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MEMORY AID IN COMMERCIAL LAW
NEGOTIABLE INSTRUMENTS LAW (NIL)
(Act No. 2031, effective June 2, 1911)
RECEIPT
If originally payable If payable to
to bearer, it will bearer, it will be
always remain so converted into a
payable regardless of receipt deliverable
NEGOTIABLE NEGOTIABLE manner of to order, if
INSTRUMENT DOCUMENT OF indorsement. indorsed specially.
TITLE A holder in due The indorsee, even
course may obtain if holder in due
Subject is money Subject is goods
title better than that course, obtains
Is itself the The document is a
of the one who only such title as
property with mere evidence of
negotiated the the person who
value title – the things of
instrument to him. caused the deposit
value being the
had over the goods.
goods mentioned in
the document
ASSIGNMENT NEGOTIATION
Has all the Does not have these Pertains to contracts Pertains to NI
requisites of Sec. 1 requisites in general
of NIL
Holder takes the Holder in due
A holder of NI may Intermediate parties instrument subject course takes it free
run after the are not secondarily to the defenses from personal
secondary parties liable if the obtaining among the defenses available
for payment if document is original parties among the parties
dishonored by the dishonored.
Governed by the Governed by the
party primarily
Civil Code NIL
liable.
A holder, if a A holder can never
holder in due acquire rights to the II. NEGOTIABILITY
course, may document better Form of NI: (Sec. 1) Key: WUPOA
acquire rights over than his 1. Must be in Writing and signed by the
the instrument predecessors. maker or drawer;
better than his 2. Must contain an Unconditional
predecessors. promise or order to pay a sum
certain in money;
BILLOF EXCHANGE CHECK 3. Must be Payable on demand, or at a
Not necessarily It is necessary that fixed or determinable future time;
drawn on a deposit. a check be drawn 4. Must be payable to Order or to
The drawee need not on a bank deposit.
bearer; and
be a bank Otherwise, there
would be fraud.
5. When the instrument is addressed to
a drawee, he must be named or
Death of a drawer of Death of the otherwise indicated therein with
a BOE, with the drawer of a check, reasonable certainty.
knowledge of the with the
bank, does not knowledge of the
Determination of negotiability:
revoke the authority bank, revokes the
of the drawee to authority of the
a. Whole instrument
pay. banker to pay. b. What appears on the face of the
May be presented for Must be presented instrument
payment within for payment within c. Requisites enumerated in Sec.1 of the
reasonable time a reasonable time NIL
after its last after its issue. d. Should contain words or terms of
negotiation. negotiability. (Gopenco, Commercial
Law Bar Reviewer, cited in Aquino, p.
May be payable on Always payable on 23)
demand or at a fixed demand
or determinable
future time In determining the negotiability of an
instrument, the instrument in its
entirety and by what appears on its face
NEGOTIABLE NEGOTIABLE
must be considered. It must comply
INSTRUMENT WAREHOUSE
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)
San Beda College of Law
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MEMORY AID IN COMMERCIAL LAW
with the requirements of Sec. 1 of the the drawee pays particular fund
NIL. (Caltex Phils. v. CA, 212 SCRA 448) himself from the indicated. Payment
particular fund is subject to the
indicated. condition that the
The acceptance of a bill of exchange fund is sufficient.
is not important in the determination of Particular fund Particular fund
its negotiability. The nature of indicated is NOT the indicated is the
acceptance is important only on the direct source of direct source of
determination of the kind of liabilities of payment but only the payment.
the parties involved (PBCOM vs. Aruego, source of
reimbursement.
102 SCRA 530)
I. MATERIAL ALTERATION
Any change in the instrument which
affects or changes the liability of the
parties in any way.
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
in possession complete it by filling up prima facie authority to negotiate instrument or 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
A check given by a borrower to a
lender for the amount of a short loan,