2003 BAR QUESTIONS AND SUGGESTED ANSWERS

QUESTION 1

A bank issues its own check. May the holder hold the bank liable thereunder if he fails to –

- prove presentment for payment, or

- present the bill to the drawee for acceptance?

Explain your answers. (4%)

ANSWER:
Yes, if such check is issued by the bank in its capacity as a drawer, the bank is liable under Negotiable
Instrument Law (III. Negotiation Section 42) whereas it expressly provide that if an instrument is drawn or
indorsed to a person as “cashier” or other fiscal officer of a bank or corporation, it is deemed prima facie
to be payable to the bank or corporation of which he is such officer, and may be negotiated by either the
indorsement of the bank or corporation or the indorsement of the officer.

QUESTION 2

Susan Kawada borrowed P500,000 from XYZ Bank which required her, together with Rose Reyes who did
not receive any amount from the bank, to execute a promissory note payable to the bank, or its order on
stated maturities. The note was executed as so agreed. What kind of liability was incurred by Rose, that
of an accommodation party or that of a solidary debtor?

Explain. (4%)

ANSWER:
Rose may be held liable as an accommodation party. Absence of consideration is in the nature of
accommodation. Defense of absence of consideration cannot be validly interposed by accommodation
party against a holder in due course.

QUESTION 3

Juan Sy purchased from “A” Appliance Center one generator set on installment with chattel mortgage in
favor of the vendor. After getting hold of the generator set, Juan Sy immediately sold it without consent
of the vendor. Juan Sy was criminally charged of estafa.

To settle the case extra judicially, Juan Sy paid the sum of P20,000 and for the balance of P5,000.00 he
executed a promissory note for said amount with Ben Lopez as an accommodation party. Juan Sy failed
to pay the balance.

1) What is the liability of Ben Lopez as an accommodation party? Explain.

 2) What is the liability of Juan Sy?

ANSWER:

1) Ben Lopez, as an accommodation party, is liable as maker to the holder up to the sum of P5,000
even if he did not receive any consideration for the promissory note. This is the nature of
accommodation. But Ben Lopez can ask for reimbursement from Juan Sy, the accommodation
party.

2) Juan Sy is liable to the extent of P5,000 in the hands of a holder in due course (Sec 14 NIL). If Ben
Lopez paid the promissory note, Juan Sy has the obligation to reimburse Ben Lopez for the amount
paid. If Juan Sy pays directly to the holder of the promissory note, or he pays Ben Lopez for the
reimbursement of the payment by the latter to the holder, the instrument is discharged.