any kind of material that substitutes
negotiable instruments. (Phil. Education
paper is sufficient.
Co. vs. Soriano, 39 SCRA 587)
With respect to the signature, it is
enough that what the maker or drawer
Treasury warrants are non-negotiable
affixed shows his intent to authenticate
because there is an indication of the fund
the writing. (Notes and Cases on Banks,
as the source of payment of the
Negotiable Instruments and other
disbursement. (Metrobank vs. CA, 194
Commercial Documents, Timoteo B.
SCRA 169)
Aquino)
b. Unconditional Promise or Order to
Payable in sum certain in money
pay a sum certain in money
An instrument is still negotiable
Unconditional promise or order
although the amount to be paid is
Where the promise or order is made to
expressed in currency that is not legal
depend on a contingent event, it is
tender so long as it is expressed in
conditional, and the instrument involved
money. (PNB vs. Zulueta, 101 Phil 1071,
is non-negotiable. The happening of the
Sec.6 (e)).
event does not cure the defect.
The certainty is however not affected
The unconditional nature of the
although to be paid:
promise or order is not affected by:
a. With interest; or
a) An indication of a particular fund out
b. By stated installments; or
of which reimbursement is to be
c. By stated installments
made, or a particular account to be
with an acceleration clause;
debited with the amount; or
d. With exchange; or
b) A statement of the transaction which
e. With cost of collection or
gives rise to the instrument
attorney’s fees. (Sec. 2)
Where the promise or order is subject
to the terms and conditions of the
The dates of each installment must be
transaction stated, the instrument is
fixed or at least determinable and the
rendered non-negotiable. The NI must be
amount to be paid for each installment.
burdened with the terms and conditions
A sum is certain if the amount to be
of that agreement to destroy its
unconditionally paid by the maker or
negotiability. (Cesar Villanueva,
drawee can be determined on the face of
Commercial Law Review, 2004 ed.)
the instrument and is not affected by the
But an order or promise to pay out of a
fact that the exact amount is arrived at
particular fund is NOT unconditional.
only after a mathematical computation.
(Sec. 3)
(Notes and Cases on Banks, Negotiable
Instruments and other Commercial
FUND FOR PARTICULAR FUND
REIMBURSEMENT FOR PAYMENT
Documents, Timoteo B. Aquino)
Drawee pays the There is only one act-
payee from his own the drawee pays ACCELERATION INSECURITY EXTENSION
funds; afterwards, directly from the CLAUSE CLAUSE CLAUSE
3. HDC may enforce the instrument as if whether the alteration was innocent
filled up according to no. 2. or fraudulent.
I. MATERIAL ALTERATION
Any change in the instrument which
affects or changes the liability of the
parties in any way.
Effects:
1. Alteration by a party – Avoids the
instrument except as against the
party who made, authorized, or
assented to the alteration and
subsequent indorsers.
However, if an altered instrument
is negotiated to a HDC, he may
enforce payment thereof according to
its original tenor regardless of
COMMERCIAL LAW COMMITTEE
CHAIRPERSON: Garny Luisa Alegre ASST. CHAIRPERSON:Jayson O’S Ramos EDP: Beatrix I. Ramos SUBJECT HEADS:
Marichelle De Vera (Negotiable Instruments Law); Jose Fernando Llave (Insurance); Aldrich Del Rosario
(Transportation Laws);
Shirley Mae Tabangcura, Bon Vincent Agustin (Corporation Law); Karl Steven Co (Special Laws); John Lemuel Gatdula
(Banking Laws); Robespierre CU (Law on Intellectual Property)
Comparison of sections 14, 15 and 16 of the negotiable instruments law
Completeness 1. Wanting in any material 1. Blank paper with Mechanically incomplete Mechanically complete
particular signature
Authority of person 1. Prima facie authority to 1.Signature operates as a No authority to complete and/or May negotiate if delivered to him by or
in possession complete it by filling up prima facie authority to negotiate instrument under the authority of the party
the blanks therein fill it up as such for any making, indorsing, drawing or
amount accepting, as the case may be.
When enforceable If filled up strictly in accordance with authority given Not enforceable When delivery is made by or under
and within a reasonable time authority of the party making,
indorsing, drawing or accepting, as the
case may be.
c. Memorandum Check