NO. There was a valid negotiable receipt as there was a valid delivery of 200 cavans of rice for deposit. In such case, the warehouseman (LWC) is not obliged to deliver the 200 cavans of rice deposited to any person, except to one who can comply with Section 8 of the Warehouse Receipts law, namely: (1) surrender the receipt of which he is a holder; (2) willing to sign a receipt for the delivery of the goods; and (3) pays the warehouseman’s liens, that is, his fees and advances, if any.
The sheriff cannot comply with these requisites, especially the first, as he is not the holder of the receipt.
a. B has a better right than S. The right of the unpaid seller, S, to the goods was defeated by the act of A in endorsing the receipt to B.
b. The warehouseman can be obliged to deliver the palay to A if B negotiates back the receipt to A. In that case, A becomes a holder again of the receipt, and A can comply with Sec. 8 of the Warehouse Receipts Law.
The pledgor should bear the loss. In the pledge of a warehouse receipt the ownership the goods remain with depositor or his transferee. Any contract of real security, among them a pledge, does not amount to or result in an assumption of risk of loss by the creditor. The Warehouse Receipts Law did not deviate from this rule.
The warehouseman is bound to deliver the goods upon demand made either by the holder of the receipt for the goods or by the depositor if the demand is accompanied by (a) an offer to satisfy the warehouseman’s lien, (b) an offer to surrender the receipt, if negotiable, with such indorsements as would be necessary for the negotiation thereof, and (c) readiness and willingness to sign when the goods are delivered if so requested by the warehouseman.
a. Mr. Tigas would have preference over the goods covered by the negotiable warehouse receipt (assuming that there was proper negotiation to him). In negotiation, the transferee’s rights over the goods vests from the very moment of transfer and the transferee thereupon acquires the direct obligation of the warehouseman to hold the goods for him.
b. Mr. Tapang, in this case, would have preference over the goods since the transferee of a non-negotiable warehouse receipt merely acquires (1) rights no better than those of the transferor and (2) the direct obligation of the warehouseman only upon notice to him of the transfer.
a. In determining whether an instrument is negotiable or not, the sole test is whether or not the requisites of negotiability expressed in Sec. 1 of the NIL are met on the face of the instrument itself. The intrinsic validity of the instrument is of no moment. Even the acceptance or non- acceptance by the drawee of the instrument would be irrelevant.
b. The promissory note is not negotiable since the same is payable to Reliable Motors merely and not “to order or to bearer” or words of similar import.
a. The promissory note is negotiable as it complies with Sec. 1, NIL.
Firstly, it is in writing and signed by the maker, Noel Castro.
Secondly, the promise is unconditional to pay a sum certain in money, that is, P2,500.00
Thirdly, it is payable on demand as no date of maturity is specified.
Fourth, it is payable to order.
b. The promissory note is negotiable. All the requirements of Sec. 1, NIL, are complied with. The sum to be paid is still certain despite that the sum is to be paid by installments.
It is a written contract for the payment of money which is intended as a substitute for money and passes from one person to another as money, in such a manner as to give a holder in due course the right to hold the instrument free from defenses available to prior parties. (Sundiang, Aquino, Reviewer in Commercial Law, p.5, 5thedition)
For an instrument to be considered as a negotiable one, it must comply with Section 1 of the Negotiable Instruments Law, 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 a 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 named or otherwise indicated therein with reasonable certainty.
A negotiable instrument is characterized by negotiability (capability of being transferred from one person to another so as to make him a holder who is entitled to the payment thereof) and its accumulation of secondary contracts resulting from indorsements at the back thereof.
A negotiable instrument is a written contract which is intended as a substitute for money like promissory notes and bill of exchange while a negotiable document is a commercial instrument with limited negotiability but they have been held to be non-negotiable in the technical sense because they do not have the requisites under the Negotiable Instruments Law. (De Leon, The Philippine Negotiable Instruments Law, p.8, 2010 edition)
Furthermore, a negotiable document actually stands for the goods it covers while in a negotiable instrument, the subject matter is a sum certain in money. Moreover, a negotiable instrument is capable of accumulating secondary contracts resulting from indorsements at the back thereof while a negotiable document is not, especially considering that indorsement of the latter does not result in liability of the endorser when the depositary, like the warehouseman, fails to comply with his duty to deliver the things or goods deposited and covered by the warehouse receipt by the depositary. Also, a negotiable instrument is either a bill of exchange or promissory note while a negotiable document has various forms such as but not limited to bill of lading, stock certificates, warehouse receipts and pawn tickets.
a.
1. A negotiable promissory note is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed determinable future time, a sum certain in money to order or bearer.
2. A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or bearer.
3. A check is a bill of exchange drawn on a bank payable on demand.
b.
1. Negotiable promissory note:
“September 15, 2002
“For value received, I hereby promise to pay Juan Santos or order the sum of TEN THOUSAND PESOS (P10,000.00) thirty (30) days from date hereof.
(Signed) Pedro Cruz”
2. Check:
“September 15, 2002
“Pay to the order of Juan Santos the sum of TEN THOUSAND PESOS (P10,000.00), Philippine currency.
(Signed) Pedro Cruz
To: Philippine National Bank, Escolta, Manila Branch”
