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1.
a.
b.
c.
d.
2.
a.
b.
c.
d.
3.
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.
5.
a.
b.
c.
d.
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.
6.
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.
a.
b.
c.
d.
Failure of consideration
Want of delivery but complete instrument
Fraud in essecontractus
Spoliation
7.
4.
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.
Answer: b. Romel was a holder for value. Love and affection does not
constitute value.
8.
a.
b.
c.
d.
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.
9.
Amer made a promissory note indicating that Nassief is the maker and is
payable to order of Amer. Amer forges Nassiefs signature. Amer
indorses the note to Norsad and Norsad to Ahmed, the present holder.
a.
b.
c.
d.
12. Gloria makes a promissory note for Three Million to the order of
Benigno. To secure benignos 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.
Answer: a. Both statements are true. Mar is deemed a holder for value to the
extent of his lien.
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c.
d.
14. Mahal signed a promissory note for P500, 000 as maker, and payable to
bearer, delivered to Belo in payment for Mahals scheduled medical
operation that will make her tall. Later, Mahal was informed that it is
impossible to make her tall. However, Belo has already delivered the
note to Haden upon the terms of payment of P 300, 000 and the balance
in a month. Haden received notice of the defect. Which is true?
a.
b.
c.
d.
Haden can collect P 500, 000 because he is a holder in due course entitle
to the full amount of the instrument.
Haden must pay the balance before he can collect for the full amount.
Haden is a holder in due course to the extent of P300, 000, the amount
paid by him.
Haden cannot collect because of the failure or absence of consideration.
Answer: c. Haden is a holder in due course to the extent of P300, 000, the
amount paid by him. Sec. 54 of the NIL provides that, 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, he will be deemed a holder in due course only to the extent
of the amount paid by him.
FORGERY
1. Forgery is the counterfeit-making or fraudulent alteration of writing and
may consist in the signing of anothers name or the alteration of an
instrument in the name, amount, description of the person and the like,
with intent thereby to
a. defraud
b. dishonor
c. confound
d. alter
2. What kind of defense is forgery under Section 23 of the Negotiable
Instrument Law?
a. Forgery can be presumed and the burden of proof lies on the party
alleging forgery.
b. Forgery is a real defense which means that it could be raised
against any holder, including a holder in due course.
c. Section 23 purports to declare neither the instrument totally void
nor the genuine signatures thereon inoperative.
d. Forgery is a real or absolute defense except a holder in due course
as provided in Section 58.
3. One of the various kinds of forgery is Simple forgery.
Statement A:
It occurs when a person signs the name of another
without the authority of the person whose signature
it purports to be.
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.
a. Both statements are true.
b. Both statements are false.
c. Only statement A is true.
d. Only statement B is true.
4.
5.
Answer: c. Where a holder took instrument for value and in good faith. This
constitutes a condition of a holder in due course.
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Statement A:
Statement B :
Statement C :
Statement D :
a.
b.
c.
d.
e.
6.
7.
8.
9.
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d.
the drawee cannot recover from the holder since the forged
instrument is necessary to the holder.
d.
a.
b.
c.
d.
e.
bank is liable
drawee bank bears the loss
drawee bank considered as paying out of its funds
b&c
all of the above
4. In the case of PNB vs. CA, for bearer instrument the signature of payee or
holder is
a.
b.
c.
d.
e.
a.
b.
c.
d.
e.
wholly inoperative
unenforceable
invalid
6. In the case of PNB vs. CA, for order instruments the signature of its rightful
order is
a.
b.
c.
d.
e.
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d.
8. In the case of Samsung vs. FEBTC, drawee who has paid upon the forged
signature bears the loss except when
a.
b.
c.
d.
e.
drawees negligence
negligence can be traced on the part of the drawer
a&b
none of the above
a.
b.
c.
d.
dishonor of checks
counterfeit and alteration
counterfeit-making or fraudulent alteration of writing and may consist
in the signing of anothers name or the alteration of an instrument in
the name, amount, description of the person and the like, with intent
thereby to defraud
none of the above
15. In the case of Samsung vs. FEBTC, condition which bars a party from
setting up the defense of forgery
a.
b.
c.
d.
guilty of negligence
guilty of fraud
a&b
none of the above
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. ends with the drawee bank
c. does not end with the drawee bank and collect reimbursement
d. a&c
12. Forge is real defense when
a.
b.
c.
it can be presumed
could be raised against any holder, including a holder in due course
raised against a holder
2.
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a.
b.
c.
d.
The drawer does not promise to pay the bill absolutely, his liability to the
holder, or to any subsequent indorser, who may be compelled to pay it,
is only secondary. His liabilities are conditional and he engages to pay
the bill only after certain conditions are complied with.
4.
In no. 5 case, supposed W, the payee, altered the bill which was
originally P1,000 to P1,500 and is accepted by Y for P1,500, how much is
Y liable to A, a holder in due course for P1,000 or P1,500?
a. Y should be liable to A for P1,500 because it is the tenor of his
acceptance.
b. Y should be liable to A for P1,000 only because the collectible
debt is only P1,000
c. Y should be liable to A for P1,500 because Y, as an acceptor,
assented to the alteration.
d. Y should be liable to A for P1,000 only because a holder in due
course may enforce payment of a materially altered
instrument according to its original tenor only.
An acceptor could not have assented to the alteration by accepting an
altered bill if he had no knowledge of the alteration. 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. (Sec.
124, par. 2)
7.
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b.
c.
d.
d.
9.
10.
12.
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c.
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c.
Answer: B
e.
Answer: C
e.
Which of the following instruments is not negotiable for the reason that
the instrument is not payable at a determinable future time?
a. On the death of X. I promise to pay to the order of B P1,000. (Sgd)
A
b. On or before October 30, 2015, I will promise to pay B or his order
P10,000. (Sgd A)
c. Sixty days after sight, I promise to pay to the order of B P5.000.
(Sgd.) A
d. Ten days before the death of X, I promise to pay B or his order
P10,000. (Sgd. ) A
Answer: D
e.
Answer: A
e. A certificate of stock is not a negotiable instrument because it lacks the
requirement of:
a. The instrument must be in writing and signed by the maker or
drawer.
b. It must contain an unconditional promise or order to pay a sum
certain in money.
c. It must be payable to bearer or order.
d. It must be payable on demand, or at fixed determinable future time.
e.
e.
e.
I promise to pay to bearer, Juan dela Cruz, the sum of P20,000.. (Sgd.)
Jose dela Cruz. The promissory note is:
a. Negotiable promissory note payable on demand
b. Negotiable promissory note payable to order
c. Negotiable promissory note payable to bearer
d. Non-negotiable
Answer: D
e.
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B. YES, the officers the officers who places their signature on the note are
prima facie makers and liable as such.
C. NO, the officers in this case acted thus accommodation party thus, they
are only secondarily liable.
D. NO, the corporate has separate juridical personality distinct from its
officers, thus, the officers signing the PN only acted as guarantor.
Hence, liability is only secondary.
AnswerB.
Reason: Persons who write their names on the face of the promissory notes
are makers and are liable as such. The officers are co-makers and as such,
they cannot escape liability arising therefrom. (Republic Planters bank v. CA,
GR No. 93073, Dec. 21, 1992)
2. Does the indorser warrant the solvency of the prior parties?
A. YES, in all cases.
B. Yes, if he is a general indorser.
C. No. The general indorser does not warrant solvency of prior parties.
D. No, the indorser only warrants the solvency of the immediate transferor.
Answer B.
Reason: The general indorser warrants the solvency of prior parties while
qualified indorser does not.
3. Who among the following is secondarily liable?
A. Juan, the maker of a promissory note who thereafter delivered it to
Pedro
B. Bingo, the drawer of a bill payable to Carlos or order
C. Charlie, who accepts the bill of exchange payable to Darling or order
D. Denver, who is named as a drawee but refused to accept the
instrument when presented by the payee.
Answer: B
Reason: Drawer, is a always secondarily liable.
e.
1.
4. X draws a check against his current account with Mayaman Bank in favor of
Y. Although X does not have sufficient funds, the bank honors the check
when it is presented for payment. Apparently, X has conspired with the
banks bookkeeper so that his ledger card would show that he still has
sufficient funds. The bank files an action for recovery of the amount paid to
Y because the case presented has no sufficient funds. Can Mayaman Bank
recover from Y?
A. YES, the bank can recover from Y, the latter being not a holder in due
course.
B. YES, the bank can recover from Y there being no sufficient funds on the
account of the drawer.
C. NO, the bank cannot recover from Y, the former being a draweeacceptor.
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D. NO, the bank cannot recover from Y, the former being negligent.
Answer: C.
Reason: When the bank honored the check, it became an acceptor. As
acceptor, the bank became primarily and directly liable to payee/holder Y.
5.
7.
A.
B.
C.
D.
Primary
Secondary
Not liable at all
Discharged from payment thereof
Answer C.
Reason: Romeo is not liable to Shylock because his signature was
forged. He can raise the defense of forgery.
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12. Can a collecting bank debit the account of the depositor when the check
indorsed to it were forged?
A. YES, because the depositor of a check as indorser warrants that it is genuine
and in all respect what it purports to be.
B. YES, 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. NO, the collecting bank was negligent, thus it cannot recover.
D. NO, the collecting bank has no authority to debit until notice of dishonor
has been given.
Answer: B
Reason: When checks deposited had forged indorsements and the
collecting bank as a consequence of such forgery, was made to pay the
drawee bank, the collecting bank can debit the account of the depositor for
his breach of warranty. (Jai-alai Corp. of the Phil V. BPI, G.R. No. L-39432,
August 6, 1975)
13. Brad indorsed a check to Angelina. Julie stole the check from Angelina,
forged the latters signature and indorsed it to Pitt. Holly Bank encashed the
check upon presentment thereof by Pitt. Is the bank liable?
A. YES, it is the primary duty of the bank to know that the check was duly
endorsed by the original payee.
B. YES, the bank who encashed a stolen check always bears the loss.
C. NO, the bank is only bound to know the signature of the drawee, not of
the payee
D. NO, the bank can raise the defense of forgery since the payees
signature was forged.
Answer: A.
Reason: The bank has the primary duty to know that check was duly
indorsed by the original payee and, where it pays the amount of the checks
to a third person who has forged the signature of the payee, the loss falls on
the bank who encashed the checks. A bank engaged in business is invested
with public interest and its duty to protect its clients and all persons who
transacts with it. (Traders Royal bank v. RPN, G.R. No. 138510, Oct. 10, 2002)
14. The following are the liabilities of an acceptor EXCEPT:
A. Engages to pay according to the original tenor of the bill
B. Admits the existence of the drawer, the genuineness of his signature,
and his capacity and authority to draw the instrument
Patrick Famillaran
1. The following are instances when a negotiable instrument is considered
to be dishonored except.
a) If it is not accepted when presented for acceptance.
b) If it is not paid when presented for payment at maturity.
c) If presentment is excused or waived and the instrument is past due
and unpaid.
d) All of the above.
Answer: D
2.
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b) Acceptor
c) Drawer, indorsers or their agents
d) Drawee
b) Waiver of presentment.
c) Waiver of Notice of Dishonor.
d) A and B only.
e) B and C only.
f) A and C only.
g) All of the above.
h) None of the above.
Answer: C
3.
Answer: G
8.
Answer: C
4.
5.
The instrument without grace falls due on April 30, 2006 which is a
Sunday, when shall be the presentment for payment?
a) Any time before the maturity date.
b) April 30, 2006 for it is the maturity date.
c) May 1, 2006 for it is the next day after April 30, 2006 which falls on a
Sunday.
d) May 2, 2006.
Answer: D
6.
7.
9.
Answer: C
10. All are true about a check except
a) Always drawn on a bank or banker.
b) Supposed to be drawn against previous deposit of funds.
c) Payable on demand or at a fixed and determinable future time.
d) Need not be presented for acceptance
Answer: C
11. In banking practice, a check will be considered stale if not
presented for payment after its issue within
a) 1 year.
b) 6 months.
c) 4 months.
d) 8 months.
Answer: B
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12. The following are cases where notice of dishonor is not required to be given
to an indorser, except
a) Where the indorser is the person to whom the instrument is
presented for payment.
b) When the drawee is a fictitious person and the indorser was aware of
that fact at the time he indorsed the instrument.
c) When the holder is a holder in due course.
d) Where the instrument was made for his accommodation.
1.
2.
Answer: C
13. The following are effects of a bank certifying a check except
a) Making the bank primary liable on the check.
b) The drawer may issue a stop payment order.
c) It discharges persons secondarily liable if procured by the holder.
d) It is equivalent to acceptance.
3.
4.
Answer: B
14. 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.
b) There should only be one specific person who shall accept the notice
for the partners.
c) Notice is not required to be given to all parties as long as it is given to
the majority of the parties.
d) Notice must be given to each of them unless one has the authority to
receive it for the others.
5.
6.
Answer: D
15. (1) A check is always drawn on a bank or banker and always payable on
demand.
(2) A bill of exchange may not be drawn on a bank and need not be drawn
against a deposit.
a) 1 is correct and 2 is wrong.
b) 1 is wrong and 2 is correct.
c) Both are correct.
d) Both are wrong.
Answer: C
7.
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8.
9.
10.
11.
12.
13.
14.
d. Prima facie
15. The writing of the signature on a paper attached to the negotiable
instrument
a. Allonge
b. Procuration
c. Forgery
d. alteration
Reiner O. Querubin
Negotiable Instruments Law
Atty. Ma. Ella Cecilia Escalante Dumlao
1st Semester 2012-2013
1. An instrument Payable to Angel Locsin or order the sum of P1, 000. Signed X
is:
a. Non-negotiable
b. A bearer instrument since it is an instrument payable to the
order of a fictitious person.
c. Negotiable because it complies with the requisites of
negotiability.
d. A bearer instrument since the name of the payee does not
purport to be the name of any person.
2. 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.
a. Holder
b. Drawer
c. Drawee
d. Maker
3. Which of the following is a negotiable instrument?
a. Bonds
b. Postal Money Order
c. Trust Receipt
d. Treasury Warrant
4. The liability of the drawee is:
a. Zero liability
b. Primary
c. Secondary before acceptance
d. Secondary after acceptance
P a g e | 17
c.
d.
11. An instrument with the words I promise to pay signed by two or more
persons give rise to:
a. No Liability
b. Joint Liability
c. Solidary Liability
d. Either Joint or Solidary Liability depending on the holder
12. An instrument payable on February 29, 2015 is payable on:
a. Either on February 28, 2015 or on March 1, 2015
b. Demand since the date February 29, 2015 does not exist
c. Date fixed by court
d. February 29, 2016, the nearest year in which the month of
February has 29 days
13. An instrument payable to ______ (blank) or order is:
a. Negotiable since the holder may insert the name of the payee
b. A bearer instrument because the name of the payee does not
purport to be the name of any person
c. Negotiable since it can be proven by extrinsic evidence who
intended payee is
d. Non-negotiable
the
14. If the signature is so placed upon the instrument that it is not clear in what
capacity the person intended to sign, he is deemed :
a. Not a party to the instrument
b. A maker or a drawer
c. Indorser
d. Holder in due course
15. Acceleration clause dependent on the ________ makes the instrument nonnegotiable.
a. Holder
b. Maker or drawer
c. Drawee
d. All of the above since the time of payment is not on demand,
or
at fixed, or determinable future time
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3. Azalea has with her a postdated check in the amount of P10,000.00. Azalea
needs money so she asks Betty to discount her check. In return for Azaleas
check, Betty issued a check in favor of Azalea less the agreed interest. Which of
the following statement is not correct?
a. Betty is a holder for value if Azalea already encashed the
check.
b. Betty is a holder for value when the check she issued
was impaired without her fault.
c. Betty is a holder for value if Azalea negotiated the check
to a third person who is a holder in due course.
d. Betty can never be a holder for value.
(Source: Notes and Cases on Banking and Negotiable Instruments Law
Volume I, 2009 Edition, page 132 by Timoteo B. Aquino)
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7. Angelo draws a bill for P10,000.00 with Budoy as payee and Xavier
as drawee. Budoy indorses the bill to Cathy, who fails to give a value
thereon. Cathy indorses the bill to Daniella who, on maturity date pay
the amount of P6,000.00 only. Five (5) days after such payment,
Daniella learns that Cathy did not give value for the instrument. Can
Daniella be considered a holder in due course?
a. No, because when Cathy failed to give a consideration to
Budoy the bill cease to become a negotiable instrument.
b. No, because the instrument is already overdue when Daniella
acquired the knowledge of the infirmity of the instrument.
c. No, because Daniella is not a holder in due course.
d. Yes, but limited to the amount of P6,000.00 or the amount
Daniella paid before she had knowledge of the infirmity.
(Source: Section 54, Negotiable Instruments Law/Commentaries and
Jurisprudence on the Commercial Law of the Philippines,
1975 Edition, page 254 by Aguedo F. Agbayani)
8. Which of the following instrument is complete and regular upon its face?
a. a trade acceptance dated September 20, 2012 and payable on
December 20
b. a promissory note with alteration, but the court, upon
inspecting the same, found that the alteration was not
apparent
c. an accepted bill where no drawee is named
d. a check containing unmistakable evidence on its face that it
has been altered innocently
(Source: Chamberlain vs. Geer, 237 Pac. 719)
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by Amy.
(Source: Mesina vs. Intermediate Appellate Court, 145 SCRA 497)