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University of San Jose Recoletos - School of Law NEGOTIABLE INSTRUMENTS LAW COURSE OUTLINE Second Semester, SY 2017-2018 © Judge Chiistine Muga-Abad 1. INTRODUCTION GoverningLaw Historical Background of our NIL Concept of Negotiable instruments. Case: GSIS vs. CA, 170 SCRA 533, Function and Importance of Negotiable Instruments Legal instruments Not Considered Negotiable Under the Negotiable instruments 1. Treasury Warrants not negotiable because they are payable out ofa particular fund. (Case: Metropolitan 8ank and Trust Company vs. CA, 269 SCRA 15. Pestal Money Orders — Case: Philippine Education Co. vs. Soriano, 39.SCRA 587, Certificate of Stack/stock certificate ~ Documents of Title - Example: bill of lading, warehouse receipt, quedan Letters of cedit ‘ommon forms of Negotiable Instruments Promissory Notes of exchange Distinctions between a promissory note and abill of exchange Distinctions between a check and an ordinary bill of exchange Checks. (Sec.185,NIl) Memorandum check Cashier's check Manager's check Traveler's check Certified check Crossed check. Case: Bataan Cigar v. CA, 2305CRA 643, Stale check i. NEGOTIABILITY ‘A. Formal Requisites of Negotiability (Sec. 2, NIL) 2, Itmust be in writing; Case: Caltex Phil Incvs. CA, 212 SCRA 448 2, Itmustbe signed by maker or drawer; 3. It must contain an unconditional promise or order (Sec3, NIL) to pay a sum certain inmoney (Sec. 2 & 5, NIU; 4, It must be payable on demand (Sec 7, NIU), oF at fixed or determinable future time (Sec 4, NIL) 5. Itmust be payable to Order (Sec. 8, NIL) or to Bearer (Sec. 9, Nil}: and 6. Whereit isa bill Of exchange, drawee must benamed or otherwise indicated therein with reasonable certainty. B. Omissions (Sec. & 13, NIL) and Provisions (Sec.5, NIL) that Do Not Affect Negotiability INTERPRETATION OF INTRUMENTS ‘A. Rules that Apply in case of Ambiguity (Sec 17, NIL) B. Other Rules. Case: Equitable Bankingy. IAC, 161 SCRA 518 1[Page vi. University of San Jose Recoletos - School of Law NEGOTIABLE INSTRUMENTS LAW COURSE OUTLINE Second Semester, S¥ 2017-2018 © ludge Christine Muga-Abad INCIDENTS OF STAGES IN THE LIFE OF A NEGOTIABLE INSTRUMENT ‘A. Preparation and signing complete with all the requisites provided for in Section, NIL. B. Issuance~ first delivery of the instrument to the payee (Sec 191, NIL) C. Negotiation - this is the transfer of the instrument from one person to another in such 3 ‘way as to mage the transferee the Holder of the Instrument. 1. Indorsement 2. Kinds of indorsement ~ special (Sec.34, NIL) ; Blank (Sec.35, NIL) Restrictive (Sec.36, NIL);Qualified (Sec.38, NIL);Conditional (Sec.39, NIL) 3. Other Rules of Indorsement (Sec.41,42,43, NIL) D. Presentment for payment. (Sec.70, NIL) E. Presentment for Acceptance (Sec.146,147, NIL) F. Acceptance. (Seci32, NIL) G. Notice of Dishonor. (Sec.97, NIL) H. Discharge of Negotiable Instruments. (Sec119, NIL] HOLDERS ‘A. Aights of Holders in General (Sec.51, NIL) B. Holders in Due Course (Sec. 52 & 57, NIL). Case: Yong vs. CA 409 SCRA 158, 1. Requisites €. "Holder for Value”. (Sec26, NIL) DEFENSES AGAINST A HOLDER ‘A. Personal defence vs. Real defense B. Minority and other Causes of Incapacity €. _Non-Delvery and Conditional Delivery 1. Delivered by Incomplete Instrument (Sec 14, NIL) 2. Incomplete Instrument Not Delivered (Se=15, Nit) 3._ Mechanically Complete But Undelivered (Sec 16, NIL) Filing Up Blanks Beyond Authority Fraud Material alteration (Sec.124, Nit) ‘Ante-Dating or Post Dating Insertion of a Wrone Date ‘Absence or Failure of Consideration. (Sec.24, NIL) Duress and Intimidation Megaity Preseri Forgery and Want of Authority. Cases: Gempesaw vs. PNB,218 SCRA 682 1. General Rules. Sec.18, 23 NIL BPI v. Casa Montessori, £30 SCRAZ61. PNB vs. Quimpo, 158 SCRA 582) 2. Persons Precluded trom Setting Up Forgery Erarrzrarms 2[Page University of San Jose Recoletos - School of Law NEGOTIABLE INSTRUMENTS LAW COURSE OUTLINE Sezond Semester, SY 2017-2018 © Judge Christine Muga-Abad Vil. LIABILITIES OF PARTIES (Sec.60, NiL) ‘A. Liability of Maker. (Sec.60) B. Liability of the Drawer. (Sec.61, NIL) Liability of a General indorser D. Liability of an Irregular Indorser E. Liability of Qualified Indorser and a Person Negotiating by Delivery. F, _ Requisites to Charge a Party Secondariy Liable. G. Accommodation parties (Sec.28, NIL) Vill, SIGNATURE BY PROCURATION References: ‘Aquino, Notes and Cases on Banks, Negotiable Instruments and Other Commercial Documents. 12006 Edition. De Leon and De Leon, Jr, The Philippine Negotiable instruments Low, Annotated. 2010 Edition 3|Page