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1.

The following are the conditions to constitute a holder in due course, except: He took the instrument in good faith and for value. He has knowledge of infirmity in the instrument. He took the instrument complete and regular in its face. He became the holder of the instrument before it was overdue. a. b. c. d.

C) To constitute a notice of defect, holder must have actual knowledge. Only A and B are incorrect. Only A and C are correct. All are correct. All are incorrect.

a. b. c. d.

Answer: b. He has knowledge of infirmity in the instrument. The NIL in Sec. 52 par. 5 provides that at the time of negotiation, the holder in due course must not have notice of infirmity or defect in the title of the person negotiating it.

5.

Jeff issues a promissory note payable to the order of Ancheta. Ancheta indorses in blank to Ryan. Paul stole the promissory note from Ryan and delivered the note to Mansano, a holder in due course. Mansano delivered to Joseph, who was informed by Ryan that said note was stolen. Joseph can collect from Jeff. Joseph cannot collect from Jeff. Joseph should ran after Paul for payment. Both B and C are collect.

2.

A obtained the note of M through simple fraud and negotiates it to Z, Z to Y, Y to X, and X to E, the present holder. Which is correct? E is presumed a holder in due course. E is a mere holder for value only. E must prove that he is actually a holder in due course. All are correct.

a. b. c. d.

a. b. c. d.

Answer: a. E is presumed a holder in due course. Every holder is prima facie presumed a holder in due course (sec. 59, NIL)

Answer: a. Joseph can collect from Jeff. Joseph delivered his title through a holder in due course and was not a part a party to any fraud or illegality affecting the instrument. Hence, Joseph is subrogated to the rights of a holder in due course. Jeff cannot raise the personal defense of complete and undelivered.

3. a. b. c. d.

The following are the rights of an ordinary holder, except: 6. He may sue on the instrument on his own name. He may receive payment in due course in effect discharges the instrument. He may enforce payment for the full amount thereof against all parties liable thereon. He holds the instrument subject to the same defenses as if it were nonnegotiable. Dan, a holder in due course, came to Nick, the maker, for collection of payment. In order for Nick to escape liability, which defense can he interpose against Dan. Failure of consideration Want of delivery but complete instrument Fraud in essecontractus Spoliation

a. b. c. d.

Answer: c. He may enforce payment for the full amount thereof against all parties liable thereon. An ordinary holder cannot enforce payment against a party who has a defense.

Answer: C. Fraud in essecontractus. This is a real defense which can stand against a holder in due course.

7. 4. A) Notice of defect or infirmity to an agent is deemed a notice to the principal. B) Notice to a partner is a notice to the partnership.

Joey upon hearing that his best friend is in need of money issued a check payable to his best friend Romel. Romel, for consideration, indorsed it to Dondy, an ordinary holder. The following are all correct, except:

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a. b. c. d.

Joey cannot be liable to Dondy. Romel was a holder for value. Romel should be liable to Dondy. If Dondy is a holder in due course, Joey can be held liable to Dondy.

Answer: d. Incomplete and undelivered instrument. It is a real defense available against any holder, whether holder in due course.

Answer: b. Romel was a holder for value. Love and affection does not constitute value.

11. These stamen are presented to you: A) Minority is a real defense available against a holder in due course. B) Prior parties of a minor indorser can set-up minority as a defense against a holder in due course. a. b. c. d. Both statements are true. Both statements are false. Only statement A is true. Only statement B is false.

8. a. b. c. d.

Which of the following is not a right of a holder in due course? He can hold the instrument free from defect of title of prior parties. He can hold the instrument free from personal defenses. He can hold the instrument free from real defenses. He can enforce payment of the instrument for the full amount thereof against all parties liable thereon.

Answer: c. He can hold the instrument free from real defenses. A Real defense is available even against a holder in due course.

Answer: a. Both statements are true. Minority as a defense passes to the minor. On the minor can avail of said defense.

9.

Amer made a promissory note indicating that Nassief is the maker and is payable to order of Amer. Amer forges Nassief’s signature. Amer indorses the note to Norsad and Norsad to Ahmed, the present holder. Whether Ahmed is a holder in due course or not, he cannot collect to Nassief. Whether Ahmed is a holder in due course or not, he can collect to Nassief. Whether Ahmed is a holder in due course or not, he can collect to Amer. Ahmed can collect to Nassief, provided he is a holder in due course.

12. Gloria makes a promissory note for Three Million to the order of Benigno. To secure benigno’s debt to Mar of Two million, he pledges the nore to Mar as a security. A) Mar may recover Three Million, holding the surplus One million for Benigno, if the note matured. B) If Gloria has defense of failure of consideration against Benigno, Mar can collect Two Million if he is a holder in due course. a. b. c. d. Both statements are true. Both statements are false. Only statement A is true. Only statement B is false.

a. b. c. d.

Answer: d. Ahmed can collect to Nassief, provided he is a holder in due course. Forgery is a real defense which is available even against a holder in due course.

Answer: a. Both statements are true. Mar is deemed a holder for value to the extent of his lien.

10. Which is available against any holder? a. b. c. d. Failure or absence of consideration. Complete but undelivered instrument. Incomplete but delivered instrument. Incomplete and undelivered instrument. 13. A) A payee may be a holder in due course. B) A drawee may be a holder in due course. a. b. Both statements are true. Both statements are false.

amount. However. the amount paid by him. Payee may become a holder in due course. Only statement B is false. Haden is a holder in due course to the extent of P300. Section 23 covers only alteration of instrument d. Haden is a holder in due course to the extent of P300. This constitutes a condition of a holder in due course. 52 of the NIL is complied with. Section 23 covers neither alteration and forgery The rules on liabilities of parties on a forged documents in a bill of exchange are: . Both statements are true. Answer: c. FORGERY 1. Mahal signed a promissory note for P500. Only statement A is true. confound d. Forgery is a real defense which means that it could be raised against any holder. Answer: c. Sec. Haden cannot collect because of the failure or absence of consideration. Answer: c. 4. 000. Section 23 applies both to forgery of signature and and alteration of the instrument c. d. alter 2. d. 3. Only statement A is true. Forgery is a real or absolute defense except a holder in due course as provided in Section 58. and payable to bearer. Statement A: It occurs when a person signs the name of another without the authority of the person whose signature it purports to be. with intent thereby to – a. 000. description of the person and the like. the holder. c. 5. Mahal was informed that it is impossible to make her tall. Where a holder took instrument for value and in good faith.P a g e |3 c. d. 15. who has not yet paid anything. c. b. dishonor c. When instrument is payable on demand is negotiated payable on demand is negotiated in an unreasonable length of time after its issue. c. A holder is not deemed a holder in due course. delivered to Belo in payment for Mahal’s schedule d medical operation that will make her tall. Section 23 applies only to forgery of signature b. Section 23 purports to declare neither the instrument totally void nor the genuine signatures thereon inoperative. Haden received notice of the defect. Where a holder took instrument for value and in good faith. What kind of forgery is covered by Section 23 of the Negotiable Instruments Law? a. Only statement B is true. Where a postal money order is delivered to Ryan. What kind of defense is forgery under Section 23 of the Negotiable Instrument Law? a. 000 and the balance in a month. he will be deemed a holder in due course only to the extent of the amount paid by him. Later. b. Belo has already delivered the note to Haden upon the terms of payment of P 300. 54 of the NIL provides that. c. defraud b. 000 as maker. Haden can collect P 500. Only statement A is true. the amount paid by him. b. a. including a holder in due course. except: a. Haden must pay the balance before he can collect for the full amount. d. 000 because he is a holder in due course entitle to the full amount of the instrument. Forgery is the counterfeit-making or fraudulent alteration of writing and may consist in the signing of another’s name or the alteration of an instrument in the name. One of the various kinds of forgery is Simple forgery. and he receives notice of infirmity in the instrument. where the transferee receives notice of any infirmity in the instrument or defect in the title of the person negotiating the same before before he has paid the full amount agreed to be paid therefore. so long as Sec. Where instrument taken by a holder. b. Statement B : Simple forgery also occurs when the person to whom the instrument has been delivered impersonated the real person named as payee and signs his name. d. Both statements are false. 14. Forgery can be presumed and the burden of proof lies on the party alleging forgery. Which is true? a.

d. since CHI Bank is bound to know the signature of B. the forged instruments is necessary to the title of the holder. 8. The latter. Due to such misrepresentation. its client. c. since forgery is only a personal defense. Only the signature forged or made without authority is inoperative. such as the collecting bank 9. May F recover from B? a. Double intent in fraudulent impersonation d. or a. The drawee cannot recover from the holder. fraud in inducement c. 6. with acceptance but the bill is paid by the drawer. A signature which is forged or made without the authority is wholly inoperative. All statements are true. c. Both statements B and C are true. d. a) forgery of an indorsement on the bill and b) forgery of the drawer’s signature. b. then negotiated it to A after forging S’s signature. c. alteration d. a. the drawee may debit the drawer’s account in spite of the forged instruments. Fraudulent impersonation b. Signature forged or made with authority is wholly operative. . indorsed it to CHI Bank which charged it to the B’s account. in turn. b. B later sued CHI Bank but it set up the forgery as its defense. but to whom B issued the note on the belief that C was Alex Santos. b. Yes. The effects of forgery of a signature are as follows except: a. d. b. b. When the party against whom it its sought to enforce such right is precluded from setting up the forgery or want of authority as a defense. No. since the payee’s signature has been forged. Both statements A and C are true. An example of such a defense is – a. to enforce payment thereof d. c. since the forgery of S’s signature results in the discharge of B. Signature made with authority is inoperative. Will it prosper? a. since the signature of S is immaterial. 13. A found a check on the street. he obtained from B a note payable to the order of Alex Santos. he being the payee. 11. c. That the signature forged or made without authority is wholly inoperative b. obtained the note from R. In case the bill is originally payable to bearer. No. would be a forgery. a. d. or to give discharge thereof. A indorsed it to B. That no right to retain the instrument. Suppose C represents himself as Alex Santos when he is not to B. The reason is that: a. All statements are false. with acceptance but the bill is paid by the drawee. without acceptance but the bill is paid by the drawer.P a g e |4 Statement A: Statement B : Statement C : Statement D : the drawer’s account cannot be charged by the drawee where the drawee paid the drawer has no right to recover from the collecting bank the payee can recover from the drawer the payee can recover from the receipt of the payment. e. Yes. since only the forged signature is inoperative and B is bound as indorser. Forgery of bills of exchange may be subdivided into. This is an example of: a. Both statements A and B are true. If B intends that the proceeds of the note will go to the real Alex Santos and not C. No. A signature which is not forged or made with authority is wholly inoperative. T. A forged C’s signature as an indorser then indorsed it personally and delivered it to MET Bank. 10. the instrument or other signatures which are genuine are affected. was forged. duress amounting to forgery b. No. Fraud amounting to forgery c. c. without acceptance but the bill is paid by the drawee. the drawee can recover from the holder. Fraud in factum 7. a holder in due course. drawn by B against CHI Bank. Yes. since B’s remedy is to run after the forger. S’s brother. the payee. A. c. which may either be with acceptance by the drawee. b. the forged instruments is not necessary to the title of the holder. Yes. A holder in due course holds the instrument free from any defect of title of prior parties and free from defenses available to prior parties among themselves. R. who indorsed it to F. debtor of S. d. fraud in esse contractus 12. wrote a promissory note payable to the order of S. since the signature of S. with C as payee. misrepresenting himself as S’s agent.

d. none of the above 2. All statements are true. e. instrument is genuine and in all respect what it purports to be has a good title to it all prior parties had capacity to contract instrument is valid and subsisting all of the above NEGOTIABLE INSTRUMENTS LAW FORGERY 1. i. Indorser of order instrument warrants that a. e. the drawee cannot recover from the holder since the forged instrument is necessary to the holder. unnecessary to pass the title to the instrument essential to transfer title to the instrument necessary to indorse the instrument unnecessary to indorse the instrument none of the above . The rules on liabilities of parties on a forged documents in a promissory note are: Statement A: A party whose indorsement is forged on a note payable to order and all parties prior to him including the maker can be held liable by any holder. Both statements A and C are true. b. d. The following are precluded from raising the defense of forgery except: a. 15. b. b. c. Statement C : A maker whose signature was forged cannot be held liable by any holder. unnecessary to pass title to the instrument essential to transfer title to the instrument necessary to indorse the instrument unnecessary to indorse the instrument none of the above 5. d. c. d. The indorsees and persons negotiating the instrument by delivery as they do not warranted that the instrument is genuine and in all respects what it purports to be. e. b. Forged signature makes the instrument a. b. wholly inoperative unenforceable invalid 6. for bearer instrument the signature of payee or holder is a. Forgery is a real or absolute defense when 14. e. f. In the case of PNB vs.P a g e |5 d. for order instruments the signature of its rightful order is a. Both statements A and B are true. the genuineness of his signature. a. h. The forger as he cannot raise his own malfeasance as a defense b. The acceptor with respect to the signature of the drawer as he admits the existence of the drawer. In the case of PNB vs. e. c. d. j. CA. g. All statements are false. CA. b. Those who are barred by estoppels or by their own negligence from raising the defense of forgery. c. c. d. drawer is guilty of negligence drawer whose signature was forged drawee’s negligence a&b b&c 3. Both statements B and C are true. bank is liable drawee bank bears the loss drawee bank considered as paying out of its funds b&c all of the above 4. c. d. Statement B : A party whose indorsement is forged on a noted originally payable to bearer and all other parties prior to him including the maker may be held liable by the holder in due course provided that it was mechanically complete before the forgery. and his capacity and authority to draw the instrument. c. If a bank pays a forged check a.

Chain of liability in cases involving forged indorsements 1. b. FEBTC. b. d. b. Payment under a forged instrument is none of the above 13. with intent thereby to defraud none of the above 9. a&c 12. amount. b. drawee’s negligence negligence can be traced on the part of the drawer a&b none of the above 14. A person becomes a party to an instrument by: a. signing the instrument A person becomes a party to an instrument by signing his name thereon. b. c. drawee who has paid upon the forged signature bears the loss except when a. c. does not end with the drawee bank and pass liability back through the collection chain to the party who took from the forger and to the forger himself b. 2. accepting the instrument in which case the party becomes an acceptor c. ends with the drawee bank c. d. In the case of Samsung vs. d. None of the above Warranties and Liabilities 11. e. guilty of negligence guilty of fraud a&b none of the above 10. indorsing a bill or note d. simple care and diligence is required extraordinary care and diligence is required highest degree of care and diligence is required b&c d. Irrespective of good faith in paying a forged check a. Forge is real defense when a. Forgery is committed through a. The general rule is that no person is liable on an instrument unless his signature appears thereon. d. c.P a g e |6 d. d. bank is not liable bank is liable bank and drawer are liable b&c none of the above 8. all prior indorsements only present indorsements all prior indorsements including forged indorsement. Concept of general indorser guarantees a. c. condition which bars a party from setting up the defense of forgery a. 7. violation of a bank’s duty not the drawer’s order drawee’s bank right to reimbursement none of the above a. In the case of Samsung vs. c. b. d. b. The following are true about promissory note except: . c. description of the person and the like. c. 15. c. it can be presumed could be raised against any holder. including a holder in due course raised against a holder a. FEBTC. Fiduciary relationship exists between a bank and depositor where a. dishonor of checks counterfeit and alteration counterfeit-making or fraudulent alteration of writing and may consist in the signing of another’s name or the alteration of an instrument in the name. b. certifying a check b. does not end with the drawee bank and collect reimbursement d.

which is not the same as the tenor of the bill itself because the acceptance may be qualified. (Sec. or to any subsequent indorser. X. A drawee of the bill is not liable to the drawer before acceptance. A drawee is only secondary liable he is not obligated to the payee or any holder to accept the bill b. The bill is presented for acceptance or for payment. A holder in due course may enforce payment of a materially altered instrument not according to its altered tenor but according to its original tenor. Yes.000 payable 30 days after sight.000 to P1. the payee. A drawee may be liable to the drawer for breach of contract if he refuses without valid reason to accept the bill. Answer questions no. b. Y should be liable to A for P1. Y should be liable to A for P1. he becomes primarily bound on the instrument and he engages to pay it according to its terms. as the case may be. The bill is dishonored by non-acceptance or non-presentment. Y should be liable to A for P1. An acceptor could not have assented to the alteration by accepting an altered bill if he had no knowledge of the alteration. As soon as he accepts it. What may be the liability of the drawee to the drawer before acceptance? a. 124. his liability to the holder. X draws on Y a bill for P1. the drawee of a bill is not liable on the instrument before acceptance. A drawer’s liability to the holder arises after the following conditions are complied with except: a. d.P a g e |7 a. as the case may be. is the one primarily liable. 6. d. d. 5. When Y accepted the bill. Because no one else would pay the balance of P500 other than Y. A person placing his signature on the face of a note is prima facie a maker and liable as such bill although he may be liable to the drawer for breach of contract if he refuses without valid reason to accept the bill. when would Y be bound to pay? a. His liabilities are conditional and he engages to pay the bill only after certain conditions are complied with. his liability arises only if he accepts by which he becomes an acceptor. c. The maker is the primary liable as he is the one to whom the holder will look first for payment and the one expected to pay. He is not obligated to the payee or any holder to accept a . 5 case.500 because Y. par. supposed W. due presentment for payment and due notice of dishonor are not necessary for the purpose of charging the maker with liability. how much is Y liable to A. the acceptor engages to pay only according to the tenor of his acceptance.500 because it is the tenor of his acceptance.000 only because the collectible debt is only P1. Due presentment and due notice of dishonor are required for the purpose of charging the maker with liability. 4. c. As a rule. In no. to fix the liability of any drawer or indorser. c. Yes. It must be in writing and signed by the maker.500. can the payee hold Y liable to the other P500 that he did not accept? a. If Y accepts the bill for P500 only. c. While the maker of a note or the drawer of a bill engages to pay according to the tenor of the instrument. however. altered the bill which was originally P1. as an acceptor.000 c. Y should be liable to A for P1. No.000 or P1. The necessary proceedings of dishonor are duly taken The drawer does not promise to pay the bill absolutely. 5. b. In promissory note. If Y merely signs the bill as acceptor. who may be compelled to pay it. 6 and 7 based on the case in no. subject to no condition whatsoever. b. a holder in due course – for P1. as a drawer.500? a. d. A drawee is primarily bound on the instrument whether he accepts it or not. to the drawee. d. assented to the alteration.000 only because a holder in due course may enforce payment of a materially altered instrument according to its original tenor only. b. which is necessary. 2) 7. Y as an acceptor engages to pay only according to the tenor of his acceptance. 3. No. The drawer promise to pay the bill absolutely whether it was accepted or paid.500 and is accepted by Y for P1. is only secondary.

Yes. In the instant case. d. An indorser and a drawer are similar in that they are both secondarily liable on the instrument. A. a guarantor is liable only subsidiarily after the assets of the principal debtor have been exhausted. M makes a promissory note payable to bearer and delivers the same to P. his immediate transferee. By indorsing the instrument to A. Because he is the party privy in making the promissory note. Because M. is P liable to B for concealing the fact that M is insolvent? a. b. b. 30 days after sight. can A recover from P? a. protest. Only when he is able to do so. Yes. his immediate transferee. P indorses the note to A. Yes. Since he did not expressly stipulate his intention to be bound as a guarantor. By guaranteeing the payment. (Secs. he waives the need for presentment. 2058. A cannot recover from P because P does not warrant M’s solvency. No. d. “I hereby guarantee payment of this instrument”. and A to B. as the maker. he is chargeable only after presentment and notice of dishonor. No. all by delivery. Being an indorser. No. Neither can he allege that P is a non . (Art. Y is bound to pay unconditionally the bill according to its tenor which is the same as the tenor of his acceptance. if he knew of M’s insolvency but co ncealed that fact from A for he warrants that “he has no knowledge of any fact which would impair the validity of the instrument or render it useless. Because the warranties of P extend only to A. is liable to B. 5 case is payable “30 days after sight. M issues a promissory note to P for P500 payable on demand. Upon being sued by A. of course. Yes.” 11. Unlike. the warranty extends in favor of no holder other than the immediate transferee. An indorser and a drawer both have warranties. Is the defense of M correct? a. as the maker. No. P would be liable. Because M. he is not discharged from liability merely because of the lack of due presentment or due notice of dishonor. If the note is dishonored in the hands of A due to the insolvency of M. however. Because P altered the amount payable. By indorsing the instrument to A. An indorser has warranties. or notice of dishonor. is the one primary liable. d. supposed the note is negotiated by P to A. is he discharged from liability for lack of due presentment or due notice of dishonor? a. Because if M is insolvent.P a g e |8 b.(d)) 10. As a guarantor. c. but he engages to pay after certain conditions are complied with. The instrument in no. No. An indorser and a drawer are parties to a bill. Yes. Yes. If an indorser indicates his intention to be bound as guarantor. M cannot say that the agreement between him and P was to pay only P300. 9 case. The following are true about an indorser and a drawer. b. an indorser. P and A are both liable to B as the general indorsers. however. No. Yes. is the one primary liable. P warrants payment of the instrument. b. c. After due presentment. or notice of dishonor but his liability is only subsidiary. protest. A person signing his name on the back of the instrument is a general indorser and liable as such. When the negotiation is by delivery only. c. No. No Because M admits the existence of P and his then capacity to indorse it. who negotiates it to A by delivery.” (Sec. Because oral agreement is inferior to the actual figure on the instrument. while a drawer makes no warranties. d. b. c. Because P indorsed the instrument notwithstanding the fact that M is insolvent. 65. except: a. Upon being sued by A. He waives the need for presentment. Civil Code) 12. the warranties of P extend only to A his immediate transferee. M claims that the agreement between him and P was to pay only P300. d. 8. The liabilities of the drawer are conditional in the same manner as those of general indorser. 61 and 66) 9. c. As an acceptor. P is the one secondary liable. Yes. d. P does not warrant the solvency of M. he becomes a guarantor who is now jointly liable with the principal debtor. c. In no. (Section 65) If an indorser writes in addition to his signature on the back of the instrument.

payment implies not only acceptance but also complaiance with drawee's obligation.” III. It increases credit circulation. 15. d. indorsers who is obliged to pay. Which of the following renders the instrument non-negotiable? a. indorsers without any knowledge of any fact which would impair the validity of the instrument or render it useless. “Pay to the order of A a piano worth P20.” IV. b. Instruments I and II b. Which of the following instruments is not negotiable for the reason that the instrument is not payable at a determinable future time? a. B Answer: C c. indorsers in good faith b. While it is true that payment by the drawee may not be considered as equivalent of acceptance. lack of capacity to contract on the part of prior parties c. 5 The following are functions of a negotiable instrument. P20.000 or deliver to him a TV of the same value. b. They may also be called as intervening indorsers. c. He is secondarily liable for breach of his warranties as an indorser under Section 65. No. It extinguishes obligation if its delivery is accepted by the creditor. at his option.000. d. Upon presentment for payment. “Pay to the order of A. An order or promise to pay out of a particular fund Answer : D. I promise to pay to the order of B P10. Warranty liability is still present even if indorsement is qualified unless such indorsement specifically excludes warranties. He is also precluded from setting up such defense as minority. 20 days after the death of Z. Instruments II and III d. CSgd. Because there is no debt anymore. The following instruments were presented to you for evaluation: I. c. drawer A directs B to pay C or order P10. d. 14. An indication of a particular account to be debited with the amount c.000 or deliver to him a piano of the same value.000. A statement of the transaction which gives rise to the instrument d. Yes.P a g e |9 existent or fictitious person. a discharge of indebtedness. Because payment amount to more than an acceptance. Sgd. Choose the exception: a. 3) e. insanity.000. payment amounts to more than an acceptance. Instruments III and IV Answer: D. Indeed. The phrase "to any subsequent indorser" refers to: a. the first. Because payment by the drawee does not imply assent to his obligation.” Assuming all the other requisites of negotiability are present. Sec. 30 days after demand. Lack of good title to the instrument indorsed b. Because payment by the drawee may not be considered as equivalent of acceptance. The effect of qualified indorsement is merely to limit his liability. No. indorsers between the drawer and the holder. 13. Answer: D e. b. But the qualified indorser is not liable to the indorsee if the instrument is dishonored for some other reason like the insolvency of the person primarily liable . Is R discharged from his obligation? a. P10.” II. Q 10 days after A passes the Bar exams. or ultra vires act of corporation. for the secon dis an obligation to pay. R draws on W a bill for P500 payable 30 days after sight. insolvency of the person primary liable d. Instruments I and III b. forgery Multiple Choice Questions in Negotiable Instruments (Section 1-9) 1. A qualified indorser is liable to the following except: a. “Pay to the order of A P20. which of the foregoing instruments are not negotiable? a. “Pay to the order of A P20. An indication of a particular fund our of which reimbursement is to be made b. c. It is a substitute for money. the promise is conditional (Sec.000. W paid the bill without proper acceptance.000. The phrase "to any subsequent indorser" refers to any indorsers between the drawer and the holder. Yes. Sgd. It increases purchasing power in circulation. I promise to pay to the order of B.

I will promise to pay B or his order P10. “Pay to the order of C within six months from date the sum of P20. The instrument must be in writing and signed by the maker or drawer. “Pay to C or order. When the last indorsement is restricted Answer: A e.000 in or before October 25. Negotiable promissory note payable on demand b. “Please let the bearer have P1. I promise to pay to the order of B P5. signed: AB. “On the death of X. signed: DG. Answer: D e.000.” (Sgd. P20. signed: CB b. “Ten days before the death of X. c. Which of the following instruments is negotiable? a.000 on instalment. “Pay to C or order P20.000.000 and reimburse yourself out of my money in your hands. Which e.000 in four instalments. ) A Answer: D e. an such fact is known to the person making it c. When the last indorsement is in blank d. A) c. 2015.” To TP.) A d. Which of the following is negotiable? a. When payable to order c.000. It must be payable to bearer or order. It must contain an unconditional promise or order to pay a sum certain in money.000 and place to my account and you will oblige. I promise to pay to the order of B P1.) A b. When is a negotiable instrument payable to order? a. Non-negotiable Answer: D e.000. When payable to the order of a fictitious or non-existing person. A certificate of stock is not a negotiable instrument because it lacks the requirement of: a. d. I agree to pay collection and attorney’s fees.” (Sgd. Sixty days after sight. An instrument is considered payable on demand: a.. When the only or last indorsement is an indorsement in blank Anwer: A “I promise to pay to bearer.” (Sgd. “Pay to B or order P1.” (Sgd. )A d.” (Sgd A) c.” (Sgd.000 on your account to the order of X. b.” (Sgd.) A d. 30 days after the death of his father. “I hereby authorize you to pay P1. the sum of P20.000. “I promise to pay B or order P20. I promise to pay B or his order P10.) A Answer: C Answer: B e. When payable to the order of a specified person of to him or his order b.) Jose dela Cruz.P a g e | 10 c.5%.)A/(to C) b.” (Sgd. .) A e.” (Sgd.” (Sgd.000 with interest at 12% per annum.” (Sgd. Negotiable promissory note payable to order c. “I promise to pay B or order P20.” (Sgd. It must be payable on demand. Which of the following is not negotiable? a. Which of the following instruments is not negotiable for the reason that the instrument is not payable at a determinable future time? a. signed: XY. “I promise to pay B. “On or before October 30.” (Sgd) A b. “I promise to pay B or order P20.000.” To XY. “Pay to C or bearer P20.000. d. If not paid on due date. When the name of the payee does not purport to be the name of any person d. Negotiable promissory note payable to bearer d.000 if he will pass the Bar exams on 2013.000 with interest at 2. Juan dela Cruz.000 six months after date.” To OP. “I promise to pay X or order P1. c. The promissory note is: a.) A c. Answer: A e. P20. or at fixed determinable future time. When no time of payment is required b.” To MN. One of the requisites of a negotiable instrument is that it must contain an unconditional promise or order to pay a sum certain in money.

C. the corporate has separate juridical personality distinct from its officers.) D b. B.) Z. 1st rule is correct. the officers the officers who places their signature on the note are prima facie makers and liable as such.000. 2nd rule is correct. Hence. Reason: The general indorser warrants the solvency of prior parties while qualified indorser does not. 1st rule: The maturity date of the above promissory note will be counted 30 days from date of the instrument. in all cases. I promise to pay to the order of Y the sum of $600 and to deliver one-fourth of the rice harvest in my farm. who is named as a drawee but refused to accept the instrument when presented by the payee. X draws a check against his current account with Mayaman Bank in favor of Y. “I promise to pay A of order P20.000. Does the indorser warrant the solvency of the prior parties? A. at the option of the holder. the bank can recover from Y there being no sufficient funds on the account of the drawer. “ I promise to pay to the order of X P10. YES.000 in Philippine pesos or in US dollars. Although X does not have sufficient funds. The general indorser does not warrant solvency of prior parties. Yes. c. I promise to pay E or bearer the sum of P27. NO. the maker of a promissory note who thereafter delivered it to Pedro B. X has conspired with the bank’s bookkeeper so that his ledger card would show that he still has sufficient funds.P a g e | 11 of the following denoted non-negotiablity? a.) Y. if he is a general indorser.000 on June 30. C.000 30 days after date. Who among the following is secondarily liable? A. the officers signing the PN only acted as guarantor. Are the officers primarily liable? A. B. Denver. c. 3.000 30 days after sight. e. the latter being not a holder in due course. d.000 to A or order. the president and treasurer acted as accommodation party. Both rules are correct. AnswerB. Juan.) B c.) C Answer B WARRANTIES AND LIABILITIES OF THE PARTIES On the right bottom margin of PN appeared the signature of the corporation’s president and treasurer above their printed names with the phrase “and in his personal capacity. 1. YES. who accepts the bill of exchange payable to Darling or order D. “I agree to pay to the order of A P30. D. 2nd rule is wrong. No. Accommodation party is always primarily liable. YES. 2nd rule: The maturity date of the above bill of exchange will be counted 30 days from the date the instrument is accepted by Y. liability is only secondary. CA.” The corporation failed to pay its obligation. 93073. YES. NO.” (Sgd. Dec. they cannot escape liability arising therefrom. Both rules are wrong. D. The officers are co-makers and as such.000 in Philippine pesos or in US dollars. 1st rule is wrong. is a always secondarily liable.” (Sgd. the bank cannot recover from Y. Charlie. C. a. YES. b. 4. 21. the drawer of a bill payable to Carlos or order C.) B d. “I promise to pay A or order P20. thus. “Pay to the order of X P10. No.” (Sgd. GR No. B.” (Sgd. Answer: D Which of the following is non-negotiable? a. the bank can recover from Y. I promise to pay N or bearer in Manila the sum of P20. (Republic Planters bank v. I promise to pay to the order of L the sum of $900 at the DBP Manila. Answer: B e. d. Bingo. b. Can Mayaman Bank recover from Y? A. the former being a draweeacceptor. the bank honors the check when it is presented for payment. dated 08/30/2012.” (Sgd. 1992) 2. the officers in this case acted thus accommodation party thus. the indorser only warrants the solvency of the immediate transferor. Answer B. Answer: B Reason: Drawer.” To Y (Sgd. they are only secondarily liable. Reason: Persons who write their names on the face of the promissory notes are makers and are liable as such. “Good for P20. dated blank. The bank files an action for recovery of the amount paid to Y because the case presented has no sufficient funds. . NO. Apparently.

a holder in due course. That the instrument is genuine and in all respects what it purports to be B. Primary Secondary Not liable at all Discharged from payment thereof Answer C. As a general rule. Primary B. Romeo placed the note in his drawer. All indorsers prior to him C. Secondary C. Bank). Existence of the drawer B. 5. Existence of the payee D. D. The following are warranties provided by the person negotiating an instrument EXCEPT: A. (First nat. Reason: Romeo is not liable to Shylock because his signature was forged. 11. Genuineness of the indorser’s signature C. 9. As acceptor. thus she is primarily liable to Shylock. Authority and capacity to draw the bill Answer B.P a g e | 12 D. Primary B. the bank cannot recover from Y. C. None of the above. That all prior parties had capacity to contract D. 10. A. What is the liability of Portia to Shylock? A. General indorser D. Reason: When the bank honored the check. Reason: Juliet. Reason: Portia is the maker of PN. Answer: C. NO. Answer: D Reason: A person negotiating an instrument warrants that he has NO knowledge of any fact which would impair the validity of the instrument or render it useless. B. which was stolen by the janitor William. the former being negligent. an agent or broker who negotiates an instrument without indorsement is liable as: A. Answer: A Reason: Every indorser is liable to all indorsers subsequent to him . but not those indorsers prior to him. a holder in due course. Not liable at all D. What is the liability of Juliet to Shylock? A. Accommodation party C. Juliet indorsed the note to Romeo. 8. All indorsers subsequent to him B. An indorser is liable to the following EXCEPT: A. That he has a good title to it C. Reason: The acceptor does not admit the genuineness of the indorser’s signature because it is only the signature of the drawer that he warrants although the purported indorsement was on the bill at the time it was accepted. He can raise the defense of forgery. Maker or drawer B. as a general indorser is liable to Shylock secondarily. That he has knowledge of any fact which would impair the validity of the instrument or render it useless. Discharged from payment thereof Answer: B. Secondary C. bank v. Portia issued a PN payable to Juliet or bearer. The acceptor warrants the following EXCEPT A. without indorsement. Any holder in any order D. the bank became primarily and directly liable to payee/holder Y. 69 NIL. The presence of special indorsements on the PN does not detract the fact that the bearer instrument is always negotiable by mere delivery. 6. 7. Northwestern Nat. Not liable at all D. it became an acceptor. Discharged from payment thereof Answer A. William indorsed the note to Antonio who in turn delivered It to Shylock. Qualified indorser Answer C Reason Sec. The agent or broker who negotiates an instrument without indorsement incurs all liabilities prescribed to a general indorser unless he discloses the name of his principal and the fact that he is only acting as an agent. What is liability of Romeo to Shylock? .

Superbank refused to encash it due to insufficiency of funds. (Jai-alai Corp. it is the primary duty of the bank to know that the check was duly endorsed by the original payee. forged the latter’s signature and indorsed it to Pitt. the genuineness of his signature. Does the argument hold water? A. After instrument is dishonored by non-payment. NO. G. No. 15. YES. They become principal debtors whose liability becomes identical to that of the original obligor. b) If it is not paid when presented for payment at maturity. C. RPN.P a g e | 13 12. YES. thus it cannot recover. was made to pay the drawee bank. there is privity between the drawer and the holder B.R. the bank who encashed a stolen check always bears the loss. YES. indorsers are always secondarily liable. NO. 2002) 14. Is the bank liable? A. Brad indorsed a check to Angelina. Carrie moved for dismissal of the case on the contention that Mariah is an indispensable party. according to their tenor. where it pays the amount of the checks to a third person who has forged the signature of the payee. the drawer is liable together with the indorser. D. No. Heirs of Bartolome ramos. c) If presentment is excused or waived and the instrument is past due and unpaid. the collecting bank has no authority to debit until notice of dishonor has been given. Can a collecting bank debit the account of the depositor when the check indorsed to it were forged? A. NO. there is no privity between the drawer and the holder. Admits the existence of the drawer. Julie stole the check from Angelina. B. A bank engaged in business is invested with public interest and its duty to protect its clients and all persons who transacts with it. NO. the bank is only bound to know the signature of the drawee. Carrie subsequently indorsed it to Celine. she would pay the corresponding amount. Mariah issued a check to Carrie. When Celine is about to encash the check. Answer: B Reason: When checks deposited had forged indorsements and the collecting bank as a consequence of such forgery. and his capacity and authority to draw the instrument C. BPI. G. NO. Celine sued Carrie for payment of money. d) All of the above. the loss falls on the bank who encashed the checks. Who are entitled to notice of dishonor? a) Maker . 138510. YES. July 14. indorsers cease to be secondarily liable. B. Engages to pay according to the original tenor of the bill B. the collecting bank can debit the account of the depositor for his breach of warranty. August 6. Admits the capacity of the payee to indorse. C. Answer: A. Admits the existence of the payee D. 10. G. (Traders Royal bank v. Answer A Reason: The acceptor engages to pay according to the TENOR OF HIS ACCEPTANCE. the drawee. or both. the collecting bank was negligent. the checks were to be accepted or paid. YES. (Tuason v. 156262. Oct. because the depositor of a check as holder warrants that the check is free from any defect that impair the validity of the instrument or render it useless C. YES.R. the bank can raise the defense of forgery since the payee’s signature was forged. NO. of the Phil V. because the depositor of a check as indorser warrants that it is genuine and in all respect what it purports to be. The indorser (Carrie in the above case) warranted that upon due presentment. 2005) Patrick Famillaran 1. Holly Bank encashed the check upon presentment thereof by Pitt. Answer: C Reason: The drawer is merely secondarily liable. not of the payee D. L-39432. 1975) 13. The following are the liabilities of an acceptor EXCEPT: A. Answer: D 2. The following are instances when a negotiable instrument is considered to be dishonored except. D. and in case they were dishonored. No. Reason: The bank has the primary duty to know that check was duly indorsed by the original payee and. a) If it is not accepted when presented for acceptance.R.

g) All of the above. d) May 2. Answer: A 5. d) Need not be presented for acceptance Answer: C 11. as long as the drawees are not alternative or in succession. b) Supposed to be drawn against previous deposit of funds. b) The last working day prior to that Sunday. b) 6 months. 2006 for it is the next day after April 30. Is the Notice of Dishonor needs to be signed? a) Yes. d) No. 2006 which is a Sunday. for a signature signifies acceptance. When the maturity of payment falls on a Sunday. 2006 which falls on a Sunday. for it might cause confussion. d) The drawee has no capacity contract. b) The drawee is a fictitious person c) When the drawee refuses to honor the bill. e) B and C only. b) No. b) April 30. b) Waiver of presentment. Instances wherein a bill of exchange may be treated as promissory note except. c) Waiver of Notice of Dishonor. All are true about a check except a) Always drawn on a bank or banker.P a g e | 14 b) Acceptor c) Drawer. a check will be considered stale if not presented for payment after its issue within a) 1 year. to be sure that there is consent from the person who issued it. 2006. as long as it is in possession of a holder in due course. f) A and C only. when shall be the presentment for payment? a) The next succeeding business day. Answer: G 8. d) The Saturday before the Sunday. d) No. c) Payable on demand or at a fixed and determinable future time. May a Bill of Exchange be addressed to more than one drawee? a) Yes. c) May 1. the drawee must be specific. c) 4 months. indorsers or their agents d) Drawee Answer: C 3. d) A and B only. Answer: A 9. c) Yes. Answer: C 10. when shall be the presentment for payment? a) Any time before the maturity date. The Notice of Dishonor shall be in a) Writing b) Mere oral notice will suffice c) Both a and b d) None of the above Answer: C 4. Answer: D 6. b) Yes. Waiver of protest constitutes a) Waiver of formal protest. 2006 for it is the maturity date. Answer: B 7. h) None of the above. Answer: B . d) 8 months. In banking practice. The instrument without grace falls due on April 30. a) When the drawer and drawee are the same person. a written notice that is not signed would not invalidate it. c) No. c) The Friday before the Sunday.

P a g e | 15 12. The blank paper bears the signature of the maker or drawer c. c) Both are correct. Substituting the words “or bearer” for “Order” b. When an instrument is negotiated d. b) 1 is wrong and 2 is correct. d) Notice must be given to each of them unless one has the authority to receive it for the others. Mechanical act of writing. or delivery c. Material alteration b. 2. Drawee c. (2) A bill of exchange may not be drawn on a bank and need not be drawn against a deposit. It was delivered by the person making the signature d. 5. a) 1 is correct and 2 is wrong. The following are material alterations except: a. Payee b. except a) Where the indorser is the person to whom the instrument is presented for payment. 7. Interest d. Writing “protest waived” above a blank indorsement c. Sum payable c. d) Where the instrument was made for his accommodation. and issuing d. 4. the following must be present. 3. The blank paper bears the name of the payee b. b) The drawer may issue a stop payment order. Serial number When the date of the instrument is in blank. The following are effects of a bank certifying a check except a) Making the bank primary liable on the check. Mechanical act of writing. The ______ may fill the blank by writing the date intended. Date b. Spoliation d. d) Both are wrong. a. or issuing In order that a person may have a prima facie authority to convert a signature on a blank paper into a negotiable instrument and fill it up for any amount. Holder d. 6. b) There should only be one specific person who shall accept the notice for the partners. It was delivered in order that the paper may be converted into a negotiable instrument When may blanks in the document be filled? a. b) When the drawee is a fictitious person and the indorser was aware of that fact at the time he indorsed the instrument. Answer: C 13. Mechanical act of writing. a. Answer: B 14. When an instrument is wanting in any material particulars b. c) When the holder is a holder in due course. d) It is equivalent to acceptance. Maker What acts are necessary to complete an instrument? a. (1) A check is always drawn on a bank or banker and always payable on demand. Answer: D 15. Answer: C 1. How shall a Notice of Dishonor be given to joint parties who are not partners? a) You can give the Notice to any of the parties. The following are cases where notice of dishonor is not required to be given to an indorser. c) Notice is not required to be given to all parties as long as it is given to the majority of the parties. When an instrument is assigned . Changing the date from which interest is to run d. Except. Material particular Changes in the following constitutes material alteration except a. Changing “I promise to pay” to “we promise to pay Any change in the instrument which affects or changes the the liability of the parties in any way. a. Mechanical act of writing. Immaterial alteration c. and delivery b. c) It discharges persons secondarily liable if procured by the holder. When an instrument is not delivered c.

d. Transfer ABC signs a piece of paper and delivers it to XYZ with the intention of making the instrument negotiable a. Holder b. Ultra vires act This means the transfer of the possession of the instrument by the maker or drawer with the intent to transfer title to the payee a. Indorsement A signature on a blank paper delivered by the person making the signature in order that the paper may be converted into a negotiable instrument operates as a __________ authority to fill it up as such for any amount a. Ella Cecilia Escalante Dumlao 1st Semester 2012-2013 1. 12. Spoliation b. Zero liability b. alteration Reiner O. Absolute b. Prima facie 15. When an instrument is a mechanically incomplete but delivered instrument.P a g e | 16 8. Assign d. 2. Mechanical act d. a. The liability of the drawee is: a. Bonds b. Postal Money Order c. Trust Receipt d. General c. Which of the following is a negotiable instrument? a. Treasury Warrant 4. Indorsement b. The negotiable character of an instrument otherwise negotiable is not affected when it gives the _______ an election to require something to be done in lieu of payment in money. any person who becomes a party thereto after its completion shall be liable to: a. Secondary after acceptance . Signed X” is: a. Secondary before acceptance d. c. 000. A bearer instrument since the name of the payee does not purport to be the name of any person. Forgery c. 9. 11. Issue c. Signature c. Allonge b. An instrument “Payable to Angel Locsin or order the sum of P1. Indorser It operate as a prima facie authority to fill up an instrument as such for any amount a. Special d. Procuration c. Negotiation c. Any holder c. Non-negotiable b. 14. XYZ can fill it up for any amount b. XYZ has implied authority to complete it c. Negotiable because it complies with the requisites of negotiability. Drawee d. Drawer c. A holder in due course b. None of the above It is the first delivery of the instrument complete in form to a person who takes it as a holder a. 10. Blank paper d. Issuance d. Primary c. Delivery Alteration by a stranger is called a. Maker 3. Maker d. Querubin Negotiable Instruments Law Atty. The writing of the signature on a paper attached to the negotiable instrument a. Assignment b. A bearer instrument since it is an instrument payable to the order of a fictitious person. A and B d. Delivery b. 13. Forgery d. Ma.

Either Joint or Solidary Liability depending on the holder 12. If the signature is so placed upon the instrument that it is not clear in what capacity the person intended to sign. Date fixed by court d. Does not avoid the instrument in the hands of any holder 7. Pay to john doe or order d. When no time for payment is expressed. 2015 is payable on: a. the nearest year in which the month of February has 29 days 13. Holder b. Payable based on the circumstances of each instrument 9. Drawees in succession d. Payable on demand b. Non-negotiable the 14. Does not avoid the instrument in the hands of a holder in due course d. a. 2015 b. Joint Drawees c. Acceleration clause dependent on the ________ makes the instrument nonnegotiable. Duly authorized b. No Liability b. or determinable future time The instrument is: a. Solidary Liability d. Either on February 28. Drawee d. 2015 does not exist c. d. Not a party to the instrument b. An instrument payable on February 29. Insertion of a wrong date: a. Maker or drawer c. 2016. Holder in due course 15. A maker or a drawer c. Demand since the date February 29. All of the above since the time of payment is not on demand. Disclosed his principal 10. (Signed) Y To : Z c. Negotiable since it can be proven by extrinsic evidence who intended payee is d. A bill of exchange because it is addressed to a drawee . Negotiable since the holder may insert the name of the payee b.000. Which of the following is not one of the requisites in order that an agent who signs a negotiable instrument escapes personal liability? a. February 29. Joint Liability c. An instrument with the words “I promise to pay” signed by two or more persons give rise to: a. Non-negotiable because it is ambiguous and therefore does not conform to the requisites of negotiability Either a promissory note or a bill of exchange 11. 2015 or on March 1. Avoids the instrument in the hands of a holder in due course b. Indorser d. A promissory note since it contains the word “promise” b.P a g e | 17 5. Which of the following do not destroy the negotiability of an instrument? a. Payable on a period fixed by the court c. it is : a. A bearer instrument because the name of the payee does not purport to be the name of any person c. or at fixed. Avoids the instrument in the hands of any holder c. Such authorization must be in writing c. X 6. he is deemed : a. Pay to cash b. I promise to pay X or order P 1. An instrument payable to ______ (blank) or order is: a. None of the above 8. Alternative Drawees b. Adding words to his signature indicating that he signs as an agent d. Payable on the date subsequently agreed upon d. Pay to the order of the king of Atlantis c. Pay to the bearer. Which of the following is not a bearer instrument? a.

b. Efforts of Jessica to collect from Guianne failed. 1960. Guianne is liable for the check because Jessica is a holder in due course as the latter acquires the check in good faith and for value. Yes. because Bobby took the instrument from Danilo. b. No. the payee or the indorsee of a bill or note who is in possession of the instrument. Aquino) 2.00. In return for Azalea’s check. Azalea has with her a postdated check in the amount of P10. Yes. Eva negotiated the note to Juan who had knowledge of the infirmity. Betty can never be a holder for value. 2009 Edition. failed to deliver the dental chair so Guianne ordered the drawee bank to “STOP PAYMENT” of the check. Guianne issued a postdated cross-check in favor of Ryan for the payment of dental chair which the latter promised to deliver. Aldo purchase an overdue negotiable promissory note signed by Bobby. Betty is a holder for value when the check she issued was impaired without her fault. page 121 by Timoteo B. (Source: Notes and Cases on Banking and Negotiable Instruments Law Volume I. on the other hand. negotiated the note to Danilo for value and who had no knowledge of the infirmity of the instrument. in turn. c. Aquino) 4. a holder in due course. September 30. c. Aquino) 3. Yes. Eva inserted P100. 2009 Edition. Can Aldo still enforce the instrument to Booby and held the latter still liable for the amount stipulated in the instrument? a. the bearer of an order instrument d. because the Negotiable Instrument Law does not provide that a holder who is not a holder in due course may not recover on the instrument in any case. d. Lando issued a promissory note in favor of Eva and authorized the latter to fill up the amount in blank with his loan account in the amount of P10. However. c. because Bobby had knowledge of the breach of trust committed by Eva against Lando. Yes.00 in violation of the instruction given to her by Lando. 2009 Edition. No. Can Jessica may held Guianne liable for the amount of the check? a. Ryan. Supposed Danilo negotiated the note to Bobby for value but with knowledge of the infirmity. 1. Therefore. G. the holder of a bearer instrument (Source: Notes and Cases on Banking and Negotiable Instruments Law Volume I. Guianne is liable for the check because Jessica is a holder in due course as the latter acquires the check without knowledge that a crossed check is issued for deposit only. Betty issued a check in favor of Azalea less the agreed interest. Jessica did not ask Ryan the purpose of crossing the check. Guianne is not liable for the check because Jessica is not a .000. L-15380.R. because Booby cannot raise the defense that the promissory note is overdue. because Bobby did not participate in the breach of trust committed by Eva against Lando.00. c. because Aldo is not a holder in due course. No. No. or the bearer thereof c. Betty is a holder for value if Azalea negotiated the check to a third person who is a holder in due course. d. b. Betty is a holder for value if Azalea already encashed the check. because Lando is not a holder in due course. page 132 by Timoteo B. Which of the following statement is not correct? a. page 140-141 by Timoteo B.P a g e | 18 Choose the best answer. Ryan negotiated the check to Jessica at a discount. b. because the promissory note is already overdue. No.000. 706) 5. Aldo is not a holder in due course. can Bobby enforce the note to Lando? a. No. 109 Phil. (Source: Notes and Cases on Banking and Negotiable Instruments Law Volume I. the payee in a bearer instrument b. (Source: Chan Wan vs. d. Juan. Azalea needs money so she asks Betty to discount her check.000. Yes. Who is a “holder” contemplated in the Negotiable Instruments Law? a. Tan Kim. Yes.

Alfo sold his old car to Chevy for P200. a promissory note with alteration. Jr. incapacity as far as incapacitated person is concern b. De Leon. Hence.) December 20 b. because Daniella is not a holder in due course.000. b. who fails to give a value thereon.00. d. Forgery cannot be raised against a holder in due course. an accepted bill where no drawee is named d. but the court. d. Alfo convinced Chevy to immediately issue a check and to make the check payable to Bugsy. Aquino) 6. Agbayani) 10. page 254 by Aguedo F. Budoy indorses the bill to Cathy. b. Guianne is not liable because Jessica even if the latter is a holder in due course. Which of the following instrument is complete and regular upon its face? a. Chevy issued a check in favor of Bugsy. c. found that the alteration was not apparent c. A claim of a holder in due course can still be defeated by the person primarily and secondarily liable if the latter has in its favor personal and real defenses. 719) 9. 2009 Edition. but limited to the amount of P6. (Source: Notes and Cases on Banking and Negotiable Instruments Law Volume I. forgery (Source: The Philippine Negotiable Instruments Law. (Source: Notes and Cases on Banking and Negotiable Instruments Law Volume I.000. page 206 by Hector S. No. 2004 Edition. Alfo was indebted to Bugsy in the amount of P200. upon inspecting the same. therefore. page 137-138 by Timoteo B. 2009 Edition. it was already destroyed by fire. 8. Which of the following is not a real defense and. De Leon and Hector M.000. Can Bugsy be considered a holder in due course? a. Aquino) 7. acquisition of instrument for an illegal consideration c. Which of the following statement is correct? a. No. No. Can Daniella be considered a holder in due course? a. because when Cathy failed to give a consideration to Budoy the bill cease to become a negotiable instrument. Angelo draws a bill for P10. No. The check was delivered to Bugsy through Alfo.P a g e | 19 holder in due course as the instrument involved is a crossed check and was supposed to be for deposit only. Cathy indorses the bill to Daniella who. because the instrument is already overdue when Daniella acquired the knowledge of the infirmity of the instrument. Geer. A claim of a holder in due course cannot be defeated by a real defense of forgery. 2012 and payable on . a check containing unmistakable evidence on its face that it has been altered innocently (Source: Chamberlain vs. because fraud was largely a factor for the issuance of the check. No. 1975 Edition. Negotiable Instruments Law/Commentaries and Jurisprudence on the Commercial Law of the Philippines.00 on September 15. b.00 only. A holder in due course is free from real defenses. c. on maturity date pay the amount of P6. No. may not be set up against a holder in due course? a. 2012. (Source: Section 54. page 138 by Timoteo B. 237 Pac. Yes. Five (5) days after such payment. d. In order to raise funds to pay his obligation. because it is Alfo who is indebted to Bugsy and therefore the Bugsy should have inquire on the purpose for the issuance of the check upon acquiring the knowledge that Alfo is not drawer therein. However.00 or the amount Daniella paid before she had knowledge of the infirmity.00 with Budoy as payee and Xavier as drawee.000.000. Alfo promised to deliver the car to Chevy on October 15. a trade acceptance dated September 20. Bugsy and Chevy was not aware that at the time the car was sold to Chevy. 2012. Daniella learns that Cathy did not give value for the instrument. Chevy was informed that the check will be issued to pay for the loan of Alfo’s outstanding obligation to Bugsy. want of delivery of incomplete instrument d.

such as absence of consideration. Aquino) extent of P800. when asked how he came to possess the check said that it was paid to him by Amy in a “certain transaction” but refused to demonstrate further. b. he may enforce payment for the full amount of the note against Mary. d.00 from Mary because she is a holder in due course. Annie may recover P1. If Baby is a holder in due course. because Bugsy acquires the instrument in good faith and for value and regular on its face and in good faith and for value.) 13. c. Annie acquired no right to enforce the instrument because forgery is a real defense and may be set up even against a holder in due course. Annie may only recover to the 14. On maturity date of the note.000. Supposed Mary issues a note for P1. because the signature of Mary is inoperative.00. No. Pedro stole the note. because as against Mary. the payee.000. d. Reema purchased from Banco ng Filipino a cashier’s check for P800. a holder in due course. because from the moment the check was stolen.) 12. page 128 by Hector S. with value. Pedro pledges the note to Annie. c.00 to the order of Pedro. holding the P200. No. forged the signature of Mary and named himself the payee thereon. even if the debt of P800. (Source: The Philippine Negotiable Instruments Law. because Annie is a holder for value to the extent of P800.000. c. b.00. the holder of the check.00 which is also the extent of his lien. Pedro pledges the note to Annie to secure the payment of his debt of P800. b. Baby is deemed a holder for value only as regard Annie but not as regards Mary and Pedro. Annie cannot collect on the note even if she is a holder in due course.00 for Pedro. De Leon. d. b. because Ben refused to say how and why the check was passed to him by Amy. d. The note is indorsed and delivered by Pedro to Annie.00. also without consideration. Yes. Jr. Yes. The check was stolen from the Manager of Banco ng Filipino to whom Reema entrusted the check for safekeeping. De Leon and Hector M. Can Annie may recover from the instrument? a. page 123 by Hector S. without consideration. 2004 Edition. Yes. such as absence of consideration. because Ben acquired the check in good faith and for value. 2004 Edition. Investigation pointed to Amy as the culprit. d. De Leon and Hector M. On maturity of the note. If Mary has defenses against Pedro. Yes. But Annie. indorses it Annie. 2004 Edition. If Mary has defenses against Pedro.) 11. Annie may recover the full amount of P1. Jr.00. Which of the following statement is correct? a. The note is indorsed and delivered by Pedro to Annie. page 136 by Timoteo B. (Source: Notes and Cases on Banking and Negotiable Instruments Law Volume I. Mary can set up the defense of want of consideration.00 even if she is not a holder in due course. no one outside of Reema can be termed a holder in due course as the latter had not indorsed it in due course. c. No. Pedro.00 is not yet due. Ben. indorser. Pedro and Annie. If Baby is not a holder in due course.000. to secure the payment of his debt of P800. Is Ben a holder in due course? a. (Source: The Philippine Negotiable Instruments Law. (Source: The Philippine Negotiable Instruments Law. Baby is deemed a holder for value not only as regard Annie but also as regards Mary and Pedro. De Leon. Annie can collect the full amount of P1. Reema immediately demanded “stop-payment” order.00 without placing her signature and the name of the payee. Supposed Mary makes a promissory note for P1. Yes. because Ben had no knowledge that the check was stolen . 2009 Edition. indorser.000. No.000. indorses the note to Baby. Which of the following statement is incorrect? a. De Leon and Hector M. because Bugsy is not a party to the contract of sale entered into by Alfo and Chevy.P a g e | 20 c. Jr. Yes. page 121 by Hector S. Mary issues a note to Pedro. De Leon.00 which is also the extent of his lien.

c. because Alva acquires the note Carla. (Source: Mesina vs. with valuable consideration. reacquires the note from Betty. No. because Alva acquires the note in exchange for some valuable consideration. 145 SCRA 497) 15. Intermediate Appellate Court. Jr. a holder in due course. page 213 by Hector S. Alva indorsed the note to Betty. De Leon. Kathleen is induced through simple fraud committed by Denise to issue a promissory note in favor of the latter. b. 2004 Edition. Can Alva enforce the note against Kathleen? a. Alva has noticed of the fraud but did not take part in it. because Alva acquires the note in bad faith. d. (Source: The Philippine Negotiable Instruments Law.P a g e | 21 by Amy. No. because the act of Alva in negotiating the note to a holder in due course in order to cut-off Kathleen’s defense upon her reacquisition of the note may be considered fraud. Yes. Denise indorsed the note to Alva. Alva acquires the status of a holder in due course. Thus. De Leon and Hector M. Yes.) . Assuming Alva. a holder in due course.