Distinctions between a Check and Bill of Exchange

CHECK BOE

– may or may not be drawn against a

– always drawn upon a bank or banker bank

– may be payable on demand or at a

– always payable on demand fixed or determinable future time

– not necessary that it be presented for – necessary that it be presented for

acceptance acceptance

– drawn on a deposit – not drawn on a deposit

– the death of a drawer of a check, with

knowledge by the banks, revokes the – the death of the drawer of the ordinary
authority of the banker pay bill of exchange does not

– must be presented for payment within – may be presented for payment within
a reasonable time after its issue   (6 a reasonable time after its last
months) negotiation.

Distinctions between a Promissory Note and Check

PN CHECK

– there are two (2) parties, the maker and – there are three (3) parties, the
the payee drawer, the drawee bank and the payee

– may be drawn against any person, not

necessarily a bank – always drawn against a bank

– may be payable on demand or at a fixed

or determinable future time -always payable on demand

– a promise to pay – an order to pay

Other Forms of Negotiable Instruments:

a) certificates of deposits
b) trade acceptances
c) bonds in the nature of promissory notes
d) drafts which are bills of exchange drawn by 1 bank to another
e) letters of credit

Trust Receipt – a security transaction intended to aid in the financing of importers and retailers who do not have sufficient funds to finance their
transaction and acquire credit except to use as collateral the merchandise imported

Requisites of a Negotiable Note (PN): (SUDO)

It must:

a. be in writing signed by the drawer

b. contains an unconditional promise or order to pay a sum certain in money
c. be payable on demand or at a fixed determinable future time
d. be payable to order or to bearer (Sec. 1 NIL)

Requisites of a Negotiable Bill (BOE): (SUDOC)

It must:

1. be in writing signed by the drawer

2. contains an unconditional promise or order to pay a sum certain in money
3. be payable on demand or at a fixed determinable future time
 4. be payable to order or to bearer
5. the drawee must be named or otherwise indicated with reasonable certainty (Sec. 1 NIL)

Section 1:
Form of negotiable instruments.
An instrument to be negotiable must conform to the following requirements:
a) It must be in writing and signed by the maker or drawer;
b) Must contain an unconditional promise or order to pay a sum certain in money;
c) Must be payable on demand, or at a fixed or determinable future time;
d) Must be payable to order or to bearer; and
e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty.

1) The instrument must be in writing

2) The instrument must be signed by the maker or drawer.
3) The instrument must contain an unconditional promise or order to pay.
4) The instrument must be payable in a sum certain in money
5) The instrument must be payable at a fixed or determinable future time or on demand
6) The instrument must be payable to order or bearer.
7) The drawee must be named
 A promissory note has no drawee. Like the drawee, the payee must be named with reasonable certainty,

Non-negotiable instrument defined.

A non-negotiable instrument is, of course, an instrument which is not negotiable, that is, an instrument which does not meet the
requirements laid down to qualify an instrument as a negotiable one, or an instrument which in its inception was negotiable but has lost its
quality of negotiability.
A typical example is a check payable only to a specified person, as when it reads merely "Pay to Pedro Cruz/' A negotiable
instrument ceases to be negotiable if the indorsement prohibits the further negotiation of the instrument, (see Sec. 36[a]; also Sees. 32 and 41.)
An instrument which is non-negotiable is covered by the general provisions of the Civil Code, not by the Negotiable Instruments Law.
It is merely a simple contract in writing and is evidence of such intangible rights as may have been created by the assent of the parties.

*In determining is the instrument is negotiable, only the instrument itself and no other, must be examined and compared with the requirements
stated in Sec. 1. If it appears on the instrument that it lacks one of the requirements, it is not negotiable and the provisions of the NIL do not
govern the instrument. The requirement lacking cannot be supplied by using a separate instrument in which that requirement which is lacking
appears.
Sum is certain even if it is to be paid with:
a. interest
b. in installments
c. in installments with acceleration clause
d. with exchange
e. costs of collection or attorney’s fees (Sec. 2 NIL)