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Course Outline
Atty. Maria Zarah Villanuew – Castro
2C / 2E / 2J
PRELIMINARY CONSIDERATIONS
1. Governing laws
6. Negotiable instruments compared with other papers (document of title, letter of credit,
certificate of stock, pawn ticket, postal money order, treasury warrant)
NEGOTIATION
1. Modes of transfer
4. Concept of delivery
CASES:
14. De la Victoria v. Hon. Burgos 245 SCRA 374
15. Development Bank of Rizal v. Sima Wei 219 SCRA 736
5. Indorsement
a. Concept
b. How Made (Sec. 31 & 32, NIL)
c. Kinds
(1) Special and Blank (Sec. 34 & 35, NIL)
(2) Conditional (Sec. 39, NIL)
(3) Qualified (Sec. 38, NIL)
(4) Restrictive (Sec. 36 & 37, NIL)
d. Other rules on indorsement
(1) Indorsement of an instrument payable to bearer (Sec. 40, NIL)
(2) Where instrument is payable to two or more persons (Sec. 21, NIL)
(3) Instrument is drawn or indorsed to a person as cashier (Sec. 42, NIL)
(4) Where name of payee or indorsee is misspelled (Sec. 43, NIL)
(5) Indorsement in a representative capacity (Sec. 44, NIL)
(6) Presumption as to time of indorsement (Sec. 45, NIL)
(7) Place of indorsement (Sec. 46, NIL)
(8) Striking out of indorsement (Sec. 48, NIL)
(9) Transfer of an order instrument without indorsement (Sec. 49, NIL)
CASES:
16. Metropol (Bacolod) Financing v. Sambok Motors Co., et. 120 SCRA 864
Al.
17. Gempesaw v. CA 218 SCRA 622
NEGOTIABLE INSTRUMENTS LAW
Course Outline
Atty. Maria Zarah Villanuew – Castro
2C / 2E / 2J
6. Negotiation by a prior party (Sec. 50, NIL)
HOLDERS
LIABILITY OF PARTIES
DEFENSES
2. Real defenses:
a. Minority and ultra vires acts (Sec. 22, NIL)
b. Non-delivery of an incomplete instrument (Sec. 15, NIL)
c. Fraud in factum
d. Forgery and want of authority (Sec. 23, NIL)
(1) Forgery of maker’s signature
(2) Of indorsers signature
(3) Of drawer’s signature
(4) Forgery of bearer instruments
e. Material alteration (partial real defense) (Sec. 124 & 125, NIL)
f. Extinctive prescription
3. Personal defenses:
a. Ante-dating or post-dating (Sec. 12, NIL)
b. Insertion of wrong date (Sec. 13, NIL)
c. Filling-up blanks beyond authority (Sec. 14, NIL)
d. Want of delivery of a complete instrument (Sec. 16, NIL)
e. Absence or failure of consideration (Sec. 28, NIL)
f. Simple fraud, duress, intimidation, force or fear, illegality of consideration, breach
of faith (Sec. 55, 56 & 57, NIL)
CASES:
32. Salas v. CA January 22, 1990
33. Philippine National Bank v. CA 256 SCRA 491
34. International Corporate Bank v. CA September 2006
35. Associate Bank v. CA January 31, 1996
36. Jai-Alai v. BPI 66 SCRA 29
37. Republic v. Ebrada July 31, 1975
38. Philippine National Bank v. Quimpo March 14, 1998
39. Gempesaw v. CA February 9, 1993
40. Philippine Commerical International Bank v. CA 350 SCRA 446
41. MWSS v. CA 143 SCRA 20
42. Ilusorio v. CA 393 SCRA 89
43. Samsung Construction v. Far East Bank August 15, 2004
44. Metrobank v. Cabilzo December 6, 2006
45. Bank of America v. Philippine Racing Club G.R. No. 150228;
July 20, 2009
ENFORCEMENT OF LIABILITY
4. Notice of dishonor
a. When dishonor of the instrument occurs
(1) Dishonor by non-payment (Sec. 83, NIL)
(2) Dishonor by non-acceptance (Sec. 149, NIL)
b. Who should give notice
(1) Holder
(2) Agent
(3) Party who may be compelled to pay
c. Form of notice (Sec. 43 & 44, NIL)
d. To whom notice is given
(1) Party secondarily liable or agent (Sec. 97, NIL)
(2) Notice where party is dead (Sec. 98, NIL)
(3) Notice to partners (Sec. 99, NIL)
(4) Notice to persons jointly liable (Sec. 100, NIL)
(5) Notice to bankrupt (Sec. 101, NIL)
e. Time and place of notice (Sec. 103-108, NIL)
f. When notice is excused or unnecessary (Sec. 109-112, 114-115, NIL)
g. When delay in giving notice excused (Sec. 113, NIL)
CASES:
46. Far East Realty Investment, Inc. v. CA 166 SCRA 256
47. Wong v. CA February 2, 2001
48. International Corporate Bank v. Sps. Gueco February 12, 2001
49. Far East Realty v. CA October 5, 1988
50. State Investment House v. CA 217 SCRA 32
51. Asia Banking Corporation v. Javier 44 PHIL 777
52. Nyco Sales Corporation v. BA Finance Corporation 200 SCRA 637
NEGOTIABLE INSTRUMENTS LAW
Course Outline
Atty. Maria Zarah Villanuew – Castro
2C / 2E / 2J
53. Arceo, Jr. v. People of the Philippines G.R. No. 142641;
July 17, 2006
54. Allied Banking v. CA, GG Sportswear July 11, 2006
55. Areza v. Express Savings Bank, Inc. G.R. No. 176697;
September 10, 2014
DISCHARGE OF INSTRUMENTS
1. Concept of discharge
CHECKS
4. Kinds of check
a. Cashier’s and manager’s check (See BSP Circulars 259, series of 2000 & 291,
series of 2001)
b. Certified check (Sec. 187-189, NIL)
c. Crossed check (Art. 541, Code of Commerce)
(1) Effects of crossing a check
d. Memorandum and traveller’s check