DE LA SALLE

UNIVERSITY COLLEGE
OF LAW

NEGOTIABLE INSTRUMENTS LAW (LAW 503M)

SYLLABUS
st
1 Semester Academic Year 2019-2020

Atty. ERIC R.G. ESPIRITU

I. INTRODUCTION

A. History

1. English Bill of Exchange Act of 1882

2. U.S. Uniform Negotiable Instruments Law of 1896

3. Code of Commerce – Book II, Articles 443 to 556

B. Governing Law – Act No. 2031, Negotiable Instruments Law (NIL or

Act)

1. [Sec. 196] – Cases not provided for in the NIL/Act

2. Article 18, Civil Code

3. [Sec. 198] – NIL took effect ninety (90) days after its publication in

the Official Gazette of March 4, 1911, or on June 2, 1911.

C. Functions and Significance of Negotiable Instruments

1. Money Substitute

- Lozano vs. Martinez, 146 SCRA 323

2. Medium of Exchange in Business Transactions

3. Medium of Credit in Business Transactions

D. Forms/Kinds of Negotiable Instruments

1. [Sec. 184] – Definition of Promissory Note; [Sec. 130 – When Bill may

be treated as Promissory Note]

2. [Sec. 126] – Definition of Bill of Exchange

3. Others

a. [Sec. 185] – Definition of Check

b. Bonds, Debentures, Notes – Sec. 3, Republic Act No. 8799,

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 Securities Regulation Code (SRC); Rule 12.1-6

c. Withdrawal Slips

- Firestone Tire & Rubber Company of the Philippines vs. Court of

Appeals and Luzon Development Bank; G.R. No. 113236. March 5,
2001

II. FORM and INTERPRETATION of NEGOTIABLE INSTRUMENTS

A. [Sec. 1] REQUISITES of NEGOTIABILITY

- Consolidated Plywood Industries, Inc., et al. vs. IFC Leasing and

Acceptance Corporation, G.R. No. 72593. April 30, 1987

- Government Service Insurance System vs. CA and Racho, 170 SCRA

533 [1989]

- Salas vs. CA, et al., 181 SCRA 296 [1990]

- Caltex [Phil.], Inc. vs. CA, 212 SCRA 448 (1992)

- Traders Royal Bank vs. CA, et al., G.R. No. 93397. March 3, 1997

- Juan Casabuena vs. CA, et al., G.R. No. 115410. February 27, 1998

- Rivera vs. Spouses Chua, G.R. No. 184458. January 14, 2015

1. [Sec. 2] Sum Certain in Money

- Nicolas and Matias vs. Matias, et al., G.R. No. L-8093. October 29,
1955

- Republic Resources and Development Corporation, G.R. No. L-33438.

October 28, 1991

2. [Sec. 3] Unconditional Promise or Order to Pay

- Metropolitan Bank & Trust Company vs. CA, et al., G.R. No. 88866.
February 18, 1991

3. [Sec. 4] Determinable Future Time

4. [Sec. 5] Act in addition to Payment of Money

5. [Sec. 6] Matters that may be Added or Omitted

6. [Sec. 7] Payable on Demand

- Ponce de Leon vs. Rehabilitation Finance Corporation, et al., G.R. No.

L-24571. December 18, 1970

7. [Sec. 8] Payable to Order

- Consolidated Plywood Industries, Inc., et al. vs. IFC Leasing and

Acceptance Corporation, G.R. No. 72593. April 30, 1987

8. [Sec. 9 & 191 par. 4] Payable to Bearer – Who is a Fictitious

Person under the NIL

- Philippine National Bank vs. Rodriguez, et al., 566 SCRA 513 [2008]

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 -People vs. Wagas, 705 SCRA 17 [2013]

9. [Sec. 10] Sufficiency of Terms

- Pacifica Jimenez vs. Dr. Jose Bucoy, G.R. No. L-10221. February
28, 1958

10. [Sec. 11] Presumption of Date

11. [Sec. 12] Antedated and Postdated Instruments

12. [Sec. 13] When Date may be Inserted

13. [Sec. 14, 15, 16] Incomplete Instruments

a) [Sec. 14] Mechanically Incomplete but Delivered Instrument

- Borromeo v. Sun, 317 SCRA 176

- Pacheco vs. CA, G.R. No. 126670. December 2, 1999

b) [Sec. 15] Mechanically Incomplete and Undelivered Instrument

c) [Sec. 16] Mechanically Complete but Undelivered Instrument

- De La Victoria v. Burgos; G.R. No. 111190, June 27, 1995

- State Investment House, Inc. vs. CA and Nora Moulic, G.R.

No. 101163. January 11, 1993

- People vs. Yabut, G.R. No. L-42847. April 29, 1977

- People vs. Grospe, G.R. No. L-74053-54. January 20, 1988

- Development Bank of Rizal v. Wei, et al., 219 SCRA 736

- Lim v. CA; G.R. No. 107898, December 19, 1995

- RCBC v. Hi-Tri Development Corporation, et al.; G.R. No.

192413, June 13, 2012

14. [Sec. 17] Rules of Construction

- PNB v. Concepcion Mining Co., Inc., G.R. No. L-16968, July 31,

1962

- Republic Planters Bank v. CA, G.R. No. 93073. December 21,

1992

15. [Sec. 18] Liability of Person who did not sign the Instrument

16. [Sec. 19 & 20] Signature by and Liability of an Agent

- The Philippine Bank of Commerce v. Aruego; G.R. Nos. L-25836-

37, January 31, 1981

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 - Republic Planters Bank v. CA, G.R. No. 93073. December 21,

1992

17. [Sec. 21] Signature by Procuration

18. [Sec. 22] Effect of Indorsement by Infant or Corporation

19. [Sec. 23] Forgery

a) Kinds of Forgery under the NIL

b) Burden of Proof to show Forgery

- Chiang Yia Min v. CA, RCBC, et al.; G.R. No. 137932. March
28, 2001

c) Kind of Defense

d) Effects of Forgery

e) Persons Precluded from raising the defense of Forgery

- Philippine National Bank v. Quimpo, et al.; G.R. No. L-53194.

March 14, 1988

- Gempesaw v. CA and PBCom; G.R. No. 92244. February 9, 1993

- Associated Bank v. Court of Appeals, et al.; G.R. No.

107382. January 31, 1996

- Francisco v. Court of Appeals, et al.; G.R. No. 116320.

November 29, 1999

- Samsung Construction Company Philippines, Inc. v. Far East

Bank and Trust Company and CA; G.R. No. 129015. August 13,
2004

B. CONSIDERATION

1. [Sec. 24] Absence or Failure of

Consideration (Art. 1354, Civil Code)

- Travel-On, Inc. v. Court of Appeals and Arturo S. Miranda; G.R. No.

L- 56169, June 26, 1992

2. [Sec. 25 & 191] Value

- Pineda vs. dela Rama, 121 SCRA 671

3. [Sec. 26] Holder for Value

4. [Sec. 27] Lien on Instrument

- Caltex (Philippines), Inc. v. CA and SBTC; G.R. No. 97753, August 10,
1992

5. [Sec. 28] Effect of Want of Consideration

a) Difference between Absence of

Consideration and Failure of Consideration
b) Kind of Defense
6. [Sec. 29] Accommodation Party

a) Requisites for consideration as an Accommodation Party

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 b) Purpose of Accommodation Party

c) Defense Available to Accommodation Party

- Travel-On, Inc. v. Court of Appeals and Arturo S. Miranda; G.R.

No. L-56169, June 26, 1992

- Aglibot v. Santia; G.R. No. 185945, December 5, 2012

- Ang v. Associated Bank and Antonio Ang Eng Long, 532 SCRA
244

C. NEGOTIATION

1. [Sec. 30] What Constitutes Negotiation

2. [Sec. 31] Indorsement, how made

3. [Sec. 32] Indorsement of Entire Instrument

- Montinola v. PNB; G.R. No. L-2861, February 26, 1951

4. [Sec. 33] Kinds of Indorsements

a) [Sec. 34 & 35] Blank and Special Indorsements

b) [Sec. 36 & 37] Restrictive Indorsement

c) [Sec. 38] Qualified Indorsement

- Metropol (Bacolod) Financing & Investment Corporation v.

Sambok Motors Company, et al.; G.R. No. L-39641, February 28,

1983

- Great Asian Sales Center Corp. v. CA, et al., 381 SCRA 557

d) [Sec. 39] Conditional Indorsement

5. [Sec. 40] Effect of Specially Indorsing Instrument Payable to

Bearer

6. [Sec. 41] Indorsement of Instrument payable to Two or More

Persons

7. [Sec. 42] Effect of Instrument Drawn or Indorsed to a Person or

Cashier

8. [Sec. 43] Indorsement where Name is Misspelled

9. [Sec. 44] Indorsement in Representative Capacity

10. [Sec. 45] Presumption as to the Time of Indorsement

11. [Sec. 46] Presumption as to the Place of Indorsement

12. [Sec. 47] How Long Negotiable Character Continues

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 13. [Sec. 48] Striking Out an Indorsement

14. [Sec. 49] Delivery without Indorsement of Order Instrument

- Metropolitan Bank and Trust Company v. Chiok; G.R. No.

175302, November 26, 2014

15. [Sec. 50] Instrument Renegotiated to Prior Party

D. RIGHTS of the HOLDER

1. [Sec. 51 to 56] Holder in Due Course

- De Ocampo & Co. v. Gatchalian, et al.; G.R. No. L-15126,

November 30, 1961

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 - State Investment House, Inc. v. CA and Moulic; G.R. No.
101163, January 11, 1993

- Patrimonio v. Gutierrez, 724 SCRA 636, June 4, 2014

- Prudencio v. CA, 143 SCRA 11

- BPI v. Roxas, 536 SCRA 168

- Gonzales v. RCBC, 508 SCRA 459

2. [Sec. 57] Rights of a Holder in Due Course

a) Personal Defenses

b) Real or Absolute Defenses

- Yang v. CA, 409 SCRA 159

c) Right to enforce Full Amount of the Instrument

3. [Sec. 58] When the Instrument is subject to Original Defenses

4. [Sec. 58] When Person not a Holder in Due Course has Rights of

Holder in Due Course

5. [Sec. 59] Who is deemed a Holder in Due Course

E. LIABILITIES of PARTIES

1. Requisites of Contract and Capacity to Contract – Articles

1318 and 1327, Civil Code

2. [Sec. 60] Maker

3. [Sec. 61] Drawer

4. [Sec. 132] Drawee

5. [Sec. 62] Acceptor

- Far East Bank & Trust Company v. Gold Palace Jewellery Co.; G.R.

No. 168274, August 20, 2008

6. [Sec. 63] Indorser

7. [Sec. 64] Irregular Indorser

8. [Sec. 65] Person negotiating by Delivery or Qualified

Indorsement

9. [Sec. 66] General Indorser

- Allied Banking Corporation v. Lim Sio Wan, et al.; G.R. No. 133179,

March 27, 2008

10. [Sec. 67] Indorser of an Instrument Negotiable by Delivery

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 11. [Sec. 68] Order of Liability of Indorsers

12. [Sec. 69] Agent or Broker

E. PRESENTMENT for PAYMENT

1. [Sec. 70] When necessary

- Vicky Moster v. People of the Philippines; G.R. No. 167461,

February 19, 2008

- Rivera v. Spouses Chua; G.R. No. 184458, January 14, 2015

2. [Sec. 71 & 72] Requisites of Sufficient Presentment

- Far East Realty Investment Inc. v. CA, et al.; G.R. No. L-36549,

October 5, 1998

3. [Sec. 73] Place of Presentment

4. [Sec. 74] Instrument must be Exhibited

5. [Sec. 75 & 87] Presentment and Rule where Instrument payable

at Bank

6. [Sec. 76] Presentment where Principal Debtor is Dead

7. [Sec. 77] Presentment to Persons liable as Partners

8. [Sec. 78] Presentment to Joint Debtors

9. [Sec. 79] When Presentment is Not Required to Charge the

Drawer

10. [Sec. 80] When Presentment is Not Required to Charge the

Indorser

11. [Sec. 81] When Delay in Presentment is Excused

12. [Sec. 82] When Presentment may be Dispensed With

13. [Sec. 83 & 84] Dishonor by Non-Payment; Immediate Right of

Recourse

14. [Sec. 85 & 86] Time of Maturity and How Time is Computed

15. [Sec. 88] Payment in Due Course

F. NOTICE of DISHONOR

1. [Sec. 89] Who must be given Notice of Dishonor

a) Who need not be given Notice of Dishonor

b) Effect of Failure to give Notice of Dishonor

2. [Sec. 90] Who may give Notice of Dishonor

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 3. [Sec. 91] Notice given by Agent

4. [Sec. 92] Effect of Notice on behalf of Holder

5. [Sec. 93] Effect of Notice given by Party Entitled Thereto

6. [Sec. 94] When Agent may give Notice

7. [Sec. 95] When Notice Sufficient

8. [Sec. 96] Form of Notice

9. [Sec. 97] To Whom Notice may be given

10. [Sec. 98] Notice where Party is Dead

11. [Sec. 99] Notice to Partners

12. [Sec. 100] Notice to Parties Jointly Liable

13. [Sec. 101] Notice to Bankrupt

14. [Sec. 102] Time within which Notice must be given

a) [Sec. 103] Notice where Parties Reside in the Same Place

b) [Sec. 104] Notice where Parties Reside in Different Places

15. [Sec. 105] When Sender deemed to have given Due Notice

16. [Sec. 106] What constitutes Deposit in Post Office

17. [Sec. 107] Notice to Subsequent Party

18. [Sec. 108] Place where Notice must be sent

19. [Sec. 109] Waiver of Notice

a) [Sec. 110] Persons affected by Waiver

b) [Sec. 111] Effect of Waiver of Notice

20. [Sec. 112] When Notice of Dishonor Dispensed With

21. [Sec. 113] Delay in giving Notice of Dishonor Excused

22. [Sec. 114] Notice of Dishonor to Drawer not required

23. [Sec. 115] Notice of Dishonor to Indorser not required

24. [Sec. 116] Effect where Notice of Non-Acceptance already given

25. [Sec. 117] Effect of Omission to give Notice of Non-Acceptance

26. [Sec. 118] When Protest need Not be made and Must be made

G. DISCHARGE of NEGOTIABLE INSTRUMENTS

1. [Sec. 119] How Negotiable Instrument is Discharged

2. [Sec. 120] When a Person Secondarily Liable is Discharged

3. [Sec. 121] Effects of Payment by Person Secondarily Liable

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 4. [Sec. 122] Renunciation by Holder

5. [Sec. 123] Effect of Unintentional Cancellation of the Instrument

6. [Sec. 124] Alteration of Instrument

a) Spoliation

b) [Sec. 125] Material Alterations

- PNB v. CA, et al.; G.R. No. 107508, April 25, 1996

- Leonardo Bognot v. RRI Lending Corporation; G.R. No.

180144, September 24, 2014

- International Corporate Bank v. CA and PNB; 501 SCRA 20

c) Immaterial Alterations

III. BILLS OF EXCHANGE

A. FORM and INTERPRETATION

1. [Sec. 126] Bill of Exchange defined

2. [Sec. 127] Bill not an Assignment of Funds

- Gempesaw v. CA and PBCom; G.R. No. 92244, February 9, 1993

3. [Sec. 128] Bill addressed to Several Drawees

4. [Sec. 129] Inland and Foreign Bills

5. [Sec. 130] When a Bill may be treated as a Promissory Note

6. [Sec. 131] Referee in case of need

B. ACCEPTANCE

1. [Sec. 132] How made

2. [Sec. 133] Holder entitled to Acceptance on Face of Bill

3. [Sec. 134] Acceptance on a Separate Instrument

4. [Sec. 135] Promise to Accept

5. [Sec. 136] Time allotted to the Drawee to Accept

6. [Sec. 137] Constructive and Implied Acceptance

7. [Sec. 138] When Acceptance may be made

8. [Sec. 139] Kinds of Acceptance

a) [Sec. 140] General Acceptance

b) [Sec. 141 & 142] Qualified Acceptance; Rights of Parties to a

Qualified Acceptance

C. PRESENTMENT for ACCEPTANCE

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 1. [Sec. 143] When Required

2. [Sec. 144] Effect of Failure to make Presentment for Acceptance

3. [Sec. 145] How Made

4. [Sec. 146] Days when Presentment for Acceptance must be

made

5. [Sec. 147] Delay Excused

6. [Sec. 148] When Excused

7. [Sec. 149] Dishonor by Non-Acceptance

a) [Sec. 150] Duty of Holder

b) [Sec. 151] Rights of the Holder

D. PROTEST

1. [Sec. 152] When Necessary

2. [Sec. 153] Procedure for Protest

3. [Sec. 154] Who can make Protest

4. [Sec. 155 & 156] When and Where Protest should be made

E. ACCEPTANCE for HONOR

1. [Sec. 161] When Acceptance for Honor may be made

2. [Sec. 164] Liability of Acceptor for Honor

3. [Sec. 165] Agreement of Acceptor for Honor

4. Acceptor for Honor distinguished from Regular Acceptor

F. PAYMENT for HONOR

1. [Sec. 171] Who can make Payment for Honor

2. Acceptance for Honor distinguished from Payment for Honor

3. [Sec. 172] How Made

4. [Sec. 174] Preference of Parties Offering to Pay for Honor

5. [Sec. 175] Effect of Payment for Honor

6. [Sec. 176] Effect of Refusal to Receive Payment for Honor

G. BILLS IN SET

1. [Sec. 178] Definition of Bill in Set

2. [Sec. 179] Rights of Holders where Different Parts of a Set are

Negotiated

3. [Sec. 180] Liability of Indorser of Different Parts of a Set

4. [Sec. 181] Liability of Acceptor of Different Parts of a Set

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 5. [Sec. 182] Liability of Acceptor who Pays Part of a Set

6. [Sec. 183] Effect of Discharging a Part of a Set

IV. PROMISSORY NOTES and CHECKS

A. [Sec. 184] Promissory Note Defined

B. [Sec. 185] Check Defined

- PAL v. CA, et al.; G.R. No. L-49188, January 30, 1990

- Roman Catholic Bishop of Malolos v. IAC, et al.; G.R. No. 72110,

November 16, 1990

1. Crossed Checks – Effects of Crossing a Check

- Hi-Cement Corporation v. Insular Bank of Asia and America; G.R.

No.132403, September 28, 2007

- Metropolitan Bank and Trust Company v. PBCom, et al.; G.R.

No. 141408, October 18, 2007

- PCIB v. Balmaceda and Ramos; G.R. No. 158143, September 21,

2011

- Equitable Banking Corporation v. Special Steel Products, Inc. and

Pardo; G.R. No. 175350, June 13, 2012

2. [Sec. 186] Time of Presentment – Effect of Delay in

Presentment

- The International Corporate Bank v. Sps. Gueco; G.R. No. 141968,

February 12, 2001

- Wong v. CA and People of the Philippines; G.R. No. 117857, February

2, 2001

3. [Sec. 187] Effect of Certification

4. [Sec. 188] Effect where Certification obtained by Holder

5. [Sec. 189] Check not an assignment of Funds; Liability of

Drawee to Drawer

- Spouses Moran v. CA and Citytrust Banking Corporation; G.R. No.

105836, March 7, 1994

V. GENERAL PROVISIONS

A. [Sec. 191] Definition of:

1) Acceptance

2) Bearer

3) Bill

4) Delivery
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 5) Holder

6) Indorsement

7) Instrument

8) Issue

9) Value

10) Written

- Manuel Lim and Rosita Lim v. CA; G.R. No. 107898, December 19, 1995

B. [Sec. 192] Person Primary Liable on the Instrument

C. [Sec. 193] What constitutes Reasonable Time

D. [Sec. 194] How Time Computed

E. [Sec. 196] What Law governs any case not provided by the NIL

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