NEGOTIABLE INSTRUMENTS LAW

QUIZ

Answer the question directly. No need to include the question in submitting your
answer.

10% of final grade

1. Yes. The letter "ATL" is enough to satisfy the requirement that the instrument be
signed by the manufacturer. Trae Young appears to have used such a letter to
authenticate the instrument, according to the problem. Another it is not required
that the signature be the maker's normal signature.

2. Can a bill of exchange or a promissory note qualify as a negotiable

instrument if: 20 points

a. It is not dated?
Yes. The date is not a significant detail required by Sec. 1, NIL, for an
instrument's negotiability.

b. The day and the month, but not the year of the maturity is given?
No. The time for the payment must be determinable. In this case the
year is not stated that’s why it is unable to determine when the maturity
is.

c. It is payable to cash
Yes. Because the payee's name does not purport to be the name of any
person, Sec. 9(d), NIL, makes the instrument payable to bearer.

d. It names two alternative drawees

No. To be negotiable, a bill cannot be addressed to two or more
drawees in the same order or in succession. As a result, the order
becomes conditional. (1997, BAR)

3. Summarize the case of Metropolitan Bank & Trust Company vs. CA, Feb. 18,
1991, 194 SCRA 169 using the following format: 25 points

Statement of Facts (maximum of 10 sentences)

Eduardo Gomez opened an account with Golden Savings and Loan Association in
January 1979 and deposited 38 treasury warrants drawn by the Philippine Fish Marketing
Authority over the course of two months. Six of these were made out to Gomez directly,
while the others were endorsed by their individual payees, with Gomez as the second
endorser. All of these warrants were then endorsed by Gloria Castillio, Golden Savings'
cashier, and deposited into the company's Metrobank savings account. They were
subsequently sent to Metrobank's main office for clearing, where they were forwarded to
the Bureau of Treasury for special clearing. Gloria Castillo went to the Metrobank branch
numerous times following the deposits to inquire whether the warrants had been cleared,
but she was instructed to wait. Meanwhile, Gomez was barred from making any
withdrawals from his account. Exasperated by Gloria Castillo's repeated enquiries
regarding the clearance and seeking to please a valued client, Metrobank permitted
Golden Savings to withdraw from the uncleared treasury warrants. As a result, Gomez was
able to make withdrawals from his own account through Golden Savings.
 Issue
Whether or not treasury warrants are negotiable instruments.

Ruling of the Court

No, a negotiable instrument must include an unconditional promise or order to pay a

certain amount of money. An unqualified order or promise to pay is unconditional within
the meaning of the Negotiable Instruments Law if it is accompanied by (a) a specific fund
from which reimbursement is to be made or a specific account from which the amount is
to be debited; or (b) a description of the transaction that led to the creation of the
instrument. An order or promise to pay out of a specific fund, on the other hand, is not
unconditional. The designation of Fund 501 as the source of the treasury warrant payment
renders the order or promise to pay "not unconditional," and the warrants themselves non-
negotiable.

4. Summarize the case of Ang Tek Lian vs. CA, 87 Phil. 383 using the following format: 25
points
Statement of Facts (maximum of ten sentences)
Knowing he had insufficient funds, Ang Tek Lian issued a check for P4000, payable to
cash. This was given to Lee Hua Hong in exchange for cash. Upon presentment
of the check, it was dishonored for having insufficient funds. It is argued that the
check, being payable to cash, wasn’t indorsed by the defendant, and thus, isn’t guilty of
the crime charged.

Issue
Whether or not the check issued by Ang Tek Lian that is payable to the order to “cash”
and not have been indorsed by Ang Tek Lian, making him not guilty for the crime of
estafa.

Ruling of the Court

No. Under Section 9(d) of the NIL, a check drawn payable to the order of "cash" is a
check payable to bearer and the bank may pay it to the person presenting it for
payment without the drawer's endorsement.