Business Law/ RFBT

1. 1st Statement: When a fortuitous event concurs with a person’s negligence resulting to a loss,
he is still liable.
2nd Statement: The creditor has a right to the fruits of the thing from the time ownership is
transferred.
a. Both statements are correct. c. Only the first is correct.
b. Both statements are false. d. Only the second is correct.

2. A obliged himself to deliver to his dog, his cow, his carabao, his elephant or his crocodile. The
first two were lost due to fortuitous event and the last three lost due to A’s fault. What is A’s
obligation if choice belongs to the creditor?
a. Creditor, B may convert to cash any of them plus damages
b. Debtor A may convert to cash the value of the last one lost plus damages
c. A may rescind the contract plus damages
d. Creditor, B may convert to cash any of the last three plus damages

3. A obliged himself to deliver to B his cellphone or as a substitute he may deliver his cute kitten.
After substitution was made, the former was lost due to A’s fault
a. A is liable and must pay damages
b. A will simply deliver his cute kitten plus damages for the loss of the cellphone
c. The loss has no effect to the obligation, obligation to deliver the latter will subsist
d. Obligation was extinguished

4. A and B jointly owe C P50,000; they issued a promissory note in favor of C. C endorsed it to D,
D endorsed it to E then endorsed it back to A who is also E’s creditor in the amount of
P50,000.
a. The obligation is partially extinguished by merger
b. The obligation is extinguished and A cannot recover any amount from B
c. The obligation is extinguished but A can recover the share of B which is P25,000
d. The obligation is partially extinguished by compensation

5. Rose obliged herself to give Jack 1 dozen of eggs on January 15, CY. When the date arrived,
Rose failed to deliver despite repeated demands from Jack. Jack’s remedy is:
a. Compel Rose to deliver eggs plus damages
b. Compel Rose to pay the amount of the eggs
c. Rescind the contract
d. Ask a 3rd person to deliver the eggs to him but chargeable to Rose

6. Mary obliged herself to give to John her BMW car on October 10, CY but she failed to deliver
on that date. On the following day, a lightning completely destroyed the car. If with demand, C
ang sagot.
a. Mary is still liable for she is in default already
b. Mary is no longer liable there being no demand , there is no delay and the thing is lost
due to fortuitous event
c. John can demand for a substitute
d. Mary is still liable even if she is in default

7. One is a correct distinction between solidarity and indivisibility.

a. Solidarity refers to the legal tie whereas indivisibility refers to prestation
b. Plurality of subject is indispensable in indivisibility
c. In case of breach, solidarity character of obligation is terminated, but the indivisible
character of the obligation remains
d. Solidarity refers to the parties of the obligation and the prestation whereas
indivisibility refers to the vinculum juris

8. Sale on approval is a sale subject to:

a. Suspensive Condition c. Potestative resolutory
b. Potestative suspensive d. Resolutory Condition
9. Here, consignation alone is enough to produce payment except:
a. If the creditor is unknown
b. Creditor is incapacitated
c. Creditor is reluctant to issue receipt
d. Two or more persons claim to be creditors

10. Which of the following is correct?

a. An action for rescission of contract prescribes in five (5) years 4 yrs dapat counted
from the execution of the contract
b. An action to declare contract void is not subject to prescription
c. An action for annulment of contract is imprescriptible
d. An action to enforce judicially a natural obligation prescribes in 4 years

11. The following contracts should observe Statute of Frauds, except:

a. Lease of real property longer than one year
b. Representation as to the credit of a third person
c. Limited partnership not notarized
d. Prenuptial agreement

12. S makes an offer to B on January 1, CY. B makes known his acceptance in a letter sent on
January 2, and received by S on January 10. Meantime, on January 5, S becomes insane.
a. The contract is not binding under manifestation theory.
b. The contract is not binding under expedition theory.- cognition theory dapat
c. There is already a meeting of minds, the contract is perfected
d. The contract is voidable because one party is insane.

13. Which of the following can be considered as feature of a void contract?

a. Subject to ratification
b. They exist
c. Action or defense for nullity is subject to prescription
d. Defense cannot be waived

14. In three of the following defective contracts, ratification cleanses the defects. Which is the
exception?
a. Contracts entered into by a person who has been given no authority
b. Sale of a piece of land thru an agent, the authority is oral
c. Sale of immovable property or interest orally entered into
d. Special Power of Attorney involving novation but not notarized

15. S, a minor, owns a specific property valued P 50,000. B, capacitated, by means of fraud
induced S to sell his property to him (B) for P 10,000 which S did so. The contract is in writing.
a. The contract is void
b. The contract is rescissible because the ward suffered lesion by more than Ľ of the
value
c. The contract remains unenforeceable because it falls under the Statute of Frauds
d. The contract is anullable

16. Type of defective contract that creates no rights and impose no obligation, but are susceptible
of ratification.
a. Void contracts
b. Rescissible contracts
c. Unenforceable contracts
d. Voidable contracts

17. The representative of an absentee sells a house and lot belonging to the latter valued at P2M
for P500,000 with court approval. The contract is:
a. Rescissible c. Voidable
b. Unenforceable d. Valid

18. Example No. 1: Donation by an insolvent debtor.

Example No. 2: Sale of shares of stocks in violation of preemptive right.
a. Voidable; Rescissible
b. Rescissible; voidable
c. No. 1 is rescissible; while No.2 is unenforceable
d. Both are rescissible
19. Which of the following contracts cannot be ratified?
a. Those whose cause or object did not exist at the time of the transaction
b. Unauthorized contracts
c. Those where both parties are incapable of giving consent
d. Those that fail to comply with the Statute of Fraud

20. On October 4, CY, A is indebted to B for P50,000 for a 20-day period. A proposed to B that X
will pay A’s debt and that A will be free from all liabilities. B and X agree to the proposal. On
October 25, CY, X became insolvent. At the time of delegation, X was already insolvent but
this was not known to A. The insolvency is not public knowledge. So B sues A on the ground
that it was A who made then proposal that A guaranteed X’s solvency. Decide.
a. A is liable because he is presumed to have guaranteed X’s solvency.
b. A is not liable because he does not know the insolvency of X at the time of delegation
and neither was the insolvency of public knowledge.
c. A is liable because he did not exercise due diligence in determining the insolvency of
X.
d. A is liable because X agree to the proposal to make himself solidarity liable for the
obligation.

21. When the thing deteriorates pending the fulfillment of the suspensive condition without the fault
of the debtor, the impairment is:
a. To borne by the party who caused the deterioration
b. To be borne partly by the debtor and partly by the creditor
c. To be borne by the debtor
d. To be borne by creditor

22. X enters into a contract with Y whereby X sold his land orally to Y. The land has been delivered
and the money has been paid. Decide.
a. The contract fully enforceable.
b. The contract is unenforeceable
c. The contract is not valid because the contract is not made in public instrument
d. The contract is not valid because it is not in writing as required by the Statute of
Fraud

23. On September 1, CY, A entered into a contract with B whereby A sells to B 5,000 sacks of
sugar to be delivered on the 15th and to be paid in full on the 30 th. There was no agreement for
rescission based on prepayment. A did not deliver on the 15 th but on the 30th, he was willing
and offering to deliver but B did not make payment on said date and so A did not like it and
refused to make delivery. Which is incorrect?
a. A cannot rescind the contract for nonpayment of the price
b. A cannot refuse to deliver the goods
c. B is not entitled to recover damages
d. A can rescind the contract for nonpayment of the price since B is at fault

24. A has a daughter, B; X has a son, Y. A, B, X and Y agree together that Y will marry B. The
agreement is oral. If B later on refuses to marry Y who spent for the necessary wedding
preparations, X and Y decided to bring an action against A and B, will the action prosper?
Decide.
a. Between Y and B, the action will prosper because the agreement is made orally.
b. In case of A and X, the action will prosper because the agreement which was made
orally in enforceable as it is based in the consideration of marriage.
c. As to A and X, the action will not prosper because the agreement is not enforceable
as it was not they who mutually promised to marry each other.
d. The action of X and Y against A and B will prosper because the agreement is based
on the consideration of marriage other than mutual promise to marry.

25. D1, D2 and D3 borrowed from C P300,000 as a security, he mortgaged their undivided
agricultural land to C, Subsequently, D1 paid C P100,000. Is the mortgage on D1’s share of
the land extinguished?
a. No, because mortgages are considered indivisible, payment in part shall not
extinguish the obligation secured by the mortgage.
b. No. because the obligation is solidary, payment in part shall not extinguish the
obligation secured by the mortgage.
c. Yes, the obligation of the debtors is joint, D1 is answerable only for P100,000.
 d. Yes, because the obligation of D1 on the debt is only P100,000.

26. B called up S by telephone, to sell his parcel of land. The land was purchased by X, but S did
not forward the money to B. Now B wants to recover the parcel of land. Decide.
a. B cannot recover because the sale is valid
b. B can recover because the sale between S and X is void
c. B can recover only if B can return the money paid by X to S
d. The sale is voidable

27. D pledged his ring to C for P100,000. D failed to pay his obligation on time. C sold it at public
auction for P8,000.
a. C can recover die deficiency even without stipulation
b. C cannot recover the deficiency even there is a stipulation
c. C cannot recover the deficiency
d. C can recover the deficiency

28. In novation which of the following is incorrect?

a. If the new obligation is void, original obligation shall subsist
b. In expromission, the insolvency of the new debtor shall never revive, the action of the creditor-
against the original debtor
c. If the original obligation is subject to a suspensive condition, the new obligation is subject to
the same condition unless stated
d. In Delegacion, insolvency of the new debtor will never revive the old obligation.

29. A is obliged to give B his only car on September 1, CY. On the said date, A did not deliver despite
demand from B. On September 2, CY, an earthquake completely destroyed the car. Is A still
liable?
a. No. Considering that no demand to deliver was made by B and the specific thing was lost, due
to fortuitous event, the obligation is extinguished.
b. No. The obligation is extinguished, even if the debtor is already in default because the debtor
can plead impossibility of performance.
c. Yes. A is already in legal delay, thus the obligation to deliver the lost specific thing is converted
into monetary claim for damages.
d. Yes. The creditor can instead demand for a substitute of equivalent value from the
debtor.

30. A, B and C are solidary debtors of X for P9,000. Later, C paid X the whole obligation. Which of the
following is considered a false statement as to the effects of C paying X the whole obligation
a. C becomes a creditor for reimbursement
b. After C paid X the whole obligation, the same is converted into a joint obligation of
reimbursement
c. If the debtot A becomes insolvent C can collect from B P6,000
d. None of the above

31. W, X, Y, Z solidarily liable to A, B, C, jointly creditors for P30,000. How much can A and B collect
from X?
a. P10,000
b. P2,500 only
c. P20,000
d. P30,000

32. On October 4, CY, A is indebted to B for P50,000 for a 20-day period. A proposed to B that X will
pay A’s debt and that A will be free from all liabilities. B and X agree to the proposal. On October
25, CY, X became insolvent. At the time of delegation, X was already insolvent but this was not
known to A. The insolvency is not public knowledge. So B sues A on the ground that it was A who
made the proposal that A guaranteed X’s solvency. Decide.
a. A is not liable anymore because of the principle of expromission.
b. A is not liable anymore.
c. A is liable because he did not exercise due diligence in determining the insolvency of X.
d. A is liable because X agreed to the proposal to make himself solidarity liable for the obligation.

33. The minimum standard of care that person obliged to give something must observe in the
preservation of the specific thing subject matter of an obligation.
a. That diligence of a good father of a family
 b. That diligence which the parties have stipulated on
c. That diligence which the law provides
d. All of the above

34. One is incorrect about extinguishment of obligation

a. Novation is not absolute but only a relative mode of extinguishment of an obligation.
b. Dacion en pago and payment by cession are governed by civil law.
c. A stockholder may not compensate what he owes the corporation with his present
stockholdings.
d. Loss of a determinate thing due to fortuitous event will exempt the debtor even if he stole it but
he later offered to return and the owner refused to accept without valid cause.

35. Which is incorrect about damages?

a. Compensatory damages are also known as punitive damages.
b. Actual damages require proof of accounting.
c. In crimes and quasi delicts, obligor is liable for all damages which are natural and probable
consequences of the act or omission whether or not foreseen.
d. Indemnification for actual damages comprehends not only the value of the loss but also the
profits the obligee failed to obtain.

36. Manuel bought the Oppo phone of Jess for P15,000 by giving 50% earnest money although
delivery of the cell phone would be after 3 days later. Before delivery however the cell phone was
lost due to flood brought by storm.
a. Manuel can recover the P7,500 he paid to Jess
b. Manuel may ask for another cell phone at no additional cost because Jess is liable.
c. Obligation of Jess to deliver is extinguished by the force majeure event and Manuel cannot
recover the amount paid.
d. The contract of sale should be rescinded.

37. One is incorrect about elements of contracts:

a. Absence of an essential element voids the contracts
b. Absence of natural or accidental elements may result to rescission and damages
c. In policitation, there is meeting of meetings but contract is incomplete hence needs reformation
d. In stipulation, pour autrui consent or acceptance of the third person involves is mandatory

38. All are essential characteristics of contracts except

a. Relativity of contracts
b. Obligatoriness of contracts
c. Autonomy of contracts
d. Uniformity of contracts

39. Statement 1: The death, civil interdiction, insanity or insolvency of either offeror or offeree before
acceptance is conveyed makes the offer ineffective
Statement 2: The cause of a contract is the psychological or personal reason whereas motive is
the objective or juridical
a. True; true
b. False; false
c. True; false
d. False; true

40. The following contracts must appear in a public instrument except:

a. Donation of immovable property
b. Agency to sell land
c. Partnership where immovable property or real rights are contributed
d. When limited partnership is formed

41. 1st statement : Rescission of contracts and rescission or resolution of reciprocal obligation are the
same
2nd statement: Prescription does not affect unauthorized contracts.
a. True, True c. False, True
b. False, False d. True, False

42. In void contract neither party may seek to enforce it, neither can they seek the aid of law. But
recovery can be made by the other party in the following cases, except:
a. The innocent party
 b. The debtor who pays usurious interest
c. The party rejecting the void contract before illegal purpose is accomplished
d. In pari delicto parties

43. Which is most defective?

a. Contracts entered into without authority
b. One of the parties is a minor suffering lesion by more than ½ of the value of his property
c. Contracts entered by a debtor to defraud his creditor
d. Contracts involving vitiated consent

44. In three of the following defective contracts, ratification cleanses the defects. Which is the
exception?
a. Contracts entered into by a person who has been given no authority
b. Sale of a piece of land thru an agent the authority is oral
c. Sale of immovable property or interest orally entered into
d. Both parties are incapable of giving consent

45. Example No. 1: A 17 years old sold his car valued at P1M for P50,000 or a lesion by more than
one-fourth of the value of the said house.
Example No. 2: G, guardian of W, sold W’s house valued at P50,000 for P37,000.
a. Voidable; Rescissible
b. Rescissible; voidable
c. No. 1 is rescissible; while No.2 is unenforceable
d. Voidable; valid perfectly

46. The following contracts should observe Statute of Frauds, except:

a. Lease of real property longer than one year
b. Representation as to the credit of a third person
c. Lease of a machine longer than one year
d. Surety

47. Which of the following contracts cannot be ratified?

a. Those involving future inheritance
b. Unauthorized contracts
c. Those where both parties are incapable of giving consent
d. Those that fail to comply with the Statute of Fraud

48. All are incorrect about contracts except one

a. Voidable contracts are also called validable contracts
b. Stipulation pour autrui is an exception to mutuality of contracts
c. Fraud in inducement is a ground to nullify a contract
d. In voidable contracts defect is intrinsic, in rescission defect is extrinsic

49. Which of the following statement is false:

a. In contract to sell, ownership is not transferred to the buyer even if there is delivery
b. Stoppage in transit can be exercised by unpaid seller if the buyer is insolvent and the vendor
has not yet parted with the thing sold
c. The price is considered certain ifI it is in reference to another thing certain
d. In a right to-resell it is not necessary that the original buyer is insolvent

50. B fraudulently induces S to sell to him (B) a masterpiece painting for P10,000. Subsequently, B
sold it to X for P12,000, a good faith purchaser. S is entitled to
a. Rescind the contract with B plus damages
b. Recover the painting from X but no damages
c. Recover damages from B
d. Rescind the contract between B and X

51. Which of the following statements is true

a. In a contract of sale the full payment of the price is in nature of suspensive condition for the
transfer of ownership of the thing sold
b. Sale or Return is a sale with suspensive condition.
c. Emptio spei speretae is an absolute sale.
 d. Pacto de retro sale is a sale with resolutory condition.

52. S agreed to sell to B his land and B agreed to pay P10,000 if X will pass the CPA Exams of 200A.
X passed, Meantime, interest earned is P1,200, while the fruits harvested is P2,000.
a. S will deliver the land to B
b. B will pay S the price of the sale
c. Combination of A and B
d. Combination of A and B, together with the fruits and interest

53. S owns a ring and sold it to B for P10,000. B paid S the price, but the latter promised to deliver the
ring to X in a public instrument and delivered the ring to X. In a contract of pledge:
Statement 1: Between B and X the latter has got a better right, because the contract of pledge
appears in a public instrument and there was delivery.
Statement 2: Some case above, but done through a private instrument.
a. Both statements are true
b. Both statements are false
c. No. 1 is true, No. 2 is false
d. No. 1 is false, No. 2 is true

54. P wrote A authorizing A to sell a piece of land on his behalf. The land was purchased by X but A
kept the money. What can P do?
a. P may refuse to surrender his land to X
b. P may require X to pay the agreed price again
c. P may recover the proceeds of the sale from A
d. P may recover his land to X thru court action

55. D, as owner of specific car and a parcel of land, properly mortgage the same to C to answer a
principal obligation of P1 million. Later, D sold the same land to W, while the car sold to Y without
informing the creditor/mortgagee.
Statement 1: The sale made to W is unenforceable, valid only if ratified
Statement 2: The car sold to Y is valid and enforceable but D is liable
a. Both statements are true
b. Both statements are false
c. No. 1 is true, No. 2 is false
d. No. 1 is false, No. 2 is true

56. Statement 1: In a sale of goods, the fruits shall pertain to the vendee from the day the goods are
delivered to the vendee.
Statement 2: In case of loss or deterioration of improvement of the thing before the arrival of the
period term, the rules during the pendency for the condition in conditional obligation shall be
observed, the vendor being considered as the debtor.
a. Both statements are true
b. Both statements are false
c. No. 1 is true, No. 2 is false
d. No. 1 is false, No. 2 is true

57. Example 1: S sold to B in a private instrumental his land. Later B wanted to have the sale
registered, but registration requires a public instrument. In here B can compel S to execute the
needed public instrument.
Example 2: Same case above but it was orally made with partial payment later, contract is still
enforceable.
a. Both examples are false
b. Only No. 1 is true
c. Only No. 2 is true
d. Both examples are true

58. The Recto Law is not applicable

a. Sale of car on straight term
b. Sale of house on installment
c. Sale of car on installment where the buyer constituted a mortgage on his truck
d. All of the above

59. Not a characteristic of mutuum/ commodatum:

a. Bilateral contract
 b. Principal contract
c. Gratuitous contract
d. Consensual contract

60. Not a characteristic of pledge/ mortgages:

a. Nominate contract
b. Onerous contract
c. Principal contract
d. Bilateral contract

61. Not a characteristic of antichresis:

a. Consensual contract
b. Onerous contract
c. Nominate contract
d. Formal contract

62. Affidavit of good faith is required in this contract.

a. Real estate mortgage
b. Antichresis
c. Chattel mortgage
d. Pledge

63. In the following contracts, which is directly affected by Recto Law:

a. Real estate mortgage
b. Antichresis
c. Chattel mortgage
d. Pledge

64. D1, D2 and D3 borrowed from C P300,000 as a security, he mortgaged their undivided
agricultural land to C, Subsequently, D1 paid C P100,000. Is the mortgage on D1’s share of the
land extinguished?
a. No, because mortgages are considered indivisible, payment in part shall not extinguish the
obligation secured by the mortgage.
b. No. because the obligation is solidary, payment in part shall not extinguish the obligation
secured by the mortgage.
c. Yes, the obligation of the debtors is joint, D1 is answerable only for P100,000.
d. Yes, because the obligation of D1 on the debt is only P100,000.

65. Statement 1: There can be a case of the mortgage appropriating for himself the mortgaged object
should the debtor/mortgagor fail to pay the principal obligation.
Statement 2: A thing put up by way of pledge may be sold to another person even without
extinguishing the contract of pledge previously entered into by the seller with his pledge creditor
a. Both statements are true
b. Both statements are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true

66. Which of the following statements is true

a. If a principal appoints an agent in writing with respect to the sale of a piece of land and the
latter sold it to a buyer orally, the contract between the agent and the buyer is void.
b. A contract of agency is generally gratuitous.
c. To lease personal property to another person for more than one year does not require a
special power of attorney.
d. The insolvency of the principal but not agent shall extinguish the agency.

67. D borrowed from C P10,000 and as security he pledged his ring to C. by common agreement D
remains in possession of the ring pledged, and a private instrument was executed to that effect,
on the date of maturity, D failed to pay, which of the following statement is correct:
a. D may go to a Notary Public and caused the sale of the ring because of failure to pay the
obligation
b. There is no contract of pledge because the ring remains in the possession of D
c. The contract of pledge between D and C is not valid because it did not appear in a public
instrument
d. The contract is unenforceable unless it will be ratified by the parties
68. A seller sold to a buyer a television set at a price of P20,000. At that time the buyer has only
P5,000 cash and he offered a diamond ring worth P15,000 which the seller accepted as payment
of the price. The nature of the contract is
a. Sale
b. Barter
c. Partly sales and partly barter
d. Commodatum

69. Statement 1: In sale or return, the risk of loss is on the vendor; In sale or trial, the risk of loss is on
the vendee.
Statement 2: In sale or return, ownership passes to the vendee upon the delivery of the goods; in
sale on trial, ownership does not pass to the vendee until he accept the goods
a. Both statements are true
b. Both statements are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true

70. Three of the following are considered elements of contract of pledge and mortgage, which is the
exception?
a. Accessory contract
b. Pledgor or mortgagor must be absolute owner
c. Thing pledged may be appropriated if debtor cannot pay
d. Pledgor or mortgagor must have a free disposal of the thing pledged

71. D mortgaged his car to C for P100,000. D failed to pay his obligation on time. C foreclosed the
mortgage and sold it at public auction for P80,000.
a. C can recover the deficiency even without stipulation
b. C cannot recover the deficiency even there is a stipulation
c. C cannot recover the deficiency
d. C can recover the deficiency

72. Statement 1: If the thing pledged is returned to the pledgor, the principal obligation is
extinguished.
Statement 2: A contract of pledge is consensual which is perfected from the time the thing pledged
is placed in the possession of the creditor, or of a third person by common agreement.
a. Both statements are true
b. Both statements are false
c. No. 1 is true; No. 2 is false
d. No. 1 is false; No. 2 is true

73. Which of the following statements is incorrect?

a. Warranty against hidden defect is a natural element
b. The seller need not be owner of the thing sold at the perfection of the sale
c. There a may be a transfer of ownership over the thing even if the seller has not delivered the
thing sold to the buyer
d. Warranty against eviction is waivable impliedly

74. S sold his car to B payable in ten (10) equal monthly installments and with a mortgage constituted
on the same property (car). For B’s failure to pay a month’s installment, which statement is correct?
a. S may foreclose the mortgage on B’s car but he no longer has the right to recover the
balance should it (the car) be sold for an amount lower than what he claims from B.
b. S may seek the cancellation of the sale made to B.
c. S may seek the cancellation of the same and later on foreclose the mortgage should he find it
impossible to collect from B.
d. S may seek fulfilment of the obligation of B to pay the amount due.

75. Araneta wrote a letter to Bascon wherein in he offered to sell a piece of land. In Araneta’s letter he
gives Bascon a period of two months within which to pay the price of P500,000. After 50 days
Araneta told Bascon that he is increasing the price of the land to P700,000. Can Bascon compel
Araneta to accept P500,000 first offered by Araneta and execute the deed of sale?
a. No, for Bascon did not signify his acceptance of the offer
b. Yes, because the period of 2 months has not yet expired
c. Yes, because Araneta is already estopped by his signed letter
d. Yes, because there was actual meeting of minds of the parties
76. A sold to B a parcel of land for P30,000. The sale is evidenced by a memorandum of agreement of
sale written in Cebuano dialect. One week later, A sold the same parcel of land to C for P40,000
which was evidenced by a formal deed of sale. Upon buying the property, C, who was aware of
the first sale, immediately took possession of the land and registered the deed of sale in her favor
with the Register of Deeds. When informed of the second sale, B subsequently registered an
adverse claim to the property. The parcel of land shall belong to
a. B, because she has an older title
b. C, because the sale was made on formal deed of sale
c. C, because she is the first to register the deed of sale
d. C, because she is the first to take possession of the land

77. The guardian of an insane person sells a house and lot belonging to the latter valued at P1,000,
000 to B, buyer for P700,000 with the approval of the court. The contract is:
a. Valid perfectly d. Unenforceable
b. Rescissible e. Void
c. Voidable

78. The following, except one, are the characteristics of void or inexistent contract. Which is the
exception
a. Void contracts are also unenforceable contracts
b. They are not subject to ratification
c. The right to raise defense of illegality cannot be waived
d. The action or defense for declaration of the nullity or inexistence of the contract does
not prescribe

79. A intimidated B to marry his daughter. After a year, B would like to file an action for annulment but
could not do so because A was around to intimidate him. The marriage contract is
a. Rescissible c. Void
b. Voidable d. Unenforceable

80. Which of the following contract is enforceable even if not reduced in writing.
a. Deed of donation involving a car worth P1M but not notarized
b. Representation as to the credit of a third person
c. Lease of immovable for a period longer than one year.
d. Agreement for the sale of immovable property.

81. Simulation of Contract - Absolute or relative. Relative when:

a. Parties not bound at all
b. The contract is void
c. The parties conceal their true agreement
d. None of the above

82. Which of the following instruments is not subject to reformation?

a. Simple donations inter vivos wherein no condition imposed
b. Wills
c. When the real agreement is void
d. All of the above

83. Essential requisites of a contract, except:

a. Consent c. Object
b. Cause or Motive d. Subject

84. The offeror must know the acceptance by the offeree is the theory of:
a. Cognition c. Expedition
b. Manifestation d. B or C

85. One of the stipulations contained in the contract between M Company and its employees is that
the company shall pay a bonus to employees of the company who shall continue its employment
for at least 2 consecutive years, unless he quits or is discharged before the expiration of the
period of 2 years. X, an employee of the company was discharged with just cause one week
before the completion of the two-year period:
a. X is not entitled to the bonus because his discharge was in accordance with the
contract.
b. X is not entitled to the bonus, because the employer’s right to terminate is superior
 than the right of the employee to be employed.
c. X is entitled to the bonus whether the discharge is with or without cause.
d. X is entitled to the bonus because the debtor company has voluntarily prevented the
happening of the condition.

86. Example No.1- W, a guardian, sold his house valued at P1M for P500,000 or a lesion by more
than one-fourth of the value of the said house.
Example No.2- A donated his land orally to B.
The contracts are:
a. Both contracts are unenforceable
b. No. 1 is rescissible; while No.2 is unenforceable
c. 1st is voidable; while 2nd is unenforceable
d. The contracts are valid and void respectively

87. Statement No.1: Partnership is a formal and preparatory contract.

Statement No.2: Sales are consensual and reciprocal as a rule.
a. Both are true c. No.1 is true; No. 2 is false
b. Both are false d. No.1 is false; No. 2 is true

88. Statement No.1: Validable contracts can be voided within the period allowed by law.
Statement No.2: There is fraud if insidious words or machinations were employed by a party on
the other just to obtain the latter’s consent, without which the latter would not have entered into
the contract.
a. Both are true c. No.1 is true; No. 2 is false
b. Both are false d. No.1 is false; No. 2 is true

89. B1 Company bought out a competitor, B2 Corporation, with a stipulation that B2 Corporation
should not thereafter engage in any business in the Philippines unless consented to and
approved by B1 Company.
a. The stipulation is defective but subject to ratification.
b. The stipulation is valid because the parties are free to enter into any
stipulation, terms and conditions such as this one.
c. The stipulation is unenforceable as there was no showing that the sale as
done in writing
d. The stipulation is invalid.

90. All are void contracts except:

a. Those whose object is outside the commerce of men.
b. Holographic will in a private instrument
c. Those with unlawful consideration.
d. Donation of building in a private instrument

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