NEGOTIABLE INSTRUMENTS REVIEWER FOR BSA 4-3D PART 2 1.

The following are essential requisites of a negotiable promissory note except a. must be written and signed by the drawer b. must contain an unconditional promise to pay a sum certain in money c. must be payable upon fixed determinable future time. d. must be payable to order or bearer 2. Which of the following is not an essential element of a bill of exchange? a. must be written and signed by the drawee b. must contain an unconditional promise to pay a sum certain in money c. must be payable to order or bearer d. drawee must be named therein 3. The following are negotiable except a. Pay to bearer Jose Cruz P 10,000 upon demand , signed by A and addressed to B b. Pay to Jose Cruz or bearer P 10,000 upon demand , signed by A and addressed to B c. I oblige myself to pay Pedro Reyes or order P 3,000 ten days after day signed by M as maker. d. Good to L or order P 5,000 July 1, 2009 signed by M as maker 4. Which of the following is negotiable? a. I promise to pay Jose Cruz or order P 10,000 or deliver 1 cow 20 days after date at the option of the holder signed by M as maker b. Pay to Pedro Reyes or bearer P 10,000 or deliver 1 cow on 4-4-10 at the option of the drawee , signed by A and addressed to B c. Pay to Pedro C. Cruz or order P 5,000 out of fund I deposited with you signed by A and addressed to B d. I promise to pay K. KHO or order P 10,000 in 5 installments, first installment August 1, 2009 and every month thereafter, signed by M as maker 5. The following are functions of negotiable instrument; except: a. used as substitute for money b. medium of credit transactions c. medium of exchange for commercial transactions d. none of them. 6. Which of the following is no an incident in the life of negotiable instrument? a, Issue b. notice of dishonor c. Preparation d. Negotiation

7. Which of the following is negotiable? a. Postal Money order b. Certificate of stock c. Treasury warranty d. None of them 8. A promissory note is payable to bearer when: a. It is payable to a person named therein or bearer b. the only indorsement is blank c. the name of payee does not support to be the name of a person d. all of the above 9. The following are considered negotiation except a. issue b. indorsement plus delivery c. delivery d. none of them 10. This indorsement constitutes the indorser as a mere assignor of the title of the instrument:

Real defenses are those that attached to the instrument itself and can be set up even against holder in due course. fraud in factum b. prior parties have capacity to contact d. except a. Who of the following is party with primary liability? a. 12. The existence of the payee and his then capacity to indorse is a warranty of: a. payment in due course by or on behalf of the party primarily liable b. forgery is both real and personal defense d. that the instrument is complete and regular upon its face. A check is not presented for payment within a reasonable length of time after issue is called a. minority 14. only person whose signature appear in the instrument can be held liable therein c. none of them. an accommodation party is liable only to a holder in due course 13. certified b. qualified d. the drawee is fictitious d. Indorser c. changing the date b. all of the above 17. he has a good title c. Maker b. Which of the following is not considered real defense? a. intentional cancellation thereof by the holder d. payment in due course by the party accommodated c. Which of the following is not a warranty of a qualified indorser? a. crossed . drawer d. person negotiating by mere delivery 20. Special b. absence or failure of consideration d. holder for value and in good faith d. forgery c. Which of the following is not false? a. restrictive 11. none of them 18. The following are requisites in order that a person can be considered a holder in due course. instrument is valid and subsisting 16. none of them 19. b. changing the amount c. A negotiable instrument is discharged by: a. the drawee has countermanded payment c. drawer d. changing the relation of the parties d. acceptor c. Which of the following is not considered material alternation a. The drawer and the drawee are the same person b.a. Notice of dishonor is not required to be given by a drawer when: a. Blank c. the instrument is genuine b. all of them 15. the maker b. Stale c. the instrument is not yet overdue or no notice of dishonor c. a holder for value is not necessarily a holder in due course b. memorandum d.

000 d. delivery 22. 2009 d.000 ten days after the date signed by M as maker. Cruz or order for P 5. I promise to pay Jose Reyes or order P 10.000 c. If the signature of A is forge. Forgery is considered a real defense d. 2009 C can collect from M only P 2.Which of the following is false? a. due bill b. Forgery is real defense 29. certificate of deposit d. Signification by the drawee of his assent to comply with the order of the drawer is: a. the payee can require payment 10 days after issue c. F in turn indorsed the bill to G & G to H. 2009 and pledged the note by indorsing it to C. In this case: a. 2009. which of the following is false? a. 2009. when the drawer and drawee are the same person the holder consider the bill was a note 26. all of them 23.000 from C payable July 31. The note is undated. the note is non negotiable b. the payee cannot negotiate the note 27. b. Which of the following is correct? a. Cruz can require payments only on May 15. a promissory note cannot be pledged without the consent of the maker b. Cruz cannot negotiate the note 28. trade acceptance d. the bill requires it c. Presentment for acceptance is required when a. A is the drawer of a bill addressed to B. Indorsement b. all indorsers prior to the forgery are discharged b. payable to C or order 10 days after acceptance for P 8. none of them c. the acceptor is primarily liable b. the bill is drawn payable elsewhere than the residence of the drawee d.000 due July 30. The bill was accepted by B when presented by F. the bill is payable after sight b. If B dishonors the bill by non-payment F may give to any indorse c. Protest is required when this bill is dishonored: a. bond 25. partial indorsement is allowed 30.000 is payable to Jose Cruz or bearer on May 10. C to D. The instrument is considered non-negotiable because the date of issue is later than the date of payment. to E and E to F. Cruz can ask for payment at anytime c. Cruz borrowed P 2. E stole the bill from D and indorsed it to F by forging the signature of D. B is required to pay F even if the signature of A is a forgery b. F is liable to H d. signed by A as drawer and addressed to B. B is not required to pay F since he has the defense of forgery c. Pay to Maria or order P 20.000 upon demand . on July 30. all of the above c acceptance d.000. 2009 C can collect from M P 5. Which of the following is correct? a. 2009. the payee can require payment at any time d. C negotiated the bill to D. Maria negotiated the bill to C. presentment for acceptance . M is the maker of a note payable to J. The following are promissory notes except: a. Which of the following is false? a. foreign 24. M however issued the note to the payee May 15. The negotiable promissory note signed by M as maker for P 10. the drawer is liable to H c.21. the issue is not negotiation d. On July 30. domestic/local b. the drawer is secondarily liable c.

a. D to E. a 4. M cannot re-issued the note d. B paid the bill.000 then indorsed the note to G. C indorsed the note to D. The drawer is liable to E since he was duly notified of the dishonor c. D to E.000 upon demand. F. altered the amount to P 15. B made a conditional acceptance in this case: a. the noted is not discharged since there is no payment c. if D paid E . Upon proper presentment. F in turn can give notice to G 32.000 ten days after sight SIGNED By A drawer as agent of B To: B Pedro Reyes negotiated the bill to C. it is still negotiable notwithstanding the conditional acceptance c. a 5. E to F and F to M. B is considered a constructive acceptor 35. D to E and E to F. the bill becomes non-negotiable b.000 ten days after date. the note is discharged b. M dishonored the note when presented by H for payment. a 3.the bill is not required to be presented for acceptance d. C to D and D to E. The indorsers are not dischaged 36. F to G and G to H. Drawer A addressed a bill to B payable to C or bearer for P 60. G can require M to pay only P 5. the holder cannot refuse to take a conditional acceptance d. B dishonored the bill by non payment. D to E.000 payable to C or bearer. this bill maybe considered as a note 33.M is the maker of a note for P 30. Which of the following is true. E to F. a 2. C negotiated the note to D. C negotiated the note to D. H is required to notify M d.000 if G is a holder in due course 34. Which is correct? a. payable to C or order for P 10. H gave notice of dishonor to F. the bill is discharged b. persons secondarily liable are likewise discharged c. only G is discharged c. G can require M to pay P 25. the unauthorized alteration renders the note void b. E to F and F to G. without authority from the prior parties. a. all indorsers prior to F are discharged b.d .000 if G is a holder in due course d. M signed a promissory note payable to C or order for P 5. all of the above Suggested Answers 1. C becomes liable to D d. The drawer is not liable to E b.000. C negotiated the note to D. E gave notice of dishonor to all prior parties except B. Drawer A addressed a bill to B for P 20. Which of the following is not correct? a. M is the maker of a note. G cannot require M to pay anything c.31. Pay to Pedro Reyes or order P 20. Which of the following is true? a.000 payable to C or order 20 days after acceptance.

and when procured by the holder. a 20. 10. d 8. at an indefinite time. Indorsers are liable prima facie in the order in which they indorse. c 32. issuance 2. upon the fulfillment of a condition d. b 33. c 22. MULTIPLE CHOICE 1. at a determinable future time b. 6.d 7. a NEGOTIABLE INSTRUMENTS REVIEWER FOR BSA 4-3D PART 1 TRUE OR FALSE 1. b 31. d 15. the instrument is discharged by confusion or merger. at or after maturity in favor of the principal debtor discharges the instrument. An instrument which is not dated will be considered dated as at the time of: a. b 29. last indorsement d. 3. the drawer and indorsers are discharged.000. b 24. A check is always payable on demand. A bill of exchange does not operate as an assignment of funds in the hands of the drawee and the drawee is not liable until the same accepts. c 30. b 28. d 9d 10. 2. a 13. on demand c. 4. hence. d 17. d 16. 5. first indorsement c. b 27. c 26. The certification of a check by a bank is equivalent to acceptance.00 30 days after the death of X . acceptance b. Payment in good faith before maturity which is made by the principal debtor to the holder and without notice that his title is defective discharges the instrument. An absolute and unconditional renunciation made by the holder before. c 34. The cancellation of a negotiable instrument which is made by the holder is presumed to have been made intentionally. b 35. The drawer of a bill of exchange need not have funds with the drawee except in the case of a check. 9. non-negotiable . c 11. When the principal debtor becomes the holder in his own right before maturity. Joint payees or joint indorsees are deemed to indorse jointly and severally. d 12. d 23. d 18.6. d 25. 7. c 14. I promise to pay P or his order the sum of P10. This is an instrument payable: a. b 21. d 19. 8.

To Walter Wenceslao or Wilfredo Wycoco. Assuming all the other requisites of negotiability are present. except: a. No delivery is required as long as there is an indorsement. III. bearer d. Statement II is false. Instrument I and II b. M signs a promissory note payable to the order of P which is blank as to amount. b. Statement I is true. Consider these two statements: I. H may collect from A. A. B to C.000 on the blank. d. An instrument originally payable to order may be converted into a bearer instrument. attachment 7. Pay to the order of Pablo Patricio P20. Both statements are true. Wilfredo Wycoco. C and also H had no knowledge of the wrongful completion of the blank. The original payee who has negotiable instrument b. A to B. wheather blank or special. Pay to the order of Jose Rizal. An instrument originally payable to bearer may be converted into an order instrument. IV. blank indorsement plus delivery d. b. d. or in his absence. memorandum c. national hero. An instrument payable to bearer mat be negotiated through any of the following means. B or C P20. II. types the amount of P50.00 or deliver to him a computer of the same value at this option. H may collect from M nothing because P violated M s instructions. and C to H.000. The following instrument were presented to you for evaluation: I. To Walter Wenceslao. Pay to Pedro Padernal.00 Assuming all the other requisites of negotiability are present. Instrument III and IV 6. The indorsee who is in possession of the instrument c. The ondoresee who has negotiable the instrument 4. c. allonge b. To Walter Wenceslao and another drawee named Wilfredo. Statement II is true. which of the following instrument is not payable to bearer? a. enclosure d. 9. To Walter Wenceslao and Wilfredo Wycoco. 10. Statement I is false. a. Who among the following is the holder of a negotiable instrument originally payable to order? a. Instrument I and III c. P. special indorsement plus delivery b. c. Pay to the order of Pablo Patricio P20. Payable to the order of Pablo Patricio P20. b. 5.3. a. Both statements are false. c. Pay to the order of cash b. H may collect from M P20. d. M delivers the note to P with instruction to type the amount of P20.000.000 the amount actually placed by P. however. which of the foregoing instrument are negotiable? a. H may collect from M P50.00 or deliver to him a computer of the same value. Which of the following is a valid address to a drawee so as to make the instrument negotiable? a.000.000. Instrument II and III d. The separate paper attached to an instrument on which an indorsement or acceptance of the instrument is written is called: a.000 and negotiates the same to A. Pay to the order of Pablo Patricio a Computer worth P20.000 since they had no knowledge of the . c.000 the amount M instructed P to place on the space for the amount.00 II. B. Pay to Pedro Padernal or bearer 8. mere delivery c. a holder in due course. The possessor of the instrument to whom the instrument was delivered without any indorsement d.

. and C. whether H is a holder in due course or not. blank indorsement.wrongful completion. accepting or indorsing the instrument. An indorsement that prohibits the further negotiation of the instrument. indorser. 16. d. 18. A keeps the note in his drawer but it is stolen by F who negotiates the same to B by forging A s signature. except: a. M makes a note payable to the order of P. A. An indorser if the maker s signature is forged. Based on the foregoing. d. C indorses the note to H. P. whether H is a holder in due course or not. 17. which of the following statements is incorrect? a. disregarded the instruction of M and indorsed the note to A. or C. holder. c. which of the following statements is incorrect? a. a holder in due course. b. steals it. b. Based on the foregoing. c. H may not enforce payment of the check against R. d. H may enforce payment against P. H may enforce payment of the check against S. 13. In order that a person may be held liable as an accommodation party. Which is it? a. qualified indorsement. if the drawer s signature is forged. B. A to B. b. and C have no knowledge of P s defective title. B indorses the note to C. c. c. c. One of the following is not a restrictive indorsement. The. c. Who is it? a. a. H may enforce payment of the check against A. H may enforce payment against M if H is a holder in due course. and C to H. The acceptor. b. M must wait for the condition to be fulfilled before he can pay A. c. A person negotiating by mere delivery if a prior party s signature is forged. whether H is a holder in due course or not. the following requisites must concur. 14. whether H is a holder in due course or not. An indorsement that vests title in the indorsee in trust for some other person. d.000 but which is blank as to the name of the payee. B. H may not enforce payment against M if H is not a holder in due course. special indorsement. An indorsement where the indorser signs only his name at the back of the instrument is a: a. M. and negotiates it to A. An indorsement that constitutes the indorsee an agent of the indorser. payee. M may pay A even if the condition has not been fulfilled but A has to hold the proceeds subject to the rights of P. b. Who among the following can set up the defense of forgery? a. He has signed the instrument as maker. B to C. M makes a note payable to P or bearer and delivers the note to P. maker if an indorser s signature is forged. 12. his secretary. drawing. d. drawer. b. however. places her name as payee on the blank. B to C. 11. B. He delivers the note to P with the instruction that P should keep the same until M has obtained the proceeds of his loan from the bank. B. maker. The holder must have no knowledge that such person signed the instrument as an accommodation party. A to B. R signs a check amounting to P50. holder. b. d. P indorses the note to A. A. P indorses the note to A as follows Pay to A if he passes the 2004 Bar Examination. P. 15. M cannot be compelled to pay even if the condition is fulfilled because the conditional indorsement renders the instrument non-negotiable. An indorsement that constitutes the indorser a mere assignor of the title to the instrument. M may pay A even if the condition has not been fulfilled. His purpose of signing the instrument is to lend his name or credit to some other person. One of the following can set up the defense of forgery in an instrument payable to order. M makes a note payable to the order of P in the amount of P10. He has not received any value for such making.000. H may not enforce payment against A. and C have no knowledge of the theft of the check and its unauthorized completion by S. and C to H. c. A. The fulfillment of the condition becomes immaterial and A becomes the absolute owner of the proceeds of the note. d. b. He keeps the check in his drawer but S. acceptor or indorser. whether H is a holder in due course or not. Forgery is not available as defense to any party to the instrument. H may enforce payment of the check against R if H is a holder in due course.

Payment in due course by or on behalf of the principal debtor. general indorser. 22. (Sgd. The indorsement must be of the whole instrument. None. 27. A. c. The special indorsement of C to D. b. Who. 20. b. c. c. c. When the principal debtor becomes the holder in his own right before maturity. release of the principal debtor. An instrument reads as follows: November 30. an absolute indorsement. Letter of credit. P specially indorses the note to A. a successive indorsement. Which of the following indorsements may H strike out? a. may avail himself of the minority of P as a defense? a. Trade acceptance. D specially indorses the note to H. The special indorsement of P to A. B to C (by general indorsement). Which of the following is not right of a holder in due course? a. b. d.d. 21. An indorsement where the indorser waives the benefits of any law intended for his protection is known as: a.000 if he places first in the May 2004 CPA Examination.) Mariano Miranda . B indorses the note in blank and delivers it to C. P indorsed the note to A. 23. None. M makes a note payable to the order of P. M. except by the: a. b. Which of the following does not discharge the instrument? a. To enforce payment of the instrument for the full amount thereof against all parties liable thereon. holder. intentional cancellation of his signature by the holder. extension of the time of payment which is assented to by such party secondarily liable. Which of the following statements pertaining to indorsements is incorrect? a. The signature of the indorser without additional words is sufficient. d. A specially indorses the note to B. B. 19. knew that he was a minor. To hold the instrument free from defect of title of prior parties. d. Treasury warrant. The special indorsement of D to H. 25. Later. c. 2003 I promise to pay to the order of Paolo Pimentel the sum of P50. qualified indorser. d. d. b. Indorsers are liable in the order in which they indorse. d. M executed a note payable to the order of P. b. To hold the instrument free from real defenses available to the prior parties among themselves. it was discovered that P was a minor. If an instrument is delivered without indorsement. d. b. only P may avail himself of his minority as a defense. c. negotiation takes effect at the time of delivery even if the instrument is subsequently indorsed. The blank indorsement of B to C. c. 24. a conditional indorsement. Postal money order. discharge of a prior party. maker. b. restrictive indorsement. To hold the instrument free from personal defenses available to prior parties among themselves. Payment in due course by the accommodated party. C specially indorses the note to D. A party secondarily liable is discharged though any of the following means. a facultative indorsement. Intentional cancellation of the instrument by the holder. d. a holder in due course. c. A to B (by qualified indorsement). aside from P. and C (by general indorsement) to H. Which of the following instrument is negotiable? a. 26. except P.

Herman Hernandez can collect the amount of the note from Minerva Maceda on January 30. b.000 sixty (60) days after date. The instrument is valid but not negotiable. d. Which of the following is not a promise to pay. I agree to pay b. d.000 b. I acknowledge my debt to P d. Alberto Antonio indorsed and delivered the note to Herman Hernandez who knew nothing with respect to the insertion of a different date of issue. Herman Hernandez can collect the amount of the note on December 2.) Maila Medina On January 31. b. I bind myself to pay c. Want of delivery of complete instrument. c. Want of consideration. The trust type of restrictive indorsement. Want or absence of consideration. d. (Sgd. Want of delivery of an incomplete instrument. 2004. 33. b. Want of authority to complete an instrument that was delivered. Nothing. 2004 I promise to pay to the order of Perla Persida the sum of P30. Want of delivery of incomplete instrument. An instrument reads as follows: I promise to pay to the order of Patrick Pelaez the sum of P50. A conditional indorsement. because the note is void since it reads I promise to pay but it was signed by three makers. (Sgd. c. b. 2004. Which of the following may be raised as defense against any holder? a. 30. Herman Hernandez can collect the amount of the note from Minerva Maceda on December 31. b.) Pontiano Parcero This is an example of: a. 29.) Minerva Maceda The instrument was delivered by Minerva Maceda on December 1. 2003 as its date of issue. 2003 when it was negotiated to him. c. 28. Pay to Alberto Alvarez for collection only. d. Insertion of a wrong date. P10. P30.) Milnore Manuel (Sgd. 2004.a. 32. Which of the following defenses may a party to an instrument avail himself of against any holder of a negotiable instrument? a. Herman Hernandez can collect nothing from Minerva Maceda because of the insertion of a wrong date. c. a. P20. A qualified indorsement. Perla Persida may collect from Melba Montinola: a. The agency type of restrictive indorsement. and thus will make as instrument non-negotiable? a. I oblige myself to pay P .2003.000 c.000 d.) Melba Montinola (Sgd. The instrument is invalid but negotiable.000 on January 31. Immediately upon receipt. 2003 to Patrick Pelaez who indorsed and delivered the note on the same day to Alberto Antonio. An instrument reads as follows: January 1. 31. d. Want of delivery of complete instrument. (Sgd. c. Alberto Antonio wrote November 1. The instrument is invalid and not negotiable. The instrument is valid and negotiable. The following day.

The indorsement by D to M was made on August 29. IDENTIFICATION 1. 2003. An alteration made by a stranger to the instrument. B. 3. places thereon his signature in blank before delivery. Includes not only a promise to pay on the part of the maker but also grants permission to the payee to take judgment against the maker without trial if the maker fails to pay on maturity.34. A. d. his pleading being abandoned . each part being numbered.000 payable to the order of P which is payable 30 days after date. The formal declaration drawn up and signed by a notary that he presented a bill of exchange for acceptance or for payment and that it was refused or cannot be obtained. all of which parts constitute but one bill. and containing a reference to the other parts. it refers to a confession of judgement accompanied by withdrawal of defense. a. 9. b. 2. 10. 5. Literally he has confessed action . in fact. C and D to collect. 2003. A bill composed of various parts. and D to M. C to D. without negligence. The authority for confession of judgment before the action is begun. a negotiable instrument. M can go after P. ANSWERS: TRUE OR FALSE . 7. has signed as instrument which was. d. The genuineness of the drawer s signature. c. not otherwise a party to the instrument. b. On August 1. The obligation on the note was extinguished by merger or confusion on August 29. The acceptor by accepting the instrument. The existence of the payee. Literally. 6. It exists in those cases in which a person. 8. B to C. admits the following. M may reissue/renegotiate the promissory note after it was indorsed to him.2003. M executed a promissory note for P50. The person who signifies his acceptance to the order of the drawer. P indorsed the note to A. Thereafter. c. 35. A to B. The right of the holder to enforce payment of the instrument. it refers to a written confession of defendant acknowledging indebtedness to plaintiff after action has been filed. 4. but was deceived as to the character of the instrument and without knowledge of it. M may strike out the indorsement to him by D. The capacity of the payee to indorse. except: a. A person who.

26. 10. 12. 21. 22. 8. 33. True True False True False False True True True True MULTIPLE CHOICE 1. 5. 2. 10. 10. 3. 13. 5. 20.1. 6. 2. 5. 28. 30. 9. 23. 11. 4. 6. 8. Spoilation Fraud in factum or in esse contractus Cognovit note Relicta verificatione Cognovit actionem Protest Bill in set Acceptor Warrant of attorney Irregular or anomalous indorser . 24. 9. 15. 7. 6. 16. D A B D A A C C C C A C D D B B D B B C D D D C D D B A A D A A C D B IDENTIFICATION 1. 8. 3. 7. 32. 31. 35. 4. 17. 19. 2. 7. 25. 34. 4. 27. 29. 14. 9. 3. 18.

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