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

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

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.
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 1 is true.

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

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.
a. True;true b. true;false c. false;false
d. false;true

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
a. Rescissible b. voidable c.
unenforceable d. Void

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
 a. Rescissible b. voidable c.
unenforceable d. Void

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.
a. Both statements are true.
b. Both statements are false.
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.
a. True;true b. true;false c. false;false
d. false;true

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.
d. None of the above.

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

64. Which of the following statements is false?

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.
a. True; True b. True; False c. False; False
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.
a. True; True b. True; False c. False; False
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.
d. All of the above.

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.
a. True; True b. True; False c. False; False
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.
a. True; True b. True; False c. False; False
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.
a. True; True b. True; False c. False; False
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.
a. True; True b. True; False c. False; False
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.
a. True; True b. True; False c. False; False
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.
a. True; True b. True; False c. False; False
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
d. None of the above