Business Law MCQ

1. A, B and C are good friends and agreed to form a universal partnership of profits
engaged in operation of Public Utility Jeeps. The partners contributed: A- 100 units of
PUJs; B-land (3,000 sq.m.); C-Fuel and oils. Which of the following is correct?
a. In case of loss due to fortuitous event, the partnership bears the loss.
b. The partnership becomes the owner of the things contributed.
c. The partners retain ownership of the things contributed; they, the partners, will
bear the risk of loss.
d. The partnership begins from the moment of the execution of the contract, except if
stipulated otherwise.
2. Which of the following statement is INCORRECT?
a. The creditor acquires real right to the fruits of the thing from the time they have
been delivered.
b. An oral sale of land made by the owner is unenforceable.
c. The buyer acquires real right to the fruits of the thing from the perfection of the
contract of sale.
d. A sale of land made by an agent without written authority from the owner is void.
3. A, 16 years old, sold his property to B, who did not notice the minority of the former.
One year later, B sold the property to C, who knew the minority of A. Can the minor
ask for the annulment of sale?
a. YES, because C is in bad faith.
b. NO, because B is in good faith.
c. NO, because B is not capable of returning the property.
d. YES, whether C is in good faith or in bad faith, because the title of B is voidable.
4. A promissory note reads “I promise to pay A, B, C and D P24,000.” Signed by E, F and
G. B can collect from E:
a. P24,000 b. P8,000 c. P6,000 d. P2,000
5. Today, S sold to B in S’s name the land of O, without authority. B bought the land in
good faith. The contract provides that the delivery will be 30 days from today. The
contract is:
a. VALID, if S owns the land on the day of delivery
b. VOID, because S was not the owner of the land when the contract was perfected
c. UNENFORCEABLE, because S had no authority to sell the land
d. VOIDABLE, because S is guilty of fraud
6. A, B and C are solidary debtors of D for P90,000; where the due date is on April 1,
2013. On January 1, 2013, A paid D P90,000. Later, A demanded reimbursement from
B. If B effects reimbursement to A on July 1, 2013, which of the following is CORRECT?
a. B pays A P60,000 plus interest from January 1 to July 1.
b. B pays A P30,000 plus interest from January 1 to July 1.
c. B pays A P30,000 plus interest from April 1 to July 1.
d. B pays A P45,000 plus interest from April 1 to July 1.
7. S sold his agricultural land to B for P1M. The FMV is P1.5M. B paid S in counterfeit
peso bills. The sale is:
a. VOID, because the cause is illegal.

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 b. VALID, because the cause is the selling price of P1M.
c. RESCISSIBLE, because of lesion which is more than ¼ of the value of the property.
d. VOIDABLE, because of the fraud committed by B.
8. As regards cash dividend, which of the following is CORRECT?
a. Declared by the board by majority vote and ratified by majority of stockholders
b. Declared by the board by majority vote and ratified by 2/3 of stockholders
c. Declared by the board by majority vote and need not be ratified by stockholders
d. Declared by the board by 2/3 vote and need not be ratified by stockholders
9. A borrowed from B P2M and to secure its payment, A orally agreed to deliver his 8
hectare agricultural land by way of antichresis and to pay 12% interest per annum.
Which of the following is CORRECT?
a. The contracts of loan and antichresis are both VALID
b. The contract of loan is VALID; the contract of antichresis is VOID
c. The contract of antichresis is VALID; the contract of loan is VOID
d. Both contracts of loan and antichresis are VOID.
10. The following are elements of contracts of pledge and mortgage, EXCEPT:
a. Both are accessory contracts
b. Both are real contracts
c. Both cannot exist without a valid obligation
d. In case of default, the creditors cannot appropriate the things pledge/mortgaged
11. Which of the following statements is INCORRECT?
a. An agreement to constitute commodatum is binding and is perfected from the
moment there is meeting of minds.
b. Fixed, savings and current deposits of money in banks and similar institutions
shall be governed by the provisions concerning mutuum.
c. Precarium is a kind of commodatum where the bailor may demand the thing loan
at will.
d. In case of extraordinary expenses, the debtor in mutuum will shoulder 50% if he is
in actual use of the thing borrowed.
12. A contributed P1M, B contributed P1M and C contributed services. They agreed to
divide the profits and losses equally. In case of loss of P3M, how much, if any, is C
liable?
a. NOTHING, because an industrial partner is exempt from losses
b. P1M but with reimbursement from A and B equally
c. A and B should shoulder the losses equally at P1.5M each
d. P1M, as stipulated
13. As regards to corporate by-laws, which of the following is TRUE?
a. To adopt, amend or repeal, 2/3 of the outstanding capital stock is needed
b. To delegate to the Board of Directors the power to amend, repeal or adopt new by-
laws, majority of the outstanding capital stock
c. To revoke the power delegated to the board to amend, repeal or adopt new by-
laws, 2/3 of the outstanding capital stock
d. To amend, repeal or adopt new by-laws, majority of the outstanding capital stock
14. A contract of antichresis is:

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 a. A contract of mortgage whereby possession of the mortgage property is given to
the creditor
b. A contract of loan secured by a real property; where possession is retained by the
debtor
c. A contract of loan without security
d. A consensual contract as it is perfected by mere consent
15. A subscribed to 1,000 voting shares of stock of X corporation. She paid 25% of the
said subscription. During the stockholders meeting, can A vote all her subscribed
shares?
a. NO, because the subscription has not yet been fully paid
b. NO, because A’s shares have become delinquent which cannot be voted
c. YES, as to the paid percentage of subscription
d. YES, because unpaid shares not delinquent can be voted
16. To defraud his creditor, A sold his property to B (in good faith). Later, B sold the
property to C, who was in bad faith. May the creditor rescind the sale?
a. YES, because C is in bad faith
b. NO, because B is in good faith
c. NO, because B is not capable of returning the property
d. YES, because the contract is rescissible
17. A was having his house repaired by B, who needed construction materials, so A orally
told the seller C, “give B the materials, I shall be responsible. I shall pay in 30 days”. C
delivered the materials. As a result:
a. The contract is unenforceable because A made an oral agreement to answer for
the debt of B
b. The contract is enforceable because A did not make a special promise to answer
for the default of another person
c. The contract shall be enforceable if there is ratification by A
d. The contract shall be unenforceable if the value is at least P500
18. Under the Negotiable Instrument Law, to be a holder in due course, the holder must
have acquired the instrument before it is overdue. Does this apply to the payee to
whom the maker issued an overdue note?
a. YES, because the payee is still considered a holder
b. YES, because issuance to the payee is not considered a negotiation
c. NO, because the law does not distinguish between payee and subsequent holder
d. NO, because the payee is privy to the contract between himself and the maker
19. In 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. With written authority from his principal, the agent sold orally the land of the
principal. The sale is:
a. Rescissible b. Voidable c. Unenforceable d. Void
21. Without authority from B, A orally sold B’s house in B’s name. The sale is:

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 a. Rescissible b. Voidable c. Unenforceable d. Void
22. S sold to B his land on September 19, 2010. On September 25, an absolute deed of
sale was executed and notarized. On September 30, the sale was registered with the
Registry of Deeds. On October 5, B took actual possession of the land by building a
fence thereon. When did B acquire ownership of the land?
a. September 19 c. September 30
b. September 25 d. October 5
23. S sold to B his car on September 19, 2010. On September 25, an absolute sale was
executed and notarized. On September 30, the sale was registered with the LTO. On
October 5, B took actual possession of the car. When did B acquire title to the car?
a. September 19 c. September 30
b. September 25 d. October 5
24. A and B are co-owners of a parcel of land. A donated his share to C. Can B redeem the
said share from C?
a. YES, because the law looks with disfavor at co-ownership
b. NO, because legal redemption applies only in case of onerous transfer
c. NO, unless he enforce his right through court action
d. YES, but in proportion to his interest in the land as co-owner
25. D owes C a sum of money with M as mortgagor of his land to secure the loan. Is the
mortgage valid even if the mortgagor is not the debtor?
a. YES, provided M is the absolute owner of the property mortgaged
b. YES, provided it is in writing and registered
c. NO, the mortgagor must be the debtor himself
d. NO, unless the mortgagor is a co-debtor
26. In three of the following cases, the agency cannot be revoked without a just cause,
EXCEPT:
a. It is a means of fulfilling an obligation already existing
b. A 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
27. P appoints A as guarantee commission agent to sell his products. A sold the same to
B, who failed to pay despite the diligent efforts of A in collecting. Is A still liable for the
purchase price?
a. YES, because of the guarantee commission given to him
b. NO, because he was not at fault in the collection
c. NO, if he returns the guarantee commission
d. YES, but he is not entitle anymore to the commission
28. P appointed A1 and A2 as his agents for a common transaction and they agreed that
they shall be solidarily liable to P for damages in case of violations of their obligations
as such. When is the agent at fault the only one liable for damages even if solidarity
has been stipulated?
a. If the other agent is not at fault
b. Both of them shall be liable always since solidarity was agreed upon
c. If the one at fault shall answer for all the damages
d. If the one at fault acted in excess of authority

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 29. A, B and C entered into an oral contract of partnership each contributing P2M each to
the common fund but failed to register the partnership with the Securities and
Exchange Commission. Is the partnership valid?
a. NO, because every contract of partnership having a capital of three thousand pesos
or more in money or property must be in public instrument and registered with
the SEC
b. YES, because public instrument is necessary only in case of contributions of
immovables
c. YES, because a partnership contract does not require a specific form to be valid
d. NO, because registration with the SEC is essential for a partnership to be valid and
acquire juridical personality.
30.A and B are co-owners of a parcel of land from where they share the profits equally as
co-heirs in inheritance. Is there a partnership?
a. There is a prima facie presumption of 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 prima facie presumption of partnership they being co-owners and co-
possessors
31.A and B are partners in AB Partnership. While A was performing his duties as a
partner in the course of business, he negligently caused damage to X, a third person.
Who shall be liable to X and up to what extent?
a. Only the partnership shall be liable it being a juridical person separate and distinct
from the partners
b. Only A shall be liable for he is the only one at fault
c. Both A and B shall be liable solidarily to X
d. A, B and AB partnership are all liable solidarily to X
32.A, B and C as partners in a partnership stipulated that A shall not share in the profits
and losses. Is the agreement valid?
a. YES, among the partners but not valid to third persons
b. YES, valid as long as third persons are not prejudiced
c. Not valid stipulating exempting a partner from sharing in the profits and losses
d. Not valid as against third persons or partnership creditors
33.In the matter of management of the corporation, this is supreme:
a. President c. Stockholders
b. Chairman of the Board d. Board of Directors

For questions # 34-37.

A promissory note reads: “I promise to pay P or order P100,000. Signed M.” The
promissory note was issued by M to P in payment of merchandise purchased from P.
However, P delivered only worth P60,000. Later P made a qualified indorsement to A, who
was not aware of the partial absence of consideration. Thereafter, A made a special

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indorsement to B, then B made a blank indorsement to C. Both B and C are aware of the
partial absence of consideration.

34.In the hands of A, A can collect from M:

a. P100,000 b. P60,000 c. P40,000 d. P0
35.In the hands of B, B can collect from M:
a. P100,000 b. P60,000 c. P40,000 d. P0
36.Using the preceding number, if M dishonors the note, B can collect from P:
a. P100,000 b. P60,000 c. P40,000 d. P0
37.In the hands of C, C can collect from M:
a. P100,000 b. P60,000 c. P40,000 d. P0

38.Which of the following is not negotiable?

a. I promise to pay P or order P100,000, 30 days after date; Signed M
b. I promise to pay P or bearer P100,000; Signed M
c. Pay to P or order P100,000 on December 25, 2011; Signed M
d. Pay to P or bearer P100,000 and charge the same against my deposit with you;
Signed M to Y

For questions # 39-40.

M made a negotiable promissory note payable to the order of P. Later P made a special
indorsement to A. Then B stole the note from A and indorsed it to C who received the note in
good faith. Later C indorsed the note to D.

39.Which of the following is CORRECT?

a. D can collect from M but not from A
b. If M will not pay, D can collect from P
c. A can collect from M
d. C can collect from indorsers P and B
40.Using the preceding number, if M pays D in good faith, which of the following is
CORRECT?
a. The obligation of M is extinguished
b. A can collect from M
c. The obligation of P is extinguished
d. A should collect from B, the thief
41.Determine from the following the INCORRECT statement:
a. The vendor is bound to deliver the thing sold and its accessions and accessories in
the condition in which they were upon the perfection of the contract

b. All the fruits of the thing sold shall pertain to the vendor from the day on which
the contract was perfected

c. The vendor shall not be bound to deliver the thing sold if the vendee has not paid
the price, if no period for the payment has been fixed in the contract

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 d. The vendor is bound to transfer the ownership of and deliver, as well as warrant
the thing which is the object of sale

42.In December, 2013, Malou promised to give Bruha her land if she (Bruha) passes the
2014 CPA Board Examination. If the condition is fulfilled, is there an obligation for
Malou to give the fruits for the waiting period (period of promising till the passing of
the Board Examination):

a. Yes, in obligation to give, once the condition is fulfilled, the obligation shall retroact
from the day of the constitution of the obligation.

b. Yes, the creditor shall appropriate the fruits and interest, unless there is contrary
intent.

c. No, if the obligation is unilateral, the debtor shall appropriate the fruits and interest
unless there is contrary intent.

d. Malou and Bruha will divide the fruits equally

43.General rule, annulment must be brought within 4 years, from the following,
determine the correct statement as to the reckoning point of the prescriptive period:

a. In cases of intimidation, violence and undue influence, the period begins from the
time the defect in the consent arises

b. In case of fraud, the period begins to run from the discovery thereof

c. In case of mistake, the period begins to run from the time it was committed

d. In cases of contracts entered into by minors or incapacitated persons, the period

begins from the time the guardianship arise

44.On July 4, 2013, Abraham, a movie producer, met Beautiful, a movie actress at the
lobby of Victoria Court Motel. The former told the actress that he is producing a
movie, the filming of which will start on December 25, 2013; and he is offering the
lead role to her for P5K talent fee. The actress accepted the offer and immediately
thereafter, the movie producer gave the former P1K as partial payment of the talent
fee. On December 25, 2013, the producer called on the actress to start filming the
movie but she refuses, stating among others that she cannot honor the agreement,
and it is unenforceable, not being in writing. Choose the best statement:

a. The contract is enforceable because it was mutually agreed upon

b. The actress can be compelled to shoot the movie because she has accepted the benefit
(partial)

c. Because the contract was made orally, the actress can just return what she has
received

d. Because it is an obligation to do, the movie actress is not bound by her agreement.

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45.ANDRES, the husband of BEA, uses force and violence to have her necklace sold and
delivered to CONCHA, who acted in good faith. BEA suffered bruises and lesion of
more than 25% of the value of the property. The best statement:

a. BEA can ask for rescission because of the lesion she suffered aside from the bruises

b. The contract is voidable because the consent was vitiated

c. The contract of sale is without defect, hence CONCHA acquired good title over the
necklace

d. The contract is void because husband and wife cannot sell property to each other

46.Payable in twelve (12) equal installments, A sold B a colored TV for P12K. The
contract provides that upon failure to pay any installment due, the whole balance
becomes due and demandable. A chattel mortgage was likewise executed by the
parties. When B defaulted on the 8th and 9th installments, A sued B for the whole
balance. The TV set was levied and sold for a value P2K short of what was due to A. Is
the recovery of the deficiency possible?

a. Yes, if there was stipulation to that effect

b. Yes, even though there was no stipulation to that effect

c. No, any stipulation allowing recovery is void

d. No, if there was no stipulation to that effect

47.A valid stipulation:

a. A promises to give B P10K, and if A fails, A will allow B to have sexual intercourse
with her

b. A will give B P10K, if B will kill C

c. A agreed to give B a house and lot if B will be his mistress

d. A agreed to put poison on the food of B’s wife, and if A fails, he will give B P10K for
damages

48.A contract perfected by delivery of the object:

a. Contract of Sale c. Contract of Loan

b. Contract to make a pledge d. Contract to make a commodatum

49.There is novation of the obligation if the period for payment is:

i. Extended from 3 to 5 years

ii. Shortened from 5 to 3 years

a. True, True b. True, False c. False, True d. False, False

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50.A, with the use of force and intimidation succeeded in having carnal knowledge with
B. Later, with anger in her eyes, B threatened to sue A if the latter will not marry her.
The marriage is:

a. Valid, because the threat of B was founded upon a legal act

b. Voidable, because the consent of A was secured through intimidation

c. Unenforceable, because both were guilty of intimidating each other

d. Void, because the consideration for marriage is illegal

51.P appointed A as his agent orally to sell his lot for P200K. Ten days later, A sold the
same for P300K through a public instrument executed by him and B. Effect and status
of contract between A and B:

a. The sale is valid because A was authorized and it was executed in a public document

b. The sale is unenforceable, because the agent went beyond the scope of his authority
for selling the land for a price higher than the agreed amount

c. The sale is void because there was no valid appointment of A as the agent of P

d. The sale can be ratified although the appointment of A was done orally, because the
sale between A and B was in public instrument

52.When a borrower uses the thing for a purpose different from the intended or delays
its return to the owner or receives the thing under appraisal or lends it to third
person or saves his property instead of the thing in case of emergency, shall be liable
even in cases of fortuitous events, because:

a. The nature of the obligation requires assumption of risk

b. The parties have expressly stipulated on such liability

c. The debtor is in delay

d. The law expressly so provides

53.A sold his car to B payable in ten equal monthly installments, with a mortgage
constituted on the same. This statement is correct if B fails to pay a month’s
installment:

a. A may foreclose the mortgage on B’s car but he can no longer has the right to recover
the balance should it be sold for an amount lower than what he claims from B

b. A may seek the cancellation of the sale made to B

c. A may seek fulfillment of the obligation of B to pay the entire purchase price

d. A may seek the cancellation of the sale and later on foreclose the mortgage should he
finds it impossible to collect from B

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54.A statement is false in this case:

a. In contract to sell, ownership is not transferred to the buyer despite delivery

b. Stoppage in transitu can be exercised by the unpaid seller if the buyer is insolvent and
the vendor has not yet parted with the thing sold

c. The price is considered certain if it is in reference to another thing certain

d. Dock warrant is an example of a negotiable document of title

55.S1. In novation by way of delegacion, there is revival of the original debtor’s

obligation if the new debtor is insolvent at the time of delegacion and such insolvency
is publicly known though not known to the old debtor.

S2. In novation by way of expromission, there is revival of the original debtor’s

obligation if the new debtor’s insolvency is known to the original debtor and also
known to the public.

a. Both statements are true c. Only statement 1 is true

b. Both statements are false d. Only statement 2 is true

56.A was obliged to pay B P1M on December 31, 2013. A paid B on December 31, 2012
believing that the obligation was already due and demandable. How much may A
recover from B on March 31, 2014?

a. Nothing c. P1M plus legal interest for 1 year

b. Legal interest for 1 year & 3 mos. d. Legal interest for 1 year

57.A promissory note reads: “I promise to pay B P100K on October 31, 2013. Sgd A”. B
transferred the note to C. Later, X stole the note and transferred the same to Y who
received the note in good faith. On maturity date, Y presented the note to A and
demanded payment. A paid the note in good faith. In this case:

a. C can recover from A c. A’s obligation is extinguished

b. C can recover from B d. C can recover only from either X or Y

58.A is indebted to B in the amount of P500K, with C as guarantor. On due date, A

tendered payment to B but the latter refused. A deposited the amount in court, and
after approval of the consignation, A withdraws the money with the consent of B.
From the following, choose the best answer:

a. B lost the right to collect as A’s obligation is extinguished

b. B lost all the preference she might have over the amount deposited but C is still liable
as guarantor

c. B lost the right to collect from A, likewise from C, the guarantor

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d. B lost all the preference she might have over the amount deposited and the guarantor
is released

59.This phrase means: “the things speaks for itself”:

a. Res Perit Domino c. Respondent Superior

b. Res Ipsa Loquitor d. Primus Inter Pares

60.A is obliged to give his only horse or his only cow to B, at B’s option on July 30, 2013.
On July 27, 2013, the horse died due to the fault of A. This is correct:

a. The obligation is converted into simple obligation

b. A is liable for damages

c. B may demand the delivery of the cow but A will not pay damages

d. A is liable for the value of the horse plus damages

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