1. A negotiable instrument is payable on c.

To a payee whose name does not purport to

demand be the name of any person
a. When it is expressly payable on demand at d. Both a & c
sight or upon presentation;
b. When there is no date of maturity; 9. An instrument is antedated when it
c. When it is endorsed already overdue contains a date
d. All of the above a. Earlier than the true date of its issuance
b. Later than the date of its issuance
2. An instrument is valid and negotiable c. The exact date of its issuance
a. When it is payable on five installments d. None of the above
b. When it is payable in money and in kind
c. When it is payable in money or in kind at the 10. When the instrument is not dated, it would
option of the payee be considered to be dated as of
d. All of them a. The time it was issued
b. The time it was paid
3. A bill of exchange may be treated as c. The time it was dishonored
promissory note by the holder at his option d. None of them
a. When the drawer and the drawee are one
and the same person 11. An instrument is considered payable on
b. When the drawee is fictitious person demand
c. When the drawee is incapacitated person
d. All of them a. When no time for payment is expressed
b. When payable to order
4. An instrument is payable to order when c. When the last indorsement is in blank
a. It is made so payable to a specific person d. When the last indorsement is restricted
b. It is made payable to the order of a certain 12. A presented a bill to B, the drawee. B
payee destroyed the bill. What can A do?
c. It is made payable to a certain payee who is
a holder in due course a. A may sue B for the destruction of his
d. None of the above property
b. A may go after the drawee for the bill
5. Negotiable instrument functions as c. A may no longer collect since the bill was
a. A substitute for money destroyed
b. A legal tender d. A may consider the bill as impliedly
c. Instrument of credit accepted by B
d. Both a & c
13. This negotiable instrument is always drawn
6. In a promissory note, the person principally against a bank.
liable is
a. The promissor a. Bill of Exchange
b. The endorser b. Check
c. The drawer c. Due Bill
d. The acceptor d. Promissory Note

14. Which of the following does not belong to

7. The sum payable is a sum certain in money
the warranties of a qualified endorser?
even if
a. It is to be paid with interest a. that the person negotiating has no liability to
b. In installment a third person
c. By stated installment b. that the instrument is genuine and in all
d. Both a & c respects what it purports to be
c. that he had good title to it and that all prior
8. An instrument is a bearer instrument if it is parties had no capacity to endorse
made payable to d. that he has no knowledge of any fact which
a. Specific person would impair the validity of the instrument
b. To the holder thereof
15. Which of the following is not requisite to
consider a person an accommodation party?
a. He must not be liable to a holder in due
course.
b. He must be a party to the instrument signing
as a maker, drawer, acceptor or indorser.
c. He must not receive value thereof.
d. He must sign for the purpose of lending his
name or credit.
16. A, B and C secured a loan from D. The
promissory note which evidences the loan
reads “I promise to pay” and signed by A, B
and C. The obligation is:
a. joint
b. solidary
c. divisible
d. invisible.
17. The following, except one, are the rights of a
holder in due course. Which is the exception?
a. to enforce payment of the instrument for the
full amount thereof against all parties liable
thereon
b. to receive payment thereof
c. to hold the instrument subject to defenses
as if it were non-negotiable
d. to sue on the instrument in his own name.
18. A certificate of stock is not a negotiable
instrument because it lacks the requisites of
a. It must be in writing and signed by the
maker or drawer
b. It must contain an unconditional promise or
order to pay a sum certain in money
c. It must be payable on demand, or at a fixed
or determinable future time
d. It must be payable to order to bearer
19. Which one of the following instruments is
not negotiable?
a. “Pay to B or order the amount of P1,000.00
and reimburse yourself out of my money
with you Signed A.”
b. Pay to B or order the sum of P1,000,00 on
account of contract between you and
Sayyat. Signed Erap.”
c. Pay to B or order the sum of P1,000,00 in
payment jewelry I bought from him Signed:
Loi To: Guia.”
d. Pay to B or bearer P1,000,00 out of money
with you. Signed X.”
20. Which of the following is not included
among the rights of an indorsee in a restrictive
indorsement?
a. To bring any action thereon that an indorser
could bring
b. To receive payment of the instrument
c. To transfer his right as such indorsee, where
the form of the indorsement authorizes him
to do so
d. To strike out any indorsement prior to the
restrictive indorsement
21. Absence or failure of consideration is a
matter of defense against a person who is
a. a holder in due course
b. not a holder in due course
c. a holder of the instrument
d. none of the above
22. A person whose signature does not appear
on an instrument is not liable thereon except
a. where a duly authorized agent sign for him
b. when he forges the signature of another
c. when he signs on an allonge
d. none of the above
23. The following statement in an instrument is
not a promise to pay
a. good for
b. to pay to cause to be paid
c. value received
d. holder for
24. A received the following note from B on
March 1, 2000. How much can A collect on April
3, 2000?
“Pay to A or order the sum of Three Thousand
Pesos (P3,000.00) with 12%”
(signed) B
a. A can not collect on the defective instrument
b. P3,000 plus interest for one month
c. P3,000 plus interest for 30 days
d. P3,000 plus interest for 33 days
25. Which of the following commercial paper
lack the requisites of negotiability under the
negotiable instruments law?
a. promissory note
b. bill of exchange
c. checks
d. treasury warrant
26. The following are considered irregular or
abnormal instruments. Which is the exception?
 a. incomplete but delivered instrument a. Joint and indivisible
b. incomplete and undelivered instrument b. Jointly and severally
c. complete and undelivered instrument c. Divisible
d. complete and delivered instrument d. Alternative

27. Defense which can be interposed not only 33. The following are special types of
against one who is not a holder in due course promissory notes. Which one is the exception?
but also against a holder in due course
a. personal defense a. certificate of deposit;
b. real defense b. debenture bonds;
c. natural defense c. bonds;
d. obsolete defense d. due bill

34. The negotiable instruments law took effect

28. An instrument is considered payable on
demand
a. when payable to order or bearer
b. when the last indorsement in in blank
c. when issued after maturity
d. when accepted at sight
29. A holder may treat a bill of exchange as a
promissory note
a. when the instrument is ambiguous
b. when the drawer and drawee are the same
person
c. when the drawee is fictitious
d. all of the above
30. The following requirements relate to the
negotiability of an instrument. Which of them is
not essential for making an instrument
negotiable?
a. must be payable to order or bearer
b. must contain a promise or order to pay a
sum certain in money
c. must be payable at fixed or determinable
future time or on demand
d. must be writing and signed by the maker or
drawer
31. The following parties are principally liable in
an instrument, except
a. maker;
b. drawee-acceptor;
c. accommodation maker/drawee;
d. accommodation drawer
32. Ara Mina, Joyce Jimenez and Sunshine Cruz
signed and issued a promissory note in favor of
Ding Dong, which reads:
“I promise to pay to the order of Ding Dong the
amount of P100.00”
The obligation is:
on
a. June 2, 1911
b. June 12, 1911
c. June 22, 1911
d. June 20, 1911
35. Incomplete and undelivered instrument is a
a. real defense
b. personal defense
c. conditional defense
d. absolute defense
36. A, maker, issued a note payable to B or
bearer. B negotiated the note D, a minor. D
indorses it in blank to E and likewise negotiated
the same by blank indorsement to F. The
instrument is now in the hands of G, a holder in
due course, who acquired the note by mere
delivery. Who are the parties liable to G?
a. prior parties to G
b. all indorsers
c. only A, maker and blank indorsers, D & E
d. all parties except B, C & D
37. A makes a note for the accommodation of B,
payee. B indorses to C, C to D, D to E, E to F. F
failed to make presentment for payment to A.
Instead F demands payment from B. B refused
to pay on the ground that, as indorser, he is
only secondarily liable and presentment for
payment to the person primarily liable is
necessary to charge person secondarily liable.
Is the refusal by B to pay valid?
a. Yes. Persons secondarily liable cannot be
charged unless the instrument is dishonored
upon presentment for payment and notice of
dishonor is properly served upon him
b. No. Accommodated party is not entitled to
notice of dishonor even if the instrument is
unpaid by virtue of holder’s failure to make
presentment of payment
 c. Yes. Accommodation party must first be
sought for payment
d. No. In accommodation instrument the real
party liable is the accommodated payee
38. X makes the following note: “I promise to
pay Y or order P ______ on demand (Sgd) X. X
delivers the note to Y on April 7, 2000. X
authorized Y to put in the amount of P10,000. Y
puts in the blank P100,000. Then he indorses
the note to A, A to B, B to C, who is not a holder
in due course. Who are liable to C?
a. All parties prior to him
b. All parties except X
c. None, the instrument is incomplete and
undelivered
d. None, except Y
b. conditional indorsement
c. attached indorsement
d. allonge
42. Which one of the following is not personal
or equitable defense?
a. fraud in factum
b. fraud in inducement
c. want or failure of consideration
d. duress in the absence of physical pressure
43. Defense which can be interposed not only
against one who is not a holder in due course
but also against a holder in due course:

39. M issued a note payable to “P” or bearer. a. personal defense

“P” indorsed and delivered the note to “A”. The b. real defense
note was lost and picked up by “B”, who in turn
forged the signature of “P” and made it appear c. defense pro-tonto
that it was indorsed to him (B) by “P”. “B”
d. none of the above
negotiated to “C” and “C” to “D”. Upon
presentment for payment, “M” refused to pay 44. An instrument originally negotiable ceases
on the ground of forgery in the indorsement of to be negotiable when
“P”. Is the defense of “M” valid?
a. restrictively indorsed
a. No. Forgery is not a valid defense if the
instrument is payable to bearer b. qualifiedly indorsed
b. No. Forgery is irrelevant or immaterial if the c. the last and only indorsement is in blank
indorsement is not necessary to the title of
the holder d. none of the above
c. Yes. Forgery of signature is a real and legal
defense 45. Payable to bearer
d. D. Yes. All parties prior to forgery are not
a. pay to bearer X P10,000
liable unless they are precluded from setting
up the defense of forgery b. pay to X, bearer P10,000
40. An instrument is negotiated when it is c. pay to holder P10,000
transferred from one person to another in three
of the following ways. Which is the exception? d. all of the above
46. Statement 1-Marco makes a promissory
a. by assignment note payable to the order of Michelle and
b. by delivery alone delivers it to Glenda. Under the law, Glenda is
c. by payment regarded as the holder
d. by indorsement completed by delivery
Statement 2-“Due to Aleli P10,000 on
41. The back of a negotiable instrument is demand” signed by Leslie is a good promissory
covered with so many indorsements that note
additional space is provided for further
indorsements by pasting to it a piece of paper. a. Both are true
This pasted piece of paper where subsequent
indorsement may be made is known as b. Both are false

a. qualified indorsement c. No. 1 is true; no. 2 is false

d. No. 1 is false; no. 2 is true
47. Which of the following may be used against c. No. 1 is true; no. 2 is false
a holder in due course?
d. No. 2 is true and no. 1 is false
a. insertion of wrong data
b. absence, want or failure of consideration
c. fraud in factum
d. fraud in inducement
48. If an instrument conforms to the following:

I. It is in writing and signed by the maker

or drawer

II. It contains an unconditional promise

or order to pay a sum certain in money

III. It is payable on demand or at a fixed

or determinable future time

IV. It is payable to order or to bearer, the

instrument is a

a. Bill of exchange
b. Check
c. Promissory note
d. Draft
49. A issued a note payable to B for P10,000. B
negotiated the note to C who in turn indorsed
the same without recourse to D, a holder in due
course. At maturity, D presented the note for
payment to A who failed to pay due to lack of
sufficient fund. Notice of dishonor for non-
payment was sent by D to B & C. From whom
can C collect and how much?

a. from B & C P10,000

b. from B P5,000 and C P5,000
c. from B alone P10,000
d. answer not given
50. Statement 1-An instrument where no time
for payment is expressed is considered non-
negotiable

Statement 2-An instrument payable upon

contingency is not negotiable but the
happening of the event will make the instrument
negotiable

a. Both are false

b. Both are true