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
COLLEGE OF BUSINESS EDUCATION
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
COLLEGE OF BUSINESS EDUCATION
BACKGROUND HISTORY
OF THE DEVELOPMENT
OF CREDIT IN THE
PHILIPPINES
COLLEGE OF BUSINESS EDUCATION
BACKGROUND HISTORY OF THE DEVELOPMENT OF
CREDIT IN THE PHILIPPINES
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.
COLLEGE OF BUSINESS EDUCATION
BACKGROUND HISTORY OF THE DEVELOPMENT OF
CREDIT IN THE PHILIPPINES
• 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.
COLLEGE OF BUSINESS EDUCATION
BACKGROUND HISTORY OF THE DEVELOPMENT OF
CREDIT IN THE PHILIPPINES
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.
COLLEGE OF BUSINESS EDUCATION
BACKGROUND HISTORY OF THE DEVELOPMENT OF
CREDIT IN THE PHILIPPINES
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.
COLLEGE OF BUSINESS EDUCATION
BACKGROUND HISTORY OF THE DEVELOPMENT OF
CREDIT IN THE PHILIPPINES
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?
COLLEGE OF BUSINESS EDUCATION
BACKGROUND HISTORY OF THE DEVELOPMENT OF
CREDIT IN THE PHILIPPINES
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.
COLLEGE OF BUSINESS EDUCATION
BACKGROUND HISTORY OF THE DEVELOPMENT OF
CREDIT IN THE PHILIPPINES
OUR LAW ON BOUNCING CHECK
Rarely, If ever can one secure a
conviction under present law, even
after amendment purportedly
making them “Stiffer”
COLLEGE OF BUSINESS EDUCATION
BACKGROUND HISTORY OF THE DEVELOPMENT OF
CREDIT IN THE PHILIPPINES
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.
COLLEGE OF BUSINESS EDUCATION
BACKGROUND HISTORY OF THE DEVELOPMENT OF
CREDIT IN THE PHILIPPINES
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.
COLLEGE OF BUSINESS EDUCATION
HOW CREDIT
INSTRUMENTS ARE
NEGOTIATED
COLLEGE OF BUSINESS EDUCATION
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.
COLLEGE OF BUSINESS EDUCATION
HOW CREDIT INSTRUMENTS ARE NEGOTIATED
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.
COLLEGE OF BUSINESS EDUCATION
HOW CREDIT INSTRUMENTS ARE NEGOTIATED
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.
COLLEGE OF BUSINESS EDUCATION
HOW CREDIT INSTRUMENTS ARE NEGOTIATED
REQUISITES FOR NEGOTIABILITY
4. It must contain no conditions.
5. If it is addressed to a drawee, the name
of the drawee must be indicated with
certainty.
COLLEGE OF BUSINESS EDUCATION
HOW CREDIT INSTRUMENTS ARE NEGOTIATED
REQUISITES FOR NEGOTIABILITY
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.
COLLEGE OF BUSINESS EDUCATION
HOW CREDIT INSTRUMENTS ARE NEGOTIATED
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
COLLEGE OF BUSINESS EDUCATION
HOW CREDIT INSTRUMENTS ARE NEGOTIATED
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
COLLEGE OF BUSINESS EDUCATION
HOW CREDIT INSTRUMENTS ARE NEGOTIATED
Full or Special Endorsement Blank Endorsement
COLLEGE OF BUSINESS EDUCATION
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
COLLEGE OF BUSINESS EDUCATION
Restrictive Endorsement
• Restrictive Endorsement prevents
the further negotiation of the
instrument.
COLLEGE OF BUSINESS EDUCATION
Restrictive Endorsement
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
(Sgd.) Katherine Belandres
• Pay to Mary Ann
(Sgd.) Katherine Belandres
COLLEGE OF BUSINESS EDUCATION
Restrictive Endorsement
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.
COLLEGE OF BUSINESS EDUCATION
Qualified Endorsement
• A qualified endorsement
contitutes the endorser a
mere assignor of the
instrument.
COLLEGE OF BUSINESS EDUCATION
Qualified Endorsement
Example:
• Pay to Mary Ann Manaois without recourse.
(Sgd.) Katherine Belandres
• Pay to to Mary Ann Manaois at her own risk.
(Sgd.) Katherine Belandres
• Pay to Mary Ann, endorser not holder
(Sgd.) Katherine Belandres
COLLEGE OF BUSINESS EDUCATION
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.
COLLEGE OF BUSINESS EDUCATION
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
COLLEGE OF BUSINESS EDUCATION
Other rules on Endorsement
Endorsements of instrument
payable to bearer.
Endorsement where payable to
two or more persons.
COLLEGE OF BUSINESS EDUCATION
REFERENCES
• bsp.gov.ph
• https://youtu.be/7OdoVXAjKmc
• https://youtu.be/MpIAbm8hY7E
COLLEGE OF BUSINESS EDUCATION
QUESTIONS?
COLLEGE OF BUSINESS EDUCATION
