Professional Documents
Culture Documents
3. I. No person is liable on the instrument whose signature does not appear thereon.
II. If one who signs in a trade or assumed name will be liable to the extent as if he had signed
in his own name.
4. I. If the sum payable is expressed in words and also in figures and there is a discrepancy
between the two, the sum denoted by the figures (words) is the sum payable.
II. If the words are ambiguous or uncertain, reference maybe had to the figures to fix the
amount.
5. I. Where the instrument is in the hands of a holder in due course, a valid delivery thereof by
all parties prior to him so as to make them liable to him is conclusively presume.
II. Where the instrument is no longer in the possession of a party whose signature appears
thereon, a valid and intentional delivery by him is presumed until the contrary is proved.
6. I. Where an incomplete instrument has not been delivered, it will (not), if completed and
negotiated without authority, be a valid contract in the hands of any holder, as against any
person whose signature was placed thereon before delivery.
II. Every contract on a negotiable instrument is incomplete and revocable until delivery of
the instrument for the purpose of giving effect thereto.
II. The insertion of a wrong date does not avoid the instrument in the hands of a
subsequent holder in due course; but as to him, the date so inserted is to be regarded as
the true date.
8. I. Where the instrument or an acceptance or any indorsement thereon is dated, such date is
deemed prima facie to be true date of the making, drawing, acceptance, or indorsement,
as the case may be.
II. The instrument is (not) invalid for the reason only that it is ante-dated or post-dated,
provided this is not done for an illegal or fraudulent purpose.
A. True; True C. True; False
B. False; False D. False; True
9. I. In a joint obligation, each of the debtors is liable only for the proportionate part of the
debt and the creditor is entitled only to a proportionate part of the credit.
II. In a solidary obligation, the creditor may enforce the obligation against one of the
debtors.
12. I. An instrument which contains an order or promise to do any act in addition to the
payment of money is not negotiable.
2. 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
countersignature, to be affixed by him before it is paid, otherwise it is incomplete is called
3. A check drawn by the bank upon itself and payable to a third person.
4. A bill of exchange to which no document is attached when presentment for payment or acceptance is made:
5 A bill of exchange to which no document is attached when presentment for payment or acceptance is made:
I. It is not dated.
II. The day and the month but not the year of its maturity is given.
III. It is payable to cash.
IV. It names two alternative drawees.
I II III IV
A. Yes Yes Yes No
B. Yes No Yes No
C. No No Yes Yes
D. No Yes No No
17 “I promise to pay to the order of X P10,000 30 days after date”. (Sgd) Y, dated blank.
1st rule: The maturity date of the above promissory note will be counted 30 days from
the date of issue of the instrument.
“Pay to the order of X P10,000, 30 days after sight.” To Y (Sgd) Z, dated 10/15/2010.
2nd rule: The maturity of the above promissory note will be counted 30 days from the
date of the instrument.
May the drawee bank refuse to honor the check on ground that the serial number thereof had been altered?
A. Yes, since the serial number is an item which is an essential requisite for negotiability.
B. Yes, because the alteration of the serial number is a material alteration.
C. No, since the serial number is not an essential requisite for negotiability and its alteration is not a material alteration.
D. No, since the serial number is not an essential requisite for negotiability even if its alteration is a material alteration.
19. I. If a promissory note is incomplete and undelivered by the maker, a holder in due course
can still recover from the maker.
II. A holder in due course does not have the right to recover from the maker if the maker did
not deliver the complete promissory note to the payee.
20 Ed issued a negotiable promissory note and authorized Maan to fill up the amount in blank up to P50,000 only. However, Maan filled it up to
P75,000 and negotiated the note to Wally, a holder in due course.
20. Nika issued a negotiable promissory note and authorized Tiny to fill up the amount in blank up to P50,000 only. However, Tiny filled it up to
P75,000 and negotiated the note to Pia, a holder in due course.
22 Henry succeeded in making Kate affix her signature on a check without Kate’s knowing that it was a check. At the time of signing, the check
was complete in all respects. Henry intended to cash the check the following morning, but that night, it was stolen by Vic who succeeded in
negotiating the same to Al who cashed the check the following morning.
Can Kate validly refuse to have the amount of the check deducted from her bank deposit if Al is –
1. A holder in due course?
2. Not a holder in due course?
Q1 Q2 Q1 Q2
A. Yes Yes C. No No
B. Yes No D. No Yes
27 John makes a negotiable promissory note payable to his order, signing Pedro’s name thereon as maker without Pedro’s knowledge and
consent. John then indorses the note to Jose, who in turn, indorses it to Carlos under circumstances which make Carlos a holder in due course.
28 Mimi makes a note payable to the order of Pete who indorses it to Ali. Fheb obtains possession of the note fraudulently, forges Ali’s signature
and indorses it to Ben who in turn indorses it to Cane. In this case, Cane can –
29 Joan makes a note payable to the order of Ped, who indorses it to Juana. Somehow, Ron obtains possession of the note and forging the
signature of Juana, indorses it to Amy. Amy then indorses the note to Neil, the holder.
30 A issued a negotiable promissory note to the order of B for P10,000 payable 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 the 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 it.
B. F can collect from A because A cannot put up forgery as his defense.
C. F can not collect from C because it was C’s signature which was forged.
D. F can not collect from B because B is a party prior to the forgery.
31 M makes a P10,000 note payable to the order of O who indorses it to A. F obtains possession of the note fraudulently, forges A’s signature,
alters the amount to P70,000 and endorses it to B who in turn endorses to C. in this case:
II – Every person whose signature appears in the negotiable instrument is presumed to have
become a party thereto for value.
34. A issued a promissory note to the order of B for P10,000 payable on September 20, 2011 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?
35 P appointed A as his agent to buy sugar. Thereafter, A drew a bill of exchange for the price of the sugar in favor of S, the seller. P accepted
the bill. After the acceptance of P, A negotiated the bill to H, a holder in due course. When the sugar was delivered, P refused to pay the bill on
the ground that the sugar was deteriorated. Is P liable?
A. Assignment.
B. Delivery of a bearer instrument.
C. Indorsement completed by delivery of an instrument payable to order.
D. Delivery of an instrument to the payee.
39 A issues a bill payable to the order of B. Later B without endorsing the bill transfers for a consideration said bill to C. the following except
one, are the valid effects of the transfer.
40 “I promise to pay to the order of B P10,000 30days after sale”. (Sgd) A. which of the following indorsements of the above promissory note is
not valid?
A. Special indorsement
B. Facultative indorsement
C. Qualified indorsement
D. Restrictive indorsement
42. “Pay to Mon in trust for Jess” (Sgd) Jun, is the example of
A. Conditional endorsement
B. Qualified endorsement
C. Facultative endorsement
D. Restrictive endorsement
43. When an indorser waives presentment and notice of dishonor, he increases his liability. His indorsement is:
A. Alternative endorsement
B. Qualified endorsement
C. Facultative endorsement
D. Restrictive endorsement
II- A holder in due course is one who possesses both the legal and beneficial interest to the
instrument but is free from real defenses only.
53. This defense is attached to the instrument itself and can e set up against the whole world, including the holder in due course.
A. Fraud in factum.
B. Incomplete and undelivered instrument
C. Insertion of a wrong date.
D. Forgery of a signature
A. Absence of consideration.
B. Forgery of a signature
C. Non-delivery of a complete instrument.
D. Failure of consideration.
67. A general indorser is distinguished from the irregular indorser in that a general indorser
A. That the instrument is genuine and in all respects what it purports to be.
B. That he has good title to it.
C. That he had no knowledge of any fact which would impair the validity of the instrument or render it valueless.
D. That the instrument, at the time of indorsement, was valid and subsisting.
Warranty 2: Admits the existence of the payee and his capacity to indorse.
73. I - An instrument is dishonored by non-payment when it is duly presented for payment and
payment is refused or cannot be obtained.
76. 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.
A. Payment in due course by the accommodated party which the instrument’s made or accepted for his confirmation.
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.
80. In the renunciation of holder of his rights against any party 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.
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.
A. Changing the words “or bearer” for the words “or order”.
B. Striking out the name of the payee and substituting another person in his face.
C. Alteration of the marginal figures of a note where the sum stated in words in the body remained unchanged.
D. Change in the date from which interest is to run.
83. Protest is not necessary –
84. The following except one, are the requisites of acceptance for honor on a bill:
A. The bill must be previously protested for dishonor by non-acceptance or protested for better security.
B. The bill is overdue.
C. The holder must give his consent.
D. The acceptor for honor must be a stranger to the bill.
85. The distinction between acceptance for honor and ordinary acceptance is that
A. In acceptance for honor, protest is not required while in ordinary acceptance, there must be previous protest.
B. In acceptance for honor, the acceptor is the drawee while in ordinary acceptance, the acceptor must be a stranger to the bill.
C. In acceptance for honor, the consent of the holder is required while in ordinary acceptance, such consent is not required.
D. Answer not given.
86. The following are instances when a drawee bank may refuse to pay checks drawn against it, except one:
87. The P1,000 bills issued by the Central Bank and in circulation are considered
A. A creditor is not bound to accept a check in satisfaction of his demand, because a check even if good when offered, does not meet the
requirements of legal tender.
B. The obligation of a debtor who had agreed to pay in dollars in a foreign bill of exchange shall be discharged in Philippine currency
measured at the prevailing rate of exchange at the time the obligation was incurred.
C. The Philippine peso bills when attempted to be exported, as when carried in excess of that allowed by the CB regulation, may be
deemed to have been taken out of a domestic circulation as legal tender and thus, treated as commodity.
D. The purchasing power or value of money or currency depends upon, can come into being, can be created or brought about by a law
enacted by the legislative department of the government.