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III. COURSE DESCRIPTION: This subject delves into the basics and
complexities of the Negotiable Instruments Law and the provisions of
the New Civil Code of the Philippines regarding credit transactions. It
provides the students with a penetrating and balanced perspective of
the functions of credit instruments normally used in business
transactions.
IV. GENERAL OBJECTIVE: At the end of the course, the students should be
able to:
a. Differentiate the different types of negotiable instruments and
credit transactions;
b. Identify the features of negotiable instruments and when they
are supposed to be used;
c. Know the proper remedies and actions to be taken when
endorsing negotiable instruments and loans; and
d. Know the laws/statutes in the Philippines governing negotiable
instruments and credit transactions
I. Introduction
a. Origin
b. Purpose
c. Application
d. Types of Negotiable Instruments
e. Distinctions
f. Concept of Real and Personal Defenses
1. Modes of transfer
2. Concept of negotiation (Sec. 30, NIL);
3. Ways of negotiation (in case of order or bearer instruments)
4. Concept of delivery
5. Indorsement
i. Concept
ii. how made (Sec. 31 & 32, NIL)
iii. kinds:
special and blank (Sec. 34 & 35, NIL)
conditional (Sec. 39, NIL)
qualified (Sec. 38, NIL)
restrictive (Sec. 36 & 37, NIL)
iv. Other rules on indorsement
indorsement of an instrument payable to bearer (Sec. 40, NIL)
where instrument is payable to two or more persons (Sec.21, NIL)
instrument is drawn or indorsed to a person as cashier (Sec. 42, NIL)
where name of payee or indorsee is misspelled (Sec. 43, NIL)
indorsement in a representative capacity (Sec. 44, NIL)
presumption as to time of indorsement (Sec. 45, NIL)
place of indorsement (Sec. 46, NIL)\
striking out of indorsement (Sec. 48, NIL)
transfer of an order instrument without indorsement (Sec.49, NIL)
LIABILITY OF PARTIES
I. Primary and secondary liability distinguished
II. Liability distinguished from warranties
III. Liability and/or warranties of parties
a. Maker (Sec. 60, NIL)
b. Drawer (Sec. Sec. 61, NIL)
i. relationship with drawee
ii. relationship with collecting bank
c. Acceptor (Sec. 127 & 62, NIL)
d. Indorsers
i. General indorsers (Sec. 66, NIL)
ii. Qualified indorser (Sec. 65, NIL)
iii. Order of liability
e. Parties negotiating by mere delivery (Sec. 65, NIL)
f. f. Other cases:
irregular indorser (Sec. 64, NIL)
indorser of bearer instrument (Sec. 67, NIL)
accommodation party (Sec. 29, NIL)
agents signing in behalf of the principal
NOTE: First Quiz
DEFENSES
I. Real and personal defenses, distinguished.
II. 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)
forgery of maker’s signature
forgery of indorser’s signature
forgery of drawer’s signature
forgery of bearer instruments
e. material alteration (partial real defense) (Sec. 124 & 125, NIL)
f. extinctive prescription
I. Commodatum
II. Simple Loan or Mutuum
III. Deposit
IV. Guaranty
V. Pledge, Mortgage and Antichresis
VI. Chattel Mortgage
NOTE: Final Quiz
NOTA BENE:
Secure a copy of the Negotiable Instruments Act and any book or reviewers on
Negotiable Instruments and Credit Transactions
Make advance readings: recitations may be conducted during lectures
Quizzes are always announced and the coverage are noted in this syllabus
GRADING SYSTEM
*Class standing (CS) = 50%
- Attendance, Recitation/class participation, quizzes and seatworks, assignments
PG = CS + PE
2
MG = CS + ME
2
FG = CS + FE
2
FINAL GRADE = PG + MG + FG
3