Syllabus For Negotiable Instruments Law
Syllabus For Negotiable Instruments Law
Syllabus For Negotiable Instruments Law
College of Laws
Syllabus for Negotiable Instruments Law
2nd Semester, 2021-2022
May Frances S. Calsiyao
COURSE DESCRIPTION:
A study of the Negotiable Instruments Law (Act 2031), related jurisprudence other
related laws including the Bouncing Checks Law (BP Blg. 22) and other relevant
administrative issuances.
METHODOLOGY:
The class will be conducted mainly through recitations, class discussions, case
analysis, quizzes, and examinations.
COUSE OBJECTIVES
2. Have a clear grasp of the process that a negotiable instrument undergoes, from
issuance to discharge and to be well-acquainted with the rules that govern it.
3. Prepare for independent, critical study and assessment of judicial decisions related
to Negotiable Instruments Law.
COURSE REQUIREMENTS:
Readings and assignments. Students are expected to be familiar with the assigned
topic on a week-to-week basis and must be ready to participate in class discussions.
Supplemental readings and assignments will be given from time to time to ensure better
understanding to specific topic.
Recitation. Each student will be called to recite or lead the discussion on an assigned
topic during the term. Students are expected to demonstrate during recitation and class
discussions their knowledge on the assigned topic and their ability to express themselves
convincingly.
Quizzes. Students will be given short quizzes from time to time to test their
knowledge on the topic assigned for the week.
Mid-term and Final Examinations. Students are given two major examinations during
the term. These will test their knowledge and familiarity of specific topics and their ability to
think critically and logically.
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GRADING SYSTEM (following College Rules):
RECOMMENDED TEXTBOOKS:
Campos, Jose C. “Notes and Selected Cases on Negotiable Instruments Law” Central Book Supply:
Quezon City, Philippines. 1994
I. Introduction
a. Kinds of negotiable instruments
b. Functions of negotiable instruments
i. San Miguel Corporation vs. Puzon, G.R. No. 167567, September 22, 2010
ii. Pua vs. Spouses Lo Bun Tiong, 708 SCRA 571, October 23, 2013
c. Concept of negotiability
d. Origin of negotiable instruments
e. History of the Negotiable Instruments Law (NIL)
f. Applicability of the NIL
III. Transfer
a. Delivery and issuance (Sec. 16)
i. Dela Victoria vs. Burgos, 245 SCRA 374, June 27, 1995
b. Negotiation (Sec. 30, 191)
c. Methods of Negotiation
d. How indorsement made
i. By signature on instrument or on allonge (Sec. 31)
ii. In case of joint payees
iii. If name misspelled (Sec. 43)
e. Indorsement must be of entire instrument (Sec. 32)
f. Kinds of Indorsements (Sec. 33)
i. Special and blank indorsements (Sec. 34, 40,35)
ii. Qualified indorsement (Sec. 38)
1. Metropol (Bacolod) Financing vs. Sambok Motors, 120 SCRA 864,
Feb. 28, 1983
iii. Conditional Indorsement (Sec. 39)
iv. Restrictive Indorsement (Sec. 36, 37)
v. Indorsement to or by collecting bank
1. Leonardi vs. Chase National Bank, 363 App. Div. 552, 33 N.Y.S. 2d
706 (1942)
vi. Negotiation by joint or alternative payees or endorsees (Sec. 41)
1. Metropolitan Bank and Trust Company, etc. vs. BA Finance Corporation
and Malayan Insurance Co, Inc., G.R. No. 179952, December 4, 2009
vii. Unindorsed Instruments (Sec. 49)
1. Whistler vs. Forster 16 Com. Bench Rep. 246 (1863)
viii. Cancellation of indorsements (Sec. 48)
ix. Indorsement of agent (Sec. 44)
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x. Presumption as to indorsements (Sec. 45, 46, 42)
xi. Continuation of negotiable character (Sec. 47)
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g. Effect of qualified, conditional and restrictive indorsements
h. Payee as holder in due course
i. Rights of a purchaser from a holder in due course (Sec. 58)
i. Fossum vs. Fernandez Hermanos et al., 44 Phil 713 (1923)
j. Presumption in favor of due course holding (Sec. 59)
i. Asia Banking Corporation vs. Ten Sen Guan y Sobrinos, et al., 44 Phil 511
(1923)
k. Transferee of unindorsed instrument (Sec. 49)
i. Commercial Bank of Lafayette & Trust Co. vs. Barry, 179 La. 684, 154 So.
736 (1934)
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c. Banco de Oro Savings and Mortgage Bank vs. Equitable Banking
Corp., 157 SCRA 188 (1988)
d. BPI vs. CA, 216 SCRA 51 (1992)
e. Gempesaw vs. CA, 218 SCRA 682 (1993)
f. Allied Banking Corp. vs. Lim Sio Wan, 549 SCRA 504,
March 27, 2008
5. Effect of negligence of drawee in informing recipient of forgery
a. Areza vs. Express Savings Bank, G.R. No. 176697, September
10, 2014
6. Effect of negligence of drawer in case of forged indorsements
on checks
a. Associated Bank vs. CA, 252 SCRA 620, (1996)
b. Samsung Construction Company Phils. vs. FEBTC, 436 SCRA
402 (2004)
e. Material alteration
i. In general (Sec. 124, 125)
1. Montinola vs. PNB, 88 Phil 178 (1951)
2. PNB vs. CA, 256 SCRA 491 (1996)
ii. Effect of negligence of drawer of check
1. Foutch vs. Alexandria Bank and Trust Co., 177 Tenn. 348, 149 SW
(2d) 76, (1941)
iii. Effect of drawee’s payment or acceptance of altered check
1. MBTC vs. Cabilzo, 510 SCRA 259, December 6, 2006
2. CHOM No. 15-460 – No Erasures Rule
f. Fraud
i. CLT Corp vs. Panac, et al., 149 P. (2d) 901, (1944)
ii. CLT Corp. vs. Panac, et al., 25 Cal. (2d) 547, 154 P. (2d) 710, 160 ALR
1285 (1944)
g. Duress
h. Complete instrument which is undelivered (Sec. 16)
i. Cohn vs. City of Taunton, 303 Mass. 182, 21 NE (2d) 281 (1939)
ii. Rizal Commercial Banking Corporation vs. Hi-Tri Development Corporation and
Luz R. Bakunawa, G.R. No. 192413, June 13, 2012.
i. Incomplete instrument which is undelivered (Sec. 15)
i. Linick vs. AJ Nutting and Co., 125 N.Y. 93, 140 App. Div. 265 (1910)
j. Incomplete instrument which has been delivered (Sec. 14)
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i. Patrimonio vs. Gutierrez, G.R. No. 187769, June 4, 2014
k. Consideration (Se. 28)
i. William Barco & Son, et al. vs. Forbes, 194 N.C. 204, 139 SE 227 (1927)
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ii. Certification and its effects (Sec. 187-189)
1. New Pacific Timber vs. Seneris, 101 SCRA 686 (1980)
2. Roman Catholic Bishop of Malolos vs. IAC, GR No. 7211, November
16, 1990
iii. Distinction between surrender of check upon payment and negotiation
iv. Clearing of checks
1. PCHC Memo Circular 2636 (June 19, 2014)
2. PCHC CHOM No. 15-460-A, September 2, 2015
f. Liability of secondary parties (Sec. 70)
i. Liability of drawer (Sec. 61)
1. PNB vs. Picornell, 46 Phil 716 (1922)
2. Banco Altantico vs. Auditor General, 81 SCRA 335 (1978)
ii. Criminal liability for bouncing checks
1. Under BP No. 22
2. Estafa under the Revised Penal Code
a. Lozano vs. Martinez, 146 SCRA 323 (1986)
b. People vs. Nitafan, 215 SCRA 79 (1992)
iii. Liability of qualified indorser and one negotiating by delivery (Sec. 65)
iv. Liability of general or unqualified indorser (Sec. 66, 67, 63, 40)
1. Adolf Ramish, Inc. vs. Woodruff, 2 Cal. (2d) 190, 28 P. (2d) 360
(1934)
2. Bank of America vs. Associated Citizens Bank, G.R. No. 141001, May
21, 2009
v. Liability of restrictive indorser
vi. Order of liability among indorsers (Sec. 68)
1. Metropolitan Bank and Trust Company, etc. vs. BA Finance Corporation
and Malayan Insurance Co, Inc., G.R. No. 179952, December 4, 2009
g. Liability of accommodation party (Sec. 29, 63, 64)
i. Clark vs. Sellner, 42 Phil 384 (1921)
ii. Acuna vs. Veloso, 50 Phil 241 (1927)
iii. Ang Tiong vs. Ting et al., 22 SCRA 713 (1968)
iv. Prudencio vs. CA, 143 SCRA 7 (1986)
v. Anamer Salazar vs. J.Y. Brothers Marketing Corporation, G.R. No. 171998,
October 20, 2010
h. Liability of an agent (Sec. 19-21, 69)
i. Insular Drug Co., Inc. vs. PNB, 58 Phil 684 (1933)
ii. Philippine Bank of Commerce vs. Aruego, 102 SCRA 530 (1981)
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i. Signature by trade name (Sec. 18)
j. Presentment for acceptance
i. When necessary; effect of non-presentment (Sec. 143, 144, 193)
ii. How and when made (Sec. 145-146)
iii. When excused (Sec. 147-148)
iv. Dishonor and its effects (Sec. 149-151, 89, 117)
k. Presentment for payment
i. When presentment necessary; effect of non-presentment (Sec. 70)
ii. When presentment not necessary
1. As to drawer (Sec. 79)
2. As to indorser (Sec. 80)
3. As to all secondary parties (Sec. 82, 151, 111)
iii. Presentment of instrument bearing fixed maturity (Sec. 71, 85-86, 194)
iv. Presentment of demand notes (Sec. 71)
v. Presentment of demand bills of exchange
vi. Presentment of checks (Sec. 185-186)
1. PNB vs. Seeto, 91 Phil 756 (1952)
2. Crystal vs. CA, 71 SCRA 443 (1976)
vii. When delay in presentment excused (Sec. 81)
viii. Manner of presentment (Sec. 74)
ix. What constitutes sufficient presentment (Sec. 72)
1. By whom; crossed checks
a. Associated Bank vs. CA, 208 SCRA 465 (1992)
b. Equitable Banking Corporation vs. Special Steel Products, Inc.,
G.R. No. 175350, June 13, 2012
2. Time of presentment (Sec. 72-b, 75)
3. Place of presentment (Sec. 73)
4. To whom presentment must be made (Sec. 72-d, 76-78)
x. What constitutes dishonor by non-payment (Sec. 83)
xi. Effect of dishonor by non-payment (Sec. 84)
1. Luis Wong vs CA, GR 117857, Feb. 2, 2001
l. Notice of dishonor
i. When necessary (Sec. 89)
1. Gullas vs. PNB, 62 Phil 519 (1935)
ii. Form and contents of notice (Sec. 95, 96)
iii. Time within which notice must be given (Sec. 102-107, 113)
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iv. Place where notice must be given (Sec. 108)
v. Who can give notice (Sec. 90-91)
vi. To whom notice can be given
1. If given by an agent (Sec. 94)
2. To whom in general (Sec. 97)
3. If party is dead (Sec. 98)
4. To partners (Sec. 99)
5. To joint parties (Sec. 100)
6. To bankrupt (Sec. 101)
vii. In whose favor notice operates (Sec. 92-93)
viii. When rule requiring notice not applied
1. In general (Sec. 112)
2. When notice of non-acceptance already given (Sec. 116)
3. Waiver (Sec. 109-110)
4. When not necessary to charge drawer (Sec. 114)
a. State Investment House vs. CA, 217 SCRA 33 (1993)
5. When not necessary to charge indorser (Sec. 115)
ix. Legal effect of failure to give notice (Sec. 89, 117)
m. Protest
i. Definition and method
ii. When necessary (Sec. 152, 129, 157)
iii. Forms and contents of certificate of protest (Sec. 153)
iv. Purpose of the certificate of protest
v. By whom made (Sec. 154)
vi. Time and place of protest (Sec. 155-156)
vii. Protest for better security (Sec. 158)
viii. When delay is excused and protest is dispensed (Sec. 159, 112)
1. Tan Leonco vs. Go Inqui, 8 Phil 531 (1907)
ix. Waiver of protest (Sec. 111)
x. Protest in case of loss of instrument (Sec. 160)
xi. Acceptance for honor (Sec. 161, 131)
xii. Payment for honor (Sec. 171)
xiii. Liability of party on indorsement after maturity (Sec. 7)
xiv. Instruments payable at a bank (Sec. 87)
xv. Bills in set (Sec. 178-183)
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xvi. Liability of transferors or assignors of negotiable instruments (Art.
1628, NCC)
VII. Discharge
a. Discharge of the instrument (Sec. 119)
i. By payment in due course (Sec. 51, 88)
1. Medium of payment
2. By whom made
3. When check deemed paid by drawee bank
4. To whom made
a. Equitable Banking vs. IAC, 161 SCRA 518 (1988)
5. At or after maturity
6. In good faith and without notice
ii. By intentional cancellation (Sec. 119 (c), 123)
iii. By any other act which will discharge a contract
iv. By reacquisition of principal debtor in his own right (Sec. 119 (e))
v. By renunciation of holder (Sec. 122)
vi. Material alteration (Sec. 124, 125)
b. Discharge of secondary parties (Sec. 120)
i. By discharge of instrument
ii. By intentional cancellation of signature (Sec. 123, 48)
iii. By discharge of prior party
iv. By valid tender of payment by prior party
v. By release of principal debtor
vi. By extension of time of payment (Sec. 120 (f))
vii. By renunciation (Sec. 122)
viii. By taking a qualified acceptance (Sec. 142)
ix. By failure to make due presentment (Sec. 70, 144)
x. By failure to give notice of dishonor (Sec. 89)
xi. Certification of check at instance of holder (Sec. 188)
xii. Effect of reacquisition by prior party
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