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If mistake, fraud, accident, or inequitable conduct prevented the meeting of the

minds of the parties to a contract, the proper remedy is:
a Ratify the contract
b Ask for specific performance
c Annulment of contract
d Reformation of contract
2. This is an accessory contract
a. Sales
b. Mutuum
c. Commodatum
d. Mortgage
3. The creditor cannot appropriate the thing pledged or mortgaged or disposed of them.
Any stipulation to the contrary is void.
The contract of pledge or mortgage may secure all kinds of obligations be they pure
or subject to a suspensive or resolutory condition.
a. True, true
b. True, false
c. False, true
d. False, false
4. These are real contracts except:
a. Commodatum
b. Deposit
c. Pledge
d. Chattel mortgage
5. X borrowed money from a bank secured by mortgage on the land of Y his close
friend. When the loan matured, Y offered to pay the bank but it refused since Y was
not the borrower. Is the banks action correct?
a. Yes, since X the true borrower did not give his consent to Ys offer to pay
b. No, since anybody can discharge Xs obligation to his benefit
c. No, since Y, the owner of the collateral has an interest in the payment of the
d. Yes since it was X who has an obligation to the bank
6. Rodulf borrowed P1m from Rodrigo and Fernando who acted as solidary creditors.
When the loan mature, Rodrigo wrote a letter to Rudolf demanding payment of the
loan directly to him. Before rodulf could comply, Fernando went to see him personally
to collect and he paid him. Did Rodulf make a valid payment?
a No, since Rodulf should have split the payment between Rodrigo and Fernando
b No, since Rodrigo, thhe other solidary creditor already made a prior demand for
payment from Rodulf
c Yes, since the payment covers the whole obligation
d Yes, since Fernando was a solidary creditor, payment to him extinguished the
7. A stipulation in favor of a third person
a Stipulation pour autrui
b Stipulation pour over
c Assignment of credit
d Pactum Commissorium
8. Alfelor borrowed P50 000 from Bayani and as security for its payment mortgaged his
car to Bayani. Upon failure to pay, Bayani sold the mortgaged chattel but the
proceeds did not fully satisfy the secured debt. Can the mortgagee recover the
deficiency from the mortgagor?
A. No, the provisions of pledge prohibiting recovery will apply
B. No, the provisions of Recto Law will apply
C. Yes, there is no such prohibition under the Civil Code although prohibited under the
Chattel Mortgage Law
D. Yes, there is no such prohibition under the Civil Code and in the Chattel Mortgage
9. X borrowed money from Y and gave a piece of land as security by way of mortgage. It
was agreed between the parties that upon nonpayment of the loan, the land would
already belong to Y. If X failed to pay the debt, would Y now become the owner of the
A. Y would become the owner because it was agreed upon by them based on the
principle of autonomy of contracts
B. Y would not become the owner because the agreement that he would become the
owner upon default of X against the law
C. Y would now become the owner but with the right to redemption by X
D. Y would not become the owner if X annuls the voidable agreement
10. A owes B P5 000 and as security, A pledged his diamond ring. Later A borrowed again
P2 000. As a result
A. B has a right to retain the thing until the P7 000 is paid
B. B has a right to retain the thing until the P5 000 is paid
C. A has a right to demand that the thing be deposited with a third person
D. B has the right to use the thing pledged until the pledge effects payment of the
11. A borrowed from C P1 000 000 to secure the payment of which the former verbally
agreed to deliver his 4 hectares 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 he loan is null and void
12. D mortgaged his car on 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 the creditor
C. Yes, if so agreed upon by the parties
D. No, unless stipulated
13. Based on the preceding case, suppose it was a pledge, would the debtor/pledger 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

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

A. Application of payment C. Cession en pago
B. Dacion en pago D. Tender of payment and consignation
15. S sold his car for the price of P2M to B who shall pay P.5M and deliver to S his land
worth P1M and the amount of P1M. There is:
A. Partly sale and partly barter C. Innominate contract
B. Barter D. Sale
16. 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 B. Expromision C. Subrogation D. Novation

17. Which of these is not a conditional obligation?

a. D is to pay C P1,000,000 if he finishes his LL.B. at the V.P.
College of law.
b. D will pay C P500,000 as soon as his financial means will
permit him to do so.
c. D is to pay C P2,000,000 ten days after his 80th birthday.
d. D will pay C P1,000,000 twenty days after he passes the
C.P.A. exams for October 2008.
e. None of the above.

18. A, B, & C obligated themselves to deliver to X a specific and

determinate car valued at P600,000. Due to the fault of A, the car
was not delivered to X causing the latter damages in the amount
of P9,000.
a. By specific performance. X can compel B & C to deliver 1/3
each of the car and H to pay damages.
b. The action of X is converted into one for damages
where he hold liable A, B & C for P203,000 each.
c. The action of X is converted into one for damages
where he can hold B & C liable for P200,000 each and A for
d. The action being solidary and indivisible only A can be held
liable by X for P609,000.

19. Payment shall be made to, except:

a. Obligee
b. Creditors assignee
c. Obligor
d. Executor of the deceased obligee

20. The delivery of a private document evidencing a credit, made

voluntarily by the creditor to the debtor even before the debt is
paid, extinguishes the obligation by:
a. Express remission b. Compensation c. Implied remission d.
21. Contracts are effective and binding only between the parties, their
assigns and their heirs. Three of the following enumerations are
exceptions as provided by law. Which does not belong to the
a. Where there is a stipulation in favor of a third party
b. Where one of the parties to the contract dies and thereafter a suit
is filed on the basis of the contract.
c. Where the obligations arising from contract are not transmissible by
their nature.
d. Where the obligations arising from contract are not transmissible
by stipulation or by provision of law.

22. Statement 1: There is stipulation pour autrui in case the

stipulation states that one of the parties to a contract is exempt from
all previous claims and damages sustained by the other party.
Statement 2: A stipulation pour autrui need not be in any particular
form, and may even be inferred from the fact that the beneficiary has
enjoyed the same for a considerable period

a. Both statements are true

b. Both statements are false
c. Statement I is true but statement II is false
d. Statement I is false but statement II is true
23. The following, except one, are the characteristics of void or
inexistent contract. Which is the exception?
a. They are not subject to ratification
b. The right to raise defense of illegality cannot be waived.
c. The defense of illegality of the contract is available to third
persons whose interest is not directly affected.
d. The action or defense for declaration of the nullity or
inexistence of the contract does not prescribe.

24. Boy Tigas entered into a contract of sale wherein Boy Tigas will
bought a knife with Jun for P3,000. However Boy Tigas bought the
knife to kill karding his mortal enemy. The contract between Boy Tigas
and Jun is:
a. Valid
b. Void
c. Rescissible
d. Unenforceable
e. Voidable
25. If movable property should have been sold to different vendees,
the ownership shall be transferred to the person
A. Who have paid in good faith the purchase price in full.
B. Who in good faith first recorded it in the Registry of
C. Who present the oldest title in good faith.
D. Who had first taken possession in good
26. M makes a negotiable promissory note for P10 000 with the name of the payable in blank. The
note is stolen by P who inserts his name as payees and then endorse 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

27. A issued a note payable to bearer. He delivers the note to B. B endorsed the note specially to
C, and C negotiates the note by delivery to D. Which of the following is not correct?
A. D can enforce the note against C C. D can enforce the note against B
B. D can enforce the note against A D. C can enforce the note against B

28. This provision renders a note non-negotiable

A. A promises to pay the order of B the sum of US$1 000 payable in pesos at the rate of exchange
prevailing on November 14, 2010
B. A promise to pay B P1 000 with 12% interest thereon
C. A promises to pay B P1 000 in two equal instalments, the first payable on November 12, 2010
and the second on December 14, 2010
D. A promises to pay B P1 000 and all costs, charges and expenses including reasonable attorneys

29. Which of the following is non-negotiable?

A. I promise to pay B or order P10 000 on or before December 14, 2010 in payment of purchase
price of the merchandise I bought from him. Sgd. A
B. Pay to the order of B P20 000 on or before December 14, 2010 and charge the same amount 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 November 14, 2010. To C Sgd. A

30. The following are negotiable except

A. Drawer A directs drawee B to pay C or order P10 000, 30 days after C passes the CPA board
B. Drawer A directs drawee B to pay C or order P10 000, 30 days after demand
C. A promises to pay B or order P10 000 within 30 days after the death of C
D. A promises to pay B or order P10 000 on or before August 14, 2010

31. This is 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

32. 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
33. Which of the following is negotiable instrument?
A. Pay to the order of C and reimburse yourself if out of the rentals of my house in Manila. (Sgd) A
To: B and X
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 bearer C P1M. Reimburse yourself out of the house rentals of my house in manila. (Sgd) A
to B

34. 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
A. No, because the special endorsement of P has made the notice to be payable to order and must
be endorsed to negotiate
B. No, because Y did not acquire title to the instrument due to lack of proper endorsement
C. Yes, because M, as make, is absolutely liable to pay the instrument in the hands of any holder
D. Yes, because an instrument originally payable to bearer remains to be payable to bearer despite
special endorsement made thereon

35. In a blank endorsement, the endorses renders himself

A. Primarily liable C. Solidarily liable
B. Secondarily liable D. Subsidiarily liable

36. Real and personal defenses may be raised between

A. Immediate parties C. Intervening parties
B. Remote parties D. Subsequent parties

37. This is a real defense

A. Fraud in inducement C. Want of delivery of an incomplete instrument
B. Want of consideration D. Duress in the absence of physical pressure

38. P, by means of fraud, induced M to issue a promissory note payable to the order of P for
P21,000. The note was indorsed by P to A, and A to H. A and H had agreed to a consideration
of P20,000 (or a discount of P1,000). Initially, H gave A the amount of P18,000. Before he could
give the balance of P2,000 to A, H learned that P's title was defective. Is H a holder in due
a. Yes, for P21,000
b. Yes, for P18,900
c. Yes, for P18,000
d. No, he is not a holder in due course because he obtained knowledge of a defect in the title of a prior
party before he could pay in full to A, the agreed consideration of P20,000.
39. Partners A, B and C contributed: P-P1M; B-P2M; 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 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
40. 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