Since 1977
BUSINESS LAW
BL.1303-Drill 4 – Negotiable Instruments
1. Statement 1: A person cannot be convicted of a crime of
BP 22 when the check is presented more than 90 days
from the date of the check.
Statement 2: Prejudice or damage to the complainant is
not a requisite for the conviction of a crime under BP 22
(Bouncing check law).
a. First statement is true; second statement is false.
b. First statement is false; second statement is true.
c. Both statements are true.
d. Both statements are false.
2. The crime of BP 22 or the bouncing check law which
penalize the act of making or drawing and issuing a
check without sufficient fund or credit is:
a. Malum in se
b. Malum prohibitum
c. Neither Malum in se nor Malum prohibitum
d. Both Malum in se and Malum prohibitum
3. Statement No. 1: A check must be presented for
payment within a reasonable time after its last
negotiation.
Statement No. 2: A bill of exchange must be presented
for payment within a reasonable time after its last
11. A bill of exchange to which no document is attached
negotiation.
a. True, true c. False, true
b. True, false d. False, false
4. A general endorser is distinguished from the irregular
endorser in that a general endorser:
a. Makes either a blank or special endorsement.
b. Indorses after its delivery to the payee.
c. Is liable to the payee and subsequent parties unless
he signs for the accommodation of the payee, in
which case he is liable only to all parties subsequent
to him.
d. Answer not given
5. The distinction between acceptance for honor and
ordinary acceptance is that:
a. In acceptance for honor, pretest is not required while
in ordinary acceptance, there must be previous
protest;
b. In acceptance for honor, the acceptor is the drawee
while in ordinary acceptance; the acceptor must be a
stranger to the bill;
c. In acceptance for honor, the consent of the holder is'
required while in ordinary acceptance, such consent
is not required;
d. Answer not given
6. A bill of exchange may be treated as a promissory note
a. When the drawee and the payee are the same
person
b. When the drawer and the payee are the same person
c. When the drawee and the drawer are the same
person
d. All of them
7. Protest is not necessary:
a. Upon dishonor by non-acceptance of a foreign bill
appearing on its face to be such;
b. Upon dishonor by non-payment of a foreign bill
appearing on its face to be such, if not having been
previously dishonored by non-acceptance;
c. In cases of inland bills and promissory notes
d. Answer not given
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ATTY. ONG/LOPEZ
OCTOBER 2012
8. When negotiable instrument had been dishonored by
non-acceptance or nonpayment, notice of dishonor must
be given to the following, otherwise they are discharged.
a. Maker c. Drawee
b. Drawer d. Acceptor
9. The separate paper attached to an instrument on which
an indorsement or acceptance of the instrument is
written is called:
a. Allonge c. enclosure
b. Memorandum d. attachment.
10. M makes a note payable to the order of P. P indorses the
note to A, A to B, B to C, C to D, D to E, and E back to A.
Based on the foregoing, which of the following
statements is incorrect?
a. A may renegotiate the promissory note.
b. A cannot go after B, C, D and E.
c. B, C, D and E enjoy temporary defense if A is the
holder.
d. If the instrument is renegotiated by A to F, the latter
cannot go after B, C, D and E.
when presentment for payment or acceptance is made
a. Trade acceptance
b. Bank acceptance
c. Clean bill of exchange
d. Documentary bill of exchange
12. Which of the following does not discharge the
instrument?
a. Payment in due course by the accommodated party.
b. Intentional cancellation of the instrument by the
holder.
c. When the principal debtor becomes the holder in his
own right before maturity.
d. Payment in due course by or on behalf of the
principal debtor.
13. Presentment for acceptance of a bill of exchange is not
necessary:
a. Where the bill is payable after sight
b. Where the bill is drawn payable elsewhere than at
the residence or place of business of the drawee
c. Where it is payable at a certain number of days after
date
d. Answer not given
14. 1st-: Where to show displeasure over a bill of exchange
addressed to him, the drawee destroys the same, under
the law he is deemed to have accepted it.
2nd-: Where the drawer and drawee are the same
person, the bill of exchange can be regarded as a
promissory note.
a. Both are true c. No. 1 is true; No. 2 is false
b. Both are false d. No. 1 is false; No. 2 is true
15. Statement No. 1: A check must be presented for
payment within a reasonable time after its last
negotiation.
Statement No. 2: A bill of exchange must be presented
for payment within a reasonable time after its last
negotiation.
a. True, true c. False, true
b. True, false d. False, false
BL.1303drill 4
EXCEL PROFESSIONAL SERVICES, INC.
16. A party secondarily liable is discharged through any of
the following means, except by the:
a. intentional cancellation of his signature by the
holder.
b. discharge of a prior party.
c. release of the principal debtor.
d. extension of the time of payment which is assented
to by such party secondarily liable.
17. Which of the following alteration is not material?
a. An alteration which changes the medium or currency
which payment is to be made
b. An alteration which adds a place of payment where
no place of payment is specified
c. An alteration which postpones the time of payment
d. An alteration which substitutes the words "or bearer"
for the words "or orders"
e. None of the above
18. A promissory note as distinguished from a bill of
exchange.
a. It contains an unconditional order
b. The one who issues it is primarily liable
c. The one who issues it is secondarily liable
d. There are three (3) parties, the drawer, the payee
and the drawee
19. Holder H altered the amount of a negotiable note from
P10,000 to P110,000 then negotiated the note to P.
a. If P is holder in due course, he can require the maker
to pay P110,000
b. If P is not a holder in due course, he can require the
maker to pay only the original sum of P10,000
c. P cannot require the maker to pay because of
forgery whether or not he is holder in due course
d. P10,000 if P is a holder in due course
20. If the drawee destroys the bill
a. The bill is considered accepted
b. The bill is considered dishonored
c. The bill is discharged
d. The bill is cancelled
21. Manager's check may be treated and considered a
promissory note because
a. The drawer and drawee are the same persons
b. The drawee is fictitious
c. The instrument is ambiguous
d. All of the above
22. Any alteration which changes the following shall be
deemed to be material, except
a. The date
b. The sum payable, either principal or interest
c. The time or place of payment
d. The number or the relation of the parties
e. None of the above
23. Ramos draws a bill of exchange payable to the order of
Palma. Palma presents the bill to Wagan, drawee, for
acceptance, and the latter accepts it. Thereafter, Palma
indorses the note to Alunan, Alunan to Bernarte,
Bernarte to Hornedo, holder. On due date, Hornedo
presents the bill to Wagan for payment but Wagan
dishonors it claiming that Palma is a minor. Wagan,
Ramos, Alunan and Bernarte claim that they did know
that Palma was a minor at the time that they transacted
on the instrument. Aside from Palma, who may claim
the defense of minority?
a. Ramos. c. Alunan and Bernarte
b. Wagan. d. None of the four.
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24. Jose Reyes signed a blank check, and in his haste to
attend a party, left the check on top of his executive
desk in his office. Later, Nazareno forced open the door
to Reyes’ office, and stole the blank check. Nazareno
immediately filled in the amount of P50,000 and a
fictitious name as payee on the said check. Nazareno
then endorsed the check in the payee’s name and passed
it to Roldan. Thereafter, Roldan endorsed the check to
Dantes. Can Dantes enforce the check against Jose
Reyes?
a. Dantes cannot enforce the check against Jose Reyes,
who can raise the defense that the check was
incomplete and not delivered, when only stolen and
filled up by Nazareno.
b. Dantes can enforce the check against Jose Reyes
because Dantes is presumed to be a holder in due
course.
c. Dantes can enforce the check against Jose Reyes
because Jose Reyes is presumed to be negligence
and therefore must suffer the loss.
d. Dantes cannot enforce the check against Jose Reyes
because Jose Reyes can set up personal defense.
25. A stranger to the instrument makes a material alteration
changing the amount thereof from P100,000 to P400,000
- this act is known as
a. Forgery c. Spoliation
b. Material alteration d. All of the above
26. Statement No. 1: A check must be presented for
payment within a reasonable time after its last
negotiation.
Statement No. 2: A bill of exchange must be presented
for payment within a reasonable time after its last
negotiation.
a. True, true c. False, true
b. True, false d. False, false
27. 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 in whose 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?
a. The notice to C inures to the benefits of D, E and G.
b. The notice given by F to B inures to the benefits of C,
D, E and G.
c. The notice to E inures to the benefit of D.
d. The notice to D inures to the benefits of E and G.
28. In relation to checks and bills of exchange, which is not a
correct statement?
a. A bill may be drawn addressed to any person as
drawee, but a check can only be addressed to a bank
as drawee.
b. A check is always payable on demand whereas a bill
may be made payable on demand or at a fixed or
determinable future time.
c. A check must be presented for payment within a
reasonable time from its date of issue, whereas a bill
within a reasonable time from the date of last
negotiation.
d. Where the check and the bill of exchange are not
presented for payment within a reasonable time as
stated in choice (c) the drawers are considered
discharged absolutely.
29. In this instrument a protest made by a notary is needed
instead of a simple notice of dishonor -
a. Inland bill of exchange
b. Foreign bill of exchange
c. Traveler's check
d. Promissory note
BL.1303drill 4