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TitleNegotiable Law Doctrines (Sundiang)
TagsPayments Cheque Forgery Law Of Agency Negotiable Instrument
File Size393.3 KB
Total Pages25
Document Text Contents
Page 25

karell marie. San Beda College Manila—College of Law

Negotiable Instruments Law

checking account user, as the drawer could very well have himself exonerated by the mere expediency of
paying a minimal fraction of the face value of the check.

The gravamen of BP 22 is the issuance of a check, not the nonpayment of an obligation—the law has
made the act of issuing a bum check a malum prohibitum.

[BPI v. CA] Transferees under Section 49 of the NIL do not enjoy the presumption of ownership in favor of
holders since they are neither payees nor indorsees of such instruments. The weight of authority is that
the mere possession of a negotiable instrument does not in itself conclusively establish either the right of
the possessor to receive payment, or of the right of one who has made payment to be discharged from
liability. Thus, something more than mere possession by persons who are not payees or indorsers of the
instrument is necessary to authorize payment to them in the absence of any other facts from which the
authority to receive payment may be inferred.

If instruments payable to named payees or to their order have not been indorsed in blank, only such
payees or their indorsees can be holders and entitled to receive payment in their own right. Negotiable
instruments are negotiated by ―transfer to one person or another in such a manner as to constitute the
transferee a holder thereof. If payable to bearer it is negotiated by delivery. If payable to order it is
negotiated by the indorsement completed by delivery. The present case involves checks payable to order.
Not being a payee or indorsee of the checks, private respondent Salazar could not be a holder thereof. It
is an exception to the general rule for a payee of an order instrument to transfer the instrument without
indorsement. Precisely because the situation is abnormal, it is but fair to the maker and to prior holders to
require possessors to prove without the aid of an initial presumption in their favor, that they came into
possession by virtue of a legitimate transaction with the last holder.

The taking and collection of a check without the proper indorsement amount to a conversion of the check
by the bank.

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