1. In no case will be the delivery of a check produce the effect of payment.

2. The drawee is the party primarily liable in a bill of exchange.

3. Acceptance of a bill of exchange is important in the determination of its negotiability.
4. An instrument which contains an order or promise to do any act in addition to the payment of money is still negotiable.
5. When an instrument is issued, accepted when it is already due, it is still negotiable with respect to all parties thereto.
6. An instrument that is payable to the order of the bearer is a bearer instrument.
7. An instrument payable in a foreign currency is non-negotiable.
8. A promissory note that gives the maker an election to give something in lieu of the payment of money is still negotiable.
9. A negotiable instrument cannot be assigned.
10. An instrument payable to bearer cannot be negotiated by indorsement and delivery.
11. A negotiable instrument may be negotiated to two or more persons severally.
12. All types of restrictive indorsements will discharge the instrument.
13. To be a holder in due course, one is required to make inquiry as to an infirmity in an instrument and defect in the holders
title.
14. A possessor of a check payable to the order of a different person is not a holder in due course.
15. Where an instrument payable on demand is negotiated on an unreasonable length of time after its issue, the holder thereof
may still be a holder in due course.

1. What are the legal consequences of a negotiation as distinguished from assignment of a negotiable instrument?
2. If a check is payable to the order of CASH, is it necessary for the drawee bank to require the holder to identify himself?
3. What will be the effect if a person accepts an instrument who claims to be acting as an agent but did not disclose his
principal?
4. May a person who was not the author of the forgery be liable for any loss caused by the forgery of a signature therein?
5. Where a drawee bank pays a check on which an indorsement has been forged, can it charge the drawers account for the
amount of the check?
6. What is the nature of the relationship between an accommodation party and the accommodated party in the accommodation
instrument?
7. In general, what constitutes material alteration of a negotiable instrument?
8. If an instrument is dishonored by non-payment what will be the effect on the persons who were originally secondarily liable?
9. What will be the effect if a depositor is using its own check and fails to provide adequate security measures to prevent
forgery?
10. Does the alteration of the checks serial number constitute material alteration?

A. M the maker issued a promissory note payable to the order of P. X fraudulently obtained the note from P and he (X)
negotiated it to H a holder in due course. Can H enforce the note against M? Reasons?


B. A, B and C signed a promissory note in favor of X wherein it stated We promise to pay X or order the sum of TEN
THOUSAND (P10,000) PESOS, on November 26, 2012. When the note became due, X sued A and B who put up the
defense that X should have impleaded C in said action. Is the defense valid? Why or why not?


C. David drew a check payable to the order of Pablo, with BPI as the drawee bank. Before David could deliver the check to
Pablo, it was fraudulently obtained by Toto who deposited the check to BDO the collecting bank. BDO indorsed the check to
BPI and was able to collect the amount of the check. Then, Toto withdrew from BDO the proceeds of the checks and
disappeared. Discuss the rights and/or liabilities of the parties stating your reasons therefor.