SYLLABUS Negotiable Instruments Law (Act No. 2031) Atty. Avelino M. Sebastian, Jr. I. Introduction II.

II. Origin Purpose Application Ang Tiong v Ting, 22 SCRA 713 Types of Negotiable Instruments Distinctions Concept of Real and Personal Defenses

Form of Negotiable Instruments Promissory Note Bills of Exchange Garcia v Lacuesta (90 Phil 489) Secs. 7, 8, and 9 of Electronic Commerce Act of 2000 (R.A. 8792) Promise to Pay Order to Pay Certainty of Sum Payment of Interest and the Usury Law (Act 2655) Effect of Unliquidated Amounts Payment of Attorneys Fees (Art. 2208, Civil Code) Effect of Installment Payments Legal Tender (Art. 1249, Civil Code) Foreign Currency and the Uniform Currency Act (R.A. 529) Unconditionality of Promise or Order to Pay Source of Funding or Reimbursement Keck v Yakima Savings, 295 Pac 311 Concept of Future or Determinable Future Time Payable at or after Sight On or before a specific date Rehabilitation Finance Corporation v CA, 94 Phil 984 Effect of Acceleration Clause and MAC Extension of Due Date State Bank of Halstad v Bilstad, 162 Iowa 433, 136 N.W. 204 Security Bank of Sioux City v Gunderson, 52, S.S. 15, 216 N.W. 595 Provisions not Affecting Negotiability Negotiability of Secured Instruments Statement of Underlying Transaction Effect of Conjunctive Obligations

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III. Prestation to do (Art. 1107, Civil Code) Test of negotiability Waiver of Debtors Rights Acts exercisable at Option of the Holder Confession of Judgment PNB v Manila Oil Refining and By-Products Co. Inc., 43 Phil 444 Omissions in a Negotiable Instrument Instruments Payable on Demand Art. 1197, Civil Code Instruments Payable to Order Designation of Payee Instruments Payable to Bearer Concept of a Fictitious Person Limjoco v Intestate Estate of Pedro Fragante, 80 Phil 776 Nazareno v Court of Appeals, 343 SCRA 637 Date of a Negotiable Instrument Relevance Ante-dating and Post-dating of instrument Triphonoff v Sweeney, et al., 65 Pre 299, 130 Pac 979 Insertion of Date

Completion and Delivery of Instruments Incomplete but Delivered Instruments Authority to complete the Instrument Rights of a holder in due course Instruments delivered in blank Incomplete and Undelivered Instruments Pavilis v Farmers Union Livestock Commission, 68 S.D.96, 298 N.W. 732 Weiner v Pennsylvania Co., 160 Pa Super 320 Linick v A.J. Nutting & Co., 125 N.Y.S. 93 Complete but Undelivered Instruments Delivery subject to Conditions

In Re Martens Estate, 226 Iowa 162, 283 N.W. 885 IV. Rules of Construction Continental Illinois Bank v Clement, 259 Mich 167 Liability of Persons signing an Instrument Signing in Trade or Assumed Name Signing as an Agent Insular Drug v PNB, 58 Phil 684 Signature by Procuration

V.

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VI. Indorsement by Infant or Corporation Murray v Thompson, 136 Tenn 118

Forgery and Alteration Forgery: Fraud in Factum Fraud in Inducement Fraud in Civil Law Duress Amounting to Forgery Fraudulent Impersonation Theory of Double Intent Procedural Requirement Effects of Forgery Extent of Effects of Forgery Parties barred from setting up the defense of forgery Endorsers Persons negotiating by delivery Acceptors Persons in estoppel Persons guilty of negligence Forgery of Notes Note Payable to Order Note Payable to Bearer Forgery of Makers signature Forgery of Bills of Exchange Endorsement of a Bill Payable to Order PNB v Quimpo, 158 SCRA 582 Endorsement of Bill Payable to Bearer Forgery of Drawers Signature with Acceptance Forgery of Drawers Signature without Acceptance PNB v National City Bank of New York, 63 Phil 711 San Carlos Milling v BPI, 59 Phil 59 Liability of Party Negotiating after Forgery Negligence of Drawer in Forgery of Indorsement other than a Check Negligence of Drawer in Forgery of Indorsement of a Check Payees Negligence in Forgery of Drawers Signature

Alteration: Definition What Constitutes Material Alteration Effects of Material Alteration Banco Atlantico v Auditor General, 81 SCRA 335 Foutch v Alexandria Bank, 177 Tenn 348, 149 S.W. (3d) 76

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Saving Bank of Richmond v National Bank of Goldsboro, 3F.ed790 Critten v Chemical National Bank, 171 N.Y. 219, 63 N.E.969 Marine National Bank v National City Bank, 59 N.Y. 67 24-Hour Clearing Rule Metropolitan bank v HSBC, 118 SCRA 537 Republic Bank v CA, 196 SCRA 100

Summary of Rights and Liabilities in relation to Forgery VII. Promissory Note Bills of Exchange Great Eastern Life Insurance Co. v HSBC, Phil 678

Consideration of Negotiable Instruments Presumption of Consideration and Rebuttal What Constitutes Value Art. 1350, Civil Code Holder for Value General Rule Expanded Rule Lien Holder Want of Consideration vs. Failure of Consideration Elgin National Bank v Goecke, et al., 295 Ill 403, 129 N.E. 149 Dougherty v Salt, 227 N.Y. 200, 135 N.E. 94 William Barco & Sons v Forbes, 194 N.C. 204, 139 S.E. 227 Nature of Defense Liability of an Accommodation Party Maulini v Serrano, 28 Phil 640 Ang Tiong v Ting, 22 SCRA 712 Rights of Accommodation Parties amongst themselves Sadaya v Sevilla.19 SCRA 924 Art. 2073, Civil Code Application of holder for value Acua v Veloso and Javier,50 Phil 241

VIII.

Negotiation: What constitutes Negotiation Difference from an Assignment Transfers by operation of law Initial Delivery of Instrument

Indorsement: How made Alonge Clark v Thompson, 104 Ala 504, 60 So. 925

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Indorsement for the full instrument Blake v Weiden, 291 N.Y. 134, 51 N.E. 2d 667 Kinds of Indorsement Restrictive Indorsement Indorsement as agent for Granado v Riverdale, Inc., C.A. 24147-R, 27 November 1964 Indorsement in trust for Sulbrason-Dickenson Co. v Hopkins, 170 US 326 Atlantic v Comm. Lumber Co., 155 Atl. 762 White v National Bank, 102 U.S. 658 Leonardo v Chase National Bank, 363 App. Div. 552, 33 N.Y.S. 2d 796 Effects of Restrictive Indorsement Qualified Indorsement Effects Liability of Qualified Indorser Fay v White, 262 N.Y. 215, 186 N.E. 678 Copeland v Burke, 59 Okla 219, 158 Pac. 1162 Hutson v Rankin, 36 Idaho 169, 213 Pac 345 Conditional Indorsement Indorsement of Bearer Instrument Indorsement to two or more persons Indorsement to a corporate official Johnson v Buffalo Bank, 112 N.W. 165 Indorsement by a Representative Time and Place of Indorsement Striking out of Indorsement Transfers without Indorsement

IX.

Rights of a Holder Holder in Due Course Elements Complete and regular upon its face Materiality of Omission Receipt before Instrument is overdue Montinola v PNB, 88 Phil 178 Without notice of prior dishonor Holder in good faith Failure to make inquiry Vicente R. de Ocampo & Co. v Anita Gatchalian, 3 SCRA 596 Acquisition for Value Defects of Title Defenses Infirmities of an Instrument Rights of a Holder in Due Course

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X. Real and Personal Defenses Fossum v Fernandez Hermanos, 44 Phil 713 Presumption in favor of holder in due course Asia BankingCorporation v Ten Sen Guan y Sobrinos, 44 Phil 511

Liabilities of Parties Liability of Maker PNB v Maza and Macenas, 48 Phil 207 Tan Sua Sia v Yu Biao Sontua, 56 Phil 707 Araneta V Perez, 14 SCRA 498 Republic v vda de Yulo, 16 SCRA 658 Parot v Gemora, 7 Phil 94 Clark v Sellner, 42 Phil 384 Warranties of Maker and defenses barred Liability of Drawer Warranties and defenses barred Secondary liability Kauffman v PNB, 42 Phil 182 Liability of unaccepted bill Reimbursement of drawee PNB v CA, 122 SCRA 553 Liability of Acceptor Warranties and defenses barred Acceptor primarily liable PNB v Picornell, 46 Phil 716 Effect of mortgage Asia Banking v Lacson Company, 48 Phil 482 Bills altered before acceptance Liability of an Indorser Who is deemed an indorser American Bank v Macondray & Co., 4 Phil 695 Concept of an irregular indorser Liability of person negotiating by delivery or qualified indorsement Warranties and Defenses barred Liability of general indorser Warranties and defenses barred PNB v CA, 25 Phil 693 Liability of indorser of a bearer instrument Order of liability

XI.

Presentment for Payment Concept of presentment for payment Holding persons secondarily liable on the instrument Demand instrument vs time instrument Concept of reasonable time

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XII. Sufficiency of presentment Place of presentment Exhibition of instrument Special rules on presentment for payment Dispensing presentment to charge drawer or indorser Delay in presentment When presentment is excused Dishonor of instrument by non-payment Liability of persons secondarily liable Payment in due course Summary of rules relating to presentment for payment

Dishonor Notice of Dishonor Asia Banking v Javier, 44 Phil 777 Statutory exceptions to the rule relating to notice of dishonor By whom given Effect of notice of dishonor Form and sufficiency of notice of dishonor Sufficiency of service of notice of dishonor To whom notice of dishonor is given Timeliness (or delay) of notice of dishonor Waiver of notice Dispensing notice of dishonor Dispensing notice to drawer, indorsers Effect of dishonor by non-acceptance Notice of dishonor by non-acceptance Protest for non-acceptance or non-payment

XIII.

Discharge of Instrument Party to effect discharge Third party payment (Arts. 1236 and 1237. Civil Code) Extension of time of payment Discharge of instrument by operation of law Payment by check (Art. 1249, Civil Code) Discharge of persons secondarily liable Payment by a person secondarily liable Renunciation by holder Effect of unintentional cancellation of instrument

XIV.

Bills of Exchange Definition Effects Inland and Foreign Bills

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XV. Acceptance of bills Form of acceptance Effect of promise to accept Timeliness of acceptance Acceptance of incomplete bill Kinds of Acceptance Presentment for Acceptance How and when made When presentment is excused Dishonor by non-acceptance Protest, meaning How, when and where made Acceptance for honor Payment for honor Bills in set

Promissory Note and Check Definitions Republic v PNB, 3 SCRA 851 Different types of checks Crossing of checks Timeliness of presentment of checks for payment Certification of checks Panlilio v David, 50 Phil 105 Assignment of funds Gregorio Araneta, Inc. v Tuason de Paterno, 91 Phil 786