RFBT - Mastery Class Batch 2

No. 125 Brgy.
San Sebastian
Lipa City, Batangas, Philippines
Mobile : 0927 283 8234
Telephone : (043) 723 8412
Gmail : icarecpareview@gmail.com
RFBT Mastery Class Handout
I. Law on Obligation
1. In which of the following types of obligation will delay not exist?

A. Negative obligation
B. Personal obligation
C. Real obligation
D. Positive obligation
2. In which of the following negligence is the defense of exercise of diligence of a good

father of a family in the selection of employee be a tenable defense on the part of the
employer?
A. Culpa criminal
B. Culpa contractual
C. Culpa aquiliana
D. Culpa delicta
3. A, B and C wrote a promissory note which states “I promise to pay P12,000 to D, E, F

and G.” G indorsed back the promissory note to A. How much obligation is extinguished
by confusion or merger?
A. P4,000
B. P3,000
C. P1,000
D. P12,000
4. In what type of delay is consignation the proper remedy on the part of injured party?
A. Mora solvendi
B. Mora obligori
C. Mora directa
D. Mora accipiendi
5. It refers to the remedy available to unpaid creditor to ask for the cancellation of contract
entered by the judgment debtor to defraud the creditor.
A. Accion directa
B. Accion pauliana
C. Accion subrogatoria
D. Accion publiciana
6. In which of the following sources of civil obligation is meeting of minds between the
plaintiff and defendant not necessary?
A. Quasi-delict
B. Quasi-contract
C. Either A or B
D. Neither A nor B
7. What is the quantum of evidence necessary to recover civil damages for action based on
a crime?
A. Preponderance of evidence
B. Substantial evidence
C. Clear and convincing evidence
D. Proof beyond reasonable doubt evidence
8. D has the obligation to deliver a specific laptop to C but the former may render a
specific cellphone as substitive. Who has the right of choice in this obligation?
A. Generally C unless granted to D
B. Generally D unless granted to C
C. Always C
D. Always D
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No. 125 Brgy. San Sebastian
Mobile : 0927 283 8234
Telephone : (043) 723 8412
9. What is the degree of diligence to be observed by the common carrier in the

transportation of passengers?
A. Diligence of a good father of a family
B. Diligence agreed upon by the contracting parties even less that extraordinary
diligence as long as the minimum is ordinary diligence
C. Extraordinary diligence
D. Diligence of a reasonable prudent person
10. Who shall be entitled to the improvement by nature of the determinate thing during the
pendency of suspensive condition or suspensive period in an obligation to deliver a
determinate thing?
A. Debtor
B. Creditor
C. Both A and B
D. Neither A nor B
11. A bus of JAM Liner Inc., while being driven by its employee bus driver, met an accident
with a private automobile owned and driven by Oscar. Pedro, a passenger of the bus,
and Tomas, a pedestrian, were injured. What is the source of obligation between Tomas
and JAM Liner Inc.?
A. Law
B. Contract
C. Quasi-delict
D. Quasi-contract
12. A, B and C are liable to D in the amount of P60,000. C voluntarily paid P60,000 to D.
Afterwards, B becomes insolvent. How much may C validly ask for reimbursement from
A?
A. P60,000
B. P30,000
C. P20,000
D. None
13. It refers to the promise or particular conduct to be performed in the execution of an

obligation.
A. Obligee
B. Obligor
C. Prestation
D. Vinculum
14. What is the source of an obligation when a stranger gives support to a child of another
person without the knowledge of the person obliged to give support?
A. Negotiorum gestio
B. Solutio indebit
C. Quasi-delict
D. Delict
15. Which of the following is not a civil liability arising from delict?
A. Restitution
B. Condonation
C. Reparation
D. Indemnification
16. What is the remedy available to the creditor when the debtor fails or refuses to perform
his obligation to deliver a determinate thing?
A. He may ask the obligation to be complied with by a third person at the expense
of the debtor with damages.
B. He may file an action for exact fulfillment plus damages.
C. He may file an action for annulment of obligation.
D. He may file an action for declaration of nullity of obligation.
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17. When is demand necessary for debtor’s delay to exist?

A. When the law expressly so declares that demand is waived.
B. When the obligation is a unilateral one.
C. When it appears that the designation of the time was controlling motive.
D. When the obligor has rendered it beyond his power to perform.
18. It refers to illicit act which impairs the strict and faithful fulfilment of the obligation.
A. Dolo
B. Culpa
C. Contravention of tenor
D. Mora
19. It refers to a type of damages awarded by the court by way of correction for the public
good.
A. Moral damages
B. Exemplary damages
C. Nominal damages
D. Temperate damages
20. Which of the following obligations is immediately demandable?

A. Obligation in diem
B. Obligation ex die
C. Obligation with a suspensive condition
D. Obligation payable when debtor’s means permits him to do so
21. In which of the following cases, will the debtor lose the benefit of the period?
A. When the debtor attempts to abscond
B. When through a fortuitous event the guaranties or securities were impaired
C. When after the obligation has been contracted, the debtor becomes solvent.
D. Any of the above.
22. Which of the following statements concerning is correct?

A. Solidarity implies indivisibility.
B. Indivisibility implies solidarity.
C. The solidary creditor can assign his interest in solidary receivable even without
the consent of his co-solidary creditors.
D. Solidary obligation may exist although the creditors and the debtors may not be
bound in the same manner and by the same period and conditions.
23. In case both parties in a reciprocal obligation have committed a breach and it cannot be
determined which of the parties first violated the reciprocal obligation, which is correct?
A. The obligation shall be deemed extinguished, and each party shall bear his own
damages.
B. The obligation shall remain to exist and the first infractor’s liability shall be
equitably tempered by courts.
C. The court shall moto proprio decree the rescission of the obligation.
D. The court shall declare the nullity of the obligation.
24. Which of the following obligations in not enforceable by a court action?

A. Solutio indebiti
B. Natural obligation
C. Negotiorum gestion
D. Culpa aquiliana
25. Which of the following is not a requisite of quasi-delict?
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A. There is pre-existing relation between the plaintiff and defendant.

B. There exists a wrongful act or omission imputable o the defendant by reason of
his fault or negligence.
C. There exists a damage or injury which must be proved by the person claiming
recovery.
D. There must be a direct causal connection or a relation of cause and effect
between the fault or negligence and the damage or injury, or that the fault or
negligence be the cause of the damage or injury.
26. They refer to fruits produced by lands of any kind through cultivation.
A. Natural fruits
B. Industrial fruits
C. Civil fruits
D. Commercial fruits
27. Advanced waiver of an action for which of the following is valid?

A. Bad faith
B. Fraud
C. Simple negligence
D. Gross fault
28. They refer to those which destined for the embellishment, use or their preservation of
another thing or more importance, have for their object the completion of the latter for
which they are indispensable or convenient.
A. Accessions
B. Accessories
C. Alternatives
D. Accomplices
29. It refers to a right of a person to demand of another, as a definite passive subject, the
fulfillment of a prestation to give, to do or not to do.
A. Personal right
B. Real right
C. Equitable right
D. Legal right
30. Which of the following obligations is valid?

A. Obligation subject to a suspensive condition purely potestative upon creditor.
B. Obligation subject to a suspensive condition that is contrary to good customs or
public policy.
C. Obligation subject to an impossible suspensive condition.
D. None of the above.
31. What is the prescriptive period for filing a civil action based on negotiorum gestio?
A. 10 years
B. 6 years
C. 5 years
D. 4 years
32. Which of the following modes of extinguishment of obligation is essentially gratuitous

and requires acceptance by the obligor?
A. Remission
B. Merger
C. Compensation
D. Novation
33. It is a type of novation which refers to the transfer of all the rights of the creditor to a
third person, who substitute him in all his rights.
A. Expromission
B. Delegacion
C. Subrogation
D. Consignation
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Telephone : (043) 723 8412
34. A is indebted in the amount of P10,000 to B. A failed to pay his obligation on its
maturity date. Due to financial difficulty, A transferred his specific laptop with cost of
P9,000 and accumulated depreciation of P2,000 to B which the latter accepted as
payment for the loan. The fair value of the said laptop at the date of transfer is P8,000.
How much obligation is extinguished by the transfer of said laptop?
A. P10,000
B. P9,000
C. P8,000
D. P7,000
35. Who has the right of choice in application of payment?

A. Debtor
B. Creditor
C. Both debtor and creditor
D. Neither debtor nor creditor
36. On March 15, 2020, D obliged himself to deliver a 2020 Ford Explorer limited edition to
C to be delivered on April 22, 2020. D lives in Manila City while C lives in Quezon City.
On March 15, 2020 a 2020 Ford Explorer limited edition is located in Pasay City while
on April 22, 2020 another 2020 Fore Explorer limited edition is located in Caloocan
City. Where shall the car be delivered?
A. Quezon City
B. Manila City
C. Pasay City
D. Caloocan City
37. A, B and C are liable in the amount of P6,000 to D and E, solidary creditors as
evidenced by a promissory note. E indorsed back the said promissory note to A. How
much obligation is extinguished?
A. P1,000
B. P2,000
C. P3,000
D. P6,000
38. D borrowed P3,000 from C as evidenced by a promissory note. To secure the loan, D
pledged and delivered his specific watch to C. At maturity date of the note, C voluntarily
returned the said watch to D. Which contract is extinguished?
A. Contract of loan
B. Contract of pledge
C. Both A and B
D. Neither A nor B
39. In which of the following cases is tender of payment mandatory prior to valid
consignation?
A. When the title of the obligation has been lost
B. When the creditor is incapacitated to receive payment at the time it is due
C. When, with just cause, the creditor refused to give a receipt
D. When two or more persons claim the same right to collect
40. Which of the following contract may become the subject matter of legal compensation?
A. Contract of mutuum
B. Contract of commodatum
C. Contract of depositum
D. None of the above
41. Which of the following is considered legal tender?

A. Postal money order
B. Manager’s check
C. Bank draft
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Telephone : (043) 723 8412
42. D made a bank deposit under a savings account to BDO in the amount of P100,000. D
also applied for a credit card with said Bank. D purchased an item from SM using the
said BDO credit card resulting to an obligation of P50,000 with maturity date on June
30, 2020. What mode of extinguishment of obligation is present upon the approval of
June 30, 2020?
A. Legal compensation
B. Conventional compensation
C. Facultative compensation
D. Judicial compensation
43. Which of the following is not considered a novation?

A. Shortening the term of the loan
B. Extension of the term of the loan
C. Both A and B
D. Neither A nor B
44. When is payment of the obligation by the debtor to a third person considered valid?
A. When in bad faith, the debtor pays to one in possession of the credit.
B. When, with notice of the assignment of the credit, the debtor pays to the original
creditor.
C. When the payment to a third person redounded to the benefit of the creditor.
D. Any of the above
45. When will check, promissory note, bill of exchange or other mercantile document
produce the effect of payment?
A. When they have been encashed by the creditor or holder.
B. When through the fault of the maker or issuer they are impaired.
C. When their amount has already been credited to the account of the maker or
issuer.
46. What law shall govern dacion en pago?

A. Law on obligation
B. Law on sales
C. Law on contract
D. FRIA of 2010
47. Which of the following debts may become the subject matter of legal compensation?
A. Void obligation
B. Unenforceable obligation
C. Voidable obligation
48. It refers to illicit act which impairs the strict and faithful fulfilment of the obligation.
A. Dolo
B. Culpa
C. Contravention of tenor
D. Mora
49. When is payment made by the debtor to an incapacitated creditor valid?

A. When it is beneficial to such creditor
B. When the creditor kept the thing
C. Either A or B
D. Neither A nor B
50. This equitable doctrine is based on the principle that a person shall be precluded from
denying an admission or representation against the person who has relied on such
admission or representation Obligation in diem
A. Laches
B. Estoppel
C. Prescription
D. Pari delicto
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51. D is indebted in the amount of P10,000 to C. T, D and C agreed that T will pay P7,000
of D’s obligation to C. After payment by T of P7,000 to C, D’s remaining cash amounted
to P4,000 only. How much out of D’s P4,000 cash be applied to C’s remaining claim
against D?
A. P1,200
B. P3,000
C. P4,000
D. P2,100
52. D is indebted in the amount of P4,000 to C guaranteed by G. At the maturity date of the
loan, C indorsed the promissory note evidencing the loan to G. Which contract is
extinguished?
A. Contract of loan
B. Contract of guaranty
C. Both A and B
D. Neither A nor B
53. Which mode of extinguishment of obligation is onerous in nature?

A. Compensation
B. Merger
C. Both A and B
D. Neither A nor B
54. Where shall the payment of an obligation be made?

A. On the place designated in the obligation
B. On the domicile of the debtor
C. On the domicile of the creditor
D. On the place where the thing is located at the time of constitution of obligation
55. In observance of right to procedural due process of the creditor, how many
notice/notices must be given by debtor to creditor in case of consignation?
A. At least one notice
B. At least two notices
C. At least three notices
D. At least four notices
56. It is a compensation which can be claimed by one of the parties who, however, has the
right to object to it, such as when one of the obligations has a period for the benefit of
one party alone and who renounces that period so as to make the obligations due.
A. Legal compensation
B. Conventional compensation
C. Facultative compensation
D. Judicial compensation
57. In case of novation of a contract of loan, which provision in the original contract of loan
will be extinguished?
A. Accessory contract of mortgage
B. Stipulation in favor of third person
C. Suspensive or resolutory condition
58. It is one of the two types of novation involving the change of original debtor wherein the
initiative does not emanate from the original debtor and may be made even without his
knowledge since it consists in a third person assuming the obligation and it logically
requires the consent of third person and the creditor
A. Expromission
B. Delegacion
C. Subrogation
D. Consignation
59. What is the prescriptive period to file a civil action based on culpa aquiliana?
A. 10 years
B. 6 years
C. 5 years
D. 4 years
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Telephone : (043) 723 8412
60. Which of the following statements about payment of obligation is incorrect?

A. Payment means only delivery of money but not performance, in any other
manner, of an obligation.
B. The payment of debts in money shall be made in the currency stipulated even if
it foreign currency.
C. The debtor of a thing cannot compel the creditor to receive a different one,
although the latter may be of the same value as, or more valuable than that
which is due.
D. In obligations to do or not to do, an act or forbearance cannot be substituted by
another act or forbearance against the obligee’s or creditor’s will.
II. Law on Contract
1. Which of the following is a solemn contract?

A. Contract of sale of land
B. Contract of guaranty
C. Contract of antichresis
D. Contract of real estate mortgage
2. Which of the following is an accidental element in a contract?

A. Agreement to pay interest in a contract of loan
B. Price certain in money in a contract of sale
C. Registration in chattel mortgage registry in a contract of chattel mortgage
D. Meeting of minds in a contract of agency
3. Which of the following innominate contracts pertains to Do Ut Facias?

A. I give that you may give.
B. I give that you may do.
C. I do that you may give.
D. I do that you may do.
4. What is the status of contract of sale of car between a minor and an insane?
A. Rescissible
B. Voidable
C. Unenforceable
D. Void
5. Which of the following instruments may become the subject matter or reformation?
A. Holographic will
B. Notarial will
C. Conditional donation inter vivos
D. Void agreement
6. What is the status of contract if the doubts are cast upon the principal object of the
contract in such a way that it cannot be known what may have been the intention or
will of the parties?
A. Rescissible
B. Voidable
C. Unenforceable
D. Void
7. What is the proper remedy available to the injured party in case of incidental fraud?
A. Action for annulment of contract
B. Action for reformation of instrument
C. Action for damages
D. Action for declaration of nullity
8. In case of doubt in incidental circumstances of contract of commodatum, it shall be

interpreted in favor of?
A. Greatest reciprocity of interests
B. Least transmission of rights
C. Greatest transmission of rights
D. Least reciprocity of interests
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Telephone : (043) 723 8412
9. This principle of contracts allows the contracting parties to provide any stipulations
they may deem convenient provided they are not contrary to law, morality, good
customs, public order or public policy.
A. Relativity of contract
B. Mutuality of contract
C. Autonomy of contract
D. Consensuality of contract
10. Which of the following contract may become the object of contract?
A. National park
B. Public streets
C. Patrimonial property of the state
11. Which of the following contracts may be assailed by a third person?

A. Rescissible contract
B. Voidable contract
C. Unenforceable contract
D. Any of the above
12. What is the remedy of the injured party if the consent is vitiated?
13. What is the remedy of the injured party in case of absolutely simulated contract?
14. What is the remedy of the injured party in case of relatively simulated contract?
15. To whom shall civil interdiction, insanity, death or insolvency before acceptance must
happen to make the offer ineffective?
A. Offerer
B. Acceptor
C. Either offerer or acceptor
D. Both offerer and acceptor
16. In case of conflict between the spirit and the letter of the contract, how shall it be
interpreted?
A. The spirit shall prevail over the letter.
B. The letter shall prevail over the spirit.
C. The contract shall be construed to be void.
D. The contract shall be reformed.
17. The cause in this type of contract is the service compensated.

A. Onerous contract
B. Commutative contract
C. Gratuitous contract
D. Remuneratory contract
18. Who among the following may ask for reformation of instrument of contract?
A. Either party in case of mutual mistake
B. Injured party
C. Successors in interest of injured party
D. Any of the above
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19. What is the status of contract entered into during lucid interval?
A. Valid and binding
B. Void
C. Voidable
D. Unenforceable
20. It refers to a vice of consent that involves taking improper advantage of his power over
the will of another, depriving the latter of a reasonable freedom of choice
A. Causal fraud
B. Undue influence
C. Violence
D. Intimidation
21. When does the acceptance made by letter or telegram bind the offerer?
A. From the time he sent his offer.
B. From the time the acceptance was sent by the other party.
C. From the time the acceptance came to the knowledge of the offerer.
D. From the time the acceptance was received by the offerer.
22. A offers his watch to B for P500. B said that he will buy it for P450. Is the contract
perfected?
A. Yes because the consent is manifested.
B. Yes provided B will pay P450.
C. No because there is no delivery of the watch.
D. No because a qualified acceptance constitutes a counter-offer.
23. ABC Inc. makes an advertisement for bidders of its land. J-Z is the highest bidder. Is
ABC Inc. bound to accept the offer of the highest bidder?
A. Yes because advertisements for bidders are definite offers.
B. No because advertisements for bidders are simply invitation to make proposals.
C. Yes because in auction sale the highest bidder is always the winner.
D. No because the lowest bidder should be the winner.
24. A contract is entered into between A, a minor and B, an insane person. C, the father of
A ratified the contract. What is the status of the contract after ratification?
A. Voidable
B. Rescissible
C. Uenforceable
D. Null and void
25. If one of the parties believed that he received a certain amount as a loan, which the
other delivered as a real deposit, what is the status of the contract?
A. Voidable contract of loan on the part of the first party.
B. Voidable contract of real deposit on the part of the second party.
C. Valid contracts of loan and deposit on both parties.
D. Void because of want of consent.
26. A borrowed money from B. Upon failure of A to pay the loan, B threatened A to file a
collection suit against A if the latter will not execute the contract of mortgage. As a
result of the threat, A entered into the contract of mortgage. What is the status of the
contract of mortgage?
A. Void because threat is illegal.
B. Voidable because the consent of A is vitiated.
C. Valid and binding because the claim of B is just and legal.
D. Unenforceable because there is violation of statute of fraud.
10 | P a g e RLACO/DSALES/NVALDERRAMA
Mobile : 0927 283 8234
Telephone : (043) 723 8412
27. Which of the following statements is incorrect?

A. Violence or intimidation shall annul the obligation, although it may have been
employed by a third person who did not take part in the contract.
B. Failure to disclose facts, when there is duty to reveal them, as when the parties
are bound by confidential relations, constitutes fraud.
C. A mere expression of an opinion does not signify fraud, unless made by an
expert and the other party has relied on the former’s special knowledge.
D. The usual exaggerations in trade, when the other party had an opportunity to
know the facts, are in themselves fraudulent.
28. Before Don Lasal dies, his heirs enter into an agreement for the partition of the estate of
their father. What is the status of the contract?
A. Voidable
B. Void
C. Unenforceable
D. Rescissible
29. One of the parties has brought an action to enforce the instrument, may he
subsequently ask for its reformation?
A. Yes because the remedies are available as successive rights.
B. No because there has been an election as between inconsistent remedies.
C. Yes because the injured party can never be estopped.
D. No if there is stipulation to that effect.
30. A offered B to purchase his car. A allowed B two weeks to accept the offer. A and B also
entered into a contract of option for the two weeks allowance and B paid P200 for the
option. Can A withdraw the offer before acceptance by B?
A. Yes because an offer may be withdrawn by offerer before the acceptance is
communicated.
B. No because the option contract is supported by a consideration.
C. No because the offer cannot be withdrawn once given.
D. Yes because the contract is not yet perfected.
III. Law on Sales
1. A and B entered into a contract whereby A will deliver his laptop to B while the latter
will deliver P10,000 cash and a cellphone with a value of P10,000 to A. What is the
name of the contract?
a. Contract of Barter
b. Contract of Agency
c. Contract of Sale
d. Contract for a Piece of Work
2. On January 1,2012, D borrowed from C P100,000 and as a security D mortgaged his

land to C. The contract of mortgage provides that D is absolutely prohibited from selling
the mortgaged land without the consent of C. On January 2,2012, D sold the same land
to X for P50,000 to be delivered on January 5,2012 without the consent of C. D failed to
pay the loan. Is the contract of sale between D and X valid?
a. No because D is no longer the owner of the land on January 2,2012.
b. No because D is no longer the owner of the land on January 5,2012.
c. Yes because D is still the owner of the land although it was mortgaged to C.
d. Yes provided D will pay the amount due to C.
3. In case of doubt whether the contract of sale is one of emptio rei speratae or one of
emptio spei, how shall the court generally interpret the type of the contract of sale?
a. Emptio rei speratae
b. Emptio spei
c. Both A and B
d. Neither A nor B
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4. S sells to B 300 sacks of yellow corn from a mass stored in the warehouse of S. The
mass, however, actually consists of 280 sacks of yellow corn. Which of the following
statements is correct?
a. The sale is null and void because there is no consent.
b. The sale is null and void because there is no determinate object.
c. B becomes the owner of all the 280 sacks and S is bound to deliver additional 20
sacks in the absence of contrary agreement.
d. B becomes the owner of all the 280 sacks and S is not bound to deliver the
additional 20 sacks.
5. Which of the following contracts of sale is void?

a. Executory oral sale of real property or any interest therein regardless of the
price.
b. Executory oral sale of goods, chattels or things in action the price of which is
P500 or more.
c. Sale of a piece of land by the agent in the name of principal wherein the
authority of the agent to sell the land is not in writing.
d. Sale of a piece of land by a third person in the name of owner but who has not
been given any authority.
6. B purchased the car of S for P100,000 payable within 30 days from the date of sale. As
a downpayment, B gives S P1,000 upon the execution of their agreement. How much
should B pay to S on the 30th day?
a. P100,000 because the P1,000 is an earnest money.
b. P99,000 because the P1,000 is an option money.
c. P100,000 because the P1,000 is an option money.
d. P99,000 because the P1,000 is an earnest money.
7. After the perfection of the contract of sale and after the delivery of the goods by the
seller to the common carrier for transmission to the buyer, who shall bear the risk of
loss of the object of the contract of sale before its arrival to the buyer?
a. Buyer because any benefit therefrom during the same period inures to him.
b. Seller because any benefit therefrom during the same period inures to him.
c. Buyer because delivery to the common carrier means delivery to the buyer.
d. Seller because goods remain at the seller’s risk until the ownership of the goods
is transferred to the buyer by actual or constructive delivery.
8. A sold a residential house and lot at an installment price of P6,000,000 payable in 50

years at P10,000 per month to B. After total payments of P5,200,000, B defaulted on
the next installment. After following the necessary procedures required by law, the
contract of sale is properly cancelled. How much cash surrender value is B entitled from
A?
a. P4,400,000
b. P3,600,000
c. P4,200,000
d. P3,900,000
9. S, a capacitated person, sold to B, a minor, a chicken joy. May S demand from B the
payment of the purchase price?
a. No because the contract of sale is voidable since B is an incapacitated person.
b. Yes because the subject matter is a necessary.
c. Yes even if the price is unreasonable.
d. No because the contract of sale is void if the buyer is a minor.
10. On January 1, S delivered an electronic calculator to B under a sale or return

arrangement. S gave B up to May 7 to return the electronic calculator. Before May 7,
the calculator was destroyed by fire. Should B pay for the purchase price?
a. No because B is not yet the owner of the calculator.
b. No because the calculator is destroyed through fortuitous event.
c. Yes because B becomes the owner of the calculator upon delivery.
d. Yes if the fire is due to the fault of B.
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11. S stole the ring of O and sold the same ring to B for P500 who does not have any
knowledge that the ring was stolen. B is a purchaser in good faith and for value. Which
of the following statements is correct?
a. B acquires title to the ring if he is a purchaser in good faith.
b. O cannot recover the ring from B if he will not reimburse B for P500.
c. O can recover the ring from B even if he will not reimburse B for P500.
d. B will acquire title to the ring if he will not be prosecuted
12. What is the only ground before the unpaid seller may exercise his right in stoppage in
transitu?
a. When the goods are perishable in nature
b. When the goods are sold without stipulation as to credit
c. When the buyer becomes insolvent
d. When the goods have been sold on credit but the term has expired
13. The following are the instances when goods are no longer in transit and therefore the
unpaid seller can no longer exercise his right of stoppage in transitu, except
a. If the buyer obtains delivery of the goods before arrival at the appointed
destination.
b. If the carrier or other bailee acknowledges to the buyer or his agent, that he is
holding the goods in his behalf, after arrival of the goods at their appointed
destination.
c. If the carrier or other bailee wrongfully refuses to deliver the goods to buyer or
his agent.
d. If the goods are rejected by the buyer, and the carrier or other bailee continues
in possession of them, even if the seller has refused to receive them back.
14. It refers to the waiver of the warranty against eviction made by the buyer without the
knowledge of the risk of eviction. Thus, the seller remains to be liable in case of eviction
because the buyer acted in good faith.
a. Waiver consciente
b. Waiver intencionada
c. Waiver sobrente
d. Waiver alluna
15. This is one of the two remedies of the vendee in case of breach of warranties against
hidden defects, of merchantability, of merchantable quality or fitness for a particular
purpose. It refers to the withdrawal from the contract or rescission.
a. Accion quanti minoris
b. Accion redhibitoria
c. Accion pauliana
d. Accion subrogatoria
16. What is the status of the contract of sale when the animals are suffering from
contagious diseases or when the animals are found to be unfit for the use or service for
which they were acquired as stated in the contract?
a. Void
b. Voidable
c. Rescissible
d. Unenforceable
17. What is the effect to the contract of sale if the determination of the price is left to the
judgment of a third person and such person is unable or unwilling to fix the price?
a. The contract of sale is voidable.
b. The contract of sale is valid and binding.
c. The contract of sale is inefficacious unless the parties subsequently agree upon
the price.
d. The contract of sale is rescissible.
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18. The following contracts of sale have prices which are certain and therefore valid, except
a. S sold to B a specific watch for P2,500 which both parties agreed upon.
b. S sold to B a certain ring of which the price is the salary of the faculty member
of La Salle School.
c. S sold to B a specific car the price of which is subject to determination of X,
third person.
d. S sold to B 500 shares of ordinary stocks of BPI at the price equivalent to the
closing price of the ALI’s ordinary shares on April 30,2020 at the Philippine
Stock Exchange.
19. Which of the following statements concerning bilateral and unilateral promise to buy
and/or sell is incorrect?
a. Bilateral promise takes place when one party promises to buy and the other
party promises to sell a determinate thing at an agreed price.
b. Bilateral promise is reciprocally demandable since this is as good as a perfected
contract of sale.
c. Unilateral promise not accepted by the promissee (policitacion) does not produce
any effect.
d. Unilateral promise accepted by the promissee is binding upon the promissor
even if it is not supported by a consideration distinct from the price.
20. On May 1, S sold his registered/titled lot to X. The deed of sale was in a private
instrument. On May 3, S sold the same lot to Y in a public instrument. On May 5, S
sold again the said lot to Z in a public instrument. Z immediately registered the sale
with Register of Deeds on May 5. X took actual possession of the lot on May 6. X, Y and
Z were not aware of the sale made to others. Who among the buyers has the better
right?
a. X because he first took actual possession in good faith.
b. X because he has the oldest title in good faith.
c. Y because he first took constructive possession in good faith.
d. Z because he is the first registrant in good faith.
21. A, B and C are co-owners of a rural lot bounded by D's farm lot in the north with area
of 1,000 SQM and also bounded by E's farm lot in the south with area of 2,000 SQM.
E's use of C's land appears to be best justified. C sold his share in the co-owned rural
lot to F. Who shall be preferred among the persons interested in their right of legal
redemption?
a. A and B
b. D
c. E
d. All of them proportionately
22. M issued a promissory note which states "I promise to pay P10,000 to bearer B." in
exchange for marijuana. B generally indorsed and delivered the promissory note to H in
exchange for cellphone. H acted in good faith. May H collect from M?
a. Yes because he is a holder in due course.
b. Yes because he is a purchaser in good faith and for value.
c. No because of M's defense of illegality of cause.
d. No because he does not pay money for the promissory note.
23. M issued a promissory note which states "I promise to pay P10,000 B." in exchange for
laptop. B generally indorsed and delivered the promissory note to H in exchange for
cellphone. M became insolvent. May H collect from B?
a. Yes provided prior notice of dishonor is given to B.
b. Yes because B warrants the solvency of maker.
c. No because B can never become liable to H.
d. No because even if notice of dishonor is given by H to B.
24. Which of the following is an indicator that a pacto de retro sale is actually an equitable
mortgage?
a. When the price of a sale with a right to repurchase is inadequate.
b. When the vendee obtains possession of the property.
c. When the purchaser retains for himself part of the purchase price.
d. When the vendee binds himself to pay the real property taxes on the thing sold.
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25. What is the period for the exercise of right of legal redemption in onerous transfer of
immovable property from the reckoning provided by law?
a. Within 4 years
b. Within 30 days
c. Within 10 years
d. Within 5 years
26. When may the seller ask the court for immediate cancellation of sale of immovable
property?
a. Reasonable ground to fear the loss of the immovable sold
b. Reasonable ground to fear the loss the price of the immovable sold
c. Either A or B
d. Neither A nor B
27. When may the vendee exercise the right to suspend payment of the price?
a. When the vendor gives security for the return of the price
b. When the disturbance in vendee's possession is a mere act of trespass
c. Either A or B
d. Neither A nor B
28. What is the proper remedy available to the seller in a contract of sale when the buyer
accepted the goods but wrongfully neglects to pay for the goods sold?
a. Maintain an action for the price of the goods
b. Maintain an action for damages
c. Rescind the contract
d. Ask for declaration of nullity of contract
29. What is the proper remedy available to the buyer in a contract of sale when the seller
refuses to deliver the determinate thing sold?
a. File an action for exact fulfillment
b. File an action for annulment of contract
c. File an action for declaration of nullity of contract
d. File an action for rescission of contract
30. What is period for filing an action redhibitoria for animal with redhibitory defect?
a. With 40 days from the date of delivery of the animal
b. With 6 months from the date of delivery of the animal
c. With 3 days from the date of delivery of the animal
d. With one year from the date of delivery of the animal
IV. Law on Pledge, Mortgage and Antichresis
1. It refers to a stipulation in a contract of pledge or contract of mortgage whereby the

thing pledged or mortgaged shall automatically become the property of the creditor in
the event of non-payment of the secured debt within the term fixed.
a. Pactum creditarium
b. Pactum commissorium
c. Pactum debitarium
d. Pactum crematorium
2. A and B jointly borrowed P10,000 from C. In order to secure the obligation, A pledged
his cellphone while B pledged his laptop. At the maturity date of the loan, A paid P5,000
of the loan. Which of the following statements is correct?
a. The contract of pledge on the cellphone is extinguished.
b. The obligation of B is extinguished.
c. A cannot demand the release of his cellphone because a contract of pledge is
indivisible.
d. The contract of pledge on the laptop is extinguished.
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3. If two or more things are pledged, who has the right to choose which thing will be sold
in the absence of stipulation in the contract of pledge?
a. Pledgor
b. Pledgee
c. Debtor
d. Government
4. What is the remedy of the pledgor-owner if there are reasonable grounds to fear the
destruction or impairment of the thing pledged with the fault of the pledgee?
a. To ask for the return of the thing, upon offering another thing in pledge,
provided the latter is of the same kind as the former and not of inferior quality
but subject to the right of the pledgee to sell the said pledged item in public
auction.
b. To ask that the thing pledged be deposited judicially or extrajudicially.
c. To ask that the thing pledged be deposited with a third person.
d. To ask for the extinguishment of the contract of pledge.
5. Which of the following extinguishes only the contract of pledge but not its secured
contract of loan?
a. Return by the pledgee to the pledgor of the promissory note evidencing the debt.
b. Renunciation or abandonment in writing by the pledgee of the contract of
pledge.
c. Appropriation by the pledgee of the thing pledgee in case of default by the debtor
in the payment of contract of loan.
d. Sale of the thing pledged in public auction by the pledgee for net proceeds less
than the amount of the loan.
6. Which of the following stipulations in a contract of pledge is valid?

a. A stipulation which provides that the contract of pledge is not extinguished by
the return of the thing pledged.
b. A stipulation allowing the appropriation by the pledgee of the thing pledged in
case the same is not sold in the first and second auctions
c. A stipulation for the recovery of deficiency in case the proceeds from the sale of
the thing pledged is less than the amount of the obligation.
d. A stipulation authorizing the pledgee to become the automatic owner of the
thing pledged in case of default by the debtor in the payment of the secured
contract of loan.
7. Which of the following statements regarding the sale of the thing pledged in public
auction regarding contract of pledge is incorrect?
a. The pledgee is generally entitled to the excess unless there is stipulation to the
contrary.
b. The pledgor may recover the excess if there is stipulation to that effect.
c. The pledgee can never recover any deficiency even if there is stipulation for such
recovery.
d. The pledgor may become liable to any deficiency if there is stipulation to that
effect.
8. Which of the following is not a characteristic of contract of real estate mortgage?

a. Accessory contract
b. Formal contract
c. Indivisible contract
d. Inseperable contract
9. Which of the following stipulations in a contract of real estate mortgage is valid?

a. A stipulation forbidding the mortgagor-owner from alienating the immovable
mortgaged.
b. A stipulation providing that the mortgagee shall become the automatic owner of
the property mortgaged upon failure of the debtor to pay the principal obligation.
c. Tipo or upset price which refers to price set by the parties as the amount at
which the property at which the property will be sold at public auction.
d. A stipulation prohibiting a second mortgage with respect to property registered
under the Torrens System.
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10. It is a type of foreclosure that may be availed only when when the deed of real estate
mortgage contains a special power of attorney (SPA) authorizing the mortgagee-creditor
to foreclosure it even without court order.
a. Legal foreclosure
b. Conventional foreclosure
c. Judicial foreclosure
d. Extra-judicial foreclosure
11. It refers to the right of the mortgagor to repurchase the property within a certain period
after it was sold in public auction for the payment of the mortgage debt.
a. Equity of redemption
b. Right of redemption
c. Conventional redemption
d. Right of preemption
12. In case of extrajudicial foreclosure of real property under Act No. 3135, what is the
period of the exercise of right of redemption by the debtor-mortgagor or any other
persons authorized by the said law?
a. Within the term of one year and after the date of sale or registration of the
sheriffs certificate of foreclosure sale.
b. Within the term of 90 days and after the date of extrajudicial sale or registration
of the sheriffs certificate of foreclosure sale.
c. Within the term of two years and after the date of extrajudicial sale or
registration of the sheriffs certificate of foreclosure sale.
d. Within the term of six months and after the date of extrajudicial sale or
registration of the sheriffs certificate of foreclosure sale.
13. Notwithstanding Act 3135, Section 47 of RA 8791 (General Banking Laws) provides that
juridical persons whose property is being sold pursuant to an extrajudicial foreclosure
by banks, shall have the right of redemption to be exercised
a. Within 3 months after the foreclosure and sale but not after the registration of
the certificate of foreclosure sale with the applicable Register of Deeds.
b. Within 6 months after the foreclosure and sale but not after the registration of
the certificate of foreclosure sale with the applicable Register of Deeds.
c. Within 1 year after the foreclosure and sale but not after the registration of the
certificate of foreclosure sale with the applicable Register of Deeds.
d. Within 2 years after the foreclosure and sale but not after the registration of the
certificate of foreclosure sale with the applicable Register of Deeds.
14. Which of the following statements regarding the sale of the thing mortgaged in public
auction regarding contract of real estate mortgage is correct?
a. The mortgagor is generally entitled to the excess unless there is stipulation to
the contrary.
b. The mortgagee may generally recover the deficiency unless there is stipulation to
the contrary.
c. Both A and B.
d. Neither A nor B.
15. What is the classification of contract of chattel mortgage as to its perfection?

a. Solemn contract
b. Consensual contract
c. Real contract
d. Legal contract
16. Where shall contract of chattel mortgage involving shares of stocks be registered?
a. Chattel Mortgage Registry where the mortgagor resides
b. Chattel Mortgage Registry where the principal office of the corporation is located
c. Both A and B
d. Neither A nor B
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17. Which of the following statements regarding the sale of the thing mortgaged in public
auction regarding contract of chattel mortgage is correct?
a. The mortgagee is generally entitled to the excess unless there is stipulation to
the contrary.
b. The mortgagor may not generally recover the deficiency unless there is
stipulation to the contrary.
c. Both A and B.
d. Neither A nor B.
18. It is an accessory contract whereby the creditor acquires the right to receive the fruits of
an immovable of his debtor, with the obligation to apply them to the payment of the
interest, if owing, and thereafter to the principal of his credit.
a. Contract of real estate mortgage
b. Contract of chattel mortgage
c. Contract of pledge
d. Contract of antichresis
19. What is the classification of contract of antichresis as to its perfection?

a. Solemn contract
b. Consensual contract
c. Real contract
d. Legal contract
20. Which of the following may become the subject matter of contract of antichresis?
a. Farm lot
b. Car
c. Shares of stocks
d. Patent
V. Law on Partnership
1. Which of the following is not a characteristic of particular partnership?

a. Principal contract
b. Gratuitous contract
c. Multilateral contract
d. Consensual contract
2. Which of the following is a prima facie evidence that a person is a partner of a

business?
a. Receipt of profit share as wages
b. Receipt of profit share as interests
c. Receipt of profit share as return of investment
d. Receipt of profit share as annuity to a widow
3. Which partner is not liable up to the extent of his separate assets?

a. Industrial partner
b. Limited partner
c. Both A and B
d. Neither A nor B
4. A, B and C are partners in ABC Partnership with loss agreement ratio of 1:4:5. A, B and
C contributed capital in the amount of 6M, 1.5M and 2.5M, respectively. In the first
year of ABC Partnership operation, it reported net income of P100,000. How much is
the share of partner B to the net income?
a. P400,000
b. P333,333.33
c. P150,000
d. P250,000
5. Which stipulation is valid in a contract of partnership?

a. Stipulation excluding a capitalist partner from share in profit
b. Stipulation excluding an industrial partner from share in profit
c. Stipulation excluding a capitalist partner from share in loss
d. Stipulation excluding an industrial partner from share in loss
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6. Which managing partner may be validly removed by the controlling partner even
without valid cause?
a. Managing partner appointed in the articles of co-partnership
b. Managing partner appointed in a separate document other than the articles of
co-partnership
c. Both A and B
d. Neither A nor B
7. A, B, C, D and E are partners in ABCDE Partnership with capital contribution ratio of

1M, 2M, 3M, 4M and 5M, respectively. A, B and C are proposing Robinson as its
supplier of office supplies while D and E are proposing SM as its supplier of office
supplies. Who shall be the supplier of ABCDE Partnership?
a. Both Robinson and SM
b. SM
c. Robinson
d. None of the above
8. Which act may be done by the managing partner alone?

a. Submission of partnership claim to arbitration
b. Remission of claim of the partnership
c. Disposition of goodwill of the partnership
d. Act which would make it possible to carry on the ordinary business of the
partnership
9. Which partner may be validly excluded by the injured partner if such partner engages
in a prohibited business without permission from the partnership?
a. Industrial partner
b. Capitalist partner
c. Both A and B
d. Neither A nor B
10. He refers to a person who is no longer a partner of business but has left his capital in
the business as loan, thereby, receiving interest from such loan.
a. Nominal partner
b. Quasi-partner
c. Dormant partner
d. Silent partner
11. Which type of partnership is created even without express agreement among the
partners?
a. De jure partnership
b. De facto partnership
c. Partnership prescription
d. Partnership by estoppel
12. When will the juridical personality of the partnership commence?

a. On the date of signing of articles of co-partnership by the partnership
b. On the date agreed mutually upon by the partners
c. On the date of issuance by SEC of certificate of registration under its official seal
d. On the date of receipt by SEC of articles of co-partnership from the partners
13. When an unlawful partnership is dissolved by a judicial decree, to whom shall the
partnership profits go?
a. To the innocent partner.
b. To the guilty partner.
c. To all the partners pro-rata.
d. To the state.
14. Which of the following statements concerning associations and societies, whose articles
are kept secret among the members, and wherein any one of the members may contract
in his own name with third persons is correct?
a. They shall have separate juridical personality.
b. They shall be treated as a corporation.
c. They shall be treated as a partnership.
d. They shall be governed by the rules on co-ownership.
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15. It is a principle which means that a partner has a right to choose those whom he wants
to be associated with the partnership.
a. Delectus personae
b. Deletus militus
c. Dilitus trustus
d. Deletos fructus
16. What is the effect if a contract of partnership with a capital of at least P3,000 in money
and/or personal property is not in a notarized document and not registered with SEC?
a. The contract of partnership is null and void.
b. The partnership shall be classified as a corporation.
c. The partnership shall be classified as a sole proprietorship.
d. The liability of the partnership and the partners thereof to third persons will not
be affected.
17. A and B orally entered into a contract of partnership whereby A contributed building
while B contributed land. The partnership business is being operated by the partners
for almost 10 years already. A and B divided equally the profits for 10 years. What is the
status of the contract of partnership after 10 years of operation?
a. It is void both as to the contracting parties and to third persons because the
contract of partnership is not in a public instrument and an inventory of the
immovable property is not signed and attached to the public instrument.
b. It may be considered valid as to the contracting parties on the basis of doctrine
of estoppel and only third persons directly affected by such void contract may
file an action for declaration of nullity.
c. It is rescissible both as to the contracting parties and to third person because it
is intended to defraud third person.
d. It is unenforceable both as to the contracting parties and to third person
because it violates status of fraud.
18. The articles of universal partnership is entered into without specification as to its
nature. What shall be its construction or interpretation?
a. It is a particular partnership.
b. It is a universal partnership of all present property.
c. It is a universal partnership of profits.
d. It is a general professional partnership.
19. What is the prescriptive period for a partner to file an action to impugn or question the
manifestly inequitable sharing of partnership profits or losses designated by a third
person?
a. Within 3 months from the knowledge of such designation but it must be before
the said partner executes it.
b. After 3 months from the knowledge of such designation but it must be before the
said partner executes it.
c. Within 3 month from the knowledge of such designation but it must be after the
d. After 3 months from the knowledge of such designation but it must be after the
20. Which of the following partners is not allowed to participate in the management of a
partnership?
a. Capitalist partner
b. Industrial partner
c. Nominal partner
d. Managing partner
31. A and B are partners in an existing partnership with total liabilities to third persons
amounting to P15,000. C is admitted to the existing partnership of A and B. After
several years of operation from admission of C, the total liabilities of the partnership to
third persons increased by P30,000. If the partnership became bankrupt and nothing
remains from its assets, how much may the creditor collect from the separate assets of
Partner C?
A. P15,000
B. P10,000
C. P5,000
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32. A, B, C and D are partners in a general partnership with original capital contribution of
P4,000, P2,000, P1,000, and industry respectively. After several years of operation, the
partners decided to liquidate the partnership. At the time of liquidation, the total assets
of partnership amounted to P57,000 while its total liabilities to third persons amounted
to P42,000. How much will be received by Partner D at the time of liquidation?
A. P4,000
B. P2,000
C. P1,000
33. Which of the following is not an automatic ground of dissolution of general partnership?
A. Insanity of a partner
B. Death of a partner
C. Insolvency of a partner
D. Civil interdiction of a partner
34. ABC Ltd. is a limited partnership. A and B are classified as general partners while C
and D are classified as limited partners. Aside from them, E is an industrial partner.
The total assets of the partners are reported at P100,000 from its total liabilities to third
persons amounted to P130,000. Assuming the partnership is liquidated, how much
may the unpaid creditors of the partnership collect from E?
A. P10,000
B. P6,000
C. P15,000
D. P7,500
35. Which of the following may not be contributed by a limited partner?

A. Money
B. Industry
C. Personal property
D. Real property
36. Which of the following claims shall be settled last in a general partnership?
A. Salaries of employees of partnership
B. Capital contribution of a partner
C. Profit share of a partner
D. Loan payable to a partner
37. Which of the following rights is not available to an assignee of a managing partner?
A. Right to share in net income of the managing partner
B. Right to share in net asset of the managing partner in case of partnership
liquidation
C. Right to manage the partnership
38. Which partner is exempted from making additional capital contribution to the
partnership to save the partnership business in case of imminent loss?
A. Industrial partner
B. Capitalist-Industrial partner
C. Capitalist partner
39. Which cause for partnership dissolution will not terminate the authority of any partner
to act for the partnership?
A. When the cause of partnership dissolution is not by the act, insolvency or death
of a partner.
B. When the cause of dissolution is by the act, insolvency or death of a partner, the
person acting had no knowledge of dissolution, death or insolvency of a partner.
C. Either A or B
D. Neither A nor B
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40. In the absence of contrary agreement, what type of asset will be received by the limited
partner who validly withdraws from the limited partnership?
A. Cash
B. The specific asset he contributed
C. Land
D. Intangible asset
41. Which of the following will require cancellation of articles of limited co-partnership?
A. When all limited partners die.
B. When a person is admitted as a limited partner.
C. When a person is substituted as a limited partner.
D. When a person is admitted as a general partner.
42. The following are the accessory obligations of a partner concerning his obligation to
deliver a sum of money he promises, except
A. To deliver to the partnership at the time it was constituted or on the date
stipulated the money he has promised to contribute.
B. To pay interest on the amount he had promised to contribute from the time he
should have complied with his obligation without need of any demand.
C. To pay damages suffered by the partnership by reason of the default in the
contribution of money.
D. To answer for eviction in case the partnership is deprived of the money he
has contributed to the partnership in the same manner as the vendor is bound
with respect to the vendee.
43. Which partner is not liable up to the extent of his separate assets in a limited
partnership?
A. Capitalist-industrial partner
B. Industrial partner
C. General partner exempted from liability to third persons
44. The partnership shall bear the risk of loss for the following contributions of partners,
except
A. Those property that cannot be kept without deteriorating.
B. Intangible property contributed by a partner where the partner contributed only
its use or enjoyment.
C. Tangible property contributed to be sold.
D. Personal property brought and appraised in the inventory unless there is a
stipulation to the contrary but the liability of the partnership is limited only to
the value of the things at which they were appraised.
45. Which of the following statements concerning the obligations of a partner is incorrect?
A. Every partner must account to the partnership for any benefit, and hold as
trustee for it any profits derived by him without the consent of the other
partners from any transaction connected with the formation, conduct, or
liquidation of the partnership or from any use by him of its property.
B. To reimburse to the partnership the amount that he has taken from the
partnership coffers with interest from the time of conversion plus damages
suffered by partnership by reason of the conversion.
C. To bring to the partnership capital his share of a partnership credit which he
has received in whole or in part even he may have given his receipt if the other
partners have not collected their shares and the debtor becomes insolvent after
the partner has received the payment.
D. To pay to the partnership for damages suffered by it through his fault but he
may compensate them with the profits and benefits which he may have earned
for the partnership by his industry.
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46. Which of the following will not dissolve a general partnership?

A. Loss before delivery of property where the partner contributed only its use or
enjoyment.
B. Loss after delivery of property where the partner contributed only its use or
enjoyment.
C. Loss before delivery of specific thing, which a partner has promised to contribute
to the partnership.
D. Loss after delivery of specific thing, which a partner has promised to contribute
to the partnership.
47. The following are the requisites in order for an admission or representation of a partner
to be used as evidence against the partnership, except
a. The admission or representation must concern partnership affairs.
b. The admission must be made judicially.
c. The admission must be made within the scope of the authority of the partner
making the admission.
d. The admission must be made during the existence of the partnership
48. D is indebted to ABC Partnership, managing partner A of ABC Partnership and B, a

non-managing partner of ABC Partnership in the amount of P20,000; P30,000 and
P40,000, respectively. D paid P9,000 to B who issued his personal receipt for the
payment. How much payment shall be applied to the claim of B?
A. P4,000
B. P6,000
C. P9,000
49. Which of the following partners may liquidate a partnership?

A. The liquidating partner agreed upon by the partners.
B. The partners who have wrongfully dissolved the partnership.
C. The legal representative of the last surviving partner, who is insolvent.
50. It refers to the change in the relation of the partners caused by any partner ceasing to
be associated in the carrying on of the business.
A. Partnership dissolution
B. Partnership liquidation
C. Partnership termination
D. Partnership formation
VI. Negotiable Instruments Law
1. Which of the following is not a party to a negotiable instrument?

A. Maker in a promissory note
B. Drawer in a bill of exchange
C. Drawee-bank in a check
2. Where a signature is so placed upon the instrument that it is not clear in what capacity
the person making the same intended to sign, he is deemed to be
A. an indorser
B. an acceptor
C. a drawer
D. a maker
3. Which of the following is not a requisite of a negotiable promissory note?

A. It must be in writing and signed by the maker.
B. It must contain an unconditional promise to pay a certain sum of
money.
C. It must be payable on demand, or at a fixed time or at a
determinable future time.
D. It must be payable to order or bearer.
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4. It is an attribute of a negotiable instrument which means that as the instrument is

passed from one person to another, secondary contracts are entered into thereby
increasing the chances of the holder to collect the amount payable on the instrument.
A. Accumulation of secondary contracts
B. Assignability
C. Transmissibility
D. Negotiability
5. How may a negotiable bearer instrument be negotiated?

A. By indorsement coupled with delivery.
B. By mere delivery.
C. By mere indorsement.
D. Either A or B.
6. Which of the following instruments is non-negotiable?

A. To A: Pay to P or order P100,000 and reimburse yourself out of my money on
your hands. Sgd. D.
B. I promise to pay to B or bearer P4,000 in four monthly installments beginning
January 1,2021. Sgd. M.
C. I promise to pay to P or order P10,000 together with all sums that may be due to
him on December 31,2020. Sgd M.
D. I promise to pay to P or order P1,000 five days after the death of Jay Cruz.
Sgd.M.
7. Which of the following instruments is invalid?

A. I promise to pay to bearer Julia Barreta P1,000. Sgd Gerad Ander.
B. I promise to pay to Berta Alonzo P1,000. Sgd. Gerad Erson.
C. Both A and B
D. Neither A nor B
8. Which of the following is a bearer negotiable instrument?

A. Pay to the order of ourselves P100.00. To B. Sgd. D.
B. I promise to pay to the order of myself P1,000. Sgd. M.
C. Pay to yourself or order P1,000. To Y. Sgd. D.
D. Pay to the order of cash. To A. Sgd. D
9. Where the negotiable instrument is so ambiguous that there is doubt whether it is a bill
of exchange or promissory note, which is true?
A. The holder may treat the negotiable instrument as either bill of exchange or
promissory note at his election.
B. The court shall determine whether the negotiable instrument is either bill of
exchange or promissory note.
C. The maker or acceptor may treat the negotiable instrument as either bill of
exchange or promissory note at his election.
D. The instrument becomes a non-negotiable instruments but remains to be valid.
10. What indorsement will revert an originally negotiable bearer instrument to its original
bearer form?
A. Blank indorsement
B. Special indorsement
C. Qualified indorsement
21. The following are the functions of negotiable instruments, except

a. They are substitutes for money.
b. They increase the purchasing medium in circulation.
c. They increase credit transactions.
d. They are intended as legal tender.
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22. It is an attribute of a negotiable instrument which allows it to be passed from one hand
to another similar to money, so as to give the holder in due course the right to hold the
instrument and collect the sum payable, for himself free from personal defenses
available to prior parties.
a. Accumulation of secondary contracts
b. Negotiability
c. Assignability
d. Tenderability
23. The following are the kinds of negotiable instruments, except

a. Promissory note
b. Bill of exchange
c. Checks
d. Bill of lading
24. The sum payable is sum certain for negotiable instruments although it is to be paid
under the following instances, except
a. By stated installments with escalation clause
b. With exchange, whether at a fixed rate or at a current rate.
c. With costs of collections or an attorney’s fee
d. With delivery of a thing other than money
25. Which of the following instruments is non-negotiable because it is conditional order to

pay?
a. Pay to B or order P1,000 and reimburse yourself out of my money on your
hands.
b. Pay to B or bearer P1,000 and debit the amount to my receivable.
c. Pay to B or order P1,000 on account of contract of sale between you and ABC
Inc.
d. Pay to B or order P1,000 out of my salary in the company.
26. Which of the following instruments is non-negotiable because it is not payable in a

determinable future time?
a. 60 days after sight, pay to the order of J P1,000.
b. On or before December 31,2025, I promise to pay X or order P1,000.
c. On the death of X, I promise to pay B or order P1,000.
d. 10 days before the death of A, I promise to pay B or bearer P1,000.
27. The following provisions do not affect negotiability of an instrument, except

a. Authorization of sale of collateral securities in case the instrument be not paid
at maturity.
b. An order or promise to do any act in addition to the payment of money.
c. Authorization of confession of judgment if the instrument be not paid at
maturity.
d. Waiver of the benefit the law intended for the advantage or protection of the
obligor.
28. Which of the following instruments is non-negotiable?

a. I promise to pay to B or order P1,000 on December 1,1985, provided, however,
that if this note is not paid at maturity date, the ring pledged may be sold at
public auction.
b. Six months after date, I promise to pay to B or order P1,000 waiving the right to
appeal and all of valuation appraisement.
c. I promise to pay B or order P1,000 or 10 dogs at the option of holder.
d. I promise to pay to bearer P1,000 and to deliver him two cars.
29. The negotiable character of an instrument is not affected by the following

circumstances, except
a. It is not dated.
b. It is not signed by the maker or drawer.
c. It bears a seal.
d. It designated a particular kind of current money in which payment is to be made
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30. The following are the instances when a negotiable instrument is payable on demand,
except
a. Where it is expressed to be payable on demand, or at sight or on presentation.
b. Where it is payable at a fixed period after date or sight.
c. Where no time for payment is expressed.
d. Where an instrument is issued, accepted, or indorsed when overdue, as regards
to the person issuing, accepting or indorsing it.
31. The following instruments are payable to order, except

a. I promise to pay to the order of B P1,000.
b. Pay to the order of ourselves P100.00. To B.
c. I promise to pay to the order of myself P1,000.
d. I promise to pay to the order of cash P1,000.
32. The following instruments are payable to bearer, except

a. Pay to the order of Pacman P1,000. (The issuer knew that the Pacman is a
fictitious person.)
b. Pay to cash. Pay to the order of money. Pay to the order of cash.
c. Pay to X or order P1,000. To Y. Sgd G. Indorsement. Sgd Y.
d. Pay to bearer B P1,000.
33. Which of the following instruments is negotiable?

a. I promise to pay P or order P10,000 on Christmas Day. Sgd. M.
b. I promise to pay P or order P10,000 on December 31, 2050. Sgd. M.
c. I promise to pay P or order P10,000 10 days before the death of Mr. Jerry Tom.
Sgd. M.
d. I promise to pay P or order P10,000 when my means permit me to do so. Sgd. M.
34. Which of the following instruments is payable on a determinable future time?

a. I promise to pay P or order P10,000. Sgd. M.
b. I promise to pay P or order P10,000 on the death of Mr. Noli Failon. Sgd. M.
c. I promise to pay P or order P10,000 on December 1, 1901. Sgd. M.
d. I promise to pay P or order P10,000 on December 1, 2050. Sgd. M.
35. Where a signature is so placed upon the instrument that it is not clear in what capacity
the person making the same intended to sign, he is deemed to be
a. An indorser
b. A maker
c. A drawer
d. An acceptor
36. In which of the following negotiable instruments shall the agent be personally liable?
a. Pay to A or order P1,000. Jose Cruz by: Pedro Vega (sgd)
b. Pay to A or bearer P1,000. (sgd) Pedro Vega for Jose Cruz
c. Pay to A or order P1,000. (sgd) Pedro Vega as agent of Jose Cruz
d. Pay to A or bearer P1,000. (sgd) Pedro Vega, agent
37. What is the effect if an instrument originally payable to bearer is negotiated by

indorsement plus delivery?
a. It remains to be a bearer instrument that may be negotiated by mere delivery.
b. It becomes an order instrument that must be negotiated by indorsement plus
delivery.
c. It becomes a non-negotiable instrument.
d. It is equivalent to assignment of credit.
38. What is the prima facie presumption of law regarding the time of indorsement where an
instrument does not bear date after the maturity of the instrument?
a. Every negotiation is deemed prima facie to have been effected before the
instrument was overdue.
b. Every negotiation is deemed prima facie to have been effected after the
instrument was overdue.
c. Every negotiation is deemed prima facie to have been effected at maturity date.
d. None of the above.
39. What is the prima facie presumption of law regarding the place of indorsement in the
absence of contrary evidence?
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a. Every negotiation is deemed prima facie to have been effected at the place where
the instrument is dated.
b. Every negotiation is deemed prima facie to have been effected at the place where
the instrument is accepted.
c. Every negotiation is deemed prima facie to have been effected at the place where
the instrument is issued originally.
d. Every negotiation is deemed prima facie to have been effected at the place where
the instrument is discharged.
40. In case an instrument payable to order is merely delivered without indorsement and the
transferor indicates the indorsement at a date later than the date of delivery, when does
the negotiation takes effect for the purpose of determining whether the transferee is a
holder in due course?
a. At the time the indorsement was actually made.
b. At the time of the delivery of instrument.
c. At the time of filing the case to compel the transferor to indicate the
indorsement.
d. At the time of the original issuance of instrument.
41. Where an instrument is payable to the order of two or more payees or indorsees who are
partners, who must indorse the instruments to effectuate valid negotiation?
a. All of two or more payees or indorsees unless the one indorsing has the
authority to indorse for others.
b. Anyone of the payees only if there is authority given by majority of the partners.
c. Anyone of the payees only if there is authority given by all of the partners.
d. Anyone of the payees because the there is presumption of mutual agency among
the payees.
42. Which of the following indorsements is valid assuming the amount of the instrument is
P1,000?
a. Pay to X P400. Sgd Indorser
b. Pay to C P600 and Pay to D P400. Sgd Indorser
c. Pay to A or B P1,000. Sgd Indorser
d. Pay to A and B P1,000. Sgd Indorser
43. Which of the following indorsements is invalid assuming the amount of the instrument
is P1,000?
a. Pay to A and B P1,000. Sgd Indorser
b. Pay to A P1,000. Sgd by Minor Indorser.
c. Pay to P1,000. Sgd. Indorser.
d. Sgd. Indorser
44. Which of the following definitions of the kinds of indorsement refers to facultative
indorsement?
a. It is an indorsement by which the indorser binds himself to pay, upon no other
condition that the failure of parties to do so and of due notice to him of such
failure.
b. It is an indorsement which is subject to the happening of a condition but the
party required to pay the instrument may disregard the condition. But any
person to whom an instrument so indorsed is negotiated will hold the same, or
the proceeds thereof, subject to the rights of the person indorsing conditionally.
c. It is an indorsement which waives the benefit provided by law to the indorsers.
d. It is an indorsement wherein the name of the indorsee is misspelled.
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45. Which of the following definitions of the kinds of indorsement refers to qualified
indorsement?
a. It is an indorsement which specifies the person to whom, or to whose order, the
instrument is to be payable, and the indorsement of such indorsee is necessary
to the further negotiaition of the instrument. If the instrument is originally an
order instrument, it will revert an instrument converted to bearer by blank
indorsement to its original character of being order instrument.
b. It is an indorsement which specifies no indorsee and an instrument so indorsed
becomes bearer instrument and may be negotiated by delivery.
c. An indorsement which either prohibits the further negotiation of the instrument,
or constitutes the indorsee the agent of the indorser or vests the title in the
indorsee in trust for or to the use of some other person. But the mere absence of
words implying power to negotiate does not make an indorsement this kind of
indorsement.
d. It is an indorsement that constitutes the indorser a mere assignor of the title to
the instrument and may be made by adding to the indorer’s signature the words
“without recourse” or any words of similar import and such indorsement does
not impair the negotiable character of the instrument.
46. Which of the following is a not a restrictive indorsement?

a. Pay to C only. Sgd. B or Pay to C and no other person. Sgd. B
b. Pay to C for collection. Sgd. B or Pay to C for deposit. Sgd. B
c. Pay to X in trust for C. Sgd. B
d. Pay to C, at indorsee’s risk. Sgd. B
47. M, issued a PN payable to order to A. A negotiated it to B by blank indorsement. B

negotiated it to C by mere delivery. C negotiated it to D by Special Indorsement coupled
with delivery. D negotiated it to E by mere delivery. Is the negotiation to E valid?
a. Yes because of blank indorsement.
b. No because the instrument is payable to order.
c. Yes because instrument payable to bearer can be converted to order instrument.
d. No because order instrument is always order instrument.
48. M issues A PN payable to order to A. A specially indorsed it to B coupled with delivery.

B specially indorsed it to C coupled with delivery. C indorsed it in blank to D coupled
with delivery. D specially indorsed it to E coupled with delivery. E specially indorsed it
to F coupled with delivery. Which indorsement can be stricken or cancelled out by F?
a. A to B
b. E to F
c. D to E
d. C to D
49. Who is the holder of a bearer negotiable instrument?

a. The possessor of it
b. The bearer of it
c. The payee or indorsee who is in possession of it
d. Any of the above
50. Which of the following is not primarily liable to a negotiable instrument?

a. Maker
b. Drawer
c. Acceptor
d. None of the above
51. In a negotiable instrument, who is secondarily liable for being guarantor of solvency of
the person primarily liable?
a. General indorser
b. Qualified indorser
c. Person negotiating the instrument by mere delivery
d. All of the above
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52. M makes a PN payable to the order of P. P indorses the note to A, A to B, B to C, C to H,

holder. H presents the note to for payment but M dishonors it. H notifies P, A, B and C.
After giving the notice, H, holder further negotiates the note to I, I to J, and J to K. Who
benefited from the notice given by H to P?
a. A, B, C, only
b. I, J, K only
c. A, B, C, I, J, K
d. A, B, C, I only
53. The following are the modes of discharging a negotiable instrument, except
a. By payment in due course by the maker
b. By the intentional cancellation, destroying, burning, or tearing of the instrument
by the holder
c. When the principal debtor becomes the holder of the instrument at or after
maturity in his own right
d. By payment in due course by drawer
54. Payment in due course by or in behalf of the principal debtor discharges the
instrument. The following are the requisites of payment in due course, except
a. Payment must be made at or after maturity date.
b. Payment must be made to the holder.
c. Payment must be made using check.
d. Payment must be made by the debtor in good faith.
55. He is a person whose name is inserted by a drawer of a bill or any indorser to whom the
holder may resort in case of need; that is to say, in case the bill is dishonored by non-
acceptance or non-payment.
a. Referee in case of need
b. Accomodation party
c. Acceptor for honor
d. Payor for honor
56. A bill may be accepted before it has been signed by the drawer, or while otherwise
incomplete, or when it is overdue, or after it has been dishonored by a previous refusal
to accept, or by non payment. But when a bill payable after sight is dishonored by non-
acceptance and the drawee subsequently accepts it, in the absence of agreement, when
is the holder entitled to have the bill accepted?
a. As of the date of the second presentment for acceptance.
b. As of the date of first presentment for acceptance.
c. As of the date of the actual acceptance.
d. As of the date of second refusal.
57. The following are examples of qualified acceptance by acceptor. Which acceptance is
unqualified or general acceptance?
a. An acceptance to pay at a particular place
b. Conditional; that is to say, which makes payment by the acceptor dependent on
the fulfillment of a condition therein stated.
c. Partial; that is to say, an acceptance to pay part only of the amount for which
the bill is drawn.
d. Qualified as to time.
58. It is the formal declaration drawn up and signed by a notary that he presented a foreign
bill of exchange for acceptance or for payment and that it was refused. It is required for
a foreign bill but not for inland bill.
a. Notice of dishonor
b. Protest
c. Petition
d. Complaint
59. The following are the instances when a protest of negotiable bill of exchange is
mandatory, except
a. Where an inland bill has been accepted for honor.
b. Where an inland bill contains a referee in case of need.
c. Where an inland bill is dishonored by the acceptor for honor
d. Where an inland bill is dishonored by non-acceptance by the drawee or non-
payment by the acceptor
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60. As a general rule, where shall protest be made?

a. At the place where the bill is written.
b. At the place where the payee is residing.
c. At the place where the bill is dishonoured.
d. At the place where the holder is residing.
61. Where an acceptance for honor does not expressly state for whose honor it is made, the
law presumes that it is made for the honor of the
a. Drawer
b. Drawee
c. Indorser
d. Payee
62. Who shall be given preference in case two or more persons offer to pay a bill for the
honor of different parties?
a. The person offering to pay the instrument in behalf of the acceptor.
b. The person offering to pay the instrument in behalf of the drawer.
c. The person offering to pay the instrument in behalf of the payee.
d. The person offering to pay the instrument in behalf of the last general indorser.
VII. Law on Corporation
1. Which of the following is a characteristic of a private corporation?

a. It is be created by operation of law.
b. It has no right of succession.
c. It has all the rights, powers and attributes of a person unless denied by law.
d. It may be dissolved even without the consent of the state.
2. Which of the following is a necessary power of a private corporation?

a. Power to declare and distribute dividends
b. Power to enter into merger or consolidation
c. Power to sue
d. Power to issue checks
3. Which doctrine means that the decisions of the board of directors on act of
management cannot be reversed by the court of law?
a. Limited liability rule
b. Separate entity theory
c. Business judgment rule
d. Right of succession
4. Which of the following does not have juridical personality?

a. Ostensible corporation
b. De facto corporation
c. De jure corporation
d. Corporation by prescription
5. In which of the following corporate acts are preferred stocks classified as non-voting in
the Articles of Incorporation not allowed to vote?
a. Approval of management contract
b. Amendment of articles of incorporation
c. Dissolution of corporation
d. Merger or consolidation of corporations
6. What shares of stocks may be classified as no-par value shares of stocks?

a. Common stocks
b. Preferred stocks
c. Both A and B
d. Neither A nor B
7. Which of the following corporations is not allowed to issue no-par value shares?
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a. Trust companies
b. Mining companies
c. Educational institution
d. Oil company
8. What is the minimum ownership of Filipinos in Public Utility?

a. 40%
b. 60%
c. 30%
d. None
9. Which of the following words may be included in the name of a Single Person
Corporation?
a. Corp.
b. Ltd.
c. Inc.
d. OPC
10. What is the effect of failure to submit by-laws under the Revised Corporation Code?
a. The corporation remains to be a de jure corporation.
b. That is merely a non-automatic ground for corporation dissolution.
c. The corporation is ipso facto dissolved by operation of law.
d. The articles of incorporation will be rejected by SEC.
11. Which of the following is not a qualification of a member of board of directors?

a. He must be a resident of the Philippines.
b. He must be a capacitated person.
c. He must be of legal age.
d. He must be a stockholder or subscriber of the corporation.
12. Which of the following corporate officers is required to be stockholder-director?

a. Compliance officer
b. President
c. Secretary
d. Treasurer
13. Which of the following reasons of vacancy in the board of directors does not allow the
remaining members of the board constituting a quorum to fill up the vacancy?
a. Disqualification
b. Abandonment of office
c. Expiration of term
d. Resignation
14. Which corporate act may not be validly performed by the executive committee of the
corporation?
a. Selection of independent external auditor
b. Approval of collectible bargaining agreement with labor union
c. Declaration of cash dividends
d. Incurring or increasing loan payable
15. It refers to a contractual right of incumbent shareholders to be given the opportunity to

purchase the shares at a reasonable price of co-stockholders in a close corporation
before it is offered to other persons.
a. Appraisal right
b. Preemptive right
c. Right of first refusal
d. Redeemable right
16. This doctrine means that the stockholders are liable only up to the extent of their
capital contribution..
a. Estoppel doctrine
b. Limited liability rule
c. Wasting asset doctrine
d. Trust fund doctrine
17. What type of dividend is treasury shares declared as dividends?
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a. Property dividend
b. Stock dividend
c. Cash dividend
d. Scrip dividend
18. In which meeting is proxy voting not allowed?

a. Election of corporate officers
b. Meeting of executive committee
c. Meeting of board of directors
d. All of the above
19. Which right is not available to delinquent subscribers?

a. Right to dividends
b. Right to vote
c. Both A and B
d. Neither A nor B
20. Which right is available to subscribers who are not yet declared delinquent?
a. Right to inspect corporate books
b. Right to vote
c. Both A and B
d. Neither A nor B
21. Which of the following is a valid consideration for the issuance of shares of stocks?
a. Future services
b. Promissory note
c. Both A and B
d. Neither A nor B
22. When shall public sale of delinquent stocks be held counted from the date of
delinquency?
a. 60 days
b. 30 days
c. 10 days
d. Not less than 30 days but not more than 60 days
23. It refers to a business combination whereby two or more existing corporations created a
new corporation.
a. Merger
b. Consolidation
c. Joint arrangement
d. Joint venture
24. Which type of corporations it not allowed to be incorporated as a close corporation?

a. Stock exchanges
b. Trading company
c. Review center
d. Restaurant business
25. What is the required vote for the revocation of the delegated power of the board to
amend by-laws?
a. At least majority of the board of directors with ratification of at least 2/3 of the
stockholders.
b. At least majority of board of directors with ratification of at least majority of the
stockholders.
c. At least 2/3 of the stockholders.
d. At least majority of the stockholders.
26. What is the required vote for the approval of management contract when there is no
interlocking directors between the managing and managed corporation?
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a. At least majority of the board of directors with ratification of at least 2/3 of the
stockholders for both managing corporation and managed corporation.
b. At least majority of the board of directors with ratification of at least majority of
the stockholders for both managing corporation and managed corporation.
c. At least majority of the board of directors with ratification of at least 2/3 of the
stockholders for managing corporation and at least majority of the board of
directors with ratification of at least majority of the stockholders for managed
corporation.
d. At least majority of the board of directors with ratification of at least 2/3 of the
stockholders for managed corporation and at least majority of the board of
directors with ratification of at least majority of the stockholders for managing
corporation.
27. What is the requirement for the fundamental amendment of the articles of incorporation
of stock corporation?
a. By at least majority vote of the board of directors and the vote or written assent
of the stockholders representing at least two-thirds (2/3) of the outstanding
capital stock.
b. By at least majority vote of the board of directors and ratification vote of the
stockholders representing at least two-thirds (2/3) of the outstanding capital
stock.
c. By at least majority vote of the board of directors and the approval vote of the
stock.
d. By at least majority vote of the board of directors and the oral agreement of the
stock.
28. It refers to act committed by the corporation outside its express powers, implied powers
and incidental powers.
a. Illegal act
b. Unlawful act
c. Ultra vires act
d. Unauthorized act
29. It refers to a private corporation created for charitable purposes.

a. Eleemosynary corporation
b. Ecclesiastical corporation
c. Civil corporation
d. Lay corporation
30. How may a nonstock corporation be converted into a stock corporation?

a. By mere amendment of articles of incorporation of nonstock corporation
b. By dissolving a nonstock corporation and forming a new stock corporation
c. Either A or B
d. Neither A nor B
31. In which corporation act is appraisal right available to a dissenting stockholder?

a. Merger or consolidation of two or more corporations
b. Approval of management contract
c. Distribution of stock dividends
d. Increase or Incurring bond indebtedness
32. What is the term of office of a director of a stock corporation?

a. Five years
b. Three years
c. One year
d. Any of the above as long as provided in the by-laws
33. There are 1,100 outstanding common stocks in a private corporation. Ten sits in the
board will be filled up by the stockholders. How many common stocks are necessary to
obtain three guaranteed sits in the board of directors?
a. At least 300 common stocks
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b. At least 306 common stocks

c. At least 303 common stocks
d. At least 333 common stocks
34. What is the maximum limit for salary of board of directors?

a. 10% of net income before tax of the immediately succeeding year
b. 10% of net income before tax of the immediately preceding year
c. 10% of net income before tax of the current year
d. 10% of net income after tax of the immediately succeeding year
35. There are 15 sits in the board of directors of a private corporation. The board of
directors held a meeting. 11 directors attended in the said meeting. In the said meeting,
the collective bargaining agreement with the labor union was approved by 6 directors.
Aside from that, the corporate secretary was elected through the vote of 7 directors.
Which corporate act is valid?
a. Approval of collective bargaining agreement with the labor union
b. Election of corporate secretary
c. Both A and B
d. Neither A nor B
36. Which is not a duty of a director of a private corporation?

a. Duty of loyalty
b. Duty of independence
c. Duty of diligence
d. Duty of obedience
37. Which of the following is an incorrect difference between a proxy and voting trust
agreement?
a. Proxy need not be notarized while voting trust agreement must be notarized.
b. There is no transfer of title to proxy while there is transfer of title to trustee.
c. Proxy is revocable at any time while trust agreement is irrevocable.
d. The proxy votes as an owner while the trustee votes as an agent.
38. In which document shall denial of preemptive right be made for its validity?
a. Articles of incorporation
b. By-laws
c. Either A or B
d. Both A and B
39. Which matter shall be provided in the articles of incorporation instead of the by-laws?
a. Provisions on founder's shares
b. Formality of proxies
c. Time for holding annual election of directors
d. Procedures for issuance of certificate of stocks
40. Which matter may be provided in the by-laws and not necessarily in the articles of
incorporation?
a. Authorized capital stock of stock corporation
b. Creation of an executive committee
c. Term of existence of corporation
d. Place of principal office of the stock corporation in the Philippines
41. Which corporation act is not required to be ratified by the stockholders?

a. Distribution of stock dividends
b. Approval of management contract
c. Acquisition of treasury shares
d. Adoption or amendment of by-laws
42. What is the nature of membership in a nonstock corporation?

a. Membership in a non-stock corporation and all rights arising therefrom are
always personal and non-transferable.
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Telephone : (043) 723 8412
b. Membership in a non-stock corporation and all rights arising therefrom are

personal and non-transferable, unless the articles of incorporation or the by-
laws otherwise provide.
c. Membership in a non-stock corporation and all rights arising therefrom are
commercial and therefore transferable, unless the articles of incorporation or the
by-laws otherwise provide.
d. Membership in a non-stock corporation and all rights arising therefrom are
always commercial and therefore always transferable.
43. Which shares of stocks may be issued below its par value as long as the price is
reasonable?
a. Common stocks
b. Treasury stocks
c. Redeemable preferred stocks
d. Convertible preferred stocks
44. What is the legal capital in no-par value common stocks?

a. The total issued value of both shares issued and shares subscribed.
b. The total issued value of shares issued only.
c. The total issued value of shares subscribed only.
d. The total consideration received.
45. When does the juridical personality of a private corporation commence?

a. From the moment of execution of articles of incorporation by the founders or
incorporators of a private corporation.
b. From the moment of submission of articles of incorporation by the founders or
incorporators to the Securities and Exchange Commission.
c. From the moment of receipt by the Securities and Exchange Commission of the
articles of incorporation from the founders or incorporators of a private
corporation.
d. From the moment of issuance by Securities and Exchange Commission of the
Certificate of Incorporation/Registration under its official seal.
VIII. Cooperative Law
1. Which of the following is not a cooperative principle?

a. Education, Training and Information
b. Cooperation among Cooperatives
c. Member Economic Participation
d. Taxability of Cooperatives
2. It is a type of cooperative the members of which are natural persons.

a. Primary Cooperative
b. Secondary Cooperative
c. Tertiary Cooperative
d. Intermediate Cooperative
3. Which of the following is not a purpose of a cooperative?

a. To promote and advance the economic, social and educational status of the
members
b. To encourage and promote self-help or self-employment as an engine for
economic growth and poverty alleviation
c. To generate funds and extend credit to the members for productive and
provident purposes
d. To create monopoly or business considered as restraint of trade
4. What is the number of cooperators or founders of a primary cooperative?

a. 15 or more natural persons
b. Not less than 5 but not more than 15 natural persons
c. 5 but not more than 10 natural persons
d. 10 or more natural persons
5. What is the maximum foreign investment or ownership in a cooperative?

a. 100%
b. 40%
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Telephone : (043) 723 8412
c. 30%
d. 0%
6. When does a cooperative formed and organized under Cooperative Code acquire
juridical personality?
a. From the date of execution of Articles of Cooperation by the members.
b. From the date of submission of Articles of Cooperation to CDA.
c. From the date of issuance by CDA of Certificate of Registration under its official
seal.
d. From the date of meeting of minds among the members.
7. What is a conclusive evidence of juridical personality of a cooperative and its due

registration with CDA unless it is proved that such registration has been cancelled?
a. Articles of Cooperation signed by the members
b. Cooperative By-laws signed by the members
c. Certificate of Registration issued by CDA under its official seal
d. Certificate of Registration issued by BIR under its official seal
8. It shall be the highest policy-making body of the cooperative and shall exercise such
powers as are stated in the Cooperative Code, in the articles of cooperation and in the
bylaws of the cooperative.
a. General Assembly
b. Board of Directors
c. Board of Trustees
d. Executive Committee
9. It shall be the body in a cooperative responsible for the strategic planning, direction-
setting and policy-formulation activities of the cooperatives.
a. General Assembly
b. Board of Directors
c. Board of Trustees
d. Executive Committee
10. What type of cooperative is absolutely exempted from all taxes and fees imposed by
national internal revenue taxes and other tax laws even without qualification?
a. Duly registered cooperative with CDA that does not transact business with non-
members or the general public.
b. Duly registered cooperative with CDA that transacts business with members,
non-members and the general public.
c. Duly registered cooperative with CDA with accumulated reserves and undivided
net savings of not more than P10,000,000.
d. Duly registered cooperative with CDA with accumulated reserves and undivided
net savings of more than P10,000,000.
IX. Banking Laws
1. What is the government instrumentality created in 1963 by virtue of Republic Act 3591
to insure the deposits of all banks which are entitled to the benefits of insurance and
considered as an an attached agency of the Department of Finance?
a. Development Bank of the Philippines (DBP)
b. Landbank of the Philippines (LBP)
c. Philippine Deposit Insurance Corporation (PDIC)
d. Bangko Sentral ng Pilipinas (BSP)
11. Which of the following deposits is not insured by PDIC?

a. Savings Deposit in Metrobank Manila Branch
b. Certificate of Time Deposit in Philippine National Bank Makati Branch
c. Bank Deposit in Japan Bank Tokyo Branch
d. Special Savings in Bank of Philippine Islands Taguig Branch
12. What is the prescriptive period for depositors to file their deposit insurance claims to
PDIC from date of takeover by PDIC of a closed bank?
a. Within 2 years from PDIC’s takeover of the closed bank
b. Within 1 years from PDIC’s takeover of the closed bank
Mobile : 0927 283 8234
Telephone : (043) 723 8412
c. Within 3 years from PDIC’s takeover of the closed bank

d. Within 4 years from PDIC’s takeover of the closed bank
13. The following are the exceptional cases when the BIR Commissioner may inspect bank
deposits, except
a. When there is application of tax compromise liability by a taxpayer on the
ground of financial incapacity
b. To determine the gross estate for computation of estate tax’s liability
c. When a request for tax information of specific taxpayers made by a foreign tax
authority pursuant to a tax treaty under The Exchange of Information on Tax
Matters Act of 2009
d. To determine the taxable income of politicians
14. Which type of bank deposit of impeachable officer may be examined by impeachment
court without consent of the impeachable officer?
a. Philippine Peso Bank Deposit
b. Foreign Currency Bank Deposit
c. Both A and B
d. Neither A nor B
15. Which government agency has the authority to reactivate an unclaimed balance
account?
a. Bureau of Internal Revenue
b. Bureau of Customs
c. Bureau of Treasury
d. Bureau of Unclaimed Balance
16. Which of the following is a predicate crime of Money Laundering Offense?

a. Jueteng and masiao
b. Adultery
c. Rebellion
d. Libel
17. It refers to a type of transaction that shall be reported by a covered person to the Anti-
Money Laundering Council because the transaction breaches the quantitative threshold
for reporting purposes.
a. Covered transaction
b. Suspicious transaction
c. Reportable transaction
d. Exempted transaction
18. Which of the following persons is not considered covered persons under Anti-Money
Laundering Law?
a. Auditing Firm rendering audit services concerning their audit fee
b. Insurance company
c. Banking institution
d. Stock brokers
19. What is the minimum number of days for maintaining a balance in the checking
account to cover the check he issued for the drawer to be exempted from conviction for
violation of BP 22?
a. A period of at least 90 days from the maturity date of check
b. A period of at least 120 days from maturity date of check
c. A period of at least 150 days from maturity date of check
d. A period of at least 180 days from maturity date of check
X. Other Special Laws
1. Which of the following is considered a registrable security under Securities Regulation

Code?
Mobile : 0927 283 8234
Telephone : (043) 723 8412
a. Deed of sale
b. Options and warrants
c. Deed of lease
d. Contract of loan
2. He refers to person who buys sells securities for his/her own account in the
ordinary course of business.
a. Issuer
b. Broker
c. Dealer
d. Associated person of a broker or dealer
3. It means a contract, transaction or scheme (collectively "contract") whereby a person

invests his money in a common enterprise and is led to expect profits primarily from the
efforts of others. It is presumed to exist whenever a person seeks to use the money or
property of others on the promise of profits.
a. Investment contract
b. Share options
c. Warrants
d. Debentures
4. It refers to the framework of rules, systems and processes in the corporation that
governs the performance by the Board of Directors and Management of their respective
duties and responsibilities to the stockholders.
a. Corporate governance
b. Corporate by-laws
c. Articles of incorporation
d. Corporate regulation
5. Who shall be the chairman of the audit committee of a corporation?

a. Chairman of the Board of Directors
b. Independent director
c. President of the Corporation
d. Secretary of the Corporation
6. Under the 1987 Constitution, which of the following industry must be fully owned
and controlled by Filipinos?
a. Educational institution
b. Mass media
c. Advertising
d. Public utility
7. This test of nationality of corporation means that corporation is a national of the

country under whose laws it has been organized and registered.
a. Place of incorporation test
b. Control test
c. Dominancy test
d. Grandfather rule test
8. What is the legal term of a patent that gives its owner the exclusive right to use the
covered invention?
a. 20 years
b. 10 years
c. 15 years
d. 25 years
9. It is an intellectual property that refers to the name or designation identifying or

distinguishing an enterprise.
a. Distinguishing name
b. Tradename
c. Patent
d. Copyright
10. It refers to a type of right provided by a copyright which makes it possible for the
creator to undertake measures to maintain and protect the personal connection
between himself and the work.
a. Economic rights
Mobile : 0927 283 8234
Telephone : (043) 723 8412
b. Moral rights
c. Material rights
d. Intellectual rights
11. It refers to any information whether recorded in a material form or not, from which
the identity of an individual is apparent or can be reasonably and directly
ascertained by the entity holding the information, or when put together with other
information would directly and certainly identify an individual.
a. Confidential information
b. Sensitive information
c. Personal information
d. Privileged information
12. Which of the following is not a general data privacy principle?

a. Transparency
b. Legitimate purpose
c. Proportionality
d. Immorality
13. It refers to information or the representation of information, data, figures, symbols

or other modes of written expression, described or however represented, by which a
right is established or an obligation extinguished, or by which a fact may be prove
and affirmed, which is receive, recorded, transmitted, stored, processed, retrieved or
produced electronically.
a. Electronic document
b. Paper document
c. Manual document
d. Computerized document
14. It refers to single common site or location, or a single online website or portal
designated for the Business Permits and Licensing System (BPLS) of an LGU to
receive and process applications, receive payments, and issue approved licenses,
clearances, permits, or authorizations.
a. Business One Stop Shop (BOSS)
b. Business Only Scope Store (BOSS)
c. Business On Site Scheme (BOSS)
d. Business Own Set Style (BOSS)
15. It refers to any individual whether or not officially involved in the operation of a
government office or agency who has access to people working therein, and whether
or not in collusion with them, facilitates speedy completion of transactions for
pecuniary gain or any other advantage or consideration.
a. Fixer
b. Arranger
c. Backer
d. Contact
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No. 125 Brgy.

RFBT Mastery Class Handout

1. In which of the following types of obligation will delay not exist?

2. In which of the following negligence is the defense of exercise of diligence of a good

3. A, B and C wrote a promissory note which states “I promise to pay P12,000 to D, E, F

9. What is the degree of diligence to be observed by the common carrier in the

13. It refers to the promise or particular conduct to be performed in the execution of an

17. When is demand necessary for debtor’s delay to exist?

20. Which of the following obligations is immediately demandable?

22. Which of the following statements concerning is correct?

24. Which of the following obligations in not enforceable by a court action?

25. Which of the following is not a requisite of quasi-delict?

A. There is pre-existing relation between the plaintiff and defendant.

27. Advanced waiver of an action for which of the following is valid?

30. Which of the following obligations is valid?

32. Which of the following modes of extinguishment of obligation is essentially gratuitous

35. Who has the right of choice in application of payment?

41. Which of the following is considered legal tender?

43. Which of the following is not considered a novation?

46. What law shall govern dacion en pago?

49. When is payment made by the debtor to an incapacitated creditor valid?

53. Which mode of extinguishment of obligation is onerous in nature?

54. Where shall the payment of an obligation be made?

60. Which of the following statements about payment of obligation is incorrect?

II. Law on Contract

1. Which of the following is a solemn contract?

2. Which of the following is an accidental element in a contract?

3. Which of the following innominate contracts pertains to Do Ut Facias?

8. In case of doubt in incidental circumstances of contract of commodatum, it shall be

11. Which of the following contracts may be assailed by a third person?

17. The cause in this type of contract is the service compensated.

27. Which of the following statements is incorrect?

III. Law on Sales

2. On January 1,2012, D borrowed from C P100,000 and as a security D mortgaged his

5. Which of the following contracts of sale is void?

8. A sold a residential house and lot at an installment price of P6,000,000 payable in 50

10. On January 1, S delivered an electronic calculator to B under a sale or return

IV. Law on Pledge, Mortgage and Antichresis

1. It refers to a stipulation in a contract of pledge or contract of mortgage whereby the

6. Which of the following stipulations in a contract of pledge is valid?

8. Which of the following is not a characteristic of contract of real estate mortgage?

9. Which of the following stipulations in a contract of real estate mortgage is valid?

15. What is the classification of contract of chattel mortgage as to its perfection?

19. What is the classification of contract of antichresis as to its perfection?

1. Which of the following is not a characteristic of particular partnership?

2. Which of the following is a prima facie evidence that a person is a partner of a

3. Which partner is not liable up to the extent of his separate assets?

5. Which stipulation is valid in a contract of partnership?

7. A, B, C, D and E are partners in ABCDE Partnership with capital contribution ratio of

8. Which act may be done by the managing partner alone?

12. When will the juridical personality of the partnership commence?

35. Which of the following may not be contributed by a limited partner?

46. Which of the following will not dissolve a general partnership?

48. D is indebted to ABC Partnership, managing partner A of ABC Partnership and B, a

49. Which of the following partners may liquidate a partnership?

VI. Negotiable Instruments Law

1. Which of the following is not a party to a negotiable instrument?

3. Which of the following is not a requisite of a negotiable promissory note?

4. It is an attribute of a negotiable instrument which means that as the instrument is

5. How may a negotiable bearer instrument be negotiated?

6. Which of the following instruments is non-negotiable?

7. Which of the following instruments is invalid?

8. Which of the following is a bearer negotiable instrument?

21. The following are the functions of negotiable instruments, except