STATEMENT 1: Where the contract is illegal, it is void or inexistent.

It cannot be ratified or
validated. STATEMENT 2: Where the contract is illegal but merely beyond the power of a
corporation, the same is merely voidable and may be enforced by performance, ratification,
or estoppel or on equitable ground. *
1/1
FALSE,
FALSE
TRUE,
TRUE
TRUE,
FALSE

FALSE, TRUE

In which of the following corporate acts is appraisal right not available to a

dissenting stockholder? *
1/1
Investment of corporate funds to other business different from the primary and
secondary purpose
Incurring or increasing bond indebtedness

Sale, disposal, pledge or mortgage of all or substantially all the

assets Shortening or extending corporate term

These powers are those inferred from or reasonably necessary for the exercise of the
provided powers of the Corporation. They flow from the nature of the underlying business
enterprise. * 1/1
Express powers
Implied or necessary powers

Discretionary powers
Incidental or inherent
powers

In which of the following corporate acts is appraisal right available to a dissenting

stockholder? * 1/1
Increase or decrease of authorized capital stock
Merger or consolidation

Distribution of stock dividends

Approval of management
contract

They are powers that attached to a corporation at the moment of its creation without regard to
its expressed powers or particular primary purpose and may be said to necessarily arise from
its being a juridical person engaged in business. They flow from the nature of the corporation
as a juridical person. *
1/1
Incidental or inherent powers
Discretionary powers
Implied or necessary
powers Express powers

STATEMENT 1: One express powers of a corporation is to invest corporate funds in another

corporation. STATEMENT 2: One express powers of a corporation is to deny pre-emptive right.
*
1
/
1
FALSE,
FALSE
FALSE,
TRUE
TRUE,
FALSE
TRUE,
TRUE

STATEMENT 1: The incidental powers of a corporation are those which can be exercised
because of the fact of its existence as a corporation. STATEMENT 2: The implied powers
of a corporation are those which can be exercised because it is a necessity in carrying out
the purpose or purposes of its existence. *
1/1
FALSE,
TRUE
TRUE,
FALSE
FALSE,
FALSE
TRUE,
TRUE

STATEMENT 1: Pre-emptive right shall extend to shares to be issued in compliance with

laws requiring stock offerings or minimum stock ownership by the public. STATEMENT 2:
Pre- emptive right shall extend to shares to be issued in good faith with the approval of
stockholders representing 2/3 of the outstanding capital stock, in exchange for property
needed for corporate purposes or payment of a previously contracted debt. *
0/1
FALSE,
TRUE
TRUE,
TRUE

TRUE,
FALSE
FALSE,
FALSE
Correct
answer
FALSE,
FALSE

STATEMENT 1: Ultra vires acts are actions by a corporation which are not beyond the
express, implied and incidental powers of a corporation. STATEMENT 2: Illegal acts are
actions by a corporation which are contrary to law, morals, good customs, public order or
public policy. *
1/1
RUE, FALSE
FALSE, TRUE

FALSE,
FALSE
TRUE,
TRUE

STATEMENT 1: One express powers of a corporation is to enter into a partnership, joint

venture, merger, consolidation, or any other commercial agreement with natural and
juridical persons. STATEMENT 2: One express powers of a corporation is to establish
pension, retirement, and other plans for the benefit of its directors, trustees, officers and
employees. * 1/1
FALSE, FALSE
TRUE, TRUE

FALSE,
TRUE
TRUE,
FALSE

STATEMENT 1: A stock corporation has the power to acquire its own shares to increase
fractional shares arising out of stock dividend. STATEMENT 2: A stock corporation has
the power to acquire its own shares to purchase delinquent shares sold in delinquency
sale. * 1/1
TRUE,
FALSE
FALSE,
FALSE
TRUE,
TRUE
FALSE,
TRUE

STATEMENT 1: A stock corporation has the power to acquire its own shares to pay
dissenting stockholders in the exercise of their pre-emptive right. STATEMENT 2: A stock
corporation has the power to acquire its own shares to redeem redeemable shares. *
1/1
FALSE, TRUE

TRUE,
FALSE
FALSE,
FALSE
TRUE,
TRUE

What is the status of ultra vires acts made by the Corporation’s board of directors or officers in
behalf of the corporation which are illegal per se such as crime? *
1/1
Rescissible
Unenforcea
ble
Voidable
Null and Void
What is the status of ultra vires contracts entered by a corporation which are not illegal per se
but outside the primary and secondary purpose of the corporation? *
0/1
Voidable on the part of the corporation

Unenforceable
Null and Void
Voidable on the part of the other party
Correct answer
Voidable on the part of the other party

It refers to the right to demand payment of the fair value of his shares, after dissenting from a
proposed corporate action involving a fundamental change in the corporation in the cases
provided by law. This right may be waived by a shareholder if he has done so knowingly and
intelligently. *
1/1
Redeemable right
Pre-emptive right
Appraisal right

Right of first refusal

They refer to the powers expressly provided, enumerated and granted by the Corporation Code
or special law to a corporation. *
1/1
Incidental or inherent powers
Discretionary powers
Implied or necessary
powers
Express powers

STATEMENT 1: The dissenting stockholder who votes against a proposed corporate action may
exercise the right of appraisal by making a written demand on the corporation for the payment of
the fair value of shares held 30 days from the date on which the vote was taken. STATEMENT
2: The board of directors in a corporation may declare dividends out of the unrestricted retained
earnings which shall be payable in cash, property or in stock to all stockholders on the basis of
outstanding stock held by them. *
1/1
FALSE, FALSE
FALSE, TRUE
TRUE, TRUE
TRUE, FALSE

STATEMENT 1: Ultra vires acts may be illegal or legal. STATEMENT 2: All illegal acts are ultra
vires acts. *
0/1
FALSE, TRUE
TRUE,
FALSE

FALSE, FALSE
TRUE, TRUE
Correct answer
TRUE, TRUE

What is the status of ultra vires contracts entered by a corporation which are not illegal per se
but in violation of the formality for ratification required by the Corporation Code? *
0/1
Unenforceable
Null and Void but declaration of nullity may be barred by estoppel
Rescissible
Voidable

Correct answer
Null and Void but declaration of nullity may be barred by estoppel

When is stockholder’s pre-emptive right not available? *

1/1
A. Shares to be issued in compliance with laws requiring stock offerings or minimum stock
ownership by the public such as Initial Public Offering requirement to become a listed entity
B. Shares to be issued in good faith and with the approval of at least 2/3 of the
outstanding capital stock in payment of a previously contracted debt.

C. Both A and B

D. Neither A nor B

The power to amend or repeal any by-laws or adopt new by-laws may be delegated to the board
of directors or trustees by a vote of *
1/1
Majority of the stockholders
¾ of the OCS
2/3 of the OCS

Majority vote of the OCS

The quorum of a stockholder’s meeting shall consist of stockholders representing *
1/1
Majority of the OCS

¾ of the OCS
2/3 of the OCS
Majority of the authorized capital stock

Regular meetings of stockholders or members shall be held *

1/1
Monthly
Weekly
Quarterly
Annually

Regular meetings of stockholders or members shall be held annually on a date fixed in the by-
laws, or if not fixed, on any date, as determined by the board of directors or trustees, in *
1/1
January
July
April

December

The quorum of a stockholder’s meeting shall consist of stockholders representing *

1/1
Majority of the OCS

¾ of the OCS
2/3 of the OCS
Majority of the authorized capital stock

Regular meetings of stockholders or members shall be held annually on a date fixed in the by-
laws, or if not fixed, on any date, as determined by the board of directors or trustees, in *
1/1
January
July
April

December

STATEMENT 1: Quorum consists of the stockholders representing majority of the outstanding

capital stock or majority of the members in the case of non-stock corporations, unless otherwise
provided in the Revised Corporation Code or in the bylaws. STATEMENT 2: The power
delegated may be withdrawn by a vote of majority of OCS or members at a regular or special
meeting. *
1/1
FALSE, FALSE
TRUE, FALSE
TRUE, TRUE

FALSE, TRUE

Special Meetings of stockholders or members shall be held at any time deemed necessary or as
provided in the by-laws upon a written notice at least *
1/1
One week prior to the meeting
None of these
Two weeks prior to the meeting
One week, unless otherwise provided in the by-laws

STATEMENT 1: Special meetings of stockholders or members shall be held at any time

deemed necessary or as provided in the bylaws. At least 1 week written notice shall be sent to
all stockholders or members, unless a different period is provided in the bylaws, law or
regulation. STATEMENT 2: Majority vote of the board and at least majority of OCS or
members, at a regular or special meeting duly called for the purpose, may amend or repeal any
by-laws or adopt new by-laws. *
1/1
FALSE, FALSE
FALSE, TRUE
TRUE, FALSE
TRUE, TRUE

Unless the by-laws provide otherwise, written notice of regular meetings shall be sent to all
stockholders at least *
1/1
One day prior to the meeting
One week prior to the meeting

Two days prior to the meeting

Two weeks prior to the meeting

Regular meetings of stockholders or members shall be held *

1/1
Monthly
Weekly
Quarterly
Annually

STATEMENT 1: Written notice of regular meetings shall be sent to all stockholders or members
of record at least 21 days prior to the meeting, unless a different period is required in the
bylaws, law, or regulation. STATEMENT 2: Outstanding capital stock means total shares of
stock issued to subscribers or stockholders, whether or not fully paid, except treasury shares. *
1/1
TRUE, FALSE
FALSE, TRUE
TRUE, TRUE

FALSE, FALSE

Unless the by-laws provide otherwise, regular meetings of the board of directors or trustees
shall be held *
1/1
Annually
Semi-annually
Monthly

Quarterly

Unless the by-laws provide otherwise, regular meetings of the board of directors or trustees
shall be held *
1/1
Annually
Quarterly
Monthly

Semi-annually

These do not form part of the outstanding capital stock *

1/1
Treasury shares

Founders’ shares
Redeemable shares
Bonus shares
STATEMENT 1: Regular meetings of directors and trustees shall be held monthly unless the by-
laws provide otherwise. STATEMENT 2: The owner of 2/3 of OCS or members may delegate to
the board the power to amend or repeal by-laws or adopt new by-laws. *
1/1
FALSE, FALSE
FALSE, TRUE
TRUE, FALSE
TRUE, TRUE

These do not form part of the outstanding capital stock *

1/1
Bonus shares
Treasury shares

Redeemable shares
Founders’ shares

Special Meetings of stockholders or members shall be held at any time deemed necessary or as
provided in the by-laws upon a written notice at least *
1/1
None of these
One week, unless otherwise provided in the by-laws

One week prior to the meeting

Two weeks prior to the meeting

Special Meetings of stockholders or members shall be held at any time deemed necessary or as
provided in the by-laws upon a written notice at least *
1/1
One week, unless otherwise provided in the by-laws

None of these
One week prior to the meeting
Two weeks prior to the meeting

Requirement to affect the amendment of the by-laws of a corporation *

1/1
Majority of the BOD
Majority vote of the OCS
Majority vote of the BOD and majority vote of OCS

Vote of 2/3 of the OCS

It refers to the agreement whereby stockholders (trustors) of a stock corporation confers upon a
trustee the right to vote and other rights pertaining to the shares and it should not be used to
circumvent the law against monopolies and illegal combinations in restraint of trade or for fraud
purposes. It may be preterminated through a court petition by the trustors when their rights are
trampled upon by the trustee. *
1/1
Proxy agreement
Consolidation agreement
Agency agreement
Voting trust agreement

Which right is removed from a delinquent stockholder? *

1/1
a. Right to vote

b. Right to dividend
c. BothAandB
d. Neither A nor B

What is the maximum number of stockholders in a close corporation? *

1/1
5 stockholders
20 stockholders

15 stockholders
10 stockholdres

Which of the following are the requisites of a non-stock corporation? *

1/1
a. It does not have capital stock divided into shares.
b. No part of whose income is, during its existence, distributable as dividends to its
members, trustees, or officers.
c. Both A and B

d. Neither A nor B

Which book is not used by a nonstock corporation? *

1/1
Stock certificate book

Minutes of meetings book

Ledger
Journal

It refers to the right to demand payment of the fair value of his shares, after dissenting from a
proposed corporate action involving a fundamental change in the corporation in the cases
provided by law. This right may be waived by a shareholder if he has done so knowingly and
intelligently. *
1/1
Pactum right
Appraisal right

Pre-emptive right
Demandable right

It refers to a stock issued for a consideration less than their par or issued price. *
1/1
Watered stock

Solidified shares
Secret reserves
Gaseous stock

In the absence of longer period stipulated in the contract of subscription, pre-incorporation

subscription shall be irrevocable for what period from the date of subscription? *
1/1
5 years
1 year
6 months

3 months

Which of the following may be organized as a close corporation? *

0/1
a. It is absolute, unless expressly curtailed in the articles of incorporation.

b. It can be exercised on voting and nonvoting stocks, including treasury shares.

c. Both A and B
d. Neither A nor B
Correct answer
c. Both A and B

In which of the following cases is appraisal right not available? *

1/1
Any amendment to the articles of incorporation that changes or restricts the rights of any
stockholder or class of shares.
Merger or consolidation.
Investment of funds in another corporation or business for a purpose other than its primary
purpose
Expiration of corporate term

Under Revised Corporation Code, in case the by-laws is silent, who shall preside the regular
meeting of board of directors or regular meeting of shareholders? *
1/1
Secretary
Chairman of the board

President
Treasurer

Which is false about the board of directors of a stock corporation? *

0/1
Only natural persons can become members of the board of directors provided that a corporation
that owns shares of stock in another corporation may designate its officer or representative to sit
in the latter corporation’s board of directors.
A majority of the quorum of the board is sufficient to adopt a proposal calling for an election of
officers.
Directors cannot attend nor vote by proxy in board meetings.
The President of the corporation must be a director but he cannot occupy the positions of
president-treasurer or president-secretary at the same time.

Correct answer
A majority of the quorum of the board is sufficient to adopt a proposal calling for an
election of officers.

Which of the following is not a requisite for merger or consolidation? *

0/1
There must be consent or approval by the creditors of the corporation.
There must be approval by Philippine Competition Commission.

There must be approval by the Securities and Exchange Commission.

There must be ratification by vote of stockholders representing at least 2/3 of outstanding capital
stock or members.
Correct answer
There must be consent or approval by the creditors of the corporation.

It refers to a business combination whereby one or more existing corporations are absorbed by
another corporation which survives and continues the combined business. (PNB + Allied Bank =
PNB) *
1/1
Joint venture
Consolidation
Merger

Joint arrangement

How many days from the approval or decision of the appraisers of stocks shall the amount be
paid to the dissenting shareholders? *
1/1
10 days
20 days
60 days
30 days

It refers to an action brought by a person in his own behalf or on behalf of all similarly situated. *
1/1
Representative suit

Individual suit
Derivative suit
Shareholders’ suit

It refers to a suit brought by one or more stockholders or members in the name and on behalf
of the corporation to redress wrongs committed against it or to protect or vindicate corporate
rights, whenever the officials of the corporation refuse to sue or are the ones to be sued or hold
control of the corporation. The corporation is a necessary party to the suit. It is a suit filed by a
person who must be a shareholder to enforce a corporation’s cause of action. *
1/1
Shareholders’ suit
Derivative suit

Representative suit
Individual suit

It refers to a written authorization given by one person to another so that the second can act for
the first and it also refers to the holder of authority or person authorized by an absent
stockholder or member to vote for him at a stockholders’ meeting. *
1/1
Principal
Debtor
Creditor
Proxy
 It refers to a type of stock corporation whose stockholders must not exceed the maximum limit
of 20 and whose transfer of shares is normally subject to restriction normally a right of first
refusal. *
1/1
Ordinary corporation
Family-owned corporation
Close corporation

Closely-held corporation

Which is not an attribute of a close corporation? *

0/1
The stocks are not listed in any stock exchange or offered to the public.
Restriction can be made absolutely prohibiting the transfer of stock to outsiders unless and until
the corporation buys there stocks from the transferring stockholder.
Management of the corporation may be entrusted to the stockholders rather than to a board of
directors.
The number of stockholders may exceed 20 where holders of treasury stock are also to be
counted.

Correct answer
Restriction can be made absolutely prohibiting the transfer of stock to outsiders unless
and until the corporation buys there stocks from the transferring stockholder.

It is a special form of corporation usually associated with the clergy, consisting of one person only
and his successors who is incorporated by law to give some legal capacities and advantages. It
may be formed by the chief archbishop, bishop, priest, minister, rabbi or other presiding elder of
such religious denomination, sect or church by filing the articles of incorporation to SEC in
accordance with the form prescribed by Corporation Code.
*
1/1
Religious societies/corporate aggregate
Ordinary nonstock religious corporation
Corporation sole

Charitable corporation

STATEMENT 1: By-laws may be adopted and filed prior to incorporation. Such by-laws shall be
approved and signed by all the incorporators and submitted to the SEC together with the articles
of incorporation. STATEMENT 2: Where the contract is illegal, it is void or inexistent. It cannot
be ratified or validated.
*
1/1
FALSE, TRUE
TRUE, TRUE
FALSE, FALSE
TRUE, FALSE

What is the effectivity or validity period of a proxy at any one time?

*
1/1
A period not exceeding 5 years

A period not exceeding 3 years

A period not exceeding 1 year
A period not exceeding 10 years

Which is false about religious corporation?

*
1/1
The approval of the SEC is necessary for its incorporation.

It is different from an ordinary corporation organized for educational purposes.

The Roman Catholic Church has the juridical personality of a corporation even if not registered
with SEC.
A religious group, sect or denomination is not required by law to incorporate as a religious
corporation.

It is an action brought by a stockholder against the corporation for direct violation of his contractual
rights.
*
1/1
Representative suit
Derivative suit
Shareholders’ suit
Individual suit

Special Meetings of stockholders or members shall be held at any time deemed necessary or as
provided in the by-laws upon a written notice at least
*
1/1
One week prior to the meeting
One week, unless otherwise provided in the by-laws

Two weeks prior to the meeting

None of these

It refers to act committed outside the object for which a corporation is created as defined by the
law of its organization and therefore beyond the express, implied and incidental powers of the
corporation.
*
1/1
Immoral act
Unconstitutional act
Ultra vires act

Illegal act

STATEMENT 1: The dissenting stockholder who votes against a proposed corporate action may
exercise the right of appraisal by making a written demand on the corporation for the payment of
the fair value of shares held 30 days from the date on which the vote was taken. STATEMENT 2:
The board of directors in a corporation may declare dividends out of the unrestricted retained
earnings which shall be payable in cash, property or in stock to all stockholders on the basis of
outstanding stock held by them.
*
1/1
FALSE, TRUE
FALSE, FALSE
TRUE, FALSE
TRUE, TRUE

In case the by-laws is silent, where shall the meeting of the board of directors be held?
*
1/1
Anywhere in or out of the Philippines

In the principal office of the corporation

Anywhere provided within the Philippines
In the principal operation of the corporation

Which is false about educational corporation?

*
1/1
It may be a stock or nonstock corporation.
The approval of the SEC is necessary to its incorporation.
It is similar to an ordinary nonstock corporation organized for educational purposes.

A family administered pre-school institution need not be incorporated.

When may the pre-incorporation subscription contract be allowed to be revoked?

*
0/1
a. When all of the other subscribers consent to the revocation.

b. When the proposed corporation fails to materialize.

c. When the articles of incorporation has already submitted to SEC.
d. Either A or B.
Correct answer
d. Either A or B.
It refers to a business combination whereby two or more existing corporations form a new
corporation different from the combining corporation. (Equitable Bank + PCI Bank = Equitable PCI
Bank)
*
1/1
Consolidation

Joint venture
Merger
Joint arrangement

Unless otherwise provided in the articles of incorporation or by-laws, what is the normal term of
office of Board of Trustees of a nonstock educational institution?
*
1/1
3 years
2 years
5 years

1 year

It refers to a type of stock corporation whose stockholders must not exceed the maximum limit of
20 and whose transfer of shares is normally subject to restriction normally a right of first refusal.
*
1/1
Family-owned corporation
Close corporation

Ordinary corporation
Closely-held corporation

What is the composition of board of trustees of non-stock educational corporations?

*
1/1
It shall not be less than 5 but not more than 10.
It shall not be less than 5 but may exceed 15.
It shall not be less than 5 but not more than 15 regardless of the number.
It shall be 5 or 10 or 15.

STATEMENT 1: Where the contract is illegal, it is void or inexistent. It cannot be ratified or

validated. STATEMENT 2: Where the contract is illegal but merely beyond the power of a
corporation, the same is merely voidable and may be enforced by performance, ratification, or
estoppel or on equitable ground.
*
1/1
FALSE, FALSE
TRUE, FALSE

FALSE, TRUE
TRUE, TRUE

It is a stock or nonstock corporation organized to provide facilities for teaching or instruction and
which requires favorable recommendation by DEPED or CHED before its articles of incorporation
may be approved by SEC.
*
1/1
Charitable corporation
Religious corporation
Civil corporation
Educational corporation

What is the status of ultra vires acts made by the Corporation’s board of directors or officers in
behalf of the corporation which are illegal per se such as crime?
*
1/1
Rescissible
Voidable
Null and Void

Unenforceable

In which of the following corporate acts is appraisal right available to a dissenting stockholder?
*
1/1
Merger or consolidation

Approval of management contract

Distribution of stock dividends
Increase or decrease of authorized capital stock

STATEMENT 1: A stock corporation has the power to acquire its own shares to increase fractional
shares arising out of stock dividend. STATEMENT 2: A stock corporation has the power to acquire
its own shares to purchase delinquent shares sold in delinquency sale.
*
1/1
TRUE, FALSE
TRUE, TRUE
FALSE, FALSE
FALSE, TRUE

STATEMENT 1: One express powers of a corporation is to invest corporate funds in another

corporation. STATEMENT 2: One express powers of a corporation is to deny pre-emptive right.
*
1/1
FALSE, FALSE
FALSE, TRUE
TRUE, FALSE
TRUE, TRUE

What is the period for making a written demand on the corporation by a dissenting stockholder for
the exercise of his appraisal rights?
*
1/1
within 30 days after the date on which the vote was taken

within 40 days after the date on which the vote was taken
within 20 days after the date on which the vote was taken
within 10 days after the date on which the vote was taken

Which is not a characteristic of an ordinary nonstock corporation?

*
1/1
It does not distribute dividends to its members, although its members may in some cases be
expressed in terms of shares of stocks.
Each member is entitled to one vote which cannot be broadened or denied in the articles of
incorporation or by-laws.

It is prohibited to engage in business with the object of making profits, although it may earn
income as an incident to its operation which must be used in furtherance of its purpose.
Cumulative voting is not allowed in the election of the board of trustees unless expressly provided
in the articles of incorporation or by-laws.

The difference between a proxy and a voting trust agreement is

*
1/1
Proxy is required to be notarized
Presence of stockholder automatically cancels the proxy

Voting trust agreement isn’t required to be notarized

Voting trust must be written

The quorum of a stockholder’s meeting shall consist of stockholders representing

*
1/1
Majority of the OCS

¾ of the OCS
2/3 of the OCS
Majority of the authorized capital stock
STATEMENT 1: Internal matters of a foreign corporation applies their own foreign laws.
STATEMENT 2: External matters of a foreign corporation applies the local laws of the Philippines.
*
1/1
FALSE, TRUE
TRUE, FALSE
TRUE, TRUE

FALSE, FALSE

STATEMENT 1: Without prejudice to other grounds provided under special laws, the license of a
foreign corporation to transact business in the Philippines may be revoked or suspended by the
Securities and Exchange Commission upon failure to file its annual report or pay any fees as
required by the Corporation Code. STATEMENT 2: Without prejudice to other grounds provided
under special laws, the license of a foreign corporation to transact business in the Philippines may
not be revoked nor suspended by the SEC upon failure to appoint and maintain a resident agent in
the Philippines as required by the Corporation Code.
*
0/1
FALSE, FALSE
TRUE, TRUE

FALSE, TRUE
TRUE, FALSE
Correct answer
TRUE, FALSE

STATEMENT 1: When a certain voluntary dissolution does not affect any creditors, the dissolution
may be effected by majority vote of the Board of directors or Trustees and by a resolution adopted
by the affirmative vote of the majority of the outstanding capital stock or majority of the members
at a meeting called for the purpose. STATEMENT 2: Upon the expiration of the shortened term,
as stated in the approved amended by-laws, the corporation shall be deemed dissolved without
any further proceedings.
*
1/1
FALSE, FALSE
FALSE, TRUE
TRUE, FALSE

TRUE, TRUE

STATEMENT 1: A resident agent may neither an individual residing in the Philippines nor a
domestic corporation lawfully transacting business in the Philippines. STATEMENT 2: An
individual resident agent must be of good moral character or of sound financial standing.
*
0/1
TRUE, TRUE
FALSE, TRUE

FALSE, FALSE
TRUE, FALSE
Correct answer
FALSE, FALSE

STATEMENT 1: The voluntary dissolution where no creditors are affected shall take effect only
upon the issuance by the SEC of a certificate of incorporation. STATEMENT 2: The voluntary
dissolution where creditors are affected shall take effect only upon the issuance by the SEC of a
certificate of incorporation.
*
1/1
TRUE, FALSE
TRUE, TRUE
FALSE, FALSE

FALSE, TRUE

STATEMENT 1: In case of voluntary dissolution where creditors are affected, the SEC shall issue
an Order fixing a deadline for filing objections to the petition which shall not be more than 30 days
nor less than 60 days after the entry of the Order. STATEMENT 2: In case of voluntary dissolution
where creditors are affected, a verified request for Dissolution shall be filed with the SEC.
*
1/1
TRUE, TRUE
FALSE, FALSE

TRUE, FALSE
FALSE, TRUE

STATEMENT 1: Unlicensed foreign corporation cannot maintain an action to protect its

intellectual property in the Philippines. STATEMENT 2: Unlicensed foreign corporation may
transact any business transactions in the Philippines.
*
1/1
FALSE, TRUE
TRUE, TRUE
FALSE, FALSE

TRUE, FALSE

STATEMENT 1: In case of the expiration of corporate term, dissolution shall automatically take
effect on the day following the last day of the corporate term stated in the articles of incorporation,
with the need for issuance of a certificate of dissolution. STATEMENT 2: It is an example of
involuntary dissolution if there was a lawful court order sent to the corporation.
*
0/1
TRUE, FALSE
FALSE, FALSE

FALSE, TRUE
TRUE, TRUE
Correct answer
FALSE, TRUE

STATEMENT 1: In case of voluntary dissolution where creditors are affected, a verified petition for
Dissolution shall be filed with the SEC. STATEMENT 2: In case of voluntary dissolution where
creditors are affected, if no objection is sufficient and the material allegations of the request are
true, the SEC shall render judgment dissolving the corporation.
*
1/1
TRUE, TRUE
FALSE, FALSE
FALSE, TRUE
TRUE, FALSE

STATEMENT 1: Without prejudice to other grounds provided under special laws, the license of a
foreign corporation to transact business in the Philippines may be revoked or suspended by the
SEC upon failure, after change of its resident agent or address, to submit to the SEC a statement
of such change as required by the Corporation Code. STATEMENT 2: Without prejudice to other
grounds provided under special laws, the license of a foreign corporation to transact business in
the Philippines may be revoked or suspended by the SEC upon a misrepresentation of any
material matter in any application, report, affidavit or other document submitted by such
corporation pursuant to the Corporation Code.
*
1/1
FALSE, FALSE
TRUE, FALSE
TRUE, TRUE

FALSE, TRUE

STATEMENT 1: A foreign corporation is one formed, organized or existing under any laws other
than those of the Philippines, and whose laws allow Filipino citizens and corporations to do
business in its own state or country. STATEMENT 2: In a foreign corporation, an application for
license shall be under oath and shall specifically contain the address and name of its resident
agent authorized to accept summons and processes in all legal proceedings.
*
1/1
TRUE, FALSE
FALSE, FALSE
TRUE, TRUE
FALSE, TRUE

STATEMENT 1: A verified request for voluntary dissolution where no creditors re affected shall be
filed with the SEC. STATEMENT 2: Within fifteen days from receipt of the verified request for
voluntary dissolution where no creditors are affected, the SEC shall approve the request and issue
the certificate of incorporation.
*
1/1
TRUE, FALSE

TRUE, TRUE
FALSE, FALSE
FALSE, TRUE

STATEMENT 1: A corporation must pass through Incorporation Test to be treated as a foreign

corporation. STATEMENT 2: A corporation must pass through Reciprocity Test to be treated as a
foreign corporation.
*
1/1
TRUE, FALSE
TRUE, TRUE

FALSE, FALSE
FALSE, TRUE

STATEMENT 1: In case of the expiration of corporate term, dissolution shall not automatically
take effect on the day following the last day of the corporate term stated in the articles of
incorporation, without the need for issuance of a certificate of dissolution. STATEMENT 2: A
corporation may not be dissolved by the SEC motu propio or upon filing of a verified complaint by
any interested party.
*
1/1
TRUE, TRUE
FALSE, TRUE
TRUE, FALSE
FALSE, FALSE

STATEMENT 1: If a corporation does not formally organize and commence its business within 5
years from the date of its incorporation, its certificate of incorporation shall be deemed revoked as
of the end of the five-year period. STATEMENT 2: If a corporation has commenced its business
but subsequently becomes inoperative for a period of at least 5 consecutive years, the SEC may,
after due notice and hearing, place the corporation under delinquent status. The corporation has 3
years to resume operations.
*
1/1
FALSE, TRUE
FALSE, FALSE
TRUE, FALSE
TRUE, TRUE

STATEMENT 1: The simplest approach for involuntary dissolution is by shortening the corporate
term . STATEMENT 2: The simplest approach for voluntary dissolution is by lengthening the
corporate term .
*
1/1
TRUE, FALSE
TRUE, TRUE
FALSE, TRUE
FALSE, FALSE

STATEMENT 1: Foreign corporation shall have the right to transact business in the Philippines
after it shall have obtained a license to transact business in accordance with the Corporation Code
and a certificate of authority from any government agency. STATEMENT 2: Foreign corporation
shall have the right to transact business in the Philippines after it shall have obtained a license to
transact business in accordance with the Corporation Code and a certificate of authority from the
appropriate agency of the government.
*
1/1
FALSE, TRUE

TRUE, FALSE
TRUE, TRUE
FALSE, FALSE

STATEMENT 1: A corporation formed or organized under the provisions of the Corporation Code
may be dissolved involuntarily or voluntarily. STATEMENT 2: Involuntary dissolution results from
the initiative of the corporation to cease operations.
*
0/1
FALSE, TRUE
TRUE, TRUE

FALSE, FALSE
TRUE, FALSE
Correct answer
TRUE, FALSE

STATEMENT 1: In case of a domestic corporation who will act as a resident agent, it must
likewise be of sound financial standing and must show proof that it is in good standing as certified
by the BSP. STATEMENT 2: A foreign corporation transacting business in
the Philippines without a license shall be allowed to maintain or intervene in any suit, action or
proceeding in any court or administrative agency of the Philippines.
*
1/1
FALSE, FALSE

TRUE, FALSE
FALSE, TRUE
TRUE, TRUE

STATEMENT 1: Licensed foreign corporation may maintain an action if it pertains to isolated

business transaction in the Philippines. STATEMENT 2: A foreign corporation doing business in
the Philippines is subject to all laws, rules and regulations applicable to domestic corporations of
the same class with regard to the creation, formation, organization or dissolution of corporations
and the relations, liabilities, responsibilities, or duties of stockholders, members or officers of
corporations to each other or to the corporation.
*
0/1
FALSE, FALSE

TRUE, FALSE
FALSE, TRUE
TRUE, TRUE
Correct answer
TRUE, FALSE

Any of the following expressions has been held sufficient as a promise to pay under the
Negotiable Instruments Law, which is the exception:
*
1/1
"I agree to pay"
"I guarantee to pay"
"I owe you"

"We certify that we are bound to pay"

Which of the following instruments is not negotiable because it lacks the requirements of an
unconditional promise or order to pay a sum certain in money?
*
0/1
Bill of exchange
Check
Certificate of stock
Promissory Note

Correct answer
Certificate of stock

Which of the following is an order instrument under the Negotiable Instruments Law?
*
1/1
When the instrument is payable to a person named in the instrument or bearer.
When the instrument is payable to the order of the drawee.

When the name of the payee does not purport to be the name of any person.
When the instrument is payable to the order of a fictitious or non-existing person, and such fact
was known to the person making it so payable.

The following are considered determinable future time, except

*
1/1
On or at a fixed period after the occurrence of a specified event which is certain to happen, though
the time of happening be uncertain.
Payable upon a contingency upon the happening of the event.

At a fixed period after date or sight.

On or before a fixed or determinable future time specified therein.

STATEMENT 1: If the instrument is proven to be non-negotiable, laws applicable will be under

Civil Code. STATEMENT 2: If qualified under Section 1 of Negotiable Instruments Law, it will be
treated as a negotiable instrument.
*
0/1
TRUE, FALSE
FALSE, TRUE

TRUE, TRUE
FALSE, FALSE
Correct answer
TRUE, TRUE

STATEMENT 1: Where an instrument is issued, accepted or indorsed when overdue, it is as

regards the person so issuing, accepting or indorsing it, payable on demand. STATEMENT 2: An
instrument is payable on demand where it is expressed to be payable on demand, or at sight or on
presentation.
*
1/1
TRUE, FALSE
TRUE, TRUE

FALSE, FALSE
FALSE, TRUE

STATEMENT 1: Generally, an instrument which contains an order or promise to do any act in

addition to the payment of money is not negotiable. STATEMENT 2: An instrument payable upon
a contingency is not negotiable and the happening of the event does not cure the defect.
*
0/1
TRUE, FALSE
FALSE, TRUE
TRUE, TRUE
FALSE, FALSE

Correct answer
TRUE, TRUE

STATEMENT 1: A promise to pay an obligation by stated installments will render the instrument
non-negotiable if it contains an acceleration clause. STATEMENT 2: A promise to pay an
obligation with interest will render the instrument non-negotiable because it is not payable in sum
certain in money.
*
0/1
FALSE, FALSE
FALSE, TRUE

TRUE, TRUE
TRUE, FALSE
Correct answer
FALSE, FALSE

An instrument is rendered non-negotiable if

*
1/1
The instrument is payable out of a particular fund.

There is an indication of a particular account to be debited with the amount.

There is an indication of a particular fund out of which reimbursement is to be made.
None of these.

Which of the following instruments is not negotiable?

*
1/1
"I promise to pay A or order P20,000 on June 30" (Sgd) E.

"I promise to pay A or order P20,000" (Sgd) D.

"Good for P20,000 to A or order" (Sgd) C.
"I promise to pay to the order of A P30,000" (Sgd) B.

STATEMENT 1: In order to be negotiable, promissory notes must be in writing and signed by a

drawer. STATEMENT 2: A negotiable instrument may be payable in kind.
*
0/1
FALSE, FALSE
TRUE, TRUE

TRUE, FALSE
FALSE, TRUE
Correct answer
FALSE, FALSE

STATEMENT 1: An instrument which is payable at a fixed period after date is an instrument

payable at a determinable future time. If the instrument is not dated, it is not negotiable.
STATEMENT 2: An instrument which is payable after the occurrence of a specified event which is
certain to happen is non-negotiable if the time of the happening of said event is uncertain.
*
0/1
TRUE, TRUE
FALSE, TRUE
FALSE, FALSE
TRUE, FALSE

Correct answer
FALSE, FALSE

The Negotiable Instruments Law

*
1/1
PD 1502
Act No. 2031

Act No. 1220

BP No. 68

"I promise to pay to bearer, Juan de la Cruz, the sum of P20,000." (Sgd) Pedro San Carlos. The
promissory note is
*
1/1
Negotiable promissory note payable on demand.
Negotiable promissory note payable to order.
Negotiable promissory note payable to bearer.
Non-negotiable.

One of the requisites of a negotiable instrument is that it must contain an unconditional promise or
order to pay a sum certain in money. The following clauses do not express a sum certain. Which is
the exception?
*
1/1
To pay P1,000 or what may be due on my current deposit.
To pay P1,000 with interest at 12% per annum.

To pay P1,000 and the reasonable wage for six days of work.
To pay P1,000 and also all other sums which may be due to him.
STATEMENT 1: An instrument which provides for a statement of transaction which gives rise to
the instrument will render the instrument non-negotiable. STATEMENT 2: An order to pay out of
a particular fund will render the instrument non-negotiable because it is conditional.
*
1/1
TRUE, TRUE
FALSE, FALSE
TRUE, FALSE
FALSE, TRUE

STATEMENT 1: The instrument is payable to bearer when it is expressed to be so payable.

STATEMENT 2: The instrument is payable to bearer when it is payable to a person named therein
or bearer.
*
1/1
FALSE, FALSE
FALSE, TRUE
TRUE, TRUE

TRUE, FALSE

The following are elements of a negotiable instrument. Which is the exception?

*
1/1
Must be payable on demand, or at a fixed or determinable future time.
Must contain an unconditional promise or order to pay a sum certain in money.
Must be payable to a specified person.

It must be in writing and signed by the maker or drawer.

STATEMENT 1: Where the instrument is payable to order, the payee must be named or otherwise
indicated therein with reasonable certainty. STATEMENT 2: The instrument is payable to bearer
when the name of the payee does not purport to be the name of any person.
*
1/1
TRUE, TRUE

TRUE, FALSE
FALSE, TRUE
FALSE, FALSE

Which of the following is non-negotiable?

*
1/1
I promise to pay to the order of B P10,000 (Sgd) A.
I agree to pay B or order P10,000 on demand (Sgd) A.
I acknowledge being indebted to B in the amount of P10,000 (Sgd) A.
I bind myself to pay B or bearer P10,000 (Sgd) A.

"I promise to pay N or bearer in Manila the sum of P18,000 in the Philippine pesos or in U.S.
dollar." (SGD. P)
2/2
A

"I promise to pay P1,000 and the reasonable wage for six days of work to Z or his order." (Sgd) G.
B

"I promise to pay X P10,000 within 10 days before I retire from government service." (Sgd. M)
2/2
B

"Pay to P or order P20,000 and reimburse yourself out of my cash in your possession."
(Addressed to X, signed by D)

I agree to pay B or order P10,000 on demand (Sgd) A.

2/2
A

I promise to pay to the order of B P10,000 (Sgd) A.

2/2
A

"I promise to pay P20,000 with interest at 15% per annum to A or order."
2/2
A

"Pay to P or order P20,000 out of my cash in your possession." (Addressed to X, signed D)

2/2
B

"I promise to pay to the order of L the sum of $900 at the DBP Manila." (Sgd.) Z
2/2
A
"I promise to pay to the order of Y the sum of $600 and to deliver one-fourth of the rice harvest in
my farm." (Sgd.) K.
0/2
A-B

MULTIPLE CHOICE
4 of 5 points
KINDLY SELECT THE BEST ANS

STATEMENT 1: Date may be inserted in an instrument if it is payable at a fixed period after

sight but the acceptance is undated. STATEMENT 2: Delivery is essential to the validity of any
negotiable instrument.
*
1/1
FALSE, TRUE
TRUE, TRUE

TRUE, FALSE
FALSE, FALSE

STATEMENT 1: There is a prima facie presumption of delivery even if the holder is a holder in due
course.STATEMENT 2: Signature in a blank paper is one of the requisites for prima facie authority
to complete an instrument lacking in material particular.
*
0/1
TRUE, FALSE
TRUE, TRUE
FALSE, FALSE

FALSE, TRUE

STATEMENT 1: Date cannot inserted in an instrument if it is payable at a fixed period after

date but its issue is undated. STATEMENT 2: Date may be inserted in an instrument if it is
payable at a fixed period after sight but the acceptance is undated.
*
1/1
FALSE, TRUE

FALSE, FALSE
TRUE, FALSE
TRUE, TRUE

STATEMENT 1: A previously incomplete instrument in the possession of a holder in due course

gives rise to a prima facie presumption of delivery. STATEMENT 2: As between immediate parties
and as regards a remote party other than a holder in due course, delivery must have been with the
intention of passing title.
*
1/1
FALSE, FALSE
TRUE, FALSE
TRUE, TRUE

FALSE, TRUE

STATEMENT 1: Date may be inserted in an instrument if it is payable at a fixed period after date
but its issue is undated. STATEMENT 2: 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.
*
1/1
FALSE, FALSE
FALSE, TRUE
TRUE, FALSE
TRUE, TRUE

NON NEGOTIABLE

1. "I promise to pay P1,000 and the reasonable wage for six days of work to Z
or his order." (Sgd) G.

Explanation:
The phrase “and the reasonable wage for six days of work” made the
instrument uncertain, therefore non-negotiable. To be negotiable, one thing
to note is that it must be with certainty. And the instrument must be payable
in sum certain in money to be negotiable.

2. "I promise to pay P1,000 and also all other sums which may be due to P or
his order." (Sgd) X.

Explanation:
The phrase “all other sums” made the instrument uncertain, therefore
non-negotiable. To be negotiable, one thing to note is that it must be with
certainty.

3. "I promise to pay P1,000 or what may be due on my current deposit to F or

his order." (Sgd) K.

Explanation:
The phrase “what may be due on my current deposit” made the
instrument uncertain, therefore non-negotiable. To be negotiable, one thing
to note is that it must be with certainty. And the instrument must be payable
in sum certain in money to be negotiable.
4. "I promise to pay to the order of Y the sum of $600 and to deliver one-fourth
of the rice harvest in my farm." (Sgd.) K.

Explanation:
The phrase “to deliver one-fourth of the rice harvest in my farm” made
the instrument uncertain, therefore non-negotiable. To be negotiable, one
thing to note is that it must be with certainty. And the instrument must be
payable in sum certain in money to be negotiable.

5. "Pay to P or order P20,000 out of my cash in your possession." (Addressed to

X, signed D)

Explanation:
The phrase “out of my cash in your possession.” made the instrument
uncertain and conditional, therefore non-negotiable. To be negotiable, one
thing to note is that it must be with certainty. If it the statement is “to
reimburse out of a certain cash”, it will be unconditional therefore negotiable.
 NEGOTIABLE

1. "Pay to P or order P20,000 and reimburse yourself out of my cash in your

possession." (Addressed to X, signed by D)

Explanation:
Even though the instrument included a phrase “reimburse yourself out
of my cash in your possession”, it’s still negotiable, specifically one of the
exceptions.

2. "I promise to pay to the order of L the sum of $900 at the DBP Manila."
(Sgd.) Z

Explanation:
Even though it is payable in dollars, it’s still negotiable. Given that the
instrument is payable in dollars, the sum payable is with measurable
exchange rate, which provides certainty to the amount.

3. "I promise to pay N or bearer in Manila the sum of P18,000 in the Philippine
pesos or in U.S. dollar." (SGD. P)

Explanation:
Even though it is payable in dollars, it’s still negotiable. Given that the
instrument is payable in dollars, the sum payable is with measurable
exchange rate, which provides certainty to the amount.

4. "I promise to pay P20,000 with interest at 15% per annum to A or order."
Explanation:
Even though the instrument included a phrase “with interest at 15%
per annum”, it’s still negotiable, specifically one of the exceptions. Even
though coupled with an interest rate, the amount is still measurable,
therefore it is certain.

It refers to a mode of dissolving a private corporation made by the Securities and Exchange
Commission upon filing of a verified complaint and after proper notice and hearing on the grounds
provided by existing laws, rules and regulations.
*
1/1
Involuntary mode

Dissolution by operation of law

Legal dissolution
Voluntary mode

STATEMENT 1: Where an incomplete instrument has been delivered, it will, if completed and
negotiated, without authority, be a valid contract in the hands of any holder, as against any person
whose signature was not placed thereon before delivery. STATEMENT 2: Delivery is essential to
the validity of any negotiable instrument.
*
1/1
TRUE, FALSE
FALSE, FALSE
TRUE, TRUE
FALSE, TRUE

The following instruments are presented to you for evaluation: I. "Pay to the order of Juan Cruz
P20,000" II. Pay to the order of Juan Cruz P20,000 or deliver to him a computer of the same value
at his option." III. "Pay to the order of Juan Cruz P20,000 or deliver to him a computer of the same
value." IV. "Pay to the order of Juan Cruz a computer worth P20,000." Assuming all the other
requisites of negotiability are present, which of the foregoing instruments are negotiable?
*
1/1
I and III
III and IV
I and II

II and III

Assuming all other requisites of negotiability are present, which of the following instruments is not
payable to bearer?
*
1/1
"Pay to the order of Jose Rizal, national hero."
"Pay to Juan Cruz or bearer."
"Pay to the order of cash."
"Pay to Juan Cruz, bearer."

A feature or characteristic of a bill of exchange not found in a promissory note:

*
0/1
Order to pay
Promise in writing to pay
Unconditional promise in writing
Promise to pay

“Pay to Kai Padilla, notice of dishonor waived” is an example of

*
1/1
Special Indorsement
Restrictive Indorsement
Facultative Indorsement

Qualified Indorsement
Which of the following instruments is negotiable?
*
1/1
Trade acceptance

Letter of credit
Postal money order
Treasury warrant

Which of the following instruments is non-negotiable?

*
1/1
“Pay to C or order P20,000 out of my cash in your possession.” (Addressed to T, signed by
D)

“Pay to C or order P20,000 and reimburse yourself out of my cash in your possession.”
(Addressed to T, signed by D)
“Pay to C or order P20,000.” (Addressed to T, signed by D)
“I promise to pay C or order, P20,000.” (Signed D)

It refers to a mode of dissolving a pr or petition for dissolution to Securities and Exchange

Commission
*
1/1
Dissolution by operation of law
Involuntary mode
Voluntary mode

Legal dissolution

Which of the following is a valid address to a drawee so as to make the instrument negotiable?
*
1/1
"To Gabby Holand and Travis Parker."

"To Gabby Holand and another drawee named Travis."

"To Gabby Holand, or in her absence, Travis Parker."
"To Gabby Holand or Travis Parker."

STATEMENT 1: A resident agent may neither an individual residing in the Philippines nor a
domestic corporation lawfully transacting business in the Philippines. STATEMENT 2: An
individual resident agent must be of good moral character or of sound financial standing.
*
0/1
TRUE, FALSE
FALSE, FALSE
FALSE, TRUE

TRUE, TRUE
Which of the following renders an instrument non-negotiable?
*
1/1
The sum payable is to be paid with costs of collection or an attorney's fee in case payment is not
made at maturity.
The instrument contains a provision authorizing the sale of collateral securities in case the
instrument is not paid at maturity.
The promise or order to pay is coupled with a statement of the transaction that gave rise to the
transaction.
The promise or order is to pay the amount of the instrument out of a particular fund.

When a corporation is voluntary dissolved by amending its articles of incorporation to shorten its
corporate term, when will the corporation be deemed dissolved?
*
1/1
Upon approval of the amended articles of incorporation or the expiration of the shortened
term, as the case may be, the corporation shall be deemed dissolved without any further
proceedings, subject to the provisions of this Code on liquidation.

There must be decision by the SEC.

There must be approval by the corporate creditors.
There must be court order.

Which of the following instruments is not negotiable because it lacks the requirement of an
unconditional promise or order to pay sum certain in money?
*
1/1
Check
Promissory Note
Bill of exchange
Cerificate of Stock

The following are functions of a negotiable instrument. Choose the exception:

*
1/1
It increases purchasing power in circulation.
It increases credit circulation.
As substitute for money.
As legal tender

Which of the following may be raised as defense against any holder?

*
1/1
Insertion of a wrong date.
Want of delivery of complete instrument.
Want of delivery of an incomplete instrument.

Want of consideration.

Consider these two statements: I. An instrument originally payable to order may be converted into
a bearer instrument. II. An instrument originally payable to bearer may not be converted into an
order instrument. IN YOUR EVALUATION OF THE FOREGOING STATEMENTS:
*
0/1
Only statement 2 is true.
Only statement 1 is true.

Both statements are false.

Both statements are true.

An accommodation party is not:

*
0/1
the surety of the accommodated party.
a signatory to the instrument as maker, drawer, acceptor or indorser.
a real party but merely lends his name.
liable to a holder in due course.

Which of the following is an order instrument under the Negotiable Instruments Law?
*
0/1
When the name of the payee does not purport to be the name of any person.

When the instrument is payable to a person named in the instrument or dearer.

When the instrument is payable to the order of the drawee.
When the instrument is payable to the order of a fictitious or non-exiting person, and such fact was
known to the person making it so payable.

May a foreign corporation file a case on a contract it entered into despite doing business in the
Philippines without the necessary license?
*
1/1
Yes by virtue of doctrine of estoppel but it must first acquire the necessary license before
the appropriate government agency for the action to prosper.

No because it will encourage violation of Corporation Code.

Yes in all instances
No because it has no license as required by Corporation Code

STATEMENT 1: The simplest approach for involuntary dissolution is by shortening the corporate
term . STATEMENT 2: The simplest approach for voluntary dissolution is by lengthening the
corporate term .
*
1/1
TRUE, TRUE
FALSE, TRUE
TRUE, FALSE
FALSE, FALSE

Under the Negotiable Instruments Law, a certificate of stock is not a negotiable instrument
because it lacks the requisites of:
*
1/1
It 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 tie.

It must be payable to order or bearer.

One of the requisites of a negotiable instrument is that it must contain an unconditional promise or
order to pay a sum certain in money. The following clauses do not express a sum certain. Which is
the exception?
*
1/1
To pay P1,000 with interest at 12% per annum.

To pay P1,000 and the reasonable wage for six days of work.
To pay P1,000 or what may be due on my current deposit.
To pay P1,000 and also all other sums which may be due to him.

STATEMENT 1: In order to be negotiable, promissory notes must be in writing and signed by a

drawer. STATEMENT 2: A negotiable instrument may be payable in kind.
*
1/1
TRUE, TRUE
TRUE, FALSE
FALSE, TRUE
FALSE, FALSE

“Pay to Jae in trust for Jacob” (Sgd) James, is an example of

*
1/1
Special Indorsement
Restrictive Indorsement

Facultative Indorsement
Qualified Indorsement
STATEMENT 1: Providing notice of dishonor is to enable the party to be charged to preserve and
protect his rights against prior parties and to make him liable to the holder. STATEMENT 2:
Where the instrument is payable at a fixed period after date, after sight, or after the happening of a
specified event, the time of payment is determined by including the day from which time is to begin
to run, and by including the date of payment. STATEMENT 3: In case of failure to give notice of
dishonor, the drawer or indorser is discharged, unless notice is dispensed with.
*
0/2
TRUE, TRUE, TRUE

TRUE, TRUE, FALSE

TRUE, FALSE, TRUE
TRUE, FALSE, FALSE
FALSE, TRUE, FALSE
FALSE, TRUE, TRUE
FALSE, FALSE, TRUE
NONE OF THESE
FALSE, FALSE, FALSE
Correct answer
TRUE, FALSE, TRUE

STATEMENT 1: When an instrument is dishonored and due notice is given to the parties primarily
liable, that is, drawer and indorser, the holder may proceed against any of them. STATEMENT 2:
Notice of dishonor is the bringing, verbally or in writing, to the knowledge of the drawer or indorser
of an instrument, the fact that a specified negotiable instrument, upon proper proceedings taken,
has not been accepted, or has not been paid, and that the party notified is expected to pay it.
STATEMENT 3: Instruments falling due or becoming payable on Saturday are to be presented for
payment on the next succeeding business day, except that instruments payable on demand may,
at the option of the holder, be presented for payment before 12:00 on Saturday when that entire
day is a holiday.
*
2/2
TRUE, TRUE, TRUE
FALSE, TRUE, TRUE
TRUE, FALSE, FALSE
FALSE, TRUE, FALSE

FALSE, FALSE, TRUE

TRUE, FALSE, TRUE
FALSE, FALSE, FALSE
NONE OF THESE
TRUE, TRUE, FALSE

STATEMENT 1: Where there are several persons, no partners, primarily liable on the instrument
and no place of payment is specified, presentment must be made to them all. STATEMENT 2:
When the instrument is dishonored by non-payment, an immediate right of recourse to all parties
secondarily liable thereon accrues to the holder. STATEMENT 3: Where the person primarily
liable on the instrument is dead and no place for payment is specified, presentment for payment
must be made to his personal representative, if such there be, and if, with the exercise of
reasonable diligence, he can be found.
*
0/2
FALSE, TRUE, TRUE
FALSE, TRUE, FALSE
TRUE, TRUE, FALSE
NONE OF THESE
FALSE, FALSE, TRUE
FALSE, FALSE, FALSE

TRUE, TRUE, TRUE

TRUE, FALSE, FALSE
TRUE, FALSE, TRUE
Correct answer
TRUE, TRUE, TRUE

STATEMENT 1: Every negotiable instrument is payable at the time fixed therein with grace.
STATEMENT 2: By presentment for payment is meant “the production of a bill of exchange to the
drawer or acceptor for payment or the production of a promissory note to the party liable for the
payment of the same. STATEMENT 3: When the day of maturity of the instrument falls upon
Sunday or a holiday, the instrument is payable on the next succeeding day.
*
2/2
FALSE, TRUE, FALSE
TRUE, TRUE, FALSE
FALSE, FALSE, TRUE
TRUE, FALSE, FALSE
NONE OF THESE
TRUE, FALSE, TRUE
FALSE, TRUE, TRUE
FALSE, FALSE, FALSE

TRUE, TRUE, TRUE

Secondarily liable
*
1/1
Drawee
Acceptor of a bill of exchange
Drawer of a bill

Maker of a promissory note

STATEMENT 1: Where the persons primarily liable on the instrument are liable as partners and no
place of payment is specified, presentment for payment may be made to any one of them, even
though there has been a dissolution of the firm. STATEMENT 2: Where the person giving and the
person to receive notice reside in different places if the notice of dishonor is given at his
residence, it must be given before the usual hours of rest on the day following. STATEMENT 3: A
misdescription of the instrument does not vitiate the notice unless the party to whom the notice is
given is in fact misled thereby.
*
2/2
FALSE, FALSE, FALSE
FALSE, TRUE, FALSE
TRUE, FALSE, FALSE
FALSE, FALSE, TRUE
TRUE, TRUE, FALSE
FALSE, TRUE, TRUE
TRUE, FALSE, TRUE

NONE OF THESE
TRUE, TRUE, TRUE

STATEMENT 1: Where a party receives notice of dishonor, he has, after the receipt of such
notice, the same time for giving notice to prior parties that the holder has after the dishonor.
STATEMENT 2: A written notice need to be signed and an insufficient written notice may be
supplemented and validated by verbal communication. STATEMENT 3: Where the person giving
and the person to receive notice reside in different places, if the notice of dishonor is sent by mail,
it must be deposited in the post office in time to go by mail the day following the day of dishonor,
or if there be no mail at a convenient hour on that day, by the next mail thereafter.
*
0/2
FALSE, FALSE, TRUE
FALSE, TRUE, FALSE

TRUE, FALSE, TRUE

TRUE, FALSE, FALSE
TRUE, TRUE, TRUE
NONE OF THESE
FALSE, TRUE, TRUE
FALSE, FALSE, FALSE
TRUE, TRUE, FALSE
Correct answer
TRUE, FALSE, TRUE

STATEMENT 1: An instrument is dishonored by non-payment when it is duly presented for

payment and payment is refused or cannot be obtained. STATEMENT 2: Presentment for
payment, to be sufficient, must be made at a proper place. STATEMENT 3: When the maturity of
the instrument falls on Sunday or a holiday, it will be payable on the next succeeding day.
*
2/2
TRUE, FALSE, FALSE
FALSE, FALSE, FALSE
NONE OF THESE
TRUE, TRUE, TRUE
TRUE, TRUE, FALSE
FALSE, TRUE, FALSE
FALSE, TRUE, TRUE
TRUE, FALSE, TRUE
FALSE, FALSE, TRUE

STATEMENT 1: Where the person giving and the person to receive notice stay in the same
place, if the notice of dishonor is sent by mail, it must be deposited in the post office in time to
reach him in usual course on the day following. STATEMENT 2: Notice may be given as soon as
the instrument is dishonored, unless delay is waived. STATEMENT 3: Where notice is given by or
on behalf of a party entitled to give notice, it inures to the benefit of the holder and all parties
succeeding to the party to whom notice is given.
*
0/2
TRUE, TRUE, TRUE
TRUE, FALSE, TRUE
FALSE, TRUE, FALSE

FALSE, FALSE, TRUE

NONE OF THESE
TRUE, FALSE, FALSE
TRUE, TRUE, FALSE
FALSE, TRUE, TRUE
FALSE, FALSE, FALSE
Correct answer
TRUE, TRUE, TRUE

Requisites of a valid presentment for payment of a promissory note, except

*
1/1
None of these.

Made at a reasonable hour on a business day

Made within a reasonable time after issue
Made by the holder or his agent

STATEMENT 1: Presentment for payment, to be sufficient, must be made by the holder, or by

some person authorized to receive payment on his behalf. STATEMENT 2: Notice of dishonor is
bringing either verbally or in writing, to the knowledge of the drawer or the indorser of an
instrument, the fact that a specified negotiable instrument, upon proper proceedings taken, has
been accepted, or has not been paid, and that the party notified is expected to pay it.
STATEMENT 3: Presentment for payment, to be sufficient, must be made at a reasonable hour on
a business day.
*
0/2
FALSE, TRUE, TRUE

NONE OF THESE
FALSE, FALSE, FALSE
TRUE, TRUE, TRUE
FALSE, FALSE, TRUE
TRUE, FALSE, FALSE
TRUE, TRUE, FALSE
FALSE, TRUE, FALSE
TRUE, FALSE, TRUE
Correct answer
TRUE, FALSE, TRUE

Presentment for acceptance of a bill of exchange is not necessary -

*
0/1
Where it is payable at a certain number of days after date.
Where the bill is payable after sight
Answer not given.

Where the bill is drawn payable elsewhere than at the residence or place of business of the
drawee.
Correct answer
Where it is payable at a certain number of days after date.

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:
*
1/1
Where the drawer and the drawee are the same person.
Where the drawer has countermanded payment.
Where the drawer is the person to whom the instrument is presented for payment.
Where the instrument was made or accepted for his accommodation.

Which of the following is not a secondary party?

*
0/1
Payor
Acceptor for honor

Drawer
Endorser
Correct answer
Payor

A makes a promissory note payable to B or order. B indorses the note to C, then C to D, D to E

and E to F, the holder who 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?
*
1/1
The notice to E inures to the benefit of D.

The notice to C inures to the benefits of D, E and G.

The notice given by F to B inures to the benefits of C, D, E and G.
The notice to D inures to the benefits of E and G.

STATEMENT 1: In order to discharge the instrument, the payment must be a payment in due
course, and second, a payment made by the principal debtor STATEMENT 2: Giving of notice
may be relatively excused where the indorser has no reason to expect that the instrument
will be honored, as when he has countermanded payment or where the drawee is fictitious
or without capacity to contract. STATEMENT 3: Payment by a person ultimately liable,
whatever his position in the paper, is a discharge of the instrument.
*
0/2
FALSE, FALSE, FALSE

FALSE, FALSE, TRUE

TRUE, FALSE, TRUE
NONE OF THESE
TRUE, TRUE, TRUE
FALSE, TRUE, FALSE
TRUE, FALSE, FALSE
TRUE, TRUE, FALSE
FALSE, TRUE, TRUE
Correct answer
TRUE, TRUE, TRUE

The following are functions of a negotiable instrument. Choose the exception:

*
1/1
As substitute for money.
It increases credit circulation.
It increases purchasing power in circulation.
As legal tender

STATEMENT 1: The check is always payable on demand. STATEMENT 2: When the principal
debtor becomes the holder in his own right before maturity, the instrument is discharges by
confusion or merger. STATEMENT 3: Payment by a party secondarily liable discharges the
instrument unless he is the party ultimately liable.
*
2/2
TRUE, FALSE, TRUE
TRUE, FALSE, FALSE

TRUE, TRUE, FALSE

NONE OF THESE
FALSE, FALSE, TRUE
FALSE, TRUE, FALSE
TRUE, TRUE, TRUE
FALSE, FALSE, FALSE
FALSE, TRUE, TRUE

STATEMENT 1: A bill of exchange is an unconditional order in writing addressed by one person to

another, signed by the person giving it, requiring the person to whom it is addressed to pay on
demand or at a fixed or determinable future time a sum certain in money to order or to bearer.
STATEMENT 2: An inland bill of exchange is a bill which on its face purports to be, both drawn
and payable within the Philippines; any other bill is a foreign bill. STATEMENT 3: The non-
acceptance of a bill and the giving of notice to the parties secondarily liable fixes the rights and
obligations of the parties to an instrument.
*
0/2
TRUE, TRUE, TRUE
TRUE, FALSE, TRUE
FALSE, FALSE, TRUE
FALSE, FALSE, FALSE
NONE OF THESE
FALSE, TRUE, TRUE
TRUE, TRUE, FALSE

TRUE, FALSE, FALSE

FALSE, TRUE, FALSE
Correct answer
TRUE, TRUE, TRUE

STATEMENT 1: Person secondarily liable is discharged by any agreement binding upon the
holder to extend the time of payment, unless made with the consent of the party secondarily liable
or the right is expressly reserved. STATEMENT 2: Draft is a bill of exchange payable on demand
or at sight or at some future determinable time. STATEMENT 3: Waiver may be made before the
time of giving notice, such as express waiver in the body of the instrument or added to the
signature of the party
*
0/2
TRUE, TRUE, FALSE

NONE OF THESE
FALSE, TRUE, TRUE
FALSE, FALSE, TRUE
FALSE, FALSE, FALSE
FALSE, TRUE, FALSE
TRUE, FALSE, FALSE
TRUE, TRUE, TRUE
TRUE, FALSE, TRUE
Correct answer
TRUE, TRUE, TRUE

STATEMENT 1: The principal debtor is the party secondarily liable unless there is another party
ultimately liable on the instrument. STATEMENT 2: Where the instrument is so ambiguous that
there is no doubt on whether it is a bill or a note, the holder may treat it as either at his option.
STATEMENT 3: Parties secondarily liable are discharged, when there is intentional cancellation of
his signature by the holder.
*
0/2
FALSE, TRUE, FALSE
FALSE, FALSE, FALSE

TRUE, TRUE, FALSE

TRUE, FALSE, TRUE
FALSE, FALSE, TRUE
FALSE, TRUE, TRUE
TRUE, FALSE, FALSE
NONE OF THESE
TRUE, TRUE, TRUE
Correct answer
FALSE, FALSE, TRUE

Which of the following does not discharge a negotiable instrument?

*
1/1
Payment by maker of a promissory note before maturity.

Intentional cancellation of the instrument by the holder.

Payment by party primarily liable to holder or his authorized representative.
Voluntary surrender of the instrument by the holder to the maker without collecting.

It is a bill which is, or on its face, purports to be both drawn and payable in the Philippines.
*
1/1
Alien bill
National bill
Inland bill

Foreign bill

STATEMENT 1: Trade acceptance is a A draft or a bill of exchange drawn by the seller on the
purchaser of goods and accepted by the latter by signing it as drawee. It has a definite date of
maturity. STATEMENT 2: A drawer tells drawee B not to pay the bill. F holder need not
give notice to A drawer. An allegation that payment of a check had been countermanded is
sufficiently set out where the check was set forth with the indorsement across the face
“Payment stopped”. STATEMENT 3: The indorser must be aware of the fact that the drawee is
fictitious or not having capacity to contract. Otherwise, notice of dishonor must be given to such
indorser to charge him.
*
0/2
TRUE, TRUE, FALSE

FALSE, FALSE, FALSE

TRUE, TRUE, TRUE
FALSE, TRUE, TRUE
TRUE, FALSE, TRUE
TRUE, FALSE, FALSE
NONE OF THESE
FALSE, TRUE, FALSE
FALSE, FALSE, TRUE
Correct answer
TRUE, TRUE, TRUE

STATEMENT 1: An inland bill of exchange is a bill which on its face purports to be, both drawn
and payable within the Philippines; any other bill is a foreign bill. Unless the contrary appears on
the face of the bill, the holder may treat it as a foreign bill. STATEMENT 2: The distinction is
important because inland bills are required to be protested because failure to do so will discharge
parties secondarily liable thereon. STATEMENT 3: A bill of exchange may be treated as
promissory note when the drawee is fictitious.
*
2/2
FALSE, FALSE, TRUE

TRUE, TRUE, TRUE

TRUE, TRUE, FALSE
FALSE, TRUE, TRUE
TRUE, FALSE, FALSE
FALSE, FALSE, FALSE
TRUE, FALSE, TRUE
FALSE, TRUE, FALSE
NONE OF THESE

STATEMENT 1: Where payment is made by a party who is not a primary obligor or an

accommodation party, his payment only conceals his own liability and those who are obligated
after him. All prior parties primarily or secondarily liable on the bill, are liable to such a payer,
and the payer may cancel indorsements subsequent to his own and reissue the paper, and it
will be valid as against the prior parties. STATEMENT 2: Payment by an accommodation
party isn’t a discharge of the instrument, whatever his position thereon and whether
the indorsement be regular or anomalous. STATEMENT 3: Payment by the drawer or indorser
is not a discharge of the instrument.
*
0/2
NONE OF THESE
TRUE, TRUE, FALSE
TRUE, FALSE, TRUE
FALSE, TRUE, TRUE
FALSE, TRUE, FALSE
FALSE, FALSE, TRUE
TRUE, FALSE, FALSE
TRUE, TRUE, TRUE
FALSE, FALSE, FALSE

Correct answer
TRUE, TRUE, TRUE

STATEMENT 1: Negotiable instrument is discharged when the principal debtor becomes the
holder of the instrument at or after maturity in his own right. STATEMENT 2: If payment is made
before the date of maturity, the instrument is not discharged as the payment is not in due course.
STATEMENT 3: When notice of dishonor need not be given to indorser, when the drawee is a
fictitious person or a person not having capacity to contract, and the indorser was aware of that
fact at the time he indorsed the instrument.
*
2/2
FALSE, TRUE, FALSE
FALSE, FALSE, FALSE
NONE OF THESE
FALSE, FALSE, TRUE
TRUE, TRUE, FALSE
FALSE, TRUE, TRUE
TRUE, TRUE, TRUE

TRUE, FALSE, TRUE

TRUE, FALSE, FALSE

A feature or characteristic of a bill of exchange not found in a promissory note:

*
0/1
Promise to pay

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

Which of the following is a valid address to a drawee so as to make the instrument negotiable?
*
1/1
"To Gabby Holand and another drawee named Travis."
"To Gabby Holand, or in her absence, Travis Parker."
"To Gabby Holand or Travis Parker."
"To Gabby Holand and Travis Parker."

The following are the essential requisites of a negotiable bill of exchange, except
*
0/1
It must be payable to order or bearer.
Since it is addressed to a drawee, he must be named or otherwise indicated therein with
reasonable certainty.
The drawer or payee must be different persons.
It must be payable on demand, or at a fixed time or at a determinable future time.
It must contain an unconditional order to pay a sum certain in money.
It must be in writing and signed by the drawer.

Correct answer
The drawer or payee must be different persons.