HANDOUT NO.

2N

A. Documents generally considered negotiable instruments, include --

a) Certificate of deposit – A certificate issued by banks payable to order

or bearer.

b) Draft – A bill of exchange payable on demand.

c) Bank draft – A bill of exchange payable on demand drawn by one

bank addressed to another bank.

d) Check – A draft drawn against a bank.

e) Cashier’s (Manager’s Check) – A check drawn by the cashier

(manager) of a bank drawn against the bank itself.

f) Memorandum check – a contract by which the drawer engages to pay

the bona fide holder absolutely and not upon condition of presentment.

g) Crossed check – a check where a banker or person is named (or

payee, if simply crossed) on a check whose intervention is required
before the drawee bank is to pay the instrument.

h) Trade acceptance – A bill of exchange drawn by a seller (as drawer)

against the purchaser of goods (as drawee).

i) Negotiable bond – A certificate of indebtedness payable by the issuer

to the bearer thereof or to the order of the holder.

j) Bills in set – A bill composed of various parts each of which contains

a reference to the others, the whole of the parts constituting on e bill of
exchange.

k) Documentary bill of exchange – A bill to which certain commercial

papers, like bills of lading, invoices or similar documents, are attached
when presented for acceptance or payment (when no such documents
are attached, the bill is called a clean bill of exchange)

l) Bank note – a promissory note payable on demand.

m) Due bill – a promissory note acknowledging a debt which the maker

promises to pay.

n) Coupon bond – it is in the nature of a promissory note, promising to

pay a sum certain in money on a day certain in the future, to which are
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attached certain other obligations called coupons, or interest

certificates and of which there usually as many as there are payments
to be made.

B. Certain commonly used instruments that do NOT qualify as negotiable

instruments include –

a) Treasury warrant – being payable out of a particular fund of the

national treasury.

b) Post office money order or Postal money order – being subject to

various restrictions and conditions under postal laws and regulations.

c) Letter of credit – being payable to a specified person for a fixed

amount or a ceiling and usually subject to the fulfillment by the payee
of certain conditions.

d) Trust receipt – being payable to the entrustor, conditioned upon the

resale of the goods and being facultative.

e) Negotiable document of title, bill of lading and warehouse receipt

– being payable in goods rather in money.

f) Pawn ticket – there being no secondary liability

g) Certificate of stock – it does not contain an unconditional promise or

order to pay sum certain money.

h) Warehouse receipt – it does not contain an unconditional promise or

order to pay sum certain money.

i) Dock warrant – it does not contain an unconditional promise or order

to pay sum certain money.

j) Quedan – it does not contain an unconditional promise or order to pay

sum certain money.

Source: Pandect of Commercial Law and

Jurisprudence, Jose C. Vitug
1997, Third Edition

A. Villegas