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The maker of an instrument is liable for its payment according to its terms but does not admit certain facts about the payee. The acceptor of a negotiable instrument admits that they will pay it according to the acceptance but does not admit facts about endorsers. An instrument payable to "Pedro Padernal or bearer" is payable to bearer. The statement that indorsers are liable in the order they indorse the instrument is correct. A conditional endorsement that payment is to be made if a condition is fulfilled does not render the instrument non-negotiable.

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KAYE JAVELLANA
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524 views

59

The maker of an instrument is liable for its payment according to its terms but does not admit certain facts about the payee. The acceptor of a negotiable instrument admits that they will pay it according to the acceptance but does not admit facts about endorsers. An instrument payable to "Pedro Padernal or bearer" is payable to bearer. The statement that indorsers are liable in the order they indorse the instrument is correct. A conditional endorsement that payment is to be made if a condition is fulfilled does not render the instrument non-negotiable.

Uploaded by

KAYE JAVELLANA
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1.

The maker, by making the instrument, has the following liabilities, except:
a. The engagement to pay the instrument according to its tenor
b. The admission of the existence of the payee
c. The admission of the capacity of the payee to indorse the instrument
d. The admission of the right of the holder to enforce payment of the instrument

2.Which is not correct? The acceptor by accepting a negotiable instrument:

a. Admits the existence of the payee and his capacity to endorse.

b. Admits the existence of the drawer, the genuineness of his signature and his capacity
to draw the instrument
c. Admits the existence of the endorser, the genuineness of his signature and his
authority to draw the instrument
d. Admits that he will pay it according to the tenor of his acceptance

3. Assuming all the other requisites of negotiability are present, which of the following instruments
is not payable to bearer?
a. “Pay to the order of cash”
b. “Pay to the order of Jose Rizal, national hero”
c. “Pay to Pedro Padernal, bearer”
d. “Pay to Pedro Padernal or bearer”

4. Which of the following statements pertaining to indorsements is incorrect?


a. The indorsement must be of the whole instrument.
b. The signature of the indorser without additional words is sufficient.
c. Indorsers are liable in the order in which they indorse.
d. If an instrument is delivered without indorsement, negotiation takes effect at
the time of delivery even if the instrument is subsequently indorsed.

5. M makes a note payable to the order of P in the amount of P10,000. P indorses the note to A
as follows “Pay to A if he passes the 2020 Bar Examination.”
a. M must wait for the condition to be fulfilled before he can pay A.
b. M may pay A even if the condition has not been fulfilled but A has to hold the
proceeds subject to the rights of P.
c. M cannot be compelled to pay even if the condition is fulfilled because the
conditional indorsement renders the instrument non-negotiable.
d. M may pay A even if the, condition has not been fulfilled. The fulfillment of the
condition becomes immaterial and A becomes the absolute owner of the
proceeds of the note.

6. Which of the following is not a right of a holder in due course?


a. To hold the instrument free from defect of title of prior parties.
b. To hold the instrument free from personal defenses available to prior parties
among themselves.
c. To enforce payment of the instrument for the full amount thereof against all
parties liable thereon.
d. To hold the instrument free from real defenses available to the prior parties
among themselves.

8. Which of the following may be raised as defense against any holder?


a. Want of consideration
b. Want of delivery of complete instrument
c. Insertion of a wrong date
d. Want of delivery of an incomplete instrument

9. The following are warranties of a qualified endorser, except:


a. That the instrument is genuine and in all respects what it purports to be.
b. That he has a good title to it.
c. That all prior parties have capacity to contract
d. None of the above

10. A general endorser is distinguished from the irregular endorser in that a general
endorser:
a. Makes either a blank or special endorsement.
b. Indorses after its delivery to the payee.
c. Is liable to the payee and subsequent parties unless he signs for the
accommodation of the payee, in which case he is liable only to all parties
subsequent to him.
d. Answer not given.

11. If the drawee destroys the bill


a. The bill is considered accepted
b. The bill is considered dishonored
c. The bill is discharged
d. The bill is cancelled.

12. A party secondarily liable is discharged through any of the following means, except by
the:
a. Intentional cancellation of his signature by the holder
b. Discharge of a prior party
c. Release of the principal debtor
d. Extension of the time of payment which is assented to by such party
secondarily liable.

13. M makes a promissory note for P2,000 payable to the order of P. P negotiates the note
to A who with the consent of P raises the amount to P20,000 and thereafter indorses it
to B, B to C, and C to D who is not a holder in due course.
In this case:
a. D can recover P2,000 as against M.
b. P and A are liable to D for P20,000
c. B and C are not liable to D
d. Answer not given
14. On August 1, 2018, M executed a promissory note for P50,000 payable to the order of P
which is payable “30 days after date.” Thereafter, P indorsed the note to A, A to B, B to
C, C to D, and D to M. The indorsement by D to M was made on August 29, 2018.
a. The obligation on the note was extinguished by merger or confusion on
August 29, 2018
b. M may reissue/renegotiate the promissory note after it was indorsed to him
c. M can go after P, A, B, C and D to collect.
d. M may strike out the indorsement to him by D.

15. Consider the following statements on the interpretation of instruments:


Statement I. Where the sum payable is expressed in words and also in figures and there is
a discrepancy between the two, the sum denoted by the words is the sum payable.
Statement II. Where there is a conflict between the written and printed provisions of the
instrument, the printed provisions prevail.
a. Both statements are true.
b. Both statements are false.
c. Statement I is true, Statement II is false.
d. Statement I is false, Statement II is true.

16. A promissory note is indorsed to C who has knowledge of the illegal consideration
between A, maker and B, payee. Later C negotiates the note to D under circumstances
which would make D a holder in due course. D in turn indorses it to E and E back to C.
Which is correct?
a. C can be considered a holder in due course because he derived his title from E
b. C cannot be considered a holder in due course
c. D, E and C are all holders in due course
d. C can collect either from A or B but not from D and E

17. In case of a qualified indorsement, which is not correct?


a. Constitutes the indorser a mere assignor of the title to the instrument
b. It does not impair the negotiable character of the instrument
c. The qualified indorser is not liable if the maker is insolvent
d. At the time of his indorsement, the instrument is valid and subsisting
18. A delivers a promissory note to B for P3,000. B increases the amount to P8,000 and
indorses the note to C and by C to D. D took the note for value and satisfied the
requirements of the holder in due course. Which is correct?
a. D can recover P8,000 from either A, B, or C
b. D can recover P3,000 from A and P5,000 from C
c. D can recover from A because of the alteration but he may recover from either B
or C
d. D can recover P8,000 from A not from C

19. Presentment for acceptance of a bill of exchange is not necessary:


a. Where the bill is payable after sight;
b. Where the bill is drawn payable elsewhere than at the residence or place of
business of the drawee
c. Where it is payable at a certain number of days after date
d. Answer not given

20. “Pay to Maria Ramos, notice of dishonor waived” is an example of?


a. Special endorsement
b. Facultative endorsement
c. Qualified endorsement
d. Restrictive endorsement

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