Professional Documents
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RFBT Reviewer Nego Free - 240212 - 114918
RFBT Reviewer Nego Free - 240212 - 114918
RFBT Reviewer Nego Free - 240212 - 114918
payment should be given. This check is 2. But the person who accepts or pays in
not to be presented for payment, but will due course shall not be prejudiced.
be redeemed by the drawer himself.
• Certified Check – one drawn by a Obligations of holder who indorses 2 or more
depositor upon funds to his credit in a parts of the Bill in Set:
bank which a proper officer of the bank 1. The person shall be liable on every such
certifies will be paid when duly part.
presented for payment 2. Every indorser subsequent to him is
• Traveler’s check – one upon which the liable on the part he has himself
purchaser’s signature must appear twice indorsed, as if such parts were separate
– at the time he buys it and also at the bills.
time he uses it. It has the
characteristics of a cashier’s check of Distinctions between a Negotiable Instrument
the issuer. and a Negotiable Document of Title (2005 Bar
• Crossed check (1995, 1996, 2004, 2005 Exam)
Bar Exams) – when 2 parallel lines are
drawn across its face or across a corner NEGOTIABLE NEGOTIABLE
thereof. If the name of a bank appears INSTRUMENTS DOCUMENTS OF
between the parallel lines, the check is TITLE
said to be specially crossed, and Subject is money Subject is goods
payment should be made only if
presented by the named bank. If no Is itself the property The document is a
name appears between the parallel lines, with value mere evidence of title
the check is said to be generally crossed, – the things of value
and payment should be made only upon being the goods
presentment by some bank. mentioned in the
o Effects of crossing a check: document
a. That the check may not be Has all the requisites Does not have these
encashed but only deposited in of Sec. 1 of NIL requisites
the bank;
b. That the check may be A holder of NI may Intermediate parties
negotiated only once to one who run after the are not secondarily
has an account with a bank; secondary parties for liable if the document
and payment if is dishonored
c. That the act of crossing the dishonored by the
check serves as a warning to the party primarily liable
holder that the check has been
issued for a definite purpose so
PROMISSORY NOTE BILLS OF
that he must inquire if he has
EXCHANGE
received the check pursuant to
Unconditional Unconditional Order
that purpose.
promise
• Stale check – one which has not been
Involves 2 parties on Involves 3 parties on
presented for payment within a
its face its face
reasonable time after its issue.
Person who issues is Person who issues is
Iron Clad Rule: Prohibits the countermanding of
the maker the drawer
payment of certified checks (Republic of the
Philippines v. PNB. GR No. 16106. December 1,
Party primarily liable Party primarily liable
1961). But the holder must be a HIDC (Mesina v.
is the maker is the acceptor
IAC, 145 SCRA 497)
One presentment Could be two
Bills in Set: one composed of several parts, each
only: for payment presentments: for
part numbered and containing a reference to the
acceptance and for
other parts, the whole of the parts constituting
payment
but one bill.
Note: Postal Money Order, Treasury Warrant, Bearer - the person in possession of a bill or
Certificate of Stock, Letter of Credit, Bill of note which is payable to bearer.
Lading and Warehouse Receipts are not
negotiable instruments.
Legal Tender
That kind of money that the law compels a
creditor to accept in payment of a debt when
tendered by the debtor in the right amount.
Under Sec. 52 of RA 7653, all notes and coins
issued by the BSP shall be legal tender in the
Philippines.
NEGOTIABLE INSTRUMENTS LAW
II. NEGOTIABILITY
Mere acknowledgment insufficient.
Requisites of Negotiability (Sec. 1, NIL) (1996
An order or promise to pay out of a particular
Bar Exam)
a. It must be in writing and signed by the fund is not unconditional because, in effect, it is
maker or drawer; subject to the condition that the fund is
b. Must contain an unconditional promise or sufficient.
order to pay a sum certain in money;
c. Must be payable on demand, or at a fixed or FUND FOR PARTICULAR FUND
determinable future time; REIMBURSEMENT FOR PAYMENT
d. Must be payable to order or to bearer; and Drawee pays the There is only one act-
e. Where the instrument is addressed to a payee from his own the drawee pays
drawee, he must be named or otherwise funds; afterwards, directly from the
indicated therein with reasonable certainty. the drawee pays particular fund
Note: Do not be confused with the word “order” himself from the indicated.
under “b” and “d” particular fund Payment is subject to
indicated. the condition that the
1. Must be in writing, signed by the maker or fund is sufficient.
drawer; Particular fund Particular fund
- Otherwise it cannot be a substitute for money. indicated is NOT the indicated is the direct
- Signature may be in any form like initial or direct source of source of payment.
mark. No particular location. payment but only the
source of
2. Must contain an unconditional promise or order reimbursement.
to pay a sum certain in money;
3. Payable on demand or at a fixed or
Certainty of sum payable determinable future time;
The sum payable is a sum certain although it is
to be paid: Certainty of time of payment
a. With interest; or An instrument is payable at a determinable
b. By stated installments; or future time which is expressed to be payable:
a. At a fixed period after date or sight; or
c. By stated installments, with a provision
b. On or before a fixed or determinable future
that, upon default in payment of any time specified therein; or
installment or of interest, the whole c. On or at a fixed period after the occurrence
shall become due; or of a specified event which is certain to
d. With exchange, whether at a fixed rate happen, though the time of happening be
or at the current rate; or uncertain.
e. With costs of collection or an attorney's
fee, in case payment shall not be made After sight means after the drawee has seen
at maturity. (sec. 2) the NI upon presentment for acceptance.
The event must necessarily happen. If
Interest stipulated but not specified – legal conditional, not negotiable.
interest. An instrument payable upon a contingency
is not negotiable, and the happening of the
Interest not stipulated – legal interest will be event does not cure the defect. (Sec. 4)
paid when the debtor incurs in delay (Art. A promise to pay “when able,” “as soon as I
2209, NCC) can”, etc., without specification of an
Interest due shall earn legal interest from absolute date is not negotiable. However,
the time it is judicially demanded (Art. 2212, there is a difference of opinion as to whether
NCC) it is a conditional promise or an absolute
promise to pay at an unreasonable time:
Note: NI need not be payable in legal tender. a. Under the first view, negotiability is
destroyed both by the condition and by
When promise or order unconditional want of a fixed time for payment;
An unqualified order or promise to pay is b. Under the second view, by the general
unconditional though coupled with: principle that a promise to pay within a
a. An indication of a particular fund out of reasonable time is not so certain as to
which reimbursement is to be made or a render an instrument negotiable.
particular account to be debited with the
amount; or
b. A statement of the transaction which
gives rise to the instrument.
NEGOTIABLE INSTRUMENTS LAW