BL 223 MIDTERM EXAMINATION

SET A and B

PROMISSORY NOTE
1. For value received, I hereby promise to pay Rose Boslis, or order, the sum of Php
100,000.00 in two equal monthly installments.
(Sgd.) VANGELO CIOBU
QUESTION: Is this a negotiable instrument? Explain, (5pts).

ANSWER: Yes, because it falls under the requisites of Negotiable Instruments which
are the following:
a) Must be in Writing and signed by the maker
b) Must contain an Unconditional promise
c) Must be Payable on demand, or determinable future time;
d) Must be payable to Order or bearer; and
e) When the instrument is Addressed to a drawee, he must be named or otherwise
indicated therein with reasonable certainty

1. A. What is the penalty in violating BP 22?, (2.5 pts.)

B. When should a complaint for BP 22 be filed?, (2.5 pts.)

ANSWER A: The penalty for violation of B.P. 22 is imprisonment of at least 30 days but not
more than one (1) year, or a fine of at least double the amount of the check but not to
exceed PHP 200,000.00.

ANSWER B: The criminal complaint for violation of B.P. 22 must be filed within four (4)
years from the time the checks have been dishonored.

2. What are the rights of the holder of a negotiable instrument if not in due course?, 136,
(5 points).

ANSWER: The right of the holder of negotiable instrument is to demand payment of

compensation and to have a right to have payment.
3. When a foreign bill of exchange is dishonored by non-acceptance, what should the
payee do, if anything required him by law, in order to protect his rights?,149 Explain, (5
pts.);

ANSWER: The payee must bring an action, showing that the bill of exchange was not
done within 48 hours, so that the payee could ask a payment of the instrument and
could transfer his right as the form authorized him to do so.

4. To accommodate JOY LYN, drawer of a promissory note, JAIMES signed as indorser

thereon, and the instrument was negotiated to ROMNICK, a holder for value. At the time
ROMNICK took the instrument, he knew JAIMES to be an accomodation party only.
When the promissory note was not paid, and ROMNICK discovered that JOY LYN had no
funds, he sued JAIMES. JAIMES pleads in defense the fact that ROMNICK knew at the
time he took the instrument, JAIMES had not received any value or consideration of any
kind for his indorsement. 93
Question: Is JAIMES liable?. Discuss with reason, (5 pts.);

ANSWER: Yes, because Jaimes is an Accommodation party. An accommodation

party is a person who sign as a drawer or maker. He must not receive a value
thereof and he must sign for the purpose of lending his name. So therefore, Jaimes
is liable.
 BL 223 MIDTERM EXAMINATION
SET A and B
5. A. What is endorsement? (2.5 pts.);
B. Enumerate the 5 kinds of endorsements, (2.5 pts.);

ANSWER A: Endorsement is used to describe writing anywhere on a negotiable

instrument, contract, receipt, or other document requiring validation and authentication
to signify that the endorser has received the document as presumably valid and
authentic.

ANSWER B: Blank Indorsement, Special Indorsement, Qualified Indorsement, Conditional

Indorsement, Restrictive Indorsement.

6. Mr. Jani Dip Kyaw makes a promissory note for Php5,000.00 but leaves the name of the
payee in blank because he wanted to verify its spelling first. He mindlessly left the note
on top of his desk at the end of the working day. When he returned the following
morning, the note was missing. It turned up later when Ms. Imber Ne Berheard presented
it to Mr. Jani Dip Kyaw for payment. Before Ms. Imber Ne Berheard, Ms. Cerit Ang Ehgit,
who turned out to have filched the note from Mr. Jani Dip Kyaw’s office, had endorsed
the note after inserting her own name in the blank space as the payee. Mr. Jani Dip
Kyaw dishonored the note contending that she did not authorize its completion and
delivery. But Ms. Imber Ne Berheard said she had no participation in or knowledge about
the pilferage and alteration therefore she enjoys the rights of a Holder in Due Course
under the NIL.
QUESTION: Who is correct and why?69, (5pts);

ANSWER: Mr. Jani Dip Kyaw is correct in this case, because Ms. Cerit ang Ehgit violates
the consideration of a Holder in due course that the holder should give notice.

7. What is forgery and what are its effects?, (5pts.)

ANSWER: Forgery is this is when a imitated signature was done whether by the payee or
drawer is wholly inoperative and has no right to gain the title of the instrument through
it. The effects of the forgery is that only the forged signature only an inoperative and the
instrument is still valid and also genuine signature.

8. Define Personal Defense and Real Defense and enumerate at least 5 of each
corresponding defenses, (5 pts.)

ANSWER: Personal Defense - growing out of agreement; renders it inequitable be

enforced vs. defendant. On the other hand, Real Defense - attaches to instrument; on
the principle that the sought to be enforced never existed/there was no contract at all.

PERSONAL DEFENSES REAL DEFENSES

Illegal Consideration Minority
Fraud in Inducement Forgery
Mistake Ultravires
Failure or absence of consideration Prescription
Want of Authority Want of Authority
 BL 223 MIDTERM EXAMINATION
SET A and B
9. A. What are the ways of violating BP 22 or Anti-Bouncing Law? (2.5 pts.);
B. What is the purpose why BP 22 was enacted? (2.5 pts.)

ANSWER A: The ways of violating BP22 is when you issued a check but you have no
sufficient funds. And when he/she issued a check even though she has a knowledge
that she cannot pay for it.

ANSWER B: The purpose of Bouncing checks law is to sue the persons who issues a
worthless check. This crime is called malum prohibitum which means that the act is not
wrong but the positive law forbids it.

10. A. Cite an instance when it becomes prima facie evidence of knowledge of

insufficiency of funds, (2.5 pts.)
B. Define “prima facie” evidence., (2.5 pts.)

ANSWER A: The making, drawing and issuance of a check payment of which is refused
by the drawee because of insufficient funds in or credit with such bank, when presented
within (90) days from the date of the check.

ANSWER B: Prima facie evidence is evidence that suffices for proof of a particular fact
unless and until contradicted and over-come by other evidence.