DIWA, WENCHIE R.

4AC01
1. Demand promissory note must be presented for payment a.
b.
c.
d.

Within a reasonable time after its issuance

Within a reasonable time after the last negotiation
Within a reasonable time after the last endorsement
All of the above

2. Which of the following is not negotiable?

a.
b.
c.
d.

I agree to pay to the order of X P1,000.00 ( sgd ) Y

Good to X or order P1,000.00 ( sgd ) Y
I promise to pay X or order P1,000.00 on January 25. ( sgd ) Y
I promise to pay X or order P1,000.00. ( sgd ) Y

3. Which of the following alterations is not material?

a.
b.
c.
d.

An alteration which changes the currency in which payment is to be made.

Alteration which adds a place of payment where no place of payment is specified.
An alteration which substitutes the word bearer for the word order
An alteration of the check number issued by the PNB San Jose City, N.E.

4. A certificate of stock is not negotiable because it lacks the requirement of a.

b.
c.
d.

The instrument must be in writing and signed by the maker or drawer

It must contain an unconditional promise or order to pay a sum certain in money
It must be payable on demand, or at a fixed or determinable future time
It must be payable to order or to bearer
5.

Which of the following is not warranted by a person negotiating an instrument by

delivery?
a.
b.
c.
d.

That at the time of his endorsement the instrument is valid and subsisting
That the instrument is genuine and in all respect what it purports to be
That he has good title to it and that all prior parties have capacity to contract
That he has no knowledge of any fact which would impair the validity of the
instrument or render it valueless

6. Alteration which changes the following shall be deemed to be material, except a. Date
b. Sum payable, either principal or interest
c. Time or place of payment

d. The check number

7. All are non-negotiable instruments except
a.
b.
c.
d.

Treasury warrant
Shares of stock
Bill of Lading
Memorandum check

8. Absence or failure of consideration is a matter of defense against any person

a.
b.
c.
d.

Holder in due course

Holder for value
Not a holder in due course
Holder of instrument

9. When is an instrument payable to bearer?

a.
b.
c.
d.

When the only or last indorsement is an indorsement in blank

When it is expressed to be so payable
When the name of the payee does not purport to be the name of any person
All of the above

10. The following are warranties of a qualified indorser except

a. Capacity of prior parties
b. Instrument is valid and subsisting
c. Good title
d. Instrument is genuine in all respect it purport to be
11. When presentment for acceptance of a bill is not necessary?
a. When the bill is payable after sight
b. When the bill is drawn payable elsewhere than at the residence or place of
business of the drawee
c. When it is payable at a certain number of days after date
d. When the note is restrictively indorse
12. A check which has not been presented for payment within a reasonable time after its
issuance is a
a.
b.
c.
d.

Certified check
Stale check
Cashiers check
Managers check

13. If the drawee destroys the bill

a.
b.
c.
d.

The bill is considered accepted

The bill is considered dishonored
The bill is discharged
The bill is cancelled

14. A feature or characteristic of a bill of exchange not found in a promissory note is

a.
b.
c.
d.

Promise to pay
Order to pay
Promise in writing to pay
Unconditional promise in writing

15. Which is an instrument payable to bearer?

a.
b.
c.
d.

Pay to bearer B, 10,000.00

Pay to B, the bearer, 10,000.00
Pay to possessor, 10,000.00
All of the above

16. An indorsement where the indorser adds the phrase without recourse is a
a.
b.
c.
d.

Blank indorsement
Restrictive indorsement
Qualified indorsement
Conditional indorsement

17. Which is an instrument payable to the order of the drawee?

a.
b.
c.
d.

Pay to yourself or order, 100.00

Pay to the order of ourselves, 100.00
I promise to pay myself or order, 100.00
All of the above

18. A fiduciary relationship exists between a bank and depositor where

a.
b.
c.
d.

Simple care and diligence is required

Extraordinary care and diligence is required
Highest degree of care and diligence is required
B and C

19. Which of the following issued and signed by Alexander is negotiable?

a.
b.

I promise to pay A or order P 100.00 if he will pass the Bar exams this year.
I promise to pay A or order P 100.00 10 days after the death of his dog Kinky.

c.
d.

I promise to pay A or order P 100.00 in two installments.

I promise to pay A P 100.00.

20. A promissory note is different from Bill of Exchange because

a.
b.
c.
d.

It contains an unconditional order;

The maker is primarily liable;
There are three parties in a promissory note;
The maker is the principal debtor.

21. An instrument which is originally negotiable ceases to be negotiable when

a. Qualifiedly indorsed
b. Restrictively indorsed
c.
Indorsed in blank
d.
Indorsed especially
22. In the renunciation of the holder of his rights against any party to the instrument,
which of the following statement is false?
a. If the instrument, is delivered to the person primarily liable without collecting, it
constitutes renunciation
b. If renunciation is made in favor of any party secondarily liable, all parties
subsequent to him are discharged from liability
c. Renunciation will not affect the rights of a holder in due course
d. If the renunciation is made in favor of the party primarily liable it must be made
before or on maturity
23. Where in a bill the drawer and the drawee are the same person or where the drawee is
a fictitious person, or a person not having the capacity to contract, the holder, at his
option, may treat the instrument as
a.
b.
c.
d.

Dishonored
Bill of exchange
Promissory note
Either a bill of exchange or a promissory note

24. Which of the following will not discharge a negotiable instrument?

a. Payment in due course by the accommodated party which the instrument is made
or accepted for his accommodation
b. Payment in due course by the principal debtor
c. Intentional cancellation of the instrument by the maker
d. Payment in due course by the accommodation maker

25. Presentment for payment is required in the following, except

a. When presentment is necessary to fix the maturity of the instrument
b. When the bill expressly stipulates that it shall be presented for acceptance
c. Where a bill is drawn payable elsewhere than at the residence or place of business
of the drawee
d.
None of the above
26. When acceptance may be made
a. Before the bill has been signed by the drawer
b.
Before it is complete
c. When it is overdue
d. All of the above
27. All are requisites of actual acceptance, except
a. It must be in writing and signed by the drawer
b.
It must not express that the drawee will perform his promise by any other means
than the payment of money
c. There must be delivery or notification of the acceptance
d.
None of the above
28. A bill of exchange is treated as a promissory note in the following, except
a. When the drawer and drawee are the same person
b. When the drawee is a fictitious person
c. When the drawee is an incapacitated person
d. When the drawee and the payee are the same person
29. When notice of dishonor need not be given to the indorser
a. When the drawer is a fictitious person or a person not having capacity to contract,
and the indorser was aware of the that fact at the time he indorsed the instrument
b.
Where the indorser is the person to whom the instrument is presented for
payment
c. Where the instrument was made or accepted for his accommodation
d. None of the above
30. When presentment for payment is excused
a. Impossibility of presentment
b. The drawer is a fictitious person
c. By waiver of presentment, express or implied
d. All of the above

31. A formal declaration of a fact of non-acceptance or non-payment usually executed by

a notary, and in popular sense all the steps accompanying the dishonor of a bill or
note necessary to charge the drawer or an indorser.
a. Notice
b.
Cancellation
c. Protest
d. Renunciation
32. The following are the requisites for acceptance for honor, except
a. The bill must have been protested for non-acceptance or non-payment
b. The bill is not overdue at the time of the acceptance for honor
c. The acceptance may be made by any person
d. The holder must give his consent
33. Which is not a bill of exchange?
a. Memorandum check
b.
Cashiers check
c. Due bill
d.
None of the above
34. A promissory note
a. Must be in writing and signed by the maker or drawer
b.
Must be payable to order or bearer
c. Must be payable in sum certain in money
d. All of the above
35. When a negotiable instrument has been dishonored by non-acceptance or nonpayment, notice of dishonor must be given to the following, otherwise they are
discharged
a.
b.
c.
d.

Maker
Drawee
Drawer
Acceptor

36. A promissory note for 100,000.00 payable to A or order. A signs his name at the back
and delivers the note to B. B negotiated the note to C by mere delivery.
a.
b.
c.
d.

Title is not transferred to C because B did not endorse

C is a mere agent of B
C becomes a holder by mere delivery
C cannot negotiate be mere delivery to D

37. Not a method of transferring commercial paper

a. Assignment
b.
Negotiation
c. Indorsement and delivery
d.
None of the above
38. Which of the following is an example of real defense?
a. Acquisition of the instrument by force
b. Acquisition of the instrument for illegal consideration
c. Fraud in the indorsement
d.
Fraud in factum
39. X obtains the signature of Y for autograph purpose. X writes a negotiable promissory
note above Ys signature. The note was validly negotiated to A who is a holder in due
course. What kind of defense can Y avail against A?
a. Personal defense
b.
Real defense
c. Qualified defense
d.
Equitable defense
40. Which of the following is not a real defense?
a. Fraud in factum
b.
Forgery of a signature
c. Incomplete and undelivered instrument
d.
Insertion of a wrong date
41. Instances when presentment for payment is excused
a.

Where after the exercise of reasonable diligence presentment as required by this

Act cannot be made
b. Where the drawee is a fictitious person
c. By waiver of presentment, express or implied
d.
Where there are excusable circumstances which are unavoidable and not
attributable to the fault of the holder
42. An accommodation party
a. He must be a party to the instrument
b.
He must receive value therefore
c. He must sign for lending his name or credit
d. All of the above

43. All must be complied for an agent to escape liability, except

a. Agent is duly authorized
b.
He indicates that he signs as an agent
c. He declares his principal
d.
None of the above.
44. If the drawee destroys the bill
a. The bill is considered accepted
b. The bill is considered dishonored
c. The bill is discharged
d. The bill is cancelled
45. A person secondarily liable on the instrument is discharged, except
a. By any act which discharged the instrument
b. By the intentional cancellation of his signature by the holder
c. By the discharged of a prior party
d. None of the above
46. M signed a blank check which he inadvertently left in his desk at his office. P later
stole the same, who filled in the amount of P 20,000.00 and a fictitious name as
payee. P then indorsed the check in the payees name and indorsed the check to A;
thereafter, A indorsed to B; then B to C, and C to D.
a. D cannot enforce the instrument against M only if D is holder in due course
b. D can enforce the instrument against M even if D is not a holder in due course
because the signature of D is genuine
c. D cannot enforce the instrument against any one of the prior parties because the
instrument is not a valid instrument and therefore, not negotiable
d. D can enforce the instrument against any one of the prior parties except M
47. A issued a bearer instrument to B. the note is negotiated by B to C, by C to D, by D to
E. Who can E hold liable for the instrument?
a. A
b. B
c. C
d. D
48. Which of the following is not a personal defense?
a.
b.
c.
d.

Absence of consideration
Forgery of a signature
Non-delivery of a complete instrument
Failure of consideration

49. X obtains the signature of Y for autograph purpose. X writes a negotiable promissory
note above Ys signature. The note was validly negotiated to A who is a holder in due
course. What kind of defense can Y avail against A?
a.
b.
c.
d.

Personal defense
Real defense
Qualified defense
Equitable defense

50. 1. Absence or failure of consideration is a matter of defense as against any person not
a holder in due course.
2. An accommodation party is liable on the instrument to a holder for value
notwithstanding such holder at the time of taking the instrument knew him to be only
an accommodation party.
a.
b.
c.
d.

Both are true

Only first statement is true
Both are false
Only second statement is true