Multiple Choice

MULTIPLE CHOICE
1. Which of the following is not an obligation with a period?

a. payable sooner
b. An obligation payable little by lime by little
c. will pay you P10,000 "if I like"
d. payable "within 2 years from today”,
e. All of the above
2. If obligation is payable in foreign currency

a, the obligation is void.
b. the obligation is valid. But the stipulation is void.
c. the creditor can compel the debtor to pay in foreign currency as per agreement.
d. The stipulation and the obligation are void.
3. Which of the following statements is false?

a. The nullity of the principal carries with it that of the penal clause.
b. proof of actual damages suffered by the creditor is not necessary in order that the
penalty may be demanded
c. I will pay you P10,000 "soonest" is for the benefit of the debtor.
d. Condonation is essentially gratuitous.
4. “I”ll give you my car one year after your death." The obligation is
a. valid, because the event is sure to come.
b. valid, the obligation is conditional.
c. Valid, but disregard the condition.
d. Void, not legally possible
5. A sold his cow to B for P2,500. No date was stipulated fir the delivery of the cow.
While still in the possession of A the cow gave birth to a calf.
a. A is entitled to the calf because it was born before his obligation to deliver the
cow arises.
b. A is entitled to the calf as B has not paid the price.
c. B is entitled to the calf which was born after the perfection of the
contract.
d. B, in order to be entitled to the calf, should pay additional cost for the calf to
be agreed upon by both parties.
6. Statement No. 1: The concurrence of more than one creditor, for or more than one
debtor in one and the Same obligation implies solidarity.
Statement No. 2: In alternative obligations where the right of choice is exercised by the
creditor, consent of the debtor as to the creditor's choice of which prestation to perform
is necessary.
a. Both are true.
b. Both are false.
c. No. 1 is true; No. 2 is false.
d. No. 1 is false; No. 2 is true.
7. The kind of compensation which may only be raised by the creditor and not by the
debtor in the obligation to give gratuitous support:
a. Judicial compensation
b. Conventional compensation
c. Facultative compensation
d. Legal compensation
8. Statement No. 1: Legal Compensation takes places by operation of law even if the
parties may not be aware of it.
Statement No. 2: The indivisibility of an obligation necessarily implies solidarity.
a. Both are true.
b. Both are false.
9. Statement No. 1: Responsibility arising from fraud is demandable in all obligations. A

waiver of an action for future fraud is void.
Statement No. 2: When the fulfillment of the condition depends upon the sole will of the
debtor, the conditional obligation shall be void. If it depends upon chance or upon the
will of a third person, the obligation shall take effect in conformity with the provisions of
laws.
a. Both are true.
b. Both are false.
10. Statement No. 1: D obliged himself to give C a specific car tomorrow. If D failed to
deliver tomorrow after demand is made, C may compel D to do his obligation and may
ask for damages.
Statement No. 2: D obliged himself to deliver a car to C tomorrow. If D failed to deliver
tomorrow after demand is made. C’s right is to ask a third person to deliver a car to him
at the expense of D plus damage.
a. Both are true.
b. Both are false.
11. A person obliged to give something must preserve the, object using a standard of
care or diligence. This stand, of care or diligence may be:
a. Diligence provided by law.
b. Diligence provided by agreement of the parties.
c. Diligence of a good father of the family.
d. Any of the above.
12. An obligation wherein various things are due but the complete performance of all of
them is necessary to extinguish the obligation.
a. Facultative obligation.
b. Conjoint obligation.
c. Alternative obligation.
d. Pure or simple obligation.
13. D1, D2 and D3 are solidary debtors of C for P30,000. The obligation was in writing.
After the lapsed of the ten-year prescriptive period, which of the following statements is
incorrect.
a. If D1 Paid C that the obligation has already prescribed, D1 cannot ask
reimbursement from D2 and D3.
b. If D1 paid C not knowing that the obligation has already prescribed, D1
cannot ask reimbursement from D2 and D3.
c. If D1 paid C not knowing that the obligation has already prescribed. D1
cannot ask reimbursement from D2 and D3.
d. None of the above.
14. S owns specific ring and sells it to B for P10,000. B paid S the price, and S
promised to deliver the ring five (5) days after. After the sale, S gets a loan from X and
pledged the ring in a private instrument
Statement 1 - between B and X, B has got a better title because pledge did not appear
in a public instrument.
Statement 2 - However, if S delivers the ring to X, X will have a better title because
there was delivery
a. Both are true.
b. Both are false.
15. S sold to B a specific car for P10,000 and promised to deliver on December 25.
2010. The next day, after the sale is made, he sold the same car to X and delivered it to
X on the same day. If no delivery is made by S to B on December 26, 2010, which of
the following is correct?
a. S is not in default because there was no demand
b. B can cancel the contract between S and X because the contract of S and B
was perfected ahead of X
c. S is liable to B for the value of the car plus damages
d. S is in default, even if there was no demand. Hence he will answer for
16. Change of persons or objects:

a. Confusion
b. Novation
c. Solutio indebiti
d. None of the above
17. Statement No. 1: In solutio indebiti, the contract of the parties is the basis for
damages in case of non-performance.
Statement No. 2: “Dolo”, as a ground for awarding dam ages, is the deliberate intention
to cause damage or injury' to another person.
a. Both are true.
b. Both are false.
18. Statement No. 1: "I will give you a specific car if you will not marry X this year
(2010). If by the end of 2010, both parties are alive and no marriage has taken place,
my obligation is extinguished.
Statement No. 2: "I will give you P10,000 if you cannot make a dead man alive. This is
an impossible condition, obligation not demandable.
a. Both are true.
b. Both are false.
19. A, B and C are joint debtors of joint creditors W, X, Y and Z in the amount of
P300,000. How much can W and X can collect from B?
a. P75,000
b. P150,000
c. P100,000
20. Which of the following is considered as quasi-contract?
a. Solutio indebiti
b. When the third person, without the knowledge of the debtor, pays the debt.
c. Reimbursement due the person who saved property during fire or storm without the
knowledge of the owner.
d. All of the above.
21. Statement No. 1: The receipt of the Principal obligation without reservation as to the
payment of interest shall raise a conclusive presumption that the interest is also paid.
Statement No. 2: The receipt of the latter installment of a debt without reservation as to
prior installment, shall not raise a conclusive presumption that the prior installments also
paid.
a. Both are true.
b. Both are false.
22. Statement No. 1: If the obligation does not fix a period, but from its nature and the
circumstances, it can be inferred that a period was intended, the court may fix the
duration thereof. Once it is fixed by the court, the parties cannot change the fixed date
for performance.
Statement No.2: “I will give you P10,000 as soon as possible.” This is an obligation with
a period for the benefit of both the debtor and creditor.
a. Both are true.
b. Both are false.
23. Example No. 1: D obliged himself to give C P10,000. However, the day before the
obligation falls due, D's apartment was completely gutted by accidental fire. There is no
question that the money was also razed by fire. The obligation of D is totally
extinguished because of fortuitous event.
Example No. 2: D obliged himself to pay C P10,000 with 6% interest. On the due date,
D tendered P10,000 with a promise to pay the P600 interest the day after. If C refused
to accept, he can be compelled to accept the tendered payment because the obligation
is divisible.
a. Both are true.
b. Both are false.
24. Example No 1: D for P10,000 mortgaged his land to C. C instead of a deed of
mortgage executed a deed of sale and let D sign his name. D's right is to go to court
and ask for annulment.
Example No. 2: D obliged himself to give object No. 1 or No. 2 to C. In here, both
objects are due.
a. Both are true.
b. Both are false.
25. S owns an oil painting. Being in need of money, S sold the painting to B for P1,000.
After the sale, S discovered that he painting was valuable and was worth P5,000. A
a. S may rescind the contract on ground of lesion or inadequacy of cause.
b. S may annul the contract on ground of fraud.
c. S may annul the contract on ground of error.
d. B is entitled to the benefit of the contract because it is valid and binding.
26. G was appointed guardian of S, the latter being 16 years old. S sold his parcel of
land in writing to B valued at P100,000 for P75,000, suffering lesion to 1/4 of the value,
What is the status of the contract?
a. Rescissible
b. Unenforceable
c. Enforceable
d. Voidable
27. On June 1, 2010, S sold to B the former's horse for P10,000. S promised to deliver
on June 25, 2010, while B did not promise when to pay.
a. B can demand delivery from S any time after June 1, upon payment of the price of
the sale.
b. S cannot demand payment until he delivers the horse.
c. Obligation of B to pay is subject to the condition that S will deliver the horse.
d. S can demand from B payment anytime from June 1 because B's obligation is
not subject to any condition.
28. Example No. 1: D owes C, P10,000 due on December 25. C owes D P6,000 due on
December 25. D's obligation is guaranteed by G. On the due date. D is insolvent. G is
liable to C for P10,00: he (c) cannot set up compensation because he is not a principle
debtor.
Example No. 2: D owes C P10,000 payable on December 25. Later, D, through
intimidation, was able to make C sign a promissory note stating that C is indebted to D
for, the same amount. In here, D cannot be acquired to pay C, 10000 because he (D)
can set up compensation against C.
a. Both examples are true.
b. Both are -false.
C. Only No. 1 is true; No. 2 is false.
d. Only No, 1 is false; No. 2 is true,
29. In which of these cases is advanced payment recoverable by the debtor?

a. If the Payment is only of interest credited for the proper period.
b. If the debtor voluntarily paid the obligation knowing that is not yet due and
demandable.
c. If the debtor was unaware of the period.
d. If the obligation is reciprocal and both parties advance payment
30. A judicial relation known as Negotiorum Gestio takes place.

a. When a person Voluntarily takes charge of another’s abandoned business or
property without the owner‘s consent.
b. When something ls received and their; is no right to demand it and it was delivered
through mistake.
c. When a person is appointed by a court to take the property or business of another.
31.A owes B P2,000 demandable and due on September 10, 2010. B. on the other
hand, owes A 132,000 demandable and due on or before September 30, 2010. If 8
claims compensation on September 10, 2010, can A rightfully oppose?
a. No. B, who was giving the benefit of the term, may claim compensation
because he could then choose to pay his debt on September 10, 2010 which is
actually “on or before September 30, 2010."
b. Yes, A can properly oppose because for compensation to take place, mutual consent
of both parties is necessary
c. Yes, A can properly oppose and if B still refuses to accept his payment made on
September 30, 2010, A can deposit his payment in court.
32. The wrongful act or tort which causes loss or harm to another is called:
a. Damages
b. Damage
c. Injury
33. The loss or harm suffered by one person on his property is called :
a. Damages
b. Damage
c. Injury
34. When debtor binds himself to pay when his means permit him to so, the obligation
is:
a. Pure
b. Conditional
c. With a period
d. Simple
e. None of the above
35. Every obligation whose performance does not depend upon future or uncertain
event, or upon a past event unknown to the he parties, is demandable at once. This
refers to:
A. Divisible and Indivisible obligations
B. Joint and Solidary obligation
C. Obligations with a period
D. Pure obligation
36. When there is a return of what was not lawfully required, there is:
A. Solutio indebiti.
B. Nogotiorum gestio
C. Cessio en pago
D. None of the above
37 Consignation alone shall give rise to the extinguishment of an Obligation. EXCEPT:

a. When the creditor if; absent or unknown, or does not appear at the place of payment
b. When he is incapacitated to receive the payment at the time it is due
C. When two or more persons claim the same right to collect.
d. When the title of the obligation has been lost.
38. Obligation may be modified by:
a. Changing their object or principal conditions.
b. Substituting the person of the debtor.
c. Subrogating a third person in the rights of the creditor.
39. The following are causes vitiating consent, EXCEPT:

A. Violence
B. Intimidation
C. Fraud
40. D owes C P10,000 payable on December 25. Later, D forced C to sign a promissory
note for P10,000 payable on December 25. If all the other requisites of compensation
are present, are both debts extinguished?
A. Yes, under legal compensation.
B. No, B’s consent was obtained by force
C. Yes, with the approval of the court.
D. Not given.
41. Which of the following is not a conditional obligation?

A. D to give P1,000, if C passes the examination.
B. D to pay C P1,000, if C has the means.
C. D to give C a horse, if C marries X
42. The passage of time extinguishes the obligation:

A. Prescription
B. Fulfillment of resolutory condition
C. Arrival of resolutory period
D. Remission
E. Recission
43. The delivery and transmission of ownership of the thing by the debtor to the creditor
as an accepted equivalent performance of an obligation is called:
A. Dacion en pago
B. Payment by cession
C. Consignation
D. Remission
44. Which of the following is not a special mode of payment?

A. Dacion en pago
C. Tender of payment and consignation
D. Consignation alone without the need of tender of payment in cases provided for by
law
E. None of the above
45. Example 1 - D obliged himself to give C a specific ring upon failure to give C
P10,000.
Example 2 - D obliged himself to give C a specific ring. However, if he so desires. D
may instead give C P10,000.
A. Both are valid obligations.
B. Only No. 2 is valid.
C. Only No. 1 is valid.
D. Both obligations are invalid because both depends upon the sole will of D.
46. A and B are solidary debtors of X and Y, solidary creditors to the amount of P4,000.
On the due date. X renounced in favor of A the entire obligation. Which of the following
is correct?
a. B shall give A P2,000.
b. Y can still collect from A or B P2,000.
c. Y can collect from X P2,000.
d. Any of the three.
e. None of the above.
47. The extinguishment of obligations when two persons, in their own right. Are debtors
and creditors of each other is called
A. Compensation
b. Merger
c. Remission
D. Novation
48. Meeting in one person of the characteristics of both debtor and creditor in one and
the same obligation extinguishes the obligation by way of:
A. Novation
B. Merger of confusion
C. Compensation or set-off
D. Condonation or remission
49 Consignation alone, as a special form of payment, may extinguish an obligation

under any of the following instances which is the exception?
A. When the creditor is absent, or is unknown or does not appear in the place of
payment
B. When the creditor is capacitated to receive payment
C. When the creditor is refuses to issue receipts
D. When there are two or more persons claiming title to one and the same obligation
E. When title to the same obligation has been lost.
50. The act of abandoning all his properties in fair if his creditors so that the latter may
cause their sale and apply the proceeds thereof to their claims proportionately is called:
A. Dacion en pago
B. Set off
C. Payment by cession
D. Tender of payment and consignation
51. Conrad and Charlie are jointly indebted to Pete for P100,000. Pete assigned his
interest to Crispin who assigned it back to Conrad.
A. The debt is totally extinguished by compensation.
B. The debt is totally extinguished by merger
C. The debt is partially extinguished by compensation.
D. The debt is partially extinguished by merger
52. Which obligation is not valid?

A. “I promise to give you P100,000 on December 25,2010.”
B. “I promise to give you P100,000, If I go to Sampaloc, Quezon this weekend”
C. “I promise to give you P100,000, if your patient dies”
D. “I promise to give you P100,000 if you pass the May 2010 CPA Board Examination.”
53. Three of these are characteristics of payment by cession. Which is the exception?
a. complete or partial insolvency.
b. more than one debt.
C. Abandonment of all the debtor's properties except those exempt from execution.
d. one debtor, one creditor.
54. A source of obligation where there exists criminal negligence

a. culpa contractual
b. Quasi-contract
c. Culpa Delictual
d. Culpa Aquiliana
55. Statement No. 1: When the prestation is negative and the debtor is precluded from
doing an impossible or unlawful condition, the entire obligation. Including the condition,
is null and void.
Statement Now 2: In an obligation subject to a period, what is suspended is the birth of
the obligation.
A. Both statements are true.
B. Both statements are false.
C. Statement No. 1 is true while statement No. 2 is false.
D. Statement No. I is false while statement No. 2 is true.
56. Which of the following is an obligation with ap eriod for the benefit of both the debtor
and the creditor?
a. Payable if I like
b. Payable when you like
C. Payable on or before December 25,2010
d. Payable on December 24, 2010
57. Statement No. 1: ln culpa aquiliana, negligence on the part of the debtor is a
substantial issue which must be proved by the creditor in order to be entitled to an
award of damages,
Statement No. 2: The highest standard of care that a person obliged to give something
is that diligence of a good father of a family.
A. Both statements are true.
B. Both statements are false.
C. Statement No. 1 is true while statement No. 2 is false.
D. Statement No. I is false while statement No. 2 is true.
58. Which of the following obligations is not subject to a period?

A. Payable soonest
B. Payable “little by little”
C. Payable whenever “I like it”
D. Payable “when my means permits me to”
59. The following, except one, are secondary modes of extinguishing obligation. Which
is that exception?
A. Death of both parties

B. Prescription
C. Compromise
D. Changing the object of the obligation with the consent of the parties
60. Which of the following is not a generic obligation?
a. obligation to pay P5,000

b. obligation to deliver 2009 Nissan Sentra Series lll
c. obligation to deliver 50 cavans of rice
d. obligation to give a delimited generic object
61. Statement No. 1: D obliged himself “to pay C the sum of P50,000 which he owes
him when he (D) feels like it”. This kind of obligation is valid and legally enforceable.
Statement No. 2: After the obligation became due and demandable, the creditor agreed
to a proposal by the debtor to give him a specific cow instead of paying P25,000. This is
a case of novation by changing the term or the object of an obligation.
a. Both are true.

b. Both are false.
c. No. ‘l is true, No. 2 is false.
d. No. 1 is false. No. 2 is true.
62. A and B are the debtors and X and Y are the creditors in a solidary obligation to the
tune of P80,000. On due date, X renounce in favor of A the entire obligation which was
validly accepted by A. Which of the following is true?
A. B shall give P40,000 to A

B. Y can collect from X P40,000
C. Y can still collect from A or B the whole amount
D. A can collect P40,000 from B
63.Statement No. 1: In alternative obligations, it is the choice of which prestation to
perform made by the debtor that will covert the alternative obligation into a pure or
simple one.
Statement No. 2: In facultative obligations, the right of substitution may be transferred to

the creditor.
a. Both are true.

b. Both are false.
c. No. ‘l is true, No. 2 is false.
d. No. 1 is false. No. 2 is true.
64.The following, except one, are requisites of payment as an a mode of extinguishing

an ordinary obligation. Which is the exception?
A. Complete or full payment

B. Payment in due course when the obligation is due and demandable
C. Payment using negotiable instrument
D. Payment using legal tender, except if payable in foreign currency
65. Not a ground for damages:
A. Culpa
B. Bad faith
C. Dolo causante
D. Mora
66.Statement No. 1: An obligation which has for its object the delivery of a “delimited
generic” Object may be lost by reason of fortuitous event.
Statement No. 2: There can be no delay in an obligation not to do
a. Both statements are true.

b, Both statements are false.
c. Statement No. 1 is true while statement no. 2 is false
d. Statement No. 1 is false while statement No. 2 is true;
67. D obliged himself to give C 100 cavans of rice on December 25, 2010. On said date,
D failed to make delivery, despite repeated demands from C.
a. C can compel D to deliver 100 cavans of rice plus damages“

b. C has no remedy under the law.
c. C may ask a third person to deliver 100 cavans of rice to him, the value
recoverable from D plus damages.
D. D can rescind the contract because the object is indeterminate.
68. Wrong committed independent of contract and with criminal intent is

A. Culpa contractual
B. Culpa auqiliana
C. Quasi-contract
69. A and B signed a promissory note to borrow P6,000 from X, Y and Z, payable in 6
months’ time. B gave as a P10,000 diamond ring as security for the amout borrowed.
How much can Y collect from B?
A. P1,000
B. 6,000
C. P2,000
D. 3,000
70. If in the situation given in No. 69 above, the diamond ring is returned by agreement
to B, which of the following statement is correct?
A. Principal obligation is extinguished.

B. Only P2,000 of the obligation is extinguished
C. Only P3,000 of the obligation is extinguished
D. None of the above.
71. Which of the following is not an obligation with a period?
A. “payable soonest”
B. An obligation payable little by little
C. Payable “with 2 years from today”
72. A, B and C executed a promissory note worded as follows: We promise to pay X, Y,

and Z the sum of P90,000 (sgd.) A, B and C
A. A is obliged to pay X, Y and Z P90,000

B. A is obliged to pay X P30,000
C. A is obliged to pay X P60,000
73. The act of abandoning or transferring all the debtor’s property to his creditors so that
the creditors may sell them, and out its net proceeds to recover their claim is called.
A. Dacion en pago
C. Tender of payment and consignation
D. Remission
74. The distinction between period and condition is
a. Period may or may not happen.

b. Condition will always happen.
c. Period may refer to a past event unknown to the parties.
d. Answer not given.
75. Solidary debtors A, B and C owes joint creditors X, Y, Z and W P12,000. X, Y and Z
can collect from a
a. P12,000
b. 6.000
c. 9,000
d. 3,000
76. Statement No. 1: “I will give you a specific car if you will not marry X this year
(2010). If by the end of 2010, both parties are alive and no marriage has taken place,
my obligation is extinguished.
Statement No. 2: “I will give you P10,000 if you cannot make a dead man alive. This is
impossible condition, not demandable,

b. Both statements are false.
c. Statement No. 1 is true while statement no. 2 is false
d. Statement No. 1 is false while statement No. 2 is true;
77. A and B are jointly and severally liable to C for P20,000. A is a minor
A. C can collect P20,000 from B

B. C can collect P10,000 from A, that is the share of B
C. C can collect P20,000 because minority is not a defense
D. C can collect P10,000 from B.
78. The debtor shalt lose every right to make use of the period except:
a. When he does not furnish a guaranty or security to the creditor.

b. When after the obligation has been constituted: becomes insolvent, unless he gives a
guaranty or for the debts.
C. When the debtor attempts to abscond
D. When the debtor violates any undertaking in. considerations of which the creditor
agreed to the period.
79. Which of the following is not a special mode of payment?'
a. Dacion en pago
b. Payment by cession
c. Tender of payment
80. A owes B P100,000 due on December 11, 2010. A mortgaged his house to B as
guaranty for the debt. Shorty, how-ever, the mortgaged house was completely
destroyed by typhoon “Nitang”. Thereafter, B demanded payment from A on October
11, 2010. Is B’s demand valid? '
a. No, The obligation is one with a definite period, must the creditor cannot demand
fulfillment of the obligation as such would be prejudicial to the rights of the debtor.
B. No. The obligation is extinguished because the object of the obligation is lost through
a fortuitous event”.
C. Yes, The debt becomes due at once because the guaranty was lost even
though a fortuitous event, unless the debtor can mortgage another property that
is equally satisfactory.
D. Yes. The debt becomes due at once because from the tenor of the obligation, the
period established is for the benefit of the creditor solely thereby giving the creditor the
right to demand performance even before the date stipulated.
81. Payment of the obligation by a solidary debtor shall not entitle him to reimbursement
from his co-debtors.
a. if such payment was made before the obligation is due
b. if such payment was made after the obligation has prescribed or become
illegal.
c. if such payment was made in compliance with the demand made to him by all the
creditors.
d. if such payment was made after the obligation has be-' come due and demandable
and notice of payment was made only to him.
82. Statement No 1: When the fulfillment of the suspensive or resolutory condition
depends upon the sole will of the debtor, the conditional obligation shall be void.
Statement No. 2: If the original obligation is subject to a suspensive or resolutory
condition and the contract is no-voted the new obligation shall be under the same
conditions unless otherwise stipulated.
a. Both are true.
b. Both are false.
c. No 1 is true; No. 2 is false.
83. A sold to B the former's horse for P5,000. No date is fixed by the parties for the
performance of their respective obligations. The obligation of A is:
a. To deliver the horse immediately as there is perfected contract.
b. To deliver the horse upon the payment of B of P5000.
c. The deliver for the horse within a reasonable time of two month from the contract
date.
d. To rescind the contract as there is no time fixed for the delivery and payment.
84. The substitution or change of an obligation by a subsequent one which extinguishes
or modifies the first, either by changing the object or principal conditions, or by
substituting the person of the debtor, rights subrogating a third person in the rights of
the creditor is called:
a. Commodatum
b. Compensation
c. Merger
d. Novation
85. X obliged himself to give to Y his brand-new Rolex watch if the latter cannot make a
circle that is at the same time square.
a. The obligation is unenforceable because the condition is immoral.

b. The condition is void because of the positive impossible condition.
c. The obligation is valid because the impossible condition is negative.
d. The obligation is void, net enforceable.
86. Proof of pecuniary loss is necessary for the award of:
a. Liquidated damages
b. Exemplary damages
c. Actual damages
d. Temperate damages
87. In the execution of obligation, liability for malice or bad faith:

a. Extends to the natural consequences even it they exceed the debtor’s
exceptions.
b. Extends only to results intended but excluding exemplary damages.
c. Is demandable in all obligations but may be renounce,
d. Extends not only to results intended but also to their foreseen consequences.
88. In contracts and quasi-contracts, the liability of the debtor who acted in good faith:
a. Extends to all natural and probable consequences the breach of the obligation,
and which the parties have foreseen or could have reasonably foreseen at the
time the obligation was constituted.
b. Extends only to results intended but excluding exemplary damages.
c. Extends to all damages which may be reasonably attributable to the non-performance
of the obligation.
d. Extends to all damages which may be renounced in advanced.
89. In delicts and quasi-delicts, the defendant shall be liable for:
a. Damages which are natural and probable consequences of the act or omission
complained of whether or not such damages have been foreseen or could have
reasonably been foreseen by the offender.
b. Not only for results intended but also to their foreseen consequences.
c. Damages which may be renounced in advanced.
d. Damages intended but excluding exemplary damages.
90. Extinguishes the, obligation upon the happen, of the condition

a. Resolutory
b. Suspensive
c. Pure
91. Extinguishment of debt may be made by creditor either verbally or in writing
a. Partial payment
b. Implied remission
c. Express remission
92. The creditor is entitled to recover damages and interest in addition to the penalty
stipulated.
a. When the parties so agreed.
b. When the debtor refuses to pay the penalty.
c. When the debtor is guilty of fraud in the fulfillment of the obligation.
93. Which of the following is not a ground for the extinguishment of an obligation?
a. Remission
b. Merger
c. Compensation
d. Death of either debtor or creditor
94. Contracts entered into during lucid-interval:
a. Voidable
b. Unenforceable
c. Void
95. An absolutely simulated or fictitious contract is:

a. Void
b. Voidable
c. Dolo causante
d. Mora solvendi
96. The delay on the part of the creditor to accept the performance of an obligation:
Mora accipiendi
97. When the period is “on or before a date”, the debtor has debtor has the benefit of
the period. This benefit is lost and the obligation becomes demandable when
a. the debtors attempts to abscond
b. after contracting the obligation, the creditor suspects the debtor to becoming
insolvent.
c. the guarantee given by the debtor is not acceptable to the creditor.
d. demand by the debtor could be useless.
98. A was bad in need of money. He offered to sell his parcel land to B for P100,000.0.
B greed and paid A the P100,000.00 and A signed a receipt. When B wanted to register
the sale, he needed a Deed of Absolute Sale. What can B do?
a. B may sue A to return the P100,000.00 under the legal maxim ''No one shall enrich
himself at the expense of another".
b. B may possess and utilize A’s land as a buyer in good faith.
c. B may compel A to execute the Deed of Absolute Sale because the contract is
valid.
d. B cannot get back the P100,000.00 because the contract is not enforceable.
99. A promissory note signed by D and dated March15,2010’s worded as follows: "I
promise to pay C the sum of P50,000 provided that if she should in the October 2010
CPA Examination, she shall return to me the said amount. “The above note gives rise to
an obligation with
a. Suspensive condition
b. Casual condition
c. resolutory condition
100. "Conrad° will continue giving Pedro the latter's meal allowance until the end of this
year” is an obligation subject to:
a. a resolutory period.
b. a suspensive condition.
c. a resolutory condition.
d. a suspensive period.
101. Statement No. 1: In cases of extra-ordinary inflation, the basis of payment is the
value of the obligation at the time it, was constituted.
Statement No. 2: After substitution, the loss of the principal object through the fault or
negligence of the debtor shall render him liable for damages.
c. Statement No. 1 is true while statement No. 2 is false.
d. Statement No. 1 is false while statement No. 2 is true.
102. Statement No. 1: Payment by cession does not totally extinguish the whole
obligation.
Statement No. 2: In obligation with penal clauses, if necessary for the creditor to show
proof of actual damages suffered by him on account of the non-performance of the
obligation by the debtor.
c. Statement No 1 is true while statement No. 2 is false
103. Statement No. 1: Merger taking place in the person of the guarantor shall
extinguish only not the secondary contract such as the contract of guaranty but not the
principal obligation.
Statement No. 2: When the debtor promises to pay his obligation "whenever his means
permit him to do so” the obligations is with a period.
104. In three of the following cases; facultative compensation shall prosper. Which is
the exception?
a. gratuitous support
b. civil liability arising from crime
c. Mutuum
d. depositum
105. Statement No. 1: In solution in debiti, the contract of the parties is the basis for
damages in case of non-compliance.
Statement No. 2: Negligence, as a ground for damages refers to the non-performance
of an obligation with respect to time.
106. Statement No 1: The creditor may be compelled to accept payment in checks as
long as the check is negotiable.
Statement No. 2: An obligation payable "should the client die for diabetes “is an
obligation subject to a period.
107. The buyer has the right to the fruit of the thing from:
a. the time the thing is delivered.
b. the time the contract is perfected.
c. the time the obligation to deliver the thing arises.
d. the time the fruits are delivered.
108. The kind of compensation which arises by way of proved counterclaim in a case is
called:
a. legal compensation.
b. voluntary compensation.
c. judicial compensation.
d. facultative compensation.
109. Statement No 1: In an obligation subject to suspensive period, if the object is

improved by time, the same insure to the benefit-of the creditor.
Statement No. 2: Culpa aquiliana is that fault which results from breach of contracts.
110 . Debtor obliged himself to deliver 100 cavans of rice on June 1, 2010. On said
date, D failed to make delivery despite repeated demands by C. In this case:
a. C has no remedy under the law.
b. C can compel D to deliver 100 cavans of rice plus damages.
recoverable from D plus damages.
111. Statement No. 1: In alternative obligations, it is the notice of which prestation to
perform made by the debtor shall convert the alternative obligation into a pure or simple
one.
Statement No. 2: In case of a joint obligation, the co-debtors may be held liable for the
share of an insolvent co-debtor.
112. Insolvency of the debtor is required in:

a. Dation in payment
b. Payment by cession
c. Tender of payment and consignation
d. Application of payment
113. A, a minor, and B, a capable person, bind themselves solidarity to pay X the sum
of P10,000:
a. A may be compelled to pay P10,000
b. A may be compelled to pay P5,000 only
c. B may be compelled to pay P10,000
d. B may be compelled to pay P5,000 only
114. D obliged himself to paint the house of C or to paint the picture of C, in a standing
position, using 10 by 10 canvass. Later, because of financial reverses, C sold his house
to X. Which of the following statements is incorrect?
a. The obligation of D Is extinguished because he cannot, make a choice.
b. D may just paint the picture of C.
c. D may cancel the contract and ask for damages.
115. A and B are jointly indebted to C for P1,000. C assigns the 1 credit to D and D
assigns it back to A.
a. The debt is partially extinguished by compensation.
b. The debt is partially extinguished by merger.
c. The debt is totally extinguished by merger.
d. The debt is not extinguished either totally or partially.
116. Requisites of application of payment, except

a. Debts are all due.
b. Debts are of different kinds.
c. Two or more debts.
d. One debtor and one creditor
117. Statement No. 1: Payment made by a third person who does not intend to be
reimbursed by the debtor is deemed to be a donation, which requires the debtor’s
consent. If the debtor’s consent is not given. The obligation is not extinguish.
Statement No. 2: if the debtor’s consent or permission is not given. But the third person
paid the creditor, his right is to proceed against the creditor for reimbursement and not
against the debto.r
a. Statement No 1 is true while statement No. 2 is false
b. Statement No. 1 is false while statement No. 2 is true.
c. Both statements are false.
d. Both statements are true.
118. In tender and consignation: if after consignation is made, the creditor allow the
debtor to withdraw the thing deposited in court, which of the following statements is
incorrect?
a. Co-debtors, guarantors, and sureties are released from the obligation unless they
consented.
b. The obligation remain to subsist.
c. The obligation is extinguished.
119. Statement No 1: Obligation for whose fulfillment a day certain has been fixed,
shall be demandable only when that day comes. Obligation with a resolutory period
takes effect at once, but terminates upon arrival the day certain.
Statement No. 2: D binds himself to pay "little by little”. The obligation is for the benefit
of the debtor.
120. Statements No 1: "I promise to pay within 2 year” is an obligation with a period, the
creditor having a right to demand payment within 2 years from the date of the
instrument.
Statements No. 2. Ten sacks of corn cannot be compensated (legal compensation) by

ten sacks of rice.
a. Both are true.
b. Both are false.
C. No. 1 is true, No. 2 is false.
d. No. 1 is false, No. 2 is true.
121. Mr. Cruz executed a first mortgage of his house in favor of Mr. Dizon on May 15,
2010 to guaranty a mortgage loan of P200,000 due of payment on May 15, 2013. On
September 16, 2012, the house was completely destroyed by typhoon. On September
18, 2012, Mr. Dizon demanded payment from Mr. Cruz of the loan. Is Mr. Dizon's
demand for payment valid?
a. No. The obligation is one with a definite period, so the creditors cannot demand
payment until the definite due date arrives.
b. No. The obligation is extinguished because the object of the obligation is lost through
a fortuitous event.
c. Yes. The obligation becomes due at once because the benefit is solely for the
creditor. The creditor can demand payment even before the date stipulated.
d. Yes. The obligation becomes due at once because the guaranty was lost even
though a fortuitous event, unless the debtor can mortgage another property
equally satisfactory.
122. Example 1 — D promised to give C a specific car valued at P100,000 after C has
killed X. Later, after the killing, the contract was novated instead of giving C a specific
car, he will just give a specific land to be delivered on February 28, 2010. Meanwhile,
both parties died. In here, the heirs of C may compel the execution of the second
contract, that is, the delivery of the specific land. Example 2 — S sold to B a specific
residential house situated in Quezon for P1 M, unknown to both parties, one (1) hour
before the sale, the property was totally gutted by fire caused by electrical defect. In
here, B can be required to pay the price of the sale, because the subject is determine.
S's obligation to deliver is extinguished, while B's obligation remain to subsist.
a. Both examples are true.
b. Only No. 2 is true, while No. 1 is false.
c. Only no. 2 is false, while No. 1 is true.
d. Both examples are false
123. Which of the following obligation is void?

a. Obligation payable within a reasonable time.
b. Obligation payable if the debtor cannot make a circle at the same time a square.
c. Obligation payable if the debtor cannot make dead man alive
124 Mr. Debtor owes Mr. Creditor, who has two legitimate emancipated children,
P50,000 payable on December 31,2010.
a. If Mr. Debtor dies before December 31, 2010, Mr. Creditor cannot collect from
the heirs of Mr. Debtor
b. If Mr. Debtor dies before December 31, 2010, Mr. Creditor can collect from the heirs
of Mr. Debtor.
c. If Mr. Creditor dies, his two (2) legitimate emancipated children cannot recover from
Mr. Debtor his obligation.
d. If both Mr. Debtor and Mr. Creditor die, the heirs of Mr. Creditor can collect from the
heirs of Mr. Debtor.
125. A owes B P5,000. C is the guarantor of A. A was able to Pay B P3,000, thus
leaving P2,000 unpaid. X, against the will of A and without the knowledge of the partial
payment made by A, paid B the sum of P5,000. How does this payment affect the
obligation?
a. The obligation is extinguished. X, however, cannot recover any amount from A since
the payment was made against will of A. Instead, A can demand payment from C, the
guarantor, to the amount of P5.000.
b. The obligation is extinguished X, however, can demand only P2000 from A as this is
the amount which benefited A. If A cannot pay, X, having been subrogated into the
rights of B can proceed against guarantor C.
c. The obligation is extinguished, X can demand P2000 against guarantor C
because having paid against the will of A, X is not entitled to subrogation.
d. X’s payment, having been made against the will of A does not extinguish the
obligation.
126. The officious manager or gestor is liable for any fortuitous event EXCEPT:
a. If he has undertaken risky operations which the owner was accustomed to
embark upon.
b. If he has preferred his own interest to that of the owner.
c. If he fails to return the property or business after demend by the owner.
d. If he assumed the management in bad faith.
127. A tie or juridical relation, which by virtue of a payment of what is not due, made
through mistake, is created between the person who paid and the one who received the
payment, compelling the latter, in consequence thereof , to return what he has received:
a. Solutio indebiti
b. Natural obligation
c. Civil obligation
d. Moral obligation
128. On Oct 4, 2010, A is indebted to B for P50,000 for a 20-day period. A proposed to
B that X will pay A’s debt and that A will be free from all liabilities. B and X agreed the
proposal. On Oct 25,2010, when B tries to collect from X, he finds that X is insolvent. At
the time of delegation, X was already insolvent bt this was not known to A. The
insolvency is not of public knowledge. So B, sues A on the ground that it was A who
made the proposal and that A really guaranteed X’s solvency. Decide:
a. A is liable because he is presumed to have guaranteed X's solvency.
b. A is not liable, because A does not know the insolvency of X at the time of
delegation and neither was the insolvency of public knowledge.
c. A is liable because he did not exercise due diligence in determining the insolvency of
X.
d. A is liable because X agreed to the proposal to make himself solidary liable for the
obligation.
129. Remission is:
a. Essentially gratuitous
b. Naturally gratuitous
c. Absolutely gratuitous
d. All of the above
130. Statement No. 1: The debtor of a thing cannot compel the creditor to receive a
different one, although the latter may be of the same value or more valuable than that
which is due.
Statement No. 2: In dation in payment, ownership of the thing delivered is transferred to
the creditor; while in cession, it merely authorizes the creditor to convert the property
into cash and out of the proceeds to extinguish the obligation partially.
a. Both are true.
b. Both are false.
c. No 1 is true; No. 2 is false.
131. Effect of the loss of the thing in a facultative obligation. Which is incorrect?
a. Before substitution: if the principal thing is lost due to fortuitous event, there is no
more obligation.
b. Before substitution: If the substitute thing is lost due to debtor’s fault, there is
no more obligation.
c. After substitution, if the principal thing is lost, the debtor is no longer liable even if it is
was lost due to ‘his fault’.
132. D1 and D2 are joint debtors of C1, C2, C3, and C4, solidary creditors to the
amount of P1,000. How much can C3 collect from D1?
a. 500
b. 1000
c. 250
d. 125
133. On July 1, 2010, A signs a promissory note and bind himself to pay X P100,000
plus 15% per annum interest on June 30, 2012.
a. Before June 30, 2012, X can demand payment.
b. If on June 30, 2011, A is paying X, X cannot refuse the payment.
c. Because the period is for the benefit of the debtor, A can compel creditor X to accept
payment any date before June 30, 2012.
d. Because the period is for the benefit of the debtor and creditor, X can refuse
any tendered payment before June 30, 2012.
134. “I will give you this book provided that if I like to have it a back, you will return the
same to me”.
a. The obligation is void, because the fulfillment upon the will of the debtor.
b. The obligation is void, because the fulfillment depends upon the will of the creditor.
c. The obligation is valid because, the condition merely causes the loss of rights
already acquired.
d. Combination of A of B.
135. D obliged himself to give a specific car to C on December 25, 2010, stipulating that
D is liable even if the thing due to fortuitous event, and without the need of a demand,
On the due date, the car got lost due to fortuitous event. Which of the following is
correct?
a. Obligation remains to subsist, but converted into monetary consideration.
b. C can compel D to deliver another car.
c. C can require another person to deliver a car, expenses chargeable to D.
d. Obligation is totally extinguished.
136. D owes C P10,000 payable on December 25, while C owes D P10,000 payable on
December 30. In here, C can set up compensation (or cum pondere) on December 25,
and this is called:
a. Legal
b. Partial
c. Judicial or “set-off”
d. facultative
137. In novation, which of the following is incorrect?
a. If the new obligation is void, original obligation shal subsist.
b. In expromission, the insolvency of the new debtor shall not revive the action of the
creditor against the original debtor.
c. If the original obligation is subject to a suspensive condition, the new
obligation is not subject to the same condition unless stated.
d. If the condition is resolutory, the new is also resotutory condition, unless otherwise
stated.
138 The following except one are primary modes of extinguishing obligations which is
the exception?
a. Confusion
b. Compensation
c. Condonation
d. Compromise
139. Which of the following does not have negligence as its basis?
a. Culpa contractual
b. Culpa aquiliana
c. Solutio indebiti
d. Culpa delictual
140. Source of obligation which is a rule of conduct, just and obligatory, promulgated by
legitimate authorities for common good, benefit and observance.
a. Contracts
b. Law
c. Quasi-contracts
d. Quasi-delict
e. Delict
141. In an Obligation worded as follows: “ I promise to continue allowing X to stay in my
condo unit until he marries,” the obligation is subject to:
a. Suspensive condition
b. Suspensive Period
c. Resolutory condition
d. Resolutory period
142. X, Y and Z solidarity bound themselves to pay to solid creditors A, B and C the
amount of P75,000.. The loan was secured by a mortgage on B's land. Out of gratuity,
in a public instrument, renounced the obligation in favor of X, with the formality required
by law. In this case, which statement is correct?
a. The principal obligation is extinguished.
b. The real estate mortgage is extinguished.
c. Both the principal obligation and the mortgage are extinguished by remission
d. Both the principal and the accessory obligations subsist.
143. D obliged to give C, either object No. 1 valued at P15,000; or object No. 2 valued
at P10,000; or object No. 3 valued at P5,000. All the objects were lost due to D's fault in
the following order stated.
a. D's obligation is extinguished.
b. D's obligation is to pay the value of object No. 1 plus damages.
c. C's right is to demand the value of any of the object plus damages.
144. In question no. 143, if object no. 1 is lost due to fortuitous event; No. 2 is lost due
to debto’s fault; No. 3 is subsisting;
a. The right of C is to demand the value of object No. 2 plus damages.
b. C has no right because he did not communicate what object the debtor will deliver.
C. The obligation of D is to deliver object No. 3
d. D’s obligation is totally extinguished.
145. D owes C P10000 payable on dec 25. Later D forced C to sign a promissory note
for P10000 payable on Dec 25. If all the other requisites of compensation are present,
are both debts extinguished?
a. Yes, under legal compensation
b. No, B’s consent was obtained by force
c. Yes, with the approval of the court.
d. Not given.
146. Statement No. 1: just before the obligation became due and demandable, the
debtor proposed to the creditor that he would give him a specific car instead of paying
p150,000.00, and which proposal was accepted by the creditor. Here, there is
extinguishment of an obligation by way of dacion en pago.
Statement No. 2: After substitution in facultative obligations, the loss of the principal
through the fault or negligence of the debtor shall render him liable for damages in favor
of the creditor.
a. Both are true.

b. Both are false.
c. No. 1 is true, No 2 is false.
147. Statement No. 1: In novation by way of expromission, there can be revival of the
original debtor’s obligation should the new debtor turns out to be insolvent and such is
of public knowledge.
Statement No. 2: In alternative obligations, what converts the same into a pure or
simple obligation is the choice of prestation to be performed by the debtor.
a. Both are true.

b. Both are false.
c. No. 1 is true, No 2 is false.
148. A1, A2 and A3 obliged themselves solidarily to give C a specific valued at P12,000.
On the due date, c demanded delivery but the debtors failed to deliver. The next day,
while A1 still in possession of the car, it got lost due to fortuitous event. The right of C is
a. None, obligation is totally extinguished.

b. Proceed against any of the debtors for the value and damages.
c. Proceed against Al only, because he is the one is possession at the time it was lost.
d. Proceed against A2 or A3 but only P4,000 each.
a. D to give C P1,000 if C passes the examination.
b. D to pay C P1,000 if C has the means.
c. D to give C a horse if C marries X.
150. On June 25, 2010, S promised to sell his land to B for P10,000, if B will pass the
CPA exams on June 25, 2012. Which is false?
a. From June 2010 up to June 2012, S remains to be the owner because the
condition is not yet fulfilled.
b. If on June 25, 2012, B passed the examination, after payment and delivery, B
becomes the owner and the effect is retroactive dating back from the time the obligation
was constituted, that is, June 25, 2010.
c. If one year after the promise was made or on June 25, 2011, S sold the land
to X the sale is not valid because the land was already sold to B on June 25, 2010.
d. If one year after the promise was made or on June 25, 2011, S sold the land to X,
the sale is valid whether or not B passes the examination on December 25, 2012.
151. I will give you specific car if you will marry X this year (2010). Which of the
following statements is incorrect?
a. If on December 25, X died, without marriage, my obligation is effective
because one party is dead, marriage is impossible to take place.
b. If on December 25, X died, without marriage, my obligation is extinguished
because one party is dead. Marriage is impossible to take place.
c. If the year has ended, no marriage taking place, both parties are alive, just the
same my obligation is extinguished because the time indicated has already elapsed.
d. If you marry X on December 25, my obligation is to give you the car.
152. I will give you a specific car if you will not marry X this year (2010). Which of the
a. If on December 25, X died and no marriage took place, my obligation becomes
effective (not extinguished) because the expected event cannot occur anymore.
b. If on December 25, you marry X, my obligation is extinguished because you
violated the condition.
c. If the year has ended, and no marriage took place, both parties are still alive, my
obligation becomes effective (not extinguished) because the time indicated has already
elapsed.
d. If on December 25, X entered the convent, the obligation can be demanded
immediately because it is clear.
e. All of the above.
153. In a solidary obligation, D1 and D2 bind themselves to give C1 and C2 P10,000.

Which of the following statements is false?
a. C1 cannot renounce the obligation of D1 and D2 to pay P10,000 because the act
is prejudicial to the other.
b. C1 can renounce the obligation of D1 and D2 to pay P10,000 but C1 must give
C2 P5,000.
c. If C1 and C2 will renounce the obligation in favor of D1, the total obligation
is extinguished and D1 is to ask P5,000 from D2 representing the share of the
latter.
d. D1 and D2 can pay anyone of the creditors and if accepted the obligation is
totally extinguished.
154. D will support C until the end of this year is an obligation with:
a. A suspensive condition.
b. A resolutory condition.
c. An EX DIE period.
d. An IN DIEM period.
155. Whenever in an obligation a period is designated, it is presumed to have been

established for the benefit of the:
a. Debtor
b. Creditor
c. Both the creditor and the debtor.
156. The debtor shall lose every right to make use of the period EXCEPT:
a. When after the obligation has been constituted, he becomes insolvent,
unless he gives a guaranty or security of the debt.
b. When he does not furnish a guaranty or security to the creditor.
c. When the debtor attempts to abscond.
d. When the debtor violates any undertaking in consideration.
157. No person shall be responsible for events which could not be foreseen, or which,
though foreseen, were inevitable, EXCEPT:
a. When the debtor is guilty of delay.
b. When the nature of the obligation requires the assumption of risk.
c. When the law expressly provides for the debtor’s liability even in cases of
fortuitous events.
d. When the subject matter of the obligation is a generic thing.
158. S sold to B to a specific car for P20,000 to be paid as follows; P5,000 upon
delivery oof the car to B, and the balance at the rate of P500 every three months
thereafter. Subsequently, the car got burned in the possession of B, without his fault,
before payment of the balance. Is B obliged to pay the balance?
a. No, because the car was lost without his fault. B’s obligation is extinguished.
b. No, because this is an installment sale, until the buyer pays the price of the sale, S
remains to be the owner.
c. Yes, because of the principle “the thing perishes with the owner”.
d. Yes, but S must give another car because of the principle “Genus nuquam perit” of
Genus never perishes.
159. An obligation wherein various things are due, but the payment of one of them is
sufficient to extinguish the obligation is called:
a. Simple obligation
b. Alternative obligation
C. Conjoint obligation
d. Facultative obligation
160. D obliged himself to give C a specific car if the latter cannot make a circle that is at
the same time a square.
a. The obligation is impossible, therefore, void.
b. The obligation is void because the condition is outside the commerce of man.
c. D cannot be obliged to deliver at all.
161. in a solidary obligation, D obliged himself to pay C1, C2, C3 P6,000 on Dec 25. If
on date of maturity, C1 demanded payment from D but the latter paid C3 the full amount
of P6,000, which of the following statement is true?
a. Obligation is totally extinguished because C3 accepted t he payment.
b. No obligation is extinguish.
c. The obligation of D to C2 and C1 are totally extinguished.
d. Only the obligation of D to C3 which is P2,000 is extinguished.
162. Statement 1: In alternative obligations, all the objects promise by the debtor to the
creditor are all due.
Statement 2: In facultative obligations, there are two objects due but the obligor can
deliver one thing due and the obligation is extinguished.
a. No. 1 is true; No.2 is false.
b. No. 1 is false; No.2 is true.
c. Both are true
d. Both are false
163. Statement 1: “I will give you P10,000 if you like” This obligation is subject to a
potestative condition and demandable at once.
Statement 2: “I will give you P10,000 if you cannot make a dead man alive”. This is a
pure obligation and demandable at once.
a. Both are true
b. Both are false.
c. No 1 is true; No 2 is false
d. No 1 is false; No 2 is true
164. Statement 1: “I will give you P10,000 if you pass the May 2010 CPA examination”
On the first day of the examination that is May 12, I poisoned you and you failed to take
the examinations. The next day my obligation is extinguished because you cannot pass
the examinations anymore.
Statement 2: “ I will give you P10,000 if I like”. In the case, the court may fixed the
duration of the period because It depends upon the will of the debtor.
A. Both are true
B. Both are false
C. No 1 is true, No 2 is false
D. No 1 is false, No 2 is true
165. In three of the following enumerations, the proper remedy is reformation of the
instrument. Which is the exception?
a. If mistake, fraud, inequitable conduct or accident has prevented the meeting of
the minds of the contracting parties.
b. If the true intention of the contracting parties is not expressed in the instrument
purporting to embody the agreement by reason of mistake, fraud, inequitable conduct or
accident
c. If the mutual mistake of the parties causes the failure of the instrument to disclose
their real agreement.
d. If one party is mistaken and the other acted fraudulently or inequitable in such a way
that the instrument does not show their true intention
166. A-1 and A-2 are solidary debtors of B-1, B-2 and B-3, joint creditors in the amount
of P90,000. How much can B-3 collect from A-2?
a. B-3 could collect P30,000 from A-2.

b. B-3 could collect P90,000 from A-2 and give P30,000 each to B-1 and B-2
c. B-3 could collect P45,000 from A-2 and give P13,000 each to B-1 and B-2
d. B-3 could collect P15,000 form A-2 and P13,000 from A-1
167. A obliges himself to pay X P100,000 in 30 days plus a penalty of P20,000 if A fails
to pay the obligation in due time. A failed to pay the obligation in 30 days. X can
demand from A
a. The principal of P100,000 plus P20,000 penalty.
b. The principal of P100,000 plus P20,000 penalty, plus legal interest.
c. The principal of P100,000 plus legal interest
d. The principal of P100,000 plus P20,000 penalty, plus legal interest, plus damages.
168. In three of the following cases, compensation shall not be proper. Which is the
exeption?
a. Commodatum
b. Gratuitous support
c. Civil liability arising out of criminal offenses
d. Bank deposit
169. Which of the following is an obligation with a period for the benefit of the debtor
and the creditor?
a. Payable when “you like”
b. Payable when debtor’s means permit him to do so
c. payable on or before December 25, 1997
d. payable “if I like”
e. Any of the above
170. Proof of pecuniary loss is not necessary for the award of

a. Moral damages
b. Nominal damages
c. Temperate damages
d. Exemplary damages
e. All of the above
171. Three of the following are requisites of an obligation. Which is the exception?
a. Prestation
b. Efficient cause
c. Delivery
d. Passive Subject
172. Statement 1: In an obligation with a penal clause, interest and damage, aside form
the penalty, may be awarded to the creditor if the debtor is guilty of fraud
Statement 2: In an obligation that is impossible of division, the debt can be enforced
only by proceeding against all the debtors. If one of the debtors should be insolvent, the
other shall not be liable for his share.
a. Both are true

b. Both are false
c. No. 1 is true; No 2 is false
d. No 1 is false; No 2 is true
173. Statement 1: Solutio indebiti may apply to payment by mistake of a prescribed

obligation.
Statement 2: Dolo causante refers to fraud in the performance of an obligation.
a. Both statements are true
b. Both statements are false
c. Statement 1 is true while statement 2 is false
d. Statement 1 is false while statement 2 is true
174. An obligation where only one prestation is due, with no period or condition needed
is called.
a. pure or simple obligation
b. conjoint obligation
c. alternative obligation
d. none of the above
175. Statement 1: In alternative obligations, the right of choice belongs to the creditor
unless it has been expressly granted to the debtor.
Statement 2: A solidary creditor cannot assign his right to a co-creditor without the
consent of the rest of the creditors.
c. Statement 1 is t true while statement 2 is false
d. Statement 1 is false while statement 2 is true
176. Amazed by the skill of X who can paint portraits using paint brushes inserted in his
right armpit, Y entered unto a contract with the former to have his own portrait done and
gave X P50,000 as full payment therefore. After he has started painting the portrait but
before its complexion, X was swiped by a speeding car while he was drunk and walking
beside the railway causing the doctors to have his right arm amputated. In this case,
what is the remedy of Y?
a. Nothing, as the service became impossible by reason of an act
independent of the will of the debtor.
b. Equivalent performance in terms of damages
c. Specific performance by compelling X to go on painting Y’s portrait.
d. Substitute performance by allowing a third person to do his portrait with
expenses therefor charged to X.
177. Fruits as resulting from spontaneous products of the soil without the intervention of
human labor, as well as animal offspring are:
a. Industrial fruits
b. Civil fruits
c. Natural fruits
d. All of the above fruits
178. Statement 1: D obliges himself to give C a specific ring, upon failure, to give C
P5,000. This is a case of facultative obligation.
Statement 2: D obliges himself to give C a specific ring. However, if he so desires, D
may instead give C P5,000. This is an example of an obligation with a penal clause.
Given these examples, which statement is correct?
a. Both obligations are valid but both are mislabeled as to their classification
as obligations.
b. Both obligations are not valid.
c. Both obligations are valid and are properly labeled as to their classification as
obligations
d. Both statements are invalid and improperly labeled as to their classification as
obligations
179. D is indebted to solidary creditors X, Y and Z for P30,000. Without the knowledge
of X and Y, Z remitted or renounced the obligation of D.
a. The obligation of D is not extinguished.
b. The obligation of D is extinguished to the extend of P20,000
c. The obligation of D is extinguished to the extent of P10,000
d. The obligation to pay P30,000 is extinguished, but X and Y may proceed
against Z for their share.
180. In novation, which of the following is incorrect?

a. If the new obligation is void, original obligation shall subsist.
b. In expromission, the insolvency of the new debtor shall not revive the action of the
creditor against the original debtor.
c. If the original obligation is subject to a suspensive condition, the new
obligation is not subject to the same condition unless stated.
d. If the condition is resolutory, the new is also subject to a resolutory condition, unless
otherwise stated
181. Statement No. 1: The debtor of a thing cannot compel the creditor to receive a
different one, although the latter may be of the same value or more valuable than that
which is due.
Statement No. 2: In dation of payment, ownership of the thing delivered is transferred to

the creditor; while in cession, it merely authorizes the creditor to convert the property
into cash and out of the proceeds to extinguish the obligation partially.
a. Both are true.

b. Both are false.
c. No. 1 is true, No. 2 is false.
182. A promissory note signed by D and dated March 15, 2010 is worded as follows: “I
promise to pay C the sum of Fifty Thousand Pesos (50,000) provided that if she should
fail in the October 2010 CPA Examination, she shall return to me said amount”. The
above note gives rise to an obligation with
a. Suspensive condition.
b. Casual condition.
c. Resolutory condition.
183. “I will give you this book provided that if I like to have it back, you will return the
same to me”
a. The obligation is void, because the fulfillment depends upon the will of the debtor.
b. The obligation is void, because the fulfillment depends upon the will of the creditor.
c. The obligation is valid, because the condition merely causes the loss of rights
already acquired.
d. Combination of A and B.
184. It refers to a joint obligation:

a. One in which each debtor is liable for the entire obligation, and each creditor is
entitled to demand the whole obligation.
b. One in which either one of the parties is indispensable and the other is not
necessary.
c. One in which the obligation of one is a resolutory condition of the obligation of the
other, the non-fulfillment of which entitles the other party to rescind the contract.
d. One in which each of the debtors is liable only for a proportionate part of the
debt and each creditor is entitled only for a proportionate part of the credit.
185. An obligation where each of the debtors is liable only for a proportionate part of the
debt, and each creditor is entitled only to a proportionate part of the credit is called:
a. Conjoint obligation
b. Joint obligation
c. Solidary obligation
d. Divisible obligation
186. An obligation where each of the debtors is liable for the entire obligation, and each
creditor is entitled to demand payment of the whole obligation is called:
a. Conjoint obligation
b. Joint obligation
c. Solidary obligation
d. Divisible obligation
187. Which of the following statements is true?

a. A condition always refers to the future.
b. The debtor loses the period if he does give any security to the creditor.
c. The condition not to do an impossible thing does not render the obligation
void.
d. The alternative obligations the right to select which of the prestation shall be
delivered belongs to the creditor, unless expressly given to the debtor.
188. Contract with false cause is:
a. Voidable
b. Void
c. Unenforceable
d. All of the above
189. A thing is considered lost when it:

a. Perishes
b. Goes out of commerce
c. Stolen or robbed
d. All of the above
190. The debtor who cedes or assigns his property to his creditor in payment of his debt
shall be released from his obligation
a. to the extent of the net proceeds of the thing leased.
b. to the extent allowed by the creditor.
c. only to the extent of the net proceeds of the thing assigned.
d. totally extinguished under dation in payment.
191. Acceptance of a commercial document is equivalent to payment when

a. The check has been cashed.
b. The check became valueless due to the creditor’s fault.
c. Creditor is in estoppels
192. A is obliged to give B his only car on September 1, 2010. On the said date, A did
not deliver. On September 2, 2010 an earthquake completely destroyed the car, is A still
liable?
a. No. Considering that no demand to deliver was made by B and the specific
thing was lost due to fortuitous event, the obligation is extinguished.
b. No. The obligation is extinguished, even if the debtor is already in default because
the debtor can plead impossibility of performance.
c. Yes. A is already in legal delay, thus the obligation to deliver the lost specific thing is
converted into monetary claim for damages.
d. Yes. The creditor can instead demand for a substitute of equivalent value from the
debtor.
193. B and C promised to deliver a particular car valued at P100,000 to M on or before

September 15, 2010. On September 15, 2010, M demanded delivery from B and C. B
was willing to deliver but C refused to deliver. In the case at bar
a. An action for specific performance will lie against both B and C
b. Both B and C shall be liable for P50,000 each with damages.
c. B shall be liable for P50,000 without damages and C shall be liable for P50,000
and damages.
194. A, B and C executed a promissory note worded as follows: “We promise to pay to
X, Y and Z the sum of P90,000 (Sgd.) A, B and C”.
a. A is obliged to pay to X, Y and Z P90,000
b. A is obliged to pay to X P30,000
c. A is obliged to pay to X P60,000
d. A is obliged to pay to X P10,000
195. If in the situation given in No. 194, there is a diamond ring pledged by the debtors,
subsequently returned by the creditors:
a. The total principal obligation is extinguished.
b. Only P30,000 of the obligation is extinguished.
c. Only P60,000 of the obligation is extinguished.
d. Principal obligation is not extinguished at all.
196. A is indebted to B for P20,000. X is the guarantor of A. B is also indebted to A for

P8,000. How much will X be liable as guarantor if B sues A, and cannot pay?
a. P12,000
b. P20,000
c. P8,000
d. X has no liability
197. Statement No. 1: Payment made to an incapacitated person is good only up to the
extent that he was benefited or up to the amount that he was able to keep.
Statement No. 2: In obligations arising from quasi-contracts, consent of the parties is

not necessary.
a. Statement No. 1 is false while statement No. 2 is true.

b. Statement No. 1 is true while statement No. 2 is false.
c. Both statements are true.
d. Both statements are false.
198. Statement No. 1: In novation by expromission, there can be a revival of the

obligation if the new debtor turn out to be insolvent, and such insolvency is of public
knowledge.
Statement No. 2; A debtor paying a natural obligation in and in favor of a creditor by
mistake can still recover the same from the latter.

c. Statement No. 1 is false while statement No. 2 is true.
d. Statement No. 1 is true while statement No. 2 is false.
199. Statement No. 1: D obliged to give a specific car to C on Dec 20, 2003. If on the
date stated, D did not comply with his obligation, the next day he is considered in
default without the need of a demand.
Statement No. 2: S sold to B a specific car for P10,000. Both parties promise to comply
with their obligations the day after tomorrow. If on the date stated, 8 delivers the car to
B, but 8 is not ready to comply with his’ obligation, from thereon he is considered in
default without the need of a demand.
A. Both are true

B. Both are false
C. No. 1 is true; No. 2 is false
D. No. 1 is false; No. 2 is true
200. Statement No. 1: “I will give you P10,000 if you will not marry X this year (2010)”. If
on Dec. 25, 2010, X entered the convent, the next day, Dec 26, my obligation is
extinguished.
Statement No. 2: “I will give you P10,000 when my means permit me to do so”. This is
conditional obligation for the benefit of the debtor.
A. Both are true

B. Both are false
201. D1, D2, and D3, obliged themselves jointly to pay C P15,000. To secure the
obligation, D1 pledged his ring D2 his T.V., D3, his refrigerator. On the date of maturity,
D1 paid C P10000. Which of the following statements is true?
A. D1 can redeem object 1 because the obligation is joint

B. D1 can redeem object 1 and object 2 because they are proportionate to the amount
paid.
C. D1 can redeem any of the object pledged.
D. D1 cannot redeem any of the thing pledged because the indivisibility of the
contract of pledge is not affected by the fact that the obligation is not solidary.
202. D owes C P10.000 with G as guarantor. Third person X, pays the obligation
without the consent of the debtor. X ask for reimbursement from D but D is insolvent.
A. X is by right subrogated to the rights of C.

B. X can compel C to return the payment.
C. The obligation of D to C subrogate him in his rights.
D. The obligation of D to C is not extinguished.
203. A obtained a loan from b for P1,500 with interest at 14% per annum. The payment
of which was secured by guarantor C. After maturity of the loan, D without the
knowledge of A paid B, P1400 and thereupon B signed a receipt and gave it to D with
this tenor: “Received from D in full payment of A’s obligation in my favor”. (Sgd.) B.
A. D can recover from P1,500 because the whole obligation of A and B has been
extinguished.
B. D can recover from A P1,500 because the balance of P100 is considered
extinguished by partial remission.
C. D can recover from A P1,400 because that was presumably the extent to which
was benefited.
D. D can recover from A because he paid without the knowledge of A.
204. Which of the following is not legal subrogation?
a. When a creditor pays another creditor who is preferred.

B. When a third person, not interested in obligation, pays with the approval of the
debtor.
C. When a third person interested in the obligation pays even without the approval of
the debtor.
D. None of them.
205. P authorized A, 16 years old, to sell his car to B. A sold the Car to P100,000. One
week after, because of the floating rate of peso, prices of car went up. P now wanted to
disallow the sale, claiming that A, his agent was a minor and therefore the contract is
voidable and no liability is at-
A. Both A and P are jointly liable to B.

B. Only A is liable because he executed teh agency knowling for himself that he is a
minor.
C. P and A are solidary liable to B.
206. D1, D2 and D3 borrowed from C P300,000 and as a security they mortgaged their
undivided agricultural land to C. Subsequently, D1 paid C P100,000. Is the mortgage on
D1’s share of the land extinguished?
A. Yes, because the obligation of D1 on the debt is only P100,000.

B. Yes, the obligation of the debtors is joint, D1 is answerable only for P100,000.
C. No, because the obligation is solidary payment in par shall not extinguish the
obligation secured by the mortgage.
D. No, because mortgages are considered individual payment in part shall not
extinguish the mortgage.
207. Example No. 1: D owes C P10,000 due on December 25 C owes D P6000 due on
December 25.D’s is insolvent G is liable for C for P10,000 . On the due date, if D is
insolvent G is liable to C for P10,000. The latter (G) cannot set up compensation against
a principal debtor.
Example No. 2: D owes C P10,000 payable or December 25. Later, D, through

intimidation, was able to make C signs promissory note stating that C is indebted to for
the D for the same amount. In here, D cannot be acquired to pay C P10,000 because
he (D) can set up compensation against C.
A. Both are true

B. Both are false
208. Statement No. 1: "To Maria, my true love, obliged myself to give you my one and
only horse when I feel like it.
Statement No. 2: "To Perla, my true sweetheart, I obliged myself to pay you the
P500.00 I owe you when I feel like it Months passed but the promisor never bothered to
make good his signed promises. Based on the settings, decide on the validity of the
Conditions.
A. Both conditions are void.
B. Both conditions are void.
C. No. 1 is void and No. 2 is valid.
D. No. 1 is valid and No. 2 is void
209. In the preceding question
A. Both obligations are enforceable.

B. Both obligations are not enforceable.
C. No. 1 is enforceable and No. 2 is not enforceable
D. No. 1 is not enforceable and No. 2 is enforceable
210. Delivery by the debtor of specific thing to the creditor in payment of an obligation
consisting of money.
A. Assignment of cession of property

B. Dation in payment
C. Tender of payment and consignation.
D. Application of payment.
211. One is not a requisite needed in order that obligations shall be extinguished by loss
or destruction of thing due.
a. When the thing lost is generic

b. When the thing is lost without the fault of the debtor
c. When the thing lost is specific.
d. When the thing is lost before the debtor has incurred in delay.
212. A, B and C are solidary debtors of X and V, solidary creditors I to the amount of
P10,000. Later, Najd X the whole obligation, Which of the following is considered a false
Statement as to the effects of C paying X the whole obligation?
A. C becomes a creditor’s reimbursement.

B. After C paid X the whole obligation, the same is converted into a join obligation of
reimbursement.
C. If the debtor A becomes insolvent C can collect from B P6,000.
213. A and B solidary debtors of X and Y, solidary creditors to the amount of P10,000.
Later, X told A that he was renouncing the whole obligation in favor of A. Under this
premise, which of the following statement is incorrect?
A. The obligation of A to X and Y is totally extinguished.

B. The obligation of A and B to X and Y is totally extinguished.
C. A can collect from B P5,000, that is B’s share is the obligation.
D. X must give Y P5,000, that is, Y’s right to the obligation.
214. The obligation is demandable on the date of the obligation and shall continue to be
in force up to the arrival of the day certain.
A. Resolutory period
B. Suspension period
C. Indefinite period
D. Legal period
215. Contracts entered into in a state of drunkenness or during a hynotic spell are
A.binding
B.Valid
C.Voidable
D.All of the stated
216. In order that fraud may make a contract voidable,
A. It may be serious and the parties must be in pari delicto.

B. It may be incidental but both parties should not be in pari delicto.
C. It should be serious and should not have been employed by the contracting
parties.
D. It may be incidental but should have been employed by both parties.
217. Bernie offered Zo a specific parcel of land at a specified price. Bernie gave Zo
60days within which to accept. Zo agreed.
A. Within 60days, Bernie cannot withdraw but may increase the price.
B. There can be no withdrawal because the period is binding.
C. Bernie may withdraw or increase the price within the 60days period.
D. There can be no withdrawal because there is a perfected option contract.
218. An obligation based on positive law and gives right to enforce its performance.
A. Moral obligation
B. Civil obligation
C. Legal obligation
D. Natural obligation
219. Which of the following is a primary classification of obligations under Civil Code?
A. Real and personal obligations.
B. Joint and solidary obligations.
C. Unilateral and bilateral obligations.
D. Civil and natural obligation.
220. Which of the following is a secondary classification of obligations under the Civil
Code?
A. Alternative and facultative obligations.

B. Obligations with a period or obligations with a term.
C. Pure and conditional obligations.
D. Determinate and generic obligations.
EXERCISES IN CONTRACTS INCLUDING

CPA EXAMINATION QUESTIONS
MULTIPLE. CHOICE
1. Which of the following is not a requisite for the validity of a contract?
a. Consent d. Delivery of the thing
b. Object e. None of the above
c. Cause or consideration
2. Before acceptance is conveyed an offer becomes ineffective upon the:
a. Death d. Involvency of either party
b. Civil interdiction e. All of the above
c. Insanity
3. X alleged that Y promised to give X one hectare of land. This is consideration of Y’s
meritorious services to Y. Y pleads in defense that since the promise was not in writing
it is unenforceable under the Statute of Frauds. Decide.
a. The promise is uneniorceable because it is not a writing.
b. The Statute of Frauds is applied because A has rendered services.

c. The Statute of Frauds is inapplicable here, because the promise to give the
land is not a sale of real property.
d. The Statute of Frauds can apply to partially executed contract.
4. The stipulation in a contract to the effect that the debtor should remain as a servant in
the house and the service of her creditor so long as she had not paid her debt is void
because it is:
a. Contrary to good custom
b. Contrary to public policy
c. Contrary to law and morality
5. X, after the death of his father sold his inheritance thought its amount has not yet
been determined to B, for a considered ration of P50,000.
a. The contract is valid only if the inheritance values at least equal or more than
P50,000.
b. The contract is rescissible.
c. The contract is valid even though nothing remains of the inheritance to be

turned over to B.
d. Contract is void, future inheritance cannot be the object of sale.
6. Which of the following contracts is void?
a Those which object is outside the commerce of men.
b. Those which contemplate an impossible service.
C. those where the intention of the parties relative to the principal object of the contract
cannot be ascertained.
d. Those expressly prohibited or declared void by law.
e. All of the above
7. Statement No.1: if the contract is entered into without authority the contract is
validable.
Statement No. 2: Contracts take effect only between the parties, their assigns and heirs,
except in case where the rights and obligations arising from the contract are not
transmissible by their nature, or by stipulation or by provision of law. The heir is not
liable beyond the value of the property he received from the decedent.
a. Both are true c. No. 1 is true No. 2 is false
b. Both are false d. No. 1 is false No. 2 is true
8. Reluctantly and against her good sense and judgment, Rosemarie entered into a
contract for the delivery of 5 tables to Corazon for a price of P15,000 Contract is:
a. Void c. Unenforceable
b. Voidable d. Valid
9. G was appointed guardian of S, the latter being 16 years old. S sold his parcel of land
in writing to B valued at P100.000 for P75,000, suffering lesion by 1/4 of the value.
What is the status of the contract?
a. Rescissible c. Enforceable
b. Unenforceable d. Voidable
10. Which is the least defective contract?
a. Rescissible contract C. Unenforceable contract
b. Voidable contract d. Void contract
11. Which of the following contract is not rescissble?
a. Those which are entered into by guardians whenever the wards whom they represent
suffer a lesion of more than 1/4 of the value of the object of the contract.
b. Those executed in representation of an absentee, if the latter Suffer a lesion of more

than 1/4 of the value of the object of the contract
c. Those where One of the parties is incapable of giving Consent to a Contract

d. Those undertaken ¡n fraud of creditors when the latter cannot in any other rnnr1er
collect the claims due them
e. Those which refer to things under litigation if they have been entered into by the
defendant without the knowledge and approval of the litigants or of competent judicial
authority.
12. Statement No.1: The legal life of a contract begins from its perfection stage. While
the death of the contract is the performance or fulfillment of the obligation.
Stament No.2: Misrepresentation made in good faith is not fraudulent but may constitute
error and renders the contract voidable.
a. Both are true
b. Both are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true
13. A contract where both parties are incapable of giving consent is:
a. Rescissible d. Void
b. Voidable e. None of the above
C. Unenforceable
14. Three of the following contracts are void. Which is the exception?
a. Those whose cause, object or purpose is contrary to law, morals, good customs,
public order or public policy,
b. Those which are absolutely simulated or fictitious,
c. Those which cause or object did not exist at the time of the transaction.
d. Those where both parties are incapable of giving consent to a contract.
15. S sold his car to B because of the intimidation of F3.
a. S can ratify the contract
b. S can ratify the sale with the conformity of B

c. B has the right to ask for annulment
d. B has only four years to ask for annulment
16. Three of the following are rescissible, which is not?
a. Sale of property under litigation made by defendant without the knowledge of the
plaintiff and authority of the court.
b. Those made to defraud creditors when the creditors has no other means to recover
his claim.
c. Those agreed upon in representation of absentees, if the absentee suffers lesion by

more than 1/4 of the value of the property subject of the Contract.
17 S and M agreed in print that, debtor for P3,000 will work as a servant of M Without
pay until she could find money with which to pay her debt. Meantime, S absconded her
obligation and failed to comply with her promise under this premise, which of the
following statements is correct?
a. The agreement to work as a servant is void because It is immoral.
b. To act as a servant without pay is unconstitutional because this is equivalent to

involuntary servitude.
c. The obligation to pay is enforceable because this is in accordance with law.
18. Which of the following a public document contracts is not required to appear
a. Acts and contracts which have for their object the creation, transmission, modification
or extinguishment of real rights over immovable property, sales of real property or of an
interest.
b. The cession, repudiation or renunciation of hereditary

rights.
c. The power to administer property.
d. Sale of immovable property.
19. In order that a stipulation in favor of a third person in a contract would be valid and
binding upon the parties thereto, three of the requisites are mentioned in the following
enumeration. Which among them is not a requisite?
a. There must be a stipulation in favor of a third person.
b. The contracting parties must have clearly and deliberately conferred a favor upon that
third person.
c. The third person communicated his acceptance to the obligor before its revocation.
d. That there must be an existing agency between either of the contracting parties
and the third person.
20. A contract whereby he offeree is given by the offeror a certain period of time within
which to buy or not to buy a certain thing for a certain price is called:
a. Option contract c. Contract to sell
b. Contract of sale d. Barter
21. Which of the following statement is false?
a. Remission is essentially gratuitous.
b. Cession is a special mode of payments.
c. The liability of a guarantor is primary.
d. In alternative obligations, the debtor is required to perform only one presentation.
22. Which of the following is presumed not to be legal subrogation?
a. When a creditor pays another creditor who is preferred
b. When a third person, not interested in obligation, pays with the approval of the
debtor.
c. When a third person interested in the obligation, pays even without the approval of
the debtor.
d. None of them.
23. D is indebted to C for P 10,000. For the purpose of defrauding C, D sold his only
parcel of land to X valued
P10,000. X had no knowledge of the intention of D.
a. The contract between D and X is binding.
b. The contract is voidable because D is in bad faith.

c. The right of C is to rescind the contract because the transaction is fraudulent.
d. The contract between D and X rescissible.
24. In order to defraud C, his creditor, D by means of force 21 compelled B to buy his
(d’s) land. B has no knowledge of such fact.
a. As to C, the contract is rescissible
b. As to B, the contract is voidable
c. Both of(a) and (b)
d. None of(a) and (b)
25. The duty not to recover what has voluntarily been paid although Payment was no
longer required.
a. Natural obligation c. Civil obligation
b. Moral obligation d. None of the above
26. X Company bought out a competitor, Y, with a stipulation that Y should thereafter
not engage in any business in the Philippines without the consent of X Company.
a. The stipulation is not valid because the parties as a rule have no absolute freedom to
stipulate terms and conditions in a contract.
b. The stipulation is not valid because this is against public policy.
c. The stipulation is valid, only it will create a monopoly in trade.
d. The stipulation is valid, it can be ratified.
27. Statement No. 1: Mutual promise to marry if orally entered into is unenforceable.
Statement No. 2: Violence or intimidation shall not annul the obligation, if it was
employed by a third person who did not take part in the contract.
a. Both are true c. No, is true; No.2 is false
b. Both are false d. No. 1 is false: No.2 is true
28. D is indebted to C in the sum of P101000. For the purpose of avoiding the claims of
C, D donated all his properties worth the same amount to X.
a. The contract is absolutely simulated.
b. The contract is recissible

e. The contract is merely voidable
d. The contract is void.
29. In three of the following, the transaction is void. Which is the exception?
a. Oral contract of partnership the capital is P3,000 or more
b. Contracts in writing contemplating impossible services.
c, Authority of the agent orally made In sale of immovable property.
d. Oral contract of partnership whenever immovable property is contributed.
30. D owes C P500. However, C’s right has already prescribed. Notwithstanding the
knowledge of this fact. D paid the amount. Realizing this mistake, D wants to recover
the amount he paid.
a. D can be made to recover on ground of mistake.
b. D can be made to recover on the ground that his obligation ¡s not legally enforceable.
c. D can be made to recover because this will enrich C at the expense of D.
d. D cannot recover.
31. Which of the following contracts is voidable?
a. Those whose object is outside the commerce of men.
b. Those which are absolutely fictitious.
c. Those where one of the parties is incapacitated.
d. Those which contemplate an impossible service.
32. X, a former government employee, suffered from severe parancia and was confined
In the mental hospital in 2010 After his release he was placed under the guardianship of
his wife to enable him to get his retirement pay. In 2013, he became a mining
prospector and sold some mining claims In 2018, he sue to annul the sale claiming that
he was not mentally capacitated at the time of sale. The sale in question was —
a. Illegal
C. Voidable
b. Void
d. Valid
33. Example No. 1: G, guardian of W, sold W’s house valued at P50,000 for P37,500 or
a lesion by one-fourth of the value.
Example No. 2: S sold his house valued at P50,000 for only Pl .000 because S did not
know the true value of the house.
a. Both contracts are rescissible.
b. Only No. 1 is rescissible.
c. No. 2 is voidable because there is an error or mistake.
d. Both contracts are valid and enforceable.
34. B1 Company bought out a competitor, B2 Corporation, with a stipulation that 82

Corporation should not there after engage in any business in the Philippines unless
consented to and approved by Bi Company.
a. The stipulation is defective but subject to ratification.
b. The stipulation is valid because the parties are free to enter into any stipulation, terms
and conditions such as this one.
c. The stipulation is unenforceable as there was no showing that the sale was done in
writing.
d. The stipulation is void because it is contrary to public policy.
35. Statement No. 1: In voidable contracts. There is no deed to ratify the same before
they can be considered valid, in unenforceable contracts, ratification is mandatory
before they can be considered enforceable.
Statement No.2: There is undue influence if insidious Words or machinations were

employed by a party on the Other just to obtain the latter’s consent, without which the
latter would not have entered into the contract.
a. Both are true c. No.1 is true; No. 2 is false
b. Both are false d. No 1 is false; No.2 is true
36. Statement No. 1: Dolo incident entitles the person against whom it was employed
the right to seek the annulment of the contract,
Statement No. 2: A stipulation pour autrui is an exception to the rule on relativity of

contracts.
a. Both are true c. No. 1 is true; No.2 is false
b. Both are false d. No. I is false; No.2 is true
37 Example No. 1 — W, 16 years old, sold his house valued at Pl M for P50,000 or a
lesion by more than one-fourth of the value of the said house.
Example No. 2: S sold his house valued at Pl M tor only P400,000 because S did not
know the true value thereof
a. Both examples are unenforceable
b. No. 1 is rescissible; while No.2 is unenforceable
c. No. 2 is unenforceable
d. Both contracts are binding
38. D forced C to lend him P 10,000. The promissory note is in writing.
a. Contract remains to be valid.
b. The contract is rescissible because the contract is fraudulent.
c. The contract is void.
d. C cannot demand payment from D because the Contract is unforceabje.
Statement No.2: There is undue influence if insidious Words or machinations were

employed by a party on the Other just to obtain the latter’s consent, without which the
latte1 would not have entered into the contract.
a. Both are true c. No. 1 is true; No. 2 is false ‘
b. Both are false d. No 1 is false; No.2 is true
36. Statement No. 1: Dolo incidente entitled s the person against whom it was employed
the right to seek the annulment of the contract,
Statement No. 2: A stipulation pour autrui is an exception to the rule on relativity of

contracts.
b. Both are false d. No. I is false; No.2 is true
39. on July 15,2010, X entered in a contract with Y. On February 10, 2011, X

discovered that fraud was committed at the time he entered into the contract, a fraud
that vitiated his consent. The action for annulment shall be bought.
a. Within three years from the time of the fraud
b. Within four years from February 10,2011
c. Within four years from the time A entered into the contract
d. On February 10,2011
40. One of the stipulations contained in the contract between M Company and its
employees is that the company shall pay a bonus to employees of the company who
shall continue its employment for at least 2 consecutive years, unless he quits or is
discharged before the expiration of the period of 2 years. X, an employee of the
company was discharged without just one week before the completion of the two-year
period.
a. X is not entitled to the bonus because his discharge was in accordance with the
contract.
b. X is not entitled to the bonus, because the employer’s right to terminate is superior to
the right of the employee to be employed.
c. X is entitled to the bonus whether the discharge is with or without cause.
d. X is entitled to the bonus because the debtor company has voluntarily

prevented the happening of the condition
41. Statement No 1: If one party was mistaken and the other fraudulently of inequitably
in such a way that the instrument does not show their true intention, the former may ask
for the annulment of the instrument.
Statement No. 2: The statement of a false cause in Contracts shall render them void, if
it should not be proven that they were founded upon another caused which is true and
lawful.
a. Both are true c. N. 1 is true; No.2 is false
b. Both are false d. No. 1 is false; No.2 is true
42. When there is concurrence of offered acceptance, there is:
a, Payment c. Consent
b. Revocation d. None of the above
43. Essential requisites of a contract:

a. Consent c. Subject 48.
b. Cause d. All of them
44. Which of the following instruments is not subject to reformation?
a. Simple donations inter vivos wherein no condition is imposed
b. Wills
c. When the real agreement is void
d. All of the above
45. Simulation of Contract — Absolute or relative. Relative when
a. Parties not bound at all
b. The contract is void
c. The parties conceal their true agreement
46. Which of the following contract is enforceable even if not reduced in writing.
a. Contract executed by one of the parties in a contract
b. Representation as to the credit of a third person
c. Lease of immovable for a period longer than one year
d. Agreement for the sale of immovable property
47. An intimidated B to marry his daughter. After a year, B would like to file action for
annulment but could not to do so because A was around to intimidate him. The
marriage contract is —
a. Rescissible c. Void
b. Voidable d. Unenforceable
48. The following, except one, are the characteristics of avoid or inexistent contract.
Which is the exception?
a. The defense of illegality of the contract is available to third persons whose
interests are not directly affected.
b They are not subject to ratification.
c. The right to raise defense of illegality cannot be waived.
d. The action or defense for declaration of their nullity or inexistence of the contract
does not prescribe.
49. D owes C P10,000. But the debt soon prescribes. Later X, against the consent of D,
pays C P10,000.
a. X can recover from D P10,000 because the latter was enriched at the expense of X
b. X has no right
c. X cannot recover from D what he pays C
d. Both D and C are liable to X
50. The guardian of an insane person sells a house and a lot belonging to the latter,
valued at P100,000, to B, buyer for P74,000 with the approval of the court. The contract
is:
a. Valid d. Undenforceable
b. Rescissible e. Void
c. Voidable
51. A conferment of a direct benefit in a contract between two persons in favor of a third
person who must accept such benefit before the same is withdrawn is known as:
a. Policitacion c. Donation propter nuptias
b. Stipulation por autrui d. Counter-offer
52. Statement No. 1: Advertisements for bidders are simply invitations to make
proposals, and the advertiser is not bound to accept the highest or lowest bidder, unless
the
contrary appears.
Statement No. 2: Accidental elements of a contract are those agreed upon by the
parties, and cannot exist without being stipulated.
a. Both are true C. No. 1 is true; No.2 is false

53. Statement No. 1: The action for annulment on the ground of fraud shall be bought
within 4 years from the time of the perfection of contract.
Statement No. 2: If a valid contract is novated to a void contract, both contracts are
considered void.
b. Both are false d No. I is false; No.2 is true
54. Contract with a false causè is —
a. Voidable c. Unenforceabe
b. Void d. All of the above
55. Three of the following are void contracts. Which is the exception?
a. Contracts where the cause is immoral.
b. Contracts to prevent a known supporter of a political rival from voting for his
candidate for a valuable consideration.
C. Contracts with valid consideration but with unlawful motives.
d. Absolutely simulated contracts.
56. Which of the following contract is not valid?
a. Mutual promise to marry entered into orally
b. Sale of immovable property orally entered into
c. One of the parties in a contract is Incapable of giving consent
57. D forced C to lend him P10,000. The promissory note is in writing.
a. The contract is rescissible because the contract is fraudulent
C. C cannot demand payment from D because the contract is unenforceable

d. Contract remains to be valid
58. Type of defective contract that creates rights and impose no obligation, but are
susceptible of ratification.
a. Voidable Contracts c. Rescissible Contracts

b. Unenforceable Contracts d. Void Contracts
59. Statement No. 1: An agreement which, by its terms and Conditions, is to be

performed within a year from the making Thereof is enforceable even if entered into
orally
Statement No. 2: A contract for the sales of necessaries to minor is a voidable contract.
a. Both are true c. No. 1 is true; No. 2 is false

b. Both are false d. No. 1 is false; No. 2 is true
60. S owns an oil painting, In need of money, S sold the painting to B for P1,000.
After the sale, it was discovered that the painting was valuable and worth P5,000.
a. S may rescind the contract on ground of lesion or inadequency of cause

b. S may rescind the contract on ground of fraud
c. S may annul the contract on the ground of error
d. B is entitled to benefit of the contract because it is valid and binding
61. A, bachelor lawyer, raped W twice. Upon learning this, “F” The father of W, was able
to force A to marry W under pain of being Sued in court and disbarred from the practice
of his law profession.
Which statement is correct?
a. The marriage may be annulled on the ground of force or violence
b. The marriage may be annulled on the ground of threat or intimidation
c. The defective marriage may, however, be ratified
d. There was no defect, the marriage was perfectly valid
62. A contact where one of the parties is incapable of giving consent is:
a. Rescissible d. Void
b. Voidable e. None of the above
c. Unenforceable
63. S, a minor, owns a specific property valued P50,000. B capacitated, By means of
fraud induced S to sell his property to him (B) for P10,000 which S did so. The contract
writing,
a. The contract is binding form start.

b. The contract remains unenforceable because it falls under the Statue of Frauds.
c. The contract is rescissible because the ward suffered lesion by more than
one-fourth of the value.
d. The contract is void.
64. Must be in writing to be enforceable:
a. Lease of land for 12 months

b. Lease of car for 18 months
c. Both of a and b
d. None of a and b
65. This kind of defective contracts refers to that contract which is validly
Agreed upon because all the essential elements exits, but courts can nullify it when
there
Is damage or prejudice to one of the parties or to a third person. Its enforcement
Would cause injustice by reason of some external facts.
a. Voidable Contract
b. Void or Inexistence Contract
c. Rescissible Contract
d. Unenforceable Contract
66. S and B orally agree that S would sell and B would buy S’s radio for P400, two
years from
the date of the agreement. At the end of two-year period, S refused to deliver the radio
although
B was willing to pay
a. B can compel S to deliver because B is willing to pay the price.

b. The contract falls under the Statute of Frauds, therefore unenforceable.
c. Statute of Frauds inapplicable because the price is less than P500.
d. The object is movable, oral contract is enforceable.
67. Statement No.1: A stipulation in a contract of lease, which provides that the leased
Premises so long as he pays the monthly rentals thereon, is valid stipulation.
Statement No. 2: The seller sold to a minor some necessaries in the amount of P600.
The goods
Were delivered to minor who, in turn paid the purchase price therefore.
The contract is unenforceable.

b. Both are false d. No. 1 is false ; No. 2 is true
68. Which of the following contracts is voidable?
a. Those where both parties are incapable of giving consent to a contract.

b. Those undertaken in fraud of creditors when the latter cannot in any other
manner collect the claims due them.
c. Those where the consent is vitiated by mistake, violence, intimidation,
undue influence or fraud.
d. Those whose object is outside the commerce of men.
69. S was forced by X to sign a contract with B for the sale of specific property for
P10,000. C, a creditor of S, is prejudiced by the contract. What can S do?
a. S may ask annulment of the contract

b. S may ask for rescission of the contract
c. S may ask C to declare the contract avoided
d. C may ask for the annulment of the contract
70. In the preceding number, what can C do?
a. C may ask for the rescission of the contract

b. C may ask for the reformation
c. C may ask S to declare the contract avoided
71. Statement No. 1: Ratification of voidable contract is necessary for its validity.
Statement No. 2: One can ask for annulment of a contract based on dolo incidente.

72. Example 1 – S sold B in a private instrument his land Later, B wanted to have the
sale registered, but
Registration requires a public instrument. In here, B may compel S to execute the
needed public instrument.
Example 2 – S Sold to B orally his specific land. After B paid S the sale, he want to
register the land in his name but he needed a public instrument of sale. In here B may
compel S to execute the needed public instrument.
a. Both examples are false

b. Only 1 is true
c. Only 2 is true
d. Both examples are true
73. In a contract of sale executed by S and B, it appears S sold his motor vehicle to B
and B bought it for P10,000. It turned out however, S has three motor vehicles. Gallant
valued P80,000: Hi-Ace valued P70,000; and jeep valued P60,000. Which of the
following is correct?
a. The contract shall be reformed because there was mistake.

b. The parties can ask for interpretation because the word Motor vehicle is
ambiguous.
c. The parties can ask for annulment of the contract.
d. There is no contract.
74. Valid until annulled unless there has been a ratification
a. Rescissible contract c. Voidable contract

b. Inexistence contract d. None of the above
75. In three of following defective contracts, ratification cleanses the defects. Which is the
exception?
a. Both parties are incapable of giving consent

b. Sale of immovable property or interest orally entered into
c. Sale of piece of land thru an agent the authority is oral
d. Contracts entered into by a person who has been given no authority
76. Statement No. 1: A threat to enforce one’s claim through competent authority. If the
claim is just or legal, does not vitiate consent.
Statement No. 2: Contracts entered into during a lucid interval are valid. Contracts
agree to in a state of drunkenness or during a hypnotic spell are binding.

77. An incidental element of a contract
a. Implied warranty
b. Payment of investment in a loan
c. Delivery of the object in contract of pledge
d. All of the above
78. Statute of Frauds is applicable to

a. Partially executed contract
b. Oral contract of load when the amount involved is less than P500
c. Contract not be performed within a year from the making thereof
d. All of the above
79. Contract which has no effect at all and cannot be ratified is a/an:
a. Unenforceable contract c. Voidable

b. Void contract d. All of them
80. An obligation which cannot be enforced by court action, but which is binding on the
party
Who makes it in conscience and according to natural justice is called
a. Civil obligation c. pure obligation

b. Natural obligation d. Simple obligation
81. B called C by telephone to guaranty the debt of D to C. The contract between B and
C is:
a. Unenforceable c. Rescissible
b. Voidable d. None of them
82. Because of the intimidation employed by X, a third person, S sold his car to B. This
contract is:
b. Voidable d. Rescissible
83. Statement No. 1: If the cause is not stated in then contract, it is presumed that it is
unlawful.
Statement No. 2: the action for rescission is subsidiary ; it cannot be instituted
except when there is no other legal means to obtain reparation damages suffered.
a. Both are true c. No. 1 is ture; No. 2 is false

b. Both are false d. No 1 is false; No. 2 is true
84. S entered into a contract with B by threatening B that if B does not agree to make
the contract. S will publish defamatory matter concerning B’s wife.
a. The contract is valid because the defarmatory matter to be published does not
relate to B, the contracting party.
b. The contract is voidable because such publication when carried out,
whether true or not, will cause a serious harm to B and his wife.
c. The contract is unenforceable but B is entitled to damages the moment the
publication is made.
d. Contract is void.
85. Statement No.1: The interpretation of obscure words or stipulation in a contract shall
not favor the party who caused the obscurity.
Statement No. 2 : Gross inadequacy of the price does not affect the validity of
contracts unless it can be shown that there was fraud, force or violence, error or
mistake, undue influence, or threat or intimidation attending the execution thereof.

86. Which of the following can be considered as a feature of the void contract?
a. Subject to ratification
b. They exist
c. Action or defense for nullity is subject to prescription
d. None of them
87. L entered into a contract of lease with X. T, the clerk of L. typed the document. Due
to T’s negligence, the document made was that of sale instead of lease.
a. The remedy is annulment

b. Parties may go to court for interpretation
c. Parties may enforce their right because it is enforceable
88. These persons are bound by contracts:

a. Contracting Parties c. Heirs
b. Assigns or assign d. All of them
89. Who is liable for the loss of the subject matter by fortuitous event?
a. Creditor c. Both creditor and debtor

b. Debtor d. None of them
90. Contract that is made for a valuable consideration is:

a. Onerous c. Onerous and gratuitous
b. Gratuitous d. None of them
91. Contracts that cannot be sued upon unless ratified:
a. Voidable c. Rescissible
b. Unenforceable d. None of the above
92. Which of the following contracts is rescissible?
a. Those where one of the parties is incapable of giving consent to a contract.

b. Those where both parties are incapable of giving consent to a contract.
c. Those which are entered into by guardians whenever the wards whom they
represent suffer a lesion of more than ¼ of the value of the object of the contract.
d. Those which are absolutely simulated of fictitious.

Those which are entered into by guardians whenever the wards whom they
represent suffer a lesion of more than ¼ of the value of the object of the contract.
93. The stage of “conception” of a contract is:

a. When the contract is fully executed
b. When the parties come to an agreement
c. When negotiations are in progress
d. When there is a meeting of the parties’ minds
94. In a contract as written, D promises to pay C P10,000 on September 15, 2010. The
consideration received by D is not stated in the contract.
a. The contract is valid because the cause is always presumed to exist.

b. The contract is valid so long as it in writing.
c. The contract is valid because the cause is not stated.
95. S makes an offer to B on January 1, 2010. B makes known his acceptance in a letter
sent on January 2, and received by S on January 10, Meantime, on January 1, S
became insane.
a. The contract is voidable because on party is insane.

b. There is already a meeting is minds, the contract is perfected.
c. The contract is not binding because there is no meeting of minds.
96. In the preceding number, S is perfectly sane but only an unemancipated minor at the
time the acceptance is communicated to him.
a. There is no meeting of minds between the parties, unless ratified by the guardian
of S.
b. The contract is binding because the party is incapacitated.
c. The contract is binding between the parties.
97. Which of the following contracts is required to be writing to be enforceable?
a. An agreement that by its terms is not to be performed within a year from the
making thereof.
b. A special promise to answer for the debt, default or miscarriage of another.
c. An agreement made in consideration of marriage, other than a mutual promise to
marry.
d. Sales of goods, chattels or things in action at a price not less than P500.00.
98. Rescission of contract can take place in this case:
a. When the things which are the object the contract are legally in the possession of
third persons who acted in good faith.
b. When he who demands rescission can return whatever he may be obliged
to restore.
c. When the party seeking rescission can perform only as to part and rescind as to
remainder.
d. When the seller cannot return the installment paid to him by the buyer.
99. An agreement in restraint of trade.
a. Perfectly valid c. Unenforceable

b. Voidable d. Void
100. Example No. 1: The husband, by intimidation, was able to obtain the consent of
his wife, with regards to the sale of a piece of land belonging to his wife for P1
million. The contract is voidable because there was intimidation.
Example No. 2: In the above example, the right of the wife is to go to Court and
file an action for annulment within four (4) years from the time intimidation ceased.
a. Both are true
b. Both are false
101. Consent is manifested by the meeting to the offer and the acceptance upon the
thing and the cause which are to constitute the contract. Which of the following
constitutes a definite offer.
a. An offer made through an agent
b. Business advertisement of things for sale
c. Advertisement for bidders
d. All of the above
102, On July 15, 2010, X entered into a contract with Y. On February 10,2011, X
discovered that fraud was committed at the time he entered into the contract, a fraud
that vitiated his consent. The action for annulment shall be brought.
b. Within four years from February 10,2011
C. Within four years from the time A entered into the contract
d. On February 10, 2011
103. In an Invitation to bid”, B proposes the following: “I will buy the property for
P10,000. If the bid of any other offerors or bidders shall be considered the best terms of
amount and conditions, I am to equal that offer”.
a. The offer Is speculative, because it cannot be considered as against another offer

which is certain
b. The offer is considered a counter offer
c. This is a continuing offer which is very certain
d. The advertiser is not bound to accept the higher bidder

104. In the preceding question, which of the following statement is correct?
a. If there is no more offer made, the contract is perfected on the offer of B because he
will be considered as the highest bidder.
b. However, if another bidder, X, bidder P15,000, he will be considered as the highest

bidder and the contract is perfected.
c. In letter (b), if X increase his bid for P20,000, and no more bid equals his bid, the
contract is perfected for P20,000.
105. The following contracts should observe the Statute of Frauds, except
a. Guaranty
b. Lease of personal property longer than one year
c. Representation as to the credit of a third person
d. Lease of real property longer than one year
106. Which of the following is correct?
a. An action to enforce judicially a natural obligation prescribes in 4 years
b. An action for annulment of contract is imprescriptible
c. An action to declare a contract void is not subject to prescription
d. An action for rescission of contract prescribes in five (5) years counted from the
execution of the contract
107. B fraudulently induces S to sell to him (B) a masterpiece painting for P10,00OE
Subsequently B sold it to X for Pl 2,000, a good faith purchaser s is entitled
a. Rescind the Contract with B plus damages
b. Recover the Painting from X but no damages
c. Recover damages from B
d. Rescind the contract between B and X

108. This principle means that contracts take effect only the contracting parties, their
assigns or successors-in-interest
a. Relativity of contract c. Mutuality of contract
b. Obligatoriness of contract d. Freedom of contract
109. By this principle, the validity and efficacy of the contract cannot be left to the will of
one of the contracting parties.
a. Relativity of contract C. Mutuality of contract
b. Obligatoriness of contract d. Freedom of contract
110. S offers to sell his house to B for P100,000. B asks him if he would accept
P80,000. Which of the following is correct?
a. Because of ambiguity, both offers are terminated by operation of law.
b. B’s response is a counter-offer effectively terminating the P 10,000 offer and

instigating an offer for P80,000.
c. B’s response is a rejection of the P100,000 offer, and there is no offer for P80,000
because it is too indefinite to be an offer.
d. B’s response is an inquiry the p100,000 offer by S is still in force.
MULTIPLE
1. Three of the following are Conditional sales. Which is the exception?
a. Sale of expectancy
b. Sale with a right to repurchase
c. Sale of a vain hope
d. Sale subject to a Contingency
2. S sold to B orally a parcel of land for P200,000. Delivery was made of the land. The
payment of the price was to be made three months later. At the end of the three month
period,
a. B may refuse to pay claiming as his defense the Statute of Frauds.
b. B may return the parcel of land to S.
c. S can collect from B because the contract was already executed partially.
d. B may refuse to pay on the ground that there is no writ ten contract to support the
sale.
3. There is a contract of sale:
a. When goods are delivered to a distributor on consignment.
b. When the manufacturer delivers the goods to an agent where the former retains the
ownership and dictates the terms of the sale.
c. When goods are delivered to a person on charge account.
d. When goods are delivered to an agent to be sold by him and the agent is not liable to
the manufacturer of the goods.
4. Which of the following obligation5 of the Vendor cannot be waived.

a. To allow the buyer to examine the goods sold
b. To transfer ownership to the buyer.
c. To pay the expenses of the deed of sale.
d. To warrant the thing sold.
5. Mr. Renato Tala-od owns a mango tree bearing fruits, ready for harvest. He sells all
the fruits of that tree to Mr. Marcelo Abalos who pays Tala-od the sum of P5,000. Tala-
od tells Abalos that he can just harvest the fruits anytime he likes pointing at the
particular tree. For legal purposes, Talaod has fulfilled his obligation to deliver the
mango fruits to Abalos by
a. Traditio brevi manu C. traditio longa manu
b. Traditio simbolica d. Answer not given
6. The vendor
a. Is liable to the vendee for hidden fault or defect of the thing sold even if he is
not aware thereof.
b. Is not liable to the vendee for hidden fault or defect of the thing sold if he is not aware
thereof.
c. Is liable to the vendee for hidden fault or defect of the thing sold if he is not aware
thereof ¡f stipulated.
7. When it is stipulated that the repurchase of the propel1Y sold could be made at any
time, the repurchase shall exercised
a. Within four years from the date of the contract.
b. Within ten years from the date of the contract.
c. After ten years from the date of the contract.
d. None of them.
8. S offered for sale to B to Cavans of wagwag rice. B asks

S the price per cavan. S told B that the price per sack is
P5.00 over the price in Divisoria Market The price is
a. certain because ¡t has got reference to another thing which is certain
b. not certain parties w 1go to court,
c. not certain because the price at Divisoria Market is not stated
d none of the above.
9. S sells to B his 2010 Cougar car, and leaves to B to deter mine the price. B refuses to
fix the price but took the car for his price. Which of the following statements is correct?
a. No sale, because the price is not fixed by the parties.
b. There is a sale. B must pay a reasonable price
C. No sale until a third person fixes the price.
d. S may go to court and ask for damages.
10. S sold to B a specific piano. It was agreed that S would fix the price a week later. At
the appointed time. S named the price P6, 000. B agreed. Is the sale perfected?
a. No, because the price was left to the discretion of one of the contracting parties.
b. No, because at the time of sale the price was not fixed.
C Yes, because the price fixed by one of the parties was accepted by the other.
11 Three of the following are implied warranties in a contract of sale Which is the
exception?
a. Reasonably fit for the purpose they are acquired.
b. Right to sell the thing at the time the contract is perfected.
C. Merchantable ¡s quality.
d. Free from charges or encumbrances not declared or known to the buyer.
12. Connie transferred to Violeta a parcel of land for the price of P100, 000; P30,000 to
be paid in cash and for the difference, she will convey her Car worth P70,000. What
kind of contract is this?
a. Lease contract c. Obligation to sell
b. Contract of Sale d. Barter
13. The unpaid seller is not entitled to retain possession of the goods where
a. The goods have been sold without any stipulation as to credit.
b. The goods have been sold on credit, but the term of credit has expired.
c. The buyer is insolvent.
d. The possession of the seller on the goods is only as agent or bailee for the buyer.
14. The seller who executed a deed of sale in a public instru ment for the sale of
specific car transferred ownership to the buyer by
a. Symbolic delivery d. Quasi-tradition
b. Traditio brevi-manu e. None of the above c. Constitutum possessorium
15. X stole a fountain pen from “O” and sold it to a Bazaar who pays for it in good faith,
not knowing it was stolen. The Bazaar then sold it to B, a Student.
a. The Bazaar having bought it in good faith becomes the legal Owner and as such, he
can transfer ownership to B.
b. Ownership passed to B because he bought it in a merchant store.
c. O may recover the fountain pen from B without reimbursement because he is the
legal owner.
d. B cannot become the owner because X, the original seller, is not the owner.
16. In a contract of sale of a specific mare dated September 1, 2010, seller S is obliged
to deliver to the buyer the mare on October31, 2010. A week before the due date, the
mare gave birth to a colt. The colt belongs to:
a. Seller, because the sale is already perfected prior to its birth.
b. Seller, because there was no specific agreement that it shall belong to the buyer.
c. Buyer, because the fruit arose after the sale was perfected.
d. Buyer, if he pays the price in full.
17. Four of the following are kinds of constructive delivery. What is the exception?
a. Execution of a public instrument.
b. Quasi-tradition.
c. Actual delivery.
d. Need not be delivered because the buyer is already ¡n possession.
e. Symbol or token signifying delivery.
18. When goods are delivered to the buyer on “sale or return” for a period of 10 days,
ownership of the goods passes to the buyer.
a. On perfection of the contract.
b. On expiration of 10 days.
c. On delivery of the goods.
d. When the buyer signifies his acceptance to the seller.
19. S sold to B a specific refrigerator for a price of P10,000. It was stipulated in the
contract that B will pay only P6,000 and for the difference B will convey a specific
television valued a P4,000. What is the nature of the contract?
a. Barter
b. party sale and party barter
C. commodatum
d. Sale
20. On January 10, 2010, S sold a piece of land to B in a public instrument. On January
11, 2010, B paid for the price On January 12, 2010, B took possession of the land. On
January 13, 2010, B registered the public instrument under the circumstances given, B
became the owner on:
a. January 10, 2010 c. January 12, 2010
b. January 11, 2010 d. January 13, 2010
21. The Recto Law is applicable:

a. Sale of car on straight term.
b. Sale of hose on installment.
c. Sale of car on installment where the buyer constituted a mortgage on his truck.
22. Ownership of Incorporeal property, transferred to the buyer

a. Execution of the sale in a public instrument
b. Placing the titles of Ownership in the possession of the buyer.
c. Use of the buyer of his right, with the seller consent
d. All of the above
23. Consideration in sale:

Statement No. 1: If the price is grossly inadequate, the contract of sale affected. And if
the price is absolutely simulated, the contract is void
Statement No. 2: The fixing of the price can never be left the discretion of one of the
parties. However, it may be fixed by a third person.
a. Both are true c. No. 1 is true; No. 2 is false.
24. What mode of extinguishing a contract of sale is effected when a person is

subrogated upon the same term and condition stipulated in the contract in the place of
one who acquires a thing by onerous title?
a. Compensation c. Legal redemption
b. Conventional redemption d. None of the above
25. S sold to B a parcel of land for a lump sum of P50,000. The contract states that the
area is 500 square meters. Subsequently, it was ascertained that the area included
within the boundaries is really 550 square meters.
a. S is bound to deliver 500 square meters and B to pay P50,000.
b. S is bound to deliver 500 square meters and B to pay P55,000.
C. S or B can rescind the sale because there is no meeting of minds.
26. In the preceding question, if the land contains 445 square meters, which of the
a. S is bound to deliver 500 square meters and B to pay P50, 000.
b. S is bound to deliver 445 square meters and B to pay P44, 500.
c. B may rescind the sale because the lack in area is more than 1/10 of the total area.
27. If the price is uncertain

a. The transaction is void.
b. The price is to be fixed by the court.
c. The buyer must pay a reasonable price.
28. Present in every contract of sale:

a. implied warranty of fitness
b. Implied warranty of merchantability
c. Implied warranty against eviction
d. All of the above
29. A offered to sell his lot to B for P100,000. In his offer to sell. it was stated that B is
given 60 days to prepare the P100,000, and as soon as B is ready with the money, A
will execute a deed of sale. Before the end of 60 days. A informed B that the price of the
lot was increased to P120,000. May B compel A to accept P100,000 offered previously
by A and make him execute the deed of sale.
a. Yes, because A is already estopped bi his signed letter.
b. No, for B never signified his acceptance of A’s offer.
c. Yes because his acceptance of A’s offer, parties, there Was actual meeting of minds
of the
d. Answer not any of the above
30. In question No, 61, if S did not foreclose the mortgaged property and Instead, he
filed his action as an ordinary creditor, what would be your answer?
a. S can recover from B the balance of P2,000.
b. S can recover from B the balance of P2 ,000 if there is stipulation to that effect.
c. S can not recover the deficiency any more even if there is stipulation to that effect.
31. Three of the following are elements of the vendor’s right of stoppage in transitu.
a. The buyer must be insolvent.
b. The goods must be in transit
c. The seller must be unpaid.
d. The seller must be in possession of the goods.
32. A, B and C are co-owners of an undivided parcel of land. B sold his 1/3 interest to C
absolutely. Which is correct?
a. A may exercise his right of redemption on the interest sold by B to C.
b. A cannot exercise the right of redemption because the sale was made in favor
of a co-owner.
c. The sale made by B to C is void because it was not made in favor of a stranger
d. A may redeem only 1/2 of the interest sold by B to C.
33. P the owner of a piece of residential land, orally authorized A to sell the land for
P500.00 with 5% commission. Today, A sold the land to C. One day later. P sold the
same land to D. Assuming that both buyers are in good faith. Who is the lawful owner?
a. C, being the first buyer.
b. C, because A was given authority by P.
c. D, because the sale made by A to C ¡s only voidable.
d. D, because the sale between A and C is void.
D 34. Which statement is true?

a. In contract to sell, ownership is transferred to the buyer upon delivery.
b. In sale with a tight to repurchase, upon delivery the buyer ¡s the absolute owner.
c. Sale con pacto de retro is an example of sale subject to a suspensive condition.
d. When the vendor binds herself to pay the taxes on the thing sold”, it is
presumed that the transaction ¡s a mortgage and not governed by contract of
sale.
35. B went to a store and offered to buy a certain watch for 1, 000. S said that he is
willing to give it for P1, 200. B to go away because he did not want to pay the price to
him (B) and said he was willing to sell the watch for P1, 000. Is the contract perfected?
a. Yes because there was a meeting of minds between S and B
b. No, S made another offer not accepted by B.
c. Yes, because the consent was already manifested at time of the offer.
d. Yes, because B’s acceptance is not qualified.
36. In a contract of sale executed by S and B, it appears S sold his motor vehicle to B
and B bought it for P50 ,000. It turned out however1 that S has three motor vehicles:
Galant valued at P80,000; Hi-Ace van valued at P70,000; and a Jeep valued at
P60,000. Which of the following is correct?
a. The contract shall be reformed because there was mistake.
b. The parties can ask for interpretation because the word motor vehicle is ambigous.
c. The parties can ask for annulment of the contract
d. There is no contract, because the object is not certain
37. Which of the following cannot be the object of a contract of sale?

a. Hereditary right.
b. Sale of credit.
c. Young of animal not yet conceived at the time of perfection.
d. Land which the seller expects to
38. Bidders in sale:

Statement No. 1: Invitation to bid are not definite offers the advertiser is not bound to
accept the highest or lowest bidder. Statement No. 2: By-bidders are persons bidding is
an auction sale in behalf of the seller: the purpose the price by fictitious id
a. Both are true. C. No. 1 is true; No.2 is false
b. Both are false. d. No .1 is false; No.2 is True
39. In distinguishing Earnest Money from Option Money, Earnest Money is:
a. Given when there is no contract of sale.
b. Given only when there is a perfected contract of sale.
c. Given to bind the offeror in a unilateral promise to sell or buy.
d. Given as a separate consideration from the purchase price.
40. Statement No, 1: In sale for a lump sum price (LSP), the vendee may ask for
reduction in the price, if the vendor cannot deliver all what is stated in the boundaries.
Statement No. 2.: There ¡s an implied warranty ¡n contracts of sale that the vendor must
have a right to sell at the time the contract is perfected.
a. Both are true.
b. Both are false.
c. No. 1 ¡s true; No. 2 is false.
d. no.1 is false; No.2 is true.
41. X, after the death of his father, sold his inheritance though amount has not yet been
determined to B, for a consideration of P50, 000. The contract is valid only if the
inheritance values least equal to or more than P50, 000.
a. the contract is valid only if the inheritance values at least equal to or more than
P50,000
b. the contract is rescissible
c. the contract is valid even though nothing remains of the inheritance to be turned over
to B.
42. S 16 years old, Sold to B. of legal age, a specific diamond ring for P10, 000. Later, B
sold it to X. Which of the following statements is incorrect?
a. S has got a voidable title because at the time of sale he is a minor.
b. X, if in good faith, shall become the owner upon delivery to him.
c. X, if in bad faith, shall also be the owner, except that his title ¡s voidable.
43. S sold residential land to B. B paid the consideration, When B wanted to register the
sale at the Register of Deeds, the latter refused to register it and required the
presentation of’ the certificate of capital gains tax payment. What can B do?
a. B may sue S to refund the consideration paid by B under the maxim, “no one shall
enrich himself at the expense of another.”
b. B cannot compel S to return the selling price because the contract is not enforceable.
c. B may possess the residential land as a buyer in good faith.
d. B may compel S to pay the capital gains tax and secure the certificate of capital
gains tax payment.
44. Quasi-tradition is equivalent to

a. Longa manu
b. Execution of a public instrument
c. Symbolical delivery
d. Brevi-manu
e. All of the above

a In Contract to sell, Ownership Is not transferred to the buyer upon delivery
b. Stoppage If transitu can be exercised by the unpaid seller if the buyer IS
insolvent and the vendor has not yet parted with the thing sold.
c. The price is considered certain if it is in reference to another thing certain.
d. Dock warrant is an example of a negotiable document of title.
50. Ownership of the thing sold
a. is transferred to the buyer upon actual delivery.

b. Is acquired by the buyer upon the perfection of the contract.
c. Is transferred to the buyer upon constructive or actual delivery of the thing.
d. Is retained by the seller in 1sale or return’.
51. Three of the following must be given by the seller to the buyer if redemption is to be
made. Which is the exception?
a. Expenses of the contract.
b. Price of the sale.
c. Necessary expenses of the thing sold.
d. Interest on the price of the sale.
52. Sale is distinguished from dation in payment, in that in sale,
a. There is a pie-existing obligation or credit.

b. The cause is the price.
C. It is a mode of extinguishing an obligation in the form of
payment.
53. Mr. Fernan orders for his workers, 1,000 pieces of T-shirts ranging in size from
small to large from the Lapulapu Garments mMfg. Corporation. The specified sizes,
although not
then available, are manufactured by said corporation and consigned to its sales outlets
regularly The contract entered into by Mr. Fernan with Lapulapu Garments Mfg.
Corporation is
a. Contract for a piece of work.

b. Contract subject to a resolutory Condition.
c. A contract of sale.
54. S sold to B a specific car for P100,000 payable in five (5) equal installments. B
mortgaged the car to C to answer the unpaid installment. First and second installments
B failed to pay. The right of S is:
a. Exact fulfillment of the obligation.
b. Cancel the sale.
c. Demand payment from B.
55. S sold to B a specific “fighting cock” by pointing it to B. What kind of delivery is

effected?
a. Brevi manu c. Constitutum possessorium
b. Quasi tradition d. None of the above
56. A sold to B the former’s horse for P5,000. No date is fixed by the parties for the
performance of their respective obligations. The obligation of A is
a. To deliver the horse immediately as there is a perfected contract.
b. To deliver the horse Upon payment by B of P5,000.
c. To deliever the horse within a reasonable time of two months from the contract date.
d. To rescind the contract as there is no time fixed for the delivery and payment.
57. D owes C P10,000 payable on December 25, 2010, and as a security D mortgaged
car to C, On December 25, 2010, D failed to pay his obligation. C foreclosed to
mortgaged car and was sold at public auction for a price of P12,000.
a. D can recover from C the excess of P2,000.
b. D cannot recover from C the P2,000.
c. D can recover from C the P2,000 if there is stipulation.
58. S sold to B a specific car for P20,000 payable in four equal installments. S delivered
the car to B to mortgage it back to S to answer for the unpaid installments. B paid the 1 st
installment, but the last three he failed to pay. S foreclosed the mortgage property and
sold it to public auction for P13,000.
a. S can recover from B the balance of P2,000.
b. S can recover from B the balance of P2,000, if there is stipulation to that effect.
c, S cannot recover the deficiency any more even if there is stipulation to that
effect.
59. On June 10, 2010, S sold to B a specific car which S acquired from a friend last
June 1, 2010. On August 10, 2010, the car was totally destroyed which was traced to a
crack in the engine block. S was not aware of the defect. Is S, the seller, liable to B?
a. No, because S was innocent and a seller in good faith.
b. No. because S has all the opportunity to examine the car before buying it,
c. Yes. S is liable to return the price and expenses by B
d. Yes. S is liable to return the price expenses and damages actually suffered by B.
60. The following are the alternative remedies, except one available to the buyer, in
case of breach of warranty by the seller:
a. Keep the goods and ask for damages.
b. Refuse to accept the goods and ask for damages.
c. Rescind the sale and retain the goods.
d. Keep the goods and setup against the seller by way of recoupment in price.
61. B bought a refrigerator on installment from S and to secure his indebtedness, B

executed a chattel mortgage on the refrigerator in favor of S. Upon default by B
on his two (2) payments, the refrigerator was foreclosed and sold for P8,000
which was less than the balance of P10.000 due to S. How much can still collect
from B?
a. P2,000 c. P10,000
b. 8,000 d. Nothing
62 Statement No 1: Where an unpaid seller has made part delivery of the goods, he
may exercise his right of lien on the remainder unless such part delivery h. s
been made under such circumstances as to show intent to waive the lien or right
of retention.
Statement No.2: In Contract to sell, ownership passes to the buyer upon actual or
constructive delivery.
a. Both are true c. No. 1 is true, No.2 is false,
b. Both are false. d. No.2 s false, No.2 is true.
63. S entered into a Contract with B whereby S sold his land orally to B. The land has
been delivered and the money has been paid. Is the oral sale of the land valid?
a. The contract is not valid because it is not in writing as required by the Statute of
Frauds.
b. The contract is not valid because the contract is not made in public instrument.
c. The contract is Unenforceable
d. The contract is valid because the contract is already perfected and executed.
64. Statement No. 1: The sale of a mere hope ort expectancy is conditioned that the
thing will come into existence.
Statement No. 2: The vendor need not be the owner at the time the sale is perfected. It
is sufficient that he is the owner at the time the thing sold is delivered.
a. Both are true c. No. I is true; No.2 is false.
b. Both are false. d. No. 1 is false; No. is true.
65. Statement No. 1: If the consideration of the contract consists partly in money arid
partly in another thing, and the intention of the parties is not clear, it shall be considered
a barter if the value of the thing given as a part of the consideration exceeds the amount
of the money or its equivalent.
Statement No.2: Emptio rei spate is the sale of thing. Which is expected to come into
existence, the quality and quantity of which are unknown.
a. Both are true c. No.1 is true; No.2 is false.
b. Both are false. d. No.1 is false; No.2 is true
66. Statement No.1: The ownership in the thing shall not pass to the purchaser until he
has fully paid the price.
Statement No.2: If at time the contract of the sale is perfected, the thing which is the
object of the contract has been partially lost, the contract shall be without effect.
a. Both are true c. No.1 is true; No.2 is false.
b. Both are false. d. No.1 is false; No.2 is true
67. Statement No.1: Sale is a consensual contract, therefore delivery or payment is not
essential for perfection.
Statement No.2: The vendor is responsible to the vendee for any hidden faults or
defects in the thing sold only if he was aware thereof.
a Both are true. c. No. 1 is true; No. 2 isfalse.
b. Both are false. d. No. 1 is false; No.2 is true.
68. Where it is stipulated that the repurchase of the property sold could be made at any
time, the repurchase shall be exercised
a. Within four years from the date of the contract.
b. Within ten years from the date of the contract.
c. After ten years from the date of the contract.
d. None of them.
69. B imports electric fans from China and specifically asks for 220 Volts fans. The fans
arrived duty labeled 220 volts and sells them to the public as as such. Later, it turned
out that the fans has been mislabeled by the manufacturer and were only good for 110
volts.
a. B is liable to the vendee for any hidden defects in the thing sold, even
though he was not ware thereof.
b. B Is not liable because he was in good faith, and this is shown by specifically
asking for 220 volts.
c. B is not liable under the principle of “let the buyer beware”.
d. B is liable because the vendee did not enjoy legal and
peaceful possession of the object of sale.
72. Statement No.1: Sale of future inheritance is void: the sale of hereditary right is
valid, the seller is liable character as an heir.
Statement No. 2: In contract to sell, delivery to the buyer will not make him the owner
until the price of the sale is totally paid.
a. Both are true. c. No. 1 ¡s true; No. 2 is false.
b. Both are false. d. No. 1 is false; No.2 ¡s true
73. G , guardian of W, sold W’s house and lot worth P480,000 for P240,000.
a. The contract can be rescinded because of inadequacy of price.
b. The contract cannot be rescinded because there is no fraud, mistake or undue
influence.
c. The contract cannot be rescinded because all the essential elements of the contract
are present.
d. The contract cannot be rescinded but can be annulled on the ground of minorit1 of
the ward (W).
74. S offers to B 100 radio sets for P50,000 payable in 30 days with 10% interest per
annum. B cables S to advise that he accepts provided the interest is reduced to 5%. If S
and B are both merchants and there is no further communication between them relating
to the terms, then
a. B has made a Counter offer.
b. The contract is formed incorporating only the terms of S.
c. The contract ¡s perfected with B’s reduced interest rate becoming part of the
agreement
75. X Shoe Store, Inc. entered into separate Contracts with two movie stars, Bi and B2.
With Bi, the agreement was that the shoe Store shall deliver at a specified date for a
price of P1 ,000 a pair of shoes of a specified brand which the store had been
manufacturing for the general public but which at the time of the Contract had already
been sold out, and with B2, the agreement was that the store shall deliver at a specified
date for a price of P2,000 a pair of shoes to be made especially for him, in accordance
with a design submitted by him. What is the nature of these two contracts?
a. Contract of piece of work c. Agency to sell
b. Sale d. Combination of A and B
76. In three of the following, there is no warranty against hid den defects of animals.
a. Animals sold at fairs.
b. Livestock sold as condemned, declared known to the buyer.
c. Animals sold at public auction.
77. In three of the following, the sale is void. Which is the exception?
a. Sale of animals suffering from contagious diseases.
b. Sale of Animals ¡f the use or service for which they are acquired has been stated ¡n
the contract and they are found to be unfit therefore.
c. Sale of a vain hope or expectancy.
d. Sale of hereditary rights.
78 Delivery of movable may be made by the keys of the place or depository where
movables are kept or stored. This kind of delivery is called:
a. Traditio longa manu
b. Traditio brevi manu
c. Traditio clavium
d. Traditio constitum possessorium
79. If immovable property should have been sold to different vendees, the ownership
shall be transferred to the person
a. Who have first taken possession in good faith.
b. Who presents the oldest title in good faith.
c. Who in good faith recorded it in the Registry of Property
d. Who have paid in good faith the purchase price in full.
80. In the preceding question, if movable property, it shall be long to the person
a. Who have paid in good faith the purchase price in full.
b. Who in good faith first recorded it in the Registry of Property.
c. Presents the oldest title in good faith.
d. Who have first taken possession in good faith.
81. Which of the statements is not true?

a. In sale or return, ownership is transferred to the upon delivery.
b. Warranty against hidden defects is an accidental of a Contract of sale.
c. In sale the obligation of the buyer is not only the payment of the price.
d. In dacion en Pago, an ObIÍg3tion Is extinguished while
in contract of sale, Obligation arise.
82. A borrowed from B P200, 000 To secure payment of the loan, A mortgaged his
house and lot to B. The mortgage is duly recorded. Then, Without the Consent of B, A
sold and delivered the house and lot to C and C took possession of the house and lot.
a. The sale to C ¡s void.
b. A cannot transfer ownership to C because did not give his consent to the sale.
c. A is liable to B for damages.
d. Ownership is transferred to C subject to the right of mortgagee B.
83. Statement No. 1: Where the seller of goods has a void able title there to but his title
has not been avoided at the time of the sale, the buyer acquires a title to the goods
whether or not the acquisition is in good faith.
Statement No. 2: If several persons, jointly and in the same contract, should sell an
undivided immovable with a right of repurchase, none of them may exercise this right for
more than his respective share.
a. Both are true. C. No. 1 is true; No.2 is false.
84. B wrote S, his sister, to sell his parcel of land. The land was purchased by X, but S
did not forward the money to B. Now, B wants to recover the parcel of land.
a. B cannot recover because the sale is valid.
b. B can recover because the sale between S and X is void, therefore there is no sale.
C. B can recover only ¡f B can return the money paid by X to S.
85. S sold a car for P3OOE000 to B. Unknown to B, the Car then had a cracked engine
block, the replacement of which would cost P75,000. Despite his knowledge of this
defect, s o tamed a waiver from B of the latter’s right under the Warranty against hidden
defects. Subsequently, the car was wrecked due to the recklessness of B who only then
discovered the defects. Which of the following statements is true?
a. S still liable to reimburse B of P75, 000, the difference between the purchase
price and the true value.
b. The waiver is void because B has no knowledge of the defect.
c. S is not liable anymore because the car got loss due to the recklessness of B.
d. The liability of S remains to be P300, 000 because of breach of warranty against
hidden defect.
86. S agreed to sell B 100 cases of napkins with the name of B’s restaurant on the
napkins, in the enforceable contract, it was specified that delivery will take place on April
15, 2010 which is one (1) month after Sand B signed the contract. B wanted the napkins
by April 15 because the grand opening of the restaurant was scheduled for April 17. On
April II, S tells B that he has too many orders and will not be able to deliver the napkins.
What options does B have?
I. Treat it as a present breach of Contract and cancel the contract.
II. Wait for a reasonable time to see if S will deliver.
Ill. Ask a third person to perform the obligation at the expense of S but no damages.
a. I only. C. Either I or II
b. II only. d. Either I or II or III
87. R brought her diamond ring to a jewelry shop for cleaning. The jewelry shop
undertook to return the ring by February 1, 2010. When the said date arrived, the
jewelry shop in formed R that the job was not yet finished. They asked her to return five
days after, On February6, 2010, R went to the shop to claim the ring, but she was
informed that the same was stolen by a thief who entered the shop the night
Statement No. 1: The jewelry shop is not liable because the lost of the ring is due to
force majuere. The right of R is to proceed against T, the theft.
Statement No. 2: The right of R is to proceed against the jewelry shop owner and ask
for the value of the ring plus damages because there was breach of contract. The shop
cannot escape liability because there was delay.
a. Both are true. C. Statement 1 s true; No.2 is false.
b. Both are false. d. Statement 1 is false; No.2 is true.
MULTIPLE CHOICE
1. It is a contract wherein a person binds himself to render special service or to do

something in behalf of another with consent of the latter.
a. Contract of piece of work
b. Contract of service
c. Contract of agency
d. Contract of exchange
2. If P leads X to believe that A is his (P’s) agent, as a matter of fact such is not true,
and A acts on such misrepresentation, there is
a. An implied agency
b. An agency by estoppel
c. An agency by necessity
d. An express agency by words spoken
3. M Company wrote a circular letter to its customers introducing a certain A as its duly
authorized agent. X, a customer, dealt or transacted business with A. Later, A’s
authority was revoked and was published in a newspaper of general circulation.
Notwithstanding his knowledge of such revocation, X continues to transact business
with M Company thru A. Is M Company still liable for the agent act even after
revocation?
a. Yes, because the revocation was not given in the same way the power was granted.
b. No more, because the third person (X) is in bad faith.
C. No more, because the transaction that will be entered after revocation will be void.
d. Answer not give
4. Today, P appointed Al his agent covered by general to lease his car to X for 6
months. The next day, P an A2 with special power to lease the same car to X b months.
On the third day, P directly transacted bus with X leasing the car for 2 months. What is
the effect agency between the parties?
a. The appointment of Al remains to be valid because has got a prior date.
b. The appointment of A2 is still in full force and effect because it is covered by a special
power.
c. The agency of Al and A2 are considered revoked because the principal direct
transacted with X.
5. A passenger bus while in motion collided with another bus X, the conductor of the
bus was injured. D, the although not authorized, engaged the services of a physician in
the name of the company. In here, there is an
a. Implied agency c. Agency by necessity
b. Agency by estoppel d. None of the above
6. Agency ¡s extinguished by any of the following causes

EXCEPT
a. By its revocation
b. By the withdrawal of the agent
c. By the death of the agent or of the principal
7. The principal ¡s not liable for the expenses incurred by agent—

a. If the agent acted in contravention of the instruction.
b. Expenses were due to the fault of the agent.
c. Agent incurred them knowing that an unfavorable result would ensure1 and the
principal was not aware thereof.
d. All of the above
8. A appoints B as his agent to sell his land, which of the following is valid?
a. The authority of B is in writing but B mortgages it also in writing.
b. The authority of B from A is by way of letter and B sells the land to C in writing.
c. The authority of B is oral and B soils the land to C for P50,000 in a written Contract of
sale.
d. The authority of B is in writing but the sale of the land in writing was made beyond the
period expressly set forth by A.
9. A was retained, in writing, to act as P’s agent for the sale of
P’s memorabilia collection. Which of the following statements is correct?
I. To be an agent, A must be at least 10 years of age.
Il. P would be liable to A if the collection was destroyed before A found a purchaser.
a. l only d. Neither I nor II
b. Il only c. Both I and II
10. Statement 1: If the agent dies, the heirs must notify the principal immediately, and
must continue the objective of the agency until it is accomplished or until the principal
appoints a new agent.
Statement 2: If the agent is prohibited from appointing sub-agent, any act executed by
the latter is unenforceable on the part of the principal.
a. Both are true C. No. 1 is true; No. 2 is false
b. Both are false d. No. 1 is false; No. 2 is tr
11. Statement 1: If the agent ¡s incapacitated, the contract between him and the third
person is binding against the principal, provided the principal is capacitated.
Statement 2: In agency, there is fiduciary relation between two persons because it is
based on outmost trust and Confidence.
12. A foreign manufacturer of computers and a Philippine distributor entered into a

contract where the distributor agreed to order 1,000 units of the manufacturer’s
computers every month and to resell them in the Philippines at the manufacturer’s
suggested prices plus 10%. All unsold units at the end of the year shall be bought back
by the manufacturer at the same price they were ordered. The manufacturer shall hold
the distributor free from any claim for defects in the units. What agreement did the
parties entered into?
a. Contract of Sale because the distributor has a right to resell them.
b. Sale with a right to repurchase, because the manufacture may buy back the unsold
units at the end of the year.
c. Contract of sale, because the warranty for defects borne by the seller manufacturer.
d. Agency to sell because there is no intention to transfer Ownership to the
buyer.
13. Statement 1: The agency shall remain in full force and effect even after the death of
principal, if it has been constituted in the common interest of the latter of the agent, or in
the interest of a third person who has accepted the stipulation in his favor.
Statement 2: If sub the thing pledge is sequent to the perfection of the pledge there is a
prima fad the Possession of the pledged or owner e presumption that the same has
been returned by the pledgee, extinguishing the contract of pledge.
a. Both are true C. No. I is true; No. 2 is false.
14. P wrote a letter authorizing A to sell his parcel of land situated in Quezon. The land
was purchased by X, but the agent (A) did not give the money to P, the sale of A to X is:
a. Void because the authority of A is not in a public instrument.
b. Unenforceable because the authority of A is not in a public instrument.
c. Inexistent because the authority of A is in a private writing.
d. Valid and enforceable.
15. Statement 1: Should the commission agent receive on a sale, ¡n addition to the
ordinary commission, another called a guarantee commission, he shall bear the risks of
collection and shall pay the principal the proceeds of the sale on the same terms agreed
upon with the purchaser.
Statement 2: The responsibility of two or more agents even though they have been
appointed simultaneously is not solidary, if solidarity has not been expressly stipulated.
If solidarity has been agreed upon, each of the agents responsible for the non-fulfillment
of the agency, and for the fault or negligence of his fellow agents, except in the latter
case when the fellow agents acted beyond the scope of their authority
a. Both are true c. No. I is true; No.2 is false
16. Statement 1: Every agents bound to render an account of his transactions and to
deliver to the principal whatever he may have received by virtue of the agency, even
though it may not be owning to the principal. Every stipulation exempting the agent from
the obligation to render an account shall be void.
Statement 2: An agency couched in general terms comprises only act of administration,
even if the principal should state that he withholds no power or that the agent may
execute such acts as he may consider appropriate, or even though the agency should
authorize a general and unlimited management.
a. Both are true c. No. 1 is true; No.2 ¡s false
17. The principal ¡s not liable for expenses incurred by the agent —
a. When the agent has complied with his obligations by acting according to the principal
instructions.
b. When it was stipulated that the agent would only be allowed a certain sum.
c. When the expenses were incurred without the fault of the agent.
d. When the agent incurred them with knowledge that an unfavorable result would
ensue and the principal was aware of it.
18. P sent a telegram to his uncle A to sell his specific parcel of land located in Quezon
for P400,000. A. in carrying out his authority to sell, looked for a buyer and orally sold
the land to X, his best friend of ten (10) years in straight-term for P500,000 with
P400,000 down payment and the balance payable one month after delivery with a
specific promise that the Deed of Absolute Sale shall be executed upon complete
payment of the purchase price. As soon as he got the down payment, A fled without
giving the giving the money to P and reneging on his promise to X. X is in a position to
deliver the balance of P100,00000. Given this scenario, which statement is incorrect?
a. The sale between A and X is valid.

b. The sale between A and X is unenforceable
c. X can validly sue P to enforce the sale.
19, Which of the following transactions involving the properties of the principal is valid if
made by an agent even if the agent’s authority is not in writing?
a. P authorizing his agent to sell Ps leasehold ri1ht in the land owned by X:

b. P authorizing his agent to sell his house located in the land belonging to X:
C. P authorizing his agent to assign P’s real estate mortgage right constituted over the
land belonging to X:
d. P authorizing his agent to sell his specific house and lot.
20. A instructed his agent A to immediately charter a small pump boat that would
transport the formers (P’s) 500 pieces of clay pots from Masbate to Sorsogon and sell
all of them for
P25 per pot at p15/pot profit. However PAGASA issued a typhoon bulletin preventing all
small sea vessels from sailing across the stormy waters of the Visayas and Bicol
regions.
A decided that it would be to transport the products after one week. Meanwhile, prices
of clay pots dipped to P15 per pot causing reducing profits on the part of P.
Premises considered:
a. A is not liable to P for the unrealized profits as he was not Supposed to execute
the agency as it would have resulted to injury, losses or damages to the principal.
b. A is liable to P for the entire unrealized profits as consequence of his failure to follow
and execute the instruction of P
c. A is liable to P only for the difference between the expected and realized profit;
d. A is liable to P but the liability is tempered or limited as he could not execute the
agency by reason of fortuitous event beyond his control.
21. Which of the following statements concerning agency law is (are) true?
I. A contract is needed to have an agency relationship

II. The agent owes a fiduciary duty to the principal.
III. The principle owes a fiduciary duty to the agent.
a. I and II only c. II only
b. land Ill only d. l , ll and Ill
22. Statement No.1: Authority refers to the orders given by the principal to his agent in
relation to the business of the agency; while instructions relate to the transaction that
the agent is commissioned to act.
Statement No.2: Authority of the agent may be investigated or inquired into by third
persons dealing with the agent, while instructions of the agent need not be determined
by third persons.

c. 1 S statement is true while 2 statement is false.
d. 1 statement is false while 2 statement is true.
23. P after becoming an American citizen, came back to the Philippines to visit and be
with his ailing mother in Leyte. X a former neighbor and classmate in high school
approached P and offered to sell his house and lot fronting a beach for nearly half the
market value of the property that is for P1 Million, P nearing his retirement age, left the
Philippines after appointing his brother A as his attorney-in-fact for the purpose of
buying the said property for such price as offered by X. Said appointment was through
an unnotarized special power of attorney (SPA). Y, the only child and heir of X, was
very much opposed to the sale as he wanted to sell the property Tar P2.4 Million,
therefore, a lesion of more than ¼ of the value of the property. He refuses to surrender
the transfer Certificate of Title (TCT) to the property which is presently in his possess
on. What is the status of the sale between X and A acting for P?
a. Voidable because P is incapacitated because he is an alien while X is legally

capacitated to sell the property .
b. Void because the agent is being made to perform an act that the principal is,
under the law. Prohibited performing by himself.
c. Unenforceable because the SPA was not notarized, thus not binding on Y who is the
possessor of the title to the property.
d. rescissible because seller suffered a lesion of more than 1/4 of the value of the
property
24. If the agent appoints a substitute against the expressed will of the principal, and the
sub-agent enters into a contract with third persons, which is correct?
a. The agent is not liable at all for the acts of the sub-agent with respect to third persons
who may suffer damages.
b. The acts of the sub-agent are without legal effect as far as the principal is
concerned, hence, considered void or inexistent.
c. The appointment is valid but the agent is liable for acts of the sub-agent only if the
principal suffers damages.
d. The appointment is valid but the agent is liable only if the sub-agent is notoriously
incompetent or insolvent.
25. Three of the following requires a special power of attorney.

a. Accept inheritance.
b. To waive obligation gratuitously.
c. To bind the principal in a contract of partnership.
26. P appointed A as his agent to borrow P10,000 from C. A borrowed P10,000 but
acted in his name. Upon maturity, who is liable?
a. A only c. Both A and P

b. P only d. Contract is void
27. A guarantee commission agent —
a. Bears the risk of collection on the same terms agreed upon with the purchaser.
b. Is liable to the principal even if the buyer is really insolvent.
c. Is liable for damages if he will not collect the credit n time.
d. Is entitled to another commission aside from ordinary commission.
28. An agent without any express authority from the principal appointed a sub-agent to
help him carry out the agency.
a. The substitution is void.

b. The substitution is valid but the agent is the only one liable for the acts of the sub-
agent
c. Both the agent and the sub-agent are liable to the principal for the acts of the
sub-agent under the valid substitution.
d. The substitution is valid but the substitute is the only one liable for his own acts.
29. In three of the following, a special power of attorney is required. Which one is
considered the exception?
a. To obligate the principal as guarantor.

b. To effect novations which put an end to obligation already contracted before the
agency.
c. To borrow money not necessary for the preservation of the property under
administration.
d. To lease real property to another person for one year.
30. Three of the following are modes of extinguishing an agency. Which is the
exception?
a. Insanity of the principle or agent.

b. Death of the principal but the agency is for the interest of the principal and
agent.
C. Accomplishment of agency.
d. Dissolution of the firm or corporation which entrusted or accepted the agency.
31. Agency may be created by:
a. Appointment d. Necessity
b. Ratification e. All of the above
c. Estoppel
32. P delivered to A 10,000 pieces of Cebu fabricated shell craft jewelry for the purpose
of selling them at P1.00 each. Out of the proceeds of the expected sale, A is to receive
a
10% commission. After 3 days, however, A sold all the items at P1.50 each to B. hut on
30-day credit. Under the situation:
a. A must pay P 10,000 immediately.

b. A cannot be compelled to pay at all.
c. A must pay P15,000 immediately.
d. A must pay P5,000 immediately and P10,000 after 60 days.’
e. A must pay P10,000 after collection from B.
33. Without P’s authority, S sold P’s car to B in P’s behalf.
a. The transaction entered by S is unauthorized therefore unenforceable.

b. The right of B is only against S as a rule,
c. The contract can be ratified, hence it is considered as a validable contract.
d. All of the above
34. The agent has no implied authority in three of the following. Which is the exception?
a. lf he is authorized to collect a debt from a debtor

b. If he is authorized to collect a debt, he is not authorized to receive partial payment.
c. But he has got implied authority to endorse the check he received as partial payment.
35. An agent with general power of administration given to him by the principal in
writing, desirous of improving the financial condition of his principal, sold two parcels of
rice fields, one for less than the price appearing in the inventory prepared by the
principal, and the Other for double the price that appeared in the said Inventory .
a. The sale for double the price appearing in the inventory is binding upon the principal
b. The two contracts cannot be enforced against the principal.
c. The sale for less than the price appearing in the inventory is binding upon the
principal
d. Both contracts are binding upon the principal.
36. Which of the following statements is true?
a. If a principal appoints an agent in writing with respect to the sale of a piece of land
and the latter sold it to a buyer orally the contract between the agent and the buyer is
void.
b. A contract of agency is generally gratuitous.
c. To lease personal property to another person for more than one year does not
require a special power of attorney.
d The insolvency of the principal but not the agent shall extinguish the agency.
37. If an agent contract, the name of his principals exceeding the scope of his authority1
what would be the status and effect of the contract?
a. Unenforceable
b. Void
C. Voidable
d. Valid
38. A commission agent:
a. Has the option to act in his own name.

b. Generally, cannot sell on credit
c. May be an agente del creditor if he receives guaranty commission.
39. In agency, the agent represents:
a. A person who is capacitated.

b. A person who is incapacitated.
c. Heirs and creditors of the estate of the debtor.
d. Judicial court.
40. Without P’s authority, A (agent), sold P’s car to X in P’s behalf. The contract is:
a. Unauthorized C. Subject to ratification
b. Unenforceable d. All of the above
41. A special power to sell includes the power to —
a. Mortgage C. Sell on credit

b. Barter d. None of the above
42. Bears risk of collecting from the buyer the price of the sale —
a. Commission agent
b. Delegacion
c. Quasi-traditio
d. Agente del credere
43. P appointed A as his agent to sell his specific car in cash for P10,000 with S
commission. A using persuasive skills Was able to sell it for P15,000 on credit. After the
sale but Before payment of the buyer
a. A must give P10 000 only.

b. A must give P 10:000 minus the commission
c. A must give P15,000 minus the commission.
d. A must give P15,000 and in turn is to give A P5,000 as commission
44. P appointed A to sell the former’s car for P200.000. A sold the car to X for P200.000
but A acted in her own name. After delivery X inspected the car and she found hidden
defects in the car. Can X file an action against P even when A acted in her own name?
a, No, under ‘’caveat emptor” let the buyer beware

b. Yes, because this is a contract involving property belonging to the principal.
c. No, because A acted in her own name not of the principal.
d. No, because the contract of sale is already perfected.
45. P appointed A as his agent orally to sell his parcel of land for P10,000. Five days
after, A sold to B the parcel of land for P8,000 by means of public instrument executed
between
A and B. What is the effect and the status of sale between A and B?
a. The sale is valid because it was executed in a public instrument.

b. The sale s unenforceable because the agent acted beyond the scope of his authority
for selling the land for less than the price instructed. Appointment of the agent
C. The sale is void because the app is oral.
d. The sale be ratified although the appointment of A is oral, because the sale by A to B
is in a public instrument.
46. A appoints B to sell his land.
Query # 1: If the authority of B is oral and B sells the land in writing. The sale is valid.
Query#2: If the authority of B is in writing and B sells the land orally. The sale is valid.
Which of the following is correct?
a. First example is false but the second example is true,

b. Both examples are true.
c. Both examples are false.
d. First example is true but the second example is false.
47. Considered “mere acts of administration”, which an agent is authorized to do if given

an agency couched in “general term”. Which is the exception?
a. To sue for the collection of debts and to engage services of a counsel to preserve the
ownership and possession of the principal’s property.
b. To give customary gifts for charity or to employees in the business managed by the
agent.
c. Unregistered lease of real property to another person for one year.
d. None of the above,
48. An implied agency may be created by —
a. Ratification
b. Lack of action by the principal
c. Silence of the principal
d. All of the above
EXERCISES IN PLEDGE AND MORTGAGES

INCLUDING PAST CPA EXAMINATION QUESTIONS
MULTIPLE CHOICE
1. In real estate mortgage, the mortgagor can sell the mortgaged property:
a. With the consent of the mortgagee in writing.
b. Even without the consent of the mortgagee.
c. Only with the consent of the mortgagee in writing or orally.
2. Real mortgage —
a. May guarantee future debts.
b. Objects is immovable property.
c. Is a accessory contract.
3. Real property mortgaged —

a. Generally, is not possessed by the creditor.
b. Cannot be acquired by the creditor, even if he is in possession for 30 years by
prescription.
c. Mortgagee cannot appropriate the property for himself, even if stipulated.
4. Effect f sale on the thing pledged if it is less than the principal obligation
a. Creditor cannot recover the deficiency
b. Creditor can recover the deficiency
c. Creditor cannot recover the deficiency even if there is stipulation. . . .
d. Creditor can recover the deficiency if there is stipUlatb01.
5. In question No. 4, if the sale is in excess of the principal obligation:

a. D cannot recover the excess.
b. D cannot recover the excess even if stipulated.
c. D can recover the excess. .
6. Real estate mortgage —

a. Has for its object movables as well as immovables.
b. Is perfected the moment the contract is registered with the Registry of Property.
c. Is inseparable because the mortgage directly and immediately subjects the
property upon which it is imposed, whoever the possessor may be, to the
fulfillment of the obligation for whose security it was constituted.
d. Entitles the mortgagee to the fruits of the thing mort gaged.
7. Which of the following statements is true and correct?

a. Pledge and mortgage are accessory contracts because they cannot exist by
themselves.
b. In both pledge and mortgage, the creditor is entitled to deficiency judgment.
c. Where an obligation is secured by a pledge or mortgage and it is not paid when due,
the pledgee or mortgagee may appropriate the thing pledged or mortgaged if there is an
agreement to that effect between the parties.
d. Unless otherwise agreed upon by the parties, the sale of the mortgaged property
extinguished in full the obligation of the mortgagor to the mortgagee.
8. A borrowed from B P50, 000. A offered his specific ring by way of pledge. It was
expressly stipulated that upon non payment of the debt on time, the ring would belong
to B. This forfeiture clause, which has traditionally not been al lowed ¡s called a
a. Caveat emptor. c. Pacto commisorio.
b. Dacion en pago. d. Pacto de retro. S
9. A thing pledged —
a. Even if stipulated, cannot be appropriated if debt is not paid.
b. Is indivisible even among successors in interest.
C. May guarantee the debts of another person.
d. May secure all kinds of obligation, be they pure or subject to a suspensive or
resolutory condition.
10. Three of the following are considered elements of contract of pledge and mortgage.
a. Accessory contract.
b. Pledgor or mortgagor must be the absolute owner.
c. Thing pledged may be appropriated ¡f debtor cannot
d. Pledgor or mortgagor must have a free disposal thing pledged.
11. Statement 1: contract of pledge gives a right to the creditor in his possession or in
that of a third person to whom it has been delivered until debt is paid
Statement 2: A pledge shall not take effect against third persons if a description of the
thing pledged and the date of the pledge do not appear in a public instrument.
a. Both are true. C. no.1 is true; no.2 in false
b. Both are false d. no.1 is false; no.2 is true
12. Statement 1: A stipulation in a contract of mortgage stipulating an upset price, at

which the property may be sold is void.
Statement 2: if the immovable mortgaged is sold, and the amount realized is less
than the mortgage debt, the buyer of the mortgaged property is liable to pay the
deficiency, if any;
a. Both are true c. no.1 is true; no.2 is false
b. Both are false d. no.1 is false; no.2 is true
13. Statement 1: A real mortgage may guarantee future obligations, while a chattel
mortgage cannot guarantee future obligations.
Statement 2: The mortgagee has the right to take possession of the chattel mortgage
upon default of the mortgagor.
a. Both are true. C. no. 1 is true; no. 2 is false
b. Both are false. D. no. 1 is false; no. 2 is true
14. S sold to B a specific car for P20, 000 payable in four equal installments. S
delivered the car to B but required B to mortgage it back to S to answer the unpaid
installment. B paid the 1st installment, but the last three he failed to pay. S foreclosed
the mortgaged property and sold it at public auction for P13, 000.
a. S can recover from B the balance of P2, 000.
b. S can recover from B the balance of P2, 000, if there is stipulation to the effect.
c. S cannot recover the deficiency any more even if there is stipulation to that
effect and this is covered by Recto Law.
15. Statement 1: In chattel mortgage, the mortgagor must execute an affidavit of goon
faith in order that the mortgage shall be valid against third person.
Statement 2: An agency cannot be revoked if a bilateral contract depends upon it, or if it
is the means of fulfilling an obligation already contracted, or if a partner is appointed
manager of a partnership in the contract of partnership and his removal from the
management is unjustifiable.
a. Both are true. C. No. 1 s true; No.2 is false.
b. Both are false. d. No.1 is false; No. 2istrue.
16. Statement 1. D borrowed P 100,000 from C, and as a security, he pledged his

diamond ring. In the public instrument executed, there is no description of the ring and
no date e pledge appearing but the ring is delivered to C. If D will sell the ring to X, will
X have a better title than C?
Yes, because to him (X) the pledge is not valid and effective
Statement 2: Any stipulation in a contract of pledge, the debt is not paid at maturity, the
thing pledge will be acquired by the creditor at the current market price is
b. Both are false. d. No. 1 is false; No. 2 is true
17. D pledged his ring to C for P10, 000. D failed to pay his obligation on time. C sold it
at public auction for P8, 000.
a. C can recover the deficiency even without stipulation
b. C cannot recover the deficiency even if there is stipulation
c. C cannot recover the deficiency
d. C can recover the deficiency
18. Dl, D2 and D3 borrowed from C P300, 000, and as a security, he mortgaged their
undivided agricultural land to C. Subsequently, Dl paid C Pl 00.000. Is the mortgage on
D1’s share of the land extinguished?
a. Yes, because the obligation of Dl on the debt is only P100, 000.
b. Yes, the obligation of the debtors is joint, Dl is answer able only for P100, 000.
c. No, because the obligation is solidary payment in part shall not extinguish the
obligation secured by the mortgage.
d. No, because mortgages are considered indivisible, payment in part shall not
extinguish the mortgage.
19. Statement 1: If the thing pledged is returned by the pledgee to the pledgor or owner,
the principal obligation is extinguished.
Statement 2: In case of pledge of animals, their offspring shall pertain to the pledgor of
the animal pledged and are no longer subject to the pledge, unless stipulated.
a. Both are true. c. No. 1 is true; No.2 is false.
20. Statement 1: If the thing pledged is alienated by the pledgor, and consented by the
pledgee, the ownership and possession is transmitted to the vendee after alienation.
Statement 2: In sales at public auction, the pledgor or Owner may bid and shall have a
better right if he should offer the same terms as the highest bidder.
a. Both are true. c. No. 1 is true; No.2 is false.
b. Both are false. d. No.lisfalse;NO. 2 is true.
21. 1st Statement: The mortgagor of a real property can sell the land despite the
agreement with the mortgagee not to sell the same until the principal obligation is
completely and fully satisfied.
2nd Statement: In pledge, if the sale of the pledged property resulted into an excess,
the pledgee may not keep the excess unless there is a stipulation to the contrary.
c. 1st statement is true while 2nd statement is false.
d. 1st statement is false while 2nd statement is true.
22. S, minor of 16 years, sold her bracelet to B for P8, 000 on, B, needing money to pay
her daughter’s tuition fee CPAR plus some allowance for books and personal r
borrowed P15, 000 from C, and as a security, pledge bracelet to the latter. B failed to
pay C resulting into the auction sale of the bracelet in favor of P for P10, 000 only of the
following statements is correct?
a. The title of B over the bracelet is not valid, hence to the pledge as well as the sale of
said bracelet is likewise defective. The pledgor must be the owner of the thing pledge.
b. The deficiency of P5, 000 may still be recovered by C from B if there is a stipulation
to this effect.
c. C can no longer recover the deficiency of P5, 000 from B. The pledge, together
with the sale is valid. The void able title of B is valid because it ¡s not annulled.
d. If P was a purchaser in bad faith as he knew of the defective title of B over the
bracelet from S, ownership will not pass to him (P).
23. In the preceding number, assuming what was executed by B in favor of C was a
valid chattel mortgage which was eventually foreclosed and the bracelet was sold to P
at the public auction for the same amount, which statement is correct?
a. The title of B over the bracelet s not valid, hence the chattel mortgage, as well as the
sale of said bracelet is likewise defective. The mortgagor must be the owner of the thing
pledged.
b. The deficiency of P5, 000 may still be recovered by C from B.
c. C can no longer recover the deficiency of P5, 000 from B as the mortgage, together
with the foreclosure sale, was valid. The title of B was still valid. .
d. If P was a purchaser in bad faith as he knew of the defective title of B over the
bracelet, ownership will not pass to him (P).
24. Dl, D2, D3 obliged themselves jointly to pay C P15, 000. To secure the obligation, Dl
pledged his ring, D2 his T.V., D3. His refrigerator. On the date of maturity, DI paid C
P10, 000. Which of the following statements is true?
a. Dl can redeem object 1 because the obligation is joint.
b. Dl can redeem object 1 and object 2 because they are proportionate to the amount
paid.
c. DI can redeem any of the object pledged.
d. Dl cannot redeem any of the thing pledged because the indivisibility of the
contract of pledge is not affected by the fact that the obligation is not solidary.
25. 1st Statement: Future property may be a valid object of a contract of pledge or
mortgage.
2nd Statement: If the creditor is deceived on the substance or quality of the thing
pledged, his only right is to immediately demand the payment of the principal obligation.
c. 1st statement is true while 2nd statement is false.
d. 1st statement is false while 2nd statement is true.
26. The principal debtor could not pay his principal obligation as secured by a pledge to
the creditor that resulted into the sale of the thing at a public auction. If the proceeds of
the sale of the thing pledged sold at a public auction are less than the principal
obligation, can the creditor recover the deficiency from the debtor?
1st Answer: Yes, if there is a stipulation to this effect in the contract of pledge.
2nd Answer: No, the creditor cannot recover the deficiency from the debtor.
a. Both answers are wrong.
b. Both answers are false.
c. Only the 1st answer ¡s correct.
d. Only the 2nd answer is correct.
27. 1st Item: The creditor, by himself and before the debt be comes due and
demandable, may sell the thing pledged. 2nd Item: D borrowed P10, 000 from C, and as
a security, he pledge his diamond ring. In the public instrument executed for the
purpose, there is no description of the ring and no date of pledge appearing. If D will sell
the ring to B, B has a better right to the ring over C.
a. Both items are true.
b. Both items are false.
c. 1st item is true while 2nd item is false.
d. 1st item is false while 2nd item is true.
28. A, B and C are solidarity indebted to X for the sum of P1.5 Million which is payable
on or before April 15, 2010. To secure their obligation to X, they executed the following
contracts to wit:
A — a chattel mortgage contract on his Isuzu Highlander
B — a real estate mortgage on his land located in Gapan, Nueva Ecija
C — a pledge of his two diamond rings
On April 3, 2011, A went to X and was paying P500, 000 as his share of the obligation,
and demanded the release or cancellation of the mortgage on his Isuzu Highlander
vehicle. On April 5, 2011, C went to X paying P500, 000 and demanding the return of
the diamond rings.
1st Answer: X may not be compelled to cancel the mortgage on the Isuzu vehicles as
the obligation is indivisible in character, so is the mortgage.
2nd Answer: X may be compelled to return the diamond rings to C as the same is
capable of manual delivery.
a. Both answers are true. c. Only the 1st answer is true.
b. Both answers are false. d. Only the 2nd answer is true.
29. Personal properties that can be mortgaged under the Chattel Mortgage Law:
a. Shared of stock.
b. Ungathered fruits or products.
c. Interest in business.
30. Debtor “A” issued a promissory note in the amount of Pl 0M ¡n favor of commercial
bank “Y” secured by mortgage of his properties worth P3OM. When “A” failed to pay his
indebtedness, despite demands made by bank “Y”I the fatter instituted a collection suit
to enforce payment of the Pl 0M account. Subsequently, bank “Y” also filed foreclosure
proceedings against “A” for the security given for the account. Which of the following
statements is false?
a. If the amount realized in the auction sale is P35, can collect from bank the excess
amount of R
b. if it is P25M, bank “Y” can collect from “A” the deficiency of P5M.
c. “Y” cannot institute an action for collection and at the same time foreclose the
mortgage property.
d. In letter (a), “A’ can only collect the excess amount if there is a stipulation to that
effect.
BUSINESS LAW TESTBANKS / REVIEWERS
1. On September 21, 2010, Piolo agreed to sell his only carabao to Sam and Sam
agreed to pay the price of P25,000 if Sam will pass the October 2010 CPA
Examination. The list of successful examinees was released on October 21,
2010 and Sam is one of those who passed the examination. As a result,
a. Piolo is entitled to the P25,000 price plus interest beginning September 21,
2010.
b. Sam is entitled to the carabao and its fruits beginning September 21, 2010.
c. Sam is entitled to the carabao beginning September 21, 2010 and to its fruits
beginning October 21, 2010.
d. Piolo shall deliver the fruits of the carabao and Sam shall pay the interest on
the price beginning September 21, 2010.
2. The following are elements of an obligation, except

a. Active and passive subjects
b. Efficient cause
c. Prescription
d. Vinculum
3. A, B, and C owe W, X, Y, and Z the sum of P120,000. If the obligation is due,

which of the following is not correct?
a. A is liable only for a total of P40,000.
b. W can only collect P10,000 from C
c. B can be required to pay P40,000 to any of the creditors
d. Y can only collect a total of P30,000
4. The following pertains to facultative obligations, except:

a. Comprehends only one object or prestation which is due
b. Choice pertains only to the debtor
c. Fortuitous loss of all prestations will extinguish the obligation
d. Not given.
5. An obligation subject to the happening of a future and certain event is
a. Conditional obligation
b. Suspensive conditional obligation
c. Resolutory conditional obligation
d. Obligation with a period
6. S1: The debtor shall lose the right to make use of the period when he does not
furnish any guaranty or security to the creditor.
S2: In an obligation subject to a suspensive period, what is suspended is birth of
the obligation.
a. True;true b. true;false c. false;false d. false;true

a. Obligation to pay P1,000,000
b. Obligation to deliver 1999 Nissan Sentra Series III
c. Obligation to deliver 50 cavans of rice
d. Obligation to give a delimited generic object
8. “I will give you my car provided that if I like to have it back, you will return the
same to me.”
a. The obligation is void, because the fulfillment depends upon the will of the
debtor.
b. The obligation is void, because the fulfillment depends upon the will of the
creditor.
c. The obligation is valid because the condition merely causes the loss of rights
already acquired.
d. Both A and B.
9. S1: Dog obliged himself to give Cat a specific car tomorrow. If Dog failed to
deliver tomorrow after demand is made, Cat may compel Dog to do his obligation
and may ask for damages.
S2: Darna obliged to deliver a car to Captain Barbel tomorrow. If Darna failed to
deliver tomorrow after demand is made, Captain Barbel’s right is to ask a third
person to deliver a car to him at the expense of Darna plus damages.
c. Statement 1 is true while statement 2 is false.
d. Statement 1 is false while statement 1 is true.

a. D to give C P1,000 if C passes the examination.
b. D to pay C P1,000 if he has the means.
c. D to give C a horse if C marries X.
d. D is to use C’s car until C returns from Davao.
11. It is the voluntary administration of the property of another without his consent.
a. Negotiorum Gestio c. Quasi-delict
b. Solutio Indebiti d. Contract
12. A, B and C are solidary debtors of X and Y, solidary creditors, for P60,000. X
makes a demand to A but the latter paid Y. In here, the obligation is not
extinguished.
A and B solidary debtors of X, Y and Z, solidary creditors. X demands payment
from A, but B, upon whom no demand is made paid Z the entire obligation. In
here, the obligation is totally extinguished.
13. Elmo is obliged to give Bert, either a ring worth P5,000; or bracelet worth P4,500;
or a watch worth P4,000. All the objects were lost due to Elmo’s fault in the order
stated.
a. Elmo’s obligation is extinguished.
b. Elmo’s obligation is to pay the value of the ring plus damages.
c. Bert’s right is to demand the value of any of the objects plus damages.
d. Elmo’s obligation is to pay the value of the watch plus damages.
14. Culpa aquiliana as distinguished from culpa contractual:

a. Proof of due diligence in the selection and supervision of employees is not
considered a defense.
b. 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
obligation.
d. The source of liability is the negligent act of the person causing damage to
another.
15. S1: When one of the parties has brought an action to enforce the contract, he
cannot subsequently ask for its reformation.
S2: The injured party may seek rescission even after he has chosen the
fulfillment of the obligation if the latter should become impossible.
a. True; true b. true;false c. false;false d. false;true
16. S1: An oral sale of land made by its owner is unenforceable.

S2: Sale of land made by an agent without written authority from owner thereof is
void.
a. False;false b. false;true c. true;true d. true;false
17. S1:The principle of autonomy of contracts means that the contracting parties as a
rule may agree upon any stipulation, clause, term and condition.
S2: Relativity of contracts means that contracts take effect not only between the
parties but also their heirs and assigns.
a. False;false b. true;true c. false;true d. true;false
18. It is an obligation which is based on positive law and gives right to enforce its
performance
a. Natural obligation c. Moral obligation
b. Civil obligation d. legal obligation
19. Which of the following is demand necessary to make the debtor in delay in the
performance of his obligation?
a. When the time of performance is of the essence
b. When the time of performance has been stipulated
c. When the law so provides
d. When demand would be useless
20. Liability for damages in the performance of an obligation arises from the
following, except
a. Negligence c. Delay
b. Acts or omissions punished by law d. Fraud
21. Liability for damages arising from fraud is demandable and there can be a waiver
of an action for past fraud.
There can be a waiver of an action for future negligence but not fraud.
a. Both statements are false c. First is true, second is false
b. Both are true d. Second is true, first is false
22. Delia borrowed from Celia a sum of money with a stipulated rate of interest to be
paid in three equal monthly installments from January to March. Delia paid an
amount for which the latter issue a receipt stating that the payment is for the
month of February. In this case,
a. The installment for the month of March is also considered paid.
b. The installment for the month of January is conclusively presumed to have
been paid.
c. The installment for the month of January is distributably presumed paid.
d. The installment for the month of January is not presumed paid.
23. A obliged himself to deliver the cans of powdered milk of B from his warehouse in
Pangasinan to Manila. While his truck was traveling on the North expressway, it
was hi-jacked by a band of robber 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 lost.
b. Yes, because he was in possession of the same at the time of the loss and
therefore presumed at fault.
c. Yes, because there was no stipulation exempting him from loss in case of
fortuitous event.
d. No, because the loss was due to fortuitous event.
24. 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 indivisible.
b. X can claim only from A the whole amount of damages other than the value of
the car.
c. 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.
25. Dennis owes Cart P1M. Xanabelle, without the knowledge or against the will of
Dennis paid Cart P2M. Can Xanabelle get reimbursement from Dennis?
a. P2M by way of reimbursement from Dennis to prevent unjust enrichment on
the part of Dennis at the expense of Xanabelle.
b. P1M only for that is the extent of benefit of Dennis.
c. No reimbursement because the payment was not proper being without the
knowledge or against the will of Dennis.
d. P1M plus interest from the time of payment until reimbursement.
26. Payment made by 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 right
b. 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.
27. Sister offered his car to Brother for P1M and giving the latter one week to decide.
Brother in turn gave Sister P1,000. In this case, there is
a. Contract of sale of the car with the P1,000 as earnest money
b. Contract of option with the P1,000 as option money
c. Contract to sell of the car at B’s option
d. Contract to sell of the car at S’s option
28. Anmony advertised in the newspaper his parcel of land wanting to sell the same
for P1M. Boy personally went to the former with cash in hand to buy the subject
parcel of land. In this case,
a. Anmony cannot anymore reject Boy as buyer of his land
b. Anmony can still reject Boy as an offered in the purchase of land
c. Anmony can reject the offer of Boy unless he properly consigns with the court
his payment for the land
d. Anmony cannot evade his obligation as seller to Boy
29. The contract entered into by the persons who cannot give consent is
a. Void ab initio because actually there is no consent
b. Unenforceable only because the contract may be ratified
c. Rescissible because of the damage caused to the person incapacitated
d. Voidable as there is consent although vitiated or defective
30. A defective contract where damage or lesion is essential is

a. Rescissible c. Unenforceable
b. Voidable d. Void
31. 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. Void
b. Voidable d. Rescissible
32. The following even if not in public instrument are valid, binding and enforceable
except
a. Negotiable instruments
b. Sale of land, either by the owner or agent with written authority
c. Agency, pledge, mortgage
d. Partnership contract wherein immovables are contributed
33. Aguilar sold to Beddie 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 to the seller
c. The fruits that shall exist after delivery will only be the ones to pertain to the
buyer
d. The fruits after the sale but before delivery shall pertain to the buyer if so
stipulated by the parties to the sale
34. A sold B’s car in B’s name to C without any authority from B. The contract of sale
is
a. Rescissible b. Voidable c. Unenforceable d. Void
35. With written authority from his principal, the agent sold verbally the land of the
principal. The sale is
a. Rescissible b. voidable c. unenforceable d. Void
36. A, as agent of P with oral authority, sold P’s land in public instrument. The sale is
37. 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
38. 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
39. A owes B P20,000 which became due and payable last June 23, 2010. 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. P15,000
b. P10,000 d. P -0-
40. If a 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
paid.
2nd answer – He subrogated to all of the rights of the creditor.
a. Both answers are correct. c. Only the first is correct.
b. Both answers are wrong. d. Only the second is correct.
41. Indivisibility as distinguished from solidarity.

a. Plurality of subject is indivisible.
b. When the obligation is converted into one of indemnity for damages because
of breach, the character of the obligation remains.
c. Refers to the legal tie or vinculum.
d. Refers to the prestation which constitutes the object of the obligation.
42. Demand is not needed to put the debtor in default, except

a. When demand would be useless
b. When the parties so stipulate
c. When the time is of the essence
d. When the fixing of the time is the controlling motive for the establishment of
the contract
43. Culpa aquiliana as distinguished from culpa contractual

a. Proof of due diligence in the selection and supervision of employees is not
available as a defense
b. Proof of the contract and of its breach is sufficient prima facie to warrant
recovery
c. The negligence of the defendant is merely an incident in the performance of
the obligation
d. The source of liability is the defendant’s negligent act or omission itself
44. 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 jeopardy
b. No, the acquittal means that the guilt of the accused was not proven by proof
beyond reasonable doubt
c. Yes, it is sufficient for him to prove the existence of the contract of carriage
and the injuries suffered
d. Yes, provided he can prove the negligence of the driver
45. 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 c. with a period
b. With a suspensive condition d. with a resolutory condition
46. An action to impugn the acts of a debtor intended to defraud the creditor is
a. Accion reivindicatoria c. accion redhibitoria
b. Accion subrogatoria d. accion pauliana
47. A owes B P11,000 due on July 2, 2010. B owes A P6,000 due on July 3, 2010
and P4,000 due on July 10, 2010. B owes C P11,000 due on July 3, 2010. On
July 2, 2010 B cannot pay C so B assigns to C her credit of P11,000 against A,
without the knowledge of A. On July 10, 2010 C tries to collect from A the
P11,000. How much can C compel A to pay?
a. P11,000 c. P5,000
b. P9,000 d. P1,000
48. If the obligation of the debtor is “I will pay you my debt after I have arrived from
abroad.” The obligation is
a. Valid c. voidable
b. Void d. unenforceable
49. There is novation of the obligation if

1. The period for payment is shortened from 5 years to 3 years.
2. The period for payment is extended form 3 years to 5 years.
a. True; true b. true;false c. false;true d. false;false
50. This is a real defense

a. Fraud is inducement c. Want of delivery of an incomplete
instrument
b. Want of consideration d. Duress in the absence of physical
pressure
51. This contract is without effect unless ratified

a. Marriage between first degree cousins c. Contract of sale between
a guardian and his ward
b. Contract of sale between two insane persons d. Donation between
husband and wife
52. Dacion en pago as distinguished from sale
a. The cause is the price
b. The object exists and is specific
c. There is no pre-existing obligation
d. There is a greater degree of freedom in fixing the price
53. A contract as a rule must be in writing to be valid.

A taxpayer is not entitled to interest in the overpayment of tax subject of a refund
because an obligation derived from law is not presumed.
a. Both statement s are true c. First is false, second is true
b. Both are false d. Second is false, first is true
54. S1: As a general rule, the extrajudicial expenses required by the payment shall
be for the account of the creditor.
S2: If there is no stipulation and the thing to be delivered is specific, the place of
payment shall be the domicile of the debtor.
a. True;true b. true;false c. false;true d. false;false
55. S1: Consignation without tender of payment is sufficient if two or more persons
claim the same right to collect.
S2: When the debt of a thing certain proceeds from a criminal offense, the debtor
shall be exempted from the payment of the price of the thing is lost through a
fortuitous event.
c. S1 is true; S2 is false.
d. S1 is false; S2 is true.
56. S1: The party may recover, if public interest will be subserved, money or property
delivered by him for an illegal purpose, provided that he repudiates the contract
before the purpose has been accomplished.
S2: If an illegal contract constitute a criminal offense and both parties are guilty,
both shall be criminally prosecuted but they may keep the object of the contract.
57. The meeting of minds manifests consent after the acceptance upon the thing and
the cause which are to constitute the contract. Which of the following constitute a
definite offer?
a. An offer made through an agent.
b. Business advertisements of things for sale.
c. Advertisements for bidders.
58. S1: If the cause is not stated in the contract it is presumed that it is lawful.
S2: The action for rescission in subsidiary; it cannot be instituted except when
there is no other legal means to obtain reparation for damages suffered.
a. Both are true c. Only 1st is true
b. Both are false d. Only 1st if false
59. Simon offers to sell his house to Pedro for P200,000. Pedro asks him if he would
accept P185,000.
1st: Because of ambiguity, both offers are terminated by operation of law.
2nd: Pedro’s response is a more inquiry, the P200,000 offer by Simon is still in
force.
a. True;true b. true;false c. false;true d. false;false
60. Debtor’s fault in real obligation is called

a. Mora accipiendi
b. Mora solvendi ex-re
c. Mora solvendi ex-persona
d. Compensation-morae
61. ) In order to amend the corporate by-laws, what vote is required to happen?
a.) 2/3 votes of the Board of Directors and 2/3 votes of the outstanding capital
stockanding capital stock b) Majority votes of the Board of Directors and 2/3
votes of the outstanding capital stock c) 2/3 votes of the Board of Directors and
majority vote
b.) Majority votes of the Board of Directors and majority votes of the
outstanding capital stock
c.) 2/3 votes of the Board of Directors and majority votes of the outstanding capital
stock
d.) Majority votes of the Board of Directors and 2/3 votes of the outstanding capital
stock
62.) Ondoy pledged his motor bike to Peping for P5,000.00. When Ondoy failed to pay
his obligation, Peping sold the motor bike at public auction to the highest bidder for
P4,000.00. Therefore:

a.) Peping can recover P1,000.00 from Ondoy if it is stipulated
b.) Peping cannot recover P1,000.00 from Ondoy even if there is stipulation
c.) Peping can recover P1,000.00 from Ondoy even without stipulation
d.) Peping cannot recover P1,000.00 from Ondoy unless stipulated that he can
63.) Dacion en Pago differs from a Sale in the sense that in latter
a.) the obligation is extinguished once the offer is accepted
b.) there is less freedom in the determination of the price of the object
c.) the cause of the contract is the price
d.)there is pre-existing credit between the parties
a.) Obligations arising from contracts have the force of law between the contracting
parties and must be complied with in good faith.
b.) Fraud committed in the performance of an obligation gives the injured party the
right to annul the contract.
c.) Not only the parties, but their heirs and assigns are bound by their
contract.
d.) Generally, the debtor is not liable for the non-performance of his obligation due to
fortuitous event.
65. Which of the following is a mode for the extinguishment of agency?

a.) Death of the principal without the knowledge of the agent
b.) Filing of a monetary claim by the agent against his principal
c.) Revocation by the agent
d.) Partial accomplishment of the agency
66. A Corporation may be dissolved voluntarily or involuntarily based on several causes.

Which of the following is a cause for the automatic dissolution of a corporation?
a.) Failure to file the required report to the Securities and Exchange Commission
b.) Failure to continue the business for at least five (5) years
c.) Failure to formally organize and commence business within two years from
the issuance of the certificate of incorporation
d.) Failure to file its corporate by-laws with the Securities and Exchange
Commission within thirty days from the issuance of the Certificate of incorporation
67. Dan mortgaged his house and lot to Casey to secure his loan amounting to P1M. It
is stipulated that Dan cannot sell his house and lot without the consent of Casey while
the loan remains unpaid. Before the maturity date, Ben offered to buy the house and lot
of Dan for P1.6M. In this scenario:
a.) Dan cannot sell his house and lot because of the prohibition in the contract.
b.) Dan cannot sell his house and lot without the consent of Casey.
c.) Dan can sell his house and lot provided he pays the loan to Casey.
d.) Dan can sell his house and lot despite the prohibition in the contract.
68. Toto sold the car of Popo without authority. When the buyer Momo demanded for
the key of the car from Popo, after paying the purchase price, Popo gave the key of his
car to the Momo. The sale made by Popo to Momo is valid while an agency between
Popo and Toto is created by:
a.) estoppel
b.) contract
c.) operation of law
d.) ratification

69. Simon transferred to Peter the ownership of his car, worth P500,000.00 in
consideration of the amount of P240,000.00 plus a hand tractor worth P260,000.00. The
contract between them is actually a form of:
a.) partly sale and partly barter

b.) sale
c.) commodatum
d.) barter
70. Ann mortgaged his house to Boy to secure his loan amounting to P1,500,000.00.
Due to the negligence of the typist, the document signed by Ann and Boy shows that
the house of Ann was sold to Boy for P1,050,000.00 only. Which of the following
statements is correct?
a.) The contract of sale between Ann and Boy rescissible because of the damage
suffered by Ann
b.) The contract of sale between Ann and Boy is relatively simulated
c.) The contract of sale between Ann and Boy is voidable because there is a
mistake
d.) The contract of sale between Ann and Boy may be reformed
71. S1: In a natural obligation, the creditor has the right to enforce the performance
thereof it being based on positive law.
S2: Solutio indebiti and negotiorum gestio are quasi-contracts that give rise to civil
obligations.
a. True; True b. True; False c. False; False
d. False; True
72. One of the following is a determinate thing. Which is it?

a. A cow
b. A horse
c. A Toyota car with engine no. 12345, body no. 34888 and plate no. JDS 111
d. A ring with diamond embellishment
73. 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 thing.
b. The performance of the obligation has become impossible.
c. The nature of the obligation does not require the assumption of risk.
d. When the law or the obligation expressly so provides.
74. S1: Liability from damages arising from fraud is demandable and there can be a
waiver of an action for past fraud.
S2: There can be a waiver of an action for future negligence but not fraud.
d. False; True
75. These are acts or omissions of diligence that cause damage to another, there
being no contractual relation between the parties.
a. Culpa contractual c. Culpa criminal
b. Quasi-delict d. Fraud
76. S1: The debtor incurs delay from the time the creditor demands fulfillment of the
obligation but the debtor fails to comply with such demand.
S2: In reciprocal obligations, where the obligations arise out of the same cause and
must be fulfilled at the same time, from the moment one of the parties fulfills his
obligation, delay by the other begins notwithstanding the absence of demand.
d. False; True
77. Which of the following is a remedy of the creditor to enforce payment of his
claims against the debtor?
a. Pursue the property in the possession of the debtor including those
exempt by law.
b. Exercise all the rights and bring all the actions of the debtor including
those personal to him.
c. Impugn the acts which the debtor may have done to defraud his creditors.
78. Consignation alone without tender of payment is sufficient in the following cases,
except:
a. When the creditor is absent or unknown or does not appear at the place of
payment.
b. When the creditor presents the title to the obligation for collection.
c. When without just cause, the creditor refuses to give a receipt.
d. When two or more persons claim the same right to collect.
79. S1: Mara borrowed P10,000 from Clara. On due date, Mara paid the debt to
Clara who had become insane. If Clara kept only P6,000 and threw away P4,000,
then payment will be valid for only P6,000.
S2: Lea makes a note payable to bearer and delivers it to Mateo. The note,
however, is lost by Mateo and is picked up Lyka. Lyka goes to Lea to collect on the
note. Lea pays Lyka believing in good faith that Lyka is the intended bearer. Lea is
still not released from liability.
a. True; True; b. True; False c. False; Fasle
d. False; True
80. Payment must be made in the following, except:

a. If there is a stipulation, then in the place designated.
b. If there is no stipulation and the obligation is to give a determinate thing,
wherever the thing might be at the time the obligation was constituted.
c. If there is no stipulation and the obligation is to give a generic thing, then
at the domicile of the obligee.
d. If there is no stipulation and the obligation is to do, then at the domicile of
the debtor.
81. In order that condonation may extinguish an obligation involving a movable

property whose value exceeds P5,000.00 –
a. It is sufficient that the condonation and the acceptance are in writing, even
a private one.
b. It is required that the condonation and the acceptance must be in a public
instrument.
c. The delivery of the document evidencing the debt is sufficient since the
property is movable.
d. The condonation and the acceptance may be made orally.
82. S1: A debtor who is adjudged an insolvent and subsequently discharged by the
court shall be released from obligations of all debts but he thereafter cannot engage
in business and acquire property until he has paid his former debts.
S2: Dwarfina owes Dennis P100,000. With the consent of both, Jennelyn, a third
person pays Dennis P50,000.00. Thus, Dennis and Jennelyn are now creditors of
Dwarfina at P50,000.00 each. If Dwarfina has only P50,000.00, it will be divided by
Dennis and Jennelyn equally.
d. False; True
83. The following cannot give consent to a contract, except;

a. Minors, except sale of necessaries in life
b. Insane persons
c. Demented persons
d. Deaf-mutes who do not know how to read and write.
84. It is the manifestation of the meeting of the offer and the acceptance upon the
thing which are to constitute the contract
a. Consideration
b. Contract
c. Consent
d. Cause
85. A solemn or formal contract has the following essential elements:

a. Consent of the contracting parties, object certain and cause or
consideration.
b. Consent of the contracting parties, object certain, cause or consideration
and delivery of the object.
c. Consent of the contracting parties, object certain, cause or consideration
and formalities required by law.
d. Consent of the contracting parties, object certain, delivery of the object
and formalities required by law.
86. S1: A contract as a general rule must be written to have force and effect as a
valid agreement.
S2: A formal or solemn contract is one that must be in writing to be valid.
d. False; True
87. An employee embezzled a sum of money from her employer, and in order that
she would not be prosecuted, her husband signed a promissory note to pay the
amount embezzled, with interest to the victim. Which is correct?
a. The husband is liable because the note was executed by the husband
voluntarily
b. The recovery shall be limited only to the amount embezzled without any
interest
c. The employer may recover from the husband of the employee and may
still prosecute the employee
d. No recovery can be made on the note because the consideration is illicit
88. One of the following contracts is not vitiated by intimidation or violence and
hence, valid. Which is it?
a. A contract of sale which was signed by a party because his arm was being
twisted by a third person.
b. A contract of sale which was entered into because the other party was
pointing a gun at his wife.
c. A contract where a party was compelled to assign his property to the other
to pay a just debt because the latter threatened to sue him in court if he does not
pay his debt.
d. A contract of donation of a parcel of land which a party signed because
the other party threatened to burn his house.
89. The following statements pertain to the cause of a contract. Which statement
refers to motive?
a. It is the essential reason for a contract.
b. It is always known to the contracting parties.
c. Its illegality does not affect the validity of the contract.
d. There will be no contract without it.
90. One of the following is not a requisite of an object of contract. Which is it?
a. It must be within the commerce of men.
b. It must not be intransmissible.
c. It must be contrary to law, morals, good customs, public order or public
policy.
d. It must be determinate as to its kind or if its quantity is not determinate, it
must be possible to determine the same without the need of a new contract
between the parties.
91. S1: If the contract is not in the form provided by law for its validity, the contract is
void.
S2: if the contract is not in the form provided by law for its enforceability, the
contract, though it has all the essential requisites for validity, cannot be enforced
against the party sought to be charged.
d. False; True
92. Acceptance of an offer made by the letter or telegram shall bind the offeror. From
the time the
a. Offeree accepted the offer
b. Acceptance came to the knowledge of the offeror
c. Offeree sent his letter or telegram
d. Offeror made the offer
93. S1: If the terms of a contract are clear and leave no doubt upon the intention of
the contracting parties, the literal meaning of the stipulations shall control.
S2: If the words appear to be contrary to the evident intention of the parties, the
latter shall prevail over the former.
d. False; True
94. A leased his property to B. Part of the premises was subleased by B to C. B

violated the conditions of the lease, so A wanted to rescind the lease contract.
Which is correct?
a. A can rescind the lease contract provided he respects the sublease
b. A cannot rescind the lease contract as the sublease would naturally be
affected
c. A may rescind the lease contract and is not bound to respect the sublease
d. B may object to the cancellation of the contract because he is not a party
to the violation
95. Which of the following need not be in writing to be enforceable?

a. An agreement for the sale of goods, chattels, or things in action at a price
not less than P500
b. An agreement for the leasing for a period longer than one year, or for the
sale of real property or of an interest thereon
c. A representation as to the credit of a third person
d. A mutual promise to marry
96. In order that fraud may make a contract voidable

a. It may be incidental but both parties should not be in pari delicto
b. It may be serious and the parties must be in pari delicto
c. It may be incidental but should have been employed by both parties
d. It should be serious and should have not been employed by both
contracting parties
97. The following are characteristics of void or inexistent contracts, except:

a. The right to set up the defense of illegality cannot be waived
b. The action or defense for the declaration of the inexistence of a contract
does not prescribe
c. A void contract cannot be ratified
d. The defense of illegality of contracts is not available to third persons
whose interests are not directly affected
98. S1: A partnership is created by mere agreement of the partners while a

corporation is created by operation of law.
S2: In a partnership, juridical personality commences from the execution of the
articles of the partnership; in a corporation, from the issuance of certificate of
incorporation by the Securities and Exchange Commission.
d. False; True
99. The minimum capital in money or property except when immovable property or
real rights thereto are contributed, that will require the contract of partnership to be in
a public instrument and be registered with the Securities and Exchange
Commission(SEC).
a. P5,000.00 b. P3,000.00 c. P3,001.00 d.
P10,000.00
100. If the partnership has the minimum capital mentioned in No. 29, but the contract
is not in a public instrument or the same is not recorded with SEC, the partnership:
a. Is voidable
b. Is void
c. Still acquires juridical personality
d. Does not acquire juridical personality
101. Three of the following contracts are void. Which one is not?
a. A universal partnership of all present property between husband and wife
b. A universal partnership of profits between a man and a woman living
together as husband and wife without the benefit of marriage
c. A particular partnership between husband and wife
d. A universal partnership of profits between a private individual and a public
officer
102. Partners Arnold, Ben and Charlie contributed: Arnold-P1,000,000; Ben-

P2,000,000; and Charlie-service. After exhausting the partnership assets, the
creditors still have a claim for P300,000. For how much are the partners liable to the
creditors for the partnership liability?
a. Only Arnold and Ben are liable equally to the creditors being capitalists
b. Only Arnold and Ben are liable at 1/3 and 2/3, respectively
c. All of Arnold, Ben and Charlie are liable pro rata to the creditors
d. Charlie is not liable being an industrial partner who is exempt from losses
103. Armando and Betty 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 profits
b. There is no partnership because co-ownership by itself does not establish
a partnership despite the sharing of profits
c. There is no partnership since in partnership division of profits is not always
necessary among partners
d. There is partnership they being co-owners and co-possessors
104. Normelita and Gracia are partners in NG Partnership. While Normelita was
performing her duties as a partner in the conduct of the business, he negligently
caused damage to Eddie, a third person. Who shall be liable to Eddie and in what
capacity?
a. Only the partnership shall be liable it being a juridical person separate and
distinct from the partners
b. Only Normelita shall be liable for she is the only one at fault
c. Both Normelita and Gracia shall be liable solidarily to Eddie
d. Normelita, Gracia and the partnership are all liable solidarily to Eddie
105. Petalcorin is indebted for P5,000 to JDS Trading Company, a partnership

managed by Dulzura to whom Petalcorin also owes P10,000.00. The two debts
which are both demandable are unsecured. Petalcorin remits P4,500.00 to Dulzura
in payment of his debt to her. Accordingly, Dulzura issues a receipt for her own
credit. To which credit should the payment be applied?
a. To Dulzura’s credit because the payment made by Petalcorin is intended
for his debt to Dulzura who issues her own receipt.
b. To both the partnership credit and Dulzura’s credit proportionately at
P1,500.00 and P3,000.00, respectively.
c. To Dulzura’s credit because its amount is greater than that of the
partnership credit.
d. To the partnership credit because the managing partner should not prefer
her own interest to that of the partnership.
106. Joseph, Aris, Dex and Earl are partners in JADE Enterprises, a jewelry store,
with Joseph contributing P50,000.00; Aris, P20,000.00; and Dex, P30,000.00. Earl is
an industrial partner and manages the partnership. Based on the foregoing
information, which one of the following statements is false?
a. Joseph may engage in the buying and selling of rice without the consent
of the other partners
b. Earl may engage in the buying and selling of rice without the consent of
the other partners
c. Earl is not liable for the losses of the partnership
d. Earl may be held liable by third persons for partnership debts with her
separate property
107. MARILEN Company is owned by the following partners with their respective
contributions: Mary, P10,000.00; Anna, P20,000.00; Rose, P30,000.00; Irma,
P40,000.00; Liza, P50,000.00; Edna, P100,000.00; and Nora, P200,000. Except for
Edna and Nora, all the rest are managers without any specification as to their
respective duties. Mary wants to buy goods from Excellent Company. Liza opposes.
Anna and Rose side with Mary while Irma sides with Liza.
a. The group of Mary will prevail because they constitute the majority.
b. The group of Liza will prevail because they constitute the controlling
interest.
c. The group of Mary will prevail because they constitute the controlling
interest.
d. Suppose Rose abstains, the group of Mary will prevail.
108. Which of the following will not cause the automatic dissolution of a general
partnership?
a. Death of a capitalist partner
b. Insolvency of a capitalist partner
c. Insanity of an industrial partner
d. Civil interdiction of an industrial partner
109. A person admitted to all the rights of a limited partner who has died or has
assigned his interest in the partnership is known as
a. An ostensible partner
b. A liquidating partner
c. A substituted limited partner
d. A general-limited partner
110. What is the order of payment of liabilities of a dissolved general partnership using
the code number representing each liability?
I. Those owing to partners than for capital or for profits
II. Those owing to creditors other than partners
III. Those owing to partners in respect of profits
IV. Those owing to partners in respect of capital
a. I, II, III, IV
b. II, I, IV, III
c. II, I, III, IV
d. I, II, IV, III
111. The articles of incorporation differ from the by-laws in that the articles of
incorporation are:
a. The rules of action adopted by a corporation for its internal government
b. Adopted before or after incorporation
c. A condition precedent in the acquisition by a corporation of a juridical
personality
d. Approved by the stockholders if adopted after incorporation
112. A corporation acquires juridical personality

a. Upon the filing of the articles of incorporation
b. Upon the filing of the by-laws
c. Upon the issuance of the certificate of incorporation
d. Within 30 days from the receipt of the notice of the issuance of the
certificate of incorporation
113. A delinquent stockholder is not entitled to the following rights, except

a. To be voted
b. To vote or be represented in the meetings of stockholders
c. To dividends
d. He is not entitled to all the rights of a stockholder
114. Every corporation incorporated under the Corporation Code has the power and
capacity
a. To adopt and use a corporate seal
b. To protect debts due to the corporation
c. To protect or aid employees
d. To increase the business of the corporation
115. All of the following, except one are qualifications of a director or trustee. Which is
it?
a. He must be the owner of at least 1 share of stock which shall stand in his
name on the books of the corporation
b. Majority of the directors or trustees must be residents of the Philippines
c. The number must not be less than 5 not more than 15
d. In case of a non-stock corporation, a trustee is not required to be a
member of the corporation
116. S1: The removal of a director must take place in a regular meeting of the
corporation or in a special meeting called for the purpose.
S2: The election must be made through the raising of hands if requested by any
voting stockholder or member. If there is no such request, voting may be made
through other means like secret ballot.
d. False; True
117. These are powers which are necessary to carry into effect powers which are
expressly granted, and which must therefore be presumed to have been the
intention in the grant of the franchise.
a. Express powers c. Implied powers
b. Incidental powers d. Inherent powers
118. Which of the following subscriptions does not comply with the subscription and
paid-up capital requirements at the time of incorporation?
Authorized Subscribed Paid-up
a. P1,000,000.00 P250,000.00 P62,500.00
b. 300,000.00 75,000.00 50,000.00
c. 100,000.00 100,000.00 100,000.00
d. 50,000.00 12,500.00 3,125.00
119. A corporation may acquire its own shares for a legitimate purpose provided it has
unrestricted retained earnings. In which of the following acquisitions is the
requirement of unrestricted retained earnings not imposed?
a. When the acquisition is made to eliminate fractional shares
b. When delinquent shares are acquired in a delinquency sale
c. When redeemable shares are repurchased in accordance with the terms
provided in the articles of incorporation
d. When shares are acquired from stockholders who exercise their appraisal
right
120. Which of the following rights is the subscriber of shares not fully paid who is not
delinquent not entitled to?
a. Right to dividends
b. Right to vote in stockholders’ meetings
c. Right to a stock certificate
d. Right to inspection of corporate books and records
121. Fatima Corporation has a statement of capital stock in its articles of incorporation
but it was stated in the same articles that dividends are not supposed to be declared
, that is , there is no distribution of retained earnings. Fatima Corporation is:
a. Stock corporation c. Corporation by prescription
b. Non-stock corporation d. Corporation by
estoppels
122. How many number of votes of the board of directors are required to change the
name of a corporation?
a. 2/3 of all members of the board
b. 2/3 vote of all present
c. Majority vote of all present constituting a quorum
d. Majority vote of the board
123. In the matter of managing the business of the corporation, the exercise of
corporate power and handling of corporate properties this is supreme:
a. 2/3 approval of the stockholders of the corporation
b. Majority vote of the OCS of the corporation
c. Majority vote of the Board of Directors
d. The President of the corporation.
124. Which of the following is not required to be included in the Articles of

Incorporation?
a. Duties of the president.
b. Name of the corporation.
c. Period of existence
d. Location of the principal office.
125. Delinquent stocks are

a. Entitled to vote in stockholders’ meeting
b. Entitled to inspect the books of the corporation
c. Entitled to dividends
OBLIGATIONS & CONTRACTS (Albano)
General Provisions
1.The duty not to recover what has been voluntarily paid although payment was no
longer required:
A. Natural obligation C. Civil obligation
B. Moral obligation D. None of the above
3.It is one of the essential elements of an obligation

A. A maker or drawer C. A drawee
B. An object or prestation D. Money
4.Three of the following are requisites of an obligation. Which is the exception?

A. Prestation C. Delivery
B. Efficient cause D. Passive subject
5.Which of the following is not an obligation arising from law?

A. Delict C. Quasi-delict
B. Quasi-contract D. Contract
6.The obligation of the employer to pay death benefits and funeral expenses for his
employee’s death while in the course of employment as sanctioned by the Workmen’s
Compensation Act is one that arises from:
A. Law C. Quasi-contracts
B. Contracts D. Answer not given
7. Which of the following is not considered as quasi-contract?

A. Solution indebiti
B. When the third person, without the knowledge of the debtor, pays the debt.
C. Negotiorum gestio
D. Reimbursement due the person who saved property during fire or storm without
the knowledge of the owner.
E. None of the above.
8. When A voluntarily takes charge of the neglected business of B without the latter’s
authority where reimbursement must be made for necessary and useful expenses, there
is a
A. Quasi delict C. Negotiorum gestio
B. Quasi contract D. Solution indebiti
9. A juridical relation known as negotiorum gestio takes place

A. When a person voluntarily takes charge of another’s abandoned business
or property without the owner’s consent.
B. When something is received and there is no right to demand it and it was
delivered through mistake.
C. When a person is appointed by a court to take the property or business of
another.
13. All of the following except one are civil liabilities arising from crime.
A. Restitution
B. Reparation of the damage caused
C. Imprisonment
D. Indemnification for consequential damages
14. A civil liability which involves the return of the object of the crime whenever possible,
plus allowances for any deterioration or diminution of value as may be determined by
the court to the rightful owner –
A. Reparation C. Indemnification
B. Restitution D. Imprisonment

A. Proof of due diligence in the selection and supervision of employees is not
available as a defense.
B. Proof of the contact and its breach is sufficient prima facie to warrant recovery.
C. The negligence of the defendant is merely an incident in the performance of the
obligation.
D. The source of liability is the defendant’s negligent act or omission itself.
18. A wrong committed independent of contract and without criminal intent is –

A. Culpa contractual C. Delict
B. Culpa aquiliana D. Quasi-contract
19. A wrong committed independent of a contract and with criminal intent –

A. Quasi-contract C. Culpa aquiliana
B. Culpa contractual D. None of the above
II – Nature and Effect of obligations.
24. Unless the law or stipulation of the parties requires another standard of care, the
obligation to give a thing carries with it the obligation to take care of it with:
A. Extra-ordinary diligence C. Diligence of a good father of a family
B. Ordinary diligence D. Answer not given
25. The creditor has a right to the fruits of the thing from
A. The time the thing is delivered.
B. The time the obligation to deliver the thing arises.
C. The time the sale is perfected.
D. The time the fruits are delivered.
28. Which of the following is a determinate thing?

A. A car.
B. A 2010 Mitsubishi adventure GSL Sport DSL
C. A Toyota Revo Sport Runner with Plate No. XCS 888.
D. A car owned by Pedro Cruz.
29. If the thing is determinate, the debtor can be compelled to deliver the thing
promised and upon failure, the creditor has a right to ask for damages.
If the object is generic and the debtor does not comply with the obligation, the
creditor can ask a third person to comply with the prestation at the expense of the
debtor, plus damages.
A. True; False C. True; True

B. False; True D. False; False
30. The obligor is not liable for a fortuitous event when
A. There is default or mora on his part.

B. He promised to deliver the same thing to two or more persons.
C. The object is generic.
D. The object is determinate.
31. One is not a requisite needed in order that the obligation shall be extinguished by
loss or destruction of the thing due:
A. When the thing is lost without the fault of the debtor.
B. When the thing lost is generic.
C. When the thing is lost before the debtor has incurred in delay.
D. When the thing lost is specific.
37. Statement 1: Delay or mora in one of the sources of obligation.

Statement 2: There is no delay in an obligation not to do.
A. True; False C. False; True

B. True; True D. False; False
42. Demand is not needed to put debtor in default except
A. When the law so provides.

B. When demand would be useless as when the obligor has rendered it beyond his
power to perform.
C. When the thing is lost due to fortuitous event.
D. When time is of the essence of the contract.
A. Creditor C. Both creditor and debtor

B. Debtor D. None of them.
47. When the subject matter of the contract is lost through a fortuitous event, who is
liable?
A. The debtor C. None of them
B. The creditor D. Both creditor and debtor
48. No person shall be responsible for events which could not be foreseen, or which,
though foreseen, were inevitable, except:
A. When the debtor is guilty of delay.
B. When the nature of the obligation requires the assumption of risk.
C. When the law expressly provides for the debtor’s liability even in cases of
fortuitous events.
D. When the subject of the obligation is a generic thing.
E. All of the above.
49. D obliged himself to give a specific house to C on April 15, 2010, stipulating that D is
liable even if the house is lost through a fortuitous event, and without the need of a
demand. On the due date, the house was destroyed by a typhoon. Which of the
A. C can compel D to deliver another house.
B. The obligation is totally extinguished.
C. C can require another person to deliver a house at the expense of D.
D. The obligation remains to subsist but converted into monetary
consideration.
51. A bound himself to deliver a determinate horse to B on January 15, 2011. On

January 16, 2011 the horse was struck and killed by a lightning.
A. A is liable for the loss of the horse because he was in delay.
B. A has the obligation to replace the horse.
C. A’s obligation is extinguished.
D. B may claim damages from A.
53. A obliged himself to deliver a specific cow to B which will be butchered and served
to the latter’s guest on the occasion of his wedding on June 20. On June 20 A did not
deliver the cow. The following day, it was killed due to a flood that occurred in their
place.
A. A is liable for the loss of the cow because he was in delay.
B. A’s obligation has been extinguished.
C. A is obliged to replace the cow.
D. A is not liable because the cause of the loss is a fortuitous event.
55. It is not a source of liability which will entitle the injured party to damages:
A. Culpa aquiliana or negligence committed in the performance of a spontaneous
act.
B. Mora or delay.
C. Dishonesty, malice or bad faith in the performance of an existing valid
obligation.
D. Contravention of the tenor of obligation.
56. Which of the following is not one of the sources of liability for damages?
A. Fraud C. Dolo causanti
B. Negligence D. Delay
59. Which of the following is not an exception to the rule that “all rights acquired in
virtue of an obligation are transmissible”.
A. When the parties agreed against its transmission.
B. When the law prohibits the transmission of rights.
C. When the nature of the obligation is purely personal.
D. When the obligation is real.
III – Diff. kinds of Obligation
61. Every obligation whose performance does not depend upon a future or uncertain
event, or upon a past event unknown to the parties, is demandable at once. This refers
to
A. Divisible and indivisible obligations.
B. Joint and solidary obligations
C. Obligations with a period.
D. Pure obligation
62. Demandable at once –

A. Conditional obligation C. Obligation with a period
B. Pure obligation D. Alternative obligation
63. One of the following is not a pure obligation –

A. I promise to pay you P500,000.
B. I will give you P50,000 if you will pass the CPA Board Examination this
year.
C. I will pay you P100,000 on demand.
D. I obliged you to give a specific car.
65. If the obligation of the debtor is “I will pay you my debt after I have arrived from
abroad”, this is
A. Unenforceable C. Void
B. With a period D. Conditional
66. 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 C. Suspensive
B. Conditional D. Resolutory
67. The obligation is demandable on the date of the obligation and shall continue to be
in force up to the arrival of the day certain
A. Resolutory period C. Indefinite period
B. Suspensive period D. Legal period
71. When the fulfillment of the condition depends upon the sole will of the debtor, the
conditional obligation shall be
A. Voidable C. Valid
B. Unenforceable D. Void
85. When the debtor binds himself to pay when his means permit him to do so, the
obligation is –
A. Conditional C. Simple
B. Pure D. With a period

established for the benefit of:
A. Both the creditor and the debtor C. The debtor
B. The third party D. The creditor
96. The debtor loses the benefit of the period, and his obligation becomes demandable
when
A. Demand by the creditor would be useless.
B. The guarantees as promised and delivered by the debtor are not acceptable to
the creditor.
C. After contracting the obligation, the creditor suspects that the debtor is becoming
insolvent.
D. The debtor attempts to abscond.
102.Facultative as distinguished from alternative obligation

A. The right of choice is given only to the debtor.
B. Various things are due, but the giving of one is sufficient.
C. If one of the prestations is illegal, the others may be valid and the obligation
remains.
D. It is impossible to give all except one, that last one must still be given.
104.In an obligation where only one prestation has been agreed upon, but to extinguish
the obligation, the debtor is allowed and does render another substitute, the obligation is
A. Facultative obligation C. Alternative obligation
B. Simple obligation D. Conjoint obligation
107.An obligation wherein various things are due but the complete performance of all of
them is necessary to extinguish the obligation
A. Facultative obligation C. Alternative obligation
B. Simple obligation D. Conjoint obligation
110.In a joint obligation, A, B and C are debtors of joint creditors, D, E and F in the
amount of P180,000. A’s obligation is
A. Pay D P60,000 C. Pay D P120,000
B. Pay D, E and F P180,000 D. Pay D P20,000
111.X, Y and Z joint debtors owe P18,000 to A, B and C, solidary creditors. How much
can B collect from X?
A. P 3,000 C. P9,000
B. P18,000 D. P6,000
113.Which of the following is not a characteristic of a joint indivisible obligation?

A. The creditor must proceed against all the debtors.
B. Each of the debtor can be held liable to pay for the entire obligation.
C. If any of the debtor be insolvent, the others shall not be liable for his share.
D. Demand must b made to all the debtors.
115.A, B and C secured a loan from D. the promissory note which evidence the
obligation states: “ I promise to pay or order P10,000 payable on demand”. (Signed) A B
C. the obligation is:
A. Solidary C. Indivisible
B. Divisible D. Joint
120.A and B are joint debtors of joint creditors C, D, E and f in the amount of P200,000.
How much can D and E collect from A?
A. P200,000 C. P100,000
B. P 25,000 D. P50,000
130.Which of the following statement is false?

A. Obligations to give definite things and those that are not susceptible of
partial performance shall be deemed to be divisible.
B. Execution of a certain number of days of work shall be divisible.
C. Accomplishment of work by metrical units are divisible.
D. An obligation to pay a certain amount in ten annual installments is divisible.
131.Which of the following is an indivisible obligation?

A. Execution of a certain number of days of work.
B. Accomplishment of work by metrical units.
C. Susceptible of partial performance.
D. To give definite things.
133. The indivisibility of an obligation necessarily implies solidarity.

If the contract is entire and a part is illegal, the whole contract in unenforceable.
A. True; False C. False; False

B. False; True D. True; True
134.In obligations with a penal clause, the creditor as a rule may recover from the
debtor in case of non-compliance the following:
A. The principal, the penalty as agreed upon, plus damages and interest.
B. The principal, the penalty, plus interest.
C. The principal and the penalty.
D. The principal, the penalty and damages.
135.A obligated himself to pay B the amount of P30,000, 30 days after May 1, 2011 plus
a penalty of P3,000 if he fails to pay the obligation on due date. After demand for
payment by B, A offered to pay on July 30, 2011. B can demand from A –
A. P30,000 plus P3,000 plus legal interest.
B. P30,000 plus legal interest.
C. P30,000 plus P3,000.
D. P30,000 plus P3,000 plus legal interest plus damages.
IV – Extinguishment of Obligations
137. Which of the following is not a ground for the extinguishment of an obligation?
A. Death of the creditor
B. Confusion or merger
C. Compensation
D. Condonation or remission
138. The following, except one, are secondary modes of extinguishing obligations.
A. Annulment
B. Death of both parties
C. Changing the object of the obligation with the consent of the parties.
D. Compromise.
139. The passage of time extinguishes the obligation

A. Proscription C. Rescission
B. Preterition D. Prescription
141. Which of the following is not a special form of payment?
A. Cession C. Consignation
B. Application of payment D. Dacion in payment

A. Adjudicacion en pago C. Tender of payment
B. Payment by cession D. application of payment
143. Don owes Ces P20,000. Without the consent of Des, Amy paid the debt which was
accepted by Ces. If Amy does not intend to be reimbursed –
A. The payment did not extinguish the debt of Des because it was made without his
consent.
B. The payment is valid as to the creditor who has accepted it.
C. The payment is not considered valid because of Amy’s intention.
D. The payment did not extinguish the debt because it was not made by the debtor.
144. Which of the following is a legal tender?

A. Letter of credit C. Promissory note
B. Bank manager’s check D. P20 worth of P0.05 coins.
145. Dan owes Che P20,000 due on April 20, 2011. When the debt matured, Dan is
paying Che a manager’s check worth P20,000.
Question 1: Can Che accept the check?

Question 2: Can Che refuse to accept the check?
Question 3: If Che accepts the check, is the acceptance equivalent to payment?
Question 1 Question 2 Question 3

A. Yes Yes Yes
B. Yes Yes No
C. No Yes No
D. No No Yes
146. The delivery of mercantile documents such as checks will produce the effect of
payment:
A. When through the fault of the creditor they have been impaired.
B. Upon delivery of the mercantile document.
C. When they are certified by the bank.
D. When they are presented to the bank for payment.
147. 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 creditor
B. At the domicile of the debtor.
C. Wherever the thing might be at the moment the obligation is to be fulfilled.
D. Wherever the thing might be at the moment the obligation is to be
constituted.
148. Del, a resident of Perez St., Dagupan City, Pangasinan, owes Cony a resident of
Sampaloc, Manila, P20,000 and the contract fails to stipulate the place of payment. The
place of payment must be:
A. Wherever they may see each other upon the maturity of the debt.
B. In Sampaloc, Manila
C. Anywhere in Dagupan
D. In the domicile of Del in Perez St., Dagupan City
149. A preferential right given to a debtor to choose the debt, from among several he
owes a single creditor, to which he wants his payment to be applied.
A. Application of payment. C. Cession of payment
B. Dation in payment D. Tender of payment
150.This is not an essential element of an application of payment.

A. There must be one debtor and one creditor.
B. Two or more debtors and two or more creditors.
C. There are two or more debts of the same kind and nature.
D. The debts are all due and demandable.
151.Jo owes John the following debts:
Debt 1 – P10,000 payable January 1, 2011

Debt 2 – P10,000 payable February 1, 2011
Debt 3 – P10,000 payable March 1, 2011
Debt 4 – P10,000 payable April 1, 2011
Suppose Jo pays John P10,000 on February 1, 2011 without stipulating to which

debt his payment shall be applied. To which of the following debt can he have his
payment applied?
A. Debt 1 C. Debt 3
B. Debt 2 D. Debt 4
154.In payment by cession or when the debtor cedes or assigns his property to his
creditor in payment of his debt, he shall be released from his obligation
A. To the full extent of debtor’s obligations.
B. Only to the extent of the net proceeds of the thing assigned.
C. Only to the extent allowed by the debtors.
D. Only to the extent allowed by the creditors.
155.Debtor Beth in indebted to Jane, Karla and Babe a total amount of P300,000 made
up of: Jane – P100,000; Karla – P50,000 and Babe – P150,000. On maturity, Beth
cannot pay his obligation so he assigns or cedes to them all his property, to be sold by
the creditors and the proceeds thereof applied to their corresponding credits. The
creditor’s sold Beth’s properties for only a total of P180,000. Is the obligation of Beth
extinguished? Decide.
A. Yes, the obligation is extinguished.
B. Jane, Babe and Karla will divide the P180,000 equally.
C. Jane will get P60,000; Karla – P30,000; and Babe – P90,000.
156.Cession as distinguished from dation en pago.

A. Does not require plurality of creditors.
B. May take place during the solvency of the creditor.
C. Does not affect all the properties of the debtor.
D. Does not transfer ownership upon delivery.
157. The abandonment of all property of the debtor for the benefit of his creditors in
order that the latter may apply the proceeds thereof to the satisfaction of their credit
A. Application of payment C. Dation in payment
B. Payment by cession D. Tender of payment
158.When the debtor abandons and assigns all his properties in favor of his creditors for
the latter to sell to satisfy his credits, this is-
A. Remission C. Dation in payment
B. Payment by cession D. Expromision
159.All of the following, except one, are requisites of cession –

A. The debtor is in a state of insolvency, either partially or totally, at the time of
cession.
B. There must be at least one debtor and two or more creditors.
C. There must be one debtor and one creditor.
D. The creditors may sell the property and apply the proceeds to their credits
proportionately.
166.Consignation is a mode of payment which extinguishes an obligation. Which of the

following is not a requisite of consignation?
A. Actual consignation with the proper judicial authorities.
B. Prior notice has not been made.
C. Existence of a valid debt.
D. There must be prior notice of consignation to persons interested in the fulfillment
of the obligation.
169.It is a mode of extinguishing an obligation whereby the debtor alienates in favor of

the creditor, property for the satisfaction of monetary debt
A. Adjudicacion en pago C. Payment by cession
B. Application of payment D. Tender of payment
170.A thing is not demmed lost when it –

A. It perishes
B. Disappears in such a way as its existence is unknown or it cannot be recovered.
C. Goes out of commerce.
D. Deteriorates.
171.One is not a requisite needed in order that the obligation shall be extinguished by
loss or destruction of the thing due:
A. When the thing is lost without the fault of the debtor.
B. When the thing lost is generic.
C. When the thing is lost before the debtor has incurred in delay.
D. When the thing lost is specific.
172.A, B and C are solidary creditors of X for P10,000. A makes a will giving the
p10,000 debt to X as legacy. The obligation is extinguished by
A. Confusion of debt C. Remission of debt
B. Novation of debt D. Payment of debt
173.A owes solidary creditors X, Y and Z P10,000. There is remission of the debts when
A. X borrows P10,000 from A.
B. X waives partially the obligation of P10,000 to A.
C. Z makes a will giving the P10,0000 debt to A as legacy.
D. Y tells that instead of paying P10,000, A shall just deliver a ring to Y.
174.One of the following is not a requisite of a valid remission

A. Must be in a public instrument.
B. Must be gratuitous.
C. Obligation is due and demandable.
D. Acceptance by the debtor.
177. Through an act or series of acts, the principal debtor has become eventually the
principal creditor himself with respect to the same obligation, and the obligation
therefore is extinguished because a person cannot collect or demand from himself
payment of the obligation
A. Merger or confusion C. Payment by cession
B. Novation D. Compensation
178.Andy makes a check payable to bearer, and hands the check to Ben, who hands it
to Cyn who finally hands it to Andy. This is an example of –
A. Condonation or remission of debt
B. Confusion or merger of rights
C. Compensation
D. Prescription
179.When two persons in their own right are reciprocally creditors and debtors of each
other and extinguishes both debts to the concurrent amount, what takes place is known
as
A. Compensation C. Confusion or merger
B. Novation D. Remission
180.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 C. Novation
B. Merger of rights D. Remission
181.It is a mode of extinguishing obligation when two persons in their own right are
creditors and debtors of each other –
A. Confusion C. Compensation
B. Reformation D. Novation
182.Legal compensation cannot take place in the following except –

A. When one debt arises from the obligation of a bailee in commodatum.
B. When one debt arises because of a claim for support due to gratuitous title.
C. When one debt arises from the obligations of a depositary.
D. When one debt arises from a bank deposit.
183.Compensaton shall takes place when –

A. One of the debts arises from the depositum or from the obligations of a
depository or of a bailee in commodatum.
B. One of the debts consists in civil liability arising from a penal offense.
C. Two persons, in their own right, are creditors and debtors of each other.
D. Answer not given.
184.Which one of the following is not an element of legal compensation?

A. Debts to be compensated are due and demandable.
B. There is controversy or adverse claim over any debts to be compensated.
C. There are two or more debts of the same kind.
D. There are two or more persons who are creditors or debtors of each other.
187.Dan and Doll are jointly indebted to Cris for P20,000. Cris endorsed the instrument
to Ane, Ane to Jun, Jun endorsed it back to Dan only. Whose obligation has been
extinguished?
A. Dan only
B. Doll only.
C. Both Dan and Doll.
D. Neither Dan nor Doll.
188.The substitution of an obligation by another which modifies or extinguishes it by

changing its object or principal condition or substituting the person of the debtor or
subrogating a third person in the rights of another is –
A. Compensation C. Subrogation
B. Novation D. Confusion of rights
189.A obliged himself to give B a car if B places among the top ten in the CPA Board
Exam. Subsequently, they agreed that A would give B the car if B merely passes the
CPA Board. This is an example of
A. Mixed novation C. Implied novation
B. Real novation D. Personal novation
190.If an obligation is modified by changing the object and also changing the principal
condition
A. There is mixed novation.
B. The original obligation remains.
C. There is real novation.
D. There is personal novation.
192.When a third person assumes the payment of the obligation even without the
knowledge and consent of the debtor but with the consent of the creditor
A. There is novation.
B. There is delegacion if debtor is released.
C. There is subrogation.
D. There is expromision if debtor is released.
193.If the substitution is without the knowledge of the original debtor and the new debtor
is insolvent and cannot pay the obligation:
A. The original debtor and the new one will share the value of the obligation.
B. The old debtor can still be liable to pay the obligation.
C. The old debtor is free from any liability after the substitution.
D. The old debtor, the new debtor and the creditor will share the value of the
obligation.
195.In delegacion, the creditor can still collect from the original debtor –
A. If the new debtor is already insolvent at the time of substitution and his
insolvency is neither of public knowledge nor known to the original debtor.
B. If the obligation is extinguished.
C. The new debtor is already insolvent at the time of substitution and same
was of public knowledge even if not known to the original debtor.
D. Even if the novation of the obligation is accepted by the creditor.
197.If a third person pays without the debtor’s knowledge or against his will, the payor is
entitled to
Reimbursement of what he has paid.

Subrogation to the rights of the creditor.
A. False; True C. False; False

B. True; False D. True; True
198.Which of the following is not a legal subrogation?

A. When a creditor pays another creditor who is preferred.
B. When a third person, not interested in obligation, pays with the approval of the
debtor.
C. When a third person interested in the obligation, pays even without the approval
of the debtor.
D. None of them.
CONTRACTS
1.Which of the following is not a valid stage of a contract?

A. Introduction C. Perfection
B. Conception D. Termination
2. A contract in a stage of conception when:

A. There is a meeting of the mind.
B. Negotiations are in progress.
C. The parties come to an agreement.
D. The contract is perfected.
3. The period when the minds of the seller and the buyer have met on the subject
matter and cause of the interest is –
A. Negotiation of the sale C. Consumption of the sale
B. Consensus of the sale D. Perfection of the sale.
4. The contract may be said to have been fully executed when there is
A. Preparation C. Perfection
B. Conception D. Consummation
5. There is no contract unless the following requisites concur, except

A. Consent of the contracting parties.
B. Object certain which is the subject matter of the contract.
C. Delivery of the subject matter.
D. Cause of the obligation which is established.
6. Three of the following are essential elements of a contract, except:

A. Cause of the obligation which is established.
B. Consent of the contracting parties.
C. Motive of the parties.
D. Object certain which is the subject matter of the contract.
7. The fulfillment of the contract is dependent upon chance

A. Adhesion C. Commutative
B. Onerous D. Aleatory
8. A contract in which a person literally contracts with himself is

A. Commutative contract C. Auto contract
B. Aleatory contract D. Unilateral contract
9. Perfected from the moment there is consent on the subject matter, and the cause or
consideration
A. Consensual contract C. Solemn contract
B. Real contract D. Formal contract
10. The statement contracts shall be obligatory in whatever form they have been
entered into provided all the requisites for their validity are present refers to:
11. Require consent, subject matter, cause or consideration, and delivery

12. Which of the following is not a real contract?

A. Deposit C. Pledge
B. Sale D. Commodatum
13. Contracts which must be in the form provided by law for their perfection
14. The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals,
good customs, public order, or public policy.
A. Liberty to contract C. Relativity
B. Mutuality of contract D. Consensuality
18. The contract must bind both contracting parties; its validity or compliance cannot be
left to the will of one of them.
A. Mutuality C. Principle of freedom
B. Consesuality D. Relativity
20. Contracts are effective and binding only between the parties, their assigns and
heirs. Three of the following enumerations are exceptions as provided by law. Which
does not belong to the exception?
A. When there is stipulation in favor of a third party.
B. Where one of the parties to the contract dies and thereafter a suit is filed
on the basis of the contract.
C. Where the obligation arising from the contract are not transmissible by their
nature.
D. Where the stipulation arising from the contract are not transmissible by
stipulation or by provision of law.
21. Which of the following is not exception to the principle of relativity?
A. When the obligations arising from the contract are not transmissible by their
nature, by stipulation, or by provision of law.
B. Where there is a stipulation pour autri.
C. When a third person induces another to violate his contract.
D. None of them.
23. D owes C P500,000. Before the debt was paid, D died leaving his only son, B –
A. If the value of the properties left by D is P1,000,000, B is obliged to pay the entire
P1,000,000 to C.
B. If the value of the properties left by D is P500,000, B is obliged to pay the
entirety to C.
C. If the value of the properties left by D is P400,000, B is has to pay the entire
P400,000 and make good the deficiency of P100,000.
D. If B did not inherit anything from D and B is very rich in his own right, B can be
compelled by C to pay the debt of his father.
24. A owes B P200,000 payable December 31, 2010. On December 1, 2010, A died
leaving property worth P100,000 to his son, C. C should pay B
A. P100,000 C. P 50,000
B. P200,000 D. Nothing
25. These are the basic principles or characteristics of a contract. Which is the
exception?
A. Freedom or liberty to stipulate.
B. Obligatory force and compliance in good faith.
C. Binding on third parties.
D. Perfection by mere consent.
26. In order that a stipulation in favor of a third person in a contract would be valid and
binding upon the parties thereto, three of the requisites are mentioned in the following
enumerations. Which among them is not a requisite?
A. There must be stipulation in favor of a third person.
B. The contracting parties must have clearly and deliberately conferred a favor upon
that third person.
C. The third person communicated his acceptance to the obligor before its
revocation.
D. That there must be an existing agency between either of the contracting
parties and the third person.
27. Not a requisite of stipulation pour autri

A. The third person is incidentally benefited by the stipulation.
B. The stipulation in favor of a third person must be a part of the contract, and not
the contract itself.
C. The favorable stipulation should not be conditioned or compensated by any kind
of obligation.
D. Neither of the contracting parties bears the legal representation or authorization
of the third party.
28. Don borrowed P100,000 from Cris payable in 2 years. The contract stipulates that
Don will pay 1% monthly interest equivalent to P1,000 per month to Emy, Cris brother,
on the 25th of each month for Emy’s support. Emy signified his acceptance before it
could be revoked.
A. Emy has no right to receive the monthly payment on the interest not being a
party to the contract.
B. Emy is not entitled to the monthly interest unless the money loaned is his.
C. Emy is entitled to the monthly interest because the amount involved per month is
his.
D. Emy is entitled to the monthly interest even if he is not a party to the
contract because there is a clear case of the stipulation pour autri.
30. A contract entered into in the name of another by one who has no authority or legal
representation, or who has acted beyond his power.
A. Voidable C. Rescissible
B. Unenforceable D. Void
31. Pat sold to Mat the computer owned by Cathy without Cathy’s authority. The
contract is
A. Perfectly valid C. Void
B. Voidable D. Unenforceable
32. Consent is manifested by the meeting of the offer and the acceptance upon the
constitute an offer?
A. An offer made to an agent.
B. Business advertisement of things for sale.
C. Advertisement for bidders.
33. When there is concurrence of the offer and the acceptance, there is –
A. Consent C. Revocation
B. Payment D. None of the above
38. Ann offered to sell her cellular phone for P10,000 to her friend, Beth. Beth accepted
the offer but is willing to pay only P8,000. Is there a perfected contract?
A. Yes, for a price of P10,000.
B. Yes, for a price of P8,000.
C. No, because the acceptance was qualified and it constituted a counter-
offer.
D. No, because the offer was rejected.
41. An offer made through an agent is accepted from the time acceptance is
communicated to the –
A. Agent C. Agent and the principal
B. Principal D. Agent and/ or the principal
43. Money paid or promised to be paid in consideration for an option

A. Option period C. Earnest money
B. Option money D. Payment
45. A offered to sell his car for P500,000 to B. A stated that he was giving B a period of
one week within which to raise the amount, and that as soon as B is ready, they will
sign the deed of sale. A had been given P5,000 by b in consideration for the option.
Which of the following is not correct?
A. A cannot sell his car to another because of the money given by B.
B. A can still sell the car before the acceptance is made known to him by B.
C. A can sell the car only after one week.
D. A cannot sell the car until after one week.
48. Which of the following is qualified to give consent to a contract?

A. Unemancipated minors
B. Insane or demented persons.
C. Deaf mutes who do not know how to write.
D. Deaf mutes who know how to read but do not know how to write.
49. Contracts entered into during lucid-interval

A. Voidable C. Void
B. Unenforceable D. None of the above.
51. Reluctantly and against her good sense and judgment, Tess entered into a contract
for the delivery of five (5) tables to Cora for the price of P15,000. The contract is
A. Void C. Voidable
B. Valid D. Unenforceable
52. Contract entered into in a state of drunkenness or during a hypnotic spell are
A. Void C. Voidable
B. Valid D. Legal
53. Choose the contract which are voidable:

A. Those undertaken in fraud of creditors when the latter cannot if any manner
collect the claims due them.
B. Those where the consent is vitiated by mistake, violence, intimidation,
undue influence or fraud.
C. Those whose object is outside the commerce of man.
D. Those where both parties are incapable of giving consent to a contract.
54. I - A simple mistake of account shall give rise to its correction.
II – In order that mistake may invalidate consent, it should refer to the substance of
the thing which
is the object of the contract.
A. True; False C. False; False

B. True; True D. False; True
57. When one of the parties to a contract is compelled to give his consent by a
reasonable and well-grounded fear of an imminent and grave evil upon his person or
property, or upon the person or property of his spouse; descendants or ascendants,
there is –
A. Violence C. Undue influence
B. Intimidation D. answer not given
58. A intimidated B to marry A’s daughter. After a year, B would like to file action for
annulment but could not do so because A was around to intimidate him. The marriage
contract is –
A. Rescissible C. Void
B. Voidable D. Unenforceable
61. When a person takes improper advantage of his power over the will of another,
depriving the latter of a reasonable freedom of choice there is
A. Violence C. Undue influence
B. Intimidation D. Mistake
62. 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 C. Mistake
B. Fraud D. Misrepresentation
TEST BANK
PARNERSHIP & CORPORATION
FR: DIAZ
PARTNERSHIP
1. All present properties are contributed
A. Universal partnership[
B. General partnership
C. Limited partnership
2. Composed of capitalist and industrial partners

A. Universal partnership
3. Partners shall enjoy practically all the profits:

A. Universal partnership[
4. They have no voice in the management of partnership affairs:

A. Managing partners
B. Silent partners
C. Both A and B
5. They have priority if the partnership is insolvent:

A. Separate creditors
B. Partnership creditors
C. Both A and B
6. May contribute money, property or industry to the common fund:

A. Both general and limited partners
B. Limited partner
C. General partners
D. Capitalist partners
7. One who takes charge of the winding up to partnership affairs upon dissolution:
A. Silent partner
B. General partner
C. Ostensible partner
D. Liquidating partner
8. A, B and C are partners. A contributed his services only; B, P20,000; and C,

P10,000.The
partnership was liquidated. After payment of the partnership’s obligation, only
P9,000 worth
of assets remained. The share of A will equal to:
A. P3,000
B. Equal of share of B
C. Equal of share of C
9. A and B entered into a universal partnership of all present property. The common
property of
the partnership shall be:
A. All the properties which belonged to each of the partners at the time of the
constitution of the partnership.
B. All the properties which belonged to each of the partners after the constitution
of the partnership.
C. All the properties which belonged to each of the partners at the time of
the constitution of the partnership as well as the profits which they may
acquire therewith.
D. All the properties which belonged to each of the partners at the time of the
constitution of the partnership as well as the profits which they may acquire
thereafter.
10. A capitalist partner engaged for his own account in an operation which is of the
kind of
business in which the partnership is engaged. Said partner can be
A. Compelled to sell his interest in the partnership to the other capitalist
partners.
B. Compelled to dissolve or discontinue the operation of his business
C. Compelled to bring to the common funds of the partnership any profits
accruing to him from his transactions.
D. Denied his share in the profits of the partnership.
11. If a partner in a partnership is insolvent, the first order of preference in the

distribution of his
assets are:
A. Partnership creditors
B. Partners contribution to the partnership
C. Separate creditors of the debtor
D. Pro-rata between the separate creditors of the debtor and the partnership
creditor
12. A, B and C are partners in a partnership. C contributed his industry. After

payments of the
partnership’s obligations, only P6,000 cash remains. No other assets. In the
absence of terms
to the contrary, the share of C in the remaining assets is:
A. Equal to share of A
B. Equal to the share of B
C. P2,000
D. Nothing
13. X, Y and Z are equal partners of Xyz Partnership. A owes the XYZ Partnership
for p9,000.
Z, a partner collected from A, P3,000 before X and Y received anything. Z issued
a receipt
on the P3,000 as his share of what A owes. When X and Y collected from A, A
was
insolvent.
A. Partner Z shall share partners X and Y with the P3,000
B. Z cannot be required to share X and Y with the P3,000
C. X and Y should first exhaust all remedies to collect from A.
D. X and Y can automatically deduct from the capital contributions of Z in the
partnership their respective share in the P3,000
14. A and B are partners in a real estate partnership . The partnership owns a piece
of land which
C desired to buy. C contacted A and inform him of his desire to buy the land and
A did not
tell to B about it. A bought B out of the partnership and afterwards sold the land
to C with a
big profit.
A. The partnership is dissolved when A became the sole owner
B. The sale of the land to C is void because it was without the knowledge of B.
C. A is not liable to B for the latter’s share in the profits
D. A is liable to B for the latter’s share in the profits
15. A, B and C are partners in ABC Partnership. D represented himself as a partner

in ABC
Partnership to E, who, on the belief of such representation, extended P50,000
credit to ABC
Partnership. Assuming only B and C consented to such representation, who will
be held
liable to E?
A. E extended the credit to ABC Partnership, so a partnership liability exists,
thus, all the partners, A, B and C are liable
B. B, C and D are partners by estoppels and thus, are liable prorate to E
C. Partners A, B and C who benefited from the credit extended by E are liable.
D. D who made the representation is liable to E
16. A and B are partners in a real estate business. A and B were approached by X
who offered to
buy a parcel of land owned by the partnership. Thereafter, b sold to A, B’s share
in the
partnership. Then, A sold the land to X at a big profit.
A. A is liable to B for B’s share in the profits
B. The partnership is dissolved when A became the sole owner
C. A is not liable to B for the latter’s share in the profits
D. The sale of the land to X is void.
17. One of the following incidents may be a cause for involuntary dissolution of a
partnership.
Which is?
A. Termination of the term of the partnership
B. Insolvency of any partner
C. Express will of any partner
D. Expulsion of any partner
18. A and B are equal partners in AB Partnership. Y presented himself as a partner

in AB
Partnership to Z, who relying on such representation, extended P50,000 credit to
AB
Partnership. Of the two (2) partners only B knew and consented to the
representation of Y.
Who should be held liable to Z?
A. Only Y, who presented himself as partner is liable.
B. Since the credit was extended to AB Partnership, a partnership liability was
created, so the two (2) partners and Y are liable.
C. Partners A and B who benefited from the credit extended to the partnership
AB Partnership shall be liable to Z.
D. B and Y are partners by estoppel and, thus, are liable to Z.
19. The following persons are disqualified to form a universal partnership. Who are
the
exception?
A. Brother and sister
B. Husband and wife
C. Those guilty of adultery and concubinage
D. Those guilty of the same criminal offense, if the partnership is entered into a
consideration of the same.
20. A is the capitalist partner and B the industrial partner. A is engaged personally in
the same
kind of business the partnership is engaged in.
A. If there are losses, the partnership will bear the losses
B. If there are profits, the profits will be shares by A and the partnership
C. If there are profits, A will give the profits to the partnership
D. A will be excluded from the partnership and pay damages.
21. A is the managing partner of ABC Partnership. X owes A personally and ABC
Partnership
P20,000 each. A collected and receive from X, P10,000 and he issued a receipt
wherein it is
stated that the amount is applied against his personal credit.
A. The amount received will be applied in favor the partnership credit
B. The amount will be applied in proportion to both credits
C. The amount received will be applied in the credit of A
D. All the partners will decide as to whose favor it will apply
22. Three (3) of the following are similarities between a partnership and a
corporation. Which is
not?
A. The individuals composing both have little voice in the conduct of the
business
B. Both have juridical personality separate and distinct from that of the
individuals composing them.
C. Like a partnership, a corporation can act only through agents
D. Both are organizations composed of an aggregate of individuals
23. A, B and C are general partners in ABC Partnership. A, the managing partner
engaged
personally in a business that is the same as the business of the partnership
without the
consent of B and C.
A. If there are profits, A will give the profits to the partnership
B. If there are losses, the partnership will bear the losses
C. If there are profits, they will be shared by partner A and the ABC Partnership
D. The profits or losses will be shared equally by A and the ABC Partnership
24. Three (3) of the following are rights of a general partner and also of a limited
partner in a
limited partnership. Which is not?
A. To inspect and copy at reasonable hours the books of the partnership and
have them kept at the principal place of business
B. To demand true and full information of all matters affecting the partnership
and a formal account of partnership affairs
C. To have dissolution and winding up by decree of court
25. The partnership is insolvent. These are preferred as regards to the partnership
property.
A. Partnership creditors
B. Partners separate creditors
C. Partners with respect to their capital
D. Partners with respect to their profits
26.
27. Bears the loss of property contributed to the partnership
A. Capitalist partner
B. Limited partner
C. None of the above
D. Partners contributing usufructory rights
28. When cash or property worth P3,000 or more is contributed as capital. The
Articles of Co-
Partnership shall be in a public instrument and be registered with the Securities
and
Exchange commission. If the said requirements are not complied with:
A. It will render the partnership void.
B. It will not affect the liability of the partnership and the partners to third
parties.
C. It will not give a legal personality to the partnership.
D. It will give the partnership a de-facto existence.
29. A, B and C are equal partners in Santos Brothers Partnership. The partnership is
indebted to
PC for P150,000. Partner A is indebted to SC for P20,000 PC attached and took
all the assets
of the partnership amounting to P90,000. B and C are solvent while A is insolvent
and all
what he owns is a land valued at P15,000.
A. SC has the priority to the land of A as a separate creditor.
B. PC has priority to the land of A to cover A’s share of the P60,000 remaining
liability of the partnership
C. B and C have priority to the land of A if they paid PC the 60,000 remaining
liability of the partnership.
D. PC and AC shall have priority to the land o A in proportion to their claim of
P60,000 and P20,000 respectively
30. A partnership is not dissolved upon the death of a:

A. General partner
B. Industrial partner
C. Limited partner
D. General limited partner
31. A and B are equal partners in AB Partnership C contacted XYZ and Co. and
represented
himself as partner in AB Partnership. XYZ and Co. contacted A who confirmed
that C is in
fact a partner of AB Partnership XYZ and Co. extended credit to C for AB
Partnership in the
amount of P60,000. Who is liable to XYZ and Co.?
A. A and C are partners by estoppels and are liable to XYZ and Co.
B. XYZ and Co. extended the credit to C for AB Partnership, so a partnership
liability exists, so both partners, A and B together with C are liable.
C. The AB Partnership benefited, so it is liable
D. Only C who made the representation is liable
32. A, B and C are partners in a trucking and freight business. B and C without the
knowledge
of A approached X and offered to sell to X all the trucks of the partnership at a
price very
much higher than their book value. Then B and C bought-out A from the
partnership and
thereafter X bought all the trucks with a big profit of B and C.
A. The sale of the trucks to X is void because it is without the knowledge and
consent of A.
B. B and C are not liable to A whatsoever
C. B and C are liable to A for his share in the profits in the sale.
D. When A was bought-out of the partnership, the partnership was dissolved so
A has no more share in the profits in the sale.
33. When the capital (of a partnership) is P3,000 or more, it must be in a public
instrument and
must be recorded with the Securities and Exchange Commission (Article 1772).
A, B and C
agreed to form a partnership and each contributed P10,000 as capital of the
partnership.
There was no compliance in the provisions of Article 1772.
A. The partnership was not established
B. The partnership did not have juridical personality
C. The partnership was established and any partner may compel the
execution of a public instrument
D. The partnership is void
34. A, as a partner contributed P30,000; B as partner, P15,000; and C as industrial

partner, his
services in the partnership. After payment of all liabilities and expenses, only
P18,000
remain as partnership assets.
A. A, P12,000; B, P6,000; C, None
B. A, P6,000; B, P6,000; C, P6,000
C. A, P9,000; B, P9,000; C, None
D. A, P8,000; B, P4,000; C, P6,000
35. This is the order of preference in the liquidation of a partnership:

A. 1.Outside creditors
2.Partners with respect to their capital
3.Partners with respect to their profit
4.Partners aside from capital and profit
B. 1. Partners with respect to their capital

3.Partners aside from capital and profit
4. Outside creditors
C. 1. Outside creditors
2. Partners aside from capital and profit
3. Partners with respect to their capital
D. 1. Partners aside from capital and profit

2. Outside creditors
3.Partners with respect to their capital
36. Three (3) of the following are rights of a partners. Which one is not?
A. Right to associate another person to his share
B. Right to admit another partner
C. Right to inspect and copy partnership book
D. Right to ask dissolution of the firm at the proper time
37 The following are similarities between partnership and a corporation. Which is the
exception?
A. Both have juridical personalities separate and distinct from that of the
individuals
composing them.
B. Like a partnership, a corporation can act only through agents
C. Both are organization of an aggregate of individuals
D. The individuals composing both have little voice in the conduct of the
business.
38. In the partnership of A, B and C, A was appointed in the Articles of Co-

Partnership as
managing partner. As such manager in good faith:
A. His power is revocable even without consent
B. His power can be revocable at any time even without just cause provided
C. He may execute all acts of administration despite the opposition of B
and C
D. He can be removed for valid cause even without the vote of the partners
owning the controlling interest
39. In the ABC Partnership, A and B contributed P20,000 each and C , his services.
After
paying all the creditors of the partnership, only P18,000 in cash remains. In the
absence of
terms to the contrary, the share of C is equal to:
A. P6,000
B. The share of A
C. The share of B
D. Nothing
40 . X and Y established a partnership by contributing, each at P50,000. Z, a third

party allowed
his name to be included in the firm name of the partnership. The partnership was
insolvent
and after exhausting all the remaining asset, there was left a liability to third
persons the
amount of P30,000. The creditors can compel:
A. Z to pay P30,000 remaining liability
B. X, Y and Z to pay P10,000 each
C. X or Y to pay P30,000 remaining liability
D. X and Y to pay P15,000 each
41. W, X, Y and Z formed a partnership. W, X and Y are general partners and

contributed
P50,000 each while Z, an industrial partner contributed his services only. All the
partners
signed an agreement stipulating that the liability of W is limited to its contribution
After all
the assets of the partnership were exhausted there remains an unpaid liability of
P40,000.
The creditors of the partnership can compel:
A. X and Y to pay the P40,000
B. X, Y and Z to pay the P40,000
C. W, X, Y and Z to pay P10,000 each and W and Z can demand
reimbursement from X and Y.
D. X and Y to pay P40,000
42. A partner in a partnership who is not really a partner, not being a party to the
partnership
agreement, but is made liable as a partner for the protection of innocent third
persons is
known as
A. Secret partner
B. Dormant partner
C. Nominal partner or partner by estoppel
D. Answer not given
43. A and B are capitalist partners, with C as industrial partner. A and B contributed
P15,000
each to the capital of the partnership. A contractual liability of P40,000 was
incurred by the
partnership in favor of X. The capital assets of P30,000 shall first be exhausted
thereby
leaving an unsatisfied liability of P10,000. X can recover the amount from:
A. A and B only
B. A, B and C
C. A, B and C and C can recover for reimbursement from A and B
D. Answer not given
44. A, B and C are partners engaged in a retail business. Their contribution is

P20,000 each. D is
admitted as a new partner with a contribution of P8,000. At the time of his
admission, the
partnership has an outstanding obligation to E in the amount of P80,000. In this
case:
A. D is not liable to E for this obligation
B. D is liable to E for this obligation so that amounting to P68,000 will be
exhausted leaving a balance of P12,000. Only A, B and C shall be liable
jointly or pro-rata, out of their separate property.
C. D is liable to E for this obligation so that after the assets of the partnership
will be exhausted, leaving a balance of P12,000, all the partners shall be
liable jointly or pro-rata, out of their separate property.
45. A, B and C are general partners in ABC Partnership. D is a debtor to the

partnership in the
amount of P15,000. A received from Debtor D the sum of P5,000 and issued a
receipt
identifying the amount as his share. Then D became insolvent, B and C cannot
collect the
P10,000.
A. A cannot be compelled to share the P5,000 with B and C
B. B and C can charge the capital of A with their share of the P5,000
C. A can be compelled to share B and C the P5,000
D. B and C automatically sue D to collect the P10,000
46. M and O are partners of M & O Partnership. M is the managing partner. N owes
M P10,000
and M & O partnership P30,000. The obligations of N are both due. M collected
from N the
debt of N to M in the amount of P10,000 and issued a receipt in the name of M.
To which
obligation will the P10,000 be applied?
A. The whole of the P10,000 be applied to debt of N to M
B. The P10,000 be applied to debt of N to M and to the partnership
C. P5,000 each of debt of N to M and to the partnership
D. P2,500 to debt of N to M and P7,500 debt of N to the partnership
47. A, B and C are partners in D-3 Partnership. On April 29,2010, partner C died. Not
knowing
that C died, on May 1, 2010, A contracted a liability to D who also do not know
the death of
C. The partnership debt is in the amount of P30,000, he can collect
A. P30,000 from A
B. P15,000 from A and P15,000 from B
C. P10,000 from estate of C; P10,000 from A ; P10,000 from B
D. P20,000 from A and P10,000 from B
48. This the order of preference in the liquidation of a general partnership:

A. Outside creditors; Partner as creditors; Partners capital; Partners profit
B. Partner as creditors; Outside creditors; Partners capital; Partners profit
C. Partners capital; Outside creditors; Partner as creditors; Partners profit
D. Outside creditors; Partner capital; Partners profit; Partners as creditors
49. R, S and T are partners. T is the industrial partner who in addition to his services,
he also
contributed capital to the partnership. There is no stipulation as to sharing of
profits and
losses. The partnership realized profits of P21,000. The share of T in the profits:
A. R and will determine T’s share I, in the profits
B. T’s share is P7,000
C. Pro-rata to his contributed capital
D. Nothing, because he is an industrial partner
50. W, X, Y and Z are partners. They contributed capital as follows: W, P50,000; X,

P30,000;
Y, P20,000 and Z, is an industrial partner, his services. The partnership’s
obligation to
outsiders exceed the total net assets by P18,000. Who and by how much will the
partners be
liable for the payment of the P18,000?
W X Y Z
A. P9,000 P5,400 P3,600 0
B. P4,500 P4,500 P4,500 P4,500
C. P6,000 P6,000 P6,000 P6,000
D. P4,500 P2,700 P1,800 P9,000
51. Which of the following is a characteristic of partnership as a contract?

A. Formal
B. Innominate
C. Gratuitous
D. Preparatory
52. One who takes active part in the business, but is not known to be a partner by
outside parties
is:
A. Silent partner
B. Dormant partner
C. Nominal partner
D. Secret partner
53. Can the partners stipulate that the newly admitted partner shall not be held liable
for the
obligations of the partnership arising before his admission? Which of the
following
statement is not correct?
A. No, because the newly admitted partner should be deemed to have assumed
all the debts of the partnership upon his voluntary participation in the
partnership.
B. No, because newly admitted partner is liable with respect to his capital
contribution which forms part of the partnership
C. No, because the third person are always protected by law.
D. No, because the subject of the stipulation is that the liability of the new
partner should not be satisfied out of the partnership property.
54. I. The arrival of the term of a partnership with a fixed term or period shall not
dissolve the
partnership if the partners continue with the business of the partnership
but such
partnership may be terminated anytime dependent on the will of the
continuing partners.
II. The general rule is that the loss of the specific thing contributed to the
partnership when
only the use of the thing is contributed by the partner and such thing after
its transfer to
the partnership which used the same or sometime was subsequently lost,
the partnership
is not dissolved.
A. True; False
B. True; True
C. False; False
D. False; True
55. May contribute money, property or industry to the common fund:

A. General partner
B. Industrial partner
C. Limited partner
D. Managing partner
56. A limited partner who takes active part in the management of the firm becomes:
A. A managing partner
B. Liable as a general partner
C. A general partner
D. A general partner and a limited partner at the same time
57. Which of the following statements is not correct?

A. A general partner in a limited partnership manages the business of the
partnership but cannot perform acts of ownership without the consent
of the limited partners
B. Valid contributions of a limited partner are money and property but not
services.
C. Additional limited partners may be admitted into the limited partnership with
the consent of all the partners.
D. A person who is both a general partner and a limited partner is deemed a
limited partner only with respect to the return of his contribution.
58. A is the managing partner of A and Company. X is indebted to A for P20,000 and
to the
partnership for P60,000. When both debts mature, X pays A P20,000 and the
latter issues a
receipt for his personal credit. The payment for P20,000 shall be applied:
A. ¼ in favor of A and ¾ in favor of the partnership
B. To the whole debt owing to A
C. ½ in favor of A and ½ in favor of the partnership
D. To the debt owing to the partnership
59. Which of the following is an essential element of partnership?

A. There must be a contribution of money, property, or industry to a common
fund.
B. It must an association for profit with the intention to divide the profits among
themselves.
C. There must be a valid and voluntary agreement.
D. All of the above.
60. A and B are partners. On June 15, 2009 when the total obligation of the
partnership totaled
P80,000. C was admitted as new partner. At the time C’s admission, the
partnership
creditors were M for P50,000 and N for P30,000. After June 15, the partnership
borrowed
from O P20,000 and P40,000 from P. On December 15, 2009, the partnership
became
insolvent leaving an obligation totaling P140,000 and partnership assets
amounting to
P30,000. The creditors are going after the separate properties of the partners to
satisfy their
remaining claims. How are the creditors’ claims satisfied?
Answer 1 - M and N can go after the separate properties of A and B but C’s
separates
properties are not answerable to their claims.
Answer 2 – O and P can go after the separate properties of A, B and C.
A. Both answers are wrong

B. Answer 2 is wrong but answer 1 is correct
C. Both answers are correct
D. Answer 2 is correct but answer 1 is wrong
61. A and B are capitalist partners with C as industrial partner. A and B contributed
P20,000
each to the capital of the partnership. A contractual liability of P50,000 was
incurred by the
partnership in favor of X. The assets of the partnership had been exhausted still
leaving an
unpaid liability of P10,000. X can recover the amount from:
A. A, B and C and C can recover by way of reimbursement from A and B
unless stipulated otherwise.
B. A and B only
C. C only
D. A, B and C and C has no right for reimbursement from A and B unless
expressly stipulated.
62. Which of the following liabilities of the partnership shall rank first in the order of
payment?
A. Those owing to creditors other than partners
B. Those owing to partners in respect to profits
C. Those owing to partners in respect to capital
D. Those owing to partners other than for capital and profits
63. I. The contribution of a limited partner may be cash, property or service.

II. A limited partner who takes part in the management of the business of the
partnership is
not a general partner but he shall be liable as a general partner.
A. True; True
B. True; False
C. False; False
D. False; True
64. I. A person may be a general and a limited partner in the same partnership at
the same time.
II. A person admitted as a partner into an existing partnership is not liable for
partnership
obligations existing before his admission.
A. True; True
B. True; False
C. False; False
D. False; True
65. I. A partner cannot assign his interest in the partnership to a third person
without the
consent of the other partners.
II. A partner’s interest in the partnership is his personal property.
A. True; True
B. True; False
C. False; False
D. False; True
66. I. The creditor of each partner shall be preferred to those of the partnership as
regards the
partner’s separate property.
II. An industrial partner is exempted from losses but not from partnership
liabilities
A. True; True
B. True; False
C. False; False
D. False; True
67. I. An industrial partner with the consent of the other partners can engage in any
business
for his own account.
II. An industrial partner is not a general partner.
A. True; True
B. True; False
C. False; False
D. False; True
68. I. A general partner not a managing partner can engage in a business different
from the
business of the partnership for his own account without the consent of the
other partners.
II. A general partnership can be formed orally.
A. True; True
B. True; False
C. False; False
D. False; True
69. I. All the partners in a general partnership are considered managing partners if
thee is no
stipulation as to who shall act as managing partner.
II. A partner is liable to the partnership for whatever property he agrees to
contribute
without necessity of demand.
A. True; True
B. True; False
C. False; False
D. False; True
70. I. If the capital contribution of the partners amount to P3,000 or more the
contract of
partnership must be in public a public document, otherwise the contract is
void.
II. A contract of partnership is void, whenever immovable property is contributed
thereto if
an inventory of said property is not made, signed by the parties and attached
to the public
document.
A. True; True
B. True; False
C. False; False
D. False; True
71. I. Dissolution does not terminate the partnership.

II. Insanity of a general partner in a limited partnership dissolves the partnership.
A. True; True
B. True; False
C. False; False
D. False; True
72. I. A general partner in a limited partnership has all the rights, powers and
liabilities as
though the partnership is not limited.
II. A general partner is personally liable for partnership obligations while a limited
partner is
not liable for partnership liabilities.
A. True; True
B. True; False
C. False; False
D. False; True
73. I. A limited partner is simply a contributor to the partnership.

II. A limited partner has a right to the return of his contribution upon the
dissolution of the
partnership.
A. True; True
B. True; False
C. False; False
D. False; True
CORPORATION
1. The nationality of a corporation is determined by the law of its domicile or place

of principal business. The test is known as:
A. The control theory
B. The full absorption theory
C. The incorporation theory
D. The management theory
2. This is unincorporated business organization created by an instrument by which

property is to be held and managed by trustees for the benefit and profit of such
person as may be or become the holders of transferable certificates evidencing
the beneficial interests in the estate
A. Business Trust
B. Close Corporation
C. Condominium Corporation
D. Joint Stock Company
3. When preferred shares are issued by a corporation with a fixed annual interest
on the face thereof, the effect is:
A. The contract of subscription is between the corporation and the stockholder
subsists
B. The stockholder is a plain investor who may rise or fall with the financial
success or failure of the corporation.
C. The stockholder is a creditor of the corporation
D. The shares of stock are negotiable instruments under the Negotiable
Instruments Law
4. This class of shares are those issued for no consideration or inadequate

consideration:
A. Bonus shares
B. Deferred shares or founders shares
C. Over issued shares
D. Watered shares
5. The power to deny pre-emptive right as a corporate power is classified as an:

A. Express power
B. Incidental power
C. Implied power
D. Discretionary power
6. The power to invest corporate funds in another corporation or business or for any
other purpose as a corporate power is classified as an:
A. Express power
B. Incidental power
C. Implied power
7. The power of conducting commercial contracts (to increase the business) and
sponsoring athletic contest for employees to keep them in good health or
maintaining a hospital for the employees is an example of:
A. Express power
B. Incidental power
C. Implied power
8. To establish pension, retirement, and other plans for the benefits of its directors,
trustees, officers and employees is an example of:
A. Express power
B. Incidental power
C. Implied power
9. A religious order is considered as a:

A. Corporation by prescription
B. Public corporation
C. Corporation sole
D. None of them.
10. Place of residence of a corporation shall be its:

A. Place of incorporation
B. Place of residence of majority of stockholders
C. Place where the principal office is established
D. None of them
11. This shall constitute a quorum for transaction of corporate business:

A. Majority of the members
B. Majority of the stockholders
C. Majority of the directors
D. All of them
12. Juridical personality of a corporation begins:

A. From the date of issuance of certificate of incorporation
B. By agreement of the parties
C. Acknowledgement before a Notary Public
D. None of them
13. Right which the existing stockholders of corporation cannot be deprived without
the consent is their right to subscribe or to purchase new stock issued by the
corporation; or unissued original stock, in proportion to their holdings before it
can be offered to others:
A. Right of redemption
B. Pre-emptive right
C. Right to purchase
D. None of them
14. A private corporation organized under the corporation law commences to have
corporate existence and juridical personality and is deemed incorporated from:
A. The date when the articles of incorporation is signed by the incorporators
B. When the articles of incorporation and by laws are presented and received by
the Securities and Exchange Commission and the filing fee is paid
C. From the date the SEC issues a certificate of incorporation under its
official seal
D. When the Articles of Incorporation is notarized by a Notary Public
15. The following are the qualifications of incorporators . Choose the exemption:
A. Majority of whom must be Filipinos
B. Majority of whom are residents of the Philippines
C. All are of legal age
D. Natural persons, not less than five but not more than 15.
16. These are the shares of stock which have been issued and fully paid for, but
subsequently reacquired by the issuing corporation:
A. Redeemable shares
B. Treasury shares
C. Founder’s share
D. None of the three
17. In the amendment of the Articles of Incorporation of a stock corporation, the

following is necessary:
A. Amendment by the majority vote of the Board of Directors plus a vote or
written assent of the stockholders representing at lest 2/3 of the
outstanding capital stock.
B. Amendment by a vote of 2/3 of the stockholders
C. Amendment by the majority vote of the Board of Directors
D. None of the three
18. Corporation governed by special laws, aside from the requirements specified
under the corporation laws, in order that their articles of incorporation may be
approved or accepted, must present before the Security and Exchange
Commission:
A. A favorable recommendation from the Ministry of Finance
B. A copy of previous income tax return and a statement of assets, liabilities and
net worth
C. A favorable recommendation of the appropriate government agency to
the effect that such articles or amendment is in accordance with law.
D. An undertaking to change the name of the corporation if found that there is
already registered with the SEC a name or a name similar to the name of this
corporation
19. The following are some of the requisites of a de facto corporation. Choose the
exception:
A. Valid law under which it is incorporated
B. Attempt to incorporate
C. Assumption of corporation power
20. The following are the qualifications of director in a corporation. Choose the
exemption:
A. Majority of the directors must be Filipino citizens
B. He must own at least one share of the stock in his name
C. Majority of the corporate directors must be residents of the Philippines
D. He must not have convicted by final judgment of an offense carrying an
imprisonment exceeding 6 years or an offense constituting a violation of the
Corporation Code
21. The secretary of a stock corporation shall be:
A. A director of the corporation
B. An incorporator of the corporation
C. A resident and citizen of the Philippines
D. Of legal age and citizen of the Philippines
22. Directors or trustees who willfully and knowingly vote or assent to patently
unlawful act of the corporation or who are guilty of gross negligence or had faith
in directing the affairs of the corporation or acquire any personal or pecuniary
interest in conflict with their duty shall be liable:
A. As trustee for the corporation
B. Criminally for violation of the corporation code
C. Jointly and severally for the damages suffered by the corporation
23. The following are methods of dissolving a corporation:

A. Expiration of the term
B. Failure to organize and commence business within two (2) years from date of
issuance of certificate of incorporation
C. Shortening of the corporate term
D. All of the above
24. Three of the following enumeration are not authorized to issue no par value
shares of stock. Which is the exception?
A. Insurance companies
B. Industrial companies
C. Public utilities
D. Trust companies
25. Any stockholder of a corporation shall have the right to dissent and demand
payment of the fair value of his share/s in three of the following corporate acts.
A. In case of any amendment to the articles of incorporation which has the effect
of changing or restricting the rights of any stockholder or class of shares.
B. In case of merger or consolidation
C. In case of sale, lease, exchange, transfer, mortgage, pledge or other
disposition of all or substantially all of the corporate assets and property of the
corporation.
D. In case of incurring, creating or increasing bonded indebtedness
26. The authorized capital stock of a proposed corporation is P100,000 divided into
1,000 shares with a par value of P100.00 each. The minimum amount of
subscription that must be paid is:
A. P8,750 or 87.5 shares C. P5,000 or 50 shares
B. P6,250 or 62.5 shares D. P7,500 or 75 shares
27. In the matter of management of the business affairs of a corporation, this is
supreme:
A. Majority of the stockholders
B. 2/3 of the stockholders
C. Board of Directors
D. President of the corporation
28. This is the equitable right of stockholders to subscribe to newly issued shares of
the corporation in proportion to their present shares in order to maintain their
equity in the corporation.
A. Right of redemption
B. Concept of corporation entity
C. Right to sue and be sued
D. Pre-emptive right
29. This is a written acknowledgement of an interest of a stockholder in the

corporation.
A. Proxy C. Certificate of Stock
B. Share of stock D. Capital Stock
30. These are the persons who sign the Articles of Incorporation, who may or may
not be subscribers of shares
A. Incorporators C. Directors
B. Trustees D. Promoters
31. Choose the minimum requirement of the Corporation Law to corporate formation:
Authorized Capital Subscribed Capital Paid-In Capital

A. P100,000 P20,000 P5,000
B. 100,000 20,000 4,000
C. 100,000 25,000 5,000
D. 100,000 25,000 6,250
32. They provide and regulate the internal matters of the corporation, such as calling
the Board of Directors and Stockholders meetings.
A. Board of Directors C. By-laws
B. Majority of Stockholders D. Articles of Incorporation
33. This is an authority to vote in a corporation stockholders meeting.

A. Proxy C. Certificate of stock
B. By-laws D. Share of stock
34. A gratuitous reissue of Treasury shares will result in:

A. Capital surplus C. Watered stock
B. Additional profit D. Stock dividend
35. Three (3) of the following are similarities between a partnership and a
corporation. Which is not?
A. The individuals composing both have title voice in the conduct of the
business
B. Both have juridical personality separate and distinct from that of the
individuals composing them
C. Like a partnership, a corporation can act only through agents
D. Both are organizations composed of an aggregate if individuals
36. One of the following is the limitation on proxies. Which is?

A. Proxy acquires legal title to the shares of the stock
B. A proxy votes even in the presence of the stockholder
C. The proxy is voted only for the meeting for which it was intended
D. A proxy is revocable at any time
37. The number of the Board of Trustees in a non-stock corporation:

A. Shall not be less than five but not more than eleven
B. May be more than fifteen upon its organization
C. May be less than five upon its organization
D. Shall not be less than five but not more than fifteen
38. One of the following is a ground for the suspension or revocation of the certificate
of incorporation by the Securities and Exchange Commission.
A. If the corporation has commenced its business transactions and
afterwards ceased operation continuously for a period of at least five (5)
years
B. If the corporation fails to commence and start to operate and the failure is due
to causes beyond the control of the Corporation
C. If the corporation does not formally commence its business transaction and
subsequently become continuously inoperative for a period of two (2) years
39. Right of the corporation to continue as a juridical entity for the term stated in the
articles of incorporation despite the death of any stockholder.
A. Juridical personality C. Right of succession
B. Pre-emptive right D. Right of existence
40. Original signatories in the articles of incorporation are called:

A. Corporators C. Stockholders
B. Promoters D. Incorporators
41. They regulate different internal matters of the corporation such as calling and
defining the conduct of the meeting of stockholders and directors.
A. Board of directors C. Articles of incorporation
B. By-laws D. Proxy
42. The document conferring authority to vote stock in a corporate meeting:
A. Power of attorney C. Capital stock
B. Shares of stock D. Proxy
43. The minimum requirement of Corporation Law to corporate formation.
Authorized Subscribed Capital Paid in Capital

A. P500,000 P100,000 P25,000
B. 500,000 125,000 31,250
C. 500,000 100,000 20,000
D. 500,000 125,000 25,000
44. Three (3) of the following are attributes of a corporation. Which is the exception?
A. An artificial being
B. Has the right of succession
C. Has powers, attributes and properties expressly authorized by law or incident
to its existence
D. Created by agreement of the incorporators
45. Three of the following are qualifications of the Board of Directors. Which is the
exception?
A. He must own at least one (1) share of the capital stock
B. At least majority of them are citizens of the Philippines
C. The shares owned must be recorded in the books of the corporation.
D. He must continuously own at least one )1) share of the stock of the
corporation
46. The voting requirement to increase or decrease capital stock

A. Majority vote of the board of directors and consented by the
stockholders representing two-thirds (2/3) of the outstanding capital
stock
B. Two-thirds (2/3) vote of the board of directors with the consent of majority of
C. Majority vote of the board of directors and with consent if majority of the
D. Majority vote of the board of directors and three-fourths (3/4) vote of the
47. A dividend payable partly in cash and partly in stocks, as to class of dividend, is a
:
A. Optional dividend C. Liquidation dividend
B. Property dividend D. Composite dividend
48. Bonds which are not secured by any specific mortgage lien of pledge or
corporate property but by the general corporation are:
A. Guaranteed bonds C. Income bonds
B. Debenture bonds D. Redeemable bonds
49. These are the rules and guidelines adopted by the stockholders of a corporation
for the internal government.
A. Rules and regulations C. Minutes of the meetings
B. Articles of Incorporation D. By-law
50. Which of these conditions comply with the minimum requirement of the law to
corporate formation?
Authorized Capital Subscribed Capital Paid In Capital

A. P100,000 P25,000 P12,500
B. 64,000 16,000 4,000
C. 200,000 50,000 10,000
D. 200,000 40,000 10,000
51. A distribution by a corporation of shares held by it in another corporation is:

A. Stock dividend
B. Sales of capital asset
C. Property dividend of actual distribution of corporate assets
D. Sale of treasury stock
52. Corporations organized by private persons performing public function and for
profit to private parties are:
A. Public corporations
B. Government controlled corporation
C. Quasi-public corporation
D. Private corporation
53. This is a document of a corporation acknowledging the interest of a stockholder

in the corporation’s assets.
A. Certificate of stock C. Share of stock
B. Capital stock D. Stockholder’s equity
54. In a corporation, any two (2) or more positions may be hels concurrently by the
same person, except that no one (1) person shall act as:
A. Chairman of the Board and President
B. Secretary and Treasurer
C. President and Secretary
D. Treasurer and Director
55. A corporation may invest its funds in any other corporation of business or any
purpose other than the primary purpose for which it was organized, only if:
A. There is majority vote of the Board of Directors and ratified by the
stockholders representing 2/3 of the outstanding capital stock
B. It is reasonably necessary to accomplish its secondary purpose, the approval
of the stockholders not necessary
C. There is a majority vote of the Board of Directors
D. There is majority vote of the outstanding capital stock
56. The following are advantages of no-par value share of stock. Which is the
exception?
A. No-par value share allow flexibility in price
B. The stockholders of no-par value shares are relieved of personal liability for
unpaid stock subscription
C. It allows the issue of stock in exchange of property
D. No-par value shares afford a possible remedy or relief from the evil of
over-capitalization and stock watering
57. The right to vote at meetings, the right to receive dividends and the right to
receive copies of financial statements is known as:
A. Right of existence C. Pre-emptive right
B. Directors right D. Stockholder’s
right
58. The Garcia Realty Development Corporation has a capital stock of P1,000,000
divided into 10,000 shares with a par value of p100 each. 5,000 shares are
ordinary share and 5,000 shares are 10% preference share. In 2008 there was
no declared dividends but in 2009 dividends in the amount of P200,000 were
declared. The holders of the preference share are entitled to receive:
A. P50,000 if cumulative, non-participating
B. P125,000 in non-cumulative, participating
C. P125,000 if cumulative, participating
D. P100,000 if non-cumulative, non-participating
59. Persons who compose the corporation whether as stockholder in a stock

corporation or member in a non-stock corporation, are called:
A. Incorporators C. Promoters
B. Subscribers D. Corporators
60. In three of the following, these persons qualify to be incorporators. Which is the
exception?
A. Must have paid at least 25% of their subscription
B. Natural persons not less than five, not more than 15
C. Majority are residents of the Philippines
D. Need not be citizens of the Philippines
61. Dividends are declared and paid out of the

A. Paid-up capital
B. Capital stock
C. Net income of the current year
D. Unrestricted retained earnings
62. The following defect will preclude the creation of even a de facto corporation:
A. The name of the corporation closely resembles that of a pre-existing
corporation that it will tend to deceive the public
B. The incorporators or a certain number of them are not residents of the
Philippines
C. Lack of certificate of incorporation from the Securities and Exchange
Commission
D. Answer not given
63. The distinction between a proxy and a voting trust is that in a voting trust:
A. The trust has a legal title to the shares of the transferring stockholder
B. Unless coupled with interest, is revocable at any time
C. Is not limited to any particular meeting
D. Answer not given
64. The distinction between subscription of shares from purchase of shares is that in
subscription of shares:
A. It is an independent agreement between the individual and the corporation to
buy shares of stock from it at a stipulated price
B. It takes place before or after incorporation and is generally paid in
installment or upon call.
C. In case of insolvency of the corporation, the subscription price cannot be
enforced on the theory that the corporation can no longer perform its
obligation to deliver the certificate of stock
D. Answer not given
65. A corporation created in strict or substantial conformity with the statutory

requirements for incorporation and whose right to exist as a corporation cannot
be successfully attacked even in a direct proceeding for that purpose by the
State is known as:
A. De jure corporation C. De facto corporation
B. Corporation by estoppels D. Answer not given
66. One of the characteristics of treasury shares is that:

A. They have the status of outstanding shares
B. They may not be reissued or sold again
C. They participate neither in dividends nor in the meetings of the
corporation as voting stocks
D. Answer not given
67. Which of the following will not qualify as incorporator of a corporation?

A. A minor who is emancipated by voluntary concession or marriage
B. A married woman without the consent of her husband where the property
involved in the act of incorporation is paraphernal
C. A corporation
D. Answer not given
68. The articles of incorporation is required to state the names, nationalities and
residences of persons who act as directors or trustees are duly elected and
qualified. This requirement is intended to provide a basis by which the Securities
and Exchange Commission could determine whether the Articles of Incorporation
has complied with the requirement that:
A. At least a majority of the directors or trustees are residents of the
Philippines
B. All the directors or trustees are residents of the Philippines
C. 2/3 of the directors or trustees are residents of the Philippines
D. Answer not given
69. The power to revoke corporate franchise for causes specified by law is vested
only in the:
A. President of the Republic of the Philippines
B. Securities and Exchange Commission
C. Court of component jurisdiction
D. Answer not given
70. Corporate dissolution may take place by voluntary inaction which will in the
cessation of its corporate powers and the corporation shall be deemed dissolved.
Such dissolution may result from:
A. Inaction by the corporation through its failure to formally organize and
commence with the transaction of its businesses or the construction of
its works within two years from the date of its incorporation
B. Failure of the corporation to submit the annual reports required by the
Securities and Exchange Commission for a period of five years
C. Merger or consolidation with respect to absorbed corporation
D. Answer not given
71. Watered stocks are shares of stock issued by a corporation for a consideration in
any form other than cash valued in excess of its fair value. In this regard:
A. The issue by itself is void
B. The agreement that it shall be paid less than its par or issued value is
illegal and void and can not be enforced
C. The subscriber and purchaser shall not be liable for the full par value of the
shares
D. Answer not given
72. The voting proportion required to enable a corporation to invest its funds in any
other corporation on business of for any purpose other than its primary purpose:
A. 2/3 vote of the board of directors and ratified by majority of the outstanding
capital stock
B. Majority vote of the board of directors and ratified by majority of the
stockholders
C. Majority of the board of directors and ratifies by 2/3 of the outstanding
stockholders
D. Majority of the board of directors and ratified by 2/3 of the outstanding
capital stock
73. An officer of a corporation may hold two or more positions in the corporation but
not as:
A. Chairman of the Board and President
B. President and Treasurer
C. Secretary and Treasurer
D. Vice President and Secretary
74. The right of a corporation to exist as juridical person during its term as stated in
its Articles of Incorporation despite the death of any of its stockholders is:
A. Right of existence C. Right of succession
B. Right of redemption D. Pre-emptive right
75. The interest or right of the owner in the corporation’s profits or in the net assets
of the corporation on dissolution is:
A. Dividend C. Certificate of stock
B. Share of stock D. Capital
76. Requirement to effect the amendment of by-laws of a corporation.

A. Majority vote of the board of Directors
B. Vote of 2/3 of the outstanding capital stock
C. Majority vote of the Board of Directors and majority vote of the
D. Majority vote of the outstanding capital stock
77. The nationality of the corporation is determined by the place of the controlling
stockholders. This test is:
A. Control test C. Incorporation test
B. Domicile test D. Capitalalization test
78. The following person can not be incorporator of a corporation.

A. A resident alien
B. A married woman without the consent of the husband even if the payment of
her shares is her paraphernal property
C. A subscriber on the share of the corporation who pays less than 25% of his
subscription
D. A corporation organized under the laws of the Philippines
79. One of the following is not required and does not form part of the three-fold duty
of directors of a corporation. Which one?
A. Duty of diligence C. Duty of obedience
B. Duty of loyalty D. Duty of efficiency
80. These do not form part of the outstanding capital stock:

A. Bonus shares C. Founder’s shares
B. Treasury shares D. Redeemable shares
81. One of the following does not require stockholder’s approval:

A. Merger or consolidation
B. Change of corporate name
C. Investment of corporate funds for a purpose outside of the main purpose of
the corporation.
D. Declaration of cash dividend
82. Under this test, a corporation is a national of the country pursuant to whose laws
it is incorporated:
A. Nationality test C. Control test
B. Capitalization test D. Incorporation test
83. Which of the following statements is not correct?

A. In the delinquency sale at public auction, the highest bidder is one who
offers to pay the full amount of the balance of the subscription plus
interest and expenses of the sale for the highest number of shares.
B. The sale of delinquent stock at public auction can be stopped if the Board of
Directors stops the sale for valid reason.
C. Payment of unpaid subscription may not be enforced by applying cash
dividends to delinquent stockholders.
D. The Board of Directors shall order, by resolution, the sale of delinquent stock
specifying the amount due plus accrued interest, the place, time and date of
the sale
84. A stockholder who does not approve the action taken by the Board of Directors in
proposing to amend the Articles of Incorporation is allowed to withdraw from the
corporation in one of the following instances:
A. Merger or consolidation
B. Investment of corporate funds in another corporation
C. Creating, incurring, increasing or decreasing any bonded indebtedness
D. Shortening or prolonging corporate existence
85. I. Membership in a non-stock corporation and all rights arising therefrom cannot
be transferred even if provided in the articles of incorporation or by laws
because membership and the rights arising therefrom are personal and non-
transferable.
II. Treasury stocks sold for less than par or issued value are considered
“watered stock” and as
such are prohibited by law. Which is correct?
A. True; False
B. Both statements are false
C. False; True
D. Both statements are true.
TEST BANK
LAW ON PARTNERSHIP & CORPORATION
fr: cpar
PARTNERSHIP
1. One of the following is not a characteristic of a contract of partnership
A. Real, in that the partners must deliver their contributions in order for the
partnership contract to be perfected.
B. Principal, because it can stand by itself.
C. Preparatory, because it is a means by which other contracts will be entered
into.
D. Onerous, because the parties contribute money, property or industry to the
common fund.
2. One of the following is not a requisite of partnership. Which is it?

A. There must be a valid contract.
B. There must be a mutual contribution of money, property or industry to a
common fund.
C. It is established for the common benefit of the partners which is to obtain
profits and divide the same among themselves.
D. The articles are kept secret among the members.
3. The minimum capital in money or property except when immovable property or
real rights
thereto are contributed, that will require the contract of partnership to be in public
instrument
and be registered with SEC.
A. P 5,000
B. P10,000
C. P 3,000
D. P30,000
4. X and Y entered into a universal partnership of all present property. At the time of
their
agreement. X had a four-door apartment which he inherited from his father 3
years earlier. Y,
on the other hand, had a fishpond which he acquired by dacion en pago from Z.
During the
first year of the partnership, rentals collected on the four-door apartment
amounted to
P480,000; while fish harvested from the fishpond were sold for P300,000. During
the same
period. B received by way of donation a vacant lot from an uncle. The partners
had an
stipulation that future property shall belong to the partnership. Which of the
following does
not belong to the common fund of the partnership?
A. Fish pond
B. Rental of P480,000
C. Apartment
D. Vacant lot
5. D and E entered into a universal partnership of profits. At the time of execution of

the articles
of partnership, D had a two-door apartment which he inherited from his father 3
years earlier.
E on the other hand, had fleet of taxis which he purchased two years before. In
the first year
of the partnership, D earned P500,000 as radio talent while E won P1,000,000 in
the lotto.
During the same period, rentals of P120,000 were collected from the apartment,
while fare
revenues of P200,000 were realized from the operation of the fleet of taxis.
Which of the
following belongs to the partnership?
A. Two-door apartment
B. Lotto winnings of P1,000,000
C. Salary of P500,000
D. Fleet of taxis
6. A partnership formed for the exercised of a profession which is duly registered is

an example
of
A. Universal partnership of profits
B. Universal partnership of all present property
C. Particular partnership
D. Partnership by estoppel
7. A, B and C are partners in ABC Enterprises. Not having established yet their
credit standing,
the three partners requested D, a well known businessman, to help them
negotiate a loan
from E, a money lender. With the consent of A, B and C, D represented himself
as a partner
of ABC Enterprises. Thereafter, E granted a loan of P150,000 to ABC
enterprises. What kind
of partner is D?
A. Managing partner
B. Liquidating partner
C. Ostensible partner
D. Partner by estoppel
8. Using the preceding number, assuming ABC Enterprises was unable to pay the
loan on due
date at which time the assets of the partnership amounted to P120,000. From
whom may E
collect the payment?
A. D only for the whole amount of P120,000.
B. A, B and C who are liable jointly for P50,000 each.
C. ABC Enterprises for its assets of P120,000; hereafter, A, B and C from their
separate assets at P10,000 each.
D. ABC Enterprises for its assets of P120,000 thereafter, A, B, C and D from
their separate assets at P7,500 each.
9. Which of the following losses will not cause the dissolution of a partnership?
A. Loss before delivery of a specific thing which a partner had promised to
contribute to the partnership.
B. Loss of a specific thing after its delivery to and acquisition of its
ownership by the partnership from the partner who contributed the
same.
C. Loss after delivery of a specific thing where the partner contributed only its
use and enjoyment where such partner reserved the ownership thereof.
D. Loss before delivery of a specific thing where the partner promised to
contribute only its use and enjoyment, reserving the ownership thereof.
10. A partner can engage in business for himself without the consent of his co-
partners if he is
A. A capitalist partner whether or not the business he will engage in is of the
same kind as or different from the partnership business.
B. An industrial partner whether or not the business he will engage in is of the
same kind as or different from the partnership business.
C. A capitalist partner and the business he will engage in is of a kind
different from the partnership business.
D. An industrial partner and the business he will engage in is of a kind different
from the partnership business.
11. The partnership will bear the risk of loss of three of the following things, except
A. Things contributed to be sold.
B. Fungible things or those that cannot be kept without deteriorating.
C. Non-fungible things contributed so that only their use and fruits will be
for the common benefit.
D. Things brought and appraised in the inventory.
12. A partner’s interest in the partnership is his share of the profits and surplus which
he may
assign to a third person. Which of the following statements concerning such right
is correct?
A. The conveyance of a partner’s interest will cause the dissolution of the
partnership.
B. The assignee becomes a partner.
C. The assignee has the right to interfere in the management of the partnership
business.
D. The assignee has the right to receive the profits which the assigning
partner would otherwise be entitled thereto.
13. Partnership as distinguished from corporation

A. Acquires juridical personality upon approval by the SEC and the issuance of
certificate.
B. Has limited liability.
C. Created by operation of law.
D. No power of succession.
14. Essential elements or feature of a partnership, except

A. Must have a lawful object or purpose
B. There must be a contribution of money, property or industry to a common
fund
C. With intention to divide and contribute whatever profits they make to
other people.
D. Must be established for the common benefit or interest of the partners.
15. Partner who contributes money and/ or property, except

A. General
B. Capitalist
C. Industrial
D. Managing
16. Partner who contributes industry or labor

A. General
B. Capitalist
C. Industrial
D. Managing
17. Partner who contributes both capital and industry

A. General
B. Limited
C. Managing
D. Capitalist-industrial
18. Partner who is liable beyond the extent of his contribution

A. General
B. Limited
C. Industrial
D. Silent
19. Partner who is liable only to the extent of his contribution

A. Limited
B. General
C. Industrial
D. Managing
20. Partner who manages actively the firm’s affairs

A. Silent
B. Liquidating
C. Managing
D. Dormant
21. Partner who does not participate in the management though he shares in the
profits or losses.
A. Liquidating
B. Nominal
C. Ostensible
D. Silent
22. Partner who winds up the affairs of the firm after it has been dissolved
A. Liquidating
B. Managing
C. Industrial
D. Capitalist
23. Partner whose connection with the firm is known to the public
A. Ostensible
B. Secret
C. Silent
D. Nominal
24. Partner whose connection with the firm is concealed or kept secret
A. Ostensible
B. Secret
C. Silent
D. Nominal
25. Partner who is both a secret and silent partner

A. Nominal
B. Ostensible
C. Limited
D. Dormant
26. Partner who is not really a partner but who may become liable as such insofar as
third
persons are concerned
A. Nominal
B. Ostensible
C. Silent
D. Secret
27. May contribute money, property or industry to the common fund
A. Limited partner
B. General partner
C. Both limited and general partners
D. Dormant partner
28. May be required to make additional contribution in case of imminent loss:

A. Capitalist partner
B. Limited partner
C. Industrial partner
D. Choices A, B and C
29. A, B and C are partners each contributing P10,000. The firm’s indebtedness
amounts to
P90,000. It was stipulated that A would be exempted from liability. Assuming that
the capital
of P30,000 is still in the firm, which of the following is not correct?
A. The creditors may get the P30,000 and still collect each P20,000 from A, B
and C.
B. A can recover P10,000 each from B and C should he (A) be required to pay
the creditors.
C. A cannot recover his original capital of P10,000.
D. The creditors can recover P45,000 each from B and C.
30. A newly admitted general partner is liable to creditors existing at the time of his
admission
and his liability is
A. Up to his capital contribution only if there is stipulation.
B. Up to his separate property even there is no stipulation.
C. Up to his capital contribution even if there is stipulation.
D. Up to his separate property only if there is stipulation.
31. Using the preceding number, but the obligations were contracted after his
admission, which of the following is correct?
A. He is liable to the creditors before and after his admission up to his separate
property.
B. He is liable to the creditors before and after his admission only up to his
capital contribution.
C. He is liable to the creditors before and after his admission up to his
capital contribution and to the creditors after his admission up to his
separate property..
D. He is not liable to creditors existing before his admission.
32. A and B are partners engaged in the real estate business. A learned that C was
interested in buying a certain parcel of land owned by the partnership, even for a
higher price. Without informing B of C’s offer A was able to convince B to sell to
him (A) his (B’s) share in the partnership. Then A sold the land at a big profit.
A. A is liable to B for the latter’s share in the profit.
B. C is liable to B for the latter’s share in the profit.
C. A new partnership is formed between A and C.
D. The sale of the land to C is void since it was without the knowledge of B.
33. A and B are partners in a real estate business. A and B were approached by X
who offered to buy a parcel of land owned by the partnership. Thereafter B sold
to A, B’s share in the partnership. Then A sold the land to X at a big profit. Which
is correct?
A. The sale of the land to X is void
B. A is liable to B for B’s share in the profits.
C. B may rescind the contract between A and X
D. A is not liable to B for any share in the profits.
34. The following persons are disqualified to form a universal partnership, except
A. Husband and wife
B. Brother and sister
C. Those guilty of adultery and concubinage
D. Those guilty of the same criminal offense; if the partnership is entered into in
35. A, B and C are capitalist partners while D is an industrial partner. A, the

managing partner engaged personally in a business that is the same as the
business of the partnership without the consent of the other partners. As a result,
A. If there are losses, the partnership will bear the losses
B. If there are profits, the profits will be shared by A and the partnership.
C. If there are profits, A will give the profits to the partnership.
D. A will be excluded from the partnership and will pay damages.
36. A, a managing partner is B’s creditor to the amount of P1,000 already

demandable. B also owes the partnership P1,000, also demandable. A collects
P1,000 from B. One is not correct.
A. If A gives a receipt for the partnership it is the partnership’s credit that has
been collected.
B. If A gives a receipt for his own credit, it is A’s credit that has been
collected.
C. If A gives a receipt for his own credit, P500 will be given to him, P500 to the
partnership.
D. B may decide that he is paying only A’s credit if the personal credit of A is
more onerous to B.
37. The remedy of capitalist partners against an industrial partner who engaged in a
business for himself without the expressed permission from the partnership is:
A. To compel him to sell his interest to the said capitalist partners.
B. To exclude him from sharing in the profits of the partnership.
C. To remove him as manager if he is appointed as manger of the partnership.
D. To expel him from the partnership and claim for damages.
38. A partnership which comprises all the profits that the partners may acquire by
their work or industry during the existence of the partnership is called:
A. Universal partnership of all present property
B. Universal partnership of profits
D. Partnership at will
39. A partnership whereby the partners contribute to a common fund all the property
actually belonging to them at the time of the constitution of the partnership, with
the intention of dividing the same among themselves, as well as the profits which
they may acquire therewith is:
40. A partnership without a definite period of existence and which can be dissolved
at any time by any of the partners is called:
41. A, B and C, capitalist partners, each contributed P10,000 and D, the industrial
partner contributed his services. Suppose X, is the creditor of the firm amounting
to P90,000. After getting the P30,000 capital assets of the partnership, which is
correct?
A. X can recover P20,000 each from A, B and C only.
B. X can recover P60,000 from either A, B and C only.
C. X can recover P15,000 each from A, B, C and D.
D. X can recover P15,000 each from A, B and C but D is exempt because he is
an industrial partner.
42. A, B and C are partners. D is admitted as a new partner. Will D be liable for
partnership obligations contracted prior to his admission to the partnership?
A. No, only for those contracted after his admission.
B. Yes, and his liability would extend to his own individual property.
C. Yes, but his liability will extend only to his share in the partnership
property and not to his own individual property.
D. Yes, as if he had been an original partner.
43. A partner who has all the rights, powers and subject to all restrictions of a
general partner but whose liability is, among themselves, limited to his capital
contribution is:
A. General partner
B. Limited partner
C. General-limited partner
D. Dormant partner
44. Bears the risk of things contributed to the partnership:

A. General partner
B. Limited partner
C. Partner contributing usufructuary rights over fungible things
D. Partner contributing usufructuary rights over non-fungible things
45. A, B and C, capitalist partners, each contributed P10,000. After exhausting the
assets of the firm,
the firm’s indebtedness amounts to P90,000. It was stipulated that A would be
exempted from
liability. Which is correct?
A. A may recover his original capital of P10,000.
B. The creditors may collect P30,000 each from A, B and C.
C. A can recover P20,000 each from B and C should he be required to pay the
creditors.
D. The creditors can recover P45,000 each from B and C.
46. Instances when a partnership is unlawful, except

A. A partnership formed to furnish apartment houses which would be used or
prostitution
B. A partnership formed for the purpose of acquiring parcels of land
C. A partnership formed for gambling purposes.
D. A partnership formed to create illegal monopolies or combinations in restraint
of trade.
47. A and B orally agreed to form a partnership two years from today, each one to
contribute P1,000. If at the arrival of the period, one refuses to go ahead with the
agreement, can the other enforce the agreement?
A. Yes, because the partnership contract is not governed by the Statute of
Frauds
B. Yes, because the prior agreement was voluntarily made.
C. No, because the agreement was merely oral and executor
D. No, since the agreement is to be enforced after one year from the making
thereof, the same should be in a public instrument to be enforceable.
48. Where at least one partner is a general partner and the rest are limited partners
A. General partnership
B. Partnership by estoppels
C. Partnership de facto
D. Limited partnership
49. Where all the partners are general partners

A. General partnership
B. Partnership by estoppels
C. Partnership de facto
D. Limited partnership
50. A and B are equal partners in AB Partnership by contributing P50,000 each on

June 1, 2010. On July 1, 2010, the partnership contracted an obligation to pay Z
the amount of P180,000 on August 31, 2010. On August 10, 2010, C was
admitted as a new partner. C contributed P50,000. How will the obligation be
paid?
A. A P60,000; B P60,000; C P60,000
B. A P90,000; B P90,000; C None
C. A P180,000 or B P180,000 and C P50,000
D. A P65,000; B P65,000; C P50,000
51. A, B and C are equal partners in ABC Partnership. On April 29, 2010, C died. Not
knowing that C is dead, on May 2, 2010, A contracted a liability to D who also did
not know about the death of C. The liability is P90,000. After D exhausted the net
assets of the partnership in the amount of P60,000, he can collect
A. P30,000 from A or P30,000 from B.
B. P15,000 from A and P15,000 from B.
C. P10,000 from the estate of C, P10,000 from A and P10,000 from B.
D. P30,000 from the estate of C or P30,000 from B or P30,000 from C.
52. A, B and C are partners. Their contributions are as follows: A, P60,000; B,

P40,000 and C, services. The partners agreed to divide profits and losses in the
following proportions: A, 35%; B, 25% and C 40%. If there is a loss of P10,000,
how should the said loss be shared by the partners?
A. A P6,000; B P4,000; C nothing
B. A P3,000; B P2,000; C P5,000
C. A P3,500; B P3,500; C P3,000
D. A P3,500; B P2,500; C P4,000
53. Using the preceding number, but the partners did not agree on how to divide
profits and losses. If
there is a loss of P10,000, how should the said loss be shared by the partners?
A. A P6,000; B P4,000; C nothing
B. A P3,000; B P2,000; C P5,000
C. A P3,500; B P3,500; C P3,000
D. A P3,500; B P2,500; C P4,000
54. When the manner of management has not been agreed upon, who shall mange
the affairs of the
partnership?
A. Capitalist partners
B. Industrial partners
C. Capitalist-industrialist partners
D. All of the partners
55. A, B and C are partners in a partnership business. A contributed P10,000, B

contributed P5,000 and C his services only. After payment of partnership debts,
what remains of the partnership assets is P6,000 only. In the absence of
stipulation to the contrary, the share of C will equal to:
A. That of A
B. P2,000
C. That of B
D. Nothing
56. A, B and C are partners in ABC Co. D owes the partnership P4,500. A, a partner,
received from D a share of P1,500 ahead of partners B and C, giving D a receipt
for his share only. When B and C were collecting from D, the latter was already
insolvent. Which of the following is correct?
A. Partner A can be required to share the P1,500 with B and C.
B. A cannot be required to share the P1,500 with B and C.
C. B and C should automatically exhaust first all remedies to collect from D.
D. B and C can automatically deduct from the capital contribution of A in the
partnership, their respective share in the P1,500.
57. A partnership suffered losses in the first year of its operation. A, a capitalist
partner, cannot
contribute an additional share to the capital because of insolvency. Can A be
obliged to sell his
interest to the other partners on the ground of such refusal?
A. Yes, A’ refusal to contribute additional share reflects his lack of interest in the
continuance of the partnership.
B. No, because there is actually no imminent loss of the business.
C. Yes, provided that A is paid the value of his interest.
D. No, because his refusal is justifiable.
58. Which of the following is considered prima facie evidence of the existence of a
partnership?
A. Where payment of interest on a loan depends on the profit of the business.
B. The receipt by a person of a share in the profits.
C. The sharing of gross returns of a business.
D. Where the parties are established as co-owners of a property.
59. A and B are partners, with A as the managing partner. D is indebted to A in the
amount of P10,000 and to the partnership in the amount of P5,000. Both debts
are due and demandable. D paid AP3,000. A issued to D a receipt in his own
name. How should the amount of P3,000 be applied?
A. The P3,000 should be applied to the indebtedness of D to A.
B. The P3,000 should be applied to the indebtedness of D to the partnership.
C. P2,000 should be applied to the indebtedness of D to the partnership and
P1,000 to the indebtedness of D to A.
D. P1,000 should be applied to the indebtedness of D to the partnership
and P2,000 to the indebtedness of D to A.
60. Using the preceding no. but A issued to D a receipt in the name of the
partnership. How should the payment of P3,000 be applied?
A. The P3,000 should be applied to the indebtedness of D to A.
B. The P3,000 should be applied to the indebtedness of D to the
partnership.
C. P2,000 should be applied to the indebtedness of D to the partnership and
D. P1,000 should be applied to the indebtedness of D to the partnership and
61. A, B, C and D are partners. Their contributions are as follows: A, P50,000; B,

P30,000; C, P20,000; D, services. The partnership incurred obligations to third
persons which the firm was unable to pay. After exhausting the assets of the
partnership, there still is unpaid balance of P10,000 to E. Who are liable to E for
the payment of the unpaid balance of P10,000 and how much should each pay to
E?
A. A P5,000; B P3,000; C P2,000; D nothing
B. A P2,500; B P2,500; C P2,500; D P2,500
C. A P4,000; B P3,000; C P2,000; D P1,000
D. A P4,000; B P4,000; C P2,000; D nothing
62. One or more but less than all the partners have no authority to perform the
following acts, except:
A. Do any act which would make it impossible to carry on the ordinary business
of the partnership.
B. Submit a partnership claim or liability to arbitration.
C. Renounce a claim of the partnership.
D. Convey partnership property in the ordinary course of partnership
business.
63. A, B and C are equal partners in ABC Partnership. The partnership is indebted to
D for P150,000. Partner A is indebted to E for P20,000. D attached and took all
the assets of the partnership amounting to P90,000. B and C are solvent while A
is insolvent and that he owns is a land valued at P15,000. Which is correct?
A. E has priority to the land of A as a separate creditor
B. D has priority to the land of A to cover A’s share of the P60,000 remaining
C. B and C have priority to the land of A if they paid D the P60,000 remaining
D. D and E shall both have priority to the land of A in proportion to their claims of
P60,000 and P20,000, respectively.
64. A, B and C are partners. A is an industrial partner. During the first year of
operation, the firm
realized a profit of P60,000. During the second year, the firm sustained a loss of
P30,000. So, the net profit for the two years of operation was only P30,000. In
the Articles of Partnership, it was agreed that A, the industrial partner would get
1/3 of the profit but would not share in the losses. How much will A, the industrial
partner will get?
A. A will get only P20,000 which is 1/3 of the profit of the 1 st year of operation.
B. A will get only P10,000 which is 1/3 of the net profit.
C. A will get only P20,000 in the first year and none in the second year.
D. A will share in the loss in the second year.
65. Three (3) of the following are rights of a partner. Which one (1) is not?
A. Right to associate another person to his share.
B. Right to admit another partner.
C. Right to inspect and copy partnership books
D. Right to ask dissolution of the firm at the proper time.
66. I. Partnership with a capital of three thousand pesos or more, in money or

property, shall appear
in a public instrument, and recorded at SEC. Failure shall not affect the liability
of a
partnership and members thereof to third person.
II. When immovable property is contributed, an inventory of said property is
needed, signed by
the parties and attached to the public instrument, otherwise the contract of
partnership is
void.
A. True; True
B. False; False
C. True; False
D. False; True
67. I. Co-ownership or co-possession does not in itself establish a partnership,

except when such co-
owners or co-possessors share in the profits made by the use of the
property.
II. The sharing of gross returns does not of itself establish a partnership, except
when the persons
sharing them have a joint or common right or interest in any property from
which the returns
are derived.
A. True; True
B. False; False
C. True; False
D. False; True
68. I. The receipt by a person of a share of the profits of a business is conclusive

evidence that he is a
partner in the business.
II. A partnership of all present property is where the partners contribute all
property which
actually belong to them to a common fund, with the intention of dividing the
same among
themselves, as well as all the profits which they may acquire therewith.
A. True; True
B. False; False
C. True; False
D. False; True(?)
69. I. In a universal partnership of all present property, the property which belong to
each of the
partners at the time of constitution of the partnership becomes a common
fund of all partners
and all profits which they may acquire through inheritance, legacy, or donation
cannot be
included in such stipulation, except the fruits thereof.
II. The universal partnership of profits comprises all that the partners may acquire
by industry or
work during the existence of the partnership. Movable or immovable property
which each
may possess at the time of the celebration of the contract shall continue to
pertain exclusively
to each, only the usufruct passing to the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
70. I. A partnership must have a lawful object or purpose, and must be established
for the common
benefit or interest of the partners.
II. When an unlawful partnership is dissolved by a judicial decree, the profits and
partners’
contributions shall be confiscated in favor of the State.
A. True; True
B. False; False
C. True; False
D. False; True
71. I. A partnership may be constituted in any form, except where immovable

property or real rights
are contributed thereto, in which case a written instrument shall be necessary.
II. Every contract of partnership having a capital of three thousand pesos or
more in money or
property shall appear in a public instrument which must be recorded in the
office of the SEC,
otherwise the partnership is void.
A. True; True
B. False; False
C. True; False
D. False; True
72. I. A contract of partnership is void, whenever immovable property is contributed
thereto, if an
inventory of said property is not made, signed by the parties and attached to
the public
instrument.
II. A universal partnership of profits is that in which the partners contribute all the
property
which actually belongs to them to a common fund with the intention of dividing
the same
among themselves, as well as the profits which they may acquired therewith.
A. True; True
B. False; False
C. True; False
D. False; True
73. I. In a universal partnership of profits, the property which belong to each of the
partners at the
time of the constitution of the partnership becomes the common property of all
the partners,
as well as all the profits which they may acquire therewith.
II. A universal partnership of all present property comprises only all that the
partners may
acquire by their industry or work during the existence of the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
74. I. A universal partnership of profits comprises all movable or immovable property

which each of
the partners may possess at the time of the celebration of the contract and all
that the partners
may acquire by their industry or work during the existence of the partnership.
II. Future property by inheritance, legacy or donation, including the fruits thereof
cannot be
included in the stipulation regarding the universal partnership of all present
property.
A. True; True
B. False; False
C. True; False
D. False; True
75. I. A and B are partners in a universal partnership of profits. Subsequently, A won

first prize in
the sweepstakes. The prize money will belong to the partnership.
II. A and B are partners in a universal partnership of profits. Later A purchased a
parcel of land.
The fruits of said land belong to the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
76. I. Persons who are prohibited from giving each other any donation or advantage
cannot
enter into universal or particular partnership.
II. A partnership begins from the moment of the execution of the contract, unless
it is otherwise
stipulated.
A. True; True
B. False; False
C. True; False
D. False; True
77. I. If property has been promised by a partner as contribution to the partnership,

the fruits
Arising from the time the property should have been delivered should also be
given provided
prior demand was made.
II. A partner who has undertaken to contribute a sum of money and fails to do so
becomes a
debtor for the interest and damages from the time he should have complied
with his
obligation, without the need of any demand.
A. True; True
B. False; False
C. True; False
D. False; True
78. I. The partners shall contribute equal shares to the capital of the partnership.
II. If there is no agreement to the contrary, in case of an imminent loss of the
business of the
partnership, any partner who refuses to contribute additional share to the
capital, to save the
venture, shall be obliged to sell his interest to the other partners.
A. True; True
B. False; False
C. True; False
D. False; True
79. I. If a partner collects a demandable sum, which was owed to him in his own
name, from a
Person who owed the partnership another sum also demandable, the sum
thus collected shall
be applied to the two credits in proportion to their amounts, even though he
may have given a
receipt for his own credit only, but should he have given it for the account of
the partnership
credit, the amount shall be fully applied to the latter.
II. The risk of specific and determinate things contributed to the partnership so
that only their use
and fruits may be for the common benefit, shall be borne by the partner who
owns them.
A. True; True
B. False; False
C. True; False
D. False; True
80. I. In the absence of stipulation, the share of each partner in the profits and
losses shall be equal
to each other.
II. A stipulation which excludes one or more partners from any share in the profits
or losses is
void, as a general rule.
A. True; True
B. False; False
C. True; False
D. False; True
81. I. The partner who has been appointed manager may execute all acts of
administration despite
the opposition of his partners, unless he should act in bad faith and his power
is irrevocable
without just or lawful cause.
II. When the manner of management has not been agreed upon, none of the
partners may,
without the consent of the others, make any important alterations in the
property of the
partnership, even if it may be useful to the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
82. I. Every partner may associate another person with him in his share, provided it
is with the
consent of all of the other partners.
II. The capitalist partners cannot engage for their own account in any operation
which is of the
kind of business in which the partnership is engaged, unless there is
stipulation to the
contrary.
A. True; True
B. False; False
C. True; False
D. False; True
83. I. Every partnership shall operate under a firm name, which shall include the
name of one or
more of the partner.
II. All partners, excluding industrial ones, shall be liable pro-rata with all their
property and after
all partnership assets have been exhausted, for the contracts which may be
entered into in the
name of and for the account of the partnership, under its signature, and by a
person authorized
to act for the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
84. I. Persons who are not partners as to each other are not partners as to third
persons, except in
cases of estoppel.
II. An admission or representation made by any partner concerning partnership
affairs is
evidence against the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
85. I. A person admitted as a partner into an existing partnership is liable for all the
obligations of
the partnership arising before his admission as though he had been a partner
when incurred
and that such liability will extend to his own individual property.
II. B has worked for M and Co., as procurer of contracts for fertilizers to be
manufactured by the
firm, and as supervisor of the mixing of the fertilizers. However, he had no
voice in the
management of the business except in his task of supervising the mixing of
said fertilizers.
For his service, he is entitled to 35% of the profits in the fertilizer
business. He is a partner in
M and Co.
A. True; True
B. False; False
C. True; False
D. False; True
86. I. C was a bookkeeper in a partnership named “AB”, with a yearly salary

amounting t 5% of the
net profits or each year. C, however had no vote at all in the management of
the business. He
is a partner in AB.
II. Unless there is a stipulation to the contrary, the partners shall contribute equal
shares to the
capital of the partnership.
A. True; True
B. False; False
C. True; False
D. False; True
87. I. Every partner may associate another person with him in his share, but the
associate shall not be
admitted in the partnership without the consent of all the other partners, even
if the partner
having an associate should be a manager.
II. Articles of universal partnership, entered into without specification of its nature,
only
constitute universal partnership of profits.
A. True; True
B. False; False
C. True; False
D. False; True
Negotiable instruments
1.An indorser of an order instrument warrants that
A. The instrument is genuine and in all respect what it purports to be

B. He has a good title to it.
C. All prior parties had capacity to contract
D. The instrument is at the time of his indorsement valid and subsisting.
E. All of the above
2. Warrantors of the genuineness of the signatures on the instrument are

A. Indorsers C. Persons negotiating by delivery
B. Acceptors D. All of the above.
3. I. No person is liable on the instrument whose signature does not appear thereon.
II. If one who signs in a trade or assumed name will be liable to the extent as if he
had signed
in his own name.
A. True; True C. True; False

B. False; False D. False; True
4. I. If the sum payable is expressed in words and also in figures and there is a
discrepancy
between the two, the sum denoted by the figures (words) is the sum payable.
II. If the words are ambiguous or uncertain, reference maybe had to the figures to fix
the
amount.

5. I. Where the instrument is in the hands of a holder in due course, a valid delivery
thereof by
all parties prior to him so as to make them liable to him is conclusively presume.
II. Where the instrument is no longer in the possession of a party whose signature
appears
thereon, a valid and intentional delivery by him is presumed until the contrary is
proved.

6. I. Where an incomplete instrument has not been delivered, it will (not), if

completed and
negotiated without authority, be a valid contract in the hands of any holder, as
against any
person whose signature was placed thereon before delivery.
II. Every contract on a negotiable instrument is incomplete and revocable until
delivery of
the instrument for the purpose of giving effect thereto.

7. I. Where an instrument expressed to be payable at a fixed period after date is

issued
undated, or where the acceptance of an instrument payable at a fixed period
after sight
is undated, any holder may insert therein the true date of issue or acceptance,
and the
instrument shall be payable accordingly.
II. The insertion of a wrong date does not avoid the instrument in the hands of a
subsequent holder in due course; but as to him, the date so inserted is to be
regarded as
the true date.

8. I. Where the instrument or an acceptance or any indorsement thereon is dated,

such date is
deemed prima facie to be true date of the making, drawing, acceptance, or
indorsement,
as the case may be.
II. The instrument is (not) invalid for the reason only that it is ante-dated or post-
dated,
provided this is not done for an illegal or fraudulent purpose.

9. I. In a joint obligation, each of the debtors is liable only for the proportionate part of
the
debt and the creditor is entitled only to a proportionate part of the credit.
II. In a solidary obligation, the creditor may enforce the obligation against one of
the
debtors.

10. An instrument is payable on demand
I. When so it is expressed to be payable on demand, or at sight, or on

presentation.
II. In which no time for payment is expressed.
III. When it is issued, accepted, or indorsed when overdue.
A. True; True; True C. True; False; True

B. False; False; True D. True; True; False
11. I. Negotiable instrument may be issued in blank or simply by a mere signature of a

maker or drawer, who intends its issuance a such thereby, omissions of: date;
value given
or value has been given; the place where it is drawn or payable does (not) affect
the
instruments.
II. The existence of a seal of an instrument or designation of a particular kind of

current
money in which payment is to be made does (not) affect the negotiable
character of an
instrument.

12. I. An instrument which contains an order or promise to do any act in addition to the
payment of money is not negotiable.
II. The negotiable character of an instrument otherwise negotiable is (not) affected

by a
provision which authorizes the sale of collateral securities if the instrument be not
paid at
maturity.

13. An instrument is payable at a determinable future time, which is expressed to be
payable
I. At a fixed period after date or sight.

II. On or before a fixed or determinable future time specified therein.
III. On or at a fixed period after the occurrence of a specified event which is
certain to happen, though the time of happening be uncertain.
A. True; True; True C. True; False; True

B. False; False; True D. True; True; False
14. I. An unqualified order or promise to pay is unconditional coupled with – an

indication of a
particular fund out of which reimbursement is to be made or a particular account
to be
debited with the amount; or a statement of the transaction which gives rise to the
instrument.
II. An order or promise to pay out of a particular fund is not unconditional.

By Albano
1.The following are functions of a negotiable instrument. Choose the exception:

A. It increases purchasing power in circulation.
B.
C. As legal tender.
D. As substitute for money.
E. It increases credit circulation.
2. A check upon which the holder’s signature must appear twice, one to be affixed by
him at the time it is issued and the second or countersignature, to be affixed by him
before it is paid, otherwise it is incomplete is called
A. Certified check C. Travelers’ check

B. Stale check D. answer not given.
3. A check drawn by the bank upon itself and payable to a third person.
A. Certified check C. Traveler’s check

B. Manager’s check D. Crossed check
4. A bill of exchange to which no document is attached when presentment for payment

or acceptance is made:
A. Trade acceptance. C. Clean bill of exchange.
B. Bank acceptance. D. Documentary bill of exchange.
5 A bill of exchange to which no document is attached when presentment for

payment or acceptance is made:
A. Trade acceptance. C. Clean bill of exchange

B. Bank acceptance D. Documentary bill of exchange
7 Which of the following is non-negotiable?
A. I bind myself to pay B or bearer P10,000. (Sgd) A.

B. I acknowledge being indebted to B in the amount of P10,000. (Sgd) A.
C. I promise to pay to the order of B P10,000. (Sgd) A.
D. I agree to pay B or order P10,000 on demand. (Sgd) A.
8 An instrument is rendered non-negotiable if
A. There is an indication of a particular fund out of which reimbursement is to be

made.
B. There is an indication of a particular account to be debited with the amount.
C. The instrument is payable out of a particular fund.
16 Can a bill of exchange qualify as a negotiable instrument if –
I. It is not dated.
II. The day and the month but not the year of its maturity is given.
III. It is payable to cash.
IV. It names two alternative drawees.
I II III IV
A. Yes Yes Yes No
B. Yes No Yes No
C. No No Yes Yes
D. No Yes No No
17 “I promise to pay to the order of X P10,000 30 days after date”. (Sgd) Y, dated
blank.
1st rule: The maturity date of the above promissory note will be counted 30 days
from
the date of issue of the instrument.
“Pay to the order of X P10,000, 30 days after sight.” To Y (Sgd) Z, dated
10/15/2010.
2nd rule: The maturity of the above promissory note will be counted 30 days from
the
date of the instrument.
A. Both rules are wrong.

B. Both rules are correct.
C. 1st rule correct; 2nd rule wrong.
D. 1st rule wrong; 2nd rule correct.
18. A check for P100,000 was drawn against drawee bank and made payable to XYZ
Marketing or order. The check was deposited with payee’s account at RST Bank which
then sent the check for clearing to drawee bank.
May the drawee bank refuse to honor the check on ground that the serial number
thereof had been altered?
A. Yes, since the serial number is an item which is an essential requisite for
negotiability.
B. Yes, because the alteration of the serial number is a material alteration.
C. No, since the serial number is not an essential requisite for negotiability
and its alteration is not a material alteration.
D. No, since the serial number is not an essential requisite for negotiability even if
its alteration is a material alteration.
19. I. If a promissory note is incomplete and undelivered by the maker, a holder in

due course
can still recover from the maker.
II. A holder in due course does not have the right to recover from the maker if the
maker did
not deliver the complete promissory note to the payee.
A. True; True C. False; False

B. True; False D. False; True
20 Ed issued a negotiable promissory note and authorized Maan to fill up the amount in
blank up to P50,000 only. However, Maan filled it up to P75,000 and negotiated the note
to Wally, a holder in due course.
Which of the following is false?
A. Ed is liable only to Wally up to P50,000.

B. If Ed dishonors the note, Maan is liable to Wally for the full amount of the note.
C. If the note is presented to Ed, she is liable to Wally for P75,000.
D. Both Ed and Maan can beheld liable for the full amount of the note.
20. Nika issued a negotiable promissory note and authorized Tiny to fill up the amount
in blank up to P50,000 only. However, Tiny filled it up to P75,000 and negotiated the
note to Pia, a holder in due course.
A. Nika is liable only to Pia up to P50,000.

B. If Nika dishonors the note, Tiny is liable to Pia for the full amount of the note.
C. If the note is presented to Nika, she is liable to Pia for P75,000.
D. Both Nika and Pia can be held liable for the full amount of the note.
22 Henry succeeded in making Kate affix her signature on a check without Kate’s
knowing that it was a check. At the time of signing, the check was complete in all
respects. Henry intended to cash the check the following morning, but that night, it was
stolen by Vic who succeeded in negotiating the same to Al who cashed the check the
following morning.
Can Kate validly refuse to have the amount of the check deducted from her bank
deposit if Al is –
1. A holder in due course?
2. Not a holder in due course?
Q1 Q2 Q1 Q2
A. Yes Yes C. No No
B. Yes No D. No Yes
26 A promissory note is signed in behalf of the principal by an agent as follows:
Juan dela Cruz

Per procuration: Manny C. Co
This operates as notice that the agent has:
A. Unlimited authority for and in behalf of the principal.

B. A limited authority to sign, and the principal is bound only in case the
agent in so signing acted within the limits of his authority.
C. A limited authority to sign, and the principal is bound only in case the agent in so
signing acted outside the actual limits of his authority.
27 John makes a negotiable promissory note payable to his order, signing Pedro’s
name thereon as maker without Pedro’s knowledge and consent. John then indorses
the note to Jose, who in turn, indorses it to Carlos under circumstances which make
Carlos a holder in due course.
Q1: May Carlos enforce the note against Pedro?
Q2: If Pedro dishonor’s the note, may Carlos hold John and Jose liable on their
respective indorsements?
Q1 Q2 Q1 Q2
A. Yes Yes C. No No
B. Yes No D. No Yes
28 Mimi makes a note payable to the order of Pete who indorses it to Ali. Fheb obtains
possession of the note fraudulently, forges Ali’s signature and indorses it to Ben who in
turn indorses it to Cane. In this case, Cane can –
A. Enforce the instrument against Mimi and Pete.

B. Enforce the instrument against Ali.
C. Enforce the instrument against Ben.
29 Joan makes a note payable to the order of Ped, who indorses it to Juana.
Somehow, Ron obtains possession of the note and forging the signature of Juana,
indorses it to Amy. Amy then indorses the note to Neil, the holder.
Which of the following is false?
A. Juana has a right to demand payment from Joan.

B. If Joan dishonors by non-payment, Juana has no right of recourse against
Ped.
C. Neil has no right of recourse against Joan, Ped or Juana.
D. Neil can proceed against Ron and Amy.
30 A issued a negotiable promissory note to the order of B for P10,000 payable 30

days after date. Later B indorsed it to C. then X stole the note from C, forged the
signature of C and negotiated it to D, and D to E, E to F, the holder. On maturity of the
note, which of the following statements is not correct and invalid?
A. F can collect from either D or E, because their signatures are genuine and the
note is operative against it.
B. F can collect from A because A cannot put up forgery as his defense.
C. F can not collect from C because it was C’s signature which was forged.
D. F can not collect from B because B is a party prior to the forgery.
31 M makes a P10,000 note payable to the order of O who indorses it to A. F obtains

possession of the note fraudulently, forges A’s signature, alters the amount to P70,000
and endorses it to B who in turn endorses to C. in this case:
A. C can enforce the note against A

B. C can enforce the note against any person.
C. C can enforce the note against M and O.
D. C can enforce the note against B.
32 I - A holder for value is an endorsee who has both the legal title and the beneficial
interest
to the instrument and is subject to both real and personal defenses available
against him.
II – Every person whose signature appears in the negotiable instrument is

presumed to have
become a party thereto for value.

34. A issued a promissory note to the order of B for P10,000 payable on September 20,
2011 in payment of a TV set sold by B to him. B failed to deliver the TV set to A and
instead transferred the note to C for value but without indorsement. Which of the effects
of the transactions listed below is valid?
A. C is deemed a holder in due course when B transferred the note to him.

B. C becomes a holder in due course when B indorsed the note to C on October 4,
2011.
C. C has no right to compel B to make the proper indorsement to him.
D. C cannot collect from A because A’s defense of lack of consideration.
35 P appointed A as his agent to buy sugar. Thereafter, A drew a bill of exchange for
the price of the sugar in favor of S, the seller. P accepted the bill. After the acceptance
of P, A negotiated the bill to H, a holder in due course. When the sugar was delivered, P
refused to pay the bill on the ground that the sugar was deteriorated. Is P liable?
A. No, the sugar is defective.

B. No, there is absence of consideration.
C. No, because there is a failure of consideration.
D. Yes, even if the consideration failed because H is a holder in due course.
36 An accommodation party is not:
A. A surety of the accommodated party.

B. A real party but merely lends his name.
C. Liable to a holder in due course.
D. A signatory to the instrument as maker, drawer, acceptor or indorser.
38 This is not a negotiation of a negotiable instrument:

A. Assignment.
B. Delivery of a bearer instrument.
C. Indorsement completed by delivery of an instrument payable to order.
D. Delivery of an instrument to the payee.
39 A issues a bill payable to the order of B. Later B without endorsing the bill transfers
for a consideration said bill to C. the following except one, are the valid effects of the
transfer.
A. C acquires the right to have the endorsement of B.

B. The bill is merely assigned and not negotiated.
C. C becomes a holder.
D. The transfer vests in C such title as B had thereon.
40 “I promise to pay to the order of B P10,000 30days after sale”. (Sgd) A. which of the
following indorsements of the above promissory note is not valid?
A. “Pay to C and D” (Sgd) B.

B. “Pay to C P5,000, balance of this note” (Sgd) B if P5,000 has been paid by A.”
C. “Pay to C P5,000 to D P5,000. (Sgd) B.
D. “Pay to C and D, partners” (Sgd) B.
41. “Pay to Mar Perez, notice of dishonor waived” is an example of:
A. Special indorsement
B. Facultative indorsement
C. Qualified indorsement
D. Restrictive indorsement
42. “Pay to Mon in trust for Jess” (Sgd) Jun, is the example of
A. Conditional endorsement
B. Qualified endorsement
C. Facultative endorsement
D. Restrictive endorsement
43. When an indorser waives presentment and notice of dishonor, he increases his
liability. His indorsement is:
A. Alternative endorsement
B. Qualified endorsement
C. Facultative endorsement
D. Restrictive endorsement
44. I - If the instrument is payable to order, it is negotiated by indorsement plus
delivery.
II- If the instrument is payable to bearer, it is negotiated only by delivery.

50. I - Every holder is deemed prima facie to be a holder in due course.
II- A holder in due course is one who possesses both the legal and beneficial
interest to the
instrument but is free from real defenses only.

53. This defense is attached to the instrument itself and can e set up against the whole
world, including the holder in due course.
A. Real defense C. Equitable defense

B. Personal defense D. Self- defense
54. Which of the following is an example of Real Defense?
A. Acquisition of the instrument by force.

B. Acquisition of the instrument for illegal consideration.
C. Fraud in the indorsement.
D. Fraud in factum.
55. Which of the following is not a real defense?
A. Fraud in factum.
B. Incomplete and undelivered instrument
C. Insertion of a wrong date.
D. Forgery of a signature
58. Which of the following is not a personal defense?
A. Absence of consideration.
B. Forgery of a signature
C. Non-delivery of a complete instrument.
D. Failure of consideration.
60. Secondarily liable
A. Maker of a promissory note

B. Acceptor of a bill of exchange
C. Drawee
D. Drawer of a bill
61. Which of the following is not a secondary party?
A. Acceptor for honor

B. Drawer
C. Payor
D. Endorser
65. Which is not correct? The acceptor by accepting a negotiable instrument:
A. Admits the existence of the payee and his capacity to endorse.

B. Admits the existence of the drawer, the genuineness of his signature and his
capacity to draw the instrument.
C. Admits the existence of the endorser, the genuineness of his signature and
his authority to draw the instrument.
D. Admits that he will pay it according to the tenor of his acceptance.
67. A general indorser is distinguished from the irregular indorser in that a general
indorser
A. Makes either a blank or special indorsement.

B. Indorses after its delivery to the payee.
C. Is liable to the payee and subsequent parties unless he signs for the
accommodations of the payee, in which case he is liable only to all parties
subsequent to him.
67. Warranties of a general indorser, except
A. That the instrument is genuine and in all respects what it purports to be.
B. That he has good title to it.
C. That he had no knowledge of any fact which would impair the validity of the
instrument or render it valueless.
D. That the instrument, at the time of indorsement, was valid and subsisting.
69. Warranty 1: Engages to pay according to the tenor of the instrument/acceptance.

Warranty 2: Admits the existence of the payee and his capacity to indorse.
The above warranties are available to:
Maker Acceptor Drawer

W1 W2 W1 W2 W1 W2
A. Yes Yes Yes Yes No No
B. Yes No No Yes Yes Yes
C. No No Yes No No Yes
D. Yes Yes No No Yes No
71. Requisites of a valid presentment for payment of a promissory note, except
A. Made within a reasonable time after issue.

B. Made at a reasonable hour on a business day.
C. Made by the holder or his agent.
D. None of the choices.
73. I - An instrument is dishonored by non-payment when it is duly presented for

payment and
payment is refused or cannot be obtained.
II – When the instrument is dishonored by non-payment, an immediate right of

recourse to
all parties secondarily liable thereon accrues to the holder.

74. Presentment for acceptance of a bill of exchange is not necessary –
A. Where the bill is payable after sight.

B. Where the bill is drawn payable elsewhere than at the residence or place of
business of the drawee.
C. Where it is payable at a certain number of days after date.
76. The holder is required to give notice of dishonor to the drawer to make him liable on
the instrument in one of the following cases:
A. Where the drawer is the person to whom the instrument is presented for
payment.
B. Where the drawer and the drawee are the same person.
C. Where the drawer has countermanded payment.
D. Where the instrument was made or accepted for his accommodation.
77. Which of the following does not discharge a negotiable instrument?
A. Payment by maker of a promissory note before maturity.

B. Intentional cancellation of the instrument by the holder.
C. Payment by the party primarily liable to holder or his authorized representative.
D. Voluntary surrender of the instrument by the holder to the maker without
collecting.
78. Which of the following does not discharge a negotiable instrument?
A. Payment in due course by the accommodated party which the instrument’s made
or accepted for his confirmation.
B. Payment in due course by the principal debtor.
C. Intentional cancellation of the instrument by the maker.
D. Payment in due course by the accommodation maker.
79. When is a negotiable instrument not discharged?
A. When the holder thereof intentionally cancel the instrument.

B. When the principal debtor becomes the holder of the instrument before, at
or after maturity in his own right.
C. When it is paid in due course by the principal debtor.
D. When it is paid in due course by the party accommodated where the instrument
is made or accepted for accommodation.
80. In the renunciation of holder of his rights against any party to the instrument, which
of the following statements is false?
A. If the instrument is delivered to the person primarily liable without collecting, it

constitutes oral renunciation.
B. If renunciation is made in favor of any party secondarily liable, all parties
subsequent to him are discharged from liability.
C. Renunciation will not affect the rights of a holder in due course without notice.
D. If the renunciation is made in favor of the party primarily liable, it must be
made before, at or after maturity.
82. Which of the following does not constitute material alteration?
A. Changing the words “or bearer” for the words “or order”.
B. Striking out the name of the payee and substituting another person in his face.
C. Alteration of the marginal figures of a note where the sum stated in words
in the body remained unchanged.
D. Change in the date from which interest is to run.
83. Protest is not necessary –

A. Upon dishonor by non-acceptance of a foreign bill appearing on its face to be
such.
B. Upon dishonor by non-payment of a foreign bill appearing on its face to be such,
if not having been previously dishonored by non-acceptance.
C. In cases of inland bills and promissory notes.
84. The following except one, are the requisites of acceptance for honor on a bill:
A. The bill must be previously protested for dishonor by non-acceptance or

protested for better security.
B. The bill is overdue.
C. The holder must give his consent.
D. The acceptor for honor must be a stranger to the bill.
85. The distinction between acceptance for honor and ordinary acceptance is that
A. In acceptance for honor, protest is not required while in ordinary acceptance,

there must be previous protest.
B. In acceptance for honor, the acceptor is the drawee while in ordinary acceptance,
the acceptor must be a stranger to the bill.
C. In acceptance for honor, the consent of the holder is required while in
ordinary acceptance, such consent is not required.
86. The following are instances when a drawee bank may refuse to pay checks drawn
against it, except one:
A. If there is a “stop payment” issued by the drawer.

B. When the bank receives notice of the drawer’s death.
C. If the drawer’s deposit is insufficient.
D. If the drawer is insolvent.
87. The P1,000 bills issued by the Central Bank and in circulation are considered
A. Bills of exchange C. Legal tender

B. Checks D. Promissory notes
88. One of the following statements is not true, which is it?
A. A creditor is not bound to accept a check in satisfaction of his demand, because

a check even if good when offered, does not meet the requirements of legal
tender.
B. The obligation of a debtor who had agreed to pay in dollars in a foreign bill
of exchange shall be discharged in Philippine currency measured at the
prevailing rate of exchange at the time the obligation was incurred.
C. The Philippine peso bills when attempted to be exported, as when carried in
excess of that allowed by the CB regulation, may be deemed to have been taken
out of a domestic circulation as legal tender and thus, treated as commodity.
D. The purchasing power or value of money or currency depends upon, can come
into being, can be created or brought about by a law enacted by the legislative
department of the government.
SUAREZ
OBLIGATION
1. Statement no. 1: The creditor may be compelled to accept payment in checks as
long as the check is negotiable.
Statement no. 2: An obligation payable “should the client die of diabetes” is an

obligation subject to a period.
a. Statement No. 1 is false while statement No.2 is true.
b. Statement No. 1 is true while statement No. 2 is true.
c. Both Statement are false
d. Both Statement are true
2. The buyer has the right to the fruit of the thing from:
a. The time the thing is delivered
b. The time the contract is perfected
c. The time the obligation to deliver the thing arises
d. The time the fruits are delivered
3. Statement no. 1: Just before the obligation became due and demandable, the
debtor proposed to the creditor that he would give him a specific car instead of
paying 150,000.00, and which proposal was accepted by the creditor. Here,
there is extinguishment of an obligation by way of dacion en pago.
Statement no. 2: After substitution in facultative obligations, the loss of the

principal through the fault or negligence of the debtor shall render him liable for
damages in favor of the creditor.
a. Both are true
b. Both are false
c. No. 1 is true, No. 2 is false
d. No. 1 is false, No. 2 is true
4. Meeting in one person of the characteristics of both the debtor and creditor in
one and the same obligation extinguishers the obligation by way of:
a. Novation
b. Compensation or set-off
c. Condonation or remission
d. Merger or confusion
5. Consignation alone, as a special form of payment, may extinguish an obligation
under any of the following instances. Which is the exception?
a. When the creditor is absent, or is unknown or does not appear in the
place of payment.
b. When the creditor is capacitated to receive payment
c. When the creditor refuses to issue receipts
d. When there are two or more persons claiming title to one and the same
obligation
e. When title to the same obligation has been lost
6. Statement no. 1: in alternative obligations, it is the notice of which prestation to

perform made by the debtor shall convert the alternative obligation into a pure or
simple one.
Statement no. 2: In the case of a joint obligation, the co-debtors may be held
liable for the share of an insolvent co-debtor.
a. Both Statement are true
b. Both statement are false
c. Statement no. 1 is true while statement no. 2 is false
d. Statement no. 1 is false while statement no. 2 is true
7. An obligation based on positive law and give right to enforce its performance.
a. Civil Obligation
b. Moral Obligation
c. Legal Obligation
d. Natural Obligation
8. An obligation wherein various things are due, but the payment of one of them is
sufficient to extinguish the obligation is called:
a. Simple obligation
b. Conjoint obligation
c. Alternative Obligation
d. Facultative Obligation
9. An obligation wherein various things are due but the complete performance of all
of them is necessary to extinguish the obligation
a. Facultative obligation
b. Conjoint obligation
c. Alternative obligation
d. Pure or simple obligation
10.Statement no. 1: “I will give you 10,000.00 if you will not marry X this year”. If by
the end of the year, X entered the convent, my obligation is extinguished.
Statement no. 2: “I will give you 10,000.00 when my means permit me to do so”.
This is a conditional obligation for the benefit of the debtor.
a. Both are true
b. Both are false
c. No. 1 is true; no. 2 is false
d. No. 1 is false; no. 2 is true
11.Change of persons or objects:

a. Solutio indebiti
b. None of the above
c. Novation
d. Confusion
12.Which of the following is not a ground for the extinguishment of an obligation?

a. Remission
b. Merger
c. Compensation
d. Death of creditor
13.S owns an oil painting. Being in need of money, S sold the painting to B for
1,000.00. After the sale S discovered that the painting was valuable and worth
5,000.00.
a. B is entitled to the benefit of the contract because it is valid and binding.
b. S may annul the contract on ground of error
c. S may annul the contract on ground of fraud
d. S may rescind the contract on ground of lesion or inadequacy of cause.
14.A and B are jointly and severally liable to C for 20,000.00. A is a minor.
a. C can collect 20,000.00 from B
b. C can collect 10,000.00 from B
c. C can collect 10,000.00 from A that is the share of B.
d. C can collect 20,000.00 because minority is not a defense
15.Every obligation whose performance does not depend upon a future or uncertain
event, or upon a past event unknown to the parties, is demandable at once. This
refers to:
a. Divisible and Indivisible obligation
b. Joint and Solidary obligations
c. Pure obligation
d. Obligations with a period
16.DR promised to give DE, his grandson, a car if the latter will pass the bar
examinations. When his grandson passed the said examinations, which of the
following statement is true?
a. DR may refuse to deliver because the condition is purely a potestative
one.
b. The obligation is valid because the condition depends upon the sole will of
the debtor.
c. Both the obligation and the condition are ineffective because they depend
upon the sole will of the donor.
d. The obligation is valid although potestative because they depend upon the
sole will of the done.
17.A, B and C executed a promissory note worded as follows: “We promise to pay to
X, Y and Z the sum of 90,000.00 (Sgd.) A, B and C”.
a. A is obliged to pay to X, Y and Z 90,000.00
b. A is obliged to pay to X 30,000.00
c. A is obliged to pay to X 60,000.00
d. A is obliged to pay to X 10,000.00
18. “I’ll give you my car one year after your death.” The obligation is
a. Valid because the event is sure to come
b. Void, not legally possible
c. Valid, the obligation is conditional
d. Valid, but disregard the condition.
19.Statement no. 1: D oblige to give a specific car to C on Dec. 20, 2006. If on the
date stated D did not comply with his obligation, the next day he is considered in
default without the need of demand.
Statement no. 2: S sold to B a specific car for 10,000.00. Both parties promise to
comply with their obligations the day after tomorrow. If on the date stated S
delivers the car to B, but B is not ready to comply with his obligation, from
thereon he is considered in default without the need of a demand.
a. Both are true
b. Both are false
20.It refers to joint obligation:

a. One which each of the debtors is liable only for a proportionate part of the
debt and each creditor is entitled only for a proportionate part of the credit.
b. One in which each debtor is liable for the entire obligation, and each
creditor is entitled to demand the whole obligation
c. One in which either one of the parties is indispensable and the other is not
necessary
d. One in which the obligation of one is a resolutory condition of the
obligation of the other, the non-fulfillment of which entitles the other party
to rescind the contract.
21.Conrad and Charlie are jointly indebted to Pete for 100,000.00. Pete assigned his
interest to Crispin who assigned it back Conrad.
a. The debt is totally extinguished by compensation
b. The debt is totally extinguished by merger
c. The debt is partially extinguished by compensation
d. The debt is partially extinguished by merger
22.In three of the following cases, compensation shall not be proper. Which is the
exception?
a. Commodatum
b. Gratuitous support
c. Civil liability arising out of criminal offenses
d. Bank deposit
23.The passage of time extinguishing obligations. Which is the exception?

a. Prescription
b. Fulfillment of resolutory condtion
c. Arrival of resolutory period
d. Remission
e. Rescission
24.A is indebted to B for 20,000.00. X is the guarantor of A. B is also indebted to A

for 8,000.00. how much will X be liable as guarantor if B sues A, and cannot pay?
a. 12,000.00
b. 20,000.0
c. 8,000.00
d. X has no liability
25.Statement no. 1: The debtor of a thing cannot compel the creditor to receive a
different one, although the latter may be of the same value or more valuable than
that which is due.
Statement no. 2: In dation in payment, ownership of the thing delivered is

transferred to the creditor; while in cession, it merely authorizes the creditor to
convert the property into cash and out of the proceeds to extinguish the
obligation partially.
a. Both are true
b. Both are false
26.I will give you specific car if you will marry X this year, 20016. Which of the
following statement in incorrect?
a. If on December 25, X died, without marriage, my obligation is effective
because one party is dead, marriage is impossible to take place.
b. If on December 25, X died, without marriage, my obligation is extinguished
because one party is dead. Marriage is impossible to take place.
c. If the year has ended, no marriage taking place, both parties are alive, just
the same my obligation is extinguished because the time indicated has
already elapsed
d. If you marry X on December, my obligation is to give you the car
27.Mr. Debtor owes Mr. Creditor who has two (2) legitimate children, 50,000.00
payable on December 31, 2006.
a. If Mr. Debtor dies before December 31, 2006, Mr. Creditor cannot collect
from the heirs of Mr. Debtor.
b. If Mr. Debtor dies before December 31, 2006, Mr. Creditor can collect
from the heirs of Mr. Debtor.
c. If Mr. Creditor dies, his two (2) legitimate emancipated children cannot
recover from Mr. Debtor his obligation.
d. If both Mr. Debtor and Mr. Creditor die, the heirs of Mr. Creditor can
collect from the heirs of Mr. Debtor.
28.A judicial relation known as negotiorum gestio takes place.

a. When a person voluntary takes charge of another’s abandoned business
b. When something is received and there is no right to demand it and it was
delivered through mistake
c. When a person is appointed by a court to take the property of business of
another.
29.A owes B 2,000.00 demandable and due on September 10, 2006. B on the other
hand, owes A 2,000.00 demandable and due on or before September 30, 2006.
If B claims compensation on September 10, 2006, can A rightfully oppose?
a. No. B who was giving the benefit of the term, may claim compensation
because he could then choose to pay his debt on September 10, 2006
which is actually “on or before September 30, 2006.”
b. Yes, A can properly oppose because for compensation to take place,
mutual consent of both parties is necessary.
c. Yes, A c ab properly oppose and if B still refuses to accept his payment
made on September 30, 2006, A can deposit his payment in court.
30.Statement no. 1: Merger taking place in the person of the guarantor shall
extinguish only the secondary contract such as the contract of guaranty but not
the principal obligation.
Statement no. 2: when the debtor promises to pay his obligation “whenever his
means permit him to do so” the obligations is with a period.
a. Both statement are true
c. Statement no. 1 is true while statement no. 2 is false
31.D obliged himself to paint the house of C or to paint the picture of C, in a standing
position, using 10 by 10 canvass. Later because of financial reverses, C sold his
house to X. which of the following statement is correct?
a. The obligation of D is extinguished because he cannot make a choice.
b. D may paint the picture of C
c. D may cancel the contract and ask for damages
32.D obliged himself to give a specific car to C on December 25, 2006, stipulating
that D is liable even if the thing is lost due to fortuitous event, and without the
need of a demand. On the due date, the car got lost due to fortuitous event.
a. Obligation remains to subsist, but converted into monetary consideration
b. C can compel D to deliver another car
c. C can require another person to deliver a car, expenses chargeable to D.
d. Obligation is totally extinguished
33.Statement no. 1: The debtor of a thing cannot compel the creditor to receive a
different one, although the latter maybe of the same value or more valuable than
that which is due.
Statement no. 2: In dation of payment, ownership of the thing delivered is

transferred to the creditor; while cession, It merely authorize the creditor to
convert the property into cash and out of the proceeds to extinguish the
obligation partially.
a. Both are true
b. Both are false
c. No.1 is true, no. 2 is false
d. No.1 is false, no.2 is true
34.A is obliged to give B his only car on September 1, 2006. On the said date, A did
not deliver. On September 2, 2006, an earthquake completely destroyed the car.
Is A still liable?
a. No. Considering that no demand to deliver was made by B and the
specific thing was lost due to fortuitous event, the obligation is
extinguished.
b. No. the obligation is extinguished, even if the debtor is already in default
because the debtor can plead impossibility of performance
c. Yes. A is already in legal delay thus the obligation to deliver the lost
specific thing is converted into monetary claim for damages.
d. Yes. The creditor can instead demand for a substitute of equivalent value
from the debtor.
35.A sold his cow to B for 2,500.00. No date was stipulated for the delivery of the
cow. While still in the possession of A, the cow gave birth to a calf.
a. A is entitled to the calf because it was born before his obligation to deliver
the cow arises.
b. A is entitled to the calf as B has not paid the price
c. B is entitled to the calf which was born after the perfection of the contract
d. B, in order to be entitled to the calf, should pay additional cost for the calf
to be agreed upon by both parties.
36.The kind of compensation which may only be raised by the creditor and not by
the debtor in the obligation to give gratuitous support:
a. Judicial compensation
b. Conventional compensation
c. Facultative compensation
d. Legal compensation
37.Statement no. 1: Legal compensation takes place by operation of law even if the
parties may not be aware of it.
Statement no. 2: The indivisibility of an obligation necessarily implies solidarity.

a. Both statement are true
c. Statement no. 1 is true while statement no .2 is false
38.Debtor obliged himself to deliver to creditor 100 cavans of rice on 06/01/2001. On

said date, D failed to make delivery despite repeated demands by C. In this case:
a. C has no remedy under the law
b. C can compel D to deliver 100 cavans of rice plus damages
recoverable from D plus damages
39.The kind of compensation which arises by way of proved counterclaim in a case

called:
a. Legal compensation
b. Voluntary compensation
c. Judicial compensation
d. Facultative compensation
40.Statement no. 1: Payment made to an incapacitated person is good only up to

the extent that he was benefited or up to the amount that he was able to keep.
Statement no. 2: In obligations arising from quasi-contracts, consent of the

parties is not necessary.
c. Statement no. 1 is true while statement no.2 is false
41.Solidary debtors A, B and C owes joint creditors X, Y, Z and W 12,000.00. X, T

and Z can collect from A
a. 12,000
b. 6.000
c. 9,000
d. 3,000
42.X, Y and Z solidary bound themselves to pay to solidary creditors A, B and C the
amount of 75,000.00. The loan was secured by a mortgage on B’s land. Out of
gratuity, A, in a public instrument, renounced the obligation in favor of X, with the
formality required by law. In this case, which statement is correct?
a. The principal obligation is extinguished
b. The real estate mortgage is extinguished
c. Both the principal obligation and the mortgage are extinguished by
remission
d. Both the principal and accessory obligations subsist.
43.Which of the following is not an obligation with a period?

a. Payable soonest
b. An obligation payable little by little
c. Will pay you 10,000.00 “if I like”
d. Payable “within 2 years from today”
e. All of the above
44.In order that fraud may make a contract voidable
a. It may be serious and the parties must be in pari delicto
b. It may be incidental but both parties should not be in pari delicto
c. It should be serious and should not have been employed by both
contracting parties
d. It may be incidental but should have been employed by both parties
45.Bernie offered Zo a specific parcel of land at a specified price. Bernie gave Zo 60

days within which to accept. Zo agreed.
a. Within 60 days, Bernie cannot withdraw but may increase the price
b. There can’t be no withdrawal because the period is binding
c. Bernie may withdraw or increase the price within the 60 day period
d. There can be no withdrawal because there is a perfected option contract
same to me”
debtor
creditor
c. The obligation is valid, because the condition merely causes the loss of
rights already acquired.
d. Combination of A and B
same to me”
debtor
creditor.
c. The obligation is valid because the condition merely causes the loss of
rights already acquired
d. Combination of A and B.
48.The following, except one, are requisites of payment as a mode of extinguishing

an ordinary obligation. Which is the exception?
a. Complete or full payment
b. Payment in due course when the obligation is due and demandable
c. Payment using negotiable instrument
d. Payment using legal tender, except if payable in foreign currency.
49.Not ground for damages:

a. Culpa
b. Bad faith
c. Dolo causante
d. Mora
50.Fruits as resulting from spontaneous products of the soil without the intervention
of human labor, as well as animal offspring are:
a. Industrial fruits
b. Civil fruits
c. Natural fruits
d. All of above fruits
CONTRACTS
1. Which of the following can be considered as a feature of a void contract?

b. They exist
d. None of them
2. L entered into a contract of lease with X. T, the clerk of L, typed the document.
Due to T’s negligence, the document made was that of sale instead of lease. a.
The remedy is annulment
a. Contracting Parties
b. Assigns or Assign
c. Heirs
d. All of them
a. Creditor
b. Debtor
c. Both creditor and debtor
d. None of them
5. S offers to sell his house to B for P100, 000. B asks him if he would accept P80,
a. Because of ambiguity, both offers are terminated by operation of law.
b. B’s response is a counter- offer effectively terminating the P10, 000 offer and
instigating an offer for P80, 000.
c. B’s response is a more inquiry, the P100, 000 offer by S is still in force.
d. B’s response is a rejection of the P100, 000 offer, and there is no offer for
P80, 000 because it is too indefinite to be an offer.
6. Example No. 1: G, guardian of W, sold W’s house valued at P50, 000 for P37,
500 or a lesion by one-fourth of the value.
Example No. 2: S sold his house valued to P50, 000 for only P10, 000 because S
did not know the true value of the house. a. Both contracts are rescissible.
b. Only No. 1 is rescissible.
c. No. 2 is voidable because there is an error or mistake.
d. Both contracts are valid and enforceable.
7. B1 Company bought out a competitor, B2 Corporation, with a stipulation that B2
Corporation should not thereafter engage in any business in the Philippines
unless consented to and approved by B1 Company.
a. The stipulation is void because it is contrary to public policy.
b. The stipulation is defective but subject to ratification.
c. The stipulation is valid because the parties are free to enter into any business
in the Philippines unless consented to and approved by B1 Company.
d. The stipulation is unenforceable as there was no showing that the was done
in writing
c. One of parties in a contract is incapable of giving consent
9. D forced C to lend him P10, 000. The promissory note is in writing.
b. Contract remains to be valid
c. The contract is void
d. C cannot demand payment from D because the contract is unenforceable
10. Example 1 – S sold to B in a private instrument his land. Later, B wanted to have
the sale registered, but registration requires a public instrument. In here, B may
compel S to execute the needed public instrument.
Example 2 – S sold to B orally his specific land. After B paid S the price of the
sale, he want to registered the land in his name but he needed a public
instrument of sale. In here B may compel S to execute the needed public
instrument.
a. Both examples are also
b. Only 1 is true
c. Only 2 is true
d. Both examples are true
11.In a contract of sale executed by S and B, it appears S sold his motor vehicle to B
and B bought it for P10, 000. It turned out however, S has three motor vehicles.
Gallant valued P80, 000: Hi-Ace van valued P70, 000; and a Jeep valued P60,
a. The contract shall be reformed because there was mistake
b. The parties can ask for interpretation because the word Motor vehicle is
ambiguous.
c. There is no contract.
d. The parties can ask for annulment of the contract 12.An agreement is
restraint of trade.
a. Void
b. Perfectly valid
c. Voidable
d. Unenforceable
13.Three of the following are rescissible, which is not?

a. Sale of property under litigation made defendant without the knowledge of
plaintiff and authority of the court.
b. Those made to defraud creditors when the creditors has no other means to
recover his claim
c. Those agreed upon in representation of absentees, if the absentee suffers
lesion by more than ¼ of the value of the property subject of the contract.
14.S and M agreed in print that, debtor for P3, 000 will work as a servant of M
without pay until she could find money with which to pay her debt. Meantime, S
absconded re obligation and failed to comply with her promise. Under this
premise, which of the following statements is correct?
a. The agreement to work as a servant is void because it is immoral
b. To act as a servant without pay is unconstitutional because this is equivalent
to involuntary servitude
c. The obligation to pay is enforceable because this is in accordance with law d.
All of the above
15.Which of the following contracts is not required to appear in a public document?
a. Acts and contracts which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property, sales
of real property or of an interest.
b. The cession, repudiation or renunciation of hereditary rights
c. The power to administer property
d. Sale of immovable property
16.In order that a stipulation in favor of a third person in a contract would be valid
and binding upon the parties thereto, three of the requisites are mentioned in the
following enumeration. Which among them is not a requisite?
a. There must be a stipulation in favor of a third person.
b. That there must be an existing agency between either of the contracting parties
and the third person.
c. The contracting parties must have clearly and deliberately conferred a favor upon
that third person.
d. The third person communicated his acceptance to the obligor before its
revocation.
17.Statement No. 1: Dolo incidente entitles the person against whom, it was
employed the right to seek the annulment of the contract.
Statement No. 2: A stipulation pour autrui is an exception to the rule on relativity
of contracts.
18.Example No.1: W, 16 year old, sold his house valued at P1 M for P50, 000 or a
lesion by more than one-fourth of the value of the said house.
Example No. 2: S sold his house valued at P1 M for only P400, 000 because S
did not know the true value thereof.
a. Both examples are unenforceable
b. No. 1 is rescissible; while No. 2 is unenforceable
c. Both contracts are binding
d. No. 2 is unenforceable
19.S owns an oul painting. Being in need of money, S sold the painting to B for P1,
000. After the sale it was discovered that the painting was valuable and worth
P5, 000.
a. B is entitled to the benefit of the contract because it is valid and binding.
b. S may rescind the contract on ground of lesion or inadequency of cause
c. S may rescind the contract on ground of fraud
d. S may annul the contract on the ground the error
20. “A”, bachelor lawyer, raped W twice. Upon learning this, “F” the father of W, was
able to force A to marry W under pain of being sued in court and dibarred from
the practice of his law profession. Which statement is correct? a. There was no
defect, the marriage was perfectly valid
b. The marriage may be annulled on the ground of force or violence
c. The marriage may be annulled on the ground of threat of intimidation
d. The defective marriage may, however, be ratified
21.Statement No. 1: If the cause is not stated in the contract it is presumed that it is
unlawful.
Statement No. 2: the action for rescission is subsidiary, it cannot be instituted
except when there is no other legal means to obtain reparation for damages
suffered.
22.In an “invitation to bud”, B proposes the following:
“I will buy the property for P10, 000 if the bid of any other offerrors or bidders
shall be considered the best terms of amount and conditions, I am to equal that
offer”.
a. The offer is speculative, because it cannot be considered as against another
offer which is certain.
b. The offer is considered a counter offer
c. The advertiser is not bound to accept the highest bidder.
d. This is a continuing offer which is very certain
23.In the preceding question, which of the following statements is correct?
a. If there is no more offer made, the contract is perfected on the offer of B
because he will be considered as the highest bidder
b. However, if another bidder, X, bid P15, 000, he will be considered as the
highest bidder and the contract is perfected.
c. In letter (b), if X increase his bid for P20, 000, and no more bid equals his bid,
the contract is perfected for P20, 000
d. Answer not given
24.Reluctantly and against her good sense and judgment, Rosemarie entered into a
contract for the delivery of 5 tables to Corazon for a price of P15, 000. Contract
is:
b. Voidable d. Valid
25.G was appointed guardian of S, the latter being 16 years old. S sold his parcel of
land in writing to B valued at P100, 000 for P75, 000, suffering lesion by ¼ pf the
value. What is the status of the contract:
a. Rescissible c. Enforceable
b. Unenforceable d. Voidable
26.One of the stipulations contained in the contract between M Company and its
employees is that the company shall pay a bonus to employees of the company
who shall continue its employment for at least 2 consecutive years, unless be
quits or is discharged before the expiration of the period of 2 years. X, an
employee of the company was discharged without just cause, one week before
the completion of the two-year period.
a. X is not entitled to the bonus because his discharge was in accordance with
the contract.
b. X is entitled to the bonus because the debtor company has voluntarily
prevented the happening of the condition.
c. X is not entitled to the bonus, because the employer’s right to terminate is
superior than the right of the employee to be employed.
d. X is entitled to the bonus whether the discharge is with or without cause.
27.Statement No. 1: if one party was mistaken and the other acted fraudulently or
inequitably in such a way that the instrument does not show their true intention,
the former may ask for the annulment of the instrument.
Statement No. 2: The statement of a false cause in contracts shall render them
void, if it should not be proven that they were founded upon another caused
which is true and lawful.
a. Both are true c. No. 1 is true; No. 2 is
false
b. Both are false d. No. 1 is false; No. 2 is
28.Must be in writing to be enforceable: true
b. Lease of care for 18 months
c. Both of a and b
d. None of a and b
29.Which of the following is not a requisite for the validity of a contract?
a. Consent d. Cause or consideration
b. Object e. None of the above
c. Delivery of the thing
30.D owes C P500. However, C’s right has already prescribed. Notwithstanding the
knowledge of thus fact, D paid the amount. Realizing this mistake, D wants to
recover the amount he paid.
a. D can be made to recover on ground of mistake.
b. D can be made to recover on the ground that his obligation is not legally
enforceable.
c. D can be made to recover because this will enrich C at the expense of D.
d. D cannot recover.
31.Three of the following contracts are void. Which is the exception?
a. Those whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy.
b. Those which re absolutely stimulated or fictitious.
c. Those where both parties are incapable of giving consent to a contract.
d. Those which cause or object did not exist at the time of the transaction.
32.X, a former government employee, suffered from severe paranoia and was
confined in the mental hospital in 2006. After his release he was placed under
the guardianship of his wife to enable his to get his retirement pay. In 2009, he
became a mining prospector and sold some mining claims. In 2012, he sues to
annul the sale claiming that he was not mentally capacitated at the time of sale.
The sale in question was
a. Illegal c. Void
b. Valid d.Voidable
33.Which of the following is presumed not to be legal subrogation?
a. When a creditor pays another creditor who is preferred
b. When a third person, not interested in obligation, pays with the approval of
the debtor
c. When a third person interested in the obligation, pays even without the
approval of the debtor
d. None of them
34.Essential requisites of a contract:
a. Consent c. Subject
b. Cause d. All of them
35.Which of the following instruments is not subject to reformation?
a. Simple donations inter vivos wherein no condition is imposed
b. Wills
d. All of the above
36.Valid until annulled unless there has been a ratification
a. Rescissible contract c. Voidable contract
b. Inexistence contract d. None of the above
37.In three of the following defective contracts, ratification ceases the defects. Which
is the exception?
a. Sale of piece of land thru an agent the authority is oral
c. Contracts entered into by a person who has been given no authority.
d. Both parties are incapable of giving consent.
38.S makes an offer to B on January 1, 2007. B makes known his acceptance in a
letter sent on January 2, and received by S on January 10. Meantime, on
January 5, S become insane.
a. The contract is voidable because on party is insane
b. The contract is not binding because there is no meeting of minds.
c. There is already a meeting of minds, the contract is perfected.
39.In the preceding number S is perfectly sane but only an unemancipated minor of
the time the acceptance is communicated to him.
a. There is no meeting of minds between the parties, unless ratified by the
guardian of S.
b. The contract is not binding because the party is incapacitated
c. The contract is binding between the parties
40.Which of the following contracts is voidable?
a. Those where one of the parties is incapacitated.
b. Those whose object is outside the commerce of men.
c. Those which are absolutely fictitious.
d. Those which contemplate an impossible service
41.The stipulation in a contract to the effect that the debtor should remain as a
servant in the house and in the service of her creditor so long as she had not
paid her debt is void because it is: a. Contrary to good custom
b. Contrary to public policy
c. Contrary to law and morality
42.X, after the death of his father, sold his inheritance though its amount has not yet
been determined to B, for a consideration of P50, 000.
a. The contract is valid only if the inheritance valued at least equal or more than
p50, 000
b. The contract is rescissible.
c. The contract is valid even though nothing remains of the inheritance to be
turned over to B.
43.X, alleged that Y promised to give X one hectare of land. This is in consideration
Y’s meritorious services to Y. Y pleads in defense that since the promise was not
in writing, it is unenforceable under the Statute of Frauds. Decide.
a. The promise is unenforceable because it is not in writing
b. The Statute of Frauds is applied because A has rendered services
c. The Statute of Frauds can apply to partially executed contract.
d. The Statute of Frauds is inapplicable here, because the promise to give the
land is not a sale of really property.
44.Statement No. 1: In voidable contracts, there is no need to ratify same before
they can be considered valid. In unenforceable contracts, however ratification is
mandatory before they can be considered enforceable.
Statement No. 2: There is undue influence if insidious words or machinations
were employed by a party on the other just to obtain the latter’s consent, without
which the latter would not have entered into contract.
b. Both re false d. No. 1 is false; No. 2 is true
45.Three of the following are void contracts. Which is the exception?
a. Contracts where the cause is immoral
candidate for a valuable consideration
c. Contracts with valid consideration but with unlawful motives
d. Absolutely simulated contracts
46.Statute of Frauds is applicable to
a. Contract not to be performed within a year from the making thereof
b. Partially executed contracts
c. Oral contract of loan when the amount involved is less than P500
47.Which of the following is correct?
a. An action to enforce judicially a natural obligation prescribes in 4 years
b. An action to declare a contract void is not subject to prescription
c. An action for annulment of contract is imprescriptible
d. An action for rescission of contract prescribes in five (5) years counted from
the execution of the contract.
48.B fraudulently induces S to sell to him (B) a masterpiece painting for P10, 000.
Subsequently, B sold it to X for P12, 000, a good faith purchaser. S is entitled to
a. Rescind the contract with B plus damages
b. Recover the painting from X but no damages
d. Rescind the contract between B and X
49.Which of the following contracts is not rescissible?
a. Those which are entered into by guardians whenever the wards whom they
represent suffer a lesion of more than ¼ of the value of the object of the
contract.
b. Those where one of the parties is incapable of giving consent to a contract.
c. Those executed in representation of an absentee, if the latter suffer a lesion
of more than ¼ of the value of the object of the contract.
d. Those undertaken in fraud of creditors when the latter cannot in any other
manner collect the claims due them.
e. Those which refer to things under litigation if they have been entered into by
the defendant without the knowledge and approval of the litigants or of
competent judicial authority.
50.When there is concurrence of offer and acceptance, there is
a. Payment c. Revocation
b. Consent d. none of the above
PARTNERSHIP
1. Common Property in a universal partnership

a. All present property and all property that they may acquire thereof
b. All present property and all profits that they may acquire therewith
c. All future property
d. All present property
2. A, B and C are partners of A and Company. They agreed that in case of loss, the
share of A is 50%, B 30%, and C 20%.After three years of total assets of A and
Company is P100,000 as against total liability of P112,000. If D is the only creditor,
D can collect from A,
a. 6,000
b. 12,000
c. 4,000
d. 8,000
3. One or more but less than all the partners have no authority to perform the following
acts, except:
a. Do any act which would make it impossible to carry on the ordinary course of
business
b. Submit a partnership claim or liability to arbitration.
c. Renounce a claim of the partnership
d. Convey partnership property in the ordinary course of business
4. A, B, and C are partners in ABC Company. D introduced himself as a partner in
ABC
Company to X, who in the belief of such introduction, extended a P60,000 credit to ABC
Company. These facts are known by A, who did not oppose. Who shall be liable to X?
a. Since X extended the credit tot the partnership, a partnership liability exists,
thus, partners A, B, C and D are liable.
b. Only A, who knows the transactions and D, are partners by estoppel and liable
pro-rata to X.
c. D who represented himself as partner in ABC Company is liable.
d. A and C who benefited in the P60,000 credit shall be liable to X.
5. Which of the following contracts of partnership may not appear in a public
instrument?
a. Limited partnership
b. Partnership where immovable are contributed
c. Partnership having a capital of 3,000 or more
6. The following persons are disqualified to form a universal partnership. Who are the
exception?
a. Brother and sister
b. Husband and wife
c. Those guilty of adultery and concubinage
d. Those guilty of the same criminal offense, if the partnership is entered into the
consideration of the same
7. May be required additional contribution in case of imminent loss:
a. Capitalist partner
b. Limited partner
c. Industrial partner
8. A, B and C formed a limited partnership, with A as general partner, while B and C as
limited partners, with the following contributions:
1. A contribute a specific parcel of land
2. B to contribute P10,000, the first P5,000 upon formation, and the last P5,000, 10
days after formation.
3. C contributed a specific car as was stated in the articles of partnership, when in
fact it was not contributed.
If the partnership was dispossessed of the land contributed by A after delivery to the
partnership by the real owner, the effect will be:
a. A is considered a debtor of the partnership
b. A is considered a trustee of the land for and in behalf of the partnership
c. The partnership will be dissolved
d. A is to answer for warranty against eviction
9. In the preceding number, if B did not deliver the last P5,000 to the partnership, the
effect will be:
a. B holds a trustee for in behalf of the partnership the P5,000
b. B is considered a debtor of the partnership of P5,000 plus interest without the
need of a demand
c. B may be expelled from the firm plus the damages incurred
d. B is considered a debtor of the firm for P5,000 plus interest after a demand is
made
10. A, B and C are partners where C as a capitalist partner is engaged in the same
business in which the partnership is engaged in. In this situation,
a. the partnership may oust C from the partnership and at the same time avail of
C’s profit in her separate business
b. the partnership may oust C from the partnership
c. the partnership may avail of C’s profits in her separate business
d. the partnership has nothing to do with C since it is her right to engage in any
business
11. Antonio is an industrial partner. Besides his service, he also contributed capital in
the partnership. There is no agreement or stipulation regarding profit or losses. His
share on the partnership profit is:
a. Depends upon the agreement of the other partners
b. Pro-rata in his interest
c. Such share that is just and equitable
d. Combination of B and C
12. Unless otherwise provided in a general partnership agreement, which of the
following statements is correct when a partner dies?
The deceased partner’s The deceased The partnership
executor would partner’s estate would be
automatically become would be free dissolved
from automatically
a partner any partnership
liability
a. Yes Yes Yes
b. Yes No No
c. No Yes No
d. No No Yes
13. A, B and C wish to go into the business together to bottle mineral water. Each
contributed P50,000 but C wanted to limit his liability to the extent of his
contribution, and his name to appear in the partnership name. Which form of
partnership as business organization should they choose?
a. General partnership
b. Limited partnership
c. No partnership organization is available
d. Limited
14. A, B and C, capitalist partners, each contributed P30,000, P20,000and P10,000,
respectively; and D, the industrial partner contributed his services. Suppose X, a
customer, is the creditor of the firm to the amount of P180,000. How can X recover
the P180,000?
a. X must sue the firm and get P60,000 from all the partners including D, the
industrial partner. X can still recover the balance of P120,000 from the four
partners, jointly.
b. X can recover from the firm P60,000. X can still recover the balance of P120,000
from the capitalist partners only.
c. X can recover from the firm P60,000. X can still recover the balance of
P120,000from any of the partners, solidary.
d. X can recover from the firm P60,000 and consider the balance of P120,000 a
loss.
15. A partnership is dissolved:
a. In contravention of the partnership agreement by the express will of any partner
at any time.
b. By any event which makes it unlawful for the business of the partnership to be
carried on or for the members to carry it on in the partnership.
c. When a specific thing which a partner had promised to contribute to the
partnership perishes before its delivery to the partnership
d. By the loss of the thing, whether before or after its delivery to the partnership,
when the partner who contributed it having reserved the ownership thereof, has
only transferred to the partnership the use or enjoyment of the same.
16. X, Y and Z are in partnership business. X contributed P10,000, Y contributed
P5,000, and Z his services only. After payment of partnership debts, what remains
of the partnership assets is P6,000 only. In the absence of terms to the contrary, the
share of Z will be equal to:
a. That of X
b. 2,000
c. That of Y
d. Nothing
17. When the manner of management has not been agreed upon, who shall manage
the affairs of the partnership?
a. Capitalist partners
b. Industrial partners
c. Capitalist-Industrialist partners
d. All of the partners
18. As a general rule, a partner cannot ask for a formal accounting of the affairs of the
partnership during its existence and before it is dissolved, except:
a. When he is wrongfully excluded from the partnership business
b. When the right exists under the terms of any agreement
c. As provided by the Article 1807
d. Whenever other circumstances render it just and reasonable
e. All of the above
19. Sometimes termed as a dormant partner:
a. Limited partner
b. Capitalist partner
c. Secret partner
20. Every contract of partnership having a capital of P3,000 or more in money or
property shall appear in public instrument which must be recorded in the Securities
and
Exchange Commission. Failure to comply with said requirements
a. will not affect the liability of the partnership and the members thereof to third
persons
b. will render the partnership void
c. will not give the partnership a legal personality
d. will give the partnership a de facto existence
21. A partner in a limited partnership cannot contribute
a. Cash
b. Property
c. Services
d. Partly cash and partly property
22. Statement No. 1: Every partner is responsible to the partnership for damages
suffered by it through his fault, and he may compensate them with the profits and
benefits which he may have earned for the partnership by his industry of work.
Statement No. 2: When an unlawful partnership is dissolved by a judicial decree, the
profits, but not the partner’s contributions, shall be confiscated in favor of the state.
a. Both are true
b. Both are false
c. 1 is true, 2 is false
d. 1 is false, 2 is true
23. Statement No. 1: If property has been promised by a partner as contribution to the
partnership, the fruit arising from the time the property should have been delivered,
should also be given without need of a demand.
Statement No. 2: The partner who has been appointed manager in the Articles of
Partnership may execute al acts of administration despite the opposition of his partners,
unless he should act in bad faith and his power is irrevocable without just or lawful
cause.
a. Both are true
b. Both are false
24. A, B and C formed a general partnership with a gross capital of P90,000. They
agree that the profit and loss sharing is: A-50%, B-25%, and C-25%. Upon
dissolution and after exhausting partnership capital, X has still collectible amount of
P30,000 from the firm. How much can X collect from C alone?
a. 7,500
b. 15,000
c. 30,000
d. 10,000
25. In the preceding question, supposing there is no profit or loss sharing, and A
contributed P24,000, B-P21,000 and C-P15,000. How much is the obligation of C to
X? a. 7,500
b. 15,000
c. 30,000
d. 10,000
26. C, a partner in “C” partnership, assigns his interest in “Y” partnership to X, who is
not made a partner. After assignment, X assert the right to
1. Participate in the management of “Y” partnership
2. C’s share in the surplus profit
3. May compel the other partners that he(X) becomes a partner X is correct
as to which of these rights?
a. 1 and 3
b. 3 only
c. 2 only
d. 2 and 3
27. A and B are partners engaged in the real estate business, A learned that C was
interested in buying a certain parcel of land owned by the partnership, even for a
higher price. Without informing B, A was able to make B sell to him (A) his (B’s)
share in the partnership. Then A sold the land at a higher profit.
a. A is liable to B for the latter’s share in the profit.
b. C is liable to B for the latter’s share in the profit.
c. The partnership is dissolved when A become the sole owner.
d. The sale of the land to C is void is void since it was without the knowledge of B.
28. Which of the following may be a cause for involuntary dissolution?
a. Express will of any partner
b. Insolvency of any partner
c. Termination of the term
d. Expulsion of any partner
29. The remedy of capitalist partners against an industrial partner who engaged in a
business for himself without the expressed permission from the partnership is:
a. To compel the industrial partner to sell his interest to the said capitalist partners.
b. To exclude him from the sharing in the profits in the partnership.
c. To remove him as manager if he is appointed as manager of the partnership.
d. To expel him from the partnership and claim for damages.
30. Management of a partnership is usually conferred upon the
a. Manager
b. President
c. Partners
31. Which of the following is not an element of a partnership?
a. There must be a valid contract.
b. There must be a mutual contribution of money, property or industry to a common
fund.
c. There must be an intent to engage in a lawful business, trade or profession.
32. A substituted limited partner is:
a. a person is admitted as a partner by the other partners
b. a buyer of right of the deceased partner
c. an assignee admitted to all the rights of a limited partner
d. all of the above
33. A partnership having for its object determinate things, their use or fruits, or a
specificundertaking, or the exercise of a profession or vocation is called:
a. Partnership by estoppel
b. Particular partnership
c. Universal partnership of al present property
d. Universal partnership of profits
34. Which of the following is false?
a. An industrial partner cannot, without the consent of all the other partners,
engage in a business similar to the business of the partnership.
b. As to liability to third persons, an industrial partner is considered as a general
partner.
c. An agreement among the partners that the managing partner shall determine the
share of all partners in the profit is void.
d. All partners including industrial ones can be compelled to give additional
contribution if the purpose is to save the business from certain loss.
35. A, B and C are partners. Their contributions are as follows: A, P60,000; B, P40,000;
and C, services. The partners agreed to divide profits and losses in the following
proportions: A, 35%, B, 25%, and C, 40%. If there is a profit of P10,000, how should
the said profit be distributed among the partners?
a. A, P6,000; B, P4,000; C, Nothing
b. A, P3,000; B, P2,000; C, P5,000
c. A, P3,500; B, P2,500; C, P4,000
d. A, P3,500; B, P3,500; C, P3,000
36. A partnership is dissolved on the death of a:
a. General partner
b. Industrial partner
c. General-Limited partner
d. Limited partner
37. In case of imminent loss of the business of a partnership, the following partners are
required to give additional contribution, except:
a. Capitalist partner
b. General partner
c. Capitalist-Industrialist partner
d. Industrial partner
38. Coverage of Statute of Frauds in a partnership contract, which is the exemption?
a. Promise to answer for the debt, default or miscarriage of another by a
partnership must be in writing
b. If the agreement to reform a partnership shall be performed within a year the
same must be in writing
c. Contracts for the sale of real property or any interest therein or leasing of
partnership immovable property for more than one year must be in writing
d. Sale of partnership personal property at a price not less than P500 must be in
writing, unless there is delivery or payment
39. Which of the following contracts of partnership will not affect its validity even if not
ina public instrument?
a. Limited partnership
b. Partnership where immovables are contributed
c. Partnership having a capital of P3,000 or more
e. All of the above
40. A partner whose connection with the partnership is open and pubic, such as by
including his name in the firm name of the partnership is called:
a. Nominal partner
b. Ostensible partner
c. Secret partner
d. Dormant partner
41. Which of the following statements is correct regarding the division of profits in a
general partnership when the written partnership agreement only provides that
losses be divided equally among the partners?
a. Based on the partners’ ratio of contribution to the partnership
b. based on the partners’ participation in day to day management
c. Equally among the partners
d. Profits will be divided according to the managing partner
42. Which of the following statements is incorrect?
a. An industrial partner who engaged in business for himself may be excluded from
the partnership plus damages.
b. An industrial partner may not engage in business for himself without the consent
of his co-partners.
c. A capitalist partner may engage in the same line of business in which the
partnership is engaged
d. An offending capitalist partner may not be excluded from the partnership.
43. Statement No. 1: The arrival of the term of the partnership with a fixed term or a
period shall not dissolve the partnership of the partners continue with the business
of the partnership but such a partnership may be terminated anytime dependent in
the will of the continuing partners.
Statement No. 2: The general rule is that the loss of the specific thing contributed to the
partnership dissolves the partnership when only the use of the thing is contributed by
the partner and such thing after it’s subsequently lost, the partnership is not dissolved.
Which is correct?
a. Both statements are false
b. Both statements are true
44. Which of the following statement is correct concerning liability when a partner in a
general partnership commits a tort while engaged in partnership business?
a. The partnership committing the tort is the only partly liable
b. The partnership is the only partly liable
c. The partners are jointly and severally liable
45. A limited partner shall not become liable as a general partner unless:
a. He takes part in the control of the business
b. He contributes his services to the capital of the firm
c. His surname appears in the partnership name
d. The word “limited” is not added to the partnership
e. All of the Above
46. A partner whose connection is concealed and has no voice nor say in the
management of the affairs of the partnership is called:
a. Nominal partner
b. Secret partner
c. Silent partner
d. Dormant partner
47. Three of the following are rights of a partner. Which one is not?
a. Right to associate another person to his share.
b. Right to admit another partner
c. Right to inspect and copy partnership books
d. Right to ask dissolution of the firm at the proper time.
48. A partnership
a. is created by mere agreement of the partners.
b. has a juridical personality separate and distinct from that of each of the partners.
c. may be constituted in any form, except, except where immovable property or
real rights are contributed thereto, in which case a public instrument shall be
necessary.
d. is dissolved by the death of a partner.
49. Three of the following do not prove the existence of a valid partnership. Which is
theexception?
a. The sharing of gross receipts
b. There is the intention of dividing the profits among themselves
c. Receipts by a person of a share of the profits for the payment of a partnership
debt by installments
d. When two or more partners are co-owners and they share correspondingly in the
profits made from the sale or use of their property.
50. Can only be made with the consent of all partners:
a. Waiver or compromise
b. Sell equipment
c. Borrow money
CORPORATION
1. Which of the following cannot be lawfully exercised by a non-stock corporation?
a. Pay dividend
b. Elect trustees
c. Amend the Articles of Incorporation
d. Adopt by-laws
2. A bond issue to pay-off prior floating indebtedness of the corporation issuing it is
called
a. Convertible bond
b. Equipment bond
c. Collateral bond
d. Funding bond
3. A bond secured by stocks or other bonds or both which are owned by the debtor,
the securities being deposited with a trustee for the bondholder is called:
a. Mortgage bond
b. Collateral trust bond
c. Equipment bond
d. Debenture bond
4. Involuntary dissolution of the corporation is caused by
a. an expiration of the period for which it was lawfully formed.
b. judicial decree of forfeiture or by order of the SEC.
c. legislative enactment.
d. failure to organize formally and commence the transaction of its
business within two years from the date of incorporation.
5. To revoke the power granted to the board to make the by-laws.
a. Majority vote of the board and of the outstanding capital stock of the
members
b. 2/3 of the outstanding capital stock of the members.
c. Majority of the quorum of the board and 2/3 of the outstanding capital
stock of the members.
d. Majority of the outstanding capital stock or of the members.
6. A corporate officer or director cannot take advantage their personal benefit in
business opportunity which the corporation is financially able to undertake.
a. Doctrine of corporate fiction
b. Trust fund doctrine
c. Doctrine of corporate opportunity
d. Doctrine of limited capacity
7. One of the following does not require stockholder’s approval.
a. Merger or consolidation
b. Change of corporate name
c. Investment of corporate funds for a purpose outside of the main
purpose of the corporation
d. Declaration of cash dividend
8. The required minimum authorized capital stock for stock corporation is:
a. Not less than P5,000
b. 25% must be subscribed and 25% must be paid
c. At least 25% must be subscribed and at least 25% must be paid and in
no case shall it be less than P5,000
d. None
9. Which of the following must be contained in a corporation’s Articles of
Incorporation?
a. Names of stockholders
b. Name of temporary treasurer
c. Provisions for issuance of par and no par value shares
d. Quorum voting requirement
10.Shares deposited by the seller or his agent with a bank or third party to be
delivered to the buyer or subscriber only upon the fulfillment of the stipulated
suspensive condition
a. Promotion shares
b. Founders shares
c. Redeemable shares
d. Escrow shares
11.A corporation cannot be an incorporator in the Philippines because only natural
persons may become incorporators, except
a. Cooperative as incorporator of rural bank
b. Eleemosynary corporations
c. Charitable organizations incorporated under the Philippines laws
d. Corporation sole
12.Every decision of the directors or trustees shall be valid as a corporate act at
which there is quorum by
a. Majority of all members of the board
b. Majority of the directors or trustees present
c. 2/3 vote of the members of the board
d. 2/3 vote of the directors or trustees present
13.The following are expressed powers of a corporation, except:
a. To sue and be sued
b. The power of succession
c. To adopt and use a corporate seal
d. To amend its Corporate Charter
14.The right of pre-emption shall not apply:
a. When such profit is denied in the corporate charter
b. To share to be issued in compliance with the laws requiring stock
offering or minimum stock ownership by the public
c. To share to be issued in good faith with the approval of the
stockholders owning 2/3 of the outstanding capital stock in exchange
for property needed for corporate purpose of a previously contracted
debt
d. All of the above
15.Ultra vires act
a. Acts which are beyond the powers expressly or impliedly conferred
upon the corporation
b. Unenforceable
c. May be ratified by the stockholders
d. May not be attacked by competitors in business
e. All of the above
16.The difference of a proxy and a voting trust agreement is
a. Proxy is required to be notarized
b. Voting trust agreement is not required to be notarized
c. Presence of the stockholder in the meeting where the proxy is given
automatically cancels the proxy
d. Voting trust must only be written
17. A, B, C, D and E organized a corporation. An article of incorporation

wasprepared, signed and acknowledge before a notary public and filed with the
SEC. The corresponding certificate of incorporation was issued. It turned out,
however, that A, B and C are not residing in the Philippines. What is the status of
the corporation?
a. De jure corporation
b. De facto corporation
c. Corporation by estoppel
d. Corporation by prescription
18. The SEC may reject the article of incorporation or disapproved any
amendmentsthereto if
a. It is not substantially in accordance with the form prescribed by law
b. The purpose or purposes of the corporation patently unconstitutional,
illegal or immoral
c. The treasurer’s affidavit concerning in the amount of capital stock
subscribed and/or paid is false
d. The required percentage of ownership of the capital stock to be owned
by the citizen of the Philippines has not been complied with
e. All of the above
19. Incorporators
a. Any number of natural persons not less than 5 but more than 15
b. Majority are residents of the Philippines
c. Must own or be subscriber to at least 1 share of the capital stock of the
stock corporation to be formed
d. Need not be citizen of the Philippines
20. Director or trustees who willfully and knowingly vote for or assent to
patentlyunlawfully act of the corporation or who are guilty of gross negligence or
bad faith in directing the affairs of the corporation or acquire any personal or
pecuniary interest in conflict with their duty shall be liable
a. As a trustee for the corporation
b. Criminally for violation of the corporation code
c. Jointly and severally liable for the damages suffered by the corporation
21. Which of the following is(are) valid consideration for the purchase of stocks of
acorporation
I. Real estate
II. A negotiable promissory note in money
III. Monetary consideration for services to be performed
a. I only
b. II only
c. Both I and III
d. Both II and III
22. Suppose “X’ Corporation has an authorized capital stock of 100,000 divided
into1000 shares of stock with par value of 100 each Subscribers:
A – 100 shares and paid 8,000
B – 160 shares and paid 100
C – 250 shares and paid 4,000
D – 50 shares and paid 5,000
E – 200 shares and paid 600
Which of the following subscription will qualify the Pre-subscription requirement
of Incorporation.
a. Combination of A and E
b. Combination of C and D
c. Combination of A and B
d. All of the above
23. Which of the following must be contained in a Corporation’s Articles
ofIncorporation?
a. Names of stockholders
b. Name of the temporary treasurer
c. Provisions for issuance of par and no par value shares
d. Quorum voting requirement
24. “X’ company is a stock corporation composed of the Reyes family engaged in
thereal estate business. Because of the regional crisis, the stockholders decided
to convert their stock corporation into a charitable non-stock and non-profit
association by amending the articles of incorporation.
Could this be legally done?
Would your answer be the same if at the inception. “X” company is a
nonstock corporation to a stock corporation? Why?
Answers:
A. Yes, by amending the articles of incorporation. Be it noted that the
stock coporation is not distributing assets to the stockholders.
B. No, because in a non-stock corporation the members are not entitled
to share in the profit.
a. Letter A is false; letter B is true

b. Both answer are false
c. Letter A is true; letter B is false
d. Both answers are true
25. Suppose that “X” Corporation has already issued the 1000 originally
authorizedshares of the corporation so that its board of directors and
stockholders wish to increase “X’s” authorized capital stock. After complying with
the requirements of the law on increase of capital stock, “X” issued an additional
1000 shares of the same value. “S” presently holds 200 shares out of the original
1000 shares. Which of the following statement is true?
a. “S” must be offered equivalent 200 shares under his pre-emptive right
of stated in the articles of incorporation
b. Such preemptive right shall only be given if it is stated in the by-laws of
the corporation.
c. The increased in share must be offered first to the stock-holders of
record under the “doctrine of first refusal”. If they refuse it will be
offered to the general public.
d. If ever there is a preemptive right, the same must be exercised within a
reasonable time as fixed by the board of directors if the articles and the
by-laws are silent.
26. Plaintiffs filed a collection action against “X” Corporation. Upon execution of
thecourt’s decision, “X” Corporation was found to be without assets. Thereafter
plaintiffs filed an action against its present and past stockholder including “Y”
Corporation which owned substantially all of the stocks of “X” corporation. The
two corporations have the same board directors and “Y” corporation financed the
operations of “X” corporation. May “Y” corporation be held liable for the debts of
“X” corporation?
a. Yes, under the principle of “corporate opportunity “of interlocking
directors.
b. Yes, under the principle of “trust fund doctrine”
c. No, under the doctrine of “separate entity”
d. Yes, under the principle of “piercing the veil of corporate entity.”
27. Which of the following is a disadvantage of forming a corporation?

a. The existence of the entity is not affected by the personal vicissitudes
or of the individual stockholders;
b. Free and ready transferability or ownership of shares
c. Subservience of minority stockholders to the wishes of the majority
subject only to equitable restraints
d. The shareholders are not liable for the debts of the business.
28. In the matter if managing the business if the corporation, the exercise ifcorporate
power and handling of corporate properties, this is supreme:
a. 2/3 approval of the stockholders of the corporation
b. Majority vote of the outstanding capital stockholders of the corporation
c. Majority vote of the Board of Directors
d. The president of the corporation
29.To adopt by-laws

a. Majority of the outstanding capital stock or of the members
b. Majority vote of the board and of the outstanding capital stock or of the
members
c. 2/3 of the outstanding stock or of the members
d. Majority vote of the board and 2/3 of the outstanding capital stock or of
the members.
30. In no case shall the total yearly compensation of directors exceeds.

a. 5% of the net income before income tax during the preceding year
b. 10% of the net income before income tax during the preceding year
c. 10% of the net income after income tax during the preceding year
d. 10% if the net income before income tax during the current year
31. Statement no. 1: Directors can attend and vote by proxy at board meetings.
Statement no. 2: The articles of incorporation may expressly provide that
redeemable shares by a corporation may be purchased upon the expiration of a
fixed period, regardless of the existence of unrestricted retained earnings in the
books of the corporation.
a. Both are true
b. Both are false
32. Three of the following statement are true; which is the exception?
a. Redemption of redeemable stock is required even if the corporation at
that time has no unrestricted earnings
b. The requirement that at least 25% of authorized capital must be
subscribed applies only to non-stock corporation
c. Directors are entitled to compensation as a matter of rights
d. Derivatives suits can be filed only by dissenting stockholders.
33. Shall constitute a quorum for the transaction of corporate business

a. 2/3 of the number of directors or trustee
c. Majority of the number of directors or trustee as fixed in the articles of
incorporation
d. ¾ of the number of directors or trustee
34. To issue stock dividends

a. Majority vote of the board and 2/3 of the outstanding capital stock
b. 2/3 of the outstanding capital stock
c. Majority of the outstanding capital stock
d. Majority of the quorum of the board and 2/3 of the outstanding capital
stock.
35. An action brought by a stockholder against the corporation for direct violation
ofhis contractual rights
a. Representative suit
b. Individual suit
c. Derivative suit
d. Corporate suit
36. To enter into management contracts, as a rule

a. Majority of the quorum of the board and majority of the outstanding
capital stock or of the members of both the managing and managed
corporations
b. Majority of the quorum of the board and 2/3 of the outstanding capital
stock of the managed corporation
c. Majority vote of the board and majority of the outstanding capital stock
or of the members
d. 2/3 of the outstanding capital stock or of the members.
37. Statement no. 1: The corporate powers of a corporation shall be exercised bythe
stockholders.
Statement no. 2: The entire consideration received by the corporation for its
nopar value shares shall be treated as capital and shall not be available for
distribution as dividends.
a. Both are true
b. Both are false
38. The stockholders or members mentioned in the articles of incorporationoriginally

forming and composing the corporation and who are signatories thereof are
called
a. Incorporators
b. Promoters
c. Corporators
d. Subscribers
39. Unless the by-laws provide otherwise, written notice of regular meetings shall
besent to all stockholders or record
a. At least one day prior to the meeting
b. At least two days prior to the meeting
c. At least one week prior to the meeting
d. At least two weeks prior to the meeting
40. Which of the following is true

a. Delinquent stock can be voted
b. Unpaid stock is necessary delinquent
c. Delinquent stock cannot be sold at public auction
d. Unpaid stocks are entitled to payment of cash dividend
41. A corporation is a citizen of

a. The state of the country where its principal office is situated
b. The state country where its principal business is situated
c. The state or country where it is incorporated
d. The state or country of its controlling stockholders
e. All of the above
42. Statement no. 1: the liability of the stockholders for the payment of
corporatedebts is limited to the value of the shares.
Statement no. 2: the entire consideration received by the corporation for its nopar
value share shall be treated as capital and shall not be available for distribution
as dividends.
a. Both are true
b. Both are false
c. No. 1is true; No. 2 is false
43. Stocks which has been issued by a corporation as fully paid up when in fact it
isnot, because it has been issued as bonus or otherwise, without any
consideration at all, or for less than par, or for property, labor or services at an
overvaluation.
a. Watered stocks
b. Over issued stocks
c. Treasury stocks
d. Redeemable stocks
44. Which of the following qualifications is necessary in order that one may
beelected secretary of the corporation?
a. He must be a citizen and a resident of the Philippines
b. He must be a director of the corporation
c. He must be a stockholders of the corporation
d. He must be a secretary of any other corporation
e. All of the above
45. Three of the following are similarities between a partnership and
corporation.Which is not?
a. The individuals composing both have little voice in the conduct of the
business
b. Both have juridical personality separate and distinct form that the
individuals composing them
c. Like a partnership, a corporation can act only through agents
d. Both are organizations composed of an aggregate of individuals
46. The right given to stockholder to dissent and demand payment of the fair valueof
their shares is called
a. Right of proxy
b. Appraisal right
c. Pre-emptive right
d. Stock right
47. All of the close corporation’s issued shares shall be held of record by bot
morethan
a. 10 persons
b. 15 persons
c. 20 persons
48. A bond which is payable to a particular individual whose name is entered on

thebooks of the corporation as the registered owner is called
a. Registered bond
b. Coupon bond
c. Convertible bond
d. Guaranteed bond
49. The authorized capital stock of a proposed corporation is 100,000 dividend 1,000
shares with a par value of 100 each. At least 25,000 or 250 shares was
subscribed by 25 subscribers. To meet the minimum amount of subscription that
must be paid
a. It is enough that 25% of the total subscription is paid, regardless of the
amount paid by each individual subscription
b. Each and every subscriber must always pay 250 which is 25% of their
individual subscription
c. Seven of the subscribers paid 6,250 and the rest of the subscribers
50. The owners of share in stock corporation are called

a. Incorporators
b. Promoters
c. Members
d. Stockholders
LAW ON OBLIGATIONS
1. Which of the following is not an essential element of an obligation?

A. Obligor
B. Efficient cause
C. Presentation
D. Creditor
2. A source of obligation not arising from law

A. Negotiorum gestio
B. Solutio indebiti
C. Culpa aquiliana
D. Contract
3. Which of the following is not a source of an obligation?

A. Law
B. Contracts
C. Delicts
D. Damages
E. Quasi-contracts
4. It is an obligation, which is based on positive law gives a right to enforce its

performance
A. Natural obligation
B. Civil obligation
C. Moral obligation
D. Legal obligation
5. Liability for damages in the performance of an obligation arises from the following,
except:
A. Negligence
B. Acts or omission punished by law
C. Delay
D. Fraud
6. An action to impugn the acts of a debtor intended to defraud the creditor is

A. Accion reivindicatoria
B. Accion subrogatoria
C. Accion redhibitoria
D. Accion pauliana
7. Obligations may arise from any of the following, except:
A. contacts
B. quasi-contracts
C. law
D. negligence
8. 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 debtor
B. At the domicile of the creditor
C. Wherever the thing might be at the moment the obligation was constituted
D. Wherever the thing might be at the moment the obligation is to be fulfilled
9. 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 stipulated
C. When the law so provides;
D. When demand would be useless.
10. Demand is not needed to put the debtor in default, except

A. When demand would be useless
B. When the parties so stipulate
C. When time is of the essence
D. When the fixing of the time is the controlling motive for the establishment
of the contract
11. 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 family
B. Extraordinary diligence of a good father of a family
C. Diligence of a father of a food family
D. Diligence of a good father of a family even if the law or the stipulation
requires another standard of care.
12. This is a principal kind of quasi-contract arising out of payment by mistake or undue
performance of an obligation:
A. Solutio indebiti
B. Negotiorum gestio
C. Other quasi-contract
D. Quasi delict
13. When the obligor voluntarily prevents the happening of the condition it is deemed
that the condition is:
A. constructively fulfilled
B. constructively extinguished
C. constructively demandable
D. constructively nullified
14. Dolo is distinguished from Culpa

A. Waiver of an action to enforce liability may be waived
B. Liability may be reduced by the courts
C. There is deliberate intention to cause damage or prejudice
D. Responsibility arising there from is demandable
15. 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 criminal
B. B may proceed against A for culpa contractual
C. C may proceed against A for culpa aquiliana
D. C may proceed against A for culpa criminal
A. Proof of due diligence in the selection and supervision of employees is not
considered a defense
B. 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 obligation
D. The source of liability is the negligent act of the person causing damage to
another.
17. Which of the following is not a civil liability arising from delict?
A. Indemnification for consequential damages
B. Rescission
C. Reparation
D. Restitution
18. 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. With a suspensive condition
C. With a period
D. With a resolutory condition
19. The following are requisites of an obligation, except:
A. passive subject, debtor or obligor

B. active subject, creditor or obligee
C. efficient cause
D. presentation
20. The sources of liability for damages are the following except:
A. fraud
B. negligence
C. delay
D. quasi-delict
21. This obligation is demandable at once

A. With a suspensive condition
B. With a period in diem
C. When my means permit me to do so
D. When it depends on the happening or a specified event
22. If the obligation of the debtor is I will pay you my debt after I have arrived from
abroad. The obligation is
A. Valid
B. Void
C. Voidable
D. Unenforceable
23. It is the voluntary administration of the property of another without his consent.
A. negotiorum gestio
B. Solutio indebiti
C. quasi-delict
D. contact
24. Indivisibility as distinguished from solidarity

A. Plurality of subject is indivisible
B. When the obligation is converted into one or indemnity for damages
because of breach, the character of the obligation remains
C. Refers to the legal tie or vinculum
D. Refers to the prestation which constitutes the object of the obligation
25. The following are special forms of payment, except:

A. Dation in payment
B. Tender of payment and consignation
C. Payment by cession
D. Compensation
26. Payment by cession as distinguished from dation in payment

A. The debtor is not necessarily in a state of financial difficulty
B. The effect is to release the debtor for the net proceeds of the things ceded
or assigned
C. The property is alienated by the debtor to the creditor in satisfaction of a
debt in money
D. What is delivered by the debtor, is merely a thing to be considered as the
equivalent of a performance of the obligation
27. This refers to delay on the part of the creditor.
A. mora solvendi ex re
B. compensatio morae
C. mora solvendi ex persona
D. mora accipiendi
28. 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 him
D. Send the debtor to jail for non-payment of his debt
29. One of the following is a determinate thing.
A. a BMW with license plate no. HNT 888

B. on of the four vehicles
C. a Honda car
D. a Rolex watch
30. It presupposes not only that the obligor is able, ready and willing but also more so, in
the act of performing his obligation
A. Promissory note
B. Bill of exchange
C. Tender of Payment
D. Obligation to sell
31. One is not a requisite needed in order that obligation shall be extinguished by loss or
destruction of a thing due
A. When the obligation is to deliver the house located at 123 Recto, Avenue,
Manila
B. When the thing is lost without the fault of the debtor
C. When the obligation is to deliver a brand new Honda SIR colored orange
D. When the thing is lost before the debtor incurred delay
32. Novation of a contract takes place in three of the following except:

A. Delegacion
B. Expromission
C. Subrogation
D. Assignment
33. When a third person assumes the payment or the obligation without the knowledge
of the debtor but with the consent of the creditor, there is
A. Delegacion
B. Expromission
C. Subrogation
D. Novation
34. 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 other
B. That both debts be due
C. 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.
35. It is a wrong committed without any preexisting relations between the parties.
A. natural obligation
B . quasi-delict
C. quasi-contract
D. culpa contractual
36. 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. P1.5M
B. P.5M D. P1M
37. 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 thing
B. The performance of the obligation has become impossible
C. The nature of the obligation does not require the assumption of risk
D. When the law of the obligation expressly so provides
38. It is a thing that is particularly designated or phisically segragated from all others of
the same class.
A. generic thing
B. indeterminate thing
C. determinate thing
D. real thing
39. When the fulfillment of the condition depends upon the sole will of the debtor, the
conditional obligation shall be:
A. voidable
B. unenforceable
C. valid
D. void

established for the benefit of :
A. both the creditor and the debtor

B. the creditor
C. the debtor
D. the third party
41. When the debtor binds himself to pay when his means permits him to do so, the
obligation is:
A. conditional
B. pure
C. simple
D. with a period
42. This payment is in kind:
A. consignation
B. payment by cession
C. dation in payment
D. application for payment
43. When the obligation is extinguished because of the passage of time, this is:
A. fulfillment of resolutory condition

B. arrival of resolutory period
C. prescription
D. rescission
44. When the debtor abandons or transfers all his properties to his creditors so that the
creditors may sell the properties and out of the net proceeds the creditor recover
their claims, this is called
A. dacion en pago
B. tender of payment and consignation
C. payment by cession
D. remission
45. Unless the law or stipulation of the parties requires another standard of care, the
obligation to give a thing carries with it the obliagation to care of it with:
A. extra-ordinary diligence
B. degree of care agreed upon by the parties
C. diligence of a good father of a family
D. diligence of a good family of a father
46. One of the following shall produce the effect of payment of debts:
A. delivery of check
B. tender of Central Bank notes
C. delivery of promissory note
D. dacion en pago
47. It presupposes not only that the obligor is able, ready and willing but more so, in the
act of performing his obligation.
A. promissory note
B. tender of payment
C. bill of exchange
D. obligation to sell
48. Acceptance of a commecial document is equivalent to payment:
A. The check has been received as payment.

B. The check became valueless because of the creditor's fault.
C. The check is a manager's or cashier's check.
D. The promissory note is used as payment.
49. In the three of the following cases, compensation cannot be claimed by the debtor
except:
A. by the bailee in commodatum

B. by the depositor in a contract of deposit
C. by the person obliged to give support due by gratuitous title
D. by the debtor in an obligation arising from penal offense
50. In facultative obligation, the right of choice belongs to:
A. creditor
B. debtor
C. both creditor and debtor
D. third person
Law on Contracts
1. A sent B a letter wherein the former offered to sell his car to the latter for Php 1M.
B signified his intention to buy the same. In A’s letter he gave B two weeks to
raise the amount. After one week, A raised the price to Php 1.5M. Can B compel
A to accept the Php 1M first offered by A and deliver to him the car?
a. Yes, since there was already offer and acceptance.

b. Yes, because A cannot change his offer without the consent of B.
c. Yes, because A cannot withdraw the offer within two weeks as he is under
estoppel.
d. No, because there was no acceptance yet of the offer.
2. A sold a parcel of land to B by word of mouth and delivered to the latter the
Transfer Certificate of Title of the land. Can B compel A to execute the deed of
sale of the land?
a. B cannot compel A to execute the deed of sale as the sale being oral is
unenforceable.
b. B cannot compel A because the sale is void being oral.
c. B can compel A because the contract is enforceable due to delivery of the
TCT to him.
d. B can compel A because the sale is merely voidable and therefore
enforceable, binding until annulled.
3. Statement 1: As a rule, contracts take effect only between the parties.

Statement 2: Mere incidental benefit of the third person is enough for stipulation
pour autri to exist provided he accepts the same.
a. S1 is true, S2 is true.
b. S1 is true, S2 is false.
d. S1 is false and S2 is true.
4. Three of the following things may be objects of the contract, except:

a. Those things within the commerce of men.
b. Services which are not contrary to law, morals and good customs.
c. Intransmissible rights.
d. Hereditary rights.
5. Statement 1: Contracts without cause are voidable because cause is presumed

to exist in a contract.
Statement 2: Offer must be absolute and acceptance must be certain before can
there be meeting of the minds of parties.
a. S1 is false, S2 is true.
b. Both statements are true.
d. S1 is true, S2 is false.
6. Statement 1: Contract of lease of a parcel of land for a term of one year must be
written, otherwise, unenforceable.
Statement 2: Contract of sale of a parcel of land must be in public instrument,
otherwise, unenforceable.
c. S1 is true, S2 is false.
7. A contract wherein both contracting parties are incapable of giving consent and
yet ratified by the guardian of either of the parties is:
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
8. Three of the following contracts are void. Which one is not?

a. Oral contract of partnership wherein more than P3,000 has been contributed
by the partners.
b. Agent given oral authority to sell the land of the principal.
c. Partnership contracts in private instrument wherein immovables have been
contributed.
d. Oral contract of limited partnership.
9. Which one of the following constitutes fraud?
a. Misrepresentation made not in bad faith.

b. Misrepresentation by a third person and both parties mistaken.
c. Usual exaggerations in trade or dealer’s/sale’s talk.
d. Failure to disclose facts when there is a duty to reveal them as when the
parties are bounded by confidential relations.
10. These are principles in contracts. Which is not?
a. Freedom of autonomy of wills.

b. Relativity of contracts.
c. Perfection by mere consent.
d. Binding on third persons.
11. Which of the following constitutes an offer?
a. Business advertisements of things for sale.

b. Advertisements for bidders.
c. An offer made through agent.
d. Before acceptance is conveyed, either of the parties dies, civilly interdicted,
becomes insane or insolvent.
12. Statement 1: There is acceptance of the offer only after it has come to the
knowledge of the offeror.
Statement 2: Lesion or inadequacy of cause shall as a rule make a contract
defective.

b. S1 is false, S2 is true.
13. Statement 1: If the cause is not stated in the contract, it is presumed that it does
not exist and therefore the contract is void.
Statement 2: In order that a contract may be voidable, there must be damage.
a. Both statements are false.

c. S1 is false, S2 is true.
14. The action to annul voidable contract is extinguished by:
a. Novation
b. Ratification
c. Rescission
d. Estoppel
15. Which of the following contracts is unenforceable?
a. One of the contracting parties is incapable of giving consent.

b. Contract of lease of a car for two years orally entered into.
c. Oral contract of sale of land.
d. Mortgage contract in private instrument.
16. Which of the following contracts is not void ab initio?
a. Those whose object is outside the commerce.

b. Those whose object did not exist at the time of transaction.
c. Those which contemplate an impossible service.
d. Those undertaken in fraud of creditors.
17. Contract which cannot be sued upon unless ratified, thus, it as if they have no
effect yet:
a. Voidable
b. Rescissible
c. Void
d. Unenforceable
18. Which of the following contracts is valid?
a. Oral contract of agency giving authority to an agent to sell the land of the
principal.
b. Oral partnership agreement where immovables are contributed.
c. Oral contract of sale of an immovable entered into by an agent who was given
oral authority by the principal.
d. Oral agreement to answer all the expenses for the wedding reception if A
marries B.
19. A sold to B a genuine bottle of Fundador brandy. However, upon delivery, the
former substituted a fake. B now wants to annul the sale. Decide:
a. The contract is void ab initio. Therefore, it can be annulled.

b. The contract can be annulled since it is voidable due to fraud.
c. The contract cannot be annulled because it is only incidental fraud.
d. There is dolo incidente. Therefore, it can be annulled.
20. G was appointed as the guardian of M who owns a parcel of land valued at P1M.
M sold the land only for P.7M to B. The contract is defective because:
a. Unenforceable
b. Rescissible
c. Voidable
d. Void
21. S was intimidated by B to sell to the latter his parcel of land at a very low price.
C, the creditor of S was thus damaged since the former has no other means of
collecting from S. The remedy of S:
a. Rescission
b. Annulment
c. Have it declared by the court as void.
d. Reformation of the contract.
22. Which of the following contracts must be in writing to be enforceable?
a. Acts and contract for the creation, transmission, modification,

extinguishments of real rights.
b. The cession, repudiation, renunciation of hereditary rights.
c. Contract of guaranty
d. Contract of partnership.
23. S made an offer to B for the sale of his car which was received by the latter on
January 2, 2001. On January 4, 2001, B sent a letter of acceptance by mail. On
January 3, 2001, S sent another letter to B withdrawing his offer. In this case;
a. There was a perfected sale because of the acceptance of the offer by B

before he had knowledge of its withdrawal by S.
b. There was perfected sale because S was estopped from withdrawing his offer
unless B had knowledge thereof before acceptance.
c. No sale took place because before acceptance was conveyed, the offer had
been withdrawn.
d. The offer was ineffective for lack of certainty as to the object.
24. Statement 1: An offer made by the principal is accepted from the time
acceptance is conveyed to him or his agent.
Statement 2: The object of a contract may be future things including future
inheritance.

d. S1 is false, S2 is true.
25. Statement 1: A contract which is the direct result of a void contract is voidable.
Statement 2: If the object of the contract did not exist at the time of the
transaction, it is void. Therefore, this may include sale of future things.
a. S1 is true, S2 is false.
b. S1 is false, S2 is true.
c. Both are false.
d. Both are true.
26. A sold in writing to B his stereo set for P600. There is no delivery from A and no
payment of the price from B. Contract is:
a. Voidable
b. Unenforceable
c. Void
d. Enforceable
27. Statement 1: If the words of the contract are clear and leave no doubt on the
intention of the parties, interpretation of contracts may be proper.
Statement 2: In case of gratuitous contracts, doubt shall be resolved in favor of
greatest reciprocity of interest.
28. S sold his parcel of land only for P1M. Although the value of the same is P2M, he
thus suffered damage or lesion in the sale due to the inadequacy of the price.
Therefore, the contract is:
a. Voidable
b. Unenforceable
c. Valid, not defective
d. Rescissible
29. Statement 1: In case of doubt, a contract purporting to be sale shall be construed

as mortgage.
Statement 2: In annulment of contracts, there shall always be mutual restitution
of both parties thereof.
30. Statement 1: Just like the voidable and unenforceable contracts, rescissible
contracts may also be ratified.
Statement 2: In case of fraud or mistake, the action for annulment must be made
within four years from the commission of the vice of consent.

31. D, fearing that his creditor C, would go after his only parcel of land to satisfy his
claim for payment of D’s debt, sold his land to X who did not know of D’s
intention. Decide:
a. C can ask for annulment of the sale as this is voidable contract.

b. C may ask for damages against X since he was damaged by the sale.
c. C can file an action for rescission of the sale.
d. C cannot ask for the rescission of the sale.
32. Statement 1: Mutual error as to the legal effect of an agreement when the
purpose of the parties is frustrated may result in the reformation of the
instrument.
Statement 2: Mutual mistake of the parties and the instrument does not express
the true agreement will make the contract voidable.

33. A without authority from B sold the latter’s car in the name of the latter. The
contract is therefore:
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
34. Statement 1: A threatened B with an administrative charge for immorality if the

latter does not marry her because she is already pregnant with their child.
Fearing that she may do so, B married her.
Statement 2: The contract of marriage is therefore voidable because of threat. A
simple mistake of account may give rise to the annulment of the contract
because of mistake.
35. A appointed B to sell his land:

Statement 1: If the authority of B is oral and the sale is in public instrument, the
sale is void.
Statement 2: If the authority of B is in writing and the sale is oral, the contract is
unenforceable.
b. S1 is true. S2 is false.
36. The three following contracts are cleansed of its defect by ratification. Which is
not so ratified?
a. Contract where the creditor was damaged by the act of the debtor intended to
defraud him.
b. Contract entered into by a person incapable of giving consent.
c. Sale of chattels orally entered into for a price not less than five hundred
pesos.
d. Lease of real property for more than one year orally entered into.
37. A gave B P1M for the latter to kill C. Before B could accomplish his criminal intent
to kill C, A changed his mind and demanded the return of the money from B.
Decide:
a. A cannot recover the payment he made to B because it was a void contract

which does not allow recovery by the guilty party.
b. A cannot recover the money because the contract is unenforceable.
c. A can recover the money although the contract is void, since the crime was
not committed.
d. No recovery and both A and B will be prosecuted for their crime.
38. Because A wants to sell his land to B but the latter does not want to buy the
same; A forced B to buy his land. The contract:
a. Not binding upon B since his consent was vitiated.

b. It is unenforceable as against B but not against A.
c. May be ratified expressly or tacitly by A.
d. It is valid, binding and enforceable.
39. D borrowed a sum of money from C with G as guarantor. The loan is in writing
but the guaranty is oral. D failed to pay C. Who now is demanding payment from
G? Can G be compelled to pay?
a. Yes, because he is the guarantor to pay in case the debtor defaults.

b. No, because the guaranty is void having been orally made.
c. No, because the guaranty is unenforceable against G, it being oral.
d. Yes, because the guaranty is enforceable, writing not needed.
40. A and B agreed on February 3, 2000 that B will construct the house of A in
January 2002. The contract was orally entered into. B received a down payment
from A with the balance payable after completion of the house. The contract is:
a. Voidable because it is not in public instrument.

b. Enforceable even if not in writing, having been ratified.
c. Unenforceable because it is not in writing and yet performance there is after
one year from perfection.
d. Void because it is not in writing as required by law.
41. A sold to B a fake Rolex watch on January 3, 2001. On January 13, 2001, B
discovered that the watch he bought from A was an imitation. The law provides
that he can annul the sale as a voidable contract within four years. Prescription
starts from:
a. January 3, 2001 when the sale was perfected.

b. The time of delivery of the watch to B.
c. The time they first talked about the sale of the watch.
d. January 3, 2001 when the fraud was discovered by B.
42. A and B agreed on a contract of pledge. However, they entered into a contract of
mortgage in the honest belief that the mortgage and pledge are the same. The
instrument may be reformed:
a. No, the document cannot be reformed since the contract is void.

b. No, it cannot be changed. They are bound by the document which speaks for
itself.
c. Yes, it can be reformed because it does not express the true agreement of
the parties.
d. No, it cannot be reformed because there was no meeting of minds between
the parties and the remedy is annulment of contract.
43. A and B entered into a contract of mortgage. However, as written the document
states it is a contract of sale with right of repurchase, the error due to the fault of
the clerk/typist. Hence:
a. The contract of sale must be annulled since it is voidable.
b. The instrument has to be enforced as is for it is the proof of the agreement
between the parties.
c. Because of the negligence of the parties in signing without first reading the
instrument, they are bound by the contents of the same.
d. The instrument may be reformed because it does not express the true
agreement of the parties.
44. S sold to B his parcel of land worth P1M for only half a million pesos. After the
sale and realizing his damage, S is now seeking to set aside the sale. Decide:
a. The contract is voidable because of mistake of the seller.

b. It is rescissible because of the lesion or damage suffered by S.
c. S has the right for an increase in the price to prevent unjust enrichment on the
part of B.
d. The sale is valid, binding and enforceable because as a rule, lesion or
inadequacy of cause or price in a sale does not invalidate a contract.
45. Statement 1: If the cause is not stated in the contract, it is presumed that it does
not exist.
Statement 2: Lesion or inadequacy of cause, as a rule, invalidates a contract.
46. D borrowed a sum of money from C with a certain rate of interest. C now wants
to increase the rate of interest without the consent of D. What principle in
contracts prohibits C from doing so?
a. Autonomy of contracts
b. Relativity of contracts
c. Mutuality of contracts
d. Consensuality of contracts
e. Obligatory force and compliance in good faith
47. Three of the following contracts must be in writing to be valid. Which is the
exception?
a. Contract of partnership where immovable are contributed.

b. Contract of agency to sell the land of the principal.
c. Contract where the amount involved exceeds five hundred pesos.
d. Negotiable instruments.
48. A threatened to kill B if the latter would not marry the former’s daughters who
was pregnant with B’s child. Intimidated, B married A’s daughter against his will.
a. The contract is not voidable because the threat was made by a third person
not by one of the parties.
b. The contract is not voidable because the claim for marriage is just or legal
and therefore, consent is not vitiated.
c. The contract is not voidable since B has to answer for his fault that A’s
daughter became pregnant.
d. Voidable is the contract due to intimidation even if employed by a third
person.
49. The following are characteristics of a void contract. Which is the exception?
a. The action or defense for the declaration of the inexistence of a contract does
not prescribe.
b. It cannot be ratified.
c. A contract which is the direct result of a void or illegal contract is voidable.
d. The defense or illegality of a void contract is not available to third person
whose interests are not directly affected.
50. The following are attributes of a voidable contract. Which is not?
a. It is binding, valid and enforceable before annulment.

b. Damage is material to be voidable contract.
c. It can be ratified and ratification has retroactive effect.
d. The capacitated cannot allege the incapacity of the other party.
Law on Partnership
1. Which of the following is not correct?
a. A – cash (Ltd.); B – cash (Gen.); C – service (Gen.)

b. A – property (Ltd.); B – cash (Gen.); C – service (Gen.)
c. A – service (Ltd.); B – cash (Gen.); C – service (Gen.)
d. A – cash (Ltd.); B – property (Gen.); C – service (Gen.)
2. A and B orally agreed to form a partnership two years from today, each one to
contribute P10,000.00. At the arrival of the said, if one refuses to go ahead
with the agreement, can the other enforce the agreement?
a. Yes, since the agreement is to be enforced after one year from the making
thereof, the same should be in writing to be enforceable.
b. Yes, because the prior agreement was voluntarily made.
c. Yes, the contract of partnership is not governed by the Statute of Frauds.
d. No, because the agreement was merely oral.
3. If a partner is insolvent, the first order of preference in the distribution of his

asset is
a. Partnership creditors
b. Partner’s contribution to the partnership
c. Separate creditors of the debtor
d. Pro-rata between the separate creditors and the partnership creditors
4. The following, except one, are common characteristics of the partnership and
corporation. Which is the exception?
a. The individuals composing both organizations have little voice in the
conduct of the business.
b. Both can only act through agents.
c. Both are business organizations composed of a number of individuals.
d. Both have juridical personalities separate and distinct from that of the
members composing it.
5. Which of the following is not requisite prescribed by the law in order that the
partners maybe held liable to a third party for the acts of one of the partners
a. The partners bind the partnership by the acquiescence for the obligations
he may have contracted in good faith.
b. The partner must have the authority to bind the partnership.
c. The contact must be in the name of the partnership or for its own account.
d. The partner must act on behalf of the partnership.
6. X, Y and Z are partners in Ace and Co. W represented himself as a partner in
the said partnership to A, who, on the faith of such representation, granted
P1M loan to the partnership. Assuming only X and Y consented to such
representation, who shall be liable to A?
a. Since the partnership benefited from the credit extended by A, all partners
X, Y, and Z are liable.
b. Only X, Y and W are partners by estoppel and are liable are pro rata.
c. Since the loan was extended to the partnership, all the partners and W are
liable.
d. Only W who made the representation shall be liable.
7. Based on the preceding facts:

a. D can participate in the management of the partnership.
b. D cannot inspect the books nor copy them for any information on the
partnership affairs as a partner can.
c. C has ceased to have the rights to use the partnership property.
d. C cannot take part in the control of the business anymore.
8. Still based on the facts:

a. If A and B want to dissolve the partnership, C as a partner need not
consent thereto because he has assigned his interest to D.
b. D may himself ask the court for its dissolution being the assignee of C’s
interest in the partnership.
c. A, B and D may dissolve the partnership even without the consent of C.
d. A, B, and C cannot dissolve the partnership without the consent of D.
9. Spouses A and B formed a limited partnership to engage in real state

business and A contributed P1M only. Is the partnership between the
spouses is valid?
a. The partnership is not valid because spouses cannot enter into a limited
partnership.
b. The partnership is valid because spouses can enter into a partnership,
limited or general, universal or particular.
c. The partnership is not valid because spouses cannot enter into any kind of
partnership for business except conjugal partnership.
d. The partnership is valid because spouses are prohibited to enter into a
universal partnership only.
10. Statement I: A corporation cannot enter into a partnership contract with a

natural person but with a juridical person it can.
Statement II: A general partner is always the capitalist in a limited partnership.
b. First is true, second is false.
c. Both are true.
d. First is false, second is true.
11. If the partner is insolvent, the first in the order of preference is:
a. Partnership creditors.
b. Partner’s contributions to the partnership.
c. Separate creditors of the partner.
d. Pro rata between the separate creditors and the partnership creditor.
12. A, B and C are partners in a partnership. A and B contributes P10,000.00

each while C contributes his service. After payment of the partnership
liabilities to creditors, only P6,000.00 remains. In the absence of stipulation to
the contrary, the share of C shall be:
a. Equal to the share of A.
b. Equal to the share of B.
c. P2,000.00
d. Nothing.
13. A and B are partners in real estate business. The partnership owns a parcel
of land which C desires to buy. C contacted A and information his in his
intention to buy the said land. A did not B such intention of C. A bought B out
of the partnership and afterwards sold the land to C at a profit.
a. The partnership was dissolved when A became the sole owner.
b. The sale is void because it was without the knowledge of B.
c. A is not liable to B for his share of the profits.
d. A is liable to B for his share in the profits.
14. May contribute money, property and industry to a common fund:

a. Limited partner
b. General partner
c. Both limited and general partner
d. Both limited and industrial partner
15. One of the following incidents is a clause for involuntary dissolution of the
partnership:
a. Termination of the definite term of partnership.
b. Insolvency of a partner.
c. Express will of a partner in a partnership at will.
d. Expulsion of a partner for cause as stated in the articles of part.
16. The following are disqualified to for a universal partnership except one:
a. Brother and sister.
b. Husband and wife.
c. Those guilty of adultery and concubinage.
d. Those guilty of the same offense, if the partnership is entered into in
17. A is the capitalist partner and B the industrial one. A engaged personality in
the same kind of business as that of the partnership:
a. If there are losses, the partnership will bear the losses.
b. If there are profits, they will be shares by A and the partnership.
c. If there are profits, A shall give them to the partnership.
d. A maybe excluded from the partnership with liability for damages.
18. A and B are capitalist partners while C is industrial partner. Both A and B
equally contributed P15,000.00 each to the capital. A contractual liability in
favor of X was incurred in the amount of P40,000.00. After exhausting
partnership assets there is a balance recoverable from
a. A and B only.
b. A, B and C.
c. A, B and C and C can get reimbursement from A and B.
d. A, B and C without reimbursement from A and B in C’s favor.
19. Statement I: After dissolution, the partners can still enter into new business
transactions in the name of the dissolved partnership although not for the
purpose of winding up partnership affairs.
Statement II: Insanity of either general or limited partner is a limited

partnership shall dissolve the partnership.
b. Both are true.
c. First is false, second is true.
d. First is true, second is false.
20. A and B orally entered into a partnership with each of them contributing
P3,000.00 each and some personal properties in the amount of
P1,000.00each. the partnership contract is:
a. Unenforceable because the amount involved exceeds P500.00.
b. Void because it is not in public instrument.
c. Valid.
d. Void because it is not registered with the SEC.
21. A partnership which must b in public instrument to be valid is:

a. Contribution immovable or real rights therein regardless of the value
thereof.
b. Contribution is P3,000.00 or more or personal property.
c. General partnership.
d. Particular partnership.
22. Statement I: A universal partnership entered into without designation is

considered one of profits.
Statement II: A limited partner’s surname cannot appear in the partnership

name if it is also the surname of a general partner to prevent misinterpretation
to third person.
c. Both are true.
23. Which of the following statement is not correct?
a. A partnership contract is not covered by the statutes of frauds.
b. A limited partnership shall not be bound by the obligations of the
partnership.
c. A limited partner who takes part in the control of the business shall be
liable as a general partner.
d. A stipulation which includes a partner for sharing in the profits or loss is
void.
24. Which of the following is incorrect?

a. An industrial partner who engages in business for himself maybe
excluded from the firm.
b. An industrial partner may not engage in business for himself unless
there is a contrary stipulation.
c. A capitalist partner may engage in the same line of business as that of
the partnership.
d. An offending capitalist partner may not be excluded from the firm.
25. Statement I: A partner’s interest in the partnership is not assignable unless

the other partners consent.
Statement II: An act of strict dominion may be performed by a partner without
the consent of his co-partner if it is advantageous to the partnership.
b. Both are true.
c. First is true, second is false.
26. Statement I: The death, insanity, insolvency or civil interdiction of a limited

partner does not dissolve the partnership.
Statement II: In a general partnership, the fact that the business can only be
carried on at a loss does not result in the dissolution of the partnership.
a. First statement is false, second is true.
c. Both are true.
d. Both are false.
27. Statement I: A partnership contract begins from the moment of the execution
of the contract unless it is otherwise stipulated.
Statement II: even if a third person in good faith, the partnership is not bound
in the contract entered into by a partner after the dissolution of the partnership
if the business of the partnership has become unlawful.
b. First statement is true, second is false.
c. Both are false.
d. Both are true.
28. Statement I: A substituted limited partner becomes as such from the time the
certificate of limited partnership is properly amended.
Statement II: Only those interest have not been assigned may dissolve the
partnership.
b. Both are false.
29. A, B and C formed a partnership with the name ABC & co. Partnership as a
limited partnership in mind. It is therefore:
a. Limited partnership.
b. General partnership.
c. If registered with the SEC, it is a limited partnership.
d. Partnership by estoppel.
30. Stamen I: In the absence of stipulation, the share of the industrial partner in
the profits shall be equal to the share of a capitalist partner with the smallest
share.
Statement II: the industrial partner shall not share in the losses unless
stipulated.
b. First statement is true, second is true.
c. Both are true.
d. Both are false.
31. A, B and C were partners. While acting within the scope of his authority in the
conduct of business. A committed a tort against X, a third person. Who shall
be liable and to what extend?
a. All partners are liable jointly or pro rata after the partnership assets
have been exhausted.
b. All partners shall be liable solidarily after the partnership assets have
been exhausted.
c. All partners and the partnership are liable solidarily.
d. All the partners and the partnership are liable solidarily.
32. Statement I: A limited partner shall not be bound by the obligations of the
partnership.
Statement II: a general partner shall be bound by the obligations of the
partnership.
b. Both are false.
33. A and B entered into universal partnership of profits. Subsequently A became

a professor in a university. Will A’s salary belong to the partnership?
a. Yes, because the salary was acquired through A’s industry or work.
b. No, unless it is stipulated that his salary shall be deemed contributed.
c. No, because it is not considered a profit acquired from a property.
d. Yes, if stipulated by the partner.
34. A and B entered into a universal partnership of profits. Later, A purchased a

parcel of land. Will the fruits of the said land belong to the partnership?
a. Yes because universal partnerships means contribution of all
properties, present and future.
b. No, because the land and the fruits are future properties, nor existing
at the time of the celebration of the contract.
c. No, even if stipulated, both as to the fruits and the land.
d. Yes, if there was stipulation that the land to be inhered shall be
considered contributed.
35. A and B entered into a universal partnership without specification whether it

is of profits or of all present property. It shall be:
a. Universal partnership of all present property.
b. Universal partnership of present profits.
c. Universal partnership of property and profits.
d. Universal property of profits.
36. A and B agreed on a profit sharing ratio in their partnership. A being the
industrial partner and B a capitalist partner. It was also stipulated that A shall
also share in the same ratio as to the losses. Is A liable for losses?
a. No, because the law exempts the industrial partner losses.
b. No, because the partners cannot stipulate that the industrial partner
shall be liable for losses.
c. Yes, even if the absence of stipulation.
d. Yes, because it was so stipulated.
37. Partnership Assets and Liabilities are as follows:
December 31, 2006 December 31, 2007

Assets P 200,000 P 50,000
Liabilities 100,000 200,000
Capital A- P 50,000 100,000 150,000
B- P 50,000
A and B general partners have fully paid the capital contributions. What is the
remedy of creditor C?
a. Collect partnership liability from the partnership.
b. Collect partnership liability from B only.
c. Collect partnership liability from A only.
d. Collect partnership liability from A and B capital contributions including
personal assets.
38. A is the managing partner of A and B Company. x is indebted to a for P
20,000 and to the partnership for P 60,000.when both debts mature. X par A
for
P 20,000 and the latter issues a receipt for his personal credit. The payment
for P 20,000 shall be applied:
a. To the whole debt owing to A.
b. ¼ in favor of A and ¾ in favor of partnership.
c. Debt owing to the partnership.
d. ½ in favor of A and ½ in favor of partnership.
39. XYZ partnership composed of three (3) capitalist partners and one industrial
partner suffered business losses. Its remaining asset remaining to P 100,000.
The partnership is indebted to its supplier in the amount of P 160,000. How
can recover the P 60,000.
a. Can recover from the partnership P 100,000 and the balance of P
60,000 from the other capitalist.
b. Can recover from the partnership P100,000 and the balance of P
60,000 from any of the partners.
c. Can recover from the partnership P100,000 and the balance of P
60,000 from the (4) partners jointly including the industrial partner.
d. Can recover from the partnership P 100,000 only and suffer as his list
in the balance of P 60,000.
40. Which of the following persons are not disqualified from a universal
partnership?
a. Those guilty of adultery and concubinage.
b. Husband and wife.
c. Brother and sister.
d. Those guilty of the same of the criminal offense. If the partnership is
entered into a consideration of the same.
41. A limited partnership formed in 2004 by X as general partner and Y and Z as

limited partners in 2006. X and Z got married. Did the marriage dissolve or
change the form of the partnership.
1st answer – Yes, partnership is dissolved by the marriage because there is a
change in equity and status among the partners.
2ns answer – No, because spouses can enter into a universal partnership.
a. Both answers are correct
b. 1st answer wrong, 2nd answer correct
c. Both answers are wrong
d. 1st answer correct, 2nd answer wrong
42. Which of the following incidents maybe a cause for involuntary dissolution of
a partnership?
a. Expulsion of any partner.
b. Insolvency of any partner.
c. Express will of any partner.
d. Termination of term of the partnership.
43. Which of the following liabilities of the partnership shall rank first in the order
of payment?
a. Those owing to creditors others than partners.
b. Those owing to partners in respect to profits.
c. Those owing to partners in respect to capital.
d. Those owing to partners other than for capital and profit.
44. X, Y and Z are partners and contributed. To the partners and partnership P
40,000, P 30,000 and services, respectively. The partnership was later
liquidated and after payment of the partnership indebtedness, only P20, 000
worth of asset remained. How much is the share of Z?
a. Zero
b. Equal to the share of X
c. Equal to the share of Y
d. P6, 000
45. The following are instances, except one, when a partnership is unlawful.
Which is the exception
a. a partnership formed to furnished apartment houses to be used as
venue for illegal gambling
b. a partnership formed to create cartel for monopoles
c. a partnership formed for smuggling of contrabands
d. a partnership formed for the purpose of buying public lands
46. A person in a partnership who is not really a partner, not being a party to the
partnership agreement but is made liable as a partner for the protection of
innocent third persons is known as:
a. Dormant partner
b. Secret partner
c. Partnership by estoppels
d. Partner by estoppels
47. A, B and C are partners engaged in retail business. Their contribution is P20,
000 each. D is admitted partner with a contribution of P12. At the time of his
admission, the partnership has an outstanding obligation to E in the amount
of P80, 000. In this case:
a. D is liable to E for this obligation so that the assets of the partnership
amounting to P68, 000 will be exhausted leaving a balance of P12,
000. Only A, B and C shall be liable jointly or pro rata, out of their
separate property.
b. D is not liable to E for this obligation
c. D is liable to E for this obligation so that the assets of the partnership
will be exhausted; leaving a balance of P12, 000 all the partners shall
be liable jointly or pro rata, out of their separate property.
d. Answer not given
48. A, B and C are equal partners in X Partnership. On April 29, 2008, partner
died. Not knowing that C died, on May 01, 2006, A contracted a liability to D
who also does not know the death of C, the liability is P90, 000. After D
exhausted the net assets of X Partnership in the amount of P60, 000, he can
collect
a. P10, 000 from estate of C, P10, 000 from B
b. P15, 000 from A and P15, 000 from B
c. P20, 000 from A and 10, 000 from B
d. P30, 000 from A
49. A and B are partners of X Partnership. A is the managing partner. E owes A

P10, 000 and X Partnership P30, 000. The obligations of E are both due. A
collected from E the debt of E to A in the amount of P10, 000 and issue a
receipt in the name of A.
a. The whole of the P10,000 will be applied to debt of E to A
b. P 10, 000 will be applied to debt of E to the partnership
c. P2, 500 to debt to E to A and P7, 500 to debt of E to the partnership
d. P5, 000 each to debt of E to A and to the partnership
50. A, B and C are general partners ion ABC partnership. G is debtor to the
partnership in the amount of P15, 000. A receive from the debtor G the sum
of P5, 000 and issued a receipt indentifying the amount collected as P5, 000.
a. A can be compelled to share B and C their P5, 000
b. B and C should automatically sue G to collect the P10, 000
c. B and C can change the capital of A with their share of the P5, 000
d. A cannot be compelled to share the P5, 000 with B and C
LAW ON CORPORATIONS
1. The declaration of dividends out of the capital and not surplus profits is violation of
the doctrine of piercing the veil of corporate fiction.
When the corporation is used as an alter ego or conduit to avoid the performance of an
obligation is violation of the trust fund doctrine.

c. First is false second is true.
d. First is true second is false.
2. Majority of the following must residents of the Philippines, except:

a. Members of the board of directors.
b. Members of the board of trustees.
c. lncorporators.
d. Officers
3. Stockholders' meeting must be in the city or municipality where the principal office is
located while members meeting of non-stock corporation may be outside thereof.
The secretary of the corporations must generally be a citizen and resident of the
Philippines.
a. Both are true.
b. Both are false.
4. The doctrine of corporate opportunity rests on the unfairness of an officer or director

of a corporation taking advantage of an opportunity for his own personal benefit adverse
to the corporation.
The by-laws must be filed with the SEC for the corporation to acquire juridical
personality.
a. Both statements are true. c. First is true, second is false

b. Both are false d First is false, second is true
c. First is true, second is false
5. Private corporations have the following attributes, except:

a. it is created by law as a juridical person.
b. lt has the right of succession.
c. lt may be formed, organized and existing under a special law or charter.
d. lt has the powers, attributes and properties expressly authorized by the law or
incident to
its existence.
6. In three of the following instances, shares with or without voting rights can be voted,
except:
a. Increase or decrease of capital stock.
b. Dissolution of the corporation.
c. Election of directors or trustees.
d. Merger or consolidation with other corporation.
7. One of the following does not have voting rights:

a. Preferred shares.
b. Redeemable shares .
c. Treasury shares
d. Common shares
8. The executive committee cannot act on this matter, except:

a. Filling of vacancy in the board of directors
b. Cash dividend declaration.
c. Board resolution on depository bank of the corporation.
d. Stock dividend declaration.
9. The merger or consolidation of corporations become effective upon approval by the

constituent corporations of the plan of merger or consolidation as the case may be.
After the merger, the absorbed corporation must undertake dissolution and winding—up
procedures.
b. Both are true.
10. When the preferred shares are issued by a corporation with a fixed interest on the
face thereof, the effect is:
a. The contract of subscription subsists.
b. The said stockholder is a creditor of the corporation.
c. The said shares of stocks become negotiable instruments. i
d. The stockholder is a plain investor who may benefit or suffer with financial success or
failure of the corporation.
11. Three of the following are not authorized to issue no-par value shares. Which one is
the exception?
a. Industrial companies
b. Insurance companies
c. Trust companies
d. Public utilities
12. The corporation has a nine-member board. Two of the members have sold their
shares while two others are abroad. To have a quorum, the number required is:
a. Seven.
b. Five.
c. Three.
d. Four.
13. A majority of the directors or trustees of all corporations organized in the Philippines
must be citizens of the Philippines.
Any two or more positions may be held concurrently by the same person, except that no
one shall act as president and secretary or as secretary and treasurer at the same time.
b. Only first statement is true.
c. Only second statement is true.
d. Both are true.
14. When par value shares are issued above par. The premium or excess is to be
considered as part of the legal capital.
Shares issued without par value shall be deemed fully paid and non-assessable and the
holder of such shares shall not be liable to the corporation or its creditors in respect
thereto.
b. Both are true.
15. Which of the following corporate acts requires the approval of the of the outstanding
capital stock or of the members?
a. To invest corporate funds in another corporation or business.
b. To adopt, amend or repeal by-laws.
c. To dissolve the corporation.
d. To amend the articles of incorporation.
16. A distribution by a corporation of shares held by it in another corporation is:

a. Stock dividend
b. Sale of capital assets
c. Sale of treasury stock
d. Property dividend
17. They are issued to those who helped in incorporating the corporation or for services
rendered in launching the welfare of the same.
a. Preferred shares
b. Stock in escrow
c. Founders shares
d. Promotion stock
18. A director of a corporation may be removed from the office by a vote of the
stockholders holding representing:
a. Majority of the outstanding capital stock
b. 2/3 of the stockholder
c. 2/3 of the outstanding capital stock
d. Majority of the stockholder
19. Three of the following are attributes of a corporation. Which is the exception?
a. Created by agreement of the incorporators
b. An artificial being
c. Has a right of succession
d. Has powers, attributes and property expressly authorized by law or incident to its
existence
20. As regards the corporate by-laws, which of the following is false?

a. To adopt majority of the outstanding capital stock is needed.
b. To delegate to the board of directors the power to amend, repeal or adopt new by-
laws, 2/3 of the outstanding capital stock.
c. To revoke the power delegated to the board to amend, repeal or adopt new by-laws,
2/3 of the outstanding capital stock.
d. To amend, repeal or adopt new by-laws, majority of the outstanding capital stock.
21. The power do deny pre-emptive rights to stockholders is:

a. Incidental power
b. Express power
c. Implied power
d. Discretionary power
22. As regards treasury shares, which is not correct?

a. They have no voting rights while in the treasury.
b. They may be distributed as property dividend if there is surplus profit.
c. They are not entitled to dividends.
d. They are considered part of the earned or surplus profits thus distributable as
dividends.
23. This is the equitable right of the stockholders to subscribe to all issues of shares in
proportion to their shareholdings to maintain their equity participation in the corporation:
a. Right of firm refusal in close corporation
b. Right to dividends date entity
d. Appraisal right of dissenting stockholder
24. In the matter of management of the corporation, this is supreme:

a. Majority of the shareholders
b. 2/3 of the stockholders
c. Board of directors
d. Officers of the corporation
25. This is the written acknowledgment of the interest of the stockholder in the
corporation.
a. Proxy
b. Share of stock
c. Voting trust agreement
d. Certificate of stock
26. These are the persons who sign the articles of incorporation and therefore must be
subscribers of shares.
a. lncorporators
b Directors
c. Stockholders
d. Corporate officers
27. The minimum requirement for incorporation?

Authorized Capital Stock Subscribed Capital Paid-up Capital
a. P100,000.00 P20,000.00 P5,000.00

b. P100,000.00 P20,000.00 P6,260.00
c. P100,000.00 P25,000.00 P5,000.00
d. P100,000.00 P25,000.00 P6,250.00
28. They provide and regulate the internal matters of the corporation:
a. Articles of incorporation
b. By-laws of the corporation
c. Certificate of incorporation
d. Certificate of filing of by-laws
29. This is a public instrument giving authority to vote for stockholder

a. Proxy
b. Voting trust agreement
c. Stock certificate
d. Voting trust certificate
30. A gratuitous reissue of treasury shares will result in:
a. Capital surplus
b. Stock dividend
c. Watered stock
d. Property dividend
31. A certificate of stock is not a negotiable instrument because it lacks the requirement
of:
a. The instrument must be in writing and signed by the maker or drawer.
b. It must contain an unconditional order or promise to pay a sum certain in money.
c. It must be payable to order or to bearer
d. It must be payable on demand or at fixed or determinable future time
32. The number of trustees in a non-stock corporation may be:

a. Not less than five year but not more than fifteen.
b. Not less than five but may be more than fifteen.
c. Not less than five but not more than eleven.
d. May be less than five and more than fifteen.
33. Stockholders with or without voting rights may vote on the following matters except:
a. Amendment of the articles of incorporation
b. Dissolution of the corporation
c. Election of directors
d. Adoption and amendment of by-laws
34. The nationality of the corporation determined by the nationality of the stockholders
in control of the same is called:
a. Domicile test
b. Incorporation test
c. Management test
d. Control test
35. For the contract between the corporation and its directors, officers or trustees may
not be
voidable, the following are conditions except:
a. The presence of the director or trustee is not necessary for the quorum.
b. The contract is fair and reasonable under the circumstances.
c. The vote of the director or trustee is not necessary for the approval of the contract.
d. Ratification by majority of the outstanding capital stock or members.
36. Redeemable shares may be taken up or purchased by the corporation even in the
absence of surplus profits.
Treasury shares may be reissued for a reasonable price even below par value.
b. Both are true.
c. Only the first is true.
d. Only the first is false.
37. ln case of shares owned in common by two or more stockholders, the consent of
either is enough to vote the same.
The pledgee or mortgagee shall have the right to vote the shares unless stipulated
otherwise.
b. Both are true.
c. Only the first is true.
d. Only the first is false.
38. Vacancy in the board of directors can be filled up by the remaining directors in the
following cases, except.
a. Increase in the number of directors.
b. Resignation of a director.
c. Death of a director.
39. The following are requisites for de facto corporation, except one:
a. Valid law under which it is incorporated.
b. Actual use of corporate powers.
c. Attempt in good faith to organize.
d. Non-issuance by the SEC of certificate of incorporation.
40. A subscribed to 1,000 shares of stock of X Corporation. She paid 25% of the said
subscription. During the stockholders meeting, can A vote all her subscribed shares?
a. No, because the subscription has not yet been fully paid.
b. No, because A's shares have become delinquent which cannot be voted.
c. No as to the unpaid percentage of subscription.
d. Yes, because unpaid shares not delinquent can be voted.
41. 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 to its
stockholders computed on the basis of representing profits and appreciation in value of
its real estate. Is the dividend declaration valid?
a. Not valid because there was no approval of 2/3 of the outstanding capital stock.
b. Valid because it was based on profit and increment in the value of the corporate
assets.
c. Not valid because dividends must only come from the unrestricted retained earnings.
d. Valid if no creditors shall be prejudiced and approved by the required votes of the
directors and stockholders.
42. A subscribed to 100 shares of X Corporation, paying 25% of the amount thereof.
The corporation refuses to issue to the former a stock certificate for his subscription
despite the demand of A for a stock certificate corresponding to 25 shares which he
claims have been paid. Meanwhile, the corporation has become insolvent and A now
refuses to pay for his unpaid balance on his subscription. ls the refusal of the
corporation to issue the certificate valid?
a. Not valid because there can be issued a stock certificate for the number of shares
already paid.
b. Valid because the stock certificate can only be issued after the full payment of the
subscription.
c. Valid with respect to the unpaid portion of the subscription
d. Not valid because only delinquent share may be denied stock certificate.
43. Their names are mentioned in the articles of incorporation as originally forming the
corporation and are signatories thereof.
a. Corporators.
b. Stockholders.
c. Incorporators.
d. Members.
44. A corporation acquires juridical personality:
a. upon the filing of the articles of incorporation.
b. upon the filing of the by-laws.
c. upon the issuance of the certificate of incorporation.
d. within 30 days from the receipt of the notice of the issuance of the certificate of
incorporation.
45. A delinquent stockholder is not entitled to the following rights, except the right:
a. to be voted.
b. to vote or to be presented in the meetings of stockholders.
c. to dividends.
d. He is not entitled to all the rights of a stockholder.
46. Under this theory, the nationality of a corporation is that of the country under whose
laws it was formed.
a. Control test.
b. Incorporation test.
c. Domiciliary test.
d. Grandfather rule.
47. the subscriber of unpaid shares which are not delinquent shall be entitled to the
following rights, except the right to:
a. vote.
b. inspect corporate books.
c. a stock certificate.
d. dividends.
48. Under this doctrine, the separate personality of a corporation may be disregarded if
it is used for fraudulent or illegal purpose or to escape the faithful compliance of an
obligation.
a. Trust fund doctrine
b. Doctrine of piercing the veil of corporate entity
c. Doctrine of corporate opportunity
d. Doctrine of limited capacity
49. The right of a stockholder to demand payment of the fair value of his shares when
he dissents from certain corporate acts is known as:
a. pre-emptive right.
b. appraisal right.
c. redemption right.
d. appreciation right.
50. Which of the following documents may be submitted before or after incorporation?
a. Verification certificate as to the name of the corporation.
b. By-laws.
c. Certificate of bank deposit as to the paid-in capital.
d. Articles of incorporation.
SMARTS
OBLIGATONS
1. A source of obligation where negligence resulted to crime:

a) Culpa contractual
b) Quasi-contract
c) Culpa delictual
d) Culpa aquiliana
ANS: C
2. Which is not a source of obligation?
a) Law
b) Culpa aquiliana
c) Culpa contractual
d) Quasi-contract
ANS:C
3. Statement No. 1: D oblige himself to give C a specific car tomorrow. If D failed to
deliver tomorrow after demand is made C may compel D to do his obligation and
may ask for damages.
Statement No. 2: D oblige himself to deliver a car to C tomorrow. If D failed to
deliver tomorrow after demand is made C’s right is to ask a third person to deliver a car
to him at the expense of D plus damage.
a) Both are true
b) Both are false
c) No. 1 is true; No. 2 is false
d) No. 1 is false; No. 2 is true
ANS:A
4. Which of the following is considered as quasi-contract?
a) Solutio indebiti
b) When the third person, without the knowledge of the debtor, pays the debt
c) Reimbursement due the person who saved property during fire or storm without
the knowledge of the owner.
d) All of the above
ANS:D
5. A judicial relation known as Negotiorum Gestio takes place.
a) When a person voluntarily takes charge of another’s abandoned business
b) When something is received and there is no right to demand it and it was
delivered through mistake.
c) When a person is appointed by a court to take the property or business of
another.
d) None of the above.
ANS:A
6. The wrongful act or tort which causes loss or harm to another is called:
a) Damages
b) Damage
c) Injury
d) Liability
ANS:C
a) Obligation to pay ₱5,000
b) Obligation to deliver Toyota INNOVA 2005
c) Obligation to deliver 50 cavans of rice
d) Obligation to give a delimited generic object
ANS:D
8. Statement No. 1: An obligation which has for its object the delivery of a “delimited
generic” object may be lost by reason of fortuitous event.
Statement No. 2: There can be no delay in an obligation not to do.
a) Both statement are true
b) Both statements are false
c) Statement No. 1 is true while statement No. 2 is false
d) Statement No. 1 is false while statement No. 2 is true
ANS:A
9. If the obligation is payable in foreign currency
a) The obligation is void
b) The obligation is valid, but the stipulation is void
c) The creditor can compel the debtor to pay in foreign currency as per
agreement
d) The stipulation and the obligation are void.
ANS:C
10. “I’ll give you my car one year after your death.” The obligation is
a) Valid, because the event is sure to come.
b) Valid, the obligation is conditional.
c) Valid, but disregard the condition.
d) Void, not legally possible.
ANS:D
11. Statement No. 1: The concurrence of more than one creditor or more than one
debtor in one and the same obligation implies solidarity.
Statement No. 2: In alternative obligations where the right of choice is exercised by
the creditor; consent of the debtor as to the creditor’s choice of which prestation to
perform is necessary.
a) Both statements are true
c) Statement No. 1 is true while statement No. 2 is false
ANS:B
12. Statement No. 1: “I will give you a NOKIA 6610 Phone if you will not marry X this
year(2012). If by the end of 2012, both parties are alive and no marriage has
taken place, my obligation is extinguished.
Statement No. 2: “I will give you ₱10,000 if I decide to go to Cebu Ciy tomorrow.
This obligation is valid.
a) Both are true
b) Both are false
ANS:B
13. Statement No. 1: If the obligation does not fix a period, but from it’s nature and the
circumstances, it can be inferred that a period was intended, the court may fix the
duration therof. Once it is fixed by the court the parties cannot change the fixed date for
performance.
Statement No. 2: “I will give you ₱10,000 if X dies next year.” This is an obligation
with a period.
a) Both are true.
b) Both are false.
ANS:B
14. Which obligation is not valid?
a) “I promise to give you ₱100,000 on December 25, 2012”
b) “I promise to give you ₱100,000 if my mood dictates”.
c) “I promise to give you ₱100,000 if your patient dies”.
d) “I promise to give you ₱100,000 if you pass the May 2013 CPA Board
Examination
ANS:B
15. Which of the following is an obligation with a period for the benefit of both the debtor
and the creditor?
a) Payable if i like
b) Payable when you like
c) Payable on or before December 25, 2012
d) Payable on December 24, 2012
ANS:D
16. Which of the following obligations is not subject to a period?
a) Payable soonest
b) Payable “little by little”
c) Payable whenever “I like it”
d) Payable “when my means permit me to”
ANS:C
17. A and B signed a promisory note o borrow ₱6,000 from X, Y, and Z, payable in 6
months time. B gave in pledge a ₱10,000 diamond ring as security for the amount
borrowed. How much can Y collect from B?
a) ₱1,000
b) ₱6,000
c) ₱2,000
d) ₱3,000
ANS:A
18. If in the situation given above, the diamond ring is returned by agreement to B,
which of the following statement is correct?
a) Principal obligation is extinguished
b) Only ₱2,000 of the obligation is extinguished
c) Only ₱3,000 of the obligation is extinguished
d) Accessory obligation is extinguished.
ANS:D
19. A, Band C executed a promisory note worded as follows:
We promise to pay X, Y and Z the sum of ₱90,000
(Sgd,) A, B and C
a) A is obliged to pay to X, Y and Z ₱90,000
b) A is obliged to pay X ₱30,000
c) A is obliged to pay X ₱60,000
d) A is obliged to pay X ₱10,000
ANS:D
20. Statement No. 1: When the fulfillmentof the suspensive or resolutory condition
depends upon the sole will of the debtor, the conditional obligation shall be void.
Statement No. 2: If the original obligation is subject to a suspensive or resolutory
condition and the contract is novated the new obligation shall be under the same
conditions unless otherwise stipulated.
a) Both are true
b) Both are false
ANS:D
21. In contracts and quasi-contracts, the liability of the debtor who acted in good faith:
a) Extends to all natural and probable consequences of the breach of the
obligation, and which the parties have foreseen or could have reasonably
foreseen at the time the obligaiton was constituted.
b) Extends only to results intended but excluding exemplary damages
c) Extends to all damages which may be reasonably attributable to the
nonperformance of the obligation
d) Extends to all damages which may be renounced in advanced
ANS:A
22. Statement No. 1: In solution indebiti, damages in case of non-compliance is the
basis of liability.
Statement No. 2: Negligence, as a ground for damages, refers to the
nonperformance of an obligation with respect to time.
c) Statement No. 1 is false while statement No. 2 is true
d) Statement No. 1 is true while statement No. 2 is false
ANS:B
23. Debtor obliged himself to deliver to creditor 100 cavans of rice on June 1, 2012. On
said date, D failed to make delivery despite repeated demands by C. In this case:
a) C has no remedy under the law
b) C can compel D to deliver 100 cavans of rice plus damages
c) C may ask a third person to deliver 100 cavans of rice to him, the value
recoverable from D plus dameges
d) Convert obligation to cash.
ANS:C
24. D obliged himself to paint the house of C or to paint the picture of C in his house
(SALA) in an standing position, using 10 by 10 canvass. Later, because of financial
reverses, C sold his house to X. Which of the following statements is correct.
a) The obligation of D is extinguished because he cannot make a choice
b) D may just paint the picture of C
c) D may cancel the contract and ask for damages
d) Contract is voidable
ANS:C
25. The officious manager or gestor is liable for any fortuitous event in all of the
following, EXCEPT:
a) If he has undertaken risky operations which the owner was accustomed to
embark upon.
b) If he has preferred his own interest to that of the owner.
c) If he fails to return the property or business after demand by the owner.
d) If he assumed the management in bad faith.
ANS:A
26. Statement No.1: D obliges himself to give C a specific ring, upon failure, to give C
₱5,000. This is a case of facultative obligation.
Staement No.2: d obliges himself to give C a specific ring. However, if he so
desires, D may instead give C ₱5,000. This is an example of an obligation with a
penal clause. Given these examples, which statement is correct?
a) Both obligations are valid but both are mislabeled as to their classification
as obligations
b) Both obligations are not valid
c) Both obligations are valid and are properly labeled as to their classification as
obligations
d) Both statements are invalid and improperly labeled as to their classification as
obligations
ANS:A
27. A is obliged to give B his only car on September 2012. On the said date, A did not
deliver. On September 2, 2012, an earthquake completely destroyed the car. Is A still
liable?
a) No. Considering that no demand to deliver was made by B and the
specific thing was lost, due to fortuitous event, the obligation is
extinguished.
b) No. The obligation is extinguished, even if the debtor is already in default
because the debtor can plead impossibility of performance.
c) Yes. A is already in legal delay, thus the obligation to deliver the lost specific
thing is converted into monetary claim for damages.
d) Yes. The creditor can instead demand for a substitute of equivalent value from
the debtor.
ANS:A
28. The distinction between period and condition is
a) Period may or may not happen
b) Condition will always happen
c) Period may refer to a past event unknown to the parties
d) Period is certain to happen unlike condition
ANS:D
29. The debtor shall lose every right to make use of the period except:
a) When he does not furnish a guaranty or security of the creditor
b) When after the obligation has been constituted he becomes insolvent, unless he
gives a guaranty or security for the debts
c) When the debtor attempts to abscond
d) When the debtor violates any undertaking in considerations of which the creditor
agreed to the period.
ANS:A
30. A owes B ₱100,000 due on December 12, 2012. A mortgaged his house to B as
guaranty for the debt. Shortly, however, the mortgaged house was completely
destroyed by typhoon “Nitang”. Therafter, B demanded payment from A on October 28,
2012. Is B’s demand valid?
a) No. The obligation is one with a definite period, thus the creditor cannot demand
fulfillment of the obligation as such would be prejudicial to the rights of the
debtor.
b) No. The obligation is extinguished because the object of the obligation is lost
through a fortuitous event.
c) Yes. The debt becomes due at once because the guaranty was lost even
through a fortuitous event, unless the debtor can mortgage another
property that is equally satisfactory.
d) Yes. The debt becomes due at once because from the tenor of the obligation,
the period established is for the benefit of the creditor solely thereby giving the
creditor the right to demand performance even before the date stipulated.
ANS:C
31. The creditor is entitled to recover damges and interest in addition to the penalty
stipulated:
a) When the parties so agreed
b) When the debtor refuses to pay the penalty
c) When the debtor is guilty of fraud in the fulfillment of the obligation
d) All of the above
ANS:B
32. “Vin Diesel will continue giving Tommy Lee the latter’s meal allowance until he finds
a job”, is an obligation subject to:
a) A resolutory period
b) A suspensive condition
c) A resolutory condition
d) A suspensive period
ANS:C
33. D obliged to give C, either object No. 1 valued ₱15,000; or object No. 2 valued
₱10,000; or object No. 3 valued ₱5,000. All the objects were lost due to D’s fault in the
following order stated.
a) D’s obligation is extinguished
b) D’s obligation is to pay the value of object No. 1 plus damages
c) C’s right is to demand the value of any of the object plus damages
d) Pay ₱5,000 plus damages
ANS:D
34. In question No. 30 if object No. 1 is lost due to fortuitous event; No. 2 is lost due to
debtor’s fault; No. 3 is subsisting;
a) The right of C is to demand the value of object No. 2 plus damages
b) C has no right because he did not communicate what object the debtor will
deliver
c) The obligation of D is to deliver object No. 3
d) D’s obligation is totally extinguished
ANS:C
35. A1, A2, and A3 oblige themselves solidarily to give C a specific car valued ₱12,000.
On the due date, C demanded delivery but the debtors failed to deliver. The next day,
while A1 is still in possession of the car, it got lost due to fortuitous event. The right of C
is
a) None, obligation is totally extinguished
b) Proceed against any of the debtors for the value and damages
c) Proceed against A1 only, because he is the one is possession at the time it was
lost
d) Proceed against A2 or A3 but only ₱4,000 each
ANS:B
36. I will give you a specific car if you will not marry X this year, C.Y. Which of the
a) If on December 25, X died and no marriage took place, my obligation becomes
effective (not extinguished) because the expected event cannot occur anymore
b) If on December 25 you marry X, my obligation is extinguished because you
violated the condition
c) If the year has ended, and no marriage took place, both parties are still alive,
my obligation becomes effective (not extinguished) because the time indicated
has already elapsed
d) If on December 25, X entered the convent, the obligation can be demanded
immediately because it is clear that the marriage will not take place
anymore.
ANS:D
37. D obliged himself to give C a specific car if the latter cannot make a circle that is at
the same time a square.
a) The obligation is impossible, therefore void.
b) The obligation is void because the condition is outside the commerce of man.
c) D cannot be obliged to deliver at all
d) Valid and enforceable
ANS:D
38. Statement No. 1: In alternative obligations, all the objects promise by the debtor to
the creditor are all due.
Statement No. 2: In facultative obligations, there are two objects due but the obligor
can deliver one thing due and the obligation is extinguished.
a) No. 1 is true; No. 2 is false
b) No. 1 is false; No. 2 is true
c) Both are true
d) Both are false
ANS:A
39. A-1 and A-2 are solidary debtors of B-1, B-2 and B-3, joint creditors in the amount of
₱90,000. How much can B-3 collect from A-2?
a) B-3 could collect ₱30,000 from A-2
b) B-3 could collect ₱90,000 from A-2 and give ₱30,000, each to B-1 and B-2
c) B-3 could collect ₱45,000 from A-2 and give ₱13,000, each to B-1 and B-2
d) B-3 could collect ₱15,000 from A-2 and ₱13,000 from A-1
ANS:A
40. Statement No. 1: A solidary creditor can assign his rights even without the consent
of the other creditors.
Statement No. 2: In an obligation that is impossible of division, the debt can be
enforced only by proceeding against all the debtors. If one of the debtors should be
insolvent, the other shall not liable for his share.
a) Both are true
b) Both are false
ANS:D
41. Statement No.1: Legal, compensation takes place by operation of law even if the
parties may be aware of it.
Statement No.2: The indivisibility of an obligation necessarily implies solidarity.
b) Both statement are false
c) Statement No.1 is true while statement No. 2 is false
ANS:C
42. Example No. 1: D owes C ₱10,000 due on December 25. C owes D ₱6,000 due on
December 25. D’s obligation is guaranteed by G. On the due date D is insolvent. G is
liable to C for ₱10,000, he(G) cannot set up compensation because he is not a principle
debtor.
Example No. 2: D owes C ₱10,000 payable on December 25. Later d through
intimidation, was able to make C sign a promissory note stating that C is indebted to
D for the same amount. In here, D cannot be required to pay C ₱10,000 because he
(D) can set up compensation against C.
a) Both examples are true
b) Both are false
c) Only No. 1 is true; No.2 is false
d) Only No.1 is false; No.2 is true
ANS:D
43. Obligaiton may be modified by:
a) Changing their object or principal conditions
b) Substituting the person of the debtor.
c) Subrogating a third person in the rights of the creditor
d) All of the above
ANS:D
a) Dacion en pago
b) Payment by cession
c) Tender of payment
d) Consignation alone without the need of tender payment in cases provided for by
the law
ANS:C
45. A and B are solidary debtors of X and Y, solidary creditors to the amount of ₱4,000.
On the due date with the consent of Y, X renounced in favor of A the entire obligation.
a) B shall give A ₱2,000
b) Y can still collect from A or B ₱2,000
c) Y can collect from X ₱2,000
d) X has no obligation to reimburse Y any amount
ANS:D
46. The act of abandoning all his properties in favor of his creditors so that the latter
may cause their sale and apply the proceeds thereof to their claims proportionally is
called:
a) Dacion en pago
b) Set off
c) Payment by cession
d) Tender of payment with consignation
ANS:C
47. A and B are the debtors and X and Y are the creditors in a solidary obligation to the
tune of ₱80,000. On due date, X renounced in favor of A the entire obligation which was
validly accepted by A. Which of the following is true?
a) B shall give ₱40,000 to A
b) Y can collect from X ₱40,000
c) Y can still collect from A or B the
d) A can collect ₱40,000 from B
ANS:B
48. The following except one, are requisites of payment as a mode of extinguishng an
ordinary obligation. Which is the exception?
a) Complete or full payment
b) Payment in due course when the obligation is due and demandable
c) Payment using negotiable instrument
d) Payment using legal tender, except if payable in foreign currency
ANS:C
49. Proof of pecuniary loss is necessary for the award of:
a) Liquidated damages
b) Exemplary damages
c) Actual damages
d) Temperate damages
ANS:C
50. All are secondary modes of extinguishing on obligation except one:
a) Compromise
b) Illegality
c) Impossibility
d) Performance
ANS:D
CONTRACTS
1. By this principle, the validity and efficacy of the contract cannot be left to the will
of one of the contracting parties.
a. Relativity of contract
b. Obligatoriness of contract
c. Mutuality of contract
d. Freedom of contract
ANS:C
2. This principle means that contracts take effect only upon the contracting parties,
their assigns or succesors-in-interest
a. Relativity of contract
b. Obligatoriness of contract
c. Mutuality of contract
d. Freedom of contract
ANS:A
3. B forced S to sell him (B) a masterpiece painting for 1M. Subseuently, B sold it to
X for 2M, a good faith purchaser. S is entitled to
a. Rescind the contract with B plus damages
b. Recover the painting from X but no damages
d. Annul the contract plus damages
ANS:C
4. The following contracts should obseve the Statute of Frauds, except:
a. Guaranty
b. Lease of personal property longer than one year
c. Representation as to the credit of a third person
d. Lease of real property longer than one year
ANS:B
5. On July 15, 2014, X entered into a contract with Y. On February 10, 2015, X
discovered that fraud was committed at the time he entered. Remedy of X is to
annul when?
b. Within four years from February 10, 2015
c. Within four years from the time A entered into the contract
d. On February 10, 2015
ANS:B
6. Consent is manifestated by the meeting of the offer and the acceptance upon the
constitutes a definite order?
a. An offer made through and agent
b. Business advertisement of things for sale
c. Advertisement for bidders
d. All of the above
ANS:A
7. An agreement in restraint of trade
a. Perfectly valid
b. Voidable
c. Unenforceable
d. Void
ANS:D
8. Rescission of contract can take place in this case:
a. When the things, which are the object of the contract, are legally in the
possession of third persons who acted in good faith
b. When he demands rescission can return whatever he may be obliged to
restore
c. When the party seeking resolution can perform only as to part and rescind as
to remainder
d. When the seller cannot return the installment paid to him bu the buyer
ANS:B
9. Which of the following contracts is required to be in writing to be enforceable?
a. An agreement that by its terms is not to be performed within a year from the
making thereof.
b. A special promise to answer for debt, default or miscarriage of another.
c. An agreement made in consideration of marriage, other than a mutual
promise to marry.
ANS:D
10. S makes an offer to B on January 1, 2014. B makes known his acceptance in a
letter sent on January 2, and received by S on January 10. Meantime, on
January 5, S becomes insane.
a. The contract is voidable because one party is insane
b. There is already a meeting of minds, the contract is perfected
c. The contract is not binding because there is no meeting of minds
d. Contract is unenforceable
ANS:C
11. In a contract, as written, D promises to pay C P10,000 on September 15, 2014.
The consideration received by D is not stated in the contract. Decide.
a. The contract is valid because the cause is always presumed to exist
b. The contract is valid so long as it in writing
c. The contract is valid because cause is not essential to a contract
d. The contract is void because the cause is not stated
ANS:A
12. The storage of “conception” of a contract is:
a. When the contract is fully executed
b. When the parties come to an agreement
c. When negotiations are in progress
d. When there is a meeting of the parties’ minds
ANS:C
a. Those where one of the parties is incapable of giving consent to a contract
b. Those where both parties are incapable of giving consent to a contract
c. Those which are entered into by guardians whenever the wards whom
they represent suffer a lesion of more than ¼ of the value of the object
of the contract
d. Those which are absolutely simulated of fictitious
ANS:C
14. Contracts that cannot be sued upon unless ratified:
a. Voidable
b. Unenforceable
c. Rescissible
d. Void
ANS:B
15. Contract that is made for a valuable consideration is:
a. Onerous
b. Gratuitous
c. Onerous and gratuitous
d. Aleatory
ANS:A
16. Who is liable for the loss of subject matter by fortuitous event?
a. Creditor
b. Debtor
c. Both creditor and debtor
d. None of them
ANS:D
a. Contracting parties
b. Assigns or assign
c. Heirs
d. All of them
ANS:D
18. L entered into a contract of lease with X. T, the clerk of L, typed the document.
Due to T’s negligence, the document made was that of sale instead of lease.
a. The remedy is annulment
d. Remedy is reformation
ANS:D
19. Which of the following can be considered as feature of the void contract?
b. They exist
d. It is imprescriptible as a defense
ANS:D
20. S entered into a contract with B by threatening B that if B does not agree to make
the contract, S would publish defamatory matter concerning B’s wife.
a. The contract is valid because the defamatory matter to be published does not
relate to B, the contracting party
b. The contract is voidable because such publication when carried out
whether true or not will cause serious harm to B and his wife
c. The contract is unenforceable but B is entitled to damages the moment the
publication is made
d. Contract is void.
ANS:B
21. S1: If the cause is not stated in the contract it is presumed that it is unlawful.
S2: The action for rescission is subsidiary; it cannot be instituted except when
there is no other legal means to obtain reparation for damages suffered.
a. Both are true
b. Both are false
c. 1 is true; 2 is false
d. 1 is false; 2 is true
ANS:D
22. Because of the intimidation employed by X, a third person, S sold his car to B.
This contract is:
a. Void
b. Voidable
c. Unenforceable
d. Rescissible
ANS:B
23. B called C by the telephone to guaranty the debt of D to C. The contract between
B and C is:
a. Unenforceable
b. Voidable
c. Rescissible
d. Annullable
ANS:A
24. An obligation which cannot be enforced by court action, but which is binding on
the party who makes it in conscience and according to natural justice is called
a. Civil obligation
b. Natural obligation
c. Pure obligation
d. Simple obligation
ANS:B
25. Contract which has no effect at all and cannot be ratified is a/an
a. Unenforceable
b. Void contract
c. Voidable
d. All of them
ANS:A
26. Statute of fraud is applicable to
a. Partially executed
b. Oral contract of loan when the amount involved is less than P500
c. Contract not to be performed within a year from the making thereof
d. All of the above
ANS:C
27. An incidental element of a contract
a. Implied warranty
b. Payment of interest in a loan
c. Delivery of the object in contract of pledge
d. All of the above
ANS:B
28. In three of the following defective contracts, ratification cleanses the defects.
a. Both parties are incapable of giving consent
c. Sale of piece of land thru an agent the authority is oral
d. Contracts entered into by a person who has been given no authority
ANS:C
29. Valid until annulled unless there has been ratified
a. Rescissible contract
b. Inexistence contract
c. Voidable contract
ANS:C
30. S was forced by X to sign a contract with B for the sale of specific property for
10,000. C a creditor of X is prejudiced by the contract. What can s do?
a. S may ask for annulment of the contract
b. S may ask for rescission of the contract
c. S may ask C to declare the contract avoided
ANS:A
31. In the preceding number, what can C do?
a. C may ask for rescission of the contract
b. C may ask for the reformation
c. C may ask S to declare the contract voided
ANS:A
32. Which of the following contract is voidable
a. Those where both parties are incapable of giving consent to a contract
b. Those undertaken in fraud of creditors when the latter cannot in any other
manner collect the claims due to them
c. Those where the consent is vitiated by mistake, violence, intimidation,
undue influence or fraud
d. Those whose object is outside the commerce of men
ANS:C
33. S and B agrree that S would sell and B would buy S’s radio for P400, to years
from the date of the agreement. At the end of the two-year period, S refused to
deliver the radio although B was willing to pay.
a. B can compel to deliver because B is willing to pay the price
b. The contract falls under the statute of frauds, therefore unenforceable
c. No statute of frauds because the price is less than P500
d. No obkect is movable, oral contract is enforceable
ANS:B
34. This kind of defective contract refers to that contract which is validly agreed upon
because all the essential elements exists, but courts nullify it when there is
damage or prejudice to one of the parties or to a third person. Its enforcement
would cause injustice by reason of some external facts.
a. Voidable contract
b. Void or inexistence contract
c. Rescissible contract
d. Unenforceable contract
ANS:C
35. Must be in writing to be enforceable
b. Lease of car for 18 months
c. Both a and b
d. None of a and b
ANS:D
36. A contract entered into in violation of right of first refusal is:
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
ANS:A
37. Type of defective contract that creates no rights and impose no obligation, but
are susceptible of ratification.
a. Voidable contracts
b. Unenforceable contracts
c. Rescissible contracts
d. Void contracts
ANS:B
38. D forced C to lend him P10,000. The promissory note is in writing.
c. C cannot demand payment from D because the contract is unenforceable
d. Contract remains to be valid
ANS:D
c. One of the parties in a contract is incapable of giving consent
d. Sale of immovable property thru an agent
ANS:D
40. Three of the following are void contracts. Which is the exception?
a. Contracts where the cause is immoral
candidate for a valuable consideration
c. Contracts with a valid consideration but with unlawful motives
d. Absolutely silmulated contracts
ANS:C
41. Contract with a false cause is
a. Voidable
b. Void
c. Unenforceable
d. All of the above
ANS:B
42. A conferment of a direct benefit in a contract between two persons in a favor of a
third person who must accept such benefit before the same is withdrawn is
known as:
a. Politicitacion
b. Stipulation por autrui
c. Donation propter nuptias
d. Counter-offer
ANS:B
43. The guardian of an insane person sells a house and a lot belonging to the latter
valued at P100,000 to B, buyer for P74,000 with the approval of the court. The
contract is:
a. Valid
b. Rescissible
c. Voidable
d. Unenforceable
ANS:A
44. Which of the following contract is enforceable even if not reduced in writing
a. Lease of car for 2 years
b. Representation as to the credit of a third person
c. Lease of immovable for a period longer than one year
d. Agreement for the sale of immovable property
ANS:A
45. Simulation of contract – absolute or relative. Relative when:
a. Parties not bound at all
c. The parties conceal their true agreement
ANS:C
46. Essential requisites of a contract:
a. Consent
b. Cause
c. Subject
d. All of them
ANS:D
47. The offeror need not know the acceptance by the offeree is the theory of:
a. Cognition
b. Manifestation
c. Expidition
d. B or C
ANS:D
48. Which of the following instruments is not subject to reformation?
a. Simple donations inter vivos wherein no condition imposed
b. Wills
d. All of the above
ANS:D
49. S1. Place and modes of payment are example of natural elements
S2. Agency, partnership and sale are example of preparatory and consensual
contracts
a. Both are true
b. Both are false
c. 1 is true; 2 is false
d. 1 is false; 2 is true
ANS:B
50. All are void contracts except:
a. Those whose object is outside the commerce of men
b. Those which are relatively simulated of fictitious
c. Those with unlawful consideration
d. Those which contemplate an impossible service
ANS:B
PARTNERSHIP
1. As a general rule, a partner cannot ask for a formal accounting of the affairs of the
partnership during the existence and before it is dissolved, except
a. When he is wrongfully excluded from the partnership business
b. When the right exists under the terms of any agreement
c. As provided by article 1807
d. Whenever other circumstances render it just and reasonable
e. All of the above
ANS:E
2. Sometimes termed dormant partner
a. Limited partner c. Secret partner
b. Capitalist partner d. Both silent & secret
ANS:D
3. Every contract of partnership having a capital P3,000 or more in money or
property shall appear in a public instrument which must be recorded in the
Securities and Exchange Commission. Failure to comply with said requirements.
a. Will not affect the liability of a partnership and the members thereof to third
persons.
b. Will render the partnership void
c. Will not give the partnership a legal personality
d. Will give the parnership a de facto existence
ANS:A
4. A, B and C capitalist partners, contributed P10,000 each and D, the industrial
partner contributed his services. Suppose X, is the creditor of the firm to the
amount of P90,000, after getting the P30,000 assets of the partnership
a. X can recover P20,000 each from A,B and C only
b. X can recover P60,000 from either A,B or C
c. X can recover P15,000 each from A,B,C and D
d. X can recover P15,000 each from A,B and C but D is exempt because he is an
industrial
ANS:C
5. A, B and C formed a general partnership A and B as general partners contributing
P60,000 and P40,000 respectively while C is an industrial partner. The partners
agreed that C, the industrial partner is exempted from liability to third
person.Upon dissolution the partnership suffered a loss consisting of a liability to
X in the amount of P30,000. As stated, which of the following statement is true
a. C is not liable because it was agreed that the industrial partner is exempted from
liability to third person
b. The 30,000 is considered a loss of the partnership and C as an industrial partner is
exempted up to P10,000 only
c. Each partner is liable P10,000 only
d. A and B are liable for P15,000 each
ANS:C
6. A, B and C are partners. Their contribution are as follows: A P60,000, B
P40,000, and C services. The partners agreed to divide the profits and losses
in the following proportions: A 35%, B 25%, and C 40%. If there is a profit of
P10,000 how should the said profit of P10,000 be distributed among the
partners?
a. A P6,000, B P4,000, C nothing
b. A P3,000, B P2,000, C P5,000
c. A P3,500, B P2,500, C P4,000
d. A P3,500, B P3,500, C P3,000
ANS:C
7. A, B and C formed a general partnership, each to contribute P100,000. The
partnership began its operation but C’s contribution is not yet fully paid leaving a
balance of P30,000. The partners agreed that C exempted from losses. Upon
dissolution there was an outstanding obligation to X in the amount of P360,000 X
therefore exhausted the capital of P270,000 leaving a balance of P90,000. Under
this premise, which of the following is TRUE:
a. C’s share in the balance of P90,000 is nothing because this was stipulated
b. C’s share in the balance of P90,000 is P60,000 that is, his share in the
contribution and his share in the loss
c. C’s obligation to X and the partnership is P50,000
d. Each partner share in the balance
ANS:C
8. In the preceding question, if C is a limited partner and there is no stipulation that C
exempted from losses, which of the following statement is correct?
a. C’s share in the balance of P90,000 is nothing because he is only a limited
partner
b. C’s share in the balance of P90,000 is P60,000 that is his share in the loss and
his unpaid contribution
c. C’s share in the balance of P90,000 is only P30,000
d. Each partner share in the balance of P90,000 is only P30,000
ANS:C
9. A partner who is liable for the payment of partnership debts to the extent of his
separate property after the partnership assets are exhausted is called
a. Managing partner c. General partner
b. Limited partner d. Silent partner
ANS:C
10. B-1, B-2 and B-3 are equal partners in 3-Brothers Partnership. The partnership is
indebted to PC for P150,000. Partner B-1 is indebted to SC for P20,000. PC
attached and took all the assets of the partnership amounting to P90,000. B-2
and B-3 are solvent while B-1 is insolvent and all what he owns is a land valued
at P15,000.
a. SC has priority to the land of B-1 as a separate creditor
b. PC has priority to the land of B-1 to cover B-1’s share of the P60,000 remaining
liability of the partnership
c. B-2 and B-3 have priority to the land of B-1 if they paid PC the P60,000
remaining liability of the partnership
d. PC and SC shall both have priority to the land of B-1 in proportion to their claims
of P60,000 and P20,000 respectively
ANS:A
11. A partnership is dissolved on the death of a
a. General partner d. Limited partner
b. Industrial partner e. a,b or c
c. General-Limited partner
ANS:E
12. In case of an imminent loss of the business of the partnership, the following
partners are required to give additional contribution except
a. Capitalist partner d. Industrial partner
b. General partner e. None of the above
c. Capitalist-industrial partner
ANS:D
13. Coverage of Statute of Frauds in partnership contact, which is the exception?
a. Promise to answer for the debt, default of miscarriage of another by a partnership
must be in writing
b. If the agreement to form a partnership shall be performed within a year the
partnership immovable property for more than one year must be in writing
writing, unless there is a delivery or payment
ANS:B
14. A, B and C, capitalists partners each contributed P30,000, P20,000 and P10,000
respectively: and D the industrial partner contributed his services. Suppose X a
customer is the creditor of the firm to the amount of P180,000. How can X
recover the P180,000?
a. X must sue the firm and get P60,000 from the partners including D, the
industrial partner. X can still recover the balance of P120,000 from the four
partners jointly
b. X can recover from the firm P60,000. X can still recover the balance of P120,000
from the capitalist partners only
c. X can recover from the firm P60,000. X can still recover the balance of P120,000
to any of the partners solidary
d. X can recover from the firm P60,000 and consider the balance of P120,000 as a
loss
ANS:A
15. Which of the following is not a common fund of a Universal Partnership
Property?
a. All the present property of each partner contributed
b. All the profits that may be derived from such properties
c. If stipulated, the properties acquired by a partner by inheritance, legacy or
donation
ANS:C
16. The following are causes of dissolution of a limited partnership EXCEPT
a. Death of general partner
b. Retirement of general partner
c. Insanity of a limited partner
ANS:C
17. A partnership is automatically dissolved, except
a. By the death of any partner
b. By the insolvency of any partner or of the partnership
c. By the civil interdiction of any partner
d. By the insanity of any partner
e. All of the above
ANS:D
18. An industrial partner who engages in a separate business without the consent of
the other partners
a. May be expelled from the Partnership plus damages
b. May be liable as a debtor
c. May be required to gave to Partnership whatever profits or benefits he may have
derived from his separate business
d. May be liable as a trustee
e. Both A & C
ANS:A
19. A person who, although not actually a partner, is made liable for the debts of
the partnership to third person by reason of his acts or omissions is called:
a. Ostensible partner
b. Nominal partner
c. Silent partner
d. Dormant partner
ANS:B
20. Except when authorized by the other partners, one or more but less than all
the partners have no authority to:
a. Assign the partnership property in trust for creditors
b. Dispose of the goodwill of the business
c. Confess a judgement
d. Compromise a partnership claim or liability
e. All of the above
ANS:E
21. Which of the following is not a property right of a partner?
a. His rights in specific partnerships property
b. His interest in the partnership
c. His right to participate in the management
d. To demand true and full information of all things affecting the
partnership
ANS:D
22. Which of the following is considered prima facie evidence of the existence of a
partnership?
a. Where payment of interest on a loan varies with the profits of the business
b. The receipts by a person of a share of the profits
c. The sharing of gross returns of a business
d. Where the parties are established as co-owners of a property
ANS:B
23. X, Y and Z are equal partners XYZ Partnership. A owes the XYZ Partnership for
P9,000. Z a partner collected from A P3,000 as his share of what A owes.
When X and Y collected from A, A was insolvent
a. Partner Z shall share partners X and Y with the P3,000
b. Z cannot be required to share X and Y with the P3,000
c. X and Y should first exhaust all remedies to collect from A
d. X and Y can automatically deduct from the capital contribution of Z in the
partnership their respective shares in the P3,000
ANS:A
24. A person who takes place of a limited partner who has died is called
a. Heir
b. Successor in interest
c. Assignor
d. Substituted limited partner
ANS:D
25. If a partner is insolvent, the first order of preference in the distribution of
his assets is
a. Partner’s contribution to the partnership
b. Partnership creditor
c. Separate creditor of the partner
d. Pro-rata between the separate creditors and partnership creditors
ANS:C
26. When the manner of management has not been agreed upon, who shall
manage the affairs of the partnership?
a. Capitalist partners
b. Industrial partners
c. Capitalist-industrial partners
d. All of the partners
ANS:D
27. X, Y and Z are partnership business X contributed P10,000, Y contributes
P5,000 and Z his services only. After payment of partnership debts, what
remains of the partnership assets is only P6,000. In the absence of terms to
the contrary, the share of Z will be equal to
a. That of Y c. That of X
b. P2,000 d. Nothing
ANS:D
28. A, B and C are partners. Their contributions are as follows: A P60,000, B
P40,000, C services. The partners did not agree on how to divide profits and
losses. If there is a loss of P10,000, how should the said loss of P10,000 be
shared by the partners?
a. A P6,000, B P4,000 ,C 0
b. A P3,000, B P2,000, C 3,500
c. A P3,500, B P3,500, C P3,500
d. A P3,500, B P2,500, C P4,000
ANS:A
29. A, B, C and D are partners. Their contributions are as follows: A P50,000, B
P30,000, C P20,000, D services. The partnership incurred obligations to third
persons which the firm was inable to pay. After exhausting the assets of the
partnership, there is still unpaid balance of P10,000. Who are liable for the
payment of the unpaid balance of P10,000? How much cash?
a. A P5,000, B P3,000, C P2,000, D nothing
b. A P2,500, B P2,500, C P2,500, D P2,500
c. A P4,000, B P3,000, C P2,000, D P1,000
d. A P4,000, B P4,000, C P2,000, D nothing
ANS:B
30. A partner whose liability for the partnership debts is limited to his capital
contribution is called:
a. General partner d. Secret partner
b. Limited partner e. None of the
above
c. General-limited partner
ANS:B
31. A partnership without definite period of existence and which can be dissolved
at any time by any of the partners is called
a. Universal partnership of all present property
b. Universal partnership of profits
c. Particular partnership
d. Partnership at will
ANS:D
32. Which of the following provision in Partnership Law is/are considered
directory and not mandatory
a. If the capital is P3,000 or more it must appear in a public instrument
b. The partnership contact must be recorded with the SEC if limited partnership
c. If immovable properties is contributed it must appear in a public instrument
d. B and C
e. A and B
ANS:A
33. A partnership is dissolved:
a. In contravention of the partnership agreement by the express will of any
partner at any time
b. By any event which makes it unlawful for the business of the partnership to be
carried on or for the members to carry it on in the partnership
c. When a specific thing which a partner had promised to contribute to the
partnership perishes before its delivery to the partnership
d. By the loss of the thing, whether before of after its delivery to the partnership
when the partner who contributed it having reserve the ownership thereof,
has only transferred the use or enjoyment of the same
e. All of the above
ANS:E
34. Coverage of Statute of Frauds in partnership contract, which is the
exemption?
a. Promise to answer for the debt, default of miscarriage of another by a partnership
must be in writing
b. If the agreement to form a partnership shall be performed within a year the
partnership immovable property for more than one year must be in
writing
writing, unless there is a delivery or payment
ANS:B
35. X and Y established a partnership by contributing P100,000 each. Z a third
party allowed his name to be indicated in the firm name of the partnership.
The partnership was insolvent and after exhausting all the remaining assets,
there was left a liability to third persons the amount of P30,000. The creditors
can compel
a. Z to pay the P30,000 remaining liability
b. X, Y and Z to pay P10,000 each
c. X or Y to pay P30,000 remaining liability
d. X and Y to pay P15,000 each
ANS:B
36. A partner who has all the rights, power and subject to all restrictions of the
general partner but whose liability is, among themselves limited to his
capital contribution is called
a. General partner d. Dormant partner
b. Limited partner e. None of the
above
c. General Limited partner
ANS:B
37. Which of the following may be a cause for involuntary dissolution?
a. Express will of any partner
b. Insolvency of any partner
c. Termination of the term
d. Expulsion of any partner
ANS:B
38. A partner who does not participate in the management of the affairs of the
partnership and whose connection with it is not made known to the public is
called
a. Ostensible partner d. Dormant
partner
b. Secret partner e. None of the above
c. Silent partner
ANS:D
39. A capitalist partner engaged for his own account in an operation which is
of the kind of business in which the partnership is engaged. Said partner
can be
a. Compelled to sell his interest in the partnership to the other capitalist
partners
b. Compelled to dissolve or discontinue the operation of his business
c. Compelled to bring to the common funds of the partnership any
profits accruing to him from his transactions
d. Denied his share in the profits of the partnership
ANS:C
40. Refers to a partnership whereby the persons who represents themselves, or
consent to another or others to represent them to anyone that they are
partners
a. General partnership c. Partnership by
estoppel
b. Limited partnership d. None of the
above
ANS:C
41. Bears the risk of things contributed to the partneship
a. Contributing partner
b. Limited partner
c. Partner contributing usufructuary rights
d. All of the above
ANS:C
42. Three of the following are the effects if immovable property is contributed in a
partnership but the contract did not appear in a public instrument. Which is the
exception?
a. A partnership has no judicial personality
b. The parties may compel each other to observe the required form
c. The parties may request the return of their capital contribution
d. The contract of partnership is void
ANS:B
43. Three of the following do not prove the existence of a valid partnership.
a. The sharing of gross receipts
b. There is an intention of dividing the profits among themselves
c. Receipts by a person of the share of the profits for payment of a
partnership debt by installments
d. When two or more persons are co-owners and they share correspondingly
in the profits made from the sale or use of their property
ANS:B
44. Which of the following is valid?
a. Oral contract of partnership where a partner contributes real property
with a value less than P3,000
b. Oral contact of partnership where the capital is P3,000 or more
c. Written contact of universal partnership of present properties between
husband and wife
d. None of them
ANS:A
45. A partnership
a. Is created by agreements of the partners
b. Has a juridical personality separate and distinct from that of each of the
partners
c. May be constituted in any form, except where immovable property or real
rights are contributed thereto in which case a public instrument is
necessary
d. All of the above
ANS:D
46. A partnership which comprises all the profits that the partners may acquire by
their work or industry during the existence of the partnership is called
a. Universal partnership of all present property
b. Universal partnership of profits
c. Particular partnership
d. Partnership at will
ANS:B
47. A partner whose connection is concealed and has no voice nor say in the
management of the affair of the partnership is
a. Nominal partner d. Dormant partner
b. Secret partner e. None of the above
c. Silent partner
ANS:D
48. A limited partner shall not liable as a general partner unless
a. He takes part in the control of the business
b. He contributes his services to the capital of the firm
c. His surname appears in the partnership name
d. The word “limited” is not added to the name of the partnership
e. All of the above
ANS:E
49. Which of the following statements is correct concerning liability when a
partner in a general partnership commits a tort while engaged in partnership
business?
a. The partner committing the tort is the only party liable
b. The partnership is the only party liable
c. The partners are jointly and severally liable
d. The partnership and the partners are liable
ANS:D
50. A partner whose connection with the partnership is open and public such as
by including his name in the firm name of the partnership is called
a. Nominal partner d. Dormant partner
b. Ostensible partner e. None of the above
c. Secret partner
ANS:B
CORPORATION
1. The by-laws of a corporation may create an executive committee, composed of
not less than 3 members of the board of directors to be appointed by the board.
The executive committee may act, by majority vote of all its members on such
specific matters within the competence of the board, as may be delegated to it in
the by-laws or on majority vote of the board, except:
a. Approval of any action for which shareholders’ approval is also required
b. Amendments or repeal of by-laws or adoption of new by-laws
c. Filing of vacancies in the Board
d. Distribution of cash dividends
e. All of the above
ANS:E
2. A corporation
a. May not enter into a contracts of guaranty or suretyship not in furtherance of
its business.
b. Has no implied power to become a partner with an individual or another
corporation
c. May enter into joint venture with individuals where the nature of the business
is within the scope of its legitimate power
d. May issue or sell stocks to subscriber
e. All of the above
ANS:E
3. One who has agreed to take stock from the corporation on the original issue of
such stock is called
a. Incorporators
b. Members
c. Promoters
d. Subscribers
ANS:D
4. The business of this corporation can be managed by the stockholders
a. Close
b. Open
c. Eleemosynary
e. All of the above
ANS:A
5. Two or more kinds of dividends paid by the corporation is called
a. Cash stock
b. Composite
c. Property cash
d. Scrip
ANS:B
6. The following are some of the requisites of a de facto corporation. Choose the
exception.
a. Valid law under which it is incorporated
b. Attempt to incorporate
c. Assumption of corporate power
ANS:D
7. Which of the following is not required to be included in the Articles of
Incorporation?
a. Duties of the president
b. Name of the corporation
c. Period of existence
d. Location of the principal office
ANS:A
8. A written promise to pay the money loaned to the corporation but ordinarily it has
no specific fund or property as security for the payment is called
a. Mortgage bond
c. Equipment bond
d. Debenture bond
ANS:D
9. A form of combination where all the constituent corporations are dissolved and
out of them a new one is formed.
a. Consolidation
b. Merger
c. Joint venture
d. All of them
ANS:A
10. Which of the following is not an express power of the corporation?
a. To adopt by-laws and amend or repeal the same
b. To enter into merger and consolidation with other corporation
c. To make reasonable donations including those for the public welfare or for
hospital, charitable, cultural. Scientific, civic and similar purposes
d. To established pension retirement and other plans for the benefit of its
directors, trustees, officers, and employees.
ANS:E
11. Statement 1: The Articles of Incorporation or the by-laws may limit or even
completely deny the right to vote of any class member in a corporation.
Statement 2: Subscribers for stock shall be liable to the corporation for the
interest from the date of subscription, but only if so required in the by-laws.
a. Both are true
b. Both are false
c. No. 1 is true; N0. 2 is false
ANS:A
12. The interest or rights of the owner in the management of the corporation in the
surplus profits and on dissolution in the balance of its assets after the payment of
the debt is
a. Certificate of stock
b. Share of stock
c. Dividend
d. Legal capital
ANS:B
13. A written instrument signed by the proper officers of the corporation, stating or
acknowledging that the person named therein is the holder of a designated
number of shares of its stock
a. Certificate of stock
b. Share of stock
c. Certificate of incorporation
d. Dividend
ANS:A
14. The owners of shares in stock corporation are called
a. Incorporators
b. Promoters
c. Members
d. Stockholders
ANS:D
15. Shares of stock may be issued for
a. Actual cash
b. Tangible or intangible properties
c. Labor performed for or services actually rendered to the corporation
d. Previously incurred indebtedness by the corporation
e. All of the above
ANS:E
16. A non-stock corporation
a. May not engage in business
b. One where the capital stock are divided into shares
c. No part of the income must be distributed as dividends
d. May have 15 board of trustees whose shall have a term of office of 3 years
e. All of the above
ANS:E
17. The holders of non-voting shares shall be entitled to vote on the following
matters, except;
a. Amendments of the Articles of Incorporation
b. Sales, lease mortgage, or other disposition of all or substantially all of the
corporate properties
c. Incurring, creating, or increasing bonded indebtedness
d. Increase or decrease of capital stock
ANS:E
18. The quorum required by law to elect directors: presence of owners of
a. Majority of the outstanding capital-voting
b. Majority of the outstanding capital-voting and non-voting
c. 2/3 of the outstanding capital voting
d. 2/3 of the outstanding capital-voting and non-voting
ANS:A
19. Dividends shall be declared and paid out of
a. Capital stock
b. Paid in capital
c. Profits earned in selling no par value shares
d. Unrestricted retained earnings
ANS:D
20. Private corporation which have accepted from the state grant of a franchise or
contract involving the performance of public duties are called
a. Quasi-public corporation
b. Quasi corporation
c. Eleemosynary corporation
d. Ecclesiastical corporation
ANS:A
21. If the principal office of CPAR corporation is located in Manila, stockholders’
meeting can be held in
a. Isabel Building
b. Las Pinas
c. Muntinlupa
d. All of the above
ANS:D
22. All of the close corporation’s issued shares shall be held of record by not more
than
a. 10 persons
b. 15 persons
c. 20 persons
ANS:C
23. A bond which is payable to a particular individual whose name is entered on the
books of the corporation as registered owner is called
a. Registered bond
b. Coupon bond
c. Convertible bond
d. Guaranteed bond
ANS:A
24. A corporation, the sole purpose of which is to invest its capital in a specific
property and afterwards consume that property or extract its value at a profit is
called
a. Quasi corporation
b. Wasting assets corporation
c. Open corporation
d. Eleemosynary corporation
ANS:B
25. Persons who compose the corporation whether as stockholders or members are
called
a. Incorporators
b. Promoters
c. Corporators
d. Subscribers
ANS:C
26. The theory of a corporation fiction may be disregarded under the doctrine of
piercing the veil of corporate entity, when the concept of the legal entity being
used
a. The defeat of public convenience
b. To protect fraud
c. To defend crime
d. To evade or violate a contract or law
e. All of the above
ANS:E
27. Three of the following are similarities between a partnership and corporation.
Which is not?
a. The individuals composing both have little voice in the conduct of the
business
b. Both have juridical personality separate and distinct from that the individuals
composing them
c. Like partnership, a corporation can act only through agents
d. Both are organizations composed of an aggregate of individuals
ANS:A
28. The right given to the stockholders to dissent and demand payment of the fair
value of their shares is called
a. Right of proxy
b. Appraisal right
d. Stock right
ANS:B
29. The following are the attributes of a corporation, except:
a. It is an artificial being
b. It is created by operation of law
c. It has rights of succession
d. It has the power, attributes and properties expressly authorized by law or
incident to its existence
ANS:E
30. Founder’s share
a. Are given to the organizers or founders of the corporation
b. Maybe given special rights and privileges by the owners of other shares
c. Maybe given the exclusive right to vote and to be voted for in the election of
the directors for the period not exceeding 5 years
d. All of the above
ANS:D
31. Which of the following qualifications is necessary in order that one may be
elected treasurer of the corporation?
b. He must be a director of the corporation
c. He must be a stockholder of the corporation
d. He must be a treasurer of any other corporation
ANS:E
32. The following are expressed powers of a corporation, except;
a. To sue and be sued
b. The power of succession
c. To adopt and use a corporate seal
d. To amend its Article of Incorporation
ANS:E
a. The secretary must be a citizen and resident of the Philippines
b. Delinquent stock are necessarily unpaid
c. Treasury stocks are by their very nature delinquent at the time they are
acquired by the corporation
d. In consolidation, the constituent corporation is dissolved and out of
them a new one is formed
ANS:D
34. Stockholders of the close corporation
a. Given right of pre-emption in the issuance of all kinds of shares including
treasury shares
b. May enter into a written agreement making them partners among themselves
c. May, for any reason, withdraw from the corporation and compel it to purchase
their share at their fair value, which shall not be less than their or issued
value, provided the corporation has sufficient assets to cover its debts and
liabilities exclusive of capital stock.
d. Any of them may, by written petition to the SEC. compel the dissolution of the
corporation whenever any act of the directors or officers of this corporation is
illegal or fraudulent or dishonesty or oppressive or whenever corporate assets
are being misapplied.
e. All of the above
ANS:E
35. Statement 1: Stock issued by a corporation in excess of the amount prescribed
or limited by its Article of Incorporation are void except in the hands of a bonafide
purchaser for value
Statement 2: Treasury shares are part of the outstanding capital stock of a
corporation
a. True; True
b. False; False
c. True; False
d. False; True
ANS:B
36. Incorporators of a corporation
a. Not less the 5 but not more than 15
b. Majority are required to be resident of the Philippines
c. Must own or must subscribe to at least 1 share of the capital stock of the
corporation
d. All of the above
ANS:D
37. The power to examine the affairs of a corporation in order to supervise, direct,
and control its management is called
a. Visitorial power of the state
b. Visitorial power of the stockholders
c. Visitorial power of the directors
d. Visitorial power of employees
ANS:A
38. Which of the following cannot be lawfully exercised by a non-stock corporation?
a. Pay dividend
b. Elect trustees
c. Amend the Articles of Incorporation
d. Adopt by-laws
ANS:A
39. A bond secured by stocks or other bonds or both which are owned by the debtor,
the securities being deposited with a trustee for the bondholder is called
a. Mortgage bond
c. Debenture bond
d. Equipment bond
ANS:B
40. Voluntary dissolution of a corporation is caused by
a. Voluntary dissolution where no creditors are affected
b. Voluntary dissolution where creditors are affected
c. Amendments of the articles of incorporation resulting in the shortening of
corporate term
d. In case of a corporation sole be submitting to the SEC a verified declaration
of dissolution
e. All of the above
ANS:E
41. Shares of stocks entitling to owner to receive dividends ahead of the owner of
common shares not only for the year the dividend is declared but also for prior
years where no dividends are declared
a. Participating preferred stock
b. Cumulative preferred stock
c. Founder’s stock
d. Watered stock
ANS:B
42. Stocks lawfully issued by the corporation for money, property, or services and
subsequently properly reacquired by it are
a. Watered stocks
b. Over issued stock
c. Bonus stock
ANS:C
43. Treasury share
a. Shall have no voting right as long as they remain I the treasury
b. Are not entitled to participate in the distribution of dividends
c. Are not part of the outstanding capital stock
d. May again be disposed of for a reasonable price, even at less than par, by the
Board of Directors
e. All of the above
ANS:E
44. To revoke the power granted to the board to make by-laws,
a. Majority of the board and of the outstanding capital stock of the members
b. 2/3 of the outstanding capital stock or of the members
c. Majority of the quorum of the board and 2/3 of the outstanding capital stock or
of the members
d. Majority of the outstanding capital stock or of the members
ANS:D
45. Which of the following is not correct?

a. In the delinquency sale at public auction the highest bidder is one who
offers to pay the full amount of the balance of the subscription plus
interest and expenses of the sale for the highest number of shares
b. The sale of delinquent stock in public auction can be stopped if the board of
directors stops the sale for valid reasons
c. Payment of unpaid subscription may not be enforced by applying cash
dividends to delinquent stockholders
d. The board of directors shall order, by resolution, the sale of delinquent stock
specifying the amount due plus accrued interest, the place, time and date of
the sale.
ANS:A
46. One of the following does not require stockholders’ approval

a. Merger or consolidation
b. Change of corporate name
c. Investment of corporate funds for a purpose outside of the main purpose of
the corporation
d. Declaration of cash dividend
ANS:D
47. Shares deposited by the seller or his agent with a bank or third party to be
delivered to the buyer or subscriber only upon the fulfilment of the stipulated
suspensive condition
a. Promotion shares
b. Founders’ share
c. Redeemable shares
d. Escrow shares
ANS:D
48. Every decision of the directors or trustee shall be valid as a corporate act at
which there is a quorum by
a. Majority of the members of the board
c. 2/3 vote of the members of the board
d. 2/3 vote of the directors or trustees present
ANS:B
49. Which of the following qualifications is necessary in order that one may be
elected president of a corporation
b. He must not be a stockholders or director of a competitor corporation
c. He must not be a president of any other corporation
d. He must be a director of the corporation
ANS:D
50. This share can be acquired by the corporation

a. Founder’s share
b. Redeemable shares
c. Par value shares
d. No-par value shares
ANS:B
I LOVE YOU 

Multiple Choice

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Read this document in other languages

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Multiple Choice

Uploaded by

Copyright:

Available Formats

MULTIPLE CHOICE

1. Which of the following is not an obligation with a period?

2. If obligation is payable in foreign currency

d. The stipulation and the obligation are void.

3. Which of the following statements is false?

9. Statement No. 1: Responsibility arising from fraud is demandable in all obligations. A

16. Change of persons or objects:

29. In which of these cases is advanced payment recoverable by the debtor?

30. A judicial relation known as Negotiorum Gestio takes place.

37 Consignation alone shall give rise to the extinguishment of an Obligation. EXCEPT:

39. The following are causes vitiating consent, EXCEPT:

41. Which of the following is not a conditional obligation?

42. The passage of time extinguishes the obligation:

44. Which of the following is not a special mode of payment?

49 Consignation alone, as a special form of payment, may extinguish an obligation

52. Which obligation is not valid?

54. A source of obligation where there exists criminal negligence

58. Which of the following obligations is not subject to a period?

A. Death of both parties

60. Which of the following is not a generic obligation?

a. obligation to pay P5,000

a. Both are true.

A. B shall give P40,000 to A

Statement No. 2: In facultative obligations, the right of substitution may be transferred to

a. Both are true.

64.The following, except one, are requisites of payment as an a mode of extinguishing

A. Complete or full payment

65. Not a ground for damages:

Statement No. 2: There can be no delay in an obligation not to do

a. Both statements are true.

a. C can compel D to deliver 100 cavans of rice plus damages“

68. Wrong committed independent of contract and with criminal intent is

A. Principal obligation is extinguished.

71. Which of the following is not an obligation with a period?

72. A, B and C executed a promissory note worded as follows: We promise to pay X, Y,

A. A is obliged to pay X, Y and Z P90,000

74. The distinction between period and condition is

a. Period may or may not happen.

a. Both statements are true.

A. C can collect P20,000 from B

a. When he does not furnish a guaranty or security to the creditor.

79. Which of the following is not a special mode of payment?'

a. The obligation is unenforceable because the condition is immoral.

86. Proof of pecuniary loss is necessary for the award of:

87. In the execution of obligation, liability for malice or bad faith:

90. Extinguishes the, obligation upon the happen, of the condition

95. An absolutely simulated or fictitious contract is:

109. Statement No 1: In an obligation subject to suspensive period, if the object is

112. Insolvency of the debtor is required in:

116. Requisites of application of payment, except

Statements No. 2. Ten sacks of corn cannot be compensated (legal compensation) by

123. Which of the following obligation is void?

a. Both are true.

a. Both are true.

a. None, obligation is totally extinguished.

153. In a solidary obligation, D1 and D2 bind themselves to give C1 and C2 P10,000.

155. Whenever in an obligation a period is designated, it is presumed to have been

a. B-3 could collect P30,000 from A-2.

170. Proof of pecuniary loss is not necessary for the award of

a. Both are true

173. Statement 1: Solutio indebiti may apply to payment by mistake of a prescribed

180. In novation, which of the following is incorrect?