True or False

(1)

TRUE OR FALSE TRUE OR FALSE

1.

1. An instrument originally payable to order maybe coAn instrument originally payable to order maybe converted into a bearer instrument.nverted into a bearer instrument. 2.

2. An instrument originally payable to bearer maybe conAn instrument originally payable to bearer maybe converted into an order instrumentverted into an order instrument 3.

3. If an authorized agent signs for and oIf an authorized agent signs for and on behalf of his principal, the n behalf of his principal, the latter will be liable, as alatter will be liable, as a rule.

rule. 4.

4. A person who signs a trade or assumed name will be liable to the same extent as if he hadA person who signs a trade or assumed name will be liable to the same extent as if he had signed in his own name.

signed in his own name. 5.

5. A person who signs a trade or assumed name will be liable to the same extent as if he hadA person who signs a trade or assumed name will be liable to the same extent as if he had signed in his own name.

signed in his own name. 6.

6. If aIf a bill of exchange bill of exchangeis accepted at the instance of the holder, the drawers and is accepted at the instance of the holder, the drawers and indorsers areindorsers are discharged.

discharged. 7.

7. If a check is accepted at the instance of the hIf a check is accepted at the instance of the holder, the drawers and indorsers are discharged.older, the drawers and indorsers are discharged. 8.

8. Minority is a real defense available against a Minority is a real defense available against a holder in due course.holder in due course. 9.

9. Prior parties of a minor indorser can set-up minority as a defense against a holder in duePrior parties of a minor indorser can set-up minority as a defense against a holder in due course.

course.

1.

1. Pay to the order of BPay to the order of B, P25,000, at sight after t, P25,000, at sight after the arrival and discharge of 10 he arrival and discharge of 10 boxes of sardinesboxes of sardines from Vessel X at Pier 8, Manila.

from Vessel X at Pier 8, Manila.

To:

To: PNB PNB Sgd. Sgd. AA

Statement No. 1. The instrument is negotiable because it is payable on demand. Statement No. 1. The instrument is negotiable because it is payable on demand. Statement No. 2. The instrument is

Statement No. 2. The instrument is not negotiablenot negotiable because the order because the orderis conditional.is conditional.

A.

A. True; True; FalseFalse B.

B. False; False; TrueTrue C.

C. Both Both statements statements are are true.true. D.

(2)

Statement 1. The note is negotiable because although it is not dated, one year from date will be one year from issuance thereof.

Statement 2. The instrument is not negotiable because thesum is not certain.

A. True; False B. False; True

C. Both statements are true. D. Both statements are false

1. I promise to pay to the order of B, U.S.$1,000 in current money at Manila Philippines, on December 10, 2009.

Statement 1. This note is negotiable because the sum is certain.

Statement 2. This note is not negotiable because it does not state a particular kind of current money.

4. I promise to pay to the order of B, P20,000 at such time as thepromissor may choose.

Sgd. X

Statement 1. The instrument is negotiable because it is payable on demand. Statement 2. The instrument is payable on a determinate future time.

(3)

5. I promise to pay to the order of B, P20,000 on _________. Sgd. X

Statement 1. The instrument is incomplete, hence not negotiable.

Statement 2. The instrument is complete and consideredpayable on demand.

6. Pay to the order of B, P20,000 on December 1, 2009. Accepted:

Sgd. X Sgd. Y

Statement 1. The bill is negotiable but ambiguous.

Statement 2. The bill is not negotiable and at the same timeambiguous.

(4)

specified with reasonable certainty.

7. A negotiable note is signed in this manner:

Sgd. X, agent of Y

Statement 1. It is X who is liable because there was no disclosure of the principal. Statement 2. It is Y who is liable because the words “agent of Y” is sufficient disclosur e.

8. I promise to pay Batman P20,000 on demand. Sgd. A

Statement 1. This is negotiable provided A knows Batman is a non-existing person at the time he made the note.

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9. Pay to the order of B, P20,000 on demand.

To: SantaClaus Sgd. A

Statement 1. The bill is not negotiable because the drawee is fictitious.

Statement 2. The bill isstill negotiable and canbe treated as a promissory note.

10. I promise to pay to the order of B, P20,000 on December 1, 2009 with costs and attorney’s fees incurred for the collection of the debt.

Sgd. A

Statement 1. The instrument is negotiable because the sum certain is ascertainable on the face of the instrument.

Statement 2. The instrument is not negotiable because the sum is not certain.

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payable to order.

(7)

1. For the purpose of lending his name without receiving value therefor, Pedro makes a note for P20,000.00 payable to the order of X who in turn negotiates it to Y, the latter knowing that Pedro is not a party for value.

a. May Y recover from Pedro if the latter interposes absence of consideration?

b. Supposing under the same facts, Pedro pays the said P20, 000.00, may he recover the same amount from X? Explain [1998 Bar Examination].

2. Nora applied for a loan of P100,000.00 with BUR Bank. By way of accommodation, Nora’s sister, Vilma, executed a promissory note in favor of BUR Bank. When Nora defaulted, BUR Bank sued Vilma, despite its knowledge that Vilma received no part of the loan.

a. May Vilma be held liable? Explain [1996 Bar Examination].

3. Santos purchased Vera’s car for P50,000.00. Not having enough cash on hand, Santos offered to pay in check. Vera refused to accept the check unless it is indorsed by Reyes, their mutual friend. Reyes indorsed Santos’ check and Vera, knowing that Reyes had not received any value for indorsing the check, accepted it. The next day, Vera presented the check to the drawee bank for payment. Payment was refused for lack of funds. Vera gave notice of dishonor to Reyes, but Reyes refused to pay, saying that he indorsed merely as a friend.

a. Is Reyes liable to Vera? In the event Reyes voluntarily pays Vera, does Reyes h ave the right to recover from Santos? Explain [1985 Bar Examination].