COURSE SYLLABUS IN

NEGOTIABLE INSTRUMENTS LAW

(AY 2021-2022)

Course No. : LLB 226

Course Title : Negotiable Instruments Law (NIL)
Credit : 3 units
Course Professor : Bernardino T. Amago IV
Email address: [email protected]

Consultation Hours : Every Saturday, 1:30 – 2:30 P.M.

Faculty Room, USC College of Law
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A. USC VISION AND MISSION

VISION

The University of San Carlos sees:

• a WORLD where the darkness of sin and the night of unbelief vanish before the light of the
Word and the Spirit of grace
• a SOCIETY where citizens are competent, noble in character and community-oriented
- What they know, they apply justly and honestly…
- What they do not know, they seek to learn…
- What they do not have, they endeavor to acquire…
- What they have, they share.

MISSION

The University of San Carlos is a Catholic institution of learning that embodies the principles of
academic discipline of San Carlos Borromeo and the missionary charism of the Society of the
Divine Word (SVD).

We aim to develop competent and socially responsible professionals and lifelong learners in an
environment that fosters excellence in the academic core processes of teaching-learning,
research, and community extension service.

Our mission is to provide timely, relevant, and transformative academic programs responsive to
the needs of the local, national, and global communities in a rapidly changing world.

B. CAROLINIAN LAW GRADUATE ATTRIBUTES

At the end of the law program, the Carolinian law graduate is expected to be Witness to
the Word and to embody the following Graduate Attributes:

Scientia: A COMPETENT PROFESSIONAL

Critical thinker
Lifelong learner
Skilled researcher
Sound decision- maker
Innovative problem-solver
Effective and articulate communicator

Virtus: A VIRTUOUS EXEMPLAR

Incorruptible servant leader
Ethical and values-driven practitioner
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Devotio: A DEDICATED ADVOCATE

Committed peacemaker
Culture- sensitive patriot
Socially- engaged citizen
Passionate worker for the marginalized

C. PROGRAM LEVEL LEARNING OUTCOMES1 (PLLO):

Upon completion of the Law program, Carolinian law graduates will demonstrate the
following:

PLLO 1: KNOWLEDGE
PLLO 2: ETHICS, PROFESSIONAL RESPONSIBILITY, WITNESS TO THE WORD
PLLO 3: THINKING SKILLS which include the skills to identify and articulate legal issues; apply
legal reasoning and research to generate appropriate responses to legal issues; engage in
critical analysis and make a reasoned choice amongst alternatives; and think creatively in
approaching legal issues and generating appropriate responses.
PLLO 4: RESEARCH SKILLS
PLLO 5: COMMUNICATION AND COLLABORATION
PLLO 6: SELF-MANAGEMENT

D. COURSE LEVEL LEARNING OUTCOMES (CLLO)

Upon completion of the course NIL, the students should be able to:

CLLO 1: Determine and explain what constitutes a negotiable instrument; assess any defects
in a negotiable instrument and propose the concomitant rights and obligations of the
parties thereto; and relate the usage of negotiable instrument to the relevant business
trades and transactions.

CLLO 2: Recognize and reflect upon the ethical issues that may arise involving the use and
dealings of negotiable instruments and exercise of the remedies available to relevant
parties in relation to the same; recognize and reflect upon the professional duties of lawyers
in promoting justice, human rights, due process and fairness in the community; use their
knowledge in the course to be Witness to the Word.

CLLO 3: Examine the facts of a given case, find the relevant facts and the key issues, identify
and apply the legal rules and principles involved, and generate appropriate responses.

CLLO 4: Communicate effectively and persuasively the key principles and concepts
involving the negotiable instruments law including the remedies available to pertinent
parties; demonstrate the ability to use appropriate means and form of communication
depending on the educational background and needs of legal or non-legal audiences;
render appropriate opinion after demonstrating the use of active listening skills such as
questioning, summarizing and paraphrasing.

E. COURSE STRUCTURE

COURSE ASSESSMENT TEACHING AND LEARNING ACTIVITIES

LEVEL TASKS
LEARNING
OUTCOMES
CLLO1, Oral Socratic method;
CLLO 2, Examination Problem-based Approaches;
CLLO 3, Essay Interactive lecture- discussion
CLLO 4 MCQ

F. COURSE REQUIREMENTS

1. Regular attendance;

1
Based in part on ALTC’s Learning and Teaching Academic Standards Program,
December 2010.
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2. Passing grades in summative tests and pre-tests; and

3. Class Participation in oral examinations and discussion groups.

G. POLICY ON CLASS RECORDINGS AND COURSE MATERIALS

The course materials are all academic property of the course professor. A student may not
record any part of the class by any means, and in exceptional cases that the student receives
written faculty authorization to record a class, the student may not copy or download such
recording to a computer or any device for distribution. All course materials are for the student’s
personal education and study. Unauthorized use of the course materials shall be treated as
violation of the University policy on honesty as well as infringement of copyright laws.

H. COURSE GUIDE AND CORE READING ASSIGNMENTS:

I. INTRODUCTION

a. Historical background of the NIL

b. Application and purpose of the NIL
c. Functions and importance of negotiable instruments
d. Characteristics or features of negotiable instruments

II. FORM and INTERPRETATION

a. Formal requirements of negotiability in general (Section 1)

i. Must be in writing
ii. Must be signed by the maker or drawer (Sections 18, 19, 21, and 22)
iii. Must contain an unconditional promise or order to pay (Section 3)
iv. Must be payable at a fixed or determinable future time or on demand
(Sections 4 and 7)
v. Must be payable to order or bearer (Sections 8 and 9)
vi. Drawee must be named
b. Kinds of Negotiable Instruments
i. Promissory Note (Section 184)
ii. Bill of Exchange (Section 126)
i.a. bill not an assignment of funds (Section 127)
i.b. bill addressed to more than one drawee (Section 128)
i.c. inland and foreign bills of exchange (Section 129)
i.d. when bill may be treated as promissory note (Section 130)
iii. Check (Section 185)
c. Parties
i. Holder in due course (Sections 52, 58 and 59)
ii. Holder not in due course (Section 53)
iii. Referee in case of need (Section 131)
d. Additions and Omissions Not Affecting Negotiability
i. Terms used (Section 10)
ii. Additions (Sections 5, 11 and 12)
iii. Omissions (Sections 6)
e. Defects (refer also to Sections 65 & 66)
i. Undated (Section 13)
ii. Incomplete but delivered (Section 14)
iii. Incomplete and Undelivered (Section 15)
iv. Complete but Undelivered (Section 16)
v. Forgery (Section 23)
vi. Material Alteration (Sections 125 and 124)
f. Ambiguity (Section 17)

CASES:
1. Philippines Education Co. vs. Soriano, G.R. No. L-22405, 30 June 1971
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2. Caltex Phil. vs. CA, G.R. No. 97753, August 10, 1992
3. Metrobank vs. CA, G.R. No. 88866, February 18, 1991
4. Sesbreno vs. CA, G.R. No. 89252, Marcy 24, 1993
5. Firestone Tire and Rubber Co. vs. CA, GR No. 113236, March 5, 2001
6. Serano vs. CA, G.R. No. 45125, April 22, 1991
7. PNB vs. Manila Oil Refining & By-Products Company, Inc., G.R. No. L-18103,
8 June 1922
8. Republic Bank vs. Ebrada, G.R. No. L-40796, July 31, 1975
9. MWSS vs. CA, 143 SCRA 20, G.R. No. 126000, Oct. 7, 1998
10. Gempesaw vs. CA, G.R. No. 92244, February 9, 1993
11. Associated Bank vs. CA, G.R. No. 107382, January 31, 1996
12. Republic Bank vs. CA, G.R. No. 42725, April 22, 1991
13. Philippine Commercial International Bank vs. CA, GR No. 121413, January
29, 2001
14. Ramon Ilusorio vs. CA, GR No. 139130, November 27, 2002
15. Samsung Construction Co., Phils. vs. FEBTC and CA, GR No. 129015, August
13, 2004
16. Cesar V. Areza, et al. vs. Express Savings Bank, Inc., G.R. No. 176697,
September 10, 2014
17. Far East Bank & Trust Company vs. Gold Palace Jewellery Co., G.R. No.
168274, August 20, 2008
18. Metrobank v. Cabilzo, G.R. No. 154469, December 6, 2006
19. International Corporate Bank v. CA, G.R. No. 129910. September 5, 2006
20. BDO Unibank, Inc. v. Engr. Selving Lao, GR. No. 227005, 19 June 2017
21. Metrobank v. Junnel’s Marketing Corp., G.R. No. 235511, June 20, 2018

III. CONSIDERATION

a. Presumption of consideration (Section 24)

b. What constitute value (Section 25)
c. Holder for value (Sections 26 and 27)
d. Effect of want of consideration (Section 28)
e. Accommodation party and its liabilities (Section 29)

Cases:

1. Ty v. People, 439 SCRA 220 (2004)

2. Cariño v. De Castro, 553 SCRA 688 (2008)
3. Tan Tiong Tick v. PMC, 10 SCRA 416 (1964)
4. Town Savings and Loan Bank, Inc. v. CA, 223 SCRA 459
5. Clark v. Sellner, 42 Phil 385
6. Sadaya vs. Sevilla, 19 SCRA 924
7. BPI vs. CA, 326 SCRA 641
8. Agro Conlomerates Inc. vs. CA, 348 SCRA 450 (GR No. 117660, December 18, 2000)

IV. NEGOTIATION

a. What constitute negotiation (Section 30)

b. How indorsement is made (Sections 31, 32, 40, 41 and 50)
c. Kinds of indorsement (Sections 33)
i. Special (Sections 34 and 35)
ii. Blank (Sections 34 and 35)
iii. Restrictive (Sections 36 and 37)
iv. Qualified (Section 38)
v. Conditional (Section 39)
d. Indorsement to a person as cashier (Section 42)
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e. Indorsement where name is misspelled (Section 43)

f. Indorsement in representative capacity (Section 44)
g. Time of indorsement (Section 45)
h. Place of indorsement (Section 46)
i. Continuation of negotiable character (Section 47)
j. Striking out indorsement (Section 48)
k. Transfer without indorsement (Section 49)

V. RIGHTS OF THE HOLDER

a. Right to payment and sue for payment (Section 51)

b. Holder in due course (Sections 52, 53 and 59)
c. Rights of holder in due course (Section 57 and 58)
d. Notice before full amount paid (Section 54)
e. When title is defective (Section 55)
f. What constitute notice of defect (Section 56)

CASES:
1. De Ocampo vs. Gatchalian 3 SCRA 596
2. Mesina vs. IAC, 145 SCRA 497

VI. LIABILITIES OF PARTIES

a. Liability of maker (Section 60)

b. Liability of drawer (Section 61)
c. Liability of acceptor (Section 62)
d. Liability of indorser
i. when deemed indorser (Section 63)
ii. warranties/liability of general indorser (Section 66)
iii. warranties/liability of irregular indorser (Section 65 and 64)
iv. liability of indorser where paper is negotiable by delivery (Section 67)
v. order in which indorsers are liable (Section 68)
e. Liability of an agent or broker (Sections 19, 20, 21, and 69)

CASES:
1. Metropol vs. Sambok, 120 SCRA 864
2. Maralit vs. Imperial, 301 SCRA 605 (1999)
3. Sapiera vs. CA, 314 SCRA 370 (1999)
4. BPI vs. CA and Napiza, 326 SCRA 641 (GR No. 11239, February 29, 2000)

VII. ACCEPTANCE and PAYMENT

A. Acceptance
a. How acceptance is made (Sections 132 and 133)
b. Kinds of acceptance (Sections 139, 140, and 141)
i. rights of parties as to qualified acceptance (Section 142)
ii. certification of check (Sections 187, 188, and 189)
c. Acceptance by separate instrument (Section 134)
d. Promise to accept (Section 135)
e. Time allowed to accept (Section 136)
f. Liability of drawee retaining or destroying bill (Section 137)
g. Acceptance of incomplete bill (Section 138)

B. Presentment for Acceptance

a. When presentment for acceptance must be made (Section 143)
b. Effects of failure to present for acceptance (Section 144)
c. How presentment for acceptance is made (Section 145)
d. On what days may presentment for acceptance may be made (Section 146)
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e. Presentment where time is insufficient (Section 147)

f. Where presentment for acceptance is excused (Section 148)
g. When is bill dishonored by non-acceptance (Section 149)
h. Duty of holder where bill is not accepted (Section 150)
i. Rights of holder where bill is not accepted (Section 151)
j. Cases where protest is necessary (Sections 152 and 158)

C. Presentment for Payment

a. Time of Maturity (Sections 85 and 86)
b. Effect of want of demand on the principal debtor (Section 70)
c. What constitutes sufficient presentment (Sections 72 and 74)
d. When check must be presented (Section 186)
e. When delay in making presentment is excused (Section 81)
f. Place of presentment (Section 73)
g. Presentment where instruments is not payable on demand and where
payable on demand (Section 71)
h. Presentment where instrument is payable at bank (Section 87 and 75)
i. Presentment where principal debtor is dead (Section 76)
j. Presentment to persons liable as partner (Section 77)
k. Presentment to joint debtors (Section 78)
l. When presentment is not required to charge the drawer (Section 79)
m. When presentment is not required to charge the indorser (Section 80)
n. When presentment may be dispensed with (Section 82)
o. When instrument is dishonored by non-payment (Section 83)
p. Liability of person secondarily liable when instrument is dishonored (Section
84)
q. What constitute payment in due course (Section 88)

D. Protest
a. How protest is made (Sections 153 and 160)
b. Who must protest (Section 154)
c. When must protest be made (Section 155)
d. Where protest is made (Section 156)
e. Protest for both non-acceptance and non-payment (Section 157)
f. When protest may be dispensed with (Section 159 and 118)

E. Acceptance for Honor

i. When bill may be accepted for honor (Section 161)
ii. How acceptance for honor is made (Sections 162 and 163)
iii. Liability of acceptor for honor (Section 164)
iv. Agreement of acceptor for honor (Section 165)
v. Maturity of bill payable after sight when accepted for honor (Section 166)
vi. Condition when dishonored bill is accepted for honor (Section 167)
vii. How presentment for payment is made to acceptor for honor (Section 168)
viii. When delay in making presentment is excused (Section 169)
ix. Dishonor of bill by acceptor for honor (Section 170)

F. Payment for Honor

a. How payment for honor is made (Sections 172 and 173)
b. Who may make payment for honor (Section 171)
c. Preference of parties offering to pay for honor (Section 174)
d. Effect on subsequent parties where bill is paid for honor (Section 175)
e. Where holder refuses to receive payment supra protest (Section 176)
f. Rights of payer for honor (Section 177)

VIII. NOTICE OF DISHONOR

a. Who gives notice of dishonor

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i. In general (Section 90)

ii. By agent (Sections 91 and 94)
iii. In behalf of holder (Section 92)
iv. Party entitled thereto (Section 93)
b. To whom notice of dishonor is given
i. In general (Sections 89 and 97)
ii. Where party is dead (Section 98)
iii. To partners (Section 99)
iv. To joint parties (Section 100)
v. To a bankrupt party (Section 101)
c. Form of notice
i. In general (Section 95)
ii. When not signed (Section 95)
d. When notice must be given
i. In general (Sections 102 and 107)
ii. Where parties reside in same place (Section 103)
iii. Where parties reside in different places (Section 104)
iv. When deposited in post office (Section 106)
v. When delay is excused (Section 113)
e. Where notice must be sent (Section 108)
f. Waiver of notice (Sections 109 and 110)
g. Waiver of protest (Section 111)
h. When notice is dispensed with (Sections 112, 114, 115 and 116)
i. Effect of omission to give notice of dishonor (Section 117)

IX. DISCHARGE OF NEGOTIABLE INSTRUMENT

a. How instrument is discharged (Section 119)

b. When person secondarily liable are discharged (Section 120)
c. Right of party who discharges instrument (Section 121)
d. Renunciation by holder (Section 122)
e. Cancellation (Section 123)

X. BILLS IN SET

a. Bills in set constitute one bill (Section 178)

b. Right of holders where different parts are negotiated (Section 179)
c. Liability of holder who indorses two or more parts of a set to different persons
(Section 180)
d. Acceptance of bill drawn in sets (Section 181)
e. Payment of acceptor of bills drawn in sets (Section 182)
f. Effect of discharging one of a set (Section 183)

XI. BP Blg. 22 – Bouncing Checks Law

a. Elements
b. Evidence and Presumption
c. Duty of Drawee

CASES:
1. State Investment House, Inc. v. CA, 217 SCRA 32 (1993)
2. Papa v. A.U. Valencia & Co., Inc., 284 SCRA 648 (1998)
3. Tan v. People, 500 SCRA 172 (2006)
4. Vaca v. CA, 298 SCRA 658 (1998)
5. Macalaglag v. People, 511 SCRA 400 (2006)
6. Cruz v. Cruz, 515 SCRA 89 (2007)
7. Del Rosario vs. Cedillo, 441 SCRA 70 (2004)
8. Resterio v. People, 681 SCRA 592 (2012)
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9. Cheng v. Sy, 592 SCRA 155 (2009)

Additional cases may be assigned during the course of the discussion.

I. Grade Distribution:

Midterm Exam 25%

Pre-final Exam 25%
Final Exam 25%
Class Standing _25%
Total 100%
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J. Exam Grading Rubric

B. Essay-Type Exam

Proper application of law and jurisprudence 70%

Cohesiveness and presentation of answer 20%
Grammar and syntax 10%
Total 100%

C. Multiple Choice-Type Exam/Objective-Type Exam

Accuracy and correctness 100%