1.

What is the effect of an indication of a particular fund out of which

reimbursement is to be made. Pursuant to Sec. 3 of the NIL, an indication of a
particular fund out of which reimbursement is to be made would still constitute an
unconditional promise.

2. What is the effect if a non-negotiable instrument is assigned? If a non-negotiable

instrument is assigned, the assignee merely steps into the shoes of the assignor and
merely acquires whatever rights the assignor may have. The assignee can never be a
holder in due course and just takes the instrument subject to the defenses obtaining
among the original parties.

3. Are withdrawal slips negotiable? No. They are merely evidence of withdrawing
from a certain account. According to Firestone Tire & Rubber Co. vs. CA, withdrawal
slips are not negotiable because the essence of negotiability which characterizes a
negotiable paper as a credit instrument lies in its freedom to circulate freely as a
credit instrument and as substitute for money is lacking.

4. What is the effect if a check is made payable to the order of “cash”? If a check is
made payable to the order of cash, then it can be negotiated to anyone by mere
delivery and any person can negotiate and encash such check. As per par d of Sec. 9,
the instrument is payable to bearer when the name of the payee does not purport to
be the name of any person. Moreover, according to the case of Ang Tek Lian vs. CA, a
check that is payable to cash is payable to bearer.

5. What is the effect of an incomplete and undelivered instrument? Sec. 15 says that
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 before delivery.

6. What is the effect of an acceptance by an alleged agent who did not disclose his
principal? An agent who did not disclose his principal will not be exempt from
personal liability. Sec. 20.

7. In a forged signature, who may raise such forgery as a defense? Under the law,
forgery may be raised by the person whose signature was forged or made without
his authority.

8. Can a collecting bank deny its liability? No. According to ECBC s. BDO, a collecting
bank cannot deny liability as it generally suffers the loss because it has the duty to
ascertain the genuineness of all prior endorsed considering that the act of
presenting the check for payment to the drawee is an assertion that the party
making the presentment has done its duty to ascertain the genuineness of the
documents.

9. What are the rules and exceptions, if a drawer bank pays a check on which an
indorsement has been forged? As a general rule, drawee bank cannot debit the
drawer’s account and loss shall be borne by the drawee bank. The exceptions are
when there was no negligence on the part of the drawee, and when it was not
established that checks containing forged instruments passed through the collecting
banks.

10. Does the mere fact that forgery was committed by a drawer-payor’s confidential
employee/agent entitle the bank to shift the loss to the drawer-payor?

11. What is the effect if the secretary of the drawer, to whom the checks were
entrusted, forged the signature of the drawer? State the rule and exception, if any.
As a general rule, when a signature is forged or made without the authority of a
person whose signature it purports to be, it is wholly inoperative, except in the case
of Ramon Illusorio s. CA wherein the drawer’s negligence was considered the
proximate cause of his loss because he entrusted his bank checks and credit cards to
his secretary.

12. In general, when is there material alteration? As per Sec. 125, there is material
alteration when any alteration changes: a) The date; b) The sum payable, either ofr
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.

13. What are the rights of a solidary accommodation maker, who made payment
against his co-accommodation makers? A solidary accommodation party may seek
reimbursement from an accommodated party or other accommodation parties. Also,
he has a right to contribution from other accommodation parties.

14. Is a holder to be a holder in due course required to make inquiries relative to the
instrument before taking it? State the rule and exception, if any.

15. Does an indorser’s acquittal from criminal liability extinguish civil liability?

16. If the drawee bank refuses to pay a check, can the payee-holder sue the bank?

17. What is the effect if a check is cleared and credited to the account of the
creditor?

18. What is a Manager’s Check? A check drawn by a manager bank in the name of
the bank itself payable to a third person. It is similar to the cashier’s check as to the
effect and use.

19. What are the effects of crossing a check?

a) It may not be encashed, but may only be deposited in the bank.
b) It may be negotiated only once – to one who has an account with the bank.
 c) It seres as a warning to the holder that the check has been issued for a
definite purpose so that he must inquire if he receied the check pursuant to
that purpose; otherwise, he is not a holder in due course. ( Go vs.
Metropolitan Bank and Trust Co.)

20. What is the effect if the check is ceritfied?

Sec. 187 says that where a check is certified by the bank on which it is drawn, the
certification is equivalent to an acceptance. Sec 188 says that where the holder of a
check procures it to be accepted or certified, the drawer and all indorsers are
discharged from liability thereon.

21. Can Sec 66 of NIL be used by the party who introduced defects in the
instrument?

22. Is there a valid indorsement if what was transferred was only a part of the
amount payable? No. Under the NIL, an indorsement must be of the entire
instrument. To transfer a part only of the amount payable does not operate as a
negotiation of the instrument.

23. Is presentment necessary to charge parties to the instrument liable? Sec. 70

provides that presentment for payment is not necessary in order to charge the
person primarily liable on the instrument. However, presentment is necessary to
charge persons who are secondarily liable.

24. Is it always necessary to give the drawer a notice of dishonor to make him liable?
State the rule and exceptions.

25. What is the difference between Sections 119 and 120 of the NIL? Sec. 119 refers
to acts that pertain to the principal debtor and that which discharge the instrument.
On the other hand, Sec. 120 refers to acts that pertain to those who are secondarily
liable on the instrument.

26. Differentiate a negotiable document from a negotiable instrument. ???

27. Distinguish fraud in factum from fraud in inducement. Fraud in factum is a real
defense. Here, the person who signs the instrument lacks knowledge of the
character or essential terms on the instrument. On the other hand, fraud in
inducement is a personal defense. Here, the person who signs the instrument
intends to sign the same as a negotiable instrument but was induced to do so only
by fraud; his consent to issue a negotiable instrument was vitiated by fraud.

28. What is the effect of an indorsement which transfers to the indorsee a part only
of the amount payable on the instrument? Pursuant to Sec. 32, such does not
operate as a negotiation of the instrument. The indorsement is not valid. Therefore,
what transpires is merely an assignment.
29. What constitutes notice of an infirmity in the instrument? Pursuant to Sec. 56, To
constitute notice of infirmity, the person to whom it is negotiated must have had
actual knowledge of the infirmity or defect, or knowledge of such facts that his
action in taking the instrument amounted to bad faith.

30. What is the effect of a notice of dishonor given by or on behalf of the holder?
Pursuant to Sec. 92, Where notice is given by or on behalf of the holder, it inures to
the benefit of all subsequent holders and all prior parties who have a right of
recourse against the party to whom it is given.

“May 17 items yung part 1 na worth 50 pts. Eto naalala ko”:

PARANG SAME LANG TO NG NASA TAAS KAYA DI KO NA SINAGUTAN 

-what is the effect when an instrument is payable to "cash" (Ang Tek Lian to)
- when is there material alteration? 2pts -what is material alteration? 6pts
-what is acceptance according to the NIL
-what is a stale check
-what is a certified check or the effect of a certified check ata
-what is a manager's check? (International corporate bank v. Spouses gueco)
-fraud in factum v. Fraud in inducement
-negotiable document v. Negotiable instrument
-can an indorser indorse a part of the amount of the instrument?
-effect of crossed check

“Tapos yung part 2, meron 3 major problems:”

I: M made a promissory note (P1000) payable to P on Dec. 15, 2016. P negotiated it

to A, who changed it to P71000 and negotiated it to B, B to C, who knew about the
alteration and C to D. On Dec. 16, 2016, D presented the note for payment. 1:if not M,
who can D enforce payment against 2: how much can D collect from M

II: I promise to pay P5000 to the King of Atlantis or his order. Mr. Rugas sgd To:
Queen of Mars, Uranus Ave Mr. Rugas delivered the note to Ms. Co, and for some
reason it went to the hands of Mr. Andy Lim (a blind person). Mr. Lim enforced
payment on Mr. Rugas. 1: is the instrument a bill of exchange, check or promissory
note? 2: if you were the lawyer of Mr. Rugas, what advice would you give him? 3: if
you were the lawyer of Mr. Lim, what advice would you give him? 4: if you were the
judge, how would you discuss the case?

III: Draco made a bill of exchange payable to Papu, addressed to Duey. Papu idorsed
it to Al, Al to Ben, Ben to Chitchit, Chitchit to D, D to Ems, Ems to Fifi. Fifi presented
the instrument to Duey for payment but Duey dishonored the same. Basta nagbigay
ng mga notice of dishonor tapos si Al and Ems and Draco hindi nabigyan. 1: is there
payment in due course 2: who can Fifi enforce payment to?

“Bonus- bedan hymn”