ANSWERS TO SAMPLEX 2013 TO 2014

I. TRUE OR FALSE 30%

1. TRUE In no case will be the delivery of a check produce the effect of payment
until it is encashed. Citing the provision of Civil Code Art. 1249
2. FALSE The drawee is not even a party to the bill of exchange, thus an acceptor
is. Until and unless accepted, the drawee acceptor shall be held primarily liable
3. FALSE Acceptance does not affect negotiability as it is not even provided for in
sec 1 of NIL
4. FALSE An instrument which contains an order or promise to do any act in
addition to the payment of money is not negotiable But also, bear in mind the
exceptions granted by Sec. 5 of the NIL.
5. TRUE Overdue instrument still negotiable. An overdue instrument is still
negotiable, and although (in the hands of one who neither is, nor makes title
through, a holder in due course) it is subject to defenses existing at the time of
transfer, it is certainly not "subject to the same defenses as if it were nonnegotiable. However, the same is presumed to have been dishonored.
6. FALSE payable to the order of bearer is still an order instrument.
TRUE it does not purport to be the name of any person
7. FALSE - Nothing in Sec. 1 of the NIL provides for the currency on which a bill or
note must conform with. What the law requires is that, it must be a sum certain in
money, regardless of whether or not the same is in PESO or DOLLAR or in any other
CURRENCY
8. FALSE the maker has no right to make such election, the payee has. Sec. 5 par.
D of NIL
9. FALSE - A negotiable instrument may be assigned *help di ko maexplain*
10. FALSE bearer instrument is negotiated by mere delivery. Indorsement thereof
is no longer necessary being a bearer instrument
11. FALSE Negotiable instruments must be negotiated as a whole, thus partial
(severally) indorsements are not allowed. But joint indorsements are allowed
provided that their signature is need to indorse the same.
12. FALSE Restrictive indorsement will not discharge the instrument *help*
13. TRUE Sec. 52
14. TRUE It is not complete and REGULAR on its face.
15. FALSE the instrument becomes overdue

II. Questions and Answers - 30%

1. A negotiable instrument may, however, instead of being negotiated, also be
assigned or transferred. The legal consequences of negotiation as distinguished
from assignment of a negotiable instrument are, of course, different. A nonnegotiable instrument may, obviously, not be negotiated; but it may be assigned or
transferred, absent an express prohibition against assignment or transfer written in
the face of the instrument:
Formalities:
Negotiation requires mere delivery of a bearer instrument and
endorsement and delivery of an order instrument to effectuate a transfer.
Assignment requires a written document signed by the transferor irrespective
of whether the instrument is a bearer or order one.
Notice of transfer:
In the case of assignment a notice of transfer of debt is required to be given
by the assignee to the debtor in order to complete his title. No such notice is
required to be given in the case of negotiation.
Consideration:
Consideration is always presumed in the case of transfer by negotiation,
whereas there is no such presumption in the case of transfer by assignment,
where the burden of proof of consideration lies upon the assignee.
From the foregoing differences it will be seen that the rights which the
transferee of a negotiable instrument by negotiation acquires are
substantially superior to those of an assignee under assignment, and it is for
this reason that the method of transfer by assignment is very rarely used
while transferring negotiable instruments.
2. The holder of the check that is payable to the order of CASH need not to identify
himself as it is merely an instrument that is payable to bearer.
3. He, as an agent will be the person that will be held primarily responsible for his
failure to disclose his principal
4. Yes. If he is an indorser. For he, gives his warranties as provided for by the law. He
secured that the instrument is genuine in all respects what it purports to be.
5. No. the drawee bank shall be held liable for the loss suffered for the bank may
have acted negligently in ascertaining the genuineness of the signature. Also, it is
also guaranteed by the warranties of the drawee bank that the existence of the

drawer , the genuineness of his signature and his then capacity to draw and
authority thereto.
6. ACCOMODATION PARTY: REQUISITES

One who has signed the instrument as maker, drawer, indorser, acceptor,
without receiving any value therefore and for the purpose of lending his name to
some other person

Requisites:
1. He must be a party to the instrument, signing as maker, acceptor, indorser, or
drawer
2. He must not receive any value therefore
3. He must sign for the purpose of lending his name or credit
RIGHTS AND LEGAL POSITION OF AN ACCOMODATION PARTY

The accomodation party is generally regarded as a surety for the party

accomodated

When the accomodation parties make payment to the holder of the notes,
they have the right to sue the accomodated party for reimbursement since
the relation between them is in effect that of a principal and sureties, the
accomodation parties being the sureties
ACCOMMODATED PARTY CANNOT RECOVER FROM ACCOMMODATING PARTY

Absence of consideration is a defense

In fact as between them, the understanding is that the accomodated party

either is to
1. To reimburse the amount which the accomodation party may be obliged to pay
2. To pay the instrument directly to the holder
LIABILITY OF THE ACCOMODATION PARTY

The accomodation party is liable on the instrument to a holder in value,

notwithstanding such holder at any time of the taking of the instrument knew
him to be only an accomodation party

The accomodation party doesn't receive any valuable consideration for the
instrument he signs but he is liable to a holder for value as if the contract wasn't for
accomodation
CORPORATIONS ARE
HOLDERS FOR VALUE

NOT

LIABLE

AS

ACCOMODATION

PARTIES

EVEN

TO

OFFICERS SIGNING FOR CORPORATION AS ACCOMODATION PARTY WITHOUT

AUTHORITY TO DO SO FOR THEIR INDIVIDUAL DEBTS OR TRANSACTIONS ARE
PERSONALLY LIABLE THEREON
HOLDER MUST OTHERWISE BE A HOLDER IN DUE COURSE
ACCOMODATION PARTY MAY ACCOMODATE ONE WHO IS NOT A PARTY TO THE
INSTRUMENT
ACCOMODATION PARTY CAN INTERPOSE DEFENSE OF WANT OF

CONSIDERATION AGAINST ONE NOT HOLDER IN DUE COURSE.

7. Sec. 125. What constitutes a material alteration. - Any alteration which
changes:
(a) The date;
(b) The sum payable, either for principal or interest;
(c) The time or place of payment:
(d) The number or the relations of the parties;
(e) The medium or currency in which payment is to be made;
(f) Or which adds a place of payment where no place of payment is specified,
or any other change or addition which alters the effect of the instrument in any
respect, is a material alteration.
8. They will be held liable in any order that the holder so desires.
9. He, as the drawer shall bear the loss. Samsung Case
10.