MULTIPLE CHOICE QUESTIONS BATCH 2

Presented to the
University of Southern Philippines
Cebu City, Philippines

In Partial Fulfillment
of the Requirements for the course:
Law on Negotiable Instruments TTH 6:00-7:30PM

BARRIGA, JOSEPHUS JR. C.

CUESTA, JERRY JR L.
GARCIA, ANGELOU S.
LAPIDEZ, CLAIRE MAE
QUERUBIN, ROSE VIRGINIE C.
TABANAO, DIANNE STEPHANIE E.

1. Statement I: The circumstances which dispense with protest and the excuses for delay in making
protest are the same as those in notice of dishonor.
Statement II: The loss or destruction or wrong detention of a bill will excuse protest.
a.
b.
c.
d.

True, True
False, False
True, False
False, True

2. The drawee resides in Tokyo but the bill is payable at the Philippine Commercial Bank, Manila. The bill
is presented for acceptance by the payee to the drawee in Tokyo but acceptance is refused. On its
maturity, the bill is presented for payment to the Philippine Commercial Bank in Manila but payment is
also refused. where should protest for non-payment be made?
a.
b.
c.
d.

Either in Tokyo or Manila

Place of dishonor is not essential
Tokyo
Manila

3. All of the following are instances where presentment for payment is dispensed with, except:
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. Where instrument is overdue and unpaid.
d. By waiver of presentment, express or implied.
4. It is one upon which the holders 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 in the presence of the payee before it
is paid, otherwise, it is incomplete.
a.
b.
c.
d.

Memorandum check
Certified check
Travelers check
Crossed-check

5. Dan is the holder of an instrument made by May and indorsed in succession by Paul, Ann, Bran and
Carl.
Statement I: If Dan renounces his rights against Bran, then only Bran is discharged.
Statement II: If Dan makes the renunciation in favor of May, the instrument is discharged as well as the
parties.
a.
b.
c.
d.

False, True
True, False
False, False
True, True

6. All of the following are true, except one:

a. Protest is required only, as a rule, in case of dishonor of a foreign bill appearing on its face to be
such.
b. Protest is always written.
c. Protest only includes presentment.

d. Protest is made on the day of dishonor.

7. The time allowed for the drawee to accept, after presentment, to decide whether or not he will accept
the bill.
a.
b.
c.
d.

12 hours
24 hours
2 days
3 days

8. Statement I: Payment supra protest is made either by a notary public, or by any respectable resident
in the presence of witnesses.
Statement II: The payment for honor supra protest is attested by a notarial act of honor which must be
appended to the protest or form an extension of it.
a.
b.
c.
d.

False, True
True, False
True, True
False, False

9. The following express negotiability except?

a. I promise to pay Lucy or bearer in Manila the sum of the P15,000 in Philippine pesos or U.S dollars, at
the option of the holder.
b. I promise to pay Erza or bearer in Iloilo the sum of P12,500 in Philippine pesos or in U.S dollars.
c. I promise to pay Natsu or order the sum of P11,600 if his father should die within five years.
d. I promise to pay to the order of Gray the sum of P2,500 at ABC Cebu.

10. Which statement is true?

Statement 1: A general acceptance assents without qualification to the order of the drawer.
Statement 2: A qualified acceptance in express terms varies the effect of the bill as drawn.
a. Statement 1 is true; Statement 2 is true
b. Statement 1 is true; Statement 2 is false
c. Statement 1 is false; Satement 2 is true
d. Statement 1 is false; Statement 2 is false

11.
It refers to the act of the holder of a negotiable instrument of exhibiting a note to the maker and
demanding payment, or showing a bill to the drawee and requesting its payment or acceptance?
a. Acceptance
b. Indorsement
c. Presentment
d. Dishonor

12.

Pay to Z only
(Sgd.) A
What kind of indorsement is shown above?
a. Blank Indorsement
b. Restrictive Indorsement
c. Facultative Indorsement
d. Successive Indorsement

For numbers 13 to 14:

Totoro draws a bill payable to Ponyo or oder with Kiki, as the draweee, and Howl, Mononoke, Arrietty and
Porco Rosso as successive indorsers, and Baron as holder. Kiki does not pay and Baron has duly
protested non-payment.

13. If Ghibli offers to pay supra protest for the honor of Arrietty,with this payment, who will it discharge?
a. Porco Rosso
b. Mononoke
c. Kiki
d. Howl

14. If Ghibli offers to pay supra protest for the honor of Howl, then who will be discharge by his
payment?

a. Mononoke, Arrietty and Porco Rosso

b. Mononoke only
c. Arrietty and Porco Rosso
d. Mononoke and Arrietty

15. If Ghibli pays for the honor of all parties to the bill, may he recover againts all of them?
a.Yes
b. No
c. Totoro only
d. Cannot be determined

16. If Baron refuses to receive payment supra protest from Ghibli for the honor of Howl,he loses his right
of recourse againts whom?
a. Mononoke, Arrietty and Porco Rosso
b. Mononoke only
c. Arrietty and Porco Rosso
d.Mononoke and Arrietty

17.

Cebu,Philippines
September 26,2016
Php 25,000

Due to Liza Soberano Twenty Five

Thousand Pesos payable to her order.
What kind promissory note is shown above?
a. Due note
b. Due bill

Enrique Gil

c. Due deposit
d. Due Judgement

18. Protest is not necessary

a. in cases of inland bills and promissory notes;
b. Upon dishonor by non-acceptance of a foreign bill appearing on its face to be such;
c. Upon dishonor by non-payment of a foreign bill appearing on its face to be such, if not having been
previously dishonored by non-acceptance;
d. Answer not given.
19.In the renunciation of holder of his rights against any party to the instrument, which of the
following statements is false?
a. if the renunciation is made in favor of the party primarily liable, it must be made before, at or after
maturity date.
b. If the instrument is delivered to the person primarily liable without collecting, it constitutes oral
renunciation.
c. If renunciation is made in favor of any party secondarily liable, all parties subsequent to him are
discharged from liability.
d. Renunciation will not affect the rights of a holder in due course without notice.
20.Which if the following is an example of Real Defense below?
a. Acquisition of the instrument by force
b. Fraud in factum
c. Acquisition of the instrument for illegal consideration
d. Fraud in the endorsement
21.Anthon obtains the signature of Bosha for autograph purpose. Anthon writes a negotiable
promissory note above Bosha's signature. The note was validly negotiated to Connie who is a holder in
due course. What kind of defense can Bosha avail against Connie?
a. Personal defense
b. Equitable defense
c. Real defense
d. Qualified defense
22. The following is a personal defense except?
a. Absence of consideration
b. Non-delivery of a complete instrument
c. Forgery of a signature
d. Failure of consideration

23. 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 given below:
a. Where the drawer is the person to whom the instrument is presented for payment.
b. Where the instrument was made or accepted for his accommodation.
c. Where the drawer and the drawee are the same person.
d. Where the drawer has countermanded payment.

24. I. Notice of dishonor must be in writing.

II. Where the parties to be notified are partners,notice of any one partner is notice to the firm even
though there has been a dissolution.
Which one of the following is wrong?
a. All statements are false
b. All statements are true
c. Statement I
d. Statements II

25. Any consideration sufficient to support a simple contract is

a. Home
b. Signature
c. Value
d. Consent

26. The following are the parties liable on an instrument, except: (61)
a.
Maker of a promissory note
b.
Acceptor of a bill of exchange
c.
Drawer of a bill of exchange
d.
Certifier of a check

27. The following are causes of dishonor, except: (83)

a.
Technical overdraft
b.
Posting reject
c.
Sequence of process

d.

Technical defects

28. Protest is required in the case of a: (152)

a.
Foreign bill of exchange
b.
Inland promissory note
c.
Inland bill of exchange
d.
Foreign promissory note

29.
An acceptance for honor which does not expressly state for whose honor it is made is deemed to
be for the honor of the: (132)
a.
Payee
b.
Drawer
c.
Acceptor
d.
Drawee

30.
a.
b.
c.
d.

Which of the following defenses may a party to an instrument avail of against any holder? (58)
Want of delivery of incomplete instrument
Want of authority to complete an instrument that was delivered
Want of delivery of complete instrument
Want or absence of consideration

31.
a.
b.
c.
d.

The significance by the drawee of his assent to the order of the drawer. (61)
Acceptance
Approval
Recommendation
Indorsement

32.
a.
b.
c.
d.

The time within which the drawee is allowed to give his acceptance is: (136)
72 hours
48 hours
24 hours
12 hours

33.
a.
b.
c.
d.

Who is qualified to be an acceptor for honor? (165)

A person already a party to the bill
Either drawee or payee
A stranger to the bill
Both A or B

34.
a.
b.
c.
d.

Cancellation is made by, except for one: (123)

By writing cancelled on the face of the instrument
By destroying the instrument
By the understanding of one party
By drawing a cross across the instrument

35. Nangutang makes a note payable to the order of Nagpautang. The note is indorsed successively by
Nagpautang to Sugarol, Sugarol to Pala-inom, Pala-inom to User and by User to Pusher, the present
holder. The note is dishonored in the hands of Pusher. User is the only one notified by Pusher.
a. Sugarol and Pala-inom are discharged from their liability
b. Nagpautang, Sugarol and Pala-inom are discharged from their liability
c. Only Pala-inom is discharged from his liability
d. Only Nagpautang and Sugarol are discharged from their liability

36. Using the same example: If User, within the time fixed by law, gives due notice to Sugarol, the notice
does not operate in favor of:
a. Nagpautang
b. Pala-inom
c. Pusher
d. Pala-inom and Pusher

37. One of the methods of discharging a negotiable instrument is through reacquisition by principal
debtor in his own right. In order that there will be a discharge in this subsection, which of the following is
incorrect?
a. The reacquisition must be at or after date of maturity
b. The reacquisition must be by the principal debtor
c. The reacquisition must be by or on behalf of principal debtor
d. The reacquisition must be in his own right

38. An agreement binding upon the holder to extend the time of payment or to postpone the holders
right to postpone the instrument discharges a secondarily liable party unless:
I. Where the extension of time is consented by such party
II. Where there is an implied reservation by the holder of his right of recourse against such party based
on acts and conduct.

III. Where there are two or more secondarily liable parties

IV. Where the holder expressly reserves his right of recourse against such party
a. I and IV
b. I and II
c. III and IV
d. II and III

39. Q is the drawer of a bill addressed to R, the drawee, and payable to the order of S. The bill is
accepted by R and indorsed by S, T, U, and V in succession. If T pays the bill, which of the following is
correct?
a. If the bill is paid by Q, T can still renegotiate the bill if he was formerly a holder in due course
b. T is remitted to his former rights as regards prior parties except for Q, the drawer
c. T may strike out his inodrsement to U as well as the indorsement of V and renegotiate the
instrument
d. Ts right to sue Q and S can only be exercised by cancelling intervening indorsements.

40. A renunciation in favour of a secondary party may be made before, at or after maturity of the
instrument. The effect of such renunciation is to:
a. Discharge such secondary party and all parties subsequent to him
b. Discharge the secondary party only
c. Discharge the negotiable instrument
d. Discharge the principal debtor and all parties subsequent to him

41. Which of the following statements is/are true?

I. A bill may be accepted before it has been signed by the drawer
II. A bill cannot be accepted while it is still incomplete
a. Both Statements are true
b. Both Statements are false
c. Only Statement I is true
d. Only Statement II is true

42. Which of the following statements is/are false?

I. A negotiable instrument materially altered without the assent of all parties liable thereon is avoided
except as against a party who has himself made, authorized or assented to the alteration and subsequent
indorsers.
II. In the hands of a holder in due course, an instrument materially altered cannot be enforced.
a. Both Statements are true
b. Both Statements are false
c. Only Statement I is false
d. Only Statement II is false

43. Which of the following statements is/are true?

I. Where the parties to be notified are partners, notice to any one partner is notice to the firm even
though there has been a dissolution.
II. Notice to joint parties who are not partners must be given to each of them unless one of them has
authority to receive such notice for the others.
a. Only Statement I is true
b. Only Statement II is true
c. Both Statements are true
d. Both statements are false

44. Mark is the maker of a promissory 30 days after date. The note dated August 1, 2015 and was issued
on the same day by Mark to Patrick. Patrick indorsed the note to Ava, Ava to Bob, and Bob to Henry. On
September 1, 2015, Henry renounced unconditionally his claim on the note against Mark who accepted
the renunciation. Nonetheless, Henry still negotiated the note on the same day to Sam who had no
knowledge of the renunciation. May Sam still collect on the note from Mark and parties subsequent to
Mark?
A. Yes, against Mark and parties subsequent to Mark.
B. No, against Mark. Yes, against parties subsequent to Mark.
C. Yes, against Mark. No, against parties subsequent to Mark.
D. No, against Mark and parties subsequent to Mark.

45. Which of the following is a common liability of the drawer, maker and acceptor?
A. The admission that the instrument is covered with sufficient funds.

B. The admission of the genuineness of the signature of any indorser.

C. The admission of the existence of the payee and his capacity to indorse.
D. The engagement on the payment of the instrument according to its tenor.

46. P executes a promissory note for P 20,000.00 indicating that the maker is M and that it is payable to
the order of P. P forges the signature of M and indorses the note to A, A to B, B to C, and C to H, holder.
Based on the situation above, which of the following statement is incorrect?
I. H can collect from M if H s a holder in due course.
II. H can collect from A, B or C whether H is a holder in due course or not.
III. H cannot collect from M whether H is a holder in due course or not.
A. Only Statement II is incorrect.
B. Statement I, II and II are incorrect.
C. Only Statement I is incorrect.
D. Only Statement III is incorrect.

47. M makes a promissory note payable to the order of P. P indorses the note to A, A to B, B to C, C to
D, and D to H, holder. H presents the note for payment to M, but M dishonors it. Which of the following
statement is correct?
I. A can give notice of dishonor only to P.
II. H, can give notice of dishonor to P, A, B, C and D.
III. D can give notice of dishonor to P, A and C but not to B.
A. Statement II and III are correct.
B. Statement I and II are correct.
C. Statement I and III are correct.
D. Statement I, II and III are correct. *Sec 90,91, 92 and 93.

48. Which is a correct answer?

A. Accepted. Payable if the payee places first in the CPA Licensure Examination. (Sgd.) Sheldon Cooper.
It is an example of a conditional acceptance.
B. Accepted. Payable at PNB, Jakosalem Branch only. (Sgd.) Damon Salvatore. It is an example of
Partial acceptance.

C. Accepted. Payable if the payee delivers the items I bought from him with seals unbroken. (Sgd. Rosa
Linda). It is an example of a partial acceptance.
D. Accepted. Payable at Sugbuanon Roral Bank, Osmea Branch. (Sgd.) Pat Aka. It is an example of
Conditional acceptance.

49. Which of the following statement is a special type of promissory note?

I. A written acknowledgment by a bank of the receipt of money on deposit which the bank promises to
pay to the depositor, bearer, or to some other person on order.
II. An instrument whereby a person acknowledges his indebtedness to another.

A. Both statements are special type of promissory note.

B. Only statement I.
C. Only statement II.
D. Both statements are not special type of promissory note.

50. I. To W and Y.
II. To W or Y.:
III. To W, or in his absence, Y
A. Statement II and III is a negotiable instrument.
B. Statement I and III is a negotiable instrument.
C. Statement II and III is not negotiable instrument.
D. Statement I and II is not negotiable instrument.

Answers:
1. C
2. D
3. C
4. C
5. A
6. C
7. B
8. A
9. C
10. A
11. C
12. B
13. A
14. A
15. A
16. A
17. B
18. A
19. A
20. B
21. C
22. C
23. B
24. C

25. C
26. C
27. C
28. A
29. B
30. A
31. A
32. C
33. C
34. C
35. B
36. A
37. C
38. A
39. C
40. A
41. C
42. D
43. C
44. A
45. C
46. C
47. B
48. A
49. A
50. C