DIAZMEAN KYLA G.

SOTELO
2020

 Page 19
No. In the instant, case the instrument is non-negotiable. One of the requisites of a
negotiable instrument under Section 1 of the Negotiable Instruments Law is that “it must
contain an unconditional order or promise to pay a sum certain in money.” In addition,
the third item to consider for the negotiability of instrument provides that we must
consider only what appear on the face of the instrument. By the tenor of the instrument,
“subject to the terms and conditions” of another contract, it violates the aforementioned
requisite for the negotiability of the instrument. Furthermore, reference to another
contract which is restrictive in nature renders the instrument non-negotiable as it burdens
the holder to consider yet another instrument part for that he holds.
 Page 43
The instrument is a bearer instrument since it is addressed to a person the drawer has
never met and does not intend to meet for reason of the instrument. The applicable rule is
the Fictitious Payee Rule, hence, the instrument is considered payable to bearer.pjm
 Page 60
a) D must enforce payment to the party primarily liable on the instrument. In this case, it
is drawee, X.
b) First, D must ensure that a notice of dishonor was provided. Then, D can go to the
parties secondarily liable on the instrument. In this case, they are drawer, A, and the
indorsers, B, C, and Y.
c) No. By the very nature and definition of an accommodation party, Y is not bound to
receive any value from the instrument. In signing as an accommodating indorser, Y
must be aware of this. Therefore, refusal to pay on this ground renders himself
estopped. In addition, D is a holder in due course, therefore, the personal defense of
wanting consideration cannot be raised against D as a party.
d) No. As provided by the Negotiable Instruments Law, is is the payment in due course
by or on behalf of the principal debtor which discharges the instrument. In this case,
Y’s payment as an indorser is not sufficient to discharge the instrument.
 Page 71
a) Order bill – “payable to B or order”
b) Since it is an instrument which was specially indorsed, indorsement is necessary to
further negotiate the instrument.
c) Either. D could either indorse it specially or in blank, this decision is completely up to
him.
d) C, having indorsed it in blank, converted the originally order instrument into a bearer
instrument and the same was properly negotiated by delivery to D. As a rule now, D
must negotiate the instrument to E by mere delivery as well because of the fact that it
is now a bearer instrument, as a result of indorsement in blank.
e) In this case, the instrument is once again, an order instrument by virtue of the special
indorsement. Therefore, as required by law, it must be further negotiated by
indorsement.
 Page 75
a) No. It is expressly provided “Pay to C only,” therefore, C violated the restrictive
indorsement under the instrument. Therefore, there can be no valid negotiation. The
transfer in this case is only a mere assignment.
 DIAZMEAN KYLA G. SOTELO
2020

b) No. Sec. 52 provides that a holder in due a course is a holder who took the instrument
for the following conditions set, one of which is “that is it is complete and regular
upon its face.” By virtue of the irregularity in the instrument D acquired brought by
the restrictive indorsement worded as “pay to C only,” D cannot be considered a
holder in due course.
c) No. Not having been a holder in due course, A can set up the defense of want of
authority against D who apparently lacked authority to hold the instrument in
violation of the restrictive indorsement in the instrument.
d) To C, the party who indorsed the instrument to him. This is in accordance to the rule
that C, in indorsing such instrument despite its apparent irregularity, warrants the
genuineness and validity of such as provided in Section 66. Therefore, D can enforce
payment only to him.
 Page 77
a) E should enforcement payment by first presenting the instrument to the party
primarily liable, in this case, X, the drawee.
b) No. Under the second type of restrictive indorsement, the indorsee is constituted as a
mere agent of the indorser. As such, E’s duty is limited to collecting the money for
the first indorser, B.
c) By virtue of the second type of restrictive indorsement, the parties subsequent to C
only acquired the same rights as C in the instrument; the right and duty to collect and
then either deposit or remit it to B, the first indorser.
d) E can enforce payment on the party secondarily liable. In this case, it’s A, the drawer
since all the indorsers in the instruments do carry a valuable consideration with them,
seeing that they are just bound to collect and deposit or remit the value.
e) None. All indorsees who were agents of the first indorser are discharged. It is now up
to B to enforce payment to A, the drawer by virtue of their contractual relationship.