Reference: Law in Negotiable Instrument, Notes in Business Law

TRUE OR FALSE

1. An instrument is presumed to be issued in exchange for a consideration.
2. " I bind myself to pay Bitoy Cruz or Bearer Php 10,000. Sgd. Anjo", is non negotiable.
3. "Pay to Mulawin, without recourse. Sgd. Dugong" is an example of a qualified indorsement.
4. The holder of an overdue instrument cannot be considered a holder in due course.
5. An order instrument that will be indorsed restrictively will cease to be negotiable.
6. An instrument which is payable to bearer is negotiable by mere delivery.
7. Presentment for acceptance of a bill of exchange is not necessary when the bill is payable after sight.
8. In a bill of exchange, the drawer is primarily liable.
9. A check is considered certified after the lapse of 6 months from the date of issuance.
10. An instrument which is payable to order is negotiable by merely delivery.
11. A holder is due course is subject to personal and real defenses.
12. The maturity date of a Promissory Note payable "1 month after date" will be counted 30 days from the date of the presentment for acceptance.
13. The maturity of a bill of exchange payable "after sight" will be counted from the date of the first presentment for acceptance.
14. This is negotiable " Cholo promises to pay to the bearer Lawrence P140,000 in 4 equal monthly installments."
15. Fraud is factum is an example of a personal defense.
16. The instrument payable out of a particular fund is not negotiable unless stipulated by the parties.
17. In a bill of exchange, the drawee is not liable.
18. When the instrument is payable to the order of a fictitious person and such fact was known to the person making it, the instrument can be negotiated by indorsement plus delivery.
19. "I promise to pay to Jodie or bearer the sum of P25,000 payable on installments" (Sgd) Cholo. The promissory note is not negotiable
20. A holder not in due course cannot recoveron the instrument.
21. The instrument of not negotiable when the same is not dated.
22. Ante dating or post dating will render the instrument non negotiable.
23. Forgery of an instrument is a real defense against all parties subsequent to the forgery.
24. When the instrument is not dated, it will be considered to be dated as of the time it was issued.
25. Where the instrument is payable to order, the payee must be named therein with reasonable certainty.

Multiple Choice

1.A without receiving value thereof, executed a note in favor of B who also without value, indorsed the note to C, who with value negotiated it to D. D is considered:

a.Holder in due course

b.Holder not in due course

c.Holder for value

d.Bearer

2.The negotiable character of an instrument is affected by a provision:

a.Giving the maker an election to require something to be done in lieu of payment of money

b.Waiving the benefit of law intended for the advantage of the debtor

c.Authorizing the sale of collateral in case the instrument is not paid on maturity

d.Authorizing a confession of judgement if the instrument is not paid on maturity

3.X executed a promissory note payable to the order of Y. Y negotiated the note to Z in this manner:

a."Pay to Z if he will marry my daughter" (Sgd) Y. In this case:

b.X may pay Z without waiting for the fulfillment of the condition

c.The instrument is non negotiable because the liability of X is subject to an uncertain event

d.Y will render himself primarily liable to Z

e.Z cannot further negotiate the instrument

4.An instrument is payable at a determinable future time, which is expressed to be payable, except:

a.At a fixed period after date or sight

b.On or before a fixed or determinable future time specified therein

c.On or at a fixed period after the occurrence of a specified event, which is certain to happen, though the time of happening be uncertain

d.Upon a contingency and the contingency actually happens

5.In which of the following situations will a forged signature may transfer title?

a.Procured by force or duress

b.A mere simulation or counterfeit

c.Unnecessary to one's title as when a bearer instrument contains a forged indorsement

d.Obtained by fraudulent use of carbon paper, or was given for other purpose but was used in converting the paper into a negotiableinstrument

6.The following rules of construction apply where the language of the instrument is ambiguous or there are omissions therein, except:

a.Where the instrument is not dated, it will be considered to be dated as of the time it was issued

b.Where there is a conflict between the written and printed provisions of the instrument, the printed provisions shall prevail

c.Where the instrument provides for the payment of interest without specifying the date from which interest is to run, the interest runs from the date of the instrument, and if the instrument is undated, from the issue thereof

d.Where the sum payable is expressed in words and also in figures and there is discrepancy between the two, the sum in words is the sum payable; but if the words are ambiguous or uncertain, reference may be had to the sum denoted by figures to fix the amount

7.The indorsement "Pay to Daisy, (Sgd) Baby" is a:

a.Blank indorsement

b.Restrictive indorsement

c.Special indorsement

d.Qualified indorsement

8.The indorsement "Pay to Andy at his own risk. (Sgd) Bambi" is a:

a.Special indorsement

b.Facultative indorsement

c.Qualified indorsement

d.Restrictive indorsement

9.The indorsement "Pay to Alfred for collection only. (Sgd) Barnie" is a"

a.Qualified indorsement

b.Restrictive indorsement

c.Special indorsement

d.Facultative indorsement

10.The indorsement "Pay to Angel if she passes the October 2010 CPA board exams. (Sgd) Ben is a:

a.Conditional indorsement

b.Restrictive indorsement

c.Qualified indorsement

d.Facultative indorsement

11.Which of the following is not a restrictive indorsement?

a.Constitutes the indorsee the agent of the indorser

b.Vests the title in the indorsee in trust for or for the use of some other person

c.Prohibits the further negotiation of the instrument

d.Payable to the indorsee where the indorser is not liable

12.X deliver to Y a promissory note payable to the order of Y without specifying the amount but X authorized Y to place the amount of P50,000 in the promissory note. Y, in violation of the instruction of X placed P 500,000 as the amount payable. Later Y indorsed the note to Z. In this case:

a.Z can recover from either X or Y

b.Z cannot recover from either X or Y, if he knows the defect

c.Z cannot recover from X but can recover from Y if he knows the defect

d.Z cannot recover from X but can recover from Y if he does not know the defect

13.Which of the following is not a condition to be a holder in due course?

a.That the instrument is complete and regular upon its face

b.That the holder became the holder of it before it was overdue and without notice that it had been previously dishonored if such was the fact

c.That at the time it was negotiated to him it has no infirmity or defect in the title of the person negotiating it

d.That he took it in good faith and for value

14.Case 1. Olive buys a diamond ring for P50,000 for which she issued a check. Later Olive found out the diamond to be an ordinary glass.

Case 2. Oying obtains the signature of Crising for autograph purpose. Oying writes a promissory note above Crising signature and endorses the note to Taleng, a holder in due course. What kind of defenses may be availed of by the parties?

ABCD

Case 1RealPersonalRealPersonal

Case 2PersonalRealRealPersonal

15.The payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof.

a.Bearer

b.Holder

c.Payee

d.Owner

16.A bill which is, or on its face purports to be, both drawn and payable within the Philippines

a.Inland Bill

b.Bills in Set

c.Bill without an allonge

d.Ordinary Bill

17.This instrument is negotiable

a."I promise to Pay P20,000." (Sgd) Jose

b."Pay Pedro Torres or order P20,000 if he marries Maria." (Sgd: Jose)

c."Good to Mario or order P20,000." (Sgd: Jose)

d." I promise to pay Oscar or order 20 cavans of Wagwag rice on October 1, 2015." (Sgd. Jose).