Capítulo 5 Resultados
5.3 Efectos de las transferencias gubernamentales sobre la recaudación de otros impuestos:
Applicability of the Negotiable Instruments Law Function and importance of negotiable instruments Characteristics or Features of negotiable instruments Common forms of negotiable instruments
Instruments with limited negotiability Form and Interpretation
Formal requirements of negotiability in general Negotiable instrument defined
Formal requirements explained Non-negotiable instrument defined Promissory note defined
Original parties to a promissory note Bill of exchange defined
Original parties to a bill of exchange Theory of a bill of exchange Certainty of sum payable Sum to be paid with interest
50. B received an instrument from A on March 31, 2000. How much can B collect on April 30, 2000. “Pay to order amount only five thousand pesos (P5,000) with 12% interest.”
A. P5,000 plus 30 – day interest
B. B cannot collect because the instrument is defective C. P5,000 only
D. P5,000 plus interest
Sum to be paid by stated installments
Sum to be paid by stated installments with acceleration clause Sum to be paid with exchange
Exchange applicable only to foreign bills
Sum to be paid with costs of collection or an attorney’s fee When promissory note contains a promise to pay
When bill of exchange contains an order to pay
Indication of a particular fund out of which reimbursements is to be made
49. 1st Statement: An order or promise to pay is unconditional though coupled with an indication of
particular fund out of which reimbursement is to be made, or particular account to be debited with the amount.
2nd Statement: An order or promise to pay out a particular fund is not unconditional.
A. B. C. D.
1st Statement True False True False
2nd Statement True False False True
Indication of a particular account to be debited with the amount Statement of transaction which gives rise to instrument Certainty of time of payment
Acts in addition to payment of money Effect of omission of date
Effect of omission of value Effect of omission of place Effect of presence of seal
Effect of particular kind of current money payable When instrument payable on demand
When instrument payable to order
Effect where payee not named or described When instrument payable to bearer Substance criterion of negotiability Presumption as to date
Date on instruments payable at a fixed future date Date in instruments payable on demand
Meaning of ante-dating and post-dating Effect of ante-dating and post-dating When date may be inserted
Effect of insertion of wrong date
Steps in issuance of negotiable instrument Application of Section 14, 15 and 16
Rules where instrument incomplete but delivered Rules where instrument incomplete and undelivered
Rules where instrument mechanically compute by undelivered Rules of construction in case of ambiguity or omission
Persons liable on an instrument; Signing in a trade or assumed name Signature by an authorized agent
27. A promissory note is signed in behalf of the principal by an agent as follows: Juan dela Cruz
Per Procuration: Manuel S. Canet This operates as notice that the agent has:
A. Unlimited authority to sign for and in behalf of the principal
B. A limited authority to sign, and the principal is bound only in case the agent in so signing noted within the actual limits of his authority
C. A limited authority to sign, but the principal is bound even in case the agent in so signing acted outside the actual limits of his authority
D. Answer not given
When agent may escape personal liability
Use of descriptive words without disclosure of principal Meaning of procuration; Effect of signature by procuration
Effect of endorsement by a minor; Effect of endorsement by a corporation
Forgery explained Application of Section 23; Cases of forgery in general; Extent of the effect of forgery; Exceptions to the general rule; Persons precluded from setting up the defense of forgery; Rights of parties in cases of forged endorsements
Non-negotiable Instruments
Examples of Negotiable Instruments
26. B bought a used cellphone from S. S preferred cash but B is a friend so S accepted B’s promissory note for P10,000.00. S thought of converting the note into cash by indorsing it to his brother X. The promissory note is a piece of paper with the following hand-printed notation: “B WILL PAY S OR HOLDER TEN THOUSAND PESOS IN PAYMENT FOR HIS CELLPHONE 1 WEEK FROM TODAY”. Below this notation is B’s signature with “8/1/00” next to it, indicating the date of the promissory note. When S presented B’s note to X, the latter said it was not a negotiable instrument under the law and so could not be a valid substitute for cash. Which of the following statements is correct?
A. The instrument is non-negotiable because it is not sign by the maker.
B. The instrument is non-negotiable because the cause or consideration paid is not stated in the instrument.
C. The instrument is negotiable because the requisites of negotiability are present. D. The instrument is non-negotiable because it is not payable to order or bearer Examples of Non-negotiable Instruments
45. Item No1: "To X: Pay to P on demand the amount of P5.000.00 and reimburse yourself from the proceeds of the sale of my car which is still in your possession. "Sgd.: Drawer"
Item No. 2: "I promise to pay X the amount of P5.000.00 on demand." Sgd.: M.
A. B. C. D.
Item No. 1 Negotiable Non-negotiable Non-negotiable Negotiable Item No. 2 Negotiable Non-negotiable Negotiable Non-negotiable
46. Which of the following examples is not negotiable?
A. “To X: PLEASE pay to the order of Y P5,000.00 on demand. “Sgd.: D
B. “To X: Pay to the order of yourself the amount of P50,000 in two EQUAL MONTHLY INSTALLMENTS beginning May 31, 2002. “ Sgd.: D
C. Pay to P or bearer the amount of P50,000 on June 25, 2002 or deliver to him ten (10) pigs AT HIS ELECTION.” Sgd.: D
D. “I promise to pay X or order P5,000 AS SOON AS I HAVE MONEY.” Sgd.: M
51. “I promise to pay to the order of Pedro San Pedro only the sum of $10,000.” (Sgd.) M. The words “Pedro San Pedro only” are written in the handwriting of M. The instrument is
A. Negotiable, convert dollars into legal tender
B. Non-negotiable, because the instrument is payable in dollars C. Non-negotiable, indorsement is restrictive
D. Non-negotiable, payable only to a specified person.
52. 1st Statement: “I promise to pay B the sum of P20,000, three (3) days from date,” Sgd. A (The
instrument is not dated)
2nd Statement: “I promise to pay to the order of B or C the sum of P50,000. Sgd. A.
A. Both are negotiable B. Both are not-negotiable
C. First is not negotiable while second is negotiable D. First is negotiable while second is not
Consideration
Meaning of consideration in general; Presumption of consideration Adequacy of consideration; Antecedent or pre-existing debt What constitutes holder of value
Where a holder has lien on instrument
Meaning of absence or want of consideration; Meaning of failure of consideration Liability of accommodation party
Meaning of “without receiving value therefore” Kinds of accommodation party
Accommodation party and regular party distinguished Negotiation
Meaning of negotiation Methods of negotiation
Payment of instrument by drawee not negotiation; Meaning of assignment
Negotiation and assignment distinguished Can there be a negotiation to a payee? Endorsements
Meaning and nature of endorsement; Form of endorsement; Place of endorsement Endorsement must be of entire instrument
Endorsement to two or more indorsees severally When partial endorsement is allowed
Special endorsement and Blank endorsement
Conversion of blank endorsement to special endorsement
Restrictive endorsement, Effect of absence of words of negotiability Rights of indorsee in restrictive endorsement
Qualified endorsement and its effect
Conditional and absolute endorsements; Different combinations of endorsements
30. M, maker, P payee. Instrument is indorsed to “pay A, if he passes the CPA exams”. Which of the following is incorrect?
A. The conditional indorsement will not affect the negotiability of the instrument B. Before the release of the result of the exams M may pay the holder
C. Before the result of the exams, M may refuse to pay the holder because the condition is not yet fulfilled
D. None of the above
53. Identify the following indorsement “Pay to A, without recourse” Sgd. P
A. Qualified C. Special Qualified indorsement
B. Blank D. Qualified restrictive
54. Identify the following indorsement.
“Pay to A if he completes work today, without recourse,” Signed P. A. Qualified indorsement
B. Special and qualified indorsement C. Restrictive and qualified
D. Special, conditional and qualified endorsement
55. 1st Statement: Where a negotiable instrument is indorsed conditionally, the person liable on the
2nd Statement: An instrument which is negotiable in origin continues to be negotiable unless
restrictively indorsed or discharged by payment.
A. B. C. D.
1st Statement True False True False
2nd Statement True False False True
28. This instrument was written on the negotiable instrument itself: “Pay to Juan San Juan, or order, provided he passes the CPA examination 2003. Sgd. Pedro San Pedro.” This kind of indorsement is called
A. Conditional indorsement C. Special indorsement B. Restrictively indorsement D. Combination of A and C
Effect of special endorsement where instrument originally payable to bearer; Application of Sec. 40 Endorsement where instrument payable to two or more payees or indorsees; When joint endorsement by all payees or indorsees not required
63. One of the following indorsement is a valid negotiation A. Pay to A P6,000 (amount of the instrument is P10,000)
B. Pay to A P7,000 and to B, the balance (amount of the note is P10,000) C. Pay to A P8,000 out of the amount of P10,000 of this note
D. Pay to A and B P10,000
Endorsement where instrument drawn or indorsed to a person as cashier Endorsement where name misspelled, etc.
Endorsement in representation capacity Presumption as to time of endorsement Presumption as to place of endorsement
Continuation of negotiable character of originally negotiable instrument When holder may strike out endorsement
Effect of transfer without endorsement; Effect of endorsement after transfer
51. C issues a bill payable to the order of R. Later R without endorsing the bill transfer for a consideration said bill to M. The following, except one, are the valid effects of the transfer A. M becomes a holder
B. M acquires the right to have the endorsement of R C. The transfer vests in M such title as R had thereon D. The bill is merely assigned and not negotiated. Right of prior party to negotiate; Limitations on negotiation Comprehensive
29. Negotiable instruments; effects of indorsement 1. Pay to A P6,000 and B P4,000
2. Pay to A and B P10,000
A. Both indorsement are valid C. Both are invalid
B. No. 1 is valid; No. 2 is invalid D. No. 1 is invalid; No. 2 is valid
58. M makes a negotiable note in favor of P payable on December 25, 1997, with the following successive indorsements. P to A, A to B, B to C, C to D. On the due date M is paying D, but D extends the payment up to December 25, 1998. Which of the following is incorrect.
A. If M become insolvent on December 25, 1998, P, A, B, C are discharged of their obligation B. “If the indorsers consented to the extension of time, and M become insolvent the
indorsers are still liable
C. If before the extension date, D cancels the signature of P as indorser, P, A, B, C and the instrument are discharged
D. None of the above
64. C issues a bill payable to the order of R. Later R without endorsing the bill transferred for a consideration said bill to M. The following except one is the valid effects of the transfer A. M becomes a holder
B. M acquires the right to have the endorsement of R C. The transfer vest in M such title as R had thereon D. The bill is merely assigned and not negotiated 47. One of the following indorsements is a valid negotiation
A. Pay to A P6.000 (amount of the instrument is P10,000)
B. Pay to A P7.000 and to B, the balance (amount of the note is P10,000) C. Pay to A P8.000 out of the amount of P10,000 of this note
D. Pay to A and B P10,000
48. Under the Negotiable Instrument Law, which of the following statements best describes the effect of a person endorsing a check "without recourse"?
A. The person has no liability to prior endorsers
B. The person makes no promise or guarantee of payment on dishonor C. The person gives no warranty protection to later transferees
D. The person converts the check into order paper.
31. Three of the following are requisites before a person is considered irregular or anomalous indorser. Which of the following is the exception?
A. Not a party to the instrument C. Signed the instrument in blank B. Person principally liable D. Signed the instrument before delivery 71. A issued a negotiable promissory note to the order of B for P10,000 payable after 30days after
date. Later B indorsed it to C. Then X stole the note from C, forged the signature of C and negotiated it to D, and D to E, E to F, the holder. On maturity of the note, which of the following statements is not correct and invalid?
A. F cannot collect from C because it was C’s signature which was forged B. F cannot collect from A because A cannot put up forgery as his defense
C. F can collect from either D or E, because their signatures are genuine and the note is operative against them
D. F cannot collect from B because B is a party prior to the forgery
35. “A” issued a promissory note payable to “B” or bearer. “A” delivered the note to “B”. “B” indorsed the note to “C”. “C” placed the note in his drawer, which was stolen by the janitor “X”. “X” indorsed the note to “D” by forging “C’s” signature. “D” indorse the note to “E” who in turn delivered the note to “F”, a holder in due course, without indorsement. Which of the following statements is false.
A. A is liable to F despite the forgery committed because F is a holder in due course B. B is liable to F because as an indorser he warrants that the instrument is genuine
C. C cannot set up forgery because the instrument is payable to bearer negotiable only by delivery, the forged signature of “X” is not necessary.
D. C can set up the defense of forgery because his signature is forged by X.
Rights of the Holder
Rights of holder in general; Right of transferee of unindorsed instrument
What constitutes a holder in due course; Payee as holder in due course; Drawee as holder in due course; Instrument complete and regular upon its face; Holder without notice of dishonor; Holder in good faith; Holder for value; Holder without notice of infirmity of instrument or defect of title
65. When is a person holder in due course? (Which is false) A. Complete and regular upon its face
B. He became holder of it after it is overdue C. He acquired it in good faith and for value D. If no notice of defect and infirmity
66. Under the Negotiable Instrument Law, which of the following requirements must be met for a transferee of order paper to become a holder?
I. Transferee in possession of the note
II. Indorsement of transferor and delivery to the transferee
A. I only C. Both I and II
B. II only D. Neither I and II
67. The value requirement in determining whether a person is a holder in due course with respect to a check will not be satisfied by the taking of the check
A. As security for an obligation to the extent of the obligation B. As payment for an antecedent debt
C. In exchange for another negotiable instrument
D. In exchange for a promise to perform services in the future
61. Under the Negotiable Instrument Law which of the following requirements must be met for a person to be a holder in due course of a promissory note?
A. The note must be payable to bearer
B. All prior holders must have been holders in due course C. The holder must be the payee of the note
D. None of the above
53. M issued and delivered to P or order a blank promissory note with a specific instruction that the latter must fill it up for a maximum of P10,000. Upon receipt thereof, P completed the instrument by putting P100,000 as the sum payable and properly indorsed it to A who qualifies as a holder in due course. At maturity, which statement is correct?
A. A can get from M P10,000 only as this was the instruction or authority given by M to P. B. A can get the entire P100,000.00 as this was the amount originally appearing on the face
of the instrument
C. The instrument is invalidated in the hands of A as the same was not completed in accordance with the strict authority of M
D. A gets nothing
Holder in due course in instrument payable on demand Effect of notice before full payment
When title of a person defective
What constitutes notice of infirmity or defect
Rights of a holder in due course; Real defenses available against a holder in due course Comprehensive
59. Holder H altered the amount of a negotiable note from P10,000 to P110,000 then negotiated to note to P.
A. If P is a holder in due course, he can require the maker to pay P110,000
B. If P is not a holder in due course, he can require the maker to pay only the original sum of P10,000
C. P cannot require the maker to pay because of forgery whether or not he is a holder in due course
D. P can require the maker to pay P10,000 if P is a holder in due course
70. M issued and delivered to P or order a promissory note which was complete in all its details and the amount was for P10,000.00 which the payee P altered to P100,000.00. What will be the correct statement?
A. A, at maturity, can get from M P10,000 only as this was the original tenor of the instrument B. A can get the entire P100,000 as this was the amount originally appearing on the face of
the instrument
C. The instrument is validated in the hands of A as the same was not completed in accordance with the strict authority of M
D. A gets nothing
62. 1st Statement: A holder for value is an endorsee who has both the legal title and the beneficial
interest to the instrument and is subject to both real and personal defenses available against him.
2nd Statement: A holder in due course is one who possesses both the legal and beneficial
interest to the instrument but is subject to personal defenses.
A. B. C. D.
1st Statement False False True True
2nd Statement False True True False
Defense in general
Fraud in factum and fraud in inducement distinguished Rights of holder not in due course
Rights of purchaser from a holder in due course When holder presumed a holder in due course Liabilities of Parties
Classification of parties according to liability Primary party and secondary party distinguished Liability of maker
Liability of drawer; Drawer distinguished from maker
Liability of acceptor; Liability depends on tenor of acceptance; Warranties of the acceptor 64. Which is not correct? The acceptor by accepting the instrument.
A. Admits the existence of the drawer, the genuineness of signature and his capacity and authority to draw the instrument
B. Admits the existence of the payee and his capacity to indorse C. Engages that he will pay it according to the tenor of his acceptance
D. Admits the existence of the indorser, the genuineness of his signature and his capacity and authority to draw the instrument
When person deemed an indorser; When a person liable as guarantor or surety
When a person an irregular or anomalous indorser; Rules as to liability of irregular or anomalous indorser; Warranties of irregular indorser
Negotiation by delivery/qualified endorsement; Liability of one negotiating by delivery and of qualified indorser; Sale of public or corporate securities
57. In case of 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 marker is insolvent
D. At the time of his indorsement, the instrument is valid and subsisting
56. Every person negotiating an instrument by delivery or by qualified indorsement warrants the following. Which does not belong to the warranties?
A. That at the time of his indorsement the instrument is valid and subsisting B. That the instrument is genuine and in all respect what it purports to be C. That he has good title to it and that all prior parties and capacity to contract