MIDTERM EXAMINATION - ECC 11 BUSINESS LAWS AND TAXATION WITH FOCUS ON LAWS AFFECTING SMEs

San Manuel,Tarlac Philippines
Email: olracocf49@yahoo.com
(045)606-1468
BS ENTREPRENEURSHIP PROGRAM
MIDTERM EXAMINATION – ECC 11 BUSINESS LAWS AND TAXATION WITH FOCUS ON LAWS
AFFECTING SMEs
nd
2 Semester, AY 2021-2022
Prepared by: Dino Soriano Dizon, MRIBM
Name:_____________________________________ Score:____________________
Student No.: _______________ Year/Section:______________
(General Instructions: (1) Use only black or blue pen. No friction pen. (2)
Erasures/Superimpositions/Alterations are considered wrong. (3) Do not tear or fold of any page/s of
your test booklet it will invalidate all your answers. (4) Mind your own business. Anyone caught talking
with his/her seatmate is considered cheating and will be dealt with accordingly. (5) No permit, No exam.)
I. Multiple Choice Questions: Choose the best answer.
1. When the debtor binds himself to pay when his means permit him to do so, the obligation is:
a. Conditional
b. Pure
c. Simple
d. With a Period
2. Contracts which cannot be sued upon unless ratified, thus it is as if they have no effect yet are:
a. Voidable
b. Rescissible
c. Void
d. Unenforceable
3. If the obligation of the debtor is "I will pay you my debt after I have arrived from abroad," this is
a. Unenforceable
b. With a Period
c. Void
d. Conditional
4. When the characters of the creditor and the debtor are merged in one and the same person, there
is extinguishment of the obligation by:
a. Compensation
b. Merger of Rights
c. Novation
d. Remission
5. Through insidious words or machinations, A was able to induce B to enter into a contract which
without them B would not have agreed to it. There is:
a. Undue Influence
b. Fraud
c. Mistake
d. Misrepresentation
6. "A sells to B his lot and house in the city if A decides to transfer and live in the countryside" is an
example of:
a. Mixed Condition
b. Potestative Condition
c. Casual Condition
d. Resolutory Condition
7. It is a mode of extinguishing an obligation when two persons in their own right are creditors of each
other.
a. Confusion
b. Reformation
c. Compensation
d. Novation
8. A contract is in the stage of conception when:

a. There is meeting of the minds.
b. Negotiations are in progress.
c. The parties come to an agreement.
d. The contract is perfected.
9. If the obligor binds himself to perform his obligation as soon as "he shall have obtained a loan"
from a certain bank, this obligation is:
a. With a Term
b. Conditional
c. Suspensive
d. Resolutory
10. Contracts entered into in a state of drunkenness or during a hypnotic spell are:
a. Void
b. Valid
c. Voidable
d. Legal
11. When the debtor binds himself to pay when his means permit him to do so, the obligation is:
a. Conditional
b. Pure
c. Simple
d. With a Period
12. Contracts entered into in a state of drunkenness or during a hypnotic spell are:
a. Void
b. Valid
c. Voidable
d. Legal
13. Which is NOT an example of “Promissory Note”:

a. “I acknowledge myself to be indebted to B in Php. 1, 000, to be paid on demand, Tor value
received.”
b. Mr B, I.O.U. 1,000.”
c. “I promise to pay B or order 500”.
d. None of the above.
14. In a Promissory Note, how many parties are involved:

a. One
b. Two
c. Three
d. Four
15. Which is NOT correct about the “Promissory Note”:

a. It contains a conditional undertaking.
b. It contains the amount mentioned on it.
c. It is an instrument in writing.
d. It is signed by the maker
16. Which is a “Promissory Note”?

a. I promise to pay B Php 500.00 and to deliver to him my black horse on 1st January next.
b. I promise to pay B Php 500.00 seven days /after my marriage with C .
c. “I acknowledge myself to be indebted to B in Php1, 000.00, to be paid on demand, for value
received.”
d. I promise to pay B Php 500.00 on D’s death, provided D leaves me enough to pay that
sum.
17. ______ means ‘something legally transferable from one person to another for a consideration’.
a. Instrument
b. Negotiable
c. Negotiable Instruments
d. all of the above
18. _____ means ‘ a written document by which some legal rights are created in favor of some
person’
a. Instrument
b. Negotiable
c. Negotiable Instruments
d. all of the above
19. Negotiable instrument means a promissory note, bill of exchange or cheque, payable to
___________
a. Bearer
b. order
c. either to bearer or order
d. neither bearer nor order
20. A negotiable instrument is freely transferable, by delivery if it is a/an ______________ instrument.

a. order
b. bearer
c. both a & B
d. None of the above
21. A negotiable instrument is freely transferable, by endorsement if it is a/an ____________

instrument.
a. order
b. bearer
c. both a & b
d. None of the above
22. The transferee of a negotiable instrument is the one

a. who transfer the instrument
b. on whose name it is transferred
c. who chases it
d. none of the above
23. _________ an instrument in writing containing an unconditional undertaking signed by the maker
to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the
instrument
a. Promissory Note
b. bill of exchange
c. Cheque
d. none of the above
24. The number of parties to a bill of exchange is _______

a. 2
b. 4
c. 6
d. 3
25. The following are essential requisites of a negotiable promissory note except
a. must be written and signed by the drawer
b. must contain an unconditional promise to pay a sum certain in money
c. must be payable upon fixed determinable future time.
d. must be payable to order or bearer
25. The following are essential requisites of a negotiable promissory note except
a. must be written and signed by the drawer
c. must be payable upon fixed determinable future time.
d. must be payable to order or bearer
26. Which of the following is not an essential element of a bill of exchange?

a. must be written and signed by the drawee
c. must be payable to order or bearer
d. drawee must be named therein
27. The following are negotiable except

a. “Pay to bearer Jose Cruz P 10,000 upon demand”, signed by A and addressed to B
b. “Pay to Jose Cruz or bearer P 10,000 upon demand”, signed by A and addressed to B
c. “I oblige myself to pay Pedro Reyes or order P 3,000 ten days after day signed by M as
maker.
d. “Good to L or order P 5,000 July 1, 2009 signed by M as maker
28. Which of the following is negotiable?

a. “ I promise to pay Jose Cruz or order P 10,000 or deliver 1 cow 20 days after date at the
option of the holder”
signed by M as maker
b. “Pay to Pedro Reyes or bearer P 10,000 or deliver 1 cow on 4-4-10 at the option of the
drawee”, signed by A and
addressed to B
c. “Pay to Pedro C. Cruz or order P 5,000 out of fund I deposited with you” signed by A and
addressed to B
d. I promise to pay K. KHO or order P 10,000 in 5 installments, first installment August 1, 2009
and every month thereafter, signed by M as maker
29. The following are functions of negotiable instrument; except:

a. used as substitute for money
b. medium of credit transactions
c. medium of exchange for commercial transactions
d. none of them.
30. Which of the following is no an incident in the life of negotiable instrument?

a, Issue
b. Preparation
c. notice of dishonor
d. Negotiation
31. Which of the following is negotiable?

a. Postal Money order
b. Certificate of stock
c. Treasury warranty
d. None of them
32. A promissory note is payable to bearer when:

a. It is payable to a person named therein or bearer
b. the only indorsement is blank
c. the name of payee does not support to be the name of a person
d. all of the above
31. The following are considered negotiation except

a. issue
b. indorsement plus delivery
c. delivery
d. none of them
32. This indorsement constitutes the indorser as a mere assignor of the title of the instrument:
a. Special
b. qualified
c. Blank
d. restrictive
33. The following are requisites in order that a person can be considered a holder in due course;
except
a. that the instrument is complete and regular upon its face.
b. the instrument is not yet overdue or no notice of dishonor
c. holder for value and in good faith
d. none of them.
34. Who of the following is party with primary liability?

a. Maker
b. drawer
c. Endorser
d. person negotiating by mere delivery
35. Which of the following is not false?

a. a holder for value is not necessarily a holder in due course
b. only person whose signature appear in the instrument can be held liable therein
c. forgery is both real and personal defense
d. an accommodation party is liable only to a holder in due course
36. Which law applies primarily to promissory notes?

a. Negotiable Instruments Law
b. New Civil Code
c. U.S. Uniform Commercial Code
d. Code Of Commerce
37. It is a special type of bill of exchange

a. Promissory Note
b. Check
c. Money
d. Special Bill
38. A quality of a bill or a note whereby it may pass from hand to hand similar to money.
a. Transferability
b. Assignability
c. Negotiability
d. Capability
39. An instrument is non-negotiable under the Negotiable Instruments Law (NIL) if it states:
a. The amount is payable out of a particular fund.

b. There is a stipulation that interest shall be paid.
c. Designates the account out of which reimbursement is to be made.
d. Designates the account where the amount payable shall be debited.
40. The following are persons involved in a bill of exchange, except:
a. drawer
b. maker
c. drawee
d. payee
II. Identification: Identify what type of Negotiable Instrument is presented in each number and the
parties involved.
1.
Manila
March 5,2022
On or before September 10,2022 pay to Pedro or order PI,000.00 at the

Philippine National Bank, Manila.
(Sgd.) Rodrigo
Abrosia
Zamboanga City
2.
March 1, 2022
I promise to pay Dionisa or order P10,000.00 on or before November 31,2022

waiving presentment for payment and notice of dishonor.
(Sgd.) Mariposa
3.
Tarlac City
March 5,2022
To: Chica
Tarlac City
Pay to Dumbo or bearer the sum of Php 25,000.00 on or before March 31,
2022.
(Sgd.) Chico
4.
March 25, 2022
I promise to pay the bearer the sum total of money amounting to Php 1,
000,000.00 on or before March 31,2022.
(Sgd.) Dee
III. Essay Questions: (10 points each- minimum of 50 words)
1. How do you apply contract and obligation laws to day-to-day activities and commercial dealings?
2. Why is it critical that obligations are faithfully carried out?
"“Striving for success without hard work is like trying to harvest where you haven’t planted.”
– David Bly
Reviewed and Checked by:
BELINDA A. DELA CRUZ
OIC-College Department

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San Manuel,Tarlac Philippines

I. Multiple Choice Questions: Choose the best answer.

8. A contract is in the stage of conception when:

13. Which is NOT an example of “Promissory Note”:

14. In a Promissory Note, how many parties are involved:

15. Which is NOT correct about the “Promissory Note”:

16. Which is a “Promissory Note”?

20. A negotiable instrument is freely transferable, by delivery if it is a/an ______________ instrument.

21. A negotiable instrument is freely transferable, by endorsement if it is a/an ____________

22. The transferee of a negotiable instrument is the one

24. The number of parties to a bill of exchange is _______

26. Which of the following is not an essential element of a bill of exchange?

27. The following are negotiable except

28. Which of the following is negotiable?

29. The following are functions of negotiable instrument; except:

30. Which of the following is no an incident in the life of negotiable instrument?

31. Which of the following is negotiable?

32. A promissory note is payable to bearer when:

31. The following are considered negotiation except

34. Who of the following is party with primary liability?

35. Which of the following is not false?

36. Which law applies primarily to promissory notes?

37. It is a special type of bill of exchange

a. The amount is payable out of a particular fund.

40. The following are persons involved in a bill of exchange, except:

On or before September 10,2022 pay to Pedro or order PI,000.00 at the

I promise to pay Dionisa or order P10,000.00 on or before November 31,2022

2. Why is it critical that obligations are faithfully carried out?

Reviewed and Checked by:

BELINDA A. DELA CRUZ

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