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(2013) Bar Examination Questions in Relation to Negotiable Instruments Law

1. Antonio issued the following instrument:


August 10, 2013
Makati City
P1OO,OOO,OO
Sixty days after date, I promise to pay Bobby or his designated representative the sum of ONE
HUNDRED THOUSAND PESOS (P100,000.00) from my BPI Acct. No. 1234 if, by this due
date, the sun still sets in the west to usher in the evening and rises in the east the following
morning to welcome the day.
(Sgd.) Antonio Reyes
Explain each requirement of negotiability present or absent in the instrument. (8%)
SUGGESTED ANSWER:
The instrument contains a promise to pay and was signed by the maker, Antonio Reyes
(Section 1(a) of Negotiable Instruments Law).
The promise to pay is unconditional insofar as the reference to the setting of the sun in the
west in the evening and its rising in the east in the morning are concerned. These are
certain to happen (Section 4(c) of Negotiable Instruments Law). The promise to pay is
conditional, because the money will be taken from a particular fund, BPI Account No. 1234
(Section 3 of Negotiable Instruments Law).
The Instrument contains a promise to pay a sum certain in money, P100,000.00 (Section (b)
of Negotiable Instruments Law).
The money is payable at a determinable future time, sixty days after August 10, 2013
(Section 4(a) of Negotiable Instruments Law). The instrument is not payable to order or to
bearer (Section 1(d) of Negotiable Instruments Law).
--MULTIPLE CHOICE
V.
Arnold, representing himself as an agent of Brian for the sale of Brians car, approached Dennis
who appeared interested in buying the car. At Arnolds prodding, Dennis issued a crossed check
payable to Brian for P25,000.00 on the understanding that the check would only be shown to

Brian as evidence of Dennis good faith and interest in buying the car. Instead, Arnold used the
check to pay for the medical expenses of his wife in Brians clinic after Brian, a doctor, treated
her.
Is Brian a holder in due course (HIDC)? (1%)
(A) Yes, Brian is a HIDC because he was the payee of the check and he received it for services
rendered.
(B) Yes, Brian is a HIDC because he did not need to go behind the check that was payable to
him.
(C) No, Brian is not a HIDC because Dennis issued the check only as evidence of good faith and
interest in buying the car.
(D) No, Brian is not a HIDC because Brian should have been placed on notice: the check was
crossed in his favor and Arnold was not the drawer.
(E) No, Brian is not a HIDC because the requisite consideration to Dennis was not present.
SUGGESTED ANSWER: (D) No, Brian is not a HIDC because Brian should have been
placed on notice: the check was crossed in his favor and Arnold was not the drawer.
(Vicente R. de Ocampo & Company v. Gatchalian, 3 SCRA 566, 1961)