NEGOTIABLE INSTRUMENTS LAW (LAW 4) MIDTERM EXAM

True or False. Write True if the statement is true, and False only if the
statement is false. (60 points).
1. An instrument to be negotiable does not have to be in writing.
2. ‘Pay to Georgina P 10,000.00’ (Sgd. Fatima) is a negotiable instrument.
3. ‘Pay to Judith P 5 million from my monthly salary from the Commission
on Elections.’ (Sgd. Hetty) is a negotiable instrument.
4. An endorsement is a writing of the amount to be paid.
5. Georgina wrote a promissory note using a Kit Kat wrapper. Nelly claims
this is not a negotiable instrument. Is she correct?
6. According to the Negotiable Instruments Law, a sum payable is a sum
certain within the meaning of the Act even though it is paid by an
installment that need not be stated.
7. According to the Negotiable Instruments Law, a sum payable is a sum
certain within the meaning of the Act even though it is paid with a
stipulation that the amount can be paid from the maker/ drawer’s earnings
from the lottery should he win.
8. An instrument which contains an order or promise to do any act in
addition to the payment of money is negotiable.
9. The negotiable character of an instrument is affected by a provision that
authorizes the sale of collateral securities in case the instrument be not
paid at maturity.
10. The negotiable character of an instrument is affected by a provision that
waives the benefit of any law intended for the advantage or protection of
the obligor.
11. The negotiable character of an instrument is not affected by a provision
that gives the holder an election to require something to be done in lieu of
payment of money.
12. The validity and negotiable character of an instrument are not affected
by the fact that it is not dated.
13. The validity and negotiable character of an instrument are not affected
by the fact that it does not specify the place where it is drawn or the place
where it is payable.
14. The validity and negotiable character of an instrument are not affected
by the fact that it designates a particular kind of current money in which
payment is to be made.
15. For an instrument to be negotiable, it must contain an unconditional
promise or order to pay a sum certain in money.
NEGOTIABLE INSTRUMENTS LAW (LAW 4) MIDTERM EXAM

16. For an instrument to be negotiable, it must be in writing and signed by

the maker or the drawer.
17. For an instrument to be negotiable, it must be payable to order or to
bearer.
18. For an instrument to be negotiable, it must state the drawee’s name or
indicated therein with reasonable certainty (if a bill of exchange).
19. The instrument is payable to order where it is drawn payable to the
order of a specified person or to him or his order.
20. In an instrument payable to order, the instrument may be drawn
payable to the order of a payee who is not maker, drawer or drawee.
21. ‘Pay to the order of Regine Velasquez P 100 Million if she loses her
voice.’ (Sgd. Johnny Manahan). This is a negotiable instrument.
22. ‘Pay to the order of Ogie Alcasid P 5 Million if he transfers back to
GMA.’ (Sgd. Annette Gozon).
23. The instrument is payable to bearer when it is expressed to be payable
to Kylie Jenner or order.
24. The instrument is not invalid for the reason only that it is ante-dated or
post-dated, despite whatever purpose it may serve.
25. Where an instrument expressed to be payable at a fixed period after
date is issued undated, or where the acceptance of an instrument payable
at a fixed period after sight is undated, it is illegal for any holder may insert
therein the true date of issue or acceptance.
26. Where the instrument is wanting in any material particular, the person
in possession thereof has a prima facie authority to complete it by filling up
the blanks therein and he can enforce it in whatever way he wants to.
27. The Negotiable Instruments Law was established in 1989.
28. Where an incomplete instrument has not been delivered, it will not, if
completed and negotiated without authority, be a valid contract in the
hands of any holder, as against any person whose signature was placed
thereon after delivery.
29. Where the instrument is not dated, it will be considered to be a non-
negotiable instrument.
30. Where a signature is so placed upon the instrument that it is not clear in
what capacity the person making the same intended to sign, he is to be
deemed a holder in due course.

Essay Questions. Write your answer in full in legible English

explaining why in each case in accordance with the law and what you
NEGOTIABLE INSTRUMENTS LAW (LAW 4) MIDTERM EXAM

learned in class. No need to cite the particular Section. But always

cite your basis.
1. Define the following: 1) a negotiable promissory note; 2) a bill of
exchange and 3) a check. (5 points).

2. Indicate and explain whether the promissory note is negotiable or non-

negotiable. Explain why. (10 points).
(A) I promise to pay A or bearer PHP 100,000.00 from my inheritance which
I will get after the death of my father.
(B) I promise to pay A or bearer PHP 4 million from my salary at the Bureau
of Internal Revenue.
(C) I promise to pay A or bearer the sum of PHP 100,000 if A passes the
2018 bar exams.
(D) I promise to pay A or bearer the sum of PHP 100 on or before December
30, 2018.
(E) I promise to pay A or bearer the sum of PHP 100,000. (Sgd. Britney
Spears).

3. Margaret is the agent of Bella with power to sell goods and collect
accounts for Bella. As such, she comes into possession of a check with Bella
as the payee. Margaret indorses and cashes the check. Bella, however,
delays in complaining to the collecting bank for three (3) years. May Bella
still recover from the collecting bank? (5 points).

4. Kyle makes a note, making it appear that Janet is the maker thereof, by
forging Janet’s signature. Kyle makes himself as the payee. Thereafter, he
endorses the note to Constantine, a holder in due course. Can Constantine
enforce the note against Janet? (5 points).

5. Solenn is the wife of Nico. She goes off to Bali for a holiday and leaves
her check book on her desk. Nico needs to pay the groceries and decides to
make one of the checks payable to himself so he can encash the same for
P 15,000.00 to buy groceries from SnR. Solenn decides to sue Nico. He
claims he was a holder in due course. What is a holder in due course? Can
Solenn sue him? Why or why not? (10 points).
NEGOTIABLE INSTRUMENTS LAW (LAW 4) MIDTERM EXAM

6. BONUS QUESTION. After learning what you have about the law, and
considering that you have the financial means to do so, would you like to try
your luck in law school in the future? Why or why not? (5 points).

END