You are on page 1of 4


A proof that an act could have been done is no proof that it was actually done. Acceptance, banker negotiable time draft or BOE drawn on and accepted by a commercial bank, used in domestic and international trade; used in domestic and international trade; used when buyer and seller are not known to each other and credit references are difficult to obtain Acceptance, general assents without qualification to the order of the drawer (Sec. 139) Acceptance, qualified in express terms varies the effect of the bill as drawn (Sec. 139) Acceptance, trade draft or bill of exchange with a definite maturity, drawn by a seller on a buyer for the purchase price of goods, bearing across its face the acceptance of the buyer Accommodation party one who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. (Sec. 29) Active participation doctrine the test WON a finance company can be a HIDC; it it actively participated in the transaction from its inception, it cannot be a HIDC (Consolidated Plywood v. IFC Leasing; note—sir disagrees with ruling) Allonge indorsement on a separate paper that is attached (Sec. 31) Antedated instrument bears date earlier than date of actual issuance Assignment transfer without negotiation; assignee merely steps into shoes Bearer person in possession of a bill or note which is payable to bearer (Sec. 191) Bearer instrument negotiable by mere delivery (PNB v. Rodriguez) Bill of exchange order made by one person to another to pay money to a third person; unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer (Sec. 126, NIL) Bill of lading written acknowledgment by a carrier of the receipt of goods described therein and an agreement to transport them to the place specified therein and deliver them there to the person named therein or his order Bond type of promissory note; evidence of indebtedness issued by a corporation, public or private, payable at a definite date in the future, usually for a long term; written promise of the corporation to pay Cambium Certificate of deposit type of promissory note; instrument issued by a bank reciting a deposit of a certain sum of money, payable either at a fixed time or on demand, to the depositor named therein Certificate of indebtedness certificates for creation and maintenance of a permanent improvement revolving fund; similar to bond; an acknowledgement of an obligation to pay a fixed sum of money (Traders Royal Bank v. CA); Certification agreement by which a bank promises to pay the check at any time it is presented for payment; prior to certification, bank not liable to holder (no privity of contract); certification operates as an assignment of a part of the funds to the creditor (New Pacific Timber v. Seneris) Check bill of exchange drawn on a bank payable on demand (Sec. 185); one who issues it orders his bank to pay the person named on the check Check, manager's aka cashier's check; drawn by bank on itself; issuance has the effect of acceptance; holder may treat check as either BOE or PN; used in transactions involving persons who hardly know each other; considered “credit” as it is deemed accepted already upon issuance, ergo, the existence of a creditor-debtor relationship (Republic v. PNB) Check, memorandum word “memorandum” or “memo” is written across its face; drawer will pay holder absolutely, without need of presentment Check, traveler's holder's signature appears twice–first when issued, second when cashed; used by travelers as safest and most convenient substitute for money Clearing check collection process; bank represetnatives exchange checks in a clearinghouse

and return to their banks to check sufficiency of the drawer's funds All items cleared at 11:30 am shall be returned not later than 3:30 am of the following business day, except for items cleared on Saturday which may be returned not later than 8:30 of the following day (Republic v. Equitable Banking Corp) Cognovit actionem a kind of judgment by confession; Confession relicta verificatione a kind of judgment by confession; Contingency an uncertain future event (State Bank of Halstad v. Bilstad) Credit (usual meaning)sum credited on the books of a company to a person who appears to be entitled to it; correlative to debt or indebtedness, and that which is due to any person (Republic v. PNB); considered credit: cashier's check (primary obligation of issuing bank, already deemed accepted), telegraphic payment order; not considered: demand draft which has not been presented for acceptance or payment Delivery transfer of possession, actual or constructive, from one person to another (Sec. 191, par. 6, NIL) Discount transaction where the indorsee pays the indorser less than the face amount of the instrument, title transferring to the indorsee Draft type of bill of exchange; order made by one person (buyer of goods) addressed to a person having in his possession funds of such buyer, ordering the addressee to pay the purchase price to the seller of the goods. Drawee addressee of the order in a bill of exchange Drawer person who gives the order to pay in a bill of exchange Estoppel principle that precludes a person from asserting something contrary to what is implied by a previous action or statement of that person or by a previous pertinent judicial determination Execution process which carries into effect a decree or judgment; for the SHERIFF to accomplish, not equivalent to satisfaction of judgment (PAL v. CA) Fictitious name feigned or pretended name Fictitious payee rule When payee is fictitious or not intended to be the true recipient of the proceeds, the check is considered a a bearer instrument (PNB v. Rodriguez) First money in is the first money out rule first items on the debit side are charged against the first items on the credit side (Merchant's National Bank v. Sta. Maria Sugar); how to know if funds represented by instrument have been withdrawn Fraud in the inducement where signer knows paper is negotiable instrument but is deceived as to its value/terms; cannot be used against HIDC; is personal defense Fraud in factum aka fraud in the execution; fraud practiced on maker/signer is such that he is tricked into signing paper he does not know is a negotiable instrument; real defense, as there was no real consent Holder payee or indorsee of a bill or note who is in possession of it, or the bearer thereof (Sec. 191) Indorsee person to whom indorser negotiates instrument; becomes holder of instrument Indorser A payee of an instrument who transfers such to another by signing the instrument at the back thereof Indorsement in blank one that specifies no indorsee, is payable to bearer, and may be negotiated by delivery (Sec. 34) Indorsement, conditional one where party required to pay the instrument may disregard the condition and make payment to the indorsee or his transferee whether the condition has been fulfilled or not. But any person to whom an instrument so indorsed is negotiated will hold the same, or the proceeds thereof, subject to the rights of the person indorsing conditionally. (Sec. 39) Indorsement, qualified one that constitutes the indorser a mere assignor of the title to the instrument (i.e. “without recourse”), and such indorsement does not impair the negotiable character of the instrument (Sec. 38) Indorsement, restrictive one which either restricts the right of the indorsee to further negotiate the instrument or reserves beneficial interest therein in the indorser or in a third person. Indorsement, special one that specifies the person to whom, or to whose order, the instrument is to be payable, and the indorsement of such indorsee is necessary to the further Clearing house rule

negotiation of the instrument (Sec. 34) Issue/Issuance of instrument: first delivery of the instrument complete in form, to a person who takes it as a holder (Sec. 191, par. 10, NIL) Language of negotiabilityfreedom to circulate as a substitute for money (Traders Royal Bank v. CA) Law merchant system of law which does not rest exclusively on the positive institutions and local customs of any particular country but consists of certain principles of equity and usages of trade which general convenience and a common sense of justice have established, to regulate the dealings of merchants and mariners in all the commercial countries of the civilized world Legal tender Maker promissor of a promissory note; what the law or custom makes receivable for payments of taxes and debts (Incitti v. Ferrante) Material alteration change or addition which alters the effect of the instrument in any respect, including date, currency, number and relations of parties, place and time of payment, and sum payable (Sec. 125) Money Not necessarily limited to legal tender as defined by law but includes any particular kind of current money; it is what the law or custom makes receivable for payments of taxes and debts, a.k.a. Obligations (Incitti v. Ferrante) Money market market dealing in standardized short- term credit instruments (involving large amounts) where lenders and borrowers do not deal directly with each other but through a middleman or dealer in open market (Allied Banking v. Lim Sio Wan) Money market placement simple loan or mutuum Negotiable instruments instruments that conform to all requirements prescribed by the Negotiable Instruments Law Negotiation transfer from one person to another in such manner as to constitute the transferee the holder thereof (Sec. 30, NIL); if bearer instrument, negotiated by delivery; if order instrument, negotiated first by indorsement of the holder and completed by delivery New bill doctrine Situation contemplated in Sec. 7, second paragraph; for an indorser of a negotiable instrument that is mature or overdue, it is payable on demand; Order command or imperative direction Order instrument requires an indorsement from payee or holder before it may be validly negotiated (PNB v. Rodriguez) Overdraft check is issued for an amount more than what the drawer has in deposit with the drawee bank Payee person to whom the promise to pay is made Postdated instrument bears date later than date of actual issuance Procuration the appointment, authority, or action of an attorney Promissory note promise to pay money; unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable future time, a sum certain in money to order or to bearer (Sec. 184, NIL) Protest testimony of some proper person, usually a notary and usually in the form of an affidavit, that the regular legal steps to fix the liability of drawer and indorsers have been taken Ratification party with full knowledge of all material facts confirms, approves, or sanctions the other's acts (Strader v. Haley) Reasonable Time regard is to be had to the nature of the instrument, the usage of trade or business with respect to such instrument and the facts of the particular case (Sec. 193) Satisfaction of judgment payment of the amount of the writ, or a lawful tender thereof, or the conversion by sale of the debtor's property into the amount equal to that due; for the CREDITOR to achieve, not equivalent to execution of judgment (PAL v. CA) Seniorage monopoly State enjoys to print legal tender Signature the name of a person appended by him to an instrument. The execution of any symbol upon a writing with intent to authenticate the instrument as one made or put into effect by him. Spoliation material alteration by a stranger Stop payment order one issued by the drawer of a check countermanding his first order to the drawee

Tranverse Two innocent parties


bank to pay said check formal denial of a matter of fact where a loss, which must be borne by one of two parties alike innocent of forgery, can be traced to the neglect or fault of either, it is reasonable that it would be borne by him, even if innocent of any intentional fraud, through whose means it has succeeded any consideration sufficient to support a simple contract (Sec. 25)