Ateneo de Zamboanga University College of Law

NEGOTIABLE INSTRUMENTS LAW

Atty. Jade Ebol-Araneta

COURSE DESCRIPTION:

This course covers the provisions of law on negotiable instruments. It includes all
topics of the birth, life and death of negotiable instruments e.g. the negotiability of
the instruments, functions, features and kinds of negotiable instruments, forgery
and its effects, consideration, parties involved, the transfer of instruments, holders
of the instrument, liabilities of each party/holder, discharge, proceedings, etc.

COURSE OBJECTIVE:

By the end of the course, student should be able:

To practice future professions in relation to negotiable instruments

competently;
To solve legal problems applying the full/adequate knowledge of the law; and
To abide the law as advocates of peace and justice.

COURSE OUTLINE AND FRAMETIME:

WEEK 1

I. General Concepts
A. Definition of Negotiable Instruments
B. Requisites (Section 1, NIL)
C. Governing Laws
D. Negotiable Instrument vs Non-Negotiable Instrument
E. Functions of Negotiable Instrument
F. Features of Negotiable Instrument

WEEK 2

II. Kinds of Negotiable Instruments

A. Promissory Note
B. Bill of Exchange
C. Life of a Negotiable Instrument

III. Checks
A. Definition
B. Bill of Exchange vs Checks
C. Types of Check
D. Crimes involving checks
E. BP 22

WEEK 3

IV. Holder
A. Definition of Holder
B. Classes of Holder
1. Holders in Due Course
a. Requisites (Section 52, NIL)
b. Rights
c. Exceptions to the Right/s
2. Holders Not in Due Course
 a. General Rule
b. Exception Shelter Rule
c. Exception to the Exception
d. Rights
3. Holders for Value

WEEK 4

V. Negotiability
A. Factors that affect the determination of Negotiability of Instruments
B. Requisites of Negotiability (Section 1, NIL)
C. Fund for Reimbursement vs Particular Fund
D. Acceleration Clause
E. Extension Clause
F. Installment
G. Fictitious Payee Rule
H. Payable to Order vs Payable to Bearer
I. Provisions affecting/not affecting negotiability
J. Omissions affecting/not affecting negotiability

WEEK 5 LONG QUIZ

WEEK 6

VI. Rules on the Interpretation of Negotiable Instruments

WEEK 7

VII. Transfer
A. Negotiation
B. Assignment
C. By operation of law

WEEK 8

VIII. Negotiation
A. Definition
B. Process
1. Issuance
2. Delivery
3. Subsequent Negotiation
4. Indorsement
C. Incomplete Negotiation of bearer instrument
D. Incomplete Negotiation of order instrument

WEEK 9 MIDTERM EXAM

WEEK 10

IX. Indorsement
A. Requisites
B. Indorsement vs Guaranty
C. Kinds
1. As to the methods of negotiation:
a. Special;
b. Blank
2. As to presence/absence of limitations:
a. Absolute;
b. Conditional
3. As to the kind of title transferred:
 a. Restrictive
4. As to scope of liability
a. Qualified
5. Other kinds:
b. Joint
c. Irregular
D. Rules

WEEK 11

X. Forgery
A. Definition
B. Effects
C. Persons precluded from setting up defense of forgery
D. Contributory Negligence
E. Last Clear Chance Doctrine
F. 24-hour Clearing Rule
G. Rules

WEEK 12

XI. Liabilities of Parties

A. Maker
B. Drawer
C. Acceptor
D. Person negotiating an instrument by delivery/qualified indorser/person
indorsing bearer instrument
E. General Indorser
F. Primary vs Secondary Liability
G. Liability of Irregular Indorser

XII. Enforcement of Liability

WEEK 13

XIII. Presentment
A. Definition
B. 2 Instances
C. When presentment should be made
D. Reasonable time
E. Proper Place of presentment
F. To whom presented
G. Exhibition
H. Delay in presentment
I. When presentment is required
J. How presentment should be made
K. Rules

XIV. Acceptance
A. Payment vs Acceptance
B. Form
C. Kinds

XV. Dishonor
A. Non-payment (Section 83, NIL)
B. Non-acceptance (Section 149, NIL)

WEEK 14 LONG QUIZ

 WEEK 15

XVI. Accommodation Party

A. Definition
B. Qualifications
C. Liability of Accommodation Party
D. Liability of Accommodated Party
E. Rights of Accommodation Party
F. Accommodation Party vs Regular Party

WEEK 16

XVII. Proceedings

XVIII. Defenses
A. Real Defenses
B. Personal Defenses
C. Effects

WEEK 17

XIX. Discharge
A. Definition
B. Requisites of Payment in Due Course
C. Cancellation
D. Surrender

WEEK 18 FINAL EXAM

CASES:

1. Phil. Educ. Co., Inc. vs. Soriano, 39 SCRA 587;

2. Tibajia, Jr. vs. CA, 223 SCRA 163;
3. Philippine Airlines vs. CA, 181 SCRA 557
4. Metropolitan Bank & Trust Company vs. CA, Feb. 18, 1991,
194 SCRA 169;
5. Caltex Phils. vs. CA, 212 SCRA 448
6. Ang Tek Lian vs. CA, 87 Phil. 383;
7. PNB vs. Rodriguez, G.R. No. 170325, September 26, 2008
8. Philippine National Bank vs. Manila Oil Refining & By-Products
Company, 43 Phil 445
9. Republic Planters Bank vs. CA, 216 SCRA 738;
10. Sps. Evangelista vs. Mercator Finance Corp., et al,
August 21, 2003;
11. Ilano vs. Hon. Espanol, G.R. No. 161756, 16 December 2005
12. Sesbreo vs. CA, 222 SCRA 466;
13. Consolidated Plywood Inc. vs. IFC Leasing 149 SCRA 448
14. De la Victoria vs. Hon. Burgos, 245 SCRA 374;
15. Development Bank of Rizal vs. Sima Wei, 219 SCRA 736
16. Metropol (Bacolod) Financing vs. Sambok Motors Co., et al.,
120 SCRA 864);
17. Gempesaw vs. CA, 218 SCRA 622
18. De Ocampo vs. Gatchalian, 03 SCRA 596;
19. Yang vs. CA, G.R. No. 138074, August 15, 2003;
20. Mesina vs. IAC, 145 SCRA 497
21. Philippine National Bank vs. Picornell, et al, 46 Phil 716;
22. Astro Electronics vs. Roxas, et al., September 23, 2003;
23. Garcia vs. Dionisio, December 8, 2003; Crisologo-Jose vs. CA,
Sept. 15, 1989;
 24. Sadaya vs. Sevilla, 19 SCRA 924;
25. Travel-On vs. CA, 210 SCRA 352;
26. Agro-Conglomerates Inc. vs. CA, 348 SCRA 350;
27. Gonzales vs. RCBC, 29 November 2006;
28. Ang vs. Associated Bank, 05 September 2007;
29. Far East vs. Gold Palace Jewelry, G.R. No. 168274,
August 20, 2008
30. Salas vs. CA, January 22, 1990;
31. Philippine National Bank vs. CA, 256 SCRA 491;
32. International Corporate Bank vs. CA, 05 September 2006;
33. Associated Bank vs. CA, January 31, 1996;
34. Jai-Alai vs. BPI, 66 SCRA 29;
35. Republic vs. Ebrada, July 31, 1975;
36. Philippine National Bank vs. Quimpo, March 14, 1988;
37. Gempesaw vs. CA, February 9, 1993;
38. Philippine Commercial International Bank vs. Court of Appeals,
350 SCRA 446;
39. MWSS vs. CA, 143 SCRA 20;
40. Ilusorio vs. CA, 393 SCRA 89;
41. Samsung Construction vs. Far East Bank, 15 August 2004;
42. Metrobank vs. Cabilzo, 06 December 2006;
43. Bank of America vs. Philippine Racing Club, G.R. No. 150228,
July 20, 2009
44. Far East Realty Investment, Inc. vs. CA, 166 SCRA 256;
45. Wong vs. CA, February 2, 2001;
46. International Corporate Bank vs. Sps. Gueco,
February 12, 2001;
47. Far East Realty vs. CA, October 5, 1988;
48. State Investment House vs. CA, 217 SCRA 32;
49. Asia Banking Corporation vs. Javier, 44 Phil 777;
50. Nyco Sales Corporation vs. BA Finance Corporation,
200 SCRA 637;
51. Arceo, Jr. vs. People of the Philippines, G.R. No. 142641,
17 July 2006;
52. Allied Banking vs. CA, GG Sportswear, 11 July 2006
53. New Pacific Timber vs. Hon. Seneris, December 19, 1980;
54. PNB vs. National City Bank of New York, 63 Phil 711;
55. Bataan Cigar vs. CA, 230 SCRA 648;
56. Stelco Marketing Corporation vs. CA, June 17, 1992;
57. State Investment House vs. CA, 175 SCRA 311;
58. Papa vs. A.U. Valencia, 284 SCRA 643;
59. Villanueva vs. Nite, G.R. No. 148211, 25 July 2006;
60. Equitable PCI vs. Ong, 15 September 2006;
61. Security Bank & Trust Company vs. RCBC, G.R. Nos. 170984 &
170987, January 30, 2009

TEXTBOOK:

The Philippine Negotiable Instruments Law, Hector De Leon

CLASS POLICY:

Recitation every meeting concepts and cases

Absences during recitation double 50% grade!

GRADING SYSTEM

Midterm Grade:

Long Quizzes 1/3

Recitation 1/3

Midterm Exam 1/3

Final Grade:

Midterm Grade 1/3

Recitation and Long Quizzes 1/3

Final Exam 1/3