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S OUTH ER N MIND ANAO ACADEMICR EVIE W& TR AINING S ER VICES 2F Laiz Building, Pioneer Avenue, General Santos City,

Philippines
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CPA Professional Review October 2012 Licensure Examination General S antos City, Reg ion XII

Ariel C. Nacion Theory of Accounts

COMPREHENS IVE REVIEW


1 .

C ONC EPTUAL F RAMEWORKand F IRS T-TIME AD OPTIONOFPFRS(TOA 02

Under which one of the following circumstances would an entitys current years financial statements no qualify as first PFRSfinancial state m ents ? A. The entity prepared its financial statements under IFRS in the previous year and these were meant fo internal purposes only. B. The entity prepared the previous years financial statements under its national GAAP. C. The entity prepared its previous years financial statements in conformity with all requirements of PFRS, but these statements did not contain an explicit and unreserved statement that the complied with PFRS. D. The entity prepared its previous years financial statements in conformity with all requirements o PFRS, and these statements did contain an explicit and unreserved statement that they complied wit PFRS.

2 . On J uly 1 , year 2, a company de cide d to adopt PF RS . The companys first PFRS reporting period is as of and fo the year ended December 31 , year 2. The company will present one year of com parative inform ation. What i the companys date of transition to PFRS? A. J anuary 1 , year 1 C. J uly 1 , year 2 B. J anuary 1 , year 2 D. December 31 , year 2

3 . XYZ Inc. is a first-time adopter under PFRS 1 . The most recent financial statements it presented under it previous GAAP were as of December 31 , 2005. It has adopted IFRS for the first time and intends to present th first IFRS financial statements as of December 31 , 2006. It plans to present two-year comparative information for the years 2005 and 2004. The opening IFRS statement of financial position should be prepared as of A. January 1 , 2005 B. J anuary 1 , 2003 C. J anuary 1 , 2004 D. J anuary 1 , 2006

4. How should a first-tim e adopter of PFRS recognize the adjustments required to present its opening PFR statement of financial position? A. All of the adjustments should be recognized in profit or loss. B. Adjustments that are capital in nature should be recognized in retained earnings and adjustments tha are revenue in nature should be recognized in profit or loss. C. Current adjustments should be recognized in profit or loss and noncurrent adjustments should b recognized in retained earnings. D. All of the adjustments should be recognized directly in retained earnings or, if appropriate, in anothe category of equity.

5 . Which one of the following does not qualify for exe m ption under PFRS 1 for the purposes of retrospectiv application? A. Hedge accounting B. Financial assets and financial liabilities derecognized prior to J anuary 1 , 2001 C. Estimates made under previous GAAP D. Fair value accounting for investment property 6. The framework is intended to establish A. Generally accepted accounting principles in financial reporting by business enterprises COMPREHENSIVE B. The meaning of Present fairly in accordance REVIEW with generally accepted accounting principle C. The objectives and concepts for use in developing standards of financial accounting and reporting D. The hierarchy of sources of generally accepted accounting principles

OBLIGATIONS CONTRACTS 7 . According to the conceptual framework, the usefulness and relevance AND of providing information in financia 1. Red promised to deliver 50 sacks of rice to Vlad on February 14, 2010. On February 8, 2010 statements is subject to the constraint of Vlad demanded the delivery of the 50 sacks of rice but Red did not comply. On February 10, A. Consistency C. Reliability typhoon Gener visited Bicol Region and all the rice stored in the warehouse of Red got B. Cost-benefit D. Representational faithfulness wet. A. 8.Red is obliged to pay damages because he was already in default when the?fortuitous What are qualitative characteristics of financial statements according to the Framework event occurred A. Qualitative characteristics are the attributes that make the information provided in financia B. Reds obligation to deliver 50 sacks of rice is extinguished because the cause of the statements useful to users. loss is a fortuitous event C. The obligation of Red is not extinguished because he can get 50 sacks of rice from

D.

other sources Reds obligation to deliver 50 sacks of rice is not extinguished because he was in default

2. Case 1: Lala, Ben and Chui, notorious gangsters in Barangay Labangal went to the house of Badet and told the latter that unless he signs the deed of sale for his lot, he will be killed by the three. Eventually, Badet signed the document. Case 2: A owes B P100,000 which is already due and demandable but A refuses to pay. So B wrote A demanding payment and indicating therein that he will file a collection case in court should A still refuse to pay. As a consequence, A paid B his debt. Which of the above cases have vitiated consent? A. I only B. II only C. Both I and II D. Neither I nor II

3. A, B and C executed a promissory note in favor of D, E and F in the amount of P9,000. Can the creditors proceed against A for the payment of the entire loan? A. No, each creditor can only collect P3,000 from A B. Yes, anyone of the creditors can collect the entire P9,000 from A C. No, each of the creditors can only collect P1,000 from each of the debtors D. Yes, because the obligation is presumed to be solidary 4. In the preceding problem, suppose C is insolvent, can B and A be held liable for his share in the obligation? A. Yes, because the obligation is presumed to be joint and several B. Yes, but A and B shall be liable proportionately C. No, because of their joint liability and therefore the debts are distinct from one another D. No, because only either of them can be held liable for the share of C 5. Still in the preceding problem, suppose the obligation is mixed solidarity can one of the creditors demand payment of the whole debt from anyone of the debtors? A. No, because the debts are distinct and separate from one another B. Yes, because it is as if there is only one obligation C. Yes, provided all of them demand from all of the debtors D. No, because despite solidarity, a debtor is liable only for his share 6. Indivisibility as distinguished from solidarity A. Plurality of subject is indispensable B. Refers to the creditors and/or debtors C. May either be passive or active D. Refers to the prestation which constitutes the object of the obligation 7. The creditor has the real right to the fruits of the thing from the time they have been delivered. The buyer acquires real right to the fruits of the thing from the perfection of the sale. A. True, true C. False, false B. True, false D. False, true 8. In natural obligation, the creditor has the right to enforce the performance thereof it being based on positive law. Solutio indebiti and negotiorum gestio are quasi-contracts that give rise to civil obligations. A. True, true C. False, false B. True, false D. False, true 9. A contract as a general rule must be written to have force and effect as a valid agreement. A formal or solemn contract is one that must be in writing to be valid. A. True, true C. False, false B. True, false D. False, true 10. The principle of autonomy of contracts means that the contracting parties as a rule may agree upon any stipulation, clause, term and condition. Relativity of contracts means that contracts take effect not only between the parties but also heirs and assigns. A. True, true C. False, false B. True, false D. False, true

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11. If the obligation is solidary it means there is mutual guaranty among the debtors and therefore the insolvency of one is shouldered by the others. Solidarity may exist although the debtors may not be bound in the same term, condition and manner of performance. A. True, true C. False, false B. True, false D. False, true 12. In dation in payment, the creditors do not become the owner of the property ceded as payment of the debt. In payment by cession, the creditors do not become the owners but are authorized to sell the properties assigned to them. A. True, true C. False, false B. True, false D. False, true 13. In tender of payment and consignation, the refusal without valid reason of the creditor to accept the payment of the debtor will extinguish the obligation. The third person who paid the obligation without the knowledge or against the will of the debtor is still entitled to the reimbursement from the debtor to the extent of the latters benefit. A. True, true C. False, false B. True, false D. False, true 14. Which of the following is not an essential element of an obligation? A. Obligor B. Efficient cause C. Presentation D. Creditor

15. It is an obligation which is based on positive law gives a right to enforce its performance. A. Natural B. Civil obligation C. Moral obligation D. Legal obligation obligation 16. Which of the following is not a source of an obligation? A. Law B. Delicts C. Damages D. Quasi-contract

17. Obligations derived from law are presumed except those found in the Civil Code or in special laws. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. A. True, true C. False, false B. True, false D. False, true 18. This is principal kind of quasi-contract arising out of payment by mistake or undue performance of an obligation. A. Solutio indebiti C. Other quasi contract B. Negotiorum gestio D. Quasi delict 19. In quasi-contract there is no consent of the parties thus preventing a meeting of minds between them. In quasi-delict, there is no intention on the part of a person doing a wrongful act or omission causing damage to another. A. True, true C. False, false B. True, false D. False, true 20. The creditor acquires a real right against the debtor form the time the thing should have been delivered. The fruits of the thing shall pertain to the creditor from the time they should have been delivered to him, that is, he has personal right to demand delivery of the fruits after the obligation to deliver the principal thing arises. A. True, true C. False, false B. True, false D. False, true 21. In the obligation to deliver a thing, the debtor has to deliver also the accessories and accessions if they have been mentioned. In obligation to do, specific performance of the debtors obligation is not available as a right of the creditor to demand from the obligor. A. True, true C. False, false

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B.

True, false

D.

False, true

22. Which of the following is demand necessary to make the debtor is delay in the performance of his obligation? A. When the time of the performance is of the essence. B. When the time of performance has been stipulated. C. When the law so provides. D. When demand would be useless. 23. Liability for damages in the performance of an obligation arises from the following, except: A. Negligence C. Delay B. Acts or omissions punished by law D. Fraud 24. Liability for damages arising from fraud is demandable and there can be a waiver of an action for past fraud. There can be waiver of an action for future negligence but not fraud. A. True, true C. False, false B. True, false D. False, true 25. In which of the following is the debtor still liable despite the fortuitous event causing the loss of the thing? A. The thing lost is a specific thing. B. The performance of the obligation has become impossible. C. The nature of the obligation does not require the assumption of risk. D. When the law or the obligation expressly so provides. 26. D borrowed from C a sum of money with the stipulated rate of interest to be paid in the three equally monthly installments from January to March. D paid an amount for which the latter issued a receipt stating that the payment is for the month of February. In this case: A. The installment for the payment of March is also considered paid. B. The installment of the month of January is conclusively presumed to have been paid. C. The installment for the month of January is disputably presumed paid. D. The installment for the month of January is not presumed paid. 27. In the is: A. B. C. D. preceding case, suppose the receipt does not mention the payment of the interest, it Conclusively presumed the interest has been also paid. Not presumed paid unless proven otherwise. Prima facie presumed to have been paid. Presumed disputably that only the principal has been paid.

28. Three of the following are the rights of the creditor against the debtor who fails to pay his debt, except: A. Attachment of the debtors properties or garnishment thereof B. Subrogation to the rights of the debtor against third persons C. Rescission of contracts entered into by the debtor to defraud him D. Send the debtor to jail for non-payment of his debt 29. Rights acquired in virtue of obligations are transmissible only if so stipulated by the parties. The law or the stipulation of the parties to an obligation may provide that the rights acquired by virtue thereof are not transmissible. A. True, true C. False, false B. True, false D. False, true 30. Impossible, unlawful immoral conditions are not valid and not demandable except the obligations which depend upon them. Potestative condition to be void must be both the suspensive and dependent on the debtors will. A. True, true C. False, false B. True, false D. False, true 31. D bound himself to deliver either specific object 1 or object 2 to C. If one of the objects is lost due to fortuitous event and without the fault of D, the effect is: A. D may still choose which he shall deliver, only the value of the thing lost if he chooses the same. B. D cannot choose because among the prestations whereby he is alternatively bound, only one is practicable. C. C may choose which of the objects he wants to delivered.

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D.

Obligation of D has been extinguished.

32. In facultative obligation, only one prestation is due but the creditor may be given the right of choice as to the prestation to be performed. In alternative obligation, the right of choice is always with the debtor. A. True, true C. False, false B. True, false D. False, true 33. A, B and C borrowed P3M from D, E and F evidenced by a promissory note worded as follows, to wit: I promise to pay D, E and F P3M. (Sgd) A, B and C. How much can D collect from A? A. P3M B. P.5M C. P1.5M D. P1M 34. In the preceding case, suppose only D is demanding payment, can A still pay any one of the creditors? A. No, because the law provides that payment shall be made to the creditor demanding payment. B. No, because in case payment is made to a creditor not demanding payment, only his share of the credit shall be extinguished. C. Yes, because the payment can be made to any of the solidary creditors. D. Yes, because payment proportionately can be made to any of the joint creditors to his share. 35. A, B and C bound themselves to deliver to X a specific car worth P3M. Due to the fault of A the car was lost. In this case: A. X can claims damages from any one of the three for his proportionate part of liability because the obligation is indivisible. B. X claims only from A the whole amount of damages other than the value of the car. C. Since it is solidary liabilities for damages, X can claim the same from any of the three. D. Only A is liable for damages although B and C are liable for their respective shares in the obligation 36. D owes C P1M. X, without the knowledge or against the will of D paid C P2M. Can X get reimbursement from D? A. P2M by the way of reimbursement from D to prevent unjust enrichment on the part of D at the expense of X. B. P1M only for that is the extent of benefit of D. C. No reimbursement because the payment was not proper being without the knowledge or against will of D. D. P1M plus interest from the time of payment until reimbursement. 37. In the preceding case: There is a quasi-contract with the obligation to reimburse the third person insofar as the payment has been beneficial to the debtor. There is legal subrogation and therefore in person, the latter may go after the mortgage, A. True, true B. True, false case the debtor fails to reimburse the third guaranty and penalty C. False, false D. False, true

38. In application of payment, the creditor as a rule shall decide on what debt the payment be applied. If the period is for the benefit of the debtor, he can apply the payment on a debt although not yet due. A. True, true C. False, false B. True, false D. False, true 39. In dation in payment, the creditor becomes owner of the thing alienated as payment while in payment be cession, the creditors do not become the owners of the properties of the debtor. In tender of payment and consignation, the tender of payment by itself shall not extinguish the obligation. If the creditor receives a check as payment and it has been impaired through his fault, the debtor/drawer shall be released to the extent of the loss. A. True, true C. False, false B. True, false D. False, true

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40. Three A. B. C. D.

of the following are essential elements of a contract, except: Cause of the obligation which is established. Consent of the contracting parties. Motive of the parties. Object certain which is the subject matter of the contract. Assignment

41. Novation of a contract takes place in the three of the following, except: A. Delegacion B. Expromision C. Subrogation D.

42. Legal compensation shall exist in the following cases, except: A. That each one of the obligees be the principal creditor of the other and he be at the same the principal debtor of the other. B. That both debts be due. C. That they may be unliquidated and demandable. D. That they both consist in a sum of money or if consumable also of the same kind and quality as that stated. 43. The following cannot give consent to a contract, except: A. Minors, except sale of necessaries in life. B. Insane persons C. Demented D. Minors who represent themselves as a legal age to one in good faith 44. The contract entered into by the person who cannot give consent is: A. Void ab initio because actually there is no consent B. Unenforceable only because the contract may be ratified C. Rescissible because of the damage cause to the person incapacitated D. Voidable as there is consent although vitiated or defective 45. A defective contract where damage or lesion is essential is: A. Rescissible B. Voidable C. Unenforceable D. Void

46. A defective contract because it is entered into the name of another without or in excess of authority, or it is verbal is A. Rescissible B. Voidable C. Unenforceable D. Void 47. The following, even if not in public instrument are valid, binding and enforceable, except: A. Negotiable instruments B. Sale of land, either by the owner or agent with written authority C. Agency, pledge, mortgage D. Partnership contract wherein immovables are contributed 48. Payment of cession as distinguished from dation in payment A. The debtor is not necessarily in a state of financial difficulty B. The effect is to release the debtor for the net proceeds of the things ceded or assigned C. The property is alienated by the debtor to the creditor is satisfaction of a debt in money D. What is delivered by the debtor is merely a thing to be considered as the equivalent of a performance of the obligation 49. A owes B P20 000 which became due and payable last June 23, 2010. On that date, A offered B P10 000, the only money he then had, but B refuses to accept the payment. A thereafter met C, Bs 23 year old son, to whom he gave the P10 000 with the request that he turn the money over to B. The money was stolen while Cs possession. How much may B still recover from A? A. P20,000 B. P10,000 C. P15,000 D. P0 50. If a third persons pays an obligation, what are the rights, which are available to him if he pays the obligation with the knowledge and consent of the debtor? First answer- He can recover from the debtor the entire amount which he has paid. Second answer- He subrogated to all the rights of the creditor A. Both answers are correct C. Only the first answer is correct B. Both answers are wrong D. Only the second answer is correct 51. A, B and C executed a promissory note binding themselves to pay P9 000 to X, Y and Z. The note is now due and demandable. Can the creditors proceed against A alone for the payment of the entire debt? A. No, each creditor can collect P9 000 from A

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B. C. D.

Yes, either X, Y or Z can collect P9 000 from A No, each creditor can collect only P1 000 from A Yes, since the promissory note is silent with respect to the rights of the creditors, the obligation is presumed to be solidary C. D. Culpa aquiliana Contract

52. A source of obligation not arising from law A. Negotiorum gestio B. Solutio indebiti

53. The loss or deterioration of the thing intended as substitute through the negligence of the obligor does not render him liable. A person alternatively bound by different prestations shall completely perform one of them. A. True, true C. False, false B. True, false D. False, true 54. There being no express stipulation and if the undertaking is to deliver a determinate thing, the payment shall be made A. At the domicile of the debtor B. At the domicile of the creditor C. Wherever the thing might be at the moment the obligation was constituted D. Wherever the thing might be at the amount the obligation is to be fulfilled 55. Demand is not needed to put the debtor in default, except A. When demand would be useless B. When the parties so stipulate C. When time is of the essence D. When the fixing of the time is the controlling motive for the establishment of the contract 56. Culpa A. B. C. D. distinguished from dolo Waiver of an action to enforce liability may be waived Liability may be reduced by courts There is deliberate intention to cause damage or prejudice Responsibility arising therefore is demandable

57. A passenger of a truck was hurt but in a criminal case against the driver, said driver was acquitted. The victim now sues the owner of the truck for culpa contractual. May the suit still prosper? A. No, this will constitute double jeopardy B. No, the acquittal means that the guild of the accused was not proved by proof beyond reasonable doubt C. Yes, it is sufficient for him to proven the existence of the contract of carriage and the injuries suffered D. Yes, provided he can prove the negligence of the driver 58. If the obligor binds himself to perform his obligation as soon as he shall have obtained a loan from a certain bank. This obligation is A. With a term C. With a period B. With a suspensive condition D. With a resolutory condition 59. One is not a requisite needed in order that the obligation shall be extinguished by loss or destruction of a thing due. A. When the obligation is to deliver the house located at 123 Recto Avenue, Manila B. When the thing is lost without the fault of the debtor C. When the obligation is to deliver a brand new Honda Str colored orange D. When the thing is lost before the debtor incurred delay 60. It presupposes not only that the obligor is liable, ready and willing but also more so, in the act of performing his obligation. A. Promissory note C. Tender of payment B. Bill of exchange D. Obligation to sell 61. A gets a loan of P1M form B which becomes due on October 1, 2010 and mortgaged his house as security for the debt. On June 30, 2010, the mortgaged house completely destroyed by fire thru the fault of C. A week later, B demanded payment from A. Is Bs demand valid? A. No, the destruction of the house was not thru the fault of A B. No, the obligation is one with a definite period which is deemed intended for the benefit of both the debtor and creditor C. Yes, the debt becomes demandable unless A can give another security equally

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D.

satisfactory Yes, the debt becomes demandable even if A can give another security equally satisfactory

62. An action to impugn the acts of a debtor intended to defraud the creditor is A. Accion reivindicatoria C. Accion redhibitoria B. Accion subrogatoria D. Accion pauliana 63. A owes B P11 000 due on July 2, 2010. B owes A P6 000 due on July 3, 2010 and P4 000 due on July 10, 2010. B owes C P11 000 due on July 3, 2010. On July 3, 2010, B cannot pay C so B assigns to C her credit of P11 000 against A, without the knowledge of A. On July 10, 2010, C tries to collect from A the P11 000. How much can C compel to A to pay? A. P11,000 B. P9,000 C. P5,000 D. P1,000 64. The contract must bind both contracting parties, its validity or compliance cannot be left to the will of one of them, and this is A. Mutuality of contract C. Relativity of contract B. Freedom of contract D. Obligatoriness of contract 65. By this principle, contracts take effect only upon the contacting parties, their assigns or successors in interest A. Mutuality of contract C. Relativity of contract B. Freedom of contract D. Obligatoriness of contract 66. The statement Contracts shall be obligatory in whatever from they have been entered into provided all the requisites for their validity are present refers to A. Consensual contract C. Formal contracts B. Real contract D. Solemn contracts 67. A contract in which a person literally contracts with himself is A. Adhesion contract C. Accessory contract B. Auto contract D. Unilateral contract 68. When a third person assumes the payment of the obligation without the knowledge of the debtor but with the consent of the creditor, there is A. Delegacion B. Expromision C. Subrogation D. Novation 69. This obligation is demandable at once A. With a suspensive condition B. With a period in diem C. When my means permit me to do so D. When it depends on the happening of a specified event 70. The following are void contracts, except A. A contract whereby X promised to live as the common law wife of Y without the benefit of marriage to consideration of P1 000 000 B. An agreement whereby A is to render service as a servant to B without compensation as long as A has not paid him debt C. A stole the cat of B. Later they entered into a contract whereby B would not prosecute A in consideration of P100 000 D. A stipulation in a contract of lease whereby the land lord can go to court to eject the tenant in case of failure of the latter to pay the rent agreed upon 71. N, R and J solidary bound themselves to deliver to S a Honda motorcycle valued to P60 000. The obligation was not fulfilled through the fault of J. Thereupon. S filed an action in court against N and the court awarded P72 000 to S representing the value of the motorcycle plus damages. Which of the following situation is valid? A. If N pays P72 000, N can collect from R and J P24 000 each B. S has to collect P24 000 each from N, R and J to satisfy the courts award of P72 000 C. N can refuse to pay the penalty because it should be charged against J, the guilty party D. If S succeeds in collecting the P72 000 from N. N in turn can collect from R P20 000 and from J P32 000 72. A, a jeepney driver driving recklessly cause serious physical injuries to his passenger B and pedestrian C. As a result, which of the following is not correct? A. B may proceed against A for culpa C. C may proceed against A for culpa criminal aquilana B. B may proceed against A for culpa D. C may proceed against A for culpa contractual criminal

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73. X, a bus driver driving negligently, killed his passenger B and pedestrian C. As a result I. B may proceed against Xs employer and the source of liability is the crime committed by A or culpa criminal. II. B may proceed against Xs employer and the source of liability is the breach of contract of carriage or culpa contractual. III. C may proceed against Xs employer and the source of liability is the crime committed by A or culpa criminal. IV. C may proceed against Xs employer and the source of liability is the quasi-delict committed by A or culpa aquilana. A. I, II and III B. I, II and IV C. II, III and IV D. I, II, III and IV 74. There is novation of the obligation if I. The period for payment is shortened from 5 years to 3 years. II. The period of payment is extended from 3 years to 5 years A. True, true C. False, false B. True, false D. False, true 75. A, with violence in her eyes, intimidated her husband B to sell his exclusive property to her. The contract of sale is A. Rescissible B. Voidable C. Unenforceable D. Void 76. In 2006, at age of 16, A sold his land for P4M payable at P1M in 2006, P1M in 2007 and P1M in 2008. In 2010, A wants to annul the contract on the ground of minority. Will his action prosper? A. No, A is allowed to ask for annulment of the contract only within 4 years from the perfection of the contract B. Yes, A has 4 years counted from the time he becomes of legal age to ask for annulment of the contract C. No, the acceptance of the instalment payments amounted to ratification of the sale D. Yes, provided A was then acting in good faith when he sold the property 77. This contract is without effect unless ratified A. Marriage between first degree cousins B. Contract of sale between two insane persons C. Contract of sale between a guardian and his ward D. Donation between husband and wife 78. Dacion en pago as distinguished from sale A. The cause is the price B. The object exists and is specific C. There is no pre-existing obligation D. There is greater degree of freedom fixing the price 79. A contract as a rule must be in writing to be valid. A taxpayer is not entitled to interest on the overpayment of tax subject of a refund because an obligation derived from law is not presumed. A. True, true C. False, false B. True, false D. False, true 80. Jo-Ann asked her close friend, Aissa, to buy some groceries for her in the supermarket. Was there a nominate contract entered into between Jo-Ann and Aissa? Which of the following is wrong? A. There was a nominate contract of agency B. There was a nominate contract of lease of services in the absence of principal-agent relationship C. There was an innominate contract to buy D. There was no innominate contract

SALES
1. Which of the following statements is not correct? A. The vendor is bound to deliver the thing sold and its accessions and accessories in the condition in which they were upon the perfection of the contract B. All the fruits of the thing sold shall pertain to the vendor from the day on which the contract was perfected C. The vendor shall not be bound to deliver the thing sold, if the vendee has not paid him the price, or if no period for the payment has been fixed in the contract

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D.

The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale

2. Which of the following statement is not correct? A. Actual delivery of the things or payment of the price is not required for the perfection of the sale B. A stipulation that even when the object is delivered to the buyer, ownership will not pass until the price is fully paid is not valid C. A sale is consummated upon delivery of the thing and the payment of the purchase price D. Sales through letters or telegrams are deemed perfected only when the seller has received acceptance by the buyer 2. To avoid prosecution for acts of lasciviousness committed by A against B, he (A) made a promissory note which reads, I promise to pay B or order P20 000. Sgd. A. Later, B negotiated the note to C. As a result, A. If C collects from B, B can collect from A B. If C did not know the reason why A executed the note, C may collect from A C. C may collect from A whether or not he know why the note was executed D. C cannot collect from A because the consideration for note is illegal, the remedy of C is to go against the indorser B 3. An oral sale of land made by its owner in unenforceable. Sale of land made by an agent without written authority from the owner thereof is void. A. True, true C. False, false B. True, false D. False, true 4. Warranties are essential elements of sales. The unpaid seller cannot recover the thing sold from an innocent purchaser of value. A. True, true C. False, false B. True, false D. False, true 5. S offered his car to B for P1M and giving the latter one week to decide. B in turn gave S P1 000.00. In this case, there is A. Contract of sale of the car with the P1 000.00 as earnest money. B. Contract of option with the P1 000.00 as option money. C. Contract of sell of the car at Bs option. D. Contract to sell of the car at Ss option. 6. A sold to B his dog with the agreement that delivery shall be after one week from the sale and the payment of the price after two weeks from delivery. If the dog shall produce offspring, it shall belong to: A. If produced before the sale, it shall pertain to the seller. B. If the puppy shall exist before the actual delivery, it shall pertain still to the seller C. The fruits that shall exist after delivery will only be the ones to pertain to the b D. The fruits after the sale but before delivery shall pertain to the buyer if so stipulated by the parties to the sale 7. A contract of sale of vain hope or expectancy is voidable at the option of the buyer and the action for annulment brought within the perspective period provided by law. The sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence. A. True, true C. False, false B. True, false D. False, true 8. A sold Bs car in his (As) name to C without any authority from B. The contract of sale is A. Rescissible B. Voidable C. Unenforceable D. Valid 9. A sold Bs car in the name of B without any authority to C. The sale is: A. Rescissible B. Voidable C. Unenforceable D. Valid

10. A sold Bs car with authority to sell but sold it in his (As) name. The contract is A. Rescissible B. Voidable C. Unenforceable D. Valid 11. A sold his land to B verbally. The sale is: A. Rescissible B. Voidable C. Unenforceable D. Void

12. A, as agent of P with oral authority, sold Ps land in a public instrument. The sale is:

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A.

Rescissible

B.

Voidable

C.

Unenforceable

D.

Void

13. With written authority from his principal, the agent sold verbally the land of the principal. The sale is: A. Rescissible B. Voidable C. Unenforceable D. Void 14. Without authority from B, A sold the formers land in Bs name. The sale is A. Rescissible B. Voidable C. Unenforceable D. Void 15. Without authority from B, A sold the formers house in writing. The sale is: A. Rescissible B. Voidable C. Unenforceable D. Void 16. A, with oral authority from P, sold the latters house in writing. The sale is: A. Rescissible B. Voidable C. Unenforceable D. Valid 17. S sold to B his land on January 10, 2010. On January 15, an absolute deed of sale was executed and notarized. On January 20, the sale was registered with the Registry of Deeds. On January 25, B took actual possession of the land by building a fence thereon. When did B acquire ownership of the land? A. On January 10 B. On January 15 C. On January 20 D. On January 25 18. S sold to B his car on January 10, 2010. On January 15, an absolute deed of sale was executed and notarized. On January 20, the sale was registered with the LTO. On January 25, B took actual possession of the car. When did B acquire title to the car? A. On January 10 B. On January 15 C. On January 20 D. On January 25 19. S sold B his car with the agreement to deliver the same one week after the sale on January 10, 2010. In this case: A. S may demand within reasonable time from the sale the payment of the price from B B. S can demand payment only after he has delivered the car to B C. B may demand delivery of the car even before the expiration of the one week period agreed upon once he pays the price D. Payment and delivery shall take place only after one week from sale 20. S sold B his car with the agreement that B will pay the price one week after the sale of January 10, 2010. In this case: A. B may demand within reasonable time from the sale the delivery of the car B. B may demand delivery only he has paid the price C. S may seek payment of the price once he delivers the car D. Payments and delivery shall take place only after one week from sale 21. S sold his car to B. No agreement was made on the time and place of delivery and payment. Hence, A. The time and place of delivery shall be at the time and placed of payment of the price B. The time and place of delivery and payment not having been agreed upon, the sale shall be void C. The seller may demand payment first before delivery of the thing sold D. The buyer may demand delivery first before payment of the price 22. The seller must be the owner of the property he sells but his ownership need not exist on the perfection but upon delivery of the thing. A contract of sale may be absolute, conditional, either suspensive or resolutory, or subject to a contingency, or undivided interest in property, either present or future except future inheritance A. True, true C. False, false B. True, false D. False, true 23. S sold his car for the price of P2M to B who shall pay P.5M and deliver to S his land worth P1M and the amount of P1M. There is: A. Partly sale and partly barter C. Innominate contract B. Barter D. Sale 24. S delivers to B his car valued at P2M in consideration of B transferring to S his land worth P1M and the amount of P1M. There is: A. Partly sale and partly barter C. Innominate contract B. Barter D. Sale 25. B ordered from S a pair of shoes of the kind and style of which S has gone out of stock. There is:

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A. B.

Contract for a piece of work Contract of lease of service

C. D.

Contract of agency Contract of sale

26. S sold to B his land valued at P1M only for the price of P.7M, thus resulting to inadequate price. The sale is A. Rescissible B. Voidable C. Unenforceable D. Valid
27. S offered his land to B with the understanding that the latter shall fix the price. B, as agreed

upon fixed the price at P2M, although the lands market value was P1.5M. It is clear, therefore, that S is to benefit from the transaction. Was there sale? A. No perfected sale as there was no consent on the price B. There was perfected sale, fixed by buyer and accepted by the seller C. Theres valid sale since the buyer was authorized to fix the price D. Voidable sale at the option of the buyer due to mistake in the fixing of the price
28. Which of the following is not constructive delivery in sale?

A. B. C. D.

Traditio longa manu Traditio constitum possessorium Thing is place in the control and possession of the buyer Traditio symbolica

29. In sale or return, the buyer becomes owner of the thing upon delivery while if on

approval, trail or satisfaction, after approval, express or implied. Sale between husband and wife is void, unless there is separation of property between them in the same way that universal partnership between them is also void. A. True, true C. False, false B. True, false D. False, true
30. S sold to B his dog without knowledge that the animal was suffering from a disease at that

time of the sale. Is the seller liable for breach of warranty against redhibitory defect of animals? A. No, because the seller was in good faith when he sold the animals B. Yes, if he were aware of the hidden fault or defect C. No, because animals unlike things easily can contact some illness D. Yes, and good faith is not a defense to avoid liability
31. S sold to B a thing without knowledge that the thing suffered from hidden defect. The

parties agreed on the waiver of the warranty by the buyer. Is the seller still liable for breach of warranty? A. No, because of the valid waiver of warranty B. No, but he must return the price to the buyer without damages C. Yes, because the waiver refers only to liability for damages D. Yes, if the seller was in bad faith at the time the waiver was made
32. S sold to B a thing with waiver of warranty against eviction. Eviction took place

subsequently. Is S still liable for breach of warranty against eviction? A. No, if it was waiver intencionada. B. No, if it were waiver consciente. C. Yes, even if it was waiver intencionada D. No, provided the seller was in good faith in entering into the contact of waiver of warranty against eviction.
33. B bought from S a second hand motor vehicle which upon inspection by B had some

mechanical troubles. After the sale, the car broke down due to engine trouble requiring an overhaul of the engine. Is S liable for breach of warranty against hidden defect? A. No, because the defect was not hidden but apparent upon inspection by B it being a second hand car B. Yes, because there was no waiver of warranty against hidden defects C. Yes, because the seller was in bad faith D. No, because it was the fault of the buyer in buying a used car
34. In which of the following is sale not presumed equitable mortgage?

A. B. C. D.

The The The The

price of the sale usually adequate. vendor remains in possession of the thing sold vendor allows the extension of time to repurchase the thing sold purchase retains to himself a part of the purchase price

35. S sold to B a car on installment wherein the latter mortgaged the same car as security for

the price. Failing to pay the installments, the mortgage on the car was foreclosed. Is B still liable for any deficiency if the seller fails to recover in the foreclosure sale?

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A. B. C. D.

Yes, because it is only in case of pledge is the debtor not liable for any deficiency Yes, if so stipulated upon by the parties No, unless agreed upon by the parties No, notwithstanding any stipulation to the contrary

36. A, B, C are co-owners of a parcel of land. A sold his share to B. Can C redeem the said share

from B? A. No, unless he was notified of the sale prior to its perfection B. No, legal redemption applies only if the interest was alienated by onerous alienation person C. Yes, because the law frowns upon co-ownership D. No, if there was stipulation requiring prior consent
37. A and B are co-owners of a parcel of land. A donated his share to C. Can B redeem the said

share A. B. C. D.

from C? Yes, because the law looks with disfavor at co-ownership No, because legal redemption applies only in case of onerous alienation No, unless he enforced his right through court action Yes, but in promotion to his interest in the land as co-owners

38. A, offered to sell to B 100 cartons of sardines at a specified price which was accepted by B and subsequently delivered his letter of acceptance. In view of the shortage of the catch of sardines, A failed to deliver the commodities it has offered for sale. B decided to sue A. Which is correct? A. The acceptance of the offer only created an option to buy B. The absence of consideration distinct from the price makes the contract without any obligatory force C. The acceptance of the offer to sell by showing the intention to buy for a price certain creates a bilateral contract to sell and buy D. The acceptance of the offer to sell constitutes binding contract of sale provided the option was supported by a sufficient consideration 39. When the goods are delivered to the buyer on sale or return for period of seven days, ownership of the goods passed to the buyer, A. Upon perfection of the contract B. Upon the delivery of the goods C. Upon expiration of seven days D. Upon acceptance by the buyer of the offer of the seller 40. A buyer may sue the seller for breach of warranty against hidden defects of things within A. 40 days from delivery of the thing C. 1 year from delivery of the things sold sold B. 6 months from delivery of the thing D. 4 years from discovery of the fraud sold 41. Which of these is not a special form of payment? A. Application of payment C. B. Dacion en pago D. Cession en pago Tender of payment and consignation

42. S and B agreed on the sale of a four hectare property at Macapagal Boulevard for the price of P15 000 per square meter on condition that if the price is not paid on a particular date, the sale will considered automatically cancelled. On the particular date agreed upon, B did not pay S, but B never asked for a juridical cancellation nor made a notarial act or rescission. In this case A. The sale is cancelled as per agreement B. S can validly refuse any subsequent offer to pay by S C. B can still pay S the price D. B cannot anymore pay the price simply because the sale is cancelled due to his failure to pay on the stipulated date

PARTNERSHIP
1. Which of the following is not correct? A. A partnership begins from the moment of the execution of the contract unless it is otherwise stipulated B. Persons who are prohibited from giving each other any donation or advantage cannot enter into universal partnership C. A particular partnership has for its objects determinate things, their use or fruits or a specific undertaking or the exercise of a profession or vocation D. Articles of universal partnership entered into without specification of its nature, only

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constitute a universal partnership of all present property 2. X, Y and Z are general partners in a merchandising firm. Having contributed equal amounts to the capital, they also agree on equal distribution of whatever net profit is realized per fiscal period. After two years of operation, Z conveys her whole interest in the partnership to J, without the knowledge and consent of X and Y. What are the rights of J, if any, should she desire to participate in the management of the partnership and in the distribution of a net profit of P360 000.00 which was realized after her purchase of Zs interest? A. J can participate in the management of the partnership and she is entitled to P120 000 of the net profit B. J can participate in the administration of the partnership and she is entitled to P120 000 of the net profit C. J cannot participate in the administration of the partnership and she is entitled to P120 000 of the net profit D. J cannot participate in the administration of the partnership and she is not entitled to P120 000 of the net profit 3. The following are advantages of a partnership as a form of organization. Which is not? A. It is easy and inexpensive to organize as it is formed by a simple contract between two or more persons B. The unlimited liability of the partners makes it reliable from the point of view of the creditor C. There is constant likelihood of dissension and disagreement when each of the partners has the same authority in the management concern D. The combined personal credit of the partners offers better opportunity for obtaining additional capital 4. Case 1: A, B and C were partners. A informed B that the former was resigning from the partnership. The partnership was dissolved by the act of A. C had no knowledge of the dissolution. Case 2: A, B and C were partners. A informed B that the former was resigning from the partnership. The partnership was dissolved by the act of A. Comment to Case 1: If partnership liability is incurred by a contract entered into by C. A and B are bound to contribute their share of the liability as if the partnership had not been dissolved. Comment to Case 2: If the contract was entered into by B despite his knowledge of the dissolution, A and C can recover from B. A. True, true C. False, false B. True, false D. False, true 5. A contract of partnership where immovables are contributed must be in public instrument to be valid. A limited partnership must be SEC registered to be valid. A. True, true C. False, false B. True, false D. False, true 6. A, B and C entered into an oral contract of partnership each contributing P1M each to the common fund plus other personal properties of the same amount and failed to register the partnership with the SEC. is the partnership valid? A. No, because every contract of partnership having a capital of three thousand pesos or more in money or property must be in public instrument and registered with SEC B. Yes, because public instrument is necessary only in case of contributions of immovable C. Yes, because a partnership contract can always be oral D. No, because registration with SEC is essential for a partnership to be valid and acquire juridical personality 7. Partners A, B and C contributed: P-P1M; B-P2M; C service. After exhausting the partnership assets, the creditors still have a claim for P.3M. For how much are the partners liable to the creditors for the partnership liability? A. Only A and B are liable equally to the creditors being capitalists B. Only A and B are liable 1/3 and 2/3, respectively C. All of A, B and C are liable pro rata to the creditors D. C is not liable being an industrial partner who is exempt from losses

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8. A and B are co-owners of a parcel of land from which they derive profits in equal sharing being co-heirs in inheritance. Is there a partnership? A. There is a partnership because of the equal sharing of profits B. There is no partnership because co-ownership by itself does not establish a partnership despite the sharing of profits C. There is no partnership since in partnership division of profits is not always necessary among partners D. There is partnership they being co-owners and co-possessors 9. A and B are partners in Ace partnership. While A was performing his duties as a partner in the conduct of the business, he negligently caused damage to X, a third person. Who shall be liable to X and in what capacity? A. Only the partnership shall be liable it being a juridical person separate and distinct from the partners B. Only A shall be liable for he is the only one at fault C. Both A and B shall be liable solidarity to X D. A, B and the partnership are all liable solidarity to X 10. Which of the following is not a prohibition on a limited partner? A. Surname of limited partner may not appear in the partnership name B. Limited partner may not take part in the control of the business C. Limited partner may not contribute service D. Limited partner may not constitute his assignee as substituted limited partner 11. A, B and C as partners in a partnership stipulated and mutually agreed that A shall not share in the profits and losses. In the agreement valid as among the partners only and not against third person? A. Yes, because among the partners it is valid to exempt one from sharing in profits and losses B. Yes, valid as long as third persons are not prejudiced C. Not valid stipulation exempting a partner from sharing profits and losses D. Not valid as against third persons or partnership creditors 12. A newly admitted partner shall be liable for the pre-existing obligation for the partnership at the time of his admission in favour of partnership to the extent of his capital contribution. An industrial partner shall not share in the losses and his share in the profits shall be just and equitable under the circumstances. A. True, true C. False, false B. True, false D. False, true 13. Three A. B. C. D. of the following dissolves a partnership, except: Partnership business has become unlawful Death, civil interdiction or insolvency of a partner Expulsion of partner Partnership business can only be carried on at a loss

14. A partner who is liable to the partnership for damages due to his fault may claim compensation if through his extraordinary efforts in other activities of the partnership unusual profits have been realized. A partner shall be the debtor of the partnership if he fails to deliver his promised contributions and shall be in delay from the time of a demand from the partnership. A. True, true C. False, false B. True, false D. False, true 15. A contributed P1M, B contributed P1M, and C contributed services. They agreed to divide the profits and losses equally. In case of loss of P.3M, how much, if any, is C liable? A. Nothing, because an industrial partner is exempt from losses B. P.1M but with reimbursement from A and B equally C. A and B alone shall shoulder the loss at Cs option D. P.1M 16. Suppose in the preceding case, there was no agreement as to profit-loss sharing, what will be the share of C in the profit? A. Equal to the share of A and B C. P1M B. Just and equitable under the D. Court to fix his share circumstances

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17. Based on the preceding number, what shall be his share in the loss? A. Equal to the share of A and B C. P1M B. Just and equitable under the D. None circumstances 18. Which of the following is the characteristic of partnership as a contract? A. Preparatory B. Formal C. Innominate D. Gratuitous

19. First statement- The arrival of the term of a partnership with a fixed term of period shall not dissolve the partnership if the partners continue with the business of the partnership but such partnership may terminated anytime dependent on the will of the continuing partners. Second statement- A partnership with a capital of P3 000 or more to money and property, must be in a public instrument and registered with SEC in order for the partnership to be able to maintain an action, in its own name against third party. A. True, true C. False, false B. True, false D. False, true

CORPORATION
1. Which one of the following those not require stockholders approval? A. Merger or consolidation C. Amendment of articles of incorporation B. Change of corporate name D. Declaration od cash dividend 2. Statement 1 After the quasi-reorganization of the corporation has been effected and approved by SEC, the corporation shall disclose on all its financial statements for a minimum period of three (3) years the effects of such quasi-reorganization to the financial condition of the company. Statement 2 In quasi-reorganization, for purpose of dividend declaration, the retained earnings of the company shall be restricted to the extent of the deficit wiped out by appraisal surplus. Which is correct? A. True, true C. False, false B. True, false D. False, true 3. Which of the following corporate acts requires the approval of the majority of the outstanding capital stock or of the members of the private corporation? A. To invest corporate funds in another corporation or business B. To adopt by-laws C. To dissolve the corporation D. None of the above 4. Except for one, every corporation whose charter expires by its own limitation, or annulled by forfelture or otherwise, or whose corporate existence for other purpose is terminated in any other manner shall nevertheless be continued as a body corporate for three years after the time when it would have been dissolved for the purpose of the following. The exception is A. Prosecuting and defending suits by or against it and enabling it to settle and close its affairs B. To dispose and convey its property C. To distribute its assets D. Continuing the business for which it was established 5. A de facto corporation is one which is not registered with the SEC. In corporation by estoppel those who misrepresented themselves as forming a corporation are liable as general partners. A. True, true C. False, false B. True, false D. False, true 6. A corporation can be a stockholder but not as incorporator. To be a de jure corporation, it must be existing in law and in fact unlike a de facto one which exists in fact but not in law. A. True, true C. False, false B. True, false D. False, true 7. A subscribed to 1 000 shares of stocks of X Corporation and paid 25% of the said subscription. Can he vote all his subscribed shares? A. No, because the subscription has not been fully paid

Page 16 of 25

B. C. D.

No, because his shares have become delinquent shares Yes, as regards the paid percentage of the subscription Yes, because shares although unpaid but not delinquent can be voted

8. X Corporation posted a P1M profits in its realty business and its real estate has appreciated in value to the tune of P4M. The board then declared dividends computed on the basis of P5Mn representing profits and appreciation in the value of its real estate. Is the dividend declaration valid? A. Not valid because there was no 2/3 ratification by the outstanding capital stock B. Valid being based on profits and increments in the value of the corporate assets C. Not valid because dividends must come only from the profits D. Valid if creditors do not object nor protest against the same 9. A subscribe to 100 shares of X Corporation, paying 25% thereof. Despite the demand by A for the issuance of the stock certificate, the corporation refuses to issue one corresponding to the 25% paid. Meanwhile, the corporation has become in solvent and A now refuses to pay his unpaid balance on his subscription. Is the refusal to issue a stock certificate valid? A. Not valid, because the stock certificate can be issued for the paid portion of the subscription B. Valid, because stock certificate can only be issued after full payment of the subscription C. Valid as regards the unpaid percentage on the subscription D. Not valid because only delinquent shares may be denied stock certificate 10. Based on the facts in the preceding number, can A validly refuse to pay the unpaid balance on his subscription now that the corporation has become insolvent? A. No, under the trust fund doctrine for the protection of the creditors B. No, under the doctrine of piercing the veil of corporate fiction C. Yes, because of the insolvency of the corporation which also extinguished his obligation to pay the balance D. Yes, because of the denial of his right to stock certificate 11. Majority of the following must be residents of the Philippines except: A. Directors B. Trustees C. Incorporators D. Officers

12. Private corporations have the following attributes, except: A. It is an artificial being created by law B. It may be formed or created under special laws or charter C. It has the right of succession D. It has the powers, attributes and properties expressly authorized by law or incident to its creation 13. In the three of the cases, all shares have voting rights, except: A. Election of directors C. Dissolution of the corporation B. Increase or decrease of capital stock D. Merger or consolidation 14. At the annual meeting of the corporation for the election of the five directors, A, B, C, D, E, F and G were nominated. A, B, C, D and E received the highest number of votes and thus proclaimed as elected. F received then (10) votes less that E. Subsequently, E sold his shares to F. Who, between E and F has the right to attend as director? A. E is the director because his term is one year until his successor is elected and qualified B. F is the director because he has bought the shares of E C. Both of them shall be directors D. Neither of them shall be director 15. ABC Corporation has an authorized capital stock of P1M divided into 50 000 common shares and 50 000 preferred shares. At its inception, the corporation offered for subscription all the common shares. However, only 40 000 shares were subscribed. Recently, the directors thought of raising additional capital and decided to offer to the public all the authorized shares at their market value. Would X, the stockholder of 4 000 shares have pre-emptive right to the remaining 10 000 shares? A. Yes, because all stockholders have pre-emptive rights to all issues of shares of any class in proportion to their shareholdings B. No, because pre-emptive right does not apply to unissued shares to be issued C. Yes, because pre-emptive right applies only to the issuance of unissued shares D. No, because he has waived this right when he subscribed to a part only of the issuance of shares 16. Based on the facts of the preceding number, would X also have pre-emptive right to the 50 000 preferred shares?

Page 17 of 25

A. B. C. D.

Yes, because all stockholders have pre-emptive rights to all issues of shares of any class in proportion to their shareholding No, because pre-emptive rights do not apply to the issuance of unissued shares Yes, because pre-emptive rights apply only to the issuance of unissued shares No, because X has waived his pre-emptive rights to the issuance of preferred shares when he subscribed to the common shares their

17. The corporation has a nine-member board of directors. Two of the members sold shares while two others are abroad. To have a quorum, the number required is A. Seven B. Five C. Three D. Four

18. Which of the following requires the approval of the majority of the outstanding capital stock? A. Investment of corporate funds in another business or corporation B. Amendment, repeal or adoption of by laws C. Dissolution of the corporation D. Amendment of the articles of incorporation 19. A director of a corporation may be removed by: A. Vote of majority of the outstanding capital stock B. 2/3 of the stockholders C. Majority of the stockholders D. 2/3 of the outstanding capital stock 20. In the matter of management of the corporation, this is supreme A. President C. Stockholders B. Chairman of the Board of Directors D. Board of Directors 21. Three of the following are required for the existence of de facto corporation, except A. Incorporated under a valid law C. Actual use of corporate powers B. Attempt in good faith to organize D. Existing in law and in fact 22. Three of the following are required for incorporators, except A. They must be natural persons C. Not less than five nor more than fifteen B. All of legal age D. Majority must be citizens of the Philippines 23. The following are qualifications of a corporate directors, except A. Must own at least one share of stock B. Must continuously own at least one share during his term as director C. Majority of the directors are citizens of the Philippines D. Ownership of shares must be recorded in the books of the corporation 24. Which of the following is the advantage of forming a corporation? A. The free and ready transferability of ownership B. The shareholders are not liable for the debts of the business C. Because of the power of succession, the existence of the entity is not affected by the personal vicissitudes of the individual stockholders D. The subservience of minority stockholders to the wishes of the majority subject only to equitable restraints 25. First statement- If the surplus profits of the stock corporation reaches the level equal to its paid-up capital, the SEC may compel the corporation to declare dividends, otherwise it will be liable for a surtax on improperly accumulated surplus. Second statement- In a corporation, two or more positions may be held concurrently by the same person except that no one person shall acts as President and Chairman of the Board. A. True, true C. False, false B. True, false D. False, true 26. After 3 years of operation, ABC, a domestic corporation wanted to declare dividends to its stockholders. The treasurer reported a net income after tax of P4 million. One million is being appropriated for the acquisition of the machineries to be bought 2 months from now. The treasurer likewise reported an increase in the value of the land previously bought to be used as plant side from 3 million to 5 million. What amount of dividend can be declared by the board? A. P9 million B. P8 million C. P4 million D. P3 million 27. Any director of a corporation may be removed from office by a vote of A. Majority of the members of the board C. 2/3 of the stockholders present B. Majority of the stock holders present D. 2/3 of the outstanding capital stock

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28. The voting requirement needed in declaring cash or property dividend A. Majority vote of the board of directors B. Majority vote of the board of directors plus the vote of a majority of the outstanding shares C. Majority vote of the board of directors plus the vote of 2/3 of the outstanding shares D. 2/3 votes of the directors plus a majority of the outstanding shares

NEGOTIABLE INSTRUMENTS
1. When the instrument is completed but undelivered, delivery is presumed to have been made in favor of a holder in due course, the presumption is A. Pro tanto B. Prima facie C. Conclusive D. None of these 2. The negotiable character of an instrument is affected by a provision A. Authorizing the sale of collateral securities in case the instrument is not paid at maturity B. Authorizing a confession of judgment if the instrument is not paid at maturity C. Giving the maker an election to require something to be done in lieu of payment of money D. Waiving the benefit of any law intended for the protection of the obligor 3. Statement 1: W prepares a promissory note payable to order of X, his nephew, who steals the same and indorses it Y, then Y to Z, from Z to A who was unaware of the theft. A may recover from W. Statement 2: W, a retiree issued a promissory note, to wit: I promise to pay X or order the sum of P50 000 out of the retirement pay which I will receive from the government. Actually, W will get more than P200 000 as retirement benefits. The note is not negotiable. A. Only statement 1 has correct C. Only statement 2 has correct conclusion conclusion B. Both statements have correct D. Both statements have wrong conclusion conclusion 4. Which of the following laws cannot be found in the Civil Code? A. Negotiable instrument law C. Mortgage law B. Law on agency D. Law on sales 5. As regards an accommodation party, one of the following is not correct A. The accommodation party is generally regarded as a surety for the party accommodated B. When the accommodation party makes payment to the holder of the note, he has the right to sue the accommodated party for reimbursement C. An accommodation party does not receive any consideration arising from the instrument D. An accommodation maker is liable to the accommodated party 6. This is not negotiable A. I promise to pay to the order of myself P10 000. Sgd. A B. Pay to the order of X, Y and Z P10 000. To B. Sgd. A C. I promise to pay to order P10 000. Sgd. A D. Pay to the order of the Commissioner of Internal Revenue P10 000. To ABC Bank. Sgd. A 7. A holder in due course has the following rights, except A. He holds the instrument free from defects of title of prior parties B. Free from defenses of prior parties among themselves C. Enforce payment against all parties liable thereon D. Holds the instrument as if it were non negotiable 8. Which of the following is not negotiable instrument? A. Pay to the order of Pedro Cruz P1M (Sgd) Jose Santos to: A or B B. I promise to pay to the order of the bearer P1M. (Sgd) M C. Due to the Bearer P1M or a BMW car worth P1M at his option. (Sgd) M D. Pay to the order of myself P1M. (Sgd) D to W 9. Three A. B. C. of the following are requisites to be a holder in due course except That the instrument is complete and regular upon its face That the holder took it in good faith and for value That he became the holder of it before it was overdue and without notice that it had

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D.

been previously dishonoured if such was the fact That he had no knowledge of any fact which would impair the validity of the instrument or render it valueless

10. A makes a note payable to B or order. The following are the endorsers of the note in the order if their endorsements: B, C, D, E, F (holder) G (subsequent holder). The note is dishonoured in the hands of F, who notifies B, C, D, E. Which is not correct? A. The notice given by F to B operates to the benefits of C, D, E and G B. The notice of C inures to the benefit of D, E and G C. The notice to D inures to the benefit of E and G D. The notice to C inures to the benefit of B 11. Which of the following is negotiable instrument? A. Pay to bearer C P1M. Reimburse yourself out of the house rentals of my house in manila. (Sgd) A to B B. Pay to C or his order P1M out of the rentals of my house in Manila. (Sgd) A To: B or in his absence X C. Pay to C P1M (Sgd) A To: B D. Pay to the order of C and reimburse yourself if out of the rentals of my house in Manila. (Sgd) A To: B and X 12. M makes a note payable to bearer and delivers the same to P who endorses it to X in this manner. Payable to X. (Sgd) P A. No, because the special endorsement of P has made the notice to be payable to order and must be endorsed to negotiate B. Yes, because an instrument originally payable to bearer remains to be payable to bearer despite special endorsement made thereon C. Yes, because M, as make, is absolutely liable to pay the instrument in the hands of any holder D. No, because Y did not acquire title to the instrument due to lack of proper endorsement 13. In a blank endorsement, the endorses renders himself A. Primarily liable C. Solidarily liable B. Secondarily liable D. Subsidiarily liable 14. Real and personal defenses may be raised between A. Immediate parties C. Intervening parties B. Remote parties D. Subsequent parties 15. This is a real defense A. Fraud in inducement B. Want of consideration C. D. Want of delivery of an incomplete instrument Duress in the absence of physical pressure

16. M makes a negotiable promissory note for P10 000 with the name of the payable in blank. The note is stolen by P who inserts his name as payees and then endorse the note to A, then A to B, and B to C, who is a holder in due course. On maturity, C cannot enforce the note against A. M B. P C. A D. B 17. A issued a note payable to bearer. He delivers the note to B. B endorsed the note specially to C, and C negotiates the note by delivery to D. Which of the following is not correct? A. D can enforce the note against C C. D can enforce the note against A B. D can enforce the note against B D. C can enforce the note against B 18. This provision renders a note non-negotiable A. A promises to pay the order of B the sum of US$1 000 payable in pesos at the rate of exchange prevailing on November 14, 2010 B. A promise to pay B P1 000 with 12% interest thereon C. A promises to pay B P1 000 and all costs, charges and expenses including reasonable attorneys fees D. A promises to pay B P1 000 in two equal instalments, the first payable on November 12, 2010 and the second on December 14, 2010 19. Which of the following is non-negotiable? A. I promise to pay B or order P10 000 on or before December 14, 2010 in payment of purchase price of the merchandise I bought from him. Sgd. A B. Pay to the order of B P20 000 on or before December 14, 2010 and charge the same

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C. D.

amount to my account. To C, Sgd. A Pay to the order of B P30 000 out of my deposit with you. To C Sgd. A Pay to B or order P40 000 for payment under contract of November 14, 2010. To C Sgd. A

20. The following are negotiable except A. Drawer A directs drawee B to pay C or order P10 000, 30 days after demand B. Drawer A directs drawee B to pay C or order P10 000, 30 days after C passes the CPA board examinations C. A promises to pay B or order P10 000 within 30 days after the death of C D. A promises to pay B or order P10 000 on or before August 14, 2010 21. This is not negotiable A. I promise to pay to the order of myself P10 000 signed by A, the maker B. Pay to the order of the Commissioner of Internal Revenue P10 000 to ABC bank, Sgd. A C. I promise to pay to order P10 000. Sgd. A D. Pay to the order of X, Y and Z, P10 000. To B. Sgd. A 22. Every negotiable instrument is presumed to have been issued for a valuable consideration. The presumption is A. Prima facie B. Conclusive C. Absolute D. Final 23. A, issued a promissory note payable to B or order for P10 000 for 10 bottles of whisky sold by B to A. Later, B negotiated the note to C. Subsequently, A discovered that only 5 bottles of whisky are genuine. As a result A. C can enforce the note against A for P10 000 regardless of whether C is holder in due course or not B. C cannot enforce the note against A for P10 000 even if he is a holder in due course C. C can enforce the note against A only for P5 000 regardless of whether is he a holder in due course or not D. C can enforce the note against A only for P5 000 if he is not a holder in course 24. A letter of credit is beyond the scope of the negotiable instrument law, because A. It is in favor of a specific person or not to order B. It is an order to pay not of a particular fund C. It is without an unconditional promise or order to pay a sum certain in money D. It is not payable on demand or at a fixed or determinable future 25. Which of the following is not negotiable? A. Documentary Bill of Exchange B. Clean bill of exchange C. D. Certificate of deposit Postal money order

26. It contains an order to pay out of a particular fund rendering the instrument beyond the scope of the negotiable instrument law. A. Bill of lading C. Certificate of stock B. Treasury warrant D. Warehouse receipt 27. Omissions that do not affect the negotiability of an instrument, except A. It is not dated B. Does not specify the value given C. Does not specify the place where it is drawn D. Does not name the payee where the instrument is payable to order 28. A delivered to B the following instrument: One month after date, I promise to pay to B P10 000. Sgd A. B endorsed the note in blank before maturity and delivered it to C for value. When due, A refused to pay and C sued B. Could C recover from B? A. No, C could not sue B and hold him liable as an endorses because the instrument is payable to a specified person B. No, the instrument is not negotiable because it is neither payable to order or to bearer C. Yes, provided C to gives notice if dishonor to B, otherwise B is discharged from liability D. Yes, the endorsement will be considered as an assignment, hence B will be liable as an assigned of the instrument 29. A, knowing that there is no such person by the name of B, makes out and signs a promissory note payable to B or order. A delivers the note to C. C in turn delivers the note to D without endorsement. Later, D delivers the note to E, a holder in due course. Which of the following is correct?

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A. B. C. D.

Being payable to order, the note can be negotiated by endorsement and delivery E has no right to collect from C because a person negotiating an instrument merely by delivery is liable only to the immediate transferee E becomes holder only if D will endorse the instrument The instrument is not negotiable because it is payable to the order of a non-existing person

30. A makes a negotiable note to bearer and delivers it to B for safe keeping. The note is negotiated by B to C. Can A refuse to pay C on the ground that the note was originally to B for a special purpose only? A. Yes, A can prove that he deliver he delivered the instrument to B for special purpose B. No, where the instrument is in the hands of any holder, a valid delivery thereof by all parties prior to him so as to make them liable to him is conclusively presumed C. Yes, because B negotiated the note without authority D. No, if C is a holder in due course 31. A made negotiable promissory note in favour of B who negotiated it to C under the following endorsement. Pay to C after passing the CPA examination in October 2010. At maturity of the note, C presented it to A for payment and it was duly paid, C did not pass the CPA examination. Which of the following is correct? A. The promissory note is not negotiable because of the condition imposed B. The promissory note becomes negotiable because of the condition was satisfied C. A had no right to pay C and, therefore can compelled to pay again D. A may disregard the condition and make payment whether the condition is fulfilled or not 32. When the instrument is complete but undelivered, delivery is presumed to have been made in favour of the holder, the presumption is A. Conclusive whether holder in due course or for value B. Prima-facie whether holder in due course or for value C. Conclusive if holder for value and prima facie if holder in due course D. Prima-facie if holder for value and conclusive, if holder in due course 33. The endorses who simply signs his name renders himself liable to all subsequent holders as A. Primarily liable C. Secondarily liable B. Solidarily liable D. Subsidiarily liable 34. There them, A. B. is no difference between a holder in due course and one who is not, since as regards real and personal defenses may always be raised if Intervening parties C. Immediate parties Remote parties D. Subsequent parties C. D. Real defense National defense

35. This is a personal defense A. Absolute defense B. Equitable defense

36. A note reads I promised to pay or order P1 000, 30 days after B receives the proceeds of his loan from ABC Banks, Sgd. A. The instrument is A. Subject to a condition B. Payable at a determinable future time C. Payable on demand D. Non-negotiable because the payment is indefinite 37. The drawee bank may not refuse to pay checks drawn if A. If there is a stop payment issued by the drawer B. If the drawer is solvent C. If the drawers is deposits is insufficient D. When the bank receives notice of the drawers death

AGENCY
1. A, agent of P, in excess of authority, entered into a contract in the name of P with X who know of the lack of authority and P did not ratify the contract. The contact is: A. Rescissible B. Voidable C. Unenforceable D. Void
2. In three of the following cases, the agency is not revocable, except:

A. B. C. D.

It is a mean of fulfilling an obligation already contracted. Bilateral contract depends upon it It is coupled with interest common to the agent and principal Partner is appointed manager in the articles of partnership and removal is without

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just cause
3. If two or more principal appoint a single agent for a common transaction, the ability of the

former shall be solidary.

If two or more agents appointed by a single principal are jointly liable unless solidarity is stipulated A. True, true C. False, false B. True, false D. False, true
4. P authorized A to sell his products with 10% commission and 5% guarantee commission. A

sold them to B who failed to pay despite the diligent efforts of A in collecting. Is A still liable for the purchase of the price? A. Yes, because of the guarantee commission given to him B. No, because he was not at fault in the collection C. No, if he returns the guarantee commission D. Yes, and he is entitles anymore to the commissions A. B. C. D. The principal authorized him to appoint a substitute The principal did not authorize him to appoint a substitute There is no stipulation as to the appointment of a substitute The principal forbids the appointment of a substitute

5. In the three following cases, the agent can appoint a substitute, except:

6. P appointed A and B as his agents for a common transaction and they agreed that the latter

shall be solidary liable to the former for damages in case of violations of their obligations as such. When is the agent at fault the only one liable for damages even if solidarity has been stipulated? A. If the other agent is not at fault B. Both then shall be liable always since solidarity was agreed upon C. If the one at fault shall answer for all the damages D. If the one at fault acted in excess of authority instalments at a lesser price of P.9M. P is now repudiating the contract with X on the ground that he is not bound since X contracted with a minor who exceeded his authority. Decide. A. P is liable under the contract because it is enough that the principal is capacitated since he is the one entering into the contract B. P is not liable for the sale on instalments since it is unenforceable because his agent acted beyond his power C. P is not liable because the agent is a minor with whom X contracted D. P is liable provided the sale is in cash for P1M

7. P authorized A, a minor, to sell his car for P1M in cash. A sold the said car to X on

8. Special power of attorney is necessary in the following cases, except

A. B. C. D. A. B. C. D.

To make such payment usually consider as acts of administration To compromise, to submit questions to arbitration To bind the principal in a contract of partnership Any other act of strict dominion To render an accounting of the transaction To subordinate his interest in favour of his principal if there is a conflict of interest To borrow if he is authorized to lend Not to carry out the agency, even if that is the instruction of the principal, if he knew it would result is a loss or damage to his principal The principal delivers his power of attorney to the agent and the latter receives it without any objection The offeree writes a letter acknowledging the receipt of the offer, but offers no objection to the agency The offeree begins to act under the authority conferred upon him The offeree receives a letter of authority but did not reply nor acted within the scope of authority conferred upon him The authority of B is in writing and the sale of the land in favor of C is oral The authority of B from A is by way of letter and B sells the land to C in writing The authority of B is oral and B sells the land to C for P50 000 in a written contract of sale The authority of B is in writing but the sale of the land in writing was made beyond

9. This not fundamental obligation of the agent

10. There is no implied agency in the following:

A.

B. C. D.

11. A appoints B as his agent to sell his land. Which of the following is perfectly valid?

A. B. C. D.

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the period expressly set forth by A


12. Which of the following constitute an act of strict dominion or ownership?

A. B. C. D. A. B. C. D.

To To To To

bind the principal to render some service without compensation sue for the collection of debts lease real property to another person for six months make customary gifts for charity

13. Which of the following is not fundamental obligation of an agent?

To borrow if he is authorized to lend To subordinate his interest in favor of his principal if there is a conflict of interest To render an accounting of the transaction Not to carry out the agency, even if that is the instruction of the principal, if he know it would result to a loss or damage to his principal

PLEDGE, MORTGAGE and OTHERS


1. Antichresis must be in writing and involves only immovables. In pledge and Recto Law there is no deficiency liability. A. True, true C. False, false B. True, false D. False, true 2. D mortgaged his car on C as security for a loan. Failing in the payment of the loan, C foreclosed the chattel mortgage and sold the car at public auction. In case of deficiency, is D liable for it? A. Yes, in the absence of contrary stipulation B. No, because it would be unjust enrichment on the part of the creditor C. Yes, if so agreed upon by the parties D. No, unless stipulated 3. Based on the preceding case, suppose it was a pledge, would the debtor/pledger be liable for the deficiency? A. No, notwithstanding stipulation to the contrary B. No, unless otherwise stipulated C. Yes, if so agreed upon D. Yes, even in the absence of stipulation 4. D mortgaged his parcel of land to C as security for a loan. Fearing foreclosure of the mortgage due to his inability to pay the loan, D sold the land to X without the consent of C. Is the sale valid? A. No, unless there was prior consent of the mortgage B. Yes, stipulation prohibiting the sale without the consent of the mortgagee shall be void C. Yes, provided the mortgage was notified before the sale D. No, if there was stipulation requiring prior consent 5. D owes C a sum of money with M as mortgagor of his land to secure the loan. In the mortgage valid even if the mortgagor is not the debtor? A. Yes, provided the mortgagor of the pledgor in case of pledge is the absolute owner of the property mortgaged or pledged B. Yes, provided it is in writing and registered C. No, the mortgagor/pledger must be the debtor himself D. No, unless the mortgagor is a co-debtor 6. D is indebited to C in the amount of P200 000 and delivers to C his diamond ring by way of pledge. If D sells the same diamond ring to T, when will T acquire ownership of the same? A. From the time the sale is perfected between D and T B. From the time T pays the price to D C. From the time C consent to the sale between D and T D. From the time T obtains actual possession of the diamond ring 7. A borrowed from C P1 000 000 to secure the payment of which the former verbally agreed to deliver his 4 hectares agricultural land by way of antichresis and to pay 12% interest per annum. The contract of loan and antichresis A. Are both valid B. Both null and void C. The loan is valid but the antichresis is null and void D. The contract of antichresis is valid, but he loan is null and void

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8. This is not a characteristic of pledge A. Bilateral B. Nominate

C.

Real

D.

Consensual

9. Mutuum as distinguished from commodatum A. Essentially gratuitous B. Loan for consumption C. Object is generally not consumable D. Bailor retains the ownership of the thing loaned 10. The pledge has a right to the reimbursement of the expenses for its preservation, and is liable for its loss or deterioration. If through the negligence of the pledgee, the thing pledged is in danger of being impaired, the pledger may require the pledgee that the thing be deposited with a third person. A. True, true C. False, false B. True, false D. False, true 11. A borrowed P50 000 from B and offered his land by way of a mortgage. If it is stipulated in the contract that if A fails to pay the debt on time, B shall become the owner of the house, the stipulation is A. Valid if it has traditionally been allowed B. Null and void because it is a pacto comisorio C. Void because it is equivalent to alienation of property in favor of the creditor D. Valid because the house would automatically serve as payment for the land 12. A owes B P5 000 and as security, A pledged his diamond ring. Later A borrowed again P2 000. As a result A. B has a right to retain the thing until the P7 000 is paid B. B has a right to retain the thing until the P5 000 is paid C. A has a right to demand that the thing be deposited with a third person D. B has the right to use the thing pledged until the pledge effects payment of the obligation 13. X borrowed money from Y and gave a piece of land as security by way of mortgage. It was agreed between the parties that upon nonpayment of the loan, the land would already belong to Y. If X failed to pay the debt, would Y now become the owner of the land? A. Y would become the owner because it was agreed upon by them based on the principle of autonomy of contracts B. Y would not become the owner because the agreement that he would become the owner upon default of X against the law C. Y would now become the owner but with the right to redemption by X D. Y would not become the owner if X annuls the voidable agreement 14. Alcomendas mortgaged his house and lot in Quezon City to Bongoran. May Alcomendas sell the house and lot to Cabalquinto? A. No, otherwise the sale is void B. Yes, if there is no stipulation forbidding the owner from selling the mortgaged property C. No, if there is a stipulation forbidding the owner from selling the mortgaged property D. Yes, even if there is a stipulation forbidding the owner from selling the mortgaged property 15. Alfelor borrowed P50 000 from Bayani and as security for its payment mortgaged his car to Bayani. Upon failure to pay, Bayani sold the mortgaged chattel but the proceeds did not fully satisfy the secured debt. Can the mortgagee recover the deficiency from the mortgagor? A. No, the provisions of pledge prohibiting recovery will apply B. No, the provisions of Recto Law will apply C. Yes, there is no such prohibition under the Civil Code although prohibited under the Chattel Mortgage Law D. Yes, there is no such prohibition under the Civil Code and in the Chattel Mortgage Law

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