1. A. Yes. A and B are accommodation parties.

A is an accommodated indorsee while

B is

an accommodation indorser.

B. No. DEF orphanage cannot collect from B. Section 29 of the Negotiable

Instruments

Law provides that in order for a holder to enforce the instrument, he must be a
holder

for value. DEF being a done is not a holder for value.

C. No. E cannot hold A liable for the value of the check because A cannot raise a
defense

of lack of consideration against E.

D. No. C cannot collect from A. C is considered an immediate party who has

knowledge

of the special purpose of delivery of the instrument. Section 14 applies in this case.

Considering that the instrument is not filled up strictly in accordance with the

instruction C cannot collect because he is considered an immediate party who is a

holder not in due course.

2. A. Yes. C can recover. Delivery for safekeeping constitutes delivery. This is a case
of an

incomplete instrument but delivered instrument is a personal defense not available

against a holder in due course. Hence, C can recover.

B. No. My answer will not be the same. Section 15 applies in this case because an

instrument is incomplete and undelivered which is

3. A. The check is an order instrument because it payable to the order of B. The fact
that

there was no purchase price is immaterial because consideration is presumed.

B. Yes. The negotiability of the instrument is not affected by the fact that if is issued

undated the date is not one of the requirements under Section 1 of the Negotiable
Instrument
Law.

.....to another. In this case, the purpose of A is, to hide the name of B in the books of
the

borrowing company XUZ.

4. A. Yes. B may transfer a non-negotiable instrument to D by assignment.

B. Yes. D can lawfully collect from either A and B subject to available personal
defenses.

D in this case is not a holder much less a holder in due course.

5. A. GHI Bank should bear the loss. In this case GHI Bank, drawee bank and
depositary of

A is constructively negligent for not ascertaining the genuineness of the signature of

drawer A

who is its depositor.

B. Yes. My answer will be the same had the instrument been a bill of exchange duly

accepted by GHI on the ground of the breach of warranty. When GHI accepts the bill,
it

warrants, genuineness of the signature of drawer A. Hence, for its failure to

ascertain the

genuineness of the signature of A, it breached its warranty.

6. A. Yes. A post-dated check is a negotiable instrument as it complies with the

requirements provided in Section 1 of Negotiable Instrument Law. In fact, a check is

a special

kind of bill of exchange.

B. No. The acceptance of said check by BCD Insurance Corporation does not produce
the

effect of payment because a check is not a legal tender and it will not

7. PNB should bear the loss. PNB is considered constructively negligent for its failure
to

ascertain the genuineness of the signature of its depositor A. Therefore, it should

credit back
the amount of P50T it debited in the account of A. A cannot be held because he is not
negligent

because when he left his friend B he has no reason to suspect that B will take a check
from his

checkbook.

D. No. C is not a holder in due course because he has knowledge of the defect of title
in the

instrument of B.

.....produce the effect of payment until it is encashed.

C. Yes. My answer will be the same. A check can only produce the effect of payment
when it is

encashed by or deposited and cleared in the account of BCD Insurance Corporation

because a

check is not a legal tender.

D. BCD Insurance Corporation will not be liable because there is no payment yet of
the

C. Yes. F can hold A liable because F is a holder and the undertaking of A is to pay B
or bearer.

8. A. Yes. C should bear the loss. In an order instrument when it turned out that a

signature of the endorser is forged, a holder in due course can be held liable by
reason of his

warranty. As an endorser, C warrants the genuineness of the instrument and in all

respects,

what it purports to be.

9. A. Yes. B can raise the defense of forgery if its signature is forged and there are
parties

who can trace their title through a series of special unbroken indorsement to him

B. No. F cannot hold B liable because B is not an immediate party and that F cannot

trace his title to B through a series of special unbroken indorsement because the
special

indorsement by B was cut by the delivery of C to D.

10. A. Yes. A may show by parol evidence that the indorsement was wholly without

consideration because under Section 28, lack of consideration is a valid defense

between the

immediate parties A and B.

B. No. A is not an accommodation indorser under the Negotiable Instrument Law.

Section 29 is explicit that the purpose of an accommodation party or its credit

11. A. Yes. E has a right of action against the bank provided that A has sufficient
funds in the

drawee bank. Lack of consideration for the isuuance of the check cannot be used by
BCD as

reason to dishonor the check.

B. No. There was no showing that the account of A was debited.

B. PNB should bear the loss by reason of its breach of warranty. PNB when it
indorsed the check

to BPI, warrants the genuineness of all prior indorsements.

C. No. C cannot hold A liable. Applying the cut-off rule, the signature of B and prior
parties to

the forgery are wholly inoperative therefore, no right to retain, give discharge or
enforce

payment on the instrument is acquired by C hence, he cannot collect from A.

D. The obligation of A to B still subsists. What is extinguished in this case is the right
of B to

collect from A on the check issued in his favor.

E. No. B cannot collect from BPI because there is no privity of contract between
them and B is

not in possession of the check which is required to be presented to BPI for

collection.

C. No. The negotiation of the instrument payable at a fixed period is not affected
when said
instrument is negotiated after said period but the holder of it is not considered as a
holder in

due course.

D. Yes. C can recover from A if he is a holder in due course. Otherwise, C cannot. Lack
of

consideration is a personal defense which can be raised against a holder who is not
a holder in

due course.

....Insurance premium and that the policy is not yet in effect. There is no payment yet
because

as far as BCD is concerned the checks can only be encashed or deposited to its
account when

the due date of the post-dated checks arises.

E. No. My answer will not be the same. BCD Insurance Corporation can be held liable
provided

that the check as premium payment had already been encashed or deposited and
cleared to its

account.

....a real defense. The want of delivery of an incomplete instrument can be raised
against C, a

holder in due course.

C. Yes. C will recover from A. This is a case of a mechanically complete instrument

but

undelivered which is governed by Section 16 of the Negotiable Instruments Law.

The

unauthorized delivery of a mechanically complete instrument is a personal defense

which

cannot be raised against C who is a holder in due course.

...a real defense. The want of delivery of an incomplete instrument can be raised
against C, a

holder in due course.

C. Yes. C will recover from A. This is a case of a mechanically complete instrument
but

undelivered which is governed by Section 16 of the negotiable instrument law. The

unauthorized delivery of a mechanically complete instrument is a personal defense

which

cannot be raised against C who is a holder in due course.