OBLIGATIONS – DIAGNOSTIC EXERCISES

TEST 1 – MULTIPLE CHOICE. Select the best answer by wri ng the le er of your choice.

1. The following are the requisite of an obliga on, except:

a. Passive subject, debtor or obligor

b. Ac ve subject, creditor or oblige

c. E cient cause
d. Demand

2. Obliga ons may arise from any of the following, except:

a. Contracts

b. Quasi-contracts

c. Law

d. Presta on

3. It is the voluntary administra on of the property of another without his consent.

a. Nego orum ges o

b. Solu on indebi

c. Quasi-delict

d. Contracts

4. It is a wrong commi ed without any pre-exis ng rela ons between the par es.

a. Natural obliga on
b. Quasi-delict

c. Quasi-contract

d. Crime

5. Unless the law or the s pula ons of the par es require another standard of care, every
person obliged to give something is also obliged to take care of it with:

a. Extra-ordinary diligence

b. Diligence of a father of a good family

c. Diligence of a good father of a family

d. Good diligence of a father of a family

ffi
ti

ti

ti
ti
ti

ti



ti



ti
tt

ti

ti
ti

ti
ti
ti
ti

ti
tt

ti

 6. The creditor has a right that is enforceable against a de nite passive subject. The right is
known as:

a. Personalright
b. Real right

c. Natural right

d. Civil right

7. It is a thing that is par cularly designated or physically segregated from all others of the
same class.

a. Generic thing

b. Indeterminate thing
c. Determinate thing

d. Real thing

8. One of the following is determinate thing. Which is it?

a. A cow

b. A horse

c. A Toyota car with engine no. 12345, body no. 35787 and plate no. ABC 123.

d. A ring with diamond embellishment

9. Demand must be made on the due date of the obliga on in order for delay to exist in oneof
the following cases. Which is it?

a. When it was s pulated by the par es that demand need not be made.

b. When the law provides that demand need not be made.

c. When the obliga on does not indicate whether demand must be made or not on due
date.

d. When me is of the essence of the contract.

10. This refers on the delay on the part of the creditor.

a. Mora solvendi ex re

b. Compensa on morae

c. Mora solvendi ex personae

d. Mora accipiendi

ti

ti

ti
ti

ti



ti

ti

fi

 11. There shall be no liability for loss due to fortuitous events in one of the following cases.
Which is it?

a. When the debtor delays.

b. When the par es so s pulated that there shall be liability even in case of loss due to
fortuitous events.

c. When the nature of the obliga on requires the assump on of risks.

d. When the obliga on is to deliver a determinate thing and there was no s pula on as
to the liability of the debtor in case of loss due to fortuitous events.

12. The following are the remedies of the creditor to pursue his claims against the debtor,
except to:

a. Pursue the property owned and in possession of the debtor.

b. Exercise all the rights and bring all the ac ons of the debtor (accion subrogatoria)

c. Impugn the acts which the debtor may have done to defraud his creditors (accion
pauliana)

d. Compel the debtor to perform the service in obliga ons to do.

13. D borrowed P50, 000 from C. C dies before he has collected the debt leaving S, his son, as
heir. Which of the following statements is correct?

a. S can collect from D although D and C did not agree that the credit right will pass on
to the heirs of C.

b. S cannot collect because the credit right is personal to C.

c. S can collect only f D and C agreed that the credit right will pass on the heirs of C.

d. S cannot collect because the law prohibits the transmission of the credit right.

14. D is obliged to give C a speci c car if C passes the CPA Licensure Examina on. D’s

obliga on is an example of:

a. A pure obliga on

b. An obliga on with a suspensive condi on

c. An obliga on with a resolutory condi on

d. An obliga on with a period

15. One of the following obliga ons is not immediately demandable.

ti
ti
ti
ti

ti
ti
ti

ti

ti

ti
fi
ti
ti
ti

ti
ti

ti

ti
ti

 a. Pure obliga on

b. Obliga on with a resolutory condi on

c. Obliga on with an in diem period

d. Obliga on with ex die period

16. One of the following is a void obliga on:

a. D is obliged to give C P5,000.00 if C does not go to the moon.

b. D is obliged to give C P5,000.00 if D does not go to Baguio.

c. D is obliged to give C P5,000.00 if C does not go to Baguio.

d. D is obliged to give C P5,000.00 if D wins rst prize in the sweepstakes on a cket that
he had already purchased.

17. D is obliged to give C P10,000.00 if X dies. This is an example of:

a. An obliga on with a suspensive condi on

b. An obliga on with a resolutory condi on

c. An obliga on with a period

d. A pure obliga on

18. When the debtor binds himself to pay when his means permit him to do so, the obliga onis:

a. An obliga on with a resolutory condi on

b. A pure obliga on

c. An obliga on with a suspensive condi on

d. An obliga on with a suspensive period

19. Whenever a period is designated in an obliga on, the said period shall be presumed to
have been established for the bene t of:

a. The debtor

b. The creditor

c. Both the debtor and the creditor

d. Neither of the par es

20. The debtor shall lose the right to make use of the period in the following cases, except
when he:
ti
ti
ti
ti
ti
ti
ti

ti

ti
ti
ti
ti

ti



ti
fi
ti
ti
ti
ti

fi

ti

ti





ti
ti

 a. Becomes insolvent.

b. Violates any undertaking in considera on of which the creditor agreed to the period.

c. A empts to abscond.

d. Does not furnish any guaranty or security to the creditor.

21. An obliga on ceases to be alterna ve and becomes a simple obliga on in the following
cases, except when:

a. The debtor has communicated his choice to the creditor.

b. The right of choice has been expressly granted to the creditor and his choice has been
communicated to the debtor.

c. Among the several presta ons that are due only one is prac cable.
d. Three presta ons are due but one of them is unlawful or impossible.

22. D s obliged to give C a speci c watch, a speci c ring, or a speci c bracelet. The par es
agreed that C will have the right to choose the thing which will be given to him. Before C
could make his choice, the watch and the ring are lost through D’s fault, successively.
What is the right of C?

a. C may choose the delivery to him of the bracelet, or the price of watch or the price of
the ring plus damages.

b. C cannot choose the price of the watch or the price of the ring because the said objects
have already been lost.

c. C can only choose to have the bracelet because anyway, D can s ll perform his
obliga on.

d. C can only choose to have delivery of the bracelet or the price of the ring which was
the last item that was lost plus damages.

23. D is obliged to give C a speci c ring. The par es agreed that D may give a speci c braceletas
subs tute. Which of the following statements is true?

a. If the ring is lost through a fortuitous event before subs tu on, the obliga on is
ex nguished.

b. If the bracelet is lost through a fortuitous event before the subs tu on, the obliga onis
ex nguished.
tt
ti
ti
ti
ti
ti

ti

ti
fi
fi

ti
ti

ti
fi

ti
ti
ti
fi
ti
ti


ti
ti

fi
ti
ti
ti

 c. If the ring is lost through a fortuitous event a er subs tu on, the obliga on is
ex nguished.

d. If the ring is lost through the debtor’s fault a er subs tu on, the debtor shall pay

damages.

24. A, B, C and D are obliged to give V, W, X, Y and Z P20,000.00.

a. V may collect from A P20,000.00

b. V may collect from A P5,000.00

c. V may collect from A P1,000.00

d. V may collect from A P4,000.00

25. A, B, C and D joint debtors, are obliged to give V, W, X, Y and Z, solidary creditors,
P20,000.00.

a. V may collect from B P20,000.00

b. V may collect from B P4,000.00

c. V may collect from B P5,000.00

d. V may collect from B P1,000.00

26. A, B, C and D, solidary debtors, are obliged to give V, W, X, Y and Z, joint creditors,
P20,000.00.

a. V may collect from B P20,000.00

b. V may collect from B P4,000.00

c. V may collect from B P5,000.00

d. V may collect from B P1,000.00

27. A, B, C and D, solidary debtors, are obliged to give V, W, X, Y and Z, solidary creditors,
P20,000.00.

a. V may collect from B P20,000.00

b. V may collect from B P4,000.00

c. V may collect from B P5,000.00

d. V may collect from B P1,000.00

28. A, 25, B, 35, and C, 17, are solidary debtors of X in the amount of P9,000.00.

a. X may collect from A P9,000.00

ti






ft
ft
ti
ti
ti

ti

ti

 b. X may collect from A P6,000.00

c. X may collect from A P1,000.00

d. X may collect nothing because the obliga on is voidable, C being a minor.

29. The following obliga ons are divisible, except an obliga on:a. To give de nite things.

b. Which has for its object the execu on of a certain number of days of work.

c. Which has for its object the accomplishment of work by metrical units.

d. Which by its nature is suscep ble of par al performance.

30. In obliga ons with a penal clause, the creditor as a rule may recover from the debtor in
case of breach the following:

a. The penalty as agreed upon, plus damages and interest.

b. The penalty and damages.

c. The penalty and interest.d. Only the penalty

31. Consider the following statements:

I. The nullity of the principal obliga on carries with it the nullity of the penal clause.

II. The nullity of the principal obliga on does not carry with it the nullity of the penal
clause.

III. The nullity of the penal clause carries with it the nullity of the principal obliga on.

IV. The nullity of the penal clause does not carry with it the nullity of the principal
obliga on.

a. Statements I and III are true.b. Statements I and IV are true.

c. Statements II and III are true.

d. Statements II and IV are true.

32. D borrowed from C P50,000.00. the obliga on is secured by a cha el mortgage on D’s
Toyota car. Subsequently, D paid C P20,000.00. unknown to D, T, a third person, pays C
P50,000.00 believing that D s ll owed C such amount.
ti

ti

ti

ti

ti

ti
ti
ti

ti
ti
ti

ti

tt

fi

ti

 a. T can recover P50,000.00 from D. if D cannot pay, T can foreclose the mortgage on D’s

Toyota car.

b. T can recover nothing from D because he paid C without the knowledge and consent
of D.

c. T can recover P30,000.00 from D. If D cannot pay, T can foreclose the mortgage on D’s

Toyota car.

d. T can recover P30,000.00 from D. if D cannot pay, T cannot foreclose the mortgage on

D’s Toyota car.

33. The following statements concerning payment by cession are true, except one. Which is
it?

a. The creditors become the owners of the proper es of the debtor that were ceded to
them.

b. Payment by cession ex nguishes the obliga on only to the extent covered by the

proceeds of the sale of the debtor’s proper es.

c. The debtor must be insolvent.

d. Cession a ects all the proper es of the debtor except those exempt from execu on.

34. D obtained from ABC Bank a loan of P12,000.00 payable at the end of 10 years. Before
maturity, an extraordinary in a on supervened causing the value of the debt to fall to
P4,000,000.00 on the date of maturity. On due date, D must pay ABC Bank:

a. P12,000,00.00

b. P4,000,000.00 c. P36,000,000.00d. P3,000,000.00

35. D borrowed from XYZ Bank P2,000,000.00 payable at the end of 5 years. Before maturity,an
extraordinary de a on supervened causing the value of the debt to rise to P5,000,000.00
on the date of maturity. On due date, B must pay XYZ Bank:

a. P2,000,000.00

b. P5,000,000.00 c. P800,000.00

ff

fl

ti
ti
fl
ti

ti

ti
ti

ti

ti

 d. P20,000,000.00

36. The money or currency which the debtor may compel the creditor to accept in paymentof
a debt, whether public or private, is known as:

a. Notes payable to orderb. Legal tender

c. Bill of exchange

d. Mercan le document

37. The delivery and transmission of ownership of a thing by the debtor to the creditor as an
accepted equivalent of performance is known as:

a. Payment by cession
b. Da on in payment

c. Applica on of payment

d. Consigna on

38. D owes C the following debts: P6,000.00 due on June 12; P6,000.00 due on June 15;
P6,000.00 due on June 18; and P6,000.00 due in 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
agreement, the bene t of the term on the 4 debts was granted to C. assuming that D has
P6,000.00 on June 18 and is ready to pay C, which of the following statements is correct?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.

b. D may apply his payment only to the debt due on June 20 because it is the most
burdensome to him.

c. D must apply the payment propor onately to the debts due as of June 18 at P2,000.00
each.

d. D may apply the payment to any of the four debts.

39. The o er made by the debtor to pay his obliga on to his creditor is known as:

a. Consigna on

b. Tender of payment

c. Applica on of payment
ti

ff
ti
ti
ti
ti
ti

fi

ti

ti

 d. Da on in payment

40. Consigna on alone without any tender of payment is su cient in the following cases,
except:

a. When the creditor is absent or unknown or does not appear at the place of payment.b.
When the creditor presents the tle to the obliga on for collec on.

c. When without just cause, the creditor refuses to give a receipt.

d. When two or more persons claim the same right to collect.

41. M owes P P10,000.00. the obliga on is evidenced by a promissory note. Subsequently, P

assigned the note to A, A to B, B to C, and C back to M. the obliga on of M is ex nguished
by:

a. Compensationb. Confusion

c. Condona on

d. The obliga on is not ex nguished because there was no payment.

42. In order that condona on may ex nguish an obliga on involving a movable property
whose value exceeds P5,000.00 –

a. It is su cient that the condona on and the acceptance are in wri ng, even a private
one.

b. It is required that the condona on and the acceptance be in a public instrument.

c. The delivery of the document evidencing the debt is su cient since the property is
movable.

d. The condona on and the acceptance may be made orally.

43. One of the following is not a requisite of legal compensa on, which is it?

a. That each one of the obligors be bound principally, and that he be at the same me a
principal creditor of the other.

b. That the two debts be due.

c. That both debts be liquidated and demandable.

d. That the debts are payable at the same place.
ti

ffi

ti
ti

ti

ti

ti
ti

ti
ti
ti
ti

ti



ti
ti
ti
ffi

ffi

ti
ti
ti

ti
ti

 44. Henry, husband, and Wilma, wife, are legally separated. By order of the court which
decreed the legal separa on, Henry is obliged to give a monthly support of P10,000.00 to
Wilma payable within the rst ve days of the month. Wilma owes Henry P10,000.00 by
way of a business loan. On the other hand, Henry has not yet given Wilma’s support of
P10,000.00 for this month. Both debts are already due. Which of the following statementsis
correct?

a. Both debts are ex nguished by legal compensa on because both are already due.
b. Wilma can claim compensa on but not Henry.

c. Henry can claim compensa on but not Wilma.

d. Neither one may claim compensa on because the debts are not of the same kind.

45. D owes C P10,000.00 with G as guarantor. C, on the other hand, owes D, P8,000.00. both
debts are already due but D is insolvent. In this case –

a. C may collect from G P10,000.00

b. C may collect from G P2,000.00 because a guarantor can set up compensa on as

regards what the creditor owes the principal debtor.

c. C may collect nothing from G because D is insolvent.

d. C may collect P8,000.00 from G.

46. D borrowed P50,000.00 from C. subsequently, D proposed to C that T would assume his

(D’s) debt. C accepted the proposal of D. This subs tu on of the debtor is known as –

a. Expromision

b. Delegacion

c. Tradi on

d. Da on en pago

47. Refer to the facts of No. 46. Assume also that on due date, T could not pay because of his
insolvency which was in fact subsis ng but was known to D or of public knowledge at the
me that D delegated his debt. In this case –

a. C can revive D’s debt because T’s insolvency was already exis ng at the me that D

delegated his debt.

ti
ti
ti

ti

ti
fi
ti
ti
fi

ti
ti

ti

ti

ti

ti
ti
ti

 b. C can revive D’s debt whether or not he (D) was aware of T’s insolvency since he (D)

proposed the subs tu on.

c. C cannot hold D liable because his (D’s) obliga on was ex nguished when he was
subs tuted by T.

d. The novation is void because D did not take steps to determine the solvency of T when
he (D) delegated his debt.

48. D obliged himself to give 5 grams of “shabu” to C. later, the par es agreed that D would
instead give to C 5 sacks of rice. Which of the following statements is correct?

a. The nova on is void because the original obliga on is void. Hence, C cannot demand
the delivery of 5 sacks of rice from D.

b. The nova on is valid because the new obliga on is valid. Hence, C can demand the
delivery of 5 sacks of rice from D.

c. The original obliga on although void is validated by the new obliga on. Hence, C can
demand the delivery of 5 sacks of rice from D.

d. The new obliga on is only voidable because had not yet performed the original
obliga on at the me of the nova on. Accordingly, the new obliga on is binding andC
may demand the delivery of 5 sacks of rice from D un l the new obliga on is annulled
by a proper ac on in court.

49. On July 1, 2010, D obliged himself to give C P50,000.00 if C will marry X on or before
December 31, 2010. The condi on of the obliga on is a:

a. Posi ve condi on

b. Nega ve condi on

c. Joint condi on

d. Impossible condi on

50. Refer to No. 49. Which of the following statements is incorrect?

a. The obliga on of D is demandable if C marries X on or before December 31, 2010.

b. The obliga on of D is ex nguished if it is already January 1, 2011 and C has not yet
married X.
ti
ti
ti
ti
ti
ti
ti
ti

ti
ti
ti

ti
ti

ti
ti

ti
ti

ti
ti

ti

ti

ti
ti

ti
ti
ti

ti
ti

ti
ti
ti

 c. The obliga on of D is ex nguished on December 2, 2010 if X dies on the same date

and C has not yet married X.

d. The obliga on is demandable if C marries X on January 1, 2011.

51. On July 1, 2010, D obliged himself to give C a speci c car if C will not marry X on or before
December 31, 2010. The condi on of the obliga on is a:

a. Posi ve condi on b. Nega ve condi on

a. Divisible condi on

b. Impossible condi on.

52. Refer to N. 51. Which of the following statements is incorrect?

a. The obliga on of D is demandable if C marries X on January 1, 2011.

b. The obliga on of D is demandable on December 2, 2010 if X dies on the same date

and D has not yet married X.

c. The obliga on of D is demandable if it is already January 1, 2011 and D has not yet
married X.

d. The obliga on is demandable if C marries X on December 2. 2010.

53. D owes C P5,000.00. T, a third person and without any inten on to be reimbursed by D,
paid the debt without the consent of D. C accepted the payment.

a. The payment did not ex nguish the debt of D to C because it was made without the
consent of D.

b. The payment did not ex nguish the debt because it was not made by D himself.c. The
payment is considered valid because it was accepted by the creditor.

d. The payment may be considered valid if T had the inten on to be reimbursed.

54. A mode of ex nguishing obliga ons up to their concurrent amount when two persons are
principal debtors and creditors of each other is called:

a. Nova on

b. Payment

c. Compensa on

d. Merger
ti
ti

ti
ti
ti
ti
ti
ti

ti
ti

ti
ti

ti

ti
ti
ti
ti

ti
ti
ti

ti
fi

ti
ti

 55. D owes C P6,000.00. No date for payment was s pulated by the par es.

a. C cannot require D to pay because there is no date for payment.

b. C can require D to pay at any me.

c. D is not liable to C because the obliga on is void there being no date of payment.

d. D is not required to pay unless C goes to court and asks the court to x a period
forthe payment.

56. Under a contract executed on November 1, 2010, D obliged himself to give a speci c horseto
C on December 10, 2010. On December 8, 2010, C demanded the delivery of the horsebut
D did not comply. The following day, the horse was struck by lightning and died instantly.

a. The obliga on of D is ex nguished because the loss is due to fortuitous event and D
was not in default.

b. The obliga on of D is not ex nguished because D can deliver another horse.

c. The obliga on of D is not ex nguished because D was in default.

d. The obliga on of D is not ex nguished because the demand was not made on due
date.

57. Which of the following is not considered a condi onal obliga on?
a. D to pay c P5,000.00 as soon as D has the means.

b. D to pay c P5,000.00 if C marries X.

c. D to pay c P5,000.00 if C tops the CPA Examina ons.

d. D to pay C if X dies of malaria.

58. The dis nc on between merger and compensa on is that in merger:

a. The two debts may be payable at di erent places.

b. Two persons are in their own right debtors and creditors of each other.

c. The debtor and creditor may agree on the set-o of debts that are not yet due.
d. The debtor and the creditor refer to only one person.

59. The passage of me as a mode of acquiring or losing a right including the ex nguishmentof
an obliga on is called:

a. Remission

ti
ti

ti
ti
ti
ti
ti
ti

ti
ti
ti
ti

ti

ff

ti
ti
ti
ti
ff
ti

ti





ti

fi
ti



fi

 b. Nova on

c. Prescrip on

d. Merger

60. Legal compensa on shall not be proper in three of the following cases. Which is the
excep on?

a. Commodatum

b. Civil liability arising from a criminal o ense

c. Gratuitous support
d. Bank deposit

61. Cecilia, the owner of a sari-sari store, purchased several bags of “Dulcita” candy worth of
P5,000.00 from Olga, an authorized dealer of the product. On due date, Cecilia, who sells
the candies at P1.00 each, tendered her payment to Olga consis ng of 5,000 pieces of
P1.00 coins.

a. Olga may refuse to accept the payment and demand that she be paid in bills.

b. Olga may not refuse to accept the payment because what Cecilia was o ering as
payment is money circulated in the Philippines.

c. Cecilia may consign the payment in court if Olga refuses to accept it.

d. The tender made by Cecilia was valid because the P1.00 coins came from her sales
and she had plenty of them.

62. Dominico and Domingo are jointly and severally liable to Crispino for P100,000.00. the
obliga on is due on June 30, 2010. On June 25, 2010, Domingo paid the whole amount of
the note to Crispino. If Domingo reimburses Dominico on July 15, 2010, Dominico is
en tled to receive from Domingo:

a. P50,000.00 plus interest from June 25 to July 15, 2010.

b. P50,000.00 plus interest from June 25 to June 30, 2010.

c. P50,000.00 plus interest from June 30 to July 15, 2010.

d. P50,000.00 with no interest because Dominico paid the note before due date.

63. One of the following statements does not pertain to dacion en pago. Which is it?

a. Ownership of the thing is transferred to the creditor.

ti
ti
ti
ti

ti

ti



ff

ti

ff

 b. The debtor must be insolvent.

c. It does not a ect all the proper es of the debtor.

d. It does not require plurality of creditors.

64. One of the following does not apply to payment by cession. Which is it?
a. Ownership of the debtor’s proper es is transferred to the creditor.

b. The debtor must be insolvent

c. It a ects all the proper es of the debtor except from execu on.

d. There are several creditors.

65. A, B and C are solidarily liable to X for P30,000.00. A pays X the whole amount due. C,
however, is insolvent.

a. A alone will bear the share of c who is insolvent since he (A) made the payment.

b. A can collect from B P10,000.00.

c. A can collect from B P15,000.00.

d. A can demand a refund of P10,000.00 from X pertaining to C’s share since C isinsolvent.

66. Anna Almeda, Belinda Bersola, and Claudia Cabrera executed the following promissory
note:

“ I promise to pay Dolores Dominguez or order the sum of P30,000.00 on June 30,2010.

(Sgd.) Anna Alameda (Sgd.) Belinda Bersola (Sgd.) Claudia Cabrera”

On June 30, 2010, Dolores Dominguez can collect from Anna Almeda:

a. P10,000.00b. P30,000.00 c. P20,000.00

d. Nothing, because the note is void since it says “I promise” but was signed by three

persons.
ff

ff

ti

ti



ti

ti

 67. One of the following is a valid obliga on. Which is it?

a. D promised to give C P50,000.00 if C will not swim across the Paci c Ocean.

b. D promised to give C P50,000.00 if D goes to Tokyo.

c. D promised to give C P50,000.00 if C can y to the moon.

d. D promised to give C P50,000.00 if C gives him 5 grams of marijuana.

68. An obliga on where various presta ons are due but the performance of all of them is
required in order to ex nguish the obliga on is known as:

a. Alterna ve obliga on

b. Faculta ve obliga on c. Conjunc ve obliga on

d. Simple obliga on

69. A, B and C are solidary debtors of X in the amount of P9,000.00. subsequently, X

renounced the share of A. A accepted the renuncia on of his share. On due date, B paid X
P6,000.00. B demanded reimbursement from C but C is insolvent. In this case:

a. B may demand the payment of P3,000.00 from A.

b. B may not demand any payment from A because the share of A had already been
renounced or condoned.

c. B may demand P1,500.00 from A represen ng A’s share in C’s insolvency.

d. B may demand from A P4,500.00 so that their sharing in the total debt is equal.

70. D is indebted to C for P20,000.00 which is due on June 10. C owes D 15,000.00 which is
due on June 5. On June 8, C assigned his credit rights to T. D gave his consent to the
assignment but did not reserve his right to the compensa on. On June 10, how much mayT
collect from D?

a. P20,000.00b. P15,000.00

c. P5,000.00

d. Nothing.

71. On May 1, 2010, D executed a wri en undertaking obliging himself to deliver 100 sacksof
rice to C on May 31, 2010. On May 28, 2010, C demanded the delivery of 100 sacks of
ti
ti
ti

ti
ti
ti

ti

ti
tt
ti
ti
fl
ti
ti
ti

ti

ti

fi

 rice from D but D did not comply. The following day, a re of undetermined origin destroyed D’s
warehouse together with about 500 sacks of rice stored therein and from which D intended to get
100 sacks of rice for delivery to C.

a. D’s obliga on to deliver 100 sacks of rice to C is ex nguished, the cause of the loss

being a fortuitous event.

b. D’s obliga on to deliver 100 sacks of rice to C is not ex nguished because he can
get100 sacks of rice from other sources.

c. D’s obliga on to deliver 100 sacks of rice to C is not ex nguished because D was in
default.

d. D’s obliga on is to pay damages because he was in default.

72. On June 1, 2009, Demetrio obtained a loan of P100,000.00 from Cornelio. The loan, whichis
payable on or before June 1, 2010, is secured by a cha el mortgage on Demetrio’s brand-
new Toyota car with plate number XYZ 123. On February 1, 2010, while Demetrio was
opening the trunk of his car at the parking lot of a grocery store to place the grocerieshe
had just purchased, three uniden ed men approached him and took his car at gunpoint.
He reported the carnapping to the authori es but his car has not been recovered.

a. Cornelio may demand immediate payment of the loan unless Demetrio gives another
security therefore.

b. Cornelio may demand payment only on June 1, 2010 because Demetrio has the
bene t of the period and the loss of the car was due to force majeure.

c. Cornelio may no longer demand payment since the loan was ex nguished by reason
of the loss of the car due to fortuitous event.

d. Cornelio may demand immediate payment even if Demetrio o ered another security
because the car is determinate and could not be replaced.

73. The estate of X who died recently, shows among other documents/contracts, the
following:

fi

ti
ti
ti

ti

ti

fi

ti

ti
tt
fi
ti
ti

ff
ti

 I. A cer cate from Harvard University gran ng a scholarship to X. X was subjected

to exhaus ve examina on and interviews before he was granted the scholarship.
He was supposed to start studying at Harvard in 3 months’ me.

II. Ar cles of partnership of XYZ Enterprise showing X as a general partner.

III. A stock cer cate of DEF Corpora on showing X as the owner of P5,000.00 shares
of stock.

IV. A promissory not amoun ng to P100,000.00 executed by M in favor of X. the noteis

due a er 90 days.

Which of the rights of X arising from the said documents/contacts will be transmi ed to the heirs
of X?

a. I and II

b. II and III c. III and IV

d. I and IV

74. The following statements pertain to either payment by cession or dacion en pago.

I. The debtor is insolvent.

II. Ownership of the thing/s is transferred to the creditor/s.

III. Plurality of creditors is required.

IV. Obliga ons are totally ex nguished as a rule.

a. Statement I and IV pertain to payment by cession.

b. Statement I and III pertain to dacion en pago. c. Statement II and IV pertain to dacion en
pago.

d. Statement III and IV pertain to payment by cession.

75. The return of what has been paid by mistake is known as:
a. Solu on indebi

b. Nego orum ges o.

c. Quasi-delict.

d. Natural obliga on.

ti

ti
ti
ft

ti
fi

ti

ti

ti
fi

ti
ti
t

ti

ti
ti

ti
ti



ti

tt

 Items 76, 77, and 78 are based on the following informa on:

Dolores borrowed P15,000.00 from Consuelo. On due date, Dolores was not ableto pay but she
promised to give Consuelo a speci c ring, a speci c bracelet, or a speci c necklace, in payment of
the debt. Consuelo accepted the o er of Dolores.

76. What kind of obliga on is the new obliga on of Dolores?

a. Faculta ve obliga on

b. Compound obliga on
c. Alterna ve obliga on

d. Simple obliga on

77. How was the obliga on of Dolores to pay P15,000.00 ex nguished?

a. By compensa on
b. By nova on

c. By confusion

d. By condona on

78. Assume that before Dolores could deliver any of the ring, bracelet or necklace, the ring
and the bracelet were lost successively through the fault of Dolores. In this case:

a. Consuelo may demand the payment of the price of the ring or the price of the bracelet
plus damages, or the delivery of the necklace.

b. Dolores may deliver the necklace to Consuelo without any obliga on to pay damages.

c. Dolores may deliver the necklace to Consuelo with the obliga ons to pay damages
because the ring and the necklace were lost through her fault.

d. Consuelo may demand the payment of the price of the bracelet which was the last
item that was lost, plus damages.

79. D obtained a loan of P100,000.00 from C. D used the amount as placement fee for a job in
the Middle East. The loan agreement showed that the loan was payable within one yearwith
interest at 6% per annum. However, there was no provision saying that the rights and
obliga ons of the par es would be transmi ed to their heirs or successors-in- interest.
Before maturity, D died leaving his son as heir. Which of the following is correct?
ti
ti
ti
ti
ti

ti

ti


ti
ti
ti
ti
ti

ti



fi
ff
ti
tt

fi

ti
ti

ti
ti

fi

 a. C cannot collect from S because no men on was made in the agreement between D
and C that the rights and obligations of the par es would be transmi ed to their heirs.

b. C can collect from S although no men on was made in the agreement that rights and
obliga ons would be transmi ed to the heirs.

c. C cannot collect from S because the obliga on is personal to D.

d. C cannot collect from S because the law prohibits the transmission of the obliga on.

80. Hilario, husband, and Wynona, wife, are legally separated. By order of the court which
decreed the legal separa on, Hilario is obliged to give a monthly support of P20,000.00 to
Wynona payable in advance within the rst ve days of the month. Wynona owes Hilario
P20,000.00 by way of loan. On the other hand, Hilario has not yet given Wynona’ssupport
of P20,000.00 for the preceding month and another P20,000.00 for the present month. All
the debts are already due. Based on the foregoing facts, which of the followingstatements
is incorrect?

a. If Wynona demands her support for the preceding month, Hilario may set up
compensa on as regards the loan that Wynona owes him.

b. If Wynina demands her support for the current month, Hilario may claim
compensa on as regards the loan that Wynona owes him.

c. If Hilario demands the payment of the loan, Wynona may set up compensa on as
regards her support for the preceding month that Hilario owes her.

d. If Hilario demands payment of the loan, Wynona may set up compensa on as regards
her support for the current month that Hilario owes her.

81. One of the following is not demandable at once. Which is it?

a. D to give his car to C. No date was ved by the par es for the date of the delivery.

b. D to give his car to C un l C completes his course in BS Accountancy.

c. D to give his car to C un l X dies.

d. D to give C his car should C enroll in BS Accountancy.

82. D owes C the following debts: P6,000.00 due on January 1; P6,000.00 due on January 15;
P6,000.00 due on January 31; P6,000.00 due on February 15; P6,000.00 due on February
28; and P6,000.00 due on March 15. All the debts are unsecured except the one on
ti
ti
ti

ti
ti
ti
tt

fi
ti
fi
ti
ti
fi
ti

ti

tt

ti
ti
ti

 February 28. The par es s pulated that C may demand payment on or before due date of each
debt. Assume that today is February 16. D, however, has not yet paid any of the debts. He has in
possession P6,000.00 which he intends to pay C.

a. D may apply the payment to the debt due on February 28 because it is the most
burdensome to him.

b. D may apply the payment to any of the ve unsecured debts.

c. D may apply the payment to any of the four debts that have become due as of today,
February 16.

d. D may apply the payment to all of the debts that have become due as of today,
February 16, propor onately at P1,500.00 each.

83. D made a promise to give a ring to C. Before D could deliver a ring to C, C borrowed D’s
ring. A er a week, D demanded the return of the ring that he had lent to C. c refused to
return the ring claiming that there was compensa on between his obliga on to return the
ring of D and D’s obliga on to give him a ring. Based on the foregoing facts, which ofthe
following statements is incorrect?

a. C en tled to claim compensa on.

b. C is not en tled to claim compensa on.

c. D may oppose the compensa on being claimed by C.

d. Only D may claim the compensa on should C demand the delivery of a ring from him
(D).

84. Maila made a non-nego able promissory note with Pia as payee. Pia assigned the note to
Aiko, Aiko signed the note to Bea, Bea assigned the not to Carmina, Carmina signed the
note to Helen, and Helen assigned it back to Maila.

a. Maila’s obliga on is ex nguished by condona on.

b. Maila’s obliga on is ex nguished by confusion.

c. Maila’s obliga on is ex nguished by compensa on.

d. Maila’s obliga on is not ex nguished because the note is not nego able.

85. Lafuente is a lessee of Oberon’s building. Under the lease contract, Lafuente must pay the
monthly rental of P10,000.00 to Oberon at Oberon’s o ce within the rst 5 days of the

ti
ft
ti

ti
ti
ti
ti
ti

ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti

ti
fi

ti
ti

ti

ffi

ti
fi

ti

 month in advance. On the sixth month of the lease, Lafuente went to Oberon’s o ce to pay the
rental but he as told by Elcano, an employee of Oberon, that Oberon was con nedat the hospital.
Elcano told Lafuente that he could entrust the payment to him. San ago,a son of Oberon, who
happened to be around, however, demanded that Lafuente must pay to him claiming that as
Oberon’s son, he was the one authorized to receive the payment. Given the situa on where you do
not know to whom you will give your payment, which of the following mode of payment would you
avail yourself of if you wereLafuente?

a. Dacion en pago

b. Payment by cession
c. Consigna on

d. Applica on of payment

86. D promised to give C 10 sacks of rice when X, C’s father, dies. The obliga on of D to C s:

a. An obliga on with a suspensive condi on.

b. An obliga on with a resolutory condi on.

c. An obliga on with a period.

d. A pure obliga on.

87. D bought a plane cket for Hong Kong from Wings Travel Company. Later, however, D
cancelled his ight to Hong Kong because of the SARS epidemic in the place. Upon being
informed of the cancella on, Wings Travel told D that D could get the refund of his plane
cket within two days. In the mean me, D thought of going instead to Australia so he
called Wings Travel to send him a cket for Brisbane promising to pay the cost of the cket
in two days. Assuming that the refund due to D for his unused plane cket to HongKong is
of the same amount as the cost of his plane cket to Australia, D two days later need not
pay Wings Travel by reason of:

a. Confusion.

b. Nova on.

c. Compensa on.

d. Condona on.
ti
ti
ti
ti
ti

ti
ti

ti
ti
fl

ti
ti



ti

ti
ti
ti

ti



ti
ti
ti
ti
fi
ffi
ti
ti

 88. 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 to C on May 1. C had the right to the fruits of the agricultural land beginning on:

a. March1b. April 1

c. May 1

d. The period should be xed by the court so that it can be determined when C is en tled
to the fruits.

89. Refer to the foregoing number. C became the owner of agricultural land and the fruits
thereof on:

a. March 1

b. April1c. May 1

d. The period should be xed by the court so that it can be determined when C actuallybecame the
owner of the agricultural land and its fruits.

90. The right of C before the delivery, on one hand, and his right a er the delivery, on the
other hand, of the agricultural land and its fruits, to him are referred to as:

a. Personal right and real right, respec vely.

b. Real right and personal right, respec vely.

c. Both are considered a personal right.

d. Both are considered real right.

91. Assuming that in No. 88, D did not deliver the land and its fruits to C. instead, he delivered
the same to X, who was in good faith when he acquired the land and its fruits, on April 30.

a. X is the righ ul owner of the land.

b. C is the righ ul owner of the land.

c. C has a right of ac on against X.

d. C cannot ask for damages against D.

92. Which of the following is not a proper remedy for the creditor?

tf
tf

ti
fi
fi

ti

ti

ft

ti

 a. To compel the debtor to make the delivery, if the obliga on is to deliver a determinate
thing.

b. To ask that the obliga on be complied with at the expense of the debtor, if the
obliga on is to deliver a generic thing.

c. To compel the debtor to perform the obliga on, if the obliga on is an obliga on to
do.

d. To ask the debtor that what has been done be undone, if the obliga on is an obliga on
not to do.

93. The delivery of the creditor of mercan le documents such as checks shall produce the
e ect of payment:

a. Upon the delivery.

b. When they have been cashed.

c. When through the fault of the debtor they have been impaired.

d. When they are deposited in the bank.

94. Which of the following statements concerning delay is incorrect?

a. There is no delay in obliga ons not to do.

b. Delay, as a rule, exists, when the debtor does not perform his obliga on on the dateit
is due.

c. Demand, as a rule, is required, in order for delay to exists.

d. When me is of the essence of the contact, delay on part of the debtor exists despite
the absence of demand.

95. When the debtor and the creditor agree to a dacion en pago (transfer of ownership of
property to the creditor to se le a monetary obliga on), before such transfer of
ownership, there is actually a:

a. Compensa on

b. Confusion

c. Condonatin
d. Nova on

96. The delivery of mercan le documents such as checks will produce the e ect of payment:
ff

ti

ti
ti

ti



ti
ti

ti
tt

ti

ti
ti
ti

ti

ti
ti
ff
ti
ti

 a. When through the fault of the creditor they have been impaired.

b. Upon delivery of the mercan le document.

c. When they are cer ed by the bank.

d. When they are presented to the bank for payment.

97. XYZ is a coopera ve store. On July 1, 2010, it paid the Government of the City of Manila
certain taxes believing that it owed the same. A er six months, XYZ learned that it was not
subject to the said taxes. Accordingly, it sought to recover the said taxes it previouslypaid.
The obliga on of the Government of the City of Manila to return the said taxes paidis
based on:

a. Nego orum ges o.

b. Solu on indebi .

c. Quasi-delict.

d. The Government is exempt from giving tax refunds.

98. S sold 100 bo les of imported “Fundador” brandy to B who paid immediately the price
thereof amoun ng to P20,000.00. S promised to deliver the brandy to B within one week
from their agreement. On the agreed date of delivery, S delivered to B 100 bo les of fake
“Fundador” brandy. The contract between S and B is:

a. Voidable

b. Voidc. Valid

d. Rescissible

99. D obtained a loan from C amoun ng to P50,000.00 which is payable in 10 equal monthly
installments. The loans bears interests of 1% per month which D agreed to give to T, a
student whom C is sending to school. To secure the loan, D executed a cha el mortgageon
his car. Although D has been paying the monthly interest to T, D could not pay any ofthe
installments due. In view thereof, D proposed, and C accepted that D should give instead a
diamond ring to C in place of the loan of P50,000.00 within two months from their new
agreement. T, however, was not no ed of the new obliga on. Based on the forgoing
facts, which of the following statements is incorrect?
ti
ti

ti

tt

ti
ti
ti
ti
ti



fi
ti
ti
ti
fi

ft

ti

tt
tt
 a. D’s obliga on to give C P50,000.00 is ex nguished by nova on.

b. The accessory contract of the cha el mortgage is ex nguished by the new agreement
between D and C.

c. T is a party to the original agreement between D and C.

d. The new contract did not ex nguish D’s liability to pay interest to T.

Alterna ve obliga on and faculta ve obliga on are similar in which of the followingrespects?

100.Alterna ve obliga on and faculta ve obliga on are similar in which of thefollowing

respects?

a. The right of choice may be given either to the debtor or creditor.

b. Several presta ons are due.

c. Only one presta on is due but the debtor may render another in subs tu on.

d. The obliga on becomes a simple obliga on once the choice of the presta on is
made and communicated.

101.D borrowed P5,000.00 from C. the obliga on is payable in full a er 30 days. In which of
the following cases is D jus ed in making a consigna on of his payment in court?

a. If C refuses to accept the payment in the form of a check which is cer ed by the
bank to be supported by su cient funds.

b. If C refuses to accept the payment consis ng of 5,000 pieces of P1.00 coins.

c. If C refuses to accept the rst instalment in the form of a P1,000.00 bill, D

promising to pay the balance of the debt in 4 equal monthly installments.

d. If C refuses to accept the payment consis ng of 250 piecesof P20.00 bills.

102. Which of the following condona ons will not ex nguish

the debtor’s obliga on?

a. The condona on is in a public instrument. The acceptance is madeorally. The

condona on involves a computer printer whose value isP4,000.00.
ti
ti
ti
ti

ti
ti
ti
ti
ti
ti

ti

ti
ffi

ti
fi
fi
tt
ti
ti
ti
ti
ti
ti
ti
ti

ti
ti
ti
ti
ti

ti

ft

ti
ti
fi

ti

ti

 b. The condonation and the acceptance are in a public instrument. Thecondona on

involves a parcel of land.

c. The condona on and the acceptance are made orally with the creditor delivering
to the debtor simultaneously the promissory note amoun ng to P10,000.00.

d. The condona on is in a public instrument. The acceptance is madein a private

instrument. The condona on involves a television set worth P20,000.00.

103.In which of the following independent cases is the payor of the debtor’s debt not
subrogated to the rights of the creditor?

a. D owes C P10,000.00. The debt is secured by a pledge of D’s ring to

C. D also owes X, P8,000.00. X pays C P10,000.00 without theknowledge of D.

b. D owes C P10,000.00. the debt is secured by a pledge of D’s ring to

C. X pays C P10,000.00 with the consent of D.

c. D owes C P10,000.00. the obliga on is guaranteed by G. G pays CP10,000.00

without the knowledge of D.

d. D owes C P10,000.00. The obliga on is guaranteed by G. X pays CP10,000.00

without the knowledge of D.

104.S sold his only horse to B for P10,000.00 cash. The par es agreed that S shall deliver the
within one week from their agreement. Nothing is mentioned in the agreement on how
the horse will be cared for by S beforedelivery.

a. S must take care of the horse with the diligence of a good father ofa family before
delivery.

b. S need not take care of the horse because nothing was men onedin the
agreement on how the horse will be cared for.

c. S must take care of the horse with extraordinary diligence.

ti
ti

ti

ti
ti

ti
ti

ti

ti

 d. The absence of a s pula on on how the horse must be cared for renders the sale
void because such s pula on is an essen al element of the contract.

105.D owes C the following debts: P3,000.00 due on August 10; P3,000.00 due on August 15;
and P3,000.00 due on August 25which is secured by a pledge of D’s ring. If today is August
22, and D pays C P3,000.00with neither D nor C designa ng the debt to which the payment
shall pay,the payment shall be applied:

a. To the debt due on August 10, following the “ rst-due, rst-pay”basis.

b. To the debts due on August 10, August 15, and August 20,propor onately at
P1,000.00 each.

c. To the debt due on August 25, since it is the most onerous to D.

d. To all the debts propor onately at P750.00 each.

106.M executed a promissory note payable to P for P100,000.00. the note, which bears
interest at 2% per month, is payable a er 60 days. On the date of maturity, P proceeded
to M’s place to collect but when M demanded the presenta on of the promissory note, P
could not present itclaiming that it had been lost. M is able and willing to pay the whole
amountdue including the interest but he is at loss on what to do because P does not have
the instrument. On the other hand, if he does not pay the amountdue, the interest on the
principal will continue to accrue. If you were M, theremedy that you will likely avail yourself
of is:

a. Dacion en pago

b. Payment by cession
c. Consigna on

d. Applica on of payment

107.A, B,C, and D owe X, Y and Z the sum of P12,000.00. based on theforegoing data, which
of the following statements is incorrect?

ti
ti

ti


ti
ti
ti
ti

ft

ti

fi
ti
ti

fi
ti

 a. The obliga on is joint.

b. There are seven dis nct debts in the obliga on.

c. Each debtor is liable only for a total P3,000.00.

d. Each creditor is en tled to collect a maximum of P4,000.00.

108.P took a public bus in going to his o ce. Although P paid his fare, the bus conductor does
not issue to him a cket. Along the way, the met an accident causing a slight injury to P
and other passengers. If P is to recover damages from the bus owner, the source of the
bus owner’s liability is:

a. Contract

b. Quasi-delict

c. Law

d. P cannot recover any amount because no cket was not issued.

109. One of the following obliga ons is void. Which is it?

a. D to give C P50,000.00 if C does not run 100 miles without stopping.

b. D to give C P50,000.00 when D has the means. c. D to give C P50,00000 if D buys a

brand-new car.

d. D to give C P50,000.00 if C runs for barangay chairman next year.

110.Which of the following obliga on is a pure obliga on and isdemandable at once?

a. D to allow C to use D’s car un l December 31, 2011.

b. D to allow C to use D’s car un l C nishes his course in accoun ng.

c. D to give C his car. No men on is made when D shall give the car.

d. D to give C a car if C nishes his course in accoun ng.

111.On January 1, 2010, D obtained a loan of P100,000.00 from C. the loan is secured by a
cha el mortgage on D’s car and is payable on December 31, 2010. On September 26, 2010,
the car was taken at gunpointfrom D while he was star ng its engine at the parking lot of a
departmentstore.
tt

ti

ti
ti
ti
fi

ti
ti
ti
ti
ti
fi
ffi
ti
ti

ti
ti

ti

ti

 a. D’s loan obligation is extinguished. However, D must give a propertywhich C may sell
to sa sfy his claim.

b. D’s loan obliga on is subsists. However, C may demand its immediate payment
unless D gives another security.

c. D’s loan obliga on subsists. However, C may not demandimmediate payment

since the loss of the security was without thefault of D. D, moreover, is not
required to give a new security.

d. D’s obliga on is ex nguished together with the mortgage since the

loss of the car was without the fault of D.

112.A and B are the owners of adjacent poultry and piggery farms. Oneday, B got sick and
failed to visit the farm. When A no ced that B was notagain around during the second day,
he himself took care of the animals byfeeding them and cleaning the pig and poultry pens.
A did this for the nextthree days un l B returned. A incurred necessary and useful
expenses amoun ng to P5,000.00 in the process. Under the circumstances, B is obliged to
reimburse A for such expenses which the la er incurred by reason of:

a. Contract

b. Solu o indebi

c. Nego orum ges o

d. Quasi-delict

113.D has a savings deposit with XYZ Bank in the amount of P20,000.00which D may withdraw
anytime from the bank. He also has a loan obligationto XYZ Bank amoun ng to P20,000.00
which has become due. D wants to withdraw his savings deposit but XYZ Bank informs D
that it has claimed compensa on of D’s deposit and his loan obliga on.

a. Both D and XYZ Bank may claim compensa on.

b. Neither D nor Xyz bank may claim compensa on

c. Only D may claim or oppose compensa on

ti
ti
ti

ti

ti
ti
ti

ti
ti
ti

ti

ti
ti
ti

ti

tt
ti

ti

ti

 d. Only XYZ Bank may claim or oppose compensa on

114. Which of the following is an indivisible obliga on?

a. To give a rendition tonight of Handel’s “Messiah” in a concert at theFolks Arts

Theater.

b. To construct a pavement measuring 2 meters wide and 10 meterslong.

c. To lecture for 5 Saturdays in a tax seminar.

d. To pay a loan obliga on of P100,000.00 in 10 equal monthlyinstallments.

115.Devera obtained a loan of P50,000.00 from Centeno who is engagedin the business of
nancing. The wri en contract of the par es provides that the loan shall bear interest of
12% per annum and shall be paid in fulltogether with the interest at the end of 12 months
at Centeno’s business o ce. On due date, Devera proceeded to Centeno’s business o ce
to payhis debt but the place was padlocked and shows no signs that it had beenoccupied
for some me. Devera is now at a loss on what to do as Centenodid not forward his
present address to him. Devera does not want to haveany outstanding obligation at the end
of the year and incur further interest.Which course of ac on will you recommend to
Devera?

a. Tender of payment

b. Compensationc. Consigna on

d. Applica on of payment

116.D borrowed P100,000.00 from C. the par es agreed at the me theobliga on was
cons tuted that should D so desire, he may give his agricultural land to C by way of dacion
en pago to pay his loan obliga on on due date. The obliga on of D to C is:

a. A conjunc ve obliga on

b. A simple obliga on
fi
ti

ti
ti
ti
ti
tt

ti
ti
ffi

ti

ti

ti
ti

ti
ti

ti
ti
ti

ti

ffi
 c. An alternative obliga on
d. A faculta ve obliga on

117.One of the dis nc ons between a faculta ve obliga on and analterna ve obliga on is
that in an alterna ve obliga on.

a. Only one thing is principally due.

b. The right of choice belongs to the debtor alone.

c. If the obliga on to give a principal thing is void, the obliga on to give the
subs tute is also void.

d. If all presta ons except one are impossible, that which is possible must s ll be
given.

118.D stole the carabao of C. D was arrested, tried in court and convicted. Aside from being
sentenced to a prison term, D was also orderedby the court to return the carabao.
However, the carabao died before D could deliver it to C.

a. D is not liable to C if the cause of the death of the carabao is afortuitous

event.

b. D is liable to C only if the carabao died because of D’s fault.

c. D is liable to C whatever may be the cause of death of the carabao.

d. D has no liability to C whatever may be the cause of the death of the carabao
because his obliga on to return the carabao was due to an order of the court and
not on his own voli on.

119.Under a contract between 0 and C, D is obliged to deliver 10 bags of detergent soap to C

10 days a er the execu on of their agreement. Ondue date, D delivered to C 10 bags of
detergent soap which he mixed withchalk.

a. The contract entered into between D and C is voidable because ofthe.-fraud

employed by D.

b. The contract is valid. The fraud employed by D does not a ect thevalidity' of the
contract but D is obliged to pay damages to C.
ti

ft
ti
ti
ti
ti

ti
ti
ti
ti
ti
ti

ti

ti

ti

ti

ff
ti

ti
ti
ti
 c. The contract is void because of the fraud employed by D in the performance of his
obliga on.

d. The contract is rescissible because of the damages su ered by C.

120.D obtained a loan from C in the amount of P50,000.00. Unable to give cash on due date in
payment of his loan obliga on, D proposed to C that he would be giving instead his
diamond ring to se le his debt. C agreed and accepted the ring from D. The new
agreement between D andC involved both:

a. Nova on and applica on of payment.

b. Nova on and dacion enpago.

c. Compensa on and payment by cession.

d. Confusion and tender of payment.

121.Salas and Bersamin entered into a contract whereby Salas would deliver 5 pieces of
genuine Rolex wristwatches to Bersamin. Salas proposed to Bersamin that should Salas
deliver 5 units of fake pieces of Rolex wristwatches by reason of nancial di cul es on his
part, Bersaminwould not sue him for damages on the ground of fraud. Bersamin accepted
the proposal. On due date, Salas delivered 5 pieces of fake Rolex wristwatches. Upon
discovery of the fraud, Bersamin sues Salas for damages. Salas contends that he cannot be
held liable for damages because Bersamin waived his right to hold him (Salas) liable on the
groundof fraud if the reason thereof is the nancial di cul es of Salas.

a. Bersanding cannot sue Salas for damages because the reason for the waiver is
valid, i.e., nancial di cul es of Salas, which is a validreason for the waiver.

b. Bersamin can sue Salas for the annulment of the contract since it isvoidable.

c. Bersamin can sue Salas for damages because the waiver he made is void.
Nonetheless, the contract is valid.
ti
ti
ti
fi
ti

tt
ffi
ti
ti
ti

fi

ff
ffi
ti
fi

ffi

ti
 d. Bersamin can sue Sales for the rescission of the contract since it isrescissible.

122.B ordered 10 boxes of "X" shirts worth P2,000.00 per box from S paying immediately the
total, price of P20,000.00. While inspec ng the goods a er their deliveryto his store,
discovered that one box was missing. Upon being informed, apologized for the error and
promised to refund the price ofP2,000.00 within three days as there was nomore stock of
"X" shirts available. In the mean me, B ordered and received from Sone box of "Y" shirts
which was also worth P2, 000.00 promising to pay the same within threedays. On the third
day, assuming that S had not yet refunded the price of the undelivered"X" shirts to B, B
need not pay S the price of "Y" shirts by claiming:

a. Consigna on. b. Compensa on.

c. Condona on.

d. Nova on.

123. The following are obliga ons with a term or period, except?

a. D to give C P50, 000.00 on December 1, 2011.

b. D to give C P50, 000.00 on Christmas day next year.

c. D to give C P50, 000.00 upon the death of C's father. d. D to give C P50, 000.00 if C's
father dies within 2 years.

124.A, B and C are liable, in solidum to X for P12,000.00. X renounced the shareof A
who accepted it. Later, B becomes insolvent.

a. X can collect from C P8,000.00.

b. X can collect from C P4,000.00.

c. X can collect from C P12,000.00.

d. X can collect nothing from C.

125.Ace Realty Company (Ace) ordered6units of "Bordeno ypewriters from Central O ce

Machines (Central) at the priceunitsP8,000.00 per unit. However, Central deliveredto Ace 6
units of "Remington" typewriters, a superior brand, which was priced P8,500,00
ti
ti
ti

ti

ti

ti

ti

ft
ft

ffi
 per unit. Central informed Ace that it will bill the la er for the “Remington typewriters at

P8,000.00 only. Ace refused to accept the "Remington" typewriters.

a. Central can compel Ace to the accept the "Remington" typewriters since they are
of superior quality.

b. Central cannot compel Ace to the accept the "Remington" typewriters although
they are of superior quality.

c. Central can compel Ace to accept the "Remington" typewriters since Ace is
required to pay only the price of "Borden" typewriters.

d. Central can compel Ace to accept the "Remington" typewriters since all that is
required of Central is to deliver a typewriter that can perform the same func on
as the one that was ordered.

126.Prime Engineering Review Center (PERC) stated in the lea ets it distributed last January
that any reviewee who places rst in licensure examina ons for engineers this year will
receive a cash prize of P150,000.00.

a. The obliga on of PERC is subject to a suspensive condi on.

b. The obliga on of PERC is subject to a resolutory condi on.

c. The obliga on of PERC is a pure obliga on.

d. The obliga on of PERC is an obliga on with suspensive period.

127.Three of the following statements pertain to natural obliga on. Which one doesnot?

a. It is not enforceable in a court of jus ce.

b. Obliga on exists by reason of equity and moral jus ce.

c. If performed voluntarily, recovery can no longer be made.

d. There is juridical necessity to perform

128.D has a grains warehouse in Davao, while C has a grains in Cebu. D borrowed10sacks of
rice worthP10,000.00 from C for D's customer in Cebu. Later, C borrowed sacks of rice
which was also worth P10,000.00 from D for C's in Davao. Both theobliga ons are already
due. Transport costs to Davao amount to P1,000.00, while those for Cebu amount to
P800.00.
ti

ti
ti
ti
ti

fi
ti

ti
ti

tt
ti
ti
ti

ti
fl



ti

ti
ti

 a. D and C need not pay each other since their debts compensated each other.

b. D and C need not pay each other since their debts compensated each other,
except for the delivery charges which C must pay to D in the amount of
P200.00(P1,000.00 less P800.00).

c. Compensa on cannot take place because the debts are payable at di erent
places.

d. D must pay C P10,800.00, while C must pay D P11,000.00.

129.D owes C P20,000.00 due on March 25. C, on the other hand, owes D the followingdebts:
P8,000.00due on March1,P3,000.00 due on March 8, P5,000.00 due -on March 14,
andP2,000.00 due on March 24. On March 18 , C assigned his credit right to T without
informing D who learned of the assignment on March 20. On March 25, T may collect
from D:

a. P20, 000:00.

b. P2, 000.00.

c. P4,000.00.

d. None, because the assignment made by C was without he knowledge of D.

130.D owes C P20,000.00 due on March 15. C, on the other hand, owes D the followingdebts:
P8,000.00 due on March 1,P3,000.00 due on March 8, P5,000.00 due on March 14.On
March 12, C assigned his right to T with no ce to D but with D not giving his consent to
the assignment. On March 15, T can collect from u:

a. P20,000.00.

b. P9,000.00.

c. P4,000.00.

d. None, because the assignment made by C was without the consent of D.

131.On December 1, 2009, Miss Santos, a professor of Manila College, engaged the services
of Lepanto Transport to bring her class to Calamba, Laguna in me for the Rizal Day
celebra on on December 30, 2009 which would start at nine o'clock in the morning,The
contract signed by the par es speci ed that a bus would be in the school premises at

ti

ti

ti

fi
ti

tt
ti
ff

 six o'clock in the morning and would leave at exactly 6:320 a. m. However, LepantoTransport
failed to send a busy on the date, me and place agreed upon.

CONTRACTS- DIAGNOSTIC EXERCISES

TEST 1 – MULTIPLE CHOICE. Select the best answer by wri ng the le er of your choice.

1. A mee ng of minds between two persons whereby one binds himself with respect tothe
other to give something or to render some service is known as:

a. Obliga on

b. Consent
c. Contract

d. S pula on

2. The stages of a contract according to the order of their accurence are:

a. Birth, concep on, and consumma on

b. Concep on, consumma on, and birth

c. Concep on, birth, and consumma on

d. Consumma on, concep on, and birth

3. The elements of a contract without which a contract would not exist are known as:

a. Accidental elements

b. Natural elements

c. Special elements d. Essen al elements

4. Consensual contract has the following essen al elements:

a. Consent of the contrac ng par es, object certain and cause or considera on.
ti
ti
ti
ti


ti
ti

ti

ti

ti
ti
ti
ti
ti
ti
ti
ti

ti
ti

tt

ti

 b. Consent of the contrac ng par es, object certain, cause or considera on anddelivery
of the object.

c. Consent of the contrac ng par es, object certain, cause or considera on and
formali es required by law.

d. Consent of the contrac ng par es, object certain, delivery of the object, and
formali es required by law.

5. A real contract has the following essen al elements:

a. Consent of the contrac ng par es, object certain and cause or considera on b. Consent of
the contrac ng par es, object certain, cause or considera on and

delivery of the object

c. Consent of the contrac ng par es, object certain, cause or considera on and
formali es required by law

d. Consent of the contrac ng par es, object certain, delivery of the object, and
formali es required by law

6. A solemn or formal contract has the following essen al elements:

a. Consent of the contrac ng par es, object certain and cause or considera on.

b. Consent of the contrac ng par es, object certain, cause or considera on anddelivery
of the object.

c. Consent of the contrac ng par es, object certain, cause or considera on and
formali es required by law.

d. Consent of the contrac ng par es, object certain, delivery of the object, and
formali es required by law.

7. Elements that accompany certain contracts unless set aside or suppressed by the par es
are known as:

a. Natural elements

b. Accidental elements

c. Essen al elements

d. Original elements

8. The warranty against hidden defects in a contract of sale is an example of:

ti
ti
ti
ti
ti
ti
ti
ti

ti

ti
ti
ti
ti
ti
ti
ti
ti
ti
ti

ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti
ti

ti

ti
ti
ti
ti
ti
ti
ti

ti
 a. Natural elements

b. Accidental elements

c. Original elements

d. S pulated elements

9. They refer to par cular s pula ons of the par es in a contract:

a. Accidental elements

b. Natural elements

c. Inherent elements

d. Essen al elements

10. One of the following is a natural element of a sales contract.

a. Terms of payment

b. Rate of interest

c. Place of delivery

d. Warranty against evic on

11. A contract that can stand by itself is known as:

a. Accessory contract
b. Principal contract

c. Commuta ve contract

d. Gratuitous contract

12. A contract that does not have any special name under the law is known as:

a. Nominate contract b. Innominate contract

c. Special contract

d. Nominal contract

13. A contract where both par es are required to do or to give something is known as a:a.
Bilateral contract

b. Unilateral contract

c. Gratuitous contract

d. Commuta ve contract
ti
ti
ti
ti

ti

ti

ti

ti
ti

ti

 14. A contract where the par es contemplate a real ful llment, hence, equivalent valuesare
given is known as:

a. Commuta ve contract

b. Gratuitous contract

c. Onerous contract

d. Aleatory contract

15. The contrac ng par es may establish such s pula ons, clauses, terms and condi ons as
they may deem convenient provided they are not contrary to law, morals, good customs,
public order or public policy. This is known as a principle of:

a. Liberty of contract

b. Mutuality of contract

c. Rela vity of contract

d. Obligatory force of contract

16. The contract must bind both contrac ng par es; its validity, or compliance cannot bele
to the will of one of them. This is known as the principle of:

a. Mutuality of contract

b. Rela vity of contract

c. Consensuality of contract

d. Freedom to contract

17. Contracts take e ect only between the contrac ng par es, their assigns and heirs, except
in cases where the obliga ons and rights arising from the contract are not transmissible by
their nature, or by s pula on, or provision of law. This principle ofcontract is known as:

a. Rela vity of contract

b. Mutuality of contract

c. Obligatory force of contract

d. Liberty of contract

18. D borrowed P500,000.00 from C. D died without having paid his loan obliga on to C. He
le S, his son and heir, proper es worth P400,000.00.
f
ti
ti
ti
ti
ti
ff

ti
ti

ti
ti

ti

ti
ti
ti
ti
ti
ti
fi

ti

ti
ti
f

 a. S is liable to C for P500,000.00

b. S is liable to C for P400,000.00

c. S is liable to C for P100,000.00

d. S is not liable at all because he should not be made to shoulder the obliga on of his
father.

19. A contract may be enforced by or against a third person, except:

a. In the case of s pula on pour autrui

b. When a third person induces another to violate his contract

c. In case of contracts intended to defraud creditors.

d. When the bene t to the third person is merely incidental

20. The principle that contracts are perfected by mere consent is known as:

a. Consistency of contract b. Consensuality of contract

c. Consumma on of contract

d. Mutuality of contract

21. Obliga on arising from contracts have the force of law between the contrac ng par esand
should be complied with in good faith. From perfec on, the par es are bound not only for
the ful llment of what has been expressly s pulated but also to all the consequences
which, according to their nature, may be in keeping with good faith, usage and law. This is
known as the principle of:

a. Consumma on of contract

b. Consensuality of contract

c. Obligatory force of contract and compliance in good faith

d. Mutuality of contract

22. One of the following is not a real contract:

a. Pledge

b. Commodatum

c. Depositd. Sale
ti

fi

ti
ti

ti
fi
ti

ti

ti

ti

ti
ti
ti
 23. D borrowed P100,000.00 from C. the obliga on is secured by a mortgage on D’s land and
building. C registered the mortgage with the register of Deeds. Therea er, D sold the land
and building to X who was not personally aware of the existence of the mortgage at the
me of sale since only the photocopy of the transfer cer cate of tlewhich did not yet
contain the annota on of the mortgage was shown to him . It was only when he went to
the Register of Deeds to register the sale of the land and buildingto him that he learned of
the mortgage.

a. C can collect from D and if D cannot pay, C can foreclose the mortgage although the
land and building are now owned by X.

b. C can collect from D, but if D cannot pay, C cannot foreclose the mortgage because X
was not aware of the existence of the mortgage at the me he bought the land and
building.

c. C cannot collect from D. He can only go a er the mortgage which was given as
security.

d. C cannot foreclose the mortgage because X was not a party thereto.

24. It is the manifesta on of the mee ng of the o er and the acceptance upon the thingand
the cause which are to cons tute the contract.

a. Considera on

b. Contractc. Consent

d. Cause

25. On June 1, 2010, S o ered to sell his only car to B for P100,000.00. B accepted the o erby
mailing his le er of acceptance on June 10, 2010. On June 12, 2010, B revoked his
previous acceptance and mailed his le er of revoca on on the same date. S received the
le er of revoca on on June 15, 2010.

a. The contract was perfected on June 14,2010 when s received B’s le er of

acceptance.

b. The contract was not perfected because at the me the acceptance was received,the
par es were no longer of one mind.
ti
tt
ti

ti

tt

ti
ti
ti

ff
ti
ti

tt

ft
ti
ff

ti
ti
ti
ti
fi
ti
tt

ft

ff
 c. The contract was perfected on June 10, 2010 when B sent his le er of acceptance.

d. The perfec on of the contract retroacts to June 1, 2010 when the o er was made.

26. On May 1, 2010, S o ered to sell a speci c car to B for P500,000.00. B sent his le er of
acceptance to S on May 8, 2010. On May 10, 2010, however, S died in a vehicular accident
and his secretary received the le er of acceptance on May 12, 2010 unawarethat S had
already paid.

a. The contract was perfected on May 8, 2010 when B sent his le er of acceptance.

b. The contract was perfected on May 12, 2010 when the secretary of S received the
le er of acceptance.

c. The contract was not perfected because the o er of S became ine ec ve when he
died.

d. The contract was perfected on May 1, 2010 because the acceptance made by B onMay
8, 2010 retroacts to the date of the o er.

27. Three of the following instances will render an o er ine ec ve before acceptance is
conveyed. Which one will not?

a. Civil interdic on of either party

b. Insolvency of either party

c. Insanity of either party

d. Intoxica on of either party

28. S o ers to sell his car to B for P125,000.00 cash. B accepts the o er but is willing to pay
only P120,000.00.

a. The contract was perfected at the price of P125,000.00 .

b. The contract was perfected at the price of P120,000.00.

c. The contract was perfected at the price of P122,500.00, the average price of theo er
and the acceptance.

d. The contract was not perfected because the acceptance by B was quali ed and it
cons tuted a counter-o er.

29. P appointed A as his agent to sell P’s only Honda Civic car for P400,000.00 cash. On

November 7, 2010, A, pursuant to the authority granted to him by P, o ered to sell the
tt
ff
ti

ti
ti
ti

ff

ff

tt
ff
fi

ff
ff
ff

ti
tt
tt
ff
ff
ff
ti
ff
fi
tt

ff

 car to B at the price of P400,000.00. B accepted the o er on November 8, 2010 by sending a le er

of acceptance to A, which le er of acceptance was received by A on November 9, 2010. On
November 10, 2010, A informed P that B had accepted the o er.

a. The contract was perfected on November 8, 2010 when B sent his le er ofacceptance.

b. The contract was perfected on November 9, 2010 when A received the le er of

acceptance.

c. The contract was perfected on November 10, 2010 when A no ed P, the trueowner
of the car, that B had accepted the o er.

d. The contract was perfected on November 7, 2010, since the acceptance by Bretroacts
to the date of the o er.

30. On July 1, 2010, Serrano o ered to sell his only Mercedes Benz car for P1,000,000.00 to
Benitez who was interested in buying the same. In his le er to Benitez, Serrano stated
that he was giving Benitez up to July 31, 2010 to make up his mind whether to buy the car
or not. On July 25, 2010, Serrano personally went to Benitez to inform him that he was no
longer willing to sell the car unless the price was increased to P1,400,000.00 because
another buyer was interested in buying the car for the said amount of P1,400,000.00.

a. Benitez may compel Serrano to sell to him the car for P1,000,000.00

b. Serrano may validly withdraw his o er to Benitez because the op on was notfounded
upon a considera on.

c. Serrano may not withdraw his o er un l a er the lapse of the op on period that he
gave to Benitez.

d. The increase in price made by Serrano was not valid because it was made within the
op on period.

31. Rockman and Company published an adver sement in the newspapers which reads as
follows “INVITATION TO BID: Construc on of the company’s warehouse located at 123
Luzon Street, Sta. Quiteria, Quezon City.” The adver sement also included the
speci ca ons of the warehouse to be constructed. Three companies submi ed their
ti
fi
ti

ti
ff

ff
tt
ff
ff
ff
ti
ti

ft
ti
ti
ff
tt
ff
ti
fi

ti
ti
tt

tt
tt

tt
 bids: ABC Company, with a bid price of P4,500,000.00; DEF Company, P4,750,000.00; and GHI
Company, P5,000,000.00. A er considering the nancial capability, reputa onand experience of
the bidders, the kind and quality of materials to be used and other factors, Rockman and Company
accepted the bid of DEF Company. ABC Company, the lowest bidder, now ques ons the award
made by Rockman and Company to DEF Company which submi ed a higher bid.

a. The award to DEF Company is voidable because it was only the second lowestbidder.

b. ABC Company should be the winning bidder having submi ed the lowest bid.

c. The award to DEF Company is valid because Rockman and Company was not boundto
accept the lowest bidder.

d. The award to DEF Company is void by reason of Rockman’s viola on of the terms of

the invita on to bid.

32. One of the following is incapable of giving his consent.

a. Insane persons

b. Deaf-mutes who do not know how to writec. Deaf-mutes who know how to read

d. Unemancipated minors

33. A contract entered into by an incapacitated person is:

a. Void

b. Voidable

c. Rescissible

d. Void

34. Contracts entered into in a state of drunkenness or during hypno c spell are:

a. Valid

b. Voidable

c. Rescissible

d. Void

35. A contract entered into by an insane person during a lucid interval is:

ti

ft
fi

tt
tt
ti
ti

ti

ti

 a. Valid

b. Voidable

c. Rescissible

d. Void

36. Aside from fraud and undue in uence, the following are the vices of consent, except:

a. Violence.

b. In mida on.

c. Mistake.

d. Dealer's talk.

37. Mistake in three of the following will make a contract voidable. Which one will not?

a. Mistake as to the substance of the thing which is the object of the contract.

b. Mistake as to the principal condi ons which principally moved one or both par es to
enter into the contract.

c. Mistake as to the iden ty or quali ca ons of one of the par es, which iden ty or
quali ca ons have been the principal cause of the contract.

d. Simple mistake of account.

38. It involves the employment of serious or irresis ble force to obtain consent.

a. In mida on.

b. Threat. c. Violence.

d. Moral coercion.

39. It is present when one of the contrac ng par es is compelled by a reasonable and
well- grounded fear of an imminent and grave evil upon his person or property, or upon
the person or property of his spouse, descendants, and ascendants, to give his consent.

a. Violence.

b. Physical coercion.c. In mida on.

d. Mistake.

40. One of the following contracts is not vi ated by in mida on or violence, and hence valid.

ti
ti

fi
ti
ti
ti

ti
ti

ti
fl
ti

fi
ti
ti
ti
ti
ti
ti
ti

ti

ti
ti

 a. A contract of sale which was signed by a party because his arm was being twisted bya
.third person.

b. A contract of sale which was entered into because the other party was poin ng a gunat
his wife.

c. A contract where a party was compelled to assign his property to the other to pay a
just debt because the la er threatened to sue him in court if he does not pay his debt.

d. A contract of donation of a parcel of land which a party signed because the other party
threatened to burn his house.

41. It exists when a person takes improper advantage of his power over the will of
anotherdepriving the la er of a reasonable freedom of choice.

a. In mida on

b. Duress

c. Threat

d. Undue in uence

42. Fraud-exists in three of the following. Which is the excep on?

a. When through the insidious words or machina ons of one of the contrac ng- par es,
the other is induced to enter into a contract which, without them, he would not have
agreed to.

b. When there is a failure to disclose facts, when there is. A to reveal them, as when the
par es are bound by con den al rela ons.

c. When there, is an expression of an opinion by an expert which turned out to be wrong,

and other party relied upon such expert knowledge.

d. When the misrepresenta on refers to the usual exaggera ons in. trade, and' the other
party had an opportunity to know the facts.

43. Abuiencia, who knew that his ring was embellished with glass, told Banzon that the
embellishment was emerald. Banzon, who knew that his watch was gold-plated, told
Abuiencia that it was made of pure gold. Banzon, believing that Abulencia's ring was
embellished with emerald, and Abuiencia; believing that Banzon's watch was made of

ti
ti

ti
fl

tt
tt
ti
fi

ti
ti

ti

ti
ti

ti
ti
ti

 pure gold, then entered into a contract whereby they exchanged their respec ve ar cles.A week
later, Banzon discovered that the ring was adorned only with an ordinary glass.

a. The contract may be annulled at the instance of Banzon since he discovered the fraud.

b. b. The contract may be annulled at the instance of Abulencia since Banzon also
employed fraud.

c. The contract is void because of the bad faith of both par es, hence, it shalt not
produce any e ect.

d. Neither' party may ask for annulment since both are guilty of fraud. The contract,
thereof is valid.

44. An absolutely simulated contract is:

a. Void.

b. Voidable

c. Valid

d. Unenforceable

45. One of the following statements does not pertain to rela vely simulated contract.

a. The par es conceal their real agreement.

b. The par es are bound by their real agreement provided it does not prejudice third
persons.

c. The par es are bound by their real agreement provided it is not contrary to law,
morals, public order or public policy.

d. The par es do not intend to be bound at all.

46. Servando and Bernardo entered into a contract where they made it appear that Servando
was mortgaging his lot and building to Bemardo to secure a contract of loan.The truth,
however, was that Servando was selling his lot and building to Bernardo. Which of the
followings statements is true?

a. The par es are bound by the contract of sale.

b. The par es are bound by their contract of loan and mortgage.

c. The par es are not bound at all

d. The par es are bound by the contract of sale only when third persons are a ected.

ti
ti
ti
ti
ti
ti
ti
ti

ff

ti
ti

ff
ti

ti

 47. One of the following is not a requisite of the object of a contract.

a. It must be within the commerce of men.b. If it is a right, it must be intransmissible.

c. It must not be contrary to law, morals, good customs, public order or public policy.

d. It must be determinate as to its kind or capable of being made determinate without

the need of the par es entering into a new agreement.

48. S and B orally entered into a contract whereby S sold his one-year produc on of eggs inhis
poultry farm to B for P50,000.00 which amount B immediately gave in cash to S. the
contract between S and B is:

a. Void because the object was not exis ng at the me of the execu on of thecontract.

b. Valid because future things may be the object of contracts.

c. Ressiscible because B will likely su er damage if the eggs do not come intoexistence.

d. Unenforceable because the contract was not in wri ng.

49. A died leaving proper es es mated at P1,000,000 00 to his sons S and T. Subsequently,S
sold one-half of his inheritance to X for P3,000,000.00, although his share was s ll to be
delivered.

a. The contract is valid since the inheritance is an exis ng inheritance.

b. The contract is void because what S sold is future inheritance which may not be the
object of a contract as a rule.

c. The contract is resissible.

d. d. The contract is unenforceable.

50. A contract whose cause is the promise of a thing or service by the other party is:a.
Onerous contract.

b. Gratuitous contract.

c. Lucra ve contract.

d. Remuneratory contract.

51. A contract whose cause is the liberality of the benefactor is:

ti

ti

ti

ti

ff
ti
ti
ti
ti

ti

ti
ti

 a. A gratuitous contract or contract of pure bene cence.

b. A remuneratory contract

c. An aleatory contract

d. An onerous contract.

52. 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
byS to B?

a. The sale is void because the mo ve of B is illegal.

b. The sale is valid because the illegality of the mo ve of the par es to the contractdoes
not have any e ect on its validity.

c. The sale is voidable because of the failure of B to disclose his mo ve to S.

d. The sale is rescissible at the instance of S because he would be damaged by the illegal
mo ve of B.

53. One of the following is not a requisite of cause in a contract. Which is it?

a. It must exist.

b. It must be lawful.

c. It must not be false.

d. It must be clearly stated in the contract.

54. D and C entered into a contract wherein D agreed to give to C P50,000.00 within 30 days
from the date of the execu on of their agreement, which, however, does not state the
considera on received by D from C. What is the status of the contract between D and C?

a. The contract is void because. the cause is riot stated in the contract.

b. The contract is valid because the cause is presumed to exist and that it is lawful.

c. The contract is rescissible because D su ered damage by reason of absence of cause.

d. The contract is valid provided another contract is executed between D and C to state
the cause.

55. The defec ve contracts arranged according to the degree of their defec veness from the
least defec ve to the most defec ve are:

ti

ti
ti

ti

ff

ti
ti
ti

ff

fi
ti

ti
ti

ti

 a. voidable, rescissible, unenforceable, and void contracts.

b. rescissible, unenforceable, voidable, and void contracts.

c. rescissible, voidable, unenforceable, and void contracts.

d. unenforceable, rescissible, voidable, and void contracts.

56. The following are characteris cs of rescissible contracts, except:

a. they may be set aside for equitable reasons.

b. they are valid un l rescinded.

c. the ac on to rescind them prescribes.

d. the ac on to rescind them are not available to third persons even if their interests are
direc y a ected.

57. The following contracts are rescissible, except:

a. Those entered into by guardians whenever the wards whom they represent su er
lesion by more than one- fourth of the value of the things which are the object ofthe
contract

b. Those entered into in representa on of absentees, if the la er su er lesion by more

than one-fourth of the value of the things which are the object of the contract.

c. Those undertaken in fraud of creditors but the la er can s ll collect the claims due
them through other means.

d. Those which refer to things under li ga on if they have been entered into by the
defendant without the knowledge and approval of the li gants or of competent
judicial authority.

58. G, the guardian of M, a minor, sold the sh harvested from the shpond of M for P7,

400.00. The sh, however, had a value of P10, 000.00.

a. The sale is rescissible because M su ered lesion by more than one-fourth of the value
of the sh sold.

b. The sale is voidable because M is a minor.

c. The sale is unenforceable because G sold the sh without approval of the courts.

d. The sale is void because the object is outside the commerce of men.
tt
ti
ti
fi

ff
fi

ti

ti

ti
ff
ti

ti
fi

fi

tt



ti
ti

tt

ff
fi

ff

 59. The following are the requisites of a rescissible payment except:

a. The debt is already due.

b. the debtor is insolvent.

c. the debtor pays the debt.

d. the payment is not yet due.'

60. Rescission of a contract will prosper in one of the following cases. Which is it?

a. When there are other legal means to obtain repara on of the damages caused.

b. When he who demands rescission cannot return whatever he may be obliged to

restore.

c. When the object of the contract is in the possession of a third person who purchased
the property of the debtor in bad faith.

d. When the ac on to bring rescission has prescribed.

61. D owes the following creditors: X, P50, 000.00; Y, P60, 000.00; and Z, P90, 000.00. He has
assets valued Pt P400,000.00. Subsequently, D donated, among his assets a parcel of land
valued at P250,000.00 to C. The dona on and acceptance were made in a public
instrument. The dona on of the land made by D to C is:

a. Ressiscible, because it was presumed to have been made in fraud of creditors.

b. Unenforceable, because D was not authorized by his creditors.

c. Void, because the dona on and acceptance should be registered.

d. Voidable, because D does not have the free disposal of his property.

62. C led a complaint in court against D to collect a money debt amoun ng to

P500,000.00.A er due hearing, the court rendered judgement in favor of C. Shortly a er
the rendi onof the judgment and before C has collected D's debt, D sold a parcel of land to
X. Z, anothercreditor, learned of the sale made by D to X and now les an ac on to rescind
the sale.

a. The right to rescind the sale is exclusively granted to because it was he who rst
learned of the sale and he has s ll to le a claim to collect D's debt.

b. The right to rescind the sale is exclusively granted to C because it was he who obtaineda
favorable judgement and he has not yet collected D's debt.

ti
fi
ti
ft
ti

ti

ti
fi
ti

ti

fi

ti
ti
fi

ft
 c. Both C and Z have a right to rescind the sale since the sale is presumed in fraud of
creditors having been made by party against whom judgment has been rendered.

d. Neither C nor Z has a right to rescind the sale.

63. R, the representa ve of A, an absentee, sold the corn with a value of P30,000.00 and the
palay with a value of P50,000.00,harvested from A's agricultural farm for a total price
ofP50,000.00. A, whose domicile was subsequently known, was informed of the sale
made by G. Based on the foregoing facts, which of the following statements incorrect?

a. A may seek payment of an addi onal P30,000.00 to recover the damages su ered.

b. A may just seek rescission of the sale of the corn to recover the damages hesu ered.

c. A may seek rescission of the sale of part of the corn and part of the rice to the extent
of the damages he sustained.

d. A may seek the rescission of the total sale to recover the damages he su ered.

SALES- DIAGNOSTIC EXERCISES

TEST I- MULTIPLE CHOICE- select the best answer by wri ng the le er of your choice.

1. A contract whereby one of the par es obligates himself to transfer the ownership of
and to deliver a determinate thing and the other to pay therefor a price certain in
money or its equivalent is a contract of;

a. Barter

b. Sale

c. Dacion en pago

d. Mortgage

2. The following are the essen al elements of a contract of sale, except:

a. Consent of the contrac ng par es

b. Subject ma er which should be determinate

c. Price which is certain in money or its equivalent

d. Warranty against evic on and against hidden defects

3. The following are the characteris cs of a contract of sale, except:

a. principal , which means that a contract of safe can stand by itself

b. Real, which requires the delivery of the object of the contract of sale for its perfec on.

c. Onerous, where rights are required in exchange of a valuable considera on.



tt

ti
ti
ti
ti

ti

ti
ti

ti



ti

tt

ti
ff
ff

ff

ti

 d. Bilateral, which means that both par es are bound reciprocally to each other.

4. One of the following characteris cs of dacion en pago is also characteris c of a

contract of sale. Which is it?

a. There is a pre-exis ng credit.

b. Obliga ons are ex nguished.

c. There is less freedom in xing the price.

d. Ownership of the object is transferred to the other party.

5. The following are characteris cs of a contract of sale except for one which refers to
payment by cession. Which characteris c refers to payment by cession?

a. There is no pre-exis ng credit.

b. The cause or considera on is the price.

c. There is more freedom in xing the price.

d.

6. The following items pertain to either a contract- of sale or a contract to sell.

I. Ownership of the thing sold is transferred upon delivery.

II. Ownership of the thing is transferred to the buyer at some future me.

III. The risk of loss is on the buyer.

IV. The risk of loss is on the seller.

Based on the above data, which of the following is correct?

a. Items I and III pertain to a contract to sell.

b. Items II and III pertain to a contract to sell.

c. Items II and IV pertain to a contract of sale.

d. Items I and III pertain to a contract of sale.

7.
One of the following is not a requisite of the object of a contract of sale. Which is it?

a. It must be within the commerce of men.

b. It must be licit.

c. It must be determinate or determinable.

d. Vendor must have the right to transfer the ownership of the thing at -the me of sale.




ti

ti
ti
ti
ti
fi
fi

ti

ti
ti
ti

ti

ti
ti



 8. The following items pertain to either emp o rei spera or emp ospei. Based on the
above informa on, which of the following is correct?

a. Items I and iI pertain to emp o rei spera ,

b. Items II and III pertain.to emp ospei.

c. Items II and III pertain to emp o rei spera .

d. Items III and IV pertain to emp ospei

11. process of manufacturing for its customers at the me the orders were received. Michael
Barkley, who is 7' tall and wears size 18shoes, was provided three days later, with a pair
that was specially made for him since Armstrong does not make shoes of his size. What
kind of contracts were entered into for the shoes provided to the two basketball players?

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.

b. The contract for the pair of shoes provided to Charles Jordan is a contract of sale, while
that for Michael Barkley is a contract for a piece of work.

c. Both contracts are contracts of sale.

d. Both contracts are contracts for a piece of work.

12. S and B entered into a contract whereby S transferred to B a speci c car for the price of
P200,000.00, while B gave to SP90,000.00in cash and a diamond ring worth
P110,000.00.The heading of the wri en contract signed by the par es reads “Contract of
Sale".

a. The contract is void because the inten on of the par es is void since the value of the
diamond ring is more than the monetary considera on given.

b. The contract is a valid contract of sale as intended by the par es regardless of whether
the monetary considera on is more or less than the value of the property
considera on.

c. The contract is a valid contract of barter since the value of the property given is more
than the monetary considera on. The inten on of the par es is immaterial.

d. The contract is partly a contract of barter and partly a contract of sale.

ti

ti
ti
ti
ti
ti
ti
ti
tt



ti
ti
ti
ti

ti


ti
ti
ti

ti

ti
ti

ti
fi
ti



 13. The price in a contract of sale is certain, except:

a. when the par es have xed or agreed upon a, de nite amount.

b. if the price is certain with 'reference to another thing certain.

c. if the xing of the price is le to the discre on of one of the contrac ng par es and
the price xed is not accepted by the other party.

d. if the price xed is that which the thing sold would have on a de nite day or in a
par cular exchange or market.

14. On January 1, S orally sold to B a speci c ring for P450.00. The par es agreed that S shall
deliver the ring to B on January 5, while B shall pay the price on January 7.

a. The contract is perfected on January 5, when the ring is delivered by S to B.

b. The contract is perfected on January 1, when the par es had a mee ng of mind on the
object and the price.

c. The contract is perfected on January 7, when the price is paid, since both par es would
by then have performed their obliga ons in the contract.

d. There is no perfected contract because the sale was made orally.

15. A sum of money paid, or a thing delivered upon the making of a contrast for the sale of
goods, to bind the bargain, the delivery and acceptance of which makes the nal assent of
both par es to the contract.

a. Op on money
b. Earnest money
c. Reserva on money
d. Down payment
16. S orally o ered to sell a certain diamond ring .to B for P50,000.00. B accepted the o er and
to prove that he was in earnest, he gave S P1,000.00. The par es agreed that the delivery
of the ring and the payment of the price would be made 30 days later. On due date:

a. S may collect from B P50,000.00.

b. S may collect from B P49,000.00.

c. S cannot enforce payment because the contract was not reduced to wri ng.

d. S cannot enforce payment because there was no contract of sale yet.

17. On June It 2010, S sold to B 50 units of machines which were scheduled to arrive from
Japan the following day on board the, vessel "MT Nippon Maru". The sale was evidenced
by an invoice iden fying each machine by serial number. Each machine was priced at
ti
ti
fi
ti
ti
ff
fi
fi
ti

ti

fi
ft

ti
fi
ti

fi

ti

ti

fi

ti
ti
ti

ti

ti
fi

ti
ff

 P10,000.00. Unknown to the par es, 30 units were damaged beyond repair by seawater on
May 31, 2010. Based on the foregoing, which of the following statements is incorrect?

a. B may rescind the whole contract.

b. B may demand delivery of the remaining 20 units and pay the price therefor.

c. S may require payment of the whole shipment from B since S was not aware of the
damage caused on the machines at the me of sale.

d. S has no op on to rescind the whole contract or require payment of the remaining 20

units.

18. It refers to the delivery of the thing sold from hand to hand in case of movables, or the
taking of possession with respect to immovables, in the presence and with the consent of
the vendor.

a. Actual or real delivery.

b. Tradi o cons tutum possessorium.

c. Tradi o longa manu.

d. Tradi o brevi manu.

19. On May 1 , 2010, S sold to B through a private instrument 20 sacks of corn stored in the
only warehouse of S. On May 10, 2010, S delivered the keys to the warehouse to B. The
delivery made by S to B is known as:

a. construc ve delivery by legal formali es.

b. symbolic delivery by tradi on clavium.

c. tradi o Tonga mane.

d. Tradi on brevi mane,

20. Delivery of incorporeal property may be made through any of the following means, except:

a. execu on of a public document.

ti
ti
ti
ti
ti

ti
ti

ti
ti

ti

ti

ti

ti

 b. placing the tles of ownership in the possession of the vendee.

c. use by the vendee of his rights, with the debtor's consent.

d. execu on of private instrument.

21. One of the following statements on the transfer of ownership of the thing in "sale on trial"
is incorrect. Which is it?

a. Ownership of the thing is transferred to the vendee when he signi es his approval or
acceptance to the vendor.

b. Ownership of the thing is transferred to the vendee when he does an act adop ng the
transac on.

c. Ownership of the thing is transferred to the vendee if the me xed for the return of
the thing has expired and the vendee retains the thing without giving no ce of
rejec on or acceptance to the vendor.

d. Ownership of the thing is transferred to the vendee upon

e. delivery.

22. On March 1, 2010, S sold and delivered to B a television set for P10,000.00 "on sale or
return" giving B up to March.16, 2010 within which to return the television set. On March
10, 2010, the television set was burned through no fault of B. Based on the foregoing,
which of the following statements is incorrect?

a. B must pay' the price of the television set.

b. S must bear the loss since the me for the return of the television set had not yet
expired.

c. The ownership of the television set was transferred to B upon delivery to him.

d. B must bear the loss of the television set.

23. In one of the following cases, delivery of the goods to a carrier for the purpose of
transmission to the buyer transfers ownership to the la er. Which one is it?

a. When by the terms of the bill of lading, the goods are to be delivered to the seller or
his agent.

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.

c. When the seller draws a bill of exchange on the buyer for the price of the ' goods and
transmits such bill of exchange and the bill of lading to the buyer to secure acceptance
or payment of the bill of exchange and the buyer dishonors the bill of exchange.

d. When the owner does not reserve the right of possession or ownership of the thing
sold upon delivery to the carrier.

24. In a contract of sale of personal property the price of which is payable in installments, the
vendor may exercise any of the following remedies, except to:
ti
ti
ti

ti

ti

tt

ti

fi

fi
ti

ti

 a. exact ful llment of the obliga on, should the vendee fail to pay any number of
installments.

b. cancel the sale, should the vendee's failure to pay cover two or more installments.

c. foreclose the cha el mortgage on the property if the vendee's failure to pay cover two
or more installments and recover any de ciency a er the foreclosure sale if they have
s pulated it.

d. foreclose the cha el mortgage on the property if the vendee's failure to pay cover two
or more installments but he may no longer recover any de ciency a er the foreclosure
sale.

25. Baldomero bought a residen al house and lot from Sta. Ana Realty for P250,000.00 giving
a down payment of P10,000.00and promising to pay the balance of P240,000.00 in 20
years in installments of P1,000.00. A er paying 72 installments, Baldomero defaulted in
the payment of the 73rd installment and subsequent ones. Despite the grace- period he
had earned, he was not able to make any further payments. Accordingly, Sta. Ana Realty
cancelled the sale. How much cash surrender value is Baldomero en tled to receive?

a. P45,100.00.

b. P39,600.00.

c. P36,000-00.

d. P41,000-00.

26. S stole a ring belonging to 0. Subsequently, the ring was o ered for sale at a public auc on
where X, who was not aware that the ring was stolen, bought it. A few weeks later, 0 saw
the ring and recognized it as his. Based on the foregoing informa on, which of the
following statements is correct?

a. 0 may recover the ring from X without reimbursing X since 0 was unlawfully deprived
of the ring.

b. 0 may recover the ring from X but he has to reimburse X since X acquired tle to the
ring.

c. 0 may no longer recover the ring even if he is willing to reimburse X.

d. X did not acquire tle to the ring since the auc oneer had no valid tle thereto.
ti



fi

tt
tt
ti
ti
ti

ft
fi
ti
ft
ff
fi
ti
ti
ft
ti

ti

ti
 27. Where the seller of goods has a voidable tle thereto, but his tle has not been avoided at
the me of the sale, the buyer acquires tle' to the goods. Such acquisi on of tle has the
following requisites, except the:

a. buyer must have bought the goods in good faith.

b. buyer must have bought them for value.

c. buyer bought them without no ce of the seller's defect of tle.

d. party from whom the seller obtained the goods must ra fy the sale.

28. An unpaid seller has the following rights, except:

a. A lien on the goods or the right to retain them for the price while he is in possession of
them.

b. In case of insolvency of the buyer, a right of stopping the goods in transitu a er he has
parted with the possession of them.

c. A right of repurchase.

d. A right to rescind.

29. An unpaid seller loses his lien on the goods in the following cases, except:

a. when he delivers the goods to a carrier or other bailee for the purpose of transmission
to the buyer without reserving the right of ownership in the goods.

b. when the buyer or his agent lawfully obtains possession of the goods.

c. when the seller waives his possessory lien.

d. when he has obtained judgment for the price of the goods.

30. Three of the following are the requisites in order that an unpaid seller may exercise his
right of stoppage of transitu. Which one is not?

a. The seller is unpaid.

b. The seller has not parted. with the possession of the goods.

c. The goods are in transit.

d. The buyer is or becomes insolvent.

31. Goods are s ll in transit:

a. If the buyer or his agent obtains delivery of the goods before their arrival at the
appointed des na on.

b. when the carrier acknowledges possession of the goods as bailee for the buyer a er
the arrival of the goods at the place of des na on.

c. if the carrier or other bailee wrongfully refuses to deliver the goods to the buyer or his
agent.
ti

ti
ti

ti

ti

ti

ti
ti

ti

ti
ti

ti

ti

ft
ti
ft
 d. if the goods are rejected by the buyer, and the carrier or other bailee con nues in
possession of them, even if the seller has refused to received them back.

32. An unpaid seller's right to resell the goods is available in the following cases, except:

a. if the goods are of a perishable nature.

b. when the seller reserved the right to resell the goods.

c. when the buyer has defaulted in the payment of the price for an unreasonable me.

d. when the seller has lost his lien on the goods.

33. Barrameda bought a piece of land from Sarmiento for a lump sum of P120,000.00. Aside
from men oning the boundaries in the contract which is required in the sale of real estate,
the contract also states that the piece of land consists of1,000square meters. Before
delivery, Sarmiento discovered that the piece of land actually contains 1,200 square
meters.

a. Sarmiento must deliver all the1,200 square meters; Barrameda must pay
P120,000.00plus an addi onal amount for the excess of 200 square meters.

b. Sarmiento is required to deliver only1,000square meters; Barrameda must pay the

contract price of P120,000.00.

c. Sarmiento must deliver all the1,200square meters; Barrameda has to pay only
P120,000.00.

d. Neither party is required to perform the obliga on because of mistake.

34. Sison sold a registered piece 'of land to Bau sta on May 1,2010in a public instrument. On
May 3, 2010, Sison sold in a private instrument the same piece of land to Cruz, who took
physical possession of the land. Neither buyer was aware of the sate made to the other.

a. The land belongs to Bau sta.

b. The land belongs to Cruz.

c. The land s ll belongs to Sison, because both sales are void.

d. The land 'should be divided equally between Bau sta and Cruz to give e ect to both
sales.

35. Refer No. 34. Assume that on May.5, 2010, Sison sold the Landin a public instrument to
Domingo who was not aware of the two previous sales. Domingo then registered the sale
with the Register of Deeds.

a. The land belongs to Bau sta.

b. The land belongs to Cruz.

c. The Iand belongs to Domingo.

d. The land will be equally divided among the three buyers.

ti
ti

ti
ti
ti

ti

ti
ti

ff

ti

ti

 36. On June1,2010, Sanchez sold to Borlaza in a private instrument a certain computer. Two
days later, Sanchez orally sold the same computer to Contreras who immediately took
possession of the computer. Neither party was aware of the sale made to the other.

a. The computer belongs to Borlaza.

b. The computer belongs to Contreras.

c. The computer will be co-owned by Borlaza and Contreras to give e ect to both sales.

d. Both sales are void. Accordingly, Sison will s ll be the owner.

37. This refers to the implied warranty on the part of the seller that he has the right to sell the
thing at the me when ownership is to pass, and that the buyer from that me shall have
and enjoy legal and peaceful possession of the thing.

a. Warranty against hidden defects.

b. Warranty against evic on.

c. Warranty of ownership.

d. Warranty of possession.

38. Three of the following are the requisites in order that the vendee may enforce the vendor's
liability in case of evic on. Which one is not?

a. There must be a nal judgment depriving the vendee of a part or the whole of the
thing sold.

b. The vendee must have appealed from such judgment rendered against him.

c. The depriva on of the vendee is based on a right prior to the state or an act imputable
to the vendor.

d. The vendor is no ed of the suit at the instance of the vendee.

39. This refers to an encumbrance imposed upon an immovable for the bene t of another
immovable belonging to a di erent owner.

a. Easement or servitude

b. Real estate mortgage

c. Pledge

d. Cha el mortgage.
tt

ti
ti

ti
fi

fi

ti
ti

ff

ti

ff
fi
ti

 40. Three following are the requisites in order that the buyer may inform the seller's liability
for hidden defects Which one is not?

a. The defects of the thing sold must not be patent or visible.

b. The ducts render the thing un t for the use for which it is intended, or which diminish
its tness for such use to an extent that had the buyer been aware thereof, he would
not have bought it.

c. The defects must be exis ng at the me of sale.

d. The defects must be capable of determina on by an expert.

41. Alessandra purchased from Rose Tan's Department Store, two pieces of imported iden cal
bathrobe, one of which was embroidered with "HIS" and the other with "HERS", which she
planned to give to his friends Jules and Assunta as a wedding present. She inspected the
items very carefully with the assistance of the store clerk before paying for them. While
she was wrapping them shortly a er she arrived home, she no ced that the hem of the
'HERS" bathrobe had disintegrated because it was loosely sewn, which damage was not
apparent because of the many colors of the apparel.

a. Alessandra can rescind the sale of both pieces of bathrobe.

b. Alessandra can rescind only the sale of the bathrobe marked "HERS"

c. Alessandra cannot rescind because she should have inspected the item well when she
bought it.

d. Alessandra must pay for both pieces of bathrobe.

42. The vendor shall be liable for the death of the animal sold when the following requisites
are present, except:

a. the disease existed at the me of sale.

b. the disease is the cause of the death of the animal.

c. the disease must be redhibitory.

d. the animal dies within 3 days from the me of purchase.

43. The jus ed refusal of the buyer to accept the goods produces the following e ects,
except:

a. buyer has no duty to return the goods, unless otherwise s pulated.

b. tle to the goods does not pass in to him,

c. buyer shall not be obliged to pay the price.

d. buyer is obliged to cons tute himself as depositary un l he returns the goods.

44. In three of the following cases, the buyer is not en tled to suspend the payment of the
price. Which one will give him the right to suspend payment?
ti
fi
ti

fi

ti
ti
ti
fi

ft
ti

ti

ti

ti

ti

ti

ti

ff
ti
 a. Disturbance in the possession or ownership of the thing purchased.

b. The seller gives him security for the return of the price.

c. It has been s pulated that the buyer shall pay the price notwithstanding any
disturbance.

d. The disturbance is a mere act of trespass.

45. A contract of sale with a right to repurchase and other contracts including a contract
purpor ng to be an absolute sale shall be presumed to be an equitable mortgage in the
following cases, except when the:

a. price of sale with right to repurchase to repurchase is unusually inadequate.

b. vendor remains in possession of the thing sold.

c. period to repurchase the property is extended.

d. vendee binds himself to pay the taxes due.

46. An owner of a rural land has the right of legal redemp on of an adjoining rural land sold if
the following requisites are present, except when the:

a. adjoining rural land is not' separated by any apparent servitudes for the
bene t of other estates..

b. land sold does not exceed one hectare.

c. grantee owns another rural land.

d. grantee owns an urban land.

47. This refers to the right of a n adjoining owner of an urban land to be given preference to
the purchase of a small piece of urban land which is held for specula on before it o ered
for sale to others.

a. Right of subroga on.

b. Right of redemp on.

c. Right of pre-emp on.

d. Right of repurchase.









fi
ti

ti
ti
ti
ti

ti

ti

ff
 48. A, B, and C, are co-owners of an undivided parcel, of land. On May 1, A sold his share to X;
on June 1, 13 sold his share also to X; and on July 1, C sold his share also to X. Each sale was
with a right to repurchase.

a. X may compel A, B and C to come to an agreement to repurchase the whole land.

b. Each co-owner may exercise his right of redemp on on the whole property including
the share of the other two co-owners.

c. Each co-owner may exercise his right of redemp on only with respect to his share.

d. Any two of the three co-owners may redeem the property propor onately.

49. R, S and T are co-owners of an undivided parcel of land. R sold his 1/3 interest to T
in a deed of absolute sale. Which is correct?

a. S may exercise the right of redemp on on the interest sold by R to T.

b. cannot exercise the right of redemp on.

c. The sale made by R to T is voidable.

d. S may redeem only 1/2 of the interest sold by R to T.

50. T steals the goods of 0 and deposits them in the warehouse of W. W issues to T a
warehouse receipt which by its terms indicates that goods are to be delivered to the order
of T, therea er. nego ates the receipt to H who purchases me document in good faith and
for value.

a. H may obtain delivery of the goods from W because H was an innocent purchaser for
value.

b. H can obtain delivery of the goods from W because the issuance of the ware house
receipt to T conferred a valid to him over the goods.

c. H can obtain delivery of the goods from IV because the acquisi on b y H of the
warehouse receipt in good faith; cured the defect in T's tle.

d. H cannot obtain delivery of the goods because he acquired whatever tle T had over
such goods, which is the tle of a thief.

51. O delivered certain goods to C, a common carrier, which issued to O a bill of lading sta ng
that the goods are to be delivered to bearer. Without O's fault, the bill of lading was stolen
by T who therea er nego ated the document by mere delivery to H ,purchaser for value
and without no ce of the defect in the tle of T.

a. The nego a on of the bill of lading by T to H is not valid because of T's defec ve tle.

b. The nego a on of the bill of lading by T to H is valid. T's defec ve tle does not have
any e ect on the validity of the nego a on.

c. H may not obtain delivery of the goods from C because H acquired whatever tle T had
over the document.

d. H acquired tle to the document but not to the goods.

ff

ti
ti

ft
ti
ti
ti
ti
ft

ti
ti
ti

ti

ti
ti

ti
ti

ti
ti

ti

ti
ti
ti
ti

ti

ti
ti
ti

ti
 52. D , obtained from C a- loan amoun ng to P50,000.00, the same being secured by a
mortgage on D's lot. Therea er, C assigned his credit right to T with no ce to D. Based on
the foregoing facts, which of the following statements is incorrect?

a. T cannot collect from D if D does not give his consent to the assignment.

b. T can collect from D. D's consent to the assignment is not required.

c. T can collect from D and if D cannot pay, T can foreclose the mortgage on the lot.

d. The no ce to D of the assignment is su cient. D must make his payment to T and no

longer to C.

53. A kind of mortgage which, although lacking some formality, form of words, or requisites
prescribed by law, shows the inten on of the par es to charge real property as security for
debt and contains nothing impossible or contrary to law is known as:

a. legal mortgage.

b. equitable mortgage.

c. conven onal mortgage.

d. voluntary mortgage.

54. If a movable property is sold separately to two or more di erent vendees, ownership shall
belong to the person:

a. who in good faith rst paid the purchase price in full.

b. who in good faith rst recorded the sale in the Registry of Property.

c. who in good faith presents the oldest tle.

d. who in good faith rst took possession of the property.

55. A contract of sale is perfected upon:

a. compliance with the requirements of the law as to form.

b. delivery of the object of the contract.

c. the mee ng of the minds. on the thing which is the object of the contract and upon
the price.

d. demand.

56. It is a contract by virtue of the terms of which the par es thereto promise and obligate
themselves to enter into another contract at a future me, upon the happening of certain
events, or the ful llment of certain condi ons.

a. Contract of adhesion

b. Contract of op on



ti
ti
ti

ti

fi
fi
fi
fi

ft
ti
ti

ti
ffi
ti

ti

ti
ti

ff

ti

 c. Contract of sale

d. Auto-contract

57. A contract of sale is not a:

a. principal. contract.

b. nominate contract.

c. consensual. contract.

d. real contract.

58. The following may not be valid objects of. a contract of sale, except:

a. objects outside the commerce of men.

b. Illicit things.

c. Future goods.

d. impossible service.

59. This is a kind of construc ve delivery where the vendor remains in possession of the
property sold, such as by virtue of a, lease agreement with the vendee.

a. tradi o longa manu.

b. Tradi on brevi manu.

c. Tradi on cons tutum possessorium.

d. delivery to common carrier.

60. When the goods are delivered to the buyer, the ownership thereof passes to the buyer in:

a. sale on approval.

b. sale or return.

c. sale on trial.

d. contract to sell.

61. S promised to sell his car to B for P200,000.00 giving B 30 days to decide. B accepted the
promise of S and informed S that he (B) would make known his decision before the lapse of
30 days. He also gave S P2,000.00 as considera on so that S would hold on to his promise.
The contract entered into between S and B and the considera on given by B to S are
known as:

a. Op on contract and op on money, respec vely.

b. Contract of sale and earnest money, respec vely.

c. Contract of sale and down payment, respec vely.

d. Contract to sell and reserva on money, respec vely.

ti
ti
ti
ti

ti

ti
ti

ti

ti
ti
ti
ti
ti

ti

 62. Refer to No. 61.

a. S may withdraw his o er to sell before the lapse of 30days by informing B.

b. S may not withdraw his o er before the lapse of 30 days.

c. S may withdraw the o er by returning the amount of P2,000.00 that was paid to him
by B.

d. S may withdraw his o er even before the lapse of 30days if a favorable price, i.e., more
than P200,000.00, is o ered to him by another prospec ve buyer.

63. The Recto Law applies to which of the following examples of sale?

a. Sale of a car on straight term.

b. Sale of house and lot on installment.

c. Sale of car on installment where the buyer cons tuted a mortgage on his truck.

d. Sate of a piano on installments where the buyer cons tuted a cha el mortgage on the
piano.

64. S sold to B a lot through a deed of absolute sale duly acknowledged before a. notary public.
Three days later, S sold the same lot to X, also through a deed of sale duly acknowledged
before a notary public. X had the sale registered with the Register of Deeds. Neither B nor
X was aware of the sale made by S to the other and neither took physical possession of the
lot. Who is the present owner of the lot?

a. B, because he was the rst purchaser in good faith.

b. X, because he registered the sale in good, faith.

c. Neither B nor X.

d. S, as long as he does not surrender physical possession of the lot.

65. Purchased from S a laptop computer worth P100,000.00. The terms of sale provide for a
down, payment of P20,000.00 with the balance payable in 8 equal monthly installments
secure the balance, S required B to execute a cha el mortgage on the laptop computer and
a real mortgage on B's lot. B complied with all the requirements but defaulted in the
payment of, the third and fourth installments. These remedies are available to S except
one. Which is it?

a. Cancel the sale.

b. Exact ful llment of the obliga on.

c. Foreclose the real mortgage and therea er recover any de ciency from B.

d. Foreclose the cha el mortgage and therea er foreclose the real mortgage in case of
de ciency.
fi

fi

tt
ff
ff
ff
ff
fi
ff
ti

ft

ft

ti
tt

ti
ti

fi

tt

 66. S and B entered into a contract whereby S transferred to B a speci c piano for the price of
P80,000.00, while B gave to S cash of P30,000.00 and a diamond ring worth P50,000.00.
What kind of contract was entered into between S and B?

a. A contract of barter.

b. A contract of sale.

c. The contract is partly a contract of barter and partly a contract of sale.

d. The contract is an innominate contract because the inten on of the par es cannot be
determined.

67. One of the dis nc ons between op on money and earnest money is that earnest money
is:

a. the considera on paid for the purpose of holding one to his promise to buy or sell a
determinate thing for a certain period of me.

b. not part of the purchase price.

c. proof of the perfec on of the contract of sale.

d. paid before the perfec on of the contract of sale.

68. This refers to the warranty of the seller that he has the right to sell the thing at the me
when ownership is to pass, and which can be enforced if the buyer is deprived pf the
property sold by a nal judgment in court.

a. Warranty against hidden defects.

b. Warranty of merchantable quality.

c. Warranty against evic on.

d. Warranty of possession.

69. P, who was in Hong Kong, made an overseas call to A, his friend, to sell P's lot in Quezon
City immediately as P needed cash. Accordingly, A sold the lot to B. The deed of sale was in
a public document. The sale of P's lot is:

a. valid.

b. rescissible.

c. unenforceable.

d. void.

70. One of the dis nc ons between a contract of sale and a contract for a piece work is that a
contract for a piece of work:






ti
ti
ti

ti
ti

fi
ti

ti
ti



ti

ti

ti

fi

ti
ti
 a. is not governed by the Statute of Frauds.

b. refers to a contract for the delivery goods which are manufactured in the ordinary
course of business although the same are not available.

c. has for its par es the vendor and the vendee.

d. has for its considera on the price of the thing.

71. A and B are co-owners of a rural lot not exceeding 1hectare.The lot is surrounded on its
four sides as follows: on the North, by the road; on the East, by the lot of X consis ng of 2
hectares; on the South, by the lot of Y consis ng of 2 '/2 hectares; and on the West, by Z's
lot consis ng of 2 ¾ hectares. A sells his undivided interest in the agricultural lot to T, who
owns several hectares of rural land in the area. Who has the right of legal redemp on over
the undivided interest in the lot sold by A to T?

a. B

b. X

c. Y

d. Z

72. It is an a rma on of fact or any promise by the seller rela ng to the thing which has a
natural tendency to induce the buyer to induce the buyer to purchase the same, relying on
such promise or a rma on.

a. Cordon

b. False representa on

c. Warranty

d. Sellers talk

73. In one of the following cases, the ownership of the thing object of the contract is
transferred to the other party upon delivery.

a. Contract to sell.

b. Agency to sell.

c. Sale or return.

d. Sale on approval.

74. Under the "Realty Installment Buyer Act", the buyer of real estate on installment payments
may pay an installment defaulted without addi onal interest if he has paid at least two
years of installments. The law is applicable to sales/transac ons involving:

a. industrial lots.

b. commercial buildings.

c. residen al lots.

d. sales to tenants under the Land Reform Law.

ti
ffi
ti

ti

ti

ti

ffi
ti

ti

ti

ti

ti
ti

ti
ti
 75. S, the owner of a rent-a-car business, leased one of his cars to B for one month. On the day
of the expira on of the lease and while B was s ll in physical possession of the car, B
o ered to buy the car from S for P200,000.00. Believing the price to be a good one, S
readily accepted B's o er and then and there executed a deed of absolute sale in favor of B
who immediately paid the price in cash. Therea er, B drove away from place of S.

a. The delivery of the car by S to B is by cons tutum posssessorium.

b. This delivery of the car by S to B is by tradi o longa manu.

c. The delivery of the car by S to B is tradi o brevi man

d. There was no delivery because B should have turned over the physical possess
on of the car to & upon the expira on of the lease so that could make the proper
delivery to him upon the execu on of the contract of sale.

76. B called on S at the shoe factory of S for the la er to make a pair of shoes which B would
be needing in the play "Romeo and Juliet." B provided S with the descrip on of the pair of
shoes that he wanted since S did not manufacture the kind of shoes that B needed. S
quoted a price of P1,000.00 which B agreed to pay upon delivery to him of the pair of
shoes: Since S and B had been neighbors for a long me, their agreement was sealed with
handshake.

a. The contract between S and B becomes enforceable if Shad already completed making
the pair of shoes.

b. The contract between S and B becomes enforceable if B had already paid the amount
agreed upon for the work.

c. The contract between S and B is enforceable even if it is s ll executory.

d. The contract cannot be enforced by either party because it was not in wri ng.

77. Which of the following contracts of sale is void?

a. Oral sale of a piece of land made through an agent whose authority is in a public
instrument.

b. Sale of a piece of land in a public instrument made through an agent whose authority
was given orally byte principal.

c. Sale of a piece of land in a private instrument made through an agent whose authority
is in a public instrument.

d. Sale of a piece of land in a public instrument made through an agent whose authority
is in a private instrument.

78. D deposited his goods in the warehouse of W who issued to D aware house receipt sta ng
that the goods are to be delivered to bearer. Therea er, A obtained possession of the
warehouse receipt from D in exchange for what A claimed to be a bar of gold, which,
however, was discovered by D to be fake. D demanded the return of the warehouse receipt
from A but the same had already been nego ated by A to H who purchased the document



ff

ti

ff

ti
ti
ti
ti
ti
ti
tt
ti
ft

ti
ft

ti

ti
ti



ti
 for value, in good faith and without no ce that D was deprived possession thereof by
fraud. The nego a on by A to His:

a. voidable.

b. valid.

c. void.

d. rescissible.

79. B purchased a pair of leather shoes from the store of S. Shortly a er leaving the store, B
decided to return and requested S, the owner, to place a protec ve rubber covering on the
sole of each shoe. Since the job required at least 30 minutes to complete, B le the store of
S to shop at the neighboring stores. When he returned to the store of S a er 30 minutes,
the pair of shoes was nowhere to be found. It turned out that C, a sales clerk, had sold the
pair of shoes that B bought to X, another customer.

a. X acquired ownership of the pair of shoes earlier bought by B.

b. X did not acquire ownership of the pair of shoes earlier bought by B.C.

c. B remained the owner of the pair of shoes that he had bought despite its sale to X.

d. S reacquired ownership of the pair of shoes when it was brought to him for addi onal
work.

80. S sold 500 shares of stock of San Manuel Corpora on to B at P50.00 per share. The transfer
of the ownership of the shares of stock may be made through any of the following means,
except:

a. execu on of the sale in a public instrument.

b. The giving by S to B of the, power to vote in the stockholders' mee ng of San Manuel
Corpora on and its exercise thereof by B.

c. the indorsement by S of the stock cer cate. covering the 500 shares of stock and its
placing it in the possession of B.

d. the issuance by S of the o cial receipt for the full payment of the purchase price of the
shares by B.

81. Which of the following documents of tle requires indorsement and delivery for its
nego a on?

a. A warehouse receipt which states that the goods are to be delivered to bearer.

b. A bill of lading which states that the goods are to be delivered to the order of a
speci ed person but such person indorsed it in blank.

c. A warehouse receipt which states that the goods are to be delivered to bearer but the
bearer indorsed it to a speci ed person.

d. A bill of lading which states that the goods are to be delivered to a speci ed person.

ti
fi

ti

ti
ti

ti
ti
ffi
fi

ti
ti
ti
fi

ti

ti
ft
ti

fi
ft
ft

ti

 82. S and B executed a deed of absolute sale involving a parcel of land supposedly containing
2,000 square meters. B paid a lump sum of P2,200,000.00 for the purchase. Based on the
foregoing facts, which of the following statements is .correct?

a. If the parcel of land is actually*'2,200 square meters in area, S has to deliver only 2,000
square meters. Thereof and B must pay P2,200,000.00 as agreed upon.

b. If the parcel of land is actually1,800 square meters in area, S must deliver only 1,800
square meters and B has to pay only the price equivalent to 1,800 square meters.

c. If the parcel of land actually contains2,200squaremeters, S must deliver all of 2,200

square meters with B s ll paying the amount of P2,200,000.00.

d. If the parcel of land actually contains2,200squaremeters, S must deliver all of2,200

square meters but B must pay a propor onate amount for the addi onal 200square
meters in addi on to the price of P2,200,000.00.

83. S sold a speci c parcel of land separately to the following persons: on July 1, 2010, to X, in
a public document; on July 5,2010 in a private document to Y, who took physical
possession of the land; and on July 9, 2010, to Z, who registered the sale with the Register
of Deeds. Neither X, Y nor Z was aware of the sale made to the other two buyers. Who is
the owner of the parcel of land?

a. X, because he was the rst purchaser.

b. Y; because he took physical possession.

c. Z, because he registered the sale.

d. S, because the mul ple sales he made rendered each sale a void contract.

84. In which of the following cases is the seller not obliged to make any payment to the buyer
for breach of warranty against evic on?

a. When such warranty has not been agreed upon,

b. When there was no s pula on exemp ng the seller from liability.

c. When there was a s pula on exemp ng the seller (who was in good faith) from breach
of warranty and the waiver was made by the buyer without knowledge of the risks of
evic on.

d. When there was a s pula on exemp ng the seller (who was in good faith) from breach
of warranty and the waiver was made by the buyer with knowledge of the risks of
evic on.

85. Mother Lilly purchased from San ago Farms four horses with di erent colors: a white, a
gray, a black, and a brown, which Mother Lilly intended to use in a movie to be starred in
by four movie actors each one of whom represents one of the colors. Each horse was
cer ed to be t by the veterinarian who was hired by the par es to examine them.
Mother Lilly paid a separate price for each of the horses. the lming of the movie, the
brown horse was always sick and could not func on as the three others. It was
subsequently discovered that it was su ering from an incurable heart ailment.
ti
ti
ti
fi

fi
ti
fi
ti
ti
ti
ti
fi
ti
ti
ti
ti

ti

ti
ti
ti

ti
ff
ti

ti

fi

ti

ff

ti

 a. Mother Lilly may ask for the rescission of the sale of the brown horse only since she
paid a separate price for each of the horses.

b. Mother Lilly may ask for the rescission of the sale of all the horses.

c. Mother Lilly may not ask for rescission of the sale of any horse because she freely
entered into the contract of sale.

d. Mother Lilly is bound by the sale of all the four horses and must honor such contract
because the veterinarian cer ed that all horses were t.

86. The buyer is obliged to pay interest for the period between the delivery of the thing sold
and the payment of the price in the following cases, except if:

a. there is a s pula on to pay interest.

b. there is no such s pula on but the thing sold produces fruits or income.

c. the buyer is in default, from the me of judicial or extra-judicial demand for the
payment of the price.

d. none of the foregoing.

87. Earnest money possesses three of the following characteris cs. Which is the excep on? a.
It is part of the purchase price.

b. is proof of the perfec on of the contract of sale.

c. It is paid at the me of the perfec on of the contract of sale.

d. It is paid as a considera on for the purpose of holding one to his promise to buy or sell
a determinate thing fora certain period.

88. S sold his farm lot to B with S reserving his right to repurchase the property within ve
years from the date of the sale. Based on the foregoing facts, which of the following
statements is incorrect?

a. The sale is subject to a suspensive condi on.

b. B may validly sell the lot to third person against whom S may exercise the right to
repurchase provided the right is registered

c. B is subrogated to the rights and ac ons of S.

d. B's ownership of the lot becomes irrevocable if S fails to exercise his right to
repurchase within the period stated.

89. D borrowed P50,000.00 from C. The obliga on is secured by a mortgage of D's house and
lot. Therea er, C assigned his credit right to T. Based on the foregoing facts, which of the
following statements is incorrect?

a. The consent of D to the assignment is not required in order that T may collect from D.

b. The assignment of the credit right did not carry with it the assignment of the
mortgage.

c. If D pays C before D was no ed of the assignment, D is released from liability.

ti
ft
ti
ti
ti
ti

ti
ti

ti
ti
fi
fi

ti

ti

ti

ti
ti

fi

ti

ti
fi

 d. The assignment, to bind third persons, must be in a public instrument and recorded
with the Registry of Property.

90. A contract of sale possesses three of the following characteris cs. Which is the excep on?

a. Bilateral, since the par es are bound by reciprocal presta ons.

b. Commuta ve, because the par es give almost equivalent values.

c. Onerous, since there is an exchange of valuable considera on.

d. Real, because the object of sale must be delivered for the perfec on of the contract.

91. S sold his lot to B reserving his right to repurchase the same within 5 years from the date of
the execu on of their agreement. The sale together with the right to repurchase was
registered with the Register of Deeds. Two years a er the execu on of the sale. B sold the
same lot to X who was not aware that S reserved his right to repurchase the lot.

a. The sale by S to B is subject to a suspensive condi on.

b. The sale by S to B is subject to a resolutory condi on.

c. The sale by S to B is subject to a condi on which is neither suspensive or resolutory.

d. The sale by S to B is absolute without any condi on.

92. Refer to Item 91.

a. S may repurchase the lot from X within the ve-year period although X was not aware
of the reserva on of the right to repurchase.

b. S may not repurchase the lot because X was not aware of the reserva on of the right.

c. S may repurchase the lot from X if X was aware of such reserva on.

d. The sale by B to X is void because the acquisi on of the lot by B from S is subject to a
con ngency.

93. B wanted to buy the car of S for P100,000.00 and to show that he was in earnest, he gave
to S P2,000.00 which S accepted. There was no wri en -instrument signed by S and B to
incorporate their agreement. Based on the foregoing, which of the following statements
does not pertain to the contract?

a. B, therea er, needs to pay P98,000.00.

b. The giving of earnest money binds S and B to a contract of sale.

c. B, therea er, must pay C the amount of P100,000.00.

d. The contract between S and B is enforceable although there was no wri en agreement
between them.

94. When the buyer is jus ed in refusing to accept the goods being delivered to him and has
relayed such refusal to the seller, such refusal produces the following e ects, except:

a. buyer has no duty to return the goods unless s pulated.

b. tle to the goods does not pass to the buyer.

ti
ti
ft
ft
ti
ti

ti

ti
ti
fi

ti

ti

fi
ti

ti
ti
ti
ti
ft
tt

ti
ti
ti

ti

ti
ti

ti
ff
tt

ti

 c. buyer is not obliged to pay the price.

d. buyer automa cally becomes a depositary of the goods

95. The unpaid seller, in addi on to his right to retain the goods while he is in possession of
them, has the following rights: except the right:

a. of stoppage in transitu.

b. to resell the goods.

c. to rescind the sale.

d. to bid when the goods are resold.

96. One of the following is a natural element of a contract of sale.

a. The price of the goods.

b. The goods sold.

c. The s pula on to pay interest on the purchase price of the goods.

d. The seller's warranty against hidden defects.

97. On January 1, 2010, Santos o ered to sell his only diamond ring for P50,000.00 cash to
Bersola who was interested in buying the same. Santos told Bersola that he was giving the
la er up toJanuary31,2010to decide whether to buy the ring or not. Bersola agreed to the
op on and gave Santos op on money ofP500.00. On January18,2010, Santos found
another buyer who was willing to pay P70,000.00cash. Santos personally visited Bersola to
inform him that he was withdrawing his o er unless Bersola agreed to buy the ring for
P70,000.00.

a. Santos may validly withdraw the o er without being held liable for breach of contract
since it would be unfair to him if he would receive only P50,000.00 as the price of his
ring when another person is willing to buy it at a higher amount.

b. Bersola is bound to pay P70,000.00 if he were to avail himself of his op on to buy the
ring.

c. Santos cannot withdraw the o er because the op on is founded upon a considera on

of P500.00.

d. Bersola needs to pay only P49,500.00 if he decides to buy the ring since the op on
money of P500.00 that he paid forms part of the purchase price.

98. S and B executed a deed of absolute sale duly acknowledged before a notary public
whereby S conveyed his car to B forP100,000.00. B, however, informed. S that he would be
going away on a business trip and that he would be taking the car from the place of S when
he returned a er two weeks. Three days a er the sale of the car to B, S sold the same car
to X through a deed of absolute sale which was also acknowledged before notary public. X
then drove the far away from the place of S and had the sale recorded with the Land
Transporta on O ce which issued to him a cer cate of registra on of the car in his
name. Neither B nor X was aware of the sale made to the other un l B returned from his
business trip.
tt
ti

ti
ti
ti

ft
ti

ffi

ti
ti
ff
ff

ff

ff
ft

ti

fi
ti

ti

ti
ti
ti
ti
 a. Preference shall be given to B since the car was rst sold to him.

b. X did not acquire tle to the car because S was no longer the owner when the sale was
made to him.

c. X acquired tle to the car because S appeared to be the owner in the record of the
Land Transporta on O ce.

d. S remained the owner of the car because the sale made to one buyer nulli ed the sale
to the other.

99. D gives his ring worth P25,000.00 to C in considera on of C's giving of P10,000.00and a
bracelet worth P15,000.00to D. Based on the. foregoing facts, which of the following
statements is incorrect?

a. The transac on between D and C is a sale if they intended it to be a contract of sale.

b. The transac on between D and C is a barter if they intended it to be a contract of

barter.

c. The transac on is barter regardless of the inten on of the par es because the bracelet
is of more value thanP10,000.00.

d. The transac on is barter if the inten on of the par es cannot be determined.

100.S, the proprietor of a rent-a-car enterprise, sold his business and his eet of 10 cars to B
for a lump sum of P3,000,000.00. S physically delivered the permits and other papers for
the opera on of the business and the vehicles to B at the la er’s o ce except for one car
which the par es agreed shall be leased by S for one month while he was winding up his
a airs in the Philippines as he was then leaving for abroad. In the mean me, the contract
of sale and the contract of lease, though already signed by the par es, have not been
acknowledged before a notary public, and hence, were s ll private instruments.

a. The ownership of the car leased by S remained with S.

b. The ownership of the car leased by S has been transferred to B although there was no
physical delivery thereof to B.

c. The execu on of the private instrument for the sale of the business and the cars
likewise transferred the ownership to B of the car leased by S.

d. Both the contract of sale and the contract of lease must be acknowledged before a
notary public by the par es before the ownership of the car leased by S is transferred
to B.

101.King Gems Company, a jewelry manufacturer, shipped ve dozen necklaces to Queen

Jewelry Store. The shipment was made under a wri en agreement allowing Queen Jewelry
Store to return the necklaces within a period of one month from delivery. Based on the
foregoing facts, which of the following statements is incorrect?

a. Title to the necklaces passed to Queen upon delivery.

b. If Queen does not return the necklaces within one month, the sale to it becomes
absolute.
ff

ti
ti
ti
ti
ti
ti
ti

ti
ti
ti
ffi

ti

ti
ti
fi
ti
ti
tt

fi
ti
tt

ti

ti
ffi
fl
ti
fi

 c. If the necklaces are destroyed by re without the fault of Queen, Queen need not pay
the price thereof.

d. If the necklaces are destroyed through the fault of Queen, Queen must pay the price
thereof to King Gems Company.

102.On January 3,2010,D deposited his goods with W, warehouseman, who issued a
warehouse receipt which states that the goods are to be delivered "to the order of D". On
January5, 2010 D indorsed the receipt to A. On January8,2010,however, D sold the goods
represented by the receipt to X who informed W immediately of the sale to him of the
goods by D. At that me, W was not aware that D had indorsed the receipt to A.

a. A acquired tle to the goods as represented by the receipt at the me such receipt was
indorsed to him

b. X acquired tle to the goods because at the me of the sale to him, W, the
warehouseman was not yet aware that D had indorsed the receipt to A.

c. D retained ownership of the goods because he cannot indorse the receipt to one
person and sell the goods to another.

d. W will be bound to deliver the goods to X.

103.One of the following statements pertaining to a sale by auc on is incorrect. Which is it?

a. A sale by public auc on is perfected when the auc oneer announces its perfec on by
the fall of the hammer, or in any other manner.

b. Before perfec on, any bidder may retract his bid.

c. Before perfec on, the auc oneer may withdraw the goods unless the auc on was
announced to be without reserve.

d. The seller may validly par cipate in the bidding without prior no ce to the bidders.

104.S sold a laptop computer to B for P120,000.00 with B giving a payment of P10,000.00 and
promising to pay the balance in equal monthly installments. B likewise executed a cha el
11 mortgage on the computer and a real mortgage on his lot to secure the payment of the
balance of the purchase price. A er paying the rst two installments, B defaulted in the
payment of next three installments. S may avail himself of any of the following remedies
except to:

a. At exact ful llment of the obliga on.

b. cancel the sale.

ti
fi
ti
ti
ti

ti
ti
ti
ti

ti
ft
fi

ti

fi

ti
ti
ti
ti

ti
ti

tt

 c. foreclose the cha el mortgage and recover any de ciency during the foreclosure sale if
there is an agreement to that e ect.

d. foreclose the real mortgage and recover the de ciency during the foreclosure sale
even if there is no agreement to that e ect.

105.B bought from Century Proper es, Inc.- a 1,000 square-meter lot located beside the
Manila Interna onal Airport on which he intended to construct a warehouse
condominium. The terms of the sale provided for the payment of the contract price of
P300,000.00 in 60 equal monthly installments of P5,000.00 each. A er having paid 36
installments, B defaulted in the payment of the succeeding - installments. As a
consequence, Century cancelled the sale. B now wants to claim the return of the cash
surrender value of the payments he had made pursuant to the "Realty Installment Buyer
Act", otherwise known as the Maceda Law.

a. B is en tled to a cash surrender value of50% ofP180,000.00, or P90,000.00 under the

Maceda Law.

b. B is en tled. to a cash surrender value of 55% ofP180,000.00, or P99,000.00 under the

Maceda Law.

c. B is en tled to a cash surrender value of90% ofP180,000.00, or P162,000.00 under the

Maceda Law.

d. B cannot invoke the Maceda Law for the return of any of the payments he had made
for the lot he purchased.

106.S shipped FOB Manila, perishable goods worth P50,000.00 to B who is based in Cebu. B
remi ed a check amoun ng toP50,000.00 for the price of the goods. While the carrier was
on its way to Cebu, S was informed by his bank that the check issued by B was dishonored
for insu cient funds. On further inquiry, he learned that B had become insolvent.
Accordingly, S obtained physical possession of the goods from the carrier A er ra fying B.
S resold the goods.

Case A - If the goods are resold for P52,000.00, the pro t ofP2 000 00 belongs to B since tle had
already passed to him.

Case B - If he proceeds of sale, net of incidental expenses a rated to P4 ,000.00, S can recover the
loss of P3,O00.00from B.

a. Born Cases are true

b. Cases are false.

c. Case A is true. Case B is false.

d. Case A is false. Case B is true.

107.B visited a store selling lamps, light bulbs and similar items. He informed the seller that he
was buying 2units of a50-wa “Philips” bulb. Though he intended to use the 2 bulbs for the
headlight of his car, he did not inform the seller of his purpose. Therea er, he installed the
2 units of “Phillips" bulb on his car but they did not func on. Based on the foregoing,
which of the following statements is incorrect?

a. The seller is liable for breach of warranty of tness for a par cular purpose.
tt
ti
ti
ti
ffi

ti

tt

ti

tt

ti
ff

ff

fi

fi
fi
fi
ti
ti
ft
ft
ft

ti
ti
 b. The seller is not liable for breach of warranty of tness for a par cular purpose
because the buyer did not rely on the seller's skill or judgment.

c. The seller is not liable to B since the seller's warranty is only for merchantability, or
that the bulb is t for the general purpose for which it was intended.

d. There is no warranty of tness for a par cular purpose since the bulb was sold to B
under its trade name.

108.S delivered a diamond ring to B for B's necklace worthP10,000.00and cash of P15,000.00
which B is scheduled to deliver one week a er their agreement. The contract between
Sand B was not in wri ng. The contract between S and B is:

a. an enforceable contract of barter.

b. an enforceable contract of sale.

c. Can enforceable contract that is partly a sale and partly a barter.

d. A sale but it is unenforceable not being in wri ng and the cash to be paid by B is at
least P500.00.

109.These contracts are presented to you for evalua on:

I. A contract for the delivery of an ar cle which is manufactured in the ordinary

course of business, but the ar cle was not available at the me of the contract
was executed.

II. A contract for the delivery' of an ar cle to be manufactured especially for the
customer and upon his special order.

In your evalua on of the said contracts:

a. Both contracts refer to a contract of sale.

b. Both contracts refer to a contract for a piece of work.

c. I refers to a contract of sale; II refers to a contract for a piece of work.

d. I refers to a contract for a piece of work; it refers to a contract of sale.

110.These statements are presented to you:

I. The sale of a thing having a poten al existence is not e ec ve if the thing

does not come into existence.

II. Sale of hope or expectancy produces e ects even if the thing hoped for
does not come into existence.

In your evalua on of the foregoing statements:

a. Both are true.

b. Both are false.





ti

ti
fi
ti


fi
ti

ti
ti
ti

ff
ti

ft
ti
ti

fi

ff
ti
ti

ti

 c. Only Statement I is true.

d. Only Statement II is true.

111.The following terms are presented to you:

I. Contract to sell.

II. Sale or return.

III. Sale on trial.

IV. Agency to sell.

Upon the delivery of the goods by the owner thereof to the other party, ownership is not
transferred in:

a. I, II and III

b. I, III and IV

c. I, II and IV

d. II, III and IV

e. 111.

112.Salvosa shipped FOB Manila goods worth P20,000.00 to Bordelo who is based in Davao
City. While the carrier was on a stopover in Cebu City, Salvosa was informed by his bank
that the check issued by Bordelo was dishonored by reason of insu ciency of funds. He
also learned from the Credit Bureau that Bordelo had become insolvent, Accordingly,
Salvosa no ed the carrier that he was taking possession of the goods.

The right availed of by Salvosain the situa on is known as the right of:

a. stoppage to transitu.

b. Subroga on.

c. a achment.

d. garnishment.

113.Refer to No. 112. A er obtaining actual possession of the goods, Salvosa o ered them for
sale at public auc on. Based on the foregoing facts, which of the following statements is
incorrect pertaining to the sale of the goods?

a. Salvos--4 mabid hyae public auc on provided there is no ce of his par cipa on.

b. The buyer of the goods at the public auc on acquires Title to the goods as against
Bordelo.

c. If the goads are soldt P19a,000.00 net of cost of selling and other expenses, Salvosa
may recover the amount ofP1,000.00 from Bordelo.

d. If the goods are sold at P22,000.00net of cost of selling and other expenses, the pro t
of P2,000.00 belongs to Salvosa.
tt

ti

ti

fi

tt
ti
ft



ti
ti
ti

ti
ffi

ti
ff
ti

fi
 114.Antonio, Benito, Carmelo and Donato are co-owners of an agricultural lot which they
inherited from their parents. Antonio sold his undivided share in the property to Teodulfo.
Either Benito, Carmelo and Donato may purchase Antonio’s share in the property from
Teodulfo by virtue of their right of

a. legal redemp on.

b. pre-erup on.

c. conven onal redemp on.

d. consolida on.

115.C, owner of certain goods, deposited the goods with W, a warehouseman, who issued to D
a warehouse receipt which states that The goods are to be delivered to the order of D. D
may nego ate the warehouse receipt by any of the following means; except by:

a. Mere delivery.

b. Indorsement completed by delivery.

c. Blank indorsement completed by delivery.

d. Indorsement to bearer completed by delivery.

116.Palmares ordered from Superstar sportswear Company, a sportswear manufacturer,

2 dozens of jackets and jogging pants Styled and designed by Palmares for the use of his
basketball team. This was not the type of sportswear normally manufactured by Superstar.
The price agreed upon by the par es was P72, 000.00. A er the ar cles were
manufactured,Palmares refused to accept them and claimed that he was not liable since
the contract did not. comply with the Statute ofFrauds.

a. Palmares is liable although the contract was not in wri ng.

b. The contract is a contract of sale.

c. The contract is a contract to sell.

d. There was no contract at all because no wri ng was executed by the par es.

117.It refers to the right which the vendor reserves to himself to repurchase the thing sold,
with the obliga on to reimburse the vendee of the price, the expenses of the contract, any
other legi mate payments made therefor and the necessary and useful expenses made on
the thing sold.

a. Conven onal redemp on.

b. Legal redemp on.

c. Equity of redemp on.

d. Right of pre-emp on.

118.The following are characteris cs of certain contracts:



ti
ti
ti
ti
ti
ti
ti

ti

ti
ti
ti

ti

ti

ti

ti

ti

ti

ft

ti
ti

 I. Nominate

II. Real

III. Aleatory

IV. Commuta ve

A contract for the sale of a sweepstakes cket is considered-as:

a. I and II.

b. I and IV.

c. I and 111.

d. III and IV.

119.These statements are presented to you for evalua on:

I. Op on money is part of the purchase price.

II. Earnest money is proof of the perfec on of the contract of sale.

In your evalua on of the said statements:

a. Both are true.

b. Both are false.

c. Only I is true.

d. Only II is true.

120.S sold a computer to B for P120, 000.00 under the following terms: P20, 000.00 down;
balance payable in 10 equal monthly installments with an accelera on clause. To secure
payment of the balance, B executed a cha el mortgage on the computer and a real
mortgage on his lot. A er paying the rst two installments defaulted in the payment of the
third, fourth and h installments. S wants to recover in full the balance ofP80,000.00
even in case of de ciency so he consults you on which of the following courses of ac on to
take to achieve that purpose:
ti

ti

ti

fi
fi
ft
ft

ti
fi
ti

tt

ti

ti
ti
 I. Exact ful llment of the balance by suing B and have the computer sold for
the execu on of the judgment against.

II. Foreclose the cha el mortgage on the computer.

III. Foreclose the real mortgage on the lot.

Based on your evalua on of the foregoing data, the course of ac on that you will likely recommend
to S to achieve his purpose is:

a. Either I or II.

b. Either Ii or III.

c. Either I or Ill.

d. Any of I, II or III.

121.On January 5, Samonte, who was going abroad as an immigrant, o ered to sell his car for
P150,000.00 to Baldriga. He informed Baldriga, however, that he wanted to rent the car for
P1,000.00per day up to January 15 as soon as the sale is executed since

his ight was not scheduled un l the 16TH. Baldriga accepted both o ers, and accordingly, he and
Samonte executed a contract of sale and a contract of lease simultaneously on the same day,
January 5. All the while, Samonte remained in physical possession of the car un l January 10 when
the car was stolen without his fault. The car was never recovered.

a. Samonte must bear the loss by returning the sum of P50,000.00 since, Baldriga did
not become the owner not having obtained physical possession thereof.

b. Baldriga must bear the loss because he acquired ownership of the car despite its
lack of physical delivery to him.

c. Both Samonte and Baldriga must share equally in the loss.

d. Kamonte must bear the loss by returning P150, 000.00less P5, 000, 00, the rental
of the car for 5 days, in par al compensa on.

122.S, who is based in Manila, shipped FOB Cebu goods worthP50, 000.00 to B. While the
goods were on their way to Cebu, S was informed by his bank that the check remi ed by B
was dishonored for insu cient funds. Accordingly, S no ed the carrier not to proceed
with the delivery and that he was taking possession of the goods. Based on the foregoing
facts, which remedy is available to S?

a. Resale of the goods.

b. Rescission of the sale.

c. Either resale or rescission of the goods, at the op on of S.

d. Newer resale nor rescission.

123.Before perfec on in a sale by auc on:

I. Any bidder may withdraw his bid.

fl
fi
ti

ti

tt

ti

ffi
ti

ti

ti

ti

ti
ti
fi

ti

ff
ff

ti
tt
 II. The auc oneer may withdraw the goods from the sale unless the auc on has been
announced to be without reserve.

The statement is true for:

a. Both I and ll.

b. Neither I nor II.

c. I only.

d. II only.

124.The following contracts of sale are presented to you:

I. S sold a certain ring to B. It turned out that the ring was stolen from 0, its
true owner.

II. S, a jewelry store sold a certain ring to B. The ring, however, actually
belongs to 0 who had lost it a few days earlier.

III. S, a pawnshop, sold at a public auc on a certain ring with B as the winning
bidder.0, however, is the true owner of the ring but the pawnshop thought
it was owned by X, a defaul ng borrower of the pawnshop.

In your evalua on of the above sales, B acquired tle to the ring in:

a. I and II.

b. II and Ill.

c. I and 111.

d. None of the three contracts.

125.

126.Refer to No.125. O may recover the ring. from B without the need of reimbursement in:

a. I only.

b. II only.

c. Ill only.

d. All three contracts.

127.S sold a brand-new electric typewriter to B for P20,000.00 on a credit term of 30days. The
agreement between the par es provides that B may return the typewriter within the same
period. Ten days a er delivery to B, burglars entered the o ce of B and carted away
various valuables including the typewriter he bought from S.

a. B must pay the price of the typewriter to S.

b. B is not obliged to pay the price of the typewriter because the loss thereof was without
his fault.

ti

ti

ft

ti
ti

ti

ti

ffi

ti

 c. S must shoulder the loss because B's ownership of the typewriter was not absolute
since he had the op on to, return it within 30 days.

d. The loss must be shared equally by S and B in fairness to both.

128.The following statements are presented to you:

I. A bearer document of tle if it is specially indorsed can be nego ated therea er

only by indorsement completed by delivery.

II. A bearer nego able instrument if it is specialty indorsed be nego ated therea er
only by indorsement completed by delivery.

In your evalua on of the foregoing statements:

a. Both statements are true.

b. Both statements are false.

c. Only I is true.

d. Only 11 is true.

129.S sold to B a speci c car for P200,000.00. The terms of the sate provide the following:
down payment of P40,000.00; balance payable in 8 equal monthly installments of
P20,900.00 each, with a real estate mortgage to be executed by B on his lot to secured the
said balance. A er paying 3 installments, B defaulted the payment of 3 more installments.
Based on the foregoing facts, the following remedies were presented to B:

I. Exact ful llment of the obliga on.

II. Cancel the sale.

III. Foreclose the real mortgage on the lot and recover any de ciency in the
foreclosure sale.

If you were B, the remedy that you may avail yourself of is:

a. Either I or ll.

b. Either II or Ill.

c. Either I or Ill

d. Any of the three remedies presented.

130.An. unpaid seller may avail himself of the following remedies, except the right to:

a. Retain the goods while he is in possession of them.

b. Resume possession of the goods at any me while they are in transit.

c. Buy the goods at any public sale if he decides to resell them.

d. Rescind the sale.

131.S sold his lot to X on April 1, 2010. The deed of sale was duly acknowledged by the par es
before a notary public. However, X did not take physical possession of the lot. On April
fi

ti
ti
ft

fi
ti
ti

ti

ti

fi

ti
ti

ft
ft

ti
 10,2010, S sold the same lot to Y under a deed of sale which was s ll to be notarized. Y
immediately took physical possession of the lot. Y was not aware of the previous sale to X.
When X visited the property, he found Y already building a structure thereon. It was also
then that he discovered that S had sold the same lot to Y.

a. The lot belongs to X.

b. The lot belongs to Y.

c. The lot will be co-owned by X and Y in fairness to both of them since they were in good
faith.

d. The lot s ll belongs to S un l it can be determined who between X and Y is the owner
of the lot.

132.A contract of sale is perfected upon the:

a. full payment of the purchase price by the buyer.

b. delivery of the object of the contract to the buyer.

c. Mee ng of minds between seller and the buyer on the object and the price.

d. Acknowledgment of the deed of sale by the seller and the buyer before a notary
public.

133.These statements are presented to you:

I. It is part of the purchase price.

II. It is paid before the contract of sale is perfected.

III. When given, it en tles the party making the payment to hold the recipient
from o ering the object of the contract to other persons within the period
agreed upon.

IV. It is proof the perfec on of the contract of sale.

Based on your evalua on of the foregoing statements, which of the following is true?

a. I and III refer to op on money.

b. II and III refer to op on money.

c. II and IV refer to earnest money.

d. III and IV refer to op on money.

134.Orlando is the owner of an agricultural lot consis ng of 9,000 square meters (or 9 hectare).
The lot is surrounded on the North by Nonato's lot consis ng of 7,000 square meters; on
ti

ff
ti

ti
ti
ti
ti

ti

ti
ti

ti

ti
ti

 the East, by Espino's lot consis ng of 6,500 square meters; on-the South, by Serrano's lot
consis ng of 8,500 square meters; And on the West, by the road, across which was
Wagan's lot consis ng of 6,300 square meters. Orlando donates the lot to Benito, his
brother, who is the owner of several rural lots in . Of the adjoining owners, only Serrano
expressed to Benito his desire to redeem the lot. The right of legal redemp on is available
to:

a. Serrano because it was only he who o ered to redeem the lot.

b. Wagan because he is the owner of the smallest adjoining lot.

c. Espino because he is the owner of the smallest lot that is nearest to the lot of Benito.

d. None of the adjoining owners may avail himself of the right of legal redemp on
including Nonato.

135.Barrameda visited the furniture store of Farrales to buy window frames for his
house .which was. undergoing construc on. Not nding any window frame. of his liking, he
made a sketch of the design he wanted and asked Farrales if he- could make four pieces of
the speci ca on for delivery a er one week. Farrales answered that he could at the price
of P2,000.00. per frame. The window frames ordered by Barrameda was of such odd shape
and design that when completed and installed, Barrameda's house would be the only one
in the community that had windows of such type. Barrameda le the sketch with Farrales
who did. not ask any down payment since he had previously transacted with Barrameda
and knew him. During all the me that Barrameda and Farrales were dealing with each
other, Arnulfo, the assistant of Farrales, was present. When the window frames were
nished, Farrales proceeded to the house of Barrameda to deliver them but Barrameda
refused to accept them saying that he had changed his mind, and that at any rate, the
contract was unenforceable, not being in wri ng.

a. The contract is enforceable because the sketch made by Barrameda was su cient to
bind him.

b. The contract is enforceable because Arnulfo can tes fy in court to prove its existence.

c. The contract is enforceable even if no wri ng was executed by the par es.

d. The contract is unenforceable because no wri ng was subscribed by the par es.

136.Refer to the preceding number. What contract was entered into between Barrameda and
Farrales?

a. Contract of sale.

b. Contract for a piece of work.

c. Contract to sell.

d. An innominate contract.

137.A contract for a piece of work is di erent from a contract of sale in that in a contract for a
piece of work:

a. the Statute of Frauds does not apply.

fi

ti

fi

ti

ti

ti
ft
ti
ff

ff
ti
ti
ti
ti
fi

ti

ft
ti

ti
ffi
ti
ti

 b. the ar cle object of the contract is manufactured or procured in the ordinary course of
business.

c. there is usually a stock which is kept on hand and made available to anyone.

d. the ar cle is not available, there is no change or modi ca on of it when it is ordered

by the customer.

138.Which of the following statements is common to both sale or return and sale on trial?

a. Ownership of the thing is transferred upon delivery to the buyer.

b. Ownership of the thing is transferred to the buyer at some future me.

c. Ownership of the thing may be reverted to the seller should the buyer return it within
the me agreed upon.

d. In case the thing is lost through a fortuitous event a er the lapse of the me to keep or
return it and the buyer was s ll in possession of it, the risk of loss is with the buyer.

139.The full payment of the price is a posi ve suspensive condi on in:

a. contract to sell.

b. contract of sale.

c. sale or return.

d. sale on trial.

140.The non-payment of the price is a nega ve resolutory condi on in:

a. contract to sell.

b. contract of sale.

c. contract of agency to sell.

d. sale on approval.

141.When there is a s pula on exemp ng the vendor from the obliga on to answer for
evic on and the vendee made the waiver with knowledge of the risks of evic on and
assumed the consequences, such waiver is known as:

a. waiver intencionada.

b. waiver consciente.

c. forfeiture of rights.

d. surrender of rights.

142.In case of evic on, the vendor shall be liable to the vendee only for the value of the thing
sold at the me of evic on in which of the following cases?

a. When there is waiver intencionada

b. When there is waiver conscience

ti
ti
ti
ti

ti

ti

ti

ti
ti

ti

ti

ti
ti
ft

fi
ti
ti

ti

ti

ti

ti

ti

 c. When the vendor was in bad faith and there was no s pula on exemp ng the vendor
from liability in case of evic on.

d. When the vendor was in bad faith and there was s pula on exemp ng the vendor
from liability in case of evic on.

143.S and B entered into a contract for the sale of the car of S to B for P100,.000.00. In reality,
however, B did not give any amount to S because the la er intended to donate the car to
B. In this case:

a. The contract between S and B is void because the prices simulated.

b. The contract between S and B is a valid contract of dona on.

c. The contract between S and B is a void contract of dona on.

d. The contract between S and B is a valid contract of sale.

144.On July 1, Serena sold to Berbola through a private instrument a speci c piano for
P20,000.00. Simultaneous with the sale, the par es agreed that Serena would lease the
piano for one week in prepara on for a concert a er which Berbola could physically get
the piano. Before the week was over, Serena sold the same piano, also in a private
instrument and for P25,000.00, to Jezebel who immediately loaded the piano in her van.
Neither Berbola nor Jezebel was aware of the sale made to the other. Who is the owner of
the piano?

a. Berbola

b. Jezebel

c. Berbola and Jezebel, as co-owners.

d. Serena who retained ownership because of Berbola and Jezebel's con ic ng rights.

145.B bought two carabaos, one male and one female, from, S. He paid P2,000.00and
P3,000.00, respec vely, for the animals which he intended to use for breeding. Later, the
female carabao was found un t for breeding because of a redhibitory defect.

a. B can rescind the sale of the female carabao only because he paid a separate price for
it.

b. B can rescind the sale of both animals because he would not have bought the male
carabao without the female carabao.

c. B cannot rescind the sale of either animal under the "let the buyer beware" rule.

d. B can rescind the sale of both animals only if he had paid a single price for both them.

146.What may the considera on consist of in an op on contract in order to bind the o erer?:

a. Monetary.






ti
ti
ti
ti
fi
ti

ti
ti
ft
ti
ti
tt

ti
ti
ti
ti

ti

fl
fi
ti
ti

ff

 b. Other things or undertakings.

c. Either (a) or (b).

d. May not be a valuable considera on, i.e., may be gratuitous.

147.The following statements pertaining to sale by auc on are presented to you:

I. The auc oneer may not withdraw the goods from the auc on sale if the sale was
announced to be without reserve.

II. The auc oneer may withdraw the goods from the auc on sale if the sale was
announced to be with reserve.

In your evalua on of the foregoing statements:

a. Both statements are true.

b. Both statements are false.

c. Only Statement I is true.

d. Only Statement II is true.

148.Under the Maceda Law, in determining the number of installments paid by the buyer, the
following payments are included, except:

a. down payments.

b. deposits.

c. op on money.

d. none of the foregoing.

149.Necessaries. include everything indispensable for sustenance, clothing and medical

a endance, and which of the following?

a. Dwelling

b. Educa on

c. Transporta on

d. All of the foregoing.

150.While her parents were away on a visit to the province, M, 17 years old, entered. into a
contract for the purchase of textbooks prescribed in his course and an evening gown.
Which sale to M is/are considered valid and binding, i.e., not voidable?

a. sale of the textbooks.

b. The sale of the evening gown.

c. Both (a) and (b).

d. Neither (a) nor (b) because a minor is incapable of giving consent.

tt
ti
ti
ti
ti

ti
ti

ti

ti
ti
ti

 151.B bought a refrigerator from S for P20,000.00 which is payable in20 installments at
P1,000.00 per month. A er paying6 installments, B defaulted in the payment of the
seventh and eight installments. Should S decide to enact ful llment of the obliga on, how
much, as a rule, may S collect from B?

a. The total amount of installments defaulted, i.e.,P2,000.00.

b. The remaining balance of P14,000.00.

c. Either (a) or (b) at the op on of S.

d. Neither (a) nor (b) because S has to wait for the sale of the property to third persons.

152.A, B and C were the co-owners of a lot in the ra o of 1:2:1. A died. He was succeeded to
the property by S, his son and heir. Who may redeem the lot of A from S?

a. B, because as the owner of a bigger por on, he enjoys preference in the exercise of the
right of legal redemp on.

b. C, so that he and B will have an equal share in the lot.

c. B and C, in propor on to the share of each in the lot.

d. Neither B nor C may exercise the right of legal redemp on.

153.When is the vendor bound to deliver the thing sold?

a. If the vendee has not paid him the price.

b. If no period for the payment of the price has been xed in the contract.

c. If the buyer has been given the bene t of the period.

d. None of the foregoing.

154.These statements concerning the double sale of an immovable are presented to you:

I. The rst buyer who was in good faith at the me the sale was made to him,
remains in good faith not withstanding that he subsequently obtains knowledge of
the second sale.

II. In order that the second buyer may be given preference he must possess good
faith from the me of sale in his favor un l the registra on of the same.

In your evalua on of the foregoing statements:

a. Both statements are true.

b. Both statements are false.

c. Only Statement I is true.






fi
ti
ti

ti
ti


ft

ti

fi

ti

ti
ti

ti
fi

ti
ti

fi

ti

 d. Only Statement 11 is true.-

155.A credit right is considered to be in li ga on:

a. as soon as a complaint is led by the creditor against the debtor.

b. when the debtor has led his answer to the complaint.

c. when the case is scheduled for pre-trial conference between the par es.

d. when the trial has started.

156.D owed C P100,000.00. The debt is evidenced by a promissory note and secured by a
mortgage of D's lot. Before due date, C assigned his credit right to T by execu ng a deed of
assignment but without the par es informing D. On due date, T went to D to collect the
debt at which me D learned of the assignment.

a. T cannot collect from D because the la er was not informed of the assignment at the
me it was made.

b. T can collect from D but if D cannot pay, T can foreclose the mortgage in the lot.

c. T can collect from if D cannot pay, T can foreclose the mortgage which is deemed
assigned together with the credit right.

d. T can only go a er C, the assignor, since the assignment was without D's knowledge.

157.What does the assignor of a credit warrant?

a. The legality and existence of the credit.

b. The solvency of the debtor.

c. Both (a) and (b).

d. Neither (a) nor (b).

158.The right of pre-emp on di ers from the right of redemp on in that in pre-emp on:

a. the ac on is directed against the buyer.

b. the ac on is directed against the seller.

c. the right arises a er the sale.

d. there can be a rescission of the original sale.

159.The following are certain modes of acquisi on of property :

I. Purchase

II. Dacion en pago

III. Succession

IV. Dona on

Legal redemp on is available when the transferee acquired the property through:
ti
ti
ti
ti

ti
ti
ft

ft

ti
fi
fi

ff

ti
ti
tt

ti
ti

ti

ti

ti

ti

 a. I or II.

b. III or IV.

c. I or Ill.

d. II or IV.

160.A sale between husband and wife is valid in which of the following cases?

a. When a separa on of property has Teen agreed upon in the marriage se lements or
when there has been judicial separa on of property.

b. When price of the sale is a moderate amount.

c. When the object of the sale is a necessary such as food or clothing.

d. When the spouses are living separately.

PLEDGE, MORTGAGE AND ANTICHRESIS - DIAGNOSTIC EXERCISES

MULTIPLE CHOICE. Select the best answer by wri ng the le er of your choice.

1. One of the dis nc ons between pledge and mortgage is that pledge:

a. is cons tuted to secure the ful llment of a principal obliga on.

b. requires absolute ownership on the part of the person cons tu ng the security.

c. requires that the one cons tu ng the security must have the free disposal of the thing or
be legally authorized for the said purpose.

d. requires the actual delivery of the thing given as security to the creditor or a third person
by common agreement.

2. In order to bind third persons, a pledge:

a. must be recorded with the Register of Deeds.

b. must be in a public instrument showing a descrip on of the thing pledged and the date of
the pledge.

c. is su cient that it be in a private instrument showing a descrip on of the thing pledged

and the date of the pledge.

d. must be accompanied by an a davit of good faith.




ffi
ti
ti
ti

ti

ti
ti
ffi
ti
fi

ti

ti
tt



ti

ti
ti

ti
tt

 3. The following is required in order that a cha el mortgage will bind third persons.

a. The cha el mortgage must be accompanied by an a davit of good faith and recorded in
the Cha el Mortgage Register.

b. The cha el mortgage must be in a public instrument showing a descrip on of the thing
mortgaged and the date of the cha el mortgage. .

c. It is su cient that the cha el mortgage be in wri ng, public or private.

d. The thing mortgaged must be delivered to the creditor.

4. The following is required in order that a real mortgage will bind third persons,

a. The real mortgage must be accompanied by an a davit of good faith and recorded with
the Registry of Property.

b. The real mortgage must be in a public instrument showing a descrip on of the thing
mortgaged and the date of the real mortgage.

c. It is su cient that the real mortgage be in wri ng, public or private.

d. The real mortgage must be recorded in the Registry of Property.

5. When is appropria on by the creditor of the thing given as security allowed in pledge, real
mortgage and cha el mortgage?

a. When the thing given as security in real mortgage is not sold at two public auc ons.

b. When the thing given as security in pledge is not sold at two public auc ons.

c. When the thing given as security in cha el mortgage is not sold at one public auc on.

d. No appropria on is allowed in either pledge, real mortgage or cha el mortgage.

6. This is a s pula on 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.

a. Cons tutum possessorium

b. Pactumcommissorium

c. Legal subroga on

d. Redemp on

7. D borrowed P30,000.00 from C. To secure the debt, D pledgedh is ring, wristwatch, and
necklace. Before the debt could bepaid, C died leaving X, Y and Z as heirs. By agreement amongthe



























tt
ti
ffi
ffi
tt
tt
ti
ti
tt


ti
ti
ti

ti

tt

tt

tt

tt
ti
ffi
ti
ffi




tt

ti

ti
ti

ti



ti

 heirs who inherited the credit, the ring would secure theshare of X of the credit, the wristwatch the
share of Y, and thenecklace the share of Z. Later, D pays X P10,000.00.

a. D can demand the ex nguishment of the pledge of the,ring.

b. X may release the pledge of the ring.

c. The pledge of the ring will remain un l the shares of Yand z are paid by D

d. D can demand the ex nguishment of the pledge of thering, wristwatch and necklace
because there has beenpar al payment.

8. T he following may be the object of pledge, except,

a. all movables within the commerce of men whichsuscep ble of possession.

b. bills of lading.

c. shares of stock

d. parcels of land.

9. A kind of mortgage which lacks the formali es required by law,but nevertheless shows the
inten on of the par es to secure adebt with real property is known as:

a. conven onal mortgage.

b. voluntary mortgage.

c. equitable mortgage.

d. legal mortgage.

10. The debtor/pledgor has the following rights, except to:

a. ask for the return of the thing pledged a er he has paidthe debt, its interests, and with
expenses in a propercase.

b. con nue to be the owner of the thing pledged unless it isexpropriated.

c. require the deposit of the thing with a third person if it isin danger of being impaired or
lost through thenegligence or willful act of the pledgee.

d. alienate the thing pledge without the consent of the pledgee.

11. The creditor/pledgee has the following rights, except to:

a. retain the thing in his possession un l the debt is paid.

b. use the thing pledged even without authority if such useis necessary for its preserva on.
























ti
ti
ti
ti

ti

ti
ti

ti

ti
ft
ti

ti

ti

 c. demand reimbursement of the expenses made for thepreserva on of the thing.

d. automa cally appropriate the thing pledged upon defaultof the debtor in the payment of
his debt.

12. On March 1, 2010, D obtained a loan of P10,000.00 from C. Tosecure the debt which is
payable on May 1, 2010, D pledged apromissory note amoun ng to P12,000.00 which was
executedin his favor by M. The promissory note is due April 25, 2010 andproperly endorsed by D to
C.

a. On April 25, 2010, C can collect the note of P12,000.00from M. The en re proceeds will
belong to C.

b. On April 25, 2010, C ccn collect the note of P12,000.00from M. However, he must give
P2,000.00 to D.

c. C cannot collect from M. D is the one en tled to collec he note from M.

d. C cannot collect from M. He must sell the note at publicauc on at maturity if D cannot pay.

13. A third person who pledges his property to secure another,person's debt is released from
liability in the following cases,except:

a. when the creditor voluntarily accepts an immovableproperty in payment of the debt.

b. when the creditor voluntarily accepts a movable propertyin payment of the debt.

c. if an extension of me is granted to the debtor by thecreditor with the pledgor's consent.

d. if through some acts of the creditor, the pledgee cannotbe subrogated to the rights,
mortgages and preferencesof the creditor.

14. A pledge is ex nguished through any of the following, except:

a. sale of the thing pledged.

b. appropria on of the thing pledged a er the thing is notsold at one public auc on.

c. wri en abandonment of the pledge in wri ng.

d. return of the thing pledged.

15. D pledged his 100 shares of stock of San Miguel Corpora on toC to secure his debt of
P5,000.00. On due date, t0 was not ableto pay the debt, so C caused the sale of the shares at
publicauc on, The shares of stock were sold at P4,500.00.

a. To ex nguish the obliga on, C may recover thede ciency of P500.00 from O if there in a
s pula on tothat e ect.

b. To ex nguish the obliga on, C may recover the de ciency even if there is no s pula on to
that e ect.




ti

ff
ti

ti

tt

ti
ti

ti
ti
ff
ti

ti
ti
ti

ft
ti
ti

fi

fi
ti
tt
ti
ti

ti
ti

ti
ti

ti



 c. The obliga on is ex nguished even .if there is a de ciency of P500.00. Accordingly, C can
norecover the de ciency.

d. The obliga on is ex nguished only if the proceeds ofsale amount to P5,000.00 or more.

16. This refers to the right of a person to retain a thing un l hereceives payment of his claim in
the cases provided by law suchas one who has executed work on a movable.

a. Conven onal pledge.

b. Voluntary pledge.

c. Legal pledge.

d. Cha el Mortgage.

17. One of the following may not be the object of a real mortgage:

a. Land, buildings, roads and construc on of all kindsadhered to the soil.

b. Fer lizer actually used on a piece of land.

c. Animal houses, pigeon houses or other breeding placesintended by the owner to be

permanently a ached to the land, including the animals therein.

d. Growing fruits that have been gathered from treesplanted on land.

18. D borrowed P100,000.00from C. To secure the debt, Dmortgaged his land and building in
favor of C. The mortgage isregistered with the Registry of Property. Some me later, D soldthe land
and building to X who was not aware of the mortgage o he land and building. Based on the above
informa on, which o he following statements is false?

a. X must respect the mortgage although he was not aparty thereto.

b. X was not bound by the mortgage because he was notof it.

c. If C forecloses the mortgage and the proceeds of theforeclosure sale are not enough to pay
for the debt, Ccan recover the de ciency from D.

d. IfC forecloses the mortgage and the proceeds of theforeclosure sale exceed the amount of
debt, D is en tledto the excess.

19. It is the right of the mortgagor to redeem the property that wasmortgaged a er it was
sold.

a. Equity of redemp on.

b. Right of redemp on.

c. Right of subroga on.

d. Right of pre-emp on.




ti
ti
tt
ti
tt
ti
fi
ti
ti
ft

ti
ti
ti

ti

ti
ti

fi
ti

ft
fi
ti

ti

ft


 20. A cha el mortgage may have the following as object, except:

a. motor vehicles.

b. shares of stock.

c. vessels.

d. oa ng docks and structures which are intended by theirnature and object to remain at a
xed place on a river lake or coast.

21. D borrowed P50,000.00 from C. The obliga on bears interest of10% per annum. To secure
the debt, D agreed with C that thefruits from the agricultural lot of D shall answer for the
interestand the principal obliga on. Assuming the form required by lawwas complied with, the
contract entered into between D and Cfor the applica on of the fruits of the lot to the interest
andprincipal obliga on is known as:

a. an chresis.

b. pledge.

c. real estate mortgage.

d. cha el mortgage.

22. For its validity, the contract referred to in the preceding number:

a. must be in wri ng, whether public or private.

b. must be in a public instrument.

c. may be in any form, whether oral or wri en.

d. may be inferred from the conduct of the par es.

23. The measurement of the applica on of the fruits to the interestand principal obliga on in
the contract referred to in No. 21 isthe actual value of the fruits at the me they are:

a. gathered.

b. applied.

c. gathered less reasonable deprecia on, if any, of theimmovable.

d. Theapplied less reasonable deprecia on, if any, o mmovable.

24. Which of the following statements is incorrect with respect to thecontract referred to in
No. 21?
fi




fl
ti
tt
ti
tt

ti

ti

ti



ti
ti
ti
tt
ti
ti

ti



fi

ti

ti
 a. An immovable belonging to aperson other than the debtor may secure the obliga on of
the debtor.

b. The contract subsists as long as the obliga on of thedebtor remains unpaid.

c. The creditor may appropriate for himself the immovableif the debtor fails to *pay his
obliga on.

d. The debtor may be, compelled by the creditor to enterinto the enjoyment of the
immovable if the creditor desires to exempt himself from the taxes and chargesupon the estate
and the expenses for its preserva onand repair.

25. D pledged his computer to secure a loan which he obtained from C. The debt which
amounts to P10,000.00 is due a er 60 days. Before the due date, C executed an instrument
abandoning thepledge.

I. debt of P10,000.00 is ex nguished.

II. The' pledge of the computer is ex nguished even if Dhas not yet accepted the renuncia on
of the pledge.

III. The pledge is not ex nguished un l C returns the ring to D.

IV. The pledge is ex nguished even if C has not returned the ring to C.

Based or the foregoing, which is false among the fourstatements?

a. I and Ill.

b. II and IV.

c. I and II.

d. II and III.

26. In a contract of pledge, the pledgee/creditormay do thefollowing, except .to:

a. use the thing pledged for purposes of preserva on.

b. retain the thing pledged unl the principal obliga on issa s ed.

c. ask for a subs tute if he was deceived on the substanceor quality of the thing pledged.

d. Sellthe thing pledged without no ce to thepledgor/debtor.

27. The following are the characteris cs of a cha el mortgage,except:

a. the mortgagor must be the absolute owner of theproperty mortgaged.

b. it is an accessory contract.

c. it involves movable or immovable property.

ti

ti

ti
ti
ft
ti
ti

ti
ti
ti
ti

ti

tt
ti
ti

ti

fi



ti

ti
 d. the deed of cha el mortgage must be accompanied byan a davit of good faith to be
binding against thirdpersons.

28. The 'following elements are common in both pledge andmortgage, except:

a. the contract is cons tuted to secure the ful llment of aprincipal obliga on.

b. the property on which the security is cons tuted must bedelivered to the creditor.

c. the debtor must be the absolute owner of the propertypledged or mortgaged.

d. the debtor- must have free disposal of the propertypledged or mortgaged.

29. In the sale of the thing pledged at public auc on, which of thefollowing statements is
incorrect?

a. The sale ex nguishes the principal obliga on regardlessof the amount of the proceeds of
sale.

b. The pledgee can appropriate the thing pledged if it is not sold at the rst public auc on.

c. The creditor has no. right to recover de ciency.

d. The debtor is not en tled to the excess of proceedsunless there is an agreement.

30. Which of the following is a similarity of cha el mortgage andpledge?

a. De ciency is recoverable in case of sale of the thingpledged/mortgaged.

b. The object of the contract is a movable property.

c. The excess of the proceeds of sale over the amount o he obliga on belongs to the
pledgor/mortgagor.

d. An a davit of good faith is required to bind thirdpersons.

31. D borrowed P100,000.00 from C. The loan is secured by amortgage of T's lot. On due date,
D was unable to pay.Accordingly, C foreclosed the mortgage*on the lot and during thepublic
auc on, the lot was sold for P90,000.00.

a. C can recover the de ciency from D.

b. C can recover the de ciency from T.

c. C can recover the de ciency from both D and T.

d. C can no longer recover the de ciency.

32. Consider the following cases:

I. D owes C P10,000.00. To secure the debt, D pledgedhis cell phone. D defaults. The cell
phone is sold forP9,000.00 at the public auc on.























ti

fi
ffi
ti

tt
ti
ti
fi
fi
fi

fi

ti



fi

ti
ti
tt
fi
ti

ft

ffi
ti
fi

ti

ti

 II. D bought a car for P360,000.00 from C. The price, whichispayable in12equal monthly
installments ofP30,000.00, is secured by a cha el mortgage on the car.A er paying 2 installments,
D defaults in the payment of 3 installments. C forecloses the cha el mortgage andthe car is sold at
the public auc on for P280,000.00.

The de ciency is recoverable in:

a. Both I and 11.

b. I only.

c. II only.

d. No de ciency is recoverable in both l and U.

33. D pledged his diamond ring and gold watch to C to secure adebt of P 10, 000.00 .

a. If D defaults and the ring and watch are sold at publicauc on, C may recover any de ciency
if the proceeds of sale amount to less than P10,000.00.

b. if D defaults, C may automa cally appropriate for himself the ring and the watch.

c. If D pays C. P5,000.00 , D may demand either the returnof

d. If C renounces the pledge in wri ng, the pledgeisex nguished although C con nues to
possess the ringand the watch

34. Alpine Corpora on obtained a loan amoun ng to P1,000,000.00from Eastern Bank. To

secure the obliga on, P, the president ofAlpine, mortgaged his own building in favor of the bank.
Thecontract of loan and deed of mortgage have been signed by thepar es but have not been
acknowledged before a notary public,

a. Alpine Corpora on and P are one and the same person.

b. P may validly mortgage his own property to secure theobliga on of Alpine to the bank.

c. The mortgage is not yet binding between the par essince it has not been notarized.

d. The mortgage contract can stand independently from the contract of loan.

35. Pledge and real mortgage are similar in what respect?

a. The object of the contract.

b. Binding e ect against third persons.

c. Recovery of de ciency.

d. The fact that third persons may pledge or mortgage theirproperty to secure another
person's debt.

36. A, B and C obtained a loan from X in the amount of P60,000.00.To secure the debt, A



























fi

fi
ti

ti
ff

fi
ti
ti

ti

ti

tt
ti

ti
ti

tt
ti

ti
ti
ft


ti

fi

 pledged his wristwatch; B, his necklace;and C, his diamond ring. A pays his share of the debt
amoun ngto P20,000.00.

I. The obliga on of A, B and C is solidary.

II. The obliga on of A, B and C is joint.

III. A may demand the return of the wristwatch a erpayment of his share of the debt.

a. I and III are true.

b. II and Ill are true.

c. I and Ill are false.

d. II and Ill are false.

37. D obtained an interest-bearing loan from. ABC Bank amoun ngto P100,000.00To secure
the obliga on, D mortgaged his building to ABC Bank. As added requirement of the loan, a
reinsurance on the building was also obtained by D with ABC Bankas bene ciary. Before the due
date of the loan, the building wasrazed by re.

a. The loan of D amoun ng to P100,000.00 is ex nguishedbut the security remains.

b. Only the security for the obliga on is ex nguished.

c. The proceeds of the insurance policy will be the newsecurity of the loan obliga on which
will subsist.

d. Both the loan and the mortgage security areex nguished.

38. D borrowed P20,000.00 from C. To secure 'the obliga on, Dpledged his ring to C. Before
the due date, C executed a publicinstrument sta ng that he was abandoning the pledge and
informed D about it. In the mean me, the ring remained in thepossession of C.

a. D must accept the renuncia onin order to ex nguish thepledge

b. C must return the ring to D to ex nguish theto

c. D's loan obliga on is ex nguished by reason of theabandonment of the pledge.

d. The pledge of the ring is ex nguished although D doesnot accept the renuncia on or has
not yet received thering from C.

39. To bind third persons, the following contracts must comply withcertain formali es/
requirements:

I. A contract of pledge must be in a public instrumentshowing the date of the pledge and a
descrip on of thething pledged and recorded with the Registry ofProperty.

II. A contract of real estate mortgage must be recorded withthe Registry of Property.

III. A contract of cha el mortgage must contain an a davitof good faith and be recorded in
the Cha el MortgageRegister.
fi























ti
ti
tt
ti

ti
ti
ti

tt

ti

ti

ti
ti
ti
ti
ti
fi

ti
ti
ti
ti
ft

ti
ffi

ti

ti

fi

ti
ti
ti

 a. All statements are true.

b. I and II are true.

c. I and III are true.

d. Il and III are true.

40. Mary Montes and Melary Manalo obtained a loan ofP 100, 000.00from Patricia Palma. The
debtors executed apromissory note which reads as follows:

We promise to pay Patricia Palma or order P100,000.00on April 30, 2004.

(Sgd) Mary Montes

(Sgd.) Melany Manalo

To secure the loan, Mary Montes pledged her diamond ring,while Melany Manalo executed a
mortgage on her lot.

a. Mary Montes may demand the return of her diamond ring if she pays her share of the
debt, while MelanyManalo's share remains outstanding:

b. Melany Manalo may demand the cancella on of themortgage on her lot if she pays her
share of the debt,while Mary Montes's share remains outstanding.

c. Both Mary Montes and Melany Manalo must pay thetotal amount of the debt before Mary
Montes coulddemand the return of the diamond ring, and MelanyManalo the cancella on of the
mortgage on her lot.

d. Patricia Palma may demand payment of the amountofP100,000.00from either Mary

Montes orManalo.

41. As a general rule, any de ciency in the foreclosure sale may berecovered in the following
contracts, except in:

a. cha el mortgage.

b. real mortgage.

c. conven onal pledge.

d. an chresis.

42. As a general rule, in case of excess of the proceeds of theforeclosure sale over the
creditor's claim, the excess shallbelong to the creditor in:

a. cha el mortgage.

b. real mortgage.






















ti
tt
tt
ti

fi
ti

ti
 c. conven onal pledge.

d. an chresis.

43. Recording in the Registry of Property in the appropriate book isrequired for the validity of
the contract of:

a. cha el mortgage.

b. real mortgage.

c. conven onal pledge.

d. an chresis.

44. The delivery required in pledge for its perfec on and validity is:

a. actual delivery.

b. execu on of public instrument.

c. execu on of private document.

d. transfer of tle of ownership.

45. D obtained a loan from C. To secure the debt, D pledged hisring to C. Before due date, C
executed a private documentsta ng that he was abandoning the pledge. In the mean me,
Cremained in possession of the ring and D has yet to express hisacceptance of the abandonment of
the pledge.

a. The pledge of the ring is ex nguished.

b. The pledge is not ex nguished un l C returns the ring.

c. The pledge is not ex nguished unless D accepts the abandonment since it is an act of
generosity.

d. The pledge is not ex nguished because theabandonment should be in a public instrument.

46. D contracted the services of T, a tailor, to sew D's pair of pantswith D providing the cloth
for the purpose. The par es agreedthat Is labor shall be P500.00. The security that T holds for
thepayment of the labor agreed upon is in the nature of:

a. cha el mortgage.

b. legal pledge.

c. conven onal pledge.

d. an chresis.






















ti
ti
ti

tt
tt
ti
ti
ti
ti
ti

ti





ti

ti
ti
ti

ti
ti

ti

ti

ti

 47. The requirement that the thing on which the security iscons tuted must be delivered by
the debtor to the creditor or athird person by common agreement refers to the characteris c ofa
pledge being:

a. an accessory contract.

b. a real contract

c. an indivisible contract

d. a consensual contract

48. The crea on of a lien on the property upon which it is imposed,whoever may be the
possessor of the property, to the ful llmentof the obliga on for whose security it was cons tuted
refers tothe characteris c of a real mortgage being:

a. an accessory contract.

b. an indivisible contract

c. an inseparable contract.

d. a real property in itself.

49. D obtained a loan of P5.000.00from C. The obliga on issecured by a pledge of D's ring
which he delivered to C. Both the loan and the pledge were in a private instrument. While theloan
was outstanding. D sold the ring through a public instrument to the X who was not aware of the
pledge. Under the deed of sale, D obliged himself to deliver the ring physically to X a er a week.
Before X could obtain actual delivery of the ring,he learned that D had earlier pledged the same
and that C wasselling the ring in a public sale because of D's default in thepayment of his debt.

a. X is bound by the pledge made by D to C.

b. X is not bound by the pledge made by D to C.

c. C can sell the ring to sa sfy his claim.

d. X did not acquire ownership of the ring from D.

50. D borrowed P10,000.00 from C the debt being payable in 6months. To secure the debt, D
promised to pledge his ringwithin2 weeks. Two weeks had already lapsed but D had notyet
cons tuted the pledge.

I. C may demand the cons tu on of the pledge.

II. D loses the bene t of the period given to him to pay thedebt; hence, C may demand
immediate payment of thedebt.

a. Both statements are true.

b. Both statements are false.

ti

ti

ti
fi

ti

ti

ti
fi

ti
ti
ti
ft
ti
ti

 c. I is true; II is false.

d. I is false; II is true.

51. Carmona, a creditor of Delantes, telephoned the la er to inform him that he (Carmona)
was abandoning the pledge of the ringwhich Delantes had cons tuted to secure his loan obliga on
toCarmona amoun ng to P20,000.00, Carmona told Delantes thathe would personally deliver the
ring to Delantes within one week.

a. Both the loan obliga on and the pledge are ex nguishedby the abandonment.

b. Neither the loan obliga on nor the pledge is ex nguishedby the abandonment.

c. Only the loan obliga on is ex nguished.

d. Only the pledge is ex nguished.

52. D applied with C for a loan of P100,000.00 at 10% interest perannum promising to
cons tute a mortgage on his condominiumunit to secure the loan within one month from the me
hereceived the proceeds. On the strength of D's promise tofurnish a security, C granted the loan
applica on and gave D theop on to pay the loan on or before the lapse of one year. D,however,
failed to cons tute the mortgage on his condominium unit within one month as he had promised.
A list containing the following possible remedies were presented to you by C for evalua on.

I. Demand immediate payment of the debt from D.

II. Demand that D cons tute the mortgage as he had promised.

III. Foreclose the mortgage on the condominium to sa sfythe claim.

Which of the foregoing possible remedies may you validly recommend to C?

a. I or 11.

b. II or III.

c. I or III.

d. II or Ill.

53. D, your client, is applying for a loan of P200,000.00 with C. He is proposing to C that he will
secure the loan with a cha elmortgage on his car. He made a list containing the items-belowand
asks you to check whether they are correct

I. D will no longer be liable for de ciency to C in case hedefaults in the payment of the loan
and the car is sold a he foreclosure sale for less than P200,000.00.

II. D and C must record the deed of cha el mortgage in theCha el Mortgage Register for the
validity of the cha elmortgage.





















ti
ti
ti

tt
ti
tt

tt
ti
ti
ti
ti
ti
ti

ti
fi



tt

ti
ti

ti
tt
ti

tt

ti

ti
ti
 III. D must execute an a davit of good faith to beappended to the deed of cha el mortgage
to bind thirdpersons.

IV. D will be en tled to the excess of the proceeds of theforeclosure sale over the loan
obliga on in case hedefaults in the payment of the loan.

Which of the foregoing will you relay to D as correct?

a. I, II,and Ill.

b. I, Il and IV.

c. I, Ill and IV.

d. II,Illand IV.

54. D obtained a loan of P1,000,000.00 from C. To secure the debt,D executed deed of
mortgage covering two of his lots, Lot A andLot B, each of which is in the name of D in the
cer cate of tle. The mortgage of Lot A was recorded within one week in the O ce of Registry of
Deeds, In the mean me, D sold Lot A to X , and Lot B to Y. X knew nothing on the mortgage of Lot
A, but Y was aware of the mortgage to Lot B.

a. Both X and Y are bound by the mortgage on the lot sold to each of them

b. Both X and Y will not be bound. In the case of X, the mortgage was not registered.

c. X is bound by the mortgage of Lot A. Y is not bound by the mortgage of Lot B

d. X is not bound by the mortgage of Lot A. Y is bound by the mortgage of Lot B.

PARTNERSHIP - DIAGNOSTIC EXERCISES

TEST I - MULTIPLE CHOICE. Select the best answer by wri ng the

le er of your choice.

1. A contract where two or more persons bind themselves to contribute money,

property or industry to a common fund with the inten on of dividing the
pro ts among themselves.

a. Voluntary associa on.

b. Corpora on

c. Partnership

d. Sale proprietorship.







tt




ti
fi
fi
ti
ti

ti
ti

ti

ti

ffi

ti

ti

ffi

tt

 2. One of the following is not a characteris c of contract of partnership.

a. Real, in that the partners must deliver their contribu on in order for the
partnership contract to be perfected.

b. Principal, because it can stand by itself.

c. Preparatory, because it is a means by which other contracts will be entered

into.

d. Onerous, because the par es contribute money property or industry to the

common fund.

3. One of the following is not a requisite of a contract of partnership. Which is it?

a. There must be a valid contract.

b. There must be a mutual contribu on of money, property or industry to a

common fund.

c. It is established for the common bene t of the .partners which is to obtain

pro ts and divide the same among themselves.

d. The ar cles are kept secret among the members.

4. The minimum capital in money or property except when immovable property

or real rights thereto are contributed, that will require the contract of
partnership to be in a public instrument and be registered with the Securi es
and Exchange Commission (SEC).

a. P5,000.00.

b. P10,000.00.

c. P3,000.00

d. P30,000.00.

5. If the partnership has the minimum capital men oned in No. 4, but the
contract is not in a public instrument or the same is not recorded with the SEG,
the partnership:

a. is void.

b. is voidable.

c. does not acquire juridical personality

d. s ll acquires juridical personality.

6. Joseph and Edward entered into a universal partnership of all present property.
At the me of their agreement, Joseph had afour-door apartment which he
inherited from his father 3 yearsearlier. Edward, on the other hand, had a
shpond which heacquired by dacionenpago from Robert. During the rst year
o he partnership, rentals collected on the four-door apartmentamounted to
fi
ti
ft
fi

ti
ti

ti

ti

fi

ti

ti

ti

fi
ti

 P480,000.00; while sh harvested from the shpond were sold for P300,000.00.
During the same period,Edward received by way of dona on a vacant lot from
an uncle.The partners had a s pula on that future property shall belong tothe
partnership. Which of the. following does not belong to thecommon fund of
the partnership?

a. Fishpond.

b. Rental of P480,000.00

c. Apartment.

d. Vacant land.

7. Vincent and James entered into a universal partnership ofpro ts. At the me of
the execu on of the ar cles of partnership,Vincent had a two-door apartment
which he inherited from hisfather 3 years earlier. James, on the other hand,
had a eet o axis which he purchased 2 years before. In the rst year of
thepartnership, Vincent earned P500,000.00 as a radio talent, whileJames won
P1,000,000.00 in the lo o. During the same period,rentals of P120,000.00 were
collected from the apartment, whilefare revenues of P200,000.00 were realized
from the opera onof the eet of taxis. Which of the following belongs to
thepartnership?

a. Two-door apartment.

b. Lo o winnings of P1,000,000.00.

c. Salary of P500,000.00.

d. Fleet of taxis.

8. A partnership formed for the exercise of a profession which isduly registered is

an example of,

a. Universal partnership of pro ts.

b. Universal partnership of all present property.

c. Par cular partnership

d. Partnership by estoppel.

9. Three of the following partnership contracts are void. Which onis not?

a. A universal partnership of all present property betweenhusband and wife.

b. A universal partnership of pro ts between a man and woman living together

as husband and wife without thebene t of marriage.

c. A par cular partnership between husband and wife.

d. A universal partnership of pro ts between a private individual and a public

o cer.

10. John, Albert and Wilfred are partners in JAW Enterprises. Nothaving
established yet their credit standing, the three partnersrequested Simon, a
ffi
tt
ti
ti
fl

ti

ft

ti

fi

ti
tt

fl
fi
ti
fi
fi

ti
fi
fi

ti
fi
fi

ti

 well-known businessman, to help themnego ate a loan from Carlos, a money

lender. With the consentof John, Albert and Wilfred, Simon represented
himself as apartner of JAW Enterprises. Therea er, Carlos granted a loan
ofP150,000.00to JAW Enterprises. What kind of partner isSimon?

a. Managing partner.

b. Liquida ng partner.

c. Ostensible partner.

d. Partner by estoppel.

11. Refer to No. 10. Assuming that JAW Enterprises was unable topay the loan on
due date at which me the assets of thepartnership amounted only to
P120,000.00. From whom mayCarlos collect the payment?

a. Simon only for the whole amount of P120,000.00.

b. John, Albert and Wilfred who are liable jointly forP50,000.00 each.

c. JAW Enterprises for its assets of, P120,000.00;therea er John, Albert and
Wilfred from their separateproperty at P10,000.00 each.

d. JAW Enterprises for its assets of P120.000.00;therea er, John, Albert, Wilfred
and Simon from theirseparate assets at P7,500.00 each.

12. Teresa, Olga, Pamela and Sonia, partners in TOPS CompanyLimited, a trading
company, have contribu ons of P50,000.00each. Teresa and Olga are general
partners; Pamela, a limitedpartner; and Sonia, a general-limited partner. TOPS
CompanyLimited purchased merchandise on credit from Moret Sales
Co.amoun ng to P180,000.00. On due date, however, TOPSCompany Limited
was unable to pay. Accordingly, Moret SalesCo. led a case of collec on against
the partnership which bythen had assets amoun ng to P150,000.00. From
whom mayMoret Sales Co. collect the sum of P180,000.00?

a. The partnership for its assets of P150,000.00; therea er,from Teresa and Olga
at P15,000.00 each from theirseparate assets.

b. Teresa and Olga only at P90,000.00 each from theirseparate assets.

c. The partnership for its assets of P150,000.00;therea er, from Teresa, Olga, and
Sonia at P10,000.00each from their separate property. However, Sonia
canrecover P5,000.00 each from Teresa and Olga.

d. Teresa, Olga and Sonia at P60,000.00each.Therea er, Sonia can recover from
Teresa and OlgaP30,000.00 each.

13. Which of the following. losses will not cause the dissolu on of apartnership?

a. Loss before delivery of a speci c thing which a partnerhas promised to

contribute to the partnership.

b. Loss of a , speci c thing a er its delivery to andacquisi on of its ownership by

the partnership from thepartner who contributed the same.
ti
ti
fi

ti

ti
ft

fi

ti

ft
fi
ti
ft

ft
ft
ft
ft
ti
ti

ti

 c. Loss a er delivery of a speci c thing where the partnercontributed only its use
and enjoyment, he havingreserved the ownership thereof.

d. Loss before delivery of a speci c thing where the partnerpromised to

contribute only its use and enjoyment,reserving the ownership thereof.

14. Gregory, Edmond and Mark are partners in GEM Company withcontribu ons of
P10,000.00, P40,000.00and P50,000.00,respec vely. Their agreement shows
that they will share in the pro ts in the ra o of 2:3:4. During the year, the
partnership sustained a loss of P9,000.00. How shall this loss be divided among
the partners?

a. Equally at P3,000.00 each.

b. Gregory, P900.00; Edmond, P3,600.00; and Mark, P4,500.00.

c. Gregory, P2,000.00; Edmond, P3,000.00; and Mark, P4.000.00.

d. The partners must establish rst a loss sharing agreement before-the loss may
be divided because they failed to have an agreement on the division of loss.

e. 15.

15. Which of the following s pula ons is valid?

a. A s pula on excluding a capitalist partnerfrom pro ts.

b. A s pula on exemp ng a capitalist partner from losses.

c. A s pula on exemp ng an industrial partner from losses.

d. A s pula on excluding an industrial partner from pro ts.

16. A partner can engage in business for himself without the consent of his co-
partners if he is:

a. a capitalist partner whether or not the business he willengage in is of the same

kind as or di erent from thepartnership business.

b. an industrial partner whether or not the business he willengage in is of the

same kind as or di erent from thepartnership business.

c. a capitalist partner and the business he will engage in isof a kind di erent from
the partnership business.

d. an industrial partner and the business he will engage Inis of a kind di erent
from the partnership business.

17. Which of the following statements is false when no one amongthe partners
was appointed as manager?

a. Each partner will be considered as agent of the partnership.

b. Any one may make an important altera on in the immovable property of the
partnership without theeided it is useful to the consent of the others pro
partnership.
ti
ti
ti
ti

ft
ti
ti
ti
ti
ff

ff
ti
ti
ti

fi
fi
fi
ti
fi

ti
ti

ti

fi
fi

ff
ff

ti

 c. In c as e the act of one partner is opposed by another, the decision of the

majority of the partners will prevail.

d. In case of a e in the vo ng, the e shall be resolved bythe vote of the partner
owning the controlling interest.

18. The following statements pertain either to a partner appointed asmanager in

the ar cles of partnership or through a documenta er the forma on of the
partnership.

I. He may be removed as manager only for a just or lawfulcause by the vote of

the partners owning the controllinginterest.

II. He may be removed as manager with or without just orlawful cause by the
vote of the partner owing thecontrolling interest.

III. He may perform all acts of administrator despite theopposi on of his partners
provided he is in good faith.

IV. He may perform all acts of administra on in good faithbut opposing partners
may resort to his removal if hepersists.

Based on the foregoing:

a. I and Ill pertain to a partner appointed as manager in thear cles of partnership.

b. Iand Ill pertain to a partner appointed as managerthrough a document a er

the forma on of thepartnership

c. IIand Ill pertain to a partner appointed through adocument a er the forma on

of the partnership.

d. I and IV pertain to a partner appointed as manager in thear cles of partnership

19. Campos, Urbano, Tamesis and Encanto are partners in CUTECompany each one
contribu ng P300,000.00 except for Encantowho is an industrial partner. The
partners agreed that Camposshall be exempted from liability to third persons.
Three years ofcon nued losses a er the forma on of the partnership resulted
inunpaid partnership liabili es to third persons amoun ng toP500,000.00.
Partnership assets have also been reduced toP200,000.00.From whom may
third persons collect thepartnership debts?

a. From the partnership assets of P200,000.00; therea er,fromthe partners for

their separate , assets atP100,000.00 each except Campos who was
exemptedfrom liability to third persons by agreement.

b. From the partnership assets of P200,000.00; therea er,from the partners for
their separate assets atP100,000.00 each except for Encanto since an
industrialpartner does not share in the losses.

c. From the partnership assets of P200,000.00; therea er,from all the partners
for their separate assets atP75,000.00 each including Campos and Encanto:

d. From the partnership assets of P200,000.00; therea er, from Urbano and
Tamesis only for their separate assetsat P150,000.00since Campos was
ti
ti
ti
ti

ti

ti

ti

ft
ti

ti

ti

ft
ft
ft
ft
ft

ti
ti
ti
ti
ft
ti
ft
ti

 exempted fromliability by agreement, while Encanto, being an

industrialpartner is not liable for losses.

20. The partnership will bear the risk of the loss of three of thefollowing things.
Which is the excep on?

a. Things contributed to be sold.

b. Fungible things or those that cannot be kept withoutdeteriora ng.

c. Things contributed so that only their use and fruits will befor the common
bene t.

d. Things brought and appraised in the inventory.

21. A partner's interest in the partnership is his share of the pro tsand surplus
which he may assign to a third person. Which of thefollowing statements
concerning such right is correct?

a. The conveyance of a partner's interest will cause thedissolu on of the

partnership.

b. The assignee becomes a partner.

c. The assignee has a right to interfere in the managementof the partnership

business.

d. The assignee has the right to receive the pro ts whichthe assigning partner
would otherwise be en tled to.

22. Torres is indebted for P5,000.00 to MACE Trading Company, apartnership

managed by Mendoza to whom Torres also owesP10,000.00.The two debts
which are both demandeb!e areunsecured. Torres remits P4,500.00 to
Mendoza in payment o is debt to him. Accordingly, Mendoza issues a receipt
for hisown credit. To which credit should the payment be applied?

a. To Mendoza's credit because the payment made byTorres is intended for his
debt to Mendoza who issueshis own receipt

b. To both the partnership credit and Mendoza's credit propor onately at

P1,500.00 and P3,000.00, respec vely.

c. To Mendoza's credit because its amount is greater than that of the partnership
credit.

d. To the partnership credit because the managing partnershould not prefer his
own interest to that of thepartnership.

23. In three of the following wrongful acts of partners,thepartnership is solidarily

liable with all the partners to thirdpersons. Which one is the excep on?

a. For loss or injury caused to a third person by reason o he wrongful act or

omission of a partner ac ng in theordinary course of business.

b. Where a partner ac ng within the scope of his apparentauthority receives

money or property of a third personand misapplies it.
fi

ti
ti
ti
fh

ti

ti

fi

ft

ti
ti
fi
ti

ti

 c. Where the partnership receives money or property of athird person in the

ordinary course of business and suchmoney or property is misapplied by a
partner while it is inthe custody of the partnership.

d. For loss or injury caused to a third person by reason o he use of partnership

property by a partner for personalpurpose.

24. Benito, Ignacio, Gregorio, Artemio and Servando are partners inBIGAS
Company which is engaged in the buying and selling ofrice. Benito is the
manager. Ignacio was also given a specialpower of a orney by the partnership
to buy a van for thecompany. No other power was given to all the partners. In
whichof the. following acts or contracts is the partnership not boundby the act
of the partner?

a. Ignacio buying rice for the partnership from Teodoro whohas no knowledge of
Ignacio's lack of authority.

b. Ignacio buying a van for the partnership from Teresa.

c. Gregorio buying a van for the partnership from Thelmawho has no knowledge
of Gregorio's lack of authority.

d. Benito selling rice for the partnership.

25. Assuming that no fraud is commi ed by or consented to by thepartner

concerned, which of the following statements is false?

a. No ce to any partner rela ng to partnership a airs while already a partner is

no ce to the partnership.

b. Knowledge of a partner ac ng on the par cular ma er acquired by him while

already a partner is knowledge of the partnership.

c. Knowledge of a partner ac ng on the par cular ma er obtained by him before

he became a partner is knowledge of the partnership provided he s ll
remembers the same.

d. Knowledge of partner not ac ng on the par cular ma er obtained by him

before he became a partner is knowledge of the partnership.

26. Which of the following statements is incorrect?

a. Partnership creditors are preferred as to partnership assets.

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.

d. A partner's separate creditors may a ach a partner's share in the partnership

assets.

27. The change in the rela on of the partners caused by any ceasing to be
associated in the carrying on the business is known as:

a. termina on of the partnership.

ti
ti

ti

ti

ti

ti
ti
ti

tt
tt

ti
ti

ti
ff

tt
tt
tt

tt
ft

ti

 b. winding up of partnership a airs.

c. liquida on of the partnership business.

d. dissolu on of the partnership.

28. A decree by the court is necessary to dissolve a general partnership based on

three of the following grounds. Which one will not require such decree but 'will
cause the automa c dissolu on of the partnership?

a. The business of the partnership can only be carried on at a loss.

b. A partner is shown to be of unsound mind.

c. A partner has been guilty of such conduct as tends to a ect prejudicially the
carrying on of the business.

d. A partner is civilly interdicted.

29. Three of the following will cause the automa c dissolu on of a general
partnership. Which one will not?

a. When any event makes it unlawful the partnership to be carried on

or , for carry it on in partnership.

b. Expulsion of any partner from the In accordance with such a power conferred
by the agreement between the partners.

c. A partner becomes in any way incapable of performing his part of the

partnership contract.

d. The insolvency of a partner or of the partnership

30. When is the partnership not bound by the act/s of a partner a er dissolu on in
the following cases?

a. Acts necessary to wind up partnership a airs.

b. Acts to complete transac ons begun before dissolu on,

c. New .transac ons where the third person is a previous creditor and there was a
publica on of the dissolu on in a newspaper of general circula on in the place
or places where the business had been carried on but such third person has
not read it.

d. New -transac ons where the third person is a new creditor and there was
publica on of the dissolu on in a newspaper of general circula on in the place
or places where the business had been carried on but such creditor has not
read it.

31. The partnership is not bound in three of the following acts of a partner a er
dissolu on. However, it is bound in one. Which is it?

a. Where the partner ac ng is insolvent.

b. When it is unlawful to carry on the-business.

ti
ti
ti

ti
ti

ti
ti
ti

ti
ti
ti
ti

ff
ti

ff

ti

ti

ti
ff

ft
ti
ti

ft
ti
 c. When the partner has no authority to wind up partnership a airs and the third
person is a previous creditor who had no knowledge of the, partner's lack of
authority.

d. When a partner has no authority to wind up partnership a airs and the third
person is a new creditor who has not read the publica on of the lack of
authority of the partnerin a newspaper of general circula on in
the place orplaces where the partnership business is carried on.

32. What is the order of payment of liabili es of a dissolved generalpartnership

using the code number represen ng each liability?

I. Those owing to partners other than for capital or for pro ts.

II. Those owing to creditors other than partners.

III. Those owing to partners in respect of pro ts.

IV. Those owing to partners in respect of capital,

a. I, II,Ill,IV.

b. II, I, IV, Ill.

c. II, I, Ill, IV.

d. I, II, IV, Ill.

33. In a limited partnership where there are 4 partners:

a. All the partners must be limited partners.

b. The number of limited partners must be equal to the number of general

partner, that is, 2:2.

c. The number of limited partners must be greater than the number of general
partners, that is, 3:1.

d. It is enough that there is one limited partner; the rest may all be general
partners.

34. A limited partner may contribute:

a. Money and/or property.

b. Money and/or services.

c. Property and/or services.

d. Services-only.

35. A. limited partner shall be liable as general partner in three of the following
cases. Which one is the excep on?

a. When he is a general-limited partner as stated in the cer cate.

b. When he takes part in the control of the business.

ti
ti

ti
fi

ti
fi
ti
ti
fi
ff

ff

 c. When he par cipates in the management of the business.

d. When his surname which appears in the partnership name is also the surname
of a general partner.

36. Which of the following omissions will make a partnership formed as a limited
partnership liable as a general partnership?.

I. The cer cate is not signed and sworn -to by all the partners.

II. The cer cate is not registered with the Securi es and Exchange Commission.

III. The partnership name does not include the word

IV. "Limited" or "Ltd.", its abbrevia on, in the cer cate.

a. I and 11.

b. II and III.

c. I and III.

d. I, II and III.

37. A person admi ed to all the rights of a limited partner who has died or has
assigned his interest in the partnership is known as:

a. An ostensible partner.

b. A liquida ng partner.

c. A subs tuted limited partner.

d. A general-limited partner.

38. If the assignee does not become the partner referred to in the preceding
number, his rights do not include:

a. The receipt of the assignor's share of the pro ts.

b. The receipt of the assignor's other compensa on by way of income.

c. The return. of the assignor's contribu on.

d. The inspec on of partnership books or account of partnership transac ons.

39. What is the order of payment of liabili es of a dissolved limited partnership

using the code number represen ng each liability?

I. Those owing to general partners other than for capital or for pro ts. .

II. Those owing to creditors including limited partners, except those to limited
partners on account of their contribu ons and general partners.

III. Those owing to limited partners by way of their share in the pro ts and other
compensa on by way of income.

IV. Those owing to limited partners in respect to the capital of their contribu ons.
ti
ti
ti

ti
fi
fi
ti

ti
ti
tt

ti
ti

ti
ti
ti

fi
ti
ti
ti
fi

fi

fi

ti
ti

 V. Those owing to general partners in respect of capital.

VI. Those owing to general partners in respect of pro ts.

a. I, II, Ill, IV, V,, Vl.

b. II, I, Ill, IV, V, VI.

c. II, I, Ill, IV, VI, V.

d. II, Ill, IV, I, VI, V.

40. Which of the following will not cause the automa c dissolu on of a limited
partnership?

a. Death of a general partner.

b. Death of a limited partner.

c. Insolvency of a general partner,

d. Insanity of a general partner.

41. One of the dis nc ons between a partnership and a corpora on is that a
partnership:

a. May be formed by one person.

b. Is created by opera on of law.

c. Acts through a board of directors.

d. May exist for an inde nite period.

42. Belinda, Ara, Rica and Klaudia are partners in BARK Enterprises, a pet shop,
with Belinda contribu ng P50,000.00; Ara, P20,000.00; and Rica, P30,000.00.
Klaudia is an industrial partner and manages the partnership. Based on the
foregoing informa on, which of the following statements is false?

a. Belinda may engage in the buying and selling of, rice without the consent of
the other partners.

b. Klaudia may engage in the buying and selling of rice without the consent of the
other partners.

c. Klaudia is not liable for the losses of the partnership.

d. Klaudia may be held liable by third persons for partnership debts with her
separate property.

43. Josephine. Ellen, Wilma, Edith and Lydia are partners in JEWEL Company, Ltd.
Josephine, Ellen and Wilma are general partners, Edith is a general-limited
partner, while Lydia is a limited partner. Based on the foregoing informa on,
which of the following statements is false?

a. Josephine, Ellen and Wilma may be held liable with their separate property
a er the exhaus on of partnership assets.
ft

ti

ti
ti
ti

ti

fi
ti

ti
fi

ti
ti

ti
 b. Edith may par cipate in the management. of the partnership.

c. Edith may not be held liable with her separate property for partnership debts
a er the exhaus on of partnership assets.

d. Lydia may not be held liable with her separate property for partnership debts
a er the exhaus on of partnership assets.

44. Which of the following will not cause the automa c dissolu on of a general
partnership?

a. Death of a partner.

b. Insolvency of a partner.

c. When the partnership business becomes unlawful.

d. Insanity of a partner,

45. Wilma, Olga and Wynona agreed to form a limited partnership with Wilma and
Olga as general partners contribu ng P50,000.00 each, and Wynona as limited
partner contribu ng P100,000.00. The partnership which is to engage in the
trading of garments was named "WOW Garments Co., Limited" as indicated in
the cer cate signed and sworn to by the partners before a notary public.
However, the cer cate was not led with the Securi es and Exchange
Commission. In the mean me, the partners already begun opera ng the
business and transac ng with third persons.

a. The partnership entered into by the Wilma, Olga and Wynona is void.

b. The partnership will be 'considered a general partnership.

c. Accordingly, all partners will be liable with their separate - property a er the
exhaus on of partnership assets.

d. The partnership will be- considered a limited partnership as indicated in its

name. Only Wilma and Olga will be liable with their separate property a er the
exhaus on of partnership assets. Wilma, Olga and Wynona will be considered
separately as sole proprietors with each one having a capital equivalent to their
respec ve contribu ons.

46. Fernando, Filoteo, Fortunato and Fulgencio are partners in the rm F4

Enterprises which is engaged in the trading of fer lizers. Fernando contributed
P50,000.00; Filoteo, P30,000.00; and Fortunato, P20,000.00. Fulgencio is an
industrial partner and manages the partnership. Based on the foregoing facts,
which of the following statements is incorrect?

a. Fernando may engage in the business of trading car spare parts without the
consent of the other partners.

b. Filoteo may be validly exempted from losses incurred by the partnership by

agreement of the partners.

c. Fulgencio may not engage in the car repair business without the consent of his
co-partners.
ft
ft
ti
ti
ti
ti
fi

ti
ti
ti
ti
ti
fi

ti

ti

ti

fi

ti

ti
ti

ti

ti

fi
ti
ft

ft
 d. Fuigencio is exempt from losses although there is no agreement among the
partners.

47. Be na, Erlinda, Amanda, Ursula, Teresa and Yolanda are partners in BEAUTY
Enterprises, a dealer in cosme cs and other beauty products, with
contribu ons of P60,000.00, P50,000.00, P40,000.00, P30,000.00, P20,000.00,
and P10,000.00, respec vely. No one was appointed as manager in the ar cles
of partnership.

a. Be na is the manager because she made the biggest investment.

b. Every act in the ordinary course of the business will have to be decided by the
majority determined on a per head basis.

c. Every act in the ordinary course -of the business will-have to be decided by the
controlling interest (biggest investment) although the partners owning them.do
not cons tute the majority.

d. All the partners are agents or managers of the partnership and any one of
them may perform acts of administra on.

48. Which of the following will nvt cause the automa c dissolu on of a general
partnership?

a. Death of a capitalist, partner.

b. Insolvency of a capitalist partner.

c. Insanity of an industrial partner.

d. Civil interdic on of an industrial partner.

49. PATOK Enterprises, a partnership engaged in the business of ren ng out video
lms, is owned by Patricia, Alice, Tina, Olga, and Kaye, with Kaye as the
manager. Diana owes PATOK Enterprises P6,000.00 and Olga, P4,000.00. Both
debts are unsecured and are already due. Diana pays Olga P4,000.00 for which
Olga issues her own receipt.

a. The payment should be applied to Olga's credit only.

b. The payment should be applied to PATOK's credit only.

c. The payment should be divided propor onately between PATOK and Olga, at
P2,400.00 and P1,600.00, respec vely.

d. The payment should be divided equally between PATOK and Olga at P2,000.00
each.

50. Federico, Alberto. Sofronio and Teodoro are partners in FAST Motorparts
Company, a dealer of car spare parts Federico, Alberto and Sofronio invested
P500.000 00, P200,000.00 and P300,000.00, respec vely. Teodoro is an
industrial partner whomanages the partnership. The partners have s pulated
thatFederico shall be exempt from liability to third persons. At theend of three
years, the assets of the partnership have dwindledto P220,000.00while its
liabili es to third persons have abalance of P340,000.00. How much ul mately
fi
tti
tti
ti

ti
ti

ti

ti

ti

ti

ti

ti

ti
ti

ti
ti

ti
ti
ti
 will be the shareof each partner a er payment to third persons and the
se lement among the partners?

a. P30,000.00 for each partner

b. Federico, P60,000.00; Alberto, P24,000.00, Sofronio, P36,000.00, and Teodoro,

none.

c. Federico, none; Alberto, P48,000.00;Sofronio,P72,000.00; and Teodoro, none.

d. Federico, none; Alberto, Sofronio and TeodoroP40,000.00 each.

51. John Solanda and Sons is a partnership composed of threenpartners,

namely:Robert Solanda, Simon Solanda,, andTheodore Solanda. The partners
are the sons of John Solandawho has re red from business but who suggested
that theyinclude his name in the rm to give them an advantage since heis
well-known in the business community.

I. John Solanda shall have all the rights of a general partner.

II. John Solanda shall have all the liabili es of a generalpartner.

Based on the foregoing facts:

a. Both statements are true.

b. Both statements are false.

c. Statement I is true; Statement 11 is false.

d. Statement I is false; Statement 11 is true.

52. The following partnership contracts were presented to you forevalua on:

I. A partnership engaged in the sale of o ce supplies with a capital of

P100,000.00broken down into: cash, P30,000.00; o ce supplies for sale,
P50,000.00; ando ce equipment, P20,000.00. The agreement is in a private
instrument.

II. A partnership engaged in the lease of o ce spacesa capital of

P700,000.00broken down into landP100,000.00; building, P500,000.00; cash,
P80,000.00 and o ce equipment, P20,000.00. The agreement is ina public
instrument a ached to which is the inventory o he land and the building
signed by the partners. Then agreement is not recorded with the Securi es
andExchange Commission.

III. A partnership engaged in the trading of computerswhose name is "Lamont

Enterprises, Ltd." It has a totalcapital of P500,000.00 broken down into
P100,000.00cash and computers worth P400,000.00, contributed byboth
general and limited partners. The agreement wassubscribed and sworn to by
all the partners before anotary public but not recorded with the Securi es and
Exchange Commission.

Based on the foregoing:

a. Each partnership has a separate juridical personality.

tt

tt
ffi
ffi

fi
ft
ti
ffi
ffi

ti

ft
ffi

ti
ti
ti

 b. I and II have separate juridical personality.

c. II and Ill have separate juridical personality.

d. None of the partnerships has a separate juridicalpersonality.GREAT Company, a

partnership engaged in the distribu on. Ofgenerators, is composed of George,
Roland, Edmond, Albertand Troy. George is the managing partner. During the
month ofApril, the following transac ons were - entered into by thefollowing
partners in behalf of the partnership. without anyauthority:

The sale of a generator by Roland to Juan Torres whowas not aware that
Roland had no authority. JuanTorres has paid for the generator which is due
fordelivery.

I. The purchase of a car by Edmond from Intrepid Motorswhose owner was not
aware of Edmond's lack ofauthority. The car and the price are due for delivery
andpayment, respec vely.

Based on the foregoing, the partnership is bound by:

a. Transac on I only.

b. Transac on II only.

c. Both Transac ons I and II.

53. Sibal, Untalan, Pareho, Eusebio, and Rances are partners inSUPER Enterprises
whose business is car pain ng and repairs.All partners are capitalist partners
with Sibal as manager. A er ve years of opera ons, Rances resigned from the
partnership.Although Sibal was aware of the resigna on of Rances, he
s llboughtgallons of car paint from Masterpaint owned by Marcelo who had
been dealing with SUPER for the past 5 years,and car spare parts from
Supremeparts, owned by Salviejo whowas transac ng for the rst me with
SUPER. The dissolu on ofSUPER was published in the Manila Bulle n but
neither Marcelonor Salviejo read it.Neither one knew at the me
theytransacted with Sibal that the partnership had been dissolved.

a. SUPER is liable to both Masterpaint and Supremeparts.

b. SUPER is liable to Masterpaint only.

c. SUPER is liable to Suprereparts only.

d. SUPER is not liable to both Masterpaint and Supremeparts.

d. The partnership cannot adopt a name which does not

include the name of at least one of the partners.

62. Ornussa, the owner of a vacant lot, leased the same to Florida


ti


ti
ti

ti

ti
ti
ft

ti
fi
ti

ti

ti

ti
ti



ti
fi

ti
ti

 under an agreement that the rental shall be paid by Florida at the rate of 10% of the annual net
income of the ower business that she would put up on the lot. A private agreement was signed by
the par es. In the rst year of opera ons, Ornussa received from. Florida the amount of
P20,000.00 represen ng 10% of the net income of the ower shop business.

a. Ornussa is a partner of Florida by her mere receipt of the

share of the net pro ts of the ower business of Florida.

b. The rela onship of Ornussa and Florida is only that of a

lessor and lessee.

c. Ornussa and Florida have a dual contract: partnership

@nd lease.

d. Ornussa and Florida are not partners; neither are they

lessor and lessee because their agreement was not in a public instrument.

63. LIFE Company, a partnership engaged in the water distribu on

business, is composed of partners Larredo, Ingles, Filler and

Encanto. One, day, Larredo was driving the rm's delivery truck
beyond the speed limit in order to serve its customers, when he
rammed into and caused extensive damage on the parked car of
Tertullo..

a. Only Larredo can be held liable for damages by Tertullo.

b. LIFE Company and Larredo are solidarily liable for

damages to Tertullo.

c. LIFE Company and the four partners are solidarily liable

for damages to Tertulbo_

d. LIFE Company and the four partners are jointly liable for

damages to Tertullo.

64. A person admi ed as a partner into an exis ng partnership shall

be liable up to the extent of his separate assets, for what

obliga ons?

a. Obliga ons of'the partnership exis ng at the me of his

admission only if there was a s pula on.

b. Obliga ons of the partnership incurred a er his

admission only if there was a s pula on.

C. Obliga ons of the partnership incurred before and a er

ti
ti

ti
ti
ti
fl
ti

fi
fi
ti

tt

fl
ti
ti
ti
ti
ti

ti
fi
ft
ti
ti
fl



ft






ti

 his admission even if there was no s pula on.

d. Obliga ons of the partnership incurred before his

admission if there was a s pula on, and those incurred a er his admission even if there was no
s pula on.

65. PARAGON Enterprises, a partnership engaged in the garments

manufacturing business, is composed of partners Pacis, Ramas and Gonzales. During the year,
PARAGON bought a

computerized embroidering machine amoun ng to P300,000.00

from Tadena with the following s pula on: down payment of
P50,000.00; balance to be paid in amount equal to 20% of the
monthly net pro ts of PARAGON un l the full amount is paid.

a. Tadena is an actual partner of Pacis, Ramas and

Gonzales :Turing the me that he receives a share of the pro ts of PARAGON as payment of the
purchase price of the machine.

b. Tadena is only a partner by estoppel of Pacis, Ramas

and Gonzales during the me that-he receives a share of the pro ts of PARAGON as payment of the
purchase price of the machine.

c. Tadena is not a partner of Pacis, Ramas and Gonzales

whether before or a er he has received the full payment

of the purchase price of the machine from PARAGON.

d. Tadena is only a nominal partner of Pacis, Ramas and

Gonzales during the me that he receives a share of the pro ts of PARAGON as payment of the
purchase price of the machine

66 MAGIC Company is a partnership composed of Martha, Agnes,

Glenda, Irene and Candice, with Martha as manager who is

authorized to collect the credits of the partnership. Theresa

owes Martha P4,000.00 which is due on December 10. She also

owes MAGIC Company P6,000.00 which is due on December

20. On December 15, Theresa tendered payment in the amount

of P4000.00 to Martha in payment of her debt to the la er.
Martha issued her -own receipt acknowledging the payment.

a. The payment will be applied propor onately to the

credits of MAGIC and Martha in the amount of P1,600.00 and P2,400.00, respec vely.

b. The payment will be applied in its en rety to Martha's

ti









ti

ti
fi
ft

ti
ti
ti
ti

ti

ti
ti
ti
ti
ti
ti
ti
ti

tt

ft







fi

fi







fi



ti

 credit.

c. The payment will be applied in its en rety to MAGIC's

credit.

d. The payment will be applied equally to the two debts of

Theresa.

67. Aseron, the managing partner of ACE Company, was driving the

delivery truck of the rm when he rammed it into an electric post

resul ng in damages to the vehicle amoun ng to P50,000.00.
To make up for accident, Aseron worked long hours for the rm
and was able to increase its sales from P5,000,000.00 to

P15,000,000.00.

a. Aseron will no longer be liable for damages to ACE

because he was able to generate unusual revenues for the rm through his extraordinary e orts.

b. Aseron will s ll be liable to the rm for damages but the

amount will be equitably reduced since he was able to generate unusual pro ts for the rm
through his extraordinary e orts.

c. Aseron's obliga on to the rm for damages will . be

ex nguished by compensa on since ACE is also liable

to him for the extraordinary e orts he exerted to increase
its sales.

d. Aseron and ACE will share equally in the damages of

P50,000.00.-

68. Trevor owes P3,000.00 to CHAMP Company, a partnership

composed of Charles, Harry, Albert, Mark and Prince, with Mark

as the manager who is authorized to collect all credits of the rm.
He also owes Charles the amount of.P6,000.00. Both debts are
already due. Trevor gives. P3,000.00 to Charles in payment of
his debt to the la er. Charles thus issues his own receipt.

a. Payment will be applied propor onately to the two

credits at P1,000.00 for Charles' credit and PP2,000.00 for CHAMP's credit.

Payment will be applied equally to the two credits.

Payment will be applied in its en rety to Charles' credit.

Payment will be applied in its en rety to CHAMP'S credit.







ti


ti

tt
ti
fi
ti
ti
ff
ff

ti
ti

fi
fi
ti
ti
ti








fi
fi

fi

















fi
fi
ff

 69. Barranda wrote Salvador a le er wherein he placed an order for

a laptop computer worth P80,000.00. In wri ng the le er,

Barranda used a sta onery which had for its le erhead
"Barranda and Bermudez, Real Estate Agents." Bermudez is not
really a partner of Barranda but they agreed to use the said
le erhead to give a semblance of bigness by making it appear
that the two of them are partners. Salvador delivered the laptop

computer but Barranda defaulted in his payment of its price.

Against whom may Salvador proceed?

a. Barranda only since Bermudez is not his partner.

b. Barranda only since the purchase of the laptop computer

is his personal transac on

c. Barranda and Bermudez since they are partners in so far

as Salvador is concerned.

d. "Barranda and Bermudez, Real Estate Brokers," only

since an actual partnership was created between Barranda and Bermudez and . it has a personality
separate and dis nct from the two.

70. Daoang and Depante have been partners for more than 5 years

in the puri ed water business. At the start of the sixth year,

Daoang assigned his interest in the partnership to Trinidad, but
Depante objected on the ground that he did not want Trinidad to
be his partner.

a. Trinidad automa cally became a partner of Depante

when Daoang conveyed his interest to him.

b. Daoang and Depante con nue to be partners despite

Daoang's conveyance of his interest to Trinidad.

c. The partnership between Daoang and Depante was

automa cally dissolved when Daoang conveyed his interest to Trinidad.

d. The conveyance by Daoang of his interest in the

partnership to Trinidad en tled the la er to inspect the books, and par cipate in the management,
of the partnership.

71. Palacios, A enza, Tablante, Elamparo, Robledo, Ocampo and

Sajenes are partners in PATEROS Poultry Farms. Palacios,

A enza and Tablante have been appointed as managers of the
ti


tt









ti
fi

ti
ti

ti
ti
ti

ti

ti

tt
tt

ti
tt

tt






















ti

 rm with the s pula on that none shall act without the consent of
the other two. On the date of the scheduled delivery of 500 kilos
of frozen dressed chickens ordered by Caintacky Restaurant,
heavy rains caused a power failure and made transport di cult
due to landslides. A local resident o ered to purchase the
dressed chickens (which were already thawing) at 80% of the .
contract price. However, only Palacios and A enza were around
to, decide as Tablante, who was on business trip for the rm,
could not be contacted due to poor communica on signals.

a. Palacios and A enza cannot decide by themselves

because the managing partners must act with unanimity.

b. Palacios and A enza may decide by themselves since

any further delay would result in more losses to the rm.

c. Palacios and A enza can decide by themselves since

they cons tute the majority among the managing

partners, which is the required vote notwithstanding a

s pula on that one cannot act without the consent of

the other managers.

d. The absence of Tablante cannot be alleged since there

was a s pula on. that none of the managing partners

shall act without the consent of the others.

72. Querubin, Roces and Solis are partners in a law rm. Querubin

was appointed as judge of the Regional Trial Court. Such

appointment:

a. suspends the par cipa on of Querubin in the

'management of the rm without causing the dissolu on

of-the partnership.

b. prohibits the inclusion of the name of Querubin in the

rm name without dissolving the partnership.

c. results in the dissolu on of the partnership.

d. merely requires the disclosure of Querubin's

appointment to the court without dissolving the

_ partnership.
fi
fi
ti









ti
ti
ti
ti

ti

ti

fi
ti
ti
ti
ti
ti
ti
ff

ti

ti

fi
ti

fi
fi

ffi












 73. Braganza, Or z and Nevado want to form a partnership with

Braganza contribu ng P500,000.00; Or z, o ce equipment; and

Nevado, his services. If the three were to form a limited

partnership, who among them will be the limited partner/s?

a. Either Braganza or Or z or both of them.

b. Either Or z or Nevado or both of them.

c. Either Braganza or Nevado or both of them.

d. All the three must be limited partners.

74. Refer,to the preceding number. Assume that the three decide to

form a general partnership: As a result, which of the following is

incorrect?

a. Any of the three may be appointed as manager.

b. All of them may be appointed as managers.

c. Only Nevado may be appointed as manager because he

only contributes his services.

d. Any two of them may be appointed as managers

75. CROWN Enterprises is composed of partners Chuck who

contributed P50,000.00; Rainier, P20,000.00; Oscar,

P40,000.00; Waldorf, P10,000.00; and Nelson, P5,000.00. No

one was appointed as manager. Two proposed contracts were
voted upon by the partners during a mee ng which took place as
follows:

Contract I - Vo ng for approval of the contract were Chuck and

Rainier; vo ng for rejec on were Oscar, Waldorf and Nelson.

Contract II - Vo ng for approval were Chuck and Rainier; vo ng for rejec on were Oscar and
Waldorf; Nelson abstained.

Which of the foregoing contracts are considered approved?

a. Both contracts.

b. Neither of two contracts.

c. Contract I only.



ti

ti
ti
ti
ti
ti

ti

ti

ti

ti
ffi

ti

ti

 d. Contract Ii only.

16. MACK's Restaurant is a partnership composed of Manalo,

Alferez, Cancio and Kilayco, with Manalo as the manager whose

contribu on is 80% of the rm's capitalManalo made

Ongpauco- his associate by assigning one-half of his share in the

rm to the la er. Did Ongpauco become a partner in the rm?

a. Yes, because Manalo is the manager.

b. No, because the other partners must give their consent

in order that Ongpauco may be admi ed to the partnership.

c. Yes, because the assignment by Manalo of his share in

the rm did not a ect his ownership of the controlling interest.

d. No, because the assignment by Manalo of his share in

the rm diminished his interest in the partnership.

77. A partner is a co-owner with his partners of speci c partnership

property. Such co-ownership:

a. allows a partner to assign his right in such property.

b. allows a partners to use such property for partnership

purposes.

c. en tles the spouse, children and other rela ves of the

partner to claim support from such property.

d. gives the private creditors of a partner to a ach his right

in such property.

78. CLEAN Laundry Services. Company is a partnership composed

of Carpio, Legaspi, Encinas, Alzate and Noval. Without the

fi



















fi
fi
ti

ti
tt

ff

fi

tt



tt
ti

fi
fi

 knowledge of the other partners, Carpio used a coat brought to

the shop by a customer for dry-cleaning in a party he a ended.
The coat was accidentally stained with food sauce during the
said party. Who will be liable to the customer for damages?

a. Carpio only since he used the coat without the

knowledge of the other partners.

CLEAN Laundry Services Company and Carpio solidarily.

c. CLEAN Laundry Services Company and all the partners

jointly.

d. CLEAN Laundry Services Company and all the partners

solidarily.

79. A limited partner is prohibited on account of his claim against the

partnership from performing the following acts, except:

a. To receive or hold as collateral security any partnership

property.

b. To receive from a general partner or the partnership any

payment, conveyance or release from liability, if

partnership assets are not su cient to discharge

partnership liabili es to outside creditors.

c. Transact business with the partnership.

d. None of the foregoing.

80. Lazarte, a limited partner in Bellevue Company, Ltd., received

the amount of P100,000.00 represen ng his contribu on which

was being returned on the date s pulated in the cer cate.
Partnership records, however, showed that the rm had liabili es
of P220,000.00 which arose before Lazarte received the return
of his contribu on, and assets of only P90,000.00 a er such

return of contribu on.

ti
ti
ti

ffi

ti

ti

fi

ft
ti
ti
fi
tt



ti








 a.- Lazarte is bound to bring back to the partnership the

amount of P100,000.00 plus interest,- thereon. '

b. Lazarte is bound to give the partnership P220,000.00

plus interest thereon.

c. Lazarte is bound to give the partnership P130,000.00

plus interest.

d. Lazarte is not bound to return to the partnership any

amount, because he received the return of his contribu on pursuant to a contractual s pula on

ti

ti
ti