CHECKS:

A check is a bill of exchange;

A stale check is a check that cannot anymore

be paid although the underlying obligation
still exists;

In payment for his debt in favor of X, Y gave

X a Managers Check in the amount of
P100,000 dated May 30, 2012. Which phrase
best completes the statementA Managers
Check is a check issued by a manager of a
bank in the name of the bank against the
bank itself for the account of the bank;

Unknown to P and M, a law was passed a

month before the sale that prohibits and
declares void any agreement to sell gecko in
the country. If X acquired the note in good
faith and for value, may he enforce payment
on it? No, since the law declared void the
contract on which the promissory note was
founded.

If the drawer and the drawee are the same

person, the holder may present the
instrument for payment without need of a
previous presentment for acceptance. In
such case, the holder treats it as a
Promissory note.

CRIMES involving Checks

Promissory Notes
P authorized A to sign a bill of exchange in
his (Ps) name. the bill reads: Pay to B or
order the sum of P1 M. Signed, A (for and in
behalf of P). The bill was drawn on P. B
indorsed the bill to C, C to D, and D to E. May
E treat the bill as a promissory note? Yes,
because the drawer and the drawee are one
and the same person.

As payment for a debt, X issued a promissory

note in favor of Y but the promissory note on
its face was marked non-negotiable. Then Y
instead of indorsing the promissory note,
assigned the same in favor of Z to whom he
owed some debt also. Which statement is
most accurate? Z can claim payment from X
even though it is marked non-negotiable;

P sold to M a pair of gecko (tuko) for

P50,000. M issued a promissory note to P
promising to pay the money within 90 days.

On June 1, 2011, Efren bought a used top-ofthe-line Mercedes Benz for P7.5 Million from
Switik Trading. On the same day, he paid
P2,500,000 in cash and issued Switik Trading
a check for P5,000,000 dated July 31, 2011.
He then brought the car to a friend's house
and hid it in an underground garage. The
check Efren issued was dishonored for
insufficiency of funds when presented for
payment on due date. Efren was asked to
honor and pay the check or to return the car,
but he refused. What crime/s did Efren
commit? Estafa and a violation of BP Blg. 22.

Is the crime of theft committed by a person

who, with intent to gain, takes a worthless
check belonging to another without the
latter's consent? No. The taking of the
worthless check, which has no value, would
not amount to the crime of theft because of
the legal impossibility to commit the
intended crime.

Stealing a worthless check constitute

impossible crime. There is impossibility to
accomplish the crime of theft since the check
has no value (See: Jacinto v. People, G.R. No.
162540, July 13, 2009).

A person who issues a memorandum check

without sufficient funds necessarily guilty of
violating B.P. Big. 22. A person who issued a
memorandum check without sufficient funds
is guilty of violating B.P. Big. 22 as said law
covers all checks whether it is an evidence of
indebtedness, or in payment of a pre-existing
obligation, or as deposit or guarantee.
(People vs. Nitafan)

X draws a check upon request of Y, the

payee, who told X that he would merely show
the check to his creditor to gain more time to
pay his account. The check bounced upon
presentation by the creditor. Under the
circumstances, who can be prosecuted for
estafa based on the dishonored check? Y as
the one who negotiated the check contrary
to the agreement

Which of the following circumstances of

dishonor of a check can be a basis for
prosecution under the bouncing checks law?
The check, drawn and issued in the
Philippines, was dishonored by the drawee
bank in a foreign country.

Negotiable Instruments
Negotiable instruments are used as
substitutes for money, which means that
when negotiated, they can be used to pay
indebtedness;

The promissory note is negotiable: I promise

to pay A or bearer P100,000 on or before
December 30, 2012.
It conforms fully with the requirements of
negotiability under Section 1 of NIL.

The promissory note is negotiable: I promise

to pay A or bearer P100,000.
It conforms fully with the requirements of
negotiability under Section 1 of NIL. It is
payable on demand because the note does
not express a time for its payment. (BAR
2012)

X issued a check in favor of his creditor, Y. It

reads: Pay to Y the amount of Seven
Thousand Hundred Pesos (Php700,000.00).
Signed, X. What amount should be
construed as true in such case? Php
700,000.00.

In a negotiable instrument, when the sum is

expressed both in numbers and in words and
there is discrepancy between the words and
numbers the sum expressed in words will
prevail over the one expressed in numbers;

X issued a promissory note which states I

promise to pay Y or bearer the amount of
HK$50,000 on or before December 30,
2013. Is the promissory note negotiable?
Yes, the promissory note is negotiable even
though the amount is stated in foreign
currency;

Which of the following instruments is

negotiable if all the other requirements of

negotiability are met? A promissory note

which contains in addition a promise to paint
the portrait of the bearer.

A promissory note states, on its face: I, X,

promise to pay Y the amount of P5,000.00
five days after completion of the on-going
construction of my house. Signed, X. Is the
note negotiable? No, since it is payable at a
fixed period after the occurrence of an event
which may not happen.

A writes a promissory note in favor of his

creditor, B. it says: Subject to my option, I
promise to pay B P1 M or his order to give P1
M worth of cement or to authorize him to sell
my house worth P1 M. signed, A. Is the note
negotiable? No, because the exercise of the
option to pay lies with A, the maker and
debtor.

B borrowed P1 M from L and offered to him

his BMW car worth P1 M as collateral. B then
executed a promissory note that reads: I, B,
promise to pay L or bearer the amount of P1
M and to keep my BMW car (loan collateral)
free from any other encumbrance. Signed,
B. Is this note negotiable? No, since it
contains a promise to do an act in addition to
the payment of money.

A bill of exchange or a promissory note can

qualify as a negotiable instrument even if it
is not dated.
Date is not a material particular required by
Sec. 1, NIL, for the negotiability of an
instrument.

A bill of exchange or a promissory note can

qualify as a negotiable instrument if the day

and month, but not the year of its maturity,

is given. The time for payment is not
determinable in this case. The year is not
stated.

The negotiability of the promissory note (PN)

is affected when the date of the PN is
February 30, 2002.
Negotiability is NOT AFFECTED. The date is
not one of the requirements for negotiability.

A bill of exchange or a promissory note can

qualify as a negotiable instrument if it is
payable to cash. Sec. 9(d), NIL, makes the
instrument payable to bearer because the
name of the payee does not purport to be
the name of any person.

The check can be considered a negotiable

instrument even if a person issued a check
for P1M which he used to pay another for
killing his political enemy.
The check can be considered a negotiable
instrument even if it was issued to pay S to
kill his political enemy. The validity of the
consideration is not one of the requisites of a
negotiable instrument (Section 1, NIL). It
merely constitutes a defect of title. (Section
55, NIL)

A document, dated July 15, 2009, that reads:

Pay to X or order the sum of P5,000.00 five
days after his pet dog, Sparky, dies. Signed
Y. is a negotiable instrument.
The document is subject to a term and not a
condition. The dying of the dog is a day

which is certain to com. Therefore, the order

to pay is unconditional, in compliance with
Section 1 of the NIL.

The negotiability is NOT AFFECTED. Giving

the option to the holder does not make the
promise conditional.

The negotiability of the promissory note (PN)

is affected when the PN gives the maker the
option to make payment either in money or
in quantity of palay of equivalent value. The
negotiability is AFFECTED. Giving the
maker the option renders the promise
conditional.

The promissory note is negotiable: I promise

to pay A or bearer P100,000 from my
inheritance which I will get after the death of
my father. There is no unconditional promise
to pay a sum certain in money as the
promise is to pay the amount out of a
particular funds, i.e., the inheritance from
the father of the promisor.

The negotiability of the promissory note (PN)

is affected when the PN bears interest
payable on the last day of each calendar
quarter at a rate equal to 5% above the then
prevailing 91-day Treasury Bill rate as
published at the beginning of such calendar
quarter.
Negotiability is NOT AFFECTED. The
interest is to be computed at a particular
time and is determinable. It does not make
the sum uncertain or the promise
conditional.

A bill of exchange or a promissory note can

qualify as a negotiable instrument if it names
two alternatives drawees.
A bill may not be addressed to two or more
drawees in the alternative or in succession,
to be negotiable. To do so makes the order
conditional.

The negotiability of the promissory note (PN)

is affected when the PN gives the holder the
option either to require payment in money or
to require the maker to serve as the
bodyguard or escort of the holder for 30
days.

The promissory note is negotiable: I promise

to pay A or bearer P100,000 plus the interest
rate of 90day treasury bills.
There is no unconditional promise to pay a
sum certain in money. The promise to pay
the interest rate of 90day treasury bills is
vague because, first, there are no 90day
treasury bills; second, the promise does not
specify whether the so-called interest rate
is that established at the primary market
(where new T-bills are sold for the first time
by the Bureau of Treasury) or at the
secondary market (where T bill can be
bought and sold after they have been issued
in the primary market); and third, T-bills are
conventionally quoted in terms of their
discount rate, rather than their interest rate.
They do not pay any interest directly;
instead, they are sold at a discount of their
face value and thus earn by selling at face
value upon maturity.

The promissory note is negotiable: I promise

to pay A or bearer P100,000 if A passes the
2012 bar exams.
The promise to pay is subject to a condition,
i.e., that A will pass the 2012 bar exams.

X issued a promissory note which states, I

promise to pay Y or order P100,000 or 1 unit
Volvo Sedan. Which statement is most
accurate the promissory note is nonnegotiable because the option as to which
form of payment is with the maker;

A asked financial support from her showbiz

friend B who accommodated her by issuing
in her favor a postdated check in the sum of
P90,000.00. Both of them knew that the
check would not be honored because Bs
account had just been closed. The two then
approached trader C whom they asked to
change the check with cash, even agreeing
that the exchange be discounted at
P85,000.00 with the assurance that the
check shall be funded upon maturity. Upon
Cs presentment of the check for payment on
due date, it was dishonored because the
account had already been closed. Can A be
held liable under B.P. 22?

1. Frank borrowed P1,000,000 from his

brother Eric. To pay the loan, Frank
issued a post-dated check to be
presented for payment a month after
the transaction. Two days before
maturity, Frank called Eric telling him
he had insufficient funds and
requested that the deposit of the
check be deferred. Nevertheless, Eric
deposited the check and it was
dishonored. When Frank failed to pay
despite demand, Eric filed a complaint
against him for violation of Batas
Pambansa Big. 22 (The Bouncing
Checks Law). Was the charge brought
against Frank correct?

2. Raul Doria gave in trust two acrylic

paintings to Amar Solo to be sold on
commission basis for P20,000.00.
Failing to sell them to George Ty, Amar
consigned the paintings to Alcanto
Gallery. In the same month, Amar
retrieved one painting and tried to
return in to Raul who refused to
receive it without the other painting.
The other painting was bought by Mr.
Lomot whose check, which Amar gave
to Raul, bounced, so that Amar paid
Raul his own check of P6,500.00
promising in writing to pay the
P3,500.00 balanceless his commission.
Is Amar liable for estafa? Why?

3. A, a businessman, borrowed
P500.000.00 from B, a friend. To pay
the loan, A issued a
postdated check to be presented for
payment 30 days after the
transaction. Two
days before the maturity date of the
check, A called up B and told him not
to deposit
the check on the date stated on the
face thereof, as A had not deposited in
the drawee
bank the amount needed to cover the
check. Nevertheless, B deposited the
check in
question and the same was
dishonored of insufficiency of funds. A
failed to settle the
amount with B in spite of the latters
demands. Is A guilty of violating B.P.
Big. 22,
otherwise known as the Bouncing
Checks Law? Explain. (5%) (2002 Bar
Question)

4. Lorenzo drew a bill of exchange in the

amount of P100,000 payable to
Barbara or order, with his wife, Diana,
as drawee. At the time the bill was

drawn, Diana was unaware that

Barbara is Lorenzos paramour.
Barbara then negotiated the bill to her
sister, Elena, who paid for it for value,
and who did not know who Lorenzo
was. On due date, Elena presented the
bill to Diana for payment, but the
latter promptly dishonored the

instrument because, by then, Diana

had already learned of her husbands
dalliance. Does the illicit cause or
consideration adversely affect the
negotiability of the bill? Explain.