Questions

Questions

1. Which of the following Is not a promise to pay, and thus will make an instrument
non-negotiable?

A. " I agree to pay P“

B. "I bind myself to pay P“
C. "I acknowledge my debt to P“
D. "I oblige myself to pay P”

2. M signs a promissory note payable to the order p which is blank as to amount. M

delivers a note to p with the instruction to type the amount of 20000 on the blank. P
however type the amount of 50000 and negotiates the same to a, a to b, b to c and c
to h, a holder in due course. A b c and also h had to knowledge of the wrongful
completion of the blank.

A. H may collect from m nothing because p violated m's instruction

B. H may collect from m the amount of 20000 the amount m instructed p to place on
the space for the amount.
C. H may collect from m 50000 tamount actually placed by p.
D. H may collect from a b or c 20000 since they had no knowledge of the wrongful
completion.

3. M made a promissory note in favour of p or order. The note, which was payable after
60 days from date of issue, amounts to 100000 and bears interest at 10% per
annum. After the delivery of the note to him, p altered the interest rate to 18% per
annum without the knowledge of m and indorse to it to a who knew nothing of the
alteration. Thereafter a indorsed the note to h, a holder in due course.

A. H may not collect any amount whether of the principal or the interest from m.
B. H may collect 100000 and interest at 10% per annum from m.
C. H may collect 100000 and interest at 18% per annum from m.
 D. H may not collect any amount whether of the interest, from a, since a was not
aware of the alteration.

4. The acceptor, by accepting the instrument admits the following:

A. Existence of the payee.

B. Capacity of the payer to indorse.
C. Genuineness of the drawers’ signature
D. Tight of the holder to force payment of the instrument

5. Dating an instrument earlier than the date of issue.

A. Post-dating
B. Ante-dating
C. Immediate party
D. Notice of Dishonor

6. Dating an instrument later than the date of issue.

A. Immediate party
B. Notice of Dishonor
C. Post-dating
D. Ante-dating

7. The following are the rules of date or dating of instrument, except:

A. When date necessary but not for negotiability

B. The instrument bears a seal
C. Presumptions as to date
D. Ante-dating / Post-dating of instrument
8. It does not avoid the instrument in the hands of a subsequent holder in the due
course; but as to him the date so inserted is the true date.

A. Post-dated
B. Ante-dated
C. Effect of insertion of a wrong date
D. Presumption as to date

9. In what section does this statement belong, “Every negotiable instrument is

deemed prima facie to have been issued for a valuable consideration; and every
person whose signature appears thereon to have become a party thereto for a
value.”

A. Section 21
B. Section 22
C. Section 23
D. Section 24

10. The placing of date in an instrument is necessary in the following cases, except:

A. To fix the maturity of the instrument of the instrument

B. To determine when interest is to run
C. To fix the prescriptive period
D. To make the instrument negotiable

11. An instrument which is not dated will be considered dated as at the time of:

A. Acceptance
B. First indorsement
C. Second indorsement
D. Issuance
12. R signs a check amounting to 50,000 but which is blank as to the name of payee. He
keeps the check in his drawer but S, his secretary, steals it , places her name as
payee on the blank , and negotiates it to A, A to B, B to C, and C to H, holder. A,B and
C have no knowledge of the theft of the check and its unauthorized completion by S.
Based on the foregoing , which of the following statements is incorrect ?

A. H may enforce payment of the check against R if H is a holder in due course.

B. H may enforce a payment of the check against S, whether H is a holder in due
course or not
C. H may enforce payment of the check against A,B, and C whether H is a holder in
due course or not.
D. H may not enforce payment of the check against R, whether H is a holder in due
course or not.

13. M makes a note payable to the order of P. He delivers the note to P with the
instruction that P should keep the same until M has obtained the proceeds of his
loan from the bank. P, however, disregarded the instruction of M and indorsed the
note to A, A to B, B to C, and C to H, holder. A, B, C have no knowledge of P's
defective title. Based on the foregoing, which of the following statements is
incorrect?

A. H may enforce payment against M if H is a holder in due course.

B. H may not enforce payment against M if H is not a holder in due course.
C. H may not enforce payment against A, B and C, whether H is a holder in due
course or not.
D. H may enforce payment against P, whether H is a gold r in due course or not.

14. M signs a promissory note payable to the order of P which is blank as to amount. M
delivers the note to P with the instruction to type the amount of P20,000.00 on the
blank. P, however, types the amount of P50,000.00, and negotiates the same to A, A
 to B, B to C, and C to H, a holder in due course. A, B, C and also H had no knowledge
of the wrongful completion of the blank.

A. H may collect from M nothing because P violated M's instructions.

B. H may collect from M P20, 000.00 the amount M instructed P to place on
the space for the amount.
C. H may collect from M P50, 000.00, the amount actually placed by P.
D. H may collect from A, B or C P20, 000.00 since they had no knowledge of
the wrongful completion.

15. M makes a note payable to P or bearer and delivers the note to P. P indorses the
note to A. A keeps the note in his drawer but it is stolen by F who negotiates the
same to B by forging A's signature. B indorses the note to C, C indorses the note to H,
a holder in due course. Who among the following can set up the defense of forgery?

A. M, maker
B. P, payee
C. A, indorser
D. Forgery is not available as defense to any party to the instrument.

16. M makes a note payable to the order of P for P10,000.00. P indorses the note to A,
and A to B. Thereafter, B indorsed the amount of the note in full to H to secure his (B's)
debt of P8, 000.00 to H. Based on the foregoing, which of the following statements is
incorrect?
A. If M has no defenses against H, H may collect P10, 000.00 from M.
B. If M has personal defenses against H, H may collect P8, 000.00 from M.
C. If M has real defenses against H, H may collect nothing from M.
D. H cannot collect anything from M whether M has real or personal defenses.

17. A holder is a holder in due course if he has taken the instrument complete and
regular on its face and three of the following conditions, except:
 A. That he became the holder of the instrument before it was overdue and without
notice that it had been previously dishonored if such was the fact.
B. That he took it in good faith and for value.
C. That there is no fraud or illegality affecting the instrument.
D. That at the time it was negotiated to him, he had no notice of any infirmity in the
instrument or defect in the title of the person negotiating the same.

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

A. Want of consideration
B. Want of delivery of complete instrument
C. Insertion of a wrong date
D. Want of delivery of an incomplete instrument.

19. M executed a promissory note in the amount of P20,000.00 payable to the order of
P. M made the promissory note for goods purchased by M from P shortly after M
obtained the consent of P whether the latter would accept the promissory note in
the meantime. When P visited M's office to collect the note, M was not around, but
P found on M's table the completed note that M made for him. Without waiting for
M, P took the note, Based on the foregoing, which of the following statements is
incorrect?

A. P cannot enforce payment of the note if M refuses to pay it.

B. If P indorsers the note to H who knows nothing on how P obtained the note. H
can collect on the note from M.
C. If P indorsers the note to H who knows how P obtained the note from M. H cannot
collect from M.
D. If P indorsers the note to H, H can collect from M whether H was aware or not
on how the note was obtained by P since he (H) was not a party to the wrongdoing
committed by P.
20. P executes a promissory note for P20, 000.00 indicating therein that the maker is M
and that it is payable to the order of P. Thereafter, he 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 foregoing data,
which of the following statement is correct?

A. H can collect from M if H is a holder in due course.

B. H cannot collect from M whether H is a holder in due course or not.
C. H can collect from A, B or C whether H is a holder in due course or not.
D. H can collect from P whether H is a holder in due course or not.

21. Which of the following defenses may a party to an instrument avail himself of
against any holder?

A. Want of delivery of incomplete instrument.

B. Want of authority to complete an instrument that was delivered.
C. Want of delivery of complete instrument.
D. Want or absence of consideration.
22. A persons who transfers a negotiable instrument by means of an indorsement.

A. Payee
B. Indorser
C. Indorsee
D. Holder

22. One that has knowledge of the conditions or limitations placed upon the delivery of
the instrument or the fact that the instrument was never delivered.

A. Holder for value

B. Immediate party
C. Qualified indorsement
D. Restrictive indorsement
24. Consider the following statements on the interpretation of instrument.
 I. Where the sum payable is expressed in words and also in figures and there is a
discrepancy between the two, the sum denoted by the words is the sum payable.
II. Where there is a conflict between the written and printed provisions of the
instrument, the printed provisions prevail.

A. Both statement is true

B. Both statement is false
C. Statement I is true, statement II is false.
D. Statement I is false, statement II is true

25. The person who executes the written order to pay a bill of exchange

A. Payee
B. Drawer
C. Drawee
D. Holder

26. The act of appointing another as one’s agent or attorney and which operates as a
notice that an agent has a limited authority to sign.

A. Assignment
B. Special Indorsement
C. Signature by Procuration
D. Restrictive Indorsement

27. The counterfeit making or fraudulent alteration of any writing, and may consists in
the signing of another’s name, or the alteration of an instrument in the name, amount,
description of the person and the like, with intent to defraud.

A. Forgery
 B. Signature by Procuration
C. Spoliation
D. Protest

28. Consider the following statements of the effect of signature per procuration.

Statement 1 : Constitutes a warning that an agent has a limited authority

Statement 2 : A person who takes the instrument so signed is bound at his

peril to
inquire into the extent and nature of the agent’s authority, and this
applies to every person

A. Both statement is true

B. Both statement is false
C. Statement I is true , Statement II is false
D. Statement I is false , Statement II is true

29. All of the following are the effects of forged signature except ,

A. no right to retain
B. no right to give a discharge
C. no right to enforce payment can be acquired.
D. no right to control

30. Under Sec. 21 Signature per Procuration , for an agent to be not liable on the
instrument he were duly authorized to sign for on behalf of a principal , the
following are the requisites except :

A. he must be duly authorized

B. he must have a witness for signing the instrument
C. he must add words to his signature indicating that he signs as an agent
 D. he must disclose his principal

31. The indorsement or assignment of the instrument by a corporation or by an infant

passes the property therein, notwithstanding that from want of capacity, the
corporation or infant may incur no liability thereon can be seen under what
section?

A. Sec. 21
B. Sec. 22
C. Sec, 23
D. Sec. 24

32. The following are the words that may be used to indicate that a person signs as an
agent except :

a. Per Procuration
b. Per Proc.
c. Per. Procurat.
d. P.P

33. A signature which is forged or made without authority is wholly __________.

a. inoperative.
b. Active
c. Busy
d. functioning

34. COGNOVIT ACTIONEM literally means :

a. “he has confessed action”

b. “he has denied the judgment ”
 c. “his pleading being abandoned”
d. “his argument being rejected ”

35. RELICTA VERIFICATIONE literally means :

a. “he has confessed action”

b. “he has denied the judgment ”
c. “his pleading being abandoned”
d. “his argument being rejected ”

36. If the phrase “at the option of the holder” or words of similar import are not
included in the above illustration, the instrument is :

a. negotiable for the reason that the option will belong to the maker or other
debtor such as the drawee
b. not negotiable for the reason that the option will belong to the maker or
other creditor such as the drawee
c. negotiable for the reason that the option will belong to the maker or other
creditor such as the drawee.
d. not negotiable for the reason that the option will belong to the maker or
other debtor such as the drawee

37. The validity and negotiable character of an instrument are not affected by the fact
that:

a. It is not dated
b. Does not specify the value give, or that any value had been given therefor
c. Does not specify the place where it is payable
d. Does not bears a seal
e. Designates a particular kind of current money in which payment is to be
made
38. Effect if a mechanically incomplete instrument is completed and delivered without
authority

Statement 1: Instrument shall not be valid in the hands of any holder, as against
any person whose signature was placed thereon before delivery. (Sec.16)

Statement 2: Instrument shall be valid in the hands of any holder, as against any
person whose signature was placed thereon before delivery. (Sec.16)

A. Both statement is true

B. Both statement is false
C. Statement I is true , Statement II is false
D. Statement I is false , Statement II is true
39. Where the language of the instrument is ambiguous or there are omissions therein,
the following rules of construction shall apply:

I. Where the sum payable is expressed in words and also in figures and there is
an discrepancy between the two, the sum denoted by the words is the sum
payable; but if the words are ambiguous or uncertain, reference may be had
to the figures to fix the amount.
II. Where the instrument provides for the payment of interest, without
specifying the date from which the interest is to run, the interest runs from
the date of the instrument, and if the instrument is undated, from the issue
thereof.
III. Where the instrument is not date, it will be dated as after time it was issued.
IV. Where there is a conflict between the written and printed provisions of the
instrument, the written provisions prevail.
V. Where the instrument is so ambiguous that there is doubt on whether it is a
bill or a note, the holder may not treat it as either at his option.
 Which of the following is true ?
A. I , II , III and IV
B. I, III and V
C. I , II and IV
D. III and IV

40. Effect of insertion of a wrong date

Statement 1. It avoids the instrument in the hands of a subsequent holder in due

course; but as to him the date so inserted is the true date

Statement 2. It does not avoid the instrument in the hands of a subsequent

holder in due course; but as to him the date so inserted is the true date

A. Both statement is true

B. Both statement is false
C. Statement I is true , Statement II is false
D. Statement I is false , Statement II is true

41. Effect of ante dating or post-dating of instrument

Statement 1.The instrument is not rendered valid provided it is not done for an
illegal or fraudulent purpose.

Statement 2.. The person to whom an instrument so dated is delivered does not
acquires title thereto as of the delivery.

A. Both statement is true

B. Both statement is false
C. Statement I is true , Statement II is false
D. Statement I is false , Statement II is true
42. The place of presentment --- Presentment for payment is made at the proper
place,--- In what section under is this statement?

A. Section 70
B. Section 71
C. Section 72
D. Section 73

43. Based on the rule in alternative obligations,

A. the choice of the presentation does not belong to the debtor unless it has
been expressly granted to the creditor.
B. the choice of the presentation does not belong to the creditor unless it has
been expressly granted to the debtor
C. the choice of the presentation belongs to the debtor unless it has been
expressly granted to the creditor.
D. the choice of the presentation belongs to the creditor unless it has been
expressly granted to the debtor.

44. The authority for confession of judgment before the action is begun is known as

A. warrant of attorney
B. confession statement
C. letter of judgment
D. certificate of confession

45. This refers to an instrument which is wanting in a material particular such as the
amount of the instrument or the name of the payee, and it is undelivered.
 A. Concept
B. Promissory note
C. Certificate of Confession
D. Object

46. Sec. 15. Incomplete instrument not delivered. –

Statement I.Where an incomplete instrument has not 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 placed
thereon before delivery.
Statement II. 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.

A. Both statement is true

B. Both statement is false
C. Statement I is true , Statement II is false
D. Statement I is false , Statement II is true

47. Prima facie authority to fill up the blanks and Prima facie authority to fill up the
instrument for any amount are the two kinds of prima facie authority which exists
in

A. a mechanically incomplete but delivered instrument

B. a mechanically incomplete but undelivered instrument
C. a mechanically complete but delivered instrument
D. a mechanically complete but undelivered instrument
48. One of the following can set up the defense of forgery in an instrument payable to
order. Who is it?

A. An indorser, if the maker's signature is forged.

B. The acceptor, if the drawer's signature is forged.
C. A person negotiating by mere delivery if a prior party's signature is forged.
D. The maker, if an indorser's signature is forged.

49. Which of the following is not a right of a holder in due course?

A. To hold the instrument free from defect of title of prior parties.

B. To hold the instrument free from personal defenses available to prior
parties among themselves.
C. To enforce payment of the instrument for the full amount thereof against
all parties liable thereon.
D. To hold the instrument free from real defenses available to the prior
parties among themselves.

50. M executed a note payable to the order of P. P indorsed the note to A, A to B (by
qualified indorsement), B to C (by general indorsement), and C (by general
indorsement) to H, a holder in due course. Later, it was discovered that P was a
minor. None, except P, knew that he was a minor. Who, aside from P, may avail
himself of the minority of P as a defense?

A. M, maker.
B. A, qualified indorser.
C. B, general indorser.
D. None, only P may avail himself of his minority as a defense.