NEGOTIN QUIZ #2

1. Explain whether or not the following instrument is negotiable?

P1,000.00 Manila, October 5, 1970

I acknowledge to have received from Jose Cruz one thousand pesos (P1,000.00) which I promise
to pay on demand or in five months from date with one percent interest per month payable within the first
five days of every month. If the interest is not paid when due, then both principal and interest shall become
due at the option of the holder.
(Sgd.) Pedro Garcia

2. Assuming that the above note were negotiable, how would the following additional stipulations affect its
negotiability?
a) “This note is given in consideration of a promise of Jose Cruz to fumigate against insects the posts of
my house at No. 9, Pasay Road, Makati.”
b) “At my option, his note may be redeemed with the payment of palay at the market price
prevailing when the note falls due.”

3. Give all the reasons you know why the following instrument is not negotiable:
February thirty first, 1959
I promise to pay Pedro Studios upon reaching the age of majority the sum of P100 or give him a
house, whichever he chooses, provided he does not stop studying up to that time.
(Sgd.) Jose Cruz

4a. When a negotiable instrument is so ambiguous that there is doubt whether it is a bill or a note, what is it?
4b. When a signature is so placed upon a negotiable instrument that it is not clear in what capacity the person
making the same intended to sign, what is his liability?

5. State whether the following instruments are negotiable or not. Explain your answer.
a) I promise to pay to the order of Ed US$4,000.00 10 days after the name(s) of all the lotto winner(s) for
the September 1997 draw shall have been determined.
(Sgd) Miguel
b) I promise to pay Leny or order the sum of P20,000.00 on demand. Leny shall have the option to receive
the payment in the form of gift certificates.
(Sgd) Tony
c) “I promise to pay to Jose Diaz or order P10,000.00 from my only BPI Savings Account which I hereby
guaranty to have sufficient funds.”

d) “Pay to Jose Diaz or bearer US$10,000.00 or a brand new Toyota Corolla XE car at the option of Jose
Diaz.”

6. a) Give the essential elements of a negotiable bill of exchange.

b) Explain what is meant by accumulation of secondary contracts as an attribute of negotiable instruments.

7. A, disbursing officer of the USAFFE, was the payee of a check of P100,000 issued to him in 1942. In 1944 he
sold P30,000.00 of the said check to B for P90,000.00 in Japanese military notes, of which only
P45,000.00 was paid. The writing made by A at the back of the check was an instruction to the bank to pay
P30,000.00 to B and to deposit the balance of P70,000.00 to his (A's) credit. Was the check legally negotiated
within the meaning of the Negotiable Instruments Law? Reasons. Explain.

8a. May a negotiable instrument initially issued as payable to order be converted into one payable to bearer?
Explain your answer.
8b. How about one initially issued as payable to bearer, may it be converted into one payable to order? Explain.

9. What circumstances must be presented to make one a holder in due course? Explain.

10. I promise to pay the order of B, P5,000 on December 1, 1982 (Sgd) A. Suppose B indorsed as follows:
Pay to C at your peril (Sgd) B
Can C further negotiate to D? Explain.