NEGOTIABLE INSTRUMENTS LAW
Morillo Notes
INTRODUCTION Q: What are the characteristics or features of a negotiable
AND instruments?
A:
GENERAL PROVISIONS 1. Negotiability – A negotiable instrument may pass
from hand to hand similar to money, as to give
Q: What is Negotiable Instrument Law? holder in due course the right to hold the instrument
A: ___ and collect the sum payable for himself free from
any defect in the titl of any of the parties, or
Q: What is a negotiable instrument? defenses available to them among themselves.
A: Any instrument that complies with the requirements [Secs. 52 & 57, NIL]
imposed under Sec. 1 of the Negotiable Instrument Law. 2. Accumulation of Secondary Contracts – negotiable
instruments are transferred from one person to
Some Definition of Terms under Sec. 191, NIL: another.
Acceptance – an acceptance completed by delivery or
notification; Q: What is the theory of negotiable instruments?
Action – includes counterclaim and set-off; A: By sending a negotiable instrument into the world, the
Bank – any person or association of persons carrying on maker thereof is estopped from urging, as against a
the business of banking, whether incorporated or not; bona fide holder who has received it from anyone in
Bearer – the person in possession of a bill or note which is possession, a defect of title. The holder, though without
payable to bearer; title, has the capacity to give title because he is the
Bill and Note – Bill means Bill of exchange, while Note apparent owner of the instrument. [Manhattan Savings
refers to Promissory Notes; vs. New York National Bank, 62 NE 1079]
Delivery – the transfer of possession, actual or
constructive, from one person to another; Q: What are the forms of negotiable instruments?
Holder – the payee or indorsee of a bill or notes who is in a A:
possession of it, or the bearer thereof; Common Special
Indorsement – an indorsement completed by delivery; Promissory notes Certificates of deposits;
Instrument – means negotiable instrument; Bills of exchange **
Issue – the first delivery of the instrument, complete in Bank check *** Bank notes; **
form, to a person who takes it as a holder; Due bills; **
Person – includes a body of persons, whether Bonds; **
incorporated or not; Drafts;
Value – means valuable consideration; Trade acceptances; ***
Written – includes printed; and and
Writing – includes print. Banker’s acceptances
***
Q: What is the purpose of the Negotiable Instrument Law?
A: The purpose of the law is to facilitate, and not hinder or Notes: ** - Special types of promissory notes
hamper the transactions of commercial papers [State *** - Special types of bills of exchange
Investment House, Inc. vs. CA, 217 SCRA 32]
Q: What is the generally rule when there is doubt in the
Q: What are the functions or importance of a negotiable interpretation of a negotiable instruments?
instrument? A: Where the meaning of the negotiable instrument is
A: doubtful, the courts have shall resolve the said doubt in
1. As a substitute for money; favor of the negotiability of the instrument. The purpose
2. As a medium of exchange for most commercial is to encourage the free circulation of the negotiable
transactions papers because of the admittedly indispensable function
3. As a medium of credit transactions; they perform in mercantile business transactions in any
4. As a means, in the case of check, of making given country and the world at large. [De Leon,
immediate payment Philippine Negotiable Instruments Law, 2016, p. 8]
Q: Who are persons primarily liable on the instrument?
NEGOTIABLE INSTRUMENTS LAW 1
NEGOTIABLE INSTRUMENTS LAW
Morillo Notes
A: These are the persons who, by the terms of the
instrument, is absolutely required to pay the negotiable
instrument. All other parties are “secondarily” liable.
[Sec. 192, NIL]
Q: What are the similarities and differences between
Contracts and Negotiable Instruments?
A:
TITLE 1
NEGOTIABLE INSTRUMENTS IN GENERAL
CHAPTER 1 – FORM AND INSTERPRETATION
Q: __
2 NEGOTIABLE INSTRUMENTS LAW
