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Business Law: Pre-week Lecture

1. 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 negligent of the defendant is only an incident in the performance of obligation. d. The source of liability is the negligent act of the person causing damage to another. 2. A, B, and C executed a promissory note in favor of D, E, and F in the amount of 9,000. Can the creditors proceed against A for the payment of the entire loan? a. No, each creditor can only collect P3,000 from A. b. Yes, anyone of the creditors can collect the entire P9,000 from A. c. No, each of the creditors can only collect P1,000 from each of the debtors. d. Yes, because the obligation is presumed to be solidary. 3. In the preceding problem, suppose C is insolvent, can B and A be held liable for his share in the obligation? a. Yes, because the obligation is presumed to be joint and several. b. Yes, but A and B shall be liable proportionately. c. No, because of their joint liability and therefore the debts are distinct from one another. d. No, because only either of them can be held liable for the share of C. 4. Still in the preceding problem, suppose the obligation is mixed solidarity can one of the creditors demand payment of the whole debt from anyone of the debtors? a. No, because the debts are distinct and separate from one another. b. Yes, because it is as if there is only one obligation. c. Yes, provided all of them demand from all of the debtors. d. No, because despite solidarity, a debtor is liable only for his share. 5. Joint liability as distinguished from solidarity: a. Liability of the subject is indispensable. b. Refers to the creditors and/or debtors. c. May either be passive or active. d. Refers to the prestation which constitutes the object of the obligation. 6. Under the Negotiable Instruments Law, to be holder in due course, a person must have acquired the instrument before it is overdue. Does this apply to the payee to whom the maker issued an overdue note? a. Yes, because the payee is still considered a holder under the law. b. No, because issuance to the payee is not considered a holder under the law. c. Yes, because the law does not distinguished between payee and subsequent holder. d. No, because the payee is privy to the contract between himself and the maker. 7. When one of the parties has brought an action to enforce the contract, he cannot subsequently ask for its reformation. 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

8. The creditor has real right to the fruits of the thing from the time they have been delivered. The buyer acquires real right to the fruits of the thing from the perfection of the sale. a. True, true b. True, false c. False, true d. False, false

9. In a natural obligation, the creditor has the right to enforce the performance thereof it being based on positive law. Solutio indebiti and negotiorum gestio are quasi-contracts that give rise to civil obligations. a. False, false b. False, true c. True, true d. True, false

10. An oral sale of land made by its owner is unenforceable. Sale of land made by an agent without written authority from the owner thereof is void. a. False, false b. False, true c. True, true d. True, false

11. A contract as a general rule must be written to have force and effect as a valid agreement A formal or solemn contract is one that must be in writing to be valid a. True, true b. False, false c. False, true d. True, false

12. A contract of partnership where immovable are contributed must be in public instrument to be valid. A limited partnership must be SEC registered to be valid. a. False, true b. True, false c. False, false d. True, true

13. The principle of autonomy of contracts means that the contacting parties as a rule may agree upon any stipulation, clause, term and condition. 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, trued. True, false

14. Antichresis must be in writing and involves only immovables. In pledge and Recto Law there is no deficiency liability. a. False, false b. True, true c. False, trued. True, false

15. A contract entered into by a minor is void. A contract where the amount involved exceeds P500.00 must be in writing to be valid. a. True, true b. False, false c. False, trued. True, false

16. A de facto corporation is one which is not registered with the SEC. In corporation by estoppel, those who misrepresented themselves as forming a corporation are liable as general partners. a. False, false b. True, true c. False, true d. True, false

17. If the obligation is solidary, it means there is mutual guaranty among the debtors and therefore the insolvency of one is shouldered by the others. Solidarity may exist although the debtors may not be bound by the same term, condition and manner of performance. a. False, false b. True, true c. True, falsed. False, true

18. In dation in payment, the creditor becomes the owner of the property ceded as payment of the debt. 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. True, false

19. In tender of payment and consignation, the refusal without valid reason of the creditor to accept the payment of the debtor will extinguish the obligation. 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. a. False, false b. True, true c. False, true d. True, false

20. A corporation can be a stockholder but not an incorporator. To be a de jure corporation, it musty be existing in law and in fact unlike a de facto one which exists in fact but not in law. a. True, true b. False, false c. False, true d. True, false

21. It is indispensable for quasi-delict to exist that there is no pre-existing contractual relation between the parties. The unpaid seller cannot recover the thing sold from an innocent purchaser for value. a. True, true b, False, false c. True, falsed. False, true

22. Which of the following is not an essential element of an obligation? a. Obligor b. Efficient cause c. Presentation d. Creditor

23. It is an obligation which is based on positive law gives a right to enforce its performance a. Natural obligation b. Civil obligation c. Moral obligation d. Legal obligation

24. Which of the following is not a source of an obligation? a. Law b. Contracts c. Delicts d. Damages e. Quasi-contracts

25. Obligations derived from law are presumed except those found in the Civil code or in special laws. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. a. Both statements are true b. First is false second is true c. Both are false d. First is true, second is false

26. This is a principal kind of quasi-contract arising out of payment by mistake or undue performance of an obligation a. Solutio indebiti b. Negotiorum gestio c. Other quasi-contract d. Quasi-delict

27. Which of the following is not a civil liability arising from delict? a. Indemnification for consequential damages b. Rescission c. Reparation d. Restitution

28. In quasi-contract there is no consent of the parties thus preventing a meeting of minds between them. In quasi-delict there is no intention on the part of a person doing wrongful act or omission causing damage to another. a. First is false statement, second is true. b. First is true, second is false. c. Both are true. d. Both are false

29. This is the kind of diligence that the obligor must observe in the performance of his obligation to give something. a. Diligence of a good father of a family. b. Extraordinary diligence of a good father of a family c. Diligence of a father of a god family. d. Diligence of a good father of a family even if the law or the stipulation requires another standard of care. 30. The creditor acquires a real right against the debtor from the time the thing should have been delivered. The fruits of the thing shall pertain to the creditor from the time they should have been delivered to existing after the obligation to deliver the principal thing arises. a. Both statement are false. b. Both are true. c. First is false, second is true d. First is true, second is false. him, that is, he has personal right to demand delivery of the fruits

31. In the obligation to deliver a thing, the debtor has to deliver also the accessories and accessions if they have been mentioned. In obligation to do, specific performance of the debtors obligation is not available as a right of the creditor to demand from the obligor. a. First statement is false, second is true. b. First is true, second is false. c. Both are false. d. Both are true.

32. Which if 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 proves; d. When demand would be useless.

33. Liability foe damages in the performance of an obligation arises from the following, except: a. Negligence b. Acts or omissions punished by law c. Delay d. Fraud

34. Liability fro damages arising from fraud is demandable and there can be a waiver of an action for past fraud. There can be waiver of an action for future negligence but not fraud. a. Both statement are false. c. First statement is true, second is false. b. Both are true. d. Second is true, first is false.

35. A obliged himself to deliver the cans of powdered milk of 8 from Pangasinan to Manila. While his truck was traveling on the North expressway, it was hi-jacked by a band of robbers who also took the cans of milk belonging to B. Is A liable for the loss of the goods? a. No, because they were generic things and as they cannot be 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. 36. 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. 37. D borrowed from C a sum of money with a stipulated rate of interest to be paid in three equal monthly installments from January to March. D paid an amount for which the latter issued a receipt stating that the payment is for the month of February. In this case: 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 disputably presumed paid. d. The installment for the month of January is presumed paid. 38. In the preceding case, suppose the receipt does not mention the payment of the interest, it is: a. Conclusively presumed the interest has been also paid. b. Not presumed paid unless proven otherwise. c. Prima facie presumed to have been paid. d. Presumed disputably that only the principal has been paid. 39. Three of the following are the rights of the creditor against the debtor who fails to pay his debt, except: a. Attachment of the debtors properties or garnishment thereof; b. Subrogation to the rights of the debtor against third persons; c. Rescission of contracts entered into by the debtor to defraud him; d. Send the debtor to jail for non-payment of his debt. 40. Rights acquired in virtue of obligations are transmissible only if so stipulated by the parties. The law of the stipulation of the parties to an obligation may provide that the rights acquired by virtue thereof are not transmissible. a. First statement is false, second is true. b. Second is false, first is true. c. Both are false. d. Both are true.

41. D borrowed a sum of money from C promising to pay after the arrival of the vessel Baliktaran from Cebu. The vessel failed to arrive due to some fortuitous event and without the fault of D. Ds obligation to pay is subject to a: a. Suspensive condition and therefore not demandable since the vessel did not arrive. b. Not a condition nor a period but rather is pure obligation and therefore is demandable at once. c. Resolutory condition and therefore extinguished upon the failure of the vessel to arrive. d. Period which the court may fix. 42. Impossible, unlawful, immoral conditions are not valid and not demandable except the obligations which depend upon them. Potestative condition to be void must both be suspensive and dependent on the debtors will. a. Both statements are true. b. Both are false. c. First is false, second is true. d. First is true, second is false.

43. D bound himself to deliver either specific object 1 or object 2 to C. If one of the objects is lost due to fortuitous event and without the fault of D, the effect is: a. D may still choose which he shall deliver, only the value of the thing lost if he chooses the same. b. D cannot choose because among the prestations whereby he is alternatively bound, only one is practicable. c. C may choose which of the objects he wants delivered. d. Obligation of D has been extinguished. 44. In facultative obligation, only one prestation is due but the creditor may be given the right of choice as to the prestation to be performed. In alternative obligation the right of choice is always with the debtor. a. First statement is false, second is true. b. First is true, second is false. c. Both are true. d. Both are false.

45. A, B and C borrowed 3M fro D, E and F evidenced by a promissory note worded as follows, to wit, I promise to pay D, E and F P3M. (Sgd) A, B and C How much can D collect from A? a. P3M b. P .5M c. P1.5M d. P 1M

46. In the preceding case, suppose only D is demanding payment, can A still pay any one of the creditors? a. No, because the law provides that payment shall be made to the creditor demanding payment. b. No, but in case payment is made to a creditor not demanding payment, only his share of the credit shall be extinguished. c. Yes, because payment can be made to any of the solidary creditors. d. Yes, because payment proportionately can be made to any of the joint creditors of his share. 47. 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 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. 48. In obligation with penal clause, proof of actual damages suffered by the creditors is essential to enforce the penalty. As a rule, the creditor may demand the payment of the penalty, damages and interest in case of non-performance of the obligation. a. Both statements are false. b. Fist is true, second is false. c. Both are true. d. Second is true, first is false.

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

50. In the preceding case: There is quasi-contract with the obligation to reimburse the third person insofar as the payment has been beneficial to the debtor. There is legal subrogation and therefore in case the debtor fails to reimburse the third person, the latter may go after the mortgage, guaranty or penalty. a. Both are false statements. b. Both are true. c. First is false, second is true. d. First is true, second is false.

51. Payment made to a third person is valid to extinguish the obligation of the debtor to the creditor in the following cases, except. a. After payment to the creditor, the third person acquires the creditors right. b. When the creditor ratifies the payment to the third person. c. When through the creditors conduct, the debtor was led to believe that the third person had authority to receive payment. d. When the third person is subrogated to the rights of the creditor. 52. The following are special forms of payment, except: a. Dation in payment b. Tender of payment and consignation c. Payment by cession d. Compensation

53. In application of payment the creditor as a rule shall decide on what debt shall the payment be applied. It the period is for the benefit of the debtor he can apply the payment on a debt although not yet due. a. Both statements are false b. Both are true. c. First is false, second is 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 by cession; the creditors do not become owners of the properties of the debtor. In tender of payment and consignation the tender of payment by itself shall not extinguish the obligations. If the creditor receives a check as payment and it has been impaired through his fault, the debtor/drawer shall be released to the extent of the loss. a. First statement is true, second is false. b. First is false, second is true. c. Both are false. d. Both are true.

55. Three of the following are essential elements of a contract, except: a. Cause of the obligation which is established b. Consent of the contracting parties c. Motive of the parties d. Object certain which is the subject matter of the contract. 56. Novation of a contract takes place in three of the following, except: a. Delegation b. Expromision 57. Legal compensation shall exist in the following cases, except: a. That each one of the obligees be the principal creditor of the other and he be at the same the principal debtor of the other. b. That both debts be due. c. That they may be unliquidated and demandable; d. That they both consist in a sum of money or if consumable also of the same kind and quality as that stated. 58. S offered his car to B for P1M and giving the latter one week to decide. B in turn gave S P 1,000.00. In this case. There is: a. Contract of sale of the car with the P1, 000.00 as earnest money. b. Contract of option with the P1, 000.00 as option money c. Contract to sell of the car at Bs option. d. Contract to sell of the car at Ss option. 59. A advertised in the newspaper his parcel of land wanting to sell the same for P1M. B personally went to the former with c ash in hand to buy the subject parcel of land. In this case: a. A cannot anymore reject B as buyer of his land; b. A can still reject B as an offerer in the purchase of his land; c. A can reject the offer of B unless he properly consigns with the court his payment for the land; d. A cannot evade is obligation as seller to B. 60. The following cannot give consent to a contract, except: a. Minors, except sale of necessaries in life; b. Insane persons c. Demented d. Minors who represent themselves as of legal age to one in good faith. 61. 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. 62. The following are still valid contracts except: a. Void b. Unenforceable 63. A defective contract where damage or lesion is essential is: a. Rescissible b. Voidable 64. A defective contract because it is prohibited by law is: a. Void b. Voidable c. Rescissible d. Unenforceable c. Unenforceable d. Void c. Voidable d. Rescissible c. Subrogation d. Assignment

65. 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 b. Voidable c. Void d. Rescissible

66. 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 67. In reformation of instruments it is necessary that there is meeting of minds of the parties to the contract otherwise; annulment of contract shall be the remedy if fraud, accident mistake or inequitable conduct prevented the meeting of minds. In the interpretation of contracts, doubts on the incidental circumstances of onerous contracts shall be resolved in favor of greatest reciprocity of interest and if gratuitous, least transmission of rights and interest a. Both statements are true b. Both are false c. First is true, second is false d. First is false, second is true.

68. A sold to B his dog with the agreement that delivery shall be after one week from safe and the payment of the price after two weeks from delivery. If the dog shall produce offspring it shall belong to: a. If produced before the sale, it shall pertain to the seller; b. If the puppy shall exist before the actual delivery, it shall pertain still to the 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. 69. A contract of sale of vain hope or expectancy is voidable at the option of the buyer and the action for annulment brought within the prescriptive period provided by law. The sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence. a. Both statements are false b. Both are true c. First is true, second is false d. First is false, second is true

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

71. A sold Bs car in the name of B without authority to C. The sale is: a. Rescissible b. Voidable c. Unenforceable d. Void

72. A sold Bs car with authority to sell but sold it in his (As) name. The contract is: a. Rescissible b. Voidable c. Unenforceable d. Void e. Valid

73. A sold his land to B verbally. The sale is: a. Rescissible b. Voidable c. Unenforceable d. Void

74. A, as agent of P with oral authority, sold Ps land in a public instrument. The sale is: a. Rescissible b. Voidable c. Unenforceable d. Void

75. 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

76. Without authority from B, A sold the formers land in Bs name. The sale is: a. Rescissible b. Voidable c. Unenforceable d. Void

77. Without authority from B, A sold the formers house in Bs name. The sale is: a. Rescissible b. Voidable c. Unenforceable d. Void

78. A with oral authority from P, sold the latters house in writing. The sale a. Rescissible b. Voidable c. Unenforceable d. Void e. Valid

79. 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

80. S sold to B his land on January 10, 2001. On January 15, an absolute deed of sale was executed and notarized. On January 20, the sale was registered with the Registry of Deeds. On January 25, B took actual possession of the land by building a fence thereon. When did B acquire ownership of the land? a. On January 10 b. On January 15 c. On January 20 d. On January 25

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, t he sale was registered with the LTO. On January 25, B took actual possession of the car? a. On January 10 b. On January 15 c. On January 20 d. On January 25

82. S sold to B his car with the agreement to deliver the same one week after the sale on January 10, 2001. In this case: a. S may demand within reasonable time from the sale the payment of the price from B. b. S can demand payment only after he has delivered the car to B. c. B may demand delivery of the car even before the expiration of the one week period agreed upon once he pays the price. d. Payment and delivery shall take place only after one week from sale. 83. S sold to B his car with agreement that B will pay the price one week after the sale on January 10, 2001. In this case: a. B may demand within reasonable time from the sale the delivery of the car. b. B may demand delivery only after he has paid the price. c. S may seek payment of the price once he delivers the car. d. Payments and delivery shall take place only after one week from the sale. 84. S sold his car to B. No agreement was made on the time and place of delivery and payment. Hence: a. The time and place of delivery shall be at the time and place of payment of the price. b. The time and place of delivery and payment not having been agreed upon, the sale shall be void. c. The seller may demand payment first before delivery of the thing sold. d. The buyer may demand delivery first before payment of the price. 85. The seller must be the owner of the property he sells but his ownership need not exist on perfection but upon delivery of the thing. A contract of sale may be absolute; conditional, either suspensive or resolutory; or subject to a contingency; or undivided interest in property, either present or future except future inheritance. a. Both are false statements. c. First is true, second is false.

b. Both are true statements.

d. First is false, second is true.

86. A sold his car for the price of P2M to B who shall pay P.5M and deliver to S his land as consideration for the sale. There is: a. Partly sale and partly barter. b. Barter c. Innominate contract d. Sale

87. S deliver to B his car valued at P2M in consideration of B transferring to S his land worth P1M and the amount of P1M. There is: a. Barter b. Sale. c. Innominate contract d. Partly sale and partly barter

88. B ordered from S a pair of shoes of the kind and style of which S has gone out of stock. There is: a. Contract for a piece of work b. Contract of lease of service c. Contract of agency d. Contract of sale

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: a. Rescissible c. Unenforceable b. Voidable d. Valid 90. S offered his land to B with the understanding that the latter shall fix the price. B, as agreed upon fixed the price at P2M, although the lands market value was P1.5M. It is clear, therefore, that S is to benefit from the transaction. Was there sale? a. No perfected sale as there was no consent on the price. b. There was perfected sale, fixed by buyer and accepted by the seller. c. Theres valid sale since the buyer was authorized to fix the price. d. Voidable sale at the option of the buyer due to mistake in the fixing of the price. 91. Which of the following is not constructive delivery in sale? a. Traditio longa manu b. Traditio constitum possession c. Thing is placed in the control and possession of buyer d. Traditio symbolica

92. In sale or return, the buyer becomes owner of the thing upon delivery while if on approval, trial or satisfaction, after approval, express or implied. Sale between husband and wife is void unless there is separation of property between them in the same way that universal partnership between them is also void. a. Both statements are true b. Both are false c. First is false, second is true d. First is true, second is false

93. S sold to B his dog without knowledge that the animal was suffering from a disease at the time of the sale. Is the seller liable for breach of warranty against redhibitory defect of animals? a. No, because the seller was in good faith when he sold the animals. b. Yes, if he were aware of the hidden fault or defect. c. No, because animals unlike things easily can contact some illness. d. Yes, and good faith is not a defense to avoid liability. 94. S sold to B a thing without knowledge that the thing suffered from a hidden defect. The parties agreed on the waiver of the warranty by the buyer. Is the seller still liable for breach of warranty? a. No, because of the valid waiver of warranty. b. No, but he must return the price to the buyer without damages. c. Yes, because the waiver refers only to liability for damages. d. Yes, if the seller was in bad faith at the time the waiver was made. 95. S sold to B a thing with a waiver of warranty against eviction. Eviction took place subsequently. Is S still liable for breach of warranty against eviction? a. No, if it was waiver intencionada. b. No, if it were waiver consciente. c. Yes, even if it was waiver intencionada. d. No, provided the seller was in good faith in entering into the contract of waiver of warranty against eviction. 96. B bought from S a second hand motor vehicle which upon inspection by B had some mechanical troubles. After the sale, the car broke down due to engine trouble requiring an overhaul of the engine. Is S liable for breach of warranty against hidden defect? a. No, because the defect was not hidden but apparent upon inspection by B it being a second hand car. b. Yes, because there was no waiver of warranty against hidden defect. c. Yes, because the seller was in bad faith. d. No, because it was the fault of the buyer in buying a used car. 97. In which of the following is sale not presumed an 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 time to repurchase the thing sold. d. The purchaser retains for himself a part of the purchase price. 98. S sold to B a car on installment wherein the latter mortgaged the same car as security for the price. Failing to pay the installments, the mortgage on the car was foreclosed. Is B still liable for any deficiency if the seller fails to recover in the foreclosure sale? a. Yes, because it is only in case of pledge is the debtor not liable for any deficiency. b. Yes, if so stipulated upon by the parties. c. No, unless agreed upon by the parties. d. No, notwithstanding any stipulation to the contrary. 99. D mortgaged his car to C as security for a loan. Failing in the payment of the loan, C foreclosed the chattel mortgage and sold the car at public auction. In case of deficiency, is D liable for it? a. Yes, in the absence of contrary stipulation. b. No, because it would be unjust enrichment on the part of creditor. c. Yes, if so agreed upon by the parties. d. No, unless stipulated. 100. Based on the preceding case, suppose it was a pledge, would the debtor/pledgor be liable for the deficiency? a. No, notwithstanding stipulation to the contrary. b. No, unless otherwise stipulated c. Yes, if so agreed upon. d. Yes, even in the absence of stipulation

101. D mortgaged his parcel of land to C as security for a loan. Fearing foreclosure of the mortgage due to his inability to pay the loan, D sold the land to X without the consent of C. Is the sale valid? a. No, unless there was prior consent of the mortgage. b. Yes, stipulation prohibiting the sale without the consent of the mortgagee shall be void. c. Yes, provided the mortgagee was notified before the sale. d. No, if there was stipulation requiring prior consent

102. A, B, C are co-owners of a parcel of land. A sold his share to B. Can C redeem the said share from B? a. No, unless he was notified of the sale prior to its perfection b. No, legal redemption applies only if the interest was alienated by onerous title to a third person. c. Yes, because the law frowns upon co-ownership. d. Yes, provided he pays B the price, expenses of the sale and necessary and useful expenses on the thing sold. 103. 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 alienation. c. No, unless he enforced his right through court action. d. Yes, but in proportion to his interest in the land as co-owner. 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 mortgagors not the debtor? a. Yes, provided the mortgagor or pledgor in case of pledge is the absolute owner of the property mortgaged or pledged. b. Yes, provided it is in writing and registered. c. No, the mortgagor/pledgor must be the debtor himself. d. No, unless the mortgagor is a co-debtor. 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. 106. If two or more principal appoint a single agent for a common transaction, the liability of the former shall be solidary. If two or more agents appointed by a single principal are jointly liable unless solidarity is stipulated. a. Both statements are false b. Both are true d. First is false, second is true c. Second is false, first is true

107. P authorized A to sell his products with 10% commission and 5% guarantee commission. A sold them to B who failed to pay despite the diligent efforts of 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, and he is not entitled anymore to the commissions. 108. In three of the following cases, the agent can appoint a substitute, except: a. The principal authorized him to appoint a substitute. b. The principal did not authorize him to appoint a substitute. c. There is no stipulation as to the appointment of a substitute. d. The principal forbids the appointment of a substitute. 109. P appointed A and B as his agents for a common transaction and they agreed that the latter shall be solidarily liable to the former for damages in case of violations of their obligations as such. When is the agent at fault the only one liable for damages even is 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. 110. A, B, and C entered into an oral contract of partnership each contributing P1M each to the common fund plus other personal properties of the same amount and failed to register the partnership with the SEC. Is the partnership valid? a. No, because every contract of partnership having a capital of three thousand pesos or more in money or property must be in public instrument and registered with he SEC. b. Yes, because public instrument is necessary only in case of contributions of immovables. c. Yes, because a partnership contract can always be oral. d. No, because registration with the SEC is essential for a partnership to be valid and acquire juridical personality. 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 price of P.9M. P is now repudiating the contract with X on the ground that he is not bound since X contracted with a minor who exceeded his authority. Decide. a. P is liable under the contract because it is enough that the principal is capacitated since he is the one entering into the contract. b. P is not liable for the sale on installments since it is unenforceable because his agent acted beyond his powers. c. P is not liable because the agent is a minor with whom X contracted. d. P is liable provided the sale is in cash for P1M. 112. Partners A, B, and C contributed: A-P1M; B-P2M; and C-service. After exhausting the partnership assets, the creditors still have a claim for P.3M. For how much are the partners liable to the creditors for the partnership liability? a. Only A and B are liable equally to the creditors being capitalists. b. Only A and B are liable at 1/3 and 2/3, respectively. c. All of A, B, and C are liable pro rata to the creditors. d. C is not liable being an industrial partner who is exempt from losses. 113. A and B are co-owners of a parcel of land from which they derive profits in equal sharing being co-heirs in inheritance. Is there a partnership? a. There is a partnership because of the equal sharing of 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. 114. A and B are partners in Ace partnership. While A was performing his duties as a partner in the conduct of the business, he negligently ca used 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 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 the partnership are all liable solidarily to X. 115.Which of the following is not a prohibition on a limited partner? a. Surname of a limited partner may not appear in the partnership name. b. Limited partner may not take part in the control of the business. c. Limited partner may not contribute service. d. Limited partner may not constitute his assignee as substituted limited partner. 116. A, B, and C as partners in a partnership stipulated and mutually agreed that A shall not share in the profits and losses. Is the agreement valid as among the partners only and not against third persons? a. Yes, because among the partners it is valid to exempt one from sharing in the profits and losses.

b. Yes, valid as long as third persons are not prejudiced. c. Not valid stipulation exempting a partner from sharing profits and losses. d. Not valid as against third persons or partnership creditors. 117. A newly admitted partner shall be liable for the pre-existing obligations of the partnership at the time of his admission in favor of partnership creditors up to the extent of his capital contribution. An industrial partner shall not share in the losses and his share in profits shall be just and equitable under the circumstances. a. First statement is false, second statement is true b. Both are true 118. Three of the following dissolves a partnership, except a. Partners business has become unlawful. b. Death, civil interdiction or insolvency of a partner. c. Expulsion of a partner. d. Partnership business can only be carried on at a loss. c. Second statement is false, first is true d. Both are false statements.

119. Special power of attorney is necessary in the following cases, except a. To make such payment usually considered as acts of administration; b. To compromise, to submit questions to arbitration; c. To bind the principal in a contract of partnership; d. Any other act of strict dominion. 120. A partner who is liable to the partnership for damages due to his fault may claim compensation if through his extraordin ary 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 delay from the time of a demand from the partnership. a. Both statements are false. b. Second statement true, first is false. c. First is true, second is false d. Both are true.

121. A contribution P1M, B contributed P1M, and C contributed services. They agreed to divide the profits and losses equally. In case of loss of P.3M, for how much, if any, is C liable? a. Nothing, because an industrial partner is exempt from losses. b. P.1M but with reimbursement from A and B equally. c. A and B alone shall shoulder the loss at Cs option. d. P.1M 122. Suppose in the preceding case, there was no agreement as to profit-loss sharing, what will be the share of C in the profit? a. Equal to the share of A and B; b. Just and equitable under the circumstances c. P1M d. Court to fix his share.

123. Based on the preceding number, what shall be his share in the loss? a. Equal to the share of A and B b. Just and equitable under the circumstances c. P1M d. None

124. A subscribed to 1,000 shares of stock of X Corporation and paid 25% of the said subscription. Can he vote all his subscribed shares? a. No, because the subscription has not been fully paid. b. No, because his shares have become delinquent shares. c. Yes, as regards the paid percentage of the subscription. d. Yes, because shares although unpaid but not delinquent can be voted. 125. X corporation posted a P1M profit in its real estate has appreciated in value to the tune of P4M. The board then declared dividends computed on the basis of P5M representing profits and appreciation in value of its real estate. Is the dividend declaration valid? a. Not valid because there was no 2/3 ratification by the outstanding capital stock. b. Valid being based on profits and increments in the value of the corporate assets. c. Not valid because dividends must come only from the profits. d. Valid if creditors do not object nor protest against the same. 126. A subscribed to 100 shares of X corporation, paying 25% thereof. Despite the demand by a for the issuance of stock certificate, the corporation refuses to issue one corresponding to the 25% paid. Meanwhile, the corporation has become insolvent and A now refuses to pay his unpaid balance on his subscription. Is the refusal to issue a stock certificate valid? a. Not valid, because stock certificate can be issued for the paid portion of the subscription. b. Valid, because stock certificate can only be issued after full payment of the subscription. c. Valid as regards the unpaid percentage on the subscription. d. Not valid because only delinquent shares may be denied stock certificate. 127. Based on the facts in the preceding number, can a validly refuse to pay the unpaid balance on his subscription now that the corporation has become insolvent? a. No, under the trust fund doctrine for the protection of creditors. b. No, under the doctrine of piercing the veil of corporate fiction. c. Yes, because of the insolvency of the corporation which also extinguished his obligation to pay the balance. d. Yes, because of the denial of his right to stock certificate. 128. The by-laws may provide that the holders of the majority of the outstanding capital stock shall elect all the members of the board. The by-laws may provide that no officer of the corporation may be required to be a stockholder. a. First statement is false, second is true. b. Second is false, first is true. c. Both are true. d. Both are false.

129. Majority of the following must be residents of the Philippines except: a. Directors b. Trustees c. Incorporators d. Officers

130. Private corporations have the following must be residents of the Philippines except: a. It is an artificial being created by law. b. It may be formed or created under special laws or charter. c. It has the right of succession. d. It has the powers, attributes and properties expressly authorized by law or incident to its creation. 131. In three of the following cases, all shares have voting rights, except: a. Election of directors c. Increase or decrease of capital stock c. Dissolution of the corporation d. Merger or consolidation

132. At the annual meeting of the corporation for the election of five directors, A,B, C, D, E, F, and G were nominated. A, B, C, D, and E received the highest number of votes and thus proclaimed as elected. F received ten (10) votes less than E. Subsequently, E sold his shares to F. Who, between E and F has the right to attend as director?

a. E is the director because his term is one year until his successor is elected and qualified. b. F is the director because he has bought the shares of E. c. Both of them shall be directors. d. Neither of them shall be director. 133. ABC corporation has an authorized capital stock of P1M divided into 50,000 common shares and 50,000 preferred shares. At its inception, the corporation offered for subscription all the common shares. However, only 40,000 shares were subscribed. Recently, the directors thought of raising additional capital and decided to offer to the public all the authorized shares at their market value. Would X, the stockholder of 4,000 shares have pre-emptive right to the remaining 10,000 shares? a. Yes, because all stockholders have pre-emptive rights to all issues of shares of any class in proportion to their shareholdings. b. No, because pre-emptive right does not apply to unissued shares to be issued. c. Yes, because pre-emptive right applies only to the issuance of unissued shares. d. No, because he has waived this right when he subscribed to a part only of the issuance of shares. 134. Based on the facts of the preceding number, would X also have pre-emptive right to the 50,000 preferred shares? a. Yes, because all stockholders have pre-emptive rights to all issues of shares of any class in proportion to their shareholdings. b. No, because pre-emptive rights do not apply to the issuance of unissued shares. c. Yes, because pre-emptive rights do not apply to the issuance of unissued shares. d. No, because X has waived his pre-emptive rights to the issuance of preferred shares when he subscribed to the common shares. 135. The corporation has a nine-member board of directors. Two of the members sold their shares while two others are abroad. To have a quorum, the number required is: a. Seven b. Five c. Three d. Four

136. Which of the following requires the approval of the majority of the outstanding capital stock? a. Investment of corporate funds in another business corporation b. Amendment, repeal or adoption by-laws c. Dissolution of the corporation d. Amendment of the articles of incorporation 137. A director of a corporation may be removed by: a. Vote of majority of the outstanding capital stock b. 2/3 of the stockholders 138. In the matter of management of the corporation, this is supreme: a. President b. Chairman of the Board of directors c. Stockholders d. Board of directors c. majority of the stockholders d. 2/3 of the outstanding capital stock

139. Three of the following are requisites for the existence of de facto corporation, except: a. Incorporated under a valid law b. Attempt in good faith to organize c. Actual use of corporate powers d. Existing in law and in fact

140. Three of the following are required for incorporators, except: a. They must be natural persons b. All of legal age 141. A holder in due course has the following rights, except: a. He holds the instrument free from defects of title of prior parties. b. Free from defenses of prior parties among themselves. c. Enforce payments against all parties liable thereon. d. Holds the instrument as if it were non-negotiable. 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 b. I promise to pay to the order of the bearer P1M. (Sgd) M c. Due to Bearer P1M or a BMW car worth P1M at his option. (Sgd) M d. Pay to the order of myself P1M. (Sgd) D to:W 143. Three of the following are requisites to be a holder in due course, except: a. That the instrument is complete and regular upon its face. b. That the holder took it in good faith and for value. c. That he became the holder of it before it was overdue and without notice that it had been previously dishonored if such was the fact; d. That he had no knowledge of any fact which would impair the validity of the instrument or render it valueless. 144. A makes payable to B or order. The following are the indorsers of the note in the order of their indorsements: B, C, D, E, F (holder) and G(subsequent holder). The note is dishonored in the hands of F, who notifies B, C, D, E. Which is not correct? a. The notice given by F to B operates to the benefit of C, D, E and G. b. The notice to C inures to the benefit of D, E, and G. c. The notice to D inures to the benefit of E and G. d. The notice to C inures to the benefit of B. 145. Which of the following is negotiable instrument? a. Pay to bearer C P1M. Reimburse yourself out of the house rentals of my house in Manila. (Sgd) A To: B b. Pay to C or his order P1M out of the rentals of my house in Manila. (Sgd) A To: B or in his absence X. 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 146. M makes a note payable to bearer and delivers the same to P who endorses it to X in this manner: Payable to X. (Sgd) P. Later X, without indorsing the note delivers the same to Y. The note is subsequently dishonored by M. May Y proceed against M for the note? a. No, because the special indorsement of P has made the note to be payable to order and must be endorsed to negotiate. b. Yes, because M, an instrument originally payable to bearer remains to be payable to bearer despite special indorsement made thereon. c. Yes, because M, as a maker, is absolutely liable to pay the instrument in the hands of any holder. d. No, because Y did not acquire title to the instrument due to lack of proper indosement. 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; b. By the intentional cancellation of the instrument; c. By payment in due course by the accommodation. d. By any other act which discharges a simple contract for the payment of money. c. Not less than five nor more than fifteen d. Majority must be citizens of the Philippines

148. Payment by cession as distinguished from Dation in payment. a. The debtor is not necessarily in a state of financial difficulty. b. The effect is to release the debtor for the net proceeds of the things ceded or assigned. c. The property is alienated by the debtor to the creditor in satisfaction of a debt in money. d. What is delivered by the debtor is merely a thing to be considered as the equivalent of a performance of the obligation. 149. A owes B P20,000 which became due and payable last June 23,2001. On that date, A offered B P10,000, the only money he then had, but B refused to accept the payment. A thereafter met C, Bs 23 year old son, to whom he gave the 10,000 with the request that he turn the money over to B. The money was stolen while Cs possession. How much may B still recover from A? a. P20,000 c. P15,000 b. P10,000 d. P-0150. If a third persons 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? First Answer- He can recover from the debtor the entire amount, which he has paid. Second Answer- He subrogated to all of the rights of the creditor. a. Both answers are correct. b. Both answers are wrong c. Only the first answer is correct. d. Only the second answer is correct.

151. A, B and C executed a promissory note binding themselves to pay P9,000 to X, Y and Z. The note is now due and demandable. Can the creditors proceed against A alone for the payment of the entire debt. a. No, each creditor can collect only P3, 000 from A. b. Yes, either X, Y or Z can collect P9,000 from A. c. No, each creditor can collect only P1, 000 from A. d. Yes, since the promissory note is silent with respect to the rights of the creditors, the obligation is presumed to be solidary. 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. b. Yes, but A and B will be liable proportionately. c. No, the debts are considered distinct from one another. d. No, only either A and B but not both will be liable. 153. Using No. 151, suppose that the obligation was about to prescribe, but X wrote a letter to A demanding for payment of the entire debt, will this have the effect of interrupting the running of the period of prescription? a. Yes, because the demand made by X covers the entire debt and will therefore inure to the benefit of the other creditors. b. Yes, insofar as A is concerned but not with regard to B and C. c. No, because the demand should have been made to all the debtors. d. No, all the creditors should have made the demand. 154. Using No. 153 and prescription sets in how much can Y collect from A? a. P9, 000 c. P1, 000 b. P3, 000 d. P-0155. Using No. 154, how much can X collect from A? a. P9, 000 b. P3, 000 156. Indivisibility as distinguished from solidarity. a. Plurality of subjects 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 with constitutes the object of the obligation. 157. When one of the parties has brought an action to enforce the instrument, he cannot subsequently ask for its reformation. The injured party may seek rescission, even after he has chosen fulfillment if the latter should become impossible. a. True, true b. True, false 158. A source of obligation not arising from law a. Negotiorum gestio b. Solutio indebiti c. Culps aquiliana d. Contract c. False, true d. False, false c. P1, 000 d. P-0-

159. The loss or deterioration of the thing intended as a substitute through the negligence of the obligor does not render him liable A person alternatively bound by different prestations shall completely perform one of them a. True, true b. True, false c. False, true d. False, false

160. There being no express stipulation and if the undertaking is to deliver a determinate thing, the payment shall be made a. At the domicile of the debtor b. At the domicile of the creditor c. Wherever the thing might be at the moment the obligation was constituted. d. Wherever the thing might be at the amount the obligation is to be fulfilled 161. Demand is not needed to put the debtor in default, except a. When demand would be useless b. When the parties so stipulate c. When time is of the essence d. When the fixing of the time is the controlling motive for the establishment of the contract.

162. 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 defendants negligent act or omission itself. 163. Culpa is distinguished from dolo a. Waiver of an action to enforce liability may be waived b. Liability may be reduced by the courts c. There is deliberate intention to cause damage or prejudice d. Responsibility arising the there from is demandable 164. 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. 165. If the obligor binds himself to perform his obligation as soon as he shall have obtained a loan from a certain bank. This obligation is a. With a term b. With a suspensive condition c. With a period d. With a resolutory condition

166. One is not a requisite needed in order that obligation shall be extinguished by loss or destruction of a thing due a. When the obligation is to deliver the house located at 123 Recto, Avenue, Manila b. When the thing is lost without the fault of the debtor 3. When the obligation is to deliver a brand new Honda Str colored orange 4. When the thing is lost before the debtor incurred delay 167. It presupposes not only that the obligor is able, ready and willing but also more so, in the act of performing his obligation a. Promissory note b. Bill of exchange c. Tender of payment d. Obligation to sell

168. A gets a loan of P1M from B which becomes due on October 1, 2003 and mortgaged his house as security for the dept. On June 30, 2003, the mortgaged house completely destroyed by fire thru the fault of C. A week later, B demanded payment from A. Is Bs demand valid? a. No, the destruction of the house was not thru the fault of A. b. No the obligation is one with a definite period which is deemed intended for the benefit of both the debtor and creditor. c. Yes, the debt becomes demandable unless A can give another security equally satisfactory. d. Yes, the debt becomes demandable even if A can give another security equally satisfactory. 169. 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 170. A owes B P11,000 due on July 2, 2003. B owes A P6,000 due on July 3,2003 and P4,000 due on July 10,2003. B owes C P11,000 due on July 3, 2003. On July 3,2003 B cannot pay C so B assigns to C her credit of P11,000 against A, without the knowledge of A. On July 3, 2003 C tries to collect from A the P11,000. How much can C compel A to pay? a. P11,000 b. P 9,000 c. P5,000 d. P 1,000

171. The contract must bind both contracting parties, its validity or compliance cannot be left to the will of one of them, and this is a. Mutuality of contract b. Freedom of contract c. Relativity of contract d. Obligatoriness of contract

172. By this principle, contracts take effect only upon the contracting parties, their assigns or successors in interest a. Mutuality of contract b. Freedom of contract c. Relativity of contract d. Obligatoriness of contract

173. The statement Contracts shall be obligatory in whatever from they have been entered into provided all the requisites for their validity are present refers to a. Consensual contracts b. Real contract 174. A contact in which a person literally contracts with himself is a. Adhesion contract b. Auto contract c. Accessory contract d. Unilateral contract c. Formal contracts d. Solemn contracts

175. If the obligation of the debtor is I will pay you my debt after I have arrived from abroad. The obligation is a. Valid b. Void c. Voidable d. Unenforceable 176. When a third person assumes the payment of the obligation without the knowledge of the debtor but with the consent of the creditor, there is a. Delegacion c. Subrogation b. Expromison d. Novation 177. This obligation is demandable at once a. With a suspensive condition b. With a period in diem 178. The following are void contracts, except a. A contract whereby X promised to live as the common-law-wife of Y without the benefit of marriage in consideration of P1,000,000. b. An agreement whereby A is to render service as a servant to B without the compensation as long as A has not paid him debt. c. A stole the car of B. Later they entered into a contract whereby B would not prosecute A in consideration of P100,000. d. A stipulation in a contract of lease whereby the landlord can go to court to eject the tenant in case of failure of the latter to pay the rent agreed upon. 179. N, R and J solidarily bound themselves to deliver to S a Honda motorcycle valued at P60,000. The obligation was not fulfilled through the fault of J. Thereupon, S filed an action in court against N and the court awarded P72,000 to S representing the value of the motorcycle plus damages. Which of the following situation is valid? a. If N pays S the P72,000, N can collect from R and J P24,000 each. b. S has to collect P24,000 each from N, R and J to satisfy the courts award of P72,000 c. N can refuse to pay the penalty because it should be charged against J, the guilty party. d. If S succeeds in collecting the P72,000 from N, N in turn can collect from R P20,000 and from J P32,000. 180. A, a jeepney driver driving recklessly caused serious physical injuries to his passenger B and pedestrian C. As a result, which of the following is not correct? a. B may proceed against A for culpa criminal c. C may proceed against A for culpa aquiliana b. B may proceed against A for culpa contractual d. C may proceed against a for culpa criminal 181. X, a bus driver driving negligently, killed his passenger B and pedestrian C. As a result 1. B may proceed against Xs employer and the source of liability is the crime committed by A or culpa criminal. 2. B may proceed against Xs employer and the source of liability is the breach of contract of carriage or culpa contractual. 3. C may proceed against Xs employer and the source of liability is the crime committed by A or culpa criminal. 4. C may proceed against Xs employer and the source of liability is the quasi-delict committed by A or culpa aquiliana. 182. There is novation of the obligation if 1. The period for payment is shortened from 5 years to 3 years. c. When my means permit me to do so d. When it depends on the happening of a specified event

2. The period for payment is extended from 3 years to 5 years. a. True, true c. False, true b. True, false d. False, false 183. In a blank indorsement, the indorser renders himself a. Primarily liable b. Secondarily liable 184. Real and personal defenses may be raised between a. Immediate parties b. Remote parties 185. This is a real defenses a. Fraud is inducement b. Want of consideration c. Want of delivery of an incomplete instrument d. Duress in the absence of physical pressure c. Intervening parties d. Subsequent paries c. Solidarily liable b. Subsidiary liable

186. A, with violence in her eyes, intimidated her husband B to sell his exclusive property to her. The contract of sale is a. Rescissible b. Voidable c. Unenforceable d. Void

187. B, husband of A, in his capacity as head of the family, sold a parapheral property in her name to C, without As consent. The contract of sale is a. Rescissible b. Voidable c. Unenforceable d. Void

188. In 1999, at age 16, A sold his land for P4M payable at P1M in 1999, P1M in 2000, P1M in 2001 and P1M in 2002. In 2004, A wants to annul the contract on the ground of minority. Will his action prosper? a. No, A is allowed to ask for annulment of the contract only within 4 years from the perfection of the contract. b. Yes, A has 4 years counted from the time he becomes of legal age to ask for annulment of the contract. c. No the acceptance of the installment payments amounted to ratification of the sale. d. Yes, provided A was then acting in good faith when he sold the property. 189. 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. 190. A, offered to sell to B 100 cartons of sardines at a specified price which was accepted by B and subsequently delivered his letter of acceptance. In view of the shortage of the catch of sardines. A failed to deliver the commodities it had offered for sale. B decided to sue A. Which is correct? a. The acceptance of the offer only created an option to buy. 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 bilateral contract to sell and buy. d. The acceptance of the offer to sell constitute a binding contract of sale provided the option was supported by a sufficient consideration. 191. M makes a negotiable promissory note for P10,000 with the name of the payable bank. The note is stolen by P who inserts his name as payee and then indorses the note to A, then A to B, and B to C, who is a holder in due course. On maturity, C cannot enforce the note against a. M b. P c. A d. B

192. A issued a note payable to bearer. He delivers the note to B indorsed the note specially to C, then C negotiates the note by delivery to D. Which of the following is not correct? a. D can enforce the note against C. b. D can enforce the note against B. 193. Provision renders a note non-negotiable. a. A promises to pay to the order of B the sum of US $1,000 payable in pesos at the rate of exchange prevailing on August 14, 2002. b. A promise to pay B P1,000 with 12% interest thereon. c. A promises to pay B P1,000 and all costs, charges and expenses including reasonable attorneys fees. d. A promises to pay B P1,000 in two equal installments, the first payable on August 14, 2002 and the second on September 14, 2002. 194. Which of the following is not negotiable? a. I promise to pay B or order P10,000 on or before September 14, 2002 in payment of the purchase price of the merchandise I bought from him. Sgd. A b. Pay to the order of B P20,000 on or before September 14, 2002 and charge the same to my account To C, Sgd. A. c. Pay to the order of B P30,000 out of my deposit with you. To C Sgd A. d. Pay to B or order P40,000 for payment under contract of August 14,2002. To C Sgd. A 195. The following are negotiable, except a. Drawer A directs drawee B to pay C or order P10,000, 30 days after demand. b. Drawer A directs drawee B to pay C or order P10,000, 30 days after C passes the CPA board examinations. c. A promises to pay B or order P10,000 within 30 days after the death of C. d. A promise to pay B or order P10,000 on or before August 14, 2002 196. This in not negotiable a. I promise to pay to the order of myself P10,000 signed by A, the maker b. Pay to the order of the Commissioner of Internal Revenue P10,000 to ABC bank, Sgd. A c. I promise to pay to order P10, 000. Sgd. A d. Pay to the order of X, Y and Z, P10,000. To B. Sgd. A 197. Every negotiable instrument is presumed to have been issued for a valuable consideration. The presumption is a. Prima facie b. Conclusive c. Absolute d. Final c. D can enforce the note against A. d. C can enforce the note against B.

198. A, issued a promissory note payable to B or order for P10, 000 for 10 bottles of whisky sold by B to A. Later B negotiated the note to C. Subsequently, A discovered that only 5 bottles of whisky are genuine. As a result a. C can enforce the note against A for P10,000 regardless of whether C is holder in due course or not b. C cannot enforce the note against A for P10,000 even if he is a holder in due course c. C can enforce the note against A only for P5,000 regardless of wether he is a holder in due course or not. d. c can enforce the note against A only for P5, 000 if he is not a holder in course. 199. A letter of credit is beyond the scope of the negotiable instrument law, because a. It is in favor of a specified person or not to order b. It is an order to pay out of a particular fund c. It is without an unconditional promise or order to pay a sum certain in money

d. It is not payable on demand or at a fixed or determinable future time 200. Which of the following is not negotiable a. Documentary Bill of Exchange b. Clean bill of exchange c. Certificate of deposit d. Postal money order 201. It contains an order to pay out of a particular fund rendering the instrument beyond the scope of the negotiable instrument law a. Bill of lading b. Treasury warrant 202. Omissions that do not effect the negotiability of an instrument, except a. It is not dated b. Does not specify the value given c. Does not specify the place where it is drawn d. Does not name the payee where the instrument is payable to order 203. A delivered to B the following instrument One month after date, I promised to pay to B P10,000. Sgd A B indorsed the note in blank before maturity and delivered it to C for value. When due, A refused to pay and C sued B. Could C recover from B? a. No, C could not sue B and hold him liable as an indorser because the instrument is payable to a specified person. b. No, the instrument is not negotiable because it is neither payable to order or to bearer. c. Yes, provided C to gives notice if dishonor to B, otherwise B is discharged from liability. d. Yes, the endorsement will be considered as an assignment, hence B will be liable as an assignor of the instrument. 204. A, knowing that there is no such person by the name of B, makes out and signs a promissory note payable to B or order. A delivers the note to C. C in turn delivers the note to D without indorsement. Later, D delivers the note to E, a holder in due course, which of the following is correct? a. Being payable to order, the note can be negotiable by indorsement and delivery. b. E has no right to collect from C because a person negotiating an instrument merely by delivery is liable only to the immediate transferee. c. E becomes holder only if D will indorse the instrument. d. The instrument is not-negotiable because it is payable to the order of a non-existing person. 205. A makes a negotiable note to bearer and delivers it to B for safe keeping. The note is negotiated by B to C. Can A refuse to pay C on the ground that the note was originally delivered to B for a special purpose only? a. Yes, A can prove that he delivered the instrument to B for a special purpose only. b. No, where the instrument is in the hands of any holder, a valid delivery thereof by all parties prior to him so as to make them liable to him is conclusively presumed. c. Yes, because B negotiated the note without authority. d. No, if C is a holder in due course. 206. A made a negotiable promissory note in favor of B who negotiated it to C under the following indorsements. Pay to C after passing the CPA examination in October 1999. At maturity of the note, C presented it to A for payment and it was duly paid, C did not pass the CPA examination. Which of the following is correct? a. The promissory note is not negotiable because of the condition imposed. b. The promissory note becomes negotiable because the condition was satisfied. c. A had no right to pay C and, therefore can compelled to pay again. d. A may disregard the condition and make payment whether the condition is fulfilled or not. 207. When the instrument is complete but undelivered, delivery is presumed to have been made in favor of the holder, the presumption is a. Conclusive whether holder in due course or for value. b. Prime-facie whether holder in due course or for value. 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. 208. The indorser who simply signs, his name renders himself liable to all subsequent holders as a. Primarily liable b. Solidarily liable c. Secondarily liable d. Subsidiarily liable c. Certificate of stock d. Warehouse receipt

209. There is no difference between a holder in due course and one who is not, since as regards them, real and personal defenses may always be raised if a. Intervening parties b. Remote parties 210. This is a personal defense a. Absolute defense b. Equitable defense c. Real defense d. National defense c. Immediate parties d. Subsequent parties

211. A note reads I promise to pay B or order P1, 000, 30 days after B receives the proceeds of his loan from ABC bank Sgd A. The instrument is a. Subject to a condition b. Payable at a determinable future time c. Payable on demand d. Non-negotiable because the payment is indefinite

212. The following are qualifications of a corporate director, except a. Must own at least one share of stock. b. Must continuously own at least one share during his term as director. c. Majority of the directors are citizens of the Philippines. d. Ownership of shares must be recorded in the books of the corporation 213. Which of the following is the disadvantage of forming a corporation? a. The free and ready transferability of ownership b. The shareholders are not liable for the debts of the business c. Because of the power of succession, the existence of the entity is not affected by the personal vicissitudes of the individual stockholders. d. The subservience of minority stockholders to the wishes of the majority subject only to equitable restraints 214. The drawee bank may not refuse to pay checks drawn against it a. If there is a stop payment issued by the drawer b. If the drawer is insolvent c. If the drawers deposits is insufficient d. When the bank receives notice of the drawers death 215. Which of the following is the characteristic of partnership as a contract a. Preparatory c. Innominate b. Formal d. Gratiutous 216. First statement- If the surplus profits of the stock corporation reaches the level equal to its paid-up capital, the SEC may compel the corporation to declare dividends, otherwise it will be liable for a surtax on improperly accumulated surplus.

Second statement- In a corporation, two or more positions may be held concurrently by the same person except that no one person shall act as President and chairman of the Board a. Both statements are true b. Both statements are false c. Only the first statement is true d. Only the second statement is true

217. First statement- The arrival of the term of a partnership with a fixed term or period shall not dissolve the partnership if the partners conti nue with the business of the partnership but such partnership maybe terminated anytime dependent on the will of the continuing partners. Second statement- A partnership with a capital of 3,000 or more to money or property, must be in a public instrument and registered with the SEC in order for the partnership to be able to maintain an action, in its own name against third party. a. Both statements are true b. Both statements are false c. Only the first statement is true d. Only the second statement is true

218. After 3 years of operation, ABC, a domestic corp. wanted to declare dividends to its stockholders. The treasurer reported a net income after tax of P4 million. One million is being appropriated for the acquisition of the machineries to be bought 2 months from now. The treasurer likewise reported an increase in the value of the land previously bought to be used as plant site from 3 million to 5 million. What amount of dividend can be declared by the board? a. 9 million b. 8 million c. 4 million d. 3 million

219. When the goods are delivered to the buyer on sale or return for a period of seven days, ownership of the goods passes to the buyer. A. Upon perfection of the contract b. Upon the delivery of the goods c. Upon expiration of seven days d. Upon acceptance by the buyer of the offer of the seller

220. This is not a fundamental obligation of the agent a. To render an accounting of the transaction b. To subordinate his interest in favor of his principal if there is a conflict of interest c. To borrow if he is authorized to lend d. Not to carry out the agency, even if that is the instruction of the principal, if he knew it would result is a loss or damage to his principal. 221. Dacion en pago as distinguished from sale a. The cause is the price b. The object exist and is specific c. There is no pre-existing obligation d. There is a greater degree of freedom in fixing the price 222. A distribution by a corporation of shares held by it in another corporation is a. Stock dividend b. Property dividend c. Sale of capital assets d. Sale of treasury stock

223. Any director of a corporation of shares held by it in another corporation is a. Majority of the members of the board b. Majority of the stockholders present c. 2/3 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 taxpayer 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. b. Both are false c. First is false, second is true d. Second is false, first is true

225. D is indebted 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? 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 breach of warranty against hidden defects of things a. Within 40 days 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 4 years from discovery of the fraud 227. Which of these is not a special from of payment? a. Application of payment b. Dacion en pago c. Cession en pago d. Tender of payment and consignation 228. The voting requirement needed in declaring cash or property dividend a. Majority vote of the board of Directors b. Majority vote of the Board of Directors plus the vote of a majority of the outstanding shares c. Majority vote of the Board of Directors plus the vote of 2/3 of the outstanding shares d. 2/3 votes of the directors plus a majority of the outstanding shares 229. D borrowed from C P 1, 000, 000 to secure the payment of which the former verbally agreed to deliver his 4 hectare agricultural land by way of antichresis and to pay 12% interest per annum. The contract of loan and antichresis a. Are both valid b. Both null and void c. The loan is valid but the antichresis is null and void d. The contract of antichresis is valid, but the loan is null and void. 230. S and B agreed on the slae of a four hectare property at Macapagal Boulevard for the price of P15,000 per square meter o n condition that if the price is not paid on a particular date, the sale will considered automatically cancelled. On the particular date agreed upon, B did not pay S, but B never asked for a judicial cancellation nor made a notarial act of recission. In this case a. The sale is cancelled as per agreement b. S can validly refuse any subsequent offer to pay by B c. B can still pay S the price d. B cannot anymore pay the price simply because the sale is cancelled due to his failure to pay on the stipulated date.

1. d 2.c 3.c 4.b 5.d 6.d 7.a 8.b 9.b 10.c 11.c 12.d 13.b 14.b 15.b 16.c 17.b 18.c 19.c 20.a 21.a 22.c 23.b 24.d 25.b 26.a 27.b 28.c

29.a 30.c 31.a 32.b 33.b 34.b 35.d 36.d 37.c 38.c 39.d 40.a 41.d 42.c 43.b 44.d 45.d 46.d 47.d 48.a 49.b 50.d 51.a 52.d 53.c 54.d 55.c 56.d

57.c 58.b 59.b 60.d 61.d 62.a 63.a 64.a 65.a 66.d 67.a 68.a 69.d 70.e 71.c 72.e 73.c 74.d 75.c 76.c 77.c 78.e 79.d 80.b 81.b 82.a 83.a 84.a

85.b 86.d 87.b 88.d 89.d 90.a 91.c 92.a 93.d 94.a 95.a 96.a 97.a 98.d 99.a 100.a 101.b 102.b 103.b 104.a 105.c 106.b 107.a 108.d 109.d 110.b 111.a 112.c

113.b 114.d 115.d 116.c 117.b 118.d 119.a 120.a 121.d 122.b 123.d 124.d 125.c 126.b 127.a 128.d 129.d 130.b 131.a 132.d 133.a 134.a 135.b 136.b

137.d 138.d 139.d 140.d 141.d 142.a 143.d 144.d 145.d 146.b 147.c 148.b 149.a 150.a 151.c 152.c 153.b 154.d 155.c 156.d 157.a 158.d 159.a 160.c 161.b 162.d

185.c 186.d 187.c 188.b 189.b 190.c 191.a 192.b 193.194.c 195.b

196.c 197.a 198.d 199.a 200.d 201.b 202.d 203.d 204.b 205.d 206.d

163.b 164. c 165.b 166.c 167.c 168.c 169.d 170.d 171.a 172.c 173.a 174.b 175.b 176.b 177.b 178.d 179.d 180.b 181.d 182.b 183.b 184.a

207.d 208.c 209.c 210.b 211.d 212.c 213.d 214.b 215.a 216.b 217.a 218.d 219.b 220.c 221.b 222.b 223.d 224.c 225.c 226.b

227.a 228.a 229.c 230.c