Tampos, Roxan Vee G.
Negotiable Instruments Law
ATTY. TRIZIA JANELLI B. PAULINO-DENUNA
February 2. 2023
1. The law provides that negotiable instrument is a written contract for the payment
of money which is intended as a substitute for money and passes from one
person to another, in such manner as to give a holder in due course the right to
hold the instrument free from defenses available to prior parties.
2. The law provides that the requisites of negotiability are as follows, to wit:
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 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 name or
otherwise indicated therein with reasonable certainty.
3. Under the law, the functions negotiable instruments are as follows, to wit;
A. It operates as a substitute for money;
B. It is a medium of exchange;
C. It is a credit instrument that increases credit circulation;
D. It increases the purchasing power in circulation ; and
E. It is a proof of transaction.
4. Under the law the two distinctive features of a negotiable instrument are as
follows, to wit:
A. Negotiability- in this feature it explains that through the negotiable instrument,
the possession could be transfer from one person to a person who is a
holder, whether the transferee meets the additional due course requirements.
B. Accumulation of Secondary Contracts- in this feature it explains that
secondary contracts are accumulated because the indorsers become liable
not only to their immediate transferees, but also to any holder or any party
C. .
5. In the case of Caltex Philippines, Inc. vs. Court of Appeals, the Supreme Court
held that “an instrument is considered negotiated when it is transferred from one
person to another in such a manner as to constitute the transferee the holder
thereof, and a holder may be the payee or indorsee of a bill or note, who is in
possession of it, of the bearer thereof.”