BUSINESS LAW: Pre-week Lecture The injured party may seek rescission even after he chosen the fulfillment

The injured party may seek rescission even after he chosen the fulfillment of the obligation if
the latter should become impossible.
1. Culpa aquiliana as distinguished from culpa conctractual: a. True, true b. True, false c. False, false d. False, true
a. Proof of due diligence in the selection and supervision of employees is not considered a
defense. 8. The real creditor has real right to the fruits of the thing from the time they have been delivered.
b. Proof of the contract and its breach is sufficient to warranty recovery. The buyer acquires real right to the fruits of the thing from the perfection of the sale.
c. The negligent of the defendant is only an incident in the performance of the obligation. a. True, true b. True, false c.False, false d. False, true
d. The source of liability is the negligent act of the person causing damage to another.
9. In a natural obligation, the creditor has the right to enforce the performance thereof it being
2. A, B, and C executed a promissory note in favor of D, E, and F in the amount of P9, 000.00.Can based on positive
the creditors proceed against A for the payment of the entire loan? law.
a. No, each creditor can only collect P3, 000 from A. Solutio indebiti and negotorium gestio are quasi-contracts that give rise to civil obligations.
b. Yes, anyone of the creditors can collect the entire P9, 000 from A a. False, false b. False, true c. True, true d. False, true
c. No, each of the creditors can only collect P1, 000 from each debtor.
d. Yes, because the obligation is presumed to be solidary 10. An oral sale of land made by its owner is unenforceable.
a. False, false b. False, true c. True, true d. False, true
3. In the preceding problem, suppose the obligation is mixed solidarity can one of the creditors
demand payment 11. A contract as a general rule must be written to have force and effects a valid agreement
of the whole debt from anyone of the debtors? A formal or solemn contract is one that must be in writing to be valid
a. Yes, because the obligation is presumed to be joint and several a. True, true b. False, false c.False, and true d. true, false
b. Yes, but A and B shall be liable proportionately
c. No, because of their jointly liability and therefore the debts are distinct from one another. 12. A contract of partnership where immovable are contributed must be in public instrument to be
d. No, because only either of them can be held liable for the share of C. valid.
A limited partnership must be SEC registered to be valid.
4. Still in the proceeding problem, suppose the obligation is mixed solidarity can one of the a. False, true b. True, false c. False, false d. True, true
creditors demand
payment of the whole debt from anyone of the debtors? 13. The principle of autonomy of contracts means that the contacting parties as a value may agree upon any
a. No, because the debts are distinct and separate from one another stipulation, clause, term and condition.
Relativity of contracts means that contracts take effect not only between the parties but also their heirs
b. Yes, because it is as if there is only one obligation.
and assigns.
c. Yes, because provided all of them demand from all of the debtors a. False, false b. True, true c. False, true d. true, false
d. No, because despite solidarity, a debtor is liable only for his share.
14. Antichresis must be in writing and involves immovable.
5. Indivisibility as distinguished from solidarity: In pledge and Recto Law there is no deficiency liability
a. Plurality of subject is indispensible a. False, false b. True, true c. False, true d. true, false
b. Refers to the creditors and/or debtors
c. May either passive or active 15. A contract entered into by a minor is void.
d. Refers to the prestation which constitutes the object of the obligation A contract where the amount involved exceeds P500.00 must be in writing to be valid.
a. True, true b. False, false c.False, true d. true, false
6. Under the Negotiable Instruments Law, to be holder in due course, a person must have acquired 16. A de facto corporation is one which is not registered with the SEC.
the In corporation by estoppels, those who misrepresented themselves as forming a corporation are liable as
instrument before its over due .Does this apply to the payee to whom the maker issued an general partners.
overdue note? a. False, false b. True, true c. False, true d. True, false
a. Yes, because the payee is still considered a holder under the law
b. No, because the issuance to the payee is not considered a holder under the law 17. If the obligation is solidary, it means there is mutual guaranty among the debtors and therefore the
c. Yes, because the law does not distinguished between payee and subsequent holder insolvency of one is shouldered by others.
Solidarity may exist although the debtors may not be bound by the same term, condition and manner of
d. No, because the payee is privy to the contract between himself and the maker.
performance.
a. False, false b. True, true c. True, false d. False, true
7. When one of the parties has brought an action to enforce the contract, he cannot subsequently
ask for its 18. In dation in payment, the creditor becomes the owner of the property ceded as payment of debt.
reformation. In payment by cession, the creditors do not become the owners but are authorized to sell the properties
assigned to them.
 a. False, false b. False, true c. True, true d. False, true
30. The creditors acquire a real right against the debtor from the time the thing should have been
19. In tender payment and consignation, the refusal without valid reason of the creditor to accept the payment delivered.
of the debtor will extinguish the obligation.
The fruits of the thing shall pertain to the creditor from the time they should have been
The third person who paid the obligation without knowledge or against the will of the debtor is still entitled
to reimbursement from the debtor to the extent of the latters benefit. delivered to him
a. False, false b. True, true c. False, true d. True, false that is; he is personal right to demand delivery of the fruits existing after the obligation to
deliver the
20. A corporation can be a stockholder not an incorporator. principal thing arises
To be a due jure corporation, it must be existing in law and in fact unlike a de facto one which exists in fact a. Both statements are false c. First is false, second is true
but not in law. b. Both are true d. First is true, second is false
a. True, true b. False, false c.False, true d. True, false
31. In the obligation to deliver a thing, the debtor has to deliver also the accessories and
21. It is indispensible for quasi-delict to exist that there is no pre-existing contractual relation between parties.
The unpaid seller cannot recover the thing sold from an innocent purchaser for value. accessions if they
a. True, true b. False, false c.False, true d. True, false have been mentioned.
In obligation to do, specific performance of the debtors obligation is not available as a right of
22. Which of the following is not an essential element of an obligation? the creditor
a. Obligor c. Presentation to demand from the obligor.
b. Efficient cause d. Creditor a. First is statement is false, second is true c. Both are false
b. First is true, second is false d. Both are true
23. It is an obligation to which is based on positive law gives it a right to enforce its performance.
a. Natural obligation c. Moral obligation
32. Which if the following is demand necessary to make the debtor in delay in the performance of
b. Civil obligation d. Legal obligation
his obligation?
24. Which of the following is not a source of an obligation? a. When the time performance is of the essence; c. When the law so provides;
a. Law b. Contracts c. Delict d. Damages e. Quasi-contracts b. When the time performance has been stipulated; d. When demand would be useless

25. Obligations are derived from law are presumed except those found in the Civil Code or in special laws. 33. Liability for the damages in the performance of an obligation arises from the following, except:
Obligations arising from contracts have the force of law between the contracting parties and should be a. Negligence c. Delay
complied with in good faith. b. Acts or omissions punished by law d. Fraud
a. Both statements are true c. Both are false
b. First is false, second is true d. First is true, second is false
34. Liability for damages arising from fraud is demandable and there can be a waiver of an action
26. This is a principal kind of quasi-contract arising out of payment by mistake or undue performance of an
for past fraud
obligation: There can be waiver of an action for future negligence but mot fraud.
a. Solutio indebiti b.Negotiorum gestio c. Other quasi-contract d. Quasi-delict a. Both statements are false c. First is false, second is true
b. Both are true d. First is true, second is false
27. Which of the following is not a civil liability arising from delict?
a. Indemnification for consequential damages c. Reparation 35. A obliged himself to deliver the cans of powdered milk of B from Pangasinan to Manila. While
b. Rescission d. Restitution his truck was
travelling on the North expressway, it was hi-jacked by a band of robbers who also took the
28. In quasi-contract there is no consent of the parties thus preventing a meeting minds between them cans of milk
In quasi-delict there is no-intention on the part of a person doing a wrongful act or omission causing
damage to another
belonging to B. Is A liable for the loss of the goods?
a. First is statement is false, second is true c. Both are true a. No, because they were generic things and as they cannot be lost
b. First is true, second is false d. Both are false b. Yes, because he was in possession of the same at the time of the loss and therefore
presumed at fault
29. This is the kind of diligence that the obligor must observe in the performance of his obligation c. Yes, because there was no stipulation exempting him for loss in case of fortuitous event
to give d. No, because the loss was due to fortuitous event
something:
a. Diligence of a good father of a family 36. In which of the following is the debtor still liable despite the fortuitous event causing the loss of
b. Extraordinary diligence of a good father of a family the thing?
c. Diligence of a father of a good family a. The thing lost is a specific thing
d. Diligence of a good father of a family even if the law or the stipulation requires another b. The performance of the obligation has become impossible
standard of care. c. The nature of obligation expressly so provides
 d. When the law or the obligation expressly so provides. the prestations to be performed.
In alternative obligation the right to choice is always with debtor
37. D borrowed from C a sum of money with a stipulated rate of interest to be paid in three equal a. First statement is false, second is true c. Both are true
c.First is true, second is false d. Both are false
monthly
installments from January to March. D paid an amount for which the latter issued a receipt 45. A, B, and C borrowed P3M from D, E and F evidenced by a promissory note worded as follows, to wit: I
stating that the promise to pay D, E and F P3M. (Sgd) A, B and CHow much can D collect from A?
payment is for the month of February .In this case: a.P3M c. P 1.5M
a. The installment for the month of March is also considered paid b.P.5M d. P1M
b. The installment for the month of January is conclusively presumed to have been paid
c. The installment for the month of January is disputably presumed paid 46. In the preceding case, suppose only D is demanding payment, can still A pay any one of the creditors?
d. The installment for the month of January is not presumed paid a. No, because the law provides that payment shall be made to the creditor demanding payment
b. No, but in case in payment is made to a creditor not demanding payment, only his share of the credit
shall
38. In the preceding case, suppose the receipt does not mention the payment of the interest, it is: be extinguished
a. Conclusively presumed the interest has been also paid c. Yes, because payment can be made to any of the solidary creditors
b. Not presume paid unless proven otherwise d. Yes, because payment proportionately can be made to any of the joint creditors of his share.
c. Prima facie presumed to have been paid
d. Presumed disputably that only principal has been paid. 47. A, B, and C bound themselves to deliver X to a specific car worth P3M. Due to the fault of A, the car was
lost .In this case:
39. Three of the following are the rights of the creditor against the debtor, who fails to pay his a X can claim damages from any of the three for his proportionate part of liability because the obligation is
indivisible.
debt, except:
b. X claim only from A the whole amount of damages other than the value of the car.
a. Attachment of the debtors properties or garnishments thereof; c. Since it is solidary liabilities for damages, X can claim the same from any of the three
b. Subrogation to the rights of the debtor against third persons; d. Only A is liable for damages although B and C are liable for their respective shares in the obligation
c. Recession of contracts entered into by the debtor to defraud him;
d. Send the debtor to jail for non-payment of his debt 48. In obligation with penal clause, proof of actual damages suffered by the creditor is essential to enforce the
40. Rights acquired in virtue of obligations are transmissible only if so stipulated by the parties penalty.
The law of the stipulation of the parties to an obligation may provide that the rights acquired As rule, the creditor may demand the payment of the penalty, damages and interest in case of
by virtue non-performance of the obligation.
thereof are not transmissible. a. Both statements are false c. Both are true
c.First is true, second is false d. Second is true, first is false
a. First statement is false, second is true c. Both are false
b. Second is false, first is true d. Both are true 49. D owes C P1M. X, without the knowledge or against the will of D paid C P2M. Can X get imbursement
from D?
41. D borrowed sum of money from C promising to pay after the arrival of the vesselBaliktaran from Cebu. a P2M by the way of reimbursement from D to prevent unjust enrichment on the part of D at the expense of
The vessel failed to arrive due to some fortuitous event and without the fault of D. Ds obligation to pay X
is subject to a: b. P1M only for that is the extent of benefit of D
a. Suspensive condition and therefore not demandable since the vessel did not arrive c. No reimbursement because the payment was not proper being without the knowledge or against the will
b. Not a condition nor a period but rather is pure obligation and therefore is demandable at once. of
c. Resolutory condition and therefore extinguished upon the failure of the vessel to arrive D.
d. Period which the court may fix d. P1M plus interest from the time of payment until reimbursement
42. Impossible, unlawful, immoral conditions are not valid and not demandable except the obligations which 50. In the preceding case:
depend upon them. There is quasi-contract with the obligation to, reimburse the third person in so far as the payment has been
Potestative condition to be void must be both suspensive and dependent on debtors will. beneficial to the debtor.
a. Both statements are true c.First is false, second is true There is a legal subrogation and therefore in case the debtor fails to reimburse the third person, the latter
b. Both are false d. First is true, second is false may go after the mortgage, guaranty or penalty.
a. Both statements are false c. First is false, second is true
43. D bound himself to specific object 1 or object 2 to C. If one of the objects is lost due to fortuitous event b. Both are true d. First is true, second is false
and without fault of D, the effect is:
a. D may still choose which he shall deliver, only the value of the thing lost if he chooses the same. 51. Payment made to third person is valid to extinguish the obligation of the debtor to the creditor in the
b. D cannot choose because among the prestations whereby he is alternatively bound, only one is following cases, except:
practicable a. After payment, to the creditor, the third person acquires the creditors right
c. C may choose which of the objects he wants to delivered b. When the creditor ratifies the payment to the third person;
d. Obligation of D has been extinguished c. When through the creditors conduct, the debtor was led to believe that the third person had authority
to receive payment
44. In facultative obligation, only one prestations is due but the creditor may be given the right of choice as to
 d. When the third person is subrogated to the rights of the creditor. 61. The contract entered into by the persons who cannot give consent is:
a. Void ab initio because actually there is no consent
52. The following are special forms of payment, except: b. Unenforceable only because the contract may be ratified
a. Dation in payment c. Payment in cession c. Rescissible because of the damage caused to the person incapacitated
b. Tender of payment and consignation d. Compensation d. Voidable as there is consent although vitiated or defective

53. In application of payment, the creditor as a rule shall decide on what debt shall the payment is applied. 62. The following are still valid contracts ex
If the period is for the benefit of the debtor he can apply the payment on a debt although not yet due. a. Void c. Voidable
a. Both statements are false c. First is false, second is true b. Unenforceable d.Recessible
b. Both are true d. First is true, second is false
54. In dation in payment, the creditor becomes owner of the thing alienated as payment while in payment 63. A defective contract where damage or lesion is essential is:
by cession; the creditors do not become owners of the properties of the debtor. a. Resistible c. Unenforceable
b. Voidable d. Void
In tender of payment and consignation, the tender of payment by itself shall not extinguish the obligation
If the creditor receives a check as payment and it has been impaired through his fault; the debtor/drawer 64. A defective contract because it is prohibited by law is:
shall be released to the extent of the loss. a. Void c. Rescissible
a. First statement is true, second is false c. Both are false b. Voidable d. Unenforceable
b. First is false, second is true d. Both are true
65. A defective contract because it is entered into the name of another without or in excess of authority, or it is
55. Three of the following are essential elements of a contract, except:
a. Cause of obligation which is established verbal is:
b. Consent of the contracting parties a. Unenforceable c. Void
c. Motive of the parties b. Voidable d. Recessible
d. Object certain which is the subject matter of the contract
66. The following even if not in public instrument are valid, binding, and enforceable, except:
56. Novation of a contract takes place in the three of the following, except: a. Negotiable instruments
a. Delegacion c. Subrogation b. Sale of land, either by the owner or agent with written authority
b. Expromission d. Assignment c. Agency, pledge, mortgage
d. Partnership contract wherein immovable are contributed
57. Legal compensation shall exist in the following cases, except:
a. That each of one of the obliges be the principal creditor of the other and he be at the same principal 67. In reformations of instruments, it is necessary that there is meeting of minds of the parties to the contract;
debtor of the other. otherwise, annulment of contract shall be the remedy if fraud, accident, mistake or inequitable conduct
b. That both debts due prevented the meeting of minds
c. That they may liquidated and demandable;
d. That they may both consist in sum of money or if consumable also of the same kind and quality as that In the interpretation of contracts, doubts on the incidental circumstances of onerous contracts shall be
stated. resolved in favor of the greatest reciprocity of interest and if gratuitous, least transmission of rights and
interest
58. S offered his car to B for P1M and giving latter one week to decide. B in turn gave S P1, 000.00.In this case a. Both statements are true c. First is true, second is false
there is: b. Both are false d. First is false, second is true
a. Contract of the sale of the car with the P1, 000.00 as earnest money
b. Contract of the sale of the car with the P1, 000.00 as option money 68. A sold to be his dog with the agreement that delivery shall be after one week from sale and the payment of
c. Contract to sell of the car at Bs option the price after two weeks from delivery. If the dog shall produce offspring, it shall belong to:
d. Contract to sell of the car at Ss option 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;
59. A advertised in the newspaper his parcel of land wanting to sell the same for P1M .B personally went to c. The fruits that shall exist after delivery will not only be the ones to pertain the buyer
the former with cash in hand to buy the subject parcel of land. In this case: d. The fruits are the sale but before delivery shall pertain to the buyer if so stipulated by the parties to the
a. A cannot anymore reject B as buyer of his land; sale.
b. A can still reject B as an offered in the purchase of his land;
c. A can still reject the offer of B unless he properly consigns with the court his payment for the land; 69. A contract of sale of vain hope or expectancy is voidable at the option of the buyer and the action for
d. A cannot evade his obligation as seller to B. annulment brought within the perspective period provided by law.

60. The following cannot give consent to contract, except: The sale of a mere hope of expectancy is deemed subject to the condition that the thing will come into
a. Minors except sale of necessaries in life existence
b. Insane persons a. Both statements are false c. First is true, second is false
c. Demented b. Both are true d. First is false, second is true
d. Minors who represent themselves as of legal age to one in good faith.
70. A sold Bs car in his (As) name to C without any authority from B.The contract of sale is:
 a. Rescissible b. Voidable c. Void d. Unenforceable e.Valid c. B may be demand delivery of the car even before the expiration of the one week period agreed upon
once
71. A sold Bs car in the name of B without any authority from C. The sale is: he pays the price
a. Rescissible b. Voidable c. Void d. Unenforceable e.Valid d. Payment and delivery shall take place only after one week for the sale.

72. A sold Bs car with authority to sell but sold it in his (As) name. The contract is: 84. S sold his car to B.No agreement was made on the time and place of delivery and payment. Hence:
a. Rescissible b. Voidable c. Void d. Unenforceable e.Valid 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
73. A sold his land to B verbally .The sale is: c. The seller may demand payment first before delivery of the thing sold.
a. Rescissible b. Voidable c. Unenforceable d. Void d. The buyer may delivery first before payment of the price

74. A, as agent of P with oral authority, sold Ps land in public instrument. The sale is: 85. The seller must be the owner of the property he sells but his ownership need not to exist on perfection but
a. Rescissible b. Voidable c. Unenforceable d. Void upon delivery of the thing.
A contract of sale may be absolute; conditional, either suspensive or resolutory; or subject to a
75. With written authority from his principal, the agent sold verbally the land of the principal. The sale is: contingency;
a. Rescissible b. Voidable c. Unenforceable d. Void undivided interest in property
a. Both are statements false c. First is true, second is false
76. Without authority from B, A sold the formers land in Bs name. The sale is: b. Both are true statements d. First is false, second is true
a. Rescissible b. Voidable c. Unenforceable d. Void
86. A car sold his car for the price of P2M to B.Who shall pay P.5M and deliver to S his land as consideration for
77. Without authority from B, A sold the formers land in Bs name. The sale is: sale. There is:
a. Rescissible b. Voidable c. Unenforceable d. Void a. Partly sale and partly barter c.Innomite contract
b. Barter d. Sale
78. A, with oral authority from P, sold the latters house in writing .The sale is:
a. Rescissible b. Voidable c. Void d. Unenforceable e.Valid 87. S delivered to B his car valued P2M in consideration of B transferring to S his land worth P1M and the
amount P1M.There is
79. A, agent of P, in excess authority ,entered into a contract in the name of P with X who knew of the lack of a. Barter c.Innomite contract
authority and P did not ratify the contract .The contract is: b. Sale d. Partly sale and partly barter
a. Rescissible b. Voidable c. Unenforceable d. Void
88. B ordered from S a pair of shoes of the kin d of style of which S has gone out of stock. There is:
80. S sold to B his land on January 10, 2001 .On January 15, an absolute deed of sale was executed and a. Contract for a piece of work c. Contract of agency
notarized. On January 20, the sale was registered with the Registry of Deeds. On January 25, B took actual b. Contract for a lease d. Contract of sale
possession of the land by building a fence thereon. When did B acquire ownership of the land?
a. On January 10 c. On January 20 89. S sold to B his land valued at P1M only for the price of P.7M, thus resulting to inadequate price. The sale is:
b. On January 15 d. On January 25 a. Rescissible c. Unenforceable
b. Voidable d. Valid
81. S sold to B his car on January 10, 2001 .On January 15, an absolute deed of sale was executed and
notarized. On January 20, the sale was registered with the LTO. On January 25, B took actual 90. S offered his land to B with the understanding that the latter shall fix the price, as agreed upon fix the
possession of the car .When did B acquire title to the car? price at P2M, although the lands market value was P1.5M.It is clear, therefore, that S is to benefit from the
a. On January 10 c. On January 20 transaction. Was there a sale
b. On January 15 d. On January 25 a. No perfected sale as there no consent on the price
b. There was perfected sale, fixed by buyer and accepted by the seller
c. Theres a valid sale since the buyer was authorized to fix the price
82. S sold to B his car with the agreement to deliver the same week after the sale on January 10, 2001.In this d. Voidable sale at the option of the buyer due to mistake in the fixing of the price.
case:
a. S may demand within reasonable time from the sale the payment of the price from B 91. Which of the following is not constructive in delivery sale?
b. S can demand payment only after he has delivered the car to B a. Traditio longa manu c. Thing is palced in the control and possession of the buyer
c. B may be demand delivery of the car even before the expiration of the one week period agreed upon b. Traditio costitum possession d. Traditio symbolica
once
he pays the price 92. In sale or return , the buyer becomes owner of the thing upon delivery while if on approval, trial or
d. Payment and delivery shall take place only after one week for the sale. satisfaction, after approval, express or implied.
Sale between husband and wife is void, unless there separation of property between them in the same
83. S sold to B his car with the agreement to deliver the same week after the sale on January 10, 2001.In this way that universal partnership between them is also void:
case: a. Both statements are true c. First is false, second is true
a. S may demand within reasonable time from the sale the payment of the price from B b. Both are false d. First is true, second is false
b. S can demand payment only after he has delivered the car to B
93. S sold to his B dog without knowledge that the animal was suffering from a disease at the time of the sale.
 Is the seller liable for breach of warranty against redhibitoria defect of animals? a. No, unless there was a prior consent of mortgage
a. No, because the seller was in good faith when he sold the animals b. Yes, stipulation prohibiting the sale without the consent of the mortgage shall be void
b. Yes, if he aware of the hidden fault or defect c. Yes, provided the mortgage notified before the sale
c. No, because animals unlike things easily can contact some illness d. No, if there was stipulation requiring prior consent.
d. Yes, and in good faith is not a defense to avoid liability
102. A, B, C are co-owner of a parcel land. A sold his share to B. Can C redeem the said share from B?
94. S sold to B a thing without knowledge that the thing suffered from a hidden defect. the parties agreed on a. No, unless he was notified of the sale prior its perfection
the waiver of the warranty by the buyer. Is the seller still liable for breach of warranty? b. No, legal redemption applies only if interest was alienated by onerous title to a third person
a. No, because of the valid waiver of warranty c. Yes, because the law frowns upon co-ownership
b. No, because he must return the price to the buyer without damages d. Yes, provided he pays b the price, expenses of the sale and necessary and useful expenses on the
c. Yes, because waiver refers only for, liability for damages thing
d. Yes, if the seller was in bad faith at the time the waiver was made sold.

95. S sold to B a thing with waiver warranty against eviction. Eviction took place subsequently. Is S still liable 103. A and B are co-owners of a parcel land. A donated his share to C. Can B redeem the said share from C?
for breach of warranty against eviction? a. Yes, because the law looks with disfavor at co-ownership
a. No, if it was waiver intencionada. b. No, because the legal redemption applies only in case of onerous alienation
b. No, if it were waiver consciente c. No, unless he enforced his right through court action
c. Yes, even if it was a waiver intencionada d. Yes, but in proportion to his interest in the land as co-owner
d. No, provided the seller was in good faith in entering into the contract of waiver of warranty against
eviction 104. D owes C a sum of money with M as mortgagor of his land to secure the loan. Is the mortgage valid even if
the
96. B brought from S a second motor vehicle which upon inspection by B has some mechanical troubles. After mortgagor is not debtor?
the sale, the car broke down due to engine trouble requiring an overhaul of engine. Is S liable for breach of a. Yes, provided the mortgagor of pledgor in case of pledge is the absolute owner of the property
warranty against hidden defect? mortgaged or
a. No, because the defect was not hidden but apparent upon inspection by B it being a second hand car pledged.
b. Yes, because there is no waiver for warranty against hidden defect b. Yes, provide it is in writing and registered.
c. Yes, because the seller was in bad faith c. No, the mortgagor/pledgor must be the debtor himself
d. No, because it was fault of the buyer in buying a used car d. No, unless the mortgagor is a co-debtor

97. In which of the following is sale not presumed equitable mortgage?
a. The price of the sale usually adequate
b.The vendor remains in possession of the thing sold.
c. The vendor allows the extension of the time to repurchase the thing sold
d. The purchaser retains himself a part of the purchase price
105. In three of the following cases, the agency is not revocable, except:
a. It is a means of fulfilling an obligation already contracted
b. Bilateral contract depends upon it.
c. It is coupled with interest common to the agent and principal
d. Partner is appointed manager in the articles of partnership and removal is without just cause.

98. S sold to B a car on installment wherein the latter mortgaged the same car as security for the price. Failing 106. If two or more principal appoint a single agent for a common transaction, the liability of the former shall
to pay the installments, the mortgage on the car was foreclosed. Is B still liable for any deficiency if the seller be solidary
fails to recover in the foreclosure sale? If two or more appointed by a single principal are jointly liable unless solidary is stipulated
a. Yes, because it is only in case of pledge is the debtor not liable for any deficiency a. Both statements are false c. First is false, second is true
b.Yes, if so stipulated upon the parties b. Both are true d. Second is false, first is true
c. No, unless agreed upon the parties
d.No, notwithstanding any stipulation to the contrary. 107. P authorized A to sell his products with 10% commission and 5% guarantee commission. A sold those to b
who failed
99. D mortgaged his car to C as security for loan. Failing in the payment of the loan, C foreclosed the chattel to pay despite the diligent efforts in collecting. Is A still liable for the purchase price?
mortgage and sold the car at public auction. In case of deficiency, is D liable for it? a. Yes, because of the guarantee commission given to him
a. Yes, in the absence of contrary stipulation b. No, because he was not at fault in the collection
b .No, because it would be unjust enrichment on the part of editor c. No, if he returns the guarantee commission
c. Yes, if so agreed upon by the parties d. Yes and he is not entitled anymore to the commissions.
d. No, unless stipulated
108. In three following case, the agent can appoint a substitute, except:
100. Based on the preceding case, suppose it was a pledge, would the debtor/pledgor be liable for the a. The principal authorized him to appoint substitute
deficiency b.The principal did not authorize him to appoint substitute
a. No, notwithstanding stipulation contrary c. Yes, if so agreed upon c. There is no stipulation as to the appointment of substitute
b. No, unless otherwise stipulated d. Yes, even if the absence of stipulation d. The principal forbids the appointment of a substitute

101. D mortgaged his parcel of land to C as security for loan. Fearing foreclosure of the mortgage due his 109. P appointed A and B as his agents for a common transaction and they agreed that the latter shall be
inability to pay the loan, D sold the land to X without the consent of C.Is the sale valid? solidary liable to the former for damages in case of violations of their obligations as such. When is the
agent 115. Which of the following is a not a prohibition on a limited partner?
at fault the only one liable for damages even if solidarity has been stipulated? a. Surname of a limited of a limited partner may not appear in the partnership name
a. If the other agent is not fault b. Limited partner may not take part in the control of the business.
b.Both of them shall be liable always since solidarity was agreed upon c. Limited partner may not contribute service.
c. If the one at fault shall answer for all damages d. Limited partner may not constitute his assignee as substituted limited partner.
d. If the one acted in excess of authority
116. A, B, and C as partners in a partners in a partnership stipulated and mutually agreed that A shall not
110. A,B and C entered in an oral partnership each contributing P1M each to the common fund plus other share in the
personal profits and losses. Is the agreement valid as among the partners only and not against third persons?
properties of the same amount and failed to register the partnership with the SEC. Is the partnership a. Yes, because among the partners it is valid to exempt one from sharing in the profits and losses.
valid? b. Yes, valid as long as third person are not prejudiced
a. No, because every contract of partnership having a capital of three thousand pesos or more in money or c. Not valid stipulation exempting a partner from sharing profits and losses.
d. Not valid against thirds persons or partnership creditors
property must be in public instrument and registered at SEC.
b. Yes, because public instrument is necessary only in case of contributions of immovable. 117. A newly admitted partner shall be liable for the pre-existing obligations of the partnership the time of his
c. Yes, because a partnership contract always be oral admission
d. No, because registration with SEC is essential for partnership to be valid and acquire juridical personality in favor of partnership creditors up to the extent of his capital contribution.
As an industrial partner shall not share in the losses and his share in the profits shall be just and equitable
111. P authorized A, a minor, to sell his car for P1M in cash. A sold the said car to X on installments at a lesser under the
price circumstances.
of P.9M is now repudiating the contract with X on the ground that he is not bound since X contracted a a. First statements are false, second statement is true c. Second statement is false, first is
minor true
who exceeded his authority. Decide. b. Both are true d. Both are false statements
a. P is liable under the contract because it is enough that the principal is capacitated since he is the one
entering 118. Three of the following dissolves a partnership, except:
into the contract a. Partnership business has become unlawful c. Expulsion of a partner
b. P is not liable for the sale of installments since it is unenforceable because his agent acted beyond his b.Death, civil interdiction or insolvency of a partner d. Partnership business can only be
powers carried on at a loss.
c. P is not liable because the agent is a minor with whom X contracted
d. P is liable provided the sale in cash for P1M 119. Special power of attorney is necessary in the following cases, except
a. To make such payments usually considered as acts of administration;
112. Partners A, B, and C contributed: A-P1M; B-P2M; and C-Service .After exhausting the partnership assets, b. To compromise, to submit questions to arbitration;
the creditors c. To bind the principal in a contract of partnership
still have a claim for P.3M.For much is the partners liable to the creditors being capitalists. d. Any other act of strict dominion
a. Only A and B are liable equally to the creditors being capitalists
b. Only A and B are liable at 1/3 and 2/3 respectively 120. A partner who is liable to the partnership for damages due to his fault may claim compensation if through
c. All of A, B, and C are liable pro pata to the creditors his
d. C is not being an industrial partner who is exempt from the losses. extraordinary efforts in other activities of the partnership unusual profits have been realized.
A partner shall debtor of the partnership if he fails, to deliver his promised contribution and shall be in
113. A and B are co-owners of a parcel of land from which they derive profits in equal sharing being co-heirs in delay from the
inheritance. time for demand from the partnership.
Is there a partnership? a. Both statements are false c. First is true, second is false.
a. There is a partnership because of the equal sharing of profits b. Second statement true, first is false d. Both are true
b. There is no partnership because co-ownership by itself does not establish a partnership despite the
sharing 121. A contributed P1M, B contributed P1M, and C contributed services. They agreed to divide profits and
of profits. losses equally.
c. There is no partnership since in partnership division of profits is not always necessary among partners. In case of loss of P.3M, for how much, if any, is C liable?
d. There is partnership they being co-owners and co-possessors a. Nothing, because an industrial partner is exempt from losses
b.P.1M but with reimbursement from A and B equally
114. A and B are partners in Ace partnership. While was performing his duties as a partner in the conduct of c. A and B alone shall shoulder the loss at Cs option
business, d. P.1M
he negligently caused damage to X, a third person. Who shall be liable to X and in what capacity?
a. Only the partnership shall be liable it being juridical person separate and distinct from partners 122. Suppose in the preceding case, there was no agreement as to profit loss sharing, what will be the share
b. Only A shall be liable for he is only the one at fault of C in the
c. Both A and B shall be liable solidarily to X. profit?
d. A, B and the partnership are all liable solidarily to X. a. Equal to the share of A and B; c. P1M
b. Just and equitable under the circumstances d. Court to fix his share
 c. It has the right of succession.
123. Based in the preceding number, what shall be his share in the loss? d. It has the powers, attributes and properties expressly authorized by law or incident to its creation.
a. Equal to the share of A and B; c. P1M
b. Just and equitable under the circumstances d. None 131. In three of the following cases, all shares have voting rights, except:
a. Election of directors c.Dissolution of the corporation
124. A subscribed 1,000 shares of stock of X Corporation and paid 25% of the said subscription. Can he vote all b. Increase or decrease of capital stock d. Merger or consolidation
his
subscribed shares? 132. At the annual meeting of the corporation for the election of five directors, A, B, C, D, E, F and G were
a. No, because the subscription has not been fully paid nominated.A, B,
b.No, because his shares have become delinquent shares. C, D, and E received the highest number of votes and thus proclaimed as elected F received ten (10) votes
c.Yes, as regards the paid percentage of the subscription less than E.
d. Yes, because shares although unpaid but not delinquent can be voted. Subsequently, E sold his shares to F.Who, between E and F has the right to attend as director?
a. E is the director because his term is one year until his successor is elected and qualified
125. X Corporation posted a P1M profit in its reality business and its real estate has appreciated in value to the b. F is the director because he has bought the shares of E
tune ofP4M. c. Both of them shall be directors
The board then declared the dividends computed on the basis of P5M representing profits and appreciation d. Neither of them shall be director
in value of its
real estate. It is dividend declaration valid? 133. ABC corporation has authorized capital stock of P1M divided into 50,000 common shares and 50,000
a. Not valid because there was no 2/3 ratification by the outstanding capital stock. preferred
b. Valid being base on profits and increments in the value of the corporate assets. shares. At its inception, the corporation offered subscription all the common shares. However, only
c. Not valid because dividends must come only from the profits 40,000 shares were
d. Valid if creditors do not subject or protest against the same. subscribed .Recently, the directors thought raising additional capital and decided to offer to the public all
the authorized
126. A subscribed to 100 shares of X corporation, paying 25% thereof. Despite the demand by for the issuance shares at their market value. Would X, the stockholder of 4,000 shares have pre-emptive right to the
of stock remaining 10,000
certificate, the corporation refuses to issue one corresponding to the 25% paid. Meanwhile, the corporation shares?
has become a. Yes because all the stockholders have pre-emptive right to all issues of shares of nay class in proportion
insolvent and A now refuses to pay his unpaid balance of subscription .Is the refusal to issue a stock to their
certificate valid? shareholdings
a. Not valid because stock certificate can be issued for the paid portion of the subscription b. No because pre-emptive right does not apply to unissued shares to be issued
b. Valid because stock certificate can only be issued after full payment of the subscription c. Yes because pre-emptive right applies only to the issuance of unissued shares
c. Valid as regards the unpaid percentage on the subscription d. No because he was waived this right when he subscribed to a part only of the issuance of shares
d. Not valid because only delinquent shares may be denied stock certificate
134. Based on the facts of the preceding number, would X also have pre-emptive right to the 50,000 preferred
127. Based on the facts in the preceding number, can A validly refuse to pay the unpaid balance on his shares?
subscription now that a. Yes, because all the stockholders have pre-emptive right to all issues of shares of nay class in
the corporation has become insolvent? proportion to their
a. No, under the trust fund doctrine for the protection of the creditors share holdings
b.No under the doctrine of piercing the veil of corporate fiction b. No, because pre-emptive right does not apply to unissued shares to be issued
c. Yes because of the insolvency of the corporation which also extinguished his obligation to pay the c. Yes, because pre-emptive right applies only to the issuance of unissued shares
balance. d. No, because X has waived his pre-emptive right to the issuance of preferred shares when he subscribed
d. Yes because of the denial of his right to stock certificate to the common
shares
128. The by-laws may provide that the holders of the majority of the outstanding capital stock shall elect all the
members of 135. The corporation has a nine-member board of directors. Two of the members sold their shares while to
the board. others are abroad.
The by-laws may provide that no officer of the corporation may be required to be the stockholder To have quorum, the number required is:
a. First statement is false, second it true c. Both are true a. Seven b. Five c.Three d. Four
b. Second is false, first is true d. Both are false
136. Which of the following requires the approval of majority of the outstanding capital stock?
129. Majority of the following must be residents of the Philippines, except: a. Investment of corporate funds in another business or corporation
a. Directors c. Incorporators b. Amendment, repeal or adoption of by-laws
b. Trustees d. Officers c. Dissolution of the corporation
d. Amendment of the articles of incorporation
130. Private corporations have the following attributes, except:
a. It is artificial being created by law. 137. A director of the corporation may be removed by:
b. It may be formed or created under special laws or charter a. Vote of majority of the outstanding capital stock c. Majority of the stockholders
 b. 2/3 of the stockholders d. 2/3 of the outstanding capital stock a. No, because the special indorsement of P has made the note to payable to order and must be endorsed
to negotiable
138. In the matter of management of corporation, this is supreme: b. Yes, because an instrument originally payable to bearer remains to be payable to bearer despite special
a. President c. Majority of the stockholders indorsement
b. Chairman of the Board of directors d. 2/3 of the outstanding capital stock made thereon.
c. Yes, because M, as maker, is absolutely liable to pay the instrument in the hands of any holder
139. Three of the following requisites for the existence of de facto corporation, except: d. No, because Y did not acquire title to the instrument due to lack of proper indorsement
a. Incorporated under valid value c. Actual use of corporate powers
b. Attempt in good faith to organize d. Existing law and in fact 147. The negotiable instrument is not discharged:
a. When the principal debtor becomes the holder thereof before, at, or after maturity in his own behalf;
140. Three of the following are required for incorporators, except: b. By the intentional cancellation of the instrument;
a. They must be natural person c. Not less than five or more than fifteen c. By payment in due course by the accommodation
b. All of legal age d. Majority must citizens of the Philippines d. B y any other act which discharges a simple contract for the payment of money.

141. A holder in due course has the following rights, except: 148. Payment by cession as distinguished from dation in payment
a. He holds the instrument free from defects of the title prior parties a. The debtor is not necessarily in a state of the financial difficulty
b. Free from defenses of prior parties among themselves b. The effect is to release the debtor for the net proceeds of the things ceded or assigned.
c. Enforcement payment against all parties liable thereon c. The property is alienated by the debtor to the creditor in satisfaction of a debt in money.
d. Holds the instrument as if it were non-negotiable d. What is delivered by the debtor is merely a thing to be considered as the equivalent of a performance of
the obligation.
142. Which of the following is not negotiable instrument?
a. Pay to the order of Pedro Cruz P1M (Sgd) Jose Santos To: A or B 149. A owes B 20,000 which he became due and payable last June 23, 2001. On that date, A offered B 10,000,
b. I promise to pay to the order of the bearer P1M. (Sgd) M the only
c. Due to bearer P1M of BMW car worth P1M at his option. (Sgd) M he then had, but B refused to accept the payment .A thereafter met C, Bs 23 year old son, to whom he
d. Pay to the order of myself P1M. (Sgd) D To: W gave the
10,000 with the request that he turn the money over to B. The money was stolen while Cs possession.
143. Three of the following are the requisites to be a holder in a due course except How much
a. That the instrument is complete and regular upon its face; may still recover from A?
b. That the holder took it in good faith and for value a. P 20,000 c. P 15,000
c. That he became the holder of it before it was due and without notice that it had been previously b. P 10,000 d. P-0-
dishonored if
such was the fact; 150. If a third persons pays an obligation. What are the rights, which are available to him if he pays the
d. That he had no knowledge of any fact which would impair the validity of the instrument or render it obligation with
valueless. the knowledge and consent of the debtor?
First answer He can recover from the debtor the entire amount, which he has paid.
144. A makes a note payable to B or order .The following are the indorses of the note in the order of their Second answer He subrogated to all of the rights of the creditor.
endorsements: a. Both statements are correct c. Only the first answer is correct
B, C, D, E, F (holder) and G (subsequent holder).The note is dishonored in the hands of F, who notifies B, b. Both answers are wrong d. Only the second answer is correct
C, D, E.Which
is not correct? 151. A, B, and C executed a promissory note binding themselves to pay 9,000 to X, Y, and Z. The note is now
a. The notice given by F to B operates to the benefit of C, D, E, and G due and
b. The notices to C inures to the benefit of D, E, and G demandable. Can creditors proceed against A alone for the payment of the entire debt?
c. The notices to D inures to the benefit of E and G a.No, each creditor can collect only 3,000 from A.
d. The notice to C inures to the benefit of B. b. Yes, either X, Y or Z can collect 9,000 from A.
c. No, each creditor can collect only 1,000 from A.
145. Which of the following is negotiable instrument? d. Yes, since the promissory note is silent with respect to the rights of the creditors, the obligation is
a. Pay to the bearer C P1M.Reimburse yourself out of the house rentals of my house in Manila. (Sgd)A To: B presumed to be
b. Pay to C or his order P1M out of the rentals of my house in Manila. (Sgd) A To: B and X solidary.
c. Pay to C P1M (Sgd) A To: B
d. Pay to the order of C and reimburse yourself out of the rentals of my house in Manila. (Sgd) A To: B and X 152. Using No.151, suppose that C is insolvent, can A and B be held liable for his share in the obligation?
a. Yes, the debt shall be presumed to be divided into as many equal shares as there are debtors.
146. M makes a note payable to bearer and delivers the same to P who endorses it to X in this manner: b.Yes, A and B will be liable proportionately.
Payable to X. (Sgd) P c. No, the debts are considered distinct from one another
Later X, without indorsing the note delivers the same to Y.The note is subsequently dishonored by M.May d.No, only either A and B but not both will be liable
Y proceed
against M for the note? 153. Using No.151, suppose that the obligation was about to prescribe, but X wrote a letter to A demanding for
a payment of
 the entire debt, will this have the effect of interrupting the running of the period of prescription? b. Proof of the contract and of its breach is sufficient prima facie to warrant recovery
a. Yes, because the demand made by X covers the entire debt and will therefore inure to the benefit of c. The negligence of the defendant is merely an incident in the performance of the obligation
the other d. These source of liability is the defendants negligent act or omission itself
creditors
b.Yes, insofar as A is concerned but not with regard to B and C. 163. Culpa is distinguish from dolo
c. No, because the demand should have been made to all the debtors a. Waiver of an action to enforce liability may be waived
d.No, all creditors should have made the demand. b. Liability may be reduced by the courts
c. There is deliberate intention to cause damage or prejudice
154. Using the No.153 and prescription sets in, how much can Y collect from A? d. Responsibility arising there from demandable
a. P 9,000 c. P 1,000
b. P 3,000 d. P-0- 164. A passenger on a truck was hurt but in a criminal case against the driver, said was acquitted. The victim
now
155. Using No.154, how much X can collect from A? Sues the owner of the truck for the culpa contractual. May suit still prosper?
a. P 9,000 c. P 1,000 a. No, this will constitute double jeopardy
b. P 3,000 d. P-0- b.No, the acquittal means that the guilty of the accused was not proven by proof beyond reasonable
doubt
156. Indivisibility as distinguished from solidarity. c. Yes, it is sufficient for him to prove the existence of the contract of carriage and the injuries suffered.
a. Plurality of the subject is indivisible d. Yes, provided he can prove the negligence of the driver
b. When the obligation is converted into one of indemnity for damages because of breach, the character
of the 165. If the obligor binds himself to perform his obligation as soon as he shall have obtained a loan from a
obligation remains certain bank.
c. Refers to the legal tie or vinculum This obligation is:
d. .Refers to the prestations without constitutes the object of the obligation. a. With a term c. With a period
b. With a suspensive condition d. With resolutory condition
157. When one of the parties has brought an action to enforce the instrument, he cannot subsequently ask for
its reformation 166. One is not a requisite needed in order that obligation shall be extinguished by loss or destruction of a
The injured party may seek rescission, even if after he has chosen fulfillment if the latter should become thing due
impossible. a. When the obligation is to deliver the house located at 123 Recto Avenue, Manila
a. True, true c. False, true b. When the thing is lost without the fault of the debtor
b. True, false d. False, false c.When the obligator is to deliver a brand new Honda Str colored orange
d.When the thing is lost before the debtor incurred delay
158. A source of obligation not arising from law
a. Negotiorum gestio c. Culps aquiliana 167. It presupposes not only that the obligor is bale, ready and willing but also more so, in the act performing
b. Solutio indebiti d. Contract his obligation.
a. Promissory note c. Tender of payment
159. The loss or deterioration of the thing intended as a substitute through the negligence of the obligor does b.Bill of exchange d. Obligation to sell
not render
him liable 168. A gets a loan of P1M from B which becomes due on October 1, 2003 and mortgaged his house as security
A person alternatively bound different prestations shall completely perform one of them for the debt.
a. True, true c. False, true On June 30, 2003, the mortgaged house completely destroyed by fire thru the fault of C. A week later, B
b. True, false d. False, false demanded
payment from A.Is Bs demand valid?
160. There being no express stipulation and if the undertaking is to deliver a determinate thing, the payment a. No, the destruction of the house was not thru the fault of A.
shall bemade b. No, the obligation is one with definite period which is deemed intended for the benefit of both debtor
a. At the domicile of the debtor and creditor
b. At the domicile of the creditor c. Yes, the debt becomes demandable unless A can give another security equally satisfactory
c.Wherever the thing might be at the moment the obligation was constituted d. Yes, the debt becomes demandable unless A can give another security equally satisfactory
d. Wherever the thing might be at the moment the obligation is to be fulfilled
169. An action impugn the acts of a debtor intended the defraud the creditor is
161. Demand is not needed to put the debtor in default, except a. Accion revindicatoria c. Accion redhibitoria
a. When demand would be useless b. Accion subrogatoria d. Accion pauliana
b. When the parties so stipulate
c. When time is of the essence 170. A owes B 11,000 due on July 2, 2003. B owes A 6,000 due on July 3, 2003 and 4,000 due on July 10,
d. When the fixing of the time is the controlling motive for the establishment of the contract 2003.B
Owes C 11,000 due on July 3, 2003 .On July 3, 2003 B cannot pay C so B assigns to C her credit of 11,000
162. Culpa aquiliana as distinguished from culpa contractual Against A, without the knowledge of A.On July 10, 2003 C tries to collect from A the 11,000.How much
a. Proof of due diligence in the selection and supervision of employees is not available as a defense can C compel A to pay?
 a. P 11,000 c. P 1,000 d. If S succeeds in collecting the 72,000 from N, N in turn can collect from R P20, 000 and from J P32, 000
b. P 9,000 d. P 1,000
180. A, a jeepney driver driving recklessly caused serious physical injuries to his passenger B and pedestrian
171. The contract must bind both contracting parties, its validity or compliance cannot be left to the will of one C.As a result,
of them, and Which of the following is not correct?
This is a. B may proceed against A for culpa criminal c. C may proceed against A for culpa aquiliana
a. Mutuality of contract c. Relativity of contract b. B may proceed against A for culpa contractual d.C may proceed against a for culpa criminal
b. Freedom of contract d.Obligatoriness of the contract
181. X, a bus driver driving negligently, killed his passenger B and pedestrian C. As a result
172. By this principle, contracts take effect only upon the contracting parties, their assigns or successors in 1. B may proceed against Xs employer and the source of liability is the crime committed by A or culpa
interest criminal
a. Mutuality of contract c. Relativity of contract 2. B may proceed against Xs employer and the source of liability is the breach of contract of carriage of
b. Freedom of contract d.Obligatoriness of the contract culpa
contractual
173. The statements Contracts shall be obligatory in whatever from the have been entered into provided all 3. C may proceed against X employer and the source of liability is the crime committed by A or culpa
the requisites criminal
a. Consensual contracts c. Formal contracts 4. C may proceed against X employer and the source of liability is the quasi-delict committed by A or
b. Real contract d. unilateral contracts culpa aquiliana
a. 1, 2 and 3 c.2, 3, 4
174. A contract with a person literally contracts with himself is b. 1, 2 and 4 d. 1, 2, 3 and 4
a. Adhesion contract c. Accessory contract
b.Auto contract d. Unilateral contract 182. There is novation of the obligation if
1. The period for payment is shortened from 5 years to 3 years
175. If the obligation of the debtor is I will pay you my debt after I have arrived from abroad.The obligation is 2. The period for payment is shortened from 3 years to 5 years
a. Valid c. Voidable a. True, true c.False, true
b. Void d. Unenforceable b. True, false d. false, true

176. When a third person assumes the payment of the obligation without the knowledge of the debtor but 183. In a blank indorsement, the indorser renders himself
with the consent a. Primarily liable c.Solidarily liable
Of the creditor, there is b. Secondarily liable d. Subsidiary liable
a. Delegacion c. Subrogation
b. Expromision d. Novation 184. Real and personal defenses may be raised between
a. Immediate parties c. Intervening parties
177. This obligation is demandable at once b. Remote parties d. Subsequent parties
a. With a suspensive condition c.When my means permit me to do so
b. With a period in diem d. When it depends on happening of specified event 185. This is a real defense
a. Fraud is inducement c. Want delivery of an incomplete instrument
178. The following are void contracts, except b. Want of consideration d. Duress in the absence of physical pressure
a. A contract whereby X promised to live as the common-law-wife of Y without the benefit of marriage in
consideration 186. A, with violence in her eyes, intimidated her husband B to sell his exclusive property to her. The contract
of P1, 000,000. of sale is
b. An agreement whereby A is to render service as a servant to B without compensation as long as A has a. Rescissible c.Unenforceable
not paid him b. Voidable d. Void
debt.
c. A stole in a contract of lease whereby B would not prosecute A consideration of 100,000 187. B, husband of A, in his capacity as head of the family, sold a parapheral property in her name to C,
d. A stipulation in a contract of lease whereby the landlord can go to court to eject the tenant in case of without As
failure of the Consent .The contract of sale is
latter to pay rent agreed upon a. Rescissible c. Enforceable
b. Voidable d. Void
179. N, R and J solidarily bound themselves to deliver to S a Honda motorcycle valued at 60,000.The obligation
was not 188. In 1999, at the age of 16, A sold his land for P4M payable at P1M in 1999, P1M in 2000, P1M in 2001 and
Fulfilled through the fault of J.Thereupon, S filed an action in court against N and the court awarded P1M in 2002.In
72,000 to S 2004, A wants to annul the contract on the ground of minority. Will his action prosper?
representing the value of the motorcycle plus damages. Which of the following situation is valid? a.No, A is allowed to ask for annulment of the contract only within 4 years from the perfection of the
a. If N pays S the 72, 000, N can collect from R and J 24,000 each contract
b. S has to collect 24,000 each from N, R and J to satisfy the courts award of 72,000 b. Yes, A has 4 years counted from the time he becomes of legal age to ask for annulment of the contract
c. N can refuse to pay the penalty because it should be charged against J, guilty party c. No, the acceptance of the installment payments amounted to ratification of the sale
189. This contract is without effect unless ratified 196. The is not negotiable
a. Marriage between first degree cousins c. Contract of sale between a guardian and his ward a. I promise to pay to the order of myself 10,000 signed by A, the maker
b. Contract of the sale between two insane persons d. Donation between husband and wife b. Pay to the order of the Commissioner of Internal Revenue 10,000 to ABC bank. Sgd.A
c. I promise to pay to order 10,000. Sgd. A
190. A offered to sell B 100 cartons of sardines at a specified price which was accepted by B and subsequently d. Pay to the order of X, Y and Z, P10, 000.To B Sgd. A
delivered
His letter of acceptance. In view of the shortage of the catch of sardines. A failed to deliver the 197. Every negotiable instrument is presumed to have been issued for a valuable consideration. The
commodities it had presumption is
Offered for sale. B decided to sue A. Which is correct? a. Prima facie c. Absolute
a. The acceptance of the offer only created an option to buy b. Conclusive d. Final
b. The absence of consideration distinct from the price makes the contract without any obligatory force
c. The acceptance of the offer to sell by showing the intention to buy for a price certain creates a 198. A issued a promissory note payable to B or order for 10,000 for 10 bottles of whisky sold by B to A. Later
bilateral contract to B
sell and buy. negotiated the note to C. Subsequently, A dissolved that only 5 bottles of whisky are genuine. As a result
d. The acceptance offer to sell constitute a binding contract of sale provided the option was supported by a. C can enforce the note against A for 10,000 regardless of whether C is holder in due course or not
sufficient b. C cannot enforce the note against A for 10,000 even if he is a holder in due course
consideration c. C can enforce the note against A for 5,000 regardless of whether C is holder in due course or not
d. C can enforce the note against A for 5,000 if he is not a holder in course
191. M makes negotiable promissory note for 10,000 with the name of the payable in blank. The note is stolen
by P who 199. A letter of credit is beyond the scope of the negotiable instrument law, because
Inserts his name as payee and then indorses the note to A, then A, to B, and B to C, who is a holder in due a. It is in favor a specified person or not to order
course b. It is an order to pay out of particular fund
On maturity, C cannot enforce the note against c. It is without an unconditional promise or order to pay a sum certain in money
a. M c. A d. It is not payable on demand or at a fixed or determinable future time
b. P d. B
200. Which of the following is not negotiable?
192. A issued a note payable to bearer .He delivers the note to B.B indorsed the note specially to C, then C a. Documentary Bill of Exchange c. Certificate of deposit
negotiates the b. Clean bill of exchange d. Postal money order
note by delivery to D. Which of the following is not correct?
a. D can enforce the note against C c. D can enforce the note against A 201. It contains an order to pay of a particular fund rendering the instrument beyond the scope of the
b. D can enforce the note against B d. D can enforce the note against B negotiable
instrument of law
193. This provision renders a note non-negotiable a. Bill of lading c. Certificate of stock
a. Promises to pay to the order of B the sum of US $ 1,000 payable in pesos at the rate of exchange b. Treasury warrant d. Warehouse receipt
prevailing on
August 14, 2002. 202. Omissions that do not effect the negotiability of an instrument, except
b. A promises to pay B 1,000 with 12% interest thereon. a. It is not dated
c. A promises to B 1,000 and all cost, charges and expenses including reasonable attorneys fees. b. Does not specify the value given
d. A promises to pay B 1,000 in two equal installments, the first payable on August 14, 2002 and the c. Does not specify the place where it is drawn
second on d. Does not name the payee where the instrument is payable to order
September 14, 2002.
203. A delivered to B the following instrument
194. Which of the following is not negotiable? One month after the date, I promise to pay to B 10,000. Sgd A B indorsed the note in blank before
a. I promise to pay B or order 10,000 on or before September 14, 2002 in payment of the purchase price maturity
of the and delivered it to C for value. When due, A refused to pay to C sued B. Could C recover from B?
merchandise a. No, C could not sue B and hold him liable as an indorser because the instrument is payable to a specified
b. Pay to the order of B 20,000 on or before September 14, 2002 and charge the same to my account. To person.
C, Sgd.A b. No, the instrument is not negotiable because it is neither payable to order or to bearer
c. Pay to the order of B 30,000 out of my deposit with you. To C Sgd.A c. Yes, provided C gives notice if dishonor to B, otherwise B is discharged from liability
d. Pay to the order of B 40,000 for payment under contract on or before August 14, 2002 To C, Sgd.A d. Yes, the endorsement will be considered as an assignment, hence B will be liable as an assignor of the
instrument
195. The following are negotiable except
a. Drawer A directs drawee B to pay C or order 10,000, 30 days after demand 204. A knowing that there is no such person by the name of B, makes out and signs a promissory note payable
b. Drawer A directs drawee B to pay C or order 10,000, 30 days after C passes the CPA board examinations to B or
c. A promises to pay B or order 10,000 within 30 days after the death of C order .A delivers the note to C. C in turn delivers the note to D without indorsement. Later, D delivers the
d. A promise to pay B or order 10,000 on before August 14, 2002 note
 to E, a holder in due course, which of the following is correct? a. Must own at least one share of stock
a. Being payable to order, the note can be negotiated by indorsement and delivery b. Must continuously own at least one share during his term as director
b. E has no right to collect from C because a person negotiating an instrument merely by delivery is liable c. Majority of the directors are citizens of the Philippines
only d. Ownership of shares of stock must be recorded in the books of the corporation
to the immediate transferee
c. E becomes holder only if D will indorse the instrument 213. Which of the following is the disadvantage of forming a corporation?
d. The instrument is not-negotiable because it is payable to the order of a non-existing person a. The free and ready transferability of ownership
b.The share holders are not liable for the debts of the business
205. A makes a negotiable note to bearer and delivers it to B for safe keeping. The note is negotiated by B to C. c. Because of the power of succession, the existence of the entity is not affected by the personal
Can A vicissitudes of the
refuse to pay C on the ground that the note was originally delivered to B for a special purpose only? individual stockholders
a. Yes A can prove that he delivered the instrument to B for special purpose d. The subservience of minority of stock holders to the wishes of the majority subject only to equitable
b.No where the instrument is in the hands of any holder, a valid delivery thereof by all parties prior to him restraints
so as to
make them liable to him is conclusively presumed. 214. The drawee bank may not refuse to pay checks drawn against it
c. Yes, because B negotiated the note without authority. a. If there is a stop payment issued by the drawer c. If the drawers deposits is insufficient
d. No, if C is a holder in due course b. If the drawer is insolvent d. When the bank receives notice of the
drawers death
206. A made a negotiable promissory note in favor of B who negotiated it C under the following
indorsementsPay to C 215. Which of the following is the characteristic of partnership as contract?
after passing the CPA examination in October 1999. At maturity of the note, C presented it to A for a. Preparatory c. Innominate
payment and b. Formal d. Gratuitous
it was duly paid; C did not pass the CPA examination. Which of the following is correct?
a. The promissory note is not negotiable because of the condition imposed 216. First statement If the surplus profits of the stock corporation reaches the level equal to its paid-up
b. The promissory note becomes negotiable because the condition was satisfied. capital, the
c. A had no right to pay C and therefore can compelled to pay again SEC may compel the corporation to declare dividends; otherwise it will be liable for surtax on improperly
d. A may disregard the condition and make a payment whether the condition is fulfilled or not. accumulated surplus

207. When the instrument is complete but undelivered, delivery is presumed to have been made in favor of the Second statement - In a corporation, two or more positions may be held concurrently by the same person
holder, the except
presumption is that no one person shall act as President and chairman of the board
a. Conclusive whether the holder in due course or for value a. Both statements are true c. Only first statement is true
b. Prima-facie whether holder in due course of for value b. Both statements are false d. Only second statement is true
c. Conclusive if holder for value and prima facie if holder in due course
d. Prima-facie if holder for value and conclusive. If holder in due course 217. First statement - The arrival of the term of a partnership with a fixed term or period shall not dissolve the
partnership
208. The indorser who simply signs his name renders himself liable to all subsequent holders as if the partners continue with the business of the partnership but such partnership maybe terminated
a. Primarily liable c. Secondarily liable anytime
b. Solidarily liable d. Subsidiary liable dependent on the will of the continuing partners.

209. There is no difference between a holder in due course and one who is not, since as regards them, real and Second statement - A partnership with a capital of 3,000 or more to money or property must be in a
personal public
defenses may always be raised if instrument and registered with the SEC in order for the partnership to be able to maintain an action, in its
a. Intervening practices c. Immediate parties own name
b. Remote parties d. Subsequent parties against third party
a. Both statements are true c. Only first statement is true
210. This a personal defense b. Both statements are false d. Only second statement is true
a. Absolute defense c. Real defense
b. Equitable defense d. National defense 218. After 3 years of operation, ABC, a domestic corp. wanted to declare dividends to its stockholders. The
treasurer
211. A note reads I promise to pay B or order 1,000, 30 days after B receives the proceeds of his loan from reported a net income after tax of P4 million. One million is being appropriated for the acquisition of the
ABC bank. machineries to
Sgd A. The instrument is be bought 2 months from now. The treasurer likewise reported an increase in the value of the land
a. Subject to a condition c. Payable on demand previously bought
b. Payable at a determinable future time d. Non-negotiable because the payment is indefinite to be used as plant site from 3million to 5million.What amount of dividend can be declared by the board?
a. 9 million c. 4 million
212. The following are qualifications of a corporate director, except b. 8 million d. 3 million
 228. The voting requirement needed in declaring cash or property dividend
219. When the goods are deliver to the buyer on sale or return for a period of seven days, ownership of the a. Majority vote the of Directors
goods passes to b.Majority vote the Board of Directors plus the vote of a majority of the outstanding shares
the buyer, c. Majority vote of the Board of Directors plus the vote of 2/3 of the outstanding shares
a. Upon perfection of the contract c. Upon expiration of seven days d. 2/3 votes of the directors plus a majority of the outstanding shares
b. Upon the delivery of the goods d. Upon acceptance by the buyer of the offer of the seller
229. D borrowed from C P1,000,000 to secure the payment of which the former verbally agreed to deliver his 4
220. This is not a fundament obligation of the agent hectare
a. To render an accounting of the transaction agricultural land by way of anticheresis and to pay 12% interst per annum. The conract of loan and
b. to subordinate his interest in favor of his principal if there is a conflict of interest antichresis
c. To borrow if is authorized to lend a.Are both valid
d. Not to carry out the agency, even if that is the instruction of the principal, if he it would result is a loss b.Both null and valid
or damage to c. The loans is valid but the anticheresis is null and viod
his principal d. The contract of antichresis is valid, but the loan is null and void.

221. Dacion en Pago as distinguished from sale 230. S and B agreed on the sale of a four hectare property at Macapagal Boulivard for the price of P15,000 per
a. The cause is the price squre meter
b. The object exist and specific on condition that if the price is not paid on a particular date, the sale will considered automatically
c. The is no pre-existing obligation cancelled. On the
d. The is a greater degree of freedom in fixing the price particular date agreed upon, B did not pay S, but B never asked for a judicial cancellation not made a
notarial act of
222. A distribution by a corporation of shares held it in another corporation is recission. In this case
a. Stock dividend c. Sale of capital assets a. The sale is cancelled as per agreement
b. Property dividend d. Sale of treasury stock b. S can validly refuse any subsequent offer to pay by B
c. B can still pay S the price
223. Any director of a corporation may be removed from office by a vote of d. B cannot anymore pay the price simply because the sale is cancelled due to his failure to pay on the
a. Majority of the members of the board c. 2/3 of the stockholders present stipulated date
b. Majority of the stockholders present d.2/3 of the outstanding capital stock

224. A contract as a rule must be in writing to be valid,

A tax payer is not entitled to interest on the overpayment of tax subject of a refund because an obligation
derived
from law is not presumed.
a. Both statements are true. c. First is false, second is true.
b. Both are false. d. Second is false, first is true.

225. D is indebited to C in the amount of P200,000 and delivers to C his diamond ring by way of pledge.If D
sells the same
diamond ring to T, when will T acquire ownership of the same?
a.From the time the sale is perfected between D and T
b. From the time T pays the price to D
c. From the time C consents to the sale between D and T
d.From the time T obtains actual possession of the diamond ring

226. A buyer may sue the seller for beach of warranty against hidden defects of things
a.Within 40 days from delivery of the thing sold
b. Within 6 months from delivery of the thing sold
c.Within 1 year from delivery of the things sold
d. Within of 4 years from discovery of the fraud

227.Which of these is not a special form of payment?

a. Application of payment
b. Dacion en pago
c. Cession en pago
d. Tender of payment and consignation