I Fr*

I V4

a.
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-.,,1

ReSA
The Review School of Accountancy

8tet.

No.735-9807 & 734-3989

ffiUSf,NESS IJtrIT

I":.rst Pre-Board Examination

22 July 2OL2 (Sunday)

3:30 P.M. 5:00 P.M.

MI,LTIPLE CHOICE
z SeLect the correct answer f or each of the f oTTowing
er:e:.'t-ro;r.s. Mark only one answer for each item by shading the box
i'r-r'i'esponCing to the letter of your choice on the sheet provided.
fiTR"lCfLY }fO .EFUTSURES eRE ALLOWED. Use pencif no. 2 only.

ISSSSgSg1Ory

i.
iCl'uqe

Can

/
b.

future inheritarrce be the subject of a contract of sale?

No, since it wi1l. put the predecessor at the risk of harm from a
t-emp1-ed buyer, cont::ary t-c.r public poll.cy . tt(\orq NAson
Yeg, since the death of the decedent is certd'in to occur.
64,., since the sel1er owns no inheritance while his predecessor
-/'No
Yes, but on the condj,tion t-hat t-he amount of the inherj-tance can onJ-y
tre ascertained af ter the obliqations of tfre e:;tate have been paid.

6 Upon the proposal of a third person/ a new debl-or srabstituted the

original debtor wj-thout the latter'.s consent. The creditor accepted the
substitution. Late::, however, the new debtor became j-nsolvent and
ciefaultecl in his obligation. What- is the effect of the new debtor's
defau.lt upon the original debtor? grpromistiorl
since novatlqrt took place
a" The orlginal debtor is freed ol.Iiabllity
and tliis relieved him of his obligation.
'rt'. The original debtor shal-l pay or: perform the obligation with recourse
t-o the new debtor.
c. The original debtor remains 1iable since he gave no consent to the
substitution.
d. The original debtor shall yiay or perform 508 of the obl.iqation to
avoid unlust enrichment on h'is part.
0

fl

il

When bilateral
rendered

contracts are vltiated

with vices of consent, they are

a. rescissible.
b. void.
c. unenforceable.
{. voidable.
Contracts take effect on1y between the parties or thej,r assigns and
he1rs, except where the rights and ob,ligations arising from the conlract
are not transmissible by thelr nature, by stipulation, or by provj-sion of
1aw. In the latter: case, the assigns or the heirs aue not bound by the
contracts. This is known as the principle of
"/;. Relativity of contracts.
b. Freedom {o stipulate.
c. Mutualitf. of contracts.
d. Obl.igatory force of corrtract-s.
5. A buyer or:dered 5,000 apples from the sell-er at F20 per appie. The selle::
delivered 6,000 apples. What- are the rights and ooligations of the buyer?
*x He can accept all 6,000 apples and pay the seller at P20 per app1e.
b. He can accept atl 6,000 apples and pay a lesser pri-ce for the 1.000
'
excess apples.
c. He can keep the 6, 000 apples without pay-irrg for lhe 1, 000 excess
since the se]Ier delivered them anyway.
He
can cancel the whole transaction since the selfer violaLecl the
d.
terms of their agreement.

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6. Lino entered -into a corttr.tct- l-o se1 L lvi i-fr Ratron, undcr tak iri(r. t.o cor:vey t_c
the lat-ter one of the f ive lot-s he own::, wi t-liout spe<:if yi ng whir:h l.ot- i t.
was/ for Lhe pri ce r>f Pi mi-L -l-ion. l,at-er, the palL j.es cou13 noi- .-iqree
whi.ch of f i-re lots he owncci Lirro unde:-took t-o sei. 1 to Ramrin. rdhat, i:; .i he
stan<ling of the corltrac r,'t dcubt oS tO the objed
a. Unei-rforccable.
b. Voidal:1e .
c. Resi:issibie.
vo id.
X
//
-l . Knowinq that the car harl
a Lrj.d,.lerr cr-.rr:k -in t-he engine, X so l.cl i I t_o y
wiLhout inf orming t-iie laLter" about j t . f n any evelt, the deecl oI sale
expr:essly stipulated that X was no1- Ijable for liidden defr.rct-s. Dor:s y
have the ri ght to clemand f r:on X a reimbur:se:nrerii, of whal- he snerrt. l-o
repai r the engine plus 'damages?
a. Yes. X is liable wheLhet: er no[- he was aware <;{' lhe hi dden def ect,.
y. Yes, sii'rce the walver js void. X knew of it bL.r1, hr: ercted j.n bad ia.it-h
in not disclosing t he fai:t_ to 1..
(1 . , No, because Y is
Lrt esLoppel, trav i.ng r:hanqed engine wi thopt pr:i or
demanr-1

d. No, because Y wairred the warrant-y a<trairrst Lr-i ckletn def eL:ts.
L Asionc; borrowecl P1 mrll ion f r.oni ..i bank, securecl by d mortgage or) hrs;
Iand. W-rthout his conserrt, hi.s fr:iend i3oyong p;iid the whole Ioan. Since
Asiong benefited from tho payment/ can l]o\/ong compe-l th<.: hank to
subror;ate irirn in rts r.i.qht its mort,gagee of Asiong-'s Lanci?
a. No, but the bank can f cre cLos;e anci pay l3oyong back.
.Y. No, since Boyong paid f or As iong' s 1.o.ln without his apprc>val .
c. Yes, since a change of crediLor: Look place by novat ion wjtl-r Lhe
bank' s corrsent .
rl . Yes, silrce it j.s bui r-:-qhl- ihat Boycng be ab-ie to gel back his nroney
and/ jf rrot, f o loreclose tl're mortg.rqe -in t,he manncr cf t.he bank.

. Rudol f borrowed P1 million

f rom Rodrigo crnd t-errrancf o whr; acted as
sol
i.dary
credi.
tors
.
When
t-he
loan rnattrrerl, Rodr:iqo wrote a Le1- Le.r l-o
l?lq
RLrrJol f , clen'rancii.ng payinerrt of the I oan cii rect Ly to li-i rn. Br:f ore Iludol f
coulcl comply, !'ernando wr.:nt- 1-o see him personaily lo cot Lect and hrl paici
him. Dici itudor-l niake a vaticj paymerrtl, th0 Me r{hc dCImrmdrd fr$ &rxrld 4g;}
a, No, sinc<: Rudol.f shc-rr-ilci ha',,i'.r spli-t t-|r: rraymr:1t. irr:tiwerer, R,;r1l r-,{fr",t1c1
9

Fernando.
C.

d.
A

No, sirlce Rodr:igo, the o1-her soliCary r.:r:e.li+:cr alreaciy made a pri or
demand f or payment- f ror.r Rudo I I .
Yes, .since the payrnent co,rer:s t-ne v;hc1e obligation.
Yes, since Fer:nando rlras a sol.jdarv credit_or, paymlnt_ i_o iijm
exL irrqui-slieci the ob l i gat i on.

10. Alian bought Bll1y's proper:ty tlir:ouqh L'ar:i.os, an aqent empowe::ed wiLh a
specia.l power Of aLtorne y (liPAf t-o seI i th,r s;ame. When Al j an wa,s ready Lo
pa-v asi schecluleci, BilJy cailed, direcl-inq A1lan 1.o 1;ay c1irt,'ctLy t-c., i-ijm.
on learning of this, Carlos, Bil lyrs aoenl-, tol<1 A,1 1an to pay through him
as his SPA provi rled and to p.rc1 ccl.- lris cc)nrmj-:;sion. tr'.iced wit-h tv/o
claimants, A}1an consi gnerl i-he payment- -in court,. ili iJ y pt olesl-(l{1,
contend,irtg thaL t-he consiqnation -is irreffer:tivc
sinr-:c no teldcr of
Pdyrner,t was matie ro nir'r . ls ho,rr)rr.C'L? e0hqlgfqdon-f effinqug6gj
No, sinr-c .:ons'i qnui iorr w-iLlroui ,(-rider -ol pd\/munf r.s -llcv;r, I in t..,r.
,/
face of tlie conflictinq
clair.rs on r,he plairrtiff.
b. Yes, <1s owner of the property soid, Birly r:an demand payrnenl- cJirei:tLy
to him.selt.
c. Yes, slnce A1lan made rro annourrcernerrt cf the terrder.
d. Yes, a Lender of paymenL. is r:ectruired for a vaiici cr:nsiqnat-]c1 .
11. x so,Lci Y 100 sar:ks of r'.ic<-' that Y r'ia:i to p.lr-:k u1> f rr:m x's r:i1;e m.i.l-.1* r-'rr a
.t-o Lakc
\ry1} pa.t-icular dat-e. Y did noL, however, dpfrear: cn the agreecl dat-q)
',.rt\delivery
of t,he rice. Afl-er one vreck, X aul-oraal-,ica11y rescinded t-he sale
Ft'r-r-l-thoLit notar:ial noti-ce to Y. is,- t.he resci'ssion vatici'? InOvaHfs --+fouhfrafic ecir giorr
,{, Yes, autornatic rescission is aLl.oweC s.ince, h.rvinq t-he ch;rracter ot l
movab l es and consumab L.es, rice can easil y dr.:teri-ctr:ate .
b. No, the biiyer 1s entj.tled to a cltsf(r[];try -i0-day exl_r.lnsi<-ri ctf. hjs; X irnrno\iqblc
obligatiorr t,c take delivory of Lhe goocis.
c. No, since t-here wast no etxf)r-ess ar;rcr_-ment rt:r;a r.<iint; auLoni;.l f- ir::
resciss i on.

7
D
t\r

R6SA: The Renletu School of Accountanqy

Pagp

3 of9

No, the se11er shoulci -[irst cieterni.ne that Y was not jusr-:f-e6i:.f,aj'ino to appecr.
@. il.o1' ancl Car'fos bof,h unijertook a contract to del-iver to Sam in Manila a
l-oa+; d.or:keci in Subj-c. Betr:re they coulcl rle.l-l.ver ,i1,, however, the boat
sarrk irr ;r st,orm. Thie corrt-ract pr:o-.ricles that fortuitous
evenL sha'Il not
.:xelrpl- Rcy and Ca r:-Los f rom thelr obiigal ior: . Owi,ng to the Loss of the
tii,:;t-c,.r' b.-'a1-, such obii"gatiort i:,; cleened converLed in -<> c.;ne of i,ndqmrri,ty for
ri,:r;r;,1,-,s. Is the 1iabi. lrty of Roy arrd Carlos o.i-rr1- <>r sollciary? ,JOin+ frftri libif
a. Neither solidary ti,(tf jo.:rr', s.ince they r-:ainncL w;eive thc defense of
loriilitous
e./ent. to'urhi.ch i,hr:v a::e erititlr:ri.
i.r. Scti-rla::y or joi-nt upon t-}ic clrsr:L:e-.1--Lon cf Sarn.
t/. 9o1icl-rry sjnce Roy .1rrd rl.irlos lai-Led i-o plart. rrri t,heir r:bligat,ron tc.r
dr:i-i."rer the motor L-;oat.
r-i, -i;i nt since t-hc r:orrver:;1on c,f Lheir liabrl.ity
!..o one of i.ridemnity for
r1;rniage.s made it i ci nt .
il

-1

r.r:r-r,1,

\,

inr.,a,-,nr

,..

t-----.-...-.=-i--:-

\-/\-/'-V/.,].I]r,t.yinitor:'nr....i(l1)]l'r,JC.1,LSal(:,Wwl.,ctltc::
o.r not m..-:ltioned in it, is; known as ihe
J. r^rarrant)- on qualii-.y.
b. r./;lrrant-y against hidden r*rfect-s.
a. _ i;a-rranty against- er,.:.cl-io;,,
"r4:' w,1 r r anty irr me::chant-abi-lrty.
i,l , L, i,.rlro wa".; . ahrroac!, p;lroned hi .: brcther, 'l , ar-rl-hori zinr; him t-o sell- X' s
0
n.jrutl - .il rarrd in Pusav. X rrcr, 1. the ticrc t.--: Y by uourier servjce. Acting
P
lcr his r>r'other:, Y executerl .a rroLarized deed of al:so-Lut-e sa.Ie of the larrd
t-rl 7, a.f t.e:r receiving payment. Whai, is the sLal-L.rs oI the sa"].e?
a. Va1rd, since a rrot-arized cleeci oi. absollrte sale c:overed the
1- ransact j on and fui-1- paymenl 1.ras made.
.
-#: Void, s i nr:e X shou Lil har;e aut-.lrori 7sQ ztgenL Y i-rr wri-t i nq to se.l. I the
-oil,l .
c. ValiC, s j.nce Y wa:; trr-i-'i y h i:: brcrthcri X' s agent and errtrLrsted wil,h the
t-it-,Ie neederl to t-.f feci, i:ire :,;ai+.
VaIici, sjnr--e t,he oiyer i:r.;i.ilci ijie: ar'. ar:tiorr t; r:onpe1 X to exer:ut-e a
cl .
deed ;t sa-Li:.
13

l/

15. in a true pacto de ret::o saIe. thr: t-i i.l-e an<1 owriership of tiie propert'y'
scld ar:e imnLedi ate1.y vr:st.erj i,n Lhr: ,zeirciee o r <:t,r r.r sub j ect. only to the
resol ut-ory condit.ion of repur cn.lse by t-hr.: venC:r: a reltro withrn the
stipu Lated pc.:r iod. This is; k-nown t;:; -Srfcn|il
a. equitable mortgage.
-W conventional redempt,i orr.
c. 1cqa1 redemption.
rj . equi ty of redempt j on .
@. a,-,.,. owod Bessy P1 mi, lIion c1r:e on Oclober 1, :).lii but fa.i lecl to pay her
on clue date. tsessy sent- a dcmand f etter ic> l\rine gi.vinq her 5 days frorn
receipt lvithin whj.ch 1,o pay. 'I'wc clayc ., fr-r:r. r'ec:r: rp1- r;f lhe ic*;t-r,;:, 1\rrrie
persorrrrly of fer:ed t-o p-ray tlrssy r.n nl.rnager's checl. bul l-hr:. l.rt1-r:r reI-usec1
1,.o arc(:ep t the same , Tlie 5 clays J. apscd . . M-y Anne' s obi igat,ic;n bc
<ron,si rle::ed extl nguished? Jtndrf qlqg- drylAt elryUidA
a, Ya)s/ s-ince Bessy's .::efusa l ,.rf the m:rtrai;er's :)-,e,-'k, lvhr,,:h i,s presumed
fulr<1ed, amounts to a sat,i-sf.lc';i-on of tiir.: obl.io.rtion,
b. No, slnce tender: of paymcni- even iri c-ash, if. ::ef rrsed, w-iI] ncti,
cl.i scharqe the obiiqert ion wi t-hoi,rl- pri:p.r:r consiqnatior': in coi,rrt.
c. Yes, sirrce Anne tendered paynien L r-;i' the f u i. L. aricunt <lur: ,
Ilo, since a manaqer's r:heck j.s not considr:re;11 legal t-encler: in t,ir<:
,{
Philippines.
1

/. X borrowed morley f i:om a bank, securerl Di/' ;: mcri gaoe on lhe .l and ct '{,
trjs clclse fr:iend. When the l.oan m;rtured, Y offe.r:r:rl to 5;ay Lhe barrk but it.
refused si-nce Y was noL lhe bor::o,n;er. Is t,hr: bank':r .,rct-ir>ri r--o::re:l-?
a. Yes, since X, t-he tr:ue bc;rlcwer:, rii ci no1, qilve h j.s consrlnt to Y' s
offer t() pay
b.- No, since anybocly can dj scl-ra::ge X's r-rkrligat-Lc'lr i-c h'rs beneiri.
1 No, since Y, ttie owner r:{'. t}Le coLlatera-r , ha-s arr int-errest. ,i-n the
payment of the obligation.
d. Yes, since j.t was X whc, itas an cil;I-i<;ai-iorr to tire i-ralrk.

rleJfl: IftC lfsYlsw )CIIOOI OI l\CGtXlnfilnGy

18. The presence of a vice of consent vitiates

contract and this renders the contract
a. Resclssible.
b. Unenforceable.
-z< Voidable.
d. Void.

Page

4 of9

the consent of a party ]n

19. The debtor promises to pay as soon as he has the means to do so.izr ll80 -or.t aittyi*pritd
The debtor promises to pay i f his son does not die of cancer j-n one
year. $v7e.w,)t9
a. First obligation is with a condition, whi-le the second is with a
period.
b. First is with period, the secorrd is positive conditlon.
c. Eirst is with suspensive period, second is with resolutory condition
,il First j-s with indefinite period, second is with suspensive condition

&'. tnese are special forms of pal,'inent. stricEly speaking, one of the
following is not a special form of payment.
/. Dation in payment.
b. Application of payment. -U0u rv'tl J'rst c'Fwgt, +a Ylhlfir d61 -D qp'h Fgnrrtc. Payment by cession.
d. Tender of payment and consignation.
21. A was hired by B as its chief accountant to serve for two years per
contract between the parti,es. But after serving only for two months, he
resigned lo join C Corporation, which enticed him to l-eave ts Corporatj-on
by offering more advantageous terms ,:f employment. B sued A for damages
for breach of contract and C al-so for damages. Decide:
a. C is l-iable for breach of contract enLered lnto between A and B.
b. c is not l-iable for damages because it was not a party to the
contract of employment between A and B.
C is liabfe for its act of inducing A to viofate his contract with B
,{ although it is not a party theret-o.
d. c is liable to pay damages to B even if it were i-n good faith because
A is liable for breach of contract.

@. o, B, and C as brothers purchasecl from their parents specific portions

of a parcel of land as evidenced by three separate deeds of sale, each
deed referring to a particular lot in meters and bounds. A. sold his
par:ce.l- of land to X and B and C warrt to redeem the same. Decide: 4d c0ome6h1p
a. Both B and C may exercise the right of redemption in a pacto de retro
sale.

V. Either of B and C may do so if there is right of redemption given to

them by X.
c. B and C have the right of 1egal" redemptiond. B and C have no right of legal redernption.
oganr

rirYtr
qp. A
sold B's parcel of land without authr:rity in A's name. The contract
is:
a. Rescissible because B was damage due to the act of A.
-{. UnenforceabLe because A was noL authorize by B. -io+(e nafie of B
c. Valid sale although A was not the owner at the time of the sa1e.
d. Valid but voidable because A was was not the owner who cannot
transfer title

24. To
a.
b.
Y
d.

affect or be binding on third persons/ a nortgage contract:

Written and duly notarized to be 1n public instrument.
Need not be wrj-tten si-nce it is already binding on Lhe parties.
Must be in public inst::ument and reqistered_
May be in private instrument but must be ::egiste,red.

(). Which statement is correct?

a. Sale of real property or interest- therein must be in writing to
valid.
b. fn sale of movables , if the price is P400.00 an oral sale
c.
y

enforceable.
Sale of land even i.f ora-l is enforceable, because it is not void,
Sale of land by an agent must bein writing otherwise it is voi<1 .

1S

'na sd7rplqtt

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R'eSA: The R'eview School of Accountancy

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26, (), the owner of a Xero.x ma<;iri-ne, ir:ased jt- :o L,, at a :errtal of
P4,0OA.l.)() a rLonth 1'or a peri od of one yecrr with opt-.rorr Lo buy the said
maCh_r,rre at Lhe end r.if the yt,rar ror P80, 000. C0 1-o 5e paid by applying the
rerrt,als, so 1.hat L needs oniy i,o pay P.j2,00C.00. L fajled i,o pay rent.tls
f<:r Lhc ,1"', 5"' and 6't nrcni-hs :io t.hai- C lerminai.-ecl [he lease anrl
r:epo:;sesseri ifrt-. mar:hine, t hr:n .,,;uer,j i, 1.<>r tire u'toaid renl-ais of thr:ee
rri'Jnt h:i or P12, 00C. 00 " i s i, i ;rL-, Lc?
a. Yr:s, lo prevent un j ust enr: j chmr:nt- rtrr l-he part- of L ai t-he expr:nse of
--1.

a.

only as regarr)s 1-hr., r'r,,rlf;irl:j in ;lrrearasr irut ncL for the r:entals
lial- cotiirl have becrr r-:olIi:c:lcrl if Lhei:e '^/as ncr clepr.ivati,on of
i ': :.i.'.j:j; Ofr by i:.
...,:. ic.t,, L--ecausc. l_fre Rqr:_rLr,r l,a,rr applir:s r:ni.y l-,o j.ltst_al Lmr-:nt sales nof to
L:,

'1,rri-1,

t.

I r,:i;:.;e c()nt-ract;s

l:", t 16: l{"1;l n l,.rw .i1,;..1 . ,'.:.

;:
. L cr4ns ;l row of afr.rrl-menL:r whi.r:ir hc,, renLs ouf- t o i-enan1:s. On Apri.J, 4,
?.Ci2 hr:: .i-cfi:. {or i,hr.: Uniierr S;tat,c)s lril'.hoLrt appoi-lL.iriq any adm:i rrist"rat.or
l,r) man;ic]e lii;s apart-rrr:Trt-s. l, a n.i-ecr: of A, concerrt:ci witl'r t-he interest of
h.er Lr.c1c-r, Look iL uF-r,ln her:;e1i to marlaqe ti,c-. 1r16;perl-y. The ;urj-d,i caJr<,. 1a1-rl-,n hetween A arrr.i R is:
a. Qr-rasi-contr;-rct
'tJ. Corii-ract
c. irrrrominate contraci-

-r.1',' Nr:r,toi-iorum Gest i.()

. A bourlni: a Lrr.rck f rom 13 6.layar:i.c j,o ,i.ns t-al Lnerri,s an,l secured a chaltel
morl-gaqe on the truck. 1',s adrlj t i.i:,riai ser:r-rr'.i.1-y, A'.: br:ol-her, C, executr-:d a
reai mortqage irr favor r:f B. A riefarullecj .iri Lhe p'-,ayrnent of severa,l.
irrstal Lment. s. B f orr:r:-1 osed i he morl-qaqe on I he t rurr:k. Can B proceecl
against tl-re ot-Lrer propi]r:ties of A arid t-ire rca l. inortgage executed by C to
lf cr!r .rl-i-er- t.htl r.:h.rtrl-,:f morl.q;rge forecl.c-rsu::e
recoi,'er t-lre deficir:ncv,
sale? (eCh q,q\l
e. B cannr;t procee,J rrqalrrst- Lhe r:t.irt:r pt<iperrt.les ctt. A blrL he can
,tore-.ciose Lhe rea 1 rnorttgalgt; ext:i:u!-ecl ir'y I' .
lJ. B ca:r:ror- proceei agar:rs1- r,lie re:a1 tl:ci]l gdJe Lui he can f oreclosed
. against the oIhe:: pr:ope::1-i e.s of ;-\.
Sz'. B cannot proceed againsl- ttre ol.her: prop.iI.i ic: ,.:f A rlfl,l t-he mortgaqe
execr,rted by C.
d. R can st-j i1 proceeci againsi. Lhe other properl,i.es r:f A ancl forec:Lose
the real mortgage.
29 . A cwes B P.5M which l'ras becolne due arid payabie ,;rr January 28, 201?.. Or:
that i)a1-e, A of f ererJ 1l P .25M, lire onilz r11p11g, i,,, : i'ien i-:ad, brrt B ::ef us;ecl
to accept t-he paynLent-. A Lilereafle:r met- C, B's '?.ia y.r:r.rs oid s.on, to whom
he qave the P.25M rryit,ir tlie reqr,ie.si- t"ha1- he t-urn Lhe mcney ol,er to iris
falher lJ- The ffioll), was stolcn whi-lt: ir: L-'s ;.,.'.r..;sessiotr. May B stiLi
recover t,he fu11 amor.rirl.- of h.is ioati tr.-, /\?
'd: \les, because t-h-^ paynLent ni(rclc by A ir.: iri s SO.TI
rvas nol valici.
b. Y'e.s, only -in regard t.o P.25N1 becrause l-he moIlll v q j velr t-O ti i .5 SCn w.tS
'
i.ost witlioul- tLre f ault r:f ri.
No, becar-rse Liis relr.rsa"l to ar:i,retr>L [-fre of j-ere<j P.25M rryas wrthout val.i.d
cl .
reason.
d. No, bec;ause he hi;cl at:cepted the of fi:r'erl P.2\M, t-he .same could not
h;rve been stol.en wh i l.e .r.rr the posse..;:j j orr oi h j s .son Cl .

2E

30. A sold Lo il a mo'.or vehr r.:Le fc: iri.2lvl i-r: irc fj,a :d .in twe-lve morrthi.y
i.nstal-l.ments .st-a-rt-irrg t,hc I5'i' ,,f iei:ru.tt-'y, .'A".,1 . ''o -rccllre r.he p,iiynenl, of,
ti'ie car, B.executed a chaILi-:1 mort-gage cn il-ie sub jeL]t mot.or .rehir:1e ancl
furnjshec.i a surety bonci.issue<1 by C. l\ laii.ed to p,-.ry two i-rrstailrnent,s. A
werit- af1-er s"urety buL wa:; ab.l r: tr; r-lht.aj-n ::nI.y' % r-,l l-irr: t-cl-.-'i amol-1nt st-i i I
drre f r:om B. Can A str.i. col,Le ct ttre rJr':f ii:ienr:y frolrr ll?
--a;' /\ can stil l. recover the def j r:i errr-:y f r:r-,.m B bec.rr-.1::e the arnounl: .reccrverl
l-ron the suraety was only l-'ayftxirlr- urr-) t-an t-o of t-]re ob j-iq;it i c,rr .
b, A can sti-1,1 forer,;lose i-he cliatte:l nrort-r;.r<1,,: or] t.he car: 1o.r the
ricf

C.
cl .

i,-i rlrrL
enn., y
'

A cannot- recov(:r' t,he def i.ci er-rcy ariymc)rc ;lpp-i yirrq i-lre Rect-o L.rw, Lhertis, A cannot maint-ain an a:tion of def i ci.ency.
l\ can still
recover the rJefi.c--ir.:nr:y afl-er ire fo-rec-losr.::i th.r chatt-srl
mortgage on the .,zeh ic i e .

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tr{eirrr. tr]t 5\EYIrEll JtLll(rt l t l,alllxlnfilngy

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6 of9

31- A leased an automobile equipment to B on January 2, zor2 with

the
agreement that the -r-ease .is for
<]a1.s on1y, -rro -rt the
!w:g[
of which, B was to return the equipfi6iE--tala. The equipment was""pi.uaioi
delivered
on January 2, 2012. on January 21, 20L2, A in a telephone calr
asked
to
return the equipment .orr the sanre-day. Because his truck broke down, BBwas
not able to comply. Early the next morni.ng, the equlpment -,aas burned in
an accidental fire that gutted the repair shop cf B. rs B tiable for the
loss of l-he equipment . because he fa j led to ieturn it ori the day atTreed
upon? [cqt cn rnolrrrft! dq+c,nct g* in deJ6rr+.
dt' B -is liable foi the ioss despite fr,e fortuitous event because he was

already in delay after the dernand for the return was

B is liable because the time of return was of the made.
essence and the
]-oss throuqh an accidental frre does rroL absolve him.
B is not liable because the thing was fost due to fortuitous event
/'
'and he was not in delay when i_t happened.
d' B is not liable to return the thing because it has been -lost already
and he shall pay damages only.
b'

32' A obtained a loan from B payable within a year. As security for its
payment, A mo::tgaged his unsecured house. Three months after the loan was
given, A's house was gutted by an accidental fire. Thereupon, B demanded
Payrnent imrnediately from A, who refused to pay contending that the foan
was for a one year period. Is A,.s contention valid? dc,.,,nOqUi on(s ;h;;
il-.@
a. A's contention is valid because the contract of loan is-explicit
that
payment is within one year and the creditor can only demand payment
at the end of the year.
b. A's contention is not va-rid because pa\rment is within a year and
therefore the creditor B has tiie be.efit for the perlod
A's contention is not valid because the security has been lost and
therefore t-he obligation is demandable at once.
d. Not valid because the creditor B as a rule has the benefit of the
period in an obli-gation.
33. A and B entered lnto verbal contract whereby A agreed to se1] to B his
only parcel of land for Pl-M, ancl agreed to buy at the aforementioned
price. B went to the bank, withdrew the necessary amount, and returned to
A for the consr-rmmation of the sale. A, however, had changed his mind and
refused to go throuqh with the sale, can be compel A to accept the
paymenL? \rhgri4t-Cgnhfu o Uj

a.
b.
c/'
/
dD

No, because the contract i.s not r.,alid, it being oral.

No, the contract is unenforceable it being oral.
Yes, because there was already a meeting of minds since sale is
consensual contract perfected by rnere consent.
Yes, to prevent damage to B who was ready to pay as agreed upon.

34' On January 1, 2012t A borrowed P1M from B payable on December l, 2012.

As security therefore, A pledgect his car to B with an agreement that B
could use it. on June 30, 2072, A offered to pay the roan in furl
asked for the return of the car. Can A compel B to accept payment of and
the
loan and return the car?
a' A can compeJ- B to accept payment and to ret-urn the car because the
debtor A, not only does he harre an obligation to pay but afso a right
Lo pay
b' Yes, he can/ provided he makes the proper consi-gnation of the money
as pa}rynent with the court if B refuses to accept payment.
c. No, because the period is for the benefit of the creditor and he may
refuse advance payment.
No,,, because the creclitor B can ::efuse premature pa}rment of fered by
-{
debtor A@. A- An implied eorrtract requires consent of the parti-es. A quasi-contract
is not predicated on consenL, being unilateral act.
B. The basis of an implied contbact is will of the parties. ?he basis of
a quasi-contract is law, tc the end that there be no unjust enrichment.
a. Both are false staternents.
6L Second i.s false. first is true.
-Z- Both are t.rue.
d. Second is true, first is false.

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@. o, B

anrJ C are so1 irlary <1cl>t-ors for a loan of P3M. The credil-or has
condoneci C's entire sha::e r-n the debt. Slince B has become i.nsolvent, the
Llreditor demands paynerit f-rorn A. i{ow rnuch, .i f dtrV, r.ay A compelJ ed lo
F:tY;

a.

b.
./

,/.

A is liab1e orrly ror rhe amourrt of P1M as hi,s share because B has
br,:c<,lrne insol.venL. alril t-heref ore the la1-ter' s f ault sha1l not make A
an:;,,'verah-lie for hi.s shar':e.
A rn;ry be compel l cd tc pay P2M oniy' in the v:.ew of l-he renission of
:lre sliare of C cf P1M,

r['r\y'

bc

compei.i.ed

to pay any anL..:urrl.

ber:ausr-:

since the ob]iqatiorr is

soli,lary,
the reniissior rrradl by t-he r--rediLor siiall ex1-inguish tLre
errtire obligat.ior-r cf tl'rc dr:btr:r:.s.
,-i. Ii 1 :i liable onJ y Ior E:14 provideci C qi-ves i'rim iri s share of PlM
Lrer.rduse orrl y B i s insof rrer:t artd i;o1-ir of t.hern s;halI share the Lat-ter's
:;lra r e of the obl ir7at- ion.

. )r,, a .rrlstomer, clrinks a bott'l r: rtf soft,clrirrk irr a restaurant arrd is

hc,r:p'Lt,rlized due 1-() ha::mfuf :;ubstance jn the beverage. 1s the
n;-rnuf ;lrrf urer
I i abl.e f or: ihr..r darnaqe-'s i n t,he ,rbsence of contractual
rr. lf ,, i,.;r bet_ween thc:n?
ls actualJy a i:on1-r'act- beLween l-hem, the
.l . Yc..j, because thi:r'e
r:e:-;taurant beirig t-h<-.: ac;r:rrt- of the manuf aci,urer:.
arj-ses out of quasi-contra<;[.s.
hr. Yes, because its liabj-lity
(j . N.J, Li-rc re being nc r-:orrLracL. f ronr wh-ich lrabi ii Ey may a rise.
tf: Yes, because of t he quasi -de1 i ct..

n
U

iB. A .l.easecl his house to B wj,th t-ire aqreement that i"eleplione b,iIls shal1 be
shoul dereci by B. Six mont-hs 1,;rter', B 1eI1., 1,Lre crenises le;:rrinq behi nd
unpairl t-elephone bil1s. A ref'.lses t,o pcy the unprld bil, ls on the grounrl
thai B ira<l alrea<1y subst-ituted him as a ci-rst ome]: 6f the telephrone
conpany. Decide:
a. A is correct to assert rro iiab1lit.y to t.he i-eicphone company due l-o
novation of the conlracl, by v;ay of substitution of debtor.
b. A 1:; not f iab"te because ihe t-el ephorrr: cor,F)ar))i f a-iled to exe::cis<: due
riiliqence in colier-:i r r-rq iroq B iiis r-inpa j I bi l i s.
(--. A is iiabte to r-hc',-elephone coinpcrry subsiC.iar:i-ty, onLy after it
/ fa: ls to collect fron B.
.Lfre contr:act was
f or the unpaid bil 1s of B be -raLlse
d. A is liable
1
between A and the 1-e Lepho.,.- r--L,nrpany ancl A carno; be subsi,,i t-ut-ed by B
wij--hout consent of t.'he company.
1 abie t.o x for P50,000.
19. A, B, C, D, and E maie thenselves soiiCarily
When tiie l atter dernanclecl paymerrt f rom A, t-he 1at- Lr:r i:ef r:s.:s Lo pay on Lhe
ground lhat B was only 1 6 years oLcl . Der: j.cle :
a. A is noL liabIe bec:aust, of r..heir sol id;r l-l y ol;1igat ion anci def r:nse of
one i s clefense of all .
A is I jable stil-l t-o pay t-he wliol.e arnount. bec,lu:;e j,t is onJ-y voidab.l-e
contract brrt sti-rI valici before annulrLr:nic. A 1s irot, Iiable until Lhe court f ixes; the per'lo,l f or payment.
cl. A is not Liable for: the share ol B of P10,000.
40. X sold a par- r:el- of Iand Lo Y wrth the agreeneni- i-hat payment is Io be
made on Febr:uary I4, 2012. i t was stipLrlat-ed tii;rt fai l rrre 1--o pay on sai.d
rlate, Lhe sa,l.e would automal-.i.ca.l lv be r.-escj.ncJerl . Y failed to pa_y and
aq.ked f or extension cf time to pav. Decide: inmaypltp -t nO qrifofq* grgtL'*k-a-+,a. Y may sti,1.L pay arid the:;alr: i:; not rescinciec if t,here was no demand
''
ye1, tor reces s ion f rom X .
b. The sale is rescindecj as per agreement,
c. The sale is resci-nded oniy ai.ter ciemand f or pa1;mslrt' by the seiler.
d. Y may stiLl pay despi t-e res(ri:is j.cn of thr: sa 1c .
.1

1. P telephoned his s-i ster t-o sel,l his parcel of, larcl . Per: j.rrstruction, t-he
latter sof d l-he said larrcl l-o B but d j d rL{)t- r'<:ni t- the payntent to h,is
brol,irer, who ncw wants to rccovej: the Lancl . Decir-.le:
a, P can recover t-he land by annuilj-nq tlie .sale,
h'. The sa -e is void.
Lr. llhe sale is unenf o::ceab1-e, becausc pa.7rne'.rri- lvL'i::j rroi- recelved by t-he:
d.

pr:.i.ncipaJ-.
P cannot an1rtnore reeover the larLC sinr:e t,he bt.')/ei- was nol, a1, f ault.

ReSA: The Revierv School of

Accountancy

page g o[9, inl.nhoq

of,on rhonfg, eqne$ lhTt'pu s fu Pat

nt 't ltV
n.
terms"and conditions:
U). B oflers to buy s' property under the *lfoLlowiiig
P1M purchase price, 10,6 o!!i"_.9ney.l
the(palancE\payable in cash upon
the clearance of tfre
pai'd and the illegal
occupants removeci. However, S changed his mind and
does rrot want to proceed with the tr.ansaction. Decide:
t
tr?t proceed with l.he sal-e because there was no sale yet but
,,Y on]_*u,
y opt lon cont ra ct .
b. There was al::eady a per:fectecl sale because of downpayment.
c. There wa6 no sale yet in the absence of earnest money as mere option
money was paid
d. The saie has been consummated when S and B consented to the terms and
conditions of the sale.

43. P is engaged in printing business wh1le S is hj-s supplier for printing

paper. P has a contract l"rith R f or the printing of the .l-atter, s schoof
paper. For failure of P to pay for the dei-iveries of S, the latter
stopped its de]-i-veries and as a result P voas not able to print the school
paper of R. R sued P for breach of contract and the latter is suj-ng S for
damages due to its failure t-o make del-iveries which affected p/ s contract
wijh R. Decidc: l5&G
is not 1iab1e for damages because it has the right of possessory
-,2:.Slien as unpaid seller.
b - S is liable
for damages because of its fai.l-ure to make deliveries
under its ccntract with P who consequently failed to honor its
contract with R.
c. P is l-iable to R for damages but may recover from S for breach of
contract .
d. R may claim damages both from S and P because it was Camaged due to
the fault of both.
@. a granted B the excl-usive right to sell- his brand of Maong pants with
the price payable in two months from deliver:y and promising B a 2AZ
commission on all saf es. After de.11very of the merchandi-se to B but
before he could se1] them, B's store was burned without his fau"It,
to-gether wj-th al1 of the pant.s. Must B pay A for the pants?
-f: B has no obligation to pay A because the pants were lost due to
fortuitous event and without B, s fault.
l-\
B need not pay A because as agent he has no obligation to pay the
price to his prlncipal A when the loss was without hi s fault.
B must pay A the value of the pants at the time of loss since he was
C.
already the owner therecf upon delivery to him.
d. B must pay A the price agreed upon because there was sale and he
became the owner thereof after delivery.

45. on due date, D, find-1ng hi-mself to pay c, his p1M obligation, proposed
in a letter that he would deed over to C his BMW car, "to be appJ-ied to
the amount which r owe you". The following day, D sent the car to C with
the proper deed of conveyance. It was accepted. The obligation of D was
extinguished by:
a. Application of payment.
-V Dacion en pago.
c. Payment by cession
d. CompensaLion

46' M and N were very good friends. N borrowed P1M from M. Because of their
close frj-endship, the promissory note executed by N provided that he
would pay the loan "whenever his means permi.t". subsequently, M and N
quarreled. M is now demandinq immediate payment from N to which the
latter refuses. Decide:
a. The obligation is one with a condition dependent upon the capability
of N to pay who shall be obtiged to pay only if has the money.
b. ft is an obligation which is demandabie at once because no period was
agreed upon by the parties.
9",' It is an obligati.on with a periotl which depends upon the ciebior, s
will whi.ctr the court may fix.
d. It is an obligation with a suspensive conditlon dependent upon the
debtor's will and therefore is void.

7
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n"sA:
The Review school of Accountancy
t

phge

9 of 9
ifi'tolqnarys+vituda1
fo
,.t
1' . h bounC himsel.f t-o deliver .r TV set-, Sorry, w-ith :eria[ no. wert, - 35 to
B wirii--h the latter fFu-nc1-fi the fornier's store anui t.r /epair Lhe piano of
B. l\ ,lid none of these thi.r;r;s;. May A bc r:cmp,:1 1ed t.<-r perf orm these
t;':t;'l;:'::
h''ii*?
pio.,o i." c.rn r,,e , bLir v,i*r re;pecr to t,he rv set- he
.:':"
cannot be compelled.
J . irr L-roth i nst-ances he c;ini-rot be conpe l ecJ,
a, 1n Lrc,th inst,anccs hc i::an t'e.
legaL:ds the TV seL- hr: can be, with regard t.he rr:pa.i-r'of tLie pi"ano
tir'l/\s
hr: t:,rrrnot be conL6:e | 1.ed.

J"

9,w

do

.l.

,li. A 1^r;ls been leasi,n<] t.o l,l hls bui-ldi.ng for ; number of years and
rep.:r.rtc-d1.y as;:;ured the I atter t,irat- i.f he shouid Cecide to se1-L the satTle/
rie wj i1 qive t-he -1.atter lhr,-: r:iqirr, of fir:st r-efr-.i.s.rl On June 30, 2O).2., A
j n.l,cl'nieci B that he wcl:j wi- i.-1 lnq t.o sel1 the building
f or P5M. the
1i:i ic.,winq c1ay, 1-he Iatter sser: t, a l-et.t-er t-o l-he f o.t nLer of f ering to buy the
rrr;iir;ii,'ri for: L'4.5M. A djcl noi- repi'7. C)ne week iaier, ts rece-ived a l.et-ter
: r rrri f- inf ornii nq ii.im tirat t hc lru j 1,1 i rLq has Lieen scl-d to him by A f or I'5M
arrri thar irr: wi.t I rici- r..:neur t.hc I e,:se wl,en ri- expi res. R i s now claiming
clanaqes from A and wanl-s to comS;r-:1 A l-c-r exec:ut.e +.-tie absolul-e cleed of sale
In li.i.s favor-. Deci<le:
a. A is 1iab] e f or bre;rch t-t: ptr,:ini-se i-o sel-f br:cause B a1r:eady sienL a
lel. 1-er to hirn cf 1e;rirLg to buy at. I14.5t"1 l.r.i wi'rich he clld not reply.
.
D ,' A rs not 1i.;rbl e f or d;rmages ;:nci r:arinot, be c,>mpe11ecl l-o execute the
,"
absolute deed ct :-;alc.: becaLrse there was ri.J sale perfected between
them.

c.
d.

A is rrcl- iiable t.ctr damages but hr: nra'y' not oe cornpel led t-o execute
1,fie absolut-e deed cf s;al e.
A i-s I ierkrl e f or: ili-ina<;e:; irut he may not be c:mpelled to execute the
;-rbsol uce clee<l cf s.rle becaust: C is an. ionocent. purchaser for: value.

(J' ..
rletern.rine the price. Tf Il re:fL;ses to fix thr,: prict-' ancl simpLy takes the
.'.aL, i-" ire .st-r-1 l. obi iqed to aay?
a. Yes, br:r-:ause tl-re fi:rirr; i-f- i-he p::i,-:e.r:rl;r tle 1t:it tc, the cl.isc-ret-.ion of
rise; t-herefore to a sale.
one of the conr-ractrnq partie-:.liv..ng
h. Yes, and he must pai/ a reasonabJ-e price due tr: hi-s ;lppropriat ion '
,t:n Yes, and A now has tlte right tc lix the ;:ri ce witliout need of B's
cronsent

d.

No, because there is no:;afe

for 1ar:k i,:f pi:"i-ce fjxed by the part-ies.

50. A, il, and C are c()-orrrrers in equai shares of a parcel of land. C sold
hls und.i vided interest- t-o his sorr D, A week LaLer, A and B served rroIice
on D of Lheir: intention t-o recieem 'lhe p<:rti or: .':t;.l.ri. Howeveta. D refused t<-,
a.Ll-ow redemption arquinq t-ha1. br:inq t-hc son of C, he wa.i not. a t.hircl
person lri coni-emplati.on of. the "l-aw with res;pr,'r:r t-o rerclempt.ion by coowners. Is l-he refusai r-rf D jrrsl-ified?
d.- No, thc rellrsal of D is not. just,ilierd bt',caust: Lie is :;t.j"11 a thi rd
/
person as ::egards rr:clenptic,:n by co-owners,
b. No, D':; refusa,l. :i.s unjr,i.:t-l1'ied becaus co-owrrr:r.:-: ;r,rn r-ercier:m t.-hr: ..;hare
sc;lcl e.ren rf not sol-d Lo a third persoll.
c. Ycs, lusl-ifi.ed hecause ire i-s not a third per::iorr bei.nq t-he Lrei-r c:f C
f rom wltom he will eventu,a l 1 y inher-it, l- he :;hare j.n thc -laricl .
\r^
-l
r;.;ua,J-so co-owncrs carr recleem t-,he sharc evcrl if :;ol d r,o ar at()!\\r, !.^---.,
u.
owner.