Background History of The Development of Credit in The Philippines How Credit Instruments Are Negotiated

BACKGROUND HISTORY OF
THE DEVELOPMENT OF
CREDIT IN THE PHILIPPINES
&
HOW CREDIT INSTRUMENTS
ARE NEGOTIATED
Name:
• Amadar, Blythe Queenie B.
• Asantor, Ma. Guillian Arlene E.
• Bunagan, Jhoanna A.
• Lloren, Michael Kristian B.
• Ravalo, Erica Mae
COLLEGE OF BUSINESS EDUCATION
PRESENTATION OUTLINE
•Background History of the Development of
Credit in the Philippines
•How Credit Instruments are Negotiated
•Requisites for Negotiability

•Kinds of Endorsements
•How to change Blank Endorsement to
Special Endorsement
•Other rules on endorsement
TERMS TO REMEMBER:
• Credit- the money one borrows with a promise to
pay in the future.
• Debt- money that a company or individual owes a
creditor
• Stigma- a mark of disgrace associated with a
particular circumstance, quality, or person.
• Endorsement- an act of affixing one's signature at
the back of the instrument
• Bearer- a person who presents a check or other
order to pay money
• Allonge- a negotiation by endorsement that may be
written at the back of the instrument
BACKGROUND HISTORY
OF THE DEVELOPMENT
OF CREDIT IN THE
PHILIPPINES

BACKGROUND HISTORY OF THE DEVELOPMENT OF
In the earlier times, even as late as the years

before the last world war, credit was
synonymous with debt (“utang” in local
parlence) with all negative connotations.
Thus, to the rich and poor alike, it was more
of a stigma to avail of credit.

• As far back as 1932, Association of Credit Men,

Inc. created to take care the credit needs of the
metropolitan areas.
• After World War II, business began to pick up.
• After years of deprivation and want, people
were naturally hungry for these goods.
• During and after liberation years, credit risk
customers started to trickle in and finally flood
credit establishments.

TYPE OF CREDITS
• Come-ons - by installment houses
• Cut-throats – competitions in credit sales
• No-down payment deals – resulted to
Credit-coddling.
Our legislature thru the years passed laws

after laws which substantially favoring the
debtors and practically neglecting the
creditors.
USURY LAW (CA No.2655)

The provisions are so stiff as to
prevent any substantial protection
to creditors who, more often that
not, have to take unusual credit
risk.

TWO INSTALLMENTS DEFAULT

RULE UNDER CIVIL LAW (Art.
1484,R.A 386)
Before any sales payable in
installments can be cancelled, At
least two installment overdue, But
supposed there is bad faith? Can the
seller afford to wait?

NO DEFICIENCY JUDGMENT
RULE IN FORCECLOSURE OR
CHATTEL MORTGAGES
In case the value of chattel

force closed is the less than the
account, The judgment creditor
cannot recover the deficiency.

OUR LAW ON BOUNCING CHECK
Rarely, If ever can one secure a

conviction under present law, even
after amendment purportedly
making them “Stiffer”

OUR COURT PROCEDURES IN

REPLEVIN CASES
Under our present procedures,

Our sheriffs cannot seize property
under mortgage on their own
authority but must be armed with a
court warrant seizure.

OUR VERY SLOW JUSTICE SYSTEM
This only contributes to the

continuous erosion of trust in our
public institutions, making it all the
more difficult for the rule of law to
prevail.

HOW CREDIT
INSTRUMENTS ARE
NEGOTIATED

HOW CREDIT INSTRUMENTS ARE NEGOTIATED
An instrument is negotiated when

it is transferred from one person to
another in such manner as to
constitute the transferee as the
holder.

If payable to order, it is negotiated

by the endorsement of the holder and
completed by delivery. If payable to
bearer, it is negotiated by mere
delivery.
Negotiation by endorsement may be
written at the back of the instrument
or upon a paper attached, called
allonge.

REQUISITES FOR NEGOTIABILITY
1. It must be in writing signed by the

marker of the drawer.
2. It must be payable on demand or at a
future determinable time.
3. It must be payable to order or to bearer.

4. It must contain no conditions.
5. If it is addressed to a drawee, the name

of the drawee must be indicated with
certainty.

6. Endorsement must be in the name appearing

on the instrument.
7. If however, the name of the payee is misspelled

or is erroneously written, the endorser may
endorse it in the same manner as it was written
but must indicate below the endorsement his real
name with the word by.

KINDS OF ENDORSEMENT
1. Special or full endorsement
-specifies the name of the person to whom, or to
whose order, the instrument is made payable.
Example: Since Cristina Laman is the payee of an instrument
which is payable to her order, she may endorse it as follows:
a. Pay to Mary Jane Moldero
By Cristina Laman
b. Pay to Mary Jane Moldero or order
By Cristina Laman
c. Pay to the order of Mary Jane Moldero
By Cristina Laman

KINDS OF ENDORSEMENT
2. An endorsement in blank specifies no
endorsee. It is done by merely affixing one’s
signature on the instrument without adding
anything.
Example: (Using the previous example as an instrument)
(Signed.) Cristina Laman

Full or Special Endorsement Blank Endorsement

How to change blank Endorsement
to Special Endorsement
• By writing over the signature of the

endorser in any blank account
consistent with the character of the
instrument

Restrictive Endorsement
• Restrictive Endorsement prevents

the further negotiation of the
instrument.

Example:
 When the endorsement prohibits the
further negotiation of the instrument.
• Pay to Mary Ann Manaois and to no one else.
(Sgd.) Katherine Belandres
• Pay to to Mary Ann Manaois only

• Pay to Mary Ann


Effects of restrictive endorsement
1. To receive payment of the
instrument.
2. To bring any action thereon that
the endorser could bring
3. To transfer his rights as such
endorser, where the form of the
endorsement authorizes him to
do so.
Qualified Endorsement
• A qualified endorsement
contitutes the endorser a
mere assignor of the
instrument.

Qualified Endorsement
Example:
• Pay to Mary Ann Manaois without recourse.
• Pay to to Mary Ann Manaois at her own risk.

• Pay to Mary Ann, endorser not holder


Conditional Endorsement
• When an endorsment is
conditional, the person required
to pay the instrument may
digregard the condition and
make payment to the endorser or
his transferee whether the
condition is fulfilled or not.

Conditional Endorsement
Example:
 Suppose Kristen Francisco, the payee
of an order note for P10,000.00 payable
on demand endorses the intrument as
follows:
• Pay to Elizabeth Laman if she goes to

United States before November 30, 2019,
(Sgd.) Kristen Francisco

Other rules on Endorsement
 Endorsements of instrument
payable to bearer.
 Endorsement where payable to
two or more persons.

REFERENCES
• bsp.gov.ph
• https://youtu.be/7OdoVXAjKmc
• https://youtu.be/MpIAbm8hY7E

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BACKGROUND HISTORY OF

•Requisites for Negotiability

COLLEGE OF BUSINESS EDUCATION

In the earlier times, even as late as the years

COLLEGE OF BUSINESS EDUCATION

• As far back as 1932, Association of Credit Men,

COLLEGE OF BUSINESS EDUCATION

Our legislature thru the years passed laws

USURY LAW (CA No.2655)

COLLEGE OF BUSINESS EDUCATION

TWO INSTALLMENTS DEFAULT

COLLEGE OF BUSINESS EDUCATION

In case the value of chattel

COLLEGE OF BUSINESS EDUCATION

OUR LAW ON BOUNCING CHECK

Rarely, If ever can one secure a

COLLEGE OF BUSINESS EDUCATION

OUR COURT PROCEDURES IN

Under our present procedures,

COLLEGE OF BUSINESS EDUCATION

OUR VERY SLOW JUSTICE SYSTEM

This only contributes to the

COLLEGE OF BUSINESS EDUCATION

COLLEGE OF BUSINESS EDUCATION

An instrument is negotiated when

COLLEGE OF BUSINESS EDUCATION

If payable to order, it is negotiated

COLLEGE OF BUSINESS EDUCATION

REQUISITES FOR NEGOTIABILITY

1. It must be in writing signed by the

COLLEGE OF BUSINESS EDUCATION

REQUISITES FOR NEGOTIABILITY

4. It must contain no conditions.

5. If it is addressed to a drawee, the name

COLLEGE OF BUSINESS EDUCATION

REQUISITES FOR NEGOTIABILITY

6. Endorsement must be in the name appearing

7. If however, the name of the payee is misspelled

COLLEGE OF BUSINESS EDUCATION

COLLEGE OF BUSINESS EDUCATION

COLLEGE OF BUSINESS EDUCATION

Full or Special Endorsement Blank Endorsement

COLLEGE OF BUSINESS EDUCATION

• By writing over the signature of the

COLLEGE OF BUSINESS EDUCATION

• Restrictive Endorsement prevents

COLLEGE OF BUSINESS EDUCATION

• Pay to to Mary Ann Manaois only

• Pay to Mary Ann

COLLEGE OF BUSINESS EDUCATION

COLLEGE OF BUSINESS EDUCATION

• Pay to to Mary Ann Manaois at her own risk.

• Pay to Mary Ann, endorser not holder

COLLEGE OF BUSINESS EDUCATION

COLLEGE OF BUSINESS EDUCATION

• Pay to Elizabeth Laman if she goes to

COLLEGE OF BUSINESS EDUCATION

COLLEGE OF BUSINESS EDUCATION

COLLEGE OF BUSINESS EDUCATION