business law - multiple choice

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OBLIGATIONSNature1. Which of the following is not an essential element of an obligation?

A. Obligor C. PresentationB. Efficient cause D. Creditor

2. A source of obligation not arising from lawA. Negotiorum gestio C. Culpa aquilianaB. Solutio indebiti D. Contract

3. Which of the following is not a source of an obligation?A. Law D. DamagesB. Contracts E. Quasi-contractsC. Delicts

4. 1st Statement. Obligations derived from law are presumed except those found in the Civil Code or on special laws.2nd Statement. Obligations arising from contracts have the force of law between the contracting parties and should be complied within good faith.

A. B. C. D.1st Statement True True False False2nd Statement True False False True

5. It is an obligation, which is based on positive law gives a right to enforce its performanceA. Natural obligation C. Moral obligationB. Civil obligation D. Legal obligation

6. Liability for damages in the performance of an obligation arises from the following, except:A. Negligence C. DelayB. Acts or omission punished by law D. Fraud

7. 1st Statement. Liability for damages arising from fraud is demandable and there can be a waiver of an action for past fraud,2nd Statement. There can be waiver of an action for future negligence but not fraud.


8. An action to impugn the acts of a debtor intended to defraud the creditor isA. Accion reivindicatoria C. Accion redhibitoriaB. Accion subrogatoria D. Accion pauliana

Conditions of Obligations9. There being no express stipulation and if the undertaking is to deliver a determinate thing, the payment shall be made

A. At the domicile of the debtorB. At the domicile of the creditorC. Wherever the thing might be at the moment the obligation was constitutedD. Wherever the thing might be at the moment the obligation is to be fulfilled

10. 1st Statement. The creditor acquires a real right against the debtor from the time the thing should have been delivered.2nd Statement. The fruits of the thing shall pertain to the creditor from the time they should been delivered to him, that is, he has personal right to demand delivery of the fruits existing after the obligation to deliver the principal thing arises.


11. 1st Statement. The creditor has real right to the fruits of the thing from the time they have been delivered.2nd Statement. The buyer acquires real right to the fruits of the thing from the perfection of the sale.


12. In which of the following situation is demand not necessary to consider the debtor delayed in the performance of his obligation?A. When the time of the performance is of the essence;B. When the time of performance has been stipulatedC. When the law so provides;D. When demand would be useless.

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13. Demand is not needed to put the debtor in default, exceptA. When demand would be uselessB. When the parties so stipulateC. When time is of the essenceD. When the fixing of the time is the controlling motive for the establishment of the contract

14. This is the kind of diligence that the obligor must observe in the performance of his obligation to give something:A. Diligence of a good father of a familyB. Extraordinary diligence of a good father of a familyC. Diligence of a father of a food familyD. Diligence of a good father of a family even if the law or the stipulation requires another standard of care.

Natural Obligations15. 1st Statement. In a natural obligation, the creditor has the right to enforce the performance thereof it being based on

positive law.2nd Statement. Solutio indebiti and negotiorum gestio are quasi-contracts that give rise to civil obligations


16. This is a principal kind of quasi-contract arising out of payment by mistake or undue performance of an obligation:A. Solutio indebiti C. Other quasi-contractB. Negotiorum gestio D. Quasi delict

17. Dolo is distinguished from CulpaA. Waiver of an action to enforce liability may be waivedB. Liability may be reduced by the courtsC. There is deliberate intention to cause damage or prejudiceD. Responsibility arising there from is demandable

18. Culpa aquiliana as distinguished from culpa contractualA. Proof of due diligence in the selection and supervision of employees is not considered a defenseB. Proof of the contract and its breach is sufficient to warrant recovery.C. The negligence of the defendant is only an incident in the performance of the obligationD. The source of liability is the negligent act of the person causing damage to another.

19. Which of the following is not a civil liability arising from delict?A. Indemnification for consequential damagesB. RescissionC. ReparationD. Restitution

20. A passenger on a truck was hurt but in a criminal case against the driver, said driver was acquitted. The victim now sues the owner of the truck for culpa contractual. May the suit still prosper?A. No, this will constitute double jeopardyB. No, the acquittal means that the guilt of the accused was not proven by proof beyond reasonable doubtC. Yes, it is sufficient for him to prove the existence of the contract of carriage and the injuries sufferedD. Yes provided he can prove the negligence of the driver

21. 1st Statement. In quasi-contract there is no consent of the parties thus preventing a meeting of minds between them.2nd Statement. In quasi-delict there is no intention on the part of a person doing a wrongful act or omission causing damage to another.


22. A, a jeepney driver, driving recklessly caused serious physical injuries to his passenger B and pedestrian C. As a result, which of the following is not correct?A. B may proceed against A for culpa criminalB. B may proceed against A for culpa contractualC. C may proceed against A for culpa aquilianaD. C may proceed against A for culpa criminal

23. X, a bus driver driving negligently, killed his passenger B and pedestrian C. As a result:1. B may proceed against X’s employer and the source of liability is the crime committed by A or culpa criminal2. B may proceed against X’s employer and the source of liability is the breach of contract or carnage or culpa

contractual3. C may proceed against X’s employer and the source of liability is the crime committed by A or culpa criminal4. C may proceed against X’s employer and the source or liability is the quasi-delict committed by A or culpa aquiliana

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A. 1, 2 and 3 C. 2, 3 and 4B. 1, 2 and 4 D. 1, 2, 3 and 4

24. 1st Statement. It is indispensable for quasi-delict to exist that there is no pre-existing contractual relation between the parties.2nd Statement. The unpaid seller cannot recover the thing sold from an innocent purchaser for value.


Pure & Conditional Obligations25. If the obligor binds himself to perform his obligation “as soon as he shall have obtained a loan” from a certain bank. This

obligation isA. With a term C. With a periodB. With a suspensive condition D. With a resolutory condition

Alternative and facultative obligations26. D bound himself to deliver either specific object 1 or specific object 2 to C. If one of the objects is lost due to fortuitous

event and without the fault of D, the effect is:A. D may still choose which he shall deliver, only the value of the thing lost if he chooses the sameB. D cannot choose because among the prestations whereby he is alternatively bound, only one is practicable. C. C may choose which of the objects he wants deliveredD. Obligation of d has been extinguished

27. 1st Statement. In facultative obligation, only one prestation is due but the creditor may be given the right of choices as to the prestation to be performed.2nd Statement. In alternative obligation the right of the choice is always with the debtor


Obligations with a period28. This obligation is demandable at once

A. With a suspensive conditionB. With a period in diemC. When my means permit me to do soD. When it depends on the happening or a specified event

29. If the obligation of the debtor is I will pay you my debt after I have arrived from abroad. The obligation isA. Valid C. VoidableB. Void D. Unenforceable

30. D borrowed a sum of money from C promising to pay after the arrival of the vessel “Balikatan” from Cebu. The vessel failed to arrive due to some fortuitous event and without the fault of D. D’s obligation to pay is subject to a:A. Suspensive condition and therefore not demandable since the vessel did not arrive.B. Not a condition nor a period but rather is pure obligation and therefore demandable at once.C. Resolutory condition and therefore extinguished upon the failure of the vessel to arrive.D. Period, which the court may fix

Obligations with a penal clause31. 1st Statement. In obligation with penal clause, proof of actual damages suffered by the creditor is essential to enforce the

penalty.2nd Statement. As a rule, the creditor may demand the payment of the penalty, damages and interest in case of non-performance of the obligation.


Joint and solidary obligation32. 1st Statement. If the obligation is solidary, it means there is mutual guaranty among the debtors and therefore the

insolvency of one is shouldered by the others.2nd Statement. Solidarity may exist although the debtors may not be bound by the same term, condition and manner of performance.


33. Indivisibility as distinguished from solidarity

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A. Plurality of subject is indivisibleB. When the obligation is converted into one or indemnity for damages because of breach, the character of the

obligation remainsC. Refers to the legal tie or vinculumD. Refers to the prestation which constitutes the object of the obligation

34. A, B, and C executed a promissory note in favor of D, E, and F in the amount of P9,000.00. Suppose the obligation is mixed solidarity, can one of the creditors demand payment of the whole debt from anyone of the debtors?A. No, because the debts are distinct and separate from one another.B. Yes, because it is as if there is only one obligation.C. Yes, provided all of them demand from all of the debtorsD. No, because despite solidarity, a debtor is liable only for his share.

35. A, B, and C executed a promissory note in favor of D, E, and F in the amount of P9,000.00. Can the creditors proceed against A for the payment of the entire loan?A. No, each creditor can only collect P3,000 for AB. Yes, anyone of the creditors can collect the entire P9,000 from A.C. No, each of the creditors can only collect P1,000 from each of the debtors.D. Yes, because the obligation is presumed to be solidary

36. A, B, and C executed a promissory note in favor of D, E, and F in the amount of P9,000.00. Suppose C is insolvent, can B and A be held liable for his share in the obligation?A. Yes, because the obligation is presumed to be joint and several.B. Yes, but A and B shall be liable proportionatelyC. No, because of their joint liability and therefore the debts are distinct from one anotherD. No, because only either of them can be held liable for the share of C

37. A, B and C executed a promissory note binding themselves to pay P9,000 to X, Y and Z. The note is now due and demandable. Can the creditors proceed against A alone for the payment of the entire debt?A. No, each creditor can collect only P3,000 from AB. Yes, either X, Y or Z can collect P9,000 from AC. No, each creditor can collect only P1,000 from AD. Yes, since the promissory note is silent with respect to the rights of the creditors, the obligation is presumed to be

solidary

38. A, B and C executed a promissory note binding themselves to pay P9,000 to X, Y and Z. The note is now due and demandable. Suppose that C is insolvent, can A and B be held liable for his share in the obligation?A. Yes, the debt shall be presumed to be divided into as many equal shares as there are debtorsB. Yes, but A and B will be liable proportionatelyC. No, the debts are considered distinct from one anotherD. No, only either A and B but not both will be liable

39. A, B and C executed a promissory note binding themselves to pay P9,000 to X, Y and Z. The note is now due and demandable. Suppose that C is insolvent, and the obligation was about to prescribe, but X wrote a letter to A demanding for payment or the entire debt, will this have the effect of interrupting the running of the period of prescription?A. Yes, because the demand made by X covers the entire debt and will therefore inure to the benefit of the other

creditorsB. Yes, insofar as A is concerned but not with regard to B and CC. No, because the demand should have been made to all the debtorsD. No, all the creditors should have made the demand

40. A, B and C executed a promissory note binding themselves to pay P9,000 to X, Y and Z. The note is now due and demandable. Suppose that C is insolvent and the obligation was about to prescribe, but X wrote a letter to A demanding for payment or the entire debt. When prescription sets in, how much can Y collect from A?A. P9,000 C. P1,000B. P3,000 D. P -0-

41. A, B and C executed a promissory note binding themselves to pay P9,000 to X, Y and Z. The note is now due and demandable. Suppose that C is insolvent and the obligation was about to prescribe, but X wrote a letter to A demanding for payment or the entire debt. When prescription sets in, how much can X collect form A?A. P9,000 C. P1,000B. P3,000 D. P -0-

42. A, B and C borrowed P3M from D, E and F evidenced by a promissory note worded as follows, to wit: “I promise to pay D, E and F P3M. (Sgd) A, B and C “How much can D collect from A?A. P3M C. P1.5MB. P.5M D. P1M

43. A, B and C borrowed P3M from D, E and F evidenced by a promissory note worded as follows, to wit: “I promise to pay D, E and F P3M. (Sgd) A, B and C.“ Suppose only D is demanding payment, can A still pay any one of the creditors?

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A. No, because the law provides that payment shall be made to the creditor demanding paymentB. No, but in case payment is made to creditor not demanding payment, only his share of the credit, shall be

extinguished.C. Yes, because payment can be made to any of the solidary creditorsD. Yes, because payment proportionately can be made to any of the joint creditors of his share.

44. N, R and J solidarily bound themselves to deliver to S a Honda motorcycle valued at P60,000. The obligation was not fulfilled through the fault of J. Thereupon, S filed an action in court against N and the court awarded P72,000 to S representing the value of the motorcycle plus damages. Which of the following situation is valid?A. If N pays S the P72,000, N can collect from R and J P24,000 eachB. S has to collect P24,000 each from N, R and J to satisfy the courts award of P72,000C. N can refuse to pay the penalty because it should be charged against J, the guilty partyD. If S succeeds in collecting the P72,000 from N, N in turn can collect from R P20,000 and from J P32,000

45. A, B and C bound themselves to deliver to X a specific car worth P3M. Due to the fault of A, the car was lost. In this case:A. X can claim damages from any one of the three for his proportionate part of liability because the obligation is invisibleB. X claim only from A the whole amount of damages other than the value of the carC. Since it is solidary liabilities for damages, X can claim the same from any of the three.D. Only A is liable for damages although B and C are liable for their respective shares in the obligation

Rules of loss, deteriorations, improvement46. In which of the following is the debtor still liable despite the fortuitous event causing the loss of the thing?

A. The thing lost is a specific thingB. The performance of the obligation has become impossibleC. The nature of the obligation does not require the assumption of riskD. When the law of the obligation expressly so provides

47. A obliged himself to deliver the cans of powdered milk of B from Pangasinan to Manila. While his truck was traveling on the North expressway, it was hi-jacked by a band of robbers who also took the cans of milk belonging to B. Is A liable for the loss of the goods?A. No, because they were generic things and as they cannot be lostB. Yes, because he was in possession of the same at the time of the loss and therefore presumed a fault.C. Yes, because there was no stipulation exempting him from loss in case of fortuitous event.D. No, because the lost was due to fortuitous event

Payment48. The following are special forms of payment, except:

A. Dation in payment C. Payment by cessionB. Tender of payment and consignation D. Compensation

49. Payment by cession as distinguished from dation in paymentA. The debtor is not necessarily in a state of financial difficultyB. The effect is to release the debtor for the net proceeds of the things ceded or assignedC. The property is alienated by the debtor to the creditor in satisfaction of a debt in moneyD. What is delivered by the debtor, is merely a thing to be considered as the equivalent of a performance of the

obligation50. A owes B P20,000 which became due and payable last June 23, 2001. On that date, A offered B P10,000, the only

money he then had, but B refused to accept the payment. A thereafter met C, B’s 23 year old son, to whom he gave the P10,000 with the request that he turn the money over to B. The money was stolen while C’s possession. How much may B still recover from A?A. P20,000 C. P15,000B. P10,000 D. P -0-

51. Payment made to a third person is valid to extinguish the obligation of the debtor to the creditor in the following cases, except:A. After payment to the creditor, the third person acquires the creditor’s rightB. When the creditor ratifies the payment to the third person;C. When through the creditor’s conduct, the debtor was led to believe that the third person had authority to receive

payment:D. When the third person is subrogated to the rights of the creditor.

52. 1st Statement. In dation in payment, the creditor becomes the owner of the property ceded as payment of the debt.2nd Statement. In payment of cession, the creditors do not become the owners but are authorized to sell the properties assigned to them.


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53. D borrowed from C a sum of money with a stipulated rate of interest to be paid in three equal monthly installments from January to March. D paid an amount for which the latter issued a receipt stating that the payment is for the month of February. In this case the installment forA. March is also considered paid.B. January is conclusively presumed to have been paidC. January is distributably presumed paid.D. January is not presumed paid.

54. Three of the following are the rights of the creditor against the debtor who fails to pay his debt, except:A. Attachment of the debtor’s properties or garnishment thereof;B. Subrogation to the rights of the debtor against third persons;C. Rescission of contracts entered into by the debtor to defraud himD. Send the debtor to jail for non-payment of his debt

55. D borrowed from C a sum of money with a stipulated rate of interest to be paid in three equal monthly installments from January to March. D paid an amount for which the latter issued a receipt without mentioning the payment of the interest, it is:A. Conclusively presumed the interest has been also paidB. Not presumed paid unless proven otherwiseC. Prima facie presumed to have been paidD. Presumed disputably that only the principal has been paid

56. 1st Statement. In application of payment, the creditor as a rule shall decide on what debt shall the payment be applied.2nd Statement. If the period is for the benefit of the debtor he can apply the payment on a debt although not yet due.


57. It presupposes not only that the obligor is able, ready and willing but also more so, in the act of performing his obligationA. Promissory note C. Tender of PaymentB. Bill of exchange D. Obligation to sell

58. 1st Statement. In dation in payment, the creditor becomes owner of the thing alienated as payment while in payment by cession, the creditors do not become owners of the properties of the debtor.2nd Statement. In tender of payment and consignation, the tender of payment by itself shall not extinguish the obligation.3rd Statement. If the creditor’s receives a check as payment and it has been impaired through his fault; the debtor/drawer shall be released to the extent of the loss.

A. B. C. D.1st Statement True True False False2nd Statement True False False True3rd Statement True. False False True

59. One is not a requisite needed in order that obligation shall be extinguished by loss or destruction of a thing dueA. When the obligation is to deliver the house located at 123 Recto, Avenue, ManilaB. When the thing is lost without the fault of the debtorC. When the obligation is to deliver a brand new Honda SIR colored orangeD. When the thing is lost before the debtor incurred delay

Compensation60. Legal compensation shall exist in the following cases, except:

A. That each of the obligees be the principal creditor of the other and he be at the same the principal debtor of the otherB. That both debts be dueC. That they may be liquidated and demandable;D. That they both consist in a sum of money or if consumable also of the same kind and qualities as that stated.

61. A owes B P11,000 due on July 2, 2003. B owes A P6,000 due on July 3, 2003 and P4,000 due on July 10, 2003. B owes C P11,000 due on July 3, 2003. On July 3, 2003 B cannot pay C so B assigns to C her credit of P11,000 against A, without the knowledge of A. On July 10, 2003 C tries to collect from A the P11,000. How much can C compel A to pay?A. P11,000 C. P5,000B. P9,000 D. P1,000

Novation62. Novation of a contract takes place in three of the following except:

A. Delegacion C. SubrogationB. Expromission D. Assignment

63. When a third person assumes the payment or the obligation without the knowledge of the debtor but with the consent of the creditor, there isA. Delegacion C. Subrogation

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B. Expromission D. Novation

64. D owes C P1M. X without the knowledge or against the will of D paid C P2M. Can X get reimbursement from D?A. P2M by way of reimbursement from D to prevent unjust enrichment on the part of D at the expense of X.B. P1M only for that is the extent of benefit of D.C. No reimbursement because the payment was not proper being without the knowledge or against the will of D.D. P1M plus interest from the time of payment until reimbursement.

65. 1st Statement. There is novation of the obligation if the period for payment is shortened from 5 years to 3 years2nd Statement. There is novation of the obligation if the period for payment is extended from 3 years to 5 years

A. B. C. D.1st Statement True True False False2nd Statement True False True False

66. If the third person pays an obligation. What are the rights, which are available to him if he pays the obligation with the knowledge and consent of the debtor?1st Answer – He can recover from the debtor the entire amount, which he has paid2nd Answer – He subrogated to all of the rights of the creditor

A. B. C. D.1st Answer Correct Wrong Correct Wrong2nd Answer Correct Wrong Wrong Correct

67. D owes C P1M. X without the knowledge or against the will of D paid C P2M. 1st Statement. There is quasi-contract with the obligation to reimburse the third person insofar as the payment has been beneficial to the debtor.2nd Statement. There is legal subrogation and therefore in case the debtor fails to reimburse the third person, the latter may go after the mortgage, guaranty or penalty.


Comprehensive68. 1st Statement. Rights acquired in virtue of obligations are transmissible only if so stipulated by the parties.

2nd Statement. The law of the stipulation of the parties to an obligation may provide that the rights acquired by virtue thereof are not transmissible.


69. 1st Statement. In the obligation to deliver a thing, the debtor has to deliver also the accessories if they have been mentioned.2nd Statement. In obligation to do specific performance of the debtor’s obligation is not available as a right of the creditor to demand from the obligor.


70. 1st Statement. Impossible, unlawful, immoral conditions are not valid and not demandable except the obligations, which depend upon them.2nd Statement. Potestative condition, to be void must both be suspensive and dependent on the debtors will


71. 1st Statement. The loss or deterioration of the thing intended as a substitute through the negligence of the obligor does not render him liable.2nd Statement. A person alternatively bound by different prestations shall completely perform one of them


72. 1st Statement. In tender payment and consignation, the refusal without valid reason of the creditor to accept the payment of the debtor will extinguish the obligation.2nd Statement. The third person who paid the obligation without the knowledge or against the will of the debtor is still entitled to reimbursement from the debtor to the extent of the latter’s benefit.

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CONTRACTSGeneral Provisions73. A contract in which a person literally contracts with himself

A. Adhesion contract. C. Accessory contractB. Auto contract. D. Unilateral contract

74. The contract must bind both contracting parties, its validity or compliance cannot be left to the will of one of them, and this isA. Mutuality of contract C. Relativity of contractB. Freedom of contract D. Obligatoriness of contract

75. By this principle, contracts take effect only upon the contracting parties, their assigns or successors in interestA. Mutuality of contract C. Relativity of contractB. Freedom of contract D. Obligatoriness of contract

76. 1st Statement. The principle of autonomy of contracts means that the contacting parties as a rule may agree upon any stipulation2nd Statement. Relativity of contracts means that contracts take effect not only between the parties as a rule may agree upon any stipulation, clause, term and condition.


77. The statement “Contracts shall be obligatory in whatever from they have been entered into provided all the requisites for their validity are present” refers toA. Consensual contracts C. Formal contractsB. Real contract D. Solemn contracts

78. Three of the following are essential elements of the contract, except:A. Cause of the obligation, which is establishedB. Consent of the contracting partiesC. Motive of the partiesD. Object certain, which is the subject matter of the contract

79. 1st Statement. A contract as a general rule must be written to have force and effect as a valid agreement2nd Statement. A formal or solemn contract is one that must be in writing to be valid.


80. The following even if not in public instrument are valid, binding, and enforceable except:A. Negotiable instrumentsB. Sale of land, either by the owner or agent with written authorityC. Agency, pledge, mortgageD. Partnership contract wherein immovable are contributed

Consideration81. Every negotiable instrument is presumed to have been issued for a valuable consideration. The presumption is

A. Prima facie C. AbsoluteB. Conclusive D. Final

Consent82. The following cannot give consent to a contract, except:

A. Minors, except sale of necessaries in lifeB. Insane personsC. DementedD. Minors who represent themselves as of legal age to one in good faith.

Defective contracts83. A defective contract where damage or lesion is essential is:

A. Rescissible C. UnenforceableB. Voidable D. Void

84. The contracts entered into by the persons who cannot give consent is:

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A. Void ab initio, because actually there is no consentB. Unenforceable only because the contract maybe ratifiedC. Rescission because of the damage caused to the person incapacitatedD. Voidable as there is consent although vitiated or defective

85. The contract is without effect, unless ratifiedA. Marriage between first degree cousinsB. Contract of sale between two insane personsC. Contract of sale between a guardian and his wardD. Donation between husband and wife

86. In 1999, at age 16, A sold his land for P4M payable at P1M in 1999, P1M in 2000, P1M in 2001 and P1M in 2002. In 2004, A wants to annul the contract on the ground of minority. Will this action prosper?A. No, A is allowed to ask for annulment of the contract only within 4 years from the perfection of the contractB. Yes, A has 4 years counted from the time he becomes of legal age to ask for annulment of the contractC. No, the acceptance of the installment payments amounted to ratification of the saleD. Yes, provided A was then acting in good faith when he sold the property

Unenforceable contracts87. B husband of A, in his capacity as head of the family, sold a parapheral property in her name to C, without A’s consent.

The contract of sale isA. Rescissible C. UnenforceableB. Voidable D. Void

88. A defective contract because it is entered into in the name of another without or in excess of authority, or it is verbal is:A. Unenforceable C. VoidB. Voidable D. Rescissible

89. A defective contract because it is prohibited by law is:A. Void C. RescissibleB. Voidable D. Unenforceable

90. The following are still valid contracts except:A. Void C. VoidableB. Unenforceable D. Rescissible

91. The following are void contracts, exceptA. A contract whereby X promised to give as the common-law-wife or Y without the benefit or marriage in consideration

of P1,000,000B. An agreement whereby A is to render service as a servant to B without compensation as long as A has not paid him

debtC. A stole the car of B. Later they entered into a contract whereby B would not prosecute A in consideration of

P1000,000D. A stipulation in a contract of lease whereby the landlord can go to court to eject the tenant in case of failure of the

latter to pay the rent agreed upon

92. A, with a violence in her eyes, intimidated her husband B to sell his exclusive property to her. The contract to sell isA. Rescissible C. UnenforceableB. Voidable D. Void

Comprehensive93. 1st Statement. When one of the parties has brought an action to enforce the contract, he cannot subsequently ask for its

reformation.2nd Statement. The injured party may seek rescission even after he has chosen the fulfillment of the obligation if the latter should become impossible.


94. 1st Statement. In reformation of instruments, it is necessary that there is meeting of minds of the parties to the contract, otherwise, annulment of contract shall be the remedy if fraud, accident, mistake or inequitable conduct prevented the meeting of minds.2nd Statement. In the interpretation of contracts, doubts on the incidental circumstances of onerous contracts shall be resolved in favor of greatest reciprocity of interest and if gratuitous, least transmission of rights and interest.


95. 1st Statement. A contract entered into by a minor is void

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2nd Statement. A contract where the amount involved exceeds P500.00 must be in writing to be validA. B. C. D.

1st Statement True True False False2nd Statement True False False True

PARTNERSHIPNature96. A, B, and C entered into an oral contract of partnership each contributing P1M each to the common fund plus other

personal properties of the same amount and failed to register the partnership with the SEC. Is the partnership valid?A. No, because every contract of partnership having a capital of three thousand pesos or more in money or property

must be in public instrument and registered with the SECB. Yes, because public instrument is necessary only in case of contributions of immovables.C. Yes, because a partnership contract can always be oralD. No, because registration with the SEC is essential for a partnership to be valid and acquire juridical personality

97. A and B are co-owners of a parcel of land from which they derive profits in equal sharing being co-heirs in inheritance. Is there a partnership?A. There is a partnership because of the equal sharing of profitsB. There is no partnership because co-ownership by itself does not establish a partnership despite the sharing of profitsC. There is no partnership since in partnership division of profits is not always necessary among partnersD. There is partnership they being co-owners and co-possessors.

98. A, B, and C as partners in a partnership, stipulated and mutually agreed that A shall not share in the profits and losses. Is the agreement valid as among the partners only and not against third persons?A. Yes, because among the partners it is valid to exempt one from sharing in the profits and lossesB. Yes, valid as long as third person is not prejudicedC. Not valid stipulation exempting a partner from sharing profits and lossesD. Not valid as against third persons or partnership creditors

Rights & Liabilities of Partners99. A and B are partners in Ace partnership. While A was performing his duties, as a partner in the conduct of the business

and negligently caused damage to X, a third person. Who shall be liable to and in what capacity?A. Only the partnership shall be liable it being a juridical person separate and distinct from the partnersB. Only A shall be liable for he is the only one faultC. Both A and B shall be liable solidarityD. A, B, and the partnership are all liable solidarily to X

100.1st Statement. A partner who is liable to the partnership for damages due to his fault may claim compensation if through his extraordinary efforts in other activities of the partnership unusual profits have been realized2nd Statement. A partner shall become a debtor of the partnership if he fails to deliver his promised contribution and shall be in delay from the time of a demand from the partnership


101.A contributed P1M, B contributed P1M, and C contributed services. They agreed to divide the profits and losses equally. In case of loss of P.3M, for how much, if any, is C liable?A. Nothing, because an industrial partner is exempt from lossesB. P.1M but with reimbursement from A and B equallyC. A and B alone shall shoulder the loss at C’s optionD. P.1M

102.A contributed P1M, B contributed P1M, and C contributed services. Suppose there was no agreement as to profit-loss sharing, In case of profit of P.3M, what will be the share of C in the profit?A. Equal to the share of A and B;B. Just and equitable under the circumstancesC. P1MD. Court to fix his share

103.A contributed P1M, B contributed P1M, and C contributed services. Suppose there was no agreement as to profit-loss sharing,iIn case of loss of P.3M, what shall be his share in the loss?A. Equal to the share of A and B;B. Just and equitable under the circumstancesC. P1MD. None.

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Dissolution of Partnership104.Three of the following dissolves a partnership, except:

A. Partnership business has become unlawfulB. Death, civil interdiction or insolvency of a partnerC. Expulsion of a partnerD. Partnership business can only be carried on at a loss

Liquidation of Partnership105.Partners A, B and C contributed: A-P1M, B-P2M, and C-service. After exhausting the partnership assets, the creditors

still have a claim for P.3M. For how much are the partners liable to the creditors for the partnership liability?A. Only A and B are liable equally to the creditors being capitalistB. Only A and B are liable at ½ and 2/3, respectivelyC. All of A, B and C are liable pro rata to the creditorsD. C is not liable being an industrial partner who is exempt form losses

Limited Partnership106.Which of the following is not a prohibition on limited partner?

A. Surname of a limited partner may not appear in the partnership nameB. Limited partner may not take part in the control of the businessC. Limited partner may not contribute serviceD. Limited partner may not constitute his assignee as substituted limited partner

Comprehensive107.1st Statement. A contract of partnership where immovables are contributed must be in public instrument to be valid.

2nd Statement. A limited partnership must be SEC registered to be validA. B. C. D.


108.1st Statement. A newly admitted partner shall be liable for the pre-existing obligations of the partnership at the time of his admission in favor of partnership creditors up to the extent of his capital contribution2nd Statement. An industrial partner shall not share in the losses and his share in the profits shall be just and equitable under the circumstances.


CORPORATIONNature109.Which of the following is the disadvantage of forming a corporation?

A. The free and ready transferability of ownershipB. The shareholders are not liable for the debts of the businessC. Because of the power of succession, the existence of the entity is not affected by the personal vicissitudes of the

individual stockholdersD. The subservience of minority stockholders to the wishes of the minority subject only to equitable restraint

110.Private corporations have the following attributes except:A. It is an article being created by lawB. It may be formed or created under special laws or charterC. It has the right of successionD. It has the powers, attributes, and properties expressed authorized by law or incident in its creation

111.Three of the following are requisites for the existence of de facto corporation, except:A. Incorporated under valid law C. Actual use of corporate powersB. Attempt in good faith to organize D. Existing in law and in fact

112.1st Statement. A de facto corporation is one which is registered with the SEC.2nd Statement. In corporation by estoppel, those who misrepresented themselves as forming a corporation are liable as general partners


113.1st Statement. A corporation can be a stockholder but not an incorporator2nd Statement. To be a de jure corporation, it must be existing in law and in fact unlike a de facto one which exist in fact but not in law.

A. B. C. D.

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Incorporation of a business114.Three of the following are required for incorporators, except:

A. They must be natural personsB. All of legal ageC. Not less than five nor more than fifteenD. Majority must be citizens of the Philippines

115.1st Statement. The by-laws may provide that the holders of the majority of the outstanding capital stock shall elect all the members of the board.2nd Statement. The by-laws may provide that no officer of the corporation may be required to be a stockholder.


Operations of a corporation116.Majority of the following must be residents of the Philippines except:

A. Directors C. IncorporatorsB. Trustees D. Officers

117.In the matter of management of the corporation, this is supreme:A. President C. StockholdersB. Chairman of the Board of directors D. Board of directors

118.The following are qualifications of a corporate director, exceptA. Must own at least one share of stockB. Must continuously own at least one share during his term as directorC. Majority of the directors are citizens of the PhilippinesD. Ownership of shares must be recorded in the book of the corporation

119.At the annual meeting of the corporation for the election of five directors, A, B, C, D, E, F, and G were nominated. A, B, C, D, and E received the highest number of votes and thus proclaimed as elected. F received ten(10) votes less than E. Subsequently, E sold his shares to F. Who, between E and F has the right to attend as director?A. E is the director because his term is one year until his successor is elected and qualifiedB. F is the director because he has bought the shares of E.C. Both of them shall be directorsD. Neither of them shall be director

120.X Corporation posted a P1M profit in its realty business and its real estate has appreciated in value to the tune of P4M. The board then declared dividends computed on the basis of P5M representing profits and appreciation in value of its real estate. Is the dividend declaration valid?A. Not valid because there was no ½ ratification by the outstanding capital stockB. Valid being based on profits and increments in the value of the corporate assetsC. Not valid because dividends must come only from the profitsD. Valid if creditors do not object nor protest against the same

121.A subscribed to 100 shares of X corporation, paying 25% thereon. Despite the demand by A for the issuance of stock certificate, the corporation refuses to issue one corresponding to the 25% paid. Meanwhile, the corporation has become insolvent and A now refuses to pay his unpaid balance on his subscription. Is the refusal to issue a stock certificate valid?A. Not valid, because stock certificate can be issued for the paid portion of the subscriptionB. Valid because stock certificate can only be issued after full payment of the subscriptionC. Valid as regards the unpaid percentage on the subscriptionD. Not valid because only delinquent shares may be denied stock certificate

122.A subscribed to 100 shares of X corporation, paying 25% thereon. Despite the demand by A for the issuance of stock certificate, the corporation refuses to issue one corresponding to the 25% paid. Meanwhile, the corporation has become insolvent and A now refuses to pay his unpaid balance on his subscription. Can A validly refuse to pay the unpaid balance on his subscription now that the corporation has become insolvent?A. No, under the trust fund doctrine for the protection of creditorsB. No, under the doctrine of piercing the veil of corporate fictionC. Yes, because of the insolvency of the corporation which also extinguished his obligation to pay the balanceD. Yes, because of the denial of his right to stock certificate

Stockholders’ Rights123.A subscribed to 1,000 shares of stock of X Corporation and paid 25% of the said subscription. Can he vote all his

subscribed shares?A. No, because the subscription has not been fully paid

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B. No, because his shares have become delinquent sharesC. Yes, as regards the paid percentage of the subscriptionD. Yes, because shares although unpaid but not delinquent can be voted.

124.In three of the following cases, all shares have voting rights except:A. Election of directors C. Dissolution of the corporationB. Increase or decrease of capital stock D. Merger or consolidation

125.ABC Corporation has an authorized capital stock of P1M divided into 50,000 common shares and 50,000 preferred shares. At its inception, the corporation offered for subscription all the common shares. However, only 40,000 shares were subscribed. Recently, the directors thought of raising additional capital and decided to offer to the public all the authorized shares at their market value. Would X, the stockholder of 4,000 shares have pre-emptive right to the remaining 10,000 shares?A. Yes, because all stockholders have preemptive rights to all issues of shares of any class in proportion to their

shareholdings.B. No, because pre-emptive right does not apply to unissued shares to be issuedC. Yes, because pre-emptive right applies only to the issuance of unissued sharesD. No, because X has waived his pre-emptive rights to the issuance of preferred shares when he subscribed to the

common shares

126.ABC Corporation has an authorized capital stock of P1M divided into 50,000 common shares and 50,000 preferred shares. At its inception, the corporation offered for subscription all the common shares. However, only 40,000 shares were subscribed. Recently, the directors thought of raising additional capital and decided to offer to the public all the authorized shares at their market value. Would X also have pre-emptive right to the 50,000 preferred shares?A. Yes, because all stockholders have pre-emptive rights to all issues of shares of any class in proportion to their

shareholdingsB. No, because pre-emptive rights do not apply to the issuance of unissued sharesC. Yes, because pre-emptive right applies only to the issuance of unissued sharesD. No, because he has waived this right when he subscribed to a part only of the issuance of shares

Meetings & Stocks127.The corporation has a nine-member board of directors. Two of the members sold their shares while two others are

abroad. To have a quorum, the number required is:A. Investment of corporate funds in another business or corporationB. Amendment, repeal or adoption of by-lawsC. Dissolution of the corporationD. Amendment of the articles of incorporation

Voting Requirements128.Which of the following requires the approval of the majority of the outstanding capital stock?

A. Investment of corporate funds in another business or corporationB. Amendment, repeal or adoption of by-lawsC. Dissolution of the corporationD. Amendment of the articles of incorporation

129.A director of a corporation may be removed by:A. Vote of majority of the outstanding capital stockB. 2/3 of the stockholdersC. Majority of the stockholdersD. 2/3 of the outstanding capital stock

NEGOTIABLE INSTRUMENTSNature130.A letter of credit is beyond the scope of the negotiable instrument law, because

A. It is in favor or a specific person or not to orderB. It is an order to pay out of a particular fundC. It is without an unconditional promise or order to pay a sum certain in moneyD. It is not payable on demand or at a fixed or determinable future time

Form and interpretation of negotiable instruments131.Omissions that do not affect the negotiability of an instrument, except

A. It is not datedB. Does not specify the value givenC. Does not specify the place where it is drawnD. Does not name the payee where the instrument is payable to order

132.When the instrument is complete but undelivered, delivery is presumed to have been made in favor of the holder, the

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presumption isA. Conclusive whether holder in due course or for valueB. Prima-facie whether holder in due course or for valueC. Conclusive if holder for value and prima facie if holder in due courseD. Prima-facie if holder for value and conclusive if holder in due course

133.Which of the following is negotiable instrument?A. Pay to bearer C P1M. Reimburse yourself out of the house rentals of my house in Manila. (Sgd) A To: BB. Pay to C or his order P1M out of the rentals of my house in Manila. (Sgd) A To: B or in his absence XC. Pay to C P1M (Sgd) A To: BD. Pay to the order of C and reimburse yourself out of the rentals of my house in Manila. (Sgd) A To: B or in his absence

X

134.Which of the following is not negotiableA. Documentary Bill of Exchange C. Certificate of depositB. Clean bill of exchange D. Postal money order

135.It contains an order to pay out of a particular fund rendering the instrument beyond the scope of the negotiable instrument lawA. Bill of lading C. Certificate of stockB. Treasury warrant D. Warehouse receipt

136.Which of the following is not negotiable instrument?A. Pay to the order of Pedro Cruz P1M (Sgd) Jose Santos To: A or BB. I promise to pay to the order of the bearer P1M. (Sgd) MC. Due to Bearer P1M or a BMW car worth P1M at his option. (Sgd) MD. Pay to the order of myself P1M. (Sgd) D To: W

137.The following are negotiable except:A. Drawer A directs drawee B to pay C or order P10,000, 30 days after demandB. Drawer A directs drawee B to pay C or order P10,000, 30 days after C passes the CPA board examinationsC. A promises to pay B or order P10,000 within 30 days after the death of CD. A promises to pay B or order P10,000 on or before August 14, 2002

138.A note reads “I promise to pay B or order P1,000, 30 days after B resolves the proceeds of his loan from ABC Bank. Sgd. A. The instrument isA. Subject to a conditionB. Payable at a determinable future timeC. Payable on demandD. Non-negotiable because the payment is indefinite

139.This provision renders a note non-negotiableA. A promises to pay to the order of B the sum of US $1,000 payable in pesos at the rate of exchange prevailing on

August 14, 2002B. A promise to pay B P1,000 with 12% interest thereonC. A promises to pay B P1,000 and all costs charges and expenses including reasonable attorney’s feeD. A promises to pay B P1,000 in two equal installments, the first payable on August 14, 2002 and the second on

September 14, 2002

140.Which of the following is not negotiable?A. I promise to pay B or order P10,000 on or before September 14, 2002 in payment of the purchase price of the

merchandise I bought from him. Sgd. AB. Pay to the order of B P20,000 on or before September 14, 2002 and change the same to my account. To C Sgd. AC. Pay to the order of B P30,000 out of my deposit with you. To C sgd. AD. Pay to B or order P40,000 for payment under contract of August 14, 2002. To C Sgd. A

141.This is not negotiableA. I promise to pay to the order of myself P10,000 signed by A, the makerB. Pay on the order of the Commissioner of Internal Revenue P10,000 to ABC bank. Sgd. AC. I promise to pay to order P10,000. Sgd. AD. Pay to the order of X, Y and Z, P10,000. to B. Sgd. A

Endorsements142.M makes a note payable to bearer and delivers the same to P who endorses it to X in this manner: “Payable to X. (Sgd)

P.”Later X, without indorsing the note delivers the same to Y. The note subsequently dishonored by M. May Y proceed against M for the note?A. No, because the special indorsement of P has made the note to be payable to order and must be endorsed to

negotiate

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B. Yes, because an instrument originally payable to bearer remains to be payable to bearer despite special indorsement made thereon

C. Yes, because M, as maker, is absolutely liable to pay the instrument in the hands of any holderD. No, because Y did not acquire title to the instrument due to lack or proper indorsement.

Rights of the Holder143.A holder in due course has the following rights except:

A. He holds the instrument free from defects of title of prior partiesB. Free from defenses of prior parties among themselvesC. Enforce payments against all parties liable thereonD. Holds the instrument as if it were non-negotiable

144.Three of the following are requisites to be a holder in due course except:A. That the instrument is complete and regular upon its faceB. That the holder took it in good faith and for valueC. That he became the holder of it before it was overdue and without notice that it had been previously dishonored if

such was the factD. That he had no knowledge of any fact, which would impair the validity of the instrument or render its valueless.

145.Under the Negotiable Instrument Law, to be holder in due course, a person must have acquired the instrument before it is overdue. Does this apply to the payee to whom the maker issued an overdue note?A. Yes, because the payee is still considered a holder under the lawB. No, because issuance to the payee is not considered a holder under the lawC. Yes, because the law does not distinguished between payee and subsequent holderD. No, because the payee is privy to the contract between himself and the maker

146.There is no difference between a holder in due course and one who is not, since as regards them, real and personal defenses may always be raised ifA. Intervening parties C. Immediate partiesB. Remote parties D. Subsequent parties

147.Real and personal defenses may be raised betweenA. Immediate parties C. Intervening partiesB. Remote parties D. Subsequent parties

148.This is a real defensesA. Fraud is inducementB. Want or considerationC. Want of delivery of an incomplete instrumentD. Duress in the absence of physical pressure

149.This is a personal defenseA. Absolute defense C. Real defenseB. Equitable defense D. National defense

150.A issued a promissory note payable to B or order for P10,000 for 10 bottles of whisky sold by B to A. Later B negotiated the note to C. Subsequently, A discovered that only 5 bottles of whisky are genuine. As a resultA. C can enforce the note against A for P10,000 regardless of whether C is holder in due course or notB. C cannot enforce the note against A for P10,000 even if he is a holder in due courseC. C can enforce the note against A only for P5,000 regardless of whether he is a holder in one course or notD. C can enforce the note against A only for P5,000 if he is not a holder in course.

151.A issued a note payable to bearer. He delivers the note to B, B indorses the note especially to C, then C negotiates the note by delivery to D. Which of the following is not correct?A. D can enforce the note against C C. D can enforce the note against AB. D can enforce the note against B D. Can enforce the note against B

Liabilities of Parties152.M makes a negotiable promissory note for P10,000 with the name of the payee in blank. The note was stolen by P, who

inserts his name as payee and then indorses the note to A, then A to B, and B to C, who is a holder in due course. On maturity, C cannot enforce the note againstA. M C. AB. P D. B

153.The indorser who simply signs his name renders himself liable to all subsequent holder asA. Primarily liable C. Secondarily liableB. Solidarily liable D. Subsidiary liable

154.In a blank indorsement, the indorser renders himself

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A. Primarily liable C. Solidarily liableB. Secondary liable D. Subsidiary liable

155.A delivered to B the following instrument“One month after date, I promise to pay to B P10,000. Sgd. A”. B indorsed the note in blank before maturity and

delivered it to C for value. When due, A refused to pay and C sued B. Could C recovered from B?A. No, C could not sue B and hold him liable as an indorser because the instrument is payable to a specified personB. No, the instrument is not negotiable because it is neither payable to order or to bearerC. Yes, provided C to give notice if dishonor to B, otherwise B is discharged from liabilityD. Yes, the endorsement will be considered as an assignment, hence B will be liable as an assignor of the instrument

156.A, knowing that there is no such person by the name of B, makes out and signs a promissory note payable to B or order. A delivers the note to C. C in turn delivers the note to D without indorsement. Later, D delivers the note to E, a holder in due course, which of the following is correct?A. Being payable to order, the note can be negotiated by indorsement and deliveryB. E has no right to collect from C because a person negotiating an instrument merely by delivery is liable only to the

immediate transfereeC. E becomes holder only if D will indorse the instrumentD. The instrument is not-negotiable because it is payable to the order of a non-existing person

157.A makes a negotiable note to bearer and delivers it to B for safe-keeping. The note is negotiated by B to C. Can A refuse to pay C on the ground that the note was originally delivered to B for a special purpose only?A. Yes, A can prove that he delivered the instrument to B for a special purposeB. No, where the instrument is in the hands of any holder, a valid delivery thereof by all parties prior to him so as to

make them liable to him is conclusively presumedC. Yes, because B negotiated the note without authorityD. No, if C is a holder in due course

158.A made a negotiable promissory note in favor of B who negotiated it to C under the following indorsements. “Pay to C after passing the CPA examination in October 1999”. At maturity of the note, C presented it to A for payment and it was duly paid, C did not pass the CPA examination. Which of the following is correct?A. The promissory note is not negotiable because of the condition imposedB. The promissory note becomes negotiable because the condition was satisfiedC. A had no right to pay C, and therefore can compelled to pay againD. A may disregard the condition and make payment whether the condition is fulfilled or not

159.The drawee bank may not refuse to pay check drawn against itA. If there is a “stop payment “ issued by the drawerB. If the drawer is insolventC. If the drawer’s deposits is insufficientD. When the bank receives notice of the drawer’s death

Notice of Dishonor160.A makes a note payable to B or order. The following are the indorsers of the note in the order of their indorsement: B, C,

D, E, F(holder) and G(subsequent holder). The note is dishonored in the hands of F, who notifies B, C, D, E. Which is not correct?A. The notice given by F to B operates to the benefit of C, D, E, and GB. The notice to C inures to the benefit of D, E, and GC. The notice to D inures to the benefit of E and GD. The notice to C inures to the benefit of B

Discharge of negotiable instruments161.The negotiable instrument is not discharged:

A. When the principal debtor becomes the holder thereof before or after maturity in his own behalfB. By the intentional cancellation of the instrumentC. By payment in due course by the accommodationD. By any other act which discharges a simple contract for the payment of money

CONTRACT OF SALENature and Form of the Contract162.A advertised in the newspaper his parcel of land wanting to sell the same for P1M. B personally went to the former with

cash in hand to buy the subject parcel of land. In this case:A. A cannot anymore reject B as buyer of his land;B. A can still reject B as an offerer in the purchase of his land;C. A can reject the offer of B unless he properly consigns with the court his payment for the landD. A cannot evade his obligation as seller to B.

163.A sold his car for the price of P2M to B who shall pay P.5M and deliver to S his land as consideration for the sale. There is:A. Partly sale and partly barter C. Innominate contract

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B. Barter D. Sale

164.S delivers to B his car valued at P2M in consideration of B transferring to S his land worth P1M and the amount of P1M. There is:A. Barter C. Innominate contractB. Sale D. Partly sale and partly barter

165.B ordered from S a pair of shoes of the kind and style of which S has gone out of stock. There is:A. Contract for a piece of work C. Contract of agencyB. Contract of lease of service D. Contract of sale

166.S sold to B his land valued at P1M only for the price of P.7M, thus resulting to inadequate price. The sale is:A. Rescissible C. UnenforceableB. Voidable D. Valid

167.S offered his land to B with the understanding that the latter shall fix the price. B, as agreed upon fixed the price at P2M, although the land’s market value was P1.5M. It is clear, therefore, that S is to benefit from the transaction. Was there sale?A. No, the sale was not perfected as there was no consent on the priceB. There was perfected sale, fixed by buyer and accepted by the sellerC. There’s valid sale since the buyer was authorized to fix the priceD. Voidable sale at the option of the buyer due to mistake in the fixing of the price.

168.1st Statement. A contract of sale of vain hope or expectancy is voidable at the option of the buyer and the action for annulment brought within the prescriptive period provided by law.2nd Statement. The sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence.


Nature169.S sold to B his land on January 10, 2001. On January 15, an absolute deed of sale was executed and notarized. On

January 20, the sale was registered with the Registry of Deeds. On January 20, the sale was registered with the Registry of Deeds. On January 25, B took actual possession of the land by building a fence thereon. When did B acquire ownership of the land?A. On January 10 C. On January 20B. On January 15 D. On January 25

170.S sold to B his car on January 10, 2001. On January 15, an absolute deed of sale was executed and notarized. On January 20, the sale was registered with the LTO. On January 25, B took actual possession of the car. When did B acquire title to the car?A. On January 10 C. On January 20B. On January 15 D. On January 25

171.S sold to B his car with the agreement to deliver the same one-week after the sale on January 10, 2001. In this case:A. S may demand within reasonable time from the sale the payment of the price from BB. S can demand payment only after he has delivered the car to B.C. B may demand delivery of the car even before the expiration of the one-week period agreed upon once he pays the

priceD. Payment and delivery shall take place only after one week from sale

172.S sold B his car with the agreement that B will pay the price one week after the sale on January 10, 2001. In this case:A. B may demand within reasonable time from the sale the delivery of the carB. B may demand delivery only after he has paid the priceC. S may seek payment of the price once he delivers the carD. Payments and delivery shall take place only after one week from sale

173.S sold his car to B. No agreement was made on the time and place of delivery and payment. Hence:A. The time and place of delivery shall be at the time and place of payment of the price.B. The time and place of delivery and payment not having been agreed upon, the sale shall be void.C. The seller may demand payment first before delivery of the thing sold.D. The buyer may demand delivery first before payment of the price.

174.1st Statement. The seller must be the owner of the property he sells but his ownership need not exist on perfection but upon delivery of the thing.2nd Statement. A contract of sale may be absolute; conditional, either suspensive or resolutory; or subject to a contingency; or undivided interest on property, either present or future except future inheritance.

A. B. C. D.

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175.A sold his land to B verbally. The sale is:A. Rescissible C. Unenforceable B. Voidable D. Void

176.A sold to B his dog with the agreement that delivery shall be after one week from sale and the payment of the price after two weeks from delivery. If the dog shall produce offspring, it shall belong to:A. If produced before the sale, it shall pertain to the seller;B. If the puppy shall exist before the actual delivery, it shall pertain still to the sellerC. The fruits that shall exist after delivery will only be the ones to pertain to the buyerD. The fruits after the sale but before delivery shall pertain to the buyer if so stipulated by the parties to the sale

177.S offered his car to B for P1M and giving the latter one-week to decide. B in turn gave S P1,000.00. In this case, there is:A. Contract of sale of the car with the P1,000.00 as earnest moneyB. Contract of option with the P1,000.00 as option moneyC. Contract to sell of the car at B’s optionD. Contract to sell of the car at S’s option

178.1st Statement. An oral sale of land made by its owner is unenforceable2nd Statement. Sale of land made by an agent without written authority from the owner thereof is void.


Capacity to Buy or Sell179.A, offered to sell to B 100 cartons of sardines at a specified price which was accepted by B and subsequently delivered

his letter of acceptance. In view of the shortage of the catch or sardines, A failed to deliver the commodities it had offered for sale. B decided to sue A. Which is correct?A. The acceptance of the offer only created an option to buyB. The absence of consideration distinct from the price makes the contract without any obligatory forceC. The acceptance of the offer to sell by showing the intention to buy for a price certain creates a bilateral contract to

sell and buyD. The acceptance of the offer to sell constitutes a binding contract of sale provided the option was supported by a

sufficient consideration

Obligations of the Vendor180.Which of the following is not constructive delivery in sale?

A. Traditio longa manuB. Traditio constitum possessoriumC. Thing is placed in the control and possession of buyerD. Traditio symbolica

Conditions and Warranties181.S sold to B a thing with waiver of warranty against eviction. Eviction took place subsequently. Is S still liable for breach of

warranty against eviction?A. No, if it was waiver intencionadaB. No, if it were waiver conscienteC. Yes, even if it was waiver intencionadaD. No, provided the seller was in good faith in entering into the contract of waiver of warranty against eviction

182.S sold to B a thing without knowledge that the thing suffered from a hidden defect. The parties agrees on the waiver of the warranty by the buyer. Is the seller still liable for breach of warranty?A. No, because of the valid waiver of warrantyB. No, but he must return the price to the buyer without damagesC. Yes, because the waiver refers only to liability for damages.D. Yes, if the seller was in bad faith at the time the waiver was made.

183.B bought from S a second hand motor vehicle, which upon inspection by B had some mechanical troubles. After the sale, the car broke down due to engine trouble requiring an overhaul of the engine. Is S liable for breach of warranty against hidden defect?A. No, because the defect was not hidden but apparent upon inspection by B it being a second hand car.B. Yes, because there was no waiver of warranty against hidden defectC. Yes, because the seller was in bad faithD. No, because it was the fault of the buyer in buying a used car

184.S sold to B his dog without knowledge that the animal was suffering from a disease at the time of the sale. Is the seller liable for breach of warranty against redhibitory defect of animals?

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A. No, because the seller was in good faith when he sold the animal.B. Yes, if he were aware of the hidden fault or defect.C. No, because animals unlike things easily can contact some illnessD. Yes, and good faith is not defense to avoid liability

Extinguishment of Sale185.In which of the following is sale not presumed equitable mortgage?

A. The price of the sale usually adequateB. The vendor remains in possession of the thing soldC. The vendor allows the extension of time to repurchase the thing soldD. The purchaser retains for himself a part of the purchase price1

186.A and B are co-owners of a parcel land. A donated his share to C. Can B redeem the said share from C?A. Yes, because the law looks with disfavor at co-ownershipB. No, because legal redemption applies only in case of onerous alienationC. No, unless he enforced his right through court actionD. Yes, but in proportion to his interest in the land as co-owner.

187.A, B, C are co-owners of a parcel of land. A sold his share to B. Can C redeem the said share from B?A. No, unless he was notified of the sale prior to its perfectionB. No, legal redemption applies only if the interest was alienated by onerous title to a third personC. Yes, because the law frowns upon co-ownershipD. Yes, provided he pays to the price, expenses of the sale and necessary and useful expenses on the thing sold

Comprehensive188.1st Statement. In “ sale or return”, the buyer becomes owner of the thing upon delivery while if “on approval, trial or

satisfaction”, after approval, express or implied.2nd Statement. 2nd Statement. Sale between husband and wife is void, unless there is separation of property between them in the same way that universal partnership between them is also void.


AGENCYNature, Form and Kinds189.In three of the following cases, the agency is not revocable, except:

A. It is a means of fulfilling an obligation already contractedB. Bilateral contract depends upon itC. It is coupled with interest common to the agent and principal.D. Partner is appointed manager in the articles of partnership and removal is without just cause.

Operation of Agency190.Special power of attorney is necessary in the following cases, except

A. To make such payments usually considered as acts of administrationB. To compromise, to submit questions to arbitrationC. To bind the principal in a contract of partnershipD. Any other act of strict dominion

191.P authorized A to sell his products with 10% commission and 5% guarantee commission. A sold them to B who failed to pay despite the diligent efforts of A in collecting. Is A still liable for the purchase price?A. Yes, because of the guarantee commission given to himB. No, because he was not at fault in the collection C. No, if he returns the guarantee commissionD. Yes, and he is not entitled anymore to the commissions

192.In three of the following cases, the agent can appoint a substitute, except:A. The principal authorized him to appoint a substituteB. The principal did not authorize him to appoint a substituteC. There is no stipulation as to the appointment of a substituteD. The principal forbids the appointment of a substitute

193.P appointed A and B as his agents for a common transaction and they agreed that the latter shall be solidarily liable to the former for damages in case of violations of their obligations as such. When is the agent at fault the only one liable for damages even if solidarity has been stipulated?A. If the other agent is not at faultB. Both of them shall be liable always since solidarity was agreed uponC. If the one at fault shall answer for all the damages

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D. If the one at fault acted in excess of authority

194.A sold B’s car in his (A’s) name to C without any authority from B, the contract of sale is A. Rescissible D. UnenforceableB. Voidable E. ValidC. Void

195.A sold B’s car in the name of B without authority to C. The sale is:A. Rescissible C. Unenforceable B. Voidable D. Void

196.A sold B’s car with authority to sell but sold it in (A’s) name. The contract is:A. Rescissible C. Unenforceable B. Voidable D. Void

197.A as agent of P with oral authority, sold P’s land in a public instrument. The sale is:A. Rescissible C. Unenforceable B. Voidable D. Void

198.With written authority from his principal, the agent sold verbally the land of the principal. The sale is:A. Rescissible C. Unenforceable B. Voidable D. Void

199.Without authority from B, A sold the former’s land in B’s name. The sale is:A. Rescissible C. Unenforceable B. Voidable D. Void

200.Without authority from B, A sold the former’s house in B’s name. The sale is:A. Rescissible C. Unenforceable B. Voidable D. Void

201.A, with oral authority from P, sold the latter’s house in writing. The sale is:A. Rescissible D. VoidB. Voidable E. ValidC. Unenforceable

202.A, agent of P, in excess of authority, entered into a contract in the name of P with X who knew of the lack of authority and P did not ratify the contract. The contract is:A. Rescissible C. Unenforceable B. Voidable D. Void

203.1st Statement. It two or more principal appoint a single agent for a common transaction, the liability of the former shall be solidary2nd Statement. If two or more agents appointed by a single principal are jointly liable unless solidarity is stipulated


204.P authorized A, a minor, to sell his car for P1M in cash. A sold the said car to x on installments at a lesser price of P.9M. P is now repudiating the contract with X on the ground that he is not bound since X contracted with a minor who exceeded his authority. Decide.A. P is liable under the contract because it is enough that the principal is capacitated since he is the one entering into

the contractB. P is not liable for the sale on installments since it is unenforceable because his agent acted beyond his powersC. P is not liable because the agent is a minor with whom X contractedD. P is liable provided the sale is in cash for P1M

PLEDGE, REALTY MORTGAGE & CHATTEL MORTGAGEPledge205.D pledged his car to C as security for a loan. Failing in the payment of the loan, C foreclosed the pledge and sold the car

at public auction. In case of deficiency, is D liable for it? A. No, notwithstanding stipulation to the contraryB. No, unless otherwise stipulatedC. Yes, if so agreed uponD. Yes, even in the absence of stipulation

Real Mortgage206.D mortgaged his parcel of land to C as security for a loan. Fearing foreclosure of the mortgage due to his inability to pay

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the loan, D sold the land to X without the consent of C. Is the sale valid?A. No, unless there was prior consent of the mortgageB. Yes, stipulation prohibiting the sale without the consent of the mortgagee shall be voidC. Yes, provided the mortgagee was notified before the saleD. No, if there was stipulation requiring prior consent

207.D owes C a sum of money with M as mortgagor of his land to secure the loan. Is the mortgage valid even if the mortgagor is not the debtor?A. Yes, provided the mortgagor or pledgor in case of pledge is the absolute owner of the property mortgaged or

pledged.B. Yes, provided it is in writing and registeredC. No, the mortgagor/pledgor must be the debtor himselfD. No, unless the mortgagor is a co-debtor

208.A gets a loan of P1M from B which becomes due on October 1, 2003 and mortgaged his house as security for the debt. On June 30, 2003, the mortgage house completely destroyed by fire thru the fault of C. A week later, B demanded payment from A. Is B’s demand valid?A. No, the destruction of the house was not thru the fault of AB. No, the obligation is one with a definite period which is deemed intended for the benefit of both the debtor and

creditorC. Yes, the debt becomes demandable unless A can give another security equally satisfactoryD. Yes, the debt becomes demandable even if A can give another security equally satisfactory

Chattel Mortgage209.S sold to B a car on installment wherein the latter mortgaged the same car as security for the price. Failing to pay the

installments, the mortgage on the car was foreclosed. Is B still liable for any deficiency if the seller fails to recover in the foreclosure sale?A. Yes, because it is only in case of pledge is the debtor not liable for any deficiencyB. Yes, if so stipulated upon by the partiesC. No, unless agreed upon by the partiesD. No, notwithstanding any stipulation to the contrary

210.D mortgaged his car to C as security for a loan. Failing in the payment of the loan, C foreclosed the chattel mortgage and sold the car at public auction. In case of deficiency, is D liable for it?A. Yes, in the absence of contrary stipulationB. No, because it would be unjust enrichment on the part of creditorC. Yes, if so agreed upon by the partiesD. No, unless stipulated

Comprehensive211.1st Statement. Antichresis must be in writing and involves only immovables

2nd Statement. In pledge and Recto Law there is no deficiency liability.A. B. C. D.


Answer Key1. C 36. C 71. A 106. D 141. C 176. A 201. A2. D 37. C 72. D 107. A 142. B 177. B3. D 38. C 73. B 108. A 143. D 178. A4. D 39. B 74. A 109. D 144. D 179. C5. B 40. D 75. C 110. A 145. D 180. C6. B 41. C 76. A 111. D 146. C 181. A7. A 42. D 77. A 112. D 147. B 182. A8. D 43. D 78. C 113. A 148. C 183. A9. C 44. D 79. D 114. D 149. B 184. D10. D 45. D 80. D 115. A 150. D 185. A11. B 46. D 81. A 116. D 151. B 186. B12. B 47. D 82. D 117. D 152. A 187. B13. B 48. D 83. A 118. C 153. C 188. A14. A 49. B 84. D 119. D 154. B 189. C15. D 50. A 85. B 120. C 155. D 190. A16. A 51. A 86. C 121. B 156. B 191. A17. C 52. A 87. C 122. A 157. D 192. D18. D 53. C 88. A 123. D 158. D 193. D19. B 54. D 89. A 124. A 159. B 194. C20. C 55. C 90. A 125. A 160. D 195. C21. A 56. D 91. D 126. A 161. A 196. C

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22. B 57. C 92. D 127. B 162. B 197. D23. D 58. A 93. A 128. B 163. D 198. C24. A 59. C 94. A 129. D 164. B 199. C25. B 60. C 95. C 130. C 165. D 200. C26. B 61. D 96. B 131. D 166. D 201. E27. C 62. D 97. B 132. D 167. A 202. B28. B 63. B 98. C 133. D 168. D 203. A29. B 64. B 99. D 134. D 169. B 204. A30. D 65. B 100. C 135. B 170. B 205. A31. C 66. A 101. D 136. A 171. A 206. A32. A 67. A 102. B 137. B 172. A 207. A33. D 68. D 103. D 138. D 173. A 208. C34. B 69. D 104. D 139. C 174. A 209. D35. C 70. D 105. C 140. C 175. C 210.A

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