10) The drawer admits the existence of the payee and his then capacity to indorse.

NEJOPABLE INSTRUMENTS (samplex put “capacity to contract” full points, but codal is indorse) Sec. 61
“Study smart lang talaga mga tropa, bobo kasi aq UwU - Jop”
11) A negotiable promissory note is discharged by the intentional cancellation thereof
A/N: True or False/Fill in the blanks, but with the correct answers or codal kasi di ko by the holder. Sec. 119 (c)
alam kung ano gusto ni sir paminsan.
12) In the event of failure to sell the goods subject of a trust receipt transaction or upon
demand of the entruster, the return of by the entrustee to the entruster of the
2018 Final Exam
goods, documents or instruments shall be the obligation of the entrustee. Sec 9 or 7
1) Where an instrument containing the words “I promise to pay” is signed by two
of the Trust Receipts Law (di ko alam gusto ni sir sowi)
persons, they are deemed to be jointly and severally liable. Sec. 17 (g)

13) An acceptance is qualified when it states that payment shall be made at a ONLY at a
2) Notice of dishonor is not required to be given to an indorser who knows at the time
particular place. Sec. 141
of his indorsement that the drawee is fictitious or a person not having any capacity
to contract. Sec. 114 (b)
14) “Holder” means the payee or endorsee of a bill or note, who is in possession of it, or
the bearer thereof. Sec. 191
3) A person who negotiates by delivery warrants only to the immediate transferee.
Sec. 65
15) The presence of two or more credible witnesses in a protest is not necessary for a
protest to be made by a notary public. Only needed when done by “any respectable
4) A waiver of protest is deemed to be a waiver not only of a formal protest but also of
resident of the place where the bill is dishonored.” Sec. 154
presentment and notice of dishonor. Sec. 111

2016 Final Exam

5) A person secondarily liable on the instrument is discharged by a valid tender of
1) Where presentment for acceptance is required and the drawee is dead, presentment
payment made by a prior party. Sec. 120 (d)
for acceptance may be made to his personal representative. Sec. 145
6) A qualified indorsement constitutes the indorser a mere assignor of the title to the
2) A letter of credit is non-negotiable because it is payable to a specific person and not
instrument. Sec.38
to order.
7) Except where the contrary appears, every indorsement is presumed prima facie to
3) Notice of dishonor is not required to be given to the drawer where the drawer is the
have been made at the place where the instrument is dated. Sec. 46
person to whom the instrument was presented for payment. Sec. 114
8) Payment is made in due course when it is made at or after the maturity of the
4) An omission to give notice of dishonor by non-acceptance does not prejudice the
instrument to the holder thereof in good faith and without notice that his title is
rights of a holder in due course subsequent to the omission. Sec. 117
defective. The phrase “in good faith” refers to the maker or acceptor of the bill.
(according to nego book) Sec. 88
5) The referee in case of need is the person named by the drawer or any indorser as the
one to whom one the holder may resort to in case of dishonor by non-acceptance or
9) The indorser whose indorsement is struck out, and all indorsers subsequent to him,
non-payment. Sec. 131
are discharged from liability. Sec. 48

1
6) When a bill is dishonored by nonacceptance, an immediate right of recourse against 6) Where an incomplete instrument has not been delivered, it will not, if completed and
the drawer and indorsers accrues to the holder and no presentment for payment is negotiated without authority, be a valid contract in the hands of any holder, as
necessary. Sec. 151 against any person whose signature was placed thereon before delivery. Sec. 15

7) A person not party to a particular negotiable instrument may be an accommodated 7) Presentment for payment is not necessary in order to charge the person primarily
party to that same instrument. samplex liable on the instrument. Sec. 70

8) The 90-day period in BP22 cases is not an element of the crime but merely raises a
8) Except as herein otherwise provided, the holder of a bill which is required to be
prima facie presumption that the drawer, maker, issuer had knowledge of the
presented for acceptance must either present it for acceptance or negotiate it within
insufficiency of their funds. samplex
a reasonable time. If he fails to do so, the drawer and indorsers are discharged.
Sec. 141
9) The certification of a check by a bank in which it is drawn is equivalent to an
acceptance and it discharges parties secondarily liable if done by the holder. samplex
9) For negotiable instruments, value is any consideration sufficient to support a simple
contract. Sec. 25
10) A check not presented for payment within a reasonable period of time after its issue
discharges the indorsers from liability thereon. Sec. 186
10) A qualified indorsement constitutes the indorser a mere assignor of the title to the
instrument. Sec. 38
2015 Final Exam
1) The title of a person who negotiates an instrument is defective within the meaning
11) Where the person giving and the person to receive notice reside in the same place,
of this Act when he obtained the instrument, or any signature thereto, by fraud,
notice must be given within the following:
duress, or force and fear, or other unlawful means, or for an illegal consideration, or
(a) If given at the place of business of the person to receive notice, it must be given
when he negotiates it in breach of faith, or under such circumstances as amount to
before the close of business hours on the day following.
a fraud. Sec. 55
(b) If given at his residence, it must be given before the usual hours of rest on the
day following.
2) Where the instrument provides for the payment of interest, without specifying the
(c) If sent by mail, it must be deposited in the post office in time to reach him in usual
date from which interest is to run, the interest runs from the date of the instrument,
course on the day following. (I put the whole codal nalang) Sec. 103
and if the instrument is undated, from the issue thereof. Sec. 17 (b)
12) A signature by "procuration" operates as notice that the agent has but a limited
3) The instrument is not invalid for the r eason only that it is ante-dated or post-dated, authority to sign, and the principal is bound only in case the agent in so signing
provided this is not done for an illegal or fraudulent purpose. The person to whom acted within the actual limits of his authority. Sec. 21
an instrument so dated is delivered acquires the title thereto as of the date of
delivery. Sec. 12 13) Where a party has been adjudged a bankrupt or an insolvent or has made an
assignment for the benefit of creditors, notice may be given either to the party
4) A qualified acceptance, if taken by the holder, discharges the drawer and all himself or to his trustee or assignee. Sec. 101
indorsers unless when the holder has been expressly or impliedly authorized to take
a qualified acceptance. Sec. 142

5) The instrument must be exhibited to the person from whom payment is demanded,
and when it is paid, must be delivered up to the party paying it. Sec. 74
2
14) An indorsement is restrictive which either:
(a) Prohibits the further negotiation of the instrument; or
(b) Constitutes the indorsee the agent of the indorser; or
(c) Vests the title in the indorsee in trust for or to the use of some other persons.
But the mere absence of words implying power to negotiate does not make an
indorsement restrictive. Sec.36
15) Where notice is given by or on behalf of the holder, it inures to the benefit of all
subsequent holders and all prior parties who have a right of recourse against the
party to whom it is given. Sec. 92
16) Every contract on a negotiable instrument is incomplete and revocable until delivery
of the instrument for the purpose of giving effect thereto. As between immediate
parties and as regards a remote party other than a holder in due course, the delivery,
in order to be effectual, must be made either by or under the authority of the party
making, drawing, accepting, or endorsing, as the case may be; and, in such case, the
delivery may be shown to have been conditional, or for a special purpose only, and
not for the purpose of transferring the property in the instrument. Sec. 16
17) Where an instrument payable on demand is negotiated on an unreasonable length
of time after its issue, the holder is not deemed a holder in due course. Sec. 53
18) A person secondarily liable on the instrument is discharged
(a) By any act which discharges the instrument;
(b) By the intentional cancellation of his signature by the holder;
(c) By the discharge of a prior party;
(d) By a valid tender or payment made by a prior party;
(e) By a release of the principal debtor unless the holder's right of recourse against
the party secondarily liable is expressly reserved;
(f) By any agreement binding upon the holder to extend the time of payment or to
postpone the holder's right to enforce the instrument unless made with the assent
of the party secondarily liable or unless the right of recourse against such party is
expressly reserved. Sec. 120
19) The acceptor, by accepting the instrument, engages that he will pay it according to
the tenor of his acceptance and admits:
(a) The existence of the drawer, the genuineness of his signature, and his capacity
and authority to draw the instrument;
(b) The existence of the payee and his then capacity to indorse Sec. 62
20) “Trust Receipt" shall refer to the written or printed document signed by the
entrustee in favor of the entruster containing terms and conditions substantially
complying with the provisions of this Decree. No further formality of execution or
authentication shall be necessary to the validity of a trust receipt.
21) A check must be presented for payment within a reasonable time after its issue or
the drawer will be discharged. Sec. 186
22) Where a bill of exchange is payable on demand, presentment for payment will be
sufficient if made within a reasonable time after the last negotiation thereof.Sec. 71
23) Presentment for payment is dispensed with where the drawee is a fictitious person.
Sec. 82
24) The instrument is dishonored by non-payment when presentment for payment is
excused and the instrument is overdue and unpaid. Sec. 83
25) In a trust receipt transaction, the risk of loss of goods, documents, or instruments
that are subject of the trust receipt is born by the entrustee/buyer.
2013 Final Exam
1) If the instrument is payable to the order of the maker or drawer, it is payable to
bearer, and irregular indorser is liable to all parties subsequent to the maker or
drawer. Sec. 64
2) Where the instrument is wanting in any material particular, the person in possession
thereof has a prima facie authority to complete it by filling up the blanks therein. In
order, however, that any such instrument when completed may be enforced against
any person who became a party thereto prior to its completion, it must be filled up
strictly in accordance with the authority given and within a reasonable time. Sec. 14
3) An accommodation party is liable on the instrument to a holder for value,
notwithstanding such person, at the time of taking the instrument, knew him to be
only an accommodation party. Sec. 29
3
4) Where an indorsement is conditional, the party required to pay the instrument may ----------MEME BREAK----------
disregard the condition and make payment to the indorsee or his transferee whether
the condition has been fulfilled or not. But any person to whom an instrument so
indorsed is negotiated will hold the same, or the proceeds thereof, subject to the
rights of the person endorsing conditionally. Sec. 39

5) Unless he discloses the name of his principal and the fact that he is acting only as
agent, a broker or other agent negotiating an instrument without indorsement he
includes all the liabilities of a general indorser. Sec. 20

6) Where the instrument is payable on demand, presentment must be made within a

reasonable time after its issue, except that in case of a bill of exchange, presentment
for payment will be sufficient if made within a reasonable time after its last
negotiation. Sec. 71
7) Where no place of payment is specified and no address of the person to make
payment is given, the instrument must be presented for payment at his usual place
of business or place of residence. Sec. 73
8) The instrument is deemed dishonored by non-payment when presentment for
payment is excused and the instrument is overdue and unpaid. Sec. 83
9) When the drawer or an indorser receives notice of a qualified acceptance, he must
within a reasonable time, express his dissent to the holder, or he will be deemed to
have assented thereto. Sec. 142
10) A negotiable instrument is discharged by an act which will discharge a simple
contract for the payment of money. samplex
11) Protest may be made by a respectable person residing in the place where the bill
was dishonored. Sec. 156
12) A bill that has been accepted for honor must be protested for non-payment before
it is presented for payment to the acceptor for honor. Sec. 167
13) In bills in set, If the drawee accepts more than one part and such accepted parts
negotiated to different holders in due course, he is liable on every such part as if it
were a separate bill. Sec. 181
A/N: Multiple Choice Questions (same banana, answers lang/doctrines na tama. Correct
codal or answers are bolded and underlined, beside of which will be the original
line/word/ MG@ w0rDZ that made the thing wrong)
2016 Final Exam
1) Rules on Liability of a drawer (all are correct) Sec. 61
a) Admits to the existence of the payee and his then capacity to indorse
b) Engages that, on due presentment, the instrument will be accepted or paid,
or both, according to its tenor.
c) If the instrument be dishonored and the necessary proceedings on
dishonor be duly taken, he will pay the amount thereof to the holder.
d) The drawer may insert in the instrument an express stipulation negativing
or limiting his own liability to the holder.
2) A date may be inserted in an instrument when: Sec. 13
a) It is not dated and it is expressed to be payable at a fixed period after date.
3) An indorsement is restrictive when: Sec. 36
a) It prohibits the further negotiation of the instrument.
4) Where the name of a payee or indorsee is wrongly designated or misspelled, he may
indorse the instrument by: Sec. 43
a) By indorsing using the wrong designation or the misspelled name

4
5) As regards a remote party who is a holder in due course, the following rule applies:
a) A valid delivery thereof by all parties prior to him so as to make them liable
to him is conclusively presumed. Sec. 16
6) An instrument is payable at a determinable future time when: Sec. 4
a) It is payable on or at a fixed period after the occurrence of a specified
event, the time of occurrence of which is uncertain although it is certain to
happen.
7) The following rules on construction are correct Except: (D was wrong but I edited +
boldz for it to be correct) Sec. 17
a) Where the sum payable is expressed in words and also in figures and there
is a discrepancy between the two, the sim denoted by the words is the sum
payable; but if the words are ambiguous or uncertain, reference may be
had to the figures to fix the amount.
b) Where the instrument is not dated, it will be considered to be dated as of
the time it was issued.
c) Where there is a conflict between the written and printed provisions of the
instrument, the written provisions prevail.
d) Where the instrument is so ambiguous that there is doubt on whether it is
a bill or a note, Holder may treat it as either at his election. (sir put
“election of the issuer”)
e) Where a signature is so placed upon the instrument that it is not clear in
what capacity the person making the same intended to sign, he is to be
deemed an indorser.
f) Where an instrument containing the word “I promise to pay” is signed by
2 or more persons, they are deemed to be jointly and severally liable
thereon.
8) Which among the following rules on consideration is incorrect: (same thing as
previous question, C was wrong) Sec. 24-29
a) Value is any consideration sufficient to support a simple contract. An
antecedent or pre-existing debt constitutes value; and is deemed such
whether the instrument is payable on demand or at a future time.
b) Where value has at any time been given for the instrument, the holder is
deemed a holder for value in respect to all parties who became such prior
to that time.
c) Absence or failure of consideration is a matter of defense as against any
person not a holder in due course; and partial failure of consideration is a
defense pro tanto, whether the failure is an ascertained and liquidated
amount or otherwise (sir omitted or otherwise)
d) Where the holder has a lien on the instrument, arising either from contract
or by implication of law, he is deemed a holder for value to the extent of
his lien.
9) Which among the following rules on negotiation of instruments is incorrect: (only C
was wrong) Sec. 41, 44, 46, 48
a) Where any person is under obligation to indorse in a representative
capacity, he may indorse in such terms as to negative personal liability.
b) Except where the contrary appears every indorsement is presumed prima
facie to have been made at the place where the instrument was dated.
c) The holder may at any time strike out any indorsement which is not
necessary to his title. The indorser whose indorsement is struck out, and
all indorsers subsequent (sir put previous) to him, are thereby relieved
from liability on the instrument.
d) Where an instrument is payable to the order of two or more payees or
indorsees who are not partners, all must indorse, unless the one indorsing
has authority to indorse fort the others.
10) The following are the rights of a holder in due course: (only E was wrong) Sec. 51-52
a) He may sue thereon in his own name
b) Payment to him in due course discharges the instrument.
c) He holds the instrument free from any defect of title of prior parties
d) He holds the instrument free from defenses available to prior parties
among themselves
e) He may, NOT AT ALL TIMES (sir put at all times), enforce payment of the
instrument for the full amount thereof against all parties liable thereon.
5
2013 Final Exam
1) When a check is certified by the drawee: (all are correct)
a) Drawee engages that he will pay it according to the tenor of its certification
b) Drawee admits the existence of a drawer and the genuineness of his
signature
c) Drawee is precluded from raising a defense involving the drawer’s
incapacity and lack of authority to draw
d) Drawer and all indorsers are discharged from liability thereon, if it was the
holder of a check who procured it to be accepted to certified.
2) When the instrument is made or accepted for his accommodation: (all are correct)
a) The indorser need not be given notice of dishonor.
b) The instrument not be presented for payment to charge the indorser
provided said indorser has no reason to expect that the instrument will be
paid if presented.
c) And if he pays in due course the amount due under the instrument, the said
instrument is discharged.
3) Under the trust receipts law, the entrustee has the obligation to:
a) Hold the goods, documents or instruments in trust for the entruster and
shall dispose of them strictly in accordance with the terms and conditions
of the trust receipt.
b) Receive the proceeds in trust for the entruster and turn over the same to
the entruster to the extent of the amount owing to the entruster or as
appears on the trust receipt.
c) Keep said goods or proceeds thereof whether in money or whatever form,
separate and capable of identification as property of the entruster. (sir put
entrustee)
d) Return the goods, documents or instruments in the event of non-sale or
upon demand of the entruster.
4) A negotiable instrument may be drawn payable to the order of: Sec. 8
a) A payee who is not maker, drawer, or drawee
b) The drawer or maker
c) The drawee
d) Two or more payees jointly (sir put severally)
e) The holder of an office for the time being
5) The following are the rules on renunciation under Section 122 of the Negotiable
Instruments Law:
a) The holder may expressly renounce his rights against any party to the
instrument bore, at or after its maturity.
b) An absolute and unconditional renunciation of his rights against the
principal before maturity of the instrument will not discharge the
instrument
c) But a renunciation does not affect the rights of a holder in due course (sir
only put holder) without notice.
d) A renunciation must be in writing, unless the instrument is delivered up to
the person primarily liable
6) An acceptance is qualified which is: Section 141
a) Conditional; that is to say, which makes payment by the acceptor
dependent on the fulfillment of a condition therein stated;
b) Partial; that is to say, an acceptance to pay part only of the amount for
which the bill is drawn;
c) Local; that is to say, an acceptance to pay only at a particular place;
d) Qualified as to time;
e) The acceptance of some, one or more of the drawees but not of all. (sir
replaced bolded codal with “less than all of the drawees”)
7) Among the rules applying to restrictive indorsements are the following: Sec. 36-37
a) An indorsement is restrictive if it constitutes the indorsee the agent of the
indorser. (sir put drawer)
b) An indorsement is restrictive if it vests the title in the indorsee in trust for
or to the use of some other persons. (sir put vests the title of the payee in
trust for or to the use of some other persons)
c) Prohibits the further negotiation of the instrument (sir did not include this
among the choices but is part of the codal)
d) But the mere absence of words implying power to negotiate does not
make an indorsement restrictive. (sir put a completely different line,
“restrictive if the words implying power to negotiate is absent”)
Formatted by Winnie Dy 🐻