Professional Documents
Culture Documents
1st Handout 1
1st Handout 1
4A3
ANSWER: D
ANSWER: D
ANSWER: B
ANSWER: D
ANSWER: C
ANSWER: D
ANSWER: A
ANSWER: C
9. Case 1: Angel buys a diamond ring for 50,000 for which he issued a check. Later Angel
found out the diamond to be an ordinary glass.
Case 2: Ben obtains the signature of C for autograph purpose. Ben writes a promissory
note above Cris’ signature and endorses the note to Dan, a holder in due course.
What kind of defense may be availed by the maker?
a. Real defense in the first case, personal defense in the second case
b. Personal defense in first case, real defense in the second case
c. Real defense in both cases
d. Personal defense in both cases (CPA MAY 1998)
ANSWER: B
10. Maturity of an undated negotiable instrument issued payable 30 days after sight is
computed from:
a. Date of the first indorsement
b. Date of the last indorsement
c. Date of the last presentation for acceptance
d. Date of issue (CPA MAY 1998)
ASNWER: D
ANSWER: A
14. Which one of the following is not negotiable for the reason that the promise or order is
not unconditional:
a. Pay to B or order the sum of P1, 000 and reimburse yourself out of money in your
hands. Sgd. A To: X.
b. Pay to B or order P1,000 on account of contract between you and the CDCP. Sgd.
A To: X.
c. Pay to B or order the sum of P25,000 in payment of the car I bought from him last
week. Sgd. A. To: X.
d. Pay to B or order the sum of P1,000 out of my money in your hands. Sgd. A. To:
X. (CPA 1984 Board)
ANSWER: D
15. Under the Negotiable Instrument law, a certificate of stock is not negotiable because
it lacks the requisite of:
a. The instrument must be in writing and signed by the maker or drawer.
b. It must contain an unconditional promise or order to pay a sum certain in money.
c. It must be payable on demand or at a fixed or determinable future time.
d. It must be payable to order or to bearer (CPA 1985 Board)
ANSWER: B
17. An indorsement which attach no liability on the part of the indorser in case of insolvency
of the person principally liable is called a
a. irregular indorsement
b. qualified indorsement
c. conditional indorsement
d. restrictive indorsement.
ANSWER: B
(1982 Board)
18. Which of the following is not included among the rights of an indorser in a restrictive
indorsement:
a. to bring any action thereon that the indorser could bring
b. to receive payment of the instrument
c. to transfer his right as such indorsee, where the form of the indorsement
authorizes him to do so
d. to strike out any indorsement prior to the restricitve indorsement.
ANSWER: D
19. Defense which can be interposed not only against one who is not a holder in due course
but also against a holder in due course
a. defense protanto
b. personal defense
c. real defense
d. none of the above
ANSWER: C
20. Give the instrument listed herein which is not negotiable as it is beyond the scope of the
negotiable instruments law
a. certificate of deposit
b. due bill
c. post office money order
d. trade acceptance
ANSWER: C
ANSWER: C
22. A presented a bill to B, the drawee. B destroyed the bill. What can A do?
a. A may sue B for the destruction of his property
b. A may go after the drawee for the bill
c. A may no longer collect since the bill was destroyed
d. A may consider the bill as impliedly accepted by B
ANSWER: D
a. Bill of exchange
b. Check
c. Due bill
d. Promissory Note
ANSWER: B
ANSWER: A
a. When the drawer and the drawee are the same person
b. When the drawer is fictitious
c. When the instrument is ambiguous
d. All of the above
ANSWER: D
ANSWER: C
ANSWER: A
ANSWER: D
ANSWER: A
ANSWER: C
ANSWER: B
ANSWER: A
35.Marcelo makes a note payable to the order of Patricia who indorses it to Alfonso. Fidel
obtains possession of the note fraudulently, forges Alfonso's signature and indorses it to
Bartolome who in turn indorses it to Cataline. In this case, Cataline can:
ANSWER: B
36. M makes a prom. note for P2,000 payable to the order of P. P negotiates the notes to A
whp, with the consent of P, raises the amount to P20,000 and thereafter indorses it to B,
B to C, C to D who is not a holder in due course. In this case:
ANSWER: C
37. A check upon which the holder’s signature must appear twice, one to be affixed by him at
the time it is issued and the second or counter-signature, to be affixed by him before it is
paid, otherwise it is incomplete, is called:
a. certified check
b. stale check
c. traveller’s check
d. answer not given (CPA 1991 EXAM)
ANSWER: C
ANSWER: C
39. A general indorser is distinguished from the irregular indorser in that a general indorser:
ANSWER: C
ANSWER: C
ANSWER: D
42. The distinction between acceptance for honor and ordinary acceptance is that:
ANSWER: C
ANSWER: A
a. Assignment
45. Which of the ff. Instruments is not negotiable because it lacks the requirements of an
unconditional premise or order to pay a sum certain in money?
a. Bill of Exchange
b. Certificate of stock
c. Promissory Note
ANSWER: C
46. “I promise to pay bearer, Juan Dela Cruz, P20,000”(Sgd)Jose Pan. The note is
ANSWER: D
a. Special endorsement
b. Facultative endorsement
c. Qualified endorsement
d. Restrictive endorsement
ANSWER: B
48. The following are functions of a negotiable instruments. Choose the exception –
ANSWER: D
ANSWER: A
50. Which one of the ff. Promissory note is not negotiable for reason that the instrument is
not payable in sum certain in money?
ANSWER: C
51. Antonio issues a bill to the order of Juan, ad Juan indorses it to Pedro. Pedro
indorses the bill to Mario, Mario to Rodolfo and Rodolfo indorses the bill to Jose,
the holder. Which of the following is not true, if Jose decides to strike out any
indorsement not necessary to his title?
ANSWER: B
52. One of the requisites of a neg. inst. Is that it must certain and unconditional promise
or order to pay a sum certain in money. Which of the ff. denotes non-negotiability?
a. I promise to pay to the order of L the sum of $900 at the DBP manila
b. I promise to pay to the order of Y the sum of $600 and to deliver ¼ of rice harvest
in any farm
c. I promise to pay N or bearer in Manila the sum of P18,000 in Philippine peso or in
U.S dollars
d. I promise to pay E or bearer in Manila the sum of 27,000 in the Philippine pesos
or U.S dollars, at the option of the holder.
ANSWER: C
53.A bill of exchange to which no document is attached when presentment for payment
or acceptance is made:
a. Trade Acceptance
b. Bank Acceptance
c. Clean bill of exchange
d. Documentary bill of exchange
ANSWER : C
a. Payment in due course by the accommodated party which the instrument’s 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.
ANSWER: A
ANSWER: C
56. Which of the following instruments is not negotiable for the resaons that the instrument is
not payable at a determinable future time?
a. "One week after X passes the CPA Board Examination, I promise to pay to the
order of Y P10,000. (Sgd.)Z"
b. "Thirty days after demand, Drawer Z directss Drawee X to pay Y or order
P10,000."
c. "Ten days after the death od X, I promise to pay to the order of Y P10,000.
(Sgd.)Z"
d. "On or before October 31, 1993, I promise to pay Y or his order P10,000.
(Sgd.Z)" (CPA 1994 Exam)
ANSWER: A
57. In the renunciation of his rights against any part to the instrument, which of the following
statements is false?
a. If the instrument is delivered to the person primarily liable without collecting, it
constitutes oral renunciation.
b. If renunciation is made in favor of any party secondarily liable, all parties
subsequent to him are discharged from liability. A B C E F G
c. Renunciation will not affect the rights of a holder in due course without notice.
d. If the renunciation is made in favor of the party primarily liable, it must be made
before, at or after maturity date. (CPA 1994 Exam)
ANSWER: B
58. The following are instances when a drawee bank may refuse to pay checks drawn against
it, except one:
a. If there is a "stop payment" issued by the drawer.
b. When the bank receives notice of the drawer's death.
c. If the drawer's deposit is insufficient.
d. If the drawer is insolvent. (CPA 1994 Exam)
ANSWER: B
59. The following are functions of a negotiable instrument. Choose the exception.
a. It increases the purchasing power in circulation.
b. As legal tender
c. As substitute for money
d. It increases credit circulation. (CPA 1994 EXAM)
ANSWER: B
60. A check drawn by the bank upon itself and payable to a third person.
a. Certified check
b. Manager's check
c. Traveller's check
d. Crossed check
ANSWER: B
61. A issues a bill payable to the order of B. Later B without endorsing the bill transfer for a
consideration said bill to C. The following except one, are the valid effects of the
transfer:
a. C acquires the right to have the endorsement of B
b. The bill is merely assigned and not negotiated.
c. C becomes a holder
d. The transfer vests in C such title as B had thereon.
ANSWER: C
62. A issued a negotiable promissory note to the order of B for P10,000 payable after 30 days
after date. Later B indorsed it to C. Then X stole the note from C, forged the signature of
C and negotiated it to D, and D to E, E to F, the holder. On maturity of note, which of the
following statements is not correct and invalid?
a. F can collect from either D or E because their signatures are genuine and the note
is operative against them.
b. F can collect from A because A cannot put up forgery as his defense.
c. F cannot collect from C because it was C's signature which was forged.
d. F cannot collect from B because B is a party prior to the forgery.
ANSWER: B
63. An instrument is indorsed as follows: "PAY TO A, FOR B" (Sgd) C. Then A indorsed
the instrument "PAY TO D" (Sgd) A, in payment of A's personal loan to D, the
instrument was accepted by D as indorsed by A. Is D acting in good faith when he
accepted the instrument as indorsed?
a. Yes, because D is a holder in due course.
b. No, because D knew by prior indorsement that A is merely a trustee for B and has
no right to negotiate the instrument.
c. Yes, because D acquired the instrument for value.
d. No, because D did not get the consent of B.
ANSWER: B
65. X obtains the signature of Y for autograph purpose. X writes a negotiable promissory
note above Y’s signature. The note was validly negotiated to Z who is a holder in due
course. What kinds of defense can Y avail against Z?
a. Personal defense
b. Real defense
c. Equitable defense
d. Qualified defense(CPA May 1995)
ANSWER: B
67. A issued a promissory note to the order of B for P10, 000 payable on September 30, 1996
in payment of a TV set sold by B to him. B failed to deliver the TV set to A and instead
transferred the note to C for value but without indorsement. Which of the effects of the
transactions listed below is valid?
ANSWER: D
68. Manuel makes a promissory note for P33, 000 payable to the order of Pedro. Pedro
negotiates the note to Antonio who with the consent of Pedro raises the amount to P30,
000 and thereafter endorses it to Boy, Boy to Cris, and Cris to Doy, who is a holder in
due course. In this case:
d. Boy and Cris are not liable to Doy. (CPA May 1995)
ANSWER: B
69. Atoy issued a bearer note to Boy. The note is negotiated by delivery by Boy to Cris, by
Cris to Doc, Doc to Ely, by Ely to Fe, the holder. Fe can hold liable:
ANSWER: B
70. A holder for value is an endorsee who has both the legal title and the beneficial interest to
the instrument and is subject to both real and personal defenses available against him.
A holder in due course is one who possesses both the legal and beneficial interest to the
instrument but is subject to personal defenses only.
ANSWER: D
ANSWER: B
72. “I promise to pay to the order of B P10, 000 30 days after sale” (Sgd) A. Which of the
following indorsement of the above promissory note is not valid?
ANSWER: C
73. “PAY TO MARIA IN TRUST FOR JESUS” (Sgd) Jose is the example of –
a. Conditional endorsement
b. Qualified endorsement
c. Facultative endorsement
d. Restrictive endorsement (CPA Oct. 1995)
ANSWER: D
74. M makes a P10, 000 note payable to the order of O who indorses it to A. F obtains
possession of the note fraudulently, forger A’s signature, alters the amount to P70, 000
and endorses it to B who in turn endorses to C. In this case:
ANSWER: D
75. “I promise to pay to the order of X P10, 000 30 days after date” (Sgd) Y, dated blank.
“Pay to the order of X P10, 000 30 days after sight” to Y (Sgd) Z, dated 10/15/95.
First rule: The maturity of the above promissory note will be counted 30 days from the
date of the instrument.
Second rule: The maturity of the above bill of exchange will be counted 30 days from the
date the instrument is accepted by Y.
ANSWER: B
76. The following, except one, are requisites of acceptance for honor on a bill:
ANSWER: B
a. Fraud in factum
b. Incomplete and undelivered instrument
c. Insertion of the wrong date.
d. Forgery of a signature.
ANSWER: C
78. Under the Negotiable Instruments Law, a certificate of stock is not a negotiable
instrument because it lacks the requisites of:
a. It must contain an unconditional promise or order to pay a sum certain in money.
b. It must be payable on demand or at a fixed or determinable future time.
c. It must be payable to order or bearer.
d. It must be in writing signed by the maker or drawer. (CPA Oct. 1996)
ANSWER: A
79. A makes a promissory note payable to B or order. B indorses the note to C, then C to D,
D to E, E to F, the holder in whose hands the note is dishonored. F notifies B, C, D and E
about the dishonor of the note and subsequently indorses it to G. Which is not correct?
ANSWER: C
80. The holder is required to give notice of dishonor to the drawer to make him liable on the
instrument in one of the following cases:
a. Where the drawer is the person to whom the instrument is presented for payment.
b. Where the drawer and the drawee are the same person.
c. Where the drawer has countermanded payment
d. Where the instrument was made or accepted for his accommodation. (CPA 1997)
ANSWER:A
ANSWER: B
82. A holder not in due course has the following rights, except:
a. He may receive payment and if the payment is in due course the instrument is
discharged.
b. He may sue on the instrument, in his own name.
c. He cannot recover on the instrument.
d. He is entitled to the instrument but holds it subject to the same defense as if it were
non-negotiable. (CPA Oct. 1997)
ANSWER: C
84. FIRST STATEMENT: A check must be presented for payment within reasonable
time after its issue or the drawer will be discharged from
liability thereon.
SECOND STATEMENT: Where the holder of a check procures it to be accepted or
certified, the drawer and all indorsers are discharged from
liability.
a. Only the first statement is TRUE c. Both statements are NOT TRUE
b. Only the second statement is TRUE d. Both Statements are TRUE
(CPA Oct. 1997)
ANSWER: D
85. A makes a note payable to B or order. The following are the indorsers of the note in the
order of their indorsements: B, C, D, E, F (Holder) and G (sub-sequent holder). The note
is dishonored in the hands of F who notifies B, C, D and E. Which is not correct?
a. The notice given by F to B operates to the benefit of C, D, E and G.
b. The notice to C inures to the benefit of D, E, and G.
c. The notice to C inures to the benefit of B.
d. The notice to D inures to the benefit of E and G. (CPA Oct. 1997)
ANSWER: C
88. When the endorser waives the presentment and notice of dishonor, he increases his
liability. His indorsement is:
a. Alternative indorsement c. Facultative Indorsement
b. Qualified Indorsement d. Restrictive Indorsement (CPA May
1997)
ANSWER: C
ANSWER: B
ANSWER: C
91. Classify a note which reads as follows: “I promise to pay Juan de la Cruz or bearer the
sum of ₱50,000 25 days before the death of Juana dela Cruz.”
a. Negotiable
b. Non-negotiable
c. Payable on demand
d. Payable upon contingency (CPA Nov. 1971)
ANSWER: B
ANSWER: C
93. A presented a bill to B, the drawee. B destroyed the bill. What can A do?
ANSWER: C
94. Three of the following are necessary in order to make an instrument negotiable. Which is
the exception?
ANSWER: D
95. An instrument is negotiated when it is transferred from one person to another in 3 of the
following ways. Which is the exception?
a. By assignment
b. By delivery alone
c. By payment
d. By indorsement completed by delivery (CPA Oct. 1977)
ANSWER: A
96. This indorsement was written on the negotiable instrument itself: “Pay to Juan dela Cruz,
or order, provided he passes the CPA examination. (Sgd.) Jose Santos.” This kind of
indorsement is called:
a. Special indorsement
b. Restrictive indorsement
c. Conditional indorsement
d. Qualified indorsement (CPA Oct. 1978)
ANSWER: C
97. This party to the instrument admits the existence of the payee and his then capacity to
indorse; and engage that on due presentment the instrument will be accepted or paid, or
both, according to its tenor, and that if it be dishonored, and the necessary proceeding on
dishonor be duly take, he will pay the amount thereof to the holder, or to any subsequent
indorser who may be compelled to pay it. This liability refers to:
a. The maker
b. The drawer
c. The acceptor
d. The payee (CPA Oct. 1978)
ANSWER: A
a. Fraud in factum
b. Fraud in the inducement
c. Want or failure of consideration
d. Duress in the absence of physical pressure (CPA May 1980)
ANSWER: D
a. Restrictively indorsed
b. Qualifiedly indorsed
c. The last and only indorsement is in blank
d. None of the above (CPA Oct. 1980)
ANSWER: A
100. Defense which can be interposed not only against one who is not a holder in due course
but also against a holder in due course:
a. Personal defense
b. Real defense
c. Defense pro tanto
d. None of the above (CPA Oct. 1980)
ANSWER: B