PRE BOARD d. The notice to D insures to the benefit of E and G.

1
. G is a golfer who before driving his golf ball into the fairway shouted the traditional warning of .
10
Which of the following is not a real defense? (CPA, Oct. 1996)
“FORE”. Unfortunately, C, a caddy was hit in the head by the ball and suffered damages in the amount a. Fraud in factum
of P150,000 b. Incomplete and undelivered instrument
a. G can be sued criminally for physical injuries; c. Insertion of wrong date
b. G can only be sued civilly for the damages of P150,000; d. Forgery of a signature
c. G can be sued both civilly and criminally; .
11
D borrowed from C P5,000,000. On maturity date when D was not able to pay, C filed a complaint for
d. G is not liable for the damages of P150,000 nor can he be criminally liable because he is not guilty of collection against the former who formally answered the same: While the case was pending, C assigned
negligence having shouted the warning “FORE”. the credit against D in favor of T for P3,000,000 on December 15, 2005. The judicial costs amount to
2
. A customer in a restaurant orders food from the owner among which is a large plate of oysters. Said P80,000. If D on April 15, 2006 would like to extinguish his obligation to T he should pay—
oysters were delivered to the customer but before he could pay for them two quality pearls were a. P5,000,000
discovered embedded among the oysters. Who will be entitled to the pearls? b. P5,000,000 plus P80,000 plus interest from December 15, 2005
a. The restaurant owner because the customer has not paid for oysters yet. c. P3,000,000
b. The restaurant owner provided the customer has not yet seen the pearls. d. P3,000,000 plus P80,000 plus interest from December 15, 2005
c. The customer provided he has already paid for the bill. .
12
Statement 1- S sold to B a car valued at P600,000 in consideration of P200,000 cash and a diamond ring
d. The customer even before payment of the bill upon the delivery of the oyster to him. worth P400,000. The transaction between S and B is barter.
3
. A director of a corporation enters into a contract with the corporation in which he is a director. Such Statement 2- S conveyed to B the ownership of a car in consideration of P300,000 in cash and a diamond
contract is generally- ring valued at P380,000. The transaction between S and B is a sale.
a. Valid a. Both statements are true.
b. Voidable b. Both statements are false.
c. Rescissible c. Statement 1 is true but statement 2 is false.
d. Void d. Statement 1 is false, but statement 2 is true.
4
. To which of these modes of special payment is the law of sales applicable? .
13
This kind of agent merely makes the principal and the third person meet and when they arrive at an
a. Dacion en pago agreement or contract become entitled to his commission.
b. Cession en pago a. Broker
c. Tender of payment and consignation b. Factor
d. Application of payment c. Commission agent
5
. 1st Statement- In all cases of extra-judicial foreclosure, the right of legal redemption can be exercised by d. Attorney at law
the mortgagor within one year from and after the registration of the sale. .
14
P appointed A his agent for the purpose of selling his car for P600,000 with a 10% commission. A was
2nd Statement- In judicial foreclosure, the mortgager may still exercise his equity of redemption after the able to sell the car to T for P800,000. How much should A deliver to P?
confirmation of the sale by the court (CPA, Oct. 1997) a. P600,000
a. Both statements are wrong b. P540,000 or minus the 10% commission
b. 1st statement correct, 2nd statement wrong c. P800,000
c. Both statements are correct d. P720,000 or minus the 10% commission
d. 1st statement wrong, 2nd statement correct .
15
X, Y, and Z are partners in a business with a total capital contribution of P3,000,000. In the course of
6
. When the preferred shares are issued by a corporation with a fixed annual interest in the face thereof, business, the partnership became indebted to C in the amount of P4,500,000. Subsequently, W was
the effect is- (CPA, Oct. 1992) admitted as a new partner with a contribution of P1,000,000. Much later, the partnership became
a. The contract of subscription between the corporation and stockholders subsists. indebted to T in the amount of P4,000,000. The partnership is insolvent and the only asset is the original
b. The stockholder becomes a creditor of the corporation. capital of P3,000,000 and the newly contributed capital of P1,000,000 by W.
c. The shares of stock become negotiable instruments a. W is not liable for the obligation of P4,500,000 in favor of C since he was not yet a partner when it
d. The stockholder is a plain investors who may benefit or suffer with the financial success or failure was incurred.
of the corporation. b. W is liable for the obligation of P4,500,000 although contracted before he became a partner but only
7
. A thing is not deemed lost when it (CPA, May 1998) up to the extent of his contribution.
a. Perishes; c. W is liable for the obligation of P4,500,000 although contracted before he became a partner up to
b. Disappears in such a way its existence is unknown or it cannot be recovered the extent of his personal property.
c. Goes out of commerce; d. W is liable for the obligation of P4,500,000 although contracted before he became a partner but only
d. Deteriorates. up to the extent of the contribution of P1,000,000 in so far as C is concerned. W, however, will be
8
. The following are instances of pledge created by operation of law, except: (CPA, May 1998) liable to T up to the extent of his personal properties.
a. Hotel keeper retains the things brought into the hotel by the guest who cannot pay his hotel bills. .
16
P orally appoints A his agent for the purpose of selling a house and lot. Accordingly, A sold the house
b. An agent retains in pledge the thing which is the object of the agency. and lot to T in a public document. The contract of A with T in so far as P is concerned is—
c. A mechanic retains the car he repaired until he is paid. a. Valid
d. A depositary retains in pledge the thing until full payment of what is due him. b. Voidable
9
. A makes a note payable to B or order. The following are the indorsers of the note in the order of their c. Unenforceable
indorsements: B, C, D. E, F (holder) and G (subsequent holder). The note is dishonored in the handle of F d. Void
who notifies B, C, D and E. Which is not correct? (CPA, Oct. 1997)
a. The notice given by F to B operates to the benefit of C, D, E & G. .
17
P in writing appoints A his agent for the purpose of selling a piece of land. Pursuant thereto, A orally
b. The notice to C insures to the benefit of D, E and G. agreed to sell the land to T. The contract of A and T with respect to P is—
c. The notice to C insures to the benefit of B. a. Valid
 b. Voidable d. Both a and b
c. Unenforceable e. All of a, b and c
d. Void 26
. This type of bonds has detachable portions usually representing payment for interest—
.
18
In which of these cases are the partners including industrial ones liable to third persons jointly only for a. Mortgage bond
the payment of partnership obligations after exhausting all assets and properties of the partnership? b. Coupon bond
a. Where the partnership obligations arose out of contract. c. Guaranteed bond
b. Where the partnership obligations arose out of quasi-contract. d. Debenture bond
c. Where the partnership obligations arose out of delict. 27
. In a situation where the warranty in case eviction applies, the evicted buyer is entitled to recover the
d. Where the partnership obligations arose out of quasi-delict. following as damages—choose the exception.
e. Both a and b a. Return of the price of the sale
.
19
S and B agreed on the sale of refrigerator for P60,000 payable on a down payment of P20,000 and P1,000 b. Income or fruits if the buyer was made to pay
monthly installments. B has already paid 10 installments but was not able to pay the 11th installment. c. Cost of the litigation
The remedy or remedies of S as an unpaid seller is or are— d. Expenses of the contract if it was the buyer who paid for the same
a. To exact fulfillment only. e. Damages if any
b. To cancel the sale only.
28
. P appointed A his commission agent for the purpose of selling textbooks for P200 per book. A sold to T
c. To foreclose in the chattel mortgage if any was constituted. 1,000 textbooks for P250 per book but on installment. Which is a correct statement?
d. To choose from among exacting fulfillment, cancellation of the sale or foreclosure of the chattel a. P is bound to agree to the sale on credit or installment.
mortgage. b. P can regard the sale as one for cash and require A to pay P250 per textbook.
.
20
Which is not a requisite common to both pledge and mortgage? c. P can regard the sale as one for cash but should be entitled only to P200 per textbook.
a. That the pledge or mortgage be constituted to secure the fulfillment of a principal obligation. d. Correct answer not indicated.
b. That the pledgor or mortgagor be the principal debtor.
29
. S sold to B a 1,000 sq. meter real property for the unit price of P10,000 per sq. meter. On a resurvey, it
c. That the pledgor or mortgagor has the free disposal of their properties. was found out that the property contains only 950 sq. meters. What is remedy provided by law for B?
d. That the things in which the pledge or mortgage consists may be alienated for the payment of the a. B can only ask for the rescission of the contract known as accion redhibitoria.
debt or debts. b. B can only ask for proportionate reduction of the price known in law as accion quanti minoris.
e. None of the above. c. B can choose to file either an accion redhibitoria or an accion quanti minoris.
.
21
1st statement- No dividends can be declared out of appraisal surplus as this could amount to declaration d. Since the contract is null and void, B can ask the court to declare the contract of sale a nullity
of dividend out of capital.
30
.S and B agreed in writing for the sale of a house and lot for P10,000, with a right to repurchase but without
2nd statement- If the surplus profits of the stock corporation reaches the level equal to its paid-up specifying the period of repurchase. Under the law, S can repurchase the house and lot—
capital, the SEC may compel the corporation to declare dividends otherwise it will be liable for a surtax a. Within one year
on improperly accumulated surplus. Which of the following is correct? (CPA Oct. 1994) b. Within two years
a. 1st statement is false but 2nd statement is true. c. Within four years
b. Both statements are false. d. Within ten years
c. 1st statement is true, but 2nd statement is false.
31
. S sold his house and lot to B on January 5, 2001, but the latter did not register nor possess the same. On
d. Both statements are true. February 14, 2001, S sold the same house and lot to B1, who took possession but did not register the
.
22
The following are functions of a negotiable instrument. Choose the exception (CPA, Oct. 1994) transaction with the Register of Deeds. Then S sold again the house and lot to B2 in April 28, 2001 who
a. It increases purchasing power in circulation. recorded the sale in good faith with the Register of Deeds on the same date without knowing of the
b. As a legal tender. previous sales to B and B1. Who among B, B1 and B2 would have a better right to the house and lot?
c. As substitute for money. a. B would have the best right to the house and lot because he has the earliest contract.
d. It increases credit circulation. b. B1 would have the best right because he took possession when it was sold to him on February 14,
.
23
The following are all modes of discharging negotiable instruments—choose the exception 2001.
a. Payment in due course by or on behalf of the principal debtor. c. B2 would have the best right to the house and lot because he bought it in good faith without
b. Payment by or on behalf of the accommodation party at or after maturity. knowledge of the previous sales to B and B1 and then recorded his transaction with the Register of
c. By the intentional cancellation of the instrument. Deeds.
d. By any act which discharges a simple contract for the payment of money. d. To avoid legal trouble, S can cancel all the three contracts of sale and just be liable for damages to B,
e. None of the above. B1 and B2.
.
24
Which of these is not a defense against the imposition of a surtax on unreasonable accumulation of
32
. D borrowed from C P200,000 and to secure its payment delivered to the latter a diamond ring. On the
retained earnings of a corporation? failure of D to pay, C brought the matter to a Notary Public for the sale by auction of the diamond ring.
a. That the unreasonable accumulation is due to an unexpected “windfall” in profits. Which is a correct statement?
b. That the retained earnings are to answer for expansion projects already approved in Board of a. If the diamond ring is sold for P250,000 the excess of P50,000 naturally goes to D.
Directors’ resolutions. b. D, the pledgor-debtor is not allowed by law to participate in the auction sale.
c. That the corporation has an agreement with financial institutions to which it owes money that c. If the diamond ring is sold for P180,000 only, the deficiency judgment of P20,000 can be recovered
dividends will not be declared without their consent. by C from D.
d. That the retained earnings are intended to answer for certain contingencies. d. If the diamond is sold for P180,000 only, the deficiency judgment of P20,000 cannot be recovered by
.
25
D is indebted to C in the amount of P10,000,000 payable on December 15, 2008. C makes an assignment C from D even if there is a stipulation to that effect.
of credit in favor of T. In this assignment of credit, C warrants to T—
a. The legality of the credit .
33
In which of these cases is the right of legal redemption not applicable.
b. The existence of the credit a. Where a 90 hectares of land is owned in an undivided manner by A,B, and C and A sells his 1/3
c. The solvency of D interest to T.
 b. Where rural property one hectare or less owned by A and is bounded by adjoining owners B, C and 35. C
D and the same is sold by A to T who has no other land.
c. Where urban property is so small and so situated that it cannot be devoted to any practical purpose
and the property is sold to T who is buying it for some speculative purpose.
d. Where a 120 hectares of land is owned in common by A, B, C and then B donated his 1/3 interest to
T.
.
34
P appointed A his agent with a generally worded authority stating that he withholds no power from A
and that he has allowed him absolute and unlimited powers. Accordingly, A sold P’s house and lot to X
for P5,000,000; leased to T an apartment unit for 2 years also leased to W, P’s car for 5 years.
a. All the contracts of A with X, T and W are perfectly valid.
b. All the contracts of A with X, T and W are unenforceable in so far as P is concerned.
c. The contracts with X and T are unenforceable but the contract with W is valid.
d. The contract with W is unenforceable but the contracts with X and T are valid.
.
35
S delivers to B on “sale or return” 60 days a TV set for the price of P40,000. Which of these statements is
correct?
a. Because the price of P40,000 has not yet been paid, ownership of the TV set is still with S.
b. If the TV set is lost while in the possession of B, S shall shoulder the loss in application of the rule—
res perit domino.
c. If the TV set is lost while in the possessions of B, the loss shall be for his account.
d. If the TV set is lost within the 60 day period, the loss shall be for the account of S.

1. D
2. D
3. A
4. A
5. B
6. B
7. D
8. B
9. C
10. C
11. D
12. D
13. A
14. C
15. D
16. D
17. C
18. E
19. A
20. B
21. C
22. B
23. B
24. A
25. D
26. B
27. A
28. C
29. B
30. C
31. C
32. D
33. D
34. C
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