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Obligation baby horse.

(RPCPA, 88-1)
1. Unless the law or the stipulation of the parties required another standard of care, the a. Z is entitled to the baby horse which was born after the perfection of the contract.
obligation to give a thing carries with it the obligation to take care of it with: b. Y is entitled to the fruit (baby horse) as Z has not paid the price yet.
a. Extra ordinary diligence c. Y is entitled to the fruit (baby horse) because it was born before his obligation to deliver
b. Ordinary diligence the horse.
c. Diligence of a good father of a family d. Z should pay additional amount for the baby horse to be entitled to it.
d. Answer not given RPCPA 0591
8. There shall be no liability for loss due to fortuitous events in one of the following cases. Which
2. The buyer of a thing has the right to the fruits of the thing: is it?
a. From the time the thing bought is delivered. a. When the debtor delays.
b. From the time the sale is perfected. b. When the parties so stipulated that there shall be liability even in case of loss due to
c. From the time the obligation to deliver the thing bought arises. RPCPA 1089 fortuitous events.
d. From the time the fruits are delivered. c. When the nature of the obligation requires the assumption of risks.
d. When the obligation is to deliver a determinate thing and there was no stipulation as to
3. The obligation of the employer to pay death benefits and funeral expenses for his employer's the liability of the debtor in case of loss due to fortuitous events.
death while in the course of employment as sanctioned by the Workmen's Compensation Act
is one that arises from: 9. When A voluntarily takes charge of the neglected business of B without the latter's authority
a. Law c. Quasi contract where reimbursement must.be made for necessary and useful expenses, there is a:
b. Contracts d. Answer not given RPCPA, 0591 (RPCPA, 97-2)
a. Quasi delict c. Negotiorum gestio
4. A mango tree in the land of O is reclining towards the road. All of a sudden, without a storm b. Quasi contract d. Solutio indebiti
or an earthquake or even strong wind, the tree falls hitting a car belonging to X causing a
P20,000 damage. The liability of 0 to X arises from: 10. Judy bought two (2) softdrinks at the price of P10.00 each. She paid the store P20.00. The
a. Law d. Delict store give her two softdrinks and coins worth P10.00. What is the source of obligation of
b. Contract e. Quasi-delict Judy?
c. quasi-contract a. Negotiorum gestio c. Solutio indebiti
b. Quasi contract d. Law
5. The following are the requisites of an obligation, except:
a. Passive subject, debtor or obligor 11. S sold 100-bottles of imported "Fundador" brandy to B who paid immediately the price thereof
b. Active subject, creditor, or oblige amounting to P20,000.00. S promised to deliver the brandy to B within one week from their
c. Efficient cause agreement. On the agreed date of delivery, S delivered to B 100 bottles of fake "Fundador"
d. Demand brandy. The contract between S and B is:
a. voidable. c. valid
6. Proof of pecuniary loss is necessary for the award of: d. void d. rescissible.
a. Liquidated damages c. Actual damages .
b. Exemplary damages d. Temperate damages . 12. On a certain year, D was obliged under a contract executed on March 1 to deliver an
agricultural land to C on April 1. D, however, actually delivered the land and the fruits thereof
7. Y sold his horse to Z for P50,000. No payment has yet been made and the sales document to C on May 1. C became the owner of the agricultural land and the fruits thereof on:
does not provide the date of delivery. Before delivery and payment, the horse gave birth to a a. March 1.
b. April 1. b. Phoebe can sues Kates for the annulment of the contract since it is voidable.
c. May 1. c. Phoebe can sue Kates for damages because the waiver he made is void. Nonetheless,
d. The period should be fixed by the court so that it can be determined when C actually the contract is valid.
became the owner of the agricultural land and its fruits. d. Phoebe can sue Kates for the rescission of the contract since it is rescissible.

13. This obligation is demandable at once: 18. One of the following is a determinate thing. Which is it?
a. pure obligation a. Cow.
b. obligation subject to a resolutory condition b. A horse.
c. obligation with an in diem period c. A Toyota car with engine no. 12345, body no. 34890 and plate no. ABC 123.
d. all of the above d. A ring with diamond embellishment.

14. When the thing deteriorates pending the fulfillment of the suspensive condition without the 19. This person is liable for the loss of the subject matter by fortuitous event: (RPCPA, 85-2; 88-
fault of the debtor, the impairment is: (RPCPA, 98-1) 1; 89-1)
a. to be borne by the party who caused the deterioration a. Creditor c. Both a and b
b. to be borne partly by the debtor and partly by the creditor b. Debtor d. None of them
c. to be borne by the debtor
d. to be borne by the creditor 20. The following are the remedies of the creditor to pursue his claims against the debtor, except
to:
15. Grelim obliges himself to give his only car to Goliath. What is the kind of prestation in the a. pursue the property owned and in possession of the debtor.
given example? b. exercise all the rights and bring all the actions of the debtor (accion subrogatoria).
a. Determinate c. Divisible c. impugn the acts which the debtor may have done to defraud his creditors (accion
b. Indeterminate d. Indivisible pauliana).
d. compel the debtor to perform the service in obligations to do.
16. One of the following obligations is not immediately demandable.
a. Pure obligation. 21. One of the following is a valid obligation. Which is it?
b. Obligation with a resolutory condition. a. D promised to give C P50,000.00 if C will not swim across the Pacific Ocean.
c. Obligation with an in diem period. b. D promised to give C P50,000.00 if D goes to Tokyo.
d. Obligation with an ex die period. c. D promised to give C P50,000.00 if C can fly to the moon.
d. D promised to give C P50.000.00 if C gives him 5 grams of marijuana..
17. Kates and Phoebe entered into contract whereby Kates would- deliver 5 pieces of genuine
Rolex wristwatches to Phoebe. Kates proposed to Phoebe that should she deliver 5 units of 22. D, on June 19, 2000 obligated himself to C to sell to the latter his house and lot for the very
fake pieces of Rolex wristwatches by reason of financial difficulties on her part, Phoebe cheap price of P5,000,000 on condition that C passes the CPA board examinations to be
would not sue her for damages on the ground of fraud. Phoebe accepted the proposal. On given in October 2000. In the meantime, not believing that C will pass the board exams, D
due date, Kates delivered 5 pieces of fake Rclex wristwatches. Upon discovery of the fraud, sold the house to T sometime in August 2000, In November 2000, C passed the exams
Phoebe sues Kates for damages. Kates contends that she cannot be held liable for damages unexpectedly. Who has a better right to the house and lot? Assume that C and T did not
because Phoebe waived her right to holdher liable on the ground of fraud if the reason record their transaction with the Registration of Deeds and neither did they take possession.
thereof is the financial difficulties of Kates. a. C has a better right to the house and lot because said right goes back to the time when
a. Phoebe cannot sue Kates for damages because the reason for the waiver is valid, i.e the obligation was contracted on June 19, 2000 although the condition was complied
financial difficulties of Kates, which is a valid reason for the waiver. with only in November 2000.
b. Thas a better right since it was sold to him in August, 2000 whereas the condition in
favor of C was complied only sometime in November 2000. 26. D is under obligation to pay C P500,000 on December 15, 2002. Before due date, D wants to
c. Because of the controversy between C and T can decide not to sell the house and lot pay C P500,000 but the latter refuses to accept because the obligation is not yet due. Decide,
anymore. a. D can compei C to accept payment because when an obligation is with a period, said
d. Correct conclusion not given. period is for. the benefit.of the debtor only.
b. C can refuse to accept payment because when an obligation is with a period, the benefit
23. D borrowed from C P5,000,000 promising to pay upon the sale of his house and lot at 123 is only for the creditor,
Rizal Avenue, Manila. The obligation of D to C is: c. C can refuse to accept because when an obligation is with a period, said period is
a. an obligation with a period presumed to be for the benefit of both debtor and .creditor.
b. an obligation with a potestative condition the fulfillment of which solely depends on the d. Correct answer not indicated.
will of the debtor and therefore void
c. C can collect only when D is able to sell the house and lot 27. An obligation with a period:
d. only the condition is nullified, but not the obligation in which case C can collect even if a. D will pay C P1,000.00 X dies.
the house and lot is not sold. b. D will pay C P1,000.00 when X dies of TB.
c. D will pay C P1,000.00 when he finishes his course in Business Administration.
24. Mr. AB owes Mr. CD P150,000 due on August 31, 1987. Mr. AB executed a mortgage in d. None of the-above
favor of Mr. CD on Mr. AB's building to guaranty the obligation. On August 10, 1987 the
mortgaged building was totally lost due to a strong typhoon. On August 12, 1987, Mr. CD 28. D is obliged to give C a specific watch, a specific ring, or a specific bracelet. The parties
demanded payment from Mr. AB. Is Mr. CD's demand valid? (RPCPA, 88-1; 88-2-M; 89-1-M; agreed that C will' have the right to choose the thing which will be given to him. Before C
90-2-M; 93-2-M;) could make his choice, the watch and the ring are lost through D's fault, successively, What is
a. No. The obligation is one with a definite period, thus the creditor cannot demand the right of C?
fulfillment of the obligation as such would the prejudicial to the rights of the debtor. a. C may choose the delivery to him of the bracelet, or the price of the watch or the price of
b. No. The obligation is extinguished because the obligation is lost through a fortuitous the ring plus damages.
event. b. C cannot choose the price of the watch or the price of the ring because the said objects
c. Yes. The debt becomes due at once because the guaranty was lost even through a have already been lost.
fortuitous event unless the debtor can mortgage another property that is equally c. C can only choose to have the bracelet because anyway, D can still perform his
satisfactory. obligation,
d. Yes. The debt becomes due at once because, from the tenor benefit is given solely to d. C can only choose to have delivery of the bracelet or the price of the ring which was the
the creditor thereby giving the creditors the right to demand performance even before the last item that was lost plus damages.
date.
29. D is obliged to give C a specific ring. The parties agreed that D may give a specific bracelet
25. In the following cases, the debtor loses the right to use the period in which case the obligation as substitute. Which of the following statements is true?
becomes immediately demandable. Choose the exception: a. If the ring is lost through a fortuitous event before substitution, the obligation is
a. When after the obligation is contracted, the debtor becomes insolvent but he gives a extinguished.
collateral security or guaranty. b. If the bracelet is lost through a fortuitous event before substitution, the obligation is
b. When he fails to furnish the collateral security that he has promised, extinguished.
c. When the collateral is impaired whether through his fault or by fortuitous event. c. If the ring is lost through a fortuitous event after substitution, the obligation is
d. When the debtor attempts to abscond. extinguished.
e. None of the above. d. If the ring is lost through the debtor's fault after substitution, the debtor shall pay
damages. I. The nullity of the principal obligation carries with it the nullity of the penal clause.
II. The nullity of the principal obligation does not carry with it the nullity of the penal clause.
30. This is the promissory note: We promise to pay A, B and, C the sum of ONE HUNDRED III. The nullity of the penal clause carries with it the nullity of the principal obligation.
EIGHTY THOUSAND (P180,000) PESOS within 60 days. Signed X, Y and Z": IV. The nullity of the penal clause does not carry with it the nullity of the principal obligation.
(RPCPA, 1089; 90-1, 87-2-M; 88-1-M; 88-2-M; 88-2-M; 89-1-M; 90-1-M; 90-2-M; 92-1-M; 92- a. Statements I and III are true.
1-M; 92-2- b. Statements I and IV are true.
M; 95-1-M; 95-1-M; 96-1-M; 96-1-M; 96-2-M; c. Statements II and III are true.
a. X is obliged to pay A P20,000 d. Statements II and IV are true.
b. X is obliged to pay A P60,000
c. X is obliged to pay A P180,000 35. D borrowed from C P100,000 with an agreement that upon failure to pay on due date, a
d. X is obliged to pay A, B and C P180,000. penalty of 20% shall be imposed. On due date, the P100,000 was not paid. C can collect
from D:
31. A, 25 years old, B, 35 years old, and C, 17 years old, are solidary debtors of X in the amount a. P100,000 only
of P9,000.00 b. P100,000 plus penalty
a. X may collect from A 9,000,00. c. P100,000 plus penalty plus interest at 12%
b. X may collect from A 6,000.00. d. P100,000 plus penalty plus interest plus damages
c. X may collect from A 1,000.00,
d. X may collect nothing because the obligation is voidable, C being a minor. 36. In the following cases, interest or damages can be collected by the creditor from the debtor in
addition to the penalty agreed upon.
32. A, B and C obligated themselves to deliver to X specific car worth P300,000. On due date, a. If there is a stipulation to that effect.
said car is not delivered to X due to the fault of A causing a P9,000 damage to the former. In b. If the debtor defaults in the payment of the penalty.
this case: c. Where the debtor commits fraud in the fulfillment of the obligation.
a. X can compel any of A,B and C to pay P309,000. d. All of the above
b. The obligation of A, B and C is presumed to be joint and therefore, X cam compel A, B e. None of a, b, and c
and C to each deliver 1/3 of the car plus damages of P3.000.
c. The obligation of A, B and C is presumed to be joint, but the action is converted into one 37. Dominico and Domingo are jointly and severally liable to Crispino for P100,000.00. The
for damages where X can collect from A, B and C P103,000 each. obligation is due on June 30, 2012. On June 25, 2012, Dominico paid the whole amount of
d. The obligation of A, B and C is presumed to be joint but the action is converted into one the note to Crispino. If Domingo reimburses Dominico on July 15, 2012, Dominico is entitled
for damages where X can collect from A PIO'9,000 and from B and C P100,000 each. to receive from Domingo:
a. P50,000.00 plus interest from June 25 to July 15, 2012.
33. A obliges himself to pay X P100,000 in 30 days plus a penalty of P20,000 if A fails to pay the b. P50,000.00 plus interest from June 25 to June 30, 2012.
obligation in due time. A failed to pay the obligation in 30 days. X can demand from A: c. P50,000.00 plus interest from June 30 to July 15, 2012.
(RPCPA, 90-2) d. P50,000.00 with no interest because Dominico paid the note before due date.
a. The principal of P100,000 plus P20,000 penalty.
b. The principal of P100,000 plus P20,000 penalty, plus legal interest damages. 38. Dodgie owes Cathy the sum of P100,000 guaranteed by Josie. Sasy, a stranger to the
c. The principal of P100,000 plus legal interest. obligation offers to pay Cathy P100,000 and the latter accept the offer of payment. However,
d. The principal of P100,000 plus P20,000 penalty, plus legal interest, plus damages. Dodgie already paid Cathy P45,000. The payment by Sasy is with the knowledge of Dodgie
but against his will. Sasy may recover from Dodgie:
34. Consider the following statements: a. P100,000 and to subrogate to the guaranty
b. P55,000 and to subrogate to the guaranty 43. Consignation is a mode of payment which extinguishes an obligation. Which of the following
c. P100,000 but not entitled to subrogate to the guaranty is not a requisite for consignation? (RPCPA, 87-1)
d. P55,000 only because this is the only amount redounded to the benefit of Dodgie. a. Actual consignation with the proper judicial authorities.
b. Prior notice has not been made.
39. In the following cases, interest or damages can be collected by the creditor from the debtor in c. Existence of a valid debt.
addition to the penalty agreed upon. d. There must be prior notice of consignation to persons interested in the fulfillment of the
a. If there is a stipulation to that effect, obligation.
b. If the debtor defaults in the payment of the penalty.
c. Where the debtor commits fraud in the fulfillment of the obligation. 44. When the debtor abandons and assigns all his properties in favor of his creditors for the latter
d. All of the above to sell to satisfy his credits, this is: (RPCPA, 90-1; 90-2-M; 94-2-M )
e. None of a, b, and c a. Remission c. Dation in payment
b. Payment by cession d. Expromission
40. D is indebted to C in the amount of P500,000. By dacion en pago D conveyed to C the
ownership of a car with an agreed appraised value of P700,000. 45. D owes the following creditors: X, P20,000.00; Y, P30,000.00; and P50,000.00. D is insolvent
a. The obligation of D to C is automatically extinguished. so he offers to assign all his properties (except those exempt from execution) to his creditors
b. The obligation of D to C is not extinguished because they agreed to sell the car from in payment of his debts. The creditors accept the offer and are able to sell the debtor's
which the payment of P500,000 is to be derived. properties for P70,000.00. Based on the foregoing facts, which of the following statements is
c. The obligation of D to C is automatically extinguished and on top of that C has to pay D incorrect?
P200,000. a. The special mode of payment availed of by D is payment by cession.
d. Correct answer not indicated. b. D is released from his total liability of P100,000.00 even if there is no stipulation to that
effect.
41. The following statements pertain to either payment by cession or dacion en pago. c. D is released from his liability only to the extent of P70,000 in the absence of any
I. The debtor is insolvent. stipulation giving him total release.
II. Ownership of the thing/s is transferred to the creditor/s. d. The creditors did not become the owners of D's properties at the time of their
III. Plurality of creditors is required. assignment.
IV. Obligations are totally extinguished as a rule.
a. Statements I and IV pertain to payment by cession. 46. Payment under the following cases are valid except:
b. Statements I and III pertain to dacion en pago. a. Payment made in good faith in possession of the document evidencing the credit.
c. Statements II and IV pertain to dacion en pago b. Payment made to incapacitated person that redounded to his benefit
d. Statements III and IV pertain to payment by cession. c. Payment made to 3rd person that redounded to the benefit of the creditor
d. Payment made to the creditor.
42. A, B and C solidarity owe X and Y P30,000. X remitted the entire obligation in favor of A. The
effect is: (RPCPA, 97-2) 47. D obtained from ABC Bank a loan of P12,000,000.00 payable at the end of 10 years. Before
a. The obligation is not extinguished until A collects from B and C. maturity, an extraordinary inflation supervened causing the value of the debt to fall to
b. The obligation is not yet extinguished until Y is paid by X of Y's share of the credit. P4,000,000.00 on the date of maturity. On due date, D must pay ABC Bank:
c. A cannot recover from B and C because remission in his favor extend to the benefit of B a. P12,000,000.00. c. P36,000,000,00
and C. b. P4,000,000.00. d. P3,000,000.00.
d. A can recover from B and C their respective share of the debt.
48. In order that condonation may extinguish an obligation involving a movable property whose
value exceeds P5,000.00 him his tape recorder. D consents and gives C the tape recorded. D's obligation is
a. It is sufficient that the condonation and the acceptance are in writing, even a private one. extinguished by:
b. It is required that the condonation and the acceptance must be in a public instrument. a. Payment c. Confusion
c. The delivery of the document evidencing the debt is sufficient since the property is b. Condonation d. Compensation
movable.
d. The condonation and the acceptance may be made orally. 54. When two persons in their own right, are debtors and creditors of each other, there is
a. Confusion c. Novation
49. D owes C the following debts: P6,000.00 due on June 12; P6,000.00 due on June 15; b. condonation d. compensation
P6,000.00 due on June 18; and P6,000.00 due on June 20. All debts are unsecured except
the debt due on June 20 which is secured by a pledge of D's diamond ring to C. By 55. When the characters, of debtor and creditor are merged in the same person with respect to
agreement, the benefit of the term on the four (4) debts was made in favor of C. Assuming the same obligation, there is:
that D has P6,000.00 on June 18 and is ready to pay C, which of the following statements is a. Remission c. Novation
correct? b. compensation d. None of the above
a. D may apply his payment of P6,000.00 to any of the debts due on June 12, June 15, and
June 18 since they are all due as of June 18. 56. Paw, husband, and Ai, wife, are legally separated. By order of the court which decreed the
b. D may apply it only to the debt due on June 20 because it is the most burdensome to legal separation, Paw is obliged to give monthly support of P20,000 to Ai and their children
him. payable within the first five days of the month. Ai owes Paw P10,000 by way of a business
c. D must apply the payment proportionately to the debts due as of June 18 at P2,000,00 loan. On the other hand, Paw has not yet given Ai's support of P20,000 for this month. Both
each. debts are already due. Which of the following statements is correct?
d. D may apply the payment to any of the four debts. a. Both debts are extinguished by legal compensation because both are already due.
b. Ai may claim compensation but not Paw
50. When the characters of creditors and debtor are merged on the same person, the mode of c. Paw may claim compensation but not Ai
extinguishing an obligation is called: (RPCPA, 86-2; 91-l-M; 96-2-M) d. Neither one may claim compensation because the debts are not of the same kind.
a. Confusion or merger c. Novation
b. Compensation d. None of the three 57. D owes C P50,000.00. Subsequently, D proposed to C that T Will assume his (D's) debt. C
accepted the proposal of D. This substitution of debtor is known as
51. Insolvency of the debtor is required in: a. Expromision. c. Tradition.
a. Dation in payment b. Delegation. d. Dacion en pago.
b. Payment by cession
c. Tender of payment and consignation 58. A obliged himself to give B a car if B places among the top ten in the CPA Board Exam.
d. Application of payment Subsequently,, they agreed that A will give B the car if B merely passes the CPA Board. This
is an example of: (RPCPA, 94-2)
52. Delivery of property in satisfaction of a debt in money is: a. Mixed novation c. Implied novation
a. ADJUDICACION EN PAGO b. Real novation d. Personal novation
b. Payment by cession
c. Consignation 59. D obliged himself to give 5 grams of shabu to C. Later, the parties agreed that D would
d. None of the above instead give to C 5sacks of rice. Which of the following statements is correct?
a. The novation is void because the original obligation is void. Hence, C cannot demand
53. D owes C PI,000.00 C tells D that he is willing to forego collection if the latter will just give the delivery of 5 sacks of rice from D.
b. The novation is valid because the new obligation is valid. Hence, C can demand the will of one of them. This is known as the principle of:
delivery of 5 sacks of rice from D. a. mutuality of contract c. consensuality of contract,
c. The original obligation although void is validated by the new obligation. Hence, C can b. relativity of contract, d. freedom to contract.
demand the delivery of 5 sacks of rice from D.
d. The new obligation is only voidable because D had not yet performed the original 2. DO UT FACIAS:
obligation at the time of the novation. Accordingly, the new obligation is binding and C a. I give that you give
may demand the delivery of 5 sacks of rice from D until the new obligation is annulled by b. I give that you make
a proper action in court. c. I make that you give
d. A make that you make
60. The distinction between conventional subrogation and assignment is that in conventional
subrogation: (RPCPA, 0591) 3. The stipulation in a contract to the effect that the debtor should remain as a servant in the
a. It is a mere cession of right. house and in the service of her creditors so long as she had not paid her debt, is void
b. An obligation is extinguish and another appears. because it is: (RPCPA, 0591)
c. The same obligation, without being extinguished, is transferred to another. a. Contrary to good customs
d. Answer not given. b. Contrary to public policy
c. Contrary to law and morality
61. D owes C. Later, the parties agreed that instead of D paying C, he will just pay X. This is an d. Answer not given.
instance of:
a. Expromission c. Convertional subrogation 4. These persons are bound by contracts. (RPCPA, 35-2; 88-2)
b. Delegacion d. Legal-subrogation a. Contracting parties c. Assigns
b. Heirs d. All of them
62. A owes B P10,000. With consent of both, C pays B P5,000. Now B and C are the creditors of
A to the amount of P5,000 each. Suppose A has only P5,000. Which is correct? (RPCPA, 98- 5. Requisites of a valid cause: (RPCPA, 85-2)
1) a. It must be lawful c. It must be real
a. B and C should divide the P5,000 equally b. It must be true d. All of them
b. C should be preferred
c. A may choose whom to pay 6. D borrowed P500,000.00 from C. D died without having paid his loan obligation to C. He left
d. B should be preferred S, his son and heir, properties worth P400,000.00.
a. S is liable to C for P500,000.00.
63. These novations take place automatically or by operation of law. Choose the exception: b. S is liable to C for P400,000.00.
a. Where a creditor pays another creditor who is preferred. c. S is liable to C for P100,000.00.
b. Where a third person who has no interest in the obligation makes payment with the d. S is not liable at all because he should not be made to shoulder the obligation of his
consent of the debtor. father.
c. Where a third person who has an interest in the obligation makes payment to the
creditor. 7. F owes C P10,000,000, F dies leaving to the only heir S a house and lot valued at
d. None of the above. P7,000,000, S voluntarily pays P10,000,000. Decide:
a. In the first place, S is under no obligation to pay C because the P10,000,000 is not his
CONTRACTS debt.
1. The contract must bind both contracting parties; its validity c compliance cannot be left to the b. S is obligated to pay P10,000,000 because he becomes liable for the debts of his
predecessor-in-interest. acceptance on June 14, 2012 and the letter of revocation on June 15, 2012.
c. C cannot be compelled to return the excess of P3,000,000 because it is the natural a. The contract was perfected on June 14, 2012 when S received B's letter of acceptance.
obligation of an heir to pay the debts of his predecessor-in-interest if S voluntarily paid b. The contract was not perfected because at the time the acceptance was received, the
P10,000,000. parties were no longer of one mind.
d. If S paid C P10,000,000 the excess of P3,000,000 should be the subject of an c. The contract was perfected on June 10, 2012 when B sent his letter of acceptance.
agreement between S and C because it is unjust to S that he should lose his own money d. The perfection of the contract retroacts to June 1, 2012 when the offer was made.
of P3,000,000.
11. Mr. A. Santos signed a letter addressed and delivered to Mr. S. Aguas. The terms of the
8. Tadeo owned a vacant lot adjacent to a bigger lot where Star Circus planned to put up a two- letter are:
week performance as provided in the lease contract which it executed with Legaspi, the 1. An offer to sell a 500 sq. m. lot for P300,000.00.
owner of the bigger lot. In expectation of using his property for a parking lot, Tadeo leveled 2. An option time up to October 31, 1991 for Mr. S. Aguas to raise the P300,000.00.
his lot and built a small shed which cost him P20,000.00, an amount he had yet to pay the 3. Upon payment of the P300,000.00, Mr. A. Santos will execute and sign a Deed of Sale.
contractor. Later, however, the circus cancelled the performance, so Tadeo brought a court On October 31, 1991, Mr. A. Santos sent a letter to Mr. S. Aguas asking for a new price of
action to recover P20,000.00 from the circus and Legaspi. Based on the foregoing P350,000.00 for the 500 sq. m. lot. Can Mr. S. Aguas compel Mr. A. Santos to accept the
information, which of the following is incorrect? P300,000.00 and make him sign and execute a Deed of sale? (RPCPA, 92-2; 96-1-M)
a. The circus contract took effect only between Star Circus and Legaspi, the parties to the a. No. Mr. S. Aguas did not accept the offer of Mr. S. Santos
contract of lease. b. Yes. Mr. A. Santos is already estopped by his signed letter and offer
b. Tadeo can recover damages from Star Circus and Legaspi by reason of stipulation pour c. Yes. There was actual meeting of the minds
autrui. d. Yes. The contract is perfected
c. Tadeo must pay his own contractor the amount of P20,000.00 because that is the
obligation he alone contracted to pay. 12. Simulation of a contract may be absolute or relative. It is relative when:(RPCPA, 0591; 96-1)
d. Tadeo, as an incidental beneficiary, has no rights under the circus contract. a. The parties do not intend to be bound at all.
b. The contract is void.
9. Mr. Santos offered to sell his land to Mr. Calma for P100,000. Mr. Calma accepted the offer c. The parties conceal their true agreement.
and paid Mr. Santos P100,000and Mr. Santos delivered the owner's duplicate of the Transfer d. Answer not given
Certificate of Title of the land. Mr. Calma wishes to register the land in his name but the
Register of Deeds asked Mr. Calma for the Deed of Sale. What can Mr. Calma do? (RPCPA, 13. S sold one of his lots to B for P100,000.00. The lot, located beside a busy street, consisted
88-2) of 1,200 square meters and was covered by Transfer Certificate of Title (TCT) No. 12345.
a. Mr. Calma cannot compel Mr. Santos to return the payment because the contract is not After registering the sale with the Register of Deeds and the issuance to him by the said
enforceable. office of a new transfer certificate of title in his name, B discovered that deed of sale and the
b. Mr. Calma may sue Mr. Santos to return the price under the legal maxim "No one may new title described S's adjoining lot which, although also consisting of 1,200 squares meters,
enrich himself at the expense of another." was covered by TCT No. 12346 and located farther from the street. B learned that C, the
c. Mr. Calma may compel Mr. Santos to execute the Deed of Sale because the contract is secretary of S, typed the wrong description on the deed of sale. B now approaches you for
valid. advice on which course of action to take. What advice will you give to B?
d. Mr. Calma may occupy and use the land as a buyer in good faith. a. Annulment of the contract because he did not consent the purchase of the lot covered by
TCT No. 12346.
10. On June 1, 2012, S offered to sell his only car to B for P100,000.00. B accepted the offer by b. Rescission because the erroneous description caused him damages.
mailing his letter acceptance on June 10, 2012. On June 12, 2012, B revoked his letter of c. Reformation because the deed of sale failed to show the true intention of the parties to
acceptance and mailed his letter of revocation on the same date. S received the letter of the contract.
d. Declaration of nullity of the contract because it is void ab initio by reason of the wrong d. Neither party may ask for annulment since both are guilty of fraud. The contract, thereof,
object. is valid.

14. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the 18. Ramon, a movie actor who has fathered many children by different women, donated a house
cause which are to constitute the contract. Which of the following constitutes an offer: and lot to Jennilyn believing that the latter is his illegitimate daughter. The deed of donation
(RPCPA, 0591) and its acceptance were in a public instrument and a new certificate of title to the house and
a. An offer made through an agent lot was issued in the name of Jennilyn. A few months later, Ramon discovered that Jennilyn
b. Business advertisement of things for sale. was not his daughter but that of another movie actor. Ramon now wants to annul the
c. Advertisement for bidders. contract.
d. Answer not given a. Ramon may no longer annul the contract because all requisites have been complied with
and a new title already issued in the name of Jennilyn.
15. A contract is in the stage of conception when: (RPCPA, 92-1) b. Ramon may annul the contract on the ground of mistake as to the identity of Jennilyn.
a. There is meeting of the minds. c. Ramon may not annul the contract but he can rescind it because he suffered damages.
b. Negotiations are in progress. d. Ramon need not annul the contract but he can have it.
c. The parties come to the agreement.
d. The contract is perfected. 19. S sold his only car for P100,000.00 to B. Unknown to S, B bought the car from him so that he
could use the same in a bank robbery. What is the status of the sale of the car by S to B?
16. Fraud exists in three of the following. Which is the exception? a. The sale is void because the motive of B is illegal.
a. When through the insidious words or machinations of one of the contracting parties, the b. The sale is valid because the illegality of the motive of the parties to the contract does
other is induced to enter into a contract which, without them, he would not have agreed not have any effect on its validity.
to. c. The sale is voidable because of the failure to disclose his motive to S.
b. When there is a failure to disclose facts, when there is a duty to reveal them, as when d The sale is rescissible at the instance of S would be damaged by the illegal motive of B.
the parties are bound by confidential relations.
c. When there is an expression of an opinion by an expert which turned out to be wrong, 20. Contracts entered into a state of drunkenness or during a hypnotic spell are: (RPCPA, 93-1;
and the other party relied upon such expert knowledge. 97-1)
d. When the misrepresentation refers to the usual exaggerations in trade, and the other a. Void c. Voidable
party had an opportunity to know the facts. b. Valid d. Legal

17. Candelario, who knew that her ring was embellished with glass, told Cordelia that the 21. It takes place when the parties do not intend to be bound at all by their agreement:
embellishment was emerald. Cordelia, who knew that her watch was gold plated, told (RPCPA, 93-1; 96-l; 97-1)
Candelaria that it was made of pure gold. Cordelia, believing that Candelaria's ringwas a. Apparent contract
embellished with emerald, and Candelaria, believing that Cordelia' watch was made of pure b. Absolutely simulated contract
gold, then entered into a contract whereby they exchanged their respective articles. A week c. Relatively simulated contract
later, Cordelia discovered that the ring was adorned.only with an ordinary glass. d. Deed of assignment.
a. The contract may be annulled at the instance of Cordelia since she discovered the fraud.
b. The contract may be annulled at the instance of Candelaria since Cordelia also 22. Clarita and Aging entered into a contract where they made it appear that Clarita was
employed farud. mortgaging her lot and building to Aging to secure a contract of loan. The truth, however, was
c. The contract is void because of the bad faith of both parties; hence, it shall not produce that Clarita do was selling her lot and building to Aging. Which of the followings statements is
any effect. true?
a. The parties are bound by the contract of sale. c. When the party seeking resolution can perform only as to part and rescind as to
b. The parties are bound by the contract of loan and mortgage, remainder.
c. The parties are not bound at all. d. When the seller cannot return the installments paid to him by the buyer.
d. The parties are bound by the contract of sale only when third persons are affected.
27. Which of the following contracts is required to be in writing to be enforceable?
23. Which of the following is not a rule in the interpretation of contracts? (RPCPA, 87-1) a. An agreement that by its terms is not to be performed within a years from the making
a. If some stipulation of any contract should admit of several meanings, it shall be thereof.
understood as bearing that import which is most' adequate to render the contracts b. A special promise to answer for the debt, default or miscarriage of another.
effectual. c. An agreement made in consideration of marriage, other than a mutual promise to marry.
b. Words which may have different significations shall be understood in that which is most d. Sales of goods, chattels or things in action at a price not less than P500.00
in keeping with the nature and object of the contract. e. All of the above.
c. In order to judge the intention of the contracting parties, their contemporaneous and
subsequent acts shall be principally considered. 28. On July 15, 2011, X entered into a contract with Y. On February 10, 2012, X discovered that
d. Although the cause is not stated in the contract, it is presumed that it exists and is lawful, fraud was committed at the time he entered into the contract a fraud that vitiated his consent.
unless the debtor proves the contrary. The action for annulment shall be brought. (RPCPA, 87-2-M)
a. Within three years from the time of the fraud.
24. The defective contracts arranged according to the degree of their defectiveness from the b. Within four years from February 10, 2012
least to the most defective are: c. Within four years from the time A entered into the contract.
a. voidable, rescissible, unenforceable, and void contracts. d. On February 10, 2012
b. rescissible, unenforceable, voidable, and void contracts.
c. rescissible, voidable, unenforceable, and void contracts. 29. Leveriza, the owner of an apartment, leased the premises to Toribio. The terms of the lease
d. unenforceable, rescissible, voidable, and void contracts. provide for a monthly rental of P6,000.00 which shall be paid by Toribio at the residence of
Leveriza about two blocks from the apartment. For the month of December, Toribio we'nt to
25. Which of the following contracts is not rescissible? the residence of Leveriza but the latter was not around to receive the payment. Not wanting
a. Those which are entered into by guardian whenever the. wards whom they represent to go back, Toribio left the payment with Nograles, a neighbor of Leveriza, who promised to
suffer a lesion of more than 1/4 of the value of the object of the contract. give the payment to Leveriza. However, Nograles spent the amount he received for himself.
b. Those executed in representation of an absentee, if the latter suffer a lesion, of more Based on the foregoing facts, which of the following statements is incorrect?
than 1A of the value of the object of the contract. a. The payment by Toribio to Nograles is valid since the latter is a neighbor of Leveriza.
c. Those where one of the parties is incapable of giving consent to a contract. b. The payment by Toribio is not valid because Nograles was not authorized to receive the
d. Those undertaken in fraud of the creditors when the latter cannot in any other manner payment.
collect the claims due them. c. Leveriza can demand payment from Toribio for the December rental.
e. Those which refer to things under litigation if they have been entered into by the d. Toribio can go after Nograles for the amount misspent by Nograles.
defendant without the knowledge and approval of the litigants or of competent judicial
authority. 30. A contract may be enforced by or against a third person, except:
a. In the case of stipulation pour autrui
26. Rescission of contract can take place in this case: (RPCPA, 93-1; 97-1 ) b. When a third person induces another to violate his contract.
a. When the things which are the object of the contracted are legally in the possession of c. In case of contracts intended to defraud creditors.
third persons who acted in bad faith. d. When the benefit to the third person is merely incidental.
b. When he demands rescission can return whatever he may be obliged to restore.
31. In order that fraud may make a contract voidable: (RPCPA, 94-2) c. Mr. Javier can sue Mr. Burgos for enriching himself at the expense of another.
a. It may be incidental but both parties should not be in pari delicto. d. Mr. Javier can posses and utilized the land as a buyer in good faith.
b. It may be serious and the parties must be in pari delicto.
c. It may be incidental but should have been employed by both parties, 36. To defraud his creditors, A contracted B by selling a land to B. B now seeks to register the
d. It should be serious and should have not have been employed by both contracting land with the Register of Deeds. X a creditor of A seeks to prevent the registration on the
parties. ground that the contract is rescindable. Despite X's objection may the land be registered
based on the contract in B's name. (RPCPA, 87-2)
32. A month ago, S, 17 1/2 years old, orally sold his bicycle for P2,000.00 to B, his neighbor, who a. The land cannot be registered based on the contract which is rescindable.
was only 16 years old. The mother of S, learned about the sale by S of his bicycle, and b. The land cannot be registered because the contract is in fraud of creditor.
demanded that S give her the amount he received. S thus gave the proceeds of the sale to c. The land can be registered based on the contract because the contract is not yet
his mother who spent the same for the family's daily expenses. F, the father of B, also rescinded.
learned about the purchase by B of the bicycle when he saw it parked in their door and began d. The land can be registered because the contract is valid and can be attacked collaterally
using it almost daily since B bought the bicycle. Based on the foregoing facts, what is now the in a land registration proceeding.
status of the sale entered into between S and B?
a. Unenforceable because both parties were incapacitate to enter into the contract. 37. Manang, the guardian of Bata, a minor, bought the fish harvested from the fishpond of Bata
b. Unenforceable because the sale was not in writing. for P7,400.00. The fish, however, had a value of P10,000
c. Validated from inception because of the subsequent acts of the parent of the parties. a. The sale is rescissible because Bata suffered a lesion by more than one-fourth of the
d. Voidable because while B was only 16 years old, S was nearing the age of majority- value of the fish sold.
which is 18 years. b. The sale is voidable because Manang is disqualified to buy.
c. The sale is unenforceable because Manang sold the fish without approval of the courts.
33. The following is considered fraud or fraudulent: (RPCPA, 90-1) d. The sale is void because the object is outside the commerce of men.
a. Failure to disclose facts when there is duty to reveal them.
b. The usual exaggeration in trade, when the other party had the opportunity to know the 38. Mr. Esguerra, a former government employee, suffered from severe paranoia and was
facts. confined in the mental hospital in 1981. After his release he was placed under the
c. Misrepresentation made not in bad faith. guardianship of his wife to enable him to get retirement pay, In 1984 he became a mining
d. "Caveat Emptor" or let the buyer beware. prospector and sold some mining claims. In 1987 he sued to annul the sale claiming that he
was not mentally capacitated at the time of sale. The sale in question was: (RPCPA, 93-1;
34. There shall be no reformation of contract in the following cases, except: (RPCPA, 96-2) 97-1)
a. In testamentary wills a. Illegal c. Voidable
b. Simple donation inter vivos with no condition being imposed b. Void d. Valid
c. When the real agreement is void
d. A contract of sale fraudulently made as a contract of lease 39. Porpolio, a wealthy businessman, had often paid the debts of Envelop his younger brother, in
order to maintain the family's good name. One day, Porpolio received a text message in his
35. Mr. Burgos sold a parcel of land to Mr. Javier for P200,000. Mr. Burgos delivered the transfer ceil phone from Carton a banker, informing him that Envelop had obtained a loan from the
Certificate of Title of the land to Mr. Javier. Later, Mr. Javier wanted to registers the land to bank but had fallen behind in his payments. Porpolio called him and said "Don't worry, if he
his name and he needed a Deed of Sale. What can Mr. Javier do? (RPCPA, 89-1) doesn't pay in three months, I will be the one to pay". After three months, Carton sent again
a. Mr. Javier can compel Mr. Burgos to execute Deed of Sale a text message to Porpolio to inform him that Envelop had not made any payments and that
b. Mr. Javier cannot compel Mr. Burgos to refund the P200,000 because the contract is not Carton was demanding payment from Porpolio on account of the promise he had made three
enforceable. months before.
a. Carton may enforce payment against Porpolio on account of his promise since he had d. It is not B but S or T who can file the action for annulment.
been paying off the other debts of envelop.
b. Carton may not demand payment from Porpolio because his promise is unenforceable. 44. Reluctantly and against her good sense and judgment, Rosemarie entered for the delivery of
c. Carton may enforce payment against Porpolio as the oral promise is sufficient 5 tables to Corazon for a price of P15,000. Contract is: (RPCPA, 93-1; 97-1)
agreement between them. The requirement of writing is only for convenience. a. Void c. Unenforceable
d. Carton may enforce payment from Porpolio because as a wealthy businessman, b. Voidable d. Valid .
Porpolio should protect his name and that of his family.
45. A has a daughter B; X has a son Y. A, B, X and Y agree together that Y will marry B. The
40. Stanley, 17 years old, suffered a deep cut on his eyebrow during basketball game. He agreement is oral. If B latter on refuses to marry Y who has spent for the necessary wedding
requested one of his teammates to call Dr Ramos whose clinic was just a stone's throw from preparations and X and Y bring an action against A and B, will the action prosper? Decide:
the basketball court. Later, Dr. Ramos sent a bill to Stanley amounting to P500.00 for the (RPCPA 87-2)
services he rendered. Stanley refused to pay bill, claiming that, as a minor, he was not liable. a. Between Y and B, the action will not prosper because the agreement is made orally.
The charge was a reasonable amount. b. In case of A and X, the action will prosper because the agreement which was made
a. Stanley is not liable because he is a minor and thus incapable of giving consent to orally is enforceable as is based on the consideration of marriage.
engage the services of the doctor. c. As to A and X, the action will not prosper because the agreement is not enforceable as it
b. Stanley is liable although he is a minor because the contract involved a necessary. was not they who mutually promised to marry each other.
c. Stanley is liable only when he reaches the age of majority. d. The action of X and Y against A and B will prosper because the agreement is based on
d. The teammate is the one liable because it was he who personally called the doctor. the consideration of marriage other than mutual promise to marry.

41. Contracts entered into a state of drunkenness or during a hypnotic spell are: (RPCPA, 93-1; 46. F disappeared without his whereabouts having been known sometime in 1994. Whereupon
97-1) in 1996, W, his wife, sold his house and lot worth P10,000,000 for only P7,000,000 in favor of
a. Void c. Voidable T in order to support the family. In 1998, F resurfaced and began staying with his family. In
b. Valid d. Legal 2003, F decided to file an action to rescind the contract with T. In this case:
a. The contract of W with T is valid and, therefore, rescission will not be available as a
42. Cecilio had Ricardo kidnapped and tortured Eduardo for refusing to sell his (Eduardo's) laid to remedy.
Cecilio. Eduardo who could no longer bear the physical pains inflicted upon him signed a b. If F can return the P7,000,000 to T and the house and Ipt has not been sold to a buyer in
document of sale in favor of Cecilio. This sale is: (RPCPA, 91-2) good faith, he can validly ask for rescission.
a. Void c. Valid c. Even if F can return the P7,000,000 and the house and lot has not been sold to a buyer
b. Voidable d. Answer not given in good faith, rescission will not lie because more than 4 years had elapsed from the
reappearance and, therefore, his right to rescind has already prescribed.
43. S offered to sell to. B his house and lot for P10,000,000. In order to pressure B into buying d. Correct remedy not indicated.
said house and lot, T, a very good friend of S, threatened B with death as a result of which B
accepted the offer of S, It turns out now that the market value of the house and lot is 47. In a written contract of sale between S and B the true intention of the parties was not
P15,000,000. Is the contract of S and B valid? incorporated due to the mistake of S but where B is innocent. Assume that there was a
a. The contract is valid since it is very clear that S did not apply the intimidation. meeting of the minds between S and B. Who can bring the action for reformation?
b. The contract is voidable because the consent given by B is anyway vitiated even if the a. B only c. Both B and S
intimidation was employed by a third person. b. S only d. Neither B nor S
c. The issue of the contract being voidable is not relevant because B will not have the
contract avoidable because it is actually favorable to him. 48. W, a woman, agreed to live with H, a man, as the wife of H without the benefit of marriage in
exchange for the monthly support of P10,000.00 that H would give to W. Both H and W are c. The government can only prosecute S and B for violation of the Dangerous Drugs Act;
single, of legal age, and there is no legal impediment for them to get married. Their parents d. The government can criminally prosecute S and B and also confiscate the opium and the
have no objections to the two getting married. Based on the foregoing information, which of P900,000 as the instrument and fruit of the crime respectively.
the following statements is true?
a. The-agreement between H and W is valid because they can legally get married if they CONTRACT OF PARTNERSHIP
want to. 1. When cash or property worth P3,000 or more is contributed as capital, the Articles of Co-
b. The agreement between H and W is void for being contrary to morals. partnership shall, be in a public instrument, and registered with the Securities and Exchange
c. H may legally demand that W live with him as his wife. Commission. If the said requirement are not complied with: (RPCPA,1089)
d. W may legally demand that H give her the monthly support of P10,000 that he had a. It will be render the partnership void.
promised. b. It will not affect the liability of the partnership and the partners thereof to third parties.
c. It will not give a legal personality to the partnership.
49. Rescission of contract can take place in this case: (RPCPA, 93-1; 97-1 ) d. It will give the partnership a de facto existence.
a. When the things which are the object of the contracted are legally in the possession of
third persons who acted in bad faith. 2. Three (3) of the following are similarities, between a partnership and a corporation. Which is
b. When he demands rescission can return whatever he may be obliged to restore. not? (RPCPA, 88-2; 90-1; 90-1-M)
c. When the party seeking resolution can perform only as to part and rescind as to a. The individual composing both have little voice in the conduct of the business.
remainder. b. Both have juridical personality separate and distinct from that of the individuals
d. When the seller cannot return the installments paid to him by the buyer. composing them.
c. Like a partnership a corporation can act only through agents.
50. The following, except one, are the characteristics of void or inexistent contract. Which is the d. Both are organizations composed of an aggregate of individuals.
exception? (RPCPA, 93-2)
a. The defense of illegality of the contract is available to third persons whose interest is not 3. Which of the following statements is not correct? (RPCPA, 93-2)
directly affected. a. A partnership contract is not covered by the Statute of Fraud.
b. They are not subject to ratification b. A limited partnership is one having at least one general partner and one limited partner
c. The right to raise defense of illegality cannot be waived. and the limited partner shall not be liable for the obligations of the partnership.
d. The action or defense for declaration of the nullity or inexistence of the contract does not c. A limited partner who takes active part in the management of the firm becomes liable as
prescribe. a general partner.
d. The contract of partnership is void if it contains a stipulation which excludes a partner
51. This results in the ratification of a contract violative of the Statute of Fraud: from, sharing in the profits of the firm.
a. Receipt of benefits under the agreement.
b. Failure to object to the presentation of evidence proving the oral agreement. 4. Joseph and Edward entered into a universal partnership of all present property. At the time of
c. Both (a) and (b) their agreement, Joseph had a four-door apartment which he inherited from his father 3 years
d. None of (a) and (b) earlier. Edward, on the other hand, had a fishpond which he acquired by dacion en pago from
Robert. During the first year'of the partnership, rentals collected on the four-door apartment
52. S sold to b P900,000 worth of opium which the latter has already paid, but S has not amounted to P480.000.00; while fish harvested from the fishpond were sold for P300.000.00.
delivered the opium. During the same period, Edward received by way of donation a vacant lot from an uncle. The
a. B can compel S by specific performance to deliver the opium; partners had a stipulation that future property shall belong to the partnership. Which of the
b. If B cannot compel S to deliver the opium he can at least have the return of his following does not belong to the common fund of the partnership?
P900,000; a. Fishpond.
b. Rental of P480,000.00 a. Each partner will be considered as agent of the partnership.
c. Apartment. b. Any one may make an important alteration in the immovable property of the partnership
d. Vacant land. without the consent of the others provided it is useful to the partnership.
c. In case the act of one partner is opposed by another, the decision of the majority of the
5. Which of the following stipulations is valid? partners will prevail.
a. A stipulation excluding a capitalist partner from profits. d. In case of a tie in the voting, the tie shall be resolved to the vote of the partner owning
b. A stipulation exempting a capitalist partner from losses. the controlling interest.
c. A stipulation exempting an industrial partner from losses.
d. A stipulation excluding an industrial partner from profits. 10. Three (3) of the following are rights of a partner. Which one (1) is not? (RPCPA, 90-1)
a. Right to associate another person to his share.
6. Which of the following statements is not correct? (RPCPA, 93-2) b. Right to admit another partner.
a. A partnership contract is not covered by the Statute of Fraud. c. Right to inspect and copy partnership book.
b. A limited partnership is one having at least one general partner and one limited partner d. Right to ask dissolution of the firm at the proper time.
and the limited partner shall not be liable for the obligations of the partnership.
c. A limited partner who takes active part in the management of the firm becomes liable as 11. The share in the profits of a partner is regarded as received by him and thus taxable although
a. general partner. not yet distributed. This principle is known as: (RPCPA, 93-1)
d. The contract of partnership is void if it contains a stipulation which excludes a partner a. Advanced reporting of income.
from sharing in the profits of the firm. b. Actual receipt of income
c. Accrual method of accounting
7. The following persons are disqualified to form a universal partnership. Who are the d. Constructive receipt of income.
exception? (RPCPA, 88-2)
a. Brother and sister 12. The following statements pertain either to a partner appointed manager in the articles of
b. Husband and wife partnership or through a document after the formation of the partnership.
c. Those guilty of adultery and concubinage I. He may be removed as manager only for a just or lawful cause by the vote of the
d. Those guilty of the same criminal offense in the partnership is entered into consideration partners owning the controlling interest.
of the same. Il. He may be removed as manager with or without just or Iawful cause by the vote of the
partner owing the controlling interest.
8. Gregory, Edmond and Mark are partners in GEM Company with contributions of P10,000.00, III. He may perform all acts of administrator despite the opposition of his partners provided
P40,000.00 and P50,000.00 respectively. Their agreement shows that they will share in the he is in good faith.
profits in the ratio of 2:3:4. During the year, the partnership sustained a loss of P9,000.00. IV. He may perform all acts of administration in good faith but opposing partners may resort
How shall this loss be divided among the partners? to his removal if he persists.
a. Equally at P3,000.00 each. Based on the foregoing:
b. Gregory, P900.00; Edmond, P3,600.00; and Mark, P4,500,00. a. I and III pertain to a partner appointed as manager in the articles of partnership.
c. Gregory, P2,000.00; Edmond, P3,000.00; and Mark, P4,000.00. b. I and III pertain to a partner appointed as manager through a document after the formatio
d. The partners must establish first a loss sharing agreement before the loss may be a of the partnership
divided because they failed to have an agreement on the division of loss. c. II and III pertain to a partner appointed through a document after the formation of the
partners lip.
9. Which of the following statements is false when no one among the partners was appointed as d. I and IV pertain to a partner appointed as manager in the articles of partnership
manager?
13. Bears the loss of property contributed to the partnership. (RPCPA, 89-1) Donna should not place her interest before that of DEAR Company.
a. Capitalist partner b. The payment of P4,500.00 will be applied entirely to Donna's credit.
b. Limited partner c. The payment will be applied in partial payment of the partnership credit of P5,500.00;
c. Partners contributing usufructory rights. hence, there will be a balance of PI,000.00.
d. None of t le above. d. Tricia, Donna and DEAR Company will have to agree as to which credit the payment
shall apply.
14. A, B, and C are general partners in ABC Partnership. D is a debtor to the partnership in the
amount of P15,000. A received from debtor D the sum of P5,000 and issued; receipt 18. Torres is indebted for P5,000.00 to MACE Trading Company, a partnership managed by
identifying the amount as his share. Then D become insolvent, B and C cannot collect the Mendoza to whom Torres also owes P10,000.00. The two debts which are both demandable
P10,000. (RPCPA, 88-1-M; 92-1; 96-1-M) are unsecured. Torres remits P4,500.00 to Mendoza in payment of his debt to him.
a. A cannot be compelled to share the P5,000 with B and C. Accordingly, Mendoza issues a receipt for his own credit. To which credit should the
b. B and C can charge the capital of A with their share of I he P5,000. payment be applied?
c. A can by compelled to share B and C with the P5,000. a. To Mendoza's credit because the payment made by Torres is intended for his debt to
d. B and C should automatically sue D to collect the P10,000. Mendoza who issues his own receipt.
b. To both the partnership credit and Mendoza's credit proportionately at P1,500.00 and
15. A is the managing partner in A & B Company. X is indebted to A for P20,000 and to the P3,000 00 respectively.
partnership for P60,000. When both debts mature, X pays A P20,000 and the latter issued a c. To Mendoza's credit because its amount is greater than that of the partnership credit.
receipt for his personal credit. The payment for P20,000 shall be applied: (RPCPA, 95-1) d. To the partnership credit because the managing partner should not prefer his own
a. 1/4 in favor of A and 3/4 in favor of partnership. interest to that of partnership.
b. To the whole debt owing to A.
c. 1/2 in favor of A and 1/2 in favor of the partnership. 19. A is the capitalist partner and B the industrial partner. A engaged personally in the same kind
d. To the debt owing to the partnership. of business the partnership is engaged in: (RPCPA, 87-1-M; 88-2; 89-1-M)
a. If there are losses, the partnership will bear the losses.
16. In the partnership of A, B and C, A was appointed in the Article o; Co-partnership as b. If there are profits, the profits will shared by A and the partnership.
managing partner. As such manager and acting in good faith: (RPCPA,'90-2) c. If there are profits, A will give the profits to the partnership.
a. His power is revocable even without his consent, d. A will be excluded from the partnership and pay damages.
b. His power can be revocable at any time even without just cause provided that it is
approved by the partners owning the controlling interest. 20. Belinda, Erlinda, Amanda, Ursula, Teresa and Yolanda are partners in BEAUTY Enterprises,
c. He may execute all acts of administration despite the opposition of B and C. a dealer in cosmetics and other beauty products, with contributions of P60,000.00,
cl. He can be removed for valid cause without the vote of the partners owning the P50,000.00, P40,000.00, P30,000.00, P20,000.00, and P10,000.00, respectively. No one
controlling interest. was appointed as manager in the articles of partnership.
a. Belinda is the manager because she made the biggest investment.
17. Donna, Emma, Alma and Rona are partners in DEAR Company with Donna as manager, b. Every act in the ordinary course of the business will have to be decided by the majority
Tricia owes DEAR Company PS,500.00 and Donna, in Donna's personal capacity, P4 determined on a per head basis.
500.00. Tricia's debt to Donna is secured by a pledgu of her diamond ring. Both debts are c. Every act in the ordinary course of the business will have to be decided by the controlling
already due. Tricia pays P4,500.00 to Donna and tells her that the same is in payment of her interest (biggest investment) although the partners owning them do not constitute the
debt to Donna. Donna, thus, issues her personal receipt. majority.
a. The payment of P4,500.00 will be applied proportionately to the two credits: to the d. All the partners are agents or managers of the partnership and any one of them may
partnership credit at P2,475.00; to Donna's credit at P2,025.00. This is so because perform acts of administration.
partnership-business.
21. Three of the following will cause the automatic dissolution of a general partnership. Which
one will not? 25. A partner's interest in the partnership is his share of the profits and surplus which he may
a. When any event makes it unlawful for the business of the partnership to be carried on or assign to a third person. Which of the following statements concerning such right is correct?
for the members to carry it on in partnership. a. The conveyance of a partner's interest will cause the dissolution of the partnership,
b. Expulsion of any partner from the business bona fide in accordance with such a power b. The assignee becomes a partner.
conferred by the agreement between the partners. c. The assignee has a right to interfere in the management of the partnership business.
c. A partner becomes in any way incapable of performing his part of the partnership d. The assignee has the right to receive the profits which the assigning partner would
contract. otherwise be entitled to.
d. The insolvency of a partner or of the partnership.
26. Which of the following right cannot be exercise by an assignee of interest:
22. Aguas and Bautista are partners in a real estate partnership. The partnership owns a piece of A. To get whatever profits the assignor partner would have obtained
land which Castro desired to buy. Castro "contacted Aguas and inform him of his desire to B. To avail himself of the usual remedies in case of fraud in the management.
buy the land and Aguas did not tell Bautista about it. Aguas bought Bautista out of the C. To demand information, accounting and inspection of the partnership books
partnership and afterwards sold the land to Castro with a big profit. (Phi! CPA, 88-1; 88-2-M; D. The right to participate in the management
90-1-M) a. All of the above c. B, C and D
a. The partnership is dissolved when Aguas became the sole owner. b. Only C d. C and D
b. The sale of the land to Castro is void because it was without the knowledge of Bautista.
c. Aguas is not liable to Bautista for the latter's share in the profits. 27. Fernando, Filoteo, Fortunato and Fulgencio are partners in the firm F4 Enterprises which is
d. Aguas is liable to Bautista for the latter's share in the profits. engaged in the trading of fertilizers Fernando contributed P50,000.00; Filoteo, P30,000.00,
Fortunato, P20,000.00. Fulgencio is an industrial partner and manages the partnership.
23. A, B and C are partners in ABC Company. D represented himself as a partner in ABC Based on the foregoing facts, which of the following statements is incorrect?
Company to E, who, on the belief of such representation, extended a P150,000 credit to ABC a. Fernando may engage in the business of trading car spare parts without the consent of
Company. Assuming only B and C consented to such representation, who will be held liable the other part
to E? (RPCPA, 88-1; 88-2-M; 89-1-M; 90-1-M; 97-2-M) b. Filoteo may be validly exempted from losses incurred by the partnership by agreement of
a. E extended the credit to ABC Company so a partnership liability exists. Thus all the the partners.
partners A, B and C and D are liable. c. Fulgencio may not engage in the car repair business without the consent of his co-
b. B, C and D are partners by estoppel and, thus, are liable prorate to E. partners.
c. Partners A, B and C who benefited from the credit extended by E are liable. d. Fulgencio is exempt from losses although there is no agreement among the partners.
d. D who made the representation is liable to E.
28. A, B and C capitalist partners, each contributed P30,000, P20,000 and P10,000 respectively
24. A partner can engage in business for himself without the consent of his co-partners if he is: and D, the industrial partner contributed his service. Suppose X a customer, is the creditor of
a. a capitalist partner whether or not the business he will engage in is of the same kind as the firm to the amount of P180,000. How can X recover the P180,000? (RPCPA, 87-2; 90-2-
or different from the partnership business. M; 91-2-M; 92-1-M; 98-1-M)
b. an industrial partner whether or not the business he will engage in is of the same kind as a. X must sue the firm and get P60,000 from all the partners including B, the industrial
or different from the partnership business. partner. X can still recover the balance of P120,000 from the four partners jointly.
c. a capitalist partner and the business he will engage in is of a kind different from the b. X can recover from the firm P60,000. X can still recover the balance of P120,000 from
partnership business. the capitalist partner only.
d. an industrial partner and the business he will engage in is of a kind different from the c. X can recover from the firm P60,000. X can still recover the balance of P120,000 from
any of the partners solidary. misappropriated it for his own use. In this case:
d. X can recover from the firm P60,000 and consider the balance of P120,000 as loss. a. T should sue alone A the misappropriating partner for the amount of P300,000.
b. T can si e A or B or C the partnership of ABC solidarity for the amount of P300,000
29. Campos, Urbano, Tamesis and Encanto are partners in C Company each one contributing c. T can only sue partners A, B and C jointly for P300,00C.
P300,000.00 except for Encanto who is an industrial partner. The partners agreed that d. Correct remedy not indicated.
Campos shall be exempted from liability to third persons. Three years of continued losses
after the formation of the partnership resulted in unpaid partnership liabilities to third persons 32. 24. X, Y and Z are partners in a business with a total capital contribution of P3,000,000. Irt
amounting to P500,000.00. Partnership assets have also been reduced to P200,000.00. the course of operating the business, the partnership became indebted to C in the amount of
From whom may third persons collect the partnership debts? P4,500,000. subsequently, W was admitted as a new partner with contribution if PI,000,000.
a. From the partnership assets of P200,000.00; thereafter from the partners for their Much later, the partnership became indebted to T in the amount of P4,000,000. . The
separate assets at Pl00,000.00 each except Campos who was e from liability to third partnership is insolvent and the only asset is the original capital of P3,000,000 plus the newly
persons by agreement. contributed capital of PI,000,000 of PI,000,000 by W.
b. From the partnership assets of P200,000.00; thereafter from the partners for their a. W is not liable for the obligation of P4,500,000 in favor of C since he was not yet a
separate assets at P100,000.00 each except for Encanto since an industrial partner does partner when it was insured.
not share in the losses. b. W is liable for the obligation of P4,5000,000 although contracted before he became a
c. From the partnership assets of P200,000.00; thereafter, from all the partners for their partner but only up to the extent of his contribution.
separate assets at P75,000.00 each including Campos and Encanto. c. W is liable for the obligation of P4,500,000 although contracted before he became a
d. From the partnership assets of P200.000.00; thereafter, from Urbano and Tamesis only partner up to the extent of his personal property.
for their separate assets at P150,000.00 since Campos was exempted from liability by d. W is liable for the obligation of P4,500,000 although contracted before he became a
agreement, while Encanto, 3eing an industrial partner is not liable for'losses. partner but not only up to the extent of his contribution. With respect to the P4,000,000
debt in favor of T, W will be liable for its payment jointly and subsidiary up to the extent of
30. A and B are partners in buying and selling automobiles. A, by the partner's agreement, was his personal property because it was incurred when he was already a partner in XYZ
authorized to buy any immovable's on a cash basis, never on the installment plan. One day A partnership.
bought on installment p an a parcel of land with improvements from X, a client. X did not
know of A's lack of authority. A's purchase was made on behalf and in the name of the 33. Can the partners stipulate that the newly admitted partner shall not be held liable for the
partnership. Is the partnership bound? obligations of the partnership arising before his admission? Which of the following answers is
a. No because A was not really authorized to buy on installment plan and the same is not not correct? (RPCPA, 94-1; 94-2)
"apparently carrying on in the usual way the business of the partnership''. a. No, because third persons are always protected by law.
b. No because A failed to obtain the consent of all partners although he was authorized to b. No, because the newly admitted partner should be deemed to have assumed all the
buy any immovables. debts of the partnership upon his voluntary participation in the partnership.
c. Yes because although A was not really authorized, still for "apparently carrying on in the c. No, because the subject of the stipulation is that the liability of the new partner should
usual way the business of the partnership" A is implicitly authorize j and X did not know not be satisfied out of the partnership property.
of A's lack of authority d. No, because a newly admitted partner is liable with respect to his capital contribution
d. Yes because all transaction made by any partners with third person is valid provided, the which forms part of the partnership.
latter acted in good forth.
34. A, B and C are partners in a trucking and freight business. B and C without the knowledge of
31. A, B and C are partners in an import and export business where customers desiring to place A approached X and offered to sell to X all the trucks of the partnership at a price very much
an order are required to make a deposit of 30% to the partnership. T, a regular customer higher than their book value. Then B and C bought-out A from the partnership and thereafter
deposited P300,000 to partner A who, instead of turning over the money to ABC partnership, X bought all the trucks with a big profit of B and C. (RPCPA, 90-1)
a. The sale of the trucks to X void because it is without the knowledge and consent of A. enjoyment, he reserved the ownership thereof.
b. B and C are not liable to A whatsoever. d. Loss before delivery of a specific thing where the partner promised to contribute only its
c. B and C are liable to A for his share in the profits in the sale. use and enjoy reserving the ownership thereof.
d. When A was bought-out of the partnership, the partnership was dissolved so A has no
more share in the profits in the sale. 38. Which is not a ground for the automatic dissolution of a partnership?
a. By the death of any partner
35. A and B are equal partners in AB and Company. Y presented himself as a partner in AB and b. By the civil interdiction of any partner
Company to Z who relying on such representation, extended a P50,000 credit to AB and c. By the incapacity of any partner to perform his part of the partnership contract
Company. Of the two (2) partners only B knew and consented to the representation of Y. d. By the insolvency of any partner or of the partnership.
Who should held liable to Z? (RPCPA, 88-2)
a. Only Y, who presented himself as partner is liable. 39. In which o these cases are the partners solidarity liable for the payment of partnership
b. Since the credit was extended to AB and Company, a partnership liability was created, obligations?
so the two (2) partners and Y are liable. a. Where the partnership obligation arose out of contract.
c. Partners A and B who benefited from the credit extended to the partnership AB and b. Where the partnership obligation arose out of equal contract.
Company shall be liable to Z. c. Where the partnership obligation arose out of delict.
d. B and Y are partner by estoppel and, thus, are liable to Z, d. Where the partnership obligation arose out of quasi delict.
e. Both C and D
36. Teresa, Olga, Pamela and Sonia, partners in TOPS Company Limited, a trading company,
have contributions of P50,000.00 each. Teresa and Olga are general partners; Pamela, a 40. A as partner contributed P30,000; B as partner, P15,000; and C, as industrial partner, his
limited partner; and Sonia, a general-limited partner. TOPS Company Limited purchased services in the partnership. After payment of all liabilities and expenses, only P18,000 remain
merchandise' on credit from Moret Sales Co. amounting to P180,000.00. On due date, as partnership assets. The dissolution of the P18,000 cash shall be: (RPCPA, 86-2-M; 88-1-
however, JOPS Company Limited was unable to pay. Accordingly, Moret Sales Co. filed a M; 90-1; 90-2; 93-2-M; 96-2-M)
case of collection against the partnership which by then had assets amounting to a. A, P12,000; B, P6,000; C, None
P150,000.00. From whom may Moret Sales Co. collect the sum of P180,000.00? b. A, P6,000; B, P6,000; C, P6,000
a. The partnership for its assets of P150,000.00; thereafter, from Teresa and Olga at c. A, P9,000; B, P9,000; C, None
P15,000.00 each from their separate assets. d. A, P8,000; B, P4,000; C, P6,000
b. Teresa and Olga only at P90,000.00 each from their separate assets.
c. The partnership for its assets of P150,000.00; thereafter, from Teresa, Olga, and Sonia 41. Sibal, Untalan, Parefio, Eusebio, and Ranees are partners of SUPER Enterprises whose
at P10,000.00 each from their separate property. However, Sonia can recover P5,000.00 business is car painting and repairs. All partners are capitalist partners with Sibal as
each from Teresa and Olga. manager. After five years of operations, Ranees resigned from the partnership. Although
d. Teresa, Olga and Sonia at P60,000.00 each. Thereafter, Sonia can recover from Teresa Sibal was aware of the resignation of Ranees, he still bought 50 gallons of car paint from
and Olga P30,000.00 each. Masterpaint owned by Marcelo who had been dealing with SUPER for the past 5 years, and
car spare parts from Supremeparts, owned by Salviejo who was transacting for the first time
37. Which of the following losses will not cause the dissolution of a partnership? with SUPER. The dissolution of SUPER was published in the Manila Bulletin but neither
a. Loss before delivery of a specific thing which a partner has promised to contribute to the Marce nor Salviejo read it. Neither one knew at the time they transacted with Sibal that the
partnership. partnership had been dissolved.
b. Loss of a specific thing, after its delivery to and acquisition of its ownership by the a. SUPER is liable to both Masterpaint and Supremeparts.
partnership from the partner who contributed the same. b. SUPER is liable to Masterpaint only.
c. Loss after delivery of a specific thing where the partner contributed only its use and c. SUPER is liable to Supremeparts only.
d. SUPER is not liable to both Masterpaint Supremeparts. II. John Solanda shall have all the liabilities of a general partner.
Based on the foregoing facts:
42. TRIUMPH Company, a partnership engaged in the buying selling of car spare parts, has for a. Both statements are true.
its partners and their respective contributions the following: b. Both statements are false.
Tomas, P10,000.00; Ramon, P20,000.00; Ignacio, c. Statement I is true; Statement II is false.
P30,000.00; Urbano; P40,000.00; Marcos, d. Statement I is false; Statement II is true.
P100,000.00; Pablo, P200,000.00; and Hilario, P300,000.00.
No one was appointed as manager of the partnership. In the course of the operation of the 46. Which of the following omissions will make a partnership formed as a limited partnership
partnership, Tomas proposed to buy car spare parts from Dominion Motors, but his proposal liable as a general partnership?
was opposed by Ramon. A voting among the partners took place and Ignacio, Urbano and I. The certificate is not signed and sworn to by all the partners.
Marcos sided with Tomas, while Pablo and Hilario sided with Ramon. II. The certificate is not registered with the Securities and Exchange Commission.
a. The group of Tomas, Ignacio, Urbano and Marcos will prevail because they constitute III. The partnership name does not include the word 'Limited" or "Ltd.", its abbreviation, in
the majority. the certificate.
b. The group of Ramon, Pablo and Hilario will prevail because they own the controlling a. I and II. c. I and III
interest. b. II and III d. I, II and III.
c. None will prevail because no one was appointed as manager of the partnership,
d. The partners will have to appoint a manager in order to resolve the conflict. 47. A person admitted to all the rights of a limited partner who has di 2d or assigned his interest
in the partnership is known as-
43. This is the order of preference in the liquidation of a partnership: (RPCPA, 90-1; 92-1; 96-1) a. An ostensible partner.
a. 1.) Outsider; 2.) Partners with respect to their capital; 3.) Partners with respect to their b. A liquidating partner.
profit.; 4.) Partners aside from capital and profit. c. A substituted limited partner.
b. 1.) Partners with respect to their capital; 2.) Partners with respect to their profit.; 3.) d. A general limited partner.
Partners aside from capital and profit; 4.) Outside creditors
c. 1.) Outsider; 2.)' Partners aside from capital and profit 3.) Partners with respect to their 48. A limited partner shall be liable as general partner in three of the following cases. Which one
capital; 4.) Partners with respect to their profit.;. is the exception?
d. 1.) Partners aside from capital and profit; 2.) Outsider; 3.) Partners with respect to their a. When he is a general-limited partner as stated in the certificate.
capital; 4.) Partners with respect to their profit. b. When he makes part in the control of the business.
c. When h= participates in the management of the business.
44. Which of the following statements is incorrect? d. When h s surname which appears in the partnership name is also the surname of a
a. Partnership creditors are preferred as to partnership assets. general partner.
b. Partnership creditors are preferred as to each partner's separate assets.
c. A partner's separate creditors are preferred as to the partner's separate assets. 49. Which of the following will not cause the automatic dissolution of a limited partnership?
d. A partner's separate creditors 'may attach a partner's share in the partnership assets. a. Death of 3 general partner.
b. Death of 3 limited partner.
45. John Solanda and Sons is a partnership composed of three partners, namely: Robert c. Insolvency of a general partner.
Solanda, Simon Solanda, and Theodore Solanda. The partners are the sons of John Solanda d. Insanity of a general partner.
who has retired from business but who suggested that they include his name in the firm to
give them an advantage since he is well-known in the business community. 50. Which of the following is a false statement?
I. John Solanda shall have all the rights of a general partner. a. If a limited partnership will be created, registration is a condition precedent for the
creation of the limited partnership e. Within one (1) year from the time he had knowledge.
b. If one of the partners in a general partnership contributed a building to the partnership,
there must be 3 public instrument and an inventory as a requirement, otherwise the 54. A limited partnership was orally agreed upon by A , B and C as general partners and D, E
partnership is void and F as limited partners. Which of these is a correct statement?
c. If a limited partnership will be created, registration is a condition subsequent for the a. A valid limited partnership is nevertheless formed.
creation of the limited partnership. b. The oral agreement is void under the law and no partnership whether limited or general
d. If a limited partnership is not registered, a general partnership is created. will exist.
c. No valid limited partnership is created and there will exist a general partnership where
51. What is the order of payment of liabilities of a dissolved limited partnership using the code only A, B and C will be regarded as general partners.
number representing each liability? d. No valid limited partnership is created but there will exist a general partnership where all
I. Those owing to general partners other than for capital or for profits. of A, B, C, D, E and F will be regarded as general partners.
II. Those owing to creditors including limited partners, except those1 to limited partners on
account of their contributions and general partners. Corporation
III. Those owing to limited partners by way of their share in the profits and other 1. One of the distinctions between a partnership and a corporation is that a partnership:
compensation by way of income. a. is managed by a board of directors.
IV. Those owing to limited partners in respect to the capital of their contributions. b. is characterized by the principle of delectus personae.
V. Those owing to general partners in respect of capital. c. has the right of succession.
VI. Those owing to general partners in respect of profits. d. may be dissolved only with the consent of the State.
a. I, II, III, IV, V, VI.
b. II,I, III, IV, V, VI. 2. Which of the following is the disadvantage of forming a corporation? (RPCPA, 93-2; 94-2; 96-
c. II, I, III, IV, VI, V. 1)
d. II, III, IV, I, VI, V. a. The free and ready transferability of ownership
b. The shareholders are not liable for the debts of the business.
52. Which of the following is not correct? In a limited partnership composed of A, B and C, the c. Because of the power of succession, the existence of the entity is not affected by the
contribution may be as fellows: (RPCPA, 97-2; 98-1) personal vicissitudes of the individual, shareholders.
a. A – cash (limited partner);- B – cash (general partner), C - services (general partner). d. The subservience of minority stockholders to the wishes of the majority subject only to
b. A – property (limited partner); B - services (general partner); C - cash (general partner). equitable restraint.
c. A – services (limited partner); B – cash (general partner)
d. A – cash (limited partner); B – property (general partner); C - services (general partner). 3. This share can be acquired by the corporation which issued it even without unrestricted
retained earnings:
53. The rule is that the designation of the share of the partners in the profits and losses cannot a. founder's shares
be entrusted to only one of the partners but to all. However, the rule allows the designation b. redeemable shares
of the share of the partners to be entrusted to a third which can be questioned or impugned c. par value shares
by the partners if such designation is manifestly inequitable. Within what time should the d. no-par shares
action or question be brought?
a. Within one (1) month from the time he had knowledge. 4. Corporations organized by private persons performing public function and for profits to private
b. Within two (2) months from the time he had knowledge. person are: (RPCPA, 1089)
c. Within three (3) months from the time he had knowledge. a. Public Corporations
d. Within six (6) months from the time he had knowledge. b. Government Controlled Corporations
c. Quasi-Public Corporations 87-l;-M; 87-2-M; 88-1; 88-2-M; 89-1-M; 1089-M; 90-1-M; 90-2-M; 92-1-M; 94-1-M)
d. Private Corporation a. b. c. d.
Authorized capital P100,000 P100,000 P100,000 P100,000
5. The following are advantages of no-par value share of stock. Which is the exception? Subscribed capital P 20,000 P 20,000 P 25,000 P 25,000
(RPCPA, 90-1) Paid in capital P 5,000 P 4,000 P 5,000 P 6,250
a. No par value shares allow flexibility in price.
b. The stockholders of no-par value shares are relieved of personal liability for unpaid stock 10. The articles of incorporation of Acme Corporation provide for the issuance of 100,000 shares
subscription. without par value price per share of P10.00. At the time of incorporation subscription and
c. It allows the issue of stocks in exchange of property. paid-up capital should not be less than:
d. No-par value shares afford a possible remedy of relief from the evil of over capitalization a. P250,000.00 and P62,500.00, respectively.
and stock watering. b. P1,000,000.00 and P250,000.00, respectively.
c. P250,000.00 and P250,000.00, respectively,
6. Which of the following statements pertaining to no-par shares is incorrect? d. P250,000.00 and P125,000.00, respectively.
a. Subscriptions to no-par shares are deemed fully paid and non-assessable.
b. Shares without par value may not be issued for a consideration less than P5.00 per 11. Three of the following enumerations are not authorized to issue no par value shares of stock.
share. Which is the exception? (RPCPA, 87-1)
c. No-par shares may not be issued by banks, trust companies, insurance companies, a. Insurance companies c. Public utilities
public utilities and building and loan associations. b. Industrial companies d. Trust companies
d. Subscriptions to no-par shares in excess of the issued price shall be available for
distribution as stock dividends. 12. 1st Statement: A majority . of the directors or trustees of ail corporations organized in the
Phil, must be citizens of the Phil,
7. The following statements pertaining to the power of a corporal to issue non-voting shares 2nd Statement: Any two (2) or more positions may be held concurrently by the same person,
were presented to you for evaluation: except that no one shall act as president and secretary or as secretary and treasurer at the
I. Those classified as "redeemable" or "preferred" may be deprived of the voting right. same time. (RPCPA, 97-2)
II. All shares of the corporation may be deprived of the voting right. a. Both statements are not true
III. Non-yoting shares may vote in certain corporate acts like in the amendment of the b. Only 1st statement is true
articles of incorporation. c. Only 2nd statement is true
a. I and II are true. d. Both statements are true
b. II and III are true.
c. I and III are true. 13. A private corporation organized under the corporation law commences to have corporate
d. All statements are true. existence and juridical personality and its deemed incorporated from:
(RPCPA, 86-2; 93-1-M; 85-2-M; 96-1-M; )
8. The articles of incorporation differ from the by-laws in that the articles of incorporation are: a. The date when the articles of incorporation is signed by the incorporators.
a. the rules of action adopted by a corporation for its internal government. b. When the articles of incorporation and by-laws are presented and received by the
b. adopted before or after incorporation. Security and Exchange Commission and the filing fee is paid.
c. a condition precedent in the acquisition by a corporation of a juridical personality. c. From the date the SEC issues a certificate of incorporation under its official seal.
d. approved by the stockholders if adopted after incorporation. d. When the articles of incorporation is notarized by a Notary Public.

9. Choose the minimum requirement of the Corporation Law to Corporate formation: (RPCPA, 14. In the amendment of the Articles of Incorporation of a stock corporation, the following is
necessary: (RPCPA, 86-2) When the voting took place, directors A, B, C and D voted for the election of Y as the new
a. Amendment by the majority vote of the Board of Directors plus a vote or written assent of treasurer; and directors A, B and C voted for the approval of the contract with X Construction
the stockholders representing at least 2/3 of the outstanding capital stock. Supplies.
b. Amendment by a vote of 2/3 of the stockholders. a. Both corporate acts are valid.
c. Amendment by a majority vote of the Board of Directors. b. Both corporate acts are not valid.
d. None of the three. c. The election of Y as the new treasurer is valid; the approval of the contract with X
Construction Supplies is not valid.
15. Which of the following will not qualify as incorporator of a corporation? (RPCPA, 86-2-M; 90- d. The election of Y as the new treasurer is not valid; tie approval of the contract with X
2-M; 91-2; 92-2-M) Construction Supplies is valid.
a. A minor who is emancipated by voluntary concession or marriage.
b. A married woman without the consent of her husband where the property involved in the 20. Which of tie following is not a qualification of corporators of a stock corporation?
act of incorporation is paraphernal. a. They must be natural persons.
c. A corporation. b. They must be of legal age.
d. Answer not given c. Majority of them must be citizens of the Philippines.
d. They must be subscribers to at least 1 share of stock of trie corporation.
16. Contracts between a corporation and third persons must be made by or under the authority of
its: (RPCPA, 93-1; 96-1) 21. The following, except one are qualifications of corporate directors: (RPCPA, 89-1-M; 94-2;
a. Board of Directors 86-2)
b. Stockholders a. Must continuously own at least one share during their tern as directors.
c. President and Chief Operating Officer b. Must own at least one share of stock.
d. General Manager. c. Ownership of shares must be recorded in the books of corporation.
d. Majority are citizens of the Philippines.
17. An officer of a corporation may hold two or more positions in the corporation but not as:
(RPCPA, 90-1-M; 92-1; 92-2-M; 94-2-M; 97-2-M) 22. The followinc are some of the requisites of a de facto corporation. Choose the exception:
a. Chairman of the Board and President. (RPCPA, 86-2; 87-2-M)
b. President and Treasurer a. Valid law under which it is incorporated.
c. Secretary and Treasurer b. Attempt :o incorporate
d. Vice President and Secretary c. Assumption of corporate power
d. None of the above
18. A Chinese national are not allowed to become:
a. Treasurer c. Director 23. In the amendment of the Articles of Incorporation of a stock corporation, the following is
b. Secretary d. President necessary: (RPCPA, 86-2; ?6-2-M)
a. Amendment by the majority vote of the Board of Director; plus a vote or written assent of
19. In the meeting of the board of directors of Grand Corporation, construction company, held on the stockholders representing at least 2/3 of the outstancing capital stock.
March 31, 2003, doctors A, B, C. D and E were present among the 9 directors. The meeting b. Amendment by a vote of 2/3 of the stockholders.
had for its agenda the following: c. Amendment by a majority vote of the Board of Director,
I. The appointment of a new treasurer. d. None of the three.
II. The approval of the contract for the purchase of cement worth P50,000.00 from X
Construction Supplies Co. 24. Which of the following meeting may be held outside the Philippines?
I. Board of Directors meetings articles of incorporation provide for 7 directors. On August 1, 2010, Directors A, B,. C, D and
II. Member; meetings of a non stock corporation E met to fill two vacancies in the board brought about by the valid removal of F for disloyalty
III: Stockholders meeting of a corporation going public to the corporation and the death of G. In the said meeting, the remaining directors voted for X
a. I only c. I and III to replace F, and Y, a son of C, to replace his father. Both X and Y are owners of at least
b. I and II d. I, II and III one share of stock of the corporation. The election of X and Y by the remaining directors is:
a. valid for both X and Y.
25. In which of the following corporations will those composing the corporation be liable as b. not valid for both X and Y.
general partners? c. valid with respect to X; not valid with respect to Y.
a. Corporarion by prescription, d. not valid with respect to X; valid with respect to Y
b. De facto corporation.
c. Corporation by estoppel. 30. Which cause of vacancy in the board of directors may be filled by the board of directors if the
d. De jure corporation. remaining directors still constitute a quorum and by the stockholders if such quorum does not
exist?
26. In the following cases, the preemptive right of the stockholders can be denied - choose the a. Removal of a director.
exception, b. Resignation of a director.
a. If it is denied in the articles of incorporation. c. Increase in the number of directors.
b. If the increase in authorized capital stock is to enable the corporation to comply with a d. Expiration of the term of some directors.
law requiring subscription by the public.
c. by a vote of 2/3 of the outstanding shares where the increase in authorized capital stock 31. A is a director and owns 50% of the outstanding capital stock of Ace Corporation which is
is to be exchanged with a property needed for a corporate purpose. engaged in the trading of computers. Ace Corporation purchased computer tables from Top
d. By a vote of a majority of the outstanding shares where the increase in authorized capital Corporation of which A is also a director and owns 15% of its outstanding capital stock. The
stock is to be used for the payment of corporate debts still to be contracted articles of incorporation of both corporations provide for 5 directors. In the approval of the
contract for the said purchase, A did not attend the meeting of the board of directors of Ace
27. Which of these purposes can be combined in just one corporation? Corporation, while in the meeting of the board of directors of Top Corporation which was
a. Bank and trust purposes called for the same purpose, directors A, B, C and D were present with all of them voting for
b. Educational and insurance purposes the approval of the contract. Assuming that there is no fraud and that the contract is fair and
c. Railroad and bank purposes reasonable under the circumstances, the contract between Ace Corporation ahd Top
d. Insurance and railroad purposes Corporation is:
e. All of the above a. valid.
b. voidable at the option of Top Corporation.
28. The certificate of incorporation of Seven Stars Corporation, a trading corporation, was issued c. unenforceable against Top Corporation,
although only 2 of its 5 incorporators are residents of the Philippines. Three, however, are d. void because corporations with interlocking directorate should not enter into a contract
citizens of the Philippines. The corporation created in such a situation is a: with each other.'
a. de jure corporation.
b. corporation by estoppel. 32. One of the following is not required and does not form part of the three-fold duty of directors
c. de facto corporation. of a corporation. Which one? (RPCPA, 92-2; 96-1)
d. No corporation was created at all. a. Duty of Diligence
b. Duty of Loyalty
29. A, B, C, D, E, F and G are the duly elected directors for 2009 of Excellent Corporation whose c. Duty of Obedience
d. Duty of Efficiency d. To amend or repeal the by-laws, majority of the Board of Directors and of the
outstanding capital stock is needed,
33. The power to deny pre-emptive rights as a corporate power is classified as: (RPCPA, 98-1)
a. Incidental power c. Implied power 38. The following may be the consideration of the shares of stock of a corporation, except:
b Express power d. Discretionary power a. actual cash paid to the corporation.
b. previously incurred indebtedness of the corporation.
34. In which of these cases may the right preemption of stockholders be denied? c. amounts transferred from unrestricted retained earnings.
a. If the right is denied in the articles of incorporation. d. service to be performed by a lawyer on the propose increase in capital stock of the
b. If the increase in authorized capital stock is for the purpose of complying with a law corporation.
requiring subscription by the public.
c. By a vote of 2/3 of the outstanding shares where the increase in authorized capital stock 39. A corporation may invest its funds in any other corporation or business or for any purpose
shall be exchanged for a property needed for a corporate purpose. other than, primary for which it was organized. (RPCPA, 90-1; 92-1-M; 96-1-M; )
d. By a vote of 2/3 of the outstanding shares where the increase in authorized capital stock a. There is a majority vote the Board of Directors and ratified by the stockholders
shall be used to pay the corporate debts previously contracted representing 2/3 of the outstanding capital stock.
e. All of the above b. It is reasonably necessary to accomplish its secondary purpose, the approval of the
stockholders not necessary.
35. Those regulate different internal matter of the corporation such as calling and defining the c. There is majority vote of the Board of Directors.
conduct of the meeting of stockholders and directors. (RPCPA, 88-1-M; 88-2; 89-1-M) d. There is majority vote of the outstanding capital stock.
a. Board of directors
b. By-laws 40. A, B, C, D, E, F, G, H and I are directors of Strong Cement Corporation whose articles of
c. Article of incorporation incorporation provide for 9 directors. In the meeting of March 2003, directors A, B, C, D and
d. Proxy E were present to approve a contract for the purchase of cement bags from E who deals in
the said product. The contract was deliberated upon exhaustively by the said directors in the
36. Which of the following by-laws is valid? meeting including E. When the voting took place however, only A, B, C and D who found the
a. A by-law which provides that one need not be the owner of a share of stock to become a contract fair and reasonable under the circumstances, voted for its approval. The contract
director of the corporation. between the corporation and E is:
b. A by-law which provides that that one must be the owner of more than one share of a. Valid and enforceable.
stock of the corporation to become a director. b. Voidable at the option of the corporation.
c. A by-law which provides that one can continue to be a director throughout his term c. Unenforceable against the corporation.
although he has disposed all his shares in the corporation. d. Void because a corporation must not enter into a contract with any of its directors since a
d. A by-law which provides a greater number of directors than that stated in the articles of director occupies a position of trust.
incorporation.
41. One of the following acts may be performed by the executive committee of a corporation,
37. As regards to corporate by-laws, which of the following rules is not correct? (RPCPA, 98-1) Which is it?
a. To adopt by-laws, majority of the outstanding capital stock is needed. a. Declaration of stock dividends.
b. To delegate to the Board of Directors or trustees the power to amend or repeal the by- b. Filling of vacancies in the board of directors.
laws, 2/3 of the outstanding capital stock is needed. c. Amendment or repeal of the by-laws or adoption of new by-laws.
c. To revoke the power delegated to the Board of Directors to adopt a new by-laws, 2/.3 of d. Approval of contracts in the ordinary course of business.
the outstanding capital stock or of its members is needed.
42. This is an authority to vote in a corporation stockholders meeting: (RPCPA, 88-1; 88-2-M) 48. This corporale act is within the implied powers of the corporation -
a. Proxy c. Certificate of stock a. Acts dore in the ordinary or unusual course of business
b. By-laws d. Shares of stock b. Acts done to help or protect employees
c. Act done to increase or expand business
43. Right which the existing stockholders or corporation cannot be deprived without the consent d. Investment of funds in another corporation or for a purpose other than the main purpose
of their right to subscribe or to purchase new stock issued by the corporation or unissued e. All of them
original stock, in proportion to their holdings before it can be offered to others: (RPCPA, 85-2;
88-1-M) 49. Stock corporations are prohibited from retaining surplus pro its in excess of one hundred
a. Right of redemption c. Right to purchase percent (100%) of :heir paid in capital stock. Three of the following enumerations are
b. Pre-emptive right d. None of them exceptions. Which does not belong to the 2 exception? (RPCPA, 87-2)
a. When justified by definite corporate expansions projects or programs approved by the
44. Any stockholder of a corporation shall have the right to dissent and demand payment of the board of directors.
fair value of his shares in three of the following corporate acts. Which is the exception? b. When there is pension plan as agreed in Collecting Bargaining Agreement.
(RPCPA, 87-1; 95-1-M; 96-2-M) c. When the corporation is prohibited under any loan agreement with any financial
a. In case o: any amendment to the articles of incorporation which has the effect of institution or creditor whether local or foreign from declaring dividends without its
changing or restricting the debts of any stockholders or class of shares. consent.
b. In case of merger or consolidation d. When it can be clearly shown that such retention is necessary under special
c. In case of sale, lease, exchange transfer, mortgage, pledge or other disposition of all or circumstances obtaining in the corporation, such as providing for probable contingencies.
substantially all of the corporate assets and property o the corporation.
d. In case of incurring, creating or increasing bonded indebtedness. 50. One of the following is a limitation on proxies. Which is? (RPCPA, 88-2)
a. Proxy acquires legal title to the shares of the stockholders.
45. This is a document of a corporation acknowledging the interest of a stockholder in the b. A pro'y votes even in the presence of the stockholders.
corporation's assets: (RPCPA, 88-L-M; 1089) c. The proxy is voted only for the meeting for which it was intended.
a. Certificate of stock c. Capital stock d. A prox" is irrevocable at any time.
b. Shares of stock d. Stockholder's equity
51. The subscriber of unpaid shares which are not delinquent shall be entitled to the following
46. The following are methods of dissolving a corporation: (RPCPA, 86-2; 91-2-M) rights, except the right to:
a. Expiration of the term a. vote
b. Failure to organize and commence business within two (2) years from date of issuance b. inspect corporate books.
of certificate of incorporation. c. a stock certificate.
c. Shortening of the corporate term d. dividends
d. All of the above
52. These statements pertaining to the meetings of directors we presented to you for evaluation:
47. The contract between corporations with interlocking directors is generally - I. Directors or trustees may attend or vote by proxy at board meetings.
a. .Valid II. The articles of incorporation or the by-laws of a corporation may provide for a greater
b. Voidable majority for its quorum during the meetings of the board of directors.
c. Unenforceable a. Both statements are true.
d. Void b. Both statements are false.
c. Statement I is true; Statement II is false.
d. Statement I is false; Statement II is true. d. the agreement need not be recorded with the Securities and Exchange Commission.

53. A stock that is issued without consideration or below par value or the issued price is known 58. Which of the following statements pertaining to treasury shares is incorrect?
as: a. Treasury shares are not part of subscribed capital stock.
a. watered stock. c. redeemable stock. b. Treasury shares may be disposed of at a price lower than the par or issued price
b. delinquent stock. d. preferred stock. provided it is reasonable and approved by the board of directors,
c. Treasury shares are not entitled to dividends.
54. A non-voting stock may vote in the following corporate acts, except in case of: d. Treasury shares, once disposed of, entitle the purchaser or transferee the right to vote.
a. approval of the compensation of directors.
b. merger or consolidation. 59. Which of the following statements is false concerning treasury shares?
c. increase or decrease in capital stock. a. They are entitled to dividends.
d. sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of b. They have no voting right.
corporate property. c. They may be disposed of for a price lower than the par value provided such price is
reasonable.
55. Winner Corporation, a dealer-manufacturer of garments and with principal office in Caloocan d. They are not outstanding shares.
City, held the meeting of its stockholders in Nasugbu, Batangas, in conjunction with its annual
company outing. Stockholders owning 75% of the capital stock were present, while 25% were 60. Which of the following will cause the automatic dissolution of a corporation?
duly represented by proxies. In the said meeting, the corporation by a vote of the a. Continuous inoperation for a period of at least 5 years.
stockholders representing 80% of the capital stock, approved the purchase of sewing b. Failure to formally organize and commence the transaction of its business or the
machines worth P5,000,000.00. The bylaws of the Corporation provide that contracts in construction of its works within 2 years from its incorporation.
excess of P3,000,000.00 must be ratified by the stockholders, contract for the purchase of c. Failure to adopt by-laws and submit the same to the Securities and Exchange
the sewing machines was unanimously approved by the board of directors before it was Commission within 30 days from the receipt of the official notice of the issuance of its
presented to the stockholders for ratification." What is the status of the contract for the certificate of incorporation.
purchase of the sewing machines? d. Commission by the corporation of an ultra-vires act.
a. Void. c. Unenforceable.
b. Valid. d. Voidable. 61. The articles of incorporation of Alco Corporation, a construction company, classify its shares
into voting common stock and non voting preferred stock, and provide for 11 directors. Its by-
56. Which of the following statements pertaining to non-stock corporations is incorrect? laws on the other hand, give the board of directors the authority to approve transactions not
a. Members may vote by mail. exceeding P2,000,000.00. Any transactions in excess of the said amount have to be ratified
b. The number of trustees may be more than 15 by the stockholders. In which of the following cases may the preferred stock vote?
c. Any incidental income that it may be distributed as dividends to its members. a. Approval of a loan amounting to P3,000,000.00 from Equitable Bank.
d. The meetings of members may be held outside or municipality where the principal off b. Declaration of stock dividends from the unissued common stock.
corporation is located. c. Increase in the number of directors from 11 to 15.
d. Purchase of cement worth P2,500,000.00 from Davao Cement Corporation.
57. One of the distinctions between a proxy and a voting trust agreement is that in a voting trust
agreement: 62. There is said to be an unreasonable accumulation of unrestricted retained earnings when
a. the representative acquires legal title to the shares to be voted. they are in excess of 100% of the paid up capital of the corporation. In the following cases
b. the exercise of the right to vote is limited to a particular meeting. are the valid defences which a corporate taxpayer may set up to prevent the imposition of a
c. the representative cannot vote if the stockholder is present during the meeting. surcharge, choose the exception
a. That in the previous year the corporation has already declared dividends. d. I and III apply to proxy.
b. That the retained earnings are intended for a project of expansion already approved by
the board of directors. 65. The articles of incorporation of Alpha Corporation, a construction company, provide for 7
c. That there is an agreement with a bank or other financial institution to which the directors. In the monthly meeting of the board of directors held on April 12, 2004, directors A,
corporation is indebted that dividends shall not be declared without its consent. B, C, D and E were present and the following resolutions were approved:
d. That the unrestricted retained earnings are being held as contingent funds for any I. A resolution for the purchase of 500 pieces of no blocks from Excellent Concrete
unforeseen losses or liabilities. Enterprises, a proprietorship owned by E. B, C, D and E voted to resolution.
e. None of the above. II. A resolution appointing T as the new treasurer corporation. A, B, C and D voted for the
resolution.
63. The articles of incorporation of Power Corporation provide for 15 directors. For the year Based on the foregoing:
2003, only 5 meetings of the board of directors were convened because of the difficulty in a. Both resolutions are valid.
mustering a quorum. In view thereof, some transactions of the corporation which required b. Both resolutions are not valid,
board approval did not materialize resulting in lost profits. In preparation for the annual c. Resolution I is valid; Resolution II is not valid.
meeting of stockholders, the following were considered by the board of directors as possible d. Resolution I is not valid; Resolution II is valid.
solutions for approval of the stockholders:
I. Amending the by-laws reducing the quorum to 6 directors. 66. Record of all stocks in the names of stockholders are contained in:
II. Providing a by-law for the creation of an executive committee consisting of 5 members of a. ledger
the board of directors to act on matters that may be delegated to it by the board/ b. stock and transfer books
III. Providing a by-law allowing directors to send representatives during the board meeting c. journal
provided that the representative is given a special power of attorney. d. Articles of Incorporation
IV. Amending the articles of incorporation reducing the number of directors from 15 to 7 e. none of the above
effective the expiration of the term of the incumbent directors.
Which of the above proposed solutions may you validly recommend for submission to the 67. Other persor s who can vote in corporate meetings besides the p-oxy:
stockholders? a. guardian
a. I or III. c. I or IV b. executor
b. II or IV d. II or III. c. administrator
d. all of the above
64. The following statements concerning representative voting were presented to you for
evaluation: 68. Which of these is an example of a public corporation?
I. The representative acquires legal title to the shares, a. Development Bank of the Philippines
II. It is good only for the meeting for which it was intended. b. The National Development Corporation
III. It is generally revocable, and the stockholder may vote even in the presence of the c. The Philippine Ports Authority
representative. d. None of e, b, and c
IV. The agreement giving the representative the power to vote must be duiy notarized and a e. All of a, t, and c
copy thereof must be submitted to the Securities and Exchange Commission to be
effective and enforceable. 69. S is a stockholder in X Corporation who happens to be indebted to C in the amount of
a. I and IV apply to voting trust agreement. P5,000,000 which became due and payable on December 15, 1999. S sold his stares of
b. I and III apply to voting trust agreement. stock in X Corporation for P10,000,000 in favor of T on August 19,1998 who was not able to
c. I and IV appiy to proxy. record the transaction in the stock and transfer book of X Corporation. Sometime in August
2000, C sued S in court where the latter was adjudged liable to the former for P5,000,000 b. Directors' right d. Stockholders' right
whereupon the shares of S were garnished by C, Who between C and T is better er titled to
the shares of S? 75. A dividend payable partly in cash and partly in stock, this class of dividend is a: (RPCPA, 89-1)
a. T becausa he legally bought the shares from C way back in August 19,1998. a. Optional dividend
b. T because sale is preferred in the transfer ownershio rather than garnishment. b. Property dividend
c. C has the better right because T did not register his sale n the corporate stock and c. Liquidating dividend
transfer book whereas the garnishment by C is a matter of corporate' record. d. Composite dividend
d. Both of a and b.
76. A gratuitous issue of Treasury shares will result in: (RPCPA, 88-1)
70. A contract entered into by a director with the corporation in which he is a director is generally a. Capital surplus c. Additional profit
considered as voidable. Which is the element which will make the contract valid? b. Watered stock d. Stock dividend
a. That the contract is fair and reasonable under the circumstance.
b. That his presence in the meeting of the board was not counted as part of the quorum. 77. In which of the following corporate acts is the appraisal right not available?
c. That his vote, if at all the voted for his contract, is not necessary for its approval. a. Merger or consolidation.
d. All of the above b. Extension or shortening of corporate existence.
c. Sale, lease, exchange, mortgage, pledge or other disposition of all or substantially all of
71. The Catholic Church of the Philippines may be regarded as en example of: its corporate stock.
a. Stock corporation d. Investment of funds for the accomplishment of the primary purpose of the corporation.
b. Corporation sole
c. Corporation by prescription 78. Which of the following special corporations is required by the Corporation Code to have its
d. Both of b and c number of directors in multiples of 5, i.e., 5, 10 or 15?
e. None of the above a. A stock educational corporation.
b. A non-stock educational corporation.
72. The rule is that the corporation can only be bound by acts of the board of directors acting as c. A corporation sole.
a body and not individually. Which is the exception? d. A religious society.
a. If the directors are themselves the only stockholders of the corporation,
b. If the act of an individual director for the corporation is ratified by the board of directors. 79. A stock corporation is similar to a non-stock corporation in what respect?
c. If the corporation is in estoppel because it misrepresented to the third person that a a. Transferability of shares or of membership.
particular director can bind the company. b. Method of voting directors or trustees.
d. All of the above c. Voting by stockholders or members in person or by proxy.
d. Term of directors or trustees.
73. This is a written acknowledgement or an interest of a stockholder in the corporation: (RPCPA,
88-1) 80. On dissolution, the liquidation of the business of the corporation may be undertaken by:
a. Proxy c. Certificate of stock a. Board of directors or trustees,
b. Share of stock d. Capital stock b. Assignee or assignees appointed by the board of directors.
c. Receiver appointed by the courts.
74. The right to vote at meetings, the right to receive dividends and the right to receive copies of d. All of the above.
financial statements is know as: (RPCPA, 90-1)
a. Right of existence c. Pre-emptive right 81. The time or duration for the winding-up or liquidation is for a period of three (3) years, except:
a. When the liquidation is to be made by the board of directors. b. The omission of any statement that value has been given.
b. When the winding-up is to be carried out by the assignee or assignees. c. The omission of the place where the instrument was drawn.
c. When the liquidation is ordered to be done by the receiver appointed by the courts. d. The omission of the signature of the maker above his typewritten name.
d. None of the above
7. M executed a promissory note as follows:
Negotiable Instruments "I promise to pay P or order P50,000.00 or to deliver to him a brand new laptop computer."
1. The following are functions of a negotiable instrument. Choose the exception: (RPCPA, 93-2; (Sgd.) M
94-2) Based on the foregoing instrument, which of the following statements is true?
a. it increases purchasing power in circulation. a. The instrument is negotiable.
b. it increases credit circulation. b. The obligation is an alternative obligation.
c. as substitute for money. c. The choice as to which prestation will be performed belongs to P.
d. as legal tender. d. The obligation is payable at a determinable future time.

2. A check upon which the holder's signature must appear twice, one to be affixed by him. at the 8. Which of the following instruments is non-negotiable? (RPCPA, 89-1-M; 92-2; 90-2-M)
time it is issued and he second or counter signature, to be affixed by him before it is paid. a. "Pay to C or order P20,000.00 out of my cash in your possession." (Addressed to T,
Otherwise" it is incomplete, is called; (RPCPA, 0591; 96-1) signed by D).
a. Certified Check c. Traveler's Check b. "Pay to C or order P20,000.00 and reimburse yourself out of my cash in your
b. Stale Check d. Manager's Check possession." (Addressed to T, signed by D).
c. "I promise to pay C or order, P20,000.00." (Signed D).
3. Which of the following instruments is negotiable? d. "Pay C or order P20,000.00." (Addressed to T, signed by D).
a. Treasury warrant. c. Letter of credit
b. Postal money order d. Trade acceptance. 9. An instrument reads as follows:
November 30, 2003
4. A corporate certificate of stock is not negotiable instrument because it lacks the following I promise to pay to the order of Paolo Pimentel the sum of P50,000.00 if he places first in the
requisite of a negotiable instrument. (RPCPA, 88-1-M; 89-1; 96-2-M; j May 2004 CPA Examination.
a. It must be in writing and signed by maker or drawer. (Sgd.) Mariano Miranda
b. It must be payable on demand or at a fixed determinable future time. a. The instrument is valid and negotiable.
c. It must be payable to order or bearer. b. The instrument is valid but not negotiable.
d. It must contain an unconditional promise or order to pay a sum certain in money. c. The instrument is invalid but negotiable.
d. The instrument is invalid and not negotiable.
5. Which of the following is not a promise to pay, and thus will make an instrument non-
negotiable? 10. An instrument is considered payable on demand: (RPCPA, 88-1; 89-1; 1089)
a. "I agree to pay P" a. When no time of payment is expressed
b. "I bind myself to pay P" b. When payable to order
c. "I acknowledge my debt to P" c. When the last endorsement is in blank
d. "I oblige myself to pay P" d. When the last endorsement is restricted.

6. Which of the following omissions on the face of an instrument will render it non-negotiable? 11. A bill of exchange reads as follows: January 1, 2004
a. The omission of the date of issue. Pay to the order of Pamela Pineda the sum of P50.000.00 thirty (30) days after sight. (Sgd.)
Rosita Rodriguez 15. The maker, by making the instrument, has the following liabilities, except:
To: Wilma Warner a. the engagement to pay the instrument according to its tenor,
The above bill was issued by Rosita Rodriguez to Pamela Pineda on December 28, 2003 and b. the admission of the existence of the payee,
was presented for acceptance by Pamela Pineda to Wilma Warner on January 10, 2004. c. the admission of the capacity of the payee to indorse the instrument.
Based on the foregoing facts, the maturity date of the bill is: d. the admission of the right of the holder to enforce payment of the instrument.
a. January 27, 2004 c. February 9, 2004.
b. January 31, 2004 d. January 10, 2004, 16. Which is not correct? The acceptor by accepting a negotiable instrument: (RPCPA, 97-2; 98-
1)
12. An instrument reads as follows: a. Admits the existence of the payee and his capacity to endorse.
I promise to pay to the order of P the sum of P50.000.00 sixty (60) days after date. b. Admits the existence of the drawer, the genuineness of his signature and his capacity to
(Sgd.) M draw the instrument.
On September 1, 2010, M issued the promissory note to P, P indorsed the note to A, A to B, c. Admits the existence of the endorser, the genuineness of his signature and his authority
and B to C. C indorsed the note to H on September 20, 2010, but before delivering it to H, C to draw the instrument.
inserted August 1, 2010 as the date of issue. H is a holder in due course. The due date of the d. Admits that he will pay it according to the tenor of his acceptance
promissory note insofar as H is concerned is:
a. October 31, 2010. 17. Assuming all the other requisites of negotiability are present, which of the following
b. September 30, 2010. instruments is not payable to bearer?
c. The promissory note becomes demandable at once. a. "Pay to the order of cash."
d. The promissory note is avoided because of the insertion of a wrong date; hence, it is of b. "Pay to the order of Jose Rizal, national hero."
no use to determine the date of maturity. c. "Pay to Pedro Padernal, bearer."
d. "Pay to Pedro Padernal or bearer."
13. Consider the following statements on the interpretation of instruments:
I. Where the sum payable is expressed in words and also in figures and there is a 18. A bill of exchange may be treated and considered a promissory note:
discrepancy between the two, the sum denoted by the words is the sum payable. a. When the drawer and the drawee are the same person.
II. Where there is a conflict between the written and printed provisions of the instrument, b. When the drawee is fictitious
the printed provisions prevail. c. When the instrument is ambiguous
a. Both statements are true. d. All of the above
b. Both statements are false.
c. Statement I is true; Statement II is false. 19. Which of the following statements pertaining to indorsements is incorrect?
d. Statement I is false; Statement II is true. a. The indo sement must be of the whole instrument.
b. The sigrature of the indorser without additional words is sufficient.
14. On August 1, 2003, M executed a promissory note for P50.000.00 payable to the order of P c. Indorsers are liable in the order in which they indorse.
which is payable "30 days after date." Thereafter, P indorsed the note to A, A to B, B to C, C d. If an instrument is delivered without indorsement, negotiation takes effect at the time of
to D, and D to M. The indorsement by D to M was-made on August 29, 2003. delivery even if the instrument is subsequently indorsed
a. The obligation on the note was extinguished by merger or confusion on August 29, 2003.
b. M may reissue/renegotiate the promissory note after it was indorsed to him. 20. M makes a promissory note payable to the order of P. P indorses the note specially to A, A
c. M can go after P, A, B, C and D to collect. indorses the note in blank ard delivers the same to B. B specially indorses the note to C, C
d. M may strike out the indorsement to him by D. specially indorses the note to D, D indorses the note in blank and delivers it to E, E specially
indorses the note to H, holder. Whose indorsement may H strike out?
a. The special indorsement of P to A.
b. The special indorsement of E to H. 25. R signs a check amounting to P50,000.00 but which is blank as to the name of payee. He
c. The blar k indorsement made by A. keeps the check in his drawer but S, his secretary, steals it, places her name as payee on the
d. The blar k indorsement made by D. blank, and negotiates it to A, A to B, B to C, and C to H, holder. A, B, and C have no
knowledge of the theft of the check and its unauthorized completion by S. Based on the
21. M makes a note payable to the order of P. P specially indorses the note to A, A specially foregoing, which of the following statements is incorrect?
indorses the note to B, B indorses the note in blank and delivers it to C, C specially indorses a. H may enforce payment of the check against R if H is a holder in due course.
the note to D, D specially indorses the note to H, holder. Which of the indorsements may H b. H may enforce payment of the check against S, whether H is a holder in due course or
strike out? not.
a. The special indorsement of P to A. c. H may enforce payment of the check against A, B and C, whether H is a holder in due
b. The blank indorsement of B to C. course or not.
c. The special indorsement of C to D. d. H may not enforce payment of the check against R, whether H is a holder in due course
d. The special indorsement of D to H. or not.

22. M makes a note payable to the order of P in the amount of P10,000.00. P indorsers the note 26. Which of the following may be raised as defense against any holder?
to A as follows "Pey to A if he passes the 2004 Bar Examination." a. Want of consideration.
a. M must wait for the condition to be fulfilled before he can pay A. b. Want of delivery of complete instrument.
b. M may pay A even if the condition has not been fulfilled but A has to hold the proceeds c. Insertion of a wrong date.
subject to the rights of P. d. Want of delivery of an incomplete instrument.
c. M cannot be compelled to pay even if the condition is fulfilled because the conditional
indorsement renders the instrument non-negotiable. 27. M makes a promissory note for P2,000 payable to the order of P. P negotiates the note to A
d. M may pay A even if the, condition has not been fulfilled. The fulfillment of the condition who with the consent of P raises the amount to P20,000 and thereafter indorses it to B, B to
becomes immaterial and A becomes the absolute owner of the proceeds of the note. C, and C to D who is not a holder in due course. In this case: (RPCPA, 91-2; 95-1-M)
a. D can recover P2,000 as against M.
23. One of the following can set up the defense of forgery in an instrument payable to order. Who b. P and A are liable to D for P20,000
is it? c. B and C are not liable to D.
a. An indorser, if the maker's signature is forged. d. Answer not given
b. The acceptor, if the drawer's signature is forged
c. A person negotiating by mere delivery if a prior party's signature is forged. 28. M makes a note payable to the order of P. He delivers the note to P with the instruction that P
d. The maker, if an indorser's signature is forged. should keep the same until M has obtained the proceeds of his loan from the bank. P,
however, disregarded the instruction of M and indorsed the note to A, A to B, B to C, and C to
24. Which of the following is not a right of a holder in due course? H, holder. A, B and C have no knowledge of P's defective title. Based on the foregoing, which
a. To hold the instrument free from defect of title of prior parties. of the following statements is incorrect?
b. To hold the instrument free from personal defenses available to prior parties among a. H may enforce payment against M if H is a holder in due course.
themselves. b. H may not enforce payment against M if H is not a holder in due course.
c. To enforce payment of the instrument for the full amount thereof against all parties liable c. H may not enforce payment against A, B and C, whether H is a holder in due course or
thereon. not.
d. To hold the instrument free from real defenses available to the prior parties among d. H may enforce payment against P, whether H is a holder in due course or not.
themselves.
29. M makes a note payable to P or bearer and delivers the note to P. P indorses the note to A. A
keeps the note in his drawer but it is stolen by F who negotiates the same to B by forging A's d. "Pay to Antonio Arevalo P20.000.00.
signature, B indorses the note to C, C indorses the note to H, a holder in due course. Who (Sgd.) Pidencio Palomar"
among the following can set up the defense of forgery?
a. M, maker. 32. Antonio issues a bill to the order of Juan, and Juan indorses it to Pedro. Pedro indorses the
b. P, payee. bill to Mario, Mario to Rodolfo and Rodolfo indorses the bill to Jose, the holder. Which of the
c. A, indorser. following is not true, if Jpse decides to strike out any indorsement not necessary to his title?
d. Forgery is not available as defense to any party to the instrument. (RPCPA, 93-2; 96-1-M)
a. If Jose cancels the indorsement of Pedro, Pedro is relieved from liability.
30. At a movie premier, Perfecto Palmares approached Sharon Morales, the star of the movie, b. If Jose cancels the indorsement of Juan; Juan, Pedro, Mario, and Rodolfo are relieved
and requested an autograph from her. Sharon Morales willingly obliged and signed her name from liability.
at the bottom right portion of a white 8" x 11" stationery which Perfecto Palmares presented c. If Jose cancels the indorsement of Pedro; Pedro, Mario, and Rodolfo are relieved from
to her. Shortly after reaching home, Perfecto Palmares printed above the signature of Sharon liability,
Morales through his computer the following: "I promise to pay Perfecto Palmares or his order d. If Jose cancels the indorsement of Mario; Mario and Rodolfo are relieved from liability.
P50,000.00". Thereafter, Perfecto Palmares negotiated the paper to Arturo Alvarez, Arturo
Alvarez to Bernardo Benitez, and Bernardo Benitez to Henry Hilado, holder. Alvarez, Benitez, 33. M makes a promissory note payable to the order of P for P10,000.00. P indorses the note to
and Hilado knew nothing about how the apparent note came into being. A, and A to B. Thereafter, B indorsed the amount of the note in full to H to secure his (B's)
a. If he is a holder in due course. Henry Hilado can collect from Sharon Morales, debt of P8,000,00 to H, Based on the foregoing, which of the following statements is
b. Whether he is a holder in due course or not, Henry Hilado cannot collect from Sharon incorrect?
Morales. a. If M has no defenses against H, H may collect P10,000.00 from M,
c. Whether he is a holder in due course or not, Henry Hilado cannot collect from Arturo b. If M has personal defenses against H, H may collect P8.000.00 from M.
Alvarez. c. If M has real defenses against H, H may collect nothing from M.
d. Whether he is a holder in due course or not, Henry Hilado cannot collect from Bernardo d. H cannot collect anything from M whether M has real or personal defenses.
Benitez.
34. M makes a promissory note payable to the order of P for PHP5,000.00. After delivery to P, P
31. Medardo Medrano makes a note payable to the order of Pidencio Palomar and Prudencio changed the amount to US$5,000.00. Thereafter, P indorsed the note to A, A to B, B to C, C
Perez for P20,000.00. The payees are not partners and neither one authorized the other to to D, and D to H. The parties subsequent to P were not aware of the alteration made by P.
act in his behalf. Based on the foregoing, which of the following is a valid indorsement? Based on the foregoing facts, which of the following statements is incorrect?
a. "Pay to Antonio Arevalo, P12,000.00, and to Alberto Alvarez, P8.000.00. a. H can hold M liable for US$5,000.00 if H is a holder in due course.
(Sgd.) Pidencio Palomar (Sgd.) Prudencio Perez." b. H can hold M liable for PHP5,000.00 if H is a holder in due course.
c. H cannot hold M liable for any amount if H is not a holder in due course.
b. "Pay to Antonio Arevalo, P14.000.00. d. H can hold A, B, C and D liable for US$5,000,00 even if H is not a holder in due course,
(Sgd.) Pidencio Palomar (Sgd.) Prudencio Perez"
Note: Medardo Medrano has paid a total of P6.000.00 to both payees before the latter made 35. A makes a note payable to B or order. The following are the indorsers of the note in the order
their indorsements. 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, and E. Which is not correct? (RPCPA, 96-
c. "Pay to Antonio Arevalo, P14,000.00. 2-M; 97-2)
(Sgd.) Pidencio Palomar (Sgd.) Prudencio Perez." a. The notice given by F to B operates to the benefit of C, D, E and G.
Note: Medardo Medrano has not paid any amount to the payees. b. The notice to C inures to the benefit of D, E and G.
c. The notice to C inures to the benefit of B. a. English rule c. New York rule
d. The notice to D inures to the benefit of E and G. b. Massachusetts rule d. Italian rule

36. Which of the following instances does not discharge a negotiable instrument? (RPCPA, 93-2; 5. The price is certain under the following:
96-1) I - The parties fixed the price
a. Payment by maker of a promissory note before maturity date. II - When the parties referred to another thing certain
b. Intentional cancellation of the instrument by the holder. III - The price is left to the judgment of buyer or the seller
c. Payment by party primarily liable to holder or his authorized representative. IV - The price is left to the judgment of 3rd person.
d. Voluntary surrender of the instrument by the holder to the maker without collecting. a. I, II and III
b. I, II and IV
37. A party secondarily liable is discharged through any of the following means, except by the: c. I and II
a. intentional cancellation of his signature by the holder. d. I, II, III and IV
b. discharge of a prior party.
c. release o the principal debtor. 6. Seller sold his only horse to Buyer for P80,000. The parties agreed that Seller shall deliver
d. extension of the time of payment which is assented to by such party secondarily liable. the horse one week from the execution of their agreement. Buyer, however, is required to
pay the price immediately in certified check. In the place of Seller and Buyer, it was the
Contract of Sales custom :hat anyone selling a horse should place a horseshoes on its hooves. However, this
1. In a sale, the buyer is entitled and has the right to the fruit of the thing sold from the time: was not stated in the agreement including how the horse would be cared for before delivery.
(RPCPA, 1089-M, 90-1; 97-2) a. Seller is not obliged to place a horseshoe on the horse a though it was the custom in the
a. The obligation to deliver the thing sold arises. place because Seller and Buyer did not stipulate about it.
b. The sale is perfected b. Seller is obliged to place a horse shoe on the horse because the observance of custom
c. The thing sold is delivered or usage in the place becomes part of the contract.
d. The fruit of the thing sold is delivered. c. Seller is not obliged to take care of the horse before delivery because the caring of the
horse was not stipulated.
2. Ownership of the thing sold is transferred/acquired/retained: (Phi! CPA, 92-2; 96-1) d. Seller end Buyer are bound only by the terms stated in their agreement.
a. Retained by the seller in "sale of return."
b. Transferred to the buyer upon constructive or actual delivery of the thing sold. 7. Somera sells to Beunviaje at P50 per gallon 300 gallons of gasoline stored in his trunk’s tank
c. Acquired by the buyer upon perfection of the contract. which, unknown to the parties, contains 500 gallons gasoline.
d. Transferred to the buyer upon acceptance of the price. What is the status of the contract of sale between Somera and Buenviaje?
a. The sale is void because the quantity is more than the quantity sold,
3. Cory transferred to Doris a parcel of land for the price of P100,000, P30,000 to be paid in b. The sale is valid up to 500 gallons of gasoline. Buenviaje must pay for the additional 200
cash and for the difference, sie will convey her car worth P70,000. gallons of gasoline.
What kind of contract is this? (RPCPA, 92-1-M; 93-1- M; 96-1-M; 96-1) c. The sale is valid up to 300 gallons of gasoline. Buenviaje becomes the owner of 3/5 of
a. Lease contract c. Obligation to sell the whole stock, while Somera becomes the owner of 2/5 thereof.
b. Contract of sale d. Barter d. The sale is rescissible because Somera will suffer a lesion of more than 1A of the value
of the whole stock.
4. If the material used in the manufacture of the article is more valuable, it is a contract of sale,
and if the labor or skill is mere valuable than the material used in the manufacture of the 8. San Miguel Corporation, which maintains a professional basketball team, entered into a
article, it is a contract for a piece of work. This school of thought followed: contract with Armstrong Rubber Company for the latter to provide a pair of rubber shoes to
the formers two imported basketball players, Charles Jordan and Michael Barkley.
Armstrong Rubber Company was instructed to make a pair for either or both players in case 11. Baldo bought a residential house and lot from Tierra Madre Realty for P250,000.00 giving a
the company did not manufacture shoes of their size. No pair was, however, immediately down payment of P10,000.00 and promising to pay the balance of P240,000.00 in 20 years in
available for both the players. Charles Jordan, who is 6'5 tall and wears size 12 rubber monthly Installments of PI,000.00. After paying 72 installments Baldo defaulted in the
shoes, was given a pair day from the 300 pairs that Armstrong was in the process of payment of the 73rd installment and subsequent ones. Despite the grace period he had
manufacturing for its customers at the time the orders were received. Michael Barkley, who is earned he was not able to make any further payments. Accordingly, Tierra Madre Realty
7' tall and wears size 18 shoes, was provided three days later, with a pair that was specially cancelled the sale. How much cash surrender value is Baldomero entitled to receive?
made for him since Armstrong does not make shoes of 'his size. What kind of contracts were a. P45,100.00 c. P36,000.00
entered into for the shoes provided to the two basketball players? b. P39,600.00 d. P41,000.00
a. The contract for the pair of shoes provided to Charles Jordan is a contract for a piece of
work, while that for Michael Barkley is a contract of sale. 12. Goods are still in transit:
b. The contract for the pair of shoes provided to Charles Jordan is a contract of sale, while a. if the buyer or his agent obtains delivery of the goods before their arrival at the appointed
that for Michael Barkley is a contract for a piece of work. destination.
c. Both contracts are contracts of sale. b. when the carrier acknowledges possession of the goods as bailee for the buyer after the
d. Both contracts are contracts for a piece of work. arrival of the goods at the place of destination.
c. if the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his
9. On June 1, 2003, S sold to B 50 units of machines which were scheduled to arrive from agent.
Japan the following day on board, the vessel "MT Nippon Maru" The sale was evidenced by d. if the goods are rejected by the buyer, and the carrier or other bailee continues in
an invoice identifying each machine by serial number. Each machine was priced at PI possession of them, even if the seller has refused to received them back.
0,000.00.
Unknown to the parties, 30 units were damaged beyond repair by seawater on May 31, 2003. 13. This refers to the implied warranty on the part of the seller that he has the right to sell the
Based on the foregoing, which of the following statements is incorrect? thing at the time when ownership is to pass, and that the buyer from that time shall have and
a. B may rescind the whole contract, enjoy legal and peaceful possession of the thing.
b. B may demand delivery of the remaining 20 pay the price therefor. a. Warranty against hidden defects.
c. S may require payment of the whole shipment since S was not aware of the damage b. Warranty against eviction.
caused on the machines at the time of sale. c. Warranty of ownership.
d. S has no option to rescind the whole contract or payment of the remaining 20 units. d. Warranty of possession.

10. In one of the following cases, delivery of the goods to a carrier for the purpose of 14. This refers to an encumbrance imposed upon an immovable for benefit of another immovable
transmission to the buyer transfers ownership to the latter. Which one is it? belonging to a different owner.
a. When by the terms of the bill of lading, the goods are to be delivered to the seller or his a. Easement or servitude c. Pledge
agent. b. Real estate mortgage d. Chattel mortgage
b. When by the terms of the bill of lading, the goods are to be delivered to the order of the
buyer or his agent but the seller retains the bill of lading, 15. The justified refusal of the buyer to accept the goods produces the following effects, except:
c. When the seller draws a bill of exchange on the buyer for the price of the goods and a. buyer has no duty to return the goods, unless otherwise stipulated.
transmits such bill of exchange and the bill of lading to the buyer to secure acceptance or b. title to the goods does not pass on to him.
payment of the bill of exchange and the buyer dishonors the bill of exchange. c. buyer shall not be obliged to pay the price.
d. When the owner does not reserve the, right of possession or ownership of the thing sold d. buyer is obliged to constitute himself as depositary until he returns the goods.
upon delivery to the carrier.
16. S, the proprietor of a rent-a-car enterprise, sold his business and his fleet of 10 cars to B for a a. Void because the object was not existing at the time of execution of the contract.
lump sum of P3,000,000.00. S physically delivered the permits and other papers for the b. Valid because future things may be the object of contracts.
operation of the business and the vehicles to B at the latter's office except for one car which c. Rescissible because buyer will likely suffer damage if the eggs do not come into
the parties agreed shall be leased by S for one month while he was winding up his affairs in existence.
the Philippines as he was then leaving for abroad. In the meantime the contract of sale and d. Unenforceable because the contract was not in writing.
the contract of lease, though already signed by the parties, have not been acknowledged
before notary public, and hence, were still private instruments. 20. RR, the representative of AA, an absentee, sold the corn with a value of P30,000.00 and the
a. The ownership of the car leased by S remained with S palay with a value of P50,000 harvested from AA's agricultural farm for a total price of
b. The ownership of the car leased by S has transferred to B although there was no P50,000. AA, whose domicile was subsequently known, was informed of the sale made by
physical delivery thereof to B. RR. Based on the foregoing facts, which of the following statements is incorrect?
c. The execution of the private instrument for the business and the cars likewise transferee a. AA- may seek payment of an additional P30,000 to recover the damages suffered.
ownership to B of the car leased by S. b. AA may just seek rescission of the sale of the corn to recover damages he suffered.
d. Both the contract of sale and the contract of lease must be acknowledged before a c. AA may seek rescission of the sale of part of the rice to the extent of the damages he
notary public by the parties before the ownership of the car leased transferred to B. sustained.
d. AA may seek the rescission of the total sale recover for the damages he suffered.
17. S, a malicious and fraudulent person, sold his house and lot successively to X, Y and Z, all of
whom acted in good faith and for value. X contented himself with his contract and did not 21. The purpose of this action is to ask for a proportionate reduction of the price
register the sale nor possess the house and lot; Y possessed the same but only intermittently a. Quanti minoris c. Replevin
which enabled Z to buy the house and lot in good faith and registered the sale with the b. Redhibitory action d. Accion vindicatoria
Register of Deeds, Who among X, Y and Z will have a better right to the house and lot?
a. X as the first buyer in good faith and for value who, has oldest title. 22. In which of these cases is there no right of legal redemption?
b. Y because he took possession of the house and lot although intermittently. a. Where a co-owner of an undivided immovable sells his interest to a third person,
c. Z as the buyer who first recorded his transaction with the Register of Deeds in good faith. b. Where the owner of rural property one hectare or less sells his property to a third person
d. X, Y and Z should share the property in equal proportion after S returns their portion of who owns other rural land or lands.
the price paid. c, Where the owner of urban land which is so small and so situated that it cannot be used
for a practical purpose sells the same to a third person.
18. S sold to B a residential lot said to be containing an area of 1,000 sq. meters at P10,000 per d. Where ths co-owner of an undivided immovable property donates his undivided interest
sq. meter. In this connection, which of these is a correct statement? to a third person.
a. If the lot should contain 1,500 sq. meters, B can reject the excess of 500 sq. meters, but
if he accepts, B should pay for the excess at the contract rate of P10,000 per sq. meter. 23. If redemption is made, which of the following will not be paid by the seller to the buyer:
b. If the lot should contain 950 sq. meters only, B can only ask for a proportionate reduction (RPCPA, 92-2; 96-1; 98-1-M)
of the price but not rescission. a. Price mad a by the buyer.
c. If the lot should contain 900 sq. meters, B can choose between proportionate reduction b. Expenses in the execution of the sales contract paid by the buwer.
of the price or rescission of the sale. c. All necessary expenses on the thing sold and to be redeemed
d. All of the above. d. Interest on the price paid by the buyer.

19. Seller and Buyer orally entered into a contract whereby Seller sold his one year production of Contract of Agency
eggs in his poultry farm to Buyer for P150,000 which amount immediately gave in cash to 1. P is the owner of a car valued at P600,000 which neighbor A sold to T foi the same amount
Seller. The contract between Seller and Buyer is: without being authorized by P. A turned over the proceeds to P who knowingly received it as
me consideration for the sale of his car. The relationship of agency created between P and A P320,000.00. Mr. Ajente shall remit to Mr. Principe: (RPCPA, 90-2-M; 91-2-M; 92-2;)
is one a. P300,000.00 c. P285,000.00
a. By appointment d. By necessity b. P320,000.00 d. P395,000.00
b. By ratification e. By operation of law
c. By estoppels 7. A appoints B as his agent to sell his land. Which of the following is valid? (RPCPA, 93-2)
a. The authority of B is in writing and the sale of the land in fa ./or of C is oral.
2. P in the presence of many people including T told the crowd that A is his agent duly b. The authority of B from A is by way of letter and B sells the land to C in writing.
authorized by him to sell his car although that is not factually true. Believing in good faith the t c. The authority of B is oral and B sells the land to C ,:or P50,000.00 in a written contract of
A is indeed an agent of P - T bought the car from A foi P600,000. This agency between P and sale.
A is one created - d. The authority of B is in writing by the sale of the land in writing was made beyond the
a. By appointment d. By necessity period expressly set forth by A,
b. By ratification e. By operation of law
c. By estoppels 8. A commission agent:
a. Has the option to act in his own name.
3. A, B and C validly entered into a contract of partnership for the purpose of buying and selling b. Generally, cannot sell on credit.
car. A or B or C as partners become that agents of ABC partnership which is created - c. May be an agente del credere if he receives guaranty commission.
a. By appointment d. By necessity d. All of the above.
b. By ratifice tion e. By operation of law
c. By estoppels 9. Bears risk of collecting from the buyer the price of the sale.
a. Commission agent c. Quasi-tradition
4. P has appointed A to manage his business affairs in the U.S.A. Then A died leaving S, his b. Delegacion d. Agente del credere
son, as his only heir, Because there are important transactions that are pending, S
immediately took care of the same, In this connection, S should be regarded as an agent of P 10. P appoints A his agent for the purpose of borrowing money and to this end mortgaged
and the relationship is created (chattel) his car. A in excess of authority sells the car to T and the latter knows of his excess
a. By appoirtment d. By necessity of authority. The principal P did not ratify the sale - the status of the contract with T is:
b. By ratifice tion e. By operation of law a. Valid c. Unenforceable
c. By estoppels b. Voidable d. Void

5. A appoints B io sell his land. 11. Which of these agencies is not revocable at the will of the principal?
Example 1 - If the authority of B is oral and B sells the land in writinc, the sale is valid. a. If a bilateral contract depends upon the agency.
Example 2 - T the authority of B is in writing and B sells the land orally, the sale is valid. (Phii b. If the agency is the means of fulfilling an obligation already contracted.
CPA, 93-2; 94-2-M) c. Where the agency is coupled with an interest,
a. First example is false but second example is true. d. All of the above.
b. Both examples are true,
c. Both examples are false. 12. One of the following acts requires a special power of attorney granted by the principal to his
d. First exanple is true but the second example is false. agent. Which is it?
a. To make gifts to employees in the business managed by the agent.
6. Mr. Principe constituted Mr. Ajente as his authorized agent to sell the former's Lancer car for b. To borrow money which is urgently needed to preserve the property of the principal
P300,000.00 and to pay him a 5% commission on the selling price. Mr. Ajente sold tie car for under the administration of the agent.
c. To make payments for purchases in the ordinary course of the business.
d. To repudiate an inheritance 17. Pedro, a Filipino who was on a business trip in Timbuktu, learned that Federico, also a
Filipino, was interested in buying his lot located in Fairview, Quezon City. To take advantage
13. Which of these is not an act of ownership and, therefore, need not be contained in a special of the opportunity, he made an overseas call to Almario, his business associate who was in
power of attorney for the agent to possess the same? Manila, to sell the lot in his (Pedro's) behalf, to Federico, for P1,000,000.00 cash. Almario
a. To make payments which are in the ordinary or usual course of business. thus sold the lot promptly to Federico. The contract of sale was in a public instrument which
b. To effect novations which put an end to obligations contracted before the agency. was signed by Almario in behalf of Pedro as seiller, and Federico as buyer. The said contract
c. To waive an obligation gratuitously. of sale is:
d. To obligate the principal as a guarantor. a. Valid, because it is in a public instrument and Almario was duly authorized to represent
Pedro.
14. 1st Statement: If the agent contracts in the name of the principal and the principal does not b. Void, because the authority of Almario was not in the form required by law.
ratify the contract, the contract shall be void if the party with whom the agency contracted is c. Unenforceable, because Pedro did not sign the contract of sale and so he haetho
aware of the limits of the powers granted by the principal. consent thereto.
2nd Statement: A third person cannot set up the fact that the agent has exceeded his powers d. Rescissible, because the contract was entered into in representation of an absentee.
if the principal has ratified or has signified his willingness to ratify the agent's acts. (RPCPA,
98-1) 18. Precision Appliances Corporation (Precision), which is based in Metro Manila, sent a letter
a. Both statements are false with a special power of attorney, to Alberto Aguado (Alberto), an agent dealing with
b. Both statements are true appliances, in the latter's office in Cebu, appointing Alberto as the agent of Precision to sell
c. 1st statement is false, 2nd statement true its new appliances. The letter, which was sent through LBC Courier Services, was duly
d. 1st statement is true, 2nd statement false received by Alberto Aguado, who signed in the logbook of LBC. Alberto, however, did not
respond to the letter. Based on the foregoing data:
15. P, 25 years old, appointed A, 17 years old, as his agent to sell certain goods for P20,000.00. a. An agency was created between Precision and Alberto by the implied acceptance of
Thereafter, A sold the goods to B for the said amount. P, however, learned that the price of Alberto of the agency.
the goods had increased to P22,000.00 so he sought to disaffirm the sale made by A to B, b. No agency was created between Precision and Alberto because Alberto did not respond
and brought an action to recover the goods from B on the ground that A's act was voidable, A to the letter.
being a minor, and hence, could not be an agent. Decide. c. An agency was created by the ratification of Alberto when he duly received the letter with
a. The sale is valid because the principal is capable. a special power of attorney.
b. The sale is void, because A is a minor and therefore, cannot be an agent. d. No agency was created because of the inaction of Alberto.
c. The sale is voidable, because A is a minor.
d. The sale is unenforceable, because A exceeded authority. 19. P, owner of a certain car, authorized A to sell the car for P100,000.00 cash. A, however, sold
the car in the name of P for P110,000.00 but on credit. B, the buyer, knew at the time of the
16. One of the following acts may be delegated by a principal to his agent. Which is it? transaction that A's authority was to sell the car of P on cash basis. The contract entered into
a. Vote during the meeting of stockholders of a corporation where the principal is a by A is:
stockholder. a. Void because B was aware of A's limit of authority. In this case, A is not liable because
b. Attend meetings of the board of directors of a corporation where the principal is a he did not undertake to get P's ratification.
director. b. Valid because the transaction, although it was for credit, was more advantageous to P.
c. Purchase land in the Philippines of which the principal is an alien. Accordingly, P will be liable.
d. Represent the principal in a marriage ceremony where the principal is a party to the c. Unenforceable against P because A acted in excess of his authority. Thus, A alone will
marriage contract. be liable,
d. Rescissible, because P will suffer damage if the sales price is not paid by B. a. The pawnshop can recover the deficiency of P1,000 from Ben
b. The pawnshop cannot recover the deficiency of P1,000 unless there is a stipulation.
20. Perez gave Almendras a special power of attorney wherein it was written that Almendras was c. The pawnshop cannot recover the deficiency of P1,000 even if there is a stipulation.
being authorized to sell the two cars of Perez. However, Perez and Almendras had an d. The pawnshop can recover the deficiency of P1,000 even without a stipulation
understanding that Almendras should sell only one of the cars. Almendras sold the two cars
to Bernarte who was not aware of the instruction given by Perez to Almendras. 2. When is appropriation by the creditor of the thing given as security allowed in pledge, real
a. Perez is bound by the sale of only one car in accordance with his understanding with mortgage and chattel mortgage?
Almendras. a. When the thing given as security in real mortgage is not sold at two public auctions.
b. Perez is bound by the sale of the two cars because that is what is contained in the b. When the thing given as security in pledge is not sold at two public auctions.
special power of attorney as written. c. When the thing given as security in chattel mortgage is not sold at one public auction.
c. Perez is not bound at all by the sale of either one or both of the two cars because d. No appropriation is allowed in either pledge, real mortgage or chattel mortgage.
Almendras violated the instructions given by Perez.
d. Perez will be bound by the sale of one or both cars at his option. 3. This is a stipulation in pledge or mortgage providing that the ownership of the thing given as
security will pass to the pledgee or mortgagee upon default of the debtor,
21. The principal is not liable for the expenses incurred by the agent in the following, except: a. Constitutum possessoriurn
a. when although the agent acted in contravention of the principal's instructions, the b. Pactum commissorium
principal wishes to avail himself of the benefits derived from the contract, c. Legal subrogation
b. when it was stipulated that the agent would be allowed only a certain sum. d. Redemption
c. when the agent incurred them with the knowledge an unfavorable result would ensue, if
the principal was not aware thereof, 4. P appoints A his agent for the purpose of borrowing money and to this end mortgaged
d. when the expenses were due to the fault of the agent (chattel) his car. A in excess of authority sells the car to T and the latter knows of his excess
of authority. The principal P did not ratify the sale - the status of the contract with T is:
22. Which of these agencies is not revocable at the will of the principal? a. Valid c. Unenforceable
a. If a bilateral contract depends upon the agency. b. Voidable d. Void
b. If the agency is the means of fulfilling an obligation already contracted.
c. Where the agency is coupled with an interest. 5. D borrowed 130,000.00 from C. To secure the debt, D pledged his ring, wristwatch, and
d. All of the above. necklace. Before the debt could be paid, C died leaving X, Y and Z as heirs. By agreement
among the heirs who inherited the credit, the ring would secure the share of X of the credit,
23. The following are modes of extinguishing an agency, except: the wristwatch the share of Y, a necklace the share of Z. Later, D pays X P10,000.00.
a. death, civil interdiction, insanity or insolvency of the principal or agent. a. D can demand the extinguishment of the pledge of the ring.
b. accomplishment of the purpose of the agency. b. X may release the pledge of the ring.
c. expiration of the period for which the agency was constituted. c The pledge of the ring will remain until the shares of Y and Z are paid by D.
d. continued losses on the part of the principal or agent d. D can demand the extinguishment of the pledge of the ring, wristwatch and necklace
because there has been part al payment.
Contract of Pledge, Mortgage and Antichresis
1. Ben pledged his watch to V.Y. Domingo Agencia for P5,000. On due date, Ben failed to 6. Cesar pledgee his Toyota car to Dan for P100,000. Cesar was unable to pay the obligation
redeem his watch. two (2) months after the obligation became due and demandable. Wherefore, Dan sold the
The pawnshop sold the watch at a public auction to the highest bidder at P4,000, (RPCPA, car at public auction for P80,000. Can Dan recover the deficiency of P20,000 from Cesar?
1089-M; 90-2-M; 98-1; 98-1-M;') 1st answer: Mo, he cannot recover the deficiency even is there is a stipulation the he can.
2nd answer: Yes, he can recover the deficiency even without stipulation. (RPCPA, 97-2; 98- pledged his wristwatch; B, his necklace; and C, his diamond ring, A pays his share of toe
1-M) debt amounting to P20,000.00,
a. 1st answer correct, 2nd answer wrong I. The obligation of A, B and C is solidary.
b. Both answers are wrong II. The obligation of A, B and C is joint.
c. 1st answer wrong, 2nd answer correct III. A may demand the return of the wristwatch after payment of his share of the debt.
d. Both answers are correct a. I and III are true c. I and III are false
b. II and III are true. d. II and III are false
7. The debtor/pledger has the-following rights, except:
a. to ask for the return of the thing pledged after he has paid the debt, its interests, and with 11. D pledged his 100 shares of stock of San Miguel Corporation to C to secure his debt of
expenses in a proper case. P5.000.00. On clue date D was not able to pay the debt, so C caused the sale of the shares
b. to continue to be the owner of the thing pledged unless it L expropriated. auction. The shares of stock were sold at P4,500.00.
c. to require the deposit of the thing with a third person if it is in danger of being impaired or a. To extinguish the obligation, C may recover the deficiency of P500.00 from D if there is a
lost through the negligence or willful act of the pledgee. stipulation to that effect.
d. to alienate the thing pledged without the consent of the pledgee. b. To extinguish the obligation, C may recover the deficiency even if there is no stipulation
to that effect.
8. D borrowed F 100,000.00 from C. To secure the debt, D mortgaged hs land and building in c. The obligation is extinguished even if there :s a deficiency of P500.00. Accordingly, C
favor of C. The mortgage is registered with the Register of Deeds. Sometime later, D sold the can no longer recover the deficiency.
land to X who was not aware of the mortgage of the land and building. Based on the above d. The obligation is extinguished only if the proceeds of sale amount to P5.000.00 or more.
information, which of the following statements is false?
a. X must respect the mortgage although he was not a party thereto. 12. This refers to the right of a person to retain a thing until he receives payment of his claim in
b. X was not bound by the mortgage because he was not aware of it. the cases provided by law such as one who has executed work on a movable.
c. If C forec oses the mortgage and the proceeds of the foreclosurs sale are not enough to a. Conventional pledge c. Legal pledge
pay for the debt, C can recovar the deficiency from D. b. Voluntary pledge d. Chattel Mortgage.
d. If C forezioses the mortgage and the proceeds of the foreclosure sale exceed the
amount of debt, D is entitled tc the excess. 13. One of the following may not be the object of a real mortgage:
a. Land, buildings, roads and construction of all kinds adhered to the soil.
9. D pledged h s computer to secure a loan which he obtained from C, The debt which amounts b. Fertilizer actually used on a piece of land.
to P10,000.00 is due after 6) days. Before the due date, C executed an instrument c. Animal houses, pigeon houses or other breeding places intended by the owner to be
abandoning the pledge. permanently attached to the land, including the animals therein.
I. D's debt cf P10,000.00 is extinguished, d. Growing fruits that have been gathered from trees planted on land.
II. The pledge of the computer is extinguished even if D has not yet accepted the
renunciation of the pledge. 14. It is the right mortgagor t« redeem the property that was mortgage after it was sold.
III. The pledge a is not extinguished until C returns the ring to D. a. Equity of redemption c. Right of subrogation
IV. The pledge is extinguished even if C has not returned the ring to C. b. Right of redemption. d. Right of pre-emption.
Based on the foregoing, which is false among the four statements?
a. I and III c. I and II 15. In a contract of pledge, the pledgee/creditor may do the following, except to:
b. II and IV d. II and III. a. use the thing pledged for purposes of preservation.
b. retain the thing pledged until the principal obligation is satisfied.
10. A, B and C obtained a loan from X in the amount of P60,000.00. To secure the debt, A c. ask for a substitute if he was deceived on the substance or quality of the thing pledged.
d. sell the thing pledged without notice to the pledger/debtor. b. Consensual d. Onerous

16. Consider the following cases: 20. Pledge and mortgage are accessory contracts because they: (Phi! CPA, 95-1)
I. D owes C P10,000.00. To secure the debt, D pledged his cell phone. D defaults. The a. Are meant to secure the fulfillment of a principal obligation.
cell phone is sold for P9,000.00 at the public auction. b. Cannot exist if the principal obligation is void.
II. D bought a car for P360.000.00 from C. The price, which is payable in 12 equal monthly c. Can exist by themselves.
installments of P30,000.00, is secured by a chattel mortgage on the car. After paying 2 d. Cannot secure fulfillment of rescissible obligation.
installments, D defaults in the payment of 3 installments. C forecloses the chattel
mortgage and the car is sold at the public auction for P280,000.00. 21. Which of the following statements regarding contract of pledge is not correct? (RPCPA, 96-2)
The deficiency is recoverable in: a. A pledge cannot be constituted unless the thing pledged be placed in the possession of
a. Both I and II, the creditor.
b. I only b. Pledge is a real contract because it is perfected by delivery of the thing pledged.
c. II only c. Pledge is an accessory contract because it needs a principal obligation to exist.
d. No deficiency is recoverable in both I and II. d. A pledge cannot be constituted to secure the performance of a voidable or
unenforceable or even a natural obligation.
17. Mary Monies and Meiany Manalo obtained a loan of P100,000.00 from Patricia Palma. The
debtors executed a promissory note which reads as follows: 22. The following are essential requisites common to the contract of pledge and mortgage,
We promise to pay Patricia Raima or order P100.000.00 on April 30, 2004. except one: (RPCPA, 97-2)
(Sgd.) Mary Monies (Sgd.) Meiany Manalo a. That they are constituted to secure the fulfillment of a principal obligation.
To secure the loan, Mary Montes pledged her diamond ring, while Meiany Manalo executed a b. That the pledgor or mortgagor is the absolute owner of the thing pledged or mortgaged.
mortgage on her lot. c. That the contract is registered with the Register of Deeds.
a. Mary Montes may demand the return of her diamond ring if she pays her share of the d. That the person constituting the contract has free disposal of his property or that he is
debt, while Meiany Manalo's share remains outstanding. authorized legally for the purpose.
b. Meiany Manaio may demand the cancellation of the mortgage on her lot if she pays her
share of the debt, while Mary Montes's share remains outstanding.
c. Both Mary Montes and Meiany Manalo must pay the total amount of the debt before
Mary Montes could demand the return of the diamond ring, and Meiany Manalo the
cancellation of the mortgage on her lot.
d. Patricia Palma may demand payment of the amount of P100,000,00 from either Mary
Montes or Meiany Manalo.

18. The creation of a lien on the property upon which, it is imposed, whoever may be the
possessor of the property, to the fulfillment of the obligation for whose security it was
constituted refers to the characteristic of a real mortgage being:
a. an accessory contract c. an inseparable contract
b. an indivisible contract d. a real property in itself.

19. One of the following is not a characteristics of pledge and mortgage: (RPCPA, 94-1)
a. Accessory c. Gratuitous