BUSINESS LAW TESTBANKS / REVIEWERS

1. On September 21, 2010, Piolo agreed to sell his only carabao to Sam and Sam agreed to
pay the price of P25,000 if Sam will pass the October 2010 CPA Examination. The list of
successful examinees was released on October 21, 2010 and Sam is one of those who
passed the examination. As a result,
a. Piolo is entitled to the P25,000 price plus interest beginning September 21, 2010.
b. Sam is entitled to the carabao and its fruits beginning September 21, 2010.
c. Sam is entitled to the carabao beginning September 21, 2010 and to its fruits
beginning October 21, 2010.
d. Piolo shall deliver the fruits of the carabao and Sam shall pay the interest on the price
beginning September 21, 2010.
2. The following are elements of an obligation, except
a. Active and passive subjects
b. Efficient cause
c. Prescription
d. Vinculum
3. A, B, and C owe W, X, Y, and Z the sum of P120,000. If the obligation is due, which of the
following is not correct?
a. A is liable only for a total of P40,000.
b. W can only collect P10,000 from C
c. B can be required to pay P40,000 to any of the creditors
d. Y can only collect a total of P30,000
4. The following pertains to facultative obligations, except:
a. Comprehends only one object or prestation which is due
b. Choice pertains only to the debtor
c. Fortuitous loss of all prestations will extinguish the obligation
d. Not given.
5. An obligation subject to the happening of a future and certain event is
a. Conditional obligation
b. Suspensive conditional obligation
c. Resolutory conditional obligation
d. Obligation with a period
6. S1: The debtor shall lose the right to make use of the period when he does not furnish
any guaranty or security to the creditor.
S2: In an obligation subject to a suspensive period, what is suspended is birth of the
obligation.
a. True;true
b. true;false
c. false;false
d. false;true
7. Which of the following is not a generic obligation?
a. Obligation to pay P1,000,000
b. Obligation to deliver 1999 Nissan Sentra Series III
c. Obligation to deliver 50 cavans of rice
d. Obligation to give a delimited generic object
8. I will give you my car provided that if I like to have it back, you will return the same to
me.
a. The obligation is void, because the fulfillment depends upon the will of the debtor.

b. The obligation is void, because the fulfillment depends upon the will of the creditor.
c. The obligation is valid because the condition merely causes the loss of rights already
acquired.
d. Both A and B.
9. S1: Dog obliged himself to give Cat a specific car tomorrow. If Dog failed to deliver
tomorrow after demand is made, Cat may compel Dog to do his obligation and may ask
for damages.
S2: Darna obliged to deliver a car to Captain Barbel tomorrow. If Darna failed to deliver
tomorrow after demand is made, Captain Barbels right is to ask a third person to deliver
a car to him at the expense of Darna plus damages.
a. Both statements are true.
b. Both statements are false.
c. Statement 1 is true while statement 2 is false.
d. Statement 1 is false while statement 1 is true.
10. Which of the following is not a conditional obligation?
a. D to give C P1,000 if C passes the examination.
b. D to pay C P1,000 if he has the means.
c. D to give C a horse if C marries X.
d. D is to use Cs car until C returns from Davao.
11. It is the voluntary administration of the property of another without his consent.
a. Negotiorum Gestio
c. Quasi-delict
b. Solutio Indebiti
d. Contract
12. A, B and C are solidary debtors of X and Y, solidary creditors, for P60,000. X makes a
demand to A but the latter paid Y. In here, the obligation is not extinguished.
A and B solidary debtors of X, Y and Z, solidary creditors. X demands payment from A,
but B, upon whom no demand is made paid Z the entire obligation. In here, the obligation
is totally extinguished.
a. True;true
b. true;false
c. false;false
d. false;true
13. Elmo is obliged to give Bert, either a ring worth P5,000; or bracelet worth P4,500; or a
watch worth P4,000. All the objects were lost due to Elmos fault in the order stated.
a. Elmos obligation is extinguished.
b. Elmos obligation is to pay the value of the ring plus damages.
c. Berts right is to demand the value of any of the objects plus damages.
d. Elmos obligation is to pay the value of the watch plus damages.
14. Culpa aquiliana as distinguished from culpa contractual:
a. Proof of due diligence in the selection and supervision of employees is not
considered a defense.
b. Proof of the contract and its breach is sufficient to warrant recovery.
c. The negligence of the defendant is only an incident in the performance of the
obligation.
d. The source of liability is the negligent act of the person causing damage to another.
15. S1: When one of the parties has brought an action to enforce the contract, he cannot
subsequently ask for its reformation.
S2: The injured party may seek rescission even after he has chosen the fulfillment of the
obligation if the latter should become impossible.
a. True; true
b. true;false
c. false;false
d. false;true

16. S1: An oral sale of land made by its owner is unenforceable.

S2: Sale of land made by an agent without written authority from owner thereof is void.
a. False;false
b. false;true
c. true;true
d. true;false
17. S1:The principle of autonomy of contracts means that the contracting parties as a rule
may agree upon any stipulation, clause, term and condition.
S2: Relativity of contracts means that contracts take effect not only between the parties
but also their heirs and assigns.
a. False;false
b. true;true
c. false;true
d. true;false
18. It is an obligation which is based on positive law and gives right to enforce its
performance
a. Natural obligation
c. Moral obligation
b. Civil obligation
d. legal obligation
19. Which of the following is demand necessary to make the debtor in delay in the
performance of his obligation?
a. When the time of 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
20. 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
21. Liability for damages arising from fraud is demandable and there can be a waiver of an
action for past fraud.
There can be a waiver of an action for future negligence but not fraud.
a. Both statements are false
c. First is true, second is false
b. Both are true
d. Second is true, first is false
22. Delia borrowed from Celia a sum of money with a stipulated rate of interest to be paid in
three equal monthly installments from January to March. Delia paid an amount for which
the latter issue a receipt stating that the payment is for the month of February. In this
case,
a. The installment for the month of March is also considered paid.
b. The installment for the month of January is conclusively presumed to have been paid.
c. The installment for the month of January is distributably presumed paid.
d. The installment for the month of January is not presumed paid.
23. A obliged himself to deliver the cans of powdered milk of B from his warehouse in
Pangasinan to Manila. While his truck was traveling on the North expressway, it was hijacked by a band of robber who also took the cans of milk belonging to B. Is A liable for
the loss of the goods?
a. No, because they were generic things and as they cannot be lost.
b. Yes, because he was in possession of the same at the time of the loss and therefore
presumed at fault.
c. Yes, because there was no stipulation exempting him from loss in case of fortuitous
event.
d. No, because the loss was due to fortuitous event.

24. 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 claim damages from any one of the three for his proportionate part of liability
because the obligation is indivisible.
b. X can claim 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.
25. Dennis owes Cart P1M. Xanabelle, without the knowledge or against the will of Dennis
paid Cart P2M. Can Xanabelle get reimbursement from Dennis?
a. P2M by way of reimbursement from Dennis to prevent unjust enrichment on the part
of Dennis at the expense of Xanabelle.
b. P1M only for that is the extent of benefit of Dennis.
c. No reimbursement because the payment was not proper being without the
knowledge or against the will of Dennis.
d. P1M plus interest from the time of payment until reimbursement.
26. Payment made by a third person is valid to extinguish the obligation of the debtor to the
creditor in the following cases, except
a. After payment to the creditor, the third person acquires the creditors right
b. When the creditor ratifies the payment to the third person
c. When through the creditors conduct, the debtor was led to believe that the third
person had authority to receive payment
d. When the third person is subrogated to the rights of the creditor.
27. Sister offered his car to Brother for P1M and giving the latter one week to decide. Brother
in turn gave Sister P1,000. In this case, there is
a. Contract of sale of the car with the P1,000 as earnest money
b. Contract of option with the P1,000 as option money
c. Contract to sell of the car at Bs option
d. Contract to sell of the car at Ss option
28. Anmony advertised in the newspaper his parcel of land wanting to sell the same for P1M.
Boy personally went to the former with cash in hand to buy the subject parcel of land. In
this case,
a. Anmony cannot anymore reject Boy as buyer of his land
b. Anmony can still reject Boy as an offered in the purchase of land
c. Anmony can reject the offer of Boy unless he properly consigns with the court his
payment for the land
d. Anmony cannot evade his obligation as seller to Boy
29. The contract entered into by the persons 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 caused to the person incapacitated
d. Voidable as there is consent although vitiated or defective
30. A defective contract where damage or lesion is essential is
a. Rescissible
c. Unenforceable
b. Voidable
d. Void

31. A defective contract because it is entered into in the name of another without or in excess
of authority, or it is verbal is
a. Unenforceable
c. Void
b. Voidable
d. Rescissible
32. 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
33. Aguilar sold to Beddie his dog with the agreement that delivery shall be after one week
from 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 to the seller
c. The fruits that shall exist after delivery will only be the ones to pertain to the buyer
d. The fruits after the sale but before delivery shall pertain to the buyer if so stipulated
by the parties to the sale
34. A sold Bs car in Bs name to C without any authority from B. The contract of sale is
a. Rescissible
b. Voidable
c. Unenforceable
d. Void
35. 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
36. A, as agent of P with oral authority, sold Ps land in public instrument. The sale is
a. Rescissible
b. voidable
c. unenforceable
d. Void
37. A, agent of P, in excess of authority, entered into a contract in the name of P with X who
knew of the lack of authority and P did not ratify the contract. The contract is
a. Rescissible
b. voidable
c. unenforceable
d. Void
38. 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 place 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
39. 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 refused 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
c. P15,000
b. P10,000
d. P -040. If a third person 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?
1st answer He can recover from the debtor the entire amount, which he has paid.
2nd answer He subrogated to all of the rights of the creditor.

a. Both answers are correct.

b. Both answers are wrong.

c. Only the first is correct.

d. Only the second is correct.

41. Indivisibility as distinguished from solidarity.

a. Plurality of subject is indivisible.
b. When the obligation is converted into one of indemnity for damages because of
breach, the character of the obligation remains.
c. Refers to the legal tie or vinculum.
d. Refers to the prestation which constitutes the object of the obligation.
42. 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 the time is of the essence
d. When the fixing of the time is the controlling motive for the establishment of the
contract
43. Culpa aquiliana as distinguished from culpa contractual
a. Proof of due diligence in the selection and supervision of employees is not available
as a defense
b. Proof of the contract and of its breach is sufficient prima facie to warrant recovery
c. The negligence of the defendant is merely an incident in the performance of the
obligation
d. The source of liability is the defendants negligent act or omission itself
44. A passenger on 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 guilt of the accused was not proven by proof beyond
reasonable doubt
c. Yes, it is sufficient for him to prove the existence of the contract of carriage and the
injuries suffered
d. Yes, provided he can prove the negligence of the driver
45. 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
46. 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
47. 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 2, 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 A to pay?
a. P11,000
c. P5,000
b. P9,000
d. P1,000
48. If the obligation of the debtor is I will pay you my debt after I have arrived from abroad.
The obligation is
a. Valid
c. voidable

b. Void

d. unenforceable

49. There is novation of the obligation if

1. The period for payment is shortened from 5 years to 3 years.
2. The period for payment is extended form 3 years to 5 years.
a. True; true
b. true;false
c. false;true
50. This is a real defense
a. Fraud is inducement
instrument
b. Want of consideration
pressure

c.

51. This contract is without effect unless ratified

a. Marriage between first degree cousins
guardian and his ward
b. Contract of sale between two insane persons
wife

d. false;false

Want of delivery of an incomplete

d.

Duress in the absence of physical

c.

Contract of sale between a

d. Donation between husband and

52. 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 a greater degree of freedom in fixing the price
53. A contract as a rule must be in writing to be valid.
A taxpayer is not entitled to interest in the overpayment of tax subject of a refund
because an obligation derived from law is not presumed.
a. Both statement s are true
c. First is false, second is true
b. Both are false
d. Second is false, first is true
54. S1: As a general rule, the extrajudicial expenses required by the payment shall be for the
account of the creditor.
S2: If there is no stipulation and the thing to be delivered is specific, the place of payment
shall be the domicile of the debtor.
a. True;true
b. true;false
c. false;true
d. false;false
55. S1: Consignation without tender of payment is sufficient if two or more persons claim the
same right to collect.
S2: When the debt of a thing certain proceeds from a criminal offense, the debtor shall be
exempted from the payment of the price of the thing is lost through a fortuitous event.
a. Both statements are true.
b. Both statements are false.
c. S1 is true; S2 is false.
d. S1 is false; S2 is true.
56. S1: The party may recover, if public interest will be subserved, money or property
delivered by him for an illegal purpose, provided that he repudiates the contract before
the purpose has been accomplished.
S2: If an illegal contract constitute a criminal offense and both parties are guilty, both shall
be criminally prosecuted but they may keep the object of the contract.
a. True;true
b. true;false
c. false;false
d. false;true

57. The meeting of minds manifests consent after the acceptance upon the thing and the
cause which are to constitute the contract. Which of the following constitute a definite
offer?
a. An offer made through an agent.
b. Business advertisements of things for sale.
c. Advertisements for bidders.
d. None of the above.
58. S1: If the cause is not stated in the contract it is presumed that it is lawful.
S2: The action for rescission in subsidiary; it cannot be instituted except when there is no
other legal means to obtain reparation for damages suffered.
a. Both are true
c. Only 1st is true
b. Both are false
d. Only 1st if false
59. Simon offers to sell his house to Pedro for P200,000. Pedro asks him if he would accept
P185,000.
1st: Because of ambiguity, both offers are terminated by operation of law.
2nd: Pedros response is a more inquiry, the P200,000 offer by Simon is still in force.
a. True;true
b. true;false
c. false;true
d. false;false
60. Debtors fault in real obligation is called
a. Mora accipiendi
b. Mora solvendi ex-re
c. Mora solvendi ex-persona
d. Compensation-morae
61. ) In order to amend the corporate by-laws, what vote is required to happen?
a.)
b.)

2/3 votes of the Board of Directors and 2/3 votes of the outstanding capital stockanding
capital stock b) Majority votes of the Board of Directors and 2/3 votes of the outstanding
capital stock c) 2/3 votes of the Board of Directors and majority vote
Majority votes of the Board of Directors and majority votes of the
outstanding capital stock

c.)

2/3 votes of the Board of Directors and majority votes of the outstanding capital stock

d.)

Majority votes of the Board of Directors and 2/3 votes of the outstanding capital stock

62.) Ondoy pledged his motor bike to Peping for P5,000.00. When Ondoy failed to pay his
obligation, Peping sold the motor bike at public auction to the highest bidder for P4,000.00.
Therefore:

a.)
b.)

Peping can recover P1,000.00 from Ondoy if it is stipulated

Peping cannot recover P1,000.00 from Ondoy even if there is

c.)

Peping can recover P1,000.00 from Ondoy even without stipulation

d.)

Peping cannot recover P1,000.00 from Ondoy unless stipulated that he can

stipulation

63.) Dacion en Pago differs from a Sale in the sense that in latter
a.) the obligation is extinguished once the offer is accepted
b.) there is less freedom in the determination of the price of the object
c.) the cause of the contract is the price
d.)there is pre-existing credit between the parties

64. Which of the following statements is false?

a.) Obligations arising from contracts have the force of law between the contracting parties
and must be complied with in good faith.
b.) Fraud committed in the performance of an obligation gives the injured party the right to
annul the contract.
c.) Not only the parties, but their heirs and assigns are bound by their contract.
d.) Generally, the debtor is not liable for the non-performance of his obligation due to
fortuitous event.

65. Which of the following is a mode for the extinguishment of agency?

a.) Death of the principal without the knowledge of the agent

b.) Filing of a monetary claim by the agent against his principal
c.) Revocation by the agent
d.) Partial accomplishment of the agency

66. A Corporation may be dissolved voluntarily or involuntarily based on several causes. Which of
the following is a cause for the automatic dissolution of a corporation?
a.)
Failure to file the required report to the Securities and Exchange Commission
b.)
Failure to continue the business for at least five (5) years
c.)
Failure to formally organize and commence business within two years from the
issuance of the certificate of incorporation
d.)
Failure to file its corporate by-laws with the Securities and Exchange Commission within
thirty days from the issuance of the Certificate of incorporation

67. Dan mortgaged his house and lot to Casey to secure his loan amounting to P1M. It is
stipulated that Dan cannot sell his house and lot without the consent of Casey while the loan
remains unpaid. Before the maturity date, Ben offered to buy the house and lot of Dan for P1.6M.
In this scenario:
a.)
b.)
c.)
d.)

Dan cannot sell his house and lot because of the prohibition in the contract.
Dan cannot sell his house and lot without the consent of Casey.
Dan can sell his house and lot provided he pays the loan to Casey.
Dan can sell his house and lot despite the prohibition in the contract.

68. Toto sold the car of Popo without authority. When the buyer Momo demanded for the key of
the car from Popo, after paying the purchase price, Popo gave the key of his car to the Momo.
The sale made by Popo to Momo is valid while an agency between Popo and Toto is created by:
a.)
b.)
c.)
d.)

estoppel
contract
operation of law
ratification

69. Simon transferred to Peter the ownership of his car, worth P500,000.00 in consideration of the
amount of P240,000.00 plus a hand tractor worth P260,000.00. The contract between them is
actually a form of:
a.)
b.)
c.)
d.)

partly sale and partly barter

sale
commodatum
barter

70. Ann mortgaged his house to Boy to secure his loan amounting to P1,500,000.00. Due to the
negligence of the typist, the document signed by Ann and Boy shows that the house of Ann was
sold to Boy for P1,050,000.00 only. Which of the following statements is correct?
a.)
by Ann
b.)
c.)
d.)

The contract of sale between Ann and Boy rescissible because of the damage suffered
The contract of sale between Ann and Boy is relatively simulated
The contract of sale between Ann and Boy is voidable because there is a mistake
The contract of sale between Ann and Boy may be reformed

71. S1: In a natural obligation, the creditor has the right to enforce the performance thereof it
being based on positive law.
S2: Solutio indebiti and negotiorum gestio are quasi-contracts that give rise to civil
obligations.
a. True; True
b. True; False
c. False; False
d. False; True

72. One of the following is a determinate thing. Which is it?

a. A cow
b. A horse
c. A Toyota car with engine no. 12345, body no. 34888 and plate no. JDS 111
d. A ring with diamond embellishment
73. 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.
74. S1: Liability from damages arising from fraud is demandable and there can be a waiver of an
action for past fraud.
S2: There can be a waiver of an action for future negligence but not fraud.
a. True; True
b. True; False
c. False; False
d. False; True
75. These are acts or omissions of diligence that cause damage to another, there being no
contractual relation between the parties.
a. Culpa contractual
c. Culpa criminal
b. Quasi-delict
d. Fraud
76. S1: The debtor incurs delay from the time the creditor demands fulfillment of the obligation
but the debtor fails to comply with such demand.
S2: In reciprocal obligations, where the obligations arise out of the same cause and must be
fulfilled at the same time, from the moment one of the parties fulfills his obligation, delay by
the other begins notwithstanding the absence of demand.
a. True; True
b. True; False
c. False; False
d. False; True
77. Which of the following is a remedy of the creditor to enforce payment of his claims against the
debtor?
a. Pursue the property in the possession of the debtor including those exempt by law.
b. Exercise all the rights and bring all the actions of the debtor including those personal to
him.
c. Impugn the acts which the debtor may have done to defraud his creditors.
d. All of the above.
78. Consignation alone without tender of payment is sufficient in the following cases, except:
a. When the creditor is absent or unknown or does not appear at the place of payment.
b. When the creditor presents the title to the obligation for collection.
c. When without just cause, the creditor refuses to give a receipt.
d. When two or more persons claim the same right to collect.
79. S1: Mara borrowed P10,000 from Clara. On due date, Mara paid the debt to Clara who had
become insane. If Clara kept only P6,000 and threw away P4,000, then payment will be valid
for only P6,000.
S2: Lea makes a note payable to bearer and delivers it to Mateo. The note, however, is lost
by Mateo and is picked up Lyka. Lyka goes to Lea to collect on the note. Lea pays Lyka
believing in good faith that Lyka is the intended bearer. Lea is still not released from liability.
a. True; True;
b. True; False
c. False; Fasle
d. False; True
80. Payment must be made in the following, except:

a. If there is a stipulation, then in the place designated.

b. If there is no stipulation and the obligation is to give a determinate thing, wherever the
thing might be at the time the obligation was constituted.
c. If there is no stipulation and the obligation is to give a generic thing, then at the domicile
of the obligee.
d. If there is no stipulation and the obligation is to do, then at the domicile of the debtor.
81. In order that condonation may extinguish an obligation involving a movable property whose
value exceeds P5,000.00
a. It is sufficient that the condonation and the acceptance are in writing, even a private one.
b. It is required that the condonation and the acceptance must be in a public instrument.
c. The delivery of the document evidencing the debt is sufficient since the property is
movable.
d. The condonation and the acceptance may be made orally.
82. S1: A debtor who is adjudged an insolvent and subsequently discharged by the court shall be
released from obligations of all debts but he thereafter cannot engage in business and
acquire property until he has paid his former debts.
S2: Dwarfina owes Dennis P100,000. With the consent of both, Jennelyn, a third person pays
Dennis P50,000.00. Thus, Dennis and Jennelyn are now creditors of Dwarfina at P50,000.00
each. If Dwarfina has only P50,000.00, it will be divided by Dennis and Jennelyn equally.
a. True; True
b. True; False
c. False; False
d. False; True
83. The following cannot give consent to a contract, except;
a. Minors, except sale of necessaries in life
b. Insane persons
c. Demented persons
d. Deaf-mutes who do not know how to read and write.
84. It is the manifestation of the meeting of the offer and the acceptance upon the thing which are
to constitute the contract
a. Consideration
b. Contract
c. Consent
d. Cause
85. A solemn or formal contract has the following essential elements:
a. Consent of the contracting parties, object certain and cause or consideration.
b. Consent of the contracting parties, object certain, cause or consideration and delivery of
the object.
c. Consent of the contracting parties, object certain, cause or consideration and formalities
required by law.
d. Consent of the contracting parties, object certain, delivery of the object and formalities
required by law.
86. S1: A contract as a general rule must be written to have force and effect as a valid
agreement.
S2: A formal or solemn contract is one that must be in writing to be valid.
a. True; True
b. True; False
c. False; False
d. False; True
87. An employee embezzled a sum of money from her employer, and in order that she would not
be prosecuted, her husband signed a promissory note to pay the amount embezzled, with
interest to the victim. Which is correct?

a. The husband is liable because the note was executed by the husband voluntarily
b. The recovery shall be limited only to the amount embezzled without any interest
c. The employer may recover from the husband of the employee and may still prosecute the
employee
d. No recovery can be made on the note because the consideration is illicit
88. One of the following contracts is not vitiated by intimidation or violence and hence, valid.
Which is it?
a. A contract of sale which was signed by a party because his arm was being twisted by a
third person.
b. A contract of sale which was entered into because the other party was pointing a gun at
his wife.
c. A contract where a party was compelled to assign his property to the other to pay a just
debt because the latter threatened to sue him in court if he does not pay his debt.
d. A contract of donation of a parcel of land which a party signed because the other party
threatened to burn his house.
89. The following statements pertain to the cause of a contract. Which statement refers to
motive?
a. It is the essential reason for a contract.
b. It is always known to the contracting parties.
c. Its illegality does not affect the validity of the contract.
d. There will be no contract without it.
90. One of the following is not a requisite of an object of contract. Which is it?
a. It must be within the commerce of men.
b. It must not be intransmissible.
c. It must be contrary to law, morals, good customs, public order or public policy.
d. It must be determinate as to its kind or if its quantity is not determinate, it must be
possible to determine the same without the need of a new contract between the parties.
91. S1: If the contract is not in the form provided by law for its validity, the contract is void.
S2: if the contract is not in the form provided by law for its enforceability, the contract, though
it has all the essential requisites for validity, cannot be enforced against the party sought to be
charged.
a. True; True
b. True; False
c. False; False
d. False; True
92. Acceptance of an offer made by the letter or telegram shall bind the offeror. From the time the
a. Offeree accepted the offer
b. Acceptance came to the knowledge of the offeror
c. Offeree sent his letter or telegram
d. Offeror made the offer
93. S1: If the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of the stipulations shall control.
S2: If the words appear to be contrary to the evident intention of the parties, the latter shall
prevail over the former.
a. True; True
b. True; False
c. False; False
d. False; True
94. A leased his property to B. Part of the premises was subleased by B to C. B violated the
conditions of the lease, so A wanted to rescind the lease contract. Which is correct?
a. A can rescind the lease contract provided he respects the sublease
b. A cannot rescind the lease contract as the sublease would naturally be affected

c. A may rescind the lease contract and is not bound to respect the sublease
d. B may object to the cancellation of the contract because he is not a party to the violation
95. Which of the following need not be in writing to be enforceable?
a. An agreement for the sale of goods, chattels, or things in action at a price not less than
P500
b. An agreement for the leasing for a period longer than one year, or for the sale of real
property or of an interest thereon
c. A representation as to the credit of a third person
d. A mutual promise to marry
96. In order that fraud may make a contract voidable
a. It may be incidental but both parties should not be in pari delicto
b. It may be serious and the parties must be in pari delicto
c. It may be incidental but should have been employed by both parties
d. It should be serious and should have not been employed by both contracting parties
97. The following are characteristics of void or inexistent contracts, except:
a. The right to set up the defense of illegality cannot be waived
b. The action or defense for the declaration of the inexistence of a contract does not
prescribe
c. A void contract cannot be ratified
d. The defense of illegality of contracts is not available to third persons whose interests are
not directly affected
98. S1: A partnership is created by mere agreement of the partners while a corporation is created
by operation of law.
S2: In a partnership, juridical personality commences from the execution of the articles of the
partnership; in a corporation, from the issuance of certificate of incorporation by the Securities
and Exchange Commission.
a. True; True
b. True; False
c. False; False
d. False; True
99. The minimum capital in money or property except when immovable property or real rights
thereto are contributed, that will require the contract of partnership to be in a public
instrument and be registered with the Securities and Exchange Commission(SEC).
a. P5,000.00
b. P3,000.00
c. P3,001.00
d. P10,000.00
100.
If the partnership has the minimum capital mentioned in No. 29, but the contract is not in
a public instrument or the same is not recorded with SEC, the partnership:
a. Is voidable
b. Is void
c. Still acquires juridical personality
d. Does not acquire juridical personality
101.
Three of the following contracts are void. Which one is not?
a. A universal partnership of all present property between husband and wife
b. A universal partnership of profits between a man and a woman living together as
husband and wife without the benefit of marriage
c. A particular partnership between husband and wife
d. A universal partnership of profits between a private individual and a public officer

102.
Partners Arnold, Ben and Charlie contributed: Arnold-P1,000,000; Ben-P2,000,000; and
Charlie-service. After exhausting the partnership assets, the creditors still have a claim for
P300,000. For how much are the partners liable to the creditors for the partnership liability?
a. Only Arnold and Ben are liable equally to the creditors being capitalists
b. Only Arnold and Ben are liable at 1/3 and 2/3, respectively
c. All of Arnold, Ben and Charlie are liable pro rata to the creditors
d. Charlie is not liable being an industrial partner who is exempt from losses
103.
Armando and Betty 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
104.
Normelita and Gracia are partners in NG Partnership. While Normelita was performing
her duties as a partner in the conduct of the business, he negligently caused damage to
Eddie, a third person. Who shall be liable to Eddie and in what capacity?
a. Only the partnership shall be liable it being a juridical person separate and distinct from
the partners
b. Only Normelita shall be liable for she is the only one at fault
c. Both Normelita and Gracia shall be liable solidarily to Eddie
d. Normelita, Gracia and the partnership are all liable solidarily to Eddie
105.
Petalcorin is indebted for P5,000 to JDS Trading Company, a partnership managed by
Dulzura to whom Petalcorin also owes P10,000.00. The two debts which are both
demandable are unsecured. Petalcorin remits P4,500.00 to Dulzura in payment of his debt to
her. Accordingly, Dulzura issues a receipt for her own credit. To which credit should the
payment be applied?
a. To Dulzuras credit because the payment made by Petalcorin is intended for his debt to
Dulzura who issues her own receipt.
b. To both the partnership credit and Dulzuras credit proportionately at P1,500.00 and
P3,000.00, respectively.
c. To Dulzuras credit because its amount is greater than that of the partnership credit.
d. To the partnership credit because the managing partner should not prefer her own
interest to that of the partnership.
106.
Joseph, Aris, Dex and Earl are partners in JADE Enterprises, a jewelry store, with Joseph
contributing P50,000.00; Aris, P20,000.00; and Dex, P30,000.00. Earl is an industrial partner
and manages the partnership. Based on the foregoing information, which one of the following
statements is false?
a. Joseph may engage in the buying and selling of rice without the consent of the other
partners
b. Earl may engage in the buying and selling of rice without the consent of the other
partners
c. Earl is not liable for the losses of the partnership
d. Earl may be held liable by third persons for partnership debts with her separate property
107.
MARILEN Company is owned by the following partners with their respective
contributions: Mary, P10,000.00; Anna, P20,000.00; Rose, P30,000.00; Irma, P40,000.00;

Liza, P50,000.00; Edna, P100,000.00; and Nora, P200,000. Except for Edna and Nora, all the
rest are managers without any specification as to their respective duties. Mary wants to buy
goods from Excellent Company. Liza opposes. Anna and Rose side with Mary while Irma
sides with Liza.
a. The group of Mary will prevail because they constitute the majority.
b. The group of Liza will prevail because they constitute the controlling interest.
c. The group of Mary will prevail because they constitute the controlling interest.
d. Suppose Rose abstains, the group of Mary will prevail.
108.
a.
b.
c.
d.

Which of the following will not cause the automatic dissolution of a general partnership?
Death of a capitalist partner
Insolvency of a capitalist partner
Insanity of an industrial partner
Civil interdiction of an industrial partner

109.
A person admitted to all the rights of a limited partner who has died or has assigned his
interest in the partnership is known as
a. An ostensible partner
b. A liquidating partner
c. A substituted limited partner
d. A general-limited partner
110.
What is the order of payment of liabilities of a dissolved general partnership using the
code number representing each liability?
I. Those owing to partners than for capital or for profits
II. Those owing to creditors other than partners
III. Those owing to partners in respect of profits
IV. Those owing to partners in respect of capital
a. I, II, III, IV
b. II, I, IV, III
c. II, I, III, IV
d. I, II, IV, III
111.The articles of incorporation differ from the by-laws in that the articles of incorporation are:
a. The rules of action adopted by a corporation for its internal government
b. Adopted before or after incorporation
c. A condition precedent in the acquisition by a corporation of a juridical personality
d. Approved by the stockholders if adopted after incorporation
112.
a.
b.
c.
d.

A corporation acquires juridical personality

Upon the filing of the articles of incorporation
Upon the filing of the by-laws
Upon the issuance of the certificate of incorporation
Within 30 days from the receipt of the notice of the issuance of the certificate of
incorporation

113.
a.
b.
c.
d.

A delinquent stockholder is not entitled to the following rights, except

To be voted
To vote or be represented in the meetings of stockholders
To dividends
He is not entitled to all the rights of a stockholder

114.
Every corporation incorporated under the Corporation Code has the power and capacity
a. To adopt and use a corporate seal

b. To protect debts due to the corporation

c. To protect or aid employees
d. To increase the business of the corporation
115.
All of the following, except one are qualifications of a director or trustee. Which is it?
a. He must be the owner of at least 1 share of stock which shall stand in his name on the
books of the corporation
b. Majority of the directors or trustees must be residents of the Philippines
c. The number must not be less than 5 not more than 15
d. In case of a non-stock corporation, a trustee is not required to be a member of the
corporation
116.
S1: The removal of a director must take place in a regular meeting of the corporation or in
a special meeting called for the purpose.
S2: The election must be made through the raising of hands if requested by any voting
stockholder or member. If there is no such request, voting may be made through other means
like secret ballot.
a. True; True
b. True; False
c. False; False
d. False; True
117.
These are powers which are necessary to carry into effect powers which are expressly
granted, and which must therefore be presumed to have been the intention in the grant of the
franchise.
a. Express powers
c. Implied powers
b. Incidental powers
d. Inherent powers
118.
Which of the following subscriptions does not comply with the subscription and paid-up
capital requirements at the time of incorporation?
Authorized
Subscribed
Paid-up
a. P1,000,000.00
P250,000.00
P62,500.00
b. 300,000.00
75,000.00
50,000.00
c. 100,000.00
100,000.00
100,000.00
d. 50,000.00
12,500.00
3,125.00
119.
A corporation may acquire its own shares for a legitimate purpose provided it has
unrestricted retained earnings. In which of the following acquisitions is the requirement of
unrestricted retained earnings not imposed?
a. When the acquisition is made to eliminate fractional shares
b. When delinquent shares are acquired in a delinquency sale
c. When redeemable shares are repurchased in accordance with the terms provided in the
articles of incorporation
d. When shares are acquired from stockholders who exercise their appraisal right
120.
Which of the following rights is the subscriber of shares not fully paid who is not
delinquent not entitled to?
a. Right to dividends
b. Right to vote in stockholders meetings
c. Right to a stock certificate
d. Right to inspection of corporate books and records
121.
Fatima Corporation has a statement of capital stock in its articles of incorporation but it
was stated in the same articles that dividends are not supposed to be declared , that is ,
there is no distribution of retained earnings. Fatima Corporation is:
a. Stock corporation
c. Corporation by prescription

b. Non-stock corporation

d. Corporation by estoppels

122.
How many number of votes of the board of directors are required to change the name of
a corporation?
a. 2/3 of all members of the board
b. 2/3 vote of all present
c. Majority vote of all present constituting a quorum
d. Majority vote of the board
123.
In the matter of managing the business of the corporation, the exercise of corporate
power and handling of corporate properties this is supreme:
a. 2/3 approval of the stockholders of the corporation
b. Majority vote of the OCS of the corporation
c. Majority vote of the Board of Directors
d. The President of the corporation.
124.
a.
b.
c.
d.

Which of the following is not required to be included in the Articles of Incorporation?

Duties of the president.
Name of the corporation.
Period of existence
Location of the principal office.

125.
a.
b.
c.
d.

Delinquent stocks are

Entitled to vote in stockholders meeting
Entitled to inspect the books of the corporation
Entitled to dividends
None of the above