The Board of Directors of Mico Metals Corporation in a resolution authorized petitioners Lee and Sio to negotiate and secure the approval of commercial loans and other banking facilities and accommodations from respondent bank. MICO availed of several loans which were credited to its current checking account. In addition, MICO also applied for domestic and foreign letters of credit, which were negotiated and accepted by MICO as evidenced by corresponding bank drafts issued and trust receipts executed.
Whether or not letters of credit and trust receipts are negotiable instruments.
NO. Negotiable instruments which are meant to be substitutes for money, must conform to the following requisites to be considered as such a) it must be in writing; b) it must be signed by the maker or drawer; c) it must contain an unconditional promise or order to pay a sum certain in money; d) it must be payable on demand or at a fixed or determinable future time; e) it must be payable to order or bearer; and f) where it is a bill of exchange, the drawee must be named or otherwise indicated with reasonable certainty. While the presumption found under the Negotiable Instruments Law may not necessarily be applicable to trust receipts and letters of credit, the presumption that the drafts drawn in connection with the letters of credit have sufficient consideration.