NIL MCQs AY 2017 2018 2nd Semester

 MCQs on NEGOTIABLE INSTRUMENTS LAW and BANKING LAWS AY 2017-2018 SECOND SEMESTER 

1. A negotiable instrument is defined as: a. a medium of exchange intended as a substitute for money;  b. a legal tender that produces the effect of payment; c. a written contract that unconditionally promises or orders the payment of  a fixed amount of money; d. a credit instrument which increases credit circulation. 2. Who are primarily protected by the Negotiable Instrument aw! a. payees;  b. holders in due course; c. public; d. merchants. ". Which of the following is not a common formal re#uirement of a promissory note and a bill of exchange! a. it must be in writing and signed by the one who issued the same;  b. it must contain an unconditional promise or order to pay a sum certain in money; c. where the instrument is addressed to another person being ordered to pay$ he must be named or otherwise indicated therein with reasonable certainty; d. it must be payable on demand$ or at a fixed or determinable future future time; e. it must contain the language of negotiability. %. &he characteristic of negotiability means: a. the creditor may not refuse to accept negotiable instrument in payment of  obligations;  b. obligations are deemed paid only when the instrument is deli'ered to a holder; c. negotiable instruments are transferred from one person to another similar to money$ so as to constitute the transferee to be a holder who may ac#uire a  better title from the transferor; transferor; d. it allows accumulation of secondary contracts. (. Which of the following is not payable in money! a. payable in currency;  b. payable in )*+ notes of one hundred,peso bills; c. payable in current funds; d. none of the abo'e. -. An incident in the life of a negotiable instrument wherein it is first deli'ered complete in form$ to a person who taes it as a holder: a. preparation;  b. issuance; c. negotiation; d. presentment; e. dishonor. dishonor. /. It means the transfer of possession$ actual or con structi'e$ from one person to another: a. acceptance;

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 b. deli'ery; c. indorsement; d. presentment. 0. It is the production of the bill of exchange to the person re#uired to pay for him to signify his assent to the order of drawer: a. presentment for acceptance;  b. presentment for payment; c. notice of dishonor; d. protest. . *tatement A: Negotiability of an instrument is determined from the writing$ that is$ the whole of the instrument shall be considered. *tatement ): Acceptance of a bill of exchange is not important in the determination of its negotiability. a. only A is true;  b. only ) is true; c. both are true; d. both are false. 1. A conse#uence of the doctrine that a negotiable instrument is not legal tender: a. deli'ery deli'ery of a negotia negotiable ble instrume instrument nt produces produces the the effect effect of payment; payment;  b. a creditor may not accept negotiable instrument as payment of obligation; c. obligations obligations are are deemed deemed paid upon upon receipt receipt of the negotiabl negotiablee instrument instruments; s; d. a negotiable negotiable instrument instrument is a proof of transact transaction. ion. 11. A distincti'e feature of negotiable instruments: a. freedom of negotiability;  b. limited negotiability; c. represent title to goods; d. accumulation of 'arious contracts. 12. 3ffect of accumulation of secondary secondary contracts: a. limits liability of a party;  b. increases probability of default; c. greater probability of payment; d. complicates negotiation. 1". 4ne of the following statements is not a factor in the determination of negotiability of  instruments! a. the entir entiree instru instrument ment shall shall be cons conside idered; red;  b. only what appears on the face of instrument shall be considered; c. in case of of ambiguity ambiguity$$ the holder holder may resort resort to other other documents; documents; d. the law law on negotiable negotiable instruments instruments shall be applied. applied. 1%. A person who by the terms of the instrument is absolutely re#uired to pay the same: a. a person secondarily liable;  b. a person subsidiarily liable; c. a person principally liable; d. a person who accommodated a party to the instrument. 1(. A party either in a promissory note or a bill of exchange: a. maer;  b. drawer; c. acceptor; d. indorser.

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1-. It is a promissory note payable to bearer on demand and intended to circulate as money: a. certificate of deposit;  b. bond; c. due bill; d. ban note. 1/. It is a form of promissory note issued by a ban acnowledging the receipt of money on deposit which the ban promises to repay the depositor$ or to him or his order at a later  date or on demand: a. certificate of deposit;  b. bond; c. mortgage note; d. ban note. 10. A chec$ as distinguished from a bill o f exchange: a. anyone may be a drawee;  b. it is always payable on demand and need not be presented for acceptance; c. it is not necessarily drawn on a deposit account; d. death of a drawer with nowledge of the drawee does not re'oe the latter5s authority to pay. 1. &his type of chec is not sub6ect to countermand by the payee after indorsement and has the same legal effect as a certificate of deposit or a certified chec and may be treated as a promissory note by the ban: a. memorandum chec;  b. cashier5s chec; c. tra'eler5s chec; d. stale chec. 2. In which of the following documents the transferee can be a holder in due course! a. duly signed and filled up withdrawal slip;  b. crossed chec; c. treasury warrant; d. postal money order. 21. A bill of exchange wherein the seller as drawer orders the buyer as drawee to pay a sum certain to the same seller as payee: a. trade acceptance;  b. sight or demand draft; c. clean bill of exchange; d. documentary bill of exchange; e. baner5s acceptance. 22. Which of the following principles is not applicable to a crossed chec! a. it may be en,cashed;  b. it must be deposited in the ban; c. it may be negotiated only once; d. warns the holder that it has been issued for a definite purpose so that the holder thereof must in#uire if he has recei'ed the chec pursuant to that purpose. 2". It is intended for immediate use thus$ it must be presented for payment within a reasonable time after it is issued: a. chec;  b. bill of exchange;

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c. promissory note; d. ban note. 2%. 7ertification of a chec is e#ui'alent to an acceptance by the ban$ what is the effect of such certification! a. it discharges persons secondarily liable if procured by the holder;  b. it operates as an assignment of funds of the drawer in the hands of the drawee; c. the holder becomes the depositor of the drawee,ban; d. all of the abo'e; e. none of the abo'e. 2(. &he sum certain re#uirement is met if the holder can calculate or compute from the instrument itself the amount he is entitled to recei'e at maturity. Which clause or  stipulation renders uncertain the sum to be paid! a. with interest or by stated installments;  b. with acceleration clause; c. with extension clause; d. all of the abo'e; e. none of the abo'e. 2-. It affects the negotiability of the instrument: a. acceleration clause dependent on the maer$ acceptor or debtor;  b. acceleration clause at the option of the payee or holder; c. extension clause at the option of the payee or holder; d. extension clause at the option of the maer or acceptor upon a specified e'ent. 2/. A non,negotiable instrument not payable at a determinable future time: a. 8&wo days after Ana is granted a 9* 'isa$ I promise to pay to the order of   +a$ +1$.. *gd< =at;>  b. 8&hree days after demand$ pay to the order of +a +1$.. &o ?arwee. *gd.< ?oreen;> c. 8@our days after a ma6or earth#uae hits =etro,=anila$ I promise to pay to the order of +edro +1$.. *gd.< Noy;> d. 8I promise to pay +eter or his order +1$.. *gd.< uiel.> 20. Which of the following is not negotiable! a. 8I bind myself to pay +ido or bearer +1$. *gd.< Neng;>  b. 8I acnowledge being indebted to +ercy in the amount of +1$. *gd.< Bil;> c. 8I promise to pay to the order of bearer )oogie +1$. *gd.< @lor;> d. 8I agree to pay bearer or order +1$. on demand *gd.< =ary.> 2. A promissory note states: 8I$  Lupeng K. Hinirang $ promise to pay +antong =. Cabayan or bearer +1$..> &he note was typewritten except for the name of the maer in italics$ which was in her handwriting. &here was no signature appearing on any other part of the note. Is the promissory note negotiable! a. No$ it does not contain an unconditional promise or order to pay a sum certain money;  b. No$ the note was not signed by the maer; c. Des$ because it payable to order or bearer; d. Des$ it complies with the formal re#uirements of a promissory note. ". 7hoose a non,negotiable instrument among the following: a. 8I promise to pay Caren or order +($. with interest of EEEE. *gd.

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=cee.>;  b. 8=rs. @errer will oblige =r. Fowee by paying =s. +attie or bearer +1$. on his account. *gd. =r. Fowee.>; c. 8I promise to pay on demand +1$. to +arson or order sub6ect to the terms and conditions of the contract to sell. * gd. =arco.>; d. 8+ay to +aulo or order +2$. and reimburse yourself from the proceeds of  the sale of my laptop with you. *gd. ?ina> "1. 4ne of the following instances pre'ents an instrument from being negotiable: a. &he dorsal portion of the instrument contains an indorsement to a specified  person;  b. &he instrument is payable to a specified person only; c. &he person to whose order the instrument is payable is non,existent; d. &he instrument is payable to order of a minor. "2. A statement that does not indicate a promise to pay : a. 8?ue =r. ima +($.;>  b. 8I.4.9. +%$. to be paid on =ay 12$ 21";> c. 8I acnowledge myself to be indebted to =s. *embrano in +"$. payable when called for;> d. 8I recognie my obligation of +2$. to =r. &aberna due on demand.> "". =r. =onroe issued in fa'or of =s. +anda a promissory note stating: 8I promise to  pay =s. +anda or order +2$. on or before ?ecember 2($ 21( with legal interest. In case of my failure to pay the principal amount$ I agree to pay the collection expenses and attorney5s fees.> Is the note negotiable! a. No$ the sum payable after maturity is uncertain;  b. Des$ it is payable in a sum certain in money at maturity; c. No$ at maturity$ the sum is not certain as the holder has to compu te the total amount due; d. No$ the interest rate and the amounts of collection expenses and attorney5s fees are not indicated. "%. What phrase does not express a sum certain! a. 8to pay +(. or what may be due on my deposit boo;>  b. 8to pay +(. with interest of 2G a month>; c. 8to pay +(. in two monthly e#ual installments beginning Hanuary 12$ 21";> d. 8to pay +(. on or before Hanuary "$ 21" but may extended for one month by the maer.> "(. Which of the following instruments is not negotiable! a. 8I promise to pay *uperman or bearer +($.. *gd. =r. 7ru;>  b. 8I assent to pay =r. Feyes or order +1$.. *gd. =r. 7ru;> c. 8Bood for +"$. to =r. ao or order. *gd. =r. 7ru;> d. 8I promise to pay =r. ee or order the sum of +%$. on =ay 2. *gd. =r. 7ru;> "-. An instance where promise or order is not unconditional: a. to pay out of a particular fund;  b. a statement of the transaction which gi'es rise to the instrument; c. an indication of a particular fund out of which reimbursement is to be made; d. a direction to debit a particular account. "/. 3#ui'alent to promise to pay:

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a. due on demand;  b. I guaranty to pay; c. I agree to pay; d. all of the abo'e. "0. Which of the following is negotiable! a. 8+ay to the order of +enny +2$. to be taen from my commission. *gd. ?r. Weewee. &o ?r. Where;>  b. 8+ay to +amela or order +1$. and charge to my account with you. *gd. ?r. Weewee. &o ?r. Where;> c. 8I promise to pay +eter or order +2$. from the proceeds of the sale of my house. *gd. =r. Cer;> d. 8I promise to pay +aul or bearer +1$. out of my salary. *gd. =r. Cer.> ". In a bill of exchange$ there must be an unconditional order to pay by one party to another. An order is a command or imperati'e direction. Which of the following is not an order to pay! a. 8please credit =r. +ayee or order;>  b. 8the drawee will much oblige the drawer by paying =r. +ayee;> c. 8let the bearer ha'e;> d. 8I authorie you to pay.> %. 8)earer> means the person in possession of a bill or a note which is payable to bearer. Which word is not e#ui'alent to 8bearer>! a. 8assignee;>  b. 8possessor;> c. 8holder or order;> d. 8to bearer =r. +ayee.> %1. An instrument not payable to bearer: a. if it is payable to the order of a fictitious person;  b. 8pay to payroll;> c. last indorsement in blan; d. none of the abo'e. %2. An instrument must be payable at a definite time or at all e'ents$ choose the phrase that is payable at a definite time! a. 8at the earliest possible time after date.>  b. 8payable 1 days before Bood @riday of 21-;> c. 8payable upon reaching the age of ma6ority;> d. all of the abo'e. %". *tatement A: As a general rule$ an instrument which contains an order or promise to do any act in addition to the payment of money is not negotiable. *tatement ): A statement in the instrument that 8the maer will deli'er additional security to the satisfaction of the holder> impairs negotiability. *tatement 7: Bi'ing the holder an election to re#uire something to be done in lieu of   payment of money maes the instrument non,negotiable. a.  b. c. d. e.

only A is true; only ) is true; only 7 is true; all are true; all are false.

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%%. An omission which renders the instrument non,negotiable: a. no date;  b. no seal; c. no place of payment; d. no statement of 'alue; e. none of the abo'e. %(. A legal conse#uence of ante,dating or post,dating: a. renders the instrument non,negotiable;  b. maes the instrument in'alid; c. as a general rule$ it does not affect the negotiability of an instrument; d. renders the instrument 'oidable. %-. *andra obtained the autograph of 3cho Fosales. owe'er$ *andra wrote a negotiable  promissory note abo'e 3cho5s signature. &he note was 'alidly negotiated to Albert who is a holder in due course. What ind of defense can 3cho a'ail of against Albert! a. personal defense;  b. absolute defense; c. e#uitable defense; d. none of the abo'e. %/. *tatement A: When a mechanically complete but undeli'ered instrument is in the hands of a holder in due course$ a 'alid deli'ery thereof by all parties prior to him so as to mae them liable to him is conclusi'ely presumed. *tatement ): When an incomplete instrument has not been deli'ered$ it will not$ if  completed and negotiated$ without authority$ be a 'alid contract in the hands of any holder$ as against any person whose signature was placed thereon before deli'ery. a. only A is true;  b. only ) is true; c. both are true; d. both are false. %0. What is the right of the holder when the instrument is so ambiguous that there is doubt whether it is a bill or a note! a. the holder may demand payment at any time;  b. he may treat it as either bill or note at his election; c. he may treat it as payable to bearer; d. the may dispense with the presentment. %. When is a promissory note similar to a bill of exchange! a. when a note is payable to the maer;  b. when a note is indorsed by the payee; c. when a note is payable at the ban; d. when a note is for the accommodation of the maer. (. When does a bill of exchange become a promissory note! a. when the drawee is a ban;  b. when the bill is accepted by the drawee; c. when drawer and payee are the same person; d. when the drawer wai'es the notice of dishonor. (1. A bill of exchange may treated as a promissory note when: a. the drawer and the payee are the same person;  b. the drawee is unnown;

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c. the drawee is insol'ent; d. the instrument is ambiguous; e. none of the abo'e. (2. As a general rule$ no person is liable on the instrument whose signature does not appear thereon$ except: a. a person signs in a trade name;  b. an authoried agent signs in behalf of the principal; c. where the acceptor maes his acceptance of a bill on a separate paper; d. all of the abo'e. (". A person who is not liable on the negotiable instrument: a. a conditional promise in ad'ance to accept a future bill of exchange;  b. one who signs using an assumed name; c. a person whose signature is forged; d. persons who negotiate by mere deli'ery. (%. &he following are legal effects when a signature is forged or made without authority of the person whose signature it purports to be$ except: a. there is no right to retain the instrument;  b. the instrument is wholly inoperati'e; c. there is no right to discharge the instrument; d. there is no right to enforce payment; e. all of the abo'e. ((. It may not pre6udice the party from in'oing forgery as a defense: a. silence;  b. warranty; c. negligence; d. dishonor. (-. *tatement A: 3'ery negotiable instrument is deemed prima facie to ha'e been issued  for a 'aluable consideration. *tatement ): An accommodation party is not liable to a holder in due course who$ at  the time of taing the instrument$ new him to be only an accommodation party. a. only A is true;  b. only ) is true; c. both are true; d. both are false. (/. *tatement A: 4nly negotiable instruments may be negotiated either by end orsement thereof coupled by deli'ery$ or by deli'ery alone. *tatement ): A negotiable instrument may be assigned or transferred only. a. only A is true;  b. only ) is true; c. both are true; d. both are false. (0. An indorsement must be written on the instrument itself or upon a paper attached thereto with the intent to transfer title$ which of the following is n ot correct! a. the signature of the indorser is a sufficient indorsement;  b. indorsement must be of the entire instrument; c. it is essential to the negotiation of an order instrument; d. it is necessary in an assignment of negotiable or non,negotiable instrument. (. Which of the following is not applicable to a negotiation by deli'ery!

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a. indorsement is not necessary because the instrument is payable to bearer;  b. refers to a holder who negotiates the instrument in the same condition in which he recei'ed it; c. includes the blan indorser; d. the liability of a person negotiating by deli'ery is the same as the person who negotiates by #ualified indorsement. -. A characteristic of an irregular indorser: a. he is not sub6ect to defenses;  b. indorses the instrument after its deli'ery to the payee; c. he is liable only to parties subse#uent to him; d. always maes a blan indorsement. -1. A special and restricti'e indorsement: a. 8+ay to 7athy only. *gd.< +eter;>  b. 8+ay to Amy without recourse. *gd.< +aul;> c. 8+ay to Andy is she marries before her "th birthday. *gd.< +epot;> d. 8@or collection only. *gd.< )en.> -2. A general indorser$ as distinguished from an irregular indorser: a. maes either a blan or special indorsement;  b. indorses before deli'ery of the instrument to the payee; c. always maes a blan indorsement; d. is liable to the payee and subse#uent parties. -". 3ffect of a restricti'e indorsement: a. it confers upon the indorsee the right to sue;  b. the holder may transfer his right; c. the holder may recei'e payment of the instrument; d. it is prohibiti'e; e. all of the abo'e; -%. &he following conditions must concur in order to #ualify a person a holder in due course$ except: a. the instrument is complete and regular upon its face;  b. the holder taes the instrument before it was o'erdue$ and without notice that it has been pre'iously dishonored$ if such was in fact; c. the instrument was negotiated to the holder within a reasonable length of  time; d. the holder too the instrument in good faith and for 'alue; e. at the time the instrument was negotiated to the holder$ he had no notice of  any infirmity in the instrument or defect in the title of the person negotiating it. -(. A holder in due course has the following rights$ except: a. he may sue on the instrument in his own name;  b. he may recei'e payment and if the payment is in due course$ the instrument is discharge; c. he holds the instrument free from personal and real defenses a'ailable to prior   parties among themsel'es; d. e holds the instrument free from any defect of title of prior parties. --. *tatement 1: &he payee may be a holder in due course. *tatement 2: &he drawee$ by paying the bill of exchange$ may become a holder in due course.

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a. both statements are correct;  b. both statements are incorrect; c. only first statement is correct; d. only second statement is correct. -/. Annie issued a draft payable to the order of Faia who$ in turn$ transferred the draft to ?onna for a consideration without indorsing it. &he following$ except one$ are the 'alid effects of the transfer: a. ?onna ac#uired the right to ha'e the endorsement of Faia;  b. ?onna is merely an assignee; c. ?onna becomes a holder; d. &he transfer 'ests in ?onna such title as Faia had thereon. -0. An example of personal defense: a. spoliation;  b. prescription; c. illegality of contract when declared by law; d. incapacity. -. Which of the following is true with respect to an anomalous indorser! a. he is an accommodation indorser;  b. he is a party to the instrument; c. he is liable to all parties to the instrument; d. he signs his name after the issuance of the instrument. /. Acona issued a note to )asco. &here was a total failure of consideration. )asco indorsed the note for a consideration to 7ru who is a holder in due course. 7ru indorsed the note to ?ia who new of the failure of consideration. 7an ?ia successfully collect from Acona! a. No$ because ?ia is not a holder in due course;  b. Des$ ?ia ac#uired the rights of 7ru$ a holder in due course and he was not a  party to any illegality; c. No$ because Acona5s defense is a real defense; d. Des$ because ?ia ac#uired the note for a consideration. /1. In which of the following cases is presentment for payment necessary in order to charge persons secondarily liable! a. when the drawee is a fictitious person;  b. when there is wai'er of presentment for payment; c. when there is delay caused by circumstances beyond the control of the holder  and not imputable to his default$ misconduct or negligence; d. when the bill of exchange has been dishonored by non,acceptance. /2. &he purpose of gi'ing notice of dishonor: a. to inform the parties secondarily liable that the maer or acceptor has failed to meet his engagement;  b. to ad'ise parties secondarily liable that they will be re#uired to mae  payment; c. to conform to the rules of international law; d. a and b only.

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/". =s. ?arra issued in fa'or of =r. +ee a chec for deposit for a piece of 6ewelry that she was supposed to sell. =s. ?arra failed to sell the piece of 6ewelry so she returned it to =r. +ee$ the payee$ before maturity of the chec. &he chec$ howe'er$ could no longer   be retrie'ed as it was already negotiated by =r. +ee to =r. Insee. =s. ?arra then withdrew her funds from the drawee ban. When =r. Insee presented the chec for  encashment$ it was dishonored for insufficiency of funds. Is =s. ?arra liable to =r. Insee despite the lac of notice of dishonor! a. no$ there was no consideration as the piece of 6ewelry was returned to =r. +ee;  b. no$ notice of dishonor was re#uired because =s. ?arra was only secondarily liable; c. yes$ because =s. ?arra could not ha'e expected her chec to be honored; d. yes$ =s. ?arra was primarily liable. /%. &he following acts discharge the negotiable instrument$ except: a. payment by accommodated party;  b. intentional cancellation of instrument by holder; c. merger of the rights of creditor and debtor; d. reac#uisition by principal debtor of the instrument as an agent. /(. A maes a note payable to ) or order. &he following are the indorsers of the note in the order of their indorsement: )$ 7$ ?$ 3$ @ holder<$ and B subse#uent holder<. &he note is dishonored in the hands of @$ who notifies )$ 7$ ?$ and 3. Which is not correct! a. the notice gi'en by @ to ) operates to the benefit of 7 ? 3 and B;  b. the notice to 7 inures to the benefit of ? 3 and B; c. the notice to 7 inures to the benefit of ); d. the notice to ? inures to the benefit of 3 and B; /-. A bill may be addressed to more than one drawee$ which of the following is allowed! a. 8to J and D>;  b. 8to A$ )$ 7 and ?>; c. 8to A or )>; d. 8to J$ in his absence$ to D>; e. a and b only; f. c and d only. //. What is the reason why a bill of exchange may not be addressed to two or more drawees in the alternati'e or in succession! a. it is difficult to determine the exact date of the dishonor;  b. the drawees are not partners; c. the obligation of the drawees once they accept is not absolute; d. the acceptance of the drawees is sub6ect to condition. /0. Which of the following does not discharge a negotiable instrument! a. payment in due course by the accommodated party when the instrument was made or accepted for his accommodation;  b. payment in due course by the principal debtor; c. intentional cancellation of the instrument by the holder; d. payment in due course by the accommodation indorser. /. Which of the following is an inland bill! a. a bill drawn outside but payable in the +hilippines;  b. a bill drawn in the +hilippines and payable in the +hilippines;

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c. a bill drawn within but payable outside the +hilippines; d. all of the abo'e. 0. Which of the following is not a re#uisite for acceptance: a. it must be in writing;  b. it must be signed by the drawee; c. it must not expressed that the drawee will perform his promise by any other  means than the payment of money; d. it must be notaried. 01. An example of a general acceptance: a. 8accepted$ payable at )?4 +*3 branch;>  b. 8accepted$ payable only at my residence;> c. 8accepted " days from date> when the bill is ( days from date; d. 8accepted$ (G of the 'alue only.> 02. 4n =ay 2$ 212$ =r. +ierre$ as payee$ obtained a promissory note for +-$. from =r. =oore by means of fraud. 4n =ay ($ 212$ =r. +ierre negotiated the note to =r. Inigo at a discounted amount of +($.$ the term of which is +"$. cash and +2$. payable within 1( days from =ay (. 4n =ay 1$ 212$ =r. =oore informed =r. Inigo of the fraud committed by =r. +ierre who induced the former to execute the note. What is the legal effect of the transactions! a. =r. Inigo is a holder in due course;  b. =r. Inigo is not a holder in due course; c. =r. Inigo is a holder in due course up to +"$. only; d. =r. Inigo is a holder in due course up to +($. only. 0". In the preceding #uestion$ what defense is a'ailable to =r. =oore! a. personal for the whole amount;  b. real for the whole amount; c. personal$ +"$.$ real$ +"$.; d. personal$ +"$.$ real$ +2$.. 0%. 8?efects of title> of the holder co'ers: a. all those situations which are nown as personal defenses;  b. those e#uities of ownership where there is breach of faith in negotiation; c. things that are wrong with the instrument itself; d. a and b only; e. b and c only; 0(. An example of a real defense: a. absence or failure of consideration;  b. fraudulent alteration by holder; c. fraud in inducement; d. discharge by payment or renunciation before maturity. 0-. A type of personal defense: a. fraud in esse contractus;  b. ac#uisition of instrument by unlawful means$ or for an illegal consideration; c. duress amounting to forgery; d. want of authority$ apparent or real. 0/. @raud in factum in the execution<$ as distinguished from simple fraud in inducement<: a. is a personal defense;  b. relates to the #uality$ #uantity$ 'alue or character of the consideration of the

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instrument; c. exists where a person signed an instrument but decei'ed as to its character  and without nowledge of it; d. is present in an existing contract as the signer new what he was signing. 00. Who among the following persons is not primarily liable! a. maer of a promissory note;  b. drawee of a bill of exchange; c. acceptor of a bill of exchange; d. the certifier of a chec. 0. )y signing the instrument$ the drawer$ with respect to a bill of exchange$ and the maer$ as to a promissory note: a. unconditionally bind themsel'es to pay the instrument according to its tenor;  b. admit the existence of the payee and his then capacity to indorse the instrument at the time it was executed; c. engage that on due presentment$ the instrument will be accepted or paid$ or   both$ according to its tenor; d. engage to pay after certain conditions are complied with. . *tatement A: &he acceptor has the same liability as the maer of the promissory note and the drawer of the bill with regard to the existence of the payee and the latter5s capacity to indorse. *tatement ): &he drawer can negati'e$ or limit his liability$ while the maer may not do so. a. only A is correct;  b. only ) is correct; c. both statements are correct; d. both statements are not correct. 1. &he drawee$ by accepting the bill$ is precluded from asserting a defense that: a. the drawer is fictitious or non,existent;  b. the drawer5s signature is a forgery; c. there is want or failure of consideration between the drawer and drawee; d. the drawer has o'erdrawn his account; e. all of the abo'e; 2. Which of the following is not a common warranty for a person negotiating an instrument by deli'ery$ #ualified indorser$ irregular indorser$ and general indorser! a. he has no nowledge of any fact which would impair the 'alidity of the instrument or render it 'alueless;  b. the instrument is genuine and in all respects what is purports to be; c. he has good title to it; d. all prior parties had capacity to contract. ". What is the effect of want of demand for pa yment on the principal debtor! a. the principal debtor in not in default;  b. the person primarily is absolutely liable$ thus he may be sued by the holder; c. wai'er of the holder to effect payment; d. persons secondarily liable are discharged. %. +resentment means: a. the production of a bill of exchange to the drawee for his acceptance;

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 b. the production of a bill of exchange to the acceptor for payment; c. the production of a promissory note to the party liable for its payment; d. all of the abo'e; e. none of the abo'e. (. &he purpose of this undertaing by a stranger to a bill who becomes secondarily liable< is to preser'e the credit of the parties to the instrument: a. payment for honor;  b. acceptance for honor; c. bills in set; d. referee in case of need. -. *tatement A: Where notice is gi'en by or on behalf of the holder$ it inures to the  benefit of all subse#uent holders and all prior parties who ha'e a right of recourse against the party to whom it is gi'en. *tatement ): Where notice is gi'en by or on behalf of a party entitled to gi'e notice$ it inures to the benefit of the holder and all parties subse#uent to the party whom notice is gi'en. a. only A is correct;  b. only ) is correct; c. both statements are correct; d. both statements are not correct. /. What is the effect of wai'er of protest! a. deemed a wai'er of notice of protest;  b. deemed a wai'er of protest for foreign bill; c. deemed wai'er of protest for foreign bill or other negotiable instrument; d. deemed wai'er not only of a formal protest$ but also of presentment and notice of dishonor. 0. A negotiable instrument is discharged: a. by payment in due course by or on behalf of the debtor;  b. by payment in due course by the party accommodated$ where the instrument is made or accepted for accommodation; c. by cancellation of the instrument by the holder; d. when the principal debtor becomes the holder of the instrument in his own right. . What is the effect of material alteration! a. the instrument is a'oided;  b. the instrument and all prior parties to material alteration are discharged; c. it does not discharge the party who has himself made$ authoried or  assented to the alteration and subse#uent indorsers; d. all of the abo'e; 1. Where a negotiable instrument is materially altered$ it is a'oided except as to: a. indorsers subse#uent to alteration;  b. parties prior to the alteration; c. holder in due course; d. all of the abo'e; e. a and c only. 11. A characteristic of a material alteration: a. it refers to physical alterations;

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 b. the alteration must be fa'orable to the person maing it; c. it excludes innocent changes; d. all of the abo'e. 12. =r. )rower prepared a bill of exchange and inserted in the said instrument the  pro'ision 8no recourse against the drawer>. What is the legal effect of the inserted  pro'ision! a. it is not 'alid as the drawer cannot limit his liability to the holder;  b. it is 'alid because the drawer may escape secondary liability; c. it is 'oid because it pre'ents negotiation of the instrument; d. it is legal because the bill can still be assigned. 1". A constructi'e acceptance: a. the drawee promised to accept a future bill of exchange;  b. the drawee returned the bill unaccepted after 2% hours from presentment; c. the drawee destroyed the bill of exchange; d. the drawee failed to notify the drawer that the bill was not accepted; e. all of the abo'e; 1%. 3ffect of transfer without endorsement of an order instrument: a. the transfer does not 'est title in fa'or of the transferee;  b. the bearer ac#uires title from the transferor; c. there is a complete negotiation; d. the transferor assigns his right to the transferee; e. all of the abo'e; 1(. A re#uisite of a payment in due course: a. made in behalf of the accommodated party where the instrument is made for his accommodation;  b. payment made to the indorser; c. payment before maturity; d. the holder must be in good faith and without notice that his title is defecti'e; 1-. Which of the following negotiable instruments is incomplete! a. 8+ay to Ann or order +(..> *B?< )ert.  b. 8+ay to the order of Ann +(..> *B?< )ert. c. 8I promise to pay to )ert or order +(..> *B?< )ert. d. 8I promise to pay bearer the sum of +(..> *B?< )ert. 1/. It renders the instrument non,negotiable: a. by agreement binding upon the holder to extend time of payment;  b. discharge; c. 'alid tender of payment made by a prior party; d. intentional cancellation of his signature by the holder; 10. +rotest$ as distinguished from notice of dishonor: a. applies only to inland bills;  b. it may be 'erbal or written; c. its noting made by the notary public or a respectable resident should be made on the day and in place of dishonor; d. it is made or gi'en in the residence of the parties or in other places pro'ided by

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law. 1. Acceptance for honor$ as differentiated from ordinary acceptance: a. protest is not necessary;  b. the acceptor is a stranger who is secondarily liable; c. any word indicating acceptance is enough and the consent of the holder  is not necessary; d. payment in due course by the acceptor discharges the bill as it in'ol'es the entire instrument. 11. +ayment by a person primarily liable$ as distinguished from payment by honor: a. there must be protest for non,payment by notarial act;  b. the person who will pay may be any person a party or a stranger< and payment discharges only the parties after the party in whose fa'or paym ent is made; c. payment is in fa'or of a specified person and the law re#uires that there is a statement for whose payment is made; d. the person who will pay is a party and payment in due course discharges the instrument. 111. What is the effect if an acceptor accepts two or more parts of the bills in set in the hands of different persons! a. the acceptor is only liable for one part as bills in set constitute one bill;  b. the acceptor is liable to separate holders in due course; c. the acceptor is liable to the first holder who will first mae the presentment for   payment; d. the acceptor is not liable because the acceptance is 'oid. BANKING LAWS :

1. &he gra'amen of the offense , 'iolation of the )ouncing 7hec aw )+ 22<: a. fraudulent maing and issuance of an unfunded chec;  b. the act of maing and issuing a worthless chec; c. the issuance of chec from a personal account that has no sufficient funds; d. the maing and issuance of a bum chec intended for payment. 2. &ransactions co'ered by )+ 22: a. issued as e'idence of indebtedness;  b. guarantee; c. payment of existing obligation; d. all of the abo'e; e. a and c only. ". An element of crime of )+ 22: a. the issuance of a corporate chec;  b. nowledge of the maer$ drawer$ or issuer that at the time of issue$ he or she does not ha'e sufficient funds in or credit with the drawee ban; c. subse#uent dishonor of the chec for insufficiency of funds or credit or dishonor for the same reason had not drawer$ without any 'alid cause$ ordered the ban to stop payment; d. all are elements of the crime; e. b and c only. %. +rima facie nowledge on the part of the maer$ drawer or issuer of insufficiency of  funds in or credit with the drawee ban:

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a. when the dishonored chec is presented within  days from date of chec and the ban has informed the payee of the dishonor;  b. if the bounced chec is presented within  days from date of chec and the maer or drawer fails to pay in full thereon or to mae arrangement with the drawee ban for that purpose within ( baning days from notice of dishonor; c. if the dishonored chec is presented within " days from date of issuance and the maer or drawer failed to pay within ( baning days from notice; d. if the dishonored chec is presented within - days from date of chec and the maer or drawer fails to pay the holder or to mae arrangement with the drawee ban for that purpose within ( baning days from notice of  dishonor. (. @unction of the +hilippine ?eposit Insurance 7orporation +?I7<: a. insurer;  b. regulator of bans; c. recei'er and li#uidator of closed bans; d. all answers are functions of +?I7; e. a and c only. -. =r. )ernal has " ban accounts: a< in his name alone worth +/$.; b< 6ointly with =s. 7abral$ +0$.; and c< 6ointly with =s. ?i'ina$ +$.. ow much is the insured deposit of =r. )ernal! a. +($.;  b. +/($.; c. +1=; d. answer not gi'en. /. 4ne of the following accounts is not allowed to be insured with +?I7: a. foreign currency deposits of domestic bans;  b. deposits of insured domestic ban at its branch outside the +hilippines; c. bonds and other securities issued by the bans; d. all are not allowed to be insured. 0. Aside from deposits in baning institutions$ this may not be examined$ in#uired or  looed into by any person unless authoried by law: a. in'estments in bonds issued by the go'ernment;  b. foreign in'estment in bans; c. all securities deposited with the ban; d. all are co'ered by the aw on *ecrecy of )an ?eposits; e. only deposits in bans are co'ered by the law. . Which of the following go'ernment entities is not allowed to loo into ban accounts! a. 7ommission on Audit;  b. +?I7; c. 7ourt of Appeals; d. *ecurities and 3xchange 7ommission. 1. @oreign currency deposits with +hilippine bans designated by the )*+ are considered: a. liabilities of the +hilippine go'ernment;  b. part of the international reser'e; c. obligations of the bans to foreign countries; d. all answers are correct.

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11. 4ne of the benefits of the foreign currency deposit: a. it is tax exempt;  b. generally$ it can be withdrawn or transferred without any restriction; c. it is exempt from attachment$ garnishment$ or any other order or process; d. all answers are correct. 12. &he 9nclaimed )alances aw not only applies to deposits of money but also to: a. credits;  b. bullion; c. security; d. all of the abo'e. 1". It is a 6udicial process in which the state$ by 'irtue of its so'ereignty$ steps in and claims abandoned$ left 'acant$ or unclaimed property$ without there being an interested  person ha'ing a legal claim thereto: a. expropriation;  b. escheat; c. writ of execution; d. writ of attachment. 1%. Any act or attempted act to conceal or disguise the identity of illegally obtained  proceeds so that they appear to ha'e originated from legitimate source: a. money laundering;  b. embelement; c. misappropriation; d. masing process. 1(. 9nder A=A$ it is a transaction in cash or other e#ui'alent monetary instrument in'ol'ing a total amount in excess of fi'e hundred thousand pesos +($.< within one 1< baning day: a. suspicious transaction;  b. unnown transaction; c. co'ered transaction; d. planned transaction. 1-. It is an extraordinary and interim relief issued by the 7ourt of Appeals to pre'ent the dissipation$ remo'al$ or disposal of properties that are suspected to be proceeds of$ or  related to$ unlawful acti'ities as defined by A=A: a. interlocutory order;  b. freee order; c. protecti'e order; d. restraining order. 1/. Which of the following statements is false! a. baning business is impressed with public interest;  b. a ban5s liability as an obligor is not merely 'icarious but primary; c. the diligence re#uired of bans is that of Foman pater familias; d. the law imposes on bans fiduciary duty. 10. It is a form of inter'ention by the )*+ to a'ert potential financial system instability or  economic disruption wherein )*+ can enforce it as soon as a ban5s condition indicates higher,than normal ris of failure: a. prompt correcti'e action;  b. recei'ership; c. li#uidation;

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d. rehabilitation order. 1. A ban that has the authority to exercise$ in addition to the powers authoried for a commercial ban$ the powers of an in'estment house and the power to in'est in non, allied enterprises: a. commercial ban;  b. thrift ban; c. uni'ersal ban; d. de'elopment ban. 2. &hese are interest,bearing deposit accounts that combine the payable on demand feature of checs and in'estment feature of sa'ings accounts: a. anonymous or numbered accounts;  b. negotiable order of withdrawal N4W< accounts; c. deposit substitutes; d. time deposits. 21. It means all those liabilities of the )*+ and of other bans which are denominated in +hilippine currency and are sub6ect to payment in legal tender upon the presentation of  checs: a. demand deposits;  b. treasury bills; c. deposit substitutes; d. numbered accounts. 22. &he total amount of loans$ credit accommodations and guarantees that may be extended by a ban to any person$ partnership$ association$ corporation or other entity shall at no time exceed: a. 2(G of the net worth of such ban;  b. 1G of the total assets of the ban; c. 2(G of the capital of such ban; d. 1G of the total li#uid assets of the ban. 2". An exception to restriction on ban exposure to directors$ officers$ stocholders$ and their related interests ?4*FI<: a. if the transaction is with written appro'al of the ma6ority of all the directors$ excluding the director concerned;  b. transaction under a fringe benefit plan appro'ed by the )*+; c. transaction appro'ed by at least 2K" 'otes of the shareholders; d. a and c only; e. a and b only. 2%. &he )*+ may issue an order re#uiring the financial institution to cease and desist from conducting business in an unsafe and unsound manner and may further order that immediate action be taen to correct the conditions resulting from such unsafe or  unsound practice. &he following circumstances may be deemed as conducting business in an unsafe or unsound manner$ except: a. the act or omission has resulted or may result in material loss or damage$ or abnormal ris or danger to the safety$ stability$ li#uidity or sol'ency of the institution;  b. the act or omission has resulted or may result in material loss or damage or abnormal ris to the institutionLs depositors$ creditors$ in'estors$ stocholders or to the )*+ or to the public in general; c. the act or omission has caused any undue in6ury$ or has gi'en any unwarranted

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 benefits$ ad'antage or preference to the ban or any party in the discharge  by the director or officer of his duties and responsibilities through manifest partiality$ e'ident bad faith or gross inexcusable negligence; d. the act or omission in'ol'es entering into an y contract or transaction disad'antageous to the ban$ #uasi,ban or trust entity$ whether or not the director or officer profited or will profit thereby. 2(. When a ban or a #uasi,ban is in a state of continuing inability or unwillingness to maintain a condition of li#uidity deemed ade#uate to protect the interests of depositors and creditors$ the =onetary )oard may appoint this person to tae charge of the assets$ liabilities$ and the management of the ban: a. li#uidator;  b. recei'er; c. conser'ator; d. members of the management committee.