2 main functions of negotiable instruments are:

1) They serve as substitute for money; and

2) They serve as credit instruments.

Characteristics of NI
negotiability and accumulation of secondary contracts.

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.

Sec. 2. What constitutes certainty as to sum. - The sum payable is a sum certain within the
meaning of this Act, although it is to be paid:

(a) With interest; or

(b) by stated installments; or
(c) by stated installments, with a provision that, upon default in payment of any
installment or of interest, the whole shall become due; or
(d) with exchange, whether at a fixed rate or at the current rate; or
(e) with costs of collection or an attorney's fee, in case payment shall not be made at
maturity.

Sec. 3. When promise is unconditional. - An unqualified order or promise to pay is

unconditional within the meaning of this Act though coupled with: (I-R-

(a) An indication of a particular fund out of which reimbursement is to be made or

a particular account to be debited with the amount; or
(b) A statement of the transaction which gives rise to the instrument.

But an order or promise to pay out of a particular fund is not unconditional.

Sec. 4. Determinable future time; what constitutes. - An instrument is payable at a
determinable future time, within the meaning of this Act, which is expressed to be payable:

(F-D

(a) At a fixed period after date or sight; or

(b) On or before a fixed or determinable future time specified therein; or

(c) On or at a fixed period after the occurrence of a specified event which is certain
to happen, though the time of happening be uncertain.

An instrument payable upon a contingency is not negotiable, and the happening of the
event does not cure the defect.

Sec. 5
Sec. 6
Sec. 7
Sec. 8
Sec. 9

trinity of defenses 14
sec. 15 (real defense) = Sec. 15. Incomplete instrument not delivered. - Where an
incomplete instrument has not been delivered, it will not, if completed and
negotiated without authority, be a valid contract in the hands of any holder, as
against any person whose signature was placed thereon before delivery.
sec. 16
sec. 23 (Barrier Rule)
sec. 22 (infancy or minority)
accommodation parties
sec. 30
Striking out endorsements
re-negotiation to prior parties
 Sec. 52. Legal Tender Power. - All notes and coins
issued by the Bangko Sentral shall be fully guaranteed
by the Government of the Republic of the Philippines
and shall be legal tender in the Philippines forall debts,
both public and private: Provided, however, That, unless
otherwise fixed by the Monetary Board, coins shall
be legal tender in amounts not exceeding Fitty pesos
(P50.00)for denominations of Twenty-five centavos and
above, and in amounts not exceeding Twenty pesos
(P20.00) for denominations of Ten centavos or less.
Sec. 57
Sec. 59
Sec. 58 (shelter rule)
Sec. 60. Legal Character. - Checks representing
demand deposits do not have legal tender power and
their acceptance in the payment of debts, both public
and private, is at the option of the creditor: Provided,
however, That a check which has been cleared and
credited to the account of the creditor shall be equivalent
to a delivery to the creditor of cash.

- obligations are deemed paid only when the instruments are encashed.
(except: check is impaired due to the fault of the creditor)
not legal tender:
- Negotiable instruments
- Bill of exchange
Sec. 61
Sec. 65
Sec. 66
presentment for payments
notice of dishonors
discharge of negotiable instruments
constructive acceptance and intentional cancellation
qualified indorsements
protest should only be dont on foreign instruments
effects of crossing cheques
differences between ordinary bill of exchange and cheques
cases principles

191 excluding Sec 23