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1. M made a promissory note to P or order. P indorsed it to A. X stole the note and indorsed it to B
by forging As signature as indorser. B indorsed it to C, then to C to D, holder in due course.
a. What are the liabilities of the parties to the instrument?
b. Assuming the same facts in #1, except when D asked A if it was his signature on the note, A
acknowledged that it was his signature. What are the liabilities of the parties to the instrument?

2. M made a promissory note payable to P or bearer and delivered the same to P, who in turn
indorsed it specially to A. X fraudulently obtained possession of the note, forged As signature by
specially indorsing the note to B. B delivered it without any indorsement to C. Who among the
parties may be held liable to C?

3. R drew an unsigned check for Php30,000 and placed it in his drawer. P stole the check, forged
Rs signature as drawer and placed his name as payee, then indorsed the check to A, holder in due
course. S Bank, the drawee-bank, encashed it when A presented it for payment.
a. Is the bank correct in debiting Rs account for the check?
b. Does S bank have a right of recourse against A?

4. R drew a check for Php50,000 and delivered the same to P, the payee. X fraudulently acquired
the check from P, forged Ps signature as indorser, then indorsed the check to A, holder in due
course. A presented the check for payment to S bank, the draww-bank, who paid the amount
thereof.
a. Is S bank correct in debiting Rs account for the check?
b. Does S bank have a right of recourse against A?
5. M made a promissory note for Php20,000 payable to P or order. P indorsed it to A. A further
indorsed it to B as follows: Pay to B sans recourse, (sgd) A. M became insolvent.
a. Against whom can B enforce the instrument?
b. assume the same facts in the immediately preceeding problem, except that Ps indorsement to A
was forged by X. Against whom can B enforce the instrument?
6. The following indorsements appear at the back of a promissory note executed by M:
(Sgd) P
Pay to B
(Sgd) A
Pay to C
(Sgd) B
a. assuming the note is payable to order, what indorsements may be stricken out by C and what are
the effects thereof?
b. Assuming the note is payable to bearer, what indorsements may be stricken out by C ad what are
the effects thereof?

7. The following indorsements appear at the back of a Bill of Exchange drawn by R:
Pay to A
(Sgd) P
Pay to B
(Sgd) A
Pay to C
(Sgd) B
Pay to D
(Sgd) C
Pay to E
(Sgd) D
Pay to C
(Sgd) E
a. who are the secondary parties liable to C, the present holder?
b. what indorsements may be stricken out by C?
c. Assuming that A and B had a prior agreement between themselves that B shall be held liable first
before A, can C run after A ahead of B?
8. M made a promissory note for Php100,000 in favor of P or order, the latter deceiving the former
that he is selling his car in A-1 condition which was in fact a piece of junk. P indorsed the note to A
who knew about the fraud. A, in turn, indorsed the note to B, a holder in due course. B further
indorsed the note to C, present holder.
a. assuming that C has no knowledge of the fraud, which would make him a holder in due course,
can C hold M liable on the note?
b. Assuming that C has notice of the fraud which would not make him a holder in due course, can
C hold M liable on the note?
c. Assuming that instead of indorsing the note to C, B indorsed it back to P, can P hold M liable on
the note?
9. M made a promissory note on March 1 of the current calendar year for Php50,000 payable to the
order of P on July 31 of the same year. P indorsed the note to A, present holder. July 31 of the said
year fell on a Friday that happened to be a holiday. M, however, was already insolvent as of this
date, which fact was known to A.
a.should A make a presentment for payment to M?
b. Assuming presentment for payment is to be duly made, when should it be done?
c. assuming presentment for payment is not done and presentment is not excused, is the note
considered dishonored if it becomes overdue and unpaid?
d. assuming the note is dishonored by non-payment and due notice of dishonor is given, can A sue
P on the note without includinf M as co-defendant?
10. M executed a promissory note payable to the order of P. P indorsed it to A, A to B, and B to C,
present holder. The note is dishonored.
a. assuming C only gives notice of dishonor to P, and B paid C, does B have a right of recourse
against P and A?
b. Assuming C only gives notice of dishonor to B, and B paid C, does B have a right of recourse
against P and A?
11. M made a promissory note for Php30,000 payable to P or order. P altered the amount by
increasing it to Php50,000. P then indorsed it to A, and A to B, present holder.
a. assuming B is not a holder in due course, discuss the liabilities of the parties to B.
b. assuming B is a holder in due course, discuss the liabilities of the parties to B
12. R drew a bill payable for Php20,000 to P or order, with S as the drawee. P indorsed it to A, then
A to B, present holder. Upon presentment for acceptance by B to S, the latter accepted the bill for
only Php10,000. What are the rights of B in this case?
13. R issued a check for Php30,000 to the order of P, with S Bank as the drawee-bank. P indorsed it
to A, present holder. R had maintained sufficient deposit with S Bank since the time he issued the
check. A failed to present it for payment within a reasonable time and S Bank became bankrupt. At
that time, Rs deposit amounted to Php750,000 but he was able to recover only Php250,000 as a
result of S Banks insolvency.
a. how much, if any, can A recover from R on the check?
b. How much, if any, can A recover from P on the check?
14.R drew a check for Php50,000 payable to the order of P, with S Bank as the drawee-bank. The
check was indorsed and delivered to A who deposited the same in his account with T Bank. The
cehck was cleared and S Bank paid T Bank the amount. Three (3) weeks later, it was discovered
that Ps signature as the payee-indorser was forged. T Bank paid S Bank and notified A that his
account has been debited for Php10,000. Who between A and T bank should bear the loss?